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 ----------CREDIT TERMS -----------SECTION 1.1. LINE OF CREDIT. (a) Line of Credit. Subject to the terms and conditions of this Agreement, -------------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. ----------------------------------------------------------------------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, --------------------------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 -1
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 -------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 -----------------------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 ------------------non-refundable documentation fee of $1000. pay to Bank at closing a
(d) Unused Commitment Fee. Borrower shall pay to Bank a fee equal to 00.25% --------------------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 --------------------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 -2 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 ----------REPRESENTATIONS AND WARRANTIES -----------------------------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 existence as a corporation which is of New Mexico, will comply with applicable to its organization and elsewhere. STATUS. The Borrower will maintain its duly authorized to do business in the State all statutes and rules and regulations