[CONFORMED COPY]
VIACOM INC.
1515 Broadway
New York, New York
October 4, 1993
NYNEX Corporation
335 Madison Avenue
New York, New York 10017
Dear Sirs:
1. Subject to the terms and conditions set forth herein,
NYNEX Corporation, a Delaware corporation (the "Purchaser"),
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hereby subscribes for, and agrees to purchase, and Viacom Inc., a
Delaware corporation (the "Company") agrees to issue and sell,
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24,000,000 shares of a new series of convertible preferred stock
of the Company designated Series B Convertible Preferred Stock,
par value $0.01 per share (the "Preferred Stock"), for an
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aggregate purchase price of $1,200,000,000, representing a
purchase price of $50.00 per share. The terms of the Preferred
Stock are set forth in the form of Certificate of Designation
attached as Annex I hereto (the "Certificate of Designation"),
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which terms are subject to amendment in accordance with the
provisions hereof.
2. (a) The closing (the "Closing") of the purchase
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provided for in paragraph 1 shall take place five Business Days
after satisfaction of the conditions specified in paragraph 5 at
the offices of Shearman & Sterling, 599 Lexington Avenue, New
York, New York. The date and time of the Closing are referred to
herein as the "Closing Date". The Company and the Purchaser
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currently anticipate that the Closing Date shall be on or about
November 30, 1993.
(b) At the Closing, the Purchaser shall deliver to the
Company $1,200,000,000 in cash by wire transfer in immediately
available funds to an account of the Company designated by the
Company, by notice to the Purchaser prior to the Closing Date, and
the Company shall deliver to the Purchaser a certificate
representing the shares of Preferred Stock, registered in the
name of the Purchaser.
3. (a) The Purchaser represents and warrants to the
Company that: (i) the execution and delivery of this Agreement
by the Purchaser and the performance of its obligations hereunder
have been duly and validly authorized
by all necessary corporate action on the part of the Purchaser;
(ii) this Agreement had been duly and validly executed and
delivered by the Purchaser and, assuming the due authorization,
execution and delivery by the Company and subject to compliance
with the MFJ (as defined in paragraph 24 hereof), constitutes a
legal, valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other
similar laws relating to or affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement
is considered in a proceeding in equity at law); (iii) the
execution, delivery and performance of this Agreement by the
Purchaser and the purchase of Preferred Stock by the Purchaser do
not conflict with or violate or result in any breach of or
constitute a default (or an event which with notice or lapse of
time or both would become a default) under the Certificate of
Incorporation or By-Laws or equivalent organizational documents
of the Purchaser; (iv) the execution, delivery and, subject to
compliance with the MFJ, performance of this Agreement by the
Purchaser do not, and the consummation of the transactions
contemplated hereby by the Purchaser will not, require any
consent, approval, authorization or permit of, or
filing with or notification to, any governmental authority with
respect to the Purchaser, except under the 1934 Act; (v) the
Purchaser is acquiring the Preferred Stock and the Common Stock
of the Company issuable upon conversion of the Preferred Stock
for its own account for the purpose of investment and not with a
view to or for sale in connection with any distribution thereof;
and (vi) the Purchaser is an "accredited investor" within the
meaning of Rule 501 under the 1933 Act.
(b) Except as set forth in this paragraph 3, the Purchaser
makes no other representation, express or implied, to the
Company.
4. (a) The Company represents and warrants to the
Purchaser that (i) each of the Company and each Subsidiary (as
defined below) is a corporation, partnership or other legal
entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or
organization and has the requisite power and authority and all
necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing
or in good standing or to have such power, authority and
governmental approvals would not, individually or in the
aggregate, have a Material Adverse Effect (as defined below);
(ii) the execution and delivery of this Agreement by the Company
and the issuance of the Preferred Stock in accordance with the
terms of this Agreement and the Certificate of Designation have
been duly and validly authorized by all necessary corporate
action on the part of the Company; (iii) this Agreement has been
duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by the
Purchaser, constitutes a legal, valid an binding obligation of
the Company, enforceable against the Company in accordance with
its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or their similar laws relating to or affecting
enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding
in equity or at law); (iv) the execution, delivery and
performance of this Agreement by the Company do not, and the
issuance of the Preferred Stock and the performance of the
Company's obligations in accordance with the terms of this
Agreement and the Certificate of Designation will not, conflict
with or violate or result in any breach of or constitute a
default (or an event which with notice or lapse of time or both
would become a default) under (A) the Certificate of
Incorporation or By-Laws or equivalent organizational documents
of the Company or any Subsidiary, (B) any law, rule, regulation,
order, judgment or decree applicable to the Company or any
Subsidiary, or (C) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument
or obligation to which the Company or any Subsidiary is a party
or by which the Company or any Subsidiary or any property or
asset of the Company or any Subsidiary is bound or affected,
except in the case of subclauses (B) and (C) above, for any such
conflicts, violations, breaches, defaults or other occurrences
which would not prevent or delay the issuance of the Preferred
Stock in accordance with the terms of this Agreement and the
Certificate of Designation in any material respect, or otherwise
prevent the Company from performing its obligations under this
Agreement and the Certificate of Designation in any material
respect, and would not, individually or in the aggregate, have a
Material Adverse Effect; (v) the execution, delivery and
performance of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, require
any consent, approval, authorization or permit of, or filing with
or notification to, any governmental authority with respect to
the Company, except for the filing with the Secretary of State of
the State of Delaware of the Certificate of Designation, filings
after the Closing of the Certificate of Designation with
appropriate authorities in states in which the Company is
qualified as a foreign corporation, any filings required to
effect the registration pursuant to paragraph 8 and any filings
pursuant to federal and state securities laws which will be
timely made after the Closing hereunder; (vi) the Preferred Stock
to be issued hereunder has been duly authorized and, upon
issuance at the Closing, will be validly issued, fully paid and
nonassessable, and free and clear of all security interests,
liens, claims, encumbrances, pledges, options and charges of any
nature whatsoever, and the issuance of such Preferred Stock will
not be subject to preemptive rights of any other stockholder of
the Company; (vii) prior to the Closing, the Certificate of
Designation will have been filed with the Secretary of State of
the State of Delaware in accordance with the Delaware
General Corporation Law; (viii) the shares of Class B Common
Stock, par value $0.01 per share ("Class B Common Stock"), of the
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Company issuable upon conversion of the Preferred Stock have been
duly authorized and reserved for issuance upon such conversion
and, upon issuance of such shares in accordance with the
Certificate of Designation, will be validly issued, fully paid
and nonassessable; (ix) the authorized capital stock of the
Company consists of 100,000,000 shares of the Company's Class A
Common Stock, 150,000,000 shares of Class B Common Stock and
100,000,000 shares of Preferred Stock, par value $0.01 per share
("Common Preferred Stock"); (x) as of August 31, 1993, (A)
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53,431,699 shares of the Company's Class A Common Stock and
67,282,799 shares of Class B Common Stock were issued and
outstanding, all of which were validly issued, fully paid and
nonassessable, (B) no shares were held in the treasury of the
Company, (C) no shares were held by the Subsidiaries, and (D)
3,843,000 shares were reserved for future issuance pursuant to
employee stock options or stock incentive rights granted pursuant
to the Company's 1989 Long-Term Management Incentive Plan and the
Company's Stock Option Plan for Outside Directors; (xi) as of the
date hereof, no shares of Company Preferred Stock are issued and
outstanding and there are no agreements, arrangements or
understandings with respect to the issuance of any Company
Preferred Stock other than the Stock Purchase Agreement dated
September 29, 1993 between the Company and Blockbuster
Entertainment Corporation; (xii) the Company has filed all forms,
reports and documents required to be filed by it with the
Securities and Exchange Commission ("Commission") since December
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31, 1990, and has heretofore made available to the Purchaser, in
the form filed with the Commission (excluding any exhibits
thereto), (A) its Annual Reports on Form 10-K for the fiscal
years ended December 31, 1990, 1991 and 1992, respectively, (B)
its Quarterly Reports on Form 10-Q for the periods ended March
31, 1993 and June 30, 1993, (C) all proxy statements relating to
the Company's meetings of stockholders (whether annual or special)
held since January 1, 1991 and (D) all other forms, reports and
other registration statements (other than Quarterly Reports on
Form 10-Q not referred to in clause (B) above and preliminary
materials) filed by the Company with the Commission since
December 31, 1990 (the forms, reports and other documents
referred to in clauses (A), (B), (C), and (D) above being
referred to herein, collectively, as the "SEC Reports"); (xiii)
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the SEC Reports and any other forms, reports and other documents
filed by the Company with the Commission after the date of this
Agreement (A) were or will be prepared in accordance with the
requirements of the 1933 Act and the 1934 Act, as the case may
be, and the rules and regulations thereunder and (B) did not at
the time they were filed, or will not at the time they are filed,
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading; (xiv)
the consolidated financial statements (including, in each case,
any notes thereto) contained in the SEC Reports were prepared in
accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods indicated (except as
may be indicated in the notes thereto) and each fairly presented
the consolidated financial position, results of operations and
cash flows of the Company and its consolidated subsidiaries as at
the respective dates thereof and for the respective periods
indicated therein (subject, in the case of unaudited statements,
to normal and recurring year-end adjustments which were not and
are not expected, individually or in the aggregate, to be
material in amount); (xv) since December 31, 1992 there has not
been any change, occurrence or circumstance in the business,
results of operations or financial condition of the Company or
any Subsidiary having, individually or in the aggregate, a
Material Adverse Effect, other than changes, occurrences and
circumstances referred to in any subsequently filed SEC Reports;
(xvi) there is no claim, action, proceeding or investigation
pending or, to the best knowledge of the Company, threatened by
any public official or governmental authority, against the
Company or any Subsidiary, or any of their respective property or
assets before any court, arbitrator or administrative,
governmental or regulatory authority or body, which challenges
the validity of this Agreement, the Certificate of Designation or
the Preferred Stock or any action taken or to be taken pursuant
hereto or, except as set forth in the SEC Reports, which is
reasonably likely to have a Material Adverse Effect; and (xvii)
neither the Company nor any Subsidiary is in conflict with, or in
default or violation of, (A) any law, rule, regulation, order,
judgment or decree applicable to the Company or any Subsidiary or
by which any property or asset of the Company or any Subsidiary
is bound or affected, or (B) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any Subsidiary
is a party or by which the Company or any Subsidiary or any
property or asset of the Company or any Subsidiary is bound or
affected, except for any such conflicts, defaults or violations
that would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) Except as set forth in this paragraph 4, the Company
makes no representation, express or implied, to the Purchaser.
(c) "Subsidiary" means a "significant subsidiary" of the
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Company, as such term is defined in Regulation S-X promulgated
under the 1933 Act.
(d) The term "Material Adverse Effect" means any change or
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effect that is or is reasonably likely to be materially adverse
to the business, results of operations or financial condition of
the Company and its Subsidiaries, taken as a whole.
(e) Notwithstanding anything to the contrary in this
paragraph 4, any change to or effect on the business, results of
operations or financial condition of the Company and its
Subsidiaries that results, directly or indirectly, from (a)
regulations adopted by the Federal Communications Commission,
whether before or after the date hereof, governing financial
interest in and syndication of broadcast programming or
implementing the Cable Television Consumer Protection and
Competition Act of 1992 or (b) the subject matter contemplated by
the Company's Current Report on Form 8-K, dated September 13,
1993 (the "Paramount Transaction"), shall not be considered for
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purposes of determining whether a breach has occurred of any
representation or warranty, covenant or agreement of the Company
contained herein.
5. (a) The obligation of the Purchaser to consummate the
Closing is subject to the satisfaction (or waiver by the
Purchaser, at its sole discretion, except for clause (iv) below,
which may not be waived by the Purchaser without the Company's
consent) of the following conditions:
(i) (A) the Company shall have performed in all
material respects all of its obligations hereunder required
to be performed by it at or prior to the Closing Date, (B)
the representations and warranties of the Company contained
in this Agreement shall be true in all material respects
(other than those contained in Paragraph 4(a)(xv), which
shall be true in all respects) as of the Closing Date, as if
made at and as of such date (except for any such
representations and warranties that are expressly stated to
be as of a different date) and (C) the Purchaser shall have
received a certificate signed by an executive officer of the
Company to the foregoing effect;
(ii) no judgment, injunction, order or decree shall
materially restrict, prevent or prohibit the consummation of
the Closing;
(iii) the Purchaser shall have received an opinion
of Shearman & Sterling, dated the Closing Date,
substantially in the form of Exhibit A hereto; and
(iv) as of the Closing, in the Purchaser's judgment,
neither the Company nor any Company Affiliate (as defined in
paragraph 24) shall be engaged in any Restricted Activity
(as defined in paragraph 24).
(b) The obligation of the Company to consummate the
Closing is subject to the satisfaction (or waiver by the Company
at its sole discretion) of the following conditions:
(i) (A) the Purchaser shall have performed in all
material respects all of its obligations hereunder required
to be performed by it at or prior to the Closing Date, (B)
the representations and warranties of the Purchaser
contained in this Agreement shall be true in all material
respects at and as of the Closing Date, as if made at and as
of such date (except for any such representations and
warranties that are expressly stated to be as of a different
date) and (C) the Company shall have received a certificate
signed by an executive officer of the Purchaser to the
foregoing effect;
(ii) no judgment, injunction, order or decree shall
materially restrict, prevent or prohibit the consummation of
the Closing; and
(iii) the Company shall have received an opinion of
Raymond F. Burke, Esq., Executive Vice President, General
Counsel and Secretary of the Purchaser, dated the Closing
Date, substantially in the form of Exhibit B hereto.
6. Effective as of the Closing and for so long as the
Purchaser and its Affiliates Beneficially Own at least 6,000,000
shares of Preferred Stock or the equivalent in number of shares
of Preferred Stock and shares of Class B Common Stock issuable
upon conversion of the Preferred Stock, the Purchaser shall be
entitled to one representative on the Board of Directors of the
Company, who shall serve in such capacity in accordance with the
Restated Certificate of Incorporation and the By-Laws of the
Company. Such representative shall initially be William C.
Ferguson, who shall become a member of the Company's Board of
Directors simultaneously with the Closing, and the Purchaser
shall receive satisfactory evidence of this action.
7. (a) The Purchaser acknowledges that the shares of
Preferred Stock and Class B Common Stock into which such
Preferred Stock is convertible have not been registered under the
1933 Act or any state securities law, and hereby agrees not to
offer, sell or otherwise transfer, pledge or hypothecate such
shares unless and until registered under the 1933 Act and any
applicable state securities law or unless, in the opinion of
counsel reasonably satisfactory to the Company, such offer, sale,
transfer, pledge or hypothecation is exempt from registration or
is otherwise in compliance with the 1933 Act and such laws.
(b) Upon issuance of the Preferred Stock, and until
such time as the same is no longer required under the applicable
requirements of the 1933 Act, the certificates evidencing the
Preferred Stock (and all securities issued in exchange therefor
or substitution thereof) shall bear the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER, IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE,
TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM
REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE ACT AND
SUCH LAWS.
8. Effective at the Closing, the Purchaser shall have
the registration rights, and the Company shall have the
obligations, set forth in Annex II.
9. (a) During the Put/Call Period (as defined
below), the Company, at its option, shall have the right to
purchase from the Purchaser and the Purchaser, at its option,
shall have the right to sell to the Company, in each case at the
Put/Call Price (as defined below), 12,000,000 shares of Preferred
Stock.
(b) The Company or the Purchaser may each exercise the
right granted to it in paragraph 9(a) by written notice to the
other party at any time during the Put/Call Period and in the
event such a notice is so delivered, the repurchase of the
12,000,000 shares of Preferred Stock by the Company (the
"Put/Call Closing") shall occur at 10:00 a.m. at the place
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specified in paragraph 2 hereof on the twentieth Business Day
following the date such written notice is delivered.
(c) At the Put/Call Closing, the Company shall deliver
to the Purchaser the Put/Call Price in cash by wire transfer in
immediately available funds to an account of the Purchaser
designated by the Purchaser by notice to the Company at least two
Business Days prior to the date of the Put/Call Closing, and the
Purchaser shall deliver to the Company a certificate representing
the 12,000,000 shares of Preferred Stock, duly endorsed to the
Company or accompanied by a stock power duly executed to the
Company, in proper form for transfer, which shares shall be
transferred by the Purchaser to the Company free and clear of any
encumbrances or adverse claims.
(d) For the purposes of this paragraph 9, the
following terms shall have the following meanings:
(i) "Put/Call Period" shall mean the period of 120
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days following the earlier of (A) August 31, 1994, if, and
only if, the Company or any of its Affiliates has not
acquired Beneficial Ownership of a majority of the
outstanding voting capital stock of Paramount Communications
Inc. ("PCI") prior to August 31, 1994 or (B) the date on
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which any party other than the Company or any of its
Affiliates acquires Beneficial Ownership of a majority of
the voting capital stock of PCI; and
(ii) "Put/Call Price" shall mean $600,000,000,
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representing the aggregate liquidation preference of the
12,000,000 shares of Preferred Stock, plus the aggregate amount
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of accrued and unpaid dividends on such shares of Preferred
Stock to the date of the Put/Call Closing (whether or not
earned or declared).
(e) The Company agrees not to enter into any contract,
agreement, arrangement or understanding, nor to take or omit to
take any action, that would restrict or impair the performance of
its obligations under this paragraph 9, and the Company
represents and warrants that it is neither a party to nor bound
by any such contract, agreement, arrangement or understanding on
the date hereof.
10. In the event that, until the earlier of (a) the
date of the expiration of the Put/Call Period or (b) the
consummation of the acquisition by the Company or any of its
Affiliates of Beneficial Ownership of a majority of the outstanding
voting capital stock of PCI, the Company issues new shares of
preferred stock (other than through an offering intended to
result in a distribution thereof to more than 35 non-accredited
investors, which shall be on market terms) the terms of the
Preferred Stock and the terms of Annex II hereto shall be amended
in order to be at least as favorable to the holders of such Stock
as those of such new shares.
11. (a) In the event of a Change of Control (as
defined below) of the Company, the Purchaser, at its option,
shall have the right to sell to the Company or its assignee, at
the Designated Price (as defined below), all shares of the
Preferred Stock then held by the Purchaser and its Affiliates.
(b) The Purchaser may exercise the right granted to it
in paragraph 11(a) by written notice to the Company at any time
during the 30-day period following public announcement of such Change
of Control and in the event such a notice is so delivered, the
repurchase of such shares of Preferred Stock by the Company
(the "Paragraph 11 Closing") shall occur at 10:00 a.m. at the
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place specified in paragraph 2 hereof on the twentieth Business
Day following the date such written notice is delivered.
(c) At the Paragraph 11 Closing, the Company or its
assignee shall deliver to the Purchaser the Designated Price in
cash by wire transfer in immediately available funds to an
account of the Purchaser designated by the Purchaser by notice to
the Company at least two Business Days prior to the date of the
Paragraph 11 Closing, and the Purchaser shall deliver to the
Company a certificate representing the shares of Preferred Stock
referred to in paragraph 11(a), duly endorsed to the Company
or accompanied by a stock power duly executed to the
Company, in proper form for transfer, which shares shall be
transferred by the Purchaser to the Company free and clear of any
encumbrances or adverse claims.
(d) For the purposes of this paragraph 11, the
following terms shall have the following meanings:
(i) A "Change of Control" of the Company shall occur
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if a Person Beneficially Owns more voting capital stock, on
a fully diluted basis, of the Company than National
Amusements, Inc., Sumner M. Redstone, any trust established
by Mr. Redstone or of which he is the settlor, beneficiary
or trustee and any heir, executor, administrator, or
personal representative of Mr. Redstone or his estate, and
any person or entity in any similar capacity, or any
Affiliate of any of the foregoing (collectively, the
"Group"), or the Group Beneficially Owns 30% or less of the
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voting capital stock, on a fully diluted basis, of the
Company.
(ii) "Designated Price" shall mean the sum of (A)
110% multiplied by the aggregate liquidation preference of the
shares of Preferred Stock referred to in paragraph 11(a), plus
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(B) the aggregate amount of accrued and unpaid dividends on such
shares of Preferred Stock to the date of the Paragraph 11
Closing.
12. (a) From and after the Closing and for so long as
the Purchaser is a significant investor in the Company (which is
understood to mean Beneficial Ownership by the Purchaser and its
Affiliates of at least 10,000,000 shares of the Preferred Stock
or the equivalent in number of shares of Preferred Stock
and shares of Class B Common Stock issuable on conversion of the
Preferred Stock), subject to any conflicting arrangements
existing on the date hereof and applicable laws, (i) the Company
agrees to provide the Purchaser and the Purchaser's Affiliates
access to video programming and programming packages originated
(or supplied, if the Company has the to provide such access) by
the Company or any controlled Affiliates of the Company, and (ii)
the Purchaser agrees to provide the Company and the Company's
Affiliates access to the distribution systems of the Purchaser
and any controlled Affiliates of the Purchaser for video
programming and programming packages originated (or supplied, if
the Company has the right to provide such access) by the Company
or any Affiliates of the Company, in the case of both (i) and
(ii) on aggregate terms negotiated in good faith by the Company
and the Purchaser to permit the Purchaser to effectively compete
in the delivery of video programming.
(b) From and after the Closing and for so long as the
Purchaser is a significant investor in the Company (as specified
in paragraph 12 (a) above), subject to any conflicting
arrangements existing on the date hereof and applicable laws, (a)
the Purchaser shall have a right of first refusal, exercisable
within 60 days of written notice by the Company, with respect to
providing telephony service upgrade expertise to the Company's
controlled cable systems and (b) with respect to any non-
controlled cable systems of the Company, the Company shall use
its reasonable best efforts to offer the Purchaser an opportunity
to provide telephony service upgrade expertise to such non-
controlled cable systems.
(c) The Purchaser and the Company agree, for a period
of 24 months following the Closing, in good faith to explore and
pursue appropriate strategic partnership opportunities in the
domestic and international media, entertainment, video transport
and telecommunications sectors (including, without limitation,
domestic and international cable systems); provided that the
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provisions of this paragraph 12(c) shall terminate, at the option
of either the Company or the Purchaser, in the event that
paragraph 24(g) shall become applicable, unless and until the
Purchaser reinvests in Preferred Stock and/or Class B Common
Stock as contemplated by paragraph 24(g)(iv).
13. (a) The representations and warranties contained
in this Agreement shall survive the Closing until the first
anniversary of the Closing Date.
(b) The Purchaser and its Affiliates, officers,
directors, employees, agents, successors and assigns shall be
indemnified and held harmless by the Company for any and all
liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including, without
limitation, reasonable attorneys' fees and expenses) (a "Loss")
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actually suffered or incurred by them, arising out of or
resulting from the breach of any representation or warranty or
covenant of the Company contained in this Agreement.
(c) The Company and its Affiliates, officers,
directors, employees, agents, successors and assigns shall be
indemnified and held harmless by the Purchaser for any and all
Losses actually suffered or incurred by them, arising out of or
resulting from the breach of any representation or warranty or
covenant of the Purchaser contained in this Agreement.
14. (a) The Purchaser agrees that neither the
Purchaser nor any of its Affiliates shall participate in any
transaction that, directly or indirectly, would have the effect
of precluding or competing with the Paramount Transaction.
(b) The Company agrees that in the event the
Company intends to engage in additional equity financing in
connection with the Paramount Transaction (other than equity to
be issued to stockholders of PCI as consideration in such
transaction), the Company shall consult with the Purchaser.
(c) The Company agrees that prior to consummation
of the Paramount Transaction, the Company shall receive an
opinion from Smith Barney Shearson Inc. that the consideration
actually to be paid by the Company in such transaction is fair,
from a financial point of view, to the stockholders of the
Company.
15. The Purchaser, on the one hand, and the Company,
on the other, acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the
parties shall be entitled to equitable relief (including
injunction and specific performance) in any action instituted in
any court of the United States or any state thereof having
subject matter jurisdiction, as a remedy for any such breach or
to prevent any breach of this Agreement. Such remedies shall not
be deemed to be the exclusive remedies for a breach or
anticipatory breach of this Agreement, but shall be in addition
to all other remedies available at law or equity to the parties
hereto. To the extent permitted by applicable law, the parties
hereto irrevocably submit to the exclusive jurisdiction of the
courts of the State of New York and the United States of America
located in the State of New York for any suits, actions or
proceedings arising out of or relating to this Agreement.
Notwithstanding the foregoing, any dispute as to the matters
specified in the proviso to paragraph 24(g)(i)(A) as being
subject to arbitration shall be subject to arbitration in the
Borough of Manhattan in the City of New York in accordance with
the commercial arbitration rules of the American Arbitration
Association, and judgment upon the award returned by the
arbitrators may be entered in any court having jurisdiction
thereof. The expenses of arbitration shall be borne by the party
against whom the decision is rendered.
16. This Agreement, its Annexes and Exhibits contain
the entire understandings of the parties with respect to the
subject matter hereof, thereby superseding all prior agreements
of the parties relating to the subject matter hereof (other than
the Confidentiality Agreement entered into between the Purchaser
and the Company dated September 24, 1993), and may not be amended
except by a writing signed by the parties. Except as otherwise
provided herein, this Agreement is not assignable by any of the
parties; provided that the Purchaser may assign its rights and
--------
obligations under this Agreement to a wholly owned subsidiary of
the Purchaser, so long as the Purchaser shall remain liable for
all financial and performance obligations of the Purchaser
hereunder. This Agreement shall be binding upon, and inure to
the benefit of, the respective successors of the parties. This
Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together will constitute one
and the same instrument.
17. Any notices and other communications required to
be given pursuant to this Agreement shall be in writing and shall
be given by delivery by hand, by mail (registered or certified
mail, postage prepaid, return receipt requested) or by facsimile
transmission or telex, as follows:
If to the Company:
Viacom Inc.
1515 Broadway
New York, New York 10036
Attention: Philippe P. Dauman
Facsimile No.: 212-258-6134
With a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Stephen R. Volk
Facsimile No.: 212-848-7179
If to the Purchaser:
NYNEX Corporation
1113 Westchester Avenue
White Plains, New York 10604-3510
Attention: Frederic V. Salerno
Facsimile No.: 914-644-7649
With copies to:
NYNEX Corporation
1113 Westchester Avenue
White Plains, New York 10604-3510
Attention: Raymond F. Burke
Facisimile No.: 914-644-6604
and
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Roger S. Aaron
Facsimile No.: 212-735-2001
or to such other addresses as either the Company or the Purchaser
shall designate to the other by notice in writing.
18. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) "Affiliate" shall mean any Person that (i)
-----------
directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with,
the Person specified or (ii) is (A) the specified Person's
spouse, parent, child, brother or sister or any issue of the
foregoing (for purposes of the definition of Affiliate, issue
shall include Persons legally adopted into the line of descent),
(B) any corporation or organization of which the Person specified
or such specified Persons's spouse, parent, child, brother or
sister or any issue of the foregoing is an officer or partner or
is, directly or indirectly, the beneficial owner of ten percent
or more of any class of voting stock, and (C) any trust or other
estate in which the specified Person or such specified Person's
spouse, parent, child, brother or sister or any issue of the
foregoing serves as trustee or in a similar fiduciary capacity
and (D) the heirs or legatees of the specified Person by will or
under the laws of descent and distribution.
(b) "Beneficially Own" with respect to any securities
----------------
and "Beneficial Ownership" shall mean having beneficial ownership
--------------------
as determined pursuant to Rule 13d-3 under the 1934 Act including
pursuant to any agreement, arrangement or understanding, whether
or not in writing.
(c) "Business Day" has the meaning specified in the
------------
Certificate of Designation.
(d) "Person" shall mean any individual, partnership,
------
joint venture, corporation, trust, incorporated organization,
government or department or agency of a government, or any entity
that would be deemed to be a "person" under Section 13(d)(3) of
the 1934 Act.
(e) "1933 Act" means the Securities Act of 1933, as
--------
amended.
(f) "1934 Act" means the Securities Exchange Act of
--------
1934, as amended.
19. Subject to the terms and conditions of this
Agreement, each of the parties hereby agrees to use all
reasonable efforts to take, or cause to be taken, all action and
to do, or cause to be done, all things necessary, proper or
advisable under applicable laws, rules and regulations to
consummate and make effective the transactions contemplated by
this Agreement, including using its best efforts to obtain all
necessary waivers, consents and approvals. In case at any time
after the execution of this Agreement, further action is
necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each of the
parties shall take all such necessary action.
20. (a) For so long as the Purchaser and its
Affiliates shall Beneficially Own all of the outstanding
Preferred Stock, the provisions of this paragraph 20 shall apply.
(b) In case the Company shall distribute (in one
distribution or a series of related distributions) to all holders
of its Class A and Class B Common Stock any Securities (as
defined in Section 7(d)(iii) of the Certificate of Designation)
with an aggregate fair market value (as determined by the Board
of Directors of the Company, whose determination shall, if made
in good faith, be conclusive) of more than $300,000,000, then in
each such case, unless the Company elects to reserve shares or
other units of such Securities for distribution to the holders of
the Preferred Stock as described in Section 7(d)(iii) of the
Certificate of Designation, the following provisions shall apply,
at the election of the Purchaser by written notice to the Company
as provided in paragraph 20(f) below (the "Election Notice"):
---------------
(i) Securities shall be distributed to the Purchaser
in the amount and kind which the Purchaser would have
received if the Purchaser had, immediately prior to the
record date for the distribution of the Securities,
converted its shares of Preferred Stock into Class B
Common Stock;
(ii) The Purchaser shall be deemed to have consented by
delivery of the Election Notice, without the need for
further vote or action on the part of the Purchaser, to
amend the Certificate of Designation, effective on the
date of the distribution of the Securities, to change
the terms of the Preferred Stock to reflect the terms
of the Redesignated Preferred Stock (as defined below)
as determined by the Redesignation Agent (as defined
below) in accordance with the provisions of paragraph
20(c) below; and
(iii) Prior to the date of distribution of the
Securities, the Company shall file with the Secretary
of State of the State of Delaware the Certificate of
Designation as amended as provided in clause (b)(ii)
above.
(c) The terms of the Redesignated Preferred Stock
shall be determined by the Redesignation Agent as follows:
(i) The Redesignation Agent shall determine the
Trading Price (as defined below) for the twenty trading days
immediately prior to the record date for the distribution of
the Securities and the Trading Price for the twenty trading
days immediately after the record date for the distribution
of the Securities and shall determine the difference, stated
as a dollar amount, in the per share Trading Price between
such two periods (the "Dollar Trading Difference");
-------------------------
(ii) The Redesignation Agent shall then multiply the
Dollar Trading Difference by the total number of shares of
Class B Common Stock that the Preferred Stock would be
convertible into immediately prior to the record date for
the distribution of the Securities (the product of such
multiplication, the "Aggregate Dollar Trading Difference");
-----------------------------------
and
(iii) The Redesignation Agent shall then adjust the
dividend rate, redemption prices, liquidation preference
and/or conversion price (without affecting the number of
underlying shares of Class B Common Stock) of the Preferred
Stock as specified in the Certificate of Designation, but no
other terms of the Preferred Stock, as necessary so that the
difference in the fair market value, in the aggregate, of
the Preferred Stock prior to the distribution of the
Securities and after the distribution of Securities shall be
as closely as possible equivalent to the Aggregate Dollar
Trading Difference (the Preferred Stock with the terms so
adjusted, the "Redesignated Preferred Stock").
----------------------------
(d) "Trading Price" for the Class B Common Stock
-------------
for any given period shall be the average of the closing prices
for the Class B Common Stock for the trading days included in
such period on the American Stock Exchange or, if the American
Stock Exchange is not the exchange on which the Class B Common
Stock is principally traded, such exchange.
(e) (i) "Redesignation Agent" shall mean an
-------------------
investment banking firm of national standing chosen in the
following manner: the Purchaser shall propose three such
investment banking firms to the Company in writing within
five Business Days of the delivery of the Election Notice by
the Purchaser to the Company and within five Business Days
of such firms being so proposed, the Company shall select by
written notice to the Purchaser one such firm to serve as
the Redesignation Agent.
(ii) All determinations of the Redesignation
Agent shall, if made in good faith, be conclusive.
(iii) All fees of the Redesignation Agent
shall be paid by the Company.
(f) If at any time the Board of Directors of
the Company determines to make a distribution of Securities to
which the provisions of this paragraph 20 would apply, the
Company shall notify the Purchaser in writing as soon as
practicable and, if the Purchaser decides to elect to have the
provisions of this paragraph 20 apply to such distribution, the
Purchaser shall so notify the Company within 15 Business Days of
such notice from the Company. The record date for any such
distribution of Securities shall not be before the earlier of 15
Business Days after the Purchaser gives such notice to the
Company and the expiration of the 15 Business Day period for the
giving of such notice.
(g) If the Purchaser elects to have the
provisions of this paragraph 20 apply in the case of a
distribution of Securities, (i) the Purchaser shall thereby waive
compliance with the provisions of Section 7 of the Certificate of
Designation that would otherwise apply in such case; (ii) the
put/call provisions of paragraph 9 of this Agreement shall apply
to the Redesignated Preferred Stock and the Put/Call Price shall
be appropriately adjusted; and (iii) the Purchaser agrees that it
shall not trade in the Class B Common Stock during either of the
Trading Periods referred to in paragraph 20(c)(i) above.
21. The Company agrees that, for so long as the
Purchaser holds Preferred Stock, the term "ratably", as used in
the Company's Restated Certificate of Incorporation with respect
to the rights of holders of the Company's common stock to receive
dividends and distributions of assets upon liquidation, will be
interpreted to mean treating Class A Common Stock and Class B
Common Stock as a single class.
22. The Company agrees that, for so long as the
Purchaser and its Affiliates Beneficially Own all of the
outstanding Preferred Stock, upon the conversion of any shares of
Preferred Stock the Purchaser shall be entitled to receive an
amount equal to dividends accrued during the Dividend Period in
which such conversion occurs and up to the date of the
conversion, less any amounts previously paid with respect to any
portion of such Dividend Period. Such amounts shall be paid
promptly after such conversion.
23. The parties agree to consult with each other
before taking any action that would require the issuance of, or
issuing, any press release or making any public statement with
respect to this Agreement or the transactions contemplated hereby
and, except as may be required by applicable law or any listing
agreement with any securities exchange, will not take any such action,
issue any such press release or make any such public statement prior
to such consultation.
24. (a) The Company agrees that it shall take, and
shall cause its Affiliates to take, Corrective Action (as defined
in paragraph 24(d)) so that, in the Purchaser's judgment, as of
and from and after the Closing, neither the Company nor any
Company Affiliate, shall, directly or indirectly and whether by
acquisition or otherwise, engage in any Restricted Activity.
(b) Both before and after the Closing, in
performing its obligations under this paragraph 24, the Company
shall consult with the Purchaser in good faith regarding which
activities are Restricted Activities and which Persons are
Company Affiliates, and the Company and the Purchaser shall
consult in good faith and cooperate with respect to any
Corrective Action.
(c) For the purposes of this paragraph 24 and
paragraph 5(a)(iv):
(i) an activity shall be a Restricted Activity
-------------------
if, in the Purchaser's judgment, such activity would be
reasonably likely to violate the "Modification of Final
Judgment" consent decree entered in United States v.
----------------
American Telephone and Telegraph Co., 552 F. Supp. 131
-------------------------------------
(1982) (the "MFJ"); and
---
(ii) a person shall be a Company Affiliate if, in the
-----------------
Purchaser's judgment, such Person would be reasonably likely
to be considered a "Bell Operating Company" or an
"affiliated enterprise" of the Purchaser because of a
relationship with the Company (as such terms in quotes are
defined in or interpreted under the MFJ).
(d) "Corrective Action" shall mean any and all action
-----------------
necessary to assure that neither the Company nor any Company
Affiliate is engaged in any Restricted Activity, including but
not limited to discontinuing, modifying or transferring ownership
of activities, deferring commencement of proposed activities or
proposing alternative structures of the Purchaser's investment
that, in the Purchaser's judgment, are of the same kind and
magnitude (including aggregate strategic and economic rights and
benefits) as the investment contemplated by this Agreement, all
within the framework of not materially and adversely affecting
the business or strategic objectives of the Company.
(e) (i) The Purchaser agrees to deal in good faith
with the Company under this paragraph 24 and the Purchaser
agrees to consider in good faith any request by the Company
that the Purchaser apply for waivers, clarifications or
other relief from the relevant competent authority that
would permit the Company and Company Affiliated to engage in
activities that would or might constitute Restricted
Activities in the absence of such waivers, clarifications or
other relief and the Company acknowledges that the Purchaser
is not required to file such applications if, in the
Purchaser's judgment, such applications could materially and
adversely affect matters affecting the Purchaser or its
Affiliates pending before such authority.
(ii) The Purchaser also agrees to consider in good
faith the restructuring of the Purchaser's investment
contemplated by this Agreement so as to permit activities by
the Company and its Affiliates that would otherwise
constitute Restricted Activities, while maintaining for the
Purchaser, in its judgment, an investment of the same kind
and magnitude (including aggregate strategic and economic
rights and benefits) as the investment contemplated by this
Agreement.
(f) If after the Closing, the Company or any Company
Affiliate proposes to , directly or indirectly and whether by
acquisition or otherwise, engage in an activity that may fall
within the MFJ, the Company shall notify the Purchaser as soon as
practicable but in no event less than 30 days in advance of doing
so and the Company and the Purchaser shall, as provided in
paragraph (b) above, consult in good faith regarding whether such
activity is a Restricted Activity. If the Company and the
Purchaser mutually agree in writing that such activity is not a
Restricted Activity, such activity shall be an "Agreed
------
Unrestricted Activity". If the Company and the Purchaser
---------------------
mutually agree in writing that such activity is a Restricted
Activity, such activity shall be an "Agreed Restricted Activity".
--------------------------
If the Company determines that such activity is not a Restricted
Activity and the Purchaser determines that such activity is a
Restricted Activity, such activity shall be a "Disputed
--------
Restricted Activity".
-------------------
(g) (i) If, after the Closing, in the Purchaser's
judgment, the Company or any Company Affiliate, directly or
indirectly and whether by acquisition or otherwise, engages in
any Restricted Activity, and the Company fails or is unable to
take Corrective Action that, in the Purchaser's judgment, is
reasonably likely to eliminate the Restricted Activity on a
timely basis, then the Purchaser, at its option and by written
----
notice to the Company, shall have the right to elect to do one or
more of the following: (x) require the Company to purchase (the
"Put Right") all or part of the Preferred Stock and any Class B
---------
Common Stock issued upon conversion of the Preferred Stock then
Beneficially Owned by the Purchaser (together, the "Subject
-------
Stock") at a price (the "Put Price") specified below; (y) require
----- ---------
the Company to promptly register all or part of the Subject Stock
pursuant to the registration rights provided in paragraph 8 (a
"Registered Offering"); and (z) sell all or part of the Subject
-------------------
Stock privately (a "Private Sale:). If the Purchaser exercises
------------
the Put Right because (x) the MFJ was judicially modified after
the date hereof so as to cause an activity that was not
previously a Restricted Activity to become a Restricted Activity
or (y) a court having jurisdiction over the interpretation and
enforcement of the MFJ determines that an Agreed Unrestricted
Activity is a Restricted Activity, then the Put Price shall be
the Market Price. If the Purchaser exercises the Put Right
because of (x) an activity which the Company did not previously
notify the Purchaser of in accordance with paragraph (f) above,
(y) an Agreed Restricted Activity, or (z) a Disputed Restricted
Activity, then the Put Price shall be the Default Price.
(A) The "Default Price" shall mean:
-------------
(1) With respect to Preferred Stock, the aggregate
liquidation preference of all shares of Preferred Stock
purchased by the Company (the "Aggregate Liquidation
---------------------
Preference"), plus accrued and unpaid dividends through the
----------
date of such purchase (whether or not earned or declared),
plus an amount equal to a 7% annual compounded rate of
----
return on the Aggregate Liquidation Preference from the date
of Closing to the date of purchase by the Company; provided
--------
that if (a) the activity (other than Agreed Restricted
Activity) with respect to which the Purchaser exercised the
Put Right is later determined by the arbitration provided
for in paragraph 15 not to be a Restricted Activity or (b)
if the activity with respect to which the Purchaser
exercised the Put Right is an activity of which the Company
did not previously notify the Purchaser in accordance with
paragraph (f) above and it is determined by the arbitration
provided for in paragraph 15 that, notwithstanding such
failure, the Company was exercising reasonable due diligence
to identify Restricted Activities and to notify the
Purchaser thereof pursuant to paragraph (f) above, then, the
annual compounded rate of return on the Aggregate
Liquidation Preference shall be 2%, instead of 7% (and any
payments made on the basis of the 7% rate shall be subject
to refund to implement such adjustment); and
(2) With respect to Class B Common Stock, the price
per share equal to 100% of the Trading Price (as defined in
paragraph 20(d)) for the 20 trading days immediately prior
to the date of purchase by the Company.
(B) The "Market Price" shall mean:
(1) With respect to the Preferred Stock, the price per
share equal to its stated liquidation preference, plus
accrued and unpaid dividends to the date of purchase by the
Company (whether or not earned or declared); and
(2) With respect to Class B Common Stock, the price
per share equal to 100% of the Trading Price for the 20
trading days immediately prior to the date of purchase by
the Company.
(iii) In any instance in which the Purchaser or its
Affiliates would be entitled to receive the Default Price
under this paragraph 24(g) and elects to dispose of the
Preferred Stock to which such Default Price would be
applicable either in a Registered Offering or a Private
Sale, the Company shall be obligated to pay to the Purchaser
or such Affiliates the amount, if any, by which the gross
proceeds to the Purchaser or such Affiliates, after
deducting underwriting commissions and discounts or agency
fees, realized in such disposition is less than the
aggregate Default Price that would have been payable to the
Purchaser and such Affiliates by the Company had the Purchaser
or such Affiliates elected to require the Company
to purchase such Preferred Stock under this paragraph 24(g);
provided, however, that the Company shall not be obligated
-------- -------
to make any such payment in any instance in which the
Purchaser or any Affiliate rejects the Company's written
request, if such a request is made by the Company by written
notice to the Purchaser within 5 Business Days of receipt by
the Company of Purchaser's notice pursuant to (g)(i) above
(and which the Company shall be entitled to make in its
discretion), to purchase such Preferred Stock from the
Purchaser or such Affiliate at the Default Price, which
right the Purchaser shall have in its discretion.
(iv) In any instance in which (A) the Company has
purchased Preferred Stock or Class B Common Stock from the
Purchaser or its Affiliates pursuant to this paragraph 24(g)
and (B) the Company has taken Corrective Action within 180
days after the date of such purchase so that the Company and
Company Affiliates are not engaged, in the Purchaser's
judgment, in any Restricted Activity, the Purchaser shall be
obligated to reinvest as soon as commercially possible in
such number of shares of Preferred Stock and of Class B
Common Stock as were so purchased by the Company for a
purchase price, in cash, equal to the amount paid to the
Purchaser by the Company pursuant to this paragraph 24(g).
From and after any purchase by the Company of Preferred
Stock or Class B Common Stock from the Purchaser or its
Affiliates pursuant to this paragraph 24(g), at the option
of either the Company or the Purchaser by written notice to
the other, the Company and the Purchaser shall continue to
take Corrective Action in accordance with this paragraph 24
for a period of 180 day after the date of such purchase by
the Company.
(v) In recognition of time being of the essence with
respect to any purchase by the Company of Preferred Stock or
Class B Common Stock pursuant to this paragraph 24(g), such
purchase shall occur as soon as commercially possible, but
in no event more than 20 Business Days, after receipt of a
written notice by the Purchaser to the Company requesting
such purchase in accordance with the terms of this paragraph
24(g). Unless otherwise agreed by the Purchaser, all
payments due to the Purchaser from the Company under this
paragraph 24(g) shall be in cash.
(h) The Purchaser agrees that paragraph 5(a)(iv) and
this paragraph 24 embody the Purchaser's exclusive remedies
against the Company under this Agreement with respect to the
MFJ.
25. The Company agrees that, for so long as the
Purchaser and its Affiliates Beneficially Own all of the
outstanding Preferred Stock, the Purchaser shall not amend,
alter or repeal any of the provisions of the Certificate of
Designation without the consent of the Purchaser.
26. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York
applicable to contracts executed in and to be performed in
that state.
Very truly yours,
VIACOM INC.
By /s/ Sumner M. Redstone
------------------------
Accepted and agreed on
the date written above:
NYNEX CORPORATION
By /s/ W.C. Ferguson
------------------
VIACOM INC.
1515 Broadway
New York, New York
November 19, 1993
NYNEX Corporation
335 Madison Avenue
New York, New York 10017
Dear Sirs:
Reference is made to the Agreement between NYNEX
Corporation and Viacom Inc., dated october 4, 1993 (the
"Agreement"). Terms defined in the Agreement are used herein as
therein defined, unless otherwise defined herein.
1. The Agreement is hereby amended as follows:
(a) Paragraph 2 is amended by deleting paragraph 2(a)
in its entirety and by replacing it with the following:
"(a) The closing (the "Closing") of the purchase
--------
provided for in paragraph 1 shall take place as soon as
practicable, but in no event more than five Business Days,
after satisfaction of the conditions specified in paragraph
5 at the offices of Shearman & Sterling, 599 Lexington
Avenue, New York, New York. The date and time of the
Closing are referred to herein as the "Closing Date". The
------------
Company and the Purchaser currently anticipate that the
Closing Date shall be on or about November 19, 1993."
(b) Paragraph 5(a) is amended by deleting the word
"and" at the end of paragraph 5(a)(iii) and by adding after
paragraph 5(a)(iv) the following new paragraphs 5(a)(v), (vi),
(vii), and (viii):
"(v) PVI Transmission Inc. ("Transco") shall have
been duly and validly incorporated under the laws of
the State of Delaware, the Identified Activities (as
hereinafter defined) shall have been transferred to
Transco as described in the certificate referred to in
paragraph 5(a)(i)(C) above, and the shares of common
stock and Non-Participating Preferred Stock (as
hereinafter defined) of Transco shall have been issued,
all as provided in paragraph 25 hereof;
(vi) No claims, proceedings, suits or
investigations shall have been initiated or threatened
by or before any court, governmental department,
commission, bureau, board, agency or instrumentality,
against the Purchaser or any other "Bell Operating
Company" or any "affiliated enterprise" of a "Bell
Operating Company" (as such terms in quotes are defined
in or interpreted under the MFJ (as defined in
paragraph 24)) that challenge or otherwise call into
question the effectiveness, as a means of insuring from
and after the Closing the Purchaser's compliance with
the MFJ, of the transfer of the Identified Activities
and the PCI Activities (as hereinafter defined) to
Transco in consideration of the issuance of the Transco
Non-Participating Preferred Stock to the Company (or
its subsidiaries) or, in the case of the PCI
Activities, to PCI (or its subsidiaries);
(vii) There shall exist no writ, judgement,
order, ruling decree or interpretation by a court,
governmental department, commission, bureau, board,
agency or instrumentality that changes or modifies
prior interpretations of the MFJ or other precedent
involving the MFJ such that the ownership of the
Preferred Stock by the Purchaser, in the Purchaser's
judgment, would cause the Company or any Company
Affiliate to be engaged in a Restricted Activity,
notwithstanding the formation of Transco, the transfer
thereto of the Identified Activities and the PCI
Activities and the issuance to the Company (or its
subsidiaries) or, in the case of the PCI Activities, to
PCI (as hereinafter defined) (or its subsidiaries) of
the Non-Participating Preferred Stock of Transco, all
as provided in paragraph 25 hereof; and
(viii) The certificate referred to in paragraph
5(a)(i)(C) above shall describe procedures and
undertakings by the Company and PCI to provide for the
implementation of the provisions of paragraph 25 hereof
as regards the PCI Activities, which procedures and
undertakings, and the proposed implementation thereof,
shall be reasonably satisfactory to the Purchaser."
(c) Paragraph 11 is amended by deleting paragraph
11(d)(i) in its entirety and by replacing it with the following:
"(i) A "Change of Control" of the Company shall
-----------------
occur if a Person Beneficially Owns more voting capital
stock, on a fully diluted basis, of the Company than
National Amusements, Inc. ("NAI"), Sumner M. Redstone,
any trust established by Mr. Redstone or of which he is
the settlor, beneficiary or trustee and any heir,
executor, administrator, or personal representative of
Mr. Redstone or his estate, and any person or entity in
any similar capacity, or any Affiliate of any of the
foregoing, (collectively, the "Group"), or the Group
-----
Beneficially Owns 30% or less of the voting capital
stock, on a fully diluted basis, of the Company;
provided, however, that NAI shall no longer be included
in the Group if a Person Beneficially Owns more voting
capital stock, on a fully diluted basis, of NAI than
the Group, or the Group Beneficially Owns 30% or less
of the voting capital stock, on a fully diluted basis,
of NAI."
(d) Paragraph 15 is amended by inserting in the
penultimate sentence thereof, after "paragraph 24(g)(i)(A)", the
following:
"or paragraph 25(g)".
(e) Paragraph 16 is amended by inserting in the
first sentence thereof, after "Annexes", the following:
", the Disclosure Schedule (as hereinafter
defined)".
(f) Paragraph 24 is amended by deleting the first
sentence of paragraph 24(c) and replacing it with the following:
"(c) For the purposes of this paragraph 24,
paragraph 25 and paragraphs 5(a)(iv) and 5(a)(vii):",
and is further amended by deleting paragraph 24(h) in its
entirety and by replacing it with the following:
"(h) The Purchaser agrees that paragraph 5(a)(iv),
this paragraph 24 and paragraph 25 embody the
Purchaser's exclusive remedies against the Company
under this Agreement with respect to the MFJ."
(g) The Agreement is amended by adding new paragraph
25 as set forth below:
"25. (a) The Company agrees that it shall take, and
shall cause its Affiliates to take, as promptly as
practicable, all action necessary (i) to duly and validly
incorporate Transco as a Delaware corporation having a
certificate of incorporation and by-laws substantially in
the form of Annex III hereto, (ii) to contribute (or cause
its subsidiaries to contribute) to the capital of Transco
the several assets identified in the disclosure schedule
(the "Disclosure Schedule") delivered by the Company to the
Purchaser on November 19, 1993 (the "Identified
Activities"), subject to the liabilities associated
therewith, in consideration of the issuance to the
transferor(s) of the Identified Activities of a number of
shares of non-participating preferred stock of Transco, with
the rights and preferences specified in the certificate of
designation included in Annex III (the "Non-Participating
Preferred Stock"), determined pursuant to paragraph (c)
below. Such contribution shall be made concurrently with
the contribution by NAI (or a subsidiary of NAI) of
$1,850,000 in consideration of the issuance to NAI (or such
subsidiary) of 100 shares of common stock of Transco.
(b) Notwithstanding any other provision in paragraph
24 to the contrary, (i) the Company and the Purchaser, in
anticipation of the acquisition by the Company and/or its
Affiliates of more than 50% of the outstanding shares of
common stock of PCI (the "Acquisition"), shall continue good
faith discussions with each other so as to identify the
specific assets and operations of PCI which constitute
Restricted Activities (the "PCI Activities") (which assets
and operations, based on such discussions to date, are
described in the Disclosure Schedule), it being understood
that in the case of disagreement, the Purchaser ultimately
shall have the right to determine, in the Purchaser's
judgment, which assets and operations of PCI constitute
Restricted Activities, and (ii) the Company agrees that it
shall take, and cause its Affiliates to take, all action
necessary to contribute (or cause to be contributed) the PCI
Activities, subject to the liabilities associated therewith,
to Transco in consideration of the issuance to the
transferor(s) of the PCI Activities of a number of shares of
Non-Participating Preferred Stock of Transco determined
pursuant to paragraph (c) below. The contribution of the
PCI Activities to Transco provided for in this paragraph (b)
shall be made concurrently with the consummation of the
Acquisition; except, that, if approval of the Acquisition
------ ----
shall not have been obtained from the Federal Communications
Commission prior to the consummation of the Acquisition and
as a result the shares of PCI acquired by the Company are
deposited at the time of the Acquisition in a voting trust
pursuant to a special temporary authorization granted by the
Federal Communications Commission, which voting trust
prevents the Company and its Affiliates from directly or
indirectly influencing the trustee under such voting trust
concerning the operation or management of the PCI
Activities, then such contribution of the PCI Activities to
Transco need not be made until the date of termination of
such voting trust.
(c) The contributions to Transco of the Identified
Activities and the PCI Activities as described in (a) and
(b) above shall be in consideration of the issuance to the
respective transferors of such number of shares of Non-
Participating Preferred stock of Transco having an aggregate
liquidation preference equalling the fair value of the
activities contributed, determined on an arms-length basis,
the fairness of which from a financial point of view shall
be evidenced by the opinion of an investment bank reasonably
satisfactory to the Company, NAI and the Purchaser.
(d) Notwithstanding any other provision of this
Agreement to the contrary, if, at any time, in the
Purchaser's judgment, the continued ownership by the Company
or its subsidiaries of an interest in Transco would cause
the Company or any Company Affiliate to be engaged in a
Restricted Activity by virtue of Transco's ownership of
Identified Activities and/or PCI Activities, and the
Purchaser determines in good faith that it would be
detrimental to the Purchaser's best interests either to
initiate efforts or to continue pursuing existing efforts to
confirm the propriety under the MFJ of the ownership by the
Company or its subsidiaries of shares of Non-Participating
Preferred Stock in Transco or any other interest in Transco,
the Company shall take any and all action necessary to cause
the Company (and all of its subsidiaries) to dispose of all
interests in Transco owned by the Company (or any of its
subsidiaries), and/or take such other action as, in the
Purchaser's judgment, is necessary so that neither the
Company nor any Company Affiliate will be engaged in a
Restricted Activity (such obligation to divest and take
other action being collectively referred to as the
"Divestment Action"). The Divestment Action shall be taken
as promptly as practicable, but in no event later than
thirty (30) Business Days after the Purchaser notifies the
Company in writing of such determination.
(e) In the event the Purchaser determines, in its
judgment, that the direct ownership by the Company (or any
of its subsidiaries) of all or any portion of the Identified
Activities or the PCI Activities would not result in the
Purchaser's being in violation of the MFJ, the Company will,
upon written notice from the Purchaser, acquire (or cause a
wholly-owned subsidiary to acquire), for fair value
determined on an arm's-length basis, the fairness of which
from a financial point of view shall be evidenced by the
opinion of an investment bank reasonably satisfactory to the
Company, NAI and the Purchaser, (i) all of the capital stock
of Transco not then owned by the Company and its
subsidiaries, or (ii) specific Identified Activities or PCI
Activities identified in writing by the Purchaser, as
determined by the Purchaser; provided that the Company shall
be entitled to defer, for a reasonable period of time, any
such acquisition if the Company determines in good faith,
and so notifies the Purchaser in writing, that consummating
such acquisition at such time would be detrimental to the
Company's best interests.
(f) If the Company fails or is unable to implement the
Divestment Action within the period set forth in (d) above,
then the Purchaser, at its option, by written notice to the
Company, shall have the right to elect to do one or more of
the following: (i) exercise the Put Right with respect to
all or part of the Subject Stock at the Divestment Price (as
defined below); (ii) require the Company to promptly
register all or part of the Subject Stock in a Registered
Offering; and/or (iii) sell all or part of the Subject Stock
privately in a Private Sale. If the Purchaser is entitled
to receive the Divestment Price under this paragraph 25(f)
and elects to dispose of the Preferred Stock or any portion
thereof either in a Registered Offering or a Private Sale,
the Company agrees to pay to the Purchaser the amount, if
any, by which the gross proceeds to the Purchaser, after
deducting underwriting commissions and discounts or agency
fees, realized in such disposition is less than the
aggregate Divestment Price that would have been payable to
the Purchaser by the Company had the Purchaser elected to
require the Company to purchase such Preferred Stock under
this paragraph 25(f); provided, however, that the Company
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shall not be obligated to make any such payment in any
instance in which the Purchaser rejects the Company's
written request, if such a request is made by the Company by
written notice to the Purchaser within 5 Business Days of
receipt by the Company of the Purchaser's notice pursuant to
this paragraph 25(f) (and which the Company shall be
entitled to make in its discretion), to purchase such
Preferred Stock from the Purchaser at the Divestment Price,
which right the Purchaser shall have in its discretion. The
Purchaser's rights under this paragraph 25 shall be
enforceable by any Affiliate to which it has transferred
Subject Stock. For purposes of this paragraph 25, the
"Divestment Price" shall mean (A) with respect to Preferred
----------------
Stock, the Aggregate Liquidation Preference plus accrued and
----
unpaid dividends through the date of such purchase (whether
or not earned or declared), plus an amount equal to a 7%
----
annual compounded rate of return on the Aggregate
Liquidation Preference from the date of Closing to the date
of purchase by the Company, and (B) with respect to Class B
Common Stock, the price per share equal to 100% of the
Trading Price for the 20 trading days immediately prior to
the date of purchase by the Company.
(g) Notwithstanding any other provision of this
Agreement, the remedy provided in (f) above is in addition
to any and all other remedies that may be available to the
Purchaser, at law or in equity, including, without
limitation, the right to seek damages, unless it is
determined by the arbitration provided for in paragraph 15
that the Company and its Affiliates shall have acted
reasonably in failing to implement the Divestment Action as
set forth in (d) above, in which event such remedy in (f)
above shall be the exclusive remedy available to the
Purchaser. In the event that the Purchaser is entitled to
seek damages as provided above in this paragraph 25(g), such
damages shall be offset by an amount equal to the 7% annual
compounded rate of return on the Aggregate Liquidation
Preference included in the Divestment Price if (but only if)
the Divestment Price both was determined by reference to
Preferred Stock and already has been paid to the Purchaser."
(h) ANNEX II of the Agreement is amended by deleting
the second sentence of the first paragraph, which currently
reads "In addition, at any time that the Purchaser shall
have the right to require the Company to purchase shares of
Preferred Stock and Class B Common Stock pursuant to
paragraph 24(g) of the Agreement, the Purchaser shall have
the right to make a request to register under the 1933 Act
any or all of such shares of Preferred Stock and Class B
Common Stock (the "Paragraph 24(g) Stock")", and by
---------------------
replacing it with the following:
"In addition, at any time that the Purchaser shall
have the right to require the Company to purchase
shares of Preferred Stock and Class B Common Stock
pursuant to paragraph 24(g) and/or paragraph 25(f) of
the Agreement, the Purchaser shall have the right to
make a request to register under the 1933 Act any or
all of such shares of Preferred Stock and Class B
Common Stock (in the case of either paragraph 24(g) or
paragraph 25(f), the "Paragraph 24(g) Stock")".
---------------------
(i) Paragraph 25 is deleted in its entirety and is
hereby replaced with the following new paragraph 26:
"The Company agrees that, for so long as the
Purchaser and its Affiliates Beneficially Own all of
the outstanding Preferred Stock, the Company shall not
amend, alter or repeal any of the provisions of the
Certificate of Designation without the consent of the
Purchaser."
(j) The Agreement is amended to change current
paragraph number "26" to "27".
(k) The Agreement is hereby amended to add thereto as
"Annex III" the attached forms of the certificate of
incorporation, by-laws and certificate of designation of
Transco.
2. This Amendment Agreement may be executed in multiple
counterparts, each of which when so executed shall be deemed to
be an original, and such counterparts together shall constitute
and be one and the same instrument.
3. This amendment to the Agreement shall be governed and
construed in accordance with the laws of the State of New York
applicable to contracts executed in and to be performed in that
state.
Very truly yours,
VIACOM INC.
By:_______________________
Accepted and agreed on
the date written above:
NYNEX CORPORATION
By:_________________