Exhibit 10.12
July 15, 1999
Xxxx X. Xxxxxxx
00000 Xxxxx 000xx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Dear Xx. Xxxxxxx:
Blockbuster Inc. ("Blockbuster"), having an address at 0000 Xxx Xxxxxx,
Xxxxxx, Xxxxx 00000, agrees to employ you and you agree to accept such
employment upon the following terms and conditions:
l. TERM. Your employment hereunder shall commence on July 15, 1999 and,
unless terminated by Blockbuster or you pursuant to paragraph 8 hereof, shall
continue through and until June 15, 2002. The period from July 15, 1999 through
June 15, 2002 shall hereinafter be referred to as the "Employment Term"
notwithstanding any earlier termination of your employment pursuant to paragraph
8.
2. DUTIES. During the Employment Term, you agree to devote your entire
business time, attention and energies to the business of Blockbuster. You will
be Chairman, Chief Executive Officer of Blockbuster and you agree to perform
such duties, and such other duties reasonable and consistent with such office as
may be assigned to you from time to time by the Chief Executive Officer (the
"CEO") of Viacom Inc. ("Viacom") or a Deputy Chairman of Viacom until
Blockbuster completes its initial public offering (the "IPO") of its Class A
Common Stock (the "Blockbuster A Stock") and thereafter as may be assigned from
time to time by the Blockbuster Board of Directors. However, nothing in this
Agreement shall preclude you from serving on the Boards of Directors of Main
Street & Main Inc. and any charitable, educational, religious, public interest
or public service organization, in each instance not inconsistent with
Blockbuster, or from devoting reasonable periods of time to the aforementioned
organizations, provided that such activities do not interfere with the
performance of your duties and responsibilities hereunder. You will have such
authority as is necessary for the performance of your duties as Chairman, Chief
Executive Officer of Blockbuster, within the authorization limits established by
the Viacom Board of Directors for management and consistent with on-going
policies developed by Viacom's senior management before the IPO and thereafter
within the authorization limits established by the Blockbuster Board of
Directors. Your principal place of business shall be at Blockbuster's
headquarters in the Dallas, Texas metropolitan area.
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Page 2
3. COMPENSATION.
(a) SALARY: For all the services rendered by you in any capacity
hereunder, Blockbuster agrees to pay you the sum of One Million Three Hundred
Thousand Dollars ($1,300,000) per annum ("Salary") for the balance of the 1999
calendar year, payable in accordance with Blockbuster's then effective payroll
practices. Your Salary for the period from January 1, 2000 through June 15, 2002
shall be One Million Dollars ($1,000,000) per annum.
(b) BONUS COMPENSATION: In addition to your Salary, you shall be
entitled to receive bonus compensation for each of the calendar years during the
Employment Term, determined and payable as follows ("Bonus"):
(i) Your Bonus for each calendar year during your employment with
Blockbuster under this Agreement will be determined in
accordance with Blockbuster's Senior Executive Short-Term
Incentive Plan (the "Senior Executive STIP") or Viacom's
Short-Term Incentive Plan (the "STIP"), as applicable, as the
same may be amended from time to time.
(ii) Your Bonus for any full calendar year during the Employment
Term before the IPO occurs shall be determined in accordance
with the STIP. Your Bonus for the calendar year in which the
IPO occurs and for each subsequent calendar year or portion
thereof during the Employment Term shall be determined in
accordance with the Senior Executive STIP.
(iii) Your Target Bonus for each of the calendar years during the
Employment Term shall be 125% of Salary and the annual rate of
Deferred Compensation (as defined in paragraph 3(c)) for such
year. Your Bonus for calendar year 2002 may be pro-rated.
(iv) Your Bonus for each calendar year shall be payable by February
28 of the following year.
(c) DEFERRED COMPENSATION: In addition to your Salary and Bonus, you
shall earn, in respect of each calendar year during the Employment Term,
commencing with the calendar year 2000, an additional amount ("Deferred
Compensation"), the payment of which (together with the return thereon as
provided in this paragraph 3(c)) shall be deferred until January of the first
calendar year in which you cease to be an executive officer of Blockbuster for
purposes of the Securities Exchange Act of 1934, as amended. The amount of
Deferred Compensation shall be Three Hundred Fifty Five Thousand Dollars
($355,000) for calendar year 2000, Four Hundred Fifty Five Thousand Dollars
($455,000) for calendar year 2001 and Two Hundred Thirty Thousand Dollars
($230,000) for the portion of calendar year 2002 during the Employment Term.
Deferred Compensation shall be credited to a bookkeeping account
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Page 3
maintained by Blockbuster for your account, the balance of which account shall
periodically be credited (or debited) with the deemed positive (or negative)
return calculated in the same manner and at the same times, as the deemed return
on your account is determined under Blockbuster's Excess 401(k) Plan, as such
plan may be amended from time to time. Blockbuster's obligation to pay the
Deferred Compensation, including the return thereon provided for in this
paragraph 3(c)) shall be an unfunded obligation to be satisfied from the general
funds of Blockbuster.
(d) BLOCKBUSTER STOCK OPTIONS:
(i) IPO COMPLETION GRANT AND INITIAL ANNUAL GRANT. Upon the
successful completion of the IPO, you shall receive stock
options to purchase one million (1,000,000) shares of the
Blockbuster A Stock (the "IPO Grant") issued at fair market
value at the time of grant, vesting in five (5) equal equal
installments on the first, second, third, fourth and fifth
anniversaries of the date of grant. The IPO Grant represents
your IPO completion grant and your initial annual grant.
(ii) SUBSEQUENT ANNUAL GRANTS. In addition to the IPO Grant, you
shall receive, upon each of the first and second anniversaries
of the IPO, a grant of stock options with respect to the
Blockbuster A Stock (a "Subsequent Annual Grant"), issued at
fair market value at the time of grant, with an aggregate
exercise price equal to Six Million Dollars ($6,000,000) for
each Subsequent Annual Grant. To illustrate, if the fair market
value of the Blockbuster A Stock was $30 per share on the date
of grant, you would receive a Subsequent Annual Grant of stock
options to purchase 200,000 shares of Blockbuster A Stock. The
Subsequent Annual Grants shall vest in four equal installments
on the first, second, third and fourth anniversaries of the
date of grant.
4. BENEFITS. You shall be entitled to participate in such medical, dental
and life insurance, 401(k), pension and other plans as Blockbuster may have or
establish from time to time and in which you would be entitled to participate
pursuant to the terms thereof. The foregoing, however, shall not be construed to
require Blockbuster to establish any such plans or to prevent the modification
or termination of such plans once established, and no such action or failure
thereof shall affect this Agreement. It is further understood and agreed that
all benefits you may be entitled to as an employee of Blockbuster shall be based
upon your Salary and Deferred Compensation, as set forth in paragraphs 3(a) and
(c) hereof, and not upon any bonus compensation due, payable or paid to you
hereunder, except where the benefit plan expressly provides otherwise. You shall
be entitled to four (4) weeks vacation.
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5. BUSINESS EXPENSES. During the Employment Term, you shall be reimbursed
for such reasonable travel and other expenses incurred in the performance of
your duties hereunder as are customarily reimbursed to senior executives of
Blockbuster. You shall be entitled to a car allowance in the amount of One
Thousand One Hundred Dollars ($1,100) per month.
6. EXCLUSIVE EMPLOYMENT, CONFIDENTIAL INFORMATION, ETC.
(a) NON-COMPETITION. You agree that your employment hereunder is on an
exclusive basis, and that during the shorter of (x) the Employment Term and (y)
one (1) year after the termination of your employment pursuant to paragraph 8(b)
or 8(c) hereof or eighteen (18) months after the termination of your employment
pursuant to paragraph 8(a) hereof (the "Non-Compete Period"), you will not
engage in any other business activity which is in conflict with your duties and
obligations hereunder. You agree that during the Non-Compete Period you shall
not directly or indirectly engage in or participate as an officer, employee,
director, agent of or consultant for any business directly competitive with any
business that Viacom or Blockbuster is in or may enter into during the
Employment Term, nor shall you make any investments in any company or business
competing with Viacom or Blockbuster; PROVIDED, HOWEVER, that nothing herein
shall prevent you from investing as less than a one (1%) percent shareholder in
the securities of any company listed on a national securities exchange or quoted
on an automated quotation system.
(b) CONFIDENTIAL INFORMATION. You agree that you shall not, during the
Employment Term or at any time thereafter, use for your own purposes, or
disclose to or for the benefit of any third party, any trade secret or other
confidential information of Blockbuster, Viacom or any of Viacom's affiliates
(except as may be required by law or in the performance of your duties hereunder
consistent with Blockbuster's policies) and that you will comply with any
confidentiality obligations of Blockbuster or Viacom to a third party, whether
under agreement or otherwise. Notwithstanding the foregoing, confidential
information shall be deemed not to include information which (i) is or becomes
generally available to the public other than as a result of a disclosure by you
or any other person who directly or indirectly receives such information from
you or at your direction or (ii) is or becomes available to you on a
non-confidential basis from a source which is entitled to disclose it to you.
(c) NO EMPLOYEE SOLICITATION. You agree that, during the Employment
Term and for one (1) year thereafter, you shall not, directly or indirectly,
engage, employ, or solicit the employment of any person who is then or has been
within six (6) months prior thereto, an employee of Blockbuster, Viacom or any
of Viacom's affiliates.
Xxxx X. Xxxxxxx
July 15, 1999
Page 5
(d) BLOCKBUSTER OWNERSHIP. The results and proceeds of your services
hereunder, including, without limitation, any works of authorship resulting from
your services during your employment with Blockbuster, Viacom and/or any of
Viacom's affiliates and any works in progress, shall be works-made-for-hire and
Blockbuster shall be deemed the sole owner throughout the universe of any and
all rights of whatsoever nature therein, whether or not now or hereafter known,
existing, contemplated, recognized or developed, with the right to use the same
in perpetuity in any manner Blockbuster determines in its sole discretion
without any further payment to you whatsoever. If, for any reason, any of such
results and proceeds shall not legally be a work-for-hire and/or there are any
rights which do not accrue to Blockbuster under the preceding sentence, then you
hereby irrevocably assign and agree to assign any and all of your right, title
and interest thereto, including, without limitation, any and all copyrights,
patents, trade secrets, trademarks and/or other rights of whatsoever nature
therein, whether or not now or hereafter known, existing, contemplated,
recognized or developed to Blockbuster, and Blockbuster shall have the right to
use the same in perpetuity throughout the universe in any manner Blockbuster
determines without any further payment to you whatsoever. You shall, from time
to time, as may be requested by Blockbuster, do any and all things which
Blockbuster may deem useful or desirable to establish or document Blockbuster's
exclusive ownership of any and all rights in any such results and proceeds,
including, without limitation, the execution of appropriate copyright and/or
patent applications or assignments. To the extent you have any rights in the
results and proceeds of your services that cannot be assigned in the manner
described above, you unconditionally and irrevocably waive the enforcement of
such rights. This paragraph 6(d) is subject to, and shall not be deemed to
limit, restrict, or constitute any waiver by Blockbuster of any rights of
ownership to which Blockbuster may be entitled by operation of law by virtue of
Blockbuster or any of its affiliates being your employer.
(e) LITIGATION. You agree that, during the Employment Term, for one
(1) year thereafter and, if longer, during the pendancy of any litigation or
other proceeding, (i) you shall not communicate with anyone (other than your own
attorneys and tax advisors and, except to the extent necessary in the
performance of your duties hereunder) with respect to the facts or subject
matter of any pending or potential litigation, or regulatory or administrative
proceeding involving any of Blockbuster, Viacom or any of Viacom's affiliates,
other than any litigation or other proceeding in which you are a
party-in-opposition, without giving prior notice to Blockbuster or Blockbuster's
counsel, and (ii) in the event that any other party attempts to obtain
information or documents from you with respect to matters possibly related to
such litigation or other proceeding, you shall promptly so notify Blockbuster's
counsel.
Xxxx X. Xxxxxxx
July 15, 1999
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(f) NO RIGHT TO GIVE INTERVIEWS OR WRITE BOOKS, ARTICLES, ETC. During
the Employment Term, except as authorized by Blockbuster or Viacom or in the
performance of your duties, you shall not (i) give any interviews or speeches,
or (ii) prepare or assist any person or entity in the preparation of any books,
articles, television or motion picture productions or other creations, in either
case, concerning Blockbuster, Viacom or any of Viacom's affiliates or any of
their officers, directors, agents, employees, suppliers or customers.
(g) RETURN OF PROPERTY. All documents, data, recordings, or other
property, whether tangible or intangible, including all information stored in
electronic form, obtained or prepared by or for you and utilized by you in the
course of your employment with Blockbuster or any of its affiliates shall remain
the exclusive property of Blockbuster. In the event of the termination of your
employment for any reason, Blockbuster reserves the right, to the extent
permitted by law and in addition to any other remedy Blockbuster may have, to
deduct from any monies otherwise payable to you the following: (i) the full
amount of any debt you owe to Blockbuster, Viacom or any of Viacom's affiliates
at the time of or subsequent to the termination of your employment with
Blockbuster, and (ii) the value of the Blockbuster property which you retain in
your possession after the termination of your employment with Blockbuster. In
the event that the law of any state or other jurisdiction requires the consent
of an employee for such deductions, this Agreement shall serve as such consent.
(h) NON-DISPARAGEMENT. You agree that you shall not, during the
Employment Term and for one (1) year thereafter, in any communications with any
customer or client of Blockbuster, Viacom or any of Viacom's affiliates,
criticize, ridicule or make any statement which disparages or is derogatory of
Blockbuster, Viacom or any of Viacom's affiliates or any of their officers,
directors, agents or employees.
(i) INJUNCTIVE RELIEF. Blockbuster has entered into this Agreement in
order to obtain the benefit of your unique skills, talent, and experience. You
acknowledge and agree that any violation of paragraphs 6(a) through (h) hereof
will result in irreparable damage to Blockbuster and Viacom, and, accordingly,
Blockbuster and Viacom may obtain injunctive and other equitable relief for any
breach or threatened breach of such paragraphs, in addition to any other
remedies available to Blockbuster and Viacom.
(j) SURVIVAL; MODIFICATION OF TERMS. Your obligations under paragraphs
6(a) through (i) hereof shall remain in full force and effect for the entire
period provided therein notwithstanding the termination of your employment
hereunder. You and Blockbuster agree that the restrictions and remedies
contained in paragraphs 6(a) through (i) are reasonable and that it is your
intention and the intention of Blockbuster that such restrictions and remedies
shall be
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enforceable to the fullest extent permissible by law. If it shall be found by a
court of competent jurisdiction that any such restriction or remedy is
unenforceable but would be enforceable if some part thereof were deleted or the
period or area of application reduced, then such restriction or remedy shall
apply with such modification as shall be necessary to make it enforceable.
7. INCAPACITY. In the event you become totally medically disabled and
cannot substantially perform your duties at any time during the Employment Term,
the Blockbuster Board of Directors at any time after such disability has
continued for 60 consecutive days, may determine that Blockbuster requires that
such duties and responsibilities be performed by another executive. In the event
you become disabled, you will receive your Salary for the first 26 weeks of
consecutive absence. Thereafter, you will be eligible to receive benefits under
Blockbuster's Long-Term Disability ("LTD") program in accordance with its terms.
Upon receipt of benefits under the LTD program, you will also be entitled to
receive the following:
(i) a pro-rated Target Bonus, subject to applicable withholding
taxes, for the calendar year in which such benefits commence;
(ii) pro-rated Deferred Compensation for the calendar year in which
such benefits commence and Deferred Compensation attributable
to prior calendar years, payable, together with the return
thereon as provided in paragraph 3(c), prior to January 31 of
the calendar year following the calendar year in which such
benefits commence; and
(iii) the vesting of all stock options granted to you with respect to
the Blockbuster A Stock which have not become exercisable on or
prior to the date on which benefits commence under the LTD
program will be accelerated and such stock options, together
with all stock options granted to you with respect to the
Blockbuster A Stock which are exercisable on or prior to the
date on which such benefits commence, will be exercisable until
one (1) year after the date on which such benefits commence,
or, if earlier, the expiration date of such stock options.
8. TERMINATION.
(a) TERMINATION FOR CAUSE. Blockbuster may, at its option, terminate
this Agreement forthwith for "cause", and Blockbuster shall thereafter have no
further obligations under this Agreement, including, without limitation, any
obligation to pay Salary, Deferred Compensation or Bonus or provide benefits
under this Agreement. For purposes of this Agreement, termination of this
Agreement for "cause" shall mean termination for embezzlement, fraud or other
conduct which would constitute a felony, conviction of a felony, or willful
unauthorized disclosure of confidential information, or if you at any time
materially breach this Agreement (including, without limitation, your willful
failure, neglect of or intentional refusal to
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substantially perform your obligations hereunder as set forth in paragraphs 2
and 11 hereof), except in the event of your disability as set forth in paragraph
7. Anything herein to the contrary notwithstanding, Blockbuster will give you
written notice prior to terminating this Agreement for your material breach
setting forth the exact nature of any alleged breach and the conduct required to
cure such breach. You shall have ten (10) business days from the giving of such
notice within which to cure to the extent the breach is curable.
(b) GOOD REASON TERMINATION. You may terminate your employment
hereunder for "Good Reason" at any time during the Employment Term by written
notice to Blockbuster not more than thirty (30) days after the occurrence of the
event constituting "Good Reason". Such notice shall state an effective date no
later than ten (10) business days after the date it is given. Blockbuster shall
have ten (10) business days from the giving of such notice to cure the alleged
cause for "Good Reason". "Good Reason shall mean, without your prior written
consent, other than in connection with the termination of your employment for
"cause" (as defined above) or in connection with your permanent disability, the
assignment to you by Blockbuster or, before the IPO, Viacom of duties
substantially inconsistent with your positions, duties, responsibilities, titles
or offices, the withdrawal of a material part of your responsibilities as set
forth in paragraph 2 to the degree that you cannot exercise the authority of
your office, the material breach by Blockbuster of its material obligations
hereunder, or the relocation of Blockbuster's principal place of business
outside of the Dallas, Texas metropolitan area.
(c) TERMINATION WITHOUT CAUSE. Blockbuster may terminate your
employment hereunder without "cause" (as defined above) at any time during the
Employment Term by written notice to you.
(d) TERMINATION PAYMENTS, ETC. In the event that your employment
terminates pursuant to paragraph 8(b) or 8(c) hereof, you shall be entitled to
receive, subject to applicable withholding taxes:
(i) your Salary as provided in paragraph 3(a) until the end of the
Employment Term, payable in accordance with Blockbuster's then
effective payroll practices;
(ii) bonus compensation for each calendar year during the Employment
Term equal to your Target Bonus as set forth in paragraph 3(b);
(iii) Deferred Compensation for each calendar year during the
Employment Term as set forth in paragraph 3(c); Deferred
Compensation attributable to the calendar year in which the
termination pursuant to paragraph 8(b) or 8(c) hereof occurs
and to prior calendar years shall be payable, together with the
return thereon as provided in paragraph 3(c), prior to January
31 of the calendar year following such termination; and
Deferred
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Compensation attributable to subsequent calendar years shall be
payable, together with the return thereon as provided in
paragraph 3(c), prior to January 31 of the following calendar
year;
(iv) your car allowance as provided in paragraph 5 until the end of
the Employment Term, payable in accordance with Blockbuster's
then effective payroll practices;
(v) medical and dental insurance coverage under COBRA until the end
of the Employment Term or, if earlier, the date on which you
become eligible for medical and dental coverage from a third
party employer; during this period, Blockbuster will pay an
amount equal to the applicable COBRA premiums (or such other
amounts as may be required by applicable law) (which amount
will be included in your income for tax purposes to the extent
required by applicable law); at the end of such period, you may
elect to continue your medical and dental insurance coverage at
your own expense for the balance, if any, of the period
required by law;
(vi) life insurance coverage until the end of the Employment Term
(the amount of Salary covered by such insurance to be reduced
by the amount of any salary payable to you by a third party);
(vii) the following with respect to grants to you of stock options
with respect to the Blockbuster A Stock:
(x) stock options granted to you with respect to the
Blockbuster A Stock which are exercisable on or prior to
the date of the termination of your employment under
paragraph 8(b) or 8(c) will be exercisable until six (6)
months (or, if provided under the plan governing such
stock options, until one (1) year) after the date of
such termination or, if earlier, the expiration date of
such stock options;
(y) the vesting of all stock options granted to you with
respect to the Blockbuster A Stock which have not become
exercisable on or prior to the date of the termination
of your employment under paragraph 8(b) or 8(c) will be
accelerated and such stock options will be exercisable
until six (6) months (or, if provided under the plan
governing such stock options, until one (1) year) after
the date of such termination; and
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(z) stock options that would have been issued to you with
respect to the Blockbuster A Stock pursuant to paragraph
3(d)(ii) shall be granted at fair market value as of the
date of the termination of your employment under
paragraph 8(b) or 8(c) and such stock options will be
exercisable until six (6) months (or, if provided under
the terms of the plan governing such options, until one
(1) year) after the date of such termination;
PROVIDED, HOWEVER, you shall be required to mitigate the amount of any payment
provided for in (i), (ii), (iii) and (iv) of this paragraph 8(d) by seeking
other employment or otherwise (I.E., by self-employment), and the amount of any
such payment provided for in (i), (ii), (iii) and (iv) shall be reduced by any
cash compensation earned by you from a third party (I.E., as salary, bonus, car
allowance, etc.) except that mitigation shall not be required, and no reduction
for any other cash compensation shall be made, for eighteen (18) months after
the termination of your employment or for the period commencing with the
termination of your employment and ending on the last day of the Employment
Term, whichever is shorter. The payments provided for in (i) above are in lieu
of any severance or income continuation or protection under any Viacom or
Blockbuster plan that may now or hereafter exist. The payments and benefits to
be provided pursuant to this paragraph 8(d) shall constitute liquidated damages,
and shall be deemed to satisfy and be in full and final settlement of all
obligations of Blockbuster to you under this Agreement.
(e) TERMINATION OF BENEFITS. Notwithstanding anything in this
Agreement to the contrary (except as otherwise provided in paragraph 8(d) with
respect to medical, dental and life insurance), coverage under all Blockbuster
benefit plans and programs (including, without limitation, vacation, 401(k),
excess 401(k), pension plan, excess pension plan, LTD, car insurance, accidental
death and dismemberment and business travel and accident insurance) will
terminate upon the termination of your employment except to the extent otherwise
expressly provided in such plans or programs.
(f) NON-RENEWAL. In the event that Blockbuster does not extend or
renew this Agreement at the end of the Employment Term on no less favorable
terms, the vesting of all stock options granted to you with respect to the
Blockbuster A Stock that are not exercisable as of the end of the Employment
Term shall be accelerated and such stock options, together with all stock
options (if any) granted to you with respect to the Blockbuster A Stock which
are exercisable at the end of the Employment Term, will be exercisable until six
(6) months (or, if provided under the plan governing such stock options, until
one (1) year) after the end of the Employment Term.
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9. DEATH. If you die prior to the end of the Employment Term, your
beneficiary or estate shall be entitled to receive, subject to applicable
withholding taxes, the following:
(i) your Salary up to the date on which the death occurs;
(ii) a pro-rated Target Bonus for the calendar year in which the
death occurs;
(iii) Deferred Compensation attributable to prior calendar years
payable, together with the return thereon as provided in
paragraph 3(c), prior to January 31 of the following year; and
(iv) the vesting of all stock options granted to you with respect to
the Blockbuster A Stock which have not become exercisable on or
prior to the date on which the death occurs will be accelerated
and such stock options, together with all stock options granted
to you with respect to the Blockbuster A Stock which are
exercisable on or prior to the date on which the death occurs,
will be exercisable until one (1) year after such date or, if
earlier, the expiration date of such stock options.
10. SECTION 317 AND 507 OF THE FEDERAL COMMUNICATIONS ACT. You represent
that you have not accepted or given nor will you accept or give, directly or
indirectly, any money, services or other valuable consideration from or to
anyone other than Blockbuster for the inclusion of any matter as part of any
film, television program or other production produced, distributed and/or
developed by Blockbuster and/or any of its affiliates.
11. EQUAL OPPORTUNITY EMPLOYER. You acknowledge that Blockbuster is an
equal opportunity employer. You agree that you will comply with Blockbuster
policies regarding employment practices and with applicable federal, state and
local laws prohibiting discrimination on the basis of race, color, creed,
national origin, age, sex or disability.
12. NOTICES. All notices required to be given hereunder shall be given in
writing, by personal delivery or by mail at the respective addresses of the
parties hereto set forth above, or at such other address as may be designated in
writing by either party, and, in the case of Blockbuster, to the attention of
the General Counsel of Viacom before the IPO and the General Counsel of
Blockbuster after the IPO. Any notice given by mail shall be deemed to have been
given three days following such mailing.
13. ASSIGNMENT. This is an Agreement for the performance of personal
services by you and may not be assigned by you or Blockbuster except that
Blockbuster may assign this Agreement to any affiliate of Blockbuster or any
successor in interest to Blockbuster and, before the IPO, to Viacom or any
affiliate of Viacom or any successor in interest to Viacom.
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14. TEXAS LAW, ETC. This Agreement and all matters or issues collateral
thereto shall be governed by the laws of the State of Texas applicable to
contracts entered into and performed entirely therein. Any action to enforce
this Agreement shall be brought in the state or federal courts located in the
State of Texas.
15. NO IMPLIED CONTRACT. Nothing contained in this Agreement shall be
construed to impose any obligation on Blockbuster to renew this Agreement or any
portion thereof. The parties intend to be bound only upon execution of a written
agreement and no negotiation, exchange of draft or partial performance shall be
deemed to imply an agreement. Neither the continuation of employment nor any
other conduct shall be deemed to imply a continuing agreement upon the
expiration of this Agreement.
16. ENTIRE UNDERSTANDING. This Agreement contains the entire understanding
of the parties hereto relating to the subject matter herein contained, and can
be changed only by a writing signed by both parties hereto.
17. VOID PROVISIONS. If any provision of this Agreement, as applied to
either party or to any circumstances, shall be adjudged by a court to be void or
unenforceable, the same shall be deemed stricken from this Agreement and shall
in no way affect any other provision of this Agreement or the validity or
enforceability of this Agreement.
18. SUPERSEDES PREVIOUS AGREEMENT. This Agreement supersedes and cancels
all prior agreements relating to your employment by Blockbuster, Viacom or any
of Viacom's affiliates except that the provision in your prior employment
agreement dated as of May 28, 1997 with Viacom shall remain in effect and be
incorporated into this Agreement which provided that, upon the termination of
your employment with Viacom for Good Reason or without "cause" (or, if earlier,
your death, your receipt of benefits under the LTD program or the non-renewal of
your employment agreement upon no less favorable terms at the end of the
employment term on June 15, 2002), the vesting of all stock options granted to
you under Viacom's 1997 Long-Term Management Incentive Plan or any successor
plan (collectively, the "LTMIP") which have not become exercisable on or prior
to such date will be accelerated, and such stock options will be exercisable
until six (6) months (or, if provided under the LTMIP, until one (1) year) after
such date. Defined terms used in the preceding sentence shall have the meanings
provided in this Agreement.
19. SEPARATION FROM VIACOM. After Viacom ceases to own a majority of
Blockbuster's Class B Common Stock, the references to Viacom and Viacom's
affiliates in Article 6 shall be eliminated except that such references in the
covenants set forth in paragraphs 6(b), (c) and (e) (with respect to
confidential information, no employee solicitation and litigation) shall,
without limiting the scope of such covenants, continue to apply to Viacom and
Viacom's affiliates.
Xxxx X. Xxxxxxx
July 15, 1999
Page 13
If the foregoing correctly sets forth our understanding, please sign one
copy of this letter and return it to the undersigned, whereupon this letter
shall constitute a binding agreement between us.
Very truly yours,
BLOCKBUSTER INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Executive Vice President,
Chief Operations Officer
ACCEPTED AND AGREED:
/s/ Xxxx X. Xxxxxxx
----------------------
Xxxx X. Xxxxxxx
