Exhibit 10.3


 


	
  Wells Fargo Retail Finance

  One Boston Place, 18th Floor

  Boston, MA 02108

  617 854 7235

  617 523 4029 Fax

  	
  

  



 


January 11, 2005


 


Ultimate Electronics, Inc.


321 West 84th Avenue


Thornton, Colorado  80260


 


1.             COMMITMENT


 


We are pleased to advise you of the several
commitments, subject to the terms and conditions hereof, of (a) Wells Fargo
Retail Finance, LLC (“WFRF”) to
provide $113,000,000 in Debtor In Possession financing in favor of Ultimate
Electronics, Inc. (the “Company”) and
certain of its subsidiaries (collectively, the “Borrower”),
consisting of a senior secured revolving credit facility in the amount of
$100,000,000 (the “Revolving Credit Facility”)
and a tranche B term loan in the amount of $13,000,000 (the “Tranche B Term Loan”) and (b) Mark J.
Wattles or an entity designated by him (“Wattles”
and, together with WFRF, the “Lenders”)
to provide a $5,547,500 tranche C term loan (the “Tranche C Term Loan” and, together with the Revolving Credit
Facility and the Tranche B Term Loan, the “Facility”),
all as contemplated on the Summary of Terms and Conditions (the “Term Sheet”) annexed to this letter as EXHIBIT A.  The commitments of the Lenders herein are
several and neither lender shall have any obligation for the commitment of the
other Lender.


 


2.             AGENT


 


WFRF
will act as Administrative Agent (and is referred to herein in such capacities
as the “Agent”) for itself and the other
Lenders.


 


3.             SYNDICATION


 


WFRF
will act as the exclusive syndication manager for the Facility and, in such
capacity, will perform the duties and exercise the authority customarily
associated with such role.  No additional
agents, arrangers or syndication managers will be appointed with respect to the
arrangement and syndication of the Facility without the consent of WFRF.  WFRF, in its sole discretion, but in
consultation with the Borrower, will manage all aspects of the syndication of
the Facility, including the selection of lenders, the determination of when to
approach potential lenders, the title and roles given various lenders in the
syndicate, and the final allocation of the commitments among the lenders.  WFRF shall, in all events, have the final say
concerning all aspects of the syndication.


 





















 


The Borrower will assist WFRF in achieving a timely
syndication, such assistance to include, among other things, (a) direct contact
during the syndication between the Borrower’s senior officers on the one hand,
and prospective lenders, on the other hand, at such times and places as WFRF
may reasonably request; (b) providing WFRF with all such financial and other
information in the Borrower’s possession with respect to the Borrower and the
transactions contemplated by this letter, including but not limited to
financial projections and forecasts relating to the foregoing which WFRF
reasonably may request from time to time; and (c) assistance in the preparation
of marketing materials to be used in connection with the syndication.  You expressly permit WFRF to distribute any
and all documents and information relating to the transactions contemplated
hereby and received from you to any potential Lender, participant or
assignee.  Following the closing of the
Facility, WFRF  may publicize information
in respect of the Facility (including WFRF’s role in the structuring and
financing thereof) subject to your prior reasonable approval of the form and
content thereof.


 


4.             CONDITIONS


 


The commitments of WFRF, as expressed in this letter,
are subject to those conditions set forth on the Term Sheet and the funding of
the Tranche C Term Loan by Wattles.  The
commitments of Wattles, as expressed in this letter, are subject to those
conditions set forth on the Term Sheet and the contemporaneous funding of the
Tranche B Term Loan by WFRF and the portion of the Revolving Credit Facility to
be borrowed on the Closing Date.


 


5.             INDEMNIFICATION


 


Whether or not the Facility contemplated hereby is
established, the Borrower agrees to indemnify and hold harmless WFRF and the
Lenders, the Agent, any participants, and their respective directors, officers,
employees, affiliates, agents, attorneys, accountants, consultants and each
other entity, if any, who controls any of the foregoing, and to hold such
persons and entities (each, an “Indemnified Person”)
harmless from and against all losses, claims, damages, liabilities and
expenses, joint or several, to which any such person or entity may become
subject arising out of or in connection with this letter, the Term Sheet, the
Facility, the use of proceeds of the extensions of credit thereunder or any
related transaction or any claim, litigation, investigation or proceeding
relating to any of the foregoing, regardless of whether any of such Indemnified
Persons is a party thereto, and to reimburse each Indemnified Person upon
demand for any reasonable legal or other expenses incurred in connection with
investigating or defending any of the foregoing; provided,
however, the foregoing indemnification shall not be available, as to
any Indemnified Person, on account of or in respect to any losses, claims,
liabilities, damages and expenses to the extent resulting from the gross
negligence or bad faith of the Indemnified Person or with respect to a claim by
one Indemnified Person against another Indemnified Person.


 


If for any reason the foregoing indemnification is
unavailable to any Indemnified Person


 


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or insufficient to hold
it harmless, then the Borrower shall contribute to the amount paid or payable
by such Indemnified Person as a result of such loss, claim, damage or liability
to the maximum amount legally permissible. 
The Borrower also agrees that neither any Indemnified Person, nor any of
their respective affiliates, partners, directors, agents, employees or
controlling persons, shall have any liability to the Borrower, any person
asserting claims on behalf or in right of the Borrower or any other person in
connection with or as a result of either this arrangement or any matter
referred to herein or in the loan documentation except to the extent that there
is a final determination made in a judicial proceeding (in which WFRF and such
Indemnified Party have had an opportunity to be heard), which determination
includes a specific finding that the losses, claims, damages, liabilities or
expenses incurred by the Borrower resulted from the gross negligence or bad
faith of such Indemnified Person.


 


Neither the Borrower nor any Indemnified Person shall
be liable for any indirect, special, punitive, or consequential damages in
connection with or arising out of this letter or the transactions contemplated
hereby.  This indemnification shall
survive any closing of the Facility.


 


6.             REIMBURSEMENT


 


The Borrower shall reimburse WFRF and Wattles from
time to time on demand for reasonable and documented third party out-of-pocket
expenses (including, but not limited to, reasonable expenses of due diligence
investigation, reasonable syndication expenses, reasonable travel expenses and
reasonable fees, disbursements and charges of its counsel), in each instance
incurred in connection with the Facility and the preparation of this letter,
the Term Sheet and the definitive documentation for the Facility, whether or
not the transactions are closed, unless the failure to close the Facility
results solely and directly from a breach of WFRF’s obligations hereunder, in
which event WFRF shall be responsible for the payment of its own expenses.


 


7.             CLOSING


 


This letter shall terminate unless accepted by the
Borrower on or before 5:00 p.m. (Boston time) on January 11, 2005 by signing
below and returning this letter to WFRF, together with a Commitment Acceptance
Fee in the amount of $125,000.  The
Commitment Acceptance Fee shall be for the sole account of WFRF and shall be in
addition to all other fees and expenses payable to WFRF and the other Lenders
pursuant the Term Sheet.  By its
execution below, the Borrower authorizes and directs WFRF to charge the
Borrower’s accounts maintained with WFRF for the amount of the Commitment
Acceptance Fee.


 


8.             NONTRANSFERABILITY OF COMMITMENT


 


The identity of the Borrower is of material importance
to the Agent and WFRF.  Consequently,
this commitment may not be assigned or transferred by the Borrower.  WFRF may assign its obligations under this
commitment to any present or future affiliate of WFRF or


 


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the Agent.


 


9.             NON-DISCLOSURE
OF COMMITMENT; EXCLUSIVE DEALINGS


 


Prior to its acceptance of this Commitment Letter, the
Borrower shall maintain as confidential the terms and conditions of this letter
and the Term Sheet and the terms, conditions, provisions and documentation of
the Facility.  Notwithstanding the
foregoing, this letter and the Term Sheet may be disclosed to (a) the employees
and affiliates of the Borrower and its accountants, financial advisors and
counsel or  (b) as may be required by
law.  The failure to comply with the
foregoing provisions shall automatically terminate any and all obligations of
WFRF with respect to the financing contemplated hereunder.


 


10.          GOVERNING
LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL


 


This
letter is a contract under the laws of the State of New York and shall be
construed in accordance with and be governed by the laws of the State of New
York.


 


The Borrower agrees that any legal action, proceeding,
case, or controversy against the Borrower with respect to this letter or the
Facility may be brought in the Courts of the State of New York or any federal
court sitting therein, as the Agent or WFRF as applicable, may elect in its
sole discretion.  By acceptance of this
letter, the Borrower for itself and in respect of its property, accepts,
submits, and consents generally and unconditionally, to the jurisdiction of the
aforesaid courts.  The Borrower Waives any objection based on forum non conveniens and any objection to venue of any
action or proceeding instituted under or with respect to this letter or the
Facility and consents to the granting of such legal or equitable remedy as is
deemed appropriate by the relevant Court. 
The Borrower further agrees that any action commenced by the Borrower
asserting any claim or counterclaim arising under or in connection with this
letter or the Facility shall be brought solely in the Courts of the State of
New York or any federal court sitting therein, and that such Courts shall have
exclusive jurisdiction with respect to any action.


 


When
accepted, this letter constitutes the entire agreement between the Agent, WFRF,
Wattles, and the Borrower concerning the Facility and replaces all prior
understandings, statements and negotiations. 
This letter may be executed in one or more counterparts, each of which
may be delivered by telecopier.


 


The Borrower makes each of the following waivers
knowingly, voluntarily, and intentionally, and each understands that the Agent,
WFRF and Wattles, in providing this letter are each relying on such waivers.


 


THE BORROWER WAIVES THE FOLLOWING:


 


THE RIGHT TO A JURY IN ANY TRIAL OF ANY
CASE OR CONTROVERSY IN WHICH THE BORROWER IS OR BECOMES A PARTY (WHETHER SUCH
CASE OR


 


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CONTROVERSY IS INITIATED BY OR AGAINST
THE BORROWER OR IN WHICH THE BORROWER IS JOINED AS A PARTY LITIGANT), WHICH
CASE OR CONTROVERSY ARISES OUT OF OR IS IN RESPECT OF, ANY RELATIONSHIP AMONGST
OR BETWEEN THE BORROWER OR ANY OTHER PERSON AND THE AGENT OR WFRF OR WATTLES.


 


[Remainder of Page
Intentionally Left Blank]


 


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If the foregoing is in
accordance with your understanding of our agreement, please sign this letter in
the space indicated below and return it to the Agent.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO RETAIL FINANCE, LLC,

  individually and as Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Timothy R. Tobin

  	
   

  
	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
          /s/
  Mark J. Wattles

  	
   

  
	
   

  	
  Mark J. Wattles

  	
   

  



 


	
  The foregoing is agreed to:

  	
   

  
	
   

  	
   

  
	
  ULTIMATE ELECTRONICS, INC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ David A. Carter

  	
   

  	
   

  
	
    Title: Chief Financial Officer

  	
   

  
	
    Dated: January 11, 2005

  	
   

  
				



 


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