Sample Business Contracts


Release and Indemnification Agreement - Viacom Inc. and Blockbuster Inc.


                     RELEASE AND INDEMNIFICATION AGREEMENT



                          DATED AS OF AUGUST 16, 1999



                                 BY AND BETWEEN



                                  VIACOM INC.



                                      AND



                                BLOCKBUSTER INC.



<PAGE>

                               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 Tax 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.  Consolidation, Merger and Sale of Assets............9
Section 4.05.  Severability.......................................10
Section 4.06.  Entire Agreement...................................10
Section 4.07.  Notices............................................10
Section 4.08.  Governing Law......................................11
Section 4.09.  Counterparts.......................................12



<PAGE>

                     RELEASE AND INDEMNIFICATION AGREEMENT
                     -------------------------------------

          RELEASE AND INDEMNIFICATION AGREEMENT (this "Agreement") dated as of
                                                       ---------
August 16, 1999 by and between VIACOM INC., a Delaware corporation ("Viacom")
                                                                     ------
and BLOCKBUSTER INC., a Delaware corporation and an indirect, wholly owned
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, since the Merger, Viacom has owned and operated the acquired
businesses and operations of BEC and other related businesses and operations and
has made significant improvements and contributions thereto and has 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, prior to such split-off, Blockbuster proposes to issue shares
of its common stock in an initial public offering registered under the
Securities Act of 1933, as amended;

          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,
-------
<PAGE>

Affiliates of Blockbuster or Viacom shall only include Persons who would be
affiliates of Blockbuster or Viacom, respectively, assuming that the Split-Off
had occurred immediately prior to the determination as to whether such Person
was an affiliate of Blockbuster or Viacom, respectively.

          "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 Initial Public Offering and Split-
           ---------------------------
Off Agreement date as of the dated 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.

                                       2
<PAGE>

          "Intercompany Agreements" means this Agreement, the IPO and Split-Off
           -----------------------
Agreement and the Transition Services Agreement, the Registration Rights
Agreement and the Tax Matters Agreement, each dated the date hereof by and
between the parties.

          "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 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, a Subsidiary of
             --------  -------
Viacom shall only include Persons who would be a Subsidiary of Viacom assuming
the Split-Off has occurred immediately prior to the determination as to whether
such Person was a Subsidiary of Viacom.

          "Transfer Costs" means any payments, costs or expenses paid to a third
           --------------
party associated with the Asset Transfers.

                                       3
<PAGE>

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

          "Viacom Business" has the meaning ascribed thereto in Section 2.02.
           ---------------

          "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
     any at time a Subsidiary or Affiliate of BEC, (B) Viacom or any Person that
     was any at 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.

                                       4
<PAGE>

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 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 Tax Matters. Notwithstanding anything to the
                         -------------------
contrary herein, the rights and obligations of the parties with respect to
indemnification for the tax matters that are the subject matter of the Tax
Matters Agreement dated as of the date hereof between the parties thereto shall
be governed solely by such agreement.

          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

                                       5
<PAGE>

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 (i) any Blockbuster Registration Statement filed at or prior to
the date of the Split-Off, including, without limitation, the IPO Registration
Statement and (ii) any Split-Off Registration Statement or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except that
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 relating to Viacom 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, (i) any Blockbuster Registration Statement filed at or prior to
the date of the Split-Off, including, without limitation, the IPO Registration
Statement, (ii) and any Split-Off Registration Statement, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only with
reference to Losses arising out of or relating to any untrue statement or
omission or alleged untrue statement or omission based on information relating
to Viacom 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 Blockbuster and shall survive the 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

                                       6
<PAGE>

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.  (a) The
                         ---------------------------------------
amount which any Indemnifying Party is required to pay to any Indemnified Party
pursuant to this Agreement shall be reduced (including, but not limited to,
retroactively) by any recovery, judgment, settlement or other amounts actually
recovered, including insurance proceeds, by such

                                       7
<PAGE>

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.

          (b) All amounts which any Indemnifying Party is required to pay to any
Indemnified Party pursuant to this Agreement shall be calculated on an after-tax
basis, taking into account the net present value of any tax cost and/or tax
benefit to the Indemnified Party in connection with such indemnification payment
and the applicable 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 past actions or
failures to take action, 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
the date hereof.

          (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 past actions or failures to take
action, 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,

                                       8
<PAGE>

obligation or responsibility for any willful or intentional misconduct in the
operation or conduct of the Blockbuster Business or the Viacom Business prior to
the date hereof.

          (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 necessary to (i)
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, and (ii) minimize any obligation
Viacom or any of its Subsidiaries (other than Blockbuster and its Subsidiaries)
may have under any standby, letter of credit, guarantee or otherwise.

          (b) Viacom agrees, and Viacom will cause its Subsidiaries, to do all
things necessary to (i) 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, and (ii) minimize any obligation Blockbuster or any
of its Subsidiaries may have under any standby, letter of credit, guarantee or
otherwise.

          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. Except as set forth in Section 4.04 hereof,
this Agreement may not be assigned by either party without the express written
consent of the other party (which consent shall not be unreasonably withheld).

          Section 4.04.  Consolidation, Merger and Sale of Assets.  Until seven
                         ----------------------------------------
(7) years after the date hereof, in the event that Blockbuster consolidates,
merges, sells assets or engages in any other similar transaction and Blockbuster
is required, pursuant to an anti-consolidation, merger and/or sale of assets
covenant or other similar covenant contained in the then existing credit
agreement of Blockbuster, as it may be amended, restated, supplemented,
refinanced, extended or otherwise modified from time to time, to obtain the
consent of the banks who are parties thereto and, in obtaining such consent,
such banks receive a guarantee, security interest or protective covenant,
Blockbuster shall give the same guarantee, security interest or protective


                                       9
<PAGE>

covenant pari passu (if applicable) to Viacom; provided that if (x) there is no
         ---- -----
anti-consolidation, merger and/or sale of assets covenant or other similar
covenant contained in such credit agreement at such time or (y) there is no such
credit agreement existing at such time, the anti-consolidation, merger and/or
sale of assets covenant or other similar covenant contained in the latest credit
agreement that contained such covenants will be incorporated by reference herein
and, if consent is required under such covenant, Blockbuster must obtain
Viacom's written consent prior to any consolidation, merger, sale of assets or
similar transaction, provided, that Viacom's consent shall not be required if
                     --------
the surviving corporation of the consolidation or merger or the acquiror of
assets agrees to assume all of the obligations of Blockbuster hereunder (without
release of any assignor); provided, however, that this Section 4.04 does not
                          --------  -------
apply if the Split-Off (or other transaction whereby Blockbuster ceases to be a
Subsidiary of Viacom) has not been consummated.

          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 then the other Intercompany
                         ----------------
Agreements, this Agreement constitutes the entire agreement of the parties
hereto with respect to the subject matter hereof and thereof and supersede all
prior agreements 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 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

                                       10
<PAGE>

               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 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

                                       11
<PAGE>

          (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.

                                       12
<PAGE>

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

                              BLOCKBUSTER INC.


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


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