EXHIBIT 10.12
AMENDMENT NUMBER FOUR TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This AMENDMENT NUMBER FOUR TO AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT ("Amendment"), is entered into as of October 1, 1998, between
FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), with a
place of business located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and CHILDREN'S BROADCASTING CORPORATION, a
Minnesota corporation ("Borrower"), with its chief executive office located at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS, Borrower and Foothill are parties to that certain
Amended and Restated Loan and Security Agreement, dated as of July 1, 1997, as
amended by that certain Amendment Number One to Amended and Restated Loan and
Security Agreement dated as of September 24, 1997, by that certain Amendment
Number Two to Amended and Restated Loan and Security Agreement dated as of March
13, 1998, and by that certain Amendment Number Three to Amended and Restated
Loan and Security Agreement dated as of May 21, 1998 (as so amended, the "Loan
Agreement");
WHEREAS, Borrower has requested that Foothill make an
additional term loan in the approximate amount of $1,000,000 (the "Supplemental
Term Loan No. 4") such that the aggregate outstanding amount under the Term Loan
as of the Amendment Date shall be $25,000,000, and the proceeds of which shall
be used in part (a) to repay the existing Overadvance outstanding under the
revolving credit facility provided for in Section 2.1 of the Loan Agreement, (b)
to establish the supplemental interest payment reserve described in Section 2.2
as amended by this Amendment, and (c) to pay Foothill the amendment fee due in
connection with this Amendment as described in described in Section 2.2 as
amended by this Amendment. Upon repayment of the Overadvance outstanding under
Section 2.1 of the Loan Agreement from the proceeds of Supplemental Term Loan
No. 4, Borrower shall be permitted to use the balance of amounts available under
Section 2.1 for general working capital purposes;
WHEREAS, Foothill has agreed to make Supplemental Term Loan
No. 4 in accordance with the terms of this Amendment; and
WHEREAS, Borrower and Foothill desire to amend the Loan
Agreement as provided in this Amendment, it being understood that no repayment
of the obligations under the Loan Agreement is being effected hereby, but merely
an amendment and restatement in accordance with the terms hereof. All
capitalized terms used herein and not defined herein shall have the meanings
ascribed to them in the Loan Agreement.
NOW, THEREFORE, in consideration of the mutual promises
contained herein, Foothill and Borrower hereby agree as follows:
1. Section 1.1 of the Loan Agreement hereby is amended by (a)
deleting the following defined terms in their entireties: "Amendment Date,"
"Loan Documents," and "Term Loan Commitment", and (b) inserting following
defined terms in alphabetical order:
"Amendment Date" means the date of the making of the Supplemental
Term Loan No. 4 on or after the first date written above.
"Loan Documents" means this Agreement as amended by the Fourth
Amendment, and as otherwise amended, supplemented, modified, or
revised from time to time prior to the Amendment Date, the
Disbursement Letter, the Concentration Account Agreement, the
Mortgages, the Collateral Assignments of Key Leases, the Collateral
Assignments of Tower Leases, the Guaranty, the Guarantor Security
Agreement, the Guarantor Stock Pledge Agreement, the Control
Agreements, the Stock Pledge Agreement, the Trademark Security
Agreement, (if and when executed and delivered pursuant hereto) the
Copyright Security Agreement, any note or notes executed by Borrower
and payable to Foothill, and any other agreement entered into, now or
in the future, in connection with this Agreement.
"Term Loan Commitment" means $25,000,000.
2. Section 1.1 of the Loan Agreement hereby is amended by inserting
following additional defined terms in alphabetical order:
"Supplemental Term Loan No. 4" shall have the meaning ascribed
to such term in the recitals of Amendment Number Four.
"Fourth Amendment" means Amendment Number Four to Loan and
Security Agreement, dated as of October 1, 1998, entered into between
Borrower and Foothill.
3. Paragraph (d) of Section 2.1 of the Loan Agreement is hereby
amended and restated in its entirety as follows:
(d) Amounts borrowed pursuant to this Section 2.1 may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed
at any time during the term of this Agreement.
4. Section 2.2 of the Loan Agreement is hereby amended and restated
in its entirety as follows:
2.2 Term Loan.
(a Foothill previously has made the Term Loan to Borrower. As
of the Amendment Date, Foothill has agreed to make the Supplemental
Term Loan No. 4 to Borrower in accordance with the terms hereof (less
the aggregate amount of any reserves to be established in connection
therewith pursuant to the provisions of Section 2.2(c)).
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Collectively, the Supplemental Term Loan No. 4 and the prior term
loans made by Foothill to Borrower shall be known as the "Term Loan."
(b) The outstanding principal balance and all accrued and unpaid
interest under the Term Loan shall be due and payable upon the
termination of this Agreement, whether by its terms, by prepayment, by
acceleration, or otherwise. All amounts outstanding under the Term
Loan shall constitute Obligations. Unless sooner terminated as
provided herein, Borrower shall repay the Term Loan in quarterly
installments and such installments shall be due and payable on the
following dates in the following amounts:
Date Installment
---- -----------
9/30/98 -0-
10/31/98 $8,000,000
12/31/98 $3,000,000
3/31/99 $3,000,000
6/30/99 $2,000,000
9/30/99 $2,000,000
12/31/99 $2,000,000
3/31/00 $2,000,000
6/30/00 $2,000,000
9/30/00 $1,000,000
(c) Anything to the contrary contained in Section 2.2(a) above
notwithstanding, it is hereby agreed among the parties hereto that
Foothill shall establish a supplementary interest payment reserve
against the Term Loan in the aggregate amount of $300,000, such
reserve to be applied to reduce the amount of proceeds of Supplemental
Term Loan No. 4 otherwise available on the Amendment Date by $300,000
to provide for the payment of a portion of the estimated interest
payments to be due Foothill on Borrower's Obligations as of the end of
each month from the Amendment Date through the earlier of October 31,
1998 or the date on which such supplementary interest payment reserve
is exhausted, such interest payment reserve to be effective and
commence as of the Amendment Date. On the first day of each month
following the Amendment Date until all amounts contained in the
supplementary interest payment reserve are exhausted, additional
proceeds an amount equal to the amount of interest due on Obligations
shall be advanced under Supplemental Term Loan No. 4, reducing the
amount of the supplementary interest payment reserve by a
corresponding amount, and shall be applied to the Loan Account as
payment of interest due on the Obligations in excess of the aggregate
amount of Collections received and applied by Foothill with respect to
interest due on the Obligations in the corresponding period.
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5. Section 7.17 of the Loan Agreement is hereby amended to delete
the proviso at the end of such Section, and to replace such proviso with the
following:
; provided, however, that in no event shall any advance under the
Supplemental Term Loan No. 4 be used to finance, in whole or in part,
directly or indirectly, (1) any Permitted Unrestricted Subsidiary
Acquisition, or (2) to advance, by way of loan, investment or
guaranty, or otherwise, any monies or credit to or for the benefit,
directly or indirectly, of Harmony.
6. Conditions Precedent to Effectiveness of Amendment. The
effectiveness of this Amendment and the obligation of Foothill to make the
Supplemental Term Loan No. 3 is subject to the completion, to the satisfaction
of Foothill and its counsel, of each of the following conditions on or before
the Amendment Date:
(a) Foothill shall have received executed consents and
reaffirmations from each Guarantor, in form and substance satisfactory to
Foothill;
(b) Foothill shall have received an amendment fee of $100,000
which shall be earned in full and non-refundable as of the date hereof. The
payment of such amendment fee shall be paid on the Amendment Date out of the
proceeds of the Supplemental Term Loan No. 4.
7. Forbearance. Foothill and Borrower hereby acknowledge that
certain Events of Default previously disclosed to Foothill by Borrower
(including without limitation those certain Events of Default acknowledged and
disclosed Foothill by Borrower in those certain letters from Borrower to
Foothill, dated as of March 3, 1998 and May 8, 1998) have occurred and are
continuing under the Loan Agreement (the "Current Defaults"). Foothill hereby
agrees to forebear from taking any action or exercising any of its remedies
under the Loan Agreement with respect to the Current Defaults during the period
from October 1, 1998, through and including October 31, 1998; provided, however,
that such forbearance shall apply only to the Current Defaults, shall not apply
to any other Event of Default continuing as of the Amendment Date, or to any
Event of Default that may occur after the Amendment Date. Further, this
forbearance shall not constitute a waiver by Foothill of any of its rights or
remedies under the Loan Agreement, but shall only constitute a limited
forbearance. Furthermore, nothing contained in this letter shall diminish,
prejudice or waive any of Foothill's rights or remedies under the Loan Agreement
or applicable law, and Foothill hereby reserves all such rights and remedies.
Anything contained in the foregoing to the contrary notwithstanding,
Foothill's continued forbearance with respect to the Current Defaults shall be
contingent on Borrower's successful consummation of the sale of certain of
Borrower's radio stations to Catholic Radio Network, LLC ("CRN") pursuant to the
transactions contemplated in the proxy statement with respect to the sale of
such radio stations to CRN (the "Proxy"), in accordance with the approvals
obtained from the holders of Borrower's Stock for such sale requested from the
holders in connection with the Proxy, on or before October 31, 1998, and
Borrower's failure to achieve the foregoing on or before the date set forth
above shall terminate Foothill's agreement to the forgoing forbearance from and
after the date of such failure.
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8. Representations and Warranties. Borrower hereby represents and
warrants to Foothill that (a) the execution, delivery, and performance of this
Amendment, are within its corporate powers, have been duly authorized by all
necessary corporate action, and are not in contravention of any law, rule, or
regulation, or any order, judgment, decree, writ, injunction, or award of any
arbitrator, court, or governmental authority, or of the terms of its charter or
bylaws, or of any contract or undertaking to which it is a party or by which any
of its properties may be bound or affected, and (b) the Loan Agreement, as
amended by this Amendment, constitute Borrower's legal, valid, and binding
obligation, enforceable against Borrower in accordance with its terms.
9. Further Assurances. Borrower shall execute and deliver all
agreements, documents, and instruments, in form and substance satisfactory to
Foothill, and take all actions as Foothill may reasonably request from time to
time, to perfect and maintain the perfection and priority of Foothill's security
interests in the Collateral, and to fully consummate the transactions
contemplated under the Loan Agreement and this Amendment.
10. Effect on Loan Documents. The Loan Agreement, as amended hereby,
and the other Loan Documents shall be and remain in full force and effect in
accordance with their respective terms and each hereby is ratified and confirmed
in all respects. Except as expressly set forth herein, the execution, delivery,
and performance of this Amendment shall not operate as a waiver of or as an
amendment of any right, power, or remedy of Foothill under the Loan Agreement or
any other Loan Document, as in effect prior to the date hereof. This amendment
shall be deemed a part of and hereby is incorporated into the Loan Agreement.
11. Miscellaneous.
(a) Upon the effectiveness of this Amendment, each reference in
the Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of
like import referring to the Agreement shall mean and refer to the Loan
Agreement as amended by this Amendment.
(b) Upon the effectiveness of this Amendment, each reference in
the Loan Documents to the "Loan Agreement", "thereunder", "therein", "thereof"
or words of like import referring to the Agreement shall mean and refer to the
Loan Agreement as amended by this Amendment.
(c) This Amendment shall be governed by and construed in
accordance with the laws of the State of California.
(d) This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Amendment by signing
any such counterpart. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile also shall deliver an original executed
counterpart of this Amendment but the failure to deliver an original executed
counterpart shall not affect the
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validity, enforceability, and binding effect of this Amendment.[Remainder of
page intentionally omitted.]
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed as of the date first written above.
FOOTHILL CAPITAL CORPORATION,
a California corporation
By /s/ ▇▇▇▇▇▇ Signrdson
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Title: Vice President
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CHILDREN'S BROADCASTING CORPORATION,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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CONSENT, RATIFICATION, AND REAFFIRMATION BY GUARANTORS
Each of the undersigned Guarantors hereby consents to the
execution, delivery, and performance of the foregoing Amendment Number Four to
Amended and Restated Loan and Security Agreement and agrees, ratifies, and
reaffirms that its obligations as a guarantor with respect to the Loan
Documents, as heretofore amended, and as amended by the foregoing amendment,
remain in full force and effect and are not impaired, diminished, or discharged
in any respect.
Dated as of the date first set forth above:
CHILDREN'S RADIO OF LOS ANGELES, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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CHILDREN'S RADIO OF NEW YORK, INC.,
a New Jersey corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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CHILDREN'S RADIO OF MINNEAPOLIS, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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CHILDREN'S RADIO OF GOLDEN VALLEY, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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CHILDREN'S RADIO OF MILWAUKEE, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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CHILDREN'S RADIO OF DENVER, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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CHILDREN'S RADIO OF KANSAS CITY, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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CHILDREN'S RADIO OF DALLAS, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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CHILDREN'S RADIO OF HOUSTON, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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CHILDREN'S RADIO OF PHILADELPHIA, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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CHILDREN'S RADIO OF CHICAGO, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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CHILDREN'S RADIO OF PHOENIX, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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WWTC-AM, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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KYCR-AM, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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WZER-AM, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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KKYD-AM, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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KCNW-AM, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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KAHZ-AM, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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KTEK-AM, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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WPWA-AM, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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WCAR-AM, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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WJDM-AM, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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KPLS-AM, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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WAUR-AM, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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KIDR-AM, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: COO
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