AGREEMENT TERM SHEET
Parties: Viacom Inc. (the "Company"), NAIRI, Inc. ("NAIRI")
and National Amusements, Inc. ("NAI" and, together
with NAIRI and the direct and indirect wholly owned
subsidiaries of NAIRI and NAI, "Seller").
Purchase and Sale: NAIRI and NAI agree to sell, or to cause Seller
to sell, to the Company, and the Company agrees
to purchase from Seller, with respect to each
calendar month (the "Applicable Month") in which the
Company purchases Shares pursuant to the Program, a
number of Class B Shares at each Closing (as
calculated in accordance with Annex A hereto) such
that Seller's ownership percentage shall not increase
as a result of purchases made pursuant to the Program
(the Class B Shares acquired from Seller, the
"Acquired Shares"). (With respect to October, 2004,
the first business day of the Applicable Month will
be deemed to be October 28, 2004. In the event that
the Agreement is terminated, the day immediately
prior to the termination date will be deemed to be
the last day of the Applicable Month in which the
termination date occurs).
Purchase Price: The aggregate purchase price for the Acquired
Shares at each Closing (the "Purchase Price") shall
be equal to the sum of (a) the product of (i) the
aggregate number of Acquired Shares to be purchased
at such Closing multiplied by (ii) the
Volume-Weighted Average Price of the Acquired Shares
for the Applicable Month plus (b) the LIBOR Carry
Amount for the Applicable Month. The Purchase Price
shall be adjusted, if necessary, to take into account
the effect of dividends relating to Acquired Shares
to be settled for the Applicable Month.
Closing: Within five business days after the end of each
Applicable Month, the Company shall deliver to
NAIRI and NAI a notice (the "Closing Notice") of
the number of Acquired Shares to be purchased by
the Company from Seller and a calculation of the
Purchase Price. Subject to the satisfaction or waiver
of the closing conditions set forth below, each
closing of the purchase and sale of the Acquired
Shares hereunder shall take place on the date set
forth in the Closing Notice, which in any event shall
be no later than the seventh business day after the
end of each Applicable Month (each, a "Closing") at
the offices of the Company located at 1515 Broadway,
New York, New York 10036, at 10:00 A.M., New York
City time, or as soon as possible thereafter;
provided no Closing shall occur until the IRS Closing
Condition set forth below has been satisfied.
Delayed Closing: In the event that the first Closing has been delayed
pending satisfaction of the IRS Closing Condition,
then the first Closing shall take place on the
day that is five business days following the
satisfaction of such IRS Closing Condition
(the "Delayed Closing") at the Company's offices at
the address and time set forth above and the
Company shall deliver a Closing Notice to NAIRI
and NAI no later than two business days prior to
the Delayed Closing. At the Delayed Closing, the
Seller shall deliver to the Company the Acquired
Shares in respect of each prior Applicable Month
for which a Closing had been delayed and the Company
shall pay the Seller the Purchase Price for such
Acquired Shares.
Conditions
to Closing: The obligations of the Company and Seller to
consummate each Closing or Delayed Closing shall be
subject to the satisfaction or waiver of conditions
customary for agreements of this nature. In addition,
the obligation of the Company to consummate the first
Closing or Delayed Closing shall be subject to the
condition that the Company shall have received
confirmation from the Internal Revenue Service
satisfactory to the Company that the purchase and
sale of the Shares pursuant to the terms of the
Agreement will not adversely affect the IRS ruling on
the Blockbuster split-off (the "IRS Closing
Condition").
Representations
and Warranties: The Agreement shall contain representations and
warranties from each of the Company, NAIRI and NAI
as are customary for an agreement of this nature.
Covenants: The Agreement shall contain covenants of each of
the Company, NAIRI and NAI as are customary for an
agreement of this nature. In addition, the Agreement
shall contain a covenant from NAIRI and NAI that
until termination of the Agreement, NAIRI and NAI
agree not to purchase, and to cause Seller not to
purchase, Shares without the consent of the Audit
Committee of the Company and not to sell, transfer,
assign or deliver, and cause Seller not to sell,
transfer, assign or deliver, Shares other than to
the Company pursuant to the Agreement; provided that
Seller may sell such Shares as are required pursuant
to the terms of NAI's senior credit agreement so long
as NAIRI and NAI provide the Company with prior
written notice of Seller's intention to sell such
Shares; and provided, further, that each of NAIRI,
NAI and their direct and indirect wholly owned
subsidiaries may transfer Shares between and among
each other entity that is a Seller.
Termination: The Agreement shall terminate:
(a) upon joint written agreement of the Company, NAIRI
and NAI; or
(b) 45 days after written notice by NAIRI and NAI, on the
one hand, or the Company, on the other hand; or
(c) upon written notice by the Company if NAIRI and NAI
have delivered a notice to the Company stating
Seller's intention to sell Shares pursuant to the
terms of NAI's senior credit agreement; or
(d) upon written notice by NAIRI and NAI, on the one
hand, or the Company, on the other hand, if
there shall be any law or regulation that makes
consummation of the transactions contemplated
hereby illegal or otherwise prohibited or if
consummation of the transactions contemplated
hereby would violate any nonappealable final
order, decree or judgment of any court or
governmental body having competent jurisdiction;
or
(e) at the termination or completion of the Program; or
(f) at the two-month anniversary of the effective date of
the Agreement in the event that the IRS Closing
Condition is not satisfied or waived by such date;
provided that with respect to (a), (b) and (c) above,
such termination shall not affect the settlement of
Acquired Shares in respect of any trading activity
which has occurred during any period prior to the
effective date of such joint agreement or such notice
of termination, as applicable.
Governing Law: State of New York.
RELATED DEFINITIONS
"Class A Shares" means shares of the Class A common stock of the
Company.
"Class B Shares" means shares of the Class B common stock of the
Company.
"Individual LIBOR Carry Amount" means, for any period, an amount
determined at the end of such period in respect of each day's trading within
such period equal to the product of (a) the volume of Acquired Shares in respect
of such day's trades and (b) the VWAP for such day and (c) the number of days
measured from the third trading day following such trading day until the date of
the next Closing and (d) LIBOR divided by 360; provided that the Individual
LIBOR Carry Amount shall be adjusted, if necessary, to take into account the
effect of dividends relating to Acquired Shares to be settled for the period.
"LIBOR Carry Amount" means, for any period, an amount determined at the
end of each period that is the sum of all Individual LIBOR Carry Amounts for
such period.
"Program" means the share repurchase program approved by the Audit
Committee of the Board of Directors of the Company on October 27, 2004
authorizing the Company to purchase from time to time such Shares as the Company
shall deem advisable from time to time up to a maximum aggregate amount of $8
billion.
"Shares" means the Class A Shares and the Class B Shares.
"Volume-Weighted Average Price" means, for any period, the average
price of the Class B Shares calculated as (a) the sum of the VWAP Volume Amount
for all of the trading days on which the Company purchased Shares pursuant to
the Program within such period divided by (b) the total VWAP Volume of all Class
B Shares traded for days on which the Company purchased Shares pursuant to the
Program within such period; provided that if the Agreement has been terminated
in accordance with clause (a), (b) or (c) under "Termination" and the date of
termination of the Agreement falls on a date other than the last business day of
the applicable period, the Volume-Weighted Average Price for the final Closing
shall be calculated only through the date of termination of the Agreement.
"VWAP" means, for any day, the sum of the volume-weighted average price
of the Class B Shares as reported for such day on Bloomberg Terminal "VIA/B
Equity AQR SEC GO".
"VWAP Volume" means, for any day, the volume of the Class B Shares
traded for such day as reported for such day on Bloomberg Terminal "VIA/B Equity
AQR SEC GO".
"VWAP Volume Amount" means, for any day, the product of (a) the VWAP
multiplied by (b) the VWAP Volume.
ANNEX A
ACQUIRED SHARES CALCULATION
The number of Acquired Shares to be purchased from Seller at each
Closing shall be equal to:
(a) the quotient of (1) the Seller Ownership Percentage divided by (2)
[1 minus the Seller Ownership Percentage]
multiplied by
(b) the number of Shares purchased by the Company pursuant to the
Program during the Applicable Month (excluding any Acquired Shares) measured
from the first business day of the Applicable Month through and including the
last business day of the Applicable Month.
For purposes of the Acquired Shares calculation, Shares shall be deemed
to have been purchased on the day that the buy trade with respect to such Shares
has been effected and not the day on which such trade settles.
"Seller Ownership Percentage" means Seller's ownership of Shares,
expressed as a percentage, as determined on the first business day of each
Applicable Month adjusted on a pro forma basis for the Acquired Shares to be
settled with respect to the prior Applicable Month that have not yet been
reflected in Seller's ownership of Shares and the Company's outstanding Shares;
provided that in the event that the number of outstanding Shares of the Company
has changed more than 5% in any Applicable Month as measured on the first
business day of the Applicable Month and the last business day of the Applicable
Month (excluding the effect of any Shares purchased by the Company pursuant to
the Program during such Applicable Month and the Acquired Shares purchased
during such Applicable Month in respect of any prior month's activity) or if
Seller has sold Shares other than to the Company pursuant to the Agreement, then
the Seller Ownership Percentage shall include an appropriate adjustment to
reflect such changes.