Document:

Letter Agreement, dated as of August 26, 2004

 Exhibit 10.28 
  
 1515 Broadway 
 New York, NY 10036-5794 
  
 Michael D. Fricklas

 Executive Vice President 
 General Counsel and Secretary 
  
 Tel 212 258 6070

 Fax 212 258 6099 
 Email:
michael.fricklas@viacom.com 
  
 August 26, 2004

  

			
	 Blockbuster Inc.
 1201 Elm Street
 Dallas, Texas 75270
 Attn: Edward B. Stead, General Counsel:
	  	[VIACOM LOGO]

  
 Dear Mr. Stead: 
  
 Reference is made to the Amended and Restated Release and Indemnification
Agreement, dated as of June 18, 2004 (the “Agreement”), by and between Viacom Inc. (“Viacom”) and Blockbuster Inc. (“Blockbuster”) and to the Registration Statement on Form S-4 filed by Blockbuster with the Securities
and Exchange Commission (the “SEC”) on June 18, 2004, as amended by Amendment No. 1 filed by Blockbuster with the SEC on July 29, 2004 and Amendment No. 2 filed by Blockbuster with the SEC on August 24, 2004 (collectively, and as such may
be further amended from time to time, the “Form S-4”). 
  
 As a result of amendments made to the Form S-4 after the initial filing thereof, Viacom and Blockbuster hereby agree to replace Schedule 2.04(a) of the Agreement in its entirety with Annex A of this letter and Schedule 2.04(b) of the
Agreement in its entirety with Annex B of this letter. 
  
 Please
acknowledge your agreement to the foregoing by signing in the space indicated below and returning the enclosed copy of this letter. 
  

			
	 Very truly yours,

	
	 VIACOM INC.

		
	 By:
	 	 /s/ Michael D. Fricklas

	 Name:
	 	 Michael D. Fricklas

	 Title:
	 	 Executive Vice President, General Counsel
 and Secretary

  

			
	 Accepted and Agreed:

	
	 BLOCKBUSTER INC.

		
	 By:
	 	 /s/ Edward B. Stead

	 Name:
	 	 Edward B. Stead

	 Title:
	 	 General Counsel

  

 Annex A 
  
 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

	 Payment of Special Distribution and Blockbuster Indebtedness

	 Stock Option Adjustment

	 Blockbuster Launch of Online DVD Rental Service

	 THE TRANSACTION

	 Recommendation of Special Committee to Blockbuster’s Board of Directors

	 Report of Lazard and Opinion of Houlihan Lokey

	 Blockbuster Charter and Bylaw Amendments

	 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—Employments Agreements

	 Blockbuster—Stock Option Arrangements

	 Blockbuster—Compensation of Members of 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 MANAGEMENTS 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 QUARTERLY PERIOD ENDED JUNE 30, 2004

  

 Annex B 
  
 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

	 Goodwill and Other Intangible Assets

	 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 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 VIACOMAmended and Restated Tax Matters Agreement

 EXHIBIT 10.12 
  
 AMENDED AND RESTATED TAX MATTERS AGREEMENT 
  
 This Amended and Restated Tax Matters Agreement (“Agreement”) is made and entered into effective as of September
4, 2004 (“Effective Date”), by and among Cogent, Inc., a Delaware corporation, formerly Cogent Systems, Incorporated, a California corporation (the “Company”), Ming Hsieh, Fang Liu Hsieh, Trustee of the Fang Liu Hsieh Annuity
Trust No. 1 dated May 12, 2004, and Ming Hsieh, Trustee of the Ming Hsieh Annuity Trust No. 1 dated May 12, 2004 (collectively, the “Stockholders”). The Company and the Stockholders are hereinafter referred to individually as a
“party” and collectively as the “parties.” 
  
 WHEREAS, the Stockholders own all the issued and outstanding capital stock of the Company; 
  
 WHEREAS, the Company is and has been an “S corporation” (within the meaning of Section 1361 of the Internal Revenue Code of 1986, as amended
(the “Code”)) since January 1, 1992; 
  
 WHEREAS, the
Company contemplates an initial public offering (the “Offering”) of its common stock; 
  
 WHEREAS, the Company intends to make a distribution to the Stockholders as provided for herein; 
  
 WHEREAS, the Company and the Stockholders have entered into this Agreement as
a condition to the foregoing distribution and the contemplated Offering; 
  
 WHEREAS, from its inception through December 31, 1991, the Company was taxed as a “C corporation” (as defined in the Code), and the Company became an S corporation effective as of January 1, 1992 and will
continue to be an S corporation through the Termination Date (defined below), after which it will be taxed as a C corporation; 
  
 WHEREAS, it is anticipated that the Company’s election to be an S corporation will terminate as provided in Section 1.4 below; and 
  
 WHEREAS, in connection with the Offering, the Company and the Stockholders
wish to provide for the treatment of certain tax matters and for indemnification as provided in this Agreement. 
  
 NOW, THEREFORE, the parties agree as follows: 
  
 1. Tax Returns and Reporting. 
  
     1.1 Consistent Reporting by the Company. For all taxable years in which the Company is taxed as an S corporation, the
Company shall not (except as required by law), without the consent of the Stockholders (which consent shall not be unreasonably withheld), file any amended income tax return or change any election or accounting method with respect to the Company, if
such filing or change would increase any federal, state, local (including but not limited to city or county) or foreign income tax liability (including interest and penalties, if any) (collectively “Tax Liability”) of the Stockholders for
any period. The limitation of liability contained in Section 2.1.5 below does not apply in the event the Company breaches the prohibition contained in this Section 1.1. 
  
     1.2 Responsibility for Tax Returns. The Company shall file all tax returns required to be
filed by it with respect to all periods for which returns shall become due after the closing of the Company’s Offering, including all returns for the short taxable year which concludes upon the termination of the Company’s S election.

  
     1.3 Responsibility for Taxes.
The Stockholders shall file all required tax returns reporting their allocable share of the Company’s taxable income for all years prior to the termination of the S election in Section 1.4, subject only to the indemnities set forth in Section 2
below. For all taxable years prior to the termination of the S election in Section 1.4, the Stockholders shall not (except as required by law), without the consent of the Company (which consent shall not be unreasonably withheld), file an amended
income tax return or change any 

  

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election or accounting method with respect to the Company, if such filing or change would increase any Tax Liability to the Company after the Termination
Date or the date of the Offering. 
  
     1.4
Termination of S Status. The Company shall terminate the Company’s status as an S corporation by electing to do so under Section 1362(d)(1) of the Code in connection with the Offering and the Stockholders shall consent to the revocation
of the S corporation election by the Company, which election shall be filed and shall be effective no later than one day before the pricing of the Offering (such effective date the “Termination Date”). Notwithstanding the foregoing, the
parties alternatively may agree to terminate the Company’s status as an S corporation under Section 1362(d)(2) of the Code by issuing shares of the Company’s common stock in the Offering, in which case the date of the Offering shall be the
Termination Date. 
  
     1.5 Allocation
of Income. Pursuant to Section 1362(e)(1) of the Code, the S termination year of the Company shall be divided into two short taxable years: an S short year and a C short year. The S short year of the Company shall be that portion of the
Company’s S termination year beginning on January 1, 2004 and ending on the day immediately preceding the Termination Date. The C short year of the Company shall be that portion of the Company’s S termination year beginning on the
Termination Date and ending on December 31, 2004. Further, in accordance with Section 1362(e)(3), the Company shall allocate tax items between its two short taxable years ending and beginning, respectively, on the day immediately preceding the
Termination Date and the Termination Date. The Company shall allocate tax items to its S short year as if the tax year of the Company ended on the day before the Termination Date and shall be allocated to the C short year as if the Company’s
tax year commenced on the Termination Date. 
  
 2.
Indemnification. 
  
     2.1
Indemnification of Stockholders. 
  
           2.1.1 Indemnification for Tax Liability. The Company hereby agrees to indemnify and hold the Stockholders harmless from, against and in respect of any Tax Liability incurred
by them resulting from a final judicial or administrative adjustment (by reason of an amended return, claim for refund, audit or otherwise) to the Company’s taxable income which is the result of an increase or change in character of the
Company’s income during the period it was treated as an S corporation. 
  
           2.1.2 Tax Adjustment. In the event that an indemnification payment pursuant to Section 2.1.1 exceeds the amount of the increase in the Company’s
accumulated adjustments account (as defined in Code Section 1368(e)(1)) resulting from the adjustment (or to the extent such payment to the Stockholders does not qualify as a distribution during the post-termination transition period as defined in
Code Section 1377(b)) such amount shall be increased by an amount calculated pursuant to Section 2.1.4 below. 
  
           2.1.3 Fees and Costs. The Company hereby agrees to reimburse the Stockholders for such
professional fees or other costs as are reasonably necessary to defend the Stockholders in the event of an audit or review of the Stockholders’ income tax returns during a year in which the Stockholders were reporting corporate income by virtue
of the S corporation election. Such reimbursement shall be limited to professional fees and costs proximately related to an audit of the Company’s taxable income. 
  
           2.1.4 Gross Up for Additional Tax. In all events, and to
the extent not otherwise reimbursed, the Company hereby agrees that if any payment pursuant to this Section 2.1 is deemed to be taxable income to the Stockholders, the amount of such payment to the Stockholders shall be increased by an amount
necessary to equal the Stockholders’ additional Tax Liability related to such amount (including, without limitation, any taxes on such additional amounts) so that the net amount received and retained by the Stockholders after payment by the
Stockholders of all taxes associated with the payment is equal to the payment otherwise required to be made. 
  
           2.1.5 Indemnification Limited to Tax Benefit. Notwithstanding anything to the contrary
in this Agreement, the Company’s obligation to indemnify pursuant to Section 2.1 of this Agreement shall be limited to the amount of the Company’s actual tax savings, if any, attributable to the circumstances giving rise to the increase in
the Tax Liability of the Stockholders. 
  

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     2.2 Indemnification of the Company. 
  
           2.2.1
Indemnification for Failure to Qualify as an S Corporation. The Stockholders agree to indemnify and hold the Company harmless from, against, and in respect of any U.S. federal or state income tax liability (including interest and penalties),
if any, resulting from the Company failing to qualify as an S corporation under Section 1361(a)(1) of the Code (as enacted and in effect prior to the Termination Date), pursuant to a final determination by an applicable taxing authority, for any
taxable year on or before the Termination Date as to which the Company filed or files tax returns claiming status as an S corporation. 
  
           2.2.2 Indemnification for Tax Liability. In addition to the indemnification obligation
provided in Section 2.2.1, the Stockholders hereby agree to indemnify and hold harmless the Company against any increase in the Company’s Tax Liability with respect to any tax year to the extent such increase results in a related decrease in
the Tax Liability of the Stockholders for any period prior to the termination of the Company’s status as an S corporation. 
  
           2.2.3 Payment. Any payment required to be made pursuant to this Agreement shall be made
within thirty (30) calendar days after receipt of written notice from the indemnified person that a payment is due hereunder. 
  
           2.2.4 Gross Up For Additional Tax. In all events, and to the extent not otherwise
reimbursed, the Stockholders hereby agree that if any payment pursuant to Section 2.2.2 is deemed to be taxable income to the Company, the amount of such payment shall be increased by an amount necessary to equal the Company’s additional Tax
Liability related to such amount (including, without limitation, any taxes on such additional amounts) so that the net amount received and retained by the Company after payment by the Company of all taxes associated with the payment is equal to the
payment otherwise required to be made. 
  
           2.2.5 Indemnification Limited to Tax Benefit. Notwithstanding anything to the contrary in this Agreement, the Stockholders’ obligation to indemnify pursuant to Sections
2.2.2 and 2.2.4 of this Agreement shall be limited to the amount of the Stockholders’ actual tax savings, if any, attributable to the circumstances giving rise to the increase in the Tax Liability of the Company. 
  
 3. Distribution to Stockholder. Prior to the Termination Date, the
Company shall declare a distribution (subject to the prior approval of the board of directors of the Company) to the Stockholders, and shall pay such distribution promptly but no later than thirty (30) days following such declaration, to the
Stockholders in an amount equal to the Company’s estimate (using commercially reasonable efforts and with the assistance of its accountants) of the Company’s accumulated adjustment account (as defined in Code Section 1368(e)(1)) as
computed immediately prior to the Offering, provided, however, (i) the amount of the distribution shall be increased for income (net of related expenses) which is exempt from tax as described in Code Section 1368(e)(1); and (ii) in no event shall
such distribution exceed $85,000,000. 
  
 4. Waiver of Invalid
Election or Termination of S Status. If the Internal Revenue Service determines that the Company failed to validly elect to be an S corporation or that the Company’s status as an S corporation was terminated inadvertently, and if the
Company wishes to obtain a ruling pursuant to Section 1362(f) of the Code, the Stockholders agree to make any adjustments required pursuant to Section 1362(f)(4) of the Code and approved by the Company’s board of directors. 
  
 5. Termination of Agreement. This Agreement shall terminate without
force or effect if the Offering is not completed on or before October 31, 2004. 
  
 6. Miscellaneous. 
  
     6.1 Counterpart Execution. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which counterparts collectively shall constitute one and the same
instrument representing the Agreement between the parties hereto. 
  
     6.2 Governing Law. This Agreement shall be governed by California law, without regard to choice of law rules applied by California courts. 
  

 3 

     6.3 Successors and Assigns. This Agreement shall be binding on and shall
inure to the benefit of successors and assigns of the parties. 
  
     6.4 Section Headings. Section headings shall not affect the interpretation of this Agreement. 
  
     6.5 Entire Agreement. This Agreement embodies the entire agreement of the parties with respect to the subject matter
contained herein. 
  
     6.6 Further
Assurances. The parties hereto agree to take all further actions necessary to effect the agreements contained herein. 
  
     6.7 Notices. All notices under this Agreement shall be in writing and delivered personally or mailed by certified mail,
postage prepaid, addressed to the parties at their last known address. 
  
     6.8 Amendment and Modification. This Agreement may be amended, modified or supplemented only by a written agreement executed by all of the parties hereto. 
  
 WHEREFORE this Agreement is entered into as of the Effective Date.

  

			
	COMPANY:
	
	 COGENT, INC.

		
	 By:
	 	/s/    PAUL KIM
		
	 Its:
	 	Chief Financial Officer

			
	
	STOCKHOLDERS:
	
	/s/    MING
HSIEH        
	Ming Hsieh
	
	/s/    MING HSIEH
	 Ming Hsieh, Trustee of the Ming Hsieh
 Annuity Trust No. 1 dated May 12, 2004

	
	/s/    FANG LIU HSIEH
	 Fang Liu Hsieh, Trustee of the Fang Liu Hsieh
 Annuity Trust No. 1 dated May 12, 2004

  

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