EXHIBIT 10.2

 
Third Modification effective December 1, 2012
to the PROMISSORY NOTE dated December 17, 2009
 
 

 
This Third Modification (this “Third Modification”), dated this 19th day of
November, 2012 and effective December 1, 2012 (the “Effective Date”) , is made
to the PROMISSORY NOTE dated December 17, 2009 (the "Original Note"), by AMREP
SOUTHWEST INC., a New Mexico corporation ("Borrower"), payable to KAPPA LENDING
GROUP, LLC, a Pennsylvania limited liability company ("Lender," as successor in
interest to Compass Bank) and subsequently modified by that certain First
Modification (the “First Modification”) dated April 29, 2011 and that certain
Second Modification (the “Second Modification”) dated August 24, 2012 (the
Original Note as modified by the First Modification and the Second Modification
hereinafter the “Note”).
 

1.          This Third Modification is a written amendment to the Note, made
pursuant to the provisions contained in the “AMENDMENTS” Section at page 2 of
the Note.

 
2.          All capitalized terms have the meaning defined in the Note unless a
specific definition for such term is contained in this Third Modification.

 
3.           By mutual agreement of the parties, the Note is modified to extend
the maturity of the Note to December 1, 2017 (the “New Maturity Date”) and to
incorporate the  other changes detailed below.

 
4.           Borrower hereby acknowledges and agrees that the outstanding
principal balance of the Note is $16,214,000.00. The Note continues to be
non-revolving and no re-advance of principal shall be made.
 
5.           The section entitled “INTEREST RATE; MINIMUM RATE” in the Original
Note is hereby deleted in its entirety and replaced with the following:
 
FIXED INTEREST RATE.  Commencing the Effective Date, this Note shall accrue
interest on the unpaid principal from time to time outstanding at the fixed rate
of Eight and One-Half Percent (8.5%) per annum.  Commencing upon the occurrence
of an Event of Default (including the failure to pay all outstanding principal
and accrued interest upon maturity) and continuing for so long as such  Event of
Default remains uncured, the interest rate on this Note shall be increased by
4.00 percentage points to Twelve and One-Half Percent (12.5%) per annum.
 
6.          The “Principal Payments” provisions set forth in Section 5 of the
Second Modification are hereby deleted in their entirety and replaced with the
following:
 
Principal Payments. The principal balance of the Note shall be repaid as
follows:
 
 
A.  
Except as otherwise set forth in the Third Amendment to Loan Agreement dated as
of even date herewith, for the period from the Effective Date until the New
Maturity Date, there shall be no principal payments due from Borrower to Lender.

 
 
 
 
 
 
B.  
The entire remaining principal balance of the Note together with all accrued and
unpaid interest shall be due and payable in full on the New Maturity Date.

 
 
7.          The section entitled “NO PREPAYMENT PENALTY” in the Original Note is
hereby modified by the provisions contained in Section 2(f) of the Third
Amendment to Loan Agreement (as hereinafter defined), which require a prepayment
premium in the circumstances contained therein.
 
8.          The Loan Agreement dated December 17, 2009 (as modified by that
certain First Amendment to Loan Agreement dated as of April 29, 2011 and that
Second Amendment to Loan Agreement dated August 24, 2012) referenced in the Note
has been amended in conjunction with this Third Modification by that certain
Third Amendment to Loan Agreement dated as of even dated herewith (the “Third
Amendment to Loan Agreement”).
 
9.          This Third Modification amends the Note and is not a replacement or
a novation of the Note. The Note, as amended by this Third Modification, remains
in full force and effect.  Borrower acknowledges there are no defenses, real or
personal to payment of the Note.
 
 

BORROWER:

                                                AMREP SOUTHWEST INC., a New
Mexico
                                                corporation

                                                By:          /s/ James H. Wall,
Jr.                     
                                                         James H. Wall, Jr., Sr.
Vice President

                                                LENDER:

                                                KAPPA LENDING GROUP, LLC

                                                By:          /s/ William J.
Bonner, Jr.              
                                                        William J. Bonner, Jr.,
Vice President