FIRST AMENDMENT OF FIXED RATE LOAN AGREEMENT
FIRST AMENDMENT OF FIXED RATE LOAN AGREEMENT (as the same may be
amended or otherwise modified from time to time, the "Amendment"), dated as
of the 8th day of January, 1999, among First Union Real Estate Equity and
Mortgage Investments, as Borrower; BankBoston, N.A., Wellsford Capital and
Bankers Trust Company, as Lenders; and Bankers Trust Company, as Agent.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Fixed Rate Loan Agreement as of
August 11, 1998 among the parties hereto (as the same may be amended or
otherwise modified from time to time, the "Loan Agreement"), Lenders made
loans to Borrower in the original aggregate principal amount of Forty-Five
Million and 00/100 ($45,000,000.00) Dollars; and
WHEREAS, Borrower and Lenders desire to modify and amend the terms and
provisions of the Loan Agreement as hereinafter provided.
NOW, THEREFORE, in consideration of the covenants set forth herein and
for other good and valuable consideration, the receipt and legal sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms used herein without definition and
which are defined in the Loan Agreement are used herein with the
meanings assigned to such terms in the Loan Agreement.
2. Amendments to Loan Agreement. The Loan Agreement is hereby modified as
follows:
a. The definition of the Imperial Credit Facility is hereby amended
to include, as part of the Amended and Restated Credit Agreement
referred to in such definition, that certain Second Amendment to
the Amended and Restated Credit Agreement dated as of December
30, 1998, a copy of which is annexed to this Amendment as EXHIBIT
A. Accordingly, the reference in SECTION 8.1(a)(xii) of the Loan
Agreement to the Prior Debt Documents "as in effect on the date
hereof" (to the extent such reference to the Prior Debt Documents
is a reference to the Imperial Credit Facility) shall mean the
Imperial Credit Facility as in effect after giving effect to such
Second Amendment to the Amended and Restated Credit Agreement.
b. The definition of Line of Credit Facility is hereby amended to
include, as part of the Amended and Restated Credit Agreement
referred to in such definition, that certain Amendment No. 2 dated
as of November 24, 1998 to the Amended and Restated Credit
Agreement dated as of November 1, 1997, a copy of which Amendment
No. 2 is annexed to this Amendment as EXHIBIT B. Accordingly, the
references in SECTIONS 6.1.9 and 7.1.3 of the Loan Agreement to
the Line of Credit Facility "as in effect on the date hereof" and
in SECTION 8.1(a)(xii) of the Loan Agreement to the Prior Debt
Documents "as in effect on the date hereof" (to the extent such
reference to the Prior Debt Documents is a reference to the Line
of Credit Facility) shall mean the Line of Credit Facility as in
effect after giving effect to Amendment No. 2.
c. Clause (b) of the definition of "Interest Period" is hereby
amended to read, in its entirety, as follows:
"(b) the final Interest Period shall end on (and include) August
11, 1999."
d. The definition of Interest Rate is hereby amended to read, in its
entirety, as follows:
"Interest Rate" means (i) from the date hereof to and including
November 11, 1998, a rate of interest equal to nine and seven-
eighths percent (9.875%) per annum and (ii) on and after November
12, 1998, a rate of interest equal to twelve percent (12%) per
annum.
e. The first sentence of SECTION 2.1.4 of the Loan Agreement is
hereby amended to read, in its entirety, as follows:
"The Commitments and the Loans shall be evidenced by the Notes of
Borrower, each in the original principal amount of the respective
Loans and having a scheduled maturity date of August 11, 1999."
f. SECTION 2.3.1 of the Loan Agreement is hereby amended to read, in
its entirety, as follows:
"Borrower shall repay the then outstanding principal amount of the
Loans in full on August 11, 1999, together with interest thereon
through (and including) the last day of the final Interest
Period."
g. SECTION 2.6 of the Loan Agreement and all related definitions are
hereby deleted.
h. All references in the Loan Agreement to the Initial Maturity Date,
the Initial Extension Maturity Date and the Final Extension
Maturity Date shall mean August 11, 1999.
ul SECTION 2.7 of the Loan Agreement is hereby amended to designate
the existing provisions thereof as paragraph (a) and to add the
following as a new SECTION 2.7(b):
"On January 15, 1999, Borrower shall pay to Agent (for the ratable
benefit of Lenders) a non-refundable facility fee of $450,000.
If, on March 31, 1999, the outstanding principal balance of the
Loans is $30,000,000 or more, then on March 31, 1999 Borrower
shall pay to Agent (for the ratable benefit of Lenders) a non-
refundable facility fee of one-half of one percent (.50%) of the
then outstanding principal balance of the Loans. If, on May 31,
1999, the outstanding principal balance of the Loans exceeds
$15,000,000, then on May 31, 1999 Borrower shall pay to Agent (for
the ratable benefit of Lenders) a non-refundable facility fee of
one percent (1.0%) of the then outstanding principal balance of
the Loans. However, if on May 31, 1999 the outstanding principal
balance of the Loans is less than or equal to $15,000,000, then on
May 31, 1999 Borrower shall pay to Agent (for the ratable benefit
of Lenders) a non-refundable facility fee of one-half of one
percent (.50%) of the then outstanding principal balance of the
Loans. Each of the fees payable pursuant to this SECTION 2.7(b)
shall be payable only if on the date such fee is due Loans are
outstanding. Any repayment of the Loans shall not entitle
Borrower to any refund of any fees or other amounts paid to
Lenders. Borrower's failure to pay, when due, any fee payable
pursuant to this SECTION 2.7(b) shall be an Event of Default."
j. SECTION 8.1(a)(ii) of the Loan Agreement is hereby amended to
read, in its entirety, as follows:
"(ii) if Borrower fails to pay the Indebtedness in full on August
11, 1999;"
k. SECTION 8.1(a) (xiv) of the Loan Agreement is hereby amended to
delete the "or" at the end thereof; SECTION 8.1(a)(xv) of the Loan
Agreement is hereby amended to add "or" at the end thereof; and
the following are hereby added to the Loan Agreement as new
SECTIONS 8.1(a)(xvi) and (xvii):
"(xvi) if on March 31, 1999 the outstanding principal amount
of the Loans is $35,000,000 or more; or
(xvii) if on May 31, 1999 the outstanding principal balance
of the Loans is $25,000,000 or more."
1. SECTIONS 11.2 and 11.3 of the Loan Agreement are hereby deleted
and SECTION 11.1 is hereby amended to read, in its entirety, as
follows:
"Borrower shall use its best efforts to consummate, on or
before each of March 31, 1999 and May 31, 1999 (each, a "Required
Payment Date"), an offering, or offerings, as the case may be
(collectively, the "Offering"), pursuant to the Registration
Statement filed by Borrower on September 17, 1998 (Registration
No. 333-63541), as amended from time to time, and such other
registration statements as Borrower shall deem necessary or
appropriate, which entitle(s) holders of equity securities of
Borrower to purchase additional equity securities of Borrower, on
a pro rata basis and which Offering, if fully subscribed, would
provide Borrower with net proceeds, together with any other
Capital Event Proceeds received by Borrower prior to each Required
Payment Date, sufficient to enable Borrower to make principal
payments on account of the Loans and Other Loans such that no
Event of Default will occur under SECTIONS 8.1(a)(xvi) or (xvii)
of the Loan Agreement or SECTIONS 8.1(a)(xvi) or (xvii) of the
Other Loan Agreement. Borrower shall use its best efforts to
take, or cause to be taken, any and all further action or actions
necessary or advisable to be taken in order to consummate the
Offering when and as required by this SECTION 11.1, including but
not limited to the distribution of a prospectus or preparation,
filing and distribution of any necessary prospectus supplement
with respect to any of the applicable registration statements
referred to above. Without limiting the foregoing, Borrower shall
use its best efforts to commence, on a timely basis, but in any
event no later than sixteen (16) days prior to each applicable
Required Payment Date, an Offering which, if fully subscribed,
would provide the Borrower with net proceeds, together with any
other Capital Event Proceeds received by Borrower prior to the
applicable Required Payment Date, sufficient to enable Borrower to
satisfy such principal amortization requirements (as previously
reduced by other prepayments) under the Loans and Other Loans due
on the applicable Required Payment Date, and, following the
commencement of such Offering, diligently proceed to consummate
such Offering. It shall be an Event of Default if the
Registration Statement filed by Borrower on September 17, 1998
(Registration No. 333-6351) is not declared effective on or prior
to February 11, 1999."
3. Amendments to Notes. The first eight (8) lines of SECTION 1 of each
Note are hereby deleted and are replaced with the following:
"FOR VALUE RECEIVED, Borrower hereby promises to pay to the order of
Lender, on or before August 11, 1999 (the "Maturity Date"), the
principal sum of "
4. Outstanding Loans. Borrower represents and warrants to Lenders that
the outstanding principal amount of the Loans is $45,000,000, that
there are no offsets, defenses or counterclaims to its obligations
under the Loan Documents and, that to the extent that any such offsets,
defenses or counterclaims exist without its knowledge, the same are
hereby waived to the fullest extent permitted by law. Except as
modified by this Amendment, the terms and provisions of the Loan
Documents are hereby ratified and confirmed in all respects and
continue in full force and effect.
5. Consent of Lenders. Concurrently herewith the parties to the Other
Loan Agreement are entering into a First Amendment to Fixed Rate Loan
Agreement (the "Other Amendment"), which Other Amendment is, except for
the parties thereto, substantially identical to this Amendment. The
Lenders hereby consent to the execution and delivery of the Other
Amendment.
6. Modifications. No provision of this Amendment may be waived, amended
or supplemented except by a written instrument executed in accordance
with SECTION 9.4 of the Loan Agreement.
7. Successors and Assigns. This Amendment, which sets forth the entire
understanding of the parties hereto with respect to the subject matter
hereof, inures to the benefit of, and shall be binding upon, the
parties hereto and their respective successors and permitted assigns.
8. Severability. In the event that any one or more of the provisions
contained in this Amendment shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Amendment, but this Amendment shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
9. Captions; Counterparts; Governing Law. Captions used in this Amendment
are for convenience of reference only and shall not be deemed a part of
this Amendment nor used in the construction of its meaning. This
Amendment may be signed in any number of counterparts, each of which,
when taken together, shall constitute one and the same Amendment. This
Amendment shall be governed by and construed and enforced in accordance
with the laws of the State of New York applicable to contracts made and
to wholly be performed within such state.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment, as of the date and year first written above.
LENDER AND AGENT:
BANKERS TRUST COMPANY
By: /s/ Steven P. Lapham
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Name: Steven P. Lapham
Title: Vice President
LENDERS:
BANKBOSTON, N.A.
By: /s/ Paul F. DiVito
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Name: Paul F. DiVito
Title: Managing Director
WELLSFORD CAPITAL
By: /s/ Gregory F. Hughes
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Name: Gregory F. Hughes
Title: Chief Financial Officer
BORROWER:
FIRST UNION REAL ESTATE EQUITY AND
MORTGAGE INVESTMENTS
By: /s/ Steven M. Edelman
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Name: Steven M. Edelman
Title: Executive Vice President
CONSENT OF STANDBY PURCHASERS
(BANK GROUP)
Each of the Standby Purchasers hereby consents to the execution and delivery
by Borrower of the foregoing Amendment and represents and warrants to Lenders
that there are no offsets, defenses or counterclaims to its obligations under
the Standby Purchase Agreement to which it is a party and, that to the extent
that any such offsets, defenses or counterclaims exist without its knowledge,
the same are hereby waived to the fullest extent permitted by law. Each
Standby Purchaser confirms that its obligations under the Standby Purchase
Agreement to which it is a party shall be applicable to each Offering
contemplated by SECTION 11.1 of the Loan Agreement and that this confirmation
shall not in any manner limit any obligations of any Standby Purchaser under
the Standby Purchase Agreement to which it is a party. The terms and
provisions of the Standby Purchase Agreements are hereby ratified and
confirmed in all respects and continue in full force and effect.
GOTHAM PARTNERS, L.P.
By: Section H Partners, L.P.
By: Karenina Corp.
By: /s/ William A. Ackman
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Name: William A. Ackman
Title: President
ELLIOTT ASSOCIATES, L.P.
By:/s/ Paul Singer
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Name: Paul Singer
Title:General Partner
GOTHAM PARTNERS III, L.P.
By:Section H Partners, L.P.
By: Karenina Corp.
By: /s/ William A. Ackman
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Name: William A. Ackman
Title: President