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EXHIBIT 10.28
EXTENSION OF AND THIRD AMENDMENT TO
THE MANAGEMENT SERVICES AGREEMENT
This EXTENSION OF AND THIRD AMENDMENT TO THE MANAGEMENT SERVICES
AGREEMENT (this "AMENDMENT") is dated as of April 28, 1999, and entered into
among WHEREHOUSE ENTERTAINMENT, INC., a Delaware corporation (the "COMPANY"),
ALVAREZ & MARSAL, INC., a New York corporation ("A&M"), A&M INVESTMENT
ASSOCIATES #3, LLC, a Delaware limited liability company (the "AFFILIATE") and
ANTONIO C. ALVAREZ II, an individual ("ALVAREZ"). Reference is made to that
certain Management Service Agreement (the "MANAGEMENT SERVICES AGREEMENT", and
as extended and amended hereby, the "EXTENDED AND AMENDED AGREEMENT") dated as
of January 31, 1997, amended by an Extension and Amendment dated as of February
1, 1998, and amended further by a Second Amendment dated as of April 30, 1998,
among the Company, A&M, the Affiliate, Alvarez and, with respect to Section 2(c)
and 8 thereof only, Cerberus, and binding upon the Support Employees. All
capitalized terms used herein and not otherwise defined shall have the meaning
given to such terms in the Management Services Agreement.
RECITALS
WHEREAS, A&M and the Company desire to extend the term of the
Management Services Agreement; and
WHEREAS, A&M, Alvarez, the Affiliate and the Company desire to
amend certain terms and provisions of the Management Services Agreement as
provided herein;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
1. EXTENSION OF THE MANAGEMENT SERVICES AGREEMENT
Pursuant to Section 2(b) of the Management Services Agreement,
the Company and A&M hereby agree to extend the term of the Management Services
Agreement such that the Extended and Amended Agreement shall terminate on
October 14, 2000, subject to earlier termination pursuant to Section 7 of the
Extended and Amended Agreement (such extended term the "SECOND EXTENDED TERM") ;
provided, however, that at least six months prior to the expiration of the
Second Extended Term, A&M and the Company shall notify the other as to whether
it desires to extend the Second Extended Term. If both A&M and the Company
desire to extend the Second Extended Term, they will promptly commence and
pursue good faith negotiations regarding the terms and conditions of such
extension. If either A&M or the Company does not desire to extend the Second
Extended Term, or if the parties are unable to reach agreement on the terms and
conditions under which the Second Extended Term shall be extended, the Extended
and Amended Agreement shall terminate on October 14, 2000, except that each of
A&M and the Company shall use its best efforts and shall provide full
cooperation to the other in making a smooth transition in the management of the
Company to the new management selected by the Company. If so terminated by
expiration of the Second Extended
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Term, except as provided in Section 6(d) of the Extended and Amended Agreement
and except for accrued but unpaid fees due to A&M pursuant to Section 4(a) of
the Extended and Amended Agreement and amounts due pursuant to Section 5 of the
Extended and Amended Agreement, neither party shall have any further obligation
to the other either hereunder or under the Extended and Amended Agreement.
2. AMENDMENT TO SECTION 4(a)(1) OF THE MANAGEMENT SERVICES
AGREEMENT
Section 4(a)(1)(i) of the Management Services Agreement is
amended to read in full as follows:
(1) Base Fees.
(i) Alvarez and Support Employees. In
consideration for the services of A&M, Alvarez and the
Support Employees, except for the Support Employees named
in paragraphs (ii), (iii), (iv) and (v) of this Section
4(a)(1) (the "NAMED SUPPORT EMPLOYEES"), for the account,
and on behalf of A&M hereunder, the Company shall pay A&M
during the term of this Agreement a management fee of
$50,000 (or a pro-rated portion thereof) per month
irrespective of the number of Support Employees provided by
A&M to the Company.
New Section 4(a)(1)(v) is added to the end of Section 4(a)(1) to
read in full as follows:
(v) Sudhir Aggarwal. Effective February 1,
1999 and continuing until the earlier of the termination of
this Agreement or the date on which Sudhir Aggarwal ceases
to serve full-time for the Company, the Company shall pay
A&M $10,416.67 per month in consideration for the full-time
services of Sudhir Aggarwal.
3. GENERAL
(a) Reference to and Effect on the Management Services
Agreement.
(i) On and after the effective date of this
Extension and Amendment, each reference in the Management Services
Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of like import referring to the Management Services
Agreement shall mean and be a reference to the Extended and
Amended Agreement; and
(ii) The execution, delivery and performance of this
Extension and Amendment shall not, except as expressly provided
herein or therein,
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constitute a waiver of any provision of, or operate as a waiver
of any right, power or remedy of the Company under, the
Management Services Agreement.
(b) Amendment. No modification or amendment of, or waiver
under, this Extension and Amendment shall be valid unless in writing and
signed by each of the parties hereto.
(c) Binding Agreement. This Extension and Amendment and the
Extended and Amended Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and
assigns.
(d) Authorization. Each of the Company and the A&M Parties
represents and warrants that its execution, delivery and performance of
this Extension and Amendment has been duly authorized by all necessary
corporate action.
(e) Governing Law. This Extension and Amendment shall be
governed by and construed in accordance with the internal laws of the
State of New York without regard to conflict of law principles.
(f) Severability. If any term, provision, covenant or
restriction herein is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Extension and Amendment shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated thereby.
(g) Tax Indemnification. A&M, Alvarez and each Support
Employee agree jointly and severally to indemnify and hold the Company
harmless against and reimburse the Company on demand for any federal,
state or local taxes, workers compensation, health or disability
benefits, and any penalties and interest thereon, payable by or on behalf
of the Company in respect of the services of A&M, Alvarez and the Support
Employees furnished to the Company pursuant to this Extension and
Amendment or the Extended and Amended Agreement.
(h) Entire Agreement. This Extension and Amendment and the
Extended and Amended Agreement contain the entire understanding of the
parties hereto respecting the subject matter hereof and supersedes all
prior discussions and understandings.
(i) Headings. Section and subsection headings in this
Extension and Amendment are included herein for convenience of reference
only and shall not constitute a part of this Extension and Amendment for
any other purpose or be given any substantive effect.
(j) Counterparts; Effectiveness. This Extension and
Amendment may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed
and delivered shall be deemed an original,
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but all such counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature
pages are physically attached to the same document. This Extension and
Amendment shall become effective upon the execution of a counterpart
hereof by the Company, A&M, the Affiliate and Alvarez and receipt by the
Company of written or telephonic notification of such execution and
authorization of delivery thereof.
IN WITNESS THEREOF, the parties have executed this Amendment as
of the day and year first above written.
ALVAREZ & MARSAL, INC.
By: /s/ Antonio C. Alvarez, II
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Its: Principal
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A&M INVESTMENT ASSOCIATES #3, LLC
By: /s/ Antonio C. Alvarez, II
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Its: Managing Member
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ANTONIO C. ALVAREZ II
/s/ Antonio C. Alvarez, II
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WHEREHOUSE ENTERTAINMENT, INC.
By: /s/ Robert S. Kelleher
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Its: Executive Vice President,
Chief Financial Officer
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