EXHIBIT 4(e)
FOURTH MODIFICATION AGREEMENT
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FOURTH MODIFICATION AGREEMENT ("AGREEMENT") ENTERED INTO AS OF THE 16TH DAY OF
MARCH, 2001 BY AND BETWEEN KABLE NEWS COMPANY, INC., AN ILLINOIS CORPORATION
("BORROWER"), AMREP CORPORATION, AN OKLAHOMA CORPORATION ("PARENT"), KABLE NEWS
EXPORT, LTD, A DELAWARE CORPORATION, KABLE NEWS COMPANY OF CANADA, LTD, AN
ONTARIO, CANADA CORPORATION, KABLE NEWS INTERNATIONAL, INC., A DELAWARE
CORPORATION, KABLE FULFILLMENT SERVICES OF OHIO, INC., A DELAWARE CORPORATION,
DISTRIBUNET INC., A DELAWARE CORPORATION AND MAGAZINE CONNECTION INC., A
DELAWARE CORPORATION (COLLECTIVELY REFERRED TO HEREIN AS "SUBSIDIARIES" AND
BORROWER, PARENT AND SUBSIDIARIES COLLECTIVELY REFERRED TO HEREIN AS "BORROWING
PARTIES"), AND AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO INDIVIDUALLY
AND AS AGENT ("AGENT") FOR HELLER FINANCIAL, INC. ("HELLER"), OLD KENT BANK
("OLD KENT"), NATIONAL CITY BANK OF MICHIGAN/ILLINOIS ("NATIONAL CITY") AND
FIRST BANK ("FIRST BANK") (AGENT, HELLER, OLD KENT, NATIONAL CITY AND FIRST BANK
COLLECTIVELY REFERRED TO HEREIN AS "LENDERS")
W I T N E S S E T H
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WHEREAS, Borrower has executed that certain Loan Agreement dated September
15, 1998 as modified by that certain Modification Agreement dated July 7, 1999,
that certain Second Modification Agreement dated June 29, 2000 and that certain
Third Modification Agreement dated December 15, 2000 (the "Loan Agreement")
relating to certain Loans ("Loans") made by Lenders to Borrower, to wit, a
certain Forty Million and No/100 ($40,000,000.00) Dollar Secured Revolving
Credit Facility, a certain One Million Two Hundred Thousand and No/100
($1,200,000.00) Dollar Secured Term Loan and a certain One Million Five Hundred
Thousand and No/100 ($1,500,000.00) Dollar Secured Term Loan; and
WHEREAS, the Loans are evidenced by Notes (the "Notes") executed by
Borrower and delivered to the Lenders; and
WHEREAS, in connection with the Loans, Borrower and each Subsidiary have
executed and delivered certain Security Agreements ("Security Agreements"); and
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WHEREAS, in connection with the Loans, Borrower has executed and delivered
that certain Trademark Collateral Assignment and Security Agreement ("Trademark
Assignment"); and
WHEREAS, in connection with the Loans, Parent and each Subsidiary have
executed and delivered those certain Guaranties ("Guaranties")'; and
WHEREAS, in connection with the Loans, Parent has executed and delivered
that certain Stock Pledge Agreement ("Stock Pledge") (the Loan Agreement, the
Notes, Security Agreements, Trademark Assignment, Guaranties and Stock Pledge
all collectively referred to herein as the "Loan Documents"); and
WHEREAS, Borrower has failed to comply with Section 6.24.2 of the Loan
Agreement (the "Financial Covenant Non Compliance") and has requested Lenders to
waive said Financial Covenant Non Compliance; and
WHEREAS, Lenders are willing to grant a limited waiver of the Financial
Covenant Non Compliance in accordance with the terms and conditions as hereafter
set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual premises of the parties
hereto, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged,
IT IS AGREED:
1. Preambles. The preambles to this Agreement are fully incorporated herein
by this reference thereto with the same force and effect as though restated
herein.
2. Defined Terms. To the extent not otherwise defined herein to the
contrary, all capitalized terms and/or phrases used in this Agreement shall have
the respective meanings assigned to them in the Loan Documents.
3. Limited Waiver of Non-Compliance. Borrowing Parties and Lenders hereby
agree that in connection with Section 6.24.2 of the Loan Agreement which reads:
"6.24.2 Consolidated Cash Flow Coverage. The Borrower will from the
fiscal quarter beginning May, 1998 and at all times thereafter
maintain a Consolidated Cash Flow Coverage Ratio, measured at the end
of each fiscal year quarter calculated by taking the sum of the
numerators of the Consolidated Cash Flow Coverage Ratio for the fiscal
quarter then ending and the immediately three preceding fiscal
quarters and dividing such amount by the sum of the denominators of
the Consolidated Cash Flow Coverage Ratio for the fiscal quarter then
ending and the immediately three preceding fiscal quarters with the
resultant ratio being not less than 1.00 to 1.00."
that to the extent Borrower and its Subsidiaries have not been in compliance
with the Consolidated Cash Flow Coverage Ratio, as previously stated and
described in Section 6.24.2 of the Loan Agreement, for the fiscal quarter ending
January 31, 2001, said Financial Covenant Non-Compliance is hereby waived by the
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Lenders. The waiver contained in this Paragraph is limited to the fiscal quarter
ending January 31, 2001 only and is not intended nor does it apply to any other
fiscal quarter subsequent thereto.
4. Conditions to Limited Waiver of Financial Covenant Non-Compliance. In
consideration of Lenders waiving the Financial Covenant Non-Compliance as set
forth in Paragraph 3 hereof, Borrowing Parties hereby covenant and agree with
Lenders that:
(a) Contemporaneously with the execution of this Agreement there shall
be paid to Agent for the ratable benefit of the Lenders the sum of Thirty
Seven Thousand Five Hundred and No/100 ($37,500.00) Dollars (the "Waiver
Fee").
(b) By no later than March 23, 2001, Borrower shall deliver to Agent
written evidence that Borrower has engaged a financial consultant (the
"Consultant") acceptable to Lenders to review the financial condition and
business operations of Borrower and the Subsidiaries. Borrowing Parties, by
their execution of this Agreement, hereby expressly agree that all
findings, recommendations, reports and other documents prepared by the
Consultant may be disclosed and delivered to Agent and the other Lenders by
the Consultant and that the Consultant may at all times discuss with Agent
the status and results of its review.
(c) Parent shall use its best efforts to, prior to May 1, 2001,
acquire from Amrepco, Inc., a Colorado corporation ("Amrepco"), and
thereafter pledge (the "Real Estate Contract Pledge") to Agent for the
ratable benefit of the Lenders all right title and interest of Amrepco
under that certain Agreement of Purchase and Sale dated February 2001
presently being negotiated between Amrepco, as seller, and Adare Homes
Bradbury Ranch, LLC., a Colorado limited liability company, as buyer (the
"Real Estate Contract") relating to the sale of certain real estate located
in the County of Douglas, State of Colorado (the "Colorado Real Estate") as
well as certain water credits both as more fully described in the Real
Estate Contract. Said Real Estate Contract Pledge:
i) shall be evidenced by the execution of such documents as may
be reasonably required by Agent and its counsel;
ii) shall provide for a first lien on Parent's right, title and
interest under the Real Estate Contract; and
iii) shall be given to secure all liabilities of Parent under the
Guaranty executed by Parent, but only to the extent of the amount
equal to the unpaid principal balance of the Parent Note (as defined
in Paragraph 4(f)(i) hereof); it being understood that upon payment in
full of the unpaid principal of the Parent Note, the Real Estate
Contract Pledge shall be extinguished.
(d) If the Real Estate Contract is not executed by April 2, 2001,
Parent shall then use its best effort, to acquire from Amrepco, prior to
May 1, 2001, all of Amrepco's right, title and interest in the Colorado
Real Estate and grant and deliver to Agent for the ratable benefit of
Lenders a mortgage (the "Mortgage") in a form and content acceptable to
Agent and its counsel encumbering the Colorado Real Estate and securing the
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liabilities of Parent under the Guaranty executed by Parent, but only to
the extent of the amount equal to the unpaid principal balance of the
Parent Note (as defined in Paragraph 4(f)(i) hereof); it being understood
that upon payment in full of the unpaid principal of the Parent Note, the
Mortgage shall be extinguished.
(e) By no later than May 1, 2001, Borrowing Parties will submit to
Agent a written business plan and debt restructuring plan (the "Business
and Debt Plan") in a form and content acceptable to Lenders in their sole
and absolute discretion.
(f) Contemporaneously with the execution of this Agreement, Borrower
shall execute and deliver to Agent for the ratable benefits of Lenders:
i) a Pledge Agreement (the "Note Pledge Agreement") pledging and
granting to Agent for the ratable benefit of the Lenders a security
interest in that certain note ("Parent Note") in the original
principal amount of Four Million Four Hundred Thousand and No/100
($4,400,000.00) Dollars payable to Borrower and executed by Parent;
and
ii) the original Parent Note endorsed by Borrower to Agent; and
(g) The Loan Agreement and the terms and conditions thereof shall be
deemed modified as set forth in Paragraph 5 hereof.
It is further agreed that:
(v) Notwithstanding whether a Default exists, if at any time any
payments of principal are received by Borrower under the Parent Note
("Parent Note Payments"): (i) Borrower shall immediately deliver said
Parent Note Payments to Agent to be applied ratably for the benefit of all
Lenders to reduce the then outstanding principal balance of all Floating
Rate Advances and (ii) the Revolving Loan Commitment shall be permanently
reduced to an amount equal to the amount of the Revolving Loan Commitment
as set forth in paragraph 5 hereof less the amount of all Parent Note
Payments; and
(w) Notwithstanding whether a Default exists, or whether the Parent
has been able to grant the Real Estate Contract Pledge or Mortgage, all
sale proceeds received by Parent and/or Amrepco in connection with the sale
under the Real Estate Contract to the extent of and not to exceed Four
Million Four Hundred Thousand and No/100 ($4,400,000.00) Dollars shall be
paid by Parent to Borrower to satisfy the principal balance of the Parent
Note;
(x) In connection with the negotiations relating to the Real Estate
Contract, Parent shall not execute or allow Amrepco, Inc. to execute the
Real Estate Contract, if as a result of said negotiations the net proceeds
to be received by the seller (after allowing all credits to be received by
the buyer) is less than $4,400,000.00 or if the closing date of the sale of
the Colorado Real Estate is after December 31, 2001;
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(y) Upon execution of the final version of the Real Estate Contract, a
fully executed copy of same shall immediately be delivered to Agent; and
(z) In any liquidation of the rights under the Real Estate Contract
pursuant to the Real Estate Contract Pledge or a foreclosure of the
Mortgage on the Colorado Real Estate, the maximum amount which Agent shall
be entitled to receive for its benefit and the ratable benefit of all the
Lenders shall be Four Million Four Hundred Thousand and No/100
($4,400,000.00) Dollars, less the aggregate amount of the Parent Note
Payments delivered to Agent pursuant to clause (v) of the Paragraph 4
hereof.
5. Modification of Loan Agreement. It is hereby agreed that the Loan
Agreement be and hereby is modified as follows effective as of the date of this
Agreement:
(a) In connection with the definition of Eligible Accounts contained
in Article I, it is expressly agreed that the following shall not be
included in Eligible Accounts at any time:
i) all Accounts representing advances due from any Person made
in connection with unbilled magazine titles
ii) all loans made to any publisher of any magazines
iii) all Accounts representing over payments made to any
publisher of any magazines
iv) all Accounts representing postage meter balances
v) all Accounts representing amounts due for supply inventory
purchased by Borrower or Subsidiaries for the benefit of
their customers
vi) all Accounts due from Persons who are not customers of
Borrower or the Subsidiaries
vii) all Accounts due from any Person in which Borrower or any
Subsidiary has an ownership interest
viii)all Accounts due from any Person which has an ownership
interest in Borrower or in any Subsidiary.
(b) The definition of "Revolving Loan Commitment" contained in Article
I is hereby restated to read:
"Revolving Loan Commitment" means that portion of the Aggregate
Commitment equal to Thirty Million and No/100 ($30,000,000.00)
Dollars.
(c) Any and all rights of Borrower under that Loan Agreement to
designate any Advances in connection with the Revolving Loan as Eurodollar
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Advances is hereby terminated. Effective as of March 16, 2001 any future
Advances shall be Floating Rate Advances bearing interest at the Floating
Rate. Upon the expiration of the Interest Period relating to any existing
Eurodollar Advance said Eurodollar Advance shall thereafter be considered
to be a Floating Rate Advance bearing interest at the Floating Rate.
(d) Section 6.1(x) is hereby restated to read: "(x) by no later than
the fifteenth (15th) day and thirtieth (30th) day of each month, during the
term of this Agreement, the Borrower shall deliver to the Agent a
Collateral Report (the "Collateral Report") in the form attached hereto as
Exhibit H.
(e) The following additional sub-paragraph is hereby added to Section
6.2, to wit:
"(xv)There shall be delivered to Agent by April 30, 2001, a
certificate (the "Twelve Month Certificate") showing in
reasonable detail the calculations of the Consolidated Cash Flow
Coverage Ratio for the twelve month period ending March 31,
2001."
(f) In addition to all other Defaults contained in Article VII the
following events shall also constitute a Default under the Loan Agreement:
"7.18 Failure of Borrower, Parent or any Subsidiary to fulfill
any of the terms and conditions contained in that certain Fourth
Modification Agreement dated March 16, 2001 executed by Agent,
Borrower, Parent and Subsidiaries. 7.19 An Event of Default under
that certain Note Pledge Agreement dated March 16, 2001 executed
by Borrower.
7.20 If the Consolidated Cash Flow Coverage Ratio shown in the
Twelve Month Certificate is less than 1.00 to 1.00.
7.21 Disapproval by Lenders of the terms contained in that
certain Business and Debt Plan as defined in and required to be
delivered under that certain Fourth Modification Agreement dated
March 16, 2001 executed by Borrower, Subsidiaries and Lenders."
6. Conditions Precedent. Lenders' execution of the present Agreement and
their agreement to the terms and conditions hereof is expressly conditioned on
the delivery to Agent of the following documents in a form and content
acceptable to Agent and its counsel:
(a) Duplicate counterpart of this Agreement executed by the
Borrowing Parties,
(b) Payment of the Waiver Fee,
(c) A copy of the latest draft of the Real Estate Contract,
(d) The executed Note Pledge Agreement; and
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(e) The original executed Parent Note endorsed by Borrower
to Agent.
(f) A currently dated Collateral Report.
7. Other Loan Documents Modifications. All Loan Documents are hereby deemed
amended and modified to provide that any and all references to any Loan
Documents therein are hereby deemed to be references to said Loan Documents as
modified by this Agreement.
8. Other Documents. At Agent's request, the Borrowing Parties hereby agree
to execute and deliver promptly to Agent such other documents as Agent, in its
reasonable discretion, shall deem necessary or appropriate to evidence the
transactions contemplated herein.
9. Reaffirmation. The Borrowing Parties do hereby reaffirm each and every
covenant, condition, obligation and provision set forth in the Loan Documents,
as modified hereby. The Borrowing Parties hereby restate and reaffirm all of the
warranties and representations contained in the Loan Documents, as modified
hereby, as being true and correct as of the date hereof.
10. References. All references herein to any of the Loan Documents shall be
understood to be to the Loan Documents as modified hereby. All references in any
of the Loan Documents to any other one or more of the Loan Documents shall
hereafter be deemed to be to such document(s) as modified hereby.
11. No Defense, Counterclaims. Each Borrowing Party hereby represents and
warrants to, and covenants with, Lenders that as of the date hereof, (a) each
Borrowing Party has no defenses, offsets or counterclaims of any kind or nature
whatsoever against any Lender with respect to the Loans or any of the Loan
Documents, or any action previously taken or not taken by any Lender with
respect thereto or with respect to any security interest, encumbrance, lien or
collateral in connection therewith to secure the liabilities of each Borrowing
Party, and (b) that the Lenders have fully performed all obligations to each
Borrowing Party which it may have had or has on and of the date hereof.
12. Release. Without limiting the generality of the foregoing, each
Borrowing Party, on its own behalf and on the behalf of its representatives,
partners, shareholders, subsidiaries, affiliated and related entities,
successors and assigns (hereinafter collectively referred to as the "Borrowing
Group" and as to the Borrowing Group, each Borrowing Party represents and
warrants that it has the right, power and authority to waive, release and
forever discharge on behalf of the Borrowing Group, the "Bank Group" as
hereinafter defined) waives, releases and forever discharges each Lender, and
their respective officers, directors, subsidiaries, affiliated and related
companies or entities, agents, servants, employees, shareholders,
representatives, successors, assigns, attorneys, accountants, assets and
properties, as the case may be (together hereinafter referred to as the "Bank
Group") from and against all manner of actions, cause and causes of action,
suits, debts, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, agreements, promises, obligations,
liabilities, costs, expenses, losses, damages, judgments, executions, claims and
demands, of whatsoever kind or nature, in law or in equity, whether known or
unknown, whether or not concealed or hidden, arising out of or relating to any
matter, cause or thing whatsoever, that any of the Borrowing Group, jointly or
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severally, may have had, or now have or that may subsequently accrue against the
Bank Group by reason of any matter or thing whatsoever arising out of or in way
connected to, directly, or indirectly, the Loans and/or any of the Loan
Documents through the date hereof, Each Borrowing Party acknowledges and agrees
that Lenders are specifically relying upon the representations, warranties,
covenants and agreements contained herein and that such representations,
warranties, covenants and agreements constitute a material inducement to enter
into this Agreement.
13. No Custom. This Agreement shall not establish a custom or waive, limit
or condition the rights and remedies of Lenders under the Loan Documents, all of
which rights and remedies are expressly reserved.
14. Reaffirmation of Loan Documents, No Novation. Except as may be
expressly set forth herein to the contrary, the Loan Documents remain
unmodified, and all other terms and conditions thereof remain in full force and
effect. Notwithstanding anything to the contrary contained herein, Borrowing
Parties and Lenders expressly state, declare and acknowledge that this Agreement
is intended only to modify each Borrowing Party's continuing obligations in the
manner set forth herein, and is not intended as a novation of any and all
amounts presently due and owing from any Borrowing Party to Lenders.
15. Captions; Counterparts. The captions used herein are for convenience of
reference only and shall not be deemed to limit or affect the construction and
interpretation of the terms of this Agreement. This Agreement may be signed in
counterparts, each of which shall be deemed an original and all of which shall
be deemed one Agreement.
16. Choice of Law and Severability. This Agreement shall be governed and
construed under the laws of the State of Illinois. If any provision of this
Agreement is held invalid or unenforceable, the remainder of this Agreement will
not be affected thereby and the provisions of this Agreement shall be severable
in any such instance.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
BORROWER:
KABLE NEWS COMPANY, INC.,
an Illinois corporation
By: /s/ Michael P. Duloc
Title: President
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LENDERS: KABLE NEWS INTERNATIONAL, INC., a
Delaware corporation
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO,
Individually and as Agent for all Lenders By: /s/ Michael P. Duloc
Title: President
By: /s/ Susan B. Kruesi
Title: First Vice President
KABLE FULFILLMENT SERVICES OF OHIO,
INC., a Delaware corporation
PARENT:
AMREP CORPORATION, an Oklahoma corporation By: /s/ Bruce Obendorf
Title: Vice President
By: /s/ Peter M. Pizza
Title: Vice President
DISTRIBUNET INC., a Delaware
corporation
SUBSIDIARIES:
By: /s/ Michael P. Duloc
KABLE NEWS EXPORT, LTD, a Delaware
corporation Title: President
By: /s/ Michael P. Duloc
Title: President MAGAZINE CONNECTION INC., a Delaware
corporation
By: /s/ Michael P. Duloc
KABLE NEWS COMPANY OF CANADA LTD,
an Ontario, Canada corporation Title: President
By: /s/Michael P. Duloc
Title: President
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