UNDERTAKING
This Undertaking is made and delivered this 7th day of November, 2005 by
FUR HOLDINGS LLC, a Delaware limited liability company ("Holdings") and FUR
Advisors LLC ("Advisors"). Concurrently with the delivery of this Undertaking,
First Union Real Estate Equity and Mortgage Investments, an Ohio trust ("First
Union") and Advisors are entering into that certain Amended and Restated
Advisory Agreement (the "Advisory Agreement") pursuant to which First Union is
retaining Advisors to provide advisory services to First Union. It is
acknowledged and agreed by Holdings and Advisors that this Undertaking is made
as an inducement to First Union to enter into the Advisory Agreement. Each
capitalized term used herein and not otherwise defined shall have the meaning
ascribed thereto in the Advisory Agreement.
WHEREAS, Holdings is the sole member of Advisors and holds an 80%
membership interest in NKT Advisors LLC ("NKT"), which has agreed to provide
advisory services pursuant to the Newkirk Advisory Agreement;
WHEREAS, Holdings and Advisors acknowledge that it is an inducement and a
condition to First Union entering into the Advisory Agreement that Holdings
deliver this Undertaking;
WHEREAS, Holdings and Advisors are deriving material benefit from First
Union entering into the Advisory Agreement and are delivering this Undertaking
to induce First Union to enter into the Advisory Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Holdings and Advisors hereby
jointly and severally agree as follows.
1. Undertakings
a. At all times from and after a termination (if any) of the
Advisory Agreement and during such period as the Newkirk Advisory
Agreement is then in effect, Holdings shall pay or cause to be paid to
First Union within five days of receipt thereof by Holdings (i) an amount
equal to 80% of all payments made to NKT pursuant to the Newkirk Advisory
Agreement on account of the Incentive Management Fee (as defined in the
Newkirk Advisory Agreement) (herein, the "80% Fee"); and (ii) any amount
or amounts payable and unpaid by Advisors to First Union with respect to
the 80% Fee prior to the termination of the Advisory Agreement;
b. At all times from and after a termination (if any) of the Newkirk
Advisory Agreement, Holdings shall pay or cause to be paid to First Union
within five days of receipt thereof by Holdings any amount or amounts
payable and unpaid by NKT to Advisors with respect to the 80% Fee; and
c. Holdings and Advisors shall direct NKT, and by delivery of a copy
of this Undertaking hereby direct NKT, in satisfaction of the obligations
of Holdings pursuant paragraph 1 hereof, to pay directly to First Union
from amounts otherwise distributable to Holdings by NKT the amounts
contemplated by Paragraphs 1(a) and 1 (b) hereof.
2. Holdings and Advisors represent, warrant and covenant to First Union
that:
a. Holdings and Advisors have the power to execute and deliver this
Undertaking and to incur and perform their obligations hereunder;
b. Holdings and Advisors have duly taken all necessary action to
authorize the execution, delivery and performance of this
Undertaking and to incur and perform its obligations hereunder;
c. No consent, approval, authorization or other action by, and no
notice to or of, or declaration or filing with, any governmental or
other public body, or any other person or entity, is required for
the due authorization, execution, delivery and performance by
Holdings or Advisors of this Undertaking or the consummation of the
transactions contemplated hereby;
d. The execution, delivery and performance by Holdings and Advisors of
this Undertaking does not and will not, with the passage of time or
the giving of notice or both, violate or otherwise conflict with any
term or provision of any material agreement, instrument, judgment,
decree, order or any statute, rule or governmental regulation
applicable to Holdings or result in the creation of any lien upon
any of its properties or assets pursuant thereto; and
e. This Undertaking has been duly authorized, executed and delivered by
Holdings and Advisors and constitutes the legal, valid and binding
obligation of Holdings and Advisors, and is enforceable against
Holdings and Advisors in accordance with its terms, except as
enforcement thereof may be subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally, and general principles of
equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law).
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IN WITNESS WHEREOF, Holdings and Advisors have duly executed or caused
this Undertaking to be duly executed as of the date first above set forth.
FUR HOLDINGS LLC
By: WEM-FUR Investors LLC
Managing Member
By
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Michael L. Ashner
Managing Member
FUR ADVISORS LLC
By: FUR Holdings LLC
Member
By: WEM-FUR Investors LLC
Managing Member
By
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Michael L. Ashner
Managing Member
[signature page to FUR Holdings undertaking}
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