This Promissory Note involves
Title: PROMISORY NOTE
Industry: Business Services
(Revolving Line of Credit)
BORROWER: AMREP Southwest, Inc. BANK: Compass Bank
333 Rio Rancho Drive NE Corporate Banking
Rio Rancho, New Mexico 87124-1450 505 Marquette NW
Albuquerque, NM 87102
Principal Amount:--$25,000,000.00 Date: September 18, 2006
PROMISE TO PAY. AMREP Southwest, Inc. ("Borrower") promises to pay to Compass
Bank ("Bank"), or order, in lawful money of the United States of America, the
principal amount of Twenty Five Million Dollars ($25,000,000.00) or so much as
may be outstanding, together with interest on the unpaid outstanding principal
balance of each advance. Interest shall be calculated from the date of each
advance until repayment of each advance.
LINE OF CREDIT.
1. REVOLVING LINE. This Note evidences a revolving line of credit. Advances
under this Note, as well as directions for payment from Borrower's accounts,
must be requested by Borrower in writing through its designated Authorized
Persons. The unpaid principal balance owing on this Note at any time may be
evidenced by endorsements on this Note or by Bank's internal records, including
daily computer print-outs. Bank will have no obligation to advance funds under
this Note if a default has occurred under the terms of this Note, or Borrower is
not in compliance with the Agreement (defined below) or with any other agreement
that Borrower has with Bank, including any agreement made in connection with the
signing of this Note.
2. ADVANCES. Advances hereunder, to the total amount of the principal sum
stated above, may be made by the holder at the joint request of (i)James Wall,
President and (ii)Gary L. Sullivan, Vice President (collectively, the
"Authorized Persons") who are authorized to jointly request advances. Written
notice of the requested advance, signed by the Authorized Persons, must be
received by Bank's designated officer(s) or department, via hand delivery,
facsimile transmission, or transmitted electronically, in form acceptable to
Bank. Bank is entitled to rely on such written notice as authentic and
contemporaneously made; so long as prior to making any advance, Bank shall
verbally confirm the written request for the advance with either one of the
Authorized Persons. All advances will be made by deposit or credit to Borrower's
account(s) at Bank.
PAYMENT. Borrower will pay the outstanding principal plus accrued interest on
September 17, 2008. In addition, Borrower will pay regular monthly payments of
all accrued unpaid interest due as of each payment date, beginning October 18,
2006, with all subsequent interest payments to be due on the same day of each
month after that. Unless otherwise agreed or required by applicable law,
payments will be applied first to interest, then to principal due, then to any
unpaid collection costs and other charges due under this Note, with any
remaining amount to the outstanding principal balance. The annual interest rate
for this Note is computed on a 365/360 basis; that is, by applying the ratio of
the annual interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay Bank at Bank's address shown above or at such
other place as Bank may designate in writing.
1. RATE OPTIONS. Borrower shall have the option to elect from two interest
rate options, described below as the WSJ Rate Option or the LIBOR Rate Option.
Borrower shall elect one of the interest rate rates upon the initial advance on
the Note and at the end of each Rate Period (as defined below). The entire
outstanding principal balance of the Note shall bear interest at the selected
interest rate as provided below which rate selection will continue until a
different rate is applicable. The WSJ RATE OPTION shall apply to any Note
principal balance for which the Borrower has not designated a rate option.
NOTICE: Under no circumstances will the interest rate on this Note be more than
the maximum rate allowed by applicable law.
A. WSJ RATE OPTION. The WSJ Rate Option is a rate of interest
subject to change from time to time based on changes in an independent index
which is the prime rate as published in The Wall Street Journal's "Money Rates"
table (the "Index"). The Index is not necessarily the lowest rate charged by
Bank on its loans. If the Index becomes unavailable during the term of this
loan, Bank may designate a substitute index after notice to Borrower. Bank will
tell Borrower the current Index rate upon Borrower's request. The interest rate
change will not occur more often than each day. Borrower understands that Bank
may make loans based on other rates as well. The interest rate to be applied to
the unpaid principal balance of this Note when the WSJ Rate option applies will
be at a rate of 1.00 percentage point under the Index.
B. LIBOR RATE OPTION. The Libor Rate Option is a rate based on the
"LIBOR" index, the London Interbank Offered Rate for the applicable Reference
Period stated on Reuter's Monitor Money Rates Service two (2) days before the
beginning of each Interest Period (or in the event no such rate is stated on
that date, the rate stated on the day most immediately preceding the date of
determination on which a rate was stated), as adjusted from time to time in
Bank's sole discretion for then-applicable reserve requirements, deposit
insurance assessment rates and other regulatory costs. If Reuter's becomes
unavailable Bank may use another source to determine LIBOR. If Reuter's states
more than one rate for the ap