Exhibit 10.2
FIFTH AMENDMENT, CONSENT AND WAIVER
TO SECURED CREDIT AGREEMENT
This Fifth Amendment, Consent and Waiver to Secured Credit Agreement (this
"Agreement") is dated as of October 13, 1999, and is between Platinum
Entertainment, Inc., a Delaware corporation (the "Borrower"), and First Source
Financial LLP, an Illinois limited liability partnership, as Agent for Lenders
party to the Secured Credit Agreement (as defined below) (the "Agent").
RECITALS
WHEREAS, the parties hereto are parties to that certain Secured Credit
Agreement, dated as of July 31, 1998 (as amended, restated, supplemented
or otherwise modified from time to time, the "Secured Credit Agreement"); and
WHEREAS, Borrower and Lenders desire to amend the Secured Credit
Agreement to make certain changes thereto and to correct certain matters, all
as set forth below.
NOW THEREFORE, in consideration of the mutual agreements contained herein,
the parties hereto agree as follows:
AGREEMENT
1. Definitions. Capitalized terms used but not otherwise defined herein shall
have the meanings as set forth in the Secured Credit Agreement.
2. Amendments to Secured Credit Agreement. The Secured Credit Agreement is
hereby amended as follows:
(a) Section 1.1 of the Secured Credit Agreement is hereby amended by adding
the following definitions in their proper alphabetical order:
"* Library" shall mean any and all sound recordings listed on
Exhibit A attached hereto and any and all masters, videos and any materials
associated with such sound recordings.
"* Sale Proceeds" shall mean the aggregate cash proceeds payable
to Borrower in connection with the sale of the * Library after deduction
of all reasonable, customary and documented costs and expenses (including,
without limitation, taxes) of such sale.
(b) Section 2.1(a) of the Secured Credit Agreement is hereby amended by
deleting the date "July 31, 2003" in the third line thereof and
replacing it with the date "March 31, 2000".
(c) Section 2.7 of the Secured Credit Agreement is hereby amended by
inserting the following new Section 2.7(d) immediately following
Section 2.7(c):
(d) Upon receipt by Borrower of the * Sale Proceeds, Borrower
shall immediately deposit the * Sale Proceeds into the Master
Account for application to the outstanding Liabilities in accordance
with the terms of this Agreement. Concurrently with the payment set
forth in this Section 2.7(d), the Revolving Commitment shall be
reduced by an amount equal to 50% of the * Sale Proceeds.
(d) Section 2.8 of the Secured Credit Agreement is hereby amended by
deleting it in its entirety.
(e) Section 5.6 of the Secured Credit Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
SECTION 5.6 Appraisal Fees. Borrower shall pay to Agent all appraisal
costs and expenses related to the following appraisals of
Borrower's music catalog prepared after the Closing Date at
the request of Agent: (i) any appraisals conducted during the
occurrence and continuance of an Unmatured Event of Default or
Event of Default; (ii) an appraisal conducted by Valuation
Research Corporation at the request of the Agent made in
September 1999; and (iii) an appraisal conducted by Kagan
Media Appraisals, Inc. at the request of the Agent made in
September 1999; provided that the aggregate fees payable by
Borrower to Agent with respect to the appraisals referenced in
clauses (ii) and (iii) above shall not exceed $60,000 plus
out-of-pocket expenses of the appraisers.
[FN]
* Confidential portions omitted and filed separately with the commission.
(f) Section 11.12 of the Secured Credit Agreement is hereby amended by
inserting the following in the eighth line thereof immediately following
the word "assets":
(unless in connection and concurrently with such sale, Borrower
indefeasibly pays in full in cash all outstanding Liabilities hereunder)
(g) Section 11.30 of the Secured Credit Agreement is hereby amended by
inserting the following in the fifth line thereof immediately following
the amount "$50,000":
and (iii) sales of Property the proceeds of which are concurrently
used by the Borrower to indefeasibly pay in full in cash all outstanding
Liabilities hereunder.
(h) Section 11.33 of the Secured Credit Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
SECTION 11.33 Financial Covenants.
(a) EBITDA. Not permit EBITDA measured on the last day of each month
set forth below for the month ended on such day to be less than the
amount listed below opposite such period:
Periods Minimum EBITDA
October 1999 $5,400,000
November 1999 $0
December 1999 ($250,000)
January 2000 ($450,000)
February 2000 $0
(b) Gross Capital Expenditures. Not, nor shall it permit any Subsidiary
to, directly or indirectly (by way of the acquisition of the
securities of a Person or otherwise), make or commit to make Gross
Capital Expenditures, except that Borrower may, so long as no Event
of Default or Unmatured Event of Default shall exist or would result
therefrom, make Gross Capital Expenditures (excluding any permitted
acquisitions) in the ordinary course of business in an aggregate
amount not to exceed $1,000,000 during (a) the period from the
Closing Date through December 31, 1998 and (ii) any Fiscal Year
thereafter.
(i) Section 11 of the Secured Credit Agreement is hereby amended by adding
the following at the end thereof:
SECTION 11.35 Borrowing Availability. Borrower shall maintain at all
times Borrowing Availability of at least $300,000.
SECTION 11.36 Board Resolution. As soon as possible and in no event
later than November 15, 1999, Borrower shall deliver to Agent
a certified copy of the unanimous resolution of the full
Board of Directors of each of the Borrower and the Guarantors
in form and substance satisfactory to Agent ratifying the
execution and delivery by Borrower and the Guarantors of the
Fifth Amendment, Consent and Waiver to Secured Credit
Agreement in its final form and the consummation of the
transactions contemplated by such agreement and each other
Related Document to be executed and delivered in connection
therewith and the performance of their respective obligations
thereunder.
(j) Section 13.1(f) of the Secured Credit Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
(f) Failure by Borrower to comply with or to perform (x) any provision
contained in clause (i) of Section 11.1(h), Section 11.4 or
Section 11.10 through 11.34 or (y) any provision contained in any
Section of this Agreement (other than occurrences referred to or
embodied in other clauses of this Section 13.1) for a period of
five (5) Business Days after the earlier of (i) Borrower's receipt
of notice from Agent or (ii) actual knowledge of such failure by
Borrower.
(k) The Secured Credit Agreement is hereby amended by deleting in their
entirety the headings "Commitments" and "Aggregate Commitments" and all
amounts listed thereunder set forth on the signature page of the Secured
Credit Agreement.
(l) Schedule 1 to the Credit Agreement is hereby amended by deleting it in
its entirety and replacing it with Schedule 1 attached to this
Agreement.
(m) Schedule 10.16 to the Secured Credit Agreement is hereby amended to
delete the address "11810 Xxxxxx Xxxx, Xxxxxxxxxx, XX 00000" and adding
the address "11415 Xxx Xxxxxxx Xx., Xxxxxxxxxx, XX 00000".
3. Waivers.
(a) Indebtedness. Lenders and Agent hereby waive any Unmatured Event of
Default or Event of Default caused by Borrower's breach of Section 11.19
or 11.21 of the Secured Credit Agreement arising from Borrower's
incurrence of the Indebtedness set forth on Exhibit A attached to this
Agreement. Schedules 11.19 and 11.21 of the Secured Credit Agreement
are hereby amended to include the Indebtedness set forth on Exhibit A
attached hereto.
(b) Financial Covenants. Lenders and Agent hereby waive any Unmatured Event
of Default or Event of Default caused by Borrower's failure to comply
with Sections 11.33(a) and 11.33(b) of the Secured Credit Agreement, as
they existed before the date of this Agreement, through and including
September 30, 1999.
(c) Polygram. Lenders and Agent hereby waive any Unmatured Event of Default
or Event of Default arising under Section 13.1(n) of the Secured Credit
Agreement as a result of the termination of the Polygram Distribution
Agreement.
(d) Commitment Reduction. Lenders and Agent hereby waive the five Business
Days' notice under Section 2.6 of the Secured Credit Agreement and any
Prepayment Premium that would otherwise be applicable with respect to
the $1,400,000 reduction of the Revolving Commitment required by
Section 6(d) of this Agreement.
(e) Legal Fees. Lenders and Agent hereby waive all fees and out-of-pocket
fees otherwise payable under Section 14.4 of the Secured Credit
Agreement incurred with respect to the negotiations regarding the sale
of the Borrower's 1,320,000 shares of Music Connection Corporation (or,
as exchanged, Xxxxxxxxxx.xxx) and the preparation, negotiations and
execution of this Agreement.
(f) Default Interest. Lenders and Agent hereby waive all accrued and unpaid
interest on the Loans outstanding on the date hereof in excess of the
non-default contract rate per annum applicable to the Loans.
(g) Interest Payment. Lenders and Agent hereby waive the Event of Default
arising under Section 13.1(a) of the Secured Credit Agreement as a
result of Borrower's late payment of the interest due on the Loans on
September 15, 1999.
(h) Limited Waivers. The foregoing waivers are limited to the specific
purpose for which they were granted, and except as set forth in this
Section 3, such waivers shall not be construed as a waiver or other
modification with respect to any other term, condition or other
provisions of any Related Document.
4. Consent.
(a) Lenders and Agent hereby consent to the sale of the Borrower's 1,320,000
shares of Music Connection Corporation (or as exchanged, Xxxxxxxxxx.xxx)
for a purchase price of $9.125 per share provided that the Asset Sale
Proceeds of such stock shall be immediately delivered to Agent by wire
transfer of immediately available funds to the Master Account for
application to the outstanding Liabilities in accordance with the terms
of Section 7.3 of the Secured Credit Agreement.
(b) Lenders and Agent hereby consent to the sale of the * Library;
provided that such sale is made by the Borrower to an unaffiliated party
on an arms length basis for cash only; provided further that all cash
proceeds of such sale are deposited into the Master Account in
accordance with the terms of Section 2.7(d) of the Secured Credit
Agreement.
5. Representations and Warranties. To induce Agent and Lenders to enter into
this Agreement and to extend Loans and L/C Guaranties under the Secured Credit
Agreement, Borrower represents and warrants to Agent that:
(a) Due Authorization, etc. The execution, delivery and performance by
Borrower of this Agreement are within its corporate powers, have been
duly authorized by all necessary corporate action, have received all
necessary governmental approval (if any shall be required), and do not
and will not contravene or conflict with any Requirement of Law or
Contractual Obligation binding upon such entity. This Agreement is the
legal, valid, and binding obligation of Borrower enforceable against
Borrower in accordance with its respective terms.
(b) Certain Agreements. To the best of Borrower's knowledge, on the date
hereof all warranties of the Borrower thereto set forth in the Secured
Credit Agreement are true and correct in all material respects, without
any waiver or modification thereof and, after giving effect to this
Agreement, no Unmatured Event of Default or Event of Default exists
under the Secured Credit Agreement or any other Related Document.
(c) Financial Information. All balance sheets, all statement of operations,
of shareholders' equity and of changes in financial position, and other
financial data which have been or shall hereafter be furnished to Agent
for the purposes of or in connection with this Agreement have been and
will be prepared in accordance with GAAP consistently applied throughout
the periods involved and do and will, present fairly the financial
condition of the entities involved as of the dates thereof and the
results of their operations for the periods covered thereby.
(d) Litigation. Except as set forth on Exhibit C to this Agreement, no
material litigation (including, without limitation, derivative actions),
arbitrations, governmental investigation or proceeding or inquiry shall,
on the date hereof, be pending which was not previously disclosed in
writing to Agent and no material adverse development shall have occurred
in any litigation (including, without limitation, derivative actions),
arbitration, government investigations, or proceeding or inquiry
previously disclosed to Agent in writing.
6. Conditions to Effectiveness. This Agreement shall be effective as of the
date hereof upon the satisfaction of the conditions set forth in this Section 6
and delivery of the following documents to Agent on or prior to the date hereof
(unless another date is specified), in form and substance satisfactory to Agent:
(a) Amendment. Borrower shall have delivered to Agent executed originals of
this Agreement.
(b) Consents and Acknowledgments. Borrower shall have obtained all
consents, approvals and acknowledgments which may be required with
respect to the execution, delivery and performance of this Agreement.
(c) No Default. As of the date hereof after giving effect to this
Agreement no Unmatured Event of Default or Event of Default under any
Related Document shall have occurred and be continuing.
(d) Commitment Reduction. Agent shall have received $1,400,000 in cash as a
permanent reduction of the Revolving Commitment to $33,024,986.
(e) Interest and Fees. Agent shall have received payment in full of all
interest and fees that would otherwise be due and payable on October 15,
1999.
(f) Resolutions. A certified copy of the unanimous resolutions of the full
Board of Directors of each of the Borrower and the Guarantors in form
and substance satisfactory to Agent authorizing the execution and
delivery of, and the consummation of the transactions contemplated by,
this Agreement and each other Related Document to be executed and
delivered in connection herewith and the performance of their respective
obligations hereunder.
(g) Incumbency Certificate. A certificate of the Secretary or Assistant
Secretary of Borrower certifying the names and true signatures of the
officers of Borrower authorized to execute, deliver and perform this
Agreement and each other Loan Document to be executed and delivered in
connection herewith, upon which certificate Agent and Lenders shall be
entitled to rely.
(h) Other Documents. All other documents, certificates and agreements as
Agent may reasonably request to accomplish the purposes of this
Agreement.
7. Affirmation of Guaranties.
Each Guarantor (i) consents to and approves the execution and delivery of
this Agreement by Borrower and Agent, (ii) agrees that this Agreement does not
nor shall it limit or diminish in any manner its obligations under its Guaranty
or under any of the other Related Documents to which it is a party, (iii)
agrees that this Agreement shall not be construed as requiring the consent of
any Guarantor in any other circumstance, (iv) reaffirms its obligations under
its Guaranty and all of the other Related Documents to which it is a party, and
(v) agrees that its Guaranty and such other Related Documents remain in full
force and effect and are each hereby ratified and confirmed.
8. Release.
In consideration of Agent's and Lenders' execution of this Agreement, the
consent set forth in Section 4 hereof and the waivers set forth in Section 3
hereof, each of Borrower and the Guarantors, individually and on behalf of its
successors, assigns, subsidiaries and affiliates, hereby forever releases,
acquits and discharges Agent and Lenders and their respective successors,
assigns, parents, subsidiaries, affiliates, officers, employees, directors,
agents and attorneys (collectively, the "Releasees") from any and all debts,
claims, demands, liabilities, responsibilities, disputes, actions and causes of
action (whether at law or in equity) and obligations of every nature whatsoever,
whether liquidated or unliquidated, known or unknown, matured or unmatured,
fixed or contingent (collectively, "Claims") that Borrower may have against the
Releasees which arise from or relate to any act of commission or omission of the
Releasees existing or occurring on or prior to the date hereof with respect to
any attempted sale or disposition and the actual sale or disposition by Borrower
of the shares of Music Connection Corporation or, as exchanged, Xxxxxxxxxx.xxx
including, without limitation, all allegations set forth, referenced or alluded
to in that certain letter, dated October 8, 1999, from Xxxx X. Xxxxx of Xxxx,
Xxxx & Xxxxx, Borrower's legal counsel, to Xxx X. Xxxxxx of Winston & Xxxxxx,
Agent's and Lenders' legal counsel.
9. Miscellaneous.
(a) Captions. Section captions used in this Agreement are for convenience
only, and shall not affect the construction of this Agreement.
(b) Governing Law. This Agreement shall be a contract made under and
governed by the laws of the State of Illinois, without regard to
conflict of laws principles. Wherever possible each provision of this
Agreement shall be interpreted in such manner to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provision
of this Agreement.
(c) Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts, and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
Delivery of an executed counterpart of a signature page to this
Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
(d) Successors and Assignees. This Agreement shall be binding upon Borrower,
the Lenders and Agent and their respective successors and assignees, and
shall inure to the sole benefit of Borrower, Agent and each Lender and
their successors and assignees.
(e) References. Any reference to the Secured Credit Agreement contained in
any notice, request, certificate, or other document executed
concurrently with or after the execution and delivery of this Agreement
shall be deemed to include this Agreement unless the context shall
otherwise require.
(f) Continued Effectiveness. Notwithstanding anything contained herein, the
terms of this Agreement are not intended to and do not serve to effect a
novation as to the Secured Credit Agreement, any Note or any of the
Collateral Documents provided to furnish security therefor. The parties
hereto expressly do not intend to extinguish the Secured Credit
Agreement, any Note or the Collateral Documents. Instead, it is the
express intention of the parties hereto to reaffirm the existence of the
indebtedness created under the Secured Credit Agreement which is
evidenced by Notes and secured by the various Collateral Documents. The
Secured Credit Agreement and each of the Related Documents as amended
hereby remain in full force and effect. The execution, delivery and
effectiveness of this Agreement shall not operate as a waiver of any
right, power or remedy of the Lenders or Agent under the Secured Credit
Agreement or any Related Document to which the Lenders and Agent are a
party nor, except as set forth in Section 3 hereof, constitute a waiver
of any provision in or Event of Default or Unmatured Event of Default
(now or hereafter existing) under the terms of the Secured Credit
Agreement or any Related Document.
(g) Entire Agreement. This Agreement and all schedules, exhibits and other
documents attached hereto or incorporated by reference herein constitute
the entire agreement of the parties hereto with respect to the subject
matter hereof and supersede all other understandings, oral or written,
with respect to the subject matter hereof.
(h) Conflict of Terms. Except as provided in this Agreement, if any
provision contained in this Agreement is in conflict or is inconsistent
with any provision in any of the other Related Documents, the provision
contained in this Agreement shall govern and control.
(i) Incorporation of Secured Credit Agreement. The provisions contained in
Sections 14.7 and 14.11 of the Secured Credit Agreement are incorporated
herein by reference to the same extent as if produced herein in their
entirety.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their duly authorized officers on the date first above
written.
PLATINUM ENTERTAINMENT, INC.,
as Borrower:
By: /s/ XXXXXXX X. XXXX
Name Printed: XXXXXXX X. XXXX
Title: CHIEF FINANCIAL OFFICER
FIRST SOURCE FINANCIAL LLP,
as a Lender and as Agent
By: First Source Financial, Inc.,
Its: Manager
By: /s/ XXXX X. XXXXXXX
Name Printed: XXXX X. XXXXXXX
Title: SENIOR VICE PRESIDENT
LEXICON MUSIC, INC., as Guarantor
By: /s/ XXXXXXX X. XXXX
Name Printed: XXXXXXX X. XXXX
Title: CHIEF FINANCIAL OFFICER
PEG PUBLISHING, INC., as Guarantor
By: /s/ XXXXXXX X. XXXX
Name Printed: XXXXXXX X. XXXX
Title: CHIEF FINANCIAL OFFICER
ROYCE PUBLISHING, INC., as Guarantor
By: /s/ XXXXXXX X. XXXX
Name Printed: XXXXXXX X. XXXX
Title: CHIEF FINANCIAL OFFICER
JUSTMIKE MUSIC, INC., as Guarantor
By: /s/ XXXXXXX X. XXXX
Name Printed: XXXXXXX X. XXXX
Title: CHIEF FINANCIAL OFFICER
