DFAN14A 1 DEFINITIVE ADDITIONAL MATERIALS 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: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive Proxy Statement [X] 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 ............................................................................ (Name of Registrant as Specified In Its Charter) The Committee to Unlock the Value of First Union Real Estate Investments ............................................................................. (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. [ ] $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 ...................................................................... 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: ...................................................................... [X] 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: ...................................................................... 4) Date Filed: ...................................................................... AN IMPORTANT MESSAGE TO ALL FIRST UNION SHAREHOLDERS FROM: THE COMMITTEE TO UNLOCK THE VALUE OF FIRST UNION REAL ESTATE INVESTMENTS MR. MASTANDREA WANTS YOUR SYMPATHY: SHOW HIM THE DOOR INSTEAD The Company continues to waste your money bombarding you with repeated mailings and phone calls begging for your vote. In all of their desperate attempts to get your vote, remember, nothing they say increases your stock price. LOOK WHO HAS REAL ESTATE EXPERIENCE The Company touts the experience of its nominees in its proxy materials but it fails to point out that Stephen R. Hardis and E. Bradley Jones have NO experience operating real estate companies. We commend these gentlemen for their experience in mutual funds, manufacturing, banking, insurance and other businesses. However, merely serving on the board of a public real estate company does not make you a real estate expert. In contrast, all three members of the Committee have extensive real estate experience. They will also be a voice for the shareholders. The Company tries to discredit James Webb, referring to him as a teacher. Yes, Mr. Webb is a Professor. He also happens to be a nationally-recognized expert on REITs with over 80 published articles in various real estate professional and academic publications. The Company tries to discredit Steve Calabrese, referring to him as a 34-year old real estate appraiser. Mr. Calabrese's entire professional career has been devoted to the real estate industry, and he has since 1988 concentrated on all aspects of real estate property management, construction, and environmental services, as well as property feasibility studies and appraisals. The Company tries to discredit Rick Osborne for a variety of different matters. The relevant facts are simple: Mr. Osborne has substantial experience as a real estate entrepreneur in real estate development and management. THE LAWSUIT SMOKESCREEN The Company has continued to waste your shareholder dollars on a senseless lawsuit. Countless motions have been filed, extensive discovery has been held, and depositions have been taken from Cleveland to Rochester to Baltimore to Washington, D.C. to Newark to Greenville, South Carolina to Fort Lauderdale, all to the enrichment of the Company's lawyers. Throughout the parade of lawyers, Rick Osborne and all the other defendants have denied the Company's charges. In the Company's latest version of the lawsuit, it claims that neither Rick Osborne, nor James Webb and Steve Calabrese, would be eligible to serve as a Trustee because of Mr. Osborne's investments in other publicly-traded real estate companies. The Company fails to say that the other real estate companies in question do not compete for investments in any way with First Union, leaving their entire argument without foundation. We find it hard to believe that on the one hand the Company tries to discredit Rick Osborne as being unqualified to be a Trustee, but on the other hand, the Company says that his real estate company investments, which are indicative of Mr. Osborne's experience and belief in the future of real estate, should somehow bar him and the other members of the Committee from serving as Trustees. LAWSUITS CANNOT STOP SHAREHOLDERS FROM REVOLTING AND REVITALIZING THIS COMPANY'S BOARD. We thought shareholders should know about one particular aspect of First Union's case. First Union's allegations are in large part based on telephone conversations between Mark Escaja, who is unaffiliated with the Committee or any of its members, and a lawyer in Chicago representing the Company. Based on statements made by Mr. Escaja in these conversations, the Company sued, allegedly believing that Rick Osborne, Mr. Escaja, Mr. Escaja's employer and others had a secret plot to take over the Company. Without informing Mr. Escaja, Mr. Mastandrea and the Company's general counsel in Cleveland listened in to Mr. Escaja's conversations with the Chicago lawyer, and Mr. Mastandrea taped the conversations. In the order of Jack B. Streepy, a federal court magistrate, requiring that the Company turn over the tape to the defendants in the lawsuit, the magistrate said that "[i]f a party behaves unethically or unprofessionally" it is not entitled to keep material, in this case the secret tape, from the other side in the lawsuit. The Company has indicated it will appeal the magistrate's decision, which it believes is wrong. We believe the decision is right and that you have a right to know. WHAT'S WRONG WITH MAKING MONEY ? Mr. Mastandrea has stated that our intentions are different from other shareholders. Let's set the record straight. Our intention is to make money for all shareholders by increasing the stock price. PERIOD! That certainly is different from what the shareholders have grown to expect from the current management. The Committee benefits when all shareholders benefit. YOU WIN IF WE WIN. EXPENSES AND SALARIES ARE WAY OUT OF LINE ! The Company claims their expenses and salaries are now in line with other REITs. What is not in line is First Union's stock price and dividend. Remember the graph on page 4 of our proxy materials? It shows how poorly First Union's stock price has fared compared to other REITs. The Company selectively forgets to mention that the stock price of other REITs has increased, unlike the Company. Moreover, the Company's dividend was cut, all while salaries, benefits and other expenses have gone in the opposite direction. PUT YOUR MONEY WHERE YOUR MOUTH IS As of February 10, 1995, the Record Date for the Annual Meeting, members of the Committee, Steven A. Calabrese, Richard M. Osborne, and James R. Webb, had the right to vote an aggregate of 1,672,800 shares, constituting approximately 9.3% of the total votes eligible to be cast at the Annual Meeting. Of the 1,672,800 shares, 1,655,800 are owned by Turkey Vulture Fund XIII, Ltd., an Ohio limited liability company (the "Fund"). Rick Osborne is the sole managing member of the Fund and as the sole managing member of the Fund is the beneficial owner of the Fund's shares. The Fund was formed to acquire, hold, sell or otherwise invest in all types of securities and other instruments. The Fund is the largest shareholder in the Company. Nobody gave us options or restricted stock. Nothing can say more about the commitment of the current Trustees than their ownership in the Company, which including vested options and restricted stock amounts to only 195,418 shares, or approximately 1.1% of outstanding shares. Excluding the options and restricted stock, the Trustees own only 76,668 shares, or less than 0.5% of the outstanding shares. WHAT ARE THE TRUSTEES SO AFRAID OF ? Mr. Mastandrea and the Trustees have constantly tried to stop the Committee from conducting a fair election. We thought the shareholders should know about some of their antics. The Company started this contest by suing Mr. Osborne and his Fund and trying to block him from voting the Fund's shares. Next they refused to give us the shareholder list, although they used the list to contact shareholders repeatedly attempting to get their votes. The law forced the Company to mail our proxy materials to certain shareholders. Interestingly enough, the Company then instructed its transfer agent not to put share amounts on our proxy cards, interfering with our ability to tabulate votes. Remember, it's your company, and, even if the Company does not believe we are entitled to a level playing field, you are entitled to vote regardless of the Company's tactics. WE WOULD LIKE TO TALK TO YOU Even though the Company won't tell us who you are, we want to hear from you, the true owners of the Company. The members of the Committee will be available to discuss the issues, answer questions and to LISTEN to what the shareholders want. If you wish to speak to any member of the Committee please call 216-951-1111 (call collect). DON'T BE CONFUSED. THE REAL ISSUE IS: WHO CAN REVIVE FIRST UNION AND MAXIMIZE SHAREHOLDER VALUE ? Richard M. Osborne James R. Webb Steven A. Calabrese CHANGE IS NEEDED NOW !! VOTE THE RED, WHITE & BLUE PROXY CARD TODAY ! ------------------------------------------------------------------------------- YOUR VOTE IS IMPORTANT No matter how many or how few shares you own, please vote for the Committee's Nominees by: SIGNING, DATING and MAILING THE ENCLOSED RED, WHITE and BLUE proxy card TODAY in the postage paid envelope provided. THE COMMITTEE URGES YOU NOT TO RETURN ANY WHITE PROXY CARDS SENT TO YOU BY THE INCUMBENT BOARD OF TRUSTEES. If you own your shares in the name of a brokerage firm, your broker cannot vote your shares unless he receives your specific instructions. Please sign, date and return the enclosed RED, WHITE and BLUE proxy card in the return envelope that has been provided. If you have any questions about how to vote your shares, please call our proxy solicitor at: BEACON HILL PARTNERS, INC. 90 Broad Street New York, NY 10004 800-755-5001 ------------------------------------------------------------------------------- ONLY YOUR LATEST DATED CARD WILL BE VOTED AT THE MEETING