AMENDED AND RESTATED RELEASE AND INDEMNIFICATION AGREEMENT



 Exhibit 10.2 
  
 Execution Copy 
  
 AMENDED AND RESTATED 
  
 RELEASE AND INDEMNIFICATION AGREEMENT 
  
 DATED AS OF JUNE 18, 2004 
  
 BY AND BETWEEN 
  
 VIACOM INC. 
  
 AND 
  
 BLOCKBUSTER INC. 







 TABLE OF CONTENTS 
  

			
	 	  	Page


	
	 ARTICLE I
 DEFINITIONS

		
	 Section 1.01. Definitions
	  	1
	
	 ARTICLE II
 INDEMNIFICATION

		
	 Section 2.01. Indemnification by Blockbuster
	  	4
		
	 Section 2.02. Indemnification by Viacom
	  	5
		
	 Section 2.03. Certain Other Matters
	  	5
		
	 Section 2.04. Registration Indemnification
	  	5
		
	 Section 2.05. Calculation of Indemnification Payments
	  	7
		
	 Section 2.06. Indemnification Procedures
	  	8
		
	 Section 2.07. Remedies Cumulative
	  	8
	
	 ARTICLE III
 RELEASE

		
	 Section 3.01. General Release
	  	8
	
	 ARTICLE IV
 MISCELLANEOUS

		
	 Section 4.01. Further Agreements
	  	9
		
	 Section 4.02. Amendments
	  	9
		
	 Section 4.03. Successors and Assignment
	  	9
		
	 Section 4.04. [intentionally omitted]
	  	9
		
	 Section 4.05. Severability
	  	9
		
	 Section 4.06. Entire Agreement
	  	9
		
	 Section 4.07. Notices
	  	9

  
 i 








			
	 Section 4.08. Governing Law
	  	10
		
	 Section 4.09. Counterparts
	  	11

  
 ii 







 AMENDED AND RESTATED 
 RELEASE AND INDEMNIFICATION AGREEMENT 
  
 AMENDED AND RESTATED RELEASE AND INDEMNIFICATION AGREEMENT (this “Agreement”) dated as of June 18, 2004, by and between VIACOM INC., a Delaware corporation (“Viacom”) and BLOCKBUSTER
INC., a Delaware corporation and an indirect subsidiary of Viacom (“Blockbuster”). 
  
 RECITALS 
  
 WHEREAS, on September 29, 1994, Viacom acquired the businesses and operations of Blockbuster Entertainment Corporation, a Delaware Corporation (“BEC”) through a merger of BEC with and into Viacom (the
“Merger”); 
  
 WHEREAS, from the Merger until the
closing of the IPO (defined below), Viacom owned and operated the acquired businesses and operations of BEC and other related businesses and operations and made significant improvements and contributions thereto and transferred certain of the
assets, businesses and operations acquired in the Merger and certain other related assets, businesses and operations to Blockbuster and its Subsidiaries (collectively, the “Asset Transfers”); 
  
 WHEREAS, Viacom presently intends to split-off Blockbuster in a tax-free
transaction; 
  
 WHEREAS, on August 16, 1999, Blockbuster issued
shares of its common stock in an initial public offering registered under the Securities Act of 1933, as amended; 
  
 WHEREAS, in consideration of the foregoing and as a condition to the willingness of the parties to proceed with the initial public offering, Blockbuster
has agreed to release and indemnify Viacom, and Viacom has agreed to release and indemnify Blockbuster, as more fully described below; and 
  
 NOW, THEREFORE, in consideration of the mutual covenants set forth in this Agreement and 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 shall have the following meanings: 
  
 “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 Date, Affiliates of Blockbuster or Viacom shall only include Persons who
would be affiliates of 
  
 1 







 Blockbuster or Viacom, respectively, assuming that the Split-Off Date had occurred immediately prior to the determination
as to whether such Person was an affiliate of Blockbuster or Viacom, respectively. 
  
 “Agreement” has the meaning ascribed thereto in the Preamble. 
  
 “Asset Transfers” has the meaning ascribed thereto in the Recitals. 
  
 “BEC” has the meaning ascribed thereto in the Recitals. 
  
 “Blockbuster” has the meaning ascribed thereto in the
Preamble. 
  
 “Blockbuster Business” has the
meaning ascribed thereto in Section 2.01(a)(i). 
  
 “Blockbuster Registration Statement” means any registration statement (or any preliminary or final prospectus included therein), information memorandum or other offering document relating to a primary offer and sale of
securities of Blockbuster prepared by Blockbuster or at its direction, in each case including all exhibits thereto and as supplemented and amended from time to time. 
  
 “Blockbuster Subsidiary Obligors” means, collectively, any direct or indirect Subsidiary of Blockbuster
that is or becomes an obligor on, guarantees, or otherwise becomes directly or indirectly liable with respect to any Senior Indebtedness of Blockbuster. 
  
 “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. 
  
 “IPO” means the initial public offering by Blockbuster of shares of Blockbuster Class A Common Stock as contemplated by the IPO Registration Statement. 
  
 “IPO and Split-Off Agreement” means the Amended and Restated
Initial Public Offering and Split-Off Agreement date as of the date hereof among Viacom, Viacom International Inc. and Blockbuster. 
  
 “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. 
  
 “Intercompany Agreements” means this Agreement; the IPO and Split-Off Agreement; the Amended and Restated Transition Services Agreement, the Amended and Restated Registration Rights Agreement, the Amended and Restated Tax
Matters Agreement, and the Insurance Agreement, each dated the date hereof by and between the parties; and the Indemnity Letter dated May 20, 2004 between and among the parties and the Directors of Blockbuster. 
  
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 “Losses” has the meaning ascribed thereto in Section 2.01(a). 
  
 “Merger” has the meaning ascribed thereto in the Recitals.

  
 “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. 
  
 “Representatives” means directors, officers, employees,
agents, consultants, advisors, accountants, attorneys and representatives. 
  
 “Securities Act” means the Securities Act of 1933, as amended from time to time, together with the rules and regulations promulgated thereunder. 
  
 “Senior Indebtedness” means, with respect to a Person, (i)
all senior indebtedness of such Person for borrowed money, (ii) all senior obligations of such Person evidenced by bonds, debentures, notes or other similar instruments and (iii) all senior indebtedness of others secured by a lien on any property of
such person. 
  
 “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 substantial part of 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 Viacom has distributed, in the Split-Off, shares of Blockbuster Class A Common Stock and/or Blockbuster Class B Common Stock which in the aggregate represent a
distribution of “control” as defined in section 368(c) of the Internal Revenue Code of 1986, as amended. 
  
 “Split-Off Registration Statement” means any registration statement (or any preliminary or final prospectus included therein),
information memorandum or other offering document relating to the Split-Off, in each case including all exhibits thereto and as supplemented and amended from time to time. 
  
 “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 Date, a Subsidiary of Viacom shall only include
Persons who would be a Subsidiary of Viacom assuming the Split-Off Date has occurred immediately prior to the determination as to whether such Person was a Subsidiary of Viacom. 
  
 “Transfer Costs” means any payments, costs or expenses paid to a third party associated with the Asset
Transfers. 
  
 “Viacom” has the meaning ascribed
thereto in the Preamble. 
  
 “Viacom Business”
has the meaning ascribed thereto in Section 2.02. 
  
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 “Viacom Guarantees” means guarantees of Viacom and its Subsidiaries with respect to
obligations arising out of or relating to the Blockbuster Business, including without limitation guarantees or other obligations under leases or other agreements relating to video and music stores, offices, warehouses and equipment. 
  
 ARTICLE II 
 INDEMNIFICATION 
  
 Section 2.01. Indemnification by Blockbuster. (a) Blockbuster and any Blockbuster Subsidiary Obligor jointly and severally agree to indemnify and hold harmless Viacom and its past, present or future Subsidiaries and Affiliates and
any of their past, present or future Representatives, heirs, executors and any of their successors and assigns against any and all payments, losses, liabilities, damages, claims, and expenses (including without limitation, attorney’s fees and
expenses incurred in good faith) and costs whatsoever (“Losses”), as incurred, arising out of or relating to: 
  
 (i) all assets, businesses and operations conducted, operated, managed or owned, in whole or in part, by (A) BEC or any Person that was at
any time a Subsidiary or Affiliate of BEC, (B) Viacom or any Person that was at any time a Subsidiary or Affiliate of Viacom that were the responsibility of the chief executive officer of the Blockbuster Entertainment operating unit of Viacom, (C)
Blockbuster or any Person that was at any time a Subsidiary or Affiliate of Blockbuster, or (D) any successor, assign or Representative of any of the foregoing at any time, whether before, at or after the IPO (including without limitation any
assets, businesses or operations that were purchased, newly started, discontinued or sold) or any transaction related thereto or causes of action arising therefrom (collectively, the “Blockbuster Business”); and 
  
 (ii) the Transfer Costs; 
  
 provided that, in case of clause (i) above, assets, businesses and operations referred
to therein shall (A) include, without limitation, home video retailing (whether videocassette, laserdisc, digital versatile disc, digital video express or otherwise and whether rental or sale or in a physical store or over the Internet), video game
retailing (whether rental or sale), music retailing, the operation of children and adult entertainment centers (but this indemnification shall not apply to assets, businesses and operations conducted by Paramount Parks) and the development,
marketing, sale and management of franchises related to the foregoing assets, businesses and operations and the Viacom Guarantees and (B) exclude all assets, businesses and operations of Spelling Entertainment Group Inc. and its Subsidiaries
(including Republic Entertainment Inc. and WorldVision Inc.), Showtime Networks Inc., Virgin Interactive Entertainment Limited and Virgin Interactive Entertainment Inc. 
  
 (b) To the extent that a Subsidiary of Blockbuster becomes a Blockbuster Subsidiary Obligor, Blockbuster shall cause such
Subsidiary to become a party to this Agreement through an amendment hereto pursuant to which such Blockbuster Subsidiary Obligor will expressly assume all of the obligations, and acquire all of the rights, of Blockbuster under this Agreement. Such
assumption of obligations and acquisition of rights shall in no way discharge Blockbuster from any of its obligations hereunder or diminish any of Blockbuster’s rights 
  
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 hereunder, as the case may be. Such amendment shall be (i) executed and delivered to Viacom (and shall become effective)
simultaneously with the execution and delivery by such Blockbuster Subsidiary Obligor (and the effectiveness) of the documentation pursuant to which it became a Blockbuster Subsidiary Obligor and (ii) contain provisions reasonably satisfactory to
Viacom to maximize the likelihood that such amendment would not be subject to attack under applicable fraudulent conveyance or similar laws. 
  
 (c) The obligations of the parties under this Section 2.01 shall be in addition to any liability which any party may have to the other party. 

 
 Section 2.02. Indemnification by Viacom. (a) Viacom agrees to
indemnify and hold harmless Blockbuster and its past, present or future Subsidiaries and Affiliates and any of their past, present or future Representatives, heirs and any of their executors, successors and assigns against any and all Losses, as
incurred, arising out of or relating to all assets, businesses and operations conducted, operated, managed or owned, in whole or in part, by Viacom or any Person that was at any time a Subsidiary or Affiliate of Viacom or any predecessor, successor,
assign or Representative of any of the foregoing at any time whether before, at or after the IPO (including, without limitation, any assets, businesses or operations that were purchased, newly started, discontinued or sold) or any transaction
related thereto or causes of action arising therefrom other than the Blockbuster Business and Transfer Costs (which Blockbuster and any Blockbuster Subsidiary Obligor agree to indemnify Viacom pursuant to Section 1.01) (the “Viacom
Business”). 
  
 (b) The obligations of the parties under
this Section 2.02 shall be in addition to any liability which any party may have to the other party. 
  
 Section 2.03. Certain Other Matters. Notwithstanding anything to the contrary herein, the rights and obligations of the parties with respect to
indemnification for (a) the tax matters that are the subject matter of the Amended and Restated Tax Matters Agreement dated as of the date hereof between the parties thereto and (b) the matters that are the subject matter of the Indemnity Letter
dated May 20, 2004 between the parties hereto and the Directors of Blockbuster, shall be governed solely by such agreements; and the rights and obligations of the parties with respect to any other indemnification or hold harmless obligation
expressly set forth in any other provision of any Intercompany Agreement shall be governed solely by such provisions. 
  
 Section 2.04. Registration Indemnification. (a) Blockbuster and any Blockbuster Subsidiary Obligor jointly and severally agree to indemnify and
hold harmless Viacom and each Person, if any, who controls Viacom within the meaning of the Securities Act and Affiliates and Representatives of each of the foregoing from and against any and all Losses (including, without limitation, any legal or
other expenses incurred in connection with defending or investigating any such action or claim), as incurred, arising out of or relating to any untrue statement or alleged untrue statement of a material fact contained in, or incorporated by
reference into, or any omission or alleged omission to state a material fact required to be stated in or necessary to make the statements therein not misleading in, or incorporated by reference into, (i) any Blockbuster Registration Statement filed
at or prior to the date of the Split-Off, including, without limitation, the IPO Registration Statement but excluding the Split-Off Registration Statement; (ii) the 
  
 5 







 sections or portions thereof of the Split-Off Registration Statement set forth on Schedule 2.04(a) attached hereto; and
(iii) any statement in (or incorporated by reference into) the Split-Off Registration Statement that is not in (or incorporated by reference into) the sections or portions thereof of the Split-Off Registration Statement set forth on Schedule
2.04(a), to the extent based on any information furnished to Viacom in writing by Blockbuster expressly for use therein or based on any information which was the subject of a representation letter or bring down letter given by Blockbuster to Viacom
in connection with the preparation of Viacom’s financial statements; except that with respect to each of clauses (i) through (iii) of this sentence, Blockbuster and any Blockbuster Subsidiary Obligor shall not be liable in any such case to the
extent that any such Losses are arising out of or relating to any such untrue statement or omission or alleged untrue statement or omission based upon information furnished to Blockbuster in writing by Viacom expressly for use therein. Such
indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of Viacom and shall survive the transfer of such securities. In the case of an offering with respect to which Viacom has designated the lead or
managing underwriters (or Viacom is offering securities of Blockbuster directly, without an underwriter), this indemnity does not apply to any Loss arising out of or relating to any untrue statement or alleged untrue statement or omission or alleged
omission in any preliminary prospectus or offering memorandum if a copy of a final prospectus or offering memorandum was not sent or given by or on behalf of any underwriter (or Viacom) to such Person asserting such Loss at or prior to the written
confirmation of the sale of the securities of Blockbuster as required by the Securities Act and such untrue statement or omission had been corrected in such final prospectus or offering memorandum. 
  
 (b) Viacom agrees to indemnify and hold harmless Blockbuster and each Person,
if any, who controls Blockbuster within the meaning of the Securities Act and Affiliates and Representatives of each of the foregoing from and against any and all Losses (including, without limitation, any legal or other expenses incurred in
connection with defending or investigating any such action or claim), as incurred, arising out of or relating to any untrue statement or alleged untrue statement of a material fact contained in, or incorporated by reference into, or any omission or
alleged omission to state a material fact required to be stated in or necessary to make the statements therein not misleading in, or incorporated by reference into, (i) any Blockbuster Registration Statement filed at or prior to the date of the
Split-Off (including, without limitation, the IPO Registration Statement but excluding the Split-Off Registration Statement), but only with reference to Losses arising out of information relating to Viacom furnished to Blockbuster in writing by
Viacom expressly for use therein; (ii) the sections or portions thereof of the Split-Off Registration Statement set forth on Schedule 2.04(b) attached hereto; and (iii) any statement in (or incorporated by reference into) the Split-Off Registration
Statement that is not in (or incorporated by reference into) the sections or portions thereof of the Split-Off Registration Statement set forth on Schedule 2.04(b), to the extent based on any information furnished to Blockbuster in writing by Viacom
expressly for use therein; except that with respect to each of clauses (i) through (iii) of this sentence, Viacom shall not be liable in any such case to the extent that any such Losses are arising out of or relating to any such untrue statement or
omission or alleged untrue statement or omission based upon (x) information furnished to Viacom in writing by Blockbuster expressly for use therein or (y) any information which was the subject of a representation letter or bring down letter given by
Blockbuster to Viacom in connection with the preparation of Viacom’s financial statements. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of Blockbuster and shall survive the

  
 6 







 transfer of such securities. In the case of an offering with respect to which Blockbuster has designated the lead or
managing underwriters (or Blockbuster is offering securities of Blockbuster directly, without an underwriter), this indemnity does not apply to any Loss arising out of or relating to any untrue statement or alleged untrue statement or omission or
alleged omission in any preliminary prospectus or offering memorandum if a copy of a final prospectus or offering memorandum was not sent or given by or on behalf of any underwriter (or Blockbuster) to such Person asserting such Loss at or prior to
the written confirmation of the sale of the securities of Blockbuster as required by the Securities Act and such untrue statement or omission had been corrected in such final prospectus or offering memorandum. 
  
 (c) If the indemnification provided for in this Section 2.04 shall for any
reason be unavailable (other than in accordance with its terms) to an Indemnified Party in respect of any Loss referred to therein, then each Indemnifying Party shall, in lieu of indemnifying such Indemnified Party, contribute to the amount paid or
payable by such Indemnified Party as a result of such Loss as between Blockbuster on the one hand and Viacom on the other, in such proportion as is appropriate to reflect the relative fault of Blockbuster and of Viacom in connection with such
statements or omissions which resulted in such Loss as well as any other relevant equitable considerations. The relative fault of Blockbuster on the one hand and of Viacom on the other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, but not by reference to Viacom’s stock ownership in Blockbuster. The amount paid or payable by an Indemnified Party as a result of the Loss in respect thereof, referred to above in
this paragraph (c) shall be deemed to include, for purposes of this paragraph (c), any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Blockbuster and
Viacom agree that it would not be just and equitable if contribution pursuant to this Section 2.04 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations
referred to in this paragraph. Notwithstanding any other provisions of this Section 2.04, Viacom shall not be required to contribute any amount in excess of the amount by which the total price at which the securities of Blockbuster were offered by
Viacom to the public exceeds the amount of any damages which Viacom has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No party guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any party who was not guilty of such fraudulent misrepresentation. 
  
 (d) Indemnification and contribution similar to that specified in the preceding paragraphs of this Section 2.04 (with appropriate modifications) shall be
given by Blockbuster and Viacom with respect to any required registration or other qualification of securities under any state law or regulation or governmental authority. 
  
 (e) The obligations of the parties under this Section 2.04 shall be in addition to any liability which any party may
otherwise have to the other party. 
  
 Section 2.05.
Calculation of Indemnification Payments. The amount which any Indemnifying Party is required to pay to any Indemnified Party pursuant to this Agreement shall 
  
 7 







 be reduced (including, but not limited to, retroactively) by any recovery, judgment, settlement or other amounts actually
recovered, including insurance proceeds, by such Indemnified Party with respect to such Losses. If an Indemnified Party shall have received payment with respect to Losses and shall subsequently actually receive a recovery, judgment, settlement or
other amount with respect to such Losses, then such Indemnified Party shall promptly, but in no event later than 15 business days after such recovery, judgment, settlement or other amount actually received, pay to such Indemnifying Party a sum equal
to the lesser of (i) the amount of such recovery, judgment, settlement or other amount actually received or (ii) the amount of payments actually received previously in respect of such Loss. 
  
 Section 2.06. Indemnification Procedures. The indemnification
procedures set forth in Section 8.01(b) of the IPO and Split-Off Agreement are incorporated herein and made a part hereof for all purposes as if fully set forth herein and shall govern the parties’ rights and obligations with respect thereto.

  
 Section 2.07. Remedies Cumulative. The remedies
provided in this Agreement shall be cumulative and shall not preclude assertion by any Indemnified Party of any other rights or the seeking of any and all other remedies against any Indemnifying Party. 
  
 ARTICLE III 
 RELEASE 
  
 Section 3.01. General Release. (a) Blockbuster for itself and on behalf of its Subsidiaries hereby releases, remises and forever discharges each of Viacom and its Subsidiaries or Affiliates and any of their Representatives from any
losses, obligation or responsibility for any and all actions or failures to take action, in each case prior to August 16, 1999, including any actions which may be deemed to have been negligent or grossly negligent, relating to, resulting from or
arising out of the operation or conduct of any assets, businesses and operations managed or operated by, or operationally related or ancillary to, directly or indirectly, the Blockbuster Business and the Viacom Business, except for any Losses,
obligation or responsibility for any willful or intentional misconduct in the operation or conduct of the Blockbuster Business or the Viacom Business prior to August 16, 1999. 
  
 (b) Viacom for itself and on behalf of its Subsidiaries hereby releases, remises and forever discharges each of Blockbuster
and its Subsidiaries or Affiliates and any of their Representatives from any losses, obligation or responsibility for any and all actions or failures to take action, in each case prior to August 16, 1999, including any actions which may be deemed to
have been negligent or grossly negligent, relating or ancillary to, resulting from or arising out of the operation or conduct of any assets, businesses and operations managed or operated by, or operationally related to, directly or indirectly, the
Blockbuster Business and the Viacom Business, except for any Losses, obligation or responsibility for any willful or intentional misconduct in the operation or conduct of the Blockbuster Business or the Viacom Business prior to August 16, 1999.

  
 8 







 (c) Nothing set forth in subsections (a) and (b) shall limit or otherwise affect any party’s rights
or obligations pursuant to, or contemplated by the Intercompany Agreements. 
  
 ARTICLE IV 
 MISCELLANEOUS 
  
 Section 4.01. Further Agreements. (a) Blockbuster agrees, and Blockbuster will cause its Subsidiaries, to do all
things reasonably necessary to maintain and conduct its business and operations, in a commercially reasonable manner, including without limitation (x) paying, on a timely basis, principal and interest in respect to its debt and rent in respect to
leases and (y) complying with its obligations under any credit agreement, indenture, lease, guarantee or other agreement or document. 
  
 (a) Viacom agrees, and Viacom will cause its Subsidiaries, to do all things reasonably necessary to maintain and conduct its business and operations, in a
commercially reasonable manner, including without limitation (x) paying, on a timely basis, principal and interest in respect to its debt and (y) complying with its obligations under any credit agreement, indenture, lease, guarantee or other
agreement or document. 
  
 Section 4.02. 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 4.03. Successors and Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. This Agreement may not be assigned by any party hereto by operation of law or otherwise without the express written consent of the other
party hereto, except that any party hereto may assign this Agreement to a successor to all or substantially all the business of such party (whether by merger, sale of stock or sale of assets or otherwise), provided that the assigning party shall not
in any event be released from its obligations, liabilities and duties under this Agreement. 
  
 Section 4.04. [intentionally omitted]. 
  
 Section 4.05. 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. 
  
 Section 4.06. Entire Agreement. Other than the other Intercompany Agreements, this Agreement constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof and thereof and supersedes all prior agreements and undertakings, both written and oral, between the parties with respect to the subject matter hereof and thereof. 
  
 Section 4.07. Notices. All notices, consents, requests, approvals, and
other communications provided for or required herein, and all legal process in regard thereto, must be 

  

 9 








 
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 4.08. 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 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 

  

 10 








 
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 4.07 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 4.09. 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. 
  

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 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written
above by their respective officers thereunto duly authorized. 
  

			
	 VIACOM INC.

		
	By:	 	 /s/ Michael D. Fricklas

	 Name:
 Title:
	 	 Michael D. Fricklas
 Executive Vice President, General Counsel
and Secretary



  

			
	BLOCKBUSTER INC.
		
	By:	 	 /s/ Edward B. Stead

	 Name:
 Title:
	 	 Edward B. Stead
 Executive Vice President and
General Counsel



  

 12 








 Schedule 2.04(a) 
  
 LETTER FROM BLOCKBUSTER’S CHAIRMAN & CEO JOHN ANTIOCO 
 SUMMARY 
 The Companies—Blockbuster 
 Description of Capital Stock of Blockbuster 
 Comparative Per Share Data—Blockbuster Per Share Data 
 Selected Historical Financial Data for Viacom and Blockbuster—Blockbuster Selected Historical Financial Data 
 Summary Unaudited Pro Forma Consolidated Condensed Financial Information for Viacom and Blockbuster—Blockbuster Summary Unaudited
Pro Forma Consolidated Condensed Financial Information 
 RISK FACTORS 
 Risk Factors Relating to Blockbuster’s Business 
 RECENT DEVELOPMENTS 
 Blockbuster Credit Arrangements 
 Stock Option Adjustment 
 Dismissal of Securities Lawsuit Against Blockbuster 
 THE TRANSACTION 
 Blockbuster Charter and Bylaw Amendments 
 No Appraisal Rights 
 BLOCKBUSTER STOCK OPTION MATTERS 
 MARKET PRICES AND DIVIDEND INFORMATION 
 Shares of Blockbuster Class A and Class B Common
Stock and Dividends 
 CAPITALIZATION OF VIACOM AND BLOCKBUSTER 
 Blockbuster 
 BLOCKBUSTER UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION 
 NOTES TO BLOCKBUSTER UNAUDITED PRO
FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION 
 AGREEMENTS BETWEEN VIACOM AND BLOCKBUSTER AND OTHER RELATED PARTY
TRANSACTIONS 
 Other Arrangements with Viacom and its Affiliates—Paramount Pictures 
 Other Arrangements with Viacom and its Affiliates—Advertising with Viacom Affiliates 
 Other Arrangements with Viacom and its Affiliates—Showtime Networks 
 Other Arrangements with Viacom and its Affiliates—Insurance Premiums 
 Other Arrangements with Viacom and its Affiliates—Interest Rate Swaps 
 Other Arrangements with Viacom and its Affiliates—Midway Games 
 Other Arrangements with Viacom and its Affiliates—Other 
 INTERESTS OF CERTAIN PERSONS 
 Blockbuster—Employment Arrangements 
 Blockbuster—Stock Option Arrangements

 Blockbuster—Compensation of Members of the Blockbuster Special Committee 
 Blockbuster—Relationship of Directors and Executive Officers with Viacom 
 Blockbuster—Relationship of Blockbuster Director with J.P. Morgan Chase & Co. 
 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF BLOCKBUSTER AND TRANSACTIONS WITH MANAGEMENT AND CERTAIN BENEFICIAL
OWNERS 
 DESCRIPTION OF CAPITAL STOCK OF BLOCKBUSTER 
 COMPARISON OF STOCKHOLDER RIGHTS 
 Comparison of Blockbuster Stockholder Rights 
 DESCRIPTION OF OTHER MATERIAL AGREEMENTS 
 WHERE YOU CAN FIND MORE INFORMATION ABOUT VIACOM AND BLOCKBUSTER 
 Blockbuster Information 
 ANNEX A—BLOCKBUSTER’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 2003 
 ANNEX B—BLOCKBUSTER’S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2004 







 Schedule 2.04(b) 
  
 COVER PAGE 
 QUESTIONS AND ANSWERS ABOUT THIS EXCHANGE OFFER 
 SUMMARY 
 The Companies—Viacom 
 The Exchange Offer 
 Spin-Off and Dispositions of Blockbuster Common Stock 
 Risk Factors 
 Comparative Market Value of Securities 
 Regulatory Approval 
 U.S. Federal Income Tax Consequences 
 Accounting Treatment of This Exchange Offer 
 The Exchange Agent 
 The Information Agent 
 The Co-Dealer Managers 
 Comparative Per Share Data—Viacom Per Share Data 

Selected Historical Financial Data for Viacom and Blockbuster—Viacom Selected Historical Financial Data 
 Summary Unaudited Pro Forma Consolidated Condensed Financial Information for Viacom and Blockbuster—Viacom Summary Unaudited Pro
Forma Consolidated Condensed Financial Information 
 RISK FACTORS 
 Risk Factors Relating to Viacom’s Business 
 Risk Factors Relating to this Exchange Offer 
 CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS 
 RECENT DEVELOPMENTS 
 New Viacom Co-Presidents and Co-Chief Operating Officers; New Blockbuster Director 
 THE TRANSACTION 
 Background of this Exchange Offer 
 Reasons for this Exchange Offer 
 Effects of this Exchange Offer 
 Participation by National Amusements 
 Blockbuster Equity Capitalization Following this Exchange Offer 
 Blockbuster Director
Resignations 
 No Appraisal Rights 
 Litigation Relating to this Exchange Offer 
 Regulatory Approval 
 Accounting Treatment 
 Tax Treatment 
 THE EXCHANGE OFFER 
 SPIN-OFF AND DISPOSITIONS OF BLOCKBUSTER COMMON STOCK 
 MARKET PRICES AND DIVIDEND INFORMATION 
 Shares of Viacom Class A and Class B Common Stock and Dividends 
 CAPITALIZATION OF VIACOM
AND BLOCKBUSTER 
 Viacom 
 VIACOM UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION 
 NOTES TO VIACOM
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION 
 AGREEMENTS BETWEEN VIACOM AND BLOCKBUSTER AND OTHER
RELATED PARTY TRANSACTIONS 
 Relationships Between Viacom and Blockbuster—Initial Public Offering and Split-Off
Agreement 
 Relationships Between Viacom and Blockbuster—Release and Indemnification Agreement 
 Relationships Between Viacom and Blockbuster—Transition Services Agreement 
 Relationships Between Viacom and Blockbuster—Registration Rights Agreement 
 Relationships Between Viacom and Blockbuster—Tax Matters Agreement 
 Relationships Between Viacom and Blockbuster—Judgment Sharing Agreement 
 Relationships Between Viacom and Blockbuster—Director and Officer Insurance Agreement 
 Relationships Between Viacom and Blockbuster—Director and Officer Indemnification and Guarantee 







 Other Arrangements with Viacom and its Affiliates—Director and Officer Liability
Insurance Program 
 U.S. FEDERAL INCOME TAX CONSEQUENCES 
 INTERESTS OF CERTAIN PERSONS 
 Blockbuster—Indemnification Arrangements 
 Blockbuster—Insurance Arrangements

 Viacom 
 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF VIACOM 
 COMPARISON OF
STOCKHOLDER RIGHTS 
 Comparison of Viacom Stockholder Rights 
 SHARES ELIGIBLE FOR FUTURE SALE 
 LEGAL MATTERS 
 EXPERTS 
 WHERE YOU CAN FIND MORE INFORMATION ABOUT VIACOM AND BLOCKBUSTER 
 Viacom Information 
 SCHEDULE I—DIRECTORS AND EXECUTIVE OFFICERS OF VIACOM 
  

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