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Staving Off a Major Blow, Palm Coast Data Settles With German Publisher, Extending Relationship

| June 12, 2014

Not what it used to be at Palm Coast Data. (© FlaglerLive)

Not what it used to be at Palm Coast Data. (© FlaglerLive)

Palm Coast Data and its parent company, Amrep Corp., today announced a settlement agreement with Heinrich Bauer LLC, one of its major clients, that will keep Bauer from dropping Palm Coast Data in exchange for more than 10 percent of the company’s stock and a pledge to stay with Palm Coast Data’s fulfillment operations until 2018. The agreement, Palm Coast Data’s parent company states, will reduce the company’s operating deficit–or “negative working capital”–by about $15 million.

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The fact of that deficit and its size, as well as the generous terms of the settlement for Bauer, are an indication of the continuing difficult conditions Palm Coast Data and its parent company have been in for most of the last seven years–but also of the company’s resourcefulness in meeting challenge after challenge.

The alternative to a settlement would have been the termination of Bauer’s agreement with Palm Coast Data and its parent company, effective June 30. That would have represented a significant blow to Palm Coast Data, which has already been weakened by successive losses over the years.

According to the agreement, Palm Coast Data and its parent company will cede 825,000 shares of common stock, with a par value of 10 cents each–or 10.3 percent of the outstanding shares of common stock of the company–to Bauer. Bauer in turn agrees not to resell or transfer the stock for at least six months. Amrep’s subsidiaries will not have to pay accounts payable owed Bauer relating to the domestic sale of Bauer magazines through an Amrep subsidiary called Kable Distribution; Palm Coast Data agreed to reduce certain fees charged to Bauer for fulfillment services; and Bauer agreed to extend the term of its fulfillment agreement to at least December 31, 2018.

“We welcome Bauer as a significant shareholder of Amrep and thank it for extending its current relationship with Palm Coast,” said Edward B. Cloues II, chairman of Amrep, in a news release. “We have had extensive discussions with Bauer over the past six months and are pleased that we have been able to settle our issues on an amicable basis and resolve the substantial net working capital deficit that existed with respect to the two distribution agreements.”

“Building on many years of receiving valuable services from Palm Coast, we are pleased to be continuing and extending our relationship with Palm Coast,” said Hubert Boehle, president and CEO  of Bauer. “We look forward to a continuing positive relationship with Amrep in our new capacity as a significant shareholder.”

Heinrich Bauer LLC is part of the Hamburg, Germany-based Bauer Media Group, a massive conglomerate that produces some 570 magazines worldwide. Its American titles include soap opera magazines, InTouch Weekly, Life & Style Weekly and Woman’s World, among others. In 2006, Bauer signed a distribution agreement with what would soon become Palm Coast Data’s parent company–Kable Distribution, itself a subsidiary of the Amrep Corp.

Amrep acquired Palm Coast data the following year and consolidated all its fulfillment operations in its Palm Coast complex, with high hopes of significantly expanding its operations in Palm Coast. At the time, it had some 1,000 employees at its Commerce Boulevard campus, and in an economic-development agreement with the city of Palm Coast, the Flagler County Commission and the state of Florida, Palm Coast Data pledged to increase its workforce by 700. Had that happened, Palm Coast would have reimbursed Palm Coast Data with up to $450,000 in incentives. The new jobs never materialized. The city never provided the incentives (though it sold its 70,000-square-foot city hall to Palm Coast Data for $3 million, which proved an extremely costly loss as the city is now in the midst of building a new city hall for three times that amount).

Both Palm Coast Data and the Rick Scott administration have refused to disclose the fate of the 2008 agreement, but filings with the Securities and Exchange Commission suggest that the company has been having to pay back the state of Florida incentives the state fronted, ahead of the jobs being created. (SEC filings regarding the Bauer agreement refer to “payments made to the State of Florida on account of the obligations owing to the State of Florida under the award agreement between Palm Coast and the State of Florida.” See below.)

According to its latest filings with the SEC, Palm Coast Data in 2013 performed fulfillment services for approximately 422 magazine titles representing 96 clients, with a subscriber database of 39 million. That’s down from two years earlier, when the company fulfilled services for 450 magazines, had 110 clients and a database of 41 million subscribers. The Palm Coast facility in 2011 was processing over 15 million pieces of outgoing mail for its clients. In 2013, it was down to 13 million pieces of outgoing mail.

In 2008, when Palm Coast Data was chosen as the site where the parent company’s other fulfillment operations would consolidate (Amrep had acquired Palm Coast Data in January 2007), the company fulfilled services for 1,050 magazines, had 300 clients and a database of 72 million subscribers, processing some 27 million pieces of outgoing mail for those clients.


Analyzing its acquisition of Palm Coast Data and the consolidation of its fulfillment services there, the company in 2007 warned investors that “There is a significant degree of difficulty involved in this process. The maintenance of ongoing operations of each business while integrating the businesses will depend on the company’s ability to retain key officers and personnel while it simultaneously proceeds to expand its operational and financial system. This increase in operating complexities may have a negative near and long-term effect on the company’s anticipated benefits resulting from the acquisition.”

The company’s own analysis proved prescient: Palm Coast Data lost revenue in all but a handful of quarters since, and key members of the Palm Coast Data team left. By 2013, the company was candidly warning investors not to expect profitability in the near or long term.

“There are a number of companies that perform subscription fulfillment services for publishers and with which Palm Coast competes,” the company’s latest filing states, “including one that is larger than Palm Coast. Since publishers often utilize only a single fulfillment company for a particular publication, there is intense competition to obtain subscription fulfillment contracts with publishers. Competition for non-publisher clients is also intense. Palm Coast has a sales staff whose primary task is to solicit subscription fulfillment business.”

The staff has had some recent successes in at least staunching the company’s hemorrhaging of titles. The company’s acquisition of FulCircle in January 2013 significantly improved Palm Coast Data’s marketing strength.

But Amrep still posted a modest loss (of $11,000) in its latest quarter, though revenue improved from $21.7 million to $23.8 million, and in the nine months ending Jan. 31, revenue had increased from $62.7 million to $67 million. The company still saw a loss of $646,000 in the first nine months. The revenue increase was due largely to Palm Coast Data’s operations and its newly acquired FulCircle (whose revenues in the third quarter and first nine months of 2014 were $1.9 million and $5.1 million).

As a result of the settlement, Amrep stock on Thursday soared in early trading by 30 percent before settling back down a bit. At noon, it was trading at $6.40 a share, after trading at $5 a share the previous day.

The complete settlement agreement, as it was filed with the SEC, is below.

 

  

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event
reported):            June 11, 2014              

 

AMREP CORPORATION
(Exact name of Registrant as specified in its charter)

 

Oklahoma 1-4702 59-0936128
(State or other jurisdiction of (Commission File (IRS Employer
incorporation) Number) Identification No.)

 

300 Alexander Park, Suite 204, Princeton, New Jersey 08540
(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including
area code:  (609) 716-8200

 

Not Applicable
(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction
A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On June 11, 2014, AMREP Corporation (the
“Company”) and its indirect subsidiaries, Kable Distribution Services, Inc. (“Kable Distribution”) and
Palm Coast Data LLC (“Palm Coast”), entered into a settlement agreement (the “Settlement Agreement”) with
Heinrich Bauer (USA) LLC (“Bauer”).

Kable Distribution and Bauer are parties
to an ordinary course of business contract pursuant to which Kable Distribution distributes certain magazines of Bauer in return
for a commission. Palm Coast and Bauer are parties to an ordinary course of business contract pursuant to which Palm Coast provides
certain fulfillment services to Bauer in return for service fees.

As described in Item 2 of Part I of the
Company’s Form 10-Q for the quarter ended January 31, 2014, which was filed with the Securities and Exchange Commission on March
17, 2014, Kable Distribution operates with negative working capital and borrows funds under a Revolving Credit and Security Agreement
available to the Company’s Media Services businesses. The negative working capital of Kable Distribution represents
the net payment obligation due to publisher clients and other third parties, which amounts will vary from period to period based
on the level of magazine distribution.  The negative working capital of Kable Distribution is calculated by deducting
(a) the sum of the cash held by Kable Distribution plus the accounts receivable (net of estimated magazine returns to Kable Distribution)
owed to Kable Distribution from wholesalers, retailers and other third parties from (b) the accounts payable (net of estimated
magazine returns to publishers) owed by Kable Distribution to publisher clients and other third parties.

During the first quarter of fiscal year
2014, Kable Distribution received notice that its ordinary course of business contract with Bauer, which provides Kable Distribution
with a substantial amount of negative working capital liquidity, would not be renewed upon its scheduled expiration in June 2014.

Pursuant to the Settlement Agreement, Kable
Distribution agreed to eliminate the commission paid by Bauer to Kable Distribution for distribution services for the remainder
of the contract and to amend the payment procedures with respect to amounts received by Kable Distribution from wholesalers or
retailers relating to the domestic sale by Kable Distribution of Bauer magazines to such wholesalers or retailers; Palm Coast agreed
to reduce certain fees charged to Bauer for fulfillment services, with Bauer agreeing to extend the term of its fulfillment agreement
to at least December 31, 2018; and the Company agreed to issue to Bauer 825,000 shares of common stock, par value $.10, of the
Company, which represents approximately 10.3% of the outstanding shares of common stock of the Company following such issuance,
with Bauer agreeing to not sell or transfer such shares for a period of six months. In return for such consideration, Bauer released
all claims it may have had against each of Kable Distribution, Palm Coast, the Company and its related persons, other than the
obligations of Kable Distribution, Palm Coast and the Company under the Settlement Agreement, the future obligations of Kable Distribution
under its distribution agreement as amended by the Settlement Agreement and the future obligations of Palm Coast under its fulfillment
agreement as amended by the Settlement Agreement. In particular, the Settlement Agreement releases Kable Distribution from having
to pay the accounts payable owed to Bauer relating to the domestic sale by Kable Distribution of Bauer magazines other than to
the extent amounts have been received by Kable Distribution or Bauer on or after May 14, 2014 from wholesalers or retailers relating
to the domestic sale by Kable Distribution of Bauer magazines to such wholesalers or retailers. As a result of the Settlement Agreement,
Kable Distribution estimates that its negative working capital will be reduced by approximately $15 million. The foregoing description
of the Settlement Agreement is a summary only and is qualified in all respects by the provisions of the Settlement Agreement.

In addition, on
June 11, 2014, certain subsidiaries of AMREP Corporation engaged in the Media Services business entered into the fourth amendment
(the “Fourth Amendment”) to the Revolving Credit and Security Agreement, dated as of May 13, 2010 (the “Credit
Facility”), with PNC Bank, National Association (“PNC”), as agent
and lender.
The Fourth Amendment provides PNC’s
consent to the Settlement Agreement and eliminates references to Bauer in the Credit Facility.
No other material terms of
the Credit Facility changed in connection with the Fourth Amendment. The foregoing description of the Fourth Amendment is a summary
only and is qualified in all respects by the provisions of the Fourth Amendment, a copy of which is attached hereto as Exhibit
10.1 and is incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information
in Item 1.01 of this Current Report on Form 8-K regarding the Fourth Amendment to the Credit Facility is incorporated by reference
into this Item 2.03.

Item 3.02 Unregistered Sales of Equity Securities.

The information in Item 1.01 of this
Current Report on Form 8-K is incorporated by reference into this Item 3.02. On or prior to the date that is three days after
the Company receives notification of approval by the New York Stock Exchange of the supplemental listing application therefor,
and in any event on or prior to July 10, 2014, the Company will issue to Bauer 825,000 shares of common stock, par value $.10,
of the Company. The shares will be issued pursuant to Section 4(2) of the Securities Act of 1933, as amended.

 

Item 9.01  Financial
Statements and Exhibits.

(d) Exhibits.

Exhibit Number Description
10.1 Fourth Amendment, dated June 11, 2014, to the Revolving Credit and Security Agreement, dated as of May 13, 2010, among Kable Media Services, Inc., et al and PNC Bank, National Association, as agent and lender.
99.1 Press Release, dated June 11, 2014, issued by AMREP Corporation.

SIGNATURES

Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

AMREP Corporation
Date: June 11, 2014   By:

/s/ Christopher V. Vitale

Name: Christopher V. Vitale
Title: Vice President, General Counsel and Secretary

EXHIBIT INDEX 

Exhibit Number Description
10.1 Fourth Amendment, dated June 11, 2014, to the Revolving Credit and Security Agreement, dated as of May 13, 2010, among Kable Media Services, Inc., et al and PNC Bank, National Association, as agent and lender.
99.1 Press Release, dated June 11, 2014, issued by AMREP Corporation.

EX-10.1
2
v381241_ex10-1.htm
EXHIBIT 10.1

 

FOURTH AMENDMENT TO

REVOLVING CREDIT AND SECURITY AGREEMENT

This Fourth Amendment
to Revolving Credit and Security Agreement (theAmendment”) is
made as of this 11th day of June, 2014by and among Kable
Media Services, Inc.
, a corporation organized under the laws of the State of Delaware (“Kable”),
Kable Distribution Services, Inc.,
a corporation organized under the laws of the State of Delaware (“Kable Distribution”), Kable
Product Services, Inc.
, a corporation organized under the laws of the State of Delaware (“Kable Product”),
Kable News Company, Inc., a corporation
organized under the laws of the State of Illinois (“Kable News”), Palm
Coast Data Holdco, Inc.
, a corporation organized under the laws of the State of Delaware (“Palm Holding”),
Kable Staffing Resources LLC,
a limited liability company organized under the laws of the State of Delaware (“Kable Staffing”), Kable
News International, Inc.
, a corporation organized under the laws of the State of Delaware (“Kable International”),
Palm Coast Data LLC, a limited
liability company organized under the laws of the State of Delaware (“Palm Coast”), Fulcircle
Media
, LLC, a Delaware limited liability company (“FulCircle” and, together with Palm Coast,
Kable International, Kable Staffing, Palm Holding, Kable News, Kable Product, Kable Distribution, Kable, and any other Person joined
as a borrower to the Loan Agreement (as defined below) from time to time, collectively, the “Borrowers”, and
each a “Borrower”), the financial institutions which are now or which hereafter become a party to the Loan Agreement
(collectively, the “Lenders” and each individually a “Lender”) and PNC BANK, NATIONAL
ASSOCIATION
(“PNC”), as agent for Lenders (PNC, in such capacity, the “Agent”) and as
a Lender.

BACKGROUND

 

A.           On
May 13, 2010, Borrowers and PNC as a Lender and Agent entered into that certain Revolving Credit and Security Agreement (as same
has been or may be amended, restated, modified, renewed, extended, replaced or substituted from time to time, including, without
limitation, as amended by certain modifications and/or waivers contained in that certain (i) Consent Letter dated September 27,
2010, (ii) Consent Letter dated December 29, 2011, (iii) Waiver and Amendment dated July 18, 2012, (iv) First Amendment to Revolving
Credit and Security Agreement dated as of October 1, 2012, (v) Second Amendment and Joinder to Revolving Credit and Security Agreement
dated as of December 31, 2012, and (vi) Third Amendment to Revolving Credit and Security Agreement dated as of March 29, 2013,
the “Loan Agreement”) to reflect certain financing arrangements between the parties thereto. The Loan Agreement
and all other documents executed in connection therewith to the date hereof are collectively referred to as the “Existing
Financing Agreements
.” All capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in
the Loan Agreement.

B.           (i)
Kable Distribution is a party to a Distribution Agreement dated January 3, 2006 with Heinrich Bauer (USA) LLC (“Bauer
US
”) (as assignee from Heinrich Bauer Verlag Beteiligungs GmbH) (as amended, restated, supplemented or otherwise modified
from time to time, the “Main Distribution Agreement”) and a Distribution Agreement for Distribution to Canada
Only dated as of January 3, 2006 with Bauer US (as amended, restated, supplemented or otherwise modified from time to time, the
Canada Distribution Agreement” and collectively with the Main Distribution Agreement, the “Distribution
Agreements
”) and (ii) Palm Coast (as assignee from Fulfillment Corporation of America) is a party to a Services Agreement
dated December 1, 1994 with Bauer US (as assignee from Bauer Publishing Company LP) (as amended, restated, supplemented, or otherwise
modified from time to time, the “Fulfillment Agreement”).

C.           Borrowers
have informed Agent that Kable Distribution, Palm Coast, and AMREP Corporation (“AMREP”) intend to enter into
a Settlement Agreement with Bauer US, dated as of June 11, 2014 (as amended, restated, supplemented, or otherwise modified from
time to time, the “Settlement Agreement”) pursuant to which the parties will agree to certain amendments to
the Distribution Agreements and the Fulfillment Agreement, the issuance by AMREP of certain shares of its common stock to Bauer
US and the release by Bauer US of claims it may have against Kable Distribution, Palm Coast, and AMREP, as further set forth in
the Settlement Agreement attached hereto on Exhibit A. In addition, Kable Distribution intends to issue a promissory note
to AMREP in a principal amount equal to the fair market value of the shares of AMREP common stock issued to Bauer US and the promissory
note will be secured by all of the assets of Kable Distribution. The foregoing transactions shall collectively be referred to herein
as the “Bauer Settlement”.

D.           Borrowers
have requested that Agent and Lenders (i) consent to the Bauer Settlement and (ii) modify certain definitions, terms and conditions
in the Loan Agreement, and Agent and Lenders are willing to do so on the terms and conditions hereafter set forth.

NOW THEREFORE, with
the foregoing background hereinafter deemed incorporated by reference herein and made part hereof, the parties hereto, intending
to be legally bound, promise and agree as follows:

Section
1             Consent.

(a)          In reliance upon
the documentation and information provided to Agent in connection with the Bauer Settlement, and notwithstanding anything to the
contrary contained in the Loan Agreement, including, without limitation, Sections 7.4, 7.10, 7.8, and 7.17 of the Loan Agreement,
or any other Existing Financing Agreement, upon the Effective Date, Agent and Lenders hereby consent to the Bauer Settlement.

(b)          This
consent shall be effective only as to the items set forth in the preceding paragraph. This consent shall not be deemed to constitute
a consent to the breach by Borrowers of any covenants or agreements contained in any Existing Financing Agreement with respect
to any other transaction or matter. Borrowers agree that the consent set forth in the preceding paragraph (a) shall be limited
to the precise meaning of the words as written therein and shall not be deemed (i) to be a consent to, or any waiver or modification
of, any other term or condition of any Existing Financing Agreement, or (ii) to prejudice any right or remedy that Agent or Lenders
may now have or may in the future have under or in connection with any Existing Financing Agreement other than with respect to
the matters for which the consent in the preceding paragraph (a) has been provided. Other than as described in this Amendment,
the consent described in the preceding paragraph (a) shall not alter, affect, release or prejudice in any way any Obligations under
the Existing Financing Agreements. This consent shall not be construed as establishing a course of conduct on the part of Agent
or Lenders upon which the Borrowers may rely at any time in the future. Borrowers expressly waive any right to assert any claim
to such effect at any time.

2

Section
2             Amendments to Loan Agreement

(a)          New
Definition
. On the Effective Date, the following defined term shall be added to Section 1.2 of the Loan Agreement:

Bauer Settlement
shall mean the arrangement reflected by that certain Settlement Agreement among Kable Distribution, Palm Coast, and AMREP Corporation
dated as of June 11, 2014, and all documents, instruments, and agreements executed in connection therewith, in each case as amended,
restated, supplemented, or otherwise modified from time to time.

(b)          Definition.
On the Effective Date, the following defined term contained in Section 1.2 of the Loan Agreement shall be amended and restated
in its entirety as follows:

Fixed Charge Coverage
Ratio
” shall mean and include, with respect to any fiscal period, the ratio of (a) EBITDA, plus stock based compensation
paid to employees during such period to the extent deducted in calculating EBITDA, plus Restructuring Charges paid during
such period to the extent such Restructuring Charges were included in the Restructuring Reserve prior to being paid and were deducted
in calculating EBITDA, minus Unfunded Capital Expenditures made during such period, minus distributions (including
tax distributions) and dividends to the extent paid in cash during such period to (b) the sum of all Debt Payments made during
such period, plus all cash payments made on account of Borrowers’ pension obligations during such period to the extent
such payments were not deducted in calculating EBITDA (but excluding up to $2,300,000 of such payments during the period commencing
on May 1, 2012 through January 31, 2013), plus payments made to the State of Florida on account of the obligations owing
to the State of Florida under the award agreement between Palm Coast and the State of Florida (but excluding such payments made
during the period commencing on May 1, 2012 through January 31, 2013 up to the initial amount of the Florida Reserve). For the
purpose of calculating the Fixed Charge Coverage Ratio, any gain to Borrowers associated with the Bauer Settlement shall be excluded
from the calculation of EBITDA.

(c)          Revolving
Advances
. On the Effective Date, Section 2.1 of the Loan Agreement shall be amended and restated in its entirety as follows:

3

2.1           Revolving
Advances

(a) Amount
of Revolving Advances
. Subject to the terms and conditions set forth in this Agreement including Sections 2.1(b), (c), (d),
(e), and (f), each Lender, severally and not jointly, will make Revolving Advances to Borrowers in aggregate amounts outstanding
at any time equal to such Lender’s Commitment Percentage of the least of: (x) the Maximum Revolving Advance Amount less the
aggregate Maximum Undrawn Amount of all outstanding Letters of Credit; (y) 85% of Cash Collections, or (z) an amount equal to the
sum of:

(i) up to 75%,
subject to the provisions of Section 2.1(d) hereof (“Receivables Advance Rate”), of Eligible Receivables, plus

(ii) up to 65%,
subject to the provision of Section 2.1 (d) and (f) hereof, of Eligible Unbilled Kable Distribution Receivables (the “Kable
Distribution Unbilled Receivables Advance Rate
” and, together with the Receivables Advance Rate, collectively, the “Advance
Rates
”), minus

(iii) the aggregate
Maximum Undrawn Amount of all outstanding Letters of Credit, minus

(iv) the Florida
Reserve, minus

(v) such reserves
as Agent may reasonably deem proper and necessary from time to time after the Closing Date; provided that Agent shall provide Borrowers
with no less than three (3) Business Days prior written notice of such reserve and the reason therefor; provided, further, that
(i) all reserves (including the amount of such reserve) established hereunder shall bear a reasonable relationship to the events,
conditions or circumstances that are the basis for such reserve and (ii) the amount of any reserve shall not be duplicative of
(a) the amount of any other reserve with respect to the same events, conditions or circumstances or (b) any exclusionary criteria
or limitations set forth in the definitions of Eligible Receivable.

The amount derived
from the sum of (x) Sections 2.1(a)(z)(i) and (ii) minus (y) Section 2.1 (a)(z)(iii), (iv), and (v) at any time and from
time to time shall be referred to as the “Formula Amount”. The Revolving Advances shall be evidenced by one
or more secured promissory notes (collectively, the “Revolving Credit Note”) substantially in the form attached
hereto as Exhibit 2.1(a).

(b) Reserved.

(c) Reserved.

4

(d) Discretionary
Rights
. The Advance Rates may be increased or decreased by Agent at any time and from time to time in the exercise of its reasonable
discretion based on Agent’s review of updated field examinations or other Collateral evaluations, it being understood that
the amount of any reduction in Advance Rates shall have a reasonable relationship to the event, condition or other matter which
is the basis for such reduction. Each Borrower consents to any such increases or decreases and acknowledges that decreasing the
Advance Rates or increasing or imposing reserves may limit or restrict Advances requested by Borrowing Agent. The rights of Agent
under this subsection are subject to the provisions of Section 16.2(b).

(e) Reserved.

(f) Sublimit
for Revolving Advances made against Eligible Unbilled Kable Distribution Receivables
. The aggregate amount of Revolving Advances
at any time outstanding made to Borrowers against Eligible Unbilled Kable Distribution Receivables shall not exceed $4,000,000.

Section 3             Intercreditor
Agreement
. Notwithstanding anything to the contrary contained in the Intercreditor Agreement
or in the Loan Agreement, upon the Effective Date, the Intercreditor Agreement, and all rights and obligations of all parties thereunder
(including, without limitation, of Agent, Bauer US, and any Borrower), shall be terminated in its entirety and shall be of no further
force and effect.

Section 4             Representations,
Warranties and Covenants of Borrowers
. Each Borrower hereby represents and warrants to and
covenants with the Agent and the Lenders that:

(a)          such
Borrower reaffirms all representations and warranties made to Agent and Lenders under the Loan Agreement and all of the other Existing
Financing Agreements and confirms that after giving effect to this Amendment all are true and correct in all material respects
as of the date hereof (except to the extent any such representations and warranties specifically relate to a specific date, in
which case such representations and warranties were true and correct in all material respects on and as of such other specific
date);

(b)          from
and after the Effective Date, such Borrower reaffirms all of the covenants contained in the Loan Agreement (as amended hereby),
covenants to abide thereby until all Advances, Obligations and other liabilities of Borrowers to Agent and Lenders under the Loan
Agreement of whatever nature and whenever incurred, are satisfied and/or released by Agent and Lenders;

(c)          after
giving effect to this Amendment, no Default or Event of Default has occurred and is continuing under any of the Existing Financing
Agreements;

5

(d)          such
Borrower has the authority and legal right to execute, deliver and carry out the terms of this Amendment, that such actions were
duly authorized by all necessary limited liability company or corporate action, as applicable, and that the officer executing this
Amendment on its behalf was similarly authorized and empowered, and that this Amendment does not contravene any provisions of its
certificate of incorporation or formation, operating agreement, bylaws, or other formation documents, as applicable, or of any
material contract or agreement to which it is a party or by which any of its properties are bound; and

(e)          this
Amendment and all assignments, instruments, documents, and agreements executed and delivered in connection herewith, are valid,
binding and enforceable in accordance with their respective terms, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally.

Section 5             Conditions
Precedent/Effectiveness Conditions
. This Amendment shall be effective upon the date of satisfaction
of all of the following conditions precedent (the “Effective Date”) (all documents to be in form and substance reasonably
satisfactory to Agent and Agent’s counsel):

 

(a)          Agent
shall have received this Amendment fully executed by the Borrowers;

(b)          Agent
shall have received a fully executedSubordination Agreement with AMREP;

(c)          Agent
shall have received a fully executed Settlement Agreement and all documents, instruments, and agreements relating thereto;

(d)          Agent
shall have received resolutions of the board of directors or members, as applicable, of Kable Distribution, Palm Coast, and AMREP
approving the terms of the Bauer Settlement;

(e)          Agent
shall have received a final copy of each of the Distribution Agreements;

(f)          Agent
shall have received copies of the documentation evidencing the merger of Kable Specialty Packaging Services LLC with and into Kable
Product;

(g)          All
documents, instruments and information required to be delivered hereunder shall be in form and substance reasonably satisfactory
to Agent and Agent’s counsel;

(h)          Agent
shall have received such other documents as Agent or counsel to Agent may reasonably request; and

(i)          No
Default or Event of Default shall have occurred and be continuing, both prior and after giving effect to the terms of this Amendment.

6

Section 6             Further
Assurances
. Each Borrower hereby agrees to take all such actions and to execute and/or deliver
to Agent and Lenders all such documents, assignments, financing statements and other documents, as Agent and Lenders may reasonably
require from time to time, to effectuate and implement the purposes of this Amendment.

Section 7             Payment
of Expenses
. Borrowers shall pay or reimburse Agent and Lenders for their reasonable attorneys’
fees and expenses in connection with the preparation, negotiation and execution of this Amendment and the documents provided for
herein or related hereto.

Section 8             Reaffirmation
of Loan Agreement
. Except as modified by the terms hereof, all of the terms and conditions
of the Loan Agreement, as amended, and all other Existing Financing Agreements are hereby reaffirmed and shall continue in full
force and effect as therein written.

Section 9             Confirmation
of Indebtedness
. Borrowers confirm and acknowledge that as of the close of business on June
10, 2014, Borrowers were indebted to Lenders for the Advances under the Loan Agreement without any deduction, defense, setoff,
claim or counterclaim, of any nature, in the aggregate principal amount of $421,871.43 due on account of Revolving Advances, and
$140,573.32 on account of undrawn Letters of Credit, plus all fees, costs and expenses incurred to date in connection with the
Loan Agreement and the Other Documents.

Section
10             Miscellaneous

(a)          Third
Party Rights
. No rights are intended to be created hereunder for the benefit of any third party donee, creditor, or incidental
beneficiary.

(b)          Headings.
The headings of any paragraph of this Amendment are for convenience only and shall not be used to interpret any provision hereof.

(c)          Modifications.
No modification hereof or any agreement referred to herein shall be binding or enforceable unless in writing and signed on behalf
of the party against whom enforcement is sought.

(d)          Governing
Law
. The terms and conditions of this Amendment shall be governed by the laws of the Commonwealth of Pennsylvania without regard
to provisions of conflicts of law.

(e)          Counterparts.
This Amendment may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so
executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any signature delivered
by a party by facsimile or pdf transmission shall be deemed to be an original signature hereto.

7

IN WITNESS WHEREOF, the parties have caused
this Amendment to be executed and delivered by their duly authorized officers as of the date first above written.

 BORROWERS:
 KABLE MEDIA SERVICES, INC.
 KABLE DISTRIBUTION SERVICES, INC.
 KABLE PRODUCT SERVICES, INC.
 KABLE NEWS COMPANY, INC.
 KABLE STAFFING RESOURCES LLC
 KABLE NEWS INTERNATIONAL, INC.
 By: /s/ Bruce Obdendorf _
 Name: Bruce Obendorf
 Title: Executive Vice President, Finance
 PALM COAST DATA LLC
 PALM COAST DATA HOLDCO, INC.
 FULCIRCLE MEDIA, LLC
 By: /s/ Peter M. Pizza
 Name: Peter M. Pizza
 Title: Vice President

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO

REVOLVING CREDIT AND SECURITY AGREEMENT]

S-1

 

 

PNC BANK, NATIONAL ASSOCIATION,
as Lender and as Agent
By: /s/ Jacqueline MacKenzie
Name: Jacqueline MacKenzie
Title: Vice President

[SIGNATURE PAGE TO FOURTH AMENDMENT TO

REVOLVING CREDIT AND SECURITY AGREEMENT]

S-2

 

FOR: AMREP Corporation
300 Alexander Park, Suite 204
Princeton, NJ  08540
CONTACT: Peter M. Pizza
Vice President and Chief Financial Officer
(609) 716-8210

 

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2 Responses for “Staving Off a Major Blow, Palm Coast Data Settles With German Publisher, Extending Relationship”

  1. blondee says:

    Still waiting on those 700 promised jobs!

  2. Anonymous says:

    The company has nothing of value to offer and will only continue to shrink.

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