/s/ LARRY J. ZINE

(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.

(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

(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 31^st 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.