EXHIBIT 10.7
December 21, 2001
Xxxx X. Xxxxxxx
00000 Xxxxx 000xx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Dear Xx. Xxxxxxx:
Reference is made to your employment agreement dated July 15, 1999 (your
"Employment Agreement"), with Blockbuster Inc. ("Blockbuster"). All defined
terms used without definitions shall have the meanings provided in your
Employment Agreement.
This letter, when fully executed below, shall amend your Employment
Agreement as follows:
1. Term. Paragraph 1 shall be amended to change the date representing the
end of the Employment Term in the first and second sentences from "June 15,
2002" to "December 31, 2006".
2. Compensation/Salary. Paragraph 3(a) shall be amended to change the
reference to "June 15, 2002" in the second sentence to "December 31, 2006".
3. Compensation/Bonus. Paragraph 3(b)(iii) shall be amended to read in its
entirety as follows:
"Your Target Bonus for the calendar years 1999 through 2001 shall be 125%
of Salary and the annual rate of Deferred Compensation (as defined in
paragraph 3(c)) for such year. Your Target Bonus for the calendar years
2002 through 2006 shall be 150% of Salary and the annual rate of Deferred
Compensation for such year."
Xxxx X. Xxxxxxx
December 21, 2001
Page 2
4. Compensation/Deferred Compensation. Paragraph 3(c) shall be amended to
delete the words "and Two Hundred Thirty Thousand Dollars ($230,000) for the
portion of calendar year 2002 during the Employment Term" that appear at the end
of the second sentence and to insert the following sentence after the second
sentence:
"The amount of Deferred Compensation shall be Six Hundred Thousand Dollars
($600,000) for calendar year 2002, Seven Hundred Fifty Thousand Dollars
($750,000) for calendar year 2003, Nine Hundred Thousand Dollars ($900,000)
for calendar year 2004, One Million Fifty Thousand Dollars ($1,050,000) for
calendar year 2005 and One Million Two Hundred Thousand Dollars
($1,200,000) for calendar year 2006."
5. Compensation/Blockbuster Stock Options. Paragraph 3(d)(ii) shall be
amended to insert the following paragraph at the end thereof:
"Blockbuster Special Grants. You shall receive grants (the "Blockbuster
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Special Grants") under Blockbuster's 1999 Long-Term Management Incentive
Plan of stock options to purchase an aggregate of Eight Hundred Thousand
(800,000) shares of Blockbuster A Stock, awarded as follows, with an
exercise price per share equal to the closing price of a share of
Blockbuster A Stock on the New York Stock Exchange (the "NYSE") on the date
of the grant:
Number of Shares of
Blockbuster A Stock Subject
To Blockbuster Special Grant Date of Grant
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200,000 December 12, 2001
200,000 March 12, 2002
200,000 June 12, 2002
200,000 September 12, 2002
Each Blockbuster Special Grant shall vest in four equal installments on
January 1, 2003, January 1, 2004, January 1, 2005 and January 1, 2006."
6. Compensation/Viacom Stock Options. Paragraph 3 shall be amended to
insert the following paragraph (e) at the end thereof:
"(e) Viacom Stock Options: You shall receive a special grant (the "Viacom
--------------------
Special Grant") under Viacom's 2000 Long-Term Management Incentive Plan of
stock options to purchase Six Hundred Thousand (600,000) shares of Viacom
Class B Common Stock on December 13, 2001 (the "Date of the Viacom Special
Grant"), with an exercise price per share equal to the closing price of a
share of Viacom Class B Common Stock on the NYSE on the Date of the Viacom
Special Grant. The Viacom Special Grant shall vest in four equal
installments on January 1, 2003, January 1, 2004, January 1, 2005 and
January 1, 2006."
Xxxx X. Xxxxxxx
December 21, 2001
Page 3
7. Termination Payments. Paragraph 8(d) shall be amended to change the
period from "eighteen (18)" months to "twenty-four (24)" months for which
mitigation shall not be required, and no offset for other compensation shall be
made, if your employment terminates for "Good Reason" or not for "cause".
Except as herein amended, all other terms and conditions of your Employment
Agreement shall remain the same and your Employment Agreement, as herein
amended, shall remain in full force and effect.
If the foregoing correctly sets forth our understanding, please sign, date
and return all four (4) copies of this letter agreement to the undersigned for
execution on behalf of Blockbuster; after this letter agreement has been
executed by Blockbuster and a fully-executed copy returned to you, it shall
constitute a binding amendment to your Employment Agreement.
Very truly yours,
BLOCKBUSTER INC.
By: /s/ Xxxxx X. Zine
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Name: Xxxxx X. Zine
Title: Executive Vice President,
Chief Financial Officer and
Chief Administrative Officer
ACCEPTED AND AGREED:
/s/Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Dated: December 28, 2001
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