Exhibit 10.14

 

[BLOCKBUSTER LOGO]

 

March 1, 2003

 

CONFIDENTIAL

 

Nicholas P. Shepherd

1201 Elm Street

Dallas, Texas 75270

 

Dear Nick,

 

I am pleased to confirm your continued eligibility and participation in the
following benefits connected with your Blockbuster Inc. assignment in the US, in
addition to those described in your Employment Agreement, effective as of the
date of such Employment Agreement. This letter will serve as an addendum to your
Employment Agreement with Blockbuster Inc.

 

Assignment Commencement & Duration

 

For purposes of this addendum your assignment commencement date is June 30,
1999. This addendum extends your assignment until February 28, 2005.

 

Pension

 

While on assignment in the US, you will continue to participate in the
Blockbuster Inc. Pension and Death Benefits Scheme at a contribution level of
15% of Salary for each twelve (12) month period during your Employment Term.
This contribution will be on a tax-free basis, and the pension company’s
commitment to your retirement account is subject to the inland revenue earnings
cap. Such participation in the Pension and Death Benefits Scheme is in lieu of
your eligibility to participate in the Blockbuster Investment Plan (401(k)) and
excess investment plan as provided for in the Employment Agreement.

 

Life Insurance/Assurance

 

While on assignment, you will be provided two times your annual salary in life
insurance under the US life insurance benefit plan, or any other additional
coverage that may be established for executives at your level. In addition, you
will be covered at two times your annual salary under the UK life assurance
plan. Between these two plans and any supplemental life insurance you may
voluntarily elect under the US plan, your total life insurance/assurance shall
not exceed six times your annual salary.

 

Home Country Housing

 

Assuming you continue to retain your UK residence during the assignment, the
Company will extend the standard applicable provisions of its International
Relocation Policy including:

 

Home Retention Allowance (HRA): An HRA will be provided if you choose to rent
your home in the UK while on assignment. The HRA is paid to you upon your return
to the UK if you retained and rented your home during your assignment. The HRA
is based on 5% of the appraised value

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of the home prior to the assignment, up to a maximum of US$ 15,000. The HRA is
considered taxable income and is not grossed-up.

 

Home Management Fees: Should you choose to rent your home in the UK while on
assignment, the Company will reimburse you for the monthly management fees
associated with the professional property management of your home. Additionally,
the Company will reimburse you a one-time commission fee to retain the services
of a property management company, if necessary.

 

Storage of Household Goods

 

The Company will reimburse the cost of storing in your Home Location any goods
you do not wish to ship to the US. Storage costs will be covered for the
duration of your assignment.

 

Car Allowance

 

The Company will provide you with a US$ 300 per month automobile allowance plus
insurance on one vehicle. The payment is subject to normal tax deductions.

 

Vacation & Holidays

 

Vacation entitlement will continue to be determined in accordance with policy in
effect within Blockbuster UK up to a maximum of 25 days per year. You will adopt
the work schedule, including hours of work, time off, and public holidays in
accordance with Blockbuster US policies and practices.

 

Home Leave

 

After each anniversary (twelve months) of your assignment, you and your
dependents in the US will be eligible for a Home Leave. This may be taken after
each twelve months of assignment (provided the assignment is scheduled to last
at least another eight weeks), at a time that is mutually convenient for you and
the Company.

 

Home leave includes all dependents in the US living with you and dependent
children in the UK visiting the US. Home Leave includes airfare, accommodations,
and car rental. Meals and other incidentals are not included. Business-class
travel is permitted to and from the UK for Home Leave.

 

For the period of your assignment, your spouse will be eligible for 2 (two) Home
Leave trips per year (including the one above) traveling in Business Class.

 

Dependent Schooling

 

It is the Company’s understanding that you intend to utilize public schools for
your children’s education. During the next 2-year term of your assignment,
should you decide that the public educational system is inadequate for your
children, Blockbuster will provide an educational stipend to you for use in
private education for your children. The stipend will be 50% of the private
school’s annual tuition, up to a maximum of US$ 4,000 per child per year. The
stipend will not be provided if your children use the public school system. The
stipend is not grossed-up and is considered taxable income.

 

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Tax Services

 

The Company will retain the services of an expert international tax advisor
annually to assist in the preparation of your personal US and UK tax returns
during any full or partial years of your assignment. Personal financial
information provided to these advisors remains confidential and details of that
information are not shared with the Company, except as necessary.

 

Social Security, Medicare, and Workers’ Compensation

 

During the assignment, you and the Company will continue FICA contributions as
required by the US Federal Government. Benefits for occupational injury or
illness will be paid in accordance with legal requirements of the US.

 

Assignment Completion

 

At the end of your assignment, or if your position is made redundant during your
assignment, the Company will assist in your repatriation to the UK. This
includes reimbursement of expenses associated with return travel; movement of
household goods; resettlement allowance of US$ 50,000 (net); temporary living in
the home country for up to 30 days; rental of a car for up to 15 days; and
temporary storage of household goods in the US for up to 90 days. Also, the
Company will pay closing costs associated with the selling of your home in the
US up to a maximum of 3% of the sale price.

 

Shipment of Household Pets

 

The Company will not pay costs associated with the relocation of household pets.
All costs incurred, including transportation, kennel expenses, travel
documentation, veterinary inspections, and quarantine costs will be your sole
responsibility.

 

Return Shipment

 

At the end of your assignment, the Company will pay for the return shipment of
your household goods. On the return shipment, you may ship up to an additional
1,500 pounds of household goods beyond your original shipment.

 

Assignment Review

 

During the term of your assignment, the Company and/or you can and should
identify and bring forward any issues associated with the assignment that have
impacted your ability to effectively perform your job duties. These issues may
include, but are not limited to, family adjustment concerns, change in roles and
responsibilities, management changes, or unacceptable performance of your job
duties.

 

If issues are identified, the Company will meet and work with you to mutually
resolve the issues. Alternatives will be identified to resolve the issues up to
and including the possibility of relocation back to the UK. The objective of
this section is to demonstrate your desire and the Company’s desire to make this
assignment highly successful, however acknowledging the potential for assignment
related issues that may require mutually agreeable resolutions. If you and the
Company mutually agree that you will return to the UK, the Company will assist
you in trying to find comparable alternative employment opportunities within
Blockbuster or one of its affiliated entities.

 

If at any time you resign your employment with the Company, or if your
employment is involuntarily terminated, the Company will pay your relocation
back to the UK provided the relocation occurs within

 

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six (6) months from the date of your resignation or termination. The terms of
your Employment Agreement shall govern any salary continuation and other
benefits after your separation from employment.

 

Agreement

 

Nick, 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 Addendum to the Employment Agreement between you and Blockbuster.

 

Sincerely yours,

 

/s/  Larry J. Zine

 

Larry J. Zine

EVP, CFO & CAO

 

 

Accepted and Agreed:

 

/s/  Nicholas P. Shepherd

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Nicholas P. Shepherd

 

7-30-03

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Date:

 

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