EXHIBIT 10.40
AMENDMENT NUMBER FIVE TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This AMENDMENT NUMBER FIVE TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT ("Amendment"), is entered into as of October 30, 1998, between
FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), with a
place of business 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, 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,
by that certain Amendment Number Three to Amended and Restated Loan and Security
Agreement dated as of May 21, 1998, and by that certain Amendment Number Four to
Amended and Restated Loan and Security Agreement dated as of October 1, 1998 (as
so amended, the "Loan Agreement");
WHEREAS, Borrower has requested that Foothill (a) revise the scheduled
repayment of the Term Loans, (b) release to Borrower Warrants currently held by
Foothill for the purchase of up to 50,000 shares of the common stock of Borrower
at a strike price of $4.40 per share, and (c) provide for the acknowledgment of
the payment to Foothill of the amendment fee due to Foothill in connection with
this Amendment;
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 on which all conditions precedent to
the Fifth Amendment are satisfied.
"Loan Documents" means this Agreement as amended by the Fifth
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.
2. Section 1.1 of the Loan Agreement hereby is amended by inserting
following additional defined terms in alphabetical order.
"Fifth Amendment" means Amendment Number Five to Loan and Security
Agreement, dated as of October 30, 1998, entered into between Borrower and
Foothill.
3. Section 2.2(b) of the Loan Agreement is hereby amended and restated
in its entirety as follows:
(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 -0-
12/31/98 -0-
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 $1,000,000
9/30/00 $1,000,000
4. Release of Warrants. Upon the effectiveness of this Amendment in
accordance with the provisions of Section 5 of this Amendment, Foothill shall
release and deliver to Borrower Warrants currently held by Foothill for the
purchase of up to 50,000 shares of the common stock of Borrower at a strike
price of $4.40 per share.
5. Conditions Precedent to Effectiveness of Amendment. The
effectiveness of this Amendment 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 $200,000 which
shall be earned in full and non-refundable as of the date hereof. Foothill
hereby acknowledges the receipt of such amendment fee in connection with
Foothill's receipt of $14,700,000, representing a portion of the proceeds of the
sale of the assets of certain of the subsidiaries of Borrower to CRN Operations,
LLC, a Delaware limited liability company ("CRN") on October 30, 1998 (the "CRN
Asset Sale").
(c) Foothill shall have received the original, executed promissory note
delivered to Borrower by CRN as a portion of the consideration delivered to
Borrower on October 30, 1998 in connection with the CRN Asset Sale (the "CRN
Note"), together with a fully executed Collateral Assignment of Rights with
respect to the CRN Note in favor of Foothill, in form and substance satisfactory
to Foothill.
6. 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.
7. 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.
8. 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 deemed a part of and hereby is incorporated into the Loan Agreement.
9. 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 or 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 validity, enforceability, and binding effect of
this Amendment
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 Xxxxxxxxx
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Title Vice President
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CHILDREN'S BROADCASTING
CORPORATION,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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CONSENT, RATIFICATION, AND REAFFIRMATION BY GUARANTORS
Each of the undersigned Guarantors hereby consent to the execution,
delivery, and performance of the foregoing Amendment Number Five 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
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Title Chief Operating Officer
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CHILDREN'S RADIO OF NEW YORK, INC.,
a New Jersey corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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CHILDREN'S RADIO OF
MINNEAPOLIS, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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CHILDREN'S RADIO OF
GOLDEN VALLEY, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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CHILDREN'S RADIO OF
MILWAUKEE, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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CHILDREN'S RADIO OF DENVER, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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CHILDREN'S RADIO OF
KANSAS CITY, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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CHILDREN'S RADIO OF DALLAS, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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CHILDREN'S RADIO OF HOUSTON, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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CHILDREN'S RADIO OF
PHILADELPHIA, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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CHILDREN'S RADIO OF DETROIT, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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CHILDREN'S RADIO OF CHICAGO, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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CHILDREN'S RADIO OF PHOENIX, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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WWTC-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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KYCR-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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WZER-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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KKYD-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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KCNW-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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KAHZ-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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KTEK-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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WPWA-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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WJDM-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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KPLS-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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WAUR-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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KIDR-AM, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxxxxx
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Title Chief Operating Officer
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