FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment to Secured Credit Agreement (this "Agreement") is
dated as of November 1, 1998 and is between Platinum Entertainment, Inc., a
Delaware corporation (the "Borrower") and First Source Financial LLP, an
Illinois limited liability partnership, as Agent and Lender (the "Agent").
RECITALS
WHEREAS, the parties hereto are parties to that certain Secured Credit
Agreement, dated as of July 31, 1998 (as from time to time amended, restated,
supplemented or otherwise modified and in effect, the "Secured Credit
Agreement"); and
WHEREAS, Borrower and Agent desire to amend the Secured Credit
Agreement to make certain changes in the covenants 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. WAIVER.
Lenders and Agent hereby waive any Unmatured Event of Default or Event
of Default caused by Borrower's failure to comply with the Minimum Net Worth or
Interest Coverage Ratio covenants set forth in Sections 11.33(a) and 11.33(b) of
the Secured Credit Agreement through September 30, 1998.
3. AMENDMENTS TO SECURED CREDIT AGREEMENT.
(a) The second paragraph of Section 4.1 is hereby amended by deleting
it in its entirety and replacing it with the following:
For the period beginning the Closing Date and ending November
14, 1998, the Prime Revolver Margin and LIBOR Revolving Margin will be
.75% and 2.75% per annum, respectively. As of November 15, 1998, the
Prime Revolver Margin and LIBOR Revolving Margin will be increased to
1.50% and 3.00% per annum, respectively. In the event that (i)
Borrower's EBITDA for the twelve (12) month period ending June 30, 1999
shall be equal to or greater than $12,431,000 as determined by
Borrower's consolidated financial performance and (ii) no Unmatured
Event of Default or Event of Default shall have occurred and be
continuing, commencing with the first day of the first calendar month
that occurs more than five (5) days after delivery of Borrower's
financial statements to the Agent for the second Fiscal Quarter of
Fiscal Year 1999, the Prime Revolver Margin and the LIBOR Revolving
Margin shall be reduced to 1.25% and 2.75% per annum, respectively.
Concurrently with the delivery of such financial statements, Borrower
shall execute and deliver to the Agent and the Lenders a certificate
setting forth in reasonable detail the basis for the change in the
Applicable Margins.
(b) Section 9.1(i) is hereby amended by deleting it in its entirety
and replacing it with the following:
(i) Accounts which remain unpaid as of one hundred twenty
(120) days after the date of the original invoice with respect thereto (other
than Accounts generated by Christmas season sales approved by
Agent in its sole discretion);
(c) Section 11.33(a) of the Secured Credit Agreement is hereby amended
by deleting it in its entirety and replacing it with the following:
(a) NET WORTH. Maintain Net Worth at all times during each
period listed below of at least the amounts set forth opposite such period:
MINIMUM
PERIOD NET WORTH
------ ---------
Fiscal Quarter ending September 30, 1998 $17,500,000
Fiscal Quarter ending December 31, 1998 $14,700,000
Fiscal Quarter ending March 31, 1999 $19,000,000
Fiscal Quarter ending June 30, 1999 $19,500,000
Fiscal Quarter ending September 30, 1999 $20,500,000
December 31, 1999 through September 30, 2000 $22,000,000
December 31, 2000 $24,500,000
March 31, 2001 and each Fiscal Quarter thereafter $24,500,000 plus fifty
percent (50%) of cumulative
quarterly Net Income (without
giving effect to any quarterly
net losses in determining
Net Income)
(d) Section 11.33(b) of the Secured Credit Agreement is hereby amended
by deleting it in its entirety and replacing it with the following:
(b) INTEREST COVERAGE RATIO. Not permit the Interest Coverage
Ratio measured on the last day of a Fiscal Quarter for the twelve (12) month
period (or, in the case of the Fiscal Quarter ending on September 30, 1998, for
the previous nine (9) months, and in the case of the Fiscal Quarter ended on
December 31, 1998, for the previous three (3) months) ending on the last day of
such Fiscal Quarter to be less than the ratio listed below opposite such period:
PERIODS RATIO
------- -----
September 30, 1998 2.0 to 1.0
December 31, 1998 1.3 to 1.0
March 31, 1999 through September 30, 1999 2.4 to 1.0
December 31, 1999 and thereafter 3.0 to 1.0
4. REPRESENTATIONS AND WARRANTIES. To induce Agent to enter into this
Agreement and to make all future Loans 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 executed as of the date hereof 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 no default of any party exists under the
Secured Credit Agreement or any
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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. 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.
5. CONDITIONS TO EFFECTIVENESS. This Agreement shall be effective as of
September 30, 1998 upon the satisfaction of the conditions set forth in this
Section 5 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 and the waiver set forth in Section 2 hereof, no Unmatured Event of
Default or Event of Default under any Related Document shall have occurred and
be continuing.
(d) AMENDMENT FEE. Agent shall have received payment on or before
November 16, 1998, of an amendment fee of $15,000.
6. 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 and shall not 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.
7. 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
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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 and Agent 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 2 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) FEES AND EXPENSES. In accordance with Section 14.4 of the Secured
Credit Agreement, Borrower agrees to pay on demand all fees, costs and expenses
incurred by Agent and the Lenders in connection with the preparation, execution
and delivery of this Agreement.
Delivered at Rolling Meadows, Illinois as of the day and year first above
written.
PLATINUM ENTERTAINMENT, INC.
as Borrower:
By: /s/ Xxxxxx Xxxxxxx
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Name Printed: Xxx Xxxxxxx
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Its: Chief Operating Officer
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FIRST SOURCE FINANCIAL LLP,
as a Lender and as Agent
By: First Source Financial, Inc.,
Its: Manager
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name Printed: Xxxxxxx X. Xxxxxx
--------------------
Its: Senior Vice President
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LEXICON MUSIC, INC., as Guarantor
By: /s/ Xxxxxx Xxxxxxx
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Name Printed: Xxx Xxxxxxx
--------------------
Its: Chief Operating Officer
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PEG PUBLISHING, INC., as Guarantor
By: /s/ Xxxxxx Xxxxxxx
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Name Printed: Xxx Xxxxxxx
--------------------
Its: Chief Operating Officer
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ROYCE PUBLISHING, INC., as Guarantor
By: /s/ Xxxxxx Xxxxxxx
------------------------------
Name Printed: Xxx Xxxxxxx
--------------------
Its: Chief Operating Officer
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JUSTMIKE MUSIC, INC., as Guarantor
By: /s/ Xxxxxx Xxxxxxx
------------------------------
Name Printed: Xxx Xxxxxxx
--------------------
Its: Chief Operating Officer
-----------------------------
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