{"id":43750,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/tax-matters-agreement-viacom-inc-and-blockbuster-inc.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"tax-matters-agreement-viacom-inc-and-blockbuster-inc","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/tax-matters-agreement-viacom-inc-and-blockbuster-inc.html","title":{"rendered":"Tax Matters Agreement &#8211; Viacom Inc. and Blockbuster Inc."},"content":{"rendered":"<pre>\n                             TAX MATTERS AGREEMENT\n                             ---------------------\n\n          THIS TAX MATTERS AGREEMENT (the 'Agreement'), dated as of August 16,\n1999 (the 'IPO Date'), is entered into between Viacom Inc., a Delaware\ncorporation ('Viacom'), and Blockbuster Inc., a Delaware corporation,\n('Blockbuster').\n\n                                R E C I T A L S\n                                ---------------\n\n          A.  Viacom is the common parent corporation of an affiliated group of\ncorporations which, together with any other corporations which may become\nmembers of such affiliated group, is referred to as the 'Viacom Consolidated\nGroup'.\n\n          B.  Blockbuster, if it were not included in the Viacom Consolidated\nGroup on the date hereof, would be the common parent corporation of an\naffiliated group of corporations within the meaning of Section 1504 of the\nInternal Revenue Code of 1986, as amended (the 'Code'), which, together with any\nother corporations which may become members of such affiliated group, is\nreferred to as the 'Blockbuster Consolidated Group'.\n\n          C.  Viacom and Blockbuster desire to set forth in the Agreement their\nagreement as to certain matters relating to the inclusion of the Blockbuster\nConsolidated Group in the Viacom Consolidated Group, including the allocation of\ntax liabilities for years in which the Blockbuster Consolidated Group is so\nincluded, and certain other matters relating to taxes.\n\n                                       1\n\n \n          The parties agree as follows:\n\n          1.  Filing of Consolidated Returns and Payment of Consolidated Tax\n              --------------------------------------------------------------\nLiability.\n--------- \n\n          For all taxable years in which Viacom files consolidated federal\nincome tax returns (any such return of the Viacom Consolidated Group for any\ntaxable year, a 'Viacom Consolidated Return') and is entitled to include the\nBlockbuster Consolidated Group in such returns under Sections 1501-1504, or\nsuccessor provisions, of the Code, Viacom shall include the Blockbuster\nConsolidated Group in the consolidated federal income tax returns it files as\nthe common parent corporation of the Viacom Consolidated Group.  Viacom,\nBlockbuster, and the other members of the Viacom Consolidated Group shall file\nany and all consents, elections or other documents and take any other actions\nnecessary or appropriate to effect the filing of such federal income tax\nreturns.  For all taxable years in which the Blockbuster Consolidated Group is\nincluded in the Viacom Consolidated Group, Viacom shall pay the entire federal\nincome tax liability of the Viacom Consolidated Group and shall indemnify and\nhold harmless Blockbuster against any such liability; provided, however, that\n                                                      --------  -------      \nBlockbuster shall make payments to Viacom or receive payments from Viacom as\nprovided in the Agreement in settlement of the Blockbuster Consolidated Group's\nshare of the entire federal income tax liability of the Viacom Consolidated\nGroup for any taxable year (which term shall throughout the Agreement include\nany short taxable year) beginning on or after the IPO Date during which the\nBlockbuster Consolidated Group is included in the Viacom Consolidated Group (any\nsuch taxable year, an 'Agreement Year' and any taxable year ending on or before\nthe IPO Date, a 'pre-Agreement Year').  For \n\n                                       2\n\n \npurposes of this Agreement, the Blockbuster Consolidated Group shall be deemed\nto have a taxable year beginning on January 1, 1999 and ending on the IPO Date\n(which year shall be treated as a pre-Agreement Year), and the Blockbuster\nConsolidated Group shall be deemed to have a taxable year beginning on the day\nafter the IPO Date and ending on December 31, 1999 (or, if earlier, the date on\nwhich the Blockbuster Consolidated Group's actual taxable year beginning January\n1, 1999 ends) which year shall be treated as an Agreement Year.\n\n          2.  Pro Forma Blockbuster Return.\n              ---------------------------- \n\n          For each Agreement Year, Viacom shall prepare a pro forma consolidated\nfederal income tax return for the Blockbuster Consolidated Group (a 'Pro Forma\nBlockbuster Return').  Except as otherwise provided herein, the Pro Forma\nBlockbuster Return for each Agreement Year shall be prepared as if Blockbuster\nfiled a consolidated return on behalf of the Blockbuster Consolidated Group for\nsuch taxable year; provided, however, that the Pro Forma Blockbuster Return\nshall not include any deduction or other tax benefit attributable to the\nexercise of an option to purchase Viacom stock by an employee of Blockbuster (or\nits affiliates).  The Pro Forma Blockbuster Return shall reflect any carryovers\nof net operating losses, net capital losses, excess tax credits, or other tax\nattributes from prior Agreement Years' Pro Forma Blockbuster Returns which could\nhave been utilized by the Blockbuster Consolidated Group (excluding those\nattributes carried back pursuant to Section 5 herein) if the Blockbuster\nConsolidated Group had never been included in the Viacom Consolidated Group and\nall Pro Forma Blockbuster Returns had been actual returns, but otherwise shall\nnot reflect any tax benefits that arise from any adjustment to a pre-\n\n                                       3\n\n \nAgreement Year or carryovers of any other tax attributes from a pre-Agreement\nYear, regardless of whether such attributes were utilized (on audit or\notherwise) on a tax return of Viacom in a pre-Agreement Year. The Pro Forma\nBlockbuster Return shall be prepared in a manner that reflects all elections,\npositions, and methods used in the Viacom Consolidated Return that must be\napplied on a consolidated basis and otherwise shall be prepared in a manner\nconsistent with the Viacom Consolidated Return. The provisions of the Code that\nrequire consolidated computations, such as Sections 861, 1201-1212, and 1231,\nshall be applied separately to the Blockbuster Consolidated Group. Section\n1.1502-13 of the Income Tax Regulations shall be applied as if the Blockbuster\nConsolidated Group and the Viacom Consolidated Group (excluding the members of\nthe Blockbuster Group) were separate affiliated groups, except that the Pro\nForma Blockbuster Return shall also include any gains or losses of the members\nof the Blockbuster Consolidated Group on transactions within the Blockbuster\nConsolidated Group (including in years prior to the first Agreement Year) which\nmust be taken into account pursuant to Section 1.1502-13 of the Income Tax\nRegulations and reflected on the Viacom Consolidated Return if the Blockbuster\nConsolidated Group ceases to be included in the Viacom Consolidated Group. For\npurposes of the Agreement, all determinations made as if the Blockbuster\nConsolidated Group had never been included in the Viacom Consolidated Group and\nas if all Pro Forma Blockbuster Returns were actual returns shall reflect any\nactual short taxable years resulting from the Blockbuster Consolidated Group\njoining or leaving the Viacom Consolidated Group.\n\n                                       4\n\n \n          3.  Pro Forma Blockbuster Return Payments.\n              ------------------------------------- \n\n          For each Agreement Year, Blockbuster shall make periodic payments\n('Periodic Payments') to Viacom in such amounts as determined by Viacom based\nupon the estimated tax payments that would be due from the Blockbuster\nConsolidated Group if it were not included in the Viacom Consolidated Group no\nlater than the dates on which payments of estimated tax would be due from the\nBlockbuster Consolidated Group if it were not included in the Viacom\nConsolidated Group.  The balance of the tax due for an Agreement Year shall be\npaid to Viacom no later than March 15 of the following year (the 'Balance\nPayment').  Blockbuster shall pay to Viacom no later than the date on which a\nViacom Consolidated Return for any Agreement Year is filed an amount equal to\nthe sum of (i) the federal income tax liability shown on the corresponding Pro\nForma Blockbuster Return prepared for the Agreement Year and (ii) the additions\nto tax, if any, under Section 6655 of the Code that would have been imposed on\nBlockbuster (treating the amount due to Viacom under (i) above as its federal\nincome tax liability and treating any periodic payments to Viacom pursuant to\nthe first sentence of this Section 3 as estimated payments under Section 6655 of\nthe Code) and which result from the inaccuracy of any information provided by\nBlockbuster to Viacom pursuant to Section 5 hereof or from the failure of\nBlockbuster to provide any requested information, reduced by (iii) the sum of\nthe amount of the Periodic Payments and the Balance Payment (collectively, the\n'Total Periodic Payments'), plus (iv) any interest and additions to tax (other\nthan under Section 6655 of the Code) that would be due under the Code if the\nTotal Periodic Payments were actual payments of tax.  If Blockbuster's Total\nPeriodic Payments to Viacom for any Agreement Year exceed the \n\n                                       5\n\n \namount of its liability under the preceding sentence, Viacom shall refund such\nexcess to Blockbuster within 30 days after filing the Viacom Consolidated\nReturn. For purposes of the Agreement, the term 'federal income tax liability'\nincludes the tax imposed by Sections 11, 55 and 59A of the Code, or any\nsuccessor provisions to such Sections. Viacom shall notify Blockbuster of any\namounts due from Blockbuster to Viacom pursuant to this Section 3 no later than\n5 business days prior to the date such payments are due and such payments shall\nnot be considered due until the later of the due date described above or the\nfifth day from the notice from Viacom.\n\n          4.  Payments for Taxable Years in the Event of Deconsolidation.\n              ---------------------------------------------------------- \n          (a) Payments by Blockbuster to Viacom.  If for any taxable year after\n              ---------------------------------                                \nthe Blockbuster Consolidated Group ceases to be included in the Viacom\nConsolidated Group (a 'Post-Consolidation Year'), (i) the federal income tax\nliability of the Blockbuster Consolidated Group is less than (ii) the federal\nincome tax liability that would have been imposed with respect to the same\nperiod if the Blockbuster Consolidated Group had not been included in the Viacom\nConsolidated Group for any Agreement Year, all Pro Forma Blockbuster Returns had\nbeen actual returns for such years, and no carryovers of Blockbuster attributes\nfrom pre-Agreement years were permitted, then Blockbuster shall pay to Viacom\nthe excess of (ii) over (i) within 10 days of the filing of the Blockbuster\nPost-Consolidation Year return.\n          (b) Payments by Viacom to Blockbuster.  If for any Post-Consolidation\n              ---------------------------------                                \nYear (i) the federal income tax liability of the Blockbuster Consolidated Group\nis greater than (ii) the federal income tax liability that would have been\nimposed with respect to the same period if the Blockbuster Consolidated Group\nhad not been included in the \n\n                                       6\n\n \nViacom Consolidated Group for any Agreement Year, all Pro Forma Blockbuster\nReturns had been actual returns for such years, and no carryovers of Blockbuster\nattributes from pre-Agreement Years were permitted, then Viacom shall pay to\nBlockbuster the excess of (i) over (ii) within 10 days of notification by\nBlockbuster to Viacom of the filing of the Blockbuster Post-Consolidation Year\nreturn.\n\n          (c) Documentation.  Prior to the payment of any amounts due pursuant\n              -------------                                                   \nto this Section 4, the parties shall exchange such information and documentation\nas is reasonably satisfactory to each of them in order to substantiate the\namounts due pursuant to this Section 4.  Any disputes as to such amounts and\ndocumentation which cannot be resolved prior to the date a payment is due shall\nbe referred to an independent accounting firm whose fees shall paid one half by\nBlockbuster and one half by Viacom.\n\n          (d) No Post-Consolidation Year Carrybacks.  If a Blockbuster federal\n              -------------------------------------                           \nincome tax return with respect to a Post-Consolidation Year reflects a net\noperating loss, net capital loss, excess tax credits, or any other tax\nattribute, such attribute may not be carried back to a Viacom tax return.\n\n          5.  Carrybacks.\n              ---------- \n\n          If a Pro Forma Blockbuster Return reflects a net operating loss, net\ncapital loss, excess tax credit or other tax attribute (a 'Pro Forma Blockbuster\nAttribute'), which  is actually utilized in a Viacom Consolidated Return\n(including any amendments thereto), then, within 30 days after the later of (i)\nthe due date for the Viacom Consolidated Return (taking into account any\nextensions thereof) or (ii) the date such Pro Forma Blockbuster Attribute is\nactually realized in cash (whether directly or by \n\n                                       7\n\n \noffset), Viacom shall pay to Blockbuster an amount equal to the lesser of (x)\nthe refund which the Blockbuster Consolidated Group would have received as a\nresult of the carryback of such Pro Forma Blockbuster Attribute to a Pro Forma\nBlockbuster Return for any prior Agreement Year or Years (determined as if the\nfirst Agreement Year were the earliest taxable year to which such attributes\ncould be carried back) or (y) the tax savings or tax benefit realized by Viacom\nwith respect to the use of such Pro Forma Blockbuster Attribute in a Viacom\nConsolidated Return. All calculations of deemed refunds pursuant to this Section\n5 shall include interest computed as if Blockbuster had filed a claim for refund\nor an application for a tentative carryback adjustment pursuant to Section\n6411(a) of the Code on the date on which the Viacom Consolidated Return is\nfiled.\n\n          6.  Preparation of Tax Package and Other Financial Reporting\n              --------------------------------------------------------\nInformation.\n----------- \n\n          Blockbuster shall provide to Viacom in a format determined by Viacom\nall information requested by Viacom as necessary to prepare the Viacom\nConsolidated Return and the Pro Forma Blockbuster Return (the 'Viacom Tax\nPackage').  The Viacom Tax Package with respect to any taxable year shall be\nprovided to Viacom on a basis consistent with current practices of the Viacom\nConsolidated Group no later than April 1 of the following year.  Blockbuster\nshall also provide to Viacom information required to determine the Total\nPeriodic Payments, current federal taxable income, current and deferred tax\nliabilities, tax reserve items, and any additional current or prior information\nrequired by Viacom on a timely basis consistent with current practices of the\nViacom Consolidated Group.\n\n                                       8\n\n \n          7.  Returns, Audits, Refunds, Amended Returns, Litigation, Adjustments\n              ------------------------------------------------------------------\nand Rulings.\n----------- \n\n          (a) Returns.  Viacom shall have exclusive and sole responsibility for\n              -------                                                          \nthe preparation and filing of the Viacom Consolidated Returns (including\nrequests for extensions thereof) and any other returns, amended returns and\nother documents or statements required to be filed with the Internal Revenue\nService (the 'IRS') in connection with the determination of the federal income\ntax liability of the Viacom Consolidated Group.\n\n          (b) Audits; Refund Claims.  Viacom will have exclusive and sole\n              ---------------------                                      \nresponsibility and control with respect to the conduct of IRS examinations of\nthe returns filed by the Viacom Consolidated Group and any refund claims with\nrespect thereto.  Blockbuster shall assist and cooperate with Viacom during the\ncourse of any such proceeding.  Viacom shall give Blockbuster notice of and\nconsult with Blockbuster with respect to any issues relating to items of income,\ngain, loss, deduction or credit of any member of the Blockbuster Consolidated\nGroup (any such items, 'Blockbuster Consolidated Return Items').  Viacom shall\nnot settle or otherwise compromise any Blockbuster Consolidated Return Item that\nwould result in additional liability for Blockbuster under this Agreement\nwithout the written consent of Blockbuster, which consent shall not be\nunreasonably withheld.  If Blockbuster does not respond to Viacom's request for\nconsent within 30 days, Blockbuster shall be deemed to have consented.\nNotwithstanding the foregoing, Viacom shall have the right in its sole\ndiscretion to pay any disputed taxes and sue for a refund in the forum of its\nchoice.  In the case of any audit or litigation with respect to a Blockbuster\nreturn for a Post-\n\n                                       9\n\n \nConsolidation Year, Blockbuster shall not settle or otherwise compromise any\nmatter relating to the treatment of any item arising in an Agreement Year or a\npre-Agreement Year in a manner which would affect the liability of Viacom to\nBlockbuster or Blockbuster to Viacom pursuant to Section 4 without the consent\nof Viacom, which consent shall not be unreasonably withheld.\n\n          (c) Litigation.  If the federal income tax liability of the Viacom\n              ----------                                                    \nConsolidated Group becomes the subject of litigation in any court, the conduct\nof the litigation shall be controlled exclusively by Viacom.  Blockbuster shall\nassist and cooperate with Viacom during the course of litigation, and Viacom\nshall consult with Blockbuster regarding any issues relating to Blockbuster\nConsolidated Return Items.\n\n          (d) Expenses.  Blockbuster shall reimburse Viacom for all reasonable\n              --------                                                        \nout-of-pocket expenses (including, without limitation, legal, consulting and\naccounting fees) in the course of proceedings (i) described in paragraphs (b)\nand (c) of this Section to the extent such expenses are reasonably attributable\nto Blockbuster Consolidated Return Items for any Agreement Year or (ii) relating\nto any assertion of liability attributable in whole or in part to actions or\nevents covered by Section 11.\n\n          (e) Recalculation of Payments to Reflect Adjustments.  To the extent\n              ------------------------------------------------                \nthat any audit, litigation or claim for refund with respect to a Viacom\nConsolidated Return or a Blockbuster return for a Post-Consolidation Year\nresults in an additional payment of tax (including a payment of tax made\npreliminary to commencing a refund claim or litigation) or a refund of tax (any\nsuch additional payment or refund, an 'Adjustment') relating to the treatment of\na Blockbuster Consolidated Return Item for an \n\n                                       10\n\n \nAgreement Year, a corresponding adjustment shall be made to the corresponding\nPro Forma Blockbuster Return.\n\n          All calculations of payments made pursuant to Sections 3, 4, and 5 of\nthe Agreement shall be recomputed to reflect the effect of any Adjustments on\nthe relevant Pro Forma Blockbuster Return or on the liability of the Blockbuster\nConsolidated Group for a Post-Consolidation Year.  Within 5 days after any such\nAdjustment, Blockbuster or Viacom, as appropriate, shall make additional\npayments or refund payments to the other party reflecting such Adjustment, plus\ninterest pursuant to Section 8 of the Agreement calculated as if payments by and\nto Blockbuster pursuant to Sections 3, 4, and 5 of the Agreement and this\nSection 7 were payments and refunds of federal income taxes.  Blockbuster shall\nfurther pay to Viacom the amount of any penalties or additions to tax incurred\nby the Viacom Consolidated Group as a result of an adjustment to any Blockbuster\nConsolidated Return Item for an Agreement Year.\n\n          (f) Rulings.  Blockbuster shall assist and cooperate with Viacom and\n              -------                                                         \ntake all actions requested by Viacom in connection with any ruling requests\nsubmitted by Viacom to the IRS, including rulings unrelated to the Distributions\n(defined in Section 11(a) below).\n\n          (g) Applicability with Respect to All Consolidated Returns.  The\n              ------------------------------------------------------      \nprovisions of Section 7(a), (b) and (c) above shall apply to Viacom Consolidated\nReturns and Blockbuster Consolidated Return Items for all taxable years in which\nthe Blockbuster Consolidated Group (or any member thereof) is includable in the\nViacom Consolidated Group.\n\n                                       11\n\n \n          (h) Document Retention, Access to Records &amp; Use of Personnel.  Until\n              --------------------------------------------------------        \nthe expiration of the relevant statute of limitations (including extensions),\nBlockbuster shall (i) retain records, documents, accounting data, computer data\nand other information (collectively, the 'Records') necessary for the\npreparation, filing, review, audit or defense of all tax returns relevant to an\nobligation, right or liability of either party under the Agreement; and (ii)\ngive Viacom reasonable access to such Records and to its personnel (insuring\ntheir cooperation) and premises to the extent relevant to an obligation, right\nor liability of either party under the Agreement.  Prior to disposing of any\nsuch Records, Blockbuster shall notify Viacom in writing of such intention and\nafford Viacom the opportunity to take possession or make copies of such Records\nat its discretion.\n\n          8.  Interest.\n              -------- \n\n          Interest required to be paid by or to Blockbuster pursuant to the\nAgreement shall, unless otherwise specified, be computed at the rate and in the\nmanner provided in the Code for interest on underpayments and overpayments,\nrespectively, of federal income tax for the relevant period.  Any payments\nrequired pursuant to the Agreement which are not made within the time period\nspecified in the Agreement shall bear interest at a rate equal to two hundred\nbasis points above the average interest rate on the senior bank debt of\nBlockbuster.\n\n          9.  Foreign, State and Local Income Taxes.\n              ------------------------------------- \n\n          In the case of foreign, state or local taxes based on or measured by\nthe net income of the Viacom Consolidated Group, or any combination of members\nthereof (other than solely with respect to members which are members of the\nBlockbuster \n\n                                       12\n\n \nConsolidated Group or which are members of the Viacom Consolidated Group but not\nthe Blockbuster Consolidated Group) on a combined, consolidated or unitary\nbasis, the provisions of the Agreement shall apply with equal force to such\nforeign, state or local tax for each Agreement Year whether or not the\nBlockbuster Consolidated Group is included in the Viacom Consolidated Group for\nfederal income tax purposes; provided however, that interest pursuant to the\n                             -------- -------\nfirst sentence of Section 8 of the Agreement shall be computed at the rate and\nin the manner provided under such foreign, state or local law for interest on\nunderpayments and overpayments of such tax for the relevant period and\nreferences to provisions of the Code throughout the Agreement shall be deemed to\nbe references to analogous provisions of state, local, and foreign law.\n\n          For any Agreement Year or pre-Agreement Year, Viacom shall have the\nsole and exclusive control of (a) the determination of whether a combined,\nconsolidated or unitary tax return should be filed for any foreign, state or\nlocal tax purpose and (b) all foreign, state or local income tax audits and\nlitigation with respect to any member of the Blockbuster Consolidated Group.\nBlockbuster shall reimburse Viacom for all reasonable out-of-pocket expenses\n(including, without limitation, legal, consulting and accounting fees) in the\ncourse of proceedings described in the preceding sentence to the extent such\nexpenses are reasonably attributable to Blockbuster or any member of the\nBlockbuster Consolidated Group.\n\n                                       13\n\n \n          Blockbuster shall provide to Viacom separate legal entity reporting\ninformation with respect to any member of the Blockbuster Consolidated Group as\nrequested by Viacom on a timely basis.\n\n          Viacom will provide notice of and consult with Blockbuster with\nrespect to any issue relating to such audits and litigation and Blockbuster will\nprovide to Viacom any information necessary to conduct such audits and\nlitigation.  Viacom shall not settle or otherwise compromise any audits or\nlitigation that would result in additional liability for Blockbuster under this\nSection 9 without the written consent of Blockbuster, which consent shall not be\nunreasonably withheld.  If Blockbuster does not respond to Viacom's request for\nconsent within 30 days, Blockbuster shall be deemed to have consented.\nNotwithstanding the foregoing, Viacom shall have the right in its sole\ndiscretion to have Blockbuster pay any disputed taxes and sue for a refund in\nthe forum of Viacom's choice.\n\n          Blockbuster shall be responsible for filing tax returns relating to\npayroll, sales and use, property, withholding and similar taxes and shall be\nresponsible for the payment of such taxes.\n\n          For all taxable years prior to and including the taxable years that\nBlockbuster is a member of the Viacom Consolidated Group, Blockbuster shall have\nthe sole and exclusive responsibility for all taxes based on or measured by the\nnet income which are determined solely by the income of the Blockbuster\nConsolidated Group (or any combination of the members thereof including the\npredecessors of such members) on a combined, consolidated, unitary or separate\ncompany basis.  Viacom, in consultation with the Chief Financial Officer of\nBlockbuster, shall have sole and \n\n                                       14\n\n \nexclusive responsibility for the preparation of returns relating to such taxes\nand the control of audits, controversies and proceedings with respect thereto.\n\n          Notwithstanding the immediately preceding paragraph, in the case of\nNew York State and New York City taxes based on or measured by the net income\nwhich are determined solely by the income of the Blockbuster Consolidated Group\n(or any combination of the members thereof including the predecessors of such\nmembers) on a combined, consolidated, unitary or separate company basis, Viacom\nshall have the sole and exclusive responsibility for such taxes and for the\nreturn preparation and the control of audits, controversies and proceedings with\nrespect thereto.\n\n          10.  UK Tax Surrenders.\n               ----------------- \n\n          If requested to do so by Viacom UK Limited ('VUKL'), Blockbuster\nagrees that it will cause any of its direct or indirect subsidiaries which,\nunder the tax laws of the United Kingdom, are or have been regarded as resident\nin the United Kingdom to consent under provisions of Chapter IV of Part X of TA\n1988 to the surrender of all or any part of their available tax losses to VUKL\nor to any member of the United Kingdom tax group of which VUKL is the principal\nmember.  This agreement is made in respect of all accounting periods ended on or\nbefore December 31, 1998, and Blockbuster agrees to take or cause to be taken\nall actions necessary to effect the loss surrender.\n\n          11.  Taxes Attributable to the Distributions.\n               --------------------------------------- \n\n          (a) Actions Inconsistent with the Rulings.  In the event that stock of\n              -------------------------------------                             \nBlockbuster (or any successor thereto) is ultimately distributed to any or all\nof Viacom's shareholders pursuant to transactions intended to qualify under\nSection 355 of the Code, including a distribution of Blockbuster stock from\nViacom International Inc. to \n\n                                       15\n\n \nViacom, (any such transaction, a 'Distribution' and collectively, the\n'Distributions'), Blockbuster shall not take or fail to take, and shall not\npermit any other member of the Blockbuster Consolidated Group or any other\ncorporation or other entity that is directly or indirectly more than 50 percent\n(by vote or value) owned by any member of the Blockbuster Consolidated Group\n(any such entity, a 'Blockbuster Affiliate' and together with the Blockbuster\nConsolidated Group, the 'Blockbuster Entities') to take or fail to take, any\naction if such act or failure to act would be inconsistent with any ruling,\nincluding for all purposes of the Agreement any supplemental rulings,\n(collectively, the 'Rulings') issued by the IRS in connection with the\nDistributions or any representation, covenant or information included in any\nsubmission to the IRS in connection with the Rulings (together with the Rulings,\nthe 'Rulings and Submissions').\n\n          (b) Liability.  Notwithstanding anything to the contrary in the\n              ---------                                                  \nAgreement, Blockbuster and the Blockbuster Entities shall be jointly and\nseverally liable for, and shall indemnify and hold harmless Viacom and each\nmember of the Viacom Consolidated Group (other than members of the Blockbuster\nConsolidated Group) from and against, on an after-tax basis, any and all taxes\n(including interest, penalties and additions to tax) resulting from the\nDistributions to the extent such taxes result from (i) any event or transaction\nafter the Distributions that involves the stock, assets, or business of the\nBlockbuster Entities, whether or not such event or transaction is the result of\ndirect actions of, or within the control of, the Blockbuster Entities, (ii) any\nact or failure to act on the part of any of the Blockbuster Entities after the\nDistributions, (iii) the breach of any representation, covenant or information\nregarding the Blockbuster Entities included in the Rulings and Submissions, or\n(iv) any actions contemplated by \n\n                                       16\n\n \nSection 11(c) below, regardless of whether such actions are permitted pursuant\nto Section 11(d) below.\n\n          (c) Covenants.  Blockbuster agrees that during the two years following\n              ---------                                                         \nthe Distributions, Blockbuster will not, and will not permit any of the\nBlockbuster Entities to:\n\n          (i)    sell, exchange, distribute or otherwise transfer all or a\n     substantial portion of its assets or any stock or equity interest in any of\n     the Blockbuster Entities,\n\n          (ii)   enter into any merger or liquidation transaction,\n\n          (iii)  discontinue or otherwise fail to maintain the active trade or\n     business relied upon in connection with the Rulings and Submissions,\n\n          (iv)   purchase any of its outstanding stock other than through stock\n     purchases meeting the requirements of section 4.05(1)(b) of Rev. Proc. 96-\n     30,\n\n          (v)    issue any stock or equity interests (except pursuant to the\n     exercise of employee stock options),\n\n          (vi)   enter into any agreement for the sale or other disposition of\n     its stock or equity interests,\n\n          (vii)  amend its certificate of incorporation (or other organizational\n     documents), whether through a stockholder vote or otherwise, in a manner\n     that affects the relative voting rights of the separate classes of\n     Blockbuster stock (including, without limitation, through the conversion of\n     one class of Blockbuster stock into another class of Blockbuster stock), or\n\n                                       17\n\n \n          (viii) take any action inconsistent with the information,\n     representations or covenants included in the Rulings and Submissions or\n     that would result in the Distributions being taxable in whole or in part to\n     the Viacom Consolidated Group or Viacom's shareholders.\n\n          (d) Exceptions to Covenants.  Notwithstanding Section 11(c) above, the\n              -----------------------                                           \nBlockbuster Entities may take actions inconsistent with the covenants contained\nin such Section 11(c), if Viacom consents in writing to such actions, such\nconsent to be determined by Viacom in its sole discretion taking into account\nsolely the preservation of the tax-free status of the Distributions; provided,\nhowever, that if such consent is not given, Blockbuster may request, which\nrequest may not be unreasonably denied, that Viacom either:\n\n          (i)  seek to obtain a ruling from the IRS that the actions in question\n     (the 'Restricted Actions') will not result in the Distributions being\n     taxable to the Viacom Consolidated Group or Viacom's shareholders (an\n     'Additional Ruling'); provided, however, that Viacom shall not be obligated\n     to request such a ruling if it determines in good faith that such request\n     might have an adverse effect on the Viacom Consolidated Group or Viacom's\n     shareholders; or\n          (ii) seek  an unqualified opinion of counsel from counsel chosen by\n     Viacom that the Restricted Actions will not result in the Distributions\n     being taxable to the Viacom Consolidated Group or Viacom's shareholders (an\n     'Unqualified Opinion').\n\nIf either an Additional Ruling or Unqualified Opinion is obtained in form and\nsubstance acceptable to Viacom, the Blockbuster Entities may engage in such\nRestricted Actions.  \n\n                                       18\n\n \nBlockbuster agrees that Viacom is to have no liability for any tax resulting\nfrom any Restricted Actions permitted pursuant to this Section 11(d) and agrees\nto indemnify and hold harmless Viacom against any such tax. Blockbuster shall\nalso bear all costs incurred by Viacom in connection with considering whether to\ngrant a request pursuant to this Section 11(d) or in requesting and\/or obtaining\nany Additional Ruling or Unqualified Opinion.\n\n          (e) Rulings and Additional Rulings.  In its sole discretion and\n              ------------------------------                             \ncontrol, Viacom shall have the right to obtain the Rulings and, if any, the\nAdditional Rulings.  Blockbuster shall cooperate with Viacom and take all\nactions requested by Viacom in connection with obtaining the Rulings and\nAdditional Rulings (including, without limitation, by making any representation\nor covenant or providing any materials or information requested by Viacom or the\nIRS; provided that Blockbuster shall not be required to make any representation\nor covenant that is inconsistent with historical facts or as to future matters\nor events over which it has no control).\n\n          12.  Deductions Attributable to Options.\n               ---------------------------------- \n\n          Viacom shall determine whether Viacom or Blockbuster shall file tax\nreturns claiming the deductions attributable to the exercise of (i) options to\npurchase stock of Viacom which are held by employees of Blockbuster (or its\naffiliates) after the Distributions or by employees of both Viacom (or its\naffiliates) and Blockbuster (or its affiliates) after the Distributions and\/or\n(ii) options to purchase stock of Blockbuster which were issued as a result of a\nconversion of Viacom options and which resulted in a charge to the earnings of\nViacom at the time of such conversion for financial reporting purposes.  If it\nis determined that Viacom shall claim all such tax deductions, Viacom \n\n                                       19\n\n \nshall be entitled to any such tax deductions and the tax returns of Viacom and\nBlockbuster shall be prepared accordingly and Viacom shall be responsible for\nthe remittance of the employer's share of FICA and similar taxes. To the extent\nany such deductions are disallowed because a tax authority determines that\nBlockbuster should have claimed such deductions, Blockbuster shall take all\nactions necessary to claim such deductions and pay to Viacom an amount equal to\nthe tax benefit of such deductions. If it is determined that Blockbuster shall\nclaim all such tax deductions, Blockbuster shall be entitled to any such tax\ndeductions and the tax returns of Viacom and Blockbuster shall be prepared\naccordingly. Blockbuster shall notify Viacom of the amount of tax deductions it\nintends to claim with respect to the exercise of Viacom options and shall pay\nViacom an amount equal to the actual benefit of the related deductions (less any\nFICA or similar taxes paid by Blockbuster) not later than 3 days prior to the\ndue date of the estimated tax payment immediately following when any member of\nthe Blockbuster Consolidated Group becomes entitled to any tax savings, refund,\ncredit or other offset attributable to such deduction. To the extent any such\ndeductions are disallowed because a tax authority determines that Viacom should\nhave claimed such deductions, Viacom shall pay to Blockbuster an amount equal to\nthe actual benefit received by Viacom as a result of the disallowance to the\nextent Blockbuster has paid Viacom pursuant to the preceding sentence. For\npurposes of the preceding sentence, such benefit shall be considered equal to\nthe excess of the amount of tax that would have been payable to a tax authority\n(or of the refund that would have been receivable) by Viacom.\n\n                                       20\n\n \n          13.  Confidentiality.\n               --------------- \n\n          Each of Viacom and Blockbuster agrees that any information furnished\npursuant to the Agreement is confidential and, except as and to the extent\nrequired by law or otherwise during the course of an audit or litigation or\nother administrative or legal proceeding, shall not be disclosed to other\npersons.  In addition, each of Viacom and Blockbuster shall cause its employees,\nagents and advisors to comply with the terms of this Section 13.\n\n          14.  Successors and Access to Information.\n               ------------------------------------ \n\n          The Agreement shall be binding upon and inure to the benefit of any\nsuccessor to any of the parties, by merger, acquisition of assets or otherwise,\nto the same extent as if the successor had been an original party to the\nAgreement.  If for any taxable year the Blockbuster Consolidated Group is no\nlonger included in the Viacom Consolidated Group, Viacom and Blockbuster agree\nto provide to the other party any information reasonably required to complete\ntax returns for taxable periods beginning after the Blockbuster Consolidated\nGroup is no longer included in a Viacom Consolidated Return, and each of Viacom\nand Blockbuster will cooperate with respect to any audits or litigation relating\nto any Viacom Consolidated Return.\n\n          15.  Governing Law.\n               ------------- \n\n          The Agreement shall be governed by and construed in accordance with\nthe laws of New York excluding (to the greatest extent permissible by law) any\nrule of law that would cause the application of the laws of any jurisdiction\nother than the State of New York.\n\n          16.  Headings.\n               -------- \n\n                                       21\n\n \n          The headings in the Agreement are for convenience only and shall not\nbe deemed for any purpose to constitute a part or to affect the interpretation\nof the Agreement.\n\n          17.  Counterparts.\n               ------------ \n\n          The Agreement may be executed simultaneously in two or more\ncounterparts, each of which will be deemed an original, and it shall not be\nnecessary in making proof of the Agreement to produce or account for more than\none counterpart.\n\n          18.  Severability.\n               ------------ \n\n          If any provision of the Agreement is held to be unenforceable for any\nreason, it shall be adjusted rather than voided, if possible, in order to\nachieve the intent of the parties to the maximum extent practicable.  In any\nevent, all other provisions of the Agreement shall be deemed valid, binding, and\nenforceable to their full extent.\n\n          19.  Termination.\n               ----------- \n\n          The Agreement shall remain in force and be binding so long as the\napplicable period of assessments (including extensions) remains unexpired for\nany taxes contemplated by the Agreement; provided, however, that neither Viacom\n                                         --------  -------                     \nnor Blockbuster shall have any liability to the other party with respect to tax\nliabilities for taxable years in which the Blockbuster Consolidated Group is not\nincluded in the Viacom Consolidated Returns except as provided in Sections 4,\n11, and 12 of  this Agreement.\n\n          20.  Successor Provisions.\n               -------------------- \n          Any reference herein to any provisions of the Code or Treasury\nRegulations shall be deemed to include any amendments or successor provisions\n\n                                       22\n\n \nthereto as appropriate.\n\n          21.  Compliance by Subsidiaries.\n               -------------------------- \n\n          Viacom and Blockbuster each agree to cause all members of the Viacom\nConsolidated Group and Blockbuster Consolidated Group (including predecessors\nand successors to such members) to comply with the terms of the Agreement.\n\n          IN WITNESS WHEREOF, each of the parties of the Agreement has caused\nthe Agreement to be executed by its duly authorized officer on this date of\nAugust 16, 1999.\n                              Viacom Inc.\n\n\n                              By: \/s\/ Michael D. Fricklas \n                                 -----------------------------\n                                  Name:   Michael D. Fricklas\n                                  Title:  Sr. Vice President,\n                                          General Counsel and\n                                          Secretary\n\n                              Blockbuster Inc.\n\n                              By: \/s\/ Edward B. Stead\n                                 -----------------------------\n                                 Name:   Edward B. Stead\n                                 Title:  Executive Vice President\n                                         General Counsel and\n                                         Secretary\n\n                                       23\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6911,9252],"corporate_contracts_industries":[9469,9465],"corporate_contracts_types":[9622,9628],"class_list":["post-43750","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-blockbuster-inc","corporate_contracts_companies-viacom-inc","corporate_contracts_industries-media__rental","corporate_contracts_industries-media__broadcasting","corporate_contracts_types-planning","corporate_contracts_types-planning__separation"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43750","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43750"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43750"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43750"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43750"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}