Exhibit 10.1
 
CONFIDENTIAL
 
August 2, 2002
 
Mr. Nigel Travis
5109 Heather Court
Flower Mound, Texas 75028
 
Dear Nigel,
 
Reference is made to your employment agreement with Blockbuster Inc. (the
“Company”) commencing December 27, 1999, and addendum dated November 13, 2000
(collectively, the “Employment Agreement”). This letter, when fully executed
below, shall amend your Employment Agreement to include the deferred
compensation arrangement described below. All defined terms used herein shall
have the meanings given to them in the Blockbuster Inc. Excess Investment Plan.
 
1.    Nonqualified Deferred Compensation Arrangement
 
Effective upon your execution of this letter, you will have the opportunity to
defer up to 15% of your annual U.S. Compensation through payroll deduction
elections (“Compensation Reduction Contributions”). This is an unfunded and
nonqualified arrangement, and no action taken pursuant to this arrangement will
create or be construed to create a trust of any kind, or a fiduciary
relationship, between the Company and you or any other person. The Company’s
obligations are unsecured general obligations of the Company and will rank
equally with other unsecured and unsubordinated indebtedness of the Company. Any
payments to you will be made from the general assets of the Company, and no
special or separate fund will be established and no other segregation of assets
will be made to assure the payment of your benefits. You will not have any right
or lien on or against any of the assets of the Company, and all amounts of
Compensation deferred by you pursuant to this arrangement will at all times
remain an unrestricted asset of the Company.
 
2.    Timing and Amount of Deferral Elections
 

 
(a)
 
You may elect to make Compensation Reduction Contributions by filing an election
with the Company setting forth your election as to the amount of your
Compensation Reduction Contributions in a whole percentage between 1% and 15% of
your Compensation. Any election that you desire to make with respect to
Compensation earned in 2002 must be made within ten days of your execution of
this letter or, if earlier, prior to September 1, 2002. Elections with respect
to Compensation earned during calendar years beginning with the calendar year
2003 must be made with respect to a full calendar year and must be made prior to
December 31 of the preceding calendar year (or such other date as may be
determined by the Company). Elections with respect to Bonus deferrals will apply
to any Bonus scheduled to be paid in the second succeeding calendar year (e.g.,
a Bonus deferral election must be made prior December 31, 2002 with respect to a
cash Bonus earned in 2003, but scheduled to be paid in 2004, from the
Blockbuster Inc. Senior Executive Short-Term Incentive Plan). Elections are
irrevocable once made.

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Mr. Nigel Travis
August 2, 2002
Page 2
 
3.    Investment Elections
 

 
(a)
 
You will initially be able to choose from one or all of the following funds to
measure the returns, if any, of your deferred Compensation balance:

 

 
•
 
   EuroPacific Growth Fund

 
•
 
   Putnam S&P 500 Index Fund

 
•
 
   The Putnam Fund for Growth and Income

 
•
 
   Putnam Stable Value Fund

 
The Company may at any time and for any reason, without liability to you,
determine in its sole discretion to add or remove funds that will be available
for measuring your returns.
 

 
(b)
 
You will be able to select different funds or transfer fund balances once each
calendar year at such time as you would ordinarily make your annual deferral
election.

 

 
(c)
 
All Compensation Reduction Contributions will be credited with an amount equal
to such amount as would have been earned had such contributions been invested in
the fund(s) and proportions selected by you. If you elect a Payment Option other
than a single lump sum payable on or about the January 31st of the calendar year
following the calendar year in which you terminate employment, all amounts
credited to your Account will be credited with earnings based on the rate of
return in the fixed income investment fund option available under the
Blockbuster Investment Plan beginning January 1 of the calendar year following
the year in which a Distribution Event (as defined in Section 5 below) occurs.
The rate of return on amounts deferred will be adjusted in accordance with the
performance of the applicable funds selected regardless of the actual investment
experience of the Company’s general funds from which deferred amounts will be
paid. No provision of this arrangement shall require the Company to actually
invest any amounts in any fund or in any other investment vehicle.

 
4.    Creation of Account
 
The Company or its designee will maintain an Account in your name reflecting
your Compensation Reduction Contributions together with any adjustments for
income, gain or loss, and any payments from the Account.
 
5.    Events Resulting in Distribution of Funds
 
The following events (“Distribution Events”) will result in the distribution of
your Account balance in accordance with your Payment Option election:
 
1.  Death
2.  Disability (as defined under the Blockbuster Investment Plan)
3.  Involuntary termination of your employment with the Company and any of its
subsidiaries
4.  Voluntary termination of your employment with the Company and any of its
subsidiaries
 
You may not withdraw or access funds in your Account while you are actively
employed, except in the event of an immediate financial emergency. You may
request the Company to accelerate distribution of all or any part of the value
of your Account solely for the purpose of alleviating an immediate financial
emergency. An “immediate financial emergency” shall mean an unanticipated
emergency that is caused by an event beyond your control and that would result
in severe financial

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Mr. Nigel Travis
August 2, 2002
Page 3
 
hardship to you if early distribution were not permitted. The Company may
request that you provide certifications and other evidence of qualification for
such emergency hardship distribution as it deems appropriate. The grant or
denial of all or any part of such request shall be in the sole discretion of the
Company.
 
If you die before all payments are made, any unpaid amounts will be paid in
accordance with your Designation of Beneficiary Form.
 
6.    Payment Option Election
 
You may elect a Payment Option at the same time that you file your initial
election to defer Compensation. Your choices for Payment Options will be such as
are set forth in the Blockbuster Inc. Excess Investment Plan. Your Payment
Option election will apply to the total of all amounts credited to your Account
as of the date of your Distribution Event. You may change your Payment Option no
more than three times over the course of your employment with the Company or any
affiliate; provided that your Payment Option may be changed no more than one
time in any calendar year. Any change in your existing Payment Option election
that is made less than six months prior to your termination of employment for
any reason will be null and void and your last valid Payment Option will remain
in effect. Payment of your Account balance will be made following a Distribution
Event in accordance with the Payment Option elected by you, but will in no event
be made prior to on or about January 31 of the calendar year following the end
of the calendar year in which a Distribution Event occurs.
 
7.    Assignment
 
Your rights under this deferred compensation arrangement are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge or
encumbrance.
 
8.    Amendment; Termination
 
The Company shall have the right to amend, suspend or terminate this deferred
compensation arrangement at any time; provided that such amendment, suspension
or termination cannot, without your consent, adversely affect your rights in
your Account.
 
Agreement
 
Nigel, if the foregoing correctly sets forth your understanding, please sign
this letter and return the original to me whereupon this letter shall constitute
a binding amendment to your Employment Agreement.
 
Sincerely yours,
/s/    LARRY J. ZINE    

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Larry J. Zine
Executive Vice President
Chief Financial Officer

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Mr. Nigel Travis
August 2, 2002
Page 4
 
Accepted and Agreed:
 
/s/    NIGEL TRAVIS

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Nigel Travis

 
8/9/02

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Date