<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 For
the quarterly period ended May 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 333-1742
AMC, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 58-2201031
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
240 PEACHTREE ST., N. W. SUITE 2200
ATLANTA, GA 30303
(Address of principal executive offices) (Zip Code)
(404) 220-2000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. X Yes No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court Yes No
--- ---
As of July 1, 1998, the Registrant has 62,173,154 shares of common
stock, par value $1.00 per share outstanding.
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
AMC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
May 31, August 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 555,527 $ 520,854
Restricted cash 3,435,890 2,598,375
Restricted escrow deposits 3,825,677 4,510,529
Accounts and notes receivable 2,769,917 2,845,294
Deferred income taxes 1,819,528 2,425,495
Other current assets 1,701,682 467,078
------------ ------------
Total current assets 14,108,221 13,367,625
Commercial property 325,939,638 333,615,976
Less accumulated depreciation 132,209,665 136,636,802
------------ ------------
Net commercial property 193,729,973 196,979,174
Notes receivable, less current maturities 469,542 939,080
Deferred income taxes 12,338,611 17,319,644
Investment in limited partnerships 6,414,114 --
Other non current assets 541,862 915,159
============ ============
$227,602,323 $229,520,682
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities:
Current portion of long-term debt $ 14,400,000 $ 14,400,000
Accounts payable and accrued expenses 7,025,500 11,712,664
Deferred revenue 6,686,482 1,901,022
------------ ------------
Total current liabilities 28,111,982 28,013,686
Long-term debt, less current portion 280,941,872 294,665,115
Revolving line of credit 5,124,381 3,079,804
Other non current liabilities 3,311,648 3,070,577
------------ ------------
Total liabilities 317,489,883 328,829,182
------------ ------------
Stockholders' deficit:
Common stock - $1 par value,
100,000,000 shares
authorized, 62,173,154 shares
issued and outstanding 62,173,154 62,173,154
Capital deficit (172,660,875) (172,660,875)
Retained earnings 20,600,161 11,179,221
------------ ------------
Total stockholders' deficit (89,887,560) (99,308,500)
============ ============
$227,602,323 $229,520,682
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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AMC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended May 31,
-------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Revenues:
Rental $ 13,811,814 $ 12,649,496
Trade shows 1,007,187 1,020,931
Other revenues 616,751 775,138
------------ ------------
Total revenues 15,435,752 14,445,565
Operating expenses:
Building operations 2,083,491 1,862,273
Trade shows 258,382 293,018
Marketing 431,263 614,000
General and administrative 4,038,038 4,481,441
Bad debt recovery (50,937) (20,858)
Property taxes 1,270,461 1,277,412
Depreciation and amortization 3,283,200 3,436,140
------------ ------------
Total operating expenses 11,313,898 11,943,426
------------ ------------
Operating income 4,121,854 2,502,139
Other (income) expenses:
Interest expense 2,086,616 2,056,733
Interest income (104,901) (117,786)
Gain on limited partnership interests (2,387,248) --
Other expense 332,474 1,163,310
------------ ------------
Total other (income) expenses, net (73,059) 3,102,257
------------ ------------
Income (loss) before income taxes 4,194,913 (600,118)
Deferred income tax expense (benefit) 1,464,000 (217,000)
------------ ------------
Net income (loss) 2,730,913 (383,118)
Retained earnings at beginning of period 17,869,248 9,994,560
------------ ------------
Retained earnings at end of period $ 20,600,161 $ 9,611,442
============ ============
Net income (loss) per share - basic $ .04 $ (.01)
============ ============
Net income (loss) per share - diluted $ .04 $ (.01)
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 4
AMC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended May 31,
-------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Revenues:
Rental $ 40,201,188 $ 36,713,428
Trade shows 10,300,166 9,467,527
Other revenues 2,681,779 2,990,757
------------ ------------
Total revenues 53,183,133 49,171,712
Operating expenses:
Building operations 6,257,103 5,972,336
Trade shows 2,023,027 1,698,213
Marketing 3,604,767 3,282,126
General and administrative 12,486,140 12,828,573
Bad debt expense 101,467 162,237
Property taxes 3,462,862 3,554,184
Depreciation and amortization 9,720,082 10,197,746
------------ ------------
Total operating expenses 37,655,448 37,695,415
------------ ------------
Operating income 15,527,685 11,476,297
Other (income) expenses:
Interest expense 6,270,215 6,280,061
Interest income (311,363) (340,251)
Gain on limited partnership interests (6,026,215) --
Other expense 587,108 1,757,643
------------ ------------
Total other expenses, net 519,745 7,697,453
------------ ------------
Income before income taxes 15,007,940 3,778,844
Deferred income tax expense 5,587,000 1,468,000
------------ ------------
Net income 9,420,940 2,310,844
Retained earnings at beginning of period 11,179,221 7,300,598
------------ ------------
Retained earnings at end of period $ 20,600,161 $ 9,611,442
============ ============
Net income per share - basic $ .15 $ .04
============ ============
Net income per share - diluted $ .15 $ .04
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 5
AMC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MAY 31, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended May 31,
-------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Net income $ 9,420,940 $ 2,310,844
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization 9,720,082 10,197,746
Deferred income tax expense 5,587,000 1,468,000
Gain on limited partnership interests (6,026,215) --
Decrease in accounts and notes receivables 49,152 1,760,766
Decrease (increase) in other current and non current assets (869,551) 398,842
Decrease in accounts payable and accrued expenses (5,075,069) (228,068)
Increase in deferred revenue 4,785,461 4,559,446
Increase (decrease) in other non current liabilities 241,075 (81,322)
------------ ------------
Net cash provided by operating activities 17,832,875 20,386,254
Cash flows from investing activities:
Principal repayments of notes receivable 469,538 469,538
Additions to commercial property (6,436,411) (7,674,328)
Increase in restricted cash (837,515) (62,487)
------------ ------------
Net cash used in investing activities (6,804,388) (7,267,277)
Cash flows from financing activities:
Decrease (increase) in restricted escrow deposits 684,852 (2,400,989)
Net increase in revolving line of credit 2,044,577 1,271,108
Principal payments of AMM Escrow Bonds -- (512,703)
Mart Bond payments (10,800,000) (9,000,000)
Principal repayments of Gift Mart Mortgage Loan (2,923,243) (3,031,402)
------------ ------------
Net cash used in financing activities (10,993,814) (13,673,986)
------------ ------------
Increase (decrease) in cash 34,673 (555,009)
Cash at beginning of period 520,854 1,052,082
------------ ------------
Cash at end of period $ 555,527 $ 497,073
============ ============
Supplemental disclosure -
Cash paid during the period for interest $ 6,183,977 $ 6,146,233
============ ============
Non-cash distribution of limited partnership interest $ 6,414,114 $ -
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 6
AMC, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1998
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of AMC,
Inc. and Subsidiaries (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the nine months ended May 31, 1998 are not necessarily
indicative of the results that may be expected for the year ended August 31,
1998. For further information, refer to the consolidated financial statements
and footnotes thereto included in the AMC, Inc. and Subsidiaries' annual report
on Form 10-K for the year ended August 31, 1997.
Certain prior year amounts have been reclassified to conform to the current
period presentation.
(2) CONTINGENT MATTERS
On April 19, 1993, a former employee of AMCMC (predecessor company) filed suit
against AMCMC for breach of contract and related tort claims. On January 19,
1996, the trial court granted summary judgment in favor of the Company on all
counts. On March 5, 1997, the Georgia Court of Appeals reversed the trial court,
and directed that judgment be entered in favor of the former employee on the
breach of contract count and remanded the case for trial on the tort claims. The
amount awarded for the breach of contract claim for damages and interest was
accrued at August 31, 1997. The Georgia Supreme Court granted the Company's
petition requesting a review of the Court of Appeals decision. On July 13, 1998
the Supreme Court issued its opinion, affirming the summary judgement on the
breach of contract claim, but ruling in favor of the Company on the tort
claims. The Company has no present intention to seek further review of the
breach of contract holding, and the Supreme Court's ruling is expected to
conclude the matter.
The Company is subject to certain other claims in the ordinary course of
business. Management does not expect that the resolution of such claims will
have a material impact on the Company's financial position or results of
operations.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 128, Earnings Per Share. SFAS 128 replaced the
previously reported primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes the dilutive effects of options, warrants and convertible
securities. Diluted earnings per share is very similar to the previously
reported fully diluted earnings per share. All earnings per share amounts for
all periods have been presented, and where necessary, restated to conform to the
SFAS 128 requirements.
(4) COMMERCIAL PROPERTY
In December 1997 the Company wrote off approximately $14,113,000 in assets which
were fully depreciated.
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<PAGE> 7
(5) INVESTMENT IN LIMITED PARTNERSHIPS
The Company, through its wholly owned subsidiary EC Holdings, Inc. ("EC
Holdings") owns limited partnership interests in partnerships owning real estate
in two mixed use complexes in San Francisco's financial district. These
interests currently include six office buildings, retail and associated parking.
In February 1998 and May 1998, two of the partnerships sold hotel properties for
an agreed upon number of units in other limited partnerships. The Company's
share of the units, which were distributed to EC Holdings, have a fair value of
approximately $6,414,000 and have been recorded as an investment in limited
partnerships. The units are pledged as security for the Antecedent Debt Notes.
The gain of $6,026,000 recorded by the Company is net of certain related costs.
The Company records its investments in limited partnerships using the cost
method of accounting.
(6) REVOLVING LINE OF CREDIT
On May 31, 1998, with the approval of the requisite bondholders, the Company's
Revolving Line of Credit was amended to increase the maximum revolving
commitment from $10,000,000 to $20,000,000 and to extend the maturity date to
May 31, 2001. Under the terms of the amendment, the Revolving Line of Credit
bears interest at the prime rate or LIBOR plus 2.10% at the Company's option,
payable monthly. In addition, a commitment fee of .375% per annum on the daily
unused portion of the Revolving Line of Credit is payable quarterly in arrears.
Amounts under the Revolving Line of Credit are available for general corporate
use, including operating expenses, working capital, capital improvements, debt
service and acquisitions. Under certain circumstances, the usage of the
Revolving Line of Credit may require the prior approval of one of the Company's
bondholders.
(7) COMMON STOCK
In May 1998, the Company issued 210,403 shares of common stock which were
issuable as a result of the restructuring which had not been previously issued
or reflected in common stock. The issuance was recorded as an adjustment to
common stock and capital deficit. Prior period balances and earnings per share
have been restated to reflect the issuance of the common stock.
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<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL
Effective October 2, 1995, Mr. John C. Portman, Jr. and The Portman Companies
entered into a series of agreements with their lenders to restructure their
existing indebtedness. Under the terms of these agreements, the net assets of
the Atlanta Market Center Companies were contributed to AMC, Inc., which had
been formed principally for such purpose. In exchange for the existing debt
reduced by certain amounts forgiven by the lenders, the creditors of Mr. Portman
and certain affiliates, including the creditors of the Company, received
approximately 82.5% of the equity interest in the Company, the Mart Bonds, the
AMM Escrow Bonds, and the Antecedent Debt Notes.
This restructuring has been accounted for as a troubled debt restructuring in
accordance with Statement of Financial Accounting Standards No. 15, "Accounting
by Debtors and Creditors for Troubled Debt Restructurings" (SFAS 15). As a
result of this troubled debt restructuring, in which the existing debt at the
time of the restructure exceeded the fair value of the equity interests issued
and the total future principal and interest payments called for under the Mart
Bonds, the Mart Bonds have initially been recorded at an amount equal to the
total future cash payments, including interest, specified by their terms in
accordance with SFAS 15. All future cash payments will be accounted for as a
reduction of the carrying amount of the Mart Bonds, and no interest expense will
be recognized on the Mart Bonds.
The Company's primary business is the operation of AmericasMart and the
management of trade shows in conjunction with such Marts. Additionally, the
Company manages trade shows on behalf of third parties at other locations.
The following discussion and analysis of the financial condition and results of
operations of the Company should be read in conjunction with the unaudited
condensed consolidated financial statements and related notes of the Company
included elsewhere in this report and the AMC, Inc. and Subsidiaries' annual
report on Form 10-K for the year ended August 31, 1997.
RESULTS OF OPERATIONS
The Company's principal sources of revenues are rental revenues from the lease
of showroom and exhibition space in AmericasMart and trade show revenues, which
relate to specific shows staged for related industries. The Company leases
showroom space over terms ranging from one to ten years with rent payable
monthly over the term of the lease. In addition, the Company rents exhibition
space during trade shows thereby affording non-tenant manufacturers an
opportunity to exhibit merchandise during a specific trade show.
Quarter Ended May 31, 1998 Compared to Quarter Ended May 31, 1997
Rental revenues increased approximately $1,162,000 during the quarter ended May
31, 1998 ("Q3 1998") as compared to the quarter ended May 31, 1997 ("Q3 1997").
Rental revenues increased approximately $332,000 in the Gift Mart due to an
increase in rental rates offset by a slight decrease in occupancy. Rental
revenues increased approximately $1,054,000 in the Merchandise Mart, reflecting
an increase in both occupancy and rental rates, primarily associated with the
Holiday and Floral area which opened in January 1997 and was expanded in January
1998. Rental revenues in the
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Apparel Mart decreased approximately $224,000 reflecting a decrease in occupancy
and in rental rates.
Trade show revenues decreased approximately $14,000 in Q3 1998 compared to Q3
1997. Other revenues decreased approximately $158,000 in Q3 1998 compared to Q3
1997 due primarily to a decrease in hotel commissions and certain joint venture
revenues.
Building operations expenses increased approximately $221,000 in Q3 1998
compared to Q3 1997 due primarily to increased electrical and building
maintenance costs.
Trade show expenses decreased approximately $35,000 in Q3 1998 compared to Q3
1997 due primarily to costs associated with the March Gift Show.
Marketing expenses decreased approximately $183,000 in Q3 1998 compared to Q3
1997 due primarily to a decrease in costs associated with the apparel markets.
General and administrative expenses decreased approximately $443,000 in Q3 1998
compared to Q3 1997 as a result of a decrease in certain professional service
costs, offset by an increase in salary and benefit costs.
Bad debt recovery increased approximately $30,000 in Q3 1998 compared to Q3 1997
due to the collection of accounts previously considered uncollectible.
Depreciation and amortization expense decreased approximately $153,000 in Q3
1998 compared to Q3 1997 due to certain assets becoming fully depreciated in
1998.
The increase in operating income of approximately $1,620,000 in Q3 1998 as
compared to Q3 1997 is primarily due to the increase in rental and trade show
revenues and the decrease in general and administrative expense.
The gain on limited partnership interest results from the sale of a hotel
property in which the Company had an interest and the distribution of
partnership units to EC Holdings in May 1998 as a result of the sale.
Other expense in Q3 1997 included the write-off of a related party note
receivable as well as certain litigation costs that were not incurred in Q3
1998.
Income tax expense increased approximately $1,681,000 in Q3 1998 compared to Q3
1997 due to the increase in taxable income.
Nine months Ended May 31, 1998 compared to Nine Months Ended May 31, 1997.
Rental revenues increased approximately $3,488,000 during the nine months ended
May 31, 1998 ("YTD 1998") as compared to the nine months ended May 31, 1997
("YTD 1997"). Rental revenues increased approximately $735,000 in the Gift Mart
due to an increase in rental rates offset by a decrease in occupancy. Rental
revenues increased $3,783,000 in the Merchandise Mart, reflecting an increase in
both occupancy and rental rates primarily associated with the Holiday and Floral
area which opened in January 1997 and was expanded in January 1998. Rental
revenues in the Apparel Mart decreased approximately $1,030,000 reflecting a
decrease in occupancy and in rental rates.
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<PAGE> 10
Trade show revenues increased approximately $833,000 in YTD 1998 compared to YTD
1997 primarily due to an increase in January International Gift and Home
Furnishings Market revenues and the addition of the Florida Gift Show. Other
revenues decreased approximately $309,000 for YTD 1998 compared to YTD 1997 due
to decreases in certain joint venture revenues and transient parking revenues,
offset by an increase in hotel commission and advertising revenues.
Building operations expenses increased approximately $285,000 for YTD 1998
compared to YTD 1997 due primarily to increased electrical and building
maintenance costs.
Trade show expenses increased approximately $325,000 for YTD 1998 compared to
YTD 1997 due primarily to costs associated with the addition of the Florida Gift
Show.
Marketing expenses increased approximately $323,000 in YTD 1998 compared to YTD
1997 due primarily to an increase in costs associated with the January
International Gift and Home Furnishings Market and the addition of the Florida
Gift Show.
General and administrative expenses decreased approximately $342,000 in YTD 1998
compared to YTD 1997 as a result of a decrease in certain professional service
costs offset by an increase in salary and benefit costs.
Property taxes decreased approximately $91,000 in YTD 1998 compared to YTD 1997
due to a decrease in the property tax assessment.
Depreciation and amortization expense decreased approximately $478,000 in YTD
1998 compared to YTD 1997 due to certain assets becoming fully depreciated in
1998.
The increase in operating income of $4,051,000 in YTD 1998 compared to YTD 1997
is primarily due to the increase in rental revenues.
Other expense decreased approximately $1,170,000 in YTD 1998 compared to YTD
1997 as a result of Olympic costs, the write-off of a related party note and
certain litigation costs incurred in YTD 1997 that were not incurred in YTD
1998.
The gain on limited partnership interests results from the sale of hotel
properties in which the Company had an interest and the distribution of
partnership units to EC Holdings in February 1998 and May 1998 as a result of
the sales.
Income tax expense increased approximately $4,119,000 in YTD 1998 compared to
YTD 1997 due to the increase in taxable income.
LIQUIDITY AND CAPITAL RESOURCES
At May 31, 1998, the Company had approximately $280.9 million in long-term debt
outstanding, of which approximately $95.6 million represents the Gift Mart
Mortgage Loan. Additionally, approximately $5.1 million was outstanding under
the Revolving Line of Credit at May 31, 1998.
The Company's primary sources of cash are operating cash flows and borrowings
under the Revolving Line of Credit. On May 31, 1998, with the approval of the
requisite bondholders, the Company's Revolving Line of Credit was amended to
increase the maximum revolving commitment from $10.0 million to $20.0 million
and to extend the maturity date to May 31, 2001. Amounts under
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<PAGE> 11
the Revolving Line of Credit are available for general corporate use, including
operating expenses, working capital, capital improvements, debt service and
acquisitions. The Company intends to use the increased availability under the
Revolving Line of Credit to fund the early expansion of the Gardens line of
business, for working capital purposes, and for an additional liquidity reserve.
Under certain circumstances, the usage of the Revolving Line of Credit may
require the prior approval of one of the Company's bondholders. At May 31, 1998
approximately $14.9 million was available under the Revolving Line of Credit.
The availability of operating cash flows generated by the Gift Mart is limited
by the terms of the Gift Mart Mortgage Loan. Cash flows from operations less
capital improvements of the Gift Mart must be used to repay principal
outstanding on the Gift Mart financing and cannot be used to fund operations or
capital improvements of other properties of the Company. Principal payments on
the Gift Mart financing totaled $2.9 million and $3.0 million for YTD 1998 and
YTD 1997, respectively.
Cash flows from operations, net of cash flows of the Gift Mart, were
approximately $13.4 million during YTD 1998, and $16.1 million during YTD 1997.
The decrease in operating cash flow in YTD 1998 compared to YTD 1997 is
primarily attributable to the timing of the payment of property taxes.
Significant capital expenditures were incurred during the past several years and
ongoing capital expenditures will be necessary to adequately maintain the
Company's properties. Total capital expenditures were approximately $6.4 million
in YTD 1998, and $7.7 million in YTD 1997, which included approximately $.7
million and $.4 million in Gift Mart capital expenditures for YTD 1998 and YTD
1997, respectively. Except as discussed below, management expects that capital
expenditures, including tenant improvements, of approximately $11.0 million will
be needed to maintain the buildings and make improvements, including
improvements related to possible increased rental activity, during the year
ending August 31, 1998. There can be no assurance, that changes in the
competitive environment, governmental regulations or unforeseen loss or damage
will not cause capital expenditures to exceed management's estimate.
Management expects that cash flows from operations and borrowings under the
Revolving Line of Credit will be sufficient to fund operations, debt service
prior to maturity and approved capital expenditures provided that the Company
can maintain its operating revenues and expenses at current levels and that no
unforeseen or additional significant capital improvements are required. There
can be no assurance the Company can maintain current revenue levels which are
affected by changing economic conditions in the specific industries represented
at its Marts and trade shows. In addition, there can be no assurance that the
overall level of capital expenditures will not increase as the Marts age. In the
event that operating cash flows and borrowings under the Revolving Line of
Credit are insufficient, the Company would be required to seek additional
financing or to refinance all of its debt obligations prior to maturity. The
Company's ability to seek additional financing is limited under the terms of the
Revolving Line of Credit and its indentures.
Under the terms of the Mart Bonds, the Company is required to use certain
portions of its cash flows to repay its indebtedness. The terms of such debt
also limit the Company's ability to incur additional debt or to create
additional liens. Accordingly, such provisions may limit the Company's ability
to make required capital improvements. Mart Bond repayments totaled
approximately $10.8 million in YTD 1998, and $9.0 million in YTD 1997. Principal
payments to reduce the indebtedness under the Gift Mart financing and the Mart
Bonds will be determined based upon cash flows of the Gift Mart and of the
Company, respectively.
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<PAGE> 12
In February 1998, one of the holders of the Mart Bonds offered to purchase for
cash a portion of the outstanding Mart Bonds. This offer has expired and it is
the understanding of the Company that none of the outstanding Mart Bonds were
purchased pursuant to this offer. In connection with the offer, the offeror
indicated that it intended to engage in discussions with the Company regarding
the refinancing of the Mart Bonds and that another holder also intends to engage
in such discussions with the Company. While the Company has from time to time
engaged in preliminary discussions with certain holders of the Mart Bonds
regarding the refinancing of those Bonds and possible arrangements under which
the Company or its affiliates would participate in repurchase of the Mart Bonds,
neither the Company nor any of its affiliates is currently a party to any
agreement, understanding or arrangement with respect to the refinancing of the
Mart Bonds or with respect to any repurchase by the Company of the Mart Bonds or
any other securities of the Company.
The remaining principal balance on the Gift Mart financing is due on July 31,
1998, with an option to extend the maturity date for one year, if specified
performance levels are achieved. The Company expects such levels to be achieved
and plans to extend the maturity of the debt. The Company's Mart Bonds are due
and payable on July 31, 2000. The Company will not generate sufficient cash to
repay such indebtedness and intends to refinance both of these debt obligations
at maturity by extending their maturity dates or securing other financing. There
can be no assurance that the Company will be able to extend the maturity dates
of any of its indebtedness or secure alternative financing to fund the repayment
thereof.
The Company has engaged a financial advisor to assist the Company in the
identification and evaluation of strategic alternatives that may include certain
transactions designed to maximize the value of the Company. The possible
transactions could include a capital restructuring, asset repositioning or a
sale of the Company or certain of its assets, in either a single transaction or
a series of related transactions. Other assets of affiliates of the Company
could be included in any such transaction or series of transactions. There can
be no assurance that the financial advisor will formulate any strategic
alternative to maximize the value of the Company or that the Company will
succeed in completing any transaction or series of transactions recommended by
the financial advisor. The fees for the services provided by the financial
advisor, including any success fees which may become payable, will be borne pro
rata by the Company and the affiliates of the Company, as provided in a separate
agreement between the Company and its affiliates. Under this agreement, based on
their respective EBITDAs for 1997, the Company will contribute approximately 71%
of fees and expenses, with any success fee that becomes payable to be based on
the value of the respective parties' assets. The agreement with the financial
advisor provides for an initial retainer fee of $250,000 and monthly fees of
$50,000 per month for a minimum of twelve months.
EC Holdings
The stock representing the Company's interests in EC Holdings, Inc. ("EC
Holdings"), which holds an interest in limited partnerships which own two
mixed-use complexes in San Francisco's financial district, and certain
unimproved land (the "Unimproved Land") has been pledged as security for the
Antecedent Debt Notes. Under the terms of the Antecedent Debt Notes, since the
Company did not liquidate its interest in EC Holdings or the Unimproved Land by
October 2, 1997, the Antecedent Debt Note holders are entitled to direct the
trustee for the bonds to foreclose upon the Company's interest in EC Holdings
and the Unimproved Land. As of July 1, 1998, no foreclosure proceedings have
been initiated.
The limited partnership interests held by EC Holdings currently have interests
in six office buildings, retail and associated parking. In February 1998 and May
1998, two of the partnerships sold hotel
I-11
<PAGE> 13
properties for an agreed upon number of units in other limited partnerships. The
Company's share of the units, which were distributed to EC Holdings, have a fair
value of approximately $6,414,000 and have been recorded as an investment in
limited partnerships. The units are pledged as security for the Antecedent Debt
Notes.
All other properties in which EC Holdings has interests are currently under an
agreement to be sold to Boston Properties Limited Partnership ("BPLP") in
exchange for a combination of preferred limited partnership units of BPLP and
cash. If the transaction closes as proposed, it is expected to result in a gain
to the Company, before related transaction costs, which could exceed $25
million. The transaction, which is proposed to close in the fourth quarter, is
subject to further negotiation, due diligence by the parties and the preparation
of mutually acceptable definitive documentation. There can be no assurance that
the transaction will be completed or that the transaction will be completed as
proposed.
Any cash distributions to EC Holdings or cash received upon the sale of limited
partnership units must first be used to pay down the Antecedent Debt and the
Revolving Line of Credit. The use of any additional cash distributions is
limited under the terms of the Company's debt agreements.
INFLATION
The Company deals with the effects of inflation by adjusting rental rates on new
leases and renewal leases, and by providing for annual rental rate increases in
most leases. In times of higher inflation, the Company's operating results are
negatively impacted due to the fact that most lease terms are from one to ten
years while the term of most service contracts is one year or less.
YEAR 2000 INFORMATION
The Company has assessed the potential impact of the Year 2000 computer systems
issue on its operations. Based upon preliminary assessments, the Company's
accounting system is the primary system which is currently not Year 2000
compliant. An upgraded version of the software which is Year 2000 compliant will
be installed by November 1998. All other system changes or upgrades which are
required to ensure Year 2000 compliance will be implemented by the end of fiscal
year 1999. It is management's belief that the impact of the issue will not
materially affect the Company's future operating results or financial condition.
I-12
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See note 2 to Part 1, Item 1 - Financial Statements.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
<TABLE>
<S> <C>
4.1 First Amendment to Credit Agreement dated as of May 31, 1998,
by and among AMC, Inc. and the Provident Bank and various
lenders.
4.2 Amended and Restated Revolving Credit Note dated May 31, 1998.
4.3 First Amendment to Intercreditor Agreement dated as of May 31,
1998 by and among The Provident Bank, as agent, and Reliance
Trust Company in its capacity as trustee.
4.4 Second Amendment to Indenture dated as of May 31, 1998 by and
between AMC, Inc. and Reliance Trust Company, as Trustee.
4.5 Modification to Deed to Secure Debt and Security Agreement
dated as of May 31, 1998 by AMC, Inc. and the Provident Bank
as agent for the various lenders.
10.1 Agreement dated April 8, 1998 among AMC, Inc., Portman
Lightfair Associates, L.P., CGS Associates, L.P., AMC Orlando,
Inc. and ADAC, L.P. regarding the engagement of Victor Capital
Group, L.P.
10.2 Agreement dated April 7, 1998 regarding the engagement of
Victor Capital Group, L.P. by AMC, Inc. for itself and as
agent for Portman Lightfair Associates, L.P., CGS Associates,
L.P., AMC Orlando, Inc. and ADAC, L.P.
11 Computation of Earnings Per Common Share
27 Financial Data Schedule
</TABLE>
(b) The Company has not filed any reports on Form 8-K during the quarter
ended May 31, 1998 or subsequent to that date but prior to the filing
date of this Form 10-Q.
II-1
<PAGE> 15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMC, Inc.
(Registrant)
/S/ JOHN M. RYAN
----------------
John M. Ryan
President
/S/ HENRY G. ALMQUIST, JR.
--------------------------
Henry G. Almquist, Jr.
Sr. Vice President - Finance and
Accounting, Chief Financial Officer
(Principal financial and accounting officer)
Date: July 14, 1998
<PAGE> 1
EXHIBIT 4.1
FIRST AMENDMENT TO
CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT ("First Amendment") dated as
of May 31, 1998, by and among AMC, INC., a Georgia corporation (hereinafter,
together with its successors in title and assigns called "Borrower"), and THE
PROVIDENT BANK, an Ohio banking corporation ("Agent"), and various Lenders as
set forth on Schedule 1 to the Credit Agreement (as hereinafter defined).
PRELIMINARY STATEMENT
WHEREAS, Borrower, Agent and Lenders have entered into a certain
Credit Agreement dated as of September 30, 1995 (the "Credit Agreement");
WHEREAS, Borrower has requested and Lenders have agreed upon certain
conditions, to increase the Maximum Revolving Commitment from Ten Million
Dollars ($10,000,000) to Twenty Million Dollars ($20,000,000) and to amend
certain other terms and provisions of the Credit Agreement.
NOW, THEREFORE, the parties hereto agree to supplement and amend the
Credit Agreement upon such terms and conditions as follows:
1. Capitalized Terms. All capitalized terms used herein shall
have the meanings assigned to them in the Credit Agreement unless the context
hereof requires otherwise. Any definitions of capitalized terms set forth
herein shall be deemed incorporated into the Credit Agreement as amended by
this First Amendment.
2. Definitions.
(a) Section 1.2 of the Credit Agreement is hereby
amended by amending and restating in their entirety the following
definitions:
"Collateral" means all of Borrower's Accounts, Inventory,
Equipment, General Intangibles, fixtures, goods, motor vehicles,
leasehold improvements, Documents, Instruments, Chattel Paper,
Intellectual Property, inventory subject to leases and rights under
lease agreements for the leasing of inventory, money, deposit
accounts, rights to draw on letters of credit, permits, licenses and
the cash or noncash Proceeds (including insurance or other rights to
receive payment with respect thereto) of any of the foregoing and all
<PAGE> 2
-2-
accessions and additions to and replacements of the foregoing, and all
books and records (including, without limitation, customer lists,
credit files, computer programs, printouts and other computer
materials and records of Borrower) pertaining to any of the foregoing
and relating to or used in connection with the ownership, maintenance,
management or operation of the Atlanta Merchandise Mart or the Atlanta
Apparel Mart (herein, together with the real property, buildings and
fixtures described in the Mortgages, and all other property and rights
assigned by Borrower to Agent, on behalf of the Lenders, to secure
Borrower's obligations under the Loan Documents).
"Commitment Fee" means a fee equal to three-eighths of one
percent (0.375%) per annum (computed on the basis of a 360-day year
for the actual number of days elapsed) on the daily unused amount of
the Maximum Revolving Commitment.
"Libor Rate" means for each Interest Period, the sum of Libor
plus two and one-tenth percent (2.10%).
"Maximum Revolving Commitment" means Twenty Million Dollars
($20,000,000).
"Revolving Credit Notes" means, collectively, with respect to
the Credit Loan, amended and restated promissory notes of Borrower,
dated as of the First Amendment Closing Date, in the aggregate
principal amount of the Maximum Revolving Commitment, in or
substantially in the form of Exhibit C attached to this First
Amendment, as the same may be amended, modified or restated.
"Revolving Credit Note" shall mean any one of the Revolving Credit
Notes
"Termination Date" means the earlier of (i) the third
anniversary of the First Amendment Closing Date; (ii) the date upon
which the entire principal of the Notes shall become due pursuant to
the provisions hereof (whether as a result of acceleration by Agent or
the Requisite Lenders or otherwise); or (iii) the date upon which the
Credit Commitments terminate pursuant to Section 9.2 hereof.
(b) The Credit Agreement is hereby amended to add the
following definitions to Section 1.2:
"Chattel Paper" means any "chattel paper" as such term is
defined in Section 9-105(1)(b) of the UCC (but only to the extent such
arises in connection with, and relates directly to the ownership,
maintenance, management or operation of, the Atlanta Apparel Mart or
the Atlanta Merchandise Mart), now or hereafter acquired by Borrower.
<PAGE> 3
-3-
"Documents" mean any "documents," as such term is defined in
Section 9-105(1)(f) of the UCC (but only to the extent such arises in
connection with, and relates directly to the ownership, maintenance,
management or operation of, the Atlanta Apparel Mart or the Atlanta
Merchandise Mart), now owned or existing or hereafter arising or
acquired by Borrower.
"Equipment" means any "equipment," as such term is defined in
Section 9-109(2) of the UCC (but only to the extent such arises in
connection with, and relates directly to the ownership, maintenance,
management or operation of, the Atlanta Apparel Mart or the Atlanta
Merchandise Mart), now owned or hereafter acquired by Borrower and
shall include, without limitation, any and all additions,
substitutions, and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts and
accessories installed thereon or affixed thereto.
"First Amendment Closing Date" means May 31, 1998.
"First Amendment Closing Fee" means a fee equal to One
Hundred and Twenty Thousand Dollars ($120,000), payable in full in
immediately-available funds on the First Amendment Closing Date.
"General Intangibles" means any "general intangibles" as such
term is defined in Section 9-106 of the UCC (but only to the extent
such arises in connection with, and relates directly to the ownership,
maintenance, management or operation of, the Atlanta Apparel Mart or
the Atlanta Merchandise Mart), now owned or hereafter acquired and, in
any event, shall include, without limitation, all right, title and
interest now in existence or hereafter arising in or to all customer
lists, trademarks, patents, rights in intellectual property, trade
names, copyrights, trade secrets, proprietary or confidential
information, inventions and technical information, procedures,
designs, knowledge, know-how, software, data bases, data, processes,
models, drawings, materials, and records now owned or hereafter
acquired, and any and all goodwill and rights of indemnification.
"Instruments" mean any "instrument," as such term is defined
in Section 9-105(1)(i) of the UCC (but only to the extent such arises
in connection with, and relates directly to the ownership,
maintenance, management or operation of, the Atlanta Apparel Mart or
the Atlanta Merchandise Mart), now owned or hereafter acquired by
Borrower.
"Inventory" means Borrower's inventory (but only to the
extent such arises in connection with, and relates directly to the
ownership, maintenance, management or operation of, the Atlanta
Apparel Mart or the Atlanta Merchandise Mart), including without
limitation: (i) all raw materials used or consumed in Borrower's
business, wherever located
<PAGE> 4
-4-
and whether in the possession of such Borrower or any other Person;
(ii) all goods, wares and merchandise, finished or unfinished, held for
sale or lease or leased or furnished or to be furnished under contracts
of service, wherever located and whether in the possession of Borrower
or any other Person; and (iii) all goods returned to or repossessed by
such Person.
"Prime Rate Loans" mean the Loan(s) which bear interest at
the Prime Rate.
(c) Section 1.2 of the Credit Agreement is hereby
amended by deleting in their entirety the definitions "Adjusted Prime
Rate" and "Adjusted Prime Rate Loans." Further, the Credit Agreement
and other Loan Documents are hereby amended by substituting all
references to "Adjusted Prime Rate" and "Adjusted Prime Rate Loans"
with "Prime Rate" and "Prime Rate Loans," respectively. References in
the Loan Documents to the "Loan Documents," "Loans" and "Notes" and
other documents, instruments, and other agreements executed in
connection with the Loans shall in each case refer to each such
document, instrument or other agreement, as it may be amended or
restated from time to time.
3. Exhibits and Schedules.
(a) Exhibit C of the Credit Agreement is hereby amended
in its entirety by Exhibit C attached to this First Amendment.
(b) Schedule 1 of the Credit Agreement is hereby amended
in its entirety by Schedule 1 attached to this First Amendment.
4. The Note. Section 2.4 of the Credit Agreement is hereby
amended in its entirety to read as follows:
"The absolute and unconditional obligation of
Borrower to repay to each Lender its respective
Pro Rata Share of the principal of the Loans and
the interest thereon shall be evidenced by a
separate Revolving Credit Note for each Lender
in the amount of its respective Credit Commitment
for each Loan dated as of the First Amendment
Closing Date. All payments under the Notes shall
be made to Agent at its Head Office, for the
account of Lenders, and Agent shall allocate
all payments on each Loan received from Borrower
among all Lenders in accordance with each Lender's
Pro Rata Share of such Loan in accordance with
Section 2.7(b)."
5. Interest Payable on the Loans. Sections 2.5(a), 2.5(c) and
2.5(g) of the Credit Agreement are hereby amended in their entirety to read as
follows:
<PAGE> 5
-5-
"(a) Interest Rate. Except as otherwise provided herein,
the Loans shall bear interest on the daily outstanding principal
balance thereunder at an annual rate equal to, at Borrower's option,
the Prime Rate or Libor Rate; provided, however that at all times, at
least one-half (2) of the aggregate amount of funds drawn under the
Revolving Credit Loan shall, at all times, bear interest on the daily
outstanding principal balance thereunder at an annual rate equal to
the Prime Rate. Each Libor Rate Loan shall bear interest from and
including the first day of the Interest Period applicable thereto to
(but not including) the last day of such Interest Period at the
interest rate determined as applicable to such Libor Rate Loan.
Borrower shall select Interest Periods with respect to Libor Rate
Loans so that it is not necessary to pay a Libor Rate Loan prior to
the last day of the applicable Interest Period in order to repay the
Loans on the Termination Date."
"(c) Conversions. Borrower may elect from time to time to
convert all or part of the outstanding principal balance of any
Revolving Credit Loan from a Prime Rate Loan to a Libor Rate Loan by
the Borrower's giving Agent at least three (3) Business Days' prior
irrevocable notice of such an election; provided, that no Loan may be
converted to a Libor Rate Loan while a Default or an Event of Default
has occurred and is continuing; provided, further, that no Loan may be
converted to a Libor Rate Loan if such conversion would result in less
than one-half of the aggregate outstanding principal amount drawn
under the Notes bearing interest at the Prime Rate. Borrower may also
elect from time to time to continue any outstanding Libor Rate Loan
(whether for a similar or a different Interest Period) upon expiration
of the Interest Period then applicable thereto by the Borrower's
giving the Agent at least three (3) Business Days' prior irrevocable
notice of such continuation of such Libor Rate Loan; provided, that no
Revolving Credit Loan may be continued as a Libor Rate Loan while a
Default or an Event of Default has occurred and is continuing or if
such continuance would result in less than one-half of the aggregate
outstanding principal amount drawn under the Notes accruing interest
at the Prime Rate."
"(g) Monthly Installments. Borrower shall pay to Agent
for the account of Lenders, monthly in arrears on the first Business
Day of each month beginning with the month following the month in
which the First Amendment Closing Date falls, (i) interest on the
outstanding principal amount of the Prime Rate Loans at the annual
rate equal to the Prime Rate and (ii) interest on the outstanding
principal amount of the Libor Rate Loans at the annual rate equal to
the Libor Rate; provided, however, that if Borrower elects to convert
a Prime Rate Loan, or any portion thereof, to a Libor Rate Loan,
Borrower shall pay to Agent, for the account of Lenders, all accrued
but unpaid interest on the Prime Rate Loan or such portion thereof
being converted for the period commencing on the date of last payment
date under this paragraph 2.5(g) to the first day of the interest
period for the Libor Rate Loan into which the Prime Rate Loan was
converted; provided, further, the first monthly
<PAGE> 6
-6-
installment after the First Amendment Closing Date shall include all
accrued and unpaid interest on the Loans as of the First Amendment
Closing Date."
6. Repayment and Prepayment of Principal. Section 2.6(c) of the
Credit Agreement is hereby amended in its entirety to read as follows:
"(a) Maturity. Subject to the terms and conditions of
this Agreement, Borrower will be entitled to reborrow all or any part
of the principal of the Revolving Credit Notes repaid or prepaid prior
to the Termination Date. The Credit Commitments shall terminate and
all of the Indebtedness evidenced by the Revolving Credit Notes shall,
if not sooner paid, be in any event absolutely and unconditionally due
and payable in full by Borrower on the third anniversary of the First
Amendment Closing Date, the date of final maturity of such Notes."
7. Repayments and Prepayments of Principal. Section 2.6(d) of
the Credit Agreement is hereby amended in its entirety to read as follows:
"(d) Prepayment Fees. Borrower may voluntarily prepay the
Obligations in full or in part at any time, without premium or
penalty."
8. Security Interest. Section 3.1 of the Credit Agreement is
hereby amended in its entirety to read as follows:
"Section 3.1 Security Interest. To secure the prompt
repayment of the Notes and the Obligations, Borrower hereby grants,
and hereby pledges and collaterally assigns, to Agent, on behalf of
the Lenders, a lien and security interest in and to and all of
Borrower's personal property and fixtures, located in or on the
Atlanta Merchandise Mart and the Atlanta Apparel Mart, whether now or
hereafter owned, existing or acquired or hereafter arising, including,
without limitation the Collateral. To secure further such liabilities
and obligations, Borrower has granted to Agent, on behalf of the
Lenders, a first lien upon certain real property owned by Borrower
identified on Schedule 3.1; has executed and delivered to Agent, on
behalf of the Lenders, security agreements or deeds, and valid
assignments of all other property rights (including, without
limitation, rights to receive rents and rights with respect to
judgments and claims) which now exist or which may exist or arise
hereafter from time to time with respect to the Atlanta Merchandise
Mart and the Atlanta Apparel Mart; and shall deliver to Agent, on
behalf of the Lenders, to the extent required herein or upon Agent's
request in accordance with the terms of this Agreement, all
instruments, documents and chattel paper in which Borrower from time
to time has an interest and such other documents as Agent may request
to perfect a security interest in the Collateral."
<PAGE> 7
-7-
9. Borrower's Depository Account. The Credit Agreement is hereby
amended to add, in its entirety, Section 6.15 to read as follows:
"6.15 Borrower's Depository Accounts. Borrower shall
concentrate all of its bank and depository accounts with Agent,
including without limitation, all demand deposit, time deposit,
concentration and zero balance accounts except that Borrower may
maintain operating accounts with any local financial institution,
provided Borrower shall use its best efforts to maintain such account
with one or more Lenders."
10. Reaffirmation of Covenants, Warranties and Representations.
Borrower hereby agrees and covenants that all representations and warranties in
the Credit Agreement, including without limitation, all of those warranties and
representations set forth in Article 5, are true and accurate in all material
respects as of the date hereof. Borrower further reaffirms all covenants in the
Credit Agreement, and reaffirms each of the affirmative covenants set forth in
Article 6 and the financial and negative covenants set forth in Articles 7 and
8, respectively, thereof, as if fully set forth herein, except to the extent
modified by this First Amendment.
11. Conditions Precedent to Closing of First Amendment. On or
prior to the First Amendment Closing Date, each of the following conditions
precedent shall have been satisfied:
(a) Proof of Corporate Authority. Lenders shall have
received from Borrower (i) copies, certified by a duly authorized
officer to be true and complete on and as of the First Amendment
Closing Date, of records of all action taken by Borrower to authorize
the execution and delivery of this First Amendment and all other
certificates, documents and instruments to which it is or is to become
a party as contemplated or required by this First Amendment, and its
performance of all of its obligations under each of such documents,
and (ii) certificates of incumbency for the officers of Borrower.
(b) Certified Copies of Organizational Documents. Agent
shall have received from Borrower a certificate from an officer
certifying that there have been no amendments, revisions or
supplements to the organizational documents previously delivered to
Agent at the Closing and that the same are in full force and effect.
(c) Good Standing. Agent shall have received from
Borrower a certificate from the Secretary of State of the state of
Borrower's incorporation and all other states in which Borrower is
qualified to do business that Borrower is in good standing.
(d) Documents. Each of the documents to be executed and
delivered at the closing and all other certificates, documents and
instruments to be executed in connection herewith including, without
limitation, a Revolving Credit Note in the form of Exhibit C
<PAGE> 8
-8-
attached to this First Amendment, shall have been duly and properly
authorized, executed and delivered by Borrower and shall be in full
force and effect on and as of the First Amendment Closing Date.
(e) Legality of Transactions. No change in applicable
law shall have occurred as a consequence of which it shall have become
and continue to be unlawful (i) for Lender to perform any of its
agreements or obligations under any of the Loan Documents, or (ii) for
Borrower to perform any of its agreements or obligations under any of
the Loan Documents.
(f) Performance. Borrower shall have duly and properly
performed, complied with and observed each of its covenants,
agreements and obligations contained in each of the Loan Documents.
Except as set forth herein, no event shall have occurred on or prior
to the First Amendment Closing Date, and no condition shall exist on
the First Amendment Closing Date, which constitutes a Default or an
Event of Default.
(g) Perfection of Security Interests. Agent shall have
received all Uniform Commercial Code Financing Statements required or,
in Agent's opinion, advisable to be filed in order to create, in favor
of the Agent for the benefit of Lenders, a perfected Lien on the
Collateral with respect to which a Lien can be perfected by means of
filing Uniform Commercial Code Financing Statements (or for the filing
of an application for certificate of title); said Financing Statements
shall have been properly filed in each office in each jurisdiction in
which such filings are required or, in the opinion of Agent,
advisable; Agent shall have received confirmation from its counsel or
counsel to Borrower that all such filings and recordations have been
made, and that all necessary filing, subscription and inscription fees
and all recording and other similar fees, and all taxes and other
expenses related to such filings and recordings have been paid or
provided for in full by or on behalf of Borrower;
(h) Priority. Agent shall have received evidence
reasonably satisfactory to Lenders that Agent's Liens for the benefit
of Lenders are first and prior, and there are no other superior,
equal, or inferior Liens except the Permitted Liens;
(i) Closing Fee. Borrower shall have paid to Agent for
the benefit of Lenders an amount equal to the First Amendment Closing
Fee minus the amount paid by Borrower to Agent as a retainer upon
execution of the proposal letter.
(j) Consents of Bond Holders. Agent shall have received
satisfactory evidence of the consent of the required majority of the
holders of the Bonds to the execution of this First Amendment and the
transactions contemplated herein.
<PAGE> 9
-9-
(k) Amendment to Intercreditor Agreement. Borrower shall
have delivered to Agent an Amendment to the Intercreditor Agreement
duly executed by the Trustee of the Mart Bonds and Borrower in a form
satisfactory to Agent.
(l) Gift Mart Financing. Borrower shall have delivered
to Agent written evidence of any consent of Bank of America, N.T. &
S.A. or any other third party that may be required by the terms of the
documents evidencing the Gift Mart Financing.
(m) Mortgage and Title Insurance. Borrower shall have
executed and delivered amendments or modifications to the Mortgages,
in a form satisfactory to Agent and Lenders. Further, Borrower shall
cause the Title Company to deliver to Agent an endorsement to the ALTA
Title Insurance Loan Policy that was delivered to Agent at Closing,
updating title and showing only such matters as may be acceptable to
Agent and Lenders, and further insuring the Mortgages, as amended.
Borrower shall have paid to the Title Company all expenses
and premiums of the Title Company in connection with the update of
title and the issuance of such endorsements. In addition, Borrower
shall have paid to the Title Company or the Agent an amount equal to
all mortgage and mortgage recording taxes, intangibles taxes, stamp
taxes and other taxes payable in connection with the execution and
delivery of the amendments to the Mortgages and the obligations
secured thereby and the recording of the amendments to the Mortgages
in the appropriate land offices.
(n) Flood Certification. Borrower shall deliver to Agent
a Federal Emergency Management Agency ("FEMA") Form 81-93, the
Standard Flood Hazard Determination Form, certifying that the Real
Estate is not located in a flood plain zone.
(o) Legal Opinion. Agent shall have received a written
legal opinion, addressed to Agent and Lenders and dated as of the
First Amendment Closing Date, from legal counsel for Borrower, which
shall be in a form acceptable to Agent, opining as to (i) the due
execution, delivery and enforceability of the documents to be
delivered in connection herewith; and (ii) the corporate existence,
good standing and authority of Borrower.
(p) Legal Fees. Borrower shall have reimbursed Agent for
all fees and disbursements of legal counsel to Agent (in its capacity
as Agent and a Lender), which shall have been incurred by Agent
through the First Amendment Closing Date in connection with the
preparation, negotiation, review, execution and delivery of this First
Amendment and the handling of any other matters incidental thereto.
<PAGE> 10
-10-
12. Miscellaneous.
(a) All of the terms, conditions and provisions of the
Credit Agreement not herein modified shall remain in full force and
effect. In the event a term, condition or provision of the Credit
Agreement conflicts with a term, condition or provision of this First
Amendment, the latter shall govern.
(b) This First Amendment shall be governed by and shall
be construed and interpreted in accordance with the laws of the State
of Ohio.
(c) This First Amendment shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
successors and assigns.
(d) This First Amendment may be executed in several
counterparts, each of which shall constitute an original, but all
which together shall constitute one and the same agreement.
[Space intentionally left blank. Signature page follows.]
<PAGE> 11
IN WITNESS WHEREOF, this First Amendment has been duly executed and
delivered by or on behalf of each of the parties as of the day and in the year
first above written.
BORROWER:
AMC, INC., a Georgia corporation
By: /S/: Henry G. Almquist
--------------------------------------
Name: Henry G. Almquist
-------------------------------------
Title: Chief Financial Officer
------------------------------------
AGENT:
THE PROVIDENT BANK, Agent
By: /S/: Eric Jeffries
-------------------------------------
Name: Eric Jeffries
-------------------------------------
Title: Vice President
------------------------------------
LENDER:
THE PROVIDENT BANK, Lender
By: /S/: Eric Jeffries
-------------------------------------
Name: Eric Jeffries
-------------------------------------
Title: Vice President
------------------------------------
<PAGE> 12
SCHEDULE 1
<TABLE>
<CAPTION>
CREDIT PARTICIPATION
LENDER COMMITMENT PERCENTAGE
<S> <C> <C>
THE PROVIDENT BANK Revolving Credit Loan
One East Fourth Street
7th Floor $20,000,000.00 100%
Cincinnati, Ohio 45202
Eric L. Jeffries
(513) 579-2236
</TABLE>
<PAGE> 1
EXHIBIT 4.2
AMENDED AND RESTATED REVOLVING CREDIT NOTE (1)
$20,000,000.00 Cincinnati, Ohio
May 31, 1998
THIS AMENDED AND RESTATED REVOLVING CREDIT NOTE ("Note") is made and
entered into as of the date hereof by AMC, INC., a Georgia corporation, (the
"Borrower") to the order of THE PROVIDENT BANK, an Ohio banding corporation
(hereinafter, together with its permitted successors and assigns, called
"Bank").
This Note has been executed and delivered pursuant to a certain Credit
Agreement dated as of September 30, 1995, as amended by First Amendment to
Credit Agreement dated of even date herewith, by and among Borrower, The
Provident Bank, as "Agent", and the Banks listed on Schedule 1 thereto (and as
the same may be amended, modified or restated, collectively the "Credit
Agreement"), and is subject to the terms and conditions of the Credit
Agreement, including without limitation, acceleration upon the terms provided
therein. All capitalized terms used herein shall have the meanings assigned to
them in the Credit Agreement unless the context hereof requires otherwise.
Borrower, for value received, promises to pay to the order of Bank, at
Agent's Head Office, for the account of Bank in accordance with the Credit
Agreement, the principal sum of TWENTY MILLION AND 00/100 DOLLARS
($20,000,000.00) (the "Credit Commitment") or so much thereof as is loaned by
Bank pursuant to the provisions hereof and the terms and provisions of the Loan
Agreement, together with interest on the unpaid principal amount thereof at the
Prime Rate or Libor Rate determined in accordance with the Credit Agreement
(the "Interest Rate"). Interest shall be due and payable monthly in arrears on
the first day of each month, commencing on June 1, 1998 and thereafter. All
interest under this Note shall be computed on the basis of the actual number of
days elapsed over an assumed year consisting of three hundred sixty (360) days.
Principal and all remaining accrued interest shall be due and payable on or
before May 31, 2001, or as otherwise provided in the Credit Agreement.
- -----------------------------
(1) This Amended and Restated Revolving Credit Note is issued in
exchange for and in substitution for a Revolving Credit Note dated September
30, 1995, in the original principal amount of $10,000,000.00 having a maturity
date of September 30, 2000. The issuance of this Amended and Restated Revolving
Credit Note is to reflect the various amendments that have been made to the
terms of the Credit Agreement, including but not limited to changing the
interest rate and increasing the Credit Commitment. This Amended and Restated
Revolving Credit Note shall not be construed as a novation or be construed in
any manner as an extinguishment of the obligations arising under the original
Revolving Credit Note, or to affect the priority of the security interests,
liens and mortgages granted in connection with any promissory notes executed
pursuant to the Credit Agreement.
<PAGE> 2
This Note is subject to mandatory prepayment upon the terms and
conditions set forth in the Credit Agreement. This Note may be prepaid in whole
or in part as set forth in the Credit Agreement.
If this Note is accelerated pursuant to the Credit Agreement or if a
Default or an Event of Default with respect to any monetary payment under the
Credit Agreement shall have occurred and during the period in which such
Default or Event of Default is continuing, the outstanding principal and all
accrued interest as well as any other Obligations due Bank or Agent under any
Loan Document shall bear interest at four percent (4.0%) above the Interest
Rate.
Subject to the terms and conditions of the Credit Agreement and until
the Termination Date, Borrower may borrow, repay and reborrow from Bank and
Bank hereby agrees to lend and relend to Borrower such amounts not to exceed
the Maximum Revolving Commitment as the Borrower may from time to time request.
The Borrower hereby: (i) waives presentment, demand, notice of demand,
protest, notice of protest and notice of nonpayment and any other notice
required to be given by law, except as otherwise specifically provided in the
Credit Agreement, in connection with the delivery, acceptance, performance,
default or enforcement of this Note, of any indorsement or guaranty of this
Note; and (ii) consents to any and all delays, extensions, renewals or other
modifications of this Note or waivers of any term hereof or the failure to act
on the part of Agent or Bank or any indulgence shown by Agent or Bank, from
time to time and in one or more instances, (without notice to or further assent
from Borrower) and agrees that no such action, failure to act or failure to
exercise any right or remedy, on the part of Agent or Bank shall in any way
affect or impair the obligations of Borrower or be construed as a waiver by
Bank of, or otherwise affect, any of Bank's rights under this Note, or under
any indorsement or guaranty of this Note. Borrower further agrees to reimburse
Agent and Bank for all advances, charges, costs and expenses, including
reasonable attorney's fees, incurred or paid in exercising any right, power or
remedy conferred by this Note, or in the enforcement thereof.
Anything herein to the contrary notwithstanding the obligations of
Borrower under this Note, the Credit Agreement or any other Loan Documents
shall be subject to the limitation that payments of interest shall not be
required to the extent that receipt of any such payment by any Bank would be
contrary to the provisions of law applicable to such Bank limiting the maximum
rate of interest that may be charged or collected by the Bank. Without limiting
the generality of the foregoing, all calculations of the rate of interest
contracted for, charged or received under this Note which are made for the
purposes of determining whether such rate of interest exceeds the maximum rate
of interest permitted by applicable law shall be made, to the extent permitted
by applicable law, by amortizing, prorating, allocating and spreading in equal
parts during the period of the full stated term of this Note, all interest at
any time contracted for, charged or received in connection with the
indebtedness evidenced by this Note, and then to the extent that any excess
remains, all such excess shall be automatically credited against and in
reduction of the principal balance, and any portion of said excess which
exceeds the principal balance shall be paid by Bank to Borrower, it being the
intent of the parties hereto that under no circumstances
<PAGE> 3
shall Borrower be required to pay any interest in excess of the highest rate
permissible under applicable law.
The provisions of this note shall be governed by and interpreted in
accordance with the laws of Ohio.
The undersigned hereby designates all courts of record sitting in
Cincinnati, Ohio and having jurisdiction over the subject matter, state and
federal, as forums where any action, suit or proceeding in respect of or
arising from or out of this Note, its making, validity or performance, may be
prosecuted as to all parties, their successors and assigns, and by the
foregoing designation the undersigned consents to the jurisdiction and venue of
such courts.
TIME IS OF THE ESSENCE IN THE PERFORMANCE OF THE OBLIGATIONS OF THIS
NOTE.
IN WITNESS WHEREOF, the undersigned has executed this Revolving Credit
Note as of the day and year set forth above.
AMC, INC.,
a Georgia corporation
By: /S/: Henry G. Almquist
-------------------------------------
Name: Henry G. Almquist, Jr.
-----------------------------------
Title: Chief Financial Officer
----------------------------------
<PAGE> 1
EXHIBIT 4.3
FIRST AMENDMENT TO INTERCREDITOR AGREEMENT
THIS FIRST AMENDMENT TO INTERCREDITOR AGREEMENT (the "Amendment") dated
as of May 31, 1998, by and among THE PROVIDENT BANK, an Ohio banking
corporation, as Agent ("Provident"), and RELIANCE TRUST COMPANY, a financial
institution organized under the laws of the State of Georgia ("Trustee"), in its
capacity as Trustee for the holders of certain Fixed Rate Class A Secured Notes
Due July 31, 2000 (the "Notes").
W I T N E S S E T H:
WHEREAS, Provident and the Trustee are parties to a certain
Intercreditor Agreement dated as of October 2, 1995 (the "Intercreditor
Agreement"); all terms used herein without definition shall have the meaning
ascribed to such terms in the Intercreditor Agreement;
WHEREAS, pursuant to the Intercreditor Agreement, Provident and the
Trustee have agreed as to the relative priorities of their respective security
deeds, liens and security interests in the assets of AMC, Inc. securing the
respective obligations of AMC, Inc. to Provident and the Trustee.
WHEREAS, the Trustee and Provident wish to enter into this Amendment to
memorialize their agreement as to certain changes in the terms and conditions of
the Intercreditor Agreement; and
WHEREAS, the requisite holders of 51% in principal amount of the
outstanding Notes have consented in writing to the execution and delivery of
this Amendment.
NOW, THEREFORE, for and in consideration of the mutual premises
contained herein and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
1. The Intercreditor Agreement is hereby amended by deleting Section
4.2(a) in its entirety and inserting the following in lieu thereof:
"The Credit Agent and the Lenders may at any time, and from
time to time, in their sole discretion, and without any
obligation to give any notice or receive any consent from the
Trustee or any Securityholders, change the manner, place or
terms of payment, or change or extend the time of payment of,
or renew, alter, refinance, increase or add to the Revolving
Obligations or obtain, release, or dispose of any collateral
therefore, or amend or supplement in any manner the Revolver
Loan Agreement, the Loan Documents, or any other agreements or
instruments evidencing, securing, or relating to the Revolving
Obligations and this Agreement shall
<PAGE> 2
continue in full force and effect with respect to all such
Revolving Obligations; provided, however that (i) the Credit
Agent shall comply with all applicable provisions of this
Agreement in respect thereof, and (ii) the aggregate principal
amount of the Revolving Obligations shall not exceed
$20,000,000.00.
2. Except as expressly amended and modified herein, all terms and
covenants and provisions of the Intercreditor Agreement shall remain unaltered
and in full force and effect, and the parties hereto do expressly ratify and
confirm the Intercreditor Agreement as modified herein. All future references to
the Intercreditor Agreement shall be deemed to refer to the Intercreditor
Agreement as amended hereby.
3. This Amendment shall be binding upon and inure to the benefit of the
parties hereto, their respective heirs, successors, successors-in-titles, and
assigns.
4. This Amendment shall be governed by and construed in accordance with
the laws of the State of Georgia, notwithstanding any principles regarding
conflicts of laws thereof.
5. This Amendment sets forth the entire understanding of the parties
with respect to the matters set forth herein, and shall supersede any prior
negotiations or agreements, whether written or oral, with respect thereto.
6. This Amendment may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
through their authorized officers as of the date first above written.
THE PROVIDENT BANK, as Credit Agent
By: /s/ Eric Jeffries
----------------------------------------
Name: Eric Jeffries
-----------------------------------
Title: Vice President
----------------------------------
RELIANCE TRUST COMPANY, as Trustee
By: /s/ E. Fannin
----------------------------------------
Name: Esther P. Fannin
----------------------------------
Title: Senior Vice President
---------------------------------
Attest: /s/ Richard M. Jaegle
------------------------------------
Name: Richard M. Jaegle
----------------------------------
Title: Vice President
---------------------------------
[CORPORATE SEAL]
-2-
<PAGE> 1
EXHIBIT 4.4
SECOND AMENDMENT TO INDENTURE
(FIXED RATE CLASS A SECURED NOTES DUE JULY 31, 2000)
THIS SECOND AMENDMENT TO INDENTURE (the "Amendment") dated as of May
__, 1998, by and between AMC, INC., a Georgia corporation (the "Borrower") and
RELIANCE TRUST COMPANY, a financial institution organized under the laws of the
State of Georgia ("Trustee"), in its capacity as Trustee for the holders of the
Notes (as defined below).
W I T N E S S E T H:
WHEREAS, the Borrower and the Trustee are parties to a certain
Indenture dated as of October 2, 1995 (the "Indenture"); all terms used herein
without definition shall have the meaning ascribed to such terms in the
Indenture;
WHEREAS, pursuant to the Indenture, Borrower has issued $160,000,000
Fixed Rate Class A Secured Notes Due July 31, 2000 (the "Notes");
WHEREAS, the Trustee and the Borrower wish to enter into this Amendment
to memorialize their agreement as to certain changes in the terms and conditions
of the Indenture; and
WHEREAS, the holders of 51% in principal amount of the outstanding
Notes have consented in writing to the execution and delivery of this Amendment.
NOW, THEREFORE, for and in consideration of the mutual premises
contained herein and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
1. The Indenture is hereby amended by deleting the definition of
"Credit Agreement" in Section 1.01 in its entirety and inserting the following
in lieu thereof:
"Credit Agreement" means the Amended and Restated Credit
Agreement, dated as of May 31, 1998, among the Company and The
Provident Bank, together with the related documents thereto (including,
without limitation, any guarantees and security documents), in each
case as such agreements may be renewed, extended, amended, supplemented
or otherwise modified from time to time.
2. Except as expressly amended and modified herein, all terms and
covenants and provisions of the Indenture shall remain unaltered and in full
force and effect, and the parties hereto do expressly ratify and confirm the
Indenture as modified herein. All future references to the Indenture shall be
deemed to refer to the Indenture as amended hereby.
<PAGE> 2
3. This Amendment shall be binding upon and inure to the benefit of the
parties hereto, their respective heirs, successors, successors-in-titles, and
assigns.
4. This Amendment shall be governed by and construed in accordance with
the laws of the State of Georgia, notwithstanding any principles regarding
conflicts of laws thereof.
5. This Amendment sets forth the entire understanding of the parties
with respect to the matters set forth herein, and shall supersede any prior
negotiations or agreements, whether written or oral, with respect thereto.
6. This Amendment may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
through their authorized officers as of the date first above written.
AMC, INC.
/s/ Sarah Borders
- ----------------------------------
Unofficial Witness By: /s/ Henry G. Almquist
----------------------------------------
Name: Henry G. Almquist
-----------------------------------
Title: Chief Financial Officer
----------------------------------
/s/ Alice Moore Attest: /s/ Neal Patton
- ---------------------------------- ------------------------------------
Notary Public Name: Neal G. Patton
------------------------------
Title: Secretary
-----------------------------
Notarization Date: 5/18/98
---------------- [CORPORATE SEAL]
My Commission Expires:
2/9/2002
- ----------------------------------
-2-
<PAGE> 3
RELIANCE TRUST COMPANY, as Trustee
/s/ Missy Price
- ----------------------------------
Unofficial Witness By: /s/ E. Fannin
----------------------------------------
Name: Esther P. Fannin
-----------------------------------
Title: Senior Vice President
----------------------------------
/s/ Mary R. Ross Attest: /s/ Richard Jaegle
- ---------------------------------- ------------------------------------
Notary Public Name: Richard Jaegle
-------------------------------
Title: Vice President
------------------------------
Notarization Date: 6/1/98
---------------- [CORPORATE SEAL]
My Commission Expires:
9/21/2000
- ----------------------------------
-3-
<PAGE> 1
EXHIBIT 4.5
- -------------------------------------------------------------------------------
This document was prepared by, and
after recording, please return to:
Vivian M. Raby
Keating, Muething & Klekamp
1800 Provident Tower
One East Fourth Street
Cincinnati, Ohio 45202
- -------------------------------------------------------------------------------
MODIFICATION TO DEED TO SECURE DEBT AND SECURITY AGREEMENT
Dated as of May 31, 1998
between
AMC, INC.,
a Georgia corporation
("Grantor")
and
THE PROVIDENT BANK,
an Ohio banking corporation,
in its capacity as agent for
various lenders described herein
("Grantee")
LOCATION OF SECURED PROPERTY
Fulton County, Georgia
===============================================================================
<PAGE> 2
MODIFICATION TO DEED TO SECURE DEBT AND SECURITY AGREEMENT
THIS MODIFICATION TO DEED TO SECURE DEBT AND SECURITY AGREEMENT (this
"Modification to Security Deed"), made as of the 31st day of May, 1998 by AMC,
INC., a Georgia corporation having its principal place of business and chief
executive office at 240 Peachtree Street, Atlanta, Georgia ("Grantor"), and THE
PROVIDENT BANK, an Ohio banking corporation having an address of One East Fourth
Street, Cincinnati, Ohio 45202 ("Grantee") in its capacity as agent for the
various lenders described in Schedule 1 hereto (collectively, the "Lenders").
WITNESSETH:
WHEREAS, Grantor has executed and delivered to Grantee a certain Deed
to Secure Debt and Security Agreement that is recorded in Book 20262, Page 184
of the records of Fulton County, Georgia (the "Security Deed") relating to
certain real property located in Fulton County as more particularly described on
attached Exhibit A (the "Secured Property");
WHEREAS, the Security Deed secures certain indebtedness evidenced,
inter alia, by (i) a Credit Agreement dated as of September 30, 1995 (as the
same may be amended, modified or restated, the "Credit Agreement") among
Grantor, Grantee and certain lenders identified therein (the "Lenders") and (ii)
certain revolving credit note(s) dated September 30, 1995 by Grantor, as maker,
payable to the order of the Lenders in the aggregate principal amount of Ten
Million Dollars ($10,000,000.00) (as the same may be amended, modified, restated
or substituted, the "Notes");
WHEREAS, Grantor has requested to borrow additional funds (the
"Additional Funds") and the Lenders have agreed, upon certain terms and
conditions, to advance the Additional Funds to Grantor;
WHEREAS, in order to evidence and document the advancement of the
Additional Funds and the terms and conditions surrounding the same, Grantor,
Grantee and the Lenders have executed a certain First Amendment to Credit
Agreement dated May 31, 1998 (the "First Amendment") and Grantor has executed
certain Amended and Restated Revolving Credit Note(s) in the aggregate principal
amount of Twenty Million Dollars ($20,000,000) with a maturity date of May 31,
2001 in favor of Lenders (collectively, as the same may be amended, modified,
restated or substituted, the "Amended Note");
WHEREAS, the parties hereto desire to assign and amend the Security
Deed to reflect the foregoing circumstances.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, Grantor and Grantee agree as follows:
<PAGE> 3
1. Amendment to Security Deed.
(A) Subparagraph (a) immediately following the "NOW, THEREFORE,"
recital of the Security Deed is hereby amended and restated in its entirety to
read as follows:
"(a) the debt evidenced by (i) those certain Amended and
Restated Revolving Credit Note(s) by Grantor, as maker, payable to the
order of the Lenders, dated of even date herewith, in the original
aggregate principal amount of TWENTY MILLION DOLLARS ($20,000,000.00)
with final payment being due no later than May 31, 2001 (collectively,
as the same may be amended, modified, restated or substituted, the
"Note"), which Note was issued in exchange for and in substitution for
a certain Revolving Credit Note dated as of October 2, 1995 in the
original principal amount of Ten Million Dollars ($10,000,000.00), (ii)
any future advances and re-advances of such principal amount from time
to time made pursuant to the Note, (iii) any and all sums due or to
become due under the Note, this Security Deed, as the same may be
modified, amended or restated, that certain Credit Agreement dated
September 30, 1995 among Grantor, Grantee and various lenders set forth
therein, as the same has been amended by that certain First Amendment
to Credit Agreement dated May 31, 1998, and as the same my be further
amended, modified or restated (collectively the "Credit Agreement") or
any other Collateral Document (hereinafter defined), (iv) any further
or subsequent advances made under the Note, this Security Deed, the
Credit Agreement or any other Collateral Document, (v) any extensions,
renewals, replacements or modifications of the Note (including without
limitation, any substitute or replacement notes or securities issued by
Grantor in connection with any registration, transfer or assignment of
all or any portion of the indebtedness evidenced by the Note and the
other Collateral Documents pursuant to the terms of the note, it being
acknowledged that, pursuant to the terms of the Note and the Credit
Agreement and in accordance with the terms and conditions thereof,
Grantee may transfer and assign all or any portion of the indebtedness
evidenced by the Note and the other Collateral Documents, whereupon
additional negotiable instruments may be made by Grantor in replacement
and substitution of the Note), (vi) any and all additional advances
made by Grantee to protect or preserve the Secured Property
(hereinafter defined) or the lien hereof on the Secured Property, or to
pay taxes on the Secured Property, to pay premiums on insurance on the
Secured Property or to repair or maintain the Secured Property, or to
complete improvements on the Secured Property (whether or not the
original Grantor remains the owner of the Secured Property at the time
of such advances and whether or not the original Grantee remains the
owner of the indebtedness secured hereby and of this Security Deed),
and (vii) any and all expenses incident to the collection of the
indebtedness secured hereby and the foreclosure hereof by action in any
court or by exercise of the power of sale herein continued or
otherwise, (the items set forth in clauses (i) through (vii) hereof
being hereinafter collectively referred to as the "Indebtedness"), and"
<PAGE> 4
(B) Exhibit B, Permitted Encumbrances, is hereby amended in its
entirety and replaced with Exhibit B attached to this Modification to Security
Deed.
2. Acknowledgment of Revolving Credit Facility. The Indebtedness
secured hereby is a revolving credit loan, the principal of which may be
advanced, repaid and readvanced at any time and from time to time in accordance
with the terms of the Credit Agreement and the Note; provided, that at no time
shall the aggregate outstanding principal balance of all advances under the Note
exceed Twenty Million and 00/100 Dollars ($20,000,000.00) except to the extent
specifically contemplated by the Credit Agreement. Accordingly, if the aggregate
outstanding principal balance of the Note is ever reduced to a zero balance, the
lien and security title of this Security Deed shall not be released or
extinguished by operation of law or implied intent of the parties. This Security
Deed and other Collateral Documents shall remain in full force and effect as to
any further advances under the Collateral Documents, including the Note, made
after any such zero balance until the Indebtedness secured by this Security Deed
is paid in full and satisfied, all agreements of Lenders to make further
advances have been terminated and this Security Deed has been released of
record.
3. No Other Changes; Reaffirmation. Except as specifically amended
hereby, the Security Deed remains in full force and effect as written. Grantor
reaffirms all covenants and representations set forth in the Security Deed as if
such covenants and representations were made as of the date hereof.
4. Miscellaneous. This Modification to Security Deed shall be governed
by and construed in accordance with the laws of the State of Georgia. This
Modification to Security Deed shall inure to the benefit of and be binding on
the respective heirs, executors, administrators, successors and assigns of the
parties hereto.
[Remainder of Page Intentional Left Blank. Signature Pages to Follow]
<PAGE> 5
IN WITNESS WHEREOF, Grantor and Grantee have each caused this
Modification to Security Deed to be duly executed and acknowledged under seal as
of the day and year first above written.
GRANTOR:
/s/ Pamela A. Brewer AMC, INC., a Georgia corporation
- --------------------------------
Unofficial Witness
/s/ Alice Moore By: /s/ Henry Almquist
- -------------------------------- ----------------------------------------
Notary Public Its: Chief Financial Officer
My commission expires: ---------------------------------------
Attest: /s/ Neal G. Patton
------------------------------------
Its: Secretary
- ------------------------------- ---------------------------------------
[NOTARY SEAL] [SEAL]
<PAGE> 6
GRANTEE:
THE PROVIDENT BANK, AGENT
- --------------------------------
Unofficial Witness
By: /s/ Eric Jeffries
----------------------------------------
/s/ Vivian Raby Its: Vice President
- -------------------------------- ---------------------------------------
Notary Public
My commission expires: Attest:
------------------------------------
No expiration Its: Secretary
- -------------------------------- ---------------------------------------
[NOTARY SEAL] [SEAL]
<PAGE> 7
EXHIBIT B
Permitted Encumbrances
1. Real Property taxes for the year subsequent to 1997, not yet due and
payable.
2. Bridge Agreement by and among the City of Atlanta, John Portman, Jr. and
The Atlanta Apparel Mart, dated August 14, 1979 recorded in Deed Book
7364, page 9, Records of Fulton County, Georgia.
3. Bridge Agreement (Inform - Atlanta Apparel Mart) by and among the City of
Atlanta, Atlanta Apparel Mart and Inforum, Ltd. dated August 31, 1987
recorded in Deed Book 11051, page 100, Records of Fulton County, Georgia,
re-recorded October 20, 1987 in Deed Book 11128, page 89, Records of
Fulton County, Georgia.
4. Agreement between Atlanta Apparel Mart, Inforum Associates, The First
National Bank of Chicago, et al., dated October 20, 1987, recorded in
Deed Book 11131, page 319, Records of Fulton County, Georgia.
5. Bridge Agreement (Atlanta Gift Mart - Atlanta Apparel Mart) by and
between City of Atlanta, The Atlanta Apparel Mart and Atlanta Merchandise
Mart, L.P., dated December 29, 1989, recorded in Deed Book 13072, page
162, Records of Fulton County, Georgia.
6. Easement Agreement from The Apparel Mart to Georgia Power Company, dated
May 25, 1979, filed for record June 20, 1979 in Deed Book 7277, page 474,
Fulton County, Georgia Records.
7. Temporary Conditional Permit for special encroachment by and between The
Atlanta Apparel Mart and the State Highway Department of Georgia, dated
April 6, 1979, filed for record June 11, 1979 in Deed Book 7271, page
399, Fulton County, Georgia Records
8. Easement Agreement by and between John C. Portman, Jr. and Atlanta Gas
Light Company, dated June 22, 1984, filed for record on June 29, 1984 in
Deed Book 9084, page 206, Fulton County, Georgia Records.
9. Easement from Greater Atlanta Development Corp., Downtown Mart, Inc. and
Metropolitan Life Insurance Company to The 230 Peachtree Company, dated
March 23, 1964, recorded in Deed Book 4244, Page 577, Records of Fulton
County, Georgia.
10. Easement from Greater Atlanta Development Corp., Downtown Mart, Inc. and
Metropolitan Life Insurance Company to The 230 Peachtree Company, dated
September 22, 1965, recorded in Deed Book 4484, Page 481, Records of
Fulton County, Georgia.
11. Agreement between the City of Atlanta, The Atlanta Merchandise Mart
Corporation and C.P. Company, dated May 5, 1967, recorded in Deed Book
4732, Page 267, Records of Fulton County, Georgia.
<PAGE> 8
12. Agreement between the City of Atlanta, The Atlanta Merchandise Mart
Corporation, The 230 Peachtree Company and Conbus Corp., dated September
12, 1967, recorded in Deed Book 4792, Page 11, Records of Fulton County,
Georgia.
13. Bridge Agreement between The Atlanta Merchandise Mart Corporation and The
230 Peachtree Company, dated December 31, 1973, recorded in Deed Book
5968, Page 401, Records of Fulton County, Georgia.
14. Bridge Agreement by and between the City of Atlanta, The Peachtree Hotel
Company, John C. Portman, Jr. and The Atlanta Merchandise Mart
Corporation, dated May 17, 1976, recorded in Deed Book 6605, Page 307,
Records of Fulton County, Georgia, as superseded by Bridge Agreement by
and between the City of Atlanta, The Peachtree Hotel Company and John C.
Portman, Jr., dated September 9, 1985, and recorded at Deed Book 10166,
Page 6, Records of Fulton County, Georgia.
15. Rights of Metropolitan Atlanta Transit Authority under and by virtue of
that certain Easement Agreement from John C. Portman, Jr. et al, to Metro
Atlanta Rapid Transit Authority dated February 15, 1980, recorded in Deed
Book 7483, Page 112, Records of Fulton County, Georgia, as amended by
First Amendment to Easement Agreement between the same parties dated July
14, 1980, recorded in Deed Book 7624, Page 270, Records of Fulton County,
Georgia, and further amended by Second Amendment to Easement Agreement
between the same parties, dated March 2, 1981, recorded in Deed Book
7793, Page 435, Records of Fulton County, Georgia.
16. Access Easement reserved in Deed to Secure Debt made by The 230 Peachtree
Company and William T. Davis in favor of Connecticut General Life
Insurance Company, dated February 6, 1967, recorded in Deed Book 4694,
page 55, Records of Fulton County, Georgia; and as stated in Easement
Agreement from William T. Davis to The 230 Peachtree Company, dated
August 1, 1975, recorded in Deed Book 6314, page 438, Records of Fulton
County, Georgia; and as amended by Easement Grant and Agreement, dated as
of March 29, 1984, by and between John C. Portman, Jr., and Trizec
Properties, Inc., recorded in Deed Book 9418, Page 318, Records of Fulton
County, Georgia.
17. Bridge Agreement between John C. Portman, Jr., d/b/a Atlanta Merchandise
Mart, and P.C. Towers, L.P., dated November 17, 1988 and recorded in Deed
Book 12061, page 131, Records of Fulton County, Georgia;
18. Bridge Agreement between the City of Atlanta, the Atlanta Merchandise
Mart, L. P. and Wayland Associates, Ltd., dated as of December 29, 1989
(unrecorded); Bridge Agreement between the City of Atlanta, the Atlanta
Merchandise Mart, L.P. and Wayland Associates, Ltd., dated as of December
29, 1989 (unrecorded);
<PAGE> 9
19. Bridge Agreement between City of Atlanta, Atlanta Merchandise Mart, L.P.
and Atlanta Gift Mart, L.P., dated December 9, 1993, recorded in Deed
Book 17592, page 266, Records of Fulton County, Georgia;
20. Bridge Agreement by and between City of Atlanta, Atlanta Merchandise
Mart, L.P. and Atlanta Gift Mart, L.P., dated December 9, 1993, recorded
in Deed Book 17592, page 280, Records of Fulton County, Georgia;
21. Agreement Regarding Bridges by and between Atlanta Merchandise Mart, L.P.
and Atlanta Gift Mart, L.P., dated February 15, 1994, recorded in Deed
Book 18395, page 264, Records of Fulton County, Georgia;
22. Bridge Agreement between City of Atlanta, Atlanta Merchandise Mart, L.P.
and Atlanta Gift Mart, L.P., dated May 10, 1995, recorded in Deed Book
19540, page 320, Records of Fulton County, Georgia.
23. Rights of Metropolitan Atlanta Rapid Transit Authority ("MARTA") under
and by virtue of easement contained in Warranty Deed from John C.
Portman, Jr. to MARTA, dated February 15, 1980, recorded in Deed Book
7483, page 23, records of Fulton County, Georgia.
24. Rights of MARTA under and by virtue of easement contained in Warranty
Deed from Comptroller of the State of New York as Trustee of the Common
Retirement Fund and John Hancock Mutual Fund Company, dated February 15,
1980, recorded in Deed Book 7483, page 31, Records of Fulton County,
Georgia.
25. Easement Agreement by and between John C. Portman, Jr. and Georgia Power
Company, dated October 18, 1984, recorded in Deed Book 9295, page 169,
Records of Fulton County, Georgia.
26. Bridge Use Agreement by and between AMC, Inc. and the Atlanta Gift Mart,
L.P., recorded on or about the date hereof in Records of Fulton County,
Georgia.
27. Bridge Easement Agreement by and between AMC, Inc. and the Peachtree
Hotel Company recorded on or about the date hereof.
28. Bridge Agreement, Atlanta Gift Mart - Atlanta Merchandise Mart Levels 17
and 18 by and between the City of Atlanta, a municipal corporation, AMC,
Inc., a Georgia corporation (successor-in-interest to Atlanta Merchandise
Mart, L.P.) and Atlanta Gift Mart, L.P., a Georgia limited partnership,
dated as of October 1, 1996, filed for record October 3, 1996 at 12:04
p.m., recorded in Deed Book 21599, Page 28, aforesaid Records.
29. Rights of tenants as tenants only under unrecorded leases.
30. Terms and provisions of Ground Leases.
31. Any and all matters which would be disclosed by a current and accurate
survey.
<PAGE> 1
EXHIBIT 10.1
[AMC LETTERHEAD]
April 8, 1998
A.J. Robinson
Portman Holdings
303 Peachtree Street, N.E.
Suite 4600
Atlanta, GA 30308
RE: ENGAGEMENT OF INVESTMENT BANKER
Dear A.J.:
The purpose of this letter is to confirm the understanding among AMC,
Inc. ("AMC"), Portman Lightfair Associates, L.P. ("PLA"), CGS Associates, L.P.
("CGS"), AMC Orlando, Inc. ("Orlando"), and ADAC, L.P. ("ADAC") (collectively,
the "Parties"), pursuant to which the above parties agree to engage Victor
Capital Group, L.P. ("VCG") to identify and evaluate potential capital
restructuring, asset disposition, and/or sale of certain assets of the Parties.
The terms of this agreement are as follows:
1. CGS, Orlando, and ADAC (collectively, the "Portman
Entities"), and each of them, hereby authorize AMC to engage VCG, for and on
behalf of the Portman Entities, to perform those services more particularly set
forth in that certain engagement letter (the "Letter") between AMC and VCG,
attached hereto as Exhibit "A" and incorporated by this reference. AMC will act
as agent for the Portman Entities in coordinating the services more
particularly described in the Letter, and all communications between the
Portman Entities and VCG will be through AMC, unless otherwise agreed by the
Parties in writing.
2. Each of the Portman Entities will designate an individual who
will be the primary contact point for all purposes in connection with the
transaction or transactions contemplated hereby (the "Transactions"). Unless
otherwise stipulated in writing, AMC will be entitled to rely upon the
authority of such individual to make decisions, issue instructions, and execute
documents in furtherance of the Transactions on behalf of such Portman Entity.
John M. Ryan will be the point of contact for AMC and PLA.
<PAGE> 2
A.J. Robinson
April 8 1998
Page 2
3. The Portman Entities will, in a timely fashion, provide to
AMC (and will authorize AMC, in turn, to provide to VCG) such financial
information as VCG may reasonably require to accomplish the objectives
described in the Letter, and to consummate the Transactions. Prior to releasing
any such information to VCG, AMC agrees to obtain from VCG a confidentiality
agreement for the benefit of the Portman Entity providing such information, in
form and content substantially similar to the agreement attached hereto as
Exhibit "B".
4. AMC will report to the designated representatives of the
Portman Entities, as often as is appropriate in AMC's judgment, but in no event
less often than monthly, VCG's progress in fulfilling its obligations under the
Letter, and the status of the Transactions. Such reports may be written or
verbal, in person or via telephone, as the Parties may mutually agree.
5. It is expressly understood and agreed that, unless
specifically authorized by a Portman Entity in writing, AMC will not have the
authority either to make or to accept any offer or proposal, or to enter into
any commitment on behalf of, or to make any representations or warranties on
behalf of such Portman Entity.
6. (a) All fees and reimbursable expenses payable to VCG under
the Letter will be borne pro rata, by the Parties in the same proportion that
each Party's 1997 EBITDA (fiscal year 1997 in the case of AMC, calendar year
1997 in the case of each of the other Parties) bears to the total 1997 EBITDA
of all of the Parties, as more particularly shown on Exhibit "C" hereto. Each
Party will be responsible for its own professional fees, including, without
limitation, legal fees (of both in-house counsel and independent counsel) and
accounting fees. The budget for reimbursable expenses payable to VCG under the
Letter will be approved in advance by each of the Parties.
(b) Notwithstanding anything contained herein to the
contrary, if any Party determines that it no longer wishes to engage VCG for
the services indicated herein, then said Party will no longer be responsible
for any fees or reimbursable expenses payable to VCG in accordance with the
terms hereof, effective ten (10) days after written notice to AMC of said
withdrawal. However, in no event shall a Party receive a refund of any fees or
reimbursable expenses
<PAGE> 3
A.J. Robinson
April 8, 1998
Page 3
paid by said Party prior to the effective date of withdrawal. Additionally, if
it is determined, either by VCG or by mutual agreement of the Parties, that any
Party or its assets is not to be part of any potential capital restructuring,
asset disposition and/or sale of certain assets, then said Party will not be
responsible for any further fees or reimbursable expenses payable to VCG, and
said Party shall receive a refund of the pro rata fees and reimbursable
expenses previously paid by said Party to VCG.
7. In the event a success fee becomes payable under the Letter
as a result of a Transaction, such success fee will be borne pro rata by the
Parties in the same proportion that the value of each Party's assets involved
in such Transaction bears to the total value of all assets of the Parties
involved in the Transaction, as such values are established at the time of such
Transaction. Notwithstanding the preceding sentence, any success fee payable
pursuant to subparagraph (iii) of the "Compensation" paragraph of the Letter
shall be borne solely by AMC. Further, at the time such Transaction is closed,
the Parties participating in such Transaction shall reapportion those fees and
expenses previously paid by such Parties under the Letter in accordance with
the proportions established by the closing valuations, as described above. Any
adjustments necessitated by such reapportionment shall be made at the time of
closing.
8. Each of the Parties hereby expressly agrees to indemnify,
defend, and hold the others harmless from and against any and all claims,
damages, or liabilities of any kind or nature arising out of or in connection
with (i) a breach by the indemnifying Party of any term or condition of this
agreement, (ii) a breach by the indemnifying Party of any representation or
warranty given in furtherance of the Transactions, (iii) any violation of
applicable laws, rules, statutes, ordinances, or regulations of any kind, or
(iv) any inaccurate, misleading, or materially incomplete statement by the
indemnifying party. Such indemnity will include, without limitation, attorneys'
fees and other costs of defense.
Assuming the above fairly reflects your understanding of our
agreement, please obtain the appropriate signature from each of the Portman
Entities on each counterpart of this agreement and return one fully executed
original to my attention.
<PAGE> 4
\A.J. Robinson
April 8, 1998
Page 4
We believe this represents an exciting opportunity for all of our
companies. I look forward to working with you in furthering our mutual goals.
In the meantime, if you have any questions, please do not hesitate to give me a
call.
Very truly yours,
AMC, INC.
/s/ John M. Ryan
John M. Ryan
President
AGREED:
PORTMAN LIGHTFAIR ASSOCIATES, L.P.
By: LFGP, Inc., its Managing General Partner
By: /s/ John M. Ryan
------------------------------------------
John M. Ryan, President
ADAC, L.P.
By: /s/ John N. Portman
------------------------------------------------
Joan N. Portman, Managing General Partner
CGS ASSOCIATES, L.P.
By: /s/ Joan N. Portman
------------------------------------------------
Joan N. Portman, Managing General Partner
AMC ORLANDO, INC.
By: /s/ Neal Kamin
------------------------------------------------
Name:
------------------------------------------
Title: Vice President
------------------------------------------
cc: Hank Almquist
Neal Patton
<PAGE> 5
[VICTOR CAPITAL GROUP LETTERHEAD]
EXHIBIT "A"
April 7, 1998
Mr. Jack Ryan
President
AMC, Inc.
Suite 2200
240 Peachtree Street, N.W.
Atlanta, Georgia 30303-1327
Dear Jack:
This letter agreement (the "Agreement") will serve to set forth and confirm our
mutual understanding regarding the terms of engagement of Victor Capital Group,
L.P. ("VCG") by AMC, Inc. ("AMC"), for itself and as agent for the related
entities listed on Exhibit A, for financial advisory services to be rendered by
VCG.
OBJECTIVES
It is our understanding that AMC and other related entities own (i) interests
in a number of income producing real estate assets listed on Exhibit B (the
"Real Estate Assets"), (ii) 100% of a trade mart/show management business
listed on Exhibit C (the "Management Business"), and (iii) interests in certain
other assets listed on Exhibit D (the "Other Assets"; the Real Estate Assets,
the Management Business and the Other Assets are hereinafter collectively
referred to as the "Assets").
Based on our conversations, VCG will undertake to assist AMC in the
identification and evaluation of strategic alternatives which may include
certain transactions designed to maximize the value of AMC and/or the Assets.
These objectives could include a capital restructuring, asset repositioning
and/or outright sale of AMC and/or the Assets. We believe that AMC's objective
can best be accomplished through a single transaction or a series of related
transactions including the recapitalization of existing debt and/or equity and
the disposition of all or a portion of the Assets and/or AMC (the execution of
this strategy and the strategy itself shall be hereinafter referred to as the
"Assignment").
<PAGE> 6
Mr. Jack Ryan
AMC, Inc.
April 7, 1998
Page 2
SCOPE OF PROFESSIONAL SERVICES
VCG accepts this Assignment as exclusive financial advisor to AMC and agrees to
provide such financial advisory services as requested by AMC in connection with
the Assignment including, but not limited to, the following (it being expressly
acknowledged that affiliates of AMC may, from time to time, provide certain
other financial services to AMC):
1. Development of Strategic/Tactical Plan
VCG will assist AMC in evaluating alternative capital structures for
AMC and/or the Assets which may include the sale, refinancing and/or
restructuring of the ownership interests in AMC and/or the Assets. The
evaluation, based in part on interviews with potential capital
providers (including investment banks and other ventures with
institutional or quasi-institutional investment funds), will result in
specific recommendations to AMC concerning a strategic/tactical plan
for the implementation of AMC's objectives.
2. Information Collection and Due Diligence
VCG will conduct a thorough review and analysis of the Assets. VCG's
review will include historical operating results, projected cash
flows, management contracts, and supporting data and assumptions;
AMC's financial projections and budgets for the Assets will be
reviewed and necessary revisions shall be recommended. VCG will also
prepare a work plan to gather and synthesize information that is not
currently available.
3. Financial Model
VCG will design an analytic framework to evaluate, and assess the
various strategic alternatives under various property, operating and
financial scenarios. Critical inputs will include: cost of equity
capital, acquisition velocity, projected cash flow, management income
and leverage. Based on these variables, the financial model will
analyze the overall financial impact on AMC under different scenarios.
4. Marketing Materials
VCG will assist AMC in organizing, packaging and presenting
information regarding the Assignment to prospective investors and
agents.
<PAGE> 7
Mr. Jack Ryan
AMC, Inc.
April 7, 1998
Page 3
5. Negotiating with Prospective Investors and Agents
VCG will solicit proposals from potential investors and agents in
accordance with the execution of the Assignment, analyze the
proposals, and assist AMC in negotiating the terms of any contracts,
agreements or documents relating to or arising from said execution.
6. Investor Due Diligence
VCG will manage the due diligence process with all investors and third
parties.
7. Documentation and Closing
VCG will work with AMC's legal, tax and accounting advisors to ensure
a timely closing. We will coordinate the creation and review of all
required documentation, relating to the execution of the Assignment.
The terms and conditions of and the decision to consummate any recommended
transaction will be determined by AMC in its sole discretion. Except as
expressly empowered in writing by AMC, VCG will not have the authority either
to make or to accept any offer or proposal or to enter into any commitment or
give any representations or assurances on behalf of AMC.
In connection with VCG's activities on AMC's behalf, AMC agrees to furnish VCG
with all available information and data concerning AMC and its ownership and
the Assets which are reasonably required in connection with the engagement (the
"Information").
In rendering its services hereunder, VCG will be using and relying primarily on
the Information without independent verification thereof and, to the extent any
such Information is provided to third parties, such Information shall first be
approved by AMC. AMC will diligently undertake to ensure that the Information
made available to VCG by AMC with respect to AMC and its ownership, and the
Assets will be complete and correct in all material respects and will not
contain any untrue statement of material fact or intentionally omit a material
fact necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. AMC will undertake to
notify VCG promptly: (i) of any material adverse change in the financial
condition of AMC and its ownership or the Assets, and (ii) of any statement
contained in the Information which in its reasonable judgment, violates its
obligations set forth in the immediately preceding sentence. No representation
will be given, nor warranty made with respect to the accuracy or completeness
of the Information and a statement to that effect will be included
<PAGE> 8
Mr. Jack Ryan
AMC, Inc.
April 7, 1998
Page 4
in materials provided to potential investors and agents. Notwithstanding the
preceding sentence, any claim by third parties arising out of the inaccuracy or
incompleteness of the Information shall be subject to AMC's indemnity
obligation set forth below.
TERM OF EMPLOYMENT
VCG's engagement will commence on the date hereof and continue for up to twelve
(12) months from the date of the Agreement (the "Termination Date"); provided,
however, that the Termination Date may be extended by agreement in writing
executed by AMC and VCG. This Agreement may be terminated by AMC in whole at
any time prior to the Termination Date upon at least thirty (30) days written
notice; however, any termination hereunder will not limit VCG's right to
receive the VCG Transaction Fees (as defined below).
COMPENSATION
VCG shall receive for this transaction total compensation (collectively, the
VCG Transaction Fees), plus approved disbursements, as follows:
(ii) A retainer fee of $250,000 payable on execution of this
Agreement and $50,000 per month on the first day of each
successive month during the term hereof. All payments made to
VCG pursuant to this subparagraph (i) will be credited
against the Success Fee (as defined below).
(ii) With respect to a sale, recapitalization and/or refinancing
of the Real Estate Assets, the Management Business and the
Other Assets, AMC will pay VCG a success fee in cash (the
"Success Fee") equal to (i) one percent (1.00%) of gross
consideration ("Gross Consideration") up to $500MM, plus (ii)
seven percent (7.0%) of Gross Consideration between $500MM
and $600MM, plus (iii) ten percent (10.0%) of Gross
Consideration in excess of $600MM. Gross Consideration will
include cash, stock, other securities, debt assumed by a
buyer and amounts paid to capitalize any ongoing entity that
may be created as a result of the Assignment. If AMC or one
of its successors receives Gross Consideration at any point
in the future (e.g., earn out or any other type of deferred
compensation or income) as a result of agreements or
contracts entered into as a result of the Assignment, then
AMC will pay VCG a Success Fee in accordance with the
foregoing amounts. Any Success Fee earned by VCG under this
Agreement will be due and payable upon the receipt of any
Gross Consideration by AMC, an ongoing entity or one of its
successors as
<PAGE> 9
Mr. Jack Ryan
AMC, Inc.
April 7, 1998
Page 5
contemplated herein.
In the event that AMC concludes a transaction covered by this
Agreement within 24 months from the date of this Agreement,
VCG shall be entitled to the same Success Fee which it would
have received had the transaction occurred during the term of
this Agreement.
(iii) To the extent that VCG is successful in negotiating a
discount from AMC's lenders, VCG shall be entitled to 7.5% of
such savings.
(iv) VCG and AMC agree that the following will be paid by AMC
regardless of the outcome of the Assignment (based on a
pre-approved budget): (i) reasonable expenses relating to the
production of marketing materials (including printing and
desk-top publishing expenses and the costs of procuring and
reproducing photographs, renderings, maps, etc.); and (ii)
all reasonable out-of-pocket expenses of VCG (including
authorized travel expenses). All expense reimbursements due
VCG under this Agreement will be due and payable by AMC
within 30 days of their receipt of a written detailed request
from VCG.
CONFIDENTIALITY
Except as required by law, regulation, legal process or regulatory authority,
VCG agrees to keep all of the Information confidential, not to disclose any
Information to anyone other than VCG's employees, officers, partners, agents
and advisors without AMC's prior approval and not to use the Information for
any purposes other than those referred to in this Agreement, all as more
particularly set forth in that certain Confidentiality and Non-Disclosure
Agreement dated February 28, 1998 between Capital Trust and AMC.
INDEMNIFICATION
AMC will indemnify, defend and hold VCG and any and all of its respective
officers, directors, partners and employees (including the officers, directors
and employees of the general partner of VCG) (each such person being an
"Indemnified Party") harmless against any and all losses, claims, damages,
liabilities, and expenses arising directly or indirectly out of, or in
connection with any actions or proceedings, or threatened actions or
proceedings, which any Indemnified Party may suffer or for which such
Indemnified Party may become liable arising out of this engagement or the
performance of services hereunder, including reasonable fees of counsel
<PAGE> 10
Mr. Jack Ryan
AMC, Inc.
April 7, 1998
Page 6
retained to act on behalf of such Indemnified party (such counsel being
mutually acceptable to VCG and AMC), except that AMC will not be liable for any
losses, claims, damages, liabilities or expenses of any Indemnified party who
shall be found by a court of competent jurisdiction to have been negligent or
guilty of willful misconduct.
MISCELLANEOUS
The terms of VCG's employment hereunder shall be construed and enforced in
accordance with the laws of the State of New York. No changes may be made to
this Agreement except pursuant to a written instrument executed by both parties
hereto. This Agreement represents the entire agreement between the parties.
This Agreement including Exhibits A, B and C contain the entire understanding
among the parties hereto relating to the matters dealt with herein and may not
be amended or otherwise modified except by an agreement in writing signed by
the parties hereto.
Very truly yours,
VICTOR CAPITAL GROUP, L.P.
By: VIC, Inc.
Its General Partner
By: /s/ Craig Hatkoff
--------------------------------
Craig Hatkoff
AGREED TO AND ACCEPTED:
AMC, INC., for itself and as agent
for the entities listed on Exhibit A
By: /s/ Jack Ryan
--------------------------------
Jack Ryan
President
<PAGE> 11
EXHIBIT A
RELATED ENTITIES
1. Portman Lightfair Associates, L.P.
2. AMC Orlando, Inc.
3. CGS Associates, L.P.
4. ADAC, L.P.
<PAGE> 12
EXHIBIT B
REAL ESTATE ASSETS
<TABLE>
<CAPTION>
Property Name Location
------------- --------
<S> <C> <C>
1. Apparel Mart Atlanta, Georgia
2. Merchandise Mart Atlanta, Georgia
3. Gift Mart Atlanta, Georgia
</TABLE>
<PAGE> 13
EXHIBIT C
MANAGEMENT BUSINESS
<TABLE>
<CAPTION>
Name of Company Location
- --------------- --------
<S> <C>
AMC, Inc. Atlanta, Georgia
</TABLE>
<PAGE> 14
EXHIBIT D
OTHER ASSETS
1. 100% of the common stock of LFGP, Inc. (which holds a 49.9981% general
partnership interest in Portman Lightfair Associates, L.P.).
2. Surf Expo owned by AMC Orlando, Inc.
3. California gift show owned by CGS Associates, L.P.
4. Atlanta Decorative Arts Center which is owned by ADAC, L.P.
<PAGE> 15
EXHIBIT "B"
CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT
THIS AGREEMENT is entered into this 28 day of February, 1998, by and
between AMC, INC., a corporation organized and existing under the laws of the
State of Georgia (hereinafter referred to as "AMC") and CAPITAL TRUST
(hereinafter referred to as "Capital").
WHEREAS, Capital is interested in discussing with AMC certain potential
transactions relating to properties or businesses owned by or affiliated with
AMC (hereinafter referred to as the "Potential Transactions");
WHEREAS, Capital has requested certain information and materials, both
oral and written (hereinafter referred to as the "Evaluation Materials),
relating to the Potential Transactions; and
WHEREAS, AMC is willing to provide the Evaluation Materials to Capital
only on the condition that Capital agrees to treat the Evaluation Materials
confidentially as hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, AMC and Capital agree as follows:
1. Subject to Paragraph 2, below, all Evaluation Materials of any kind
concerning AMC or the Potential Transactions which may be furnished to Capital
by AMC or at AMC's instance or request, as well as the fact that the Evaluation
Materials have been made available to Capital and the fact that AMC and Capital
are having discussions concerning the Potential Transactions, shall be treated
by Capital and its agents as confidential and will not be disclosed by, or be
permitted to be disclosed by, Capital to any party without the prior written
approval of AMC, except that such information may be disclosed to such
directors, officers, employees, attorneys, and accountants of Capital as may be
reasonably required for the purposes for which such information is furnished.
All such persons shall be informed by Capital of the confidential nature of such
information and shall, prior to the disclosure of such information, agree (in
writing, if so requested by AMC) to keep all such information in the strictest
confidence and to use such information only for the purpose of evaluating or
participating in a possible transaction between AMC and Capital. Capital agrees
that the Evaluation Materials will be used solely for the purpose of evaluating
a possible transaction between AMC and Capital, and Capital shall not,
<PAGE> 16
either directly or indirectly, in any way, use any Evaluation Materials in
connection with the sale brokerage or purchase, or with the negotiation for sale
brokerage or purchase of any property, real or personal, or any securities of
any person, or the development or management of any business enterprise of any
kind, other than with AMC. The term "person" as used in this Agreement shall be
interpreted broadly to include, without limitation, any corporation,
partnership, association or individual.
2. The obligation set forth in Paragraph 1 hereof shall not in any way
restrict or impair the right to use or disclose to others information which (i)
now is or hereafter becomes information in the public domain through no act by
or on behalf of Capital, or its agents or employees, in violation of this
Agreement; (ii) now is or hereafter becomes available to Capital from a third
party; or (iii) is required to be disclosed in connection with any court action
or any proceeding before a regulatory or administrative body.
3. Capital agrees not to make any of the Evaluation Materials
available, or disclose any of the contents of the Evaluation Materials, or the
fact that discussions or negotiations are taking place concerning a possible
transaction to any person other than as permitted in this Agreement, unless (i)
such person has been identified to AMC; (ii) AMC has approved in writing the
disclosure of the Evaluation Materials to such person; and (iii) such person has
entered into a confidentiality agreement with AMC, the provisions of which
agreement shall be substantially the same as the provisions of this Agreement.
4. Based upon Capital's review of the Evaluation Materials, Capital
agrees that, should Capital desire to move ahead in further evaluation of the
Potential Transactions, Capital will not make any contact with any of the
persons indicated in any and all Evaluation Materials, or any of their
representatives, including without limitation any of AMC's lenders, to discuss,
directly or indirectly, the Potential Transactions or any and all other
transactions, without the express prior written permission of AMC.
5. Upon request of AMC, Capital shall return to AMC (or, at AMC's
direction, destroy) all Evaluation Materials provided to Capital, together with
all copies or duplicates of such Evaluation Materials produced or created by, or
at the direction of Capital, as well as all documents of every sort
incorporating all or any part of the Evaluation Materials, including those
stored on electronic media.
6. This Agreement shall remain in effect, unless earlier terminated by
the parties hereto, until the earlier of (i) the execution of documents
consummating any of the Potential Transactions; or (ii) the
date which is two years following the date hereof.
- 2 -
<PAGE> 17
IN WITNESS WHEREOF, the parties have executed this Agreement with
intent to be bound hereby as of the day and year first above written.
CAPITAL TRUST
By: /s/ Craig Hatkoff
--------------------------
Title: Vice Chairman
-----------------------
AMC, INC.
By: /s/ John M. Ryan
-----------------------
Title: President
-----------------------
<PAGE> 18
EXHIBIT C
<TABLE>
<CAPTION>
COMPANY EBITDA %
<S> <C> <C>
AMC, Inc. 29,327,066 70.89
CGS Associates, L.P. 5,263,977 12.72
AMC Orlando, Inc. 2,384,231 5.76
PLALP 231,677 0.56
ADAC 4,165,414 10.07
---------- ------
TOTAL 41,372,365 100.00
========== ======
</TABLE>
<PAGE> 1
EXHIBIT 10.2
April 7, 1998
Mr. Jack Ryan
President
AMC, Inc.
Suite 2200
240 Peachtree Street, N.W.
Atlanta, Georgia 30303-1327
Dear Jack:
This letter agreement (the "Agreement") will serve to set forth and confirm our
mutual understanding regarding the terms of engagement of Victor Capital Group,
L.P. ("VCG") by AMC, Inc. ("AMC"), for itself and as agent for the related
entities listed on Exhibit A, for financial advisory services to be rendered by
VCG.
OBJECTIVES
It is our understanding that AMC and other related entities own (i) interests
in a number of income producing real estate assets listed on Exhibit B (the
"Real Estate Assets"), (ii) 100% of a trade mart/show management business
listed on Exhibit C (the "Management Business"), and (iii) interests in certain
other assets listed on Exhibit D (the "Other Assets"; the Real Estate Assets,
the Management Business and the Other Assets are hereinafter collectively
referred to as the "Assets").
Based on our conversations, VCG will undertake to assist AMC in the
identification and evaluation of strategic alternatives which may include
certain transactions designed to maximize the value of AMC and/or the Assets.
These objectives could include a capital restructuring, asset repositioning
and/or outright sale of AMC and/or the Assets. We believe that AMC's objective
can best be accomplished through a single transaction or a series of related
transactions including the recapitalization of existing debt and/or equity and
the disposition of all or a portion of the Assets and/or AMC (the execution of
this strategy and the strategy itself shall be hereinafter referred to as the
"Assignment").
<PAGE> 2
Mr. Jack Ryan
AMC, Inc.
April 7, 1998
Page 2
SCOPE OF PROFESSIONAL SERVICES
VCG accepts this Assignment as exclusive financial advisor to AMC and agrees to
provide such financial advisory services as requested by AMC in connection with
the Assignment including, but not limited to, the following (it being expressly
acknowledged that affiliates of AMC may, from time to time, provide certain
other financial services to AMC):
1. Development of Strategic/Tactical Plan
VCG will assist AMC in evaluating alternative capital structures for
AMC and/or the Assets which may include the sale, refinancing and/or
restructuring of the ownership interests in AMC and/or the Assets. The
evaluation, based in part on interviews with potential capital
providers (including investment banks and other ventures with
institutional or quasi-institutional investment funds), will result in
specific recommendations to AMC concerning a strategic/tactical plan
for the implementation of AMC's objectives.
2. Information Collection and Due Diligence
VCG will conduct a thorough review and analysis of the Assets. VCG's
review will include historical operating results, projected cash
flows, management contracts, and supporting data and assumptions;
AMC's financial projections and budgets for the Assets will be
reviewed and necessary revisions shall be recommended. VCG will also
prepare a work plan to gather and synthesize information that is not
currently available.
3. Financial Model
VCG will design an analytic framework to evaluate, and assess the
various strategic alternatives under various property, operating and
financial scenarios. Critical inputs will include: cost of equity
capital, acquisition velocity, projected cash flow, management income
and leverage. Based on these variables, the financial model will
analyze the overall financial impact on AMC under different scenarios.
4. Marketing Materials
VCG will assist AMC in organizing, packaging and presenting
information regarding the Assignment to prospective investors and
agents.
<PAGE> 3
Mr. Jack Ryan
AMC, Inc.
April 7, 1998
Page 3
5. Negotiating with Prospective Investors and Agents
VCG will solicit proposals from potential investors and agents in
accordance with the execution of the Assignment, analyze the
proposals, and assist AMC in negotiating the terms of any contracts,
agreements or documents relating to or arising from said execution.
6. Investor Due Diligence
VCG will manage the due diligence process with all investors and third
parties.
7. Documentation and Closing
VCG will work with AMC's legal, tax and accounting advisors to ensure
a timely closing. We will coordinate the creation and review of all
required documentation, relating to the execution of the Assignment.
The terms and conditions of and the decision to consummate any recommended
transaction will be determined by AMC in its sole discretion. Except as
expressly empowered in writing by AMC, VCG will not have the authority either
to make or to accept any offer or proposal or to enter into any commitment or
give any representations or assurances on behalf of AMC.
In connection with VCG's activities on AMC's behalf, AMC agrees to furnish VCG
with all available information and data concerning AMC and its ownership and
the Assets which are reasonably required in connection with the engagement (the
"Information").
In rendering its services hereunder, VCG will be using and relying primarily on
the Information without independent verification thereof and, to the extent any
such Information is provided to third parties, such Information shall first be
approved by AMC. AMC will diligently undertake to ensure that the Information
made available to VCG by AMC with respect to AMC and its ownership, and the
Assets will be complete and correct in all material respects and will not
contain any untrue statement of material fact or intentionally omit a material
fact necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. AMC will undertake to
notify VCG promptly: (i) of any material adverse change in the financial
condition of AMC and its ownership or the Assets, and (ii) of any statement
contained in the Information which in its reasonable judgment, violates its
obligations set forth in the immediately preceding sentence. No representation
will be given, nor warranty made with respect to the accuracy or completeness
of the Information and a statement to that effect will be
<PAGE> 4
Mr. Jack Ryan
AMC, Inc.
April 7, 1998
Page 4
included in materials provided to potential investors and agents.
Notwithstanding the preceding sentence, any claim by third parties arising out
of the inaccuracy or incompleteness of the Information shall be subject to
AMC's indemnity obligation set forth below.
TERM OF EMPLOYMENT
VCG's engagement will commence on the date hereof and continue for up to twelve
(12) months from the date of the Agreement (the "Termination Date"); provided,
however, that the Termination Date may be extended by agreement in writing
executed by AMC and VCG. This Agreement may be terminated by AMC in whole at
any time prior to the Termination Date upon at least thirty (30) days written
notice; however, any termination hereunder will not limit VCG's right to
receive the VCG Transaction Fees (as defined below).
COMPENSATION
VCG shall receive for this transaction total compensation (collectively, the
VCG Transaction Fees), plus approved disbursements, as follows:
(1) A retainer fee of $250,000 payable on execution of this
Agreement and $50,000 per month on the first day of each
successive month during the term hereof. All payments made to
VCG pursuant to this subparagraph (i) will be credited
against the Success Fee (as defined below).
(2) With respect to a sale, recapitalization and/or refinancing
of the Real Estate Assets, the Management Business and the
Other Assets, AMC will pay VCG a success fee in cash (the
"Success Fee") equal to (i) one percent (1.00%) of gross
consideration ("Gross Consideration") up to $500MM, plus (ii)
seven percent (7.0%) of Gross Consideration between $500MM
and $600MM, plus (iii) ten percent (10.0%) of Gross
Consideration in excess of $600MM. Gross Consideration will
include cash, stock, other securities, debt assumed by a
buyer and amounts paid to capitalize any ongoing entity that
may be created as a result of the Assignment. If AMC or one
of its successors receives Gross Consideration at any point
in the future (e.g., earn out or any other type of deferred
compensation or income) as a result of agreements or
contracts entered into as a result of the Assignment, then
AMC will pay VCG a Success Fee in accordance with the
foregoing amounts. Any Success Fee earned by VCG under this
Agreement will be due and payable upon the receipt of any
Gross Consideration by AMC, an ongoing entity or one of its
successors as contemplated herein.
<PAGE> 5
Mr. Jack Ryan
AMC, Inc.
April 7, 1998
Page 5
In the event that AMC concludes a transaction covered by this
Agreement within 24 months from the date of this Agreement,
VCG shall be entitled to the same Success Fee which it would
have received had the transaction occurred during the term of
this Agreement.
(3) To the extent that VCG is successful in negotiating a
discount from AMC's lenders, VCG shall be entitled to 7.5% of
such savings.
(4) VCG and AMC agree that the following will be paid by AMC
regardless of the outcome of the Assignment (based on a
pre-approved budget): (i) reasonable expenses relating to the
production of marketing materials (including printing and
desk-top publishing expenses and the costs of procuring and
reproducing photographs, renderings, maps, etc.); and (ii)
all reasonable out-of-pocket expenses of VCG (including
authorized travel expenses). All expense reimbursements due
VCG under this Agreement will be due and payable by AMC
within 30 days of their receipt of a written detailed request
from VCG.
CONFIDENTIALITY
Except as required by law, regulation, legal process or regulatory authority,
VCG agrees to keep all of the Information confidential, not to disclose any
Information to anyone other than VCG's employees, officers, partners, agents
and advisors without AMC's prior approval and not to use the Information for
any purposes other than those referred to in this Agreement, all as more
particularly set forth in that certain Confidentiality and Non-Disclosure
Agreement dated February 28, 1998 between Capital Trust and AMC.
INDEMNIFICATION
AMC will indemnify, defend and hold VCG and any and all of its respective
officers, directors, partners and employees (including the officers, directors
and employees of the general partner of VCG) (each such person being an
"Indemnified Party") harmless against any and all losses, claims, damages,
liabilities, and expenses arising directly or indirectly out of, or in
connection with any actions or proceedings, or threatened actions or
proceedings, which any Indemnified Party may suffer or for which such
Indemnified Party may become liable arising out of this engagement or the
performance of services hereunder, including reasonable fees of counsel
retained to act on behalf of such Indemnified party (such counsel being
mutually acceptable to VCG and AMC), except that AMC will not be liable for any
losses, claims, damages, liabilities
<PAGE> 6
Mr. Jack Ryan
AMC, Inc.
April 7, 1998
Page 6
or expenses of any Indemnified party who shall be found by a court of competent
jurisdiction to have been negligent or guilty of willful misconduct.
MISCELLANEOUS
The terms of VCG's employment hereunder shall be construed and enforced in
accordance with the laws of the State of New York. No changes may be made to
this Agreement except pursuant to a written instrument executed by both parties
hereto. This Agreement represents the entire agreement between the parties.
This Agreement including Exhibits A, B and C contain the entire understanding
among the parties hereto relating to the matters dealt with herein and may not
be amended or otherwise modified except by an agreement in writing signed by
the parties hereto.
Very truly yours,
VICTOR CAPITAL GROUP, L.P.
By: VIC, Inc.
Its General Partner
By: /s/ Craig Hatoff
--------------------------------
Craig Hatkoff
AGREED TO AND ACCEPTED:
AMC, INC., for itself and as agent
for the entities listed on Exhibit A
By: /s/ Jack Ryan
--------------------------------
Jack Ryan
President
<PAGE> 7
EXHIBIT A
RELATED ENTITIES
1. Portman Lightfair Associates, L.P.
2. AMC Orlando, Inc.
3. CGS Associates, L.P.
4. ADAC, L.P.
<PAGE> 8
EXHIBIT B
REAL ESTATE ASSETS
<TABLE>
<CAPTION>
Property Name Location
------------- --------
<S> <C> <C>
1. Apparel Mart Atlanta, Georgia
2. Merchandise Mart Atlanta, Georgia
3. Gift Mart Atlanta, Georgia
</TABLE>
<PAGE> 9
EXHIBIT C
MANAGEMENT BUSINESS
<TABLE>
<CAPTION>
Name of Company Location
- --------------- --------
<S> <C>
AMC, Inc. Atlanta, Georgia
</TABLE>
<PAGE> 10
EXHIBIT D
OTHER ASSETS
1. 100% of the common stock of LFGP, Inc. (which holds a 49.9981% general
partnership interest in Portman Lightfair Associates, L.P.).
2. Surf Expo owned by AMC Orlando, Inc.
3. California gift show owned by CGS Associates, L.P.
4. Atlanta Decorative Arts Center which is owned by ADAC, L.P.
<PAGE> 1
EXHIBIT 11
AMC, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(For the three and nine months ended May 31, 1998 and 1997)
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
May 31, May 31,
---------------------------- ----------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
BASIC
Net Earnings (Loss) $ 2,730,913 $ (383,118) $ 9,420,940 $ 2,310,844
Weighted average outstanding common shares 62,173,154 62,173,154 62,173,154 62,173,154
Basic Earnings Per Share $ .04 $ (.01) $ .15 $ .04
=========== ========== =========== ===========
DILUTED
Net Earnings (Loss) $ 2,730,913 $ (383,118) $ 9,420,940 $ 2,310,844
Weighted average outstanding common
shares 62,173,154 62,173,154 62,173,154 62,173,154
Net effect of dilutive securities (a) (a) (a) (a)
Diluted earnings per share $ .04 $ (.01) $ .15 $ .04
=========== ========== =========== ===========
</TABLE>
(a) Not applicable as warrants are anti-dilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AMC, INC. FOR THE NINE MONTHS ENDED MAY 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> MAY-31-1998
<CASH> 556
<SECURITIES> 0
<RECEIVABLES> 2,769
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,108
<PP&E> 325,940
<DEPRECIATION> 132,210
<TOTAL-ASSETS> 227,602
<CURRENT-LIABILITIES> 28,112
<BONDS> 280,942
0
0
<COMMON> 62,173
<OTHER-SE> (152,061)
<TOTAL-LIABILITY-AND-EQUITY> 227,602
<SALES> 0
<TOTAL-REVENUES> 53,183
<CGS> 0
<TOTAL-COSTS> 37,554
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 101
<INTEREST-EXPENSE> 6,270
<INCOME-PRETAX> 15,008
<INCOME-TAX> 5,587
<INCOME-CONTINUING> 9,421
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,421
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
