FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
AND GUARANTY
FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT AND
GUARANTY dated as of September 30, 1996 ("Fourth Amendment") among Alliance
Entertainment Corp. ("Alliance"), AEC Holdings (UK) Limited ("AEC (UK)"), Castle
Communications Limited ("Castle"), each of the BANKS as specified in the Credit
Agreement referred to below, each of the GUARANTORS as specified in the Credit
Agreement referred to below, and THE CHASE MANHATTAN BANK (successor by merger
to The Chase Manhattan Bank, N.A.), as agent for the Banks (in such capacity,
together with its successors, the "Agent"). Alliance, AEC (UK), and Castle are
referred to herein individually as a "Borrower" and collectively as the
"Borrowers".
PRELIMINARY STATEMENT. The Borrowers, the Guarantors, the Banks and the
Agent have entered into a Third Amended and Restated Credit Agreement and
Guaranty dated as of July 25, 1995, as amended by First Amendment to Third
Amended and Restated Credit Agreement and Guaranty dated as of September 30,
1995, as further amended by a Second Amendment to Third Amended and Restated
Credit Agreement and Guaranty dated as of December 31, 1995, and as further
amended by a Third Amendment to Third Amended and Restated Credit Agreement and
Guaranty Dated as of June 30, 1996 (as further modified, amended or supplemented
from time to time, the "Credit Agreement"). Any term used herein shall have the
meaning assigned to such term in the Credit Agreement.
Each of the parties hereto have agreed to amend the Credit Agreement as
hereinafter set forth.
SECTION 1. Amendments to Credit Agreement. The Credit Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, hereby amended as follows;
(1) The following definition is added in its proper alphabetical order:
"Matrix Acquisition" means the acquisition by Alliance of Matrix Software,
Inc. under and pursuant to the terms of that certain Merger Agreement Dated as
of October 11, 1996.
(2) The definition of "Permitted Acquisition" is amended by adding after
"purchase" in the last line thereof the following:
"and (4) the Matrix Acquisition".
(3) The definition of "Permitted Acquisition Amount" is amended in its
entirety to read as follows:
" ' Permitted Acquisition Amount' means (1) during the period from July 1,
1996 to and including October 10, 1996, Four Million Six Hundred Thousand
Dollars ($4,600,000), and (2)
during the period from October 11, 1996 to and including December 31, 1996, up
to Two Million One Hundred Thousand Dollars ($2,100,000) in Cash consideration
in connection with the Matrix Acquisition."
(4) The definition of "Permitted Employee Loans" is amended by deleting all
text after "that," in the fourth line thereof and inserting in its place the
following: ", the aggregate principal amount of all such loans or advances to
all employees outstanding at any time is equal to or less than One Million Six
Hundred Twenty Thousand Dollars ($1,620,000) less an amount equal to the total
of all repayments of such loans or advances made by all employees."
(5) The definition of "Permitted Investment Affiliate Advance" is amended
by deleting all text after "that" in the second line thereof and inserting in
its place the following: " , the aggregate principal amount of all such loans or
advances to Investment Affiliates outstanding at an time is equal to or less
than Twelve Million Five Hundred Thousand Dollars ($12,500,000) less an amount
equal to the total of all repayments of such loans or advances made by all
Investment Affiliates."
(6) The definition of "Permitted Investments" is amended by deleting clause
"(3)" thereof in its entirety.
(7) The definition of "Permitted Investment Amount" is amended in its
entirety to read as follows:
"Permitted Investment Amount" means an amount equal to eight Hundred
Thousand Dollars ($800,000) less an amount equal to the total of all repayments
of Permitted Investments.
(8) Section 8.10, New Restricted Subsidiaries, is amended by adding at the
end thereof the following:
"Notwithstanding the foregoing, no Subsidiary is or can be designated a
Restricted Subsidiary if the assets of or any of the capital stock of such
Subsidiary was acquired by Alliance or any of its Subsidiaries in exchange for
or otherwise through the issuance of capital stock of Alliance or any of its
Subsidiaries."
(9) The financial test set forth in Section 10.02, Consolidated Leverage
Ratio, is deleted for September 30, 1996 and each of the financial tests set
forth in Section 10.03, Consolidated Cash Flow Coverage Ratio, and Section
10.05, Consolidated Minimum Interest Coverage Ratio, are deleted for the four
quarters (taken as a whole) ended September 30, 1996.
SECTION 2. Conditions of Effectiveness. This Fourth Amendment shall become
effective as of the date on which each of the following conditions has been
fulfilled:
(1) This Fourth Amendment. The Borrowers, the Guarantors, the Required
Banks and the Agent shall each have executed and delivered this Fourth
Amendment.
(2) Amendment Fee. Alliance shall have paid to the Agent an amendment fee
in the amount of Two Hundred Forty Thousand Six Hundred Twenty-Five Dollars
($240,625) for the account of the Banks, and the Agent will deliver to each Bank
its Pro Rata Share of such fee.
3. Officer's Certificate. The following statements shall be true and the
Agent shall have received a certificate signed by a duly authorized officer of
Alliance dated the date hereof stating that, after giving effect to this Fourth
Amendment and the transactions contemplated hereby:
(a) The representations and warranties contained in the Credit Agreement
and in each of the other Loan Documents are correct on and as of the date hereof
as though made on and as of such date in all material respects if such
representation and warranty is not subject to a Material Adverse Change
exception, and if such representation and warranty is subject to such an
exception, is correct, and
(b) No Default or Event of Default has occurred and is continuing.
(4) Additional Documentation. The Agent and each Bank shall have received
such other approvals, opinions or documents as the Agent or such Bank may
reasonably request.
SECTION 3. Reference to and Effect on the Loan Documents. (a) Upon the
effectiveness of Section 1 hereof, on and after the date hereof each reference
in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of like import, and each reference in the other Loan Documents to the
Credit Agreement, shall mean and be a reference to the Credit Agreement as
amended hereby.
(b) The execution, delivery and effectiveness of this Fourth Amendment
shall not operate as a waiver of any right, power or remedy of the Agent or any
Bank under any of the Loan Documents, nor constitute a waiver of any provision
of any of the Loan Documents, and, except as specifically provided herein, the
Credit Agreement and each other Loan Document shall remain in full force and
effect and are hereby ratified and confirmed.
SECTION 4. Costs, Expenses and Taxes. Alliance agrees to reimburse the
Agent and each Bank on demand for out-of-pocket costs, expenses and charges
(including without limitation, all fees and charges of external legal counsel
for the Agent and each Bank) incurred by the Agent and each Bank in connection
with the preparation, reproduction, execution and delivery of this Fourth
Amendment and any other instruments and documents to be delivered hereunder. In
addition, Alliance shall pay any and all stamp and other taxes and fees payable
or determined to be payable in connection with the execution and delivery,
filing or recording of this Fourth Amendment and the other instruments and
documents to be delivered hereunder, and agrees to save the Agent and each Bank
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes or fees.
SECTION 5. Governing Law. This Fourth Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 6. Headings. Section headings in this Fourth Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Fourth Amendment for any other purpose.
SECTION 7. Counterparts. This Fourth Amendment may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any party hereto may execute this Fourth Amendment by
signing any such counterpart.
IN WITNESS HEREOF, the parties hereto have caused this Fourth Amendment to
be duly executed as of the day and year first above written.
ALLIANCE ENTERTAINMENT CORP.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Executive Vice President
AEC ONE STOP GROUP, INC.
By
------------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice Chairman, President and
Chief Financial Officer
PASSPORT DISTRIBUTION, INC.
By /s/ Xxxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
CASTLE COMMUNICATIONS LIMITED
By /s/ Xxxxxx X. Xxxxxx
-------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
CASTLE COMMUNICATIONS (U.S.), INC.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
EXECUSOFT, INC.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
CONCORD JAZZ, INC.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
THE JAZZ ALLIANCE, INC.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
PASSPORT MUSIC WORLDWIDE, INC.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
AEC ACQUISITION CORP.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
AEC AMERICAS, INC.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
ALLIANCE VENTURES, INC.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
PREMIER ARTISTS SERVICES, INC.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
PREMIER SIGNATURES, INC.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
FL ACQUISITION CORP.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
DISQUEMUSIC COMMERCIAL IMPORTADORA
LTDA.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
BRASISON DISTRIBUIDORA DE DISCOS
LTDA.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
AEC HOLDINGS (UK) LIMITED
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
CASTLE COMMUNICATIONS (DEUTSCHLAND)
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
THE ST. CLAIR ENTERTAINMENT GROUP
INC.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
A.E. LAND CORP.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
DOJO LIMITED
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
HENDRING LIMITED
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
EASTERN LIGHT PRODUCTIONS LIMITED
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
WHITE METAL MUSIC LIMITED
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
CASTLE COPYRIGHTS LIMITED
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
KAZ RECORDS LIMITED
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
INDEPENDENT NATIONAL DISTRIBUTORS INC.
By /s/ Xxxxxxxxxxx X. Xxxxx
--------------------------------------------------
Name: Xxxxxxxxxxx X. Xxxxx
Title: Executive Vice President
ONE WAY RECORDS, INC.
By /s/
--------------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Executive Vice President
DEJA VU MUSIC, INC.
By /s/
--------------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Executive Vice President
THE CHASE MANHATTAN BANK,
as Bank
By /s/ Xxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
THE CHASE MANHATTAN BANK,
(London Branch) as Bank
By /s/ Xxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
CREDITSTALT CORPORATE
FINANCE, INC.
By /s/ Xxxxxxxx X. Xxxxx
--------------------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Vice President
By /s/ Xxxxx XxXxxx
--------------------------------------------------
Name: Xxxxx XxXxxx
Title: Senior Associate
CREDITANSTALT-BANKVEREIN,
(London Branch)
By /s/ E. Wenusch
--------------------------------------------------
Name: E. Wenusch
Title: Assistant Director
By /s/ M.A. Xxxxxx
--------------------------------------------------
Name: M.A. Xxxxxx
Title: Senior Manager
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Xxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Managing Director
THE FIRST NATIONAL BANK OF CHICAGO
(London Branch)
By /s/ Xxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Managing Director
IBJ XXXXXXXX BANK & TRUST COMPANY
By
--------------------------------------------------
Name:
Title:
NATIONAL BANK OF CANADA
By /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
By /s/ Xxxxxx X. Triseso
--------------------------------------------------
Name: Xxxxxx X. Triseso
Title: Assistant Vice President
EUROPEAN AMERICAN BANK,
By /s/ Xxxxxx Xxxxxxx
--------------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
ABN AMRO BANK N.V.
By /s/ K. Page
--------------------------------------------------
Name: K. Page
Title: Authorized Signatories
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
(London Branch)
By /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
GIROCREDIT BANK
AKTIENGESELLSCHAFT der
SPARKASSEN, Grand Cayman
Island Branch
By /s/ Xxxx Xxxxxx
--------------------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
By /s/
--------------------------------------------------
Name:
Title:
NATIONAL CITY BANK
By /s/ Xxxx Xxxx Xxxx
--------------------------------------------------
Name: Xxxx Xxxx Xxxx
Title: Account Officer
FIRST SOURCE FINANCIAL, LLP.
by FIRST SOURCE FINANCIAL, INC.,
Its Agent
By /s/ Xxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President
THE BANK OF NOVA SCOTIA
By /s/ Xxxxx Xxxxx
--------------------------------------------------
Name: Xxxxx Xxxxx
Title: Senior Relationship Manager
SCOTIABANK (U.K.), LTD.
By /s/ Xxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Relationship Manager
THE CHASE MANHATTAN BANK,
as Agent
By /s/ Xxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
