<PAGE>

                                                                  Exhibit 10.1.4

                                                                   June 25, 1999

CONGRESS FINANCIAL CORPORATION (NORTHWEST)
One Main Place, 101 Southwest Main
Suite 725
Portland, Oregon  97204

          Re:  Amendment No. 4 to Loan and Security Agreement
               ----------------------------------------------

Ladies and Gentlemen:

     CONGRESS FINANCIAL CORPORATION (NORTHWEST) ("Lender")  and VALLEY MEDIA,
INC., a Delaware corporation ("Borrower"), have entered into certain financing
arrangements pursuant to the Loan and Security Agreement, dated as of May 21,
1998, by and between Lender and Borrower (as amended, the "Loan Agreement") and
all other Financing Agreements at any time executed and/or delivered in
connection therewith or related thereto.  All capitalized terms used herein
shall have the meaning assigned thereto in the Loan Agreement, unless otherwise
defined herein.

     Borrower has requested that Lender amend certain provisions of the Loan
Agreement (a) with respect to the Interest Rate, (b) with respect to the unused
line fee set forth in Section 3.4 of the Loan Agreement and (c) to provide for
certain Loans, within the Maximum Credit, the proceeds of which shall be used by
Borrower to purchase certain Equipment, and Lender is willing to agree to the
foregoing, on and subject to the terms and conditions contained in this
Amendment No. 4 to Loan and Security Agreement (this "Amendment").

     In consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties hereto, the parties hereto hereby agree as follows:

     1.   Additional Definitions.  Section 1 of the Loan Agreement is hereby
          ----------------------
amended by adding thereto the following defined terms having the following
subsection designation in Section 1:

          "1.46 "Capex Line Loans" shall have the meaning set forth in Section
          2.5 hereof."

          "1.47 "Capex Line Sublimit" shall mean $8,000,000."

          "1.48 "Eligible Equipment" shall mean Equipment that meets all of the
following criteria:

                                       1
<PAGE>

          (a) the Equipment shall be described by model, make, manufacturer,
          serial number and/or such other identifying information as may be
          appropriate, as determined by Lender, in a schedule to be submitted by
          Borrower to Lender; (b) Lender shall have a perfected first-and-only
          lien on and security interest in such Equipment; (c) such Equipment
          shall be located at premises owned or leased by Borrower and which, in
          the case of the premises owned by Borrower is not subject to a
          mortgage in favor of any mortgagee other than Lender or is the subject
          of a mortgagee's waiver in favor of, and satisfactory to, Lender, and,
          in the case of premises leased by Borrower, is the subject of a
          landlord's waiver in favor of, and satisfactory to, Lender; (d) such
          Equipment is not a fixture; (e) such Equipment is acceptable to Lender
          as Collateral; and (f) Borrower shall have delivered to Lender a copy
          of a bill of sale, invoice or other instrument evidencing that the
          vendor of such Equipment has transferred good and absolute title
          thereto to Borrower for the Equipment Purchase Price set forth therein
          and, if applicable, any deferred payment terms given to Borrower in
          connection with such sale.

The criteria for Eligible Equipment shall be subject to Lender's continuing
satisfaction and may be revised by Lender from time-to-time in its sole
judgment.  Any Equipment that is not Eligible Equipment shall nevertheless be
and remain at all times part of the Collateral (subject to the provisions of
Section 5 of this Agreement)."

          "1.49 "Equipment Purchase Price" shall mean, with respect to the
purchase by Borrower of an item of Eligible Equipment, the net cash amount
actually paid to acquire title to such item, net of all incentives, trade-in
allowances, discounts and rebates, and exclusive of freight, delivery charges,
installation costs and charges, software costs, charges and fees, warranty
costs, taxes, insurance and other incidental costs or expenses and all indirect
costs or expenses of any kind."

     2.   Amendment of Definitions. (a) Clause (a) of the definition of
          ------------------------
"Interest Rate"  set forth in Section 1.26 is hereby deleted in its entirety and
the following is hereby substituted therefor:

               "(a) as to Prime Rate Loans, commencing as of the date hereof
          through and including June 30, 1998, a rate equal to eight and one-
          half (8-1/2%) percent; and thereafter, for any given month, (i) if the
          Monthly Excess Availability for the immediately preceding calendar
          month is equal to or greater than $50,000,000, a rate equal to one-
          quarter (1/4%) percent per annum below the Prime Rate, (ii) if the
          Monthly Excess Availability for the immediately preceding calendar
          month is equal to or greater than $35,000,000, but less than
          $50,000,000, a rate equal to the Prime Rate, (iii) if the Monthly
          Excess Availability for the immediately preceding calendar month is
          equal to or greater than $25,000,000, but less than

                                       2
<PAGE>

          $35,000,000, a rate equal to the Prime Rate, (iv) if the Monthly
          Excess Availability for the immediately preceding month is equal to or
          greater than $10,000,000, but less than $25,000,000, a rate equal to
          one-quarter (1/4%) percent per annum in excess of the Prime Rate, and
          (v) if the Monthly Excess Availability for the immediately preceding
          calendar month is less than $10,000,000, a rate equal to one-half
          (1/2%) percent per annum in excess of the Prime Rate, and ..."

               (b) Section 1.30 of the Loan Agreement is hereby deleted in its
          entirety and the following is hereby substituted therefor:

               "1.30 "Loans" shall mean the Revolving Loans and the Capex
               Loans."

     3.   Capex Loans.  The following new Section is hereby added to the Loan
          -----------
Agreement as Section 2.5 thereof:

               "Section 2.5   Capex Line Loans.  In addition to all other loans,
                              ----------------
          advances and other financial accommodations to be made by Lender to
          Borrower pursuant to this Agreement and subject to the terms and
          conditions of this Agreement, Lender agrees to make loans to Borrower,
          upon Borrower's written request, for the purpose of purchasing
          Eligible Equipment (each, a "Capex Loan"). Each Capex Loan requested
          shall be in an amount of not less than $1,000,000 and shall not exceed
          80% (or such lesser percentage as may be specified by Lender from time
          to time by written notice to Borrower) of the Equipment Purchase Price
          of the Eligible Equipment to be purchased with the proceeds of such
          Capex Loan, provided that, (i) the aggregate cumulative amount of all
                      -------- ----
          Capex Loans made hereunder shall not exceed the Capex Line Sublimit;
          (ii) the Capex Loans, once repaid, may not be reborrowed hereunder;
          and (iii) Lender shall not be obligated to fund any particular Capex
          Loan to Borrower unless Lender is satisfied, in its sole judgment and
          based on such actual and pro forma financial information as Lender may
          request, that no Event of Default exists at the time of and after
          giving effect to such Capex Loan.  Borrower shall request each Capex
          Loan by notice in writing to Lender's representative responsible for
          Borrower's account not less than ten (10) Business Days prior to the
          requested date of disbursement of such Capex Loan, and Borrower shall
          provide Lender with such information and documents regarding such
          Capex Loan and the Eligible Equipment to be financed thereby as Lender
          may request.  Each Capex Loan to Borrower shall be repaid in
          successive equal monthly installments of principal based on a sixty
          (60) month amortization, with the first such installment being due and
          payable on the first day of the first calendar month immediately
          following the calendar month in which such Capex Loan is made.  The
          entire unpaid principal balance of each Capex Loan shall, at the
          option of Lender, be due and payable upon the occurrence of

                                       3
<PAGE>

          an Event of Default but in any event shall be immediately due and
          payable upon the termination of this Agreement. Interest shall accrue
          on the unpaid principal amount of each Capex Loan at the Interest Rate
          and shall be paid in accordance with Section 3.1 hereof."

     4.   Reduction in Basis for Calculation of Unused Line Fee.  Section 3.4 of
          -----------------------------------------------------
the Loan Agreement is hereby  deleted in its entirety and the following is
hereby substituted therefor:

          "3.4 Unused Line Fee.  Borrower shall pay to Lender monthly, while
               ---------------
          this Agreement is in effect and for so long thereafter as any of the
          Obligations are outstanding, an unused line fee at a rate equal to
          three-eighths (3/8%) percent per annum calculated upon the amount by
          which the amount equal to the Applicable Percentage (as defined below)
          multiplied by the Maximum Credit exceeds the average daily principal
          balance of the outstanding Revolving Loans and Letter of Credit
          Accommodations during the immediately preceding such month (or part
          thereof), which fee shall be payable on the first of each month in
          arrears. For purposes of this Section 3.4, "Applicable Percentage"
          means, for any month, (a) if the Monthly Excess Availability for the
          month immediately preceding such month was at least $50,000,000,
          seventy (70%) percent, and (b) if the Monthly Excess Availability for
          the month immediately preceding such month was less than $50,000,000,
          eighty (80%) percent."

     5.   Representations, Warranties and Covenants.  In addition to the
          -----------------------------------------
continuing representations, warranties and covenants heretofore made by Borrower
to Lender pursuant to the Loan Agreement and the other Financing Agreements,
Borrower hereby represents, warrants and covenants with and to Lender as follows
(which representations, warranties and covenants are continuing and shall
survive the execution and delivery of this Amendment and shall be incorporated
into and made a part of the Financing Agreements):

          (a)  No Event of Default exists on the date of this Amendment (after
          giving effect to the Amendments to the Loan Agreement made by this
          Amendment); and

          (b) This Amendment has been duly executed and delivered by Borrower
          and is in full force and effect as of the date hereof, and the
          agreements and obligations of Borrower contained herein constitute its
          legal, valid and binding obligations enforceable against Borrower in
          accordance with their respective terms.

                                       4
<PAGE>

     6.   Conditions Precedent.  This Amendment shall not become effective
          --------------------
unless all of the following conditions precedent have been satisfied in full, as
determined by Lender:

          (a)  The receipt by Lender of an original of this Amendment, duly
          authorized, executed and delivered by Borrower; and

          (b) as of the date of this Amendment, no Event of Default shall have
          occurred and be continuing and no event shall have occurred or a
          condition be existing and continuing which, with notice or passage of
          time or both, would constitute an Event of Default.

     7.   Effect of this Amendment.  Except as modified pursuant hereto, no
          ------------------------
other changes or modifications to the Loan Agreement and the other Financing
Agreements are intended or implied and in all other respects the Loan Agreement
and the other Financing Agreements are hereby specifically ratified, restated
and confirmed by all parties hereto as of the effective date hereof.  To the
extent of any conflict between the terms of this Amendment and the Loan
Agreement or any of the other Financing Agreements, the terms of this Amendment
shall control.  The Loan Agreement and this Amendment shall be read and
construed as one agreement.

     8.   Further Assurances.  At Lender's request, Borrower shall execute and
          ------------------
deliver such additional documents and take such additional actions as Lender
reasonably requests to effectuate the provisions and purposes of this Amendment
and to protect and/or maintain perfection of Lender's security interests in and
liens upon the Collateral.

     9.   Governing Law.  The validity, interpretation and enforcement of this
          -------------
Amendment in any dispute arising out of the relationship between the parties
hereto, whether in contract, tort, equity or otherwise shall be governed by the
internal laws of the State of California (without giving effect to principles of
conflicts of law).

     10.  Binding Effect.  This Amendment shall be binding upon and enure to the
          --------------
benefit of each of the parties hereto and their respective successors and
assigns.

     11.  Counterparts.  This Amendment may be executed in any number of
          ------------
counterparts, but all of such counterparts when executed shall together
constitute one and the same Agreement.  In making proof of this Amendment, it
shall not be necessary

                                       5
<PAGE>

to produce or account for more than one counterpart thereof signed by each of
the parties hereto.

                                    Very truly yours,

                                    VALLEY MEDIA, INC.


                                    By:      /s/ Donald E. Rose
                                             ------------------

                                    Title:   Treasurer
                                             ---------


AGREED:

CONGRESS FINANCIAL CORPORATION (NORTHWEST)

By:     /s/ Rodney S. Davis
        -------------------

Title:  First Vice President
        --------------------

                                       6