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Exhibit 99(c)
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; Gotham Partners, L.P., Gotham Partners III, L.P.,
Elliott Associates, L.P. and Ableco Finance LLC, for its own account and as
agent for other 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
dated as of August 11, 1998 among the parties hereto or, in the case of Ableco
Finance LLC, its predecessor, (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
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following: "obtain Lender Approval of the
registration statement for the Offering."
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)
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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 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.
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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.
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
interest shall be equitably adjusted and shared, when
received by Agent, by the purchaser and the seller on
such interest. 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 one 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)
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shall then exist under the Other Loan Agreement,
Bankers Trust Company shall readvance to Borrower
$3,000,000 under the Other Loan Agreement (and such
readvance shall be referred to as the "OTHER
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 a
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
Loan Agreement (and such readvance shall be referred
to as the "READVANCED LOANS"; the Readvanced Loans
and the Other Readvanced Loan are, collectively, the
"AGGREGATE READVANCED LOANS"). Gotham Partners, L.P.,
Gotham Partners III, L.P. and Elliott Associates,
L.P. each agrees to make its Readvanced Loan
concurrently with the making of the Other Readvanced
Loan. 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 Lenders and Other Lender (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%
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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 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 PARAGRAPHS 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
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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 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 Loans (as defined in this
Agreement) and the Readvanced Loan (as
defined in the Other Loan Agreement).
"READVANCED LOANS" shall mean the $6,000,000
Readvanced Loans made by Gotham Partners,
L.P., Gotham Partners III, L.P. and Elliott
Associates, L.P. 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 Loans.
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-
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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 Loans
shall (from after the making of the
Readvanced Loans) 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 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
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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 a holder of a 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 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.
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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.
AGENT:
BANKERS TRUST COMPANY
By: /s/ Steven P. Lapman
Name: Steven P. Lapman
Title: Principal
LENDERS:
ABLECO FINANCE LLC, individually
and as agent for other Lenders
By: /s/ Mark A. Neporent
Name: Mark A. Neporent
Title: Senior Vice President
ELLIOTT ASSOCIATES, L.P.
By: /s/ Paul Singer
Name: Paul Singer
Title: General Partner
GOTHAM PARTNERS, L.P. and
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
BORROWER:
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE
INVESTMENTS
By: /s/ Daniel P. Friedman
Name: Daniel P. Friedman
Title: President
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CONSENT OF STANDBY PURCHASERS
-----------------------------
(GOTHAM 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