Exhibit 10.32

 

SUPPLEMENT NO. 1

 

SUPPLEMENT NO. 1 dated as of December 22, 2004 (this “Supplement”), to the
Guarantee and Collateral Agreement dated as of August 20, 2004, among
Blockbuster Inc., a Delaware corporation (the “Borrower”), each subsidiary of
the Borrower listed on Schedule I thereto (each such subsidiary individually a
“Subsidiary Guarantor” and collectively, the “Subsidiary Guarantors”; the
Borrower and each Subsidiary Guarantor required to pledge Equity Interests under
such agreement being referred to herein as the “Grantors”) and JPMORGAN CHASE
BANK, N.A., a national banking corporation formerly known as JPMorgan Chase Bank
(“JPMCB”), as Collateral Agent (in such capacity, the “Collateral Agent”).

 

A. Reference is made to the Credit Agreement dated as of August 20, 2004 (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among the Borrower, the lenders from time to time party thereto
and, JPMCB, as Administrative Agent.

 

B. Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement and the Collateral
Agreement referred to therein.

 

C. The Grantors and Subsidiary Guarantors have entered into the Collateral
Agreement in order to induce the Lenders to make Loans and the Issuing Banks to
issue Letters of Credit. Section 6.14 of Collateral Agreement provides that
additional Subsidiaries of the Borrower may become Subsidiary Parties under the
Collateral Agreement by execution and delivery of an instrument in the form of
this Supplement. The undersigned Subsidiary (the “New Subsidiary”) is executing
this Supplement in accordance with the requirements of the Credit Agreement to
become a Subsidiary Party under the Collateral Agreement in order to induce the
Lenders to make additional Loans and the Issuing Banks to issue additional
Letters of Credit and as consideration for Loans previously made and Letters of
Credit previously issued.

 

Accordingly, the Collateral Agent and the New Subsidiary agree as follows:

 

SECTION 1. In accordance with Section 6.14 of the Collateral Agreement, the New
Subsidiary by its signature below becomes a Subsidiary Party, a Guarantor and,
if such New Subsidiary at any time owns any Equity Interests in a Significant
Subsidiary, a Grantor under the Collateral Agreement with the same force and
effect as if originally named therein as a Subsidiary Party, and the New
Subsidiary hereby (a) agrees to all the terms and provisions of the Collateral
Agreement applicable to it, if any, as a Subsidiary Party, Grantor and Guarantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Grantor, if applicable, and Guarantor thereunder (as
supplemented hereby) are true and correct on and as of the date hereof (except
to the extent that such representations and warranties are expressly made as of
a particular date, in which event such representations and warranties

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were true and correct as of such date). In furtherance of the foregoing, the New
Subsidiary, as security for the payment in full of the Obligations (as defined
in the Collateral Agreement), does hereby assign, pledge and grant to the
Collateral Agent, its successors and assigns, for the benefit of the Secured
Parties, their successors and assigns, a security interest in and lien on all of
the New Subsidiary’s right, title and interest in and to the Collateral (as
defined in the Collateral Agreement) of the New Subsidiary. Each reference to a
“Guarantor” or “Grantor” (if applicable) in the Collateral Agreement shall be
deemed to include the New Subsidiary. The Collateral Agreement is hereby
incorporated herein by reference.

 

SECTION 2. The New Subsidiary represents and warrants to the Collateral Agent
and the other Secured Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.

 

SECTION 3. This Supplement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract. This Supplement shall become effective when the Collateral Agent shall
have received a counterpart of this Supplement that bears the signature of the
New Subsidiary and the Collateral Agent has executed a counterpart hereof.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.

 

SECTION 4. The New Subsidiary hereby represents and warrants that as of the date
hereof (a) set forth on Schedule I attached hereto is a true and correct
schedule of all Equity Interests owned or held by the New Subsidiary, (b) set
forth on Schedule I attached hereto is a true and correct schedule of all Equity
Interests issued by the New Subsidiary, and (c) set forth under its signature
hereto is the true and correct legal name of the New Subsidiary, its
jurisdiction of organization, the identifying number, if any, assigned to it by
such jurisdiction, and the location of its chief executive office. Schedule I
attached hereto shall be attached to Schedule II of the Collateral Agreement and
made a part thereof in accordance with Section 3.02(a) of the Collateral
Agreement.

 

SECTION 5. Except as expressly supplemented hereby, the Collateral Agreement
shall remain in full force and effect.

 

SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Collateral Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties

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hereto shall endeavor in good-faith negotiations to replace the invalid, illegal
or unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

 

SECTION 8. All communications and notices hereunder shall be in writing and
given as provided in Section 6.01 of the Collateral Agreement.

 

SECTION 9. The New Subsidiary agrees to reimburse the Collateral Agent for its
reasonable out-of-pocket expenses in connection with this Supplement, including
the reasonable fees, other charges and disbursements of counsel for the
Collateral Agent.

 

IN WITNESS WHEREOF, the New Subsidiary and the Collateral Agent have duly
executed this Supplement as of the day and year first above written.

 

EJL, INC.

   

by

       

/s/ Marilyn R. Post

   

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Name: Marilyn R. Post

Title: Vice President and Secretary

       

Legal Name: EJL, Inc.

       

Jurisdiction of Organization: Oregon

       

Identifying Number (if any):

        Registry No. 257607-94

       

Location of Chief Executive Office:

        1201 Elm Street, Suite 2100

        Dallas, Texas 75270

 

JPMORGAN CHASE BANK, N.A.,

AS COLLATERAL AGENT

   

By

           

/s/ Barry Bergman

   

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Name: Barry Bergman

       

Title: Vice President

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Schedule I

to the Supplement No. 1 to the

Guarantee and

Collateral Agreement

 

EQUITY INTERESTS

 

Issuer

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Number of

Certificate

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Registered

Owner

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Number and

Class of

Equity Interests

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Percentage

of Equity Interests

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EJL, Inc.

   1    Blockbuster, Inc.    1000 common shares    100%