[CONFORMED COPY]
STOCKHOLDERS STOCK OPTION AGREEMENT
STOCKHOLDERS STOCK OPTION AGREEMENT, dated
as of January 7, 1994, among VIACOM INC., a Delaware corporation
("Viacom"), and each other person and entity listed on the
signature pages hereof (each, a "Stockholder").
WHEREAS, as of the date hereof each Stockholder owns
(either beneficially or of record) the number of shares of
common stock, par value $0.10 per share ("Blockbuster Common
Stock"), of Blockbuster Entertainment Corporation, a Delaware
corporation ("Blockbuster"), set forth opposite such
Stockholder's name on Exhibit A hereto (all such shares owned
by the Stockholders and any shares hereafter acquired by the
Stockholders prior to the termination of this Agreement being
referred to herein as the "Shares");
WHEREAS, Viacom and Blockbuster propose to enter into
an Agreement and Plan of Merger, dated as of the date hereof
(as the same may be amended from time to time, the "Merger
Agreement"), which provides, upon the terms and subject to the
conditions thereof, for the merger of Blockbuster with and into
Viacom (the "Merger"); and
WHEREAS, as a condition to the willingness of Viacom
to enter into the Merger Agreement, Viacom has requested that
each Stockholder agree, and, in order to induce Viacom to enter
into the Merger Agreement, each Stockholder has agreed,
severally and not jointly, to grant Viacom options to purchase
such Stockholder's Shares;
NOW, THEREFORE, in consideration of the premises and
of the mutual agreements and covenants set forth herein and in
the Merger Agreement, the parties hereto agree as follows:
ARTICLE I
THE OPTIONS
SECTION 1.01. Grant of Options. Each Stockholder
hereby grants to Viacom an irrevocable option (each, an
"Option") to purchase such Stockholder's Shares at a price per
Share equal to $30.125 (the "Purchase Price"). Each Option
shall expire if not exercised prior to the close of
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business on the 120th day following termination of the Merger
Agreement. Each Option shall also expire if the Merger
Agreement is terminated pursuant to Section 8.01(c) thereof.
SECTION 1.02. Exercise of Options. Provided that (a)
to the extent necessary, any applicable waiting periods (and
any extension thereof) under the Hart-Scott-Rodino Antitrust
Improvement Act of 1976 and the rules and regulations
promulgated thereunder (the "HSR Act") with respect to the
exercise of an Option shall have expired or been terminated and
(b) no preliminary or permanent injunction or other order,
decree or ruling issued by any court or governmental or
regulatory authority, domestic or foreign, of competent
jurisdiction prohibiting the exercise of an Option or the
delivery of Shares shall be in effect, Viacom may exercise any
or all of the Options at any time following termination of the
Merger Agreement (other than a termination pursuant to
Section 8.01(c) thereof) until the expiration of such Options,
provided that at the time of exercise of the Options there
exists a Competing Transaction (as defined in the Merger
Agreement) with respect to Blockbuster. In the event that
Viacom wishes to exercise an Option, Viacom shall give written
notice (the date of such notice being herein called the "Notice
Date"), to the Stockholder who granted such Option specifying a
place and date (not later than ten Business Days (as defined
below) and not earlier than three Business Days following the
Notice Date) for closing such purchase (the "Closing"). For
the purposes of this Agreement, the term "Business Day" shall
mean a Saturday, a Sunday or a day on which banks are not
required or authorized by law or executive order to be closed
in the City of New York.
SECTION 1.03. Payment for and Delivery of
Certificates. At the Closing, (a) Viacom shall pay the
aggregate Purchase Price for the Shares being purchased from
each Stockholder by wire transfer in immediately available
funds of the total amount of the Purchase Price for such Shares
to an account designated by such Stockholder by written notice
to Viacom, and (b) each Stockholder whose Shares are being
purchased shall deliver to Viacom a certificate or certificates
evidencing such Stockholder's Shares, and such Stockholder
agrees that such Shares shall be transfered free and clear of
all liens. All such certificates shall be duly endorsed in
blank, or with appropriate stock powers, duly executed in
blank, attached thereto, in proper form for transfer, with the
signature of such Stockholder thereon guaranteed, and with all
applicable taxes paid or provided for.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
THE STOCKHOLDERS
Each Stockholder, severally and not jointly, hereby
represents and warrants to Viacom as follows:
SECTION 2.01. Due Organization, etc. Such
Stockholder (if it is a corporation, partnership or other legal
entity) is duly organized and validly existing under the laws
of the jurisdiction of its incorporation or organization. Such
Stockholder has full power and authority (corporate or
otherwise) to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by
all necessary action (corporate or otherwise) on the part of
such Stockholder. This Agreement has been duly executed and
delivered by or on behalf of such Stockholder and, assuming its
due authorization, execution and delivery by Viacom,
constitutes a legal, valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance
with its terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar
laws affecting creditors' rights generally and subject, as to
enforceability, to the effect of general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
SECTION 2.02. No Conflicts; Required Filings and
Consents. (a) The execution and delivery of this Agreement by
such Stockholder do not, and the performance of this Agreement
by such Stockholder will not, (i) conflict with or violate the
Certificate of Incorporation or By-Laws or similar
organizational document of such Stockholder (in the case of a
Stockholder that is a corporation, partnership or other legal
entity), (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to such
Stockholder or by which it or any of its properties is bound or
affected, or (iii) result in any breach of or constitute a
default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance on any of the
property or assets of such Stockholder or (if such Stockholder
purports to be a corporation) any of its subsidiaries pursuant
to, any note,
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bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which
such Stockholder is a party or by which such Stockholder or any
of its properties is bound or affected, except for any such
breaches, defaults or other occurrences that would not cause or
create a material risk of non-performance or delayed
performance by such Stockholder of its obligations under this
Agreement.
(b) The execution and delivery of this Agreement by
such Stockholder do not, and the performance of this Agreement
by such Stockholder will not, require any consent, approval,
authorization or permit of, or filing with or notification to,
any governmental or regulatory authority, domestic or foreign,
except (i) for applicable requirements, if any, of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (the "Exchange Act"), and the HSR Act
and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or
notifications, would not prevent or delay the performance by
such Stockholder of its obligations under this Agreement.
SECTION 2.03. Title to Shares. At the Closing such
Stockholder will deliver good and valid title to its Shares
free and clear of any pledge, lien, security interest, charge,
claim, equity, option, proxy, voting restriction, right of
first refusal or other limitation on disposition or encumbrance
of any kind, other than pursuant to this Agreement. Subject to
Permitted Liens (as defined below), which will be eliminated
prior to or at the Closing, such Stockholder has full right,
power and authority to sell, transfer and deliver its Shares
pursuant to this Agreement. Upon delivery of such Shares and
payment of the Purchase Price therefor as contemplated herein,
Viacom will receive good and valid title to such Shares, free
and clear of any pledge, lien, security interest, charge,
claim, equity, option, proxy, voting restriction or encumbrance
of any kind.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
VIACOM
Viacom hereby represents and warrants to each
Stockholder as follows:
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SECTION 3.01. Due Organization, etc. Viacom is a
corporation duly organized and validly existing under the laws
of the State of Delaware. Viacom has all necessary corporate
power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby by Viacom have been
duly authorized by all necessary corporate action on the part
of Viacom. This Agreement has been duly executed and delivered
by Viacom and, assuming its due authorization, execution and
delivery by each Stockholder, constitutes a legal, valid and
binding obligation of Viacom, enforceable against Viacom in
accordance with its terms.
SECTION 3.02. No Conflict; Required Filings and
Consents. (a) The execution and delivery of this Agreement by
Viacom do not, and the performance of this Agreement by Viacom
will not, (i) conflict with or violate the Certificate of
Incorporation or By-laws of Viacom, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree
applicable to Viacom or by which Viacom or any of its
properties is bound or affected, or (iii) result in any breach
of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or
encumbrance on any of the property or assets of Viacom pursuant
to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or
obligation to which Viacom is a party or by which it or any of
its properties is bound or affected, except for any such
breaches, defaults or other occurrences that would not cause or
create a material risk of non-performance or delayed
performance by Viacom of its obligations under this
Agreement.
(b) The execution and delivery of this Agreement by
Viacom do not, and the performance of this Agreement by Viacom
will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Exchange Act and the
HSR Act and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings
or notifications, would not prevent or delay the performance by
Viacom of its obligations under this Agreement.
SECTION 3.03. Investment Intent. The purchase of
Shares from any Stockholder pursuant to this Agreement is for
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the account of Viacom for the purpose of investment and not
with a view to or for sale in connection with any distribution
thereof within the meaning of the Securities Act, and the rules
and regulations promulgated thereunder.
ARTICLE IV
TRANSFER AND VOTING OF SHARES
SECTION 4.01. Transfer of Shares. During the term of
the Options, and except as otherwise provided herein, each
Stockholder shall not (a) sell, pledge (other than Permitted
Liens (as defined below)) or otherwise dispose of any of its
Shares, (b) deposit its Shares into a voting trust or enter
into a voting agreement or arrangement with respect to such
Shares or grant any proxy with respect thereto or (c) enter
into any contract, option or other arrangement or undertaking
with respect to the direct or indirect acquisition or sale,
assignment, transfer or other disposition of any Blockbuster
Common Stock. Exercise of rights or remedies pursuant to bona
fide pledges of Shares to banks or other financial institutions
("Permitted Liens") are not restricted by this Agreement;
provided that in the case of Permitted Liens granted after the
date of this Agreement, such Shares continue to be subject to
the Options.
SECTION 4.02. Voting of Shares; Further Assurances.
(a) Each Stockholder, by this Agreement, with respect to those
Shares that it owns of record, does hereby constitute and
appoint Viacom, or any nominee of Viacom, with full power of
substitution, during and for the term of the Option granted by
such Stockholder hereunder (or, following termination of the
Merger Agreement, during such periods as the Options are
exercisable), as its true and lawful attorney and proxy, for
and in its name, place and stead, to vote each of such Shares
as its proxy, at every annual, special or adjourned meeting of
the stockholders of Blockbuster (including the right to sign
its name (as stockholder) to any consent, certificate or other
document relating to Blockbuster that the law of the State of
Delaware may permit or require) (i) in favor of the adoption of
the Merger Agreement and approval of the Merger and the other
transactions contemplated by the Merger Agreement, (ii) against
any proposal for any recapitalization, merger, sale of assets
or other business combination between Blockbuster and any
person or entity (other than the Merger) or any other action or
agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement
of Blockbuster under the Merger Agreement or which could result
in any of the conditions to Blockbuster's
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obligations under the Merger Agreement not being fulfilled, and
(iii) in favor of any other matter relating to consummation of
the transactions contemplated by the Merger Agreement. Each
Stockholder further agrees to cause the Shares owned by it
beneficially to be voted in accordance with the foregoing.
Each Stockholder acknowledges receipt and review of a copy of
the Merger Agreement.
(b) If Viacom shall exercise any Option in accordance
with the terms of this Agreement, and without additional
consideration, the Stockholder who granted such Option shall
execute and deliver further transfers, assignments,
endorsements, consents and other instruments as Viacom may
reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement and the Merger
Agreement, including the transfer of any and all of such
Stockholder's Shares to Viacom and the release of any and all
liens, claims and encumbrances covering such Shares.
(c) Each Stockholder shall perform such further acts
and execute such further documents and instruments as may
reasonably be required to vest in Viacom the power to carry out
the provisions of this Agreement.
ARTICLE V
GENERAL PROVISIONS
SECTION 5.01. Notices. All notices and other
communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made as
of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by
registered or certified mail (postage prepaid, return receipt
requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the
telecopier number specified below:
(a) If to Viacom:
Viacom Inc.
1515 Broadway
New York, New York 10036
Attention: Senior Vice President,
General Counsel and Secretary
Telecopier No.: 212-258-6134
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with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Attention: Stephen R. Volk, Esq.
Telecopier No.: (212) 848-7179
(b) If to a Stockholder, to the address set forth
below such Stockholder's name on the signature
pages hereof.
with a copy to:
Blockbuster Entertainment Corporation
One Blockbuster Plaza
Fort Lauderdale, Florida 33301
Attention: Vice President, General
Counsel and Secretary
Telecopier No.: 305-832-3929
SECTION 5.02. Headings. The headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
SECTION 5.03. Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of
being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon
such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in
an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
SECTION 5.04. Entire Agreement. This Agreement
constitutes the entire agreement of the parties and supersedes
all prior agreements and undertakings, both written and oral,
between the parties, or any of them, with respect to the
subject matter hereof.
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SECTION 5.05. Assignment. This Agreement shall not
be assigned by operation of law or otherwise.
SECTION 5.06. Parties in Interest. This Agreement
shall be binding upon and inure solely to the benefit of each
party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any person any
right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
SECTION 5.07. Specific Performance. The parties
hereto agree that irreparable damage would occur in the event
any provision of this Agreement was not performed in accordance
with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
SECTION 5.08. Governing Law. Except to the extent
that Delaware Law is mandatorily applicable to the rights of
the stockholders of Blockbuster, this Agreement shall be
governed by, and construed in accordance with, the laws of the
State of New York applicable to contracts executed and to be
performed entirely within that state.
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SECTION 5.09. Counterparts. This Agreement may be
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first written above.
VIACOM INC.
By /s/ Sumner M. Redstone
Name: Sumner M. Redstone
Title: Chairman of the
Board
/s/ H. Wayne Huizenga
H. Wayne Huizenga
c/o Blockbuster Entertainment
Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
/s/ Steven R. Berrard
Steven R. Berrard
c/o Blockbuster Entertainment
Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
/s/ John J. Melk
John J. Melk
c/o Blockbuster Entertainment
Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
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/s/ Donald F. Flynn
Donald F. Flynn
c/o Blockbuster Entertainment
Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
/s/ G. Harry Huizenga
G. Harry Huizenga
for G. Harry Huizenga
and Jean Huizenga
c/o Blockbuster Entertainment
Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
EXHIBIT A
List of Stockholders
Number of Shares of
Blockbuster Common Stock Owned
Name of Stockholder Beneficially and of Record
H. Wayne Huizenga 10,905,885
Steven R. Berrard 4,970
John J. Melk 1,547,058
Donald F. Flynn 1,547,057
Harry and Jean Huizenga 1,000,000