**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 nationalbanking 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 modifiedfrom 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 theCredit 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 thatadditional 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*”) isexecuting 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 additionalLetters 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 aSubsidiary 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 SubsidiaryParty, 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 representationsand 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 aparticular 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 (asdefined 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 NewSubsidiary’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 shallbe 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 anoriginal, 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 Subsidiaryand 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 thedate 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 Interestsissued 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 thelocation 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 Agreementshall remain in full force and effect. 

 

**SECTION 6. THISSUPPLEMENT 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, thevalidity, 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 aparticular 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 ofwhich 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 inconnection 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
       
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
       
Name: Barry Bergman
    
Title: Vice President

Schedule I 

to the Supplement No. 1 to the 

Guarantee and 

Collateral Agreement 

 

EQUITY INTERESTS 

 

**Issuer**
  
**Number of**

**Certificate**
  
**Registered**

**Owner**
  
**Number and**

**Class of**

**Equity Interests**
  
**Percentage**

**of Equity Interests**

EJL, Inc.
  1  Blockbuster, Inc.  1000 common shares  100%