exhibit10-3.htm


    


    Exhibit
10.3

     

    
 

    December 4, 2008

    


    Circuit
City Stores, Inc. as Lead Borrower

    9954
Mayland Drive

    Richmond,
Virginia 23233

    Attention:
Treasurer and General Counsel

    


    Ladies
and Gentlemen:

    


    Reference
is hereby made to that certain Senior Secured, Super-Priority,
Debtor-In-Possession Credit Agreement, dated as of November 12, 2008 (as it may
be amended, restated, supplemented or otherwise modified from time to time, the
“DIP Credit
Agreement”), by and between, among others, (i) Circuit City Stores, Inc.
(the “Lead
Borrower”), (ii) the other Domestic Borrowers party thereto (together
with the Lead Borrower, the “U.S. Debtors”), (iii)
InterTAN Canada Ltd. as Canadian Borrower, (iv) the Lenders party thereto (the
“DIP Lenders”),
(iv) Bank of America, N.A., as Administrative Agent and Collateral Agent (the
“Agent”) and
(v) Bank of America, N.A. (acting through its Canada branch), as Canadian
Administrative Agent and Canadian Collateral Agent (the “Canadian
Agent”).  All terms used herein and not otherwise defined shall
have the meanings ascribed to such terms in the DIP Credit
Agreement.

     

    In
connection with the DIP Credit Agreement, (i) the U.S. Bankruptcy Court in the
Chapter 11 Case (as defined in the DIP Credit Agreement) entered an Interim
Order Pursuant to 11 U.S.C. Sections 105, 361, 362, 363 and 364 and Rules 2002,
4001 and 9014 of the Federal Rules of Bankruptcy Procedure (1) Authorizing
Incurrence by The Debtors of Post-Petition Secured Indebtedness with Priority
over All Secured Indebtedness and with Administrative Superpriority, (2)
Granting Liens, (3) Authorizing Use of Cash Collateral by the Debtors Pursuant
to 11 U.S.C. Section 363 and Providing for Adequate Protection, (4) Modifying
the Automatic Stay, and (5) Scheduling a Final Hearing (the “Interim Order”), and
(ii) the Canadian Bankruptcy Court in the Canadian Bankruptcy Case (as defined
in the DIP Credit Agreement) entered an Initial Order (the “Initial
Order”).

     

    The Lead
Borrower has requested that the DIP Lenders consent to the following, which, if
consummated, otherwise would result in the occurrence of a Default and Event of
Default:

     

    
      	
              1.  

            	
              The
      U.S. Bankruptcy Court in the Chapter 11 Case has entered an Order under
      Bankruptcy Code Sections 105(a), 363, and 366, and Bankruptcy Rule 6003
      (I) Approving Debtors’ Adequate Assurance of Payment, (II) Establishing
      Procedures for Resolving Requests by Utility Companies for Additional
      Assurance of Payment, (III) Scheduling a Hearing with respect to Contested
      Adequate Assurance of Payment Requests, and (IV) Authorizing Debtors to
      Pay Claims of a Third Party Vendor (the “Utilities
      Order”).  Pursuant to the Utilities Order, the U.S.
      Debtors were directed to establish the Utility Blocked Account (as defined
      in the Utilities Order) in the amount of $5,000,000 with Bank of
      America.  The U.S. Debtors have failed to establish the
      Utilities Block Account, which failure may constitute a Default and/or
      Event of Default under Section 7.01(v) of the DIP Credit Agreement and the
      U.S. Debtors have therefore requested a waiver of such potential Default
      and/or Event of Default and any other Default and/or Event of Default
      arising as a result thereof.  In lieu of establishing the
      Utility Blocked Account, the U.S. Debtors have
  requested:

            


    

     

    


     

    
      	
              a.  

            	
              that the following new
      definitions be added in appropriate alphabetical
  order:

            


    

     

    “Payment
Request” has the meaning set forth in the Utility Order.

     

    “Utilities
Order” means that certain Order under Bankruptcy Code Sections 105(a), 363, and
366, and Bankruptcy Rule 6003 (I) Approving Debtors’ Adequate Assurance of
Payment, (II) Establishing Procedures for Resolving Requests by Utility
Companies for Additional Assurance of Payment, (III) Scheduling a Hearing with
respect to Contested Adequate Assurance of Payment Requests, and (IV)
Authorizing Debtors to Pay Claims of a Third Party Vendor dated November 10,
2008, as amended or modified from time to time.

     

    “Utility
Blocked Account” has the meaning set forth in the Utility Order.

     

    
      	
              b.  

            	
              that
      an Availability Reserve in the amount of $5,000,000 (or such other amount
      as may be authorized by the U.S. Bankruptcy Court) be imposed under the
      Borrowing Base; and

            


    

     

    


     

    
      	
              c.  

            	
              that the Swingline Lender make a
      Swingline Loan (or the DIP Lenders make a Revolving Loan), whether or not
      the conditions precedent set forth in Section 4.02 of the DIP Credit
      Agreement are then satisfied and until such time as the Commitments have
      been terminated, to fund any Payment Request (as defined in the Utilities
      Order) made by any Utility Company;
and

            


    

     

    


     

    
      	
              d.  

            	
              that
      the provisions of Section 7.04(a), clause ELEVENTH of the DIP Credit
      Agreement be amended to provide as
follows:

            


    

     

    ELEVENTH,
(a) first, to fund the Utility Blocked Account in an amount equal to $5,000,000
(or such other amount as may be authorized by the U.S. Bankruptcy Court), and
(b) thereafter, to the Lead Borrower for distribution to the Loan Parties, their
successors or assigns, or as a court of competent jurisdiction may otherwise
direct.

     

    
      	
              2.  

            	
              The
      U.S. Bankruptcy Court in the Chapter 11 Case has entered an Order pursuant
      to Bankruptcy Code Sections 105(a), 506(a), 507(a)(8) and 1129, and
      Bankruptcy Rule Authorizing The Debtors to Pay Pre-Petition Sales, Use,
      Trust Fund and Other Taxes and Related Obligations.  The U.S.
      Debtors have filed a Supplemental Motion for Order pursuant to Bankruptcy
      Code Sections 105(a), 506(a), 507(a)(8) and 1129, and Bankruptcy Rule
      Authorizing The Debtors to Pay Pre-Petition Sales, Use, Trust Fund and
      Other Taxes and Related Obligations in the approximate sum of
      $13,000,000.  The payment of such pre-petition tax claims
      without the consent of the Required Lenders would constitute a Default
      and/or Event of Default under (i) Section 7.01(d) as a result of breaching
      Sections 5.11, 5.17(i), 6.13(f), 6.13(g), (ii) Section 7.01(t), (iii)
      Section 7.01(u) and (iv) Section 7.01(v) of the DIP Credit Agreement and
      the U.S. Debtors have therefore requested a waiver of such Defaults and
      Events of Default in order to make such tax
  payments.

            


    

     

    


     

    
      	
              3.  

            	
              The
      Canadian Borrower, with the support of the Monitor, has requested certain
      modifications to the Initial Order in the Canadian Bankruptcy Case, the
      effect of which is to potentially increase the amount of the obligations
      to be paid to the Canadian unsecured creditors after payment of the
      Canadian Liabilities (other than the Facility Guaranty executed by the
      Canadian Loan Parties) before application of the proceeds of the
      Collateral from the Canadian Loan Parties to such Facility Guaranty, to
      provide additional protection for landlords, and to restrict the Canadian
      Borrower’s ability to terminate certain agreements without Monitor or
      court approval.  The entry of such a modification without the
      consent of the Agents and the Required Lenders would result in a Default
      and/or Event of Default under (i) Section 7.01(d) as a result of breaching
      Sections 6.13(b), 6.13(c), 6.13(d), 6.13(g), (ii) Section 7.01(o) and
      (iii) Section 7.01(s) of the DIP Credit Agreement and the Canadian Loan
      Parties have therefore requested a waiver of such Event of Default in
      order to so amend the Initial
Order.

            


    

     

    


     

    
      	
              4.  

            	
              The
      Lead Borrower has requested that the DIP Lenders waive, effective as of
      the Closing Date, any Default and/or Event of Default that may have
      occurred under Section 7.01(d) as a result of the entering by the U.S.
      Bankruptcy Court in the Chapter 11 Case of an Order which authorizes the
      return of any of the Loan Parties’ property pursuant to Section 546(h) of
      the Bankruptcy Code in breach of Section 6.13(e) of the DIP Credit
      Agreement, and any other Default and/or Event of Default arising as a
      result thereof.

            


    

     

    


     

    The Lead
Borrower has requested that the DIP Lenders consent to the following amendments
to the DIP Credit Agreement:

     

    1.           The
definition of “Permitted Encumbrances” is hereby amended by deleting clause (k)
thereof in its entirety and by substituting “(k) The Administration Charge,
Directors’ Charge, KERP Charge and Canadian Creditor Charge” in its
stead;

     

    2.           Section
2.29(b) of the DIP Credit Agreement is hereby deleted in its entirety and the
following substituted in its stead: “All of the Obligations are secured by Liens
on all the assets of the Canadian Loan Parties and at all times will be entitled
to a super priority claim status and will be secured by a first priority
perfected security interest and hypothec in favor of the Canadian Agent (in each
case subject only to (i) the Directors’ Charge, (ii) the Administration Charge,
(iii) the KERP Charge, (iv) solely with respect to the Obligations owed by the
Domestic Loan Parties, the Canadian Creditor Charge, and (v) Permitted
Encumbrances having priority under Applicable Law).  All Liens on the
assets of the Canadian Loan Parties which secure the Obligations shall
constitute first priority Liens, subject only to the Liens securing the
Pre-Petition Liabilities and the items described in subclauses (i) through (v)
above to the extent that such charges have priority under Applicable
Law.  No other claims or Liens having a priority superior or pari
passu to that granted to or on behalf of the Canadian Agent or the Lenders shall
be granted or approved while any of the Obligations or the Commitments remain
outstanding.”

     

    3.           Section
6.13(e) of the DIP Credit Agreement is hereby deleted in its entirety and the
following substituted in its stead: “The return of any of the Loan Parties’
property pursuant to Section 546(h) of the Bankruptcy Code or any similar
provision of the CCAA or Applicable Law in Canada;”

     

    4.           Section
7.01(s) of the DIP Credit Agreement is hereby deleted in its entirety and the
following substituted in its stead: “The filing of any application by any Loan
Party without the express prior written consent of the Agents and the Required
Lenders for the approval of any super-priority claim in the Cases which is pari
passu with or senior to the priority of the claims of the Agents and the Lenders
for the Obligations, or there shall arise any such super-priority claim under
the Bankruptcy Code or CCAA (in each case, other than the Professional Fee Carve
Out, the Administration Charge, the Directors’ Charge, the KERP Charge, the
claim of the lenders under the Term Loan, and solely with respect to the
Obligations owed by the Domestic Loan Parties, the Canadian Creditor
Charge);”

     

    The
Agents and the Required Lenders consent to each of the foregoing (including
entry of the court orders described above) and waive any Defaults and/or Events
of Default referenced above, subject to the following:

     

    
      	
              a.  

            	
              The
      U.S. Debtors obtain an amended Utilities Order on the terms set forth
      herein and otherwise reasonably acceptable to the Agents (which order
      shall include the protections set forth in Paragraph 9 of the existing
      Utilities Order).

            


    

     

    


     

    
      	
              b.  

            	
              The
      form of amended Initial Order in the Canadian Bankruptcy Case shall be
      reasonably satisfactory in form and substance to the Canadian Agent and
      the Canadian Lenders.

            


    

     

    


     

    
      	
              c.  

            	
              The
      U.S. Bankruptcy Court and the Canadian Bankruptcy Court shall have entered
      such orders, if any, as the Agents may reasonably require in connection
      with the entering into of this letter by the
  Borrowers.

            


    

     

    


     

    
      	
              d.  

            	
              The
      foregoing waiver relates only to the matters specified herein and is not a
      continuing waiver of any provisions of the DIP Credit Agreement, each of
      which continue to remain in full force and effect as
    written.

            


    

     

    


     

    This
letter is intended to be solely for the benefit of the parties hereto and is not
intended to confer any benefits upon, or create any rights in favor of, any
person other than the parties hereto. This letter may be executed by each
party on a separate counterpart, each of which when so executed and delivered
shall be an original, but all of which together shall constitute one
agreement.  A facsimile or other electronic copy of this letter
bearing the signature of any party hereto shall be deemed to be an
original.  Section headings used herein are for convenience of
reference only, are not part of this letter and are not to affect the
construction of, or to be taken into consideration in interpreting, this
letter.  This letter embodies the entire agreement and understanding
among the parties with respect to the matters reference herein, and supersedes
all prior agreements and understandings relating to the subject matter
thereof. The letter is a Loan Document under the terms of the DIP Credit
Agreement.

     

    This letter shall be governed by, and
construed in accordance with, the laws of the State of New York without regard to conflicts of laws
principles, the Bankruptcy Code and the CCAA.  Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the United States
Bankruptcy Court for the Eastern District of Virginia any New York State court
or federal court sitting in the County of New York (and with respect to the
Canadian Loan Parties, the Ontario Superior Court of Justice (Commercial List))
in respect of any suit, action or proceeding arising out of or relating to the
provisions of this letter and irrevocably agrees that all claims in respect of
any such suit, action or proceeding may be heard and determined in any such
court.  Each party hereby waives any objection that they may now or
hereafter have to the laying of venue of any such suit, action or proceeding
brought in any such court, and any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient
forum.  The parties hereto
hereby waive, to the fullest extent permitted by applicable law, any right to
trial by jury with respect to any action or proceeding arising out of or
relating to this letter.

     

    [SIGNATURE
PAGES FOLLOW]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Please
indicate your agreement with the foregoing by signing below.

     

    If you
have any questions regarding the foregoing, please do not hesitate to contact
us.

     

    


     

    Very
truly yours,

    


    BANK OF
AMERICA, N.A.,

    as
Administrative Agent, as Collateral Agent,

    and as
Domestic Lender

    


    


    By:________________________

    Name:

    Title:

    


    


    BANK OF
AMERICA, N.A., (acting through its Canada branch), as Canadian Lender and as
Canadian Administrative Agent and Canadian Collateral Agent

    


    By:________________________

    Name:______________________

    Title:_______________________

     

    GENERAL
ELECTRIC CAPITAL CORPORATION,

    as
Co-Documentation Agent, as Co-Collateral Agent and as Domestic
Lender

    By:________________________

    Name:______________________

    Title:_______________________

    


    


    WELLS
FARGO RETAIL FINANCE, LLC, as Syndication Agent, Joint Bookrunner and Domestic
Lender

    By:________________________

    Name:______________________

    Title:_______________________

    


    JPMORGAN
CHASE BANK, N.A.

    as
co-Documentation Agent and as Domestic Lender

    By:________________________

    Name:______________________

    


    WACHOVIA
CAPITAL FINANCE CORPORATION (CENTRAL), as Domestic Lender

    


    By:________________________

    Name:______________________

    Title:_______________________

    Address:

    


    GMAC
COMMERCIAL FINANCE LLC, as

    Domestic
Lender

    


    By:________________________

    Name:______________________

    Title:_______________________

    


    THE CIT
GROUP/BUSINESS CREDIT, INC., as

    Domestic
Lender

    


    By:________________________

    Name:______________________

    Title:_______________________

    


    NATIONAL
CITY BUSINESS CREDIT, INC., as Domestic Lender

    


    By:________________________

    Name:______________________

    Title:_______________________

    


    BURDALE
FINANCIAL LTD., as

    Domestic
Lender

    


    By:________________________

    Name:______________________

    Title:_______________________

    


    UBS LOAN
FINANCE LLC, as

    Domestic
Lender

    


    By:________________________

    Name:______________________

    Title:_______________________

    


    UPS
CAPITAL CORPORATION, as

    Domestic
Lender

    


    By:________________________

    Name:______________________

    Title:_______________________

    


    FIFTH
THIRD BANK, as Domestic Lender

    By:________________________

    Name:______________________

    Title:_______________________

    


    SUNTRUST
BANK, as

    Domestic
Lender

    


    By:________________________

    Name:______________________

    Title:_______________________

    


    TEXTRON
FINANCIAL CORPORATION, as

    Domestic
Lender

    


    By:________________________

    Name:______________________

    Title:_______________________

    MERRILL
LYNCH CAPITAL, a Division of Merrill Lynch Business Financial Services Inc.,
as

    Domestic
Lender

    


    By:________________________

    Name:______________________

    Title:_______________________

    


    PNC BANK,
N.A., as

    Domestic
Lender

    


    By:________________________

    Name:______________________

    Title:_______________________

    


    WEBSTER
BUSINESS CREDIT CORPORATION, as

    Domestic
Lender

    


    By:________________________

    Name:______________________

    Title:_______________________

    


    CAPITAL
ONE LEVERAGE FINANCE CORP., as

    Domestic
Lender

    


    By:________________________

    Name:______________________

    Title:_______________________

    


    Acknowledged and Agreed to
by:

    


    Domestic
Borrowers:

    


    CIRCUIT
CITY STORES, INC.

    


    By:           ______________________________

    Name:

    Title:

    


    


    CIRCUIT
CITY STORES WEST COAST, INC.

    


    By:           ______________________________

    Name:

    Title:

    


    


    CIRCUIT
CITY STORES PR, LLC

    


    By:           ______________________________

    Name:

    Title:

    


    Canadian
Borrower:

    


    INTERTAN
CANADA LTD.

    


    By:           ______________________________

    Name:

    Title:

    


    Facility
Guarantors: