EXHIBIT 99.4
AMENDMENT NUMBER ONE TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NUMBER ONE TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT ("Amendment"), is entered into as of September 24, 1997, between
FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), with a
place of business located at 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000-0000, and CHILDREN'S BROADCASTING CORPORATION, a
Minnesota corporation ("Borrower"), with its chief executive office located at
000 Xxxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000.
WHEREAS, Borrower and Foothill are parties to that certain Amended and
Restated Loan and Security Agreement, dated as of July 1, 1997 (the "Loan
Agreement");
WHEREAS, Borrower has requested that Foothill make an additional term
loan in the amount of $5,800,000 (the "Supplemental Term Loan"), and the
proceeds of such Supplemental Term Loan will be used in part to pay Foothill the
amendment fee described in SECTION 8(c) of this Amendment. In addition,
Borrower will use an amount not to exceed $2,750,000 of the proceeds of the
Supplemental Term Loan for the acquisition of more stock of Harmony;
WHEREAS, Borrower and Foothill have agreed to combine the term loans
previously made by Foothill to Borrower and the Supplemental Term Loan into a
single term loan that will repaid by Borrower 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 adding the
following new defined terms in alphabetical order:
"ACCELERATION EVENT" means one or more of the following: (a) Borrower
fails to obtain approval from the FCC, on or before December 31, 1997, of the
314 filings in connection with the application by Borrower of transfer of
control of Borrower to Global,
(Page 29 of 57 Pages)
(b) Borrower fails to obtain a fairness opinion issued by a nationally
recognized investment bank reasonably acceptable to Foothill of the fairness,
from a financial point of view, of the consideration provided by Global in the
proposed sale of Borrower to Global on or before October 31, 1997, (c) Borrower
fails to prepare a proxy to its shareholders in connection with the proposed
sale of Borrower to Global (the "Proxy") on or before October 31, 1997, (d)
Borrower fails to submit the Proxy to the Securities and Exchange Commission on
or before October 31, 1997, (e) Borrower fails to mail the Proxy to the
shareholders of Borrower on or before November 30, 1997, and (f) Borrower fails
to conduct a meeting of its shareholders on or before December 31, 1997, at
which the shareholders of Borrower approve of the proposed sale of Borrower to
Global.
"AMENDMENT DATE" means the date of the making of the Supplemental Term
Loan on or after the first date written above.
"GLOBAL" means Global Broadcasting Company.
"HARMONY STOCK VALUE" means as of the date of measurement, the average
per share trading price of the common stock of Harmony of the previous thirty
(30) calendar days MULTIPLIED by the number of shares of Harmony that Borrower
has pledged to Foothill.
"SUPPLEMENTAL TERM LOAN" shall have the meaning ascribed to such term
in the recitals of this Amendment.
"TERM LOAN" has the meaning ascribed to such term in SECTION 2.2(A)
hereof.
"TERM LOAN COMMITMENT" means $22,500,000.
"THIRD WARRANT" means a warrant agreement respecting 200,000 shares of
Borrower's common stock, in form and substance reasonably satisfactory to
Foothill.
"VCOC LETTER" means a letter agreement among Borrower, Guarantors, and
Foothill's Participants that meets the Venture Capital Operating Company
requirements and that is in form and substance reasonably satisfactory to
Foothill.
2. 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 date hereof, Foothill has agreed to make the Supplemental Term Loan to
Borrower in accordance with the terms hereof. Collectively, the Supplemental
Term Loan and the prior terms loans made by Foothill to Borrower shall be known
as the "Term Loan."
(Page 30 of 57 Pages)
(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 Foothill gives Borrower notice that an Acceleration Event
has occurred, 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
----------------------
3/31/98 $ 500,000
----------------------
6/30/98 $5,000,000
----------------------
9/30/98 $2,000,000
----------------------
12/31/98 $2,000,000
----------------------
3/31/99 $2,000,000
----------------------
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
----------------------
----------------------
In the event that an Acceleration Event occurs and Foothill gives
notice to Borrower of the same, 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:
(Page 31 of 57 Pages)
----------------------
----------------------
DATE INSTALLMENT
----------------------
3/31/98 $ 500,000
----------------------
6/30/98 $5,000,000
----------------------
9/30/98 $4,000,000
----------------------
12/31/98 $3,000,000
----------------------
3/31/99 $2,000,000
----------------------
6/30/99 $2,000,000
----------------------
9/30/99 $2,000,000
----------------------
12/31/99 $2,000,000
----------------------
3/31/00 $1,000,000
----------------------
6/30/00 $ 500,000
----------------------
9/30/00 $ 500,000
----------------------
----------------------
3. SECTION 2.6(a) of the Loan Agreement is hereby amended and
restated in its entirety as follows:
"Interest Rate. From and after the Amendment Date, all Obligations
shall bear interest at a per annum rate of 3.75 percentage points
above the Reference Rate."
4. SECTION 2.6(c) of the Loan Agreement is hereby amended and
restated in its entirety as follows:
"Default Rate. Upon the occurrence and during the continuation of an
Event of Default, all Obligations shall bear interest at a per annum
rate of 6.75 percentage points above the Reference Rate."
5. The following shall be added to the end of SECTION 4.1 of the
Loan Agreement:
"Notwithstanding the foregoing, in the event that Borrower wishes to
dispose of an individual radio station, Foothill has established
minimum release amounts for the individual radio stations as set forth
on SCHEDULE 4.1. In any event, the sufficiency of consideration for
an individual radio station will be determined by Foothill on a case
by case basis."
(Page 32 of 57 Pages)
6. The following SECTION 6.21 is hereby added to the Loan Agreement
and shall provide in its entirety as follows:
"6.21 HARMONY STOCK VALUE. Borrower shall maintain a minimum
amount of Harmony stock pledged to Foothill such that the Harmony Stock Value is
not less than $2,600,000, provided, however, that if Borrower fails to maintain
such minimum Harmony Stock Value, Borrower may cure such condition by pledging
to Foothill additional stock of Harmony or other collateral reasonably
satisfactory to Foothill within twenty (20) days of the first date on which the
Harmony Stock Value fell below such minimum amount."
7. The following SECTION 8.15 is hereby added to the Loan Agreement
and shall provide in its entirety as follows:
"8.15 If Borrower or any Guarantor fails or neglects to perform,
keep, or observe any term, provision, covenant, or agreement contained in the
VCOC Letter and applicable to it, if such failure or neglect continues for
twenty (20) days following the date that Foothill gives notice to such Person."
8. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AMENDMENT. The
effectiveness of this Amendment and the obligation of Foothill to make the
Supplemental Term Loan is subject to the fulfillment, 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 the Third Warrant and such
Third Warrant shall be duly executed, and in full force and effect;
(c) Foothill shall have received an amendment fee of $350,000
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; and
(d) Foothill shall have received the VCOC Letter and such VCOC
Letter shall be duly executed, and in full force and effect.
9. CONDITION SUBSEQUENT. As a condition subsequent to the
effectiveness of this Amendment, immediately upon the acquisition or receipt of
stock of Harmony and not later than twenty (20) days following the Amendment
Date, Borrower shall deliver an amendment to the Stock Pledge Agreement to
Foothill by which Borrower pledges 1,707,961 shares of Harmony owned by Borrower
to Foothill.
10. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Foothill that (a) the execution, delivery, and performance of this
Amendment,
(Page 33 of 57 Pages)
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.
11. 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.
12. EFFECT ON LOAN AGREEMENT. The Loan Agreement, as amended hereby,
shall be and remain in full force and effect in accordance with its respective
terms and hereby is ratified and confirmed in all respects. The execution,
delivery, and performance of this Amendment shall not operate as a waiver of or,
except as expressly set forth herein, as an amendment, of any right, power, or
remedy of Lender under the Loan Agreement, as in effect prior to the date
hereof.
13. 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.
(Page 34 of 57 Pages)
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/ Xxxxxx XxXxxxxxxx
---------------------------------------------------
Title: Senior Vice President
-----------------------------------------------
CHILDREN'S BROADCASTING CORPORATION, a
Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
----------------------------------------------------
Title: Chief Operating Officer
------------------------------------------------
(Page 35 of 57 Pages)
CONSENT, RATIFICATION, AND REAFFIRMATION BY GUARANTORS
Each of the undersigned Guarantors hereby consents to the execution,
delivery, and performance of the foregoing Amendment Number One 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/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
CHILDREN'S RADIO OF NEW YORK, INC.,
a New Jersey corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
CHILDREN'S RADIO OF MINNEAPOLIS, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
(Page 36 of 57 Pages)
CHILDREN'S RADIO OF GOLDEN VALLEY, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
CHILDREN'S RADIO OF MILWAUKEE, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
CHILDREN'S RADIO OF DENVER, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
CHILDREN'S RADIO OF KANSAS CITY, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
(Page 37 of 57 Pages)
CHILDREN'S RADIO OF DALLAS, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
CHILDREN'S RADIO OF HOUSTON, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
CHILDREN'S RADIO OF PHILADELPHIA, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
CHILDREN'S RADIO OF DETROIT, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
(Page 38 of 57 Pages)
CHILDREN'S RADIO OF CHICAGO, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
CHILDREN'S RADIO OF PHOENIX, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
WWTC-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
KYCR-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
(Page 39 of 57 Pages)
WZER-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
KKYD-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
KCNW-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
KAHZ-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
(Page 40 of 57 Pages)
KTEK-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
WPWA-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
WCAR-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
WJDM-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
(Page 41 of 57 Pages)
KPLS-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
WAUR-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
KIDR-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Chief Operating Officer
--------------------------------
(Page 42 of 57 Pages)
