FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
55 Public Square
Suite 1900
Cleveland, Ohio 44113-1937
January 8, 1999
Bankers Trust Company
BankBoston, N.A
Wellsford Capital
c/o Bankers Trust Company
130 Liberty Street
New York, New York 10006
Gentlemen:
Reference is hereby made to that certain Fixed Rate Loan Agreement
dated as of August 11, 1998 (as amended by that certain First Amendment of
Fixed Rate Loan Agreement dated as of January 8, 1999 and as the same may
further be amended or otherwise modified from time to time, the "Loan
Agreement"). 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.
1. Borrower and Lenders hereby agree that the Loan Agreement
shall be and hereby is modified as follows:
(a) The first sentence of Section 2.7(b) is hereby deleted
and the following is substituted in lieu thereof:
"On January 8, 1999, Borrower shall pay to Agent (for the
ratable benefit of Lenders) a non-refundable facility fee of
$150,000 and, on February 11, 1999, Borrower shall pay to
Agent (for the ratable benefit of Lenders) a non-refundable
facility fee of 1% of the then outstanding principal balance
of the Loans."
(b) Section 11.1 of the Loan Agreement 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, May 31, 1999 and August 11,
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) (i),(xvi) or (xvii) of the Loan Agreement or SECTIONS
8.1(a)(i), (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. It shall be an
Event of Default if Borrower shall not commence, by that
date which is 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
payment or amortization requirements (as previously reduced
by other prepayments) under the Loans and Other Loans due on
the applicable Required Payment Date. Following the
commencement of such Offering, Borrower shall diligently
proceed to consummate such Offering. Borrower shall use its
best efforts to cause the Registration Statement filed by
Borrower on September 17, 1998 (Registration No. 333-6351)
to be declared effective on or prior to February 11, 1999."
2. As modified hereby, the Loan Agreement is hereby ratified
and confirmed.
3. Concurrently herewith, the parties to the Other Loan
Agreement are entering into a letter agreement (the "Other Letter
Agreement"), which is, except for the parties thereto, identical to this
letter agreement. The Lenders hereby consent to the execution and delivery
of the Other Letter Agreement.
4. This letter agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of such counterparts together shall constitute one and the
same instrument.
If the foregoing is acceptable to you, please so indicate by
signing below.
Very truly yours,
FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
By: /s/ Steven M. Edelman
--------------------------------
Name: Steven M. Edelman
Title: Executive Vice President
LENDER AND AGENT:
BANKERS TRUST COMPANY
By: /s/ Steven P. Lapham
-----------------------------
- --
Name: Steven P. Lapham
Title: Vice President
LENDERS:
BANKBOSTON, N.A.
By: /s/ Paul F. DiVito
----------------------------
- --
Name: Paul F. DiVito
Title: Managing Director
WELLSFORD CAPITAL
By: /s/ Gregory F. Hughes
------------------------------
Name: Gregory F. Hughes
Title: Chief Financial
Officer
CONSENTED TO:
GOTHAM PARTNERS, L.P.
By: Section H Partners, L.P.
By: Karenina Corp.
By: /s/ William A. Ackman
-------------------------------
Name: William A. Ackman
Title: President
ELLIOTT ASSOCIATES, L.P.
By: /s/ Paul Singer
----------------------------
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
----------------------------
Name: William A. Ackman
Title: President