-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MZmFsdKU1eGAB9D5DwRr5CPIofeaGFdfgUjpfeSvbuLfWzTO6qyezKv4S8GwdLFL nn640UWIJRa1NtY4HbBt8A== 0000950152-99-003696.txt : 19990430 0000950152-99-003696.hdr.sgml : 19990430 ACCESSION NUMBER: 0000950152-99-003696 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19990429 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990429 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST UNION REAL ESTATE EQUITY & MORTGAGE INVESTMENTS CENTRAL INDEX KEY: 0000037008 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 346513657 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-06249 FILM NUMBER: 99605086 BUSINESS ADDRESS: STREET 1: 55 PUBLIC SQUARE STREET 2: STE 1900 CITY: CLEVELAND STATE: OH ZIP: 44113 BUSINESS PHONE: 2167814030 MAIL ADDRESS: STREET 1: 55 PUBLIC SQUARE SUITE 1910 CITY: CLEVELAND STATE: OH ZIP: 44113 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION REALTY DATE OF NAME CHANGE: 19691012 8-K 1 FIRST UNION RELA ESTATE EQUITY & MORTGAGE 8-K 1 ================================================================================ ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 --------------------------------- Date of Report April 29, 1999 -------------- First Union Real Estate Equity and Mortgage Investments - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Ohio 1-6249 34-6513657 - --------------------------- ------------------------ ------------------- State or other jurisdiction (Commission File Number) (I.R.S. Employer Identification No.) Suite 1900, 55 Public Square Cleveland, Ohio 44113-1937 - --------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (216) 781-4030 --------------- - -------------------------------------------------------------------------------- Former name or former address, if changed since last report. Total number of pages in report 2. 2 ITEM 5. OTHER EVENTS ------------ First Union Real Estate Equity and Mortgage Investments (the "Company") has entered into amendments to its (1) Amended and Restated Credit Agreement, dated as of November 1, 1997, among the Company, First Union Management, Inc., the lenders party thereto, and National City Bank, as Administrative Agent for the lenders, (2) Fixed Rate Loan Agreement, dated as of August 11, 1998, among the Company, BankBoston, N.A., Wellsford Capital and Bankers Trust Company, as lenders, and Bankers Trust Company, as Agent for the lenders, and (3) Fixed Rate Loan Agreement, dated as of August 11, 1998, among the Company, Blackacre Bridge Capital, L.L.C., Gotham Partners, L.P., Gotham Partners III, L.P. and Elliott Associates, L.P., as lenders, and Bankers Trust Company, as Agent for the lenders. Copies of the amendments are being filed as Exhibits 1, 2 and 3 hereto. In connection with the Company's rights offering (the "Rights Offering") as described in the Company's Prospectus, dated April 13, 1999, as supplemented by the Prospectus Supplement, dated April 21, 1999, the Company has entered into a letter agreement with Gotham Partners, L.P., Gotham Partners III, L.P. and Gotham Partners International, Ltd. (collectively, "Gotham") that sets forth the terms of Gotham's agreement to act as a standby purchaser in the Rights Offering. A copy of the letter agreement is being filed as Exhibit 4 hereto. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS --------------------------------- The following are filed as exhibit hereto: Exhibits -------- 99.a) Amendment No. 3, dated as of March 1, 1999, to Amended and Restated Credit Agreement, dated as of November 1, 1997, among the Company, First Union Management, Inc., the lenders party thereto, and National City Bank, as Administrative Agent for the lenders. 99.b) Second Amendment of Fixed Rate Loan Agreement, dated as of April 19, 1999, among the Company, BankBoston, N.A., Wellsford Capital and Bankers Trust Company, as lenders, and Bankers Trust Company, as Agent for the lenders. 99.c) Second Amendment of Fixed Rate Loan Agreement, dated as of April 19, 1999, among the Company, Ableco Finance LLC, for its own account and an agent for the other lenders, Gotham Partners, L.P., Gotham Partners III, L.P. and Elliott Associates, L.P., as lenders and Bankers Trust Company, as Agent for the lenders. 99.d) Letter Agreement, dated April 19, 1999, among the Company, Gotham Partners, L.P., Gotham Partners III, L.P. and Gotham Partners International, Ltd. 3 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. First Union Real Estate Equity and Mortgage Investments ------------------------------ (Registrant) Date: April 29, 1999 By: /S/ Gregory C. Scott -------------- --------------------- Gregory C. Scott Controller EX-99.A 2 EXHIBIT 99(A) 1 Exhibit 99(a) FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS AS THE BORROWER FIRST UNION MANAGEMENT, INC. AS THE MANAGEMENT COMPANY THE FINANCIAL INSTITUTIONS NAMED HEREIN AS LENDERS AND NATIONAL CITY BANK AS ADMINISTRATIVE AGENT --------------------- AMENDMENT NO. 3 DATED AS OF MARCH 1, 1999 TO AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF NOVEMBER 1, 1997 --------------------- 2 AMENDMENT NO. 3 TO AMENDED AND RESTATED CREDIT AGREEMENT THIS AMENDMENT NO. 3, dated as of March 1, 1999 ("THIS AMENDMENT"), among FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS, a real estate investment trust organized under the laws of Ohio (herein, together with its successors and assigns, the "BORROWER"); FIRST UNION MANAGEMENT, INC., a Delaware corporation (herein, together with its successors and assigns, the "Management Company"); the financial institutions listed on the signature pages hereof (the "LENDERS"); and NATIONAL CITY BANK, a national banking association, as Administrative Agent (the "ADMINISTRATIVE AGENT") for the Lenders under the Credit Agreement: PRELIMINARY STATEMENTS: (1) The Borrower, the Management Company, the Lenders named therein and the Administrative Agent entered into the Amended and Restated Credit Agreement, dated as of November 1, 1997, as amended by Amendment No. 1 thereto, dated as of June 15, 1998, and Amendment No. 2 thereto, dated as of January 8, 1999 (as so amended and in effect prior to the effective date of this Amendment, the "CREDIT AGREEMENT"; with the terms defined therein, or the definitions of which are incorporated therein, being used herein as so defined). (2) The Borrower and the Management Company have requested the Lenders and the Administrative Agent to amend certain of the provisions of the Credit Agreement, all as more fully set forth below. NOW, THEREFORE, the parties hereby agree as follows: SECTION 1. AMENDMENTS AND AGREEMENTS. 1.1. VOLUNTARY REDUCTION OF THE TOTAL COMMITMENT. The Borrower hereby voluntarily and permanently reduces the Total Commitment under the Credit Agreement from $110,000,000 to $105,000,000, effective on the Effective Date of this Amendment provided for in section 3 hereof. Such reduction shall be applied to permanently and proportionally reduce the Commitments of each of the Lenders. The Lenders hereby waive any requirement for prior notice of such reduction. After giving effect to such reduction, the Commitments of the respective Lenders will be as follows:
LENDER COMMITMENT National City Bank $ 25,200,000 Bankers Trust Company $ 21,000,000 KeyBank National Association $ 21,000,000 The Huntington National Bank $ 16,800,000 Mellon Bank, N. A. $ 12,600,000 First Merit Bank $ 8,400,000 TOTAL COMMITMENT $105,000,000
1.2. MANDATORY REDUCTION OF TOTAL COMMITMENT. Effective on the Effective Date of this Amendment provided for in section 3 hereof, section 3.3(c) of the Credit Agreement is amended to read in its entirety as follows: 3 (c) If as of any date specified below the Total Commitment has not otherwise been permanently reduced to not more than the amount specified below for such date, the Total Commitment shall be automatically and permanently reduced, without premium or penalty, on each of the dates specified below to the amount specified for such date:
DATE TOTAL COMMITMENT April 30, 1999 $80,000,000 June 30, 1999 $50,000,000
Any such reduction shall apply to proportionately and permanently reduce the Commitment of each of the Lenders. 1.3. MANDATORY PREPAYMENT. Effective on the Effective Date of this Amendment provided for in section 3 hereof, section 4.2(d) of the Credit Agreement is amended by adding a sentence at the end thereof, with the result that as so amended, section 4.2(d) of the Credit Agreement reads in its entirety as follows: (d) Not later than one Business Day following the date of receipt of any cash proceeds from the sale or other disposition of any Mortgaged Property, an amount, conforming to the requirements as to the amount of partial prepayments contained in section 4.1, at least equal to 100% of such cash proceeds (net of fees and expenses of the transaction) then received from such sale or disposition, shall be applied as a mandatory prepayment of principal of the outstanding Loans. In addition, (i) in the event the Borrower successfully completes a rights offering of its shares (such offering is expected to be completed in May 1999 with gross proceeds of approximately $50 million), not later than three Business Days following the date of receipt of the proceeds from such offering, the Borrower will make a one time mandatory prepayment of principal of the outstanding Loans in an amount at least equal to $9,000,000, or such lesser amount as is necessary to prepay all outstanding Loans in full; and (ii) if after no loans are outstanding under the Borrower's Fixed Rate Loan Agreements, dated as of August 11, 1998, as amended, the Borrower receives any proceeds from (1) any sale of its shares, (2) any disposition of a Subsidiary, (3) any disposition or refinancing of real property and or improvements (including leaseholds) not constituting a Mortgaged Property, or (4) any refinancing of any Mortgaged Property which may be permitted hereunder, then the Borrower will make a mandatory prepayment of principal of the outstanding Loans in an amount at least equal to 100% of the cash proceeds (net of fees and expenses of the transaction and any amounts applied to pay Indebtedness of the Subsidiary so sold or secured by the disposed property) then received from such transaction, or such lesser amount as is necessary to prepay all outstanding Loans in full. 1.4. ADDITIONAL COLLATERAL. Effective on the Effective Date of this Amendment provided for in section 3 hereof, a new section 7.21 is added to the Credit Agreement, reading in its entirety as follows: 7.21. ADDITIONAL COLLATERAL. If any Lender so requests in writing at any time after no loans are outstanding under the Borrower's Fixed Rate Loan Agreements, dated as of August 11, 1998, as amended, the Borrower will, or will cause its Subsidiaries to, within 15 4 Business Days, grant to the Administrative Agent, as security for the Obligations, a mortgage, deed of trust or similar instrument (similar in form and provisions to the Mortgages previously delivered to the Administrative Agent, but conforming to any local legal requirements) covering any real property and improvements (including leaseholds) owned by the Borrower or any of its Subsidiaries which is identified by such Lender, located in the United States and is not at the time then (x) encumbered by a mortgage or similar instrument securing indebtedness of the Borrower or any of its Subsidiaries, or (y) owned by Imperial Parking Limited or Impark Services Limited or any of their Subsidiaries and subject to restrictions contained in the Canco Credit Agreement or any related documents which would effectively prohibit any such mortgage, deed of trust or similar instrument. No appraisal or environmental assessment shall be required to be delivered hereunder in connection with any such mortgage, deed of trust or similar instrument entered into with the Administrative Agent, notwithstanding anything to the contrary contained in this Agreement, any of the other Loan Documents or any other document. 1.5. ADDITIONAL RESTRICTION ON USE OF PROCEEDS. Effective on the Effective Date of this Amendment provided for in section 3 hereof, a new section 7.22 is added to the Credit Agreement, reading in its entirety as follows: 7.22. ADDITIONAL RESTRICTION ON USE OF PROCEEDS. No Borrowing shall be made after March 22, 1999 if after giving effect thereto the Unutilized Total Commitment is less than $4,400,000 (any such Borrowing, to the extent it represents a reduction of the Unutilized Total Commitment below $4,400,000, a "LIMITED USE BORROWING"), unless at the time the Borrower requests such Limited Use Borrowing, the Borrower provides a certificate to the Administrative Agent, certifying that the proceeds of such Limited Use Borrowing are to be immediately applied to payment of the cost and expense of tenant improvements on Properties leased to persons who are not Affiliates, specifying in reasonable detail the amount, character and location of the tenant improvements to be so financed, and certifying that no prior Limited Use Borrowing has been made to finance such costs and expenses of tenant improvements. The Borrower undertakes and covenants that the proceeds of any Limited Use Borrowing will be immediately applied to the payment of the costs and expenses of tenant improvements identified by the Borrower in its certificate delivered to the Administrative Agent at the time the Borrower requested such Borrowing. This section 7.22 shall cease being effective when the Borrower has (x) applied cumulative proceeds of Loans made after March 22, 1999 of at least $4,400,000 to finance costs and expenses of tenant improvements referred to above, and (y) notified the Lenders in writing of such application, describing in reasonable detail the amount and purpose of the expenditures by location. 1.6. FINANCIAL COVENANTS---ADJUSTED NET WORTH. The last two sentences of section 7.16(d) of the Credit Agreement are amended to read in their entirety as follows: Notwithstanding the foregoing, the foregoing amount (as it may be increased from time to time as provided above) shall also be reduced, but not below $80,000,000, by the amount of any downward adjustments to Adjusted Net Worth made (i) for any write-down in the carrying value of any specific assets which is made subsequent to September 30, 1998 in accordance with the requirements of GAAP, and (ii) to give effect to a reduction in the depreciable lives of fixed assets, which change is made after September 30, 1998 as a consequence of comments from the staff of the SEC. The Borrower will promptly advise the Lenders in writing of the date, amount and identity of assets involved in any such write-down, and of the dollar amounts by relevant period of the change in depreciation resulting from such change in depreciable lives. 1.7. DEFINITION OF NET INCOME. The definition of the term Net Income contained in 5 section 10.1 of the Credit Agreement is amended by changing the quarterly amount in clause (iv)(A) thereof from $2,500,000 to $4,000,000. SECTION 2. REPRESENTATIONS AND WARRANTIES. 2.1. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower represents and warrants that: (a) this Amendment has been duly authorized by all necessary organizational action on its part, has been duly executed and delivered by it, and constitutes its valid and binding agreement, enforceable against it in accordance with its terms, SUBJECT to the qualifications specified in section 6.3(b) of the Credit Agreement; (b) its representations and warranties contained in the Credit Agreement, as amended hereby, are true and correct on and as of the date hereof as though made on and as of the date hereof, except to the extent that such representations and warranties expressly relate to a specified date, in which case such representations and warranties are hereby reaffirmed as true and correct when made; (c) no condition or event has occurred or exists which constitutes or which, after notice or lapse of time or both, would constitute an Event of Default; (d) it is in full compliance with all covenants and agreements contained in the Credit Agreement, as amended hereby, and the other Loan Documents to which it is a party; and (e) the Borrower has furnished the Lenders with a true, correct and complete copy of the Borrower's Form 10-Q Quarterly Report for the fiscal period ended September 30, 1998, as filed with the SEC, and the financial statements included in such Form 10-Q Quarterly Report present fairly in all material respects the consolidated financial position of the Borrower and its Subsidiaries (as combined with the Management Company, if so presented) and the consolidated results of their operations (combined as aforesaid, if so presented), subject to routine year-end audit adjustments and to additional adjustments related to the Borrower's determination to reduce the depreciable lives of its assets and/or write-down the carrying value of its assets, all as announced publicly on or prior to March 15, 1999. 2.2. REPRESENTATIONS AND WARRANTIES OF THE MANAGEMENT COMPANY. The Management Company represents and warrants that: (a) this Amendment has been duly authorized by all necessary corporate action on its part, has been duly executed and delivered by it, and constitutes its valid and binding agreement, enforceable against it in accordance with its terms, subject to the qualifications specified in section 6.3(b) of the Credit Agreement; (b) its representations and warranties contained in the Credit Agreement, as amended hereby, are true and correct on and as of the date hereof as though made on and as of the date hereof, except to the extent that such representations and warranties expressly relate to a specified date, in which case such representations and warranties are hereby reaffirmed as true and correct when made; (c) no condition or event has occurred or exists which constitutes or which, after notice or lapse of time or both, would constitute an Event of Default; and (d) it is in full compliance with all covenants and agreements contained in the Credit Agreement, as amended hereby, and the other Loan Documents to which it is a party. SECTION 3. EFFECTIVENESS. This Amendment shall become effective if and when, on a date (the "EFFECTIVE DATE"), on or prior to April 30, 1999, the following conditions shall be satisfied: (a) this Amendment shall have been executed by the Borrower, the Management Company and the Administrative Agent, and counterparts hereof as so executed shall have been delivered to the Administrative Agent; (b) the Administrative Agent shall have been notified by all of the Lenders that such Lenders have executed this Amendment (which notification may be by facsimile or 6 other written confirmation of such execution); (c) the Borrower shall have paid to the Administrative Agent, for PRO RATA distribution to the Lenders, an amendment fee in the amount of $262,500; and (d) on or prior to the Effective Date, the Borrower shall have delivered to the Lenders copies of an undertaking or agreement of the Borrower's lenders under its Fixed Rate Loan Agreements, dated as of August 11, 1998, as amended, pursuant to which such lenders agree or it is provided that at least $9,000,000 of proceeds of the Borrower's pending rights offering may be applied as a prepayment of the Loans under the Credit Agreement, and such undertaking or agreement shall be in full force and effect and satisfactory in form and substance to each of the Lenders. The Administrative Agent shall notify the Borrower and each Lender in writing of the Effective Date. SECTION 4. RATIFICATIONS. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Credit Agreement, and except as expressly modified and superseded by this Amendment, the terms and provisions of the Credit Agreement are ratified and confirmed and shall continue in full force and effect. SECTION 5. MISCELLANEOUS. 5.1. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and inure to the benefit of the Borrower, each Lender and the Administrative Agent and their respective permitted successors and assigns. 5.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made in this Amendment shall survive the execution and delivery of this Amendment, and no investigation by the Administrative Agent or any Lender or any subsequent Loan or issuance of a Letter of Credit shall affect the representations and warranties or the right of the Administrative Agent or any Lender to rely upon them. 5.3. REFERENCE TO CREDIT AGREEMENT. The Credit Agreement and any and all other agreements, instruments or documentation now or hereafter executed and delivered pursuant to the terms of the Credit Agreement as amended hereby, are hereby amended so that any reference therein to the Credit Agreement shall mean a reference to the Credit Agreement as amended hereby. 5.4. EXPENSES. As provided in the Credit Agreement, but without limiting any terms or provisions thereof, the Borrower agrees to pay on demand all costs and expenses incurred by the Administrative Agent in connection with the preparation, negotiation, and execution of this Amendment, including without limitation the costs and fees of the Administrative Agent's special legal counsel, regardless of whether this Amendment becomes effective in accordance with the terms hereof, and all costs and expenses incurred by the Administrative Agent or any Lender in connection with the enforcement or preservation of any rights under the Credit Agreement, as amended hereby. 7 5.5. SEVERABILITY. Any term or provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the term or provision so held to be invalid or unenforceable. 5.6. APPLICABLE LAW. This Amendment shall be governed by and construed in accordance with the laws of the State of Ohio. 5.7. HEADINGS. The headings, captions and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment. 5.8. ENTIRE AGREEMENT. This Amendment is specifically limited to the matters expressly set forth herein. This Amendment and all other instruments, agreements and documentation executed and delivered in connection with this Amendment embody the final, entire agreement among the parties hereto with respect to the subject matter hereof and supersede any and all prior commitments, agreements, representations and understandings, whether written or oral, relating to the matters covered by this Amendment, and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto. There are no oral agreements among the parties hereto relating to the subject matter hereof or any other subject matter relating to the Credit Agreement. 5.9. LIABILITY OF BORROWER'S TRUSTEES, ETC. Notwithstanding any provision of this Amendment to the contrary, this Amendment has been executed and delivered by a duly authorized officer of the Borrower, for and on behalf of the Borrower's trustees. The Administrative Agent and each Lender each acknowledges that neither the trustees of the Borrower, nor any additional or successor trustees of the Borrower, nor any beneficiary, officer, employee or agent of the Borrower, shall have any personal, individual liability hereunder or under any of the Loan Documents. The Administrative Agent and each Lender agrees to look solely to the Property and assets of the Borrower (and, where so provided herein or in any of the Loan Documents, to the Property and assets of the Management Company) for the satisfaction of all claims of any nature arising under or in connection with this Amendment. 5.10. COUNTERPARTS. This Amendment may be executed by the parties hereto separately in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement. 8 IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as of the date first above written.
FIRST UNION REAL ESTATE EQUITY FIRST UNION MANAGEMENT, INC. AND MORTGAGE INVESTMENTS BY:_____________________________ By:_____________________________ TITLE: Title: NATIONAL CITY BANK, BANKERS TRUST COMPANY, individually and as Administrative Agent individually and as Syndication Agent By:_____________________________ By:_____________________________ Title: Title: KEYBANK NATIONAL ASSOCIATION, MELLON BANK, N. A. individually and as Documentation Agent By:_____________________________ By:_____________________________ Title: Title: THE HUNTINGTON NATIONAL BANK FIRST MERIT BANK By:_____________________________ By:_____________________________ Title: Title:
EX-99.B 3 EXHIBIT 99(B) 1 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: -------------------- 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." 2 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 3 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. 4 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 5 "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 6 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 7 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 8 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 9 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. 10 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 11 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 EX-99.C 4 EXHIBIT 99(C) 1 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 2 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) 3 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. 4 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) 5 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%
6
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 7 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- 8 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 9 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. 10 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. 11 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 12 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 EX-99.D 5 EXHIBIT 99(D) 1 Exhibit 99(d) April 19, 1999 First Union Real Estate Equity and Mortgage Investments 55 Public Square, Suite 1900 Cleveland, Ohio 44113-1937 Ladies and Gentlemen: Reference is hereby made to (i) the Fixed Rate Loan Agreement (as amended through the date hereof, the "Gotham Loan Agreement") dated as of August 11, 1998 by and between First Union Real Estate Equity and Mortgage Investments (the "Company"), Ableco Finance LLC, as Agent, Gotham Partners, L.P. ("Gotham LP"), Gotham Partners III, L.P. ("Gotham III LP"), Elliott Associates, L.P. ("Elliott Associates"), and Bankers Trust Company, (ii) the Fixed Rate Loan Agreement (as amended through the date hereof, the "Other Loan Agreement," and together with the Gotham Loan Agreement, the "Loan Agreements") dated as of August 11, 1998 by and between the Company, Bankers Trust Company, BankBoston N.A. and Wellsford Capital, (iii) the Standby Purchase Agreement dated as of August 11, 1998 (the "Gotham Partners Standby Purchase Agreement") by and between the Company and Gotham LP, (iv) the Standby Purchase Agreement dated as of August 11, 1998 (the "Gotham III Standby Purchase Agreement," and together with the Gotham Partners Standby Purchase Agreement, the "Standby Purchase Agreements") by and between the Company and Gotham III LP, (v) the Letter Agreement dated August 11, 1998 (the "August 11 Letter Agreement") among the Company, Gotham LP, Gotham III LP and Elliott Associates and (vi) the rights offering(s) described in your registration statement on Form S-3 (File No. 333-63547) originally filed on September 17, 1998, as the same may be amended with the consent of each of the Standby Purchasers (which consent may not be unreasonably withheld or delayed), and in any prospectus or prospectus supplement thereto (collectively, and together with all the documents incorporated by reference therein, the "Registration Statement"). Gotham LP, Gotham III LP and Gotham Partners International, Ltd. ("GPI," and together with Gotham LP and Gotham III LP, "Gotham") are referred to herein as the "Standby Purchasers." 1. ONE OR MORE RIGHTS OFFERINGS CONTEMPLATED; STANDBY PURCHASE AGREEMENTS REMAIN IN FULL FORCE AND EFFECT. Notwithstanding the references to "the Rights Offering" in each of the Standby Purchase Agreements and to "the Offering" in each of the Loan Agreements, the parties hereto hereby agree that such references shall 2 refer to not more than two rights offerings to be conducted by the Company (for purposes of this letter agreement, each, an "Offering"). In addition, the parties also agree that references in each of the Standby Purchase Agreements to the "Shelf Registration Statement" shall be deemed to refer to the Registration Statement. The parties hereby further agree that, except as otherwise provided herein, the terms and conditions of the Standby Purchase Agreements shall remain in full force and effect and shall apply to each Offering, MUTATIS MUTANDIS. Notwithstanding the foregoing, the parties hereby further agree that the obligations of the Standby Purchasers under the Standby Purchase Agreements shall be limited to the two Offerings contemplated by this letter agreement. 2. FIRST OFFERING. The Company hereby agrees that it shall conduct an Offering (the "First Offering") of such size as shall be determined by the Board of Trustees of the Company, provided that (i) the First Offering shall generate gross proceeds to the Company of at least $50,000,000 and (ii) the subscription price per share (the "First Subscription Price") of the Company's Shares of Beneficial Interest, $1.00 par value per share (the "Common Shares"), offered for sale in the First Offering shall be as follows: (a) if the Company commences the First Offering on or before April 23, 1999, then the First Subscription Price shall be $4.00 and (b) if the Company commences the First Offering after April 23, 1999, then the First Subscription Price shall be the lesser of: (1) $4.00; and (2) the average of the closing prices of the Common Shares on the New York Stock Exchange (the "NYSE") during the 10 consecutive trading days immediately preceding the date such Offering is commenced (the "Average Market Value"), less a discount equal to 5% of such Average Market Value (it being understood that the calculation made pursuant to this subclause (2) shall be rounded to the nearest one-sixteenth of $1.00). For purposes of this paragraph 2, the First Offering will be deemed to commence on the date the rights relating thereto are distributed. The Company further agrees that it shall provide the Standby Purchasers with five trading days' advance notice of the record date for the distribution of rights in the First Offering. The Company and the Standby Purchasers understand that the proceeds of the First Offering shall be used by the Company to repay amounts outstanding under the Loan Agreements, and for no other purpose; provided that the parties also understand that the lenders under the Loan Agreements shall extend the Aggregate Readvanced Loans (as defined in the Loan Agreements) to the Company following the application of the proceeds of the First Offering to enable the Company to repay $9,000,000 principal amount outstanding under the Company's senior credit facility. 2.1 FIRST STANDBY PURCHASE COMMITMENT. (a) In connection with the First Offering, Gotham hereby agree to purchase, subject to the terms and conditions of this letter agreement, from the Company, at the First Subscription Price, all of the Common Shares offered for sale in the First Offering and not validly subscribed for through the exercise of Rights (as defined in each of the Standby Purchase Agreements) and any oversubscription option or privilege in accordance with the terms of the First -2- 3 Offering (the "First Standby Purchase Commitment"); provided, however, that the maximum aggregate subscription price required to be paid (and the corresponding maximum number of Common Shares required to be purchased) by such Standby Purchasers in the First Offering shall equal the difference of (i) the lesser of (a) an amount equal to the product of (I) the number of Common Shares offered for sale in the First Offering multiplied by (II) the First Subscription Price and (b) $50,000,000 minus (ii) an amount equal to the product of (a) the number of Common Shares validly subscribed for in the First Offering through the exercise of Rights and any oversubscription option or privilege (but excluding the purchase of Common Shares by the Standby Purchasers pursuant to the provisions of this paragraph 2.1) multiplied by (b) the First Subscription Price (it being understood that if the calculation made pursuant to this proviso results in an amount that is less than zero, the value assigned to such amount shall be zero). (b) The parties hereby agree that the Standby Purchasers' obligations under the First Standby Purchase Commitment shall expire on the 45th day following the date the First Offering is commenced (the "First Expiration Date") if the First Offering shall not have been consummated by the First Expiration Date. For all purposes of this Agreement, an Offering shall be deemed consummated on the Closing Date (as defined in each of the Standby Purchase Agreements). The Company shall give the Standby Purchasers at least one business day's advance notice of the Closing Date. 2.2 PAYMENTS. The Company acknowledges that the Standby Purchasers entered into the Standby Purchase Agreements to enable the Company to consummate the Loan Agreements. The Company hereby agrees that in consideration for their agreement to enter into the Standby Purchase Agreements and for other good and valuable consideration, receipt of which is hereby acknowledged by the Company, Gotham is entitled to a payment of $1,800,000 (collectively, the "First Payments"), which First Payments the Company agrees have been earned. The parties hereby agree that the applicable First Payments shall be paid by the Company to the Standby Purchasers contemporaneously with the execution this letter agreement. 3. SECOND OFFERING. The parties hereby agree that in the event the Company elects to conduct another Offering for the sole purpose of repaying all or a portion of the amounts outstanding under the Loan Agreements (the "Second Offering") (and the Company hereby agrees that it shall conduct such Second Offering if required to do so under the Loan Agreements), the Standby Purchasers shall purchase such number of Common Shares offered for sale in the Second Offering as described in paragraph 3.1 below (the "Second Standby Purchase Commitment"). The Company agrees that it shall provide the Standby Purchasers with five trading days' advance notice of the record date for the distribution of the rights in the Second Offering. The Second Standby Purchase Commitment shall be subject to the condition that the subscription price per Common -3- 4 Share (the "Second Subscription Price") of the Common Shares offered for sale in the Second Offering shall equal the Average Market Value of the Common Shares immediately preceding the date the Second Offering is commenced, less a discount equal to 15% of such Average Market Value (it being understood that the calculation made pursuant to this sentence shall be rounded to the nearest one-sixteenth of $1.00); provided, however, that such Second Subscription Price shall in no event exceed $4.00 (subject to appropriate adjustment for stock splits and stock dividends as shall be reasonably determined by the parties hereto); and provided further, however, that the pricing mechanism described above shall be announced publicly at least ten trading days in advance of the date the Second Offering is commenced. For purposes of this paragraph 3, the Second Offering will be deemed to commence on the date the rights relating thereto are distributed. In no event shall the Second Offering be commenced sooner than 20 trading days after the consummation of the First Offering. 3.1 SECOND STANDBY PURCHASE COMMITMENT. (a) In connection with the Second Offering, Gotham hereby agree to purchase from the Company, at the Second Subscription Price, the Common Shares offered for sale in the Second Offering and not validly subscribed for through the exercise of Rights and any oversubscription option or privilege in accordance with the terms of the Second Offering; provided, however, that the maximum aggregate subscription price required to be paid (and the corresponding maximum number of Common Shares required to be purchased) by such Standby Purchasers in the Second Offering shall equal the difference of (i) the lesser of (the "Second Base Commitment Amount") (a) an amount equal to the aggregate principal amount outstanding under the Loan Agreements on the day immediately preceding the date the Second Offering is consummated and (b) $40,000,000 minus (ii) an amount equal to the product of (a) the number of Common Shares validly subscribed for in the Second Offering through the exercise of Rights and any oversubscription option or privilege (but excluding the purchase of Common Shares by the Standby Purchasers pursuant to the provisions of this paragraph 3.1) multiplied by (b) the Second Subscription Price (it being understood that if the calculation made pursuant to this clause (ii) results in an amount that is less than zero, the value assigned to such amount shall be zero). (b) The parties hereby agree that the Standby Purchasers' obligations under the Second Standby Purchase Commitment shall expire on the 45th day following the date the Second Offering is commenced (the "Second Expiration Date") if the Second Offering shall not have been consummated by the Second Expiration Date. 3.2 SECOND PAYMENTS. The Standby Purchasers and the Company hereby agree that there will be no additional consideration, fee or payment due or payable to the Standby Purchasers in connection with the Second Standby Purchase Commitment. 4. TERMINATION BY THE STANDBY PURCHASERS. In addition to their other -4- 5 rights in this letter agreement, the parties hereby agree that each Standby Purchaser shall have the right to terminate, without any liability, its obligations hereunder and under its Standby Purchase Agreement with respect to a particular Offering if (i) after January 15, 1999 there shall be a material adverse change in the Company's business, financial condition or results of operations (except to the extent (a) such business, financial condition or results of operations are reflected or described in (x) the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998, as amended by its Amendment to Annual Report on Form 10-K/A for the fiscal year ended December 31, 1998, as filed with the Securities and Exchange Commission on April 13, 1999, or (y) the section of the base prospectus entitled "The Company" contained in the Registration Statement, as amended through April 13, 1999, or (b) any such changes result from the decline in the trading prices of stocks generally), (ii) between the date the rights with respect to such Offering are distributed and the Closing Time (as defined in each of the Standby Purchase Agreements) of such Offering, trading in securities generally on the NYSE is suspended, (iii) between the date the rights with respect to such Offering are distributed and the Closing Time, an event of default exists under any instrument governing outstanding indebtedness of the Company such that the lenders thereunder shall have the right to accelerate such indebtedness and such default would result in a material adverse effect on the financial condition of the Company and its subsidiaries, taken as a whole, provided, however, that the Standby Purchasers shall not have such right of termination so long as the lenders waive such default for at least 30 days after the Closing Date, (iv) between the date the rights with respect to such Offering are distributed and the Closing Time of such Offering, a general moratorium on commercial banking activities in New York shall have been declared by either federal or New York State authorities, (v) the Common Shares are suspended (other than with respect to temporary suspensions lasting no more than one trading day in duration) or delisted from trading on the NYSE on or after April 22, 1999, (vi) any of the closing conditions contained in Section 7 of each of the Standby Purchase Agreements (as applicable to the respective Standby Purchasers) (other than subsection (d) of such Section 7) shall not be satisfied as of the Closing Time of such Offering, (vii) the Company shall otherwise be in material breach of this letter agreement or the applicable Standby Purchase Agreement, (viii) the Company fails to deliver a certificate of its chief executive officer, dated the Closing Date of such Offering and delivered prior to the Closing Time on such date, certifying that, to the knowledge of the Company, as of such date no event or state of facts exists that would give a Standby Purchaser the right to terminate its obligations under this letter agreement or its Standby Purchase Agreement pursuant to this paragraph 4 or (ix) such Offering is not consummated by February 11, 2000 (provided that with respect to the Second Offering, such date shall be changed to August 11, 1999 if the First Offering is consummated on or prior to May 15, 1999 and generates gross proceeds to the Company of at least $50,000,000). The parties hereby further agree that a material adverse change in the Company's business, financial condition or results of operations shall not be deemed to exist solely as a result of a decline in the price of any class of the Company's -5- 6 capital stock. Any exercise of the right to terminate hereunder by a Standby Purchaser shall be in writing and delivered prior to the Closing Time of an Offering in accordance with the provisions of paragraph 14 below. Any termination by a Standby Purchaser shall be without prejudice to any claims for damages which such Standby Purchaser may have as a result of the Company's failure, if any, to comply with its obligations. 5. NO MATERIAL OMISSIONS OR MISSTATEMENTS IN REGISTRATION STATEMENT. The Company hereby represents that as of the date of any final prospectus or prospectus supplement relating to any Offering contemplated by this letter agreement, and as of the date any such Offering is consummated, such prospectus or prospectus supplement (including all documents incorporated or deemed to be incorporated by reference therein) shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. 6. AUGUST 11 LETTER AGREEMENT SUPERSEDED. The parties hereby agree that this letter agreement shall supersede and replace the August 11 Letter Agreement, and that except as expressly amended hereby, the Standby Purchase Agreements shall remain unchanged and in full force and effect. 7. REGISTRATION RIGHTS. The Company agrees that it shall enter into a registration rights agreement with respect to the registration for resale under the Securities Act of 1933, as amended, of all of the Common Shares to be acquired by Gotham in the First Offering and/or the Second Offering, which registration rights agreement shall be upon such reasonable terms and conditions as the parties hereto shall reasonably agree. 8. INDEMNIFICATION. (a) The Company hereby agrees to indemnify and hold harmless each Standby Purchaser and its partners: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of an untrue statement or alleged untrue statement of a material fact included in any preliminary prospectus or prospectus supplement or final prospectus or prospectus supplement (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid with respect to any litigation, investigation or proceeding by any governmental agency or body, commenced -6- 7 or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; and (iii) against any and all expense whatsoever (including, without limitation, the fees and disbursements of legal counsel) reasonably incurred in investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraphs (i) or (ii) of this paragraph 8(a); provided, however, that this indemnity does not apply to any loss, liability, claim, damage or expense to the extent arising out of an untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information furnished to the Company by or on behalf of such Standby Purchaser (as Standby Purchaser and not in any other capacity) for use in the Registration Statement or any preliminary prospectus or prospectus supplement or final prospectus or prospectus supplement (or any amendment or supplement thereto). (b) Each Standby Purchaser hereby agrees to indemnify and hold harmless the Company, its Trustees, each of its officers who signed the Registration Statement and the other Standby Purchasers and their partners against any and all losses, liabilities, claims, damages and expenses described in the indemnity contained in subparagraph (a) of this paragraph 8, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement or in any preliminary prospectus or prospectus supplement or final prospectus or prospectus supplement (or any amendment or supplement thereto) in reliance upon and in conformity with information furnished to the Company by or on behalf of such Standby Purchaser (as Standby Purchaser and not in any other capacity) for use in the Registration Statement or such preliminary prospectus or prospectus supplement or final prospectus or prospectus supplement (or any amendment or supplement thereto). The aggregate indemnification obligation by a Standby Purchaser pursuant to this subparagraph (b) of paragraph 8 shall not exceed the product of (i) an amount equal to the number of Common Shares acquired by such Standby Purchaser in the applicable Offering, multiplied by (ii) the subscription price for Common Shares in such Offering. (c) The parties agree that each indemnified party shall give prompt notice to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. If any such action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly -7- 8 notified indemnifying party, to assume the defense thereof with counsel satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this paragraph 8 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation. The indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be at the expense of the indemnifying party if the indemnifying party has assumed the defense of the action with counsel reasonably satisfactory to the indemnified party; PROVIDED, HOWEVER, that if the indemnified party is a Standby Purchaser, the fees and expenses of such counsel shall be at the expense of the indemnifying party if: (i) the employment of such counsel has been specifically authorized in writing by the indemnifying party, or (ii) the named parties to any such action (including any impleaded parties) include both a Standby Purchaser and the indemnifying party, and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them or a Standby Purchaser has been advised that there may be one or more legal defenses available to it different from or in conflict with any legal defenses available to the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of such Standby Purchaser). (d) The parties further agree that no indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. No indemnifying party shall be liable for any settlement of any action or claim for monetary damages which an indemnified party may effect without the written consent of the indemnifying party, which written consent shall not be unreasonably withheld. 9. CONTRIBUTION. If the indemnification provided for in paragraph 8 is unavailable to or insufficient to hold harmless an indemnified party under subparagraphs (a) or (b) of paragraph 8 in respect of any loss, liability, claim, damage or expense (or actions in respect thereof) referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Standby Purchasers on the other from any Offering to which such loss, liability, claim, damage or expense (or action in respect thereof) relates. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to -8- 9 give the notice required under subparagraph (c) of paragraph 8 above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and the Standby Purchasers on the other in connection with the statements or omissions which resulted in such loss, liability, claim, damage or expense (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Standby Purchasers on the other in connection with any Offering shall be deemed to be in the same proportion as the total net proceeds from such Offering (before deducting expenses but after deducting any payments made by the Company to the Standby Purchasers pursuant to paragraph 2.2 hereof) received by the Company bear to the total payments received by such Standby Purchasers. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Standby Purchasers on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Standby Purchasers agree that it would not be just and equitable if contributions pursuant to this paragraph 9 were determined by pro rata allocation between the Company on the one hand and the Standby Purchasers on the other or by any other method of allocation which does not take account of the equitable considerations referred to above in this paragraph 9. The amount paid or payable by an indemnified party as a result of the loss, liability, claim, damage or expense (or actions in respect thereof) referred to above in this paragraph 9 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act of 1933, as amended) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 10. OPINION OF COUNSEL. The Company hereby agrees that in connection with any purchase of Common Shares by the Standby Purchasers pursuant to the terms of this letter agreement, the Standby Purchasers shall receive an opinion of independent legal counsel to the Company that addresses the issues set forth in Exhibit A attached hereto, that is substantially in the form set forth in such Exhibit A and that is otherwise in form and substance reasonably acceptable to the Standby Purchasers. 11. GPI BOUND BY GOTHAM PARTNERS STANDBY PURCHASE AGREEMENT. By its execution of this letter agreement, (i) GPI hereby agrees, including without limitation, for the benefit of the lenders under the Loan Agreements, to be bound by the terms and conditions of the Gotham Partners Standby Purchase Agreement as if it were originally a party thereto and acknowledges that it shall be jointly and severally liable with Gotham LP and Gotham III LP thereunder and (ii) Gotham LP and Gotham III LP hereby -9- 10 acknowledge that GPI shall be so bound and liable and agree that they will separately arrange and coordinate with GPI with respect to any specific obligations to be performed by GPI under the Gotham Partners Standby Purchase Agreement. 12. OBLIGATIONS NOT SEVERAL. All the obligations of Gotham LP, Gotham III LP and GPI under this letter agreement are joint and several. 13. BINDING EFFECT. The parties hereby agree that if the terms and conditions set forth in this letter agreement are in conflict with, or inconsistent in any way with, the Standby Purchase Agreements, the terms of this letter agreement shall control. 14. NOTICES. All notices and other communications under this letter agreement shall be in writing and deemed to have been duly given if delivered by hand, courier or mail or transmitted by any standard form of telecommunication, if to: (i) the Company, to Suite 1900, 55 Public Square, Cleveland, Ohio 44113-1937, Attention: Paul F. Levin, Senior Vice President, General Counsel and Secretary, Facsimile: (216) 781-7364, with a copy to Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New York 10004-1980, Attention: Steven G. Scheinfeld, Esq., Facsimile: (212) 859-4000; or (ii) Gotham LP, Gotham III LP or GPI, to Gotham Partners Management Co., LLC, 110 East 42nd Street, 18th Floor, New York, New York 10017, Attention: William A. Ackman, Facsimile: (212) 286-1133, with copies to Goodwin, Procter & Hoar, LLP, 599 Lexington Avenue, 40th Floor, New York, New York 10022, Attention: Richard J. Holmstrom, Esq., Facsimile: (212) 355-3333. Notices shall be deemed effective on receipt thereof. 15. NO PERSONAL LIABILITY. Notwithstanding anything contained herein to the contrary, this letter agreement is made and executed on behalf of the Company, a business trust organized under the laws of the State of Ohio, by its officer(s) on behalf of the Trustees thereof, and none of the Trustees or any additional or successor Trustee hereafter appointed, or any beneficiary, officer, employee or agent of the Company shall, except as otherwise may be required by law, have any liability in such Trustee's, beneficiary's, officer's, employee's or agent's personal or individual capacity, but instead, all parties shall look solely to the property and assets of the Company for satisfaction of claims of any nature arising under or in connection with this letter agreement. -10- 11 Please confirm your agreement with the above by signing in the space provided below. This letter agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Very truly yours, GOTHAM PARTNERS, L.P. By: Section H Partners, L.P. By: Karenina Corp. By: ------------------------------------- Name: Title: GOTHAM PARTNERS III, L.P. By: Section H Partners, L.P. By: Karenina Corp. By: ------------------------------------- Name: Title: GOTHAM PARTNERS INTERNATIONAL, LTD. By: Gotham International Advisors, L.L.C., its investment manager By: ------------------------------------- Name: Title: ACCEPTED AND AGREED TO: FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS By Name: Daniel P. Friedman Title: President and Chief Executive Officer -11- 12 EXHIBIT A Opinion of independent counsel of the Company to be delivered pursuant to paragraph 10 of this letter agreement : 1. The Company is validly existing as a business trust in good standing under the applicable laws of the State of Ohio. 2. This letter agreement has been duly authorized, executed and delivered by, and is a valid and binding agreement of, the Company, enforceable against the Company in accordance with its terms. 3. The Common Shares to be purchased by the Standby Purchasers from the Company have been duly authorized for issuance and sale and, when issued and delivered by the Company against payment of the consideration therefor, will be validly issued, fully paid and nonassessable. 4. The Registration Statement has been declared effective by the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"). To the best of such counsel's knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued under the Securities Act and no proceedings for such purpose have been instituted or are pending or threatened by the Commission. 5. The execution, delivery and performance of this letter agreement and the consummation by the Company of the transactions contemplated in this letter agreement and compliance by the Company with its obligations under this letter agreement do not and will not violate the Amended Declaration of Trust or By-laws of the Company as in effect as of the date hereof, or result in a breach of, or default under any indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which the Company is a party or by which the Company is bound or to which any of its Properties or assets are subject, which such agreement or instrument (i) has been filed with the Commission (the "Filed Contracts") or (ii) with respect to agreements or instruments entered into by the Company on or after June 1, 1998, is a Filed Contract or is an agreement or instrument which such counsel has actual knowledge of (the agreements or instruments in clauses (i) and (ii), the "Applicable Contracts"), except for any such breach or default as would not result in a Material Adverse Effect, nor will such action result in any violation of the provisions of any applicable federal, New York or Ohio law, statute, rule, regulation, or any judgment, order, or decree, known to such counsel, of any government, government instrumentality or court of the United States, or New York or -12- 13 Ohio having jurisdiction over the Company or its Properties or assets, which violation in any such case would result in a Material Adverse Effect; provided, however, that such counsel need express no opinion with respect to any violation, breach or default, as applicable, not ascertainable from the face of any agreement, instrument, judgment, decree or order referred to above, or arising under or based upon any cross-default provision, insofar as any such violation relates to a default under an agreement or instrument that is not an Applicable Contract or such violation arises under or is based upon any covenant of a financial or numerical nature or which requires arithmetic computation. 6. No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any New York, Ohio or federal court or governmental authority or New York, Ohio or federal agency, is necessary or required in connection with the due authorization, execution and delivery of this letter agreement or for the offering, issuance, sale or delivery of the Common Shares (other than under the Securities Act and the regulations thereunder, which have been obtained, or as may be required under the securities or blue sky laws of the various states). In addition, such counsel shall state that they have participated in conferences with officers and other representatives of the Company, representatives of the independent public or certified public accountants for the Company and with representatives of the Standby Purchasers at which the contents of the Registration Statement, prospectus dated _______, 1999 (the "Prospectus") and prospectus supplement dated ________, 1999 (the "Prospectus Supplement"), and any supplements or amendments thereto, and related matters were discussed and, although such counsel is not passing upon and does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Prospectus or the Prospectus Supplement, and any supplements or amendments thereto, on the basis of the foregoing, nothing has come to their attention which would lead them to believe that either the Registration Statement or any amendments thereto, at the time the Registration Statement or such amendments became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus or the Prospectus Supplement, as of their respective dates or at the date of the closing of the applicable Offering, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that such counsel need express no belief as to the financial statements or schedules or other financial or statistical data derived therefrom, included or incorporated by reference in the Registration Statement, the Prospectus or the Prospectus Supplement or any amendments or supplements thereto). -13- -----END PRIVACY-ENHANCED MESSAGE-----