[CONFORMED COPY]
PROXY AGREEMENT
PROXY 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 proxies to vote 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
REPRESENTATIONS AND WARRANTIES OF
THE STOCKHOLDERS
Each Stockholder, severally and not jointly, hereby
represents and warrants to Viacom as follows:
SECTION 1.01. 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 1.02. Title to Shares. Such Stockholder is
the record or beneficial owner of its Shares free and clear of
any proxy or voting restriction other than pursuant to this
Agreement.
ARTICLE II
TRANSFER AND VOTING OF SHARES
SECTION 2.01. Transfer of Shares. During the Proxy
Term (as defined below), 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.
SECTION 2.02. 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 Proxy Term, 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 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.
(b) For the purposes of this Agreement, "Proxy Term"
shall mean the period from the execution of this Agreement
until the termination of the Merger Agreement, and following
termination of the Merger Agreement (other than a termination
pursuant to Section 8.01(c) thereof), during such time as a
Competing Transaction (as defined in the Merger Agreement)
exists with respect to Blockbuster; provided that in no event
shall the Proxy Term extend beyond the close of business on the
120th day following termination of the Merger Agreement.
(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 III
GENERAL PROVISIONS
SECTION 3.01. 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 3.02. 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.
SECTION 3.03. Assignment. This Agreement shall not
be assigned by operation of law or otherwise.
SECTION 3.04. 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 3.05. 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 3.06. 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.
SECTION 3.07. 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
PHILIPS ELECTRONICS N.V.
By /s/ D.G. Eustace
Name: D.G. Eustace
Title: Executive Vice
President
Groenewoudseweg 1
5621 BA
Eindhoven, The Netherlands
WESTBURY (BERMUDA) LTD.
By /s/ James Watt
Name: James Watt
Title: Vice President
Victoria Hall
11 Victoria Street
P.O. Box HM 1065
Hamilton HM EX
Bermuda
/s/ John J. Melk
John J. Melk
c/o Blockbuster Entertainment
Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
/s/ Donald F. Flynn
Donald F. Flynn
c/o Blockbuster Entertainment
Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
/s/ George D. Johnston, Jr.
George D. Johnston, Jr.
c/o Blockbuster Entertainment
Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
/s/ Scott A. Beck
Scott A. Beck
c/o Blockbuster Entertainment
Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
/s/ Harris W. Hudson
Harris W. Hudson
529 Bontana Avenue
Fort Lauderdale, FL 33301
/s/ Bonnie J. Hudson
Bonnie J. Hudson
529 Bontana Avenue
Fort Lauderdale, FL 33301
/s/ Peter Huizenga
Peter Huizenga
Trustee, Peter H.
Huizenga Sr.
Testamentary Trust
c/o Blockbuster Entertainment
Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
/s/ Peter Huizenga
Peter Huizenga
c/o Blockbuster Entertainment
Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
/s/ Peter Huizenga
Peter Huizenga
Trustee, Elizabeth I.
Huizenga Trust
c/o Blockbuster Entertainment
Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
/s/ Peter Huizenga
Peter Huizenga
Trustee, Betsy
Huizenga Trust
c/o Blockbuster Entertainment
Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
/s/ Peter Huizenga
Peter Huizenga
Trustee, Greta
Huizenga Trust
c/o Blockbuster Entertainment
Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
/s/ Heidi Huizenga
Heidi Huizenga
Trustee, Peter
Huizenga Jr. Trust
c/o Blockbuster Entertainment
Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
/s/ Heidi Huizenga
Heidi Huizenga
Trustee, Timothy
Huizenga Trust
c/o Blockbuster Entertainment
Corporation
One Blockbuster Plaza
Fort Lauderdale, FL 33301
/s/ Dean Buntrock
Dean Buntrock
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
Philips Electronics N.V. 17,245,211
Westbury (Bermuda) Ltd. 1,400,000
John J. Melk 4,771,969
Donald F. Flynn 4,398,119
George D. Johnston, Jr. 2,827,465
Scott A. Beck 3,290,819
Harris W. Hudson and
Bonnie J. Hudson 600,000
Peter Huizenga, as trustee
for Peter H. Huizenga
Sr. Testamentary Trust 1,761,296
Peter Huizenga 421,430
Peter Huizenga, as trustee
for Elizabeth I.
Huizenga Trust 50,000
Peter Huizenga, as trustee
for Betsy Huizenga
Trust 20,800
Peter Huizenga, as trustee
for Greta Huizenga
Trust 20,800
Heidi Huizenga, as trustee
for Peter Huizenga
Jr. Trust 20,800
Heidi Huizenga, as trustee
for Timothy Huizenga
Trust 20,800
Dean Buntrock 4,000,000