EXECUTIVE SERVICE AGREEMENT

Exhibit 10.1

 

EXECUTIVE SERVICE AGREEMENT

 

This Agreement is made on October 1, 2005

 

Between

 

(1)	Blockbuster Entertainment Limited (“Blockbuster”), a company incorporated in England and Wales under registration number 2111417, the registered office of which is Harefield Place, The Drive, Uxbridge, Middlesex, UB10 8AQ, a subsidiary of Blockbuster Inc.; and

 

(2)	Christopher Wyatt (“you”).

 

In this Agreement the words set out below shall have the following meanings:

 

The “Board” means the board of directors from time to time of Blockbuster or a duly authorised committee of it;

 

The “Group” means Blockbuster, any subsidiary of Blockbuster, any holding company of Blockbuster, any subsidiary of such holding company and any company designated by the Board as an associated company from time to time.

 

1. Appointment (a) Blockbuster will employ you, and you will [continue to] serve Blockbuster as Executive Vice President and President International

 

(b) This Agreement will be effective as of October 1^st 2005 and will continue thereafter until terminated by either party in accordance with Paragraph 9 below. Your continuous period of employment with Blockbuster commenced on 15 July 1996.

 

2. Duties (a) You agree to devote your entire business time, attention and energies to the business of Blockbuster and the Group during your employment. You will be Executive Vice President and President, International of Blockbuster, and you agree to perform all duties reasonable and consistent with that (or such comparable office) or other individual designated by the Chief Executive Officer (the “CEO”) of Blockbuster Inc. may assign to you from time to time.

 

(b) Your normal place of work will be at Harefield Place. However, you will attend and work at any premises of the Blockbuster Group company, and travel and work both in the United Kingdom and abroad, as may be required for the proper fulfilment of your duties.

 

(c) You will, whenever so required for the proper fulfilment of your duties, work without further remuneration in excess of normal hours of work of Blockbuster which are [9.00am to 5.30pm Monday to Friday]. You agree that for the purposes of the Working Time Regulations 1988 (and any amendment or re-enactment thereof) any legislative provisions imposing a maximum number of average weekly hours shall not apply to your employment. The Executive may withdraw consent by giving Blockbuster not less than three month’s notice in writing.

 

3. Compensation.

 

(a) Salary. For all the services rendered by you in any capacity under this Agreement, Blockbuster agrees to pay you a basic salary at the rate of £346,000 per annum accruing from day to day (“Salary”), less deductions for tax and National Insurance, which is payable by equal monthly instalments in arrears on or before the 23^rd day of each calendar month, in accordance with Blockbuster’s payroll practices as they may exist from time to time and includes any directors fees payable in relation to your acting as officer of Blockbuster or any affiliated company.

 

(b) Bonus Compensation. You also will receive bonus compensation (“Bonus”) in accordance with Blockbuster’s Short-Term Incentive Plan or, if applicable, Blockbuster’s Senior Executive Short-Term Incentive Plan, each as may be amended from time to time (either of such plans, as applicable, to be hereinafter referred to as the “STIP”) and as follows:

(i) Your target bonus (“Target Bonus”) for each calendar year will be 60% of your Salary on November 1^st of the calendar year; provided that, for any years in which you are a participant in Blockbuster’s Senior Executive Short-Term Incentive Plan, for purposes of this Section 3(b)(i), your Target Bonus will be based on your Salary as defined in such plan. Your Bonus may be prorated for any portion of the calendar year that you were employed under this Agreement.

 

(ii) Your Bonus for any calendar year will be payable, less applicable deductions and withholding taxes, by the end of the first quarter of the following year.

 

4.

Holiday

 

(a)You will be entitled, with full remuneration, to the usual public and statutory holidays and a further 25 working days’ holiday in each full holiday year, to be taken at such times as will be agreed between you and the Board or, failing agreement, as the Board may determine. Holidays must be requested as far in advance as is practicable and in any event not less than one week prior to the start of the holiday.

 

(b)Your holiday entitlement will be deemed to accrue from day to day and may not be carried over from one holiday year to the next. No payment will be made to you in lieu of holiday accrued but not taken by you save on the termination of your employment. However, where you are dismissed pursuant to Clause 9 any such payment will be limited to that required by law. If on termination of your employment you have exceeded your accrued holiday entitlement, the appropriate deduction will be made from your final salary payment.

 

(c) Blockbuster’s holiday year runs fro 1 April to 31 March.

 

5.

Benefits.

 

(a) You are eligible to participate in such medical, life insurance, permanent health insurance, long-term incentive and other plans as Blockbuster may have or establish from time to time and in which you would be entitled to participate under the terms of the plan. This provision, however, will not be construed to either require Blockbuster to establish any welfare, compensation or long-term incentive plans, or to prevent the modification or termination of any plan once established, and no action or inaction with respect to any plan will affect this Agreement. It is agreed that Blockbuster will not be liable to you for any default, act, error, omission or otherwise of any third party, insurer or provider of any of these plans.

 

(b) You are entitled to be a member of Blockbuster’s pension scheme subject to the rules and regulations of the scheme from time to time. Blockbuster will make a contribution of up to 15% of your Salary per year into the scheme. Blockbuster reserves the right to amend or substitute the terms, or wholly replace the scheme. There is not a contracting out certificate in respect of the pension scheme.

 

(c) If you are prevented by illness or accident from working you must provide a statement of your disability signed by a medical practitioner covering absence after the seventh day. Blockbuster will pay your salary in full for five days per annum and additionally at the discretion of the Board. Such remuneration will be inclusive of statutory sick pay.

 

(d) Blockbuster provides access to permanent health insurance (PHI) which is operated by a third party insurer. Information regarding this scheme is available from Human Resources. For the periods that you receive compensation and benefits under the PHI scheme, such compensation and benefits and the bonus compensation provided by the PHI are in lieu of Salary and Bonus under paragraphs 3(a) and (b). It is agreed that Blockbuster will not be liable to you for any default, act, error or omission or otherwise of the insurer or provider of the PHI scheme.

 

6.

Business Expenses; Car Allowance and Insurance.

 

(a) During your employment under this Agreement, Blockbuster will reimburse you for such reasonable travel and other expenses incurred in the performance of your duties consistent with Blockbuster’s then applicable expense reimbursement policies for Blockbuster executives at comparable position levels.

(b) Subject to your holding a current full driving licence, Blockbuster will provide you with a motorcar of a make, model and specification commensurate with your status (in the reasonable opinion of Blockbuster) for your sole business use, together with appropriate insurance and a fuel card and in accordance with Blockbuster’s policies, as may be amended from time to time. On the termination of your employment, you shall have no entitlement to compensation for loss of use of the motorcar and related insurance and fuel card, and shall return the motorcar forthwith in good condition, together with all keys, documents, fuel card, mobile phone and other property relating to it, to Blockbuster or as directed by Blockbuster.

 

7.

Non-Competition, Confidential Information, Etc.

 

(a) Non-Competition. You agree that your employment with Blockbuster is on an exclusive basis and that, while you are employed by Blockbuster, you will not engage in any other business activity which is in conflict with your duties and obligations (including your commitment of time) under this Agreement. You agree that after the date of termination of your employment (“the Termination Date”) you will not, without the prior written approval of Blockbuster, directly or indirectly as an owner, partner, stockholder, officer, employee, director, agent of or consultant whether for your own benefit or that of others during the Non-Compete Period (as defined below):

 

(i)

engage in or participate in any Blockbuster Competitor;

 

(ii)

render or attempt to render any Restricted Services within a Restricted Area for any Blockbuster Competitor;

 

(iii)

solicit, entice or induce any Key Employee to become employed or engaged by any Blockbuster Competitor or by you or by any other person, firm, company or association.

 

You acknowledge that the restrictions in this Clause are independent and severable and that they are fair and necessary to protect the legitimate business interests of Blockbuster. You undertake to inform any prospective new employer of these restrictions.

 

(1) Unless otherwise set forth herein, the “Non-Compete Period” is the period of six (6) months immediately following the Termination Date.

 

(2) A “Blockbuster Competitor” is any business entity which at the Termination Date engages in the acquisition, aggregation, or delivery of audio or video entertainment, including but not limited to the rental, purchase, trading or sale of video, DVD, or other movie product, equipment, or video games, either (i) in electronic, digital, or internet commerce, or (ii) within a Restricted Area; provided that such acquisition, aggregation, or delivery of audio or video entertainment constituted at least twenty percent (20%) of the business entity’s total revenue in the twelve (12) months preceding the termination date or in the business entity’s most recent fiscal year.

 

(3) A “Restricted Area” is the United Kingdom and any country where in the 12 months preceding the Termination Date you have performed your duties for Blockbuster and where Blockbuster has its operations (or is engaged in real estate site selection or has taken other steps toward the commencement of operations), either alone or in association with another entity

 

(4) “Restricted Services” means services of a type provided by Blockbuster at any time during the 12 months preceding the Termination Date (specifically including the acquisition, aggregation, or delivery of audio or video entertainment which includes but is not limited to the rental, purchase, trading or sale of video, DVD, or other movie product, equipment, or video games) and in connection with which you have been materially involved in that period;

 

(5) “Key Employee” means any person who at any time during the 12 months immediately preceding the Termination Date was and remains an employee of Blockbuster in the following capacities: managerial, marketing, or director and with whom you had direct dealings in the 12 months prior to the Termination Date.

 

You agree that this non-compete covenant is ancillary to an otherwise enforceable agreement, including but not limited to the confidentiality covenant and the payment provisions in Paragraph 3.

(b) Confidential Information. You agree that, during your employment and at any time thereafter, (i) you will not (a) use for any purpose other than the duly authorized business of Blockbuster conducted in the course of your employment at Blockbuster or, (b) disclose to any third party, any business information, technological information, intellectual property, trade secrets and other information belonging to Blockbuster or any of its affiliated companies or relating to Blockbuster’s business, technology, or customers (“Confidential Information”), including, without limitation, any written (including in any electronic form) or oral communication incorporating Confidential Information in any way; and (ii) you will comply with any and all confidentiality obligations of Blockbuster to a third party, whether arising under a written agreement or otherwise. Information will not be deemed Confidential Information which (x) is or becomes generally available to the public other than as a result of a disclosure by you or at your direction or by any other person who directly or indirectly receives such information from you, or (y) is or becomes available to you on a non-confidential basis from a source which is entitled to disclose it to you.

 

(c) Intellectual Property Rights.

 

(i) You will promptly disclose and deliver to the Company for the exclusive use and benefit of the Group full details of any Inventions upon the making, devising or discovering of the same during your employment, irrespective of whether they were so made, devised or discovered during normal working hours or using the facilities of the Company. You will, irrespective of the termination of the your employment, give all information and data in your possession as to the exact mode of working, producing and using the same and will also at the expense of the Company give all such explanations, demonstrations and instructions to the Company as the Board may deem appropriate to enable the full and effectual working, production or use of the same.

 

(ii) You will, without additional payment to you (except to the extent provided in Section 40, Patents Act 1977 or any similar provision of applicable law), whether or not during the continuance of your employment, at the expense of the Company, promptly execute and do all acts, matters, documents and things necessary to enable the Company or its nominee to apply for and obtain any or all applicable Intellectual Property Rights in any or all countries relating to any Inventions or other materials produced by you during the employment.

 

(iii) You:

 

(a) will do anything necessary to confirm vesting of title to any or all applicable Intellectual Property Rights (except only to the extent that such Intellectual Property Rights fail to vest in the Company) in any or all countries relating to any Inventions or other materials produced by you during your employment in the