Exhibit 10.1
LOAN AGREEMENT
THIS
LOAN AGREEMENT ("Agreement") is dated effective September 18, 2006,
by
and between AMREP SOUTHWEST, INC., a New Mexico corporation
("Borrower"),
and
COMPASS BANK, ("Bank").
SECTION ONE
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CREDIT TERMS
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SECTION 1.1. LINE OF
CREDIT.
(a)
Line of Credit.
Subject to the terms and conditions of this Agreement,
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Bank hereby agrees to
make advances
to Borrower from time to time up to and
including September
17, 2008, not to exceed at any time the aggregate principal
amount of TWENTY FIVE MILLION Dollars ($25,000,000.00) ("Line of Credit"), the
proceeds of which
shall be used for
Borrower's
working capital and general
corporate purposes.
Borrower's
obligation to repay
advances under the Line of
Credit shall be
evidenced by a promissory note dated as of the date of
this
Agreement ("Line of
Credit Note") (to
include any amendment, modification,
renewal, or replacement thereof), all terms of which are
incorporated herein by
this reference.
The maturity date of
the Line of Credit and the Line of Credit
Note is September 17, 2008, the "Maturity Date."
(b)
Borrowing, Repayment,
and Limitation Based on Minimum Net Worth.
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Borrower may from time
to time during
the term of the Line
of Credit borrow,
partially or wholly repay its outstanding borrowings, and reborrow, subject to
all of the limitations, terms and conditions contained herein and
in the Line of
Credit Note; provided however, that: the total outstanding
borrowings under the
Line of Credit shall not at any time exceed the maximum
principal amount
of:
i) $25,000,000
while Borrower's Minimum Tangible Net Worth is
not
less than $37,500,000, and
ii) $20,000,000 if the
Borrower's Minimum
Tangible Net Worth is less
than $37,500,000 but not less than $30,000,000.
Bank shall not be obligated to make or fund any advance requested
by Borrower if
Borrower's Minimum Net
Worth is less than $30,000,000 or if an event of default
as defined herein has occurred. Minimum Tangible Net Worth is
defined in Section
4.6, below.
(c)
Letter of Credit Subfeature. As a subfeature under the Line of
Credit,
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Bank agrees
from time to time
during the term thereof to issue or cause an
affiliate to issue one
or more standby
letters of credit
for the account of
Borrower (each,
a "Letter of Credit"
and collectively,
"Letters of
Credit");
provided however, that
the aggregate unfunded amount of all outstanding Letters
of Credit shall not at any time exceed Five Million Dollars
($5,000,000.00). The
form and substance
of each Letter of Credit shall be subject to approval by
Bank, in its sole
discretion. Each
Letter of Credit shall be issued for a term
as designated by Borrower; provided however, that no Letter of
Credit shall have
an expiration date
subsequent to the
maturity date of the Line of Credit. The
unfunded amount of all
Letters of Credit
shall be reserved
under the Line of
Credit and shall reduce the amount which is available for
borrowings thereunder.
No interest shall
accrue on the unfunded
amount of any Letter of Credit. Each
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Letter of Credit shall be subject to the additional terms and conditions of the
Letter of Credit agreement required by Bank when issued, including any
application and any
related documents
required by Bank in
connection with the
issuance thereof. Each
drawing paid under a Letter of Credit shall be deemed an
advance under the Line
of Credit and shall be repaid by Borrower in accordance
with the terms and
conditions of this
Agreement applicable
to such advances;
provided however,
that if advances under
the Line of Credit are not available,
for any reason, at the time any drawing is paid, then Borrower
shall immediately
pay to Bank the full amount drawn, together with interest thereon
from the date
such drawing is paid to the date such amount is fully repaid by
Borrower, at the
rate of interest
applicable to advances under the Line of Credit. In such event
Borrower agrees
that Bank, in its sole discretion, may debit any account
maintained by Borrower with Bank for the amount of any such
drawing.
SECTION 1.2. INTEREST/FEES.
(a)
Interest. The outstanding principal balance of the Line of Credit
shall
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bear interest,
and the amount of each
drawing paid under any
Letter of Credit
shall bear interest
from the date such
drawing is paid to the date such amount
is fully repaid by
Borrower, at the rate of interest set forth
in the Line of
Credit Note or other instrument or document executed in connection
therewith.
(b)
Computation and
Payment. Interest
shall be computed on the basis of a
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360-day year, actual
days elapsed. Interest
shall be payable at
the times and
place set forth in each promissory note or other instrument or
document required
hereby.
(c)
Documentation
Fee. Borrower
shall
pay to Bank at closing a
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non-refundable documentation fee of $1000.
(d)
Unused Commitment Fee. Borrower shall pay to Bank a fee equal to
00.25%
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per annum (computed on the basis of a 360-day year, actual days elapsed) on the
average daily unused amount of the line of credit, which fee shall
be calculated
on a quarterly basis by Bank and shall be due and payable by
Borrower in arrears
within ten (10) days
after each billing
is sent by Bank.
Any portion of the
Revolving Credit
utilized for a Standby
Letter of Credit will
count as a used
portion when
calculating
the Unused
Fee. Such fee is waived in any
quarter
during which the outstanding principal balance of the Revolving Line of
Credit
Note for such quarter exceeds $10,000,000.
(e)
Letter of Credit Fees.
Borrower shall pay to Bank: (i) a fee upon the
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issuance of each
Letter of Credit
equal to 0.95% per
annum (computed
on the
basis of a 360-day year, actual days of term) of the face amount
thereof, but in
no event less than
$250.00 for such Letter of Credit, and (ii) fees for each
draw, payment,
or negotiation of each drawing or payment under
any Letter of
Credit and fees upon the occurrence of any other activity with respect to any
Letter of Credit (including without limitation, the fronting transfer,
amendment, negotiation
or cancellation of any
Letter of Credit)
determined in
accordance with
Bank's standard fees and charges then in effect for such
activity.
SECTION 1.3 EXTENSION REQUEST. Borrower may request, prior to any
Maturity
Date, that Bank extend
the Maturity Date for
an additional
period of time so
that the resulting
maturity will be 24 months from the date any such extension.
If such request is made, Bank will evaluate such request in
accordance with its
then applicable credit and other underwriting standards. Bank may in its sole
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discretion grant such
request but is not
required or
obligated to grant
such
extension if requested, nor required to offer an extension
on any then existing
rates or other terms.
SECTION TWO
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REPRESENTATIONS AND WARRANTIES
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Borrower makes the following representations and warranties to
Bank, which
representations and warranties shall survive the execution of this
Agreement and
shall continue in full
force and effect until the full and final payment, and
satisfaction and
discharge, of all
obligations of
Borrower to Bank subject to
this Agreement.
SECTION 2.1. 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.
SECTION 2.2.
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.
SECTION 2.3. DUE AUTHORIZATION. The execution, delivery and
performance by
the Borrower of this
Agreement and each promissory note and other document
required hereby
(the "Loan Documents") have been duly authorized by all
necessary corporate action by the Borrower and its Board of
Directors.
SECTION 2.4. 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.
SECTION 2.5. 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.
SECTION 2.6 INCOME TAX RETURNS. At the time of execution of this
Agreement,
Borrower has no
knowledge of any
pending assessments
or adjustments of its
income tax payable with respect to any year.
SECTION 2.7. NO
SUBORDINATION. There
is no agreement,
indenture, contract
or instrument
to which Borrower is a party or by which
Borrower may be
bound
that requires
the subordination in right of payment of any of Borrower's
obligations subject to this Agreement to any other obligation of
Borrower.
SECTION 2.8. ERISA. Borrower is in compliance in all material
respects with
all applicable
provisions of the
Employee Retirement
Income Security Act of
1974, as amended or
recodified from time
to time ("ERISA");
Borrower has not
violated any provision of any defined employee pension benefit plan (as
defined
in ERISA) maintained
or contributed to by Borrower (each, a "Plan"); no
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Reportable Event as defined in ERISA has occurred and is continuing
with respect
to any Plan
initiated by Borrower; Borrower has met its minimum funding
requirements under
ERISA with respect to each Plan; and each Plan will be able
to fulfill its benefit
obligations as they come due in accordance with the Plan
documents and under generally accepted accounting principles.
SECTION 2.9.
OTHER OBLIGATIONS. Borrower is not in default on any
obligation for
borrowed money,
any purchase money obligation or any other
material lease,
commitment, contract,
instrument or
obligation, in excess
of
$300,000.00.
SECTION 2.10.
ENVIRONMENTAL
MATTERS. Except as disclosed by Borrower
to
Bank in writing prior
to the date hereof,
Borrower is in compliance in all
material respects with all applicable federal or state
environmental,
hazardous
waste, health and safety statutes, and any rules or regulations
adopted pursuant
thereto, which govern
or affect any of Borrower's operations and/or properties,
including without
limitation,
the Comprehensive Environmental Response,
Compensation and
Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act
of 1976, and the Federal Toxic Substances Control Act, as any of
the same may be
amended, modified or
supplemented from time
to time. None of the operations of
Borrower is the subject of any federal or state investigation
evaluating whether
any remedial action
involving a material
expenditure is needed to respond to a
release of any toxic
or hazardous
waste or substance into the environment.
Borrower has no material contingent liability in connection with any
release of
any toxic or hazardous waste or substance into the environment.
SECTION 2.11.
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.
SECTION 2.12.
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.
SECTION 2.13. NO MISREPRESENTATION. No certificate, statement,
information
or documents delivered
by or on behalf of borrower, 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.
SECTION THREE
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CONDITIONS
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SECTION 3.1.
CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of
Bank to extend the initial credit contemplated by this Agreement is subject
to
the fulfillment to Bank's satisfaction of all of the following
conditions:
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(a)
Approval of Bank Counsel. All legal matters incidental to the
extension
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of credit by Bank shall be satisfactory to Bank's counsel.
(b)
Documentation. Bank
shall have received, in form and substance
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satisfactory to Bank, each of the following, duly executed:
(i) This
Agreement and each
promissory note or
other instrument
or
document required hereby.
(ii) Resolution
authorizing borrowing.
(iii) Such other documents as Bank may require under any other
Section
of this Agreement, including Borrower's organizational
documents.
SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation
of Bank
to make each extension
of credit requested by Borrower hereunder shall be
subject to the
fulfillment
to Bank's satisfaction of each of the following
conditions:
(a)
Compliance. The
representations and warranties contained herein and in
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each of the other
Loan Documents shall be true on and as of the date of
the
signing of this
Agreement and on the
date of each extension
of credit by Bank
pursuant hereto,
with the same
effect as though such representations and
warranties had been
made on and as of each such date, and on each such date, no
Event of Default as defined herein, and no condition, event or act which with
the giving of notice or the passage of time or both
would constitute such an
Event of Default, shall have occurred and be continuing or shall
exist.
(b)
Documentation. Bank
shall have received all additional documents which
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may be required in connection with such extension of credit.
SECTION FOUR
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AFFIRMATIVE COVENANTS
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Borrower covenants
that so long as Bank remains committed to extend credit
to Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or
unliquidated) of Borrower to Bank under any of the Loan
Documents
remain outstanding,
and until payment in
full of all
obligations of
Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in
writing:
SECTION 4.1. PUNCTUAL
PAYMENTS. Punctually pay all principal,
interest,
fees or other
liabilities due under
any of the Loan Documents at the times and
place and in the manner specified therein, and immediately repay the amount
by
which the outstanding principal balance of any credit subject
hereto at any time
exceeds any limitation on borrowings app
