EXHIBIT 10.4
REGISTRATION RIGHTS AGREEMENT
DATED AS OF AUGUST 16, 1999
BY AND BETWEEN
VIACOM INC.
AND
BLOCKBUSTER INC.
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions.....................................................2
Section 1.02. Internal References.............................................5
ARTICLE II
REGISTRATION RIGHTS
Section 2.01. Demand Registration - Registrable Securities....................5
Section 2.02. Piggyback Registration..........................................7
Section 2.03. Expenses.......................................................10
Section 2.04. Registration and Qualification.................................10
Section 2.05. Conversion of Other Securities, Etc............................12
Section 2.06. Underwriting; Due Diligence....................................12
Section 2.07. Indemnification and Contribution...............................13
Section 2.08. Rule 144 and Form S-3..........................................16
Section 2.09. Transfer of Registration Rights................................16
Section 2.10. Holdback Agreement.............................................17
ARTICLE III
MISCELLANEOUS
Section 3.01. Limitation of Liability........................................17
Section 3.02. Subsidiaries...................................................17
Section 3.03. Term...........................................................17
Section 3.04. Further Assurances.............................................17
Section 3.05. Specific Performance...........................................17
Section 3.06. Amendments.....................................................18
Section 3.07. Successors and Assigns.........................................18
Section 3.08. Severability...................................................18
Section 3.09. Entire Agreement...............................................18
Section 3.10. Notices........................................................18
Section 3.11. Governing Law..................................................19
Section 3.12. Counterparts...................................................20
REGISTRATION RIGHTS AGREEMENT
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REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of August
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16, 1999 by and between VIACOM INC., a Delaware corporation ("Viacom"), and
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BLOCKBUSTER INC., a Delaware corporation and an indirect, wholly owned
subsidiary of Viacom ("Blockbuster").
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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, Viacom beneficially owns all of the issued and outstanding
class B common stock, par value $0.01 per share, of Blockbuster (the
"Blockbuster Class B Common Stock"); and
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WHEREAS, the parties desire to enter into this Agreement to set forth
their agreement regarding certain registration rights with respect to
Blockbuster Class B Common Stock (and any other securities issued in respect
thereof or in exchange therefor).
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Viacom and Blockbuster, for
themselves, their successors, and assigns, hereby agree as follows:
Capitalized terms not otherwise defined herein have the meaning given
to them in the IPO and Split-Off Agreement dated , 1999 among Viacom,
Viacom International and Blockbuster.
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used in this Agreement, the following
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terms will have the following meanings, applicable both to the singular and the
plural forms of the terms described:
"Affiliates" means, with respect to any specified Person, any Person
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that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with such specified Person; provided,
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however, that prior to the Split-Off, Affiliates of Blockbuster or Viacom shall
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only include Persons who would be affiliates of Blockbuster or Viacom,
respectively, assuming that the Split-Off had occurred immediately prior to the
determination as to whether such Person was an affiliate of Blockbuster or
Viacom, respectively.
"Agreement" has the meaning ascribed thereto in the Preamble.
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"Applicable Stock" means at any time the (i) shares of Blockbuster
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Common Stock owned by Viacom and its Affiliates that were owned on the date
hereof, plus (ii) shares of Blockbuster Class B Common Stock purchased by Viacom
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and its Affiliates pursuant to Article VII of the Initial Public Offering and
Split-Off Agreement, plus (iii) shares of Blockbuster Common Stock that were
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issued to Viacom and its Affiliates in respect of shares described in either
clause (i) or clause (ii) in any reclassification, share combination, share
subdivision, share dividend, share exchange, merger, consolidation or similar
transaction or event.
"Blockbuster" has the meaning ascribed thereto in the Preamble.
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"Blockbuster Class A Common Stock" means the class A common stock, par
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value $.01 per share of Blockbuster.
"Blockbuster Class B Common Stock" has the meaning ascribed thereto in
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the Recitals.
"Blockbuster Common Stock" means the Blockbuster Class B Common Stock,
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the Blockbuster Class A Common Stock, any other class of Blockbuster's capital
stock representing the right to vote generally for the election of directors
and, for so long as Blockbuster continues to be a subsidiary corporation
includable in a consolidated federal income tax return of the Viacom Group, any
other security of Blockbuster treated as stock for purposes of Section 1504 of
the Internal Revenue Code of 1986, as amended.
"Company Securities" has the meaning ascribed thereto in Section
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2.02(b).
"Disadvantageous Condition" has the meaning ascribed thereto in
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Section 2.01(a).
"Holder" means Viacom, its Affiliates and any Transferee.
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"Holder Securities" has the meaning ascribed thereto in Section
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2.02(b).
"IPO" means the initial public offering by Blockbuster of shares of
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Blockbuster Class A Common Stock as contemplated by the IPO Registration
Statement.
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"IPO and Split-Off Agreement" means the Initial Public Offering and
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Split-Off Agreement dated as of the dated hereof among Viacom, Viacom
International and Blockbuster.
"IPO Date" means the date of completion of the initial sale of
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Blockbuster Class A Common Stock in the IPO.
"Losses" has the meaning ascribed thereto in Section 2.01(a) of the
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Release and Indemnification Agreement.
"Other Holders" has the meaning ascribed thereto in Section 2.02(c).
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"Other Securities" has the meaning ascribed thereto in Section 2.02.
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"Ownership Percentage" means, at any time, the fraction, expressed as
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a percentage and rounded to the next highest thousandth of a percent, whose
numerator is the aggregate Value of the Applicable Stock and whose denominator
is the sum of the aggregate Value of the outstanding shares of Blockbuster
Common Stock; provided, however, that any shares of Blockbuster Common Stock
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issued by Blockbuster in violation of its obligations under Article VII of the
IPO and Split-Off Agreement shall not be deemed outstanding for the purpose of
determining the Ownership Percentage. For purposes of this definition, "Value"
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means, with respect to any share of stock, the value of such share determined by
Viacom under principles applicable for purposes of Section 1504 of the Internal
Revenue Code of 1986, as amended.
"Person" means any individual, corporation, limited or general
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partnership, limited liability company, joint venture association, joint stock
company, trust unincorporated organization or government or any agency or
political subdivision thereof.
"Registrable Securities" means shares of Blockbuster Common Stock and
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any stock or other securities into which or for which such Blockbuster Common
Stock may hereafter be changed, converted or exchanged and any other shares or
securities issued to Holders of such Blockbuster Common Stock (or such shares or
other securities into which or for which such shares are so changed, converted
or exchanged) upon any reclassification, share combination, share subdivision,
share dividend, share exchange, merger, consolidation or similar transaction or
event or pursuant to the Nonvoting Stock Option. As to any particular
Registrable Securities, such Registrable Securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
sale by the Holder thereof shall have been declared effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (ii) they shall have been distributed to the
public in accordance with Rule 144, (iii) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer shall have been delivered by Blockbuster and subsequent disposition of
them shall not require registration or qualification of them under the
Securities Act
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or any state securities or blue sky law then in effect or (iv) they shall have
ceased to be outstanding.
"Registration Expenses" means any and all reasonable expenses incident
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to performance of or compliance with any registration of securities pursuant to
Article II, including, without limitation, (i) all expenses, including filing
fees, in connection with the preparation, printing and filing of the
registration statement, any preliminary prospectus or final prospectus, any
other offering document and amendments and supplements thereto and the mailing
and delivering of copies thereof to any underwriters and dealers; (ii) the cost
of printing or producing any agreements among underwriters, underwriting
agreements, and blue sky or legal investment memoranda, any selling agreements
and any other documents in connection with the offering, sale or delivery of the
securities to be disposed of; (iii) all expenses in connection with the
qualification of the securities to be disposed of for offering and sale under
state securities laws, including the fees and disbursements of counsel for the
underwriters of securities in connection with such qualification and in
connection with any blue sky and legal investment surveys; (iv) the filing fees
incident to securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the securities to be
disposed of; (v) transfer agents' and registrars' fees and expenses and the fees
and expenses of any other agent or trustee appointed in connection with such
offering; (vi) all security engraving and security printing expenses; (vii) all
fees and expenses payable in connection with the listing of the securities on
any securities exchange or automated interdealer quotation system or the rating
of such securities and (ix) any other fees and disbursements of underwriters
customarily paid by issuers of securities.
"Rule 144" means Rule 144 (or any successor rule to similar effect)
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promulgated under the Securities Act.
"Rule 415 Offering" means an offering on a delayed or continuous basis
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pursuant to Rule 415 (or any successor rule to similar effect) promulgated under
the Securities Act.
"SEC" means the U.S. Securities and Exchange Commission.
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"Securities Act" means the Securities Act of 1933, as amended from
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time to time, together with the rules and regulations promulgated thereunder.
"Selling Holder" has the meaning ascribed thereto in Section 2.04(e).
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"Split-Off" means the distribution of Blockbuster Common Stock by
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Viacom in one or more transactions occurring after the IPO that collectively
have the effect that all or a substantial part of the shares of Blockbuster
Common Stock held by Viacom are distributed to all or some of the stockholders
of Viacom, whenever such transaction(s) shall occur.
"Subsidiary" means with respect to any Person, any other Person a
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majority of the equity ownership or voting stock of which is at the time owned,
directly or indirectly, by such
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Person and/or one or more other Subsidiaries of such Person; provided, however,
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that prior to the Split-Off, a Subsidiary of Viacom shall only include Persons
who would be a Subsidiary of Viacom assuming the Split-Off has occurred
immediately prior to the determination as to whether such Person were a
Subsidiary of Viacom.
"Transferee" has the meaning ascribed thereto in Section 2.09.
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"Viacom" has the meaning ascribed thereto in the Preamble.
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"Viacom Group" means Viacom and its Affiliates and Blockbuster and its
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Affiliates.
"Viacom International" is Viacom International Inc., a Delaware
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corporation and a wholly owned subsidiary of Viacom.
"Viacom Ownership Reduction" means any decrease at any time in the
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Ownership Percentage to less than 45%.
"Viacom Transferee" has the meaning ascribed thereto in Section
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2.09(a).
Section 1.02. Internal References. Unless the context indicates
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otherwise, references to Articles, Sections and paragraphs shall refer to the
corresponding articles, sections and paragraphs in this Agreement and references
to the parties shall mean the parties to this Agreement.
ARTICLE II
REGISTRATION RIGHTS
Section 2.01. Demand Registration - Registrable Securities. (a)
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Upon written notice provided at any time after the IPO Date from any Holder of
Registrable Securities requesting that Blockbuster effect the registration under
the Securities Act of any or all of the Registrable Securities held by such
Holder, which notice shall specify the intended method or methods of disposition
of such Registrable Securities, Blockbuster shall use its reasonable best
efforts to effect the registration under the Securities Act and applicable state
securities laws of such Registrable Securities for disposition in accordance
with the intended method or methods of disposition stated in such request
(including in a Rule 415 Offering, if Blockbuster is then eligible to register
such Registrable Securities on Form S-3 (or a successor form) for such
offering); provided that:
(i) with respect to any registration statement filed, or to be filed,
pursuant to this Section 2.01, if Blockbuster shall furnish to the Holders
of Registrable Securities that have made such request a certified
resolution of the Board of Directors of Blockbuster (adopted by the
affirmative vote of a majority of the directors not designated by Viacom
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or its Affiliates) stating that in the Board of Directors' good faith
judgment it would (because of the existence of, or in anticipation of, any
acquisition or financing activity, or the unavailability for reasons beyond
Blockbuster' reasonable control of any required financial statements, or
any other event or condition of similar significance to Blockbuster) be
significantly disadvantageous (a "Disadvantageous Condition") to
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Blockbuster for such a registration statement to be maintained effective,
or to be filed and become effective, and setting forth the general reasons
for such judgment, Blockbuster shall be entitled to cause such registration
statement to be withdrawn and the effectiveness of such registration
statement terminated, or, in the event no registration statement has yet
been filed, shall be entitled not to file any such registration statement,
until such Disadvantageous Condition no longer exists (notice of which
Blockbuster shall promptly deliver to such Holders). Upon receipt of any
such notice of a Disadvantageous Condition, such Holders shall forthwith
discontinue use of the prospectus contained in such registration statement
and, if so directed by Blockbuster, each such Holder will deliver to
Blockbuster all copies, other than permanent file copies then in such
Holder's possession, of the prospectus then covering such Registrable
Securities current at the time of receipt of such notice; provided that the
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filing of any such registration statement may not be delayed for a period
in excess of 90 days due to the occurrence of any particular
Disadvantageous Condition;
(ii) after any Viacom Ownership Reduction, the Holders of Registrable
Securities may collectively exercise their rights under this Section 2.01
on not more than three occasions (it being acknowledged that prior to any
Viacom Ownership Reduction, there shall be no limit to the number of
occasions on which such Holders (other than any Viacom Transferees and
their Affiliates (other than Viacom or its Affiliates)) may exercise such
rights); and
(iii) The Holders of Registrable Securities shall not have the right
to exercise registration rights pursuant to this Section 2.01 within the
180-day period following the registration and sale of Registrable
Securities effected pursuant to a prior exercise of the registration rights
provided in this Section 2.01.
(b) Notwithstanding any other provision of this Agreement to the
contrary, a registration requested by a Holder of Registrable Securities
pursuant to this Section 2.01 shall not be deemed to have been effected (and,
therefore, not requested for purposes of paragraph (a) above), (i) unless it has
become effective, (ii) if after it has become effective such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court for any reason other than a
misrepresentation or an omission by such Holder and, as a result thereof, the
Registrable Securities requested to be registered cannot be completely
distributed in accordance with the plan of distribution set forth in the related
registration statement or (iii) if the conditions to closing specified in the
purchase agreement or underwriting agreement entered into in connection with
such registration are not satisfied or waived other than by reason of some act
or omission by such Holder of Registrable Securities.
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(c) In the event that any registration pursuant to this Section 2.01
shall involve, in whole or in part, an underwritten offering, the Holders of a
majority of the Registrable Securities to be registered shall have the right to
designate an underwriter or underwriters as the lead or managing underwriters of
such underwritten offering reasonably acceptable to Blockbuster and, in
connection with each registration pursuant to this Section 2.01, such Holders
may select one counsel to represent all such Holders.
(d) Blockbuster shall have the right to cause the registration of
additional equity securities for sale for the account of any Person (including,
without limitation, Blockbuster, and any existing or former directors, officers
or employees of Blockbuster and its Affiliates) in any registration of
Registrable Securities requested by the Holders pursuant to paragraph (a) above;
provided, however, that if such Holders are advised in writing (with a copy to
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Blockbuster) by a nationally recognized investment banking firm selected by such
Holders reasonably acceptable to Blockbuster (which shall be the lead
underwriter or a managing underwriter in the case of an underwritten offering)
that, in such firm's good faith view, all or a part of such additional equity
securities cannot be sold and the inclusion of such additional equity securities
in such registration would be likely to have an adverse effect on the price,
timing or distribution of the offering and sale of the Registrable Securities
then contemplated by any Holder, the registration of such additional equity
securities or part thereof shall not be permitted. The Holders of the
Registrable Securities to be offered may require that any such additional equity
securities be included in the offering proposed by such Holders on the same
conditions as the Registrable Securities that are included therein. In the
event that the number of Registrable Securities requested to be included in a
registration statement by the Holders thereof exceeds the number which, in the
good faith view of such investment banking firm, can be sold without adversely
affecting the price, timing, distribution or sale of securities in the offering,
the number shall be allocated pro rata among the requesting Holders on the basis
of the relative number of Registrable Securities then held by each such Holder
(provided that any number in excess of a Holder's request may be reallocated
among the remaining requesting Holders in a like manner).
Section 2.02. Piggyback Registration. In the event that Blockbuster
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at any time after the IPO Date proposes to register any of its Blockbuster
Common Stock, any other of its equity securities or securities convertible into
or exchangeable for its equity securities (collectively, including Blockbuster
Common Stock, "Other Securities") under the Securities Act, whether or not for
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sale for its own account, in a manner that would permit registration of
Registrable Securities for sale for cash to the public under the Securities Act,
it shall at each such time give prompt written notice to each Holder of
Registrable Securities of its intention to do so and of the rights of such
Holder under this Section 2.02. Subject to the terms and conditions hereof, such
notice shall offer each such Holder the opportunity to include in such
registration statement such number of Registrable Securities as such Holder may
request. Upon the written request of any such Holder made within 15 days after
the receipt of Blockbuster' notice (which request shall specify the number of
Registrable Securities intended to be disposed of and the intended method of
disposition thereof), Blockbuster shall use its reasonable best efforts to
effect, in connection with the registration of the Other Securities, the
registration under the
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Securities Act of all Registrable Securities which Blockbuster has been so
requested to register, to the extent required to permit the disposition (in
accordance with such intended method of disposition thereof) of the Registrable
Securities so requested to be registered; provided that:
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(a) if, at any time after giving such written notice of its intention
to register any Other Securities and prior to the effective date of the
registration statement filed in connection with such registration, Blockbuster
shall determine for any reason not to register the Other Securities, Blockbuster
may, at its election, give written notice of such determination to such Holders
and thereupon Blockbuster shall be relieved of its obligation to register such
Registrable Securities in connection with the registration of such Other
Securities, without prejudice, however, to the rights of the Holders of
Registrable Securities immediately to request that such registration be effected
as a registration under Section 2.01 to the extent permitted thereunder;
(b) if the registration referred to in the first sentence of this
Section 2.02 is to be an underwritten registration on behalf of Blockbuster, and
a nationally recognized investment banking firm selected by Blockbuster advises
Blockbuster in writing that, in such firm's good faith view, the inclusion of
all or a part of such Registrable Securities in such registration would be
likely to have an adverse effect upon the price, timing or distribution of the
offering and sale of the Other Securities then contemplated, Blockbuster shall
include in such registration: (i) first, all Other Securities Blockbuster
proposes to sell for its own account ("Company Securities"); (ii) second, up to
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the full number of Registrable Securities held by Holders constituting Viacom
and its Affiliates that are requested to be included in such registration
(Registrable Securities that are so held being sometimes referred to herein as
"Holder Securities") in excess of the number of Company Securities to be sold in
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such offering which, in the good faith view of such investment banking firm, can
be sold without adversely affecting such offering and the sale of the Other
Securities then contemplated (and (x) if such number is less than the full
number of such Holder Securities, such number shall be allocated by Viacom among
Viacom and its Affiliates and (y) in the event that such investment banking firm
advises that less than all of such Holder Securities may be included in such
offering, Viacom and its Affiliates may withdraw their request for registration
of their Registrable Securities under this Section 2.02 and 90 days subsequent
to the effective date of the registration statement for the registration of such
Other Securities request that such registration be effected as a registration
under Section 2.01 to the extent permitted thereunder); (iii) third, up to the
full number of Registrable Securities held by Holders (other than Viacom and its
Affiliates) of Registrable Securities that are requested to be included in such
registration in excess of the number of Company Securities and Holder Securities
to be sold in such offering which, in the good faith view of such investment
banking firm, can be so sold without so adversely affecting such offering (and
(x) if such number is less than the full number of such Registrable Securities,
such number shall be allocated pro rata among such Holders on the basis of the
number of Registrable Securities requested to be included therein by each such
Holder and (y) in the event that such investment banking firm advises that less
than all of such Registrable Securities may be included in such offering, such
Holders may withdraw their request for registration of their Registrable
Securities under this
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Section 2.02 and 90 days subsequent to the effective date of the registration
statement for the registration of such Other Securities request that such
registration be effected as a registration under Section 2.01 to the extent
permitted thereunder); and (iv) fourth, up to the full number of the Other
Securities (other than Company Securities), if any, in excess of the number of
Company Securities and Registrable Securities to be sold in such offering which,
in the good faith view of such investment banking firm, can be so sold without
so adversely affecting such offering (and, if such number is less than the full
number of such Other Securities, such number shall be allocated pro rata among
the holders of such Other Securities (other than Company Securities) on the
basis of the number of securities requested to be included therein by each such
holder);
(c) if the registration referred to in the first sentence of this
Section 2.02 is to be an underwritten secondary registration on behalf of
holders of Other Securities (the "Other Holders"), and the lead underwriter or
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managing underwriter advises Blockbuster in writing that in their good faith
view, all or a part of such additional securities cannot be sold and the
inclusion of such additional securities in such registration would be likely to
have an adverse effect on the price, timing or distribution of the offering and
sale of the Other Securities then contemplated, Blockbuster shall include in
such registration the number of securities (including Registrable Securities)
that such underwriters advise can be so sold without adversely affecting such
offering, allocated pro rata among the Other Holders and the Holders of
Registrable Securities on the basis of the number of securities (including
Registrable Securities) requested to be included therein by each Other Holder
and each Holder of Registrable Securities; provided that if such registration
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statement is to be filed at any time after a Viacom Ownership Reduction, if any,
and if such Other Holders have requested that such registration statement be
filed pursuant to demand registration rights granted to them by Blockbuster,
Blockbuster shall include in such registration: (i) Other Securities sought to
be included therein by the Other Holders pursuant to the exercise of such demand
registration rights; (ii) the number of Holder Securities sought to be included
in such registration in excess of the number of Other Securities sought to be
included in such registration by the Other Holders which in the good faith view
of such investment banking firm, can be so sold without so adversely affecting
such offering (and (x) if such number is less than the full number of such
Holder Securities, such number shall be allocated by Viacom among Viacom and its
Affiliates and (y) in the event that such investment banking firm advises that
less than all of such Holder Securities may be included in such offering, Viacom
and its Affiliates may withdraw their request for registration of their
Registrable Securities under this Section 2.02 and 90 days subsequent to the
effective date of the registration statement for the registration of such Other
Securities request that such registration be effected as a registration under
Section 2.01 to the extent permitted thereunder); and (iii) the number of
Registrable Securities sought to be included in such registration by Holders
(other than Viacom and its Affiliates) of Registrable Securities in excess of
the number of Other Securities and the number of Holder Securities sought to be
included in such registration which, in the good faith view of such investment
banking firm, can be so sold without so adversely affecting such offering (and
(x) if such number is less than the full number of such Registrable Securities,
such number shall be allocated pro rata among such Holders on the basis of the
number of Registrable Securities requested to be
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included therein by each such Holder and (y) in the event that such investment
banking firm advises that less than all of such Registrable Securities may be
included in such offering, such Holders may withdraw their request for
registration of their Registrable Securities under this Section 2.02 and 90 days
subsequent to the effective date of the registration statement for the
registration of such Other Securities request that such registration be effected
as a registration under Section 2.01 to the extent permitted thereunder);
(d) Blockbuster shall not be required to effect any registration of
Registrable Securities under this Section 2.02 incidental to the registration of
any of its securities in connection with mergers, acquisitions, exchange offers,
subscription offers, dividend reinvestment plans or stock option or other
executive or employee benefit or compensation plans; and
(e) no registration of Registrable Securities effected under this
Section 2.02 shall relieve Blockbuster of its obligation to effect a
registration of Registrable Securities pursuant to Section 2.01.
Section 2.03. Expenses. Except as provided herein, Viacom shall pay
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all or its pro rata share of Registration Expenses with respect to a particular
offering (or proposed offering), as the case may be, except for fees,
disbursements and expenses related to Blockbuster's counsel, accountants and
other advisors. Notwithstanding the foregoing, each Holder and Blockbuster
shall be responsible for its own internal administrative and similar costs,
which shall not constitute Registration Expenses.
Section 2.04. Registration and Qualification. If and whenever
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Blockbuster is required to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 2.01 or 2.02, Blockbuster shall
as promptly as practicable:
(a) prepare, file and use its reasonable best efforts to cause to
become effective a registration statement under the Securities Act relating to
the Registrable Securities to be offered;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the disposition of all
Registrable Securities until the earlier of (A) such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition set forth in such registration statement and (B) the
expiration of (i) six months after such registration statement becomes effective
or (ii) twenty four months after a registration statement filed in a Rule 415
Offering becomes effective; provided, that such respective periods shall be
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extended for such number of days that equals the number of days elapsing from
(x) the date the written notice contemplated by paragraph (f) below is given by
Blockbuster to (y) the
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date on which Blockbuster delivers to the Holders of Registrable Securities the
supplement or amendment contemplated by paragraph (f) below;
(c) furnish to the Holders of Registrable Securities and to any
underwriter of such Registrable Securities such number of conformed copies of
such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary prospectus
and any summary prospectus), in conformity with the requirements of the
Securities Act, such documents incorporated by reference in such registration
statement or prospectus, and such other documents, as the Holders of Registrable
Securities or such underwriter may reasonably request, and a copy of any and all
transmittal letters or other correspondence to or received from, the SEC or any
other governmental agency or self-regulatory body or other body having
jurisdiction (including any domestic or foreign securities exchange) relating to
such offering;
(d) use its reasonable best efforts to register or qualify all
Registrable Securities covered by such registration statement under the
securities or blue sky laws of such jurisdictions as the Holders of such
Registrable Securities or any underwriter to such Registrable Securities shall
request, and use its reasonable best efforts to obtain all appropriate
registrations, permits and consents in connection therewith, and do any and all
other acts and things which may be necessary or advisable to enable the Holders
of Registrable Securities or any such underwriter to consummate the disposition
in such jurisdictions of its Registrable Securities covered by such registration
statement; provided, that Blockbuster shall not for any such purpose be required
--------
to qualify generally to do business as a foreign corporation in any such
jurisdiction wherein it is not so qualified or to consent to general service of
process in any such jurisdiction;
(e) (i) use its reasonable best efforts to furnish to each Holder of
Registrable Securities included in such registration (each, a "Selling Holder")
--------------
and to any underwriter of such Registrable Securities an opinion of counsel for
Blockbuster addressed to each Selling Holder and dated the date of the closing
under the underwriting agreement (if any) (or if such offering is not
underwritten, dated the effective date of the registration statement) and (ii)
use its reasonable best efforts to furnish to each Selling Holder a "cold
----
comfort" letter addressed to each Selling Holder and signed by the independent
-------
public accountants who have audited the financial statements of Blockbuster
included in such registration statement, in each such case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to underwriters in
underwritten public offerings of securities and such other matters as the
Selling Holders may reasonably request and, in the case of such accountants'
letter, with respect to events subsequent to the date of such financial
statements;
(f) as promptly as practicable, notify the Selling Holders in writing
(i) at any time when a prospectus relating to a registration pursuant to
Sections 2.01 or 2.02 is required to be delivered under the Securities Act of
the happening of any event as a result of which the
11
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading and (ii)
of any request by the SEC or any other regulatory body or other body having
jurisdiction for any amendment of or supplement to any registration statement or
other document relating to such offering, and in either such case, at the
request of the Selling Holders prepare and furnish to the Selling Holders a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading;
(g) if reasonably requested by the lead or managing underwriters, use
its reasonable best efforts to list all such Registrable Securities covered by
such registration on each securities exchange and automated inter-dealer
quotation system on which a class of common equity securities of Blockbuster is
then listed;
(h) to the extent reasonably requested by the lead or managing
underwriters, send appropriate officers of Blockbuster to attend any "road
----
shows" scheduled in connection with any such registration, with all out-of-
pocket costs and expense incurred by Blockbuster or such officers in connection
with such attendance to be paid by Blockbuster; and
(i) furnish for delivery in connection with the closing of any
offering of Registrable Securities pursuant to a registration effected pursuant
to Sections 2.01 or 2.02 unlegended certificates representing ownership of the
Registrable Securities being sold in such denominations as shall be requested by
the Selling Holders or the underwriters.
Section 2.05. Conversion of Other Securities, Etc. In the event that
-----------------------------------
any Holder offers any options, rights, warrants or other securities issued by it
or any other Person that are offered with, convertible into or exercisable or
exchangeable for any Registrable Securities, the Registrable Securities
underlying such options, rights, warrants or other securities shall continue to
be eligible for registration pursuant to Sections 2.01 and 2.02.
Section 2.06. Underwriting; Due Diligence. (a) If requested by the
---------------------------
underwriters for any underwritten offering of Registrable Securities pursuant to
a registration requested under this Article II, Blockbuster shall enter into an
underwriting agreement with such underwriters for such offering, which agreement
will contain such representations and warranties by Blockbuster and such other
terms and provisions as are customarily contained in underwriting agreements
with respect to secondary distributions, including, without limitation,
indemnification and contribution provisions substantially to the effect and to
the extent provided in Section 2.07, and agreements as to the provision of
opinions of counsel and accountants' letters to the effect and to the extent
provided in Section 2.04(e). The Selling Holders on whose behalf the Registrable
12
Securities are to be distributed by such underwriters shall be parties to any
such underwriting agreement and the representations and warranties by, and the
other agreements on the part of, Blockbuster to and for the benefit of such
underwriters, shall also be made to and for the benefit of such Selling Holders.
Such underwriting agreement shall also contain such representations and
warranties by such Selling Holders and such other terms and provisions as are
customarily contained in underwriting agreements with respect to secondary
distributions, including, without limitation, indemnification and contribution
provisions substantially to the effect and to the extent provided in Section
2.07.
(b) In connection with the preparation and filing of each registration
statement registering Registrable Securities under the Securities Act pursuant
to this Article II, Blockbuster shall give the Holders of such Registrable
Securities and the underwriters, if any, and their respective counsel and
accountants, such reasonable and customary access to its books and records and
such opportunities to discuss the business of Blockbuster with its officers and
the independent public accountants who have certified the financial statements
of Blockbuster as shall be necessary, in the opinion of such Holders and such
underwriters or their respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
Section 2.07. Indemnification and Contribution. (a) In the case of
--------------------------------
each offering of Registrable Securities made pursuant to this Article II,
Blockbuster agrees to indemnify and hold harmless, to the extent permitted by
law, each Selling Holder, each underwriter of Registrable Securities so offered
and each Person, if any, who controls any of the foregoing Persons within the
meaning of the Securities Act and the officers, directors, Affiliates, employees
and agents of each of the foregoing, against any and all Losses (including,
without limitation, any legal or other expenses incurred in connection with
defending or investigating any such action or claim), as incurred, arising out
of or relating to any untrue statement or alleged untrue statement of a material
fact contained in, or incorporated by reference into, in the registration
statement (or in any preliminary or final prospectus included therein) or in any
offering memorandum or other offering document relating to the offering and sale
of such Registrable Securities prepared by Blockbuster or at its direction, or
any amendment thereof or supplement thereto, or any omission by Blockbuster or
alleged omission by Blockbuster to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
except that Blockbuster shall not be liable to any Person in any such case to
the extent that any such Loss arising out of or relating to any untrue statement
or alleged untrue statement, or any omission or alleged omission, if such
statement or omission shall have been made in reliance upon and in conformity
with information relating to a Selling Holder, another holder of securities
included in such registration statement or underwriter furnished in writing to
Blockbuster by or on behalf of such Selling Holder, other holder or underwriter,
as the case may be, specifically for use in the registration statement (or in
any preliminary or final prospectus included therein), offering memorandum or
other offering document, or any amendment thereof or supplement thereto. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of any Selling Holder, any other holder or any underwriter
and shall survive the transfer of such securities. In the case of an offering
with respect to which a Selling Holder has
13
designated the lead or managing underwriters (or a Selling Holder is offering
Registrable Securities directly, without an underwriter), this indemnity does
not apply to any Loss arising out of or relating to any untrue statement or
alleged untrue statement or omission or alleged omission in any preliminary
prospectus or offering memorandum if a copy of a final prospectus or offering
memorandum was not sent or given by or on behalf of any underwriter (or such
Selling Holder or other holder, as the case may be) to such Person asserting
such Loss at or prior to the written confirmation of the sale of the Registrable
Securities as required by the Securities Act and such untrue statement or
omission had been corrected in such final prospectus or offering memorandum.
(b) In the case of each offering made pursuant to this Agreement, each
Selling Holder, by exercising its registration rights hereunder, agrees to
indemnify and hold harmless, and to cause each underwriter of Registrable
Securities included in such offering (in the same manner and to the same extent
as set forth in Section 2.07(a)) to agree to indemnify and hold harmless,
Blockbuster, each other underwriter who participates in such offering, each
other Selling Holder or other holder with securities included in such offering
and in the case of an underwriter, such Selling Holder or other holder, and each
Person, if any, who controls any of the foregoing within the meaning of the
Securities Act and the Affiliates and Representatives of each of the foregoing,
against any and all Losses (including, without limitation, any legal or other
expenses incurred in connection with defending or investigating any such action
or claim), as incurred, arising out of or relating to any untrue statement or
alleged untrue statement of a material fact contained in, or incorporated by
reference into, the registration statement (or in any preliminary or final
prospectus included therein) or in any offering memorandum or other offering
document relating to the offering and sale of such Registrable Securities
prepared by Blockbuster or at its direction, or any amendment thereof or
supplement thereto, or any omission by such Selling Holder or underwriter, as
the case may be, or alleged omission by such Selling Holder or underwriter, as
the case may be, of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but in each case only to the
extent that such untrue statement of a material fact is contained in, or such
material fact is omitted from information relating to such Selling Holder or
underwriter, as the case may be, furnished in writing to Blockbuster by or on
behalf of such Selling Holder or underwriter, as the case may be, specifically
for use in such registration statement (or in any preliminary or final
prospectus included therein), offering memorandum or other offering document, or
any amendment thereof or supplement thereto. In the case of an offering made
pursuant to this Agreement with respect to which Blockbuster has designated the
lead or managing underwriters (or Blockbuster is offering securities directly,
without an underwriter), this indemnity does not apply to any Loss arising out
of or related to any untrue statement or alleged untrue statement or omission or
alleged omission in any preliminary prospectus or offering memorandum if a copy
of a final prospectus or offering memorandum was not sent or given by or on
behalf of any underwriter (or Blockbuster, as the case may be) to such Person
asserting such loss, liability, cost, claim or damage at or prior to the written
confirmation of the sale of the Registrable Securities as required by the
Securities Act and such untrue statement or omission had been corrected in such
final prospectus or offering memorandum.
14
(c) 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.
(d) If the indemnification provided for in this Section 2.07 shall for
any reason be unavailable (other than in accordance with its terms) to an
Indemnified Party in respect of any Loss referred to therein, then each
Indemnifying Party shall, in lieu of indemnifying such Indemnified Party,
contribute to the amount paid or payable by such Indemnified Party as a result
of such Loss (i) as between Blockbuster and the Selling Holders on the one hand
and the underwriters on the other, in such proportion as shall be appropriate to
reflect the relative benefits received by Blockbuster and the Selling Holders on
the one hand and the underwriters on the other hand or, if such allocation is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits but also the relative fault of Blockbuster and
the Selling Holders on the one hand and the underwriters on the other with
respect to the statements or omissions which resulted in such Loss as well as
any other relevant equitable considerations and (ii) as between Blockbuster on
the one hand and each Selling Holder on the other, in such proportion as is
appropriate to reflect the relative fault of Blockbuster and of each Selling
Holder in connection with such statements or omissions as well as any other
relevant equitable considerations. The relative benefits received by
Blockbuster and the Selling Holders on the one hand and the underwriters on the
other shall be deemed to be in the same proportion as the total proceeds from
the offering (net of underwriting discounts and commissions but before deducting
expenses) received by Blockbuster and the Selling Holders bear to the total
underwriting discounts and commissions received by the underwriters, in each
case as set forth in the table on the cover page of this prospectus. The
relative fault of Blockbuster and the Selling Holders on the one hand and of the
underwriters on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by Blockbuster
and the Selling Holders or by the underwriters. The relative fault of
Blockbuster on the one hand and of each Selling Holder on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission, but not be reference to any Indemnified
Party's stock ownership in Blockbuster. The amount paid or payable by an
Indemnified Party as a result of the Loss in respect thereof, referred to above
in this paragraph (d) shall be deemed to include, for purposes of this paragraph
(d), any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Blockbuster and the Selling Holders agree that it would not be just and
equitable if contribution pursuant to this Section 2.07 were determined by pro
---
rata allocation (even if the underwriters were treated as one entity for such
----
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this paragraph. Notwithstanding any
other provisions of this Section 2.07, no Selling Holder shall be required to
contribute any amount in excess of the amount by which the total price at which
the Registrable Securities of such Selling Holder were
15
offered to the public exceeds the amount of any damages which such Selling
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. Each Selling Holder's
obligations to contribute pursuant to this Section 2.07 are several in
proportion to the proceeds of the offering received by such Selling Holder bears
to the total proceeds of the offering received by all the Selling Holders and
not joint. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(e) Indemnification and contribution similar to that specified in the
preceding paragraphs of this Section 2.07 (with appropriate modifications) shall
be given by Blockbuster, the Selling Holders and underwriters with respect to
any required registration or other qualification of securities under any state
law or regulation or governmental authority.
(f) The obligations of the parties under this Section 2.07 shall be in
addition to any liability which any party may otherwise have to any other party.
Section 2.08. Rule 144 and Form S-3. Commencing 90 days after the
---------------------
IPO Date, Blockbuster shall use its reasonable best efforts to ensure that the
conditions to the availability of Rule 144 set forth in paragraph (c) thereof
shall be satisfied. Upon the request of any Holder of Registrable Securities,
Blockbuster will deliver to such Holder a written statement as to whether it has
complied with such requirements. Blockbuster further agrees to use its
reasonable efforts to cause all conditions to the availability of Form S-3 (or
any successor form) under the Securities Act of the filing of registration
statements under this Agreement to be met as soon as practicable after the IPO
Date. Notwithstanding anything contained in this Section 2.08, Blockbuster may
deregister under Section 12 of the Securities Exchange Act of 1934, as amended,
if it then is permitted to do so pursuant to said Act and the rules and
regulations thereunder.
Section 2.09. Transfer of Registration Rights. (a) Any Holder may
-------------------------------
transfer all or any portion of its rights under Article II to (i) any other
transferee in respect of a number of Registrable Securities owned by such Holder
equal to or exceeding 3% of the outstanding Blockbuster Common Stock at the time
of the transfer (each transferee that receives such minimum number of
Registrable Securities shall be referred to herein as a "Transferee"). Any
----------
transfer of registration rights pursuant to this Section 2.09(a) shall be
effective upon receipt by Blockbuster of (i) written notice from such Holder
stating the name and address of any Transferee and identifying the number of
Registrable Securities with respect to which the rights under this Agreement are
being transferred and the nature of the rights so transferred and (ii) a written
agreement from such Transferee to be bound by the terms of this Article II and
Sections 3.03, 3.06, 3.07, 3.09, and 3.11 of this Agreement. The Holders may
exercise their rights hereunder in such priority as they shall agree upon among
themselves.
16
(b) Notwithstanding the foregoing, in the event that any stockholder
of Viacom receives restricted Registrable Securities in the Split-Off and as a
result of the Split-Off, such stockholder is "affiliated" with Blockbuster for
purposes of the Securities Act, such stockholder shall be entitled to the rights
hereunder; provided, however, that it shall only be entitled to request
registration of Registrable Securities pursuant to Section 2.01 only twice and
such stockholder signs a written agreement to be bound by the terms of this
Agreement. Any such stockholder for purposes of this Agreement shall be
considered a "Holder."
Section 2.10. Holdback Agreement. If any registration pursuant to
------------------
this Article II shall be in connection with an underwritten public offering of
Registrable Securities, each Selling Holder agrees not to effect any public sale
or distribution, including any sale under Rule 144, of any equity security of
Blockbuster (otherwise than through the registered public offering then being
made), within 7 days prior to or 90 days (or such lesser period as the lead or
managing underwriters may permit) after the effective date of the registration
statement (or the commencement of the offering to the public of such Registrable
Securities in the case of Rule 415 offerings). Upon the reasonable request of
the underwriters, Blockbuster hereby also so agrees and agrees to use its
reasonable best efforts to cause each other holder of equity securities or
securities convertible into or exchangeable or exercisable for such securities
(other than in the case of equity securities, under dividend reinvestment plans
or employee stock plans) purchased from Blockbuster otherwise than in a public
offering to so agree.
ARTICLE III
MISCELLANEOUS
Section 3.01. 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 3.02. Subsidiaries. Viacom agrees and acknowledges that
------------
Viacom shall be responsible for the performance by each of its Affiliates of the
obligations hereunder applicable to such Affiliate.
Section 3.03. Term. This Agreement shall remain in effect until all
----
Registrable Securities held by Holders have been transferred by them to Persons
other than Transferees; provided that the provisions of Section 2.07 shall
--------
survive any such expiration.
Section 3.04. Further Assurances. Viacom and Blockbuster shall
------------------
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such instruments and take such other action as may be necessary or
advisable to carry out their obligations under this Agreement and under any
exhibit, document or other instrument delivered pursuant hereto.
Section 3.05. Specific Performance. The parties hereto acknowledge
--------------------
and agree that irreparable damage would occur in the event that any of the
provisions of this Agreement
17
were not performed in accordance with their specific terms or were otherwise
breached. Accordingly, it is agreed that they shall be entitled to an injunction
or injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court of competent
jurisdiction in the United States or any state thereof, in addition to any other
remedy to which they may be entitled at law or equity.
Section 3.06. 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 3.07. Successors and Assigns. This Agreement shall be
----------------------
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns. Nothing contained in this Agreement, express
or implied, is intended to confer upon any other person or entity any benefits,
rights or remedies.
Section 3.08. 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 3.09. Entire Agreement. Other than the IPO and Split-Off
----------------
Agreement, the Release and Indemnification Agreement, the Transition Services
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 supersede all prior agreements and undertakings, both written and
oral, between the parties with respect to the subject matter hereof and thereof.
Section 3.10. 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:
If to Viacom:
18
Viacom Inc.
0000 Xxxxxxxx
Xxx Xxxx Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, General Counsel
Phone Number: 000-000-0000
Fax Number: 000-000-0000
If to Blockbuster:
Blockbuster Inc.
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xx Xxxxx, General Counsel
Phone Number: 000-000-0000
Fax Number: 000-000-0000
Section 3.11. 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 any 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 3.06 hereof;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by New York law; and
19
(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 3.12. 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.
20
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
VIACOM INC.
By: /s/ XXXXXXX X. XXXXXXXX
----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Sr. Vice President
BLOCKBUSTER INC.
By: /s/ XXXXXX X. XXXXX
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Exec. Vice President, General
Counsel and Secretary
