Exhibit 6
August 28, 1997
A&M Investment Associates #4, LLC
Xxxxxxx & Marsal, Inc.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Term Loan Agreement
Gentlemen:
This letter agreement (this "Agreement") shall
constitute the agreement of Xxxxxxxxx, LLC ("Xxxxxxxxx") to make
a term loan to A&M Investment Associates #4, LLC, a Delaware
limited liability company ("A&M"), for the purpose of financing
the purchase by A&M of 385,542 shares of common stock of
Wherehouse Entertainment, Inc. (the "Stock") at the price of Ten
and Three Eighths of One Dollar per share ($10 3/8).
i. Definitions. The following terms used in
this Agreement shall have the following meanings:
"Affiliate" means, as applied to any person, any other
person directly or indirectly controlling, controlled by, or
under common control with, that person. For the purposes of this
definition, "control" (including, with correlative meanings, the
terms "controlling," "controlled by" and "under common control
with"), as applied to any person, means the possession, directly
or indirectly, of the power to direct or cause the direction of
the management and policies of that person, whether through the
ownership of voting securities or by contract or otherwise.
"A&M Stock Pledge and Account Agreement" means that certain
A&M Stock Pledge and Account Agreement dated as of the date
hereof between Xxxxxxxxx and A&M and in the form of Annex II
hereto.
"Promissory Note" means the Secured Non-Recourse Promissory
Note of A&M, dated the date hereof and in the form of Annex I
hereto, to evidence the Term Loan made by Xxxxxxxxx under this
Agreement.
"Obligations" means all obligations of A&M under this
Agreement, the Promissory Note, the A&M Stock Pledge and Account
Agreement and all matters relating hereto and thereto.
ii. Term Loan.
(i) Amount; Expiration. Xxxxxxxxx
hereby agrees to provide a term
loan in the amount of Two Million
Five Hundred Thousand Nine Hundred
Ninety Eight United States Dollars
and Twenty Five United States Cents
($2,599,998.25) to A&M (the "Term
Loan"). The commitment of
Xxxxxxxxx hereunder to make the
Term Loan shall expire immediately
and without further action on
September 1, 1997 if the Term Loan
is not made on or before that date.
(ii) Borrowing Mechanics. A&M may
request the Term Loan by delivering
to Xxxxxxxxx, not later than 12:00
noon (New York time) on the
proposed funding date for the Term
Loan, a notice of borrowing which
shall be in the amount of
$2,599,998.25 and shall specify the
proposed funding date for the Term
Loan the proceeds of which shall be
transmitted by wire on such
proposed funding date to:
Citibank
ABA #000000000
for account of Bear Xxxxxxx Securities Corp.
Account #00000000
for sub-account of Xxxxxxxxx, LLC
Sub-account #1020675227
Such notice shall be executed by the person acting as an
authorized representative of A&M, who shall, until A&M advises
Xxxxxxxxx to the contrary, be Xxxxxxx X. Xxxxxxx XX or Xxxxx
Xxxxxx. A&M may make only one borrowing under the Term Loan, and
amounts borrowed under the Term Loan and subsequently repaid or
prepaid may not be reborrowed. Except as otherwise provided in
this Agreement, the Promissory Note and the A&M Stock Pledge and
Account Agreement, A&M hereby agrees that amounts borrowed under
this subsection 2(b) shall be applied only toward the purchase by
A&M of the Stock.
(iii) Repayments, Prepayments;
Promissory Note. The
principal of the Term Loan
shall be repaid in full on
January 31, 2004 and shall be
evidenced by the Promissory
Note; provided, however that
A&M may, upon written notice
to Xxxxxxxxx on or prior to
12:00 Noon (New York City
time) on the date of
prepayment, prepay all or any
portion of the principal of
the Term Loan. In the event
that all amounts due and owing
under this Agreement are not
paid immediately upon January
31, 2004, Xxxxxxxxx may,
subject to subsection 5.10 of
this Agreement, exercise any
other remedy available to it
at law, in equity or
otherwise.
(iv) Interest. Interest shall be
payable on the Term Loan at the
rate and at the times set forth in
the Promissory Note.
(v) Use of Proceeds. The proceeds
of the Term Loan shall be used by
A&M solely for the purchase of the
Stock, and A&M shall purchase the
Stock on the same date that A&M
receives the proceeds of the Term
Loan from Xxxxxxxxx.
(vi) Assignments and
Participations. Xxxxxxxxx shall
have the right at any time to sell,
assign, transfer, negotiate or
grant participations in all or any
part of the Promissory Note and the
Term Loan. A&M hereby acknowledges
and agrees that any such
disposition will give rise to a
direct obligation of A&M to the
participant and the participant
shall for all purposes relevant
thereto be considered to be treated
as though it were "Xxxxxxxxx" under
the Promissory Note and hereunder.
iii. Representations and Warranties. A&M
represents and warrants as follows:
3.1 Valid Existence, etc. A&M is a limited liability
company duly organized and validly existing under the laws of the
State of Delaware; A&M has the power and adequate authority,
rights and franchises to own its properties and to carry on its
business as now conducted; A&M has the power and adequate
authority to make and carry out this Agreement, the Promissory
Note and the A&M Stock Pledge and Account Agreement; and A&M is
in good standing wherever necessary to carry on its present
business and operations.
3.2 Due Authorization. Xxxxxxx X. Xxxxxxx XX and
Xxxxx Xxxxxx are the sole co-managers of A&M, and either Xxxxxxx
X. Xxxxxxx XX or Xxxxx Xxxxxx are duly authorized to execute and
deliver this Agreement and the A&M Stock Pledge and Account
Agreement on behalf of A&M. A&M has duly authorized the
execution and delivery of this Agreement, the Promissory Note and
the A&M Stock Pledge and Account Agreement.
3.3 Binding Obligation. This Agreement, the
Promissory Note and the A&M Stock Pledge and Account Agreement
are the legal, valid and binding obligations of A&M, enforceable
against A&M in accordance with their respective terms, subject,
however, to the application by a court of general principles of
equity and to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar law affecting
creditors' rights generally.
3.4 No Conflict. The execution and delivery of this
Agreement, the Promissory Note and the A&M Stock Pledge and
Account Agreement, the consummation of the transactions herein
and therein contemplated and the fulfillment of or compliance
with the terms and conditions hereof and thereof will not in any
material respect conflict with or constitute a violation or
breach of or default (with due notice or the passage of time or
both) under the operating agreement of A&M or any applicable law
or administrative rule or regulation, or any applicable court or
administrative decree or order, or any note, trust agreement,
mortgage, deed of trust, loan agreement, lease, contract or other
agreement or instrument to which A&M is a party or by which it or
its properties are otherwise subject or bound, or result in the
creation or imposition of any lien of any nature whatsoever, upon
any of the property or assets of A&M except for the A&M Stock
Pledge and Account Agreement.
iv. Covenants.
4.1 Affirmative Covenants. In consideration of
Xxxxxxxxx entering into this Agreement, A&M agrees that it will,
unless Xxxxxxxxx shall otherwise consent in writing:
(i) Maintenance of Existence.
Maintain and preserve its existence
and all rights, privileges,
licenses, franchises and other
authority adequate for the conduct
of its business in an orderly
manner without voluntary
interruption.
(ii) Compliance with Laws. Comply
with all applicable laws, rules,
regulations and orders of any
governmental authority, the non-compliance with
which would
materially and adversely affect the
business or condition of A&M.
(iii) Payment of Taxes.
Promptly pay all lawful taxes,
governmental charges and
assessments at any time levied
or assessed upon or against it
or its properties; provided,
however, that it shall have
the right to contest in good
faith and by appropriate
proceedings diligently pursue
any such sums and pending such
contest may delay or defer
payment thereof.
(iv) Notice of Adverse Events.
Deliver written notice promptly
upon (and, in any event, within one
business day of) (i) the occurrence
of any default in the payment when
due of any indebtedness of A&M or
of any condition or event that
would permit the holders of any
outstanding indebtedness of A&M to
declare such indebtedness to be due
and payable prior to its scheduled
maturity or (ii) any material
adverse change in the business,
condition (financial or otherwise),
operations, properties or prospects
of A&M.
4.2 Negative Covenant. In consideration of Xxxxxxxxx
entering into this Agreement, A&M agrees that it will not,
without the prior written consent of Xxxxxxxxx, sell, assign (by
operation of law or otherwise) or otherwise dispose of any of the
Stock; or, except for the security interest created by the A&M
Stock Pledge and Account Agreement, create or suffer to exist any
lien upon or with respect to any of the Stock to secure the
indebtedness or other obligations of any person or entity; or
(iii) do, or permit or suffer to be done, anything that may
impair the value of the Stock or the security intended to be
effected under this Agreement, the Promissory Note and the A&M
Stock Pledge and Account Agreement, and shall use its best
efforts to preserve, protect and enhance the value of the Stock.
v. Miscellaneous.
5.1 Taxes. All sums payable by A&M under this
Agreement shall be paid (i) free of any restriction or condition,
(ii) free and clear of and (except to the extent required by law)
without any deduction or withholding on account of any tax
imposed, levied, collected, withheld or assessed by or within the
United States of America or any political subdivision in or of
the United States of America and (iii) without deduction or
withholding (except to the extent required by law) on account of
any other amount, whether by way of set-off or otherwise.
5.2 Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by A&M
therefrom, shall in any event be effective unless the same shall
be in writing and signed by Xxxxxxxxx and A&M and then such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
5.3 Notice, Etc. All notices, demands and other
communications provided for hereunder shall, unless otherwise
stated herein, be in writing (including facsimile notice with
telephonic confirmation) and mailed, sent or delivered, if to
A&M:
A&M Investment Associates #4, LLC
c/o Alvarez & Marsal, Inc.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xx. Xxxxxxx X. Xxxxxxx XX
Telecopy no.: (000) 000-0000
and if to Xxxxxxxxx, in the case of deliveries or mailings, at
its address at 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, and in the case of telecopy, to telecopy no.: (000) 000-0000, in each
case Attention: Xx. Xxxxxx X. Xxxxxxxxx.
5.4 No Waiver; Remedies. No failure on the part of
Xxxxxxxxx to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
5.5 Costs, Expenses and Taxes. A&M hereby agrees to
pay on demand all reasonable costs and expenses incurred in
connection with the preparation, execution, delivery, filing,
recording and administration of this Agreement including, without
limitation, the reasonable fees and expenses of counsel for
Xxxxxxxxx with respect to the preparation and administration of
this Agreement and the Promissory Note and advising Xxxxxxxxx as
to its rights and responsibilities under this Agreement and the
Promissory Note. A&M also agrees to pay all reasonable costs and
expenses (including reasonable counsel fees and expenses)
incurred in connection with the enforcement or amendment of this
Agreement or the Promissory Note or any insolvency or bankruptcy
proceeding. In addition, A&M shall pay any and all stamp and
other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of
this Agreement, the Promissory Note and the A&M Stock Pledge and
Account Agreement, and agrees to save Xxxxxxxxx harmless from and
against any and all liabilities with respect to or resulting from
any delay in paying or omitting to pay such taxes and fees,
except to the extent that such liability results from the gross
negligence or willful misconduct of Xxxxxxxxx.
5.6 Binding Effect. This Agreement shall become
effective when it shall have been executed by A&M and Xxxxxxxxx
and thereafter shall be binding upon and inure to the benefit of
A&M and Xxxxxxxxx and their respective successors and assigns,
except that A&M shall not have the right to assign its rights
hereunder or any interest herein to any person without the prior
written consent of Xxxxxxxxx.
5.7 Severability. Any provision of this Agreement
which is prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or non-authorization without
invalidating or affecting the remaining
provisions hereof, or affecting the validity, enforceability or
legality of such provision in any other jurisdiction.
5.8 Governing Law and Jurisdiction. This Agreement
and the rights and obligations of the parties hereunder shall be
governed by, and shall be construed and enforced in accordance
with, the internal laws of the State of New York without regard
to conflicts of laws principles. Any action or proceeding
arising out of or relating to this Agreement, the Promissory Note
or the A&M Stock Pledge and Account Agreement shall be heard and
determined in an appropriate state or federal court in the State
of New York.
5.9 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY AGREES TO WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT, THE PROMISSORY NOTE OR THE A&M STOCK
PLEDGE AND ACCOUNT AGREEMENT, OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THE PROMISSORY NOTE AND THIS
AGREEMENT AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. The scope of this waiver is intended to be all-encompassing of
any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction,
including without limitation, contract claims, tort claims,
breach of duty claims, and all other common law and statutory
claims. Each party hereto acknowledges that this waiver is a
material inducement to enter into a business relationship, that
each has already relied on the waiver in entering into this
Agreement, and that each will continue to rely on the waiver in
their related future dealings. Each party hereto further
warrants and represents that each has reviewed this waiver with
its legal counsel, and that each knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel.
THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT, THE PROMISSORY NOTE, THE A&M STOCK PLEDGE AND
ACCOUNT AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE PROMISSORY NOTE. In the event of litigation,
this Agreement may be filed as a written consent to a trial by
the court.
5.10 Recourse Limited. Notwithstanding any provision
of this Agreement, Madeleine's sole remedy in respect of the
Obligations arising under this Agreement, the Promissory Note and
the A&M Stock Pledge and Account Agreement shall be to sell,
mortgage, foreclose upon or otherwise dispose of the Stock.
5.11 Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto on
separate counterparts, each of which counterpart, when so
executed and delivered, shall be deemed to be an original and all
of which counterparts, taken together, shall constitute but one
and the same agreement.
[Remainder of page intentionally left blank]
Kindly indicate your acceptance of this Agreement by
executing and delivering a counterpart of this Agreement on or
before August 28, 1997.
XXXXXXXXX, LLC
By: ______________________________
THE FOREGOING AGREEMENT IS
ACCEPTED:
A&M INVESTMENT ASSOCIATES #4, LLC
By: _________________________________
Xxxxxxx X. Xxxxxxx XX, Co-manager
