Exhibit 1.1
Blockbuster Inc.
24,800,000 Shares1
Class A Common Stock
($.01 par value)
U.S. Underwriting Agreement
New York, New York
August __, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
As U.S. Representatives of the several
U.S. Underwriters,
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Blockbuster Inc., a corporation organized under the laws of
Delaware (the "Company"), proposes to sell to the several U.S. Underwriters, for
whom the U.S. Representatives are acting as representatives, 24,800,000 shares
of class A common stock, $.01 par value (the "Common Stock"), of the Company
(said shares to be issued and sold by the Company being hereinafter called the
"U.S. Underwritten Securities"). The Company also proposes to grant to the U.S.
Underwriters an option to purchase up to 3,720,000 additional shares of Common
Stock to cover over-allotments (the "U.S. Option Securities" and together with
the U.S. Underwritten Securities, the "U.S. Securities"). It is understood that
the Company is concurrently entering into the International Underwriting
Agreement providing for the sale by the Company of an aggregate of 6,200,000
shares of Common Stock (said shares to be sold by the Company pursuant to the
International Underwriting Agreement being hereinafter called the "International
Underwritten Securities") and providing for the grant to the International
Underwriters of an option to purchase from the Company up to 930,000 additional
shares of Common Stock (the "International Option Securities"). It is further
understood and agreed that
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1. Plus an option to purchase from the Company up to 3,720,000 additional
U.S. Securities to cover over-allotments.
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the International Underwriters and the U.S. Underwriters have entered into an
Agreement Between U.S. Underwriters and International Underwriters dated the
date hereof (the "Agreement Between U.S. Underwriters and International
Underwriters"), pursuant to which, among other things, the International
Underwriters may purchase from the U.S. Underwriters a portion of the U.S.
Securities to be sold pursuant to this U.S. Underwriting Agreement and the U.S.
Underwriters may purchase from the International Underwriters a portion of the
International Securities to be sold pursuant to the International Underwriting
Agreement. To the extent there are no additional U.S. Underwriters listed on
Schedule I other than you, the term U.S. Representatives as used in this U.S.
Underwriting Agreement shall mean you, as U.S. Underwriters, and the terms U.S.
Representatives and U.S. Underwriters shall mean either the singular or plural
as the context requires. The use of the neutral in this U.S. Underwriting
Agreement shall include the feminine and masculine wherever appropriate. Certain
terms used in this U.S. Underwriting Agreement are defined in Section 17 hereof.
As part of the offering contemplated by this Agreement,
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. has agreed to reserve out of the shares set forth
opposite its name on Schedule I to this Agreement, up to 1,550,000 shares, for
sale to certain employees, officers, and directors of the Company and other
parties associated with and designated by the Company (collectively,
"Participants"), as set forth in the Prospectuses under the heading
"Underwriting" (the "Directed Share Program"). The shares to be sold by ▇▇▇▇▇▇▇
▇▇▇▇▇ Barney Inc. pursuant to the Directed Share Program (the "Directed Shares")
will be sold by ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. pursuant to this Agreement at the
public offering price. Any Directed Shares not orally confirmed for purchase by
any Participants by the end of the business day on which this Agreement is
executed will be offered to the public by ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. as set forth
in the Prospectuses.
1. REPRESENTATIONS AND WARRANTIES.
(i) The Company represents and warrants to, and agrees with,
each U.S. Underwriter as set forth below in this Section 1.
(a) The Company has prepared and filed with the Commission a
registration statement on Form S-1 (file number 333-77899), including
related Preliminary Prospectuses, for registration under the Act of the
offering and sale of the Securities. The Company has filed five
amendments thereto, including the related Preliminary Prospectuses,
each of which has previously been furnished to you. The Company will
next file with the Commission either (1) prior to the Effective Date of
such registration statement, a further amendment to such registration
statement (including the form of final prospectuses) or (2) after the
Effective Date of such registration statement, final prospectuses in
accordance with Rules 430A and 424(b). In the case of clause (2), the
Company has included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A Information)
required by the Act and the rules and regulations promulgated
thereunder to be included in such registration statement and the
Prospectuses. As filed, such amendment and form of final prospectuses,
or such final prospectuses, shall contain all Rule 430A Information,
together with all other such required information, and, except to the
extent the U.S. Representatives shall agree in
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writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectuses) as the Company has advised you, prior
to the Execution Time, will be included or made therein.
It is understood that two forms of prospectuses are to be used
in connection with the offering and sale of the Securities: one form of
prospectus relating to the U.S. Securities, which are to be offered and
sold to United States and Canadian Persons, and one form of prospectus
relating to the International Securities, which are to be offered and
sold to persons other than United States and Canadian Persons. The U.S.
Prospectus and the International Prospectus are identical except for
the outside front cover page and the outside back cover page.
(b) On the Effective Date, the Registration Statement did or
will, and when the Prospectuses are first filed (if required) in
accordance with Rule 424(b) and on the Closing Date (as defined in this
U.S. Underwriting Agreement) and on any date on which Option Securities
are purchased, if such date is not the Closing Date (a "settlement
date"), each Prospectus (and any supplements thereto) will, comply in
all material respects with the applicable requirements of the Act and
the rules and regulations promulgated thereunder; on the Effective Date
and at the Execution Time, the Registration Statement did not or will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order
to make the statements therein not misleading; each Preliminary
Prospectus as of its date, did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, each Prospectus, if not filed
pursuant to Rule 424(b), will not, and on the date of any filing
pursuant to Rule 424(b) and on the Closing Date and any settlement
date, each Prospectus (together with any supplement thereto) will not,
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that the Company makes no representations or
warranties as to the information contained in or omitted from the
Registration Statement, or the Prospectuses (or any supplement thereto)
in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion in the Registration
Statement or the Prospectuses (or any supplement thereto).
(c) Each of the Company and its subsidiaries (i) has been duly
incorporated and is validly existing as a corporation in good standing,
if applicable, under the laws of the jurisdiction in which it is
chartered or organized with full corporate power and authority to own
or lease, as the case may be, and to operate its properties and conduct
its business as described in the Prospectuses, except where the failure
to be duly incorporated, validly existing or in good
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standing, as applicable, individually and in the aggregate with all
other such failures to be duly incorporated, validly existing or in
good standing would not have a material adverse effect on the business,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, and (ii) is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction which requires such qualification, except
where the failure to be qualified or in good standing, as applicable,
individually and in the aggregate with all other such failures to be
qualified or in good standing would not have a material adverse effect
on the business, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole.
(d) All the outstanding shares of capital stock of each
subsidiary have been duly authorized and validly issued and are fully
paid and nonassessable, except where the failure to be duly authorized,
validly issued, fully paid and nonassessable, individually and in the
aggregate with all other such failures to be duly authorized, validly
issued, fully paid and nonassessable would not have a material adverse
effect on the business, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole and, except as
otherwise set forth in the Prospectuses, all outstanding shares of
capital stock of the subsidiaries are owned by the Company either
directly or through wholly owned subsidiaries free and clear of any
security interest or any other claims, liens or encumbrances, except
where the existence of any such security interest, claim, lien or
encumbrance, individually and in the aggregate with all other such
security interests, claims, liens and encumbrances would not have a
material adverse effect on the business, financial condition or results
of operations of the Company and its subsidiaries, taken as a whole.
(e) The Company's authorized equity capitalization is as set
forth in the Prospectuses; the capital stock of the Company conforms in
all material respects to the description thereof contained in the
Prospectuses; the outstanding shares of common stock have been (and, on
the Closing Date, the outstanding shares of class B common stock will
be) duly authorized and validly issued and are (and, on the Closing
Date, the outstanding shares of class B common stock will be) fully
paid and nonassessable; the Securities being sold under the
Underwriting Agreements by the Company have been duly authorized, and,
when issued and delivered to and paid for by the U.S. Underwriters
pursuant to this U.S. Underwriting Agreement and by the International
Underwriters pursuant to the International Underwriting Agreement, will
be validly issued, fully paid and nonassessable; the certificates for
the Securities are in valid and sufficient form in accordance with all
applicable laws; except as set forth in the Prospectuses, the holders
of outstanding shares of capital stock of the Company are not entitled
to preemptive or other rights to subscribe for the Securities; and,
except as set forth in the Initial Public Offering and Split-Off
Agreement dated August __, 1999 among the Company, Viacom Inc. and
Viacom International Inc., no options, warrants or other rights to
purchase, agreements or other obligations to issue, or rights to
convert any obligations into or exchange any securities for, shares of
capital stock of or ownership interests in the Company are outstanding.
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(f) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectuses, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements in the Prospectuses
under the headings "Description of Capital Stock" and "Separation from
Viacom" fairly summarize, in all material respects, the matters therein
described.
(g) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectuses, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended.
(h) No consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection
with the transactions contemplated herein, except: (i) the registration
of the transactions contemplated herein under the Act; (ii) the
registration of the Common Stock under the Exchange Act; (iii) the
listing of the shares of Common Stock on the New York Stock Exchange;
and (iv) such consents, approvals, authorizations, filings or orders as
may be required under state securities or blue sky laws of any
jurisdiction, in connection with the purchase and distribution of the
Securities by the Underwriters in the manner contemplated herein and in
the Prospectuses.
(i) Neither the issue and sale of the Securities nor the
consummation of any of the other transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its subsidiaries
pursuant to: (i) the certificate of incorporation or by-laws (or other
similar organization instruments with different names) of the Company
or any of its subsidiaries, (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the
Company or any of its subsidiaries is a party or bound or to which its
or their property is subject, or (iii) any statute, law, rule,
regulation, judgment, order or decree applicable to the Company or any
of its subsidiaries of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its subsidiaries or any of its
or their properties, except, with respect to clauses (ii) and (iii)
above, for such conflicts, breaches, violations or impositions that,
individually and in the aggregate with all other such conflicts,
breaches, violations and impositions, would not have a material adverse
effect on the business, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole.
(j) Except as set forth in the Registration Rights Agreement
dated as of August __, 1999 between the Company and Viacom Inc., no
holders of securities of the Company have rights to the registration of
such securities under the Registration Statement or have rights to
require the Company to file a registration statement under the Act with
respect to such securities.
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(k) The combined historical financial statements and schedules
of the Company and its combined subsidiaries included in the
Prospectuses and the Registration Statement present fairly in all
material respects the financial condition, results of operations and
cash flows of the Company as of the dates and for the periods
indicated, comply as to form in all material respects with the
applicable accounting requirements of the Act and have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as otherwise
noted therein). The selected combined historical and pro forma
financial and operating data set forth under the caption "Selected
Combined Historical and Pro Forma Financial and Operating Data" in the
Prospectuses and Registration Statement fairly present, on the basis
stated in the Prospectuses and the Registration Statement, the
information included therein.
(l) Other than as set forth in the Prospectuses, no actions,
suits or proceedings by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
subsidiaries or its or their property are pending or, to the Company's
knowledge, threatened that (i) could reasonably be expected to have a
material adverse effect on the performance of this Agreement or the
consummation of any of the transactions contemplated hereby or (ii)
could reasonably be expected to have a material adverse effect on the
business, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole.
(m) Each of the Company and each of its subsidiaries owns or
leases all such properties as are necessary to the conduct of its
operations as presently conducted; has good title to all real and
personal property owned by them, in each case free and clear of all
liens, encumbrances and defects, except such as are described in the
Prospectuses, except where the existence of any such lien, encumbrance
or defect, individually and in the aggregate with all other such liens,
encumbrances and defects would not have a material adverse effect on
the business, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole; and holds valid,
subsisting and enforceable leases or subleases for any real property
and buildings held under lease by the Company and its subsidiaries,
except where the failure to hold a valid, subsisting and enforceable
lease or sublease, individually and in the aggregate with all other
such failures, would not have a material adverse effect on the
business, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole.
(n) Neither the Company nor any subsidiary is in violation or
default of (i) any provision of its charter or bylaws, (ii) the terms
of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or bound or to which its
property is subject, or (iii) any statute, law, rule, regulation,
judgment, order or decree of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or such subsidiary or any of its
properties, as applicable, except, in the case of clauses (ii) and
(iii) above, for such violations or defaults which, individually and in
the aggregate with all other such
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violations and defaults, would not have a material adverse effect on
the business, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole.
(o) PricewaterhouseCoopers LLP, who have certified certain
financial statements of the Company and its combined subsidiaries and
delivered their report with respect to the audited combined financial
statements and schedules included in the Prospectuses, are independent
public accountants with respect to the Company within the meaning of
the Act and the applicable published rules and regulations of the
Commission thereunder.
(p) Except as set forth in the Prospectuses (exclusive of any
supplement thereto), the Company and its subsidiaries possess all
licenses, certificates, permits and other authorizations issued by the
appropriate federal, state or foreign regulatory authorities necessary
to conduct their respective businesses, and neither the Company nor any
such subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse
effect on the business, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole.
(q) The Company has not taken, directly or indirectly, any
action designed to or which has constituted or which might reasonably
be expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(r) The Company and its subsidiaries (i) are, to the Company's
knowledge, in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) have, to the Company's knowledge, received and are in
compliance with all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses and (iii) have not received notice of any actual or
potential liability for the investigation or remediation of any
disposal or release of hazardous or toxic substances or wastes,
pollutants or contaminants, except where such non-compliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals, or liability would not, individually or in the
aggregate, have a material adverse effect on the business, financial
condition or results of operations of the Company and its subsidiaries,
taken as a whole. Neither the Company nor any of the subsidiaries has
been named as a "potentially responsible party" under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended.
(s) The Company and its subsidiaries do not maintain any
"plan" (as defined in Section 3(3) of the United States Retirement
Security Act of 1974 ("ERISA") and the
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regulations and published interpretations thereunder) that is subject
to Section 302 of ERISA or Title IV of ERISA, and any other "plan"
which the Company and its subsidiaries maintains and sponsors is in
compliance in all material respects with the presently applicable
provisions of ERISA and such regulations and published interpretations.
The Company and its subsidiaries have not incurred any unpaid liability
to the Pension Benefit Guaranty Corporation (other than for the payment
of premiums in the ordinary course) with respect to any such "plan"
ever maintained by the Company, any of its subsidiaries or any entity
treated as a single employer with either the Company or any of its
subsidiaries under Section 414(b), (c), or (m) of the Internal Revenue
Code of 1986, as amended.
(t) The Company and its subsidiaries own, possess, license or
have other rights to use, on reasonable terms, all trade and service
marks, trade and service ▇▇▇▇ registrations, trade names, copyrights,
licenses, inventions, trade secrets, technology, know-how and other
intellectual property (collectively, the "Intellectual Property")
necessary for the conduct of the Company's business as now conducted or
as proposed in the Prospectuses to be conducted. Except as set forth in
the Prospectuses under the caption "Business--Intellectual Property,"
(a) there are, to the Company's knowledge, no rights of third parties
to any such Intellectual Property; (b) there is, to the Company's
knowledge, no infringement by third parties of any such Intellectual
Property; (c) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging the
Company's or any of its subsidiaries' rights in or to any such
Intellectual Property, and the Company is unaware of any facts which
would form a reasonable basis for any such claim; (d) there is no
pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any
such Intellectual Property, and the Company is unaware of any facts
which would form a reasonable basis for any such claim; and (e) there
is no pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others that the Company or any of its
subsidiaries infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others, and the
Company is unaware of any other fact which would form a reasonable
basis for any such claim; in each case, other than such rights
infringements, actions, suits, proceedings or claims that, individually
and in the aggregate with all other such rights, infringements,
actions, suits, proceedings or claims, would not have a material
adverse effect on the business, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole.
(u) The year 2000 statements in the Prospectuses under the
headings "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" fairly summarize, in all
material respects, the matters therein described.
(v) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
business, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole, from that set forth in the
Prospectuses (exclusive of any amendment thereof or supplement thereto
subsequent to the date of this Agreement).
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Furthermore, the Company represents and warrants to ▇▇▇▇▇▇▇
▇▇▇▇▇ Barney Inc. that (i) the Registration Statement, the Prospectuses and any
Preliminary Prospectuses comply, and any further amendments or supplements
thereto will comply, in all material respects with any applicable laws or
regulations of foreign jurisdictions in which the Prospectuses or any
Preliminary Prospectuses, as amended or supplemented, if applicable, are
distributed in connection with the Directed Share Program, and (ii) no
authorization, approval, consent, license, order, registration or qualification
of or with any government, governmental instrumentality or court, other than
such as have been obtained, is necessary under the securities laws and
regulations of foreign jurisdictions in which the Directed Shares are offered
outside the United States.
The Company has not offered, or caused the Underwriters to
offer, shares to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business with the
Company, or (ii) a trade journalist or publication to write or publish favorable
information about the Company or its products.
Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters in connection
with the offering of the Securities shall be deemed a representation and
warranty by the Company, as to matters covered thereby, to each U.S.
Underwriter.
2. PURCHASE AND SALE. (a) Subject to the terms and conditions
and in reliance upon the representations and warranties in this U.S.
Underwriting Agreement set forth, the Company agrees to sell to each U.S.
Underwriter, and each U.S. Underwriter agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $ ___________ per share, the
amount of the U.S. Underwritten Securities set forth opposite such U.S.
Underwriter's name in Schedule I to this U.S. Underwriting Agreement.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties set forth in this U.S. Underwriting
Agreement, the Company hereby grants an option to the several U.S. Underwriters
to purchase, severally and not jointly, up to 3,720,000 U.S. Option Securities
at the same purchase price per share as the U.S. Underwriters shall pay for the
U.S. Underwritten Securities. Said option may be exercised only to cover
over-allotments in the sale of the U.S. Underwritten Securities by the U.S.
Underwriters. Said option may be exercised in whole or in part at any time (but
not more than once with respect to the U.S. Underwritten Securities) on or
before the 30th day after the date of the U.S. Prospectus upon written or
telegraphic notice by the U.S. Representatives to the Company setting forth the
number of shares of the U.S. Option Securities as to which the several U.S.
Underwriters are exercising the option and the settlement date. The number of
U.S. Option Securities to be purchased by each U.S. Underwriter shall be the
same percentage of the total number of shares of the U.S. Option Securities to
be purchased by the several U.S. Underwriters as such U.S. Underwriter is
purchasing of the U.S. Underwritten Securities, subject to such adjustments as
you in your absolute discretion shall make to eliminate any fractional shares.
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3. DELIVERY AND PAYMENT. Delivery of and payment for the U.S.
Underwritten Securities and the U.S. Option Securities (if the option provided
for in Section 2(b) hereof shall have been exercised on or before the third
Business Day prior to the Closing Date) shall be made at 10:00 AM, New York City
time, on August __, 1999, or at such time on such later date not more than three
Business Days after the foregoing date as the U.S. Representatives and the
International Representatives shall designate, which date and time may be
postponed by agreement among the U.S. Representatives, the International
Representatives and the Company or as provided in Section 9 hereof (such date
and time of delivery and payment for the U.S. Securities being called in this
U.S. Underwriting Agreement, the "Closing Date"). Delivery of the U.S.
Securities shall be made to the U.S. Representatives for the respective accounts
of the several U.S. Underwriters against payment by the several U.S.
Underwriters through the U.S. Representatives of the respective aggregate
purchase prices of the U.S. Securities being sold by the Company to or upon the
order of the Company by wire transfer payable in immediately available funds to
the accounts specified by the Company. Delivery of the U.S. Underwritten
Securities and the U.S. Option Securities shall be made through the facilities
of The Depository Trust Company unless the U.S. Representatives shall otherwise
instruct.
If the option provided for in Section 2(b) hereof is exercised
after the third Business Day prior to the Closing Date, the Company will deliver
certificates for the U.S. Option Securities (at the expense of the Company) to
the U.S. Representatives, at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ the
date specified by the U.S. Representatives (which shall be within three Business
Days after exercise of said option) in such names and denominations as the U.S.
Representatives shall have requested for the respective accounts of the several
U.S. Underwriters, against payment by the several U.S. Underwriters through the
U.S. Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in immediately available funds to the accounts
specified by the Company. If settlement for the U.S. Option Securities occurs
after the Closing Date, the Company will deliver to the U.S. Representatives on
the settlement date for the U.S. Option Securities, and the obligation of the
U.S. Underwriters to purchase the U.S. Option Securities shall be conditioned
upon receipt of, supplemental opinions, certificates and letters confirming as
of such date the opinions, certificates and letters delivered on the Closing
Date pursuant to Section 6 hereof.
It is understood and agreed that the Closing Date shall occur
simultaneously with the "Closing Date" under the International Underwriting
Agreement, and that the settlement date, if any, shall occur simultaneously with
the "settlement date" under the International Underwriting Agreement.
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4. OFFERING BY UNDERWRITERS. It is understood that the several
U.S. Underwriters propose to offer the U.S. Securities for sale to the public as
set forth in the U.S. Prospectus.
5. AGREEMENTS.
(i) The Company agrees with the several U.S. Underwriters
that:
(a) The Company will use its reasonable best efforts to cause
the Registration Statement, if not effective at the Execution Time, and
any amendment thereof, to become effective. Prior to the termination of
the offering of the Securities, the Company will not file any amendment
of the Registration Statement or supplement to the Prospectuses or any
Rule 462(b) Registration Statement unless the Company has furnished you
a copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object.
Subject to the foregoing sentence, if the Registration Statement has
become or becomes effective pursuant to Rule 430A, or filing of the
Prospectuses is otherwise required under Rule 424(b), the Company will
cause the Prospectuses, properly completed, and any supplement thereto
to be filed with the Commission pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the U.S. Representatives of such timely filing. The
Company will promptly advise the U.S. Representatives (1) when the
Registration Statement, if not effective at the Execution Time, shall
have become effective, (2) when the Prospectuses, and any supplement
thereto, shall have been filed (if required) with the Commission
pursuant to Rule 424(b) or when any Rule 462(b) Registration Statement
shall have been filed with the Commission, (3) when, prior to
termination of the offering of the Securities, any amendment to the
Registration Statement shall have been filed or become effective, (4)
of any request by the Commission or its staff for any amendment of the
Registration Statement, or any Rule 462(b) Registration Statement, or
for any supplement to the Prospectuses or for any additional
information, (5) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (6)
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the institution or threatening of any proceeding for
such purpose. The Company will use its reasonable best efforts to
prevent the issuance of any such stop order or the suspension of any
such qualification and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which either of the Prospectuses as then supplemented
would include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
or if it shall be necessary to amend the Registration Statement or
supplement either of the Prospectuses to comply with the Act or the
rules and regulations promulgated thereunder, the Company promptly
12
will (1) notify the U.S. Representatives of any such event; (2) prepare
and file with the Commission, subject to the second sentence of
paragraph (i)(a) of this Section 5, an amendment or supplement which
will correct such statement or omission or effect such compliance; and
(3) supply any supplemented Prospectuses to you in such quantities as
you may reasonably request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the U.S. Representatives an
earnings statement or statements of the Company and its subsidiaries
which will satisfy the provisions of last paragraph of Section 11(a) of
the Act and Rule 158 under the Act.
(d) The Company will furnish one signed copy of the
Registration Statement (including exhibits thereto) to each of the U.S.
Representatives and to counsel for the U.S. Underwriters and will
furnish to each other U.S. Underwriter a copy of the Registration
Statement (without exhibits thereto). So long as delivery of a
prospectus by a U.S. Underwriter or dealer may be required by the Act,
the Company will furnish as many copies of each U.S. Preliminary
Prospectus and the U.S. Prospectus and any supplement thereto as the
U.S. Representatives may reasonably request.
(e) The Company will use its reasonable efforts to arrange, if
necessary, for the qualification of the Securities for sale under the
applicable securities laws of such states and other jurisdictions as
the U.S. Representatives may designate and will maintain such
qualifications in effect so long as required for the distribution of
the U.S. Securities; provided that in no event shall the Company be
obligated to qualify to do business, or to subject itself to taxation
in respect thereof, in any jurisdiction where it is not now so
qualified or taxed, or to take any action that would subject it to
service of process in suits, other than those arising out of the
offering or sale of the Securities, in any jurisdiction where it is not
now so subject.
(f) Except as expressly contemplated hereby, the Company will
not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.,
offer, sell, contract to sell, pledge, or otherwise dispose of, (or
enter into any transaction which is designed to, or might reasonably be
expected to, result in the disposition (whether by actual disposition
or effective economic disposition due to cash settlement or otherwise)
by the Company or any affiliate of the Company or any person in privity
with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish
or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange
Act, any other shares of Common Stock or any securities convertible
into, or exercisable, or exchangeable for, shares of Common Stock; or
publicly announce an intention to effect any such transaction, for a
period of 180 days after the date of the U.S. Underwriting Agreement,
provided, however, that (i) the Company may issue and sell Common Stock
pursuant to any employee stock option plan, stock ownership plan or
dividend reinvestment plan of the Company described in the
Prospectuses, and may make public announcements with respect to the
transactions
13
permitted by this clause (i); (ii) the Company may issue its class B
common stock to Viacom International, Inc. or its affiliates in
satisfaction of the Company's obligations under the Initial Public
Offering and Split-off Agreement dated August __, 1999 among the
Company, Viacom Inc. and Viacom International Inc.; and (iii) the
Company may issue and sell Common Stock in connection with the merger
with or acquisition of another corporation or entity or the acquisition
of the assets or properties of any such corporation or entity, and may
make public announcements with respect to the transactions permitted by
this clause (iii), so long as the recipient of the Common Stock agrees
prior to the consummation of any such transaction pursuant to an
instrument in form and substance reasonably satisfactory to ▇▇▇▇▇▇▇
▇▇▇▇▇ Barney Inc. (which instrument will be deemed satisfactory if it
is substantially similar to the provisions of this Section 5(f)) to be
bound by the provisions of this Section 5(f) insofar as they relate to
the shares of Common Stock or other securities acquired.
(g) The Company will not take, directly or indirectly, any
action designed to or which has constituted or which might reasonably
be expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(h) The Company agrees to pay the costs and expenses relating
to the following matters: (i) the preparation, printing or reproduction
and filing with the Commission of the Registration Statement (including
financial statements and exhibits thereto), each Preliminary
Prospectus, each Prospectus, and each amendment or supplement to any of
them; (ii) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of
such copies of the Registration Statement, each Preliminary Prospectus,
each Prospectus, and all amendments or supplements to any of them, as
may, in each case, be reasonably requested for use in connection with
the offering and sale of the Securities; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the
Securities, including any stamp or transfer taxes in connection with
the original issuance and sale of the Securities; (iv) the word
processing and printing (or reproduction) and delivery of this U.S.
Underwriting Agreement and the International Underwriting Agreement,
any blue sky memorandum and all other agreements or documents printed
(or reproduced) and delivered in connection with the offering of the
Securities; (v) the registration of the Securities under the Exchange
Act and the listing of the Securities on the New York Stock Exchange;
(vi) any registration or qualification of the Securities for offer and
sale under the securities or blue sky laws of the several states
(including filing fees and the reasonable fees and expenses of counsel
for the Underwriters relating to such registration and qualification);
(vii) any filings required to be made with the National Association of
Securities Dealers, Inc. (the "NASD")(including filing fees, the
reasonable fees and expenses of counsel for the Underwriters relating
to such filings and any counsel fees incurred on behalf of or
disbursements by Bear, ▇▇▇▇▇▇▇ & Co. Inc. in its capacity as "qualified
independent underwriter"); (viii) the transportation and other expenses
incurred by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Securities, it being
understood that the Company will pay
14
all costs and expenses incident to any chartered air travel less the
commercial airline coach class fares to and from the cities in which
such presentations were made that would otherwise have been incurred by
the individuals representing the U.S. Underwriters who actually
traveled with the Company to and from such cities; (ix) the fees and
expenses of the Company's accountants and the fees and expenses of
counsel (including local and special counsel) for the Company; and (x)
all other costs and expenses incident to the performance by the Company
of their obligations under the Underwriting Agreements.
(i) The Company agrees to use the net proceeds received by it
from the sale of the Securities pursuant to this Agreement in the
manner specified in the Prospectuses under the heading "Use of
Proceeds".
(j) In connection with the Directed Share Program, the Company
will ensure that the Directed Shares will be restricted to the extent
required by the NASD or the NASD rules for sale, transfer, assignment,
pledge or hypothecation for a period of three months following the date
of the effectiveness of the Registration Statement. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Barney Inc. will notify the Company as to which Participants will need
to be so restricted. The Company will direct the transfer restrictions
during such period of time.
(k) The Company agrees to pay all fees and disbursements of
counsel incurred by the Underwriters in connection with the Directed
Share Program, up to $100,000 in the aggregate, and all stamp duties,
similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program.
Furthermore, the Company covenants with ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Inc. that the Company will comply with all applicable securities and other
applicable laws, rules and regulations in each foreign jurisdiction in which the
Directed Shares are offered in connection with the Directed Share Program.
(ii) Each U.S. Underwriter agrees that (1) it is not
purchasing any of the U.S. Securities for the account of anyone other than a
United States or Canadian Person, (2) it has not offered or sold, and will not
offer or sell, directly or indirectly, any of the U.S. Securities or distribute
any U.S. Prospectus to any person outside the United States or Canada, or to
anyone other than a United States or Canadian Person, and (3) any dealer to whom
it may sell any of the U.S. Securities will represent that it is not purchasing
for the account of anyone other than a United States or Canadian Person and
agree that it will not offer or resell, directly or indirectly, any of the U.S.
Securities outside the United States or Canada, or to anyone other than a United
States or Canadian Person or to any other dealer who does not so represent and
agree; PROVIDED, HOWEVER, that the foregoing shall not restrict (A) purchases
and sales between the International Underwriters on the one hand and the U.S.
Underwriters on the other hand pursuant to the Agreement Between U.S.
Underwriters and International Underwriters, (B) stabilization transactions
contemplated under the Agreement Between U.S. Underwriters and International
Underwriters, conducted through ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. (or through the U.S.
Representatives and International Representatives) as part of the distribution
of the Securities, and (C) sales to or through (or distributions of U.S.
Prospectuses or U.S. Preliminary
15
Prospectuses to) United States or Canadian Persons who are investment
advisors, or who otherwise exercise investment discretion, and who are
purchasing for the account of anyone other than a United States or
Canadian Person.
(iii) The agreements of the U.S. Underwriters set forth in
paragraph (ii) of this Section 5 shall terminate upon the earlier of the
following events:
(a) a mutual agreement of the U.S. Representatives and the
International Representatives to terminate the selling restrictions set
forth in paragraph (ii) of this Section 5 and in Section 5(ii) of the
International Underwriting Agreement; or
(b) the expiration of a period of 30 days after the Closing
Date, unless (A) the U.S. Representatives shall have given notice to
the Company and the International Representatives that the distribution
of the U.S. Securities by the U.S. Underwriters has not yet been
completed, or (B) the International Representatives shall have given
notice to the Company and the U.S. Representatives that the
distribution of the International Securities by the International
Underwriters has not yet been completed. If such notice by the U.S.
Representatives or the International Representatives is given, the
agreements set forth in such paragraph (ii) shall survive until the
earlier of (1) the event referred to in clause (a) of this subsection
(iii) or (2) the expiration of an additional period of 30 days from the
date of any such notice.
6. CONDITIONS TO THE OBLIGATIONS OF THE U.S. UNDERWRITERS. The
obligations of the U.S. Underwriters to purchase the U.S. Underwritten
Securities and the U.S. Option Securities, as the case may be, shall be subject
to the accuracy of the representations and warranties on the part of the Company
contained in this U.S. Underwriting Agreement as of the Execution Time, the
Closing Date and any settlement date pursuant to Section 3 hereof, to the
accuracy of the statements of the Company made in any certificates pursuant to
the provisions hereof, to the performance by the Company of its obligations
under this U.S. Underwriting Agreement and to the following additional
conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the U.S. Representatives and the
International Representatives agree in writing to a later time, the Registration
Statement will become effective not later than (i) 6:00 PM New York City time on
the date of determination of the public offering price, if such determination
occurred at or prior to 3:00 PM New York City time on such date or (ii) 9:30 AM
on the Business Day following the day on which the public offering price was
determined, if such determination occurred after 3:00 PM New York City time on
such date; if filing of either of the Prospectuses, or any supplement thereto,
is required pursuant to Rule 424(b), the Prospectuses, and any such supplement,
will be filed in the manner and within the time period required by Rule 424(b);
and no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or threatened.
16
(b) (1) The Company shall have requested and caused Shearman &
Sterling, counsel for the Company, to have furnished to the Representatives
their opinion, dated the Closing Date and addressed to the Representatives, to
the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with full corporate power and authority to own or lease,
as the case may be, and to operate its properties and conduct its
business as described in the Prospectuses;
(ii) the outstanding shares of the Company's capital stock
have been duly authorized and validly issued and are fully paid and
nonassessable;
(iii) the Securities being sold under the Underwriting
Agreements by the Company have been duly authorized, and, when issued
and delivered to and paid for by the Underwriters pursuant to the
Underwriting Agreements, will be validly issued, fully paid and
nonassessable; and, except as set forth in the Prospectuses, to the
knowledge of such counsel, the holders of outstanding shares of capital
stock of the Company are not entitled to preemptive or other rights to
subscribe for the Securities;
(iv) the statements in the Prospectuses under the headings
"Description of Capital Stock", "Prospectus Summary--Separation from
Viacom" and "Separation from Viacom" fairly summarize the legal matters
therein described;
(v) the Underwriting Agreements have been duly authorized,
executed and delivered by the Company;
(vi) the Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectuses, will not be, an "investment
company" as defined in the Investment Company Act of 1940, as amended;
(vii) no authorization, approval, consent, license or order
of, or filing with, any government, governmental instrumentality or
court is necessary for the issuance, sale and delivery by the Company
of the Securities pursuant to the Underwriting Agreements, except such
as have been obtained under the Act and the Exchange Act and such as
may be required under the securities or blue sky laws of the various
states;
(viii) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions contemplated in the
Underwriting Agreements nor the fulfillment of the terms of the
Underwriting Agreements will conflict with, result in a breach or
violation of or imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to, (i) the charter or
by-laws of the Company, (ii) the terms, conditions or provisions of any
agreement or instrument filed as an exhibit to the Registration
Statement, or (iii) any statute, law, rule, regulation, judgment, order
or decree applicable to the Company or its subsidiaries of any court,
regulatory body, administrative agency, governmental body, arbitrator
or other authority having
17
jurisdiction over the Company or its subsidiaries or any of its or
their properties, except with respect to clauses (ii) and (iii) above,
for such conflicts, breaches, violations or impositions that,
individually and in the aggregate with all other such conflicts,
breaches, violations or impositions, would not have a material adverse
effect on the business, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole;
(ix) Except as disclosed in the Prospectuses, to the knowledge
of such counsel, no holders of securities of the Company have rights to
the registration of such securities under the Registration Statement or
have rights to require the Company to file a registration statement
under the Act with respect to such securities;
(x) the Registration Statement has become effective under the
Act; any required filing of the Prospectuses, and any supplements
thereto, pursuant to Rule 424(b) has been made in the manner and within
the time period required by Rule 424(b); to the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued, no proceedings for that purpose have been
instituted or threatened (the foregoing views in this clause (x) may be
expressed in an opening paragraph to such counsel's opinion); and
(xi) the Registration Statement and each of the Prospectuses
(other than the financial statements and other financial or
statistical data contained therein or omitted therefrom, as to which
such counsel need express no opinion) appear on their face to be
appropriately responsive in all material respects to the requirements
of the Act and the applicable rules and regulations of the Commission
thereunder; no facts came to such counsel's attention which gave them
reason to believe that (a) the Registration Statement (other than the
financial statements and other financial or statistical data contained
therein or omitted therefrom, as to which such counsel need express no
opinion), at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or (b) the Prospectuses (other than the
financial statements and other financial or statistical data contained
therein or omitted therefrom, as to which such counsel need express no
opinion), as of their date or the Closing Date, contained an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; to the
knowledge of such counsel, there are no pending or threatened legal or
governmental proceedings of a character required to be described in the
Prospectuses that are not so described; and, to the knowledge of such
counsel, there is no statute, regulation, franchise, contract or other
document of a character required to be described in, or filed as an
exhibit to, the Registration Statement that is not so described or
filed (the foregoing views in this clause (xi) may be expressed in a
letter separate from such counsel's opinion).
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other
than the State of New York or the Federal
18
laws of the United States, to the extent they deem proper and specified
in such opinion, upon the opinion of other counsel of good standing
whom they believe to be reliable and who are satisfactory to counsel
for the Underwriters and (B) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the Company and
public officials. Reference to the Prospectuses in this paragraph (b)
include any supplements thereto at the Closing Date.
(2) The Company shall have requested and caused
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, General Counsel for the Company, to have furnished to the
Representatives his opinion, dated the Closing Date and addressed to the
Representatives, to the effect that:
(i) the Company is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction
which requires such qualification, except where the failure to be so
qualified, individually and in the aggregate, with all other such
failures to be qualified would not have a material adverse effect on
the business, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other
than the State of New York or the Federal laws of the United States, to
the extent he deems proper and specified in such opinion, upon the
opinion of other counsel of good standing whom he believes to be
reliable and who are satisfactory to counsel for the Underwriters and
(B) as to matters of fact, to the extent he deems proper, on
certificates of responsible officers of the Company and public
officials. Reference to the Prospectuses in this paragraph (b)(2)
include any supplements thereto at the Closing Date.
(3) The Company shall have requested and caused
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, tax counsel for its parent, Viacom Inc., to have furnished to
the Representatives his opinion, dated the Closing Date and addressed to the
Representatives, to the effect that:
(i) the statements in the Prospectuses under the heading
"Material United States Tax Consequences to Non-United States Holders"
fairly summarize the legal matters therein described.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other
than the State of New York or the Federal laws of the United States, to
the extent he deems proper and specified in such opinion, upon the
opinion of other counsel of good standing whom he believes to be
reliable and who are satisfactory to counsel for the Underwriters and
(B) as to matters of fact, to the extent he deems proper, on
certificates of responsible officers of the Company and public
officials. Reference to the Prospectuses in this paragraph (b)(3)
include any supplements thereto at the Closing Date.
(c) The Representatives shall have received from ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the Underwriters, such opinion or opinions,
dated the Closing Date and
19
addressed to the Representatives, with respect to the issuance and sale of the
Securities, the Registration Statement, the Prospectuses (together with any
supplement thereto) and other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon such
matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by (i) the Chief Executive Officer and
President of the Company and (ii) the Chief Financial Officer of the Company,
dated the Closing Date, to the effect that the signers of such certificate have
carefully examined the Registration Statement, the Prospectuses, any supplements
to the Prospectuses and the Underwriting Agreements and that:
(i) the representations and warranties of the Company in the
Underwriting Agreements are true and correct in all material respects
on and as of the Closing Date with the same effect as if made on the
Closing Date; provided, however, that if any such representation or
warranty is already qualified by materiality, such representation or
warranty as so qualified is true and correct in all respects on and as
of the Closing Date with the same effect as if made on the Closing Date
and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to
the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectuses (exclusive of any supplement thereto),
there has been no material adverse effect on the business, financial
condition or results of operations of the Company and its subsidiaries,
taken as a whole, except as set forth in the Prospectuses (exclusive of
any supplement thereto).
(e) The Company shall have requested and caused
PricewaterhouseCoopers LLP to have furnished to the Representatives letters,
dated respectively as of the Execution Time and as of the Closing Date, in form
and substance satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Act and the applicable rules
and regulations adopted by the Commission thereunder and that they have
performed a review of the unaudited consolidated interim financial statements of
the Company for the three-month periods ended March 31, 1998 and 1999 and as of
March 31, 1999 in accordance with Statement on Auditing Standards No. 71, and
stating in effect that:
(i) in their opinion the audited consolidated financial
statements included in the Registration Statement and the Prospectuses
and reported on by them comply as to form in all material respects with
the applicable accounting requirements of the Act and the related rules
and regulations adopted by the Commission;
20
(ii) on the basis of a reading of the latest unaudited
financial data made available by the Company and its subsidiaries;
their limited review, in accordance with standards established under
Statement on Auditing Standards No. 71, of the unaudited consolidated
interim financial statements for the three-month periods ended March
31, 1998 and 1999, and as of March 31, 1999; carrying out certain
specified procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set forth
in such letter; a reading of the minutes of the meetings of the
stockholders and directors of Viacom Inc.; a reading of the minutes of
the meetings of the stockholders, directors and the audit, compensation
and governance and nominations committees of the Company and its
subsidiaries; and inquiries of certain officials of the Company who
have responsibility for financial and accounting matters of the Company
and its subsidiaries as to transactions and events subsequent to
December 31, 1998, nothing came to their attention which caused them to
believe that:
(1) any unaudited consolidated financial statements
included in the Registration Statement and the Prospectuses do
not comply as to form in all material respects with applicable
accounting requirements of the Act and with the related rules
and regulations adopted by the Commission; and said unaudited
consolidated financial statements are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated
financial statements included in the Registration Statement
and the Prospectuses;
(2) with respect to the period subsequent to March
31, 1999, there were, at a specified date not more than five
days prior to the date of the letter, any increases in the
long-term debt of the Company and its subsidiaries (except
that with respect to the period from June 30, 1999 to the date
of such letter, such increase shall be in excess of
$5,000,000) or any changes in the capital stock of the Company
or any decreases, as of June 30, 1999, in the stockholders'
equity of the Company as compared with the amounts shown on
the March 31, 1999 consolidated balance sheet included in the
Registration Statement and the Prospectuses, or for the period
from April 1, 1999 to June 30, 1999 there were any decreases,
as compared with the corresponding period in the prior year in
revenues, operating income, income before income taxes and
depreciation and amortization of the Company and its
subsidiaries, or for the period from June 30, 1999 to the
specified date not more than five days prior to the date of
the letter there were any decreases, as compared with the
corresponding period in the prior year, in revenues, except in
all instances for increases or decreases set forth in such
letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof
unless said explanation is not deemed necessary by the
Representatives;
(3) the information included in the Registration
Statement and Prospectuses in response to Regulation S-K, Item
301 (Selected Financial Data)
21
and Item 402 (Executive Compensation) is not in conformity
with the applicable disclosure requirements of Regulation S-K;
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Registration Statement and the Prospectuses, including the
information set forth under the captions "Management's Discussion and
Analysis of Financial Condition and Results of Operations", "Prospectus
Summary", "Capitalization", "Selected Consolidated Historical and Pro
Forma Financial and Operating Data", "Business" and "Risk Factors" in
the Prospectuses, agrees with the accounting records of the Company and
its subsidiaries, excluding any questions of legal interpretation; and
(iv) on the basis of a reading of the unaudited pro forma
consolidated balance sheet as of March 31, 1999 and the unaudited pro
forma consolidated statements of operations for the year ended December
31, 1998 and the three-month period ended March 31, 1999, in each case
included in the Registration Statement and the Prospectuses; and
carrying out certain specified procedures, which include making
inquiries of certain officials of the Company who have responsibility
for financial and accounting matters and proving the arithmetic
accuracy of the application of the pro forma adjustments to the
historical amounts in the unaudited pro forma consolidated financial
statements, nothing came to their attention which caused them to
believe that the unaudited pro forma consolidated financial statements
do not comply as to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X or that the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of such unaudited pro forma consolidated
financial statements.
References to the Prospectuses in this paragraph (e) include
any supplement thereto at the date of the letter.
(f) Subsequent to the Execution Time or, if earlier, the
dates as of which information is given in the Registration Statement (exclusive
of any amendment thereof) and the Prospectuses (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified in the
letter or letters referred to in paragraph (e) of this Section 6 or (ii) any
change, or any development involving a prospective change, in or affecting the
condition (financial or otherwise), earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectuses (exclusive of any supplement thereto) the
effect of which, in any case referred to in clause (i) or (ii) above, is, in the
sole judgment of the U.S. Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of the U.S.
Securities as contemplated by the Registration Statement (exclusive of any
amendment thereof) and the Prospectuses (exclusive of any supplement thereto).
22
(g) The closing of the purchase of the U.S. Underwritten
Securities to be issued and sold by the Company pursuant to the U.S.
Underwriting Agreement shall occur concurrently with the closing of the
International Underwritten Securities to be issued and sold by the Company
pursuant to the International Underwriting Agreement.
(h) The Securities shall have been duly admitted for listing
and authorized for trading on the New York Stock Exchange, subject only to
official notice of issuance, and satisfactory evidence of such actions shall
have been provided to the Representatives.
(i) At the Execution Time, the Company shall have furnished to
the Representatives a letter substantially in the form of Exhibit A hereto from
each executive officer and director of the Company and from Viacom Inc. (on
behalf of itself and its subsidiaries), in each case, addressed to the
Representatives.
(j) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information, certificates and
documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled when and as provided in this U.S. Underwriting Agreement and
the International Underwriting Agreement, or if any of the opinions and
certificates mentioned above or elsewhere in this U.S. Underwriting Agreement
shall not be reasonably satisfactory in form and substance to the U.S.
Representatives and counsel for the Underwriters, this U.S. Underwriting
Agreement and all obligations of the U.S. Underwriters under this U.S.
Underwriting Agreement may be canceled at, or at any time prior to, the Closing
Date by the U.S. Representatives. Notice of such cancelation shall be given to
the Company in writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall
be delivered at the office of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the
Underwriters, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ on the Closing
Date.
7. REIMBURSEMENT OF U.S. UNDERWRITERS' EXPENSES. If the sale
of the U.S. Securities provided for in this U.S. Underwriting Agreement is not
consummated because any condition to the obligations of the U.S. Underwriters
set forth in Section 6 hereof is not satisfied, because of any termination
pursuant to Section 10 hereof or because of any refusal, inability or failure on
the part of the Company to perform any agreement in this U.S. Underwriting
Agreement or comply with any provision hereof other than by reason of a default
by any of the U.S. Underwriters, the Company will reimburse the U.S.
Underwriters severally through ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. on demand for all
reasonable out-of-pocket expenses (including reasonable fees and disbursements
of counsel) that shall have been incurred by them solely and directly in
connection with the transactions contemplated by this Agreement.
8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each U.S. Underwriter, the directors, officers,
employees and agents of each U.S. Underwriter and each person who controls any
U.S. Underwriter within the meaning of
23
either the Act or the Exchange Act against any and all losses, claims, damages
or liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or state statutory law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the registration statement for the registration of the Securities
as originally filed or in any amendment thereof, or in any U.S. or International
Preliminary Prospectus, or in either of the Prospectuses (or in any other
prospectus of the Company (whether or not filed with the Commission)), or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any U.S. Underwriter through the U.S.
Representatives specifically for inclusion therein; PROVIDED, FURTHER, that with
respect to any untrue statement or omission of material fact made in any
Preliminary Prospectuses, the indemnity agreement contained in this Section 8(a)
shall not inure to the benefit of any U.S. Underwriter from whom the person
asserting any such loss, claim, damage or liability purchased the Securities or
any person controlling such U.S. Underwriter, to the extent that any such loss,
claim, damage or liability of such U.S. Underwriter occurs under the
circumstance where it shall have been determined by a court of competent
jurisdiction by final and nonappealable judgment that (w) the Company had
previously furnished copies of the Prospectuses to the Representatives, (x)
delivery of the U.S. Prospectus was required by the Act to be made to such
person, (y) the untrue statement or omission of a material fact contained in the
Preliminary Prospectuses was corrected in the U.S. Prospectus and (z) there was
not sent or given to such person, at or prior to the written confirmation of the
sale of such Securities to such person, a copy of the U.S. Prospectus. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) The Company agrees to indemnify and hold harmless ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and each person who controls ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act ("▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Entities"), from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) (i) caused by any untrue statement or
alleged untrue statement of a material fact contained in the prospectus wrapper
material prepared by or with the consent of the Company for distribution in
foreign jurisdictions in connection with the Directed Share Program attached to
the Prospectuses or any Preliminary Prospectuses, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statement therein, when considered in conjunction with
the Prospectuses or any applicable Preliminary Prospectuses, not misleading;
(ii) caused by the failure of any Participant to pay for and accept delivery of
the shares which immediately following the
24
effectiveness of the Registration Statement, were subject to a properly
confirmed agreement to purchase; or (iii) related to, arising out of, or in
connection with the Directed Share Program, provided that, the Company shall not
be responsible under this subparagraph (iii) for any losses, claims, damages or
liabilities (or expenses relating thereto) that are finally judicially
determined to have resulted from the bad faith, willful misconduct or gross
negligence of any ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Entities.
(c) The Company also agrees to indemnify and hold harmless
Bear, ▇▇▇▇▇▇▇ & Co. Inc. and each person, if any, who controls Bear, ▇▇▇▇▇▇▇ &
Co. Inc. within the meaning of either Section 15 of the Act, or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages,
liabilities and judgments incurred as a result of its participation as a
"qualified independent underwriter" within the meaning of Rule 2720 of the
National Association of Securities Dealers' Conduct Rules in connection with the
offering of the Securities, except to the extent any such losses, claims,
damages, liabilities and judgments are found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from the gross negligence or willful misconduct of Bear,
▇▇▇▇▇▇▇ & Co. Inc.
(d) Each U.S. Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity in paragraph (a) above to each U.S.
Underwriter, but only with reference to written information relating to such
U.S. Underwriter furnished to the Company by or on behalf of such U.S.
Underwriter through the U.S. Representatives specifically for inclusion in the
documents referred to in the foregoing indemnity in paragraph (a) above. This
indemnity agreement will be in addition to any liability which any U.S.
Underwriter may otherwise have hereunder. The Company acknowledges that the
statements set forth in the last paragraph of the cover page regarding delivery
of the U.S. Securities, and, under the heading "Underwriting", (i) the first and
second sentences of the fourth paragraph (related to concessions and
reallowances) and the fourth and fifth sentences of the seventeenth paragraph
(related to the qualified independent underwriter) and (ii) the eleventh
paragraph (related to the intersyndicate agreement), the thirteenth paragraph
(related to United Kingdom offers), the fourteenth paragraph (related to
Canadian offers) and the fifteenth paragraph (related to stabilization,
syndicate covering transactions and penalty bids) in any U.S. or International
Preliminary Prospectus and the Prospectuses constitute the only information
furnished in writing by or on behalf of the several U.S. Underwriters for
inclusion in any U.S. or International Preliminary Prospectus or the
Prospectuses.
(e) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a), (b), (c) or (d) above
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any
25
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a), (b),
(c) or (d) above. The indemnifying party shall be entitled to appoint counsel of
the indemnifying party's choice at the indemnifying party's expense to represent
the indemnified party in any action for which indemnification is sought (in
which case the indemnifying party shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by the indemnified party or
parties except as set forth below); PROVIDED, HOWEVER, that such counsel shall
be satisfactory to the indemnified party. Notwithstanding the indemnifying
party's election to appoint counsel to represent the indemnified party in an
action, the indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the reasonable
fees, costs and expenses of such separate counsel if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, (iii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action or (iv)
the indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought under this U.S. Underwriting
Agreement (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding. Notwithstanding anything
contained herein to the contrary, if indemnity may be sought pursuant to Section
8, paragraph (b) hereof in respect of such action or proceeding, then in
addition to such separate firm for the indemnified parties, the indemnifying
party shall be liable for the reasonable fees and expenses of not more than one
separate firm (in addition to any local counsel) for ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
for the defense of any losses, claims, damages and liabilities arising out of
the Directed Share Program, and all persons who control ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Inc. within the meaning of either Section 15 of the Act or Section 20 of the
Exchange Act. Notwithstanding anything contained herein to the contrary, if
indemnity may be sought pursuant to Section 8, paragraph (c) hereof in respect
of such action or proceeding, then in addition to such separate firm for the
indemnified parties, the indemnifying party shall be liable for the reasonable
fees and expenses of not more than one separate firm (in addition to any local
counsel) for Bear, ▇▇▇▇▇▇▇ & Co. Inc. in its capacity as a "qualified
independent underwriter" and all persons, if any, who control Bear, ▇▇▇▇▇▇▇ &
Co. Inc. within the meaning of either Section 15 of the Act or Section 20 of the
Exchange Act.
(f) In the event that the indemnity provided in paragraph (a),
(b), (c) or (d) of this Section 8 is unavailable to or insufficient to hold
harmless an indemnified party for any reason, the Company and the U.S.
Underwriters agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
26
connection with investigating or defending same) (collectively "Losses") to
which the Company and one or more of the U.S. Underwriters may be subject in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and by the U.S. Underwriters on the other from the
offering of the U.S. Securities; PROVIDED, HOWEVER, that in no case shall any
U.S. Underwriter (except as may be provided in any agreement among underwriters
relating to the offering of the Securities) be responsible for any amount in
excess of the underwriting discount or commission applicable to the Securities
purchased by such U.S. Underwriter under this U.S. Underwriting Agreement. If
the allocation provided by the immediately preceding sentence is unavailable for
any reason, the Company and the U.S. Underwriters severally shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company on the one hand and of the U.S.
Underwriters on the other in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the total net
proceeds from the offering (before deducting expenses) received by the Company,
and benefits received by the U.S. Underwriters shall be deemed to be equal to
the total underwriting discounts and commissions, in each case as set forth on
the cover page of the U.S. Prospectus. Relative fault shall be determined by
reference to, among other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information provided by the Company on the one hand or
the U.S. Underwriters on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the U.S. Underwriters agree that
it would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (f), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an U.S. Underwriter within the meaning
of either the Act or the Exchange Act and each director, officer, employee and
agent of an U.S. Underwriter shall have the same rights to contribution as such
U.S. Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (f).
9. DEFAULT BY A U.S. UNDERWRITER. If any one or more U.S.
Underwriters shall fail to purchase and pay for any of the U.S. Securities
agreed to be purchased by such U.S. Underwriter or U.S. Underwriters under this
U.S. Underwriting Agreement and such failure to purchase shall constitute a
default in the performance of its or their obligations under this U.S.
Underwriting Agreement, the remaining U.S. Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the amount
of U.S. Securities set forth opposite their names in Schedule I hereto bears to
the aggregate amount of U.S. Securities set forth opposite the names of all the
remaining U.S. Underwriters) the U.S. Securities which the defaulting U.S.
27
Underwriter or U.S. Underwriters agreed but failed to purchase; PROVIDED,
HOWEVER, that in the event that the aggregate amount of U.S. Securities which
the defaulting U.S. Underwriter or U.S. Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of U.S. Securities set forth
in Schedule I hereto, the remaining U.S. Underwriters shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the U.S.
Securities, and if such nondefaulting U.S. Underwriters do not purchase all the
U.S. Securities, this U.S. Underwriting Agreement will terminate without
liability to any nondefaulting U.S. Underwriter or the Company. In the event of
a default by any U.S. Underwriter as set forth in this Section 9, the Closing
Date shall be postponed for such period, not exceeding five Business Days, as
the U.S. Representatives shall determine in order that the required changes in
the Registration Statement and the Prospectuses or in any other documents or
arrangements may be effected. Nothing contained in this U.S. Underwriting
Agreement shall relieve any defaulting U.S. Underwriter of its liability, if
any, to the Company and any nondefaulting U.S. Underwriter for damages
occasioned by its default under this U.S. Underwriting Agreement.
10. TERMINATION. This U.S. Underwriting Agreement shall be
subject to termination in the absolute discretion of the U.S. Representatives,
by notice given to the Company prior to delivery of and payment for the U.S.
Securities, if at any time prior to such time (i) trading in the Company's
Common Stock shall have been suspended by the Commission or the New York Stock
Exchange or trading in securities generally on the New York Stock Exchange shall
have been suspended or limited or minimum prices shall have been established on
such Exchange, (ii) a banking moratorium shall have been declared either by
Federal or New York State authorities or (iii) there shall have occurred any
outbreak or escalation of hostilities, declaration by the United States of a
national emergency or war, or other calamity or crisis the effect of which on
financial markets is such as to make it, in the sole judgment of the U.S.
Representatives, impractical or inadvisable to proceed with the offering or
delivery of the Securities as contemplated by the U.S. Prospectus (exclusive of
any supplement thereto).
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the U.S. Underwriters set forth in or made
pursuant to this U.S. Underwriting Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any U.S.
Underwriter or the Company or any of the officers, directors, employees, agents
or controlling persons referred to in Section 8 hereof, and will survive
delivery of and payment for the U.S. Securities. The provisions of Sections 7
and 8 hereof shall survive the termination or cancelation of this U.S.
Underwriting Agreement.
12. NOTICES. All communications under this U.S. Underwriting
Agreement will be in writing and effective only on receipt, and, if sent to the
U.S. Representatives, will be mailed, delivered or telefaxed to the ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Inc. General Counsel (fax no.:(▇▇▇) ▇▇▇-▇▇▇▇) and confirmed to such
General Counsel at ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel; or, if sent to the Company, will be
mailed, delivered or telefaxed to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, General Counsel and confirmed
to it at Blockbuster Inc., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, attention of
the Legal Department.
28
13. SUCCESSORS. This U.S. Underwriting Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective
successors and the officers, directors, employees, agents and controlling
persons referred to in Section 8 hereof, and no other person will have any right
or obligation under this U.S. Underwriting Agreement.
14. APPLICABLE LAW. THIS U.S. UNDERWRITING AGREEMENT WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WITHIN THE STATE OF NEW YORK.
15. COUNTERPARTS. This U.S. Underwriting Agreement may be
signed in one or more counterparts, each of which shall constitute an original
and all of which together shall constitute one and the same agreement.
16. HEADINGS. The section headings used in this U.S.
Underwriting Agreement are for convenience only and shall not affect the
construction hereof.
17. DEFINITIONS. The terms which follow, when used in this
U.S. Underwriting Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or
trust companies are authorized or obligated by law to close in New York
City.
"Commission" shall mean the Securities and Exchange
Commission.
"Effective Date" shall mean each date and time that the
Registration Statement, any post-effective amendment or amendments
thereto and any Rule 462(b) Registration Statement became or become
effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this U.S.
Underwriting Agreement is executed and delivered by the parties hereto.
"International Preliminary Prospectus" shall have the meaning
set forth under "U.S. Preliminary Prospectus."
"International Prospectus" shall mean such form of prospectus
relating to the International Securities as first filed pursuant to
Rule 424(b) after the Execution Time or, if no filing pursuant to Rule
424(b) is made, such form of prospectus included in the Registration
Statement at the Effective Date.
29
"International Representative" shall mean the addressees of
the International Underwriting Agreement.
"International Securities" shall mean the International
Underwritten Securities and the International Option Securities.
"International Underwriters" shall mean the several
underwriters named in Schedule I to the International Underwriting
Agreement.
"International Underwriting Agreement" shall mean the
International Underwriting Agreement dated the date hereof related to
the sale of the International Securities by the Company to the
International Underwriters.
"Option Securities" shall mean the U.S. Option Securities and
the International Option Securities.
"Preliminary Prospectus" shall have the meaning set forth
under "U.S. Preliminary Prospectus."
"Prospectuses" and "each Prospectus" shall mean the U.S.
Prospectus and the International Prospectus.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(i)(a) above, including exhibits and
financial statements, as amended at the Execution Time (or, if not
effective at the Execution Time, in the form in which it shall become
effective) and, in the event any post-effective amendment thereto or
any Rule 462(b) Registration Statement becomes effective prior to the
Closing Date, shall also mean such registration statement as so amended
or such Rule 462(b) Registration Statement, as the case may be. Such
term shall include any Rule 430A Information deemed to be included
therein at the Effective Date as provided by Rule 430A.
"Representatives" shall mean the U.S. Representatives and the
International Representatives.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules
under the Act.
"Rule 430A Information" shall mean information with respect to
the Securities and the offering thereof permitted to be omitted from
the Registration Statement when it becomes effective pursuant to Rule
430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the registration statement referred
to in Section 1(a)(i) hereof.
"Securities" shall mean the U.S. Securities and the
International Securities.
30
"subsidiary" or "subsidiaries" shall have the meaning set
forth in Rule 1-02 of Regulation S-X of the rules and regulations of
the Act.
"Underwriter" and "Underwriters" shall mean the U.S.
Underwriters and the International Underwriters.
"Underwriting Agreements" shall mean the U.S. Underwriting
Agreement and the International Underwriting Agreement.
"Underwritten Securities" shall mean the International
Underwritten Securities and the U.S. Underwritten Securities.
"U.S. Preliminary Prospectus" and the "International
Preliminary Prospectus", respectively, shall mean any preliminary
prospectus with respect to the offering of the U.S. Securities and the
International Securities, as the case may be, referred to in paragraph
1(i)(a) above and any preliminary prospectus with respect to the
offering of the U.S. Securities and the International Securities, as
the case may be, included in the Registration Statement at the
Effective Date that omits Rule 430A Information; and the U.S.
Preliminary Prospectus and the International Preliminary Prospectus are
hereinafter collectively called the "Preliminary Prospectuses".
"U.S. Prospectus" shall mean the prospectus relating to the
Securities that is first filed pursuant to Rule 424(b) after the
Execution Time or, if no filing pursuant to Rule 424(b) is required,
shall mean the form of final prospectus relating to the Securities
included in the Registration Statement at the Effective Date.
"U.S. Representatives" shall mean the addressees of the U.S.
Underwriting Agreement.
"U.S. Securities" shall mean the U.S. Underwritten Securities
and the U.S. Option Securities.
"U.S. Underwriting Agreement" shall mean this agreement
relating to the sale of the U.S. Securities by the Company to the U.S.
Underwriters.
"U.S. Underwriters" shall mean the several underwriters named
in Schedule I to the U.S. Underwriting Agreement.
"United States or Canadian Person" shall mean any person who
is a national or resident of the United States or Canada, any
corporation, partnership, or other entity created or organized in or
under the laws of the United States or Canada or of any political
subdivision thereof, or any estate or trust the income of which is
subject to United States or Canadian Federal income taxation,
regardless of its source (other than any non-United States or
non-Canadian branch of any United States or Canadian Person), and shall
include any United States or Canadian branch of a person other than a
United States or Canadian Person. "U.S." or "United States" shall mean
the United States of
31
America (including the states thereof and the District of Columbia),
its territories, its possessions and other areas subject to its
jurisdiction.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several U.S. Underwriters.
Very truly yours,
BLOCKBUSTER INC.
By:
---------------------------------
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY INC.
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY INC.
By
-----------------------------
Name:
Title:
For themselves and the other
several U.S. Underwriters
named in Schedule I to the foregoing
Agreement.
SCHEDULE I
NUMBER OF UNDERWRITTEN
SECURITIES TO BE
UNDERWRITERS PURCHASED
------------ ----------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc...............................
Bear, ▇▇▇▇▇▇▇ & Co. Inc................................
Credit Suisse First Boston Corporation.................
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co....................................
▇.▇. ▇▇▇▇▇▇ Securities Inc.............................
Banc of America Securities LLC.........................
ING Barings LLC........................................
PaineWebber Incorporated...............................
▇▇▇▇▇▇▇▇ & Co. Inc.....................................
▇▇ ▇▇▇▇▇ Securities Corporation........................
Wit Capital Corporation................................
----------------------
Total . . . . . . . . .
[FORM OF LOCK-UP AGREEMENT] EXHIBIT A
[LETTERHEAD OF VIACOM INC. (ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) AND
OF EACH EXECUTIVE OFFICER OR DIRECTOR OF THE COMPANY]
BLOCKBUSTER INC.
PUBLIC OFFERING OF COMMON STOCK
August __, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
As Representatives of the several U.S. Underwriters,
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Salomon Brothers International Limited and
Bear, ▇▇▇▇▇▇▇ International Limited
As Representatives of the several International Underwriters,
c/o Salomon Brothers International Limited
Victoria Plaza
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed U.S. Underwriting Agreement and International Underwriting Agreement
(the "Underwriting Agreements"), between Blockbuster Inc., a Delaware
corporation (the "Company"), and each of you as representatives of a group of
U.S. Underwriters and International Underwriters named therein, relating to an
underwritten public offering of Class A Common Stock, $.01 par value per share
(the "Common Stock"), of the Company.
In order to induce you and the other U.S. Underwriters and
International Underwriters to enter into the Underwriting Agreements, the
undersigned will not, [and will cause its subsidiaries (other than Blockbuster
Inc. and its subsidiaries, to the extent they are
permitted under the Underwriting Agreements) not to,]* without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and Salomon Brothers International Limited,
offer, sell, contract to sell, pledge or otherwise dispose of, (or enter into
any transaction which is designed to, or might reasonably be expected to, result
in the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Company or any affiliate
of the Company or any person in privity with the Company or any affiliate of the
Company) directly or indirectly, including the filing (or participation in the
filing of) a registration statement with the Securities and Exchange Commission
in respect of, or establish or increase a put equivalent position or liquidate
or decrease a call equivalent position within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Securities and Exchange Commission promulgated thereunder with respect to,
any shares of capital stock of the Company or any securities convertible into,
or exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period of 180 days after the
date of the Underwriting Agreements, other than shares of Common Stock disposed
of as bona fide gifts approved by ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
[Notwithstanding the foregoing, Viacom Inc. and its
subsidiaries (other than Blockbuster Inc. and its subsidiaries) may issue and
sell Common Stock in connection with the merger with or acquisition of another
corporation or entity or the acquisition of the assets or properties of any such
corporation or entity, and may make public announcements with respect to the
transactions permitted by this paragraph, so long as the recipient of the Common
Stock agrees prior to the consummation of any such transaction pursuant to an
instrument in form and substance reasonably satisfactory to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney
Inc. (which instrument will be deemed satisfactory if it is substantially
similar to the provisions of this letter agreement) to be bound by the
provisions of this letter agreement insofar as they relate to the shares of
Common Stock or other securities acquired.]*
[It is agreed and understood that nothing in this agreement
shall prohibit the undersigned from (1) exercising any stock option granted as a
direct or indirect result of any Company program, including but not limited to,
any form of "cashless" exercise generally available for such grants, provided
that the net resulting shares from stock exercise are not sold during the period
of this agreement; (2) using any Company stock or stock options as collateral
for a loan provided that the holder of said collateral executes this agreement
or an agreement substantially similar in form; (3) gifting any Company stock to
family members or family trusts provided that such family members or family
trusts execute this agreement or an agreement substantially similar in form.]**
----------
* Included in Viacom Inc. letter only.
** Included in Company executive officer and director letters only.
In furtherance of the foregoing, the Company and First Chicago
Trust Company of New York, a division of EquiServe, L.P., its transfer agent,
are hereby authorized to decline to make any transfer of securities if such
transfer would constitute a violation or breach of this letter agreement.
If for any reason the Underwriting Agreements shall be
terminated prior to the Closing Date (as defined in the Underwriting
Agreements), the agreement set forth above shall likewise be terminated.
Yours very truly,
[SIGNATURE OF VIACOM INC. AND OF EACH EXECUTIVE
OFFICER OR DIRECTOR OF THE COMPANY]
[NAME AND ADDRESS OF VIACOM INC. AND OF EACH
EXECUTIVE OFFICER OR DIRECTOR OF THE COMPANY]