Exhibit 10.1

 

FORM OF

 

RESTRICTED SHARE AWARD AGREEMENT

 

PURSUANT TO THE BLOCKBUSTER INC.

AMENDED AND RESTATED 1999 LONG-TERM MANAGEMENT INCENTIVE PLAN

(AS AMENDED THROUGH OCTOBER 6, 2004)

 

OR

 

2004 LONG-TERM MANAGEMENT INCENTIVE PLAN

(AS AMENDED THROUGH OCTOBER 6, 2004)

 

This Restricted Share Award Agreement (this “Agreement”) is entered into by and
between Blockbuster Inc., a Delaware corporation (the “Company”), and
                     (the “Participant”). The Company and the Participant agree
as follows:

 

1. Grant of Restricted Shares. Pursuant to the Blockbuster Inc. Amended and
Restated 1999 Long-Term Management Incentive Plan (as amended through October 6,
2004) or 2004 Long-Term Management Incentive Plan (as amended through October 6,
2004) (either of which is referred to as the “Plan”) and a duly adopted
resolution of the Senior Executive Compensation Committee (the “Committee”) of
the Board of Directors (the “Board”) of the Company, the Company hereby grants
to the Participant an Award of                      Restricted Shares, subject
to the terms and conditions set forth in this Agreement and in the Plan.
Capitalized terms used and not otherwise defined herein have the meanings
assigned to them in the Plan. The Date of Grant of this Award is December 20,
2004.

 

2. Interpretation. This Award and the Restricted Shares are subject to the terms
and conditions of the Plan, which terms and conditions are incorporated herein
by reference; however, unless specifically permitted by the Committee, the terms
of the Plan shall not be considered an enlargement of any benefits under this
Agreement. This Award and the Restricted Shares are subject to any rules
promulgated pursuant to the Plan by the Board or the Committee and communicated
to the Participant in writing.

 

3. Vesting. Except as specifically provided in this Agreement and subject to
certain restrictions and conditions set forth in Section 4 below and in the
Plan, the Restricted Shares will vest, and the restrictions with respect to the
Restricted Shares will lapse, in accordance with the following schedule:

 

Percentage of

Shares Vesting

--------------------------------------------------------------------------------

  

Vesting Date

--------------------------------------------------------------------------------

33 1/3%

   December 20, 2005

33 1/3%

   December 20, 2006

33 1/3%

   December 20, 2007

--------------------------------------------------------------------------------

4. Rights and Restrictions Governing Restricted Shares. As of the Date of Grant,
the appropriate number of Restricted Shares granted to a Participant shall be
registered in the Participant’s name or otherwise credited to the Participant,
but shall be held by the Company for the account of the Participant. The
Participant shall have, with respect to his or her Restricted Shares, all rights
of a stockholder as to such Restricted Shares (including, to the extent
applicable, the right to vote and to receive dividends or other distributions
made or paid with respect to such shares), subject to the following
restrictions: (i) the Participant is not entitled to delivery of such Restricted
Shares until such Restricted Shares have vested and the Participant’s Tax
Obligations (as defined below) with respect to such vested shares have been
satisfied; (ii) none of the Restricted Shares may be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of until such Restricted
Shares have vested and any such purported sale, transfer, assignment, pledge or
other encumbrance or disposition will be void and unenforceable against the
Company or any Subsidiary; and (iii) all unvested Restricted Shares will be
immediately forfeited upon a Participant’s termination of service with the
Company or any Subsidiary for any reason, including voluntary termination,
Termination for Cause or without Cause, death or Permanent Disability. Any
dividends that are paid in shares or other distributions that are paid in shares
shall be subject to the same restrictions as the Restricted Shares with respect
to which such dividends or other distributions are made.

 

5. Delivery of Restricted Shares. Subject to the terms and conditions of the
Plan and this Agreement, the Restricted Shares will vest in accordance with the
vesting schedule set forth in Section 3 of this Agreement. On the date on which
Restricted Shares vest and upon satisfaction of all other applicable conditions
set forth in the Plan and this Agreement, all restrictions contained in this
Agreement covering such Restricted Shares and in the Plan shall lapse as to such
Restricted Shares. All vested Restricted Shares will be held by EquiServe Trust
Company, N.A., the Company’s transfer agent, or any successor thereto (the
“Transfer Agent”), unless the Participant makes other arrangements with the
Transfer Agent; provided, however, that the obligation of the Company to deliver
the vested Restricted Shares shall be subject to (i) the condition that, if at
any time the Board or the Committee shall determine in its discretion that the
listing, registration, or qualification of the vested Restricted Shares is
required under any federal, state or other law or by the rules of any securities
exchange, or the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the issuance of
the vested Restricted Shares, then this Award will not vest in whole or in part
unless and until such listing, registration, qualification, consent, or approval
shall have been effected or obtained free of any conditions not acceptable to
the Committee; and (ii) the Participant’s satisfaction of any Tax Obligations as
specified under Section 7 of this Agreement. Any certificates issued by the
Company to the Participant shall bear such legends as the Committee, in its sole
discretion, may determine to be necessary or advisable in order to comply with
applicable federal, state or other securities laws. No fractional shares of
Common Stock will be issued under this Agreement.

 

6. Rights in Event of a Change of Control. Notwithstanding the vesting dates set
forth in Section 3, but subject to the other terms and conditions set forth in
this Agreement, upon the effective date of a Change of Control of the Company,
all unvested Restricted Shares will immediately and unconditionally vest, the
restrictions with respect to such Restricted Shares will lapse and the
Participant will be entitled to delivery of the vested Restricted Shares. For

 

2

--------------------------------------------------------------------------------

purposes of this Agreement, a “Change of Control” means the occurrence of any of
the following events:

 

a. The agreement to acquire or a tender offer for beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) by any individual,
entity or group (within the meaning of section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a “Person”), of 40% or more of either (i) the then outstanding
shares of common stock of the Company (the “Outstanding Stock”) or (ii) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a Change in
Control: (A) any acquisition directly from the Company, (B) any acquisition by
the Company, (C) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company or (D) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of paragraph (b) below; or

 

b. Consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company or an
acquisition of assets of another corporation (a “Business Combination”), in each
case, unless, following such Business Combination, (i) the Outstanding Stock and
Outstanding Company Voting Securities immediately prior to such Business
Combination represent or are converted into or exchanged for securities which
represent or are convertible into more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company, or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries), (ii) no Person
(excluding any employee benefit plan (or related trust) of the Company or the
corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership of the
Company existed prior to the Business Combination and (iii) at least a majority
of the members of the board of directors of the corporation resulting from such
Business Combination were members of the Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or

 

c. Approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

 

3

--------------------------------------------------------------------------------

7. Taxes.

 

a. In order to comply with all international, federal, state or local laws or
regulations, the Company or any Subsidiary may take such action as it deems
appropriate to ensure that all applicable international, federal, state and
local income, employment or other tax withholding obligations (collectively,
“Tax Obligations”) to which Participant is subject, which are the sole and
absolute responsibility of the Participant, are withheld or collected from the
Participant.

 

b. The Participant may elect to satisfy the Participant’s Tax Obligations that
arise from the vesting of the Restricted Shares by (i) providing the Company
with a cash payment equal to the amount of the Tax Obligations to which the
Participant is subject; or (ii) instructing the Transfer Agent to sell on behalf
of the Participant the number of vested Restricted Shares having a market value,
net of sales commissions, equal to the amount of the Tax Obligations to which
the Participant is subject. If the Participant makes the election in clause (i)
of the first sentence of this Section 7(b), but the Participant does not deliver
to the Company or the Company’s designee the cash payment required in connection
with any vesting of Restricted Shares by the date that such payment is required
to be received in accordance with instructions delivered to the Participant by
the Company, the Transfer Agent or another representative of the Company, then a
number of the Participant’s vested Restricted Shares having a market value, net
of any sales commissions, equal to the amount of the Tax Obligations to which
the Participant is subject will be sold on behalf of the Participant. The
Participant hereby authorizes the sale of such Vested Shares under such
circumstances by the Transfer Agent, and the Participant hereby appoints the
Transfer Agent the Participant’s attorney-in-fact, with full power of
substitution and resubstitution, to execute such sale.

 

c. The Participant agrees to release and indemnify the Company and its
Subsidiaries from any liability or damages arising from or relating to the
Participant’s failure to comply with his or her Tax Obligations.

 

8. Termination of Service, Death or Permanent Disability. This Award, and all
unvested Restricted Shares granted to the Participant hereunder, will terminate
and such unvested Restricted Shares will be forfeited immediately upon the
termination of the Participant’s service with the Company or any Subsidiary for
any reason. This termination and forfeiture provision applies regardless of the
reason for the termination of the Participant’s service, including voluntary
termination, Termination for Cause or without Cause, death or Permanent
Disability.

 

9. Restriction on Transfer. The Restricted Shares and any rights under this
Agreement may not be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of by the Participant, and any such purported sale,
assignment, transfer, pledge, hypothecation or other disposition will be void
and unenforceable against the Company or any Subsidiary.

 

10. Adjustment of Number of Shares and Related Matters. The number and kind of
shares of Common Stock covered by this Award shall be subject to adjustment in
accordance with Article IX of the Plan.

 

4

--------------------------------------------------------------------------------

11. Participant’s Representations. Notwithstanding any of the provisions hereof,
the Participant hereby agrees that this Award will not vest in whole or in part,
and that the Company will not be obligated to issue any shares of Common Stock
to the Participant hereunder, if the vesting of this Award or the issuance of
such shares shall constitute a violation by the Participant or the Company of
any provision of any law or regulation of any governmental authority. Any
determination in this connection by the Board or the Committee shall be final,
binding, and conclusive. The obligations of the Company and the rights of the
Participant are subject to all applicable laws, rules, and regulations.

 

12. Investment Representation. Unless the Common Stock is issued to the
Participant in a transaction registered under applicable federal, state or other
securities laws, the Participant represents and warrants to the Company that all
Common Stock that may be acquired hereunder will be acquired by the Participant
for investment purposes for his or her own account and not with any intent for
resale or distribution in violation of any such securities laws. Unless the
Common Stock is issued to the Participant in a transaction registered under
applicable federal, state or other securities laws, all certificates issued with
respect to the Common Stock shall bear an appropriate restrictive legend. The
Participant agrees to comply with any applicable securities laws of any
applicable jurisdiction in connection with the sale of the Common Stock.

 

13. Participant’s Acknowledgments. The Participant acknowledges receipt of a
copy of the Plan and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Award subject to all the terms and
provisions thereof. The Participant hereby agrees to accept as binding,
conclusive, and final all decisions or interpretations of the Board and/or the
Committee upon any questions arising under the Plan or this Agreement. The
Participant acknowledges that the value of Common Stock is subject to market
risk, and there is no assurance of the Participant’s actual receipt of any
particular value as a result of this Award. The Participant acknowledges that
his or her participation in the Plan with respect to the Award is voluntary.

 

14. Law Governing. This Agreement shall be governed by, construed, and enforced
in accordance with the laws of the State of Delaware (excluding any conflict of
laws rule or principle of Delaware law that might refer the governance,
construction, or interpretation of this Agreement to the laws of another state).
The Company, the Board and the Committee shall not be liable for any good faith
determination made hereunder or under the Plan.

 

15. No Right to Continued Employment or Future Awards, and other Participant
Acknowledgments. Nothing herein shall be construed to confer upon the
Participant the right to continue in the employment of the Company or any
Subsidiary or interfere with or restrict in any way the right of the Company or
any Subsidiary to discharge the Participant at any time (subject to any
contractual rights of the Participant). Furthermore, nothing in this Agreement
shall in any way be construed as imposing on the Company or any Subsidiary a
contractual obligation between the Company or any Subsidiary and the Participant
other than with respect to the specific offer contemplated by this Agreement.
The Participant acknowledges that the Participant’s employment with a Subsidiary
does not constitute employment with the Company for any purpose. Furthermore,
the Participant expressly acknowledges and agrees that execution of this
Agreement and the benefits

 

5

--------------------------------------------------------------------------------

contained hereunder shall in no manner be interpreted as if the Participant had
(a) an employment relationship; or (b) an “acquired right” over the benefits
contained hereunder with the Company for any purpose whatsoever; that the grant
of Awards on a particular basis in any year does not create any right to or
expectation of the grant of Awards on the same basis, or at all, in any future
year; and that, subject to the express provisions of the Plan, the Plan may be
terminated at any time by the Board in its discretion without any responsibility
to the Participant.

 

16. Legal Construction. In the event that any one or more of the terms,
provisions, or agreements that are contained in this Agreement shall be held by
a Court of competent jurisdiction to be invalid, illegal, or unenforceable in
any respect for any reason, the invalid, illegal, or unenforceable term,
provision, or agreement shall not affect any other term, provision, or agreement
that is contained in this Agreement and this Agreement shall be construed in all
respects as if the invalid, illegal, or unenforceable term, provision, or
agreement had never been contained herein.

 

17. Covenants and Agreements as Independent Agreements. Each of the covenants
and agreements that is set forth in this Agreement shall be construed as a
covenant and agreement independent of any other provision of this Agreement. The
existence of any claim or cause of action of the Participant against the
Company, whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of the covenants and agreements that
are set forth in this Agreement.

 

18. Entire Agreement. This Agreement, together with the Plan, supersedes any and
all other prior understandings and agreements, either oral or in writing,
between the parties with respect to the subject matter hereof and, except as
specifically stated herein, constitutes the sole and only agreement between the
parties with respect to the said subject matter. All prior negotiations and
agreements between the parties with respect to the subject matter hereof are
merged into this Agreement. Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, oral or otherwise, have
been made by any party or by anyone acting on behalf of any party, which are not
embodied in this Agreement or the Plan and that any agreement, statement or
promise that is not contained in this Agreement or the Plan shall not be valid
or binding or of any force or effect.

 

19. Parties Bound. The terms, provisions, representations, warranties,
covenants, and agreements that are contained in this Agreement shall apply to,
be binding upon, and inure to the benefit of the parties and their respective
heirs, executors, administrators, legal representatives, and permitted
successors and assigns.

 

20. Modification. No change or modification of this Agreement shall be valid or
binding upon the parties unless the change or modification is in writing and
signed by the parties. Notwithstanding the preceding sentence, the Company may
amend the Plan or this Agreement to the extent permitted by the Plan.

 

21. Headings. The headings that are used in this Agreement are used for
reference and convenience purposes only and do not constitute substantive
matters to be considered in construing the terms and provisions of this
Agreement.

 

6

--------------------------------------------------------------------------------

22. Gender and Number. Words of any gender used in this Agreement shall be held
and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise.

 

23. Notice. Any notice required or permitted to be delivered hereunder shall be
deemed to be delivered only when actually received by the Company or by the
Participant, as the case may be, at the respective addresses set forth below, or
at such other addresses as they have theretofore specified by written notice
delivered in accordance herewith:

 

a. Notice to the Company shall be delivered as follows:

 

Blockbuster Inc.

1201 Elm Street

Suite 2100

Dallas, TX 75270

Attn: General Counsel

 

b. Notice to the Participant shall be delivered to the Participant’s home or
business address as specified in the records of the Company.

 

BLOCKBUSTER INC. By:         John Antioco     Chairman of the Board and    
Chief Executive Officer

Participant:

 

 

7