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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 1-9553
VIACOM INC.
(Exact Name Of Registrant As Specified In Its Charter)
DELAWARE 04-2949533
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation Or Organization) Identification Number)
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1515 Broadway
New York, NY 10036
(212) 258-6000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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Securities Registered Pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
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Class A Common Stock, $0.01 par value New York Stock Exchange
Class B Common Stock, $0.01 par value New York Stock Exchange
6.75% Senior Notes due 2003 American Stock Exchange
7.75% Senior Notes due 2005 American Stock Exchange
7.625% Senior Debentures due 2016 American Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
None
(Title Of Class)
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
As of March 19, 2001, 137,458,566 shares of Viacom Inc. Class A Common
Stock, $0.01 par value ("Class A Common Stock"), and 1,644,694,576 shares of
Viacom Inc. Class B Common Stock, $0.01 par value ("Class B Common Stock"),
were outstanding. The aggregate market value of the shares of Class A Common
Stock (based upon the closing price of $46.87 per share as reported by the New
York Stock Exchange on that date) held by non-affiliates was approximately
$2,049,856,075 and the aggregate market value of the shares of the Class B
Common Stock (based upon the closing price of $46.60 per share as reported by
the New York Stock Exchange on that date) held by non-affiliates was
approximately $70,957,111,400.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Viacom Inc.'s Notice of the 2001 Annual Meeting and Proxy
Statement to be filed with the Securities and Exchange Commission pursuant to
Regulation 14A of the Securities Exchange Act of 1934, as amended (the Proxy
Statement) (Part III).
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Part I
Item 1. Business.
Background
Viacom Inc. (together with its subsidiaries unless the context otherwise
requires, the "Company" or "Viacom") is a diversified worldwide entertainment
company with operations, during 2000, in seven segments:
. CABLE NETWORKS: The Cable Networks segment operates MTV: MUSIC
TELEVISION(R), SHOWTIME(R), NICKELODEON(R), NICK AT NITE(R), VH1 MUSIC
FIRST(R), TV LAND(R), TNN: THE NATIONAL NETWORK(TM) and CMT: COUNTRY MUSIC
TELEVISION(TM), among other program services.
. TELEVISION: The Television segment consists of the CBS(R) and UPN(R)
television networks, 39 owned broadcast television stations, and the
Company"s television production and syndication business, including KING
WORLD PRODUCTIONS(TM) and PARAMOUNT TELEVISION(TM).
. INFINITY: The Infinity segment operates 184 radio stations through
INFINITY BROADCASTING(R), and outdoor advertising properties through
INFINITY OUTDOOR(TM) and TDI(R).
. ENTERTAINMENT: The Entertainment segment includes PARAMOUNT PICTURES(R),
which produces and distributes theatrical motion pictures; PARAMOUNT
PARKS(R), which owns and operates five theme parks and a themed
attraction in the U.S. and Canada; and movie theater and music
publishing operations.
. VIDEO: The Video segment consists of an approximately 82% equity
interest in Blockbuster Inc., which operates and franchises
BLOCKBUSTER(R) video stores worldwide.
. PUBLISHING: The Publishing segment publishes and distributes consumer
books and related multimedia products, under such imprints as SIMON &
SCHUSTER(R), POCKET BOOKS(TM), SCRIBNER(R) and THE FREE PRESS(TM).
. ONLINE: The Online segment provides online music and children"s
destinations through Internet sites related to MTV: MUSIC TELEVISION,
NICKELODEON, NICK AT NITE, VH1 MUSIC FIRST, and CMT: COUNTRY MUSIC
TELEVISION, as well as SonicNet.com, and NickJR.com. In addition,
CBS.com offers a broad range of informational, entertainment, news and
promotional services. Effective January 1, 2001, the Company will
present its online businesses as part of the Cable Networks and
Television segments.
The Company was organized in Delaware in 1986 for the purpose of acquiring
the stock of a predecessor. In 1994, the Company acquired Paramount
Communications Inc. and Blockbuster Entertainment Corporation. On August 10,
1999, Blockbuster Inc. ("Blockbuster") (NYSE: BBI) sold to the public 31
million shares of its Class A common stock at $15 per share. The Company,
through its ownership of all of the 144 million shares of Blockbuster Class B
common stock outstanding, retains approximately 82% of the total equity value
in, and approximately 96% of the combined voting power of, Blockbuster. In
1999, the Company announced that it intended to split-off Blockbuster by
offering to exchange all of its shares of Blockbuster common stock for shares
of the Company's common stock. The split-off was subject to approval by the
Company's Board of Directors and an assessment of market conditions. The
Company no longer has any plans for the split-off of Blockbuster.
During 2000 and in the first quarter of 2001, the Company took several
important steps to secure its position as a leading global media and
entertainment company. Significant transactions included the following:
. On May 4, 2000, CBS Corporation ("CBS") merged with and into the
Company. At the time of the merger, the Company issued 1.085 shares of
its Class B Common Stock for each share of CBS common stock and 1.085
shares of its Series C Preferred Stock for each share of CBS Series B
preferred stock. The total purchase price of approximately $39.8 billion
represents the issuance of 825.5 million shares
I-1
of Viacom Class B Common Stock, 11,004 shares of Viacom Series C
convertible preferred stock (which were subsequently converted into 11.0
million shares of Viacom Class B Common Stock), the estimated fair value
of CBS stock options which were assumed by issuing Viacom options, and
estimated transaction costs. In addition, Viacom assumed approximately
$3.7 billion of CBS debt.
. As a result of its merger with CBS, the Company acquired an approximate
64.2% equity interest in Infinity Broadcasting Corporation ("Infinity
Broadcasting"). On February 21, 2001 Infinity Broadcasting merged with
and into a wholly owned subsidiary of the Company. In connection with
the merger, the Company issued 0.592 of a share of Viacom Class B Common
Stock for each issued and outstanding share of Infinity Broadcasting
Class A common stock resulting in the issuance of approximately 232
million shares of Viacom Class B Common Stock.
. On August 24, 2000, Infinity Broadcasting completed the acquisition of
18 radio stations from Clear Channel Communications Inc. for $1.4
billion. The acquisition resulted in Infinity Broadcasting expanding
into five new top 50 radio markets and owning over 180 radio stations.
During June 2000, Infinity Broadcasting completed the acquisition of
Giraudy SA, one of France's largest outdoor advertising companies, for
approximately $400 million. Infinity Broadcasting also acquired SMA
Societa Manifesti ed Affissione S.p.A, one of the leading Italian
outdoor media sales companies, for approximately $90 million.
. On November 3, 2000, the Company announced an agreement to acquire BET
Holdings II, Inc. ("BET"), which operates the BET: BLACK ENTERTAINMENT
TELEVISION(R) and BET ON JAZZ(R) cable networks. On January 23, 2001,
the Company completed its acquisition of BET for a total purchase price
of approximately $3.0 billion, which principally represents the issuance
of approximately 43.4 million shares of Viacom Class B Common Stock and
the assumption by the Company of approximately $590 million in debt.
Beginning in the first quarter of 2001, BET will be reported in the
Cable Networks segment.
As of March 19, 2001, National Amusements, Inc. ("NAI"), a closely held
corporation that owns and operates approximately 1,400 movie screens in the
U.S., the U.K. and South America, beneficially owned approximately 68% of the
Company's Class A Common Stock, and approximately 11% of the Company's Class A
Common Stock and Class B Common Stock on a combined basis. NAI is not subject
to the reporting requirements of the Securities Exchange Act of 1934, as
amended. Sumner M. Redstone, the controlling shareholder of NAI, is the
Chairman of the Board and Chief Executive Officer of the Company.
The Company's principal offices are located at 1515 Broadway, New York, New
York 10036 (telephone 212/258-6000).
For additional information about principal acquisitions and divestitures,
see Notes 3 and 5 to the Consolidated Financial Statements.
Viacom Segments
Cable Networks
The Company owns and operates advertiser-supported basic cable television
program services through its MTV Networks ("MTVN") division and premium
subscription television program services through Showtime Networks Inc. ("SNI")
in the U. S. and internationally.
Generally, the Company's cable networks are offered to customers of cable
television operators, distributors of direct-to-home satellite services ("DTH")
and other multichannel distributors. Cable television is currently the
predominant means of distribution of the Company's program services in the U.S.
Internationally, the predominant distribution technology varies territory by
territory.
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MTV Networks. In the U.S., MTVN's owned and operated program services
include MTV: MUSIC TELEVISION ("MTV"), MTV's spin-off, MTV2: MUSIC
TELEVISION(TM) ("MTV2"), NICKELODEON, NICK AT NIGHT, TV LAND, VH1 MUSIC FIRST
("VH1"), CMT: COUNTRY MUSIC TELEVISION ("CMT"), and TNN: THE NATIONAL NETWORK
("TNN").
MTV's programming consists of music videos and events, augmented by music
and general lifestyle information, comedy and dramatic series, animated
programs, news specials, interviews, documentaries and other youth-oriented
programming appealing primarily to an audience aged 18 to 24. At December 31,
2000 according to the Nielsen Media Research report, MTV reached approximately
77.3 million domestic subscriber households. MTV2, a 24-hour, seven-days-a-
week spin-off of MTV, offers a "freeform" music format which features music
videos from a broad range of musical genres and artists. MTVN also operates
"The Suite from MTV Networks" ("The Suite"), a package of digital television
program services, which currently consists of MTV2 and five other music
related services, and NOGGIN(R) and two other program services from
NICKELODEON. The Suite is offered through DBS distributors and cable operators
offering digital technology. During 2000, MTVN also offered THE BOX(R) MUSIC
NETWORK, a 24-hour, all music basic cable channel, with technology allowing
selection of music videos on a market-by-market basis. On December 31, 2000,
THE BOX MUSIC NETWORK was integrated into MTV2. At December 31, 2000, MTV2,
with the integration of the subscribers of THE BOX MUSIC NETWORK, had
approximately 30.0 million domestic subscriber households (based on subscriber
counts provided by each distributor of the service, including cable, DTH and
other multichannel programming providers).
NICKELODEON combines acquired and originally produced programs in a pro-
social, non-violent format comprising two distinct program units tailored to
age-specific demographic audiences: NICKELODEON, targeted to audiences ages 2
to 11 (which includes NICK JR.(R), a program block designed for 2 to 5 year
olds, and such popular shows as RUGRATS, BLUE'S CLUES and SPONGEBOB
SQUAREPANTS); and NICK AT NITE, which attracts primarily audiences ages 18 to
54 and offers mostly situation comedies from various eras, including I LOVE
LUCY, THE DICK VAN DYKE SHOW, THE MARY TYLER MOORE SHOW and TAXI. At December
31, 2000, according to the Nielsen Media Research report, NICKELODEON/NICK AT
NITE reached approximately 79.8 million domestic subscriber households.
NICKELODEON licenses its brands and characters for and in connection with
merchandise, home video and publishing worldwide. NICKELODEON MOVIES(R)
develops a mix of story- and character-driven projects based on original ideas
and NICKELODEON programming, such as the feature films SNOW DAY, released
theatrically on February 11, 2000, and RUGRATS IN PARIS: THE MOVIE, released
in fourth quarter 2000 by PARAMOUNT PICTURES, as well as a BLUE'S CLUES
direct-to-video movie BLUE'S BIG MUSICAL. Additionally, the Company publishes
monthly NICKELODEON MAGAZINE(TM). NICKELODEON GAS GAMES AND SPORTS FOR
KIDS(R), a cable program service packaged as part of The Suite, features
children's game shows and sports programming for viewers ages 6 to 11, and
includes a related online service. NICKELODEON owns and operates theme park
attractions and touring shows under its NICKELODEON RECREATION(TM) unit and
interactive public attractions and television production studios under its
NICKELODEON STUDIOS(R) unit located at Universal Studios Florida. NICKELODEON
also produces original animation at its NICKTOONS(R) Animation Studio in
Burbank, California.
TV LAND, a 24-hour, seven-days-a-week spin-off of NICK AT NITE, is
comprised of a broad range of well-known television programs from various
genres, including comedies, dramas, westerns, variety and other formats from
the 1950s through the 1980s, including THE HONEYMOONERS, THE ANDY GRIFFITH
SHOW, LEAVE IT TO BEAVER and CHARLIE'S ANGELS. At December 31, 2000, according
to the Nielsen Media Research report, TV LAND reached approximately 55.5
million domestic subscriber households.
VH1 presents music and related programming directed at an audience aged 25
to 49 with an emphasis on series which feature viewers' favorite music and
artists such as VH1 BEHIND THE MUSIC, STORYTELLERS, POP UP VIDEO, VH1 BEFORE
THEY WERE ROCK STARS and VH1 ALL ACCESS. In addition, VH1 airs music videos,
concerts, special events and musically themed movies. In April 2000, VH1 aired
DIVAS 2000: A TRIBUTE TO DIANA ROSS, followed in November 2000 with its debut
of the first MY VH1 MUSIC AWARDS, where nominees and winners were determined
by fans voting online. In December 2000, VH1 had
I-3
its most successful original movie premiere with A DIVAS CHRISTMAS CAROL. The
VH1 SAVE THE MUSIC(R) Foundation, in connection with VH1's cable television
and satellite affiliates, restored music education programs to 214 schools in
40 communities while also winning the Governors' Award from the Academy of
Television Arts & Sciences, the George Foster Peabody Award for broadcasting
and cable excellence and the Beacon Award presented by the Cable Television
Public Affairs Association. At December 31, 2000, according to the Nielsen
Media Research report, VH1 reached approximately 74.2 million domestic
subscriber households.
CMT is an advertiser-supported, 24-hour cable network which presents
country music videos, and related events, lifestyle and entertainment
programming. Its programming in 2000 included CMT All ACCESS, a monthly series
of concerts featuring country music artists, and special events such as CHICKS
MUSIC TELEVISION featuring a variety of programs showcasing the Dixie Chicks.
The Company offers CMT in the U.S. and, through a minority joint venture, in
Canada. At December 31, 2000, according to the Nielsen Media Research report,
CMT reached approximately 44.7 million domestic subscriber households.
TNN (formerly TNN: The Nashville Network(R)) is an advertiser-supported
general entertainment cable network with a focus on popular lifestyle and
entertainment programming. The Company offers TNN in the U.S. and, as a non-
advertiser supported service, in Canada. At December 31, 2000, according to
the Nielsen Media Research report, TNN reached approximately 79.2 million
domestic subscriber households and Mediastat reports TNN's Canadian
distribution at 6.3 million households. TNN's programming includes the highly
rated series WWF RAW IS WAR, as well as popular movies and favorite off-net
television series such as STARSKY AND HUTCH and THE DUKES OF HAZZARD, and
sports, including professional bull-riding, motor sports, fishing and other
outdoor sports.
MTV FILMS(TM), in association with PARAMOUNT PICTURES, produced THE
ORIGINAL KINGS OF COMEDY which was released by PARAMOUNT PICTURES in 2000,
and, with PARAMOUNT PICTURES, is currently producing ORANGE COUNTY. MTV FILMS
also produced SAVE THE LAST DANCE, with PARAMOUNT PICTURES, released in
January 2001. MTV has also launched lines of home videos, consumer products
and books, featuring MTV programming and personalities. In addition, MTV
pursues broadcast network and first-run syndication television opportunities
through MTV PRODUCTIONS(TM).
Internationally, MTVN owns and operates, participates in as a joint
venturer, and licenses third parties to operate, MTVN program services,
including MTV and NICKELODEON programming. The MTVN international program
services are described in the chart that follows. Most of the MTVN
international program services are regionally customized to suit the local
tastes of their young adult viewers by the inclusion of local music,
programming and on-air personalities, and use of the local language. MTV
Networks Europe is Europe's most widely distributed cable and satellite
network comprising 16 individual music channels, including MTV (9 regionalized
services), VH1 (3 services), MTV2, MTV Extra(TM), MTV Base, and VH1
Classic(TM). The network currently reaches more than 90 million households in
Europe via a combination of satellite, cable, and terrestrial distribution.
MTVN, in exchange for cash and advertising time or for promotional
consideration only, licenses from record companies music videos for exhibition
on MTV, MTV2, VH1, CMT and other MTVN program services. MTVN has entered into
multi-year global or regional music video licensing agreements with certain of
the major record companies. These agreements generally cover a three to five
year period and contain provisions regarding video debut and exclusivity for a
limited number of music videos in the U.S. MTVN also is negotiating and
expects to renew or initiate additional global or regional license agreements
with the other major record companies and independent labels. However, there
can be no assurance that such renewals or agreements can be concluded on
favorable terms (see "Viacom Segments--Competition--Cable Networks").
MTVN derives revenues principally from two sources: the sale of time on its
own networks to advertisers and the license of the networks to cable
television operators, DTH and other distributors. The sale of MTVN advertising
time is affected by viewer demographics, viewer ratings and market conditions
for advertising time. Adverse changes to any of these factors could have an
adverse effect on revenues. In addition, continued consolidation among cable
operators could have an adverse effect on MTVN's license fee revenue (see
"Viacom Segments--Competition--Cable Networks").
I-4
International MTVN Program Services
The following table sets forth information regarding MTVN program services
operated internationally:
Launch/
Regional Commencement
Program Service Territory Ownership Feeds/Language(1) Date
--------------- --------- --------- ----------------- ------------
MTV Europe 40 territories, 100% by the 9 Regional Feeds Various: August
(includes MTV: including all EU states, Company (U.K., Netherlands, 1987-2000.
Music Television Eastern and Central Scandinavia, Poland,
and MTV Base, Europe, South Africa, Spain, France,
MTV Extra and certain countries in the Central, South and
MTV2) former Soviet Union, the European) all in or
Middle East, Egypt, mainly in English
Faroe Islands, Israel, (except for Central
Liechtenstein, Malta and presented in German,
Moldova Poland presented in
Polish and South
presented in Italian)
MTV Latin Latin America, the 100% by the 3 Regional Feeds in October 1993
America Caribbean, Brazil and Company Spanish
the U.S.
MTV Brasil Brazil Joint Venture Portuguese October 1990
(with Abril
S.A.)
MTV Asia Taiwan, certain Joint Venture English, Mandarin, April 1995
provinces in China*, (with PolyGram Bahasa Indonesian,
Brunei, Thailand, N.V.) Tagalog, Hindi, and
Singapore, Philippines, Korean
Indonesia, Malaysia,
Vietnam, Hong Kong*,
South Korea*, Papua New
Guinea, India, Sri
Lanka, Bangladesh, Nepal
and Pakistan
MTV Australia Australia Licensing English March 1997
Arrangement
(with Optus
Vision Pty
Limited)
MTV Russia Russia Joint Venture Russian September 1998
(with Russia
Partners
Company, L.P.,
Biz
Enterprises
and others)
MTV Japan Japan Joint Venture Japanese January 1, 2001
with @Japan
Media K.K. and
others)
Nickelodeon Latin America, Brazil 100% by the Spanish, Portuguese December 1996
Latin America and the Caribbean Company and English
Nickelodeon Nordic region (including 100% by the Swedish, Norwegian and February 1997
Nordic* Sweden, Norway, Denmark Company Danish
and Finland)
Nickelodeon U.K. Joint Venture English September 1993-
U.K.* (with British Nick
Sky September 1999-
Broadcasting Nick Jr.
Limited)
Nickelodeon Australia Joint Venture English October 1995
Australia (with XYZ
Entertainment
Pty Ltd.)
Nickelodeon Spain 100% by the Spanish March 1999
Spain* Company
Nickelodeon Japan, CIS/Baltic 100% by the Japanese, Russian, November 1998
Global Network Republics, India, Company Magyar, English,
Ventures(2) Poland*, Hungary*, Polish and Romanian
Africa*, Malaysia, New
Zealand, Romania,
Indonesia, Philippines,
Singapore, Turkey,
Bangladesh, Nepal and
Malta
VH1 U.K./VH1 All EU states, the 100% by the English September 1994
Export/ VH1 Middle East, Africa, Company
Classic Scandinavia, Israel,
Malta, Moldova, South
Africa and Eastern
Europe
VH1 Germany Germany and Austria 100% by the German May 1995
Company
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* Denotes program services that are not 24 hours-a-day/seven-days-a-week.
(1) All MTV and VH1 program services include English language music videos.
(2) Nickelodeon Global Network Ventures consists of eleven different services
with customized programming for targeted markets.
I-5
Showtime Networks Inc. SNI owns and operates three commercial-free, premium
subscription television program services in the U.S.: SHOWTIME, offering
recently released theatrical feature films, original motion pictures and
series, family entertainment, and boxing and other special events; THE MOVIE
CHANNEL(R), offering recently released theatrical feature films and related
programming; and FLIX(R), featuring theatrical feature films primarily from
the 70s, 80s and 90s as well as selected other titles. At December 31, 2000,
SHOWTIME, THE MOVIE CHANNEL and FLIX, in the aggregate, had approximately 28.4
million subscriptions in the 50 states and certain U.S. territories. SUNDANCE
CHANNEL(R), a joint venture (among SNI, an affiliate of Robert Redford and
Universal Studios) managed by SNI, is a commercial-free premium subscription
television program service in the U.S., dedicated to independent film,
featuring top-quality American independent films, documentaries, foreign and
classic art films, shorts and animation, with an emphasis on recently released
titles.
SNI also owns and operates several multiplexed versions of SHOWTIME and THE
MOVIE CHANNEL in the U.S., including SHOWTIME BEYOND(R), a genre-based channel
featuring sci-fi, horror and fantasy programming, and SHOWTIME EXTREME(R), a
genre-based channel featuring action/adventure programming. On March 1, 2001,
SNI launched SHOWTIME NEXT(TM), a channel targeting 18-24 year-olds, SHOWTIME
WOMEN(TM), focusing on women in front of and behind the camera, and SHOWTIME
FAMILYZONE(TM), a channel featuring no R-rated programming. SNI also transmits
a high definition television version of SHOWTIME. In addition, SNI jointly
owns an advertiser-supported basic television program service in Spain named
SHOWTIME EXTREME(R) with Media Park, S.A., a leader in thematic channel
production based in Barcelona. At the end of 2000, SNI entered into a joint
venture with Zone Vision Enterprises, Limited, a UK company, for the
production and distribution of an advertiser-supported action-oriented basic
television program service in Turkey. The channel was launched in January 2001
under the name SHOWTIME(TM).
SNI also provides special events, such as sports and musical events, to
licensees on a pay-per-view basis. SHOWTIME EVENT TELEVISION(TM) is a pay-per-
view distributor of these special events, including boxing events. This unit
has produced and distributed seven of the top ten pay-per-view events of all
time, including the top two: Tyson vs. Holyfield I and Holyfield vs. Tyson II.
SHOWTIME EVENT TELEVISION has also been instrumental in bringing other events
to the viewing public, such as DORITOS PRESENTS DREW CAREY'S IMPROV ALL STARS,
as well as numerous music concerts, including THE LAST KISS, SPICE GIRLS IN
CONCERT--WILD!, THE BACKSTREET BOYS, TINA TURNER and THE ROLLING STONES.
The costs of acquiring premium television rights to programming and
producing original motion pictures and series are the principal expenses of
SNI. In order to exhibit theatrical motion pictures on premium subscription
television, SNI enters into commitments to acquire rights, with an emphasis on
acquiring exclusive rights for SHOWTIME and THE MOVIE CHANNEL, from major or
independent motion picture producers and other distributors. SNI's exhibition
rights cover the U.S. and may, on a contract-by-contract basis, cover
additional territories. SNI has the exclusive U.S. premium subscription
television rights to all PARAMOUNT PICTURES' feature films theatrically
released beginning January 1, 1998, as well as non-exclusive rights to certain
titles from PARAMOUNT PICTURES' film library (see "Viacom Segments--
Entertainment"). SNI also has significant theatrical motion picture license
agreements with other motion picture producers and distributors, including
Metro-Goldwyn-Mayer Studios Inc. ("MGM"), Artisan Pictures Inc., and Buena
Vista Television (a subsidiary of The Walt Disney Company) for Dimension Films
theatrical pictures, covering motion pictures initially theatrically released
through dates ranging from December 31, 2001 to December 31, 2008. Theatrical
motion pictures that are licensed to SNI on an exclusive basis are generally
exhibited first on SHOWTIME and THE MOVIE CHANNEL after an initial period or
"window" for theatrical, home video and pay-per-view exhibition and before the
period commenced for standard broadcast television and basic cable television
exhibition. Many of the motion pictures which appear on FLIX have been
previously available for standard broadcast and other exhibitions (but are
shown on FLIX unedited and commercial-free).
SNI also arranges for the development, production, acquisition and, in many
cases, distribution of original programs, series and motion pictures. SNI's
original series include RESURRECTION BLVD., the first English-language U.S.
dramatic television series that predominantly features Hispanics both in front
of and behind the
I-6
camera, and SOUL FOOD, a series (based on the theatrical motion picture of the
same name) that follows the struggles, rivalries and triumphs of a multi-
generational African-American family. SNI's original motion pictures have
received numerous industry awards over the years, including the prestigious
Golden Globe Award for "Best Mini-Series or Motion Picture Made for
Television" for 2000. As part of its original programming strategy, SNI
premiered 30 original motion pictures on SHOWTIME in 2000, and expects to
premiere approximately 35 original motion pictures in 2001. The producers of
some of SNI's original motion pictures are given an opportunity to seek a
theatrical release prior to such pictures' exhibition on SHOWTIME or THE MOVIE
CHANNEL. If the producers are not successful in obtaining such a theatrical
release, these pictures then premiere in the U.S. on SHOWTIME or THE MOVIE
CHANNEL. SNI has entered into and plans to continue to enter into co-
financing, co-production and/or co-distribution arrangements with other
parties to reduce the net cost to SNI for its original motion pictures. In
2000, Hallmark Entertainment Distribution LLC, PARAMOUNT TELEVISION and MGM
were the predominant co-producers, co-financiers and co-distributors of SNI's
original motion pictures, programs and series for that calendar year.
BLOCKBUSTER and SNI have an agreement whereby BLOCKBUSTER will license from
SNI the exclusive domestic home video rights to up to 180 SNI original motion
pictures and other programs over the period from April 1, 2000 through March
31, 2005.
Cable Networks Joint Ventures. COMEDY CENTRAL(R), a joint venture of the
Company and Home Box Office ("HBO"), a unit of AOL Time Warner Inc., is an
advertiser-supported basic cable television program service which features
comedy programming, including SOUTH PARK. The Company is a joint venturer in
GULF DTH ENTERTAINMENT LDC, a satellite direct-to-home platform offering the
following channels in the Middle East: MTV, VH1, NICKELODEON, TV LAND and THE
PARAMOUNT COMEDY CHANNEL(TM). A joint venture between NICKELODEON and Sesame
Workshop (formerly Children"s Television Workshop) operates NOGGIN, a 24-hour,
seven-days-a-week, non-commercial children's educational program service,
distributed by digital cable and satellite, which includes a related online
service. NOGGIN's purpose is to educate and entertain 2 to 12 year olds.
NOGGIN's programming line-up includes a mix of live action, news, animated and
puppet shows, including many acclaimed series such as Sesame Street, Electric
Company and BLUE'S CLUES after their initial network runs. MTV Polska, a joint
venture between MTV Networks BV, the Dutch subsidiary of MTV Networks Europe,
and UPC Programming BV, was established to create, produce and broadcast two
new channels: MTV Polska, and VH1 Polska. MTV Polska is broadcast by cable and
satellite throughout Poland.
Television
The Television segment consists of the CBS and UPN television networks, 39
owned broadcast television stations, and the Company's television production
and syndication business.
Television Networks. The CBS TELEVISION NETWORK(TM) through CBS NEWS(TM),
CBS SPORTS(TM) and CBS ENTERTAINMENT(TM) distributes a comprehensive schedule
of news and public affairs broadcasts, sports and entertainment programming,
and feature films to more than 200 domestic affiliates, 16 of the Company's
owned and operated television stations, and to certain overseas affiliated
stations. The affiliates serve, in the aggregate, all 50 states and the
District of Columbia, reaching virtually every television home in the United
States. The CBS TELEVISION NETWORK is responsible for sales of advertising
time for its network broadcasts.
CBS NEWS operates a worldwide news organization, providing the CBS
TELEVISION NETWORK and the CBS RADIO NETWORK(R) with regularly scheduled news
and public affairs broadcasts, including 60 MINUTES, the pioneering news
magazine now in its 33rd year, and its offspring, 60 MINUTES II, the CBS
EVENING NEWS WITH DAN RATHER, 48 HOURS, THE EARLY SHOW, FACE THE NATION, THE
SATURDAY EARLY SHOW and CBS NEWS SUNDAY MORNING--as well as special reports.
CBS NEWS maintains 18 news bureaus and offices around the world, in addition
to its headquarters operations in New York City. CBS Radio News serves more
than 2000 radio stations with hourly newscasts, instant coverage of breaking
stories, special reports, updates, features, customized reports and news feed
material. Among its many features
I-7
are "World News Roundup," and "The World Tonight." CBS News Productions, the
off-network production company created by CBS NEWS, produces original
nonfiction programming for domestic and international outlets, including the
cable television, home video, CD-ROM, audio-book and in-flight markets, as
well as schools and libraries.
CBS SPORTS broadcasts comprehensive regular-season golf and college
basketball lineups on network television, in addition to the NFL's American
Football Conference schedule and championship games. CBS SPORTS' 2000-2001
broadcast schedule was highlighted by Super Bowl XXXV. Among the events CBS
SPORTS airs are THE NFL TODAY; NCAA basketball, including the men's Final Four
and championship games; golf, including the Masters and PGA Championship; the
U.S. Open Tennis Championships; college football; CBS SPORTS SPECTACULAR,
including track and field and gymnastics, and NCAA championships, including
the College World Series. Extending its franchises off the field, CBS SPORTS
has launched a licensing program that will showcase its logo on apparel and
sports equipment and has formed a marketing unit to develop licensing,
merchandising, multimedia and other business opportunities for advertisers and
event organizers.
CBS ENTERTAINMENT is responsible for acquiring or developing and scheduling
the entertainment programming presented on the CBS TELEVISION NETWORK which
includes primetime comedy and drama series, new television movies and mini-
series, theatrical films, specials, children's programs, daytime dramas, game
shows and late-night broadcasts. In the past year, the Company introduced to
U.S. audiences the highly successful reality-based SURVIVOR series. CBS
ENTERTAINMENT has introduced two dramas in the 2000-2001 season, CSI: CRIME
SCENE INVESTIGATION and THE DISTRICT, and a new comedy YES, DEAR. Its shows
include EVERYBODY LOVES RAYMOND, BECKER, THE KING OF QUEENS, JUDGING AMY,
TOUCHED BY AN ANGEL, JAG and FAMILY LAW. The division presents two movie
franchises, a lineup of specials that includes THE GRAMMY AWARDS, THE CMA
AWARDS and THE KENNEDY CENTER HONORS, and THE LATE SHOW WITH DAVID LETTERMAN.
The CBS Daytime lineup and the drama THE YOUNG AND THE RESTLESS have been
rated number one in the daypart by Nielsen Media Research for 12 consecutive
years.
In 1997, the Company acquired a 50% interest in the UNITED PARAMOUNT
NETWORK(R) ("UPN") from BHC Communications, Inc. ("BHC"), a subsidiary of
Chris-Craft Industries, Inc. In March 2000, BHC sold to the Company the
remaining 50% interest in UPN for $5 million. After the May 2000 merger with
CBS, pursuant to which the Company acquired the CBS TELEVISION NETWORK, the
Federal Communications Commission (the "FCC" or the "Commission") ordered the
Company to come into compliance with its rule prohibiting a single entity from
operating two networks within 12 months of the merger closing date. The FCC
subsequently proposed to eliminate this rule. (See "Viacom Segments--
Regulation--Broadcasting").
At December 31, 2000, UPN provided 23 hours of programming a week,
including two-hour prime-time programming blocks five nights per week, to
affiliates in 177 U.S. television markets, reaching approximately 96% of all
U.S. television households, including secondary affiliates. Nineteen of the
Company's owned television stations and two stations which the Company
programs pursuant to local marketing agreements ("LMAs") are affiliates of
UPN.
Television Stations. The Company owns 39 television stations, all of which
operate under licenses granted by the FCC pursuant to the Communications Act
of 1934, as amended (the "Communications Act"). The licenses are renewable
every eight years. In addition to these 39 owned stations, the Company
operates two additional commercial television stations--(WTVX-TV in West Palm
Beach--Ft. Pierce, FL and WLWC-TV in Providence, RI--New Bedford, MA),
pursuant to LMAs.
The Company's television stations are located in the 12 largest, and 18 of
the top 20, television markets in the United States. Consistent with the 1999
liberalization of the FCC's local ownership rules, the Company has duopolies
in 6 major markets: Philadelphia (market #4), Boston (market #6), Dallas
(market #7), Detroit (market #9), Miami (market #16) and Pittsburgh (market
#20). The 39 owned stations reach approximately 48% of all U.S. television
households, which equals approximately 41% of U.S. television households under
the FCC
I-8
national ownership limitation. The FCC's order approving the merger of Viacom
and CBS requires that the Company be in compliance with the FCC's national
ownership limitation of 35% by May 4, 2001. The Company has challenged the
rule in federal court and is seeking a stay of the requirement to come into
compliance with the limit pending judicial review of the national ownership
cap (See "Viacom Segments--Regulation--Broadcasting").
The stations produce news and broadcast public affairs and other
programming to serve their local markets and offer CBS or UPN television
network and syndicated programming. Many of the Company's television stations
currently operate Web sites which promote the stations' talent and
programming, and provide news, information and entertainment, as well as other
services.
Currently, broadcast signals are, for the most part, transmitted in analog
form. However, in April 1997, the FCC assigned each existing television
station a six MHz channel to be used for the broadcast of digital television.
The FCC adopted a time schedule under which stations are required (absent
conditions beyond their control) to construct digital transmission facilities
and begin digital operations. The schedule has staggered deadlines depending
upon a station's market size and whether the station is affiliated with a
major broadcast television network (CBS, ABC, NBC, or FOX). Under the
schedule, the Company was required to construct digital transmission
facilities for its eight CBS network affiliated stations in the top ten
markets by May 1, 1999, and by November 1, 1999, for its seven CBS network
affiliated stations in the 11th through 30th markets. The Company is required
to construct digital facilities for the five CBS network affiliated stations
in markets below the top 30, as well as for its UPN network affiliated
stations in all markets, by May 1, 2002. The Company is currently transmitting
digital broadcasts for CBS network affiliated owned and operated stations in
New York, Los Angeles, Philadelphia, San Francisco, Boston, Dallas (low
power), Detroit, Pittsburgh and Baltimore. The Company is currently
transmitting digital broadcasts for UPN network affiliated owned and operated
stations in Dallas and Detroit.
I-9
Television Stations
The table below sets forth the 39 television stations owned by the Company
and the two television stations operated by the Company pursuant to LMAs.
Market Type/ Network
Station and Metropolitan Area Served(1) Rank(2) Channel Affiliation
- --------------------------------------- ------- ------- -----------
WCBS-TV............................................. 1 VHF/2 CBS
New York, NY
KCBS-TV............................................. 2 VHF/2 CBS
Los Angeles, CA
WBBM-TV............................................. 3 VHF/2 CBS
Chicago, IL
KYW-TV.............................................. 4 VHF/3 CBS
Philadelphia, PA
WPSG-TV............................................. 4 UHF/57 UPN
Philadelphia, PA
KPIX-TV............................................. 5 VHF/5 CBS
San Francisco, CA
WBZ-TV.............................................. 6 VHF/4 CBS
Boston, MA
WSBK-TV............................................. 6 UHF/38 UPN
Boston, MA
KTVT-TV............................................. 7 VHF/11 CBS
Dallas-FT. Worth, TX
KTXA-TV............................................. 7 UHF/21 UPN
Dallas-FT. Worth, TX
WDCA-TV............................................. 8 UHF/20 UPN
Washington, DC
WKBD-TV............................................. 9 UHF/50 UPN
Detroit, MI
WWJ-TV.............................................. 9 UHF/62 CBS
Detroit, MI
WUPA-TV............................................. 10 UHF/69 UPN
Atlanta, GA
KTXH-TV............................................. 11 UHF/20 UPN
Houston, TX
KSTW-TV............................................. 12 VHF/11 UPN
Seattle-Tacoma, WA
WCCO-TV............................................. 14 VHF/4 CBS
Minneapolis-St. Paul, MN
Satellites:
KCCO-TV(3)........................................ CBS
Alexandria, MN
KCCW-TV(4)........................................ CBS
Walker, MN
WTOG-TV............................................. 15 UHF/44 UPN
Tampa-St. Petersburg, Sarasota, FL
WFOR-TV............................................. 16 VHF/4 CBS
Miami-Ft. Lauderdale, FL
WBFS-TV............................................. 16 UHF/33 UPN
Miami-Ft. Lauderdale, FL
KCNC-TV............................................. 18 VHF/4 CBS
Denver, CO
KMAX-TV............................................. 19 UHF/31 UPN
Sacramento-Stockton-Modesto, CA
I-10
Market Type/ Network
Station and Metropolitan Area Served(1) Rank(2) Channel Affiliation
- --------------------------------------- ------- ------- -----------
KDKA-TV........................................... 20 VHF/2 CBS
Pittsburgh, PA
WNPA-TV........................................... 20 UHF/19 UPN
Pittsburgh, PA
WJZ-TV............................................ 24 VHF/13 CBS
Baltimore, MD
WNDY-TV........................................... 25 UHF/23 UPN
Indianapolis, IN
WWHO-TV........................................... 34 UHF/53 UPN/WB(5)
Columbus, OH
KUTV-TV........................................... 36 VHF/2 CBS
Salt Lake City, UT
Satellite:
KUSG-TV(6)...................................... CBS
St. George, UT
WGNT-TV........................................... 40 UHF/27 UPN
Norfolk, Portsmouth, Newport News, VA
WUPL-TV........................................... 41 UHF/54 UPN
New Orleans, LA
KAUT-TV........................................... 45 UHF/43 UPN
Oklahoma City, OK
KEYE-TV........................................... 60 UHF/42 CBS
Austin, TX
KSCC-TV(7)........................................ 65 UHF/36 UPN
Wichita-Hutchinson, KS
WFRV-TV........................................... 69 VHF/5 CBS
Green Bay-Appleton, WI
Satellite:
WJMN-TV(8)...................................... 177 CBS
Escanaba, MI
WHDF-TV(9)........................................ 81 UHF/15 UPN
Huntsville-Decatur-Florence, AL
The following two stations are operated by the Company pursuant to LMAs:
WTVX-TV........................................... 44 UHF/34 UPN/WB(10)
West Palm Beach-Ft. Pierce, FL
WLWC-TV........................................... 50 UHF/28 UPN/WB(11)
Providence, RI-New Bedford, MA
- --------
(1) Metropolitan Area Served is Nielsen Media Research's Designated Market
Area.
(2) Market Rank based on September 2000 Nielsen Media Research U.S.
Television Household Estimates as provided by BIA Media Access.
(3) KCCO-TV is operated as a satellite station of WCCO-TV.
(4) KCCW-TV is operated as a satellite station of WCCO-TV.
(5) WWHO-TV's primary affiliation is with the UPN network. The station has a
secondary affiliation with the WB network.
(6) KUSG-TV is operated as a satellite station of KUTV-TV.
(7) KSCC-TV is operated by Clear Channel Broadcasting, Inc. ("CCB") pursuant
to an LMA. On February 24, 2001, pursuant to a contractual right, the
Company notified CCB that it would require CCB to acquire the station.
(8) WJMN-TV is operated as a satellite station of WFRV-TV.
(9) The Company owns an attributable 17.5% interest in WHDF-TV.
(10) WTVX-TV's primary affiliation is with the UPN network. The station has a
secondary affiliation with the WB network.
(11) WLWC-TV's primary affiliation is with the UPN network. The station has a
secondary affiliation with the WB network.
I-11
Television Production and Syndication. The Company, through CBS ENTERPRISES
(including KING WORLD PRODUCTIONS and CBS BROADCAST INTERNATIONAL), PARAMOUNT
TELEVISION, SPELLING TELEVISION(R) (including BIG TICKET TELEVISION(R)) and
VIACOM PRODUCTIONS acquires or produces, and distributes programming worldwide
including series, miniseries, specials and made-for-television movies
primarily for broadcast on network television, and first-run and off-network
syndicated programming.
The Company's current network programming includes ED (NBC); FRASIER (NBC);
BECKER (CBS); DIAGNOSIS MURDER (CBS); JAG (CBS); SOME OF MY BEST FRIENDS
(CBS); SABRINA, THE TEENAGE WITCH (WB); MOESHA (UPN); SEVEN DAYS (UPN); THE
PARKERS (UPN); STAR TREK: VOYAGER (UPN); CHARMED (WB); 7TH HEAVEN (WB); THAT'S
LIFE (CBS); and GIRLFRIENDS (UPN). Generally, a network will license a
specified number of episodes for exhibition on the network in the U.S. during
a license period. The bulk of remaining distribution rights, including foreign
and off-network syndication rights, are typically retained by the Company. The
episodic network license fee is normally less than the costs of producing each
series episode; however, in many cases, the Company has been successful in
recouping a portion of its costs through domestic syndication of episodes
after their network runs or by obtaining international sales through its
licensing operations. Foreign sales are generally concurrent with U.S. network
runs. Generally, a series must have a network run of at least three or four
years to be successfully sold in domestic syndication.
In off-network syndication, the Company distributes such series as CAROLINE
IN THE CITY; EARLY EDITION; FRASIER; MOESHA; SABRINA, THE TEENAGE WITCH; 7TH
HEAVEN; SISTER, SISTER; SPIN CITY; STAR TREK: VOYAGER and TOUCHED BY AN ANGEL.
Outside the U.S., PARAMOUNT PICTURES INTERNATIONAL, WVI FILMS B.V. and CBS
BROADCAST INTERNATIONAL distribute U.S. network series programming.
The Company produces and/or distributes programming for first-run
syndication which it sells directly to television stations in the U.S. on a
market-by-market basis. The Company's first-run syndicated programming
includes such shows as ENTERTAINMENT TONIGHT, ENTERTAINMENT TONIGHT WEEKEND,
HOLLYWOOD SQUARES, INSIDE EDITION, JEOPARDY!, JUDGE JOE BROWN, JUDGE JUDY,
JUDGE MILLS LANE, MARTHA STEWART LIVING, MAXIMUM EXPOSURE, THE MONTEL WILLIAMS
SHOW, THE OPRAH WINFREY SHOW, QUEEN OF SWORDS, REAL TV, RELIC HUNTER and WHEEL
OF FORTUNE.
The Company produces and/or distributes original television programming to
basic cable program services (such as the television series ANY DAY NOW,
BEYOND CHANCE and THE DIVISION, on Lifetime), including services in which the
Company has an interest, such as NICK AT NITE, TV LAND and VH1 in the U.S. and
PARAMOUNT COMEDY CHANNEL in U.K. and Spain. It also produces and/or
distributes for premium subscription services programming such as SOUL FOOD,
RESURRECTION BLVD. and THE CHRIS ISAAK SHOW. The Company also co-produces
and/or distributes original television programming for foreign television
exhibition, including such shows as HOPE ISLAND, HIGHER GROUND, LARGO WINCH
and TRIBE.
The recognition of revenues for license fees for completed television
programming in syndication and on basic cable is similar to that of feature
films exhibited on television with license fees recorded as revenue in the
year that programming is available for exhibition which, among other reasons,
may cause substantial fluctuation in the Televsion segment's operating
results. At December 31, 2000, the unrecognized revenues attributable to
television program license agreements were approximately $622 million,
compared to approximately $462 million at December 31, 1999.
Infinity
Infinity's operations are focused on the out-of-home media business with
operations in radio broadcasting through INFINITY BROADCASTING, and outdoor
advertising through INFINITY OUTDOOR and TDI. The
I-12
Radio Stations and Outdoor Displays table sets forth selected information with
regard to Infinity's radio stations and outdoor displays in the top 25 U.S.
radio markets. Infinity characterizes its radio and outdoor advertising
businesses as out-of-home because a majority of radio listening, and virtually
all viewing of outdoor advertising, takes place in automobiles, transit
systems, on the street and other locations outside the consumer's home.
Infinity's strategy generally is to acquire out-of-home media properties in
the largest markets.
Infinity Radio. INFINITY BROADCASTING, consisting of 184 radio stations
serving 41 markets, accounted for approximately 13% of total 2000 U.S. radio
advertising expenditures. The Company's stations ranked first or second, in
terms of 2000 pro forma radio revenues, in 30 out of the 41 markets in which
the Company operates stations. Approximately 91% of the Company's radio
stations are located in the 50 largest radio markets in the United States, and
62% and 97% of the Company's pro forma 2000 net radio revenues were generated
in the 10 and 50 largest U.S. markets, respectively. The Company believes that
this focus on large markets makes it more appealing to advertisers, enables it
to attract more highly skilled management, employees and on-air talent, and
enables it to more efficiently manage its business and generate higher levels
of cash flow than would be the case if it managed a larger number of smaller
stations. Infinity owns the CBS RADIO NETWORK, which is managed by Westwood
One, Inc.
Infinity's radio stations serve diverse target demographics through a broad
range of programming formats. This diversity provides advertisers with the
convenience to select stations to reach a targeted demographic group or to
select groups of stations and outdoor advertising properties to reach broad
groups of consumers within and across markets. This diversity also reduces its
dependence on any single station, local economy, format or advertiser.
Infinity seeks to maintain substantial diversity among its radio stations
in many respects. The geographically wide-ranging stations serve diverse
target demographics through a broad range of programming formats, such as
rock, oldies, news/talk, adult contemporary, sports/talk and country, and
Infinity has established leading franchises in news, sports, and personality
programming. The overall mix of each radio station's programming is designed
to fit the station's specific format and serve its local community. Infinity's
general programming strategy includes acquiring significant on-air talent and
the rights to broadcast sports franchises and news content for its radio
stations. This strategy, in addition to developing loyal audiences for its
radio stations, creates the opportunity to obtain additional revenues from
syndicating such programming franchises to other radio stations.
Outdoor Advertising. INFINITY OUTDOOR and TDI sell advertising space on
various media, including billboards, bulletins, buses, bus shelters and
benches, trains, train platforms and terminals throughout commuter rail
systems, mall posters and phone kiosks. Infinity has outdoor advertising
operations in more than 90 markets in North America, and all 50 of the largest
metropolitan markets in the United States, 14 of the 15 largest metropolitan
markets in Canada and all of the 45 largest metropolitan markets in Mexico.
Additionally, the Company has the exclusive rights to manage advertising space
within the London Underground and on more than 90% of the buses in London and
the United Kingdom, has the exclusive rights to transit advertising in the
Republic of Ireland and parts of Northern Ireland, and has a variety of
outdoor advertising displays in the Netherlands, France, Italy, Spain and
Finland.
The substantial majority of Infinity's revenues are generated from the sale
of local, regional and national advertising. The major categories of out-of-
home advertisers include: automotive, retail, healthcare, telecommunications,
fast food, beverage, movies, entertainment and services.
Infinity beneficially owns shares and vested warrants representing
approximately 18% of the common stock of Westwood One, Inc., which it manages
pursuant to a management agreement. Westwood One is one of the leading
producers and distributors of syndicated and network radio programming in the
U.S. and distributes syndicated and network radio programming to the Company's
radio stations as well as to competitors of Infinity.
Seasonal revenue fluctuations are common in the out-of-home media industry
and are primarily the result of fluctuations in advertising expenditures by
retailers. Infinity's revenues are typically lowest in the first quarter and
highest in the fourth quarter.
I-13
Radio Stations and Outdoor Displays
The following table sets forth certain selected information with regard to
the Company's U.S. radio stations and outdoor displays in the top 25 U.S.
markets as of February 23, 2001:
2000 Market Rank Radio Outdoor
By Metro Area -------------------------------------------- --------------------------------
Market Population Stations AM/FM Format Display Type
- ------ ---------------- -------- ----- ----------------------------- --------------------------------
New York, NY............ 1 WCBS FM Oldies Bus, Bus Shelters, Rail, Kiosks,
WCBS AM News Billboards, Walls, Trestles,
WFAN AM Sports "Spectacular Signage,"
WINS AM News Bulletins, Posters, Mall Posters
WNEW FM Talk
WXRK FM Alternative Rock
Los Angeles, CA......... 2 KCBS FM Classic Rock Bus, Bus Shelters, Kiosks,
KFWB AM News Beach Panels, Bulletins, Walls,
KLSX FM Talk Posters, Mall Posters
KNX AM News
KROQ FM Alternative Rock
KRTH FM Oldies
KTWV FM Smooth Jazz
Chicago, IL............. 3 WBBM FM Contemporary Hit, Radio/Dance Bus, Bus Shelters,
WBBM AM News Bulletins, Posters, Mall Posters
WCKG FM Talk
WJMK FM Oldies
WSCR AM Sports/Talk
WUSN FM Country
WXRT FM Adult Alternative Rock
San Francisco, CA....... 4 KCBS AM News Bus, Bus Shelters, Rail, Cable
KFRC FM Oldies Cars, Bulletins, Walls, Posters,
KFRC AM Oldies Mall Posters
KITS FM Alternative Rock
KLLC FM Modern Adult Contemporary
KYCY AM Talk
KYCY FM Country
Philadelphia, PA........ 5 KYW AM News Bus, Bus Shelters, Rail,
WIP AM Sports Bulletins, Mall Posters,
WOGL FM Oldies
WPHT AM Talk
WYSP FM Active Rock
Dallas--Fort Worth, TX.. 6 KHVN AM Gospel Bus, Bulletins, Mall Posters
KLUV FM Oldies
KOAI FM Smooth Jazz
KRBV FM Rhythmic Contemporary Hits
KRLD AM News/Talk
KVIL FM Adult Contemporary
KYNG FM Talk
Detroit, MI............. 7 WKRK FM Talk Bus, Bus Shelters, Bulletins,
WOMC FM Oldies Posters, Mall Posters
WVMV FM Smooth Jazz
WWJ AM News
WXYT AM Talk/Sports
WYCD FM Country
Boston, MA.............. 8 WBCN FM Alternative Bus, Rail, Mall Posters
WBMX FM Modern Adult Contemporary
WBZ AM News/Talk/Sports
WODS FM Oldies
WZLX FM Classic Rock
Washington, D.C......... 9 WARW FM Classic Rock Bus, Rail, Mall Posters
WHFS FM Alternative Rock
WJFK FM Talk
WPGC FM Urban Contemporary
WPGC AM Gospel
I-14
2000 Market Rank Radio Outdoor
By Metro Area ------------------------------------- --------------------------------
Market Population Stations AM/FM Format Display Type
- ------ ---------------- -------- ----- --------------------- --------------------------------
Houston, TX............... 10 KIKK FM Country Bulletins, Mall Posters
KIKK AM Business
KILT FM Country
KILT AM Sports
Atlanta, GA............... 11 WAOK AM Gospel Bus, Bus Shelters, Rail,
WVEE FM Urban Contemporary Bulletins, Posters, Mall Posters
WZGC FM Classic Rock
Miami-Ft. Lauderdale, FL.. 12 -- -- -- Bulletins, Mall Posters
Seattle-Tacoma, WA........ 14 KBKS FM Country Bus, Bulletins, Mall Posters
KMPS FM Country
KYCW AM Adult Contemporary
Hit Radio
KYPT FM 80's Pop Rock
KZOK FM Classic Rock
San Diego, CA............. 15 KPLN FM Classic Rock Bus, Bus Shelters, Bulletins,
KYXY FM Adult Contemporary Posters, Mall Posters
Phoenix, AZ............... 16 KOOL FM Oldies Bus Shelters, Bulletins,
KZON FM Alternative Rock Posters, Mall Posters
KMLE FM Country
Minneapolis, MN........... 17 WCCO AM News/Talk Bus, Bulletins, Mall Posters
WLTE FM Adult Contemporary
WXPT FM Modern Adult
Contemporary
KSGS AM Urban Adult
Contemporary
Nassau-Suffolk, NY........ 18 -- -- -- Bus, Bulletins
St. Louis, MO............. 19 KEZK FM Soft Rock Bulletins, Posters, Mall Posters
KMOX AM News/Talk/Sports
KYKY FM Adult Contemporary
Hot
Baltimore, MD............. 20 WBGR AM Gospel Mall Posters
WBMD AM Religion
WJFK AM Talk
WLIF FM Lite Music
WQSR FM Oldies
WWMX FM Hot Adult
Contemporary
WXYV FM Contemporary Hit
Radio
Tampa-St. Petersburg, FL.. 21 WLLD FM Rhythmic Contemporary Bulletins, Mall Posters
Hit Radio
WQYK FM Country
WQYK AM Sports/Talk
WYUU FM Oldies
WRBQ FM Country
WSJT FM Smooth Jazz
Pittsburgh, PA............ 22 KDKA AM News/Talk Bus, Bulletins, Mall Posters
WBZZ FM Contemporary Hit
Radio Top 40
WDSY FM Country
WZPT FM Hot Adult
Contemporary
Denver, CO................ 23 KDJM FM Jammin' Oldies Bus Benches, Bulletins, Posters,
KIMN FM Adult Contemporary Mall Posters
KXKL FM Oldies
Cleveland, OH............. 24 WNCX FM Classic Rock Bulletins, Mall Posters
WDOK FM Soft Adult
Contemporary
WQAL FM Hot Adult
Contemporary
WZJM FM Jammin' Oldies
Portland, OR.............. 25 KVMX FM Modern Adult Bulletins, Mall Posters
Contemporary
KINK FM Adult Album
Alternative
KKJZ FM Smooth Jazz
KUFO FM Album Oriented Rock
KUPL FM Country
KUPL AM Classic Country
I-15
Entertainment
The Entertainment segment's principal businesses are PARAMOUNT PICTURES,
which produces and distributes motion pictures; PARAMOUNT PARKS, which
operates five regional theme parks and a themed attraction in the U.S. and
Canada; FAMOUS PLAYERS(R), which operates movie theaters; and FAMOUS MUSIC(R).
Theatrical Motion Pictures. Through PARAMOUNT PICTURES, the Company
produces, finances and distributes feature motion pictures. Motion pictures
are produced by PARAMOUNT PICTURES, produced by independent producers and
financed in whole or in part by PARAMOUNT PICTURES, or produced by others and
distributed by PARAMOUNT PICTURES. Each picture is a separate and distinct
product with its financial success dependent upon many factors, among which
cost and public response are of fundamental importance. In general, motion
pictures produced or acquired for distribution by PARAMOUNT PICTURES are
exhibited in U.S. and foreign theaters followed by videocassettes, discs and
DVDs, pay-per-view television, premium subscription television, network
television, basic cable television and syndicated television exploitation.
During 2000, PARAMOUNT PICTURES produced or co-produced and theatrically
released 12 feature motion pictures in the U.S., including WONDER BOYS, RULES
OF ENGAGEMENT, MISSION: IMPOSSIBLE 2, SHAFT and WHAT WOMEN WANT; THE ORIGINAL
KINGS OF COMEDY produced by MTV FILMS in association with PARAMOUNT PICTURES;
and SNOW DAY and RUGRATS IN PARIS: THE MOVIE produced by NICKELODEON MOVIES in
association with PARAMOUNT PICTURES. PARAMOUNT PICTURES currently plans to
release approximately 17 films in 2001 (which release plans may change due to
a variety of factors), including DOWN TO EARTH, ENEMY AT THE GATES, ALONG CAME
A SPIDER, TOMB RAIDER, RAT RACE, DOMESTIC DISTURBANCE, FOUR FEATHERS, and
VANILLA SKY, and ZOOLANDER produced by VH1 FILMS(TM) in association with
PARAMOUNT PICTURES, SAVE THE LAST DANCE and ORANGE COUNTY produced by MTV
FILMS in association with PARAMOUNT PICTURES, and JIMMY NEUTRON-BOY GENIUS
produced by NICKELODEON MOVIES in association with PARAMOUNT PICTURES.
PARAMOUNT CLASSICS(TM), a division of PARAMOUNT PICTURES, released seven
films in 2000, including SUNSHINE, THE VIRGIN SUICIDES, YOU CAN COUNT ON ME
and THE GIFT. PARAMOUNT CLASSICS was established to handle the distribution of
specialized film product that may require alternative release strategies from
films generally distributed by PARAMOUNT PICTURES. PARAMOUNT CLASSICS
currently plans to release approximately six titles in 2001 (which release
plans may change due to a variety of factors).
In seeking to limit PARAMOUNT PICTURES' financial exposure, the Company has
pursued a strategy with respect to a number of films of entering into
agreements to distribute such films produced and/or financed, in whole or in
part, with other parties. The parties to these arrangements include studio and
non-studio entities, both domestic and foreign. In various of these
arrangements, the other parties control certain distribution and other
ownership rights.
PARAMOUNT PICTURES generally distributes its motion pictures for theatrical
release outside the U.S. and Canada through United International Pictures
("UIP"), a company owned by the Company and an affiliate of Universal Studios,
Inc. ("Universal"). Pursuant to an agreement, UIP will continue to distribute
each studio's films through 2006. PARAMOUNT PICTURES distributes its motion
pictures on videocassette and disc in the U.S. and Canada through PARAMOUNT
HOME ENTERTAINMENT(TM) and outside the U.S. and Canada, generally through
PARAMOUNT HOME ENTERTAINMENT INTERNATIONAL. Commencing April 2000, PARAMOUNT
HOME ENTERTAINMENT INTERNATIONAL started releasing pictures in DVD format in
Europe and Japan. PARAMOUNT PICTURES' feature films initially theatrically
released in the U.S. on or after January 1, 1998 are exhibited exclusively (to
U.S. premium subscription television) on SHOWTIME and THE MOVIE CHANNEL.
PARAMOUNT PICTURES also distributes its motion pictures for premium
subscription, free and basic cable television release outside the U.S. and
Canada and licenses its motion pictures to residential and hotel/motel pay-
per-view, airlines, schools and universities.
I-16
During 2000, PARAMOUNT PICTURES INTERNATIONAL entered into an agreement
with DBS Satellite Services for pay television distribution rights in Israel
for current films, library films and television products and PARAMOUNT
PICTURES INTERNATIONAL and WVI FILMS B.V. entered into an agreement with Movie
Television Inc. for free television distribution rights in Japan for current
motion picture and television product. This latter agreement also includes
free television distribution rights in Japan for various motion picture and
television library product.
In addition to premium subscription television, most motion pictures are
also licensed for exhibition on broadcast and basic cable television, with
fees generally collected in installments. All of the above license fees for
television exhibition (including international and U.S. premium television and
basic cable television) are recorded as revenue in the year that licensed
films are available for such exhibition, which, among other reasons, may cause
substantial fluctuation in PARAMOUNT PICTURES' operating results. At December
31, 2000, the unrecognized revenues attributable to such licensing of
completed films from PARAMOUNT PICTURES' license agreements were approximately
$1.0 billion, compared to approximately $1.2 billion at December 31, 1999. At
December 31, 2000, PARAMOUNT PICTURES had approximately 1,000 motion pictures
in its library. The Company also has a library of additional motion picture
titles, most of which comprise the SPELLING ENTERTAINMENT(TM) library.
Through PARAMOUNT PICTURES and various of its affiliates, the Company is a
joint venturer in a number of international program services, including THE
PARAMOUNT COMEDY CHANNEL(TM) in the U.K., an afternoon and nighttime
(including prime time) program service featuring comedies and films, which is
a joint venture with BSkyB. On March 1, 1999, the Company launched THE
PARAMOUNT COMEDY CHANNEL(R) in Spain, a wholly owned, 24-hour program service,
including a NICKELODEON program segment.
Theatrical Exhibition. The Company's movie theater operations consist
primarily of FAMOUS PLAYERS in Canada and United Cinemas International ("UCI")
in Europe, Latin America and Asia. At December 31, 2000, FAMOUS PLAYERS, a
wholly owned subsidiary of the Company, operated approximately 880 screens in
104 theaters across Canada. UCI, a 50%-owned joint venture of entities
affiliated with the Company and Universal, operated as of December 31, 2000,
approximately 970 screens in 113 theaters in the U.K., Ireland, Germany,
Austria, Spain, Japan, Italy, Poland, Argentina, Brazil, Panama and Taiwan.
As of November 29, 1999, WF Cinema Holdings, L.P. (a limited partnership in
which the Company owns a 50% interest and the other 50% is controlled by AOL
Time Warner Inc., "WF Cinema") entered into agreements (the "Asset
Agreements") with WestStar Cinemas, Inc., WestStar Real Estate, Inc., Colorado
Holdings LLC and WestStar Holdings, Inc. (collectively, "WestStar"), which
parties are the subject of a Chapter 11 Bankruptcy Code proceeding. Pursuant
to the Asset Agreements, WF Cinema agreed to purchase from WestStar various
theaters and related assets for a purchase price of $90 million (which was
paid during 2000) and other consideration. The theaters and assets which are
the subject of this transaction comprise in large part the assets that were
sold by WF Cinema (then known as Cinamerica Theaters L.P.) to WestStar in
1997. WF Cinema has disposed of or closed a number of the theaters that were
acquired and currently intends to dispose of or close some of the remaining
theaters. The Company and AOL Time Warner have agreed to guarantee certain
obligations of WF Cinema as part of these transactions. The Asset Agreements
were approved by the Bankruptcy Court on January 12, 2000, and the acquisition
by WF Cinema closed on January 28, 2000.
Music Publishing. The FAMOUS MUSIC publishing companies own, control and/or
administer all or a portion of the copyright rights to more than 100,000
musical works (songs, scores, cues). These rights include the right to license
and exploit such works, as well as the right to collect income generated by
such licensing and exploitation.
The majority of rights acquired by FAMOUS MUSIC are derived from (i) music
acquisition agreements entered into by PARAMOUNT PICTURES, PARAMOUNT
TELEVISION, SPELLING TELEVISION, MTVN and various other divisions of the
Company respecting certain motion pictures, television programs and other
properties produced by such units and (ii) music acquisition agreements
entered into directly by FAMOUS MUSIC with songwriters and music publishers,
including exclusive songwriting agreements, catalog purchases and music
administration agreements.
I-17
Parks. PARAMOUNT PARKS owns and operates five regional theme parks and a
themed attraction in the U.S. and Canada: PARAMOUNT'S CAROWINDS(R), in
Charlotte, North Carolina; PARAMOUNT'S GREAT AMERICA(TM), in Santa Clara,
California; PARAMOUNT'S KINGS DOMINION(TM), located near Richmond, Virginia;
PARAMOUNT'S KINGS ISLAND(TM), located near Cincinnati, Ohio; PARAMOUNT
CANADA'S WONDERLAND(R), located near Toronto, Ontario; and STAR TREK: THE
EXPERIENCE(R), at the Las Vegas Hilton, a futuristic, interactive environment
based on the popular television and movie series. Each of the theme parks
features attractions, products and live shows based on various intellectual
properties of the Company.
A substantial amount of the theme parks' income is generated during its
seasonal operating period. Factors such as local economic conditions,
competitors and their marketing/pricing actions, and extreme weather
conditions could negatively impact the business' overall profitability if they
come into play during the operating season.
Video
The Company operates in the home video business through its approximately
82% equity interest in Blockbuster Inc. As of December 31, 2000, the Company's
video segment, which included BLOCKBUSTER's home video, DVD and video game
rental and retailing operations operated or franchised approximately 7,700
stores in the U.S., its territories and 25 other countries. BLOCKBUSTER also
operates its Internet site, "blockbuster.com" and is exploring various forms
of electronic entertainment delivery including video-on-demand.
In its stores, which operate primarily under the highly recognized
BLOCKBUSTER brand name, BLOCKBUSTER offers video movies and video games
primarily for rental and also offers certain titles for purchase. BLOCKBUSTER
also offers DVDs for rental and for sale in most of its U.S. stores. In
addition, BLOCKBUSTER offers previously-viewed tapes and previously-viewed
video games for sale. During 2000, BLOCKBUSTER expanded its traditional video
rental service through an agreement with DIRECTV, Inc. ("DIRECTV"), a provider
of digital television entertainment service. Pursuant to this agreement,
BLOCKBUSTER is now marketing DIRECTV System equipment and DIRECTV(R)
programming packages in over 3,800 of BLOCKBUSTER's U.S. stores. Blockbuster
and DIRECTV have also announced that they plan to introduce a co-branded pay-
per-view service during 2001. BLOCKBUSTER also launched a movies-on-demand
service on a trial basis in four cities in December 2000. In addition, in
February 2001, BLOCKBUSTER entered into a strategic alliance with RadioShack
Corporation for the purpose of introducing a RadioShack store-within-a-store
concept inside BLOCKBUSTER.
BLOCKBUSTER acquires its VHS movies primarily pursuant to revenue-sharing
arrangements that were initially implemented in 1998 with the major motion
picture studios, including PARAMOUNT PICTURES. BLOCKBUSTER entered into these
arrangements in order to increase the quantity and selection of newly released
video titles and to satisfy its customers' demand for newly released videos
earlier. For titles acquired under these arrangements, revenue-sharing
generally allows BLOCKBUSTER to license videocassettes for minimal up-front
payments with a percentage of the U.S. rental revenues shared with the studios
over a contractually determined period of time. In addition to acquiring
products pursuant to revenue-sharing agreements, BLOCKBUSTER purchases certain
products that are not subject to revenue-sharing agreements, at wholesale
prices. BLOCKBUSTER also purchases "sell-through" titles, which are movies
that are released by the studios at relatively low initial prices in order to
generate consumer demand to purchase, rather than rent, them. Almost all DVDs
are also released by the studios at sell-through prices. In addition,
BLOCKBUSTER also acquires and offers a wide variety of independent and lower-
cost movies that are generally exclusively available for a specified period of
time at its stores. BLOCKBUSTER also rents video game consoles and DVD players
in most of its U.S. stores.
As with other retail outlets, there is a distinct seasonal pattern to the
home video and video games business, with particularly weaker business in
April and May, due in part to improved weather and Daylight Savings Time, and
in September and October, due in part to the start of school and the
introduction of new television programs.
I-18
Publishing
SIMON & SCHUSTER publishes and distributes consumer hardcover books, trade
paperbacks, mass-market paperbacks, children's books, audiobooks, electronic
books and CD-ROM products in the U.S. and internationally. SIMON & SCHUSTER's
flagship imprints include SIMON & SCHUSTER, POCKET BOOKS, SCRIBNER and THE
FREE PRESS. SIMON & SCHUSTER also develops special imprints and publishes
titles based on MTV, VH1, NICKELODEON and PARAMOUNT PICTURES products. SIMON &
SCHUSTER distributes its products directly and through third parties. SIMON &
SCHUSTER also delivers content and promotes its products on Internet sites
operated by various imprints or linked to individual titles.
In 2000, SIMON & SCHUSTER published 87 titles which were New York Times
bestsellers, including seven New York Times number one bestsellers. Best-
selling titles released in 2000 include "NOTHING LIKE IT IN THE WORLD" by
Stephen Ambrose, "JOE DIMAGGIO: THE HERO'S LIFE" by Richard Ben Cramer,
"BEFORE I SAY GOODBYE" by Mary Higgins Clark, "BLACKBIRD" by Jennifer Lauck,
"TALKING DIRTY WITH THE QUEEN OF CLEAN" by Linda Cobb, "ON WRITING" by Stephen
King, "AN INVITATION TO THE WHITE HOUSE" by Hillary Rodham Clinton, and
"OLIVIA" by Ian Falconer, as well as a number of RUGRATS and BLUE'S CLUE'S
books, featuring the popular NICKELODEON characters.
SIMON & SCHUSTER AUDIO(R) publishes audio editions of prominent works
published by SIMON & SCHUSTER and by other publishers, as well as the
PIMSLEUR(R) line of language instruction. Major titles released as audiobooks
in 2000 include "SHOPGIRL" by Steve Martin, "THE MILLIONAIRE NEXT DOOR" by
Thomas J. Stanley and William D. Danko, and "WHO MOVED MY CHEESE?" by Spencer
Johnson.
Titles published by SIMON & SCHUSTER INTERACTIVE(R) generally consist of
CD-ROM editions or product extensions of well-known book publishing properties
or titles associated with recognized authors and Company properties, including
such 2000 titles as "STAR TREK DEEP SPACE NINE: THE FALLEN," "SABRINA THE
ANIMATED SERIES: MAGICAL ADVENTURE" and "M&M'S: THE LOST FORMULAS."
SIMON & SCHUSTER ONLINE(TM), through "SimonSays.com," publishes original
content, builds reader communities, and promotes and sells SIMON & SCHUSTER's
books and products over the Internet. In 2000, SIMON & SCHUSTER ONLINE, in
conjunction with SCRIBNER, published Stephen King"s "RIDING THE BULLET," an
original story released exclusively in digital form.
International publishing includes the international distribution of
English-language titles through SIMON & SCHUSTER UK(TM) and SIMON & SCHUSTER
AUSTRALIA(TM) and other distributors, as well as the publication of local
titles by SIMON & SCHUSTER UK and SIMON & SCHUSTER AUSTRALIA.
The consumer publishing marketplace is subject to increased periods of
demand in the summer months and during the end-of-year holiday season. Major
new title releases drive a significant portion of SIMON & SCHUSTER's sales
throughout the year.
Consumer books are generally sold on a fully returnable basis, resulting in
significant product returns. In the international markets, the Company is
subject to global trends and local economic conditions.
Online
Through its 90% equity interest in THE MTVi GROUP, L.P. ("MTVi") and
through NICKELODEON ONLINE(TM), the Company operates Internet sites which are
targeted to the current audiences of its various MTV, VH1 and NICKELODEON
television program services worldwide, as well as to new online audiences. The
remaining 10% interest in MTVi is owned by Liberty Digital, Inc. In addition
to providing entertainment and information on such Web sites, the Company also
sells Company-licensed and third-party merchandise.
I-19
MTVi has numerous music Web site destinations around the world, including
MTV.com, VH1.com, Country.com and SonicNet.com. In December 2000, MTVi's Web
sites attracted over 4 million unique visitors, according to Media Metrix, a
leading online audience research measurement service. MTV.com offers users the
latest music news, information on artists and MTV programs, and interactive
entertainment through convergence programs such as Direct Effect (DFX), Total
Request Live (TRL) and VJ for a Day. VH1.com offers users convergent
entertainment, music news, fan club information, daily polls and community
features.
MTVi currently obtains much of its content from record labels, music
publishers and artists. While MTVi obtains certain rights to some of such
content (such as performance rights of song composers and non-interactive
rights to digital transmission of recordings) pursuant to statutory compulsory
licenses, the royalties payable for such compulsory licenses are not yet
established or have not yet been negotiated. Other rights are not subject to
compulsory licenses and must be negotiated with the individual record labels
and other providers. If these providers begin to charge significant fees for
their content, or otherwise alter or discontinue their relationship with MTVi,
then MTVi's content offering and business, financial condition and operating
results could be adversely affected. In addition, because the laws relating to
online rights for music and other copyrighted works are evolving, it is
possible that parties from whom MTVi currently does not obtain licenses will
demand that MTVi obtain them and pay certain fees for usage (see "Viacom
Segments--Regulation--Intellectual Property").
NICKELODEON ONLINE operates Web sites that feature NICKELODEON properties,
including Nick.com, NickJR.com, TVLand.com, Nick-at-Nite.com, Gas.Nick.com and
Teachers.Nick.com. Nick.com is a leading Web site for kids, offering
convergent entertainment, online games, entertainment tools and services,
Internet radio, information on Nickelodeon celebrities and programs and other
content for kids. NickJR.com offers online content for parents and their pre-
school aged kids, including advice, parent-to-parent communities, e-commerce,
as well as a preschool area featuring interactive games, art, stories and
music. In December 2000, NICKELODEON ONLINE's Web sites attracted over 2.8
million unique visitors, according to Media Metrix.
In addition, the Company operates two Web sites, CBS.com and CBSNews.com,
which draw visitors from CBS TELEVISION NETWORK programming in all dayparts
(daytime, primetime and late night). CBS.com integrates local, national and
international news, weather, sports and information on CBS TELEVISION NETWORK
programming in one location. The site provides information on CBS
ENTERTAINMENT programming (including such features as David Letterman's "Top
Ten" list). In early 2001, as a result of the debut of CBS's reality show,
SURVIVOR: THE AUSTRALIAN OUTBACK, CBS.com reached its highest visitor levels
ever. The site also provides links to a number of sites in which the Company
owns an equity interest, including CBS MarketWatch, CBS SportsLine and CBS
HealthWatch.
CBSNews.com brings the coverage and reputation of CBS NEWS to the Internet,
including multimedia coverage of top stories, coverage of breaking news events
and information from CBS NEWS investigations.
During 2000, the Online segment included an investment in iWon, Inc., which
operates an Internet portal. Subsequent to December 31, 2000, the successor to
iWon will be included with the Company's other Internet investments. Effective
January 1, 2001, the Company will present its online businesses as part of the
Cable Networks and Television segments. Online revenues are primarily
generated by advertising revenues derived from online advertising and on-air
promotion and by the sale of merchandise.
The Company also operates Internet sites through its other businesses, such
as PARAMOUNT PICTURES, INFINITY BROADCASTING, BLOCKBUSTER, SHOWTIME and SIMON
& SCHUSTER, for the purpose of marketing and commerce. Such activity is not
reported as part of the Online segment.
Internet Investments: The Company holds minority investments in five public
Internet companies: Sportsline.com, Inc. (NASDAQ: SPLN), which publishes
several sports Internet sites including CBS.sportsline.com; MarketWatch.com,
Inc. (NASDAQ: MKTW), which publishes financial and market data Internet sites
including CBS.marketwatch.com; Hollywood Media Corp. (NASDAQ: HOLL), which
publishes entertainment content Internet sites, including hollywood.com;
Switchboard Incorporated (NASDAQ: SWBD),
I-20
which publishes local information directory Internet sites, including
switchboard.com; and Medicalogic/Medscape, Inc. (NASDAQ: MDLI), which
publishes consumer health Internet sites including
CBShealthwatch.medscape.com. Other Internet investments of the Company include
minority investments in Office.com, Inc., Content Commerce, L.P., RX.com, Inc.
and Wrenchead.com, Inc.
Competition
Corporate mergers consummated in recent years have resulted in greater
consolidation in the entertainment industries, which may also present
significant competitive challenges to several of the Company's businesses.
Cable Networks
MTV Networks. MTVN services compete with other basic cable program services
for channel space and compensation for carriage from cable television
operators, DTH and other multichannel distributors. MTVN also competes for
advertising revenue with other basic cable and broadcast television networks,
and radio and print media. For basic cable television networks such as the
MTVN services, advertising revenues derived by each program service depend on
the number of households subscribing to the service through local cable
operators and other distributors in addition to household and demographic
viewership as determined by research companies such as Nielsen Media Research.
MTVN services also compete with other cable services and broadcast television
for the acquisition of popular programming.
Certain major record companies have launched music-based program services
outside the U.S., including, but not limited to: Channel V, which is jointly
owned and operated in Asia and Australia by Star TV and four major record
labels; and Viva and Viva 2, German-language music channels distributed in
Germany and owned in large part by four major record labels. In addition to
the competition referred to above, MTVN's music-based program services compete
with other music-based television program services and blocks for distribution
by cable, satellite and other systems, and for distribution license fees and
advertising revenues.
Children-oriented programming blocks are currently exhibited on a number of
U.S. broadcast television networks, including, among others, "Fox Kids,"
"Kids' WB" and a Saturday morning block on ABC, all of which compete with
NICKELODEON for advertising revenue. There are also a number of other U.S.
cable television program services featuring children-oriented programming,
including the Cartoon Network, the Disney Channel and the Fox Family Channel.
In addition to the competition referred to above, NICKELODEON competes
internationally with other television program services and blocks targeted at
children for distribution by cable, satellite and other systems, and for
distribution license fees and advertising revenue.
Showtime Networks Inc. Competition among premium subscription television
program services in the U.S. is primarily dependent on: (i) the acquisition
and packaging of an adequate number of recently released quality motion
pictures and the production, acquisition and packaging of original motion
pictures, original series and other original programs; and (ii) the offering
of prices, marketing and advertising support and other incentives to cable
operators and other distributors for carriage so as to favorably position and
package SNI's premium subscription television program services to subscribers.
HBO is the dominant company in the U.S. premium subscription television
category, offering two premium subscription television program services, the
HBO service and Cinemax. SNI is second to HBO with a significantly smaller
share of the premium subscription television category. Starz Encore Media
Group (an affiliate of AT&T Corp.) owns the third principal premium
subscription television program service in the U.S., Starz!, which features
recently released motion pictures and competes with SNI's and HBO's premium
program services.
Television
The television broadcast environment is highly competitive. The principal
methods of competition in broadcast television are the acquisition of popular
programming and the development of audience interest
I-21
through programming and promotions in order to sell advertising at profitable
rates. Broadcast networks like CBS and UPN compete for audience, advertising
revenues and programming with other broadcast networks, independent television
stations, basic cable program services as well as other media, including
satellite television services, videocassettes, DVDs and the Internet.
Television stations compete for programming and for advertising revenues with
other stations in their respective coverage areas and, in some cases, with
larger station groups for programming, and in the case of advertising
revenues, with other local media. In addition, the CBS and UPN television
networks compete with other television networks to secure affiliations with
independently owned television stations in markets across the country, which
are necessary to ensure the effective distribution of network programming to a
nationwide audience.
Because an extended conversion to digital television broadcasting has begun
current and future technological developments may affect competition within
the television marketplace. Technological developments that compress digital
signals will increasingly permit the same broadcast, cable, or satellite
channel to carry multiple video and data services which could result in an
expanded field of competing services. Television broadcasters will continue to
operate their current stations while gradually building and operating digital
facilities concurrently on separate channels.
As a producer and distributor of programming, the Company competes with
studios, television networks and independent producers and syndicators to sell
programming both domestically and overseas.
Infinity
The Company's radio stations and outdoor advertising properties compete for
audience, advertising revenues and programming directly with other radio
stations and outdoor advertising companies, as well as with other media, such
as broadcast television, newspapers, magazines, cable television, the Internet
and direct mail, within their respective markets.
The radio and outdoor advertising industry is also subject to competition
from new media technologies that are being developed or introduced, such as
the delivery of audio programming by cable television systems, by satellite
and by terrestrial delivery of digital audio broadcasting. The FCC has
authorized spectrum for the use of a new technology, satellite digital audio
radio services, to deliver audio programming. Satellite digital audio radio
service will provide a medium for the delivery by satellite of multiple new
audio programming formats to local and national audiences. The FCC also has a
pending proceeding which contemplates the use of digital technology by
existing terrestrial radio broadcast stations either on existing or alternate
broadcasting frequencies. The FCC recently authorized a new "low power" radio
or "microbroadcasting" service with the intent of creating opportunities for
low cost neighborhood service on frequencies which would not interfere with
existing stations.
Entertainment
Theatrical Motion Pictures. The Company competes with other major studios
and independent film producers in the production and distribution of motion
pictures, videocassettes, discs and DVDs. PARAMOUNT PICTURES' competitive
position primarily depends on the quality of the product produced, its
distribution and marketing success, and public response. The Company also
competes to obtain creative talent and story properties which are essential to
the success of all of the Company's entertainment businesses.
Parks. During the last two years, the regional theme park industry has
experienced increased consolidation. The Company must now compete in a
business environment that is dominated by highly-capitalized, multi-park
entertainment corporations. In order to compete effectively, regional theme
park operators must differentiate their product by having access to the latest
entertainment intellectual property and brands and must reinvest capital to
maintain a fresh experience for their repeat-visitor base. The Company
believes that its intellectual properties enhance existing attractions and
facilitate the development of new attractions, which encourage visitors to the
PARAMOUNT PARKS theme parks and STAR TREK: THE EXPERIENCE at the Las Vegas
Hilton. The Company's theme parks also compete with other forms of leisure
entertainment.
I-22
Video
BLOCKBUSTER operates in a highly competitive environment. The Company
believes that BLOCKBUSTER's most significant competition comes from (i) video
stores and other retailers that rent or sell movies and (ii) providers of
direct delivery home viewing entertainment.
Video stores and other retailers that rent or sell movies include, among
others, (i) local, regional and national video stores; (ii) mass merchant
retailers; (iii) supermarkets, pharmacies and convenience stores; and (iv)
online retailers and mail order services. The Company believes that the
principal factors that BLOCKBUSTER faces in competing with video stores and
other retailers are (a) convenience and visibility of store locations; (b)
quality, quantity and variety of titles; (c) pricing; and (d) customer
service.
With the development of new technologies, a significant competitive risk to
BLOCKBUSTER's video store business comes from direct broadcast satellite,
digital cable television and high-speed Internet access. In response to this
competition in 2000, BLOCKBUSTER entered the direct broadcast satellite market
through its alliance with DIRECTV (see "Viacom Segments--Video"). Direct
broadcast satellite, digital cable and "traditional" cable providers not only
offer numerous channels of conventional television, but they also offer pay-
per-view movies which permit a subscriber to pay a fee to see a selected
movie. Because of the increased availability of channels, direct broadcast
satellite and digital cable providers have been able to enhance their pay-per-
view business by (i) substantially increasing the number and variety of movies
they can offer their subscribers on a pay-per-view basis; and (ii) providing
more frequent and convenient start times for the most popular movies. Pay-per-
view allows the consumer to avoid trips to the video store for rentals and
returns of movies, which also eliminates the chance they will incur additional
costs for keeping a movie beyond its initial rental term. However, newly
released movies are currently made available by the studios for rental prior
to being made available for pay-per-view. Pay-per-view also does not allow the
consumer to start, stop and rewind the movie or fully control start times. As
a result, some digital cable providers and a limited number of Internet
content providers have begun implementing technology referred to as "video-on-
demand," which technology transmits movies on demand with interactive
capabilities such as start, stop and rewind. BLOCKBUSTER also began testing a
video-on-demand service in 2000 with its initial movies-on-demand trials. In
addition to competing with the video retail industry, video-on-demand competes
with other uses of cable and telephony infrastructure, such as the ability to
provide Internet access and basic telephone services, some of which may
provide higher returns for operators. In addition, video-on-demand providers,
including BLOCKBUSTER, may face competition from the studios, which are
considering implementing their own video-on-demand service.
Publishing
The consumer publishing business is highly competitive and has been
affected by consolidation trends. Recent years have brought a number of
significant mergers among the leading consumer publishers. The book superstore
has emerged as a significant factor in the industry contributing to the
general trend toward consolidation in the retail channel. There have also been
a number of mergers completed in the distribution channel.
The Company must compete with other publishers for the rights to works by
well-known authors and public personalities.
Online
The online industry is highly competitive and is rapidly evolving and
facing changing market conditions, including consolidation, alterations in
online advertising spending, slower growth in e-commerce and greater
difficulties in accessing public and private financing. Competition among
media and Internet companies pursuing online consumers is particularly
intense. The Company's online businesses compete for online consumers,
advertisers and content providers with leading news/information/entertainment
online sites, online portal services and broadcasters, traditional media,
retail and record companies and their respective Internet properties, and
I-23
online commerce companies. Rivalry for online consumers' attention and leisure
time, and associated advertising dollars and e-commerce expenditures by online
consumers, will continue to increase for all industry participants.
Web sites maintained by existing and potential competitors may be perceived
by online consumers, advertisers and content and other online vendors to be
superior to the Company's Web sites. In addition, with respect to MTVi's Web
sites, the major record companies, which control the vast majority of recorded
music, have started to engage in strategic arrangements, including business
combinations, with Internet and Internet-related businesses for the online
distribution and other commercialization of their music libraries and artist
relationships. As a result of these actions, the Company's online businesses
may not be able to maintain or increase online traffic levels on its Web
sites, which may negatively affect their advertising and e-commerce revenues.
Regulation
The Company's businesses are either subject to or affected by regulations
of federal, state and local governmental authorities. The rules, regulations,
policies and procedures affecting these businesses are constantly subject to
change. The descriptions which follow are summaries and should be read in
conjunction with the texts of the statutes, rules and regulations described
herein. The descriptions do not purport to describe all present and proposed
statutes, rules and regulations affecting the Company's businesses.
Intellectual Property
Domestic and international laws affecting intellectual property are of
significant importance to the Company.
WIPO Copyright Treaties. In 1996, delegates to the World Intellectual
Property Organization ("WIPO") adopted a proposed Copyright Treaty which will
take effect if ratified by 30 nations. As of December 2000, 22 countries,
including the U.S., had ratified the Copyright Treaty.
The proposed Copyright Treaty updates the Berne Convention, last revised in
1971, and addresses copyright protection for new technologies that have
emerged since that time. It is not possible to predict whether the Copyright
Treaty will take effect or how countries would implement the Treaty after
ratification. Because the Treaty includes important copyright protections for
the digital transmission of content, if ratified, the Treaty likely would have
a positive impact on the Company.
The U.S. implementing legislation, known as the Digital Millennium
Copyright Act ("DMCA"), which is effective whether or not WIPO is ultimately
ratified, affords important new copyright protections, including civil and
criminal penalties for the manufacture of, or trafficking in, devices that
circumvent copyright protection technologies such as encryption and
scrambling, and for the act of circumventing such technologies to gain
unauthorized access to a copyrighted work. The DMCA also amends the Copyright
Act by creating a new statutory license concerning certain rights related to
digital transmissions of sound recordings. The statute provides that new
statutory rates for each license will be set either through voluntary
negotiations between the interested parties or through Copyright Arbitration
Royalty Proceedings.
Copyright Term Extension. In October 1998, Congress passed legislation
extending the copyright term an additional twenty years. The extended term is
life of the author plus 70 years for authored works and 95 years for works-
made-for-hire. This extension puts the U.S. copyright term on par with the
European Community. Term extension should have a beneficial effect for the
Company over time, including with respect to important publishing properties
which otherwise would have passed into the public domain in the next several
years.
Compulsory Copyright License.
Multichannel Distributors Other Than DTH. The Copyright Act provides a
----------------------------------------
compulsory license for the retransmission of broadcast signals by
multichannel video distributors such as cable television, MMDS (Multipoint
Multichannel Distribution Systems) and SMATV (Satellite Master Antenna
Television)
I-24
operators. The compulsory license rate paid to programmers for the
retransmission of distant broadcast signals by cable, MMDS and SMATV
operators is established by statute. There is no licensing fee for the
retransmission of local broadcast signals.
DTH. In November 1999, Congress enacted legislation to extend and reform
---
the Satellite Home Viewer Act (SHVA). The original SHVA legislation created
a temporary compulsory license that allowed satellite carriers to import
distant broadcast signals to those homes that were unable to receive their
local broadcast signals. This distant signal compulsory license was set to
expire at the end of 1999. Through the SHVA legislation, Congress extended
the distant signal compulsory license until December 31, 2004, and set a
statutory compulsory license fee for these distant signals of $0.189 per
subscriber for superstations and $0.1485 per subscriber for networks. Up to
this point, the DTH compulsory license fee was set through negotiations and
binding arbitration. In addition, Congress created a new and permanent
compulsory license for the retransmission of local broadcast signals back
into the local market, the so-called "local-into-local" provision. Unlike
the distant signal compulsory license, the local signal compulsory license
is royalty-free.
First Sale Doctrine. The copyright "First Sale" doctrine provides that the
owner of a legitimate copy of a copyrighted work may use or dispose of it in
such manner as the owner sees fit, including by renting it. The First Sale
doctrine does not apply to sound recordings or computer software (other than
software made for a limited purpose computer, such as a video game platform)
for which the Copyright Act vests a rental right (i.e., the right to control
the rental of the copy) in the copyright holder. The repeal or limitation of
the First Sale doctrine (or conversely, the creation of a rental right vested
in the copyright holder) for audiovisual works or for computer software made
for limited purpose computers would have an adverse impact on the Company's
home video and game rental business. No such legislation is pending in
Congress at the present time. However, the Copyright Office is currently
conducting a study of the First Sale doctrine and it is unclear whether the
Office will recommend that Congress make any changes to the doctrine.
Cable Networks
Cable Rate Regulation. The Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act") directed the FCC to limit by
regulation cable system rates for the "basic service tier" ("BST") (including
retransmission consent and must carry broadcast signals and public,
educational and governmental channels) and the "cable programming service
tier" ("CPST") to a level not to exceed the rates that would be charged in the
presence of effective competition. Programming offered on a per-channel or
per-program basis is exempt from rate regulation.
Although all rate regulation of the CPST expired on March 31, 1999, local
franchising authorities continue to be responsible for regulating the BST. The
Company believes that cable rate regulation adversely affects its non-premium
cable program services which rely on cable operator license fee support, along
with advertising revenues, to maintain the quantity and quality of
programming. Rate regulation in this area tends to erode cable operator
incentives to invest in programming and particularly in start-up program
services.
Program Access. The "program access" provisions of the 1992 Cable Act
impose certain pricing and other restrictions on vertically integrated program
providers (those program services that are owned in whole or in part by cable
operators) with respect to the provision of their program services to
multichannel programming distributors, such as cable systems, SMATV systems,
MMDS operators and TVRO (TeleVision Receive Only) systems and DBS
distributors. Specifically, vertically integrated program services generally
are prohibited from entering into exclusive arrangements with cable operators
and from discriminating against cable competitors on programming price and
other terms. The program access provisions were intended to spur competition
to cable providers by facilitating the access of cable competitors to
programming owned by cable operators or their affiliates. The
Telecommunications Act of 1996 extended the program access rules to program
services in which common carriers that provide video programming have an
attributable interest.
The Company divested its cable systems in 1996 and, as a result, the
Company's wholly owned program services are no longer subject to the program
access rules. Legislation which would extend the program access
I-25
provisions to non-vertically integrated program services, if enacted, could
adversely impact the Company's program services by reducing the Company's
flexibility to negotiate the most favorable terms available for the
distribution of its content. However, no such legislation is pending in
Congress at this time. The FCC, as directed by statute, will launch a rule
making proceeding, likely toward the end of the year, to determine whether the
existing prohibition against exclusive grants by vertically integrated program
services to cable operators should extend beyond 2002.
Programming. Under FCC rules, cable operators must eventually close caption
most of their programming on a phased-in basis, which began in January 1998.
As a practical matter, however, cable networks assume responsibility for these
closed captioning requirements. FCC rules also directed that all television
receiver models with screens 13 inches or larger be equipped with "V-chip"
technology as of January 1, 2000. This technology, which works in tandem with
television ratings (age and content markers), permits parents to block out
certain programming from their children. Most cable networks, including those
of MTVN and SNI, voluntarily encode their programming with television ratings.
In addition, the FCC in August 2000 adopted rules that require the top five
basic cable networks to air 50 hours per quarter of programming containing
audio descriptions of video for the visually impaired.
Broadcasting
General. Television and radio broadcasting are subject to the jurisdiction
of the FCC under the Communications Act of 1934, most recently amended by the
Telecommunications Act of 1996. The Communications Act prohibits the operation
of broadcasting stations except under a license issued by the FCC and empowers
the FCC, among other actions, to:
. issue, renew, revoke and modify broadcasting licenses;
. assign frequency bands; determine stations' frequencies, locations and
operating power;
. regulate some of the equipment used by stations;
. adopt other regulations to carry out the provisions of the
Communications Act;
. impose penalties for violation of such regulations; and
. impose annual fees as well as fees for processing applications and other
administrative functions.
Under the Communications Act, the FCC also regulates certain aspects of the
operation of cable television systems and other electronic media that compete
with broadcast stations.
License Assignments. The Communications Act requires prior approval for the
assignment of a license or transfer of control of a licensee. When passing on
an assignment or transfer application, the FCC is prohibited from considering
whether the public interest might be served by an assignment or transfer to
any party other than the assignee or transferee specified in the application.
License Renewals. Under the Communications Act, the FCC is authorized to
renew broadcast licenses for terms of up to eight years. The Communications
Act requires renewal of a broadcast license if the FCC finds that:
. the station has served the public interest, convenience and necessity;
. there have been no serious violations of either the Communications Act
or the FCC's rules and regulations by the licensee; and
. there have been no other serious violations that taken together
constitute a pattern of abuse.
In making its determination, the FCC may consider petitions to deny but
cannot consider whether the public interest would be better served by a person
other than the renewal applicant and competing applications for the same
frequency may be accepted only after the FCC has denied an incumbent's
application for renewal of license.
I-26
Ownership Regulation. The Communications Act and FCC rules and regulations
also regulate broadcast ownership. The FCC has promulgated rules that, among
other matters, limit the ability of individuals and entities to own or have an
official position or ownership interest, known as an attributable interest,
above a specific level in broadcast stations as well as other specified mass
media entities. As discussed below, in August 1999, the FCC substantially
revised a number of its multiple ownership and attribution rules and clarified
some of those rules in January 2001. The FCC's various broadcast ownership
rules, inclusive of the recent revisions, are summarized below.
Local Radio Ownership. With respect to radio licenses, the maximum
allowable number of stations that can be commonly owned in a market varies
depending on the number of radio stations within that market, as determined
using a method prescribed by the FCC. In markets with more than 45
stations, one company may own, operate or control up to eight radio
stations, with no more than five in either AM or FM. The FCC initiated a
rule making proceeding in December 2000, which proposes to modify the
manner in which the number of stations in a radio market is counted. If
adopted, such modification could impair on a going-forward basis the
ability of large radio station groups such as Infinity to enjoy economies
of scale permitted under the FCC's current radio market definition and
could potentially restrict their ability to freely sell existing
combinations. However the FCC's rule making proposes that existing radio
ownership combinations, such as those held by Infinity, would be
grandfathered.
Local Television Ownership. The FCC's television duopoly rule permits
parties to own two television stations without regard to signal contour
overlap provided they are located in separate markets referred to as
designated market areas. In addition, the rules permit parties in larger
designated market areas to own up to two television stations in the same
designated market area so long as at least eight independently owned and
operating full-power television stations remain in the market at the time
of acquisition and at least one of the two stations is not among the top
four-ranked stations in the market based on audience share. In calculating
the number of independently owned stations in a market, the FCC clarified
that it will count only those stations in a market whose signal contour
overlaps with that of at least one of the stations in the proposed
combination. Further, without regard to numbers of remaining or
independently owned TV stations, the FCC will permit television duopolies
within the same designated market area so long as certain signal contours
of the stations involved do not overlap.
"Satellite" stations that simply rebroadcast the programming of a
"parent" station will continue to be exempt from the duopoly rule if
located in the same designated market area as the parent station. The
duopoly rule also applies to same-market local marketing agreements
involving more than l5% of the brokered station's program time, although
current local marketing agreements will be exempt from the TV duopoly rule
for a limited period of time of either two or five years, depending on the
date of the adoption of the local marketing agreement. Further, the FCC may
grant a waiver of the TV duopoly rule if one of the two television stations
is a "failed" or "failing" station, or the proposed transaction would
result in the construction of a new television station.
As a result of the merger with CBS, the Company has duopolies in the
following six television markets: Philadelphia, Boston, Dallas, Miami,
Detroit, and Pittsburgh. The Company has no in-market local marketing
agreements.
National Television Ownership Cap. On the national level, the FCC
imposes a 35 percent national audience reach cap for television ownership,
under which one party may not have an attributable interest in television
stations which reach more than 35 percent of all U.S. television
households. The Commission discounts the audience reach of a UHF station
for this purpose by 50 percent. Additionally, under FCC rules, for entities
that have attributable interests in two stations in the same market, the
FCC counts the audience reach of that market only once for national cap
purposes. Last May, as part of the Congressionally mandated biennial review
of broadcast ownership rules, the FCC determined to retain the 35% cap. At
the same time, the FCC voted to maintain the UHF discount.
After the May 4, 2000 merger with CBS, the television stations currently
held by the Company have an aggregate national audience reach for purposes
of the national ownership cap of approximately 41%. As
I-27
a condition of its approval of the merger, the FCC ordered the Company to
come into compliance with the national television ownership cap within 12
months of the merger closing date, which is May 4, 2001. The Company has
challenged the rule in federal court and is seeking a stay of the
requirement to come into compliance with the limit pending judicial review
of the national ownership cap.
Dual Network Rule. In the Telecommunications Act, Congress directed the
FCC to liberalize its rule, which then generally prohibited television
stations from affiliating with an entity that maintained more than one
national network. The FCC's implementing regulation states that a
television broadcast station may not affiliate with an entity that
maintains one of the existing four major networks (ABC, CBS, NBC, and Fox)
and one of other specific qualifying networks in existence as of February
8, 1996. The legislative history of the dual network rule suggests that the
rule was intended to prohibit one of the four major networks from acquiring
either of The WB or UPN. After the merger with CBS, the Company owns both
the CBS and UPN networks. As a condition of its approval of the merger, the
FCC ordered the Company to come into compliance with the dual network rule
within 12 months of the May 4, 2000 merger closing date, which is May 4,
2001. The FCC initiated a rule making in June 2000, in which it proposes to
eliminate the dual network rule with respect to UPN and The WB. If the
proposal is adopted, the Company would be free to maintain both CBS and
UPN. The FCC is expected to issue the new rule within the next couple of
months.
Radio-Television Cross-Ownership. The so-called "one-to-a-market" rule
has until recently prohibited common ownership or control of a radio
station, whether AM, FM or both, and a television station in the same
market, subject to waivers in some circumstances. The FCC's new radio-
television cross-ownership rule embodies a graduated test based on the
number of independently owned media voices in the local market.
In large markets, i.e., markets with at least 20 independently owned
media voices, a single entity can own up to one television station and
seven radio stations or, if permissible under the new TV duopoly rule, two
television stations and six radio stations.
Waivers of the new radio-television cross-ownership rule will be granted
only under the failed station test. Unlike under the TV duopoly rule, the
FCC will not waive the radio-television cross-ownership rules in situations
of failing or unbuilt stations.
After the merger with CBS, the Company owned radio-television
combinations that exceeded the FCC's cross-ownership rule in five markets:
Los Angeles, Chicago, Dallas/Ft. Worth, Sacramento and Baltimore. As a
result, in approving the merger, the FCC ordered the Company to come into
compliance with the radio-television cross-ownership rule within six months
of the May 4, 2000 merger closing, which was November 6, 2000. By that
date, the Company had entered into contracts and filed applications in each
of the five markets sufficient to comply with the conditions in the FCC
merger approval order.
Attribution of Ownership. Under the FCC's recently clarified attribution
rules, a direct or indirect purchaser of various types of securities of the
Company could violate FCC regulations or policies if that purchaser owned
or acquired an "attributable" interest in other media properties in the
same area as stations owned by the Company in a manner prohibited by the
FCC. Under the FCC's revised rules, an "attributable" interest for purposes
of the Commission's broadcast ownership rules generally includes:
. equity and debt interests, which combined exceed 33% of a licensee's
total assets, if the interest holder supplies more than 15% of total
weekly programming, or is a same-market media entity, whether TV,
radio, cable or newspaper;
. 5% or greater voting stock interest;
. 20% or greater voting stock interest, if the holder is a qualified
passive investor;
. any equity interest in a limited liability company or limited
partnership, unless properly "insulated" from management activities;
and
. all officers and directors of a licensee and its direct or indirect
parent.
I-28
In a clarification of the attribution rules, which was issued in January
2001, the FCC eliminated the single majority shareholder exemption, which
previously had rendered as non-attributable interests up to 49% if the
licensee is controlled by a single majority shareholder. Minority interests
acquired prior to December 14, 2000 are grandfathered.
Alien Ownership. The Communications Act limits the ability of foreign
entities or individuals to own or hold interests in broadcast licenses. As
applicable to the Company, non-U.S. citizens, collectively, may directly or
indirectly own or vote up to twenty percent of the capital stock of a
corporate licensee. In addition, a broadcast license may not be granted to or
held by any corporation that is controlled, directly or indirectly, by any
other corporation more than one-fourth of whose capital stock is owned or
voted by non-U.S. citizens or their representatives, by foreign governments or
their representatives, or by non-U.S. corporations, if the FCC finds that the
public interest will be served by the refusal or revocation of such license.
The FCC has interpreted this provision of the Communications Act to require an
affirmative public interest finding before a broadcast license may be granted
to or held by any such corporation, and the FCC has made such affirmative
findings only in limited circumstances. The Company does periodic surveys of
its public shareholders to ascertain compliance with this statute.
Digital Television Service. The FCC has taken a number of steps to
implement digital television broadcasting service in the United States. The
FCC has adopted a digital television table of allotments that provides all
authorized television stations with a second channel on which to broadcast a
digital television signal. The FCC has attempted to provide digital television
coverage areas that are comparable to stations' existing service areas. The
FCC has ruled that television broadcast licensees may use their digital
channels for a wide variety of services such as high definition television,
multiple channels of standard definition television programming, audio, data,
and other types of communications, subject to the requirement that each
broadcaster provide at least one free video channel equal in quality to the
current technical standard.
Digital television channels will generally be located in the range of
channels from channel 2 through channel 51. The FCC has required affiliates of
ABC, CBS, Fox and NBC in the top 10 television markets to begin digital
broadcasting by May 1, 1999. Affiliates of the four major networks in the top
30 markets were required to begin digital broadcasting by November 1, 1999,
and all other commercial broadcasters must do so by May 1, 2002. Many
stations, including several of the Company's stations, have already begun
digital broadcasting. The FCC's plan calls for the digital television
transition period to end in the year 2006, at which time the FCC expects that
television broadcasters will cease non-digital broadcasting and return one of
their two channels to the government, allowing that spectrum to be recovered
for other uses.
Under the Balanced Budget Act, however, the FCC is authorized to extend the
December 31, 2006 deadline for reclamation of a television station's non-
digital channel if, in any given market one or more television stations
affiliated with ABC, CBS, NBC or Fox is not broadcasting digitally, and the
FCC determines that such stations have "exercised due diligence" in attempting
to convert to digital broadcasting; or less than 85% of the television
households in the station's market subscribe to a multichannel video service
that carries at least one digital channel from each of the local stations in
that market, and less than 85% of the television households in the market can
receive digital signals off the air using either a set-top converter box for
an analog television set or a new digital television set.
The implementation of digital television will also impose substantial
additional costs on television stations because of the need to replace
equipment and because some stations will need to operate at higher utility
costs and there can be no assurance that our television stations will be able
to increase revenue to offset such costs. In addition, the Communications Act
allows the FCC to charge a spectrum fee to broadcasters who use the digital
spectrum to offer subscription-based services. The FCC has adopted rules that
require broadcasters to pay a fee of 5% of gross revenues received from
ancillary or supplementary uses of the digital spectrum for which they charge
subscription fees, excluding revenues from the sale of commercial time. The
Company cannot predict what future actions the FCC might take with respect to
digital television, nor can it predict the effect of the FCC's
I-29
present digital television implementation plan or such future actions on the
Company's business. The Company will incur considerable expense in the
conversion to digital television and is unable to predict the extent or timing
of consumer demand for any such digital television services.
Pursuant to Congressional mandate, the FCC will be auctioning that part of
the spectrum now used by broadcasters operating on channels 60-69. The
auction, now set for September 12, 2001, will draw bidders who will provide
"third generation" wireless service upon broadcasters' surrender of their
analog licenses. The Company has two television stations that operate on the
channel 60-69 spectrum. These stations will not be adversely affected unless
they are required to move to other channels before the digital television
transition date. At this time, the FCC has stated that any such move by
broadcasters will be on a voluntary basis only.
In January 2001, the FCC issued rules relating to the cable carriage of
digital broadcast television signals, in which it determined that a commercial
station operating in both analog and digital during the transition period may
elect must carry or retransmission consent for its analog signal and
retransmission consent for its digital signal. The FCC also tentatively
concluded that it would reject mandatory "dual carriage," which would permit a
local TV station to assert a right to carriage for both its analog and digital
signals. However, the Commission issued a rule making to evaluate, among other
things, the state of the digital television marketplace in order to determine
whether a dual carriage requirement would violate the cable operators' First
Amendment rights. The Company has concluded or is negotiating agreements with
cable operators for the carriage of its stations' digital signals.
Satellite Carriage of Broadcast Television Stations. In 1999, Congress
enacted the Satellite Home Viewer Improvement Act (SHVIA), which permits
satellite carriers to retransmit a local television station's signal into its
local market, subject to the consent of the local broadcaster. In March 2000,
as directed under SHVIA, the FCC adopted rules that govern "good faith"
negotiations between broadcasters and satellite carriers for retransmission
consent. Superstations, defined to include certain stations affiliated with
the UPN and WB networks, including WSBK-TV, Boston, which is owned by the
Company, may be carried by satellite carriers nationally without consent.
However, satellite carriers must apply network nonduplication, syndicated
exclusivity and sports blackout protections to the retransmission of
superstation signals. Further, until the end of 2004, the satellite carrier
may retransmit distant network signals to households unserved by local network
affiliates. Finally, beginning on January 1, 2002, satellite carriers will be
required to carry the signals of all local broadcast stations, if they so
request, in local markets in which the satellite carrier carries at least one
signal under a local-to-local license. Almost all of the Company's CBS-
affiliated television station signals and one UPN television station signal,
pursuant to retransmission consent agreements, are being retransmitted into
their local markets by the two major satellite carriers.
Programming. Under FCC rules, television stations must eventually close
caption most of their programming on a phased-in basis, which began in January
1998. FCC rules also directed that all television receiver models with screens
13 inches or larger be equipped with "V-chip" technology as of January 1,
2000. This technology, which works in tandem with television ratings (age and
content markers), permits parents to block out certain programming from their
children. Most broadcasters, including CBS and UPN, voluntarily encode their
programming with television ratings. In addition, the FCC in August 2000
adopted rules that require affiliates of the four major broadcast networks
(including CBS) in the top 25 markets to air 50 hours per quarter of
programming containing audio descriptions of video for the visually impaired.
Digital Audio Radio Service and Low-Power FM. The FCC has authorized or is
considering authorizing various digital audio radio services. In January 1995,
the FCC adopted rules to allocate spectrum for satellite digital audio radio
services. The FCC has issued two authorizations to launch and operate
satellite digital audio radio services (DARS), and the two companies holding
those authorizations are expected to begin offering DARS some time in 2001.
The FCC also has undertaken an inquiry into terrestrial digital audio radio.
On November 1, 1999, the FCC issued a Notice of Proposed Rulemaking on that
subject which solicited comments and proposals to implement terrestrial
digital audio radio, including conversion to in-band on-channel transmissions
by existing
I-30
radio broadcasters. Comments and reply comments were subsequently filed in
that proceeding. The Company cannot predict the impact of either DARS or
terrestrial digital audio radio services on its business. The Company has an
ownership interest in iBiquity Digital Corporation, an entity which was
created by the merger of USA Digital Radio, Inc. and Lucent Digital Radio and
which is developing digital broadcasting technology, including technology for
in-band on-channel terrestrial transmissions.
The FCC established a new low power FM service (LPFM) on January 20, 2000.
The new LPFM stations are intended to operate in the existing FM band to
provide small area, localized service. On December 21, 2000, the FCC announced
that 255 noncommercial educational applicants in twenty states are eligible
for LPFM licenses. Pursuant to Congressional legislation passed in mid-
December, 2000, these applicants, and all future LPFM applicants, are eligible
for LPFM licenses only if their proposed stations fully protect full service
FM stations (and FM translator stations). At this time, the Company cannot
predict the impact, if any, that LPFM authorizations might have on the
Company's broadcast operations.
Outdoor Advertising
The outdoor advertising industry is subject to extensive governmental
regulation in the United States at the federal, state and local levels. These
regulations include restrictions on the construction, repair, upgrading,
height, size and location of and, in some instances, content of advertising
copy being displayed on outdoor advertising structures.
Federal law, principally the Highway Beautification Act of 1965 (Highway
Beautification Act), encourages states, by the threat of withholding 10% of
the federal appropriations for the construction and improvement of highways
within such states, to implement state legislation to prohibit billboards
located within 660 feet of, or visible from, interstate and primary highways,
except in commercial or industrial areas where off-site signage is permitted
provided it meets spacing and size restrictions. All of the states have
implemented regulations at least as restrictive as the Highway Beautification
Act. The Highway Beautification Act, and the various state statutes
implementing it, require payment of just compensation whenever governmental
authorities require legally erected and maintained billboards to be removed
from areas adjacent to federally-aided highways.
State and local jurisdictions have, in some cases, passed additional and
more restrictive regulations applicable to the construction, repair,
upgrading, height, size and location of outdoor advertising structures
adjacent to federally-aided highways and other thoroughfares. In some cases,
the construction of new billboards or the relocation or modification of
existing billboards is prohibited. From time to time, governmental authorities
order the removal of billboards by the exercise of eminent domain. Thus far,
the Company believes it has been able to obtain satisfactory compensation for
its structures removed at the direction of governmental authorities, although
there is no assurance that it will be able to continue to do so in the future.
Outdoor advertising in Canada is subject to regulation at the federal,
provincial and municipal levels. These regulations may prohibit advertising of
certain products on outdoor signs in certain locations. In Mexico, the
placement of outdoor billboards is primarily regulated at the local level. For
example, Mexico City regulates the placement of billboards near historical
monuments. In France, outdoor advertising is regulated at the national,
regional and local levels, including the regulation of content and the
duration of certain contracts.
To date, regulations in the Company's outdoor advertising markets have not
materially adversely affected its operations. However, the outdoor advertising
industry is heavily regulated and at various times and in various markets can
be expected to be subject to varying degrees of regulation affecting the
operation of advertising displays. Accordingly, although the Company's
experience to date is that the regulatory environment is not unduly
restrictive, no assurance can be given that existing or future laws or
regulations will not adversely affect the Company.
I-31
Video
BLOCKBUSTER is subject to various federal, state and local laws that govern
the access and use of its video stores by disabled people and the disclosure
and retention of video rental records. BLOCKBUSTER also must comply with
various regulations affecting its business, including state and local
advertising, consumer protection, credit protection, licensing, zoning, land
use, construction, environmental, and minimum wage and other labor and
employment regulations.
BLOCKBUSTER is also subject to the Trade Regulation Rule of the Federal
Trade Commission ("FTC") entitled "Disclosure Requirements and Prohibitions
Concerning Franchising and Business Opportunity Ventures" and state laws and
regulations that govern (i) the offer and sale of franchises and (ii)
franchise relationships. These regulations require BLOCKBUSTER to furnish each
prospective franchisee with a current franchise offering circular prior to the
offer or sale of a franchise. In addition, a number of states require that
BLOCKBUSTER, as franchisor, comply with that state's registration or filing
requirements prior to offering or selling a franchise in the state and provide
a prospective franchisee with a current franchise offering circular complying
with the state's laws, prior to the offer or sale of the franchise.
BLOCKBUSTER intends to maintain a franchise offering circular that complies
with all applicable federal and state franchise sales and other applicable
laws.
BLOCKBUSTER is also subject to a number of state laws and regulations that
regulate some substantive aspects of the franchisor-franchisee relationship,
including (i) those governing the termination or non-renewal of a franchise
agreement; (ii) requirements that the franchisor deal with its franchisees in
good faith; (iii) prohibitions against interference with the right of free
association among franchisees; and (iv) those regulating discrimination among
franchisees in charges, royalties or fees.
Compliance with federal and state franchise laws is costly and time-
consuming, and no assurance can be given that BLOCKBUSTER will not encounter
difficulties or delays in this area or that it will not require significant
capital for franchising activities.
Online
Web Sites Directed to Children. The Children's Online Privacy Protection
Act of 1998 ("COPPA"), which was implemented by the FTC in October 1999,
applies to Web sites, or those portions of Web sites, directed to children
under age 13. Under COPPA, Web site operators generally cannot collect online
from a child under age 13 information that is individually identifiable such
as a first and last name, an e-mail address or telephone number without the
prior consent of that child's parent. The FTC rules became effective on April
21, 2000. Congress may also consider legislation this year or next regarding
online privacy for adults.
Anti-Cybersquatting Legislation. In 1999, Congress enacted legislation to
address the practice of domain name piracy. The legislation is designed to
limit the practice of registering an Internet address of an established
trademark with the hopes of selling the Internet address to the affected
company. The legislation also includes a prohibition on the registration of a
domain name that is the name of another living person, or a name that is
confusingly similar to that name. There is a broad exemption for personal
names linked to copyrighted works.
Intellectual Property
It is the Company's practice to protect its theatrical and television
product, software, publications and its other original and acquired works. The
following logos and trademarks and related trademark families are among those
strongly identified with the product lines they represent and are significant
assets of the Company: VIACOM(R), BLOCKBUSTER(R), CBS(R), CBS
ENTERTAINMENT(TM), CBS NEWS(TM), CBS SPORTS(TM), INFINITY BROADCASTING(R),
INFINITY OUTDOOR(TM), TDI(R), MTV: MUSIC TELEVISION(R), NICK AT NITE(R),
NICKELODEON(R), TV LAND(R), VH1 MUSIC FIRST(TM), PARAMOUNT(R), FAMOUS
MUSIC(R), BIG TICKET TELEVISION(R), PARAMOUNT PARKS(R), ENTERTAINMENT
TONIGHT(R), STAR TREK(R), SHOWTIME(R), THE MOVIE CHANNEL(R), FLIX(R), SIMON &
SCHUSTER(R) and POCKET BOOKS(TM).
I-32
Employees and Labor Matters
At December 31, 2000, the Company employed approximately 133,830 people, of
which approximately 57,840 were full-time salaried employees. Labor agreements
covering the services of writers and actors which the Company utilizes in its
motion picture and television businesses are currently scheduled to expire
during 2001. Work stoppages and/or higher costs in connection with these
agreements could adversely impact the ability of the Company to produce or
acquire new programming.
Financial Information About Segments and Foreign and Domestic Operations
Financial and other information by segment and relating to foreign and
domestic operations for each of the last three years ending December 31, is
set forth in Note 16 to the Consolidated Financial Statements.
Cautionary Statement Concerning Forward-Looking Statements
This document and the documents incorporated by reference into this Form
10-K, contain both historical and forward-looking statements. All statements
other than statements of historical fact are, or may be deemed to be, forward-
looking statements within the meaning of section 27A of the Securities Act of
1933 and section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements are not based on historical facts, but rather
reflect the Company's current expectations concerning future results and
events. These forward-looking statements generally can be identified by the
use of statements that include phrases such as "believe," "expect,"
"anticipate," "intend," "plan," "foresee," "likely," "will" or other similar
words or phrases. Similarly, statements that describe the Company's
objectives, plans or goals are or may be forward-looking statements. These
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of the Company to be different from any future results, performance and
achievements expressed or implied by these statements. More information about
these risks, uncertainties and other factors is set forth on pages II-26 and
II-27 of "Management's Discussion and Analysis of Results of Operations and
Financial Condition." The Company does not have any obligation to publicly
update any forward-looking statements to reflect subsequent events or
circumstances.
Item 2. Properties.
The Company maintains its world headquarters at 1515 Broadway, New York,
New York, where it rents approximately 1.2 million square feet for executive
offices and certain of its operating divisions. The lease for the majority of
the space runs to 2010, with four renewal options for five years each
thereafter. The Company also leases the following major facilities in New York
City for certain of its operating divisions: (a) approximately 548,000 square
feet of office space at 1633 Broadway, New York, New York, which lease runs to
2010, and (b) approximately 237,000 square feet of office space at 1230 Avenue
of the Americas, New York, New York, which lease runs to 2009. The Company
owns the building located at 51 West 52nd Street New York, New York containing
approximately 900,000 square feet which is utilized for executive and certain
operating division offices or is leased to third parties, and the CBS
Broadcast Center complex located on approximately 3.7 acres at 524 West 57th
Street and consists of approximately 860,000 square feet. The Company also
owns 3 studio facilities in California: (a) the Paramount Pictures studio at
5555 Melrose Avenue, Los Angeles, California, located on approximately 65
acres, (b) the CBS Studio Center at 4204 Radford Avenue, Studio City,
California, located on approximately 40 acres, and (c) CBS Television City at
7800 Beverly Boulevard, Los Angeles, California, located on approximately 11
acres. PARAMOUNT PARKS' operations in the U.S. include approximately 1,950
acres owned and 108 acres leased and in Canada include approximately 380 acres
owned. BLOCKBUSTER's headquarters at 1201 Elm Street, Dallas, Texas consists
of approximately 240,000 square feet of leased space and its distribution
center in McKinney, Texas consists of approximately 850,000 square feet of
leased space.
The Company also owns and leases office, studio, retail and warehouse
space, broadcast, antenna and satellite transmission facilities and outdoor
advertising throughout the U.S., Canada and several countries around the world
for its businesses. The Company considers its properties adequate for its
present needs.
I-33
Item 3. Legal Proceedings.
Antitrust. The Company, Blockbuster and Paramount Home Entertainment are
among the defendants in a lawsuit filed on July 21, 1999 in the United States
District Court for the Western District of Texas by one former and three
present independent video retailers against the major motion picture studios
and the Company. The plaintiffs, purporting to act as class representatives on
behalf of themselves and all others similarly situated, allege that the
Company and the studios conspired among themselves and with Blockbuster to
restrain competition in the nationwide market for distribution of
videocassettes for rental to the public in violation of federal and California
law. Plaintiffs seek injunctive relief under federal law as well as triple the
amount of the alleged actual damages to themselves and those similarly
situated under California statutes. In January 2001, plaintiffs moved to
withdraw their California state law claims from the federal lawsuit in Texas
and filed a substantially similar complaint with approximately 200 additional
named plaintiffs in Superior Court for the County of Los Angeles. This
complaint also sought certification of a nationwide class of similarly
situated plaintiffs. In March 2001, the Texas court denied the plaintiffs'
motion for class certification of both the federal and the California state
law claims in the federal action and denied the plaintiffs' motion to withdraw
their California state law claims from that action. The Company believes that
the plaintiffs' position in these litigations is without merit and intends to
defend itself vigorously in the litigations.
The Company, through Paramount Pictures, is subject to a consent decree,
entered in 1948, which contains restrictions on certain motion picture trade
practices in the U.S. The Company, through Paramount Pictures, along with
other major distributors, has received a Civil Investigative Demand from the
Justice Department which is investigating possible violations of the industry-
wide decrees. The Company believes that it has not committed any violation of
the consent decree and has not been advised that the Department of Justice
believes otherwise.
Other Matters. The Company is a defendant in numerous lawsuits claiming
various asbestos-related personal injuries, which allegedly occurred from use
or inclusion of asbestos in certain products supplied by previously divested
industrial business, generally in the pre-1970 time period. Typically, these
lawsuits are brought against multiple defendants in state and federal courts.
The Company was neither a manufacturer nor a producer of asbestos. As of
December 31, 2000, the Company had pending approximately 99,590 asbestos
cases, excluding cases in various stages of settlement. The Company has
brought suit against certain of its insurance carriers with respect to
asbestos claims. Under the terms of a settlement agreement resulting from this
suit, carriers that have agreed to the settlement are now reimbursing the
Company for a substantial portion of its current costs and settlement
associated with asbestos claims. The Company believes that it has meritorious
defenses to asbestos matters, that where appropriate it has adequately
provided for resolution of matters and that any ultimate liability resulting
from asbestos matters is not likely to have a material adverse effect on its
results of operations, financial position or cash flows.
The Company from time to time receives claims from federal and state
environmental regulatory agencies and other entities asserting that it is or
may be liable for environmental cleanup costs and related damages principally
relating to discontinued operations conducted by companies acquired by the
Company. While the outcome of these claims cannot be predicted with certainty,
on the basis of its experience and the information currently available to it,
the Company does not believe that the claims it has received will have a
material adverse effect on its results of operations, financial position or
cash flows.
In addition to the above matters, the Company and various of its
subsidiaries are parties to certain other legal proceedings. Litigation is
inherently uncertain and always difficult to predict. However, based on its
understanding and evaluation of the relevant facts and circumstances, the
Company believes that these matters are not likely to have a material adverse
effect on its results of operations, financial position or cash flows. (See
Item 7. "Management's Discussion and Analysis of Results of Operations and
Financial Condition.")
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable
I-34
Executive Officers of the Company
Set forth below is certain information concerning the executive officers of
the Company.
Name Age Title
- ---- --- -----
Sumner M. Redstone.... 77 Chairman of the Board of Directors and Chief
Executive Officer
Mel Karmazin.......... 57 President and Chief Operating Officer and Director
Carl D. Folta......... 43 Senior Vice President, Corporate Relations
Martin D. Franks...... 50 Senior Vice President
Robert G. Freedline... 43 Vice President and Treasurer
Michael D. Fricklas... 41 Executive Vice President, General Counsel and
Secretary
Susan C. Gordon....... 47 Vice President, Controller and Chief Accounting
Officer
Carol A. Melton....... 46 Senior Vice President, Government Affairs
Fredric G. Reynolds... 50 Executive Vice President and Chief Financial Officer
William A. Roskin..... 58 Senior Vice President, Human Resources and
Administration
Martin M. Shea........ 57 Senior Vice President, Investor Relations
- --------
None of the executive officers of the Company is related to any other
executive officer or director by blood, marriage or adoption except that Brent
D. Redstone and Shari Redstone, Directors of the Company, are the son and
daughter, respectively, of Sumner M. Redstone.
Mr. Redstone has been a Director of the Company since 1986 and Chairman of
the Board since 1987, acquiring the additional title of Chief Executive
Officer in January 1996. Mr. Redstone has served as Chief Executive Officer of
NAI since 1967, and continues to serve in such capacity; he has also served as
Chairman of the Board of NAI since 1986. Mr. Redstone was President of NAI
from 1967 through 1999. Mr. Redstone became a Director of Blockbuster in 1999.
He is a member of the Advisory Council for the Academy of Television Arts and
Sciences Foundation and on the Board of Trustees for The Museum of Television
and Radio. Mr. Redstone served as the first Chairman of the Board of the
National Association of Theatre Owners, and is currently a member of the
Executive Committee of that organization. Since 1982, Mr. Redstone has been a
member of the faculty of Boston University Law School, where he has lectured
on entertainment law, and since 1994, he has been a Visiting Professor at
Brandeis University. In 1944, Mr. Redstone graduated from Harvard University
and, in 1947, received an LL.B. from Harvard University School of Law. Upon
graduation, he served as Law Secretary with the U.S. Court of Appeals, and
then as a Special Assistant to the U.S. Attorney General.
Mr. Karmazin has been President and Chief Operating Officer of the Company
and a member of the Board of Directors since May 2000. He became a Director of
Blockbuster in May 2000. Mr. Karmazin served as President and Chief Executive
Officer of CBS Corporation from January 1999 until May 2000, and President and
Chief Operating Officer from April 1998 to January 1999. Mr. Karmazin also
served as Chairman, President and Chief Executive Officer of Infinity
Broadcasting Corporation from December 1998, the time of Infinity's most
recent initial public offering, until February 2001, when its public shares
were acquired by the Company. He continues to serve as Chairman of Infinity.
Mr. Karmazin joined CBS in December 1996 as Chairman and Chief Executive
Officer of CBS Radio and served as Chairman and Chief Executive Officer of the
CBS Station Group (Radio and Television) from May 1997 to April 1998. Prior to
joining CBS, Mr. Karmazin served as President and Chief Executive Officer of
Infinity Broadcasting Corporation from 1981 to December 1996. Mr. Karmazin is
on the Board of Trustees for The Museum of Television and Radio and serves on
the Board of Directors of the New York Stock Exchange, Inc. and Westwood One,
Inc.
Mr. Folta was elected Senior Vice President, Corporate Relations of the
Company in November 1994. Prior to that, he served as Vice President,
Corporate Relations of the Company from April 1994 to November 1994. From 1984
until joining the Company in April 1994, Mr. Folta held various Corporate
Communications positions at Paramount Communications Inc., serving most
recently as Senior Director, Corporate Communications.
Mr. Franks has been Senior Vice President of the Company and Executive Vice
President, CBS Television since May 2000. From June 1997 to May 2000, he
served as Senior Vice President, CBS Corporation and President, CBS
Foundation. Mr. Franks joined CBS in July 1988 as Vice President, Washington,
CBS Inc. and in January 1994 was named Senior Vice President, Washington, CBS
Inc.
I-35
Mr. Freedline has been Vice President and Treasurer of the Company since
May 2000. From May 1998 to May 2000, he served as Vice President and
Controller of CBS Corporation. Mr. Freedline also served as Director of
Business Planning and Development of CBS from June 1996 to May 1998, and as
director of Corporate Audit from March 1995 to June 1996.
Mr. Fricklas was elected Executive Vice President, General Counsel and
Secretary in May 2000. From October 1998 to May 2000, he served as Senior Vice
President, General Counsel and Secretary of the Company and from July 1993 to
October 1998, he served as Deputy General Counsel of the Company. He served as
Vice President, General Counsel and Secretary of Minorco (U.S.A.) Inc. from
1990 to 1993. Prior to that, Mr. Fricklas was an attorney in private practice
at the law firm of Shearman & Sterling.
Ms. Gordon was elected Vice President, Controller and Chief Accounting
Officer in April 1995. Prior to that, she served as Vice President, Internal
Audit of the Company since October 1986. From June 1985 to October 1986, Ms.
Gordon served as Controller of Viacom Broadcasting. She joined the Company in
1981 and held various positions in the corporate finance area.
Ms. Melton was elected Senior Vice President, Government Affairs of the
Company in May 1997. Before joining the Company, Ms. Melton served most
recently as Vice President, Law and Public Policy at Time Warner Inc., having
joined Warner Communications Inc. in 1987. Prior to that, Ms. Melton served as
Legal Advisor to the Chairman of the Federal Communications Commission and as
Assistant General Counsel for the National Cable Television Association.
Mr. Reynolds has been Executive Vice President and Chief Financial Officer
of the Company since May 2000. He became a Director of Blockbuster in December
2000. Mr. Reynolds served as Executive Vice President and Chief Financial
Officer of CBS Corporation from March 1994 to May 2000, and assumed the
additional post of Chief Financial Officer of CBS Inc. in April 1996. From
1982 to 1994, Mr. Reynolds held various executive financial positions at
PepsiCo Inc., including Senior Vice President and Chief Financial Officer for
PepsiCo Foods International. In March 2001, the Company announced that Mr.
Reynolds would become President of the CBS Television Stations Division.
On March 26, 2001, the Company announced that Richard J. Bressler will join
the Company as Senior Executive Vice President and Chief Financial Officer,
assuming the duties of Chief Financial Officer effective May 1, 2001. Prior to
the announcement, Mr. Bressler was Executive Vice President of AOL Time Warner
Inc. and Chief Executive Officer of AOL Time Warner Investments. Mr. Bressler
was Executive Vice President and Chief Financial Officer of Time Warner Inc.
from March 1995 to June 1999 and served in various financial capacities with
Time Warner prior to that time.
Mr. Roskin has been an executive officer of the Company since April 1988
when he became Vice President, Human Resources and Administration. In July
1992, Mr. Roskin was elected Senior Vice President, Human Resources and
Administration of the Company. From May 1986 to April 1988, he was Senior Vice
President, Human Resources at Coleco Industries, Inc. From 1976 to 1986, he
held various executive positions at Warner Communications Inc., serving most
recently as Vice President, Industrial and Labor Relations.
Mr. Shea was elected Senior Vice President, Investor Relations of the
Company in January 1998. From July 1994 to May 1995 and from November 1995 to
December 1997, he was Senior Vice President, Corporate Communications for
Triarc Companies, Inc. From June 1995 through October 1995, he served as
Managing Director of Edelman Worldwide. From 1977 until July 1994, Mr. Shea
held various Investor Relations positions at Paramount Communications Inc.,
serving most recently as Vice President, Investor Relations.
I-36
PART II
Item 5. Market for Viacom Inc.'s Common Equity and Related Security Holder
Matters.
Viacom Inc. voting Class A Common Stock and Viacom Inc. non-voting Class B
Common Stock are listed and traded on the New York Stock Exchange ("NYSE")
under the symbols "VIA" and "VIA.B", respectively.
The following table sets forth, for the calendar periods indicated, the per
share range of high and low sales prices for Viacom Inc.'s Class A Common
Stock and Class B Common Stock, as reported on the NYSE.
Viacom Inc. Viacom Inc.
Class A Class B
Common Stock Common Stock
------------- -------------
High Low High Low
------ ------ ------ ------
1999
1st quarter $45.50 $35.31 $45.94 $35.38
2nd quarter 48.75 36.69 49.19 36.63
3rd quarter 49.63 38.44 48.75 38.56
4th quarter 60.44 40.31 60.44 39.81
2000
1st quarter $63.31 $49.56 $63.25 $49.56
2nd quarter 71.25 46.06 70.88 45.69
3rd quarter 76.06 55.00 75.88 54.13
4th quarter 59.81 44.56 59.88 44.31
Viacom Inc. has not declared cash dividends on its common stock for the
periods presented above and has no present intention of so doing.
As of March 19, 2001, there were approximately 7,721 record holders of
Viacom Inc. Class A Common Stock and 82,067 record holders of Viacom Inc.
Class B Common Stock.
II-1
Item 6. Selected Financial Data.
VIACOM INC. AND SUBSIDIARIES
(Millions of dollars, except per share amounts)
Year Ended December 31,
----------------------------------------------------
2000(a)(b) 1999 1998 1997 1996
---------- --------- --------- --------- ---------
Revenues $20,043.7 $12,858.8 $12,096.1 $10,684.9 $ 9,683.9
Operating income $ 1,320.9 $ 1,247.3 $ 751.6 $ 685.4 $ 1,197.2
Earnings (loss) from
continuing operations $ (363.8) $ 371.7 $ (43.5) $ 373.5 $ 152.2
Net earnings (loss) $ (816.1) $ 334.0 $ (122.4) $ 793.6 $ 1,247.9
Net earnings (loss)
attributable to common
stock $ (816.1) $ 321.6 $ (149.6) $ 733.6 $ 1,187.9
Basic earnings per
common share:
Earnings (loss) from
continuing operations $ (.30) $ .52 $ (.10) $ .44 $ .13
Net earnings (loss) $ (.67) $ .46 $ (.21) $ 1.04 $ 1.63
Diluted earnings per
common share:
Earnings (loss) from
continuing operations $ (.30) $ .51 $ (.10) $ .44 $ .13
Net earnings (loss) $ (.67) $ .45 $ (.21) $ 1.04 $ 1.62
At Year End:
Total assets $82,646.1 $24,486.4 $23,613.1 $28,288.7 $28,834.0
Long-term debt, net of
current portion $12,473.8 $ 5,697.7 $ 3,813.4 $ 7,423.0 $ 9,855.7
Stockholders' equity $47,966.9 $11,132.0 $12,049.6 $13,383.6 $12,586.5
Viacom Inc. has not declared cash dividends on its common stock for any of
the periods presented above.
(a) On May 4, 2000, CBS Corporation merged with Viacom Inc. and
effective from this date, its results of operations are included in the
consolidated financial results of the Company.
(b) As a result of the adoption of Statement of Position 00-2,
"Accounting by Producers or Distributors of Films," the Company recorded a
non-cash after-tax charge of $452.3 million as a cumulative effect of a
change in accounting.
See Notes to Consolidated Financial Statements for additional information
on transactions and accounting classifications which have affected the
comparability of the periods presented above.
II-2
Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
(Tabular dollars in millions)
General
Management's discussion and analysis of the results of operations and
financial condition of Viacom Inc. and its subsidiaries ("Viacom" or the
"Company") should be read in conjunction with the Consolidated Financial
Statements and related Notes. Descriptions of all documents incorporated by
reference herein or included as exhibits hereto are qualified in their
entirety by reference to the full text of such documents so incorporated or
included.
Several significant transactions occurred during 2000 and in the first
quarter of 2001 that demonstrated the Company's strength in the media
business. These investments are expected to generate significant levels of
cash flow. The Company's significant transactions were as follows:
. The Company completed its merger with CBS Corporation ("CBS") in May of
2000.
. In November 2000, the Company announced an agreement to acquire BET
Holdings II, Inc. ("BET") for approximately $3 billion, consisting
principally of Viacom Class B Common Stock and the assumption of debt.
The transaction closed in January 2001 and was accounted for as a
purchase. Beginning in the first quarter of 2001, BET will be
consolidated with the Company's results of operations.
. In October 2000, the Company and Infinity Broadcasting Corporation
("Infinity Broadcasting") entered into a merger agreement under which
the Company would acquire all of the issued and outstanding shares of
Infinity common stock that it did not already own, approximately 36%.
The merger was completed in February 2001.
. In the third quarter of 2000, the Company issued $1.65 billion of debt
securities to repay existing short-term debt and to take advantage of
attractive rates in the fixed rate market.
. In the third quarter of 2000, Infinity Broadcasting completed the
acquisition of 18 radio stations from Clear Channel Communications,
Inc. ("Clear Channel") for $1.4 billion in an asset transaction.
. In the second quarter of 2000, Infinity Broadcasting completed the
acquisition of Giraudy, one of France's largest outdoor advertising
companies, for approximately $400 million.
Business Segment Information
The Company had the following seven reportable segments during 2000:
Cable Networks--Basic Cable and Premium Subscription Television Program
Services.
Television--Television Networks and Stations; and production and
distribution of television programming.
Infinity--Radio stations and outdoor advertising properties.
Entertainment--Production and distribution of Motion Pictures; as well as
the operation of Movie Theaters, Theme Parks and Music
Publishing.
Video--Home Video and Game Rental and Retail through traditional stores and
the Internet.
Publishing--Consumer Publishing.
Online--Interactive Online Services.
Effective January 1, 2001, the Company operates its online business under
the Cable Networks and Television segments and accordingly, the Company will
present its online business as part of these respective segments.
II-3
The following tables set forth revenues and operating income (loss) by
business segment, as reported for the years ended December 31, 2000, 1999 and
1998.
- ---------------------------------------------------------------------------------------
Percent
Year ended December 31, Better/(Worse)
2000 1999 1998 2000 vs. 1999 1999 vs. 1998
- ---------------------------------------------------------------------------------------
Revenues:
Cable Networks $ 3,895.0 $ 3,045.5 $ 2,607.9 28% 17%
Television 5,381.7 2,352.0 2,271.4 129 4
Infinity 2,764.7 -- -- NM --
Entertainment 2,758.3 2,665.9 2,914.3 3 (9)
Video 4,960.1 4,463.5 3,893.4 11 15
Publishing 596.0 610.7 564.6 (2) 8
Online 100.7 29.8 13.7 238 118
Intercompany
eliminations (412.8) (308.6) (169.2) (34) (82)
- ---------------------------------------------------------------------------------------
Total Revenues $20,043.7 $12,858.8 $12,096.1 56% 6%
- ---------------------------------------------------------------------------------------
Operating Income (Loss):
Cable Networks $ 1,250.0 $ 932.4 $ 744.3 34% 25%
Television 431.2 143.4 262.4 201 (45)
Infinity 589.4 -- -- NM --
Entertainment 209.7 231.1 235.5 (9) (2)
Video 75.7 127.9 (342.2) (41) NM
Publishing 49.6 54.3 53.2 (9) 2
Online (256.7) (64.5) (7.5) (298) NM
- ---------------------------------------------------------------------------------------
Segment Total 2,348.9 1,424.6 945.7 65 51
Corporate
expenses/eliminations (950.5) (177.3) (194.1) NM 9
Residual costs of
discontinued operations (77.5) -- -- NM --
- ---------------------------------------------------------------------------------------
Total Operating Income $ 1,320.9 $ 1,247.3 $ 751.6 6% 66%
- ---------------------------------------------------------------------------------------
NM--Not meaningful
Pro Forma Results
In order to enhance comparability, the following discussion of the
Company's results of operations is supplemented by pro forma financial
information that gives effect to the CBS merger and other acquisitions
(including significant acquisitions made by CBS prior to the completion of the
merger), excludes non-recurring items and reflects the adoption of Statement
of Position 00-2, "Accounting by Producers or Distributors of Films" as if
they had occurred at the beginning of each period presented. The pro forma
results are presented for informational purposes only and are not indicative
of the operating results that would have occurred had the transactions
actually occurred at the beginning of 1999, nor are they necessarily
indicative of future operating results.
- -----------------------------------------------------------------------
Year Ended Percent
December 31, Better/(Worse)
2000 1999 2000 vs. 1999
- -----------------------------------------------------------------------
Pro Forma Revenues:
Cable Networks $ 4,082.3 $ 3,610.0 13%
Television 7,255.4 7,073.7 3
Infinity 4,037.2 3,562.4 13
Entertainment 2,758.3 2,665.9 3
Video 4,960.1 4,463.5 11
Publishing 596.0 610.7 (2)
Online 113.2 43.2 162
Intercompany eliminations (443.4) (334.2) (33)
- -----------------------------------------------------------------------
Total Pro Forma Revenues $23,359.1 $21,695.2 8%
- -----------------------------------------------------------------------
II-4
-------------------------------------------------------------------------
Year Ended Percent
December 31, Better/(Worse)
2000 1999 2000 vs. 1999
-------------------------------------------------------------------------
Pro Forma Operating Income (Loss):
Cable Networks $1,268.6 $1,006.0 26%
Television 582.9 189.9 207
Infinity 727.8 479.8 52
Entertainment 209.7 170.7 23
Video 107.3 127.9 (16)
Publishing 49.6 54.3 (9)
Online (309.7) (100.0) (210)
-------------------------------------------------------------------------
Segment Total 2,636.2 1,928.6 37
Corporate expenses/eliminations (321.0) (266.1) (21)
Residual costs of discontinued
operations (120.8) (84.5) (43)
-------------------------------------------------------------------------
Total Pro Forma Operating Income $2,194.4 $1,578.0 39%
-------------------------------------------------------------------------
EBITDA
The following tables set forth EBITDA (defined as operating income (loss)
before depreciation and amortization principally of goodwill related to
business combinations) for the years ended December 31, 2000, 1999 and 1998.
The Company believes that EBITDA is an appropriate measure of evaluating the
operating performance of its segments. However, EBITDA should be considered in
addition to, not as a substitute for or superior to, operating income, net
earnings, cash flows, and other measures of financial performance prepared in
accordance with generally accepted accounting principles ("GAAP"). As EBITDA
is not a measure of performance calculated in accordance with GAAP, this
measure may not be comparable to similarly titled measures employed by other
companies.
- ----------------------------------------------------------------------------------
Percent
Year ended December 31, Better/(Worse)
2000 1999 1998 2000 vs. 1999 1999 vs. 1998
- ----------------------------------------------------------------------------------
EBITDA:
Cable Networks $1,495.0 $1,053.1 $ 851.3 42% 24%
Television 979.5 271.5 372.9 261 (27)
Infinity 1,282.6 -- -- NM --
Entertainment 368.8 378.3 368.7 (3) 3
Video 534.8 520.3 39.9 3 NM
Publishing 71.3 74.0 71.2 (4) 4
Online (182.1) (48.4) (3.5) (276) NM
- ----------------------------------------------------------------------------------
Segment Total 4,549.9 2,248.8 1,700.5 102 32
Corporate
expenses/eliminations (928.0) (156.8) (171.6) NM 9
Residual costs of
discontinued
operations (77.5) -- -- NM --
- ----------------------------------------------------------------------------------
Total EBITDA $3,544.4 $2,092.0 $1,528.9 69% 37%
- ----------------------------------------------------------------------------------
NM--Not meaningful
II-5
----------------------------------------------------------------------
Year ended Percent
December 31, Better/(Worse)
2000 1999 2000 vs. 1999
----------------------------------------------------------------------
Pro Forma EBITDA:
Cable Networks $1,566.3 $1,296.3 21%
Television 1,335.6 954.3 40
Infinity 1,794.1 1,505.5 19
Entertainment 368.8 317.9 16
Video 534.8 520.3 3
Publishing 71.3 74.0 (4)
Online (231.4) (82.1) (182)
----------------------------------------------------------------------
Segment Total 5,439.5 4,586.2 19
Corporate expenses/eliminations (296.9) (240.7) (23)
Residual costs of discontinued
operations (120.8) (84.5) (43)
----------------------------------------------------------------------
Total Pro Forma EBITDA $5,021.8 $4,261.0 18%
----------------------------------------------------------------------
RESULTS OF OPERATIONS 2000 VERSUS 1999
On a reported basis, revenues increased 56% to $20.0 billion for the year
ended December 31, 2000 from $12.9 billion for 1999. Reported operating
results for the year ended December 31, 2000 are not comparable with the prior
year due to the CBS merger, merger-related charges and other non-recurring
items.
On a pro forma basis, revenues increased 8% to $23.4 billion for 2000 from
$21.7 billion for 1999 with double digit increases at the Cable Networks,
Infinity and Video segments. Increased advertising revenues drove Cable
Networks and Infinity revenue growth. Increased same store revenues and the
increase in the number of Company-operated stores drove Video segment revenue
growth.
On a reported basis, total expenses increased 61% to $18.7 billion for 2000
from $11.6 billion for 1999 principally reflecting expenses of CBS following
the merger, an increase of $1.1 billion in amortization expense, merger
related charges of $698 million and increases associated with revenue growth.
On a pro forma basis, total expenses increased 5% to $21.2 billion for 2000
from $20.1 billion for 1999 principally reflecting increases associated with
revenue growth.
On a reported basis, EBITDA and operating income increased 69% to $3.5
billion and 6% to $1.3 billion, respectively, for 2000 from $2.1 billion and
$1.2 billion, respectively for 1999.
Segment Results of Operations 2000 versus 1999
Cable Networks (Basic Cable and Premium Subscription Television Program
Services)
-----------------------------------------------------
Year Ended
December 31, Percent
2000 1999 Better/(Worse)
-----------------------------------------------------
As Reported:
Revenues $3,895.0 $3,045.5 28%
Operating income $1,250.0 $ 932.4 34
EBITDA $1,495.0 $1,053.1 42
-----------------------------------------------------
Pro Forma:
Revenues $4,082.3 $3,610.0 13%
Operating income $1,268.6 $1,006.0 26
EBITDA $1,566.3 $1,296.3 21
-----------------------------------------------------
II-6
The Cable Networks segment is comprised of MTV Networks ("MTVN"),
including, MTV, VH1, Nickelodeon, Nick at Nite, TV Land, TNN: The National
Network and CMT, basic cable television program services; and Showtime
Networks Inc. ("SNI"), owner of several premium subscription television
program services.
For the year, MTVN revenues of $2.9 billion, EBITDA of $1.3 billion and
operating income of $1.1 billion increased 29%, 42% and 33%, respectively. The
increase in MTVN's revenues reflect 28% higher worldwide advertising revenues
principally driven by rate increases at MTV, VH1 and TV Land and higher
affiliate fees. MTVN's EBITDA and operating income gains were driven by the
increased revenues partially offset by increased programming and production
expenses, principally at MTV and VH1. On a pro forma basis, MTVN revenues of
$3.0 billion and EBITDA of $1.4 billion increased 14% and 21%, respectively,
over the prior year's pro forma revenues of $2.7 billion and EBITDA of $1.1
billion. Pro forma results are presented as if the acquisition of the CBS
Cable Networks, TNN and CMT, had occurred on January 1, 1999.
For the year, SNI's revenues, EBITDA and operating income increased 10%,
21% and 24%, respectively, as compared with the prior year. The revenue
increases were principally due to an increase of approximately 5.2 million
subscriptions, up 22% over the prior year to 28.4 million subscriptions at
December 31, 2000. Operating results reflect revenue increases attributable to
the continued growth of direct broadcast satellite subscriptions partially
offset by higher programming expenses and increased marketing for the
promotion of original series.
On January 23, 2001, the Company completed its acquisition of BET for
approximately $3 billion, which principally represents the issuance of
approximately 43.4 million shares of Viacom Class B Common Stock and the
assumption by the Company of approximately $590 million in debt. Beginning
first quarter of 2001, BET results will be reported as part of the Cable
Networks segment.
Television (CBS and UPN Television Networks and Stations; Television
Production and Syndication)
-----------------------------------------------------
Year Ended
December 31, Percent
2000 1999 Better/(Worse)
-----------------------------------------------------
As Reported:
Revenues $5,381.7 $2,352.0 129%
Operating income $ 431.2 $ 143.4 201
EBITDA $ 979.5 $ 271.5 261
-----------------------------------------------------
Pro Forma:
Revenues $7,255.4 $7,073.7 3%
Operating income $ 582.9 $ 189.9 207
EBITDA $1,335.6 $ 954.3 40
-----------------------------------------------------
The Television segment is comprised of the CBS and UPN Television Networks
and stations, television production and syndication.
For the year, Television segment pro forma revenues, EBITDA and operating
income growth was principally driven by the strong performance at the CBS
Network, television stations and at the United Paramount Network ("UPN"). CBS
Network's pro forma revenues and EBITDA growth for 2000 were primarily due to
increases in both upfront and scatter advertising pricing. Television stations
pro forma results benefited from strong advertising pricing in local owned and
operated TV markets. Approximately 80% of CBS Network's inventory for the
2000-2001 television season was sold in the upfront market and all day-parts
achieved double digit price increases. The success of the CBS Network was led
by its new reality-based television shows, including Survivor, the finale of
which was second only to the Super Bowl as the most watched television event
in 2000. Survivor also favorably impacted the ratings and revenue generated by
other day parts, including News and Late Night. CBS Network's Monday night
comedies, led by Everybody Loves Raymond, also posted significant year-to-year
growth. CBS Network's strong revenue growth was partially offset by higher
II-7
programming costs and election year expenses. CBS Network had the top two new
dramas in the fall season with CSI: Crime Scene Investigation and The
District. CBS Enterprises, which includes King World productions, reported
higher pro forma revenues and EBITDA primarily due to increased domestic
license fees from The Oprah Winfrey Show and Hollywood Squares, partially
offset by lower revenues from The Roseanne Show.
Paramount Television revenues for the full year 2000 were higher for
continuing network and first run syndication shows including Entertainment
Tonight, Judge Judy, Charmed, 7th Heaven and Judge Joe Brown. Syndication
revenues included the first time syndication availability of Sabrina, The
Teenage Witch and Moesha, and distribution fees from the initial syndication
of Spin City; however, these contributions did not compare favorably with the
prior year which included the last seasons of Beverly Hills 90210, Melrose
Place, Sunset Beach, Star Trek: Deep Space Nine, and Sister, Sister and the
first time syndication availability of JAG, Star Trek: Voyager, Viper and The
Sentinel and higher library syndication revenues. Paramount Television's
EBITDA also improved led by Frasier and Judge Judy combined with significant
overhead savings resulting from the integration of Spelling Entertainment into
Paramount Television. Revenues for the year ended December 31, 1999 also
benefited from the recognition of a cable retransmission royalty settlement.
Pro forma results assume that the CBS merger and the acquisitions of King
World, two Texas television stations and the remaining 50% interest of UPN had
occurred at the beginning of each period presented, exclude the third quarter
1999 Spelling restructuring charge and other non-recurring charges and reflect
the adoption of the change in accounting as of January 1, 1999 as described
below.
In the second quarter of 2000, the Company elected early adoption of the
AICPA's Statement of Position "Accounting by Producers or Distributors of
Films" ("SOP 00-2") which is effective for financial statements for fiscal
years beginning after December 15, 2000. SOP 00-2 established new film
accounting standards, including changes in revenue recognition and accounting
for advertising, development and overhead costs. As a result of the early
adoption, Television recorded a pre-tax charge of $330 million, primarily
related to Spelling Entertainment. This charge was recorded as a cumulative
effect of a change in accounting and is not included in EBITDA and operating
income above. Partially as a result of the adoption of SOP 00-2, prior year
pro forma results are higher than the prior year as reported results due to
the timing of distribution costs as required by SOP 00-2. The Television
segment's operating results for 2000 were reduced by approximately $9 million
due to this accounting change.
License fees for completed television programming in syndication and on
basic cable are recorded as revenue in the period that the products are
available for such exhibition, which, among other reasons, may cause
substantial fluctuation in operating results. As of December 31, 2000, the
unrecognized revenues attributable to such licensing agreements were
approximately $622 million.
Infinity (Radio Stations, Outdoor Advertising Properties)
-----------------------------------------------------
Year Ended
December 31, Percent
2000 1999 Better/(Worse)
-----------------------------------------------------
As Reported:
Revenues $2,764.7 -- NM
Operating income $ 589.4 -- NM
EBITDA $1,282.6 -- NM
-----------------------------------------------------
Pro Forma:
Revenues $4,037.2 $3,562.4 13%
Operating income $ 727.8 $ 479.8 52
EBITDA $1,794.1 $1,505.5 19
-----------------------------------------------------
NM--not meaningful
II-8
The Infinity segment is comprised of owned and operated radio stations and
outdoor advertising properties.
For the year, Infinity Broadcasting, the Company's out-of-home media
subsidiary, recorded pro forma revenues, EBITDA and operating income increases
of 13%, 19% and 52%, respectively, principally driven by advertising revenue
growth at both Infinity's radio stations and outdoor advertising businesses.
Advertising revenue growth was primarily driven by higher advertising rates,
reflecting increased demand for advertising at the majority of the radio
stations and in the outdoor advertising business. Infinity Radio's pro forma
net revenues and EBITDA increased 14% and 18%, respectively, principally
reflecting strong growth in the top 15 radio markets, with New York, Los
Angeles, Chicago and San Francisco delivering double-digit revenue and EBITDA
growth for the year. Infinity's outdoor advertising businesses pro forma net
revenues and EBITDA increased 13% and 23%, respectively. Pro forma results
assume the acquisition of Infinity Broadcasting, as part of the CBS merger,
and the completion of all acquisitions and related divestitures of radio and
outdoor properties by Infinity Broadcasting, including the acquisition of
Infinity Outdoor, formerly known as Outdoor Systems, Inc. and 18 radio
stations from Clear Channel, occurred at the beginning of each period
presented.
On February 21, 2001, the Company announced the completion of its merger
with Infinity Broadcasting. Under the terms of the merger, which is tax free
for the stockholders of Infinity and Viacom, each share of Infinity Class A
Common Stock not owned by the Company, approximately 36%, has been converted
into the right to receive 0.592 of a share of Viacom Class B Common Stock.
Entertainment (Production and distribution of Motion Pictures; as well as
the operation of Movie Theaters, Theme Parks and Music Publishing)
-----------------------------------------------------
Year Ended
December 31, Percent
2000 1999 Better/(Worse)
-----------------------------------------------------
As Reported:
Revenues $2,758.3 $2,665.9 3%
Operating income $ 209.7 $ 231.1 (9)
EBITDA $ 368.8 $ 378.3 (3)
-----------------------------------------------------
Pro Forma:
Revenues $2,758.3 $2,665.9 3%
Operating income $ 209.7 $ 170.7 23
EBITDA $ 368.8 $ 317.9 16
-----------------------------------------------------
The Entertainment segment is comprised of Paramount Pictures, movie
theaters, Paramount Parks and music publishing.
For the year, Entertainment revenues increased 3% to $2.8 billion compared
with the prior year, principally reflecting higher Features and Theaters
revenues. Higher Features revenues were driven by increased worldwide
theatrical and home video revenues as compared with 1999. Domestic theatrical
revenues for 2000 included the strong performance of Mission: Impossible 2,
What Women Want, Shaft, Rugrats in Paris: The Movie, Rules of Engagement, Snow
Day and The Original Kings of Comedy. Foreign theatrical revenues for 2000
were higher primarily due to the success of Mission: Impossible 2, Shaft,
Double Jeopardy and Sleepy Hollow. Home video revenues were higher and
included contributions from Mission Impossible 2, Double Jeopardy, Runaway
Bride, Sleepy Hollow and Rules of Engagement. Theater revenues were higher
primarily as a result of additional new multiplex theaters opened since the
end of 1999 and increased per capita spending. Parks' revenues were comparable
with the prior year. Entertainment revenues for the prior year also included
the recognition of a pay television license for library products and the
renewal of a film processing agreement.
For the year, Entertainment's EBITDA and operating income decreased 3% and
9%, respectively, primarily due to lower Theaters profits as a result of
higher operating costs and costs associated with opening additional
II-9
multiplexes in 2000. On a pro forma basis, Entertainment's EBITDA and
operating income increased 16% and 23%, respectively, over the prior year. Pro
forma results are presented as if the adoption of the change in accounting for
motion pictures (as described below) had occurred at the beginning of each
period presented. Parks' EBITDA and operating income for 2000 were higher than
the prior year due to lower operating costs.
As a result of the Company's adoption of SOP 00-2 in the second quarter of
2000, Paramount Pictures recorded a pre-tax charge of $423 million as a
cumulative effect of a change in accounting which is not included in EBITDA
and operating income above. For 2000, Entertainment's operating results were
reduced by approximately $20 million due to this accounting change. Prior
year's pro forma results are lower than the as reported results due to the
timing of when distribution expenses are recognized as required by SOP 00-2.
License fees for completed television exhibition of motion pictures are
recorded as revenue in the period that the products are available for such
exhibition, which, among other reasons, may cause substantial fluctuation in
operating results. As of December 31, 2000, the unrecognized revenues
attributable to such licensing agreements were approximately $1.0 billion.
Video (Home Video and Game rental and retail through traditional stores and
the Internet)
---------------------------------------------------
Year Ended
December 31, Percent
2000 1999 Better/(Worse)
---------------------------------------------------
Revenues $4,960.1 $4,463.5 11%
Operating income $ 75.7 $ 127.9 (41)
EBITDA $ 534.8 $ 520.3 3
---------------------------------------------------
The Video segment is comprised of Blockbuster's operations in the home
video, DVD and video game rental and retailing business through traditional
stores and the Internet.
For the year, Video revenues increased 11% driven by an increase in same
store revenues and the increase in the number of Company-operated stores.
Worldwide same store revenues increased 5.6% for the year ended December 31,
2000 and worldwide rental revenues increased 5.9%. For the year, international
same store revenues increased 11.6% and domestic same store revenues increased
4.3% over 1999. Blockbuster ended the year with 7,677 company-owned and
franchise stores, a net increase of 524 stores over the prior year.
Operating results for 2000 were impacted by Blockbuster's investment in its
online operations, which began operations in the fourth quarter of 1999 and
resulted in reductions to EBITDA and operating income of $53.4 million and
$96.8 million, respectively. Excluding the amounts attributable to its online
operations, Video's EBITDA and operating income increased 12% and 28%,
respectively, as compared with the prior year. Additionally, during the fourth
quarter of 2000, Blockbuster determined that the carrying value of certain
hardware and capitalized software components primarily related to the e-
commerce portion of its Internet site was impaired, and as a result, recorded
a charge of approximately $31.6 million as part of depreciation expense. Pro
forma results exclude the impact of this impairment charge from depreciation
expense.
For the year, Video's gross margin decreased to 59.0% from 60.5%
principally due to an increase in the percentage of total revenues generated
through revenue-sharing arrangements, as revenue-sharing arrangements on
average have lower gross margins than do traditional buying arrangements.
Blockbuster is continually evaluating its product mix and product offerings,
as well as related strategic offerings, to try to optimize its stores'
revenues and gross profit. Blockbuster intends to continue to increase its
stores' depth of DVDs and other home entertainment products in response to
accelerated consumer acceptance of DVD and other home entertainment products.
These initiatives to optimize stores' revenues and gross profit may cause
Blockbuster to alter the product mix in its stores. This continued consumer
shift to DVD format may cause Blockbuster to rationalize its stores existing
product mix which could result in a non-cash charge.
II-10
Publishing (Consumer Publishing)
-----------------------------------------------
Year Ended
December 31, Percent
2000 1999 Better/(Worse)
-----------------------------------------------
Revenues $596.0 $610.7 (2)%
Operating income $ 49.6 $ 54.3 (9)
EBITDA $ 71.3 $ 74.0 (4)
-----------------------------------------------
The Publishing segment is comprised of Simon & Schuster, which includes
imprints such as Pocket Books, Scribner and The Free Press.
For the year, Publishing experienced lower net sales at the Pocket Books
and Trade divisions primarily due to lower frontlist sales which drove the
EBITDA and operating income declines partially offset by increased license
fees and lower product costs. In 2000, Trade division's best-selling titles
included Before I Say Good-bye by Mary Higgins Clark, On Writing by Stephen
King and Seat of the Soul by Gary Zukav and the Children's division best
selling titles included Olivia by Ian Falconer.
Online (Interactive Online Services)
-----------------------------------------------------
Year Ended
December 31, Percent
2000 1999 Better/(Worse)
-----------------------------------------------------
As Reported:
Revenues $ 100.7 $ 29.8 238%
Operating income $(256.7) $ (64.5) (298)
EBITDA $(182.1) $ (48.4) (276)
-----------------------------------------------------
Pro Forma:
Revenues $ 113.2 $ 43.2 162%
Operating income $(309.7) $(100.0) (210)
EBITDA $(231.4) $ (82.1) (182)
-----------------------------------------------------
The Company operates Internet sites that provide online music and offer a
broad range of information, entertainment, news and promotional content.
For the year the increase in Online revenues, as reported and pro forma,
reflect increased license fees and higher advertising revenues. Operating
losses, as reported and pro forma, were driven by increased marketing expenses
for iWon.com (a consolidated subsidiary), which was launched in the fourth
quarter of 1999, and increased spending at MTVi. Pro forma results assume the
CBS merger had occurred at the beginning of each period presented. Effective
January 1, 2001, the Company will present its online businesses as part of the
Cable Networks and Television segments and the Company will account for iWon
as a deconsolidated investment.
Other Income and Expense Information 2000 versus 1999
Corporate Expenses/Eliminations
Corporate expenses/eliminations, excluding depreciation expense, of $928.0
million for 2000 are intersegment profit eliminations of $103.2 million and
$650 million of merger-related charges (of which $400 million was non-cash).
Pro forma corporate expenses, excluding intersegment profit eliminations and
depreciation expense, were $193.8 million for the year ended December 31, 2000
as compared with $227.7 million for the prior year.
II-11
Depreciation and Amortization
For the year ended December 31, 2000, depreciation and amortization
increased to $2.2 billion as compared with $844.7 million for 1999. This
increase was primarily due to the Company's merger with CBS, which resulted in
additional amortization expense of approximately $1.0 billion. The goodwill
associated with the CBS merger of approximately $50 billion is being amortized
on a straight-line basis over its useful life which does not exceed 40 years.
Interest Expense
Interest expense increased 83% to $822.3 million for 2000 from $448.9
million for 1999 due to higher average debt outstanding during 2000 as the
Company assumed $3.7 billion of debt with the CBS merger. The Company had
approximately $12.7 billion and $6.0 billion principal amount of debt
outstanding (including current maturities) at December 31, 2000 and December
31, 1999, respectively, at weighted average interest rates of 7.6% and 7.5%,
respectively.
Interest Income
Interest income increased 92% to $53.2 million for 2000 from $27.7 million
for 1999 due to higher marketable securities as a result of the CBS merger and
favorable returns on investments.
Other Items, Net
In 2000, "Other items, net" of $8.8 million principally reflects foreign
exchange gains of $31.7 million and net gains on the sale of assets of
approximately $44.3 million which were mostly offset by the write down of
several internet cost investments to their current market value for
approximately $66.9 million. In 1999, "Other items, net" of $17.8 million
principally reflects a $25.2 million foreign exchange gain partially offset by
a net loss of approximately $7.4 million from the sale of assets.
Provision for Income Taxes
The provision for income taxes represents federal, state and foreign income
taxes on earnings before income taxes. The annual effective tax rates of 73.4%
for 2000, excluding the 2000 merger-related charges of $698 million, and 48.8%
for 1999 were adversely affected by amortization of intangibles in excess of
the amounts deductible for tax purposes. Excluding the non-deductible
amortization of intangibles, the annual effective tax rates would have been
38.8% for 2000 and 35.4% for 1999.
Equity in Loss of Affiliated Companies, Net of Tax
"Equity in loss of affiliated companies, net of tax" was $124.2 million for
2000 as compared to $60.7 million for 1999, principally reflecting increased
losses of internet equity ventures and losses in equity theater ventures
partially offset by the improved performance of Comedy Central. In March 2000,
the Company acquired the remaining 50% interest in UPN and began consolidating
UPN's results of operations in the second quarter of 2000.
Minority Interest
Minority interest in 2000 primarily represents the minority ownership of
Infinity Broadcasting and Blockbuster common stock. The Company acquired the
remaining minority interest of Infinity Broadcasting that it did not own
through a merger with Infinity, completed in February 2001.
Extraordinary Loss
In 1999, the Company recognized after-tax extraordinary losses on the early
extinguishment of debt of $37.7 million, or a loss of $.06 per basic and
diluted share.
II-12
Cumulative Effect of Change in Accounting Principle
For the year ended December 31, 2000, the Company recorded an after-tax
non-cash charge of $452.3 million, or $.37 per basic and diluted share,
resulting from the early adoption of the new accounting standard for motion
pictures.
Net Earnings (Loss)
For the reasons described above, the Company reported a net loss of $816.1
million for 2000 as compared with net earnings of $334.0 million for 1999.
RESULTS OF OPERATIONS 1999 VERSUS 1998
Revenues increased 6% to $12.9 billion for 1999 from $12.1 billion for
1998. Revenue increases were paced by gains in the Cable Networks, Video and
Publishing segments. Cable Networks recorded higher advertising revenues and
affiliate fees for the year. Video's revenue gains were led by increases in
worldwide same store sales and the increased number of system-wide stores in
1999. Entertainment's revenues were down slightly for the year as its
worldwide theatrical and home video contributions did not match the
extraordinary box office and home video success in 1998 of Titanic, Deep
Impact and the theatrical performance of Saving Private Ryan.
Total expenses increased 3% to $11.6 billion for 1999 from $11.3 billion
for 1998 principally reflecting normal increases associated with revenue
growth and the Spelling charge of $81.1 million. In addition, results for 1998
include the second quarter Blockbuster charge of $424.3 million associated
with an adjustment to the carrying value of rental tapes due to a new method
of accounting.
EBITDA and operating income increased 37% to $2.1 billion and 66% to $1.2
billion, respectively, for 1999 from $1.5 billion and $751.6 million,
respectively, for 1998. Excluding the impact of the Spelling charge recorded
in the third quarter of 1999 and the second quarter 1998 Blockbuster charge
from the results presented above, EBITDA increased 11% and operating income
increased 13% for 1999.
Segment Results of Operations 1999 versus 1998
The following discussion of Viacom's segment results has been reclassified
to conform to the 2000 segment presentation. No pro forma discussion is
presented for the 1999 versus 1998 yearly results.
Cable Networks (Basic Cable and Premium Subscription Television Program
Services)
---------------------------------------------------
Year Ended
December 31, Percent
1999 1998 Better/(Worse)
---------------------------------------------------
Revenues $3,045.5 $2,607.9 17%
Operating income $ 932.4 $ 744.3 25
EBITDA $1,053.1 $ 851.3 24
---------------------------------------------------
For the year, MTVN revenues of $2.25 billion, EBITDA of $915.1 million and
operating income of $816.9 million increased 21%, 23% and 24%, respectively.
The increase in MTVN's revenues principally reflects higher worldwide
advertising revenues, up 22% for the year, and higher affiliate fees, up 13%,
along with the success of MTVN's consumer products licensing programs,
including Rugrats and Blue's Clues. Advertising revenue growth was driven by
rate increases at VH1 and MTV and higher unit volume at MTV. Nickelodeon's
advertising revenue growth was driven by the increased number of units sold
and lower average unit rates which was principally due to a 2% decline in
spending in the Kids' advertising segment during 1999 as well as increased
competition in that category. The increased revenues drove MTVN's EBITDA and
operating income gains.
II-13
SNI's revenues, EBITDA and operating income increased 7%, 14% and 19%,
respectively, over the prior year. The revenue increases were principally due
to an increase of approximately 3.5 million subscriptions, up 18% over the
prior year to 23.2 million subscriptions at December 31, 1999. Operating
results reflect revenue increases attributable to the continued growth of
direct broadcast satellite subscriptions, as well as higher programming,
marketing and advertising expenses to support subscription growth, and SNI's
original films and branding initiatives.
Television (Television Stations; Television Production and Syndication)
---------------------------------------------------
Year Ended
December 31, Percent
1999 1998 Better/(Worse)
---------------------------------------------------
Revenues $2,352.0 $2,271.4 4%
Operating income $ 143.4 $ 262.4 (45)
EBITDA $ 271.5 $ 372.9 (27)
---------------------------------------------------
For the year, Television revenues were higher primarily due to higher
syndication revenues from Judge Judy, the first time availability of JAG, Star
Trek: Voyager, The Sentinel and Viper, and from an additional season of
Sister, Sister. Television programming revenues for the year also benefited
from the recognition of a cable retransmission royalty settlement. For the
year, the increase in programming revenues was partially offset by lower
library syndication revenues.
Television's EBITDA and operating income decreased 27% and 45%,
respectively, as the 1999 results were impacted by the Spelling charge. The
Spelling charge of $81.1 million was incurred in the third quarter of 1999, of
which $70.3 million was recorded as a restructuring charge and $10.8 million
was recorded as part of depreciation expense. The restructuring charge was
primarily associated with the integration of Spelling's operations into
Paramount Television, resulting in the elimination of duplicative sales forces
and certain other back office functions. Excluding the impact of the Spelling
charge, Television's EBITDA and operating income decreased 8% and 14%,
respectively. For the year, Paramount television stations' revenues increased
2% to $437.1 million, EBITDA increased 2% to $151.5 million and operating
income increased 1% to $100.6 million.
License fees for completed television programming in syndication and on
basic cable are recorded as revenue in the period that the products are
available for such exhibition, which, among other reasons, may cause
substantial fluctuation in operating results. As of December 31, 1999, the
unrecognized revenues attributable to such licensing agreements were
approximately $462.1 million.
Entertainment (Production and distribution of Motion Pictures; as well as
the operation of Movie Theaters, Theme Parks and Music Publishing)
---------------------------------------------------
Year Ended
December 31, Percent
1999 1998 Better/(Worse)
---------------------------------------------------
Revenues $2,665.9 $2,914.3 (9)%
Operating income $ 231.1 $ 235.5 (2)
EBITDA $ 378.3 $ 368.7 3
---------------------------------------------------
For the year, Entertainment's revenues decreased as 1999 results did not
match the prior year's extraordinary box office and home video success of
Titanic and Deep Impact and the theatrical performance of Saving Private Ryan.
Entertainment's revenues included strong theatrical contributions from Varsity
Blues, Payback, The General's Daughter, Runaway Bride, Double Jeopardy, Sleepy
Hollow and The Talented Mr. Ripley, but did not match 1998's box office
success of Titanic, Saving Private Ryan, Deep Impact, The Truman Show and The
Rugrats Movie. Foreign home video revenues were higher primarily driven by
Saving Private Ryan, The Rugrats Movie and The Truman Show, but were offset by
lower domestic home video revenues which did not match
II-14
1998's release of Titanic. Theaters' revenues were higher primarily as a
result of the new multiplex theaters opened since the end of 1998.
Entertainment's EBITDA increased 3% principally due to the revenue items
discussed above and a change in product mix while operating income decreased
2% reflecting higher depreciation expense for new theaters opened since the
end of 1998. Theaters' EBITDA and operating income were lower for the year
primarily due to the one-time costs associated with opening new multiplexes.
Theme Parks' revenue, EBITDA and operating income declines for the year
reflect declines in overall attendance primarily due to increased competition
at two of the parks and generally less than favorable weather conditions.
License fees for the television exhibition of motion pictures and for
syndication and basic cable exhibition of television programming are recorded
as revenue in the period that the products are available for such exhibition,
which, among other reasons, may cause substantial fluctuation in operating
results. As of December 31, 1999, the unrecognized revenues attributable to
such licensing agreements were approximately $1.2 billion.
Video (Home Video and Game rental and retail through traditional stores and
the Internet)
----------------------------------------------------
Year Ended
December 31, Percent
1999 1998 Better/(Worse)
----------------------------------------------------
Revenues $4,463.5 $3,893.4 15%
Operating income $ 127.9 $ (342.2) NM
EBITDA $ 520.3 $ 39.9 NM
----------------------------------------------------
NM--not meaningful
For the year, Video's revenues were higher principally due to higher
worldwide same store sales and the increased number of system-wide video
stores. Worldwide same store sales, including rental and retail product,
increased 8.3%, and worldwide same store rental revenues increased 10.1%. The
increase in same store revenues was principally due to increases in the
average domestic rental fee and increased sales of previously-viewed tapes.
Blockbuster ended the year with 7,153 stores, a net increase of 772 stores
over the prior year.
Video's EBITDA increased to $520.3 million in 1999 from $39.9 million in
1998. The 1999 results reflect Blockbuster's investment in its Internet
business which resulted in a reduction to EBITDA and operating income of $6.6
million and $7.0 million, respectively, for the year ended December 31, 1999.
The 1998 results reflect a charge taken in the second quarter of $424.3
million associated with an adjustment to the carrying value of rental tapes
due to a new method of accounting.
Excluding the amounts attributable to the investment in its Internet
business and the effects of the 1998 charge, Video's EBITDA increased by $62.7
million, or 14%, reflecting the continuing success of revenue growth programs
implemented in the first quarter of 1999 which emphasize tape copy depth,
promote customer loyalty and reward customer frequency. For the year, Video's
gross margin percentage decreased slightly to 60.5% from 60.8%, excluding the
Internet business' results in 1999 and the $424.3 million charge taken in
1998.
Publishing (Consumer Publishing)
-----------------------------------------------
Year Ended
December 31, Percent
1999 1998 Better/(Worse)
-----------------------------------------------
Revenues $610.7 $564.6 8%
Operating income $ 54.3 $ 53.2 2
EBITDA $ 74.0 $ 71.2 4
-----------------------------------------------
II-15
For the year, the improved revenues and operating results are due
principally to higher sales in the Trade division, led by the best selling
titles Tis by Frank McCourt, Hearts in Atlantis by Stephen King and When Pride
Still Mattered by David Maraniss. The Children's division revenues also
increased for the year driven by higher sales including the best-selling title
The Dance by Richard Paul Evans and Eloise at Christmastime by Kay Thompson.
On November 27, 1998, the Company completed the sale of Non-Consumer
Publishing for $4.6 billion in cash. The Company realized a gain of $65.5
million, net of tax, from the sale and presented Non-Consumer Publishing as a
discontinued operation for 1998 and for all prior periods.
Online (Interactive Online Services)
------------------------------------------------
Year Ended
December 31, Percent
1999 1998 Better/(Worse)
------------------------------------------------
Revenues $ 29.8 $13.7 118%
Operating income $(64.5) $(7.5) NM
EBITDA $(48.4) $(3.5) NM
------------------------------------------------
NM--not meaningful
Revenue increases for the year principally reflect increased license fees
and higher advertising revenues. The operating losses reflect the continued
investments in the Company's online services.
On July 15, 1999, the Company together with Liberty Digital Inc. formed the
MTVi Group, L.P. ("MTVi"). The Company contributed all of its assets used
exclusively in its Internet music businesses, including the assets of Imagine
Radio, which the Company acquired in February 1999, in exchange for a 90%
equity interest in MTVi. Liberty Digital Inc. contributed all of its assets
used in its Internet music businesses, including SonicNet.com and assets of
The Box Worldwide, Inc. (certain of which were concurrently licensed to MTVN)
in exchange for a 10% equity interest in MTVi.
Other Income and Expense Information 1999 versus 1998
Corporate Expenses/Eliminations
Corporate expenses/eliminations, excluding depreciation expense, decreased
9% to $156.8 million for 1999 from $171.6 million for 1998. Corporate expenses
of $174.1 million in 1999 increased 7% from $162.0 million in 1998 while the
benefit from eliminations of $17.3 million increased over the prior year by
approximately $21 million principally due to the timing of the recognition of
intersegment sales.
Interest Expense
Interest expense decreased 28% to $448.9 million for 1999 from $622.4
million for 1998 due to lower average debt outstanding of $5.8 billion during
1999 versus $7.4 billion during 1998. The Company had approximately $6.0
billion and $4.2 billion principal amount of debt outstanding (including
current maturities) at December 31, 1999 and 1998, respectively, at weighted
average interest rates of 7.5% and 7.8%, respectively.
Interest Income
Interest income increased 18% to $27.7 million for 1999 from $23.4 million
for 1998.
Other Items, Net
"Other items, net" reflects $17.8 million of income for 1999 compared to a
loss of $15.3 million in 1998. The net increase of $33.1 million principally
reflects a $25.2 million foreign exchange gain in 1999 compared to a $7.4
million foreign exchange loss in 1998. "Other items, net" also includes a net
loss of approximately $7.4
II-16
million from the sale of assets in 1999 and the loss of approximately $91
million associated with the closing of the Viacom Entertainment Store
partially offset by a net gain of approximately $82.9 million from the sale of
assets in 1998.
Provision for Income Taxes
The provision for income taxes represents federal, state and foreign income
taxes on earnings before income taxes. The annual effective tax rates of 48.8%
for 1999 and 101.0% for 1998 were both adversely affected by amortization of
intangibles in excess of amounts which are deductible for tax purposes.
Excluding the non-deductible amortization of intangibles, the annual effective
tax rates would have been 35.4% for 1999 and 31.8% for 1998.
Equity in Loss of Affiliated Companies, Net of Tax
"Equity in loss of affiliated companies, net of tax" was $60.7 million for
1999 as compared to $41.4 million for 1998 principally reflecting increased
net operating losses of UPN and international ventures partially offset by the
improved results of Comedy Central.
Minority Interest
Minority interest primarily represents the minority ownership of
Blockbuster common stock in 1999 and Spelling common stock in 1998.
Discontinued Operations
For 1998, discontinued operations reflect the results of operations, net of
tax, of Non-Consumer Publishing and the music retail stores which were sold on
November 27, 1998 and October 26, 1998, respectively. Discontinued operations
also reflect the gain from the sale of Non-Consumer Publishing of $65.5
million, net of tax, the loss from the sale of music retail stores of $138.5
million, net of tax, additional losses recognized for Virgin Interactive
operations prior to disposal of $20.3 million, net of minority interest, the
tax benefit associated with the disposal of Virgin Interactive of $134.0
million and the reversal of excess cable split-off reserves.
Extraordinary Loss
During 1999 and 1998, the Company recognized after-tax extraordinary losses
on the early extinguishment of debt of $37.7 million and $74.7 million,
respectively.
Net Earnings (Loss)
For the reasons described above, net earnings of $334.0 million for 1999
increased $456.4 million from a loss of $122.4 million for 1998.
Acquisitions and Merger-Related Charges
On May 4, 2000, CBS was merged with and into the Company (the "Merger").
The total purchase price of approximately $39.8 billion included approximately
$37.7 billion for the issuance of 825.5 million shares of Viacom Class B
Common Stock and 11,004 shares of Viacom Series C convertible preferred stock,
which were subsequently converted into 11.0 million shares of Viacom Class B
Common Stock and approximately $1.9 billion for the fair value of CBS stock
options assumed by the Company and transaction costs. In addition, Viacom
assumed approximately $3.7 billion of CBS debt.
The Company presently holds television stations which reach approximately
41% of United States television households (as calculated for this purpose
under rules and regulations of the Federal Communications Commission (the
"FCC"), which apply a 50% discount to the reach of UHF stations). These
stations reach approximately 6% in excess of the 35% limit permitted by FCC
regulations. In connection with FCC approval of the Merger, the Company was
given one year to come into compliance with the limit. The Company has
II-17
challenged the rule in federal court and is seeking a stay of the requirement
to come into compliance with the limit pending judicial review of the national
ownership cap. The Company was also provided with one year to come into
compliance with the FCC's "dual network" rule, which prohibits the Company
from owning and controlling both CBS and UPN. On June 20, 2000, the FCC
released a Notice of Proposed Rule Making, in which it proposes to modify the
dual network rule, the effect of which would be to permit the Company to own
both CBS and UPN.
In the second quarter of 2000, the Company recorded non-recurring merger-
related charges of $698 million ($505 million after-tax or $.41 per share),
associated with the integration of Viacom and CBS and the acquisition of UPN
(see Note 3). These amounts included non-cash charges of $415 million
principally attributable to compensation for stock options and $283 million of
cash payments and accrued liabilities for severance, transaction fees and
costs. As of December 31, 2000, the Company had paid and charged approximately
$92 million for severance liabilities, $27 million for transaction fees and $6
million related to integration costs.
In June 1999, the Company completed its tender offer for all outstanding
shares of Spelling common stock that it did not already own for $9.75 per
share in cash and then acquired the remaining outstanding shares of Spelling
not tendered through a merger of Spelling and a wholly owned subsidiary of the
Company. As a result of the merger, each share of Spelling common stock was
also converted into the right to receive $9.75 in cash. The consideration for
tendered shares was approximately $176 million.
In connection with the integration of the operations of Spelling into
Paramount Television, the Company recorded a charge of approximately $81.1
million, of which $70.3 million was recorded as a restructuring charge and
$10.8 million was recorded as part of depreciation expense in the third
quarter of 1999. Included in the charge were severance and employee related
costs of $48.1 million, lease termination and other occupancy costs of $17.7
million and other exit costs of $4.5 million. Severance and other employee
related costs represent the costs to terminate approximately 250 employees
engaged in legal, sales, marketing, finance, information systems, technical
support and human resources for Spelling. Lease termination and other
occupancy costs principally represent the expenses associated with vacating
existing lease obligations in New York and Los Angeles. The depreciation
expense of approximately $10.8 million was associated with the fixed asset
write-offs for software, leasehold improvements and equipment located at these
premises. As of December 31, 2000, the Company had paid and charged
approximately $43.6 million against the severance liability, $11.3 million
against lease termination and other occupancy costs, and $2.0 million against
the other exit costs.
Other Acquisitions
On February 21, 2001, the Company completed a merger with Infinity
Broadcasting, acquiring all of the issued and outstanding shares of Infinity
common stock that it did not already own, approximately 36%. Under the terms
of the merger, which is tax free for the stockholders of Infinity and Viacom,
each share of Infinity Class A common stock was converted into the right to
receive 0.592 of a share of Viacom Class B Common Stock. The total purchase
price of approximately $13.4 billion represents the issuance of approximately
232 million shares of Viacom Class B Common Stock and the fair value of
Infinity stock options assumed by the Company.
On January 23, 2001, the Company completed its acquisition of BET for
approximately $3 billion, which principally represents the issuance of
approximately 43.4 million shares of Viacom Class B Common Stock and the
assumption by the Company of approximately $590 million in debt.
On September 15, 2000, Infinity Broadcasting completed the acquisition of
Memphis radio stations WMC-AM and WMC-FM from Raycom Media for approximately
$76 million.
On August 24, 2000, Infinity Broadcasting completed the acquisition of 18
radio stations from Clear Channel for $1.4 billion in an asset transaction.
These stations are located in San Diego, Phoenix, Denver, Cleveland,
Cincinnati, Orlando and Greensboro--Winston-Salem.
II-18
On July 1, 2000, Infinity Broadcasting completed the acquisition of
Waterman Broadcasting Corporation of Texas ("Waterman Broadcasting") in
exchange for approximately 2.7 million shares of Infinity Broadcasting Class A
common stock valued at approximately $88 million. Waterman Broadcasting owns
radio stations KTSA-AM and KTFM-FM in San Antonio, Texas.
During the second quarter of 2000, Infinity Broadcasting completed the
acquisition of Giraudy, one of France's largest outdoor advertising companies,
for approximately $400 million. Infinity Broadcasting also acquired Societa
Manifesti & Affisioni S.p.A., one of the leading Italian outdoor media sales
companies, for approximately $90 million.
On March 31, 2000, the Company acquired the remaining 50% interest in UPN
that it did not already own. In the second quarter of 2000, the Company
consolidated UPN's results of operations. Prior to this acquisition, the
Company reported its proportionate share of net losses of UPN in "Equity in
loss of affiliated companies, net of tax" in the Consolidated Statements of
Operations.
Liquidity and Capital Resources
The Company expects to fund its anticipated cash requirements (including
the anticipated cash requirements of its capital expenditures, share
repurchase programs, joint ventures, commitments and payments of principal and
interest on its outstanding indebtedness) with internally generated funds, in
addition to various external sources of funds. The external sources of funds
may include the Company's access to commercial paper and the Company's credit
agreements, co-financing arrangements by the Company's various divisions
relating to the production of entertainment products, and/or additional
financings.
As of December 31, 2000, the Company had certain restrictions on Infinity
Broadcasting's cash balance of $143.0 million, reflected in the Company's
consolidated cash amount of $934.5 million. Infinity Broadcasting's cash
became available to Viacom upon the merger of Infinity into a subsidiary of
Viacom, effective February 21, 2001.
Subsequent to its August 1999 initial public offering, Blockbuster no
longer participates in the Company's centralized cash management system. Cash
generated by Blockbuster's operations is expected to be retained by
Blockbuster to fund its anticipated cash requirements.
The Company filed a shelf registration statement with the Securities and
Exchange Commission registering debt securities, preferred stock and warrants
of Viacom that may be issued for aggregate gross proceeds of $5.0 billion. The
registration statement was declared effective on January 8, 2001. The net
proceeds from the sale of the offered securities may be used by Viacom for
general corporate purposes, including repayment of borrowings, working capital
and capital expenditures; or for such other purposes as may be specified in
the applicable Prospectus Supplement. To date, the Company has not issued any
securities under the shelf registration statement.
On July 7, 1999, the Viacom Five-Year Warrants expired. The Company
received proceeds of approximately $317 million and issued approximately 9.0
million shares of its Class B Common Stock in connection with the exercise of
4.5 million warrants issued as part of the 1994 acquisition of Paramount
Communications.
At December 31, 2000, National Amusements, Inc. ("NAI") beneficially owned
approximately 68% of Viacom Inc. Class A Common Stock and approximately 13% of
Class A and Class B Common Stock on a combined basis.
Share Repurchase Programs
During 2000, the Company repurchased 10,000 shares of its Class A Common
Stock and 34.2 million shares of its Class B Common Stock for approximately
$1.95 billion in the aggregate. Fourth quarter 2000 repurchases
II-19
included in this total amounted to $356.8 million. In January 2001, the
Company repurchased 1.1 million shares of its Class B Common Stock for
approximately $56.3 million. On February 1, 2001, the Company initiated a new
repurchase program to acquire up to $2.0 billion of Viacom Class B Common
Stock, and through March 19, 2001, the Company had repurchased under this
program 2.8 million shares of its Class B Common Stock for $141.5 million.
During 1999, the Company had repurchased 25,000 shares of its Class A
Common Stock, 10.6 million shares of its Class B Common Stock and 1.1 million
Viacom Five-Year Warrants, for approximately $466.4 million in the aggregate.
During 1998, the Company had repurchased a total of 12,000 shares of its Class
A Common Stock, 26.2 million shares of its Class B Common Stock and 5.5
million Viacom Five-Year Warrants, for approximately $822.0 million in the
aggregate.
On December 2, 1998, the Company repurchased 12 million shares of its
convertible preferred stock from Bell Atlantic Corporation for $564 million in
cash. On January 5, 1999, the Company repurchased the remaining 12 million
shares of its convertible preferred stock from Bell Atlantic Corporation for
$612 million in cash.
Commitments and Contingencies
The Company, Blockbuster and Paramount Home Entertainment are among the
defendants in a lawsuit filed on July 21, 1999 in the United States District
Court for the Western District of Texas by one former and three present
independent video retailers against the major motion picture studios and the
Company. The plaintiffs, purporting to act as class representatives on behalf
of themselves and all others similarly situated, allege that the Company and
the studios conspired among themselves and with Blockbuster to restrain
competition in the nationwide market for distribution of videocassettes for
rental to the public in violation of federal and California law. Plaintiffs
seek injunctive relief under federal law as well as triple the amount of the
alleged actual damages to themselves and those similarly situated under
California statutes. In January 2001, plaintiffs moved to withdraw their
California state law claims from the federal lawsuit in Texas and filed a
substantially similar complaint with approximately 200 additional named
plaintiffs in Superior Court for the County of Los Angeles. This complaint
also sought certification of a nationwide class of similarly situated
plaintiffs. In March 2001, the Texas court denied the plaintiffs' motion for
class certification of both the federal and the California state law claims in
the federal action and denied the plaintiffs' motion to withdraw their
California state law claims from that action. The Company believes that the
plaintiffs' position in these litigations is without merit and intends to
defend itself vigorously in the litigations.
The Company is a defendant in numerous lawsuits claiming various asbestos-
related personal injuries, which allegedly occurred from use or inclusion of
asbestos in certain products supplied by previously divested industrial
business, generally in the pre-1970 time period. Typically, these lawsuits are
brought against multiple defendants in state and Federal courts. The Company
was neither a manufacturer nor a producer of asbestos. As of December 31,
2000, the Company had pending approximately 99,590 asbestos cases, excluding
cases in various stages of settlement. The Company has brought suit against
certain of its insurance carriers with respect to asbestos claims. Under the
terms of a settlement agreement resulting from this suit, carriers that have
agreed to the settlement are now reimbursing the Company for a substantial
portion of its current costs and settlement associated with asbestos claims.
The Company believes that it has meritorious defenses to asbestos matters,
that where appropriate it has adequately provided for resolution of matters
and that any ultimate liability resulting from asbestos matters is not likely
to have a material adverse effect on its results of operations, financial
position or cash flows.
The Company from time to time receives claims from federal and state
environmental regulatory agencies and other entities asserting that it is or
may be liable for environmental cleanup costs and related damages, principally
relating to discontinued operations conducted by companies acquired by the
Company. The Company's liabilities reflect management's best estimate of its
environmental exposure. Such liability was not discounted or reduced by
potential insurance recoveries and reflects management's estimate of cost
sharing at
II-20
multiparty sites. The estimated liability was calculated based upon currently
available facts, existing technology and presently enacted laws and
regulations. On the basis of its experience and the information currently
available to it, the Company believes that the claims it has received will not
have a material adverse effect on its results of operations, financial
position or liquidity.
In addition to the above matters, the Company and various of its
subsidiaries are parties to certain other legal proceedings. Litigation is
inherently uncertain and always difficult to predict. However, based on its
understanding and evaluation of the relevant facts and circumstances, the
Company believes that these matters are not likely to have a material adverse
effect on its results of operations, financial position or cash flows.
The commitments of the Company for program license fees, estimated to
aggregate approximately $15.2 billion, are not reflected in the balance sheet
as of December 31, 2000. These commitments include approximately $10.8 billion
for the acquisition of sports programming rights. A majority of such fees are
payable over several years, as part of normal programming expenditures. See
Note 15 of Notes to Consolidated Financial Statements for a description of the
Company's future minimum lease commitments and franchise payments.
Financial Position
Current assets increased to $7.8 billion as of December 31, 2000 from $5.2
billion as of December 31, 1999, due to the addition of approximately $2.9
billion in current assets resulting from the CBS merger, partially offset by a
reduction in inventory reflecting the impact of the adoption of SOP 00-2. The
allowance for doubtful accounts as a percentage of receivables decreased to
5.8% for 2000 from 6.1% for 1999. The change in property and equipment
principally reflects the addition of approximately $3.1 billion in fixed
assets due to the Merger and capital expenditures of $659.0 million for new
and existing video stores and construction of new movie theaters, partially
offset by depreciation expense of $799.7 million. Intangibles of $62.0 billion
at December 31, 2000 increased by $50.5 billion compared to $11.5 billion as
of December 31, 1999, principally reflecting the CBS merger and other
acquisitions. Current liabilities increased $3.4 billion to $7.8 billion as of
December 31, 2000 due to the addition of approximately $3.2 billion resulting
from the Merger. Non-current liabilities of $19.9 billion reflect the
inclusion of $3.7 billion of debt and $5.6 billion of other liabilities from
the Merger. The minority interest balance of $7.0 billion as of December 31,
2000 included $5.7 billion of the minority ownership interest of Infinity.
The Company continually monitors its positions with, and credit quality of,
the financial institutions which are counterparties to its financial
instruments. The Company is exposed to credit loss in the event of
nonperformance by the counterparties to the agreements. However, the Company
does not anticipate nonperformance by the counterparties. The Company's
receivables do not represent significant concentrations of credit risk at
December 31, 2000, due to the wide variety of customers, markets and
geographic areas to which the Company's products and services are sold.
Cash Flows
Net cash flow provided by operating activities of $2.3 billion in 2000
primarily reflects the net loss of $816.1 million adjusted for non-cash
expenses of $2.2 billion for depreciation and amortization, $415 million of
merger-related charges and $753.9 million for the cumulative effect of change
in accounting principle partially offset by increases to receivables and
payment of accrued liabilities. Net cash flow from operations of $294.1
million in 1999 primarily reflected net earnings of $334.0 million plus
depreciation and amortization expenses of $844.7 million, partially offset by
the increased investment in inventory of $512.7 million and an increase in
unbilled receivables of $120.7 million. Net cash expenditures for investing
activities of $2.9 billion for 2000 principally reflect capital expenditures
of $659.0 million and acquisitions of $2.4 billion principally for radio
stations and outdoor businesses. Net cash expenditures for investing
activities of $1.1 billion for 1999 principally reflect capital expenditures
and the Spelling transaction as well as acquisitions of video stores and
television stations. Financing activities for 2000 principally reflect
approximately $3.1 billion of borrowings from banks and proceeds from the
issuance of senior notes and debentures partially offset by the purchase of
treasury stock. Financing activities for 1999 principally reflect borrowings
and repayment of debt as well as the repurchase of the Company's common stock,
warrants and convertible preferred stock.
II-21
Planned capital expenditures, including information systems costs, are
approximately $625 million to $675 million in 2001. Capital expenditures are
primarily related to capital additions for cable networks, television and
radio equipment, new and existing video stores and theme park attractions. The
Company's joint ventures are expected to require estimated net cash
contributions of approximately $15 million to $25 million in 2001.
For the year ended December 31, 2000, cash flow from operating activities
used to fund federal, state and local and foreign income taxes amounted to
$61.2 million. Certain non-recurring tax deductions significantly reduced cash
taxes paid in 2000. These tax deductions in the aggregate totaled $2.3 billion
and included severance costs relating to the Merger, the adoption of SOP 00-2,
the amortization of a prior year cumulative change in an income tax method of
accounting for inventory at Blockbuster, stock option exercises and limited
right stock option exercises arising from the Merger. With the absence of such
deductions, cash taxes to be paid in 2001 are expected to increase
significantly.
Capital Structure
The following table sets forth the Company's long-term debt:
-----------------------------------------------------------------------
At December 31, 2000 1999
-----------------------------------------------------------------------
Notes payable to banks, including commercial paper $ 5,735.5 $3,054.2
Senior debt 5,662.7 2,310.9
Senior subordinated debt 664.4 35.3
Subordinated debt 39.4 --
Other notes 43.5 --
Obligations under capital leases 552.2 591.6
-----------------------------------------------------------------------
12,697.7 5,992.0
Less current portion 223.9 294.3
-----------------------------------------------------------------------
$12,473.8 $5,697.7
-----------------------------------------------------------------------
Debt, including the current portion, as a percentage of total
capitalization of the Company decreased to 21% at December 31, 2000 from 35%
at December 31, 1999.
As a result of the Merger, Viacom assumed approximately $3.7 billion of CBS
debt.
On March 28, 2000, the Viacom Credit Agreements were amended to allow for
the merger of CBS with and into the Company. On April 17, 2000, the CBS credit
agreement, which consisted of a $1.5 billion revolving credit facility
maturing August 29, 2001 and the Infinity credit agreement, which consisted of
a $1.5 billion revolving credit facility maturing August 29, 2001, were
amended to allow for the merger of CBS with and into the Company. On May 3,
2000, Infinity Broadcasting entered into two new credit facilities, totaling
$1.95 billion, comprised of a $1.45 billion 5-year revolving credit facility
and a $500 million 364-day revolving credit facility. Borrowing rates under
the CBS and Infinity facilities were determined at the time of each borrowing
and were based generally on a floating rate index, the London Interbank Offer
Rate ("LIBOR"), plus a margin based on the respective senior unsecured debt
rating.
On March 7, 2001, the Company cancelled all of the above-mentioned credit
agreements other than the Infinity Broadcasting $1.45 billion facility, and
entered into two new credit facilities. These two new facilities total $3.5
billion and are comprised of a $1.5 billion 5-year revolving credit facility
and a $2.0 billion 364-day revolving credit facility. The Company also amended
and restated the Infinity Broadcasting $1.45 billion facility, substantially
to conform to the terms and conditions of the new $1.5 billion 5-year
revolving credit facility and to designate the Company as the borrower. The
primary purpose of the facilities is to support commercial paper borrowings.
The Company, at its option, may borrow in certain foreign currencies up to
specified limits under the new $1.5 billion 5-year revolving credit facility.
Borrowing rates under the facilities are determined
II-22
at the time of each borrowing and are based generally on LIBOR plus a margin
based on the Company's senior unsecured debt rating. At December 31, 2000,
LIBOR for borrowing periods of one month and two months were 6.56% and 6.49%,
respectively.
The new and amended facilities contain certain covenants which, among other
things, require that the Company maintain a minimum interest coverage ratio.
At December 31, 2000, the Company was in compliance with the financial
covenants. The Company expects to be in compliance and satisfy all such
covenants as may be applicable from time to time during 2001.
The Company pays a commitment fee based on the total amount of the loan
commitments. As of March 7, 2001, the facilities totaled $4.95 billion.
In March 2001, the Company increased its commercial paper program from $4.0
billion to $4.95 billion and Infinity Broadcasting cancelled its $3.25 billion
commercial paper program. Borrowings under the program have maturities of less
than a year and are supported by unused committed bank facilities. At December
31, 2000, the Company had borrowings under the program of approximately $1.7
billion and Infinity Broadcasting had borrowings under its commercial paper
program of approximately $2.1 billion.
On January 9, 2001, the Company issued, under Rule 144A, $400 million of
6.40% unsecured senior notes due January 30, 2006, $500 million of 7.70%
unsecured senior notes due July 30, 2010, and $750 million of 7.875% unsecured
senior debentures due July 30, 2030; interest on the senior notes and
debentures will be payable semi-annually. Proceeds from the debt issuance were
used to repay bank debt, including commercial paper. During March 2001, these
notes and debentures were exchanged for registered notes and debentures. The
unsecured senior debentures and the unsecured senior notes due July 30, 2010
are redeemable at any time at their principal amount plus the applicable
premium and accrued interest.
On August 1, 2000, the Company issued $1.15 billion of 7.70% unsecured
senior notes due July 30, 2010 and $500 million of 7.875% unsecured senior
debentures due July 30, 2030; interest on the senior notes and debentures will
be payable semi-annually. Proceeds from the debt issuance were used to repay
bank debt, including commercial paper. The senior notes and debentures are
redeemable at any time at their principal amount plus the applicable premium
and accrued interest.
On February 1, 2001, the Company redeemed all $60.3 million outstanding of
Infinity Broadcasting's 9% senior subordinated notes due 2006 at a redemption
price equal to 104.5% of the principal amount. On December 1, 2000, the
Company redeemed all $105.3 million outstanding of Infinity Broadcasting's
9.75% senior subordinated notes due 2005 at a redemption price equal to 104.9%
of the principal amount.
During 1999, the Company redeemed the remaining $211.8 million principal
amount of its 8% merger debentures outstanding and recognized an extraordinary
loss of $37.4 million, net of tax, on the early redemption.
The Company has classified short-term indebtedness as long-term debt based
upon its intent and ability to refinance such indebtedness on a long-term
basis. The Company's scheduled maturities of long-term debt outstanding at
December 31, 2000, excluding capital leases, are as follows:
----------------------------------------------------------
Year of Maturity
2001 2002 2003 2004 2005
----------------------------------------------------------
Long-term debt $1,557.8 $2,507.4 $911.7 $667.5 $2,924.8
----------------------------------------------------------
Blockbuster Credit Agreement
On June 21, 1999, Blockbuster entered into a $1.9 billion unsecured credit
agreement (the "Blockbuster Credit Agreement") with a syndicate of banks. The
Blockbuster Credit Agreement was comprised of a $700
II-23
million long-term revolver due July 1, 2004; a $600 million term loan due in
quarterly installments beginning April 1, 2002 and ending July 1, 2004; and a
$600 million short-term revolver, which was paid down during 2000. The
repayment of the short-term revolver permanently reduced the borrowing
capacity under the Blockbuster Credit Agreement from $1.9 billion to $1.3
billion. Interest rates under the Blockbuster Credit Agreement are based on
the prime rate or LIBOR at Blockbuster's option at the time of borrowing. A
variable commitment fee based on the total leverage ratio is charged on the
unused amount of the revolver (.25% at December 31, 2000).
The Blockbuster Credit Agreement contains certain restrictive covenants,
which, among other things, relate to the payment of dividends, repurchase of
Blockbuster's common stock or other distributions and also require compliance
with certain financial covenants with respect to a maximum leverage ratio and
a minimum fixed charge coverage ratio. At December 31, 2000, Blockbuster was
in compliance with all financial covenants under the Blockbuster Credit
Agreement.
On June 23, 1999, Blockbuster borrowed $1.6 billion, comprised of $400
million borrowed under the long-term revolver, $600 million borrowed under the
term loan, and $600 million under the short-term revolver. The proceeds of the
borrowings were used to pay amounts owed to Viacom. Blockbuster repaid $442.9
million of the short-term revolver through proceeds from its initial public
offering and repaid the remaining $157.1 million of the short-term revolver
during the year ended December 31, 2000. Blockbuster had $278.0 million of
available borrowing capacity under the long-term revolver at December 31,
2000. The weighted average interest rate at December 31, 2000 for these
borrowings was 8.0%.
Blockbuster's scheduled maturities of long-term debt outstanding at
December 31, 2000, excluding capital leases, are as follows:
-----------------------------------------------
Year of Maturity
2001 2002 2003 2004 2005
-----------------------------------------------
Long-term debt $8.0 $158.8 $279.3 $599.9 $1.0
-----------------------------------------------
Market Risk
The Company uses derivative financial instruments to reduce its exposure to
market risks from changes in foreign exchange rates and interest rates. The
Company does not hold or issue financial instruments for speculative trading
purposes. The derivative instruments used are foreign exchange forward
contracts, spots and options. The foreign exchange contracts have principally
been used to hedge the British Pound, the Australian Dollar, the Japanese Yen,
the Canadian Dollar, the Singapore Dollar and the European Union's common
currency (the "Euro"). These derivatives, which are over-the-counter
instruments, are non-leveraged. Realized gains and losses on contracts that
hedge anticipated future cash flows are recognized in "Other items, net" and
were not material in any of the periods presented. The Company is primarily
vulnerable to changes in LIBOR which is the rate currently used in existing
agreements; however, the Company does not believe this exposure to be
material.
The Company entered into interest rate exchange agreements with off-balance
sheet risk in order to reduce its exposure to changes in interest on its
variable rate long-term debt and/or take advantage of changes in interest
rates. These interest rate exchange agreements include interest rate swaps and
interest rate caps. At December 31, 2000, the Company had no interest rate
exchange agreements outstanding with commercial banks.
Other Matters
On August 10, 1999, Blockbuster sold to the public 31 million shares of its
Class A common stock for $15 per share. The shares are traded on the New York
Stock Exchange. The Company, through its ownership of all of the 144 million
shares of Blockbuster Class B common stock outstanding, retained approximately
82% of
II-24
the total equity value in, and approximately 96% of the combined voting power
of, Blockbuster. Proceeds from the offering aggregated $442.9 million, net of
underwriting discounts and commissions and before payment of offering
expenses, and were used by Blockbuster to repay outstanding indebtedness under
a $1.9 billion term and revolving credit agreement. The Company recorded a
reduction to equity of approximately $662 million as a result of the issuance
of subsidiary stock.
In 1999, the Company announced that it intended to split-off Blockbuster by
offering to exchange all of its shares of Blockbuster common stock for shares
of the Company's common stock. The split-off was subject to approval by the
Company's Board of Directors and an assessment of market conditions. The
Company no longer has any plans for the split-off of Blockbuster.
Recent Pronouncements
In June 2000, the Company elected early adoption of Statement of Position
00-2, "Accounting by Producers or Distributors of Films" ("SOP 00-2"). SOP 00-
2 established new film accounting standards, including changes in revenue
recognition and accounting for advertising, development and overhead costs.
Under the new accounting standard, all exploitation costs such as advertising
expenses, marketing costs and video duplication costs for theatrical and
television product will be expensed as incurred, whereas under the old
accounting standards, these costs were capitalized and amortized over the
products' lifetime. As a result of this early adoption in the second quarter
of 2000, the Company recorded a pre-tax non-cash charge of $754 million ($452
million after-tax or $.37 per share). This charge has been reflected as a
cumulative effect of a change in accounting principle, effective January 1,
2000, in the consolidated statement of operations for the year ended December
31, 2000. Under the SOP 00-2 for the year ended December 31, 2000, the Company
reported lower operating results of approximately $77 million.
In June 2000, the Financial Accounting Standards Board ("FASB") issued
Statement 139 ("SFAS 139") which rescinds FASB Statement 53 on financial
reporting by motion picture film producers or distributors. SFAS 139 requires
public companies to follow the guidance provided by SOP 00-2.
In June 1998, the FASB issued SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), effective for fiscal years
beginning after June 15, 2000, as amended by Statements 137 and 138 in June
1999 and June 2000, respectively. These statements require companies to
recognize all derivatives as either assets or liabilities on the balance sheet
and measure those instruments at fair value. The statements also established
new accounting rules for hedging instruments which, depending on the nature of
the hedge, require that changes in the fair value of the derivatives either be
offset against the change in fair value of assets, liabilities or firm
commitments through earnings, or be recognized in other comprehensive income
until the hedged item is recognized in earnings. The Company adopted SFAS 133,
as amended, on January 1, 2001, which resulted in an immaterial impact on the
Company's consolidated results of operations and financial position.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial
Statements" ("SAB 101"). SAB 101 summarizes certain of the SEC's staff's views
in applying generally accepted accounting principles to revenue recognition in
financial statements. During the fourth quarter of 2000, the Company adopted
SAB 101 and accordingly, reclassified previously reported gross revenues in
its Television and Entertainment segments to a net basis.
Euro Conversion
In January 1999, eleven member countries of the European Union established
permanent conversion rates between their existing currencies and the Euro. The
transition period for the introduction of the Euro will be between January 1,
1999 and June 30, 2002. The Company conducts business in member countries and
is addressing the issues involved with the introduction of the Euro. The more
important issues facing the Company include: converting information technology
systems, reassessing currency risk, negotiating and amending licensing
agreements and contracts, and processing tax, accounting, payroll and customer
records.
II-25
Based on the progress to date, the Company believes that the transition to
the Euro currency will not have a significant impact on the manner in which it
conducts its business affairs and processes its business and accounting
records. Accordingly, conversion to the Euro is not expected to have a
material effect on the Company's financial condition or results of operations.
Cautionary Statement Concerning Forward-Looking Statements
This document and the documents incorporated by reference into this Form
10-K, including "Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition", contain both historical and forward-
looking statements. All statements other than statements of historical fact
are, or may be deemed to be, forward-looking statements within the meaning of
section 27A of the Securities Act of 1933 and section 21E of the Securities
Exchange Act of 1934, as amended. These forward-looking statements are not
based on historical facts, but rather reflect the Company's current
expectations concerning future results and events. These forward-looking
statements generally can be identified by the use of statements that include
phrases such as "believe," "expect," "anticipate," "intend," "plan,"
"foresee," "likely," "will" or other similar words or phrases. Similarly,
statements that describe the Company's objectives, plans or goals are or may
be forward-looking statements. These forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be different from any
future results, performance and achievements expressed or implied by these
statements.
The following important factors, among others, could affect future results,
causing these results to differ materially from those expressed in the
Company's forward-looking statements:
. The Company derives substantial revenues from the sale of advertising
time on its over-the-air networks, basic cable networks, television
stations, radio stations and outdoor businesses. The advertising market
has recently experienced softness. The sale of advertising time is
affected by viewer demographics, viewer ratings and market conditions
for advertising time. Adverse changes to any of these factors could have
a negative effect on revenues.
. Operating results derived from the Company's motion picture and
television production fluctuate depending primarily upon cost of such
productions and acceptance of such productions by the public, which are
difficult to predict. Motion picture and television production has
experienced cycles in which increased costs of talent and other factors
have resulted in higher production costs. In addition, the commercial
success of the Company's motion picture and television productions also
depends upon the quality and acceptance of other competing productions,
and the availability of alternative forms of entertainment and leisure
time activities.
. The Company's operating results also fluctuate due to the timing and
availability of theatrical and home video releases, as well as a result
of the recording of license fees for television exhibition of motion
pictures and for syndication and basic cable exhibition of television
programming in the period that the products are available for such
exhibition.
. The Company's basic cable networks and premium subscription television
networks are dependent on affiliation agreements with cable and direct
broadcast satellite distributors on acceptable terms. The loss of
carriage on such distributors, or continued carriage on less favorable
terms, could adversely affect, with respect to basic cable networks,
revenues from subscriber fees and the ability to sell advertising time,
and with respect to premium subscription television networks, subscriber
fee revenues.
. Some of the Company's businesses are seasonal. More specifically, the
home video business and consumer publishing business are subject to
increased periods of demand coinciding with summer and winter holidays,
while a substantial majority of the theme parks operating income is
generated from May through September. In addition, the home video and
theme parks businesses' revenues are influenced by weather.
II-26
. Changes in FCC laws and regulations could, directly or indirectly,
adversely affect the operations and ownership of the Company's
properties.
. The Company has contingent liabilities related to discontinued
operations, including environmental liabilities and pending litigation.
While there can be no assurance in this regard, the pending or potential
litigation, environmental and other liabilities should not have a
material adverse effect on the Company.
. The Company may be adversely affected by changes in technology and its
effect on competition in the Company's markets.
. Labor agreements covering the services of writers and actors which the
Company utilizes in its motion picture and television businesses are
currently scheduled to expire during 2001. Work stoppages and/or higher
costs in connection with these agreements could adversely impact the
ability of the Company to produce or acquire new programming.
. Other economic, business, competitive and/or regulatory factors
affecting the Company's businesses generally.
These factors are not necessarily all of the important factors that could
cause actual results to differ materially from those expressed in any of our
forward-looking statements. Other unknown or unpredictable factors also could
have material adverse effects on our future results. The forward-looking
statements included in this document are only made as of the date of this
document and the Company does not have any obligation to publicly update any
forward-looking statements to reflect subsequent events or circumstances. The
Company cannot assure you that projected results or events will be achieved.
You should review carefully all information, including the financial
statements and the notes to the financial statements, included or incorporated
by reference into this Form 10-K.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Response to this item is included in "Item 7--Management's Discussion and
Analysis of Results of Operations and Financial Condition--Market Risk."
II-27
Item 8. Financial Statements and Supplementary Data.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of Viacom Inc.
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of cash flows and of
stockholders' equity and comprehensive income present fairly, in all material
respects, the financial position of Viacom Inc. and its subsidiaries (the
"Company") at December 31, 2000 and 1999 and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2000 in conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the financial statement
schedule listed in the index appearing under Item 14(a) presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These
financial statements and financial statement schedule are the responsibility
of the Company's management; our responsibility is to express an opinion on
these financial statements and financial statement schedule based on our
audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
PricewaterhouseCoopers LLP
February 12, 2001, except for the first paragraph of Note 2,
which is as of February 21, 2001
II-28
MANAGEMENT'S STATEMENT OF RESPONSIBILITY FOR FINANCIAL REPORTING
Management has prepared and is responsible for the consolidated financial
statements and related notes of Viacom Inc. They have been prepared in
accordance with generally accepted accounting principles and necessarily
include amounts based on judgments and estimates by management. All financial
information in this annual report is consistent with the consolidated
financial statements.
The Company maintains internal accounting control systems and related
policies and procedures designed to provide reasonable assurance that assets
are safeguarded, that transactions are executed in accordance with
management's authorization and properly recorded, and that accounting records
may be relied upon for the preparation of consolidated financial statements
and other financial information. The design, monitoring, and revision of
internal accounting control systems involve, among other things, management's
judgment with respect to the relative cost and expected benefits of specific
control measures. The Company also maintains an internal audit function which
evaluates and reports on the adequacy and effectiveness of internal accounting
controls, policies and procedures.
Viacom Inc.'s consolidated financial statements have been audited by
PricewaterhouseCoopers LLP, independent accountants, who have expressed their
opinion with respect to the presentation of these statements.
The Audit Committee of the Board of Directors, which is comprised solely of
directors who are not employees of the Company, meets periodically with the
independent accountants, with our internal auditors, as well as with
management, to review accounting, auditing, internal accounting controls and
financial reporting matters. The Audit Committee is also responsible for
recommending to the Board of Directors the independent accounting firm to be
retained for the coming year, subject to stockholder approval. The independent
accountants and the internal auditors have full and free access to the Audit
Committee with and without management's presence.
Viacom Inc.
/s/ Sumner M. Redstone
By: _________________________________
Sumner M. Redstone
Chairman of the Board of
Directors,
Chief Executive Officer
/s/ Fredric G. Reynolds
By: _________________________________
Fredric G. Reynolds
Executive Vice President,
Chief Financial Officer
/s/ Susan C. Gordon
By: _________________________________
Susan C. Gordon
Vice President, Controller,
Chief Accounting Officer
II-29
VIACOM INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
- -------------------------------------------------------------------------------
Year Ended December 31,
2000 1999 1998
- -------------------------------------------------------------------------------
Revenues $20,043.7 $12,858.8 $12,096.1
- -------------------------------------------------------------------------------
Expenses:
Operating 11,707.1 8,337.9 8,506.3
Selling, general and administrative 4,093.7 2,358.6 2,060.9
Merger-related and restructuring charges 698.5 70.3 --
Depreciation and amortization 2,223.5 844.7 777.3
- -------------------------------------------------------------------------------
Total expenses 18,722.8 11,611.5 11,344.5
- -------------------------------------------------------------------------------
Operating income 1,320.9 1,247.3 751.6
Interest expense (822.3) (448.9) (622.4)
Interest income 53.2 27.7 23.4
Other items, net 8.8 17.8 (15.3)
- -------------------------------------------------------------------------------
Earnings from continuing operations before
income taxes 560.6 843.9 137.3
Provision for income taxes (729.8) (411.4) (138.7)
Equity in loss of affiliated companies, net
of tax (124.2) (60.7) (41.4)
Minority interest, net of tax (70.4) (.1) (.7)
- -------------------------------------------------------------------------------
Net earnings (loss) from continuing
operations before extraordinary loss and
cumulative effect of change in accounting
principle (363.8) 371.7 (43.5)
Discontinued operations loss, net of tax -- -- (54.1)
Net gain on dispositions, net of tax -- -- 49.9
- -------------------------------------------------------------------------------
Net earnings (loss) before extraordinary loss
and cumulative effect of change in
accounting principle (363.8) 371.7 (47.7)
Extraordinary loss, net of tax -- (37.7) (74.7)
Cumulative effect of change in accounting
principle, net of tax (452.3) -- --
- -------------------------------------------------------------------------------
Net earnings (loss) (816.1) 334.0 (122.4)
Cumulative convertible preferred stock
dividend requirement -- (.4) (57.2)
(Premium) discount on repurchase of preferred
stock -- (12.0) 30.0
- -------------------------------------------------------------------------------
Net earnings (loss) attributable to common
stock $ (816.1) $ 321.6 $ (149.6)
- -------------------------------------------------------------------------------
Basic earnings per common share:
Earnings (loss) from continuing operations $ (.30) $ .52 $ (.10)
Net earnings (loss) $ (.67) $ .46 $ (.21)
- -------------------------------------------------------------------------------
Diluted earnings per common share:
Earnings (loss) from continuing operations $ (.30) $ .51 $ (.10)
Net earnings (loss) $ (.67) $ .45 $ (.21)
- -------------------------------------------------------------------------------
Weighted average number of common shares:
Basic 1,225.3 695.2 708.7
Diluted 1,225.3 709.5 708.7
- -------------------------------------------------------------------------------
See notes to consolidated financial statements.
II-30
VIACOM INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions)
- -------------------------------------------------------------------------------
At December 31,
2000 1999
- -------------------------------------------------------------------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 934.5 $ 680.8
Receivables, less allowances of $246.2 (2000) and
$109.5 (1999) 3,964.1 1,697.4
Inventory (Note 8) 1,402.0 1,959.5
Other current assets 1,531.8 860.7
- -------------------------------------------------------------------------------
Total current assets 7,832.4 5,198.4
- -------------------------------------------------------------------------------
Property and Equipment:
Land 713.8 450.3
Buildings 837.1 660.1
Capital leases 852.5 881.9
Advertising structures 2,076.5 --
Equipment and other 4,505.8 3,263.6
- -------------------------------------------------------------------------------
8,985.7 5,255.9
Less accumulated depreciation and amortization 2,383.9 1,830.6
- -------------------------------------------------------------------------------
Net property and equipment 6,601.8 3,425.3
- -------------------------------------------------------------------------------
Inventory (Note 8) 3,632.9 2,829.5
Intangibles, at amortized cost 62,004.1 11,478.9
Other assets 2,574.9 1,554.3
- -------------------------------------------------------------------------------
Total Assets $82,646.1 $24,486.4
- -------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,261.1 $ 544.4
Accrued expenses 2,790.2 1,431.2
Deferred income 605.9 371.4
Accrued compensation 642.0 473.3
Participants' share, residuals and royalties payable 1,220.3 1,087.2
Program rights 709.8 196.9
Income taxes payable 305.0 1.0
Current portion of long-term debt 223.9 294.3
- -------------------------------------------------------------------------------
Total current liabilities 7,758.2 4,399.7
- -------------------------------------------------------------------------------
Long-term debt (Note 10) 12,473.8 5,697.7
Pension and postretirement benefit obligation (Note 14) 1,636.8 245.0
Other liabilities 5,770.2 1,765.5
Commitments and contingencies (Note 15)
Minority interest 7,040.2 1,246.5
Stockholders' Equity:
Class A Common Stock, par value $.01 per share; 500.0
shares authorized; 138.9 (2000) and 139.7 (1999)
shares issued 1.4 1.4
Class B Common Stock, par value $.01 per share; 3,000.0
shares authorized; 1,454.7 (2000) and 606.6 (1999)
shares issued 14.5 6.1
Additional paid-in capital 50,729.9 10,338.5
Retained earnings 1,431.8 2,247.9
Accumulated other comprehensive loss (Note 1) (152.5) (30.2)
- -------------------------------------------------------------------------------
52,025.1 12,563.7
Less treasury stock, at cost; 1.4 (2000 and 1999) Class
A shares and 96.3 (2000) and 47.1 (1999) Class B
shares 4,058.2 1,431.7
- -------------------------------------------------------------------------------
Total stockholders' equity 47,966.9 11,132.0
- -------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $82,646.1 $24,486.4
- -------------------------------------------------------------------------------
See notes to consolidated financial statements.
II-31
VIACOM INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
- -------------------------------------------------------------------------------
Year Ended December 31,
2000 1999 1998
- -------------------------------------------------------------------------------
Operating Activities:
Net earnings (loss) $ (816.1) $ 334.0 $ (122.4)
Adjustments to reconcile net earnings (loss) to
net cash flow from operating activities:
Depreciation and amortization 2,223.5 844.7 777.3
Merger-related and restructuring charges 698.5 70.3 --
Cumulative effect of change in accounting
principle 753.9 -- --
Loss (gain) on dispositions 25.6 (33.7) (168.8)
Loss on redemption of debt, net of tax -- 37.7 126.6
Equity in loss of affiliated companies 124.2 60.7 41.4
Distribution from affiliated companies 48.3 26.4 17.9
Minority interest 70.4 .1 .7
Barter revenues (125.2) -- --
Amortization of deferred financing costs 17.9 15.4 16.1
Change in operating assets and liabilities:
Decrease (increase) in receivables (377.9) 61.7 135.6
Decrease (increase) in inventory and related
program liabilities, net (157.3) (603.4) 367.1
Increase in other current assets (172.2) (49.4) (119.7)
Decrease (increase) in unbilled receivables (55.7) (120.7) 105.0
Increase (decrease) in accounts payable and
accrued expenses (200.1) (19.7) 192.6
Increase (decrease) in income taxes payable and
net deferred taxes 166.9 (344.5) (563.9)
Increase in deferred income 76.5 57.0 7.4
Other, net 22.1 (42.5) 51.2
- -------------------------------------------------------------------------------
Net cash flow provided by operating activities 2,323.3 294.1 864.1
- -------------------------------------------------------------------------------
Investing activities:
Acquisitions, net of cash acquired (2,380.0) (312.4) (126.4)
Capital expenditures (659.0) (706.2) (603.5)
Investments in and advances to affiliated
companies (239.2) (161.6) (100.3)
Purchases of short-term investments (89.9) (416.2) (151.6)
Proceeds from sale of short-term investments 307.4 406.3 101.4
Proceeds from dispositions 190.6 114.3 4,950.1
Proceeds from sale of cost investments 9.2 4.0 167.3
Other, net -- (35.8) (18.6)
- -------------------------------------------------------------------------------
Net cash flow provided by (used for) investing
activities (2,860.9) (1,107.6) 4,218.4
- -------------------------------------------------------------------------------
Financing activities:
Borrowings from (repayments to) banks,
including commercial paper 1,413.4 2,184.8 (2,383.0)
Proceeds from issuance of senior notes and
debentures 1,682.9 -- --
Purchase of treasury stock and warrants (1,945.4) (478.8) (809.6)
Repayment of notes and debentures (331.9) (1,075.3) (869.3)
Repurchase of Preferred Stock -- (611.9) (564.0)
Payment on capital lease obligations (130.6) (106.5) (110.7)
Purchase of treasury stock by subsidiary (84.1) -- --
Net proceeds from issuance of subsidiary stock -- 430.7 --
Proceeds from exercise of stock options and
warrants 187.0 390.8 182.8
Payment of Preferred Stock dividends -- (7.8) (64.8)
Other, net -- 1.0 11.1
- -------------------------------------------------------------------------------
Net cash flow provided by (used for) financing
activities 791.3 727.0 (4,607.5)
- -------------------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents 253.7 (86.5) 475.0
Cash and cash equivalents at beginning of year 680.8 767.3 292.3
- -------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 934.5 $ 680.8 $ 767.3
- -------------------------------------------------------------------------------
See notes to consolidated financial statements.
II-32
VIACOM INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND
COMPREHENSIVE INCOME
(In millions)
Year ended December 31,
--------------------------------------------------------
2000 1999 1998
--------------------------------------------------------
Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------
Convertible Preferred
Stock:
Balance, beginning of
year -- $ -- 12.0 $ 600.0 24.0 $ 1,200.0
Repurchase of Preferred
Stock -- -- (12.0) (600.0) (12.0) (600.0)
- -----------------------------------------------------------------------------------
Balance, end of year -- -- -- -- 12.0 600.0
- -----------------------------------------------------------------------------------
Class A Common Stock:
Balance, beginning of
year 139.7 1.4 141.6 1.4 140.7 1.4
Exercise of stock
options and warrants -- -- -- -- .9 --
Conversion of A shares
into B shares (.8) -- (1.9) -- -- --
- -----------------------------------------------------------------------------------
Balance, end of year 138.9 1.4 139.7 1.4 141.6 1.4
- -----------------------------------------------------------------------------------
Class B Common Stock:
Balance, beginning of
year 606.6 6.1 591.9 5.9 581.1 5.8
Exercise of stock
options and warrants 10.8 .1 12.8 .2 10.8 .1
Issuance of stock for
CBS acquisition 836.5 8.3 -- -- -- --
Conversion of A shares
into B shares .8 -- 1.9 -- -- --
- -----------------------------------------------------------------------------------
Balance, end of year 1,454.7 14.5 606.6 6.1 591.9 5.9
- -----------------------------------------------------------------------------------
Additional Paid-In
Capital:
Balance, beginning of
year 10,338.5 10,574.7 10,329.5
Exercise of stock
options and warrants,
net of tax benefit 349.7 443.5 280.1
Loss on Blockbuster
Offering -- (662.1) --
Warrants repurchased -- (17.6) (34.9)
Issuance of stock for
CBS acquisition 39,641.7 -- --
Stock option
acceleration
attributable to CBS
acquisition 400.0 -- --
- -----------------------------------------------------------------------------------
Balance, end of year 50,729.9 10,338.5 10,574.7
- -----------------------------------------------------------------------------------
Retained Earnings:
Balance, beginning of
year 2,247.9 1,932.9 2,089.0
Net earnings (loss) (816.1) 334.0 (122.4)
Preferred Stock
dividend requirement -- (.4) (57.2)
Discount (premium) on
repurchase of
Preferred Stock -- (12.0) 30.0
Exercise of stock
options -- (6.6) (6.5)
- -----------------------------------------------------------------------------------
Balance, end of year 1,431.8 2,247.9 1,932.9
- -----------------------------------------------------------------------------------
Accumulated Other
Comprehensive Income
(Loss):
Balance, beginning of
year (30.2) (67.1) (12.6)
Other comprehensive
income (loss) (122.3) 36.9 (54.5)
- -----------------------------------------------------------------------------------
Balance, end of year (152.5) (30.2) (67.1)
- -----------------------------------------------------------------------------------
Treasury Stock, at cost:
Balance, beginning of
year 48.5 (1,431.7) 38.5 (998.2) 13.0 (229.5)
Common Stock
repurchased 34.2 (1,945.4) 10.6 (448.8) 26.2 (787.0)
Exercise of stock
options (Class B) -- -- (.6) 15.3 (.7) 18.3
Shares held in trust 15.0 (681.1) -- -- -- --
- -----------------------------------------------------------------------------------
Balance, end of year 97.7 (4,058.2) 48.5 (1,431.7) 38.5 (998.2)
- -----------------------------------------------------------------------------------
Total Stockholders'
Equity $47,966.9 $11,132.0 $12,049.6
- -----------------------------------------------------------------------------------
Comprehensive Income
(Loss):
Net earnings (loss) $ (816.1) $ 334.0 $ (122.4)
- -----------------------------------------------------------------------------------
Other Comprehensive
Income (Loss):
Unrealized (loss) gain
on securities (92.8) 15.8 85.2
Reclassification
adjustment for
realized (gains)
losses, net of tax 45.3 (2.3) (118.9)
Cumulative translation
adjustments (71.4) 21.2 (19.0)
Minimum pension
liability adjustment (3.4) 2.2 (1.8)
- -----------------------------------------------------------------------------------
Total Other
Comprehensive Income
(Loss) (122.3) 36.9 (54.5)
- -----------------------------------------------------------------------------------
Total Comprehensive
Income (Loss) $ (938.4) $ 370.9 $ (176.9)
- -----------------------------------------------------------------------------------
See notes to consolidated financial statements.
II-33
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in millions, except per share amounts)
1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation--Viacom Inc. ("Viacom" or the "Company") is a
diversified company with operations in seven segments: (i) Cable Networks,
(ii) Television, (iii) Infinity, (iv) Entertainment, (v) Video, (vi)
Publishing and (vii) Online. On May 4, 2000, CBS Corporation ("CBS") merged
with and into the Company and effective from this date, CBS' results of
operations are included in the Company's consolidated results of operations
(See Note 3). See Note 16 regarding the relative contribution to revenues and
operating results from each of the reportable segments.
Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could subsequently differ from
those estimates.
Principles of Consolidation--The consolidated financial statements include
the accounts of the Company and investments of more than 50% in subsidiaries
and other entities. Investments in affiliated companies over which the Company
has a significant influence or ownership of more than 20% but less than or
equal to 50% are accounted for under the equity method. Investments of 20% or
less are accounted for under the cost method. All significant intercompany
transactions have been eliminated.
Cash and Cash Equivalents--Cash and cash equivalents consist of cash on
hand and short-term (three months or less) highly liquid investments. At
December 31, 2000, certain restrictions existed on Infinity Broadcasting
Corporation's ("Infinity Broadcasting") cash balance of $143.0 million
included as part of cash and cash equivalents of $934.5 million in the
consolidated balance sheet. Infinity Broadcasting's cash became available to
the Company upon the merger with Infinity Broadcasting, effective February 21,
2001 (See Note 2).
Inventories--Inventories related to theatrical and television product
(which includes direct production costs, production overhead and acquisition
costs) are stated at the lower of amortized cost or net realizable value.
Inventories are amortized, and estimated liabilities for residuals and
participation are accrued, for an individual product based on the proportion
that current estimated revenues bear to the estimated remaining total lifetime
revenues. Estimates for initial domestic syndication and basic cable revenues
are not included in the estimated lifetime revenues of network series until
such sales are probable. These estimates are periodically reviewed. As a
result of the adoption of Statement of Position 00-2, "Accounting by Producers
or Distributors of Films," the costs of feature and television films are
classified as non-current assets.
The Company estimates that approximately 95% of unamortized costs of
completed and released films (excluding amounts allocated under purchase
accounting) at December 31, 2000 will be amortized within the next three
years. Approximately $491 million of released, and completed and not released,
film costs are expected to be amortized during the next twelve months. As of
December 31, 2000, unamortized acquired film libraries of approximately $546
million remain to be amortized on a straight-line basis over an average
remaining life of 13 years.
Inventories related to base stock videocassettes (generally less than five
copies per title for each store) are recorded at cost and a portion of these
costs are amortized on an accelerated basis over three months, with the
remaining base stock videocassette costs amortized on a straight-line basis
over 33 months to an estimated $4 salvage value. The cost of non-base stock
videocassettes is amortized on an accelerated basis over three months to an
estimated $4 salvage value. Video games and base-stock DVDs are amortized on
an accelerated basis over a 12 month period to an estimated $10 and $4 salvage
value, respectively (See Note 6).
II-34
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
Program Rights--The Company acquires rights to programming and produces
programming to exhibit on its broadcast networks, cable networks and broadcast
stations. The costs incurred in acquiring and producing programs are
capitalized and amortized over the license period or projected useful life of
the programming. Program rights and the related liabilities are recorded at
the gross amount of the liabilities when the license period has begun, the
cost of the program is determinable, and the program is accepted and available
for airing.
Property and Equipment--Property and equipment is stated at cost.
Depreciation is computed by the straight-line method over estimated useful
lives as follows:
Buildings (including capital leases) 20 to 40 years
Leasehold improvements 4 to 15 years
Advertising structures 5 to 20 years
Equipment and other (including capital
leases) 3 to 20 years
Depreciation expense, including capitalized lease amortization, was $799.7
million (2000), $496.8 million (1999) and $441.8 million (1998). Amortization
expense related to capital leases was $77.8 million (2000), $80.1 million
(1999) and $62.6 million (1998). Accumulated amortization of capital leases
was $296.6 million at December 31, 2000 and $295.5 million at December 31,
1999.
Impairment of Long-Lived Assets--The Company assesses long-lived assets and
certain identifiable intangibles for impairment whenever there is an
indication that the carrying amount of the asset may not be recoverable.
Recoverability of these assets is determined by comparing the forecasted
undiscounted cash flows generated by those assets to their net carrying value.
The amount of impairment loss, if any, will generally be measured by the
difference between the net book value of the assets and the estimated fair
value of the related assets.
Intangible Assets--Intangible assets, which primarily consist of the cost
of acquired businesses in excess of the fair value of tangible assets and
liabilities acquired ("goodwill") and FCC licenses, are generally amortized by
the straight-line method over estimated useful lives of up to 40 years. The
Company evaluates the amortization period of intangibles on an ongoing basis
in light of changes in any business conditions, events or circumstances that
may indicate the potential impairment of intangible assets. At December 31,
2000, approximately $10.9 billion of intangible assets are attributable to FCC
licenses. Accumulated amortization of intangible assets was $3.4 billion at
December 31, 2000 and $1.9 billion at December 31, 1999.
Revenue Recognition--Subscriber fees for Cable Networks are recognized in
the period the service is provided. Advertising revenues are recognized in the
period during which spots are aired. Video segment revenues are recognized at
the time of rental or sale. The Publishing segment recognizes revenue when
merchandise is shipped. Revenues from the sale of outdoor advertising space
are recognized ratably over the contract terms. Online advertising revenue is
recognized ratably during the period in which the advertising is displayed and
obligations are satisfied.
Revenues from films in the domestic and foreign theatrical markets are
recognized as films are exhibited; revenues from the sale of videocassettes,
discs and DVDs are recognized upon availability of sale to the public; and
revenues from all television sources are recognized upon availability of the
film for telecast. On average, the length of the initial revenue cycle for
feature films approximates four to seven years.
Television series initially produced for the networks and first-run
syndication are generally licensed to domestic and foreign markets
concurrently. The more successful series are later syndicated in domestic
markets and in certain foreign markets. The length of the revenue cycle for
television series will vary depending on the number of seasons a series
remains in active production. Revenues arising from television license
agreements
II-35
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
are recognized in the period that the films or television series are available
for telecast and therefore may cause fluctuation in operating results.
Interest--Costs associated with the refinancing or issuance of debt, as
well as with debt discount, are expensed as interest over the term of the
related debt. The Company may enter into interest rate exchange agreements;
the amount to be paid or received under such agreements would be accrued as
interest rates change and recognized over the life of the agreements as an
adjustment to interest expense. Amounts paid for purchased interest rate cap
agreements would be amortized as interest expense over the term of the
agreement.
Foreign Currency Translation and Transactions--The Company's foreign
subsidiaries' assets and liabilities are translated at exchange rates in
effect at the balance sheet date, while results of operations are translated
at average exchange rates for the respective periods. The resulting
translation gains or losses are included as a separate component of
stockholders' equity in accumulated other comprehensive income. Foreign
currency transaction gains and losses have been included in "Other items,
net".
Subsidiary Stock Transactions--Gains or losses arising from issuances by a
subsidiary of its own stock in a public offering are recorded within
stockholders' equity.
Provision for Doubtful Accounts--The provision for doubtful accounts
charged to expense was $124.1 million (2000), $33.5 million (1999) and $29.5
million (1998).
Net Earnings (Loss) per Common Share--Basic earnings per share is based
upon the net earnings applicable to common shares after preferred dividend
requirements and divided by the weighted average number of common shares
outstanding during the period. Diluted earnings per share reflects the effect
of the assumed conversions of convertible securities and the exercise of stock
options only in the periods in which such effect would have been dilutive.
The numerator used in the calculation of both basic and diluted EPS for
each respective year reflects earnings (loss) from continuing operations less
preferred stock dividends of $.4 million for 1999 and $57.2 million for 1998
plus the (premium) discount on preferred stock of ($12) million for 1999 and
$30 million for 1998, respectively. For the years ended December 31, 2000 and
December 31, 1998, incremental shares of 30.1 million and 9.5 million,
respectively, for the assumed exercise of stock options were excluded from the
computation of diluted EPS because their inclusion would have been anti-
dilutive.
The table below presents a reconciliation of weighted average shares used
in the calculation of basic and diluted EPS:
2000 1999 1998
------- ----- -----
Weighted average shares for basic EPS 1,225.3 695.2 708.7
Plus incremental shares for stock options -- 14.3 --
------- ----- -----
Weighted average shares for diluted EPS 1,225.3 709.5 708.7
======= ===== =====
In the first quarter of 2001, the Company completed the acquisitions of
Infinity Broadcasting and BET Holdings II, Inc. ("BET"). (See Note 2) These
acquisitions resulted in the issuance of approximately 275.0 million shares of
Viacom Class B Common Stock and approximately 10.9 million of Viacom options.
II-36
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
Comprehensive Income (Loss)--The components of accumulated other
comprehensive income (loss) were as follows:
Minimum Accumulated
Unrealized Cumulative Pension Other
Gain (Loss) Translation Liability Comprehensive
on Securities Adjustments Adjustment Income (Loss)
------------- ----------- ---------- -------------
At December 31, 1997 $ 34.9 $ (39.1) $ (8.4) $ (12.6)
Current period change (33.7) (19.0) (1.8) (54.5)
------ ------- ------ -------
At December 31, 1998 1.2 (58.1) (10.2) (67.1)
Current period change 13.5 21.2 2.2 36.9
------ ------- ------ -------
At December 31, 1999 14.7 (36.9) (8.0) (30.2)
Current period change (47.5) (71.4) (3.4) (122.3)
------ ------- ------ -------
At December 31, 2000 $(32.8) $(108.3) $(11.4) $(152.5)
====== ======= ====== =======
Reclassifications--Certain amounts reported for prior years have been
reclassified to conform to the current year's presentation.
Change in Accounting--In June 2000, the Company elected early adoption of
Statement of Position 00-2, "Accounting by Producers or Distributors of Films"
("SOP 00-2"). SOP 00-2 established new film accounting standards, including
changes in revenue recognition and accounting for advertising, development and
overhead costs. Under the new accounting standard, all exploitation costs such
as advertising expenses, marketing costs and video duplication costs for
theatrical and television product will be expensed as incurred, whereas under
the old accounting standards, these costs were capitalized and amortized over
the products' lifetime. As a result of this early adoption in the second
quarter of 2000, the Company recorded a pre-tax non-cash charge of $754
million ($452 million after-tax or $.37 per share). This charge has been
reflected as a cumulative effect of a change in accounting principle,
effective January 1, 2000, in the consolidated statement of operations for the
year ended December 31, 2000. Under SOP 00-2 for the year ended December 31,
2000, the Company reported lower operating results of approximately $77
million.
In June 2000, the Financial Accounting Standards Board ("FASB") issued
Statement 139 ("SFAS 139") which rescinds FASB Statement 53 on financial
reporting by motion picture film producers or distributors. SFAS 139 requires
public companies to follow the guidance provided by SOP 00-2.
Recent Pronouncements--In June 1998, the FASB issued SFAS 133, "Accounting
for Derivative Instruments and Hedging Activities" ("SFAS 133"), effective for
fiscal years beginning after June 15, 2000, as amended by Statements 137 and
138 in June 1999 and June 2000, respectively. These statements require
companies to recognize all derivatives as either assets or liabilities on the
balance sheet and measure those instruments at fair value. The statements also
established new accounting rules for hedging instruments which, depending on
the nature of the hedge, require that changes in the fair value of the
derivatives either be offset against the change in fair value of assets,
liabilities or firm commitments through earnings, or be recognized in other
comprehensive income until the hedged item is recognized in earnings. The
Company adopted SFAS 133, as amended, on January 1, 2001, which resulted in an
immaterial impact on the Company's consolidated results of operations and
financial position.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial
Statements" ("SAB 101"). SAB 101 summarizes certain of the SEC's staff's views
in applying generally accepted accounting principles to revenue recognition in
financial statements. During the fourth quarter of 2000, the Company adopted
SAB 101 and accordingly, reclassified previously reported gross revenues in
its Television and Entertainment segments to a net basis.
II-37
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
2) SUBSEQUENT EVENTS
On February 21, 2001, the Company completed a merger with Infinity
Broadcasting, acquiring all of the issued and outstanding shares of Infinity
common stock that it did not already own, approximately 36%. Under the terms
of the merger, which is tax free for the stockholders of Infinity and Viacom,
each share of Infinity Class A common stock was converted into the right to
receive 0.592 of a share of Viacom Class B Common Stock. The Infinity merger
will be accounted for at historical cost, with the exception of minority
interest, which will be accounted for under the purchase method of accounting.
The total purchase price of approximately $13.4 billion represents the
issuance of approximately 232 million shares of Viacom Class B Common Stock
and the fair value of Infinity stock options assumed by the Company.
On February 1, 2001, the Company initiated a share repurchase program to
acquire up to $2.0 billion in the Company's Class B Common Stock and through
March 19, 2001, the Company had repurchased under this program 2.8 million
shares of its Class B Common Stock for approximately $141.5 million.
On January 23, 2001, the Company completed its acquisition of BET for
approximately $3 billion, which principally represents the issuance of
approximately 43.4 million shares of Viacom Class B Common Stock and the
assumption by the Company of approximately $590 million in debt. Beginning in
the first quarter of 2001, BET's results will be reported as part of the Cable
Networks segment.
3) ACQUISITIONS
On May 4, 2000, CBS was merged with and into the Company (the "Merger").
The total purchase price of approximately $39.8 billion included approximately
$37.7 billion for the issuance of 825.5 million shares of Viacom Class B
Common Stock and 11,004 shares of Viacom Series C convertible preferred stock,
which were subsequently converted into 11.0 million shares of Viacom Class B
Common Stock and approximately $1.9 billion for the fair value of CBS stock
options assumed by the Company and transaction costs. In addition, Viacom
assumed approximately $3.7 billion of CBS debt.
The Merger was accounted for under the purchase method of accounting. CBS'
results of operations are included in the Company's reported consolidated
results of operations from the effective date of acquisition. The total cost
to acquire CBS has been allocated based on the fair values of the assets
acquired and liabilities assumed at the time of the Merger. The excess
purchase price over the fair value of the tangible net assets acquired of
approximately $50 billion was allocated to intangibles and is being amortized
on a straight-line basis not to exceed 40 years. The final allocation of the
purchase price will be based on comprehensive final evaluations of the fair
value of CBS' tangible and identifiable intangible assets acquired and
liabilities assumed.
The Company presently holds television stations which reach approximately
41% of United States television households (as calculated for this purpose
under rules and regulations of the Federal Communications Commission (the
"FCC"), which apply a 50% discount to the reach of UHF stations). These
stations reach approximately 6% in excess of the 35% limit permitted by FCC
regulations. In connection with FCC approval of the Merger, the Company was
given one year to come into compliance with the limit. The Company has
challenged the rule in federal court and is seeking a stay of the requirement
to come into compliance with the limit, pending judicial review of the
national ownership cap. The Company was also provided with one year to come
into compliance with the FCC's "dual network" rule, which prohibits the
Company from owning and controlling both CBS and United Paramount Network
("UPN"). On June 20, 2000, the FCC released a Notice of Proposed Rule Making,
in which it proposes to modify the dual network rule, the effect of which
would be to permit the Company to own both CBS and UPN.
II-38
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
On September 15, 2000, Infinity Broadcasting completed the acquisition of
Memphis radio stations WMC-AM and WMC-FM from Raycom Media for approximately
$76 million.
On August 24, 2000, Infinity Broadcasting completed the acquisition of 18
radio stations from Clear Channel Communications, Inc. for $1.4 billion in an
asset transaction. These stations are located in San Diego, Phoenix, Denver,
Cleveland, Cincinnati, Orlando and Greensboro--Winston-Salem.
On July 1, 2000, Infinity Broadcasting completed the acquisition of
Waterman Broadcasting Corporation of Texas ("Waterman Broadcasting") in
exchange for approximately 2.7 million shares of Infinity Broadcasting Class A
common stock valued at approximately $88 million. Waterman Broadcasting owns
radio stations KTSA-AM and KTFM-FM in San Antonio, Texas.
During the second quarter of 2000, Infinity Broadcasting completed the
acquisition of Giraudy, one of France's largest outdoor advertising companies,
for approximately $400 million. Infinity Broadcasting also acquired Societa
Manifesti & Affisioni S.p.A., one of the leading Italian outdoor media sales
companies, for approximately $90 million.
On March 31, 2000, the Company acquired the remaining 50% interest in UPN
that it did not already own. In the second quarter of 2000, the Company
consolidated UPN's results of operations. Prior to this acquisition, the
Company reported its proportionate share of net losses of UPN in "Equity in
loss of affiliated companies, net of tax" in the Consolidated Statements of
Operations.
The unaudited condensed pro forma results of operations data presented
below assumes the Merger, pre-merger CBS acquisitions, and other acquisitions,
including UPN and the acquisition of Infinity Broadcasting's Class A common
stock, had occurred as of January 1, 1999. The unaudited condensed pro forma
results of operations were prepared based upon the historical consolidated
results of operations of the Company and CBS prior to the Merger, adjusted to
exclude the non-recurring merger-related charges and to reflect the adoption
of the change in accounting principle as of the beginning of each period
presented (see Note 1). Financial results of CBS subsequent to the date of
acquisition are included in the Company's financial statements. The pre-merger
CBS acquisitions assumed to have been acquired January 1, 1999 are Infinity
Outdoor, King World and two Texas television stations. The aggregate impact of
other acquisitions was not material to consolidated results of operations.
Pro Forma Results of Operations Data (unaudited)
- ------------------------------------------------------------------------------
Year Ended December 31, 2000 1999
- ------------------------------------------------------------------------------
Revenues $23,359.1 $21,695.2
Net loss before discontinued operations,
extraordinary loss and cumulative effect of change
in accounting principle $ (133.3) $ (427.3)
Net earnings (loss) attributable to common stock $ (583.3) $ 145.6
Basic and diluted earnings (loss) per common share:
Net loss before discontinued operations,
extraordinary loss and cumulative effect of change
in accounting principle $ (.08) $ (.25)
Net earnings (loss) $ (.34) $ .08
- ------------------------------------------------------------------------------
The pro forma financial information is presented for comparative purposes
only and is not necessarily indicative of the operating results that actually
would have occurred had the CBS, UPN, Infinity and other acquisitions been
consummated on January 1, 1999. In addition, these results are not intended to
be a projection of future results and do not reflect any synergies that might
be achieved from the combined operations.
II-39
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
4) MERGER-RELATED AND RESTRUCTURING CHARGES
In the second quarter of 2000, the Company recorded non-recurring merger-
related charges of $698 million ($505 million after-tax or $.41 per share)
associated with the integration of Viacom and CBS and the acquisition of UPN
(see Note 3). These amounts included non-cash charges of $415 million
principally attributable to compensation for stock options and $283 million of
cash payments and accrued liabilities for severance, transaction fees and
integration costs. As of December 31, 2000, the Company had paid and charged
approximately $92 million for severance liabilities, $27 million for
transaction fees and $6 million related to integration costs.
In connection with the integration of the operations of Spelling into
Paramount Television, the Company recorded a charge of approximately $81.1
million, of which $70.3 million was recorded as a restructuring charge and
$10.8 million was recorded as part of depreciation expense in the third
quarter of 1999. Included in the charge were severance and employee related
costs of $48.1 million, lease termination and other occupancy costs of $17.7
million and other exit costs of $4.5 million. Severance and other employee
related costs represent the costs to terminate approximately 250 employees
engaged in legal, sales, marketing, finance, information systems, technical
support and human resources for Spelling. Lease termination and other
occupancy costs principally represent the expenses associated with vacating
existing lease obligations in New York and Los Angeles. The depreciation
expense of approximately $10.8 million was associated with the fixed asset
write-offs for software, leasehold improvements and equipment located at these
premises. As of December 31, 2000, the Company had paid and charged
approximately $43.6 million against the severance liability, $11.3 million
against lease termination and other occupancy costs and $2.0 million against
the other exit costs.
5) DISCONTINUED OPERATIONS
The Company presented its educational, professional and reference
publishing businesses ("Non-Consumer Publishing") and its music retail stores
as discontinued operations for the year ended December 31, 1998.
On November 27, 1998, the Company completed the sale of Non-Consumer
Publishing for $4.6 billion in cash. Viacom retained its consumer publishing
operations, including the Simon & Schuster name. As a result of the sale, the
Company recorded a net gain on the transaction of $65.5 million.
On October 26, 1998, the Company completed the sale of its music retail
stores to Wherehouse Entertainment, Inc. for $115 million in cash and recorded
a net loss on the transaction of $138.5 million. The Company had previously
closed the remaining music stores that were not part of the transaction.
Summarized financial data of discontinued operations are as follows:
For the Year ended Non-Consumer
December 31, 1998(1)(2) Publishing Music Total
---------------------------------------------------------
Revenues $1,718.0 $293.5 $2,011.5
Loss from operations
before income taxes (15.2) (20.9) (36.1)
Benefit (provision) for
income taxes (26.0) 8.0 (18.0)
Net loss (41.2) (12.9) (54.1)
---------------------------------------------------------
(1) Results of operations reflect Non-Consumer Publishing for the period
January 1 through November 26, 1998.
(2) Results of operations reflect the music retail stores for the period
January 1 through August 10, 1998.
II-40
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
The provision for income taxes of $18.0 million for 1998 represents an
effective tax rate of (49.9%). The differences between the effective tax rate
and the statutory federal tax rate of 35% principally relate to certain non-
deductible expenses, the allocation of non-deductible goodwill amortization,
state and local taxes.
-------------------------------------------------------------------
For the Year ended December 31, 1998
-------------------------------------------------------------------
Net gain on dispositions, net of tax:
Loss on sale of Music $(138.5)
Gain on sale of Non-Consumer Publishing 65.5
Additional reserves for Interactives' operating losses (20.3)
Tax benefit for the sale of Virgin Interactive 134.0
Other 9.2
-------------------------------------------------------------------
Net gain on dispositions, net of tax $ 49.9
-------------------------------------------------------------------
Basic and diluted earnings (loss) per share for discontinued operations was
$(.01) for 1998.
6) BLOCKBUSTER CHANGE IN ACCOUNTING METHOD
Effective April 1, 1998, Blockbuster adopted an accelerated method of
amortizing videocassette and game rental inventory. Blockbuster adopted this
new method of amortization because it implemented a new business model,
including revenue sharing agreements with Hollywood studios, which
dramatically increased the number of videocassettes in the stores and is
satisfying consumer demand over a shorter period of time. Revenue sharing
allows Blockbuster to acquire videocassettes at a lower product cost than the
traditional buying arrangements, with a percentage of the net rental revenues
shared with the studios over a contractually determined period of time. As the
new business model results in a greater proportion of rental revenue over a
shorter period of time, Blockbuster changed its method of amortizing rental
inventory in order to more closely match expenses in proportion with the
anticipated revenues to be generated therefrom.
Pursuant to the new accounting method, the Company records base stock
videocassettes (generally less than five copies per title for each store) at
cost and amortizes a portion of these costs on an accelerated basis over three
months, with the remaining base stock videocassette costs amortized on a
straight-line basis over 33 months to an estimated $4 salvage value. The cost
of non-base stock videocassettes is amortized on an accelerated basis over
three months to an estimated $4 salvage value. Video games and base-stock DVDs
are amortized on an accelerated basis over a 12-month period to an estimated
$10 and $4 salvage value, respectively. Revenue sharing payments are expensed
when revenues are earned pursuant to the applicable contractual arrangements.
The new method of accounting was applied to rental inventory held at April
1, 1998. The adoption of the new method of amortization was accounted for as a
change in accounting estimate effected by a change in accounting principle.
The Company recorded a pre-tax charge of $436.7 million to operating expenses
in the second quarter of 1998. Approximately $424.3 million of the charge
represented an adjustment to the carrying value of the rental tapes due to the
new method of accounting and approximately $12.4 million represented a write-
down of retail inventory.
7) ACCOUNTS RECEIVABLE
As of December 31, 2000, the Company had an aggregate of $550.0 million
outstanding under revolving receivable securitization programs. Proceeds from
the securitization programs were used to reduce outstanding borrowings.
II-41
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
8) INVENTORY
------------------------------------------------------------------
At December 31, 2000 1999
------------------------------------------------------------------
Theatrical and television inventory:
Theatrical:
Released (including acquired film libraries) $ 365.6 $ 798.7
Completed, not released 49.5 .8
In process and other 276.6 276.6
Television:
Released (including acquired film libraries) 881.9 1,039.4
In process and other 151.5 135.0
Program rights 2,163.4 1,434.4
------------------------------------------------------------------
3,888.5 3,684.9
Less current portion 985.9 1,515.0
------------------------------------------------------------------
2,902.6 2,169.9
------------------------------------------------------------------
Merchandise inventory, including sell-through
videocassettes 309.9 338.0
Videocassette rental inventory 631.6 569.5
Publishing, primarily finished goods 67.9 70.4
Other 137.0 126.2
------------------------------------------------------------------
1,146.4 1,104.1
Less current portion 416.1 444.5
------------------------------------------------------------------
730.3 659.6
------------------------------------------------------------------
Total Current Inventory $1,402.0 $1,959.5
------------------------------------------------------------------
Total Non-Current Inventory $3,632.9 $2,829.5
------------------------------------------------------------------
9) INVESTMENTS IN AFFILIATED COMPANIES
The Company accounts for its investments in affiliated companies over which
the Company has significant influence or ownership of more than 20% but less
than or equal to 50%, under the equity method. Such investments principally
include but are not limited to the Company's interest in Comedy Central (50%
owned), United Cinemas International (50% owned), Nickelodeon U.K. (50%
owned), NOGGIN (50% owned), Middle East Channel (33% owned), WF Cinemas (50%
owned), and several Internet-based companies with ownership interests ranging
from 22%-50%. The equity Internet investments are comprised of
MarketWatch.com, Inc.; Switchboard Incorporated; Hollywood Media Corp.;
Office.com, Inc. and Content Commerce, L.P. Investments in affiliates are
included as a component of other assets.
II-42
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
The following is a summary of combined financial information that is based
on information provided by the equity investees.
-----------------------------------------------------------------------
Year Ended December 31, 2000 1999 1998
-----------------------------------------------------------------------
Results of Operations Data:
Revenues $2,465.0 $1,995.4 $1,898.3
Operating loss (191.4) (109.4) (73.2)
Net loss (254.9) (154.9) (115.4)
-----------------------------------------------------------------------
-----------------------------------------------------------------------
At December 31, 2000 1999
-----------------------------------------------------------------------
Financial Position:
Current assets $1,025.7 $ 851.9
Non-current assets 1,247.9 972.1
Current liabilities 786.1 811.3
Non-current liabilities 580.3 652.8
Equity 907.2 359.9
-----------------------------------------------------------------------
For Internet equity investments, a difference typically exists between the
initial investment and the proportionate share in the underlying net assets of
these companies. This difference is being amortized over a five-year period
and as of December 31, 2000 the unamortized difference is $127.5 million. The
amortization expense of the Company's initial basis is presented as "Equity in
loss of affiliated companies, net of tax" in the Consolidated Statements of
Operations.
At December 31, 2000, the Company's equity investments included three
publicly traded Internet-based companies: Hollywood Media Corp.,
MarketWatch.com, Inc. and Switchboard Incorporated. Based upon quoted market
prices at December 31, 2000, the aggregate market value of such investments
was approximately $69.6 million.
At the date of acquisition, for equity investments in Internet-based
companies, the Company typically records the investment at an amount equal to
the cash consideration paid plus the fair value of the advertising and
promotion time to be provided. The associated obligation to provide future
advertising and promotion time is non-cash and is recorded as deferred revenue
at an amount equal to the fair value of the advertising and promotion time to
be provided. Any related deferred revenue balance is presented as deferred
income and other liabilities in the Consolidated Balance Sheets. Deferred
revenue is relieved and barter revenue is recognized as the related
advertising and promotion time is delivered. Barter revenue of $125.2 million
has been recognized for the year ended December 31, 2000.
At December 31, 2000, the Company had $126.7 million in cost investments
that are included as a component of other assets. The 2000 mark-to-market
adjustments in fair value for the publicly traded cost investments were $33.7
million, net of tax, and were recorded as a decrease in other comprehensive
income. The Company determined that some of its cost investments in Internet-
based companies experienced an other than temporary decline in market value as
of December 31, 2000, and accordingly, the Company recorded a non-cash write-
down of such investments for approximately $66.9 million in "Other items, net"
in the Consolidated Statements of Operations.
The Company, through the normal course of business, is involved in
transactions with affiliated companies that have not been material in any of
the periods presented.
II-43
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
10) BANK FINANCING AND DEBT
Long-term debt consists of the following:
-----------------------------------------------------------------------
At December 31, 2000 1999
-----------------------------------------------------------------------
Notes payable to banks, including commercial paper $ 5,735.5 $3,054.2
5.875% Senior Notes* due 2000 -- 149.9
7.50% Senior Notes* due 2002 249.6 249.1
7.625% Senior Notes due 2002 143.0 --
8.375% Senior Notes due 2002 201.4 --
6.75% Senior Notes due 2003 349.9 349.9
6.875% Senior Notes due 2003 274.9 --
10.50% Senior Debentures due 2004 67.8 --
7.15% Senior Exchange Notes due 2005 499.0 --
7.75% Senior Notes due 2005 966.9 966.0
7.70% Senior Notes due 2010 1,148.7 --
8.625% Senior Debentures due 2012 271.1 --
8.875% Senior Notes due 2014 101.9 --
7.625% Senior Debentures due 2016 198.9 198.9
8.25% Senior Debentures* due 2022 237.2 247.5
7.125% Senior Notes due 2023 52.2 --
7.50% Senior Debentures* due 2023 149.6 149.6
7.875% Senior Debentures due 2023 250.7 --
7.875% Senior Debentures due 2030 499.9 --
10.25% Senior Subordinated Notes* due 2001 35.3 35.3
9.00% Senior Subordinated Notes due 2006 63.1 --
9.375% Senior Subordinated Notes due 2006 189.6 --
8.875% Senior Subordinated Exchange Notes due 2007 376.4 --
11.375% Subordinated Exchange Debentures due 2009 39.4 --
Other notes 43.5 --
Obligations under capital leases 552.2 591.6
-----------------------------------------------------------------------
12,697.7 5,992.0
Less current portion 223.9 294.3
-----------------------------------------------------------------------
$12,473.8 $5,697.7
-----------------------------------------------------------------------
* Issues of Viacom International Inc. guaranteed by the Company.
The notes and debentures are presented net of an aggregate unamortized
discount of $21.4 million as of December 31, 2000 and $10.1 million as of
December 31, 1999.
As a result of the Merger, Viacom assumed approximately $3.7 billion of CBS
debt.
On March 28, 2000, the Viacom Credit Agreements were amended to allow for
the merger of CBS with and into the Company. On April 17, 2000, the CBS credit
agreement, which consisted of a $1.5 billion revolving credit facility
maturing August 29, 2001 and the Infinity credit agreement, which consisted of
a $1.5 billion revolving credit facility maturing August 29, 2001, were
amended to allow for the merger of CBS with and into the Company. On May 3,
2000, Infinity Broadcasting entered into two new credit facilities, totaling
$1.95 billion, comprised of a $1.45 billion 5-year revolving credit facility
and a $500 million 364-day revolving credit facility.
II-44
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
Borrowing rates under the CBS and Infinity facilities are determined at the
time of each borrowing and are based generally on a floating rate index, the
London Interbank Offer Rate ("LIBOR"), plus a margin based on the respective
senior unsecured debt rating.
On March 7, 2001, the Company cancelled all of the above-mentioned credit
agreements other than the Infinity Broadcasting $1.45 billion facility, and
entered into two new credit facilities. These two new facilities total $3.5
billion and are comprised of a $1.5 billion 5-year revolving credit facility
and a $2.0 billion 364-day revolving credit facility. The Company also amended
and restated the Infinity Broadcasting $1.45 billion facility; the terms and
conditions were substantially conformed to the new $1.5 billion 5-year
revolving credit facility and the Company was designated as the borrower. The
primary purpose of the facilities is to support commercial paper borrowings.
The Company, at its option, may borrow in certain foreign currencies up to
specified limits under the new $1.5 billion 5-year revolving credit facility.
Borrowing rates under the facilities are determined at the time of each
borrowing and are based generally on LIBOR plus a margin based on the
Company's senior unsecured debt rating. At December 31, 2000, LIBOR for
borrowing periods of one month and two months were 6.56% and 6.49%,
respectively.
The new and amended facilities contain certain covenants which, among other
things, require that the Company maintain a minimum interest coverage ratio.
At December 31, 2000 the Company was in compliance with the financial
covenants.
The Company pays a commitment fee based on the total amount of the loan
commitments. As of March 7, 2001, the facilities totaled $4.95 billion.
In March 2001, the Company increased its commercial paper program from $4.0
billion to $4.95 billion and Infinity Broadcasting cancelled its $3.25 billion
commercial paper program. Borrowings under the program have maturities of less
than a year and are supported by unused committed bank facilities. At December
31, 2000, the Company had borrowings under the program of approximately $1.7
billion and Infinity Broadcasting had borrowings under its commercial paper
program of approximately $2.1 billion.
On January 9, 2001, the Company issued, under Rule 144A, $400 million of
6.40% unsecured senior notes due January 30, 2006, $500 million of 7.70%
unsecured senior notes due July 30, 2010, and $750 million of 7.875% unsecured
senior debentures due July 30, 2030; interest on the senior notes and
debentures will be payable semi-annually. Proceeds from the debt issuance were
used to repay bank debt, including commercial paper. During March 2001, these
notes and debentures were exchanged for registered notes and debentures. The
unsecured senior debentures and the unsecured senior notes due July 30, 2010
are redeemable at any time at their principal amount plus the applicable
premium and accrued interest.
On August 1, 2000, the Company issued $1.15 billion of 7.70% unsecured
senior notes due July 30, 2010 and $500 million of 7.875% unsecured senior
debentures due July 30, 2030; interest on the senior notes and debentures will
be payable semi-annually. Proceeds from the debt issuance were used to repay
bank debt, including commercial paper. The senior notes and debentures are
redeemable at any time at their principal amount plus the applicable premium
and accrued interest.
On February 1, 2001, the Company redeemed all $60.3 million outstanding of
Infinity Broadcasting's 9% senior subordinated notes due 2006 at a redemption
price equal to 104.5% of the principal amount. On December 1, 2000, the
Company redeemed all $105.3 million outstanding of Infinity Broadcasting's
9.75% senior subordinated notes due 2005 at a redemption price equal to 104.9%
of the principal amount.
II-45
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
During 1999, the Company redeemed the remaining $211.8 million principal
amount of its 8% merger debentures outstanding and recognized an extraordinary
loss of $37.4 million, net of tax, on the early redemption.
The Company has classified short-term indebtedness as long-term debt based
upon its intent and ability to refinance such indebtedness on a long-term
basis. The Company's scheduled maturities of long-term debt outstanding at
December 31, 2000, excluding capital leases, are as follows:
---------------------------------------------------------
Year of Maturity
2001 2002 2003 2004 2005
---------------------------------------------------------
Long-term debt $1,557.8 $2,507.4 $911.7 $667.5 $2,924.8
---------------------------------------------------------
Blockbuster Credit Agreement
On June 21, 1999, Blockbuster entered into a $1.9 billion unsecured credit
agreement (the "Blockbuster Credit Agreement") with a syndicate of banks. The
Blockbuster Credit Agreement was comprised of a $700 million long-term
revolver due July 1, 2004; a $600 million term loan due in quarterly
installments beginning April 1, 2002 and ending July 1, 2004; and a $600
million short-term revolver, which was paid down during 2000. The repayment of
the short-term revolver permanently reduced the borrowing capacity under the
Blockbuster Credit Agreement from $1.9 billion to $1.3 billion. Interest rates
under the Blockbuster Credit Agreement are based on the prime rate or LIBOR at
Blockbuster's option at the time of the borrowing. A variable commitment fee
based on the total leverage ratio is charged on the unused amount of the
revolver (.25% at December 31, 2000).
The Blockbuster Credit Agreement contains certain restrictive covenants,
which, among other things, relate to the payment of dividends, repurchase of
Blockbuster's common stock or other distributions and also require compliance
with certain financial covenants with respect to a maximum leverage ratio and
a minimum fixed charge coverage ratio. At December 31, 2000, Blockbuster was
in compliance with all financial covenants under the Blockbuster Credit
Agreement.
On June 23, 1999, Blockbuster borrowed $1.6 billion, comprised of $400
million borrowed under the long-term revolver, $600 million borrowed under the
term loan, and $600 million under the short-term revolver. The proceeds of the
borrowings were used to pay amounts owed to Viacom. Blockbuster repaid $442.9
million of the short-term revolver through proceeds from its initial public
offering and repaid the remaining $157.1 million of the short-term revolver
during the year ended December 31, 2000. Blockbuster had $278.0 million of
available borrowing capacity under the long-term revolver at December 31,
2000. The weighted average interest rate at December 31, 2000 for these
borrowings was 8.0%.
Blockbuster's scheduled maturities of long-term debt outstanding at
December 31, 2000, excluding capital leases, are as follows:
-----------------------------------------------
Year of Maturity
2001 2002 2003 2004 2005
-----------------------------------------------
Long-term debt $8.0 $158.8 $279.3 $599.9 $1.0
-----------------------------------------------
11) FINANCIAL INSTRUMENTS
The Company's carrying value of financial instruments approximates fair
value, except for differences with respect to the notes and debentures and
certain differences related to other financial instruments that are not
significant. The carrying value of the senior debt and senior subordinated
debt is $6.4 billion and the fair value, which is estimated based on quoted
market prices, is $6.6 billion.
II-46
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
The Company enters into interest rate exchange agreements with off-balance
sheet risk in order to reduce its exposure to changes in interest on its
variable rate long-term debt and/or take advantage of changes in interest
rates. These interest rate exchange agreements include interest rate swaps and
interest rate caps. At December 31, 2000, the Company had no interest rate
exchange agreements outstanding with commercial banks.
The Company enters into foreign currency exchange contracts in order to
reduce its exposure to changes in foreign currency exchange rates that affect
the value of its firm commitments and certain anticipated foreign currency
cash flows. These contracts generally mature within the calendar year. The
Company does not enter into foreign currency contracts for speculative
purposes. To date, the contracts utilized have been purchased options, spots
and forward contracts. A spot or forward contract is an agreement between two
parties to exchange a specified amount of foreign currency, at a specified
exchange rate on a specified date. An option contract provides the right, but
not the obligation, to buy or sell currency at a fixed exchange rate on a
future date. In 2000 the foreign exchange contracts have principally been used
to hedge the British Pound, the Australian Dollar, the Japanese Yen, the
Canadian Dollar, the Singapore Dollar and the European Union's common currency
(the "Euro"). At December 31, 2000, the Company had outstanding contracts with
a notional value of approximately $199 million that expire in 2001. Realized
gains and losses on contracts that hedge anticipated future cash flows are
recognized in "Other items, net" and were not material. Option premiums are
expensed at the inception of the contract. Deferred gains and losses on
foreign currency exchange contracts as of December 31, 2000 were not material.
The Company continually monitors its positions with, and credit quality of,
the financial institutions which are counterparties to its financial
instruments. Outstanding letters of credit totaled $239 million at December
31, 2000. The Company is exposed to credit loss in the event of nonperformance
by the counterparties to the agreements. However, the Company does not
anticipate nonperformance by the counterparties. The Company's receivables do
not represent significant concentrations of credit risk at December 31, 2000,
due to the wide variety of customers, markets and geographic areas to which
the Company's products and services are sold.
12) STOCKHOLDERS' EQUITY
During 2000, the Company repurchased 10,000 shares of its Class A Common
Stock and 34.2 million shares of its Class B Common Stock for approximately
$1.95 billion in the aggregate. During 1999, the Company had repurchased a
total of 25,000 shares of its Class A Common Stock, 10.6 million shares of its
Class B Common Stock and 1.1 million Viacom Five-Year Warrants, for
approximately $466.4 million in the aggregate.
On July 7, 1999, the Viacom Five-Year Warrants expired. The Company
received proceeds of approximately $317 million and issued approximately 9.0
million shares of its Class B Common Stock in connection with the exercise of
4.5 million warrants issued as part of the 1994 acquisition of Paramount
Communications.
On December 2, 1998, the Company repurchased 12 million shares of its
convertible preferred stock from Bell Atlantic Corporation for $564 million in
cash. On January 5, 1999, the Company repurchased the remaining 12 million
shares of its convertible preferred stock from Bell Atlantic Corporation for
$612 million in cash.
Long-Term Incentive Plans--The Company has four Long-Term Incentive Plans
(the "Plans"): the Viacom Long-Term Management Incentive Plan (the "Viacom
Plan"), the Blockbuster Long-Term Management Incentive Plan (the "Blockbuster
Plan"), the Infinity Stock-Based Compensation Plans (the "Infinity Plan") and
MTVi Long-Term Incentive Plan (the "MTVi Plan"). The Plans provide for the
issuance of fixed grants of equity-based interests, which include stock
options, stock appreciation rights, restricted shares, phantom shares and
other equity-based interests.
II-47
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
The Company has adopted the disclosure-only provisions of SFAS 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"). In accordance with the
provisions of SFAS 123, the Company applies APB 25 "Accounting for Stock
Issued to Employees" and related interpretations in accounting for the Plans
and accordingly, does not recognize compensation expense for any of the Plans
because the Company typically does not issue options at exercise prices below
the market value at date of grant. Had compensation expense for the Plans been
determined based upon the fair value at the grant date for awards consistent
with the methodology prescribed by SFAS 123, the Company's consolidated net
earnings (loss) would have been $(922.0) million or $(0.75) per basic and
diluted common share, $263.2 million or $0.38 per basic and $0.37 per diluted
common share, and $(162.9) million or $(0.23) per basic and diluted common
share in 2000, 1999, and 1998 respectively. These pro forma effects may not be
representative of future amounts since the estimated fair value of stock
options on the date of grant is amortized to expense over the vesting period
and additional options may be granted in future years.
Viacom Plan--The purpose of the Viacom Plan is to benefit and advance the
interests of the Company by rewarding certain key employees for their
contributions to the financial success of the Company and thereby motivating
them to continue to make such contributions in the future. The Viacom Plan
provides for fixed grants of equity-based interests pursuant to awards of
phantom shares, stock options, stock appreciation rights, restricted shares or
other equity-based interests ("Awards"), and for subsequent payments of cash
with respect to phantom shares or stock appreciation rights based, subject to
certain limits, on their appreciation in value over stated periods of time.
The stock options generally vest over a four to six year period from the date
of grant and expire 10 years after the date of grant. The Company has reserved
a total of 14,038 shares of Viacom Inc. Class A Common Stock and 117,165,267
shares of Viacom Inc. Class B Common Stock for exercise of stock options.
During 2000, the total aggregate number of shares of Viacom Inc. Class B
Common Stock that may be issued under the 1997 plan was increased by 5,000,000
shares. In the second quarter of 2000, the Viacom Inc. 2000 Long-Term
Management Incentive Plan and 2000 Stock Option Plan for outside directors was
adopted. An aggregate of 100,000,000 and 1,000,000 shares of Viacom Inc. Class
B Common Stock may be issued under these plans, respectively. The stock
options available for future grant under the Viacom Plans are as follows:
December 31, 1998 14,849,484
December 31, 1999 11,726,413
December 31, 2000 107,266,077
The weighted-average fair value of each option as of the grant date was
$27.39, $19.89 and $12.97 in 2000, 1999 and 1998, respectively. The fair value
of each option grant is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions:
2000 1999 1998
----- ----- -----
Expected dividend yield(a) -- -- --
Expected stock price volatility 32.10% 29.64% 32.76%
Risk-free interest rate 6.56% 6.11% 5.43%
Expected life of options (years) 6.8 7.5 6.0
- --------
(a) The Company has not declared any cash dividends on its common stock for
any of the periods presented and has no present intention of so doing.
II-48
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
The following table summarizes the Company's stock option activity under
the Viacom Plans:
Options Weighted-Average
Outstanding Exercise Price
----------- ----------------
Balance at December 31, 1997 45,216,574 $15.78
-----------
Granted 13,576,420 30.53
Exercised (12,077,298) 16.16
Cancelled (1,802,390) 16.97
-----------
Balance at December 31, 1998 44,913,306 20.09
-----------
Granted 14,283,483 42.02
Exercised (4,403,681) 17.19
Cancelled (814,588) 18.59
-----------
Balance at December 31, 1999 53,978,520 26.16
-----------
Granted 11,147,875 57.12
CBS stock options assumed 64,258,809 24.76
Exercised (10,765,816) 17.42
Cancelled (1,440,083) 39.63
-----------
Balance at December 31, 2000 117,179,305 28.98
===========
The following table summarizes information concerning outstanding and
exercisable stock options under the Viacom Plans at December 31, 2000:
Outstanding Exercisable
--------------------------------- ---------------------------
Remaining Weighted-
Contractual Average
Range of Life Exercise Weighted-Average
Exercise Price Options (Years) Price Options Exercise Price
-------------- ----------- ----------- --------- ---------- ----------------
$ 0 to 9.99 7,033,493 2.8 $ 4.70 7,033,493 $ 4.70
10 to 19.99 39,904,525 5.2 16.38 33,508,530 16.57
20 to 29.99 16,632,440 5.6 24.25 16,289,056 24.26
30 to 39.99 20,933,600 6.9 31.69 13,252,262 31.48
40 to 49.99 14,562,606 8.5 42.46 1,689,999 46.77
50 to 59.99 17,010,641 9.3 55.70 504,770 56.42
60 to 69.99 1,092,000 9.5 68.91 -- --
70 to 71.00 10,000 9.6 71.00 -- --
----------- ----------
117,179,305 72,278,110
=========== ==========
Shares issuable under exercisable stock options:
December 31, 1998 8,892,882
December 31, 1999 12,647,656
December 31, 2000 72,278,110
Blockbuster Plan
On July 15, 1999, Blockbuster's Board of Directors adopted the Blockbuster
Plan for the benefit of its employees and directors. An aggregate of
25,000,000 shares of Blockbuster class A common stock is reserved
II-49
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
for issuance under the Blockbuster Plan, which provides for the issuance of
stock-based incentive awards, including stock options to purchase shares of
Blockbuster class A common stock, stock appreciation rights, restricted shares
of Blockbuster class A common stock, restricted share units and phantom
shares. Blockbuster stock options granted in 1999 generally vest over a five-
year period from the date of grant and generally expire 10 years after the
date of the grant and the Blockbuster Stock options granted in 2000 generally
vest over a four-year period from the date of grant and generally expire 10
years after the date of the grant.
The weighted average fair value of each Blockbuster option as of the grant
date was $5.63 for 2000 and $7.98 for 1999. The fair value of each Blockbuster
option grant is estimated on the date of grant using the Black-Scholes option-
pricing model with the following weighted-average assumptions:
2000 1999
---- ----
Expected dividend yield(a) 1.0% 0.6%
Expected stock price volatility 45.0% 45.0%
Risk-free interest rate 6.1% 6.2%
Expected life of options (years) 7.0 7.0
- --------
(a) Blockbuster's current intention is to pay dividends of $.02 per share each
quarter on both its class A common stock and class B common stock.
The following table summarizes Blockbuster's stock option activity pursuant
to the Blockbuster Plan:
Options Weighted-Average
Outstanding Exercise Price
----------- ----------------
Balance at December 31, 1998 -- $ --
Granted 11,573,108 14.99
Exercised -- --
Cancelled (337,629) 15.00
----------
Balance at December 31, 1999 11,235,479 14.99
Granted 4,695,235 11.04
Exercised -- --
Cancelled (2,235,173) 14.47
----------
Balance at December 31, 2000 13,695,541 13.72
==========
The following table summarizes information concerning outstanding and
exercisable Blockbuster stock options issued to Blockbuster employees and
directors at December 31, 2000:
Outstanding Exercisable
--------------------------------------- --------------------------
Remaining
Range of Contractual
Exercise Life Weighted-Average Weighted-Average
Price Options (Years) Exercise Price Options Exercise Price
-------- ---------- ----------- ---------------- --------- ----------------
$11.00 4,349,665 9.6 $11.00 -- $ --
13.50
to 15.00 9,345,876 8.7 14.99 1,923,326 14.99
---------- ---------
13,695,541 1,923,326
========== =========
Infinity Stock-Based Compensation Plans
Infinity had several stock-based compensation plans that provided for the
granting of stock-based awards to officers or employees of Infinity, its
parent and subsidiaries. Generally, Infinity stock option awards vest three
II-50
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
years from the date of grant and expire ten years from the date of grant. At
the time of the Merger, there were 16.6 million outstanding Infinity options
with a weighted-average exercise price of $23.49 per share. Infinity did not
grant any additional options in 2000 subsequent to the Merger.
The following table summarizes information concerning outstanding and
exercisable Infinity stock options at December 31, 2000:
Outstanding Exercisable
--------------------------------------- --------------------------
Remaining
Range of Contractual
Exercise Life Weighted-Average Weighted Average
Price Options (Years) Exercise Price Options Exercise Price
-------- ---------- ----------- ---------------- --------- ----------------
$ 0 to
9.99 753,816 5.3 $2.09 753,816 $2.09
10 to
19.99 924,279 7.3 13.47 924,279 13.47
20 to
29.99 5,183,786 8.2 26.15 1,727,929 26.15
30 to
36.19 6,295,751 9.2 34.22 -- --
---------- ---------
13,157,632 3,406,024
========== =========
In connection with the Company's merger with Infinity on February 2, 2001
(see Note 2), the Company converted approximately 12.9 million then-
outstanding Infinity options into approximately 7.6 million options to acquire
shares of the Company's Class B Common Stock with a weighted-average exercise
price of $52.01 per share.
MTVi Plan
MTVi, a subsidiary of the Company, operates the Company's Internet music
business. In 1999, the Company established the MTVi Plan to benefit and
advance the interests of the business by rewarding employees for their
contributions to the financial success of MTVi and thereby motivating them to
continue to make such contributions in the future. An aggregate of
approximately 12 million shares of MTVi Class A common stock is reserved for
issuance under the MTVi Plan. The MTVi stock options generally vest over a
three to four year period from the date of grant and expire 10 years after the
date of grant.
The weighted average fair value of each option as of the grant date was
$11.45 for 2000. The fair value of each MTVi option grant is estimated on the
date of grant using the Black-Scholes option-pricing model with the weighted-
average assumptions of an expected stock price volatility of 97.6%, risk-free
interest rate of 6.04% and expected life of 5 years.
At December 31, 2000, there were 4,214,700 outstanding stock options issued
with an exercise price of $15 under the MTVi Plan. All outstanding shares have
a weighted remaining contractual life of 8.79 years and none of them are
exercisable as of December 31, 2000.
13) INCOME TAXES
Earnings from continuing operations before income taxes are attributable to
the following jurisdictions:
------------------------------------
Year Ended
December 31, 2000 1999 1998
------------------------------------
United States $165.3 $656.3 $ 74.1
Foreign 395.3 187.6 63.2
------------------------------------
Total $560.6 $843.9 $137.3
------------------------------------
II-51
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
Components of the provision for income taxes on earnings from continuing
operations before income taxes are as follows:
-----------------------------------------
Year Ended
December 31, 2000 1999 1998
-----------------------------------------
Current:
Federal $553.1 $167.4 $151.0
State and local 209.8 21.3 34.9
Foreign 47.1 35.3 50.9
-----------------------------------------
810.0 224.0 236.8
Deferred (80.2) 187.4 (98.1)
-----------------------------------------
$729.8 $411.4 $138.7
-----------------------------------------
The equity losses of affiliated companies are shown net of tax on the
Company's Statements of Operations. The tax benefit relating to losses from
equity investments in 2000, 1999 and 1998 are $20.5 million, $17.7 million and
$24.0 million, respectively, which represents an effective tax rate of 14.2%,
22.6% and 36.7%, respectively.
The cumulative effect of change in accounting principle is presented net of
a tax benefit of $301.6 million.
The difference between the effective tax rates and the statutory U.S.
federal tax rate of 35% is principally due to the effect of non-deductible
goodwill amortization, state and local taxes and foreign income taxed below
statutory U.S. rates. In 2000 and 1999, respectively, $218.8 million and $58.8
million of income tax benefit was recorded as a component of stockholders'
equity as a result of exercised stock options.
A reconciliation of the statutory U.S. federal tax rate to the Company's
effective tax rate on earnings from continuing operations before income taxes
is summarized as follows:
-----------------------------------------------------------------------
Year Ended December 31, 2000 1999 1998
-----------------------------------------------------------------------
Statutory U.S. federal tax rate 35.0% 35.0% 35.0%
Amortization of intangibles 81.1 15.7 86.3
State and local taxes, net of federal tax benefit 7.3 3.7 5.7
Effect of foreign operations (17.7) (9.3) (35.5)
Merger-related costs and non-deductible expenses 19.5 -- --
Other, net 5.0 3.7 9.5
-----------------------------------------------------------------------
Effective tax rate on earnings from continuing
operations before income taxes 130.2% 48.8% 101.0%
-----------------------------------------------------------------------
II-52
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
The following is a summary of the components of the deferred tax accounts:
----------------------------------------------------------------
At December 31, 2000 1999
----------------------------------------------------------------
Deferred tax assets:
Provision for expense and losses $ 1,854.5 $436.6
Postretirement and other employee benefits 586.5 41.7
Tax credit and loss carryforwards 485.6 83.4
----------------------------------------------------------------
Total deferred tax assets 2,926.6 561.7
Valuation allowance (172.1) (96.0)
----------------------------------------------------------------
Net deferred tax assets 2,754.5 465.7
----------------------------------------------------------------
Deferred tax liabilities:
Property, equipment and intangible assets (2,522.0) (55.9)
Lease portfolio (422.2) --
Other (612.1) --
----------------------------------------------------------------
Total deferred tax liabilities (3,556.3) (55.9)
----------------------------------------------------------------
Deferred income taxes, net liability $ (801.8) $409.8
----------------------------------------------------------------
At December 31, 2000 and 1999, the Company had a net current deferred tax
asset of $336.3 million and $188.0 million, and net non-current deferred tax
liability of $1.1 billion and $221.8 million, respectively.
At December 31, 2000, the Company had net operating loss carryforwards for
federal, state and local and foreign jurisdiction of approximately $437.8
million, which expire in various years from 2001 through 2019. In addition,
the Company had alternative minimum tax credit carryforwards of $203.2 million
that have no expiration dates and foreign tax credit carryforwards of $64.3
million that expire through 2004.
The 2000 and 1999 deferred tax assets are reduced by a valuation allowance
of $172.1 million and $96.0 million, respectively, principally relating to tax
benefits of net operating losses which are not expected to be recognized as a
result of certain limitations applied where there is a change of ownership.
The Company's share of the undistributed earnings of foreign subsidiaries
not included in its consolidated federal income tax return that could be
subject to additional income taxes if remitted, was approximately $1.6 billion
and $1.4 billion at December 31, 2000 and December 31, 1999, respectively. No
provision has been recorded for the U.S. or foreign taxes that could result
from the remittance of such undistributed earnings since the Company intends
to reinvest these earnings outside the United States indefinitely and it is
not practicable to estimate the amount of such taxes.
14) PENSION PLANS, OTHER POSTRETIREMENT BENEFITS AND POSTEMPLOYMENT BENEFITS
The Company and certain of its subsidiaries have non-contributory pension
plans covering specific groups of employees. The benefits for these plans are
based primarily on an employee's years of service and pay near retirement.
Participant employees are vested in the plans after five years of service. The
Company's policy for all pension plans is to fund amounts in accordance with
the Employee Retirement Income Security Act of 1974. Plan assets consist
principally of common stocks, marketable bonds and U.S. government securities.
The Company's Class B Common Stock represents approximately 8.0% and 20.8% of
the plan assets' fair value at December 31, 2000 and 1999, respectively.
II-53
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
In addition, the Company sponsors a health and welfare plan that provides
certain postretirement health care and life insurance benefits to retired
employees and their covered dependents who are eligible for these benefits if
they meet certain age and service requirements. The plan is contributory and
contains cost-sharing features such as deductibles and coinsurance which are
adjusted annually. The plan is not funded and the Company funds these benefits
as claims are paid.
The significant changes in the components of the benefit obligation plan
assets and the net periodic cost in 2000 were due primarily to the merger with
CBS in May 2000.
The following table sets forth the change in benefit obligation for the
Company's benefit plans:
---------------------------------------------------------------------------
Postretirement
Pension Benefits Benefits
At December 31, 2000 1999 2000 1999
---------------------------------------------------------------------------
Change in benefit obligation:
Benefit obligation, beginning of
year $ 795.2 $ 844.2 $ 51.1 $53.6
Service cost 38.5 33.7 2.1 .7
Interest cost 278.9 61.5 59.3 3.7
Benefits paid (356.5) (45.2) (79.6) (5.7)
Actuarial (gain) (14.8) (147.9) (1.2) (1.6)
Business combinations 4,238.7 52.0 1,092.0 --
Participants' contributions .5 -- 2.9 .4
Amendments 1.5 .2 (6.4) --
Cumulative translation adjustments (3.0) 1.1 -- --
Special termination benefits 5.3 2.7 -- --
Curtailments -- (7.1) -- --
---------------------------------------------------------------------------
Benefit obligation, end of year $4,984.3 $ 795.2 $1,120.2 $51.1
---------------------------------------------------------------------------
The following table sets forth the change in plan assets for the Company's
benefit plans:
---------------------------------------------------------------------------
Postretirement
Pension Benefits Benefits
At December 31, 2000 1999 2000 1999
---------------------------------------------------------------------------
Change in plan assets:
Fair value of plan assets, beginning
of year $ 973.8 $ 786.6 $ -- $ --
Actual return on plan assets 160.6 167.2 1.3 --
Employer contributions 34.8 6.0 75.7 5.3
Benefits paid (356.5) (45.2) (79.6) (5.7)
Business combinations 4,082.4 56.5 46.1 --
Participants' contributions .5 -- 2.9 .4
Cumulative translation adjustments (4.4) 2.7 -- --
---------------------------------------------------------------------------
Fair value of plan assets, end of
year $4,891.2 $ 973.8 $ 46.4 $ --
---------------------------------------------------------------------------
For those pension plans with accumulated benefit obligations in excess of
plan assets, the projected benefit obligations and accumulated benefit
obligations were $511.9 million and $474.5 million, respectively, for 2000
II-54
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
and $103.4 million and $92.6 million, respectively, for 1999. The fair value of
such plan assets was $4.7 million for 2000 and $0 for 1999.
The accrued pension and postretirement costs recognized in the Company's
consolidated balance sheet are computed as follows:
----------------------------------------------------------------------------
Pension Postretirement
Benefits Benefits
At December 31, 2000 1999 2000 1999
----------------------------------------------------------------------------
Funded status: $ (93.1) $ 178.6 $(1,073.8) $(51.1)
Unrecognized actuarial (gain) (192.4) (336.8) (16.2) (17.1)
Unrecognized prior service cost
(benefit) 10.4 10.9 (10.5) (4.8)
Unrecognized asset at transition (1.1) (2.3) -- --
----------------------------------------------------------------------------
Accrued pension liability, net $(276.2) $(149.6) $(1,100.5) $(73.0)
----------------------------------------------------------------------------
Amounts recognized in the
Consolidated Balance Sheets:
Accrued pension liability $(536.3) $(172.0) $(1,100.5) $(73.0)
Prepaid benefits cost 239.1 8.4 -- --
Intangibles 1.9 .5 -- --
Accumulated other comprehensive pre-
tax loss 19.1 13.5 -- --
----------------------------------------------------------------------------
Net liability recognized $(276.2) $(149.6) $(1,100.5) $(73.0)
----------------------------------------------------------------------------
Net periodic cost for the Company's pension and postretirement benefit plans
consists of the following:
--------------------------------------------------------------------------------------
Postretirement
Pension Benefits Benefits
At December 31, 2000 1999 1998 2000 1999 1998
--------------------------------------------------------------------------------------
Components of net periodic cost:
Service cost $ 38.5 $ 33.7 $ 36.8 $ 2.1 $ .7 $ 1.0
Interest cost 278.9 61.5 57.8 59.3 3.7 6.5
Expected return on plan assets (301.8) (79.4) (64.4) (2.2) -- --
Amortization of prior service cost 1.9 1.6 2.6 (.6) (.7) (3.0)
Amortization of transition obligation (1.1) (.2) (2.2) -- -- --
Recognized actuarial (gain) loss (17.0) 1.1 3.7 (1.2) (.7) (2.9)
Curtailment (gain) -- (7.1) (31.4) -- -- (77.5)
Special termination benefits 1.7 3.6 -- -- -- --
--------------------------------------------------------------------------------------
Net periodic cost $ 1.1 $ 14.8 $ 2.9 $57.4 $3.0 $(75.9)
--------------------------------------------------------------------------------------
II-55
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
The following weighted average assumptions were used in accounting for the
pension plans:
----------------------------------------------------------
2000 1999 1998
----------------------------------------------------------
Discount rate 7.71% 8.0% 6.75%
Expected return on plan assets 8.3% 9.5% 9.5%
Rate of increase in future compensation 5.0% 5.0% 5.0%
----------------------------------------------------------
The following weighted average assumptions were used in accounting for
postretirement benefits:
--------------------------------------------------------
2000 1999 1998
--------------------------------------------------------
Discount rate 7.75% 8.0% 6.75%
Projected health care cost trend rate 8.0% 5.5% 6.0%
Ultimate trend rate 5.8% 5.5% 5.5%
Year ultimate trend rate is achieved 2008 1999 1999
--------------------------------------------------------
Assumed health care cost trend rates could have a significant effect on the
amounts reported for the postretirement health care plan. A one-percentage
point change in assumed health care cost trend rates would have the following
effects:
------------------------------------------------------------------------
One Percentage One Percentage
Point Increase Point Decrease
------------------------------------------------------------------------
Effect on total of service and interest
cost components $ 3.1 $ (2.9)
Effect on the accumulated postretirement
benefit obligation $39.1 $(36.0)
------------------------------------------------------------------------
In 1998, as a result of the sale of Non-Consumer Publishing, the Company
realized curtailment gains of $31.4 million related to pension benefits and
$77.5 million related to postretirement benefits, which have been included in
the net gain on disposition for that year.
The Company contributes to multi-employer plans that provide pension and
health and welfare benefits to certain employees under collective bargaining
agreements. The contributions to these plans were $32.3 million (2000) and
$26.1 million (1999).
In addition, the Company has defined contribution plans for the benefit of
substantially all employees meeting certain eligibility requirements. Employer
contributions to such plans were $35.8 million, $16.5 million and $21.1
million for the years ended December 31, 2000, 1999 and 1998.
15) COMMITMENTS AND CONTINGENCIES
The Company has long-term noncancelable operating lease commitments for
retail and office space and equipment, transponders, studio facilities and
vehicles. The Company has also entered into capital leases for satellite
transponders and buildings.
Infinity's outdoor advertising business has franchise rights entitling it
to display advertising on such media as buses, taxis, trains, bus shelters,
terminals, billboards, and phone kiosks. Under most of these franchise
agreements, the franchiser is entitled to receive the greater of a percentage
of the relevant advertising revenues, net of advertising agency fees, or a
specified guaranteed minimum annual payment.
II-56
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
At December 31, 2000, minimum rental payments under noncancelable leases
and minimum franchise payments are as follows:
-------------------------------------------------------------
Leases
----------------- Guaranteed Minimum
Capital Operating Franchise Payments
-------------------------------------------------------------
2001 $173.7 $ 831.6 $ 310.5
2002 175.3 691.5 280.1
2003 104.3 623.8 235.6
2004 67.5 500.4 219.8
2005 55.5 389.8 177.2
2006 and thereafter 109.7 1,978.9 311.1
------ -------- --------
Total minimum lease
payments 686.0 $5,016.0 $1,534.3
======== ========
Less amounts
representing interest 133.8
------
Present value of net
minimum payments $552.2
-------------------------------------------------------------
Future minimum capital lease payments have not been reduced by future
minimum sublease rentals of $17.9 million. Rent expense amounted to $838.2
million (2000), $601.7 million (1999) and $533.8 million (1998).
The commitments of the Company for program license fees, estimated to
aggregate approximately $15.2 billion, are not reflected in the balance sheet
as of December 31, 2000. These commitments include approximately $10.8 billion
for the acquisition of sports programming rights. A majority of such fees are
payable over several years, as part of normal programming expenditures.
The Company, Blockbuster and Paramount Home Entertainment are among the
defendants in a lawsuit filed on July 21, 1999 in the United States District
Court for the Western District of Texas by one former and three present
independent video retailers against the major motion picture studios and the
Company. The plaintiffs, purporting to act as class representatives on behalf
of themselves and all others similarly situated, allege that the Company and
the studios conspired among themselves and with Blockbuster to restrain
competition in the nationwide market for distribution of videocassettes for
rental to the public in violation of federal and California law. Plaintiffs
seek injunctive relief under federal law as well as triple the amount of the
alleged actual damages to themselves and those similarly situated under
California statutes. In January 2001, plaintiffs moved to withdraw their
California state law claims from the federal lawsuit in Texas and filed a
substantially similar complaint with approximately 200 additional named
plaintiffs in Superior Court for the County of Los Angeles. This complaint
also sought certification of a nationwide class of similarly situated
plaintiffs. In March 2001, the Texas court denied the plaintiffs' motion for
class certification of both the federal and the California state law claims in
the federal action and denied the plaintiffs' motion to withdraw their
California state law claims from that action. The Company believes that the
plaintiffs' position in these litigations is without merit and intends to
defend itself vigorously in the litigations.
The Company is a defendant in numerous lawsuits claiming various asbestos-
related personal injuries, which allegedly occurred from use or inclusion of
asbestos in certain products supplied by previously divested industrial
business, generally in the pre-1970 time period. Typically, these lawsuits are
brought against multiple defendants in state and Federal courts. The Company
was neither a manufacturer nor a producer of asbestos. As of December 31,
2000, the Company had pending approximately 99,590 asbestos cases, excluding
cases in various stages of settlement. The Company has brought suit against
certain of its insurance carriers with respect
II-57
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
to asbestos claims. Under the terms of a settlement agreement resulting from
this suit, carriers that have agreed to the settlement are now reimbursing the
Company for a substantial portion of its current costs and settlement
associated with asbestos claims. The Company believes that it has meritorious
defenses to asbestos matters, that where appropriate it has adequately
provided for resolution of matters and that any ultimate liability resulting
from asbestos matters is not likely to have a material adverse effect on its
results of operations, financial position or cash flows.
The Company from time to time receives claims from federal and state
environmental regulatory agencies and other entities asserting that it is or
may be liable for environmental cleanup costs and related damages, principally
relating to discontinued operations conducted by companies acquired by the
Company. The Company's liabilities reflect management's best estimate of its
environmental exposure. Such liability was not discounted or reduced by
potential insurance recoveries and reflects management's estimate of cost
sharing at multiparty sites. The estimated liability was calculated based upon
currently available facts, existing technology and presently enacted laws and
regulations. On the basis of its experience and the information currently
available to it, the Company believes that the claims it has received will not
have a material adverse effect on its results of operations, financial
position or liquidity.
In addition to the above matters, the Company and various of its
subsidiaries are parties to certain other legal proceedings. Litigation is
inherently uncertain and always difficult to predict. However, based on its
understanding and evaluation of the relevant facts and circumstances, the
Company believes that these matters are not likely to have a material adverse
effect on its results of operations, financial position or cash flows.
16) REPORTABLE SEGMENTS
The following tables set forth the Company's financial performance by
reportable operating segment. As a result of the merger with CBS, the segment
information reflects a new organizational structure. Prior period information
for Viacom has been reclassified to conform to the new structure. Intersegment
revenues are recorded at fair market value as if the sales were to third
parties and are eliminated in consolidation. Intersegment revenues of the
Entertainment segment for 2000, 1999 and 1998 were $374.0 million, $248.4
million and $146.1 million, respectively. Residual costs of discontinued
businesses primarily include pension and postretirement benefit costs for
benefit plans retained by CBS for previously divested industrial businesses.
The Company evaluates performance based on many factors; one of the primary
measures is EBITDA, defined as operating income before depreciation and
amortization. The Company believes that EBITDA is an appropriate measure of
evaluating the operating performance of its segments. However, EBITDA should
be considered in addition to, not as a substitute for or superior to,
operating income, net earnings, cash flows, and other measures of financial
performance prepared in accordance with generally accepted accounting
principles ("GAAP"). As EBITDA is not a measure of performance calculated in
accordance with GAAP, this measure may not be comparable to similarly titled
measures employed by other companies.
II-58
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
--------------------------------------------------------------------------
Year ended December 31, 2000 1999 1998
--------------------------------------------------------------------------
Revenues:
Cable Networks $ 3,895.0 $ 3,045.5 $ 2,607.9
Television 5,381.7 2,352.0 2,271.4
Infinity 2,764.7 -- --
Entertainment 2,758.3 2,665.9 2,914.3
Video 4,960.1 4,463.5 3,893.4
Publishing 596.0 610.7 564.6
Online 100.7 29.8 13.7
Intercompany eliminations (412.8) (308.6) (169.2)
--------------------------------------------------------------------------
Total Revenues $20,043.7 $12,858.8 $12,096.1
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Year ended December 31, 2000 1999 1998
--------------------------------------------------------------------------
EBITDA:
Cable Networks $ 1,495.0 $ 1,053.1 $ 851.3
Television 979.5 271.5 372.9
Infinity 1,282.6 -- --
Entertainment 368.8 378.3 368.7
Video 534.8 520.3 39.9
Publishing 71.3 74.0 71.2
Online (182.1) (48.4) (3.5)
--------------------------------------------------------------------------
Segment total 4,549.9 2,248.8 1,700.5
Reconciliation to Operating Income:
Corporate expenses/eliminations (928.0) (156.8) (171.6)
Residual costs of discontinued
operations (77.5) -- --
Depreciation and amortization (2,223.5) (844.7) (777.3)
--------------------------------------------------------------------------
Total Operating Income $ 1,320.9 $ 1,247.3 $ 751.6
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Year ended December 31, 2000 1999 1998
--------------------------------------------------------------------------
Depreciation and Amortization:
Cable Networks $ 245.0 $ 120.7 $ 107.0
Television 548.3 128.1 110.5
Infinity 693.2 -- --
Entertainment 159.1 147.2 133.2
Video 459.1 392.4 382.1
Publishing 21.7 19.7 18.0
Online 74.6 16.1 4.0
--------------------------------------------------------------------------
Segment total 2,201.0 824.2 754.8
Corporate 22.5 20.5 22.5
--------------------------------------------------------------------------
Total Depreciation and Amortization $ 2,223.5 $ 844.7 $ 777.3
--------------------------------------------------------------------------
II-59
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
----------------------------------------------------------------
At December 31, 2000 1999 1998
----------------------------------------------------------------
Total Assets:
Cable Networks $ 7,893.2 $ 3,138.1 $ 2,770.2
Television 25,177.2 4,744.2 4,577.4
Infinity 33,689.7 -- --
Entertainment 4,853.9 5,899.5 5,699.0
Video 8,385.1 8,475.6 8,142.6
Publishing 954.1 948.1 962.4
Online 425.2 162.1 5.8
----------------------------------------------------------------
Segment total 81,378.4 23,367.6 22,157.4
Corporate expenses/eliminations 1,267.7 1,118.8 1,455.7
----------------------------------------------------------------
Total Assets $82,646.1 $24,486.4 $23,613.1
----------------------------------------------------------------
----------------------------------------------------------------
Year Ended December 31, 2000 1999 1998
----------------------------------------------------------------
Capital Expenditures:
Cable Networks $ 120.5 $ 83.4 $ 89.8
Television 100.1 51.3 60.6
Infinity 72.0 -- --
Entertainment 87.9 134.3 174.7
Video 212.1 384.9 196.0
Publishing 6.0 8.7 37.5
Online 53.6 22.8 --
----------------------------------------------------------------
Segment total 652.2 685.4 558.6
Corporate 6.8 20.8 44.9
----------------------------------------------------------------
Total Capital Expenditures $ 659.0 $ 706.2 $ 603.5
----------------------------------------------------------------
Information regarding the Company's operations by geographic area is as
follows:
-----------------------------------------------------------
Year Ended December 31, 2000 1999 1998
-----------------------------------------------------------
Revenues(a):
United States $16,428.3 $10,207.0 $ 9,268.3
International 3,615.4 2,651.8 2,827.8
-----------------------------------------------------------
Total Revenues $20,043.7 $12,858.8 $12,096.1
-----------------------------------------------------------
Long-lived Assets:
United States $71,979.5 $17,675.6 $16,857.0
International 2,834.2 1,401.3 1,326.9
-----------------------------------------------------------
Total Long-lived Assets $74,813.7 $19,076.9 $18,183.9
-----------------------------------------------------------
Intercompany transfers between geographic areas are not significant.
(a) Revenue classifications are based on customers' locations.
II-60
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
17) OTHER ITEMS, NET
In 2000, "Other items, net" of $8.8 million principally reflects foreign
exchange gains of $31.7 million and gains on the sale of assets of
approximately $78.7 million which were mostly offset by the write down of
several internet cost investments to their fair market value for approximately
$66.9 million and losses associated with securitizing trade receivables. In
1999, "Other items, net" of $17.8 million principally reflects a $25.2 million
foreign exchange gain and net gain of $17.1 million from the sale of land,
property and equipment, partially offset by losses associated with
securitizing trade receivables. In 1998, "Other items, net" of ($15.3) million
reflects a loss of approximately $91 million associated with the closing of
the Viacom Entertainment Store, losses associated with foreign exchange and
securitizing trade receivables, partially offset by a gain of approximately
$118.9 million from the sale of a cost investment.
18) EXTRAORDINARY LOSS
For the year ended December 31, 1999, the Company recognized an
extraordinary loss of $37.7 million, net of tax of $26.2 million, or a loss of
$.06 per basic and diluted common share, on the early extinguishment of the
8.0% merger debentures and the 10.25% senior subordinated notes.
For the year ended December 31, 1998, the Company recognized an
extraordinary loss of $74.7 million, net of tax of $51.9 million, or a loss of
$.10 per basic and diluted common share, on the early extinguishment of the
10.25% senior subordinated notes for $163.7 million, 7.0% senior subordinated
debentures for $231.5 million and the 8.0% merger debentures for $555.6
million.
19) SUPPLEMENTAL CASH FLOW INFORMATION
--------------------------------------------------------------------------
Year Ended December 31, 2000 1999 1998
--------------------------------------------------------------------------
Cash payments for interest, net of amounts
capitalized $ 651.4 $ 445.6 $ 668.2
Cash payments for income taxes $ 61.2 $ 615.8 $ 656.6
Supplemental schedule of non-cash
financing and investing activities:
Equipment acquired under capitalized
leases $ 72.9 $ 223.4 $ 116.8
Fair value of assets acquired $ 61,910.3 $ 463.2 $ 138.2
Fair value of liabilities assumed (14,849.3) (.8) (11.8)
Minority interest in net assets acquired (5,712.1) (150.0) --
Cash paid, net of cash acquired (2,380.0) (312.4) (126.4)
--------------------------------------------------------------------------
Impact on stockholders' equity $ 38,968.9 $ -- $ --
--------------------------------------------------------------------------
II-61
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
20) QUARTERLY FINANCIAL DATA (unaudited):
- ------------------------------------------------------------------------------
First Second Third Fourth Total
2000 Quarter Quarter(1) Quarter(1) Quarter(1) Year(1)
- ------------------------------------------------------------------------------
Revenues(2) $3,025.8 $4,850.9 $5,810.8 $6,356.2 $20,043.7
Operating income
(loss)(3)(4) $ 240.4 $ (278.2) $ 759.9 $ 598.8 $ 1,320.9
Earnings (loss) from
continuing
operations(4) $ 68.0 $ (495.6) $ 33.4 $ 30.4 $ (363.8)
Net earnings (loss)(4) $ (384.3) $ (495.6) $ 33.4 $ 30.4 $ (816.1)
Net earnings (loss)
attributable to common
stock(4) $ (384.3) $ (495.6) $ 33.4 $ 30.4 $ (816.1)
Basic earnings per
common share:
Earnings (loss) from
continuing operations $ .10 $ (.41) $ .02 $ .02 $ (.30)
Net earnings (loss) $ (.55) $ (.41) $ .02 $ .02 $ (.67)
Diluted earnings per
common share:
Earnings (loss) from
continuing operations $ .10 $ (.41) $ .02 $ .02 $ (.30)
Net earnings (loss) $ (.54) $ (.41) $ .02 $ .02 $ (.67)
Weighted average number
of common shares:
Basic 694.8 1,207.6 1,503.7 1,498.2 1,225.3
Diluted 711.5 1,207.6 1,544.5 1,531.1 1,225.3
- ------------------------------------------------------------------------------
1999
- ------------------------------------------------------------------------------
Revenues $2,951.1 $3,003.3 $3,332.0 $3,572.4 $12,858.8
Operating income(5) $ 277.5 $ 282.3 $ 321.2 $ 366.3 $ 1,247.3
Earnings from
continuing operations $ 68.4 $ 59.3 $ 110.9 $ 133.1 $ 371.7
Net earnings(6) $ 44.9 $ 59.3 $ 96.7 $ 133.1 $ 334.0
Net earnings
attributable to common
stock $ 32.5 $ 59.3 $ 96.7 $ 133.1 $ 321.6
Basic earnings per
common share:
Earnings from
continuing operations $ .08 $ .09 $ .16 $ .19 $ .52
Net earnings $ .05 $ .09 $ .14 $ .19 $ .46
Diluted earnings per
common share:
Earnings from
continuing operations $ .08 $ .08 $ .16 $ .19 $ .51
Net earnings $ .05 $ .08 $ .14 $ .19 $ .45
Weighted average number
of common shares:
Basic 696.1 690.6 696.7 697.4 695.2
Diluted 711.1 705.0 709.5 712.1 709.5
- ------------------------------------------------------------------------------
(1) Includes financial information for CBS from the date of its merger with
and into Viacom on May 4, 2000. Accordingly, operating results are not
necessarily comparable on a year-to-year basis.
(2) Revenues have been restated based on the guidelines set forth in SAB 101,
"Revenue Recognition in Financial Statements".
(3) The second quarter of 2000 included merger-related charges of $698
million ($505 million after-tax) related to the merger with CBS and the
acquisition of the remaining 50% interest in UPN that the Company did not
already own.
(4) The first quarter of 2000 included an after-tax charge of $452.3 million
related to the Company's early adoption of SOP 00-2. This charge was
reflected as a cumulative effect of a change in accounting principle,
effective January 1, 2000. Under SOP 00-2, for the three months ended
March 31, 2000, the Company recognized additional operating expenses of
$14.6 million ($8.0 million after-tax).
(5) The third quarter of 1999 included a $81.1 million charge for integrating
the operations of Spelling into Paramount Television.
(6) The first and third quarter of 1999 included an extraordinary loss of
$23.5 million and $14.2 million, net of tax, respectively, on the early
extinguishment of debt (See Note 18).
II-62
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
21) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Viacom International is a wholly owned subsidiary of the Company. The
Company has fully and unconditionally guaranteed Viacom International debt
securities (See Note 10). The Company has determined that separate financial
statements and other disclosures concerning Viacom International are not
material to investors. The following condensed consolidating financial
statements present the results of operations, financial position and cash
flows of the Company, Viacom International, the direct and indirect Non-
Guarantor Affiliates of the Company, and the eliminations necessary to arrive
at the information for the Company on a consolidated basis.
Year Ended December 31, 2000
------------------------------------------------------------
Non-
Viacom Viacom Guarantor Viacom Inc.
Inc. International Affiliates Eliminations Consolidated
- -------------------------------------------------------------------------------------
Revenues $ 271.7 $2,520.2 $17,264.4 $(12.6) $20,043.7
Expenses:
Operating 107.4 813.5 10,766.2 20.0 11,707.1
Selling, general and
administrative 122.5 892.6 3,078.6 -- 4,093.7
Merger-related charges -- 650.0 48.5 -- 698.5
Depreciation and
amortization 14.6 149.6 2,059.3 -- 2,223.5
- -------------------------------------------------------------------------------------
Total expenses 244.5 2,505.7 15,952.6 20.0 18,722.8
- -------------------------------------------------------------------------------------
Operating income 27.2 14.5 1,311.8 (32.6) 1,320.9
Other income (expense):
Interest income
(expense), net (598.9) 67.4 (237.6) -- (769.1)
Other items, net (19.4) 26.7 1.5 -- 8.8
- -------------------------------------------------------------------------------------
Earnings (loss) before
income taxes (591.1) 108.6 1,075.7 (32.6) 560.6
Benefit (provision) for
income taxes 236.5 (154.6) (811.7) -- (729.8)
Equity in loss of
affiliated companies,
net of tax (461.5) (463.0) (158.2) 958.5 (124.2)
Minority interest, net
of tax -- 20.1 (90.5) -- (70.4)
- -------------------------------------------------------------------------------------
Net loss before
cumulative effect of
change in accounting
principle (816.1) (488.9) 15.3 925.9 (363.8)
Cumulative effect of
change in accounting
principle, net of tax -- -- (452.3) -- (452.3)
- -------------------------------------------------------------------------------------
Net loss $(816.1) $ (488.9) $ (437.0) $925.9 $ (816.1)
- -------------------------------------------------------------------------------------
II-63
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
Year Ended December 31, 1999
------------------------------------------------------------
Non-
Viacom Viacom Guarantor Viacom Inc.
Inc. International Affiliates Eliminations Consolidated
- -------------------------------------------------------------------------------------
Revenues $ 35.4 $2,164.6 $10,709.5 $ (50.7) $12,858.8
Expenses:
Operating 30.5 706.3 7,680.8 (79.7) 8,337.9
Selling, general and
administrative 3.0 783.2 1,572.4 -- 2,358.6
Restructuring charge -- -- 70.3 -- 70.3
Depreciation and
amortization 4.6 105.4 734.7 -- 844.7
- -------------------------------------------------------------------------------------
Total expenses 38.1 1,594.9 10,058.2 (79.7) 11,611.5
- -------------------------------------------------------------------------------------
Operating income (loss) (2.7) 569.7 651.3 29.0 1,247.3
Other income (expense):
Interest income
(expense), net (361.3) 77.4 (137.3) -- (421.2)
Other items, net (24.8) 28.0 14.6 -- 17.8
- -------------------------------------------------------------------------------------
Earnings (loss) before
income taxes (388.8) 675.1 528.6 29.0 843.9
Benefit (provision) for
income taxes 159.5 (276.8) (294.1) -- (411.4)
Equity in earnings
(loss) of affiliated
companies, net of tax 600.7 199.9 (82.1) (779.2) (60.7)
Minority interest, net
of tax -- 2.8 (2.9) -- (.1)
- -------------------------------------------------------------------------------------
Earnings before
extraordinary loss 371.4 601.0 149.5 (750.2) 371.7
Extraordinary loss, net
of tax (37.4) (.3) -- -- (37.7)
- -------------------------------------------------------------------------------------
Net earnings 334.0 600.7 149.5 (750.2) 334.0
Cumulative convertible
preferred stock
dividend requirement (.4) -- -- -- (.4)
Premium on repurchase
of preferred stock (12.0) -- -- -- (12.0)
- -------------------------------------------------------------------------------------
Net earnings
attributable to common
stock $ 321.6 $ 600.7 $ 149.5 $(750.2) $ 321.6
- -------------------------------------------------------------------------------------
II-64
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
Year Ended December 31, 1998
------------------------------------------------------------
Non-
Viacom Viacom Guarantor Viacom Inc.
Inc. International Affiliates Eliminations Consolidated
- --------------------------------------------------------------------------------------
Revenues $ 39.4 $1,775.3 $10,301.9 $(20.5) $12,096.1
Expenses:
Operating 33.3 563.7 7,929.8 (20.5) 8,506.3
Selling, general and
administrative 2.6 650.6 1,407.7 -- 2,060.9
Depreciation and
amortization 2.1 87.0 688.2 -- 777.3
- --------------------------------------------------------------------------------------
Total expenses 38.0 1,301.3 10,025.7 (20.5) 11,344.5
- --------------------------------------------------------------------------------------
Operating income 1.4 474.0 276.2 -- 751.6
Other income (expense):
Interest expense, net (516.0) (34.0) (49.0) -- (599.0)
Other items, net (21.2) 89.0 (83.1) -- (15.3)
- --------------------------------------------------------------------------------------
Earnings (loss) from
continuing operations
before income taxes (535.8) 529.0 144.1 -- 137.3
Benefit (provision) for
income taxes 219.7 (216.9) (141.5) -- (138.7)
Equity in earnings
(loss) of affiliated
companies, net of tax 236.9 (236.3) (54.0) 12.0 (41.4)
Minority interest, net
of tax -- 1.3 (2.0) -- (.7)
- --------------------------------------------------------------------------------------
Earnings (loss) from
continuing operations (79.2) 77.1 (53.4) 12.0 (43.5)
Discontinued operations:
Loss, net of tax -- -- (54.1) -- (54.1)
Net gain (loss) on
dispositions, net of
tax -- 191.2 (141.3) -- 49.9
- --------------------------------------------------------------------------------------
Net earnings (loss)
before extraordinary
loss (79.2) 268.3 (248.8) 12.0 (47.7)
Extraordinary loss, net
of tax (43.2) (31.5) -- -- (74.7)
- --------------------------------------------------------------------------------------
Net earnings (loss) (122.4) 236.8 (248.8) 12.0 (122.4)
Cumulative convertible
preferred stock
dividend requirement (57.2) -- -- -- (57.2)
Discount on repurchase
of preferred stock 30.0 -- -- -- 30.0
- --------------------------------------------------------------------------------------
Net earnings (loss)
attributable to common
stock $(149.6) $ 236.8 $ (248.8) $ 12.0 $ (149.6)
- --------------------------------------------------------------------------------------
II-65
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
At December 31, 2000
--------------------------------------------------------------
Non-
Viacom Viacom Guarantor Viacom Inc.
Inc. International Affiliates Eliminations Consolidated
- ----------------------------------------------------------------------------------------
Assets
Cash and cash
equivalents $ 192.8 $ 326.5 $ 415.2 $ -- $ 934.5
Receivables, net 89.3 456.0 3,661.3 (242.5) 3,964.1
Inventory 11.3 259.9 1,130.8 -- 1,402.0
Other current assets 355.1 425.5 789.3 (38.1) 1,531.8
- ----------------------------------------------------------------------------------------
Total current assets 648.5 1,467.9 5,996.6 (280.6) 7,832.4
- ----------------------------------------------------------------------------------------
Property and equipment 170.0 744.8 8,070.9 -- 8,985.7
Less accumulated
depreciation and
amortization 14.2 319.9 2,049.8 -- 2,383.9
- ----------------------------------------------------------------------------------------
Net property and
equipment 155.8 424.9 6,021.1 -- 6,601.8
- ----------------------------------------------------------------------------------------
Inventory -- 518.6 3,132.1 (17.8) 3,632.9
Intangibles, at
amortized cost 264.9 636.4 61,102.8 -- 62,004.1
Investments in
consolidated
subsidiaries 49,331.0 14,898.9 -- (64,229.9) --
Other assets 198.2 695.1 1,813.0 (131.4) 2,574.9
- ----------------------------------------------------------------------------------------
Total Assets $50,598.4 $18,641.8 $78,065.6 $(64,659.7) $82,646.1
- ----------------------------------------------------------------------------------------
Liabilities and
Stockholders' Equity
Accounts payable $ -- $ 35.2 $ 1,332.3 $ (106.4) $ 1,261.1
Accrued expenses and
other 312.3 1,515.5 3,379.3 (154.2) 5,052.9
Accrued participations -- -- 1,234.5 (14.2) 1,220.3
Current portion of long-
term debt -- 10.8 213.1 -- 223.9
- ----------------------------------------------------------------------------------------
Total current
liabilities 312.3 1,561.5 6,159.2 (274.8) 7,758.2
- ----------------------------------------------------------------------------------------
Long-term debt 7,194.1 858.2 4,613.2 (191.7) 12,473.8
Other liabilities (9,118.5) 3,588.9 5,908.2 7,028.4 7,407.0
Minority interest -- 158.9 6,881.3 -- 7,040.2
Stockholders' equity:
Preferred Stock -- 106.1 20.4 (126.5) --
Common Stock 15.9 185.7 508.8 (694.5) 15.9
Additional paid-in
capital 50,729.9 7,253.4 54,621.6 (61,875.0) 50,729.9
Retained earnings 5,523.0 4,931.1 (496.5) (8,525.8) 1,431.8
Accumulated other
comprehensive income
(loss) (.1) (2.0) (150.6) .2 (152.5)
- ----------------------------------------------------------------------------------------
56,268.7 12,474.3 54,503.7 (71,221.6) 52,025.1
Less treasury stock, at
cost 4,058.2 -- -- -- 4,058.2
- ----------------------------------------------------------------------------------------
Total stockholders'
equity 52,210.5 12,474.3 54,503.7 (71,221.6) 47,966.9
- ----------------------------------------------------------------------------------------
Total Liabilities and
Stockholders' Equity $50,598.4 $18,641.8 $78,065.6 $(64,659.7) $82,646.1
- ----------------------------------------------------------------------------------------
II-66
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
At December 31, 1999
-----------------------------------------------------------------
Viacom Viacom Non-Guarantor Viacom Inc.
Inc. International Affiliates Eliminations Consolidated
- -------------------------------------------------------------------------------------------
Assets
Cash and cash
equivalents $ 81.6 $ 486.0 $ 113.2 $ -- $ 680.8
Receivables, net 10.9 340.4 1,441.7 (95.6) 1,697.4
Inventory 10.9 250.4 1,698.2 -- 1,959.5
Other current assets 2.8 172.6 685.3 -- 860.7
- -------------------------------------------------------------------------------------------
Total current assets 106.2 1,249.4 3,938.4 (95.6) 5,198.4
- -------------------------------------------------------------------------------------------
Property and equipment 13.4 684.5 4,558.0 -- 5,255.9
Less accumulated
depreciation and
amortization 3.8 242.6 1,584.2 -- 1,830.6
- -------------------------------------------------------------------------------------------
Net property and
equipment 9.6 441.9 2,973.8 -- 3,425.3
- -------------------------------------------------------------------------------------------
Inventory -- 365.2 2,464.3 -- 2,829.5
Intangibles, at
amortized cost 106.4 647.1 10,725.4 -- 11,478.9
Investments in
consolidated
subsidiaries 6,829.2 14,891.0 -- (21,720.2) --
Other assets 58.0 204.7 1,411.0 (119.4) 1,554.3
- -------------------------------------------------------------------------------------------
Total Assets $ 7,109.4 $17,799.3 $21,512.9 $(21,935.2) $24,486.4
- -------------------------------------------------------------------------------------------
Liabilities and
Stockholders' Equity
Accounts payable $ .1 $ 9.0 $ 578.6 $ (43.3) $ 544.4
Accrued expenses and
other 15.3 1,637.3 1,441.6 (620.4) 2,473.8
Accrued participations -- -- 1,109.1 (21.9) 1,087.2
Current portion of long-
term debt -- 17.7 276.6 -- 294.3
- -------------------------------------------------------------------------------------------
Total current
liabilities 15.4 1,664.0 3,405.9 (685.6) 4,399.7
- -------------------------------------------------------------------------------------------
Long-term debt 3,262.1 1,013.4 1,422.2 -- 5,697.7
Other liabilities (11,421.6) 1,889.6 7,339.9 4,202.6 2,010.5
Minority interest -- 144.4 1,102.1 -- 1,246.5
Stockholders' equity:
Preferred Stock -- 104.1 20.4 (124.5) --
Common Stock 7.5 185.7 495.4 (681.1) 7.5
Additional paid-in
capital 10,338.5 7,342.3 7,739.4 (15,081.7) 10,338.5
Retained earnings 6,339.2 5,422.7 50.9 (9,564.9) 2,247.9
Accumulated other
comprehensive income
(loss) -- 33.1 (63.3) -- (30.2)
- -------------------------------------------------------------------------------------------
16,685.2 13,087.9 8,242.8 (25,452.2) 12,563.7
Less treasury stock, at
cost 1,431.7 -- -- -- 1,431.7
- -------------------------------------------------------------------------------------------
Total stockholders'
equity 15,253.5 13,087.9 8,242.8 (25,452.2) 11,132.0
- -------------------------------------------------------------------------------------------
Total Liabilities and
Stockholders' Equity $ 7,109.4 $17,799.3 $21,512.9 $(21,935.2) $24,486.4
- -------------------------------------------------------------------------------------------
II-67
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
Year Ended December 31, 2000
--------------------------------------------------------------
Non-
Viacom Viacom Guarantor Viacom Inc.
Inc. International Affiliates Eliminations Consolidated
- ----------------------------------------------------------------------------------------
Net cash flow provided
by (used for) operating
activities $ (654.1) $ 830.5 $ 2,146.9 $-- $ 2,323.3
- ----------------------------------------------------------------------------------------
Investing Activities:
Acquisitions, net of
cash acquired -- -- (2,380.0) -- (2,380.0)
Capital expenditures (1.5) (126.3) (531.2) -- (659.0)
Investments in and
advances to affiliated
companies (7.3) (57.9) (174.0) -- (239.2)
Purchases of short-term
investments -- (89.9) -- -- (89.9)
Proceeds from sale of
short-term investments -- 72.9 234.5 -- 307.4
Proceeds from
dispositions -- -- 190.6 -- 190.6
Proceeds from sale of
cost investments -- 9.2 -- -- 9.2
- ----------------------------------------------------------------------------------------
Net cash flow used for
investing activities (8.8) (192.0) (2,660.1) -- (2,860.9)
- ----------------------------------------------------------------------------------------
Financing Activities:
Borrowings (repayments)
of credit agreements,
net 469.7 (96.2) 1,039.9 -- 1,413.4
Increase (decrease) in
intercompany payables 456.3 (530.3) 74.0 -- --
Proceeds from senior
notes and debentures 1,606.5 -- 76.4 -- 1,682.9
Purchase of treasury
stock and warrants (1,945.4) -- -- -- (1,945.4)
Repayment of notes and
debentures -- (160.6) (171.3) -- (331.9)
Payment on capital
lease obligations -- (10.9) (119.7) -- (130.6)
Purchase of treasury
stock by subsidiary -- -- (84.1) -- (84.1)
Proceeds from exercise
of stock options and
warrants 187.0 -- -- -- 187.0
- ----------------------------------------------------------------------------------------
Net cash flow provided
by (used for) financing
activities 774.1 (798.0) 815.2 -- 791.3
- ----------------------------------------------------------------------------------------
Net increase (decrease)
in cash and cash
equivalents 111.2 (159.5) 302.0 -- 253.7
Cash and cash
equivalents at
beginning of year 81.6 486.0 113.2 -- 680.8
- ----------------------------------------------------------------------------------------
Cash and cash
equivalents at end of
year $ 192.8 $ 326.5 $ 415.2 $-- $ 934.5
- ----------------------------------------------------------------------------------------
II-68
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
Year Ended December 31, 1999
------------------------------------------------------------
Non-
Viacom Viacom Guarantor Viacom Inc.
Inc. International Affiliates Eliminations Consolidated
- --------------------------------------------------------------------------------------
Net cash flow provided
by (used for) operating
activities $ 423.0 $(221.5) $ 92.6 $-- $ 294.1
- --------------------------------------------------------------------------------------
Investing Activities:
Acquisitions, net of
cash acquired (180.6) -- (131.8) -- (312.4)
Capital expenditures -- (113.9) (592.3) -- (706.2)
Investments in and
advances to
affiliated companies -- (40.3) (121.3) -- (161.6)
Purchases of short-term
investments -- (416.2) -- -- (416.2)
Proceeds from sale of
short-term investments -- 406.3 -- -- 406.3
Proceeds from
dispositions -- -- 114.3 -- 114.3
Proceeds from sale of
cost investments -- 4.0 -- -- 4.0
Other, net (18.4) (6.6) (10.8) -- (35.8)
- --------------------------------------------------------------------------------------
Net cash flow used for
investing activities (199.0) (166.7) (741.9) -- (1,107.6)
- --------------------------------------------------------------------------------------
Financing Activities:
Borrowings (repayments)
of credit agreements,
net 999.3 -- 1,185.5 -- 2,184.8
Increase (decrease) in
intercompany payables 232.4 722.1 (954.5) -- --
Purchase of treasury
stock and warrants (478.8) -- -- -- (478.8)
Repayment of notes and
debentures (1,073.8) (1.5) -- -- (1,075.3)
Repurchase of Preferred
Stock (611.9) -- -- -- (611.9)
Payment on capital
lease obligations -- (35.9) (70.6) -- (106.5)
Net proceeds from
issuance of subsidiary
stock -- -- 430.7 -- 430.7
Proceeds from exercise
of stock options and
warrants 390.8 -- -- -- 390.8
Payment of Preferred
Stock dividends (7.8) -- -- -- (7.8)
Other, net 1.0 -- -- -- 1.0
- --------------------------------------------------------------------------------------
Net cash flow provided
by (used for) financing
activities (548.8) 684.7 591.1 -- 727.0
- --------------------------------------------------------------------------------------
Net increase (decrease)
in cash and cash
equivalents (324.8) 296.5 (58.2) -- (86.5)
Cash and cash
equivalents at
beginning of year 406.4 189.5 171.4 -- 767.3
- --------------------------------------------------------------------------------------
Cash and cash
equivalents at end of
year $ 81.6 $ 486.0 $ 113.2 $-- $ 680.8
- --------------------------------------------------------------------------------------
II-69
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Tabular dollars in millions, except per share amounts)
Year Ended December 31, 1998
-------------------------------------------------------------
Non-
Viacom Viacom Guarantor Viacom Inc.
Inc. International Affiliates Eliminations Consolidated
- ---------------------------------------------------------------------------------------
Net cash flow provided
by (used for) operating
activities $ 527.3 $ (303.7) $ 640.5 $-- $ 864.1
- ---------------------------------------------------------------------------------------
Investing Activities:
Acquisitions, net of
cash acquired (14.9) -- (111.5) -- (126.4)
Capital expenditures -- (88.6) (514.9) -- (603.5)
Investments in and
advances to affiliated
companies -- (3.6) (96.7) -- (100.3)
Purchases of short-term
investments -- (151.6) -- -- (151.6)
Proceeds from sale of
short-term investments -- 101.4 -- -- 101.4
Proceeds from
dispositions -- 4,677.3 272.8 -- 4,950.1
Proceeds from sale of
cost investments -- 131.7 35.6 -- 167.3
Other, net -- (6.9) (11.7) -- (18.6)
- ---------------------------------------------------------------------------------------
Net cash flow provided
by (used for) investing
activities (14.9) 4,659.7 (426.4) -- 4,218.4
- ---------------------------------------------------------------------------------------
Financing Activities:
Borrowings (repayments)
of credit agreements,
net (1,788.6) (470.0) (124.4) -- (2,383.0)
Increase (decrease) in
intercompany payables 3,140.7 (3,100.7) (40.0) -- --
Purchase of treasury
stock and warrants (809.6) -- -- -- (809.6)
Repayment of notes and
debentures (202.6) (666.7) -- -- (869.3)
Repurchase of Preferred
Stock (564.0) -- -- -- (564.0)
Payment on capital
lease obligations -- (20.6) (90.1) -- (110.7)
Proceeds from exercise
of stock options and
warrants 182.8 -- -- -- 182.8
Payment of Preferred
Stock dividends (64.8) -- -- -- (64.8)
Other, net -- -- 11.1 -- 11.1
- ---------------------------------------------------------------------------------------
Net cash flow used for
financing activities (106.1) (4,258.0) (243.4) -- (4,607.5)
- ---------------------------------------------------------------------------------------
Net increase (decrease)
in cash and cash
equivalents 406.3 98.0 (29.3) -- 475.0
Cash and cash
equivalents at
beginning of year .1 91.5 200.7 -- 292.3
- ---------------------------------------------------------------------------------------
Cash and cash
equivalents at end of
year $ 406.4 $ 189.5 $ 171.4 $-- $ 767.3
- ---------------------------------------------------------------------------------------
II-70
PART III
Item 10. Directors and Executive Officers.
The information contained in the Viacom Inc. Definitive Proxy Statement
under the captions "Information Concerning Directors and Nominees" and
"Section 16(a) Beneficial Ownership Reporting Compliance" is incorporated
herein by reference. Information with respect to the Executive Officers of the
Company is included in Part I hereof.
Item 11. Executive Compensation.
The information contained in the Viacom Inc. Definitive Proxy Statement
under the captions "Directors' Compensation" and "Executive Compensation" is
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information contained in the Viacom Inc. Definitive Proxy Statement
under the caption "Security Ownership of Certain Beneficial Owners and
Management" is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
The information contained in the Viacom Inc. Definitive Proxy Statement
under the captions "Compensation Committee Interlocks and Insider
Participation" and "Related Transaction" is incorporated herein by reference.
III-1
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) and (d) Financial Statements and Schedules (see Index on Page F-1)
(b) Reports on Form 8-K
Current Report on Form 8-K of Viacom Inc. with a Report Date of October
30, 2000, relating to an Agreement and Plan of Merger pursuant to which
Infinity Broadcasting Corporation would merge with and into a subsidiary of
the Company.
Current Report on Form 8-K of Viacom Inc. with a Report Date of November
2, 2000, announcing an agreement for the purchase of BET Holdings II, Inc.
by the Company.
Current Report on Form 8-K of Viacom Inc. with a Report Date of December
4, 2000, with respect to Investor Presentation Materials for use at the UBS
Warburg Media Conference 2000.
(c) Exhibits (see Index on Page E-1)
IV-1
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Viacom Inc. has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized.
Viacom Inc.
/s/ Sumner M. Redstone
By: _________________________________
Sumner M. Redstone,
Chairman of the Board of
Directors,
Chief Executive Officer
/s/ Fredric G. Reynolds
By: _________________________________
Fredric G. Reynolds,
Executive Vice President,
Chief Financial Officer
/s/ Susan C. Gordon
By: _________________________________
Susan C. Gordon,
Vice President, Controller,
Chief Accounting Officer
Date: March 28, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of Viacom Inc. and
in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
* Director March 28, 2001
______________________________________
George S. Abrams
* Director March 28, 2001
______________________________________
David R. Andelman
* Director March 28, 2001
______________________________________
George H. Conrades
* Director March 28, 2001
______________________________________
Philippe P. Dauman
* Director March 28, 2001
______________________________________
William H. Gray III
/s/ Mel Karmazin Director March 28, 2001
______________________________________
Mel Karmazin
Signature Title Date
--------- ----- ----
* Director March 28, 2001
______________________________________
Jan Leschly
* Director March 28, 2001
______________________________________
David T. McLaughlin
* Director March 28, 2001
______________________________________
Ken Miller
* Director March 28, 2001
______________________________________
Leslie Moonves
* Director March 28, 2001
______________________________________
Brent D. Redstone
* Director March 28, 2001
______________________________________
Shari Redstone
/s/ Sumner M. Redstone Director March 28, 2001
______________________________________
Sumner M. Redstone
* Director March 28, 2001
______________________________________
Frederic V. Salerno
* Director March 28, 2001
______________________________________
William Schwartz
* Director March 28, 2001
______________________________________
Ivan Seidenberg
* Director March 28, 2001
______________________________________
Patty Stonesifer
* Director March 28, 2001
______________________________________
Robert D. Walter
/s/ Michael D. Fricklas March 28, 2001
*By: _________________________________
Michael D. Fricklas
Attorney-in-Fact
for the Directors
VIACOM INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
ITEM 14(c)
Exhibit No. Description of Document Page No.
----------- ----------------------- --------
(2) Plan of Acquisition
(a) Amended and Restated Agreement and Plan of Merger,
dated as of September 6, 1999, as amended and restated
as of October 8, 1999 and as of November 23, 1999,
among Viacom Inc., CBS Corporation and Viacom/CBS LLC
(incorporated by reference to Exhibit 2.1 to the
Registration Statement on Form S-4 filed by Viacom
Inc.) (File No. 333-88613).
(b) Agreement and Plan of Merger, dated as of October 30,
2000, among Viacom Inc., IBC Merger Corp. and Infinity
Broadcasting Corporation (incorporated by reference to
Exhibit 99.1 to the Current Report on Form 8-K of
Viacom Inc. with a Report Date of October 30, 2000)
(File No. 1-9553).
(3) Articles of Incorporation and By-laws
(a) Restated Certificate of Incorporation of Viacom Inc.
effective May 4, 2000 (incorporated by reference to
Exhibit 3.1 to the Registration Statement on Form S-4
filed by Viacom Inc.) (File No. 333-88613).
(b) Amended and Restated By-laws of Viacom Inc. effective
May 4, 2000 (incorporated by reference to Exhibit 3.2
to the Registration Statement on Form S-4 filed by
Viacom Inc.) (File No. 333-88613).
(4) Instruments defining the rights of security holders,
including indentures
(a) Specimen certificate representing the Viacom Inc.
Class A Common Stock (incorporated by reference to
Exhibit 4.1 to the Registration Statement on Form S-4
filed by Viacom Inc.) (File No. 33-13812).
(b) Specimen certificate representing Viacom Inc. Class B
Common Stock (incorporated by reference to Exhibit 4(a)
to the Quarterly Report on Form 10-Q of Viacom Inc. for
the quarter ended June 30, 1990) (File No. 1-9553).
(c) The instruments defining the rights of holders of the
long-term debt securities of Viacom Inc. and its
subsidiaries are omitted pursuant to section
(b)(4)(iii)(A) of Item 601 of Regulation S-K. Viacom
Inc. hereby agrees to furnish copies of these
instruments to the Securities and Exchange Commission
upon request.
(10) Material Contracts
(a) Viacom Inc. 1989 Long-Term Management Incentive Plan
(as amended and restated through April 23, 1990, as
further amended and restated through April 27, 1995 and
as further amended and restated through November 1,
1996) (incorporated by reference to Exhibit 10(a) to
the Annual Report on Form 10-K of Viacom Inc. for the
fiscal year ended December 31, 1996) (File No. 1-
9553).*
(b) Viacom Inc. 1994 Long-Term Management Incentive Plan
(as amended and restated through April 27, 1995 and as
further amended and restated through November 1, 1996)
(incorporated by reference to Exhibit 10(b) to the
Annual Report on Form 10-K of Viacom Inc. for the
fiscal year ended December 31, 1996) (File No. 1-
9553).*
(c) Viacom Inc. 1997 Long-Term Management Incentive Plan
(as amended and restated through July 29, 1999, as
further amended and restated through September 6, 1999
and as further amended and restated through May 25,
2000) (incorporated by reference to Exhibit B to Viacom
Inc.'s Definitive Proxy Statement dated June 5, 2000)
(File No. 1-9553).*
- --------
* Management contract or compensatory plan required to be filed as an exhibit
to this form pursuant to Item 14(c).
E-1
Exhibit No. Description of Document Page No.
----------- ----------------------- --------
(d) Viacom Inc. 2000 Long-Term Management Incentive Plan
(incorporated by reference to Exhibit A to Viacom
Inc.'s Definitive Proxy Statement dated June 5, 2000)
(File No. 1-9553).*
(e) Viacom Inc. Senior Executive Short-Term Incentive Plan
(as amended and restated through March 27, 1996, as
further amended and restated through March 18, 1999 and
as further amended and restated through May 25, 2000)
(incorporated by reference to Exhibit C to Viacom
Inc.'s Definitive Proxy Statement dated June 5, 2000)
(File No. 1-9553).*
(f) Viacom International Inc. Deferred Compensation Plan
for Non-Employee Directors (as amended and restated
through December 17, 1992) (incorporated by reference
to Exhibit 10(e) to the Annual Report on Form 10-K of
Viacom Inc. for the fiscal year ended December 31,
1992, as amended by Form 10-K/A Amendment No. 1 dated
November 29, 1993 and as further amended by Form 10-K/A
Amendment No. 2 dated December 9, 1993) (File No. 1-
9553).*
(g) Viacom Inc. and Viacom International Inc. Retirement
Income Plan for Non-Employee Directors (incorporated by
reference to Exhibit 10(f) to the Annual Report on Form
10-K of Viacom Inc. for the fiscal year ended December
31, 1989) (File No. 1-9553).*
(h) Viacom Inc. Stock Option Plan for Outside Directors
(incorporated by reference to Exhibit 10.2 to the
Quarterly Report on Form 10-Q of Viacom Inc. for the
quarter ended June 30, 1993) (File No. 1-9553).*
(i) Viacom Inc. 1994 Stock Option Plan for Outside
Directors (incorporated by reference to Exhibit B to
Viacom Inc.'s Definitive Proxy Statement dated April
28, 1995) (File No. 1-9553).*
(j) Viacom Inc. 2000 Stock Option Plan for Outside
Directors (incorporated by reference to Exhibit D to
Viacom Inc.'s Definitive Proxy Statement dated June 5,
2000) (File No. 1-9553).*
(k) Viacom Inc. Excess Investment Plan (Effective April 1,
1984 and Amended as of January 1, 1996) (incorporated
by reference to Exhibit 4.1 to the Viacom Inc.
Registration Statement on Form S-8) (File No. 333-
42987).*
(l) Excess Pension Plan for Certain Employees of Viacom
International Inc. restated as of January 1, 1996
(incorporated by reference to Exhibit 10(j) to the
Annual Report on Form 10-K of Viacom Inc. for the
fiscal year ended December 31, 1999)
(File No. 1-9553).*
(m) Viacom Inc. Executive Severance Plan for Senior Vice
Presidents (incorporated by reference to Exhibit 10.2
to the Quarterly Report on Form 10-Q of Viacom Inc. for
the quarter ended September 30, 1999) (File No. 1-
9553).*
(n) Employment Letter Agreement, dated September 6, 1999,
between Viacom Inc. and Sumner M. Redstone
(incorporated by reference to Exhibit 10.3 to the
Registration Statement on Form S-4 filed by Viacom
Inc.) (File No. 333-88613).*
(o) Employment Letter Agreement, dated September 6, 1999,
between Viacom Inc. and Mel Karmazin (incorporated by
reference to Exhibit 10.4 to the Registration Statement
on Form S-4 filed by Viacom Inc.) (File No. 333-88613),
as amended by the First Amendment to Employment
Agreement dated December 31, 1999 (incorporated by
reference to Exhibit 10(ss) to the Annual Report on
Form 10-K of CBS Corporation for the fiscal year ended
December 31, 1999) (File No. 1-977), and as further
amended by an Agreement dated June 13, 2000
(incorporated by reference to Exhibit 10.5 to the
Quarterly Report on Form 10-Q of Viacom Inc. for the
quarter ended June 30, 2000) (File No. 1-9553).*
- --------
* Management contract or compensatory plan required to be filed as an exhibit
to this form pursuant to Item 14(c).
E-2
Exhibit No. Description of Document Page No.
----------- ----------------------- --------
(p) Agreement, dated as of January 1, 1996, between Viacom
Inc. and Philippe P. Dauman (incorporated by reference
to Exhibit 10(l) to the Annual Report on Form 10-K of
Viacom Inc. for the fiscal year ended December 31,
1995) (File No. 1-9553), as amended by an Agreement
dated August 20, 1998 (incorporated by reference to
Exhibit 10.1 to the Quarterly Report on Form 10-Q of
Viacom Inc. for the quarter ended September 30, 1998)
(File No. 1-9553).*
(q) Agreement, dated September 6, 1999, between Viacom Inc.
and Philippe P. Dauman (incorporated by reference to
Exhibit 10.5 to the Current Report on Form 8-K of
Viacom Inc. with a Report Date of September 6, 1999)
(File No. 1-9553), as amended by an Agreement dated
April 28, 2000 (incorporated by reference to Exhibit
10.3 to the Quarterly Report on Form 10-Q of Viacom
Inc. for the quarter ended March 31, 2000) (File No.
1-9553).*
(r) Agreement, dated as of January 1, 1996, between Viacom
Inc. and Thomas E. Dooley (incorporated by reference to
Exhibit 10(m) to the Annual Report on Form 10-K of
Viacom Inc. for the fiscal year ended December 31,
1995) (File No. 1-9553), as amended by an Agreement
dated August 20, 1998 (incorporated by reference to
Exhibit 10.2 to the Quarterly Report on Form 10-Q of
Viacom Inc. for the quarter ended September 30, 1998)
(File No. 1-9553).*
(s) Agreement, dated September 6, 1999, between Viacom Inc.
and Thomas E. Dooley (incorporated by reference to
Exhibit 10.6 to the Current Report on Form 8-K of
Viacom Inc. with a Report Date of September 6, 1999)
(File No. 1-9553), as amended by an Agreement dated
April 28, 2000 (incorporated by reference to Exhibit
10.3 to the Quarterly Report on Form 10-Q of Viacom
Inc. for the quarter ended March 31, 2000) (File No.
1-9553).*
(t) Agreement, dated as of May 1, 2000, between Viacom Inc.
and Michael D. Fricklas (incorporated by reference to
Exhibit 10.3 to the Quarterly Report on Form 10-Q of
Viacom Inc. for the quarter ended September 30, 2000)
(File No. 1-9553).*
(u) Agreement, dated March 2, 1999, between CBS Corporation
and Fredric G. Reynolds (incorporated by reference by
Exhibit 10(q) to the Quarterly Report on Form 10-Q of
CBS Corporation for the quarter ended March 31, 1999)
(File No. 1-977).*
(v) Agreement, dated as of May 1, 2000, between Viacom Inc.
and William A. Roskin (filed herewith).*
(w) Service Agreement, dated as of March 1, 1994, between
George S. Abrams and Viacom Inc. (incorporated by
reference to Exhibit 10(q) to the Annual Report on Form
10-K of Viacom Inc. for the fiscal year ended December
31, 1994) (File No. 1-9553).*
(x) Agreement, dated as of May 17, 1995, between CBS
Broadcasting Inc. and Leslie Moonves, as amended by an
Agreement dated January 20, 1998 (incorporated by
reference to Exhibit 10(v) to the Annual Report on Form
10-K of CBS Corporation for the fiscal year ended
December 31, 1997) (File No. 1-977), as further amended
by an Agreement dated as of July 5, 1999 (incorporated
by reference to Exhibit 10(q) to the Quarterly Report
on Form 10-Q of CBS Corporation for the quarterly
period ended September 30, 1999 (File No. 1-977), and
as further amended by an Agreement dated as of May 25,
2000 (filed herewith).*
(y) CBS Corporation ("CBS") plans* assumed by Viacom Inc.
after the merger with CBS, consisting of the following:
(i) CBS 1991 Long-Term Incentive Plan (as amended
as of July 28, 1999) (incorporated by reference
to Exhibit 10.15 to the Quarterly Report on
Form 10-Q of Infinity Broadcasting Corporation
for the quarter ended September 30, 1999) (File
No. 1-4599).
- --------
* Management contract or compensatory plan required to be filed as an exhibit
to this form pursuant to Item 14(c).
E-3
Exhibit No. Description of Document Page No.
----------- ----------------------- --------
(ii) CBS 1993 Long-Term Incentive Plan (as amended
as of July 28, 1999) (incorporated by
reference to Exhibit 10.16 to the Quarterly
Report on Form 10-Q of Infinity Broadcasting
Corporation for the quarter ended September
30, 1999) (File No. 1-4599).
(iii) Infinity Broadcasting Corporation Warrant
Certificate No. 3 to Mel Karmazin (incorporated
by reference to Exhibit 4.6 to the Post-
Effective Amendment No. 1 on Form S-8 to the
Registration Statement on Form S-4 filed by CBS
Corporation (f/k/a Westinghouse Electric
Corporation) (File No. 333-13219).*
(iv) Westinghouse Executive Pension Plan (As amended
and restated as of July 28, 1999) (incorporated
by reference to Exhibit 10.20 to the Quarterly
Report on Form 10-Q of Infinity Broadcasting
Corporation for the quarter ended September 30,
1999) (File No. 1-4599).
(v) CBS Supplemental Executive Retirement Plan (As
amended as of April 1, 1999) (incorporated by
reference to Exhibit 10(h) to the Quarterly
Report on Form 10-Q of CBS for the quarter
ended September 30, 1999) (File No. 1-977).
(vi) CBS Bonus Supplemental Executive Retirement
Plan (As amended as of April 1, 1999)
(incorporated by reference to Exhibit 10(i)
to the Quarterly Report on Form 10-Q of CBS
for the quarter ended September 30, 1999)
(File No. 1-977).
(vii) CBS Supplemental Employee Investment Fund (As
amended as of January 1, 1998) (incorporated
by reference to Exhibit 10(j) to the
Quarterly Report on Form 10-Q of CBS for the
quarter ended September 30, 1999) (File No.
1-977).
(viii) Director's Charitable Giving Program, As
Amended Effective April 30, 1996
(incorporated by reference to Exhibit 10(g)
to the Quarterly Report on Form 10-Q of CBS
(f/k/a Westinghouse Electric Corporation) for
the quarter ended June 30, 1996) (File No. 1-
977).
(ix) CBS Deferred Compensation and Stock Plan for
Directors (as amended as of February 24, 2000)
(filed herewith).
(x) Advisory Director's Plan Termination Fee
Deferral Terms and Conditions, Effective April
30, 1996. (As Revised Effective February 24,
2000) (filed herewith).
(z) Infinity Broadcasting Corporation ("Infinity") stock
option plans* assumed by Viacom Inc. after the merger
with Infinity, consisting of the following:
(i) Infinity 1998 Long-Term Incentive Plan
(incorporated by reference to Exhibit 10.16 to
the Annual Report on Form 10-K of Infinity for
the fiscal year ended December 31, 1999) (File
No. 1-4599).
(ii) Amended and Restated Infinity Stock Option
Plan (incorporated by reference to Exhibit 4.4
to the Post-Effective Amendment No. 1 on Form
S-8 to the Registration Statement on Form S-4
filed by CBS (f/k/a Westinghouse Electric
Corporation)) (File No. 333-13219).
(aa) Credit Agreement, dated as of June 21, 1999, between
Blockbuster Inc. and the banks named therein
(incorporated by reference to Exhibit 10.22 to the
Registration Statement on Form S-1 filed by Blockbuster
Inc.) (File No. 333-77899).
(bb) Amended and Restated Five-Year Credit Agreement, dated
as of May 3, 2000, as amended and restated as of March
7, 2001, among Viacom Inc.; Viacom International Inc.;
the Subsidiary Borrowers Parties thereto; the Lenders
named therein; The Chase Manhattan Bank, as
Administrative Agent; Fleet National Bank and Bank of
America, N.A., as Co-Syndication Agents; and Bank of
New York, as Documentation Agent (filed herewith).
- --------
* Management contract or compensatory plan required to be filed as an exhibit
to this form pursuant to Item 14(c).
E-4
Exhibit No. Description of Document Page No.
----------- ----------------------- --------
(cc) Five-Year Credit Agreement, dated as of March 7, 2001,
among Viacom Inc.; Viacom International Inc.; the
Subsidiary Borrowers Parties thereto; the Lenders named
therein; The Chase Manhattan Bank, as Administrative
Agent; Salomon Smith Barney Inc., as Syndication Agent;
and Bank of America, N.A. and Fleet National Bank, as
Co-Documentation Agents (filed herewith).
(dd) 364-Day Credit Agreement, dated as of March 7, 2001,
among Viacom Inc.; Viacom International Inc.; the
Subsidiary Borrowers Parties thereto; the Lenders named
therein; The Chase Manhattan Bank, as Administrative
Agent; Salomon Smith Barney Inc., as Syndication Agent;
and Fleet National Bank and Bank of America, N.A., as
Co-Documentation Agents (filed herewith).
(21) Subsidiaries of Viacom Inc.
(23) Consents of Experts and Counsel
(a) Consent of PricewaterhouseCoopers LLP
(24) Powers of Attorney
E-5
VIACOM INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
Item 14a
The following consolidated financial statements and schedule of the
registrant and its subsidiaries are submitted herewith as part of this report:
Reference
(Page/s)
-----------
1. Report of Independent Accountants............................. II-28
2. Management's Statement of Responsibility for Financial
Reporting.................................................... II-29
3. Consolidated Statements of Operations for the years ended
December 31, 2000, 1999 and 1998............................. II-30
4. Consolidated Balance Sheets as of December 31, 2000 and 1999.. II-31
5. Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 1999 and 1998............................. II-32
6. Consolidated Statements of Stockholders' Equity and
Comprehensive Income for the years ended December 31, 2000,
1999 and 1998................................................ II-33
7. Notes to Consolidated Financial Statements.................... II-34-II-70
Financial Statement Schedule:
II. Valuation and qualifying accounts........................... F-2
All other Schedules are omitted since the required information is not
present or is not present in amounts sufficient to require submission of the
schedule.
F-1
VIACOM INC. AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(Millions of dollars)
Col. A Col. B Col. C Col. D Col. E
- ---------------------- ---------- ------------------------------------ ---------- ----------
Balance at Balance Charged to Charged Balance at
Beginning Acquired through Costs and to Other End of
Description of Period Acquisitions(1) Expenses Accounts Deductions Period
- ----------- ---------- ---------------- ---------- -------- ---------- ----------
Allowance for doubtful
accounts:
Year ended December
31, 2000 $109.5 $ 94.7 $124.1 $28.4 $110.5 $246.2
Year ended December
31, 1999 $ 98.7 $ -- $ 33.5 $ 8.1 $ 30.8 $109.5
Year ended December
31, 1998 $ 99.8 $ -- $ 29.5 $18.3 $ 48.9(2) $ 98.7
Valuation allowance on
deferred tax assets:
Year ended December
31, 2000 $ 96.0 $ 53.0 $ 39.0 $ -- $ 15.9 $172.1
Year ended December
31, 1999 $ 88.3 $ -- $ -- $ 3.8 $ (3.9) $ 96.0
Year ended December
31, 1998 $106.8 $ -- $ -- $ -- $ 18.5 $ 88.3
Reserves for inventory
obsolescence:
Year ended December
31, 2000 $ 33.2 $196.7 $ 59.0 $(1.7) $ 96.4 $190.8
Year ended December
31, 1999 $ 56.7 $ -- $ 18.5 $16.8 $ 58.8 $ 33.2
Year ended December
31, 1998 $150.6 $ -- $ 25.7 $(8.1) $111.5 $ 56.7
- --------
Notes:
(1) Primarily consists of acquisition of CBS.
(2) Primarily related to the sale of Non-Consumer Publishing and amounts
written off, net of recoveries.
F-2
Exhibit 10(v)
As of May 1, 2000
William A. Roskin
Dear Mr. Roskin:
Viacom Inc. ("Viacom"), 1515 Broadway, New York, New York 10036, agrees to
employ you and you agree to accept such employment upon the following terms and
conditions:
1. Term. The term of your employment under this Agreement shall commence
----
on May 1, 2000 and, unless terminated by Viacom or you pursuant to paragraph
8(a), (b) or (c), shall continue through and until August 1, 2003. The period
from May 1, 2000 through August 1, 2003 is referred to as the "Term"
notwithstanding any earlier termination of your employment for any reason.
2. Duties. You agree to devote your entire business time, attention and
------
energies to the business of Viacom and its subsidiaries during your employment
with Viacom. You will be Senior Vice President, Human Resources and
Administration of Viacom, reporting directly and solely to the President and
Chief Operating Officer (the "COO") or the Chief Executive Officer (the "CEO")
of Viacom, and you agree to perform all duties reasonable and consistent with
that office as the COO or the CEO may assign to you from time to time. You will
have such authority as is necessary for the performance of your obligations
hereunder. Your principal place of business shall be Viacom's headquarters in
the New York City metropolitan area.
3. Compensation.
------------
(a) Salary. For all the services rendered by you in any capacity
------
under this Agreement, Viacom agrees to pay you Eight Hundred Thousand Dollars
($800,000) a year in base salary ("Salary"), less applicable deductions and
withholding taxes, in accordance with Viacom's payroll practices as they may
exist from time to time. Your Salary will be increased on May 1, 2001 to Eight
Hundred Seventy Five Thousand Dollars ($875,000) a year and on May 1, 2002 to
Nine Hundred Fifty Thousand Dollars ($950,000) a year.
William A. Roskin
As of May 1, 2000
Page 2
(b) Bonus Compensation. You also shall be entitled to receive annual
------------------
bonus compensation ("Bonus") during your employment with Viacom under this
Agreement, determined and payable as follows:
(i) Your Bonus for each calendar year during your employment with
Viacom under this Agreement will be determined in accordance
with the Viacom Senior Executive Short-Term Incentive Plan, as
the same may be amended from time to time (the "STIP").
(ii) Your target bonus ("Target Bonus") for each of those calendar
years shall be 60% of your Salary as in effect on November 1st
of such year. Your Bonus may be prorated for any portion of
the calendar year that you were employed by Viacom.
(iii) Your Bonus for any calendar year shall be payable, less
applicable deductions and withholding taxes, by February 28th
of the following year.
(c) Long-Term Incentive Plans.
-------------------------
(i) Special Grant: You have been awarded a special grant (the
-------------
"Special Grant") under Viacom's 1997 Long-Term Management
Incentive Plan (the "l997 LTMIP") of stock options to purchase
One Hundred Thousand (100,000) shares of Viacom's Class B
Common Stock, effective as of May 25, 2000 (the "Date of
Special Grant"), with an exercise price of $54.0625 for each
share (the closing price of the Class B Common Stock on the
NYSE on the date of grant). The Special Grant shall vest in
three equal installments on the first, second and third
anniversaries of the Date of Special Grant.
(ii) Additional Grants: In addition to the Special Grant, during
-----------------
your employment under this Agreement, you shall be eligible to
participate in one or more of Viacom's long-term incentive
plans at a level appropriate to your position as determined by
the Viacom Board of Directors or a committee of the Board.
4. Benefits. You shall participate in such vacation, medical, dental, life
--------
insurance, long-term disability insurance, 401(k), pension and other plans as
Viacom may have or establish from time to time and in which you would be
entitled to participate under the terms of the plan. This provision, however,
shall not be construed to either require Viacom to establish any welfare,
compensation or long-term incentive plans, or to prevent the modification or
termination of any plan once established, and no action or inaction with respect
to any plan shall affect this Agreement.
William A. Roskin
As of May 1, 2000
Page 3
5. Business Expenses; Car Allowance and Insurance. During your employment
----------------------------------------------
under this Agreement, Viacom shall reimburse you for such reasonable travel and
other expenses incurred in the performance of your duties as are customarily
reimbursed to Viacom executives at comparable levels. You shall receive a car
allowance and car insurance for one vehicle in accordance with Viacom's
policies, as the same may be amended from time to time.
6. Non-Competition, Confidential Information, Etc.
----------------------------------------------
(a) Non-Competition. You agree that your employment with Viacom is
---------------
on an exclusive basis and that, while you are employed by Viacom, you will not
engage in any other business activity which is in conflict with your duties and
obligations (including your commitment of time) under this Agreement. You agree
that, during the Non-Compete Period (as defined below), you shall not directly
or indirectly engage in or participate as an owner, partner, stockholder,
officer, employee, director, agent of or consultant for any business competitive
with any business of Viacom, without the written consent of Viacom; provided,
--------
however, that this provision shall not prevent you from investing as less than a
- -------
one (1%) percent stockholder in the securities of any company listed on a
national securities exchange or quoted on an automated quotation system. The
Non-Compete Period shall cover the entire Term; provided, however, that, if your
-------- ------
employment terminates before the end of the Term, the Non-Compete Period shall
terminate, if earlier, (i) one year after you terminate your employment for Good
Reason or Viacom terminates your employment without Cause, or on such earlier
date as you may make the election under paragraph 6(j) (which relates to your
ability to terminate your obligations under this paragraph 6(a) in exchange for
waiving your right to certain compensation and benefits); or (ii) eighteen (18)
months after Viacom terminates your employment for Cause. (Defined terms used
without definitions in the preceding sentence have the meanings provided in
paragraphs 8(a) and (b).)
(b) Confidential Information. You agree that, during the Term or at
------------------------
any time thereafter, (i) you shall not use for any purpose other than the duly
authorized business of Viacom, or disclose to any third party, any information
relating to Viacom or any of its affiliated companies which is proprietary to
Viacom or any of its affiliated companies ("Confidential Information"),
including any trade secret or any written (including in any electronic form) or
oral communication incorporating Confidential Information in any way (except as
may be required by law or in the performance of your duties under this Agreement
consistent with Viacom's policies); and (ii) you will comply with any and all
confidentiality obligations of Viacom to a third party, whether arising under a
written agreement or otherwise. Information shall not be deemed Confidential
Information which (x) is or becomes generally available to the public other than
as a result of a disclosure by you or at your direction or by any other person
who directly or indirectly receives such information from you, or (y) is or
becomes available to you on a non-confidential basis from a source which is
entitled to disclose it to you.
William A. Roskin
As of May 1, 2000
Page 4
(c) No Employee Solicitation. You agree that, during the Term and
------------------------
for one (1) year thereafter, you shall not, directly or indirectly, engage,
employ or solicit the employment or consulting services of any person who is
then or has been within six (6) months prior to the time of such action, an
employee of Viacom or any of its affiliated companies, or agree to do so.
(d) Viacom Ownership. The results and proceeds of your services
----------------
under this Agreement, including, without limitation, any works of authorship
resulting from your services during your employment with Viacom and/or any of
its affiliated companies and any works in progress resulting from such services,
shall be works-made-for-hire and Viacom shall be deemed the sole owner
throughout the universe of any and all rights of every nature in such works,
whether such rights are now known or hereafter defined or discovered, with the
right to use the works in perpetuity in any manner Viacom determines in its sole
discretion without any further payment to you. If, for any reason, any of such
results and proceeds are not legally deemed a work-made-for-hire and/or there
are any rights in such results and proceeds which do not accrue to Viacom under
the preceding sentence, then you hereby irrevocably assign and agree to assign
any and all of your right, title and interest thereto, including, without
limitation, any and all copyrights, patents, trade secrets, trademarks and/or
other rights of every nature in the work, whether now known or hereafter defined
or discovered, and Viacom shall have the right to use the work in perpetuity
throughout the universe in any manner Viacom determines in its sole discretion
without any further payment to you. You shall, as may be requested by Viacom
from time to time, do any and all things which Viacom may deem useful or
desirable to establish or document Viacom's rights in any such results and
proceeds, including, without limitation, the execution of appropriate copyright,
trademark and/or patent applications, assignments or similar documents and, if
you are unavailable or unwilling to execute such documents, you hereby
irrevocably designate the CEO or his designee as your attorney-in-fact with the
power to execute such documents on your behalf. To the extent you have any
rights in the results and proceeds of your services under this Agreement that
cannot be assigned as described above, you unconditionally and irrevocably waive
the enforcement of such rights. This paragraph 6(d) is subject to, and does not
limit, restrict, or constitute a waiver by Viacom or any of its affiliated
companies of any ownership rights to which Viacom or any of its affiliated
companies may be entitled by operation of law by virtue of being your employer.
(e) Litigation. You agree that, during the Term, for one (1) year
----------
thereafter and, if longer, during the pendancy of any litigation or other
proceeding, (i) you shall not communicate with anyone (other than your own
attorneys and tax advisors), except to the extent necessary in the performance
of your duties under this Agreement, with respect to the facts or subject matter
of any pending or potential litigation, or regulatory or administrative
proceeding involving Viacom or any of Viacom's affiliated companies, other than
any litigation or other proceeding in which you are a party-in-opposition,
without giving prior notice to Viacom or Viacom's counsel; and (ii) in the event
that any other party attempts to obtain information or documents from you with
respect to matters possibly related to such litigation or other proceeding, you
shall promptly notify Viacom's counsel before providing such information or
documents.
William A. Roskin
As of May 1, 2000
Page 5
(f) No Right to Give Interviews or Write Books, Articles, Etc.
---------------------------------------------------------
During the Term, except as authorized by Viacom, you shall not (i) give any
interviews or speeches, or (ii) prepare or assist any person or entity in the
preparation of any books, articles, television or motion picture productions or
other creations, in either case, concerning Viacom or any of its affiliated
companies or any of their respective officers, directors, agents, employees,
suppliers or customers.
(g) Return of Property. All documents, data, recordings, or other
------------------
property, whether tangible or intangible, including all information stored in
electronic form, obtained or prepared by or for you and utilized by you in the
course of your employment with Viacom or any of its affiliated companies shall
remain the exclusive property of Viacom. In the event of the termination of your
employment for any reason, Viacom reserves the right, to the extent permitted by
law and in addition to any other remedy Viacom may have, to deduct from any
monies otherwise payable to you the following: (i) all amounts you may owe to
Viacom or any of its affiliated companies at the time of or subsequent to the
termination of your employment with Viacom; and (ii) the value of the Viacom
property which you retain in your possession after the termination of your
employment with Viacom. In the event that the law of any state or other
jurisdiction requires the consent of an employee for such deductions, this
Agreement shall serve as such consent.
(h) Non-Disparagement. You agree that, during the Term and for one
-----------------
(1) year thereafter, you shall not, in any communications with the press or
other media or any customer, client or supplier of Viacom or any of its
affiliated companies, criticize, ridicule or make any statement which disparages
or is derogatory of Viacom or any of its affiliated companies or any of their
respective directors or senior officers.
(i) Injunctive Relief. Viacom has entered into this Agreement in
-----------------
order to obtain the benefit of your unique skills, talent, and experience. You
acknowledge and agree that any violation of paragraphs 6(a) through (h) of this
Agreement will result in irreparable damage to Viacom, and, accordingly, Viacom
may obtain injunctive and other equitable relief for any breach or threatened
breach of such paragraphs, in addition to any other remedies available to
Viacom.
(j) Survival; Modification of Terms. Your obligations under
-------------------------------
paragraphs 6(a) through (i) shall remain in full force and effect for the entire
period provided therein notwithstanding the termination of your employment under
this Agreement for any reason or the expiration of the Term; provided, however,
-------- -------
that your obligations under paragraph 6(a) (but not under any other provision of
this Agreement) shall cease if you terminate your employment for Good Reason or
Viacom terminates your employment without Cause and you notify Viacom in writing
that you have elected to waive your right to receive, or to continue to receive,
termination payments and benefits under paragraphs 8(d)(i) through (vi) and/or
8(e). You and Viacom
William A. Roskin
As of May 1, 2000
Page 6
agree that the restrictions and remedies contained in paragraphs 6(a) through
(i) are reasonable and that it is your intention and the intention of Viacom
that such restrictions and remedies shall be enforceable to the fullest extent
permissible by law. If a court of competent jurisdiction shall find that any
such restriction or remedy is unenforceable but would be enforceable if some
part were deleted or the period or area of application reduced, then such
restriction or remedy shall apply with the modification necessary to make it
enforceable.
7. Disability. In the event that you become "disabled" within the meaning
----------
of such term under Viacom's Short-Term Disability ("STD") program and its
Long-Term Disability ("LTD") program during the Term (such condition is referred
to as a "Disability"), you will receive compensation under the STD program in
accordance with its terms. Thereafter, you will be eligible to receive benefits
under the LTD program in accordance with its terms. If you have not returned to
work by December 31st of a calendar year during the Term, you will receive bonus
compensation for the calendar year(s) during the Term in which you receive
compensation under the STD program, determined as follows:
(i) for the portion of the calendar year from January 1st until
the date on which you first receive compensation under the STD
program, bonus compensation shall be determined in accordance
with the STIP (i.e., based upon Viacom's achievement of its
----
goals and Viacom's good faith estimate of your achievement of
your personal goals) and prorated for such period; and
(ii) for any subsequent portion of that calendar year and any
portion of the following calendar year in which you receive
compensation under the STD program, bonus compensation shall
be in an amount equal to your Target Bonus and prorated for
such period(s).
Bonus compensation under this paragraph 7 shall be paid, less applicable
deductions and withholding taxes, by February 28th of the year(s) following the
year as to which such bonus compensation is payable. You will not receive bonus
compensation for any portion of the calendar year(s) during the Term while you
receive benefits under the LTD program. For the periods that you receive
compensation and benefits under the STD and LTD programs, such compensation and
benefits and the bonus compensation provided under this paragraph 7 are in lieu
of Salary and Bonus under paragraphs 3(a) and (b). The stock options granted to
you under the LTMIP (as defined in paragraph 8(d)(vii)) which are exercisable on
or prior to the date on which benefits commence under the LTD program, together
with all LTMIP stock options that would have vested and become exercisable on or
before the last day of the Term (which options shall become immediately vested
and exercisable), shall be exercisable until the first anniversary of the date
on which such benefits commence or, if earlier, the expiration date of the stock
options.
William A. Roskin
As of May 1, 2000
Page 7
8. Termination.
-----------
(a) Termination for Cause. Viacom may, at its option, terminate your
---------------------
employment under this Agreement forthwith for Cause and thereafter shall have no
further obligations under this Agreement, including, without limitation, any
obligation to pay Salary or Bonus or provide benefits. Cause shall mean: (i)
embezzlement, fraud or other conduct which would constitute a felony; (ii)
willful unauthorized disclosure of Confidential Information; (iii) your failure
to obey a material lawful directive that is appropriate to your position from an
executive(s) in your reporting line; (iv) your material breach of this
Agreement; or (v) your failure (except in the event of your Disability) or
refusal to substantially perform your material obligations under this Agreement.
Viacom will give you written notice prior to terminating your employment
pursuant to (iii), (iv), or (v) of this paragraph 8(a), setting forth the nature
of any alleged failure, breach or refusal in reasonable detail and the conduct
required to cure. Except for a failure, breach or refusal which, by its nature,
cannot reasonably be expected to be cured, you shall have ten (10) business days
from the giving of such notice within which to cure any failure, breach or
refusal under (iii), (iv), or (v) of this paragraph 8(a); provided, however,
-------- -------
that, if Viacom reasonably expects irreparable injury from a delay of ten (10)
business days, Viacom may give you notice of such shorter period within which to
cure as is reasonable under the circumstances.
(b) Good Reason Termination. You may terminate your employment under
-----------------------
this Agreement for Good Reason at any time during the Term by written notice to
Viacom no more than thirty (30) days after the occurrence of the event
constituting Good Reason. Such notice shall state an effective date no earlier
than thirty (30) business days after the date it is given. Viacom shall have ten
(10) business days from the giving of such notice within which to cure and, in
the event of such cure, your notice shall be of no further force or effect. Good
Reason shall mean without your consent (other than in connection with the
termination or suspension of your employment or duties for Cause or in
connection with your Disability): (i) the assignment to you of duties or
responsibilities substantially inconsistent with your position(s) or duties;
(ii) the withdrawal of material portions of your duties described in paragraph 2
or a change in your reporting relationships such that you do not report directly
and solely to the COO or CEO; (iii) the material breach by Viacom of its
material obligations under this Agreement; or (iv) the relocation of your
position outside the New York City metropolitan area.
(c) Termination Without Cause. Viacom may terminate your employment
-------------------------
under this Agreement without Cause at any time during the Term by written notice
to you.
(d) Termination Payments/Benefits. In the event that your employment
-----------------------------
terminates under paragraph 8(b) or (c), you shall thereafter receive, less
applicable withholding taxes:
(i) your Salary, as in effect on the date on which your employment
terminates, until the end of the Term, paid in accordance with
Viacom's then effective payroll practices;
William A. Roskin
As of May 1, 2000
Page 8
(ii) bonus compensation for the calendar year in which such
termination occurs, payable by February 28th of the following
year, determined as follows:
(x) for the portion of the calendar year from January 1st
until the date of the termination, bonus compensation
shall be determined in accordance with the STIP (i.e.,
----
based on Viacom's achievement of its goals and Viacom's
good faith estimate of your achievement of your personal
goals) and prorated for such period; and
(y) for the remaining portion of such calendar year during
the Term, bonus compensation shall be in an amount equal
to your Target Bonus and prorated for such period;
(iii) bonus compensation for each subsequent calendar year or
portion thereof during the Term, in an amount equal to your
Target Bonus, prorated for any partial calendar year and
payable by February 28th of the following year;
(iv) your car allowance until the end of the Term, paid in
accordance with Viacom's then effective payroll practices;
(v) medical and dental insurance coverage provided under COBRA at
no cost to you (except as hereafter described) pursuant to
Viacom's then-current benefit plans until the end of the Term
or, if earlier, the date on which you become eligible for
medical and dental coverage from a third party; provided,
--------
that, during the period that Viacom provides you with this
coverage, an amount equal to the applicable COBRA premiums (or
such other amounts as may be required by law) will be included
in your income for tax purposes to the extent required by law
and Viacom may withhold taxes from your compensation for this
purpose; and provided, further, that you may elect to continue
-------- -------
your medical and dental insurance coverage under COBRA at your
own expense for the balance, if any, of the period required by
law;
(vi) life insurance coverage until the end of the Term pursuant to
Viacom's then-current policy in the amount then furnished to
Viacom employees at no cost (the amount of such coverage will
be reduced by the amount of life insurance coverage furnished
to you at no cost by a third party employer); and
William A. Roskin
As of May 1, 2000
Page 9
(vii) the following with respect to any stock options granted to you
under the 1997 LTMIP and any predecessor or successor plans
("LTMIP"):
(x) all LTMIP stock options that have not vested and become
exercisable on the date of such termination but that
would have vested on or before the end of the Term shall
vest on the date of termination; such LTMIP stock
options shall remain exercisable for six (6) months
after such date or, if earlier, until their expiration
date; and
(y) all outstanding LTMIP stock options that have previously
vested and become exercisable by the date of such
termination shall remain exercisable for six (6) months
after such date or, if earlier, until their expiration
date.
You shall be required to mitigate the amount of any payment provided for in (i),
(ii), (iii) and (iv) of this paragraph 8(d) by seeking other employment, and the
amount of such payments shall be reduced by any compensation earned by you from
any source, including, without limitation, salary, sign-on or annual bonus
compensation, consulting fees, commission payments, car allowance and, in the
event you receive long-term compensation with a present value, as reasonably
determined by Viacom, greater than you would likely have received from Viacom
during a comparable period (based on historical grants of long-term compensation
during your service with Viacom and Viacom's practices with respect to your
position, and prorating the value of such long-term compensation over the term
of service required to vest therein), in each case as reasonably determined by
Viacom, the amount of such excess; provided, that mitigation shall not be
--------
required, and no reduction for other compensation shall be made, for twelve (12)
months after the termination of your employment or, if less, the balance of the
Term.
(e) Non-Renewal Notice/Payments. If Viacom elects not to extend or renew
---------------------------
this Agreement at the end of the Term, you shall receive the following:
(i) If (x) Viacom notifies you less than twelve (12) months before
the end of the Term that it has elected not to extend or renew
this Agreement (such notice is referred to as a "Non-Renewal
Notice"), or (y) your employment terminates under paragraph
8(b) or (c) during the final twelve (12) months of the Term,
you shall continue to receive, after your employment
terminates, your then-current Salary for the balance of the
twelve (12) months from the date on which the Non-Renewal
Notice is given or your employment terminates, whichever is
earlier.
William A. Roskin
As of May 1, 2000
Page 10
(ii) If Viacom does not give you a Non-Renewal Notice by the end of
the Term and you remain employed through that date but have
not entered into a new contractual relationship with Viacom or
any of its affiliated companies, and Viacom thereafter
terminates your employment without Cause, you shall continue
to receive your then-current Salary for the balance, if any,
of the twelve (12) months after the expiration of the Term.
Notwithstanding the foregoing, you shall not receive Salary under this paragraph
8(e) with respect to any period for which you receive Salary under paragraph
8(d)(i). Payments under this paragraph 8(e) shall be made, less applicable
withholding taxes, in accordance with Viacom's then effective payroll practices.
You shall be required to mitigate the amount of any payment under this paragraph
8(e) by seeking other employment, and the amount of any such payment shall be
reduced by any compensation earned by you from any source, including, without
limitation, salary, sign-on or annual bonus compensation, consulting fees,
commission payments, car allowance and, in the event you receive long-term
compensation with a present value, as reasonably determined by Viacom, greater
than you would likely have received from Viacom during a comparable period
(based on historical grants of long-term compensation during your service with
Viacom and Viacom's practices with respect to your position, and prorating the
value of such long-term compensation over the term of service required to vest
therein), in each case as reasonably determined by Viacom, the amount of such
excess.
(f) Termination of Benefits. Notwithstanding anything in this
-----------------------
Agreement to the contrary (except as otherwise provided in paragraph 8(d) with
respect to medical and dental benefits and life insurance), participation in all
Viacom benefit plans and programs (including, without limitation, vacation
accrual, the Viacom Investment Plan, the Viacom Pension Plan and the related
excess plans, LTD, car insurance and accidental death and dismemberment and
business travel and accident insurance) will terminate upon the termination of
your employment except to the extent otherwise expressly provided in such plans
or programs and subject to any vested rights you may have under the terms of
such plans or programs. The foregoing shall not apply to the LTMIP and, after
the termination of your employment, your rights under the LTMIP shall be
governed by the terms of the LTMIP option agreements and the applicable LTMIP
plans together with paragraph 8(d)(vii).
(g) Resignation from Official Positions. If your employment with
-----------------------------------
Viacom terminates for any reason, you shall be deemed to have resigned at that
time from any and all officer or director positions that you may have held with
Viacom or any of its affiliated companies and all board seats or other positions
in other entities you held on behalf of Viacom. If, for any reason, this
paragraph 8(g) is deemed insufficient to effectuate such resignation, you agree
to execute, upon the request of Viacom, any documents or instruments which
Viacom may deem necessary or desirable to effectuate such resignation or
resignations, and you hereby authorize the Secretary and any Assistant Secretary
of Viacom to execute any such documents or instruments as your attorney-in-fact.
William A. Roskin
As of May 1, 2000
Page 11
(h) Election of Rights Under Executive Severance Plan. In the event
-------------------------------------------------
that your employment is terminated on or before May 4, 2001 by Viacom without
Cause or by you for Good Reason within the meaning of such terms under this
Agreement and the Viacom Executive Severance Plan for Senior Vice Presidents
(the "Severance Plan"), then you may elect to receive the severance compensation
and benefits provided either (i) in this Agreement, or (ii) in the Severance
Plan. By entering into this Agreement, you waive your right to terminate your
employment for Good Reason under the Severance Plan based on events that
occurred before you entered into this Agreement. If your employment terminates
without Cause or for Good Reason, you will remain subject to all of the terms
and conditions, including, without limitation, restrictive covenants and the
requirement of a general release (i) provided in this Agreement if you elect the
severance compensation and benefits provided in this Agreement, or (ii) provided
in the Severance Plan if you elect the severance compensation and benefits
provided in the Severance Plan.
9. Death. In the event of your death prior to the end of the Term while
-----
actively employed, your beneficiary or estate shall receive (i) your Salary up
to the date on which the death occurs; (ii) any Bonus earned in the prior year
but not yet paid; and (iii) bonus compensation for the calendar year in which
the death occurs, determined in accordance with the STIP (i.e., based upon
----
Viacom's achievement of its goals and Viacom's good faith estimate of your
achievement of your personal goals) and pro-rated for the portion of the year
through the date of death, payable, less applicable deductions and withholding
taxes, by February 28th of the following year. In the event of your death after
the termination of your employment while you are entitled to receive
compensation under paragraph 8(d) or (e), your beneficiary or estate shall
receive (x) any Salary payable under paragraph 8(d)(i) or 8(e) up to the date on
which the death occurs; (y) any bonus compensation earned under paragraph
8(d)(ii) or (iii) with respect to the prior year but not yet paid; and (z) any
bonus compensation for the calendar year in which the death occurs, determined
in accordance with paragraph 8(d)(ii) or (iii) and pro-rated for the portion of
the year through the date of death, payable, less applicable deductions and
withholding taxes, by February 28th of the following year. Your beneficiary or
estate or permitted transferee shall also be entitled to exercise LTMIP stock
options which are exercisable on or prior to your death, together with all LTMIP
stock options that would have vested and become exercisable on or prior to the
last day of the Term but for your death (which options shall immediately become
vested and exercisable), until the first anniversary of the date of death or, if
earlier, the expiration date of the stock options.
10. No Acceptance of Payments. You represent that you have not accepted or
-------------------------
given nor will you accept or give, directly or indirectly, any money, services
or other valuable consideration from or to anyone other than Viacom for the
inclusion of any matter as part of any film, television program or other
production produced, distributed and/or developed by Viacom and/or any of its
affiliated companies.
William A. Roskin
As of May 1, 2000
Page 12
11. Equal Opportunity Employer; Employee Statement of Business Conduct.
------------------------------------------------------------------
You recognize that Viacom is an equal opportunity employer. You agree that you
will comply with Viacom policies regarding employment practices and with
applicable federal, state and local laws prohibiting discrimination on the basis
of race, color, sex, religion, national origin, citizenship, age, marital
status, sexual orientation, disability or veteran status. In addition, you agree
that you will comply with the Viacom Employee Statement of Business Conduct.
12. Indemnification. Viacom hereby agrees that it shall indemnify and hold
---------------
you harmless to the maximum extent permitted by law. Neither the determination
of Viacom, its Board of Directors, independent legal counsel or stockholders
that you are not entitled to indemnification or the failure of any or all of
them to make any determination regarding such entitlement shall create any
presumption or inference that you have not met the applicable standard of
conduct. If you have any knowledge of any actual or threatened action, suit or
proceeding, whether civil, criminal, administrative or investigative, as to
which you may request indemnity under this provision (a "Proceeding"), you will
give Viacom prompt written notice thereof, provided that the failure to give
--------
such notice shall not affect your right to indemnification. Viacom shall be
entitled to assume the defense of any Proceeding and you will use reasonable
efforts to cooperate with such defense. To the extent that you in good faith
determine that there is an actual or potential conflict of interest between
Viacom and you in connection with the defense of a Proceeding, you shall so
notify Viacom and shall be entitled to separate representation by counsel
selected by you (provided that Viacom may reasonably object to the selection of
counsel within five (5) business days after notification thereof) which counsel
shall cooperate, and coordinate the defense, with Viacom's counsel and minimize
the expense of such separate representation to the extent consistent with your
separate defense. Viacom shall not be liable for any settlement of any
Proceeding effected without its prior written consent. You shall be entitled to
advancement of expenses incurred by you in defending any Proceeding upon receipt
of an undertaking by you or on your behalf to repay such amount if it shall
ultimately be determined that you are not entitled to be indemnified by Viacom.
13. Notices. All notices under this Agreement must be given in writing, by
-------
personal delivery or by mail, at the parties' respective addresses shown on this
Agreement (or any other address designated in writing by either party), with a
copy, in the case of Viacom, to the attention of the General Counsel of Viacom.
Any notice given by mail shall be deemed to have been given three days following
such mailing.
14. Assignment. This is an Agreement for the performance of personal
----------
services by you and may not be assigned by you or Viacom except that Viacom may
assign this Agreement to any affiliated company of or any successor in interest
to Viacom.
William A. Roskin
As of May 1, 2000
Page 13
15. NEW YORK LAW, ETC. YOU ACKNOWLEDGE THAT THIS AGREEMENT HAS BEEN
-----------------
EXECUTED, IN WHOLE OR IN PART, IN NEW YORK, AND YOUR EMPLOYMENT DUTIES ARE
PRIMARILY PERFORMED IN NEW YORK. ACCORDINGLY, YOU AGREE THAT THIS AGREEMENT AND
ALL MATTERS OR ISSUES ARISING OUT OF OR RELATING TO YOUR VIACOM EMPLOYMENT SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS ENTERED
INTO AND PERFORMED ENTIRELY THEREIN. ANY ACTION TO ENFORCE THIS AGREEMENT SHALL
BE BROUGHT SOLELY IN THE STATE OR FEDERAL COURTS LOCATED IN THE CITY OF NEW
YORK, BOROUGH OF MANHATTAN.
16. No Implied Contract. Nothing contained in this Agreement shall be
-------------------
construed to impose any obligation on Viacom or you to renew this Agreement or
any portion thereof. The parties intend to be bound only upon execution of a
written agreement and no negotiation, exchange of draft or partial performance
shall be deemed to imply an agreement. Neither the continuation of employment
nor any other conduct shall be deemed to imply a continuing agreement upon the
expiration of the Term.
17. Entire Understanding. This Agreement contains the entire understanding
--------------------
of the parties hereto relating to the subject matter contained in this
Agreement, and can be changed only by a writing signed by both parties.
18. Void Provisions. If any provision of this Agreement, as applied to
---------------
either party or to any circumstances, shall be found by a court of competent
jurisdiction to be unenforceable but would be enforceable if some part were
deleted or the period or area of application were reduced, then such provision
shall apply with the modification necessary to make it enforceable, and shall in
no way affect any other provision of this Agreement or the validity or
enforceability of this Agreement.
William A. Roskin
As of May 1, 2000
Page 14
19. Supersedes Prior Agreements. With respect to the period covered by the
---------------------------
Term, this Agreement supersedes and cancels all prior agreements relating to
your employment by Viacom or any of its affiliated companies.
If the foregoing correctly sets forth our understanding, please sign, date
and return all three (3) copies of this Agreement to the undersigned for
execution on behalf of Viacom; after this Agreement has been executed by Viacom
and a fully-executed copy returned to you, it shall constitute a binding
agreement between us.
Very truly yours,
VIACOM INC.
By: /s/ Mel Karmazin
-------------------------------------
Name: Mel Karmazin
Title: President and Chief Operating
Officer
ACCEPTED AND AGREED:
/s/ William A. Roskin
- ----------------------------------
William A. Roskin
Dated: September 14, 2000
------------------
EXHIBIT 10(x)
As of May 25, 2000
Mr. Leslie Moonves
Re: Employment Agreement
--------------------
Dear Mr. Moonves:
Reference is hereby made to the employment agreement dated as of May 17,
1995, as amended as of June 29, 1995, October 16, 1995, January 20, 1998 and
July 5, 1999 (collectively the "Agreement") between you and us, in connection
with your services for CBS.
You and we have agreed, and do hereby agree, to amend the Agreement as
follows, effective May 25, 2000:
1. Subparagraph 1(b) of the Agreement is hereby deleted and, in lieu
thereof, is replaced with the following:
"(b) Executive shall report directly and only to the person who is the
Chief Executive Officer of Viacom Inc. ("Viacom"); provided, however, that
Executive may report directly to the person who is the Chief Operating
Officer of Viacom if that person is Mel Karmazin."
2. Subparagraph 1(d) of the Agreement is hereby deleted and, in lieu
thereof, is replaced with the following:
"So long as this Agreement is not terminated pursuant to paragraph 7 below
and Executive is rendering services hereunder, Executive shall provide
executive services to CBS in the manner determined by the person who is the
Chief Executive Officer of Viacom or the Chief Operating Officer of Viacom
if the Chief Operating Officer is Mel Karmazin."
Mr. Leslie Moonves
As of May 25, 2000
Page 2
3. Subparagraph 2(b)(ii) of the Agreement is hereby amended by deleting the
reference to the "Compensation Committee of the CBS Board of Directors" and, in
lieu thereof, inserting the "Compensation Committee of the Viacom Board of
Directors." The remainder of said paragraph shall remain unchanged.
4. Paragraph 15 of the Agreement is hereby amended by deleting, in the
second sentence of said paragraph, the reference to "Louis J. Briskman,
Executive Vice President and General Counsel" and, in lieu thereof, inserting
"Michael D. Fricklas, Executive Vice President, General Counsel and Secretary".
The remainder of said paragraph (including said second sentence) shall remain
unchanged.
5. Paragraph 16 of the Agreement is hereby amended by deleting the
reference to the "Compensation Committee of the CBS Board of Directors" and, in
lieu thereof, inserting the "Compensation Committee of the Viacom Board of
Directors" and by adding the following additional grammatical paragraphs at the
end of said paragraph 16:
"Executive hereby acknowledges that on or about January 26, 2000, he was
granted non-qualified stock options to purchase an aggregate of 250,000
shares of common stock of CBS Corporation under the Plan, as defined above
in this paragraph 16. Such stock option grant is reflected in and governed
by a stock option agreement executed by CBS Corporation and Executive whose
terms are consistent with the terms of the stock option agreements
applicable to the prior grants by CBS to Executive of 500,000 options on
June 17, 1997, 290,000 options on July 28, 1997, 250,000 options on
January 26, 1999 and 1,000,000 options on June 14, 1999.
In addition to the foregoing, Viacom has granted to Executive non-qualified
stock options to purchase an aggregate of 750,000 shares of Viacom Class B
common stock (the "Viacom Stock Options") under the Viacom 2000 Long-Term
Management Incentive Plan (the "2000 LTMIP"). The Viacom Stock Options
have an exercise price per share of $54.0625, the fair market value (as
defined in the 2000 LTMIP) of the Viacom Class B common stock on the grant
date (May 25, 2000). Thirty-three and one-third percent of the Viacom
Stock Options shall vest on the first, second and third anniversaries of
the date of grant. The Viacom Stock Options will expire on May 25, 2010
(the "Expiration Date"). If Executive's active employment with Viacom or
any of its subsidiaries
Mr. Leslie Moonves
As of May 25, 2000
Page 3
terminates for any reason other than for cause, the Viacom Stock Options
will be exercisable in accordance with the following provisions: (i) if
Executive dies, his outstanding Viacom Stock Options (including any Viacom
Stock Options that have not vested by the date of death) may be exercised
by the person who acquires the right to exercise such Viacom Stock Options
until the earlier of two (2) years after the date of death or the
Expiration Date; (ii) if Executive's employment is terminated by CBS other
than for disability or for cause or Executive terminates his employment for
Good Reason, his outstanding Viacom Stock Options (including any Viacom
Stock Options that have not vested by the termination date) can be
exercised by Executive until the earlier of three (3) years after the
termination date or the Expiration Date; (iii) in the event of Executive's
Retirement (as defined in the 2000 LTMIP), any outstanding Viacom Stock
Options that had vested prior to the date of his Retirement may be
exercised by Executive until the Expiration Date; (iv) in the event of
Executive's Permanent Disability (as defined in the 2000 LTMIP), any
outstanding Viacom Stock Options that had vested prior to the date of the
onset of Permanent Disability can be exercised by Executive until the
earlier of two (2) years after such date or the Expiration Date; or (v) if
Executive's employment terminates for any reason other than for cause or as
a result of death, termination by CBS other than for disability or for
cause or termination by Executive for Good Reason, Retirement or Permanent
Disability, any outstanding Viacom Stock Options that had vested by the
date of such termination of employment can be exercised by Executive until
the earlier of six (6) months after the date of termination or the
Expiration Date. The grant of the Viacom Stock Options shall be reflected
in and governed by a stock option agreement to be executed by Viacom and
provided to Executive upon his execution of the letter agreement dated as
of May 25, 2000 amending this agreement. In the event of any inconsistency
between the provisions of the stock option agreement and the provisions of
such letter agreement relating to the Viacom Stock Options, the provisions
of such letter agreement shall control."
Mr. Leslie Moonves
As of May 25, 2000
Page 4
Except as expressly provided hereinabove in this amendatory letter
agreement, all of the other terms and conditions of the Agreement, as amended
(including by the Amendment) shall remain unchanged and are hereby in all
respects ratified and confirmed.
Please indicate your agreement to the foregoing by signing in the space
provided below and delivering a copy of this amendatory letter agreement,
bearing your signature, to the undersigned.
Very truly yours,
CBS BROADCASTING INC.
By: /s/ William A. Roskin
------------------------
Name: William A. Roskin
Title: Senior Vice President
Human Resources and
Administration
ACCEPTED AND AGREED:
/s/ Leslie Moonves
- --------------------
Leslie Moonves
Dated: 8/30/00
EXHIBIT 10(y)(ix)
CBS CORPORATION
DEFERRED COMPENSATION AND STOCK PLAN
FOR DIRECTORS
(as amended as of February 24, 2000)
Section 1. Introduction
1.1 Establishment. CBS Corporation, a Pennsylvania corporation formerly
known as Westinghouse Electric Corporation (the "Company" or "CBS"), has
established the Deferred Compensation and Stock Plan for Directors, as amended
from time to time (the "Plan"), for those directors of the Company who are
neither officers (other than non-executive officers) nor employees of the
Company. The Plan provides, among other things, for the payment of specified
portions of the Annual Director's Fee and the Annual Board Chairman's Fee, if
applicable, in the form of Stock Options and Restricted Stock, the payment of
the Annual Committee Chair's Fee in the form of Restricted Stock, the granting
of Stock Options and Restricted Stock as additional Director compensation, and
the opportunity for the Directors to defer receipt of all or a part of their
cash compensation. Unless otherwise provided for herein, the term Company
includes CBS Corporation and its subsidiaries.
1.2 Purposes. The purposes of the Plan are to encourage the Directors to
own shares of the Company's stock and thereby to align their interests more
closely with the interests of the other shareholders of the Company, to
encourage the highest level of Director performance, and to provide a financial
incentive that will help attract and retain the most qualified Directors.
Section 2. Definitions
2.1 Definitions. The following terms will have the meanings set forth
below:
o "Annual Board Chairman's Fee" means the annual amount (which may be
prorated) established from time to time by the Board as the annual
fee to be paid to the Board Chairman, if any, for his or her
services as Board Chairman.
o "Annual Committee Chair's Fee" means the annual amount (which may be
prorated for a Director serving as a committee chair for less than a
full year) established from time to time by the Board as the annual
fee to be paid to Directors for their services as chairs of standing
committees of the Board.
o "Annual Director's Fee" means the annual amount (which may be
prorated for a Director serving less than a full calendar year, as
in the case of a Director who will be retiring or not standing for
reelection at the annual meeting of shareholders or a Director
joining the Board (or otherwise first becoming a Director) after the
beginning of the year) established from time to time by the Board as
the annual fee to be paid to Directors for their services as
directors.
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o "Attendance Percentage" for a Director with respect to a particular
Grant Year means the percentage of the aggregate of all meetings of
the Board and committees of which the Director was a member held
during the Grant Year (or, for Directors who join the Board or
otherwise first become Directors after the beginning of the Grant
Year, Directors who retire at the annual meeting of shareholders (as
described in the Company's By-laws) held during the Grant Year,
Directors who do not stand for reelection at the annual meeting of
shareholders held during the Grant Year, or Directors who die during
the Grant Year, the aggregate of all such meetings held for the
portion of the Grant Year during which the Director served as a
director), excluding any meeting(s) not attended because of illness,
travel conditions, or other excused absences, which were attended by
the Director. Except as otherwise provided below, in the event that
a Director ceases to be a director at any time during the Grant Year
for any reason other than retirement at the annual meeting of
shareholders, not standing for reelection at the annual meeting of
shareholders, or death, all meetings held during the Grant Year of
the Board and committees of which he was a member at the time of
termination of service will continue to be included as meetings when
calculating the Attendance Percentage.
o "Board" means the Board of Directors of the Company.
o "Board Chairman" means the director who is the non-employee,
non-executive chairman of the Board, if any.
o "Cash Account" means the account established by the Company in
respect of each Director pursuant to Section 6.3(a) hereof and to
which deferred cash compensation has been or will be credited
pursuant to the Plan.
o "Cause" means any act of (i) fraud or intentional misrepresentation
or (ii) embezzlement, misappropriation or conversion of assets or
opportunities of the Company or any of its direct or indirect
majority-owned subsidiaries.
o "CBS" or "Company" means CBS Corporation, a Pennsylvania
corporation, and its successors.
o "CBS/Viacom Merger" means the merger of CBS Corporation and Viacom
Inc.
o "Change in Control" will have the meaning assigned to it in Section
9.2 hereof.
o "Committee" means the Compensation Committee of the Board (or any
subcommittee thereof) or any successor committee established by the
Board, or any subcommittee thereof, in each case consisting of two
or more members each of whom is a "non-employee director" as that
term is defined by Rule 16b-3 under the Exchange Act, as such rule
may be amended, or any successor rule.
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o "Common Stock Equivalent" means a hypothetical share of Stock which
will have a value on any date equal to the mean of the high and low
prices of the Stock as reported by the composite tape of the New
York Stock Exchange on that date, except as otherwise provided under
Section 9.1.
o "Common Stock Equivalent Award" means an award of Common Stock
Equivalents granted to a Director pursuant to Section 5 of the Plan
prior to its amendment as of April 26, 1995.
o "Debenture" means a hypothetical debenture of the Company that has a
face value of $100, bears interest at a rate equal to the ten-year
U.S. Treasury Bond rate (prior to January 1, 1995, the seven-year
U.S. Treasury Bond rate) in effect the week prior to the regular
January meeting of the Board (or, if no such meeting is held, the
week prior to the first trading day of the New York Stock Exchange
in February) in the year in respect of which deferred amounts are
earned, and is convertible into Stock at a conversion rate
determined by dividing $100 by the mean of the high and low prices
of the Stock as reported by the composite tape of the New York Stock
Exchange on the date the Debenture is credited to the Deferred
Debenture Account pursuant to Section 6.3 hereof.
o "Deferred Debenture Account" means the account established by the
Company pursuant to Section 6.3(c) hereof in respect of each
Director electing to defer cash compensation under the Plan for 1997
and/or for an earlier year or years and to which has been or will be
credited Debentures and other amounts pursuant to the Plan.
o "Deferred Stock Account" means the account established by the
Company in respect of each Director pursuant to Section 5.2 hereof
and to which has been or will be credited Common Stock Equivalents
pursuant to the Plan.
o "Director" means a member of the Board who is neither an officer nor
an employee of the Company. For purposes of the Plan, an employee is
an individual whose wages are subject to the withholding of federal
income tax under Section 3401 of the Internal Revenue Code, and an
officer is an individual elected or appointed by the Board or chosen
in such other manner as may be prescribed in the By-laws of the
Company to serve as such, other than a non-executive officer (such
as the Board Chairman).
o "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
o "Fair Market Value" means the mean of the high and low prices of the
Stock as reported by the composite tape of the New York Stock
Exchange (or such successor reporting system as the Committee may
select) on the relevant date or, if no sale of the Stock has been
reported for that day, the average of such prices on the next
preceding day and the next following day for which there were
reported sales.
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o "Grant Date" means, as to a Stock Option Award, the date of grant
pursuant to Section 7.1 and as to a Restricted Stock Award, the date
of grant pursuant to Section 8.1.
o "Grant Year" means, as to a particular award, the calendar year in
which the award was granted; provided, however, for the year 2000,
Grant Year will mean the calendar year 2000 or the period from
January 1, 2000 to and including the effective date of the
CBS/Viacom Merger, whichever is shorter.
o "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time.
o "Option Vesting Date" will have the meaning assigned to it in
Section 7.2.
o "Restricted Stock" means shares of Stock awarded to a Director
pursuant to Section 8 and subject to certain restrictions in
accordance with the Plan.
o "Restricted Stock Award" means an award of shares of Restricted
Stock granted to a Director pursuant to Section 8 of the Plan.
o "Stock" means the common stock, $1.00 par value, of the Company.
o "Stock Option" means a non-statutory stock option to purchase shares
of Stock for a purchase price per share equal to the Exercise Price
(as defined in Section 7.2(a)) in accordance with the provisions of
the Plan.
o "Stock Option Award" means an award of Stock Options granted to a
Director pursuant to Section 7 of the Plan.
o "Stock Option Value" means the value of a Stock Option for one share
of Stock on the relevant date as determined by the Company.
o "Viacom" means Viacom Inc. and its successors.
2.2 Gender and Number. Except when otherwise indicated by the context, the
masculine gender will also include the feminine gender, and the definition of
any term herein in the singular will also include the plural.
Section 3. Plan Administration
(a) The Plan will be administered by the Committee. The members of
the Committee will be members of the Board appointed by the Board, and any
vacancy on the Committee will be filled by the Board or in a manner authorized
by the Board.
The Committee will keep minutes of its meetings and of any action taken by
it without a meeting. A majority of the Committee will constitute a quorum, and
the acts of a majority of the
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members present at any meeting at which a quorum is present will be the acts of
the Committee. Any action that may be taken at a meeting of the Committee may be
taken without a meeting if a consent or consents in writing setting forth the
action so taken is signed by all of the members of the Committee. The Committee
will make appropriate reports to the Board concerning the operations of the
Plan.
(b) Subject to the limitations of the Plan, the Committee and/or the
Board, will have the sole and complete authority: (i) to impose such
limitations, restrictions and conditions upon such awards as it deems
appropriate; (ii) to interpret the Plan and to adopt, amend and rescind
administrative guidelines and other rules and regulations relating to the Plan;
and (iii) to make all other determinations and to take all other actions
necessary or advisable for the implementation and administration of the Plan.
The Committee's or the Board's determinations on matters within its authority
will be conclusive and binding upon the Company and all other persons.
(c) The Company will be the sponsor of the Plan. All expenses
associated with the Plan will be borne by the Company.
Section 4. Stock Subject to the Plan
4.1 Number of Shares. 600,000 shares of Stock are authorized for issuance
under the Plan in accordance with the provisions of the Plan, subject to
adjustment and substitution as set forth in this Section 4. This authorization
may be increased from time to time by approval of the Board and, if such
approval is required, by the shareholders of the Company. The Company will at
all times during the term of the Plan retain as authorized and unissued Stock at
least the number of shares from time to time required under the provisions of
the Plan, or otherwise assure itself of its ability to perform its obligations
hereunder.
4.2 Other Shares of Stock. Any shares of Stock that are subject to a
Common Stock Equivalent Award, a Stock Option Award, a Restricted Stock Award or
a Debenture and which are forfeited, any shares of Stock that for any other
reason are not issued to a Director, and any shares of Stock tendered by a
Director to pay the Exercise Price of a Stock Option will automatically become
available again for use under the Plan if Rule 16b-3 under the Exchange Act, as
such rule may be amended, or any successor rule, and interpretations thereof by
the Securities and Exchange Commission or its staff permit such share
replenishment.
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4.3 Adjustments Upon Changes in Stock. If there is any change in the Stock
and/or in the corporate structure of the Company, through merger, consolidation,
division, share exchange, combination, reorganization, recapitalization, stock
dividend, stock split, spin-off, split up, dividend in kind or other change in
the corporate structure or distribution to the shareholders, appropriate
adjustments may be made by the Committee (or, if the Company is not the
surviving corporation in any such transaction, the board of directors of the
surviving corporation) in the aggregate number and kind of shares subject to the
Plan, and the number and kind of shares which may be issued under the Plan.
Appropriate adjustments may also be made by the Committee in the terms of any
awards or Debentures under the Plan to reflect such changes and to modify any
other terms of outstanding awards on an equitable basis as the Committee in its
discretion determines.
Section 5. Common Stock Equivalent Awards
5.1 Grants of Common Stock Equivalent Awards. Common Stock Equivalents
equal to a fixed number of shares of Stock were granted automatically to
Directors on a formula basis under Section 5.1 of the Plan prior to its
amendment as of April 26, 1995. All Common Stock Equivalents granted pursuant to
Section 5.1 prior to its amendment as of April 26, 1995 are subject to
adjustment as provided in Section 4.3.
5.2 Deferred Stock Account. A Deferred Stock Account has been established
for each Director elected prior to the annual meeting of shareholders held in
1995. The Deferred Stock Account consists of compensation in the form of Common
Stock Equivalents which have been awarded to the Director hereunder by the
Company plus Common Stock Equivalents credited to the Deferred Stock Account in
respect of dividends and other distributions on the Stock pursuant to Sections
5.3 and 5.4.
5.3 Hypothetical Investment. Compensation awarded hereunder in the form of
Common Stock Equivalents is assumed to be a hypothetical investment in shares of
Stock, and is subject to adjustment to reflect stock dividends, splits and
reclassifications and as otherwise set forth in Section 4.3.
5.4 Hypothetical Dividends. Dividends and other distributions on Common
Stock Equivalents will be deemed to have been paid as if such Common Stock
Equivalents were actual shares of Stock issued and outstanding on the respective
record or distribution dates. Common Stock Equivalents will be credited to the
Deferred Stock Account in respect of cash dividends and any other securities or
property issued on the Stock in connection with reclassifications, spin-offs and
the like on the basis of the value of the dividend or other asset distributed
and the value of the Common Stock Equivalents on the date of the announcement of
the dividend or asset distribution, all at the same time and in the same amount
as dividends or other distributions are paid or issued on the Stock. Such Common
Stock Equivalents are subject to adjustment as provided in Section 4.3.
Fractional shares will be credited to a Director's Deferred Stock Account
cumulatively but the balance of shares of Common Stock Equivalents in a
Director's Deferred Stock Account will be rounded to the next highest whole
share for any payment to such Director pursuant to Section 5.6.
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5.5 Statement of Account. A statement will be sent to each Director as to
the balance of his Deferred Stock Account at least once each calendar year.
5.6 Payment of Deferred Stock. Unless the Board or the Committee
determines otherwise, upon termination of services as a Director, the balance of
the Director's Deferred Stock Account will be paid to such Director in Stock in
January of the year following the year of termination of services as a director
or, as elected by such Director in writing, in five, ten or fifteen consecutive
annual installments beginning in January of the year following the year of
termination of services as a director, on the basis of one share of Stock for
each Common Stock Equivalent in such Director's Deferred Stock Account. For
purposes of this Section 5.6, if a CBS director becomes a Viacom director on the
effective date of the CBS/Viacom Merger, he or she will not be deemed to have
terminated service as a director until he or she terminates service as a
director of Viacom.
5.7 Payments to a Deceased Director's Estate. In the event of a Director's
death before the balance of his or her Deferred Stock Account is fully paid to
the Director, payment of the balance of the Director's Deferred Stock Account
will then be made to the beneficiary properly designated by the Director
pursuant to Section 5.8, if any, or to his or her estate in the absence of such
a beneficiary designation, in the time and manner selected by the Committee. The
Committee may take into account the application of any duly appointed
administrator or executor of a Director's estate and direct that the balance of
the Director's Deferred Stock Account be paid to his or her estate in the manner
requested by such application.
5.8 Designation of Beneficiary. A Director may designate a beneficiary in
the event of the Director's death in a form approved by the Company.
Section 6. Deferral of Compensation
6.1 Amount of Deferral. A Director may elect to defer receipt of all or a
specified portion of the cash compensation otherwise payable to the Director for
services rendered to the Company in any capacity as a director.
6.2 Manner of Electing Deferral. A Director will make elections permitted
hereunder by giving written notice to the Company in a form approved by the
Committee and in compliance with Section 6.4. The notice will include: (i) the
percentage of cash compensation to be deferred, which amount must be stated in
whole increments of five percent; and (ii) the time as of which deferral is to
commence.
6.3 Accounts.
(a) Cash Account. A Cash Account has been or will be established for
each Director electing to defer hereunder. Each Cash Account will be credited
with the amounts deferred on the date such compensation is otherwise payable and
will be debited with the amount of any such compensation forfeited in accordance
with applicable Board policy.
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(b) Interest. Deferred amounts in the Cash Account will accrue
interest from time to time as follows:
(1) Pre-1998. For deferred amounts credited to the Cash
Account prior to January 1, 1998 (including but not limited to
Annual Director's Fees for the calendar year 1997), such deferred
amounts will accrue interest from time to time at a rate equal to
the ten-year U.S. Treasury Bond rate (prior to January 1, 1995, the
seven-year U.S. Treasury Bond rate) in effect the week prior to the
regular January meeting of the Board (or, if no such meeting is
held, the week prior to the first trading day of the New York Stock
Exchange in February) in the year in respect of which such deferred
amounts are earned until the last trading day of the New York Stock
Exchange prior to the regular January meeting of the Board (or, if
no such meeting is held, until the first trading day of February) in
the year following the year in respect of which deferred amounts are
earned, at which time such deferred amounts, including interest,
will be invested in Debentures and credited to the Deferred
Debenture Account. Deferred amounts will be credited to the Deferred
Debenture Account only in $100 amounts. Fractional amounts of $100
will remain in the Cash Account and continue to accrue interest.
(2) 1998 and Thereafter. For deferred amounts credited to the
Cash Account on or after January 1, 1998 (and any fractional amounts
remaining in the Cash Account from prior deferrals), unless
otherwise determined by the Board or the Committee prior to the
deferral date such deferred amounts will accrue interest from time
to time at the Interest Credit Rate then in effect, compounded
annually. The "Interest Credit Rate" will be reset by the Company on
an annual basis in January of the year, and will equal the then
current one-year U.S. Treasury Bill rate or such other fixed rate as
the Committee may from time to time determine.
(c) Deferred Debenture Account. A Deferred Debenture Account has
been established for each Director electing to defer cash compensation hereunder
for the calendar year 1997 and/or for an earlier year or years. Deferred amounts
credited to the Cash Account prior to January 1, 1998 will be invested in
Debentures and credited to the Deferred Debenture Account at the time and in the
manner set forth in Section 6.3(b)(1). Deferred amounts credited to the Cash
Account on or after January 1, 1998 will not be invested in Debentures but will
remain in the Cash Account and accrue interest until payment hereunder.
6.4 Time for Electing Deferral. Any election to (i) defer cash
compensation, (ii) alter the portion of such amounts deferred, or (iii) revoke
an election to defer such amounts, must be made prior to the time such
compensation is earned by the Director and otherwise in compliance with any
deadline which the Company may from time to time impose and in the manner set
forth in Section 6.2.
6.5 Payment of Deferred Amounts. Unless the Board or the Committee
determines otherwise, upon termination of services as a Director, payments from
a Deferred Debenture
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Account and/or from a Cash Account will be made in five consecutive annual
installments beginning in the January following the Director's termination of
service or, if elected by such Director in writing, such payments may be made in
ten or fifteen consecutive annual installments or may be made in lump sum in the
January following the Director's termination of services. For purposes of this
Section 6.5, if a CBS director becomes a Viacom director on the effective date
of the CBS/Viacom Merger, he or she will not be deemed to have terminated
service as a Director until he or she terminates service as a director of
Viacom.
Payments from a Deferred Debenture Account will consist of accumulated
interest on the Debentures (which amount will only be payable in cash) plus the
greater value of (i) the face value of the Debentures or (ii) the shares of
Stock into which the Debentures are convertible. In the event the value of the
payment is determined by the amount referred to in clause (i), payment will be
made in cash. In the event such value is determined by clause (ii), such payment
will be made in Stock, other than the value of fractional shares which will be
paid in cash.
Payments from a Cash Account will consist of the deferred cash
compensation and accumulated interest in said account and will be made in cash.
6.6 Payments to a Deceased Director's Estate. In the event of a Director's
death before the balance of his or her Cash Account or Deferred Debenture
Account is fully paid to the Director, payment of the balance of the Cash
Account or Deferred Debenture Account will then be made to the beneficiary
properly designated by the Director pursuant to Section 6.7, if any, or to his
or her estate in the absence of such a beneficiary designation, in the time and
manner selected by the Committee. The Committee may take into account the
application of any duly appointed administrator or executor of a Director's
estate and direct that the balance of the Director's Cash Account or Deferred
Debenture Account be paid to his or her estate in the manner requested by such
application.
6.7 Designation of Beneficiary. A Director may designate a beneficiary in
the event of the Director's death in a form approved by the Company.
Section 7. Stock Option Awards
7.1 Grants of Stock Option Awards.
(a) For calendar year 1995, Stock Options for a fixed number of
shares of Stock were granted automatically to Directors on a formula basis under
Section 7.1(a) of the Plan.
(b) For calendar year 1995, Stock Options for a fixed number of
shares of Stock were granted automatically on a formula basis under Section
7.1(b) of the Plan to Directors serving as chairs of standing committees of the
Board.
(c) For calendar years 1996 and 1997, Stock Options were granted
automatically under Section 7.1(c) of the Plan to Directors for one-fourth of
the value of their Annual Director's Fees.
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(d) Annual Director's Fee Grants. Beginning with calendar year 1998,
unless otherwise determined by the Board or the Committee each Director will
receive 5/16ths (31.25%) of the value of his or her Annual Director's Fee in the
form of a Stock Option Award. Such Stock Options will be granted automatically
each year on the last Wednesday in January of such year to each Director in
office on such Grant Date.
If a person joins the Board or otherwise first becomes a Director at any
time after the last Wednesday in January of a given calendar year (beginning
with 1998) but before the end of that calendar year, whether by action of the
shareholders of the Company or the Board or otherwise, unless otherwise
determined by the Board or the Committee such person upon becoming a Director
will be granted automatically 5/16ths (31.25%) of the value of his or her Annual
Director's Fee for that calendar year (which may be prorated) in the form of a
Stock Option Award on the last Wednesday of the calendar month in which such
person first becomes a Director (or in the next following calendar month if such
person first becomes a Director after the last Wednesday of the month). The
total number of shares of Stock subject to any such Stock Option Award will be
the number of shares determined by dividing the amount of the Annual Director's
Fee to be paid in the form of a Stock Option Award by the Stock Option Value on
the Grant Date, rounded up to the nearest whole share.
(e) Annual Board Chairman's Fee Grants. Beginning with calendar year
1999, unless otherwise determined by the Board or the Committee, the Board
Chairman, if any, will receive 5/16ths (31.25%) of the value of his or her
Annual Board Chairman's Fee in the form of a Stock Option Award, and such Stock
Options will be granted automatically each year on the last Wednesday in January
of such year to the Board Chairman in office on such Grant Date, if any.
If a director becomes Board Chairman at any time after the last Wednesday
in January of a given calendar year (beginning with calendar year 1999) but
before the end of that calendar year, whether by action of the Board or
otherwise, unless otherwise determined by the Board or the Committee such
director upon so becoming the Board Chairman will be granted automatically
5/16ths (31.25%) of the value of his or her Annual Board Chairman's Fee for that
calendar year (which may be prorated) in the form of a Stock Option Award on the
last Wednesday of the calendar month in which such person first becomes Board
Chairman (or in the next following calendar month if such person first becomes
Board Chairman after the last Wednesday of the month). The total number of
shares of Stock subject to any such Stock Option Award will be the number of
shares determined by dividing the amount of the Annual Board Chairman's Fee to
be paid in the form of a Stock Option Award by the Stock Option Value on the
Grant Date, rounded up to the nearest whole share.
(f) Other Stock Option Grants. Beginning with calendar year 1999,
the Board or the Committee may, from time to time, grant Stock Option Awards to
one or more Directors or to the Board Chairman for such number of shares as the
Board or the Committee may determine as additional compensation to such Director
or Directors or to such Board Chairman for their services as such.
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(g) All Stock Options granted pursuant to Section 7.1 are subject to
adjustment as provided in Section 4.3.
7.2 Terms and Conditions of Stock Options. Unless otherwise determined by
the Board or the Committee, Stock Options granted under the Plan will be subject
to the following terms and conditions:
(a) Exercise Price. Beginning with Stock Options granted in calendar
year 1998 and thereafter, the purchase price per share at which a Stock Option
may be exercised ("Exercise Price") will be equal to the Fair Market Value of a
share of Stock on the Grant Date. Notwithstanding anything herein to the
contrary, in no event may the Board or the Committee establish an Exercise Price
that is less than the Fair Market Value of a share of Stock on the Grant Date.
For Stock Options granted in 1995, 1996 and 1997, the Exercise Price was
determined as follows: on any Grant Date, (1) Stock Options for two-thirds of
the option shares granted on the Grant Date had an Exercise Price per share
equal to 100% of the Fair Market Value of a share of Stock on the Grant Date;
and (2) Stock Options for the remaining one-third of the option shares granted
on the Grant Date had an Exercise Price per share equal to 125% of the Fair
Market Value of a share of Stock on the Grant Date.
(b) Exercisability. Subject to the terms and conditions of the Plan
and of the agreement referred to in Section 7.2(j), a Stock Option may be
exercised in whole or in part upon notice of exercise to the Company: (1) as to
any Stock Option granted in calendar year 1995, commencing on the first day
after the Grant Date and until it terminates; and (2) as to any Stock Option
granted after January 1, 1996 that vests as provided in Section 7.2(c)(2),
7.2(c)(3) or 7.2(c)(4), commencing on January 1 of the calendar year next
following the Grant Year (the "Option Vesting Date") or, if so provided in the
relevant Stock Option Agreement, upon the occurrence of a Change in Control, if
earlier, and until it terminates. During a Director's lifetime, a Stock Option
may be exercised only by the Director or the Director's guardian or legal
representative. The Committee or the Board may at any time and from time to time
accelerate the time at which all or any part of a Stock Option may be exercised.
(c) Vesting of Stock Option Awards.
(1) Stock Options granted in calendar year 1995 vested immediately
on grant.
(2) Annual Director's Fee Grants. Except as otherwise set forth in
Section 7.1(c)(4), Stock Options granted as part of a Director's Annual
Director's Fee after January 1, 1996 will vest on the Option Vesting Date if the
Director has an Attendance Percentage of at least seventy-five percent (75%) for
the Grant Year. The Committee or the Board may at any time or from time to time
accelerate the vesting of all or any part of a Stock Option.
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In the event that a Director has an Attendance Percentage of less than
seventy-five percent (75%) for a Grant Year, Stock Options granted in that Grant
Year for a number of shares equal to the Director's Attendance Percentage for
that year multiplied by the total number of option shares granted for that year
(rounded up to the nearest whole share) will vest on the Option Vesting Date,
and Stock Options granted in that Grant Year as to the remaining option shares
will be forfeited and will terminate as of the Option Vesting Date.
(3) Annual Board Chairmen's Fee Grants and Other Grants. Except as
otherwise set forth in Section 7.1(c)(4), Stock Options granted as part of an
Annual Board Chairman's Fee, if any, or granted to a Director or to the Board
Chairman, if any, pursuant to Section 7.1(f) will vest on the Option Vesting
Date.
(4) Notwithstanding anything to the contrary herein, (i) in the
event that a director is removed for Cause from office as a director of the
Company (and/or, in the case of Stock Options granted to a director in his or
her capacity as Board Chairman, from office as Board Chairman, if applicable),
all outstanding Stock Options will be forfeited immediately as of the time the
grantee is so removed from office, (ii) if so provided in the relevant Stock
Option Agreement or if the Committee or the Board so determines with respect to
a Stock Option or Options, upon the occurrence of a Change in Control, all such
outstanding Stock Options will vest and become immediately exercisable, and
(iii) for any Director who, at the effective date of the CBS/Viacom Merger is
not a director of Viacom, Stock Options granted in calendar year 2000 as part of
such Director's Annual Director's Fee and Stock Options granted in calendar year
2000 to such Director, if any, pursuant to Section 7.1(f) will vest and become
immediately exercisable at the effective time of the CBS/Viacom Merger.
(d) Mandatory Holding of Stock. Except as otherwise provided in
Section 7.5 or Section 10 or unless waived by the Committee or the Board, any
Stock acquired on exercise of a Stock Option must be held by the grantee for a
minimum of: (1) three years from the date of exercise; (2) two years from the
date the grantee ceases to be a director of the Company; or (3) if so provided
in the relevant Stock Option Agreement or if the Committee or the Board so
determines with respect to a Stock Option or Options, until the occurrence of a
Change in Control, whichever first occurs (the "Option Shares Holding Period").
Notwithstanding the foregoing or anything to the contrary contained in any Stock
Option agreement, upon the effective time of the CBS/Viacom Merger, the Option
Shares Holding Period for any Stock acquired or to be acquired on exercise of a
Stock Option shall terminate.
(e) Option Term. The term of a Stock Option (the "Option Term") will
be the shorter of: (1) the period of ten years from its Grant Date; (2) the
period from the Grant Date until the Option Vesting Date for a Stock Option that
does not vest and is terminated on said date as provided in Section 7.2(c)(2),
if applicable (or with respect to any portion of a Stock Option that does not
vest on the Option Vesting Date and is terminated as provided in Section
7.2(c)(2), if applicable); (3) the period from the Grant Date until the time the
Stock Option is forfeited as provided in Section 7.2(c)(4)(i) in the event a
director is removed from office as a director of the Company and/or as Board
Chairman, if applicable, for Cause; or (4) the period from the Grant Date until
the date the Stock Option ceases to be exercisable as provided in Section
7.2(h).
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(f) Payment of Exercise Price. Stock purchased on exercise of a
Stock Option must be paid for as follows: (1) in cash or by check (acceptable to
the Company), bank draft or money order payable to the order of the Company, (2)
through the delivery of shares of Stock which are then outstanding and which
have a Fair Market Value on the date of exercise equal to the Exercise Price per
share multiplied by the number of shares as to which the Stock Option is being
exercised (the "Aggregate Exercise Price"); (3) by delivery of an unconditional
and irrevocable undertaking by a broker to deliver promptly to the Company
sufficient funds to pay the Aggregate Exercise Price, or (4) by a combination of
the permissible forms of payment; provided, however, that any portion of the
Exercise Price representing a fraction of a share must be paid in cash and no
share of Stock held for less than six months may be delivered in payment of the
Aggregate Exercise Price.
(g) Rights as a Shareholder. The holder of a Stock Option will not
have any of the rights of a shareholder with respect to any shares of Stock
subject to the Stock Option until such shares are issued by the Company
following the exercise of the Stock Option.
(h) Termination of Eligibility. If a grantee ceases to be a director
and/or ceases to be Board Chairman, if applicable, for any reason, any
outstanding Stock Options will be exercisable according to the following
provisions:
(1) If a grantee ceases to be a director and/or ceases to be Board
Chairman, if applicable, for any reason other than removal for Cause or death,
any outstanding Stock Options held by such grantee which are vested or which
thereafter vest will be exercisable by the grantee in accordance with their
terms at any time prior to the expiration of the Option Term;
(2) If a grantee is removed from office as a director of the Company
and/or as Board Chairman, if applicable, for Cause, any outstanding vested Stock
Options held by such grantee will be exercisable by the grantee in accordance
with their terms at any time prior to the earlier of (a) the time the grantee is
so removed from office and (b) the expiration of the Option Term; and
(3) Following the death of a grantee while a director and/or while
Board Chairman, if applicable, or after the grantee ceased to be a director
and/or ceased to be Board Chairman, if applicable, for any reason other than
removal for Cause, any Stock Options that are outstanding and exercisable by
such grantee at the time of death or which thereafter vest will be exercisable
in accordance with their terms by the person or persons entitled to do so under
the grantee's will, by a beneficiary properly designated by the director in the
event of death pursuant to Section 7.4, if any, or by the person or persons
entitled to do so under the applicable laws of descent and distribution at any
time prior to the earlier of (a) the expiration of the Option Term and (b) two
years after the date of death.
(i) Termination of Stock Option. A Stock Option will terminate on
the earlier of (1) exercise of the Stock Option in accordance with the terms of
the Plan, and (2) expiration of the Option Term as specified in Sections 7.2(e)
and 7.2(h).
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(j) Stock Option Agreement. All Stock Options will be confirmed by
an agreement, or an amendment thereto, which will be executed on behalf of the
Company by the Chief Executive Officer, the President or any Vice President and
by the grantee.
(k) General Restrictions.
(1) The obligation of the Company to issue Stock pursuant to Stock
Options under the Plan will be subject to the condition that, if at any time the
Company determines that (a) the listing, registration or qualification of shares
of Stock upon any securities exchange or under any state or federal law, or (b)
the consent or approval of any government or regulatory body is necessary or
desirable, then such Stock will not be issued unless such listing, registration,
qualification, consent or approval has been effected or obtained free from any
conditions not acceptable to the Company.
(2) Shares of Stock for use under the provisions of this Section 7
will not be issued until they have been duly listed, upon official notice of
issuance, upon the New York Stock Exchange and such other exchanges, if any, as
the Board may determine, and a registration statement under the Securities Act
of 1933 with respect to such shares has become, and is, effective.
Subject to the foregoing provisions of this Section 7.2 and the other
provisions of the Plan, any Stock Option granted under the Plan will be subject
to such restrictions and other terms and conditions, if any, as the Board and/or
the Committee may determine, in its or their discretion, and as are set forth in
the agreement referred to in Section 7.2(j), or an amendment thereto; provided,
however, that in no event will the Committee or the Board have any power or
authority which would cause transactions pursuant to the Plan to cease to be
exempt from the provisions of Section 16(b) of the Exchange Act pursuant to Rule
16b-3, as such rule may be amended, or any successor rule.
7.3 Annual Statement. A statement will be sent to each Director as to the
status of his or her Stock Options at least once each calendar year.
7.4 Designation of a Beneficiary. A Director may designate a beneficiary
to hold and exercise outstanding Stock Options in accordance with the Plan in
the event of the Director's death in a form approved by the Company.
7.5 Holding Period Applicable to a Deceased Grantee's Estate. As long as
at least six months have elapsed since the Grant Date, a beneficiary properly
designated by the Director pursuant to Section 7.4, if any, or a person holding
a Stock Option under a deceased grantee's will or under the applicable laws of
descent or distribution, exercising a Stock Option in accordance with Section
7.2(h) will not be subject to the Holding Period with respect to shares of Stock
received on exercise of a Stock Option.
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Section 8. Restricted Stock Awards.
8.1 Grants of Restricted Stock Awards.
(a) Annual Director's Fee Grants. For calendar years 1996 and 1997,
each Director received one-fourth of the value of his or her Annual Director's
Fee in the form of a Restricted Stock Award.
Beginning with calendar year 1998, unless otherwise determined by the
Board or the Committee each Director will receive 5/16ths (31.25%) of the value
of his or her Annual Director's Fee in the form of a Restricted Stock Award, and
such Restricted Stock will be granted automatically each year on the last
Wednesday in January of such year to each Director in office on such Grant Date.
If a person joins the Board or otherwise first becomes a Director at any
time after the last Wednesday in January of a given calendar year (beginning
with 1998) but before the end of that calendar year, whether by action of the
shareholders of the Company or the Board or otherwise, unless otherwise
determined by the Board or the Committee such person upon becoming a Director
will be granted automatically 5/16ths (31.25%) of the value of his or her Annual
Director's Fee for that calendar year (which may be prorated) in the form of a
Restricted Stock Award on the last Wednesday in the calendar month in which such
person first becomes a Director (or in the next following calendar month if said
person first becomes a Director after the last Wednesday of the month).
(b) Annual Committee Chair's Fee Grants. Beginning with calendar
year 1996, unless otherwise determined by the Board or the Committee each
Director who is the chair of a standing committee of the Board will receive the
full value of his or her Annual Committee Chair's Fee in the form of a
Restricted Stock Award, and such Restricted Stock will be granted automatically
each year immediately following the annual meeting of shareholders and the
organization meeting of the Board related to such annual meeting of
shareholders, beginning with the annual meeting of shareholders and related
organization meeting held in 1996, to each Director who is elected at such
organization meeting to serve as the chair of a standing committee of the Board.
Beginning after the 1998 organization meeting of the Board, if a Director
is elected to serve as the chair of a standing committee of the Board at any
time after the organization meeting of the Board held in connection with the
annual meeting of shareholders for a given year but before the next organization
meeting of the Board is held, unless otherwise determined by the Board or the
Committee such Director will, upon so becomming a committee chair, receive the
value of his or her Annual Committee Chair's Fee for that year (which may be
prorated) in the form of a Restricted Stock Award on the later of: (1) the last
Wednesday in the calendar month in which such Director becomes a standing
committee chair (or in the next following calendar month if said Director
becomes a standing committee chair after the last Wednesday of the month); and
(2) January 27, 1999.
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(c) Annual Board Chairman's Fee Grants. Beginning with calendar year
1999, unless otherwise determined by the Board or the Committee, the Board
Chairman, if any, will receive 5/16ths (31.25%) of the value of his or her
Annual Board Chairman's Fee in the form of a Restricted Stock Award, and such
Restricted Stock will be granted automatically each year on the last Wednesday
in January of such year to the Board Chairman in office on such Grant Date, if
any.
If a director becomes Board Chairman at any time after the last Wednesday
in January of a given calendar year (beginning with calendar year 1999) but
before the end of that calendar year, whether by action of the Board or
otherwise, unless otherwise determined by the Board or the Committee such
director upon so becoming the Board Chairman will receive 5/16ths (31.25%) of
the value of his or her Annual Board Chairman's Fee for that year (which may be
prorated) in the form of a Restricted Stock Award on the last Wednesday in the
calendar month in which such director becomes the Board Chairman (or in the next
following calendar month if said director becomes Board Chairman after the last
Wednesday of the month.
(d) The total number of shares of Stock representing any such
Restricted Stock Award will be the number of shares determined by dividing the
amount of the Annual Director's Fee, the Annual Committee Chair's Fee or the
Annual Board Chairman's Fee, as the case may be, to be paid in the form of a
Restricted Stock Award by the Fair Market Value of a share of Stock on the Grant
Date, rounded up to the nearest whole share.
(e) Other Restricted Stock Grants. Beginning with calendar year
1999, the Board or the Committee may, from time to time, grant Restricted Stock
Awards to one or more Directors or to the Board Chairman for such number of
shares of Restricted Stock as the Board or the Committee may determine as
additional compensation to such Director or Directors or to such Board Chairman
for their services as such.
(f) Restricted Stock granted pursuant to Section 8.1 is subject to
adjustment as provided in Section 4.3.
8.2 Terms and Conditions of Restricted Stock. Unless otherwise determined
by the Board or the Committee, Restricted Stock granted under the Plan will be
subject to the following terms and conditions:
(a) Restriction Period. Restricted Stock will be subject to a
Restriction Period ("Restriction Period") beginning on the Grant Date and
continuing through December 31 of the calendar year in which the Grant Date
occurred.
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(b) Vesting.
(1) Annual Director's Fee Grants. Except as set forth in Section
8.2(b)(3), a Director's right to ownership in shares of Restricted Stock granted
to a Director pursuant to Section 8.1(a) will vest on the January 1 immediately
following the expiration of the Restriction Period for such shares (the
"Restricted Stock Vesting Date") if the Director has an Attendance Percentage of
at least seventy-five percent (75%) for the Grant Year. The Committee or the
Board may at any time or from time to time waive the Restriction Period or
accelerate the vesting of shares of Restricted Stock.
In the event that a Director has an Attendance Percentage of less than
seventy-five percent (75%) for a Grant Year, a number of shares of Restricted
Stock equal to the Director's Attendance Percentage for the Grant Year
multiplied by the total number of shares of Restricted Stock granted pursuant to
Section 8.1(a) during the Grant Year (rounded up to the nearest whole share)
will vest on the Restricted Stock Vesting Date and the remaining shares of
Restricted Stock granted pursuant to Section 8.1(a) during the Grant Year will
be forfeited as of the Restricted Stock Vesting Date.
(2) Annual Committee Chair's Fee Grants, Annual Board Chairman's Fee
Grants, and Other Grants. Except as set forth in Section 8.2(b)(3) below, a
Director's right to ownership in shares of Restricted Stock granted to a
Director pursuant to Section 8.1(e), to a committee chair pursuant to Section
8.1(b), or to the Board Chairman, if any, pursuant to Section 8.1(c) will vest
on the Restricted Stock Vesting Date.
(3) Notwithstanding anything to the contrary herein, (i) in the
event that a director is removed for Cause from office as a director of the
Company (and/or in the case of Restricted Stock granted to a director in his or
her capacity as Board Chairman, from office as Board Chairman, if applicable)
prior to the Restricted Stock Vesting Date, all of said Director's shares of
Restricted Stock that have not yet vested will be forfeited immediately as of
the time the grantee is so removed from office and the Company will have the
right to complete the blank stock power described below with respect to such
shares, (ii) if so provided in the relevant Restricted Stock Agreement or if the
Committee or the Board so determines with respect to a share or shares of
Restricted Stock, upon the occurrence of a Change in Control, all such shares of
Restricted Stock that have not yet vested will immediately vest, and (iii) for
any Director who, at the effective date of the CBS/Viacom Merger is not a
director of Viacom, Restricted Stock granted in calendar year 2000 pursuant to
section 8.1(e) or 8.2(b), if any, will at the effective time of the CBS/Viacom
Merger, immediately vest.
(c) Issuance of Shares. On or about the Grant Date, a certificate
representing the shares of Restricted Stock will be registered in the Director's
name and deposited by the Director, together with a stock power endorsed in
blank, with the Company. Subject to the transfer restrictions set forth in
Section 8.2(d) and to the last sentence of this Section 8.2(c), the Director as
owner of shares of Restricted Stock will have the rights of the holder of such
Restricted Stock during the Restriction Period. On the Restricted Stock Vesting
Date following expiration of the Restriction Period, vested shares of Restricted
Stock will be
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redelivered by the Company to the Director, and non-vested shares of Restricted
Stock will be forfeited and the Company will have the right to complete the
blank stock power with respect to such non-vested shares; provided, however,
with respect to shares of Restricted Stock granted in 1996 prior to shareholder
approval of an amendment to the Plan on April 24, 1996, no certificates were
issued, such shares were not issued and outstanding, and the Directors did not
have any of the rights of an owner of the shares until the date such shareholder
approval occurred.
(d) Transfer Restrictions; Mandatory Holding of Stock. Except as
otherwise provided in Section 8.5 or Section 10, shares of Restricted Stock are
not transferable during the Restriction Period. Once the Restriction Period
lapses and shares vest, except as otherwise provided in Section 8.5 or Section
10 or unless waived by the Committee or the Board, shares acquired as a
Restricted Stock Award must be held by the grantee for a minimum of: (1) three
years from the Grant Date; (2) two years from the date the grantee ceases to be
a director of the Company; or (3) if so provided in the relevant Restricted
Stock Agreement or if the Committee or the Board so determines with respect to a
share or shares of Restricted Stock, until the occurrence of a Change of
Control, whichever first occurs (the "Restricted Shares Holding Period").
Notwithstanding the foregoing or anything to the contrary contained in any
Restricted Stock agreement, upon the effective time of the CBS/Viacom Merger,
the Restricted Shares Holding Period for any Restricted Stock acquired as a
Restricted Stock Award shall terminate.
(e) Restricted Stock Agreement. All Restricted Stock Awards will be
confirmed by an agreement, or an amendment thereto, which will be executed on
behalf of the Company by the Chief Executive Officer, the President or any Vice
President and by the grantee.
(f) General Restriction.
(1) The obligation of the Company to issue shares of Restricted
Stock under the Plan will be subject to the condition that if, at any time, the
Committee determines that (a) the listing, registration or qualification of
shares of Restricted Stock upon any securities exchange or under any state or
federal law or (b) the consent or approval of any government or regulatory body
is necessary or desirable, then such Restricted Stock will not be issued unless
such listing, registration, qualification, consent or approval has been effected
or obtained free from any conditions not acceptable to the Company.
(2) Shares of Stock for use under the provisions of this Section 8
will not be issued until they have been duly listed, upon official notice of
issuance, upon the New York Stock Exchange and such other exchanges, if any, as
the Board may determine, and a registration statement under the Securities Act
of 1933 with respect to such shares has become, and is, effective.
Subject to the foregoing provisions of this Section 8.2 and the other
provisions of the Plan, any shares of Restricted Stock granted under the Plan
will be subject to such restrictions and other terms and conditions, if any, as
the Board or the Committee may be determine, in its discretion, and as are set
forth in the agreement referred to in Section 8.2(e), or an amendment
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thereto; provided, however, that in no event will either the Committee or the
Board have any power or authority which would cause transactions pursuant to the
Plan to cease to be exempt from the provisions of Section 16(b) of the Exchange
Act under Rule 16b-3, as such rule may be amended, or any successor rule.
8.3 Annual Statement. A statement will be sent to each Director as to the
status of his or her Restricted Stock at least once each calendar year.
8.4 Designation of a Beneficiary. A Director may designate a beneficiary
to hold shares of Restricted Stock in accordance with the Plan in the event of
the Director's death in a form approved by the Company.
8.5 Holding Period Applicable to a Deceased Grantee's Estate. As long as
at least six months have elapsed since the Grant Date, a beneficiary properly
designated by the Director pursuant to Section 8.4 in the event of death, if
any, or a person holding shares of Restricted Stock under a deceased grantee's
will or under the applicable laws of descent or distribution, will not be
subject to the Restricted Shares Holding Period with respect to such shares of
Restricted Stock.
Section 9. Change in Control
9.1 Settlement of Compensation. In the event of a Change in Control of the
Company as defined herein: (a) with respect to awards and other benefits made or
granted pursuant to the Plan prior to July 28, 1999, to the extent not already
vested, all Stock Option Awards, Restricted Stock Awards and other benefits
hereunder will be vested immediately (provided, however, that with respect to
awards and other benefits made or granted pursuant to the Plan on or after July
28, 1999, the occurrence of a Change in Control will have no effect on such
outstanding awards or benefits pursuant to the Plan unless otherwise provided in
an agreement governing the award or other benefit or unless the Committee or the
Board determines otherwise); and (b) the value of all unpaid Common Stock
Equivalents and deferred amounts (whether deferred before or after July 28,
1999) will be paid in cash to PNC Bank, National Association, the trustee
pursuant to a trust agreement dated as of June 22, 1995, as amended from time to
time, or any successor trustee, or otherwise on such terms as the Committee may
prescribe or permit. For purposes of this Section 9.1: the value of unpaid
Common Stock Equivalents and deferred amounts will be equal to the sum of (i)
the value of all Common Stock Equivalent Awards then held in such Director's
Deferred Stock Account (the value of which will be based upon the highest price
of the Stock as reported by the composite tape of the New York Stock Exchange
during the 30 days immediately preceding the Change in Control), (ii) the value
of the Director's Cash Account, and (iii) the greater value of (x) the cash
amount equal to the face value of the Debentures in the Director's Deferred
Debenture Account plus cash equal to accrued interest on the Debentures or (y)
the number of shares of Stock into which the Debentures in the Director's
Deferred Debenture Account are convertible (the value of which will be based
upon the highest price of the Stock as reported by the composite tape of the New
York Stock Exchange during the 30 days immediately preceding the Change in
Control), plus cash equal to accrued interest on the Debentures.
-19-
9.2 Definition of Change in Control. A Change in Control will mean the
occurrence of one or more of the following events:
(a) there shall be consummated (i) any consolidation or merger of
the Company in which the Company is not the continuing or surviving corporation
or pursuant to which shares of the Company's Stock would be converted into cash,
securities or other property, other than a merger of the Company in which the
holders of the Company's Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger, or (ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company; or
(b) the shareholders of the Company shall approve of any plan or
proposal for the liquidation or dissolution of the Company; or
(c) (i) any person (as such term is defined in Section 13(d) of the
Exchange Act), corporation or other entity shall purchase any Stock of the
Company (or securities convertible into the Company's Stock) for cash,
securities or any other consideration pursuant to a tender offer or exchange
offer, unless, prior to the making of such purchase of Stock (or securities
convertible into Stock), the Board shall determine that the making of such
purchase shall not constitute a Change in Control, or (ii) any person (as such
term is defined in Section 13(d) of the Exchange Act), corporation or other
entity (other than the Company or any benefit plan sponsored by the Company or
any of its subsidiaries) shall become the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing twenty percent or more of the combined
voting power of the Company's then outstanding securities ordinarily (and apart
from any rights accruing under special circumstances) having the right to vote
in the election of directors (calculated as provided in Rule 13d-3(d) in the
case of rights to acquire any such securities), unless, prior to such person so
becoming such beneficial owner, the Board shall determine that such person so
becoming such beneficial owner shall not constitute a Change in Control; or
(d) at any time during any period of two consecutive years,
individuals who at the beginning of such period constituted the entire Board
shall cease for any reason to constitute at least a majority thereof, unless the
election or nomination for election of each new director during such two-year
period is approved by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of such two-year period.
Section 10. Assignability
10.1 The right to receive payments or distributions hereunder (including
any "derivative security" issued pursuant to the Plan, as such term is defined
by the rules promulgated under Section 16 of the Exchange Act), any shares of
Restricted Stock granted hereunder during the Restriction Period, and any Stock
Options granted hereunder will not be transferable or assignable by a Director
other than by will, by the laws of descent and distribution, to a beneficiary
properly designated by the Director pursuant to the appropriate section of the
Plan in the event of death, if any, or pursuant to a domestic relations order as
defined by Section
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414(p)(1)(B) of the Internal Revenue Code or the rules thereunder that satisfies
Section 414(p)(1)(A) of the Internal Revenue Code or the rules thereunder.
10.2 In addition, Stock acquired on exercise of a Stock Option will not be
transferable prior to the end of the applicable Option Shares Holding Period, if
any, set forth in Sections 7.2(d) and 7.5, and Stock acquired as Restricted
Stock will not be transferable prior to the end of the applicable Restricted
Shares Holding Period, if any, set forth in Sections 8.2(d) and 8.5, in either
case other than by will, by transfer to a beneficiary properly designated by the
Director pursuant to the appropriate section of the Plan in the event of death,
if any, by the applicable laws of descent and distribution, or pursuant to a
domestic relations order as defined by Section 414(p)(1)(B) of the Internal
Revenue Code or the rules thereunder that satisfies Section 414(p)(1)(A) of the
Internal Revenue Code or the rules thereunder.
Section 11. Retention; Withholding of Tax
11.1 Retention. Nothing contained in the Plan or in any Stock Option Award
or Restricted Stock Award granted under the Plan will interfere with or limit in
any way the right of the Company to remove any director from the Board or to
remove the Board Chairman, if any, from office as such pursuant to the Restated
Articles of Incorporation and the By-laws of the Company, nor confer upon any
Director any right to continue in the service of the Company.
11.2 Withholding of Tax. To the extent required by applicable law and
regulation, each Director must arrange with the Company for the payment of any
federal, state or local income or other tax applicable to any payment or any
delivery of Stock hereunder before the Company will be required to make such
payment or issue (or, in the case of Restricted Stock, deliver) such shares
under the Plan.
Section 12. Plan Amendment, Modification and Termination
The Board may at any time terminate, and from time to time may amend or
modify the Plan, provided, however, that no amendment or modification may become
effective without approval of the amendment or modification by the shareholders
if shareholder approval is required to enable the Plan to satisfy any applicable
statutory or regulatory requirements.
Section 13. Requirements of Law
13.1 Federal Securities Law Requirements. Implementation and
interpretations of, transactions pursuant to, the Plan will be subject to all
conditions required under Rule 16b-3, as such rule may be amended, or any
successor rule, to qualify such transactions for any exemption from the
provisions of Section 16(b) of the Exchange Act available under that rule, or
any successor rule.
13.2 Governing Law. The Plan and all agreements hereunder will be
construed in accordance with and governed by the laws of the Commonwealth of
Pennsylvania.
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Section 14. Other Compensation
Nothing contained in the Plan will be deemed to limit or restrict the
right of the Company to compensate directors for their services in any capacity
in whole or in part under separate compensation or deferral plans or programs
for directors or under other compensation arrangements.
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EXHIBIT 10(y)(x)
ADVISORY DIRECTOR'S PLAN TERMINATION FEE
DEFERRAL TERMS AND CONDITIONS
Effective April 30, 1996
(As Revised Effective
February 24, 2000)
ADVISORY DIRECTOR'S PLAN TERMINATION FEE
DEFERRAL TERMS AND CONDITIONS
The Board of Directors of Westinghouse Electric Corporation (the
"Company") hereby adopts the following deferral terms and conditions (the "ADP
Deferral Plan") for Termination Fees under the Company's Advisory Director's
Plan.
Section 1. Definitions
1.1 Definitions. The following terms shall have the meanings set forth
below:
(a) "Board" means the Board of Directors of the Company.
(b) "Change in Control" shall have the meaning assigned to it in
Section 4.2.
(c) "Committee" means the Compensation Committee of the Board or any
successor established by the Board.
(d) "Debenture" means a hypothetical debenture of the Company that
has a face value of $100, bears interest at a rate equal to the ten-year U.S.
Treasury Bond rate in effect the week prior to April 30, 1996, and would be
deemed to be convertible into Stock at a conversion rate determined by dividing
$100 by the mean of the high and low prices of the Stock as reported by the
composite tape of the New York Stock Exchange on April 30, 1996, the date the
Debenture is credited to an ADP Deferred Debenture Account pursuant to Section
3.2.
(e) "ADP Deferred Debenture Account" means the account established
by the Company for a Director pursuant to Section 3.2 and to which Debentures
are credited pursuant to the ADP Deferral Plan.
(f) "Director" means a non-employee member of the
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Board who is entitled to Termination Fees under the Company's Advisory
Director's Plan.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(h) "Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended from time to time.
(i) "Stock" means the common stock, $1.00 par value, of the Company.
(j) "Termination Fee" means a termination fee payment pursuant to
the Company's Advisory Director's Plan.
1.2 Number. Except when otherwise indicated by the context the definition
of any term herein in the singular shall also include the plural.
Section 2. ADP Deferral Plan Administration
(a) The ADP Deferral Plan shall be administered by the Committee.
The members of the Committee shall be members of the Board appointed by the
Board, and any vacancy on the Committee shall be filled by the Board.
The Committee shall keep minutes of its meetings and of any action taken
by it without a meeting. A majority of the Committee shall constitute a quorum,
and the acts of a majority of the members present at any meeting at which a
quorum is present shall be the acts of the Committee. Any action that may be
taken at a meeting of the Committee may be taken without a meeting if a consent
or consents in writing setting forth the action so taken shall be signed by all
of the members of the Committee. The Committee shall make appropriate reports to
the Board concerning the operations of the ADP Deferral Plan.
(b) Subject to the limitations of the ADP Deferral
- 2 -
Plan, the Committee shall have the sole and complete authority: (i) to impose
such limitations, restrictions and conditions on Debentures as it shall deem
appropriate; (ii) to interpret the ADP Deferral Plan and to adopt, amend and
rescind administrative guidelines and other rules and regulations relating to
the ADP Deferral Plan; and (iii) to make all other determinations and to take
all other actions necessary or advisable for the implementation and
administration of the ADP Deferral Plan. The Committee's determinations on
matters within its authority shall be conclusive and binding upon the Company
and all other persons.
(c) The Company shall be the sponsor of the ADP Deferral Plan. All
expenses associated with the ADP Deferral Plan shall be borne by the Company.
Section 3. Deferral of Termination Fees
3.1 Amount of Deferral. Any Termination Fee payable to a Director under
the Company's Advisory Director's Plan is subject to mandatory deferral under
the terms of the ADP Deferral Plan.
3.2 ADP Deferred Debenture Accounts. An ADP Deferred Debenture Account has
been or shall be established for each Director eligible to receive a Termination
Fee. The amount of deferred Termination Fees for each Director on April 30,
1996, together with 1996 interest, shall be deemed to be invested in Debentures
and shall be credited to the ADP Deferred Debenture Account for each such
Director on April 30, 1996. Deferred amounts shall be credited to the ADP
Deferred Debenture Account only in $100 amounts.
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3.3 Payment of Deferred Amounts. Payments from an ADP Deferred Debenture
Account shall be made in five consecutive annual installments beginning in the
January following the Director's termination of service or if elected by the
Director in writing, such payments may be made in ten or fifteen consecutive
annual installments or in lump sum in the January following the Director's
termination of service. Payments from an ADP Deferred Debenture Account shall
all be made in cash and shall consist of accumulated interest on the Debentures
plus the greater value of (i) the face value of the Debentures or (ii) the value
of the shares of Stock into which the Debentures would be deemed to be
convertible.
3.4 Payments to a Deceased Director's Estate. In the event of a Director's
death before the balance of the Director's ADP Deferred Debenture Account is
fully paid, payment of the balance of the Director's ADP Deferred Debenture
Account shall then be made to the beneficiary designated by the Director
pursuant to Section 3.5, or to the Director's estate in the absence of such a
beneficiary designation, in the time and manner selected by the Committee. The
Committee may take into account the application of any duly appointed
administrator or executor of a Director's estate and direct that the balance of
the Director's ADP Deferred Debenture Account be paid to the Director's estate
in the manner requested by such application.
3.5 Designation of Beneficiary. A Director may designate a beneficiary in
a form approved by the Committee and filed with the Secretary of the Company.
- 4 -
Section 4. Change in Control
4.1 Settlement of Compensation. In the event of a Change in Control of the
Company as defined herein and if elected by the Committee in writing, the value
of all unpaid deferred amounts shall be paid in cash to PNC Bank, National
Association, the trustee pursuant to a trust agreement dated as of June 1995, as
amended from time to time, or any successor trustee. For purposes of this
Section 4.1, the value of deferred amounts shall be equal to the greater value
of (a) the cash amount equal to the face value of the Debentures plus cash equal
to accrued interest or (b) the number of shares of Stock into which the
Debentures would be deemed to be convertible (the value of which shall be based
upon the highest price of the Stock as reported by the composite tape of the New
York Stock Exchange during the thirty days immediately preceding the Change in
Control) plus cash equal to accrued interest.
4.2 Definition of Change in Control. A Change in Control shall mean the
occurrence of one or more of the following events:
(a) there shall be consummated (i) any consolidation or merger of
the Company in which the Company is not the continuing or surviving corporation
or pursuant to which shares of the Company's Stock would be converted into cash,
securities or other property, other than a merger of the Company in which the
holders of the Company's Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger, or (ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company; or
(b) the shareholders of the Company shall approve of any plan or
proposal for the liquidation or dissolution of the Company; or
(c) (i) any person (as such term is defined in Section 13(d) of the
Exchange Act), corporation or other entity shall
- 5 -
purchase any Stock of the Company (or securities convertible into the Company's
Stock) for cash, securities or any other consideration pursuant to a tender
offer or exchange offer, unless, prior to the making of such purchase of Stock
(or securities convertible into Stock), the Board shall determine that the
making of such purchase shall not constitute a Change in Control, or (ii) any
person (as such term is defined in Section 13(d) of the Exchange Act),
corporation or other entity (other than the Company or any benefit plan
sponsored by the Company or any of its subsidiaries) shall become the
"beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing twenty
percent or more of the combined voting power of the Company's then outstanding
securities ordinarily (and apart from any rights accruing under special
circumstances) having the right to vote in the election of directors (calculated
as provided in Rule 13d-3(d) in the case of rights to acquire any such
securities), unless, prior to such person so becoming such beneficial owner, the
Board shall determine that such person so becoming such beneficial owner shall
not constitute a Change in Control; or
(d) at any time during any period of two consecutive years
individuals who at the beginning of such period constituted the entire Board
shall cease for any reason to constitute at least a majority thereof, unless the
election or nomination for election of each new director during such two-year
period is approved by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of such two-year period.
- 6 -
Section 5. Assignability
The right to receive payments or distributions hereunder and any
Debentures granted hereunder shall not be transferable or assignable by a
Director other than by will, by the laws of descent and distribution, to a
properly designated beneficiary in the event of death, or pursuant to a domestic
relations order as defined by Section 414(p)(1)(B) of the Internal Revenue Code
or the rules thereunder that satisfies Section 414(p)(1)(A) of the Internal
Revenue Code or the rules thereunder.
Section 6. Retention; Withholding of Tax
6.1 Retention. Nothing contained in the ADP Deferral Plan shall interfere
with or limit in any way the right of the Company to remove any Director from
the Board pursuant to the Restated Articles of Incorporation and the By-laws of
the Company, nor confer upon any Director any right to continue in the service
of the Company.
6.2 Withholding of Tax. To the extent required by applicable law and
regulation, each Director must arrange with the Company for the payment of any
federal, state or local income or other tax applicable to any payment hereunder
before the Company shall be required to make such payment under the ADP Deferral
Plan.
Section 7. ADP Deferral Plan Amendment, Modification and Termination
The Board may from time to time amend or modify the ADP Deferral Plan and
may at any time terminate the ADP Deferral Plan.
- 7 -
Section 8. Governing Law
The ADP Deferral Plan shall be construed in accordance with and governed
by the laws of the Commonwealth of Pennsylvania without regard to its conflicts
of law principles.
Section 9. Effective Date
The ADP Deferral Plan shall be effective as of April 30, 1996.
The ADP Deferral Plan shall not preclude the adoption by appropriate means
of any other compensation or deferral plan for directors.
- 8 -
EXHIBIT 10(bb)
CONFORMED COPY
- --------------------------------------------------------------------------------
$1,450,000,000
AMENDED AND RESTATED FIVE-YEAR CREDIT AGREEMENT
among
VIACOM INC.,
VIACOM INTERNATIONAL INC.,
THE SUBSIDIARY BORROWERS PARTIES HERETO,
THE LENDERS NAMED HEREIN,
THE CHASE MANHATTAN BANK,
as Administrative Agent,
FLEET NATIONAL BANK and BANK OF AMERICA, N.A.,
as Co-Syndication Agents
and
BANK OF NEW YORK,
as Documentation Agent,
Dated as of May 3, 2000,
As Amended and Restated as of March 7, 2001
- --------------------------------------------------------------------------------
JP MORGAN, A DIVISION OF CHASE SECURITIES INC.
and
FLEETBOSTON ROBERTSON STEPHENS INC.,
as Joint Lead Arrangers and Joint Bookrunners
BANK OF AMERICA, N.A. and BANK OF NEW YORK,
as Arrangers
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS........................................................1
SECTION 1.1. Defined Terms...........................................1
SECTION 1.2. "Terms Generally"......................................18
ARTICLE II THE CREDITS......................................................20
SECTION 2.1. Commitments............................................20
SECTION 2.2. Revolving Credit Loans; Competitive Loans..............20
SECTION 2.3. Competitive Bid Procedure..............................20
SECTION 2.4. Revolving Credit Borrowing Procedure...................23
SECTION 2.5. Repayment of Loans.....................................24
SECTION 2.6. Swingline Loans........................................24
SECTION 2.7. Letters of Credit......................................27
SECTION 2.8. Conversion and Continuation Options....................31
SECTION 2.9. Fees...................................................32
SECTION 2.10. Interest on Loans; Eurodollar Tranches; Etc...........33
SECTION 2.11. Default Interest......................................34
SECTION 2.12. Alternate Rate of Interest............................34
SECTION 2.13. Termination, Reduction and Increase of Commitments....35
SECTION 2.14. Optional Prepayments of Revolving Credit Loans........36
SECTION 2.15. Reserve Requirements; Change in Circumstances.........37
SECTION 2.16. Indemnity.............................................39
SECTION 2.17. Pro Rata Treatment; Funding Matters;
Evidence of Debt......................................39
SECTION 2.18. Sharing of Setoffs....................................41
SECTION 2.19. Payments..............................................42
Page
----
SECTION 2.20. Taxes.................................................42
SECTION 2.21. Termination or Assignment of Commitments Under
Certain Circumstances ................................44
SECTION 2.22. Currency Equivalents..................................45
SECTION 2.23. Judgment Currency.....................................46
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................46
SECTION 3.1. Corporate Existence....................................46
SECTION 3.2. Financial Condition....................................47
SECTION 3.3. Litigation.............................................47
SECTION 3.4. No Breach, etc.........................................47
SECTION 3.5. Corporate Action.......................................48
SECTION 3.6. Approvals..............................................48
SECTION 3.7. ERISA..................................................48
SECTION 3.8. Taxes..................................................48
SECTION 3.9. Investment Company Act.................................49
SECTION 3.10. Environmental.........................................49
SECTION 3.11. Material Subsidiaries.................................49
ARTICLE IV CONDITIONS OF EFFECTIVENESS AND LENDING..........................49
SECTION 4.1. Effectiveness..........................................49
SECTION 4.2. Initial Loans to Subsidiary Borrowers..................50
SECTION 4.3. All Credit Events......................................50
ARTICLE V COVENANTS.........................................................51
SECTION 5.1. Financial Statements...................................51
SECTION 5.2. Corporate Existence, Etc...............................53
SECTION 5.3. Insurance..............................................54
SECTION 5.4. Prohibition of Fundamental Changes.....................54
Page
----
SECTION 5.5. Limitation on Liens....................................55
SECTION 5.6. Limitation on Subsidiary Indebtedness..................56
SECTION 5.7. Consolidated Coverage Ratio............................57
SECTION 5.8. Use of Proceeds........................................57
SECTION 5.9. Transactions with Affiliates...........................57
ARTICLE VI EVENTS OF DEFAULT................................................57
ARTICLE VII THE AGENTS......................................................60
ARTICLE VIII GUARANTEES.....................................................62
SECTION 8.1. Viacom Guarantee.......................................62
SECTION 8.2. Viacom International Guarantee.........................65
ARTICLE IX MISCELLANEOUS....................................................68
SECTION 9.1. Notices................................................68
SECTION 9.2. Survival of Agreement..................................69
SECTION 9.3. Binding Effect.........................................69
SECTION 9.4. Successors and Assigns.................................69
SECTION 9.5. Expenses; Indemnity....................................73
SECTION 9.6. Right of Setoff........................................74
SECTION 9.7. APPLICABLE LAW.........................................74
SECTION 9.8. Waivers; Amendment.....................................74
SECTION 9.9. Entire Agreement.......................................75
SECTION 9.10. Waiver of Jury Trial..................................75
SECTION 9.11. Severability..........................................76
SECTION 9.12. Counterparts..........................................76
SECTION 9.13. Headings..............................................76
SECTION 9.14. Jurisdiction; Consent to Service of Process...........76
Page
----
SECTION 9.15. Confidentiality.......................................77
SECTION 9.16. Waiver of Notice of Termination Period................78
ANNEXES
Annex I Pricing Grid
EXHIBITS
Exhibit A Administrative Questionnaire
Exhibit B-1 Form of Competitive Bid Request
Exhibit B-2 Form of Notice of Competitive Bid Request
Exhibit B-3 Form of Competitive Bid
Exhibit B-4 Form of Revolving Credit Borrowing Request
Exhibit B-5 Form of Swingline Borrowing Request
Exhibit B-6 Form of Notice of Designated Letter of Credit
Exhibit B-7 Form of Subsidiary Borrower Designation
Exhibit B-8 Form of Subsidiary Borrower Request
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Confidentiality Agreement
Exhibit E Form of Closing Certificate
Exhibit F Form of Issuing Lender Agreement
Exhibit G Form of New Lender Supplement
Exhibit H Form of Commitment Increase Letter
SCHEDULES
Schedule 1.1 Commitments; Addresses for Notices
Schedule 1.1(a) Guarantees
Schedule 5.6 Subsidiary Indebtedness
1
AMENDED AND RESTATED FIVE-YEAR CREDIT AGREEMENT entered into as of
May 3, 2000, as amended and restated as of March 7, 2001, among VIACOM INC., a
Delaware corporation ("Viacom"), VIACOM INTERNATIONAL INC. ("Viacom
International"), each Subsidiary Borrower (as herein defined); the lenders whose
names appear on Schedule 1.1 hereto or who subsequently become parties hereto as
provided herein (the "Lenders"); THE CHASE MANHATTAN BANK, a New York banking
corporation ("Chase"), as administrative agent for the Lenders; FLEET NATIONAL
BANK, a national banking corporation, and BANK OF AMERICA, N.A., a national
banking association, each as co-syndication agent for the Lenders (in such
capacity, the "Co-Syndication Agents"); and BANK OF NEW YORK, a New York banking
corporation, as documentation agent for the Lenders (in such capacity, the
"Documentation Agent").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Viacom, the parent of Infinity (as defined below), has
requested to replace Infinity hereunder and Viacom has agreed to assume all of
Infinity's rights and responsibilities hereunder; and
WHEREAS, the Administrative Agent and the Lenders have agreed to
modify the terms and conditions hereof to conform to the terms and conditions of
the Five-Year Facility (as herein defined) as set forth herein; and
WHEREAS, the Lenders are willing to extend credit to the Borrowers
on the terms and subject to the conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, Viacom, Infinity, Viacom International, each
Subsidiary Borrower heretofore designated, the Administrative Agent and each
Lender hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms.
As used in this Agreement, the following terms shall have the
meanings specified below:
"ABR Loan" shall mean (a) any Revolving Credit Loan bearing interest
at a rate determined by reference to the Alternate Base Rate in accordance with
the provisions of Article II and (b) any ABR Swingline Loan.
"ABR Revolving Credit Loan" shall mean any Revolving Credit Loan
which is an ABR Loan.
"ABR Swingline Exposures" shall mean at any time the aggregate
principal amount at such time of the outstanding ABR Swingline Loans. The ABR
Swingline Exposure of
2
any Lender at any time shall mean its Revolving Credit Percentage of the
aggregate ABR Swingline Exposures at such time.
"ABR Swingline Loan" shall have the meaning assigned to such term in
Section 2.6(a).
"Absolute Rate Loan" shall mean any Competitive Loan bearing
interest at a fixed percentage rate per annum (expressed in the form of a
decimal rounded to no more than four decimal places) specified by the Lender
making such Loan in its Competitive Bid.
"Administrative Agent" shall mean Chase, together with its
affiliates, as an arranger of the Commitments and as the administrative agent
for the Lenders under this Agreement, and any successor thereto pursuant to
Article VII.
"Administrative Agent Fee Letter" shall mean the Fee Letter with
respect to this Agreement between Viacom and the Administrative Agent, as
amended, supplemented or otherwise modified from time to time.
"Administrative Agent's Fees" shall have the meaning assigned to
such term in Section 2.9(c).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A hereto.
"Affiliate" shall mean, as to Viacom, any Person which directly or
indirectly controls, is under common control with or is controlled by Viacom. As
used in this definition, "control" (including, with correlative meanings,
"controlled by" and "under common control with") shall mean possession, directly
or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise); provided that, in any event, any
Person which owns directly or indirectly 10% or more of the securities having
ordinary voting power for the election of directors or other governing body of a
corporation or 10% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person. Notwithstanding the
foregoing, (a) no individual shall be deemed to be an Affiliate of Viacom solely
by reason of his or her being an officer, director or employee of Viacom or any
of its Subsidiaries and (b) Viacom International and Viacom and their
Subsidiaries shall not be deemed to be Affiliates of each other, unless
expressly stated to the contrary.
"Agents" shall mean the collective reference to the Administrative
Agent, the Joint Lead Arrangers and Joint Bookrunners, the Arrangers, the
Documentation Agent and the Co-Syndication Agents.
"Aggregate LC Exposure" shall mean, at any time, the sum of (a) the
aggregate undrawn amount of all Letters of Credit outstanding at such time and
(b) the aggregate amount which has been drawn under Letters of Credit but for
which the applicable Issuing Lender or the Lenders, as the case may be, have not
been reimbursed by Viacom or the relevant Subsidiary Borrower at such time.
3
"Agreement" shall mean this Amended and Restated Five-Year Credit
Agreement, as amended, supplemented or otherwise modified from time to time.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate"
shall mean the rate of interest per annum publicly announced from time to time
by the Lender serving as the Administrative Agent as its prime rate in effect at
its principal office in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as effective; and
"Federal Funds Effective Rate" shall mean, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent
from three Federal funds brokers of recognized standing selected by it. If for
any reason the Administrative Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to ascertain the
Federal Funds Effective Rate for any reason, including the inability or failure
of the Administrative Agent to obtain sufficient quotations in accordance with
the terms thereof, the Alternate Base Rate shall be the Prime Rate until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Amendment Closing Date" shall mean March 7, 2001.
"Applicable Eurodollar Margin" shall mean the "Applicable Eurodollar
Margin" determined in accordance with the Pricing Grid set forth in Annex I
hereto.
"Applicable Facility Fee Rate" shall mean the "Applicable Facility
Fee Rate" determined in accordance with the Pricing Grid set forth in Annex I
hereto.
"Applicable LC Fee Rate" shall mean (a) with respect to Financial
Letters of Credit, the "Applicable Financial LC Fee Rate" determined in
accordance with the Pricing Grid set forth in Annex I hereto and (b) with
respect to Non-Financial Letters of Credit, the "Applicable Non-Financial LC Fee
Rate" determined in accordance with the Pricing Grid set forth in Annex I
hereto.
"Applicable Utilization Fee Rate" shall mean the "Applicable
Utilization Fee Rate" determined in accordance with the Pricing Grid set forth
in Annex I hereto.
"Arrangers" shall mean Bank of America, N.A., a national banking
association, and Bank of New York, a New York banking corporation.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit C.
4
"Blockbuster Event" means the sale or deconsolidation of Blockbuster
Inc. from Viacom, which sale or deconsolidation shall be substantially
non-recourse to Viacom and Viacom International.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"Bonds" shall have the meaning assigned to such term in Section
8.2(g).
"Borrower" shall mean, as applicable, Viacom or the relevant
Subsidiary Borrower.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which banks are
open for business in New York City; provided, however, that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for international business (including
dealings in Dollar deposits) in the London interbank market.
"Capital Lease Obligations" of any Person shall mean the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property (other than
satellite transponders), or a combination thereof, which obligations are
required to be classified and accounted for as capital leases on a balance sheet
of such Person under GAAP and, for the purposes of this Agreement, the amount of
such obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants or options to purchase any of the
foregoing.
"Chase" shall have the meaning assigned to such term in the preamble
to this Agreement.
"Closing Certificate" shall mean a certificate, substantially in the
form of Exhibit E.
"Closing Date" shall mean May 3, 2000.
"Code" shall mean the Internal Revenue Code of 1986, as the same may
be amended from time to time.
"Commitment" shall mean, with respect to each Lender, the commitment
of such Lender to make Revolving Credit Loans pursuant to Section 2.1, to make
or refund ABR Swingline Loans pursuant to Section 2.6 and to issue or
participate in Letters of Credit pursuant to Section 2.7, as set forth on
Schedule 1.1, as such Lender's Commitment may be permanently terminated or
reduced from time to time pursuant to Section 2.13 or changed pursuant to
Section 9.4.
5
"Commitment Increase Date" shall have the meaning assigned to such
term in Section 2.13(e).
"Commitment Increase Letter" shall have the meaning assigned to such
term in Section 2.13(e) and shall be substantially in the form of Exhibit H.
"Commitment Utilization Percentage" shall mean on any day the
percentage equivalent to a fraction (a) the numerator of which is the sum of the
aggregate outstanding principal amount of Revolving Credit Loans, including the
aggregate outstanding principal amount of Letters of Credit, Swingline Loans and
Competitive Loans, and (b) the denominator of which is the Total Commitment (or,
on any day after termination of the Commitments, the Total Commitment in effect
immediately preceding such termination).
"Communications Act" shall mean the Communications Act of 1934, as
amended.
"Competitive Bid" shall mean an offer to make a Competitive Loan
pursuant to Section 2.3.
"Competitive Bid Rate" shall mean, as to any Competitive Bid made
pursuant to Section 2.3(b), (a) in the case of a Eurodollar Competitive Loan,
the Margin, and (b) in the case of an Absolute Rate Loan, the fixed rate of
interest offered by the Lender making such Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant to
Section 2.3 in the form of Exhibit B-1.
"Competitive Loan" shall mean a Loan from a Lender to a Borrower
pursuant to the bidding procedure described in Section 2.3. Each Competitive
Loan shall be a Eurodollar Competitive Loan or an Absolute Rate Loan and,
subject to Section 2.3(a), may be denominated in Dollars or a Foreign Currency.
"Compliance Certificate" shall have the meaning assigned to such
term in Section 5.1.
"Confidential Information" shall have the meaning assigned to such
term in Section 9.15(a).
"Confidentiality Agreement" shall mean a confidentiality agreement
substantially in the form of Exhibit D, with such changes as Viacom may approve.
"Consolidated Coverage Ratio" shall mean, for any period, the ratio
of (a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense
for such period.
"Consolidated EBITDA" shall mean, with respect to Viacom and its
Consolidated Subsidiaries for any period, operating profit (loss) (excluding
that related to Discontinued Operations), plus other income (loss), plus
interest income, plus depreciation and amortization (excluding amortization
related to programming rights, prepublication costs and videocassettes),
6
excluding (a) gains (losses) on sales of assets (except (I) gains (losses) on
sales of inventory sold in the ordinary course of business and (II) gains
(losses) on sales of other assets if such gains (losses) are less than
$10,000,000 individually and less than $50,000,000 in the aggregate during such
period), (b) other non-cash items (including (i) provisions for losses and
additions to valuation allowances, (ii) provisions for restructuring, litigation
and environmental reserves and losses on the Disposition of businesses and (iii)
pension settlement charges), and (c) nonrecurring expenses incurred during such
period in connection with the merger of CBS and Viacom pursuant to the Agreement
and Plan of Merger entered into by CBS, Viacom and Viacom/CBS LLC dated as of
September 6, 1999, as amended, amended and restated, supplemented and otherwise
modified from time to time, minus cash payments made during such period in
respect of non-cash charges taken during any previous period (excluding cash
payments in respect of non-cash charges taken prior to December 31, 1999).
"Consolidated Interest Expense" shall mean for any period the gross
cash interest expense of Viacom and its Consolidated Subsidiaries on
Indebtedness for such period plus cash dividends paid on preferred stock to
persons other than Viacom and its Wholly Owned Subsidiaries for such period, but
excluding the gross cash interest expense of the Discontinued Operations for
such period.
"Consolidated Subsidiary" shall mean, as to any Person, each
Subsidiary of such Person (whether now existing or hereafter created or
acquired) the financial statements of which shall be consolidated with the
financial statements of such Person in accordance with GAAP.
"Consolidated Tangible Assets" shall mean at any date the assets of
Viacom and its Subsidiaries determined on such date on a consolidated basis,
less goodwill and other intangible assets.
"Co-Syndication Agents" shall have the meaning assigned to such term
in the preamble hereto.
"Credit Event" shall mean the making of any Loan or the issuance of
any Letter of Credit hereunder (including the designation of a Designated Letter
of Credit as a "Letter of Credit" hereunder). It is understood that conversions
and continuations pursuant to Section 2.8 do not constitute "Credit Events".
"Debt Rating" shall mean the rating applicable to Viacom's senior,
unsecured, non-credit-enhanced long-term indebtedness for borrowed money, as
assigned by either Rating Agency.
"Default" shall mean any event or condition which upon notice, lapse
of time or both would constitute an Event of Default.
"Designated Letters of Credit" shall mean each letter of credit
issued by an Issuing Lender that (a) is not a Letter of Credit hereunder at the
time of its issuance and (b) is designated on or after the Closing Date by
Viacom or any Subsidiary Borrower, with the consent
7
of such Issuing Lender, as a "Letter of Credit" hereunder by written notice to
the Administrative Agent in the form of Exhibit B-6.
"Discontinued Operations" shall mean the operations classifed as
"discontinued operations" pursuant to Accounting Principles Board Opinion No. 30
as presented in the quarterly report of CBS on Form 10-Q for the quarter ended
September 30, 1997 and filed with the SEC on December 14, 1997.
"Disposition" shall mean, with respect to any Property, any sale,
lease, assignment, conveyance, transfer or other disposition thereof; and the
terms "Dispose" and "Disposed of" shall have correlative meanings.
"Documentation Agent" shall have the meaning assigned to such term
in the preamble hereto.
"Dollars" or "$" shall mean lawful money of the United States of
America.
"Environmental Laws" shall mean any and all Federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment, including, without limitation, ambient air, surface water, ground
water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" shall mean, with respect to Viacom, any trade or
business (whether or not incorporated) that is a member of a group of which
Viacom is a member and which is treated as a single employer under Section 414
of the Code.
"Eurodollar Competitive Loan" shall mean any Competitive Loan which
is a Eurodollar Loan.
"Eurodollar Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" shall mean, with respect to an Interest Period
pertaining to any Eurodollar Loan, the rate of interest determined on the basis
of the rate for deposits in Dollars or the relevant Foreign Currency, as the
case may be, for a period equal to such Interest Period commencing on the first
day of such Interest Period appearing on Page 3750 (or, in the case of any
Foreign Currency, the applicable page) of the Telerate Screen as of 11:00 A.M.,
London time, two Business Days prior to the beginning of such Interest Period.
In the event that such rate does not appear on such page of the Telerate Screen
(or otherwise on the Telerate Service), the "Eurodollar Rate" shall instead be
the interest rate per annum (rounded upwards, if
8
necessary, to the next 1/16 of 1%) equal to the average of the rates at which
deposits in Dollars or the relevant Foreign Currency, as the case may be,
approximately equal in principal amount to (a) in the case of a Eurodollar
Tranche, the portion of such Eurodollar Tranche of the Lender serving as
Administrative Agent and (b) in the case of a Eurodollar Competitive Loan, a
principal amount that would have been the portion of such Loan of the Lender
serving as the Administrative Agent had such Loan been a Eurodollar Revolving
Credit Loan, and for a maturity comparable to such Interest Period, are offered
by the principal London offices of the Reference Banks (or, if any Reference
Bank does not at the time maintain a London office, the principal London office
of any affiliate of such Reference Bank) for immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
"Eurodollar Revolving Credit Loan" shall mean any Revolving Credit
Loan which is a Eurodollar Loan.
"Eurodollar Tranche" shall mean the collective reference to
Eurodollar Revolving Credit Loans made by the Lenders, the then current Interest
Periods with respect to all of which begin on the same date and end on the same
later date (whether or not such Loans shall originally have been made on the
same day).
"Event of Default" shall have the meaning assigned to such term in
Article VI; provided that any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.
"Excess Utilization Day" shall mean each day on which the Commitment
Utilization Percentage exceeds 50%.
"Exchange Act Report" shall have the meaning assigned to such term
in Section 3.3.
"Existing Credit Agreements" shall mean the (a) $6,400,000,000
Amended and Restated Credit Agreement, dated as of March 26, 1997 (as amended,
restated, supplemented or otherwise modified), among Viacom, as the borrower,
the banks named therein, The Bank of New York, Citibank, N.A., Morgan Guaranty
Trust Company of New York, Bank of America NT&SA and The Chase Manhattan Bank,
as managing agents, The Bank of New York, as documentation agent, Citibank,
N.A., as the administrative agent, and JP Morgan Securities Inc. and Bank of
America NT&SA, as the syndication agents; (b) $1,500,000,000 Amended and
Restated Credit Agreement, dated as of December 10, 1999 (as amended, restated,
supplemented or otherwise modified), among Viacom (successor by merger with CBS
Corporation), as the borrower, the lenders named therein, Bank of America, N.A.
and The Toronto-Dominion Bank, as syndication agents, The Chase Manhattan Bank,
as documentation agent and Morgan Guaranty Trust Company of New York, as
administrative agent; (c) $1,500,000,000 Amended and Restated Credit Agreement,
dated as of December 10, 1999 (as amended, restated, supplemented or otherwise
modified), among Infinity, as the borrower, each subsidiary borrower, Viacom
(successor by merger with CBS Corporation), as a guarantor, the lenders named
therein, Bank of America, N.A. and The Toronto-Dominion Bank, as syndication
agents, The Chase Manhattan Bank, as documentation agent and Morgan Guaranty
Trust Company of
9
New York, as administrative agent; and (d) $500,000,000 364-Day Credit
Agreement, dated as of May 3, 2000 (as amended, restated, supplemented or
otherwise modified), among Infinity, as the borrower, each subsidiary borrower,
the lenders named therein, Bank of New York, as documentation agent, The Chase
Manhattan Bank, as administrative agent, and Bank of America, N.A. and Fleet
National Bank, as co-syndication agents.
"Facility Exposure" shall mean, with respect to any Lender, the sum
of (a) the Outstanding Revolving Extensions of Credit of such Lender, (b) the
aggregate outstanding principal amount of any Competitive Loans made by such
Lender and (c) in the case of a Swingline Lender, the aggregate outstanding
principal amount of any Quoted Swingline Loans made by such Swingline Lender.
"Facility Fees" shall mean all fees payable pursuant to Section
2.9(a).
"Federal Funds Effective Rate" shall have the meaning assigned to
such term in the definition of "Alternate Base Rate".
"Fees" shall mean the Facility Fees, the Administrative Agent's
Fees, the Issuing Lender Fees, the LC Fees and the Utilization Fees.
"Financial Covenant" shall mean the financial covenant contained in
Section 5.7.
"Financial Letter of Credit" shall mean any Letter of Credit that,
as determined by the Administrative Agent acting in good faith, (a) supports a
financial obligation and (b) qualifies for the 100% credit conversion factor
under the applicable Bank for International Settlements guidelines.
"Financial Officer" of any corporation shall mean its Chief
Financial Officer, its Vice President and Treasurer or its Vice President and
Chief Accounting Officer or, in each case, any comparable officer or any Person
designated by any such officer.
"Five-Year Credit Agreement" shall mean the five-year credit
agreement, dated the date hereof, among Viacom, Viacom International, each
subsidiary borrower, the lenders party thereto, Chase, as administrative agent,
and Salomon Smith Barney Inc., as syndication agent.
"Foreign Currency" shall mean any currency other than Dollars which
is readily transferable and readily convertible by the relevant Lender or
Issuing Lender, as the case may be, into Dollars in the London interbank market.
"Foreign Exchange Rate" shall mean, with respect to any Foreign
Currency on a particular date, the rate at which such Foreign Currency may be
exchanged into Dollars, determined by reference to the selling rate in respect
of such Foreign Currency published in the "Wall Street Journal" on the relevant
date of determination. In the event that such rate is not, or ceases to be, so
published by the "Wall Street Journal", the "Foreign Exchange Rate" with respect
to such Foreign Currency shall be determined by reference to such other publicly
available source for determining exchange rates as may be agreed upon by the
Administrative Agent and Viacom or, in the absence of such agreement, such
"Foreign Exchange Rate" shall
10
instead be the Administrative Agent's spot rate of exchange in the interbank
market where its foreign currency exchange operations in respect of such Foreign
Currency are then being conducted, at or about 12:00 noon, local time, at such
date for the purchase of Dollars with such Foreign Currency, for delivery two
banking days later.
"GAAP" shall mean generally accepted accounting principles.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Granting Bank" shall have to meaning specified in Section 9.4(i).
"Guarantee" of or by any Person shall mean any obligation,
contingent or otherwise, of such Person guaranteeing or entered into with the
purpose of guaranteeing any Indebtedness of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase Property, securities or
services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness or (c) to maintain working capital, equity capital
or other financial statement condition or liquidity of the primary obligor so as
to enable the primary obligor to pay such Indebtedness; provided, however, that
the term "Guarantee" shall not include endorsements for collection or deposit,
in either case in the ordinary course of business.
"Indebtedness" of any Person shall mean at any date, without
duplication, (i) all obligations of such Person for borrowed money (including,
without limitation, in the case of any Borrower, the obligations of such
Borrower for borrowed money under this Agreement), (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of Property or
services, except as provided below, (iv) all obligations of such Person as
lessee under Capital Lease Obligations, (v) all Indebtedness of others secured
by a Lien on any Property of such Person, whether or not such Indebtedness is
assumed by such Person, (vi) all Indebtedness of others directly or indirectly
guaranteed or otherwise assumed by such Person, including any obligations of
others endorsed (otherwise than for collection or deposit in the ordinary course
of business) or discounted or sold with recourse by such Person, or in respect
of which such Person is otherwise directly or indirectly liable, including,
without limitation, any Indebtedness in effect guaranteed by such Person through
any agreement (contingent or otherwise) to purchase, repurchase or otherwise
acquire such obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation, or to maintain the solvency or any
balance sheet or other financial condition of the obligor of such obligation,
provided that Indebtedness of Viacom and its Subsidiaries shall not include (a)
guarantees in existence on the date hereof of Indebtedness of Discontinued
Operations and (b) guarantees of Indebtedness that are identified on Schedule
1.1(a) hereto, (vii) all obligations of such Person as issuer, customer or
account party under letters of credit or bankers' acceptances that are either
drawn or that back financial obligations that would otherwise be Indebtedness;
provided, however, that in each of the foregoing clauses (i) through (vii),
Indebtedness shall not include obligations (other than under
11
this Agreement) specifically with respect to the production, distribution and
acquisition of motion pictures or other programming rights, talent or publishing
rights.
"Infinity" shall mean Infinity Broadcasting Corporation, a Delaware
corporation.
"Interest Payment Date" shall mean (a) with respect to any
Eurodollar Loan or Absolute Rate Loan, the last day of the Interest Period
applicable thereto and, in the case of a Eurodollar Loan with an Interest Period
of more than three months' duration or an Absolute Rate Loan with an Interest
Period of more than 90 days' duration, each day that would have been an Interest
Payment Date for such Loan had successive Interest Periods of three months'
duration or 90 days' duration, as the case may be, been applicable to such Loan
and, in addition, the date of any conversion of any Eurodollar Revolving Credit
Loan to an ABR Loan, the date of repayment or prepayment of any Eurodollar Loan
and the applicable Maturity Date; (b) with respect to any ABR Loan (other than
an ABR Swingline Loan which is not an Unrefunded Swingline Loan), the last day
of each March, June, September and December and the applicable Maturity Date;
(c) with respect to any ABR Swingline Loan (other than an Unrefunded Swingline
Loan), the earlier of (i) the day that is five Business Days after such Loan is
made and (ii) the Revolving Credit Maturity Date and (d) with respect to any
Quoted Swingline Loan, the date established as such by the relevant Swingline
Borrower and the relevant Swingline Lender prior to the making thereof (but in
any event no later than the Revolving Credit Maturity Date).
"Interest Period" shall mean (a) as to any Eurodollar Loan, the
period commencing on the borrowing date or conversion date of such Loan, or on
the last day of the immediately preceding Interest Period applicable to such
Loan, as the case may be, and ending on the numerically corresponding day (or,
if there is no numerically corresponding day, on the last day) in the calendar
month that is 7 days (subject to the prior consent of each Lender) or 1, 2, 3 or
6 months or (subject to the prior consent of each Lender) 9 or 12 months
thereafter, as the relevant Borrower may elect, and (b) as to any Absolute Rate
Loan, the period commencing on the date of such Loan and ending on the date
specified in the Competitive Bids in which the offer to make such Absolute Rate
Loan was extended; provided, however, that (i) if any Interest Period would end
on a day other than a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless, in the case of Eurodollar Loans only,
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(ii) notwithstanding anything to the contrary herein, no Borrower may select an
Interest Period which would end after the Maturity Date applicable to the
relevant Loan. Interest shall accrue from and including that first day of an
Interest Period to but excluding the last day of such Interest Period.
"Issuing Lender" shall mean any Lender designated as an Issuing
Lender in an Issuing Lender Agreement executed by such Lender, Viacom and the
Administrative Agent; provided, that the Issuing Lender may, in its discretion,
arrange for one or more Letters of Credit to be issued by any of its Lender
Affiliates (in which case the term "Issuing Lender" shall include such Lender
Affiliate with respect to Letters of Credit issued by such Lender Affiliate);
provided, further, with respect to any Designated Letter of Credit, the Lender
or Lender Affiliate of such Lender which issued such Designated Letter of
Credit.
12
"Issuing Lender Agreement" shall mean an agreement, substantially in
the form of Exhibit F, executed by a Lender, Viacom, and the Administrative
Agent pursuant to which such Lender agrees to become an Issuing Lender
hereunder.
"Issuing Lender Fees" shall mean, as to any Issuing Lender, the fees
set forth in the applicable Issuing Lender Agreement.
"LC Disbursement" shall mean any payment or disbursement made by an
Issuing Lender under or pursuant to a Letter of Credit.
"LC Exposure" shall mean, as to each Lender, such Lender's Revolving
Credit Percentage of the Aggregate LC Exposure.
"LC Fee" shall have the meaning assigned such term in Section
2.9(b).
"Lender Affiliate" shall mean, (a) with respect to any Lender, (i)
an affiliate of such Lender or (ii) any entity (whether a corporation,
partnership, trust or otherwise) that is engaged in making, purchasing, holding
or otherwise investing in bank loans and similar extensions of credit in the
ordinary course of its business and is administered or managed by a Lender or an
affiliate of such Lender and (b) with respect to any Lender that is a fund which
invests in bank loans and similar extensions of credit, any other fund that
invests in bank loans and similar extensions of credit and is managed by the
same investment advisor as such Lender or by an affiliate of such investment
advisor.
"Lenders" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Letters of Credit" shall mean letters of credit or bank guarantees
issued by an Issuing Lender for the account of Viacom or any Subsidiary Borrower
pursuant to Section 2.7(including any Designated Letters of Credit).
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement.
"Loan" shall mean any loan made by a Lender hereunder.
"Loan Documents" shall mean this Agreement and the Administrative
Agent Fee Letter.
"Margin" shall mean, as to any Eurodollar Competitive Loan, the
margin (expressed as a percentage rate per annum in the form of a decimal
rounded to no more than four places) to be added to or subtracted from the
Eurodollar Rate in order to determine the interest rate applicable to such Loan,
as specified in the Competitive Bid relating to such Loan.
"Margin Stock" shall have the meaning assigned to such term under
Regulation U.
13
"Material Acquisition" shall mean any acquisition of Property or
series of related acquisitions of Property (including by way of merger) which
(a) constitutes assets comprising all or substantially all of an operating unit
of a business or constitutes all or substantially all of the common stock of a
Person and (b) involves the payment of consideration by Viacom and its
Subsidiaries (valued at the initial principal amount thereof in the case of
non-cash consideration consisting of notes or other debt securities and valued
at fair market value in the case of other non-cash consideration) in excess of
$100,000,000.
"Material Adverse Effect" shall mean (a) a material adverse effect
on the Property, business, results of operations or financial condition of
Viacom and its Subsidiaries taken as a whole or (b) material impairment of the
ability of Viacom to perform any of its obligations under this Agreement.
"Material Disposition" shall mean any Disposition of Property or
series of related Dispositions of Property which yields gross proceeds to Viacom
or any of its Subsidiaries (valued at the initial principal amount thereof in
the case of non-cash proceeds consisting of notes or other debt securities and
valued at fair market value in the case of other non-cash proceeds) in excess of
$100,000,000.
"Material Subsidiary" shall mean any "significant subsidiary" of
Viacom as defined in Regulation S-X of the SEC; provided, that each Subsidiary
Borrower shall in any event constitute a Material Subsidiary.
"Maturity Date" shall mean (a) in the case of the Revolving Credit
Loans and the ABR Swingline Loans, the Revolving Credit Maturity Date, (b) in
the case of the Quoted Swingline Loans, the date established as such by the
relevant Swingline Borrower and the relevant Swingline Lender prior to the
making thereof (but in any event no later than the Revolving Credit Maturity
Date) and (c) in the case of Competitive Loans, the last day of the Interest
Period applicable thereto, as specified in the related Competitive Bid Request.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 3(37) of ERISA to which contributions have been made by Viacom or any
ERISA Affiliate of Viacom and which is covered by Title IV of ERISA.
"New Lender" shall have the meaning assigned to such term in Section
2.13(d).
"New Lender Supplement" shall mean the agreement made pursuant to
Section 2.13(d) substantially in the form of Exhibit G.
"Non-Financial Letter of Credit" shall mean any Letter of Credit
that is not a Financial Letter of Credit.
"Non-U.S. Person" shall have the meaning assigned to such term in
Section 2.20(f).
14
"Other Taxes" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"Outstanding Revolving Extensions of Credit" shall mean, as to any
Lender at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Credit Loans made by such Lender then outstanding, (b)
such Lender's LC Exposure at such time and (c) such Lender's ABR Swingline
Exposure at such time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred
to and defined in ERISA, or any successor thereto.
"Person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership, limited liability company or
other entity, or any government or any agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code and which is
maintained for employees of Viacom or any ERISA Affiliate.
"Prime Rate" shall have the meaning assigned to such term in the
definition of "Alternate Base Rate".
"Pro Forma Period" shall have the meaning assigned to such term in
Section 1.2(c).
"Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"Quoted Swingline Loans" shall have the meaning assigned to such
term in Section 2.6(a).
"Quoted Swingline Rate" shall have the meaning assigned to such term
in Section 2.6(a).
"Rating Agencies" shall mean S&P and Moody's.
"Reference Banks" shall mean Chase, Citibank N.A. and Bank of
America, N.A.
"Register" shall have the meaning assigned to such term in Section
9.4(d).
"Regulation D" shall mean Regulation D of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
15
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Required Lenders" shall mean, at any time, Lenders whose respective
Total Facility Percentages aggregate more than 50%.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement (or, in the case of matters
relating to ERISA, any officer responsible for the administration of the pension
funds of such corporation).
"Revolving Credit Borrowing Request" shall mean a request made
pursuant to Section 2.4 in the form of Exhibit B-4.
"Revolving Credit Loans" shall mean the revolving loans made by the
Lenders to any Borrower pursuant to Section 2.4. Each Revolving Credit Loan
shall be a Eurodollar Loan or an ABR Loan.
"Revolving Credit Maturity Date" shall mean May 3, 2005.
"Revolving Credit Percentage" of any Lender at any time shall mean
the percentage of the aggregate Commitments (or, following any termination of
all the Commitments, the Commitments most recently in effect) represented by
such Lender's Commitment (or, following any such termination, the Commitment of
such Lender most recently in effect).
"S&P" shall mean Standard & Poor's Ratings Services.
"SEC" shall mean the Securities and Exchange Commission.
"SPC" shall have the meaning specified in Section 9.4(i).
"Spot Rate" shall mean, at any date, the Administrative Agent's or
Lender's, as the case may be, (or, for purposes of determinations in respect of
the Aggregate LC Exposure related to Letters of Credit issued in a Foreign
Currency, the Issuing Lender's or Issuing Lenders', as the case may be) spot
buying rate for the relevant Foreign Currency against Dollars as of
approximately 11:00 a.m. (London time) on such date for settlement on the second
Business Day.
"Subsidiary" shall mean, for any Person (the "Parent"), any
corporation, partnership or other entity of which shares of Voting Capital Stock
sufficient to elect a majority of the board of directors or other Persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) are at the time directly or indirectly owned or controlled by
the Parent or one or more of its Subsidiaries or by the Parent and one or more
of its Subsidiaries. Unless otherwise qualified, all references to a
16
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of Viacom.
"Subsidiary Borrower" shall mean any Subsidiary of Viacom (a) which
is designated as a Subsidiary Borrower by Viacom pursuant to a Subsidiary
Borrower Designation, (b) which has delivered to the Administrative Agent a
Subsidiary Borrower Request and (c) whose designation as a Subsidiary Borrower
has not been terminated pursuant to Section 4.2. No Subsidiary of Viacom
incorporated in Canada or any province or territory thereof may be a Subsidiary
Borrower hereunder.
"Subsidiary Borrower Designation" shall mean a designation,
substantially in the form of Exhibit B-7, which may be delivered by Viacom and
approved by Viacom and shall be accompanied by a Subsidiary Borrower Request.
"Subsidiary Borrower Obligations" shall mean, with respect to each
Subsidiary Borrower, the unpaid principal of and interest on the Loans made to
such Subsidiary Borrower (including, without limitation, interest accruing after
the maturity of the Loans made to such Subsidiary Borrower and interest accruing
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to such Subsidiary
Borrower, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) and all other obligations and liabilities of such
Subsidiary Borrower to the Administrative Agent or to any Lender, whether direct
or indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement.
"Subsidiary Borrower Request" shall mean a request, substantially in
the form of Exhibit B-8, which is received by the Administrative Agent in
connection with a Subsidiary Borrower Designation.
"Swingline Borrower" shall mean Viacom and any Subsidiary Borrower
designated as a "Swingline Borrower" by Viacom in a written notice to the
Administrative Agent; provided, that, unless otherwise agreed by the
Administrative Agent, no more than one Subsidiary Borrower may be a Swingline
Borrower at any one time. Only a Subsidiary Borrower which is a U.S. Person may
be a Swingline Borrower.
"Swingline Commitment" shall mean, (i) with respect to any Swingline
Lender, the Commitment of such Lender to make ABR Swingline Loans pursuant to
Section 2.6, as designated in accordance with Section 2.6(g) and as set forth on
Schedule 1.1, and, (ii) in the aggregate, $300,000,000.
"Swingline Lender" " shall mean The Chase Manhattan Bank and any
other Lender designated from time to time by Viacom, and approved by such
Lender, as a "Swingline Lender" pursuant to Section 2.6(g).
"Swingline Loans" shall mean the collective reference to the ABR
Swingline Loans and the Quoted Swingline Loans.
17
"Swingline Percentage" of any Swingline Lender at any time shall
mean the percentage of the aggregate Swingline Commitments represented by such
Swingline Lender's Swingline Commitment.
"Test Period" shall have the meaning assigned to such term in
Section 1.2(c).
"364-Day Credit Agreement" shall mean the 364-day credit agreement,
dated the date hereof, among Viacom, Viacom International, each subsidiary
borrower, the lenders party thereto, Chase, as administrative agent, and Salomon
Smith Barney Inc., as syndication agent.
"Total Commitment" shall mean at any time the aggregate amount of
the Commitments in effect at such time.
"Total Facility Exposure" shall mean at any time the aggregate
amount of the Facility Exposures at such time.
"Total Facility Percentage" shall mean, as to any Lender at any
time, the quotient (expressed as a percentage) of (a) such Lender's Commitment
(or (x) for the purposes of acceleration of the Loans pursuant to clause (II) of
Article VI or (y) if the Commitments have terminated, such Lender's Facility
Exposure) and (b) the aggregate of all Lenders' Commitments (or (x) for the
purposes of acceleration of the Loans pursuant to clause (II) of Article VI or
(y) if the Commitments have terminated, the Total Facility Exposure).
"Transferee" shall mean any assignee or participant described in
Section 9.4(b) or (f).
"Type" when used in respect of any Loan, shall refer to the Rate by
reference to which interest on such Loan is determined. For purposes hereof,
"Rate" shall mean the Eurodollar Rate, the Alternate Base Rate, the Quoted
Swingline Rate and the rate paid on Absolute Rate Loans.
"Unrefunded Swingline Loans" shall have the meaning assigned to such
term in Section 2.6(d).
"U.S. Person" shall mean a citizen, national or resident of the
United States of America, or an entity organized in or under the laws of the
United States of America.
"Utilization Fee" shall have the meaning assigned to such term in
Section 2.9(e).
"Viacom" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Viacom International" shall have the meaning assigned to such term
in the preamble to this Agreement.
"Viacom Obligations" shall mean, with respect to Viacom, the unpaid
principal of and interest on the Loans made to Viacom (including, without
limitation, interest accruing after the maturity of the Loans made to Viacom and
interest accruing after the filing of any petition in
18
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to Viacom, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) and all other obligations,
including its Guarantee obligations hereunder, and liabilities of Viacom to the
Administrative Agent or to any Lender, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, this Agreement.
"Voting Capital Stock" shall mean securities or other ownership
interests of a corporation, partnership or other entity having by the terms
thereof ordinary voting power to vote in the election of the board of directors
or other Persons performing similar functions of such corporation, partnership
or other entity (without regard to the occurrence of any contingency).
"Wholly Owned Subsidiary" shall mean any Subsidiary of which all
shares of Voting Capital Stock (other than, in the case of a corporation,
directors' qualifying shares) are owned directly or indirectly by the Parent (as
defined in the definition of "Subsidiary").
SECTION 1.2. "Terms Generally".
(a) The definitions in Section 1.1 shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall, except
where the context otherwise requires, be deemed to be followed by the phrase
"without limitation". All references herein to Articles, Sections, Exhibits and
Schedules shall be deemed references to Articles and Sections of, and Exhibits
and Schedules to, this Agreement unless the context shall otherwise require.
(b) Except as otherwise expressly provided herein, all terms of an
accounting nature shall be construed in accordance with GAAP in effect from time
to time. The parties hereto agree, however, that in the event that any change in
accounting principles from those used in the preparation of the financial
statements referred to in Section 3.2 is hereafter occasioned by the
promulgation of rules, regulations, pronouncements, opinions and statements by
or required by the Financial Accounting Standards Board or Accounting Principles
Board or the American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) and such change materially affects
the calculation of any component of the Financial Covenant or any standard or
term contained in this Agreement, the Administrative Agent and Viacom shall
negotiate in good faith to amend such Financial Covenant, standards or terms
found in this Agreement (other than in respect of financial statements to be
delivered hereunder) so that, upon adoption of such changes, the criteria for
evaluation of Viacom's and its Subsidiaries' financial condition shall be the
same after such change as if such change had not been made; provided, however,
that (i) any such amendments shall not become effective for purposes of this
Agreement unless approved by the Required Lenders and (ii) if Viacom and the
Required Lenders cannot agree on such an amendment, then the calculations under
such Financial Covenant, standards or terms shall continue to be computed
without giving effect to such change in accounting principles; provided further,
however, that the parties hereto agree that Viacom and its Subsidiaries shall
adopt Statement of Position 00-2, "Accounting by Producers or Distributors of
Films" effective as from January 1, 2000.
19
(c) For the purposes of calculating Consolidated EBITDA and
Consolidated Interest Expense for any period (a "Test Period"), (i) if at any
time from the period (a "Pro Forma Period") commencing on the second day of such
Test Period and ending on the date which is ten days prior to the date of
delivery of the Compliance Certificate in respect of such Test Period (or, in
the case of any pro forma calculation made pursuant hereto in respect of a
particular transaction, ending on the date such transaction is consummated after
giving effect thereto), Viacom or any Subsidiary shall have made any Material
Disposition, the Consolidated EBITDA for such Test Period shall be reduced by an
amount equal to the Consolidated EBITDA (if positive) attributable to the
Property which is the subject of such Material Disposition for such Test Period
or increased by an amount equal to the Consolidated EBITDA (if negative)
attributable thereto for such Test Period, and Consolidated Interest Expense for
such Test Period shall be reduced by an amount equal to the Consolidated
Interest Expense for such Test Period attributable to any Indebtedness of Viacom
or any Subsidiary repaid, repurchased, defeased or otherwise discharged with
respect to Viacom and its Subsidiaries in connection with such Material
Disposition (or, if the Capital Stock of any Subsidiary is sold, the
Consolidated Interest Expense for such Test Period directly attributable to the
Indebtedness of such Subsidiary to the extent Viacom and its continuing
Subsidiaries are no longer liable for such Indebtedness after such Disposition);
(ii) if during such Pro Forma Period Viacom or any Subsidiary shall have made a
Material Acquisition, Consolidated EBITDA and Consolidated Interest Expense for
such Test Period shall be calculated after giving pro forma effect thereto
(including the incurrence or assumption of any Indebtedness in connection
therewith) as if such Material Acquisition (and the incurrence or assumption of
any such Indebtedness) occurred on the first day of such Test Period; and (iii)
if during such Pro Forma Period any Person that subsequently became a Subsidiary
or was merged with or into Viacom or any Subsidiary since the beginning of such
Pro Forma Period shall have entered into any disposition or acquisition
transaction that would have required an adjustment pursuant to clause (i) or
(ii) above if made by Viacom or a Subsidiary during such Pro Forma Period,
Consolidated EBITDA and Consolidated Interest Expense for such Test Period shall
be calculated after giving pro forma effect thereto as if such transaction
occurred on the first day of such Test Period. For the purposes of this
paragraph, whenever pro forma effect is to be given to a Material Disposition or
Material Acquisition, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
discharged or incurred in connection therewith, the pro forma calculations shall
be determined in good faith by a Financial Officer of Viacom. If any
Indebtedness bears a floating rate of interest and the incurrence or assumption
thereof is being given pro forma effect, the interest expense on such
Indebtedness shall be calculated as if the rate in effect on the last day of the
relevant Pro Forma Period had been the applicable rate for the entire relevant
Test Period (taking into account any interest rate protection agreement
applicable to such Indebtedness if such interest rate protection agreement has a
remaining term in excess of 12 months). Comparable adjustments shall be made in
connection with any determination of Consolidated EBITDA.
(d) For purposes of the Financial Covenant, (i) the Discontinued
Operations shall be disregarded and (ii) the businesses classified as
Discontinued Operations shall be limited to those businesses treated as such in
the financial statements of Viacom referred to in the definition of
"Discontinued Operations" and the accounting treatment of Discontinued
Operations shall be consistent with the accounting treatment thereof in such
financial statements.
20
ARTICLE II
THE CREDITS
SECTION 2.1. Commitments.
Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Lender agrees, severally
and not jointly, to make Revolving Credit Loans to Viacom or any Subsidiary
Borrower, at any time and from time to time on and after the Closing Date and
until the earlier of (a) the Business Day immediately preceding the Revolving
Credit Maturity Date and (b) the termination of the Commitment of such Lender,
in an aggregate principal amount at any time outstanding not to exceed such
Lender's Commitment. Each Borrower may borrow, prepay and reborrow Revolving
Credit Loans on and after the Closing Date and prior to the Revolving Credit
Maturity Date, subject to the terms, conditions and limitations set forth
herein.
SECTION 2.2. Revolving Credit Loans; Competitive Loans.
(a) Each Revolving Credit Loan shall be made to the relevant
Borrower by the Lenders ratably in accordance with their respective Commitments.
Each Competitive Loan shall be made to the relevant Borrower by the Lender whose
Competitive Bid therefor is accepted, and in the amount so accepted, in
accordance with the procedures set forth in Section 2.3. The Revolving Credit
Loans or Competitive Loans shall be made in minimum amounts equal to (i) in the
case of Competitive Loans, $5,000,000 or an integral multiple of $1,000,000 in
excess thereof, (ii) in the case of Eurodollar Revolving Credit Loans,
$50,000,000 or an integral multiple of $5,000,000 in excess thereof, and (iii)
in the case of ABR Revolving Credit Loans, $25,000,000 or an integral multiple
of $5,000,000 in excess thereof (or an aggregate principal amount equal to the
remaining balance of the available Total Commitment).
(b) Each Lender shall make each Loan (other than a Swingline Loan,
as to which this Section 2.2 shall not apply) to be made by it on the proposed
date thereof by wire transfer of immediately available funds to the
Administrative Agent in New York, New York, not later than 12:00 noon, New York
City time (or, in connection with an ABR Loan to be made on the same day on
which a notice is submitted, 12:30 p.m., New York City time) and the
Administrative Agent shall by 3:00 p.m., New York City time, credit the amounts
so received to the general deposit account of the relevant Borrower with the
Administrative Agent.
SECTION 2.3. Competitive Bid Procedure.
(a) In order to request Competitive Bids, the relevant Borrower
shall hand deliver or telecopy to the Administrative Agent a duly completed
Competitive Bid Request in the form of Exhibit B-1, to be received by the
Administrative Agent (i) in the case of a Eurodollar Competitive Loan in
Dollars, not later than 10:00 a.m., New York City time, four Business Days
before a proposed Competitive Loan, (ii) in the case of a Eurodollar Competitive
Loan in a Foreign Currency, not
21
later than 10:00 a.m., New York City time, five Business Days before a proposed
Competitive Loan , (iii) in the case of an Absolute Rate Loan in Dollars, not
later than 10:00 a.m., New York City time, one Business Day before a proposed
Competitive Loan and (iv) in the case of an Absolute Rate Loan in a Foreign
Currency, not later than 10:00 a.m., New York City time, three Business Day
before a proposed Competitive Loan. A Competitive Bid Request (A) that does not
conform substantially to the format of Exhibit B-1 may be rejected in the
Administrative Agent's discretion (exercised in good faith), and, (B) for a
Competitive Loan denominated in a Foreign Currency will be rejected by the
Administrative Agent if, after giving effect thereto, the Dollar equivalent of
the aggregate face amount of all Competitive Loans denominated in Foreign
Currencies then outstanding would exceed $150,000,000, as determined by the
Administrative Agent, and, in each case, the Administrative Agent shall promptly
notify the relevant Borrower of such rejection by telephone, confirmed by
telecopier. Such request shall in each case refer to this Agreement and specify
(w) whether the Competitive Loan then being requested is to be a Eurodollar
Competitive Loan or an Absolute Rate Loan, (x) the currency, (y) the date of
such Loan (which shall be a Business Day) and the aggregate principal amount
thereof which shall be in a minimum principal amount of the equivalent of
$5,000,000 and, in the case of a Competitive Bid for a Competitive Loan in
Dollars, in an integral multiple of $1,000,000, and (z) the Interest Period with
respect thereto (which may not end after the Revolving Credit Maturity Date).
Promptly after its receipt of a Competitive Bid Request that is not rejected as
aforesaid (and in any event by 5:00 p.m., New York City time, on the date of
such receipt if such receipt occurs by the time specified in the first sentence
of this paragraph), the Administrative Agent shall invite by telecopier (in the
form set forth in Exhibit B-2) the Lenders to bid, on the terms and conditions
of this Agreement, to make Competitive Loans pursuant to such Competitive Bid
Request.
(b) Each Lender may, in its sole discretion, make one or more
Competitive Bids to the relevant Borrower responsive to a Competitive Bid
Request. Each Competitive Bid must be received by the Administrative Agent by
telecopier, in the form of Exhibit B-3, (i) in the case of a Eurodollar
Competitive Loan in Dollars, not later than 9:30 a.m., New York City time, three
Business Days before a proposed Competitive Loan, (ii) in the case of a
Eurodollar Competitive Loan in a Foreign Currency, not later than 9:30 a.m., New
York City time, four Business Days before a proposed Competitive Loan, (iii) in
the case of an Absolute Rate Loan in Dollars, not later than 9:30 a.m., New York
City time, on the day of a proposed Competitive Loan, and (iv) in the case of an
Absolute Rate Loan in a Foreign Currency, not later than 9:30 a.m., New York
City time, two days before a proposed Competitive Loan. Multiple Competitive
Bids will be accepted by the Administrative Agent. Competitive Bids that do not
conform substantially to the format of Exhibit B-3 may be rejected by the
Administrative Agent after conferring with, and upon the instruction of, the
relevant Borrower, and the Administrative Agent shall notify the Lender making
such nonconforming Competitive Bid of such rejection as soon as practicable.
Each Competitive Bid shall refer to this Agreement and specify (x) the principal
amount in the relevant currency (which shall be in a minimum principal amount of
the equivalent of $5,000,000 and, in the case of a Competitive Bid for a
Competitive Loan in Dollars, in an integral multiple of $1,000,000 and which may
equal the entire principal amount of the Competitive Loan requested by the
relevant Borrower) of the Competitive Loan or Loans that the applicable Lender
is willing to make to the relevant Borrower, (y) the Competitive Bid Rate or
Rates at which such Lender is prepared to make the Competitive Loan or Loans and
(z) the Interest Period and the last day thereof. A Competitive Bid submitted
pursuant to this paragraph
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(b) shall be irrevocable (subject to the satisfaction of the conditions to
borrowing set forth in Article IV).
(c) The Administrative Agent shall promptly (and in any event by
10:15 a.m., New York City time, on the date on which such Competitive Bids shall
have been made) notify the relevant Borrower by telecopier of all the
Competitive Bids made, the Competitive Bid Rate and the principal amount in the
relevant currency of each Competitive Loan in respect of which a Competitive Bid
was made and the identity of the Lender that made each Competitive Bid. The
Administrative Agent shall send a copy of all Competitive Bids to the relevant
Borrower for its records as soon as practicable after completion of the bidding
process set forth in this Section 2.3.
(d) The relevant Borrower may in its sole and absolute discretion,
subject only to the provisions of this paragraph (d), accept or reject any
Competitive Bid referred to in paragraph (c) above. The relevant Borrower shall
notify the Administrative Agent by telephone, confirmed by telecopier in such
form as may be agreed upon by such Borrower and the Administrative Agent,
whether and to what extent it has decided to accept or reject any of or all the
Competitive Bids referred to in paragraph (c) above, (i) in the case of a
Eurodollar Competitive Loan in Dollars, not later than 11:00 a.m., New York City
time, three Business Days before a proposed Competitive Loan, (ii) in the case
of a Eurodollar Competitive Loan in a Foreign Currency, not later than 11:00
a.m., New York City time, four Business Days before a proposed Competitive Loan,
(iii) in the case of an Absolute Rate Loan in Dollars, not later than 11:00
a.m., New York City time, on the day of a proposed Competitive Loan, and (iv) in
the case of an Absolute Rate Loan in a Foreign Currency, not later than 11:00
a.m., New York City time, on the day before a proposed Competitive Loan;
provided, however, that (A) the failure by such Borrower to give such notice
shall be deemed to be a rejection of all the Competitive Bids referred to in
paragraph (c) above, (B) such Borrower shall not accept a Competitive Bid made
at a particular Competitive Bid Rate if it has decided to reject a Competitive
Bid made at a lower Competitive Bid Rate, (C) the aggregate amount of the
Competitive Bids accepted by such Borrower shall not exceed the principal amount
specified in the Competitive Bid Request (but may be less than that requested),
(D) if such Borrower shall accept a Competitive Bid or Competitive Bids made at
a particular Competitive Bid Rate but the amount of such Competitive Bid or
Competitive Bids shall cause the total amount of Competitive Bids to be accepted
by it to exceed the amount specified in the Competitive Bid Request, then such
Borrower shall accept a portion of such Competitive Bid or Competitive Bids in
an amount equal to the amount specified in the Competitive Bid Request less the
amount of all other Competitive Bids accepted with respect to such Competitive
Bid Request, which acceptance, in the case of multiple Competitive Bids at such
Competitive Bid Rate, shall be made pro rata in accordance with the amount of
each such Competitive Bid at such Competitive Bid Rate, and (E) except pursuant
to clause (D) above no Competitive Bid shall be accepted for a Competitive Loan
unless such Competitive Loan is in a minimum principal amount of the equivalent
of $5,000,000 and, in the case of a Competitive Bid for a Competitive Loan in
Dollars, an integral amount multiple of $1,000,000; provided, further, however,
that if a Competitive Loan must be in an amount less than the equivalent of
$5,000,000 because of the provisions of clause (D) above, such Competitive Loan
may be for a minimum of, in the case of a Competitive Bid for a Competitive Loan
in Dollars, $1,000,000 or any integral multiple thereof, and in calculating the
pro rata allocation of acceptances of portions of multiple
23
Competitive Bids at a particular Competitive Bid Rate pursuant to clause (D)
above the amounts shall be rounded to integral multiples of the equivalent of
$1,000,000 (or, in the case of a Competitive Bid for a Competitive Loan in a
Foreign Currency, a multiple selected by the Administrative Agent) in a manner
which shall be in the discretion of such Borrower. A notice given by any
Borrower pursuant to this paragraph (d) shall be irrevocable.
(e) The Administrative Agent shall promptly notify each bidding
Lender whether or not its Competitive Bid has been accepted (and if so, in what
amount and at what Competitive Bid Rate) by telecopy sent by the Administrative
Agent, and each successful bidder will thereupon become bound, subject to the
other applicable conditions hereof, to make the Competitive Loan in respect of
which its Competitive Bid has been accepted.
(f) On the date the Competitive Loan is to be made, each Lender
participating therein shall (i) if such Competitive Loan is to be made in
Dollars, make available its share of such Competitive Loan in Dollars not later
than 2:00 p.m. New York City time, in immediately available funds, in New York
to the Administrative Agent as notified by the Administrative Agent by two
Business Days notice and (ii) if such Competitive Loan is to be made in a
Foreign Currency, make available its share of such Competitive Loan in such
Foreign Currency not later than 11:00 a.m. London time, in immediately available
funds, in London to the Administrative Agent as notified by the Administrative
Agent by two Business Days notice.
(g) If the Lender which is the Administrative Agent shall elect to
submit a Competitive Bid in its capacity as a Lender, it shall submit such
Competitive Bid directly to the relevant Borrower at least one quarter of an
hour earlier than the latest time at which the other Lenders are required to
submit their Competitive Bids to the Administrative Agent pursuant to paragraph
(b) above.
(h) All notices required by this Section 2.3 shall be given in
accordance with Section 9.1.
(i) No Borrower shall have the right to prepay any Competitive Loan
without the consent of the Lender or Lenders making such Competitive Loan.
SECTION 2.4. Revolving Credit Borrowing Procedure.
In order to request a Revolving Credit Loan, the relevant Borrower
shall hand deliver or telecopy to the Administrative Agent a Revolving Credit
Borrowing Request in the form of Exhibit B-4 (a) in the case of a Eurodollar
Revolving Credit Loan, not later than 11:00 a.m., New York City time, three
Business Days before a proposed borrowing and (b) in the case of an ABR
Revolving Credit Loan, not later than 11:00 a.m., New York City time, on the day
of a proposed borrowing. Such notice shall be irrevocable and shall in each case
specify (i) whether the Revolving Credit Loan then being requested is to be a
Eurodollar Revolving Credit Loan or an ABR Revolving Credit Loan, (ii) the date
of such Revolving Credit Loan (which shall be a Business Day) and the amount
thereof; and (iii) in the case of a Eurodollar Revolving Credit Loan, the
Interest Period with respect thereto. The Administrative Agent shall promptly
advise the Lenders of any notice given pursuant to this Section 2.4 and of each
Lender's portion of the requested Loan.
24
SECTION 2.5. Repayment of Loans.
Each Borrower shall repay all outstanding Revolving Credit Loans and
ABR Swingline Loans made to it, in each case on the Revolving Credit Maturity
Date (or such earlier date on which the Commitments shall terminate in
accordance herewith). Each Borrower shall repay Quoted Swingline Loans and
Competitive Loans made to it, in each case on the Maturity Date applicable
thereto. Each Loan shall bear interest from and including the date thereof on
the outstanding principal balance thereof as set forth in Section 2.10.
SECTION 2.6. Swingline Loans.
(a) Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Swingline Lender agrees,
severally and not jointly, at any time and from time to time on and after the
Closing Date and until the earlier of the Business Day immediately preceding the
Revolving Credit Maturity Date and the termination of the Swingline Commitment
of such Swingline Lender, (i) to make available to any Swingline Borrower
Swingline Loans ("Quoted Swingline Loans") on the basis of quoted interest rates
(each, a "Quoted Swingline Rate") furnished by such Swingline Lender from time
to time in its discretion to such Swingline Borrower (through the Administrative
Agent) and accepted by such Swingline Borrower in its discretion and (ii) to
make Swingline Loans ("ABR Swingline Loans") to any Swingline Borrower bearing
interest at a rate equal to the Alternate Base Rate in an aggregate principal
amount (in the case of this clause (ii)) not to exceed such Swingline Lender's
Swingline Commitment. The aggregate outstanding principal amount of the Quoted
Swingline Loans of any Swingline Lender, when added to the aggregate outstanding
principal amount of the ABR Swingline Loans of such Swingline Lender, may exceed
such Swingline Lender's Swingline Commitment; provided, that in no event shall
the aggregate outstanding principal amount of the Swingline Loans exceed the
aggregate Swingline Commitments then in effect. Each Quoted Swingline Loan shall
be made only by the Swingline Lender furnishing the relevant Quoted Swingline
Rate. Each ABR Swingline Loan shall be made by the Swingline Lenders ratably in
accordance with their respective Swingline Percentages. The Swingline Loans
shall be made in a minimum aggregate principal amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof (or an aggregate principal
amount equal to the remaining balance of the available Swingline Commitments).
Each Swingline Lender shall make the portion of each Swingline Loan to be made
by it available to any Swingline Borrower by means of a credit to the general
deposit account of such Swingline Borrower with the Administrative Agent or a
wire transfer, at the expense of such Swingline Borrower, to an account
designated in writing by such Swingline Borrower, in each case by 3:30 p.m., New
York City time, on the date such Swingline Loan is requested to be made pursuant
to paragraph (b) below, in immediately available funds. Each Swingline Borrower
may borrow, prepay and reborrow Swingline Loans on or after the Closing Date and
prior to the Revolving Credit Maturity Date (or such earlier date on which the
Commitments shall terminate in accordance herewith) on the terms and subject to
the conditions and limitations set forth herein.
(b) The relevant Swingline Borrower shall give the Administrative
Agent telephonic, written or telecopy notice substantially in the form of
Exhibit B-5 (in the case of telephonic notice, such notice shall be promptly
confirmed by telecopy) no later than 2:30 p.m., New York City time (or, in the
case of a proposed Quoted Swingline Loan, 12:00 noon, New
25
York City time), on the day of a proposed Swingline Loan. Such notice shall be
delivered on a Business Day, shall be irrevocable (subject, in the case of
Quoted Swingline Loans, to receipt by the relevant Swingline Borrower of Quoted
Swingline Rates acceptable to it) and shall refer to this Agreement and shall
specify the requested date (which shall be a Business Day) and amount of such
Swingline Loan. The Administrative Agent shall promptly advise the Swingline
Lenders of any notice received from any Swingline Borrower pursuant to this
paragraph (b). In the event that a Swingline Borrower accepts a Quoted Swingline
Rate in respect of a proposed Quoted Swingline Loan, it shall notify the
Administrative Agent (which shall in turn notify the relevant Swingline Lender)
of such acceptance no later than 2:30 p.m., New York City time, on the relevant
borrowing date.
(c) In the event that any ABR Swingline Loan shall be outstanding
for more than five Business Days, the Administrative Agent shall, on behalf of
the relevant Swingline Borrower (which hereby irrevocably directs and authorizes
the Administrative Agent to act on its behalf), request each Lender, including
the Swingline Lenders, to make an ABR Revolving Credit Loan in an amount equal
to such Lender's Revolving Credit Percentage of the principal amount of such ABR
Swingline Loan. Unless an event described in Article VI, paragraph (f) or (g),
has occurred and is continuing, each Lender will make the proceeds of its
Revolving Credit Loan available to the Administrative Agent for the account of
the Swingline Lenders at the office of the Administrative Agent prior to 12:00
Noon, New York City time, in funds immediately available on the Business Day
next succeeding the date such notice is given. The proceeds of such Revolving
Credit Loans shall be immediately applied to repay the ABR Swingline Loans.
(d) A Swingline Lender that has made an ABR Swingline Loan to a
Borrower may at any time and for any reason, so long as Revolving Credit Loans
have not been made pursuant to Section 2.6(c) to repay such ABR Swingline Loan
as required by said Section, by written notice given to the Administrative Agent
not later than 12:00 noon New York City time on any Business Day require the
Lenders to acquire participations on such Business Day in all or a portion of
such unrefunded ABR Swingline Loans (the "Unrefunded Swingline Loans"), and each
Lender severally, unconditionally and irrevocably agrees that it shall purchase
an undivided participating interest in such ABR Swingline Loan in an amount
equal to the amount of the Revolving Credit Loan which otherwise would have been
made by such Lender pursuant to Section 2.6(c), which purchase shall be funded
by the time such Revolving Credit Loan would have been required to be made
pursuant to Section 2.6(c). In the event that the Lenders purchase undivided
participating interests pursuant to the first sentence of this paragraph (d),
each Lender shall immediately transfer to the Administrative Agent, for the
account of such Swingline Lender, in immediately available funds, the amount of
its participation. Any Lender holding a participation in an Unrefunded Swingline
Loan may exercise any and all rights of banker's lien, setoff or counterclaim
with respect to any and all moneys owing by the relevant Swingline Borrower to
such Lender by reason thereof as fully as if such Lender had made a Loan
directly to such Swingline Borrower in the amount of such participation.
(e) Whenever, at any time after any Swingline Lender has received
from any Lender such Lender's participating interest in an ABR Swingline Loan,
such Swingline Lender receives any payment on account thereof, such Swingline
Lender will promptly distribute to such Lender its participating interest in
such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Lender's participating interest was
26
outstanding and funded); provided, however, that in the event that such payment
received by such Swingline Lender is required to be returned, such Lender will
return to such Swingline Lender any portion thereof previously distributed by
such Swingline Lender to it.
(f) Notwithstanding anything to the contrary in this Agreement, each
Lender's obligation to make the Revolving Credit Loans referred to in Section
2.6(c) and to purchase and fund participating interests pursuant to Section
2.6(d) shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Lender or any Swingline Borrower
may have against any Swingline Lender, any Swingline Borrower or any other
Person for any reason whatsoever; (ii) the occurrence or continuance of a
Default or an Event of Default or the failure to satisfy any of the conditions
specified in Article IV; (iii) any adverse change in the condition (financial or
otherwise) of Viacom or any of its Subsidiaries; (iv) any breach of this
Agreement by any Borrower or any Lender; or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
(g) Upon written or telecopy notice to the Swingline Lenders and to
the Administrative Agent, Viacom may at any time terminate, from time to time in
part reduce, or from time to time (with the approval of the relevant Swingline
Lender) increase, the Swingline Commitment of any Swingline Lender. At any time
when there shall be fewer than ten Swingline Lenders, Viacom may appoint from
among the Lenders a new Swingline Lender, subject to the prior consent of such
new Swingline Lender and prior notice to the Administrative Agent, so long as at
no time shall there be more than ten Swingline Lenders. Notwithstanding anything
to the contrary in this Agreement, (i) if any ABR Swingline Loans shall be
outstanding at the time of any termination, reduction, increase or appointment
pursuant to the preceding two sentences, the Swingline Borrowers shall on the
date thereof prepay or borrow ABR Swingline Loans to the extent necessary to
ensure that at all times the outstanding ABR Swingline Loans held by the
Swingline Lenders shall be pro rata according to the respective Swingline
Commitments of the Swingline Lenders and (ii) in no event may the aggregate
Swingline Commitments exceed $300,000,000. On the date of any termination or
reduction of the Swingline Commitments pursuant to this paragraph (g), the
Swingline Borrowers shall pay or prepay so much of the Swingline Loans as shall
be necessary in order that, after giving effect to such termination or
reduction, (i) the aggregate outstanding principal amount of the ABR Swingline
Loans of any Swingline Lender will not exceed the Swingline Commitment of such
Swingline Lender and (ii) the aggregate outstanding principal amount of all
Swingline Loans will not exceed the aggregate Swingline Commitments.
(h) Each Swingline Borrower may prepay any Swingline Loan in whole
or in part at any time without premium or penalty; provided, that such Swingline
Borrower shall have given the Administrative Agent written or telecopy notice
(or telephone notice promptly confirmed in writing or by telecopy) of such
prepayment not later than 10:30 a.m., New York City time, on the Business Day
designated by such Swingline Borrower for such prepayment; and provided,
further, that each partial payment shall be in an amount that is an integral
multiple of $1,000,000. Each notice of prepayment under this paragraph (h) shall
specify the prepayment date and the principal amount of each Swingline Loan (or
portion thereof) to be prepaid, shall be irrevocable and shall commit such
Swingline Borrower to prepay such Swingline Loan (or portion thereof) by the
amount stated therein on the date stated therein. All prepayments under
27
this paragraph (h) shall be accompanied by accrued interest on the principal
amount being prepaid to the date of payment. Each payment of principal of or
interest on ABR Swingline Loans shall be allocated, as between the Swingline
Lenders, pro rata in accordance with their respective Swingline Percentages.
SECTION 2.7. Letters of Credit.
(a) Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Issuing Lender agrees, at
any time and from time to time on or after the Closing Date until the earlier of
(i) the fifth Business Day preceding the Revolving Credit Maturity Date and (ii)
the termination of the Commitments in accordance with the terms hereof, to issue
and deliver or to extend the expiry of Letters of Credit for the account of any
Borrower in an aggregate outstanding undrawn amount which does not exceed the
maximum amount specified in the applicable Issuing Lender Agreement; provided,
that in no event shall the Aggregate LC Exposure exceed $750,000,000 at any
time. Each Letter of Credit (i) shall be in a form approved in writing by the
applicable Borrower and the applicable Issuing Lender and (ii) shall permit
drawings upon the presentation of such documents as shall be specified by such
Borrower in the applicable notice delivered pursuant to paragraph (c) below. The
Lenders agree that, subject to compliance with the conditions precedent set
forth in Section 4.3, any Designated Letter of Credit may be designated as a
Letter of Credit hereunder from time to time on or after the Closing Date
pursuant to the procedures specified in the definition of "Designated Letters of
Credit". For the avoidance of doubt, Letters of Credit issued by any Issuing
Lender under this Agreement after the Closing Date, but before the Amendment
Closing Date, shall be deemed to be issued under this Agreement for all purposes
herein so long as such Issuing Lender continues to be a Lender after the
Amendment Closing Date. Viacom confirms that any Issuing Lender Agreement or
like agreement entered into by any Issuing Lender (i) under this Agreement after
the Closing Date, but before the Amendment Closing Date or (ii) in respect of
any Designated Letter of Credit, in each case, shall continue to be binding on
the parties thereto
(b) Each Letter of Credit shall by its terms expire not later than
the fifth Business Day preceding the Revolving Credit Maturity Date. Any Letter
of Credit may provide for the renewal thereof for additional periods (which
shall in no event extend beyond the date referred to in the preceding sentence).
Each Letter of Credit shall by its terms provide for payment of drawings in
Dollars or in a Foreign Currency; provided, that a Letter of Credit denominated
in a Foreign Currency may not be issued if, after giving effect thereto, the
Dollar equivalent (calculated on the basis of the applicable Foreign Exchange
Rate) of the aggregate face amount of all Letters of Credit denominated in
Foreign Currencies then outstanding would exceed $150,000,000, as determined by
the Administrative Agent acting in good faith.
(c) The applicable Borrower shall give the applicable Issuing Lender
and the Administrative Agent written or telecopy notice not later than 10:00
a.m., New York City time, three Business Days (or such shorter period as shall
be acceptable to such Issuing Lender) prior to any proposed issuance of a Letter
of Credit. Each such notice shall refer to this Agreement and shall specify (i)
the date on which such Letter of Credit is to be issued (which shall be a
Business Day) and the face amount of such Letter of Credit, (ii) the name and
address of the beneficiary, (iii) whether such Letter of Credit is a Financial
Letter of Credit or a Non-Financial
28
Letter of Credit (subject to confirmation of such status by the Administrative
Agent), (iv) whether such Letter of Credit shall permit a single drawing or
multiple drawings, (v) the form of the documents required to be presented at the
time of any drawing (together with the exact wording of such documents or copies
thereof), (vi) the expiry date of such Letter of Credit (which shall conform to
the provisions of paragraph (b) above) and (vii) if such Letter of Credit is to
be in a Foreign Currency, the relevant Foreign Currency. The Administrative
Agent shall give to each Lender prompt written or telecopy advice of the
issuance of any Letter of Credit. Each determination by the Administrative Agent
as to whether or not a Letter of Credit constitutes a Financial Letter of Credit
shall be conclusive and binding upon the applicable Borrower and the Lenders.
(d) By the issuance of a Letter of Credit and without any further
action on the part of the applicable Issuing Lender or the Lenders in respect
thereof, the applicable Issuing Lender hereby grants to each Lender, and each
Lender hereby acquires from such Issuing Lender, a participation in such Letter
of Credit equal to such Lender's Revolving Credit Percentage at the time of any
drawing thereunder of the stated amount of such Letter of Credit, effective upon
the issuance of such Letter of Credit. In addition, the applicable Issuing
Lender hereby grants to each Lender, and each Lender hereby acquires from such
Issuing Lender, a participation in each Designated Letter of Credit equal to
such Lender's Revolving Credit Percentage at the time of any drawing thereunder
of the stated amount of such Designated Letter of Credit, effective on the date
such Designated Letter of Credit is designated as a Letter of Credit hereunder.
In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of each Issuing Lender, in accordance with paragraph (f) below, such
Lender's Revolving Credit Percentage of each unreimbursed LC Disbursement made
by such Issuing Lender; provided, however, that the Lenders shall not be
obligated to make any such payment with respect to any payment or disbursement
made under any Letter of Credit to the extent resulting from the gross
negligence or willful misconduct of such Issuing Lender.
(e) Each Lender acknowledges and agrees that its acquisition of
participations pursuant to paragraph (d) above in respect of Letters of Credit
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Lender or the applicable Borrower
may have against any Issuing Lender, any Borrower or any other Person, for any
reason whatsoever; (ii) the occurrence or continuance of a Default or an Event
of Default or the failure to satisfy any of the conditions specified in Article
IV; (iii) any adverse change in the condition (financial or otherwise) of the
applicable Borrower; (iv) any breach of this Agreement by any Borrower or any
Lender; or (v) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing.
(f) On the date on which it shall have ascertained that any
documents presented under a Letter of Credit appear to be in conformity with the
terms and conditions of such Letter of Credit, the applicable Issuing Lender
shall give written or telecopy notice to the applicable Borrower and the
Administrative Agent of the amount of the drawing and the date on which payment
thereon has been or will be made. If the applicable Issuing Lender shall not
have received from the applicable Borrower the payment required pursuant to
paragraph (g) below by 12:00 noon, New York City time, two Business Days after
the date on which payment of a draft
29
presented under any Letter of Credit has been made, such Issuing Lender shall so
notify the Administrative Agent, which shall in turn promptly notify each
Lender, specifying in the notice to each Lender such Lender's Revolving Credit
Percentage of such LC Disbursement. Each Lender shall pay to the Administrative
Agent, not later than 2:00 p.m., New York City time, on such second Business
Day, such Lender's Revolving Credit Percentage of such LC Disbursement (which
obligation shall be expressed in Dollars only), which the Administrative Agent
shall promptly pay to the applicable Issuing Lender. The Administrative Agent
will promptly remit to each Lender such Lender's Revolving Credit Percentage of
any amounts subsequently received by the Administrative Agent from the
applicable Borrower in respect of such LC Disbursement; provided, that (i)
amounts so received for the account of any Lender prior to payment by such
Lender of amounts required to be paid by it hereunder in respect of any LC
Disbursement and (ii) amounts representing interest at the rate provided in
paragraph (g) below on any LC Disbursement for the period prior to the payment
by such Lender of such amounts shall in each case be remitted to the applicable
Issuing Lender.
(g) If an Issuing Lender shall pay any draft presented under a
Letter of Credit, the applicable Borrower shall pay to such Issuing Lender an
amount equal to the amount of such draft before 12:00 noon, New York City time,
on the second Business Day immediately following the date of payment of such
draft, together with interest (if any) on such amount at a rate per annum equal
to the interest rate in effect for ABR Loans (or, in the case of Foreign
Currency denominated Letters of Credit, the rate which would reasonably and
customarily be charged by such Issuing Lender on outstanding loans denominated
in the relevant Foreign Currency) from (and including) the date of payment of
such draft to (but excluding) the date on which such Borrower shall have repaid,
or the Lenders shall have refunded, such draft in full (which interest shall be
payable on such second Business Day and from time to time thereafter on demand
until such Borrower shall have repaid, or the Lenders shall have refunded, such
draft in full). In the event that such drawing shall be refunded by the Lenders
as provided in Section 2.7(f), the applicable Borrower shall pay to the
Administrative Agent, for the account of the Lenders, quarterly on the last day
of each March, June, September and December, interest on the amount so refunded
at a rate per annum equal to the interest rate in effect for ABR Loans from (and
including) the date of such refunding to (but excluding) the date on which the
amount so refunded by the Lenders shall have been paid in full in Dollars by
such Borrower. Each payment made to an Issuing Lender by the applicable Borrower
pursuant to this paragraph shall be made at such Issuing Lender's address for
notices specified herein in lawful money of (x) the United States of America (in
the case of payments made on Dollar-denominated Letters of Credit) or (y) the
applicable foreign jurisdiction (in the case of payments on Foreign
Currency-denominated Letters of Credit) and in immediately available funds. The
obligation of the applicable Borrower to pay the amounts referred to above in
this paragraph (g) (and the obligations of the Lenders under paragraphs (d) and
(f) above) shall be absolute, unconditional and irrevocable and shall be
satisfied strictly in accordance with their terms irrespective of:
(i) any lack of validity or enforceability of any Letter of Credit
or any Issuing Lender Agreement or of the obligations of any Borrower
under this Agreement or any Issuing Lender Agreement;
(ii) the existence of any claim, setoff, defense or other right
which any Borrower or any other Person may at any time have against the
beneficiary under
30
any Letter of Credit, the Agents, any Issuing Lender or any Lender (other
than the defense of payment in accordance with the terms of this Agreement
or a defense based on the gross negligence or willful misconduct of the
applicable Issuing Lender) or any other Person in connection with this
Agreement or any other transaction;
(iii) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect; provided,
that payment by the applicable Issuing Lender under such Letter of Credit
against presentation of such draft or document shall not have constituted
gross negligence or willful misconduct;
(iv) payment by the applicable Issuing Lender under a Letter of
Credit against presentation of a draft or other document which does not
comply in any immaterial respect with the terms of such Letter of Credit;
provided, that such payment shall not have constituted gross negligence or
willful misconduct; or
(v) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing; provided, that such other circumstance or
event shall not have been the result of gross negligence or willful
misconduct of the applicable Issuing Lender.
It is understood that in making any payment under a Letter of Credit
(x) such Issuing Lender's exclusive reliance on the documents presented to it
under such Letter of Credit as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary thereof equals the
amount of such draft and whether or not any document presented pursuant to such
Letter of Credit proves to be forged, fraudulent or invalid in any respect, if
such document on its face appears to be in order, and whether or not any other
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever, and (y) any noncompliance in any immaterial
respect of the documents presented under a Letter of Credit with the terms
thereof shall, in either case, not, in and of itself, be deemed willful
misconduct or gross negligence of such Issuing Lender.
(h) (i) Notwithstanding anything to the contrary contained in this
Agreement, for purposes of calculating any LC Fee payable in respect of any
Business Day, the Administrative Agent shall convert the amount available to be
drawn under any Letter of Credit denominated in Foreign Currency into an amount
of Dollars based upon the relevant Foreign Exchange Rate in effect for such day.
If on any date the Administrative Agent shall notify the applicable Borrower
that, by virtue of any change in the Foreign Exchange Rate of any Foreign
Currency in which a Letter of Credit is denominated, the Total Facility Exposure
shall exceed the Total Commitment then in effect, then, within three Business
Days after the date of such notice, such Borrower shall prepay the Revolving
Credit Loans and/or the Swingline Loans to the extent necessary to eliminate
such excess. Each Issuing Lender which has issued a Letter of Credit denominated
in a Foreign Currency agrees to notify the Administrative Agent of the average
daily outstanding
31
amount thereof for any period in respect of which LC Fees are payable and, upon
request by the Administrative Agent, for any other date or period. For all
purposes of this Agreement, determinations by the Administrative Agent of the
Dollar equivalent of any amount expressed in a Foreign Currency shall be made on
the basis of Foreign Exchange Rates reset monthly (or on such other periodic
basis as shall be selected by the Administrative Agent in its sole discretion)
and shall in each case be conclusive absent manifest error.
(ii) Notwithstanding anything to the contrary contained in this
Section 2.7, prior to demanding any reimbursement from the Lenders pursuant to
Section 2.7(f) in respect of any Letter of Credit denominated in a Foreign
Currency, the relevant Issuing Lender shall convert the obligation of the
applicable Borrower under Section 2.7(g) to reimburse such Issuing Lender in
such Foreign Currency into an obligation to reimburse such Issuing Lender (and,
in turn, the Lenders) in Dollars. The amount of any such converted obligation
shall be computed based upon the relevant Foreign Exchange Rate (as quoted by
the Administrative Agent to such Issuing Lender) in effect for the day on which
such conversion occurs.
SECTION 2.8. Conversion and Continuation Options.
(a) The relevant Borrower may elect from time to time to convert
Eurodollar Revolving Credit Loans (or, subject to Section 2.10(f), a portion
thereof) to ABR Revolving Credit Loans on the last day of an Interest Period
with respect thereto by giving the Administrative Agent prior irrevocable notice
of such election. The relevant Borrower may elect from time to time to convert
ABR Revolving Credit Loans (subject to Section 2.10(f)) to Eurodollar Revolving
Credit Loans by giving the Administrative Agent at least three Business Days'
prior irrevocable notice of such election. Any such notice of conversion to
Eurodollar Revolving Credit Loans shall specify the length of the initial
Interest Period therefor. Upon receipt of any such notice the Administrative
Agent shall promptly notify each Lender thereof. All or any part of outstanding
Eurodollar Revolving Credit Loans and ABR Revolving Credit Loans may be
converted as provided herein; provided, that no Revolving Credit Loan may be
converted into a Eurodollar Revolving Credit Loan when any Event of Default has
occurred and is continuing and the Administrative Agent has or the Required
Lenders have determined in its or their sole discretion not to permit such a
conversion.
(b) Any Eurodollar Revolving Credit Loans (or, subject to Section
2.10(f), a portion thereof) may be continued as such upon the expiration of the
then current Interest Period with respect thereto by the relevant Borrower
giving irrevocable notice to the Administrative Agent, not less than three
Business Days prior to the last day of the then current Interest Period with
respect thereto, of the length of the next Interest Period to be applicable to
such Revolving Credit Loans; provided, that no Eurodollar Revolving Credit Loan
may be continued as such when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Required Lenders have
determined in its or their sole discretion not to permit such a continuation;
and provided, further, that if the relevant Borrower shall fail to give any
required notice as described above in this paragraph or if such continuation is
not permitted pursuant to the preceding proviso such Eurodollar Revolving Credit
Loans shall be automatically converted to ABR Revolving Credit Loans on the last
day of such then expiring Interest Period. Upon receipt of any notice from a
Borrower pursuant to this Section 2.8(b), the Administrative Agent shall
promptly notify each Lender thereof. The Administrative Agent shall promptly
notify the
32
applicable Borrower upon the determination in accordance with this Section
2.8(b), by it or the Required Facility Lenders, not to permit such a
continuation.
SECTION 2.9. Fees.
(a) Viacom agrees to pay to the Administrative Agent for the account
of each Lender a Facility Fee for the period from and including the Amendment
Closing Date to the Revolving Credit Maturity Date (or such earlier date on
which the Commitments shall terminate in accordance herewith), computed at a per
annum rate equal to the Applicable Facility Fee Rate on the such Lender's
Commitment (whether used or unused); provided that, if such Lender continues to
have any Facility Exposure after its Commitment terminates, then such Facility
Fee shall continue to accrue on the daily amount of such Lender's Facility
Exposure from and including the date on which its Commitment terminates to but
excluding the date on which such Lender ceases to have any Facility Exposure.
All Facility Fees shall be computed on the basis of the actual number of days
elapsed in a year of 360 days and shall be payable quarterly in arrears on the
last day of each March, June, September and December, on the Revolving Credit
Maturity Date or such earlier date on which the Commitments shall be terminated,
commencing on the first of such dates to occur after the Amendment Closing Date.
(b) Viacom agrees to pay each Lender, through the Administrative
Agent, on the last day of each March, June, September and December and on the
Revolving Credit Maturity Date or the date on which the Commitment of such
Lender shall be terminated as provided herein and all Letters of Credit issued
hereunder shall have expired, a letter of credit fee (an "LC Fee") computed at a
per annum rate equal to the Applicable LC Fee Rate on such Lender's Revolving
Credit Percentage of the average daily undrawn amount of the Financial Letters
of Credit or Non-Financial Letters of Credit, as the case may be, outstanding
during the preceding quarter (or shorter period commencing with the Closing Date
or ending with the Revolving Credit Maturity Date or the date on which the
Commitment of such Lender shall have been terminated and all Letters of Credit
issued hereunder shall have expired). All LC Fees shall be computed on the basis
of the actual number of days elapsed in a year of 360 days.
(c) Viacom agrees to pay to the Administrative Agent, for its own
account, the administrative agent's fees ("Administrative Agent's Fees")
provided for in the Administrative Agent Fee Letter at the times provided
therein.
(d) Each Borrower agrees to pay to each Issuing Lender, through the
Administrative Agent, for its own account, the applicable Issuing Lender Fees,
including, without limitation, a fronting fee at a rate to be determined by the
relevant Borrower and the relevant Issuing Lender payable on the last day of
each March, June, September and December to such Issuing Lender for the period
from and including the date of issuance of such Letter of Credit to, but not
including, the termination date of such Letter of Credit.
(e) Viacom agrees to pay to each Lender, through the Administrative
Agent, on each Interest Payment Date for ABR Loans, a utilization fee (a
"Utilization Fee") at a rate per annum equal to the Applicable Utilization Fee
Rate for each Excess Utilization Day during the period covered by such Interest
Payment Date on the Facility Exposure of such Lender on such
33
Excess Utilization Day. All Utilization Fees shall be computed on the basis of
the actual number of days elapsed in a year of 360 days and shall be payable in
arrears.
(f) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the relevant Lenders or to the Issuing Lenders. Once paid,
none of the Fees shall be refundable under any circumstances (other than
corrections of errors in payment).
SECTION 2.10. Interest on Loans; Eurodollar Tranches; Etc.
(a) Subject to the provisions of Section 2.11, Eurodollar Loans
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal to (i) in the case of each
Eurodollar Revolving Credit Loan, the Eurodollar Rate for the Interest Period in
effect for such Loan plus the Applicable Eurodollar Margin and (ii) in the case
of each Eurodollar Competitive Loan, the Eurodollar Rate for the Interest Period
in effect for such Loan plus the Margin offered by the Lender making such Loan
and accepted by the relevant Borrower pursuant to Section 2.3. The Eurodollar
Rate for each Interest Period shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error. The
Administrative Agent shall promptly advise the relevant Borrower and each Lender
of such determination.
(b) Subject to the provisions of Section 2.11, ABR Loans shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 365 or 366 days, as the case may be, when determined by reference to the
Prime Rate and over a year of 360 days at all other times) at a rate per annum
equal to the Alternate Base Rate. The Alternate Base Rate shall be determined by
the Administrative Agent, and such determination shall be conclusive absent
manifest error.
(c) Subject to the provisions of Section 2.11, Quoted Swingline
Loans shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 360 days) at a rate per annum equal to the relevant
Quoted Swingline Rate.
(d) Subject to the provisions of Section 2.11, each Absolute Rate
Loan shall bear interest at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to the fixed rate
of interest offered by the Lender making such Loan and accepted by the relevant
Borrower pursuant to Section 2.3.
(e) Interest on each Loan shall be payable on each applicable
Interest Payment Date.
(f) Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions, continuations, repayments and prepayments of Eurodollar
Revolving Credit Loans hereunder and all selections of Interest Periods
hereunder in respect of Eurodollar Revolving Credit Loans shall be in such
amounts and shall be made pursuant to such elections so that, after giving
effect thereto, the aggregate principal amount of the Eurodollar Revolving
Credit Loans comprising each Eurodollar Tranche shall be equal to $50,000,000 or
a whole multiple of
34
$5,000,000 in excess thereof. Unless otherwise agreed by the Administrative
Agent, in no event shall there be more than 25 Eurodollar Tranches outstanding
at any time.
(g) If no election as to the Type of Revolving Credit Loan is
specified in any notice of borrowing with respect thereto, then the requested
Loan shall be an ABR Loan. If no Interest Period with respect to a Eurodollar
Revolving Credit Loan is specified in any notice of borrowing, conversion or
continuation, then the relevant Borrower shall be deemed to have selected an
Interest Period of one month's duration. The Interest Period with respect to a
Eurodollar Competitive Loan shall in no case be less than one month's duration.
SECTION 2.11. Default Interest.
If all or a portion of the principal amount of any Loan shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
all outstanding Loans (whether or not overdue) shall bear interest at a rate per
annum which is equal to the rate that would otherwise be applicable thereto
pursuant to the provisions of Section 2.10 plus 2% and (b) if all or a portion
of any LC Disbursement, any interest payable on any Loan or LC Disbursement or
any Fee or other amount payable hereunder shall not be paid when due (whether at
the stated maturity, by acceleration or otherwise), such overdue amount shall
bear interest at a rate per annum equal to the rate otherwise applicable to ABR
Loans pursuant to Section 2.10(b) plus 2%, in each case, with respect to clauses
(a) and (b) above, from the date of such non-payment until such amount is paid
in full (as well after as before judgment).
SECTION 2.12. Alternate Rate of Interest.
In the event, and on each occasion, that on the day two Business
Days prior to the commencement of any Interest Period for a Eurodollar Loan (i)
the Administrative Agent shall have determined (which determination shall be
conclusive and binding upon each Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or (ii) the Required
Lenders shall have determined and shall have notified the Administrative Agent
that the Eurodollar Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (as conclusively
certified by such Lenders) of making or maintaining Eurodollar Loans during such
Interest Period, the Administrative Agent shall, as soon as practicable
thereafter, give written or telecopy notice of such determination to the
Borrowers and the Lenders. In the event of any such determination, until the
Administrative Agent shall have advised the Borrowers and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any request by a
Borrower for a Eurodollar Competitive Loan pursuant to Section 2.3 to be made
after such determination shall be of no force and effect and shall be denied by
the Administrative Agent, (ii) any request by a Borrower for a Eurodollar
Revolving Credit Loan pursuant to Section 2.4 to be made after such
determination shall be deemed to be a request for an ABR Loan and (iii) any
request by a Borrower for conversion into or a continuation of a Eurodollar
Revolving Credit Loan pursuant to Section 2.8 to be made after such
determination shall have no force and effect (in the case of a requested
conversion) or shall be deemed to be a request for a conversion into an ABR Loan
(in the case of a requested continuation). Also, in the event of any such
determination, the relevant Borrower shall be entitled, in its sole discretion,
if the requested Loan has not been made, to
35
cancel its acceptance of the Competitive Bids or to cancel its Competitive Bid
Request relating thereto. Each determination by the Administrative Agent or the
Required Lenders hereunder shall be conclusive absent manifest error.
SECTION 2.13. Termination, Reduction and Increase of Commitments.
(a) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, Viacom may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the
Commitments; provided, however, that (i) each partial reduction of the
Commitments shall be in a minimum principal amount of $10,000,000 and in
integral multiples of $1,000,000 in excess thereof and (ii) no such termination
or reduction shall be made if, after giving effect thereto and to any
prepayments of the Loans made on the effective date thereof, (x) the Outstanding
Revolving Extensions of Credit of any Lender would exceed such Lender's
Commitment then in effect or (y) the Total Facility Exposure would exceed the
Total Commitment then in effect. The Administrative Agent shall promptly advise
the Lenders of any notice given pursuant to this Section 2.13(a).
(b) Except as otherwise provided in Section 2.21, each reduction in
the Commitments hereunder shall be made ratably among the Lenders in accordance
with their respective Commitments. Viacom agrees to pay to the Administrative
Agent for the account of the Lenders, on the date of termination or reduction of
the Commitments, the Facility Fees on the amount of the Commitments so
terminated or reduced accrued through the date of such termination or reduction.
(c) Viacom shall have the right at any time and from time to time to
increase the Total Commitments to an aggregate amount not to exceed
$1,950,000,000 (i) by requesting that one or more banks or other financial
institutions not a party to this Agreement become a Lender hereunder or (ii) by
requesting that any Lender already party to this Agreement increase the amount
of such Lender's Commitment; provided, that the addition of any bank or
financial institution pursuant to clause (i) above shall be subject to the
consent of the Administrative Agent (which consent shall not be unreasonably
withheld); provided further, the Commitment of any bank or other financial
institution pursuant to clause (i) above, shall be in an aggregate principal
amount at least equal to $10,000,000; provided further, the amount of the
increase of any Lender's Commitment pursuant to clause (ii) above when added to
the amount of such Lender's Commitment before the increase, shall be in an
aggregate principal amount at least equal to $10,000,000.
(d) Any additional bank, financial institution or other entity which
elects to become a party to this Agreement and obtain a Commitment pursuant to
clause (c) of this Section 2.13 above shall execute a New Lender Supplement
(each, a "New Lender Supplement") with Viacom and the Administrative Agent,
substantially in the form of Exhibit G, whereupon such bank, financial
institution or other entity (herein called a "New Lender") shall become a Lender
for all purposes and to the same extent as if originally a party hereto and
shall be bound by and entitled to the benefits of this Agreement, and Schedule
1.1 shall be deemed to be amended to add the name and Commitment of such New
Lender.
36
(e) Any increase in the Total Commitment pursuant to clause (c)(ii)
of this Section 2.13 shall be effective only upon the execution and delivery to
Viacom and the Administrative Agent of a commitment increase letter in
substantially the form of Exhibit H hereto (a "Commitment Increase Letter"),
which Commitment Increase Letter shall be delivered to the Administrative Agent
not less than five Business Days prior to the Commitment Increase Date and shall
specify (i) the amount of the Commitment of any bank or financial institution
not a party to this agreement which is becoming a Lender or the amount of any
increase in the Commitment of any Lender and (ii) the date such increase is to
become effective (the "Commitment Increase Date").
(f) Any increase in the Total Commitment pursuant to this Section
2.13 shall not be effective unless:
(i) no Default or Event of Default shall have occurred and be
continuing on the Commitment Increase Date;
(ii) each of the representations and warranties made by Viacom
and the Subsidiary Borrowers in Sections 3.1, 3.2, 3.4, 3.5 and 3.6
shall be true and correct in all material respects on the Commitment
Increase Date with the same effect as though made on and as of such
date, except to the extent such representations and warranties
expressly relate to an earlier date in which case such
representations and warranties shall be true and correct in all
material respects as of such earlier date;
(iii) the Administrative Agent shall have received each of (A)
a certificate of the corporate secretary or assistant secretary of
the Borrowers as to the taking of any corporate action necessary in
connection with such increase and (B) an opinion or opinions of
general counsel to the Borrowers as to their corporate power and
authority to borrow hereunder after giving effect to such increase
and such other matters relating thereto as the Administrative Agent
and its counsel may reasonably request.
Each notice requesting an increase in the Total Commitments pursuant to this
Section 2.13 shall constitute a certification to the effect set forth in clauses
(i) and (ii) of this Section 2.13(f).
(g) No Lender shall at any time be required to agree to a request of
Viacom to increase its Commitment or obligations hereunder.
SECTION 2.14. Optional Prepayments of Revolving Credit Loans.
The relevant Borrower may at any time and from time to time prepay
the Revolving Credit Loans, in whole or in part, without premium or penalty,
upon giving irrevocable written or telecopy notice (or telephone notice promptly
confirmed by written or telecopy notice) to the Administrative Agent: (i) before
10:00 a.m., New York City time, three Business Days prior to prepayment, in the
case of Eurodollar Revolving Credit Loans, and (ii) before 10:00 a.m., New York
City time, one Business Day prior to prepayment, in the case of ABR Revolving
Credit Loans. Such notice shall specify the date and amount of
37
prepayment and whether the prepayment is of Eurodollar Revolving Credit Loans,
ABR Revolving Credit Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each. If a Eurodollar Revolving Credit Loan is
prepaid on any day other than the last day of the Interest Period applicable
thereto, the relevant Borrower shall also pay any amounts owing pursuant to
Section 2.16. Upon receipt of any such notice the Administrative Agent shall
promptly notify each Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified therein,
together with (except in the case of ABR Revolving Credit Loans) accrued
interest to such date on the amount prepaid. Partial prepayments of Revolving
Credit Loans shall be in an aggregate principal amount of $10,000,000 or a whole
multiple of $1,000,000 in excess thereof.
SECTION 2.15. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if after the Closing
Date any change in applicable law or regulation (including any change in the
reserve percentages provided for in Regulation D) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof shall change the basis of taxation of
payments to any Lender of the principal of or interest on any Eurodollar Loan or
Absolute Rate Loan made by such Lender (other than changes in respect of taxes
imposed on the overall net income of such Lender by the jurisdiction in which
such Lender has its principal office (or in which it holds any Eurodollar Loan
or Absolute Rate Loan) or by any political subdivision or taxing authority
therein and other than taxes that would not have been imposed but for the
failure of such Lender to comply with applicable certification, information,
documentation or other reporting requirements), or shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets of
or deposits with or for the account of such Lender, or shall impose on such
Lender or the London interbank market any other condition affecting this
Agreement or any Eurodollar Loan or Absolute Rate Loan made by such Lender, and
the result of any of the foregoing shall be to increase the cost to such Lender
of making or maintaining any Eurodollar Loan or Absolute Rate Loan or to reduce
the amount of any sum received or receivable by such Lender hereunder (whether
of principal, interest or otherwise) in respect of any Eurodollar Loan or
Absolute Rate Loan by an amount deemed by such Lender to be material, then the
relevant Borrower agrees to pay to such Lender as provided in paragraph (c)
below such additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered. Notwithstanding the foregoing,
no Lender shall be entitled to request compensation under this paragraph with
respect to any Competitive Loan if the change giving rise to such request shall,
or in good faith should, have been taken into account in formulating the
Competitive Bid pursuant to which such Competitive Loan shall have been made.
(b) If any Lender or any Issuing Lender shall have determined that
the adoption after the Closing Date hereof of any law, rule, regulation or
guideline regarding capital adequacy, or any change in any law, rule, regulation
or guideline regarding capital adequacy or in the interpretation or
administration of any of the foregoing by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any lending office of such Lender) or
Issuing Lender or any Lender's or Issuing Lender's holding company with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or
38
comparable agency, has or would have the effect of reducing the rate of return
on such Lender's or Issuing Lender's capital or on the capital of such Lender's
or Issuing Lender's holding company, if any, as a consequence of this Agreement
or the Loans made by such Lender or the LC Exposure of such Lender or Letters of
Credit issued by such Issuing Lender pursuant hereto to a level below that which
such Lender or Issuing Lender or such Lender's or Issuing Lender's holding
company could have achieved but for such applicability, adoption, change or
compliance (taking into consideration such Lender's or Issuing Lender's policies
and the policies of such Lender's or Issuing Lender's holding company with
respect to capital adequacy) by an amount deemed by such Lender or Issuing
Lender to be material, then from time to time Viacom agrees to pay to such
Lender or Issuing Lender as provided in paragraph (c) below such additional
amount or amounts as will compensate such Lender or Issuing Lender or such
Lender's or Issuing Lender's holding company for any such reduction suffered.
(c) A certificate of each Lender or Issuing Lender setting forth
such amount or amounts as shall be necessary to compensate such Lender or
Issuing Lender as specified in paragraph (a) or (b) above, as the case may be,
and the basis therefor in reasonable detail shall be delivered to the relevant
Borrower and shall be conclusive absent manifest error. The relevant Borrower
shall pay each Lender or Issuing Lender the amount shown as due on any such
certificate within 30 days after its receipt of the same. Upon the receipt of
any such certificate, the relevant Borrower shall be entitled, in its sole
discretion, if any requested Loan has not been made, to cancel its acceptance of
the relevant Competitive Bids or to cancel the Competitive Bid Request relating
thereto, subject to Section 2.16.
(d) Except as provided in this paragraph, failure on the part of any
Lender to demand compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital with respect to any
period shall not constitute a waiver of such Lender's right to demand
compensation with respect to any other period. The protection of this Section
2.15 shall be available to each Lender regardless of any possible contention of
the invalidity or inapplicability of the law, rule, regulation, guideline or
other change or condition which shall have occurred or been imposed so long as
it shall be customary for Lenders affected thereby to comply therewith. No
Lender shall be entitled to compensation under this Section 2.15 for any costs
incurred or reductions suffered with respect to any date unless it shall have
notified the relevant Borrower that it will demand compensation for such costs
or reductions under paragraph (c) above not more than 90 days after the later of
(i) such date and (ii) the date on which it shall have become aware of such
costs or reductions. Notwithstanding any other provision of this Section 2.15,
no Lender shall demand compensation for any increased cost or reduction referred
to above if it shall not at the time be the general policy or practice of such
Lender to demand such compensation in similar circumstances under comparable
provisions of other credit agreements, if any. In the event any Borrower shall
reimburse any Lender pursuant to this Section 2.15 for any cost and such Lender
shall subsequently receive a refund in respect thereof, such Lender shall so
notify such Borrower and, upon its request, will pay to such Borrower the
portion of such refund which such Lender shall determine in good faith to be
allocable to the cost so reimbursed. The covenants contained in this Section
2.15 shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
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SECTION 2.16. Indemnity.
Each Borrower agrees to indemnify each Lender against any loss or
expense described below which such Lender may sustain or incur as a consequence
of (a) any failure by such Borrower to fulfill on the date of any borrowing
hereunder the applicable conditions set forth in Article IV, (b) any failure by
such Borrower to borrow, continue or convert any Loan hereunder after
irrevocable notice of such borrowing, continuation or conversion has been given
or deemed given or Competitive Bids have been accepted pursuant to Article II,
(c) any payment, prepayment or conversion of a Eurodollar Loan or Absolute Rate
Loan made to such Borrower required by any other provision of this Agreement or
otherwise made or deemed made, whatever the circumstances may be that give rise
to such payment, prepayment or conversion, or any transfer of any such Loan
pursuant to Section 2.21 or 9.4(b), on a date other than the last day of the
Interest Period applicable thereto, or (d) if any breakage is incurred, any
failure by a Borrower to prepay a Eurodollar Loan on the date specified in a
notice of prepayment; provided, that any request for indemnification made by any
Lender to any Borrower pursuant hereto shall be accompanied by such Lender's
calculation of such amount to be indemnified. The loss or expense for which such
Lender shall be indemnified under this Section 2.16 shall be equal to the
excess, if any, as reasonably determined by such Lender, of (i) its cost of
obtaining the funds for the Loan being paid, prepaid, converted or not borrowed,
continued, prepaid or converted (assumed to be the Eurodollar Rate in the case
of Eurodollar Loans) for the period from the date of such payment, prepayment,
conversion or failure to borrow, continue, prepay or convert to the last day of
the Interest Period for such Loan (or, in the case of a failure to borrow,
continue, prepay or convert, the Interest Period for such Loan which would have
commenced on the date of such failure) over (ii) the amount of interest (as
reasonably determined by such Lender) that would be realized by such Lender in
reemploying the funds so paid, prepaid, converted or not borrowed, continued,
prepaid or converted for such period or Interest Period, as the case may be;
provided, however, that such amount shall not include any loss of a Lender's
margin or spread over its cost of obtaining funds as described above. A
certificate of any Lender setting forth any amount or amounts which such Lender
is entitled to receive pursuant to this Section 2.16 (with calculations in
reasonable detail) shall be delivered to the relevant Borrower and shall be
conclusive absent manifest error. This covenant shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
SECTION 2.17. Pro Rata Treatment; Funding Matters; Evidence of Debt.
(a) Except as required under Section 2.21, each payment or
prepayment of principal of any Revolving Credit Loan, each payment of interest
on the Revolving Credit Loans, each payment of LC Fees, each payment of the
Facility Fees, and each reduction of the Commitments, shall be allocated pro
rata among the Lenders in accordance with their respective Commitments (or, if
such Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of their outstanding Revolving Credit Loans). Each
Lender agrees that in computing such Lender's portion of any Loan to be made
hereunder, the Administrative Agent may, in its discretion, round such Lender's
percentage of such Loan to the next higher or lower whole Dollar amount.
(b) Unless the Administrative Agent shall have received notice from
a Lender prior to the relevant borrowing date that such Lender will not make
available to the
40
Administrative Agent such Lender's portion of a borrowing, the Administrative
Agent may assume that such Lender has made such portion available to the
Administrative Agent on the date of such borrowing in accordance with this
Agreement and the Administrative Agent may, in reliance upon such assumption,
make available to the relevant Borrower on such date a corresponding amount. If
and to the extent that such Lender shall not have made such portion available to
the Administrative Agent, each of such Lender and the relevant Borrower agrees
to repay to the Administrative Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to such Borrower until the date such amount is repaid to the
Administrative Agent at (i) in the case of such Borrower, the interest rate
applicable at the time to the relevant Loan and (ii) in the case of such Lender,
the Federal Funds Effective Rate. If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such borrowing for the purposes of this Agreement;
provided, that such repayment shall not release such Lender from any liability
it may have to such Borrower for the failure to make such Loan at the time
required herein.
(c) The failure of any Lender to make any Loan shall not in itself
relieve any other Lender of its obligation to lend hereunder (it being
understood, however, that no Lender shall be responsible for the failure of any
other Lender to make any Loan required to be made by such other Lender).
(d) Each Lender may at its option make any Eurodollar Loan by
causing any domestic or foreign branch or Lender Affiliate of such Lender to
make such Loan; provided, that any exercise of such option shall not affect the
obligation of the relevant Borrower to repay such Loan in accordance with the
terms of this Agreement.
(e) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness to such Lender resulting from
each Loan made by it from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time under this Agreement.
The Administrative Agent shall maintain accounts in which it will record (i) the
amount of each Loan made hereunder, the Borrower with respect to each Loan, the
Type of each Loan and each Interest Period, if any, applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and payable
from each Borrower to each Lender hereunder and (iii) the amount of any sum
received by the Administrative Agent hereunder from any Borrower and each
Lender's share thereof. The entries made in the accounts maintained pursuant to
this paragraph (e) shall, to the extent permitted by applicable law, be prima
facie evidence of the existence and amounts of the obligations therein recorded;
provided, however, that the failure of any Lender or the Administrative Agent to
maintain such accounts or any error therein shall not in any manner affect the
obligations of any Borrower to repay the Loans in accordance with their terms.
(f) In order to expedite the transactions contemplated by this
Agreement, each Subsidiary Borrower shall be deemed, by its execution and
delivery of a Subsidiary Borrower Request, to have appointed Viacom to act as
agent on behalf of such Subsidiary Borrower for the purpose of (a) giving any
notices contemplated to be given by such Subsidiary Borrower pursuant to this
Agreement, including, without limitation, borrowing notices, prepayment notices,
continuation notices, conversion notices, competitive bid requests and
competitive bid
41
acceptances or rejections and (b) paying on behalf of such Subsidiary Borrower
any Subsidiary Borrower Obligations owing by such Subsidiary Borrower; provided,
that each Subsidiary Borrower shall retain the right, in its discretion, to
directly give any or all of such notices or make any or all of such payments.
(g) The Administrative Agent shall promptly notify the Lenders upon
receipt of any Subsidiary Borrower Designation and Subsidiary Borrower Request.
The Administrative Agent shall promptly notify the Swingline Lenders upon
receipt of any designation of a Subsidiary Borrower as a Swingline Borrower.
SECTION 2.18. Sharing of Setoffs.
Except to the extent that this Agreement provides for payments to be
allocated to Revolving Credit Loans, Swingline Loans or Competitive Loans, as
the case may be, each Lender agrees that if it shall, through the exercise of a
right of banker's lien, setoff or counterclaim against any Borrower, or pursuant
to a secured claim under Section 506 of Title 11 of the United States Code or
other security or interest arising from, or in lieu of, such secured claim,
received by such Lender under any applicable bankruptcy, insolvency or other
similar law or otherwise, or by any other means (other than pursuant to any
provision of this Agreement), obtain payment (voluntary or involuntary) in
respect of any category of its Loans or such Lender's Revolving Credit
Percentage of any LC Disbursement as a result of which the unpaid principal
portion of such Loans or the unpaid portion of such Lender's Revolving Credit
Percentage of the LC Disbursements shall be proportionately less than the unpaid
principal portion of such Loans or the unpaid portion of the Revolving Credit
Percentage of the LC Disbursements of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at face value, and shall
promptly pay to such other Lender the purchase price for, a participation in
such Loans or the Revolving Credit Percentage of the LC Disbursements of such
other Lender, so that the aggregate unpaid principal amount of such Loans and
participations in such Loans held by each Lender or the Revolving Credit
Percentage of LC Disbursements and participations in LC Disbursements held by
each Lender shall be in the same proportion to the aggregate unpaid principal
amount of all such Loans or LC Disbursements then outstanding as the principal
amount of such Loans or the Revolving Credit Percentage of LC Disbursements of
each Lender prior to such exercise of banker's lien, setoff or counterclaim or
other event was to the principal amount of all such Loans or LC Disbursements
outstanding prior to such exercise of banker's lien, setoff or counterclaim or
other event; provided, however, that, if any such purchase or purchases or
adjustments shall be made pursuant to this Section 2.18 and the payment giving
rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustment restored without interest, unless the Lender from
which such payment is recovered is required to pay interest thereon, in which
case each Lender returning funds to such Lender shall pay its pro rata share of
such interest. Any Lender holding a participation in a Loan or LC Disbursement
deemed to have been so purchased may exercise any and all rights of banker's
lien, setoff or counterclaim with respect to any and all moneys owing by any
Borrower to such Lender by reason thereof as fully as if such Lender had made a
Loan directly to such Borrower or issued a Letter of Credit for the account of
such Borrower in the amount of such participation.
42
SECTION 2.19. Payments.
(a) Except as otherwise expressly provided herein, each Borrower
shall make each payment (including principal of or interest on any Loan or any
Fees or other amounts) hereunder without setoff or counterclaim and shall make
each such payment not later than 12:00 noon, New York City time, on the date
when due in Dollars to the Administrative Agent at its offices at The Chase
Manhattan Bank, 270 Park Avenue, New York, New York 10017, in immediately
available funds. Notwithstanding the foregoing, each Borrower shall make each
payment with respect to any Loan denominated in any Foreign Currency (including
principal of or interest on any such Loan or other amounts) hereunder without
setoff or counterclaim and shall make each such payment not later than 12:00
noon, London time, on the date when due in the relevant Foreign Currency to the
Administrative Agent at its offices at Chase Manhattan International Ltd., 9
Thomas Moore Street, London E1-9YT United Kingdom, in immediately available
funds.
(b) Whenever any payment (including principal of or interest on any
Loan or any Fees or other amounts) hereunder shall become due, or otherwise
would occur, on a day that is not a Business Day, such payment may be made on
the next succeeding Business Day, and such extension of time shall in such case
be included in the computation of interest or Fees, if applicable.
SECTION 2.20. Taxes.
(a) Any and all payments by each Borrower hereunder shall be made,
in accordance with Section 2.19, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, duties, charges, fees,
deductions, charges or withholdings, and all liabilities with respect thereto
imposed by or on behalf of any Governmental Authority, excluding net income
taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the
Administrative Agent or any Lender as a result of a present or former connection
between the Administrative Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Administrative Agent's or such Lender's having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document) (all such nonexcluded taxes, levies,
imposts, duties, charges, fees, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If any Borrower shall be
required by law to deduct any Taxes or Other Taxes from or in respect of any sum
payable to any Agent or any Lender hereunder, (i) the sum payable shall be
increased by the amount necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.20) such Agent or such Lender shall receive an amount equal to the sum it
would have received had no such deductions been made, (ii) such Borrower shall
make such deductions and (iii) such Borrower shall pay the full amount deducted
to the relevant taxing authority or other Governmental Authority in accordance
with applicable law.
(b) The relevant Borrower agrees to pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
43
(c) The relevant Borrower will indemnify each Lender (or Transferee)
and the Administrative Agent for the full amount of Taxes and Other Taxes
(including any Taxes or Other Taxes imposed by the applicable jurisdiction on
amounts payable under this Section 2.20) paid by such Lender (or Transferee) or
the Administrative Agent, as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted by
the relevant taxing authority or other Governmental Authority. Such
indemnification shall be made within 30 days after the date such Lender (or
Transferee) or the Administrative Agent, as the case may be, makes written
demand therefor.
(d) Whenever any Taxes or Other Taxes are payable by any Borrower,
within 30 days thereafter such Borrower shall send to the Administrative Agent
for its own account or for the account of the relevant Lender, as the case may
be, a certified copy of an official receipt received by such Borrower showing
payment thereof (or other evidence of such payment reasonably satisfactory to
the Administrative Agent).
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.20
shall survive the payment in full of the principal of and interest on all Loans
made hereunder and of all other amounts payable hereunder.
(f) Each Lender (or Transferee) that is not a "United States Person"
as defined in Section 7701(a)(30) of the Code (such Lender (or Transferee), a
"Non-U.S. Person") shall deliver to Viacom and the Administrative Agent (or, in
the case of a participant, to the Lender from which the related participation
shall have been purchased) two copies of either U.S. Internal Revenue Service
Form W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Person claiming
exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of "portfolio interest", a Form W-8BEN, or any
subsequent versions thereof or successors thereto (and, if such Non-U.S. Person,
claiming an exemption with respect to payments of "portfolio interest", delivers
a Form W-8BEN, an annual certificate representing that such Non-U.S. Person is
not a "bank" for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of Viacom
and is not a controlled foreign corporation related to Viacom (within the
meaning of Section 864(d)(4) of the Code)), properly completed and duly executed
by such Non-U.S. Person claiming complete exemption from U.S. federal
withholding tax on all payments by any Borrower under this Agreement. Such forms
shall be delivered by each Non-U.S. Person promptly after it becomes a party to
this Agreement (or, in the case of any participant, promptly after the date such
participant purchases the related participation). In addition, each Non-U.S.
Person shall deliver such forms promptly upon the obsolescence or invalidity of
any form previously delivered by such Non-U.S. Person. Each Non-U.S. Person
shall promptly notify Viacom at any time it determines that it is no longer in a
position to provide any previously delivered certificate to Viacom (or any other
form of certification adopted by the U.S. taxing authorities for such purpose).
Unless Viacom and the Administrative Agent (or, in the case of a participant,
the Lender from which the related participation shall have been purchased) have
received forms or other documents satisfactory to them indicating that payments
hereunder are not subject to United States withholding tax, the relevant
Borrower or the Administrative Agent shall withhold taxes from such payments at
the applicable statutory rate in the case of payments
44
of interest to or for any Lender (or Transferee) that is a Non-U.S. Person.
Notwithstanding any other provision of this Section 2.20(f), a Non-U.S. Person
shall not be required to deliver any form pursuant to this Section 2.20(f) that
such Non-U.S. Person is not legally able to deliver by reason of the adoption of
any law, rule or regulation, or any change in any law, rule or regulation or in
the interpretation thereof, in each case occurring after the date such Non-U.S.
Person becomes a Lender (or Transferee).
(g) A Lender that is entitled to an exemption from or reduction of
any non-U.S. withholding tax under the law of the jurisdiction in which a
Borrower is located, or under any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to such Borrower
(with a copy to the Administrative Agent), at the time or times prescribed by
applicable law or reasonably requested by such Borrower, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate, provided that such
Lender is legally entitled to complete, execute and deliver such documentation
and in such Lender's reasonable judgment such completion, execution or
submission would not materially prejudice the legal position of such Lender.
(h) No Borrower shall be required to pay any additional amounts to
any Agent or Lender pursuant to paragraph (a) above (i) if the obligation to pay
such additional amounts would not have arisen but for a failure by such Agent or
Lender to comply with the provisions of paragraph (f) or (g) above or (ii) in
the case of a Transferee, to the extent such additional amounts exceed the
additional amounts that would have been payable had no transfer or assignment to
such Transferee occurred; provided, however, that each Borrower shall be
required to pay those amounts to any Agent or Lender (or Transferee) that it was
required to pay hereunder prior to the failure of such Agent or Lender (or
Transferee) to comply with the provisions of such paragraph (f) or (g).
SECTION 2.21. Termination or Assignment of Commitments Under Certain
Circumstances.
(a) Any Lender (or Transferee) claiming any additional amounts
payable pursuant to Section 2.15 or Section 2.20 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any certificate or
document requested by any Borrower or to change the jurisdiction of its
applicable lending office if the making of such a filing or change would avoid
the need for or reduce the amount of any such additional amounts which may
thereafter accrue and would not, in the sole determination of such Lender (or
Transferee), be otherwise disadvantageous to such Lender (or Transferee).
(b) In the event that (x) any Lender shall have delivered a notice
or certificate pursuant to Section 2.15, (y) any Borrower shall be required to
make additional payments to any Lender under Section 2.20, or (z) any Lender (a
"Non-Consenting Lender") shall withhold its consent to any amendment described
in clause (i) or (ii) of Section 9.8(b) as to which consents have been obtained
from Lenders having Total Facility Percentages aggregating at least 90%, Viacom
shall have the right, at its own expense, upon notice to such Lender (or
Lenders) and the Administrative Agent, (i) to terminate the Commitments of such
Lender (except in the case of clause (z) above) or (ii) to require such Lender
(or, in the case of clause (z) above, each Non-
45
Consenting Lender) to transfer and assign without recourse (in accordance with
and subject to the restrictions contained in Section 9.4) all its interests,
rights and obligations under this Agreement to one or more other financial
institutions acceptable to Viacom (unless an Event of Default has occurred and
is continuing) and the Administrative Agent, which approval in each case shall
not be unreasonably withheld, which shall assume such obligations; provided,
that (w) in the case of any replacement of Non-Consenting Lenders, each assignee
shall have consented to the relevant amendment, (x) no such termination or
assignment shall conflict with any law, rule or regulation or order of any
Governmental Authority, (y) the Borrowers or the assignee (or assignees), as the
case may be, shall pay to each affected Lender in immediately available funds on
the date of such termination or assignment the principal of and interest accrued
to the date of payment on the Loans made by it hereunder and all other amounts
accrued for its account or owed to it hereunder and (z) Viacom may not terminate
Commitments representing more than 10% of the original aggregate Commitments
pursuant to this paragraph (b).
SECTION 2.22. Currency Equivalents.
(a) The Administrative Agent shall determine the Dollar equivalent
of each Competitive Bid Loan in a Foreign Currency as of the first day of each
Interest Period applicable thereto and, in the case of any such Interest Period
of more than three months, at three-month intervals after the first day thereof.
The Administrative Agent shall promptly notify the Borrower and the Lenders of
the Dollar equivalent so determined by it. Each such determination shall be
based on the Spot Rate (i) on the date of the related Competitive Bid Request,
for purposes of the initial determination of such Competitive Bid Loan, and (ii)
on the fourth Business Day prior to the date on which such Dollar equivalent is
to be determined, for purposes of subsequent determinations.
(b) The Administrative Agent shall determine the Dollar equivalent
of the Aggregate LC Exposure related to each Letter of Credit issued in a
Foreign Currency as of the date of the issuance thereof, at three-month
intervals after the date of issuance thereof and as of the date of each drawing
thereunder. Each such determination shall be based on the Spot Rate (i) on the
date of the related notice of any proposed issuance of a Letter of Credit
pursuant to Section 2.7(c), in the case of the initial determination of such
Letter of Credit, (ii) on the second Business Day prior to the date as of which
such Dollar equivalent is to be determined, in the case of any subsequent
determination with respect to an outstanding Letter of Credit and (iii) on the
second Business Day prior to the related drawing thereunder, in the case of any
determination as of a drawing thereunder.
(c) If after giving effect to any such determination of a Dollar
equivalent under (a) or (b) above, the Dollar equivalent of (a) or (b) above
exceeds $150,000,000, the Borrower shall within five Business Days, (i), in the
case of an excess determined pursuant to (a) above, prepay outstanding
Competitive Bid Loans in Foreign Currencies to eliminate such excess, (ii), in
the case of an excess determined pursuant to (b) above, prepay (or, at the
relevant Borrower's option, cash collateralize) Letters of Credit in Foreign
Currencies to eliminate such excess, or (iii), in each case, take such other
action to the extent necessary to eliminate any such excess; provided, whether
or not the Dollar equivalent of (a) or (b) above exceeds $150,000,000, if after
giving effect to any such determination of a Dollar equivalent under (a) or (b)
above, the Commitment Utilization Percentage is greater than 110%, the Borrower
shall within five
46
Business Days prepay outstanding Competitive Bid Loans in Foreign Currencies,
prepay (or, at the relevant Borrower's option, cash collateralize) outstanding
Letters of Credit in Foreign Currencies or take such other action to the extent
necessary to eliminate any such excess.
SECTION 2.23. Judgment Currency.
If, for the purpose of obtaining judgment in any court, it is
necessary to convert a sum due from the Borrower hereunder in the currency
expressed to be payable herein (the "specified currency") into another currency,
the parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which in accordance with normal
banking procedures the Administrative Agent could purchase the specified
currency with such other currency at the Administrative Agent's London office on
any Business Day preceding that on which the final judgment is given. The
obligations of the Borrower in respect of any sum due to any Lender or the
Administrative Agent hereunder shall, notwithstanding any judgment in a currency
other than the specified currency, be discharged only to the extent that on the
Business Day following receipt by such Lender or the Administrative Agent, as
the case may be, of any sum adjudged to be so due in such other currency such
Lender or the Administrative Agent, as the case may be, may in accordance with
normal banking procedures purchase the specified currency with such other
currency. If the amount of the specified currency so purchased is less than the
sum originally due to such Lender or the Administrative Agent, as the case may
be, in the specified currency, the Borrower agrees, to the fullest extent that
it may effectively do so, as a separate obligation and notwithstanding any such
judgment, to indemnify such Lender or the Administrative Agent, as the case may
be, against such loss, and if the amount of the specified currency so purchased
exceeds (i) the sum originally due to any Lender or the Administrative Agent, as
the case may be, in the specified currency and (ii) any amounts shared with
other Lenders as a result of allocations of such excess as a disproportionate
payment to such Lender as compared to such Lender's Total Facility Percentage,
such Lender or the Administrative Agent, as the case may be, agrees to remit
such excess to the Borrower.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Viacom hereby represents and warrants, and each Subsidiary Borrower
by its execution and delivery of a Subsidiary Borrower Request represents and
warrants (to the extent specifically applicable to such Subsidiary Borrower), to
each of the Lenders that:
SECTION 3.1. Corporate Existence.
Each of Viacom and each Material Subsidiary: (a) is a corporation,
partnership or other entity duly organized and validly existing under the laws
of the jurisdiction of its organization; (b) has all requisite corporate or
other power, and has all material governmental licenses, authorizations,
consents and approvals, necessary to own its assets and carry on its business as
now being or as proposed to be conducted, except where the failure to have any
of the foregoing would not result in a Material Adverse Effect; and (c) is
qualified to do business in
47
all jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify would result in a
Material Adverse Effect.
SECTION 3.2. Financial Condition.
The consolidated balance sheet of Viacom and its Consolidated
Subsidiaries as at December 31, 1999, and the related consolidated statements of
income and cash flows of Viacom and its Consolidated Subsidiaries for the fiscal
year ended on such date, with the opinion thereon of PricewaterhouseCoopers LLC,
heretofore furnished to each of the Lenders, fairly present the consolidated
financial condition of Viacom and its Consolidated Subsidiaries as at such date
and the consolidated results of their operations for the fiscal year ended on
such date in accordance with GAAP. Neither Viacom nor any of its Material
Subsidiaries had on such date any known material contingent liability, except as
referred to or reflected or provided for in the Exchange Act Report or in such
balance sheets (or the notes thereto) as at such date.
SECTION 3.3. Litigation.
Except as disclosed to the Lenders in the Exchange Act Report filed
prior to the Closing Date or otherwise disclosed in writing to the Lenders prior
to the Closing Date, there are no legal or arbitral proceedings, or any
proceedings by or before any Governmental Authority, pending or (to the
knowledge of Viacom) threatened against Viacom or any of its Material
Subsidiaries which have resulted in a Material Adverse Effect (it being agreed
that any legal or arbitral proceedings which have been disclosed in the Exchange
Act Report, whether threatened, pending, resulting in a judgment or otherwise,
prior to the time a final judgment for the payment of money shall have been
recorded against Viacom or any Material Subsidiary by any Governmental Authority
having jurisdiction, and the judgment is non-appealable (or the time for appeal
has expired) and all stays of execution have expired or been lifted shall not,
in and of itself, be deemed to result in a Material Adverse Effect). The
"Exchange Act Report" shall mean, collectively, (i) the Annual Report of Viacom
on Form 10-K for the year ended December 31, 1999 and Quarterly Reports on Form
10-Q and Reports on Form 8-K of Viacom filed subsequent to December 31, 1999,
but on or before February 20, 2001, (ii) the Annual Report of CBS Corporation on
Form 10-K for the year ended December 31, 1999 and Quarterly Reports on Form 10-
Q and Reports on Form 8-K of Viacom filed subsequent to December 31, 1999, but
on or before February 20, 2001, and (iii) Reports on Form S-4 filed on October
7, 1999 and November 22, 2000, in each case, as amended or supplemented on or
before February 20, 2001.
SECTION 3.4. No Breach, etc.
None of the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated and compliance with the
terms and provisions hereof will conflict with or result in a breach of, or
require any consent under, the charter or By-laws (or other equivalent
organizational documents) of any Borrower, or any applicable law or regulation,
or any order, writ, injunction or decree of any Governmental Authority, or any
material agreement or instrument to which Viacom or any of its Material
Subsidiaries is a party or by which any of them is bound or to which any of them
is subject, or constitute a default under any such agreement or instrument, or
result in the creation or imposition of any Lien upon any of the revenues or
assets of Viacom or any of its Material Subsidiaries pursuant to the terms of
any
48
such agreement or instrument. Neither Viacom nor any of its Material
Subsidiaries is in default under or with respect to any of its material
contractual obligations in any respect which would have a Material Adverse
Effect.
SECTION 3.5. Corporate Action Each Borrower has all necessary
corporate power and authority to execute, deliver and perform its obligations
under this Agreement; the execution and delivery by each Borrower of this
Agreement (or, in the case of each Subsidiary Borrower, the relevant Subsidiary
Borrower Request), and the performance by each Borrower of this Agreement, have
been duly authorized by all necessary corporate action on such Borrower's part;
this Agreement (or, in the case of each Subsidiary Borrower, the relevant
Subsidiary Borrower Request) has been duly and validly executed and delivered by
each Borrower; and this Agreement constitutes a legal, valid and binding
obligation of each Borrower, enforceable in accordance with its terms except as
such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws of general
applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 3.6. Approvals No authorizations, approvals or consents of,
and no filings or registrations with, any Governmental Authority are necessary
for the execution, delivery or performance by each Borrower of this Agreement or
for the validity or enforceability hereof.
SECTION 3.7. ERISA Viacom and, to the best of its knowledge, its
ERISA Affiliates have fulfilled their respective obligations under the minimum
funding standards of ERISA and the Code with respect to each Plan and are in
compliance in all material respects with the currently applicable provisions of
ERISA and the Code except where any failure or non-compliance would not result
in a Material Adverse Effect.
SECTION 3.8. Taxes.
As of the Amendment Closing Date, United States Federal income tax
returns of or including Viacom have been, to the knowledge of Viacom, examined
and closed through the fiscal year of Viacom ended December 31, 1994. Viacom and
its Material Subsidiaries, to the knowledge of Viacom, have filed all United
States Federal income tax returns and all other material tax returns which are
required to be filed by or in respect of them and have paid or caused to be paid
all taxes shown as due on such returns or pursuant to any assessment received by
Viacom or any of its Material Subsidiaries, except those being contested and
reserved against in accordance with Section 5.2.
49
SECTION 3.9. Investment Company Act No Borrower is an "investment
company", or a company "controlled" by an "investment company", subject to
regulation under the Investment Company Act of 1940, as amended.
SECTION 3.10. Environmental Except as in the aggregate would not
have a Material Adverse Effect, neither Viacom nor any of its Subsidiaries has
received any notice of violation, alleged violation, non-compliance or liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of its or its Subsidiaries' Properties or business, nor does
Viacom have any knowledge that any notice will be received or is being
threatened.
SECTION 3.11. Material Subsidiaries The list of Material
Subsidiaries set forth in the most recently issued Form 10-K of Viacom is
complete and correct in all material respects as of the date of the issuance of
such Form 10-K.
ARTICLE IV
CONDITIONS OF EFFECTIVENESS AND LENDING
SECTION 4.1. Effectiveness.
The effectiveness of this Agreement is subject to the satisfaction
of the following conditions:
(a) Amended and Restated Credit Agreement. The Administrative Agent
shall have received this Agreement, executed and delivered by a duly authorized
officer of Viacom and Viacom International.
(b) Closing Certificate. The Administrative Agent shall have
received a Closing Certificate, substantially in the form of Exhibit E, of
Viacom and Viacom International, with appropriate insertions and attachments.
(c) Termination of Existing Credit Agreements. The Existing Credit
Agreements shall have been paid in full and all obligations thereunder shall
have been terminated.
(d) Opinion of Counsel. The Administrative Agent shall have received
an opinion of the general counsel of Viacom and Viacom International in form and
substance satisfactory to the Administrative Agent and customary for
transactions of this type.
(e) Five-Year Credit Agreement and 364-Day Credit Agreement. All
conditions to effectiveness specified in Section 4.1 of the Five-Year Credit
Agreement and Section 4.1 of the 364-Day Credit Agreement shall have been
satisfied.
50
SECTION 4.2. Initial Loans to Subsidiary Borrowers.
The obligation of each Lender to make its initial Loan to a
particular Subsidiary Borrower, if designated as such after the Amendment
Closing Date, is subject to the satisfaction of the conditions that (a) Viacom
shall have delivered to the Administrative Agent a Subsidiary Borrower
Designation for such Subsidiary Borrower and (b) such Subsidiary Borrower shall
have furnished to the Administrative Agent (i) a Subsidiary Borrower Request,
(ii) a Closing Certificate of such Subsidiary Borrower, with appropriate
insertions and attachments and (iii) one or more executed legal opinions with
respect to such Subsidiary Borrower, in form and substance reasonably
satisfactory to the Administrative Agent. Any Subsidiary designated as a
Subsidiary Borrower by Infinity pursuant to this Agreement prior to the
Amendment Closing Date shall continue to be a Subsidiary Borrower after the
Amendment Closing Date, unless Infinity subsequently delivered a termination of
such Subsidiary Borrower's designation prior to the Amendment Closing Date;
provided, such Subsidiary Borrower shall deliver to the Administrative Agent the
items listed in clause (ii) and (iii) above prior to such Subsidiary Borrower's
initial borrowing after the Amendment Closing Date. Viacom may from time to time
deliver a subsequent Subsidiary Borrower Designation with respect to any
Subsidiary Borrower, countersigned by such Subsidiary Borrower, for the purpose
of terminating such Subsidiary Borrower's designation as such, so long as, on
the effective date of such termination, all Subsidiary Borrower Obligations in
respect of such Subsidiary Borrower shall have been paid in full. In addition,
if on any date a Subsidiary Borrower shall cease to be a Subsidiary, all
Subsidiary Borrower Obligations in respect of such Subsidiary Borrower shall
automatically become due and payable on such date and no further Loans may be
borrowed by such Subsidiary Borrower hereunder.
SECTION 4.3. All Credit Events.
The obligation of each Lender to make each Loan, and the obligation
of each Issuing Lender to issue each Letter of Credit, are subject to the
satisfaction of the following conditions:
(a) The Administrative Agent shall have received a request for, or
notice of, such Credit Event if and as required by Section 2.3, 2.4, 2.6 or 2.7,
as applicable;
(b) Each of the representations and warranties made by Viacom and,
in the case of a borrowing by a Subsidiary Borrower, by such Subsidiary
Borrower, in Sections 3.1, 3.2, 3.4, 3.5 and 3.6 shall be true and correct in
all material respects on and as of the date of such Credit Event with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date in which case
such representations and warranties shall be true and correct in all material
respects as of such earlier date;
(c) At the time of and immediately after giving effect to such
Credit Event no Default or Event of Default shall have occurred and be
continuing; and
51
(d) After giving effect to such Credit Event, (i) the Outstanding
Revolving Extensions of Credit of each Lender shall not exceed such Lender's
Commitment then in effect and (ii) the Total Facility Exposure shall not exceed
the Total Commitment then in effect.
Each Credit Event shall be deemed to constitute a representation and warranty by
Viacom on the date of such Credit Event as to the matters specified in
paragraphs (b) and (c) of this Section 4.3.
ARTICLE V
COVENANTS
Viacom covenants and agrees with each Lender that, as long as the
Commitments shall be in effect or the principal of or interest on any Loan shall
be unpaid, or there shall be any Aggregate LC Exposure, unless the Required
Lenders shall otherwise consent in writing:
SECTION 5.1. Financial Statements.
Viacom shall deliver to each of the Lenders:
(a) within 60 days after the end of each of the first three
quarterly fiscal periods of each fiscal year of Viacom, consolidated statements
of income and cash flows of Viacom and its Consolidated Subsidiaries for such
period and for the period from the beginning of the respective fiscal year to
the end of such period, and the related consolidated balance sheet as at the end
of such period, setting forth in each case in comparative form the corresponding
consolidated figures for the corresponding period in the preceding fiscal year,
accompanied by a certificate of a Financial Officer of Viacom which certificate
shall state that such financial statements fairly present the consolidated
financial condition and results of operations of Viacom and its Consolidated
Subsidiaries in accordance with GAAP as at the end of, and for, such period,
subject to normal year-end audit adjustments; provided, that the requirement
herein for the furnishing of such quarterly financial statements may be
fulfilled by providing to the Lenders the report of Viacom to the SEC on Form
10-Q for the applicable quarterly period, accompanied by the officer's
certificate described in the last sentence of this Section 5.1;
(b) within 120 days after the end of each fiscal year of Viacom,
consolidated statements of income and cash flows of Viacom and its Consolidated
Subsidiaries for such year and the related consolidated balance sheet as at the
end of such year, setting forth in comparative form the corresponding
consolidated figures for the preceding fiscal year, and accompanied by an
opinion thereon (unqualified as to the scope of the audit) of independent
certified public accountants of recognized national standing, which opinion
shall state that such consolidated financial statements fairly present the
consolidated financial condition and results of operations of Viacom and its
Consolidated Subsidiaries as at the end of, and for, such fiscal year; provided,
that the requirement herein for the furnishing of annual financial statements
may be fulfilled by providing to the Lenders the report of Viacom to the SEC on
Form 10-K for the applicable fiscal year;
(c) promptly upon their becoming publicly available, copies of all
registration statements and regular periodic reports (including without
limitation any and all reports on Form
52
8-K), if any, which Viacom or any of its Subsidiaries shall have filed with the
SEC or any national securities exchange;
(d) promptly upon the mailing thereof to the shareholders of Viacom
generally, copies of all financial statements, reports and proxy statements so
mailed;
(e) within 30 days after a Responsible Officer of Viacom knows or
has reason to believe that any of the events or conditions specified below with
respect to any Plan or Multiemployer Plan have occurred or exist which would
reasonably be expected to result in a Material Adverse Effect, a statement
signed by a senior financial officer of Viacom setting forth details respecting
such event or condition and the action, if any, which Viacom or its ERISA
Affiliate proposes to take with respect thereto (and a copy of any report or
notice required to be filed with or given to PBGC by Viacom or an ERISA
Affiliate with respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of ERISA and
the regulations issued thereunder, with respect to a Plan, as to which
PBGC has not by regulation waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the occurrence of such event;
provided, that a failure to meet the minimum funding standard of Section
412 of the Code or Section 302 of ERISA shall be a reportable event
regardless of the issuance of any waiver in accordance with Section 412(d)
of the Code;
(ii) the filing under Section 4041 of ERISA of a notice of intent to
terminate any Plan or the termination of any Plan;
(iii) the institution by PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by Viacom or any ERISA Affiliate of a
notice from a Multiemployer Plan that such action has been taken by PBGC
with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal by Viacom or any ERISA
Affiliate under Section 4201 or 4204 of ERISA from a Multiemployer Plan,
or the receipt by Viacom or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against Viacom or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30 days;
and
(vi) a failure to make a required installment or other payment with
respect to a Plan (within the meaning of Section 412(n) of the Code), in
which case the notice required hereunder shall be provided within 10 days
after the due date for filing notice of such failure with the PBGC;
53
(f) promptly after a Responsible Officer of Viacom knows or has
reason to believe that any Default or Event of Default has occurred, a notice of
such Default or Event of Default describing it in reasonable detail and,
together with such notice or as soon thereafter as possible, a description of
the action that Viacom has taken and proposes to take with respect thereto;
(g) promptly after a Responsible Officer of Viacom knows that any
change has occurred in Viacom's Debt Rating by either Rating Agency, a notice
describing such change; and
(h) promptly from time to time such other information regarding the
financial condition, operations or business of Viacom or any of its Subsidiaries
(including, without limitation, any Plan or Multiemployer Plan and any reports
or other information required to be filed under ERISA) as any Lender through the
Administrative Agent may reasonably request.
Viacom will furnish to the Administrative Agent and each Lender, at the time it
furnishes each set of financial statements pursuant to paragraph (a) or (b)
above, a certificate (which may be a copy in the case of each Lender) of a
Financial Officer of Viacom (a "Compliance Certificate") (i) to the effect that
no Default or Event of Default has occurred and is continuing (or, if any
Default or Event of Default has occurred and is continuing, describing it in
reasonable detail and describing the action that Viacom has taken and proposes
to take with respect thereto), and (ii) setting forth in reasonable detail the
computations (including any pro forma calculations as described in Section
1.2(c)) necessary to determine whether Viacom is in compliance with the
Financial Covenant as of the end of the respective quarterly fiscal period or
fiscal year. Each Lender hereby agrees that Viacom may, in its discretion,
provide any notice, report or other information to be provided pursuant to this
Section 5.1 to such Lender by (i) electronic mail to the electronic mail address
provided by such Lender and/or (ii) through access to a web site, including,
without limitation, www.sec.gov.
SECTION 5.2. Corporate Existence, Etc.
Viacom will, and will cause each of its Material Subsidiaries to,
preserve and maintain its legal existence and all of its material rights,
privileges and franchises (provided that (a) nothing in this Section 5.2 shall
prohibit any transaction expressly permitted under Section 5.4, (b) the
corporate existence of any Subsidiary (other than a Subsidiary Borrower or
Viacom International) may be terminated if, in the good faith judgment of the
board of directors or the chief financial officer of Viacom, such termination is
in the best interests of Viacom and such termination would not have a Material
Adverse Effect), and (c)Viacom or such Material Subsidiary shall not be required
to preserve or maintain any such right, privilege or franchise if the Board of
Directors of Viacom or such Material Subsidiary, as the case may be, shall
determine that the preservation or maintenance thereof is no longer desirable in
the conduct of the business of Viacom or such Material Subsidiary, as the case
may be); comply with the requirements of all applicable laws, rules, regulations
and orders of Governmental Authorities (including, without limitation, all
Environmental Laws) and with all contractual obligations if failure to comply
with such requirements or obligations would reasonably be expected to result in
a Material Adverse Effect; pay and discharge all material taxes, assessments,
governmental charges, levies or other obligations of whatever nature imposed on
it or on its income or profits
54
or on any of its Property prior to the date on which penalties attach thereto,
except for any such tax, assessment, charge, levy or other obligation the
payment of which is being contested in good faith and by proper proceedings and
against which adequate reserves are being maintained; maintain all its Property
used or useful in its business in good working order and condition, ordinary
wear and tear excepted, all as in the judgment of Viacom or such Material
Subsidiary may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times (provided
that Viacom or such Material Subsidiary shall not be required to maintain any
such Property if the failure to maintain any such Property is, in the judgment
of Viacom or such Material Subsidiary, desirable in the conduct of the business
of Viacom or such Material Subsidiary); keep proper books of records and
accounts in which entries that are full, true and correct in all material
respects shall be made in conformity with GAAP; and permit representatives of
any Lender, during normal business hours upon reasonable advance notice, to
inspect any of its books and records and to discuss its business and affairs
with its Financial Officers or their designees, all to the extent reasonably
requested by such Lender.
SECTION 5.3. Insurance.
Viacom will, and will cause each of its Material Subsidiaries to,
keep insured by financially sound and reputable insurers all Property of a
character usually insured by corporations engaged in the same or similar
business and similarly situated against loss or damage of the kinds and in the
amounts consistent with prudent business practice and carry such other insurance
as is consistent with prudent business practice (it being understood that self-
insurance shall be permitted to the extent consistent with prudent business
practice).
SECTION 5.4. Prohibition of Fundamental Changes.
Viacom will not, and will not permit any of its Material
Subsidiaries to (i) enter into any transaction of merger, consolidation,
liquidation or dissolution or (ii) Dispose of, in one transaction or a series of
related transactions, all or a substantial part of the consolidated assets of
Viacom and its Subsidiaries taken as a whole, whether now owned or hereafter
acquired (excluding (x) financings by way of sales of receivables or inventory,
(y) inventory or other Property Disposed of in the ordinary course of business
and (z) obsolete or worn-out Property, tools or equipments no longer used or
useful in its business). Notwithstanding the foregoing provisions of this
Section 5.4:
(a) Viacom may consummate the Blockbuster Event;
(b) any Subsidiary of Viacom may be merged or consolidated with or
into: (i) Viacom if Viacom shall be the continuing or surviving corporation or
(ii) any other such Subsidiary; provided, that (x) if any such transaction shall
be between a Subsidiary and a Wholly Owned Subsidiary, such Wholly Owned
Subsidiary shall be the continuing or surviving corporation and (y) if any such
transaction shall be between a Subsidiary and a Subsidiary Borrower, the
continuing or surviving corporation shall be a Subsidiary Borrower;
55
(c) any Subsidiary of Viacom may distribute, dividend or Dispose of
any of or all its Property (upon voluntary liquidation or otherwise) to Viacom
or a Wholly Owned Subsidiary of Viacom;
(d) Viacom may merge or consolidate with or into any other Person
(including, without limitation, Viacom International) if (i) either (x) Viacom
is the continuing or surviving corporation or (y) the corporation formed by such
consolidation or into which Viacom is merged shall be a corporation organized
under the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume the obligations of Viacom
hereunder pursuant to a written agreement and shall have delivered to the
Administrative Agent such agreement and a certificate of a Responsible Officer
and an opinion of counsel to the effect that such merger or consolidation
complies with this Section 5.4(c), and (ii) after giving effect thereto and to
any repayment of Loans to be made upon consummation thereof (it being expressly
understood that no repayment of Loans is required solely by virtue thereof), no
Default or Event of Default shall have occurred and be continuing;
(e) any Subsidiary of Viacom may merge or consolidate with or into
any other Person if, after giving effect thereto and to any repayment of Loans
to be made upon the consummation thereof (it being expressly understood that,
except as otherwise expressly provided in Section 4.2 with respect to Subsidiary
Borrowers, no repayment of Loans is required solely by virtue thereof), no
Default or Event of Default shall have occurred and be continuing; and
(f) Viacom or any Subsidiary of Viacom may Dispose of its Property
if, after giving effect thereto and to any repayment of Loans to be made upon
the consummation thereof (it being expressly understood that, except as
otherwise expressly provided in Section 4.2 with respect to Subsidiary
Borrowers, no repayment of Loans is required solely by virtue thereof), no
Default or Event of Default shall have occurred and be continuing.
SECTION 5.5. Limitation on Liens.
Viacom shall not, directly or indirectly, create or suffer to exist,
or permit any of its Subsidiaries to create or suffer to exist, any Lien upon or
with respect to any of its Properties, whether now owned or hereafter acquired,
or assign, or permit any of its Subsidiaries to assign, any right to receive
income, in each case to secure or provide for the payment of any Indebtedness of
any Person, except:
(a) purchase money Liens or purchase money security interests upon
or in any Property acquired or held by Viacom or any Subsidiary of Viacom in the
ordinary course of business to secure the purchase price of such Property or to
secure Indebtedness incurred solely for the purpose of financing the acquisition
of such Property;
(b) Liens existing on Property at the time of its acquisition (other
than any such Lien created in contemplation of such acquisition);
(c) Liens on Property of Persons which become or became Subsidiaries
securing Indebtedness existing, with respect to any such Person, on the date
such Person becomes or
56
became a Subsidiary (other than any such Lien created in contemplation of such
Person becoming a Subsidiary);
(d) Liens securing Indebtedness incurred by Viacom or any Subsidiary
of Viacom; provided, however, that the aggregate principal amount of
Indebtedness referred to in this clause (d) secured by Liens shall not exceed
$30,000,000 at any time outstanding; and
(e) any Lien securing the renewal, extension or refunding of any
Indebtedness secured by any Lien permitted by clause (a), (b), (c) or (d) above
that does not extend to Indebtedness other than that which is being renewed,
extended or refunded.
SECTION 5.6. Limitation on Subsidiary Indebtedness. Viacom will not
permit any of its Subsidiaries to create, incur, assume or suffer to exist any
Indebtedness (which includes, for the purposes of this Section 5.6, any
preferred stock), except:
(a) Indebtedness of any Person which is acquired by Viacom or any of
its Subsidiaries after the Closing Date, which Indebtedness was outstanding
prior to the date of acquisition of such Person and was not created in
anticipation thereof;
(b) any Indebtedness owing by Viacom or any of its Subsidiaries to
Viacom or any of its Subsidiaries (including any intercompany Indebtedness
created by the declaration of a note payable dividend by any Subsidiary to
Viacom or any of its other Subsidiaries);
(c) Indebtedness (including backed-up commercial paper) of any
Subsidiary Borrower or Viacom International under this Agreement;
(d) Indebtedness (including backed-up commercial paper) existing at
any time under the Five-Year Credit Agreement or under the 364-Day Credit
Agreement;
(e) Indebtedness outstanding on the Closing Date, with such
Indebtedness outstanding as of September 30, 2000 being set forth on Schedule
5.6;
(f) any replacement, renewal, refinancing or extension of any
Indebtedness permitted by Section 5.6(a) through (d) or set forth on Schedule
5.6 that does not exceed the aggregate principal amount (plus associated fees
and expenses) of the Indebtedness being replaced, renewed, refinanced or
extended (except that accrued and unpaid interest may be part of any
refinancing); and
(g) Indebtedness incurred after the Closing Date; provided, that
after giving effect thereto the aggregate principal amount of Indebtedness
incurred pursuant to this paragraph (g) that is outstanding on such date (it
being understood that, for the purposes of this paragraph (g), the term
"Indebtedness" does not include Indebtedness excepted by any of clauses (a)
through (f) inclusive) does not exceed the greater of (i) an aggregate principal
amount in excess of 5% of Consolidated Tangible Assets (measured by reference to
the then latest financial statements delivered pursuant to Section 5.1(a) or
(b), as applicable) and (ii) $800,000,000 at any time.
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SECTION 5.7. Consolidated Coverage Ratio.
Viacom will not permit the Consolidated Coverage Ratio for any
period of four consecutive fiscal quarters to be less than 3.00 to 1.00.
SECTION 5.8. Use of Proceeds.
On and after the Amendment Closing Date, each Borrower will use the
proceeds of the Loans and will use the Letters of Credit hereunder solely for
general corporate purposes, including, without limitation, acquisitions and
commercial paper backup (in each case in compliance with all applicable legal
and regulatory requirements, including, without limitation, Regulation U and the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended, and the regulations thereunder); provided, that neither any Agent nor
any Lender shall have any responsibility as to the use of any of such proceeds.
SECTION 5.9. Transactions with Affiliates.
Excepting transactions directly or indirectly entered into pursuant
to any agreement entered into prior to the Amendment Closing Date, or
transactions contemplated by any agreement directly or indirectly entered into
prior to the Amendment Closing Date, Viacom will not, and will not permit any of
its Material Subsidiaries to, directly or indirectly enter into any material
transaction with any Affiliate of Viacom except on terms at least as favorable
to Viacom or such Subsidiary as it could obtain on an arm's-length basis.
ARTICLE VI
EVENTS OF DEFAULT.
In case of the happening of any of the following events ("Events of
Default"):
(a) (i) any Borrower shall default in the payment when due of any
principal of any Loan or (ii) any Borrower shall default in the payment when due
of any interest on any Loan, any reimbursement obligation in respect of any LC
Disbursement, any Fee or any other amount payable by it hereunder and, in the
case of this clause (ii), such default shall continue unremedied for a period of
five Business Days;
(b) any representation, warranty or certification made or deemed
made herein (or in any modification or supplement hereto) by any Borrower, or
any certificate furnished to any Lender or the Administrative Agent pursuant to
the provisions hereof, shall prove to have been false or misleading in any
material respect as of the time made, deemed made or furnished;
(c) (i) Viacom shall default in the performance of any of its
obligations under Sections 5.7 or 5.8, (ii) Viacom shall default in the
performance of any of its obligations under Section 5.4 and, in the case of this
clause (ii), such default shall continue unremedied for a period of 5 days after
notice thereof to Viacom by the Administrative Agent or the Required Lenders
(through the Administrative Agent), or (iii) Viacom shall default in the
performance of any of its other obligations under this Agreement and, in the
case of this clause (iii), such default shall
58
continue unremedied for a period of 15 days after notice thereof to Viacom by
the Administrative Agent or the Required Lenders (through the Administrative
Agent);
(d) Viacom or any of its Subsidiaries shall (i) fail to pay at final
maturity any Indebtedness in an aggregate amount in excess of $250,000,000, or
(ii) fail to make any payment (whether of principal, interest or otherwise),
regardless of amount, due in respect of, or fail to observe or perform any other
term, covenant, condition or agreement contained in any agreement or instrument
evidencing or governing, any such Indebtedness, in excess of $250,000,000 if the
effect of any failure referred to in this clause (ii) has caused such
Indebtedness to become due prior to its stated maturity (it being agreed that
for purposes of this paragraph (d) only, the term "Indebtedness" shall include
obligations under any interest rate protection agreement, foreign currency
exchange agreement or other interest or exchange rate hedging agreement and that
the amount of any Person's obligations under any such agreement shall be the net
amount that such Person could be required to pay as a result of a termination
thereof by reason of a default thereunder);
(e) Viacom or any of its Material Subsidiaries shall admit in
writing its inability, or be generally unable, to pay its debts as such debts
become due;
(f) Viacom or any of its Material Subsidiaries shall (i) apply for
or consent to the appointment of, or the taking of possession by, a receiver,
trustee or liquidator of itself or of all or a substantial part of its Property,
(ii) make a general assignment for the benefit of its creditors, (iii) commence
a voluntary case under the Bankruptcy Code (as now or hereafter in effect), (iv)
file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code, or (vi) take any corporate action
for the purpose of effecting any of the foregoing;
(g) a proceeding or a case shall be commenced, without the
application or consent of Viacom or any of its Material Subsidiaries, in any
court of competent jurisdiction, seeking (i) its liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of its debts, (ii)
the appointment of a trustee, receiver, custodian, liquidator or the like of
Viacom or such Material Subsidiary or of all or any substantial part of its
assets or (iii) similar relief in respect of Viacom or such Material Subsidiary
under any law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in effect, for a period of
60 or more days; or an order for relief against Viacom or such Material
Subsidiary shall be entered in an involuntary case under the Bankruptcy Code;
(h) a final judgment or judgments for the payment of money in excess
of $250,000,000 in the aggregate shall be rendered by one or more courts,
administrative tribunals or other bodies having jurisdiction against Viacom
and/or any of its Material Subsidiaries and the same shall not be paid or
discharged (or provision shall not be made for such discharge), or a stay of
execution thereof shall not be procured, within 60 days from the date of the
date of entry thereof and Viacom or the relevant Material Subsidiary shall not,
within said period of 60 days,
59
or such longer period during which execution of the same shall have been stayed,
appeal therefrom and cause the execution thereof to be stayed during such
appeal;
(i) an event or condition specified in Section 5.1(e) shall occur or
exist with respect to any Plan or Multiemployer Plan and, as a result of such
event or condition, together with all other such events or conditions, Viacom or
any ERISA Affiliate shall incur or shall be reasonably likely to incur a
liability to a Plan, a Multiemployer Plan or PBGC (or any combination of the
foregoing) which would constitute a Material Adverse Effect; or
(j) The guarantee (i) by Viacom contained in Section 8.1 shall
cease, for any reason, to be in full force and effect or Viacom shall so assert
or (ii) by Viacom International contained in Section 8.2 shall cease, for any
reason except pursuant to Section 8.2(g), to be in full force and effect or
Viacom International shall so assert;
then and in every such event (other than an event with respect to Viacom
described in paragraph (f) or (g) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to Viacom, take any or all of the
following actions, at the same or different times: (I) terminate forthwith the
Commitments, (II) declare the Loans then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of each Borrower accrued hereunder, shall
become forthwith due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived by each
Borrower, anything contained herein to the contrary notwithstanding, and (III)
require that Viacom deposit cash with the Administrative Agent, in an amount
equal to the Aggregate LC Exposure, as collateral security for the repayment of
any future LC Disbursements; and in any event with respect to any Borrower
described in paragraph (f) or (g) above, (A) if such Borrower is Viacom, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of each Borrower accrued hereunder, shall
automatically become due and payable and Viacom shall be required to deposit
cash with the Administrative Agent, in an amount equal to the Aggregate LC
Exposure, as collateral security for the repayment of any future drawings under
the Letters of Credit and (B) if such Borrower is a Subsidiary Borrower, the
principal of the Loans made to such Subsidiary Borrower then outstanding,
together with accrued interest thereon and all other liabilities of such
Subsidiary Borrower accrued hereunder, shall automatically become due and
payable and such Subsidiary Borrower shall be required to deposit cash with the
Administrative Agent, in an amount equal to the outstanding Letters of Credit
issued to such Subsidiary Borrower, as collateral security for the repayment of
any future drawings under the Letters of Credit, in each case without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by each Borrower, anything contained herein to the
contrary notwithstanding.
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ARTICLE VII
THE AGENTS
In order to expedite the transactions contemplated by this
Agreement, each Agent is hereby appointed to act as Agent on behalf of the
Lenders. Each of the Lenders and the Issuing Lenders hereby irrevocably
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are specifically delegated to the Administrative Agent
by the terms and provisions hereof, together with such actions and powers as are
reasonably incidental thereto. The Administrative Agent is hereby expressly
authorized by the Lenders and the Issuing Lenders, without hereby limiting any
implied authority, (a) to receive on behalf of the Lenders all payments of
principal of and interest on the Loans and the LC Disbursements and all other
amounts due to the Lenders and Issuing Lenders hereunder, and promptly to
distribute to each Lender and Issuing Lender its proper share of each payment so
received; (b) to give notice on behalf of each of the Lenders to the Borrowers
of any Event of Default specified in this Agreement of which the Administrative
Agent has actual knowledge acquired in connection with its agency hereunder; and
(c) to distribute to each Lender and Issuing Lender copies of all notices,
financial statements and other materials delivered by any Borrower pursuant to
this Agreement as received by the Administrative Agent.
Neither any Agent nor any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted by any of them
except for its or his own gross negligence or willful misconduct, or be
responsible for any statement, warranty or representation herein or the contents
of any document delivered in connection herewith, or be required to ascertain or
to make any inquiry concerning the performance or observance by any Borrower of
any of the terms, conditions, covenants or agreements contained in this
Agreement. The Agents shall not be responsible to the Lenders for the due
execution, genuineness, validity, enforceability or effectiveness of this
Agreement or other instruments or agreements. The Administrative Agent shall in
all cases be fully protected in acting, or refraining from acting, in accordance
with written instructions signed by the Required Lenders (or, when expressly
required hereby, all the Lenders) and, except as otherwise specifically provided
herein, such instructions and any action or inaction pursuant thereto shall be
binding on all the Lenders and the Issuing Lenders. The Administrative Agent
shall, in the absence of knowledge to the contrary, be entitled to rely on any
instrument or document believed by it in good faith to be genuine and correct
and to have been signed or sent by the proper Person or Persons. Neither the
Agents nor any of their directors, officers, employees or agents shall have any
responsibility to any Borrower on account of the failure of or delay in
performance or breach by any Lender or Issuing Lender of any of its obligations
hereunder or to any Lender or Issuing Lender on account of the failure of or
delay in performance or breach by any other Agent, any other Lender or Issuing
Lender or any Borrower of any of their respective obligations hereunder or in
connection herewith. The Administrative Agent may execute any and all duties
hereunder by or through agents or employees and shall be entitled to rely upon
the advice of legal counsel selected by it with respect to all matters arising
hereunder and shall not be liable for any action taken or suffered in good faith
by it in accordance with the advice of such counsel.
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The Lenders and the Issuing Lenders hereby acknowledge that the
Administrative Agent shall be under no duty to take any discretionary action
permitted to be taken by it pursuant to the provisions of this Agreement unless
it shall be requested in writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided below, the Administrative Agent may resign at
any time by notifying the Lenders, the Issuing Lenders and the Borrowers. Upon
any such resignation, the Required Lenders shall have the right to appoint from
the Lenders a successor. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint from the
Lenders a successor Administrative Agent which shall be a bank with an office in
New York, New York, having a combined capital and surplus of at least
$500,000,000 or an affiliate of any such bank, which successor shall be
acceptable to Viacom (such acceptance not to be unreasonably withheld). Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
bank, such successor shall succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Administrative Agent and the
retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After the Administrative Agent's resignation hereunder,
the provisions of this Article and Section 9.5 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Administrative Agent.
With respect to the Loans made by them and their LC Exposure
hereunder, the Agents in their individual capacity and not as Agents shall have
the same rights and powers as any other Lender and may exercise the same as
though they were not Agents, and the Agents and their affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrowers or any of their respective Subsidiaries or any Affiliate thereof
as if they were not Agents.
Each Lender and Issuing Lender agrees (i) to reimburse the
Administrative Agent in the amount of its pro rata share (based on its Total
Facility Percentage or, after the date on which the Loans shall have been paid
in full, based on its Total Facility Percentage immediately prior to such date)
of any reasonable, out-of-pocket expenses incurred for the benefit of the
Lenders or the Issuing Lenders by the Administrative Agent, including reasonable
counsel fees and compensation of agents and employees paid for services rendered
on behalf of the Lenders or the Issuing Lenders, which shall not have been
reimbursed by or on behalf of any Borrower and (ii) to indemnify and hold
harmless the Administrative Agent and any of its directors, officers, employees
or agents, in the amount of such pro rata share, from and against any and all
liabilities, taxes, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against it in its capacity as
Administrative Agent in any way relating to or arising out of this Agreement or
any action taken or omitted by it under this Agreement, to the extent the same
shall not have been reimbursed by or on behalf of Viacom; provided, that no
Lender or Issuing Lender shall be liable to the Administrative Agent or any such
director, officer, employee or agent for any portion of such liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of the Administrative Agent or any of its directors, officers,
employees or agents.
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Each Lender and Issuing Lender acknowledges that it has,
independently and without reliance upon the Agents or any other Lender or
Issuing Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender and Issuing Lender also acknowledges that it will,
independently and without reliance upon any Agent or any other Lender or Issuing
Lender and based on such documents and information as it shall from time to time
deem appropriate, continue to make its own decisions in taking or not taking
action under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder.
Neither the Documentation Agent, the Co-Syndication Agents, the Lead
Arranger nor any managing agent shall have any duties or responsibilities
hereunder in its capacity as such.
ARTICLE VIII
GUARANTEES
SECTION 8.1. Viacom Guarantee.
(a) Guarantee. In order to induce the Administrative Agent and the
Lenders to become bound by this Agreement and to make the Loans hereunder to the
Subsidiary Borrowers, and in consideration thereof, Viacom hereby
unconditionally and irrevocably guarantees, as primary obligor and not merely as
surety, to the Administrative Agent, for the ratable benefit of the Lenders, the
prompt and complete payment and performance by each Subsidiary Borrower when due
(whether at stated maturity, by acceleration or otherwise) of the Subsidiary
Borrower Obligations, and Viacom further agrees to pay any and all expenses
(including, without limitation, all reasonable fees, charges and disbursements
of counsel) which may be paid or incurred by the Administrative Agent or by the
Lenders in enforcing, or obtaining advice of counsel in respect of, any of their
rights under the guarantee contained in this Section 8.1(a). The guarantee
contained in this Section 8.1(a), subject to Section 8.1(e), shall remain in
full force and effect until the Subsidiary Borrower Obligations are paid in full
and the Commitments are terminated, notwithstanding that from time to time prior
thereto any Subsidiary Borrower may be free from any Subsidiary Borrower
Obligations. Viacom agrees that whenever, at any time, or from time to time, it
shall make any payment to the Administrative Agent or any Lender on account of
its liability under this Section 8.1, it will notify the Administrative Agent
and such Lender in writing that such payment is made under the guarantee
contained in this Section 8.1 for such purpose. No payment or payments made by
any Subsidiary Borrower or any other Person or received or collected by the
Administrative Agent or any Lender from any Subsidiary Borrower or any other
Person by virtue of any action or proceeding or any setoff or appropriation or
application, at any time or from time to time, in reduction of or in payment of
the Subsidiary Borrower Obligations shall be deemed to modify, reduce, release
or otherwise affect the liability of Viacom under this Section 8.1 which,
notwithstanding any such payment or payments, shall remain liable for the unpaid
and outstanding Subsidiary Borrower Obligations until, subject to Section
8.1(e), the Subsidiary Borrower Obligations are paid in full and the Commitments
are terminated. Notwithstanding any other provision herein, the maximum
liability of Viacom under
63
this Section 8.1 shall in no event exceed the amount which can be guaranteed by
Viacom under applicable law.
(b) No Subrogation, etc. Notwithstanding any payment or payments
made by Viacom hereunder, or any set-off or application of funds of Viacom by
the Administrative Agent or any Lender, Viacom shall not be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against any Subsidiary Borrower or against any collateral security or guarantee
or right of offset held by the Administrative Agent or any Lender for the
payment of the Subsidiary Borrower Obligations, nor shall Viacom seek or be
entitled to seek any contribution, reimbursement, exoneration or indemnity from
or against any Subsidiary Borrower in respect of payments made by Viacom
hereunder, until all amounts owing to the Administrative Agent and the Lenders
by the Subsidiary Borrowers on account of the Subsidiary Borrower Obligations
are paid in full and the Commitments are terminated. So long as the Subsidiary
Borrower Obligations remain outstanding, if any amount shall be paid by or on
behalf of any Subsidiary Borrower or any other Person to Viacom on account of
any of the rights waived in this Section 8.1, such amount shall be held by
Viacom in trust, segregated from other funds of Viacom, and shall, forthwith
upon receipt by Viacom, be turned over to the Administrative Agent in the exact
form received by Viacom (duly indorsed by Viacom to the Administrative Agent, if
required), to be applied against the Subsidiary Borrower Obligations, whether
matured or unmatured, in such order as the Administrative Agent may determine.
(c) Amendments, etc. with respect to the Subsidiary Borrower
Obligations. Viacom shall remain obligated under this Section 8.1
notwithstanding that, without any reservation of rights against Viacom, and
without notice to or further assent by Viacom, any demand for payment of or
reduction in the principal amount of any of the Subsidiary Borrower Obligations
made by the Administrative Agent or any Lender may be rescinded by the
Administrative Agent or such Lender, and any of the Subsidiary Borrower
Obligations continued, and the Subsidiary Borrower Obligations, or the liability
of any other party upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Administrative Agent or any
Lender, and this Agreement and any other documents executed and delivered in
connection herewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Required Lenders (or all Lenders, as the case may be)
may deem advisable from time to time, and any collateral security, guarantee or
right of offset at any time held by the Administrative Agent or any Lender for
the payment of the Subsidiary Borrower Obligations may be sold, exchanged,
waived, surrendered or released. Neither the Administrative Agent nor any Lender
shall have any obligation to protect, secure, perfect or insure any lien at any
time held by it as security for the Subsidiary Borrower Obligations or for the
guarantee contained in this Section 8.1 or any property subject thereto.
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(d) Guarantee Absolute and Unconditional. Viacom waives any and all
notice of the creation, renewal, extension or accrual of any of the Subsidiary
Borrower Obligations and notice of or proof of reliance by the Administrative
Agent or any Lender upon the guarantee contained in this Section 8.1 or
acceptance of the guarantee contained in this Section 8.1; the Subsidiary
Borrower Obligations shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon the guarantee contained in this Section 8.1; and all dealings between
Viacom or the Subsidiary Borrowers, on the one hand, and the Administrative
Agent and the Lenders, on the other, shall likewise be conclusively presumed to
have been had or consummated in reliance upon the guarantee contained in this
Section 8.1. Viacom waives diligence, presentment, protest, demand for payment
and notice of default or nonpayment to or upon Viacom or any Subsidiary Borrower
with respect to the Subsidiary Borrower Obligations. The guarantee contained in
this Section 8.1 shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity or enforceability of
this Agreement, any of the Subsidiary Borrower Obligations or any collateral
security therefor or guarantee or right of offset with respect thereto at any
time or from time to time held by the Administrative Agent or any Lender, (b)
the legality under applicable requirements of law of repayment by the relevant
Subsidiary Borrower of any Subsidiary Borrower Obligations or the adoption of
any requirement of law purporting to render any Subsidiary Borrower Obligations
null and void, (c) any defense, setoff or counterclaim (other than a defense of
payment or performance by the applicable Subsidiary Borrower) which may at any
time be available to or be asserted by Viacom against the Administrative Agent
or any Lender, or (d) any other circumstance whatsoever (with or without notice
to or knowledge of Viacom or any Subsidiary Borrower) which constitutes, or
might be construed to constitute, an equitable or legal discharge of any
Subsidiary Borrower for any of its Subsidiary Borrower Obligations, or of Viacom
under the guarantee contained in this Section 8.1, in bankruptcy or in any other
instance. When the Administrative Agent or any Lender is pursuing its rights and
remedies under this Section 8.1 against Viacom, the Administrative Agent or any
Lender may, but shall be under no obligation to, pursue such rights and remedies
as it may have against any Subsidiary Borrower or any other Person or against
any collateral security or guarantee for the Subsidiary Borrower Obligations or
any right of offset with respect thereto, and any failure by the Administrative
Agent or any Lender to pursue such other rights or remedies or to collect any
payments from any Subsidiary Borrower or any such other Person or to realize
upon any such collateral security or guarantee or to exercise any such right of
offset, or any release of any Subsidiary Borrower or any such other Person or of
any such collateral security, guarantee or right of offset, shall not relieve
Viacom of any liability under this Section 8.1, and shall not impair or affect
the rights and remedies, whether express, implied or available as a matter of
law, of the Administrative Agent and the Lenders against Viacom.
(e) Reinstatement. The guarantee contained in this Section 8.1 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Subsidiary Borrower Obligations is
rescinded or must otherwise be restored or returned by the Administrative Agent
or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of any Subsidiary Borrower or upon or as a result of the
appointment of a
65
receiver, intervenor or conservator of, or trustee or similar officer for, any
Subsidiary Borrower or any substantial part of its property, or otherwise, all
as though such payments had not been made.
(f) Payments. Viacom hereby agrees that any payments in respect of
the Subsidiary Borrower Obligations pursuant to this Section 8.1 will be paid to
the Administrative Agent without setoff or counterclaim in Dollars at the office
of the Administrative Agent specified in Section 9.1. Notwithstanding the
foregoing, any payments in respect of the Subsidiary Borrower Obligations
pursuant to this Section 8.1 with respect to any Loan denominated in any Foreign
Currency (including principal of or interest on any such Loan or other amounts)
hereunder shall be made without setoff or counterclaim to the Administrative
Agent at its offices at Chase Manhattan International Ltd., 9 Thomas Moore
Street, London E1-9YT United Kingdom, in immediately available funds.
SECTION 8.2. Viacom International Guarantee.
(a) Guarantee. In order to induce the Administrative Agent and the
Lenders to become bound by this Agreement and to make the Loans hereunder to
Viacom, and in consideration thereof, Viacom International hereby
unconditionally and irrevocably guarantees, as primary obligor and not merely as
surety, to the Administrative Agent, for the ratable benefit of the Lenders, the
prompt and complete payment and performance by Viacom when due (whether at
stated maturity, by acceleration or otherwise) of the Viacom Obligations, and
Viacom International further agrees to pay any and all expenses (including,
without limitation, all reasonable fees, charges and disbursements of counsel)
which may be paid or incurred by the Administrative Agent or by the Lenders in
enforcing, or obtaining advice of counsel in respect of, any of their rights
under the guarantee contained in this Section 8.2(a). The guarantee contained in
this Section 8.2(a), subject to Section 8.2(e), shall remain in full force and
effect until the Viacom Obligations are paid in full and the Commitments are
terminated, notwithstanding that from time to time prior thereto Viacom may be
free from any Viacom Obligations. Viacom International agrees that whenever, at
any time, or from time to time, it shall make any payment to the Administrative
Agent or any Lender on account of its liability under this Section 8.2, it will
notify the Administrative Agent and such Lender in writing that such payment is
made under the guarantee contained in this Section 8.2 for such purpose. No
payment or payments made by Viacom or any other Person or received or collected
by the Administrative Agent or any Lender from Viacom or any other Person by
virtue of any action or proceeding or any setoff or appropriation or
application, at any time or from time to time, in reduction of or in payment of
the Viacom Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of Viacom International under this Section 8.2 which,
notwithstanding any such payment or payments, shall remain liable for the unpaid
and outstanding Viacom Obligations until, subject to Section 8.2(e), the Viacom
Obligations are paid in full and the Commitments are terminated. Notwithstanding
any other provision herein, the maximum liability of Viacom International under
this Section 8.2 shall in no event exceed the amount which can be guaranteed by
Viacom International under applicable law.
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(b) No Subrogation, etc. Notwithstanding any payment or payments
made by Viacom International hereunder, or any set-off or application of funds
of Viacom International by the Administrative Agent or any Lender, Viacom
International shall not be entitled to be subrogated to any of the rights of the
Administrative Agent or any Lender against Viacom or against any collateral
security or guarantee or right of offset held by the Administrative Agent or any
Lender for the payment of the Viacom Obligations, nor shall Viacom International
seek or be entitled to seek any contribution, reimbursement, exoneration or
indemnity from or against Viacom in respect of payments made by Viacom
International hereunder, until all amounts owing to the Administrative Agent and
the Lenders by Viacom on account of the Viacom Obligations are paid in full and
the Commitments are terminated. So long as the Viacom Obligations remain
outstanding, if any amount shall be paid by or on behalf of Viacom or any other
Person to Viacom International on account of any of the rights waived in this
Section 8.2, such amount shall be held by Viacom International in trust,
segregated from other funds of Viacom International, and shall, forthwith upon
receipt by Viacom International, be turned over to the Administrative Agent in
the exact form received by Viacom International (duly indorsed by Viacom
International to the Administrative Agent, if required), to be applied against
the Viacom Obligations, whether matured or unmatured, in such order as the
Administrative Agent may determine.
(c) Amendments, etc. with respect to the Viacom Obligations. Viacom
International shall remain obligated under this Section 8.2 notwithstanding
that, without any reservation of rights against Viacom International, and
without notice to or further assent by Viacom International, any demand for
payment of or reduction in the principal amount of any of the Viacom Obligations
made by the Administrative Agent or any Lender may be rescinded by the
Administrative Agent or such Lender, and any of the Viacom Obligations
continued, and the Viacom Obligations, or the liability of any other party upon
or for any part thereof, or any collateral security or guarantee therefor or
right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and this
Agreement and any other documents executed and delivered in connection herewith
may be amended, modified, supplemented or terminated, in whole or in part, as
the Required Lenders (or all Lenders, as the case may be) may deem advisable
from time to time, and any collateral security, guarantee or right of offset at
any time held by the Administrative Agent or any Lender for the payment of the
Viacom Obligations may be sold, exchanged, waived, surrendered or released.
Neither the Administrative Agent nor any Lender shall have any obligation to
protect, secure, perfect or insure any lien at any time held by it as security
for the Viacom Obligations or for the guarantee contained in this Section 8.2 or
any property subject thereto.
(d) Guarantee Absolute and Unconditional. Viacom International
waives any and all notice of the creation, renewal, extension or accrual of any
of the Viacom Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon the guarantee contained in this Section
8.2 or
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acceptance of the guarantee contained in this Section 8.2; the Viacom
Obligations shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee contained in this Section 8.2; and all dealings between Viacom
International or Viacom, on the one hand, and the Administrative Agent and the
Lenders, on the other, shall likewise be conclusively presumed to have been had
or consummated in reliance upon the guarantee contained in this Section 8.2.
Viacom International waives diligence, presentment, protest, demand for payment
and notice of default or nonpayment to or upon Viacom International or Viacom
with respect to the Viacom Obligations. The guarantee contained in this Section
8.2 shall be construed as a continuing, absolute and unconditional guarantee of
payment without regard to (a) the validity or enforceability of this Agreement,
any of the Viacom Obligations or any collateral security therefor or guarantee
or right of offset with respect thereto at any time or from time to time held by
the Administrative Agent or any Lender, (b) the legality under applicable
requirements of law of repayment by Viacom of any Viacom Obligations or the
adoption of any requirement of law purporting to render any Viacom Obligations
null and void, (c) any defense, setoff or counterclaim (other than a defense of
payment or performance by Viacom) which may at any time be available to or be
asserted by Viacom International against the Administrative Agent or any Lender,
or (d) any other circumstance whatsoever (with or without notice to or knowledge
of Viacom International or Viacom) which constitutes, or might be construed to
constitute, an equitable or legal discharge of Viacom for any of its Viacom
Obligations, or of Viacom International under the guarantee contained in this
Section 8.2, in bankruptcy or in any other instance. When the Administrative
Agent or any Lender is pursuing its rights and remedies under this Section 8.2
against Viacom International, the Administrative Agent or any Lender may, but
shall be under no obligation to, pursue such rights and remedies as it may have
against Viacom or any other Person or against any collateral security or
guarantee for the Viacom Obligations or any right of offset with respect
thereto, and any failure by the Administrative Agent or any Lender to pursue
such other rights or remedies or to collect any payments from Viacom or any such
other Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of Viacom or any such other
Person or of any such collateral security, guarantee or right of offset, shall
not relieve Viacom International of any liability under this Section 8.2, and
shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the Administrative Agent and the Lenders
against Viacom International.
(e) Reinstatement. The guarantee contained in this Section 8.2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Viacom Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
Viacom or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, Viacom or any substantial
part of its property, or otherwise, all as though such payments had not been
made.
(f) Payments. Viacom International hereby agrees that any payments
in respect of the Viacom Obligations pursuant to this Section 8.2 will be paid
to the Administrative Agent without setoff
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or counterclaim in Dollars at the office of the Administrative Agent specified
in Section 9.1. Notwithstanding the foregoing, any payments in respect of the
Viacom Obligations pursuant to this Section 8.2 with respect to any Loan
denominated in any Foreign Currency (including principal of or interest on any
such Loan or other amounts) hereunder shall be made without setoff or
counterclaim to the Administrative Agent at its offices at Chase Manhattan
International Ltd., 9 Thomas Moore Street, London E1-9YT United Kingdom, in
immediately available funds.
(g) Release of Guarantee. Notwithstanding the foregoing, the
guarantee contained in this Section 8.2 shall be released on the earlier of the
date on which (i) all notes, debentures and bonds now or hereafter issued by
Viacom which carry a Viacom International guarantee (the "Bonds") are paid in
full and (ii) the guarantee of Viacom International with respect to the Bonds is
released. On such date, this Section 8.2, including without limitation Section
8.2(e), shall be deemed to have no legal effect whatsoever.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Notices.
Notices and other communications provided for herein shall be in
writing (or, where permitted to be made by telephone, shall be confirmed
promptly in writing) and shall be delivered by hand or overnight courier
service, mailed or sent by telecopier as follows:
(a) if to Viacom, to it at Viacom Inc., 1515 Broadway, New York, New
York 10036, Attention of Vice President and Treasurer (Telecopy No. (212)
860-2341), with a copy to General Counsel (Telecopy No. (212) 975-9856);
(b) if to Viacom International, to it c/o Viacom Inc., 1515
Broadway, New York, New York 10036, Attention of Vice President and Treasurer
(Telecopy No. (212) 860-2341), with a copy to General Counsel (Telecopy No.
(212) 975-9856);
(c) if to the Administrative Agent, to it at The Chase Manhattan
Bank, 270 Park Avenue, New York, New York 10017, Attention: William Rottino
(Telecopy No. 212-270-1204), with a copy to The Chase Manhattan Bank, One Chase
Manhattan Plaza, New York, New York, 10080, Attention: Camille Wilson (Telecopy
No. 212-552-5700);
(d) if to any Issuing Lender, to it at the address for notices
specified in the applicable Issuing Lender Agreement;
(e) if to a Lender, to it at its address (or telecopy number) set
forth in Schedule 1.1 or in the Assignment and Acceptance pursuant to which such
Lender shall have become a party hereto; and
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(f) if to a Subsidiary Borrower, to it at its address set forth in
the relevant Subsidiary Borrower Request.
Notwithstanding the foregoing, each of Viacom, any other Borrower, the
Administrative Agent and the Issuing Lender may, in its discretion, provide any
notice, report or other information to be provided under this Agreement to a
Lender by (i) electronic mail to the electronic mail address provided by such
Lender in its Administrative Questionnaire and/or (ii) through access to a web
site. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on (A) the date of receipt if delivered by hand or overnight courier
service or sent by telecopy or electronic mail, (B) the date of posting if given
by web site access, (C) the date of such telephone call, if permitted by the
terms hereof and if promptly confirmed in writing, or (D) on the date five
Business Days after dispatch by registered mail if mailed, in each case
delivered, sent or mailed (properly addressed) to such party as provided in this
Section 9.1 or in accordance with the latest unrevoked direction from such party
given in accordance with this Section 9.1.
SECTION 9.2. Survival of Agreement.
All representations and warranties made hereunder and in any
certificate delivered pursuant hereto or in connection herewith shall be
considered to have been relied upon by the Agents and the Lenders and shall
survive the execution and delivery of this Agreement and the making of the Loans
and other extensions of credit hereunder, regardless of any investigation made
by the Agents or the Lenders or on their behalf.
SECTION 9.3. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of
each Borrower, each Agent and each Lender and their respective successors and
assigns, except that Viacom shall not have the right to assign its rights or
obligations hereunder or any interest herein without the prior consent of all
the Lenders.
SECTION 9.4. Successors and Assigns.
(a) Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and assigns of such
party, and all covenants, promises and agreements by or on behalf of each
Borrower, any Agent or any Lender that are contained in this Agreement shall
bind and inure to the benefit of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations under this Agreement (including all or
a portion of its Commitment or Swingline Commitment and the Loans at the time
owing to it); provided, however, that (i) except in the case of an assignment to
a Lender or a Lender Affiliate (other than if at the time of such assignment,
such Lender or Lender Affiliate would be entitled to require any Borrower to pay
greater amounts under Section 2.20(a) than if no such assignment had occurred,
in which case such assignment shall be subject to the consent requirement of
this clause (i)), Viacom and the Administrative Agent must give their prior
written consent to such assignment (which consent shall not be unreasonably
withheld or delayed), (ii) (x) except in the
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case of assignments to any Person that is a Lender prior to giving effect to
such assignment, the amount of the aggregate Commitments and/or Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $10,000,000 and (y) the amount of
the aggregate Commitments and/or Loans retained by any assigning Lender
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$10,000,000, unless (in the case of clause (x) or (y) above) the assigning
Lender's Commitment and Loans (other than any Competitive Loans) are being
reduced to $0 pursuant to such assignment, (iii) the assignor and assignee shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $3,500 and (iv) the assignee,
if it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire. Upon acceptance and recording pursuant to Section
9.4(e), from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days after the
execution thereof (or any lesser period to which the Administrative Agent and
Viacom may agree), (A) the assignee thereunder shall be a party hereto and, to
the extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement and (B) the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto (but shall continue to be entitled
to the benefits of Sections 2.15, 2.16, 2.20 and 9.5, as well as to any Fees
accrued for its account hereunder and not yet paid)). Notwithstanding the
foregoing, any Lender or Issuing Lender assigning its rights and obligations
under this Agreement may maintain any Competitive Loans or Letters of Credit
made or issued by it outstanding at such time, and in such case shall retain its
rights hereunder in respect of any Loans or Letters of Credit so maintained
until such Loans or Letters of Credit have been repaid or terminated in
accordance with this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim created
by such assigning Lender, (ii) except as set forth in clause (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or any other instrument or document
furnished pursuant hereto, or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other instrument or
document furnished pursuant hereto or the financial condition of Viacom or any
of its Subsidiaries or the performance or observance by Viacom or any of its
Subsidiaries of any of its obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Sections 3.2 and 5.1 and such other documents and
information as it has deemed appropriate to make it own credit analysis and
decision to enter into such Assignment and Acceptance; (v) such assignee will
independently and without reliance upon the Administrative Agent, such assigning
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Lender or any other Agent or Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (vi) such
assignee appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Administrative Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as agent of
each Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive in the absence of manifest error and each Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by any Borrower and any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of Viacom and the Administrative
Agent to such assignment, the Administrative Agent shall (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to Viacom.
(f) Each Lender may without the consent of any Borrower or the
Agents sell participations to one or more banks, other financial institutions or
other entities (provided, that any such other entity is a not a competitor of
Viacom or any Affiliate of Viacom) all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitments
and the Loans owing to it); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (ii) the participating banks or other entities shall be
entitled to the benefit of the cost protection provisions contained in Sections
2.15, 2.16 and 2.20 to the same extent as if they were Lenders (provided, that
additional amounts payable to any Lender pursuant to Section 2.20 shall be
determined as if such Lender had not sold any such participations) and (iv) the
Borrowers, the Agents and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of each Borrower relating to the Loans and the Letters
of Credit and to approve any amendment, modification or waiver of any provision
of this Agreement (other than amendments, modifications or waivers decreasing
any fees payable hereunder or the amount of principal of or the rate at which
interest is payable on the Loans or LC Disbursements, extending any scheduled
principal payment date or date fixed for the payment of interest on the Loans or
LC Disbursements or of LC Fees or Facility Fees, increasing the amount of or
extending the
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Commitments or releasing the guarantee contained in Section 8.1 or 8.2 (except
in accordance with Section 8.2(g)), in each case to the extent the relevant
participant is directly affected thereby).
(g) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 9.4, disclose to the assignee or participant or proposed assignee or
participant any information relating to any Borrower furnished to such Lender by
or on behalf of such Borrower; provided, that, prior to any such disclosure of
information designated by such Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute a Confidentiality
Agreement whereby such assignee or participant shall agree (subject to the
exceptions set forth therein) to preserve the confidentiality of such
confidential information. A copy of each such Confidentiality Agreement executed
by an assignee shall be promptly furnished to Viacom. It is understood that
confidential information relating to the Borrowers would not ordinarily be
provided in connection with assignments or participations of Competitive Loans.
(h) Notwithstanding the limitations set forth in paragraph (b)
above, (i) any Lender may at any time assign or pledge all or any portion of its
rights under this Agreement to a Federal Reserve Bank and (ii) any Lender which
is a "fund" may at any time assign or pledge all or any portion of its rights
under this Agreement to secure such Lender's indebtedness, in each case without
the prior written consent of any Borrower or the Administrative Agent; provided,
that each such assignment shall be made in accordance with applicable law and no
such assignment shall release a Lender from any of its obligations hereunder. In
order to facilitate any such assignment, each Borrower shall, at the request of
the assigning Lender, duly execute and deliver to the assigning Lender a
registered promissory note or notes evidencing the Loans made to such Borrower
by the assigning Lender hereunder.
(i) Notwithstanding anything to the contrary contained herein, any
Bank (a "Granting Bank") may grant to a special purpose funding vehicle (a
"SPC"), identified as such in writing from time to time by the Granting Bank to
the Administrative Agent and the relevant Borrower, the option to provide to
such Borrower all or any part of any Loan that such Granting Bank would
otherwise be obligated to make to such Borrower pursuant to this Agreement;
provided, that (i) nothing herein shall constitute a commitment by any SPC to
make any Loan, and (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting Bank shall
be obligated to make such Loan pursuant to the terms hereof. The making of a
Loan by an SPC hereunder shall utilize the Commitment of the Granting Bank to
the same extent, and as if, such Loan were made by such Granting Bank. Each
party hereto hereby agrees that no SPC shall be liable for any indemnity or
similar payment obligation under this Agreement (all liability for which shall
remain with the Granting Bank). In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior indebtedness
of any SPC, it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State thereof. In addition, notwithstanding anything to the contrary contained
in this Section, any SPC may (i) with notice to, but without the prior written
consent of, the relevant Borrower and the Administrative Agent and without
paying any processing fee therefor, assign all or a
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portion of its interests in any Loans to the Granting Bank or to any financial
institutions (consented to by such Borrower and the Administrative Agent )
providing liquidity and/or credit support to or for the account of such SPC to
support the funding or maintenance of Loans and (ii) disclose on a confidential
basis any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC. This section may not be amended without the
written consent of any SPC which has been identified as such by the Granting
Bank to the Administrative Agent and the relevant Borrower and which then holds
any Loan pursuant to this paragraph (i).
(j) Neither Viacom nor any Subsidiary Borrower shall assign or
delegate any of its rights or duties hereunder without the prior consent of all
the Lenders; provided, Viacom may assign or delegate any of its rights or duties
hereunder (excepting its rights and duties pursuant to Section 8.1) to any
Subsidiary Borrower and any Subsidiary Borrower may assign or delegate any of
its rights or duties hereunder to Viacom or (excepting Viacom International's
rights and duties pursuant to 8.2) to any other Subsidiary Borrower, in each
case without the prior consent of the Lenders unless such assignment would
adversely affect the Lenders; provided, further, Viacom may and any Subsidiary
Borrower may assign or delegate any of its rights and duties hereunder pursuant
to a merger or consolidation permitted by Section 5.4(b) or (d) without the
prior consent of the Lenders.
SECTION 9.5. Expenses; Indemnity.
(a) Viacom agrees to pay all reasonable legal and other out-of-
pocket expenses incurred by JP Morgan, a division of Chase Securities Inc., in
its capacity as a Lead Arranger, and by the Administrative Agent and their
respective affiliates in connection with the preparation, negotiation, execution
and delivery of this Agreement or in connection with any amendments,
modifications or waivers of the provisions hereof (whether or not the
transactions hereby contemplated shall be consummated) or incurred by any Agent,
any Lender or any Issuing Lender in connection with the enforcement or
protection of the rights of the Agents, the Lenders or the Issuing Lenders under
this Agreement or in connection with the Loans made or the Letters of Credit
issued hereunder, including, without limitation, the reasonable fees, charges
and disbursements of Simpson Thacher & Bartlett (as set forth the in the Letter
Agreement, dated as of February 2, 2001, between Simpson Thacher & Bartlett and
Viacom), counsel for JP Morgan, a division of Chase Securities Inc., in its
capacity as a Lead Arranger, and the Administrative Agent, and, in connection
with any such enforcement or protection, the reasonable fees, charges and
disbursements of any other counsel for any Agent, Lender or Issuing Lender.
(b) Viacom agrees to indemnify and hold harmless each Agent, each
Lender, each Issuing Lender and each of their respective directors, officers,
employees, affiliates and agents (each, an "Indemnified Person") against, and to
reimburse each Indemnified Person, upon its demand, for, any losses, claims,
damages, liabilities or other expenses ("Losses"), to which such Indemnified
Person becomes subject insofar as such Losses arise out of or in any way relate
to or result from (i) the execution or delivery of this Agreement, any Letter of
Credit or any agreement or instrument contemplated hereby (and any amendment
hereto or thereto), the performance by the parties hereto or thereto of their
respective obligations hereunder or thereunder or the consummation of the
transactions contemplated hereby or thereby or (ii) the
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use (or proposed use) of the proceeds of the Loans or other extensions of credit
hereunder, including, without limitation, Losses consisting of reasonable legal,
settlement or other expenses incurred in connection with investigating,
defending or participating in any legal proceeding relating to any of the
foregoing (whether or not such Indemnified Person is a party thereto); provided,
that the foregoing will not apply to any Losses to the extent they are found by
a final decision of a court of competent jurisdiction to have resulted from the
gross negligence or willful misconduct of such Indemnified Person. No
Indemnified Person shall be liable for any damages arising from the use by
others of Information or other materials obtained through electronic,
telecommunications or other information transmission systems (provided, that the
foregoing will not apply to any Losses to the extent they are found by a final
decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of such Indemnified Person).
(c) The provisions of this Section 9.5 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any investigation made by or on behalf of any
Agent or Lender. All amounts under this Section 9.5 shall be payable on written
demand therefor.
SECTION 9.6. Right of Setoff.
If an Event of Default shall have occurred and be continuing, each
Agent and each Lender is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Agent or Lender to or for the
credit or the account of any Borrower against any of and all the obligations of
such Borrower now or hereafter existing under this Agreement or the
Administrative Agent Fee Letter held by such Agent or Lender which shall be due
and payable. The rights of each Agent and each Lender under this Section 9.6 are
in addition to other rights and remedies (including other rights of setoff)
which such Agent or Lender may have.
SECTION 9.7. APPLICABLE LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.8. Waivers; Amendment.
(a) No failure or delay of any Agent, any Issuing Lender or any
Lender in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Agents, the Issuing Lenders and
the Lenders hereunder are cumulative and are not exclusive of any rights or
remedies which they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by any Borrower from any such provision
shall in any event be effective unless the
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same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on any Borrower in any case shall entitle any
Borrower to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement in writing entered into by
the Borrowers and the Required Lenders; provided, however, that no such
agreement shall (i) reduce the amount or extend the scheduled date of maturity
of any Loan or of any installment thereof, or reduce the stated amount of any LC
Disbursement, interest or fee payable hereunder or extend the scheduled date of
any payment thereof or increase the amount or extend the expiration date of any
Commitment of any Lender, in each case without the prior written consent of each
Lender directly affected thereby; (ii) amend, modify or waive any provision of
this Section 9.8(b), or reduce the percentage specified in the definition of
"Required Lenders", release the guarantee contained in Section 8.1 or 8.2
(except in accordance with Section 8.2(g)) or consent to the assignment or
delegation by Viacom or any Subsidiary Borrower of any of its rights and
obligations under this Agreement (except (A) by Viacom (excepting its rights and
duties pursuant to Section 8.1) to any Subsidiary Borrower or (B) by any
Subsidiary Borrower to Viacom or (excepting Viacom International's rights and
duties pursuant to Section 8.2) to any other Subsidiary Borrower and as set
forth in Section 9.4(j)), in each case without the prior written consent of all
the Lenders; or (iii) amend, modify or waive any provision of Article VII
without the prior written consent of each Agent affected thereby; provided,
further that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent, the Swingline Lenders or the
Issuing Lenders hereunder in such capacity without the prior written consent of
the Administrative Agent, each Swingline Lender directly affected thereby or
each Issuing Lender directly affected thereby, as the case may be.
SECTION 9.9. Entire Agreement.
This Agreement (together with the Issuing Lender Agreements, the
Subsidiary Borrower Designations and the Subsidiary Borrower Requests)
constitutes the entire contract between the parties relative to the subject
matter hereof. Any previous agreement among the parties with respect to the
subject matter hereof is superseded by this Agreement. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party other than
the parties hereto any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
SECTION 9.10. Waiver of Jury Trial.
Each party hereto hereby waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect of any
litigation directly or indirectly arising out of, under or in connection with
this Agreement. Each party hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
waiver and (b) acknowledges that it and the other parties hereto have been
induced to enter into this Agreement by, among other things, the mutual waivers
and certifications in this Section 9.10.
76
SECTION 9.11. Severability.
In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 9.12. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which constitute an original but all of which when taken together shall
constitute but one contract, and shall become effective as provided in Section
9.3.
SECTION 9.13. Headings.
Article and Section headings and the Table of Contents used herein
are for convenience of reference only, are not part of this Agreement and are
not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION 9.14. Jurisdiction; Consent to Service of Process.
(a) Each Borrower hereby irrevocably and unconditionally submits,
for itself and its Property, to the nonexclusive jurisdiction of any New York
State court or Federal court of the United States of America sitting in New York
City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State court or, to the
extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Each Subsidiary Borrower designates and
directs Viacom at its offices at 1515 Broadway, New York, New York 10036, as its
agent to receive service of any and all process and documents on its behalf in
any legal action or proceeding referred to in this Section 9.14 in the State of
New York and agrees that service upon such agent shall constitute valid and
effective service upon such Subsidiary Borrower and that failure of Viacom to
give any notice of such service to any Subsidiary Borrower shall not affect or
impair in any way the validity of such service or of any judgment rendered in
any action or proceeding based thereon. Nothing in this Agreement shall affect
any right that any Agent or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement against any Borrower or its Properties in
the courts of any jurisdiction.
(b) Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State or
Federal court. Each of the parties hereto hereby irrevocably waives, to
77
the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.1. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.15. Confidentiality.
(a) Each Lender agrees to keep confidential and not to disclose (and
to cause its affiliates, officers, directors, employees, agents and
representatives to keep confidential and not to disclose) and, at the request of
Viacom (except as provided below or if such Lender is required to retain any
Confidential Information (as defined below) pursuant to customary internal or
banking practices, bank regulations or applicable law), promptly to return to
Viacom or destroy the Confidential Information and all copies thereof, extracts
therefrom and analyses or other materials based thereon, except that such Lender
shall be permitted to disclose Confidential Information (i) to such of its
officers, directors, employees, agents, affiliates and representatives as need
to know such Confidential Information in connection with such Lender's
participation in this Agreement, each of whom shall be informed by such Lender
of the confidential nature of the Confidential Information and shall agree to be
bound by the terms of this Section 9.15; (ii) to the extent required by
applicable laws and regulations or by any subpoena or similar legal process or
requested by any Governmental Authority or agency having jurisdiction over such
Lender; provided, however, that, except in the case of disclosure to bank
regulators or examiners in accordance with customary banking practices, if
legally permitted written notice of each instance in which Confidential
Information is required or requested to be disclosed shall be furnished to
Viacom not less than 30 days prior to the expected date of such disclosure or,
if 30 days' notice is not practicable under the circumstances, as promptly as
practicable under the circumstances; (iii) to the extent such Confidential
Information (A) is or becomes publicly available other than as a result of a
breach of this Agreement, (B) becomes available to such Lender on a non-
confidential basis from a source other than a party to this Agreement or any
other party known to such Lender to be bound by an agreement containing a
provision similar to this Section 9.15 or (C) was available to such Lender on a
non-confidential basis prior to this disclosure to such Lender by a party to
this Agreement or any other party known to such Lender to be bound by an
agreement containing a provision similar to this Section 9.15; (iv) as permitted
by Section 9.4(g); or (v) to the extent Viacom shall have consented to such
disclosure in writing. As used in this Section 9.15, "Confidential Information"
shall mean any materials, documents or information furnished by or on behalf of
any Borrower in connection with this Agreement designated by or on behalf of
such Borrower as confidential.
(b) Each Lender (i) agrees that, except to the extent the conditions
referred to in subclause (A), (B) or (C) of clause (iii) of paragraph (a) above
have been met and as provided in paragraph (c) below, (A) it will use the
Confidential Information only in connection with its participation in this
Agreement and (B) it will not use the Confidential Information in connection
with any other matter or in a manner prohibited by any law, including, without
limitation, the securities laws of the United States and (ii) understands that
breach of this Section 9.15 might seriously prejudice the interest of the
Borrowers and that the Borrowers are entitled to equitable relief, including an
injunction, in the event of such breach.
78
(c) Notwithstanding anything to the contrary contained in this
Section 9.15, each Agent and each Lender shall be entitled to retain all
Confidential Information for so long as it remains an Agent or a Lender to use
solely for the purposes of servicing the credit and protecting its rights
hereunder.
SECTION 9.16. Waiver of Notice of Termination Period.
By its execution of this Agreement, each Lender hereby waives any
right to notice of termination, or any notice period with respect to the
termination, of any Existing Credit Agreement that such Lender may have had
under such Existing Credit Agreement.
[Remainder of the page left blank intentionally; Signature page to follow.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
VIACOM INC.
By: /s/ Robert G. Freedline
----------------------------------------
Name: Robert G.Freedline
Title: Vice President and Treasurer
VIACOM INTERNATIONAL INC.
By: /s/ Robert G. Freedline
----------------------------------------
Name: Robert G.Freedline
Title: Vice President and Treasurer
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Lender
By: /s/ Thomas H. Kozlark
----------------------------------------
Name: Thomas H. Kozlark
Title: Vice President
FLEET NATIONAL BANK, as Co-Syndication
Agents and as a Lender
By: /s/ Laura Neenan
----------------------------------------
Name: Laura Neenan
Title: Assistant Vice President
BANK OF AMERICA, N.A., as Co-Syndication
Agents and as a Lender
By: /s/ Thomas J. Kane
----------------------------------------
Name: Thomas J. Kane
Title: Vice President
BANK OF NEW YORK, as Documentation Agent
and as a Lender,
By: /s/ John R. Ciulla
----------------------------------------
Name: John R. Ciulla
Title: Vice President
BARCLAYS BANK PLC, as a Lender,
By: /s/ Daniele Iacovone
----------------------------------------
Name: Daniele Iacovone
Title: Director
CITIBANK, N.A., as a Lender,
By: /s/ Elizabeth H. Minnella
----------------------------------------
Name: Elizabeth H. Minnella
Title: Vice President
DEUTSCHE BANK A.G., NEW YORK BRANCH
and/or CAYMAN ISLANDS BRANCH, as a Lender,
By: /s/ William W. McGinty
----------------------------------------
Name: William W. McGinty
Title: Director
By: /s/ Irene Egues
----------------------------------------
Name: Irene Egues
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
NEW YORK BRANCH, as a Lender,
By: /s/ William Kennedy
----------------------------------------
Name: William Kennedy
Title: Senior Vice President
MELLON BANK, N.A., as a Lender,
By: /s/ Raghunatha Reddy
----------------------------------------
Name: Raghunatha Reddy
Title: Lending Officer
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH, as a Lender,
By: /s/ Lucie L. Guernsey
----------------------------------------
Name: Lucie L. Guernsey
Title: Director
By: /s/ Pascal Kabemba
----------------------------------------
Name: Pascal Kabemba
Title: Associate Director
MERRILL LYNCH CAPITAL CORPORATION,
as a Lender,
By: /s/ Paul Fox
----------------------------------------
Name: Paul Fox
Title: Vice President
LEHMAN COMMERCIAL PAPER INC., as a Lender,
By: /s/ G. Andrew Keith
----------------------------------------
Name: G. Andrew Keith
Title: Authorized Signatory
THE SANWA BANK, LIMITED, NEW YORK BRANCH,
as a Lender,
By: /s/ Jean-Michel Fatovic
----------------------------------------
Name: Jean-Michel Fatovic
Title: Vice President
THE SUMITOMO BANK, LIMITED, as a Lender,
By: /s/ C. Michael Garrido
----------------------------------------
Name: C. Michael Garrido
Title: Senior Vice President
MERRILL LYNCH BANK USA, as a Lender,
By: /s/ Raymond J. Dardano
----------------------------------------
Name: Raymond J. Dardano
Title: Senior Credit Officer
BANK ONE, NA, as a Lender,
By: /s/ Curtis R. Worthington
----------------------------------------
Name: Curtis R. Worthington
Title: Corporate Banking Officer
CREDIT SUISSE FIRST BOSTON, as a Lender,
By: /s/ Kristin Lepri
----------------------------------------
Name: Kristin Lepri
Title: Associate
By: /s/ Bill O'Daly
----------------------------------------
Name: Bill O'Daly
Title: Vice President
THE NORINCHUKIN BANK, NEW YORK BRANCH,
as a Lender,
By: /s/ Yoshiro Niiro
----------------------------------------
Name: Yoshiro Niiro
Title: General Manager
WACHOVIA BANK, N.A., as a Lender,
By: /s/ J. Timothy Toler
----------------------------------------
Name: J. Timothy Toler
Title: Senior Vice President
EXHIBIT 10(cc)
CONFORMED COPY
- --------------------------------------------------------------------------------
$1,500,000,000
FIVE-YEAR CREDIT AGREEMENT
among
VIACOM INC.,
VIACOM INTERNATIONAL INC.,
THE SUBSIDIARY BORROWERS PARTIES HERETO,
THE LENDERS NAMED HEREIN,
THE CHASE MANHATTAN BANK,
as Administrative Agent,
SALOMON SMITH BARNEY INC.,
as Syndication Agent
and
BANK OF AMERICA, N.A. and FLEET NATIONAL BANK,
as Co-Documentation Agents
Dated as of March 7, 2001
- --------------------------------------------------------------------------------
JP MORGAN, A DIVISION OF CHASE SECURITIES INC.
and
SALOMON SMITH BARNEY INC.,
as Joint Lead Arrangers
JP MORGAN, A DIVISION OF CHASE SECURITIES INC.,
as Sole Bookrunner
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS.......................................................1
SECTION 1.1. Defined Terms..........................................1
SECTION 1.2. Terms Generally.......................................21
ARTICLE II THE CREDITS.....................................................23
SECTION 2.1. Commitments...........................................23
SECTION 2.2. Revolving Credit Loans; Competitive Loans.............23
SECTION 2.3. Competitive Bid Procedure.............................24
SECTION 2.4. Revolving Credit Loan Borrowing Procedure.............27
SECTION 2.5. Repayment of Loans....................................27
SECTION 2.6. Swingline Loans.......................................28
SECTION 2.7. Letters of Credit.....................................31
SECTION 2.8. Conversion and Continuation Options...................35
SECTION 2.9. Fees..................................................36
SECTION 2.10. Interest on Loans; Eurocurrency Tranches; Etc........37
SECTION 2.11. Default Interest.....................................38
SECTION 2.12. Alternate Rate of Interest...........................38
SECTION 2.13. Termination, Reduction and Increase of Commitments...39
SECTION 2.14. Optional Prepayments of Revolving Credit Loans.......42
SECTION 2.15. Reserve Requirements; Change in Circumstances........42
SECTION 2.16. Indemnity............................................44
SECTION 2.17. Pro Rata Treatment; Funding Matters; Evidence
of Debt..............................................45
SECTION 2.18. Sharing of Setoffs...................................47
SECTION 2.19. Payments.............................................48
SECTION 2.20. Taxes................................................48
SECTION 2.21. Termination or Assignment of Commitments Under
Certain Circumstances................................50
SECTION 2.22. Currency Equivalents.................................51
SECTION 2.23. Judgment Currency....................................52
ARTICLE III REPRESENTATIONS AND WARRANTIES.................................53
SECTION 3.1. Corporate Existence...................................53
SECTION 3.2. Financial Condition...................................53
SECTION 3.3. Litigation............................................54
SECTION 3.4. No Breach, etc........................................54
SECTION 3.5. Corporate Action......................................55
SECTION 3.6. Approvals.............................................55
SECTION 3.7. ERISA.................................................55
SECTION 3.8. Taxes.................................................55
SECTION 3.9. Investment Company Act................................55
SECTION 3.10. Environmental........................................56
SECTION 3.11. Material Subsidiaries................................56
ARTICLE IV CONDITIONS OF EFFECTIVENESS AND LENDING.........................56
SECTION 4.1. Effectiveness.........................................56
SECTION 4.2. Initial Loans to Subsidiary Borrowers.................56
SECTION 4.3. All Credit Events.....................................57
ARTICLE V COVENANTS........................................................58
SECTION 5.1. Financial Statements..................................58
SECTION 5.2. Corporate Existence, Etc..............................60
SECTION 5.3. Insurance.............................................61
SECTION 5.4. Prohibition of Fundamental Changes....................61
ii
SECTION 5.5. Limitation on Liens...................................62
SECTION 5.6. Limitation on Subsidiary Indebtedness.................63
SECTION 5.7. Consolidated Coverage Ratio...........................64
SECTION 5.8. Use of Proceeds.......................................64
SECTION 5.9. Transactions with Affiliates..........................64
ARTICLE VI EVENTS OF DEFAULT...............................................64
ARTICLE VII THE AGENTS.....................................................67
ARTICLE VIII GUARANTEES....................................................70
SECTION 8.1. Viacom Guarantee......................................70
SECTION 8.2. Viacom International Guarantee........................73
ARTICLE IX MISCELLANEOUS...................................................76
SECTION 9.1. Notices...............................................76
SECTION 9.2. Survival of Agreement.................................77
SECTION 9.3. Binding Effect........................................77
SECTION 9.4. Successors and Assigns................................77
SECTION 9.5. Expenses; Indemnity...................................81
SECTION 9.6. Right of Setoff.......................................82
SECTION 9.7. APPLICABLE LAW........................................82
SECTION 9.8. Waivers; Amendment....................................83
SECTION 9.9. Entire Agreement......................................84
SECTION 9.10. Waiver of Jury Trial.................................84
SECTION 9.11. Severability.........................................84
SECTION 9.12. Counterparts.........................................84
SECTION 9.13. Headings.............................................84
SECTION 9.14. Jurisdiction; Consent to Service of Process..........84
iii
SECTION 9.15. Confidentiality......................................85
SECTION 9.16. Waiver of Notice of Termination Period...............86
iv
ANNEXES
Annex I Pricing Grid
Annex II Certain Canadian Facility Provisions
EXHIBITS
Exhibit A Administrative Questionnaire
Exhibit B-1 Form of Competitive Bid Request
Exhibit B-2 Form of Notice of Competitive Bid Request
Exhibit B-3 Form of Competitive Bid
Exhibit B-4 Form of Borrowing Request
Exhibit B-5 Form of Swingline Borrowing Request
Exhibit B-6 Form of Notice of Designated Letter of Credit
Exhibit B-7 Form of Subsidiary Borrower Designation
Exhibit B-8 Form of Subsidiary Borrower Request
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Confidentiality Agreement
Exhibit E Form of Closing Certificate
Exhibit F Form of Issuing Lender Agreement
Exhibit G Form of New Lender Supplement
Exhibit H Form of Commitment Increase Letter
SCHEDULES
Schedule 1.1 Commitments; Addresses for Notices
Schedule 1.1(a) Guarantees
Schedule 5.6 Subsidiary Indebtedness
v
1
FIVE-YEAR CREDIT AGREEMENT entered into as of March 7, 2001, among
VIACOM INC., a Delaware corporation ("Viacom"), each Subsidiary Borrower (as
herein defined); VIACOM INTERNATIONAL INC., a Delaware corporation ("Viacom
International"); the lenders whose names appear on Schedule 1.1 hereto or who
subsequently become parties hereto as provided herein (the "Lenders"); THE CHASE
MANHATTAN BANK, a New York banking corporation ("Chase"), as administrative
agent for the Lenders; SALOMON SMITH BARNEY INC., a New York corporation, as
syndication agent for the Lenders (in such capacity, the "Syndication Agent");
and FLEET NATIONAL BANK, a national banking corporation, and BANK OF AMERICA,
N.A., a national banking corporation, as co-documentation agents for the Lenders
(in such capacity, the "Co-Documentation Agents").
W I T N E S S E T H :
WHEREAS, Viacom has requested that the Lenders provide extensions of
credit to it and to certain Subsidiary Borrowers to be used for general
corporate purposes (including, without limitation, acquisitions and commercial
paper backup), which extensions of credit shall enable the Borrowers (as herein
defined) to borrow loans in an aggregate amount not to exceed $1.50 billion
(except as increased or reduced pursuant to Section 2.13) on a revolving credit
basis on and after the Closing Date (as herein defined) and prior to the
Revolving Credit Maturity Date (as herein defined); and
WHEREAS, Viacom has requested that the Lenders provide a
multi-currency borrowing option in an aggregate principal amount not to exceed
$1.00 billion (except as increased or reduced pursuant to Section 2.13), which
(A) the Lenders (excluding the US-Canadian Lenders (as defined herein)) will
make available to the Borrowers (excluding the Canadian Borrowers (as defined
herein)) with sublimits as follows: (i) Euros (as defined herein), $500 million,
(ii) Sterling (as defined herein), $500 million and (iii) Yen (as defined
herein), $300 million, and (B) the US-Canadian Lenders will make available up to
the Canadian Dollar equivalent of $300 million as a separate tranche to the
Canadian Borrowers in Canadian Dollars and to any Borrower (excepting the
Canadian Borrowers) in Dollars.
WHEREAS, the Lenders are willing to extend credit to the Borrowers
on the terms and subject to the conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
2
"ABR Loan" shall mean (a) any Revolving Credit Loan bearing interest
at a rate determined by reference to the Alternate Base Rate in accordance with
the provisions of Article II and (b) any ABR Swingline Loan.
"ABR Revolving Loan" shall mean any Revolving Credit Loan, which is
an ABR Loan.
"ABR Swingline Exposures" shall mean at any time the aggregate
principal amount at such time of the outstanding ABR Swingline Loans. The ABR
Swingline Exposure of any Lender at any time shall mean its Revolving Credit
Percentage of the aggregate ABR Swingline Exposures at such time.
"ABR Swingline Loan" shall have the meaning assigned to such term in
Section 2.6(a).
"ABR US$-Canadian Loans" shall mean any US$-Canadian Loan bearing
interest at the Alternate Base Rate.
"Absolute Rate Loan" shall mean any Competitive Loan bearing
interest at a fixed percentage rate per annum (expressed in the form of a
decimal rounded to no more than four decimal places) specified by the Lender
making such Loan in its Competitive Bid.
"Administrative Agent" shall mean Chase, together with its
affiliates, as an arranger of the Commitments and as the administrative agent
for the Lenders and the US-Canadian Lenders (with respect to US$-Canadian Loans)
under this Agreement, and any successor thereto pursuant to Article VII.
"Administrative Agent Fee Letter" shall mean the Fee Letter with
respect to this Agreement between Viacom and the Administrative Agent, as
amended, supplemented or otherwise modified from time to time.
"Administrative Agent's Fees" shall have the meaning assigned to
such term in Section 2.9(c).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A hereto.
"Affiliate" shall mean, as to Viacom, any Person, which directly or
indirectly controls, is under common control with or is controlled by Viacom. As
used in this definition, "control" (including, with correlative meanings,
"controlled by" and "under common control with") shall mean possession, directly
or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise); provided that, in any event, any
Person which owns directly or indirectly 10% or more of the securities having
ordinary voting power for the election of directors or other governing body of a
corporation or 10% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person. Notwithstanding the
foregoing, (a) no individual shall be deemed to be an Affiliate of Viacom solely
by reason of his
3
or her being an officer, director or employee of Viacom or any of its
Subsidiaries and (b) Viacom International and Viacom and their Subsidiaries
shall not be deemed to be Affiliates of each other, unless expressly stated to
the contrary.
"Agents" shall mean the collective reference to the Administrative
Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Sole
Bookrunner, and the Syndication Agent.
"Aggregate LC Exposure" shall mean, at any time, the sum of (a) the
aggregate undrawn amount of all Letters of Credit outstanding at such time and
(b) the aggregate amount which has been drawn under Letters of Credit but for
which the applicable Issuing Lender or the Lenders, as the case may be, have not
been reimbursed by Viacom or the relevant Subsidiary Borrower at such time.
"Agreement" shall mean this Five-Year Credit Agreement, as amended,
supplemented or otherwise modified from time to time.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate"
shall mean the rate of interest per annum publicly announced from time to time
by the Lender serving as the Administrative Agent as its prime rate in effect at
its principal office in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as effective; and
"Federal Funds Effective Rate" shall mean, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent
from three Federal funds brokers of recognized standing selected by it. If for
any reason the Administrative Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to ascertain the
Federal Funds Effective Rate for any reason, including the inability or failure
of the Administrative Agent to obtain sufficient quotations in accordance with
the terms thereof, the Alternate Base Rate shall be the Prime Rate until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Eurocurrency Margin" shall mean the "Applicable
Eurocurrency Margin" determined in accordance with the Pricing Grid set forth in
Annex I hereto.
"Applicable Facility Fee Rate" shall mean the "Applicable Facility
Fee Rate" determined in accordance with the Pricing Grid set forth in Annex I
hereto.
"Applicable LC Fee Rate" shall mean (a) with respect to Financial
Letters of Credit, the "Applicable Financial LC Fee Rate" determined in
accordance with the Pricing Grid set forth in Annex I hereto and (b) with
respect to Non-Financial Letters of Credit, the
4
"Applicable Non-Financial LC Fee Rate" determined in accordance with the Pricing
Grid set forth in Annex I hereto.
"Applicable Utilization Fee Rate" shall mean the "Applicable
Utilization Fee Rate" determined in accordance with the Pricing Grid set forth
in Annex I hereto.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit C.
"Blockbuster Event" means the sale or deconsolidation of Blockbuster
Inc. from Viacom, which sale or deconsolidation shall be substantially
non-recourse to Viacom and Viacom International.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"Bonds" shall have the meaning assigned to such term in Section
8.2(g).
"Borrower" shall mean, as applicable, Viacom or the relevant
Subsidiary Borrower (including the relevant Canadian Borrower for all purposes
other than Article II and Annex II).
"Borrowing Request" shall mean a request made pursuant to Section
2.4 in the form of Exhibit B-4.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which banks are
open for business in New York City; provided, however, that, when used in
connection with a Eurocurrency Loan, the term "Business Day" shall also exclude
any day on which banks are not open for international business (including
dealings in Dollar deposits) in the London interbank market; provided further,
that, when used in connection with a Eurocurrency Loan denominated in Sterling,
the term "Business Day" shall also exclude any day on which banks are not open
for international business (including dealings in Dollar deposits) in the Paris
interbank market.
"Canadian Administrative Agent" shall have the meaning assigned to
such term in Annex II hereto.
"Canadian Borrower" shall have the meaning assigned to such term in
Annex II hereto.
"Canadian Commitments" shall have the meaning assigned to such term
in Annex II hereto.
"Canadian Dollars" or "C$" shall have the meaning assigned to such
term in Annex II hereto.
5
"Canadian Lending Office" shall have the meaning assigned to such
term in Annex II hereto.
"C$ Loan" shall have the meaning assigned to such term in Annex II
hereto.
"Capital Lease Obligations" of any Person shall mean the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property (other than
satellite transponders), or a combination thereof, which obligations are
required to be classified and accounted for as capital leases on a balance sheet
of such Person under GAAP and, for the purposes of this Agreement, the amount of
such obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants or options to purchase any of the
foregoing.
"Chase" shall have the meaning assigned to such term in the preamble
to this Agreement.
"Closing Certificate" shall mean a certificate, substantially in the
form of Exhibit E.
"Closing Date" shall mean March 7, 2001.
"Code" shall mean the Internal Revenue Code of 1986, as the same may
be amended from time to time.
"Co-Documentation Agents" shall have the meaning assigned to such
term in the preamble hereto.
"Commitments" shall mean the Revolving Commitments and the Canadian
Commitments.
"Commitment Increase Date" shall have the meaning assigned to such
term in Section 2.13(e).
"Commitment Increase Letter" shall have the meaning assigned to such
term in Section 2.13(e) and shall be substantially in the form of Exhibit H.
"Commitment Utilization Percentage" shall mean on any day the
percentage equivalent to a fraction (i) the numerator of which is the sum of (A)
the Total Revolving Facility Exposure, including the aggregate outstanding
principal amount of Letters of Credit, Swingline Loans and Competitive Loans,
and (B) the Total Canadian Facility Exposure and (ii) the denominator of which
is the sum of the Total Revolving Commitment and the Total Canadian Commitment
(or, on any day after termination of the Commitments, the Total Revolving
6
Commitment and the Total Canadian Commitment in effect immediately preceding
such termination).
"Communications Act" shall mean the Communications Act of 1934, as
amended.
"Competitive Bid" shall mean an offer to make a Competitive Loan
pursuant to Section 2.3.
"Competitive Bid Rate" shall mean, as to any Competitive Bid made
pursuant to Section 2.3(b), (a) in the case of a Eurocurrency Competitive Loan,
the Margin, and (b) in the case of an Absolute Rate Loan, the fixed rate of
interest offered by the Lender making such Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant to
Section 2.3 in the form of Exhibit B-1.
"Competitive Loan" shall mean a Loan from a Lender to a Borrower
pursuant to the bidding procedure described in Section 2.3. Each Competitive
Loan shall be a Eurocurrency Competitive Loan or an Absolute Rate Loan and,
subject to Section 2.3(a), may be denominated in Dollars or a Foreign Currency.
"Compliance Certificate" shall have the meaning assigned to such
term in Section 5.1.
"Confidential Information" shall have the meaning assigned to such
term in Section 9.15(a).
"Confidentiality Agreement" shall mean a confidentiality agreement
substantially in the form of Exhibit D, with such changes as Viacom may approve.
"Consolidated Coverage Ratio" shall mean, for any period, the ratio
of (a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense
for such period.
"Consolidated EBITDA" shall mean, with respect to Viacom and its
Consolidated Subsidiaries for any period, operating profit (loss) (excluding
that related to Discontinued Operations), plus other income (loss), plus
interest income, plus depreciation and amortization (excluding amortization
related to programming rights, prepublication costs and videocassettes),
excluding (a) gains (losses) on sales of assets (except (I) gains (losses) on
sales of inventory sold in the ordinary course of business and (II) gains
(losses) on sales of other assets if such gains (losses) are less than
$10,000,000 individually and less than $50,000,000 in the aggregate during such
period), (b) other non-cash items (including (i) provisions for losses and
additions to valuation allowances, (ii) provisions for restructuring, litigation
and environmental reserves and losses on the Disposition of businesses and (iii)
pension settlement charges), and (c) nonrecurring expenses incurred during such
period in connection with the merger of CBS and Viacom pursuant to the Agreement
and Plan of Merger entered into by CBS, Viacom and Viacom/CBS LLC dated as of
September 6, 1999, as amended, amended and restated, supplemented and otherwise
modified from time to time, minus cash payments made during such
7
period in respect of non-cash charges taken during any previous period
(excluding cash payments in respect of non-cash charges taken prior to December
31, 1999).
"Consolidated Interest Expense" shall mean for any period the gross
cash interest expense of Viacom and its Consolidated Subsidiaries on
Indebtedness for such period plus cash dividends paid on preferred stock to
persons other than Viacom and its Wholly Owned Subsidiaries for such period, but
excluding the gross cash interest expense of the Discontinued Operations for
such period.
"Consolidated Subsidiary" shall mean, as to any Person, each
Subsidiary of such Person (whether now existing or hereafter created or
acquired) the financial statements of which shall be consolidated with the
financial statements of such Person in accordance with GAAP.
"Consolidated Tangible Assets" shall mean at any date the assets of
Viacom and its Subsidiaries determined on such date on a consolidated basis,
less goodwill and other intangible assets.
"Credit Event" shall mean the making of any Loan or the issuance of
any Letter of Credit hereunder (including the designation of a Designated Letter
of Credit as a "Letter of Credit" hereunder). It is understood that conversions
and continuations pursuant to Section 2.8 and subsection 2.6 of Annex II do not
constitute "Credit Events".
"Debt Rating" shall mean the rating applicable to Viacom's senior,
unsecured, non-credit-enhanced long-term indebtedness for borrowed money, as
assigned by either Rating Agency.
"Default" shall mean any event or condition which upon notice, lapse
of time or both would constitute an Event of Default.
"Designated Letters of Credit" shall mean each letter of credit
issued by an Issuing Lender that (a) is not a Letter of Credit hereunder at the
time of its issuance and (b) is designated on or after the Closing Date by
Viacom or any Subsidiary Borrower (excepting any Canadian Borrower), with the
consent of such Issuing Lender, as a "Letter of Credit" hereunder by written
notice to the Administrative Agent in the form of Exhibit B-6.
"Discontinued Operations" shall mean the operations classifed as
"discontinued operations" pursuant to Accounting Principles Board Opinion No. 30
as presented in the quarterly report of CBS on Form 10-Q for the quarter ended
September 30, 1997 and filed with the SEC on December 14, 1997.
"Disposition" shall mean, with respect to any Property, any sale,
lease, assignment, conveyance, transfer or other disposition thereof; and the
terms "Dispose" and "Disposed of" shall have correlative meanings.
"Dollars" or "$" shall mean lawful money of the United States of
America.
"Environmental Laws" shall mean any and all Federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions,
8
grants, franchises, licenses, agreements or other governmental restrictions
relating to the environment or to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment, including, without
limitation, ambient air, surface water, ground water or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" shall mean, with respect to Viacom, any trade or
business (whether or not incorporated) that is a member of a group of which
Viacom is a member and which is treated as a single employer under Section 414
of the Code.
"Eurocurrency Competitive Loan" shall mean any Competitive Loan
which is a Eurocurrency Loan.
"Eurocurrency Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Eurocurrency Rate.
"Eurocurrency Rate" shall mean, with respect to an Interest Period
(a) pertaining to any Eurocurrency Loan (excepting Sterling), the rate of
interest determined on the basis of the rate for deposits in Dollars or the
relevant Foreign Currency, as the case may be, for a period equal to such
Interest Period commencing on the first day of such Interest Period appearing on
Page 3750 (or, in the case of any Foreign Currency, the applicable page) of the
Telerate Screen as of 11:00 A.M., London time, two Business Days prior to the
beginning of such Interest Period and (b) pertaining to any Eurocurrency Loan
denominated in Sterling, the rate of interest determined by the Administrative
Agent to be the average of the rates quoted by the Reference Banks at
approximately 11:00 a.m. London time (or as soon thereafter as practicable) on
the day two Business Days prior to the first day of the Interest Period for such
Loans for the offering by the Reference Banks to leading banks in the Paris
interbank market of deposits in Sterling having a term comparable to such
Interest Period and in an amount comparable to the principal amount of the
respective Eurocurrency Loans of the Reference Banks to which such Interest
Period relates. In the event that such rate does not appear on such page of the
Telerate Screen (or otherwise on the Telerate Service), the "Eurocurrency Rate"
shall instead be the interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the average of the rates at which deposits in
Dollars or the relevant Foreign Currency, as the case may be, approximately
equal in principal amount to (a) in the case of a Eurocurrency Tranche, the
portion of such Eurocurrency Tranche of the Lender serving as Administrative
Agent and (b) in the case of a Eurocurrency Competitive Loan, a principal amount
that would have been the portion of such Loan of the Lender serving as the
Administrative Agent had such Loan been a Eurocurrency Revolving Loan, and for a
maturity comparable to such Interest Period, are offered by the principal London
offices of the Reference Banks (or, if any Reference Bank does not at the time
maintain a London office, the principal London office of any affiliate of such
Reference Bank) for immediately available funds in the London interbank market
at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
9
"Eurocurrency Revolving Loan" shall mean any Revolving Credit Loan,
which is a Eurocurrency Loan. Subject to the limitations contained herein, a
Eurocurrency Revolving Loan may be a Multi-Currency Revolving Loan.
"Eurocurrency Tranche" shall mean the collective reference to
Eurocurrency Loans under a particular Facility denominated in the same currency
made by the Lenders, the then current Interest Periods with respect to all of
which begin on the same date and end on the same later date (whether or not such
Eurocurrency Loans shall originally have been made on the same day).
"Eurocurrency US$-Canadian Loans" shall mean any US$-Canadian Loan
bearing interest at the Eurocurrency Rate.
"Euros" shall mean the single currency of participating member
states of the European Monetary Union.
"Event of Default" shall have the meaning assigned to such term in
Article VI; provided that any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.
"Excess Utilization Day" shall mean each day on which the Commitment
Utilization Percentage exceeds 50%.
"Exchange Act Report" shall have the meaning assigned to such term
in Section 3.3.
"Existing Credit Agreements" shall mean the (a) $6,400,000,000
Amended and Restated Credit Agreement, dated as of March 26, 1997 (as amended,
restated, supplemented or otherwise modified), among Viacom, as the borrower,
the banks named therein, The Bank of New York, Citibank, N.A., Morgan Guaranty
Trust Company of New York, Bank of America NT&SA and The Chase Manhattan Bank,
as managing agents, The Bank of New York, as documentation agent, Citibank,
N.A., as the administrative agent, and JP Morgan Securities Inc. and Bank of
America NT&SA, as the syndication agents; (b) $1,500,000,000 Amended and
Restated Credit Agreement, dated as of December 10, 1999 (as amended, restated,
supplemented or otherwise modified), among Viacom (successor by merger with CBS
Corporation), as the borrower, the lenders named therein, Bank of America, N.A.
and The Toronto-Dominion Bank, as syndication agents, The Chase Manhattan Bank,
as documentation agent and Morgan Guaranty Trust Company of New York, as
administrative agent; (c) $1,500,000,000 Amended and Restated Credit Agreement,
dated as of December 10, 1999 (as amended, restated, supplemented or otherwise
modified), among Infinity, as the borrower, each subsidiary borrower, Viacom
(successor by merger with CBS Corporation), as a guarantor, the lenders named
therein, Bank of America, N.A. and The Toronto-Dominion Bank, as syndication
agents, The Chase Manhattan Bank, as documentation agent and Morgan Guaranty
Trust Company of New York, as administrative agent; and (d) $500,000,000 364-Day
Credit Agreement, dated as of May 3, 2000 (as amended, restated, supplemented or
otherwise modified), among Infinity, as the borrower, each subsidiary borrower,
the lenders named therein, Bank of New York, as
10
documentation agent, The Chase Manhattan Bank, as administrative agent, and Bank
of America, N.A. and Fleet National Bank, as co-syndication agents.
"Existing Infinity Credit Agreement" shall mean the Five-Year Credit
Agreement, dated as of May 3, 2000 (as amended, restated, supplemented or
otherwise modified from time to time), among Infinity, as borrower, the
subsidiary borrowers party thereto, the lenders named therein, Bank of New York,
as documentation agent, Chase, as administrative agent, and Bank of America,
N.A. and Fleet National Bank, as co-syndication agents.
"Facility" shall mean each of (a) the Revolving Credit Commitments
and the extensions of credit made thereunder (the "Revolving Facility") and (b)
the Canadian Commitments and the extensions of credit made thereunder (the
"Canadian Facility").
"Facility Fees" shall mean all fees payable pursuant to Section
2.9(a).
"Federal Funds Effective Rate" shall have the meaning assigned to
such term in the definition of "Alternate Base Rate".
"Fees" shall mean the Facility Fees, the Administrative Agent's
Fees, the Issuing Lender Fees, the LC Fees and the Utilization Fees.
"Financial Covenant" shall mean the financial covenant contained in
Section 5.7.
"Financial Letter of Credit" shall mean any Letter of Credit that,
as determined by the Administrative Agent acting in good faith, (a) supports a
financial obligation and (b) qualifies for the 100% credit conversion factor
under the applicable Bank for International Settlements guidelines.
"Financial Officer" of any corporation shall mean its Chief
Financial Officer, its Vice President and Treasurer or its Vice President and
Chief Accounting Officer or, in each case, any comparable officer or any Person
designated by any such officer.
"Foreign Currency" shall mean any currency (including, without
limitation, any Multi-Currency and Canadian Dollars, but excluding Dollars),
which is readily transferable and readily convertible by the relevant Lender or
Issuing Lender, as the case may be, into Dollars in the London interbank market.
"Foreign Exchange Rate" shall mean, with respect to any Foreign
Currency on a particular date, the rate at which such Foreign Currency may be
exchanged into Dollars, determined by reference to the selling rate in respect
of such Foreign Currency published in the "Wall Street Journal" on the relevant
date of determination. In the event that such rate is not, or ceases to be, so
published by the "Wall Street Journal", the "Foreign Exchange Rate" with respect
to such Foreign Currency shall be determined by reference to such other publicly
available source for determining exchange rates as may be agreed upon by the
Administrative Agent and Viacom or, in the absence of such agreement, such
"Foreign Exchange Rate" shall instead be (i) with respect to any Foreign
Currency, excepting Canadian Dollars, the Administrative Agent's spot rate of
exchange in the interbank market where its foreign currency exchange operations
in respect of such Foreign Currency are then being conducted, at or about
11
12:00 noon, local time, at such date for the purchase of Dollars with such
Foreign Currency, for delivery two banking days later and (ii) with respect to
Canadian Dollars, the spot rate at which Canadian Dollars may be exchanged into
Dollars, as quoted by the Canadian Administrative Agent at approximately 12:00
noon, Toronto time, at such date for the purchase of Dollars with such Canadian
Dollars, for delivery two banking days later.
"GAAP" shall mean generally accepted accounting principles.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Granting Bank" shall have to meaning specified in Section 9.4(i).
"Guarantee" of or by any Person shall mean any obligation,
contingent or otherwise, of such Person guaranteeing or entered into with the
purpose of guaranteeing any Indebtedness of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase Property, securities or
services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness or (c) to maintain working capital, equity capital
or other financial statement condition or liquidity of the primary obligor so as
to enable the primary obligor to pay such Indebtedness; provided, however, that
the term "Guarantee" shall not include endorsements for collection or deposit,
in either case in the ordinary course of business.
"Indebtedness" of any Person shall mean at any date, without
duplication, (i) all obligations of such Person for borrowed money (including,
without limitation, in the case of any Borrower (including any Canadian
Borrower), the obligations of such Borrower or such Canadian Borrower, as
applicable, for borrowed money under this Agreement), (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
Property or services, except as provided below, (iv) all obligations of such
Person as lessee under Capital Lease Obligations, (v) all Indebtedness of others
secured by a Lien on any Property of such Person, whether or not such
Indebtedness is assumed by such Person, (vi) all Indebtedness of others directly
or indirectly guaranteed or otherwise assumed by such Person, including any
obligations of others endorsed (otherwise than for collection or deposit in the
ordinary course of business) or discounted or sold with recourse by such Person,
or in respect of which such Person is otherwise directly or indirectly liable,
including, without limitation, any Indebtedness in effect guaranteed by such
Person through any agreement (contingent or otherwise) to purchase, repurchase
or otherwise acquire such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation, or to maintain the
solvency or any balance sheet or other financial condition of the obligor of
such obligation, provided that Indebtedness of Viacom and its Subsidiaries shall
not include (a) guarantees in existence on the date hereof of Indebtedness of
Discontinued Operations and (b) guarantees of Indebtedness that are identified
on Schedule 1.1(a) hereto (vii) all obligations of such Person as issuer,
customer or account party under letters of credit or bankers' acceptances that
are either drawn or that back financial obligations that
12
would otherwise be Indebtedness; provided, however, that in each of the
foregoing clauses (i) through (vii), Indebtedness shall not include obligations
(other than under this Agreement) specifically with respect to the production,
distribution and acquisition of motion pictures or other programming rights,
talent or publishing rights.
"Infinity" shall mean Infinity Broadcasting Corporation, a Delaware
corporation.
"Interest Payment Date" shall mean (a) with respect to any
Eurocurrency Loan or Absolute Rate Loan, the last day of the Interest Period
applicable thereto and, in the case of a Eurocurrency Loan with an Interest
Period of more than three months' duration or an Absolute Rate Loan with an
Interest Period of more than 90 days' duration, each day that would have been an
Interest Payment Date for such Loan had successive Interest Periods of three
months' duration or 90 days' duration, as the case may be, been applicable to
such Loan and, in addition, the date of any conversion of any Eurocurrency
Revolving Loan to an ABR Loan, the date of repayment or prepayment of any
Eurocurrency Loan and the applicable Maturity Date; (b) with respect to any ABR
Loan (other than an ABR Swingline Loan which is not an Unrefunded Swingline
Loan), the last day of each March, June, September and December and the
applicable Maturity Date; (c) with respect to any ABR Swingline Loan (other than
an Unrefunded Swingline Loan), the earlier of (i) the day that is five Business
Days after such Loan is made and (ii) the Revolving Credit Maturity Date and (d)
with respect to any Quoted Swingline Loan, the date established as such by the
relevant Swingline Borrower and the relevant Swingline Lender prior to the
making thereof (but in any event no later than the Revolving Credit Maturity
Date).
"Interest Period" shall mean (a) as to any Eurocurrency Loan, the
period commencing on the borrowing date or conversion date of such Loan, or on
the last day of the immediately preceding Interest Period applicable to such
Loan, as the case may be, and ending on the numerically corresponding day (or,
if there is no numerically corresponding day, on the last day) in the calendar
month that is 7 days (subject to the prior consent of all Lenders under the
relevant Facility) or 1, 2, 3 or 6 months or (subject to the prior consent of
all Lenders under the relevant Facility) 9 or 12 months thereafter, as the
relevant Borrower may elect, and (b) as to any Absolute Rate Loan, the period
commencing on the date of such Loan and ending on the date specified in the
Competitive Bids in which the offer to make such Absolute Rate Loan was
extended; provided, however, that (i) if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of Eurocurrency Loans only, such
next succeeding Business Day would fall in the next calendar month, in which
case such Interest Period shall end on the next preceding Business Day and (ii)
notwithstanding anything to the contrary herein, no Borrower may select an
Interest Period which would end after the Maturity Date applicable to the
relevant Loan. Interest shall accrue from and including that first day of an
Interest Period to but excluding the last day of such Interest Period.
"Issuing Lender" shall mean any Lender designated as an Issuing
Lender in an Issuing Lender Agreement executed by such Lender, Viacom and the
Administrative Agent; provided, that the Issuing Lender may, in its discretion,
arrange for one or more Letters of Credit to be issued by any of its Lender
Affiliates (in which case the term "Issuing Lender" shall include such Lender
Affiliate with respect to Letters of Credit issued by such Lender Affiliate);
13
provided, further, with respect to any Designated Letter of Credit, the Lender
or Lender Affiliate of such Lender which issued such Designated Letter of
Credit.
"Issuing Lender Agreement" shall mean an agreement, substantially in
the form of Exhibit F, executed by a Lender, Viacom, and the Administrative
Agent pursuant to which such Lender agrees to become an Issuing Lender
hereunder.
"Issuing Lender Fees" shall mean, as to any Issuing Lender, the fees
set forth in the applicable Issuing Lender Agreement.
"Joint Lead Arrangers" shall mean JP Morgan, a division of Chase
Securities Inc., a New York corporation, and Salomon Smith Barney Inc., a New
York corporation.
"LC Disbursement" shall mean any payment or disbursement made by an
Issuing Lender under or pursuant to a Letter of Credit.
"LC Exposure" shall mean, as to each Lender, such Lender's Revolving
Credit Percentage of the Aggregate LC Exposure.
"LC Fee" shall have the meaning assigned such term in Section
2.9(b).
"Lender Affiliate" shall mean, (a) with respect to any Lender, (i)
an affiliate of such Lender or (ii) any entity (whether a corporation,
partnership, trust or otherwise) that is engaged in making, purchasing, holding
or otherwise investing in bank loans and similar extensions of credit in the
ordinary course of its business and is administered or managed by a Lender or an
affiliate of such Lender and (b) with respect to any Lender that is a fund which
invests in bank loans and similar extensions of credit, any other fund that
invests in bank loans and similar extensions of credit and is managed by the
same investment advisor as such Lender or by an affiliate of such investment
advisor.
"Lenders" shall have the meaning assigned to such term in the
preamble to this Agreement. It is understood and agreed that each reference in
this Agreement to any Lender shall, to the extent applicable, be deemed to be a
reference to each US-Canadian Lender (for all purposes other than Article II and
Annex II).
"Letters of Credit" shall mean letters of credit or bank guarantees
issued by an Issuing Lender for the account of Viacom or any Subsidiary Borrower
(excepting any Canadian Borrower) pursuant to Section 2.7(including any
Designated Letters of Credit).
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement.
"Loan" shall mean any loan made by a Lender hereunder.
"Loan Documents" shall mean this Agreement and the Administrative
Agent Fee Letter.
14
"Margin" shall mean, as to any Eurocurrency Competitive Loan, the
margin (expressed as a percentage rate per annum in the form of a decimal
rounded to no more than four places) to be added to or subtracted from the
Eurocurrency Rate in order to determine the interest rate applicable to such
Loan, as specified in the Competitive Bid relating to such Loan.
"Margin Stock" shall have the meaning assigned to such term under
Regulation U.
"Material Acquisition" shall mean any acquisition of Property or
series of related acquisitions of Property (including by way of merger) which
(a) constitutes assets comprising all or substantially all of an operating unit
of a business or constitutes all or substantially all of the common stock of a
Person and (b) involves the payment of consideration by Viacom and its
Subsidiaries (valued at the initial principal amount thereof in the case of
non-cash consideration consisting of notes or other debt securities and valued
at fair market value in the case of other non-cash consideration) in excess of
$100,000,000.
"Material Adverse Effect" shall mean (a) a material adverse effect
on the Property, business, results of operations or financial condition of
Viacom and its Subsidiaries taken as a whole or (b) material impairment of the
ability of Viacom to perform any of its obligations under this Agreement.
"Material Disposition" shall mean any Disposition of Property or
series of related Dispositions of Property which yields gross proceeds to Viacom
or any of its Subsidiaries (valued at the initial principal amount thereof in
the case of non-cash proceeds consisting of notes or other debt securities and
valued at fair market value in the case of other non-cash proceeds) in excess of
$100,000,000.
"Material Subsidiary" shall mean any "significant subsidiary" of
Viacom as defined in Regulation S-X of the SEC; provided, that each Subsidiary
Borrower shall in any event constitute a Material Subsidiary.
"Maturity Date" shall mean (a) in the case of the Revolving Credit
Loans and the ABR Swingline Loans, the Revolving Credit Maturity Date, (b) in
the case of the Quoted Swingline Loans, the date established as such by the
relevant Swingline Borrower and the relevant Swingline Lender prior to the
making thereof (but in any event no later than the Revolving Credit Maturity
Date) and (c) in the case of Competitive Loans, the last day of the Interest
Period applicable thereto, as specified in the related Competitive Bid Request.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multi-Currency" shall mean Euros, Sterling and Yen.
"Multi-Currency Revolving Loans" shall mean each Eurocurrency
Revolving Loan denominated in any Multi-Currency.
"Multi-Currency Sublimit" shall mean with respect to (i) Euros,
$500,000,000, (ii) Sterling, $500,000,000, (iii) Yen, $300,000,000 and (iv)
Canadian Dollars, $300,000,000, as
15
the sublimit may be increased or decreased from time to time in accordance with
Section 2.13 and subsection 3.2 of Annex II.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 3(37) of ERISA to which contributions have been made by Viacom or any
ERISA Affiliate of Viacom and which is covered by Title IV of ERISA.
"New Lender" shall have the meaning assigned to such term in Section
2.13(d).
"New Lender Supplement" shall mean the agreement made pursuant to
Section 2.13(d) substantially in the form of Exhibit G.
"Non-Financial Letter of Credit" shall mean any Letter of Credit
that is not a Financial Letter of Credit.
"Non-U.S. Person" shall have the meaning assigned to such term in
Section 2.20(f).
"Other Taxes" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"Outstanding Canadian Extensions of Credit" shall mean, as to any
US-Canadian Lender at any time, an amount equal to the sum of (a) the aggregate
principal amount of all US$-Canadian Loans made by such US-Canadian Lender then
outstanding and (b) the aggregate principal amount of all C$ Loans made by such
US-Canadian Lender then outstanding.
"Outstanding Revolving Extensions of Credit" shall mean, as to any
Lender at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Credit Loans made by such Lender then outstanding, (b)
such Lender's LC Exposure at such time and (c) such Lender's ABR Swingline
Exposure at such time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred
to and defined in ERISA, or any successor thereto.
"Person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership, limited liability company or
other entity, or any government or any agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code and which is
maintained for employees of Viacom or any ERISA Affiliate.
"Prime Rate" shall have the meaning assigned to such term in the
definition of "Alternate Base Rate".
16
"Pro Forma Period" shall have the meaning assigned to such term in
Section 1.2(c).
"Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"Quoted Swingline Loans" shall have the meaning assigned to such
term in Section 2.6(a).
"Quoted Swingline Rate" shall have the meaning assigned to such term
in Section 2.6(a).
"Rating Agencies" shall mean S&P and Moody's.
"Reference Banks" shall mean Chase, Citibank N.A. and Bank of
America, N.A.
"Register" shall have the meaning assigned to such term in Section
9.4(d).
"Regulation D" shall mean Regulation D of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Required US-Canadian Lenders" shall mean, at any time, US-Canadian
Lenders whose respective Total Canadian Facility Percentages aggregate more than
50%.
"Required Facility Lenders" shall mean the Required US-Canadian
Lenders or the Required Revolving Lenders, as applicable.
"Required Revolving Lenders" shall mean, at any time, Lenders whose
respective Total Revolving Facility Percentages aggregate more than 50%.
"Required Lenders" shall mean, at any time, Lenders whose respective
Total Facility Percentages aggregate more than 50%.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement (or, in the case of matters
relating to ERISA, any officer responsible for the administration of the pension
funds of such corporation).
"Revolving Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Revolving Credit Loans pursuant to Section
2.1(a), to make or refund ABR Swingline Loans pursuant to Section 2.6 and to
issue or participate in Letters of Credit pursuant to Section 2.7, in each case,
as set forth on Schedule 1.1, as such Lender's
17
Commitment may be permanently terminated or reduced from time to time pursuant
to Section 2.13 or changed pursuant to Section 9.4.
"Revolving Credit Loans" shall mean the revolving loans made by the
Lenders to any Borrower pursuant to Section 2.4. Each Revolving Credit Loan
shall be a Eurocurrency Loan or an ABR Loan.
"Revolving Credit Maturity Date" shall mean March 7, 2006.
"Revolving Credit Percentage" of any Lender at any time shall mean
the percentage of the aggregate Revolving Commitments (or, following any
termination of all the Revolving Commitments, the Revolving Commitments most
recently in effect) represented by such Lender's Revolving Commitment (or,
following any such termination, the Revolving Commitment of such Lender most
recently in effect).
"Revolving Facility Exposure" shall mean, with respect to any
Lender, the sum of (a) the Outstanding Revolving Extensions of Credit of such
Lender, (b) the aggregate outstanding principal amount of any Competitive Loans
made by such Lender and (c) in the case of a Swingline Lender, the aggregate
outstanding principal amount of any Quoted Swingline Loans made by such
Swingline Lender.
"S&P" shall mean Standard & Poor's Ratings Services.
"SEC" shall mean the Securities and Exchange Commission.
"Sole Bookrunner" shall mean JP Morgan, a division of Chase
Securities Inc., a New York corporation.
"Specified Currency Availability" shall mean the Multi-Currency
Sublimit with respect to the relevant Multi-Currency less the Dollar equivalent
of the aggregate principal amount of all Multi-Currency Revolving Loans
denominated in such Multi-Currency outstanding on the date of borrowing.
"SPC" shall have the meaning specified in Section 9.4(i).
"Spot Rate" shall mean, at any date, the Administrative Agent's or
Lender's, as the case may be, (or, for purposes of determinations in respect of
the Aggregate LC Exposure related to Letters of Credit issued in a Foreign
Currency, the Issuing Lender's or Issuing Lenders', as the case may be) spot
buying rate for the relevant Foreign Currency against Dollars as of
approximately 11:00 a.m. (London time) on such date for settlement on the second
Business Day.
"Sterling" shall mean British Pounds Sterling, the lawful currency
of the United Kingdom on the date hereof.
"Subsidiary" shall mean, for any Person (the "Parent"), any
corporation, partnership or other entity of which shares of Voting Capital Stock
sufficient to elect a majority of the board of directors or other Persons
performing similar functions of such corporation,
18
partnership or other entity (irrespective of whether or not at the time
securities or other ownership interests of any other class or classes of such
corporation, partnership or other entity shall have or might have voting power
by reason of the happening of any contingency) are at the time directly or
indirectly owned or controlled by the Parent or one or more of its Subsidiaries
or by the Parent and one or more of its Subsidiaries. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of Viacom.
"Subsidiary Borrower" shall mean any Subsidiary of Viacom (a) which
is designated as a Subsidiary Borrower by Viacom pursuant to a Subsidiary
Borrower Designation, (b) which has delivered to the Administrative Agent a
Subsidiary Borrower Request and (c) whose designation as a Subsidiary Borrower
has not been terminated pursuant to Section 4.2. The term "Subsidiary Borrower"
shall include (except for purposes of Article II and Annex II) any Canadian
Borrower.
"Subsidiary Borrower Designation" shall mean a designation,
substantially in the form of Exhibit B-7, which may be delivered by Viacom and
approved by Viacom and shall be accompanied by a Subsidiary Borrower Request.
"Subsidiary Borrower Obligations" shall mean, with respect to each
Subsidiary Borrower (including each Canadian Borrower), the unpaid principal of
and interest on the Loans made to such Subsidiary Borrower (including, without
limitation, interest accruing after the maturity of the Loans made to such
Subsidiary Borrower and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to such Subsidiary Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) and all
other obligations and liabilities of such Subsidiary Borrower to the
Administrative Agent or to any Lender (including any US-Canadian Lender),
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, this Agreement.
"Subsidiary Borrower Request" shall mean a request, substantially in
the form of Exhibit B-8, which is received by the Administrative Agent in
connection with a Subsidiary Borrower Designation.
"Swingline Borrower" shall mean Viacom and any Subsidiary Borrower
designated as a "Swingline Borrower" by Viacom in a written notice to the
Administrative Agent; provided, that, unless otherwise agreed by the
Administrative Agent, no more than one Subsidiary Borrower may be a Swingline
Borrower at any one time. Only a Subsidiary Borrower which is a U.S. Person may
be a Swingline Borrower.
"Swingline Commitment" shall mean, (i) with respect to any Swingline
Lender, the Commitment of such Lender to make ABR Swingline Loans pursuant to
Section 2.6, as designated in accordance with Section 2.6(g) and as set forth on
Schedule 1.1, and, (ii) in the aggregate, $300,000,000.
19
"Swingline Lender" shall mean The Chase Manhattan Bank and any other
Lender designated from time to time by Viacom, and approved by such Lender, as a
"Swingline Lender" pursuant to Section 2.6(g).
"Swingline Loans" shall mean the collective reference to the ABR
Swingline Loans and the Quoted Swingline Loans.
"Swingline Percentage" of any Swingline Lender at any time shall
mean the percentage of the aggregate Swingline Commitments represented by such
Swingline Lender's Swingline Commitment.
"Syndication Agent" shall have the meaning assigned to such term in
the preamble hereto.
"Test Period" shall have the meaning assigned to such term in
Section 1.2(c).
"364-Day Credit Agreement" shall mean the 364-day credit agreement,
dated the date hereof, among Viacom, Viacom International, each subsidiary
borrower, the lenders party thereto, Chase, as administrative agent, Salomon
Smith Barney Inc., as syndication agent, and Fleet National Bank and Bank of
America, N.A., as co-documentation agents.
"Total Canadian Commitment" shall mean at any time the aggregate
amount of the Canadian Commitments in effect at such time.
"Total Canadian Facility Exposure" shall mean at any time the
aggregate amount of the Outstanding Canadian Extensions of Credit at such time.
"Total Canadian Facility Percentage" shall mean, as to any
US-Canadian Lender at any time, the quotient (expressed as a percentage) of (a)
such US-Canadian Lender's Canadian Commitment (or (x) for the purposes of
acceleration of the Loans pursuant to clause (II) of Article VI or (y) if the
Canadian Commitments have terminated, the sum of such Lender's Outstanding
Canadian Extensions of Credit) and (b) the aggregate of all US-Canadian Lenders'
Canadian Commitments (or (x) for the purposes of acceleration of the Loans
pursuant to clause (II) of Article VI or (y) if the Canadian Commitments have
terminated, the Total Canadian Facility Exposure).
"Total Facility Percentage" shall mean, (i) as to any Lender
(including any US-Canadian Lender) at any time, the quotient (expressed as a
percentage) of (a) the sum of such Lender's Commitment and Canadian Commitment
(or (x) for the purposes of acceleration of the Loans pursuant to clause (II) of
Article VI or (y) if the Commitments have terminated, the sum of such Lender's
Revolving Facility Exposure and Outstanding Canadian Extensions of Credit) and
(b) the aggregate of all Lenders' Commitments and Canadian Commitments (or (x)
for the purposes of acceleration of the Loans pursuant to clause (II) of Article
VI or (y) if the Commitments have terminated, the sum of the Total Revolving
Facility Exposure and Total Canadian Facility Exposure).
"Total Revolving Commitment" shall mean at any time the aggregate
amount of the Revolving Commitments in effect at such time.
20
"Total Revolving Facility Exposure" shall mean at any time the
aggregate amount of the Revolving Facility Exposures at such time.
"Total Revolving Facility Percentage" shall mean, as to any Lender
at any time, the quotient (expressed as a percentage) of (a) such Lender's
Revolving Commitment (or (x) for the purposes of acceleration of the Loans
pursuant to clause (II) of Article VI or (y) if the Revolving Commitments have
terminated, such Lender's Revolving Facility Exposure) and (b) the aggregate of
all Lenders' Revolving Commitments (or (x) for the purposes of acceleration of
the Loans pursuant to clause (II) of Article VI or (y) if the Revolving
Commitments have terminated, the Total Revolving Facility Exposure).
"Total Specified Currency Availability" shall mean with respect to
Multi-Currency Revolving Loans, $1,000,000,000 (as increased or decreased from
time to time pursuant to Section 2.13) less the Dollar equivalent of the
aggregate principal amount of all Multi-Currency Revolving Loans then
outstanding.
"Transferee" shall mean any assignee or participant described in
Section 9.4(b) or (f).
"Type" when used in respect of any Loan, shall refer to the Rate by
reference to which interest on such Loan is determined. For purposes hereof,
"Rate" shall mean the Eurocurrency Rate, the Alternate Base Rate, the Quoted
Swingline Rate and the rate paid on Absolute Rate Loans.
"Unrefunded Swingline Loans" shall have the meaning assigned to such
term in Section 2.6(d).
"US-Canadian Lenders" shall have the meaning assigned to such term
in Annex II hereto.
"US$-Canadian Loans" shall have the meaning set forth in Section
2.1. Each US$-Canadian Loan shall be a Eurocurrency Loan or an ABR Loan.
"U.S. Person" shall mean a citizen, national or resident of the
United States of America, or an entity organized in or under the laws of the
United States of America.
"Utilization Fee" shall have the meaning assigned to such term in
Section 2.9(e).
"Viacom" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Viacom International" shall have the meaning assigned to such term
in the preamble to this Agreement.
"Viacom Obligations" shall mean, with respect to Viacom, the unpaid
principal of and interest on the Loans made to Viacom (including, without
limitation, interest accruing after the maturity of the Loans made to Viacom and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating
21
to Viacom, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) and all other obligations, including its Guarantee
obligations hereunder, and liabilities of Viacom to the Administrative Agent or
to any Lender, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement.
"Voting Capital Stock" shall mean securities or other ownership
interests of a corporation, partnership or other entity having by the terms
thereof ordinary voting power to vote in the election of the board of directors
or other Persons performing similar functions of such corporation, partnership
or other entity (without regard to the occurrence of any contingency).
"Wholly Owned Subsidiary" shall mean any Subsidiary of which all
shares of Voting Capital Stock (other than, in the case of a corporation,
directors' qualifying shares) are owned directly or indirectly by the Parent (as
defined in the definition of "Subsidiary").
"Yen" shall mean the lawful currency of Japan.
SECTION 1.2. Terms Generally. (a) The definitions in Section 1.1
shall apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall, except where the context otherwise requires, be deemed to be
followed by the phrase "without limitation". All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement unless the context
shall otherwise require.
(b) Except as otherwise expressly provided herein, all terms of an
accounting nature shall be construed in accordance with GAAP in effect from time
to time. The parties hereto agree, however, that in the event that any change in
accounting principles from those used in the preparation of the financial
statements referred to in Section 3.2 is hereafter occasioned by the
promulgation of rules, regulations, pronouncements, opinions and statements by
or required by the Financial Accounting Standards Board or Accounting Principles
Board or the American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) and such change materially affects
the calculation of any component of the Financial Covenant or any standard or
term contained in this Agreement, the Administrative Agent and Viacom shall
negotiate in good faith to amend such Financial Covenant, standards or terms
found in this Agreement (other than in respect of financial statements to be
delivered hereunder) so that, upon adoption of such changes, the criteria for
evaluation of Viacom's and its Subsidiaries' financial condition shall be the
same after such change as if such change had not been made; provided, however,
that (i) any such amendments shall not become effective for purposes of this
Agreement unless approved by the Required Lenders and (ii) if Viacom and the
Required Lenders cannot agree on such an amendment, then the calculations under
such Financial Covenant, standards or terms shall continue to be computed
without giving effect to such change in accounting principles; provided further,
however, that the parties hereto agree that Viacom and its Subsidiaries shall
adopt Statement of Position 00-2, "Accounting by Producers or Distributors of
Films" effective as from January 1, 2000.
22
(c) For the purposes of calculating Consolidated EBITDA and
Consolidated Interest Expense for any period (a "Test Period"), (i) if at any
time from the period (a "Pro Forma Period") commencing on the second day of such
Test Period and ending on the date which is ten days prior to the date of
delivery of the Compliance Certificate in respect of such Test Period (or, in
the case of any pro forma calculation made pursuant hereto in respect of a
particular transaction, ending on the date such transaction is consummated after
giving effect thereto), Viacom or any Subsidiary shall have made any Material
Disposition, the Consolidated EBITDA for such Test Period shall be reduced by an
amount equal to the Consolidated EBITDA (if positive) attributable to the
Property which is the subject of such Material Disposition for such Test Period
or increased by an amount equal to the Consolidated EBITDA (if negative)
attributable thereto for such Test Period, and Consolidated Interest Expense for
such Test Period shall be reduced by an amount equal to the Consolidated
Interest Expense for such Test Period attributable to any Indebtedness of Viacom
or any Subsidiary repaid, repurchased, defeased or otherwise discharged with
respect to Viacom and its Subsidiaries in connection with such Material
Disposition (or, if the Capital Stock of any Subsidiary is sold, the
Consolidated Interest Expense for such Test Period directly attributable to the
Indebtedness of such Subsidiary to the extent Viacom and its continuing
Subsidiaries are no longer liable for such Indebtedness after such Disposition);
(ii) if during such Pro Forma Period Viacom or any Subsidiary shall have made a
Material Acquisition, Consolidated EBITDA and Consolidated Interest Expense for
such Test Period shall be calculated after giving pro forma effect thereto
(including the incurrence or assumption of any Indebtedness in connection
therewith) as if such Material Acquisition (and the incurrence or assumption of
any such Indebtedness) occurred on the first day of such Test Period; and (iii)
if during such Pro Forma Period any Person that subsequently became a Subsidiary
or was merged with or into Viacom or any Subsidiary since the beginning of such
Pro Forma Period shall have entered into any disposition or acquisition
transaction that would have required an adjustment pursuant to clause (i) or
(ii) above if made by Viacom or a Subsidiary during such Pro Forma Period,
Consolidated EBITDA and Consolidated Interest Expense for such Test Period shall
be calculated after giving pro forma effect thereto as if such transaction
occurred on the first day of such Test Period. For the purposes of this
paragraph, whenever pro forma effect is to be given to a Material Disposition or
Material Acquisition, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
discharged or incurred in connection therewith, the pro forma calculations shall
be determined in good faith by a Financial Officer of Viacom. If any
Indebtedness bears a floating rate of interest and the incurrence or assumption
thereof is being given pro forma effect, the interest expense on such
Indebtedness shall be calculated as if the rate in effect on the last day of the
relevant Pro Forma Period had been the applicable rate for the entire relevant
Test Period (taking into account any interest rate protection agreement
applicable to such Indebtedness if such interest rate protection agreement has a
remaining term in excess of 12 months). Comparable adjustments shall be made in
connection with any determination of Consolidated EBITDA.
(d) For purposes of the Financial Covenant, (i) the Discontinued
Operations shall be disregarded and (ii) the businesses classified as
Discontinued Operations shall be limited to those businesses treated as such in
the financial statements of Viacom referred to in the definition of
"Discontinued Operations" and the accounting treatment of Discontinued
Operations shall be consistent with the accounting treatment thereof in such
financial statements.
23
ARTICLE II
THE CREDITS
SECTION 2.1. Commitments.
(a) Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Lender agrees, severally
and not jointly, to make Revolving Credit Loans to Viacom or any Subsidiary
Borrower at any time and from time to time on and after the Closing Date and
until the earlier of (x) the Business Day immediately preceding the Revolving
Credit Maturity Date and (y) the termination of the Revolving Commitment of such
Lender, in an aggregate principal amount at any time outstanding not to exceed
such Lender's Revolving Commitment. Each Borrower may borrow, prepay and
reborrow Revolving Credit Loans on and after the Closing Date and prior to the
Revolving Credit Maturity Date, subject to the terms, conditions and limitations
set forth herein.
(b) Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each US-Canadian Lender agrees,
severally and not jointly, (A) to make C$ Loans to any Canadian Borrower as
provided in Annex II or (B) at Viacom's request, to make revolving loans
denominated in Dollars to Viacom or any Subsidiary Borrower (excluding any
Canadian Borrower) (such revolving loans, "US$-Canadian Loans"), in each case,
through its applicable Canadian Lending Office with respect to such Loan, at any
time and from time to time on and after the Closing Date and until the earlier
of (x) the Business Day immediately preceding the Revolving Credit Maturity Date
and (y) the termination of the Canadian Commitment of such US-Canadian Lender,
in an aggregate principal amount at any time outstanding not to exceed such
US-Canadian Lender's Canadian Commitment. Each Borrower may borrow, prepay and
reborrow US$-Canadian Loans on and after the Closing Date and prior to the
Revolving Credit Maturity Date, subject to the terms, conditions and limitations
set forth herein and in Annex II and each Canadian Borrower may borrow, prepay
and reborrow C$ Loans as provided in Annex II.
SECTION 2.2. Revolving Credit Loans; Competitive Loans.
(a) Each Revolving Credit Loan shall be made to the relevant
Borrower by the Lenders ratably in accordance with their respective Revolving
Commitments, in accordance with the procedures set forth in Section 2.4. Each
US$-Canadian Loan shall be made to the relevant Borrower by the US-Canadian
Lenders ratably in accordance with their respective Canadian Commitments, in
accordance with the procedures set forth in Section 2.4. Each Competitive Loan
shall be made to the relevant Borrower by the Lender whose Competitive Bid
therefor is accepted, and in the amount so accepted, in accordance with the
procedures set forth in Section 2.3. The Revolving Credit Loans, US$-Canadian
Loans or Competitive Loans shall be made in minimum amounts equal to (i) in the
case of Competitive Loans, $5,000,000 or an integral multiple of $1,000,000 in
excess thereof, (ii) in the case of Eurocurrency US$-Canadian Loans and
Eurocurrency Revolving Loans, $50,000,000 or an integral multiple of $5,000,000
in excess thereof, (iii) in the case of Multi-Currency Revolving Loans, the
Dollar equivalent of $25,000,000 or an integral multiple of $5,000,000 in excess
thereof and (iv) in the case of ABR
24
US$-Canadian Loans and ABR Revolving Loans, $25,000,000 or an integral multiple
of $5,000,000 in excess thereof (or (A) (x) in the case of Revolving Credit
Loans, an aggregate principal amount equal to the remaining balance of the
available Total Revolving Commitment or, if less, (y) with respect to
Multi-Currency Revolving Loans, the lesser of (I) the Specified Currency
Availability with respect to such currency and (II) the Total Specified Currency
Availability or (B) in the case of US$-Canadian Loans, an aggregate principal
amount equal to the remaining balance of the available Total Canadian
Commitment).
(b) Each Lender or US-Canadian Lender, as applicable, shall make
each Loan (other than a Swingline Loan, as to which this Section 2.2 shall not
apply, and a C$ Loan, as to which Annex II shall govern) to be made by it on the
proposed date thereof by wire transfer of immediately available funds to the
Administrative Agent in New York, New York, not later than 12:00 noon, New York
City time (or, in connection with an ABR Loan to be made on the same day on
which a notice is submitted, 12:30 p.m., New York City time) and the
Administrative Agent shall by 3:00 p.m., New York City time, credit the amounts
so received to the general deposit account of the relevant Borrower with the
Administrative Agent. Each US-Canadian Lender shall make each US$-Canadian Loan
through a branch or Lender Affiliate of such US-Canadian Lender located in the
United States (or as otherwise may be agreed form time to time between Viacom
and such US-Canadian Lander).
SECTION 2.3. Competitive Bid Procedure.
(a) In order to request Competitive Bids, the relevant Borrower
shall hand deliver or telecopy to the Administrative Agent a duly completed
Competitive Bid Request in the form of Exhibit B-1, to be received by the
Administrative Agent (i) in the case of a Eurocurrency Competitive Loan in
Dollars, not later than 10:00 a.m., New York City time, four Business Days
before a proposed Competitive Loan, (ii) in the case of a Eurocurrency
Competitive Loan in a Foreign Currency, not later than 10:00 a.m., New York City
time, five Business Days before a proposed Competitive Loan , (iii) in the case
of an Absolute Rate Loan in Dollars, not later than 10:00 a.m., New York City
time, one Business Day before a proposed Competitive Loan and (iv) in the case
of an Absolute Rate Loan in a Foreign Currency, not later than 10:00 a.m., New
York City time, three Business Day before a proposed Competitive Loan. A
Competitive Bid Request (A) that does not conform substantially to the format of
Exhibit B-1 may be rejected in the Administrative Agent's discretion (exercised
in good faith), and, (B) for a Competitive Loan denominated in a Foreign
Currency will be rejected by the Administrative Agent if, after giving effect
thereto, the Dollar equivalent of the aggregate face amount of all Competitive
Loans denominated in Foreign Currencies then outstanding would exceed
$150,000,000, as determined by the Administrative Agent, and, in each case, the
Administrative Agent shall promptly notify the relevant Borrower of such
rejection by telephone, confirmed by telecopier. Such request shall in each case
refer to this Agreement and specify (w) whether the Competitive Loan then being
requested is to be a Eurocurrency Competitive Loan or an Absolute Rate Loan, (x)
the currency, (y) the date of such Loan (which shall be a Business Day) and the
aggregate principal amount thereof which shall be in a minimum principal amount
of the equivalent of $5,000,000 and, in the case of a Competitive Bid for a
Competitive Loan in Dollars, in an integral multiple of $1,000,000, and (z) the
Interest Period with respect thereto (which may not end after the Revolving
Credit Maturity Date). Promptly after its receipt of a Competitive Bid Request
that is not rejected as aforesaid (and in any event by 5:00 p.m., New York City
time, on the date of such
25
receipt if such receipt occurs by the time specified in the first sentence of
this paragraph), the Administrative Agent shall invite by telecopier (in the
form set forth in Exhibit B-2) the Lenders to bid, on the terms and conditions
of this Agreement, to make Competitive Loans pursuant to such Competitive Bid
Request.
(b) Each Lender may, in its sole discretion, make one or more
Competitive Bids to the relevant Borrower responsive to a Competitive Bid
Request. Each Competitive Bid must be received by the Administrative Agent by
telecopier, in the form of Exhibit B-3, (i) in the case of a Eurocurrency
Competitive Loan in Dollars, not later than 9:30 a.m., New York City time, three
Business Days before a proposed Competitive Loan, (ii) in the case of a
Eurocurrency Competitive Loan in a Foreign Currency, not later than 9:30 a.m.,
New York City time, four Business Days before a proposed Competitive Loan, (iii)
in the case of an Absolute Rate Loan in Dollars, not later than 9:30 a.m., New
York City time, on the day of a proposed Competitive Loan, and (iv) in the case
of an Absolute Rate Loan in a Foreign Currency, not later than 9:30 a.m., New
York City time, two days before a proposed Competitive Loan. Multiple
Competitive Bids will be accepted by the Administrative Agent. Competitive Bids
that do not conform substantially to the format of Exhibit B-3 may be rejected
by the Administrative Agent after conferring with, and upon the instruction of,
the relevant Borrower, and the Administrative Agent shall notify the Lender
making such nonconforming Competitive Bid of such rejection as soon as
practicable. Each Competitive Bid shall refer to this Agreement and specify (x)
the principal amount in the relevant currency (which shall be in a minimum
principal amount of the equivalent of $5,000,000 and, in the case of a
Competitive Bid for a Competitive Loan in Dollars, in an integral multiple of
$1,000,000 and which may equal the entire principal amount of the Competitive
Loan requested by the relevant Borrower) of the Competitive Loan or Loans that
the applicable Lender is willing to make to the relevant Borrower, (y) the
Competitive Bid Rate or Rates at which such Lender is prepared to make the
Competitive Loan or Loans and (z) the Interest Period and the last day thereof.
A Competitive Bid submitted pursuant to this paragraph (b) shall be irrevocable
(subject to the satisfaction of the conditions to borrowing set forth in Article
IV).
(c) The Administrative Agent shall promptly (and in any event by
10:15 a.m., New York City time, on the date on which such Competitive Bids shall
have been made) notify the relevant Borrower by telecopier of all the
Competitive Bids made, the Competitive Bid Rate and the principal amount in the
relevant currency of each Competitive Loan in respect of which a Competitive Bid
was made and the identity of the Lender that made each Competitive Bid. The
Administrative Agent shall send a copy of all Competitive Bids to the relevant
Borrower for its records as soon as practicable after completion of the bidding
process set forth in this Section 2.3.
(d) The relevant Borrower may in its sole and absolute discretion,
subject only to the provisions of this paragraph (d), accept or reject any
Competitive Bid referred to in paragraph (c) above. The relevant Borrower shall
notify the Administrative Agent by telephone, confirmed by telecopier in such
form as may be agreed upon by such Borrower and the Administrative Agent,
whether and to what extent it has decided to accept or reject any of or all the
Competitive Bids referred to in paragraph (c) above, (i) in the case of a
Eurocurrency Competitive Loan in Dollars, not later than 11:00 a.m., New York
City time, three Business Days before a proposed Competitive Loan, (ii) in the
case of a Eurocurrency Competitive Loan in a Foreign Currency,
26
not later than 11:00 a.m., New York City time, four Business Days before a
proposed Competitive Loan, (iii) in the case of an Absolute Rate Loan in
Dollars, not later than 11:00 a.m., New York City time, on the day of a proposed
Competitive Loan, and (iv) in the case of an Absolute Rate Loan in a Foreign
Currency, not later than 11:00 a.m., New York City time, on the day before a
proposed Competitive Loan; provided, however, that (A) the failure by such
Borrower to give such notice shall be deemed to be a rejection of all the
Competitive Bids referred to in paragraph (c) above, (B) such Borrower shall not
accept a Competitive Bid made at a particular Competitive Bid Rate if it has
decided to reject a Competitive Bid made at a lower Competitive Bid Rate, (C)
the aggregate amount of the Competitive Bids accepted by such Borrower shall not
exceed the principal amount specified in the Competitive Bid Request (but may be
less than that requested), (D) if such Borrower shall accept a Competitive Bid
or Competitive Bids made at a particular Competitive Bid Rate but the amount of
such Competitive Bid or Competitive Bids shall cause the total amount of
Competitive Bids to be accepted by it to exceed the amount specified in the
Competitive Bid Request, then such Borrower shall accept a portion of such
Competitive Bid or Competitive Bids in an amount equal to the amount specified
in the Competitive Bid Request less the amount of all other Competitive Bids
accepted with respect to such Competitive Bid Request, which acceptance, in the
case of multiple Competitive Bids at such Competitive Bid Rate, shall be made
pro rata in accordance with the amount of each such Competitive Bid at such
Competitive Bid Rate, and (E) except pursuant to clause (D) above no Competitive
Bid shall be accepted for a Competitive Loan unless such Competitive Loan is in
a minimum principal amount of the equivalent of $5,000,000 and, in the case of a
Competitive Bid for a Competitive Loan in Dollars, an integral amount multiple
of $1,000,000; provided, further, however, that if a Competitive Loan must be in
an amount less than the equivalent of $5,000,000 because of the provisions of
clause (D) above, such Competitive Loan may be for a minimum of, in the case of
a Competitive Bid for a Competitive Loan in Dollars, $1,000,000 or any integral
multiple thereof, and in calculating the pro rata allocation of acceptances of
portions of multiple Competitive Bids at a particular Competitive Bid Rate
pursuant to clause (D) above the amounts shall be rounded to integral multiples
of the equivalent of $1,000,000 (or, in the case of a Competitive Bid for a
Competitive Loan in a Foreign Currency, a multiple selected by the
Administrative Agent) in a manner which shall be in the discretion of such
Borrower. A notice given by any Borrower pursuant to this paragraph (d) shall be
irrevocable.
(e) The Administrative Agent shall promptly notify each bidding
Lender whether or not its Competitive Bid has been accepted (and if so, in what
amount and at what Competitive Bid Rate) by telecopy sent by the Administrative
Agent, and each successful bidder will thereupon become bound, subject to the
other applicable conditions hereof, to make the Competitive Loan in respect of
which its Competitive Bid has been accepted.
(f) On the date the Competitive Loan is to be made, each Lender
participating therein shall (i) if such Competitive Loan is to be made in
Dollars, make available its share of such Competitive Loan in Dollars not later
than 2:00 p.m. New York City time, in immediately available funds, in New York
to the Administrative Agent as notified by the Administrative Agent by two
Business Days notice and (ii) if such Competitive Loan is to be made in a
Foreign Currency, make available its share of such Competitive Loan in such
Foreign Currency not later
27
than 11:00 a.m. London time, in immediately available funds, in London to the
Administrative Agent as notified by the Administrative Agent by two Business
Days notice.
(g) If the Lender which is the Administrative Agent shall elect to
submit a Competitive Bid in its capacity as a Lender, it shall submit such
Competitive Bid directly to the relevant Borrower at least one quarter of an
hour earlier than the latest time at which the other Lenders are required to
submit their Competitive Bids to the Administrative Agent pursuant to paragraph
(b) above.
(h) All notices required by this Section 2.3 shall be given in
accordance with Section 9.1.
(i) No Borrower shall have the right to prepay any Competitive Loan
without the consent of the Lender or Lenders making such Competitive Loan.
SECTION 2.4. Revolving Credit Loan Borrowing Procedure.
In order to request a Revolving Credit Loan or a US$-Canadian Loan,
the relevant Borrower shall hand deliver or telecopy to the Administrative Agent
a Borrowing Request in the form of Exhibit B-4 (a) in the case of a Eurocurrency
Revolving Loan denominated in Dollars or a Eurocurrency US$-Canadian Loan, not
later than 11:00 a.m., New York City time, three Business Days before a proposed
borrowing, (b) in the case of a Multi-Currency Revolving Loan, 8:00 a.m. New
York City time three Business Days before a proposed borrowing, and (c) in the
case of an ABR Revolving Loan or an ABR US$-Canadian Loan, not later than 11:00
a.m., New York City time, on the day of a proposed borrowing. Such notice shall
be irrevocable and shall in each case specify (i) whether the Revolving Credit
Loan or US$-Canadian Loan, as applicable, then being requested is to bear
interest at the Eurocurrency Rate or the Alternate Base Rate, (ii) the date of
such Revolving Credit Loan or US$-Canadian Loan (which shall be a Business Day)
and the amount thereof; (iii) in the case of a Eurocurrency Revolving Loan or a
Eurocurrency US$-Canadian Loan, the Interest Period with respect thereto, and
(iv) in the case of a Multi-Currency Revolving Loan, the currency in which such
Loan shall be denominated. The Administrative Agent shall promptly advise the
relevant Lenders and US-Canadian Lenders of any notice given pursuant to this
Section 2.4 and of each Lender's or US-Canadian Lender's, as applicable, portion
of the requested Loan.
SECTION 2.5. Repayment of Loans.
Each Borrower shall repay all outstanding Revolving Credit Loans,
US$-Canadian Loans and ABR Swingline Loans made to it, in each case on the
Revolving Credit Maturity Date (or such earlier date on which the Commitments
shall terminate in accordance herewith). Each Borrower shall repay Quoted
Swingline Loans and Competitive Loans made to it, in each case on the Maturity
Date applicable thereto. Each Loan above shall bear interest from and including
the date thereof on the outstanding principal balance thereof as set forth in
Section 2.10.
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SECTION 2.6. Swingline Loans.
(a) Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Swingline Lender agrees,
severally and not jointly, at any time and from time to time on and after the
Closing Date and until the earlier of the Business Day immediately preceding the
Revolving Credit Maturity Date and the termination of the Swingline Commitment
of such Swingline Lender, (i) to make available to any Swingline Borrower
Swingline Loans ("Quoted Swingline Loans") on the basis of quoted interest rates
(each, a "Quoted Swingline Rate") furnished by such Swingline Lender from time
to time in its discretion to such Swingline Borrower (through the Administrative
Agent) and accepted by such Swingline Borrower in its discretion and (ii) to
make Swingline Loans ("ABR Swingline Loans") to any Swingline Borrower bearing
interest at a rate equal to the Alternate Base Rate in an aggregate principal
amount (in the case of this clause (ii)) not to exceed such Swingline Lender's
Swingline Commitment. The aggregate outstanding principal amount of the Quoted
Swingline Loans of any Swingline Lender, when added to the aggregate outstanding
principal amount of the ABR Swingline Loans of such Swingline Lender, may exceed
such Swingline Lender's Swingline Commitment; provided, that in no event shall
the aggregate outstanding principal amount of the Swingline Loans exceed the
aggregate Swingline Commitments then in effect. Each Quoted Swingline Loan shall
be made only by the Swingline Lender furnishing the relevant Quoted Swingline
Rate. Each ABR Swingline Loan shall be made by the Swingline Lenders ratably in
accordance with their respective Swingline Percentages. The Swingline Loans
shall be made in a minimum aggregate principal amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof (or an aggregate principal
amount equal to the remaining balance of the available Swingline Commitments).
Each Swingline Lender shall make the portion of each Swingline Loan to be made
by it available to any Swingline Borrower by means of a credit to the general
deposit account of such Swingline Borrower with the Administrative Agent or a
wire transfer, at the expense of such Swingline Borrower, to an account
designated in writing by such Swingline Borrower, in each case by 3:30 p.m., New
York City time, on the date such Swingline Loan is requested to be made pursuant
to paragraph (b) below, in immediately available funds. Each Swingline Borrower
may borrow, prepay and reborrow Swingline Loans on or after the Closing Date and
prior to the Revolving Credit Maturity Date (or such earlier date on which the
Commitments shall terminate in accordance herewith) on the terms and subject to
the conditions and limitations set forth herein.
(b) The relevant Swingline Borrower shall give the Administrative
Agent telephonic, written or telecopy notice substantially in the form of
Exhibit B-5 (in the case of telephonic notice, such notice shall be promptly
confirmed by telecopy) no later than 2:30 p.m., New York City time (or, in the
case of a proposed Quoted Swingline Loan, 12:00 noon, New York City time), on
the day of a proposed Swingline Loan. Such notice shall be delivered on a
Business Day, shall be irrevocable (subject, in the case of Quoted Swingline
Loans, to receipt by the relevant Swingline Borrower of Quoted Swingline Rates
acceptable to it) and shall refer to this Agreement and shall specify the
requested date (which shall be a Business Day) and amount of such Swingline
Loan. The Administrative Agent shall promptly advise the Swingline Lenders of
any notice received from any Swingline Borrower pursuant to this paragraph (b).
In the event that a Swingline Borrower accepts a Quoted Swingline Rate in
respect of a proposed Quoted Swingline Loan, it shall notify the Administrative
Agent (which shall in turn notify the relevant
29
Swingline Lender) of such acceptance no later than 2:30 p.m., New York City
time, on the relevant borrowing date.
(c) In the event that any ABR Swingline Loan shall be outstanding
for more than five Business Days, the Administrative Agent shall, on behalf of
the relevant Swingline Borrower (which hereby irrevocably directs and authorizes
the Administrative Agent to act on its behalf), request each Lender, including
the Swingline Lenders, to make an ABR Revolving Loan in an amount equal to such
Lender's Revolving Credit Percentage of the principal amount of such ABR
Swingline Loan. Unless an event described in Article VI, paragraph (f) or (g),
has occurred and is continuing, each Lender will make the proceeds of its
Revolving Credit Loan available to the Administrative Agent for the account of
the Swingline Lenders at the office of the Administrative Agent prior to 12:00
Noon, New York City time, in funds immediately available on the Business Day
next succeeding the date such notice is given. The proceeds of such Revolving
Credit Loans shall be immediately applied to repay the ABR Swingline Loans.
(d) A Swingline Lender that has made an ABR Swingline Loan to a
Borrower may at any time and for any reason, so long as Revolving Credit Loans
have not been made pursuant to Section 2.6(c) to repay such ABR Swingline Loan
as required by said Section, by written notice given to the Administrative Agent
not later than 12:00 noon New York City time on any Business Day require the
Lenders to acquire participations on such Business Day in all or a portion of
such unrefunded ABR Swingline Loans (the "Unrefunded Swingline Loans"), and each
Lender severally, unconditionally and irrevocably agrees that it shall purchase
an undivided participating interest in such ABR Swingline Loan in an amount
equal to the amount of the Revolving Credit Loan which otherwise would have been
made by such Lender pursuant to Section 2.6(c), which purchase shall be funded
by the time such Revolving Credit Loan would have been required to be made
pursuant to Section 2.6(c). In the event that the Lenders purchase undivided
participating interests pursuant to the first sentence of this paragraph (d),
each Lender shall immediately transfer to the Administrative Agent, for the
account of such Swingline Lenders, in immediately available funds the amount of
its participation. Any Lender holding a participation in an Unrefunded Swingline
Loan may exercise any and all rights of banker's lien, setoff or counterclaim
with respect to any and all moneys owing by the relevant Swingline Borrower to
such Lender by reason thereof as fully as if such Lender had made a Loan
directly to such Swingline Borrower in the amount of such participation.
(e) Whenever, at any time after any Swingline Lender has received
from any Lender such Lender's participating interest in an ABR Swingline Loan,
such Swingline Lender receives any payment on account thereof, such Swingline
Lender will promptly distribute to such Lender its participating interest in
such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Lender's participating interest was
outstanding and funded); provided, however, that in the event that such payment
received by such Swingline Lender is required to be returned, such Lender will
return to such Swingline Lender any portion thereof previously distributed by
such Swingline Lender to it.
(f) Notwithstanding anything to the contrary in this Agreement, each
Lender's obligation to make the Revolving Credit Loans referred to in Section
2.6(c) and to purchase and fund participating interests pursuant to Section
2.6(d) shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff,
30
counterclaim, recoupment, defense or other right which such Lender or any
Swingline Borrower may have against any Swingline Lender, any Swingline Borrower
or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default or an Event of Default or the failure to satisfy any of
the conditions specified in Article IV; (iii) any adverse change in the
condition (financial or otherwise) of Viacom or any of its Subsidiaries; (iv)
any breach of this Agreement by any Borrower or any Lender; or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
(g) Upon written or telecopy notice to the Swingline Lenders and to
the Administrative Agent, Viacom may at any time terminate, from time to time in
part reduce, or from time to time (with the approval of the relevant Swingline
Lender) increase, the Swingline Commitment of any Swingline Lender. At any time
when there shall be fewer than ten Swingline Lenders, Viacom may appoint from
among the Lenders a new Swingline Lender, subject to the prior consent of such
new Swingline Lender and prior notice to the Administrative Agent, so long as at
no time shall there be more than ten Swingline Lenders. Notwithstanding anything
to the contrary in this Agreement, (i) if any ABR Swingline Loans shall be
outstanding at the time of any termination, reduction, increase or appointment
pursuant to the preceding two sentences, the Swingline Borrowers shall on the
date thereof prepay or borrow ABR Swingline Loans to the extent necessary to
ensure that at all times the outstanding ABR Swingline Loans held by the
Swingline Lenders shall be pro rata according to the respective Swingline
Commitments of the Swingline Lenders and (ii) in no event may the aggregate
Swingline Commitments exceed $300,000,000. On the date of any termination or
reduction of the Swingline Commitments pursuant to this paragraph (g), the
Swingline Borrowers shall pay or prepay so much of the Swingline Loans as shall
be necessary in order that, after giving effect to such termination or
reduction, (i) the aggregate outstanding principal amount of the ABR Swingline
Loans of any Swingline Lender will not exceed the Swingline Commitment of such
Swingline Lender and (ii) the aggregate outstanding principal amount of all
Swingline Loans will not exceed the aggregate Swingline Commitments.
(h) Each Swingline Borrower may prepay any Swingline Loan in whole
or in part at any time without premium or penalty; provided, that such Swingline
Borrower shall have given the Administrative Agent written or telecopy notice
(or telephone notice promptly confirmed in writing or by telecopy) of such
prepayment not later than 10:30 a.m., New York City time, on the Business Day
designated by such Swingline Borrower for such prepayment; and provided,
further, that each partial payment shall be in an amount that is an integral
multiple of $1,000,000. Each notice of prepayment under this paragraph (h) shall
specify the prepayment date and the principal amount of each Swingline Loan (or
portion thereof) to be prepaid, shall be irrevocable and shall commit such
Swingline Borrower to prepay such Swingline Loan (or portion thereof) by the
amount stated therein on the date stated therein. All prepayments under this
paragraph (h) shall be accompanied by accrued interest on the principal amount
being prepaid to the date of payment. Each payment of principal of or interest
on ABR Swingline Loans shall be allocated, as between the Swingline Lenders, pro
rata in accordance with their respective Swingline Percentages.
(i) All Swingline Loans shall be made in Dollars.
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SECTION 2.7. Letters of Credit.
(a) Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Issuing Lender agrees, at
any time and from time to time on or after the Closing Date until the earlier of
(i) the fifth Business Day preceding the Revolving Credit Maturity Date and (ii)
the termination of the Revolving Commitments in accordance with the terms
hereof, to issue and deliver or to extend the expiry of Letters of Credit for
the account of any Borrower in an aggregate outstanding undrawn amount which
does not exceed the maximum amount specified in the applicable Issuing Lender
Agreement; provided, that in no event shall the Aggregate LC Exposure exceed
$750,000,000 at any time. Each Letter of Credit (i) shall be in a form approved
in writing by the applicable Borrower and the applicable Issuing Lender and (ii)
shall permit drawings upon the presentation of such documents as shall be
specified by such Borrower in the applicable notice delivered pursuant to
paragraph (c) below. The Lenders agree that, subject to compliance with the
conditions precedent set forth in Section 4.3, any Designated Letter of Credit
may be designated as a Letter of Credit hereunder from time to time on or after
the Closing Date pursuant to the procedures specified in the definition of
"Designated Letters of Credit".
(b) Each Letter of Credit shall by its terms expire not later than
the fifth Business Day preceding the Revolving Credit Maturity Date. Any Letter
of Credit may provide for the renewal thereof for additional periods (which
shall in no event extend beyond the date referred to in the preceding sentence).
Each Letter of Credit shall by its terms provide for payment of drawings in
Dollars or in a Foreign Currency; provided, that a Letter of Credit denominated
in a Foreign Currency may not be issued if, after giving effect thereto, the
Dollar equivalent (calculated on the basis of the applicable Foreign Exchange
Rate) of the aggregate face amount of all Letters of Credit denominated in
Foreign Currencies then outstanding would exceed $150,000,000, as determined by
the Administrative Agent acting in good faith.
(c) The applicable Borrower shall give the applicable Issuing Lender
and the Administrative Agent written or telecopy notice not later than 10:00
a.m., New York City time, three Business Days (or such shorter period as shall
be acceptable to such Issuing Lender) prior to any proposed issuance of a Letter
of Credit. Each such notice shall refer to this Agreement and shall specify (i)
the date on which such Letter of Credit is to be issued (which shall be a
Business Day) and the face amount of such Letter of Credit, (ii) the name and
address of the beneficiary, (iii) whether such Letter of Credit is a Financial
Letter of Credit or a Non-Financial Letter of Credit (subject to confirmation of
such status by the Administrative Agent), (iv) whether such Letter of Credit
shall permit a single drawing or multiple drawings, (v) the form of the
documents required to be presented at the time of any drawing (together with the
exact wording of such documents or copies thereof), (vi) the expiry date of such
Letter of Credit (which shall conform to the provisions of paragraph (b) above)
and (vii) if such Letter of Credit is to be in a Foreign Currency, the relevant
Foreign Currency. The Administrative Agent shall give to each Lender prompt
written or telecopy advice of the issuance of any Letter of Credit. Each
determination by the Administrative Agent as to whether or not a Letter of
Credit constitutes a Financial Letter of Credit shall be conclusive and binding
upon the applicable Borrower and the Lenders.
32
(d) By the issuance of a Letter of Credit and without any further
action on the part of the applicable Issuing Lender or the Lenders in respect
thereof, the applicable Issuing Lender hereby grants to each Lender, and each
Lender hereby acquires from such Issuing Lender, a participation in such Letter
of Credit equal to such Lender's Revolving Credit Percentage at the time of any
drawing thereunder of the stated amount of such Letter of Credit, effective upon
the issuance of such Letter of Credit. In addition, the applicable Issuing
Lender hereby grants to each Lender, and each Lender hereby acquires from such
Issuing Lender, a participation in each Designated Letter of Credit equal to
such Lender's Revolving Credit Percentage at the time of any drawing thereunder
of the stated amount of such Designated Letter of Credit, effective on the date
such Designated Letter of Credit is designated as a Letter of Credit hereunder.
In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of each Issuing Lender, in accordance with paragraph (f) below, such
Lender's Revolving Credit Percentage of each unreimbursed LC Disbursement made
by such Issuing Lender; provided, however, that the Lenders shall not be
obligated to make any such payment with respect to any payment or disbursement
made under any Letter of Credit to the extent resulting from the gross
negligence or willful misconduct of such Issuing Lender.
(e) Each Lender acknowledges and agrees that its acquisition of
participations pursuant to paragraph (d) above in respect of Letters of Credit
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Lender or the applicable Borrower
may have against any Issuing Lender, any Borrower or any other Person, for any
reason whatsoever; (ii) the occurrence or continuance of a Default or an Event
of Default or the failure to satisfy any of the conditions specified in Article
IV; (iii) any adverse change in the condition (financial or otherwise) of the
applicable Borrower; (iv) any breach of this Agreement by any Borrower or any
Lender; or (v) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing.
(f) On the date on which it shall have ascertained that any
documents presented under a Letter of Credit appear to be in conformity with the
terms and conditions of such Letter of Credit, the applicable Issuing Lender
shall give written or telecopy notice to the applicable Borrower and the
Administrative Agent of the amount of the drawing and the date on which payment
thereon has been or will be made. If the applicable Issuing Lender shall not
have received from the applicable Borrower the payment required pursuant to
paragraph (g) below by 12:00 noon, New York City time, two Business Days after
the date on which payment of a draft presented under any Letter of Credit has
been made, such Issuing Lender shall so notify the Administrative Agent, which
shall in turn promptly notify each Lender, specifying in the notice to each
Lender such Lender's Revolving Credit Percentage of such LC Disbursement. Each
Lender shall pay to the Administrative Agent, not later than 2:00 p.m., New York
City time, on such second Business Day, such Lender's Revolving Credit
Percentage of such LC Disbursement (which obligation shall be expressed in
Dollars only), which the Administrative Agent shall promptly pay to the
applicable Issuing Lender. The Administrative Agent will promptly remit to each
Lender such Lender's Revolving Credit Percentage of any amounts subsequently
received by the Administrative Agent from the applicable Borrower in respect of
such LC Disbursement; provided, that (i) amounts so received for the account of
any Lender
33
prior to payment by such Lender of amounts required to be paid by it hereunder
in respect of any LC Disbursement and (ii) amounts representing interest at the
rate provided in paragraph (g) below on any LC Disbursement for the period prior
to the payment by such Lender of such amounts shall in each case be remitted to
the applicable Issuing Lender.
(g) If an Issuing Lender shall pay any draft presented under a
Letter of Credit, the applicable Borrower shall pay to such Issuing Lender an
amount equal to the amount of such draft before 12:00 noon, New York City time,
on the second Business Day immediately following the date of payment of such
draft, together with interest (if any) on such amount at a rate per annum equal
to the interest rate in effect for ABR Loans (or, in the case of Foreign
Currency denominated Letters of Credit, the rate which would reasonably and
customarily be charged by such Issuing Lender on outstanding loans denominated
in the relevant Foreign Currency) from (and including) the date of payment of
such draft to (but excluding) the date on which such Borrower shall have repaid,
or the Lenders shall have refunded, such draft in full (which interest shall be
payable on such second Business Day and from time to time thereafter on demand
until such Borrower shall have repaid, or the Lenders shall have refunded, such
draft in full). In the event that such drawing shall be refunded by the Lenders
as provided in Section 2.7(f), the applicable Borrower shall pay to the
Administrative Agent, for the account of the Lenders, quarterly on the last day
of each March, June, September and December, interest on the amount so refunded
at a rate per annum equal to the interest rate in effect for ABR Loans from (and
including) the date of such refunding to (but excluding) the date on which the
amount so refunded by the Lenders shall have been paid in full in Dollars by
such Borrower. Each payment made to an Issuing Lender by the applicable Borrower
pursuant to this paragraph shall be made at such Issuing Lender's address for
notices specified herein in lawful money of (x) the United States of America (in
the case of payments made on Dollar-denominated Letters of Credit) or (y) the
applicable foreign jurisdiction (in the case of payments on Foreign
Currency-denominated Letters of Credit) and in immediately available funds. The
obligation of the applicable Borrower to pay the amounts referred to above in
this paragraph (g) (and the obligations of the Lenders under paragraphs (d) and
(f) above) shall be absolute, unconditional and irrevocable and shall be
satisfied strictly in accordance with their terms irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit or any Issuing Lender Agreement or of the obligations of any
Borrower under this Agreement or any Issuing Lender Agreement;
(ii) the existence of any claim, setoff, defense or other
right which any Borrower or any other Person may at any time have
against the beneficiary under any Letter of Credit, the Agents, any
Issuing Lender or any Lender (other than the defense of payment in
accordance with the terms of this Agreement or a defense based on
the gross negligence or willful misconduct of the applicable Issuing
Lender) or any other Person in connection with this Agreement or any
other transaction;
(iii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent or invalid in any respect or
any statement therein being untrue or inaccurate in any respect;
provided, that payment by the applicable Issuing Lender under such
Letter of Credit against presentation of such
34
draft or document shall not have constituted gross negligence or
willful misconduct;
(iv) payment by the applicable Issuing Lender under a Letter
of Credit against presentation of a draft or other document which
does not comply in any immaterial respect with the terms of such
Letter of Credit; provided, that such payment shall not have
constituted gross negligence or willful misconduct; or
(v) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing; provided, that such other
circumstance or event shall not have been the result of gross
negligence or willful misconduct of the applicable Issuing Lender.
It is understood that in making any payment under a Letter of Credit
(x) such Issuing Lender's exclusive reliance on the documents presented to it
under such Letter of Credit as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary thereof equals the
amount of such draft and whether or not any document presented pursuant to such
Letter of Credit proves to be forged, fraudulent or invalid in any respect, if
such document on its face appears to be in order, and whether or not any other
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever, and (y) any noncompliance in any immaterial
respect of the documents presented under a Letter of Credit with the terms
thereof shall, in either case, not, in and of itself, be deemed willful
misconduct or gross negligence of such Issuing Lender.
(h) (i) Notwithstanding anything to the contrary contained in this
Agreement, for purposes of calculating any LC Fee payable in respect of any
Business Day, the Administrative Agent shall convert the amount available to be
drawn under any Letter of Credit denominated in Foreign Currency into an amount
of Dollars based upon the relevant Foreign Exchange Rate in effect for such day.
If on any date the Administrative Agent shall notify the applicable Borrower
that, by virtue of any change in the Foreign Exchange Rate of any Foreign
Currency in which a Letter of Credit is denominated, the Total Revolving
Facility Exposure shall exceed the Total Revolving Commitment then in effect,
then, within three Business Days after the date of such notice, such Borrower
shall prepay the Revolving Credit Loans and/or the Swingline Loans to the extent
necessary to eliminate such excess. Each Issuing Lender which has issued a
Letter of Credit denominated in a Foreign Currency agrees to notify the
Administrative Agent of the average daily outstanding amount thereof for any
period in respect of which LC Fees are payable and, upon request by the
Administrative Agent, for any other date or period. For all purposes of this
Agreement, determinations by the Administrative Agent of the Dollar equivalent
of any amount expressed in a Foreign Currency shall be made on the basis of
Foreign Exchange Rates reset monthly (or on such other periodic basis as shall
be selected by the Administrative Agent in its sole discretion) and shall in
each case be conclusive absent manifest error.
(ii) Notwithstanding anything to the contrary contained in this
Section 2.7, prior to demanding any reimbursement from the Lenders pursuant to
Section 2.7(f) in respect of any Letter of Credit denominated in a Foreign
Currency, the relevant Issuing Lender shall convert the
35
obligation of the applicable Borrower under Section 2.7(g) to reimburse such
Issuing Lender in such Foreign Currency into an obligation to reimburse such
Issuing Lender (and, in turn, the Lenders) in Dollars. The amount of any such
converted obligation shall be computed based upon the relevant Foreign Exchange
Rate (as quoted by the Administrative Agent to such Issuing Lender) in effect
for the day on which such conversion occurs.
SECTION 2.8. Conversion and Continuation Options.
(a) The relevant Borrower may elect from time to time to (i) convert
Eurocurrency Revolving Loans denominated in Dollars (or, subject to Section
2.10(f), a portion thereof) to ABR Revolving Loans or (ii) convert Eurocurrency
US$-Canadian Loans (or, subject to Section 2.10(f), a portion thereof) to ABR
US$-Canadian Loans, in each case on the last day of an Interest Period with
respect thereto by giving the Administrative Agent prior irrevocable notice of
such election. The relevant Borrower may elect from time to time to (x) convert
ABR Revolving Loans (subject to Section 2.10(f)) to Eurocurrency Revolving Loans
denominated in Dollars or (y) convert ABR US$-Canadian Loans (subject to Section
2.10(f)) to Eurocurrency US$-Canadian Loans, in each case by giving the
Administrative Agent at least three Business Days' prior irrevocable notice of
such election. Any such notice of conversion to Eurocurrency Revolving Loans or
Eurocurrency US$-Canadian Loans shall specify the length of the initial Interest
Period therefor. Upon receipt of any such notice the Administrative Agent shall
promptly notify each Lender or US-Canadian Lender, as applicable, thereof. All
or any part of outstanding Eurocurrency Revolving Loans, ABR Revolving Loans,
Eurocurrency US$-Canadian Loans or ABR US$-Canadian Loans may be converted as
provided herein; provided, that no ABR Revolving Loan or ABR US$-Canadian Loan
may be converted into a Eurocurrency Revolving Loan or Eurocurrency US$-Canadian
Loan, respectively, when any Event of Default has occurred and is continuing and
the Administrative Agent has or the Required Facility Lenders with respect to
the relevant Facility have determined in its or their sole discretion not to
permit such a conversion.
(b) Any Eurocurrency Revolving Loan or Eurocurrency US$ Canadian
Loan (or, in each case, subject to Section 2.10(f), a portion thereof) may be
continued as such upon the expiration of the then current Interest Period with
respect thereto by the relevant Borrower giving irrevocable notice to the
Administrative Agent, not less than three Business Days prior to the last day of
the then current Interest Period with respect thereto, of the length of the next
Interest Period to be applicable to such Eurocurrency Loans; provided, that no
Eurocurrency Revolving Loan or Eurocurrency US$ Canadian Loan may be continued
as such when any Event of Default has occurred and is continuing and the
Administrative Agent has or the Required Facility Lenders with respect to the
relevant Facility have determined in its or their sole discretion not to permit
such a continuation; and provided, further, that if the relevant Borrower shall
fail to give any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso such
Eurocurrency Revolving Loans or Eurocurrency US$ Canadian Loans shall be
automatically converted to ABR Revolving Loans or ABR US$ Canadian Loans,
respectively, on the last day of such then expiring Interest Period (in the case
of Multi-Currency Revolving Loans, such Loan shall be converted to Dollars at
the Foreign Exchange Rate on such date before being converted to ABR Revolving
Loans). Upon receipt of any notice from a Borrower pursuant to this Section
2.8(b), the Administrative Agent shall promptly notify each Lender or
US-Canadian Lender, as applicable, thereof. The Administrative
36
Agent shall promptly notify the applicable Borrower upon the determination in
accordance with this Section 2.8(b), by it or the Required Facility Lenders, not
to permit such a continuation.
SECTION 2.9. Fees.
(a) (i) Viacom agrees to pay to the Administrative Agent for the
account of each Lender and (ii) Viacom agrees to cause a Canadian Borrower to
pay to the Canadian Administrative Agent for the account of each US-Canadian
Lender, a Facility Fee for the period from and including the Closing Date to the
Revolving Credit Maturity Date (or such earlier date on which the Commitments
shall terminate in accordance herewith), computed at a per annum rate equal to
the Applicable Facility Fee Rate on such Lender's Commitments or US-Canadian
Lender's Canadian Commitments (in each case, whether used or unused); provided
that, if such Lender or US-Canadian Lender, as applicable, continues to have any
Revolving Facility Exposure or Outstanding Canadian Extensions of Credit, as
applicable, after its Commitments terminate, then such Facility Fee shall
continue to accrue on the daily amount of such Lender's Revolving Facility
Exposure or US-Canadian Lender's Outstanding Canadian Extensions of Credit, as
applicable, from and including the date on which its Commitments terminate to
but excluding the date on which such Lender or US-Canadian Lender, as
applicable, ceases to have any Revolving Facility Exposure or Outstanding
Canadian Extensions of Credit, respectively. All Facility Fees shall be computed
on the basis of the actual number of days elapsed in a year of 360 days and
shall be payable quarterly in arrears on the last day of each March, June,
September and December, on the Revolving Credit Maturity Date or such earlier
date on which the Commitments shall be terminated, commencing on the first of
such dates to occur after the Closing Date.
(b) Viacom agrees to pay each Lender, through the Administrative
Agent, on the last day of each March, June, September and December and on the
Revolving Credit Maturity Date or the date on which the Revolving Commitment of
such Lender shall be terminated as provided herein and all Letters of Credit
issued hereunder shall have expired, a letter of credit fee (an "LC Fee")
computed at a per annum rate equal to the Applicable LC Fee Rate on such
Lender's Revolving Credit Percentage of the average daily undrawn amount of the
Financial Letters of Credit or Non-Financial Letters of Credit, as the case may
be, outstanding during the preceding quarter (or shorter period commencing with
the Closing Date or ending with the Revolving Credit Maturity Date or the date
on which the Revolving Commitment of such Lender shall have been terminated and
all Letters of Credit issued hereunder shall have expired). All LC Fees shall be
computed on the basis of the actual number of days elapsed in a year of 360
days.
(c) Viacom agrees to pay to the Administrative Agent, for its own
account, the administrative agent's fees ("Administrative Agent's Fees")
provided for in the Administrative Agent Fee Letter at the times provided
therein.
(d) Each Borrower agrees to pay to each Issuing Lender, through the
Administrative Agent, for its own account, the applicable Issuing Lender Fees,
including, without limitation, a fronting fee at a rate to be determined by the
relevant Borrower and the relevant Issuing Lender payable on the last day of
each March, June, September and December to such Issuing Lender for the period
from and including the date of issuance of such Letter of Credit to, but not
including, the termination date of such Letter of Credit.
37
(e) (i) Viacom agrees to pay to the Administrative Agent for the
account of each Lender and (ii) Viacom agrees to cause a Canadian Borrower to
pay to the Canadian Administrative Agent for the account of each US-Canadian
Lender, on each Interest Payment Date for ABR Loans, a utilization fee (a
"Utilization Fee") at a rate per annum equal to the Applicable Utilization Fee
Rate for each Excess Utilization Day during the period covered by such Interest
Payment Date on such Lender's Revolving Facility Exposure or US-Canadian
Lender's Outstanding Canadian Extensions of Credit, as applicable, on such
Excess Utilization Day. All Utilization Fees shall be computed on the basis of
the actual number of days elapsed in a year of 360 days and shall be payable in
arrears.
(f) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent (or the Canadian Administrative
Agent, as applicable) for distribution, if and as appropriate, among the
relevant Lenders and US-Canadian Lenders or to the Issuing Lenders. Once paid,
none of the Fees shall be refundable under any circumstances (other than
corrections of errors in payment).
SECTION 2.10. Interest on Loans; Eurocurrency Tranches; Etc.
(a) Subject to the provisions of Section 2.11, Eurocurrency Loans
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal to (i) in the case of each
Eurocurrency Revolving Loan and each Eurocurrency US$-Canadian Loan, the
Eurocurrency Rate for the Interest Period in effect for such Loan plus the
Applicable Eurocurrency Margin and (ii) in the case of each Eurocurrency
Competitive Loan, the Eurocurrency Rate for the Interest Period in effect for
such Loan plus the Margin offered by the Lender making such Loan and accepted by
the relevant Borrower pursuant to Section 2.3. The Eurocurrency Rate for each
Interest Period shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error. The Administrative
Agent shall promptly advise the relevant Borrower and the relevant Lenders or
US-Canadian Lenders, as applicable, of such determination.
(b) Subject to the provisions of Section 2.11, ABR Loans shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 365 or 366 days, as the case may be, when determined by reference to the
Prime Rate and over a year of 360 days at all other times) at a rate per annum
equal to the Alternate Base Rate. The Alternate Base Rate shall be determined by
the Administrative Agent, and such determination shall be conclusive absent
manifest error.
(c) Subject to the provisions of Section 2.11, Quoted Swingline
Loans shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 360 days) at a rate per annum equal to the relevant
Quoted Swingline Rate.
(d) Subject to the provisions of Section 2.11, each Absolute Rate
Loan shall bear interest at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to the fixed rate
of interest offered by the Lender making such Loan and accepted by the relevant
Borrower pursuant to Section 2.3.
38
(e) Interest on each Loan shall be payable on each applicable
Interest Payment Date.
(f) Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions, continuations, repayments and prepayments of
Eurocurrency Revolving Loans or Eurocurrency US$-Canadian Loans, as applicable,
hereunder and all selections of Interest Periods hereunder in respect of
Eurocurrency Revolving Loans or Eurocurrency US$-Canadian Loans, as applicable,
shall be in such amounts and shall be made pursuant to such elections so that,
after giving effect thereto, the aggregate principal amount of the Eurocurrency
Revolving Loans or Eurocurrency US$-Canadian Loans, as applicable, comprising
each Eurocurrency Tranche shall be equal to $50,000,000 (or the Dollar
equivalent thereof) or a whole multiple of $5,000,000 (or the Dollar equivalent
thereof) in excess thereof. Unless otherwise agreed by the Administrative Agent,
in no event shall there be more than 25 Eurocurrency Tranches outstanding at any
time.
(g) If no election as to the Type of Revolving Credit Loan or
US$-Canadian Loan is specified in any notice of borrowing with respect thereto,
then the requested Loan shall be an ABR Loan, unless such request is for a
Revolving Credit Loan denominated in a Multi-Currency. If no Interest Period
with respect to a Eurocurrency Revolving Loan or a Eurocurrency US$-Canadian
Loan is specified in any notice of borrowing, conversion or continuation, then
an Interest Period of one month's duration shall be deemed to have been
selected. The Interest Period with respect to a Eurocurrency Competitive Loan
shall in no case be less than one month's duration.
SECTION 2.11. Default Interest.
If all or a portion of the principal amount of any Loan shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
all outstanding Loans (whether or not overdue) shall bear interest at a rate per
annum which is equal to the rate that would otherwise be applicable thereto
pursuant to the provisions of Section 2.10 plus 2% and (b) if all or a portion
of any LC Disbursement, any interest payable on any Loan or LC Disbursement or
any Fee or other amount payable hereunder shall not be paid when due (whether at
the stated maturity, by acceleration or otherwise), such overdue amount shall
bear interest at a rate per annum equal to the rate otherwise applicable to ABR
Loans pursuant to Section 2.10(b) plus 2%, in each case, with respect to clauses
(a) and (b) above, from the date of such non-payment until such amount is paid
in full (as well after as before judgment). Notwithstanding the foregoing, if
all or a portion of the principal amount of any Loan shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), C$ Loans shall
bear interest at the rate set forth in subsection 3.4(b) of Annex II.
SECTION 2.12. Alternate Rate of Interest.
(a) In the event, and on each occasion, that on the day two Business
Days prior to the commencement of any Interest Period for a Eurocurrency Loan
(i) the Administrative Agent shall have determined (which determination shall be
conclusive and binding upon each Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurocurrency Rate for such Interest Period, or
39
(ii) the Administrative Agent shall have received notice from the Required
Facility Lenders in respect of the relevant Facility that the Eurocurrency Rate
determined or to be determined for such Interest Period will not adequately and
fairly reflect the cost to such Lenders or US-Canadian Lenders, as applicable,
(as conclusively certified by such Lenders or US-Canadian Lenders, as
applicable) of making or maintaining their affected Loans during such Interest
Period, the Administrative Agent shall, as soon as practicable thereafter, give
written or telecopy notice of such determination to the Borrowers and the
Lenders and the US-Canadian Lenders, as relevant. In the event of any such
determination, until the Administrative Agent shall have advised the Borrowers
and the Lenders and the US-Canadian Lenders, as relevant, that the circumstances
giving rise to such notice no longer exist, if applicable to the Facility for
which notice was given, (i) any request by a Borrower for a Eurocurrency
Competitive Loan pursuant to Section 2.3 to be made after such determination
shall be of no force and effect and shall be denied by the Administrative Agent,
(ii) any request by a Borrower for a Eurocurrency Revolving Loan denominated in
Dollars or a US$-Canadian Loan to be made after such determination shall be
deemed to be a request for an ABR Loan (from the relevant Facility), (iii) any
request by a Borrower for a Multi-Currency Revolving Loan to be made after such
determination shall be deemed to be a request for an ABR Loan in an aggregate
principal amount equal to the Dollar equivalent (as determined by the Foreign
Exchange Rate on such date) of the relevant Multi-Currency and (iv) any request
by a Borrower for conversion into or a continuation of a Eurocurrency Revolving
Loan or a US$-Canadian Loan pursuant to Section 2.8 to be made after such
determination shall have no force and effect (in the case of a requested
conversion) or shall be deemed to be a request for a conversion into an ABR Loan
(in the case of a requested continuation; provided, that any request for a
conversion of a Multi-Currency Revolving Loan shall be deemed to be a request
for a conversion into an ABR Loan in an aggregate principal amount equal to the
Dollar equivalent (as determined by the Foreign Exchange Rate on such date) of
the relevant Multi-Currency. Also, in the event of any such determination, the
relevant Borrower shall be entitled, in its sole discretion, if the requested
Competitive Loan has not been made, to cancel its acceptance of the Competitive
Bids or to cancel its Competitive Bid Request relating thereto. Each
determination by the Administrative Agent or the Required Facility Lenders (with
respect to such Facility) hereunder shall be conclusive absent manifest error.
SECTION 2.13. Termination, Reduction and Increase of Commitments.
(a) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, Viacom may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the
Revolving Commitments; provided, however, that (i) each partial reduction of the
Revolving Commitments shall be in a minimum principal amount of $10,000,000 and
in integral multiples of $1,000,000 in excess thereof and (ii) no such
termination or reduction shall be made if, after giving effect thereto and to
any prepayments of the Loans made on the effective date thereof, (x) the
Outstanding Revolving Extensions of Credit of any Lender would exceed such
Lender's Commitment then in effect or (y) the Total Revolving Facility Exposure
would exceed the Total Revolving Commitment then in effect. The Administrative
Agent shall promptly advise the Lenders of any notice given pursuant to this
Section 2.13(a).
(b) Except as otherwise provided in Section 2.21, each reduction in
the Revolving Commitments hereunder shall be made ratably among the Lenders in
accordance with
40
their respective Commitments. Viacom agrees to pay to the Administrative Agent
for the account of the Lenders, on the date of termination or reduction of the
Revolving Commitments, the Facility Fees on the amount of the Revolving
Commitments so terminated or reduced accrued through the date of such
termination or reduction.
(c) Viacom shall have the right at any time and from time to time to
increase the Total Revolving Commitments and the Total Canadian Commitments to
an aggregate amount, when added to the aggregate amount of Total Commitments (as
defined under the 364-Day Credit Agreement) under the 364-Day Credit Agreement,
not to exceed $4,500,000,000 (i) by requesting that one or more banks or other
financial institutions not a party to this Agreement become a Lender or a
US-Canadian Lender hereunder or (ii) by requesting that any Lender or
US-Canadian Lender already party to this Agreement increase the amount of such
Lender's Revolving Commitment or such US-Canadian Lender's Canadian Commitment,
as applicable; provided, that the addition of any bank or financial institution
pursuant to clause (i) above shall be subject to the consent of the
Administrative Agent (which consent shall not be unreasonably withheld);
provided further, the Revolving Commitment or Canadian Commitment of any bank or
other financial institution pursuant to clause (i) above, shall be in an
aggregate principal amount at least equal to $10,000,000; provided further, the
amount of the increase of any Lender's Revolving Commitment or US-Canadian
Lender's Canadian Commitment, as applicable, pursuant to clause (ii) above when
added to the amount of such Lender's Revolving Commitment or such US-Canadian
Lender's Canadian Commitment, respectively, before the increase, shall be in an
aggregate principal amount at least equal to $10,000,000.
(d) Any additional bank, financial institution or other entity which
elects to become a party to this Agreement and obtain a Revolving Commitment or
Canadian Commitment pursuant to clause (c) of this Section 2.13 above shall
execute a New Lender Supplement (each, a "New Lender Supplement") with Viacom
and the Administrative Agent, substantially in the form of Exhibit G, whereupon
such bank, financial institution or other entity (herein called a "New Lender")
shall become a Lender or a US-Canadian Lender, as applicable, for all purposes
and to the same extent as if originally a party hereto and shall be bound by and
entitled to the benefits of this Agreement, and Schedule 1.1 shall be deemed to
be amended to add the name and Revolving Commitment or Canadian Commitment, as
applicable, of such New Lender. Any additional bank, financial institution or
other entity, which elects to obtain a Canadian Commitment, shall also certify
that it is a bank listed on Schedule I, Schedule II or Schedule III to the Bank
Act (Canada).
(e) Any increase in the Total Revolving Commitment or Total Canadian
Commitment pursuant to clause (c)(ii) of this Section 2.13 shall be effective
only upon the execution and delivery to Viacom and the Administrative Agent of a
commitment increase letter in substantially the form of Exhibit H hereto (a
"Commitment Increase Letter"), which Commitment Increase Letter shall be
delivered to the Administrative Agent not less than five Business Days prior to
the Commitment Increase Date and shall specify (i) the amount of the Revolving
Commitment or Canadian Commitment, as applicable, of any bank or financial
institution not a party to this agreement which is becoming a Lender or
US-Canadian Lender, as applicable, or the amount of any increase in the
Revolving Commitment of any Lender or Canadian Commitment of any US-Canadian
Lender, as applicable, and (ii) the date such increase is to become effective
(the "Commitment Increase Date"). Any Lender which elects to obtain a
41
Canadian Commitment shall certify that it is a bank listed on Schedule I,
Schedule II or Schedule III to the Bank Act (Canada).
(f) Any increase in the Total Revolving Commitment or Total Canadian
Commitment, as applicable, pursuant to this Section 2.13 shall not be effective
unless:
(i) no Default or Event of Default shall have occurred and be
continuing on the Commitment Increase Date;
(ii) each of the representations and warranties made by Viacom
and the Subsidiary Borrowers (including the Canadian Borrowers) in
Sections 3.1, 3.2, 3.4, 3.5 and 3.6 shall be true and correct in all
material respects on the Commitment Increase Date with the same
effect as though made on and as of such date, except to the extent
such representations and warranties expressly relate to an earlier
date in which case such representations and warranties shall be true
and correct in all material respects as of such earlier date;
(iii) the Administrative Agent shall have received each of (A)
a certificate of the corporate secretary or assistant secretary of
the Borrowers or the Canadian Borrowers, as applicable, as to the
taking of any corporate action necessary in connection with such
increase and (B) an opinion or opinions of general counsel to the
Borrowers or the Canadian Borrowers, as applicable, as to their
corporate power and authority to borrow hereunder after giving
effect to such increase and such other matters relating thereto as
the Administrative Agent and its counsel may reasonably request.
Each notice requesting an increase in the Total Revolving Commitments or Total
Canadian Commitments, as applicable, pursuant to this Section 2.13 shall
constitute a certification to the effect set forth in clauses (i) and (ii) of
this Section 2.13(f).
(g) Upon a decrease, pursuant to Section 2.13(a) or (b), in the
Total Revolving Commitments, Viacom may decrease the Multi-Currency Sublimit
with respect to any or all Multi-Currencies in a minimum principal amount of
$10,000,000 and in integral multiples of $1,000,000 in excess thereof. No such
termination or reduction shall be made if, after giving effect thereto and to
any prepayments of the Loans made on the effective date thereof, the
Multi-Currency Sublimit with respect to each applicable Multi-Currency would be
less than the Multi-Currency Revolving Loans outstanding in such Multi-Currency
at such time. Upon an increase, pursuant to Section 2.13(c), in the Total
Revolving Commitments or Total Canadian Commitments, as applicable, the
Administrative Agent, with the consent of the Required Facility Lenders in
respect of the relevant Facility, may increase the Multi-Currency Sublimit with
respect to Canadian Dollars or any or all Multi-Currencies to an amount not in
excess of the Total Canadian Commitments or Total Revolving Commitments, as
applicable.
(h) No Lender or US-Canadian Lender shall at any time be required to
agree to a request of Viacom to increase its Commitment or obligations
hereunder.
42
SECTION 2.14. Optional Prepayments of Revolving Credit Loans.
The relevant Borrower may at any time and from time to time prepay
the Revolving Credit Loans, in whole or in part, without premium or penalty,
upon giving irrevocable written or telecopy notice (or telephone notice promptly
confirmed by written or telecopy notice) to the Administrative Agent: (i) before
10:00 a.m., New York City time, three Business Days prior to prepayment, in the
case of Eurocurrency Revolving Loans, and (ii) before 10:00 a.m., New York City
time, one Business Day prior to prepayment, in the case of ABR Revolving Loans.
Such notice shall specify the date and amount of prepayment and whether the
prepayment is of Eurocurrency Revolving Loans, ABR Revolving Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. If a Eurocurrency Revolving Loan is prepaid on any day other than the last
day of the Interest Period applicable thereto, the relevant Borrower shall also
pay any amounts owing pursuant to Section 2.16. Upon receipt of any such notice
the Administrative Agent shall promptly notify each Lender thereof. If any such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein, together with (except in the case of ABR Revolving
Loans) accrued interest to such date on the amount prepaid. Partial prepayments
of Revolving Credit Loans shall be in an aggregate principal amount of
$10,000,000 or a whole multiple of $1,000,000 in excess thereof.
SECTION 2.15. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if after the Closing
Date any change in applicable law or regulation (including any change in the
reserve percentages provided for in Regulation D) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof shall change the basis of taxation of
payments to any Lender or US-Canadian Lender of the principal of or interest on
any Eurocurrency Loan, Absolute Rate Loan or C$ Loan made by such Lender or US-
Canadian Lender (other than changes in respect of taxes imposed on the overall
net income of such Lender or US-Canadian Lender by the jurisdiction in which
such Lender or US-Canadian Lender has its principal office (or in which it holds
any Eurocurrency Loan, Absolute Rate Loan or C$ Loan) or by any political
subdivision or taxing authority therein and other than taxes that would not have
been imposed but for the failure of such Lender or US-Canadian Lender to comply
with applicable certification, information, documentation or other reporting
requirements), or shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of or deposits with or for the
account of such Lender or US-Canadian Lender or shall impose on such Lender or
US-Canadian Lender or the London interbank market or Toronto interbank market
(with respect to C$ Loans), as applicable, any other condition affecting this
Agreement or any Eurocurrency Loan, Absolute Rate Loan or C$ Loan made by such
Lender or US-Canadian Lender and the result of any of the foregoing shall be to
increase the cost to such Lender or US-Canadian Lender of making or maintaining
any Eurocurrency Loan, Absolute Rate Loan or C$ Loan or to reduce the amount of
any sum received or receivable by such Lender or US-Canadian Lender hereunder
(whether of principal, interest or otherwise) in respect of any Eurocurrency
Loan, Absolute Rate Loan or C$ Loan by an amount deemed by the applicable Lender
or US-Canadian Lender to be material, then the relevant Borrower or Canadian
Borrower (with respect to C$ Loans) agrees to pay to such Lender or US-Canadian
Lender, as applicable, as provided in paragraph (c) below such additional amount
or amounts as will compensate such
43
Lender or US-Canadian Lender, as applicable, for such additional costs incurred
or reduction suffered. Notwithstanding the foregoing, no Lender shall be
entitled to request compensation under this paragraph with respect to any
Competitive Loan if the change giving rise to such request shall, or in good
faith should, have been taken into account in formulating the Competitive Bid
pursuant to which such Competitive Loan shall have been made.
(b) If any Lender, any US-Canadian Lender or any Issuing Lender
shall have determined that the adoption after the Closing Date hereof of any
law, rule, regulation or guideline regarding capital adequacy, or any change in
any law, rule, regulation or guideline regarding capital adequacy or in the
interpretation or administration of any of the foregoing by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender, US-Canadian Lender (or any
lending office of such Lender or US-Canadian Lender) or Issuing Lender or any
Lender's, US-Canadian Lender's or Issuing Lender's holding company with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's, US-Canadian
Lender's or Issuing Lender's capital or on the capital of such Lender's,
US-Canadian Lender's or Issuing Lender's holding company, if any, as a
consequence of this Agreement or the Loans made by such Lender or US-Canadian
Lender, as applicable, or the LC Exposure of such Lender or Letters of Credit
issued by such Issuing Lender pursuant hereto to a level below that which such
Lender or Issuing Lender or such Lender's or Issuing Lender's holding company
could have achieved but for such applicability, adoption, change or compliance
(taking into consideration such Lender's or Issuing Lender's policies and the
policies of such Lender's or Issuing Lender's holding company with respect to
capital adequacy) by an amount deemed by such Lender or Issuing Lender to be
material, then from time to time Viacom agrees to pay to such Lender,
US-Canadian Lender or Issuing Lender as provided in paragraph (c) below such
additional amount or amounts as will compensate such Lender, US-Canadian Lender
or Issuing Lender or such Lender's, US-Canadian Lender's or Issuing Lender's
holding company for any such reduction suffered.
(c) A certificate of each Lender, US-Canadian Lender or Issuing
Lender setting forth such amount or amounts as shall be necessary to compensate
such Lender, US-Canadian Lender or Issuing Lender as specified in paragraph (a)
or (b) above, as the case may be, and the basis therefor in reasonable detail
shall be delivered to the relevant Borrower or Canadian Borrower and shall be
conclusive absent manifest error. The relevant Borrower or Canadian Borrower
shall pay each Lender, US-Canadian Lender or Issuing Lender the amount shown as
due on any such certificate within 30 days after its receipt of the same. Upon
the receipt of any such certificate, the relevant Borrower shall be entitled, in
its sole discretion, if any requested Loan has not been made, to cancel its
acceptance of the relevant Competitive Bids or to cancel the Competitive Bid
Request relating thereto, subject to Section 2.16.
(d) Except as provided in this paragraph, failure on the part of any
Lender or US-Canadian Lender, as applicable, to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Lender's or US-Canadian Lender's right to demand compensation with respect
to any other period. The protection of this Section 2.15 shall be available to
each Lender and US-Canadian Lender regardless of any possible contention of the
invalidity or
44
inapplicability of the law, rule, regulation, guideline or other change or
condition which shall have occurred or been imposed so long as it shall be
customary for Lenders or US-Canadian Lenders, as applicable, affected thereby to
comply therewith. No Lender or US-Canadian Lender shall be entitled to
compensation under this Section 2.15 for any costs incurred or reductions
suffered with respect to any date unless it shall have notified the relevant
Borrower or Canadian Borrower that it will demand compensation for such costs or
reductions under paragraph (c) above not more than 90 days after the later of
(i) such date and (ii) the date on which it shall have become aware of such
costs or reductions. Notwithstanding any other provision of this Section 2.15,
no Lender or US-Canadian Lender shall demand compensation for any increased cost
or reduction referred to above if it shall not at the time be the general policy
or practice of such Lender or US-Canadian Lender to demand such compensation in
similar circumstances under comparable provisions of other credit agreements, if
any. In the event any Borrower shall reimburse any Lender or US-Canadian Lender
or any Canadian Borrower shall reimburse any US-Canadian Lender pursuant to this
Section 2.15 for any cost and such Lender or US-Canadian Lender shall
subsequently receive a refund in respect thereof, such Lender or US-Canadian
Lender, as applicable, shall so notify the relevant Borrower or Canadian
Borrower and, upon its request, will pay to such Borrower or Canadian Borrower
the portion of such refund which such Lender or US-Canadian Lender, as
applicable, shall determine in good faith to be allocable to the cost so
reimbursed. The covenants contained in this Section 2.15 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
SECTION 2.16. Indemnity.
Each Borrower agrees to indemnify each Lender and US-Canadian
Lender, as applicable, and each Canadian Borrower agrees to indemnify each US-
Canadian Lender against any loss or expense described below which such Lender or
US-Canadian Lender may sustain or incur as a consequence of (a) any failure by
such Borrower or Canadian Borrower, as applicable, to fulfill on the date of any
borrowing hereunder the applicable conditions set forth in Article IV, (b) any
failure by such Borrower or Canadian Borrower, as applicable, to borrow,
continue or convert any Loan hereunder after irrevocable notice of such
borrowing, continuation or conversion has been given or deemed given or
Competitive Bids have been accepted pursuant to Article II, (c) any payment,
prepayment or conversion of a Eurocurrency Loan, Absolute Rate Loan or C$ Loan
made to such Borrower or Canadian Borrower, as applicable, required by any other
provision of this Agreement or otherwise made or deemed made, whatever the
circumstances may be that give rise to such payment, prepayment or conversion,
or any transfer of any such Loan pursuant to Section 2.21 or 9.4(b) or
subsection 3.8 of Annex II or, on a date other than the last day of the Interest
Period applicable thereto, or (d) if any breakage is incurred, any failure by a
Borrower to prepay a Eurodollar Loan on the date specified in a notice of
prepayment; provided, that any request for indemnification made by any Lender to
any Borrower or any Canadian Borrower or by any US-Canadian Lender to any
Canadian Borrower pursuant hereto shall be accompanied by such Lender's or US-
Canadian Lender's calculation of such amount to be indemnified. The loss or
expense for which such Lender or US-Canadian Lender shall be indemnified under
this Section 2.16 shall be equal to the excess, if any, as reasonably determined
by such Lender or US-Canadian Lender, as applicable, of (i) its cost of
obtaining the funds for the Loan being paid, prepaid, converted or not borrowed,
continued, prepaid or
45
converted (assumed to be the Eurocurrency Rate in the case of Eurocurrency
Loans) for the period from the date of such payment, prepayment, conversion or
failure to borrow, continue, prepay or convert to the last day of the Interest
Period for such Loan (or, in the case of a failure to borrow, continue, prepay
or convert, the Interest Period for such Loan which would have commenced on the
date of such failure) over (ii) the amount of interest (as reasonably determined
by the relevant Lender or US-Canadian Lender) that would be realized by such
Lender or US-Canadian Lender in reemploying the funds so paid, prepaid,
converted or not borrowed, continued, prepaid or converted for such period or
Interest Period, as the case may be; provided, however, that such amount shall
not include any loss of a Lender's or US-Canadian Lender's margin or spread over
its cost of obtaining funds as described above. A certificate of any Lender or
US-Canadian Lender setting forth any amount or amounts which such Lender or
US-Canadian Lender is entitled to receive pursuant to this Section 2.16 (with
calculations in reasonable detail) shall be delivered to the relevant Borrower
or Canadian Borrower and shall be conclusive absent manifest error. This
covenant shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
SECTION 2.17. Pro Rata Treatment; Funding Matters; Evidence of Debt.
(a) Except as required under Section 2.21, each payment or
prepayment of principal of any Revolving Credit Loan, each payment of interest
on the Revolving Credit Loans, each payment of LC Fees, each payment of Facility
Fees, and each reduction of the Commitments, shall be allocated pro rata among
the Lenders in accordance with their respective Revolving Commitments (or, if
such Revolving Commitments shall have expired or been terminated, in accordance
with their Outstanding Revolving Extensions of Credit). Each Lender agrees that
in computing such Lender's portion of any Revolving Credit Loan to be made
hereunder, the Administrative Agent may, in its discretion, round such Lender's
percentage of such Loan to the next higher or lower whole Dollar amount.
(b) Unless the Administrative Agent shall have received notice from
a Lender or US-Canadian Lender, as applicable, prior to the relevant borrowing
date that such Lender or US-Canadian Lender, as applicable, will not make
available to the Administrative Agent such Lender's portion or US-Canadian
Lender's portion of a borrowing, the Administrative Agent may assume that such
Lender or US-Canadian Lender, as applicable, has made such portion available to
the Administrative Agent on the date of such borrowing in accordance with this
Agreement and the Administrative Agent may, in reliance upon such assumption,
make available to the relevant Borrower on such date a corresponding amount. If
and to the extent that such Lender or US-Canadian Lender, as applicable, shall
not have made such portion available to the Administrative Agent, each of such
Lender or US-Canadian Lender, as applicable, and the relevant Borrower agrees to
repay to the Administrative Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to such Borrower until the date such amount is repaid to the
Administrative Agent at (i) in the case of such Borrower, the interest rate
applicable at the time to the relevant Loan and (ii) in the case of such Lender
or US-Canadian Lender, as applicable, the Federal Funds Effective Rate. If such
Lender or US-Canadian Lender, as applicable, shall repay to the Administrative
Agent such corresponding amount, such amount shall constitute such Lender's Loan
or US Canadian Lender's Loan, as applicable, as part of such borrowing for the
purposes of this Agreement; provided, that such repayment shall not release such
Lender or US-Canadian
46
Lender, as applicable, from any liability it may have to such Borrower for the
failure to make such Loan at the time required herein.
(c) The failure of any Lender to make any Loan shall not in itself
relieve any other Lender of its obligation to lend hereunder (it being
understood, however, that no Lender shall be responsible for the failure of any
other Lender to make any Loan required to be made by such other Lender). The
failure of any US-Canadian Lender to make the US$-Canadian Loans to be made by
it on any Borrowing Date shall not relieve any other US-Canadian Lender of its
obligation, if any, hereunder to make its US$-Canadian Loans on such borrowing
date, but no US-Canadian Lender shall be responsible for the failure of any
other US-Canadian Lender to make the US$-Canadian Loans to be made by such other
US-Canadian Lender on such borrowing date.
(d) Each Lender may at its option make any Eurocurrency Loan by
causing any domestic or foreign branch or Lender Affiliate of such Lender to
make such Loan; provided, that any exercise of such option shall not affect the
obligation of the relevant Borrower to repay such Loan in accordance with the
terms of this Agreement.
(e) Each Lender and each US-Canadian Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness to such Lender or US-Canadian Lender, as applicable, resulting from
each Loan made by it from time to time, including the amounts of principal and
interest payable and paid to such Lender or US-Canadian Lender from time to time
under this Agreement. The Administrative Agent shall maintain accounts in which
it will record (i) the amount of each Loan made hereunder, the Borrower or
Canadian Borrower, as applicable, with respect to each Loan, the Type of each
Loan and each Interest Period, if any, applicable thereto, (ii) the amount of
any principal or interest due and payable or to become due and payable from each
Borrower or Canadian Borrower, as applicable, to each Lender or US-Canadian
Lender, as applicable, hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder from any Borrower or Canadian Borrower, as
applicable, and each Lender's or US-Canadian Lender's share thereof. The entries
made in the accounts maintained pursuant to this paragraph (e) shall, to the
extent permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations therein recorded; provided, however, that the failure
of any Lender, US-Canadian Lender or the Administrative Agent to maintain such
accounts or any error therein shall not in any manner affect the obligations of
any Borrower or Canadian Borrower to repay the Loans in accordance with their
terms.
(f) In order to expedite the transactions contemplated by this
Agreement, each Subsidiary Borrower and Canadian Borrower shall be deemed, by
its execution and delivery of a Subsidiary Borrower Request, to have appointed
Viacom to act as agent on its behalf for the purpose of (a) giving any notices
contemplated to be given by such Subsidiary Borrower or Canadian Borrower, as
applicable, pursuant to this Agreement, including, without limitation, borrowing
notices, prepayment notices, continuation notices, conversion notices,
competitive bid requests and competitive bid acceptances or rejections and (b)
paying on behalf of such Subsidiary Borrower or Canadian Borrower, as
applicable, any Subsidiary Borrower Obligations owing by the relevant Subsidiary
Borrower or Canadian Borrower; provided, that each
47
Subsidiary Borrower and Canadian Borrower shall retain the right, in its
discretion, to directly give any or all of such notices or make any or all of
such payments.
(g) The Administrative Agent shall promptly notify the Lenders and
the US-Canadian Lenders upon receipt of any Subsidiary Borrower Designation and
Subsidiary Borrower Request. The Administrative Agent shall promptly notify the
Swingline Lenders upon receipt of any designation of a Subsidiary Borrower as a
Swingline Borrower.
SECTION 2.18. Sharing of Setoffs.
Except to the extent that this Agreement provides for payments to be
allocated to Revolving Credit Loans, Swingline Loans or Competitive Loans, as
the case may be, each Lender agrees that if it shall, through the exercise of a
right of banker's lien, setoff or counterclaim against any Borrower, or pursuant
to a secured claim under Section 506 of Title 11 of the United States Code or
other security or interest arising from, or in lieu of, such secured claim,
received by such Lender under any applicable bankruptcy, insolvency or other
similar law or otherwise, or by any other means (other than pursuant to any
provision of this Agreement), obtain payment (voluntary or involuntary) in
respect of any category of its Loans or such Lender's Revolving Credit
Percentage of any LC Disbursement as a result of which the unpaid principal
portion of such Loans or the unpaid portion of such Lender's Revolving Credit
Percentage of the LC Disbursements shall be proportionately less than the unpaid
principal portion of such Loans or the unpaid portion of the Revolving Credit
Percentage of the LC Disbursements of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at face value, and shall
promptly pay to such other Lender the purchase price for, a participation in
such Loans or the Revolving Credit Percentage of the LC Disbursements of such
other Lender, so that the aggregate unpaid principal amount of such Loans and
participations in such Loans held by each Lender or the Revolving Credit
Percentage of LC Disbursements and participations in LC Disbursements held by
each Lender shall be in the same proportion to the aggregate unpaid principal
amount of all such Loans or LC Disbursements then outstanding as the principal
amount of such Loans or the Revolving Credit Percentage of LC Disbursements of
each Lender prior to such exercise of banker's lien, setoff or counterclaim or
other event was to the principal amount of all such Loans or LC Disbursements
outstanding prior to such exercise of banker's lien, setoff or counterclaim or
other event; provided, however, that, if any such purchase or purchases or
adjustments shall be made pursuant to this Section 2.18 and the payment giving
rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustment restored without interest, unless the Lender from
which such payment is recovered is required to pay interest thereon, in which
case each Lender returning funds to such Lender shall pay its pro rata share of
such interest. Any Lender holding a participation in a Loan or LC Disbursement
deemed to have been so purchased may exercise any and all rights of banker's
lien, setoff or counterclaim with respect to any and all moneys owing by any
Borrower to such Lender by reason thereof as fully as if such Lender had made a
Loan directly to such Borrower or issued a Letter of Credit for the account of
such Borrower in the amount of such participation.
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SECTION 2.19. Payments.
(a) Except as otherwise expressly provided herein, each Borrower
shall make each payment (including principal of or interest on any Loan or any
Fees or other amounts) hereunder without setoff or counterclaim and shall make
each such payment not later than 12:00 noon, New York City time, on the date
when due in Dollars to the Administrative Agent at its offices at The Chase
Manhattan Bank, 270 Park Avenue, New York, New York 10017, in immediately
available funds. Notwithstanding the foregoing, each Borrower shall make each
payment with respect to any Loan denominated in any Multi-Currency (including
principal of or interest on any such Loan or other amounts) hereunder without
setoff or counterclaim and shall make each such payment not later than 12:00
noon, London time, on the date when due in the relevant Multi-Currency to the
Administrative Agent at its offices at Chase Manhattan International Ltd., 9
Thomas Moore Street, London E1-9YT United Kingdom, in immediately available
funds.
(b) Whenever any payment (including principal of or interest on any
Loan or any Fees or other amounts) hereunder shall become due, or otherwise
would occur, on a day that is not a Business Day, such payment may be made on
the next succeeding Business Day, and such extension of time shall in such case
be included in the computation of interest or Fees, if applicable.
SECTION 2.20. Taxes.
(a) Any and all payments by each Borrower hereunder shall be made,
in accordance with Section 2.19, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, duties, charges, fees,
deductions, charges or withholdings, and all liabilities with respect thereto
imposed by or on behalf of any Governmental Authority, excluding net income
taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the
Administrative Agent or any Lender as a result of a present or former connection
between the Administrative Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Administrative Agent's or such Lender's having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document) (all such nonexcluded taxes, levies,
imposts, duties, charges, fees, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If any Borrower shall be
required by law to deduct any Taxes or Other Taxes from or in respect of any sum
payable to any Agent or any Lender hereunder, (i) the sum payable shall be
increased by the amount necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.20) such Agent or such Lender shall receive an amount equal to the sum it
would have received had no such deductions been made, (ii) such Borrower shall
make such deductions and (iii) such Borrower shall pay the full amount deducted
to the relevant taxing authority or other Governmental Authority in accordance
with applicable law.
(b) The relevant Borrower agrees to pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
49
(c) The relevant Borrower will indemnify each Lender (or Transferee)
and the Administrative Agent for the full amount of Taxes and Other Taxes
(including any Taxes or Other Taxes imposed by the applicable jurisdiction on
amounts payable under this Section 2.20) paid by such Lender (or Transferee) or
the Administrative Agent, as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted by
the relevant taxing authority or other Governmental Authority. Such
indemnification shall be made within 30 days after the date such Lender (or
Transferee) or the Administrative Agent, as the case may be, makes written
demand therefor.
(d) Whenever any Taxes or Other Taxes are payable by any Borrower,
within 30 days thereafter such Borrower shall send to the Administrative Agent
for its own account or for the account of the relevant Lender, as the case may
be, a certified copy of an official receipt received by such Borrower showing
payment thereof (or other evidence of such payment reasonably satisfactory to
the Administrative Agent).
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.20
shall survive the payment in full of the principal of and interest on all Loans
made hereunder and of all other amounts payable hereunder.
(f) Each Lender (or Transferee) that is not a "United States Person"
as defined in Section 7701(a)(30) of the Code (such Lender (or Transferee), a
"Non-U.S. Person") shall deliver to Viacom and the Administrative Agent (or, in
the case of a participant, to the Lender from which the related participation
shall have been purchased) two copies of either U.S. Internal Revenue Service
Form W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Person claiming
exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of "portfolio interest", a Form W-8BEN, or any
subsequent versions thereof or successors thereto (and, if such Non-U.S. Person,
claiming an exemption with respect to payments of "portfolio interest", delivers
a Form W-8BEN, an annual certificate representing that such Non-U.S. Person is
not a "bank" for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of Viacom
and is not a controlled foreign corporation related to Viacom (within the
meaning of Section 864(d)(4) of the Code)), properly completed and duly executed
by such Non-U.S. Person claiming complete exemption from U.S. federal
withholding tax on all payments by any Borrower under this Agreement. Such forms
shall be delivered by each Non-U.S. Person promptly after it becomes a party to
this Agreement (or, in the case of any participant, promptly after the date such
participant purchases the related participation). In addition, each Non-U.S.
Person shall deliver such forms promptly upon the obsolescence or invalidity of
any form previously delivered by such Non-U.S. Person. Each Non-U.S. Person
shall promptly notify Viacom at any time it determines that it is no longer in a
position to provide any previously delivered certificate to Viacom (or any other
form of certification adopted by the U.S. taxing authorities for such purpose).
Unless Viacom and the Administrative Agent (or, in the case of a participant,
the Lender from which the related participation shall have been purchased) have
received forms or other documents satisfactory to them indicating that payments
hereunder are not subject to United States withholding tax, the relevant
Borrower or the Administrative Agent shall withhold taxes from such payments at
the applicable statutory rate in the case of payments
50
of interest to or for any Lender (or Transferee) that is a Non-U.S. Person.
Notwithstanding any other provision of this Section 2.20(f), a Non-U.S. Person
shall not be required to deliver any form pursuant to this Section 2.20(f) that
such Non-U.S. Person is not legally able to deliver by reason of the adoption of
any law, rule or regulation, or any change in any law, rule or regulation or in
the interpretation thereof, in each case occurring after the date such Non-U.S.
Person becomes a Lender (or Transferee).
(g) A Lender that is entitled to an exemption from or reduction of
any non-U.S. withholding tax under the law of the jurisdiction in which a
Borrower is located, or under any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to such Borrower
(with a copy to the Administrative Agent), at the time or times prescribed by
applicable law or reasonably requested by such Borrower, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate, provided that such
Lender is legally entitled to complete, execute and deliver such documentation
and in such Lender's reasonable judgment such completion, execution or
submission would not materially prejudice the legal position of such Lender.
(h) No Borrower shall be required to pay any additional amounts to
any Agent or Lender pursuant to paragraph (a) above (i) if the obligation to pay
such additional amounts would not have arisen but for a failure by such Agent or
Lender to comply with the provisions of paragraph (f) or (g) above or (ii) in
the case of a Transferee, to the extent such additional amounts exceed the
additional amounts that would have been payable had no transfer or assignment to
such Transferee occurred; provided, however, that each Borrower shall be
required to pay those amounts to any Agent or Lender (or Transferee) that it was
required to pay hereunder prior to the failure of such Agent or Lender (or
Transferee) to comply with the provisions of such paragraph (f) or (g).
SECTION 2.21. Termination or Assignment of Commitments Under Certain
Circumstances.
(a) Any Lender (or Transferee) claiming any additional amounts
payable pursuant to Section 2.15 or Section 2.20 and any US-Canadian Lender (or
Transferee) claiming any additional amounts payable pursuant to Section 2.15 or
subsection 3.7 of Annex II shall use reasonable efforts (consistent with legal
and regulatory restrictions) to file any certificate or document requested by
any Borrower or Canadian Borrower or to change the jurisdiction of its
applicable lending office if the making of such a filing or change would avoid
the need for or reduce the amount of any such additional amounts which may
thereafter accrue and would not, in the sole determination of such Lender,
US-Canadian Lender or Transferee, be otherwise disadvantageous to such Lender,
US-Canadian Lender or Transferee.
(b) In the event that (w) any Lender or US-Canadian Lender shall
have delivered a notice or certificate pursuant to Section 2.15, (x) any
Borrower shall be required to make additional payments to any Lender under
Section 2.20, (y) any Canadian Borrower (in respect of C$ Loans) or Borrower (in
respect of US$-Canadian Loans) shall be required to make additional payments to
any US-Canadian Lender under Section 2.20 or (z) any Lender or US-Canadian
Lender (a "Non-Consenting Lender") shall withhold its consent to any amendment
described in
51
clause (i) or (ii) of Section 9.8(b) as to which consents have been obtained
from Lenders and US-Canadian Lenders having Total Facility Percentages
aggregating at least 90%, Viacom shall have the right, at its own expense, upon
notice to such Lender or US-Canadian Lender (or Lenders or US-Canadian Lenders)
and the Administrative Agent, (i) to terminate the Revolving Commitments of such
Lender or terminate the Canadian Commitments of such US-Canadian Lender, as
applicable, (except in the case of clause (z) above), or (ii) to require such
Lender or US-Canadian Lender (or, in the case of clause (z) above, each
Non-Consenting Lender) to transfer and assign without recourse (in accordance
with and subject to the restrictions contained in Section 9.4) all its
interests, rights and obligations under this Agreement to one or more other
financial institutions acceptable to Viacom (unless an Event of Default has
occurred and is continuing) and the Administrative Agent, which approval in each
case shall not be unreasonably withheld, which shall assume such obligations;
provided, that (w) in the case of any replacement of Non-Consenting Lenders,
each assignee shall have consented to the relevant amendment, (x) no such
termination or assignment shall conflict with any law, rule or regulation or
order of any Governmental Authority, (y) (I) the Borrowers or the assignee (or
assignees) shall pay to each affected Lender and US-Canadian Lender, as
applicable, and (II) the Canadian Borrowers or the assignee (or assignees) shall
pay to each affected US-Canadian Lender, as the case may be, in each case, in
immediately available funds on the date of such termination or assignment the
principal of and interest accrued to the date of payment on the Loans made by it
hereunder and all other amounts accrued for its account or owed to it hereunder
and (z) (A) Viacom may not terminate Revolving Commitments representing more
than 10% of the original aggregate Revolving Commitments pursuant to this
paragraph (b) and (B) Viacom may not terminate Canadian Commitments representing
more than 10% of the original aggregate Canadian Commitments pursuant to this
paragraph (b).
SECTION 2.22. Currency Equivalents.
(a) The Administrative Agent shall determine the Dollar equivalent
of each Competitive Bid Loan in a Foreign Currency and each Multi-Currency
Revolving Loan as of the first day of each Interest Period applicable thereto
and, in the case of any such Interest Period of more than three months, at
three-month intervals after the first day thereof. The Administrative Agent
shall promptly notify the relevant Borrower and the Lenders of the Dollar
equivalent so determined by it. Each such determination shall be based on the
Spot Rate (i) (A) for purposes of the initial determination of such Competitive
Bid Loan, on the date of the related Competitive Bid Request and (B) for
purposes of the initial determination of such Multi-Currency Revolving Loan, on
the date of the related Borrowing Request, and (ii) for purposes of subsequent
determinations, on the fourth Business Day prior to the date on which such
Dollar equivalent is to be determined.
(b) The Administrative Agent shall determine the Dollar equivalent
of the Aggregate LC Exposure related to each Letter of Credit issued in a
Foreign Currency as of the date of the issuance thereof, at three-month
intervals after the date of issuance thereof and as of the date of each drawing
thereunder. Each such determination shall be based on the Spot Rate (i) on the
date of the related notice of any proposed issuance of a Letter of Credit
pursuant to Section 2.7(c), in the case of the initial determination of such
Letter of Credit, (ii) on the second Business Day prior to the date as of which
such Dollar equivalent is to be determined, in the case of any subsequent
determination with respect to an outstanding Letter of Credit and (iii) on the
52
second Business Day prior to the related drawing thereunder, in the case of any
determination as of a drawing thereunder.
(c) If after giving effect to any such determination of a Dollar
equivalent with respect to Competitive Bid Loans and Letters of Credit, the
Dollar equivalent thereof exceeds $150,000,000, Viacom shall, or shall cause the
applicable Subsidiary Borrowers to, within five Business Days, (i), in the case
of an excess with respect to Competitive Bid Loans, prepay outstanding
Competitive Bid Loans in Foreign Currencies to eliminate such excess, and (ii)
in the case of an excess with respect to Letters of Credit, cause to be reduced
(or, at the relevant Borrower's option, cash collateralized) outstanding Letters
of Credit in Foreign Currencies to eliminate such excess, or (iii), in each
case, take such other action to the extent necessary to eliminate any such
excess. If any such prepayment occurs on a day which is not the last day of the
then current Interest Period with respect thereto, Viacom shall, or shall cause
the applicable Subsidiary Borrowers to, pay to the Lenders such amounts, if any,
as may be required pursuant to Section 2.16. If after giving effect to any such
determination of a Dollar with respect to Multi-Currency Revolving Loans, the
Dollar equivalent thereof exceeds (A) the Multi-Currency Sublimit for any
currency or (B) the Total Multi-Currency Sublimit, Viacom shall, or shall cause
the relevant Subsidiary Borrowers to, within five Business Days, prepay
outstanding Multi-Currency Revolving Loans so that the Specified Currency
Availability for each currency is greater than or equal to zero and so that the
Total Specified Currency Availability is greater than or equal to zero or take
such other action to the extent necessary to eliminate any such excess.
(d) Notwithstanding the foregoing, if at any time (i) the Commitment
Utilization Percentage is greater than 110%, Viacom shall, or shall cause the
relevant Subsidiary Borrowers to, within five Business Days prepay outstanding
Competitive Bid Loans in Foreign Currencies, prepay outstanding Multi-Currency
Revolving Loans, prepay (or, at the relevant Borrower's option, cash
collateralize) outstanding Letters of Credit in Foreign Currencies or take such
other action to the extent necessary to eliminate any such excess or (ii) the
Dollar equivalent of the outstanding Multi-Currency Revolving Loans is greater
than 110% of (A) the Multi-Currency Sublimit for any currency or (B) the Total
Multi-Currency Sublimit, Viacom shall, or shall cause the relevant Subsidiary
Borrowers to, within five Business Days, prepay outstanding Multi-Currency
Revolving Loans so that the Specified Currency Availability for each currency is
greater than or equal to zero and so that the Total Specified Currency
Availability is greater than or equal to zero or take such other action to the
extent necessary to eliminate any such excess.
(e) If any prepayment occurs pursuant to this Section 2.22 on a day
which is not the last day of the then current Interest Period with respect
thereto, Viacom shall pay to the Lenders such amounts, if any, as may be
required pursuant to Section 2.16.
SECTION 2.23. Judgment Currency.
If, for the purpose of obtaining judgment in any court, it is
necessary to convert a sum due from any Borrower or any Canadian Borrower
hereunder in the currency expressed to be payable herein (the "specified
currency") into another currency, the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used shall be
that at which in accordance with normal banking procedures the Administrative
Agent could purchase the specified currency with such other currency at the
Administrative Agent's London office (or
53
with respect to C$ Loans, Toronto office) on any Business Day (or with respect
to C$ Loans, Business Day (Canada)) preceding that on which the final judgment
is given. The obligations of such Borrower or Canadian Borrower, as applicable,
in respect of any sum due to any Lender, US-Canadian Lender or the
Administrative Agent hereunder shall, notwithstanding any judgment in a currency
other than the specified currency, be discharged only to the extent that on the
Business Day or Business Day (Canada), as applicable, following receipt by such
Lender, US-Canadian Lender or the Administrative Agent, as the case may be, of
any sum adjudged to be so due in such other currency such Lender, US-Canadian
Lender or the Administrative Agent, as the case may be, may in accordance with
normal banking procedures purchase the specified currency with such other
currency. If the amount of the specified currency so purchased is less than the
sum originally due to such Lender, US-Canadian Lender or the Administrative
Agent, as the case may be, in the specified currency, such Borrower or Canadian
Borrower, as applicable, agrees, to the fullest extent that it may effectively
do so, as a separate obligation and notwithstanding any such judgment, to
indemnify such Lender, US-Canadian Lender or the Administrative Agent, as the
case may be, against such loss, and if the amount of the specified currency so
purchased exceeds (i) the sum originally due to any Lender, US-Canadian Lender
or the Administrative Agent, as the case may be, in the specified currency and
(ii) any amounts shared with other Lenders or US-Canadian Lenders, as
applicable, as a result of allocations of such excess as a disproportionate
payment to such Lender or US-Canadian Lender as compared to such Lender's Total
Revolving Facility Percentage or US-Canadian Lender's Total Canadian Facility
Percentage, such Lender, US-Canadian Lender or the Administrative Agent, as the
case may be, agrees to remit such excess to such Borrower or Canadian Borrower,
as applicable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Viacom hereby represents and warrants, and each Subsidiary Borrower
by its execution and delivery of a Subsidiary Borrower Request represents and
warrants (to the extent specifically applicable to such Subsidiary Borrower), to
each of the Lenders that:
SECTION 3.1. Corporate Existence. Each of Viacom and each Material
Subsidiary: (a) is a corporation, partnership or other entity duly organized and
validly existing under the laws of the jurisdiction of its organization; (b) has
all requisite corporate or other power, and has all material governmental
licenses, authorizations, consents and approvals, necessary to own its assets
and carry on its business as now being or as proposed to be conducted, except
where the failure to have any of the foregoing would not result in a Material
Adverse Effect; and (c) is qualified to do business in all jurisdictions in
which the nature of the business conducted by it makes such qualification
necessary and where failure so to qualify would result in a Material Adverse
Effect.
SECTION 3.2. Financial Condition. The consolidated balance sheet of
Viacom and its Consolidated Subsidiaries as at December 31, 1999, and the
related consolidated statements of income and cash flows of
54
Viacom and its Consolidated Subsidiaries for the fiscal year ended on such date,
with the opinion thereon of PricewaterhouseCoopers LLC, heretofore furnished to
each of the Lenders, fairly present the consolidated financial condition of
Viacom and its Consolidated Subsidiaries as at such date and the consolidated
results of their operations for the fiscal year ended on such date in accordance
with GAAP. Neither Viacom nor any of its Material Subsidiaries had on such date
any known material contingent liability, except as referred to or reflected or
provided for in the Exchange Act Report or in such balance sheets (or the notes
thereto) as at such date.
SECTION 3.3. Litigation. Except as disclosed to the Lenders in the
Exchange Act Report filed prior to the Closing Date or otherwise disclosed in
writing to the Lenders prior to the Closing Date, there are no legal or arbitral
proceedings, or any proceedings by or before any Governmental Authority, pending
or (to the knowledge of Viacom) threatened against Viacom or any of its Material
Subsidiaries which have resulted in a Material Adverse Effect (it being agreed
that any legal or arbitral proceedings which have been disclosed in the Exchange
Act Report, whether threatened, pending, resulting in a judgment or otherwise,
prior to the time a final judgment for the payment of money shall have been
recorded against Viacom or any Material Subsidiary by any Governmental Authority
having jurisdiction, and the judgment is non-appealable (or the time for appeal
has expired) and all stays of execution have expired or been lifted shall not,
in and of itself, be deemed to result in a Material Adverse Effect). The
"Exchange Act Report" shall mean, collectively, (i) the Annual Report of Viacom
on Form 10-K for the year ended December 31, 1999 and Quarterly Reports on Form
10-Q and Reports on Form 8-K of Viacom filed subsequent to December 31, 1999,
but on or before February 20, 2001, (ii) the Annual Report of CBS Corporation on
Form 10-K for the year ended December 31, 1999 and Quarterly Reports on Form
10-Q and Reports on Form 8-K of Viacom filed subsequent to December 31, 1999,
but on or before February 20, 2001, and (iii) Reports on Form S-4 filed on
October 7, 1999 and November 22, 2000, in each case, as amended or supplemented
on or before February 20, 2001.
SECTION 3.4. No Breach, etc. None of the execution and delivery of
this Agreement, the consummation of the transactions herein contemplated and
compliance with the terms and provisions hereof will conflict with or result in
a breach of, or require any consent under, the charter or By-laws (or other
equivalent organizational documents) of any Borrower, or any applicable law or
regulation, or any order, writ, injunction or decree of any Governmental
Authority, or any material agreement or instrument to which Viacom or any of its
Material Subsidiaries is a party or by which any of them is bound or to which
any of them is subject, or constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien upon any of the
revenues or assets of Viacom or any of its Material Subsidiaries pursuant to the
terms of any such agreement or instrument. Neither Viacom nor any of its
Material Subsidiaries is in default under or with respect to any of its material
contractual obligations in any respect which would have a Material Adverse
Effect.
55
SECTION 3.5. Corporate Action. Each Borrower has all necessary
corporate power and authority to execute, deliver and perform its obligations
under this Agreement; the execution and delivery by each Borrower of this
Agreement (or, in the case of each Subsidiary Borrower, the relevant Subsidiary
Borrower Request), and the performance by each Borrower of this Agreement, have
been duly authorized by all necessary corporate action on such Borrower's part;
this Agreement (or, in the case of each Subsidiary Borrower, the relevant
Subsidiary Borrower Request) has been duly and validly executed and delivered by
each Borrower; and this Agreement constitutes a legal, valid and binding
obligation of each Borrower, enforceable in accordance with its terms except as
such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws of general
applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 3.6. Approvals. No authorizations, approvals or consents of,
and no filings or registrations with, any Governmental Authority are necessary
for the execution, delivery or performance by each Borrower of this Agreement or
for the validity or enforceability hereof.
SECTION 3.7. ERISA. Viacom and, to the best of its knowledge, its
ERISA Affiliates have fulfilled their respective obligations under the minimum
funding standards of ERISA and the Code with respect to each Plan and are in
compliance in all material respects with the currently applicable provisions of
ERISA and the Code except where any failure or non-compliance would not result
in a Material Adverse Effect.
SECTION 3.8. Taxes. As of the Closing Date, United States Federal
income tax returns of or including Viacom have been, to the knowledge of Viacom,
examined and closed through the fiscal year of Viacom ended December 31, 1994.
Viacom and its Material Subsidiaries, to the knowledge of Viacom, have filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by or in respect of them and have paid or caused
to be paid all taxes shown as due on such returns or pursuant to any assessment
received by Viacom or any of its Material Subsidiaries, except those being
contested and reserved against in accordance with Section 5.2.
SECTION 3.9. Investment Company Act. No Borrower is an "investment
company", or a company "controlled" by an "investment company", subject to
regulation under the Investment Company Act of 1940, as amended.
56
SECTION 3.10. Environmental. Except as in the aggregate would not
have a Material Adverse Effect, neither Viacom nor any of its Subsidiaries has
received any notice of violation, alleged violation, non-compliance or liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of its or its Subsidiaries' Properties or business, nor does
Viacom have any knowledge that any notice will be received or is being
threatened.
SECTION 3.11. Material Subsidiaries. The list of Material
Subsidiaries set forth in the most recently issued Form 10-K of Viacom is
complete and correct in all material respects as of the date of the issuance of
such Form 10-K.
ARTICLE IV
CONDITIONS OF EFFECTIVENESS AND LENDING
SECTION 4.1. Effectiveness. The effectiveness of this Agreement is
subject to the satisfaction of the following conditions:
(a) Credit Agreement. The Administrative Agent shall have received
this Agreement, executed and delivered by a duly authorized officer of Viacom
and Viacom International.
(b) 364-Day Credit Agreement. All conditions to effectiveness set
forth in Section 4.1 of the 364-Day Credit Agreement shall have been satisfied.
(c) Closing Certificate. The Administrative Agent shall have
received a Closing Certificate, substantially in the form of Exhibit E, of
Viacom and Viacom International, with appropriate insertions and attachments.
(d) Termination of Existing Credit Agreements. The Existing Credit
Agreements shall have been paid in full and all obligations thereunder shall
have been terminated.
(e) Opinion of Counsel. The Administrative Agent shall have received
an opinion of the general counsel of Viacom and Viacom International in form and
substance satisfactory to the Administrative Agent and customary for
transactions of this type.
SECTION 4.2. Initial Loans to Subsidiary Borrowers. The obligation
of each Lender to make its initial Loan to a particular Subsidiary Borrower, if
designated as such after the Closing Date, is subject to the satisfaction of the
conditions that (a) Viacom shall have delivered to the Administrative Agent a
Subsidiary Borrower Designation for such Subsidiary Borrower and (b) such
Subsidiary Borrower shall
57
have furnished to the Administrative Agent (i) a Subsidiary Borrower Request,
(ii) a Closing Certificate of such Subsidiary Borrower, with appropriate
insertions and attachments and (iii) one or more executed legal opinions with
respect to such Subsidiary Borrower, in form and substance reasonably
satisfactory to the Administrative Agent. Viacom may from time to time deliver a
subsequent Subsidiary Borrower Designation with respect to any Subsidiary
Borrower, countersigned by such Subsidiary Borrower, for the purpose of
terminating such Subsidiary Borrower's designation as such, so long as, on the
effective date of such termination, all Subsidiary Borrower Obligations in
respect of such Subsidiary Borrower shall have been paid in full. In addition,
if on any date a Subsidiary Borrower shall cease to be a Subsidiary, all
Subsidiary Borrower Obligations in respect of such Subsidiary Borrower shall
automatically become due and payable on such date and no further Loans may be
borrowed by such Subsidiary Borrower hereunder.
SECTION 4.3. All Credit Events. The obligation of each Lender to
make each Loan, and the obligation of each Issuing Lender to issue each Letter
of Credit, are subject to the satisfaction of the following conditions:
(a) The Administrative Agent shall have received a request for, or
notice of, such Credit Event if and as required by Section 2.3, 2.4, 2.6 or 2.7
or subsection 2.2 or 2.3 of Annex II, as applicable;
(b) Each of the representations and warranties made by Viacom and,
in the case of a borrowing by a Subsidiary Borrower, by such Subsidiary
Borrower, in Sections 3.1, 3.2, 3.4, 3.5 and 3.6 shall be true and correct in
all material respects on and as of the date of such Credit Event with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date in which case
such representations and warranties shall be true and correct in all material
respects as of such earlier date;
(c) At the time of and immediately after giving effect to such
Credit Event no Default or Event of Default shall have occurred and be
continuing; and
(d) After giving effect to such Credit Event, (A) with respect to
Revolving Credit Loans (i) the Outstanding Revolving Extensions of Credit of
each Lender shall not exceed such Lender's Commitment then in effect and (ii)
the Total Revolving Facility Exposure shall not exceed the Total Revolving
Commitment then in effect, (B) with respect to C$ Loans and US$-Canadian Loans
(i) the Outstanding Canadian Extensions of Credit of each Lender shall not
exceed such Lender's Canadian Commitment then in effect and (ii) the Total
Canadian Facility Exposure shall not exceed the Total Canadian Commitment then
in effect, (C) with respect to Multi-Currency Revolving Loans and C$ Loans, (i)
the outstanding Multi-Currency Revolving Loans in a particular Multi-Currency or
C$ Loans, as applicable, shall not exceed the Multi-Currency Sublimit for such
currency and (ii) the aggregate outstanding Multi-Currency Revolving Loans shall
not exceed the Total Multi-Currency Sublimit.
58
Each Credit Event shall be deemed to constitute a representation and warranty by
Viacom on the date of such Credit Event as to the matters specified in
paragraphs (b) and (c) of this Section 4.3.
ARTICLE V
COVENANTS
Viacom covenants and agrees with each Lender that, as long as the
Commitments shall be in effect or the principal of or interest on any Loan shall
be unpaid, or there shall be any Aggregate LC Exposure, unless the Required
Lenders shall otherwise consent in writing:
SECTION 5.1. Financial Statements. Viacom shall deliver to each of
the Lenders:
(a) within 60 days after the end of each of the first three
quarterly fiscal periods of each fiscal year of Viacom, consolidated statements
of income and cash flows of Viacom and its Consolidated Subsidiaries for such
period and for the period from the beginning of the respective fiscal year to
the end of such period, and the related consolidated balance sheet as at the end
of such period, setting forth in each case in comparative form the corresponding
consolidated figures for the corresponding period in the preceding fiscal year,
accompanied by a certificate of a Financial Officer of Viacom which certificate
shall state that such financial statements fairly present the consolidated
financial condition and results of operations of Viacom and its Consolidated
Subsidiaries in accordance with GAAP as at the end of, and for, such period,
subject to normal year-end audit adjustments; provided, that the requirement
herein for the furnishing of such quarterly financial statements may be
fulfilled by providing to the Lenders the report of Viacom to the SEC on Form
10-Q for the applicable quarterly period, accompanied by the officer's
certificate described in the last sentence of this Section 5.1;
(b) within 120 days after the end of each fiscal year of Viacom,
consolidated statements of income and cash flows of Viacom and its Consolidated
Subsidiaries for such year and the related consolidated balance sheet as at the
end of such year, setting forth in comparative form the corresponding
consolidated figures for the preceding fiscal year, and accompanied by an
opinion thereon (unqualified as to the scope of the audit) of independent
certified public accountants of recognized national standing, which opinion
shall state that such consolidated financial statements fairly present the
consolidated financial condition and results of operations of Viacom and its
Consolidated Subsidiaries as at the end of, and for, such fiscal year; provided,
that the requirement herein for the furnishing of annual financial statements
may be fulfilled by providing to the Lenders the report of Viacom to the SEC on
Form 10-K for the applicable fiscal year;
(c) promptly upon their becoming publicly available, copies of all
registration statements and regular periodic reports (including without
limitation any and all reports on Form 8-K), if any, which Viacom or any of its
Subsidiaries shall have filed with the SEC or any national securities exchange;
59
(d) promptly upon the mailing thereof to the shareholders of Viacom
generally, copies of all financial statements, reports and proxy statements so
mailed;
(e) within 30 days after a Responsible Officer of Viacom knows or
has reason to believe that any of the events or conditions specified below with
respect to any Plan or Multiemployer Plan have occurred or exist which would
reasonably be expected to result in a Material Adverse Effect, a statement
signed by a senior financial officer of Viacom setting forth details respecting
such event or condition and the action, if any, which Viacom or its ERISA
Affiliate proposes to take with respect thereto (and a copy of any report or
notice required to be filed with or given to PBGC by Viacom or an ERISA
Affiliate with respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued thereunder, with respect to a Plan,
as to which PBGC has not by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of the
occurrence of such event; provided, that a failure to meet the
minimum funding standard of Section 412 of the Code or Section 302
of ERISA shall be a reportable event regardless of the issuance of
any waiver in accordance with Section 412(d) of the Code;
(ii) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan or the termination of any Plan;
(iii) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by Viacom or any
ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by PBGC with respect to such Multiemployer
Plan;
(iv) the complete or partial withdrawal by Viacom or any ERISA
Affiliate under Section 4201 or 4204 of ERISA from a Multiemployer
Plan, or the receipt by Viacom or any ERISA Affiliate of notice from
a Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against Viacom or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30
days; and
(vi) a failure to make a required installment or other payment
with respect to a Plan (within the meaning of Section 412(n) of the
Code), in which case the notice required hereunder shall be provided
within 10 days after the due date for filing notice of such failure
with the PBGC;
(f) promptly after a Responsible Officer of Viacom knows or has
reason to believe that any Default or Event of Default has occurred, a notice of
such Default or Event of
60
Default describing it in reasonable detail and, together with such notice or as
soon thereafter as possible, a description of the action that Viacom has taken
and proposes to take with respect thereto;
(g) promptly after a Responsible Officer of Viacom knows that any
change has occurred in Viacom's Debt Rating by either Rating Agency, a notice
describing such change; and
(h) promptly from time to time such other information regarding the
financial condition, operations or business of Viacom or any of its Subsidiaries
(including, without limitation, any Plan or Multiemployer Plan and any reports
or other information required to be filed under ERISA) as any Lender through the
Administrative Agent may reasonably request.
Viacom will furnish to the Administrative Agent and each Lender, at the time it
furnishes each set of financial statements pursuant to paragraph (a) or (b)
above, a certificate (which may be a copy in the case of each Lender) of a
Financial Officer of Viacom (a "Compliance Certificate") (i) to the effect that
no Default or Event of Default has occurred and is continuing (or, if any
Default or Event of Default has occurred and is continuing, describing it in
reasonable detail and describing the action that Viacom has taken and proposes
to take with respect thereto), and (ii) setting forth in reasonable detail the
computations (including any pro forma calculations as described in Section
1.2(c)) necessary to determine whether Viacom is in compliance with the
Financial Covenant as of the end of the respective quarterly fiscal period or
fiscal year. Each Lender hereby agrees that Viacom may, in its discretion,
provide any notice, report or other information to be provided pursuant to this
Section 5.1 to such Lender by (i) electronic mail to the electronic mail address
provided by such Lender and/or (ii) through access to a web site, including,
without limitation, www.sec.gov.
SECTION 5.2. Corporate Existence, Etc. Viacom will, and will cause
each of its Material Subsidiaries to, preserve and maintain its legal existence
and all of its material rights, privileges and franchises (provided that (a)
nothing in this Section 5.2 shall prohibit any transaction expressly permitted
under Section 5.4, (b) the corporate existence of any Subsidiary (other than a
Subsidiary Borrower or Viacom International) may be terminated if, in the good
faith judgment of the board of directors or the chief financial officer of
Viacom, such termination is in the best interests of Viacom and such termination
would not have a Material Adverse Effect), and (c)Viacom or such Material
Subsidiary shall not be required to preserve or maintain any such right,
privilege or franchise if the Board of Directors of Viacom or such Material
Subsidiary, as the case may be, shall determine that the preservation or
maintenance thereof is no longer desirable in the conduct of the business of
Viacom or such Material Subsidiary, as the case may be); comply with the
requirements of all applicable laws, rules, regulations and orders of
Governmental Authorities (including, without limitation, all Environmental Laws)
and with all contractual obligations if failure to comply with such requirements
or obligations would reasonably be expected to result in a Material Adverse
Effect; pay and discharge all material taxes, assessments, governmental charges,
levies or other obligations of whatever nature imposed on it or on its income or
profits or on any of its Property prior to the date on which penalties attach
thereto, except for any such tax, assessment, charge, levy or other obligation
the payment of which is being contested in good
61
faith and by proper proceedings and against which adequate reserves are being
maintained; maintain all its Property used or useful in its business in good
working order and condition, ordinary wear and tear excepted, all as in the
judgment of Viacom or such Material Subsidiary may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times (provided that Viacom or such Material Subsidiary shall
not be required to maintain any such Property if the failure to maintain any
such Property is, in the judgment of Viacom or such Material Subsidiary,
desirable in the conduct of the business of Viacom or such Material Subsidiary);
keep proper books of records and accounts in which entries that are full, true
and correct in all material respects shall be made in conformity with GAAP; and
permit representatives of any Lender, during normal business hours upon
reasonable advance notice, to inspect any of its books and records and to
discuss its business and affairs with its Financial Officers or their designees,
all to the extent reasonably requested by such Lender.
SECTION 5.3. Insurance. Viacom will, and will cause each of its
Material Subsidiaries to, keep insured by financially sound and reputable
insurers all Property of a character usually insured by corporations engaged in
the same or similar business and similarly situated against loss or damage of
the kinds and in the amounts consistent with prudent business practice and carry
such other insurance as is consistent with prudent business practice (it being
understood that self-insurance shall be permitted to the extent consistent with
prudent business practice).
SECTION 5.4. Prohibition of Fundamental Changes. Viacom will not,
and will not permit any of its Material Subsidiaries to (i) enter into any
transaction of merger, consolidation, liquidation or dissolution or (ii) Dispose
of, in one transaction or a series of related transactions, all or a substantial
part of the consolidated assets of Viacom and its Subsidiaries taken as a whole,
whether now owned or hereafter acquired (excluding (x) financings by way of
sales of receivables or inventory, (y) inventory or other Property Disposed of
in the ordinary course of business and (z) obsolete or worn-out Property, tools
or equipments no longer used or useful in its business). Notwithstanding the
foregoing provisions of this Section 5.4:
(a) Viacom may consummate the Blockbuster Event;
(b) any Subsidiary of Viacom may be merged or consolidated with or
into: (i) Viacom if Viacom shall be the continuing or surviving corporation or
(ii) any other such Subsidiary; provided, that (x) if any such transaction shall
be between a Subsidiary and a Wholly Owned Subsidiary, such Wholly Owned
Subsidiary shall be the continuing or surviving corporation and (y) if any such
transaction shall be between a Subsidiary and a Subsidiary Borrower, the
continuing or surviving corporation shall be a Subsidiary Borrower;
(c) any Subsidiary of Viacom may distribute, dividend or Dispose of
any of or all its Property (upon voluntary liquidation or otherwise) to Viacom
or a Wholly Owned Subsidiary of Viacom;
62
(d) Viacom may merge or consolidate with or into any other Person
(including, without limitation, Viacom International) if (i) either (x) Viacom
is the continuing or surviving corporation or (y) the corporation formed by such
consolidation or into which Viacom is merged shall be a corporation organized
under the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume the obligations of Viacom
hereunder pursuant to a written agreement and shall have delivered to the
Administrative Agent such agreement and a certificate of a Responsible Officer
and an opinion of counsel to the effect that such merger or consolidation
complies with this Section 5.4(c), and (ii) after giving effect thereto and to
any repayment of Loans to be made upon consummation thereof (it being expressly
understood that no repayment of Loans is required solely by virtue thereof), no
Default or Event of Default shall have occurred and be continuing;
(e) any Subsidiary of Viacom may merge or consolidate with or into
any other Person if, after giving effect thereto and to any repayment of Loans
to be made upon the consummation thereof (it being expressly understood that,
except as otherwise expressly provided in Section 4.2 with respect to Subsidiary
Borrowers, no repayment of Loans is required solely by virtue thereof), no
Default or Event of Default shall have occurred and be continuing; and
(f) Viacom or any Subsidiary of Viacom may Dispose of its Property
if, after giving effect thereto and to any repayment of Loans to be made upon
the consummation thereof (it being expressly understood that, except as
otherwise expressly provided in Section 4.2 with respect to Subsidiary
Borrowers, no repayment of Loans is required solely by virtue thereof), no
Default or Event of Default shall have occurred and be continuing.
SECTION 5.5. Limitation on Liens. Viacom shall not, directly or
indirectly, create or suffer to exist, or permit any of its Subsidiaries to
create or suffer to exist, any Lien upon or with respect to any of its
Properties, whether now owned or hereafter acquired, or assign, or permit any of
its Subsidiaries to assign, any right to receive income, in each case to secure
or provide for the payment of any Indebtedness of any Person, except:
(a) purchase money Liens or purchase money security interests upon
or in any Property acquired or held by Viacom or any Subsidiary of Viacom in the
ordinary course of business to secure the purchase price of such Property or to
secure Indebtedness incurred solely for the purpose of financing the acquisition
of such Property;
(b) Liens existing on Property at the time of its acquisition (other
than any such Lien created in contemplation of such acquisition);
(c) Liens on Property of Persons which become or became Subsidiaries
securing Indebtedness existing, with respect to any such Person, on the date
such Person becomes or became a Subsidiary (other than any such Lien created in
contemplation of such Person becoming a Subsidiary);
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(d) Liens securing Indebtedness incurred by Viacom or any Subsidiary
of Viacom; provided, however, that the aggregate principal amount of
Indebtedness referred to in this clause (d) secured by Liens shall not exceed
$30,000,000 at any time outstanding; and
(e) any Lien securing the renewal, extension or refunding of any
Indebtedness secured by any Lien permitted by clause (a), (b), (c) or (d) above
that does not extend to Indebtedness other than that which is being renewed,
extended or refunded.
SECTION 5.6. Limitation on Subsidiary Indebtedness. Viacom will not
permit any of its Subsidiaries to create, incur, assume or suffer to exist any
Indebtedness (which includes, for the purposes of this Section 5.6, any
preferred stock), except:
(a) Indebtedness of any Person which is acquired by Viacom or any of
its Subsidiaries after the Closing Date, which Indebtedness was outstanding
prior to the date of acquisition of such Person and was not created in
anticipation thereof;
(b) any Indebtedness owing by Viacom or any of its Subsidiaries to
Viacom or any of its Subsidiaries (including any intercompany Indebtedness
created by the declaration of a note payable dividend by any Subsidiary to
Viacom or any of its other Subsidiaries);
(c) Indebtedness (including backed-up commercial paper) of any
Subsidiary Borrower or Viacom International under this Agreement;
(d) Indebtedness (including backed-up commercial paper) existing at
any time under the 364-Day Credit Agreement or under the Existing Infinity
Credit Agreement;
(e) Indebtedness outstanding on the Closing Date, with such
Indebtedness outstanding as of September 30, 2000 being set forth on Schedule
5.6;
(f) any replacement, renewal, refinancing or extension of any
Indebtedness permitted by Section 5.6(a) through (d) or set forth on Schedule
5.6 that does not exceed the aggregate principal amount (plus associated fees
and expenses) of the Indebtedness being replaced, renewed, refinanced or
extended (except that accrued and unpaid interest may be part of any
refinancing); and
(g) Indebtedness incurred after the Closing Date; provided, that
after giving effect thereto the aggregate principal amount of Indebtedness
incurred pursuant to this paragraph (g) that is outstanding on such date (it
being understood that, for the purposes of this paragraph (g), the term
"Indebtedness" does not include Indebtedness excepted by any of clauses (a)
through (f) inclusive) does not exceed the greater of (i) an aggregate principal
amount in excess of 5% of Consolidated Tangible Assets (measured by reference to
the then latest financial statements delivered pursuant to Section 5.1(a) or
(b), as applicable) and (ii) $800,000,000 at any time.
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SECTION 5.7. Consolidated Coverage Ratio. Viacom will not permit the
Consolidated Coverage Ratio for any period of four consecutive fiscal quarters
to be less than 3.00 to 1.00.
SECTION 5.8. Use of Proceeds. On and after the Closing Date, each
Borrower will use the proceeds of the Loans and will use the Letters of Credit
hereunder solely for general corporate purposes, including, without limitation,
acquisitions and commercial paper backup (in each case in compliance with all
applicable legal and regulatory requirements, including, without limitation,
Regulation U and the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended, and the regulations thereunder); provided,
that neither any Agent, nor any Lender shall have any responsibility as to the
use of any of such proceeds.
SECTION 5.9. Transactions with Affiliates. Excepting transactions
directly or indirectly entered into pursuant to any agreement entered into prior
to the Closing Date, or transactions contemplated by any agreement directly or
indirectly entered into prior to the Closing Date, Viacom will not, and will not
permit any of its Material Subsidiaries to, directly or indirectly enter into
any material transaction with any Affiliate of Viacom except on terms at least
as favorable to Viacom or such Subsidiary as it could obtain on an arm's-length
basis.
ARTICLE VI
EVENTS OF DEFAULT.
In case of the happening of any of the following events ("Events of
Default"):
(a) (i) any Borrower shall default in the payment when due of any
principal of any Loan or (ii) any Borrower shall default in the payment when due
of any interest on any Loan, any reimbursement obligation in respect of any LC
Disbursement, any Fee or any other amount payable by it hereunder and, in the
case of this clause (ii), such default shall continue unremedied for a period of
five Business Days;
(b) any representation, warranty or certification made or deemed
made herein (or in any modification or supplement hereto) by any Borrower, or
any certificate furnished to any Lender or the Administrative Agent pursuant to
the provisions hereof, shall prove to have been false or misleading in any
material respect as of the time made, deemed made or furnished;
(c) (i) Viacom shall default in the performance of any of its
obligations under Sections 5.7 or 5.8, (ii) Viacom shall default in the
performance of any of its obligations under Section 5.4 and, in the case of this
clause (ii), such default shall continue unremedied for a period of 5 days after
notice thereof to Viacom by the Administrative Agent or the Required Lenders
(through the Administrative Agent) or (iii) Viacom shall default in the
performance of any of its other obligations under this Agreement and, in the
case of this clause (iii), such default shall
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continue unremedied for a period of 15 days after notice thereof to Viacom by
the Administrative Agent or the Required Lenders (through the Administrative
Agent);
(d) Viacom or any of its Subsidiaries shall (i) fail to pay at final
maturity any Indebtedness in an aggregate amount in excess of $250,000,000, or
(ii) fail to make any payment (whether of principal, interest or otherwise),
regardless of amount, due in respect of, or fail to observe or perform any other
term, covenant, condition or agreement contained in any agreement or instrument
evidencing or governing, any such Indebtedness, in excess of $250,000,000 if the
effect of any failure referred to in this clause (ii) has caused such
Indebtedness to become due prior to its stated maturity (it being agreed that
for purposes of this paragraph (d) only, the term "Indebtedness" shall include
obligations under any interest rate protection agreement, foreign currency
exchange agreement or other interest or exchange rate hedging agreement and that
the amount of any Person's obligations under any such agreement shall be the net
amount that such Person could be required to pay as a result of a termination
thereof by reason of a default thereunder);
(e) Viacom or any of its Material Subsidiaries shall admit in
writing its inability, or be generally unable, to pay its debts as such debts
become due;
(f) Viacom or any of its Material Subsidiaries shall (i) apply for
or consent to the appointment of, or the taking of possession by, a receiver,
trustee or liquidator of itself or of all or a substantial part of its Property,
(ii) make a general assignment for the benefit of its creditors, (iii) commence
a voluntary case under the Bankruptcy Code (as now or hereafter in effect), (iv)
file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code, or (vi) take any corporate action
for the purpose of effecting any of the foregoing;
(g) a proceeding or a case shall be commenced, without the
application or consent of Viacom or any of its Material Subsidiaries, in any
court of competent jurisdiction, seeking (i) its liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of its debts, (ii)
the appointment of a trustee, receiver, custodian, liquidator or the like of
Viacom or such Material Subsidiary or of all or any substantial part of its
assets or (iii) similar relief in respect of Viacom or such Material Subsidiary
under any law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in effect, for a period of
60 or more days; or an order for relief against Viacom or such Material
Subsidiary shall be entered in an involuntary case under the Bankruptcy Code;
(h) a final judgment or judgments for the payment of money in excess
of $250,000,000 in the aggregate shall be rendered by one or more courts,
administrative tribunals or other bodies having jurisdiction against Viacom
and/or any of its Material Subsidiaries and the same shall not be paid or
discharged (or provision shall not be made for such discharge), or a stay of
execution thereof shall not be procured, within 60 days from the date of the
date of entry thereof and Viacom or the relevant Material Subsidiary shall not,
within said period of 60 days,
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or such longer period during which execution of the same shall have been stayed,
appeal therefrom and cause the execution thereof to be stayed during such
appeal;
(i) an event or condition specified in Section 5.1(e) shall occur or
exist with respect to any Plan or Multiemployer Plan and, as a result of such
event or condition, together with all other such events or conditions, Viacom or
any ERISA Affiliate shall incur or shall be reasonably likely to incur a
liability to a Plan, a Multiemployer Plan or PBGC (or any combination of the
foregoing) which would constitute a Material Adverse Effect; or
(j) The guarantee (i) by Viacom contained in Section 8.1 shall
cease, for any reason, to be in full force and effect or Viacom shall so assert
or (ii) by Viacom International contained in Section 8.2 shall cease, for any
reason except pursuant to Section 8.2(g), to be in full force and effect or
Viacom International shall so assert;
then and in every such event (other than an event with respect to Viacom
described in paragraph (f) or (g) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to Viacom, take any or all of the
following actions, at the same or different times: (I) terminate forthwith the
Commitments, (II) declare the Loans then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of each Borrower accrued hereunder, shall
become forthwith due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived by each
Borrower, anything contained herein to the contrary notwithstanding, and (III)
require that Viacom deposit cash with the Administrative Agent, in an amount
equal to the Aggregate LC Exposure, as collateral security for the repayment of
any future LC Disbursements; and in any event with respect to any Borrower
described in paragraph (f) or (g) above, (A) if such Borrower is Viacom, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of each Borrower accrued hereunder, shall
automatically become due and payable and Viacom shall be required to deposit
cash with the Administrative Agent, in an amount equal to the Aggregate LC
Exposure, as collateral security for the repayment of any future drawings under
the Letters of Credit and (B) if such Borrower is a Subsidiary Borrower, the
principal of the Loans made to such Subsidiary Borrower then outstanding,
together with accrued interest thereon and all other liabilities of such
Subsidiary Borrower accrued hereunder, shall automatically become due and
payable and such Subsidiary Borrower shall be required to deposit cash with the
Administrative Agent, in an amount equal to the outstanding Letters of Credit
issued to such Subsidiary Borrower, as collateral security for the repayment of
any future drawings under the Letters of Credit, in each case without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by each Borrower, anything contained herein to the
contrary notwithstanding.
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ARTICLE VII
THE AGENTS
In order to expedite the transactions contemplated by this
Agreement, each Agent is hereby appointed to act as Agent on behalf of the
Lenders. Each of the Lenders and the Issuing Lenders hereby irrevocably
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are specifically delegated to the Administrative Agent
by the terms and provisions hereof, together with such actions and powers as are
reasonably incidental thereto. Each of the US-Canadian Lenders hereby
irrevocably authorizes the Canadian Administrative Agent to take such actions on
its behalf and to exercise such powers as are specifically delegated to the
Canadian Administrative Agent by the terms and provisions hereof, together with
such actions and powers as are reasonably incidental thereto. The Administrative
Agent is hereby expressly authorized by the Lenders and the Issuing Lenders,
without hereby limiting any implied authority, (a) to receive on behalf of the
Lenders all payments of principal of and interest on the Loans (excepting C$
Loans) and the LC Disbursements and all other amounts due to the Lenders and
Issuing Lenders (excepting with respect to the US-Canadian Lenders, any Fees or
other fees payable under this Agreement) hereunder, and promptly to distribute
to each Lender and Issuing Lender its proper share of each payment so received;
(b) to give notice on behalf of each of the Lenders to the Borrowers of any
Event of Default specified in this Agreement of which the Administrative Agent
has actual knowledge acquired in connection with its agency hereunder; and (c)
to distribute to each Lender and Issuing Lender copies of all notices, financial
statements and other materials delivered by any Borrower pursuant to this
Agreement as received by the Administrative Agent. The Canadian Administrative
Agent is hereby expressly authorized by the US-Canadian Lenders, without hereby
limiting any implied authority, (a) to receive on behalf of the US-Canadian
Lenders all payments of principal of and interest on the C$ Loans and all other
amounts due to the US-Canadian Lenders hereunder (except in respect of their
US$-Canadian Loans), and promptly to distribute to each US-Canadian Lender its
proper share of each payment so received; (b) to give notice on behalf of each
of the US-Canadian Lenders to the Administrative Agent of any Event of Default
specified in this Agreement of which the Canadian Administrative Agent has
actual knowledge acquired in connection with its agency hereunder; and (c) to
distribute to each US-Canadian Lender and the Administrative Agent copies of all
notices, financial statements and other materials delivered by any Canadian
Borrower pursuant to this Agreement as received by the Canadian Administrative
Agent.
Neither any Agent nor any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted by any of them
except for its or his own gross negligence or willful misconduct, or be
responsible for any statement, warranty or representation herein or the contents
of any document delivered in connection herewith, or be required to ascertain or
to make any inquiry concerning the performance or observance by any Borrower of
any of the terms, conditions, covenants or agreements contained in this
Agreement. The Agents shall not be responsible to the Lenders for the due
execution, genuineness, validity, enforceability or effectiveness of this
Agreement or other instruments or agreements. The Administrative Agent shall in
all cases be fully protected in acting, or refraining from acting, in
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accordance with written instructions signed by the Required Lenders (or, when
expressly required hereby, all the Lenders) and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Lenders and the Issuing Lenders.
The Administrative Agent and the Canadian Administrative Agent shall, in the
absence of knowledge to the contrary, be entitled to rely on any instrument or
document believed by it in good faith to be genuine and correct and to have been
signed or sent by the proper Person or Persons. Neither the Agents nor any of
their directors, officers, employees or agents shall have any responsibility to
any Borrower on account of the failure of or delay in performance or breach by
any Lender or Issuing Lender of any of its obligations hereunder or to any
Lender or Issuing Lender on account of the failure of or delay in performance or
breach by any other Agent, any other Lender or Issuing Lender or any Borrower of
any of their respective obligations hereunder or in connection herewith. The
Administrative Agent and the Canadian Administrative Agent may execute any and
all duties hereunder by or through agents or employees and shall be entitled to
rely upon the advice of legal counsel selected by the Administrative Agent with
respect to all matters arising hereunder and shall not be liable for any action
taken or suffered in good faith by it in accordance with the advice of such
counsel.
The Lenders and the Issuing Lenders hereby acknowledge that neither
the Administrative Agent nor the Canadian Administrative Agent shall be under
any duty to take any discretionary action permitted to be taken by it pursuant
to the provisions of this Agreement unless it shall be requested in writing to
do so by (i) with respect to the Administrative Agent, the Required Lenders or
the Required Revolving Lenders, as applicable, and (ii) with respect to the
Canadian Administrative Agent, the Required Canadian Lenders.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided below, the Administrative Agent may resign at
any time by notifying the Canadian Administrative Agent, the Lenders, the
Issuing Lenders and the Borrowers. Upon any such resignation, the Required
Lenders shall have the right to appoint from the Lenders a successor. If no
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent may, on
behalf of the Lenders, appoint from the Lenders a successor Administrative Agent
which shall be a bank with an office in New York, New York, having a combined
capital and surplus of at least $500,000,000 or an affiliate of any such bank,
which successor shall be acceptable to Viacom (such acceptance not to be
unreasonably withheld). Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor bank, such successor shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After the Administrative Agent's
resignation hereunder, the provisions of this Article and Section 9.5 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Administrative Agent.
Subject to the appointment and acceptance of a successor Canadian
Administrative Agent as provided below, the Canadian Administrative Agent may
resign at any time by notifying the Administrative Agent, the US-Canadian
Lenders and the Borrowers. Upon any such resignation, the Required Canadian
Lenders shall have the right to appoint from the US-Canadian Lenders a
successor. If no successor shall have been so appointed by the Required
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Canadian Lenders and shall have accepted such appointment within 30 days after
the retiring Canadian Administrative Agent gives notice of its resignation, then
the retiring Canadian Administrative Agent may, on behalf of the US-Canadian
Lenders, appoint from the US-Canadian Lenders a successor Canadian
Administrative Agent which shall be a bank with an office in New York, New York
and in Toronto, Ontario, having a combined capital and surplus of at least
$500,000,000 or an affiliate of any such bank, which successor shall be
acceptable to Viacom (such acceptance not to be unreasonably withheld). Upon the
acceptance of any appointment as Canadian Administrative Agent hereunder by a
successor bank, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Canadian Administrative
Agent and the retiring Canadian Administrative Agent shall be discharged from
its duties and obligations hereunder. After the Canadian Administrative Agent's
resignation hereunder, the provisions of this Article and Section 9.5 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Canadian Administrative Agent.
With respect to the Loans made by them and their LC Exposure
hereunder, the Agents in their individual capacity and not as Agents shall have
the same rights and powers as any other Lender and may exercise the same as
though they were not Agents, and the Agents and their affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrowers or any of their respective Subsidiaries or any Affiliate thereof
as if they were not Agents.
Each Lender and Issuing Lender agrees (i) to reimburse the
Administrative Agent and the Canadian Administrative Agent in the amount of its
pro rata share (based on its Total Facility Percentage or, after the date on
which the Loans shall have been paid in full, based on its Total Facility
Percentage immediately prior to such date) of any reasonable, out-of-pocket
expenses incurred for the benefit of the Lenders or the Issuing Lenders by the
Administrative Agent or the Canadian Administrative Agent, as applicable,
including reasonable counsel fees and compensation of agents and employees paid
for services rendered on behalf of the Lenders or the Issuing Lenders, which
shall not have been reimbursed by or on behalf of any Borrower and (ii) to
indemnify and hold harmless the Administrative Agent and the Canadian
Administrative Agent and any of their respective directors, officers, employees
or agents, in the amount of such pro rata share, from and against any and all
liabilities, taxes, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against it in its capacity as
Administrative Agent or Canadian Administrative Agent, as applicable, in any way
relating to or arising out of this Agreement or any action taken or omitted by
it under this Agreement, to the extent the same shall not have been reimbursed
by or on behalf of Viacom; provided, that no Lender or Issuing Lender shall be
liable to the Administrative Agent, the Canadian Administrative Agent or any
such director, officer, employee or agent for any portion of such liabilities,
taxes, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or willful
misconduct of the Administrative Agent, the Canadian Administrative Agent or any
of their respective directors, officers, employees or agents, as applicable.
Each Lender and Issuing Lender acknowledges that it has,
independently and without reliance upon the Agents or any other Lender or
Issuing Lender and based on such
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documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender and Issuing
Lender also acknowledges that it will, independently and without reliance upon
any Agent or any other Lender or Issuing Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
Neither the Syndication Agent, the Co-Documentation Agents, the
Joint Lead Arrangers nor any managing agent shall have any duties or
responsibilities hereunder in its capacity as such.
ARTICLE VIII
GUARANTEES
SECTION 8.1. Viacom Guarantee. (a) Guarantee. In order to induce the
Administrative Agent and the Lenders to become bound by this Agreement and to
make the Loans hereunder to the Subsidiary Borrowers, and in consideration
thereof, Viacom hereby unconditionally and irrevocably guarantees, as primary
obligor and not merely as surety, to the Administrative Agent, for the ratable
benefit of the Lenders, the prompt and complete payment and performance by each
Subsidiary Borrower when due (whether at stated maturity, by acceleration or
otherwise) of the Subsidiary Borrower Obligations, and Viacom further agrees to
pay any and all expenses (including, without limitation, all reasonable fees,
charges and disbursements of counsel) which may be paid or incurred by the
Administrative Agent or by the Lenders in enforcing, or obtaining advice of
counsel in respect of, any of their rights under the guarantee contained in this
Section 8.1(a). The guarantee contained in this Section 8.1(a), subject to
Section 8.1(e), shall remain in full force and effect until the Subsidiary
Borrower Obligations are paid in full and the Commitments are terminated,
notwithstanding that from time to time prior thereto any Subsidiary Borrower may
be free from any Subsidiary Borrower Obligations. Viacom agrees that whenever,
at any time, or from time to time, it shall make any payment to the
Administrative Agent or any Lender on account of its liability under this
Section 8.1, it will notify the Administrative Agent and such Lender in writing
that such payment is made under the guarantee contained in this Section 8.1 for
such purpose. No payment or payments made by any Subsidiary Borrower or any
other Person or received or collected by the Administrative Agent or any Lender
from any Subsidiary Borrower or any other Person by virtue of any action or
proceeding or any setoff or appropriation or application, at any time or from
time to time, in reduction of or in payment of the Subsidiary Borrower
Obligations shall be deemed to modify, reduce, release or otherwise affect the
liability of Viacom under this Section 8.1 which, notwithstanding any such
payment or payments, shall remain liable for the unpaid and outstanding
Subsidiary Borrower Obligations until, subject to Section 8.1(e), the Subsidiary
Borrower Obligations are paid in full and the Commitments are terminated.
Notwithstanding any other provision herein, the maximum liability of Viacom
under this Section 8.1 shall in no event exceed the amount which can be
guaranteed by Viacom under applicable law.
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(b) No Subrogation, etc. Notwithstanding any payment or payments
made by Viacom hereunder, or any set-off or application of funds of Viacom by
the Administrative Agent or any Lender, Viacom shall not be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against any Subsidiary Borrower or against any collateral security or guarantee
or right of offset held by the Administrative Agent or any Lender for the
payment of the Subsidiary Borrower Obligations, nor shall Viacom seek or be
entitled to seek any contribution, reimbursement, exoneration or indemnity from
or against any Subsidiary Borrower in respect of payments made by Viacom
hereunder, until all amounts owing to the Administrative Agent and the Lenders
by the Subsidiary Borrowers on account of the Subsidiary Borrower Obligations
are paid in full and the Commitments are terminated. So long as the Subsidiary
Borrower Obligations remain outstanding, if any amount shall be paid by or on
behalf of any Subsidiary Borrower or any other Person to Viacom on account of
any of the rights waived in this Section 8.1, such amount shall be held by
Viacom in trust, segregated from other funds of Viacom, and shall, forthwith
upon receipt by Viacom, be turned over to the Administrative Agent in the exact
form received by Viacom (duly indorsed by Viacom to the Administrative Agent, if
required), to be applied against the Subsidiary Borrower Obligations, whether
matured or unmatured, in such order as the Administrative Agent may determine.
(c) Amendments, etc. with respect to the Subsidiary Borrower
Obligations. Viacom shall remain obligated under this Section 8.1
notwithstanding that, without any reservation of rights against Viacom, and
without notice to or further assent by Viacom, any demand for payment of or
reduction in the principal amount of any of the Subsidiary Borrower Obligations
made by the Administrative Agent or any Lender may be rescinded by the
Administrative Agent or such Lender, and any of the Subsidiary Borrower
Obligations continued, and the Subsidiary Borrower Obligations, or the liability
of any other party upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Administrative Agent or any
Lender, and this Agreement and any other documents executed and delivered in
connection herewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Required Lenders (or all Lenders, as the case may be)
may deem advisable from time to time, and any collateral security, guarantee or
right of offset at any time held by the Administrative Agent or any Lender for
the payment of the Subsidiary Borrower Obligations may be sold, exchanged,
waived, surrendered or released. Neither the Administrative Agent nor any Lender
shall have any obligation to protect, secure, perfect or insure any lien at any
time held by it as security for the Subsidiary Borrower Obligations or for the
guarantee contained in this Section 8.1 or any property subject thereto.
(d) Guarantee Absolute and Unconditional. Viacom waives any and all
notice of the creation, renewal, extension or accrual of any of the Subsidiary
Borrower Obligations and notice of or proof of reliance by the Administrative
Agent or any Lender upon the guarantee contained in this Section 8.1 or
acceptance of the guarantee contained in this Section 8.1; the Subsidiary
Borrower Obligations
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shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon the guarantee contained
in this Section 8.1; and all dealings between Viacom or the Subsidiary
Borrowers, on the one hand, and the Administrative Agent and the Lenders, on the
other, shall likewise be conclusively presumed to have been had or consummated
in reliance upon the guarantee contained in this Section 8.1. Viacom waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon Viacom or any Subsidiary Borrower with respect to the
Subsidiary Borrower Obligations. The guarantee contained in this Section 8.1
shall be construed as a continuing, absolute and unconditional guarantee of
payment without regard to (a) the validity or enforceability of this Agreement,
any of the Subsidiary Borrower Obligations or any collateral security therefor
or guarantee or right of offset with respect thereto at any time or from time to
time held by the Administrative Agent or any Lender, (b) the legality under
applicable requirements of law of repayment by the relevant Subsidiary Borrower
of any Subsidiary Borrower Obligations or the adoption of any requirement of law
purporting to render any Subsidiary Borrower Obligations null and void, (c) any
defense, setoff or counterclaim (other than a defense of payment or performance
by the applicable Subsidiary Borrower) which may at any time be available to or
be asserted by Viacom against the Administrative Agent or any Lender, or (d) any
other circumstance whatsoever (with or without notice to or knowledge of Viacom
or any Subsidiary Borrower) which constitutes, or might be construed to
constitute, an equitable or legal discharge of any Subsidiary Borrower for any
of its Subsidiary Borrower Obligations, or of Viacom under the guarantee
contained in this Section 8.1, in bankruptcy or in any other instance. When the
Administrative Agent or any Lender is pursuing its rights and remedies under
this Section 8.1 against Viacom, the Administrative Agent or any Lender may, but
shall be under no obligation to, pursue such rights and remedies as it may have
against any Subsidiary Borrower or any other Person or against any collateral
security or guarantee for the Subsidiary Borrower Obligations or any right of
offset with respect thereto, and any failure by the Administrative Agent or any
Lender to pursue such other rights or remedies or to collect any payments from
any Subsidiary Borrower or any such other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of any Subsidiary Borrower or any such other Person or of any such
collateral security, guarantee or right of offset, shall not relieve Viacom of
any liability under this Section 8.1, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Administrative Agent and the Lenders against Viacom.
(e) Reinstatement. The guarantee contained in this Section 8.1 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Subsidiary Borrower Obligations is
rescinded or must otherwise be restored or returned by the Administrative Agent
or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of any Subsidiary Borrower or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, any Subsidiary Borrower or any substantial part of its property, or
otherwise, all as though such payments had not been made.
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(f) Payments. Viacom hereby agrees that any payments in respect of
the Subsidiary Borrower Obligations pursuant to this Section 8.1 will be paid to
the Administrative Agent without setoff or counterclaim in Dollars at the office
of the Administrative Agent specified in Section 9.1. Notwithstanding the
foregoing, any payments in respect of the Subsidiary Borrower Obligations
pursuant to this Section 8.1 with respect to any Loan denominated in any
Multi-Currency (including principal of or interest on any such Loan or other
amounts) hereunder shall be made without setoff or counterclaim to the
Administrative Agent at its offices at Chase Manhattan International Ltd., 9
Thomas Moore Street, London E1-9YT United Kingdom, in immediately available
funds.
SECTION 8.2. Viacom International Guarantee. (a) Guarantee. In order
to induce the Administrative Agent and the Lenders to become bound by this
Agreement and to make the Loans hereunder to Viacom, and in consideration
thereof, Viacom International hereby unconditionally and irrevocably guarantees,
as primary obligor and not merely as surety, to the Administrative Agent, for
the ratable benefit of the Lenders, the prompt and complete payment and
performance by Viacom when due (whether at stated maturity, by acceleration or
otherwise) of the Viacom Obligations, and Viacom International further agrees to
pay any and all expenses (including, without limitation, all reasonable fees,
charges and disbursements of counsel) which may be paid or incurred by the
Administrative Agent or by the Lenders in enforcing, or obtaining advice of
counsel in respect of, any of their rights under the guarantee contained in this
Section 8.2(a). The guarantee contained in this Section 8.2(a), subject to
Section 8.2(e), shall remain in full force and effect until the Viacom
Obligations are paid in full and the Commitments are terminated, notwithstanding
that from time to time prior thereto Viacom may be free from any Viacom
Obligations. Viacom International agrees that whenever, at any time, or from
time to time, it shall make any payment to the Administrative Agent or any
Lender on account of its liability under this Section 8.2, it will notify the
Administrative Agent and such Lender in writing that such payment is made under
the guarantee contained in this Section 8.2 for such purpose. No payment or
payments made by Viacom or any other Person or received or collected by the
Administrative Agent or any Lender from Viacom or any other Person by virtue of
any action or proceeding or any setoff or appropriation or application, at any
time or from time to time, in reduction of or in payment of the Viacom
Obligations shall be deemed to modify, reduce, release or otherwise affect the
liability of Viacom International under this Section 8.2 which, notwithstanding
any such payment or payments, shall remain liable for the unpaid and outstanding
Viacom Obligations until, subject to Section 8.2(e), the Viacom Obligations are
paid in full and the Commitments are terminated. Notwithstanding any other
provision herein, the maximum liability of Viacom International under this
Section 8.2 shall in no event exceed the amount which can be guaranteed by
Viacom International under applicable law.
(b) No Subrogation, etc. Notwithstanding any payment or payments
made by Viacom International hereunder, or any set-off or application of funds
of Viacom International by the Administrative Agent or any Lender, Viacom
International shall not be entitled to be subrogated to any of the
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rights of the Administrative Agent or any Lender against Viacom or against any
collateral security or guarantee or right of offset held by the Administrative
Agent or any Lender for the payment of the Viacom Obligations, nor shall Viacom
International seek or be entitled to seek any contribution, reimbursement,
exoneration or indemnity from or against Viacom in respect of payments made by
Viacom International hereunder, until all amounts owing to the Administrative
Agent and the Lenders by Viacom on account of the Viacom Obligations are paid in
full and the Commitments are terminated. So long as the Viacom Obligations
remain outstanding, if any amount shall be paid by or on behalf of Viacom or any
other Person to Viacom International on account of any of the rights waived in
this Section 8.2, such amount shall be held by Viacom International in trust,
segregated from other funds of Viacom International, and shall, forthwith upon
receipt by Viacom International, be turned over to the Administrative Agent in
the exact form received by Viacom International (duly indorsed by Viacom
International to the Administrative Agent, if required), to be applied against
the Viacom Obligations, whether matured or unmatured, in such order as the
Administrative Agent may determine.
(c) Amendments, etc. with respect to the Viacom Obligations. Viacom
International shall remain obligated under this Section 8.2 notwithstanding
that, without any reservation of rights against Viacom International, and
without notice to or further assent by Viacom International, any demand for
payment of or reduction in the principal amount of any of the Viacom Obligations
made by the Administrative Agent or any Lender may be rescinded by the
Administrative Agent or such Lender, and any of the Viacom Obligations
continued, and the Viacom Obligations, or the liability of any other party upon
or for any part thereof, or any collateral security or guarantee therefor or
right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and this
Agreement and any other documents executed and delivered in connection herewith
may be amended, modified, supplemented or terminated, in whole or in part, as
the Required Lenders (or all Lenders, as the case may be) may deem advisable
from time to time, and any collateral security, guarantee or right of offset at
any time held by the Administrative Agent or any Lender for the payment of the
Viacom Obligations may be sold, exchanged, waived, surrendered or released.
Neither the Administrative Agent nor any Lender shall have any obligation to
protect, secure, perfect or insure any lien at any time held by it as security
for the Viacom Obligations or for the guarantee contained in this Section 8.2 or
any property subject thereto.
(d) Guarantee Absolute and Unconditional. Viacom International
waives any and all notice of the creation, renewal, extension or accrual of any
of the Viacom Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon the guarantee contained in this Section
8.2 or acceptance of the guarantee contained in this Section 8.2; the Viacom
Obligations shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee contained in this Section 8.2; and all dealings between Viacom
International or Viacom, on the one hand, and the Administrative Agent and the
Lenders, on the other, shall likewise be conclusively presumed to have been had
or consummated
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in reliance upon the guarantee contained in this Section 8.2. Viacom
International waives diligence, presentment, protest, demand for payment and
notice of default or nonpayment to or upon Viacom International or Viacom with
respect to the Viacom Obligations. The guarantee contained in this Section 8.2
shall be construed as a continuing, absolute and unconditional guarantee of
payment without regard to (a) the validity or enforceability of this Agreement,
any of the Viacom Obligations or any collateral security therefor or guarantee
or right of offset with respect thereto at any time or from time to time held by
the Administrative Agent or any Lender, (b) the legality under applicable
requirements of law of repayment by Viacom of any Viacom Obligations or the
adoption of any requirement of law purporting to render any Viacom Obligations
null and void, (c) any defense, setoff or counterclaim (other than a defense of
payment or performance by Viacom) which may at any time be available to or be
asserted by Viacom International against the Administrative Agent or any Lender,
or (d) any other circumstance whatsoever (with or without notice to or knowledge
of Viacom International or Viacom) which constitutes, or might be construed to
constitute, an equitable or legal discharge of Viacom for any of its Viacom
Obligations, or of Viacom International under the guarantee contained in this
Section 8.2, in bankruptcy or in any other instance. When the Administrative
Agent or any Lender is pursuing its rights and remedies under this Section 8.2
against Viacom International, the Administrative Agent or any Lender may, but
shall be under no obligation to, pursue such rights and remedies as it may have
against Viacom or any other Person or against any collateral security or
guarantee for the Viacom Obligations or any right of offset with respect
thereto, and any failure by the Administrative Agent or any Lender to pursue
such other rights or remedies or to collect any payments from Viacom or any such
other Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of Viacom or any such other
Person or of any such collateral security, guarantee or right of offset, shall
not relieve Viacom International of any liability under this Section 8.2, and
shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the Administrative Agent and the Lenders
against Viacom International.
(e) Reinstatement. The guarantee contained in this Section 8.2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Viacom Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
Viacom or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, Viacom or any substantial
part of its property, or otherwise, all as though such payments had not been
made.
(f) Payments. Viacom International hereby agrees that any payments
in respect of the Viacom Obligations pursuant to this Section 8.2 will be paid
to the Administrative Agent without setoff or counterclaim in Dollars at the
office of the Administrative Agent specified in Section 9.1. Notwithstanding the
foregoing, any payments in respect of the Viacom Obligations pursuant to this
Section 8.2 with respect to any Loan denominated in any Multi-Currency
(including principal of or interest on any such Loan or other amounts) hereunder
shall be made without
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setoff or counterclaim to the Administrative Agent at its offices at Chase
Manhattan International Ltd., 9 Thomas Moore Street, London E1-9YT United
Kingdom, in immediately available funds.
(g) Release of Guarantee. Notwithstanding the foregoing, the
guarantee contained in this Section 8.2 shall be released on the earlier of the
date on which (i) all notes, debentures and bonds now or hereafter issued by
Viacom which carry a Viacom International guarantee (the "Bonds") are paid in
full and (ii) the guarantee of Viacom International with respect to the Bonds is
released. On such date, this Section 8.2, including without limitation Section
8.2(e), shall be deemed to have no legal effect whatsoever.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Notices. Notices and other communications provided for
herein shall be in writing (or, where permitted to be made by telephone, shall
be confirmed promptly in writing) and shall be delivered by hand or overnight
courier service, mailed or sent by telecopier as follows:
(a) if to Viacom, to it at Viacom Inc., 1515 Broadway, New York, New
York 10036, Attention of Vice President and Treasurer (Telecopy No. (212)
860-2341), with a copy to General Counsel (Telecopy No. (212) 975-9856);
(b) if to Viacom International, to it c/o Viacom Inc., 1515
Broadway, New York, New York 10036, Attention of Vice President and Treasurer
(Telecopy No. (212) 860-2341), with a copy to General Counsel (Telecopy No.
(212) 975-9856);
(c) if to the Administrative Agent, to it at The Chase Manhattan
Bank, 270 Park Avenue, New York, New York 10017, Attention: William Rottino
(Telecopy No. 212-270-1204), with a copy to The Chase Manhattan Bank, One Chase
Manhattan Plaza, New York, New York, 10080, Attention: Camille Wilson (Telecopy
No. 212-552-5700);
(d) if to any Issuing Lender, to it at the address for notices
specified in the applicable Issuing Lender Agreement;
(e) if to a Lender, to it at its address (or telecopy number) set
forth in Schedule 1.1 or in the Assignment and Acceptance pursuant to which such
Lender shall have become a party hereto; and
(f) if to a Subsidiary Borrower, to it at its address set forth in
the relevant Subsidiary Borrower Request.
Notwithstanding the foregoing, each of Viacom, any other Borrower, the
Administrative Agent and the Issuing Lender may, in its discretion, provide any
notice, report or other information to
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be provided under this Agreement to a Lender by (i) electronic mail to the
electronic mail address provided by such Lender in its Administrative
Questionnaire and/or (ii) through access to a web site. All notices and other
communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been given on (A) the date of receipt if
delivered by hand or overnight courier service or sent by telecopy or electronic
mail, (B) the date of posting if given by web site access, (C) the date of such
telephone call, if permitted by the terms hereof and if promptly confirmed in
writing, or (D) on the date five Business Days after dispatch by registered mail
if mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section 9.1 or in accordance with the latest unrevoked
direction from such party given in accordance with this Section 9.1.
SECTION 9.2. Survival of Agreement. All representations and
warranties made hereunder and in any certificate delivered pursuant hereto or in
connection herewith shall be considered to have been relied upon by the Agents
and the Lenders and shall survive the execution and delivery of this Agreement
and the making of the Loans and other extensions of credit hereunder, regardless
of any investigation made by the Agents or the Lenders or on their behalf.
SECTION 9.3. Binding Effect. This Agreement shall be binding upon
and inure to the benefit of each Borrower, each Agent and each Lender and their
respective successors and assigns, except that Viacom shall not have the right
to assign its rights or obligations hereunder or any interest herein without the
prior consent of all the Lenders.
SECTION 9.4. Successors and Assigns. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party, and all covenants, promises
and agreements by or on behalf of each Borrower, any Agent or any Lender that
are contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations under this Agreement (including all or
a portion of its Commitment or Swingline Commitment and the Loans at the time
owing to it); provided, however, that (i) except in the case of an assignment to
a Lender or a Lender Affiliate (other than if at the time of such assignment,
such Lender or Lender Affiliate would be entitled to require any Borrower to pay
greater amounts under Section 2.20(a) than if no such assignment had occurred,
in which case such assignment shall be subject to the consent requirement of
this clause (i)), Viacom and the Administrative Agent must give their prior
written consent to such assignment (which consent shall not be unreasonably
withheld or delayed), (ii) (x) except in the case of assignments to any Person
that is a Lender prior to giving effect to such assignment, the amount of the
aggregate Commitments and/or Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent) shall not be less
than $10,000,000 (or, if
78
applicable, the Dollar equivalent thereof), (y) the amount of the aggregate
Commitments and/or Loans retained by any assigning Lender (determined as of the
date the Assignment and Acceptance with respect to such assignment is delivered
to the Administrative Agent) shall not be less than $10,000,000 (or, if
applicable, the Dollar equivalent thereof), unless (in the case of clause (x) or
(y) above) the assigning Lender's Commitment and Loans (other than any
Competitive Loans) are being reduced to $0 pursuant to such assignment, and (z)
each assignment by each US-Canadian Lender of a Canadian Commitment shall be to
an additional bank, financial institution or other entity that is engaged in the
business of loaning money which has the established capability of providing C$
Loans, (iii) the assignor and assignee shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a processing
and recordation fee of $3,500 and (iv) the assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire. Upon acceptance and recording pursuant to Section 9.4(e), from
and after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five Business Days (or, with respect to
Canadian Loans or Canadian Commitments, five Business Days (Canada)) after the
execution thereof (or any lesser period to which the Administrative Agent and
Viacom may agree), (A) the assignee with respect to a Facility hereunder shall
be a party hereto and, to the extent of the interest assigned by such Assignment
and Acceptance, have the rights and obligations of a Lender to such Facility
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto (but shall continue to be entitled to the benefits of Sections 2.15,
2.16, 2.20 and 9.5 and subsection 3.7 of Annex II, as applicable, as well as to
any Fees accrued for its account hereunder and not yet paid)). Notwithstanding
the foregoing, any Lender or Issuing Lender assigning its rights and obligations
under this Agreement may maintain any Competitive Loans or Letters of Credit
made or issued by it outstanding at such time, and in such case shall retain its
rights hereunder in respect of any Loans or Letters of Credit so maintained
until such Loans or Letters of Credit have been repaid or terminated in
accordance with this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim created
by such assigning Lender, (ii) except as set forth in clause (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or any other instrument or document
furnished pursuant hereto, or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other instrument or
document furnished pursuant hereto or the financial condition of Viacom or any
of its Subsidiaries or the performance or observance by Viacom or any of its
Subsidiaries of any of its obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to
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Sections 3.2 and 5.1 and such other documents and information as it has deemed
appropriate to make it own credit analysis and decision to enter into such
Assignment and Acceptance; (v) such assignee will independently and without
reliance upon the Administrative Agent, such assigning Lender or any other Agent
or Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (vi) such assignee appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all the obligations which by the terms of
this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as agent of
each Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amount of the Loans owing to, each Lender under each Facility
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive in the absence of manifest error and each
Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by any Borrower and any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of Viacom and the Administrative
Agent to such assignment, the Administrative Agent shall (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to Viacom.
(f) Each Lender may without the consent of any Borrower or the
Agents sell participations to one or more banks, other financial institutions or
other entities (provided, that any such other entity is a not a competitor of
Viacom or any Affiliate of Viacom) all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitments
and the Loans owing to it); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (ii) the participating banks or other entities shall be
entitled to the benefit of the cost protection provisions contained in Sections
2.15, 2.16 and 2.20 and subsection 3.7, as applicable, to the same extent as if
they were Lenders under the Facility of the Lender which sold the participation
to such participating bank (provided, that additional amounts payable to any
Lender pursuant to Section 2.20 or subsection 3.7, as applicable, shall be
determined as if such Lender had not sold any such participations) and (iv) the
Borrowers, the Agents and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of each Borrower relating to the Loans and the Letters
of Credit and to approve any amendment,
80
modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing any fees payable hereunder or
the amount of principal of or the rate at which interest is payable on the Loans
or LC Disbursements, extending any scheduled principal payment date or date
fixed for the payment of interest on the Loans or LC Disbursements or of LC Fees
or Facility Fees or Acceptance Fees, increasing the amount of or extending the
Commitments under the relevant Facility or releasing the guarantee contained in
Section 8.1 or 8.2 (except in accordance with Section 8.2(g)), in each case to
the extent the relevant participant is directly affected thereby).
(g) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 9.4, disclose to the assignee or participant or proposed assignee or
participant any information relating to any Borrower furnished to such Lender by
or on behalf of such Borrower; provided, that, prior to any such disclosure of
information designated by such Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute a Confidentiality
Agreement whereby such assignee or participant shall agree (subject to the
exceptions set forth therein) to preserve the confidentiality of such
confidential information. A copy of each such Confidentiality Agreement executed
by an assignee shall be promptly furnished to Viacom. It is understood that
confidential information relating to the Borrowers would not ordinarily be
provided in connection with assignments or participations of Competitive Loans.
(h) Notwithstanding the limitations set forth in paragraph (b)
above, (i) any Lender may at any time assign or pledge all or any portion of its
rights under this Agreement to a Federal Reserve Bank and (ii) any Lender which
is a "fund" may at any time assign or pledge all or any portion of its rights
under this Agreement to secure such Lender's indebtedness, in each case without
the prior written consent of any Borrower or the Administrative Agent; provided,
that each such assignment shall be made in accordance with applicable law and no
such assignment shall release a Lender from any of its obligations hereunder. In
order to facilitate any such assignment, each Borrower shall, at the request of
the assigning Lender, duly execute and deliver to the assigning Lender a
registered promissory note or notes evidencing the Loans made to such Borrower
by the assigning Lender hereunder.
(i) Notwithstanding anything to the contrary contained herein, any
Bank (a "Granting Bank") may grant to a special purpose funding vehicle (a
"SPC"), identified as such in writing from time to time by the Granting Bank to
the Administrative Agent and the relevant Borrower, the option to provide to
such Borrower all or any part of any Loan that such Granting Bank would
otherwise be obligated to make to such Borrower pursuant to this Agreement;
provided, that (i) nothing herein shall constitute a commitment by any SPC to
make any Loan, and (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting Bank shall
be obligated to make such Loan pursuant to the terms hereof. The making of a
Loan by an SPC hereunder shall utilize the Commitment of the Granting Bank to
the same extent, and as if, such Loan were made by such Granting Bank. Each
party hereto hereby agrees that no SPC shall be liable for any indemnity or
similar payment obligation under this Agreement (all liability for which shall
remain with the Granting Bank). In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior indebtedness
of any SPC, it will not institute
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against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any State thereof. In addition,
notwithstanding anything to the contrary contained in this Section, any SPC may
(i) with notice to, but without the prior written consent of, the relevant
Borrower and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Bank or to any financial institutions (consented to by such Borrower and the
Administrative Agent ) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and (ii)
disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC. This section may not
be amended without the written consent of any SPC which has been identified as
such by the Granting Bank to the Administrative Agent and the relevant Borrower
and which then holds any Loan pursuant to this paragraph (i).
(j) Neither Viacom nor any Subsidiary Borrower shall assign or
delegate any of its rights or duties hereunder without the prior consent of all
the Lenders; provided, Viacom may assign or delegate any of its rights or duties
hereunder (excepting its rights and duties pursuant to Section 8.1) to any
Subsidiary Borrower and any Subsidiary Borrower may assign or delegate any of
its rights or duties hereunder to Viacom or (excepting Viacom International's
rights and duties pursuant to 8.2) to any other Subsidiary Borrower, in each
case without the prior consent of the Lenders unless such assignment would
adversely affect the Lenders; provided, further, Viacom may and any Subsidiary
Borrower may assign or delegate any of its rights and duties hereunder pursuant
to a merger or consolidation permitted by Section 5.4(b) or (d) without the
prior consent of the Lenders.
SECTION 9.5. Expenses; Indemnity. (a) Viacom agrees to pay all
reasonable legal and other out-of-pocket expenses incurred by JP Morgan, a
division of Chase Securities Inc., in its capacity as a Joint Lead Arranger and
in its capacity as the Sole Bookrunner, and by the Administrative Agent and
their respective affiliates in connection with the preparation, negotiation,
execution and delivery of this Agreement or in connection with any amendments,
modifications or waivers of the provisions hereof (whether or not the
transactions hereby contemplated shall be consummated) or incurred by any Agent,
any Lender or any Issuing Lender in connection with the enforcement or
protection of the rights of the Agents, the Lenders or the Issuing Lenders under
this Agreement or in connection with the Loans made or the Letters of Credit
issued hereunder, including, without limitation, the reasonable fees, charges
and disbursements of Simpson Thacher & Bartlett (as set forth the in the Letter
Agreement, dated as of February 2, 2001, between Simpson Thacher & Bartlett and
Viacom), counsel for JP Morgan, a division of Chase Securities Inc., in its
capacity as a Joint Lead Arranger and in its capacity as the Sole Bookrunner,
and the Administrative Agent, and, in connection with any such enforcement or
protection, the reasonable fees, charges and disbursements of any other counsel
for any Agent, Lender or Issuing Lender.
(b) Viacom agrees to indemnify and hold harmless each Agent, each
Lender, each Issuing Lender and each of their respective directors, officers,
employees, affiliates and agents (each, an "Indemnified Person") against, and to
reimburse each Indemnified Person, upon
82
its demand, for, any losses, claims, damages, liabilities or other expenses
("Losses"), to which such Indemnified Person becomes subject insofar as such
Losses arise out of or in any way relate to or result from (i) the execution or
delivery of this Agreement, any Letter of Credit or any agreement or instrument
contemplated hereby (and any amendment hereto or thereto), the performance by
the parties hereto or thereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby or (ii) the use (or proposed use) of the proceeds of the Loans or other
extensions of credit hereunder, including, without limitation, Losses consisting
of reasonable legal, settlement or other expenses incurred in connection with
investigating, defending or participating in any legal proceeding relating to
any of the foregoing (whether or not such Indemnified Person is a party
thereto); provided, that the foregoing will not apply to any Losses to the
extent they are found by a final decision of a court of competent jurisdiction
to have resulted from the gross negligence or willful misconduct of such
Indemnified Person. No Indemnified Person shall be liable for any damages
arising from the use by others of Information or other materials obtained
through electronic, telecommunications or other information transmission systems
(provided, that the foregoing will not apply to any Losses to the extent they
are found by a final decision of a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person).
(c) The provisions of this Section 9.5 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any investigation made by or on behalf of any
Agent or Lender. All amounts under this Section 9.5 shall be payable on written
demand therefor.
SECTION 9.6. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Agent and each Lender is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Agent or Lender to or for the credit or the account of any Borrower
against any of and all the obligations of such Borrower now or hereafter
existing under this Agreement or the Administrative Agent Fee Letter held by
such Agent or Lender which shall be due and payable. The rights of each Agent
and each Lender under this Section 9.6 are in addition to other rights and
remedies (including other rights of setoff) which such Agent or Lender may have.
SECTION 9.7. APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.8. Waivers; Amendment. (a) No failure or delay of any
Agent, any Issuing Lender or any Lender in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or
83
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Agents, the Issuing Lenders and the Lenders hereunder are
cumulative and are not exclusive of any rights or remedies which they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any Borrower from any such provision shall in any event be
effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice or demand on any Borrower in any case
shall entitle any Borrower to any other or further notice or demand in similar
or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement in writing entered into by
the Borrowers and the Required Lenders; provided, however, that no such
agreement shall (i) reduce the amount or extend the scheduled date of maturity
of any Loan or of any installment thereof, or reduce the stated amount of any LC
Disbursement, interest or fee payable hereunder or extend the scheduled date of
any payment thereof or increase the amount or extend the expiration date of any
Commitment of any Lender, in each case without the prior written consent of each
Lender directly affected thereby; (ii) amend, modify or waive any provision of
this Section 9.8(b), or reduce the percentage specified in the definition of
"Required Lenders", release the guarantee contained in Section 8.1 or 8.2
(except in accordance with Section 8.2(g)) or consent to the assignment or
delegation by Viacom or any Subsidiary Borrower of any of its rights and
obligations under this Agreement (except (A) by Viacom (excepting its rights and
duties pursuant to Section 8.1) to any Subsidiary Borrower or (B) by any
Subsidiary Borrower to Viacom or (excepting Viacom International's rights and
duties pursuant to Section 8.2) to any other Subsidiary Borrower and as set
forth in Section 9.4(j)), in each case without the prior written consent of all
the Lenders, (iii) reduce the percentage specified in the definition of (A)
"Required US-Canadian Lenders" without the prior written consent of all
US-Canadian Lenders (it being understood that the consent of the Required
Revolving Lenders shall not also be required) or (B) "Required Revolving
Lenders" without the prior written consent of all Lenders (excluding US-Canadian
Lenders) (it being understood that the consent of the Required US-Canadian
Lenders shall not also be required); (iv) amend, modify or waive any provision
of Annex II or any provision with respect to the US$-Canadian Loans, C$ Loans or
Canadian Commitments without the prior written consent of the Required
US-Canadian Lenders (it being understood that the consent of the Required
Revolving Lenders or the Required Lenders shall not be required), (v) amend,
modify or waive any provision with respect to the Revolving Credit Loans or
Revolving Commitments without the prior written consent of the Required
Revolving Lenders (it being understood that the consent of the Required
US-Canadian Lenders or the Required Lenders shall not be required) or (vi)
amend, modify or waive any provision of Article VII without the prior written
consent of each Agent affected thereby; provided, further that no such agreement
shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent, the Swingline Lenders or the Issuing Lenders hereunder in
such capacity without the prior written consent of the Administrative Agent,
each Swingline Lender directly affected thereby or each Issuing Lender directly
affected thereby, as the case may be.
84
SECTION 9.9. Entire Agreement. This Agreement (together with the
Issuing Lender Agreements, the Subsidiary Borrower Designations and the
Subsidiary Borrower Requests) constitutes the entire contract between the
parties relative to the subject matter hereof. Any previous agreement among the
parties with respect to the subject matter hereof is superseded by this
Agreement. Nothing in this Agreement, expressed or implied, is intended to
confer upon any party other than the parties hereto any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
SECTION 9.10. Waiver of Jury Trial. Each party hereto hereby waives,
to the fullest extent permitted by applicable law, any right it may have to a
trial by jury in respect of any litigation directly or indirectly arising out
of, under or in connection with this Agreement. Each party hereto (a) certifies
that no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (b) acknowledges that it
and the other parties hereto have been induced to enter into this Agreement by,
among other things, the mutual waivers and certifications in this Section 9.10.
SECTION 9.11. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 9.12. Counterparts. This Agreement may be executed in two or
more counterparts, each of which constitute an original but all of which when
taken together shall constitute but one contract, and shall become effective as
provided in Section 9.3.
SECTION 9.13. Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.14. Jurisdiction; Consent to Service of Process. (a) Each
Borrower hereby irrevocably and unconditionally submits, for itself and its
Property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard
85
and determined in such New York State court or, to the extent permitted by law,
in such Federal court. Each of the parties hereto agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law. Each Subsidiary Borrower designates and directs Viacom at its offices at
1515 Broadway, New York, New York 10036, as its agent to receive service of any
and all process and documents on its behalf in any legal action or proceeding
referred to in this Section 9.14 in the State of New York and agrees that
service upon such agent shall constitute valid and effective service upon such
Subsidiary Borrower and that failure of Viacom to give any notice of such
service to any Subsidiary Borrower shall not affect or impair in any way the
validity of such service or of any judgment rendered in any action or proceeding
based thereon. Nothing in this Agreement shall affect any right that any Agent
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement against any Borrower or its Properties in the courts of any
jurisdiction.
(b) Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State or
Federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.1. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.15. Confidentiality. (a) Each Lender agrees to keep
confidential and not to disclose (and to cause its affiliates, officers,
directors, employees, agents and representatives to keep confidential and not to
disclose) and, at the request of Viacom (except as provided below or if such
Lender is required to retain any Confidential Information (as defined below)
pursuant to customary internal or banking practices, bank regulations or
applicable law), promptly to return to Viacom or destroy the Confidential
Information and all copies thereof, extracts therefrom and analyses or other
materials based thereon, except that such Lender shall be permitted to disclose
Confidential Information (i) to such of its officers, directors, employees,
agents, affiliates and representatives as need to know such Confidential
Information in connection with such Lender's participation in this Agreement,
each of whom shall be informed by such Lender of the confidential nature of the
Confidential Information and shall agree to be bound by the terms of this
Section 9.15; (ii) to the extent required by applicable laws and regulations or
by any subpoena or similar legal process or requested by any Governmental
Authority or agency having jurisdiction over such Lender; provided, however,
that, except in the case of disclosure to bank regulators or examiners in
accordance with customary banking practices, if legally permitted written notice
of each instance in which Confidential Information is required or requested to
be disclosed shall be furnished to Viacom not less than 30 days prior to the
expected date of such disclosure or, if 30 days' notice is not practicable under
the circumstances, as promptly as practicable under the circumstances; (iii) to
the extent such Confidential Information (A) is or becomes publicly available
other than as a result of a breach of this Agreement, (B) becomes available to
such Lender on a non-
86
confidential basis from a source other than a party to this Agreement or any
other party known to such Lender to be bound by an agreement containing a
provision similar to this Section 9.15 or (C) was available to such Lender on a
non-confidential basis prior to this disclosure to such Lender by a party to
this Agreement or any other party known to such Lender to be bound by an
agreement containing a provision similar to this Section 9.15; (iv) as permitted
by Section 9.4(g); or (v) to the extent Viacom shall have consented to such
disclosure in writing. As used in this Section 9.15, "Confidential Information"
shall mean any materials, documents or information furnished by or on behalf of
any Borrower in connection with this Agreement designated by or on behalf of
such Borrower as confidential.
(b) Each Lender (i) agrees that, except to the extent the conditions
referred to in subclause (A), (B) or (C) of clause (iii) of paragraph (a) above
have been met and as provided in paragraph (c) below, (A) it will use the
Confidential Information only in connection with its participation in this
Agreement and (B) it will not use the Confidential Information in connection
with any other matter or in a manner prohibited by any law, including, without
limitation, the securities laws of the United States and (ii) understands that
breach of this Section 9.15 might seriously prejudice the interest of the
Borrowers and that the Borrowers are entitled to equitable relief, including an
injunction, in the event of such breach.
(c) Notwithstanding anything to the contrary contained in this
Section 9.15, each Agent and each Lender shall be entitled to retain all
Confidential Information for so long as it remains an Agent or a Lender to use
solely for the purposes of servicing the credit and protecting its rights
hereunder.
SECTION 9.16. Waiver of Notice of Termination Period. By its
execution of this Agreement, each Lender hereby waives any right to notice of
termination, or any notice period with respect to the termination, of any
Existing Credit Agreement that such Lender may have had under such Existing
Credit Agreement.
[Remainder of the page left blank intentionally; Signature page to follow.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
VIACOM INC.
By: /s/ Robert G. Freedline
----------------------------------------
Name: Robert G.Freedline
Title: Vice President and Treasurer
VIACOM INTERNATIONAL INC.
By: /s/ Robert G. Freedline
----------------------------------------
Name: Robert G.Freedline
Title: Vice President and Treasurer
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Lender
By: /s/ Thomas H. Kozlark
----------------------------------------
Name: Thomas H. Kozlark
Title: Vice President
SALOMON SMITH BARNEY INC., as
Syndication Agent and as a Lender
By: /s/ Carolyn A. Kee
----------------------------------------
Name: Carolyn A. Kee
Title: Attorney-in-Fact
FLEET NATIONAL BANK, as Co-Documentation
Agents and as a Lender
By: /s/ Laura Neenan
----------------------------------------
Name: Laura Neenan
Title: Assistant Vice President
BANK OF AMERICA, N.A., as Co-Documentation
Agents and as a Lender
By: /s/ Thomas J. Kane
----------------------------------------
Name: Thomas J. Kane
Title: Vice President
THE CHASE MANHATTAN BANK, TORONTO BRANCH,
as a Lender,
By: /s/ Christine Chan
----------------------------------------
Name: Christine Chan
Title: Authorized Representative
By: /s/ Sara Collins
----------------------------------------
Name: Sara Collins
Title: Authorized Representative
CITIBANK, N.A., as a Lender,
By: /s/ Elizabeth H. Minnella
----------------------------------------
Name: Elizabeth H. Minnella
Title: Vice President
CITIBANK CANADA, as a Lender,
By: /s/ Adam Shepherd
----------------------------------------
Name: Adam Shepherd
Title: Vice President
BANK OF AMERICA CANADA, as a Lender,
By: /s/ Donald R. Chung
----------------------------------------
Name: Donald R. Chung
Title: Vice President, Corporate Investment
Banking
THE SUMITOMO BANK, LIMITED, as a Lender,
By: /s/ C. Michael Garrido
----------------------------------------
Name: C. Michael Garrido
Title: Senior Vice President
THE BANK OF NEW YORK, as a Lender,
By: /s/ John R. Ciulla
----------------------------------------
Name: John R. Ciulla
Title: Vice President
THE BANK OF TOKYO-MITSUBISHI, LTD., NY
BRANCH, as a Lender,
By: /s/ J.J. Wallace, Jr.
----------------------------------------
Name: J.J. Wallace, Jr.
Title: Executive Vice President
DEUTSCHE BANK A.G., NEW YORK BRANCH
and/or CAYMAN ISLANDS BRANCH, as a Lender,
By: /s/ William W. McGinty
----------------------------------------
Name: William W. McGinty
Title: Director
By: /s/ Irene Egues
----------------------------------------
Name: Irene Egues
Title: Vice President
DEUTSCHE BANK CANADA, as a Lender,
By: /s/ Robert A. Johnson
----------------------------------------
Name: Robert A. Johnson
Title: Vice President
By: /s/ Jens Lohmueller
----------------------------------------
Name: Jens Lohmueller
Title: Assistant Vice President
THE DAI-ICHI KANGYO BANK, LTD. (dba
Mizuho Financial Group), as a Lender,
By: /s/ Marvin Mirel Lazar
----------------------------------------
Name: Marvin Mirel Lazar
Title: Vice President
THE FUJI BANK, LIMITED, as a Lender,
By: /s/ Nobuoki Koike
----------------------------------------
Name: J.J. Wallace, Jr.
Title: Vice President & Senior Team Leader
THE INDUSTRIAL BANK OF JAPAN, LIMITED
(d.b.a. Mizuho Financial Group),
as a Lender,
By: /s/ William Kennedy
----------------------------------------
Name: William Kennedy
Title: Senior Vice President
THE BANK OF NOVA SCOTIA, as a Lender,
By: /s/ Vincent J. Fitzgerald, Jr.
----------------------------------------
Name: Vincent J. Fitzgerald, Jr.
Title: Authorized Signatory
BARCLAYS BANK PLC, as a Lender,
By: /s/ Daniele Iacovone
----------------------------------------
Name: Daniele Iacovone
Title: Director
THE SANWA BANK, LIMITED, NEW YORK BRANCH,
as a Lender,
By: /s/ Jean-Michel Fatovic
----------------------------------------
Name: Jean-Michel Fatovic
Title: Vice President
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES, as a Lender,
By: /s/ Laura G. Fazio
----------------------------------------
Name: Laura G. Fazio
Title: First Vice President
By: /s/ Brian Schneider
----------------------------------------
Name: Brian Schneider
Title: Assistant Vice President
MELLON BANK, N.A., as a Lender,
By: /s/ Raghunatha Reddy
----------------------------------------
Name: Raghunatha Reddy
Title: Lending Officer
CREDIT SUISSE FIRST BOSTON, as a Lender,
By: /s/ Kristin Lepri
----------------------------------------
Name: Kristin Lepri
Title: Associate
By: /s/ Bill O'Daly
----------------------------------------
Name: Bill O'Daly
Title: Vice President
CREDIT SUISSE FIRST BOSTON CANADA,
as a Lender,
By: /s/ W.M. McFarland
----------------------------------------
Name: W.M. McFarland
Title: Vice President
By: /s/ Peter Chauvin
----------------------------------------
Name: Peter Chauvin
Title: Vice President
BANK ONE, NA, as a Lender,
By: /s/ Curtis R. Worthington
----------------------------------------
Name: Curtis R. Worthington
Title: Corporate Banking Officer
BANK ONE CANADA (to be BANK ONE, NA,
CANADA BRANCH as of 3/31/01 and thereafter),
as a Lender,
By: /s/ Kelly T. Cotton
----------------------------------------
Name: Kelly T. Cotton
Title: First Vice President
THE ROYAL BANK OF SCOTLAND PLC, as a Lender,
By: /s/ David Lucas
----------------------------------------
Name: David Lucas
Title: Senior Vice President
WACHOVIA BANK, N.A., as a Lender,
By: /s/ J. Timothy Toler
----------------------------------------
Name: J. Timothy Toler
Title: Senior Vice President
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH, as a Lender,
By: /s/ Lucie L. Guernsey
----------------------------------------
Name: Lucie L. Guernsey
Title: Director
By: /s/ Pascal Kabemba
----------------------------------------
Name: Pascal Kabemba
Title: Associate Director
LLOYDS TSB BANK PLC, as a Lender,
By: /s/ Windsor R. Davies
----------------------------------------
Name: Windsor R. Davies
Title: Director, Corporate Bank, USA
By: /s/ David Rodway
----------------------------------------
Name: David Rodway
Title: Vice President
THE NORINCHUKIN BANK, NEW YORK BRANCH,
as a Lender,
By: /s/ Yoshiro Niiro
----------------------------------------
Name: Yoshiro Niiro
Title: General Manager
SUNTRUST BANK, as a Lender,
By: /s/ W. David Wisdom
----------------------------------------
Name: W. David Wisdom
Title: Vice President
ABN AMRO BANK NV, as a Lender,
By: /s/ David Carrington
----------------------------------------
Name: David Carrington
Title: Group Vice President
By: /s/ Thomas Cha
----------------------------------------
Name: Thomas Cha
Title: Corporate Banking Officer
UBS AG, STAMFORD BRANCH, as a Lender,
By: /s/ Dorothy L. McKinley
----------------------------------------
Name: Dorothy L. McKinley
Title: Director Banking Product Services, US
By: /s/ Wilfred V. Saint
----------------------------------------
Name: Wilfred V. Saint
Title: Associate Director Banking Product
Services, US
MERRILL LYNCH BANK USA, as a Lender,
By: /s/ Raymond J. Dardano
----------------------------------------
Name: Raymond J. Dardano
Title: Senior Credit Officer
NATIONAL AUSTRALIA BANK LIMITED, A.C.N.
004044937, as a Lender,
By: /s/ Eduardo Salazar
----------------------------------------
Name: Eduardo Salazar
Title: Head of Media & Entertainment
THE TOKAI BANK, LIMITED - NEW YORK
BRANCH, as a Lender,
By: /s/ Shinichi Nakatani
----------------------------------------
Name: Shinichi Nakatani
Title: Assistant General Manager
EXHIBIT 10(dd)
CONFORMED COPY
- --------------------------------------------------------------------------------
$2,000,000,000
364-DAY CREDIT AGREEMENT
among
VIACOM INC.,
VIACOM INTERNATIONAL INC.,
THE SUBSIDIARY BORROWERS PARTIES HERETO,
THE LENDERS NAMED HEREIN,
THE CHASE MANHATTAN BANK,
as Administrative Agent,
SALOMON SMITH BARNEY INC.,
as Syndication Agent, and
FLEET NATIONAL BANK AND BANK OF AMERICA, N.A.,
as Co-Documentation Agents
Dated as of March 7, 2001
- --------------------------------------------------------------------------------
JP MORGAN, A DIVISION OF CHASE SECURITIES INC.
and
SALOMON SMITH BARNEY INC.,
as Joint Lead Arrangers
JP MORGAN, A DIVISION OF CHASE SECURITIES INC.,
as Sole Bookrunner
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS........................................................1
SECTION 1.1. Defined Terms...........................................1
SECTION 1.2. Terms Generally........................................13
ARTICLE II THE CREDITS......................................................15
SECTION 2.1. Commitments............................................15
SECTION 2.2. Loans..................................................15
SECTION 2.3. Revolving Credit Borrowing Procedure...................15
SECTION 2.4. Repayment of Loans.....................................16
SECTION 2.5. Conversion and Continuation Options....................16
SECTION 2.6. Fees...................................................16
SECTION 2.7. Interest on Loans; Eurodollar Tranches; Etc............17
SECTION 2.8. Default Interest.......................................18
SECTION 2.9. Alternate Rate of Interest.............................18
SECTION 2.10. Termination, Reduction and Increase of Commitments.....18
SECTION 2.11. Optional Prepayments of Loans..........................20
SECTION 2.12. Reserve Requirements; Change in Circumstances..........20
SECTION 2.13. Indemnity..............................................22
SECTION 2.14. Pro Rata Treatment; Funding Matters; Evidence of
Debt ..................................................22
SECTION 2.15. Sharing of Setoffs.....................................24
SECTION 2.16. Payments...............................................24
SECTION 2.17. Taxes..................................................25
SECTION 2.18. Termination or Assignment of Commitments Under
Certain Circumstances .................................27
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................27
SECTION 3.1. Corporate Existence....................................28
SECTION 3.2. Financial Condition....................................28
SECTION 3.3. Litigation.............................................28
SECTION 3.4. No Breach, etc.........................................28
SECTION 3.5. Corporate Action.......................................29
SECTION 3.6. Approvals..............................................29
SECTION 3.7. ERISA..................................................29
SECTION 3.8. Taxes..................................................29
SECTION 3.9. Investment Company Act.................................30
SECTION 3.10. Environmental..........................................30
SECTION 3.11. Material Subsidiaries..................................30
ARTICLE IV CONDITIONS OF EFFECTIVENESS AND LENDING..........................30
SECTION 4.1. Effectiveness..........................................30
SECTION 4.2. Initial Loans to Subsidiary Borrowers..................31
SECTION 4.3. All Credit Events......................................31
ARTICLE V COVENANTS.........................................................32
SECTION 5.1. Financial Statements...................................32
SECTION 5.2. Corporate Existence, Etc...............................34
SECTION 5.3. Insurance..............................................35
SECTION 5.4. Prohibition of Fundamental Changes.....................35
SECTION 5.5. Limitation on Liens....................................36
SECTION 5.6. Limitation on Subsidiary Indebtedness..................36
SECTION 5.7. Consolidated Coverage Ratio............................37
SECTION 5.8. Use of Proceeds........................................37
SECTION 5.9. Transactions with Affiliates...........................37
ARTICLE VI EVENTS OF DEFAULT................................................38
ARTICLE VII THE AGENTS......................................................40
ARTICLE VIII GUARANTEES.....................................................42
SECTION 8.1. Viacom Guarantee.......................................42
ii
SECTION 8.2. Viacom International Guarantee.........................44
ARTICLE IX MISCELLANEOUS....................................................47
SECTION 9.1. Notices................................................47
SECTION 9.2. Survival of Agreement..................................48
SECTION 9.3. Binding Effect.........................................48
SECTION 9.4. Successors and Assigns.................................48
SECTION 9.5. Expenses; Indemnity....................................52
SECTION 9.6. Right of Setoff........................................53
SECTION 9.7. APPLICABLE LAW.........................................53
SECTION 9.8. Waivers; Amendment.....................................53
SECTION 9.9. Entire Agreement.......................................54
SECTION 9.10. Waiver of Jury Trial...................................54
SECTION 9.11. Severability...........................................54
SECTION 9.12. Counterparts...........................................54
SECTION 9.13. Headings...............................................54
SECTION 9.14. Jurisdiction; Consent to Service of Process............54
SECTION 9.15. Confidentiality........................................55
SECTION 9.16. Waiver of Notice of Termination Period.................56
iii
ANNEXES
Annex I Pricing Grid
EXHIBITS
Exhibit A Administrative Questionnaire
Exhibit B-1 Form of Revolving Credit Borrowing Request
Exhibit B-2 Form of Subsidiary Borrower Designation
Exhibit B-3 Form of Subsidiary Borrower Request
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Confidentiality Agreement
Exhibit E Form of Closing Certificate
Exhibit F Form of New Lender Supplement
Exhibit G Form of Commitment Increase Letter
SCHEDULES
Schedule 1.1 Commitments; Addresses for Notices
Schedule 1.1(a) Guarantees
Schedule 5.6 Subsidiary Indebtedness
iv
364-DAY CREDIT AGREEMENT entered into as of March 7, 2001, among
VIACOM INC., a Delaware corporation ("Viacom"), each Subsidiary Borrower (as
herein defined); VIACOM INTERNATIONAL INC., a Delaware corporation ("Viacom
International"); the lenders whose names appear on Schedule 1.1 hereto or who
subsequently become parties hereto as provided herein (the "Lenders"); THE CHASE
MANHATTAN BANK, a New York banking corporation ("Chase"), as administrative
agent for the Lenders; SALOMON SMITH BARNEY INC., a New York corporation, as
syndication agent for the Lenders (in such capacity, the "Syndication Agent");
and FLEET NATIONAL BANK, a national banking corporation, and BANK OF AMERICA,
N.A., a national banking corporation, as co-documentation agents for the Lenders
(in such capacity, the "Co-Documentation Agents").
W I T N E S S E T H :
WHEREAS, Viacom has requested that the Lenders provide extensions of
credit to it and to certain Subsidiary Borrowers to be used for general
corporate purposes (including, without limitation, acquisitions and commercial
paper backup), which extensions of credit shall enable the Borrowers (as herein
defined) to borrow loans in an aggregate amount not to exceed $2.0 billion
(except as increased or reduced pursuant to Section 2.10) on a revolving credit
basis on and after the Closing Date (as herein defined) and prior to the
Revolving Credit Maturity Date (as herein defined); and
WHEREAS, the Lenders are willing to extend credit to the Borrowers
on the terms and subject to the conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR Loan" shall mean any Loan bearing interest at a rate determined
by reference to the Alternate Base Rate in accordance with the provisions of
Article II.
"Administrative Agent" shall mean Chase, together with its
affiliates, as an arranger of the Commitments and as the administrative agent
for the Lenders under this Agreement, and any successor thereto pursuant to
Article VII.
"Administrative Agent Fee Letter" shall mean the Fee Letter with
respect to this Agreement between Viacom and the Administrative Agent, as
amended, supplemented or otherwise modified from time to time.
"Administrative Agent's Fees" shall have the meaning assigned to
such term in Section 2.6(b).
2
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A hereto.
"Affiliate" shall mean, as to Viacom, any Person which directly or
indirectly controls, is under common control with or is controlled by Viacom. As
used in this definition, "control" (including, with correlative meanings,
"controlled by" and "under common control with") shall mean possession, directly
or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise); provided that, in any event, any
Person which owns directly or indirectly 10% or more of the securities having
ordinary voting power for the election of directors or other governing body of a
corporation or 10% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person. Notwithstanding the
foregoing, (a) no individual shall be deemed to be an Affiliate of Viacom solely
by reason of his or her being an officer, director or employee of Viacom or any
of its Subsidiaries and (b) Viacom and Viacom International and their
Subsidiaries shall not be deemed to be Affiliates of each other, unless
expressly stated to the contrary.
"Agents" shall mean the collective reference to the Administrative
Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Sole
Bookrunner and the Syndication Agent.
"Agreement" shall mean this 364-Day Credit Agreement, as amended,
supplemented or otherwise modified from time to time.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate"
shall mean the rate of interest per annum publicly announced from time to time
by the Lender serving as the Administrative Agent as its prime rate in effect at
its principal office in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as effective; and
"Federal Funds Effective Rate" shall mean, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent
from three Federal funds brokers of recognized standing selected by it. If for
any reason the Administrative Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to ascertain the
Federal Funds Effective Rate for any reason, including the inability or failure
of the Administrative Agent to obtain sufficient quotations in accordance with
the terms thereof, the Alternate Base Rate shall be the Prime Rate until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Facility Fee Rate" shall mean the "Applicable Facility
Fee Rate" determined in accordance with the Pricing Grid set forth in Annex I
hereto.
3
"Applicable Eurodollar Margin" shall mean the "Applicable Eurodollar
Margin" determined in accordance with the Pricing Grid set forth in Annex I
hereto.
"Applicable Utilization Fee Rate" shall mean the "Applicable
Utilization Fee Rate" determined in accordance with the Pricing Grid set forth
in Annex I hereto.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit C.
"Blockbuster Event" means the sale or deconsolidation of Blockbuster
Inc. from Viacom, which sale or deconsolidation shall be substantially
non-recourse to Viacom and Viacom International.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"Bonds" shall have the meaning assigned to such term in Section
8.2(g).
"Borrower" shall mean, as applicable, Viacom or the relevant
Subsidiary Borrower.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which banks are
open for business in New York City; provided, however, that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in Dollar deposits in the
London interbank market.
"Capital Lease Obligations" of any Person shall mean the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property (other than
satellite transponders), or a combination thereof, which obligations are
required to be classified and accounted for as capital leases on a balance sheet
of such Person under GAAP and, for the purposes of this Agreement, the amount of
such obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants or options to purchase any of the
foregoing.
"Chase" shall have the meaning assigned to such term in the preamble
to this Agreement.
"Closing Certificate" shall mean a certificate, substantially in the
form of Exhibit E.
"Closing Date" shall mean March 7, 2001.
"Code" shall mean the Internal Revenue Code of 1986, as the same may
be amended from time to time.
4
"Co-Documentation Agents" shall have the meaning assigned to such
term in the preamble hereto.
"Commitment" shall mean, with respect to each Lender, the commitment
of such Lender to make Loans pursuant to Section 2.1, as set forth on Schedule
1.1, as such Lender's Commitment may be permanently terminated or reduced from
time to time pursuant to Section 2.10 or changed pursuant to Section 9.4.
"Commitment Increase Date" shall have the meaning assigned to such
term in Section 2.10(e).
"Commitment Increase Letter" shall have the meaning assigned to such
term in Section 2.10(e) and shall be substantially in the form of Exhibit G.
"Commitment Utilization Percentage" shall mean on any day the
percentage equivalent to a fraction (a) the numerator of which is the sum of the
aggregate outstanding principal amount of Loans, and (b) the denominator of
which is the Total Commitment (or, on any day after termination of the
Commitments, the Total Commitment in effect immediately preceding such
termination).
"Communications Act" shall mean the Communications Act of 1934, as
amended.
"Compliance Certificate" shall have the meaning assigned to such
term in Section 5.1.
"Confidential Information" shall have the meaning assigned to such
term in Section 9.15(a).
"Confidentiality Agreement" shall mean a confidentiality agreement
substantially in the form of Exhibit D, with such changes as Viacom may approve.
"Consolidated Coverage Ratio" shall mean, for any period, the ratio
of (a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense
for such period.
"Consolidated EBITDA" shall mean, with respect to Viacom and its
Consolidated Subsidiaries for any period, operating profit (loss) (excluding
that related to Discontinued Operations), plus other income (loss), plus
interest income, plus depreciation and amortization (excluding amortization
related to programming rights, prepublication costs and videocassettes),
excluding (a) gains (losses) on sales of assets (except (I) gains (losses) on
sales of inventory sold in the ordinary course of business and (II) gains
(losses) on sales of other assets if such gains (losses) are less than
$10,000,000 individually and less than $50,000,000 in the aggregate during such
period), (b) other non-cash items (including (i) provisions for losses and
additions to valuation allowances, (ii) provisions for restructuring, litigation
and environmental reserves and losses on the Disposition of businesses and (iii)
pension settlement charges), and (c) nonrecurring expenses incurred during such
period in connection with the merger of CBS and Viacom pursuant to the Agreement
and Plan of Merger entered into by CBS, Viacom and Viacom/CBS LLC dated as of
September 6, 1999, as amended, amended and restated, supplemented and otherwise
modified from time to time, minus cash payments made during such period in
respect of non-cash charges taken during any previous period (excluding cash
payments in respect of non-cash charges taken prior to December 31, 1999).
5
"Consolidated Interest Expense" shall mean for any period the gross
cash interest expense of Viacom and its Consolidated Subsidiaries on
Indebtedness for such period plus cash dividends paid on preferred stock to
persons other than Viacom and its Wholly Owned Subsidiaries for such period, but
excluding the gross cash interest expense of the Discontinued Operations for
such period.
"Consolidated Subsidiary" shall mean, as to any Person, each
Subsidiary of such Person (whether now existing or hereafter created or
acquired) the financial statements of which shall be consolidated with the
financial statements of such Person in accordance with GAAP.
"Consolidated Tangible Assets" shall mean at any date the assets of
Viacom and its Subsidiaries determined on such date on a consolidated basis,
less goodwill and other intangible assets.
"Credit Event" shall mean the making of any Loan. It is understood
that conversions and continuations pursuant to Section 2.5 do not constitute
"Credit Events".
"Debt Rating" shall mean the rating applicable to Viacom's senior,
unsecured, non-credit-enhanced long-term indebtedness for borrowed money, as
assigned by either Rating Agency.
"Default" shall mean any event or condition which upon notice, lapse
of time or both would constitute an Event of Default.
"Discontinued Operations" shall mean the operations classifed as
"discontinued operations" pursuant to Accounting Principles Board Opinion No. 30
as presented in the quarterly report of CBS on Form 10-Q for the quarter ended
September 30, 1997 and filed with the SEC on December 14, 1997.
"Disposition" shall mean, with respect to any Property, any sale,
lease, assignment, conveyance, transfer or other disposition thereof; and the
terms "Dispose" and "Disposed of" shall have correlative meanings.
"Dollars" or "$" shall mean lawful money of the United States of
America.
"Environmental Laws" shall mean any and all Federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment, including, without limitation, ambient air, surface water, ground
water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" shall mean, with respect to Viacom, any trade or
business (whether or not incorporated) that is a member of a group of which
Viacom is a member and which is treated as a single employer under Section 414
of the Code.
6
"Eurodollar Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" shall mean, with respect to an Interest Period
pertaining to any Eurodollar Loan, the rate of interest determined on the basis
of the rate for deposits in Dollars for a period equal to such Interest Period
commencing on the first day of such Interest Period appearing on Page 3750 of
the Telerate Screen as of 11:00 A.M., London time, two Business Days prior to
the beginning of such Interest Period. In the event that such rate does not
appear on Page 3750 of the Telerate Screen (or otherwise on the Telerate
Service), the "Eurodollar Rate" shall instead be the interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the average of
the rates at which Dollar deposits approximately equal in principal amount to,
in the case of a Eurodollar Tranche, the portion of such Eurodollar Tranche of
the Lender serving as Administrative Agent, and for a maturity comparable to
such Interest Period, are offered by the principal London offices of the
Reference Banks (or, if any Reference Bank does not at the time maintain a
London office, the principal London office of any affiliate of such Reference
Bank) for immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Eurodollar Tranche" shall mean the collective reference to
Eurodollar Loans made by the Lenders, the then current Interest Periods with
respect to all of which begin on the same date and end on the same later date
(whether or not such Loans shall originally have been made on the same day).
"Event of Default" shall have the meaning assigned to such term in
Article VI; provided that any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.
"Excess Utilization Day" shall mean each day on which the Commitment
Utilization Percentage exceeds 50%.
"Exchange Act Report" shall have the meaning assigned to such term
in Section 3.3.
"Existing Credit Agreements" shall mean the (a) $6,400,000,000
Amended and Restated Credit Agreement, dated as of March 26, 1997 (as amended,
restated, supplemented or otherwise modified), among Viacom, as the borrower,
the banks named therein, The Bank of New York, Citibank, N.A., Morgan Guaranty
Trust Company of New York, Bank of America NT&SA and The Chase Manhattan Bank,
as managing agents, The Bank of New York, as documentation agent, Citibank,
N.A., as the administrative agent, and JP Morgan Securities Inc. and Bank of
America NT&SA, as the syndication agents; (b) $1,500,000,000 Amended and
Restated Credit Agreement, dated as of December 10, 1999 (as amended, restated,
supplemented or otherwise modified), among Viacom (successor by merger with CBS
Corporation), as the borrower, the lenders named therein, Bank of America, N.A.
and The Toronto-Dominion Bank, as syndication agents, The Chase Manhattan Bank,
as documentation agent and Morgan Guaranty Trust Company of New York, as
administrative agent; (c) $1,500,000,000 Amended and Restated Credit Agreement,
dated as of December 10, 1999 (as amended, restated, supplemented or otherwise
modified), among Infinity, as the borrower, each subsidiary borrower, Viacom
(successor by merger with CBS Corporation), as a guarantor, the lenders named
therein, Bank of America, N.A. and The Toronto-Dominion Bank, as syndication
agents,
7
The Chase Manhattan Bank, as documentation agent and Morgan Guaranty Trust
Company of New York, as administrative agent; and (d) $500,000,000 364-Day
Credit Agreement, dated as of May 3, 2000 (as amended, restated, supplemented or
otherwise modified), among Infinity, as the borrower, each subsidiary borrower,
the lenders named therein, Bank of New York, as documentation agent, The Chase
Manhattan Bank, as administrative agent, and Bank of America, N.A. and Fleet
National Bank, as co-syndication agents.
"Existing Infinity Credit Agreement" shall mean the Five-Year Credit
Agreement, dated as of May 3, 2000 (as amended, restated, supplemented or
otherwise modified from time to time), among Infinity, as borrower, the
subsidiary borrowers party thereto, the lenders named therein, Bank of New York,
as documentation agent, Chase, as administrative agent, and Bank of America,
N.A. and Fleet National Bank, as co-syndication agents.
"Facility Fees" shall mean all fees payable pursuant to Section
2.6(a).
"Federal Funds Effective Rate" shall have the meaning assigned to
such term in the definition of "Alternate Base Rate".
"Fees" shall mean the Facility Fees, the Administrative Agent's Fees
and the Utilization Fees.
"Financial Covenant" shall mean the financial covenant contained in
Section 5.7.
"Financial Officer" of any corporation shall mean its Chief
Financial Officer, its Vice President and Treasurer or its Vice President and
Chief Accounting Officer or, in each case, any comparable officer or any Person
designated by any such officer.
"Five-Year Credit Agreement" shall mean the five-year credit
agreement, dated the date hereof, among Viacom, Viacom International, each
subsidiary borrower, the lenders party thereto, Chase, as administrative agent,
Salomon Smith Barney Inc., as syndication agent, and Fleet National Bank and
Bank of America, N.A., as co-documentation agents.
"GAAP" shall mean generally accepted accounting principles.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Granting Bank" shall have to meaning specified in Section 9.4(i).
"Guarantee" of or by any Person shall mean any obligation,
contingent or otherwise, of such Person guaranteeing or entered into with the
purpose of guaranteeing any Indebtedness of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase Property, securities or
services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness or (c) to maintain working capital, equity capital
or other financial statement condition or liquidity of the primary obligor so as
to enable the primary obligor to pay such Indebtedness; provided, however, that
the term "Guarantee" shall not include endorsements for collection or deposit,
in either case in the ordinary course of business.
8
"Indebtedness" of any Person shall mean at any date, without
duplication, (i) all obligations of such Person for borrowed money (including,
without limitation, in the case of any Borrower, the obligations of such
Borrower for borrowed money under this Agreement), (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of Property or
services, except as provided below, (iv) all obligations of such Person as
lessee under Capital Lease Obligations, (v) all Indebtedness of others secured
by a Lien on any Property of such Person, whether or not such Indebtedness is
assumed by such Person, (vi) all Indebtedness of others directly or indirectly
guaranteed or otherwise assumed by such Person, including any obligations of
others endorsed (otherwise than for collection or deposit in the ordinary course
of business) or discounted or sold with recourse by such Person, or in respect
of which such Person is otherwise directly or indirectly liable, including,
without limitation, any Indebtedness in effect guaranteed by such Person through
any agreement (contingent or otherwise) to purchase, repurchase or otherwise
acquire such obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation, or to maintain the solvency or any
balance sheet or other financial condition of the obligor of such obligation,
provided that Indebtedness of Viacom and its Subsidiaries shall not include (a)
guarantees in existence on the date hereof of Indebtedness of Discontinued
Operations and (b) guarantees of Indebtedness that are identified on Schedule
1.1(a) hereto, (vii) all obligations of such Person as issuer, customer or
account party under letters of credit or bankers' acceptances that are either
drawn or that back financial obligations that would otherwise be Indebtedness;
provided, however, that in each of the foregoing clauses (i) through (vii),
Indebtedness shall not include obligations (other than under this Agreement)
specifically with respect to the production, distribution and acquisition of
motion pictures or other programming rights, talent or publishing rights.
"Infinity" shall mean Infinity Broadcasting Corporation, a Delaware
corporation.
"Interest Payment Date" shall mean (a) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable thereto and, in
the case of a Eurodollar Loan with an Interest Period of more than three months'
duration, each day that would have been an Interest Payment Date for such Loan
had successive Interest Periods of three months' duration been applicable to
such Loan and, in addition, the date of any conversion of any Eurodollar Loan to
an ABR Loan, the date of repayment or prepayment of any Eurodollar Loan and the
applicable Maturity Date; (b) with respect to any ABR Loan, the last day of each
March, June, September and December and the applicable Maturity Date.
"Interest Period" shall mean as to any Eurodollar Loan, the period
commencing on the borrowing date or conversion date of such Loan, or on the last
day of the immediately preceding Interest Period applicable to such Loan, as the
case may be, and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month that is 7
days (subject to the prior consent of each Lender) or 1, 2, 3 or 6 months or
(subject to the prior consent of each Lender) 9 or 12 months thereafter, as the
relevant Borrower may elect; provided, however, that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, in the case of Eurodollar
Loans only, such next succeeding Business Day would fall in the next calendar
month, in which case such Interest Period shall end on the next preceding
Business Day and (ii) notwithstanding anything to the contrary herein, no
Borrower may select an Interest Period which would end after the Maturity Date
applicable to the relevant Loan. Interest shall accrue from and including that
first day of an Interest Period to but excluding the last day of such Interest
Period.
9
"Joint Lead Arrangers" shall mean JP Morgan, a division of Chase
Securities Inc., a New York corporation, and Salomon Smith Barney Inc., a New
York corporation.
"Lenders" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Lender Affiliate" shall mean, (a) with respect to any Lender, (i)
an affiliate of such Lender or (ii) any entity (whether a corporation,
partnership, trust or otherwise) that is engaged in making, purchasing, holding
or otherwise investing in bank loans and similar extensions of credit in the
ordinary course of its business and is administered or managed by a Lender or an
affiliate of such Lender and (b) with respect to any Lender that is a fund which
invests in bank loans and similar extensions of credit, any other fund that
invests in bank loans and similar extensions of credit and is managed by the
same investment advisor as such Lender or by an affiliate of such investment
advisor.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement.
"Loan" shall mean the revolving loans made by the Lenders to any
Borrower pursuant to Section 2.3. Each Loan shall be a Eurodollar Loan or an ABR
Loan.
"Loan Documents" shall mean this Agreement and the Administrative
Agent Fee Letter.
"Margin Stock" shall have the meaning assigned to such term under
Regulation U.
"Material Acquisition" shall mean any acquisition of Property or
series of related acquisitions of Property (including by way of merger) which
(a) constitutes assets comprising all or substantially all of an operating unit
of a business or constitutes all or substantially all of the common stock of a
Person and (b) involves the payment of consideration by Viacom and its
Subsidiaries (valued at the initial principal amount thereof in the case of
non-cash consideration consisting of notes or other debt securities and valued
at fair market value in the case of other non-cash consideration) in excess of
$100,000,000.
"Material Adverse Effect" shall mean (a) a material adverse effect
on the Property, business, results of operations or financial condition of
Viacom and its Subsidiaries taken as a whole or (b) material impairment of the
ability of Viacom to perform any of its obligations under this Agreement.
"Material Disposition" shall mean any Disposition of Property or
series of related Dispositions of Property which yields gross proceeds to Viacom
or any of its Subsidiaries (valued at the initial principal amount thereof in
the case of non-cash proceeds consisting of notes or other debt securities and
valued at fair market value in the case of other non-cash proceeds) in excess of
$100,000,000.
"Material Subsidiary" shall mean any "significant subsidiary" of
Viacom as defined in Regulation S-X of the SEC; provided, that each Subsidiary
Borrower shall in any event constitute a Material Subsidiary.
10
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 3(37) of ERISA to which contributions have been made by Viacom or any
ERISA Affiliate of Viacom and which is covered by Title IV of ERISA.
"New Lender" shall have the meaning assigned to such term in Section
2.10(d).
"New Lender Supplement" shall mean the agreement made pursuant to
Section 2.10(d) substantially in the form of Exhibit F.
"Non-U.S. Person" shall have the meaning assigned to such term in
Section 2.17(f).
"Other Taxes" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"Outstanding Extensions of Credit" shall mean, as to any Lender at
any time, an amount equal to the sum of the aggregate principal amount of all
Loans made by such Lender then outstanding.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred
to and defined in ERISA, or any successor thereto.
"Person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership, limited liability company or
other entity, or any government or any agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code and which is
maintained for employees of Viacom or any ERISA Affiliate.
"Prime Rate" shall have the meaning assigned to such term in the
definition of "Alternate Base Rate".
"Pro Forma Period" shall have the meaning assigned to such term in
Section 1.2(c).
"Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"Rating Agencies" shall mean S&P and Moody's.
"Reference Banks" shall mean Chase, Citibank N.A. and Bank of
America, N.A.
"Register" shall have the meaning assigned to such term in Section
9.4(d).
11
"Regulation D" shall mean Regulation D of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Required Lenders" shall mean, at any time, Lenders whose respective
Total Facility Percentages aggregate more than 50%.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement (or, in the case of matters
relating to ERISA, any officer responsible for the administration of the pension
funds of such corporation).
"Revolving Credit Borrowing Request" shall mean a request made
pursuant to Section 2.3 in the form of Exhibit B-1.
"Revolving Credit Maturity Date" shall mean March 6, 2002.
"Revolving Credit Percentage" of any Lender at any time shall mean
the percentage of the aggregate Commitments (or, following any termination of
all the Commitments, the Commitments most recently in effect) represented by
such Lender's Commitment (or, following any such termination, the Commitment of
such Lender most recently in effect).
"S&P" shall mean Standard & Poor's Ratings Services.
"SEC" shall mean the Securities and Exchange Commission.
"Sole Bookrunner" shall mean JP Morgan, a division of Chase
Securities Inc., a New York corporation.
"SPC" shall have the meaning specified in Section 9.4(i).
"Subsidiary" shall mean, for any Person (the "Parent"), any
corporation, partnership or other entity of which shares of Voting Capital Stock
sufficient to elect a majority of the board of directors or other Persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) are at the time directly or indirectly owned or controlled by
the Parent or one or more of its Subsidiaries or by the Parent and one or more
of its Subsidiaries. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of Viacom.
"Subsidiary Borrower" shall mean any Subsidiary of Viacom (a) which
is designated as a Subsidiary Borrower by Viacom pursuant to a Subsidiary
Borrower Designation, (b) which has delivered to the Administrative Agent a
Subsidiary Borrower Request and (c) whose designation as a Subsidiary Borrower
has not been terminated pursuant to Section 4.2.
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No Subsidiary of Viacom incorporated in Canada or any province or territory
thereof may be a Subsidiary Borrower hereunder.
"Subsidiary Borrower Designation" shall mean a designation,
substantially in the form of Exhibit B-2, which may be delivered by Viacom and
approved by Viacom and shall be accompanied by a Subsidiary Borrower Request.
"Subsidiary Borrower Obligations" shall mean, with respect to each
Subsidiary Borrower, the unpaid principal of and interest on the Loans made to
such Subsidiary Borrower (including, without limitation, interest accruing after
the maturity of the Loans made to such Subsidiary Borrower and interest accruing
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to such Subsidiary
Borrower, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) and all other obligations and liabilities of such
Subsidiary Borrower to the Administrative Agent or to any Lender, whether direct
or indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement. "Subsidiary Borrower Request" shall mean a request, substantially in
the form of Exhibit B-3, which is received by the Administrative Agent in
connection with a Subsidiary Borrower Designation.
"Syndication Agent" shall have the meaning assigned to such term in
the preamble hereto.
"Test Period" shall have the meaning assigned to such term in
Section 1.2(c).
"Total Commitment" shall mean at any time the aggregate amount of
the Commitments in effect at such time.
"Total Facility Exposure" shall mean at any time the aggregate
amount of the Outstanding Extensions of Credit at such time.
"Total Facility Percentage" shall mean, as to any Lender at any
time, the quotient (expressed as a percentage) of (a) such Lender's Commitment
(or (x) for the purposes of acceleration of the Loans pursuant to clause (II) of
Article VI or (y) if the Commitments have terminated, such Lender's Outstanding
Extensions of Credit) and (b) the aggregate of all Lenders' Commitments (or (x)
for the purposes of acceleration of the Loans pursuant to clause (II) of Article
VI or (y) if the Commitments have terminated, the Total Facility Exposure)).
"Transferee" shall mean any assignee or participant described in
Section 9.4(b) or (f).
"Type" when used in respect of any Loan, shall refer to the Rate by
reference to which interest on such Loan is determined. For purposes hereof,
"Rate" shall mean the Eurodollar Rate or the Alternate Base Rate.
"U.S. Person" shall mean a citizen, national or resident of the
United States of America, or an entity organized in or under the laws of the
United States of America.
"Utilization Fee" shall have the meaning assigned to such term in
Section 2.6(c).
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"Viacom" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Viacom International" shall have the meaning assigned to such term
in the preamble to this Agreement.
"Viacom Obligations" shall mean, with respect to Viacom, the unpaid
principal of and interest on the Loans made to Viacom (including, without
limitation, interest accruing after the maturity of the Loans made to Viacom and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
Viacom, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) and all other obligations, including its Guarantee
obligations hereunder, and liabilities of Viacom to the Administrative Agent or
to any Lender, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement.
"Voting Capital Stock" shall mean securities or other ownership
interests of a corporation, partnership or other entity having by the terms
thereof ordinary voting power to vote in the election of the board of directors
or other Persons performing similar functions of such corporation, partnership
or other entity (without regard to the occurrence of any contingency).
"Wholly Owned Subsidiary" shall mean any Subsidiary of which all
shares of Voting Capital Stock (other than, in the case of a corporation,
directors' qualifying shares) are owned directly or indirectly by the Parent (as
defined in the definition of "Subsidiary").
SECTION 1.2. Terms Generally.
(a) The definitions in Section 1.1 shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall, except
where the context otherwise requires, be deemed to be followed by the phrase
"without limitation". All references herein to Articles, Sections, Exhibits and
Schedules shall be deemed references to Articles and Sections of, and Exhibits
and Schedules to, this Agreement unless the context shall otherwise require.
(b) Except as otherwise expressly provided herein, all terms of an
accounting nature shall be construed in accordance with GAAP in effect from time
to time. The parties hereto agree, however, that in the event that any change in
accounting principles from those used in the preparation of the financial
statements referred to in Section 3.2 is hereafter occasioned by the
promulgation of rules, regulations, pronouncements, opinions and statements by
or required by the Financial Accounting Standards Board or Accounting Principles
Board or the American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) and such change materially affects
the calculation of any component of the Financial Covenant or any standard or
term contained in this Agreement, the Administrative Agent and Viacom shall
negotiate in good faith to amend such Financial Covenant, standards or terms
found in this Agreement (other than in respect of financial statements to be
delivered hereunder) so that, upon adoption of such changes, the criteria for
evaluation of Viacom's and its Subsidiaries' financial condition shall be the
same after such change as if such change had not been made; provided, however,
that (i) any such amendments shall not become effective for purposes of this
Agreement unless approved by the Required Lenders and (ii) if Viacom and the
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Required Lenders cannot agree on such an amendment, then the calculations under
such Financial Covenant, standards or terms shall continue to be computed
without giving effect to such change in accounting principles; provided further,
however, that the parties hereto agree that Viacom and its Subsidiaries shall
adopt Statement of Position 00-2, "Accounting by Producers or Distributors of
Films" effective as from January 1, 2000.
(c) For the purposes of calculating Consolidated EBITDA and
Consolidated Interest Expense for any period (a "Test Period"), (i) if at any
time from the period (a "Pro Forma Period") commencing on the second day of such
Test Period and ending on the date which is ten days prior to the date of
delivery of the Compliance Certificate in respect of such Test Period (or, in
the case of any pro forma calculation made pursuant hereto in respect of a
particular transaction, ending on the date such transaction is consummated after
giving effect thereto), Viacom or any Subsidiary shall have made any Material
Disposition, the Consolidated EBITDA for such Test Period shall be reduced by an
amount equal to the Consolidated EBITDA (if positive) attributable to the
Property which is the subject of such Material Disposition for such Test Period
or increased by an amount equal to the Consolidated EBITDA (if negative)
attributable thereto for such Test Period, and Consolidated Interest Expense for
such Test Period shall be reduced by an amount equal to the Consolidated
Interest Expense for such Test Period attributable to any Indebtedness of Viacom
or any Subsidiary repaid, repurchased, defeased or otherwise discharged with
respect to Viacom and its Subsidiaries in connection with such Material
Disposition (or, if the Capital Stock of any Subsidiary is sold, the
Consolidated Interest Expense for such Test Period directly attributable to the
Indebtedness of such Subsidiary to the extent Viacom and its continuing
Subsidiaries are no longer liable for such Indebtedness after such Disposition);
(ii) if during such Pro Forma Period Viacom or any Subsidiary shall have made a
Material Acquisition, Consolidated EBITDA and Consolidated Interest Expense for
such Test Period shall be calculated after giving pro forma effect thereto
(including the incurrence or assumption of any Indebtedness in connection
therewith) as if such Material Acquisition (and the incurrence or assumption of
any such Indebtedness) occurred on the first day of such Test Period; and (iii)
if during such Pro Forma Period any Person that subsequently became a Subsidiary
or was merged with or into Viacom or any Subsidiary since the beginning of such
Pro Forma Period shall have entered into any disposition or acquisition
transaction that would have required an adjustment pursuant to clause (i) or
(ii) above if made by Viacom or a Subsidiary during such Pro Forma Period,
Consolidated EBITDA and Consolidated Interest Expense for such Test Period shall
be calculated after giving pro forma effect thereto as if such transaction
occurred on the first day of such Test Period. For the purposes of this
paragraph, whenever pro forma effect is to be given to a Material Disposition or
Material Acquisition, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
discharged or incurred in connection therewith, the pro forma calculations shall
be determined in good faith by a Financial Officer of Viacom. If any
Indebtedness bears a floating rate of interest and the incurrence or assumption
thereof is being given pro forma effect, the interest expense on such
Indebtedness shall be calculated as if the rate in effect on the last day of the
relevant Pro Forma Period had been the applicable rate for the entire relevant
Test Period (taking into account any interest rate protection agreement
applicable to such Indebtedness if such interest rate protection agreement has a
remaining term in excess of 12 months). Comparable adjustments shall be made in
connection with any determination of Consolidated EBITDA.
(d) For purposes of the Financial Covenant, (i) the Discontinued
Operations shall be disregarded and (ii) the businesses classified as
Discontinued Operations shall be limited to
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those businesses treated as such in the financial statements of Viacom referred
to in the definition of "Discontinued Operations" and the accounting treatment
of Discontinued Operations shall be consistent with the accounting treatment
thereof in such financial statements.
ARTICLE II
THE CREDITS
SECTION 2.1. Commitments.
Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Lender agrees, severally
and not jointly, to make Loans to Viacom or any Subsidiary Borrower, at any time
and from time to time on and after the Closing Date and until the earlier of (a)
the Business Day immediately preceding the Revolving Credit Maturity Date and
(b) the termination of the Commitment of such Lender, in an aggregate principal
amount at any time outstanding not to exceed such Lender's Commitment. Each
Borrower may borrow, prepay and reborrow Loans on and after the Closing Date and
prior to the Revolving Credit Maturity Date, subject to the terms, conditions
and limitations set forth herein.
SECTION 2.2. Loans.
(a) Each Loan shall be made to the relevant Borrower by the Lenders
ratably in accordance with their respective Commitments. The Loans shall be made
in minimum amounts equal to (i) in the case of Eurodollar Loans, $50,000,000 or
an integral multiple of $5,000,000 in excess thereof, and (ii) in the case of
ABR Loans, $25,000,000 or an integral multiple of $5,000,000 in excess thereof
(or an aggregate principal amount equal to the remaining balance of the
available Total Commitment).
(b) Each Lender shall make each Loan to be made by it on the
proposed date thereof by wire transfer of immediately available funds to the
Administrative Agent in New York, New York, not later than 12:00 noon, New York
City time (or, in connection with an ABR Loan to be made on the same day on
which a notice is submitted, 12:30 p.m., New York City time) and the
Administrative Agent shall by 3:00 p.m., New York City time, credit the amounts
so received to the general deposit account of the relevant Borrower with the
Administrative Agent.
SECTION 2.3. Revolving Credit Borrowing Procedure.
In order to request a Loan, the relevant Borrower shall hand deliver
or telecopy to the Administrative Agent a Revolving Credit Borrowing Request in
the form of Exhibit B-1 (a) in the case of a Eurodollar Loan, not later than
11:00 a.m., New York City time, three Business Days before a proposed borrowing
and (b) in the case of an ABR Loan, not later than 11:00 a.m., New York City
time, on the day of a proposed borrowing. Such notice shall be irrevocable and
shall in each case specify (i) whether the Loan then being requested is to be a
Eurodollar Loan or an ABR Loan, (ii) the date of such Loan (which shall be a
Business Day) and the amount thereof; and (iii) in the case of a Eurodollar
Loan, the Interest Period with respect thereto. The Administrative Agent shall
promptly advise the Lenders of any notice given pursuant to this Section 2.3 and
of each Lender's portion of the requested Loan.
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SECTION 2.4. Repayment of Loans.
Each Borrower shall repay all outstanding Loans on the first
anniversary of the Revolving Credit Maturity Date (or such earlier date on which
the Loans shall be due and payable in accordance herewith). Each Loan shall bear
interest from and including the date thereof on the outstanding principal
balance thereof as set forth in Section 2.07.
SECTION 2.5. Conversion and Continuation Options.
(a) The relevant Borrower may elect from time to time to convert
Eurodollar Loans (or, subject to Section 2.07(d), a portion thereof) to ABR
Loans on the last day of an Interest Period with respect thereto by giving the
Administrative Agent prior irrevocable notice of such election. The relevant
Borrower may elect from time to time to convert ABR Loans (subject to Section
2.07(d)) to Eurodollar Loans by giving the Administrative Agent at least three
Business Days' prior irrevocable notice of such election. Any such notice of
conversion to Eurodollar Loans shall specify the length of the initial Interest
Period therefor. Upon receipt of any such notice the Administrative Agent shall
promptly notify each Lender thereof. All or any part of outstanding Eurodollar
Loans and ABR Loans may be converted as provided herein; provided, that no Loan
may be converted into a Eurodollar Loan when any Event of Default has occurred
and is continuing and the Administrative Agent has or the Required Lenders have
determined in its or their sole discretion not to permit such a conversion.
(b) Any Eurodollar Loans (or, subject to Section 2.07(d), a portion
thereof) may be continued as such upon the expiration of the then current
Interest Period with respect thereto by the relevant Borrower giving irrevocable
notice to the Administrative Agent, not less than three Business Days prior to
the last day of the then current Interest Period with respect thereto, of the
length of the next Interest Period to be applicable to such Loans; provided,
that no Eurodollar Loan may be continued as such when any Event of Default has
occurred and is continuing and the Administrative Agent has or the Required
Lenders have determined in its or their sole discretion not to permit such a
continuation; and provided, further, that if the relevant Borrower shall fail to
give any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso such Eurodollar
Loans shall be automatically converted to ABR Loans on the last day of such then
expiring Interest Period. Upon receipt of any notice from a Borrower pursuant to
this Section 2.5(b), the Administrative Agent shall promptly notify each Lender
thereof. The Administrative Agent shall promptly notify the applicable Borrower
upon the determination in accordance with this Section 2.5(b), by it or the
Required Facility Lenders, not to permit such a continuation.
SECTION 2.6. Fees.
(a) Viacom agrees to pay to the Administrative Agent for the account
of each Lender a Facility Fee for the period from and including the Closing Date
to the Revolving Credit Maturity Date (or such earlier date on which the
Commitments shall terminate in accordance herewith), computed at a per annum
rate equal to the Applicable Facility Fee Rate on such Lender's Commitment
(whether used or unused); provided that, if such Lender continues to have any
Facility Exposure after its Commitment terminates, then such Facility Fee shall
continue to accrue on the daily amount of such Lender's Facility Exposure from
and including the date on which its Commitment terminates to but excluding the
date on which such Lender ceases to have any Facility Exposure. All Facility
Fees shall be computed on the basis of the actual number of days elapsed in a
year of 360 days and shall be payable quarterly in arrears on the last day of
17
each March, June, September and December, on the Revolving Credit Maturity Date
or such earlier date on which the Commitments shall be terminated, commencing on
the first of such dates to occur after the Closing Date.
(b) Viacom agrees to pay to the Administrative Agent, for its own
account, the administrative agent's fees ("Administrative Agent's Fees")
provided for in the Administrative Agent Fee Letter at the times provided
therein.
(c) Viacom agrees to pay to each Lender, through the Administrative
Agent, on each Interest Payment Date for ABR Loans, a utilization fee (a
"Utilization Fee") at a rate per annum equal to the Applicable Utilization Fee
Rate for each Excess Utilization Day during the period covered by such Interest
Payment Date on the Outstanding Extensions of Credit of such Lender on such
Excess Utilization Day. All Utilization Fees shall be computed on the basis of
the actual number of days elapsed in a year of 360 days and shall be payable in
arrears.
(d) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the relevant Lenders. Once paid, none of the Fees shall be
refundable under any circumstances (other than corrections of errors in
payment).
SECTION 2.7. Interest on Loans; Eurodollar Tranches; Etc.
(a) Subject to the provisions of Section 2.08, Eurodollar Loans
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal to in the case of each
Eurodollar Loan, the Eurodollar Rate for the Interest Period in effect for such
Loan plus the Applicable Eurodollar Margin. The Eurodollar Rate for each
Interest Period shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error. The Administrative
Agent shall promptly advise the relevant Borrower and each Lender of such
determination.
(b) Subject to the provisions of Section 2.08, ABR Loans shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 365 or 366 days, as the case may be, when determined by reference to the
Prime Rate and over a year of 360 days at all other times) at a rate per annum
equal to the Alternate Base Rate. The Alternate Base Rate shall be determined by
the Administrative Agent, and such determination shall be conclusive absent
manifest error.
(c) Interest on each Loan shall be payable on each applicable
Interest Payment Date.
(d) Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions, continuations, repayments and prepayments of Eurodollar
Loans hereunder and all selections of Interest Periods hereunder in respect of
Eurodollar Loans shall be in such amounts and shall be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the Eurodollar Loans comprising each Eurodollar Tranche shall be equal to
$50,000,000 or a whole multiple of $5,000,000 in excess thereof. Unless
otherwise agreed by the Administrative Agent, in no event shall there be more
than 25 Eurodollar Tranches outstanding at any time.
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(e) If no election as to the Type of Loan is specified in any notice
of borrowing with respect thereto, then the requested Loan shall be an ABR Loan.
If no Interest Period with respect to a Eurodollar Loan is specified in any
notice of borrowing, conversion or continuation, then the relevant Borrower
shall be deemed to have selected an Interest Period of one month's duration.
SECTION 2.8. Default Interest.
If all or a portion of the principal amount of any Loan shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
all outstanding Loans (whether or not overdue) shall bear interest at a rate per
annum which is equal to the rate that would otherwise be applicable thereto
pursuant to the provisions of Section 2.07 plus 2% and (b) if all or a portion
of any interest payable on any Loan or any Fee or other amount payable hereunder
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum equal to
the rate otherwise applicable to ABR Loans pursuant to Section 2.07(b) plus 2%,
in each case, with respect to clauses (a) and (b) above, from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).
SECTION 2.9. Alternate Rate of Interest.
In the event, and on each occasion, that on the day two Business
Days prior to the commencement of any Interest Period for a Eurodollar Loan (i)
the Administrative Agent shall have determined (which determination shall be
conclusive and binding upon each Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or (ii) the Required
Lenders shall have determined and shall have notified the Administrative Agent
that the Eurodollar Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (as conclusively
certified by such Lenders) of making or maintaining Eurodollar Loans during such
Interest Period, the Administrative Agent shall, as soon as practicable
thereafter, give written or telecopy notice of such determination to the
Borrowers and the Lenders. In the event of any such determination, until the
Administrative Agent shall have advised the Borrowers and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any request by a
Borrower for a Eurodollar Loan pursuant to Section 2.3 to be made after such
determination shall be deemed to be a request for an ABR Loan and (ii) any
request by a Borrower for conversion into or a continuation of a Eurodollar Loan
pursuant to Section 2.5 to be made after such determination shall have no force
and effect (in the case of a requested conversion) or shall be deemed to be a
request for a conversion into an ABR Loan (in the case of a requested
continuation). Each determination by the Administrative Agent or the Required
Lenders hereunder shall be conclusive absent manifest error.
SECTION 2.10. Termination, Reduction and Increase of Commitments.
(a) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, Viacom may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the
Commitments; provided, however, that (i) each partial reduction of the
Commitments shall be in a minimum principal amount of $10,000,000 and in
integral multiples of $1,000,000 in excess thereof and (ii) no such termination
or reduction shall be made if, after giving effect thereto and to any
prepayments of the Loans made
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on the effective date thereof, (x) the Outstanding Extensions of Credit of any
Lender would exceed such Lender's Commitment then in effect or (y) the Total
Facility Exposure would exceed the Total Commitment then in effect. The
Administrative Agent shall promptly advise the Lenders of any notice given
pursuant to this Section 2.10(a).
(b) Except as otherwise provided in Section 2.18, each reduction in
the Commitments hereunder shall be made ratably among the Lenders in accordance
with their respective Commitments. Viacom agrees to pay to the Administrative
Agent for the account of the Lenders, on the date of termination or reduction of
the Commitments, the Facility Fees on the amount of the Commitments so
terminated or reduced accrued through the date of such termination or reduction.
(c) Viacom shall have the right at any time and from time to time to
increase the Total Commitments to an aggregate amount, when added to the
aggregate amount of Total Commitments (as defined under the Five-Year Credit
Agreement) under the Five-Year Credit Agreement, not to exceed $4,500,000,000
(i) by requesting that one or more banks or other financial institutions not a
party to this Agreement become a Lender hereunder or (ii) by requesting that any
Lender already party to this Agreement increase the amount of such Lender's
Commitment; provided, that the addition of any bank or financial institution
pursuant to clause (i) above shall be subject to the consent of the
Administrative Agent (which consent shall not be unreasonably withheld);
provided further, the Commitment of any bank or other financial institution
pursuant to clause (i) above, shall be in an aggregate principal amount at least
equal to $10,000,000; provided further, the amount of the increase of any
Lender's Commitment pursuant to clause (ii) above when added to the amount of
such Lender's Commitment before the increase, shall be in an aggregate principal
amount at least equal to $10,000,000.
(d) Any additional bank, financial institution or other entity which
elects to become a party to this Agreement and obtain a Commitment pursuant to
clause (c) of this Section 2.10 above shall execute a New Lender Supplement
(each, a "New Lender Supplement") with Viacom and the Administrative Agent,
substantially in the form of Exhibit G, whereupon such bank, financial
institution or other entity (herein called a "New Lender") shall become a Lender
for all purposes and to the same extent as if originally a party hereto and
shall be bound by and entitled to the benefits of this Agreement, and Schedule
1.1 shall be deemed to be amended to add the name and Commitment of such New
Lender.
(e) Any increase in the Total Commitment pursuant to clause (c) of
this Section 2.10 shall be effective only upon the execution and delivery to
Viacom and the Administrative Agent of a commitment increase letter in
substantially the form of Exhibit G hereto (a "Commitment Increase Letter"),
which Commitment Increase Letter shall be delivered to the Administrative Agent
not less than five Business Days prior to the Commitment Increase Date and shall
specify (i) the amount of the Commitment of any bank or financial institution
not a party to this agreement which is becoming a Lender or the amount of any
increase in the Commitment of any Lender and (ii) the date such increase is to
become effective (the "Commitment Increase Date").
(f) Any increase in the Total Commitment pursuant to this Section
2.10 shall not be effective unless:
(i) no Default or Event of Default shall have occurred and be
continuing on the Commitment Increase Date;
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(ii) each of the representations and warranties made by Viacom and
the Subsidiary Borrowers in Sections 3.1, 3.2, 3.4, 3.5 and 3.6 shall be
true and correct in all material respects on the Commitment Increase Date
with the same effect as though made on and as of such date, except to the
extent such representations and warranties expressly relate to an earlier
date in which case such representations and warranties shall be true and
correct in all material respects as of such earlier date;
(iii) the Administrative Agent shall have received each of (A) a
certificate of the corporate secretary or assistant secretary of the
Borrowers as to the taking of any corporate action necessary in connection
with such increase and (B) an opinion or opinions of general counsel to
the Borrowers as to their corporate power and authority to borrow
hereunder after giving effect to such increase and such other matters
relating thereto as the Administrative Agent and its counsel may
reasonably request.
(g) Each notice requesting an increase in the Total Commitments
pursuant to this Section 2.10 shall constitute a certification to the effect set
forth in clauses (i) and (ii) of this Section 2.10(f).
(h) No Lender shall at any time be required to agree to a request of
Viacom to increase its Commitment or obligations hereunder.
SECTION 2.11. Optional Prepayments of Loans.
The relevant Borrower may at any time and from time to time prepay
the Loans, in whole or in part, without premium or penalty, upon giving
irrevocable written or telecopy notice (or telephone notice promptly confirmed
by written or telecopy notice) to the Administrative Agent: (i) before 10:00
a.m., New York City time, three Business Days prior to prepayment, in the case
of Eurodollar Loans, and (ii) before 10:00 a.m., New York City time, one
Business Day prior to prepayment, in the case of ABR Loans. Such notice shall
specify the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans, ABR Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each. If a Eurodollar Loan is prepaid on any
day other than the last day of the Interest Period applicable thereto, the
relevant Borrower shall also pay any amounts owing pursuant to Section 2.13.
Upon receipt of any such notice the Administrative Agent shall promptly notify
each Lender thereof. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with
(except in the case of ABR Loans) accrued interest to such date on the amount
prepaid. Partial prepayments of Loans shall be in an aggregate principal amount
of $10,000,000 or a whole multiple of $1,000,000 in excess thereof.
SECTION 2.12. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if after the Closing
Date any change in applicable law or regulation (including any change in the
reserve percentages provided for in Regulation D) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof shall change the basis of taxation of
payments to any Lender of the principal of or interest on any Eurodollar Loan
made by such Lender (other than changes in respect of taxes imposed on the
overall net income of such Lender by the jurisdiction in which such Lender has
its principal office (or in which it holds any Eurodollar Loan) or by any
political subdivision or taxing authority therein and other than taxes that
would not have been imposed but for the failure of such Lender to comply with
applicable
21
certification, information, documentation or other reporting requirements), or
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of or deposits with or for the account of such
Lender, or shall impose on such Lender or the London interbank market any other
condition affecting this Agreement or any Eurodollar Loan made by such Lender,
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan or to reduce the amount of
any sum received or receivable by such Lender hereunder (whether of principal,
interest or otherwise) in respect of any Eurodollar Loan by an amount deemed by
such Lender to be material, then the relevant Borrower agrees to pay to such
Lender as provided in paragraph (c) below such additional amount or amounts as
will compensate such Lender for such additional costs incurred or reduction
suffered.
(b) If any Lender shall have determined that the adoption after the
Closing Date hereof of any law, rule, regulation or guideline regarding capital
adequacy, or any change in any law, rule, regulation or guideline regarding
capital adequacy or in the interpretation or administration of any of the
foregoing by any Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by any
Lender (or any lending office of such Lender) or any Lender's holding company
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such Lender's capital
or on the capital of such Lender's holding company, if any, as a consequence of
this Agreement or the Loans made by such Lender pursuant hereto to a level below
that which such Lender or such Lender's holding company could have achieved but
for such applicability, adoption, change or compliance (taking into
consideration such Lender's policies and the policies of such Lender's holding
company with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time Viacom agrees to pay to such Lender as
provided in paragraph (c) below such additional amount or amounts as will
compensate such Lender or such Lender's holding company for any such reduction
suffered.
(c) A certificate of each Lender setting forth such amount or
amounts as shall be necessary to compensate such Lender as specified in
paragraph (a) or (b) above, as the case may be, and the basis therefor in
reasonable detail shall be delivered to the relevant Borrower and shall be
conclusive absent manifest error. The relevant Borrower shall pay each Lender
the amount shown as due on any such certificate within 30 days after its receipt
of the same.
(d) Except as provided in this paragraph, failure on the part of any
Lender to demand compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital with respect to any
period shall not constitute a waiver of such Lender's right to demand
compensation with respect to any other period. The protection of this Section
2.12 shall be available to each Lender regardless of any possible contention of
the invalidity or inapplicability of the law, rule, regulation, guideline or
other change or condition which shall have occurred or been imposed so long as
it shall be customary for Lenders affected thereby to comply therewith. No
Lender shall be entitled to compensation under this Section 2.12 for any costs
incurred or reductions suffered with respect to any date unless it shall have
notified the relevant Borrower that it will demand compensation for such costs
or reductions under paragraph (c) above not more than 90 days after the later of
(i) such date and (ii) the date on which it shall have become aware of such
costs or reductions. Notwithstanding any other provision of this Section 2.12,
no Lender shall demand compensation for any increased cost or reduction referred
to above if it shall not at the time be the general policy or practice of such
Lender to demand such compensation in similar circumstances under comparable
provisions of
22
other credit agreements, if any. In the event any Borrower shall reimburse any
Lender pursuant to this Section 2.12 for any cost and such Lender shall
subsequently receive a refund in respect thereof, such Lender shall so notify
such Borrower and, upon its request, will pay to such Borrower the portion of
such refund which such Lender shall determine in good faith to be allocable to
the cost so reimbursed. The covenants contained in this Section 2.12 shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
SECTION 2.13. Indemnity.
Each Borrower agrees to indemnify each Lender against any loss or
expense described below which such Lender may sustain or incur as a consequence
of (a) any failure by such Borrower to fulfill on the date of any borrowing
hereunder the applicable conditions set forth in Article IV, (b) any failure by
such Borrower to borrow, continue or convert any Loan hereunder after
irrevocable notice of such borrowing, continuation or conversion has been given
or deemed given pursuant to Article II, (c) any payment, prepayment or
conversion of a Eurodollar Loan made to such Borrower required by any other
provision of this Agreement or otherwise made or deemed made, whatever the
circumstances may be that give rise to such payment, prepayment or conversion,
or any transfer of any such Loan pursuant to Section 2.18 or 9.4(b), on a date
other than the last day of the Interest Period applicable thereto, or (d) if any
breakage is incurred, any failure by a Borrower to prepay a Eurodollar Loan on
the date specified in a notice of prepayment; provided, that any request for
indemnification made by any Lender to any Borrower pursuant hereto shall be
accompanied by such Lender's calculation of such amount to be indemnified. The
loss or expense for which such Lender shall be indemnified under this Section
2.13 shall be equal to the excess, if any, as reasonably determined by such
Lender, of (i) its cost of obtaining the funds for the Loan being paid, prepaid,
converted or not borrowed, continued, prepaid or converted (assumed to be the
Eurodollar Rate in the case of Eurodollar Loans) for the period from the date of
such payment, prepayment, conversion or failure to borrow, continue, prepay or
convert to the last day of the Interest Period for such Loan (or, in the case of
a failure to borrow, continue, prepay or convert, the Interest Period for such
Loan which would have commenced on the date of such failure) over (ii) the
amount of interest (as reasonably determined by such Lender) that would be
realized by such Lender in reemploying the funds so paid, prepaid, converted or
not borrowed, continued, prepaid or converted for such period or Interest
Period, as the case may be; provided, however, that such amount shall not
include any loss of a Lender's margin or spread over its cost of obtaining funds
as described above. A certificate of any Lender setting forth any amount or
amounts which such Lender is entitled to receive pursuant to this Section 2.13
(with calculations in reasonable detail) shall be delivered to the relevant
Borrower and shall be conclusive absent manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
SECTION 2.14. Pro Rata Treatment; Funding Matters; Evidence of Debt.
(a) Except as required under Section 2.18, each payment or
prepayment of principal of any Loan, each payment of interest on the Loans, each
payment of the Facility Fees pursuant to Section 2.6(a), and each reduction of
the Commitments, shall be allocated pro rata among the Lenders in accordance
with their respective Commitments (or, if such Commitments shall have expired or
been terminated, in accordance with the respective principal amounts of their
outstanding Loans). Each Lender agrees that in computing such Lender's portion
of any
23
Loan to be made hereunder, the Administrative Agent may, in its discretion,
round such Lender's percentage of such Loan to the next higher or lower whole
Dollar amount.
(b) Unless the Administrative Agent shall have received notice from
a Lender prior to the relevant borrowing date that such Lender will not make
available to the Administrative Agent such Lender's portion of a borrowing, the
Administrative Agent may assume that such Lender has made such portion available
to the Administrative Agent on the date of such borrowing in accordance with
this Agreement and the Administrative Agent may, in reliance upon such
assumption, make available to the relevant Borrower on such date a corresponding
amount. If and to the extent that such Lender shall not have made such portion
available to the Administrative Agent, each of such Lender and the relevant
Borrower agrees to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to such Borrower until the date such amount is
repaid to the Administrative Agent at (i) in the case of such Borrower, the
interest rate applicable at the time to the relevant Loan and (ii) in the case
of such Lender, the Federal Funds Effective Rate. If such Lender shall repay to
the Administrative Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such borrowing for the purposes of this Agreement;
provided, that such repayment shall not release such Lender from any liability
it may have to such Borrower for the failure to make such Loan at the time
required herein.
(c) The failure of any Lender to make any Loan shall not in itself
relieve any other Lender of its obligation to lend hereunder (it being
understood, however, that no Lender shall be responsible for the failure of any
other Lender to make any Loan required to be made by such other Lender).
(d) Each Lender may at its option make any Eurodollar Loan by
causing any domestic or foreign branch or Lender Affiliate of such Lender to
make such Loan; provided, that any exercise of such option shall not affect the
obligation of the relevant Borrower to repay such Loan in accordance with the
terms of this Agreement.
(e) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness to such Lender resulting from
each Loan made by it from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time under this Agreement.
The Administrative Agent shall maintain accounts in which it will record (i) the
amount of each Loan made hereunder, the Borrower with respect to each Loan, the
Type of each Loan and each Interest Period, if any, applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and payable
from each Borrower to each Lender hereunder and (iii) the amount of any sum
received by the Administrative Agent hereunder from any Borrower and each
Lender's share thereof. The entries made in the accounts maintained pursuant to
this paragraph (e) shall, to the extent permitted by applicable law, be prima
facie evidence of the existence and amounts of the obligations therein recorded;
provided, however, that the failure of any Lender or the Administrative Agent to
maintain such accounts or any error therein shall not in any manner affect the
obligations of any Borrower to repay the Loans in accordance with their terms.
(f) In order to expedite the transactions contemplated by this
Agreement, each Subsidiary Borrower shall be deemed, by its execution and
delivery of a Subsidiary Borrower Request, to have appointed Viacom to act as
agent on behalf of such Subsidiary Borrower for the purpose of (a) giving any
notices contemplated to be given by such Subsidiary Borrower
24
pursuant to this Agreement, including, without limitation, borrowing notices,
prepayment notices, continuation notices, and conversion notices and (b) paying
on behalf of such Subsidiary Borrower any Subsidiary Borrower Obligations owing
by such Subsidiary Borrower; provided, that each Subsidiary Borrower shall
retain the right, in its discretion, to directly give any or all of such notices
or make any or all of such payments.
(g) The Administrative Agent shall promptly notify the Lenders upon
receipt of any Subsidiary Borrower Designation and Subsidiary Borrower Request.
SECTION 2.15. Sharing of Setoffs.
Except to the extent that this Agreement provides for payments to be
allocated to Loans, each Lender agrees that if it shall, through the exercise of
a right of banker's lien, setoff or counterclaim against any Borrower, or
pursuant to a secured claim under Section 506 of Title 11 of the United States
Code or other security or interest arising from, or in lieu of, such secured
claim, received by such Lender under any applicable bankruptcy, insolvency or
other similar law or otherwise, or by any other means (other than pursuant to
any provision of this Agreement), obtain payment (voluntary or involuntary) in
respect of any category of its Loans as a result of which the unpaid principal
portion of such Loans shall be proportionately less than the unpaid principal
portion of such Loans of any other Lender, it shall be deemed simultaneously to
have purchased from such other Lender at face value, and shall promptly pay to
such other Lender the purchase price for, a participation in such Loans of such
other Lender, so that the aggregate unpaid principal amount of such Loans and
participations in such Loans held by each Lender shall be in the same proportion
to the aggregate unpaid principal amount of all such Loans then outstanding as
the principal amount of such Loans of each Lender prior to such exercise of
banker's lien, setoff or counterclaim or other event was to the principal amount
of all such Loans outstanding prior to such exercise of banker's lien, setoff or
counterclaim or other event; provided, however, that, if any such purchase or
purchases or adjustments shall be made pursuant to this Section 2.15 and the
payment giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustment restored without interest, unless the
Lender from which such payment is recovered is required to pay interest thereon,
in which case each Lender returning funds to such Lender shall pay its pro rata
share of such interest. Any Lender holding a participation in a Loan deemed to
have been so purchased may exercise any and all rights of banker's lien, setoff
or counterclaim with respect to any and all moneys owing by any Borrower to such
Lender by reason thereof as fully as if such Lender had made a Loan directly
such Borrower.
SECTION 2.16. Payments.
(a) Except as otherwise expressly provided herein, each Borrower
shall make each payment (including principal of or interest on any Loan or any
Fees or other amounts) hereunder without setoff or counterclaim and shall make
each such payment not later than 12:00 noon, New York City time, on the date
when due in Dollars to the Administrative Agent at its offices at The Chase
Manhattan Bank, 270 Park Avenue, New York, New York 10017, in immediately
available funds.
(b) Whenever any payment (including principal of or interest on any
Loan or any Fees or other amounts) hereunder shall become due, or otherwise
would occur, on a day that is not a Business Day, such payment may be made on
the next succeeding Business Day, and such
25
extension of time shall in such case be included in the computation of interest
or Fees, if applicable.
SECTION 2.17. Taxes.
(a) Any and all payments by each Borrower hereunder shall be made,
in accordance with Section 2.16, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, duties, charges, fees,
deductions, charges or withholdings, and all liabilities with respect thereto
imposed by or on behalf of any Governmental Authority, excluding net income
taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the
Administrative Agent or any Lender as a result of a present or former connection
between the Administrative Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Administrative Agent's or such Lender's having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document) (all such nonexcluded taxes, levies,
imposts, duties, charges, fees, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If any Borrower shall be
required by law to deduct any Taxes or Other Taxes from or in respect of any sum
payable to any Agent or any Lender hereunder, (i) the sum payable shall be
increased by the amount necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.17) such Agent or such Lender shall receive an amount equal to the sum it
would have received had no such deductions been made, (ii) such Borrower shall
make such deductions and (iii) such Borrower shall pay the full amount deducted
to the relevant taxing authority or other Governmental Authority in accordance
with applicable law.
(b) The relevant Borrower agrees to pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The relevant Borrower will indemnify each Lender (or Transferee)
and the Administrative Agent for the full amount of Taxes and Other Taxes
(including any Taxes or Other Taxes imposed by the applicable jurisdiction on
amounts payable under this Section 2.17) paid by such Lender (or Transferee) or
the Administrative Agent, as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted by
the relevant taxing authority or other Governmental Authority. Such
indemnification shall be made within 30 days after the date such Lender (or
Transferee) or the Administrative Agent, as the case may be, makes written
demand therefor.
(d) Whenever any Taxes or Other Taxes are payable by any Borrower,
within 30 days thereafter such Borrower shall send to the Administrative Agent
for its own account or for the account of the relevant Lender, as the case may
be, a certified copy of an official receipt received by such Borrower showing
payment thereof (or other evidence of such payment reasonably satisfactory to
the Administrative Agent).
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.17
shall survive the payment in full of the principal of and interest on all Loans
made hereunder and of all other amounts payable hereunder.
26
(f) Each Lender (or Transferee) that is not a "United States Person"
as defined in Section 7701(a)(30) of the Code (such Lender (or Transferee), a
"Non-U.S. Person") shall deliver to Viacom and the Administrative Agent (or, in
the case of a participant, to the Lender from which the related participation
shall have been purchased) two copies of either U.S. Internal Revenue Service
Form W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Person claiming
exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of "portfolio interest", a Form W-8BEN, or any
subsequent versions thereof or successors thereto (and, if such Non-U.S. Person,
claiming an exemption with respect to payments of "portfolio interest", delivers
a Form W-8BEN, an annual certificate representing that such Non-U.S. Person is
not a "bank" for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of Viacom
and is not a controlled foreign corporation related to Viacom (within the
meaning of Section 864(d)(4) of the Code)), properly completed and duly executed
by such Non-U.S. Person claiming complete exemption from U.S. federal
withholding tax on all payments by any Borrower under this Agreement. Such forms
shall be delivered by each Non-U.S. Person promptly after it becomes a party to
this Agreement (or, in the case of any participant, promptly after the date such
participant purchases the related participation). In addition, each Non-U.S.
Person shall deliver such forms promptly upon the obsolescence or invalidity of
any form previously delivered by such Non-U.S. Person. Each Non-U.S. Person
shall promptly notify Viacom at any time it determines that it is no longer in a
position to provide any previously delivered certificate to Viacom (or any other
form of certification adopted by the U.S. taxing authorities for such purpose).
Unless Viacom and the Administrative Agent (or, in the case of a participant,
the Lender from which the related participation shall have been purchased) have
received forms or other documents satisfactory to them indicating that payments
hereunder are not subject to United States withholding tax, the relevant
Borrower or the Administrative Agent shall withhold taxes from such payments at
the applicable statutory rate in the case of payments of interest to or for any
Lender (or Transferee) that is a Non-U.S. Person. Notwithstanding any other
provision of this Section 2.17(f), a Non-U.S. Person shall not be required to
deliver any form pursuant to this Section 2.17(f) that such Non-U.S. Person is
not legally able to deliver by reason of the adoption of any law, rule or
regulation, or any change in any law, rule or regulation or in the
interpretation thereof, in each case occurring after the date such Non-U.S.
Person becomes a Lender (or Transferee).
(g) A Lender that is entitled to an exemption from or reduction of
any non-U.S. withholding tax under the law of the jurisdiction in which a
Borrower is located, or under any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to such Borrower
(with a copy to the Administrative Agent), at the time or times prescribed by
applicable law or reasonably requested by such Borrower, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate, provided that such
Lender is legally entitled to complete, execute and deliver such documentation
and in such Lender's reasonable judgment such completion, execution or
submission would not materially prejudice the legal position of such Lender.
(h) No Borrower shall be required to pay any additional amounts to
any Agent or Lender pursuant to paragraph (a) above (i) if the obligation to pay
such additional amounts would not have arisen but for a failure by such Agent or
Lender to comply with the provisions of paragraph (f) or (g) above or (ii) in
the case of a Transferee, to the extent such additional amounts exceed the
additional amounts that would have been payable had no transfer or
27
assignment to such Transferee occurred; provided, however, that each Borrower
shall be required to pay those amounts to any Agent or Lender (or Transferee)
that it was required to pay hereunder prior to the failure of such Agent or
Lender (or Transferee) to comply with the provisions of such paragraph (f) or
(g).
SECTION 2.18. Termination or Assignment of Commitments Under Certain
Circumstances.
(a) Any Lender (or Transferee) claiming any additional amounts
payable pursuant to Section 2.12 or Section 2.17 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any certificate or
document requested by any Borrower or to change the jurisdiction of its
applicable lending office if the making of such a filing or change would avoid
the need for or reduce the amount of any such additional amounts which may
thereafter accrue and would not, in the sole determination of such Lender (or
Transferee), be otherwise disadvantageous to such Lender (or Transferee).
(b) In the event that (x) any Lender shall have delivered a notice
or certificate pursuant to Section 2.12, (y) any Borrower shall be required to
make additional payments to any Lender under Section 2.17, or (z) any Lender (a
"Non-Consenting Lender") shall withhold its consent to any amendment described
in clause (i) or (ii) of Section 9.8(b) as to which consents have been obtained
from Lenders having Total Facility Percentages aggregating at least 90%, Viacom
shall have the right, at its own expense, upon notice to such Lender (or
Lenders) and the Administrative Agent, (i) to terminate the Commitments of such
Lender (except in the case of clause (z) above) or (ii) to require such Lender
(or, in the case of clause (z) above, each Non-Consenting Lender) to transfer
and assign without recourse (in accordance with and subject to the restrictions
contained in Section 9.4) all its interests, rights and obligations under this
Agreement to one or more other financial institutions acceptable to Viacom
(unless an Event of Default has occurred and is continuing) and the
Administrative Agent, which approval in each case shall not be unreasonably
withheld, which shall assume such obligations; provided, that (w) in the case of
any replacement of Non-Consenting Lenders, each assignee shall have consented to
the relevant amendment, (x) no such termination or assignment shall conflict
with any law, rule or regulation or order of any Governmental Authority, (y) the
Borrowers or the assignee (or assignees), as the case may be, shall pay to each
affected Lender in immediately available funds on the date of such termination
or assignment the principal of and interest accrued to the date of payment on
the Loans made by it hereunder and all other amounts accrued for its account or
owed to it hereunder and (z) Viacom may not terminate Commitments representing
more than 10% of the original aggregate Commitments pursuant to this paragraph
(b).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Viacom hereby represents and warrants, and each Subsidiary Borrower
by its execution and delivery of a Subsidiary Borrower Request represents and
warrants (to the extent specifically applicable to such Subsidiary Borrower), to
each of the Lenders that:
28
SECTION 3.1. Corporate Existence.
Each of Viacom and each Material Subsidiary: (a) is a corporation,
partnership or other entity duly organized and validly existing under the laws
of the jurisdiction of its organization; (b) has all requisite corporate or
other power, and has all material governmental licenses, authorizations,
consents and approvals, necessary to own its assets and carry on its business as
now being or as proposed to be conducted, except where the failure to have any
of the foregoing would not result in a Material Adverse Effect; and (c) is
qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would result in a Material Adverse Effect.
SECTION 3.2. Financial Condition.
The consolidated balance sheet of Viacom and its Consolidated
Subsidiaries as at December 31, 1999, and the related consolidated statements of
income and cash flows of Viacom and its Consolidated Subsidiaries for the fiscal
year ended on such date, with the opinion thereon of PricewaterhouseCoopers LLC,
heretofore furnished to each of the Lenders, fairly present the consolidated
financial condition of Viacom and its Consolidated Subsidiaries as at such date
and the consolidated results of their operations for the fiscal year ended on
such date in accordance with GAAP. Neither Viacom nor any of its Material
Subsidiaries had on such date any known material contingent liability, except as
referred to or reflected or provided for in the Exchange Act Report or in such
balance sheets (or the notes thereto) as at such date.
SECTION 3.3. Litigation.
Except as disclosed to the Lenders in the Exchange Act Report filed
prior to the Closing Date or otherwise disclosed in writing to the Lenders prior
to the Closing Date, there are no legal or arbitral proceedings, or any
proceedings by or before any Governmental Authority, pending or (to the
knowledge of Viacom) threatened against Viacom or any of its Material
Subsidiaries which have resulted in a Material Adverse Effect (it being agreed
that any legal or arbitral proceedings which have been disclosed in the Exchange
Act Report, whether threatened, pending, resulting in a judgment or otherwise,
prior to the time a final judgment for the payment of money shall have been
recorded against Viacom or any Material Subsidiary by any Governmental Authority
having jurisdiction, and the judgment is non-appealable (or the time for appeal
has expired) and all stays of execution have expired or been lifted shall not,
in and of itself, be deemed to result in a Material Adverse Effect). The
"Exchange Act Report" shall mean, collectively, (i) the Annual Report of Viacom
on Form 10-K for the year ended December 31, 1999 and Quarterly Reports on Form
10-Q and Reports on Form 8-K of Viacom filed subsequent to December 31, 1999,
but on or before February 20, 2001, (ii) the Annual Report of CBS Corporation on
Form 10-K for the year ended December 31, 1999 and Quarterly Reports on Form
10-Q and Reports on Form 8-K of Viacom filed subsequent to December 31, 1999,
but on or before February 20, 2001, and (iii) Reports on Form S-4 filed on
October 7, 1999 and November 22, 2000, in each case, as amended or supplemented
on or before February 20, 2001.
SECTION 3.4. No Breach, etc.
None of the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated and compliance with the
terms and provisions hereof will conflict with or result in a breach of, or
require any consent under, the charter or By-laws (or other equivalent
organizational documents) of any Borrower, or any applicable law or regulation,
29
or any order, writ, injunction or decree of any Governmental Authority, or any
material agreement or instrument to which Viacom or any of its Material
Subsidiaries is a party or by which any of them is bound or to which any of them
is subject, or constitute a default under any such agreement or instrument, or
result in the creation or imposition of any Lien upon any of the revenues or
assets of Viacom or any of its Material Subsidiaries pursuant to the terms of
any such agreement or instrument. Neither Viacom nor any of its Material
Subsidiaries is in default under or with respect to any of its material
contractual obligations in any respect which would have a Material Adverse
Effect.
SECTION 3.5. Corporate Action.
Each Borrower has all necessary corporate power and authority to
execute, deliver and perform its obligations under this Agreement; the execution
and delivery by each Borrower of this Agreement (or, in the case of each
Subsidiary Borrower, the relevant Subsidiary Borrower Request), and the
performance by each Borrower of this Agreement, have been duly authorized by all
necessary corporate action on such Borrower's part; this Agreement (or, in the
case of each Subsidiary Borrower, the relevant Subsidiary Borrower Request) has
been duly and validly executed and delivered by each Borrower; and this
Agreement constitutes a legal, valid and binding obligation of each Borrower,
enforceable in accordance with its terms except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or similar laws of general applicability affecting the enforcement of
creditors' rights and (b) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
SECTION 3.6. Approvals.
No authorizations, approvals or consents of, and no filings or
registrations with, any Governmental Authority are necessary for the execution,
delivery or performance by each Borrower of this Agreement or for the validity
or enforceability hereof.
SECTION 3.7. ERISA.
Viacom and, to the best of its knowledge, its ERISA Affiliates have
fulfilled their respective obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and are in compliance in all
material respects with the currently applicable provisions of ERISA and the Code
except where any failure or non-compliance would not result in a Material
Adverse Effect.
SECTION 3.8. Taxes.
As of the Closing Date, United States Federal income tax returns of
or including Viacom have been, to the knowledge of Viacom, examined and closed
through the fiscal year of Viacom ended December 31, 1994. Viacom and its
Material Subsidiaries, to the knowledge of Viacom, have filed all United States
Federal income tax returns and all other material tax returns which are required
to be filed by or in respect of them and have paid or caused to be paid all
taxes shown as due on such returns or pursuant to any assessment received by
Viacom or any of its Material Subsidiaries, except those being contested and
reserved against in accordance with Section 5.2.
30
SECTION 3.9. Investment Company Act.
No Borrower is an "investment company", or a company "controlled" by
an "investment company", subject to regulation under the Investment Company Act
of 1940, as amended.
SECTION 3.10. Environmental.
Except as in the aggregate would not have a Material Adverse Effect,
neither Viacom nor any of its Subsidiaries has received any notice of violation,
alleged violation, non-compliance or liability regarding environmental matters
or compliance with Environmental Laws with regard to any of its or its
Subsidiaries' Properties or business, nor does Viacom have any knowledge that
any notice will be received or is being threatened.
SECTION 3.11. Material Subsidiaries.
The list of Material Subsidiaries set forth in the most recently
issued Form 10-K of Viacom is complete and correct in all material respects as
of the date of the issuance of such Form 10-K.
ARTICLE IV
CONDITIONS OF EFFECTIVENESS AND LENDING
SECTION 4.1. Effectiveness.
The effectiveness of this Agreement is subject to the satisfaction
of the following conditions:
(a) Credit Agreement. The Administrative Agent shall have received
this Agreement, executed and delivered by a duly authorized officer of Viacom
and Viacom International.
(b) Five-Year Credit Agreement. All conditions to effectiveness set
forth in Section 4.1 of the Five-Year Credit Agreement shall have been
satisfied.
(c) Closing Certificate. The Administrative Agent shall have
received a Closing Certificate, substantially in the form of Exhibit E, of
Viacom and Viacom International, with appropriate insertions and attachments.
(d) Termination of Existing Credit Agreements. The Existing Credit
Agreements shall have been paid in full and all obligations thereunder shall
have been terminated.
(e) Opinion of Counsel. The Administrative Agent shall have received
an opinion of the general counsel of Viacom and Viacom International in form and
substance satisfactory to the Administrative Agent and customary for
transactions of this type.
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SECTION 4.2. Initial Loans to Subsidiary Borrowers.
The obligation of each Lender to make its initial Loan to a
particular Subsidiary Borrower, if designated as such after the Closing Date, is
subject to the satisfaction of the conditions that (a) Viacom shall have
delivered to the Administrative Agent a Subsidiary Borrower Designation for such
Subsidiary Borrower and (b) such Subsidiary Borrower shall have furnished to the
Administrative Agent (i) a Subsidiary Borrower Request, (ii) a Closing
Certificate of such Subsidiary Borrower, with appropriate insertions and
attachments and (iii) one or more executed legal opinions with respect to such
Subsidiary Borrower, in form and substance reasonably satisfactory to the
Administrative Agent. Viacom may from time to time deliver a subsequent
Subsidiary Borrower Designation with respect to any Subsidiary Borrower,
countersigned by such Subsidiary Borrower, for the purpose of terminating such
Subsidiary Borrower's designation as such, so long as, on the effective date of
such termination, all Subsidiary Borrower Obligations in respect of such
Subsidiary Borrower shall have been paid in full. In addition, if on any date a
Subsidiary Borrower shall cease to be a Subsidiary, all Subsidiary Borrower
Obligations in respect of such Subsidiary Borrower shall automatically become
due and payable on such date and no further Loans may be borrowed by such
Subsidiary Borrower hereunder.
SECTION 4.3. All Credit Events.
The obligation of each Lender to make each Loan are subject to the
satisfaction of the following conditions:
(a) The Administrative Agent shall have received a request for, or
notice of, such Credit Event if and as required by Section 2.3;
(b) Each of the representations and warranties made by Viacom and,
in the case of a borrowing by a Subsidiary Borrower, by such Subsidiary
Borrower, in Sections 3.1, 3.2, 3.4, 3.5 and 3.6 shall be true and correct in
all material respects on and as of the date of such Credit Event with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date in which case
such representations and warranties shall be true and correct in all material
respects as of such earlier date;
(c) At the time of and immediately after giving effect to such
Credit Event no Default or Event of Default shall have occurred and be
continuing; and
(d) After giving effect to such Credit Event, (i) the Outstanding
Extensions of Credit of each Lender shall not exceed such Lender's Commitment
then in effect and (ii) the Total Facility Exposure shall not exceed the Total
Commitment then in effect.
Each Credit Event shall be deemed to constitute a representation and warranty by
Viacom on the date of such Credit Event as to the matters specified in
paragraphs (b) and (c) of this Section 4.3.
32
ARTICLE V
COVENANTS
Viacom covenants and agrees with each Lender that, as long as the
Commitments shall be in effect or the principal of or interest on any Loan shall
be unpaid, unless the Required Lenders shall otherwise consent in writing:
SECTION 5.1. Financial Statements.
Viacom shall deliver to each of the Lenders:
(a) within 60 days after the end of each of the first three
quarterly fiscal periods of each fiscal year of Viacom, consolidated statements
of income and cash flows of Viacom and its Consolidated Subsidiaries for such
period and for the period from the beginning of the respective fiscal year to
the end of such period, and the related consolidated balance sheet as at the end
of such period, setting forth in each case in comparative form the corresponding
consolidated figures for the corresponding period in the preceding fiscal year,
accompanied by a certificate of a Financial Officer of Viacom which certificate
shall state that such financial statements fairly present the consolidated
financial condition and results of operations of Viacom and its Consolidated
Subsidiaries in accordance with GAAP as at the end of, and for, such period,
subject to normal year-end audit adjustments; provided, that the requirement
herein for the furnishing of such quarterly financial statements may be
fulfilled by providing to the Lenders the report of Viacom to the SEC on Form
10-Q for the applicable quarterly period, accompanied by the officer's
certificate described in the last sentence of this Section 5.1;
(b) within 120 days after the end of each fiscal year of Viacom,
consolidated statements of income and cash flows of Viacom and its Consolidated
Subsidiaries for such year and the related consolidated balance sheet as at the
end of such year, setting forth in comparative form the corresponding
consolidated figures for the preceding fiscal year, and accompanied by an
opinion thereon (unqualified as to the scope of the audit) of independent
certified public accountants of recognized national standing, which opinion
shall state that such consolidated financial statements fairly present the
consolidated financial condition and results of operations of Viacom and its
Consolidated Subsidiaries as at the end of, and for, such fiscal year; provided,
that the requirement herein for the furnishing of annual financial statements
may be fulfilled by providing to the Lenders the report of Viacom to the SEC on
Form 10-K for the applicable fiscal year;
(c) promptly upon their becoming publicly available, copies of all
registration statements and regular periodic reports (including without
limitation any and all reports on Form 8-K), if any, which Viacom or any of its
Subsidiaries shall have filed with the SEC or any national securities exchange;
(d) promptly upon the mailing thereof to the shareholders of Viacom
generally, copies of all financial statements, reports and proxy statements so
mailed;
(e) within 30 days after a Responsible Officer of Viacom knows or
has reason to believe that any of the events or conditions specified below with
respect to any Plan or Multiemployer Plan have occurred or exist which would
reasonably be expected to result in a
33
Material Adverse Effect, a statement signed by a senior financial officer of
Viacom setting forth details respecting such event or condition and the action,
if any, which Viacom or its ERISA Affiliate proposes to take with respect
thereto (and a copy of any report or notice required to be filed with or given
to PBGC by Viacom or an ERISA Affiliate with respect to such event or
condition):
(i) any reportable event, as defined in Section 4043(b) of ERISA and
the regulations issued thereunder, with respect to a Plan, as to which
PBGC has not by regulation waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the occurrence of such event;
provided, that a failure to meet the minimum funding standard of Section
412 of the Code or Section 302 of ERISA shall be a reportable event
regardless of the issuance of any waiver in accordance with Section 412(d)
of the Code;
(ii) the filing under Section 4041 of ERISA of a notice of intent to
terminate any Plan or the termination of any Plan;
(iii) the institution by PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by Viacom or any ERISA Affiliate of a
notice from a Multiemployer Plan that such action has been taken by PBGC
with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal by Viacom or any ERISA
Affiliate under Section 4201 or 4204 of ERISA from a Multiemployer Plan,
or the receipt by Viacom or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against Viacom or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30 days;
and
(vi) a failure to make a required installment or other payment with
respect to a Plan (within the meaning of Section 412(n) of the Code), in
which case the notice required hereunder shall be provided within 10 days
after the due date for filing notice of such failure with the PBGC;
(f) promptly after a Responsible Officer of Viacom knows or has
reason to believe that any Default or Event of Default has occurred, a notice of
such Default or Event of Default describing it in reasonable detail and,
together with such notice or as soon thereafter as possible, a description of
the action that Viacom has taken and proposes to take with respect thereto;
(g) promptly after a Responsible Officer of Viacom knows that any
change has occurred in Viacom's Debt Rating by either Rating Agency, a notice
describing such change; and
(h) promptly from time to time such other information regarding the
financial condition, operations or business of Viacom or any of its Subsidiaries
(including, without
34
limitation, any Plan or Multiemployer Plan and any reports or other information
required to be filed under ERISA) as any Lender through the Administrative Agent
may reasonably request.
Viacom will furnish to the Administrative Agent and each Lender, at the time it
furnishes each set of financial statements pursuant to paragraph (a) or (b)
above, a certificate (which may be a copy in the case of each Lender) of a
Financial Officer of Viacom (a "Compliance Certificate") (i) to the effect that
no Default or Event of Default has occurred and is continuing (or, if any
Default or Event of Default has occurred and is continuing, describing it in
reasonable detail and describing the action that Viacom has taken and proposes
to take with respect thereto), and (ii) setting forth in reasonable detail the
computations (including any pro forma calculations as described in Section
1.2(c)) necessary to determine whether Viacom is in compliance with the
Financial Covenant as of the end of the respective quarterly fiscal period or
fiscal year. Each Lender hereby agrees that Viacom may, in its discretion,
provide any notice, report or other information to be provided pursuant to this
Section 5.1 to such Lender by (i) electronic mail to the electronic mail address
provided by such Lender and/or (ii) through access to a web site, including,
without limitation, www.sec.gov.
SECTION 5.2. Corporate Existence, Etc.
Viacom will, and will cause each of its Material Subsidiaries to,
preserve and maintain its legal existence and all of its material rights,
privileges and franchises (provided that (a) nothing in this Section 5.2 shall
prohibit any transaction expressly permitted under Section 5.4, (b) the
corporate existence of any Subsidiary (other than a Subsidiary Borrower or
Viacom International) may be terminated if, in the good faith judgment of the
board of directors or the chief financial officer of Viacom, such termination is
in the best interests of Viacom and such termination would not have a Material
Adverse Effect), and (c)Viacom or such Material Subsidiary shall not be required
to preserve or maintain any such right, privilege or franchise if the Board of
Directors of Viacom or such Material Subsidiary, as the case may be, shall
determine that the preservation or maintenance thereof is no longer desirable in
the conduct of the business of Viacom or such Material Subsidiary, as the case
may be); comply with the requirements of all applicable laws, rules, regulations
and orders of Governmental Authorities (including, without limitation, all
Environmental Laws) and with all contractual obligations if failure to comply
with such requirements or obligations would reasonably be expected to result in
a Material Adverse Effect; pay and discharge all material taxes, assessments,
governmental charges, levies or other obligations of whatever nature imposed on
it or on its income or profits or on any of its Property prior to the date on
which penalties attach thereto, except for any such tax, assessment, charge,
levy or other obligation the payment of which is being contested in good faith
and by proper proceedings and against which adequate reserves are being
maintained; maintain all its Property used or useful in its business in good
working order and condition, ordinary wear and tear excepted, all as in the
judgment of Viacom or such Material Subsidiary may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times (provided that Viacom or such Material Subsidiary shall
not be required to maintain any such Property if the failure to maintain any
such Property is, in the judgment of Viacom or such Material Subsidiary,
desirable in the conduct of the business of Viacom or such Material Subsidiary);
keep proper books of records and accounts in which entries that are full, true
and correct in all material respects shall be made in conformity with GAAP; and
permit representatives of any Lender, during normal business hours upon
reasonable advance notice, to inspect any of its books and records and to
discuss its business and affairs with its Financial Officers or their designees,
all to the extent reasonably requested by such Lender.
35
SECTION 5.3. Insurance.
Viacom will, and will cause each of its Material Subsidiaries to,
keep insured by financially sound and reputable insurers all Property of a
character usually insured by corporations engaged in the same or similar
business and similarly situated against loss or damage of the kinds and in the
amounts consistent with prudent business practice and carry such other insurance
as is consistent with prudent business practice (it being understood that
self-insurance shall be permitted to the extent consistent with prudent business
practice).
SECTION 5.4. Prohibition of Fundamental Changes.
Viacom will not, and will not permit any of its Material
Subsidiaries to (i) enter into any transaction of merger, consolidation,
liquidation or dissolution or (ii) Dispose of, in one transaction or a series of
related transactions, all or a substantial part of the consolidated assets of
Viacom and its Subsidiaries taken as a whole, whether now owned or hereafter
acquired (excluding (x) financings by way of sales of receivables or inventory,
(y) inventory or other Property Disposed of in the ordinary course of business
and (z) obsolete or worn-out Property, tools or equipments no longer used or
useful in its business). Notwithstanding the foregoing provisions of this
Section 5.4:
(a) Viacom may consummate the Blockbuster Event;
(b) any Subsidiary of Viacom may be merged or consolidated with or
into: (i) Viacom if Viacom shall be the continuing or surviving corporation or
(ii) any other such Subsidiary; provided, that (x) if any such transaction shall
be between a Subsidiary and a Wholly Owned Subsidiary, such Wholly Owned
Subsidiary shall be the continuing or surviving corporation and (y) if any such
transaction shall be between a Subsidiary and a Subsidiary Borrower, the
continuing or surviving corporation shall be a Subsidiary Borrower;
(c) any Subsidiary of Viacom may distribute, dividend or Dispose of
any of or all its Property (upon voluntary liquidation or otherwise) to Viacom
or a Wholly Owned Subsidiary of Viacom;
(d) Viacom may merge or consolidate with or into any other Person
(including, without limitation, Viacom International) if (i) either (x) Viacom
is the continuing or surviving corporation or (y) the corporation formed by such
consolidation or into which Viacom is merged shall be a corporation organized
under the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume the obligations of Viacom
hereunder pursuant to a written agreement and shall have delivered to the
Administrative Agent such agreement and a certificate of a Responsible Officer
and an opinion of counsel to the effect that such merger or consolidation
complies with this Section 5.4(c), and (ii) after giving effect thereto and to
any repayment of Loans to be made upon consummation thereof (it being expressly
understood that no repayment of Loans is required solely by virtue thereof), no
Default or Event of Default shall have occurred and be continuing;
(e) any Subsidiary of Viacom may merge or consolidate with or into
any other Person if, after giving effect thereto and to any repayment of Loans
to be made upon the consummation thereof (it being expressly understood that,
except as otherwise expressly provided in Section 4.2 with respect to Subsidiary
Borrowers, no repayment of Loans is required
36
solely by virtue thereof), no Default or Event of Default shall have occurred
and be continuing; and
(f) Viacom or any Subsidiary of Viacom may Dispose of its Property
if, after giving effect thereto and to any repayment of Loans to be made upon
the consummation thereof (it being expressly understood that, except as
otherwise expressly provided in Section 4.2 with respect to Subsidiary
Borrowers, no repayment of Loans is required solely by virtue thereof), no
Default or Event of Default shall have occurred and be continuing.
SECTION 5.5. Limitation on Liens
Viacom shall not, directly or indirectly, create or suffer to exist,
or permit any of its Subsidiaries to create or suffer to exist, any Lien upon or
with respect to any of its Properties, whether now owned or hereafter acquired,
or assign, or permit any of its Subsidiaries to assign, any right to receive
income, in each case to secure or provide for the payment of any Indebtedness of
any Person, except:
(a) Purchase money Liens or purchase money security interests upon
or in any Property acquired or held by Viacom or any Subsidiary of Viacom in the
ordinary course of business to secure the purchase price of such Property or to
secure Indebtedness incurred solely for the purpose of financing the acquisition
of such Property;
(b) Liens existing on Property at the time of its acquisition (other
than any such Lien created in contemplation of such acquisition);
(c) Liens on Property of Persons which become or became Subsidiaries
securing Indebtedness existing, with respect to any such Person, on the date
such Person becomes or became a Subsidiary (other than any such Lien created in
contemplation of such Person becoming a Subsidiary);
(d) Liens securing Indebtedness incurred by Viacom or any Subsidiary
of Viacom; provided, however, that the aggregate principal amount of
Indebtedness referred to in this clause (d) secured by Liens shall not exceed
$30,000,000 at any time outstanding; and
(e) any Lien securing the renewal, extension or refunding of any
Indebtedness secured by any Lien permitted by clause (a), (b), (c) or (d) above
that does not extend to Indebtedness other than that which is being renewed,
extended or refunded.
SECTION 5.6. Limitation on Subsidiary Indebtedness.
Viacom will not permit any of its Subsidiaries to create, incur,
assume or suffer to exist any Indebtedness (which includes, for the purposes of
this Section 5.6, any preferred stock), except:
(a) Indebtedness of any Person which is acquired by Viacom or any of
its Subsidiaries after the Closing Date, which Indebtedness was outstanding
prior to the date of acquisition of such Person and was not created in
anticipation thereof;
(b) any Indebtedness owing by Viacom or any of its Subsidiaries to
Viacom or any of its Subsidiaries (including any intercompany Indebtedness
created by the declaration of a note payable dividend by any Subsidiary to
Viacom or any of its other Subsidiaries);
37
(c) Indebtedness (including backed-up commercial paper) of any
Subsidiary Borrower or Viacom International under this Agreement;
(d) Indebtedness (including backed-up commercial paper) existing at
any time under the Five-Year Credit Agreement or under the Existing Infinity
Credit Agreement;
(e) Indebtedness outstanding on the Closing Date, with such
Indebtedness outstanding as of September 30, 2000 being set forth on Schedule
5.6;
(f) any replacement, renewal, refinancing or extension of any
Indebtedness permitted by Section 5.6(a) through (d) or set forth on Schedule
5.6 that does not exceed the aggregate principal amount (plus associated fees
and expenses) of the Indebtedness being replaced, renewed, refinanced or
extended (except that accrued and unpaid interest may be part of any
refinancing); and
(g) Indebtedness incurred after the Closing Date; provided, that
after giving effect thereto the aggregate principal amount of Indebtedness
incurred pursuant to this paragraph (g) that is outstanding on such date (it
being understood that, for the purposes of this paragraph (g), the term
"Indebtedness" does not include Indebtedness excepted by any of clauses (a)
through (f) inclusive) does not exceed the greater of (i) an aggregate principal
amount in excess of 5% of Consolidated Tangible Assets (measured by reference to
the then latest financial statements delivered pursuant to Section 5.1(a) or
(b), as applicable) and (ii) $800,000,000 at any time.
SECTION 5.7. Consolidated Coverage Ratio.
Viacom will not permit the Consolidated Coverage Ratio for any
period of four consecutive fiscal quarters to be less than 3.00 to 1.00.
SECTION 5.8. Use of Proceeds.
On and after the Closing Date, each Borrower will use the proceeds
of the Loans solely for general corporate purposes, including, without
limitation, acquisitions and commercial paper backup (in each case in compliance
with all applicable legal and regulatory requirements, including, without
limitation, Regulation U and the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and the regulations thereunder);
provided, that neither any Agent nor any Lender shall have any responsibility as
to the use of any of such proceeds.
SECTION 5.9. Transactions with Affiliates.
Excepting transactions directly or indirectly entered into pursuant
to any agreement entered into prior to the Closing Date, or transactions
contemplated by any agreement directly or indirectly entered into prior to the
Closing Date, Viacom will not, and will not permit any of its Material
Subsidiaries to, directly or indirectly enter into any material transaction with
any Affiliate of Viacom except on terms at least as favorable to Viacom or such
Subsidiary as it could obtain on an arm's-length basis.
38
ARTICLE VI
EVENTS OF DEFAULT.
In case of the happening of any of the following events ("Events of
Default"):
(a) (i) any Borrower shall default in the payment when due of any
principal of any Loan or (ii) any Borrower shall default in the payment when due
of any interest on any Loan, any Fee or any other amount payable by it hereunder
and, in the case of this clause (ii), such default shall continue unremedied for
a period of five Business Days;
(b) any representation, warranty or certification made or deemed
made herein (or in any modification or supplement hereto) by any Borrower, or
any certificate furnished to any Lender or the Administrative Agent pursuant to
the provisions hereof, shall prove to have been false or misleading in any
material respect as of the time made, deemed made or furnished;
(c) (i) Viacom shall default in the performance of any of its
obligations under Sections 5.7 or 5.8, (ii) Viacom shall default in the
performance of any of its obligations under Section 5.4 and, in the case of this
clause (ii), such default shall continue unremedied for a period of 5 days after
notice thereof to Viacom by the Administrative Agent or the Required Lenders
(through the Administrative Agent) or (iii) Viacom shall default in the
performance of any of its other obligations under this Agreement and, in the
case of this clause (iii), such default shall continue unremedied for a period
of 15 days after notice thereof to Viacom by the Administrative Agent or the
Required Lenders (through the Administrative Agent);
(d) Viacom or any of its Subsidiaries shall (i) fail to pay at final
maturity any Indebtedness in an aggregate amount in excess of $250,000,000, or
(ii) fail to make any payment (whether of principal, interest or otherwise),
regardless of amount, due in respect of, or fail to observe or perform any other
term, covenant, condition or agreement contained in any agreement or instrument
evidencing or governing, any such Indebtedness, in excess of $250,000,000 if the
effect of any failure referred to in this clause (ii) has caused such
Indebtedness to become due prior to its stated maturity (it being agreed that
for purposes of this paragraph (d) only, the term "Indebtedness" shall include
obligations under any interest rate protection agreement, foreign currency
exchange agreement or other interest or exchange rate hedging agreement and that
the amount of any Person's obligations under any such agreement shall be the net
amount that such Person could be required to pay as a result of a termination
thereof by reason of a default thereunder);
(e) Viacom or any of its Material Subsidiaries shall admit in
writing its inability, or be generally unable, to pay its debts as such debts
become due;
(f) Viacom or any of its Material Subsidiaries shall (i) apply for
or consent to the appointment of, or the taking of possession by, a receiver,
trustee or liquidator of itself or of all or a substantial part of its Property,
(ii) make a general assignment for the benefit of its creditors, (iii) commence
a voluntary case under the Bankruptcy Code (as now or hereafter in effect), (iv)
file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
39
involuntary case under the Bankruptcy Code, or (vi) take any corporate action
for the purpose of effecting any of the foregoing;
(g) a proceeding or a case shall be commenced, without the
application or consent of Viacom or any of its Material Subsidiaries, in any
court of competent jurisdiction, seeking (i) its liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of its debts, (ii)
the appointment of a trustee, receiver, custodian, liquidator or the like of
Viacom or such Material Subsidiary or of all or any substantial part of its
assets or (iii) similar relief in respect of Viacom or such Material Subsidiary
under any law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in effect, for a period of
60 or more days; or an order for relief against Viacom or such Material
Subsidiary shall be entered in an involuntary case under the Bankruptcy Code;
(h) a final judgment or judgments for the payment of money in excess
of $250,000,000 in the aggregate shall be rendered by one or more courts,
administrative tribunals or other bodies having jurisdiction against Viacom
and/or any of its Material Subsidiaries and the same shall not be paid or
discharged (or provision shall not be made for such discharge), or a stay of
execution thereof shall not be procured, within 60 days from the date of the
date of entry thereof and Viacom or the relevant Material Subsidiary shall not,
within said period of 60 days, or such longer period during which execution of
the same shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal;
(i) an event or condition specified in Section 5.1(e) shall occur or
exist with respect to any Plan or Multiemployer Plan and, as a result of such
event or condition, together with all other such events or conditions, Viacom or
any ERISA Affiliate shall incur or shall be reasonably likely to incur a
liability to a Plan, a Multiemployer Plan or PBGC (or any combination of the
foregoing) which would constitute a Material Adverse Effect; or
(j) The guarantee (i) by Viacom contained in Section 8.1 shall
cease, for any reason, to be in full force and effect or Viacom shall so assert
or (ii) by Viacom International contained in Section 8.2 shall cease, for any
reason except pursuant to Section 8.2(g), to be in full force and effect or
Viacom International shall so assert;
then and in every such event (other than an event with respect to Viacom
described in paragraph (f) or (g) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to Viacom, take any or all of the
following actions, at the same or different times: (I) terminate forthwith the
Commitments and (II) declare the Loans then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of each Borrower accrued hereunder, shall
become forthwith due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived by each
Borrower, anything contained herein to the contrary notwithstanding; and in any
event with respect to any Borrower described in paragraph (f) or (g) above, (A)
if such Borrower is Viacom, the Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest
thereon and any unpaid accrued Fees and all other liabilities of each Borrower
accrued hereunder, shall automatically become due and payable and (B) if such
Borrower is a Subsidiary Borrower, the principal of the Loans made to such
40
Subsidiary Borrower then outstanding, together with accrued interest thereon and
all other liabilities of such Subsidiary Borrower accrued hereunder, shall
automatically become due and payable, in each case without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by each Borrower, anything contained herein to the contrary
notwithstanding.
ARTICLE VII
THE AGENTS
In order to expedite the transactions contemplated by this
Agreement, each Agent is hereby appointed to act as Agent on behalf of the
Lenders. Each of the Lenders hereby irrevocably authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
specifically delegated to the Administrative Agent by the terms and provisions
hereof, together with such actions and powers as are reasonably incidental
thereto. The Administrative Agent is hereby expressly authorized by the Lenders,
without hereby limiting any implied authority, (a) to receive on behalf of the
Lenders all payments of principal of and interest on the Loans and all other
amounts due to the Lenders hereunder, and promptly to distribute to each Lender
its proper share of each payment so received; (b) to give notice on behalf of
each of the Lenders to the Borrowers of any Event of Default specified in this
Agreement of which the Administrative Agent has actual knowledge acquired in
connection with its agency hereunder; and (c) to distribute to each Lender
copies of all notices, financial statements and other materials delivered by any
Borrower pursuant to this Agreement as received by the Administrative Agent.
Neither any Agent nor any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted by any of them
except for its or his own gross negligence or willful misconduct, or be
responsible for any statement, warranty or representation herein or the contents
of any document delivered in connection herewith, or be required to ascertain or
to make any inquiry concerning the performance or observance by any Borrower of
any of the terms, conditions, covenants or agreements contained in this
Agreement. The Agents shall not be responsible to the Lenders for the due
execution, genuineness, validity, enforceability or effectiveness of this
Agreement or other instruments or agreements. The Administrative Agent shall in
all cases be fully protected in acting, or refraining from acting, in accordance
with written instructions signed by the Required Lenders (or, when expressly
required hereby, all the Lenders) and, except as otherwise specifically provided
herein, such instructions and any action or inaction pursuant thereto shall be
binding on all the Lenders. The Administrative Agent shall, in the absence of
knowledge to the contrary, be entitled to rely on any instrument or document
believed by it in good faith to be genuine and correct and to have been signed
or sent by the proper Person or Persons. Neither the Agents nor any of their
directors, officers, employees or agents shall have any responsibility to any
Borrower on account of the failure of or delay in performance or breach by any
Lender of any of its obligations hereunder or to any Lender on account of the
failure of or delay in performance or breach by any other Agent, any other
Lender or any Borrower of any of their respective obligations hereunder or in
connection herewith. The Administrative Agent may execute any and all duties
hereunder by or through agents or employees and shall be entitled to rely upon
the advice of legal counsel selected by it with respect to all matters arising
hereunder and shall not be liable for any action taken or suffered in good faith
by it in accordance with the advice of such counsel.
41
The Lenders hereby acknowledge that the Administrative Agent shall
be under no duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement unless it shall be requested in
writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided below, the Administrative Agent may resign at
any time by notifying the Lenders and the Borrowers. Upon any such resignation,
the Required Lenders shall have the right to appoint from the Lenders a
successor. If no successor shall have been so appointed by the Required Lenders
and shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint from the Lenders a
successor Administrative Agent which shall be a bank with an office in New York,
New York, having a combined capital and surplus of at least $500,000,000 or an
affiliate of any such bank, which successor shall be acceptable to Viacom (such
acceptance not to be unreasonably withheld). Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor bank, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.5 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Administrative Agent.
With respect to the Loans made by them hereunder, the Agents in
their individual capacity and not as Agents shall have the same rights and
powers as any other Lender and may exercise the same as though they were not
Agents, and the Agents and their affiliates may accept deposits from, lend money
to and generally engage in any kind of business with the Borrowers or any of
their respective Subsidiaries or any Affiliate thereof as if they were not
Agents.
Each Lender agrees (i) to reimburse the Administrative Agent in the
amount of its pro rata share (based on its Total Facility Percentage or, after
the date on which the Loans shall have been paid in full, based on its Total
Facility Percentage immediately prior to such date) of any reasonable,
out-of-pocket expenses incurred for the benefit of the Lenders by the
Administrative Agent, including reasonable counsel fees and compensation of
agents and employees paid for services rendered on behalf of the Lenders, which
shall not have been reimbursed by or on behalf of any Borrower and (ii) to
indemnify and hold harmless the Administrative Agent and any of its directors,
officers, employees or agents, in the amount of such pro rata share, from and
against any and all liabilities, taxes, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against it in
its capacity as Administrative Agent in any way relating to or arising out of
this Agreement or any action taken or omitted by it under this Agreement, to the
extent the same shall not have been reimbursed by or on behalf of Viacom;
provided, that no Lender shall be liable to the Administrative Agent or any such
director, officer, employee or agent for any portion of such liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of the Administrative Agent or any of its directors, officers,
employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon any Agent or any other
42
Lender and based on such documents and information as it shall from time to time
deem appropriate, continue to make its own decisions in taking or not taking
action under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder.
Neither the Syndication Agent, the Co-Documentation Agents, the
Joint Lead Arrangers nor any managing agent shall have any duties or
responsibilities hereunder in its capacity as such.
ARTICLE VIII
GUARANTEES
SECTION 8.1. Viacom Guarantee.
(a) Guarantee. In order to induce the Administrative Agent and the
Lenders to become bound by this Agreement and to make the Loans hereunder to the
Subsidiary Borrowers, and in consideration thereof, Viacom hereby
unconditionally and irrevocably guarantees, as primary obligor and not merely as
surety, to the Administrative Agent, for the ratable benefit of the Lenders, the
prompt and complete payment and performance by each Subsidiary Borrower when due
(whether at stated maturity, by acceleration or otherwise) of the Subsidiary
Borrower Obligations, and Viacom further agrees to pay any and all expenses
(including, without limitation, all reasonable fees, charges and disbursements
of counsel) which may be paid or incurred by the Administrative Agent or by the
Lenders in enforcing, or obtaining advice of counsel in respect of, any of their
rights under the guarantee contained in this Section 8.1(a). The guarantee
contained in this Section 8.1(a), subject to Section 8.1(e), shall remain in
full force and effect until the Subsidiary Borrower Obligations are paid in full
and the Commitments are terminated, notwithstanding that from time to time prior
thereto any Subsidiary Borrower may be free from any Subsidiary Borrower
Obligations. Viacom agrees that whenever, at any time, or from time to time, it
shall make any payment to the Administrative Agent or any Lender on account of
its liability under this Section 8.1, it will notify the Administrative Agent
and such Lender in writing that such payment is made under the guarantee
contained in this Section 8.1 for such purpose. No payment or payments made by
any Subsidiary Borrower or any other Person or received or collected by the
Administrative Agent or any Lender from any Subsidiary Borrower or any other
Person by virtue of any action or proceeding or any setoff or appropriation or
application, at any time or from time to time, in reduction of or in payment of
the Subsidiary Borrower Obligations shall be deemed to modify, reduce, release
or otherwise affect the liability of Viacom under this Section 8.1 which,
notwithstanding any such payment or payments, shall remain liable for the unpaid
and outstanding Subsidiary Borrower Obligations until, subject to Section
8.1(e), the Subsidiary Borrower Obligations are paid in full and the Commitments
are terminated. Notwithstanding any other provision herein, the maximum
liability of Viacom under this Section 8.1 shall in no event exceed the amount
which can be guaranteed by Viacom under applicable law.
(b) No Subrogation, etc.
Notwithstanding any payment or payments made by Viacom hereunder, or
any set-off or application of funds of Viacom by the Administrative Agent or any
Lender, Viacom shall not be entitled to be subrogated to any of the rights of
the Administrative Agent or any Lender against any Subsidiary Borrower or
against any collateral security or guarantee or right of
43
offset held by the Administrative Agent or any Lender for the payment of the
Subsidiary Borrower Obligations, nor shall Viacom seek or be entitled to seek
any contribution, reimbursement, exoneration or indemnity from or against any
Subsidiary Borrower in respect of payments made by Viacom hereunder, until all
amounts owing to the Administrative Agent and the Lenders by the Subsidiary
Borrowers on account of the Subsidiary Borrower Obligations are paid in full and
the Commitments are terminated. So long as the Subsidiary Borrower Obligations
remain outstanding, if any amount shall be paid by or on behalf of any
Subsidiary Borrower or any other Person to Viacom on account of any of the
rights waived in this Section 8.1, such amount shall be held by Viacom in trust,
segregated from other funds of Viacom, and shall, forthwith upon receipt by
Viacom, be turned over to the Administrative Agent in the exact form received by
Viacom (duly indorsed by Viacom to the Administrative Agent, if required), to be
applied against the Subsidiary Borrower Obligations, whether matured or
unmatured, in such order as the Administrative Agent may determine.
(c) Amendments, etc. with respect to the Subsidiary Borrower
Obligations.
Viacom shall remain obligated under this Section 8.1 notwithstanding
that, without any reservation of rights against Viacom, and without notice to or
further assent by Viacom, any demand for payment of or reduction in the
principal amount of any of the Subsidiary Borrower Obligations made by the
Administrative Agent or any Lender may be rescinded by the Administrative Agent
or such Lender, and any of the Subsidiary Borrower Obligations continued, and
the Subsidiary Borrower Obligations, or the liability of any other party upon or
for any part thereof, or any collateral security or guarantee therefor or right
of offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and this
Agreement and any other documents executed and delivered in connection herewith
may be amended, modified, supplemented or terminated, in whole or in part, as
the Required Lenders (or all Lenders, as the case may be) may deem advisable
from time to time, and any collateral security, guarantee or right of offset at
any time held by the Administrative Agent or any Lender for the payment of the
Subsidiary Borrower Obligations may be sold, exchanged, waived, surrendered or
released. Neither the Administrative Agent nor any Lender shall have any
obligation to protect, secure, perfect or insure any lien at any time held by it
as security for the Subsidiary Borrower Obligations or for the guarantee
contained in this Section 8.1 or any property subject thereto.
(d) Guarantee Absolute and Unconditional.
Viacom waives any and all notice of the creation, renewal, extension
or accrual of any of the Subsidiary Borrower Obligations and notice of or proof
of reliance by the Administrative Agent or any Lender upon the guarantee
contained in this Section 8.1 or acceptance of the guarantee contained in this
Section 8.1; the Subsidiary Borrower Obligations shall conclusively be deemed to
have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon the guarantee contained in this Section 8.1; and all
dealings between Viacom or the Subsidiary Borrowers, on the one hand, and the
Administrative Agent and the Lenders, on the other, shall likewise be
conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 8.1. Viacom waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon
Viacom or any Subsidiary Borrower with respect to the Subsidiary Borrower
Obligations. The guarantee contained in this Section 8.1 shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to
(a) the validity or enforceability of this
44
Agreement, any of the Subsidiary Borrower Obligations or any collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Administrative Agent or any Lender, (b) the
legality under applicable requirements of law of repayment by the relevant
Subsidiary Borrower of any Subsidiary Borrower Obligations or the adoption of
any requirement of law purporting to render any Subsidiary Borrower Obligations
null and void, (c) any defense, setoff or counterclaim (other than a defense of
payment or performance by the applicable Subsidiary Borrower) which may at any
time be available to or be asserted by Viacom against the Administrative Agent
or any Lender, or (d) any other circumstance whatsoever (with or without notice
to or knowledge of Viacom or any Subsidiary Borrower) which constitutes, or
might be construed to constitute, an equitable or legal discharge of any
Subsidiary Borrower for any of its Subsidiary Borrower Obligations, or of Viacom
under the guarantee contained in this Section 8.1, in bankruptcy or in any other
instance. When the Administrative Agent or any Lender is pursuing its rights and
remedies under this Section 8.1 against Viacom, the Administrative Agent or any
Lender may, but shall be under no obligation to, pursue such rights and remedies
as it may have against any Subsidiary Borrower or any other Person or against
any collateral security or guarantee for the Subsidiary Borrower Obligations or
any right of offset with respect thereto, and any failure by the Administrative
Agent or any Lender to pursue such other rights or remedies or to collect any
payments from any Subsidiary Borrower or any such other Person or to realize
upon any such collateral security or guarantee or to exercise any such right of
offset, or any release of any Subsidiary Borrower or any such other Person or of
any such collateral security, guarantee or right of offset, shall not relieve
Viacom of any liability under this Section 8.1, and shall not impair or affect
the rights and remedies, whether express, implied or available as a matter of
law, of the Administrative Agent and the Lenders against Viacom.
(e) Reinstatement.
The guarantee contained in this Section 8.1 shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Subsidiary Borrower Obligations is rescinded or must
otherwise be restored or returned by the Administrative Agent or any Lender upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of any
Subsidiary Borrower or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, any Subsidiary
Borrower or any substantial part of its property, or otherwise, all as though
such payments had not been made.
(f) Payments.
Viacom hereby agrees that any payments in respect of the Subsidiary
Borrower Obligations pursuant to this Section 8.1 will be paid to the
Administrative Agent without setoff or counterclaim in Dollars at the office of
the Administrative Agent specified in Section 9.1.
SECTION 8.2. Viacom International Guarantee.
(a) Guarantee. In order to induce the Administrative Agent and the
Lenders to become bound by this Agreement and to make the Loans hereunder to
Viacom, and in consideration thereof, Viacom International hereby
unconditionally and irrevocably guarantees, as primary obligor and not merely as
surety, to the Administrative Agent, for the ratable benefit of the Lenders, the
prompt and complete payment and performance by Viacom when due (whether at
stated maturity, by acceleration or otherwise) of the Viacom Obligations, and
45
Viacom International further agrees to pay any and all expenses (including,
without limitation, all reasonable fees, charges and disbursements of counsel)
which may be paid or incurred by the Administrative Agent or by the Lenders in
enforcing, or obtaining advice of counsel in respect of, any of their rights
under the guarantee contained in this Section 8.2(a). The guarantee contained in
this Section 8.2(a), subject to Section 8.2(e), shall remain in full force and
effect until the Viacom Obligations are paid in full and the Commitments are
terminated, notwithstanding that from time to time prior thereto Viacom may be
free from any Viacom Obligations. Viacom International agrees that whenever, at
any time, or from time to time, it shall make any payment to the Administrative
Agent or any Lender on account of its liability under this Section 8.2, it will
notify the Administrative Agent and such Lender in writing that such payment is
made under the guarantee contained in this Section 8.2 for such purpose. No
payment or payments made by Viacom or any other Person or received or collected
by the Administrative Agent or any Lender from Viacom or any other Person by
virtue of any action or proceeding or any setoff or appropriation or
application, at any time or from time to time, in reduction of or in payment of
the Viacom Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of Viacom International under this Section 8.2 which,
notwithstanding any such payment or payments, shall remain liable for the unpaid
and outstanding Viacom Obligations until, subject to Section 8.2(e), the Viacom
Obligations are paid in full and the Commitments are terminated. Notwithstanding
any other provision herein, the maximum liability of Viacom International under
this Section 8.2 shall in no event exceed the amount which can be guaranteed by
Viacom International under applicable law.
(b) No Subrogation, etc.
Notwithstanding any payment or payments made by Viacom International
hereunder, or any set-off or application of funds of Viacom International by the
Administrative Agent or any Lender, Viacom International shall not be entitled
to be subrogated to any of the rights of the Administrative Agent or any Lender
against Viacom or against any collateral security or guarantee or right of
offset held by the Administrative Agent or any Lender for the payment of the
Viacom Obligations, nor shall Viacom International seek or be entitled to seek
any contribution, reimbursement, exoneration or indemnity from or against Viacom
in respect of payments made by Viacom International hereunder, until all amounts
owing to the Administrative Agent and the Lenders by Viacom on account of the
Viacom Obligations are paid in full and the Commitments are terminated. So long
as the Viacom Obligations remain outstanding, if any amount shall be paid by or
on behalf of Viacom or any other Person to Viacom International on account of
any of the rights waived in this Section 8.2, such amount shall be held by
Viacom International in trust, segregated from other funds of Viacom
International, and shall, forthwith upon receipt by Viacom International, be
turned over to the Administrative Agent in the exact form received by Viacom
International (duly indorsed by Viacom International to the Administrative
Agent, if required), to be applied against the Viacom Obligations, whether
matured or unmatured, in such order as the Administrative Agent may determine.
(c) Amendments, etc. with respect to the Viacom Obligations.
Viacom International shall remain obligated under this Section 8.2
notwithstanding that, without any reservation of rights against Viacom
International, and without notice to or further assent by Viacom International,
any demand for payment of or reduction in the principal amount of any of the
Viacom Obligations made by the Administrative Agent or any Lender may be
rescinded by the Administrative Agent or such Lender, and any of the Viacom
46
Obligations continued, and the Viacom Obligations, or the liability of any other
party upon or for any part thereof, or any collateral security or guarantee
therefor or right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Administrative Agent or any
Lender, and this Agreement and any other documents executed and delivered in
connection herewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Required Lenders (or all Lenders, as the case may be)
may deem advisable from time to time, and any collateral security, guarantee or
right of offset at any time held by the Administrative Agent or any Lender for
the payment of the Viacom Obligations may be sold, exchanged, waived,
surrendered or released. Neither the Administrative Agent nor any Lender shall
have any obligation to protect, secure, perfect or insure any lien at any time
held by it as security for the Viacom Obligations or for the guarantee contained
in this Section 8.2 or any property subject thereto.
(d) Guarantee Absolute and Unconditional.
Viacom International waives any and all notice of the creation,
renewal, extension or accrual of any of the Viacom Obligations and notice of or
proof of reliance by the Administrative Agent or any Lender upon the guarantee
contained in this Section 8.2 or acceptance of the guarantee contained in this
Section 8.2; the Viacom Obligations shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee contained in this Section 8.2; and all dealings
between Viacom International or Viacom, on the one hand, and the Administrative
Agent and the Lenders, on the other, shall likewise be conclusively presumed to
have been had or consummated in reliance upon the guarantee contained in this
Section 8.2. Viacom International waives diligence, presentment, protest, demand
for payment and notice of default or nonpayment to or upon Viacom International
or Viacom with respect to the Viacom Obligations. The guarantee contained in
this Section 8.2 shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity or enforceability of
this Agreement, any of the Viacom Obligations or any collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Administrative Agent or any Lender, (b) the
legality under applicable requirements of law of repayment by Viacom of any
Viacom Obligations or the adoption of any requirement of law purporting to
render any Viacom Obligations null and void, (c) any defense, setoff or
counterclaim (other than a defense of payment or performance by Viacom) which
may at any time be available to or be asserted by Viacom International against
the Administrative Agent or any Lender, or (d) any other circumstance whatsoever
(with or without notice to or knowledge of Viacom International or Viacom) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of Viacom for any of its Viacom Obligations, or of Viacom
International under the guarantee contained in this Section 8.2, in bankruptcy
or in any other instance. When the Administrative Agent or any Lender is
pursuing its rights and remedies under this Section 8.2 against Viacom
International, the Administrative Agent or any Lender may, but shall be under no
obligation to, pursue such rights and remedies as it may have against Viacom or
any other Person or against any collateral security or guarantee for the Viacom
Obligations or any right of offset with respect thereto, and any failure by the
Administrative Agent or any Lender to pursue such other rights or remedies or to
collect any payments from Viacom or any such other Person or to realize upon any
such collateral security or guarantee or to exercise any such right of offset,
or any release of Viacom or any such other Person or of any such collateral
security, guarantee or right of offset, shall not relieve Viacom International
of any liability under this Section 8.2, and shall not impair
47
or affect the rights and remedies, whether express, implied or available as a
matter of law, of the Administrative Agent and the Lenders against Viacom
International.
(e) Reinstatement.
The guarantee contained in this Section 8.2 shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Viacom Obligations is rescinded or must otherwise be
restored or returned by the Administrative Agent or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of Viacom or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, Viacom or any substantial part of its
property, or otherwise, all as though such payments had not been made.
(f) Payments.
Viacom International hereby agrees that any payments in respect of
the Viacom Obligations pursuant to this Section 8.2 will be paid to the
Administrative Agent without setoff or counterclaim in Dollars at the office of
the Administrative Agent specified in Section 9.1.
(g) Release of Guarantee.
Notwithstanding the foregoing, the guarantee contained in this
Section 8.2 shall be released on the earlier of the date on which (i) all notes,
debentures and bonds now or hereafter issued by Viacom which carry a Viacom
International guarantee (the "Bonds") are paid in full and (ii) the guarantee of
Viacom International with respect to the Bonds is released. On such date, this
Section 8.2, including without limitation Section 8.2(e), shall be deemed to
have no legal effect whatsoever.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Notices.
Notices and other communications provided for herein shall be in
writing (or, where permitted to be made by telephone, shall be confirmed
promptly in writing) and shall be delivered by hand or overnight courier
service, mailed or sent by telecopier as follows:
(a) if to Viacom, to it at Viacom Inc., 1515 Broadway, New York, New
York 10036, Attention of Vice President and Treasurer (Telecopy No. (212)
860-2341), with a copy to General Counsel (Telecopy No. (212) 975-9856);
(b) if to Viacom International, to it c/o Viacom Inc., 1515
Broadway, New York, New York 10036, Attention of Vice President and Treasurer
(Telecopy No. (212) 860-2341), with a copy to General Counsel (Telecopy No.
(212) 975-9856);
(c) if to the Administrative Agent, to it at The Chase Manhattan
Bank, 270 Park Avenue, New York, New York 10017, Attention: William Rottino
(Telecopy No. 212-270-1204), with a copy to The Chase Manhattan Bank, One Chase
Manhattan Plaza, New York, New York, 10080, Attention: Camille Wilson (Telecopy
No. 212-552-5700);
48
(d) if to a Lender, to it at its address (or telecopy number) set
forth in Schedule 1.1 or in the Assignment and Acceptance pursuant to which such
Lender shall have become a party hereto; and
(e) if to a Subsidiary Borrower, to it at its address set forth in
the relevant Subsidiary Request.
Notwithstanding the foregoing, each of Viacom, any other Borrower, the
Administrative Agent and the Issuing Lender may, in its discretion, provide any
notice, report or other information to be provided under this Agreement to a
Lender by (i) electronic mail to the electronic mail address provided by such
Lender in its Administrative Questionnaire and/or (ii) through access to a web
site. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on (A) the date of receipt if delivered by hand or overnight courier
service or sent by telecopy or electronic mail, (B) the date of posting if given
by web site access, (C) the date of such telephone call, if permitted by the
terms hereof and if promptly confirmed in writing, or (D) on the date five
Business Days after dispatch by registered mail if mailed, in each case
delivered, sent or mailed (properly addressed) to such party as provided in this
Section 9.1 or in accordance with the latest unrevoked direction from such party
given in accordance with this Section 9.1.
SECTION 9.2. Survival of Agreement.
All representations and warranties made hereunder and in any
certificate delivered pursuant hereto or in connection herewith shall be
considered to have been relied upon by the Agents and the Lenders and shall
survive the execution and delivery of this Agreement and the making of the Loans
and other extensions of credit hereunder, regardless of any investigation made
by the Agents or the Lenders or on their behalf.
SECTION 9.3. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of
each Borrower, each Agent and each Lender and their respective successors and
assigns, except that Viacom shall not have the right to assign its rights or
obligations hereunder or any interest herein without the prior consent of all
the Lenders.
SECTION 9.4. Successors and Assigns.
(a) Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and assigns of such
party, and all covenants, promises and agreements by or on behalf of each
Borrower, any Agent or any Lender that are contained in this Agreement shall
bind and inure to the benefit of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations under this Agreement (including all or
a portion of its Commitment and the Loans at the time owing to it); provided,
however, that (i) except in the case of an assignment to a Lender or a Lender
Affiliate (other than if at the time of such assignment, such Lender or Lender
Affiliate would be entitled to require any Borrower to pay greater amounts under
Section 2.17(a) than if no such assignment had occurred, in which case such
assignment shall be subject to the consent requirement of this clause (i)),
Viacom and the
49
Administrative Agent must give their prior written consent to such assignment
(which consent shall not be unreasonably withheld or delayed), (ii) (x) except
in the case of assignments to any Person that is a Lender prior to giving effect
to such assignment, the amount of the aggregate Commitments and/or Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $10,000,000 and (y) the amount of
the aggregate Commitments and/or Loans retained by any assigning Lender
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$10,000,000, unless (in the case of clause (x) or (y) above) the assigning
Lender's Commitment and Loans are being reduced to $0 pursuant to such
assignment, (iii) the assignor and assignee shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a processing
and recordation fee of $3,500 and (iv) the assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire. Upon acceptance and recording pursuant to Section 9.4(e), from
and after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five Business Days after the execution thereof
(or any lesser period to which the Administrative Agent and Viacom may agree),
(A) the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement and (B) the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto (but shall continue to be entitled to the
benefits of Sections 2.12, 2.13, 2.17 and 9.5, as well as to any Fees accrued
for its account hereunder and not yet paid)).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim created
by such assigning Lender, (ii) except as set forth in clause (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or any other instrument or document
furnished pursuant hereto, or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other instrument or
document furnished pursuant hereto or the financial condition of Viacom or any
of its Subsidiaries or the performance or observance by Viacom or any of its
Subsidiaries of any of its obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Sections 3.2 and 5.1 and such other documents and
information as it has deemed appropriate to make it own credit analysis and
decision to enter into such Assignment and Acceptance; (v) such assignee will
independently and without reliance upon the Administrative Agent, such assigning
Lender or any other Agent or Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (vi) such
assignee appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Administrative Agent by the terms hereof, together with such
50
powers as are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as agent of
each Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive in the absence of manifest error and each Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by any Borrower and any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of Viacom and the Administrative
Agent to such assignment, the Administrative Agent shall (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to Viacom.
(f) Each Lender may without the consent of any Borrower or the
Agents sell participations to one or more banks, other financial institutions or
other entities (provided, that any such other entity is a not a competitor of
Viacom or any Affiliate of Viacom) all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitments
and the Loans owing to it); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (ii) the participating banks or other entities shall be
entitled to the benefit of the cost protection provisions contained in Sections
2.12, 2.13 and 2.17 to the same extent as if they were Lenders (provided, that
additional amounts payable to any Lender pursuant to Section 2.17 shall be
determined as if such Lender had not sold any such participations) and (iv) the
Borrowers, the Agents and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of each Borrower relating to the Loans and to approve
any amendment, modification or waiver of any provision of this Agreement (other
than amendments, modifications or waivers decreasing any fees payable hereunder
or the amount of principal of or the rate at which interest is payable on the
Loans, extending any scheduled principal payment date or date fixed for the
payment of interest on the Loans or of Facility Fees, increasing the amount of
or extending the Commitments or releasing the guarantee contained in Section 8.1
or 8.2 (except in accordance with Section 8.2(g)), in each case to the extent
the relevant participant is directly affected thereby).
(g) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 9.4, disclose to the assignee or participant or proposed assignee or
participant any information relating to any Borrower furnished to such Lender by
or on behalf of such Borrower; provided, that, prior to any such disclosure of
information designated by such Borrower as confidential, each such assignee
51
or participant or proposed assignee or participant shall execute a
Confidentiality Agreement whereby such assignee or participant shall agree
(subject to the exceptions set forth therein) to preserve the confidentiality of
such confidential information. A copy of each such Confidentiality Agreement
executed by an assignee shall be promptly furnished to Viacom.
(h) Notwithstanding the limitations set forth in paragraph (b)
above, (i) any Lender may at any time assign or pledge all or any portion of its
rights under this Agreement to a Federal Reserve Bank and (ii) any Lender which
is a "fund" may at any time assign or pledge all or any portion of its rights
under this Agreement to secure such Lender's indebtedness, in each case without
the prior written consent of any Borrower or the Administrative Agent; provided,
that each such assignment shall be made in accordance with applicable law and no
such assignment shall release a Lender from any of its obligations hereunder. In
order to facilitate any such assignment, each Borrower shall, at the request of
the assigning Lender, duly execute and deliver to the assigning Lender a
registered promissory note or notes evidencing the Loans made to such Borrower
by the assigning Lender hereunder.
(i) Notwithstanding anything to the contrary contained herein, any
Bank (a "Granting Bank") may grant to a special purpose funding vehicle (a
"SPC"), identified as such in writing from time to time by the Granting Bank to
the Administrative Agent and the relevant Borrower, the option to provide to
such Borrower all or any part of any Loan that such Granting Bank would
otherwise be obligated to make to such Borrower pursuant to this Agreement;
provided, that (i) nothing herein shall constitute a commitment by any SPC to
make any Loan, and (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting Bank shall
be obligated to make such Loan pursuant to the terms hereof. The making of a
Loan by an SPC hereunder shall utilize the Commitment of the Granting Bank to
the same extent, and as if, such Loan were made by such Granting Bank. Each
party hereto hereby agrees that no SPC shall be liable for any indemnity or
similar payment obligation under this Agreement (all liability for which shall
remain with the Granting Bank). In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior indebtedness
of any SPC, it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State thereof. In addition, notwithstanding anything to the contrary contained
in this Section, any SPC may (i) with notice to, but without the prior written
consent of, the relevant Borrower and the Administrative Agent and without
paying any processing fee therefor, assign all or a portion of its interests in
any Loans to the Granting Bank or to any financial institutions (consented to by
such Borrower and the Administrative Agent ) providing liquidity and/or credit
support to or for the account of such SPC to support the funding or maintenance
of Loans and (ii) disclose on a confidential basis any non-public information
relating to its Loans to any rating agency, commercial paper dealer or provider
of any surety, guarantee or credit or liquidity enhancement to such SPC. This
section may not be amended without the written consent of any SPC which has been
identified as such by the Granting Bank to the Administrative Agent and the
relevant Borrower and which then holds any Loan pursuant to this paragraph (i).
(j) Neither Viacom nor any Subsidiary Borrower shall assign or
delegate any of its rights or duties hereunder without the prior consent of all
the Lenders; provided, Viacom may assign or delegate any of its rights or duties
hereunder (excepting its rights and duties pursuant to Section 8.1) to any
Subsidiary Borrower and any Subsidiary Borrower may assign or delegate any of
its rights or duties hereunder to Viacom or (excepting Viacom International's
rights and
52
duties pursuant to 8.2) to any other Subsidiary Borrower, in each case without
the prior consent of the Lenders unless such assignment would adversely affect
the Lenders; provided, further, Viacom may and any Subsidiary Borrower may
assign or delegate any of its rights and duties hereunder pursuant to a merger
or consolidation permitted by Section 5.4(b) or (d) without the prior consent of
the Lenders.
SECTION 9.5. Expenses; Indemnity.
(a) Viacom agrees to pay all reasonable legal and other
out-of-pocket expenses incurred by JP Morgan, a division of Chase Securities
Inc., in its capacity as a Joint Lead Arranger and in its capacity as Sole
Bookrunner, and the Administrative Agent and their respective affiliates in
connection with the preparation, negotiation, execution and delivery of this
Agreement or in connection with any amendments, modifications or waivers of the
provisions hereof (whether or not the transactions hereby contemplated shall be
consummated) or incurred by any Agent, any Lender in connection with the
enforcement or protection of the rights of the Agents, the Lenders under this
Agreement or in connection with the Loans made hereunder, including, without
limitation, the reasonable fees, charges and disbursements of Simpson Thacher &
Bartlett (as set forth the in the Letter Agreement, dated as of February 2,
2001, between Simpson Thacher & Bartlett and Viacom), counsel for JP Morgan, a
division of Chase Securities Inc., in its capacity as a Joint Lead Arranger and
in its capacity as Sole Bookrunner, and the Administrative Agent , and, in
connection with any such enforcement or protection, the reasonable fees, charges
and disbursements of any other counsel for any Agent or Lender.
(b) Viacom agrees to indemnify and hold harmless each Agent, each
Lender and each of their respective directors, officers, employees, affiliates
and agents (each, an "Indemnified Person") against, and to reimburse each
Indemnified Person, upon its demand, for, any losses, claims, damages,
liabilities or other expenses ("Losses") to which such Indemnified Person
becomes subject insofar as such Losses arise out of or in any way relate to or
result from (i) the execution or delivery of this Agreement or any agreement or
instrument contemplated hereby (and any amendment hereto or thereto), the
performance by the parties hereto or thereto of their respective obligations
hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby or (ii) the use (or proposed use) of the proceeds of the
Loans, including, without limitation, Losses consisting of reasonable legal,
settlement or other expenses incurred in connection with investigating,
defending or participating in any legal proceeding relating to any of the
foregoing (whether or not such Indemnified Person is a party thereto); provided,
that the foregoing will not apply to any Losses to the extent they are found by
a final decision of a court of competent jurisdiction to have resulted from the
gross negligence or willful misconduct of such Indemnified Person. No
Indemnified Person shall be liable for any damages arising from the use by
others of Information or other materials obtained through electronic,
telecommunications or other information transmission systems (provided, that the
foregoing will not apply to any Losses to the extent they are found by a final
decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of such Indemnified Person).
(c) The provisions of this Section 9.5 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any investigation made by or on
53
behalf of any Agent or Lender. All amounts under this Section 9.5 shall be
payable on written demand therefor.
SECTION 9.6. Right of Setoff.
If an Event of Default shall have occurred and be continuing, each
Agent and each Lender is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Agent or Lender to or for the
credit or the account of any Borrower against any of and all the obligations of
such Borrower now or hereafter existing under this Agreement or the
Administrative Agent Fee Letter held by such Agent or Lender which shall be due
and payable. The rights of each Agent and each Lender under this Section 9.6 are
in addition to other rights and remedies (including other rights of setoff)
which such Agent or Lender may have.
SECTION 9.7. APPLICABLE LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.8. Waivers; Amendment.
(a) No failure or delay of any Agent or any Lender in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Agents and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies which they would otherwise have. No waiver
of any provision of this Agreement or consent to any departure by any Borrower
from any such provision shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Borrower in any case shall entitle any Borrower to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement in writing entered into by
the Borrowers and the Required Lenders; provided, however, that no such
agreement shall (i) reduce the amount or extend the scheduled date of maturity
of any Loan or of any installment thereof, interest or fee payable hereunder or
extend the scheduled date of any payment thereof or increase the amount or
extend the expiration date of any Commitment of any Lender, in each case without
the prior written consent of each Lender directly affected thereby; (ii) amend,
modify or waive any provision of this Section 9.8(b), or reduce the percentage
specified in the definition of "Required Lenders", release the guarantee
contained in Section 8.1 or 8.2 (except in accordance with Section 8.2(g)) or
consent to the assignment or delegation by Viacom or any Subsidiary Borrower of
any of its rights and obligations under this Agreement (except (A) by Viacom
(excepting its rights and duties pursuant to Section 8.1) to any Subsidiary
Borrower or (B) by any Subsidiary Borrower to Viacom or (excepting Viacom
International's rights and duties pursuant to Section 8.2) to any other
Subsidiary Borrower and as set forth in Section 9.4(j)), in each case without
the prior written consent of all the Lenders; or (iii) amend, modify or waive
any provision of Article VII without the prior written consent of each Agent
affected thereby;
54
provided, further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent hereunder in such capacity
without the prior written consent of the Administrative Agent.
SECTION 9.9. Entire Agreement.
This Agreement (together with the Subsidiary Borrower Designations
and the Subsidiary Borrower Requests) constitutes the entire contract between
the parties relative to the subject matter hereof. Any previous agreement among
the parties with respect to the subject matter hereof is superseded by this
Agreement. Nothing in this Agreement, expressed or implied, is intended to
confer upon any party other than the parties hereto any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
SECTION 9.10. Waiver of Jury Trial.
Each party hereto hereby waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect of any
litigation directly or indirectly arising out of, under or in connection with
this Agreement. Each party hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
waiver and (b) acknowledges that it and the other parties hereto have been
induced to enter into this Agreement by, among other things, the mutual waivers
and certifications in this Section 9.10.
SECTION 9.11. Severability.
In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 9.12. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which constitute an original but all of which when taken together shall
constitute but one contract, and shall become effective as provided in Section
9.3.
SECTION 9.13. Headings
Article and Section headings and the Table of Contents used herein
are for convenience of reference only, are not part of this Agreement and are
not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION 9.14. Jurisdiction; Consent to Service of Process.
(a) Each Borrower hereby irrevocably and unconditionally submits,
for itself and its Property, to the nonexclusive jurisdiction of any New York
State court or Federal court of the United States of America sitting in New York
City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
55
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State court or, to the
extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Each Subsidiary Borrower designates and
directs Viacom at its offices at 1515 Broadway, New York, New York 10036, as its
agent to receive service of any and all process and documents on its behalf in
any legal action or proceeding referred to in this Section 9.14 in the State of
New York and agrees that service upon such agent shall constitute valid and
effective service upon such Subsidiary Borrower and that failure of Viacom to
give any notice of such service to any Subsidiary Borrower shall not affect or
impair in any way the validity of such service or of any judgment rendered in
any action or proceeding based thereon. Nothing in this Agreement shall affect
any right that any Agent or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement against any Borrower or its Properties in
the courts of any jurisdiction.
(b) Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State or
Federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.1. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.15. Confidentiality.
(a) Each Lender agrees to keep confidential and not to disclose (and
to cause its affiliates, officers, directors, employees, agents and
representatives to keep confidential and not to disclose) and, at the request of
Viacom (except as provided below or if such Lender is required to retain any
Confidential Information (as defined below) pursuant to customary internal or
banking practices, bank regulations or applicable law), promptly to return to
Viacom or destroy the Confidential Information and all copies thereof, extracts
therefrom and analyses or other materials based thereon, except that such Lender
shall be permitted to disclose Confidential Information (i) to such of its
officers, directors, employees, agents, affiliates and representatives as need
to know such Confidential Information in connection with such Lender's
participation in this Agreement, each of whom shall be informed by such Lender
of the confidential nature of the Confidential Information and shall agree to be
bound by the terms of this Section 9.15; (ii) to the extent required by
applicable laws and regulations or by any subpoena or similar legal process or
requested by any Governmental Authority or agency having jurisdiction over such
Lender; provided, however, that, except in the case of disclosure to bank
regulators or examiners in accordance with customary banking practices, if
legally permitted written notice of each instance in which Confidential
Information is required or requested to be disclosed shall be furnished to
Viacom not less than 30 days prior to the expected date of such disclosure or,
if 30 days' notice is not practicable under the circumstances, as promptly as
practicable under the circumstances; (iii) to the extent such Confidential
Information (A) is or becomes publicly available other than as a result of a
breach of this Agreement, (B) becomes available to such Lender on a
non-confidential basis from a source other than a party to this Agreement or any
other party known to such Lender to be bound by an agreement containing a
provision similar to this Section 9.15 or
56
(C) was available to such Lender on a non-confidential basis prior to this
disclosure to such Lender by a party to this Agreement or any other party known
to such Lender to be bound by an agreement containing a provision similar to
this Section 9.15; (iv) as permitted by Section 9.4(g); or (v) to the extent
Viacom shall have consented to such disclosure in writing. As used in this
Section 9.15, "Confidential Information" shall mean any materials, documents or
information furnished by or on behalf of any Borrower in connection with this
Agreement designated by or on behalf of such Borrower as confidential.
(b) Each Lender (i) agrees that, except to the extent the conditions
referred to in subclause (A), (B) or (C) of clause (iii) of paragraph (a) above
have been met and as provided in paragraph (c) below, (A) it will use the
Confidential Information only in connection with its participation in this
Agreement and (B) it will not use the Confidential Information in connection
with any other matter or in a manner prohibited by any law, including, without
limitation, the securities laws of the United States and (ii) understands that
breach of this Section 9.15 might seriously prejudice the interest of the
Borrowers and that the Borrowers are entitled to equitable relief, including an
injunction, in the event of such breach.
(c) Notwithstanding anything to the contrary contained in this
Section 9.15, each Agent and each Lender shall be entitled to retain all
Confidential Information for so long as it remains an Agent or a Lender to use
solely for the purposes of servicing the credit and protecting its rights
hereunder.
SECTION 9.16. Waiver of Notice of Termination Period.
By its execution of this Agreement, each Lender hereby waives any
right to notice of termination, or any notice period with respect to the
termination, of any Existing Credit Agreement that such Lender may have had
under such Existing Credit Agreement.
[Remainder of the page left blank intentionally; Signature page to follow.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
VIACOM INC.
By: /s/ Robert G. Freedline
----------------------------------------
Name: Robert G.Freedline
Title: Vice President and Treasurer
VIACOM INTERNATIONAL INC.
By: /s/ Robert G. Freedline
----------------------------------------
Name: Robert G.Freedline
Title: Vice President and Treasurer
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Lender
By: /s/ Thomas H. Kozlark
----------------------------------------
Name: Thomas H. Kozlark
Title: Vice President
SALOMON SMITH BARNEY INC., as
Syndication Agent and as a Lender
By: /s/ Carolyn A. Kee
----------------------------------------
Name: Carolyn A. Kee
Title: Attorney-in-Fact
FLEET NATIONAL BANK, as Co-Documentation
Agents and as a Lender
By: /s/ Laura Neenan
----------------------------------------
Name: Laura Neenan
Title: Assistant Vice President
BANK OF AMERICA, N.A., as Co-Documentation
Agents and as a Lender
By: /s/ Thomas J. Kane
----------------------------------------
Name: Thomas J. Kane
Title: Vice President
CITIBANK, N.A., as a Lender,
By: /s/ Elizabeth H. Minnella
----------------------------------------
Name: Elizabeth H. Minnella
Title: Vice President
THE SUMITOMO BANK, LIMITED, as a Lender,
By: /s/ C. Michael Garrido
----------------------------------------
Name: C. Michael Garrido
Title: Senior Vice President
THE BANK OF NEW YORK, as a Lender,
By: /s/ John R. Ciulla
----------------------------------------
Name: John R. Ciulla
Title: Vice President
THE BANK OF TOKYO-MITSUBISHI, LTD., NY
BRANCH, as a Lender,
By: /s/ J.J. Wallace, Jr.
----------------------------------------
Name: J.J. Wallace, Jr.
Title: Executive Vice President
DEUTSCHE BANK A.G., NEW YORK BRANCH
and/or CAYMAN ISLANDS BRANCH, as a Lender,
By: /s/ William W. McGinty
----------------------------------------
Name: William W. McGinty
Title: Director
By: /s/ Irene Egues
----------------------------------------
Name: Irene Egues
Title: Vice President
THE DAI-ICHI KANGYO BANK, LTD. (dba
Mizuho Financial Group), as a Lender,
By: /s/ Marvin Mirel Lazar
----------------------------------------
Name: Marvin Mirel Lazar
Title: Vice President
THE FUJI BANK, LIMITED, as a Lender,
By: /s/ Nobuoki Koike
----------------------------------------
Name: J.J. Wallace, Jr.
Title: Vice President & Senior Team Leader
THE INDUSTRIAL BANK OF JAPAN, LIMITED
(d.b.a. Mizuho Financial Group),
as a Lender,
By: /s/ William Kennedy
----------------------------------------
Name: William Kennedy
Title: Senior Vice President
THE BANK OF NOVA SCOTIA, as a Lender,
By: /s/ Vincent J. Fitzgerald, Jr.
----------------------------------------
Name: Vincent J. Fitzgerald, Jr.
Title: Authorized Signatory
BARCLAYS BANK PLC, as a Lender,
By: /s/ Daniele Iacovone
----------------------------------------
Name: Daniele Iacovone
Title: Director
THE SANWA BANK, LIMITED, NEW YORK BRANCH,
as a Lender,
By: /s/ Jean-Michel Fatovic
----------------------------------------
Name: Jean-Michel Fatovic
Title: Vice President
DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN
BRANCHES, as a Lender,
By: /s/ Laura G. Fazio
----------------------------------------
Name: Laura G. Fazio
Title: First Vice President
By: /s/ Brian Schneider
----------------------------------------
Name: Brian Schneider
Title: Assistant Vice President
MELLON BANK, N.A., as a Lender,
By: /s/ Raghunatha Reddy
----------------------------------------
Name: Raghunatha Reddy
Title: Lending Officer
CREDIT SUISSE FIRST BOSTON, as a Lender,
By: /s/ Kristin Lepri
----------------------------------------
Name: Kristin Lepri
Title: Associate
By: /s/ Bill O'Daly
----------------------------------------
Name: Bill O'Daly
Title: Vice President
BANK ONE, NA, as a Lender,
By: /s/ Curtis R. Worthington
----------------------------------------
Name: Curtis R. Worthington
Title: Corporate Banking Officer
THE ROYAL BANK OF SCOTLAND PLC, as a Lender,
By: /s/ David Lucas
----------------------------------------
Name: David Lucas
Title: Senior Vice President
WACHOVIA BANK, N.A., as a Lender,
By: /s/ J. Timothy Toler
----------------------------------------
Name: J. Timothy Toler
Title: Senior Vice President
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH, as a Lender,
By: /s/ Lucie L. Guernsey
----------------------------------------
Name: Lucie L. Guernsey
Title: Director
By: /s/ Pascal Kabemba
----------------------------------------
Name: Pascal Kabemba
Title: Associate Director
LLOYDS TSB BANK PLC, as a Lender,
By: /s/ Windsor R. Davies
----------------------------------------
Name: Windsor R. Davies
Title: Director, Corporate Bank, USA
By: /s/ David Rodway
----------------------------------------
Name: David Rodway
Title: Vice President
THE NORINCHUKIN BANK, NEW YORK BRANCH,
as a Lender,
By: /s/ Yoshiro Niiro
----------------------------------------
Name: Yoshiro Niiro
Title: General Manager
SUNTRUST BANK, as a Lender,
By: /s/ W. David Wisdom
----------------------------------------
Name: W. David Wisdom
Title: Vice President
ABN AMRO BANK NV, as a Lender,
By: /s/ David Carrington
----------------------------------------
Name: David Carrington
Title: Group Vice President
By: /s/ Thomas Cha
----------------------------------------
Name: Thomas Cha
Title: Corporate Banking Officer
UBS AG, STAMFORD BRANCH, as a Lender,
By: /s/ Dorothy L. McKinley
----------------------------------------
Name: Dorothy L. McKinley
Title: Director Banking Product Services, US
By: /s/ Wilfred V. Saint
----------------------------------------
Name: Wilfred V. Saint
Title: Associate Director Banking Product
Services, US
MERRILL LYNCH BANK USA, as a Lender,
By: /s/ Raymond J. Dardano
----------------------------------------
Name: Raymond J. Dardano
Title: Senior Credit Officer
NATIONAL AUSTRALIA BANK LIMITED, A.C.N.
004044937, as a Lender,
By: /s/ Eduardo Salazar
----------------------------------------
Name: Eduardo Salazar
Title: Head of Media & Entertainment
THE TOKAI BANK, LIMITED - NEW YORK BRANCH,
as a Lender,
By: /s/ Shinichi Nakatani
----------------------------------------
Name: Shinichi Nakatani
Title: Assistant General Manager
EXHIBIT 21
Subsidiaries of Viacom Inc. are listed below.
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
1020917 Ontario Inc. Canada (Ontario)
13 Radio Corporation Delaware
176309 Canada Inc. Canada (Federal)
2 Day Video, Inc. Texas
2 Day Video, Inc. of Georgia Georgia
24th Floor Inc. Canada (Ontario)
2853-5912 Quebec Inc. Canada (Quebec)
2gether Productions Inc. Canada (B.C.)
3247236 Canada, Inc. Canada
37th Floor Productions Inc. Delaware
5555 Communications Inc. Delaware
559733 British Columbia Ltd. Canada (B.C.)
730806 Alberta Ltd. Canada (Alberta)
730995 Ontario Inc. Canada (Ontario)
779991 Ontario Inc. Canada (Ontario)
90210 Productions, Inc. California
A.S. Payroll Company California
Aaron Spelling Productions, Inc. California
Abaco Farms, Limited Bahamas
Abandon Productions Inc. Canada (Ontario)
Acorn Pipe Line Company Texas
Acorn Properties, Inc. Texas
Acorn Trading Company Texas
Addax Music Co., Inc. Delaware
Administradora de Anuncios Comerciales, S.A .de C.A. Mexico
Aetrax International Corporation Delaware
After School Productions Inc. Delaware
Agency Films Inc. Canada (Ontario)
Ages Electronics, Inc. Delaware
Ages Entertainment Software, Inc. Delaware
Page 2
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Ainsa de Mexico, S.A. de C.V. Mexico
Alaska Oil Company (Partnership) Florida
Alaska Oil Company, Inc. Florida
All Media Inc. Delaware
Alta Broadcasting Company California
Amadea Film Productions, Inc. Texas
Amanda Productions Inc. Canada (Ontario)
American Journal Inc. New York
Anastasia Advertising Art, Inc. Florida
Antics G.P. Inc. Delaware
Antics Inc. Delaware
Antilles Oil Company, Inc. Puerto Rico
A-R Acquisition Corp. Delaware
Ardnasillagh Ltd. Ireland
Are We Having Fun Yet? Productions Canada (B.C.)
Aros N.V. Switzerland
Around the Block Productions, Inc. Delaware
Artcraft Productions Inc. Delaware
Aspenfair Music, Inc. California
Atlanta Bus Shelters Georgia
Atlantic Associates, Inc. Delaware
Atlantic Home Video Delaware
Atlantic Prospect, Inc. New York
Audio House, Inc., The California
Avery Productions Inc. Delaware
Bahamas Underwriters Services Limited Bahamas
Bardwire Inc. Delaware
Bay County Energy Systems, Inc. Delaware
Bay Resource Management, Inc. Delaware
Belhaven Limited Bahamas
BET Acquisition Corp. Delaware
BET Arabesque, LLC Delaware
BET Creations, Inc. Delaware
BET Development Company Delaware
Page 3
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
BET Documentaries, LLC. Delaware
BET Event Productions, LLC Delaware
BET Holdings Inc. Delaware
BET Innovations Publishing, Inc. Delaware
BET Interactive, LLC Delaware
BET International, Inc. Delaware
BET Music Soundz, Inc. Delaware
BET Pictures II Development & Production, Inc. Delaware
BET Pictures II Distribution, Inc. Delaware
BET Pictures II, LLC Delaware
BET Publications, LLC Delaware
BET Radio, L.L.C. Delaware
BET Satellite Services, Inc. Delaware
BET Services, Inc. Delaware
BET Television Productions, LLC Delaware
Beta Theatres Inc. Delaware
Beverlyfax Music, Inc. California
Big Planet Video, Inc. New Hampshire
Big Shows Inc. Delaware
Big Ticket Music Inc. Delaware
Big Ticket Pictures Inc. Delaware
Big Ticket Productions Inc. Delaware
Big Ticket Television Inc. Delaware
Black Entertainment Television, Inc. Delaware
Black Rock Enterprises, Inc. New York
Blockbuster Airships, Inc. Delaware
Blockbuster Amphitheater Corporation Delaware
Blockbuster Argentina S.A. Argentina
Blockbuster Australia Pty Ltd. Australia
Blockbuster BEI Taiwan Ltd. Taiwan
Blockbuster Canada Co. Canada (Nova Scotia)
Blockbuster Canada Inc. Delaware
Blockbuster Computer Systems Corporation Florida
Blockbuster de Mexico, S.A. de C.V. Mexico
Page 4
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Blockbuster Distribution, Inc. Delaware
Blockbuster Entertainment (Ireland) Ltd. Ireland
Blockbuster Entertainment Corporation Delaware
Blockbuster Entertainment Limited United Kingdom
Blockbuster Express (Scotland) Ltd. United Kingdom
Blockbuster Express Limited United Kingdom
Blockbuster Global Services Inc. Delaware
Blockbuster Holding Denmark A/S Denmark
Blockbuster Inc. Delaware
Blockbuster International Spain Inc. Delaware
Blockbuster International Taiwan B.V. Netherlands
Blockbuster Investments LLC Delaware
Blockbuster Mid-America, Inc. Delaware
Blockbuster On-Line Services, Inc. Delaware
Blockbuster Park Lands, Inc. Florida
Blockbuster Park, Inc. Delaware
Blockbuster SC Video Operating Corporation Delaware
Blockbuster Services Inc. Delaware
Blockbuster Technology Holding Corporation Delaware
Blockbuster UK Limited United Kingdom
Blockbuster Uruguay Limitada Uruguay
Blockbuster Video (New Zealand) Ltd. New Zealand
Blockbuster Video Acquisition Corp. Delaware
Blockbuster Video Denmark A/S Denmark
Blockbuster Video Espana, SpA Spain
Blockbuster Video International Corporation (Chile) Limitada Chile
Blockbuster Video Italy, Inc. Delaware
Blockbuster Video Jylland A/S Denmark
Blockbuster Video Superstores (Australia) Pty Limited Australia
Blockbuster.com Holding Inc.. Delaware
Blockbuster.com LLC Delaware
Blue Cow Inc. Delaware
BN Productions Inc. Delaware
Bombay Hook Limited Delaware
Page 5
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Bonneville Wind Corporation Utah
Box Italy LLC, The Delaware
Box Italy S.R.L., The Italy
Box Worldwide LLC, The Delaware
Branded Productions Inc. California
Bruin Music Company Delaware
BS Hotel, Inc. Delaware
BTC Films Inc. Canada (Ontario)
Bulletin Company Delaware
Butterick Road Productions Inc. Canada (Ontario)
C & W Land Corporation New Jersey
California Holdings LLC Delaware
Caloil Inc. Canada
Cania Productions Inc. Canada (Ontario)
Capital Equipment Leasing Limited United Kingdom
Caroline Film Productions, Inc. California
CATV Enterprises, Inc. New York
Cayman Overseas Reinsurance Association Cayman Islands
CBS Broadcast International Asia Inc. New York
CBS Broadcast International of Canada, Ltd. Canada (Ontario)
CBS Broadcast Services, Ltd. England
CBS Broadcasting Inc. New York
CBS Cable Networks, Inc. Delaware
CBS Canada Co. Canada (Nova Scotia)
CBS Communications Services, Inc. Delaware
CBS Corporation Pennsylvania
CBS Dallas Media, Inc. Delaware
CBS Dallas Ventures, Inc. Texas
CBS FMX Stereo, Inc. New York
CBS Mass Media Corporation Delaware
CBS News Communications Inc. New York
CBS Overseas Inc. New York
CBS Pageants, Inc. Delaware
CBS Sports Asia Inc. New York
Page 6
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
CBS Survivor Productions, Inc. Delaware
CBS TeleNoticias do Brasil Ltda. Brazil
CBS Worldwide Inc. Delaware
Central Fidelity Insurance Company Vermont
Centurion Satellite Broadcast Inc. Delaware
Century Entertainment Ltd. United Kingdom
CG Films Inc. Canada (Ontario)
Charlotte Amphitheater Corporation Delaware
Charmac, Inc. Florida
Chartcom, Inc. Delaware
Charter Barge Company New York
Charter Caribbean Company Florida
Charter Crude Oil Company Texas
Charter Crude Oil Trading Company Texas
Charter Futures Trading Company Texas
Charter International Development Co. Florida
Charter International Finance N.V. Netherlands Antilles
Charter International Oil Company Texas
Charter Marine Transportation Inc. Delaware
Charter Media Company Delaware
Charter Oil (Alaska), Inc. Florida
Charter Oil (Bahamas) Limited Bahamas
Charter Oil (Bahamas), Inc. Florida
Charter Oil (International), Inc. Florida
Charter Oil Company Florida
Charter Oil Services, Inc. Texas
Charter Oil Specialities Limited Bahamas
Charter Publishing Company Delaware
Chazo Productions Inc. Delaware
Chenille International B.V. Netherlands
CI Productions Inc. Canada (B.C.)
Cinamerica Service Corporation Delaware
Cinema Dominicana S.A. Dominican Republic
Cinematic Arts B.V. Netherlands
Page 7
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
City Lights Productions Inc. Canada (B.C.)
Cityvision Investments Ltd. United Kingdom
Cityvision PLC United Kingdom
Cityvision Videotheken Ges.M.B.H. Austria
Classless Inc. Delaware
Climate Productions Inc. Canada (B.C.)
Cloverleaf Productions Inc. Delaware
COFI Credit Corporation Delaware
Columbia Television, Inc. New York
Columbus Circle Films Inc. Delaware
Communities IP Holdings, Inc. Delaware
Communities LP Holdings, Inc. Delaware
Compelling Music Corporation California
Corporate Fleet Leasing Company, Inc. Delaware
Country Entertainment, Inc. Delaware
Country Music Television, Inc. Tennessee
Country Network Enterprises, Inc. Delaware
country.com, Inc. Delaware
Creative Film Services Inc. Delaware
D.E.J. Productions Inc. Delaware
Day Reagan Productions Inc. Canada (Ontario)
Dayton Press, Inc. Florida
DC Films Inc. Canada (B.C.)
Debate Films Inc. Canada (Ontario)
Defenders Productions Inc. Canada (Ontario)
Delaware Blue Steel Inc. Delaware
Delaware Resource Beneficiary, Inc. Delaware
Delaware Resource Lessee Trust Delaware
Delaware Resource Management, Inc. Delaware
Design-Graphics, Inc. Florida
Desilu Productions, Inc. Delaware
Direct Court Productions, Inc. Delaware
Doghouse Films Inc. Canada (B.C.)
DT Productions Inc. Canada (B.C.)
Page 8
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Dutchess Resource Management, Inc. Delaware
Dynamic Soap, Inc. California
Eagle Direct Inc. Delaware
Eighth Century Corporation Delaware
Elite Productions Inc. Delaware
Energy Development Associates, Inc. Delaware
Ensign Music Corporation Delaware
EPI Music Company California
Erica Film Productions, Inc. California
Ersh, Inc. New York
Evergreen Programs, Inc. New York
EWB Corporation Delaware
Family Entertainment Centers, Inc. Florida
Famous Music Corporation Delaware
Famous Music Publishing Germany GmbH & Co KG Germany
Famous Music Publishing Limited United Kingdom
Famous Orange Productions Inc. Delaware
Famous Players Films Inc. Canada (Federal)
Famous Players Inc. Canada (Federal)
Famous Players International B.V. Netherlands
Famous Players Investments B.V. Netherlands
Festival Inc. Delaware
Fifty-Sixth Century Antrim Iron Company, Inc. Delaware
Film Intex Corporation Delaware
Filmcraft Productions Inc. Delaware
Films Paramount S.A. France
First Hotel Investment Corporation Delaware
First Westinghouse Capital Corporation Delaware
FLC Holding Corp. Florida
Focus Video Pty. Ltd. Australia
Fortin Industries, Inc. Delaware
Forty-Fourth Century Corporation Delaware
Four Crowns, Inc. Delaware
French Street Management Inc. Delaware
Page 9
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Fried Worms Productions Inc. Delaware
Front Street Management Inc. Delaware
Future General Corporation Delaware
G & W Leasing Company Delaware
G & W Natural Resources Company, Inc. Delaware
Games Animation Inc. Delaware
Games Exchange Inc. Delaware
Games Productions Inc. Delaware
Gateway Fleet Company Delaware
GC Productions Inc. Delaware
Giraudy S.A. France
Gladwin of Indiana, Inc. Indiana
GLD Holdings L.L.C. Delaware
Glendale Property Corp. Delaware
Global Film Distributors B.V. Netherlands
Glory Productions Inc. Delaware
Gloucester Titanium Company, Inc. Delaware
GNS Productions Inc. Delaware
Go Mass Media Finance S.A. France
Go Mass Media S.A. France
Go Outdoor Systems Holdings S.A. France
Golden Communications, Inc. Michigan
Grace Productions LLC Delaware
Grammar Productions Inc. Delaware
Gramps Company, Inc., The Delaware
Grand Bahama Petroleum Company Limited Bahamas
Grande Alliance Co. Ltd. Cayman Islands
Granite Productions, Inc. California
Great American Entertainment Motion Pictures, Inc. California
Great American Entertainment Television, Inc. California
Green Tiger Press, Inc. California
Group W Television Stations, Inc. Delaware
GS Films Inc. Canada (Ontario)
Gulf & Western do Brazil Industria e Comercio Limitada Brazil
Page 10
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Gulf & Western Indonesia, Inc. Delaware
Gulf & Western Intercontinental Investments N.V. Netherlands Antilles
Gulf & Western International Finance N.V. Switzerland
Gulf & Western International N.V. Netherlands Antilles
Gulf & Western Limited Bahamas
Gulf DTH Production United Kingdom
Gulf DTH Services United Kingdom
Hamilton Projects, Inc. New York
Hardwood Productions Inc. Canada (Ontario)
Harvester Press Limited, The United Kingdom
Heartland Productions Inc. Canada (Alberta)
Hemisphere Broadcasting Corporation Delaware
HFM Productions Inc. Canada (Ontario)
High Command Productions Limited United Kingdom
Hit Radio, Inc. New York
House of Yes Productions Inc. Delaware
HZH Company Delaware
Image Edit, Inc. Delaware
Imagine Radio, Inc. California
IMR Acquisition Corp. Delaware
Independent Petrochemical Corporation Ohio
INFCO Network Inc. Delaware
Infinity Broadcasting Corporation Delaware
Infinity Broadcasting Corporation of Atlanta Delaware
Infinity Broadcasting Corporation of Baltimore New York
Infinity Broadcasting Corporation of Boston Delaware
Infinity Broadcasting Corporation of California Delaware
Infinity Broadcasting Corporation of Chesapeake Delaware
Infinity Broadcasting Corporation of Chicago Delaware
Infinity Broadcasting Corporation of Dallas Delaware
Infinity Broadcasting Corporation of Dallas II Delaware
Infinity Broadcasting Corporation of Detroit Delaware
Infinity Broadcasting Corporation of Florida Delaware
Page 11
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Infinity Broadcasting Corporation of Ft. Worth Delaware
Infinity Broadcasting Corporation of Georgia Delaware
Infinity Broadcasting Corporation of Glendale Delaware
Infinity Broadcasting Corporation of Illinois Delaware
Infinity Broadcasting Corporation of Los Angeles Delaware
Infinity Broadcasting Corporation of Maryland Delaware
Infinity Broadcasting Corporation of Michigan Delaware
Infinity Broadcasting Corporation of New York Delaware
Infinity Broadcasting Corporation of Northern California Delaware
Infinity Broadcasting Corporation of Pennsylvania Pennsylvania
Infinity Broadcasting Corporation of Philadelphia Delaware
Infinity Broadcasting Corporation of San Antonio Texas
Infinity Broadcasting Corporation of San Francisco Delaware
Infinity Broadcasting Corporation of Tampa Delaware
Infinity Broadcasting Corporation of Texas Delaware
Infinity Broadcasting Corporation of Washington Delaware
Infinity Broadcasting Corporation of Washington, D.C. Delaware
Infinity Holdings Corp. of Chesapeake Delaware
Infinity Holdings Corp. of Ft. Worth Delaware
Infinity Holdings Corp. of Georgia Delaware
Infinity Holdings Corp. of Massachusetts Delaware
Infinity Holdings Corp. of Orlando Delaware
Infinity KFRC-FM, Inc. Delaware
Infinity KOAI-FM Holdings Corporation Delaware
Infinity KOAI-FM Licensee Corporation Delaware
Infinity KOAI-FM, Inc. Delaware
Infinity Media Corporation Delaware
Infinity Network, Inc. Delaware
Infinity of Chesapeake Licensee Corporation Delaware
Infinity of Ft. Worth Licensee Corporation Delaware
Infinity of Georgia Licensee Corporation Delaware
Infinity Outdoor of Florida Holding Co. Delaware
Infinity Outdoor of Florida, Inc. Florida
Infinity Outdoor, Inc. Delaware
Page 12
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Infinity Radio Holdings, Inc. Virginia
Infinity Radio Inc. Delaware
Infinity Radio License Inc. Delaware
Infinity Radio of Austin Inc. Delaware
Infinity Radio of Charlotte License Inc. Virginia
Infinity Radio of Kansas City License Inc. Virginia
Infinity Radio of North Carolina License Inc. Virginia
Infinity Radio of Pittsburgh License Inc. Virginia
Infinity Radio of Portland Inc. Delaware
Infinity Radio of Sacramento License Inc. Virginia
Infinity Radio of Seattle License Inc. Virginia
Infinity Radio of St. Louis License Inc. Virginia
Infinity Radio of Washington License Inc. Virginia
Infinity Technical Services Inc. Delaware
Infinity Ventures, Inc. Delaware
Infinity WLIF, Inc. Maryland
Infinity WLIF-AM, Inc. Maryland
Infinity WOAZ-FM, Inc. Massachusetts
Infinity WPGC (AM), Inc. Delaware
Inside Edition Inc. New York
International Overseas Film Services, Inc. Delaware
International Overseas Productions, Inc. California
International Raw Materials Limited Bahamas
Interstitial Programs Inc. Delaware
Irvine Games Inc. Delaware
Irvine Games USA Inc. Delaware
Jeopardy Productions Inc. Canada (B.C.)
Jerry's Outdoor Advertising, Inc. Florida
Jiffy Billboards, Inc. Florida
Joseph Productions Inc. Delaware
Justice Productions Inc. Canada (Ontario)
K.W.M. Inc. Delaware
Katled Systems Inc. Delaware
Kilo Mining Corporation Pennsylvania
Page 13
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
King World Animation Inc. California
King World Corporation Delaware
King World Development Inc. California
King World Direct Inc. Delaware
King World FSC Corporation Virgin Islands
King World Media Sales Inc. Delaware
King World Merchandising, Inc. Delaware
King World Productions, Inc. Delaware
King World Studios West Inc. California
King World/GSN Inc. Delaware
King World/LR Inc. California
Kings Island Company Delaware
KSLQ, Inc. Missouri
KTVT Broadcasting Company, L.P. Texas
KUTV Holdings, Inc. Delaware
KW Development Inc. California
KWTS Productions Inc. California
L23 Productions Inc. Canada (Ontario)
Ladies Man Productions Inc. Canada (Ontario)
Ladies Man Productions USA Inc. Delaware
Large Ticket Songs Inc. Delaware
Laurel Entertainment, Inc. Delaware
LDI Limited United Kingdom
Level Nine Productions Inc. Canada (B.C.)
Levitt Property Managers, Inc. California
List Productions Inc. Canada (Ontario)
Lizarb B.V. Netherlands
Long Road Productions Illinois
Low Key Productions Inc. Delaware
LS Productions Inc. Canada (Ontario)
LT Holdings Inc. Delaware
Maarten Investerings Partnership New York
Made To Love Productions Inc. Canada (Ontario)
Magic Hour Productions, Ltd. Canada (B.C.)
Page 14
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Magical Motion Pictures Inc. Delaware
Magicam, Inc. Delaware
Major Video National Advertising Council Corporation Nevada
Major Video Super Stores, Inc. Nevada
Marathon Holdings Inc. Delaware
Mars Film Produzione S.P.A. Italy
Matlock Company, The Delaware
Matt Houston Company, The California
Mattalex Corporation Delaware
Maxim Video Ltd. United Kingdom
Maxmedia, Inc. Florida
Mediacom Inc. Canada
Melrose Productions Inc. California
Merlot Film Productions, Inc. California
Merritt Inc. Delaware
Metro Poster Advertising Ltd. Ireland
Metrobus Advertising Limited United Kingdom
Michaela Productions Inc. Delaware
Montgomery Acquisition, Inc. Delaware
Movie Channel Production UK Ltd., The United Kingdom
MTV Animation Inc. Delaware
MTV Asia Development Company Inc. Delaware
MTV Asia LDC Cayman Islands
MTV Asia Ownership One LDC Cayman Islands
MTV Asia Ownership Two LDC Cayman Islands
MTV Asia Ventures Co. Cayman Islands
MTV Australia Inc. Delaware
MTV Europe Delaware
MTV Hong Kong Limited Hong Kong
MTV India Development Company Inc. Delaware
MTV India LDC Cayman Islands
MTV India Private Limited India
MTV Networks AB Sweden
MTV Networks B.V. Netherlands
Page 15
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
MTV Networks Company Delaware
MTV Networks de Mexico S. de R.L. de C.V. Mexico
MTV Networks Enterprises Inc. Delaware
MTV Networks Europe Inc. Delaware
MTV Networks Global Services Inc. Delaware
MTV Networks GmbH Germany
MTV Networks Latin America Inc. Delaware
MTV Networks SARL France
MTV Networks Shopping Inc. Delaware
MTV Networks South Africa Inc. Delaware
MTV Networks Srl Italy
MTV Russia Holdings Inc. Delaware
MTV SA LDC Cayman Islands
MTV Songs Inc. Delaware
MTV Taiwan LDC Cayman Islands
MTVBVI Inc. Delaware
MTVi Group, Inc., The Delaware
MTVi Group, L.P., The Delaware
MTVN Online Inc. Delaware
MTVN Online Partner I Inc. Delaware
MTVN Online Partner I LLC Delaware
MTVN Shopping Inc. Delaware
Multi Mineral Corporation Texas
Music By Nickelodeon Inc. Delaware
Music By Video Inc. Delaware
N.V. Alrecon Netherlands
Naked City Productions Inc. Canada (Ontario)
National Advertising Company Delaware
Nepco (Florida), Inc. Florida
Nepco Energy Corporation New York
Nepco Exploration (U.K.) Limited United Kingdom
Nepco Petroleum Limited Canada
Network Enterprises, Inc. Tennessee
Network Talent, LLC Tennessee
Page 16
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Networks Media Services Ltd. United Kingdom
Neutronium Inc.. Delaware
New CORAL Ltd. Cayman Islands
New England Petroleum Corporation New York
New Jersey Zinc Exploration Company, The Delaware
New Leaf Entertainment Corporation Delaware
New Providence Assurance Company Limited Bahamas
New York Subways Advertising Co., Inc. Arizona
Newdon Productions Illinois
Nick At Nite's TV Land Retromercials Inc. Delaware
Nickelodeon Verwaltung GmbH Germany
Nickelodeon Animation Studios Inc. Delaware
Nickelodeon Australia Inc. Delaware
Nickelodeon Brasil Inc. Delaware
Nickelodeon Direct Inc. Delaware
Nickelodeon Global Network Ventures Inc. Delaware
Nickelodeon Huggings U.K. Limited United Kingdom
Nickelodeon India Corporation Delaware
Nickelodeon International Ltd. United Kingdom
Nickelodeon Magazines Inc. Delaware
Nickelodeon Movies Inc. Delaware
Nickelodeon Online Inc. Delaware
Nicki Film Productions, Inc. California
Night Falls Productions Inc. Delaware
North Shore Productions Inc. California
NTA Films, Inc. New York
NTA, Inc. New York
Number One FSC Ltd. US Virgin Islands
NV Broadcasting (Canada), Inc. Canada
NV International, Inc. Georgia
O & W Corporation Tennessee
O Good Songs Company California
Page 17
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
O'Connor Combustor Corporation California
Oil Company, The Delaware
OM/TV Productions Inc. Delaware
One and Only Joint Venture, The New York
OS Bus, Inc. Georgia
OS Florida, Inc. Florida
OSI Sports Marketing, Inc. Delaware
OSI Tall Wall Media, LLC California
Oswego Barge Corporation Delaware
Our Home Productions Inc. Delaware
Outatown Productions Inc. Delaware
Outdoor Communications, Inc. Florida
Outdoor Entertainment, Inc. Tennessee
Outdoor Images Limited United Kingdom
Outdoor Management Network, Inc. California
Outdoor Systems (New York), Inc. New York
Outdoor Systems Electrical Corp. New York
Outdoor Systems Mexido, S.A. de C.V. Mexico
Outdoor Systems, Inc. Delaware
Overseas Services B.V. Netherlands
Paramount (PDI) Distribution Inc. Delaware
Paramount Advertiser Services Inc. Delaware
Paramount Asia Inc. Delaware
Paramount British Pictures Limited United Kingdom
Paramount Canadian Productions, Inc. Delaware
Paramount Channel Partnership, The United Kingdom
Paramount Communications Technology Group Inc. Delaware
Paramount Digital Entertainment Inc. Delaware
Paramount Film Production (Deutschland) GmbH Germany
Paramount Film Services Ltd. United Kingdom
Paramount Films B.V. Netherlands
Paramount Films of Australia Inc. Delaware
Paramount Films of China, Inc. Delaware
Paramount Films of Egypt, Inc. Delaware
Page 18
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Paramount Films of India, Ltd. Delaware
Paramount Films of Italy, Inc. New York
Paramount Films of Lebanon, Inc. New York
Paramount Films of Pakistan Ltd. New York
Paramount Films of Southeast Asia Inc. Delaware
Paramount General Entertainment Australia Inc. Delaware
Paramount Home Entertainment (Denmark) IS Denmark
Paramount Home Entertainment (France) SAS France
Paramount Home Entertainment (Germany) GmBH Germany
Paramount Home Entertainment (New Zealand) Limited New Zealand
Paramount Home Entertainment (Norway) ANS Norway
Paramount Home Entertainment (Scandinavia) AB Sweden
Paramount Home Entertainment (Spain) SL Spain
Paramount Home Entertainment (UK) United Kingdom
Paramount Home Entertainment Australia Pty Ltd. Australia
Paramount Home Entertainment B.V. Netherlands
Paramount Home Entertainment Inc. Delaware
Paramount Home Entertainment International (Holdings) B.V. Netherlands
Paramount Home Entertainment International B.V. Netherlands
Paramount Home Entertainment International Limited United Kingdom
Paramount Images Inc. Delaware
Paramount International Netherlands B.V. Netherlands
Paramount LAPTV Inc. Delaware
Paramount Music Corporation Delaware
Paramount Overseas Productions, Inc. Delaware
Paramount Parks Experience Inc. Nevada
Paramount Parks Inc. Delaware
Paramount Parks International B.V. Netherlands
Paramount Pay TV Limited United Kingdom
Paramount Pictures (Australia) Pty. Limited Australia
Paramount Pictures (Canada) Inc. Canada (Ontario)
Paramount Pictures (U.K.) Limited. United Kingdom
Paramount Pictures Corporation Delaware
Paramount Pictures Corporation (Canada) Inc. Canada (Ontario)
Page 19
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Paramount Production Support Inc. Delaware
Paramount Productions Service Corporation Delaware
Paramount Productions, Inc. Canada (Ontario)
Paramount Show Services International LDC Cayman Islands
Paramount Stations Group Inc. Virginia
Paramount Stations Group of Fort Worth/Dallas Inc. Virginia
Paramount Stations Group of Houston Inc. Virginia
Paramount Stations Group of Miami Inc. Delaware
Paramount Stations Group of Oklahoma City LLC Delaware
Paramount Stations Group of Philadelphia Inc. Delaware
Paramount Stations Group of Pittsburgh Inc. Delaware
Paramount Stations Group of Washington Inc. Virginia
Paramount Stations Group of Wichita Inc. Delaware
Paramount Television International Services, Ltd. Bermuda
Paramount Television Limited United Kingdom
Paramount Television Service, Inc. Delaware
Paramount Worldwide Productions Inc. Delaware
Para-Sac Music Corporation Delaware
Park Court Productions, Inc. Delaware
Part-Time Productions Inc. Delaware
PCCGW Company, Inc. Delaware
PCI Canada Inc. Delaware
PCI Network Partner II Inc. Delaware
PCI Network Partner Inc. Delaware
Peak FSC, Ltd. Bermuda
Peppercorn Productions, Inc. Tennessee
Permutation Productions Inc. Delaware
Pet II Productions Inc. Delaware
PMV Productions Inc. Delaware
Pocket Books of Canada, Ltd. Canada (Federal)
Possum Point Incorporated Delaware
PPC Film Management GmbH Germany
Premiere House, Inc. Delaware
Prentice-Hall International (U.K.) Ltd. United Kingdom
Page 20
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Preye, Inc. California
Prospect Company Ltd. Cayman Islands
Proxy Music Corporation California
PSG of PHA Inc. Virginia
PT Productions Inc. Delaware
Publishing FSC Ltd. US Virgin Islands
Quebec Oil Refinery, Ltd. Canada
Quemahoning Coal Processing Company Pennsylvania
R.G.L. Realty Limited United Kingdom
Radio Systems of Philadelphia, Inc. Pennsylvania
Raianna Productions Inc. Canada (Federal)
Rat Race USA Inc. Delaware
Raven Media LLC Delaware
Real TV Music Inc. Delaware
Reality Check Productions Inc. Delaware
Remote Productions Inc. Delaware
Republic Distribution Corporation Delaware
Republic Entertainment Inc. Delaware
Republic Pictures Corporation of Canada, Ltd. Canada
Republic Pictures Enterprises, Inc. Delaware
Republic Pictures Netherlands Antilles N.V. Netherlands Antilles
Republic Pictures Productions, Inc. California
RH Productions Inc. California
Ripple Vale Holdings, Limited US Virgin Islands
Ritz Video Film Hire Ltd. United Kingdom
ROA Media Corp. Florida
Roadshow Advertising Ltd. Ireland
Rocks, Inc. Delaware
Rocky Mount Town Associates Limited Partnership Delaware
RR Films Inc. Canada (Alberta)
RTV News Inc. Delaware
RTV News Music Inc. Delaware
RWS Productions Inc. Canada (B.C.)
Sagittarius Broadcasting Corporation New York
Page 21
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Salm Enterprises, Inc. California
San Francisco Broadcasters, Inc. California
San Francisco Walls, Inc. California
San Juan Resource Management, Inc. Delaware
Satellite Holdings Inc. Delaware
Saucon Valley Iron and Railroad Company, The Pennsylvania
Scarab Publishing Corporation Delaware
Scott Mattson Farms, Inc. Florida
SDI Raven LLC Delaware
Season Four Sentinel Productions Inc. Canada (B.C.)
Season Three Seven Days Productions Inc. Canada (B.C.)
Season Three Viper Productions Inc. Canada (B.C.)
Season Two Seven Days Productions Inc. Canada (B.C.)
Season Two Soul Food Productions Inc. Canada (Ontario)
SEG Equity Holdings, Inc. Delaware
Sentinel Productions Inc. Canada (B.C.)
Servicios Administrativos America, S.A. de C.V. Mexico
Seven-Up Bottling Co. of Visalia California
SF Films Inc. Canada (Ontario)
SFI Song Company Delaware
Sher Ventures, Inc. New York
Ship House, Inc. Florida
Show Works Productions Inc. Delaware
Showtime Networks Inc. Delaware
Showtime Networks Inc. (U.K.) Delaware
Showtime Networks Middle East Inc. Delaware
Showtime Networks Satellite Programming Company California
Showtime Online Inc. Delaware
Showtime Satellite Networks Inc. Delaware
Showtime/Sundance Holding Company Inc. Delaware
SIFO One Inc. Delaware
SIFO Two Inc. Delaware
Simon & Schuster (Australia) Pty. Limited Australia
Simon & Schuster (U.K.) Limited United Kingdom
Page 22
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Simon & Schuster Global Services Inc. Delaware
Simon & Schuster International Inc. Delaware
Simon & Schuster Japan K.K. Japan
Simon & Schuster Limited United Kingdom
Simon & Schuster of Canada (1976) Ltd. Canada (Federal)
Simon & Schuster, Inc. New York
Sirens Productions Inc. Canada (Ontario)
SJ Films Inc. Canada (Ontario)
Sky Blue Investments, Limited Jersey
SNI Development Corp. Delaware
Snow Day Productions Inc. Canada (Alberta)
SOAF Films Inc. Canada (Ontario)
Soapmusic Company Delaware
Solar Service Company Delaware
SonicNet L.L.C. Delaware
Southeastern Home Video, Inc. Delaware
Spark Network Services, Inc. Delaware
Spelling Daytime Songs Inc. Delaware
Spelling Daytime Television Inc. Delaware
Spelling Entertainment Group Inc. Delaware
Spelling Entertainment Inc. Delaware
Spelling Films Inc. Delaware
Spelling Films Music Inc. Delaware
Spelling Pictures Inc. Delaware
Spelling Satellite Networks, Inc. California
Spelling Television (Canada) Inc. Canada (B.C.)
Spelling Television Inc. Delaware
Spelling Television Quebec Inc. Canada (Federal)
Spider Films Inc. Canada (B.C.)
Sport Pages Productions Inc. Canada (B.C.)
Spy Productions Inc. Canada (Ontario)
St. Francis Ltd. Cayman Islands
St. Ives Company Ltd. Cayman Islands
St. Johns Realty Investors Massachusetts
Page 23
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Starfish Productions Inc. Florida
Stargate Acquisition Corp. Delaware
State of Mind Inc. Delaware
Station Holdings B, Inc. Delaware
Stranglehold Productions, Inc. California
Streak Productions Inc. Canada (Ontario)
Sudbury (Joint Venture) Canada (Federal)
Sunn Classic Pictures, Inc. Utah
Sunset Beach Productions, Inc. Delaware
Superstar Productions Inc. Canada (Ontario)
Superstar Productions USA Inc. Delaware
Sweetwater Productions Inc. Canada (B.C.)
T & R Payroll Company Delaware
T.V. Factory, Inc., The New York
Talent Court Productions, Inc. Delaware
Taylor Forge Memphis, Inc. Delaware
TC Productions Inc. Delaware
TDI (BP) Limited United Kingdom
TDI (FB) Limited United Kingdom
TDI Advertising Limited United Kingdom
TDI Buses Limited United Kingdom
TDI France Holding SAS France
TDI Holdings Limited United Kingdom
TDI Holland B.V. Netherlands
TDI International, Inc. Delaware
TDI Mail Holdings Limited Northern Ireland
TDI Metro (NI) Limited Northern Ireland
TDI Metro, Ltd. Ireland
TDI Transit Advertising Limited United Kingdom
TDI Worldwide, Inc. Delaware
Tele-Vu Ltee. Canada (Federal)
They Productions Inc. Delaware
Things of the Wild Songs Inc. Delaware
Thinner Productions, Inc. Delaware
Page 24
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Third Century Company Delaware
Thirteenth Century Corporation Delaware
Thirtieth Century Corporation Delaware
Three Productions Inc. Canada (B.C.)
Thunder, Inc. Delaware
Timber Purchase Company Florida
Times Square Displays, LLC New York
Titus Productions, Inc. California
TMI International B.V. Netherlands
TMRG, Inc. Delaware
TNN Classic Sessions, Inc. Delaware
TNN Productions, Inc. Delaware
Toe-To-Toe Productions Inc. Delaware
Topper Productions, Inc. California
Torand Payroll Company Delaware
Torand Productions Inc. Delaware
Total Warehouse Services Corporation Delaware
Trans-American Resources, Inc. Delaware
Transportation Displays Incorporated Delaware
Tredegars Home Entertainment Limited United Kingdom
TRF III Entertainment, Inc. Delaware
Triohurst Limited. United Kingdom
True Productions Inc. Canada (B.C.)
TS Video, Inc. Louisiana
TSM Services Inc. Delaware
Tube Mill, Inc. Alabama
Tunes By Nickelodeon Inc. Delaware
TV Scoop Inc. Delaware
Two of Us Films Inc. Canada (Ontario)
Two Productions, Inc. Delaware
UCGI, Inc. Delaware
UI Video Stores, Inc. Colorado
United Paramount Network (UPN) Delaware
Universal American Corporation Delaware
Page 25
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Uptown Productions Inc. Delaware
Uro, S.A. Spain
Valdez Oil Inc. Delaware
VE Development Company Delaware
VE Drive Inc. Delaware
VE Television Inc. Delaware
VH-1 Television GmbH & Co OHG Germany
VH-1 Television Verwaltung GmbH Germany
VHONE Inc. Delaware
VI Services Corporation Delaware
VIA Aircraft Management Inc. Delaware
Viacom (Deutschland) Beteiligungen GmbH Germany
Viacom A.G. Switzerland
Viacom Animation of Korea Inc. Delaware
Viacom Asia Inc. Delaware
Viacom Brasil Holdings Limitada Brazil
Viacom Broadcasting of Seattle Inc. Delaware
Viacom Broadcasting West Inc. Delaware
Viacom Camden Lock Inc. Delaware
Viacom Canada Limited Canada (Federal)
Viacom Canadian Productions Inc. Canada (Ontario)
Viacom Consumer Products Inc. Delaware
Viacom Consumer Products Ltd. United Kingdom
Viacom Corporate Services Inc. Delaware
Viacom DBS Inc. Delaware
Viacom Enterprises Canada Ltd. Canada (Federal)
Viacom Entertainment Canada Inc. Canada (Ontario)
Viacom Executive Services Corporation Delaware
Viacom Film Funding Company Inc. Delaware
Viacom Finanz AG Switzerland
Viacom First Run Development Company Inc. Delaware
Viacom First Run Limited Delaware
Viacom Global Services Inc. Delaware
Viacom Group Finance Limited United Kingdom
Page 26
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Viacom HA! Holding Company Delaware
Viacom Holdings (Germany) B.V. Germany
Viacom Holdings (Germany) II B.V. Germany
Viacom IDA Inc. Delaware
Viacom International (Netherlands) B.V. Netherlands
Viacom International Canada Ltd. Canada (Ontario)
Viacom International Holdings B.V. Netherlands
Viacom International Inc. Delaware
Viacom International Inc. Political Action Committee Corporation New York
Viacom International Limited United Kingdom
Viacom International Pty. Limited Australia
Viacom Internet Services Inc. Delaware
Viacom IRB Acquisition Inc. Delaware
Viacom Japan Inc. New York
Viacom K-Band Inc. Delaware
Viacom Limited New Zealand
Viacom Middle East Holdings VOF Netherlands Antilles
Viacom Networks Europe Inc. Delaware
Viacom Networks Europe Ltd. Netherlands
Viacom Networks Inc. New York
Viacom Networks UK Limited United Kingdom
Viacom Phoenix Inc. Delaware
Viacom Pictures Development Company Delaware
Viacom Pictures Inc. Delaware
Viacom Pictures Movie Music Inc. Delaware
Viacom Pictures Overseas Inc. Delaware
Viacom Pictures Songs Inc. Delaware
Viacom PNW Sports Inc. Delaware
Viacom Productions Inc. Delaware
Viacom Properties Inc. Delaware
Viacom Realty Corporation Delaware
Viacom Receivables Funding I Corporation Delaware
Viacom Receivables Funding II Corporation Delaware
Viacom Retail Stores, Inc. Delaware
Page 27
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Viacom Satellite News Inc. Delaware
Viacom Services Inc. Delaware
Viacom Shopping Inc. Delaware
Viacom Telecommunications (D.C.) Inc. Delaware
Viacom UK Limited United Kingdom
Viacom VHENO GmbH Germany
Viacom Video-Audio Communicacoes Limitada Brazil
Viacom VOF Netherlands Antilles
Viacom World Wide Ltd. New York
Via-Sac Music Inc. Delaware
Viasem Brasil Holdings Limitada Brazil
Video Club (G.B.) Limited United Kingdom
Video Store (Jersey) Limited Channel Islands
Viper Productions Inc. Canada (B.C.)
VISI Services Inc. Delaware
Vision Productions, Inc. New York
VJK Inc. Delaware
VNM Inc. Delaware
VP Direct Inc. Delaware
VP Programs Inc. California
VSC Communications Inc. Delaware
VSC Compositions Inc. New York
VSC Music Inc. New York
Washington Outdoor Advertising, Inc. Washington
Washington Transit Advertising, Inc. Washington
Waste Resource Energy, Inc. Delaware
WBCE Corporation New York
WCC FSC I, Inc. Delaware
WCC FSC III, Inc. Virgin Islands
WCC FSC IX, Inc. Virgin Islands
WCC FSC V, Inc. Bermuda
WCC FSC VIII, Inc. Virgin Islands
Wcc Project Corp. Delaware
Wcc Soledad I, Inc. Delaware
Page 28
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
Wcc Soledad II, Inc. Delaware
Western Row Properties, Inc. Ohio
Westinghouse (New Zealand) Ltd. New Zealand
Westinghouse Beverage Group Delaware
Westinghouse Canada Holdings L.L.C. Delaware
Westinghouse CBS Holding Company, Inc. Delaware
Westinghouse Electric Corporation Delaware
Westinghouse Electric GmbH, Birsfelden Switzerland
Westinghouse Environmental Management Company of Ohio, Inc. Delaware
Westinghouse Foreign Sales Corporation Barbados
Westinghouse Hanford Company Delaware
Westinghouse Holdings Corporation Delaware
Westinghouse Idaho Nuclear Company, Inc. Delaware
Westinghouse Investment Corporation Delaware
Westinghouse Irish Holdings, Limited Ireland
Westinghouse Licensing Corporation Pennsylvania
Westinghouse LMG, Inc. Delaware
Westinghouse Pictures, Inc. Delaware
Westinghouse Reinvestment Company L.L.C. Delaware
Westinghouse Wireless Communications Products, SRL de CV Mexico
Westinghouse World Investment Corporation Delaware
Westside Amphitheater Corporation, The Arizona
W-F Productions, Inc. Delaware
Wheatsheaf Books Limited United Kingdom
Wilshire Court Productions, Inc. Delaware
Wilshire Entertainment Inc. Delaware
Wilshire/Hauser Company Delaware
Wilson Century Theatres Limited Canada (Ontario)
Wilson-Curtis, Inc. Missouri
WL Films Inc. Canada (Ontario)
WMJX, Inc. Florida
Woburn Insurance Ltd. Bermuda
Woodhead-Faulkner (Publishers) Limited United Kingdom
World Entertainment Corp. New York
Page 29
PLACE OF INCORPORATION
----------------------
SUBSIDIARY NAME OR ORGANIZATION
- --------------- ---------------
World Sports Enterprises Tennessee
World Volleyball League, Inc. New York
Worldvision Enterprises (France) S.A.R.L. France
Worldvision Enterprises (United Kingdom), Ltd. New York
Worldvision Enterprises de Venezuela Venezuela
Worldvision Enterprises Latino-Americana, S.A. Panama
Worldvision Enterprises of Australia, Pty., Ltd. Australia
Worldvision Enterprises of Canada, Limited New York
Worldvision Enterprises, GmbH Germany
Worldvision Enterprises, Inc. New York
Worldvision Filmes do Brasil, Ltda. Brazil
Worldvision Foreign Sales Corporation Virgin Islands
Worldvision Home Video, Inc. New York
Worldwide Productions, Inc. Delaware
WPIC Corporation Delaware
WT Animal Music Inc. Delaware
WT Productions Inc. Delaware
WV Productions, Inc. Delaware
WVIT Inc. Delaware
Xtra-Vision Ltd. Ireland
Yellams LDC Cayman Islands
York Resource Energy Systems, Inc. Delaware
Young Reader's Press, Inc. Delaware
YP Productions Inc. Canada (Ontario)
Exhibit 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 (No. 333-52728) of Viacom Inc. and in the Registration
Statements on Form S-8 (No.333-42987, No. 333-34125, No. 33-41934, No. 33-56088,
No. 33-59049, No.33-59141, No. 33-55173, No. 33-55709, No. 33-60943,
No. 333-36440, No. 333-88613 and No. 333-55346) of Viacom Inc. of our report
dated February 12, 2001, except for the first paragraph of Note 2, which is as
of February 21, 2001, included in Item 8 of this Form 10-K.
PricewaterhouseCoopers LLP
New York, New York
March 28, 2001
EXHIBIT 24
VIACOM INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
each of Michael D. Fricklas and Mark C. Morril, severally and not jointly, to be
his true lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 (and any amendments thereto); granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully for all intents
and purposes as he might or could do in person hereby ratifying and confirming
all that the said attorney-in-fact and agent, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name this 21st day of March,
2001.
/s/ George S. Abrams
------------------------------
George S. Abrams
VIACOM INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
each of Michael D. Fricklas and Mark C. Morril, severally and not jointly, to be
his true lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 (and any amendments thereto); granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully for all intents
and purposes as he might or could do in person hereby ratifying and confirming
all that the said attorney-in-fact and agent, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name this 21st day of March,
2001.
/s/ David R. Andelman
------------------------------
David R. Andelman
VIACOM INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
each of Michael D. Fricklas and Mark C. Morril, severally and not jointly, to be
his true lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 (and any amendments thereto); granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully for all intents
and purposes as he might or could do in person hereby ratifying and confirming
all that the said attorney-in-fact and agent, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name this 21st day of March,
2001.
/s/ George H. Conrades
------------------------------
George H. Conrades
VIACOM INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
each of Michael D. Fricklas and Mark C. Morril, severally and not jointly, to be
his true lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 (and any amendments thereto); granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully for all intents
and purposes as he might or could do in person hereby ratifying and confirming
all that the said attorney-in-fact and agent, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name this 21st day of March,
2001.
/s/ Philippe P. Dauman
------------------------------
Philippe P. Dauman
VIACOM INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
each of Michael D. Fricklas and Mark C. Morril, severally and not jointly, to be
his true lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 (and any amendments thereto); granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully for all intents
and purposes as he might or could do in person hereby ratifying and confirming
all that the said attorney-in-fact and agent, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name this 21st day of March,
2001.
/s/ William H. Gray III
------------------------------
William H. Gray III
VIACOM INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
each of Michael D. Fricklas and Mark C. Morril, severally and not jointly, to be
his true lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 (and any amendments thereto); granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully for all intents
and purposes as he might or could do in person hereby ratifying and confirming
all that the said attorney-in-fact and agent, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name this 21st day of March,
2001.
/s/ Jan Leschly
------------------------------
Jan Leschly
VIACOM INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
each of Michael D. Fricklas and Mark C. Morril, severally and not jointly, to be
his true lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 (and any amendments thereto); granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully for all intents
and purposes as he might or could do in person hereby ratifying and confirming
all that the said attorney-in-fact and agent, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name this 21st day of March,
2001.
/s/ David T. McLaughlin
------------------------------
David T. McLaughlin
VIACOM INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
each of Michael D. Fricklas and Mark C. Morril, severally and not jointly, to be
his true lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 (and any amendments thereto); granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully for all intents
and purposes as he might or could do in person hereby ratifying and confirming
all that the said attorney-in-fact and agent, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name this 21st day of March,
2001.
/s/ Ken Miller
------------------------------
Ken Miller
VIACOM INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
each of Michael D. Fricklas and Mark C. Morril, severally and not jointly, to be
his true lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 (and any amendments thereto); granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully for all intents
and purposes as he might or could do in person hereby ratifying and confirming
all that the said attorney-in-fact and agent, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name this 21st day of March,
2001.
/s/ Leslie Moonves
------------------------------
Leslie Moonves
VIACOM INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
each of Michael D. Fricklas and Mark C. Morril, severally and not jointly, to be
his true lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 (and any amendments thereto); granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully for all intents
and purposes as he might or could do in person hereby ratifying and confirming
all that the said attorney-in-fact and agent, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name this 21st day of March,
2001.
/s/ Brent D. Redstone
------------------------------
Brent D. Redstone
VIACOM INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
each of Michael D. Fricklas and Mark C. Morril, severally and not jointly, to be
her true lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for her and in her name, place and stead, in any and all
capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 (and any amendments thereto); granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully for all intents
and purposes as she might or could do in person hereby ratifying and confirming
all that the said attorney-in-fact and agent, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name this 21st day of March,
2001.
/s/ Shari Redstone
------------------------------
Shari Redstone
VIACOM INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
each of Michael D. Fricklas and Mark C. Morril, severally and not jointly, to be
his true lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 (and any amendments thereto); granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully for all intents
and purposes as he might or could do in person hereby ratifying and confirming
all that the said attorney-in-fact and agent, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name this 21st day of March,
2001.
/s/ Frederic V. Salerno
------------------------------
Frederic V. Salerno
VIACOM INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
each of Michael D. Fricklas and Mark C. Morril, severally and not jointly, to be
his true lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 (and any amendments thereto); granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully for all intents
and purposes as he might or could do in person hereby ratifying and confirming
all that the said attorney-in-fact and agent, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name this 21st day of March,
2001.
/s/ William Schwartz
------------------------------
William Schwartz
VIACOM INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
each of Michael D. Fricklas and Mark C. Morril, severally and not jointly, to be
his true lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 (and any amendments thereto); granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully for all intents
and purposes as he might or could do in person hereby ratifying and confirming
all that the said attorney-in-fact and agent, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name this 21st day of March,
2001.
/s/ Ivan Seidenberg
------------------------------
Ivan Seidenberg
VIACOM INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
each of Michael D. Fricklas and Mark C. Morril, severally and not jointly, to be
her true lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for her and in her name, place and stead, in any and all
capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 (and any amendments thereto); granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully for all intents
and purposes as she might or could do in person hereby ratifying and confirming
all that the said attorney-in-fact and agent, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name this 21st day of March,
2001.
/s/ Patty Stonesifer
------------------------------
Patty Stonesifer
VIACOM INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
each of Michael D. Fricklas and Mark C. Morril, severally and not jointly, to be
his true lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 (and any amendments thereto); granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully for all intents
and purposes as he might or could do in person hereby ratifying and confirming
all that the said attorney-in-fact and agent, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto signed my name this 21st day of March,
2001.
/s/ Robert D. Walter
------------------------------
Robert D. Walter
