0000006207-01-500003.txt : 20011018
0000006207-01-500003.hdr.sgml : 20011018
ACCESSION NUMBER: 0000006207-01-500003
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 5
CONFORMED PERIOD OF REPORT: 20010430
FILED AS OF DATE: 20010730
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: AMREP CORP
CENTRAL INDEX KEY: 0000006207
STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531]
IRS NUMBER: 590936128
STATE OF INCORPORATION: OK
FISCAL YEAR END: 0430
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-04702
FILM NUMBER: 1692851
BUSINESS ADDRESS:
STREET 1: 641 LEXINGTON AVENUE
STREET 2: 6TH FLOOR
CITY: NEW YORK
STATE: NY
ZIP: 10022
BUSINESS PHONE: 2127054700
MAIL ADDRESS:
STREET 1: 641 LEXINGTON AVE
STREET 2: 6TH FLOOR
CITY: NEW YORK
STATE: NY
ZIP: 10022
FORMER COMPANY:
FORMER CONFORMED NAME: AMERICAN REALTY & PETROLEUM CORP
DATE OF NAME CHANGE: 19671019
10-K
1
axr10k01a.txt
4TH QUARTER FILING
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 2001 Commission File Number 1-4702
-------------- ------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________
AMREP CORPORATION
----------------------------------------------------
(Exact name of registrant as specified in its Charter)
Oklahoma 59-0936128
------------------------------- ------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
641 Lexington Ave., 6th Floor
New York, New York 10022
--------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 705-4700
--------------
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- ---------------------
Common Stock $.10 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
Aggregate market value of Common Stock held by non-affiliates of the Registrant,
computed by reference to the last sales price of such Common Stock on July 26,
2001, on the New York Stock Exchange Composite Tape - $14,646,586.
Number of shares of Common Stock, par value $.10 per share, outstanding at July
26, 2001 - 6,573,586.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents of the Registrant are incorporated by
reference into the indicated parts of this report: Definitive Proxy Statement
for 2001 Annual Meeting - Part III.
PART I
------
Item 1. Business
------- -------- GENERAL
The Company* is primarily engaged in two unrelated businesses, each operated by
a wholly-owned subsidiary: the Real Estate business operated by AMREP Southwest
Inc., and the Fulfillment Services and Magazine Distribution business operated
by Kable News Company, Inc. ("Kable"). The Company's foreign sales and
activities are not significant.
Data concerning Industry Segments is set forth in Note 14 of Notes to
Consolidated Financial Statements. The Company's foreign sales and activities
are not significant.
REAL ESTATE OPERATIONS
Recent Developments
For many years, the Company was both a real estate developer and a builder of
single-family homes, originally in Rio Rancho, New Mexico and more recently in
the Denver, Colorado, Sacramento, California and Portland, Oregon metro areas.
In the early 1960s, the Company established the community that now is the City
of Rio Rancho, New Mexico, and until 1999 was the predominant builder of housing
there. Rio Rancho, which adjoins Albuquerque, now has a population of over
50,000. The Company entered the Denver market in 1993, and in 1997 it purchased
the assets of a land developer and homebuilder with operations in the Sacramento
and Portland markets. However, two years ago the Company decided to (i) cease
all homebuilding operations and (ii) sell its landholdings in California,
Colorado and Oregon. It now is out of the homebuilding business and, as noted
below, has sold, entered into agreements of sale or is offering for sale all of
its landholdings outside of New Mexico.
Land Development Operations
Prior to fiscal 1999, the Company developed both residential and commercial
sites at Rio Rancho and from time to time bought acreage in Colorado, California
and Oregon for its own homebuilding operations and to develop for sale to other
builders. As discussed above, the Company currently is performing development
work only at Rio Rancho.
Rio Rancho (including the City) consists of 91,049 contiguous acres in Sandoval
County, New Mexico, near Albuquerque, of which some 72,700 acres have been
platted into approximately 112,100 homesite and commercial lots and 16,300 acres
are dedicated to community facilities, roads and drainage with the remainder
consisting of unplatted land. At April 30, 2001, a total of approximately 82,100
of the lots had been sold. The Company currently owns approximately 22,000 acres
in Rio Rancho, of which approximately 7,000 acres are in contiguous blocks
suitable for development. The balance is in scattered lots which may require the
purchase of a sufficient number of adjoining lots to create tracts suitable for
development or which may be sold individually or in small groups.
-----------------
* As used herein, "Company" includes the Registrant and its subsidiaries unless
the context requires or indicates otherwise.
2
The development activity includes the obtaining of necessary governmental
approvals ("entitlements"), installation of utilities and necessary storm
drains, and building or improving of roads. At Rio Rancho, the Company is
developing both residential lots and sites for commercial and industrial use as
the demand warrants, and also is securing entitlements for large development
tracts for sale to homebuilders. The engineering work at Rio Rancho is performed
by both Company employees and outside firms, but development work is performed
by outside contractors. Land at Rio Rancho is marketed by Company personnel,
both directly and through brokers. The Company competes with other owners of
land in the Albuquerque area who offer for sale developed residential lots and
sites for commercial and industrial use.
The commercial areas in Rio Rancho presently include more than 500 businesses
and professional offices, as well as 15 shopping centers with approximately 1.25
million square feet of retail space and office space, including a 55,000 square
foot office building owned by the Company. The industrial areas have
approximately 80 buildings with over 3.2 million square feet, including a
manufacturing facility containing approximately 2.1 million square feet which is
owned and occupied by Intel Corporation. Intel, Rio Rancho's largest employer,
has recently started construction on a 1 million square foot expansion of its
plant which is expected to create 2,000 construction jobs over the next two
years and employ an additional 1,000 people after completion of the project in
late 2002 or early 2003.
Since early 1977, no individual lots without homes at Rio Rancho have been sold
by the Company to consumers. Over 50,000 lots were sold prior to 1977, and most
of these are in areas where utilities have not yet been installed. However,
under certain of the contracts pursuant to which the lots were sold, if
utilities have not reached the respective lot when the purchaser is ready to
build a home, the Company is obligated to exchange a lot in an area then
serviced by water, telephone and electric utilities for the lot of the
purchaser, without cost to the purchaser. The Company has not incurred
significant costs related to such exchanges.
The Company owns two tracts of land in Colorado, consisting of approximately 335
acres planned for approximately 900 homes. One of these tracts, consisting of
approximately 170 acres planned for approximately 534 homes, is under contract
for sale and is anticipated to close during fiscal 2002. The Company is in
process of obtaining entitlements for the other tract, which is being offered
for sale subject to obtaining all necessary approvals. In California, it owns
one tract of land in the Sacramento area zoned for approximately 420 units of
multi-family residential housing, which is currently under contract for sale and
anticipated to close during fiscal 2002.
Home Building Operations
In fiscal 2001, the Company substantially completed all homebuilding activities.
The Company closed a total of 18 homes in the Portland area in fiscal 2001 at an
average selling price of approximately $256,000 per home. At April 30, 2001, the
Company owned 3 lots in the Portland area on which homes were built. Of this
total, 2 were under contract for sale. The Company expects all to be sold in
fiscal 2002. Although the Company has no present plans to do any further
homebuilding, the decision to change its real estate focus to emphasize land
development operations in New Mexico and wind-down homebuilding operations is
not considered to be a permanent change of strategy.
Other Real Estate Projects
The Company developed the Eldorado at Santa Fe, New Mexico subdivision which had
approximately 2,400 homes as of April 30, 2001. The Company sold 20 lots there
in fiscal 2001, and 31 lots remained to be sold at the end of fiscal 2001. The
Company also owns and operates a water utility company which serves the
subdivision.
The Company also owns approximately 14 acres in the Orlando, Florida area which
is being offered for sale.
3
MAGAZINE DISTRIBUTION AND FULFILLMENT OPERATIONS
Through its wholly-owned subsidiary, Kable News Company, Inc., the Company (i)
performs fulfillment and related services for publishers and other customers and
(ii) distributes periodicals nationally and in Canada and, to a small degree, in
other foreign countries. As of July 1, 2001, Kable employed approximately 900
persons, of whom approximately 740 were involved in its fulfillment activities
and 160 in distribution activities.
Fulfillment Services
Kable's Fulfillment Services division performs a number of fulfillment and
fulfillment-related activities, principally magazine subscription fulfillment
services, list services and product fulfillment services. The division accounted
for 71% of Kable's total revenues in 2001, 70% in 2000 and 64% in 1999.
In the magazine subscription fulfillment service operation, Kable processes new
orders, receives and accounts for payments, prepares and sends to each publisher
printer labels or tapes containing the names and addresses of subscribers for
mailing each issue, handles subscriber telephone inquiries and correspondence,
prepares and mails renewal and statement notifications, maintains subscriber
lists and databases, generates marketing and statistical reports, processes
Internet orders and prints forms and promotional materials. Kable performs all
of these services for many clients, but some clients utilize only certain of
them. Although by far the largest number of magazine titles for which Kable
performs fulfillment services are consumer publications, Kable also performs
services for a number of trade (business) publications, membership organizations
and government agencies which utilize the broad capabilities of Kable's
extensive database system.
List services clients are primarily publishers. In this activity, Kable
maintains client customer lists, selects names for clients who rent their lists,
merges rented lists with a client's list to eliminate duplication for the
client's promotional mailings, and sorts and sequences mailing labels to provide
optimum postal discounts for clients.
Product fulfillment services are provided for Kable's publisher clients and
other direct marketers. In this activity, the division receives, warehouses,
processes and ships merchandise.
Kable plans to expand these ancillary services, including lettershop, list
services and product fulfillment services, to other, non-publisher clients.
Kable now performs fulfillment services for approximately 630 different magazine
titles for approximately 240 clients and maintains almost 14 million active
subscriber names for its client publishers. In a typical month, Kable produces
over 15 million mailing labels for its client publishers and also produces and
mails approximately 4.1 million billing and renewal statements.
There are a large number of companies that perform fulfillment services for
publishers and with which Kable competes, two of which are much larger than
Kable. Since publishers often utilize only a single fulfillment company for a
particular publication, there is intense competition to obtain fulfillment
contracts with publishers. Competition for non-publisher clients is also
intense. Kable has a staff whose primary task is to solicit fulfillment
business.
Distribution Services
In its distribution operation, Kable distributes magazines for over 180
publishers. Among the titles are many special interest magazines, including
automotive, crossword puzzles, men's sophisticates, comics, romance and sports.
In a typical month, Kable distributes to wholesalers over 26.5 million copies of
various titles. Kable purchases the publications from its publishers and sells
them to approximately 56 independent wholesalers. The wholesalers in turn sell
the publications to individual retail outlets. All parties generally have full
return rights for unsold copies. For reasons set forth below, Distribution
4
revenues have been declining for several years and accounted for 29% of Kable's
revenues in fiscal 2001, 30% in fiscal 2000 and 36% in fiscal 1999.
While the Kable Distribution division does not handle all publications of all of
its publisher clients, it usually is the exclusive distributor for the
publications it distributes. Kable has a distribution sales and marketing force
that works with wholesalers and retailers to promote product sales and assist in
determining the number of copies of product to be delivered to each retailer.
Kable generally does not physically handle any product. It determines, in
consultation with the wholesalers and publishers, the number of copies of each
issue to be distributed, and generates and delivers to each publisher's printer
shipping instructions with the addresses of the wholesalers and the number of
copies of product to be shipped to each. All magazines have an "off sale" date
(generally the on-sale date of the next issue) following which the retailers
return unsold copies to the wholesalers, who destroy them after accounting for
returned merchandise in a manner satisfactory to Kable.
A realignment of industry relationships in the distribution of magazines started
during fiscal 1996 and rapidly grew to major proportions. It was triggered by
the decision of certain major retailers with multiple outlets to sharply reduce
the number of wholesalers with whom the retailers would deal. This action has
led to the erosion of wholesaler profit margins and to a substantial continuing
reduction in the number of wholesalers through the merger of certain
wholesalers, the formation by certain other wholesalers of cooperatives to bid
for the business of such retailers, and the complete retirement from the
business by a number of wholesalers. The consolidation has reduced the number of
Kable's wholesale customers by approximately 60% since fiscal 1995, which has
increased the concentration of its revenue source and trade accounts receivable;
at April 30, 2001, approximately 56% of Kable's distribution accounts receivable
was due from three customers. These changes also contributed to demands by most
remaining wholesalers to purchase magazines at lower prices which many
publishers, including some of Kable's, have accepted. In addition, many
wholesalers have instituted programs to eliminate low volume titles and reduce
circulation volume retail outlets. The objective of wholesalers was to reduce
their handling costs and improve sales. Kable feels these programs have had
limited success.
Financial pressures on wholesalers and publishers arising from these adverse
business conditions continued in fiscal 2001. Consequently, Kable increased its
accounts receivable reserves during 2001 by approximately $2.3 million in
anticipation of uncollectible balances from certain publisher and wholesaler
customers. Management believes that industry changes will continue with the
potential for further adverse consequences for publishers and their national
distributors, including Kable.
Kable generally makes substantial cash advances to publishers against future
sales, which publishers may use to help pay for printing, paper and production
costs prior to the product going on sale. Kable is usually not paid by
wholesalers for product until some time after the product has gone on sale, and
is therefore exposed to potential credit risks with both the publishers and the
wholesalers. Its ability to make a profit is dependent in part on its skill in
estimating the number of copies of an issue which should be printed and
distributed and on limiting its advances to the publisher accordingly.
Kable competes primarily with four national distributors, all of whom are
substantially larger than Kable. Each of these large competitors is owned by or
affiliated with a magazine publishing company. Such companies publish a
substantial portion of all magazines published in the United States, and the
competition for the distribution rights to the remaining publications is
intense.
COMPANY OFFICES
The Company's principal executive offices are in New York City. Kable has an
executive and sales office in New York City, and its operations are centered in
both owned and leased facilities in Mt. Morris, Illinois and Marion, Ohio. Real
estate operations are headquartered in Rio Rancho, New Mexico in a modern office
building owned by the Company.
5
EMPLOYEES
The Company has approximately 925 employees as of July 1, 2001. The Company
provides retirement, health and other benefits to its employees and considers
its employee relations to be good.
Item 2. Properties
------- ----------
The information contained in Item 1 of this report with respect to properties
owned by the Company is hereby incorporated herein by reference.
Item 3. Legal Proceedings
------- -----------------
In the civil action entitled United Magazine Company, Inc., et al. v. Murdoch
Magazines Distribution, Inc., et al., reported in the Registrant's Report on
Form 10-Q for the quarterly period ended October 31, 2000, motions by the
defendants to dismiss the Amended Complaint were granted, with leave to the
plaintiffs to replead specified claims. On or about June 21, 2001, a Second
Amended Complaint was filed which includes two claims against Kable (i)
violation of the Robinson-Patman Act, which generally prohibits discriminatory
pricing, and (ii) breach of fiduciary duty. The defendants have moved to dismiss
the Second Amended Complaint with the exception of claims by three plaintiffs
under one section of the Robinson-Patman Act. Those motions are pending.
The Registrant and/or its subsidiaries are involved in various other claims and
legal actions incident to their operations, which in the opinion of management,
based in part upon advice of counsel, will not materially affect the
consolidated financial position or results of operations of the Registrant and
its subsidiaries.
Item 4. Submission of Matters to a Vote of Security Holders
------- ---------------------------------------------------
Not Applicable.
Executive Officers of the Registrant
------------------------------------
Set forth below is certain information concerning persons who are the executive
officers of the Company.
Name Office Held/Principal Occupation for Past Five Years Age
---- ---------------------------------------------------- ---
James Wall Senior Vice President of the Company since 1991; 64
Chief Executive Officer of AMREP Southwest Inc.,
a wholly-owned subsidiary of the Company, since 1991.
Peter M. Pizza Vice President-Chief Financial Officer since May 2001; 50
Controller of the Company since 1995;
Vice President-Controller of the Company from 1997 to 2001.
Michael P. Duloc President and Chief Operating Officer of Kable News 45
Company, Inc. since November 2000;
President and Chief Operating Officer of Kable
Distribution Services from 1996 to November 2000.
The executive officers are elected or appointed by the Board of Directors of the
Company or its appropriate subsidiary to serve until the appointment or election
and qualification of their successors or their earlier death, resignation or
removal.
6
PART II
Item 5. Market for Registrant's Common Equity and
------- -----------------------------------------
Related Stockholder Matters
---------------------------
The Company's common stock is traded on the New York Stock Exchange under the
symbol "AXR". On July 26, 2001, there were approximately 2,250 holders of record
of the common stock. The Company has historically not paid cash dividends. The
range of high and low closing prices for the last two fiscal years by quarter is
presented below:
FIRST SECOND THIRD FOURTH
HIGH LOW HIGH LOW HIGH LOW HIGH LOW
2001 $ 7.37 $ 4.94 $ 5.50 $ 4.56 $ 4.75 $ 4.00 $ 4.00 $ 3.60
2000 $ 7.25 $ 5.37 $ 6.56 $ 4.44 $ 5.12 $ 3.06 $ 5.94 $ 4.50
Item 6. Selected Financial Data
-----------------------
(TO BE SUPPLIED)
7
Item 7. Management's Discussion and Analysis of Financial
------- -------------------------------------------------
Condition and Results of Operations
-----------------------------------
(TO BE SUPPLIED)
13
Item 7(A). Quantitative and Qualitative Disclosures About Market Risk
---------- ----------------------------------------------------------
(TO BE SUPPLIED)
14
Item 8. Financial Statements and Supplementary Data
------- -------------------------------------------
(TO BE SUPPLIED)
15
Item 9. Changes in and Disagreements with Accountants on Accounting
------- -----------------------------------------------------------
and Financial Disclosure.
-------------------------
Not Applicable.
PART III
--------
The information called for by Part III is hereby incorporated by reference from
the information set forth and under the headings "Common Stock Ownership of
Certain Beneficial Owners and Management", "Election of Directors", and
"Executive Compensation" in Registrant's definitive proxy statement for the 2001
Annual Meeting of Shareholders, which meeting involves the election of
directors, such definitive proxy statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A within 120 days after the end of
the fiscal year covered by this Annual Report on Form 10-K. In addition,
information on Registrant's executive officers has been included in Part I above
under the caption "Executive Officers of the Registrant".
35
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
-------- ----------------------------------------------------------------
(a) 1. The following financial statements and supplementary financial
information are filed as part of this report:
(TO BE SUPPLIED)
2. The following financial statement schedules are filed as part of this
report:
(TO BE SUPPLIED)
3. Exhibits:
The exhibits filed in this report are listed in the Exhibit Index.
The Registrant agrees, upon request of the Securities and Exchange
Commission, to file as an exhibit each instrument defining the rights of holders
of long-term debt of the Registrant and its consolidated subsidiaries which has
not been filed for the reason that the total amount of securities authorized
thereunder does not exceed 10% of the total assets of the Registrant and its
subsidiaries on a consolidated basis.
(b) During the quarter ended April 30, 2001, Registrant filed no Current Report
on Form 8-K.
36
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized. AMREP CORPORATION (Registrant)
Dated: July 26, 2001 By /s/Peter M. Pizza
Peter M. Pizza
Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Registrant and in
the capacities and on the dates indicated.
/s/Jerome Belson /s/Albert V. Russo
Jerome Belson Albert V. Russo
Director Director
Dated: July 26, 2001 Dated: July 26, 2001
/s/Edward B. Cloues, II /s/Samuel N. Seidman
Edward B. Cloues, II Samuel N. Seidman
Director Director
Dated: July 26, 2001 Dated: July 26, 2001
/s/Lonnie A. Coombs /s/James Wall
Lonnie A. Coombs James Wall
Director Director
Dated: July 26, 2001 Dated: July 26, 2001
/s/Nicholas G. Karabots /s/Peter M. Pizza
Nicholas G. Karabots Peter M. Pizza
Director Vice President,
Dated: July 26, 2001 Principal Financial Officer
and Principal Accounting Officer*
Dated: July 26, 2001
*Also acting as Principal Executive Officer in the absence of a Chief Executive
Officer, solely for the purpose of signing this Annual Report.
37
AMREP CORPORATION AND SUBSIDIARIES
----------------------------------
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
-----------------------------------------------
(Thousands)
(TO BE SUPPLIED)
38
EXHIBIT INDEX
-------------
3 (a) (i) Articles of Incorporation, as amended - Incorporated by reference to
Exhibit (3) (a) (i) to Registrant's Annual Report on Form 10-K for
the fiscal year ended April 30, 1998.
3 (a) (ii) Certificate of Merger - Incorporated by reference to Exhibit (3) (a)
(ii) to Registrant's Annual Report on Form 10-K for the fiscal year
ended April 30, 1998.
3 (b) By-Laws as restated September 24, 1997 - Incorporated by reference to
Exhibit 3 (c) to Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended October 31, 1997.
4 (a) Loan Agreement dated as of September 15, 1998 between Kable News
Company, Inc., and American National Bank and Trust Company of
Chicago as Agent and the Lenders defined therein (the "Kable Loan
Agreement") - Incorporated by reference to Exhibit 4 (a) to
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended October 31, 1998.
4 (b) Modification Agreement dated as of July 7, 1999 to the Kable Loan
Agreement - Incorporated by reference to Exhibit 4(b) to Registrant's
Annual Report on Form 10-K for the fiscal year ended April 30, 2000.
4 (c) Second Modification Agreement dated as of June 29, 2000 to the Kable
Loan Agreement - Incorporated by reference to Exhibit 4(a) to
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended October 31, 2000.
4 (d) Third Modification Agreement dated as of December 15, 2000 to the
Kable Loan Agreement - Incorporated by reference to Exhibit 4(a) to
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended January 31, 2001.
4 (e) Fourth Modification Agreement dated as of March 16, 2001 to the Kable
Loan Agreement - Filed herewith.
4 (f) Fifth Modification Agreement dated as of June 11, 2001 to the Kable
Loan Agreement - Filed herewith.
4 (g) Master Loan Agreement dated July 31, 2000 between Amrep Southwest,
Inc. and Wells Fargo Bank New Mexico, N.A. and First Amendment dated
January 5, 2001 and Second Amendment dated June 15, 2001 thereto -
Filed herewith.
10 (a) 1992 Stock Option Plan - Incorporated by reference to Exhibit 10 (h)
to Registrant's Annual Report on Form 10-K for the fiscal year ended
April 30, 1997.*
10 (b) Non-Employee Directors Option Plan, as amended - Incorporated by
reference to Exhibit 10 (i) to Registrant's Annual Report on Form
10-K for the fiscal year ended April 30, 1997.*
10 (c) Employment Termination and Consulting Agreement and General Release
dated July 28, 2000 between registrant and Kable News Company, Inc.
and Daniel Friedman - Incorporated by reference to Exhibit 10(a) to
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended July 31, 2000.*
10 (d) Employment Termination and Consulting Agreement and General Release
dated January 17, 2001 between Registrant and Mohan Vachani -
Incorporated by reference to Exhibit 10(a) to Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended January 31, 2001.*
21 Subsidiaries of Registrant - Filed herewith.
23 Consent of Arthur Andersen LLP - (TO BE SUPPLIED).
_________________________________________
* Management contract or compensatory plan or arrangement in which directors
or officers participate.
39
EX-4
3
exhibit4e.txt
FOURTH MODIFICATION AGREEMENT KABLE NEWS
EXHIBIT 4(e)
FOURTH MODIFICATION AGREEMENT
-----------------------------
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
- - - - - - - - - -
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
1
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
2
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
3
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
5
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
6
(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
7
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
8
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
9
EX-4
4
exhibit4f.txt
FIFTH MODIFICATION AGREEMENT KABLE NEWS
EXHIBIT 4(f)
FIFTH MODIFICATION AGREEMENT
----------------------------
FIFTH MODIFICATION AGREEMENT ("AGREEMENT") ENTERED INTO AS OF THE 11TH DAY OF
JUNE, 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"), 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,
HELLER, 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 and that certain Fourth
Modification Agreement ("Fourth Modification") dated March 16, 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
1
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
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"); and
WHEREAS, Borrower has failed to comply with Section 6.24.2 of the Loan
Agreement (the "Financial Covenant Non Compliance") and Lenders have granted a
limited waiver of the Financial Covenant Non Compliance pursuant to the Fourth
Modification and at the time of the execution of the Fourth Modification there
was also executed by Borrower and delivered to Lender a certain Note Pledge
Agreement ("Note Pledge Agreement") dated March 16, 2001 pledging to Agent for
the ratable benefit of the Lenders that certain Note ("Pledged Note") dated
March 16, 2001 in the original principal amount of Four Million Four Hundred
Thousand and No/100 Dollars ($4,400,000.00) executed by Parent and payable to
Borrower (the Loan Agreement, Notes, Security Agreements, Trademark Assignment,
Guaranties, Stock Pledge Agreement and Note Pledge Agreement together with the
First Modification, Second Modification, Third Modification, Fourth
Modification, this Agreement and the herein defined Additional Loan Documents
are collectively referred to herein as the "Loan Documents"); and
WHEREAS, subsequent to the execution of the Fourth Modification, Borrowing
Parties and Agent on behalf of the Lenders have executed that certain
Forbearance Agreement ("Forbearance Agreement") dated April 30, 2001 which among
other matters provided that Lenders would forbear from exercising all their
rights and remedies under the Loan Documents as a result of certain "Existing
Defaults" as defined in the Forbearance Agreement for a limited period of time
but for no later than May 31, 2001 (the "Forbearance Period"); and
WHEREAS the Forbearance Period has now expired and Lenders and Borrowing
Parties are desirous of setting forth the terms of their continued relationship
as borrower and lenders as restructured and modified (the "Loan Restructuring")
in accordance with and on the conditions as set forth herein.
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,
2
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. Continued Loan Relationship and Loan Restructuring. Borrowing Parties
and Lenders hereby agree that they will continue their loan relationship in
accordance with the Loan Documents conditioned however on:
(a) An amendment of the Loan Documents which restructures the terms of
the Loans as set forth hereafter in this Agreement,
(b) The delivery by Borrowing Parties of the Additional Loan Documents
as set forth in Paragraph 4 hereof, and
(c) Borrowing Parties compliance with all the other terms and
conditions of this Agreement.
4. Additional Loan Documents. Borrowing Parties will execute and deliver or
cause the following documents (the "Additional Loan Documents") to be delivered
to Agent on behalf of the Lenders in a form and content acceptable to Agent and
its counsel:
Contemporaneously with the execution of this Agreement:
(a) Mortgage or Deed of Trust (the "Colorado Mortgage") encumbering a
certain parcel of vacant land, located in Douglas County, Colorado (the
"Colorado Property") executed by Amrepco, Inc., a Colorado corporation
("Amrepco").
(b) Collateral Assignment ("Amrepco Assignment") of all right, title
and interest of Amrepco under (i) that certain Escrow Agreement (the
"Collateral Escrow Agreement") relating to the sale of the Colorado
Property to Penrose Island Development, LLC ("Penrose"), (ii) that certain
Purchase and Sale Agreement ("Colorado Sale Agreement") dated April 27,
2001 and all amendments thereto between Amrepco and Scott L. Carlson and
subsequently assigned by Scott L. Carlson to Penrose and (iii) that certain
note dated April 30, 2001 in the original principal amount of Six Million
Nine Hundred Seventy Thousand Four Hundred and No/100 Dollars
($6,970,400.00) executed by Penrose and payable to Amrepco and collateral
assignment of deed of trust relating to the Pledged Note executed by
Amrepco ("Deed of Trust Assignment").
3
(c) ALTA mortgage loan policy from a title company acceptable to Agent
insuring the lien of the Colorado Mortgage on the Colorado property in a
form and content acceptable to Agent and its counsel.
(d) ALTA survey of the Colorado Property in a form and content
acceptable to Agent and its counsel.
(e) Mortgage or Deed of Trust and Assignment of Rents (the "Illinois
Mortgage") encumbering those certain parcels of real estate and
improvements thereon located in Ogle County, Illinois (the "Illinois
Property") executed by Borrower.
(f) Mortgage or Deed of Trust and Assignment of Rents (the "Ohio
Mortgage") encumbering those certain parcels of real estate and
improvements thereon located in Marion County, Ohio (the "Ohio Property")
executed by Kable Fulfillment Services of Ohio, Inc., a Delaware
corporation ("Fulfillment").
(g) Environmental report in a form and content acceptable to Agent on
the Colorado Property.
(h) UCC-1 Financing Statements executed by Amrepco, Borrower,
Fulfillment and Magazine Connection Inc. ("Connection"), a Delaware
corporation relating to the Amrepco Assignment, Colorado Mortgage, Illinois
Mortgage, Ohio Mortgage, as well as the Amendment of the Trademark
Assignment and Trademark Assignment Agreement described in (l) and (m)
below.
(i) Consent Letter from Wells Fargo addressed to Agent consenting to
the transfer by Amrepco of Four Million Four Hundred Thousand and No/100
Dollars ($4,400,000.00) from the proceeds of the sale of the Colorado
Property to Parent free and clear of any claim of Wells Fargo for use in
satisfying in full the payment of the Parent Note as defined in the Loan
Agreement.
(j) Flood Plain Certificates for the Colorado Property, Illinois
Property and Ohio Property.
(k) UCC-1 Financing Statements executed by Magazine Connection Inc.
for filing in Illinois and Texas.
(l) Amendment of the Trademark Assignment executed by Borrower to
reflect the addition of a new trademark to wit "Magazine Connection".
(m) Trademark Assignment Agreement executed by Connection.
(n) Copies of all documents of record affecting the Colorado Property.
(o) Certificates of insurance showing Agent as mortgagee and lender
loss payee relating to the Ohio Property and Illinois Property.
4
(p) Environmental Indemnity Agreements executed by Borrower,
Fulfillment and Amrepco relating to the Illinois Property, Ohio Property
and Colorado Property respectively.
(q) Corporate certificates with attached (i) certified copy of
Articles of Incorporation, (ii) By-laws, (iii) certificate of incumbency,
(iv) current good standing certificate and (v) corporate resolutions for
all Borrowing Parties and Amrepco.
(r) Opinion letters from counsel to Borrowing Parties and Amrepco in a
form and content acceptable to Agent and its counsel.
And by no later than July 15, 2001:
(i) ALTA mortgagee loan policy from a title company acceptable to
Agent insuring the lien of the Illinois Mortgage on the Illinois
Property in a form and content acceptable to Agent and its counsel.
(ii) ALTA Survey of the Illinois Property in a form and content
acceptable to Agent and its counsel.
(iii) ALTA Loan Policy from a title company acceptable to Agent
insuring the lien of the Ohio Mortgage on the Ohio Property in a form
and content acceptable to Agent and its counsel.
(iv) ALTA Survey of the Ohio Property in a form and content
acceptable to Agent and its counsel.
(v) Current UCC, tax and judgment lien searches for all Borrowing
Parties and Amrepco showing no matters unacceptable to Agent.
(vi) Environmental reports in a form and content acceptable to
Agent on the Illinois Property and Ohio Property.
(vii) Copies of all documents of record affecting the Illinois
Property.
(viii) Copies of all documents of record affecting the Ohio
Property.
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) The definition of "Facility Termination Date" is hereby restated
to read:
"Facility Termination Date" means July 31, 2001. However, said
Facility Termination Date will be automatically extended to
(i) September 30, 2001 if by no later than July 31, 2001, the
principal balance of the Revolving Loan outstanding is
permanently reduced to Twenty Five Million Six Hundred Thousand
and No/100 Dollars ($25,600,000.00), and further extended,
5
(ii) to May 1, 2002 if by no later than September 30, 2001,
Parent has repaid the full principal amount of Four Million Four
Hundred Thousand and No/100 Dollars ($4,400,000.00) due on the
Parent Note to Borrower ("Parent Repayment") and the full amount
of said Parent Repayment has been paid to Agent for the ratable
benefit of all Lenders to reduce the then outstanding principal
balance of the Revolving Loan."
(b) The definition of "Revolving Loan Commitment" is hereby restated
to read:
"Revolving Loan Commitment" means that portion of the Aggregate
Commitment equal to (i) Thirty Million and No/100 Dollars
($30,000,000.00) for the period commencing June 11, 2001 to and
including July 30, 2001 ("First Period") but permanently reduced
to Twenty Five Million Six Hundred Thousand and No/100 Dollars
($25,600,000.00) on the day of receipt by Agent of the full
Parent Repayment if said Parent Repayment is received during the
First Period; (ii) Twenty Five Million Six Hundred Thousand and
No/100 Dollars ($25,600,000.00) for the period from July 31, 2001
to December 30, 2001 ("Second Period"); (iii) Twenty Three
Million Five Hundred Thousand and No/100 Dollars ($23,500,000.00)
for the period from December 31, 2001 to April 29, 2002 ("Third
Period"); and (iv) Twenty Million Five Hundred Thousand and
No/100 Dollars ($20,500.000.00) for the period from April 30,
2002 and at all times thereafter ("Fourth Period"). The amounts
of the Revolving Loan Commitment stated in the Second Period,
Third Period and Fourth Period above shall all automatically be
permanently reduced by Five Hundred Thousand and No/100 Dollars
($500,000.00) upon receipt by Borrower of the Imaging Lease
Financing."
(c) The following additional definitions are hereby added to Article
I:
"Imaging Project" means the acquisition by Borrower of certain
Banctec Transports, file servers, workstations, licenses and
professional services and other miscellaneous costs not to exceed
in the aggregate One Million Nine Hundred Forty Seven Thousand
and No/100 Dollars ($1,947,000.00.)"
"Imaging Lease Financing" means receipt of funds from a
third-party lender or lenders for lease or conventional financing
for a portion of the Imaging Project in an aggregate amount of at
least One Million Four Hundred Thousand and No/100 Dollars
($1,400,000.00)."
"Parent Note" means that certain Note dated March 16, 2001
executed by Parent payable to Borrower in the original principal
amount of Four Million Four Hundred Thousand and No/100 Dollars
($4,400,000.00)."
6
(d) Section 2.17 of the Loan Agreement is hereby restated to read:
"2.17 Limitation on Outstanding Amount of Revolving Loan. At no
time shall the outstanding amount of the Revolving Loan exceed
the lesser of (x) the then Revolving Loan Commitment or
(y) (i) for the period from June 11, 2001 to the date of the
receipt of the Parent Repayment by Agent eighty percent (80%) of
the Eligible Accounts, (ii) from the date of the receipt by Agent
of the Parent Repayment to December 30, 2001, seventy-five
percent (75%) of the Eligible Accounts, and (iii) from
December 31, 2001 through May 1, 2002, seventy percent (70%) of
the Eligible Accounts."
(e) The following sentence is hereby added to Section 6.1(ii) of the
Loan Agreement:
"Said interim monthly financial statements shall include monthly
balance sheets, profit and loss statements, and cash flow
statements prepared in accordance with GAAP (but without the full
footnotes GAAP calls for) and a direct gross margin contribution
report by line of business for the Borrower and each Subsidiary."
(f) In addition to all other reporting requirements contained in
Section 6.1 of the Loan Agreement, the following additional reporting
requirement is hereby added:
"(xv) Within twenty-five (25) days of the end of each fiscal
quarter of Borrower, a financial report on the results of the
Investments, as defined in the Second Modification Agreement
dated June 29, 2000 in a form and content acceptable to Agent."
(g) Section 6.14(vii) of the Loan Agreement is hereby restated to
read:
"(vii) Loans to publishers evidenced by promissory notes which
shall bear interest on the unpaid principal balance as well as
advances or loans to publishers for movie tie-ins even if not
evidenced by a promissory note but all of which shall not exceed
One Million Five Hundred Thousand and No/100 Dollars
($1,500,000.00) in the aggregate. The name of each publisher and
the amounts of said loans or advances shall be included in the
monthly Compliance Certificate required to be delivered under
Section 6.1(x) hereof."
(h) The phrase "(a) may pay to the Parent on a quarterly basis an
amount not to exceed fifty percent (50%) of the Borrower's Consolidated Net
Income after provision for income taxes for the preceding fiscal quarter,
as shown on the Borrower's financial statements, provided, however, that at
the end of any fiscal year the aggregate of such quarterly payments shall
not exceed fifty percent (50%) of the Borrower's Consolidated Net Income
after provision for income taxes for such fiscal year" is hereby deleted
from Section 6.10 of the Loan Agreement.
7
(i) Section 6.14(viii) of the Loan Agreement is hereby restated to
read:
"(viii) Loans or advances to Parent or any Affiliate not
exceeding in the aggregate (x) One Hundred Thousand and No/100
Dollars ($100,000.00) plus (y) the principal balance of the
Parent Note until repaid, plus (z) amounts lent or advanced to
the Parent to pay state and federal taxes attributable to its
ownership of Borrower and Subsidiaries."
(j) Section 6.24.2 of the Loan Agreement is hereby restated to read:
"6.24.2 Consolidated Cash Flow Coverage. The Borrower will
maintain a Consolidated Cash Flow Coverage Ratio calculated on a
trailing twelve month basis at all times equal to the following
ratios for the periods indicated:
Period Ratio
From May 31, 2001 to Not less than .6 to 1.
July 31, 2001
From August 1, 2001 to Not less than .65 to 1.
September 30, 2001
From October 1, 2001 to Not less than .75 to 1.
November 30, 2001
From December 1, 2001 to Not less than .85 to 1.
December 31, 2001
From January 1, 2002 to Not less than 1.5 to 1.
March 31, 2002
From April 1, 2002 to Not less than 2. to 1."
May 1, 2002
(k) Section 6.24.3 of the Loan Agreement is hereby restated to read:
"6.24.3 Consolidated Tangible Net Worth. The Borrower will
maintain the following minimum Consolidated Tangible Net Worth
amounts at all times during the following periods:
8
Consolidated Tangible
Period Net Worth
From May 31, 2001 to $8,000,000.00
October 30, 2001
From October 31, 2001 to $8,500,000.00
January 30, 2002
From January 31, 2002 to $9,000,000.00
April 29, 2002
From April 30, 2002 and $9,500,000.00"
thereafter
For the purpose of determining Consolidated Tangible Net Worth
under this Section, the principal balance of the Parent Note will not
be excluded.
(l) Section 6.14(v) is hereby deleted from the Loan Agreement.
(m) The following additional covenants are hereby added to Article VI
of the Loan Agreement.
"6.27 Limitation of Investments in Connection. During the period
from May 1, 2001 to April 30, 2002 the sum of all "Connection
Investments" by Borrower or any of its Subsidiaries in Connection
shall not exceed Seven Hundred Fifty Thousand and No/100 Dollars
($750,000.00). As used herein the term "Connection Investments"
means the aggregate of all (a), capital contributions to
Connection in the form of cash or property for any purpose, (b)
loans for any purpose to Connection, (c) any guaranty of any debt
of Connection, (d) a pledge of any assets of Borrower or any of
its Subsidiaries to secure any debt of Connection, (e) cash paid
or property transferred to acquire any ownership interest in or
the right to acquire any ownership interest in Connection, and
(f) cash advances to Connection to fund operating losses of
Connection. The determination of the value of any property used
in calculating the amount of the Connection 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 Connection Investments.
9
6.28 Limitations on Investments in the Partnerships and
Management. Notwithstanding anything to the contrary contained in
this Agreement, during the period from May 1, 2001 to April 30,
2002, Borrower and Subsidiaries of Borrower shall not make
Investments, as said term is defined in Paragraph 4 of the Second
Modification Agreement dated June 29, 2000 entered into and
between Agent, Borrower and all Subsidiaries of Borrower, in the
Partnerships or Management which exceed in the aggregate Five
Hundred Thousand and No/100 Dollars ($500,000.00.)"
(n) The reference to "50 Basis Points" contained in the Pricing
Schedule attached to the Loan Agreement is hereby changed to "100 Basis
Points".
(o) In addition to all other Defaults contained in Article VII of the
Loan Agreement the following events shall also constitute a Default under
the Loan Agreement:
"7.22 Failure of Borrower, Parent or any Subsidiary to fulfill
any of the terms and conditions contained in that certain Fifth
Modification Agreement ("Fifth Modification") dated June 11, 2001
executed by Agent, Borrower, Parent and Subsidiaries.
7.23 A default or event of default occurs under the Additional
Loan Documents as said term is defined in the Fifth
Modification."
6. Conditions Precedent. 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 following documents in a
form and content acceptable to Agent and its counsel:
(a) Duplicate counterparts of this Agreement executed by the Borrowing
Parties,
(b) Payment of the Extension Fee,
(c) Delivery of the Additional Loan Documents,
(d) Payment of all Costs.
7. Extension Fee. In consideration of Lenders entering into the present
Agreement and modifying and restructuring the Loans as described herein,
Borrower shall pay to Agent for the ratable benefit of all Lenders an extension
fee (the "Extension Fee") equal to Seventy Five Thousand and No/100 Dollars
($75,000.00) contemporaneously with the execution of this Agreement.
8. Release of Colorado Mortgage, Amrepco Assignment and Deed of Trust
Assignment. Agent shall cause North American Title Company as escrow agent to
release the Colorado Mortgage, Amrepco Assignment and Deed of Trust Assignment
upon the payment to Agent for the ratable benefit of all Lenders the full amount
of the Parent Note equaling Four Million Four Hundred Thousand and No/100
Dollars ($4,400,000.00).
10
9. Release of Ohio Mortgage. Provided no Default or Unmatured Default then
exists, Agent shall release the Ohio Mortgage contemporaneously with the sale of
the Ohio Property to a third party by Fulfillment in an arms-length transaction
(the "Bona Fide Sale") but only on the conditions that:
(a) All the net proceeds ("Net Proceeds") of the Bona Fide Sale shall
be deposited with Agent for the ratable benefit of all Lenders and only
released to Fulfillment to pay for expenses for leasehold improvements to
Fulfillment's business location in Ohio, and
(b) Agent for the ratable benefit of all the Lenders is given a valid
first lien on all said leasehold improvements to be evidenced by such
documents as may be required by Agent and its counsel.
To the extent said Net Proceeds are not used for the aforesaid leasehold
improvements, they shall be paid to Agent for the ratable benefit of all Lenders
and the then amount of the Revolving Loan Commitment reduced by the amount of
said application.
10. 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 herein, including, without limitations, reasonable fees and
expenses of Agent's counsel (the "Costs").
11. 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.
12. 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.
13. 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.
14. 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.
15. No Defense, Counterclaims. Each Borrowing Party hereby represents and
warrants to, and covenants with, Lenders that as of the date hereof, (a) each
11
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.
16. 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
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.
17. 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.
18. 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.
19. 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.
12
20. 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.)
13
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
14
PARENT: KABLE NEWS INTERNATIONAL, INC., a
Delaware corporation
AMREP CORPORATION, an Oklahoma
corporation
By: /s/ Michael P. Duloc
By: /s/ Peter M. Pizza Title: President
Title: Vice President
KABLE FULFILLMENT SERVICES OF
OHIO, INC., a Delaware corporation
SUBSIDIARIES:
KABLE NEWS EXPORT, LTD., a Delaware By: /s/ Bruce Obendorf
corporation
Title: Vice President
By: /s/ Michael P. Duloc
Title: President
DISTRIBUNET INC., a Delaware
corporation
KABLE NEWS COMPANY OF CANADA LTD.,
an Ontario, Canada corporation By: /s/ Michael P. Duloc
Title: President
By: /s/ Michael P. Duloc
Title: President
MAGAZINE CONNECTION INC., a
Delaware corporation
By: /s/ Michael P. Duloc
Title: President
LENDERS:
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Agent and Lender
By: /s/ Susan B Kreusi
Title: First Vice President
15
FIFTH THIRD BANK, CHICAGO
By: /s/ Jeffrey S. Armstrong
Title: Vice President
NATIONAL CITY BANK OF MICHIGAN/ILLINOIS
By: /s/ Elizabeth Brandt
Title: Vice President
FIRST BANK
By: /s/ Joseph D. Pauge
Title: Vice President
HELLER FINANCIAL, INC.
By: /s/ Dennis Graham
Title: Assistant Vice President
16
EX-4
5
exhibit4g.txt
MASTER LOAN AGREEMENT AMREP SOUTHWEST
EXHIBIT 4(g)
MASTER LOAN AGREEMENT
---------------------
Dated Effective July 31, 2000
This Loan Agreement dated effective July 31, 2000, is by and between AMREP
SOUTHWEST, INC. ("Borrower"), a New Mexico corporation, and WELLS FARGO BANK NEW
MEXICO, N.A. ("Bank"), a state banking corporation.
This Agreement is made and executed upon the terms and conditions contained
or referenced herein. All previous, new, or future loans or financial
accommodations by the Bank to the Borrower are subject to this Agreement.
Borrower understands and agrees that:
(a) In granting, renewing, or extending any Loan, the Bank is relying upon
Borrower's representations, warranties, and agreements as set forth in
this Agreement and the financial and other information provided to the
Bank by or on behalf of the Borrower;
(b) The granting, renewing, or extending of any Loan by the Bank shall at
all times be subject to the Bank's sole judgment and discretion.
Advances and disbursements on notes or commitments specified in this
Agreement will be made provided the Borrower has satisfied all
requirements and conditions required by this Agreement or any exhibit
hereto for such grant have been satisfied; and
(c) All such Loans shall be and shall remain subject to the terms of this
Agreement. This Agreement shall continue to be in full force and
effect between the parties until all Loans by the Bank to the
Borrower, including all extensions, renewals, replacements,
substitutions, and modifications thereof are paid in full.
(d) Maximum Aggregate Outstanding Balance. Notwithstanding any provision
of this Agreement or any Related Document to the contrary, Lender has
no obligation to make any advances, draws, loan or loans to Borrower
in excess of $20,870,000, in the aggregate maximum principal amount.
(e) Prior Agreements Replaced. This Agreement replaces all existing
agreements, commitments, and loan agreements between the Borrower and
the Bank including the Master Loan Agreement dated effective February
26, 1999, including all amendments to that prior loan agreement.
(f) Existing Notes and Requested Financing. The Borrower has requested
that the Bank restructure its credit facilities to continue, extend,
or modify certain existing credits and to grant new credits, increase,
extend, or modify certain existing notes and commitments as described
in this Agreement.
SECTION I - DEFINITIONS.
------------------------
As used in this Agreement, the following terms shall have the respective
meanings indicated:
1
1.01 Agreement means this Master Loan Agreement.
1.02 Bank means Wells Fargo Bank New Mexico, N.A. (formerly known as
Norwest Bank New Mexico, N.A.) and its successors and assigns.
1.03 Borrower means Amrep Southwest, Inc., a New Mexico corporation and its
successors and assigns.
1.04 Borrower's Resolutions means the resolutions duly adopted by the Board
of Directors of the Borrower dated July 17, 2000, authorizing execution and
delivery of the Loan Documents, a copy of which is attached as Exhibit 1.04.
1.05 Business Day means a day when the Bank is open for business.
1.06 Closing Date means July 31, 2000.
1.07 Collateral means all collateral, liens, assignments, mortgages,
security interests, and other rights, presently in connection with the Loan, or
hereafter, created or signed by or in favor of Borrower to the Bank in order to
secure performance and/or repayment of the Loan.
1.08 Collateral Documents means any and all documents executed by or on
behalf of the Borrower, any guarantor, or any party having any right, title or
interest in any Collateral which evidences, grants, creates, assigns, or
perfects any interest in the Collateral in favor of Bank.
1.09 Governmental Authority means the United States of America; the State
of New Mexico; any political subdivision of any of the foregoing and any agency,
department, commission, board, bureau or instrumentality of any of them which
now or hereafter exercises jurisdiction over the Borrower.
1.10 Guaranty means the Commercial Guaranty of Borrower's parent company
Amrep Corp., an Oklahoma corporation, in the form attached as Exhibit 1.10.
1.11 Indebtedness means and includes without limitation all loans, notes,
obligations, debts, and liabilities of the Borrower to the Bank, as well as all
claims by the Bank against the Borrower pursuant to any Loan Document; whether
now or hereafter existing, voluntary or involuntary, due or not due, absolute or
contingent, liquidated or unliquidated; where the Borrower may be liable
individually or jointly with others; where the Borrower may be obligated as a
guarantor, surety or otherwise.
1.12 Loan(s) means all indebtedness of the Borrower to the Bank, when
advanced pursuant to the terms of this Agreement or otherwise, and including the
Note(s).
1.13 Loan Documents means this Agreement and all exhibits, Notes,
Collateral Documents, and all other liens, lien interests, and instruments (and
including all exhibits thereto), executed pursuant hereto or in connection with
or as security for the payment of the Obligations or for performance of the
Borrower's obligations under this Agreement, or for both such payment and
performance and all renewals, extensions, modifications and amendments of any of
the foregoing.
2
1.14 Loan Fees means the loan fees payable by Borrower to Bank at closing,
plus Bank's attorneys' fees and costs and other fees incurred by the Bank in
initiating and/or enforcing its rights under the Loan Documents.
1.15 Note(s) collectively means all notes existing, executed in conjunction
with the closing or hereafter executed and delivered by the Borrower to the Bank
together with all extensions, amendments, modifications, revisions,
replacements, and substitutions thereof permitted by the Bank, including but not
limited to:
(a) The "$4,000,000 Revolving Line of Credit Note" in the maximum
principal amount of $4,000,000, a proposed copy of which is attached
as Exhibit 1.15(a).
(b) The proposed "$6,385,000 Offsite Development Note" in the maximum
aggregate principal amount of $6,385,000, in form acceptable to the
Bank. When executed, a copy of such note will become Exhibit 1.15(b).
(c) The proposed "$2,000,000 Unit 13B On-Site Development Note" in the
maximum aggregate principal amount of $2,000,000, in form acceptable
to the Bank. When executed, a copy of such note will become Exhibit
1.15(c).
(d) The "$6,000,000 Receivables Financing Note" , in the maximum principal
amount of $6,000,000, maturing September 30, 2001, in form acceptable
to the Bank. When executed, a copy of such note will become Exhibit
1.15(d).
(e) The "$502,000 Letter of Credit Commitment" to fund letters of credit,
not to exceed the aggregate amount of $502,000, issued to secure
Borrower's construction obligations to the Town of Parker, Colorado or
the Parker Water and Sanitation District in Parker, Colorado with
current outstanding letters of credit totaling approximately $218,124.
(f) The "$100,000 Non-Revolving Standby Letter of Credit" dated October
21, 1998, as amended, in the maximum principal amount of $100,000,
expiring October 31, 2001, in favor of HOW Insurance Company, a copy
of which is attached as Exhibit 1.15(f).
(g) The "Commerce Center Note" dated April 29, 1998, and renewed April 29,
1999, in the original principal amount of $8,220,000, with a current
outstanding principal balance of approximately $455,024, maturing
April 29, 2001, a copy of which is attached as Exhibit 1.15(g).
(h) The "1,500,000 Interim Note" dated July 17, 2000 maturing August 17,
2000, a copy of which is attached as Exhibit 1.15(h).
1.16 Obligations means all obligations of the Borrower:
(a) To pay the principal of, and interest on all Loan(s), each Note and
any Renewal Note in accordance with their respective terms, now
existing or existing in the future, and to all other Indebtedness of
Borrower to the Bank.
3
(b) To reimburse the Bank, on demand, for all of the Bank's expenses and
costs, including the reasonable fees and expenses of its counsel, in
connection with maintenance and protection of any Collateral, the
initiation, amendment, modification or enforcement of the Loan
Documents and any documents evidencing or relating to a Renewal Note,
including, without limitation, any proceeding brought or threatened to
enforce payment of any of the Obligations, if the Bank prevails
against the Borrower in litigation to enforce such payment.
1.17 Organizational Documents means copies of the current Articles of
Incorporation and Bylaws of the Borrower and all amendments thereto, and
evidence satisfactory to the Bank that the Borrower is a corporation in good
standing in the State of New Mexico.
1.18 Person means any individual, partnership, corporation or other
business entity or organization.
1.19 Renewal Note means any promissory note executed and delivered by the
Borrower to the Bank in connection with a renewal, extension, modification,
amendment, revision, replacement or substitution of any Note described or
referenced in this Agreement.
SECTION II - THE LOANS.
-----------------------
2.01 The Loan. The Notes listed as Exhibits in Section 1.15 are, at
closing, the only Notes outstanding to the Bank from the Borrower, or proposed
to be made by the Bank to the Borrower,. and no other notes, loans, extensions
of credit or advances are to be made except advances on certain of the Notes as
described in this Agreement, including the exhibits. Except as specifically
described in this Agreement or the Exhibits to this Agreement, there are no
commitments or promises to loan or fund any other loans or extensions of credit
to the Borrower, express or implied.
2.02 Security for Payment and Performance. The Collateral is given to
secure the Loans and is and will be used as security for any and all other
obligations of Borrower to the Bank, whether now existing or hereafter arising.
Repayment and performance of the Obligations is secured by the Collateral
Documents, including, but not limited to the following:
(a) Real Estate Mortgage dated July 31, 2000, in the form attached as
Exhibit 2.02(a) granting a mortgage lien on various parcels of
commercial property in Rio Rancho, New Mexico, and various parcels in
the Enchanted Hills subdivision of Rio Rancho, New Mexico as described
therein (the " Mortgage").
(b) The Commercial Guaranty of Amrep Corp., a copy of which is attached as
Exhibit 1.10 as limited by the letter dated July 25, 2000, from the
Bank to Guarantor, a copy of which is attached as Exhibit 1.10(a).
(c) Any Certificates of Deposit or other security for any letters of
credit issued by the Bank on Borrower's behalf, and
(d) All other Collateral previously, now, or hereafter assigned, pledged,
mortgaged or granted to the Bank to secure repayment of the Loan.
4
2.03 Right of Setoff. Collateral includes the Bank's right of set-off
against any balance or share belonging to Borrower of any deposit or other
account with the Bank, notwithstanding any other security for the Loans.
2.04 Collateral; Deficiency. All security held by the Bank under the terms
of this Agreement and the other Loan Documents shall be available as Collateral
for the Loans and may be applied to satisfy the Borrower's Obligations and to
otherwise perform its duties and obligations under the Loan Documents. The
Borrower shall remain liable for any deficiency remaining after such
application.
2.05 Interest on the Notes. Interest shall accrue at the rate specified in
the Note. The Bank may, at its option, calculate and charge interest as though
each payment is made on the payment due date with principal reductions effective
as of the date of receipt.
2.06 Repayment of the Notes. Each Note shall be due and payable on the
dates specified in the Note and in accordance with the terms thereof. All
payments shall be paid directly to the Bank in immediately available funds. Upon
any Event of Default, the Bank may charge any deposit account of Borrower for
all or any part of the Obligations due or declared due. The records maintained
by the Bank shall be deemed to be evidence of the date of and amount of each
payment on the Note and the other Obligations. Upon an Event of Default payments
may be applied to any Note(s) in such amounts and in such order or priority as
the Bank deems necessary.
2.07 Renewals, Extensions, Additional Loans. Each Note, Line, and Letter of
Credit referenced in this Agreement contains its own repayment terms and
maturity. Borrower acknowledges the enforceability of such specific terms and
acknowledges that there is no agreement, representation, or assurance by the
Bank that a renewal, extension, or modification of any note or loan, if such
request is made by the Borrower, would be considered or approved by the Bank.
Should Borrower, at any future date, request the renewal, extension, or
modification of any note or loan, the decision whether to grant or allow such
request shall be at the Bank's sole discretion, the Bank has no obligation or
duty to the Borrower to grant such request(s) if made, and shall have no
liability to the Borrower or to any other person if it declines, for any reason,
to approve any such request. This Agreement shall apply to and shall control as
to any subsequent renewal, extension, modification, note, loan, or other
extension of credit by the Bank to the Borrower, unless specific contrary
language, referencing that this Agreement does not apply, is contained in such
subsequent note.
SECTION III - COLLATERAL REQUIREMENTS; APPRAISALS; DISBURSEMENT PROCEDURES;
--------------------------------------------------------------------------------
RELEASE PROVISIONS; PAYMENTS.
-----------------------------
3.01 Provided no Event of Default exists, disbursements payments and lot
releases shall be governed by this Agreement and the following exhibits,
applicable to the Notes identified, which contain various note specific
requirements including; the Borrower maintain minimum collateral requirements,
entitle the Borrower to release of collateral and require Borrower to make
payment on the Notes:
(a) Exhibit 3.01(a) - Disbursement Procedures, $4,000,000 Revolving Line
of Credit Note;
(b) Exhibit 3.01(b) - Disbursement Procedures, $6,385,000 Offsite
Development Note;
(c) Exhibit 3.01(c) - Disbursement Procedures, $2,000,000 Unit 13B On-Site
Development Note;
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(d) Exhibit 3.01(d) - Disbursement Procedure, $6,000,000 Receivables
Financing Note;
(e) Exhibit 3.01(e) - Procedures for issuing letters of credit under the
$502,000 Letter of Credit Commitment to issue letters of credit for
Borrower's construction obligations to the Town of Parker or the
Parker Water and Sanitation District in Parker, Colorado;
(f) No Exhibit.
(g) Exhibit 3.01(g) - Release Provisions for the $8,220,000 Commerce
Center Note; and
(h) Exhibit 3.01 (h) - Disbursement Procedures, $1,500,000 Interim Note.
3.02 Appraisals. The value of the real property subject to the Enchanted
Hills Mortgage and the Commercial Lots Mortgage is, at the Closing Date, being
appraised as required by the Bank's credit policies and applicable regulatory
requirements. Such appraisals on the various parcels are expected to be received
over the next 30 days and upon receipt, must be reviewed for adequacy and
compliance with the Bank's internal requirements and applicable regulatory
compliance. As the appraisals are received, reviewed, and confirmed to have met
such requirements, the value of each appraised parcel may support advances on
certain Notes as follows, subject also to the requirements of the Disbursement
Procedures for such Note:
(a) $4,000,000 Revolving Line of Credit Note. Advances on this Note, based
on the appraised value of the Commercial Lots Mortgage parcels are
controlled by Exhibit 3.01(a).
(b) $6,385,000 Off-Site Development Note and $2,000,000 On Site
Development Note. These Notes will be executed and delivered to the
Bank after the effective date of this Agreement. Advances on such
notes will be made only after receipt, review, and approval by the
Bank of the appraisals on the Mortgage property, and will be governed
by Exhibits 3.01(b) and (c) respectively.
3.03 Cessation of Advances. Notwithstanding any of the foregoing, any
agreement to fund or make advances under any Note or any commitment to make any
additional Loan to Borrower, whether under this Agreement or under any other
agreement, the Bank shall have no obligation to make or fund advances under any
Note nor to fund any other commitment if:
(a) Borrower or any Guarantor is in default under the terms of this
Agreement, any Loan Document, or any other agreement that Borrower or
Guarantor has with the Bank;
(b) Borrower or Guarantor becomes insolvent, files a petition in
bankruptcy or similar proceedings, or is adjudged a bankrupt;
(c) There occurs a material adverse change in Borrower's financial
condition, in the financial condition of any Guarantor, or in the
value of any Collateral securing any Loan;
(d) Any Guarantor seeks, claims or otherwise attempts to limit, modify or
revoke the legal enforceability of Guarantor's guaranty of the Loan or
any other loan with the Bank;
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(e) The Bank receives any stop notice pursuant to the Stop Notice Act or
any lien, in excess of $50,000, is filed by any subcontractor or
supplier on any real property which is Collateral for this Loan; or
(f) The Bank in good faith deems itself insecure even though no Event of
Default shall have occurred. Any election or agreement by the Bank to
fund any advance or disbursement despite any of the foregoing shall
not operate to waive, limit, or modify this provision, nor create any
obligation or duty upon the Bank to honor any other concurrent or
subsequent funding requests occurring during an Event of Default.
3.04 Release Provisions; Payments. The release of lots or parcels from the
Mortgage are subject to the requirements of the exhibits listed in subsection
3.01, above. Payments of principal and interest on each Note are due and payable
as specified in the Note; additional payments on a Note may be required by
applicable exhibits listed in subsection 3.01.
SECTION IV. COVENANTS, REPRESENTATIONS, REQUIREMENTS, AND RESTRICTIONS.
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The Borrower represents, warrants, covenants and agrees that:
4.01 Corporate Status. The Borrower is a duly organized and validly
existing corporation in good standing and duly authorized to carry on its
business in the State of New Mexico as now conducted and to enter into and
perform its obligations under this Agreement and each of the Loan Documents.
4.02 Maintenance of Status. The Borrower will maintain its existence as a
corporation which is duly authorized to do business in the State of New Mexico,
will comply with all statutes and rules and regulations applicable to its
organization and existence and its business in New Mexico or elsewhere, and will
maintain its properties and other assets in good condition.
4.03 Due Authorization. The execution, delivery and performance by the
Borrower of the Loan Documents have been duly authorized by all necessary
corporate action by the Borrower and its Board of Directors.
4.04 Validity and Binding Effect. The Loan Documents have been duly and
validly executed, issued and delivered by the Borrower and constitute valid and
legally binding obligations of the Borrower, enforceable in accordance with
their terms except as may be limited by bankruptcy, insolvency, reorganization
or other similar laws related to or affecting enforcement of creditors' rights.
4.05 Compliance. The execution and delivery by the Borrower of the Loan
Documents and compliance by the Borrower with the terms thereof will not violate
(i) any law or regulation, including but not limited to any securities law or
regulation, (ii) Borrower's Organizational Documents or (iii) any other
instrument or agreement binding upon the Borrower.
4.06 Impositions. The Borrower will comply with all legal requirements and
will pay all taxes, assessments, governmental charges and other obligations
which, if unpaid, might become a lien against the Borrower's property, except
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liabilities being contested in good faith and against which, if requested by the
Bank, the Borrower will set up reserves to satisfy such obligations as they
become due.
4.07 Expenses and Loan Fees. The Borrower will pay on behalf of the Bank or
reimburse the Bank directly for all reasonable out-of-pocket expenses incurred
by the Bank before and after closing in connection with the Loan, including but
not limited to, charges and disbursements for appraisals, title insurance,
recording fees, environmental studies, and the Bank's legal fees. The Borrower
will also pay at the date of the first advance on each of the following Notes,
non-refundable loan fees in the following amount for such Note; $10,000 for the
$4,000,000 Revolving Line of Credit Note, $17,200 for the $6,385,000 Offsite
Development Note, and $10,000 for the $2,000,000 Unit 13B On-Site Development
Note.
4.08 Accuracy of Representations. No certificate, statement, document,
valuation, financial or other information delivered by or on behalf of Borrower
to the Bank in connection herewith or in connection with the Loan contains any
untrue statement of a material fact or fails to state any material fact
necessary to keep such information from being misleading. Borrower represents
and warrants all financial and other information hereafter furnished to the Bank
will be materially accurate and complete and acknowledges that such information
will be submitted to the Bank with the intent that the Bank will rely upon such
information.
4.09 Financial Information, Ratios, and Other Information. So long as any
Loans remain outstanding, the Borrower will furnish, or cause to be furnished,
to the Bank financial information at such frequency and in form as required by
the Bank and will observe the following requirements:
(a) Quarterly Form 10-Q reports filed by Amrep Corporation pursuant to the
Securities Exchange Act of 1934. Said reports to be provided within 15
days after each filing with the Securities Exchange Commission.
(b) Annual Form 10-K reports filed by Amrep Corporation pursuant to the
Securities Exchange Act of 1934. Said reports to be provided within 15
days after each filing with the Securities Exchange Commission.
(c) Annual audited consolidated financial statements of Amrep Corporation,
audited by Arthur Anderson and Company or other national accounting
firm acceptable to the Bank, within 15 days after Amrep Corporation's
receipt of each financial statement.
(d) Quarterly consolidating financial statements and such supporting
documentation as Bank may require of AMREP Corporation and all
subsidiaries, within 60 days after the end of each fiscal quarter.
(e) Quarterly financial statements of the Borrower and such supporting
documentation as the Bank may require, within 60 days after the end of
each fiscal quarter.
(f) Annual audited financial statements, and such supporting documentation
as the Bank may require of the Borrower, within 15 days of receipt by
the Borrower and in no event more than 150 days after Borrower's
fiscal year-end.
(g) Such other financial and other information as the Bank may reasonably
require.
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(h) Borrower and/or Guarantor shall perform, observe, and comply with the
provisions contained in Exhibit 4.09(h).
4.10 Collateral Title, Liens. Borrower shall, at its own expense, take any
and all actions necessary to remove any encumbrances or clouds upon title to the
Collateral, except those agreed to in writing by the Bank; and Borrower shall
keep the Collateral free and clear of such encumbrances or clouds upon title,
except those agreed to in writing by the Bank.
4.11 Solvency. The Borrower is solvent, and has no actual knowledge that
there are any proceedings, pending or threatened against it, which could
materially adversely affect its financial condition or its ability to timely
perform all Obligations, nor are there any governmental or any judicial
proceedings of any kind pending or threatened against it except as disclosed to
the Bank in writing prior to closing.
4.12 No Misrepresentation. No certificate, statement, information or
documents delivered by or on behalf of the Borrower or any guarantor, to the
Bank in connection with this Agreement or in connection with the Loan contains
any untrue statement of a material fact or fails to state any material fact
necessary to keep the statements contained in this Agreement from being
misleading.
4.13 Collateral Free and Clear. The Collateral is free and clear of any
adverse liens, restrictions or limitations including any restriction from
transfer except those that have been disclosed to the Bank in writing prior to
closing.
4.14 Notice to Bank of Adverse Claims. The Borrower will promptly notify
the Bank of (i) any litigation or any claim or controversy which might be the
subject of litigation against the Borrower affecting any of the Collateral, if
such litigation or potential litigation might, in the event of an unfavorable
outcome, have a material adverse effect on such entity's financial condition or
on the Bank's lien or security interest in the Collateral or might cause an
Event of Default; (ii) any material adverse change in the financial condition or
business of the Borrower; (iii) any other matter which in the opinion of the
Borrower might materially adversely affect the financial condition of the
Borrower; and/or (iv) the occurrence of any Event of Default.
4.15 Records. The Borrower will keep accurate records, in accordance with
generally accepted accounting principles, of all its transactions so that at any
time, and from time to time, its true and complete financial condition may be
readily determined and, at the Bank's reasonable request, make such records
available for the Bank's inspection and permit the Bank to make and retain
copies thereof.
4.16 Payment of Wages. The Borrower shall pay all wages and payroll taxes
(federal, state and local) as they become due and shall comply with all
applicable federal, state and local labor laws.
4.17 Further Assurances. Throughout the term of the Loan, Borrower and any
guarantor shall take whatever action is deemed by the Bank to be reasonably
necessary to preserve and/or protect the Bank's lien on the Collateral,
including, without limitation, executing additional documents.
4.18 No Assignment. The Borrower may not without the Bank's prior written
consent , assign the Loan ,the Loan proceeds or the Borrower's rights under the
Loan Documents. Any such assignment without such consent shall be void.
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4.19 Hazardous Substances. The terms "hazardous substance", "disposal",
"release", and "threatened release", as used in this Agreement, shall have the
same meanings as set forth in the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et
seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub.
L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq., the Resource Conservation and Recovery Act, 49 U.S.C.
Section 6901, et seq., or other applicable state or Federal laws, rules, or
regulations adopted pursuant to any of the foregoing. Except as disclosed to and
acknowledged by the Bank in writing, Borrower represents and warrants that:
(a) During the period of Borrower's ownership of the Collateral, there has
been no use, generation, manufacture, storage, treatment, disposal,
release or threatened release of any hazardous waste or substance by
any person on, under, or about any of the Collateral.
(b) Borrower has no knowledge of, or reason to believe that there has
been:
(i) any use, generation, manufacture, storage, treatment, disposal,
release, or threatened release of any hazardous waste or
substance by any prior owners or occupants of any of the
Collateral, or
(ii) any actual or threatened litigation or claims of any kind by any
person relating to such matters.
(c) Neither Borrower nor any tenant, contractor, agent or other authorized
user of any of the Collateral shall use, generate, manufacture, store,
treat, dispose of, or release any hazardous waste or substance on,
under, or about any of the Collateral. Borrower authorizes the Bank
and its agents to enter upon the Collateral to make such inspections
and tests as the Bank may deem appropriate to determine compliance of
the Collateral with this section of the Agreement. Any inspections or
tests made by the Bank shall be for the Bank's purposes only and shall
not be construed to create any responsibility or liability on the part
of the Bank to Borrower or to any other person.
Borrower hereby:
(i) releases and waives any future claims against the Bank for
indemnity or contribution in the event Borrower becomes liable
for cleanup or other costs (excluding any cost incurred due to
any hazard caused by the Bank, its successors, or assigns) under
any such laws, and
(ii) agrees to indemnify and hold harmless the Bank against any and
all claims, losses, liabilities, damages, penalties, and expenses
which the Bank may directly or indirectly sustain or suffer
resulting from a breach of this section of the Agreement or as a
consequence of any use, generation, manufacture, storage,
disposal, release or threatened release occurring prior to
Borrower's ownership or interest in the Collateral, whether or
not the same was or should have been known to Borrower.
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The provisions of this section of the Agreement, including the obligation
to indemnify, shall survive the payment of the indebtedness and the satisfaction
of this Agreement and shall not be affected by the Bank's acquisition of any
interest in any of the Collateral, whether by foreclosure or otherwise.
4.20 Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as the Bank may require with respect to
Borrower's properties and operations, in form, amounts, coverages and with
insurance companies reasonably acceptable to the Bank. Borrower, upon request of
the Bank, will deliver to the Bank from time to time the policies or
certificates of insurance in form satisfactory to the Bank, including
stipulations that coverages will not be canceled or diminished without at least
ten (10) days' prior written notice to the Bank. In connection with all policies
covering assets in which the Bank holds or is offered a security interest for
the Loans, Borrower will provide the Bank with such loss payable or other
endorsements as Lender may require.
4.21 Notification of Additional Debt to Borrowers. The Borrower shall
notify the Bank in writing within ten (10) business days of incurring any new
indebtedness in excess of $1,000,000, individually or in the aggregate,
including any written or other contractual commitment to loan the Borrower such
amount(s).
SECTION V - CLOSING CONDITIONS; TITLE INSURANCE.
------------------------------------------------
5.01 Conditions Precedent to Closing. The Bank shall not be obligated to
close the Loan unless all of the following conditions shall be satisfied at the
time of such advance, or current compliance with such condition shall have been
waived in writing by the Bank and unless all warranties were substantially true,
correct and accurate at the time made and remain so through closing;
(a) The Loan Documents and Other Items. The Bank shall have received
original, properly executed Loan Documents and other documents or
items, including:
(1) This Agreement;
(2) The Notes, Exhibits 1.15(a-h);
(3) The Borrower's Resolution;
(4) The Collateral Documents described in Section II.
(b) No Default. There shall be no Event of Default under any existing
Notes or any Loan Documents.
(c) No Potential Default. No event shall have occurred which, with
notice or lapse of time or both, would constitute an Event of
Default under any Loan Documents, unless such potential default
shall have been cured to the satisfaction of Bank prior to the
ripening of such potential default into actual default.
(d) Fulfillment of Conditions. The Borrower shall have satisfied all
conditions for the advance and the Borrower shall be in current
compliance with all of its covenants, agreements and obligations
under any Loan Documents.
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5.02 Title Insurance. The Bank, in addition to any requirements necessary
to any disbursement or advance allowed under this Agreement (and any Exhibit)
may require, prior to any advance or disbursement, ALTA Mortgagee's policies of
title insurance, insuring a first lien position on the mortgages referenced in
Section II, including policy endorsements insuring all advances under the Loan.
Such coverage shall include, as necessary, coverage for the revolving or
multiple advance Notes contemplated in this Agreement.
SECTION VI - DEFAULT AND REMEDIES.
----------------------------------
6.01 Events of Default. Each of the following shall constitute an Event of
Default under this Agreement:
(a) Default on Indebtedness - Failure of Borrower to make any payment
on any Note within five (5) days of the date due.
(b) Other Defaults - Failure of Borrower to comply with or to perform
any other terms, obligations, requirements, restrictions,
covenants or conditions contained in this Agreement or in any
Note or any Loan Document, or failure of Borrower to comply with
or to perform any other term, obligation, covenant or condition
contained in any other agreement between Bank and Borrower (other
than payment of a monetary amount required on any Note), or
between the Borrower and any other creditor or lender, within
fifteen (15) days of the date due unless such failure cannot
reasonably be cured within fifteen days, Borrower is diligently
pursuing the cure, and neither timely repayment of the Loan nor
the value, security or marketability of the Collateral is
impaired.
(c) False Statements - Any warranty, representation, or statement
made or furnished to Bank by or on behalf of Borrower or any
Guarantor under this Agreement or the Related Documents is false
or misleading in any material respect, either now or at the time
made or furnished.
(d) Defective Collateralization - This Agreement or any of the
Related Documents ceases to be in full force and effect
(including failure of any collateral document to create a valid
and perfected security interest or lien) at any time and for any
reason.
(e) Insolvency - The dissolution or termination of Borrower's
existence as a going business, insolvency, appointment of a
receiver for any part of Borrower's property, any assignment for
the benefit of creditors, any type of creditor workout, or the
commencement of any proceeding under any bankruptcy or insolvency
laws by or against Borrower.
(f) Creditor Proceedings - Commencement of any collection action,
collection suit, garnishment, attachment, levy, or foreclosure,
whether by judicial process, self-help, repossession, or other
method, by any creditor of Borrower or of the Guarantor seeking
to collect an amount or claim in excess of $100,000.00 or seeking
to foreclose or execute against or place a lien upon the
Collateral. The Borrower shall give the Bank written notice of
the occurrence of any such claim or action; such event shall not
be an Event of Default if the Borrower has provided the Bank with
information, assurances, or other necessary protection by which
the Bank can reasonably determine that such claim against the
Borrower or Guarantor does not impair timely repayment of the
Loan, nor impair the Collateral.
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(g) Stop Notices or Lien Claims - The Bank receives any stop notice
pursuant to the Stop Notice Act or any lien, in excess of
$50,000, is filed by any subcontractor or supplier on any real
property which is Collateral for this Loan.
(h) Events Affecting Guarantor - Any of the preceding events occurs
with respect to the Guarantor.
(i) Insecurity - Bank, in good faith, deems itself insecure.
6.02 Remedies Upon Default. Upon the occurrence of any Event of Default,
the Bank may forthwith or at any time during such default or events, without
notice to the Borrower declare, the unpaid balance of the Obligations, including
all principal and all interest then accrued, to be immediately due and payable;
and the Obligations shall become and be immediately due and payable without
presentment, notice of protest or other notice of dishonor or of any other kind
of notice whatsoever, including, without limitation, notice of default, notice
of intent to accelerate and notice of acceleration, all of which are hereby
expressly waived by Borrower; and the Bank may immediately enforce its rights
under the Loan Documents; and may exercise all rights available to it in law or
equity including all rights available under this Agreement or under the other
Loan Documents.
SECTION VII - MISCELLANEOUS.
----------------------------
7.01 Execution and Form of Documents. Each written instrument required by
this Agreement or any of the other Loan Documents to be furnished to the Bank
shall be duly executed by the person or persons specified (or where no
particular person is specified, by such person as the Bank shall require), duly
acknowledged where required by the Bank and, in the case of affidavits and
similar sworn instruments, duly sworn to and subscribed before a notary public
duly authorized to act in the premises by Governmental Authority; shall be
furnished to the Bank in one or more copies as required by the Bank; shall be in
such form and of such substance as shall be effective, in the judgment of the
Bank, to accomplish the results intended by such instrument; and shall in all
respects be in form and substance satisfactory to the Bank and to its legal
counsel.
7.02 Form of Evidence of Facts. Where evidence of the existence or
nonexistence of any fact is required by this Agreement or any of the other Loan
Documents to be furnished to the Bank, such evidence shall in all respects be in
form and substance reasonably satisfactory to the Bank, and the duty to furnish
such evidence shall not be considered satisfied until the Bank shall have
acknowledged, in writing, that it is satisfied therewith; provided that, if the
Bank fails to so acknowledge within sixty (60) days after receipt of such
evidence, it shall be deemed to be satisfied therewith.
7.03 Assignment of Loan Proceeds. Borrower hereby irrevocably assigns to
the Bank and grants a security interest to the Bank in and to its right, title
and interest in (a) all Loan proceeds held by the Bank, whether or not disbursed
and (b) all funds deposited by the Borrower with the Bank either under this
Agreement or otherwise.
7.04 Severability. If any item, term or provision contained in the Loan
Documents is in conflict, or may hereafter be held to be in conflict with the
laws of the United States or the State of New Mexico, as applicable, or any
political subdivision of any of them, then only the documents containing such
13
provision shall be affected and it shall be affected only as to such particular
item, term or provision and shall in all other respects remain in full force and
effect.
7.05 No Waiver. No course of dealing between the Bank and the Borrower or
any guarantor, or any delay on the part of the Bank in exercising any rights
hereunder or under the Loan Documents shall operate as a waiver of any rights of
the Bank, except to the extent, if any, expressly waived in writing by the Bank.
7.06 Survival. All covenants, agreements, representations and warranties
made by the Borrower in the Loan Documents and in any certificates or other
documents or instruments delivered pursuant to this Agreement shall survive the
making by the Bank of the Loan and the execution and delivery of the Loan
Documents, and shall continue in full force and effect until the Obligations are
paid in full.
7.07 Notices. Any notice, request or other communication required or
permitted to be given hereunder shall be given in writing by hand delivery,
facsimile transmission, delivery by commercial courier or by depositing the same
in the United States Mail, postage prepaid, addressed to the respective parties
as follows:
If to the Borrower: Amrep Southwest, Inc.
333 Rio Rancho Drive
Rio Rancho, NM 87124
Attn: James H. Wall, President
with a copy to:
Matthew M. Spangler, Esq.
P.O. Box 15698
Rio Rancho, NM 87174-5698
If to the Bank: Wells Fargo Bank New Mexico, N.A.
P.O. Box 1081
Albuquerque, NM 87103
Attn: Ron D. Smith, Executive Vice
President
7.08 Modification. This Agreement shall not be changed orally or by course
of conduct or dealing but shall be changed only by agreement in writing signed
by all parties hereto.
7.09 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which, when so executed and delivered, shall be
an original, but such counterparts shall together constitute one and the same
instrument.
7.10 Binding Effect. This Agreement shall be binding upon the Bank, the
Borrower and its successors, assigns, heirs and personal representatives.
7.11 No Partnership or Joint Venture. Notwithstanding anything to the
contrary in the Loan Documents, and notwithstanding any action the Bank takes
pursuant to the Loan Documents, the Bank and the Borrower shall not be deemed to
be engaged in a partnership or joint venture, nor shall the Bank be deemed to be
an agent or principal of the Borrower.
14
7.12 Assignment by the Bank. The Loan Documents, and the Loan contemplated
thereby, may be placed, participated, assigned and/or serviced by the Bank
and/or its successors and assigns, and in connection with any of the foregoing,
the Bank may receive servicing, brokerage or other fees. Any such placement,
participation, assignment or servicing shall be at the Bank's sole option; and
the Bank and its successors and assigns shall have no obligations to disclose to
the Borrower the receipt, or contemplated receipt, of any such fees, nor shall
the Borrower have any claim or right to the same. In the event the Bank sells or
transfers its entire interest in the Loan and the Loan Documents, the Bank or
such purchaser or assignee will notify the Borrower of such event within 30
days.
7.13 Relation to Other Documents. The provisions of this Agreement are not
intended to supersede the provisions of the other Loan Documents except as
stated hereinabove, but should be construed as supplemental thereto. However,
except as specifically provided herein, if there is any inconsistency between
the provisions of this Agreement and the other Loan Documents, this Agreement
shall control any conflicting language or provision deemed modified to comport
with this Agreement. All terms or words defined in this Agreement shall have the
same meaning, in any exhibit to this Agreement, unless a particular exhibit
contains a specific alternative definition for use in that exhibit.
7.14 Arbitration and Jurisdiction. Upon the demand of any party, any
Dispute shall be resolved by binding arbitration (except as set forth in (e)
below) in accordance with the terms of this Agreement. A "Dispute" shall mean
any action, dispute, claim or controversy of any kind, whether in contract or
tort, statutory or common law, legal or equitable, now existing or hereafter
arising under or in connection with, or in any way pertaining to, any of the
Loan Documents, or any past, present or future extensions of credit and other
activities, transactions or obligations of any kind related directly or
indirectly to any of the Loan Documents, including without limitation, any of
the foregoing arising in connection with the exercise of any self-help,
ancillary or other remedies pursuant to any of the Loan Documents. Any party may
by summary proceedings bring an action in court to compel arbitration of a
Dispute. Any party who fails or refuses to submit to arbitration following a
lawful demand by any other party shall bear all costs and expenses incurred by
such other party in compelling arbitration of any Dispute.
(a) Governing Rules. Arbitration proceedings shall be administered by
the American Arbitration Association ("AAA") or such other administrator as
the parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved
in accordance with the Federal Arbitration Act (Title 9 of the United
States Code), notwithstanding any conflicting choice of law provision in
any of the Loan Documents. The arbitration shall be conducted at a location
in Albuquerque, New Mexico selected by the AAA or other administrator. If
there is any inconsistency between the terms hereof and any such rules, the
terms and procedures set forth herein shall control. All statutes of
limitation applicable to any Dispute shall apply to any arbitration
proceeding. All discovery activities shall be expressly limited to matters
directly relevant to the Dispute being arbitrated. Judgment upon any award
rendered in an arbitration may be entered in any court having jurisdiction;
provided however, that nothing contained herein shall be deemed to be a
waiver by any party that is a bank of the protections afforded to it under
12 U.S.C. 91 or any similar applicable state law.
(b) No Waiver; Provisional Remedies, Self-Help and Foreclosure. No
provision hereof shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or
personal property collateral or security, or to obtain provisional or
ancillary remedies, including without limitation injunctive relief,
15
sequestration, attachment, garnishment or the appointment of a receiver,
from a court of competent jurisdiction before, after or during the pendency
of any arbitration or other proceeding. The exercise of any such remedy
shall not waive the right of any party to compel arbitration hereunder.
(c) Arbitrator Qualifications and Powers; Awards. Arbitrators must be
active members of the State Bar of New Mexico or retired judges of the
state or federal judiciary of New Mexico with expertise in the substantive
law applicable to the subject matter of the Dispute. Arbitrators are
empowered to resolve Disputes by summary rulings in response to motions
filed prior to the final arbitration hearing. Arbitrators (i) shall resolve
all Disputes in accordance with the substantive law of the State of New
Mexico, (ii) may grant any remedy or relief that a court of the State of
New Mexico could order or grant within the scope hereof and such ancillary
relief as is necessary to make effective any award, and (iii) shall have
the power to award recovery of all costs and fees, to impose sanctions and
to take such other actions as they deem necessary to the same extent a
judge could pursuant to the Federal Rules of Civil Procedure, the New
Mexico Rules of Civil Procedure or other applicable law. Any Dispute in
which the amount in controversy is $5,000,000 or less shall be decided by a
single arbitrator who shall not render an award of greater than $5,000,000
(including damages, costs, fees and expenses). By submission to a single
arbitrator, each party expressly waives any right or claim to recover more
than $5,000,000. Any Dispute in which the amount in controversy exceeds
$5,000,000 shall be decided by majority vote of a panel of three
arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations.
(d) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the Dispute with
the AAA. No arbitrator or other party to an arbitration proceeding may
disclose the existence, content or results thereof, except for disclosures
of information by a party required in the ordinary course of its business,
by applicable law or regulation, or to the extent necessary to exercise any
judicial review rights set forth herein. If more than one agreement for
arbitration by or between the parties potentially applies to a Dispute, the
arbitration provision most directly related to the Loan Documents or the
subject matter of the Dispute shall control. This arbitration provision
shall survive termination, amendment or expiration of any of the Loan
Documents or any relationship between the parties.
7.15 Governing Law. This Agreement and the Loan Documents have been
negotiated, executed and delivered solely within the State of New Mexico. The
rights and obligations of the parties under this Agreement and under each of the
Loan Documents shall be governed by and construed and interpreted in accordance
with the laws of the State of New Mexico.
BORROWER: AMREP SOUTHWEST, INC.
By: /s/ James H. Wall
James H. Wall, President
16
BANK: WELLS FARGO BANK NEW MEXICO, N.A.
By: /s/ Ron D. Smith
Ron D. Smith, Executive Vice President
17
FIRST AMENDMENT TO THE MASTER LOAN AGREEMENT
--------------------------------------------
DATED EFFECTIVE JULY 31, 2000
-----------------------------
THIS AMENDMENT is dated effective January 5, 2001, between and among Amrep
Southwest, Inc. (the "Borrower"), Rio Venture XV, Inc. ("Rio Venture"), and
Wells Fargo Bank New Mexico, N.A. (the "Bank").
This Amendment is made pursuant to Section 7.08 of the Master Loan
Agreement dated effective July 31, 2000 (the "Agreement"). The parties each
acknowledge and agree that the Agreement remains in full force and effect except
as specifically modified or altered herein and that as used hereafter the term
"Agreement" refers to the Agreement, as amended and modified by this Amendment.
1. Borrower has requested that the Bank grant it a new credit facility in
the amount of $2,000,000, payable in six months, to fund the Borrower's working
capital requirements. The Bank has agreed to grant such credit under the terms
and conditions contained and referenced herein.
2. Rio Venture and the Borrower have requested that the Bank extend the
maturity of the June 30, 1999, loan originated by the Bank to Eldorado Joint
Venture, assumed by Rio Venture under the Assumption Agreement dated effective
February 25, 2000, the "Eldorado Note" from December 30, 2000, to December 30,
2001, under the terms, conditions and requirements contained or referenced
herein.
3. The $2,000,000 Working Capital Note, maturing July 5, 2001, is granted
by the Bank. A copy of such Note is attached as Exhibit 1.15(i). The Borrower
acknowledges and agrees that such Note is a "Note" as defined in the Agreement
and is secured by all Collateral as defined in the Agreement.
4. The $1,500,000 Interim Note (Exhibit 1.15(h)) has been paid in full.
5. A copy of the Eldorado Note is attached as Exhibit 1.15(j) and a copy of
the Promissory Note Change in Terms Agreement extending the maturity date of
such Note is attached as Exhibit 1.15(j)(1).
6. The following additional language is added to Section 2.07 Renewals,
Extensions and Additional Loans is restated to read:
Each Note, Line, and Letter of Credit referenced in this Agreement contains
its own repayment terms and maturity. Borrower acknowledges the
enforceability of such specific terms and acknowledges that there is no
agreement, representation, or assurance by the Bank that a renewal,
extension, or modification of any note or loan, if such request is made by
the Borrower, would be considered or approved by the Bank. Should Borrower,
at any future date, request the renewal, extension, or modification of any
note or loan, the decision whether to grant or allow such request shall be
at the Bank's sole discretion, the Bank has no obligation or duty to the
Borrower to grant such request(s) if made, and shall have no liability to
the Borrower or to any other person if it declines, for any reason, to
approve any such request. This Agreement shall apply to and shall control
as to any subsequent renewal, extension, modification, note, loan, or other
extension of credit by the Bank to the Borrower, unless specific contrary
language, referencing that this Agreement does not apply, is contained in
such subsequent note. Without limiting or altering the foregoing, the
Borrower acknowledges and agrees that should it, at the maturity of the new
18
$2,000,000 Working Capital Note request any renewal or extension of such
Note, any consideration by the Bank shall first require that the request
include the continuing guaranty of such Note by Amrep Corporation. The
decision whether to consider or to grant such request, if made, shall rest
solely with the Bank. Should the Bank consider such request, it would do so
based on its then applicable credit and underwriting standards and
criteria. Neither this additional language nor any agreement to review or
consider such request, if made, shall be deemed or operate to suggest such
request may be granted nor require the Bank to grant or allow such request
or renewal.
7. The following provisions are added to Section 3.01:
a) Exhibit 3.01(i): Payment Requirements for the $2,000,000
Working Capital Note.
b) Exhibit 3.01(j): Payment Requirements and Release Provisions
for the Eldorado Note.
8. Exhibit 4.09(h) is modified by Replacement Exhibit 4.09(h), a copy of
which is attached, which further limits payments and transfers of funds from the
Borrower to its parent company Amrep Corporation.
9. The Borrower acknowledges and reaffirms its liability under the
Commercial Guaranty dated June 30, 1999, of the Eldorado Note and that such
Guaranty continues in full force and effect according to its terms.
10. The parties acknowledge and agree that the term "Dispute" as used in
Section 7.14 Arbitration and Jurisdiction now includes the Eldorado Note as
modified by the Change in Terms Agreement dated effective January 5, 2001, and
all collateral and loan documents related thereto, including all guaranties of
such indebtedness.
WELLS FARGO BANK AMREP SOUTHWEST, INC.
NEW MEXICO, N.A.
By:___/s/ Elizabeth R. Allbright_________ By:__/s/ James H. Wall_____
Elizabeth R. Allbright, Vice President James H. Wall, President
RIO VENTURE XV, INC.
By: /s/ James H. Wall
Its: Pres.
19
SECOND AMENDMENT DATED EFFECTIVE JUNE 15, 2001,
-----------------------------------------------
TO THE MASTER LOAN AGREEMENT
----------------------------
DATED EFFECTIVE JULY 31, 2000
-----------------------------
THIS AMENDMENT is dated effective June 15, 2001, between and among Amrep
Southwest, Inc. (the "Borrower"), and Wells Fargo Bank New Mexico, N.A. (the
"Bank").
This Amendment is made pursuant to Section 7.08 of the Master Loan
Agreement dated effective July 31, 2000 (the "Agreement"). As used in the
Agreement, this Amendment, and all exhibits hereto, the term "Agreement" refers
to the Agreement, as amended and modified by this Amendment.
1. Borrower has requested that the Bank approve the changes to the Loan, as
detailed herein, in order to allow the Borrower to advance up to $4,400,000.00
in cash to its parent company, Amrep Corp., from the sale of residential real
property in Bradbury, Colorado (the "Bradbury Sale").
2. The Bank is willing to allow such upstreaming, in consideration of the
changes and modifications to the Loan, including certain existing Notes and in
consideration of the other provisions, requirements, restrictions, and covenants
contained in this Amendment or referenced in the Exhibits hereto.
3. Generally, changes to existing Notes under the Loan, as detailed below
and in the referenced exhibits, are:
a) the "$4,000,000.00 Revolving Line of Credit Note" dated July 31,
2000, maturing October 31, 2001, in the maximum principal amount of
$4,000,000.00, will be reduced to the maximum principal amount of
$3,000,000.00, as provided in paragraph 11, below, in the Change in
Terms Agreement attached as Exhibit 1.15(a).1, and in the attached
Second Replacement Exhibit 3.01(a), and
b) the "$6,000,000.00 Receivables Financing Note" dated August 17,
2000, maturing September 30, 2001, is reduced to the maximum principal
amount of $3,000,000.00, as provided in the Change in Terms Agreement
attached as Exhibit 1.15(d).1, and in the Second Replacement Exhibit
3.01(d).
4. Upon Borrowers closing of the Bradbury Sale and payment by the
purchaser, the Borrower expects to receive approximately $7,000,000.00 of net
cash proceeds and proposes to transfer up to $4,400,000.00 of such proceeds to
its parent company Amrep Corp.
5. Such transfer would be prohibited under the previous Exhibit 4.09(h)(B)
to the Loan Agreement, but for this Amendment and the provisions contained
herein and in the exhibits hereto.
6. Amrep Corp. requests the $4,400,000.00 transfer from the Borrower in
order to repay certain obligations to its subsidiary Kable News, to allow Kable
News to apply such amount to reduce its current indebtedness to its lender
American National Bank and Trust, Chicago, Illinois. Further, Kable News lender
has requested that, pending receipt of such partial payment, the Borrower grant
that lender a deed of trust lien up to the amount of $4,400,000.00, on the
20
Bradbury, Colorado property, securing obligations of Kable News to such lender.
Prior written approval by the Bank is required under the terms of the Loan
Agreement for the Borrower to grant such lien.
7. The Borrower is allowed, upon the execution and delivery of this
Amendment and all other documents referenced herein, to execute and deliver to
American National Bank and Trust, a deed of trust on the Bradbury, Colorado
property, for the principal amount of $4,400,000.00, securing obligations of
Kable News to such Lender, in the form attached hereto as Exhibit A.
8. The $2,000,000.00 Working Capital Note dated January 5, 2001, maturing
July 5, 2001, is paid in full as part of the execution of this Amendment.
9. The Bank has required for approval of these transactions the Corporate
Resolution to Guaranty and the Commercial Guaranty by Amrep Corp. of all
indebtedness of the Borrower in the forms attached as Exhibits B and C.
10. Additional limitations on the amount of distributions by the Borrower
to Amrep Corp. are contained in Second Replacement Exhibit 4.09(h) to the Master
Loan Agreement.
11. The Change in Terms Agreement reducing the $4,000,000.00 Revolving Line
of Credit Note to $3,000,000.00 and portions of the Second Replacement Exhibit
3.01(a) which reduce such Note and advances under such Note to $3,000,000.00,
shall be effective immediately upon the earliest of any one of the following
events:
a) closing of the Bradbury Sale,
b) closing on a sale by the Borrower of its Lot G, Folsom,
California property, or
c) September 30, 2001.
12. The Borrower will pay at closing all legal fees and other costs
incurred by the Bank to prepare this Amendment, all related documents and the
closing of these transactions.
13. The parties each acknowledge and agree that the Agreement, as
previously amended by the First Amendment dated effective January 5, 2001,
remains in full force and effect except as specifically modified or altered by
this Amendment and the exhibits hereto.
WELLS FARGO BANK AMREP SOUTHWEST, INC.
NEW MEXICO, N.A.
By:_/s/ Elizabeth R. Allbright__________ By:_/s/ James H. Wall_____
Elizabeth R. Allbright, Vice President James H. Wall, President
21
SECOND REPLACEMENT EXHIBIT 3.01(a) dated effective June 15, 2001
----------------------------------------------------------------
to MASTER LOAN AGREEMENT dated effective July 31, 2000
------------------------------------------------------
Disbursement Procedures and Requirements
----------------------------------------
for the $4,000,000 Revolving Line of Credit Note
------------------------------------------------
(to be reduced to a $3,000,000.00 revolving credit note)
The Borrower shall, in addition to all other requirements and restrictions
under the Master Loan Agreement, observe and perform the following requirements
as to the now $3,000,000.00 Revolving Line of Credit Note (referred to below as
"this Note"):
A. PURPOSE
-------
This Note is intended to be a revolving credit facility in the maximum
principal amount of $4,000,000.00 to fund Borrower's various project
construction costs and development working capital costs. Upon the occurrence of
the first of certain occurrences, the maximum disbursed amount will be limited
to $3,000,000.00
B. BORROWING BASE; REDUCTION
-------------------------
1. All amounts outstanding and all advances requested under this Note
shall be based upon a maximum Credit Balance not to exceed 60% of the
Collateral Value. For purposes of such calculation, the term "Credit
Balance" means the principal balances of this Note. The term "Collateral
Value" means the bulk valuation, as determined by the Bank's appraisals, of
the commercial parcels, mortgaged to the Bank in the Mortgage dated
effective July 31, 2000, in Commerce Center, Gateway South, Gateway North,
High Resort Center, Arrowhead Ridge, and Unser Marketplace (Such parcels
collectively referred to as the "Commercial Lots" and more specifically
described in the Mortgage). In the event the Credit Balance to Collateral
Value ratio exceeds 60%, the Borrower shall immediately reduce the Credit
Balance by the amount necessary to reduce such ratio to not more than 60%.
Such reduction shall be applied in the order specified in Section D below.
2. In addition to the requirements and restrictions of subparagraph 1,
above, any sale of Commercial Lot(s) which occurs prior to the effective
date of the reduction of this revolving line from $4,000,000.00 to
$3,000,000.00 will result in the committed amount on the Note being reduced
by an amount equal to the net proceeds from the sale of such Commercial
Lot(s) up to the maximum aggregate reduction of $1,000,000.00. If the
outstanding Credit Balance is greater than the resulting reduced committed
balance, then the Borrower must reduce the principal balance of the Note by
such excess. For example, if the Note balance is $3,500,000.00 and there is
a sale of a Commercial Lot for net proceeds of $750,000.00, the total
commitment of $4,000,000.00, is reduced by the $750,000.00 sale, to
$3,250,000.00. The principal balance of $3,500,000.00 must be reduced by
$250,000.00 to equal the reduced committed balance of $3,250,000.00. This
requirement is in addition to the requirement to maintain the 60%
Collateral to Value ratio requirement in subparagraph 1, above, and will
continue until the Note commitment is reduced to $3,000,000.00 as provided
in the Second Amendment dated June 15, 2001, to the Master Loan Agreement.
C. DISBURSEMENTS
-------------
22
Provided no event of default or noncompliance with the Loan Agreement
exists, this Note is not fully advanced, and the following requirements have
been satisfied, the Borrower may request, subject to all limitations and
requirements of Section B, that the Bank advance undisbursed proceeds on this
Note up to a Credit Balance of 60% of the Collateral Value of the unreleased
Commercial Lots. If available, such funds will be advanced by the Bank within
three (3) business days of the date requested.
D. PAYMENTS AND RELEASES FOR LOT SALES
-----------------------------------
Provided no event of default has occurred, the Borrower shall be entitled
to releases of its mortgage lien on the Commercial Lots as follows, to allow
said lots to be sold and conveyed to third party purchasers, at fair value and
the proceeds are applied as follows:
1. Proceeds from Sale of Commercial Lots. Proceeds from the sale of
CommercialLots shall, if necessary to maintain the 60% Credit Balance to
Collateral Value ratio, be applied to reduce the principal balance of this
Note. Proceeds from sales of Commercial Lots not needed to reduce the
principal balance of maintain such ratio, will be released to the Borrower.
2. Releases of Excess Commercial Lots. Releases as to Commercial Lots may
be requested by the Borrower provided that the principal balance of this
Note does not exceed $3,000,000.00, provided that the resulting Credit
Balance to Collateral Value ratio does exceed 60%, and subject to the
requirements of Section B, above. Should a release be requested and the
resulting Credit Balance to Collateral Value would be greater than 60%,
Borrower shall reduce the Credit Balance by payment on a note(s) in the
order provided in Section B, above before the requested release will be
allowed.
3. Releases Upon any Event of Default. If any event of default has
occurred, releasesof the Bank's mortgage lien otherwise allowed by any of
the above provisions shall be at the sole discretion of the Bank.
E. SUBSTITUTE LEGAL DESCRIPTIONS AND RELEASES FOR DEDICATED STREETS, ETC.
----------------------------------------------------------------------
Borrower has or is presently in the process of preparing and seeking
approval for development plans, including approval of subdivision plans and
plats, which will result in the platting of certain presently unplatted portions
in Unit 20. As a result, the legal descriptions in some presently unplatted
portions of Unit 20 will be converted into tract legal descriptions. The Bank
agrees, provided it approves the form, resulting numbers, sizes of lots, and
collateral values of residential and commercial lots created as a result of such
plats, and also subject to the Bank's ability to confirm and obtain appropriate
modifications of the Mortgage, endorsements of title insurance insuring such
Mortgage, and subject also to any other necessary assurances, to modify the
Mortgage to revise such legal descriptions. The Bank will not disprove the
substitution of legal descriptions or the release of dedicated property as to
any platted dedication conforming to the Unit 20 master plan or the Unit 20
Development Agreements between the Borrower and the City of Rio Rancho. As to
such approved replats, the Bank will release the Mortgage as to those platted
portions of property to be dedicated to the City of Rio Rancho for public
streets, drainage areas, public facilities, or other infrastructure required for
platting, public use, and public access as a condition for master plan or
subdivision approval. As to such parcels, no release payment is required.
23
EXHIBIT 3.01(b) to MASTER LOAN AGREEMENT
----------------------------------------
Dated Effective July 31, 2000
-----------------------------
Disbursement Procedures, Requirements, Limitations, and Lot
-----------------------------------------------------------
Releases for the $6,385,000 Off Site Development Note
-----------------------------------------------------
A. Appraisal.
----------
The value of the property subject to the Enchanted Hills Mortgage is, at
the Closing Date, being appraised as required by the Bank credit policies and
applicable regulatory requirements. Such appraisal is expected to be received
over the next 30 days and upon receipt, must be reviewed for adequacy and
compliance with the Bank's internal requirements and applicable regulatory
compliance. When the appraisal is received, reviewed, and confirmed to have met
such requirements and established a minimum wholesale or bulk value of
$9,825,000 for Units 9, 10, 11, 12, 13A, 14A, and 14B, the Borrower will
immediately execute and deliver the Note to the Bank and the Borrower may then
request advances on the Note in accordance with these Disbursement Procedures.
B. Disbursement Procedures and Requirements.
-----------------------------------------
This Note is a multiple advance, non-revolving, declining balance, credit
facility. The Bank will, subject to the terms of the Agreement disburse not more
than the aggregate maximum principal amount of $6,385,000 as follows:
1. $705,500 to renew/extend the outstanding principal balance of the
February 29, 1999, offsite development note, and
2. the remainder, up to the maximum aggregate Note amount including the
amounts advanced under the preceding paragraph, to fund 75% of the
Borrower's actual cost of satisfactorily completed unreimbursed
offsite development costs for Enchanted Hills portion of Unit 20, Rio
Rancho, Sandoval County, New Mexico, primarily to complete the main
drainage channel through Enchanted Hills.
All advances shall be subject to the following requirements and restrictions:
3. The aggregate of all principal advances on this Note, including the
$705,500 advance to renew/extend the February 29, 1999, offsite
development note balance, will not exceed $6,385,000. The Note
requires periodic interest and principal payments described in the
Note and below and is due and payable in full February 17, 2003.
4. This Note is a non-revolving credit facility with a declining maximum
outstanding principal balance, requiring quarterly interest payments,
and requiring principal payments to reduce the principal amount of the
Note during its term as follows:
a) Interest Payments: Quarterly interest payments of all accrued
interest due beginning November 17, 2000, and continuing on the
same day of each subsequent three (3) month period until
maturity.
b) Principal Payments: Quarterly principal payments of $638,500
beginning April 30, 2001, and continuing on the same day of each
24
subsequent three (3) month period until maturity. Payments for
release of individual lots sold during the term of the Note will
be applied to the required quarterly principal reductions, during
the quarter received. Payments made in excess of the quarterly
requirement will be a credit toward the next quarterly payment.
5. Draw requests by the Borrower shall be made not more often than
twice per month;
6. Draw requests will be accompanied by a signed application and
request for advance (in the form of AIA Document No. G702 or
mutually agreeable equivalent), which details:
(a) Total budgeted cost by category;
(b) Percentage completed since the previous request;
(c) Total percentage completed by category;
(d) Estimated (or if known, actual) cost per category, including
total cost, cost for activity performed during the month,
and total amount of activity completed to date by category;
(e) Borrower's pro-rata cost since the last request and to date,
by item or activity; and
(f) Bank's pro-rata cost since the last request and to date, by
item or activity.
7. Any costs for which the Bank has previously advanced a pro-rata
amount under the previous offsite development loan shall not be
eligible for inclusion in the costs for pro-rata funding under
this Note.
8. Requests shall include a signed statement by the appropriate
representative of the Borrower that all invoices for work or
materials related to such development are properly submitted and
that Borrower has paid or approved for payment in accordance with
its terms and conditions payment to such provider.
9. The Bank shall, within ten (10) business days of receipt of the
draw request, inspect the property and improvements, to the
extent it deems necessary, to verify the apparent completion of
work reportedly performed. Within such 10-day period the Bank
will approve the draw requests and advance the appropriate amount
of Loan proceeds, by direct deposit to Borrower's account with
the Bank or as otherwise agreed by the parties, or will notify
the Borrower of any concern regarding the draw request and
documentation. The parties will use their best efforts to
immediately resolve any questions or discrepancies.
10. In the event actual construction costs for the project are less
than 90% of budget, the Bank shall advance only its pro-rata
share (75%) of the actual costs incurred. If such total costs are
in excess of the construction budget, the Bank shall not be
obligated to advance more than the Loan amount and all costs in
excess of budget shall be promptly paid by Borrower.
C. Release Provisions
------------------
25
Provided no Event of Default exists, Borrower shall be entitled to a
release of the Bank's mortgage lien(s) on an individual lot(s) provided that as
to such lot(s):
1. The Borrower pays to the Bank a per lot release payment of
$6,800, for lots in Phases 9 through 12, 13A, 14A, and 14B;
(1) All other conditions or limitations as to the release of a lot
contained in the Agreement or any other exhibit thereto have been
satisfied, and
(2) Additional release payments are required for lots in Phase 13B as
provided in Exhibit 3.01(c).
D. Substitute Legal Descriptions and Releases for Dedicated Streets, etc.
----------------------------------------------------------------------
Borrower has or is presently in the process of preparing and seeking
approval for development plans, including approval of subdivision plans and
plats, which will result in the platting of certain presently unplatted portions
in Unit 20. As a result, the legal descriptions in some presently unplatted
portions of Unit 20 will be converted into tract legal descriptions. The Bank
agrees, provided it approves the form, resulting numbers, sizes of lots, and
collateral values of residential and commercial lots created as a result of such
plats, and also subject to the Bank's ability to confirm and obtain appropriate
modifications of the Mortgage, endorsements of title insurance insuring such
Mortgage, and subject also to any other necessary assurances, to modify the
Mortgage to revise such legal descriptions. The Bank will not disprove the
substitution of legal descriptions or the release of dedicated property as to
any platted dedication conforming to the Unit 20 master plan or the Unit 20
Development Agreements between the Borrower and the City of Rio Rancho. As to
such approved replats, the Bank will release the Mortgage as to those platted
portions of property to be dedicated to the City of Rio Rancho for public
streets, drainage areas, public facilities, or other infrastructure required for
platting, public use, and public access as a condition for master plan or
subdivision approval. As to such parcels, no release payment is required.
26
EXHIBIT 3.01(c) to MASTER LOAN AGREEMENT
----------------------------------------
Dated Effective July 31, 2000
-----------------------------
Disbursement Procedures, Limitations, and Lot
---------------------------------------------
Releases for the Unit 13B $2,000,000 On Site Development Note
-------------------------------------------------------------
A. Appraisal.
---------
The value of the property subject to the Enchanted Hills Mortgage is, at
the Closing Date, being appraised as required by the Bank credit policies and
applicable regulatory requirements. Such appraisal is expected to be received
over the next 30 days and upon receipt, must be reviewed for adequacy and
compliance with the Bank's internal requirements and applicable regulatory
compliance. When the appraisal is received, reviewed, and confirmed to have met
such requirements and established a minimum wholesale or bulk value of
$3,080,000 for Unit 13B, the Borrower will immediately execute and deliver the
Note to the Bank and the Borrower may then request advances on the Note in
accordance with these Disbursement Procedures.
B. Disbursement Procedures and Requirements.
-----------------------------------------
The Bank will, subject to the terms of this Agreement, disburse up to 80%
of Borrower's actual lot development costs not previously submitted for Unit 13B
of Enchanted Hills, Rio Rancho, Sandoval County, New Mexico. The aggregate
maximum amount of all principal advances advanced on the Note shall not exceed
$2,000,000, subject to the following additional provisions:
1. Draw requests by the Borrower shall be made not more often than twice
per month;
2. Draw requests will be accompanied by a signed application and request
for advance (in the form of AIA Document No. G702 or mutually
agreeable equivalent), which details:
(a) Total budgeted cost by category;
(b) Percentage completed since the previous request by category;
(c) Total percentage completed by category;
(d) Estimated (or if known, actual) cost per category, including
total cost, cost for activity performed during the month, and
total amount of activity completed to date by category;
(e) Borrower's pro-rata costs since the last request and to date, by
item or activity; and
(f) Bank's pro-rata cost since the last request and to date, by item
or activity.
3. Requests shall include a signed statement by the appropriate
representative of the Borrower that all invoices for work or materials
related to such development are properly submitted and that Borrower
has paid or approved for payment in accordance with its terms and
conditions payment with such provider.
27
4. The Bank shall, within ten (10) business days of receipt of the draw
request, inspect the property and improvements, to the extent it deems
necessary, to verify the apparent completion of work reportedly
performed. Within such 10-day period the Bank will approve the draw
requests and advance the appropriate amount of Loan proceeds, by
direct deposit to Borrower's account with the Bank or as otherwise
agreed by the parties, or will notify the Borrower of any concern
regarding the draw request and documentation. The parties will use
their best efforts to immediately resolve any questions or
discrepancies.
5. In the event actual construction costs for the remaining portion of
the project are less than 90% of budget, the Bank shall advance only
its pro-rata share (80%) of the actual costs incurred and not
previously submitted for reimbursement. If such total costs are in
excess of the construction budget, the Bank shall not be obligated to
advance more than the Loan amount and all costs in excess of budget
shall be promptly paid by Borrower.
C. Step-Down Principal Payments.
-----------------------------
1. During the two (2) year term of the Unit 13B On Site Development
Note, the Borrower shall, in addition to all previous payments,
make additional principal payments ("Step-Down" payments) on the
Note to reduce the principal balance to the amount specified at
each of the following dates:
Date Maximum Principal Balance
June 5, 2001 $770,000
November 1, 2001 $360,000
D. Release Provisions
------------------
Provided no Event of Default exists, Borrower shall be entitled to release
of the Bank's mortgage lien(s) on individual lots in Unit 13B provided:
1. The Borrower pays to the Bank a per lot release payment of $6,800 on
the $6,385,000 Offsite Development Note plus a per lot $16,400 payment
on this Note, and
2. All other conditions or limitations as to the release of a lot
contained in the Agreement or any other exhibit thereto have been
satisfied. 3.
E. Substitute Legal Descriptions and Releases for Dedicated Streets, etc.
----------------------------------------------------------------------
Borrower has or is presently in the process of preparing and seeking
approval for development plans, including approval of subdivision plans and
plats, which will result in the platting of certain presently unplatted portions
in Unit 20. As a result, the legal descriptions in some presently unplatted
portions of Unit 20 will be converted into tract legal descriptions. The Bank
agrees, provided it approves the form, resulting numbers, sizes of lots, and
collateral values of residential and commercial lots created as a result of such
plats, and also subject to the Bank's ability to confirm and obtain appropriate
modifications of the Mortgage, endorsements of title insurance insuring such
Mortgage, and subject also to any other necessary assurances, to modify the
28
Mortgage to revise such legal descriptions. The Bank will not disprove the
substitution of legal descriptions or the release of dedicated property as to
any platted dedication conforming to the Unit 20 master plan or the Unit 20
Development Agreements between the Borrower and the City of Rio Rancho. As to
such approved replats, the Bank will release the Mortgage as to those platted
portions of property to be dedicated to the City of Rio Rancho for public
streets, drainage areas, public facilities, or other infrastructure required for
platting, public use, and public access as a condition for master plan or
subdivision approval. As to such parcels, no release payment is required.
29
SECOND REPLACEMENT EXHIBIT 3.01(d) dated effective June 15, 2001
----------------------------------------------------------------
to MASTER LOAN AGREEMENT
------------------------
Dated Effective July 31, 2000
-----------------------------
Disbursement Procedures and Requirements, Borrowing Base, Escrow and Payments
-----------------------------------------------------------------------------
for the $3,000,000 Receivables Financing Note
---------------------------------------------
The Borrower shall, in addition to all other requirements and restrictions
under the Master Loan Agreement, as amended, observe and perform the following
requirements as to the now $3,000,000 Receivables Financing Note.
A. REVOLVING LINE
--------------
This Line is a revolving credit facility to finance notes or contracts
payable to the Borrower from its sale of residential and commercial real estate
and developed lots. The Note amount and the maximum principal amount which may
be outstanding at any time is reduced from $6,000,000 to $3,000,000. Collateral
for the Line consists of a pool of individual real estate contracts, real estate
notes and mortgages, real estate notes and deeds of trust, and other
receivables, in accordance with all Borrowing Base and other requirements and
conditions of this Exhibit and the Agreement. All amounts outstanding, all
advances requested under this Receivables Financing Line and all required
payments shall be based upon the borrowing base formula and other requirements
described or referenced below.
B. BORROWING BASE; ELIGIBLE CONTRACTS
----------------------------------
1) Eligible Contracts; Requirements. The term "Eligible Contracts" means
any real estate contract, real estate note and mortgage, real estate note and
deed of trust, or other similar real estate purchase contracts receivable
(generically, "contract(s)") which the Bank determines: (i) meet the general
standards described below; (ii) are satisfactory collateral for the Receivables
Financing Note, and (iii) do not appear to contain more than a normal credit
risk. The decision of the Bank as to whether to accept any contract as an
Eligible Contract shall be final. Factors which the Bank will generally require
to consider an Eligible Contract as part of the Borrowing Base will include, but
are not limited to:
a) The initial contract balance will be not more than 80% of the total
real estate purchase price and the contract required a minimum 20%
cash down payment from the purchaser;
b) The outstanding principal balance of the contract must be not less
than $100,000.00 at the time the contract is offered and accepted as
an Eligible Contract and the purchaser's obligation to pay the
contract balance is not conditional or contingent;
c) The contract purchaser is a bona fide third party purchaser for
value, is not affiliated with the Borrower, and is a corporation or
individual purchasing property for a business purpose. Contracts by
individuals to buy residential property for their own use are not
eligible;
d) The original contract payment and other terms must not have been
30
altered, extended, renewed, or modified;
e) If the contract requires payments of interest only, the maturity
(date on which the principal balance is due in full) must be not more
than 12 months from the original contract date;
f) If the contract requires payment of both interest and principal (on
not less than annual intervals), the maturity (date in which the
principal balance is due in full) must be not be more than 36 months
from the original contract date;
g) Not more than the aggregate of $1,200,000.00 in contract principal
balances ($900,000.00 of the Borrowing Base and the Receivables
Financing Note principal balance) will be comprised of contracts due
from any single or affiliated or related group of purchasers without
the Bank's prior written approval;
h) Payments on the contract must be less than 90 days past due and the
contract must not be in default;
i) The weighted average remaining maturity of all accepted Eligible
Contracts, based upon the adjusted contract balances (as defined
below), calculated at least monthly, must not exceed 24 months;
j) A mortgagee's title policy or title search on the contract real
property subject to the contract confirming the Borrower's interest is
not: (i) subject to any prior liens or encumbrances (other than for
current taxes and the like), or (ii) subject to any restrictions or
covenants which adversely effect the value or marketability of the
property;
k) The Borrower is required to provide to the Bank any financial or
other information about the contract purchaser(s), information about
the value and marketability of the underlying real estate, and any
other information which the Bank reasonably requests.
2) Collateral Pledge/Assignment of Eligible Contracts. In order for an
Eligible Contract to be accepted by the Bank and included in the Borrowing Base
Formula, such contract must be assigned and pledged to the Bank and such pledge
or assignment perfected, at Borrower's expense. Generally, the Bank anticipates
that real estate contracts for the purchase of real property in New Mexico will
be collaterally assigned to the Bank, the assignment recorded, and a mortgage by
the Borrower to the Bank (subject to the interest of the real estate contract
purchaser) will be recorded. Real estate notes and mortgages will be assigned to
the Bank, the assignment recorded, and physical possession of the original
promissory note will be held by the escrow company as agent for the Bank. Other
receivables will be pledged or assigned and such assignment perfected at the
Borrower's expense as determined necessary by the Bank and its legal counsel and
applicable state law.
3) Acceptance of Eligible Contracts. The Borrower will submit to the Bank
proposed contracts to be accepted as Eligible Contracts, with properly
recorded/perfected assignments or pledges as required by the Bank, escrowed as
described in this Exhibit, together with any other documentation required by the
Bank. The Bank shall have the sole discretion to accept any contract as an
31
Eligible Contract and may reject any contract for any reason. Acceptance by the
Bank will be in writing.
C. BORROWING BASE FORMULA
----------------------
1) Borrowing Base Formula. Advances on the Receivables Financing Note will
be limited to a Borrowing Base Formula of 75% of the adjusted contract balances
derived from accepted Eligible Contract balances (the "Borrowing Base"). To
calculate such Borrowing Base, the principal balance(s) of any accepted
contracts which allow a per lot pro rata release will first be reduced/adjusted
as provided in subparagraph 2, below. Subject to all other requirements,
conditions, and limits in this Exhibit and the Agreement, and provided no Event
of Default by the Borrower under the Agreement has occurred, the Borrower may
request advances on the Receivables Financing Note up to the Borrowing Base. For
example, if the aggregate adjusted contract balance is $800,000, the Borrower
could, at that date, have a maximum aggregate of $600,000 advanced on the
Receivables Financing Note.
2) Adjustments (Reductions) for Partial Releases. As to any accepted
Eligible Contract which contains multiple lots/parcels, and per lot/parcel
payment and partial release provisions, the contract balance (and the resulting
Borrowing Base) will be reduced by the greater of; (a) the per lot release price
as stated in the Eligible Contract, or (b) 115% of the pro-rata per lot release
price, resulting in an adjusted (reduced) contract balance and reduced Borrowing
Base. A schedule showing example calculations is attached as Attachment I to
this Exhibit.
3) Funding Advances. If the Note is not fully advanced and the Borrowing
Base calculations reflect that additional advances under the Borrowing Base
Formula can be made, the Borrower may request, and the Bank will, within 3
business days of such request, advance the requested amount supported by the
Borrowing Base Formula. The Bank is not obligated to make any advance unless all
requirements, conditions, and limitations of the Agreement including this
Exhibit have been observed.
4) Applying Payments from Eligible Contracts. All principal payments
received on any Eligible Contract assigned to the Bank under the Borrowing Base
will be paid to the Bank. Provided no Event of Default by the Borrower under the
Agreement has occurred, such principal payment received will be applied to
reduce the principal balance of the Receivables Financing Note. If an Event of
Default has occurred, such payment will be applied to any Obligations of the
Borrower to the Bank in accordance with the Agreement or the terms of any
Note(s).
5) Recalculation of the Borrowing Base. The Borrowing Base will be
recalculated when:
(a) any payment is received on any accepted Eligible Contract,
(b) at any time such a contract no longer meets the Bank's
requirements for Eligible Contracts (whether due to delinquency of 90
days or more, weighted average maturity(ies) exceeding 24 months, real
estate contracts are in default, or for any other reason), as
determined by the Bank, or
(c) a new Eligible Contract is accepted by the Bank into the Borrowing
Base.
6) Additional Collateral or Principal Reduction Required. In the event the
32
principal balance of the Receivables Financing Note for any reason exceeds the
Borrowing Base, the Borrower shall within 5 business days of notice from the
Bank either:
a) Provide additional Eligible Contracts acceptable to the Bank to
increase the Borrowing Base to more than the Receivables Financing
Note balance, or
b) Reduce the principal balance of the Receivables Financing Note to
the Borrowing Base.
Any failure by the Borrower to comply with this requirement shall constitute an
Event of Default by the Borrower under the Agreement. If the Borrowing Base is
exceeded due to a recalculation for contracts delinquent 90 days or more and is
not corrected as required above, the Bank will require the Borrower, at the
Borrower's expense, to immediately take steps to obtain Mortgagee's title
insurance insuring the Bank's interest on such delinquent contract(s), and
obtain appraisals which meet all current bank regulatory requirements and meet
the Bank's internal real estate appraisal requirements for each parcel of real
property remaining on such delinquent contract(s).
D. ESCROW OF ELIGIBLE CONTRACTS, ESCROW COMPANY
--------------------------------------------
All Eligible Contracts will be escrowed by the Borrower and subject to an
escrow agreement, in the form acceptable to the Bank. Such escrow agreement(s)
will generally provide:
1) All Eligible Contracts which are accepted by the Bank and are part of
the Borrowing Base Formula will be escrowed with the named escrow company
which will be responsible for collecting all payments and maintaining
payment, delinquency, and default records for each such Eligible Contract;
2) The contract purchaser, obligor, or maker, of each Eligible Contract
shall be notified to make all payments directly and only to the escrow
company;
3) All principal payments on each Eligible Contract will be received by the
escrow company as agent for the Bank and shall be forwarded by the escrow
company directly to the Bank. Provided no Event of Default by the Borrower
under the Agreement exists interest payment received by the escrow company
shall be paid to the Borrower. Upon the occurrence of any such Event of
Default, all payments of interest and all other payments received under
each escrowed Eligible Contract shall be paid directly to the Bank;
4) The escrow company will hold physical possession of the promissory notes
and all other negotiable instruments related to any Eligible Contract, as
agent for the Bank, in order to perfect the Bank's security interest,
assignment, and any liens on such instruments;
5) The Bank will release its lien on any Eligible Contract or any lot or
parcel subject to any Eligible Contract in exchange for the per lot or pro
rata release price contained in such contract. The escrow company will
furnish, with any principal payment on any Eligible Contract, a description
of the lots to be released. The Bank will, upon receipt of such payment (in
collected funds) prepare and return a release for the appropriate lot(s) to
the escrow company for delivery to the contract purchaser.
33
6) The Escrow Agreement will require the escrow company to provide periodic
reports to the Bank and the Borrower of all payments received on each
Eligible Contract during the month and include information regarding
delinquent contracts and notices and other remedial actions taken as to any
delinquent contracts.
F. BORROWING BASE CERTIFICATES
---------------------------
1) The Borrower shall provide to the Bank a monthly certification of the
Eligible Receivables Borrowing Base not later than the 25th day of the following
month. The Borrowing Base Certificate shall contain the information required by
the Bank which will include, but is not limited to:
a) Contract Purchaser
b) Contract Date
c) Contract Maturity
d) Original Sale Price
e) Original Contract Balance
f) Payment Terms
g) Current Payment Due Date
h) Outstanding Contract Balance
i) Adjusted Outstanding Contract Balance (adjusted for partial
releases)
j) Months to Maturity
k) Maximum Advance Amount (calculated on adjusted contract balances)
l) Weighted Average Life of Eligible Contracts (calculated on
adjusted contract balances)
m) Any other information which the Bank may reasonably require.
2) In addition to the monthly Borrowing Base Certificates, the Borrower
shall provide to the Bank, a monthly report listing as to each Eligible
Contract, not later than the 25th day of each month which report will include,
as to each Eligible Contract:
a) Purchaser
b) Contract Identification
c) Original Lots/Legal Description
d) Lots/Legal Description for Released Land
e) Lots/Legal Description for Remaining Land
f) Contract Principal Balance
g) Contracted pro rata per lot/parcel Release Price for Remaining
Land
h) Contracted pro rata per lot/parcel Release Percentage for
Remaining Land
G. RELEASE OF ELIGIBLE CONTRACTS
-----------------------------
In the event the Borrower repays the Receivable Financing Note in full and
wishes to terminate such credit facility, and provided no Event of Default has
occurred under the Agreement, the Borrower shall be entitled to request that the
Bank release its liens upon and release any escrow agreements relating to any
remaining Eligible Contracts. Upon such request and provided the Receivables
Financing Note is paid in full and no Event of Default has occurred, the Bank
shall promptly furnish such releases to the Borrower.
34
ATTACHMENT I TO EXHIBIT 3.01(d)
EXAMPLES OF PARTIAL RELEASE BORROWING BASE ADJUSTMENTS
------------------------------------------------------
The following examples of adjustments to contract balances and Borrowing
Base assume a $1,000,000 contract balance for 10 lots at 100%, 115%, and 120%
pro rata, per lot release terms:
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Example 1: Contract Balance Adjusted Contract Borrowing Base
$100,000 (100% pro rata per Balance (75% of Adjusted
lot release) (115% Minimum Reduction) Contract Balance)
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Initial Balance: $1,000,000 $1,000,000 $750,000
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Payment and Release for (100,000) (115,000)
1st Lot:
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Balance after Release $900,000 $885,000 $663,750
of 1st Lot:
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Payment and Release for (100,000) (115,000)
2nd Lot:
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Balance after Release $800,000 $770,000 $577,500
of 2nd Lot:
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Example 2: Contract Balance Adjusted Contract Borrowing Base
$115,000 (115% pro rata per Balance (75% of Adjusted
lot release) (115% Minimum Reduction) Contract Balance)
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Initial Balance: $1,000,000 $1,000,000 $750,000
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Payment and Release for (115,000) (115,000)
1st Lot:
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Balance after Release $885,000 $885,000 $663,750
of 1st Lot:
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Payment and Release for (115,000) (115,000)
2nd Lot:
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Balance after Release $770,000 $770,000 $577,500
of 2nd Lot:
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
35
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Example 3: Contract Balance Adjusted Contract Borrowing Base
$120,000 (120% pro rata per Balance (75% of Adjusted
lot release) (115% Minimum Reduction) Contract Balance)
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Initial Balance: $1,000,000 $1,000,000 $750,000
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Payment and Release for (120,000) (120,000)
1st Lot:
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Balance after Release $880,000 $880,000 $660,000
of 1st Lot:
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Payment and Release for (120,000) (120,000)
2nd Lot:
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
Balance after Release $760,000 $760,000 $570,000
of 2nd Lot:
------------------------------- ------------------------- ------------------------- ------------------------- ----------------------
36
EXHIBIT 3.01(e) to MASTER LOAN AGREEMENT
----------------------------------------
Dated Effective July 31, 2000
-----------------------------
Procedure to Issue Letters of Credit under the
----------------------------------------------
$502,000 Letter of Credit Commitment
------------------------------------
The Borrower shall, in addition to all other requirements and restrictions
under the Master Loan Agreement, observe and perform the following requirements
as to the $502,000 Letter of Credit Commitment.
A. PURPOSE.
--------
This Commitment is a non-revolving commitment to issue individual letters
of credit on the Borrower's behalf, up to the maximum amount of $502,000,
including the $218,214 of letters of credit outstanding as of the Closing Date.
The remaining $283,786 commitment amount expires [September 30, 2001] . No
Letters of Credit will be issued after such expiration date. Letters of Credit,
in form issued by the Bank on Borrower's behalf to the Town of Parker, Colorado
or the Parker Water and Sanitation District to assure completion of construction
related improvements.
B. PROCEDURE TO ISSUE LETTERS OF CREDIT.
-------------------------------------
Provided no event of default or noncompliance with the Loan Agreement
exists, the Note is not fully advanced, and the following requirements have been
satisfied, Borrower may request that the Bank issue letters of credit under this
Commitment subject to the following:
1. Requests must be in writing (including via fax) and include the
requested amount, beneficiary, and expiration date,
2. The amount requested, together will all Letters of Credit issued under
this Commitment, must not exceed the aggregate of $502,000,
3. The Borrower has pledged or assigned to the Bank a certificate of
deposit or other collateral acceptable to the Bank in an amount or
value which the Bank deems adequate, and
4. The Borrower has satisfied any other conditions required by the Bank.
C. LETTERS OF CREDIT.
------------------
1. Letters of Credit will be issued in a form acceptable to the Bank.
2. No Letter of Credit may be requested, and the Bank is not obligated to
issue any Letter of Credit after this Commitment expires on [September
30, 2001].
37
EXHIBIT 3.01(g) To MASTER LOAN AGREEMENT
----------------------------------------
Dated Effective July 31, 2000
-----------------------------
Release Provisions
------------------
for the Commerce Center Note
----------------------------
All advances on the Commerce Center Note dated April 29, 1998, have been
previously made. The principal balance is currently approximately $455,024, no
further advances will be made, and the Note is due and payable in full on April
29, 2001.
Release Provisions
------------------
Provided no Event of Default exists, Borrower shall be entitled to release
of the Bank's mortgage lien(s) on individual platted Project lots at closing
provided:
1. The Borrower pays to the Bank a per lot release payment amount as
provided on the following schedule:
Sale Price (per square foot) Release Payment
---------------------------- ---------------
less than $3.00/sq. ft. $1.50/sq. ft.
$3.00 - $6.00/sq. ft. 50% of net sale price*
$6.01 - $9.00/sq. ft. $4.50/sq. ft.
more than $9.00/sq. ft. 50% of net sale price*
* "net sale price" means the gross sale price after deduction of
actual seller's closing costs, commissions and title fees, but in no
event less than 85% of the gross sale price.
2. All other conditions or limitations as to the release of a lot
contained in the Agreement or any other exhibit thereto have been
satisfied, and
3. The requested release is to allow the Borrower to sell the lot, in an
arms-length, fair market value, cash sale.
38
EXHIBIT 3.01(h) to MASTER LOAN AGREEMENT
----------------------------------------
Dated Effective July 17, 2000
-----------------------------
Disbursement Procedures and Requirements
----------------------------------------
for the $1,500,000 Interim Note
-------------------------------
The Borrower shall, in addition to all other requirements and restrictions
under the Master Loan Agreement, observe and perform the following requirements
as to the $1,500,000.00 Interim Note:
A. PURPOSE:
--------
This Note is intended to be a short term (30 day) temporary multiple
advance, non-revolving, credit facility in the maximum principal amount of
$1,500,000.00 to fund Borrower's various project construction costs and
development working capital costs.
B. DISBURSEMENTS:
--------------
Provided no event of default or noncompliance with the Loan Agreement
exists, the Note is not fully advanced, and the following requirements have been
satisfied, Borrower may request advances under this Line subject to the
following:
1. Advances must be requested in amounts of not less than $50,000.
2. If available, such funds will be advanced by the Bank within three (3)
business days of the date requested.
3. The maximum aggregate of all amount advanced under this line shall not
exceed $1,500,000.
C. PAYMENTS.
---------
The Note is due and payable in full on the maturity date specified in the
Note.
39
To MASTER LOAN AGREEMENT dated effective July 31, 2000
------------------------------------------------------
Additional Principal Payment Requirements for the $2,000,000 Working Capital
----------------------------------------------------------------------------
Note
----
1. Required Principal Payments. In addition to payment of the $2,000,000 Working
Capital Note at maturity as required in the Note, Borrower shall make additional
principal payment during the term of this Note of net sale proceeds sufficient
to pay the Note in full from the following proposed sales by the Borrower; a)
multi-family lots totaling approximately 33.7 acres in Unit 10, Lot G, Willow
Creek Estates South, City of Folsum, California, and/or b) residential lots or
tracts totaling approximately 162 acres in Douglas County, Colorado.
As used herein, "net sale proceeds" means gross sale price after deducting the
Borrower's actual selling and closing costs, commission, and title fees.
2. The Borrower anticipates that sale or closing on either of the referenced
sale of the California or Colorado properties will generate sufficient net sale
proceeds to repay the $2,000,000 Working Capital Note in full. To the extent
such sales do not occur, or the net sale proceeds are insufficient to repay the
$2,000,000 Working Capital Note in full, the balance of such Note is due and
payable at maturity in accordance with its terms.
40
EXHIBIT 3.01(j) dated effective January 5, 2001
-----------------------------------------------
To MASTER LOAN AGREEMENT dated effective July 31, 2000
------------------------------------------------------
Payment Requirements and Release Provisions
-------------------------------------------
for the Eldorado Note
---------------------
1. Lot Release Provisions
----------------------
Provided no Event of Default has occurred, Rio Venture, XV shall be
entitled to a release of the Bank's mortgage lien(s) on individual residential
lots at closing of a bona fide sale of a lot for fair market value, in exchange
for a payment of $48,000 per lot. Such lot release payments will be applied to
the principal balance of the Eldorado Note.
2. Additional Required Principal Payments
--------------------------------------
During the one year extended maturity term of this Note, Rio Venture, XV
shall make minimum quarterly principal payments of $360,000 per quarter on March
31, 2001, June 30, 2001, and September 30, 2001. Payments for all lot sales
under subsection A above shall be credited first toward the required quarterly
reduction in the quarter received and the excess, if any, applied to the next
quarterly payment. (For example, if during the first quarter ending March 31,
2001, a total of eight lots are sold (8 lots x $48,000 = $384,000), $360,000
will be applied as the required principal payment during the first quarter, and
the $24,000 excess amount will be credited toward the June 30, 2001, quarterly
step-down payment.) The maximum principal balance outstanding at the end of each
calendar quarter, as a result of such mandatory step-down principal payments,
shall be:
Calendar Quarter Ending Maximum Note Principal
----------------------- Balance at End of Quarter
-------------------------
December 31, 2000 $1,123,639.46
March 31, 2001 $ 763,639.46
June 30, 2001 $ 403,639.46
September 30, 2001 $ 43,639.46
The outstanding balance of the Eldorado Note will be due and payable in full at
maturity, December 30, 2001.
3. Guaranty by Amrep Corporation
-----------------------------
In consideration for the extension of the maturity date of the Eldorado
Note, Rio Venture, XV will provide a guaranty by Amrep Corporation of the
Eldorado Note in form satisfactory to the Bank. The specific terms of such
guaranty will provide that if Rio Venture XV, Inc. or Amrep Southwest fail to
make any required payment on the Eldorado Note, Amrep Corporation shall, within
five days of receipt of Notice from the Bank, make all payments on the Note.
Such guaranty will not limit or alter the liability of Amrep Southwest on its
guaranty of the Eldorado Note.
4. Release of Mortgage
-------------------
Provided no Event of Default has occurred, the mortgage which secures the
41
Eldorado Note will be released when the Eldorado Note is paid in full.
42
SECOND REPLACEMENT EXHIBIT 4.09(h) dated effective June 15, 2001
----------------------------------------------------------------
to the MASTER LOAN AGREEMENT dated effective July 31, 2000
----------------------------------------------------------
A. FINANCIAL RATIOS AND RESTRICTIONS.
----------------------------------
1. Leverage:
---------
Total Debt/Net Worth of Borrower shall not exceed .75 to 1.0.
Total Debt is defined as Total Liabilities plus loans to unconsolidated
projects guaranteed by AMREP Southwest at each period end. Net Worth is
defined as Total Shareholders Equity at each period end.
2. Net Worth:
----------
Net Worth of Borrower shall not be less than $73,000,000.00.
3. Liquidity:
----------
Current Assets/Current Liabilities of Borrower shall not be less than 2.0
to 1.0.
Current Assets are defined as cash and temporary cash investments plus
accounts receivable due within one year plus cost of homes and condominiums
inventory plus cost of developed or entitled commercial, industrial and
residential lots available for immediate sale.
Current Liabilities are defined as accounts payable, deposits and accrued
expenses plus notes payable due within one year plus taxes payable due
within one year.
4. Minimum Profitability:
----------------------
The Borrower's minimum net profit before taxes ("NPBT") shall not be less
than $840,000 per calendar quarter for any two (2) consecutive calendar
quarters, beginning with the fiscal quarter ending July 31, 2001.
B. Maximum Payments to AMREP Corp..
--------------------------------
Payments or transfers of cash, funds or other assets by the Borrower to its
parent company AMREP Corp. shall be limited, in each fiscal year, to the
following amounts, provided no events of default have occurred under the
Master Loan Agreement dated July 31, 2000, as amended:
1) Upstreaming proceeds from the sale of Bradbury, Colorado property. The
Borrower has a pending purchase agreement for sale of a residential
tract in Bradbury, Colorado to Pen Rose Island Development, a Colorado
limited liability company. Upon the closing of such sale, the Borrower
will receive net cash proceeds of approximately $7,000,000.00 of which
43
up to $4,400,000.00 may be advanced by the Borrower to Amrep Corp. The
amount advanced will result in Amrep Corp. showing an intercompany
payable to the Borrower from Amrep Corp.
2) Taxes The amount necessary for AMREP Corp. to pay federal, state, and
local income taxes on the Borrower's income, net of any reductions due
to reporting or filing by AMREP Corp. on a consolidated basis with the
Borrower and other subsidiaries.
3) General and Administrative Not more than $1,500,000 per fiscal year
for actual general and administrative services provided to the
Borrower by or through AMREP Corp.
4) Sale of "Non-Core" Assets Net proceeds from the sale by the Borrower
of "Non-Core" Assets, defined as land in Orlando, Florida.
5) Net Profits After Tax:
a) Up to 35% of the Borrower's net income after tax, to the extent
such amount exceeds the sum of all amounts paid to AMREP Corp.
under subsection (3) above. This is a reduction from the 75%
amount previously allowed and such reduction to 35% is defined as
"Net Profits Retention". Any net income after tax attributed to
subsection (4) above will be removed from net income prior to the
calculation of such 35% formula. With respect to this provision,
the calculation shall be made on a rolling twelve month basis,
recalculated quarterly as of the end of each fiscal quarter of
the Borrower. Amrep shall provide the Bank a complete accounting
for distributions made, and for the allowable amount of
distributions, within 60 days of each period end. In the event
the maximum limit is exceeded due to a loss in the most recent
quarter, Borrower shall be prohibited from making any additional
distributions to Amrep Corp. under this subparagraph (4) until
such time as the formula shall again allow for such
distributions, but Amrep Corp. shall not be required to make a
repayment of the prior distributions. If the maximum limit is
exceeded for any other reason, Amrep Corp. shall immediately
repay such excess amount to the Borrower, then
b) When the Net Profits Retention from the reduction of the advance
of net profits after tax from 75% to 35% aggregates $4,400,000.00
then, thereafter, the Borrower may again advance to Amrep Corp.
up to 75% of the Borrower's net income after tax, to the extent
such amount exceeds the sum of all amounts paid to AMREP Corp.
under subsection (3) above, and the 35% limitation shall no
longer apply. Any net income after tax attributed to subsection
(4) above will be removed from net income prior to the
calculation of such 75% formula. With respect to this provision,
the calculation shall be made on a rolling twelve month basis,
recalculated quarterly as of the end of each fiscal quarter of
the Borrower. Amrep shall provide the Bank a complete accounting
for distributions made, and for the allowable amount of
distributions, within 60 days of each period end. In the event
the maximum limit is exceeded due to a loss in the most recent
quarter, Borrower shall be prohibited from making any additional
distributions to Amrep Corp. under this subparagraph (5) until
such time as the formula shall again allow for such
distributions, but Amrep Corp. shall not be required to make a
repayment of the prior distributions. If the maximum limit is
exceeded for any other reason, Amrep Corp. shall immediately
repay such excess amount to the Borrower.
44
Payments or transfers allowed under Section B (2-5) are permissible
provided such payments would not violate or result in the violation of any
other financial ratios, restrictions in this Exhibit or any other Loan
Document and are further contingent on there being no other Event of
Default.
All financial and accounting terms used in this Exhibit refer to the terms
or categories used by the Borrower in its financial statements, as defined
or calculated using generally accepted accounting principals ("GAAP").
C. Short Term Loans by Amrep Corporation.
--------------------------------------
In addition to the above payments, or transfers, it is contemplated that
from time to time Amrep Corp. may advance money to Borrower for short term
working capital purposes. Provided no Event of Default has occurred, Borrower
shall be allowed with the Bank's prior written approval to repay such advances
and said repayment shall not be included in the foregoing distribution
calculation. Borrower shall include a detail of all such advances and repayments
in its required quarterly accounting of distributions.
45
EX-21
6
exhibit21.txt
SUBSIDIARIES OF THE REGISTRANT
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
Jurisdiction of
Subsidiary Organization
-------------- ------------------
AMREP Metro Services, Inc. New York
AMREP Saratoga Construction, Inc. New York
AMREP Solutions, Inc. New York
AMREP Southwest Inc. New Mexico
Advance Financial Corp. New Mexico
AMREP Construction Corporation New Mexico
AMREP Financial Corp. New Mexico
AMREP Insurance Agency, Inc. New Mexico
AMREP Metro Works, Inc. New York
PERMA Corp. New York
Strickland Construction Corp. New Jersey
AMREP Southeast, Inc. Florida
AMREP Saratoga Square Homes, Inc. Florida
AMREPCO Inc. Colorado
Carity-Hoffman Associates, Inc. New York
Double R Realty, Inc. New Mexico
Eldorado at Santa Fe, Inc. New Mexico
Lexington Homes Northwest, Inc. Oregon
M.F.G. Realty Corp. New York
New Mexico Foreign Trade Zone Corp. New Mexico
Rancho Homes, Inc. New Mexico
S.G.R. Realty Corp. New Jersey
Shasta Real Estate Company California
Sun Oaks Realty Corp. Florida
Rio Venture XV, Inc. New Mexico
El Dorado Utilities, Inc. New Mexico
Kable News Company, Inc. Illinois
Kable Fulfillment Services of Ohio, Inc. Delaware
Kable News Company of Canada, Ltd. Ontario, Canada
Kable News Export, Ltd. Delaware
Kable News International, Inc. Delaware
Distribunet Inc. Delaware
Magazinet Management, L.L.C. Delaware
Magazinet, L.P. Delaware
Magazine Connection Inc. Delaware