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Exhibit 99(b)
SECOND AMENDMENT OF FIXED RATE LOAN AGREEMENT
SECOND 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 19th day of April 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:
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WHEREAS, pursuant to that certain Fixed Rate Loan Agreement
dated as of August 11, 1998 among the parties hereto (as amended by a First
Amendment of Fixed Rate Loan Agreement dated as of January 8, 1999 and a letter
agreement dated January 8, 1999 and as the same may further 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;
WHEREAS, without limiting Borrower's obligations under the
Loan Agreement, Borrower contemplates that on or about April 29, 1999, but in no
event later than May 15, 1999, it will complete a rights offering and that the
net proceeds of such offering available to Borrower will equal or exceed
$41,000,000;
WHEREAS, all of such net proceeds shall be applied to repay
the Loans and the Other Loans and $9,000,000 thereof shall be readvanced to
Borrower, as described in this Amendment; and
WHEREAS, to implement the foregoing, Borrower, Lenders and
Agent 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 are 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. PRESENT AMENDMENTS. The provisions of this PARAGRAPH
2 shall be effective upon the execution and delivery
of this Amendment.
a. SECTION 6.1.8 of the Loan Agreement is hereby amended to
delete the following: "obtain Lender Approval of the
registration statement for the Offering."
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b. SECTION 8.1(a)(xvi) of the Loan Agreement is hereby amended
to read, in its entirety, as follows:
"(xvi) if on April 29, 1999, (A) the
outstanding principal amount of the Loans is
$35,000,000 or more and (B) the Registration
Statement to be used by Borrower in an Offering which
will result in net proceeds to Borrower of
$41,000,000 or more is not effective;"
c. SECTION 8.1(a)(xvii) of the Loan Agreement is hereby
amended to read, in its entirety, as follows:
"(xvii) if on May 15, 1999, the outstanding principal
balance of the Loans is $18,955,000 or more; or"
d. SECTION 8.1(a) of the Loan Agreement is hereby amended to
add the following thereto as a new SECTION 8.1(a)(xviii):
"(xviii) without limiting any of the other provisions
of this SECTION 8.1(a), if Borrower defaults under any Standby
Purchase Agreement or if the First Subscription Price (as
defined in any Standby Purchase Agreement) or the Second
Subscription Price (as defined in any Standby Purchase
Agreement) shall exceed the subscription price per share at
which Borrower agreed, in the Standby Purchase Agreements, to
conduct the First Offering or the Second Offering, as the case
may be, or if Borrower takes any action, or permits any event
(within its reasonable control) to occur, which would release
or relieve any Standby Purchaser from its obligation(s) under
any Standby Purchase Agreement; provided, however, that it
shall not be an Event of Default under this clause (xviii) if
Borrower indemnifies any Standby Purchaser for its obligations
under any Standby Purchase Agreement or if Borrower and any
Standby Purchaser agree to a higher subscription price and
such agreement does not release any Standby Purchaser of its
obligations under any Standby Purchase Agreement."
e. 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 April 29, 1999 (but if the Registration
Statement to be used by Borrower in an offering which will
result in net proceeds to Borrower of $41,000,000 or more is
effective on or prior to April 29, 1999, then such foregoing
reference to April 29, 1999 shall be deemed to be May 15,
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.
333-63547), as amended from time to time, and such
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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 sixteen
(16) days prior to each of May 15, 1999 and August 11, 1999,
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 each of May 15,
1999 and August 11, 1999, 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 such dates. 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 April 29, 1999."
f. 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. 3 dated as of March 1, 1999 to the Amended and
Restated Credit Agreement dated as of November 1, 1997, a copy
of which Amendment No. 3 is annexed to this Amendment as
EXHIBIT A. 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 Document 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. 3.
g. On the execution and delivery of this Amendment, Borrower
shall pay to Agent (for the ratable benefit of Lenders) a
non-refundable payment of one-quarter of one percent (.25%) of
the outstanding principal balance of the Loans as of March 31,
1999, and this payment is in addition to any other payments
payable by Borrower under the Loan Documents.
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h. With respect to SECTION 2.11 of the Loan Agreement and
PARAGRAPH 4 of the Intercreditor Agreement, it is agreed that
such provisions shall be implemented through purchases of
interests in the Loans and the Other Loans (not
participations) at face and effective as of the date the
payment was improperly made or received, with each party to
bear its own expenses, and accrued and unpaid interest on such
interests shall be equitably adjusted and shared, when
received by Agent, by the purchaser and the seller of such
interests. In addition, the Person making the purchase shall
pay interest to the seller of such interest at six percent
(6%) per annum from the date of the original payment which is
being redistributed as a result of SECTION 2.11 of the Loan
Agreement or PARAGRAPH 4 of Intercreditor Agreement to the
date of purchase.
3. FUTURE AMENDMENTS. If the rights offering referred to in the
recitals hereto is timely consummated, no Default and/or Event
of Default shall exist and be continuing and the Net Proceeds
(as defined below) of the rights offering referred to in the
recitals to this Amendment are timely applied as provided in
PARAGRAPH 3(a) below, then the provisions of this PARAGRAPH 3
shall become operative; otherwise they shall have no force or
effect.
a. Borrower hereby confirms that it is obligated to apply the
entire net proceeds (the "NET PROCEEDS") of the rights
offering referred to in the recitals to this Amendment to
reduce the principal of the Loans and the Other Loans.
However, if the Net Proceeds equal or exceed $41,000,000, then
Borrower may, by written notice to Agent given on the date the
Net Proceeds become available to the Borrower (but in no event
later than May 15, 1999), elect that $9,000,000 of the
repayments of the principal of the Loans and the Other Loans
be readvanced to Borrower by certain of the Lenders and
certain of the Other Lenders (which term shall refer to the
"Lenders" under the Other Loan Agreement) specified below. Any
such notice must be accompanied by a currently dated
certificate of Borrower's chief financial officer and chief
executive officer, in such capacities, stating that no Default
and/or Event of Default then exists under the Loan Agreement
and that no "Default" and/or "Event of Default" (as such
quoted terms are defined in the Other Loan Agreement) then
exists under the Other Loan Agreement. If no Default and/or
Event of Default shall then exist under the Loan Agreement and
if no "Default" and/or "Event of Default" (as such quoted
terms are defined in the Other Loan Agreement) shall then
exist under the Other Loan Agreement, Bankers Trust Company
shall readvance to Borrower $3,000,000 under the Loan
Agreement (and such readvance shall be referred to as the
"READVANCED LOAN") and Gotham Partners, L.P., Gotham Partners
III, L.P. and Elliott Associates, L. P. shall, in the
aggregate, readvance (each maker of an Other Readvanced Loan
only being obligated so to readvance the amount set forth
opposite its name in (ii) through (iv) below) to Borrower
$6,000,000 under the Other Loan Agreement (and such readvance
shall be referred to as the
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"OTHER READVANCED LOANS"; the Readvanced Loan and the Other
Readvanced Loans are, collectively, the "AGGREGATE READVANCED
LOANS"). Bankers Trust Company agrees to make its Readvanced
Loan concurrently with the making of the Other Readvanced
Loans. The Aggregate Readvanced Loans shall be made without an
exchange of funds and shall for all purposes of the Loan
Agreement and the Other Loan Agreement, except as otherwise
expressly provided in PARAGRAPH 3(d) of this Amendment, be
treated as Advances of the Loans or Other Loans, as the case
may be. The Aggregate Readvanced Loans shall be held in the
following amounts and percentages by the following Lender and
Other Lenders (collectively, the "AGGREGATE READVANCED
LENDERS"):
i. Bankers Trust Company $3,000,000 33.333334%
ii. Elliott Associates, L.P. $3,000,000 33.333333%
iii. Gotham Partners, L.P. $2,970,000 33.0%
iv. Gotham Partners III, L.P. $ 30,000 .333333%
b. The Net Proceeds shall be applied to the principal of the
Loans and the Other Loans in accordance with the following
percentages, except that, solely in order to implement the
making of the Aggregate Readvanced Loans with the Net
Proceeds, the amount otherwise payable to each Aggregate
Readvanced Lender shall be reduced by the amount of such
Aggregate Readvanced Lender's Aggregate Readvanced Loan:
LENDERS AND OTHER LENDERS PERCENTAGES
------------------------- -----------
Bankers Trust Company 16.666667%
BankBoston N.A. 16.666667%
Wellsford Capital 16.666667%
Gotham Partners, L.P. 16.500000%
Gotham Partners III, L.P. 0.166667%
Elliott Associates, L.P. 16.666667%
Ableco Finance LLC, individually and as Agent 16.666667%
c. The Aggregate Readvanced Loans shall be utilized for the
following purpose and no others: to repay $9,000,000 of the
principal due and owing under the Line of Credit Facility.
d. Except as otherwise provided in SECTIONS 2.8.2, 2.8.3 or
2.11 of the Loan Agreement or PARAGRAPHS 3 (other than
PARAGRAPH 3A) or 4 of the Intercreditor Agreement, if the
Aggregate Readvanced Loans have been made and no Default
and/or Event of Default shall exist and be
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continuing, thereafter (i) all principal payments made on
account of the Loans or the Other Loans shall be applied to
the principal of the Loans and the Other Loans (excluding the
Aggregate Readvanced Loans) in accordance with the percentages
set forth in PARAGRAPH 3(b) of this Amendment and (ii) the
principal of the Loans and the Other Loans (excluding the
Aggregate Readvanced Loans) shall be paid in full prior to any
payments being made on account of the principal of the
Aggregate Readvanced Loans. If a Default or an Event of
Default shall exist and be continuing, the foregoing
provisions of this subparagraph (d) shall be void and of no
force or effect and payments shall be made as provided in the
Loan Agreement and the Intercreditor Agreement. If, while a
Default or an Event of Default shall exist and be continuing,
a payment shall have been made on account of the principal of
the Loans and the Other Loans (to the exclusion of the
Aggregate Readvanced Loans), then such payments shall be
treated as a payment received by the Remaining Lenders in
excess of their Pro Rata Share and SECTION 2.11 of the Loan
Agreement and PARAGRAPH 4 of the Intercreditor Agreement shall
be applicable. If Borrower is, for any reason, to make a
principal payment on account of the Loans and the Other Loans
(excluding the Aggregate Readvanced Loans), then as a
condition precedent to making such principal payment, Borrower
shall deliver to Agent and each Lender and Other Lender a
certificate of Borrower's chief financial officer and chief
executive officer, in such capacities, stating that, as of the
date of the proposed payment, no Default and/or Event of
Default then exists under the Loan Agreement and that no
"Default" and/or "Event of Default" (as such quoted terms are
defined in the Other Loan Agreement) exists under the Other
Loan Agreement. Except as otherwise expressly provided in
SECTIONS 2.8.2, 2.8.3 or 2.11 of the Loan Agreement or
PARAGRAPHS 3 (other than PARAGRAPH 3A) or 4 of the
Intercreditor Agreement, once all of the principal of and
interest on the Loans and the Other Loans (excluding the
Aggregate Readvanced Loans) and all other amounts payable to
the Remaining Lenders (in such capacity) have been paid in
full, all payments with respect to the Loans and all the Other
Loans shall be made exclusively in reduction of the Aggregate
Readvanced Loans and other amounts owing to the Aggregate
Readvanced Lenders in accordance with the percentages set
forth in PARAGRAPH 3(a) of this Amendment.
e. PARAGRAPH 3A of the Intercreditor Agreement is hereby amended to
delete the phrase "PARI PASSU basis (in accordance with such Lender's
Pro Rata Share (as defined in the Group A Loan Agreement and the Group
B Loan Agreement) under the Group A Loan Agreement or the Group B Loan
Agreement, as the case may be) without preference or priority of any
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amount over any other amount" and to substitute, in lieu thereof,
"ratable basis in accordance with each Lender's share of the total
amounts owing (including the Readvanced Loans) by Borrower to Lenders
under the Group A Loan Documents and the Group B Loan Documents without
preference or priority of any amount over any other amount." It is the
intention of the parties that if a Default or an Event of Default shall
exist and be continuing, then all Lenders and Other Lenders shall
share, on a pro-rata basis, in all payments and recoveries in respect
of the Loans and the Other Loans (including the Aggregate Readvanced
Loans), except as otherwise expressly provided in SECTIONS 2.8.2, 2.8.3
or 2.11 of the Loan Agreement or PARAGRAPHS 3 (other than PARAGRAPH 3A)
or 4 of the Intercreditor Agreement.
f. The following definitions are added to SECTION 1.1 of the Loan
Agreement in the appropriate alphabetical order:
"AGGREGATE READVANCED LOANS" shall mean the Readvanced Loan (as defined
in this Agreement) and the Readvanced Loans (as defined in the Other
Loan Agreement).
"READVANCED LOAN" shall mean the $3,000,000 Readvanced Loan made by
Bankers Trust Company to the Borrower, as provided in that certain
Second Amendment of Fixed Rate Loan Agreement dated as of April 19,
1999.
"REMAINING LENDERS" shall mean the holders of the Remaining Loans.
"REMAINING LOANS" shall mean all Loans other than the Readvanced Loan.
g. 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; provided,
however, that the Interest Rate applicable to the Readvanced Loan shall
(from after the making of the Readvanced Loan) be fifteen percent (15%)
per annum.
h. The definition of Pro Rata Share is hereby amended to read, in its
entirety, as follows:
"PRO RATA SHARE" means with respect to each Lender, the percentage
obtained by dividing as of any date of determination, (A) the aggregate
principal amount of such Lender's outstanding
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Advances BY (B) the sum of the aggregate principal amount of all
outstanding Advances.
i. SECTION 2.7(b) of the Loan Agreement is hereby amended to read, in its
entirety, as follows:
"If, on May 31, 1999, the outstanding principal balance of the
Remaining Loans exceeds $15,000,000, then on May 31, 1999 Borrower
shall pay to Agent (for the ratable benefit of Remaining Lenders in
accordance with their then respective interests in the Remaining Loans)
a non-refundable facility payment of one percent (1.0%) of the then
outstanding principal balance of the Remaining Loans. However, if on
May 31, 1999, the outstanding principal balance of the Remaining 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 Remaining Lenders in
accordance with their then respective interests in the Remaining Loans)
a non-refundable facility payment of one-half of one percent (.50%) of
the then outstanding principal balance of the Remaining Loans. Each of
the payments payable pursuant to this SECTION 2.7(b) shall be payable
only if on the date such payment is due Remaining Loans are
outstanding. Any repayment of the Loans shall not entitle Borrower to
any refund of any payments or other amounts paid to Lenders. Borrower's
failure to pay, when due, any payment payable pursuant to this SECTION
2.7(b) shall be an Event of Default."
j. SECTION 8.1(a)(xvii) of the Loan Agreement is hereby modified to
read, in its entirety, as follows:
"(xvii) if on May 15, 1999 the outstanding principal balance of the
Remaining Loans is $18,955,000 or more; or"
k. SECTION 11.1 of the Loan Agreement is hereby modified to add the
following sentence at the end thereof:
"For all purposes of SECTION 11.1, Loans and Other Loans shall include
the Readvanced Loans and the Remaining Loans."
l. Notwithstanding anything in the Loan Agreement to the contrary, the
Required Lenders may not elect to take any action which is materially
adverse to the holder of the Readvanced Loan, unless such holder
consents, in writing, to such action.
4. CONCERNING THE STANDBY PURCHASE AGREEMENTS. Each Lender hereby consents to
the execution and delivery of the letter agreement dated April 19, 1999
(the "LETTER AGREEMENT") among Gotham Partners, L.P., Gotham Partners III,
L.P., Gotham Partners International, Ltd. and Borrower, and agrees
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that, except with respect to Elliott Associates, L.P., all references in
the Loan Documents to the Standby Purchase Agreements shall mean the
Standby Purchase Agreements as modified by the Letter Agreement. A copy of
the Letter Agreement is annexed to this Amendment as EXHIBIT B.
5. OUTSTANDING LOANS. Borrower represents and warrants to Lenders that the
outstanding principal amount of the Loans is $37,640,093.50, 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.
6. CONSENT OF LENDERS. Concurrently herewith the parties to the Other Loan
Agreement are entering into a Second Amendment of 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 and agree that they will not amend the provisions of PARAGRAPH
3 without the prior written consent of the "Required Lenders" under the
Other Loan Agreement.
7. 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.
8. 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.
9. 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.
10. 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.
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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. Lapman
Name: Steven P. Lapman
Title: Principal
LENDERS:
BANKBOSTON, N.A.
By: /s/ Mark E. Beaham
Name: Mark E. Beaham
Title: Managing Director
WELLSFORD CAPITAL
By: /s/ Gregory F. Hughes
Name: Gregory F. Hughes
Title:
BORROWER:
FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
By: /s/ Daniel P. Friedman
Name: Daniel P. Friedman
Title: President
First Union - Second Amendment of Fixed
Rate Loan Agreement
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CONSENT OF STANDBY PURCHASERS
-----------------------------
(BANK GROUP)
Each of Gotham Partners, L.P. and Gotham Partners III, L.P. (a) 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, (b) agrees that the terms and provisions of the Standby
Purchase Agreements, as modified by the Letter Agreement, are hereby ratified
and confirmed in all respects and continue in full force and effect, and (c)
consents to the execution and delivery by Borrower of the foregoing Amendment.
Elliott Associates, L.P., in its capacity as a Standby Purchaser, hereby
consents to the execution and delivery of the foregoing Amendment, but such
consent shall not be construed as a waiver of any offsets, defenses, or
counterclaims which Elliott Associates, L.P. may have to its obligations, if
any, under the Standby Purchase Agreement to which it is a party.
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