-----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, F2c3pXunphotz+1RzVGL4Ngi83v7cDYjTAEKOJbuMdkunbtl7X3/U3+L/ETsq4zR QuvDFw4DFwXnHCWxGyca7g== 0000895345-98-000196.txt : 19980402 0000895345-98-000196.hdr.sgml : 19980402 ACCESSION NUMBER: 0000895345-98-000196 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19980401 SROS: NYSE SUBJECT COMPANY: 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: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-19676 FILM NUMBER: 98585498 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 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GOTHAM PARTNERS LP /NY/ CENTRAL INDEX KEY: 0000899983 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 363593298 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 110 EAST 42ND ST 18TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2122860300 MAIL ADDRESS: STREET 1: 110 EAST 42 ND ST 18TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 SC 13D/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 24) First Union Real Estate Equity and Mortgage Investments - --------------------------------------------------------------------------- (Name of Issuer) Shares of Beneficial Interest, $1.00 par value - --------------------------------------------------------------------------- (Title of Class of Securities) 337400105 -------------------------------------------- (CUSIP Number) Stephen Fraidin, P.C. Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 (212) 859-8140 - --------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 31, 1998 -------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|. Check the following box if a fee is being paid with the statement |_|. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) NOTE: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SEC1746(12-91) SCHEDULE 13D CUSIP No. 337400105 Page 2 of 6 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Gotham Partners, L.P. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS* WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York, U.S.A. NUMBER OF 7 SOLE VOTING POWER SHARES 2,601,951 Shares BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 0 REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 2,601,951 Shares 10 SHARED DISPOSITIVE POWER 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,601,951 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES* 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.24% 14 TYPE OF REPORTING PERSON* PN *SEE INSTRUCTIONS SCHEDULE 13D CUSIP No. 337400105 Page 3 of 6 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Gotham Partners II, L.P. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS* WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York, U.S.A. NUMBER OF 7 SOLE VOTING POWER SHARES 30,449 Shares BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 0 REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 30,449 Shares 10 SHARED DISPOSITIVE POWER 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 30,449 Shares 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES* 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.10% 14 TYPE OF REPORTING PERSON* PN *SEE INSTRUCTIONS SCHEDULE 13D CUSIP No. 337400105 Page 4 of 6 Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Gotham International Advisors, L.L.C. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS* WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7 SOLE VOTING POWER SHARES 287,900 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 0 REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 287,900 10 SHARED DISPOSITIVE POWER 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 287,900 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ] EXCLUDES CERTAIN SHARES* 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.91% 14 TYPE OF REPORTING PERSON* 00; IA *SEE INSTRUCTIONS This Amendment No. 24 amends and supplements the Statement on Schedule 13D (the "Schedule 13D") relating to the shares of Beneficial Interest, par value $1.00 per share ("Shares"), of First Union Real Estate Equity and Mortgage Investments, an Ohio business trust (the "Company") previously filed by Gotham Partners, L.P. ("Gotham"), Gotham Partners II, L.P., both New York limited partnerships, and Gotham International Advisors, L.L.C., a Delaware limited liability company. Capitalized terms used and not defined in this Amendment have the meanings set forth in the Schedule 13D. Except as specifically provided herein, this Amendment does not modify any of the information previously reported on the Schedule 13D. Item 4 is hereby amended to add the following information: "Item 4. Purpose of the Transaction On March 31, 1998, counsel for Gotham and Gotham II filed a Defendants' and Counterclaimants' Motion for Preliminary Injunction in the Court of Common Pleas, Cuyahoga County, Ohio. A copy of such Motion is attached as Exhibit 46 hereto and incorporated herein by this reference. On March 31, 1998, Judge Timothy J. McGinty of the Court of Common Pleas, Cuyahoga County, Ohio, ordered that the Company hold a Special Meeting of the Beneficiaries of the Company in lieu of the 1998 Annual Meeting of the Beneficiaries of the Company, with the change in the characterization of the meeting being without prejudice to Gotham's proposal and nominations. The Special Meeting will be held on May 19, 1998, and the record date for such meeting will be April 28, 1998. The Court also ordered that the Company (i) not provide any new employee benefits or compensation outside the ordinary course of business and (ii) not transfer any assets of the Company other than for fair value. Finally, the Court ordered the Company to distribute Gotham's proxy materials in accordance with the Federal proxy rules." Item 7 is hereby amended to add the following information: "Item 7. Material to be Filed as Exhibits. 46. Defendant's and Counterclaimants' Motion for Preliminary Injunction filed in the Court of Common Pleas, Cuyahoga County, Ohio on March 31, 1998." After reasonable inquiry and to the best of ou knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. After reasonable inquiry and to the best of our knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. April 1, 1998 GOTHAM PARTNERS, L.P. By: Section H Partners, L.P., its general partner By: Karenina Corporation, a general partner of Section H Partners, L.P. By: /s/ William A. Ackman ------------------------------- William A. Ackman President By: DPB Corporation, a general partner of Section H Partners, L.P. By: /s/ David P. Berkowitz ------------------------------- David P. Berkowitz President GOTHAM PARTNERS II, L.P. By: Section H Partners, L.P., its general partner By: Karenina Corporation, a general partner of Section H Partners, L.P. By: /s/ William A. Ackman ------------------------------- William A. Ackman President By: DPB Corporation, a general partner of Section H Partners, L.P. By: /s/ David P. Berkowitz ------------------------------- David P. Berkowitz President GOTHAM INTERNATIONAL ADVISORS, L.L.C. By: /s/ William A. Ackman ------------------------------------- William A. Ackman Senior Managing Member By: /s/ David P. Berkowitz ------------------------------------- David P. Berkowitz Senior Managing Member EX-99 2 EXHIBIT 46 IN THE COURT OF COMMON PLEAS CUYAHOGA COUNTY, OHIO FIRST UNION REAL ESTATE ) CASE NO. 347063 EQUITY AND MORTGAGE ) INVESTMENTS, ) ) Plaintiff, ) JUDGE TIMOTHY J. McGINTY ) v. ) DEFENDANTS' AND ) COUNTERCLAIMANTS' MOTION GOTHAM PARTNERS, L.P., et al., ) FOR PRELIMINARY INJUNCTION ) Defendants and ) Counterclaimants. ) Last Friday, this Court ruled that all shareholders of First Union Real Estate Equity and Mortgage Investments ("First Union" or the "Trust") "should have a fair opportunity to decide the direction of their corporation at the April 14, 1998 annual meeting." Judgment Entry of March 27, 1998 ("Judgment") at 13. Unchastened by the Court's ruling that First Union management has been acting to entrench itself rather than to protect First Union and its REIT status, First Union is continuing on its course of ignoring its own Declaration of Trust ("Declaration") and impeding its shareholders' electoral rights. First Union's reaction to the Judgment was swift and shocking. It immediately issued a press release, in which Chief Executive Officer James Mastandrea implied that the Judgment was a nullity, stated that continued litigation was necessary to reach a "real decision" on the issues in the case, and stated that all the issues determined by this Court would "have to be reconsidered in the pending federal case." Exhibit A. In the same release, First Union announced that it was purporting to delay the April 14 meeting and to reset the record date for determination of shareholders entitled to vote at that meeting. Consistent with First Union's desire to sow confusion and disarray in the electoral process, it failed to disclose even the meeting and record dates as reset. These attempts at delay are lawless. First, there is no provision in First Union's Declaration or By-Laws that authorizes such a postponement. The Declaration provides: "Annual meetings of the Beneficiaries shall be held at 2:00 p.m. Eastern Standard time on the second Tuesday of the fourth month following the end of each fiscal year . . . ." Decl. ss. 7.1 (emphasis added). Under this provision, the annual meeting for 1998 must be held on April 14.(FN1) See State ex Carpenter v. Kreutzer, 100 Ohio St. 246, 126 N.E. 54 (1919) Second, this action was undertaken with the improper purpose of frustrating the desire of Gotham Partners, L.P. and Gotham Partners, II, L.P. (together, "Gotham") and other First Union shareholders to vote to change the leadership of First Union. Thus, the Court should issue an order preliminarily restraining First Union and those acting in concert with it, including its Trustees and officers, from taking any steps to delay the conduct of the annual meeting on April 14 or to change the record date for determining shareholders entitled to vote at that meeting. - --------------------------- [FN] 1 To determine those beneficiaries entitled to vote at the annual meeting, the Trustees may "fix a record date, which ... shall not be more than sixty days preceding the date of the meeting of the Beneficiaries...." Decl. ss. 7.4. On February 18, First Union disclosed in its preliminary proxy materials filed with the Securities and Exchange Commission that pursuant to this section it had set the record date as February 13, 1998. The Declaration makes no provision for altering the record date once set. In addition, Gotham seeks preliminary relief to prevent First Union and those acting in concert with it, including its Trustees and officers, from taking any action outside the ordinary course of business pending the conclusion of the annual meeting and the seating of Trustees following that meeting. As the Court is aware, over at least the last two weeks management and the Trustees have, without notice to or the approval of First Union's shareholders, repeatedly acted in an attempt to confer millions of dollars of benefits upon First Union management and employees with the Trust receiving no benefit in return. On or about March 19, the Trustees purported to amend Mastandrea's employment agreement such that, instead of his compensation being reduced to comply with Internal Revenue Code limitations on excessive executive compensation, his compensation is increased to pay him for taxes that he may owe for receipt of excessive compensation, which could cost the Trust millions of dollars without any corresponding benefit. These actions have been undertaken not to benefit First Union or its shareholders, but to bestow undeserved economic windfalls upon management and to "scorch the earth," in a reckless effort to inflict economic damage to the value of First Union and thereby to dissuade Gotham and other First Union shareholders from voting to change the size and composition of the Board of Trustees. To prevent further damage to the Trust and the electoral process, the Court should issue an order preliminarily enjoining First Union and those acting in concert with it, including its Trustees and officers, from taking or authorizing further action outside the ordinary course of business pending the completion of the annual meeting and the seating of new Trustees following that meeting. See Joseph E. Seagram & Sons, Inc. v. Abrams, 510 F. Supp. 860, 861 (S.D.N.Y. 1981) ("It is inconceivable that an alleged flourishing enterprise has authorized its board to subject the assets and charter of the company to a scorched earth policy to be accomplished in the name of the exercise of business judgment but in fact . . . merely to thwart a change . . . which may end the tenure of the present directors and key officers of the company.") (entering temporary restraining order against, inter alia, actions outside the ordinary course of business) (opinion and order attached as Exhibit B). In addition, the Court should enjoin First Union and those acting in concert with it, including its Trustees and officers, from taking any action to effectuate any decisions made by the Board or any committee of the Board since January 8, 1998 that have the purpose or effect of bestowing any benefits upon any First Union Trustee or any officer or employee, including (without limitation) the First Amendment to Employment Agreement Between First Union Real Estate Equity and Mortgage Investments and James C. Mastandrea, dated on or about March 19, 1998, and any policies, practices or procedures acted on by the Trustees on or about March 23, 1998 concerning employee severance and accelerated vesting of options and restricted shares. Finally, the Court should appoint as a receiver a representative of an independent investment bank or accounting firm to observe and monitor First Union's activities pending the outcome of the annual meeting and the seating of Trustees following that meeting. See Granada Investments, Inc. v. DWG Corp., 823 F. Supp. 448, 459-60 (N.D. Ohio 1993) (under Ohio law, courts have broad equitable powers to appoint receivers to remedy mismanagement and preserve assets) (citing Phoenix Portland Cement Co. v. Shadrach, 18 Ohio App. 264, 267-69 (Franklin County 1924)). OF COUNSEL: /s/ David C. Weiner ----------------------------------- David C. Weiner (0013351) HAHN LOESER & PARKS LLP Michael J. Garvin (0025394) 3300 BP America Building 200 Public Square Cleveland, Ohio 44114-2301 (216) 621-0150 - and - OF COUNSEL FRIED, FRANK, HARRIS, SHRIVER /s/ John Sullivan & JACOBSON ----------------------------------- John Sullivan 24th Floor One New York Plaza New York, New York 10004-1980 (212) 859-8000 Attorneys for Defendants and Counterclaim Plaintiffs Dated March 30, 1998 Cleveland, Ohio CERTIFICATE OF SERVICE ---------------------- A copy of the foregoing Motion for Preliminary Injunction was sent by messenger to Frances Floriano Goins, Squire, Sanders & Dempsey L.L.P., 4900 Key Tower, 127 Public Square, Cleveland, Ohio 44114-1304, attorneys for Plaintiff and Counterclaim Defendant, this 30th day of March, 1998. /s/ David C. Weiner ----------------------------------- One of the attorneys for Defendants and Counterclaim Plaintiffs -----END PRIVACY-ENHANCED MESSAGE-----