SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
First Union Real Estate Equity and Mortgage Investments
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(Name of Registrant as Specified In Its Charter)
The Committee to Unlock the Value of First Union Real Estate Invesstments
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[X] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
Shares of Beneficial Interest, $1.00 par value
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2) Aggregate number of securities to which transaction applies:
......................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
......................................................................
4) Proposed maximum aggregate value of transaction:
......................................................................
5) Total fee paid:
......................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
......................................................................
2) Form, Schedule or Registration Statement No.:
......................................................................
3) Filing Party:
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4) Date Filed:
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Page 1 of 21 Pages
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[Preliminary Copy]
PROXY STATEMENT
IN OPPOSITION TO THE BOARD OF TRUSTEES OF
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
ANNUAL MEETING OF SHAREHOLDERS
SCHEDULED FOR APRIL 11, 1995
TO ALL SHAREHOLDERS OF FIRST UNION REAL ESTATE
EQUITY AND MORTGAGE INVESTMENTS:
This Proxy Statement is furnished by The Committee to Unlock the Value
of First Union Real Estate Investments (the "Committee") in connection with its
solicitation of proxies to be used at the Annual Meeting of Shareholders of
First Union Real Estate Equity and Mortgage Investments ("First Union" or the
"Company") scheduled to be held on Tuesday, April 11, 1995, at the National
City Bank Auditorium, on the fourth floor of the National City Center Annex
Building, 1900 East Ninth Street, Cleveland, Ohio 44114 at 10:00 A.M., local
time, and at any adjournments or postponements thereof. This Proxy Statement
and the accompanying RED, WHITE AND BLUE Proxy Card are first being sent to the
Company's shareholders on or about March 13, 1995.
The Company has set February 10, 1995, as the Record Date for
determination of shareholders entitled to notice of, and to vote at, the Annual
Meeting. According to the Company, as of the close of business on the Record
Date there were outstanding and entitled to vote at the Annual Meeting a total
of 18,262,725 shares of Beneficial Interest, par value $1.00 per share (the
"Shares"). Each Share is entitled to one vote on all matters submitted to a
vote of the shareholders at the Annual Meeting. Pursuant to Section 8.2 of the
Company's Amended Declaration of Trust, the affirmative vote of the holders of
a plurality of the Shares cast at the Annual Meeting is required for the
election of trustees. If you own your First Union Shares in the name of a
brokerage firm, your broker cannot vote such Shares unless he receives your
specific instructions.
As of the Record Date, the Committee had the right to vote an aggregate of
982,500 Shares constituting approximately 5.4% of the total votes eligible to
be cast at the Annual Meeting. See "The Committee."
THE COMMITTEE URGES YOU TO SIGN, DATE AND RETURN THE ENCLOSED RED,
WHITE AND BLUE PROXY CARD TO VOTE FOR THE ELECTION OF THE
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COMMITTEE'S NOMINEES AS TRUSTEES. A POSTAGE-PAID ENVELOPE HAS
BEEN PROVIDED FOR YOUR CONVENIENCE.
REASONS FOR THIS SOLICITATION
The Committee is urgently soliciting your proxy to enable us to
salvage and then revive the Company. We had high hopes for the Company when we
first made our investments. We now believe that First Union has little or no
future if management is not changed immediately. The Committee seeks your help
to elect three trustees with substantial commercial real estate experience who
will constitute one-third of the Board of Trustees. We believe these new
trustees will be more knowledgeable in real estate investment and management,
more responsive to shareholder concerns and more responsible in their direction
of the management of the Company. The Committee will recommend to its nominees,
if elected, that they seek the removal of James C. Mastandrea, the current
Chief Executive Officer of the Company, whose policies are a continuation of
past mistakes and who has shown a callous disregard for shareholders. We
believe that the Committee's nominees, through a new management team, will
implement the policies necessary to maximize shareholder value.
We send you this request for your proxy and ask for your vote for a
number of reasons:
(1) The Company's Shares, which once traded at prices exceeding
$27.00 per share, have steadily declined for more than eight
years, hovering in the $6.00 - $10.00 range for most of the
past year.
(2) The Company's current Trustees and executive officers have
shown little faith in the Company -- their total investment
in the Company amounts to only 245,348 Shares (excluding
unexercised options), or only 1.3% of outstanding Shares. Of
the 245,348 Shares, 162,500 Shares of restricted stock were
awarded to executive officers in 1994 under the Company's
Long Term Incentive Performance Plan. Therefore, the Trustees
and executive officers have purchased at most only 82,848
Shares, or less than 0.5% of the outstanding Shares, on the
open market.
(3) From 1993 to 1994, Mr. Mastandrea's annual salary, not
including bonuses, increased from $200,000 to $250,000, an
increase of 25%, and his bonus increased to $110,610, an
increase of 25% on an annualized basis. Moreover, in 1994 Mr.
Mastandrea received options to purchase 162,500 Shares and
was rewarded with 112,500 Shares of restricted stock under
the Company's 1994 Long Term Incentive Performance Plan. All
these increases and grants were made while from 1993 to 1994
the Company's per share earnings were cut in half.
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(4) From 1992 to 1993, annual general and administrative expenses
increased 27%, or $408,000; from the third quarter of 1993 to
the third quarter of 1994 the nine-month increase was 142%,
or $1.5 million!
(5) As of December 31, 1994, the average dividend yield of 102
real estate investment trusts was 7.7%. (Source, A.G. Edwards
& Sons, Inc., Quarterly REIT Review, January 18, 1995.) First
Union's yield was only 6.0% as of December 31, 1994.
(6) From 1992 to 1993, annual operating expenses increased 8% or
$1.8 million, but revenue increased only 2%, or $1.5 million;
from the third quarter of 1993 to the third quarter of 1994
the nine-month operating expense increase was 3%, or
$540,000, but revenue increased only 1% or $710,000.
(7) In 1994, First Union sold a 50% interest in two regional
shopping malls, one in Wilkes Barre, Pennsylvania and the
other in Fairmount, West Virginia (the "Malls") for a sale
price equivalent to approximately $58 per square foot. Mr.
Mastandrea then agreed on behalf of the Company to use a
portion of the proceeds of the Mall sales to purchase a
suburban shopping center outside of his hometown of Chicago
for a price equivalent to approximately $120 per square foot.
(8) The Mall sales generated over $29 million in gains for the
Company, or over $1.60 per share. Contrary to the past
practice of the Company, none of these gains were, or will
be, distributed to the Company's shareholders.
WHAT WE WILL DO
A proxy contest is not the best forum for detailed discussion of a
business plan. Our nominees, however, have experience in investing, managing
and analyzing real estate in a profitable manner. They are committed to:
(1) The hiring of a chief executive officer who will be
responsive to shareholders and who will aggressively manage
the Company enabling it to provide returns to the
shareholders that they have every right to expect and for so
long have not received;
(2) An urgent review of all the Company's real estate
investments with a view toward improving the performance
of the portfolio;
(3) The development of a plan to increase the dividends payable to
shareholders;
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(4) The imposition of strict controls on overhead expenses and the
implementation of necessary steps to cut overhead costs;
(5) The termination of all stock option and restricted stock
award plans that benefit management at the expense of
shareholders;
(6) The termination of the Rights Agreement, which is commonly
known as a poison pill, adopted by the Company in 1990;
(7) The termination of the restrictions in Section 6 of the
Company's By-Laws that prohibit any person from owning more
than 9.8% of the Shares;
(8) The termination of the staggered election of members of the
Company's Board of Trustees;
(9) The implementation of a continuous, effective shareholder
relations program to keep shareholders informed about the
Company; and
(10) To the extent possible, a reversal of management's decision
not to distribute the over $29 million in gains received from
the Mall sales.
WHAT WE WILL NOT DO
(1) We will NOT terminate employees simply for the sake of cutting
costs; our grievance is with the Company's trustees, including Mr. Mastandrea,
not its professional staff. We trust that with stability, a coherent business
plan, professional management and shareholder oversight, their distinguished
talents can be put to profitable use.
(2)We will NOT waste the shareholders' money on lavish offices for the
management.
(3) We will NOT increase the pay and benefits of officers or reward
them with grants of Shares or "golden parachutes" at a time when First Union
share prices are declining.
(4) We will NOT hire expensive outside consultants to give advice on
matters that First Union's management should know for themselves.
(5) We will NOT take any action to impair First Union's status as a
real estate investment trust ("REIT") under the Internal Revenue Code of 1986.
(6) We will NOT announce a new policy of investor communications (Source,
Letter, dated March 25, 1994, from Mr. Mastandrea to First Union shareholders),
and
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then refuse to meet with the Company's largest shareholder and spend Company
funds to launch enormously expensive litigation against the shareholder.
See "Litigation."
WHY SHAREHOLDER INVESTMENTS WILL BE LOST
IF MANAGEMENT IS NOT CHANGED
We have summarized the events and failures which have led us to
believe that management must change. We have personally invested nearly $6.8
million in the Company. We describe below in further detail why we believe that
First Union's shareholders deserve a prompt and comprehensive change of First
Union's ways of doing business.
1. The Market's Rejection of First Union
From a high of over $27.00 per share in 1987, First Union's
stock traded at less than $6.25 per share on September 30, 1994 and, after the
announcement of our investment, has since risen to a high of $8.50 per share on
January 19, 1995, and again on January 30, 1995. On March 10, 1995, the last
trading day prior to the date of this Proxy Statement, the closing sales price
for First Union Shares was $____. This steep per share decline shows that the
market is trying to send a message to First Union. We seek your proxy because
management is not getting the message.
2. Mr. Mastandrea Has Personally Benefitted at the Expense of
First Union Shareholders
While the performance of First Union has continued to decline
from 1993 to 1994, Mr. Mastandrea received a $50,000 annual salary increase, or
25%, and an increase in his bonus equal to 25% on an annualized basis. At the
same time, Mr. Mastandrea received the following: (1) options to purchase
162,500 Shares; (2) a reward of 112,500 Shares of restricted stock under the
Company's 1994 Long Term Incentive Performance Plan; (3) a "golden parachute"
that requires the Company, in certain circumstances, to continue to pay his
base salary and bonus and provide benefits, including pension contributions and
vesting of options, for a period of three years after Mr. Mastandrea is no
longer employed by the Company, and, in certain circumstances such as the
termination of Mr. Mastandrea without cause after a change in control of the
Company (as defined), the base salary, bonus and benefits otherwise payable
over the three-year period become immediately due and payable by the Company in
a lump sum; (4) Company-paid memberships in several exclusive Cleveland social
clubs; and (5) a $2.5 million split-dollar life insurance policy, all the
premiums on which are paid by the Company during his employment and on which
the Company must continue to pay premiums, in certain circumstances, even after
he is no longer employed by the Company.
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As shareholders, we continue to fund Mr. Mastandrea's
lucrative salary and perquisites without receiving any value in return.
3. First Union Shares Continually Underperform the Market
Based on information provided by the Company, the following
performance graph assumes the investment of $100 on December 31, 1989 in First
Union Shares, the New York Stock Exchange (NYSE) Composite, and All REITs, with
dividends reinvested when paid and share prices as of the last day of each
calendar year. The All REITs was compiled by the National Association of Real
Estate Investment Trusts (NAREIT). The "star" in the table indicates the date
on which Mr. Mastandrea joined First Union.
1989 1990 1991 1992 1993 1994
First Union $100 $50 $53 $76 $85 $62
All REITs $100 $83 $112 $126 $149 $150
NYSE Composite $100 $96 $124 $130 $148 $145
As the graph indicates, a $100 investment in First Union
Shares on December 31, 1989 would be worth $62 on December 31, 1994. The same
$100 would be worth $145 if invested in the NYSE Composite or $150 if invested
in All REITs.
LITIGATION
Richard M. Osborne is sole managing member of Turkey Vulture Fund
XIII, Ltd., an Ohio limited liability company (the "Fund"), that was formed to
acquire, hold, sell or otherwise invest in all types of securities and other
instruments. The Fund is the largest shareholder in First Union. Mr. Osborne
attempted to meet with management of First Union to discuss First Union and the
significant investment made by the Fund. Management of First Union refused to
meet with him. Instead, on February 3, 1995, First Union commenced an action
(No. 1:95CV 0274) in the U.S. District Court for the Northern District of Ohio,
Eastern Division, against Mr. Osborne, the Fund, and various
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other persons (the "First Union Action"). First Union alleges, among other
matters, that the named defendants were conspiring to take control of First
Union, violated federal and state securities laws and breached certain
obligations to other First Union shareholders.
Mr. Osborne and the Fund vehemently deny all charges made by First
Union and are contesting the charges vigorously. Among other matters, Mr.
Osborne and the Fund have sought (1) dismissal of the First Union Action, (2) a
declaration that First Union breached its fiduciary duty to its shareholders by
bringing the First Union Action and thereby wasting corporate assets, (3)
damages in the amount of all fees and costs incurred in prosecuting and
defending the First Union Action and all damages awarded from the failure of
the trustees of First Union to independently investigate the basis of
the First Union Action and from their obligation to not abuse the process, and
(4) the production of the First Union shareholder list.
This enormously expensive litigation has resulted in nothing of value
to First Union. On February 8, 1995, the court denied First Union's motion for
a temporary restraining order on the grounds that First Union failed to show a
substantial likelihood of prevailing on the merits of its claim, or irreparable
injury if the motion was not granted. The court has scheduled a hearing on
First Union's injunction motion for May 2, 1995.
Despite clear evidence that, other than the Fund, none of the other
defendants in the First Union Action own any Shares or have any intention to
purchase any Shares of First Union, the Company continues to wage legal
warfare, without any concern over the cost to the Company and its shareholders.
THE COMMITTEE
The members of the Committee are Steven A. Calabrese, Richard M. Osborne,
and James R. Webb. The Committee believes that, as of the Record Date, its
members beneficially owned or were entitled to vote an aggregate of 982,500
Shares, representing approximately 5.4% of the outstanding Shares.
WE ARE SHAREHOLDERS, NOT CORPORATE RAIDERS
Contrary to First Union's groundless accusations, neither the Committee
nor any of its members are attempting to benefit themselves at the expense of
any other shareholders. Rather, the Committee is seeking to increase value to
all shareholders. Neither the Committee nor its members will acquire any of
First Union's operations or assets or be compensated either as principal or
agent in transactions relating to the redeployment of First Union assets, or
earn any profits, commissions or other fees from First Union for their services
in connection therewith, other than (1) such compensation, if any, as might be
payable to any of the Committee members solely in their capacities
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as trustees of First Union, (2) payments received by Committee members in their
capacity as holders of First Union stock, and (3) reimbursements of professional
fees and expenses incurred in the legal proceedings brought by First Union
against Mr. Osborne and the Fund. See "Litigation."
Additional information concerning the members of the Committee and their
holdings of Shares is set forth in Appendix A hereto.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL 1: NOMINEES FOR ELECTION AS TRUSTEES
The Company's Board of Trustees is presently composed of nine trustees,
divided into three classes of trustees who serve for three-year terms. The
trustees elected at the Annual Meeting will serve in such capacity until the
1998 Annual Meeting of Shareholders and thereafter until their successors shall
have been elected and qualified. In opposition to the incumbent Class II of the
Board of Trustees the Committee is proposing a slate of three experienced and
well-qualified nominees for election as trustees of the Company who, if
elected, would constitute one-third of the Board of Trustees.
Each nominee named below has consented to serve as a trustee of the
Company if elected. The Committee does not expect that any of the nominees will
be unable to stand for election but, in the event that a vacancy in the slate
of nominees should occur unexpectedly, the Shares represented by the enclosed
RED, WHITE AND BLUE Proxy Card will be voted for a substitute candidate
selected by the Committee.
The following information concerning business address, age, and
principal occupation has been furnished by the Committee' minees.
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Name and Business Address Age Principle Occupation for Past Five Years
Steven A. Calabrese 34 Since 1988, Mr. Calabrese has been Executive
1110 Euclid Avenue Vice President and a Director of Calabrese, Racek
Suite 300 and Markos, Inc. ("CRM"), a commercial-industrial
Cleveland, Ohio 44115 real estate appraisal company located in
Cleveland, Ohio. He is also an executive officer
and a Director of various affiliates of CRM, also
located in Cleveland, that provide full-service real
estate property management, construction and
environmental services. Mr. Calabrese is a
member of the Appraisal Institute, holds the MAI
designation and is also a certified appraiser.
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Richard M. Osborne 49 Mr. Osborne is President and Chief Executive
7001 Center Street Officer of OsAir, Inc., Mentor, Ohio ("OsAir"), a
Mentor, Ohio 44060 company he founded in 1963. OsAir is a
manufacturer of industrial gases for pipeline delivery
and a real property developer. Mr. Osborne has substantial
experience in real estate development and management.
During his career as a real estate entrepreneur, he has
developed, managed or sold over 1 million square feet of
industrial space and over 1.5 million square feet of
commercial space, and is currently developing a 250
acre industrial park in Mentor, Ohio. At its formation
in November 1994, Mr. Osborne became the sole managing
member of the Fund. Mr. Osborne is also Vice-Chairman
and Director of Great Lakes Bank, of Mentor, Ohio, a
position he has held since the Bank's founding in July 1994.
From 1985 through 1990, Mr. Osborne was Chairman of the
Board of Peoples Savings Bank of Ashtabula, now First
Bankcorp of Ohio.
James R. Webb, PhD. 47 Dr. Webb is Professor and Director of the Center
Department of Finance for the Study of Real Estate Brokerage and
College of Business Markets at the James J. Nance College of
Cleveland State University Business, Cleveland State University, a position
Cleveland, Ohio 44115 that he has held since 1991. From 1989 to 1991,
he was Professor and Chairman of the Department of Finance at
that College of Business. Since 1991, Dr. Webb has been the
Chairman of the Board of the National Bureau of Real Estate
Research, a non-profit organization specializing in
real estate analysis, and since 1987, he has been the Executive
Director of the American Real Estate Society, the largest
real estate education and research organization in the
United States. Dr. Webb founded that organization in 1985 and
served as its President in 1986. In addition, he has
published over eighty articles on various aspects of real
estate investment in professional and academic
journals. Dr. Webb received his PhD. from the University of
Illinois in 1982.
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None of the nominees has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) during the past ten
years. Additional information concerning the Committee's nominees is set forth
in Appendix A hereto.
The Committee urges you to sign, date and return the enclosed RED,
WHITE AND BLUE proxy card to vote for the election of the Committee's nominees
as trustees.
PROPOSAL 2: SHAREHOLDER PROPOSAL
Statement in Support and Proposal
Mr. Allen Wolff, D.V.M., Trustee, 4241 Center Road, Brunswick, Ohio
44212-0474, who is the beneficial owner of 520 Shares of Beneficial Interest,
has, according to the Company, advised it that he intends to present at the
Annual Meeting the following proposal:
I have invested my life savings in various equities to try to provide
for retirement and old age, and I want the funds to be there when I need them.
Throughout corporate America, many stockholder proposals have been introduced
to try to control compensation to directors and top management and to try to
tie them in with profits and dividends. Management opposes this! . . . Most
shareholder proposals fail because (1) the investors are not organized and have
no alternative, (2) management already controls a large number of votes and
then rewards itself with more shares to vote against such proposals, and (3) we
are not playing on a level field; management gets to count unmarked proxies as
voting in favor of their position and then is allowed to solicit proxies at the
company's expense.
I feel that many Boards of Directors have lost touch with the
investors, and it seems that they are giving more and more rewards for less and
less success. In Junior High School, we learned that there were three (3) parts
to any business: CAPITAL, LABOR AND MANAGEMENT. The boards seem to have
forgotten this lesson. The boards, in general, are self-perpetuating groups
seemingly intent on rewarding themselves and members of management, at the
expense of the investor.
I am particularly dismayed at the statement on proxies that "Proxies
signed, but not specifically marked, will be voted as management has
suggested."
Management says that stockholders clearly understand how their votes
will be counted if they don't put Xs in the boxes; yet may shareholders didn't
understand THAT (and I have letters about that). They say that this process
allows the stockholder not to be burdened with making THREE OR FOUR Xs. WOW!
How many shareholders even understand what they are being asked to vote on?
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Last April at the annual meeting of First Union Real Estate Trust, a
company that also has reduced its dividends in the last two years, there was a
management proposal to increase compensation ("because that's what we have to
do to attract top executives"). An interesting question from the floor to the
CEO: "Without this incentive, would you not work very hard at your base
salary?" Answer muted. The proposal passed by 69% (including the UNMARKED
proxies). An astute investor in the audience did some quick arithmetic and
pointed out that less than 50% of the shares voted were actually voted for the
proposal.
When I go to the polls and figure there is no clear choice among
candidates and leave that space "unmarked", it is not voted in favor of the
incumbent or the incumbent's party, it is merely a non-vote.
Therefore, be it resolved that in future proxies of this company,
there will be no discretionary power of voting by the named proxy-holder on any
issues where no direction has been given, including ANY ISSUE "WHICH MAY
PROPERLY COME UP AT THE MEETING."
Committee's Statement
The Committee takes no position regarding this proposal. RED, WHITE
AND BLUE Proxy Cards not marked with respect to this proposal will be voted as
an abstention.
Vote Required
According to the Company, approval of this proposal will require the
affirmative vote of the holders of a majority of the Shares present in person
or by proxy and voting at the meeting.
VOTING OF PROXIES
Unless otherwise indicated, the persons named in the accompanying RED,
WHITE AND BLUE Proxy Card will vote properly executed and duly returned proxies
(1) FOR the election of three Committee nominees as members of Class II of the
Board of Trustees of the Company to serve for a term of three years until the
1998 annual meeting of shareholders and until their successors are elected and
qualified, (2) as an abstention with respect to the shareholder's proposal set
forth in Proposal 2, and (3) in accordance with their judgment on such other
business as may be properly presented to the meeting and any adjournment or
postponement thereof.
RED, WHITE AND BLUE Proxy Cards should be signed, dated and returned
in the postage-paid envelope provided. Execution of the enclosed RED, WHITE AND
BLUE Proxy Card will not affect a shareholder's right to attend the Annual
Meeting and vote in
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person. A shareholder who has given a proxy may revoke it at any time before
such proxy is voted either by a later dated proxy or by voting in person at the
Annual Meeting. Attendance at the Annual Meeting will not in and of itself
constitute a revocation. If you were a shareholder of record on the Record Date,
you will retain the voting rights in connection with the Annual Meeting even if
you sell or sold such Shares after the Record Date. Accordingly, it is important
that you vote the Shares held by you on the Record Date or grant a proxy to vote
such Shares whether or not you still own such Shares.
Shareholders cannot select trustees from among those proposed by the
Company and the Committee. Therefore, if you wish to support the Committee's
nominees, your last dated properly executed proxy must be a RED, WHITE AND BLUE
Proxy Card.
PROXY SOLICITATION; EXPENSES
Proxies may be solicited by members of the Committee and their
nominees by mail, telephone, telecopier and personal solicitation. Regular
employees of Mr. Osborne of all classes may be used to solicit proxies, and
when used, will not receive additional compensation therefor. Banks, brokerage
houses and other custodians, nominees and fiduciaries will be requested to
forward the soliciting material of the Committee to their customers for whom
they hold shares, and the Committee will reimburse them for their reasonable
out-of-pocket expenses.
The Committee has retained Beacon Hill Partners, 90 Broad Street, New
York, New York, 10004, to assist in the solicitation of proxies. The Committee
has agreed to pay Beacon Hill Partners a fee of $25,000 and to reimburse it for
its reasonable out-of-pocket expenses. Approximately 25 people will be used by
Beacon Hill Partners in its solicitation efforts. The entire expense of
preparing, assembling, printing and mailing this Proxy Statement and related
materials and the cost of soliciting proxies for the nominees proposed by the
Committee will be borne by the Committee.
The Committee anticipates that its total expenditures relating to the
solicitation will be approximately $225,000 (excluding costs represented by
salaries and wages of regular employees of Mr. Osborne); total expenditures to
date have been less than $30,000. All expenses of the solicitation will be
borne by the members of the Committee in a manner to be determined by them. The
Committee will seek reimbursement from the Company for those expenses and does
not intend to seek shareholder approval for such reimbursement at a subsequent
meeting unless such approval is required under Ohio law.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
In order to be included in the Company proxy statement for the 1996
Annual Meeting, any shareholder proposal to be presented at the 1996 Annual
Meeting must be
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received in the Office of the Secretary of the Company by the date specified in
the Company proxy statement for this year's Annual Meeting.
OTHER MATTERS
The Committee is not aware of any other matters scheduled to be
presented at the Annual Meeting. If any other matters properly come before the
meeting, the persons named in the enclosed RED, WHITE AND BLUE Proxy Card will
have discretionary authority to vote all proxies with respect to such matters
in accordance with their judgment.
Sincerely,
March 13, 1995 THE COMMITTEE TO UNLOCK THE
VALUE OF FIRST UNION REAL
ESTATE INVESTMENTS
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IMPORTANT
Your vote is important. No matter how many or how few First Union
shares you own, please vote FOR the Committee's nominees by signing, dating and
mailing the enclosed RED, WHITE AND BLUE Proxy Card today. The Committee urges
you NOT to return any proxy cards sent to you by the Board of Trustees of First
Union.
If you have already returned a Board of Trustees' proxy card before
receiving this Proxy Statement, you have every right to change your vote by
signing and returning the enclosed RED, WHITE AND BLUE Proxy Card. Only your
latest dated properly executed proxy will count at the Annual Meeting.
If you own your First Union Shares in the name of a brokerage firm,
your broker cannot vote such Shares unless he receives your specific
instructions. Please sign, date and return the enclosed RED, WHITE AND BLUE
Proxy Card in the postage-paid envelope that has been provided.
If you have any questions about how to vote your First Union shares,
please call our proxy solicitor:
Beacon Hill Partners
90 Broad Street
New York, NY 10004
Telephone: 1-800-755-5001
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APPENDIX A
On the date hereof, Richard M. Osborne, as the sole managing member of
the Fund, is the beneficial owner of 965,500 Shares, representing approximately
5.3% of the 18,262,725 Shares outstanding according to the most recently
available filing by the Company with the Securities and Exchange Commission.
Steven A. Calabrese is the beneficial owner of 17,000 Shares, representing less
than 0.1% of the Shares outstanding. R-C Enterprises, a general partnership
("R-C Enterprises"), of which Mr. Calabrese is managing partner, is a member of
the Fund.
Under the terms of the Operating Agreement of the Fund, Mr. Osborne as
the sole managing member, manages all day-to-day operations involving, and
makes all decisions concerning, the business and affairs of the Fund. Other
than Mr. Osborne, the members have no authority or power to bind the Fund, vote
securities owned by the Fund, make investment decisions for the Fund or dispose
of any securities held by the Fund. Each member has agreed, under the terms of
the Operating Agreement, to indemnify the Fund for any costs or damages
incurred by the Fund as a result of the exercise of any unauthorized authority
by each such member.
Under Rule 13d-3 promulgated by the Securities and Exchange
Commission, "a beneficial owner of a security includes any person, who,
directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares:
(1) Voting power which includes the power, to vote, or to direct the
voting of, such security, and/or
(2) Investment power which includes the power to dispose, or to direct the
disposition of, such security."
Because the members of the Fund, other than Mr. Osborne, lack any of the
requisite powers of beneficial ownership, none of them, other than Mr. Osborne,
are beneficial owners of the Shares solely because of their investment as
members in the Fund.
Mr. Osborne believes that as of the Record Date, the members of the
Fund, or their affiliates (including Mr. Calabrese), were, through purchases of
Stock other than by the Fund, beneficial owners of 81,000 Shares, or less than
0.5% of the outstanding Shares. Neither the Fund nor Mr. Osborne has any
interest, beneficial or otherwise, in these 81,000 Shares.
The Operating Agreement of the Fund contains a provision that
prohibits any of the members or their affiliates from selling, selling short or
covering short sales in any securities in which the Fund has a long position.
In addition to any other remedies available under law, the penalties under the
Operating Agreement for violating this
A-1
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provision are (1) disgorgement of any profits to the Fund, (2) payment of any
losses, claims, damages, liabilities, cost and expenses (including attorneys'
fees) of the Fund, and (3) if Mr. Osborne determines in his sole discretion,
expulsion of the member from the Fund. The foregoing provision was included in
the Operating Agreement to avoid any conflict of interest among the members by
insuring that the Fund could not be damaged by an adverse act of any one
member.
The table below sets forth all Shares purchased by Mr. Osborne within
the past two years, the dates on which such purchases were made and the amount
of such purchases. The 20,000 Shares purchased on August 11, 1994 and 10,000 of
the Shares purchased on December 28, 1994 were purchased by the Profit Sharing
Trust of OsAir. All 906,000 Shares set forth in the table below, including
those Shares purchased by the Profit Sharing Trust, were contributed to the
Fund by Mr. Osborne on January 13, 1995. Mr. Osborne sold no shares during the
two year period.
Date Number of Shares
August 2, 1994 35,000
August 3, 1994 27,500
August 4, 1994 5,100
August 5, 1994 25,800
August 8, 1994 1,600
August 9, 1994 5,000
August 11, 1994 20,000
October 3, 1994 4,000
October 4, 1994 38,000
October 5, 1994 8,900
October 6, 1994 15,500
October 7, 1994 7,700
October 10, 1994 5,200
October 11, 1994 22,800
October 12, 1994 21,700
October 13, 1994 44,300
October 14, 1994 20,000
October 17, 1994 12,000
October 20, 1994 700
October 21, 1994 16,000
October 24, 1994 9,900
October 25, 1994 10,900
October 26, 1994 5,500
October 27, 1994 25,400
October 28, 1994 17,000
October 31, 1994 9,800
A-2
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November 1, 1994 4,700
November 16, 1994 13,700
November 17, 1994 5,800
November 18, 1994 14,000
November 21, 1994 13,700
November 22, 1994 12,000
November 23, 1994 40,800
December 6, 1994 18,200
December 7, 1994 20,100
December 8, 1994 31,000
December 9, 1994 102,000
December 14, 1994 17,400
December 16, 1994 22,300
December 19, 1994 20,000
December 21, 1994 17,800
December 22, 1994 20,600
December 23, 1994 24,900
December 27, 1994 2,500
December 28, 1994 14,200
December 29, 1994 22,000
December 30, 1994 20,000
January 4, 1995 4,500
January 5, 1995 5,800
January 6, 1995 5,500
January 10, 1995 17,200
The table below sets forth all Shares purchased by the Fund, the dates
on which such purchases were made and the amount of such purchases, other than
the 906,000 Shares contributed to the Fund by Mr. Osborne on January 13, 1995.
The Shares purchased by the Fund are held in a margin account, in which there
are also securities other than the Shares. The margin balance of that account
as of February 27, 1995, was approximately $2.8 million. The Fund sold no
shares during the two year period.
Date Number of Shares
January 16, 1995 9,000
February 2, 1995 3,000
February 3, 1995 12,800
February 7, 1995 9,300
February 8, 1995 10,000
February 9, 1995 4,300
February 10, 1995 11,100
A-3
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The table below sets forth all Shares purchased by Mr. Calabrese, the
dates on which such purchases were made and the amount of such purchases. The
Shares purchased on January 17, 1995, were purchased by R-C Enterprises, and
are held in a margin account, in which there are also securities other than the
Shares. The margin balance of that account as of February 27, 1995 was
approximately $60,000. Mr. Calabrese sold no shares during the two year period.
Date Number of Shares
January 17, 1995 13,200
January 19, 1995 3,800
Except as otherwise set forth in this Appendix A, neither the Committee
or any of its members or any "associate" of any of the foregoing persons or any
other person who may be deemed a "participant" in the Proxy Solicitation is the
beneficial or record owner of any Shares. Except as otherwise set forth in this
Appendix A, neither the Committee or any of its members or any "associate" of
any of the foregoing persons or any other person who may be deemed a
"participant" in the Proxy Solicitation has purchased or sold any Shares within
the past two years, borrowed any funds for the purpose of acquiring or holding
any Shares or is or was within the past year a party to any contract or
arrangement or understanding with any person with respect to any Shares. There
has not been any transaction since the beginning of the Company's last fiscal
year and there is not currently any proposed transaction to which the Company
is a party, in which the Committee or any of its members or any "associate" or
immediate family member of any of the foregoing persons or any other person who
may be deemed a "participant" in the Proxy Solicitation had or will have a
direct material interest.
A-4
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[Side 1]
PROXY
First Union Real Estate Equity and Mortgage Investments
1995 Annual Meeting of Shareholders
Unless otherwise specified, this proxy will be voted FOR Item 1 and
ABSTAIN on Item 2 and will be voted in the discretion of the proxies on such
other matters as may properly come before the meeting or any adjournment(s) or
postponement(s) thereof.
1. Election of Trustees FOR o WITHHOLD o
Committee nominees are:
Steven A. Calabrese, Richard M. Osborne, and James R. Webb
(Authority to vote for any nominee(s) may be withheld by lining through
or otherwise striking out the name of such nominee(s).)
THE COMMITTEE RECOMMENDS A VOTE FOR ITEM 1.
2. Shareholder Proposal Concerning Tabulation of Proxies
FOR o AGAINST o ABSTAIN o
The Proxy revokes all prior proxies and voting instructions.
(Continued and to be signed and dated on the reverse side)
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[Side 2]
SOLICITED ON BEHALF OF THE
COMMITTEE TO UNLOCK THE
VALUE OF FIRST UNION REAL PROXY SOLICITED IN OPPOSITION
ESTATE INVESTMENTS TO THE BOARD OF TRUSTEES
The undersigned hereby appoints Steven A. Calabrese, Richard M.
Osborne and James R. Webb, and each of them, with full power of substitution,
as proxies for the undersigned, to represent and vote, as designated on the
reverse side, all shares of beneficial interest of First Union to which the
undersigned is entitled to vote at the 1995 Annual Meeting of Shareholders of
First Union scheduled to be held on April 11, 1995, and at any adjournment(s)
or postponement(s) thereof, and revokes all prior proxies with respect to the
matters covered by this proxy.
Date: ________________, 1995
Signature:__________________________
Signature: _________________________
Title or Authority: ____________________
(Please sign exactly as name appears on share
certificates, indicating title or representation
capacity, where applicable)
PLEASE SIGN, DATE AND MAIL YOUR PROXY TODAY
If you have any questions on voting, please call:
Beacon Hill Partners at 1-800-755-5001
