1
Filed Pursuant to Rule 424(b)(5)
Registration Nos. 333-62052,
333-62052-01
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JUNE 22, 2001)
$325,000,000
[VIACOM LOGO]
7.25% SENIOR NOTES DUE 2051
UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF
PRINCIPAL AND INTEREST BY
VIACOM INTERNATIONAL INC.
(A WHOLLY OWNED SUBSIDIARY OF VIACOM INC.)
----------------------
This is an offering of $325,000,000 of 7.25% senior notes due 2051 to be
issued by Viacom and guaranteed by Viacom International. The senior notes will
be unsecured senior obligations of Viacom. The guarantees will be unsecured
senior obligations of Viacom International. The senior notes will mature on June
30, 2051. Viacom will pay interest on the senior notes on March 30, June 30,
September 30 and December 30 of each year. The first payment will be on
September 30, 2001. The senior notes will be redeemable at the option of Viacom,
in whole or in part, at any time on or after June 30, 2006 at a redemption price
equal to 100% of the principal amount redeemed plus accrued and unpaid interest
to the redemption date. The senior notes will be issued in minimum denominations
of $25 and in multiples of $25.
Viacom intends to list the senior notes on The New York Stock Exchange
and expects trading in the senior notes on The New York Stock Exchange to begin
within 30 days after the original issue date. The senior notes are expected to
trade "flat." This means that purchasers will not pay and sellers will not
receive any accrued and unpaid interest on the senior notes that is not included
in the trading price.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
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PER SENIOR NOTE
DUE 2051 TOTAL
--------------- -------------
Public offering price...................................... 100.00% $325,000,000
Underwriting discount...................................... 3.15% $ 10,237,500
Proceeds to Viacom (before expenses)....................... 96.85% $314,762,500
The public offering price set forth above does not include accrued
interest, if any. Interest on the senior notes will accrue from June 29, 2001,
and must be paid by the purchaser if the senior notes are delivered after June
29, 2001.
The underwriters may also purchase up to an additional $48,750,000
aggregate principal amount of senior notes from Viacom at the initial public
offering price, less the underwriting discount, within 30 days from the date of
this prospectus supplement to cover over-allotments.
The senior notes will be ready for delivery in book-entry form only
through the facilities of The Depository Trust Company, on or about June 29,
2001.
----------------------
JOINT BOOK-RUNNING MANAGERS
MERRILL LYNCH & CO. SALOMON SMITH BARNEY
----------------------
A.G. EDWARDS & SONS, INC.
PRUDENTIAL SECURITIES
UBS WARBURG
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BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANC ALEX. BROWN
JPMORGAN
June 22, 2001
2
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. NEITHER
WE, VIACOM INTERNATIONAL, NOR THE UNDERWRITERS HAVE AUTHORIZED ANYONE TO PROVIDE
YOU WITH DIFFERENT OR ADDITIONAL INFORMATION. IF ANYONE PROVIDES YOU WITH
DIFFERENT OR ADDITIONAL INFORMATION, YOU SHOULD NOT RELY ON IT. YOU SHOULD
ASSUME THAT THE INFORMATION APPEARING IN OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IS ACCURATE AS OF THEIR
RESPECTIVE DATES. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND
PROSPECTS MAY HAVE CHANGED SINCE THEN. NEITHER WE, VIACOM INTERNATIONAL, NOR THE
UNDERWRITERS ARE MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE
OFFER IS NOT PERMITTED.
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TABLE OF CONTENTS
PAGE
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PROSPECTUS SUPPLEMENT
Cautionary Statement Concerning Forward-Looking
Statements................................................ S-1
The Company................................................. S-3
The Guarantor............................................... S-3
Recent Developments......................................... S-3
Use of Proceeds............................................. S-3
Capitalization.............................................. S-4
Summary Historical Financial Data........................... S-5
Summary Unaudited Pro Forma Combined Financial
Information............................................... S-6
Description of the Senior Notes............................. S-7
Certain United States Tax Considerations.................... S-11
Underwriting................................................ S-15
Where You Can Find More Information......................... S-17
Legal Matters............................................... S-18
Experts..................................................... S-18
PROSPECTUS
About this Prospectus....................................... i
Where You Can Find More Information......................... 1
Cautionary Statement Regarding Forward-Looking Statements... 1
The Company................................................. 4
The Guarantor............................................... 4
Use of Proceeds............................................. 5
Ratio of Earnings to Fixed Charges.......................... 5
General Description of the Debt Securities.................. 6
Description of the 2001 Debt Securities..................... 11
Description of the 1995 Senior Debt Securities.............. 19
Description of Preferred Stock.............................. 26
Description of Common Stock................................. 30
Description of Warrants..................................... 32
Plan of Distribution........................................ 34
Legal Matters............................................... 34
Experts..................................................... 34
In this prospectus supplement we use the term "Viacom" to refer to Viacom
Inc. The terms "we," "us," and "our" refer to Viacom. The term "Viacom
International" means Viacom International Inc. References to "$" and "dollars"
are to United States dollars.
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It is expected that delivery of the senior notes will be made against
payment therefor on or about the date specified in the last paragraph on the
cover page of this prospectus supplement, which will be the fifth business day
following the date of this prospectus supplement. Under Rule 15c6-1 of the
Securities Exchange Act of 1934, as amended, trades in the secondary market
generally are required to settle in three business days, unless the parties to
any such trade expressly agree otherwise. Accordingly, purchasers who wish to
trade senior notes on the date of this prospectus supplement or the next four
succeeding business days will be required, by virtue of the fact that the senior
notes initially will settle in five business days, to specify alternative
settlement arrangements at the time of such trade to prevent failed settlement.
Purchasers of senior notes who wish to trade senior notes on the date of this
prospectus supplement or the next four succeeding business days should consult
their own advisors.
Unless otherwise indicated, all information in this prospectus supplement
assumes that the underwriters will not exercise their over-allotment option.
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This prospectus supplement and the documents incorporated by reference into
this prospectus supplement contain both historical and forward-looking
statements. All statements other than statements of historical fact are, or may
be deemed to be, forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements are not based on historical facts, but rather reflect
our current expectations concerning future results and events. These
forward-looking statements generally can be identified by the use of statements
that include phrases such as "believe," "expect," "anticipate," "intend,"
"plan," "foresee," "likely," "will" or other similar words or phrases.
Similarly, statements that describe our objectives, plans or goals are or may be
forward-looking statements. These forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause our actual
results, performance or achievements to be different from any future results,
performance and achievements expressed or implied by these statements. You
should review carefully all information, including the financial statements and
the notes to the financial statements, included or incorporated by reference
into this prospectus supplement.
The following important factors, among others, could affect our future
results, causing these results to differ materially from those expressed in our
forward-looking statements:
- We derive substantial revenues from the sale of advertising time on our
over-the-air networks, basic cable networks, television stations, radio
stations and outdoor businesses. The advertising market has recently
experienced softness. The sale of advertising time is affected by viewer
demographics, viewer ratings and market conditions for advertising time.
Adverse changes to any of these factors could have a negative effect on
revenues.
- Operating results derived from our motion picture and television
production fluctuate depending primarily upon cost of such productions
and acceptance of such productions by the public, which are difficult to
predict. Motion picture and television production has experienced cycles
in which increased costs of talent and other factors have resulted in
higher production costs. In addition, the commercial success of our
motion picture and television productions also depends upon the quality
and acceptance of other competing productions, and the availability of
alternative forms of entertainment and leisure time activities.
- Our operating results also fluctuate due to the timing and availability
of theatrical and home video releases, as well as a result of the
recording of license fees for television exhibition of motion pictures
and for syndication and basic cable exhibition of television programming
in the period that the products are available for such exhibition.
- Our basic cable network and premium subscription television networks are
dependent on affiliation agreements with cable and direct broadcast
satellite distributors on acceptable terms. The loss of carriage on such
distributors, or continued carriage on less favorable terms, could
adversely affect, with respect to basic cable networks, revenues from
subscribers fees and the ability to sell advertising time, and with
respect to premium subscription television networks, subscribers fee
revenues.
- Some of our businesses are seasonal. More specifically, the home video
business and consumer publishing business are subject to increased
periods of demand coinciding with summer and winter holidays, while a
substantial majority of the theme parks operating income is generated
from May through September. In addition, the home video and theme parks
businesses' revenues are influenced by weather.
- Changes in FCC laws and regulations could, directly or indirectly,
adversely affect the operations and ownership of our properties.
- We have contingent liabilities related to discontinued operations,
including environmental liabilities and pending litigation. While there
can be no assurance in this regard, the pending or potential litigation,
environmental and other liabilities should not have a material adverse
effect on us.
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- We may be adversely affected by changes in technology and its effect on
competition in our markets.
- Labor agreements covering the services of actors whom we utilize in our
motion picture and television businesses are currently scheduled to
expire during 2001. Work stoppages and/or higher costs in connection with
these agreements could adversely impact our ability to produce or acquire
new programming.
- Other economic, business, competitive and/or regulatory factors affecting
our businesses generally.
These factors and the risk factors incorporated by reference are not
necessarily all of the important factors that could cause actual results to
differ materially from those expressed in any of our forward-looking statements.
Other unknown or unpredictable factors also could have material adverse effects
on our future results. The forward-looking statements included in this
prospectus supplement are made only as of the date of this prospectus supplement
and under Section 27A of the Securities Act and Section 21E of the Exchange Act
and we do not have any obligation to publicly update any forward-looking
statements to reflect subsequent events or circumstances. We cannot assure you
that projected results or events will be achieved.
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THE COMPANY
We, together with our subsidiaries, are a diversified worldwide
entertainment company with operations in six segments: Cable Networks,
Television, Infinity, Entertainment, Video and Publishing. The Cable Networks
segment operates MTV: MUSIC TELEVISION(R), SHOWTIME(R), NICKELODEON(R), NICK AT
NITE(R), VH1 MUSIC FIRST(R), TV LAND(R), TNN: THE NATIONAL NETWORK(TM), CMT:
COUNTRY MUSIC TELEVISION(TM) and BET: BLACK ENTERTAINMENT TELEVISION(R), among
other program services. The Television segment consists of CBS(R) and UPN(R)
television networks, 39 owned broadcast television stations and Viacom's
television production and syndication business, including KING WORLD
PRODUCTIONS(TM) and PARAMOUNT TELEVISION(TM). The Infinity segment operates
approximately 184 radio stations through INFINITY BROADCASTING(R) and outdoor
advertising properties through INFINITY OUTDOOR(TM) and TDI(R). The
Entertainment segment includes PARAMOUNT PICTURES(R), which produces and
distributes theatrical motion pictures; PARAMOUNT PARKS(R), which owns and
operates five theme parks and a themed attraction in the United States and
Canada; and movie theater and music publishing operations. The Video segment
consists of an approximately 82% equity interest in Blockbuster Inc., which
operates and franchises BLOCKBUSTER(R) video stores worldwide. The remainder of
Blockbuster's common stock was sold to the public in August 1999. The Publishing
segment publishes and distributes consumer books and related multimedia
products, under such imprints as SIMON & SCHUSTER(R), POCKET BOOKS(TM),
SCRIBNER(R) and THE FREE PRESS(TM). We were organized under the laws of the
State of Delaware in 1986. Viacom's principal offices are located at 1515
Broadway, New York, New York 10036 and our telephone number is (212) 258-6000.
THE GUARANTOR
Viacom International, the guarantor of the senior notes, was organized
under the laws of the State of Delaware in 1995 and has its corporate
headquarters at 1515 Broadway, New York, New York 10036. Viacom International
has 100 shares of common stock outstanding, all of which are held by Viacom. The
operating assets of Viacom International and its subsidiaries include MTV: MUSIC
TELEVISION(R), SHOWTIME(R), NICKELODEON(R), NICK AT NITE(R), VH1 MUSIC FIRST(R),
TV LAND(R), approximately 18 broadcast television stations, all interests in the
businesses of the Video, Entertainment and Publishing segments and certain
related Internet sites.
RECENT DEVELOPMENTS
As a result of Viacom's merger with CBS Corporation on May 4, 2000, Viacom
acquired an approximate 64.2% equity interest in Infinity Broadcasting
Corporation. On February 21, 2001, Infinity merged with and into a wholly owned
subsidiary of Viacom. In connection with the Viacom/Infinity merger, Viacom
issued 0.592 of a share of its Class B common stock for each issued and
outstanding share of Infinity Class A common stock resulting in the issuance of
approximately 232 million shares of Viacom Class B common stock.
On November 3, 2000, Viacom announced an agreement to acquire BET Holdings
II, Inc., which operates the BET: BLACK ENTERTAINMENT TELEVISION(R) cable
networks. On January 23, 2001, we completed our acquisition of BET for a total
purchase price of approximately $3.0 billion, which principally represents the
issuance of approximately 43.4 million shares of Viacom Class B common stock and
the assumption by Viacom of approximately $590 million in debt.
USE OF PROCEEDS
We expect to use the net proceeds from the offering to repay commercial
paper indebtedness with an average yield of approximately 4.32% and an average
maturity of approximately 29 days. Our net proceeds from this offering of senior
notes are estimated to be approximately $314,262,500 after deducting the
underwriting discount and estimated offering expenses that we will have paid.
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CAPITALIZATION
The following table sets forth our capitalization as of March 31, 2001:
- on a historical basis, as reported by Viacom and
- on a pro forma basis to reflect the issuance and sale of the 6.40%
senior notes due 2006 and the 6.625% senior notes due 2011 on May 17,
2001, and the issuance and sale of the senior notes in this offering
and the application of the net proceeds from the sales of the senior
notes to the repayment of outstanding commercial paper indebtedness.
AT MARCH 31, 2001(1)
(UNAUDITED)
-------------------------
HISTORICAL PRO FORMA
----------- ----------
(IN MILLIONS, EXCEPT PER
SHARE AMOUNTS)
LONG-TERM DEBT:
Continuing operations:
Notes payable to banks (including commercial paper)....... $ 4,532 $ 2,824
Senior notes and debentures (6.75%-10.50%, due
2002-2030)............................................. 6,953 6,953
Senior subordinated notes (8.875%-10.25%, due
2001-2007)............................................. 564 564
Subordinated exchange debentures (11.375%, due 2009)...... 39 39
Other..................................................... 42 42
Obligations under capital leases.......................... 508 508
6.40% senior notes due 2006............................... 399 805
6.625% senior notes due 2011.............................. -- 993
7.25% senior notes due 2051............................... -- 325
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Total debt............................................. 13,037 13,053
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STOCKHOLDERS' EQUITY:
Class A common stock, par value $.01 per share; 500 shares
authorized; 139 shares issued(1).......................... 1 1
Class B common stock, par value $.01 per share; 3,000 shares
authorized; 1,689 shares issued(1)........................ 17 17
Additional paid-in capital.................................. 64,726 64,726
Retained earnings........................................... 1,425 1,425
Accumulated other comprehensive loss........................ (201) (201)
Less: Treasury stock........................................ (2,510) (2,510)
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Total stockholders' equity............................. 63,458 63,458
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Total capitalization................................... $76,495 $76,511
======= =======
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(1) Except as set forth above and except as otherwise disclosed in any documents
incorporated herein by reference, there has been no material change in the
total capitalization of Viacom since March 31, 2001.
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SUMMARY HISTORICAL FINANCIAL DATA
The summary consolidated financial data presented below have been derived
from, and should be read together with, our audited consolidated financial
statements and the accompanying notes included in our annual report on Form 10-K
for the year ended December 31, 2000 and the unaudited interim consolidated
financial statements and the accompanying notes included in our quarterly report
on Form 10-Q for the quarter ended March 31, 2001, both of which are
incorporated by reference into this prospectus supplement and the attached
prospectus.
THREE MONTHS
ENDED MARCH 31,
(UNAUDITED) YEAR ENDED DECEMBER 31,
---------------- ----------------------------------------------
2001(a) 2000 2000(a) 1999 1998 1997 1996
------- ------ ------- ------- ------- ------- ------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS DATA:
Revenues..................................... $5,752 $3,026 $20,044 $12,859 $12,096 $10,685 $9,684
Depreciation................................. 214 135 800 497 442 447 331
Amortization of intangibles.................. 531 95 1,424 348 336 325 323
Operating income............................. 404 240 1,321 1,247 752 685 1,197
Earnings (loss) from continuing operations... (7) 68 (364) 372 (44) 374 152
Net earnings (loss).......................... (7) (384) (816) 334 (122) 794 1,248
Net earnings (loss) attributable to common
stock...................................... (7) (384) (816) 322 (150) 734 1,188
Earnings (loss) per common share:
Basic:
Earnings (loss) from continuing
operations............................... $ -- $ 0.10 $ (0.30) $ 0.52 $ (0.10) $ 0.44 $ 0.13
Net earnings (loss)........................ $ -- $(0.55) $ (0.67) $ 0.46 $ (0.21) $ 1.04 $ 1.63
Diluted:
Earnings (loss) from continuing
operations............................... $ -- $ 0.10 $ (0.30) $ 0.51 $ (0.10) $ 0.44 $ 0.13
Net earnings (loss)........................ $ -- $(0.54) $ (0.67) $ 0.45 $ (0.21) $ 1.04 $ 1.62
Weighted average shares outstanding:
Basic...................................... 1,628 695 1,225 695 709 706 728
Diluted.................................... 1,628 711 1,225 710 709 709 735
OTHER DATA:
EBITDA (b)................................... $1,149 $ 470 $ 3,544 $ 2,092 $ 1,530 $ 1,457 $1,851
AT DECEMBER 31,
AT MARCH 31, 2001 -----------------------------------------------
(UNAUDITED)(a) 2000(a) 1999 1998 1997 1996
----------------- ------- ------- ------- ------- -------
(IN MILLIONS)
BALANCE SHEET DATA:
Cash and cash equivalents.................. $ 948 $ 935 $ 681 $ 767 $ 292 $ 209
Intangibles, net........................... 71,867 62,004 11,479 11,557 14,700 14,894
Total assets............................... 92,550 82,646 24,486 23,613 28,289 28,834
Long-term debt, net of current portion..... 12,887 12,474 5,698 3,813 7,423 9,856
Stockholders' equity....................... 63,458 47,967 11,132 12,050 13,384 12,587
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(a) Includes financial information for CBS Corporation from May 4, 2000, the
date of its merger with and into Viacom. Accordingly, operating results and
financial position are not necessarily comparable on a year-to-year basis.
(b) We define EBITDA as operating income before depreciation and amortization,
principally of goodwill related to business combinations. We believe that
EBITDA is an appropriate measure for evaluating our operating performance.
However, EBITDA should be considered in addition to, not as a substitute for
or superior to, operating income, net earnings, cash flows and other
measures of financial performance prepared in accordance with generally
accepted accounting principles. As EBITDA is not a measure of performance
calculated in accordance with generally accepted accounting principles, this
measure may not be comparable to similarly titled measures employed by other
companies.
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SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following summary unaudited pro forma combined financial information is
based upon the historical financial statements of Viacom, adjusted for the
Viacom/CBS merger, BET acquisition, Viacom/Infinity merger and certain other
transactions. The unaudited pro forma combined condensed statement of operations
data for the three months ended March 31, 2001 and the year ended December 31,
2001 is presented as if the above transactions had occurred on January 1, 2000.
The summary unaudited pro forma combined condensed financial data is for
illustrative purposes only and does not necessarily indicate the operating
results that would have been achieved had the Viacom/ CBS merger, BET
acquisition, Viacom/Infinity merger and certain other transactions been
completed as of the dates indicated or of the results that may be obtained in
the future. In addition, the data does not reflect synergies that might be
achieved from combining these operations.
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
2001 2000
--------------------- ---------------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS DATA:
Revenues.................................................... $5,768 $23,620
Operating income............................................ 378 1,908
Earnings from continuing operations......................... 121 971
Loss from continuing operations............................. (30) (189)
Basic and diluted earning (loss) from continuing operations
per share................................................. (0.02) (0.11)
Basic and diluted weighted average shares outstanding....... 1,770 1,774
OTHER DATA:
EBITDA(a)................................................... $1,154 $ 5,047
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(a) We define EBITDA as operating income before depreciation and amortization,
principally of goodwill related to business combinations. We believe that
EBITDA is an appropriate measure for evaluating our operating performance.
However, EBITDA should be considered in addition to, not as a substitute
for, or superior to, operating income, net earnings, cash flow and other
measures of financial performance prepared in accordance with generally
accepted accounting principles. As EBITDA is not a measure of performance
calculated in accordance with generally accepted accounting principles, this
measure may not be comparable to similarly titled measures employed by other
companies.
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DESCRIPTION OF THE SENIOR NOTES
GENERAL
We provide information to you about the senior notes in two separate
documents:
- the accompanying prospectus and
- this prospectus supplement.
The following statements about the senior notes are summaries and are
subject to, and qualified in their entirety by reference to, the prospectus and
the "2001 senior indenture" referred to in the prospectus. See "General
Description of the Debt Securities" and "Description of the 2001 Debt
Securities" in the prospectus for additional information concerning the senior
notes and the 2001 senior indenture. The following statements, therefore, do not
contain all the information that may be important to you. Not all the defined
terms used in this prospectus supplement are defined herein, and you should
refer to the accompanying prospectus or the 2001 senior indenture for the
definitions of such terms. The provisions of the 2001 senior indenture set forth
the terms of the senior notes in greater detail than this prospectus supplement
or the prospectus. If the statements herein differ from the provisions of the
2001 senior indenture, the provisions of the 2001 senior indenture control.
The senior notes:
- will be unsecured obligations of Viacom;
- will rank equally with all other unsecured and unsubordinated
indebtedness of Viacom from time to time outstanding;
- will be fully and unconditionally guaranteed by Viacom International,
which guarantee will rank equally with all other unsecured and
unsubordinated indebtedness of Viacom International;
- will initially be limited in aggregate principal amount to $325,000,000
(and up to $373,750,000 if the over-allotment option is exercised by the
underwriters), which aggregate principal amount may, without the consent
of holders, be increased in the future on the same terms as to status,
redemption, CUSIP number or otherwise as the senior notes being offered
hereby;
- will mature on June 30, 2051, which maturity may be shortened at our
option upon the occurrence of a specified tax event, as described below
under the heading " -- Redemption for Tax Reasons";
- will be issued in minimum denominations of $25 and in multiples of $25;
- will be redeemable at our option, in whole or in part, at any time on or
after June 30, 2006 at a redemption price equal to 100% of the principal
amount redeemed plus accrued and unpaid interest to the redemption date;
- will be redeemable at our option in whole, prior to June 30, 2006, upon
the occurrence of a specified tax event, as described below under the
heading "-- Redemption for Tax Reasons;" and
- are expected to be listed on The New York Stock Exchange.
QUARTERLY PAYMENTS
Interest on the senior notes will accrue from the date of original issuance
at a rate of 7.25% per annum and will be payable quarterly in arrears on March
30, June 30, September 30, and December 30, of each year, commencing September
30, 2001 (each an "Interest Payment Date"). On an Interest Payment Date interest
will be paid to the persons in whose names the senior notes were registered as
of the record date. With respect to any Interest Payment Date, the record date
will be the fifteenth day of the month of such Interest Payment Date, except as
otherwise provided in the 2001 senior indenture.
The amount of interest payable for any period will be computed on the basis
of twelve 30-day months and a 360-day year and, for any period shorter than a
full quarterly interest period, will be computed on
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the basis of the actual number of days elapsed in such 90-day quarterly interest
period. If any Interest Payment Date falls on a Saturday, Sunday, legal holiday
or day on which banking institutions in The City of New York are authorized by
law to close, then payment of interest may be made on the next succeeding
business day and no interest will accrue because of such delayed payment.
REDEMPTION AND REPAYMENT
The senior notes will be redeemable at our option, in whole or in part, at
any time on or after June 30, 2006 through maturity at June 30, 2051, upon not
less than 30 nor more than 60 days' notice, at a redemption price equal to 100%
of the principal amount redeemed plus accrued and unpaid interest to the
redemption date. Additionally, we may at any time repurchase senior notes at any
price in the open market and may hold, resell or surrender such senior notes to
the Trustee for cancellation. You will not have the right to require us to repay
senior notes prior to maturity. The senior notes are not subject to any sinking
fund.
REDEMPTION FOR TAX REASONS
Upon the occurrence of a tax event (as described below), we will have the
right:
- to redeem the senior notes in whole (but not in part) prior to June 30,
2006, at a redemption price equal to 100% of the principal amount to be
redeemed plus accrued and unpaid interest to the redemption date; or
- to shorten the maturity of the senior notes at any time to the extent
required so that interest paid on the senior notes will be deductible for
United States federal income tax purposes.
A tax event will occur if we receive an opinion of nationally recognized
independent tax counsel experienced in such matters to the effect that, as a
result of any:
- amendment to, or change (including any announced proposed change) in the
laws or any regulations under the laws of the United States or any
political subdivision or taxing authority thereof;
- official administrative pronouncement or judicial decision interpreting
or applying the laws or regulations stated above whether or not the
pronouncement or decision is issued to or in connection with a proceeding
involving Viacom or Viacom International; or
- any amendment to, clarification of, or change in any official position
with respect to, or any interpretation of, an administrative or judicial
action or law or regulation of the United States that differs from the
theretofore generally accepted position or interpretations;
in each case which amendment or change is effective or which proposed change,
pronouncement, action or decision is announced on or after the date of issuance
of the senior notes pursuant to a resolution of our board of directors, a
supplement to the 2001 senior indenture, or under an officer's certificate
pursuant to the 2001 senior indenture, there is more than an insignificant risk
that interest paid by Viacom or Viacom International on the senior notes is not,
or will not be, within 90 days of the date of the opinion of counsel,
deductible, in whole or in part, for United States federal income tax purposes.
FURTHER ISSUES
We may from time to time, without notice to or the consent of the holders
of the senior notes, create and issue further senior notes ranking equally and
ratably with the senior notes in all respects, or in all respects except for the
payment of interest accruing prior to the issue date or except for the first
payment of interest following the issue date of those further senior notes. Any
such further senior notes will be consolidated with and form a single series
with the senior notes currently being offered and will have the same terms as to
status, redemption, CUSIP number or otherwise as the senior notes. Any such
further senior notes will be issued pursuant to a resolution of our board of
directors, a supplement to the 2001 senior indenture, or under an officer's
certificate pursuant to the 2001 senior indenture.
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TRADING CHARACTERISTICS
We expect the senior notes to trade at a price that takes into account the
value, if any, of accrued and unpaid interest. This means that purchasers will
not pay, and sellers will not receive, accrued and unpaid interest on the senior
notes that is not included in their trading price. Any portion of the trading
price of a senior note that is attributable to accrued and unpaid interest will
be treated as ordinary interest income for United States federal income tax
purposes and will not be treated as part of the amount realized for purposes of
determining gain or loss on the disposition of the senior notes. See generally
"Certain United States Tax Considerations" in this prospectus supplement.
THE TRUSTEE AND TRANSFER AND PAYING AGENT
The Bank of New York, acting through its principal corporate trust office
at 101 Barclay Street, New York, New York, is the Trustee for the senior notes
and is the transfer and paying agent for the senior notes. Payment of principal
and interest will be payable, and the senior notes will be transferable, at the
office of the paying agent. We may, however, pay interest by check mailed to
registered holders of the senior notes. At the maturity of the senior notes, the
principal, together with accrued interest thereon, will be payable in
immediately available funds upon surrender of such senior notes at the office of
the Trustee.
BOOK-ENTRY ONLY
The senior notes will be issued in one or more fully registered global
securities (each a "Global Security") which will be deposited with, or on behalf
of, The Depository Trust Company, New York, New York (the "Depositary") and
registered in the name of Cede & Co., the Depositary's nominee. The Depositary
has advised us that it is a limited-purpose trust company organized under the
New York Banking Law, a "Banking Organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "Clearing
Corporation" within the meaning of the New York Uniform Commercial Code, and a
"Clearing Agency" registered pursuant to the provisions of section 17A of the
Securities Exchange Act of 1934, as amended. Except as set forth below or as we
may otherwise agree in our sole discretion, we will not issue senior notes in
certificated form. Beneficial interests in the global securities will be
represented through book-entry accounts of financial institutions acting on
behalf of beneficial owners as direct and indirect participants in the
Depositary (the "Depositary Participants"). Investors may elect to hold
interests in the global securities through the Depositary. Beneficial interests
in the global securities will be held in denominations of $25 and integral
multiples thereof. Except as set forth below, the global securities may be
transferred, in whole but not in part, only to another nominee of the Depositary
or to a successor of the Depositary or its nominee.
Upon the issuance of the Global Security, the Depositary will credit
Depositary Participants accounts on its book-entry registration and transfer
system with their respective principal amounts of the senior notes represented
by such Global Security. The underwriters designate which Depositary
Participants' accounts will be credited. The only persons who may own beneficial
interests in the Global Security will be the Depositary Participants or persons
that hold interests through such Depositary Participants. Ownership of
beneficial interests in such Global Security will be shown on, and the transfer
of that ownership will be effected only through, records maintained by the
Depositary or its nominee (with respect to interests of its participants) and on
the records of Depositary Participants (with respect to interests of persons
other than such Depositary Participants). The laws of some states may require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such limits and laws may impair your ability to transfer
your interest in the senior notes.
So long as the Depositary or its nominee is the registered owner of the
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the senior notes represented by such
Global Security for all purposes under the 2001 senior indenture. Except as
provided below or as we may otherwise agree in our sole discretion, owners of
beneficial interests in a Global Security will not be entitled to have senior
notes represented by such Global Security registered in
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their names, will not receive or be entitled to receive physical delivery of
senior notes in definitive form and will not be considered the owners or holders
thereof under the 2001 senior indenture.
Principal and interest payments on senior notes registered in the name of
the Depositary or its nominee will be made to the Depositary or its nominee, as
the case may be, as the registered owner of the Global Security representing
such senior notes. None of us, the Trustee, any paying agent or the registrar
for the senior notes will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial interests in
such Global Security for such senior notes or for maintaining, supervising or
reviewing any records relating to such beneficial interests.
We expect that the Depositary for the senior notes or its nominee, upon
receipt of any payment of principal or interest, will credit immediately
Depositary Participants accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Security
for such senior notes as shown on the records of the Depositary or its nominee.
We also expect that payments by such Depositary Participants to owners of
beneficial interests in such Global Security held through such participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "Street Name" (i.e., the name of a securities broker or dealer). Such
payments will be the responsibility of Depositary Participants.
If the Depositary is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by us within 90 days, we
will issue senior notes in definitive form in exchange for the entire Global
Security representing such senior notes. In addition, we may at any time, and in
our sole discretion, determine not to have the senior notes represented by the
Global Security and, in such event, will issue senior notes in definitive form
in exchange for the Global Security representing such senior notes. In any such
instance, an owner of a beneficial interest in the Global Security will be
entitled to physical delivery in definitive form of senior notes represented by
such Global Security equal in principal amount to such beneficial interest and
to have such senior notes registered in its name. Senior notes so issued in
definitive form will be issued as registered senior notes in denominations that
are integral multiples of $25.
EVENTS OF DEFAULT
See "Description of the 2001 Debt Securities -- Default and Remedies" in
the accompanying prospectus.
APPLICATION OF DEFEASANCE PROVISION
The accompanying prospectus contains a section entitled "Description of the
2001 Debt Securities -- Defeasance and Covenant Defeasance." That section
describes provisions for the full defeasance and covenant defeasance of
securities held under the 2001 senior indenture. Those provisions will apply to
the senior notes.
To effect full defeasance or covenant defeasance of a series of senior
securities, we would be required to deliver to the Trustee an opinion of counsel
to the effect that the deposit of money or U.S. government obligations in the
trust created when we elect full defeasance or covenant defeasance will not
cause the holders of the affected series of senior securities to recognize
income, gain or loss for federal income tax purposes.
GOVERNING LAW
The 2001 senior indenture and the senior notes will be governed by and
construed in accordance with the laws of the State of New York.
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CERTAIN UNITED STATES TAX CONSIDERATIONS
The following describes the material United States federal income tax
consequences of the ownership and disposition of senior notes to initial holders
of senior notes purchasing the senior notes at the public offering price to
investors set forth on the cover page of this prospectus supplement. This
description is based on the Internal Revenue Code of 1986, as amended to the
date hereof (the "Code" ), administrative pronouncements, judicial decisions and
existing and proposed Treasury Regulations, and interpretations of the
foregoing, changes to any of which subsequent to the date of this prospectus
supplement may affect the tax consequences described herein. These statements
address only the tax consequences to initial holders holding senior notes as
capital assets within the meaning of Section 1221 of the Code. They do not
discuss all of the tax consequences that may be relevant to holders in light of
their particular circumstances or to holders subject to special rules, such as
certain financial institutions, insurance companies, dealers in securities or
foreign currencies, United States Holders (as defined below) whose functional
currency (as defined in Code Section 985) is not the U.S. dollar, persons
holding senior notes in connection with a hedging transaction, "straddle",
conversion transaction or other integrated transaction, traders in securities
that elect to mark to market, holders liable for alternative minimum tax or
persons who have ceased to be United States citizens or to be taxed as resident
aliens. Persons considering the purchase of the senior notes should consult
their tax advisors concerning the application of United States federal income
tax laws, as well as the laws of any state, local or foreign taxing
jurisdictions, to their particular situations.
We believe that the senior notes are indebtedness for United States federal
income tax purposes and that an exercise of our right to shorten the maturity of
the senior notes as described above in "Description of the Senior
Notes -- Redemption for Tax Reasons" will not be a taxable event. Prospective
investors should be aware, however, that exercising our right to shorten the
maturity of the senior notes would be a taxable event if the senior notes were
treated as equity for United States federal income tax purposes before the
maturity is shortened (assuming that the senior notes are treated as
indebtedness for such purposes following the shortening of the maturity). The
following discussion assumes that the senior notes are indebtedness for United
States federal income tax purposes.
As used in this section, a "United States Holder" means a beneficial owner
of senior notes that is for United States federal income tax purposes a holder
that is a United States person. A "United States person" means:
- any individual who is a citizen or resident of the United States;
- a corporation, partnership or other entity created or organized in or
under the laws of the United States, any State thereof or the District of
Columbia (other than a partnership that is not treated as a United States
person under any applicable United States Treasury regulations);
- any estate the income of which is subject to United States federal income
taxation regardless of its source; or
- any trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of
the trust.
Notwithstanding the preceding sentence, to the extent provided in the Treasury
regulations, certain trusts in existence on August 20, 1996, and treated as
United States persons prior to such date that elect to continue to be treated as
United States persons, will also be United States persons.
As used in this section, the term "United States Alien Holder" means a
beneficial owner of senior notes that is, for United States federal income tax
purposes:
- a nonresident alien individual;
- a foreign corporation;
- a nonresident alien fiduciary of a foreign estate or trust; or
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- a foreign partnership one or more of the members of which is a
nonresident alien individual, a foreign corporation or a nonresident
alien fiduciary of a foreign estate or trust.
TAX CONSEQUENCES TO UNITED STATES HOLDERS
Payments of Interest
Interest on senior notes will generally be taxable to a United States
Holder as ordinary interest income at the time it accrues or is received in
accordance with the United States Holder's method of accounting for United
States federal income tax purposes.
Sale, Exchange or Retirement
Upon the sale, exchange or retirement of senior notes, a United States
Holder will recognize gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement of the senior notes and such
holder's tax basis in the senior notes. A United States Holder's tax basis in
the senior notes will generally equal the cost of the senior notes to such
holder. The amount realized excludes any amounts attributable to unpaid interest
accrued between interest payment dates and not previously included in income,
which will be taxable as ordinary income. Such gain or loss will be capital gain
or loss and will be long-term capital gain or loss if at the time of the sale,
exchange or retirement the senior notes have been held for more than one year.
Under current laws, the excess of the taxpayer's net long-term capital gains
over net short-term capital losses is taxed at a lower rate than ordinary income
for certain non-corporate taxpayers. The distinction between capital gain or
loss and ordinary income or loss is also relevant for purposes of, among other
things, the limitations on the deductibility of capital losses.
TAX CONSEQUENCES TO UNITED STATES ALIEN HOLDERS
Under present United States federal tax law, and subject to the discussion
below concerning backup withholding:
(a) payments of principal and interest on the senior notes by Viacom
or its paying agent to any United States Alien Holder will be exempt from
the 30% United States federal withholding tax, provided that (i) such
holder does not own, actually or constructively, 10% or more of the total
combined voting power of all classes of stock of Viacom entitled to vote,
(ii) such holder is not a controlled foreign corporation related, directly
or indirectly, to Viacom through stock ownership, (iii) such holder is not
a bank receiving interest on a loan entered into in the ordinary course of
business and (iv) the requirement to certify such holder's non-U.S. status,
as set forth in section 871(h) or section 881(c) of the Code, has been
fulfilled with respect to the beneficial owner, as discussed below;
(b) a United States Alien Holder of senior notes will not be subject
to United States federal income tax on gain realized on the sale, exchange
or retirement of such senior notes, unless (i) such holder is an individual
who is present in the United States for 183 days or more in the taxable
year of the disposition, and either the gain is attributable to an office
or other fixed place of business maintained by such individual in the
United States or, generally, such individual has a "tax home" in the United
States or (ii) such gain is effectively connected with the holders' conduct
of a trade or business in the United States (and, if an income tax treaty
applies, generally is attributable to a U.S. "permanent establishment"
maintained by such holder); and
(c) senior notes held by an individual who is not, for United States
estate tax purposes, a resident or citizen of the United States at the time
of his death will not be subject to United States federal estate tax,
provided that the individual does not own, actually or constructively, 10%
or more of the total combined voting power of all classes of stock of
Viacom entitled to vote and, at the time of such individual's death,
payments with respect to such senior notes would not have been effectively
connected with the conduct by such individual of a trade or business in the
United States.
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The certification requirement referred to in subparagraph (a) will be
fulfilled if the beneficial owner of senior notes certifies on Internal Revenue
Service Form W-8BEN or successor form under penalties of perjury, that it is not
a United States person and provides its name and address, and (i) such
beneficial owner files such Form W-8BEN or successor form with the withholding
agent or (ii) in the case of senior notes held on behalf of the beneficial
owners by a securities clearing organization, bank or other financial
institution holding customers' notes in the ordinary course of its trade or
business, such financial institution files with the withholding agent a
statement that it has received the Form W-8BEN or successor form from the United
States Alien Holder, furnishes the withholding agent with a copy thereof and
otherwise complies with the applicable Internal Revenue Service requirements.
Alternatively, these certification requirements will not apply if the
beneficial owner of the senior notes holds those notes directly through a
"qualified intermediary" (which is a non-U.S. office of a bank, securities
dealer or similar intermediary that has signed an agreement with the Internal
Revenue Service concerning withholding tax procedures), the qualified
intermediary has sufficient information in its files to indicate that the holder
is a United States Alien Holder and the intermediary complies with Internal
Revenue Service requirements. Special rules may apply with respect to senior
notes held by a foreign partnership. Prospective investors, including foreign
partnerships and their partners and holders who hold their senior notes through
a qualified intermediary, should consult their tax advisers regarding possible
reporting requirements.
If a United States Alien Holder of senior notes is engaged in a trade or
business in the United States, and if interest on the senior notes (or gain
realized on their sale, exchange or other disposition) is effectively connected
with the conduct of such trade or business (and, if an income tax treaty
applies, generally is attributable to a U.S. "permanent establishment"
maintained by such holder), the United States Alien Holder, although exempt from
the withholding tax discussed in the preceding paragraphs, will be subject to
regular United States income tax on such effectively connected income, generally
in the same manner as if it were a United States Holder. See "Tax Consequences
to United States Holders" above. In lieu of the certificate described in the
preceding paragraph, such a holder will be required to provide to the
withholding agent a properly executed Internal Revenue Service Form W-8ECI or
successor form, as appropriate, to claim an exemption from withholding tax. In
addition, if such United States Alien Holder is a foreign corporation, it may be
subject to a 30% branch profits tax (unless reduced or eliminated by an
applicable treaty) on its earnings and profits for the taxable year attributable
to such effectively connected income, subject to certain adjustments.
Interest payments made to a United States Alien Holder will generally be
reported to the holder and to the Internal Revenue Service on Form 1042-S.
However, this reporting does not apply if the holder holds the senior notes
directly through a qualified intermediary.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current United States federal income tax law, information reporting
requirements apply to certain payments of principal and interest made to, and to
the proceeds of sales before maturity by, non-corporate United States Holders.
In addition, a 31% backup withholding tax will apply if the non-corporate United
States Holder (i) fails to furnish its Taxpayer Identification Number ("TIN")
which, for an individual, is his Social Security Number, (ii) furnishes an
incorrect TIN, (iii) is notified by the Internal Revenue Service that it is
subject to backup withholding for failure to report interest and dividend
payments, or (iv) under certain circumstances fails to certify, under penalties
of perjury, that it has furnished a correct TIN and has not been notified by the
Internal Revenue Service that it is subject to backup withholding for failure to
report interest and dividend payments. Holders should consult their tax advisers
regarding their qualification for exemption from backup withholding and the
procedure for obtaining such an exemption if applicable.
Backup withholding will not apply to payments made on senior notes if the
certifications required by Sections 871(h) and 881(c) as described above are
received or if the exemption for qualified intermediaries discussed above
applies, provided that Viacom or its paying agent or the qualified
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intermediary, as the case may be, does not have actual knowledge or reason to
know that the payee is a United States person. Under current Treasury
Regulations, payments on the sale, exchange or other disposition of senior notes
made to or through a foreign office of a broker generally will not be subject to
backup withholding. However, if such broker is:
- a United States person;
- a controlled foreign corporation for United States federal income tax
purposes;
- a foreign person 50% or more of whose gross income for certain periods is
effectively connected with a United States trade or business; or
- a foreign partnership with certain connections to the United States;
then information reporting will be required unless the broker has in its records
documentary evidence that the beneficial owner is not a United States person and
certain other conditions are met or the beneficial owner otherwise establishes
an exemption. Backup withholding may apply to any payment that such broker is
required to report if the broker has actual knowledge or reason to know that the
payee is a United States person. Payments to or through the United States office
of a broker will be subject to backup withholding and information reporting
unless the holder certifies, under penalties of perjury, that it is not a United
States person and the payor does not have actual knowledge or reason to know
that the holder is a United States person, or the holder otherwise establishes
an exemption.
United States Alien Holders of senior notes should consult their tax
advisers regarding the application of information reporting and backup
withholding in their particular situations, the availability of an exemption
therefrom, and the procedure for obtaining such an exemption, if available. Any
amounts withheld from a payment to a United States Alien Holder under the backup
withholding rules will be allowed as a credit against such holder's United
States federal income tax liability and may entitle such holder to a refund,
provided that the holder files a United States income tax return and the
required information is furnished to the Internal Revenue Service.
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UNDERWRITING
We intend to offer the senior notes through the underwriters. Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc. are
acting as representatives for the underwriters named below. Subject to the terms
and conditions set forth in an underwriting agreement dated June 22, 2001, among
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc.,
the other underwriters named below, Viacom International and us, we have agreed
to sell to the underwriters, and the underwriters severally have agreed to
purchase from us, the principal amount of the senior notes set forth opposite
their names below. Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Salomon Smith Barney Inc. are acting as joint book-running managers.
UNDERWRITER PRINCIPAL AMOUNT
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..................... $ 48,800,000
Salomon Smith Barney Inc....................... 48,800,000
A.G. Edwards & Sons, Inc....................... 48,500,000
Prudential Securities Incorporated............. 48,500,000
UBS Warburg LLC................................ 48,500,000
Banc of America Securities LLC................. 9,750,000
Credit Suisse First Boston Corporation......... 9,750,000
Deutsche Banc Alex. Brown Inc.................. 9,750,000
J.P. Morgan Securities Inc..................... 9,750,000
ABN AMRO Incorporated.......................... 1,625,000
Banc One Capital Markets, Inc. ................ 1,625,000
Bear, Stearns & Co. Inc. ...................... 1,625,000
BNY Capital Markets, Inc....................... 1,625,000
CIBC World Markets Corp. ...................... 1,625,000
Dain Rauscher Incorporated..................... 1,625,000
First Union Securities, Inc. .................. 1,625,000
H&R Block Financial Advisors, Inc. ............ 1,625,000
HSBC Securities (USA) Inc. .................... 1,625,000
Lehman Brothers Inc. .......................... 1,625,000
McDonald Investments Inc., a KeyCorp Company... 1,625,000
Quick & Reilly, Inc. .......................... 1,625,000
Raymond James & Associates, Inc. .............. 1,625,000
The Robinson-Humphrey Company, LLC............. 1,625,000
Tucker Anthony Incorporated.................... 1,625,000
U.S. Bancorp Piper Jaffray Inc. ............... 1,625,000
Advest, Inc. .................................. 650,000
BB&T Capital Markets, a division of Scott and
Stringfellow, Inc. .......................... 650,000
C.L. King & Associates, Inc. .................. 650,000
Charles Schwab & Co., Inc. .................... 650,000
Crowell, Weedon & Co. ......................... 650,000
D.A. Davidson & Co. ........................... 650,000
Fahnestock & Co., L.L.C. ...................... 650,000
Fifth Third Securities, Inc. .................. 650,000
Gibraltar Securities Co. ...................... 650,000
Gruntal & Co., L.L.C. ......................... 650,000
J.J.B. Hilliard, W.L. Lyons, Inc............... 650,000
Janney Montgomery Scott LLP.................... 650,000
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UNDERWRITER PRINCIPAL AMOUNT
Legg Mason Wood Walker, Incorporated........... 650,000
Mesirow Financial, Inc. ....................... 650,000
Morgan Keegan & Company, Inc. ................. 650,000
NatCity Investments, Inc. ..................... 650,000
Robert W. Baird & Co. Incorporated............. 650,000
Southwest Securities, Inc. .................... 650,000
Stifel, Nicolaus & Company, Incorporated....... 650,000
TD Securities (USA) Inc. ...................... 650,000
Utendahl Capital Partners, L.P. ............... 650,000
Wachovia Securities, Inc. ..................... 650,000
Wedbush Morgan Securities, Inc. ............... 650,000
Wells Fargo Van Kasper, LLC.................... 650,000
William Blair & Company, L.L.C. ............... 650,000
The Williams Capital Group, L.P. .............. 650,000
------------
Total............................. $325,000,000
============
The underwriters have agreed to purchase all of the senior notes sold
pursuant to the terms and conditions of the underwriting agreement if any of the
senior notes are purchased. If an underwriter defaults, the underwriting
agreement provides that the purchase commitments of the non-defaulting
underwriters may be increased or the underwriting agreement may be terminated.
The senior notes are a new issue of securities with no established trading
market. We intend to list the senior notes on The New York Stock Exchange and
expect trading in the senior notes on The New York Stock Exchange to begin
within 30 days after the original issue date. The underwriters have advised us
that, prior to the commencement of trading on The New York Stock Exchange, they
intend to make a market in the senior notes, but they are not obligated to do
so. The underwriters may discontinue any market making in the senior notes at
any time without notice. Neither we nor the underwriters can give you any
assurance as to the liquidity of any trading market for the senior notes.
We have agreed to indemnify the underwriters against, or to contribute to
payments that the underwriters may be required to make in respect of certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The underwriters are offering the senior notes, subject to prior sale,
when, as and if issued to and accepted by them, subject to approval of legal
matters by their counsel, including the validity of the senior notes, and other
conditions contained in the underwriting agreement, such as the receipt by the
underwriters of officers' certificates and legal opinions. The underwriters
reserve the right to withdraw, cancel or modify offers to the public and to
reject orders in whole or in part.
We have granted the underwriters an option, exercisable by the
representatives for the underwriters, to purchase up to an additional
$48,750,000 aggregate principal amount of senior notes at the public offering
price set forth on the cover page of this prospectus supplement, less the
underwriting discount, within 30 days from the date of this prospectus
supplement. The representatives for the underwriters may exercise the option
solely for the purpose of covering over-allotments, if any, made in connection
with the offering of the senior notes. To the extent the option is exercised,
each underwriter will become obligated to purchase approximately the same
percentage of the additional senior notes as that which the underwriter
purchased in the original offering. If the underwriters' option is exercised in
full, the total public offering price would be $373,750,000, the total
underwriting discount would be $11,773,125 and total proceeds, before deducting
expenses, to us would be $361,976,875.
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COMMISSIONS AND DISCOUNTS
The underwriters have advised us that they propose initially to offer the
senior notes to the public at the public offering price set forth on the cover
page of this prospectus supplement and to certain securities dealers at that
price less a concession of $0.50 per senior note. The underwriters may allow,
and such dealers may reallow, a concession not in excess of $0.45 per senior
note to certain brokers and dealers. After the initial public offering, the
underwriters may change the public offering price and concessions. We will pay
the expenses of the offering which are estimated to be approximately $500,000,
excluding the underwriting discount.
PRICE STABILIZATION AND SHORT POSITIONING
In connection with this offering, the underwriters are permitted to engage
in transactions that stabilize the market price of the senior notes. Such
transactions consist of bids or purchases to peg, fix or maintain the price of
the senior notes. If the underwriters create a short position in the senior
notes in connection with the offering, i.e., if they sell more senior notes than
are on the cover page of this prospectus supplement, the underwriters may reduce
that short position by purchasing senior notes in the open market. Purchases of
senior notes for the purpose of stabilization or to reduce a short position
could cause the price of the security to be higher than it might be in the
absence of such purchases.
Neither we nor any underwriter makes any representation or prediction as to
the direction or magnitude of any effect that the transactions described above
may have on the price of the senior notes. In addition, neither we nor any
underwriter makes any representation that the underwriters will engage in these
transactions or that these transactions, once commenced, will not be
discontinued at any time without notice.
SETTLEMENT ARRANGEMENTS
It is expected that delivery of the senior notes will be made against
payment therefor on or about the date specified in the last paragraph on the
cover page of this prospectus supplement, which will be the fifth business day
following the date of this prospectus supplement. Under Rule 15c6-1 of the
Securities Exchange Act of 1934, as amended, trades in the secondary market
generally are required to settle in three business days, unless the parties to
any such trade expressly agree otherwise. Accordingly, purchasers who wish to
trade senior notes on the date of this prospectus supplement or the next four
succeeding business days will be required, by virtue of the fact that the senior
notes initially will settle in five days, to specify alternative settlement
arrangements at the time of such trade to prevent failed settlement. Purchasers
of senior notes who wish to trade senior notes on the date of this prospectus
supplement or the next four succeeding business days should consult their own
advisors.
OTHER RELATIONSHIPS
Some of the underwriters and their affiliates have engaged in, and may in
the future engage in, investment banking and other commercial dealings in the
ordinary course of business with us or our affiliates. They have received
customary fees and commissions for these transactions.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549;
7 World Trade Center, Suite 1300, New York, New York 10048; and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from the SEC's web site at
http://www.sec.gov.
Our Class A common stock and Class B common stock are listed on The New
York Stock Exchange. Information about us also is available at The New York
Stock Exchange. In accordance with
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U.S. securities laws, Viacom International is not obligated to file annual,
quarterly and current reports, proxy statements and other information with the
SEC. Accordingly, Viacom International does not file separate financial
statements with the SEC and does not independently publish its financial
statements. Viacom International's financial condition, results of operations
and cash flows are consolidated into the financial statements of Viacom.
We are "incorporating by reference" specific documents that we file with
the SEC, which means that we can disclose important information to you by
referring you to those documents that are considered part of this prospectus
supplement. Information that we file subsequently with the SEC will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act, including filings made
after the date of the initial registration statement and until we sell all of
the senior notes:
- Our Annual Report on Form 10-K for the year ended December 31, 2000;
- Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2001;
- Our Current Report on Form 8-K dated May 4, 2000 as amended on July 17,
2000, our Current Report on Form 8-K dated January 5, 2001, our Current
Report on Form 8-K dated January 8, 2001, our Current Report on Form 8-K
dated February 15, 2001, our Current Report on Form 8-K dated February
21, 2001, our Current Report on Form 8-K dated May 30, 2001 and our
Current Report on Form 8-K dated June 1, 2001;
- Our definitive Proxy Statement dated April 16, 2001;
- CBS Corporation Annual Report on Form 10-K for the year ended December
31, 1999, as amended on April 28, 2000;
- The consolidated financial statements of Infinity Broadcasting
Corporation, as set forth in Item 8 and the notes thereto to Infinity's
Annual Report on Form 10-K for the year ended December 31, 1999;
- The condensed consolidated financial statements of Infinity, as set forth
in Item 1 to Infinity's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2000; and
- Our Registration Statement on Form S-4 dated January 12, 2001.
You may obtain a copy of these filings at no cost, by writing or telephoning us
at the following address: Viacom Inc., 1515 Broadway, 52nd Floor, New York, New
York 10036, Attn: Investor Relations, Telephone Number: (212) 258-6000.
LEGAL MATTERS
The validity of the senior notes and the guarantee will be passed upon for
us and Viacom International by Shearman & Sterling, New York, New York, and for
the underwriters by Hughes Hubbard & Reed LLP, New York, New York. Hughes
Hubbard & Reed LLP performs legal services for us and Viacom International from
time to time.
EXPERTS
Our financial statements incorporated in this prospectus supplement by
reference from our Annual Report on Form 10-K for the year ended December 31,
2000, have been audited by PricewaterhouseCoopers LLP, independent accountants,
as stated in their report, which is incorporated herein by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The consolidated financial statements and schedule of CBS as of December
31, 1999 and 1998, and for each of the years in the three-year period ended
December 31, 1999, incorporated in this prospectus supplement by reference from
Item 8 of CBS's Annual Report on Form 10-K for the year ended
S-18
22
December 31, 1999, have been audited by KPMG LLP, independent accountants, as
stated in their reports, which are incorporated herein by reference, and has
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The consolidated financial statements and schedule of Infinity as of
December 31, 1999 and 1998 and for each of the years in the three-year period
ended December 31, 1999, incorporated in this prospectus supplement by reference
from Item 8 of Infinity's Annual Report on Form 10-K for the year ended December
31, 1999, have been audited by KPMG LLP, independent accountants as stated in
their reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
S-19
23
PROSPECTUS
$5,000,000,000
VIACOM INC.
CERTAIN SECURITIES OF WHICH ARE UNCONDITIONALLY
GUARANTEED AS TO PAYMENT OF PRINCIPAL AND
INTEREST BY VIACOM INTERNATIONAL INC.
(A WHOLLY OWNED SUBSIDIARY OF VIACOM INC.)
----------------------
We may offer and sell, from time to time, in one or more offerings and
series, together or separately:
- 2001 senior debt securities of Viacom;
- 2001 senior subordinated debt securities of Viacom;
- 1995 senior debt securities of Viacom;
- preferred stock of Viacom;
- guarantees of Viacom International of any of the foregoing; and
- warrants representing rights to purchase 2001 senior debt securities,
2001 senior subordinated debt securities, 1995 senior debt securities or
preferred stock of Viacom.
The 2001 senior debt securities, 2001 senior subordinated debt securities,
1995 senior debt securities and preferred stock of Viacom may be convertible
into Class B common stock of Viacom.
When we offer securities we will provide you with a prospectus supplement
or term sheet describing the specific terms of the specific issue of securities,
including the offering price of the securities. You should carefully read this
prospectus and the prospectus supplements or term sheets relating to the
specific issue of securities before you decide to invest in any of these
securities.
----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is June 22, 2001.
24
TABLE OF CONTENTS
PAGE
----
ABOUT THIS PROSPECTUS....................................... i
WHERE YOU CAN FIND MORE INFORMATION......................... 1
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS... 1
THE COMPANY................................................. 4
THE GUARANTOR............................................... 4
USE OF PROCEEDS............................................. 5
RATIO OF EARNINGS TO FIXED CHARGES.......................... 5
GENERAL DESCRIPTION OF THE DEBT SECURITIES.................. 6
DESCRIPTION OF THE 2001 DEBT SECURITIES..................... 11
DESCRIPTION OF THE 1995 SENIOR DEBT SECURITIES.............. 19
DESCRIPTION OF PREFERRED STOCK.............................. 26
DESCRIPTION OF COMMON STOCK................................. 30
DESCRIPTION OF WARRANTS..................................... 32
PLAN OF DISTRIBUTION........................................ 34
LEGAL MATTERS............................................... 34
EXPERTS..................................................... 34
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing the "shelf" registration process. Under this shelf process, we may
sell the securities described in this prospectus in one or more offerings up to
a total dollar amount of $5,000,000,000. This prospectus provides you with a
general description of the securities we may offer. Each time we sell
securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may also
add, update or change information contained in this prospectus. You should read
both this prospectus and any prospectus supplement together with additional
information described under the heading "Where You Can Find More Information."
In this prospectus we use the terms "Viacom," "we," "us," and "our" to
refer to Viacom Inc. References to "Viacom International" are references to
Viacom International Inc. References to "2001 senior debt securities" are
references to the senior debt securities that may be issued under the 2001
senior indenture; references to "2001 senior subordinated debt securities" are
references to the senior subordinated debt securities that may be issued under
the 2001 senior subordinated indenture; references to "1995 senior debt
securities" are references to the senior debt securities that may be issued
under the 1995 senior indenture; references to "2001 debt securities" are
references to both the 2001 senior debt securities and the 2001 senior
subordinated debt securities; and references to "debt securities" are references
to the 2001 debt securities and 1995 senior debt securities, collectively.
References to "securities" includes any security that we might sell under this
prospectus or any prospectus supplement. References to "$" and "dollars" are to
United States dollars.
You should rely only on the information contained in or incorporated by
reference in this prospectus. Viacom has not authorized anyone to provide you
with different information. If anyone provides you with different or additional
information, you should not rely on it. Neither Viacom nor Viacom International
is making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information contained in or
incorporated by reference in this prospectus is accurate as of any date other
than the date on the front of this prospectus. Our business, financial
condition, results of operations and prospects may have changed since then.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document that we file at the
SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549;
7 World Trade Center, Suite 1300, New York, New York 10048; and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from the SEC's web site at
http://www.sec.gov. Our Class A common stock and Class B common stock are listed
on the New York Stock Exchange. Information about us is also available at the
New York Stock Exchange. In accordance with U.S. securities laws, Viacom
International is not obligated to file annual, quarterly and current reports,
proxy statements and other information with the SEC. Accordingly, Viacom
International does not file separate financial statements with the SEC and does
not independently publish its financial statements. Viacom International's
financial condition, results of operations and cash flows are consolidated into
the financial statements of Viacom.
We are "incorporating by reference" specified documents that we file with
the SEC, which means that we can disclose important information to you by
referring you to those documents that are considered part of this prospectus.
Information that we file subsequently with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14,
or 15(d) of the Exchange Act, including filings made after the date of the
initial registration statement and until we sell all of the securities:
- Our Annual Report on Form 10-K for the year ended December 31, 2000;
- Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2001;
- Our Current Report on Form 8-K dated May 4, 2000 as amended on July 17,
2000, our Current Report on Form 8-K dated January 5, 2001, our Current
Report on Form 8-K dated January 8, 2001, our Current Report on Form 8-K
dated February 15, 2001, our Current Report on Form 8-K dated February
21, 2001, our Current Report on Form 8-K dated May 30, 2001 and our
Current Report on Form 8-K dated June 1, 2001;
- Our definitive Proxy Statement dated April 16, 2001;
- CBS Corporation Annual Report on Form 10-K for the year ended December
31, 1999, as amended on April 28, 2000;
- The consolidated financial statements of Infinity Broadcasting
Corporation, as set forth in Item 8 to Infinity's Annual Report on Form
10-K for the year ended December 31, 1999;
- The condensed consolidated financial statements of Infinity, as set forth
in Item 1 to Infinity's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2000; and
- Our Registration Statement on Form S-4 dated January 12, 2001.
You may obtain a copy of these filings at no cost, by writing or
telephoning us at the following address: Viacom Inc., 1515 Broadway, 52nd Floor,
New York, New York 10036, Attn: Investor Relations, Telephone Number: (212)
258-6000.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus contain both historical and forward-looking statements. All
statements other than statements of historical fact are, or may be deemed to be,
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements are not based on historical facts, but rather reflect
our current expectations concerning future results and events. These
forward-looking statements generally can be identified by the use of statements
that include phrases such as "believe," "expect," "anticipate," "intend,"
"plan," "foresee," "likely," "will" or other similar
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words or phrases. Similarly, statements that describe our objectives, plans or
goals are or may be forward-looking statements. These forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
our actual results, performance or achievements to be different from any future
results, performance and achievements expressed or implied by these statements.
You should review carefully all information, including the financial statements
and the notes to the financial statements, included or incorporated by reference
into this prospectus.
The following important factors, among others, could affect our future
results, causing these results to differ materially from those expressed in our
forward-looking statements:
- We derive substantial revenues from the sale of advertising time on our
over-the-air networks, basic cable networks, television stations, radio
stations and outdoor businesses. The advertising market has recently
experienced softness. The sale of advertising time is affected by viewer
demographics, viewer ratings and market conditions for advertising time.
Adverse changes to any of these factors could have a negative effect on
revenues.
- Operating results derived from our motion picture and television
production fluctuate depending primarily upon cost of such productions
and acceptance of such productions by the public, which are difficult to
predict. Motion picture and television production has experienced cycles
in which increased costs of talent and other factors have resulted in
higher production costs. In addition, the commercial success of our
motion picture and television productions also depends upon the quality
and acceptance of other competing productions, and the availability of
alternative forms of entertainment and leisure time activities.
- Our operating results also fluctuate due to the timing and availability
of theatrical and home video releases, as well as a result of the
recording of license fees for television exhibition of motion pictures
and for syndication and basic cable exhibition of television programming
in the period that the products are available for such exhibition.
- Our basic cable network and premium subscription television networks are
dependent on affiliation agreements with cable and direct broadcast
satellite distributors on acceptable terms. The loss of carriage on such
distributors, or continued carriage on less favorable terms, could
adversely affect, with respect to basic cable networks, revenues from
subscriber fees and the ability to sell advertising time, and with
respect to premium subscription television networks, subscriber fee
revenues.
- Some of our businesses are seasonal. More specifically, the home video
business and consumer publishing business are subject to increased
periods of demand coinciding with summer and winter holidays, while a
substantial majority of the theme parks operating income is generated
from May through September. In addition, the home video and theme parks
businesses' revenues are influenced by weather.
- Changes in FCC laws and regulations could, directly or indirectly,
adversely affect the operations and ownership of our properties.
- We have contingent liabilities related to discontinued operations,
including environmental liabilities and pending litigation. While there
can be no assurance in this regard, the pending or potential litigation,
environmental and other liabilities should not have a material adverse
effect on us.
- We may be adversely affected by changes in technology and its effect on
competition in our markets.
- Labor agreements covering the services of actors whom we utilize in our
motion picture and television businesses are currently scheduled to
expire during 2001. Work stoppages and/or higher costs in connection with
these agreements could adversely impact our ability to produce or acquire
new programming.
- Other economic, business, competitive and/or regulatory factors affecting
our businesses generally.
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These factors and the risk factors incorporated by reference are not
necessarily all of the important factors that could cause actual results to
differ materially from those expressed in any of our forward-looking statements.
Other unknown or unpredictable factors also could have material adverse effects
on our future results. The forward-looking statements included in this
prospectus are made only as of the date of this prospectus and under Section 27A
of the Securities Act and Section 21E of the Exchange Act and we do not have any
obligation to publicly update any forward-looking statements to reflect
subsequent events or circumstances. We cannot assure you that projected results
or events will be achieved.
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THE COMPANY
We, together with our subsidiaries, are a diversified worldwide
entertainment company with operations in six segments: Cable Networks,
Television, Infinity, Entertainment, Video and Publishing. The Cable Networks
segment operates MTV: MUSIC TELEVISION(R), SHOWTIME(R), NICKELODEON(R), NICK AT
NITE(R), VH1 MUSIC FIRST(R), TV LAND(R), TNN: THE NATIONAL NETWORK,(TM) CMT:
COUNTRY MUSIC TELEVISION(TM) and BET: BLACK ENTERTAINMENT TELEVISION(R), among
other program services. The Television segment consists of CBS(R) and UPN(R)
television networks, 39 owned broadcast television stations and Viacom's
television production and syndication business, including KING WORLD
PRODUCTIONS(TM) and PARAMOUNT TELEVISION(TM). The Infinity segment operates
approximately 184 radio stations through INFINITY BROADCASTING(R) and outdoor
advertising properties through INFINITY OUTDOOR(TM) and TDI(R). The
Entertainment segment includes PARAMOUNT PICTURES(R), which produces and
distributes theatrical motion pictures; PARAMOUNT PARKS(R), which owns and
operates five theme parks and a themed attraction in the United States and
Canada; and movie theater and music publishing operations. The Video segment
consists of an approximately 82% equity interest in Blockbuster Inc., which
operates and franchises BLOCKBUSTER(R) video stores worldwide. The remainder of
Blockbuster's common stock was sold to the public in August 1999. The Publishing
segment publishes and distributes consumer books and related multimedia
products, under such imprints as SIMON & SCHUSTER(R), POCKET BOOKS(TM),
SCRIBNER(R) and THE FREE PRESS(TM). We were organized under the laws of the
State of Delaware in 1986. Viacom's principal offices are located at 1515
Broadway, New York, New York 10036 and our telephone number is (212) 258-6000.
THE GUARANTOR
Viacom International, the guarantor of the debt securities and/or the
preferred stock if any guarantees are issued, was organized under the laws of
the State of Delaware in 1995 and has its corporate headquarters at 1515
Broadway, New York, New York 10036. Viacom International has 100 shares of
common stock outstanding, all of which are held by Viacom. The operating assets
of Viacom International and its subsidiaries include MTV: MUSIC TELEVISION(R),
SHOWTIME(R), NICKELODEON(R), NICK AT NITE(R), VH1 MUSIC FIRST(R), TV LAND(R),
approximately 18 broadcast television stations, all interests in the businesses
of the Video, Entertainment and Publishing segments and certain related Internet
sites.
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USE OF PROCEEDS
Unless indicated otherwise in a prospectus supplement, we expect to use the
net proceeds from the sale of our securities for general corporate purposes,
including acquisitions, repayment of borrowings, working capital, capital
expenditures and stock repurchases.
RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
The ratios of earnings to fixed charges for Viacom are set forth below, on
a pro forma basis, for the three months ended March 31, 2001 and the year ended
December 31, 2000 to give effect to the merger of CBS into Viacom, the
acquisition of BET Holdings II, Inc. by Viacom, the merger of Infinity into a
subsidiary of Viacom and certain other transactions as if each occurred on
January 1, 2000, and on a historical basis, for the three months ended March 31,
2001 and for each year in the five-year period ended December 31, 2000.
For purposes of computing the following ratios, earnings represent income
from continuing operations before fixed charges and taxes. Fixed charges
represent interest expense, amortization of capitalized interest and such
portion of rental expense, which represents an appropriate interest factor.
YEAR ENDED DECEMBER 31,
THREE MONTHS ENDED --------------------------------------------
MARCH 31, 2001 VIACOM HISTORICAL
---------------------- 2000 --------------------------------
HISTORICAL PRO FORMA PRO FORMA 2000 1999 1998 1997 1996
---------- --------- --------- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges... 1.5x 1.4x 1.2x 1.5x 2.2x 1.1x 2.0x 1.4x
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GENERAL DESCRIPTION OF THE DEBT SECURITIES
The following description, together with the descriptions found in
"Description of the 2001 Debt Securities" and "Description of the 1995 Senior
Debt Securities", of Viacom's debt securities to be issued under the debt
indentures summarizes the general terms and provisions of its debt securities to
which any prospectus supplement may relate. The following descriptions also
describe the specific terms of Viacom's debt securities and the extent, if any,
to which the general provisions summarized may apply to any series of its debt
securities in the prospectus supplement relating to such series. References to
"2001 senior debt securities" are references to the senior debt securities that
may be issued under the 2001 senior indenture; references to "2001 senior
subordinated debt securities" are references to the senior subordinated debt
securities that may be issued under the 2001 senior subordinated indenture;
references to "1995 senior debt securities" are references to the senior debt
securities that may be issued under the 1995 senior indenture; references to
"2001 debt securities" are references to both the 2001 senior debt securities
and the 2001 senior subordinated debt securities; and references to "debt
securities" are references to the 2001 debt securities and the 1995 senior debt
securities, collectively.
Viacom may issue its 2001 senior debt securities from time to time, in one
or more series under a senior indenture, between Viacom and The Bank of New
York, as senior trustee, or another senior trustee named in a prospectus
supplement. We refer to this indenture as the "2001 senior indenture." The 2001
senior indenture is filed as an exhibit to the registration statement of which
this prospectus is a part. Viacom may issue its 2001 senior subordinated debt
securities from time to time, in one or more series under a senior subordinated
indenture, between Viacom and The Bank of New York, as senior subordinated
trustee, or another senior subordinated trustee named in a prospectus
supplement. We refer to this indenture as the "2001 senior subordinated
indenture." The 2001 senior subordinated indenture is filed as an exhibit to the
registration statement of which this prospectus is a part. Viacom may issue its
1995 senior debt securities from time to time, in one or more series under a
senior indenture, dated as of May 15, 1995, among Viacom, our wholly owned
subsidiary, Viacom International, as guarantor, and Citibank, N.A., as successor
to State Street Bank and Trust Company and The First National Bank of Boston,
Trustee. This senior indenture was supplemented by a first supplemental
indenture, dated as of May 24, 1995, was further supplemented and amended by a
second supplemental indenture and amendment no. 1, dated as of December 15,
1995, was further supplemented by a third supplemental indenture, dated as of
July 22, 1996, was further supplemented by a fourth supplemental indenture,
dated as of August 1, 2000, was further supplemented by a fifth supplemental
indenture, dated January 17, 2001, was further supplemented by a sixth
supplemental indenture, dated May 17, 2001 and was further supplemented by a
seventh supplemental indenture, dated as of May 31, 2001. We refer to this
senior indenture, as so supplemented and amended, as the "1995 senior
indenture." Together the 2001 senior indenture and the 2001 senior subordinated
indenture are referred to as the 2001 debt indentures, and together the 2001
debt indentures and the 1995 senior indenture are referred to as the "debt
indentures." The trustee under the 2001 senior indenture is called the "2001
senior debt trustee," the trustee under the 2001 senior subordinated indenture
is called the "2001 senior subordinated debt trustee" and the trustee under the
1995 senior indenture is called the "1995 senior debt trustee." Together the
2001 senior debt trustee and the 2001 senior subordinated debt trustee are
called the 2001 debt trustees and together the 2001 debt trustees and the 1995
senior debt trustee are called the "debt trustees."
None of the indentures limit the amount of debt securities that may be
issued. The applicable indenture provides that debt securities may be issued up
to an aggregate principal amount authorized by Viacom and may be payable in any
currency or currency unit designated by Viacom.
GENERAL
Viacom will issue debt securities from time to time and offer its debt
securities on terms determined by market conditions at the time of their sale.
Viacom may issue debt securities in one or more series with the same or various
maturities, at par, at a premium, or at a discount. Any debt securities bearing
no interest or interest at a rate which at the time of issuance is below market
rates will be sold at a discount, which may be substantial, from their stated
principal amount. Viacom will describe the material federal
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income tax consequences and other special considerations applicable to any
substantially discounted debt securities in a related prospectus supplement.
You should refer to the prospectus supplement for the following terms of
the debt securities offered by this registration statement:
- the designation, aggregate principal amount and authorized denominations
of the debt securities;
- the percentage of the principal amount at which Viacom will issue the
debt securities;
- the date or dates on which the debt securities will mature;
- the annual interest rate or rates of the debt securities, or the method
of determining the rate or rates;
- the date or dates on which any interest will be payable, the date or
dates on which payment of any interest will commence and the regular
record dates for the interest payment dates;
- whether the debt securities will be guaranteed by Viacom International;
- the terms of any mandatory or optional redemption, including any
provisions for any sinking, purchase or other similar funds, or repayment
options;
- the currency, currencies or currency units for which the debt securities
may be purchased and in which the principal, any premium and any interest
may be payable;
- if the currency, currencies or currency units for which the debt
securities may be purchased or in which the principal, any premium and
any interest may be payable is at Viacom's election or the purchaser's
election, the manner in which the election may be made;
- if the amount of payments on the debt securities is determined by an
index based on one or more currencies or currency units, or changes in
the price of one or more securities or commodities, the manner in which
the amounts may be determined;
- the extent to which any of the debt securities will be issuable in
temporary or permanent global form, and the manner in which any interest
payable on a temporary or permanent global security will be paid;
- the terms and conditions upon which the debt securities may be
convertible into or exchanged for common stock, preferred stock, or
indebtedness or other securities of any person, including Viacom;
- information with respect to book-entry procedures, if any;
- a discussion of any material federal income tax and other special
considerations, procedures and limitations relating to the debt
securities; and
- any other specific terms of the debt securities not inconsistent with the
applicable debt indenture.
If Viacom sells any of the debt securities for one or more foreign
currencies or foreign currency units or if the principal of, premium, if any, or
interest on any series of debt securities will be payable in one or more foreign
currencies or foreign currency units, it will describe the restrictions,
elections, any material federal income tax consequences, specific terms and
other information with respect to the issue of debt securities and the
currencies or currency units in the related prospectus supplement.
Unless specified otherwise in a prospectus supplement, the principal of,
premium on, and interest on the debt securities will be payable, and the debt
securities will be transferable, at the corporate trust office of the applicable
debt trustee in New York, New York. However, Viacom may make payment of
interest, at its option, by check mailed on or before the payment date to the
address of the person entitled to the interest payment or by transfer to an
account held by the payee as it appears on the registry books of the debt
trustee, Viacom or its agents.
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Unless specified otherwise in a prospectus supplement, Viacom will issue
the debt securities in registered form and in denominations of $1,000 and any
integral multiple of $1,000. Bearer securities, other than those issued in
global form, will be issued in denominations of $5,000. No service charge will
be made for any transfer or exchange of any debt securities, but Viacom may,
except in specific cases not involving any transfer, require payment of a
sufficient amount to cover any tax or other governmental charge payable in
connection with the transfer or exchange.
Viacom's rights and the rights of its creditors, including holders of debt
securities, to participate in any distribution of assets of any Viacom
subsidiary upon its liquidation or reorganization or otherwise is subject to the
prior claims of creditors of the subsidiary, except to the extent that Viacom's
claims as a creditor of the subsidiary may be recognized.
GUARANTEES
Viacom International may unconditionally guarantee the due and punctual
payment of the principal of, premium, if any, and any interest on the debt
securities when and as the same shall become due and payable, whether at
maturity, upon redemption, upon acceleration or otherwise. The guarantees of the
debt securities will be endorsed on the debt securities.
Various federal and state fraudulent conveyance laws have been enacted for
the protection of creditors and may be utilized by a court of competent
jurisdiction to subordinate or avoid all or part of any guarantee issued by
Viacom International. The applicable debt indentures provide that in the event
that the guarantees would constitute or result in a fraudulent transfer or
conveyance for purposes of, or result in a violation of, any United States
federal, or applicable United States state, fraudulent transfer or conveyance or
similar law, then the liability of Viacom International under the guarantees
shall be reduced to the extent necessary to eliminate such fraudulent transfer
or conveyance or violation under the applicable fraudulent transfer or
conveyance or similar law. Application of this clause could limit the amount
which holders of debt securities may be entitled to collect under the
guarantees. Holders, by their acceptance of the debt securities, will have
agreed to such limitations.
To the extent that a court were to find that (x) a guarantee was incurred
by Viacom International with the intent to hinder, delay or defraud any present
or future creditor or (y) Viacom International did not receive fair
consideration or reasonably equivalent value for issuing its guarantee and
Viacom International (i) was insolvent or rendered insolvent by reason of the
issuance of the guarantee, (ii) was engaged or about to engage in a business or
transaction for which the remaining assets of Viacom International constituted
unreasonably small capital to carry on its business or (iii) intended to incur,
or believed that it would incur, debts beyond its ability to pay such debts as
they matured, the court could subordinate or avoid all or part of such guarantee
in favor of Viacom International's other creditors. To the extent any guarantee
issued by Viacom International was voided as a fraudulent conveyance or held
unenforceable for any other reason, the holders of any debt securities
guaranteed by Viacom International could cease to have any claim against Viacom
International and would be creditors solely of Viacom.
We and Viacom International believe that the issuances of the guarantees by
Viacom International are not fraudulent conveyances. There can be no assurance,
however, that a court passing on such questions would reach the same
conclusions. In rendering their opinions on the validity of the 2001 senior debt
securities, 2001 senior subordinated securities and 1995 senior securities and,
if applicable, the related guarantees, neither our counsel, counsel for Viacom
International nor counsel for any initial purchaser or underwriter will express
any opinion as to federal or state laws relating to fraudulent transfers.
RANKING
The 2001 senior debt securities will be senior unsecured obligations of
Viacom and will rank equally in right of payment with all of Viacom's other
unsecured and unsubordinated indebtedness. The guarantees on the 2001 senior
debt securities will be senior unsecured obligations of Viacom International and
will rank equally in right of payment with all of Viacom International's other
unsecured and unsubordinated indebtedness.
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The 2001 senior subordinated debt securities will be senior unsecured
subordinated obligations of Viacom and will be subordinated in right of payment
to Viacom's senior indebtedness. The guarantees on the 2001 senior subordinated
debt securities will be senior unsecured subordinated obligations of Viacom
International and will be subordinated in right of payment to Viacom
International's senior indebtedness.
The 1995 senior debt securities will be senior unsecured obligations of
Viacom and will rank equally in right of payment with all of Viacom's other
unsecured and unsubordinated indebtedness. The guarantees on the 1995 senior
debt securities will be senior unsecured obligations of Viacom International and
will rank equally in right of payment with all of Viacom International's other
unsecured and unsubordinated indebtedness.
The debt securities and the guarantees will be effectively subordinated to
any secured indebtedness of Viacom or Viacom International, as the case may be,
to the extent of the value of the assets securing such indebtedness. The debt
indentures do not limit the amount of debt that Viacom, Viacom International or
their respective subsidiaries can incur.
In addition, both Viacom International and Viacom conduct their operations
through subsidiaries, which generate a substantial portion of their respective
operating income and cash flow. As a result, distributions or advances from
subsidiaries of Viacom and Viacom International are a major source of funds
necessary to meet their respective debt service and other obligations.
Contractual provisions, laws or regulations, as well as a subsidiaries'
financial condition and operating requirements, may limit the ability of Viacom
or Viacom International to obtain cash required to pay Viacom's debt service
obligations, including payments on the debt securities, or Viacom
International's payment obligations under the guarantees. The debt securities
(whether senior or subordinated obligations of Viacom) will be structurally
subordinated to all obligations of Viacom's subsidiaries (other than Viacom
International, to the extent such debt securities are guaranteed) including
claims with respect to trade payables. The guarantees (whether senior or
subordinated obligations of Viacom International) will be structurally
subordinated to all obligations of Viacom International's subsidiaries,
including claims with respect to trade payables. This means that holders of the
debt securities of Viacom will have a junior position to the claims of creditors
of Viacom's subsidiaries (other than Viacom International, to the extent such
debt securities are guaranteed) on the assets and earnings of such subsidiaries.
Holders of guarantees of Viacom International, if any, will have a junior
position to the claims of creditors of Viacom International's subsidiaries on
the assets and earnings of such subsidiaries and will have no claim by virtue of
such guarantees against Viacom or any subsidiary of Viacom that is not a
subsidiary of Viacom International. As of March 31, 2001, Viacom's subsidiaries,
other than Viacom International, had approximately $2.3 billion of indebtedness
outstanding, while Viacom International's subsidiaries had approximately $1.4
billion of indebtedness outstanding.
GLOBAL SECURITIES
Viacom may issue debt securities of a series, in whole or in part, in the
form of one or more global securities and will deposit them with or on behalf of
a depositary identified in the prospectus supplement relating to that series.
Viacom may issue global securities in fully registered or bearer form and in
either temporary or permanent form. Unless and until it is exchanged in whole or
in part, for the individual debt securities represented thereby, a global
security may only be transferred among the depositary, its nominees and any
successors.
The specific terms of the depositary arrangement relating to a series of
debt securities will be described in the prospectus supplement relating to that
series. It is anticipated that the following provisions will generally apply to
depositary arrangements.
Upon the issuance of a global security, the depositary for the global
security or its nominee will credit on its book-entry registration and transfer
system the principal amounts of the individual debt securities represented by
the global security to the accounts of persons that have accounts with the
depositary. The accounts will be designated by the dealers, underwriters or
agents with respect to the debt securities or by Viacom if the debt securities
are offered and sold directly by it. Ownership of beneficial interests in a
global security will be limited to persons that have accounts with the
applicable depositary participants or
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persons that hold interests through these participants. Ownership of beneficial
interests in a global security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by:
- the applicable depositary or its nominee, with respect to interests of
depositary participants; and
- the records of depositary participants, with respect to interests of
persons other than depositary participants.
The laws of some states require that purchasers of securities take physical
delivery of the securities in definitive form. These laws may impair the ability
to transfer beneficial interests in a global security.
So long as the depositary for a global security or its nominee is the
registered owner of that global security, the depositary or the nominee will be
considered the sole owner or holder of the debt securities represented by the
global security for all purposes under the applicable debt indenture. Except as
provided below, owners of beneficial interests in a global security will:
- not be entitled to have any of the individual debt securities of the
series represented by the global security registered in their names;
- not receive or be entitled to receive physical delivery of any debt
security of that series in definitive form; and
- not be considered the owners or holders thereof under the applicable 2001
debt indenture governing the debt securities.
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DESCRIPTION OF THE 2001 DEBT SECURITIES
FURTHER ISSUES
Not all 2001 debt securities of any one series need be issued at the same
time and, unless otherwise provided, a series may be reopened, without the
consent of the holders, for issuances of additional 2001 debt securities of such
series.
PAYMENT AND PAYING AGENTS
Payments of principal of, any premium on, and any interest on individual
2001 debt securities represented by a global security registered in the name of
a depositary or its nominee will be made to the depositary or its nominee as the
registered owner of the global security representing the 2001 debt securities.
Neither Viacom, the 2001 debt trustee, any paying agent, nor the security
registrar for the 2001 debt securities will have any responsibility or liability
for the records relating to or payments made on account of beneficial ownership
interests of the global security for the 2001 debt securities or for
maintaining, supervising or reviewing any records relating to the beneficial
ownership interests.
Viacom expects that the depositary for a series of 2001 debt securities or
its nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent global security representing any of the 2001 debt
securities, will immediately credit participants' accounts with payments in
amounts proportionate to their beneficial interests in the principal amount of
the global security for the 2001 debt securities as shown on the records of the
depositary or its nominee. Viacom also expects that payments by participants to
owners of beneficial interests in the global security held through the
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." The payments will be the responsibility of
those participants.
MERGER, CONSOLIDATION OR SALE OF ASSETS
Under the terms of the 2001 debt indentures, Viacom and Viacom
International generally would be permitted to consolidate or merge with another
entity or to sell all or substantially all of our respective assets to another
entity, subject to Viacom and Viacom International meeting all of the following
conditions:
- the resulting entity (other than Viacom or Viacom International) must
agree through a supplemental indenture to be legally responsible for the
2001 debt securities;
- immediately following the consolidation, merger, sale or conveyance, no
Event of Default (as defined below) shall have occurred and be
continuing;
- the surviving entity to the transaction must be a corporation organized
under the laws of a state of the United States;
- Viacom or Viacom International, as the case may be, must deliver certain
certificates and documents to the 2001 debt trustee; and
- Viacom and Viacom International, if applicable, must satisfy any other
requirements specified in the prospectus supplement relating to a
particular series of 2001 debt securities.
We and Viacom International may merge or consolidate with, or sell all or
substantially all of our assets to each other or any of our Subsidiaries. When
we make reference in this section to the sale of "all or substantially all of
our assets," we mean property and assets generating revenues representing, in
the aggregate, at least 80% of our total consolidated revenues.
In the event that Viacom or Viacom International consolidates or merges
with another entity or sells all or substantially all of its assets to another
entity, the surviving entity shall be substituted for Viacom or Viacom
International, as the case may be, under the 2001 debt indentures and Viacom or
Viacom
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International, as the case may be, shall be discharged from all of its
obligations under the 2001 debt indentures.
LIMITATIONS ON LIENS
We covenant in the 2001 debt indentures that we will not create, assume or
permit any Lien on any of our properties or assets, unless we secure the 2001
debt securities at least equally and ratably to the secured Indebtedness. The
foregoing only applies to Liens that in the aggregate exceed 15% of our total
consolidated assets, reduced by the Attributable Debt related to any permitted
sale and leaseback arrangement. See "-- Limitations on Sale and Leaseback
Transactions" below. The restrictions do not apply to Capitalized Leases or
Indebtedness that is secured by:
- Liens existing, in the case of any 2001 debt securities, on the date such
2001 debt securities are issued;
- Liens on any property or any Indebtedness of a person existing at the
time the person becomes a Subsidiary (whether by acquisition, merger or
consolidation);
- Liens in favor of us or our Subsidiaries; and
- Liens existing at the time of acquisition of the assets secured thereby
and purchase money Liens.
The restrictions do not apply to extensions, renewals or replacements of
any of the foregoing types of Liens.
LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS
We covenant in the 2001 debt indentures that neither we nor any Restricted
Subsidiary will enter into any arrangement with any person to lease a Principal
Property (except for any arrangements that exist on the date the 2001 debt
securities are issued or that exist at the time any person that owns a Principal
Property becomes a Restricted Subsidiary) which has been or is to be sold by us
or the Restricted Subsidiary to the person unless:
- the sale and leaseback arrangement involves a lease for a term of not
more than three years;
- the sale and leaseback arrangement is entered into between us and any
Subsidiary or between our Subsidiaries;
- we or the Restricted Subsidiary would be entitled to incur indebtedness
secured by a Lien on the Principal Property at least equal in amount to
the Attributable Debt permitted pursuant to the first paragraph under
"Limitations on Liens" without having to secure equally and ratably the
2001 debt securities;
- the proceeds of the sale and leaseback arrangement are at least equal to
the fair market value (as determined by our board of directors in good
faith) of the property and we apply within 180 days after the sale an
amount equal to the greater of the net proceeds of the sale or the
Attributable Debt associated with the property to (i) the retirement of
long-term debt for borrowed money that is not subordinated to the 2001
debt securities and that is not debt to us or a Subsidiary, or (ii) the
purchase or development of other comparable property; or
- the sale and leaseback arrangement is entered into within 180 days after
the initial acquisition of the Principal Property subject to the sale and
leaseback arrangement.
The term "Attributable Debt," with regard to a sale and leaseback
arrangement of a Principal Property, is defined in the 2001 debt indentures as
an amount equal to the lesser of: (a) the fair market value of the property (as
determined in good faith by our board of directors); or (b) the present value of
the total net amount of rent payments to be made under the lease during its
remaining term, discounted at the rate of interest set forth or implicit in the
terms of the lease, compounded semi-annually. The
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calculation of the present value of the total net amount of rent payments is
subject to adjustments specified in the 2001 debt indentures.
The term "Principal Property" is defined in the 2001 debt indentures to
include any parcel of our or our Restricted Subsidiaries' real property and
related fixtures or improvements located in the United States, the aggregate
book value of which on the date of determination exceeds $1.0 billion. The term
"Principal Property" does not include any telecommunications equipment or
parcels of real property and related fixtures or improvements that are
determined in good faith by our board of directors not to be of material
importance to our and our Subsidiaries' total business. As of the date of this
prospectus, neither we nor any of our Subsidiaries own any Principal Property.
DEFAULTS AND REMEDIES
Holders of 2001 debt securities will have specified rights if an Event of
Default (as defined below) occurs in respect of the 2001 debt securities of that
series, as described below.
The term "Event of Default" in respect of the 2001 debt securities of a
particular series means any of the following:
- Viacom does not pay interest on a 2001 debt security of such series
within 30 days of its due date;
- Viacom does not pay the principal of or any premium on a 2001 debt
security of such series when due and payable, at its maturity, or upon
its acceleration or redemption;
- Viacom remains in breach of a covenant or warranty in respect of the 2001
senior indenture for 60 days after Viacom receives a written notice of
default; the notice must be sent by either the 2001 debt trustee or
holders of at least 25% in principal amount of a series of outstanding
2001 debt securities; or
- Viacom or Viacom International, if guarantees are issued, files for
bankruptcy, or other events of bankruptcy specified in the applicable
2001 debt indenture, insolvency or reorganization occur.
If an Event of Default has occurred, the 2001 debt trustee or the holders
of at least 25% in principal amount of the 2001 debt securities of the affected
series may declare the entire unpaid principal amount (and premium, if any) of,
and all the accrued interest on, the 2001 debt securities of that series to be
due and immediately payable. This is called a declaration of acceleration of
maturity. There is no action on the part of the 2001 debt trustee or any holder
of 2001 debt securities required for such declaration if the Event of Default is
a bankruptcy, insolvency or reorganization. Holders of a majority in principal
amount of the 2001 debt securities of a series may also waive certain past
defaults under the 2001 debt indenture on behalf of all of the holders of such
series of 2001 debt securities. A declaration of acceleration of maturity may be
canceled, under specified circumstances, by the holders of at least a majority
in principal amount of a series of 2001 debt securities and the 2001 debt
trustee.
Except in cases of default, where the 2001 debt trustee has special duties,
a 2001 debt trustee is not required to take any action under a 2001 debt
indenture at the request of holders unless the holders offer the 2001 debt
trustee reasonable protection from expenses and liability satisfactory to the
2001 debt trustee. If a reasonable indemnity is provided, the holders of a
majority in principal amount of a series of 2001 debt securities may direct the
time, method and place of conducting any lawsuit or other formal legal action
seeking any remedy available to the debt trustee. The 2001 debt trustee may
refuse to follow those directions in certain circumstances specified in the
applicable 2001 debt indenture. No delay or omission in exercising any right or
remedy will be treated as a waiver of the right, remedy or Event of Default.
Before holders are allowed to bypass the 2001 debt trustee and bring a
lawsuit or other formal legal action or take other steps to enforce their rights
or protect their interests relating to the 2001 debt securities, the following
must occur:
- holders must give the 2001 debt trustee written notice that an Event of
Default has occurred and remains uncured;
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- holders of at least 25% in principal amount of the outstanding 2001 debt
securities of a series must make a written request that the 2001 debt
trustee take action because of the default and must offer the 2001 debt
trustee indemnity satisfactory to the 2001 debt trustee against the cost
and other liabilities of taking that action;
- the 2001 debt trustee must have failed to take action for 60 days after
receipt of the notice and offer of indemnity; and
- holders of a majority in principal amount of the 2001 debt securities of
a series must not have given the 2001 debt trustee a direction
inconsistent with the above notice for a period of 60 days after the debt
trustee has received the notice.
Holders are, however, entitled at any time to bring a lawsuit for the
payment of money due on the 2001 debt securities on or after the due date.
MODIFICATION OF THE 2001 DEBT INDENTURES
The 2001 debt indentures provide that Viacom, Viacom International, if
applicable, and the 2001 debt trustee may, without the consent of any holders of
2001 debt securities, enter into supplemental indentures for the purposes, among
other things, of:
- adding to Viacom's or Viacom International's covenants;
- adding additional events of default;
- change or eliminate any provisions of the 2001 debt indenture so long as
there are no holders entitled to the benefit of the provisions;
- establishing the form or terms of any series of 2001 debt securities; or
- curing ambiguities or inconsistencies in the 2001 debt indenture or
making any other provisions with respect to matters or questions arising
under the 2001 debt indentures.
With specific exceptions, the 2001 debt indentures or the rights of the
holders of the 2001 debt securities may be modified by Viacom, Viacom
International and the 2001 debt trustee with the consent of the holders of a
majority in aggregate principal amount of the 2001 debt securities of each
series affected by the modification then outstanding, but no modification may be
made without the consent of the holders of each outstanding 2001 debt security
affected which would:
- change the maturity of any payment of principal of, or any premium on, or
any installment of interest on any 2001 debt security;
- change the terms of any sinking fund with respect to any 2001 debt
security;
- reduce the principal amount of, or the interest or any premium on, any
2001 debt security upon redemption or repayment at the option of the
holder;
- change any obligation of Viacom to pay additional amounts;
- change any place of payment where, or the currency in which, any 2001
debt security or any premium or interest is payable;
- impair the right to sue for the enforcement of any payment on or with
respect to any 2001 debt security;
- reduce the percentage in principal amount of outstanding 2001 debt
securities of any series required to consent to any supplemental
indenture, any waiver of compliance with provisions of a 2001 debt
indenture or specific defaults and their consequences provided for in the
2001 debt indenture, or otherwise modify the sections in the 2001 debt
indenture relating to these consents; or
- reduce the obligations of Viacom International, if any, in respect of the
due and punctual payment of principal, premium and interest, if any.
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MEETINGS
The 2001 debt indentures contain provisions for convening meetings of the
holders of the 2001 debt securities of any or all series. Specific terms related
to such meetings of the holders are described in the 2001 debt indentures.
DEFEASANCE AND COVENANT DEFEASANCE
Viacom may elect either (i) to defease and be discharged (and, if
applicable, to have Viacom International defeased and discharged) from any and
all obligations with respect to the 2001 debt securities (except as otherwise
provided in the 2001 debt indentures) ("defeasance") or (ii) to be released from
its obligations with respect to certain covenants that are described in the 2001
debt indentures ("covenant defeasance"), upon the deposit with the 2001 debt
trustee, in trust for such purpose, of money and/or government obligations that
through the payment of principal and interest in accordance with their terms
will provide money in an amount sufficient, without reinvestment, to pay the
principal of, premium, if any, and interest on the 2001 debt securities of such
series to maturity or redemption, as the case may be, and any mandatory sinking
fund or analogous senior payments thereon. As a condition to defeasance or
covenant defeasance, Viacom must deliver to the 2001 debt trustee an opinion of
counsel to the effect that the holders of the 2001 debt securities of such
series will not recognize income, gain or loss for United States federal income
tax purposes as a result of such defeasance or covenant defeasance and will be
subject to United States federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such defeasance or
covenant defeasance had not occurred. Such opinion of counsel, in the case of
defeasance under clause (i) above, must refer to and be based upon a ruling of
the Internal Revenue Service or a change in applicable United States federal
income tax law occurring after the date of the 2001 debt indentures.
Viacom may exercise its defeasance option with respect to the 2001 debt
securities of any series notwithstanding its prior exercise of its covenant
defeasance option. If Viacom exercises its defeasance option, payment of the
2001 debt securities of such series may not be accelerated because of an event
of default and the guarantees relating to such 2001 debt securities will cease
to exist. If Viacom exercises its covenant defeasance option, payment of the
2001 debt securities of such series may not be accelerated by reference to any
covenant from which Viacom is released as described under clause (ii) above.
However, if acceleration were to occur for other reasons, the realizable value
at the acceleration date of the money and government obligations in the
defeasance trust could be less than the principal and interest then due on the
2001 debt securities of such series, in that the required deposit in the
defeasance trust is based upon scheduled cash flows rather than market value,
which will vary depending upon interest rates and other factors.
NOTICES
Notices to holders of 2001 debt securities will be given by mail to the
addresses of such holders as they appear in the security register.
TITLE
We, Viacom International, as guarantor, the 2001 debt trustees and any
agent of us, may treat the registered owner of any registered 2001 debt security
as the absolute owner thereof (whether or not the 2001 debt security shall be
overdue and notwithstanding any notice to the contrary) for the purpose of
making payment and for all other purposes.
REPLACEMENT OF 2001 DEBT SECURITIES
We will replace any mutilated 2001 debt security at the expense of the
holders upon surrender to the trustee. We will replace 2001 debt securities that
become destroyed, lost or stolen at the expense of the holder upon delivery to
the trustee of satisfactory evidence of the destruction, loss or theft thereof.
In the event of a destroyed, lost or stolen 2001 debt security, an indemnity or
security satisfactory to us and the
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2001 debt trustee may be required at the expense of the holder of the 2001 debt
security before a replacement 2001 debt security will be issued.
GOVERNING LAW
The 2001 debt indentures, the 2001 debt securities and the guarantees will
be governed by, and construed in accordance with, the laws of the State of New
York.
CONCERNING THE 2001 DEBT TRUSTEES
Viacom will identify the 2001 debt trustees in the relevant prospectus
supplement. In specific instances, Viacom or the holders of a majority of the
then outstanding principal amount of the 2001 debt securities issued under a
2001 debt indenture may remove the 2001 debt trustee and appoint a successor
trustee. The 2001 debt trustee may become the owner or pledgee of any of the
2001 debt securities with the same rights, subject to conflict of interest
restrictions, it would have if it were not the 2001 debt trustee. The 2001 debt
trustee and any successor trustee must be eligible to act as trustee under the
Section 310(a)(1) of the Trust Indenture Act of 1939 and shall have a combined
capital and surplus of at least $50,000,000 and be subject to examination by
federal or state authority. Subject to applicable law relating to conflicts of
interest, the 2001 debt trustee may also serve as trustee under other indentures
relating to securities issued by Viacom or its affiliated companies and may
engage in commercial transactions with Viacom and its affiliated companies. The
initial 2001 debt trustee under each 2001 debt indenture is The Bank of New
York.
2001 SENIOR DEBT SECURITIES
Viacom will describe the specific terms of the 2001 senior debt securities
offered by any prospectus supplement and the extent, if any, to which the
general provisions summarized in this description may apply to any series of its
2001 senior debt securities in the prospectus supplement relating to that
series.
2001 SENIOR SUBORDINATED DEBT SECURITIES
In addition to the provisions previously described in this prospectus and
applicable to all 2001 debt securities, the following description of Viacom's
2001 senior subordinated debt securities summarizes the additional terms and
provisions of its 2001 senior subordinated debt securities to which any
prospectus supplement may relate. The specific terms of Viacom's 2001 senior
subordinated debt securities offered by any prospectus supplement and the
extent, if any, to which the general provisions summarized below may apply to
any series of 2001 senior subordinated debt securities will be described in the
prospectus supplement relating to that series.
Subordination. The 2001 senior subordinated debt securities will be
subordinated in right of payment to Viacom's senior indebtedness to the extent
set forth in the applicable prospectus supplement.
The payment of the principal of, premium, if any, and interest on the 2001
senior subordinated debt securities will be subordinated in right of payment to
the prior payment in full of all of Viacom's senior indebtedness. Viacom may not
make payment of principal of, premium, if any, or interest on the 2001 senior
subordinated debt securities and may not acquire, or make payment on account of
any sinking fund for, the 2001 senior subordinated debt securities unless full
payment of amounts then due for principal, premium, if any, and interest on all
senior indebtedness by reason of the maturity thereof has been made or duly
provided for in cash or in a manner satisfactory to the holders of the senior
indebtedness. In addition, the senior subordinated indenture provides that if a
default has occurred giving the holders of the senior indebtedness the right to
accelerate the maturity of that senior indebtedness, or an event has occurred
which, with the giving of notice, or lapse of time, or both, would constitute an
event of default, then unless and until that event has been cured or waived or
has ceased to exist, no payment of principal, premium, if any, or interest on
the 2001 senior subordinated debt securities and no acquisition of, or payment
on account of a sinking fund for, the 2001 senior subordinated debt securities
may be made. Viacom will give prompt written notice to the 2001 senior
subordinated trustee of any default under any
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senior indebtedness or under any agreement pursuant to which senior indebtedness
may have been issued. The 2001 senior subordinated indenture provisions
described in this paragraph, however, do not prevent Viacom from making a
sinking fund payment with 2001 senior subordinated debt securities acquired
prior to the maturity of senior indebtedness or, in the case of default, prior
to the default and notice thereof. Upon any distribution of assets in connection
with Viacom's dissolution, liquidation or reorganization, all senior
indebtedness must be paid in full before the holders of the 2001 senior
subordinated debt securities are entitled to any payments whatsoever. As a
result of these subordination provisions, in the event of Viacom's insolvency,
holders of the 2001 senior subordinated debt securities may recover ratably less
than the holders of Viacom's senior indebtedness.
For purposes of the description of the 2001 senior subordinated debt
securities, the term "Senior Indebtedness" of the Company or the Guarantor, as
the case may be, means the principal of and premium, if any, and interest on the
following, whether outstanding on the date of execution of the senior
subordinated indenture or incurred or created after the execution:
- indebtedness for money borrowed by it, or evidenced by securities, other
than the 2001 senior subordinated debt securities or any other
indebtedness which is subordinate to the 2001 senior subordinated debt
securities;
- obligations with respect to letters of credit;
- indebtedness constituting a guarantee of indebtedness of others, other
than any subordinated guarantees;
- obligations under Capitalized Leases (as defined below) (other than (x)
telecommunications equipment, including satellite transponders, and (y)
theme park equipment and attractions);
- any obligation of a third party if secured by a lien on assets; or
- renewals, extensions or refundings of any of the indebtedness referred to
in the preceding bullet points unless, in the case of any particular
indebtedness, renewal, extension or refunding, under the express
provisions of the instrument creating or evidencing the same, or pursuant
to which the same is outstanding, the indebtedness or the renewal,
extension or refunding thereof is not superior in right of payment to the
2001 senior subordinated debt securities.
Senior Indebtedness of the Company or the Guarantor, as the case may be,
will not include any obligation of the Company or the Guarantor (i) to any
subsidiary of the Company or the Guarantor or to any person with respect to
which the Company or the Guarantor is a subsidiary or (ii) specifically with
respect to the production, distribution or acquisition of motion pictures or
other programming rights, talent or publishing rights.
As of March 31, 2001, a total of approximately $10.2 billion of Viacom's
indebtedness was Senior Indebtedness and approximately $647 million of Viacom
International's indebtedness was Senior Indebtedness.
CERTAIN DEFINITIONS
The following definitions are applicable to the 2001 debt indentures:
"Capitalized Lease" means any obligation of a person to pay rent or
other amounts incurred with respect to real property or equipment acquired
or leased by such person and used in its business that is required to be
recorded as a capital lease in accordance with generally accepted
accounting principles consistently applied as in effect from time to time.
"Indebtedness" of any person means, without duplication (i) any
obligation of such person for money borrowed, (ii) any obligation of such
person evidenced by bonds, debentures, notes or other similar instruments,
(iii) any reimbursement obligation of such person in respect of letters of
credit or other similar instruments which support financial obligations
which would otherwise become Indebtedness, (iv) any obligation of such
person under Capitalized Leases (other than in respect of
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(x) telecommunications equipment including, without limitation, satellite
transponders, and (y) theme park equipment and attractions), and (v) any
obligation of any third party to the extent secured by a Lien on the assets
of such person; provided, however, that "Indebtedness" of such person shall
not include any obligation of such person (i) to any Subsidiary of such
person or to any person with respect to which such person is a Subsidiary
or (ii) specifically with respect to the production, distribution or
acquisition of motion pictures or other programming rights, talent or
publishing rights. When used with respect to Viacom, the term
"Indebtedness" also includes any obligation of Viacom International
specified in clauses (i) through (v) above to the extent that said
Indebtedness is guaranteed by Viacom.
"Lien" means any pledge, mortgage, lien, encumbrance or other security
interest.
"Restricted Subsidiary" means a corporation all of the outstanding
voting stock of which is owned, directly or indirectly, by Viacom or by one
or more of its Subsidiaries, or by Viacom and one or more of its
Subsidiaries, which is incorporated under the laws of a State of the United
States, and which owns a Principal Property.
"Subsidiary" of any person means (i) a corporation a majority of the
outstanding voting stock of which is at the time, directly or indirectly,
owned by such person, by one or more Subsidiaries of such person, or by
such person and one or more Subsidiaries thereof or (ii) any other person
(other than a corporation), including, without limitation, a partnership or
joint venture, in which such person, one or more Subsidiaries thereof, or
such person and one or more Subsidiaries thereof, directly or indirectly,
at the date of determination thereof, has at least majority ownership
interest entitled to vote in the election of directors, managers or
trustees thereof (or other persons performing similar functions).
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DESCRIPTION OF THE 1995 SENIOR DEBT SECURITIES
FURTHER ISSUES
We may from time to time without notice to, or the consent of, the holders
of a series of 1995 senior debt securities, create and issue further 1995 senior
debt securities of the same series, equal in rank to the 1995 senior debt
securities in all respects (or in all respects except for the payment of
interest accruing prior to the issue date of the new notes or except for the
first payment of interest following the issue date of the new notes) so that the
new notes may be consolidated and form a single series with the relevant series
of 1995 senior debt securities and have the same terms as to status, redemption
or otherwise as the relevant series of 1995 senior debt securities.
MERGER, CONSOLIDATION OR SALE OF ASSETS
Under the terms of the 1995 senior indenture, we and Viacom International
generally would be permitted to consolidate or merge with another corporation.
We and Viacom International would also be permitted to sell all or substantially
all of our assets to another person. However, neither we nor Viacom
International may take any of these actions unless all the following conditions
are met:
- the merger, consolidation or sale of assets must not cause an Event of
Default. See "-- Defaults and Remedies" below. An Event of Default for
this purpose would also include any event that would be an Event of
Default if the notice or time requirements were disregarded;
- the person we would merge or consolidate with or sell all or
substantially all of our assets to must be organized under the laws of
any state of the United States;
- the person we would merge or consolidate with or sell all or
substantially all of our assets to must agree to be legally responsible
for the outstanding securities issued under the 1995 senior indenture;
and
- we or Viacom International must deliver specified certificates and
documents to the 1995 senior debt trustee.
We and Viacom International may merge or consolidate with, or sell all or
substantially all of our assets to each other or any of our Subsidiaries. When
we make reference in this section to the sale of "all or substantially all of
our assets," we mean property and assets generating revenues representing, in
the aggregate, at least 80% of our total consolidated revenues.
In the event that Viacom or Viacom International consolidates or merges
with another entity or sells all or substantially all of its assets to another
entity, the surviving entity shall be substituted for Viacom or Viacom
International, as the case may be, under the 1995 senior indenture and Viacom or
Viacom International, as the case may be, shall be discharged from all of its
obligations under the 1995 senior indenture.
LIMITATIONS ON LIENS
We covenant in the 1995 senior indenture that we will not create, assume or
permit any Lien on any of our properties or assets, unless we secure the 1995
senior debt securities at least equally and ratably to the secured Indebtedness.
The foregoing only applies to Liens that in the aggregate exceed 15% of our
total consolidated assets, reduced by the Attributable Debt related to any
permitted sale and leaseback arrangement. See "-- Limitations on Sale and
Leaseback Transactions" below. The restrictions do not apply to Capitalized
Leases or Indebtedness that is secured by:
- Liens existing, in the case of any 1995 senior debt securities, on the
date such 1995 senior debt securities are issued;
- Liens on any property or any Indebtedness of a person existing at the
time the person becomes a Subsidiary (whether by acquisition, merger or
consolidation);
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- Liens in favor of us or our Subsidiaries; and
- Liens existing at the time of acquisition of the assets secured thereby
and purchase money Liens.
The restrictions do not apply to extensions, renewals or replacements of
any of the foregoing types of Liens.
LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS
We covenant in the 1995 senior indenture that neither we nor any Restricted
Subsidiary will enter into any arrangement with any person to lease a Principal
Property (except for any arrangements that exist on the date the 1995 senior
debt securities are issued or that exist at the time any person that owns a
Principal Property becomes a Restricted Subsidiary) which has been or is to be
sold by us or the Restricted Subsidiary to the person unless:
- the sale and leaseback arrangement involves a lease for a term of not
more than three years;
- the sale and leaseback arrangement is entered into between us and any
Subsidiary or between our Subsidiaries;
- we or the Restricted Subsidiary would be entitled to incur indebtedness
secured by a Lien on the Principal Property at least equal in amount to
the Attributable Debt permitted pursuant to the first paragraph under
"Limitations on Liens" without having to secure equally and ratably the
1995 senior debt securities;
- the proceeds of the sale and leaseback arrangement are at least equal to
the fair market value (as determined by our board of directors in good
faith) of the property and we apply within 180 days after the sale an
amount equal to the greater of the net proceeds of the sale or the
Attributable Debt associated with the property to (i) the retirement of
long-term debt for borrowed money that is not subordinated to the 1995
senior debt securities and that is not debt to us or a Subsidiary, or
(ii) the purchase or development of other comparable property; or
- the sale and leaseback arrangement is entered into within 180 days after
the initial acquisition of the Principal Property subject to the sale and
leaseback arrangement.
The term "Attributable Debt," with regard to a sale and leaseback
arrangement of a Principal Property, is defined in the 1995 senior indenture as
an amount equal to the lesser of: (a) the fair market value of the property (as
determined in good faith by our board of directors); or (b) the present value of
the total net amount of rent payments to be made under the lease during its
remaining term, discounted at the rate of interest set forth or implicit in the
terms of the lease, compounded semi-annually. The calculation of the present
value of the total net amount of rent payments is subject to adjustments
specified in the 1995 senior indenture.
The term "Principal Property" is defined in the 1995 senior indenture to
include any parcel of our or our Restricted Subsidiaries' real property and
related fixtures or improvements located in the United States, the aggregate
book value of which on the date of determination exceeds $1.0 billion. The term
"Principal Property" does not include any telecommunications equipment or
parcels of real property and related fixtures or improvements that are
determined in good faith by our board of directors not to be of material
importance to our and our Subsidiaries' total business. As of the date of this
prospectus, neither we nor any of our Subsidiaries own any Principal Property.
DEFAULTS AND REMEDIES
Holders of 1995 senior debt securities have specified rights if an Event of
Default occurs in respect of the 1995 senior debt securities of that series, as
described below.
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The term "Event of Default" in respect of the 1995 senior debt securities
means any of the following:
- we do not pay interest on a 1995 senior debt security of such series
within 30 days of its due date;
- we do not pay the principal of or any premium on a 1995 senior debt
security of such series on its due date;
- we remain in breach of a covenant or warranty in respect of the 1995
senior indenture for 60 days after we receive a written notice of
default. The notice must be sent by either the trustee or holders of at
least 25% in principal amount of a series of outstanding 1995 senior debt
securities;
- we are in default under agreements under which we have Indebtedness
outstanding in excess of $250 million in the aggregate and which
Indebtedness is due either at maturity or has been declared due prior to
maturity and remains unpaid;
- we fail to pay a money judgment in excess of $250 million for a period of
60 days after it becomes final and not subject to further appeal; or
- we or Viacom International file for bankruptcy, or other specified events
of bankruptcy, insolvency or reorganization occur.
If an Event of Default has occurred, the 1995 senior debt trustee or the
holders of at least 25% in principal amount of the 1995 senior debt securities
of the affected series may declare the entire principal amount and premium, if
any, and all the accrued interest on, the 1995 senior debt securities of that
series to be due and immediately payable. This is called a declaration of
acceleration of maturity. There is no action on the part of the 1995 senior debt
trustee or any holder of 1995 senior debt securities required for such
declaration if the Event of Default is a bankruptcy, insolvency or
reorganization.
Holders of a majority in principal amount of the 1995 senior debt
securities of a series may also waive certain past defaults under the 1995
senior indenture on behalf of all of the holders of such series of 1995 senior
debt securities. A declaration of acceleration of maturity may be canceled,
under specified circumstances, by the holders of at least a majority in
principal amount of a series of 1995 senior debt securities.
Except in cases of default, where the 1995 senior debt trustee has special
duties, the 1995 senior debt trustee is not required to take any action under
the 1995 senior indenture at the request of holders unless the holders offer the
1995 senior debt trustee reasonable protection from expenses and liability
satisfactory to the 1995 senior debt trustee. If a reasonable indemnity is
provided, the holders of a majority in principal amount of a series of 1995
senior debt securities may direct the time, method and place of conducting any
lawsuit or other formal legal action seeking any remedy available to the 1995
senior debt trustee. The 1995 senior debt trustee may refuse to follow those
directions in specified circumstances. No delay or omission in exercising any
right or remedy will be treated as a waiver of the right, remedy or Event of
Default.
Before holders are allowed to bypass the 1995 senior debt trustee and bring
a lawsuit or other formal legal action or take other steps to enforce their
rights or protect their interests relating to the 1995 senior debt securities,
the following must occur:
- holders must give the 1995 senior debt trustee written notice that an
Event of Default has occurred and remains uncured;
- holders of at least 25% in principal amount of the outstanding 1995
senior debt securities of a series must make a written request that the
1995 senior debt trustee take action because of the default and must
offer the 1995 senior debt trustee indemnity satisfactory to the 1995
senior debt trustee against the cost and other liabilities of taking that
action;
- the 1995 senior debt trustee must have failed to take action for 60 days
after receipt of the notice and offer of indemnity; and
- holders of a majority in principal amount of the 1995 senior debt
securities of a series must not have given the 1995 senior debt trustee a
direction inconsistent with the above notice.
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Holders of 1995 senior debt securities are, however, entitled at any time
to bring a lawsuit for the payment of money due on those 1995 senior debt
securities on or after the due date.
We are required to furnish to the 1995 senior debt trustee an annual
statement as to our performance of our obligations under the 1995 senior
indenture and as to any default in such performance. We are also required to
notify the 1995 senior debt trustee of any event that is, or after notice or
lapse of time or both would become, an Event of Default.
PAYMENT AND PAYING AGENTS
Unless otherwise specified in the applicable prospectus supplement,
principal of, premium, if any, and interest on the 1995 senior debt securities
will be payable, subject to any applicable laws and regulations, at the office
of our paying agent or paying agents that we may designate from time to time,
except that at our option, payment of interest may be made by check mailed to
the address of the person entitled thereto at the address in the security
register. Unless otherwise specified in the applicable prospectus supplement, we
will pay interest on the 1995 senior debt securities on any interest payment
date to the person in whose name the 1995 senior debt security (or predecessor
1995 senior debt security) is registered at the close of business on the regular
record date for such interest.
Unless otherwise specified in the applicable prospectus supplement, the
corporate trust office of the 1995 senior debt trustee will be designated as our
paying agent for payments with respect to the 1995 senior debt securities of
each series. We may at any time designate additional paying agents or rescind
the designation of any paying agent or approve a change in the office through
which any paying agent acts, except that we will be required to maintain a
paying agent in each place of payment for the series.
Any money paid by us or Viacom International, as guarantor, to a paying
agent for the payment of the principal of, premium, if any, or interest on any
1995 senior debt security of any series that remains unclaimed at the end of two
years after such principal, premium or interest has become due and payable will
be repaid to us or Viacom International, as guarantor, as the case may be, and
the holder of such 1995 senior debt security may thereafter look only to us and
Viacom International for that payment.
MEETINGS, MODIFICATION AND WAIVER
The 1995 senior debt indenture provides that Viacom, Viacom International,
if applicable, and the 1995 senior debt trustee may, without the consent of any
holders of 1995 senior debt securities, enter into supplemental indentures for
the purposes, among other things, of:
- adding to Viacom or Viacom International's covenants;
- adding additional events of default;
- change or eliminate any provisions of the 1995 debt indenture so long as
there are no holders entitled to the benefit of the provisions;
- establishing the form or terms of any series of debt securities; or
- curing ambiguities or inconsistencies in the debt indenture or making
other provisions.
Modifications and amendments of the 1995 senior indenture may be made by
us, Viacom International, as guarantor, and the 1995 senior debt trustee with
the consent of the holders of not less than a majority in aggregate principal
amount of the outstanding 1995 senior debt securities of each series affected by
such modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the holders of each outstanding 1995
senior debt security affected thereby, (a) change the stated maturity of the
principal of, or any installment of principal of or interest on, any 1995 senior
debt security or the terms of any sinking fund or analogous payment with respect
to any 1995 senior debt security, (b) reduce the principal amount of, or premium
or interest on, any 1995 senior debt security, (c) change our obligation to pay
additional amounts, (d) reduce the amount of principal of an original issue
discount 1995 senior debt security payable upon acceleration of the maturity
thereof or
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provable in bankruptcy, (e) change the place of payment where, or the coin or
currency in which, any 1995 senior debt security or any premium or interest
thereon is payable, (f) impair the right to institute suit for the enforcement
of any payment on or with respect to any 1995 senior debt security, (g) reduce
the percentage in principal amount of outstanding 1995 senior debt securities of
any series, the consent of whose holders is required for modification or
amendment of the 1995 senior indenture or for waiver of compliance with certain
provisions of the 1995 senior indenture or for waiver of certain defaults, (h)
reduce the requirements contained in the 1995 senior indenture for quorum or
voting, (i) change our obligation to maintain an office or agency in the places
and for the purposes required by the 1995 senior indenture, or (j) reduce the
obligations of Viacom International, if any, in respect of the due and punctual
payment of any principal of, premium or interest on any 1995 senior debt
security or any additional amounts in respect thereof.
The holders of at least a majority in aggregate principal amount of the
outstanding 1995 senior debt securities of a series may, on behalf of the
holders of all the 1995 senior debt securities of that series, waive, insofar as
that series is concerned, our compliance with specified provisions of the 1995
senior indenture. The holders of not less than a majority in aggregate principal
amount of the outstanding 1995 senior debt securities of a series may, on behalf
of all holders of 1995 senior debt securities of that series, waive any past
default under the 1995 senior indenture with respect to 1995 senior debt
securities of that series, except a default (a) in the payment of principal of
or any premium or interest on any 1995 senior debt security of such series or
(b) in respect of any other provision of the 1995 senior indenture that cannot
be modified or amended without the consent of the holder of each outstanding
1995 senior debt security of such series affected thereby.
The 1995 senior indenture provides that, in determining whether the holders
of the requisite principal amount of the outstanding 1995 senior debt securities
have given any request, demand, authorization, direction, notice, consent or
waiver thereunder or are present at a meeting of holders of 1995 senior debt
securities for quorum purposes, the principal amount of an original issue
discount senior security that shall be deemed to be outstanding shall be the
amount that would be due and payable as of the date of such determination upon
acceleration of the maturity thereof.
The 1995 senior indenture contains provisions for convening meetings of the
holders of 1995 senior debt securities of any or all series. A meeting may be
called at any time by the 1995 senior debt trustee, and also, upon request, by
us or the holders of at least 33 1/3% in aggregate principal amount of the
outstanding 1995 senior debt securities of such series, in any such case upon
notice given in accordance with "Notices" below. Except for any consent that
must be given by the holder of each outstanding 1995 senior debt security
affected thereby, as described above, any resolution presented at a meeting or
adjourned meeting at which a quorum is present may be adopted by the affirmative
vote of the holders of a majority in principal amount of the outstanding 1995
senior debt securities of that series; provided, however, that, except for any
consent that must be given by the holder of each outstanding 1995 senior debt
security affected thereby, as described above, any resolution with respect to
any consent, waiver, request, demand, notice, authorization, direction or other
action that may be made, given or taken by the holders of not less than a
specified percentage in principal amount of the outstanding 1995 senior debt
securities of a series may be adopted at a meeting or an adjourned meeting at
which a quorum is present only by the affirmative vote of the holders of not
less than such specified percentage in principal amount of the outstanding 1995
senior debt securities of that series.
Any resolution passed or decision taken at any meeting of holders of 1995
senior debt securities of any series duly held in accordance with the 1995
senior indenture will be binding on all holders of 1995 senior debt securities
of that series. The quorum at any meeting called to adopt a resolution, and at
any adjourned meeting, will be persons holding or representing a majority in
principal amount of the outstanding 1995 senior debt securities of a series;
provided, however, that, if any action is to be taken at such meeting with
respect to a consent, waiver, request, demand, notice, authorization, direction
or other action that may be given by the holders of not less than a specified
percentage in principal amount of the outstanding 1995 senior debt securities of
a series, the persons holding or representing such specified
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percentage in principal amount of the outstanding 1995 senior debt securities of
such series will constitute a quorum.
DEFEASANCE AND COVENANT DEFEASANCE
We may elect either (i) to defease and be discharged (and, if applicable,
to have Viacom International defeased and discharged) from any and all
obligations with respect to the 1995 senior debt securities (except as otherwise
provided in the 1995 senior indenture) ("defeasance") or (ii) to be released
from our obligations with respect to certain covenants that are described in the
1995 senior indenture ("covenant defeasance"), upon the deposit with the 1995
senior debt trustee, in trust for such purpose, of money and/or specified
government obligations that through the payment of principal and interest in
accordance with their terms will provide money in an amount sufficient, without
reinvestment, to pay the principal of, premium, if any, and interest on the 1995
senior debt securities of such series to maturity or redemption, as the case may
be, and any mandatory sinking fund or analogous senior payments thereon. As a
condition to defeasance or covenant defeasance, we must deliver to the 1995
senior debt trustee an opinion of counsel to the effect that the holders of the
1995 senior debt securities of such series will not recognize income, gain or
loss for United States federal income tax purposes as a result of such
defeasance or covenant defeasance and will be subject to United States federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such defeasance or covenant defeasance had not
occurred. Such opinion of counsel, in the case of defeasance under clause (i)
above, must refer to and be based upon a ruling of the Internal Revenue Service
or a change in applicable United States federal income tax law occurring after
the date of the 1995 senior indenture.
We may exercise our defeasance option with respect to the 1995 senior debt
securities of any series notwithstanding the prior exercise of our covenant
defeasance option. If we exercise our defeasance option, payment of the 1995
senior debt securities of such series may not be accelerated because of an event
of default and the guarantees relating to such 1995 senior debt securities will
cease to exist. If we exercise our covenant defeasance option, payment of the
1995 senior debt securities of such series may not be accelerated by reference
to any covenant from which we are released as described under clause (ii) above.
However, if acceleration were to occur for other reasons, the realizable value
at the acceleration date of the money and government obligations in the
defeasance trust could be less than the principal and interest then due on the
1995 senior debt securities of such series, in that the required deposit in the
defeasance trust is based upon scheduled cash flows rather than market value,
which will vary depending upon interest rates and other factors.
NOTICES
Notices to holders of 1995 senior debt securities will be given by mail to
the addresses of such holders as they appear in the security register.
TITLE
We, Viacom International, as guarantor, the 1995 senior debt trustee and
any agent of us, may treat the registered owner of any registered 1995 senior
debt security as the absolute owner thereof (whether or not the 1995 senior debt
security shall be overdue and notwithstanding any notice to the contrary) for
the purpose of making payment and for all other purposes.
REPLACEMENT OF 1995 SENIOR DEBT SECURITIES
We will replace any mutilated 1995 senior debt security at the expense of
the holders upon surrender to the trustee. We will replace 1995 senior debt
securities that become destroyed, lost or stolen at the expense of the holder
upon delivery to the trustee of satisfactory evidence of the destruction, loss
or theft thereof. In the event of a destroyed, lost or stolen 1995 senior debt
security, an indemnity or security satisfactory to us and the 1995 senior debt
trustee may be required at the expense of the holder of the 1995 senior debt
security before a replacement 1995 senior debt security will be issued.
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GOVERNING LAW
The 1995 senior indenture, the 1995 senior debt securities and the
guarantees will be governed by, and construed in accordance with, the laws of
the State of New York.
REGARDING THE 1995 SENIOR DEBT TRUSTEE
We and Viacom International maintain deposit accounts and banking and
borrowing relations with Citibank, N.A., the 1995 senior debt trustee under the
1995 senior indenture, and such 1995 senior debt trustee is currently a lender
to us and Viacom International and certain of our other subsidiaries. We may
remove the 1995 senior debt trustee at any time with respect to the 1995 senior
debt securities of any series, provided that we immediately appoint a successor
trustee meeting the requirements for trustees specified in the 1995 senior
indenture and provided further that no default with respect to such 1995 senior
debt securities has occurred and is continuing.
CERTAIN DEFINITIONS
The following definitions are applicable to the 1995 senior indenture:
"Capitalized Lease" means any obligation of a person to pay rent or
other amounts incurred with respect to real property or equipment acquired
or leased by such person and used in its business that is required to be
recorded as a capital lease in accordance with generally accepted
accounting principles consistently applied as in effect from time to time.
"Indebtedness" of any person means, without duplication (i) any
obligation of such person for money borrowed, (ii) any obligation of such
person evidenced by bonds, debentures, notes or other similar instruments,
(iii) any reimbursement obligation of such person in respect of letters of
credit or other similar instruments which support financial obligations
which would otherwise become Indebtedness, (iv) any obligation of such
person under Capitalized Leases (other than in respect of (x)
telecommunications equipment including, without limitation, satellite
transponders, and (y) theme park equipment and attractions), and (v) any
obligation of any third party to the extent secured by a Lien on the assets
of such person; provided, however, that "Indebtedness" of such person shall
not include any obligation of such person (a) to any Subsidiary of such
person or to any person with respect to which such person is a Subsidiary
or (b) specifically with respect to the production, distribution or
acquisition of motion pictures or other programming rights, talent or
publishing rights. When used with respect to Viacom, the term
"Indebtedness" also includes any obligation of Viacom International
specified in clauses (i) through (v) above to the extent that said
Indebtedness is guaranteed by Viacom.
"Lien" means any pledge, mortgage, lien, encumbrance or other security
interest.
"Restricted Subsidiary" means a corporation all of the outstanding
voting stock of which is owned, directly or indirectly, by Viacom or by one
or more of its Subsidiaries, or by Viacom and one or more of its
Subsidiaries, which is incorporated under the laws of a State of the United
States, and which owns a Principal Property.
"Subsidiary" of any person means (i) a corporation a majority of the
outstanding voting stock of which is at the time, directly or indirectly,
owned by such person, by one or more Subsidiaries of such person, or by
such person and one or more Subsidiaries thereof or (ii) any other person
(other than a corporation), including, without limitation, a partnership or
joint venture, in which such person, one or more Subsidiaries thereof, or
such person and one or more Subsidiaries thereof, directly or indirectly,
at the date of determination thereof, has at least majority ownership
interest entitled to vote in the election of directors, managers or
trustees thereof (or other persons performing similar functions).
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DESCRIPTION OF PREFERRED STOCK
The following description sets forth certain general terms of preferred
stock which Viacom may issue. The terms of any series of the preferred stock
will be described in the applicable prospectus supplement relating to the
preferred stock being offered. The description set forth below and in any
prospectus supplement is not complete, and is subject to, and qualified in its
entirety by reference to, Viacom's restated certificate of incorporation, and
the certificate of designations relating to each particular series of the
preferred stock, which was or will be filed with the SEC at or before the
issuance of the series of preferred stock.
TERMS OF THE PREFERRED STOCK
Under Viacom's restated certificate of incorporation Viacom is authorized
to issue up to 25,000,000 shares of preferred stock, par value $0.01 per share.
The board of directors of Viacom has the authority, without approval of the
stockholders, to issue all of the shares of preferred stock which are currently
authorized in one or more series and to fix the number of shares and the rights,
preferences, privileges, qualifications, restrictions and limitations of each
series. As of March 31, 2001, Viacom had 25,000,000 shares of preferred stock
available for issuance.
The applicable prospectus supplement will describe the terms of each series
of preferred stock, including, where applicable, the following:
- the designation, stated value, liquidation preference and number of
shares offered;
- the offering price or prices;
- the dividend rate or rates, or method of calculation, the dividend
periods, the date on which dividends shall be payable and whether
dividends are cumulative or noncumulative and, if cumulative, the dates
from which dividends begin to accumulate;
- any redemption or sinking fund provisions;
- any conversion or exchange provisions;
- any voting rights;
- whether the preferred stock will be issued in certificated or book-entry
form;
- whether the preferred stock will be listed on a national securities
exchange;
- information with respect to any book-entry procedures;
- a discussion of any material federal income tax and other special
considerations, procedures and limitations relating to the preferred
stock; and
- any additional rights, preferences, privileges, limitations and
restrictions of the preferred stock which are not inconsistent with the
provisions of the restated certificate of incorporation.
The preferred stock will be, when issued against payment, fully paid and
nonassessable. Holders will have no preemptive rights to subscribe for any
additional securities which Viacom may issue. Unless otherwise specified in the
applicable prospectus supplement, the shares of each series of preferred stock
will rank equally with all other outstanding series of preferred stock issued by
Viacom as to payment of dividends, other than with respect to cumulation of
dividends, and as to the distribution of assets upon liquidation, dissolution,
or winding up of Viacom. As of March 31, 2001, there were no shares of Viacom's
preferred stock outstanding. Each series of preferred stock will rank senior to
the common stock, and any other stock of Viacom that is expressly made junior to
that series of preferred stock.
Unless otherwise specified in the applicable prospectus supplement, The
Bank of New York will be the transfer agent, dividend disbursing agent and
registrar for the shares of the preferred stock.
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Viacom's rights and the rights of holders of Viacom securities, including
the holders of preferred stock, to participate in the distribution of assets of
any subsidiary of Viacom upon its liquidation or recapitalization will be
subject to the prior claims of the subsidiary's creditors and preferred
stockholders, except to the extent Viacom may itself be a creditor with
recognized claims against the subsidiary or a holder of preferred stock of the
subsidiary.
DIVIDENDS AND DISTRIBUTIONS
Unless otherwise specified in the prospectus supplement, holders of shares
of the preferred stock will be entitled to receive, as, if and when declared by
the board of directors of Viacom or a duly authorized committee of the board of
directors, out of funds legally available for the payment of dividends, cash
dividends at the rate set forth in, or calculated in accordance with the formula
set forth in, the prospectus supplement relating to the preferred stock being
offered. Dividends on the preferred stock may be cumulative or noncumulative as
provided in the applicable prospectus supplement. Dividends on the cumulative
preferred stock will accumulate from the date of original issue and will be
payable as specified in the applicable prospectus supplement. The applicable
prospectus supplement will set forth the applicable dividend period with respect
to a dividend payment date. If the board of directors of Viacom or a duly
authorized committee of the board of directors fails to declare a dividend on
any series of noncumulative preferred stock for any dividend period, Viacom will
have no obligation to pay a dividend for that period, whether or not dividends
on that series of noncumulative preferred stock are declared for any future
dividend period.
No dividends will be declared or paid or set apart for payment on the
preferred stock of any series ranking, as to dividends, equally with or junior
to any other series of preferred stock for any period unless dividends have been
or are contemporaneously declared and paid or declared and a sum sufficient for
the payment of those dividends has been set apart for:
- in the case of cumulative preferred stock, all dividend periods
terminating on or before the date of payment of full cumulative
dividends; or
- in the case of noncumulative preferred stock, the immediately preceding
dividend period.
When dividends are not paid in full upon any series of preferred stock, and
any other preferred stock ranking equally as to dividends with that series of
preferred stock, all dividends declared upon shares of that series of preferred
stock and any other preferred stock ranking equally as to dividends will be
declared pro rata so that the amount of dividends declared per share on that
series of preferred stock and any other preferred stock ranking equally as to
dividends will in all cases bear to each other the same ratio that accrued
dividends per share on the shares of that series of preferred stock and the
other preferred stock bear to each other. In the case of noncumulative preferred
stock, any accrued dividends described in the immediately preceding paragraph
will not include any cumulation in respect of unpaid dividends for prior
dividend periods.
Except as provided in the immediately preceding paragraph or the applicable
prospectus supplement unless full dividends on all outstanding shares of any
series of preferred stock have been declared and paid, in the case of a series
of cumulative preferred stock, for all past dividend periods, or in the case of
noncumulative preferred stock, for the immediately preceding dividend period,
Viacom may not declare dividends or pay or set aside for payment or other
distribution on any of its capital stock ranking junior to or equally with that
series of preferred stock as to dividends or upon liquidation, other than
dividends or distributions paid in shares of, or options, warrants or rights to
subscribe for or purchase shares of, the common stock of Viacom or other capital
stock of Viacom ranking junior to that series of preferred stock as to dividends
and upon liquidation, and other than in connection with the distribution or
trading of any of its capital stock, Viacom may not redeem, purchase or
otherwise acquire any of its capital stock ranking junior to or equally with
that series of preferred stock as to dividends or upon liquidation, for any
consideration or any moneys paid to or made available for a sinking fund for the
redemption of any shares of any of its capital stock, except by conversion or
exchange for capital stock of Viacom ranking junior to that series of preferred
stock as to dividends and upon liquidation.
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Unless otherwise specified in the applicable prospectus supplement, the
amount of dividends payable for any period shorter than a full dividend period
shall be computed on the basis of twelve 30-day months, a 360-day year and the
actual number of days elapsed in any period of less than one month.
LIQUIDATION PREFERENCE
Unless otherwise specified in the applicable prospectus supplement, upon
any voluntary or involuntary liquidation, dissolution or winding up of Viacom,
the holders of the preferred stock will have preference and priority over the
common stock of Viacom and any other class of stock of Viacom ranking junior to
the preferred stock upon liquidation, dissolution or winding up, for payments
out of or distributions of the assets of Viacom or proceeds from any
liquidation, of the amount per share set forth in the applicable prospectus
supplement plus all accrued and unpaid dividends, to the date of final
distribution to such holders. After any liquidating payment, the holders of
preferred stock will not be entitled to any other payments.
REDEMPTION
If specified in the prospectus supplement relating to a series of preferred
stock being offered, Viacom may, at its option, at any time or from time to
time, redeem that series of preferred stock, in whole or in part, at the
redemption prices and on the dates set forth in the applicable prospectus
supplement.
If less than all outstanding shares of a series of preferred stock is to be
redeemed, the selection of the shares to be redeemed shall be determined by lot
or pro rata as may be determined to be equitable by the board of directors of
Viacom or a duly authorized committee of the board of directors. From and after
the redemption date, unless Viacom is in default in providing for the payment of
the redemption price, dividends shall cease to accrue on the shares of that
series of preferred stock called for redemption and all rights of the holders
shall cease, other than the right to receive the redemption price.
VOTING RIGHTS
Unless otherwise described in the applicable prospectus supplement, holders
of the preferred stock will have no voting rights except as required by law.
CONVERSION OR EXCHANGE RIGHTS
The prospectus supplement relating to a series of preferred stock that is
convertible or exchangeable will state the terms on which shares of that series
are convertible or exchangeable into common stock, another series of preferred
stock or debt securities.
PREFERRED STOCK GUARANTEES
The following description summarizes the general terms and provisions of
the preferred stock guarantees that may be executed and delivered by Viacom
International for the benefit of the holders from time to time of our preferred
stock. The terms and provisions of each preferred stock guarantee will be as set
forth in each preferred stock guarantee. This description is qualified in its
entirety by reference to the form of preferred stock guarantee agreement, which
is filed as an exhibit to the registration statement of which this prospectus
forms a part.
General
Pursuant to each preferred stock guarantee, Viacom International will
irrevocably and unconditionally agree to pay in full, to the holders of our
preferred stock, certain payments, to the extent not paid by us, regardless of
any defense, right of set-off or counterclaim that we may have or assert. Unless
otherwise
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specified in the applicable prospectus supplement, the following payments or
distributions with respect to our preferred stock will be subject to the
preferred stock guarantee:
- the redemption price, including all accrued and unpaid dividends to the
date of redemption, with respect to any preferred stock called for
redemption by Viacom; and
- upon our voluntary or involuntary dissolution, winding-up or termination,
the aggregate of the liquidation amount and all accrued and unpaid
dividends on that preferred stock to the date of payment, to the extent
that we have funds available.
We will refer to these amounts as "guarantee payments" in this description.
The obligation of Viacom International to make a guarantee payment may be
satisfied by direct payment of the required amounts by Viacom International to
the holders of preferred stock or by our payment of those amounts to those
holders. In the event of a redemption or our voluntary or involuntary
dissolution, winding-up or termination, the obligations of Viacom International
under any issued preferred stock guarantees will in the aggregate provide a full
and unconditional guarantee on a subordinated basis by Viacom International of
payments due on the preferred stock, as further described below.
Certain Covenants of Viacom International
Unless otherwise specified in the applicable prospectus supplement, so long
as any shares of preferred stock issued by us which are guaranteed by Viacom
International are outstanding, Viacom International will not make any payment
with respect to any capital stock issued by Viacom International, if at such
time it is in default with respect to the guarantee payments or other payment
obligations under the preferred stock guarantee.
Amendments and Assignment
Except with respect to any changes that do not adversely affect the rights
of holders of preferred stock, in which case no consent will be required, a
preferred stock guarantee can be amended only with the prior approval of the
holders of not less than 66 2/3% of the preferred stock. The manner of obtaining
an approval of holders of the preferred stock will be described in an
accompanying prospectus supplement. All guarantees and agreements contained in a
preferred stock guarantee shall bind the successors, assignees, receivers,
trustees and representatives of Viacom International and shall inure to the
benefit of the holders of our preferred stock then outstanding. Except in
connection with a consolidation, merger or sale involving Viacom that is
permitted under the preferred stock guarantee agreement, Viacom International
may not assign its obligations under any preferred stock guarantee.
Termination of the Preferred Stock Guarantees
Each preferred stock guarantee will terminate and be of no further force
and effect as to any series of our preferred stock upon full payment of the
redemption price of all shares of preferred stock of that series, or upon the
full payment of amounts payable upon our liquidation. Notwithstanding the
foregoing, each preferred stock guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time any holder of our preferred
stock must restore payment of any sums paid under such preferred stock or such
guarantee.
Status of the Preferred Stock Guarantees
The obligations of Viacom International under each preferred stock
guarantee to make any guarantee payments will be an unsecured obligation of
Viacom International and will rank:
- subordinate and junior in right of payment to all of Viacom
International's other liabilities, except those made pari passu or
subordinate by their terms,
- senior to all capital stock at any time issued by Viacom International
and to any guarantee now or hereafter entered into by Viacom
International in respect of any of its capital stock, and
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- proportionally and equally with each other preferred stock guarantee.
Each preferred stock guarantee is a guarantee of payment and not of
collection. A guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under the guarantee without first
instituting a legal proceeding against any other person or entity. Any holder of
our preferred stock may institute a legal proceeding directly against Viacom
International to enforce its rights under a preferred stock guarantee, without
first instituting a legal proceeding against us or any other person or entity.
Limitation of Guarantor's Liability
Various federal and state fraudulent conveyance laws have been enacted for
the protection of creditors and may be utilized by a court of competent
jurisdiction to subordinate or avoid all or part of any guarantee issued by
Viacom International. For a discussion of fraudulent conveyance laws, as
applicable to upstream guarantees, such as the preferred stock guarantees, see
"General Description of the Debt Securities -- Guarantees."
Governing Law
The preferred stock guarantees will be governed by, and construed in
accordance with, the laws of the State of New York.
DESCRIPTION OF COMMON STOCK
The authorized common stock of Viacom as set forth in its restated
certificate of incorporation consists of 750,000,000 shares of Viacom Class A
common stock and 10,000,000,000 shares of Viacom Class B common stock. Viacom is
not registering with the SEC and is therefore not permitted to offer or sell any
shares of Viacom Class A common stock pursuant to the registration statement of
which this prospectus is a part. Viacom is only registering with the Securities
and Exchange Commission shares of Viacom Class B common stock as may from time
to time be issued upon conversion of 2001 senior debt securities, 2001 senior
subordinated debt securities, 1995 senior debt securities or preferred stock.
VIACOM CLASS A COMMON STOCK
As of March 31, 2001, there were approximately 137,500,000 shares of Viacom
Class A common stock issued and outstanding. Shares of Viacom Class A common
stock are not redeemable. Holders of shares of Viacom Class A common stock are
entitled to one vote per share.
VIACOM CLASS B COMMON STOCK
Viacom Class B common stock has rights, privileges, limitations,
restrictions and qualifications identical to Viacom Class A common stock except
that shares of Viacom Class B common stock have no voting rights other than
those required by the Delaware General Corporation Law. As of March 31, 2001,
there were approximately 1,644,700,000 shares of Viacom Class B common stock
issued and outstanding. Shares of Viacom Class B common stock are not
redeemable.
VOTING AND OTHER RIGHTS OF VIACOM COMMON STOCK
Voting Rights. Under Viacom's restated certificate of incorporation,
except as noted below or otherwise required by the Delaware General Corporation
Law, holders of the outstanding shares of Viacom Class A common stock vote
together with the holders of the outstanding shares of all other classes of
capital stock of Viacom entitled to vote, without regard to class. At the
present time, however, there are
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no outstanding shares of any other class of capital stock of Viacom entitled to
vote. Under Viacom's restated certificate of incorporation:
- each holder of an outstanding share of Viacom Class A common stock is
entitled to cast one vote for each share registered in the name of the
holder, and
- the affirmative vote of the holders of a majority of the outstanding
shares of Viacom Class A common stock is necessary to approve any
consolidation or merger of Viacom with or into another corporation
pursuant to which shares of Viacom Class A common stock would be
converted into or exchanged for any securities or other consideration.
A holder of an outstanding share of Viacom Class B common stock is not
entitled to vote on any question presented to the shareholders of Viacom
including, but not limited, to whether to increase or decrease, but not below
the number of shares then outstanding, the number of authorized shares of Viacom
Class B common stock. However, under the Delaware General Corporation Law, a
holder of an outstanding share of Viacom Class B common stock is entitled to
vote on any proposed amendment to Viacom's restated certificate of
incorporation, if the amendment will increase or decrease the par value of the
shares of Viacom Class B common stock, or alter or change the powers,
preferences or special rights of the shares of Viacom Class B common stock so as
to affect them adversely. Subject to the foregoing, any future change in the
number of authorized shares of Viacom Class B common stock or any consolidation
or merger of Viacom with or into another corporation pursuant to which shares of
Viacom Class B common stock would be converted into or exchanged for any
securities or other consideration could be consummated with the approval of the
holders of a majority of the outstanding shares of Viacom Class A common stock
and without any action by the holders of shares of Viacom Class B common stock.
Dividends. Subject to the rights and preferences of any outstanding
preferred stock, dividends on Viacom Class A common stock and Viacom Class B
common stock are payable ratably on shares of Class A common stock and Class B
common stock out of the funds of Viacom legally available therefore when, as and
if declared by the Viacom Board.
Rights in Liquidation. In the event Viacom is liquidated, dissolved or
wound up, whether voluntarily or involuntarily, the net assets of Viacom would
be divided ratably among the holders of the then outstanding shares of Viacom
Class A common stock and Viacom Class B common stock after payment or provision
for payment of the full preferential amounts to which the holders of any series
of preferred stock of Viacom then issued and outstanding would be entitled.
Split, Subdivision or Combination. If Viacom splits, subdivides or
combines the outstanding shares of Viacom Class A common stock or Viacom Class B
common stock, the outstanding shares of the other class of Viacom common stock
shall be proportionally split, subdivided or combined in the same manner and on
the same basis as the outstanding shares of the other class of Viacom common
stock have been split, subdivided or combined.
Preemptive Rights. Shares of Viacom Class A common stock and Viacom Class
B common stock do not entitle a holder to any preemptive rights enabling a
holder to subscribe for or receive shares of stock of any class or any other
securities convertible into shares of stock of any class of Viacom. The board of
directors of Viacom possesses the power to issue shares of authorized but
unissued Viacom Class A common stock and Viacom Class B common stock without
further shareholder action, subject to the requirements of applicable law and
stock exchanges, unless National Amusements, Inc. would no longer hold a
majority of the outstanding shares of voting stock of Viacom as a result of the
issuance. The number of authorized shares of Viacom Class A common stock and
Viacom Class B common stock could be increased with the approval of the holders
of a majority of the outstanding shares of Viacom Class A common stock and
without any action by the holders of shares of Viacom Class B common stock.
Trading Market. The outstanding shares of Viacom Class A common stock and
Viacom Class B common stock are listed for trading on the NYSE. The registrar
and transfer agent for Viacom common stock is The Bank of New York.
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Alien Ownership. Viacom's restated certificate of incorporation provides
that Viacom may prohibit the ownership or voting of a percentage of its equity
securities in order to ensure compliance with the requirements of the
Communications Act of 1934, as amended.
DESCRIPTION OF WARRANTS
Viacom may issue warrants for the purchase of its 2001 senior debt
securities, 2001 senior subordinated debt securities, 1995 senior debt
securities or shares of preferred stock. The warrants may be co-issued by Viacom
International when the securities with respect to which the warrants are issued
will be guaranteed by Viacom International. Warrants may be issued independently
or together with any 2001 senior debt securities, senior subordinated debt
securities, 1995 senior debt securities or shares of preferred stock offered by
any prospectus supplement and may be attached to or separate from 2001 senior
debt securities, 2001 senior subordinated debt securities, 1995 senior debt
securities or shares of preferred stock. The warrants are to be issued under
warrant agreements to be entered into among Viacom, Viacom International as
co-issuer, if applicable, and The Bank of New York, as warrant agent, or such
other bank or trust company as is named in the prospectus supplement relating to
the particular issue of warrants. The warrant agent will act solely as an agent
of Viacom in connection with the warrants and will not assume any obligation or
relationship of agency or trust for or with any holders of warrants or
beneficial owners of warrants.
GENERAL
If warrants are offered, the prospectus supplement will describe the terms
of the warrants, including the following:
- the offering price;
- the currency, currencies or currency units for which warrants may be
purchased;
- the designation, aggregate principal amount, currency, currencies or
currency units and terms of 2001 senior debt securities, 2001 senior
subordinated debt securities or 1995 senior debt securities purchasable
upon exercise of the debt warrants and the price at which the 2001 senior
debt securities, 2001 senior subordinated debt securities or 1995 senior
debt securities may be purchased upon such exercise;
- the designation, number of shares and terms of the preferred stock
purchasable upon exercise of the preferred stock warrants and the price
at which the shares of preferred stock may be purchased upon such
exercise;
- if applicable, the designation and terms of 2001 senior debt securities,
2001 senior subordinated debt securities, 1995 senior debt securities or
preferred stock with which the warrants are issued and the number of
warrants issued with each 2001 senior debt securities, 2001 senior
subordinated debt security, 1995 senior debt securities or share of
preferred stock;
- if applicable, the date on and after which the warrants and the related
2001 senior debt securities, 2001 senior subordinated debt securities,
1995 senior debt securities or preferred stock will be separately
transferable;
- the date on which the right to exercise the warrants will commence and
the date on which the right will expire;
- whether the warrants will be issued in registered or bearer form;
- a discussion of any material federal income tax and other special
considerations, procedures and limitations relating to the warrants; and
- any other terms of the warrants.
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Warrants may be exchanged for new warrants of different denominations. If
in registered form, the warrants may be presented for registration of transfer.
The Warrants may be exercised at the corporate trust office of the warrant agent
or any other office indicated in the prospectus supplement. Before the exercise
of their warrants, holders of warrants will not have any of the rights of
holders of the various securities purchasable upon the exercise, including the
right to receive payments of principal of, any premium on, or any interest on,
2001 senior debt securities, 2001 senior subordinated debt securities or 1995
senior debt securities purchasable upon the exercise or to enforce the covenants
in the applicable indenture or to receive payments of dividends, if any, on the
preferred stock purchasable upon their exercise or to exercise any applicable
right to vote. If Viacom maintains the ability to reduce the exercise price of
any preferred stock warrant and the right is triggered, it will comply with
federal securities laws, including Rule 13e-4 under the Exchange Act, to the
extent applicable.
EXERCISE OF WARRANTS
Each warrant will entitle the holder to purchase a principal amount of 2001
senior debt securities, 2001 senior subordinated debt securities, 1995 senior
debt securities or a number of shares of preferred stock at the exercise price
as will in each case be set forth in, or calculable from, the prospectus
supplement relating to the warrant. Warrants may be exercised at the times that
are set forth in the prospectus supplement relating to the warrants. After the
close of business on the date on which the warrant expires, or any later date to
which Viacom may extend the expiration date, unexercised warrants will become
void.
Subject to any restrictions and additional requirements that may be set
forth in the prospectus supplement relating thereto, warrants may be exercised
by delivery to the warrant agent of the certificate evidencing the warrants
properly completed and duly executed and of payment as provided in the
prospectus supplement of the amount required to purchase the 2001 senior debt
securities, 2001 senior subordinated debt securities, 1995 senior debt
securities or shares of preferred stock purchasable upon the exercise. The
exercise price will be the price applicable on the date of payment in full, as
set forth in the prospectus supplement relating to the warrants. Upon receipt of
the payment and the certificate representing the warrants to be exercised,
properly completed and duly executed at the corporate trust office of the
warrant agent or any other office indicated in the prospectus supplement, Viacom
will, as soon as practicable, issue and deliver the 2001 senior debt securities,
2001 senior subordinated debt securities, 1995 senior debt securities or shares
of preferred stock purchasable upon the exercise, and, if applicable, Viacom
International will issue guarantees relating to those securities. If fewer than
all of the warrants represented by a certificate are exercised, a new
certificate will be issued for the remaining amount of warrants.
ADDITIONAL PROVISIONS
The exercise price payable and the number of shares of preferred stock
purchasable upon the exercise of each stock warrant will be subject to
adjustment in specific events, including the issuance of a stock dividend to
holders of preferred stock, or a combination, subdivision or reclassification of
preferred stock. In lieu of adjusting the number of shares of preferred stock
purchasable upon exercise of each stock warrant, Viacom may elect to adjust the
number of preferred stock warrants. No adjustment in the number of shares
purchasable upon exercise of the preferred stock warrants will be required until
cumulative adjustments require an adjustment of at least 1% thereof. Viacom may,
at its option, reduce the exercise price at any time. No fractional shares will
be issued upon exercise of preferred stock warrants, but Viacom will pay the
cash value of any fractional shares otherwise issuable. In case of any
consolidation, merger, or sale or conveyance of the property of Viacom as an
entirety or substantially as an entirety, the holder of each outstanding
preferred stock warrant will have the right upon the exercise to the kind and
amount of shares of stock and other securities and property, including cash,
receivable by a holder of the number of shares of preferred stock into which the
stock warrants were exercisable immediately prior thereto.
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NO RIGHTS AS SHAREHOLDERS
Holders of preferred stock warrants will not be entitled, by virtue of
being the holders, to vote, to consent, to receive dividends, to receive notice
as shareholders with respect to any meeting of shareholders for the election of
the directors or any other matter, or to exercise any rights whatsoever as its
shareholders, with respect to either Viacom or Viacom International.
PLAN OF DISTRIBUTION
We may sell the securities in any of three ways (or in any combination):
(a) through underwriters or dealers; (b) directly to a limited number of
purchasers or to a single purchaser; or (c) through agents. The prospectus
supplement will set forth the terms of the offering of such securities,
including:
- the name or names of any underwriters, dealers or agents and the amounts
of securities underwritten or purchased by each of them;
- the offering price of the securities and the proceeds to us and any
discounts, commissions or concessions allowed or reallowed or paid to
dealers; and
- any securities exchanges on which the securities may be listed.
Any offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
If underwriters are used in the sale of any securities, the securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
a fixed public offering price or at varying prices determined at the time of
sale. The securities may be either offered to the public through underwriting
syndicates represented by managing underwriters, or directly by underwriters.
Generally, the underwriters' obligations to purchase the securities will be
subject to certain conditions precedent. The underwriters will be obligated to
purchase all of the securities if they purchase any of the securities.
We may sell the securities through agents from time to time. The prospectus
supplement will name any agent involved in the offer or sale of the securities
and any commissions we pay to them. Generally, any agent will be acting on a
best efforts basis for the period of its appointment.
We may authorize underwriters, dealers or agents to solicit offers by
certain purchasers to purchase the securities from Viacom at the public offering
price set forth in the prospectus supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
The contracts will be subject only to those conditions set forth in the
prospectus supplement, and the prospectus supplement will set forth any
commissions we pay for soliciting these contracts.
Agents and underwriters may be entitled to indemnification by us against
certain civil liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which the agents or underwriters may be
required to make in respect thereof. Agents and underwriters may be customers
of, engage in transactions with, or perform services for us in the ordinary
course of business.
LEGAL MATTERS
Certain legal matters in connection with the securities will be passed upon
under United States law for us and for Viacom International by Shearman &
Sterling, New York, New York.
EXPERTS
Our financial statements incorporated in this prospectus by reference from
our Annual Report on Form 10-K for the year ended December 31, 2000, have been
audited by PricewaterhouseCoopers LLP, independent accountants, as stated in
their report, which is incorporated herein by reference, and have
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been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The consolidated financial statements and schedule of CBS as of December
31, 1999 and 1998, and for each of the years in the three-year period ended
December 31, 1999, incorporated in this prospectus by reference from Item 8 of
CBS's Annual Report on Form 10-K for the year ended December 31, 1999, have been
audited by KPMG LLP, independent accountants, as stated in their reports, which
are incorporated herein by reference, and has been so incorporated in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
The consolidated financial statements and schedule of Infinity as of
December 31, 1999 and 1998 and for each of the years in the three-year period
ended December 31, 1999, incorporated in this prospectus by reference from Item
8 of Infinity's Annual Report on Form 10-K for the year ended December 31, 1999,
have been audited by KPMG LLP, independent accountants as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
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$325,000,000
[VIACOM LOGO]
7.25% SENIOR NOTES DUE 2051
UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF
PRINCIPAL AND INTEREST BY
VIACOM INTERNATIONAL INC.
(A WHOLLY OWNED SUBSIDIARY OF VIACOM INC.)
------------
PROSPECTUS SUPPLEMENT
JUNE 22, 2001
------------
JOINT BOOK-RUNNING MANAGERS
MERRILL LYNCH & CO. SALOMON SMITH BARNEY
------------------
A.G. EDWARDS & SONS, INC.
PRUDENTIAL SECURITIES
UBS WARBURG
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANC ALEX. BROWN
JPMORGAN
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