FORM OF PERFORMANCE-BASED RESTRICTED SHARE UNIT AWARD AGREEMENT

Exhibit 10.2

FORM OF

PERFORMANCE-BASED RESTRICTED SHARE UNIT 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)

FOR

THE UNITED KINGDOM

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

1. Grant of Performance-Based Restricted Share Units . 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 Board of Directors (the “Board”) of the Company, the Company hereby agrees to grant to the Participant a Performance Award of Restricted Share Units (the “Performance-Based Restricted Share Units”), subject to the terms and conditions set forth in this Agreement and in the Plan. The target number of Restricted Share Units that may be granted to the Participant is identified in the Participant’s personalized grant letter prepared and delivered to the Participant in connection with the Performance Award (the “Target Grant”). If and when the performance goals described below are met, the actual number of Performance-Based Restricted Share Units granted to the Participant may be [Description of Range] of the Target Grant. This Agreement and the Grant hereunder are subject to the Participant’s valid acceptance of his or her Performance Award and the terms of this Agreement in accordance with the procedures provided by the Company. The Date of Grant, if any, of the Performance-Based Restricted Share Units will be [Date of Grant].

2. Performance Period . The performance period (the “Performance Period”) is [Performance Period].

3. Performance Goals . The Participant’s actual receipt of a grant of any Performance-Based Restricted Share Units is conditioned upon:

[Description of Performance Goals]

[Definition of Performance Goals]

4. Adjustment of Target Grant . The number of Performance-Based Restricted Share Units actually granted, if any, will be based upon the Company’s actual level of [Performance Goals] for the Performance Period, as shown in the chart in Section 3 above. The chart in Section 3 of this Agreement reflects only certain milestones and interpolated achievements of performance will be used for any final grant calculation. In no event will the Participant be entitled to receive a total number of Performance-Based Restricted Share Units greater than [Percentage] of the Target Grant. In addition, for the avoidance of doubt, in no event will the Participant be entitled to receive a grant of Performance-Based Restricted Share Units if he or she is not employed with the Company or any Subsidiary on the Date of Grant of the Performance-Based Restricted Share Units.

5. Vesting of Performance-Based Restricted Share Units . Except as specifically provided in this Agreement and subject to certain restrictions and conditions set forth in Section 7 below and in the Plan, any Performance-Based Restricted Share Units granted will vest, and the restrictions with respect to the Performance-Based Restricted Share Units will lapse, in accordance with the following schedule:

6. Interpretation . Capitalized terms used and not otherwise defined herein have the meanings assigned to them in the Plan. The Performance Award and the Performance-Based Restricted Share Units 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 Board or the Committee, the terms of the Plan shall not be considered an enlargement of any benefits under this Agreement. The Performance Award and the Performance-Based Restricted Share Units are subject to any rules promulgated pursuant to the Plan by the Board or the Committee and communicated to the Participant in writing.

7. Settlement of Performance-Based Restricted Share Units . Subject to the terms and conditions of the Plan and this Agreement, the Performance-Based Restricted Share Units will vest in accordance with the vesting schedule set forth in Section 5 of this Agreement. Upon each vesting date, the Participant will be entitled to delivery of one share of Common Stock for each Performance-Based Restricted Share Unit that vests on that date (the “Vested Shares”). As soon as reasonably practicable thereafter, such Vested Shares will be registered in the Participant’s name or otherwise delivered or credited for the Participant’s account or benefit, subject to (a) the Participant’s satisfaction of any Tax Obligations (as defined below) and (b) the condition that, if at any time the Board or the Committee shall determine in their discretion that the listing, registration, or qualification of the Vested Shares is required under any federal, provincial, 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 Shares, then the Performance 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 Board or the

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Committee. All Vested Shares will be held by the transfer or other agent of the Company, or any successor thereto (the “Transfer Agent”), on behalf of the Participant, unless the Participant makes other arrangements with the Transfer Agent. Any certificates issued by the Company to the Participant shall bear such legends as the Board or the Committee, in their 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.

8. Taxes .

a. In order to comply with all international, provincial, federal, state or local laws or regulations of the United States or other applicable jurisdictions, 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 or social security contributions (collectively, “Tax Obligations”) to which the 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 or settlement of the Performance-Based Restricted Share Units, if any, 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 Plan administrator to sell, or cause to be sold, on behalf of the Participant the number of Vested Shares having a market value equal to the amount of the Tax Obligations (plus sales commissions) to which the Participant is subject. If the Participant makes the election in clause (i) of the first sentence of this Section 8(b), but the Participant does not deliver to the Company or the Company’s designee the cash payment required in connection with any vesting or settlement of Performance-Based Restricted Share Units by the date that such payment is required to be received in accordance with instructions delivered to the Participant by the Company, the Plan administrator or another representative of the Company, then a number of the Participant’s Vested Shares having a market value equal to the amount of the Tax Obligations (plus sales commissions) 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 Plan administrator, and the Participant hereby appoints the Plan administrator 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.

9. Termination of Service, Death or Permanent Disability . The Performance Award and all unvested Performance-Based Restricted Share Units granted to the Participant hereunder, will terminate and such unvested Performance-Based Restricted Share Units 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

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reason for the termination of the Participant’s service, including voluntary termination, Termination for Cause or without Cause, death or Permanent Disability.

10. Restriction on Transfer . Unvested Performance-Based Restricted Share Units and any rights under this Agreement may not be sold, assigned, transferre