Employment Agreement - Blockbuster Inc. and James Notarnicola


                                                                October 13, 2000



James Notarnicola
3514 Raintree Drive
Flower Mound, TX  75028

Dear Jim:

     Blockbuster Inc. ("Blockbuster"), 1201 Elm Street, Dallas, Texas 75270,
agrees to employ you and you agree to accept employment with Blockbuster upon
the following terms and conditions (the "Agreement"):

     1. Term. The term of this Agreement shall commence on November 23, 1999 and
        ----
end on March 1, 2000, and will be automatically renewed on March 1 of each year
for a term of three (3) years commencing on the date of automatic renewal,
unless terminated by Blockbuster pursuant to Paragraph 8(a) or (b) or otherwise.
As used in this Agreement, the "Term" refers to the period beginning on the
initial commencement date of this Agreement and ending on the following March
1st or, if the term of your employment has been automatically renewed pursuant
to this Paragraph 1, the period beginning on the date of automatic renewal and
ending on the third anniversary of the date of automatic renewal,
notwithstanding any earlier termination pursuant to Paragraph 8(a) or (b) or
otherwise.

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

     3. Compensation.
        -------------

        (a)  Salary. For all the services rendered by you in any capacity under
             ------
this Agreement, Blockbuster agrees to pay you Thirty-five thousand Dollars
($35,000) a month in base salary ("Salary"), less applicable deductions and
withholding taxes, in accordance with Blockbuster's payroll practices as they
may exist from time to time.

        (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
             50% of your Salary on November 1st 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.



James Notarnicola
October 13, 2000
Page 2

     4. Benefits. You will participate in such vacation, medical, dental, life
        --------
insurance, long-term disability insurance, 401(k), 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.

     5. Business Expenses; Car Allowance and Insurance. 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. You will receive a car allowance and
car insurance for one (1) vehicle in accordance with Blockbuster's policies, as
same may be amended from time to time.

     6. 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, during the Non-Compete Period (as defined below), you will not
directly or indirectly engage in or participate as an owner, partner,
stockholder, officer, employee, director, agent of or consultant for any
Blockbuster Competitor (as defined below) and will perform no services for a
Blockbuster Competitor similar to any services performed for Blockbuster;
provided, however, that this provision will not prevent you from investing as
--------  -------
less than a one (1%) percent stockholder in the securities of any company listed
on a national securities exchange or quoted on an automated quotation system.
The Non-Compete Period will cover the entire Term plus any period after the Term
for which you receive payments pursuant to Paragraph 8(c)(i). A Blockbuster
Competitor is any business entity which engages in the acquisition, aggregation,
or delivery of audio or video entertainment, including but not limited to the
rental or sale of video, DVD, or other movie product, equipment, or video games,
either (i) in electronic, digital, or internet commerce, or (ii) in one or more
geographic areas 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. In every case,
the good faith judgment of Blockbuster will be conclusive as to whether a
business entity constitutes a Blockbuster Competitor. 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 the Term 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) No Employee Solicitation. You agree that, during the Term and for
            ------------------------
one (1) year thereafter, you will not, directly or indirectly, engage, employ or
solicit the employment or consulting services of any person who is then or has
been within six (6) months prior to the time of such action, an employee of
Blockbuster or any of its affiliated companies.



James Notarnicola
October 13, 2000
Page 3

     (d) Blockbuster Ownership. Any inventions, discoveries, ideas, processes,
         ---------------------
programs, systems, improvements or contributions (whether or not patentable),
including but not limited to any useful process, method, formula or, technique
that is conceived, developed or discovered by you during your employment by
Blockbuster shall be the sole property of Blockbuster. Any works of authorship
or other materials created by you, in any form (including in any electronic
form), created by you in the course of employment with Blockbuster and/or any of
its affiliated companies and any works in progress resulting from such
employment will be works-made-for hire pursuant to 17 U.S.C., Section 201 (the
Copyright Act) and Blockbuster will be deemed the sole owner throughout the
universe of any and all rights of every nature in and to such works (including,
without limitation, any copyrights, patents, trade secrets and trademarks),
whether such rights are now known or hereafter defined or discovered, with the
right to use the works in perpetuity in any manner Blockbuster determines in its
sole discretion without any further payment to you. If, for any reason, any of
such results and proceeds are not legally deemed a work-made-for-hire and/or
there are any rights in such results and proceeds which do not accrue to
Blockbuster under the preceding sentence, then you hereby irrevocably assign and
agree to assign any and all of your rights, title and interest thereto,
including, without limitation, any and all copyrights, patents, trade secrets,
trademarks, and/or other rights of every nature in the work, whether known or
hereafter defined or discovered, and Blockbuster will have the right to use the
work in perpetuity throughout the universe in any manner Blockbuster determines
in its sole discretion without any further payment to you. You will, as may be
requested by Blockbuster from time to time, do any and all things which
Blockbuster may deem useful or desirable to establish or document Blockbuster's
rights in any such results and proceeds, including, without limitation, the
execution of appropriate copyright, trademark and/or patent applications,
assignments or similar documents and, if you are unavailable or unwilling to
execute such documents, you hereby irrevocably designate the CEO or his designee
as your attorney-in-fact with the power to execute such documents on your
behalf. To the extent you have any rights in the results and proceeds of your
services under this Agreement that cannot be assigned as described above, you
unconditionally and irrevocably waive the enforcement of such rights. This
Paragraph 6(d) is subject to, and does not limit, restrict, or constitute a
waiver by Blockbuster or any of its affiliated companies of any ownership rights
to which Blockbuster or any of its affiliated companies may be entitled by
operation of law by virtue of being your employer.

     (e) Litigation. You agree that, during the Term and the pendancy of any
         ----------
litigation or other proceeding, and at any time thereafter, (i) you will not
communicate with anyone (other than your own attorneys or tax advisors), except
to the extent necessary in the performance of your duties under this Agreement,
with respect to the facts or subject matter of any pending or potential
litigation, or regulatory or administrative proceeding involving Blockbuster or
any of Blockbuster's affiliated companies, other than any litigation or other
proceeding in which you are a party-in-opposition, without giving prior notice
to Blockbuster or Blockbuster's counsel; and (ii) in the event that any other
party attempts to obtain information or documents from you with respect to
matters possibly related to such litigation or other proceeding, you will
promptly notify Blockbuster's counsel before providing such information or
documents.

     (f) No Right to Give Interviews, Write Books, or Articles. During the Term
         -----------------------------------------------------
and at any time thereafter, except as authorized by Blockbuster, you will not
(i) give any interviews or speeches, or (ii) prepare or assist any person or
entity in the preparation of any books, articles, television or motion picture
productions or other creations, in either case, concerning Blockbuster or any of
its affiliated companies or any of their respective officers, directors, agents,
employees, suppliers or customers.

     (g) Return of Property. All documents, data, recordings, or other property,
         ------------------
whether tangible or intangible, including all information stored in electronic
form, obtained or prepared by or for you and utilized by you in the course of
your employment with Blockbuster or any of its affiliated companies, will remain
the exclusive property of Blockbuster. In the event of the termination of your
employment for any reason, Blockbuster reserves the right, to the extent
permitted by law and in addition to any other remedy Blockbuster may have, to
deduct from any monies otherwise payable to you the following: (i) all amounts
you may owe to Blockbuster or any of its affiliated companies at the time of or



James Notarnicola
October 13, 2000
Page 4


subsequent to the termination of your employment with Blockbuster, and (ii) the
value of the Blockbuster property which you retain in your possession after the
termination of your employment with Blockbuster. In the event that the law of
any state or other jurisdiction requires the consent of any employee for such
deductions, this Agreement will serve as such consent.

        (h) Non-Disparagement. You agree that, during the Term and at any time
            -----------------
thereafter, you will not, in any communications with the press or other media or
any customer, client or supplier of Blockbuster or any of its affiliated
companies, criticize, ridicule or make any statement which disparages or is
derogatory of Blockbuster or any of its affiliated companies or any of their
respective directors or officers.

        (i) Injunctive Relief. Blockbuster has entered into this Agreement in
            -----------------
order to obtain the benefit of your unique skills, talent, and experience. You
acknowledge and agree that any violation of paragraphs 6(a) through (h) of this
Agreement will result in irreparable damage to Blockbuster, and, accordingly,
Blockbuster shall be entitled to obtain injunctive and other equitable relief
for any breach or threatened breach of such paragraphs, in addition to any other
remedies available to Blockbuster.

        (j) Survival; Modification of Terms. Your obligations under
            -------------------------------
Paragraph 6(a) through (i) will remain in full force and effect for the entire
period provided therein notwithstanding the termination of your employment for
any reason or the expiration of the Term. You and Blockbuster agree that the
restrictions and remedies contained in paragraphs 6(a) through (i) are
reasonable and that it is your intention and the intention of Blockbuster that
such restrictions and remedies will be enforceable to the fullest extent
permissible by law. If a court of competent jurisdiction will find that any such
restriction or remedy is unenforceable but would be enforceable if some part
were deleted or the period or area of application reduced, then such restriction
or remedy will apply with the modification necessary to make it enforceable.

     7. Disability. If you become "disabled" within the meaning of such term
        ----------
under Blockbuster's Short-Term Disability ("STD") program and its Long-Term
Disability ("LTD") program during the Term (such condition is referred to as a
"Disability"), you will receive compensation under the STD program for the first
twenty-six (26) weeks of consecutive absence in accordance with its terms.
Thereafter, you will be eligible to receive benefits under the LTD program in
accordance with its terms. If you have not returned to work by December 31st of
a calendar year during the Term, you will receive bonus compensation for the
calendar year(s) during the Term in which you receive compensation under the STD
program, determined as follows:

          (i)  for the portion of the calendar year from January 1st until the
               date on which you first receive compensation under the STD
               program, bonus compensation will be determined in accordance with
               the STIP (i.e., based upon Blockbuster's achievement of specified
                         ----
               goals and Blockbuster's good faith estimate of your achievement
               of your personal goals, if applicable) and prorated for such
               period; and

          (ii) for any subsequent portion of the calendar year and any portion
               of the following calendar year in which you receive compensation
               under the STD program, bonus compensation will be in an amount
               based on Blockbuster's achievement of specified goals and
               prorated for such period(s).

Bonus compensation under this Paragraph 7 will be paid, less applicable
deductions and withholding taxes, by the end of the first quarter of the year(s)
following the year as to which such bonus compensation is payable. You will not
receive bonus compensation for any portion of the calendar year(s) during the
Term while you receive benefits under the LTD program. For the periods that you
receive compensation and benefits under the STD and LTD programs, such
compensation and benefits and the bonus compensation provided under this
Paragraph 7 are in lieu of Salary and Bonus under



James Notarnicola
October 13, 2000
Page 5


paragraphs 3(a) and (b). Notwithstanding anything to the contrary in this
Agreement, the Term will not automatically extend in the event you are receiving
benefits under the STD or LTD programs.

     8.  Termination.
         -----------

        (a)   Termination for Cause. Blockbuster may, at its option, terminate
              ---------------------
your employment under this Agreement forthwith for Cause and thereafter will
have no further obligations under this Agreement, including, without limitation,
any obligation to pay Salary or Bonus or provide benefits. Cause will mean: (i)
dishonesty; (ii) embezzlement, fraud, or other conduct which would constitute a
felony; (iii) unauthorized disclosure of Confidential Information; (iv) your
failure to obey a material lawful directive that is appropriate to your position
from an executive(s) in your reporting line; (v) your material breach of this
Agreement; or (vi) your failure (except in the event of your disability) or
refusal to substantially perform your material obligations under this Agreement.

        (b)   Termination Without Cause. Blockbuster may terminate your
              -------------------------
employment under this Agreement without Cause at any time during the Term by
written notice to you.

        (c)   Termination Payments/Benefits. If your employment terminates under
              -----------------------------
Paragraph 8(b), you will thereafter receive, less applicable withholding taxes,
and conditioned on your execution of a General Release and Waiver of Claims
substantially in the form attached hereto as an Addendum:

        (i)   your Salary, as in effect on the date on which your employment
              terminates, for thirty-six (36) months after the date of such
              termination, paid in accordance with Blockbuster's then effective
              payroll practices;

        (ii)  bonus compensation for the calendar year in which such
              termination occurs, payable by the end of the first quarter of
              the following year, determined as follows:

              (x)  for the portion of the calendar year from January 1st until
                   the date of the termination, bonus compensation will be
                   determined in accordance with the STIP (i.e., based on
                                                           ----
                   Blockbuster's achievement of specified goals and
                   Blockbuster's good faith estimate of your achievement of
                   your personal goals, if applicable) and prorated for such
                   period; and

              (y)  for the remaining portion of such calendar year during the
                   Term, bonus compensation will be in an amount based on
                   Blockbuster's achievement of specified goals, and prorated
                   for such period;

        (iii) bonus compensation for each subsequent calendar year or portion
              thereof during the Term, in an amount based on Blockbuster's
              achievement of specified goals, prorated for any partial calendar
              year, and payable by the end of the first quarter of the
              following year;

        (iv)  medical and dental insurance coverage provided under COBRA at no
              cost to you (except as hereafter described) pursuant to
              Blockbuster's then-current benefit plans until the end of the
              Term or, if earlier, the date on which you become eligible for
              medical and dental coverage from a third party; provided, that,
                                                              --------
              during the period that Blockbuster provides you with this
              coverage, an amount equal to the applicable COBRA premiums (or
              such other amount as may be required by law) will be included in
              your income for tax purposes to the extent required by law and
              Blockbuster may withhold taxes from your compensation for this
              purpose; and provided, further, that you may elect to continue
                           --------  -------
              your medical and dental



James Notarnicola
October 13, 2000
Page 6

            insurance under COBRA at your own expense for the balance, if any,
            of the period required by law;

     (v)    your car allowance until the end of the Term, paid in accordance
            with Blockbuster's then effective payroll practices;

     (vi)   life insurance coverage until the end of the Term, pursuant to
            Blockbuster's then-current policy in the amount then furnished to
            Blockbuster employees at no cost (the amount of such coverage will
            be reduced by the amount of life insurance coverage furnished to you
            at no cost by a third party employer); and

     (vii)  stock options granted to you under Blockbuster's Long-Term
            Management Incentive Plan ("LTMIP") which are exercisable on or
            prior to the date of termination of your employment under
            Paragraph 8(b) hereof and that would have vested and become
            exercisable on or before the last date of the Term will be
            exercisable until six (6) months after the date of such termination
            or, if earlier, the expiration date of the stock options.

You will be required to mitigate the amount of any payment provided for in (i),
(ii), (iii) and (v) of this Paragraph 8(c) by seeking other employment, and the
amount of such payments will be reduced by any compensation earned by you from
any source, including, without limitation, salary, sign-on or annual bonus
compensation, consulting fees, commission payments, car allowance and, in the
event you receive significantly more long-term compensation than you received
from Blockbuster, Blockbuster's good faith estimate of the present value of the
portion of such long-term compensation in excess of the long-term compensation
from Blockbuster; provided, that mitigation will not be required, and no
                  --------
reduction for other compensation will be made, for twelve (12) months after the
termination of your employment. You agree to notify Blockbuster with respect to
any such compensation earned by you during the period when such mitigation is
required and to promptly respond to any inquiries from Blockbuster with respect
to such compensation or your efforts to fulfill your mitigation obligations
under this provision.

        (d) Termination of Benefits. Notwithstanding anything in this Agreement
            -----------------------
to the contrary (except as otherwise provided in Paragraph 8(c) with respect to
medical and dental benefits and life insurance), participation in all
Blockbuster benefit plans and programs (including, without limitation, vacation
accrual, the 401(k) plan, the pension plan and the related excess plans, LTD and
accidental death and dismemberment and business travel and accident insurance)
will terminate upon the termination of your employment except to the extent
otherwise expressly provided in such plans or programs and subject to any vested
rights you may have under the terms of such plans or programs. The foregoing
will not apply to the LTMIP and, after the termination of your employment, your
rights under the LTMIP will be governed by the terms of the LTMIP option
agreements and the applicable LTMIP plans together with Paragraph 8(c)(vii).

        (e) Resignation from Official Positions. If your employment with
            -----------------------------------
Blockbuster terminates for any reason, you will be deemed to have resigned at
that time from any and all officer or director positions that you may have held
with Blockbuster or any of its then-current or previously affiliated companies
and all board seats or other positions in other entities you held on behalf of
Blockbuster. If, for any reason, this Paragraph 8(e) is deemed insufficient to
effectuate such resignation, you agree to execute, upon the request of
Blockbuster, any documents or instruments which Blockbuster may deem necessary
or desirable to effectuate such resignation or resignations, and you hereby
authorize the Secretary and any Assistant Secretary of Blockbuster to execute
any such documents or instruments as your attorney-in-fact.

     9. Death. In the event of your death prior to the end of the Term while
        -----
actively employed, your beneficiary or estate will receive (i) your Salary up to
the date on which the death occurs; (ii) any Bonus earned in the prior year but
not yet paid; and (iii) bonus compensation for the calendar year in


James Notarnicola
October 13, 2000
Page 7


which the death occurs, determined in accordance with the STIP (i.e., based upon
                                                                ----
Blockbuster's achievement of specified goals and Blockbuster's good faith
estimate of your achievement of your personal goals, if applicable) and
pro-rated for the portion of the year through the date of death, payable, less
applicable deductions and withholding taxes, by the end of first quarter of the
following year. In the event of your death after the termination of your
employment while you are entitled to receive compensation under Paragraph
8(c)(i) your beneficiary or estate will receive (x) any Salary payable under
Paragraph 8(c)(i) up to the date on which the death occurs; (y) any bonus
compensation earned under Paragraph 8(c)(ii) with respect to the prior year but
not yet paid; and (z) any bonus compensation for the calendar year in which the
death occurs, determined in accordance with Paragraph 8(c)(ii) and pro-rated for
the portion of the year through the date of death, payable, less applicable
deductions and withholding taxes, by the end of the first quarter of the
following year. Notwithstanding anything to the contrary in this Agreement, the
Term will terminate as of the date of your death.

     10. No Acceptance of Payments. You represent that you have not accepted or
         -------------------------
given nor will you accept or give, directly or indirectly, any money, services
or other valuable consideration from or to anyone other than Blockbuster for the
inclusion of any matter as part of any film, television program or other
production produced, distributed and/or developed by Blockbuster and/or any of
its affiliated companies.

     11. Equal Opportunity Employer. You recognize that Blockbuster is an equal
         --------------------------
opportunity employer. You agree that you will comply with Blockbuster policies
regarding employment practices and with applicable federal, state and local laws
prohibiting discrimination on the basis of race, color, sex, religion, national
origin, citizenship, age, marital status, sexual orientation, disability or
veteran status.

     12. Employee Statement of Business Conduct. You acknowledge you have read
         --------------------------------------
and agree that you will comply with the Blockbuster Employee Statement of
Business Conduct as it may be amended from time to time.

     13. Notices. All notices under this Agreement must be given in writing, by
         -------
personal delivery or by mail, at the parties' respective addresses shown on this
Agreement (or any other address designated in writing by either party), with a
copy, in the case of Blockbuster, to the attention of the General Counsel of
Blockbuster. Any notice given by mail will be deemed to have been given three
(3) days following such mailing.

     14. Assignment. This is an Agreement for the performance of personal
         ----------
services by you and may not be assigned by you or Blockbuster except that
Blockbuster may assign this Agreement to any affiliated company of or any
successor in interest to Blockbuster.

     15. TEXAS LAW AND JURISDICTION. YOU ACKNOWLEDGE THAT THIS AGREEMENT HAS
         --------------------------
BEEN EXECUTED, IN WHOLE OR IN PART, IN TEXAS, AND YOUR EMPLOYMENT DUTIES ARE
PRIMARILY PERFORMED IN TEXAS. ACCORDINGLY, YOU AGREE THAT THIS AGREEMENT AND ALL
MATTERS OR ISSUES ARISING OUT OF OR RELATING TO YOUR BLOCKBUSTER EMPLOYMENT WILL
BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS ENTERED
INTO AND PERFORMED ENTIRELY THEREIN. ANY ACTION TO ENFORCE THIS AGREEMENT WILL
BE BROUGHT SOLELY IN THE STATE OR FEDERAL COURTS LOCATED IN THE CITY OF DALLAS.

     16. No Implied Contract. The parties intend to be bound only upon execution
         -------------------
of a written agreement and no negotiation, exchange of draft or partial
performance will be deemed to imply an agreement. Neither the continuation of
employment nor any other conduct will be deemed to imply a continuing agreement
upon the expiration of the Term.



James Notarnicola
October 13, 2000
Page 8


     17. Entire Understanding. This Agreement contains the entire understanding
         --------------------
of the parties hereto relating to the subject matter contained in this
Agreement, and can be changed only by a writing signed by both parties.

     18. Void Provisions. If any provision of this Agreement, as applied to
         ---------------
either party or to any circumstances, will be found by a court of competent
jurisdiction to be unenforceable but would be enforceable if some part were
deleted or the period or area of application were reduced, then such provision
will apply with the modification necessary to make it enforceable, and will in
no way affect any other provision of this Agreement or the validity or
enforceability of this Agreement.

     19. Effect of Viacom Agreement. If the terms of your employment are
         --------------------------
currently governed by an agreement entered into between you and Blockbuster
Entertainment Group, a business unit of Viacom Inc. ("Viacom") ("Viacom
Agreement"), the Viacom Agreement, along with the applicable Viacom stock option
agreement(s), will continue to govern your rights with respect to stock options
granted to you under Viacom's 1994 and 1997 Long Term Management Incentive Plans
and any successor or other plans until such time as Viacom distributes all or
substantially all of its shares of Blockbuster common stock to stockholders of
Viacom (a "Split-Off"). In addition to any rights set forth in the applicable
Viacom stock option agreement(s), Viacom has indicated to Blockbuster that, in
the event of a Split-Off, any options to purchase Viacom common stock ("Viacom
Stock Options") that are held by you (i) that are exercisable at the date you
cease to be a Viacom employee as a result of the Split-Off (the "Termination
Date") and (ii) to the extent the terms of your employment are subject to a
Viacom Agreement, that would have become exercisable during the employment term
of the Viacom Agreement will remain outstanding and will be exercisable by you
for a period of six (6) months after the Termination Date or, if earlier, the
expiration date of the stock options. By executing this Agreement, you hereby
acknowledge and agree that, in the event of the foregoing, your only remaining
right with respect to the Viacom Agreement will be your right to exercise your
Viacom Stock Options and Viacom will be released from any and all other
obligations and liabilities under the Viacom Agreement.

     20. Supersedes Prior Agreement. Subject to Paragraph 19, this Agreement
         --------------------------
supersedes and cancels all prior agreements relating to your employment by
Blockbuster or any of its affiliated companies with respect to the period
covered by the Term.



James Notarnicola
October 13, 2000
Page 9


     If the foregoing correctly sets forth our understanding, please sign, date
and return all three (3) copies of this Agreement to the undersigned for
execution on behalf of Blockbuster; after this Agreement has been executed by
Blockbuster and a fully-executed copy returned to you, it will constitute a
binding agreement between us.

                                           Very truly yours,

                                           BLOCKBUSTER INC.




                                           By:/s/  Larry J. Zine
                                              ----------------------------------
                                              Larry J. Zine
                                              Executive Vice President and
                                              Chief Financial Officer



ACCEPTED AND AGREED:



/s/ James Notarnicola
----------------------------
James Notarnicola

Date:     10/27/00
     -----------------------



James Notarnicola
October 13, 2000
Page 10



                      General Release and Waiver of Claims
                      ------------------------------------

     a. Release of Claims. As consideration by you, you agree on behalf of
        -----------------
yourself, successors and assigns, to release and forever discharge Blockbuster
and its subsidiaries, parent and affiliated companies, employees, officers and
directors, and their respective assigns, from any and all manner of claims,
debts, demands, damages, liabilities and causes of action, whether known or
unknown, from the beginning of time, which you, or your successors and assigns,
may have had or may presently have, relating to or arising out of the employment
relationship or the termination of said relationship including, but not limited
to, causes of action for libel, slander, breach of contract, impairment of
economic opportunity, intentional infliction of emotional distress or any other
tort, or claims under federal, state, or local constitutions, statutes,
regulations, ordinances or common law, including, but not limited to, the
Employee Retirement Income Security Act of 1974; the Civil Rights Acts of 1866,
1871, 1964 and 1991; the Age Discrimination in Employment Act, as amended by the
Older Workers Benefit Protection Act of 1990; the Rehabilitation Act of 1973;
the Equal Pay Act of 1963; the Americans with Disabilities Act of 1990; and, the
Family and Medical Leave Act of 1993.

     b. Post-Release Claims. You do not waive any rights or claims that may
        -------------------
arise after the date this Release is executed.

     c. No Admission. Nothing contained in this Release constitutes an admission
        ------------
of liability by Blockbuster concerning any aspect of your employment with or
separation from Blockbuster.

     d. Confidentiality. You acknowledge that, during the course of the
        ---------------
employment relationship, you were privy to confidential and proprietary business
information belonging to Blockbuster, the unauthorized disclosure of which could
cause serious and irreparable injury to Blockbuster and its affiliates. The
information includes, but is not limited to, information concerning existing and
prospective expansion plans; existing and potential financing sources and
arrangements; existing and prospective marketing plans and activities;
proprietary computer software programs and applications; business plans and
strategies and other non-public information. You agree to hold and safeguard the
confidential information in trust for Blockbuster, its successors and assigns,
and agree that you will not, at any time, misappropriate, use for your own
advantage, disclose or otherwise make available to anyone who is not an officer
of Blockbuster, for any reason, any of the confidential information, regardless
of whether the confidential information was developed or prepared by you or
others. You agree not to remove any writings containing confidential information
from Blockbuster's premises or possession without Blockbuster's express consent.
You agree to promptly return to Blockbuster all confidential information in your
possession or under your control (whether in original, copy, or disk form).
Before disclosing any confidential information under compulsion of legal
process, you agree to promptly give notice to Blockbuster of the fact that you
have been served with legal process pursuant to which the disclosure of
confidential information may be requested. Such notice will be given within
sufficient time to permit Blockbuster to intervene in the matter or to take such
other actions as may be necessary or appropriate to protect its interest in its
confidential business information. The scope of this Release is not limited to
information that is patented, patentable, copyrighted or technically
classifiable as a trade secret. These restrictions will not apply to
confidential information which is or becomes generally available to the public
other than as a result of a disclosure by you or any other person who directly
or indirectly receives such information from you, or is or becomes available to
you on a non-confidential basis from a source which is entitled to disclose it
to you.

     e. Cooperation. Subject to reimbursement by Blockbuster of reasonable
        -----------
out-of-pocket costs and expenses, you agree to cooperate fully with Blockbuster
and its counsel with respect to any matter (including litigation, investigation
or governmental proceeding) which relates to matters with which you were
involved during the term of your employment with Blockbuster. Such cooperation
will include appearing from time to time at the offices of Blockbuster or
Blockbuster's counsel for conferences and interviews and in general providing
the officers of Blockbuster and its counsel with the full benefit of your
knowledge with respect to any such matter. You agree to render such cooperation
in a timely fashion and at such times as may be mutually agreeable to the
parties concerned.



James Notarnicola
October 13, 2000
Page 11

     f. Litigation. You agree that, during the pendency of any litigation or
        ----------
other proceeding, and anytime thereafter, (x) you will not communicate with
anyone (other than your attorneys and tax advisors) with respect to the facts or
subject matter of any pending or potential litigation, or regulatory or
administrative proceeding involving Blockbuster or any of its officers,
directors, agents, employees, suppliers or customers, other than any litigation
or other proceeding in which you are a party-in-opposition, without giving prior
notice to Blockbuster's General Counsel, and (y) in the event that any other
party attempts to obtain information or documents from you with respect to
matters possibly related to such litigation or other proceeding, you will
promptly so notify Blockbuster's General Counsel.

     g. Confidentiality of Release. This Release and the terms hereof are
        --------------------------
confidential. You agree not to disclose this Release or its provisions to any
person except to your attorney or tax advisor.

     h. Rights upon Breach. For breach of any provision of this Release, the
        ------------------
parties will have such remedies and rights as are customarily available at law
or in equity, except that, in any action or proceeding brought to enforce this
Release or to recover damages for its breach, the prevailing party will be
entitled to recover, should it substantially prevail in the matter, reasonable
attorneys' fees and litigation expenses. In the event you, or any party acting
on your behalf, breach this Release, Blockbuster's obligations imposed herein
will be extinguished and Blockbuster will not be obligated to continue
performance under this Release. In such a case, you will be required to re-pay
Blockbuster all consideration received pursuant to this Release and this Release
will act as a complete and total bar to any recovery.

     i. Injunctive Relief. The legal remedies for the breach of this Release
        -----------------
would not be adequate and, in addition to any other remedies available at law,
these provisions may be specifically enforced by temporary or permanent
injunctive or other equitable relief.

     j. Texas Law and Jurisdiction. THIS AGREEMENT WILL BE GOVERNED BY AND
        --------------------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, IRRESPECTIVE OF THE
CONFLICT OF LAWS RULES. FURTHERMORE, BECAUSE YOU AND BLOCKBUSTER AGREE THAT THE
TEXAS COURTS ARE THE EXCLUSIVE FORUM FOR RESOLVING ANY DISPUTES ARISING OUT OF
THIS AGREEMENT OR YOUR EMPLOYMENT, THE PARTIES SUBMIT THEMSELVES TO THE PERSONAL
JURISDICTION OF THE TEXAS COURTS.

     k. Advice of Counsel. You are herein advised to discuss this Release with
        -----------------
an attorney of your choice before signing it.

     l. No Parol Evidence. This Release represents the full understanding
        -----------------
between you and Blockbuster, and no parol evidence will be relevant to
supplement or explain this Release.

     m. Void Provisions. Should any provision of this Release be found
        ---------------
unenforceable, the remainder of the Release, in its modified form, will
nonetheless be fully enforceable.

     n. Headings. The headings of the sections are included solely for
        --------
convenience. If the headings and the text of the Release conflict, the text
shall control. All references to sections are to the Release unless otherwise
indicated.

     o. Review and Revocation. You acknowledge that you have been given at least
        ---------------------
twenty-one (21) days to review and consider this Release, and may revoke
acceptance within seven (7) days of the execution of this Release. This Release
will become effective and enforceable immediately upon the expiration of the
revocation period.