Exhibit 10.3
FORM OF TRANSITION SERVICES AGREEMENT
DATED AS OF , 1999
BY AND BETWEEN
VIACOM INC.
AND
BLOCKBUSTER INC.
TABLE OF CONTENTS
Page
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ARTICLE I
FEES AND TERM
Section 1.01. Price and Payment...............................................1
Section 1.02. Term............................................................2
ARTICLE II
SERVICES
Section 2.01. Services........................................................2
ARTICLE III
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 3.01. Transitional Services...........................................3
Section 3.02. Indemnity by Service Receiver...................................3
Section 3.03. Indemnification Procedures......................................4
ARTICLE IV
MISCELLANEOUS
Section 4.01. Limitation of Liability.........................................4
Section 4.02. Relationship of the Parties.....................................4
Section 4.03. Force Majeure...................................................4
Section 4.04. Amendments......................................................5
Section 4.05. Successors and Assignment.......................................5
Section 4.06. Severability....................................................5
Section 4.07. Entire Agreement................................................5
Section 4.08. Notices.........................................................5
Section 4.09. Governing Law...................................................6
Section 4.10. Counterparts....................................................7
TRANSITION SERVICES AGREEMENT
TRANSITION SERVICES AGREEMENT (this "AGREEMENT") dated as of ,
1999 by and between VIACOM INC., a Delaware corporation ("VIACOM") and
BLOCKBUSTER INC., a Delaware corporation and an indirect, wholly owned
subsidiary of Viacom ("BLOCKBUSTER").
RECITALS
WHEREAS, since September 29, 1994, Viacom has owned and operated
the businesses and operations related to Blockbuster;
WHEREAS, Viacom presently intends to split-off Blockbuster in a
tax-free transaction;
WHEREAS, prior to such split-off, Blockbuster proposes to issue
shares of its common stock in an initial public offering registered under the
Securities Act of 1933, as amended;
WHEREAS, prior to the initial public offering of Blockbuster,
Viacom has heretofore provided certain services to Blockbuster;
WHEREAS, Blockbuster has requested from Viacom that certain such
services continue for a limited period of time pursuant to this Agreement; and
WHEREAS, Viacom agreed to provide and Blockbuster agreed to be
provided with these services on terms and conditions set forth herein (Viacom as
such provider of transitional services referred to herein as the "SERVICE
PROVIDER" and Blockbuster as such receiver of transitional services referred to
herein as the "SERVICE RECEIVER").
NOW, THEREFORE, in consideration of the above premises and the
mutual covenants contained herein, it is agreed by and between the parties as
follows:
Capitalized terms not otherwise defined herein have the meaning given to
them in the Initial Public Offering and Split-Off Agreement dated as of the
dated hereof among Viacom, Viacom International Inc. and Blockbuster.
ARTICLE I
FEES AND TERM
Section 1.01. PRICE AND PAYMENT. (a) As consideration for the
transitional services to be provided to Blockbuster by Viacom under the terms of
this Agreement, Blockbuster shall initially pay to Viacom a services fee (the
"BLOCKBUSTER SERVICES FEE") of Dollars ($ ) per month, which is based upon
Viacom's cost in providing these services. The
Blockbuster Services Fee only represents payment with respect to the
transitional services and not for other payments, costs expenses related to the
underlying transitional services themselves. The Blockbuster Services Fee shall
be payable by Blockbuster to Viacom in arrears 15 days after the close of each
month (prorated for any partial month) during the term of this Agreement. Any
transitional services provided by Viacom to Blockbuster beyond the transitional
services covered by the Blockbuster Services Fee shall be billed to Blockbuster
on a cost basis, or on such other basis as the parties may agree from time to
time. The Blockbuster Services Fee shall be reviewed and either increased or
reduced from time to time to account for Viacom's cost of providing the
transitional services hereunder.
(b) In addition to the Blockbuster Services Fee, Blockbuster
shall promptly pay or reimburse Viacom for any out-of-pocket payments, costs or
expenses incurred in good faith associated with, or related to, the underlying
transitional services provided by Viacom hereunder.
Section 1.02. TERM. The term of this Agreement (the "TERM") shall
commence on the date hereof and shall expire on the closing of the Split-Off.
ARTICLE II
SERVICES
Section 2.01. SERVICES. (a) Viacom agrees to, or will cause one
of its Subsidiaries to, provide the following transitional services (subject to
such modification or adjustment as may be mutually agreed upon by the parties)
to Blockbuster and its Subsidiaries or Affiliates during the Term:
(i) CERTAIN CASH MANAGEMENT SERVICES: Viacom shall assist
Blockbuster with certain of its treasury and cash
management needs, including foreign currency and certain
hedging activities, consistent with past practice.
(ii) CERTAIN EMPLOYEE BENEFIT PLANS ADMINISTRATION: Viacom
shall assist in the administration to certain employees of
Blockbuster and its Subsidiaries all benefit plans and a
401(k) plan consistent with past practice.
(iii) INSURANCE ADMINISTRATION: Viacom shall administer
insurance coverage on behalf of Blockbuster and its
Subsidiaries and Affiliates under Viacom's insurance
policies against certain risks and in amounts consistent
with past practice. To the extent any loss is incurred
by Blockbuster and its Subsidiaries or Affiliates, such
entity shall be responsible for the payment of any
deductible amounts related thereto and any amounts in
excess of applicable coverage limits. In the event that
the "aggregate stop loss" deductible is exceeded in any
insurance period, Blockbuster and its Subsidiaries and
Affiliates, on one hand, and Viacom and its Subsidiaries
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and Affiliates, on the other hand, shall be responsible
for their PRO RATA portion of such deductible based upon
the losses of such parties submitted to Viacom's insurance
carrier(s) in such period. To the extent that one party is
allocated more than its PRO RATA portion of the such
deductible due to the timing of losses submitted to
Viacom's insurance carrier(s), the other party shall
promptly pay the first party an amount so that each party
has been properly allocated its PRO RATA portion of the
aggregate stop loss deductible.
(iv) CERTAIN ACCOUNTING AND FINANCIAL SERVICES: Viacom shall
provide to Blockbuster internal audit supervision and
shall assist Blockbuster with its periodic and public
reporting requirements pursuant to the U.S. securities
laws.
(v) TAX DEPARTMENT: Viacom shall provide to Blockbuster tax
compliance, reporting and planning services for
international, U.S. federal, state and local tax matters
consistent with past practice and in compliance with the
Tax Matters Agreement.
(vi) CERTAIN LEGAL SERVICES: Viacom shall provide to
Blockbuster certain legal services consistent with past
practice.
(vii) CERTAIN MANAGEMENT INFORMATION SYSTEM SERVICES. Viacom
shall provide to Blockbuster certain management
information system services consistent with past practice.
ARTICLE III
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 3.01. TRANSITIONAL SERVICES. (a) In the absence of gross
negligence or reckless or willful misconduct on Service Provider's part, and
whether or not it is negligent, Service Provider shall not be liable for any
claims, liabilities, damages, losses, costs, expenses (including, but not
limited to, settlements, judgments, court costs and reasonable attorneys' fees),
fines and penalties, arising out of or relating to any actual or alleged injury,
loss or damage of any nature whatsoever in providing or failing to provide the
transitional services to Service Receiver.
(b) Service Provider's liability for damages to Service Receiver
for any cause whatsoever, and regardless of the form of action, whether in
contract or in tort, including gross negligence or willful misconduct, shall be
limited to the Blockbuster Services Fee.
Section 3.02. INDEMNITY BY SERVICE RECEIVER. (a) Service Receiver
shall indemnify, defend and hold Service Provider harmless against any and all
claims, liabilities, damages, losses, costs, expenses (including, but not
limited to, settlements, judgments, court costs
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and reasonable attorneys' fees) and any loss or damage of any nature whatsoever
(including, without limitation, loss of or damage to property, or damage to the
environment) ("LOSSES") arising out of or relating to the providing or failing
to provide the transitional services by such Service Provider except for Losses
which are the direct and sole result of gross negligence or willful misconduct
of the personnel of Service Provider.
(b) Any claim for indemnity under this Article must be made by
written notice to the indemnifying party within one (1) year after the discovery
thereof. Notwithstanding the foregoing, the indemnities contained in this
Article shall survive for a period of three (3) years after the Term.
Section 3.03. INDEMNIFICATION PROCEDURES. The indemnification
procedures set forth in Section 8.01(b) of the IPO and Split-Off Agreement are
incorporated herein and made a part hereof for all purposes as if fully set
forth herein and shall govern the parties' rights and obligations with respect
thereto.
ARTICLE IV
MISCELLANEOUS
Section 4.01. LIMITATION OF LIABILITY. Neither Viacom nor
Blockbuster shall be liable to the other for any special, indirect, incidental
or consequential damages of the other arising in connection with this Agreement.
Section 4.02. RELATIONSHIP OF THE PARTIES. It is expressly
understood and agreed that in rendering the transitional services hereunder,
Viacom is acting as an independent contractor and that this Agreement does not
constitute Viacom as an employee, agent or other representative of Blockbuster
for any purpose whatsoever. Viacom does not have the right or authority to enter
into any contract, warranty, guarantee or other undertaking in the name or for
the account of Blockbuster, or to assume or create any obligation or liability
of any kind, express or implied, on behalf of Blockbuster, or to bind
Blockbuster in any manner whatsoever, or to hold itself out as having any right,
power or authority to create any such obligation or liability on behalf of
Blockbuster or to bind Blockbuster in any manner whatsoever (except as to any
actions taken by Viacom at the express written request and direction of
Blockbuster).
Section 4.03. FORCE MAJEURE. In the event that Viacom is
prevented from performing, or is unable to perform, any of its obligations under
this Agreement due to any act of God, fire, casualty, flood, war, strike, lock
out, failure of public utilities, injunction or any act, exercise, assertion or
requirement of governmental authority, epidemic, destruction of production
facilities, insurrection, inability to procure materials, labor, equipment,
transportation or energy sufficient to meet manufacturing needs, or any other
cause beyond the reasonable control of Viacom, and if Viacom shall have used its
reasonable best efforts to avoid such occurrence and minimize its duration and
has given prompt written notice to Blockbuster, then Viacom's
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performance for the period of delay or inability to perform due to such
occurrence shall be suspended. Should Viacom fail to perform hereunder and shall
have provided proper notice to Blockbuster that it is unable to perform on
account of one or more reasons set forth in this section, Blockbuster may obtain
replacement services from a third party for the duration of such delay or
inability to perform, or for such longer period as Blockbuster shall be
reasonably required to commit to in order to obtain such replacement services
and the Blockbuster Services Fee shall be reduced accordingly.
Section 4.04. AMENDMENTS. This Agreement shall not be
supplemented, amended or modified in any manner whatsoever (including without
limitation by course of dealing or of performance or usage of trade) except in
writing signed by the parties.
Section 4.05. SUCCESSORS AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. This Agreement may not be assigned by any
party by operation of law or otherwise without the express written consent of
the other party (which consent may be granted or withheld by such party).
Section 4.06. SEVERABILITY. Wherever possible, each provision of
this Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law. If any portion of this Agreement is declared invalid
for any reason in any jurisdiction, such declaration shall have no effect upon
the remaining portions of this Agreement, which shall continue in full force and
effect as if this Agreement had been executed with the invalid portions thereof
deleted; PROVIDED that the entirety of this Agreement shall continue in full
force and effect in all other jurisdictions.
Section 4.07. ENTIRE AGREEMENT. Other than the IPO and Split-Off
Agreement, the Release and Indemnification Agreement, the Registration Rights
Agreement and the Tax Matters Agreement, this Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof and supersedes all prior agreements and undertakings, both written and
oral, between the parties with respect to the subject matter hereof and thereof.
Section 4.08. NOTICES. All notices, consents, requests,
approvals, and other communications provided for or required herein, and all
legal process in regard thereto, must be in writing and shall be deemed validly
given, made or served, (a) when delivered personally or sent by telecopy to the
facsimile number indicated below with a required confirmation copy sent in
accordance with subsection (c) below; or (b) on the next business day after
delivery to a nationally recognized express delivery service with instructions
and payment for overnight delivery; or (c) on the fifth (5th) day after
deposited in any depository regularly maintained by the United States postal
service, postage prepaid, certified or registered mail, return receipt
requested, addressed to the following addresses or to such other address as the
party to be notified shall have specified to the other party in accordance with
this section:
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If to Viacom:
Viacom Inc.
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▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, General Counsel
Phone Number: ▇▇▇-▇▇▇-▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
If to Blockbuster:
Blockbuster Inc.
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇, General Counsel
Phone Number: ▇▇▇-▇▇▇-▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
Section 4.09. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York. Each of the
parties hereto agrees that any dispute relating to or arising from this
Agreement or the transactions contemplated hereby shall be resolved only in the
Court of the State of New York sitting in the County of New York or the United
States District Court for the Southern District of New York and the appellate
courts having jurisdiction of appeals in such courts. In that context, and
without limiting the generality of the foregoing, each of the parties hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal suit, action
or proceeding relating to this Agreement or transaction contemplated hereby, or
for recognition and enforcement of any judgment in respect thereof, to the
exclusive jurisdiction of the Courts of the State of New York sitting in the
County of New York or the United States District Court for the Southern District
of New York and appellate courts having jurisdiction of appeals in such courts,
and each of the parties hereto irrevocably and unconditionally agrees that all
claims in respect of any such suit, action, or proceeding shall be heard and
determined in such New York State court or, to the extent permitted by law, in
such federal court;
(b) consents that any such suit, action or proceeding may and
shall be brought in such courts and waives any objection that it may now or
hereafter have to the venue or jurisdiction or any such action or proceeding in
such court or that such action or proceeding was brought in an inconvenient
forum and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to such party
in its address as provided in Section 4.08 hereof;
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(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by New York law; and
(e) agrees that this Agreement has been entered into in the State
of New York and performed in part in the State of New York.
Section 4.10. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
VIACOM INC.
By:
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Name:
Title:
BLOCKBUSTER INC.
By:
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Name:
Title:
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