Exhibit 10.18
As of June 1, 1998
Xxxxx Xxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
Dear Nigel:
Blockbuster Entertainment Group ("Blockbuster"), a business unit of
Viacom Inc. ("Viacom"), currently having an address at 0000 Xxx Xxxxxx, Xxxxxx,
Xxxxx 00000, agrees to employ you and you agree to accept such employment on the
terms and conditions set forth herein.
1. TERM. The term of your employment hereunder shall commence on June
1, 1998 and, unless terminated by Blockbuster pursuant to paragraph 8 hereof,
shall continue through and until May 31, 2001. The period from June 1, 1998
through May 31, 2001 shall hereinafter be referred to as the "Employment Term"
notwithstanding any earlier termination 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 President, Retail Operations 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 Chairman, Chief Executive Officer of
Blockbuster (the "CEO") or such other individual as may be designated by the
CEO. Your principal place of business shall be in the greater metropolitan
Dallas, Texas area.
3. COMPENSATION.
(a) SALARY. For all the services rendered by you in any capacity
hereunder, Blockbuster agrees to pay you the sum of Four Hundred Thirty Thousand
Dollars ($430,000) per annum ("Salary"), payable in accordance with
Blockbuster's then effective payroll practices. Your Salary will be increased to
Four Hundred Sixty Five Thousand Dollars ($465,000) per annum on June 1, 1999
and to Five Hundred Five Thousand Dollars ($505,000) per annum on June 1, 2000.
(b) BONUS. 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 of the calendar years during the
Employment Term will be based upon a measurement of
performance against objectives in accordance with the
Viacom Short-Term Incentive Plan, as the same may be
amended from time to time.
(ii) Your Target Bonus for each of the calendar years during
the Employment Term shall be 50% of Salary which may be
prorated for any partial calendar year during the
Employment Term.
(iii) Your Bonus for any calendar year shall be payable by
February 28 of the following year.
(c) ANNUAL STOCK OPTION GRANTS. You shall receive an annual grant (the
"Annual Grant") for the 1999 and 2000 calendar years under the Viacom Inc. 1997
Long-Term Management Incentive Plan and any successor plans (collectively, the
"LTMIP") of stock options to purchase not less than 15,000 shares of Viacom's
Class B Common Stock. Each Annual Grant shall be made as of August 1st or the
date on which the Compensation Committee of the Viacom Board of Directors shall
award the major stock option grant under the LTMIP to Viacom's senior executives
for such calendar year and shall be on the same terms with respect to vesting
and so forth as such major stock option grant.
4. BENEFITS. During the Employment Term, you will continue to
participate in (i) the U.K. Pension Plan on the same basis that you have
previously participated (i.e., Blockbuster will make contributions of 15% of
your Salary on a basis that is tax-free to you), and (ii) the Blockbuster U.K.
vacation policy except that you will adopt Blockbuster's U.S. work schedule,
including hours of work, time off and public holidays. Except for the foregoing,
you shall be entitled to participate in such medical, dental and life insurance,
401(k), 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, as
set forth in paragraph 3(a) hereof, and not upon any bonus compensation due,
payable or paid to you hereunder, except where the benefit plan expressly
provides otherwise.
5. BUSINESS EXPENSES. During your employment with Blockbuster, 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 lease of $750 per
month for one car in accordance with Blockbuster's policy.
6. EXCLUSIVE EMPLOYMENT, CONFIDENTIAL INFORMATION, ETC.
(a) NON-COMPETITION. You agree that your employment hereunder
is on an exclusive basis, and that as long as you are employed by Blockbuster,
you will not engage in any other business activity which is in conflict with
your duties and obligations hereunder. You agree that during the Employment Term
and for a period of one (1) year thereafter you shall not directly or indirectly
engage in or participate as an owner, partner, shareholder, officer, employee,
director, agent of or consultant for any business that competes with any of the
principal business activities of Blockbuster; PROVIDED, HOWEVER, that nothing
herein shall prevent you from investing as less than a one percent (1%)
shareholder in the securities of any company listed on a national securities
exchange or quoted on an automated quotation system. Notwithstanding anything to
the contrary in this Agreement, your obligations under the second sentence of
this paragraph 6(a) shall survive a termination of your employment with
Blockbuster and remain in full force and effect for the period set forth therein
regardless of the reason for your termination (or lack thereof).
(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,
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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.
(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 being your employer.
(e) LITIGATION. You agree that, during the Employment Term, for one (1)
year thereafter and, if longer, during the pendency 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 Blockbuster or Viacom or any of their officers, directors,
agents, employees, suppliers or customers, other than any litigation or other
proceeding in which you are a party-in-opposition, without giving prior notice
to Blockbuster's General 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 General Counsel.
(f) NO RIGHT TO GIVE INTERVIEWS OR WRITE BOOKS, ARTICLES, ETC. You agree
that during the Employment Term and for a period of one (1) year thereafter,
except as authorized by Blockbuster or Viacom, 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
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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 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. You acknowledge and
agree that the foregoing remedy shall not be the sole and exclusive remedy of
Blockbuster with respect to a breach of this paragraph 6(g).
(h) NON-DISPARAGEMENT. You agree that you shall not, during the
Employment Term and for a period of one (1) year thereafter, 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 harm to Blockbuster and Viacom for which damages are
not readily ascertainable. Accordingly, you agree that Blockbuster and/or 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/or 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 the Employment Term
pursuant to paragraph 8 hereof or otherwise. 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 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 medically disabled and cannot
substantially perform your duties at any time during the Employment Term, the
CEO, at any time after such disability has continued for 30 consecutive days,
may determine that Blockbuster requires such duties and responsibilities be
performed by another executive. In the event you become disabled, you will first
receive benefits under Blockbuster's short-term disability program for the first
26 weeks of consecutive absence in accordance with its terms. Thereafter, you
will be eligible to receive benefits under the Blockbuster 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 a pro-rated Target Bonus for
the calendar year in which such benefits commence.
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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 or Bonus or provide benefits under this Agreement. For
purposes of this Agreement, "cause" shall mean (i) the commission of a felony or
the commission of any other act involving dishonesty, disloyalty or fraud with
respect to Blockbuster, Viacom or any of Viacom's affiliates, (ii) conduct
bringing, or having the potential to bring, Blockbuster, Viacom or any of
Viacom's affiliates into substantial public disgrace or disrepute, (iii) willful
misconduct with respect to Blockbuster, Viacom or any of Viacom's affiliates, or
(iv) any material breach of this Agreement (including, without limitation, your
failure, neglect of or refusal to 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. Except for a breach
which by its nature cannot be cured, you shall have ten (10) business days from
the giving of such notice within which to cure.
(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
earlier than thirty (30) business days after the date it is given. Blockbuster
shall have ten (10) business days from the giving such notice within which to
cure. Good Reason shall mean (x) the breach by Blockbuster of any of its
material obligations hereunder, or (y) 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 Viacom of duties substantially inconsistent with the
duties of an officer of Blockbuster.
(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) your car lease as provided in paragraph 5 until the end
of the Employment Term, payable in accordance with
Blockbuster's then effective payroll practices;
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(iv) for as long as you remain in the United States after
your termination, medical and dental insurance coverage
under Blockbuster's then current benefit plans pursuant
to 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;
(v) life insurance coverage pursuant to Blockbuster's then
current policies 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); and
(vi) stock options granted to you under Viacom's 1994 and
1997 Long-Term Management Incentive Plans and any
successor plans which are exercisable on or prior to the
date of the termination of your employment under
paragraph 8(b) or 8(c) hereof or that would have vested
and become exercisable on or before the last date of the
Employment Term will be exercisable until six (6) months
after the date of such termination or, if earlier, the
expiration date of the stock options;
PROVIDED, HOWEVER, you shall be required to mitigate the amount of any payment
provided for in (i), (ii) and (iii) of this paragraph 8(d) by seeking other
employment or otherwise, and the amount of any such payment provided for in (i),
(ii) and (iii) shall be reduced by any compensation earned by you from a third
person except that mitigation shall not be required for twelve (12) 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 Blockbuster or
Viacom 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), (i) coverage under all Blockbuster benefit
plans and programs (including, without limitation, vacation, upon the
termination of your employment the 401(k) plan, the U.K. Pension Plan, LTD, car
insurance and accidental death and dismemberment and business travel and
accident insurance) will terminate except to the extent otherwise expressly
provided in such plans or programs; and (ii) Blockbuster will have no obligation
and make any further contributions to the U.K. Pension Plan.
(f) NON-RENEWAL NOTICE. Blockbuster shall notify you in writing in the
event that Blockbuster elects not to extend or renew this Agreement. If
Blockbuster gives you such notice less than
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twelve (12) months before the end of the Employment Term, or your employment
terminates pursuant to paragraph 8(b) or 8(c) hereof during the final twelve
(12) months of the Employment Term, you shall be entitled to receive your Salary
as provided in paragraph 3(a), payable in accordance with Blockbuster's then
effective payroll practices, subject to applicable withholding requirements, for
the period commencing after the end of the Employment Term which, when added to
the portion of the Employment Term, if any, remaining when the notice is given
or the termination occurs, equals twelve (12) months. The payments provided for
in this paragraph 8(f) are in lieu of any severance or income continuation or
protection under any Blockbuster or Viacom plan that may now or hereafter exist.
You shall be required to mitigate the amount of any payment provided for in this
paragraph 8(f) by seeking other employment or otherwise, and the amount of any
such payment provided hereunder shall be reduced by any compensation earned by
you from a third person.
9. DEATH. If you die prior to the end of the Employment Term, your
beneficiary or estate shall be entitled to receive your Salary up to the date on
which the death occurs and a pro-rated Target Bonus.
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, Viacom and/or any of Viacom's affiliates.
11. EQUAL OPPORTUNITY EMPLOYER. You acknowledge that Blockbuster is an
equal opportunity employer. You agree that you will comply with Blockbuster
policies and 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 Blockbuster. 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. Blockbuster or Viacom may assign
this Agreement to Viacom or any affiliate of Viacom or any purchaser of all or
substantially all of the assets of Blockbuster or Viacom or any successor in
interest to Viacom or Blockbuster.
14. GOVERNING LAW. This Agreement and all matters or issues collateral
thereto shall be governed by the laws of 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.
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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.
* * * * *
If the foregoing correctly sets forth our understanding, please sign and
date 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 ENTERTAINMENT GROUP
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Senior Vice President
Worldwide Human Resources
ACCEPTED AND AGREED:
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
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