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Initial Public Offering and Split-Off Agreement - Viacom Inc., Viacom International Inc. and Blockbuster Inc.

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                INITIAL PUBLIC OFFERING AND SPLIT-OFF AGREEMENT



                          DATED AS OF AUGUST 16, 1999



                                     AMONG



                                  VIACOM INC.



                           VIACOM INTERNATIONAL INC.



                                      AND



                               BLOCKBUSTER INC.
<PAGE>

                               TABLE OF CONTENTS

                                                                            Page

                                   ARTICLE I
                                  DEFINITIONS

Section 1.01.    Definitions.................................................. 1

                                  ARTICLE II
                           THE IPO AND THE SPLIT-OFF

Section 2.01.    The IPO and Other Primary Offerings.......................... 7
Section 2.02.    The Split-Off................................................ 7
Section 2.03.    Certain Stockholder Matters.................................. 7
Section 2.04.    Prior Relationship........................................... 8
Section 2.05.    Further Assurances Regarding the Split-Off................... 8

                                  ARTICLE III
                                   EXPENSES

Section 3.01.    General...................................................... 9
Section 3.02.    Certain Expenses Relating to the IPO and any Other
                 Primary Offerings by Blockbuster............................. 9
Section 3.03.    Certain Expenses Relating to the Split-Off................... 9

                                  ARTICLE IV
                             ACCESS TO INFORMATION

Section 4.01.    Restrictions on Disclosure of Information....................10
Section 4.02.    Legally Required Disclosure of Confidential Information......10
Section 4.03.    Access to Information........................................11
Section 4.04.    Record Retention.............................................11

                                   ARTICLE V
                                   COVENANTS

Section 5.01.    Financial and Other Information..............................12
Section 5.02.    No Violations................................................18
Section 5.03.    Other Agreements.............................................18
<PAGE>

                                                                            Page
                                                                            ----

                                  ARTICLE VI
                           ASSIGNMENT AND ASSUMPTION

Section 6.01.    Assignment of Obligations....................................19
Section 6.02.    Assumption of Obligations....................................19
Section 6.03.    Assignment of Certain Employment Agreements..................19
Section 6.04.    Assumption of Certain Employment Agreements..................19

                                  ARTICLE VII
                                    OPTIONS

Section 7.01.    Options......................................................19
Section 7.02.    Notice.......................................................20
Section 7.03.    Option Exercise and Payment..................................20
Section 7.04.    Effect of Failure to Exercise................................21
Section 7.05.    IPO..........................................................21
Section 7.06.    Termination of Options.......................................21

                                 ARTICLE VIII
                                INDEMNIFICATION

Section 8.01.    Indemnification Procedures...................................21

                                  ARTICLE IX
            CONDITION TO CONSUMMATION OF TRANSACTIONS; TERMINATION

Section 9.01.    Condition....................................................23
Section 9.02.    Termination..................................................23

                                   ARTICLE X
                                 MISCELLANEOUS

Section 10.01.   Limitation of Liability......................................23
Section 10.02.   Further Assurances...........................................23
Section 10.03.   Waiver.......................................................23
Section 10.04.   Remedies.....................................................24
Section 10.05.   Performance..................................................24
Section 10.06.   References; Construction.....................................24
Section 10.07.   Amendments...................................................24
Section 10.08.   Successors and Assignment....................................24
Section 10.09.   Severability.................................................24
Section 10.10.   Entire Agreement.............................................25
Section 10.11.   Notices......................................................25

                                       ii
<PAGE>

Section 10.12.   Governing Law................................................25
Section 10.13.   Counterparts.................................................26

EXHIBITS

Exhibit A        Form of Release and Indemnification Agreement
Exhibit B        Form of Transition Services Agreement
Exhibit C        Form of Registration Rights Agreement
Exhibit D        Form of Tax Matters Agreement

                                      iii
<PAGE>

                INITIAL PUBLIC OFFERING AND SPLIT-OFF AGREEMENT
                -----------------------------------------------

          INITIAL PUBLIC OFFERING AND SPLIT-OFF AGREEMENT (this "Agreement")
                                                                 ---------
dated as of August 16, 1999, among Viacom Inc., a Delaware corporation

("Viacom"), Viacom International Inc., a Delaware corporation and a wholly owned
  ------
subsidiary of Viacom ("Viacom International"), and Blockbuster Inc., a Delaware
                       --------------------
corporation and an indirect, wholly owned subsidiary of Viacom ("Blockbuster").
                                                                 -----------
Certain capitalized terms used herein are defined in Article I of this
Agreement.


                                   RECITALS

          WHEREAS, since September 29, 1994, Viacom has owned and operated the
businesses and operations related to Blockbuster;

          WHEREAS, Viacom presently intends to split off Blockbuster in a tax-
free transaction;

          WHEREAS, prior to such split-off, Blockbuster proposes to issue shares
of its common stock in an initial public offering registered under the
Securities Act of 1933, as amended; and

          WHEREAS, the parties intend in this Agreement, including the Exhibits
attached hereto, to set forth the principal arrangements between them regarding
such initial public offering and such split-off.

          NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:


                                   ARTICLE I
                                  DEFINITIONS

          Section 1.01.  Definitions.  As used in this Agreement, the following
                         -----------
terms will have the following meanings, applicable both to the singular and the
plural forms of the terms described:

          "Affiliates" means, with respect to any specified Person, any Person
           ----------
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with such specified Person; provided,
                                                                      --------
however, that prior to the Split-Off, Affiliates of Blockbuster or Viacom shall
-------
only include Persons who would be affiliates of Blockbuster or Viacom,
respectively, assuming that the Split-Off had occurred immediately prior to the
determination as to whether such Person was an affiliate of Blockbuster or
Viacom, respectively.
<PAGE>

          "Agreement" has the meaning ascribed thereto in the Preamble.
           ---------

          "Ancillary Agreements" means the Registration Rights Agreement,
           --------------------
Transition Services Agreement, the Release and Indemnification Agreement and the
Tax Matters Agreement.

          "Annual Financial Statements" has the meaning ascribed thereto in
           ---------------------------
Section 5.01(v).

          "Applicable Stock" means at any time the (i) shares of Blockbuster
           ----------------
Common Stock owned by Viacom and its Affiliates that were owned on the date
hereof, plus (ii) shares of Blockbuster Class B Common Stock purchased by Viacom
        ----
and its Affiliates pursuant to Article VII, plus (iii) shares of Blockbuster
                                            ----
Common Stock that were issued to Viacom and its Affiliates in respect of shares
described in either clause (i) or clause (ii) in any reclassification, share
combination, share subdivision, share dividend, share exchange, merger,
consolidation or similar transaction or event.

          "Blockbuster" has the meaning ascribed thereto in the Preamble.
           -----------

          "Blockbuster Business" has the meaning ascribed thereto in Section
           --------------------
2.01(a)(i) of the Release and Indemnification Agreement.

          "Blockbuster Class A Common Stock" means the class A common stock, par
           --------------------------------
value $0.01 per share of Blockbuster.

          "Blockbuster Class B Common Stock" means the class B common stock, par
           --------------------------------
value $0.01 per share of Blockbuster.

          "Blockbuster Class B Common Stock Option" has the meaning ascribed
           ---------------------------------------
thereto in Section 7.01(a).

          "Blockbuster Class B Common Stock Option Notice" has the meaning
           ----------------------------------------------
ascribed thereto in Section 7.02.

          "Blockbuster Common Stock" means the Blockbuster Class B Common Stock,
           ------------------------
the Blockbuster Class A Common Stock, any other class of Blockbuster's capital
stock representing the right to vote generally for the election of directors
and, for so long as Blockbuster continues to be a subsidiary corporation
includible in a consolidated federal income tax return of the Viacom Group, any
other security of Blockbuster treated as stock for purposes of Section 1504 of
the Code.

          "Blockbuster Public Documents" has the meaning ascribed thereto in
           ----------------------------
Section 5.01(viii).

                                       2
<PAGE>

          "Blockbuster Public Filings" has the meaning ascribed thereto in
           --------------------------
Section 5.01(xii).

          "Blockbuster Transfer Agent" means the company designated by
           --------------------------
Blockbuster as the transfer agent and registrar for the Blockbuster Class A
Common Stock and the Blockbuster Class B Common Stock.

          "Blockbuster's Auditors" has the meaning ascribed thereto in Section
           ----------------------
5.01(xiii).

          "Business" means the Blockbuster Business or the Viacom Business, as
           --------
the case may be.

          "Business Day" means any day other than a Saturday, a Sunday, or a day
           ------------
on which banking institutions located in the State of New York are authorized or
obligated by law or executive order to close.

          "Code" means the Internal Revenue Code of 1986, as amended from time
           ----
to time, together with the rules and regulations promulgated thereunder.

          "Confidential Information" means, with respect to any party hereto,
           ------------------------
(i) any Information concerning such party, its business or any of its Affiliates
that was obtained by another party hereto, (ii) any Information concerning such
party that is obtained by another party under Section 4.03, or (iii) any other
Information obtained by, or furnished to, another party hereto.

          "Control" means the possession, direct or indirect, of the power to
           -------
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended
           ------------
from time to time, together with the rules and regulations promulgated
thereunder.

          "Indemnified Party" means any Person who is entitled to received
           -----------------
payment or defense from an Indemnifying Party pursuant to this Agreement.

          "Indemnifying Party" means any party who is required to pay or defend
           ------------------
any other Person pursuant to this Agreement.

          "Information" means all records, books, contracts, instruments,
           -----------
computer data and other data.

          "IPO" means the initial public offering by Blockbuster of shares of
           ---
Blockbuster Class A Common Stock as contemplated by the IPO Registration
Statement.

                                       3
<PAGE>

          "IPO Effective Date" means the date on which the IPO Registration
           ------------------
Statement is declared effective by the SEC.

          "IPO Registration Statement" means the Registration Statement on Form
           --------------------------
S-1, Registration No. 333-77899, of Blockbuster, including all exhibits thereto
and as supplemented and amended from time to time.

          "Issuance Event" has the meaning ascribed thereto in Section 7.02.
           --------------

          "Issuance Event Date" has the meaning ascribed thereto in Section
           -------------------
7.02.

          "Losses" has the meaning ascribed thereto in Section 2.01(a) of the
           ------
Release and Indemnification Agreement.

          "Market Price" of any shares of Blockbuster Class A Common Stock on
           ------------
any date means (i) the average of the last sale price of such shares on each of
the five trading days immediately preceding such date on the New York Stock
Exchange, Inc. or, if such shares are not listed thereon, on the principal
national securities exchange or automated interdealer quotation system on which
such shares are traded or (ii) if such sale prices are unavailable or such
shares are not so traded, the value of such shares on such date determined in
accordance with agreed-upon procedures reasonably satisfactory to Blockbuster
and Viacom.

          "Nonvoting Stock" means any class of Blockbuster' capital stock not
           ---------------
representing the right to vote generally for the election of directors.

          "Nonvoting Stock Option" has the meaning ascribed thereto in Section
           ----------------------
7.01(c).

          "Nonvoting Stock Option Notice" has the meaning ascribed thereto in
           -----------------------------
Section 7.02.

          "Ownership Percentage" means, at any time, the fraction, expressed as
           --------------------
a percentage and rounded to the next highest thousandth of a percent, whose
numerator is the aggregate Value of the Applicable Stock and whose denominator
is the sum of the aggregate Value of the outstanding shares of Blockbuster
Common Stock; provided, however, that any shares of Blockbuster Common Stock
              --------  -------
issued by Blockbuster in violation of its obligations under Article VII of this
Agreement shall not be deemed outstanding for the purpose of determining the
Ownership Percentage.  For purposes of this definition, "Value" means, with
                                                         -----
respect to any share of stock, the value of such share determined by Viacom
under principles applicable for purposes of Section 1504 of the Code.

          "Owning Party" has the meaning ascribed thereto in Section 4.02.
           ------------

                                       4
<PAGE>

          "Person" means any individual, corporation, limited or general
           ------
partnership, limited liability company, joint venture association, joint stock
company, trust unincorporated organization or government or any agency or
political subdivision thereof.

          "Prior Relationship" means the ownership relationship between Viacom
           ------------------
and Blockbuster at any time prior to the Split-Off Date.

          "Public Filings" has the meaning ascribed thereto in Section
           --------------
5.01(xii).

          "Quarterly Financial Statements" has the meaning ascribed thereto in
           ------------------------------
Section 5.01(iv).

          "Registration Rights Agreement" means the Registration Rights
           -----------------------------
Agreement to be entered into on or before the IPO Effective Date between Viacom
and Blockbuster, in substantially the form attached hereto as Exhibit C.

          "Regulation S-K" means Regulation S-K of the General Rules and
           --------------
Regulations promulgated by the SEC.

          "Regulation S-X" means Regulation S-X of the General Rules and
           --------------
Regulations promulgated by the SEC.

          "Related Parties" has the meaning ascribed thereto in Section 4.03.
           ---------------

          "Release and Indemnification Agreement" means the Release and
           -------------------------------------
Indemnification Agreement to be entered into on or before the IPO Effective Date
between Viacom and Blockbuster, in substantially the form attached hereto as
Exhibit A.

          "Representatives" means directors, officers, employees, agents,
           ---------------
consultants, advisors, accountants, attorneys and representatives.

          "Requestor" has the meaning ascribed thereto in Section 4.03.
           ---------

          "Retention Period" has the meaning ascribed thereto in Section 4.04.
           ----------------

          "SEC" means the Securities and Exchange Commission.
           ---

          "Securities Act" means the Securities Act of 1933, as amended from
           --------------
time to time, together with the rules and regulations promulgated thereunder.

          "Split-Off" means the distribution of Blockbuster Common Stock by
           ---------
Viacom in one or more transactions occurring after the IPO that collectively
have the effect that all or a

                                       5
<PAGE>

substantial part of the shares of Blockbuster Common Stock held by Viacom are
distributed to all or some of the stockholders of Viacom, whenever such
transaction(s) shall occur.

          "Split-Off Date" is the date upon which the Split-Off is consummated.
           --------------

          "Subsidiary" means, with respect to any Person, any other Person a
           ----------
majority of the equity ownership or voting stock of which is at the time owned,
directly or indirectly, by such Person and/or one or more other Subsidiaries of
such Person; provided, however, that prior to the Split-Off, a Subsidiary of
             --------  -------
Viacom shall only include Persons who would be a Subsidiary of Viacom assuming
the Split-Off has occurred immediately prior to the determination as to whether
such Person were a Subsidiary of Viacom.

          "Tax Matters Agreement" means the Tax Matters Agreement to be entered
           ---------------------
into on or before the IPO Effective Date between Viacom and Blockbuster, in
substantially the form as attached hereto as Exhibit D.

          "Third Party Claim" has the meaning ascribed thereto in Section
           -----------------
8.01(b).

          "Transition Services Agreement" means the Transition Services
           -----------------------------
Agreement to be entered into on or before the IPO Effective Date between Viacom
and Blockbuster, in substantially the form attached hereto as Exhibit B.

          "Underwriting Agreement" means the Underwriting Agreement is between
           ----------------------
Blockbuster and the underwriters relating to the IPO, as amended from time to
time.

          "Viacom" has the meaning ascribed thereto in the Preamble.
           ------

          "Viacom Annual Statements" has the meaning ascribed thereto in Section
           ------------------------
5.01(xiv).

          "Viacom Business" means any assets, business or operations of Viacom
           ---------------
or any of its Affiliates other than the Blockbuster Business.

          "Viacom Class A Common Stock" means the class A common stock, par
           ---------------------------
value $0.01 per share, of Viacom.

          "Viacom Class B Common Stock" means the class B common stock, par
           ---------------------------
value $0.01 per share, of Viacom.

          "Viacom Common Stock" means the Viacom Class A Common Stock and the
           -------------------
Viacom Class B Common Stock.

                                       6
<PAGE>

          "Viacom Group" includes for federal income tax purposes, Viacom, its
           ------------
Affiliates, Blockbuster and its Affiliates.

          "Viacom International" has the meaning ascribed thereto in the
           --------------------
Preamble.

          "Viacom Public Filings" has the meaning ascribed thereto in Section
           ---------------------
5.01(xii).

          "Viacom's Auditors" has the meaning ascribed thereto in Section
           -----------------
5.01(xiv).

          "Viacom Transfer Agent" means the company designated by Viacom as the
           ---------------------
transfer agent and registrar for the Viacom Common Stock.

          "Wherehouse Stock Purchase Agreement" means the Stock Purchase
           -----------------------------------
Agreement, dated as of August 10, 1998, between Viacom International and
Wherehouse Entertainment, Inc.


                                  ARTICLE II
                           THE IPO AND THE SPLIT-OFF

          Section 2.01.  The IPO and Other Primary Offerings.  Until the Split-
                         -----------------------------------
Off Date, Blockbuster shall consult with, and cooperate in all respects with,
Viacom in connection with any primary offering of the Blockbuster Common Stock
or any other securities of Blockbuster and shall, at Viacom's direction,
promptly take any and all actions necessary or desirable to consummate such
transactions.

          Section 2.02.  The Split-Off.  Viacom currently intends, following the
                         -------------
consummation of the IPO, to complete the Split-Off at a date after September 29,
1999.  Viacom shall, in its sole and absolute discretion, determine whether to
proceed with all or part of the Split-Off and all terms of the Split-Off,
including, without limitation, the form, structure and terms of any
transaction(s) and/or offering(s) to effect the Split-Off and the timing of and
conditions to the consummation of the Split-Off.  In addition, Viacom may at any
time and from time to time until the completion of the Split-Off abandon, modify
or change any or all of the terms of the Split-Off, including, without
limitation, by accelerating or delaying the timing of the consummation of all or
part of the Split-Off.  Blockbuster shall cooperate with Viacom in all
commercially reasonable respects to accomplish the Split-Off and shall, at
Viacom's direction, promptly take any and all actions necessary or desirable to
effect the Split-Off, including, without limitation, the registration under the
Securities Act of Blockbuster Common Stock on an appropriate registration form
or forms to be designated by Viacom.  Viacom shall select any investment
banker(s) and manager(s) in connection with the Split-Off, as well as any other
institutions providing services in connection with the Split-Off.

          Section 2.03.  Certain Stockholder Matters.  From and after the
                         ---------------------------
distribution of Blockbuster Common Stock in connection with any transaction(s)
included as part of the

                                       7
<PAGE>

Split-Off and until such Blockbuster Common Stock is duly transferred in
accordance with applicable law, Blockbuster shall regard the Persons receiving
Blockbuster Common Stock in such transaction(s) as record holders of Blockbuster
Common Stock in accordance with the terms of such transaction(s) without
requiring any action on the part of such Persons.  Blockbuster agrees that,
subject to any transfers of such stock, (a) each such holder shall be entitled
to receive all dividends payable on, and exercise voting rights and all other
rights and privileges with respect to, the shares of Blockbuster Common Stock
then held by such holder and (b) each such holder shall be entitled, without any
action on the part of such holder, to receive one or more certificates
representing, or other evidence of ownership of, the shares of Blockbuster
Common Stock then held by such holder.  Viacom shall cooperate, and shall
instruct the Viacom Transfer Agent to cooperate, with Blockbuster and the
Blockbuster Transfer Agent, and Blockbuster shall cooperate, and shall instruct
the Blockbuster Transfer Agent to cooperate, with Viacom and the Viacom Transfer
Agent, in connection with all aspects of the Split-Off and all other matters
relating to the issuance and delivery of certificates representing, or other
evidence of ownership of, the shares of Blockbuster Common Stock distributed to
the holders of Viacom Common Stock in connection with any transaction(s)
included as part of the Split-Off.  Following the Split-Off, Viacom shall
promptly, but in no event no later than two business days thereafter, instruct
the Viacom Transfer Agent to deliver to the Blockbuster Transfer Agent true,
correct and complete copies of the stock and transfer records reflecting the
holders of Viacom Common Stock receiving shares of Blockbuster Common Stock in
connection with any transaction(s) included as part of the Split-Off.

          Section 2.04.  Prior Relationship.  Blockbuster, with respect to
                         ------------------
Blockbuster and its Affiliates, and Viacom, with respect to Viacom and its
Affiliates, agree to take all commercially reasonable action to discontinue
their respective uses as promptly as is commercially reasonable of any printed
material that indicates an ownership or other relationship between or among
Viacom and Blockbuster or any of their respective Affiliates that has changed as
a result of the IPO, the Split-Off or any other transactions contemplated
hereby; provided that this Section 2.04 shall not prohibit the use of printed
        --------
material containing appropriate and accurate references to such relationship.

          Section 2.05.  Further Assurances Regarding the Split-Off.  In
                         ------------------------------------------
addition to the actions specifically provided for elsewhere in this Agreement,
Blockbuster shall, at Viacom's direction, use all commercially reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things commercially reasonably necessary, proper or expeditious under
applicable laws, regulations and agreements in order to consummate and make
effective the Split-Off as promptly as reasonably practicable.  Without limiting
the generality of the foregoing, Blockbuster shall, at Viacom's direction,
cooperate with Viacom, and execute and deliver, or use all commercially
reasonable efforts to cause to have executed and delivered, all instruments,
including instruments of conveyance, assignment and transfer, and to make all
filings with, and to obtain all consents, approvals or authorizations of, any
domestic or foreign governmental or regulatory authority requested by Viacom in
order to consummate and make effective the Split-Off.

                                       8
<PAGE>

                                  ARTICLE III
                                   EXPENSES

          Section 3.01.  General.  Except as otherwise provided in this
                         -------
Agreement, the Ancillary Agreements or any other agreement between the parties
relating to the IPO or the Split-Off, all costs and expenses of either party
hereto in connection with the IPO and the Split-Off shall be paid by the party
that incurs such costs and expenses.

          Section 3.02.  Certain Expenses Relating to the IPO and any Other
                         --------------------------------------------------
Primary Offerings by Blockbuster.  Except for the fees and disbursements related
--------------------------------
to Viacom's counsel, accountants and other advisors, Blockbuster shall pay or
cause to be paid all third party expenses relating to the IPO or any other
primary offering by Blockbuster prior to the Split-Off Date, including (i) the
preparation, printing and filing of the IPO Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto or any other registration statements, (ii) the preparation, printing and
delivery to any underwriters of any underwriting agreement, any agreement among
underwriters and any other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Blockbuster Common Stock
or any other securities of Blockbuster, (iii) the preparation, issuance and
delivery of the certificates for the Blockbuster Common Stock or any other
securities of Blockbuster to any underwriters or any other purchasers, including
any stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Blockbuster Common Stock or any other
securities of Blockbuster to any underwriters or any other securities, (iv) the
qualification of the Blockbuster Common Stock or any other securities of
Blockbuster under the securities laws in accordance with any state (Blue Sky
laws), including filing fees and the reasonable fees and disbursements of
counsel for any underwriters in connection therewith and in connection with the
preparation of the Blue Sky Survey and any supplement thereto, (v) the printing
and delivery to any underwriters of copies of each preliminary prospectus, any
term sheets and of the final prospectus and any amendments or supplements
thereto, (vi) the preparation, printing and delivery to any underwriters of
copies of the Blue Sky Survey and any supplement thereto, (vii) the fees and
expenses of any transfer agent or registrar for the Blockbuster Common Stock or
any other securities of Blockbuster, (viii) the filing fees incident to, and the
reasonable fees and disbursements of counsel to any underwriters in connection
with, the review by the National Association of Securities Dealers, Inc. (the
"NASD") of the terms of the sale of the Blockbuster Common Stock or any other
securities of Blockbuster and (ix) the fees and expenses incurred in connection
with the listing of the Blockbuster Common Stock or any other securities of
Blockbuster on the New York Stock Exchange, any other national securities
exchange or any national over the counter quotation system.

          Section 3.03.  Certain Expenses Relating to the Split-Off.   Except
                         ------------------------------------------
for the fees and disbursements related to Blockbuster's counsel, accountants and
other advisors, Viacom shall pay or cause to be paid all third party expenses
relating to the Split-Off, including (i) the fees and expenses of the
underwriter or dealer-manager, (ii) the preparation, printing, filing (including
under federal and state securities laws), mailing and publishing of the offering
materials relating

                                       9
<PAGE>

to the Blockbuster Common Stock, (iii) the preparation, printing and delivery of
any certificates or documents entered into in connection with the Split-Off,
(iv) the fees and expenses of any exchange agent, information agent, transfer
agent or registrar for the Blockbuster Common Stock, (v) the fees and expenses
incurred in connection with the listing of the Blockbuster Common Stock with the
NASD or the New York Stock Exchange, any other national securities exchange or
any national over the counter quotation system, if applicable and (vi) any other
fees incurred in connection with the Split-Off.


                                  ARTICLE IV
                             ACCESS TO INFORMATION

          Section 4.01.  Restrictions on Disclosure of Information.  (a)
                         -----------------------------------------
Without limiting any rights or obligations under any other agreement between or
among the parties hereto and/or any of their respective Affiliates relating to
confidentiality, for a period of three years following the date hereof, each of
the parties hereto agrees that it shall not, and shall not permit any of its
Affiliates or Representatives to, disclose any Confidential Information to any
Person, other than to such Affiliates or Representatives on a need-to-know basis
in connection with the purpose for which the Confidential Information was
originally disclosed.  Such Information shall no longer be deemed Confidential
Information, to the extent that it is or was (i) in the public domain other than
by the breach of this Agreement or by breach of any other agreement between or
among the parties hereto and/or any of their respective Affiliates, (ii)
available to such party outside the context of the Prior Relationship on a
nonconfidential basis prior to its disclosure by the other party, (iii) lawfully
acquired outside the context of the Prior Relationship on a nonconfidential
basis or independently developed by, or on behalf of, such party by Persons who
do not have access to, or descriptions of, any such Confidential Information,
(iv) required to be disclosed by law, governmental order or the rules and
regulations of the SEC, or (v) mutually agreed to by the parties.

          (b) Each of the parties hereto shall maintain, and shall cause its
respective Affiliates to maintain, policies and procedures, and develop such
further policies and procedures as shall from time to time become necessary or
appropriate, to ensure compliance with this Section 4.01.

          Section 4.02.  Legally Required Disclosure of Confidential
                         -------------------------------------------
Information.  If any of the parties to this Agreement or any of their respective
Affiliates or Representatives become legally required to disclose any
Confidential Information, such disclosing party shall promptly notify the party
owning the Confidential Information (the "Owning Party") and shall use all
                                          ------------
commercially reasonable efforts to cooperate with the Owning Party so that the
Owning Party may seek a protective order or other appropriate remedy and/or
waive compliance with this Section 4.02.  All expenses reasonably incurred in
seeking a protective order or other remedy shall be borne by the Owning Party.
If such protective order or other remedy is not obtained, or if the Owning Party
waives compliance with this Section 4.02, the disclosing party or its Affiliate
or Representative, as applicable, shall (a) disclose only that portion of the
Confidential

                                       10
<PAGE>

Information it is compelled by law to disclose, (b) use all commercially
reasonable efforts to obtain reliable assurance requested by the Owning Party
that confidential treatment will be accorded such Confidential Information, and
(c) promptly provide the Owning Party with a copy of the Confidential
Information so disclosed, in the same form and format so disclosed, together
with a description of all Persons to whom such Confidential Information was
disclosed.

          Section 4.03.  Access to Information.  (a)  During the Retention
                         ---------------------
Period, each of the parties hereto shall cooperate with and afford, and shall
cause their respective Affiliates, Representatives, Subsidiaries, successors
and/or assignees, and shall use reasonable efforts to cause joint ventures that
are not Affiliates (collectively, "Related Parties") to cooperate with, and
                                   ---------------
afford to the other party, reasonable access upon reasonable advance written
request to all information (other than information created after the Split-Off
Date (i) the disclosure of which would have the effect of waiving a legal
privilege, or (ii) which is the subject of a confidentiality agreement between
such party and a third party which prohibits disclosure to the other party,

provided that such party shall use all commercially reasonable efforts to obtain
--------
such third party's consent to disclosure of such information) within such
party's or any Related Party's possession. Access to the requested information
shall be provided so long as it relates to the requesting party's (the

"Requestor") assets, business and operations, and access is reasonably required
----------
by the Requestor as a result of the parties' Prior Relationship for purposes of
auditing, accounting, claims or litigation (except for claims or litigation
between the parties hereto), employee benefits, regulatory or tax purposes or
fulfilling disclosure or reporting obligations including, without limitation,
information reasonably necessary for the preparation of reports required by or
filed under the Securities Act or the Exchange Act with respect to any period
entirely or partially prior to the Split-Off Date or any other reasonable
purpose.

          (b) Each party agrees to cooperate fully to allow access to each
others employees (i) to the extent that they are reasonably necessary to discuss
and explain all requested Information with and to the requesting party and (ii)
with respect to any claims brought against the other involving the conduct of
the Blockbuster Business prior to the Split-Off Date.

          Section 4.04.  Record Retention.  (a)  Books and Records.  Viacom and
                         ----------------
Blockbuster shall preserve and keep all of their respective books and records in
the possession of such party or its Related Parties, whether in electronic form
or otherwise, for no less than the later of (i) the record retention policy of
Viacom and Blockbuster as in effect as of the Split-Off Date or (ii) any period
as may be required by any laws, regulations or rulings promulgated thereunder of
any jurisdiction (or of any political subdivision or taxing authority thereof)
(the "Retention Period"), at such party's sole cost and expense.  Viacom shall
      ----------------
deliver to Blockbuster on the Split-Off Date any and all original corporate
organization books that Viacom has in its possession relating solely to the
Blockbuster Business, copies of which Viacom may retain at its own expense.
Upon reasonable prior written request, Viacom and Blockbuster shall deliver to
the other copies of any and all books and records that Viacom or Blockbuster, as
the case may be, has in its possession relating to the Blockbuster Business.

                                       11
<PAGE>

                                   ARTICLE V
                                   COVENANTS

          Section 5.01.  Financial and Other Information.  Blockbuster (and
                         -------------------------------
Viacom with respect to clause (xii) below) agrees that, for so long as Viacom is
required to consolidate Blockbuster's results of operations and financial
position (determined in accordance with generally accepted accounting principles
consistently applied):

          (i)     Blockbuster shall, and shall cause each of its Subsidiaries
     to, maintain a system of internal accounting controls in accordance with
     generally accepted accounting principles and SEC and tax related
     requirements that will provide reasonable assurance that Blockbuster's and
     such Subsidiaries' books, records and accounts fairly reflect all
     transactions and dispositions of assets.

          (ii)    Blockbuster shall, and shall cause each of its Subsidiaries
     to, maintain a fiscal year which commences and ends on the same dates as
     does Viacom's fiscal year of each calendar year.

          (iii)   As soon as practicable, and in any event within ten Business
     Days after the end of each month in each fiscal year of Blockbuster,
     Blockbuster shall deliver to Viacom (a) a monthly consolidated income
     statement and related schedules for Blockbuster and its Subsidiaries and
     (b) a year-to-date consolidated income statement and related schedules for
     Blockbuster and its Subsidiaries.  As soon as practicable, and in any event
     within 20 Business Days (x) after the end of each of the first three
     quarters in each fiscal year of Blockbuster, and (y) after the end of each
     such fiscal year, Blockbuster shall deliver to Viacom a consolidated
     balance sheet and related schedules and statement of cash flows and related
     schedules for Blockbuster and its Subsidiaries for such fiscal quarter or
     year end, as the case may be.

          (iv)    As soon as practicable, and in any event within 35 days after
     the end of each of the first three quarters in each fiscal year of
     Blockbuster and no later than ten days before Blockbuster intends to file
     its Quarterly Financial Statements (as defined below) with the SEC,
     Blockbuster shall deliver to Viacom drafts of (A) the consolidated
     financial statements of Blockbuster and its Subsidiaries (and notes
     thereto) for such periods and for the period from the beginning of the
     current fiscal year to the end of such quarter, setting forth in each case
     in comparative form for each such fiscal quarter of Blockbuster the
     consolidated figures (and notes thereto) for the corresponding quarter and
     periods of the previous fiscal year and all in reasonable detail and
     prepared in accordance with Article 10 of Regulation S-X, and (B) a
     discussion and analysis by management of Blockbuster's and its
     Subsidiaries' financial condition and results of operations for such fiscal
     period, including, without limitation, an explanation of any material
     adverse change, all in reasonable detail and prepared in accordance with
     Item 303(b) of Regulation S-K. The information set forth in subsections (A)
     and (B) above is herein referred to as the

                                       12
<PAGE>

     "Quarterly Financial Statements."  No later than the earlier of (x) two
     -------------------------------
     Business Days prior to the date Blockbuster publicly files the Quarterly
     Financial Statements with the SEC or otherwise makes such Quarterly
     Financial Statements publicly available or (y) two Business Days prior to
     the date on which Viacom has notified Blockbuster that it intends to file
     its quarterly financial statements with the SEC, Blockbuster shall deliver
     to Viacom the substantially final form of the Quarterly Financial
     Statements certified by the chief financial officer of Blockbuster as
     presenting fairly, in all material respects, the financial condition and
     results of operations of Blockbuster and its Subsidiaries; provided that
                                                                --------
     Blockbuster and Viacom shall actively consult with each other regarding any
     changes (whether or not substantive) which Blockbuster may consider making
     to its Quarterly Financial Statements and related disclosures prior to the
     filing with the SEC.  In addition to the foregoing, no (a) Quarterly
     Financial Statement or (b) any other document which refers, or contains
     information with respect, to the ownership of Blockbuster by Viacom, the
     separation of Blockbuster from Viacom or the Split-Off shall be filed with
     the SEC or otherwise made public by Blockbuster or any of its Subsidiaries
     without the prior consent of Viacom which shall not be unreasonably
     withheld.  In any event, Blockbuster shall deliver to Viacom its final
     Quarterly Report on Form 10-Q no later than 45 days after the end of each
     of the first three quarters in each fiscal year of Blockbuster.  If the
     time period required by the SEC for Blockbuster to file its Quarterly
     Report on Form 10-Q is changed, Blockbuster and Viacom shall renegotiate in
     good faith to set more appropriate time periods relating to the dates as
     set forth in this Section 5.01(iv).  As soon as practicable but in no event
     two Business Days prior to issuance, Blockbuster shall deliver to Viacom
     copies of substantially final drafts of all of its quarterly earnings
     releases.  In addition, within such two day period, Blockbuster shall
     actively consult with Viacom regarding any changes (other than
     typographical or other similar minor changes) to such substantially final
     drafts.  Immediately following the issuance thereof, Blockbuster shall
     deliver to Viacom final copies of such earnings releases.  Viacom shall
     determine, in its sole discretion, the timing of Blockbuster's quarterly
     earnings releases, provided that Blockbuster and Viacom will consult with
                        --------
     each other on such timing if the senior management of Blockbuster notifies
     Viacom that Blockbuster is required by law as advised by its counsel not to
     release its earnings at such time as initially determined by Viacom.

          (v)     Blockbuster shall deliver to Viacom as soon as practicable,
     and in any event within 60 days after the end of each fiscal year of
     Blockbuster and no later than 15 days before Blockbuster intends to file
     its Annual Financial Statements with the SEC, (A) drafts of the
     consolidated financial statements of Blockbuster (and notes thereto) for
     such year, setting forth in each case in comparative form the consolidated
     figures (and notes thereto) for the previous fiscal year and all in
     reasonable detail and prepared in accordance with Regulation S-X and (B) a
     discussion and analysis by management of Blockbuster's and its
     Subsidiaries' financial condition and results of operations for such year,
     including, without limitation, an explanation of any material adverse
     change, all in reasonable detail and prepared in accordance with Item
     303(a) of Regulation S-K. The information set forth in (A) and (B) above is
     herein referred to as the "Annual Financial
                                ----------------

                                       13
<PAGE>

     Statements." Blockbuster shall deliver to Viacom all material revisions to
     -----------
     such drafts as soon as any such revisions are prepared or made. No later
     than the earlier of (x) five Business Days prior to the date Blockbuster
     publicly files the Annual Financial Statements with the SEC or otherwise
     makes such Annual Financial Statements publicly available or (y) five
     Business Days prior to the date on which Viacom has notified Blockbuster
     that it intends to file its annual financial statements with the SEC,
     Blockbuster shall deliver to Viacom the final form of the Annual Financial
     Statements certified by the chief financial officer of Blockbuster as
     presenting fairly, in all material respects, the financial condition and
     results of operations of Blockbuster and its Subsidiaries; provided that
                                                                --------
     Blockbuster and Viacom shall actively consult with each other regarding any
     changes (whether or not substantive) which Blockbuster may consider making
     to its Annual Financial Statements and related disclosures prior to the
     filing with the SEC. In addition to the foregoing, no (a) Annual Financial
     Statement or (b) any other document which refers, or contains information
     with respect, to the ownership of Blockbuster by Viacom, the separation of
     Blockbuster from Viacom or the Split-Off shall be filed with the SEC or
     otherwise made public by Blockbuster or any of its Subsidiaries without the
     prior consent of Viacom which shall not be unreasonably withheld. In any
     event, Blockbuster shall deliver to Viacom its final Annual Report on Form
     10-K no later than 90 days after the end of each fiscal year of
     Blockbuster. If the time period required by the SEC for Blockbuster to file
     its Annual Report on Form 10-K is changed, Blockbuster and Viacom shall
     renegotiate in good faith to set more appropriate time periods relating to
     the dates as set forth in this Section 5.01(v). As soon as practicable but
     in no event two Business Days prior to issuance, Blockbuster shall deliver
     to Viacom copies of substantially final drafts of its annual earnings
     releases. In addition, within such two day period, Blockbuster shall
     actively consult with Viacom regarding any changes (other than
     typographical or other similar minor changes) to such substantially final
     drafts. Immediately following the issuance thereof, Blockbuster shall
     deliver to Viacom final copies of the earnings release. Viacom shall
     determine, in its sole discretion, the timing of Blockbuster's annual
     earnings release, provided, that Blockbuster and Viacom will consult with
                       --------
     each other on such timing if the senior management of Blockbuster notifies
     Viacom that Blockbuster is required by law as advised by its counsel not to
     release its earnings at such time as initially determined by Viacom.

          (vi)    Blockbuster shall deliver to Viacom all Quarterly and Annual
     Financial Statements of each Subsidiary of Blockbuster which is itself
     required to file financial statements with the SEC or otherwise make such
     financial statements publicly available, with such financial statements to
     be provided in the same manner and detail and on the same time schedule as
     those financial statements of Blockbuster required to be delivered to
     Viacom pursuant to this Section 5.01.

          (vii)   All information provided by Blockbuster or any of its
     Subsidiaries to Viacom pursuant to Sections 5.01(iii) through (vi)
     inclusive shall be consistent in terms of format and detail and otherwise
     with the procedures in effect on the date hereof with

                                       14
<PAGE>

     respect to the provision of such financial information by the Blockbuster
     Business and/or Blockbuster and its Subsidiaries, as applicable, to Viacom
     (and, where appropriate, as presently presented in financial reports to
     Viacom's Board of Directors), with such changes therein as may be requested
     by Viacom from time to time consistent with changes in reporting by sectors
     and Subsidiaries of Viacom in accordance with generally accepted accounting
     principles.

          (viii)  Blockbuster and each of its Subsidiaries which files
     information with the SEC shall deliver to Viacom:  (A) as soon as the same
     are prepared, substantially final drafts of (x) all reports, notices and
     proxy and information statements to be sent or made available by
     Blockbuster or any of its Subsidiaries to their security holders, (y) all
     regular, periodic and other reports to be filed under Sections 13, 14 and
     15 of the Exchange Act (including current reports on Form 8-K and annual
     reports to stockholders), and (z) all registration statements and
     prospectuses to be filed by Blockbuster or any of its Subsidiaries with the
     SEC or any securities exchange pursuant to the listed company manual (or
     similar requirements) of such exchange (collectively, the documents
     identified in clauses (x), (y) and (z) are referred to herein as
     "Blockbuster Public Documents"); and (B) as soon as practicable, but in no
     -----------------------------
     event later than four Business Days prior to the date the same are printed,
     sent or filed, whichever is earliest, substantially final drafts of all
     such Blockbuster Public Documents; provided that Blockbuster and Viacom
                                        --------
     shall actively consult with each other regarding any changes (whether or
     not substantive) which Blockbuster may consider making to any of its
     Blockbuster Public Documents and related disclosures prior to any
     anticipated filing with the SEC.  In addition to the foregoing, no (a)
     Blockbuster Public Document or (b) any other document which refers, or
     contains information with respect, to the ownership of Blockbuster by
     Viacom, the separation of Blockbuster from Viacom or the Split-Off shall be
     filed with the SEC or otherwise made public by Blockbuster or any of its
     Subsidiaries without the prior consent of Viacom which consent shall not
     unreasonably be withheld.

          (ix)    Blockbuster shall, as promptly as practicable, deliver to
     Viacom copies of all annual and other budgets and financial projections
     (consistent in terms of format and detail and otherwise with the procedures
     in effect on the date hereof) relating to Blockbuster or any of its
     Subsidiaries and shall provide Viacom an opportunity to meet with
     management of Blockbuster to discuss such budgets and projections.

          (x)     With reasonable promptness, Blockbuster shall deliver to
     Viacom such additional financial and other information and data with
     respect to Blockbuster and its Subsidiaries and their business, properties,
     financial positions, results of operations and prospects as from time to
     time may be reasonably requested by Viacom.

          (xi)    Except with respect to Blockbuster's quarterly and annual
     earnings releases, Blockbuster shall deliver to Viacom as soon as
     practicable but in no event two Business Days prior to issuance, copies of
     substantially final drafts of all press releases

                                       15
<PAGE>

     and other statements to be made available by Blockbuster or any of its
     Subsidiaries to employees of Blockbuster or any of its Subsidiaries or to
     the public concerning material developments in the business, properties,
     earnings, results of operations, financial condition or prospects of
     Blockbuster or any of its Subsidiaries or the relationship between (A)
     Blockbuster or any of its Subsidiaries and (B) Viacom or any of its
     Affiliates. In addition, within such two day period, prior to the issuance
     of any such press release or public statement, Blockbuster shall actively
     consult with Viacom regarding any changes (other than typographical or
     other similar minor changes) to such substantially final drafts.
     Immediately following the issuance thereof, Blockbuster shall deliver to
     Viacom copies of final drafts of all press releases and other public
     statements.

          (xii)   Viacom and Blockbuster shall cooperate fully, and cause their
     respective accountants to cooperate fully, to the extent requested by the
     other party in the preparation of the other party's public earnings
     releases, annual reports on Form 10-K, quarterly reports on Form 10-Q, any
     current reports on Form 8-K and any other proxy, information and
     registration statements, reports, notices, prospectuses and any other
     filings made by Viacom or Blockbuster with the SEC, any national securities
     exchange or otherwise made publicly available (collectively, "Viacom Public
                                                                   -------------
     Filings" and the "Blockbuster Public Filings" and together, the "Public
     -------           --------------------------                     ------
     Filings").  Viacom and Blockbuster agree to provide to each other all
     -------
     information that the other party reasonably requests in connection with any
     Public Filings or that, in the judgment of either party's, is required to
     be disclosed or incorporated by reference therein under any law, rule or
     regulation.  Such information shall be provided by such party in a timely
     manner on the dates requested by the other party (which may be earlier than
     the dates on which such party otherwise would be required hereunder to have
     such information available) to enable the other party to prepare, print and
     release all Public Filings on such dates as such party shall determine.
     Viacom and Blockbuster shall use its reasonable best efforts to cause their
     respective accountants to consent to any reference to them as experts in
     any Public Filing required under any law, rule or regulation.  If and to
     the extent requested by either party, the other party shall diligently and
     promptly review all drafts of such Public Filing and prepare in a diligent
     and timely fashion any portion of such Public Filing pertaining to that
     party. Prior to any printing or public release of any Public Filing, an
     appropriate executive officer of Viacom or Blockbuster shall, if requested
     by the other party, certify that the information provided by such party
     relating to such party, its Affiliates or its business in such Public
     Filing is accurate, true and correct in all material respects.  Unless
     required by law, rule, regulation or generally accepted accounted
     principle, Blockbuster shall not publicly release any financial or other
     information which significantly conflicts with the information with respect
     to Blockbuster, any of its Affiliates or the Blockbuster Business that is
     included in any Viacom Public Filing without Viacom's prior written
     consent. Prior to the release or filing thereof, Viacom and Blockbuster
     shall provide each other with a draft of any portion of a Public Filing
     containing information relating to the other party and its Subsidiaries and
     shall give such party an opportunity to review such

                                       16
<PAGE>

     information and comment thereon; provided that the other party shall
                                      --------
     determine in its sole discretion the final form and content of all Public
     Filings.

          (xiii)  Blockbuster shall not change its independent certified public
     accountants ("Blockbuster's Auditors") without Viacom's prior consent.
                   ----------------------

          (xiv)   Blockbuster shall use its reasonable best efforts to enable
     the Blockbuster Auditors to complete their audit such that they will date
     their opinion on Blockbuster's audited annual financial statements on the
     same date that Viacom's independent certified public accountants ("Viacom's
                                                                        --------
     Auditors") date their opinion on Viacom's audited annual financial
     --------
     statements (the "Viacom Annual Statements"), and to enable Viacom to meet
                      ------------------------
     its timetable for the printing, filing and public dissemination of the
     Viacom Annual Statements.

          (xv)    Blockbuster shall authorize Blockbuster's Auditors to make
     available to Viacom's Auditors both the personnel who performed or are
     performing the annual audit of Blockbuster and work papers related to the
     annual audit of Blockbuster, in all cases within a reasonable time prior to
     Blockbuster's Auditors' opinion date, so that Viacom's Auditors are able to
     perform the procedures they consider necessary to take responsibility for
     the work of Blockbuster's Auditors as it relates to Viacom's Auditors'
     report on Viacom's statements, all within sufficient time to enable Viacom
     to meet its timetable for the printing, filing and public dissemination of
     the Viacom Annual Statements.

          (xvi)   Blockbuster shall provide Viacom's internal auditors access to
     Blockbuster's and its Subsidiaries, books and records so that Viacom may
     conduct reasonable audits relating to the financial statements provided by
     Blockbuster pursuant hereto as well as to the internal accounting controls
     and operations of Blockbuster and its Subsidiaries.

          (xvii)  Blockbuster shall give Viacom as much prior notice as is
     reasonably practical of any proposed determination of, or any changes in,
     its accounting estimates or accounting principles from those in effect on
     the date hereof.  Blockbuster will consult with Viacom and, if requested by
     Viacom, Blockbuster will consult with Viacom's independent public
     accountants with respect thereto.  Blockbuster will not make such
     determination or changes without Viacom's prior consent, which shall not be
     unreasonably withheld.

          (xviii) Notwithstanding clause (xvii) above, Blockbuster shall make
     any changes in its accounting estimates or accounting principles that are
     requested by Viacom in order for Blockbuster's accounting estimates and
     principles to be consistent with those of Viacom.

                                       17
<PAGE>

Nothing in this Section 5.01 shall require Blockbuster to violate any agreement
with any of its customers, suppliers or other third parties regarding the
confidentiality of commercially sensitive information relating to that customer,
suppliers or other third parties or its business; provided that in the event
                                                  --------
that Blockbuster is required under this Section 5.01 to disclose any such
information, Blockbuster shall use all commercially reasonable efforts to seek
to obtain such customer's, suppliers' or other third parties, consent to the
disclosure of such information.

          For the purposes of these covenants, Viacom and Blockbuster understand
and appreciate that their mutual interests will be best served by effecting a
rapid and fair resolution of any claims or disputes which may arise out of this
Section 5.01.  Therefore, each party agrees to use its reasonable best efforts
to resolve all such disputes as rapidly as possible on a fair and equitable
basis.  Toward this end, each party agrees to develop and follow a process for
presenting, rapidly assessing, and settling claims and other disputes on a fair
and equitable basis. If any dispute or claim arising under this Section 5.01
cannot be readily resolved by the parties, the parties agree to refer the matter
to the chief financial officers of each party who shall meet and attempt to
resolve the dispute within fifteen days from the date the dispute was brought
before their attention.  If any dispute or claim arising under this Section 5.01
cannot be resolved by chief financial officers, the parties agree to refer the
matter to a senior auditing partner of a nationally recognized  accounting firm
not currently providing services to either party.

          Section 5.02.  No Violations.  (a)  For so long as the Ownership
                         -------------
Percentage is equal to or greater than 50%, Blockbuster covenants and agrees
that it will not take any action or enter into any commitment or agreement which
may reasonably be anticipated to result, with or without notice and with or
without lapse of time or otherwise, in a contravention or event of default by
any of its Affiliates of (i) any provisions of applicable law or regulation,
including but not limited to provisions pertaining to the Code or the Employee
Retirement Income Security Act of 1974, as amended, (ii) any provision of
Viacom's certificate of incorporation or bylaws, (iii) any credit agreement or
other material agreements (including agreements relating to covenants not to
compete) binding upon Viacom or (iv) any judgment, order or decree of any
governmental body, agency or court having jurisdiction over Viacom or any of its
respective assets.

          (b) Blockbuster and Viacom agree to provide to the other any
information and documentation requested by the other for the purpose of
evaluating and ensuring compliance with Section 5.02(a) hereof.

          (c) Notwithstanding the foregoing Section 5.01, nothing in this
Agreement is intended to limit or restrict in any way Viacom's right's as a
stockholder of Blockbuster.

          Section 5.03.  Other Agreements.  On or prior to the consummation of
                         ----------------
the IPO, Viacom and Blockbuster shall have executed and delivered to each other
each of the Ancillary Agreements.

                                       18
<PAGE>

                                  ARTICLE VI
                           ASSIGNMENT AND ASSUMPTION

          Section 6.01.  Assignment of Obligations.  Pursuant to the assignment
                         -------------------------
provision of Section 10.07 of the Wherehouse Stock Purchase Agreement, Viacom
International hereby transfers, conveys, sets over and assigns to Blockbuster
any and all rights under the Wherehouse Stock Purchase Agreement and any
ancillary agreements executed in connection therewith.

          Section 6.02.  Assumption of Obligations.  Blockbuster hereby
                         -------------------------
undertakes, assumes and agrees to perform all of the duties, obligations and
liabilities of Viacom International under the Wherehouse Stock Purchase
Agreement and any ancillary agreements executed in connection therewith.

          Section 6.03.  Assignment of Certain Employment Agreements.  On or
                         -------------------------------------------
about the Split-Off Date, Viacom will transfer, convey, set over and assign to
Blockbuster any and all employment agreements between "Blockbuster Entertainment
Group, a business unit of Viacom," and the employees who are a party to such
employment agreements.

          Section 6.04.  Assumption of Certain Employment Agreements.  On or
                         -------------------------------------------
about the Split-Off Date, Blockbuster will undertake, assume and agree to
perform all of the duties, obligations and liabilities of "Blockbuster
Entertainment Group, a business unit of Viacom," under the employment agreements
referred to in Section 6.03 herein.


                                  ARTICLE VII
                                    OPTIONS

          Section 7.01.  Options.  (a)  Blockbuster hereby grants to Viacom
                         -------
International, on the terms and conditions set forth herein, a continuing right
(the "Blockbuster Class B Common Stock Option") to purchase from Blockbuster, at
      ---------------------------------------
the times set forth herein, such number of shares of Blockbuster Class B Common
Stock as is necessary to allow the Viacom International to maintain the
Ownership Percentage.  The exercise price for the shares of Blockbuster Class B
Common Stock purchased pursuant to the Blockbuster Class B Common Stock Option
shall be the Market Price of the Blockbuster Class A Common Stock as of the date
of first delivery of notice of exercise of the Blockbuster Class B Common Stock
Option by Viacom International to Blockbuster.

          (b) The provisions of Section 7.01(a) hereof notwithstanding, the
Blockbuster Class B Common Stock Option granted pursuant to Section 7.01(a)
shall not apply and shall not be exercisable in connection with the issuance by
Blockbuster of any shares of Blockbuster Common Stock pursuant to any stock
option or other executive or employee benefit or compensation plan maintained by
Blockbuster, so long as, from and after the date hereof and prior to the
issuance of such shares, Blockbuster or Viacom International has repurchased
from

                                       19
<PAGE>

shareholders and Blockbuster has not subsequently reissued a number of shares
equal or greater to the number of shares to be issued in any such issuance.

          (c) Blockbuster hereby grants to Viacom International, on the terms
and conditions set forth herein, a continuing right (the "Nonvoting Stock
                                                          ---------------
Option" and, together with the Blockbuster Class B Common Stock Option, the

"Options") to purchase from Blockbuster, at the times set forth herein, such
--------
number of shares of Nonvoting Stock as is necessary to allow the Viacom
International to own 80 percent of each class of outstanding Nonvoting Stock.
The exercise price for the shares of Nonvoting Stock purchased pursuant to the
Nonvoting Stock Option shall be the price at which such Nonvoting Stock is then
being sold to third parties, or, if no Nonvoting Stock is being sold, the fair
market value thereof as determined in good faith by an independent investment
advisor.

          Section 7.02.  Notice.  At least two business days prior to the
                         ------
issuance of any shares of Blockbuster Common Stock (other than in connection
with the IPO, including the full exercise of all underwriters' over-allotment
options granted in connection therewith and other than issuances of Blockbuster
Common Stock Viacom International) or the first date on which any event could
occur that, in the absence of a full or partial exercise of the Blockbuster
Class B Common Stock Option, would result in a reduction in the Ownership
Percentage, Blockbuster will notify Viacom International in writing (a

"Blockbuster Class B Common Stock Option Notice") of any plans it has to issue
-----------------------------------------------
such shares or the date on which such event could first occur. At least two
business days prior to the issuance of any shares of Nonvoting Stock (other than
issuances of Nonvoting Stock to Viacom International) or the first date on which
any event could occur that, in the absence of a full or partial exercise of the
Nonvoting Stock Option, would result in the Viacom International owning less
than 80 percent of each class of outstanding Nonvoting Stock, Blockbuster will
notify Viacom International in writing (a "Nonvoting Stock Option Notice" and,
                                           -----------------------------
together with a Blockbuster Class B Common Stock Option Notice, an "Option
                                                                    ------
Notice") of any plans it has to issue such shares or the date on which such
------
event could first occur.  Each Option Notice must specify the date on which
Blockbuster intends to issue such additional shares or on which such event could
first occur (such issuance or event being referred to herein as an "Issuance
                                                                    --------
Event" and the date of such issuance or event as an "Issuance Event Date"), the
-----                                                -------------------
number of shares Blockbuster intends to issue or may issue and the other terms
and conditions of such Issuance Event.

          Section 7.03.  Option Exercise and Payment.  The Blockbuster Class B
                         ---------------------------
Common Stock Option may be exercised by Viacom International for a number of
shares equal to or less than the number of shares that are necessary for the
Viacom International to maintain, in the aggregate, the then-current Ownership
Percentage.  The Nonvoting Stock Option may be exercised by Viacom International
for a number of shares equal to or less than the number of shares that are
necessary for the Viacom International to own, in the aggregate, 80 percent of
each class of outstanding Nonvoting Stock.  Each Option may be exercised at any
time after receipt of an applicable Option Notice and prior to the applicable
Issuance Event Date by the delivery to Blockbuster of a written notice to such
effect specifying (i) the number of shares of

                                       20
<PAGE>

Blockbuster Class B Common Stock or Nonvoting Stock, as the case may be, to be
purchased by Viacom International and (ii) a calculation of the exercise price
for such shares. Upon any such exercise of either Option, Blockbuster will,
prior to the applicable Issuance Event Date, deliver to Viacom International,
against payment therefor, certificates (issued in the name of Viacom
International) representing the shares of Blockbuster Class B Common Stock or
Nonvoting Stock, as the case may be, being purchased upon such exercise. Payment
for such shares shall be made by wire transfer or intrabank transfer of
immediately-available funds to such account as shall be specified by
Blockbuster, for the full purchase price for such shares.

          Section 7.04.  Effect of Failure to Exercise.  Except as provided in
                         -----------------------------
Section 7.06, any failure by Viacom International to exercise either Option, or
any exercise for less than all shares purchasable under either Option, in
connection with any particular Issuance Event shall not affect Viacom
International's right to exercise the relevant Option in connection with any
subsequent Issuance Event.

          Section 7.05.  IPO.  Notwithstanding the foregoing, Viacom
                         ---
International shall not be entitled to exercise the Blockbuster Class B Common
Stock Option in connection with the IPO of the Blockbuster Class A Common Stock
if, upon the completion of the IPO, including the full exercise of all
underwriters' over-allotment options granted in connection therewith, the
Ownership Percentage would be greater than 80%.

          Section 7.06.  Termination of Options.  The Options shall terminate
                         ----------------------
upon the occurrence of any Issuance Event that, after considering Viacom
International's response thereto and to any other Issuance Events, results in
the Ownership Percentage being less than 45%, other than any Issuance Event in
violation of this Agreement.


                                 ARTICLE VIII
                                INDEMNIFICATION

          Section 8.01.  Indemnification Procedures.  (a)  The indemnification
                         --------------------------
procedures set forth in Section 8.01(b) herein are applicable to any indemnity
granted pursuant to the Ancillary Agreements (other than the Tax Matters
Agreement).

          (b) If a claim or demand is made against an Indemnified Party by any
Person who is not a party to the Ancillary Agreements (a "Third Party Claim") as
                                                          -----------------
to which such Indemnified Party is entitled to indemnification pursuant to the
Ancillary Agreements, such Indemnified Party shall give the Indemnifying Party
notice of such Third Party Claim, as promptly as practicable, but in any event
no later than 15 days of the receipt by the Indemnified Party of such notice;

provided, however, that the failure to provide such notice shall not release the
--------  -------
Indemnifying Party from any of its obligations under the Ancillary Agreements
except to the extent the Indemnifying Party is materially prejudiced by such
failure and shall not relieve the Indemnifying Party from any other obligation
or liability that it may have to any Indemnified Party otherwise than under the
Ancillary Agreements.  If the Indemnifying Party acknowledges in

                                       21
<PAGE>

writing its obligations to indemnify the Indemnified Party hereunder against any
Losses that may result from such Third Party Claim, then such Indemnifying Party
shall be entitled to assume and control the defense of such Third Party Claim at
its expense and through counsel of its choice, subject to the approval of the
Indemnified Party (which approval shall not be unreasonably withheld or
delayed), if it gives notice of its intention to do so to the Indemnified Party
within 15 business days of the receipt of such notice from the Indemnified
Party; provided, however, that if there exists or is reasonably likely to exist
       --------  -------
a conflict of interest that would make it inappropriate in the reasonable
judgment of the Indemnified Party for the same counsel to represent both the
Indemnified Party and the Indemnifying Party, then the Indemnified Party shall
be entitled to retain its own counsel, in each jurisdiction for which the
Indemnified Party determines counsel is required to participate in such defense,
at the expense of the Indemnifying Party. In the event the Indemnifying Party
exercises the right to undertake any such defense against any such Third Party
Claim as provided above, the Indemnified Party shall cooperate with the
Indemnifying Party in such defense and make available to the Indemnifying Party,
at the Indemnifying Party's expense, all witnesses, pertinent records, materials
and information in the Indemnified Party's possession or under the Indemnified
Party's control relating thereto as is reasonably required by the Indemnifying
Party, subject to reimbursement of reasonable out-of-pocket expenses. Similarly,
in the event the Indemnified Party is, directly or indirectly, conducting the
defense against any such Third Party Claim, the Indemnifying Party shall
cooperate with the Indemnified Party in such defense and make available to the
Indemnified Party all such witnesses, records, materials and information in the
Indemnifying Party's possession or under the Indemnifying Party's control
relating thereto as is reasonably required by the Indemnified Party, subject to
reimbursement of reasonable out-of-pocket expenses. No such Third Party Claim
may be settled by the Indemnifying Party without the prior written consent of
the Indemnified Party (which shall not be unreasonably withheld or delayed)
unless such settlement is solely for money and includes an unconditional release
of each Indemnified Party from any and all Losses arising out of such action,
claim, suit or proceeding and would not otherwise adversely affect the
Indemnified Party. No such Third Party Claim may be settled by the Indemnified
Party without the prior written consent of the Indemnifying Party which shall
not be unreasonably withheld or delayed.

          Notwithstanding the foregoing, the Indemnifying Party shall not be
entitled to assume the defense of any Third Party Claim and shall be liable for
the fees and expenses of counsel incurred by the Indemnified Party in defending
such Third Party Claim if the Third Party Claim seeks an order, injunction or
other equitable relief or relief for other than money damages against the
Indemnified Party which the Indemnified Party reasonably determines, after
conferring with its counsel, cannot be separated from any related claim for
money damages.  If such equitable relief or other relief portion of the Third
Party Claim can be so separated from that for money damages, the Indemnifying
Party shall be entitled to assume the defense of the portion relating to money
damages.

                                       22
<PAGE>

                                  ARTICLE IX
            CONDITION TO CONSUMMATION OF TRANSACTIONS; TERMINATION

          Section 9.01.  Condition.  Consummation of the transactions provided
                         ---------
for in this Agreement and the Ancillary Agreements is conditioned upon, and
shall only be effected upon or after (i) the final approval of the IPO by the
Board of Directors of Blockbuster and Viacom, (ii) the final approval of the
Split-Off by the Board of Directors of Viacom and (iii) the closing of the IPO.

          Section 9.02.  Termination.  This Agreement may be terminated and the
                         -----------
IPO and Split-Off abandoned by the Board of Directors of Viacom in its sole
discretion, without the approval of Blockbuster at any time prior to the IPO
Effective Date or Split-Off Date, as applicable.  In the event of any such
termination, no party shall have any liability of any kind to the other party.


                                   ARTICLE X
                                 MISCELLANEOUS

          Section 10.01.  Limitation of Liability.  Neither Viacom nor
                          -----------------------
Blockbuster shall be liable to the other for any special, indirect, incidental
or consequential damages of the other arising in connection with this Agreement.

          Section 10.02.  Further Assurances.  Each party agrees to execute,
                          ------------------
acknowledge, deliver, file, record and publish such further certificates,
amendments to certificates, instruments and documents, and do all such other
acts and things as may be required by law, or as may be required to carry out
the intent and purposes of this Agreement and the Ancillary Agreements and the
translations contemplated thereby.

          Section 10.03.  Waiver.  The observance of any term of this
                          ------
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the party entitled to enforce such term, but
such waiver shall be effective only if it is in writing signed by a duly
authorized officer of the party against which such waiver is to be asserted.
Unless other expressly provided in this Agreement, no delay or omission on the
part of any party in exercising any right or privilege under this Agreement
shall operate as a waiver thereof, nor shall any waiver on the part of any party
of any right or privilege under this Agreement operates as a waiver of any other
right or privilege under this Agreement nor shall any single or partial exercise
of any right or privilege preclude any other or future exercise thereof or the
exercise of any other right or privilege under this Agreement.  No failure by
either party to take any action or assert any right or privilege hereunder shall
be deemed to be a waiver of such right or privilege in the event of the
continuation or repetition of the circumstances giving rise to such right unless
expressly waived in writing by the party against whom the existence of such
waiver is asserted.

                                       23
<PAGE>

          Section 10.04.  Remedies.  Each of Viacom and Blockbuster
                          --------
acknowledges and agrees that under certain circumstances the breach by Viacom or
any of its Affiliates or Blockbuster or any of its Affiliates of a term or
provision of this Agreement will materially and irreparably harm the other
party, that money damages will accordingly not be an adequate remedy for such
breach and that the non-defaulting party, in its sole discretion and in addition
to its rights under this Agreement and any other remedies it may have at law or
in equity, may apply to any court of law or equity of competent jurisdiction for
specific performance and/or other injunctive relief in order to enforce or
prevent any breach of the provisions of this Agreement.

          Section 10.05.  Performance.  Each of the parties hereto shall use
                          -----------
all commercially reasonable efforts to cause to be performed all actions,
agreements and obligations set forth herein to be performed by any Affiliate of
such party.

          Section 10.06.  References; Construction.  The table of contents
                          ------------------------
and the section and other headings and subheadings contained in this Agreement
and the exhibits hereto are solely for the purpose of reference, are not part of
the agreement of the parties hereto, and shall not in any way affect the meaning
or interpretation of this Agreement or any exhibit hereto.  All references to
days or months shall be deemed references to calendar days or months.  Unless
the context otherwise requires, any reference to a "Section" or an "Exhibit"
shall be deemed to refer to a section of this Agreement or an exhibit to this
Agreement, as applicable.  The words "hereof," "herein" and "hereunder" and
words of similar import referring to this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement.  This Agreement
shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting or causing the
document to be drafted.

          Section 10.07.  Amendments.  This Agreement shall not be
                          ----------
supplemented, amended or modified in any manner whatsoever (including without
limitation by course of dealing or of performance or usage of trade) except in
writing signed by the parties.

          Section 10.08.  Successors and Assignment.  This Agreement shall
                          -------------------------
be binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. Except as set forth below, this Agreement may
not be assigned by any party by operation of law or otherwise without the
express written consent of the other party (which consent may be granted or
withheld).  The Option granted to Viacom International pursuant to Article VII
hereof may be assigned to Viacom or any Subsidiary of Viacom.

          Section 10.09.  Severability.  Wherever possible, each provision
                          ------------
of this Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law.  If any portion of this Agreement is declared
invalid for any reason in any jurisdiction, such declaration shall have no
effect upon the remaining portions of this Agreement, which shall continue in
full force and effect as if this Agreement had been executed with the invalid
portions thereof deleted; provided that the entirety of this Agreement shall
                          --------
continue in full force and effect in all other jurisdictions.

                                       24
<PAGE>

          Section 10.10.  Entire Agreement.  Other than the Ancillary
                          ----------------
Agreements, this Agreement constitutes the entire agreement of the parties
hereto with respect to the subject matter hereof and thereof and supersede all
prior agreements, including Article 7 of the Asset Purchase Agreement dated June
7, 1999 between Viacom Entertainment Canada Inc. and Blockbuster Canada Inc.,
and undertakings, both written and oral, between the parties with respect to the
subject matter hereof and thereof.

          Section 10.11.  Notices.  All notices, consents, requests, approvals,
                          -------
and other communications provided for or required herein, and all legal process
in regard thereto, must be in writing and shall be deemed validly given, made or
served, (a) when delivered personally or sent by telecopy to the facsimile
number indicated below with a required confirmation copy sent in accordance with
subsection (c) below; or (b) on the next business day after delivery to a
nationally-recognized express delivery service with instructions and payment for
overnight delivery; or (c) on the fifth (5th) day after deposited in any
depository regularly maintained by the United States postal service, postage
prepaid, certified or registered mail, return receipt requested, addressed to
the following addresses or to such other address as the party to be notified
shall have specified to the other party in accordance with this section:

          If to Viacom:

               Viacom Inc.
               1515 Broadway
               New York New York  10036
               Attention:  Michael D. Fricklas, General Counsel
               Phone Number:  212-258-6070
               Fax Number:  212-258-6099

          If to Blockbuster:

               Blockbuster Inc.
               1201 Elm Street
               Dallas, Texas  75270
               Attention:  Ed Stead, General Counsel
               Phone Number:  214-854-3499
               Fax Number:  214-854-3677

          Section 10.12.  Governing Law.  This Agreement shall be governed by
                          -------------
and construed in accordance with the laws of the State of New York.  Each of
the parties hereto agrees that any dispute relating to or arising from this
Agreement or the transactions contemplated hereby shall be resolved only in the
court of the State of New York sitting in the County of New York or the United
States District Court for the Southern District of New York and the appellate
court having jurisdiction of appeals in such courts.  In that context, and
without

                                       25
<PAGE>

limiting the generality of the foregoing, each of the parties hereby irrevocably
and unconditionally:

          (a) submits for itself and its property in any legal suit, action or
     proceeding relating to this Agreement or any transaction contemplated
     hereby, or for recognition and enforcement of any judgment in respect
     thereof, to the exclusive jurisdiction of the courts of the State of New
     York sitting in the County of New York or the United States District Court
     for the Southern District of New York and appellate court having
     jurisdiction of appeals in such courts, and each of the parties hereto
     irrevocably and unconditionally agrees that all claims in respect of any
     such suit, action, or proceeding shall be heard and determined in such New
     York State court or, to the extent permitted by law, in such federal court;

          (b) consents that any such suit, action or proceeding may and shall be
     brought in such courts and waives any objection that it may now or
     hereafter have to the venue or jurisdiction or any such action or
     proceeding in such court or that such action or proceeding was brought in
     an inconvenient forum and agrees not to plead or claim the same;

          (c) agrees that service of process in any such action or proceeding
     may be effected by mailing a copy thereof by registered or certified mail
     (or any substantially similar form of mail), postage prepaid, to such party
     in its address as provided in Section 10.11 hereof;

          (d) agrees that nothing herein shall affect the right to effect
     service of process in any other manner permitted by New York law; and

          (e) agrees that this Agreement has been entered into in the State of
     New York and performed in part in the State of New York.

          Section 10.13.  Counterparts.  This Agreement may be executed in two
                          ------------
or more counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same instrument.

                                       26
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date and year first written above.



                            VIACOM INC.


                            By: /s/ MICHAEL D. FRICKLAS
                               ----------------------------------------
                               Name:  Michael D. Fricklas
                               Title: Sr. Vice President, General
                                      Counsel and Secretary



                            VIACOM INTERNATIONAL INC.


                            By: /s/ MICHAEL D. FRICKLAS
                               ----------------------------------------
                               Name:  Michael D. Fricklas
                               Title: Sr. Vice President and
                                      General Counsel



                            BLOCKBUSTER INC.


                            By: /s/ EDWARD B. STEAD
                               ----------------------------------------
                               Name:  Edward B. Stead
                               Title: Exec. Vice President, General
                                      Counsel and Secretary

<PAGE>

                                                                       Exhibit A
                                                                       ---------


                 Form of Release and Indemnification Agreement


<PAGE>

                                                                       Exhibit B
                                                                       ---------


                     Form of Transition Services Agreement


<PAGE>

                                                                       Exhibit C
                                                                       ---------


                     Form of Registration Rights Agreement

<PAGE>

                                                                       Exhibit D
                                                                       ---------


                         Form of Tax Matters Agreement