Exhibit 4(a)
SIXTH MODIFICATION AGREEMENT
SIXTH MODIFICATION AGREEMENT ("AGREEMENT") ENTERED INTO AS OF THE 28th DAY OF
SEPTEMBER, 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, MAGAZINE CONNECTION INC., A DELAWARE
CORPORATION (COLLECTIVELY THE "ORIGINAL SUBSIDIARIES"), MAGAZINET, L.P., A
DELAWARE LIMITED PARTNERSHIP ("MAGAZINET") AND MAGAZINET MANAGEMENT, L.L.C., A
DELAWARE LIMITED LIABILITY COMPANY ("MANAGEMENT") (MAGAZINET AND MANAGEMENT
COLLECTIVELY REFERRED TO AS THE "NEW SUBSIDIARIES" AND THE ORIGINAL SUBSIDIARIES
AND NEW SUBSIDIARIES 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 ▇▇▇▇▇▇ FINANCIAL, INC. ("▇▇▇▇▇▇"), FIFTH THIRD BANK,
CHICAGO FORMERLY KNOWN AS OLD KENT BANK ("FIFTH THIRD"), NATIONAL CITY BANK OF
MICHIGAN/ILLINOIS ("NATIONAL CITY") AND FIRST BANK ("FIRST BANK") (AGENT,
▇▇▇▇▇▇, FIFTH THIRD, NATIONAL CITY AND FIRST BANK COLLECTIVELY REFERRED TO
HEREIN AS "LENDERS")
W I T N E S S E T H
WHEREAS, Borrower has executed that certain Loan Agreement dated September
15, 1998 as modified by that certain Modification Agreement ("First
Modification") dated July 7, 1999, that certain Second Modification Agreement
("Second Modification") dated June 29, 2000, that certain Third Modification
Agreement ("Third Modification") dated December 15, 2000, that certain Fourth
Modification Agreement ("Fourth Modification") dated March 16, 2001 and that
certain Fifth Modification Agreement ("Fifth Modification") dated June 11, 2001
(the "Loan Agreement") relating to certain Loans ("Loans") made by Lenders to
Borrower, to wit, a certain Forty Million and No/100 Dollar ($40,000,000.00)
Secured Revolving Credit Facility, a certain One Million Two Hundred Thousand
and No/100 Dollar ($1,200,000.00) Secured Term Loan and a certain One Million
Five Hundred Thousand and No/100 Dollar ($1,500,000.00) 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 Original
Subsidiary have executed and delivered certain Security Agreements ("Security
Agreements"); and
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 Original 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,
Notes, Security Agreements, Trademark Assignment, Guaranties, Stock Pledge
Agreement together with the First Modification, Second Modification, Third
Modification, Fourth Modification, Fifth Modification, this Agreement and the
herein defined New Subsidiaries' Security Agreements and New Subsidiaries'
Guaranties are collectively referred to herein as the "Loan Documents"); and
WHEREAS, pursuant to the terms of the Second Modification Lenders consented
to, among other matters, Distribunet Inc. investing in and becoming a limited
partner in Senequier Holdings L.P., a Texas limited partnership ("Senequier");
and
WHEREAS, Borrower, Distribunet Inc. and Magazine Connection Inc. are
desirous of entering into that certain Termination Agreement dated September 28,
2001 (the "Termination Agreement") with both Senequier, Senequier Investment
Management Inc., Mags2Go L.L.C. as well as Magazinet, Management and NewComm
Corporation which among other matters will result in the redemption of all of
the interest held by Distribunet (the "Distribunet Senequier Interest") as a
limited partner in Senequier; and
WHEREAS, the Borrowing Parties have requested Lenders to (i) consent to the
execution of the Termination Agreement and the related documents described
therein as well as (ii) release the lien held by Agent for the ratable benefit
of the Lenders on the Distribunet Senequier Interest; and
WHEREAS, Lenders have agreed to give said consent, release said lien and to
modify the Loan Documents in accordance with the terms of this Agreement
conditioned on the terms contained herein including but not limited to the
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delivery to Lenders of Security Agreements executed by the New Subsidiaries (the
"New Subsidiaries' Security Agreements") and Guaranties executed by the New
Subsidiaries (the "New Subsidiaries' Guaranties").
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. Modification of Loan Agreement. Borrowing Parties and Lenders hereby
agree that effective (the "Effective Time") immediately following the closing
under the Termination Agreement the Loan Agreement be and hereby is modified as
follows:
(a) Magazinet, L.P., a Delaware limited partnership ("Magazinet"), and
Magazinet Management, L.L.C., a Delaware limited liability company
("Management") are hereby added to the definition of "Borrower Entities";
(b) The Security Agreement of even date with this Agreement which
shall be executed at the Effecive Time by Magazinet in favor of Agent for
the ratable benefit of the Lenders as amended from time to time (the
"Magazinet Security Agreement") and the Security Agreement of even date
with this Agreement which shall be executed at the Effective Time by
Management in favor of Agent for the ratable benefit of the Lenders as
amended from time to time (the "Management Security Agreement") are hereby
added to the definition of the "Collateral Documents";
(c) Magazinet and Management are hereby added to the definition of
"Guarantors";
(d) The Guaranty of even date with this Agreement which shall be
executed by Magazinet ("Magazinet Guaranty") and the Guaranty of even date
with this Agreement which shall be executed by Management (the "Management
Guaranty") at the Effective Time are hereby added to the definition of
"Subsidiary Guaranties";
(e) Magazinet and Management are hereby added to the definition of
"Subsidiary Guarantors");
(f) Section 6.21 of the Loan Agreement is hereby restated to read:
"6.21 Business Activities. The Borrower and its Subsidiaries will
not engage in any type of business except (a) the businesses in
which they were engaged on April 30, 1998, including, without
limitation, the distribution of paperbacks, magazines and related
products; product, order and subscription processing and
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fulfillment; customer service; telemarketing and related
services; and (b) supplying magazines and other periodicals to
retail sellers. However, Borrower may become engaged in the
publishing business if such business does not at any time account
for greater than ten percent (10%) of Borrower's revenues on an
annual basis."
Borrowing Parties further agree that the provisions of Section 6.22 of the
Loan Agreement apply with equal force and effect to Magazinet and Management and
that in further consideration of Lenders executing this Agreement Borrower shall
also make available and loan to Magazinet and Management portions of any
Advances relating to the Revolving Loan to be used by Magazinet and Management
for working capital purposes. Magazinet and Management by their execution of
this Agreement hereby join in the Certificate of Acknowledgment and Pledge
attached to the Loan Agreement as if they were an original signatory thereto and
hereby grants a security interest in favor of Borrower in and to all presently
existing and hereafter arising accounts, inventory, equipment, general
intangibles, instruments, investment securities and chattel paper of Magazinet
and Management and the proceeds of all of the foregoing to secure all amounts
advanced and/or lent to them by Borrower pursuant to said Section 6.22. Borrower
by its execution of this Agreement hereby assigns all the foregoing together
with all loans made in connection therewith to Magazinet and Management to Agent
for the ratable benefit of the Lenders to further secure the repayment of the
Obligations.
(g) Section 6.28 is hereby restated to read:
"6.28 Limitations on Investments in Senequier Holdings, L.P. (the
"Partnership"). Notwithstanding anything to the contrary
contained in this Agreement, after September 28, 2001, Borrower
and Subsidiaries of Borrower shall not make any Investments, as
said term is defined in Paragraph 4 of the Second Modification
Agreement dated June 29, 2000, in the Partnership."
(h) The following additional covenant is hereby added to Article VI of
the Loan Agreement.
"6.29 Limitation of Investments in Magazinet and Management.
During the period from May 1, 2001 to April 30, 2002 the sum of
all "Magazinet Investments" by Borrower or any of its
Subsidiaries in Magazinet and Management shall not exceed Four
Hundred Fifty Thousand and No/100 Dollars ($450,000.00). As used
herein the term "Magazinet Investments" means the aggregate of
all (a), capital contributions to Magazinet and Management in the
form of cash or property for any purpose, (b) loans for any
purpose to Magazinet and Management, (c) any guaranty of any debt
of Magazinet and Management, (d) a pledge of any assets of
Borrower or any of its Subsidiaries to secure any debt of
Magazinet and Management, (e) cash paid or property transferred
to acquire any ownership interest in or the right to acquire any
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ownership interest in Magazinet and Management, and (f) cash
advances to Magazinet and Management to fund operating losses of
Magazinet and Management. The determination of the value of any
property used in calculating the amount of the Magazinet
Investments shall be done by Agent in its sole discretion.
Borrower further agrees that in addition to all other matters to
be shown on the Compliance Certificate that there also shall be
shown thereon in a form and content acceptable to Agent the
amount of the outstanding Magazinet Investments."
4. Modification of Security Agreement Executed by Magazine Connection Inc.
At the Effective Time, Item G of Schedule I to the Security Agreement executed
by Magazine Connection Inc. is hereby restated to read:
"Item G Pledged Shares
Issuer Interest
Magazinet Management, L.L.C.,
a Delaware limited liability company 1% membership interest
Magazinet, L.P., a Delaware 1% partnership interest
limited partnership
5. Modification of Security Agreement Executed by Distribunet Inc. At the
Effective Time, Items G and H of Schedule I to the Security Agreement executed
by Distribunet Inc. are hereby restated to read:
"Item G Pledged Partnership Interest
Issuer Percentage of Partnership Interest
Magazinet, L.P., a Delaware
Limited partnership 98%
Item H Pledged Membership Interest
Issuer Interest
Magazinet Management, L.L.C.,
a Delaware limited liability company 99% membership interest"
6. Deliveries. Agent's execution of the present Agreement on behalf of all
Lenders and their agreement to the terms and conditions hereof is expressly
conditioned on the delivery to Agent of the documents referred to in clauses
(a), (j), (n) and (o) of this Section 6 in a form and content acceptable to
Agent and its counsel. The Borrowing Parties covenant and agree that the
documents called for in the remaining clauses in this Section 6 in a form and
content acceptable to Agent and its counsel will be delivered to the Agent at
the Effective Time:
(a) Duplicate counterparts of this Agreement executed by the Borrowing
Parties (execution by Magazinet and Management to be at the Effective
Time),
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(b) Delivery of the executed New Subsidiaries' Security Agreements,
(c) Delivery of the executed New Subsidiaries' Guaranties,
(d) UCC-1 Financing Statements listing Magazinet as debtor in favor of
Agent for filing in Delaware,
(e) UCC-1 Financing Statement listing Magazinet as debtor in favor of
Borrower and assigned to Agent for filing in Delaware,
(f) UCC-1 Financing Statement listing Management as debtor in favor of
Agent for filing in Delaware,
(g) UCC-1 Financing Statement listing Management as debtor in favor of
Borrower and assigned to Agent for filing in Delaware,
(h) UCC-1 Financing Statement listing Magazine Connection Inc. as
debtor in favor of Agent for filing in Delaware,
(i) UCC-1 Financing Statement listing Magazine Connection Inc. as
debtor in favor of Borrower and assigned to Agent for filing in Delaware,
(j) Certificate of Good Standing for Magazinet issued by the Delaware
Secretary of State,
(k) Certificate of Good Standing for Management issued by the Delaware
Secretary of State,
(l) Partners Certificate for Magazinet certifying as to (i) attached
Partnership Agreement, (ii) authorized partners' signatures,
(m) Members Certificate for Management certifying as to (i) attached
copy of Articles of Formation, (ii) Operating Agreement,
(iii) authorized managers' signatures,
(n) Copy of executed Termination Agreement and all other executed
documents relating thereto, and
(o) Payments of all Costs.
7. Release and Consent. Provided all the conditions precedent in the first
sentence of Section 6 are fulfilled (i) Lenders hereby consent to the execution
of the Termination Agreement and (ii) Agent shall deliver to Borrower at the
closing under the Termination Agreement a release of the lien on the Distribunet
Senequier Interest in such form as the Borrowing Parties may reasonably request
and executed Uniform Commercial Code Amendments amending the existing UCC-1
Financing Statements to eliminate the Distribunet Senequier Interest from the
described Collateral.
8. Costs. Concurrently with the execution of this Agreement, Borrower shall
pay or cause to be paid to Agent in immediately available funds all fees and
expenses of Lenders relating to this Agreement and the transactions contemplated
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herein, including, without limitations, reasonable fees and expenses of Agent's
counsel (the "Costs").
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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
severally, may have had, or now have or that may subsequently accrue against the
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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.
15. 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.
16. 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.
17. 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.
18. 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.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK AND THE SIGNATURES BEGIN
ON THE NEXT PAGE.)
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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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
PARENT:
AMREP CORPORATION, an Oklahoma corporation KABLE NEWS INTERNATIONAL, INC.,
a Delaware corporation
By: /s/▇▇▇▇▇ ▇. Pizza
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Title: President
SUBSIDIARIES:
KABLE NEWS EXPORT, LTD., a Delaware KABLE FULFILLMENT SERVICES OF
corporation OHIO, INC., a Delaware
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President Title: Authorized Signatory
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KABLE NEWS COMPANY OF CANADA
LTD., an Ontario, Canada
Corporation
DISTRIBUNET INC., a Delaware
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
MAGAZINET, L.P., a Delaware
limited partnership
MAGAZINE CONNECTION INC., a
By: Magazinet Management, L.L.C., a Delaware corporation
Delaware limited liability company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Title: President
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Manager
MAGAZINET MANAGEMENT, L.L.C., a
Delaware limited liability company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Manager
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LENDERS:
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Agent for all Lenders
and as a Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: First Vice President
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