Offer to Purchase for Cash
Up to
5,000,000 Common Shares of Beneficial Interest
of
First Union Real Estate Equity and Mortgage Investments
at
$2.30 Net Per Share
by
FUR Investors, LLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, DECEMBER 29, 2003 UNLESS THE OFFER IS EXTENDED.
THIS OFFER IS BEING MADE UNDER A STOCK PURCHASE AGREEMENT DATED AS OF
NOVEMBER 26, 2003 (THE "STOCK PURCHASE AGREEMENT") BETWEEN FIRST UNION REAL
ESTATE EQUITY AND MORTGAGE INVESTMENTS, AN OHIO BUSINESS TRUST (THE "COMPANY"),
AND FUR INVESTORS, LLC, A DELAWARE LIMITED LIABILITY COMPANY (THE "PURCHASER").
THE SHARES SOUGHT HEREUNDER REPRESENT APPROXIMATELY 19.2% OF THE SHARES
CURRENTLY OUTSTANDING.
PURSUANT TO THE STOCK PURCHASE AGREEMENT, FOLLOWING THE EXPIRATION OF THIS
OFFER WE WILL PURCHASE FROM THE COMPANY, AT A PURCHASE PRICE OF $2.60 PER SHARE,
BETWEEN 5,000,0000 AND 5,185,724 NEWLY ISSUED SHARES OF THE COMPANY, DEPENDING
UPON THE NUMBER OF SHARES PURCHASED IN THE OFFER. IF THIS OFFER IS FULLY
SUBSCRIBED, FOLLOWING THIS OFFER AND OUR PURCHASE OF SHARES FROM THE COMPANY, WE
WILL OWN 10,000,000 SHARES, REPRESENTING 32.2% OF THE OUTSTANDING COMMON SHARES
OF THE COMPANY.
FOLLOWING THIS OFFER AND OUR PURCHASE OF SHARES FROM THE COMPANY, OUR
AFFILIATE WILL BE RETAINED BY THE COMPANY TO MANAGE THE DAY TO DAY OPERATIONS OF
THE COMPANY.
THE OFFER IS SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN THIS OFFER
TO PURCHASE. SEE SECTION 13 OF THIS OFFER TO PURCHASE. THE OFFER IS NOT
CONDITIONED UPON THE RECEIPT OF FINANCING OR ANY MINIMUM NUMBER OF SHARES BEING
TENDERED.
-------------
THE BOARD OF TRUSTEES OF THE COMPANY HAS APPROVED THE STOCK PURCHASE
AGREEMENT BUT IS REMAINING NEUTRAL AND TAKING NO POSITION AS TO WHETHER
SHAREHOLDERS SHOULD TENDER THEIR SHARES IN THE OFFER.
-------------
IMPORTANT
Any shareholder desiring to tender all or any portion of that
shareholder's shares should either (1) complete and sign the letter of
transmittal, or a facsimile thereof, in accordance with the instructions to the
letter of transmittal, have that shareholder's signature thereon guaranteed if
so required, mail or deliver the letter of transmittal, or facsimile, or, in the
case of a book-entry transfer, an agent's message (as defined therein), and any
other required documents to the depositary and either deliver the certificates
for those shares to the depositary along with the letter of transmittal, or
facsimile, or deliver those shares in accordance with the procedure for
book-entry transfer or (2) request that shareholder's broker, dealer, bank,
trust company or other shareholder nominee effect the transaction for that
shareholder. A shareholder having shares registered in the name of a broker,
dealer, bank, trust company or other nominee must contact that person if that
shareholder desires to tender those shares.
If a shareholder desires to tender shares and that shareholder's
certificates for shares are not immediately available or the procedure for
book-entry transfer cannot be completed on a timely basis, or time will not
permit all required documents to reach the depositary prior to the expiration
date (as defined herein), that shareholder's tender may be effected by following
the procedure for guaranteed delivery set forth in this Offer to Purchase.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the letter of transmittal and the notice of guaranteed
delivery may be directed to MacKenzie Partners, Inc., information agent, at the
address and telephone number set forth on the back cover of this Offer to
Purchase.
December 1, 2003
IMPORTANT
Any shareholder desiring to tender any or all of such shareholder's shares
should, prior to December 29, 2003, either (i) mail, deliver or telecopy to
National City Bank (the "depositary") at the address or facsimile number set
forth below (a) a properly completed and duly executed Letter of Transmittal (a
copy of which is enclosed with this Offer to Purchase, printed on cream paper),
including any required signature guarantees, (b) the stock certificates
representing the shares tendered and (c) any other documents required by the
Letter of Transmittal, (ii) cause such shareholder's broker, dealer, commercial
bank, trust company or custodian to tender applicable shares pursuant to the
procedures for book-entry transfer or (iii) comply with the guaranteed delivery
procedures.
Via U.S. Mail: National City Bank
Corporate Actions Processing Center
P.O. Box 859208
000 Xxx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000-0000
Via Overnight Courier: National City Bank
Corporate Actions Processing Center
000 Xxx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Via Hand: c/o The Depository Trust Company
Transfer Agent Drop Service
00 Xxxxx Xxxxxx
Xxxxxxxx Xxxx Entrance
Xxx Xxxx, XX 00000
or
National City Bank
Corporate Trust Operations
3rd Floor--North Annex
0000 Xxxx 000xx Xxxxxx
Xxxxxxxxx, XX 00000
Via Facsimile: 0-000-000-0000
Questions or requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to MacKenzie Partners,
Inc., the information agent, at the address or facsimile number set forth below.
[LOGO]
MACKENZIE
PARTNERS, INC.
000 Xxxxxxx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
xxxxx@xxxxxxxxxxxxxxxxx.xxx
(000) 000-0000 (call collect)
or
Toll-Free (000) 000-0000
TABLE OF CONTENTS
Page
----
INTRODUCTION...............................................................................4
THE TENDER OFFER...........................................................................5
Section 1 Terms of the Offer; Proration..............................................5
Section 2. Procedure for Tendering Shares.............................................6
Section 3. Withdrawal Rights..........................................................9
Section 4. Acceptance for Payment and Payment.........................................9
Section 5. Certain U.S. Federal Income Tax Consequences..............................10
Section 6. Price Range of the Shares.................................................11
Section 7. Effect of the Offer on the Market for the Shares..........................12
Section 8. Information Concerning First Union........................................12
Section 9. Information Concerning the Purchaser and Its Affiliates...................12
Section 10. Source and Amount of Funds................................................13
Section 11. Contacts and Transactions With First Union; Background of the Offer.......13
Section 12. Purpose of the Offer; Plans For First Union...............................20
Section 13. Conditions to the Offer...................................................20
Section 14. Legal Matters.............................................................21
Section 15. Fees and Expenses.........................................................21
Section 16. Miscellaneous.............................................................22
SCHEDULE I INFORMATION REGARDING THE PURCHASER'S SOLE MANAGER
SCHEDULE II FINANCIAL STATEMENT
SUMMARY TERM SHEET
FUR Investors, LLC, referred to in this Offer to Purchase as the
"Purchaser," "FUR Investors," "we" or "us," is offering to purchase up to
5,000,000 common shares of First Union Real Estate Equity and Mortgage
Investments, referred to in this Offer to Purchase as "First Union," or the
"Company", for $2.30 per share in cash. The following are some questions you, as
a shareholder of First Union, may have and answers to those questions. We urge
you to read the remainder of this Offer to Purchase and the accompanying letter
of transmittal carefully, because the information in this summary is not
complete and the remainder of this Offer to Purchase and the letter of
transmittal contain additional important information.
Who Is Offering To Buy My Shares?
FUR Investors is offering to purchase your shares . FUR Investors is a
Delaware limited liability company that is not affiliated with First Union. See
Section 9 of this Offer to Purchase for additional information about us. We are
offering to purchase your shares in accordance with a Stock Purchase Agreement
that we entered into with First Union pursuant to which we are making a
significant investment in First Union. Following this offer and our purchase of
shares from the Company, our affiliate will be retained by the Company to manage
the day to day operations of the Company and our manager, Xxxxxxx X. Xxxxxx,
will become President and Chief Executive Officer of First Union. See Section 11
of this Offer to Purchase for more information regarding the terms of the Stock
Purchase Agreement.
What Shares Are You Seeking in This Offer?
We are offering to purchase up to 5,000,000 common shares of First Union.
See Section 1 of this Offer to Purchase for the specific terms of our offer.
What Happens if Shareholders Tender More than You are Willing to Buy?
If shareholders tender more than 5,000,000 shares, we will accept
5,000,000 shares for payment on a pro-rata basis (with adjustments to avoid
purchases of fractional shares) based upon the number of shares validly tendered
and not withdrawn by the expiration date by each shareholder. If we prorate, the
shares which are not accepted for purchase will be returned to you. For more
information regarding proration, see Section 1 of this Offer to Purchase.
If You Prorate, When Will I Know How Many Shares Will Actually Be Accepted For
Tender and Payment?
If proration of tendered shares is required, because of the difficulty of
determining the precise number of shares to be purchased from each tendering
shareholder, we do not expect to announce the final results of proration or pay
for any shares until at least five New York Stock Exchange trading days after
the expiration date. Preliminary results of proration will be announced by press
release as promptly as practicable. You may obtain such preliminary information
from the information agent at its telephone number set forth on the back cover
of this Offer to Purchase.
How Much Are You Offering To Pay, What Is the Form of Payment and Will I Have To
Pay Any Fees or Commissions?
We are offering to pay $2.30 per share, net to you, in cash (subject to
applicable withholding of United States federal, state and local taxes), less
the per share amount of distributions, if any, declared and payable by First
Union to common shareholders from and after the date of this offer until the
expiration of the offer. If you are the record owner of your shares and you
tender your shares to us in the offer, you will not have to pay brokerage fees
or similar expenses. If you own your shares through a broker or other nominee
and that person tenders your shares on your behalf, that person may charge you a
fee for doing so. You should consult your broker or other nominee to determine
whether any charges will apply.
Do You Have the Financial Resources To Make Payment?
If 5,000,000 shares are purchased, our capital commitment will be
$11,500,000 to purchase the shares purchased in the offer and an additional
$13,000,000 to purchase newly issued shares from the Company following the
offer. We have adequate funds available to us to pay tendering shareholders for
shares tendered and to pay for the newly issued shares, and neither the offer
nor the newly issued share purchase is conditioned on our obtaining any
financing. However, we may choose to finance the purchase of the shares
tendered. Our most recent financial statement is attached as Schedule II.
Why Are You Making This Offer?
We are making the offer and acquiring additional shares from the Company
in order to acquire a significant stake in the Company. Following the conclusion
of the offer and our purchase of shares from the Company, our affiliate will be
retained by the Company to manage the day to day operations of the Company. See
Section 11 of this Offer to Purchase for a description of the background of the
offer and the advisory agreement under which our affiliate will be retained.
How Long Do I Have To Decide Whether To Tender in the Offer?
You will have at least until 12:00 midnight, New York City time on
December 29, 2003 to decide whether to tender your shares in the offer. If you
cannot deliver everything that we require in order to make a valid tender by
that time, you may be able to use a guaranteed delivery procedure, which we
discuss in Sections 1 and 2 of this Offer to Purchase.
Can the Offer Be Extended and Under What Circumstances?
Yes. We may extend the offer, in our discretion. If we extend the offer,
we will inform National City Bank, which is the depositary for the offer, of
that fact and will make a public announcement of the extension, by not later
than 9:00 a.m., New York City time, on the business day after the day on which
the offer was scheduled to expire. See Section 1 of this Offer to Purchase for
information relating to an extension of the offer.
What Are the Most Important Conditions to the Offer?
There are no conditions to the offer based on minimum shares tendered, the
availability of financing or otherwise determined by the success of the offer.
However, we may not be obligated to purchase any shares in the event certain
conditions occur, such as legal or government actions which would prohibit the
purchase. Furthermore, we are not obligated to purchase any shares which are
validly tendered if, among other things, the board of trustees withdraws its
approval of the Stock Purchase Agreement or recommends that shareholders not
tender their shares in the offer. See Section 13 of this Offer to Purchase for
more information pertaining to conditions to the offer.
How Do I Tender My Shares?
To tender shares, you must deliver the certificates representing your
shares, together with a completed letter of transmittal, or facsimile thereof,
and any other documents required, to National City Bank, the depositary for the
offer, not later than the time the offer expires. If your shares are held in
street name, the shares can be tendered only by your nominee through The
Depository Trust Company. If you cannot deliver something that is required by
the expiration of the offer, you may still participate in the offer by having a
broker, bank or other fiduciary that is a member of the Securities Transfer
Agents Medallion Program or another eligible institution guarantee that the
depositary will receive the missing items within a period of three trading days.
The depositary must receive the missing items within that period for the tender
to be valid. See Section 2 of this Offer to Purchase for more information
pertaining to the procedure for tendering shares.
Until What Time Can I Withdraw Previously Tendered Shares?
You can withdraw shares at any time until the offer has expired and, under
certain limited circumstances, after expiration of the offer. See Section 3 of
this Offer to Purchase for more information on your withdrawal rights.
How Do I Withdraw Previously Tendered Shares?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the depositary while you
still have the right to withdraw the shares. If you have tendered your shares by
giving instructions to a broker or nominee, you must instruct that person to
arrange for the withdrawal of your shares. See Section 3 of this Offer to
Purchase for more information on your withdrawal rights.
If I Decide Not to Tender, How Will the Offer Affect My Shares?
If you decide not to tender your shares, you will still own the same
number of common shares of First Union, which will still be a public company
listed on the New York Stock Exchange. However, our purchase of shares under the
offer may reduce the number of holders of shares and the number of shares that
might otherwise trade publicly and could adversely affect the liquidity and
2
market value of the remaining shares the public holds. In addition, our purchase
of additional shares from the Company following expiration of the offer in
accordance with the terms of the Stock Purchase Agreement, although at a price
that is higher than the offer price hereunder, will decrease your percentage
ownership of common shares. In this regard, if we acquire all of the shares
sought in the offer, we would own approximately 32.2% of the outstanding shares.
Do I Have Appraisal or Dissenter's Rights?
There are no appraisal or dissenters' rights available in connection with
the offer.
What Does First Union's Board of Directors Think of This Offer?
First Union's board of trustees unanimously authorized the Stock Purchase
Agreement and determined that the Stock Purchase Agreement and the transactions
contemplated thereby are in the best interests of the Company's shareholders.
However, the board of trustees has determined to remain neutral and is taking no
position as to whether shareholders should tender their shares in the offer.
First Union will be preparing a Solicitation and Recommendation Statement
containing additional information regarding the board of trustees' determination
and recommendation. The Solicitation and Recommendation Statement will be sent
to shareholders no later than five days after the date of this offer.
What Is the Market Value of My Shares as of a Recent Date?
On November 26, 2003, the last trading day before First Union announced
that it had entered into the Stock Purchase Agreement, the last sale price of
the shares reported by the New York Stock Exchange was $1.87 per share. You
should obtain a recent price for shares in deciding whether to tender your
shares. See Section 6 of this Offer to Purchase for information on the market
price of your shares since January 2001.
What Are the Tax Consequences Of Tendering Shares in the Offer?
If your shares are accepted for payment pursuant to the offer, you
generally will recognize gain or loss measured by the difference between the
cash you receive and your adjusted tax basis in the shares that you tender. See
Section 5 of this Offer to Purchase for further information. We recommend that
you consult with your tax advisor.
Who Can I Talk to if I Have Questions About the Tender Offer?
You may call MacKenzie Partners, Inc., which is acting as the information
agent for our offer, toll free at (000) 000-0000.
3
INTRODUCTION
We are offering to purchase up to 5,000,000 common shares of beneficial
interest, par value $1.00 per share, of First Union at a purchase price of $2.30
per share, net to the seller in cash (subject to applicable withholding of
United States federal, state and local taxes), less the per share amount of
distributions, if any, declared and payable by First Union between the date
hereof and the expiration date of the offer, without interest thereon, on the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related letter of transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "offer"). In this
Offer to Purchase, references to sections are to sections hereof unless
otherwise indicated.
Tendering shareholders whose shares are registered in their own names and
who tender directly to National City Bank, the depositary for the offer, will
not be obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 to the letter of transmittal, stock transfer taxes on the purchase
of shares by us under the offer. We will pay all fees and expenses of National
City Bank and MacKenzie Partners, Inc., which is acting as the information
agent, that are attributable to the offer.
We are making the offer under the terms of a Stock Purchase Agreement
between us and First Union dated as of November 26, 2003. Pursuant to the Stock
Purchase Agreement, following the expiration of this offer we will purchase from
the Company, at a purchase price of $2.60 per share, between 5,000,0000 and
5,185,724 newly issued shares of the Company, depending upon the number of
shares purchased in the offer. If this offer is fully subscribed, following this
offer and our purchase of shares from the Company, we will own 10,000,000
shares, representing 32.2% of the outstanding common shares of the Company.
Following this offer and our purchase of shares from the Company, our affiliate
will be retained by the Company to manage the day to day operations of the
Company and our manager, Xxxxxxx X. Xxxxxx, will become President and Chief
Executive Officer of the Company.
The offer is not conditioned upon the receipt of financing or any minimum
number of shares being tendered. Our obligation to accept, and pay for, shares
validly tendered pursuant to the offer is conditioned upon satisfaction of the
conditions set forth in Section 13 of this Offer to Purchase.
First Union's board has approved the Stock Purchase Agreement but is
remaining neutral and taking no position as to whether shareholders should
tender their shares in the offer. The Company will be filing a
Solicitation/Recommendation Statement on Schedule 14D-9 with the Securities and
Exchange Commission and mailing the 14D-9 to First Union's shareholders as
promptly as reasonably practicable after the date of this offer but in no event
later than five business days thereafter. We urge you to read the Schedule
14D-9.
First Union has informed us that, as of November 26, 2003, 26,058,913
common shares were issued and outstanding.
Section 5 of this Offer to Purchase describes certain United States
federal income tax consequences of a sale of shares under the offer.
This Offer to Purchase and the related letter of transmittal contain
important information that you should read carefully before you make any
decision regarding the offer.
4
THE TENDER OFFER
Section 1. Terms of the Offer; Proration
On the terms of and subject to the conditions to the offer, we will accept
for payment and pay for up to 5,000,000 shares validly tendered prior to the
expiration date and not theretofore properly withdrawn in accordance with
section 3 of this Offer to Purchase. The term "expiration date" means 12:00
midnight, New York City time, on December 29, 2003, unless and until we, in our
sole discretion, shall have extended the period of time during which the offer
is open, in which event the term "expiration date" will mean the latest time and
date on which the offer, as so extended by us, will expire. For purposes of this
offer, the term "business day" means any day other than Saturday, Sunday or any
U.S. federal holiday consisting of the time period from 12:01 a.m. through 12:00
midnight, New York City time.
If more than 5,000,000 shares are validly tendered prior to the expiration
date, and not withdrawn, we will, upon the terms and subject to the conditions
of the offer, purchase 5,000,000 shares on a pro rata basis (with adjustments to
avoid purchases of fractional shares) based upon the number of shares validly
tendered by the expiration date and not withdrawn. If proration of tendered
shares is required, because of the difficulty of determining the precise number
of shares properly tendered and not withdrawn, we do not expect to announce the
final results of proration or pay for any shares until at least five New York
Stock Exchange trading days after the expiration date and proration period.
Preliminary results of proration will be announced by press release as promptly
as practicable. Holders of shares may obtain such preliminary information from
the information agent. All shares not accepted for payment due to an
oversubscription will be returned to the shareholder or, in the case of tendered
shares delivered by book-entry transfer, credited to the account at the
book-entry transfer facility from which the transfer had previously been made,
in each case, in accordance with the procedure described in Section 4 of this
Offer to Purchase.
Pursuant to the Stock Purchase Agreement, without the consent of First
Union, we will not:
o reduce the maximum number of shares sought under the offer;
o reduce the price per share payable under the offer or change the
form of consideration payable under the offer;
o impose any other condition to the offer other than those described
in section 13 of this Offer to Purchase; or
o amend, add to or waive any other term of the offer in any manner
that would be, in any significant respect, adverse to the Company or
the shareholders.
Subject to applicable rules and regulations of the Securities and Exchange
Commission, we expressly reserve the right, in our sole discretion, at any time
or from time to time, to extend the expiration date.
Under no circumstances will we pay interest on the purchase price for
tendered shares, whether or not we exercise our right to extend the offer. There
can be no assurance that we will exercise our right to extend the offer.
Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement. In the case of an extension of
the offer, oral or written notice thereof will be given to the depositary and
the announcement will be made no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date. Any public
announcement made pursuant to the offer will be disseminated promptly to the
shareholders in a manner reasonably designed to inform the shareholders of such
change. Without limiting the manner in which we may choose to make any public
announcement, except as provided by applicable law, including Rules 13e-4(d)(2)
and 13e-4(e)(3) under the Securities Exchange Act of 1934 (the "Exchange Act"),
we shall have no obligations to publish, advertise or otherwise communicate any
such public announcement other than by issuing a press release to the Dow Xxxxx
News Service.
If we extend the offer, or we are delayed in our acceptance for payment of
or payment, whether before or after our acceptance for payment, for shares or
are unable to pay for shares under the offer for any reason, then, without
prejudice to our rights under the offer, the depositary may retain tendered
shares on our behalf, and those shares may not be withdrawn except to the extent
tendering shareholders are entitled to withdrawal rights as set forth in Section
3 of this Offer to Purchase. Exchange Act Rule 14e-1(c), however, will limit our
ability to delay our payment for shares we have accepted for payment. That rule
requires that a bidder pay the consideration offered or return the securities
deposited by or on behalf of holders of securities promptly after the
termination or withdrawal of that bidder's offer.
5
If we make a material change in the offer, or if we waive a material
condition to the offer, we will extend the offer to the extent required by Rules
13e-4(d)(2) and 13e-4(e)(3) under the Exchange Act. The minimum period during
which an offer must remain open following material changes in its terms or the
information concerning it, other than a change in price or the percentage of
securities sought, will depend on the facts and circumstances then existing,
including the relative materiality of the changed terms or information. In the
view of the Securities and Exchange Commission, an offer should remain open for
a minimum of five business days from the date the material change is first
published, sent or given to shareholders, and, if material changes are made with
respect to information that approaches the significance of price and the
percentage of securities sought, a minimum of 10 business days may be required
to allow for adequate dissemination and investor response. With respect to a
change in price, a minimum period of 10 business days from the date of the
change is generally required to allow for adequate dissemination to
shareholders.
First Union has provided us with its shareholder lists and security
position listing for the purpose of disseminating the offer to holders of
shares. We will mail this offer to purchase, the related letter of transmittal
and other relevant materials to record holders of shares, and we will furnish
those materials to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on First
Union's shareholder lists or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of shares.
Section 2. Procedure for Tendering Shares
Valid Tender. For a shareholder to validly to tender shares under the
offer:
o the depositary must receive, at one of the addresses set forth on
the back cover of this Offer to Purchase and prior to the expiration
date:
o a letter of transmittal, or a facsimile thereof, properly completed
and duly executed, together with any required signature guarantees,
or, in the case of a book-entry transfer, an agent's message (see
"-- Book-Entry Transfer" below), and any other required documents;
and
o either certificates representing the tendered shares or, in the case
of tendered shares delivered in accordance with the procedures for
book-entry transfer we describe below, a book-entry confirmation of
that delivery (see "-- Book-Entry Transfer" below); or
o the tendering shareholder must comply with the guaranteed delivery
procedures we describe below.
The valid tender of shares by you by one of the procedures described in
this Section 2 will constitute a binding agreement between you and us on the
terms of and subject to the conditions to the offer.
Book-Entry Transfer. For purposes of the offer the depositary will
establish accounts for the shares at The Depository Trust Company (the
"book-entry transfer facility") within two business days after the date of this
Offer to Purchase. Any financial institution that is a participant in the
book-entry transfer facility's system may make book-entry delivery of shares by
causing the book-entry transfer facility to transfer those shares into the
depositary's account in accordance with the book-entry transfer facility's
procedures for that transfer. Although delivery of shares may be effected
through book-entry transfer into the depositary's account at the book-entry
transfer facility, the letter of transmittal, or a facsimile thereof, properly
completed and duly executed, with any required signature guarantees, or an
agent's message, and any other required documents, must, in any case, be
transmitted to, and received by, the depositary at one of the addresses set
forth on the back cover of this Offer to Purchase prior to the expiration date,
or the tendering shareholder must comply with the guaranteed delivery procedures
we describe below.
The confirmation of a book-entry transfer of shares into the depositary's
account at the book-entry transfer facility as we describe above is a
"book-entry confirmation." Delivery of documents to the book-entry transfer
facility in accordance with the book-entry transfer facility's procedures will
not constitute delivery to the depositary.
The term "agent's message" means a message transmitted by the book-entry
transfer facility to, and received by, the depositary and forming a part of a
book-entry confirmation, stating that the book-entry transfer facility has
received an express acknowledgment from the participant in the book-entry
transfer facility tendering the shares that the participant has received and
agrees to be bound by the terms of the letter of transmittal and that we may
enforce that agreement against that participant.
6
The method of delivery of shares, the letter of transmittal and all other
required documents, including delivery through the book-entry transfer facility,
is at the election and risk of the tendering shareholder. Shares will be deemed
delivered only when actually received by the depositary (including, in the case
of a book-entry transfer, by book-entry confirmation). If you plan to make
delivery by mail, we recommend that you deliver by registered mail with return
receipt requested and obtain proper insurance. In all cases, sufficient time
should be allowed to ensure timely delivery.
Signature Guarantees. No signature guarantee will be required on a letter
of transmittal for shares tendered thereby if:
o the "registered holder(s)" of those shares signs that letter of
transmittal and has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment
Instructions" on that letter of transmittal; and
o those shares are tendered for the account of an "eligible
institution."
For purposes hereof, a "registered holder" of tendered shares will include
any participant in the book-entry transfer facility's system whose name appears
on a security position listing as the owner of those shares, and an "eligible
institution" is a "financial institution," which term includes most commercial
banks, savings and loan associations and brokerage houses, that is a participant
in any of the following:
o the Security Transfer Agents Medallion Program;
o the New York Stock Exchange, Inc. Medallion Signature Guarantee
Program; or
o the Stock Exchanges Medallion Program.
Except as we describe above, all signatures on any letter of transmittal
for shares tendered thereby must be guaranteed by an eligible institution. See
instructions 1 and 5 to the letter of transmittal. If the certificates for
shares are registered in the name of a person other than the signer of the
letter of transmittal, or if payment is to be made or certificates for shares
not tendered or not accepted for payment are to be returned to a person other
than the registered holder of the certificates surrendered, the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as aforesaid. See Instructions 1 and 5 to the letter of
transmittal.
Guaranteed Delivery. If you wish to tender shares in the offer and your
certificates for shares are not immediately available or the procedures for
book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the depositary prior to the expiration
date, your tender may be effected if all the following conditions are met:
o your tender is made by or through an eligible institution;
o you ensure that a properly completed and duly executed notice of
guaranteed delivery, substantially in the form we provide, is
received by the depositary, as provided below, prior to the
expiration date; and
o you ensure that the depositary receives, at one of the addresses set
forth on the back cover of this Offer to Purchase and within the
period of three trading days after the date of execution of that
notice of guaranteed delivery, either:
o the certificates representing the shares being tendered together
with (1) a letter of transmittal, or a facsimile thereof, relating
thereto which has been properly completed and duly executed and
includes all signature guarantees required thereon and (2) all other
required documents; or
o in the case of any book-entry transfer of the shares being tendered
which is effected in accordance with the book-entry transfer
procedures we describe above under "-- Book-Entry Transfer" within
the same period (1) either a letter of transmittal, or a facsimile
thereof, relating thereto which has been properly completed and duly
executed and includes all signature guarantees required thereon or
an agent's message, (2) a book-entry confirmation relating to that
transfer and (3) all other required documents.
7
For these purposes, a "trading day" is any day on which the New York Stock
Exchange is open for business.
A notice of guaranteed delivery may be delivered by hand to the depositary
or transmitted by facsimile transmission or mail to the depositary and must
include a guarantee by an eligible institution in the form that notice of
guaranteed delivery sets forth.
Other Requirements. Notwithstanding any other provision hereof, payment
for shares accepted for payment under the offer will in all cases be made only
after timely receipt by the depositary of:
o certificates representing, or a timely book-entry confirmation
respecting, those shares;
o a letter of transmittal, or a facsimile thereof, properly completed
and duly executed, with any required signature guarantees thereon,
or, in the case of a book-entry transfer, an agent's message in lieu
of a letter of transmittal; and
o any other documents the letter of transmittal requires.
Accordingly, tendering shareholders may be paid at different times
depending on when certificates representing, or book-entry confirmations
respecting, their shares are actually received by the depositary.
Under no circumstances will we pay interest on the purchase price of the
shares we purchase under the offer, regardless of any extension of the offer or
any delay in making that payment.
Appointment. By executing a letter of transmittal, or a facsimile thereof,
or, in the case of a book-entry transfer, by delivery of an agent's message in
lieu of a letter of transmittal, you will irrevocably appoint our designees as
your attorneys-in-fact and proxies in the manner the letter of transmittal sets
forth, each with full power of substitution, to the full extent of your rights
with respect to the shares tendered by you and accepted for payment by us and
with respect to any and all other shares and other securities or rights issued
or issuable in respect of such shares on or after the date of this Offer to
Purchase. All these proxies will be considered coupled with an interest in the
tendered shares and additional securities attributable thereto. This appointment
will be effective when, and only to the extent that, we accept for payment
shares tendered by you as provided herein. On that appointment, all prior powers
of attorney, proxies and consents you have given with respect to the shares
tendered by you and accepted for payment by us and all additional securities
attributable thereto will, without further action, be revoked and no subsequent
powers of attorney, proxies, consents or revocations may be given by you or on
your behalf (and, if given, will not be effective). Our designees will thereby
be empowered to exercise all your voting and other rights with respect to those
shares and additional securities in respect of any annual, special or adjourned
meeting of First Union's shareholders, actions by written consent without any
such meeting or otherwise, as our designees in their sole discretion deem
proper. We reserve the right to require that, in order for shares to be deemed
validly tendered, we must be able, immediately on our acceptance for payment of
those shares, to exercise full voting, consent and other rights with respect to
those shares and the additional securities attributable thereto, including
voting at any meeting of shareholders or acting by written consent without such
a meeting.
Determination of Validity. We will decide, in our sole discretion, all
questions as to the validity, form, eligibility, including time of receipt, and
acceptance of any tender of shares, and each such decision will be final and
binding. We reserve the absolute right to reject any or all tenders we determine
not to be in proper form or the acceptance for payment of or payment for which
may, in the opinion of our counsel, be unlawful. We also reserve the absolute
right to waive any defect or irregularity in the tender of any shares of any
particular shareholder whether or not we waive similar defects or irregularities
in the case of other shareholders. No tender of shares will be deemed to have
been validly made until all defects or irregularities relating thereto have been
cured or waived. None of the Purchaser, the depositary, the information agent or
any other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. Our interpretation of the terms of and conditions to the offer,
including the letter of transmittal and the instructions thereto, will be final
and binding. By tendering shares to us you agree to accept all decisions we make
concerning these matters and waive any right you might otherwise have to
challenge those decisions.
Backup U.S. Federal Income Tax Withholding. Under the U.S. federal income
tax laws, payments in connection with the transaction may be subject to "backup
withholding" at a rate of 28% unless a shareholder that holds shares:
o provides a correct taxpayer identification number (which, for an
individual shareholder, is the shareholder's social security number)
and any other required information; or
8
o is a corporation or comes within other exempt categories and, when
required, demonstrates this fact and otherwise complies with
applicable requirements of the backup withholding rules.
A shareholder that does not provide a correct taxpayer identification
number may be subject to penalties imposed by the Internal Revenue Service. To
prevent backup U.S. federal income tax withholding on cash payable under the
offer, each shareholder should provide the depositary with his or her correct
taxpayer identification number and certify that he or she is not subject to
backup U.S. federal income tax withholding by completing the Substitute Internal
Revenue Service Form W-9 included in the letter of transmittal. (See instruction
9 to the letter of transmittal.) Backup withholding is not an additional tax.
Amounts so withheld can be refunded or credited against the federal income tax
liability of the stockholder, provided appropriate information is forwarded to
the IRS.
FIRPTA Withholding. To prevent the withholding of federal income tax in an
amount equal to 10% of the purchase price for each share tendered, tendering
shareholders must complete the FIRPTA Affidavit included in the letter of
transmittal certifying such shareholder's taxpayer identification number and
address and that the shareholder is not a foreign person. (See instruction 9 to
the letter of transmittal.)
Section 3. Withdrawal Rights
Except as this Section 3 otherwise provides, tenders of shares are
irrevocable. You may withdraw shares that you have previously tendered under the
offer according to the procedures we describe below at any time prior to the
expiration date and, unless theretofore accepted for payment and paid for by us
under the offer, you may also withdraw your previously tendered shares at any
time after January 30, 2004.
For a withdrawal to be effective, a written notice of withdrawal must:
o be received in a timely manner by the depositary at one of its
addresses listed on the back cover of this Offer to Purchase; and
o specify the name of the person who tendered the shares to be
withdrawn, the number of shares to be withdrawn and the name of the
registered holder of the shares to be withdrawn, if different from
the name of the person who tendered the shares.
If certificates for shares have been delivered or otherwise identified to
the depositary, then, prior to the physical release of those certificates, the
serial numbers shown on those certificates must be submitted to the depositary
and, unless an eligible institution has tendered those shares, an eligible
institution must guarantee the signatures on the notice of withdrawal.
If shares have been delivered in accordance with the procedures for
book-entry transfer set forth in Section 2 of this Offer to Purchase, any notice
of withdrawal must also specify the name and number of the account at the
book-entry transfer facility to be credited with the withdrawn shares and
otherwise comply with the book-entry transfer facility's procedures.
Withdrawals of tenders of shares may not be rescinded, and any shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the offer. Withdrawn shares may be retendered at any time prior to the
expiration date by again following one of the procedures described in Section 2.
We will decide, in our sole discretion, all questions as to the form and
validity, including time of receipt, of notices of withdrawal, and each such
decision will be final and binding. We also reserve the absolute right to waive
any defect or irregularity in the withdrawal of shares by any shareholder,
whether or not we waive similar defects or irregularities in the case of any
other shareholder. None of the Purchaser, the depositary, the information agent
or any other person will be under any duty to give notification of any defects
or irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification.
Section 4. Acceptance for Payment and Payment
On the terms of and subject to the conditions to the offer, including, if
we extend or amend the offer, the terms and conditions of any such extension or
amendment, we will accept for payment and will pay promptly after the expiration
date for all shares validly tendered prior to the expiration date and not
properly withdrawn in accordance with section 3 of this Offer to Purchase, up to
a maximum of 5,000,000 shares. We will decide, in our sole discretion, all
questions as to the satisfaction of those terms and conditions, and each such
9
decision will be final and binding. See Sections 1 and 13 of this Offer to
Purchase. We expressly reserve the right, in our sole discretion, to delay
acceptance for payment of or payment for shares in order to comply in whole or
in part with any applicable law. We will effect any such delays in compliance
with Exchange Act Rule 14e-1(c), which relates to the obligation of a bidder to
pay for or return tendered securities promptly after the termination or
withdrawal of its offer.
In all cases, we will pay for shares we have accepted for payment under
the offer only after timely receipt by the depositary of:
o certificates representing, or a timely book-entry confirmation
respecting, those shares;
o a letter of transmittal, or a facsimile thereof, properly completed
and executed with any required signatures thereon or, in the case of
a book-entry transfer, an agent's message; and
o any other documents the letter of transmittal requires.
Accordingly, tendering shareholders may be paid at different times
depending on when certificates for shares or book-entry confirmations respecting
shares are actually received by the depositary.
The per share consideration we will pay to any shareholder under the offer
will be the highest per share consideration we will pay to any other shareholder
under the offer.
For purposes of the offer, we will be deemed to have accepted for payment,
and thereby purchased, shares properly tendered to us and not withdrawn as, if
and when we give oral or written notice to the depositary of our acceptance for
payment of those shares. On the terms of and subject to the conditions to the
offer, we will pay for shares we have accepted for payment under the offer by
depositing the purchase price therefor with the depositary. The depositary will
act as agent for tendering shareholders for the purpose of receiving payment
from us and transmitting payment to tendering shareholders whose shares we have
accepted for payment. Upon the deposit of funds with the depositary for the
purpose of making payment to validly tendering shareholders, our obligation to
make such payment shall be satisfied and such tendering shareholders must
thereafter look solely to the depositary for payment of the amounts owed to them
by reason of acceptance for payment of shares pursuant to the offer.
Under no circumstances will we pay interest on the purchase price for
tendered shares, regardless of any extension of or amendment to the offer or any
delay in paying for those shares.
If we are delayed in our acceptance for payment of or payment for shares
or are unable to accept for payment or pay for shares under the offer for any
reason, then, without prejudice to our rights under the offer, but subject to
our compliance with Exchange Act Rule 14e-1(c), the depositary nevertheless may
retain tendered shares on our behalf and those shares may not be withdrawn
except to the extent tendering shareholders are entitled to exercise, and duly
exercise, the withdrawal rights described in Section 3 of this Offer to
Purchase.
If we do not purchase any tendered shares under the offer for any reason,
then, as promptly as practicable following the expiration or termination of the
offer and at no expense to tendering shareholders:
o the depositary will return certificates it has received respecting
tendered shares to the person who delivered those certificates to
the depositary; and
o in the case of tendered shares delivered by book-entry transfer into
the depositary's account at the book-entry transfer facility in
accordance with the procedures described in Section 2 of this Offer
to Purchase, those shares will be credited to the account at the
book-entry transfer facility from which that transfer had been
previously made.
Section 5. Certain U.S. Federal Income Tax Consequences
Shareholders are urged to consult their own tax advisors as to the
particular tax consequences to them of the offer, including the effect of state
and local tax laws or foreign tax laws.
This summary assumes that each shareholder is, for United States federal
income tax purposes: (1) a citizen or resident of the United States; (2) a
corporation or other entity taxable as a corporation created or organized in the
United States or under the laws of the United States or of any political
subdivision of the United States; or (3) an estate or trust, the income of which
is includible in gross income for federal income tax purposes regardless of its
source.
10
Your receipt of cash for shares accepted for payment in the offer will be
a taxable transaction for U.S. federal income tax purposes under the Internal
Revenue Code of 1986, as amended (the "Code"), and also may be a taxable
transaction under applicable state, local or foreign income or other tax laws.
Generally, for U.S. federal income tax purposes, you will recognize gain
or loss equal to the difference between the amount of cash you receive and your
adjusted tax basis in the shares purchased. Gain or loss will be calculated
separately for each block of shares tendered and purchased under the offer.
If you hold shares as capital assets, the gain or loss you recognize will
be capital gain or loss, which will be long-term capital gain or loss if your
holding period for the shares exceeds one year. If you are a non-corporate
shareholder, long-term capital gains will be eligible for a maximum federal
income tax rate of 15%. (Long-term capital gain of corporations is taxed to them
at the same rate as ordinary income.) Under present law the ability to use
capital losses to offset ordinary income is limited. You should consult your tax
advisor in this regard.
The foregoing discussion may not be applicable with respect to (1) shares
received on the exercise of employee stock options or otherwise as compensation
or (2) shareholders who are subject to special tax treatment under the Code,
such as non-U.S. persons, life insurance companies, tax-exempt organizations and
financial institutions. In addition, the foregoing discussion may not apply to a
shareholder in light of individual circumstances, such as holding shares as a
hedge or as part of a straddle or a hedging, constructive sale, integrated or
other risk-reduction transaction. We base this discussion on present law, which
is subject to change, possibly with retroactive effect.
Shareholders may be subject to backup withholding at a 28% rate or FIRPTA
withholding at a 10% rate on cash payments they receive in the offer unless
certain information is provided to the depositary or an exemption applies. See
Section 2 of this Offer to Purchase.
Section 6. Price Range of the Shares
The shares are traded on the New York Stock Exchange under the symbol
"FUR." The following table sets forth, for each of the periods indicated, the
high and low sales prices per share as reported by the New York Stock Exchange
based on the Company's Annual Report on Form 10-K with respect to 2002 and 2001
and based on published financial sources with respect to all periods subsequent
thereto.
High Low
---- ---
2003 Quarter Ended
October 1 - November 26, 2003 $1.87 $1.76
September 30 1.89 1.72
June 30 1.89 1.65
March 31 1.78 1.47
2002 Quarter Ended
December 31 $2.30 $1.60
September 30 2.30 2.14
June 30 2.43 2.21
March 31 2.40 2.32
2001 Quarter Ended
December 31 $2.56 $2.20
September 30 2.75 2.23
June 30 2.62 2.16
March 31 2.85 2.30
11
On November 26, 2003, the last trading day before First Union announced
that it had entered into the Stock Purchase Agreement, the last sale price of
First Union's shares reported by the New York Stock Exchange was $1.87. We urge
shareholders to obtain a current market price for the shares.
Section 7. Effect of the Offer on the Market for the Shares
Following completion of this offer and our subsequent purchase of newly
issued shares from the Company, we will own a minimum of approximately 17% of
the outstanding shares (assuming no shares are tendered in the offer) and a
maximum of approximately 32.2% of the outstanding shares (assuming the maximum
number of shares are tendered). Accordingly, our votes could significantly
influence the outcome of any matter requiring the vote of shareholders. However,
in connection with the Stock Purchase Agreement, we will agree, except in
certain circumstances, to vote our shares in proportion to the votes cast by all
other voting shareholders. See Section 11 of this Offer to Purchase for more
details on the covenant agreement.
Our purchase of shares under the offer may also reduce the number of
holders of shares and the number of shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
shares the public holds. In addition, our purchase of shares from the Company
following expiration of the offer in accordance with the terms of the Stock
Purchase Agreement, although at a purchase price higher than the purchase price
in the offer, will decrease each remaining shareholder's percentage ownership of
outstanding shares of the Company.
Section 8. Information Concerning First Union
General. First Union is an unincorporated association in the form of a
business trust organized in Ohio under a Declaration of Trust dated August 1,
1961, as amended from time to time through March 2001, which has as its stated
principal business activity the ownership and management of real estate
investments. First Union operates as a real estate investment trust under
Sections 856 through 860 of the Internal Revenue Code. Its executive offices are
at 000 Xxxx Xxxxxx, 00xx xxxxx, Xxx Xxxx, Xxx Xxxx 00000, and its telephone
number at that address is (000) 000-0000.
Available Information. First Union is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
First Union must disclose in its proxy statements distributed to First Union's
shareholders and filed with the Securities and Exchange Commission information
as of particular dates concerning its directors and officers, their
remuneration, stock options and other matters, the principal holders of its
securities and any material interest of those persons in transactions with First
Union. That information is available for inspection at the public reference
facilities of the Securities and Exchange Commission at 000 Xxxxx Xxxxxx, X.X.,
Xxxxxxxxxx, XX 00000. You can obtain copies of that information by mail, upon
payment of the Securities and Exchange Commission's customary charges, by
writing to the Securities and Exchange Commission's principal office at 000
Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, XX 00000. The Securities and Exchange Commission
also maintains a web site that contains reports, proxy statements and other
information regarding registrants that file electronically with it. You can find
those reports, proxy statements and other information on the Securities and
Exchange Commission's web site, xxxx://xxx.xxx.xxx.
Except as otherwise stated herein, the information concerning First Union
contained herein has been taken from or based on publicly available documents on
file with the Securities and Exchange Commission and other publicly available
information. Although we do not have any knowledge that any such information is
untrue, we do not take any responsibility for the accuracy or completeness of
that information or for any failure by First Union to disclose events that may
have occurred and may affect the significance or accuracy of any such
information but that are unknown to us.
Section 9. Information Concerning the Purchaser and Its Affiliates
General. We are a Delaware limited liability company organized for the
purpose of entering into the Stock Purchase Agreement and consummating the
transactions contemplated thereby, including the offer. Our manager is Xxxxxxx
X. Xxxxxx. The principal office of the Purchaser and Xx. Xxxxxx is located at
000 Xxxxxxx Xxxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxx Xxxx 00000, and their telephone
number is (000) 000-0000.
12
For certain information concerning Xx. Xxxxxx, see Schedule I to this
Offer to Purchase. Xx. Xxxxxx owns 100,000 common shares and he intends to sell
those shares prior to the expiration of the offer. Our most recent financial
statement is attached as Schedule II.
Except as otherwise set forth herein, (i) neither the Purchaser nor, to
the best knowledge of the Purchaser, Xx. Xxxxxx nor any affiliate, associate or
majority-owned subsidiary of such persons beneficially owns or has a right to
acquire any shares, (ii) neither the Purchaser nor, to the best knowledge of the
Purchaser, Xx. Xxxxxx nor any affiliate of the Purchaser, or any director,
executive officer or subsidiary of any of the foregoing has effected any
transaction in the shares within the past 60 days, (iii) neither the Purchaser
nor, to the best knowledge of the Purchaser, Xx. Xxxxxx nor any affiliate of the
Purchaser has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company, including but not
limited to, contracts, arrangements, understandings or relationships concerning
the transfer or voting thereof, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss or the giving or
withholding of proxies, consents or authorizations, (iv) there have been no
transactions or business relationships which would be required to be disclosed
under the rules and regulations of the Securities and Exchange Commission
between the Purchaser or, to the best knowledge of the Purchaser, Xx. Xxxxxx, or
any affiliate of the Purchaser on the one hand, and the Company or its officers,
directors or affiliates, on the other hand, (v) there have been no contracts,
negotiations or transactions between the Purchaser, or to the best knowledge of
the Purchaser any affiliate of the Purchaser on the one hand, Xx. Xxxxxx, and
the Company or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets, (vi) Xx. Xxxxxx has not been convicted in a criminal proceeding during
the past five years (excluding traffic violations or similar misdemeanors), and
(vii) Xx. Xxxxxx has not been a party to any judicial or administrative
proceeding during the past five years (except for matters dismissed without
sanction or settlement) that resulted in a judgment, decree, or final order
enjoining him from future violations of, or prohibiting activities subject to,
federal or state securities laws, or a finding of any violation of federal or
state securities laws.
Section 10. Source and Amount of Funds
The offer is not conditioned on any financing arrangements.
We will require funds totaling $11,500,000 in order to purchase the
5,000,000 shares we are seeking in the offer and an additional $13,000,000 to
purchase the newly issued shares following the offer (assuming the maximum
number of shares sought hereunder are tendered). We anticipate that an
additional amount of approximately $300,000 may be required to pay related fees
and expenses. We expect to pay shareholders for shares tendered out of funds
available to us. Accordingly, no financing will be required, although we may
choose to finance the purchase of the shares tendered.
Section 11. Contacts and Transactions With First Union; Background of the
Offer
Background of the Offer.
On July 7, 2003, we sent a letter to Xxxx Xxxxxx, Interim Chief Executive
Officer of the Company, proposing to make a substantial investment in the
Company and have an affiliate of ours enter into a management advisory agreement
with the Company to assume responsibility for the long term growth of the
Company. More specifically, we proposed to purchase 9,656,000 common shares at a
price of $2.00 per share resulting in our owning approximately 25% of the
outstanding common shares and have the Company issue to us 10 year warrants
entitling us to acquire 25% of any additional common shares issued by the
Company at an exercise price of $2.00 per share. We also proposed that the
Company grant us an exception from the limitations on share ownership contained
in the Company's organizational documents. The letter included a number of
corporate governance proposals and provided for Xxxxxxx Xxxxxx to assume the
positions of Chairman and Chief Executive Officer of the Company.
In July and August 2003, Xxxxxxx Xxxxxx had a number of discussions with
representatives of the Company, and on September 3, 2003, we sent a letter to
Xxxx Xxxxxx containing a revised proposal. In the letter we proposed to purchase
9,335,000 common shares at a price of $2.57 per shares resulting in our owning
approximately 43% of the outstanding common shares. The provisions of our July
7th letter providing for the issuance of warrants were deleted while the
provisions of the prior letter on corporate governance, the advisory agreement
and the waiver of share ownership limitations remained unchanged.
13
On September 7, 2003, we sent a letter was sent to Xxxx Xxxxxx
supplementing the proposal contained in our September 3rd letter. In the letter
we proposed that, in lieu of purchasing 9,335,000 common shares from the
Company, we would acquire 5,000,000 shares from the Company, subject to increase
as described below, for $2.60 per share and make a public tender offer to
acquire 5,000,000 shares at $2.30 per share. To the extent that the tender offer
was not fully subscribed, the number of shares to be issued by the Company to us
would be increased by the amount of the deficiency. The other terms of the
September 3rd letter remained unchanged.
During September and October, Xxxxxxx Xxxxxx had a number of discussions
with members of the board of trustees of the Company. Following these
discussions, we sent a letter on October 22, 2003 to Xxxx Xxxxxx. The letter
addressed various concerns raised by the board of trustees relating to the
Company's property in Little Rock, Arkansas.
On November 5 and 6, 2003, our legal advisors sent the Company a draft
Stock Purchase Agreement and related agreements embodying the proposals
contained in our September 7th letter. On November 12, 2003, Xx. Xxxxxx, Xx.
Xxxxxx and Xxxxxx X. Xxxxx, a trustee of the Company met, together with their
respective legal advisors, to negotiate specific terms of the transaction and
discuss the draft documents that had been circulated.
On November 13, 2003 our legal advisors distributed revised draft
documents reflecting issues discussed at the November 12th meeting. On November
20, 2003, Messrs. Xxxxxx, Xxxxxx and Xxxxx and their respective legal advisors
met again to discuss further issues relating to the transaction documents and on
November 21 and 22, 2003, our legal advisors distributed revised transaction
documents.
On November 14, 2003 we executed a confidentiality agreement with the
Company.
On November 24, 2003 representatives of the Company notified us that the
First Union board had met to evaluate the Stock Purchase Agreement and related
agreements, and that, subject to further discussions with respect to certain
matters, the board was prepared to approve the agreements.
On November 25, 2003, after further discussion between Xx. Xxxxxx and Xx.
Xxxxx, the First Union board met and approved the Stock Purchase Agreement and
related agreements and on November 26, 2003 we and First Union signed the Stock
Purchase Agreement.
Transaction Documents.
Stock Purchase Agreement. The following is a summary of the material
provisions of the Stock Purchase Agreement entered into between us and the
Company. For more complete information, please refer to the full text of the
Stock Purchase Agreement, a copy of which is attached to the Company's current
report on Form 8-K filed with the Securities and Exchange Commission on December
1, 2003. We encourage you to read the Stock Purchase Agreement in its entirety
because it, and not this summary, is the legal document that governs the rights
and obligations of the parties under the Stock Purchase Agreement.
The Offer. Pursuant to the terms of the Stock Purchase Agreement, we
agreed to commence this offer no later than December 5, 2003 on the terms set
forth in this Offer to Purchase. The Company agreed to file with the Securities
and Exchange Commission a Solicitation/Recommendation Statement on Schedule
14D-9, within five days after commencement of the offer, stating that the board
has authorized the Stock Purchase Agreement and all the transactions
contemplated thereby, and has determined that the Stock Purchase Agreement and
such transactions are in the best interests of the shareholders but that the
board is remaining neutral and is not taking a position as to whether the
shareholders should tender their shares in the offer. We are entitled to include
the board recommendation in our Offer to Purchase.
Newly Issued Share Purchase. On the second business day following the
expiration date of the offer, the Company will issue to us an additional amount
of shares equal to 5,000,000 plus the difference between (x) 5,000,000 and (y)
the number of shares purchased by us pursuant to the offer. However, the number
of shares to be issued will not exceed the number that represents 19.9% of the
total outstanding shares immediately prior to the purchase of such shares. The
purchase price of the newly issued shares is $2.60 per share.
Representations and Warranties. The Stock Purchase Agreement contains
certain customary representations by the Company and us. In addition, the
Company has represented that prior to the expiration of the offer, the Company's
Bylaws will be amended to exempt us from the 9.8% ownership limit contained in
the Bylaws so long as our ownership does not exceed 33% of the outstanding
shares and subject to certain other restrictions designed to ensure the
Company's continued eligibility to maintain its status as a real estate
investment trust.
14
Board Composition. Concurrently with the purchase and sale of the newly
issued shares, one individual designated by us will be appointed to the board of
the Company by the existing board in the class of trustees to be determined by
us. In addition, the existing board will appoint two trustees, proposed by us
and acceptable to the board, that meet the independence requirements of Section
303A.03 of the New York Stock Exchange's Listed Company Manual, as amended
November 3, 2003. Immediately following the appointments, two members of the
existing board will resign.
Concurrently with the closing of the newly issued share issuance, the
existing board will appoint Xxxxxxx X. Xxxxxx as President and Chief Executive
Officer of the Company and the current President and Chief Executive Officer of
the Company will resign as such. During the period that either Xx. Xxxxxx is
serving as Chairman or Chief Executive Officer of the Company or Xx. Xxxxxx and
his affiliates are the beneficial owners of at least 10% of the outstanding
shares, we will have the continuing non-exclusive right to nominate individuals
to fill vacancies on the board created by the resignation, death or removal of
trustees that would qualify as independent trustees and the exclusive right to
designate individuals to fill vacancies created by the resignation, death or
removal of non-independent trustees.
Concurrently with the closing of the newly issued share issuance, an audit
committee, a compensation committee and a nomination committee of the board will
be established. The audit committee will consist solely of three independent
trustees, one of whom will be an "audit committee financial expert", as defined
by the rules promulgated under the Exchange Act. The compensation committee will
consist solely of two independent trustees and the nominating committee will
consist solely of four independent trustees. The nominating committee will be
given the power and authority to approve nominations for vacancies in the board
created by the death, removal or resignation of an independent trustee, upon
proposal of such nominee by the members of the board that are not on the
nominating committee or by us. At the closing of the newly issued share
issuance, the newly reconstituted board will amend the Bylaws of the Company to
remove any restrictions to the granting of such authority to the nominating
committee.
Bylaw Amendment. At the closing of the newly issued share issuance, the
Bylaws of the Company will be amended to provide that all investments made by
the Company in excess of $1,500,000 (other than investments in government
insured securities) and all dispositions in excess of $2,000,000 will require
prior majority board approval.
Agreements to be Executed at or Before Closing. At the closing of the
newly issued share issuance, (i) the Company and an affiliate of ours will enter
into an advisory agreement (as described below) (ii) the Company and Xx. Xxxxxx
will enter into an exclusivity services agreement (as described below) and (iii)
and we and the Company will enter into a post-closing covenant agreement (as
described below). In addition, prior to the expiration of the offer, we and the
Company will enter into an escrow agreement (as described below). Finally,
concurrently with execution of the Stock Purchase Agreement, Xx. Xxxxxx executed
a guaranty in favor of the Company guaranteeing our payment of the aggregate
offer price under the offer and aggregate purchase price for the maximum number
of newly issued shares to be issued to us following consummation of the offer.
Listing of Newly Issued Shares. As soon as practicable following
commencement of the offer, the Company will file with the New York Stock
Exchange an application to list the maximum number of newly issued shares
issuable pursuant to the Stock Purchase Agreement, in accordance with the New
York Stock Exchange's listing standards.
Termination. The Stock Purchase Agreement may be terminated at any time
prior to the closing as follows:
o by mutual consent of us and the Company;
o by either us or the Company if any governmental authority shall have
issued any order which has the effect of making consummation of the
offer or the newly issued share purchase illegal;
o by us if, prior to the closing, (i) the board or any committee of
the board shall have withdrawn or modified in a manner adverse to us
its approval of the Stock Purchase Agreement, the newly issued share
purchase or the board recommendation, or (ii) the board approves or
recommends an acquisition proposal by a third party that the board
determines to be superior to the transactions under the Stock
Purchase Agreement, provided, that if we have not yet terminated the
Stock Purchase Agreement we will no longer have the right to
terminate as provided in clause (ii) above once the Company has
notified us that the board has withdrawn its recommendation and
approval of the acquisition proposal and has reinstated its approval
of the Stock Purchase Agreement and board recommendation.
15
o by the Company, upon approval of the board, if (i) we shall have
terminated the offer without having accepted any shares for payment
or failed to pay for shares pursuant to the offer by March 15, 2004,
unless such action or inaction was caused by or resulted from the
failure of certain conditions of the offer that pertain to
obligations of or representations by the Company or (ii) prior to
the purchase of shares pursuant to the offer, the board determines,
upon consultation with outside counsel, that it is required to do so
by its fiduciary duties under applicable law.
o by either us or the Company following the date which is 90 days
after the entering by any governmental authority of a temporary
restraining order or preliminary injunction, which has not been
vacated or dismissed, that prohibits the consummation, in whole or
in part, of the offer or the newly issued share issuance.
Escrow Agreement. The following is a summary of the material provisions of
the Escrow Agreement to be entered into between us, the Company and a designated
escrow agent. For more complete information, please refer to the full text of
the Escrow Agreement, a copy of which is attached to the Company's Current
Report on Form 8-K filed with the Securities and Exchange Commission on December
1, 2003. We encourage you to read the Escrow Agreement in its entirety because
it, and not this summary, is the legal document that governs the rights and
obligations of the parties under the escrow agreement.
Pursuant to the Stock Purchase Agreement, prior to the expiration of the
offer, we and the Company will enter into an escrow agreement with a designated
escrow agent. Concurrently with the execution of the escrow agreement, the
Company will deliver to the escrow agent:
o stock certificates representing the maximum 5,185,724 shares that
can be purchased by us in the newly issued share purchase. The
certificates will be designated in denominations of 5,000,000 shares
(1 certificate); 20,000 shares (9 certificates) and 5,724 shares (1
certificate);
o copies, executed by the Company, of the advisory agreement, the
exclusivity services agreement and the purchaser post-closing
covenant agreement;
o fully executed resolutions of the board electing the trustees to
serve on the board in accordance with the Stock Purchase Agreement
(see "Stock Purchase Agreement - Board Composition" above); and
o resignation of two existing members of the board in accordance with
the Stock Purchase Agreement (see "Stock Purchase Agreement - Board
Composition" above).
Concurrently with the execution of the escrow agreement, we will deliver to the
escrow agent:
o $13,482,882 representing the aggregate purchase price for the
maximum 5,185,724 shares that can be purchased by us in the newly
issued share purchase;
o copies, executed by us (or Xxxxxxx X. Xxxxxx, individually, as
applicable) of the advisory agreement, the exclusivity services
agreement and the post-closing covenant agreement; and
o resolutions of the newly constituted board (i) establishing
committees in accordance with the Stock Purchase Agreement and (ii)
amending the Bylaws to provide for approval of the board prior to
certain investments and dispositions by the Company (see "Stock
Purchase Agreement - Bylaw Amendment" above)
In addition, two business days before the expiration date of the offer we
will deliver to the escrow agent $11,500,000 representing the aggregate purchase
price for the maximum 5,000,000 shares sought by us under the offer.
On the first business day immediately following the date that we accept
shares for payment under the offer, we will deliver written notice to the escrow
agent (with a copy to the Company) stating the number of shares so accepted and
the number of additional shares to be issued to us following the offer.
16
Two business days after we accept shares for payment under the offer, the
escrow agent will (i) distribute to each of us and the Company two original
copies of each of the documents held in escrow, (ii) distribute to the Company
the aggregate payment for the newly issued shares, (iii) distribute to the
depositary for the offer payment for the shares accepted for payment in the
offer; and (iv) distribute to us certificates representing the newly issued
shares or less than but as close to such number of shares as possible given the
denomination of certificates delivered to the escrow agent by the Company. If
less than the total number of newly issued shares is so delivered to us, the
Company will issue the certificates representing such shortfall to us within
three business days.
After such disbursements, the escrow agent shall return to us and the
Company, respectively, all remaining funds and shares.
We and the Company will each indemnify the escrow agent for one half of
liabilities incurred by the escrow agent arising out of the escrow agent's
duties under the escrow agreement, other than liabilities arising out of the
gross negligence or willful misconduct of the escrow agent.
Advisory Agreement. The following is a summary of the material provisions
of the advisory agreement to be entered into between the Company and an
affiliate of ours. For more complete information, please refer to the full text
of the advisory agreement, a copy of which is attached to the Company's current
report on Form 8-K filed with the Securities and Exchange Commission on December
1, 2003. We encourage you to read the advisory agreement in its entirety because
it, and not this summary, is the legal document that governs the rights and
obligations of the parties under the advisory agreement.
Advisory Services. Pursuant to the Stock Purchase Agreement, the Company
will enter into an advisory agreement with our affiliate. The advisory agreement
will provide that the advisor will serve as investment and financial advisor to,
and manage the day-to-day operations of, the Company.
The Company will generally indemnify the advisor and its affiliates
against liabilities arising from the advisory agreement (other than liabilities
arising from the advisor's bad faith, gross negligence, willful misconduct or
material breach of the advisory agreement). The advisor will generally indemnify
the Company and its affiliates from liabilities arising from third party actions
to the extent caused by the advisor's bad faith, gross negligence, willful
misconduct or material breach by the advisor or its affiliates of the advisory
agreement.
Fees.
Asset Management Fee. The advisor will be entitled to receive an
annual asset management fee of 1% of the gross asset value of the Company up to
$100 million, .75% of the gross asset value of the Company between $100 million
and $250 million, .625% of the gross asset value of the Company between $250
million and $500 million and .50% of the gross asset value of the Company in
excess of $500 million. The "gross asset value" of the Company will be
determined, in the case of assets that are not readily ascertainable, by the
most recent appraisal of such assets by an independent appraiser.
Property and Construction Management Fees. The Company may, from
time to time, enter into separate property management agreements and/or
construction management agreements with third parties, the advisor or an
affiliate of the advisor, pursuant to which the advisor or its affiliate will be
entitled to a fee that does not exceed commercially reasonable rates and is
approved by a majority of the independent trustees.
Loan Servicing Fee. The advisor will receive loan servicing fees
(not exceeding commercially reasonable rates approved by a majority of the
independent trustees) for providing administrative and clerical services with
respect to loans made by the Company to third parties.
Incentive Fee. The advisor will be paid an incentive fee equal to
20% of all distributions to shareholders after the date of the advisory
agreement in excess of the "Hurdle". The Hurdle is defined as (x) $71.3 million,
increased by the net issuance price of all shares issued after the date of the
advisory agreement, and decreased by the redemption price of all shares redeemed
after the date of the advisory agreement, plus (y) a return on the amount, as
adjusted, set forth in (x) equal to 7% per annum compounded annually. The
incentive fee will be paid if and when such distributions are made, to the
extent the incentive fee at such time exceeds the incentive fee already paid to
advisor.
Expenses. The advisor will pay all employment expenses of employees
of the advisor, office expenses of the Company and the advisor, and certain
administrative expenses relating to performance by the advisor of its duties
under the advisory agreement. The Company will pay certain third party costs
including professional fees and other expenses of the Company.
17
Term and Termination. The advisory agreement will continue for one year
and will be automatically renewed for successive one-year periods unless
terminated by either party. The Company may terminate the advisory agreement
with or without cause upon 60 days notice to the advisor and the advisor may
terminate the advisory agreement with or without cause upon 120 days notice to
the Company. In addition, the Company may terminate the advisory agreement for
cause. The advisor will have the right to terminate the advisory agreement at
any time after the exclusivity services agreement or post-closing covenant
agreement (each as described below) is, without our consent, terminated by the
Company or voided, in each case, in whole or material part.
Termination Fee. Upon termination of the advisory agreement, the
Company will be obligated to pay the advisor a termination fee equal to 20% of
the difference between (x) the Deemed Excess Share Distributions (defined as the
difference between (A) the aggregate of all distributions to shareholders plus
the net asset value of the Company as of the date of termination, and (B) the
Hurdle, as of the date of termination) less (y) the amount of incentive fees
paid up to such date to the advisor as described above, under "Incentive Fee".
Post-Closing Covenant Agreement. The following is a summary of the
material provisions of the post-closing covenant agreement entered into between
us and the Company. For more complete information, please refer to the full text
of the post-closing covenant agreement, a copy of which is attached to the
Company's current report on Form 8-K filed with the Securities and Exchange
Commission on December 1, 2003. We encourage you to read the covenant agreement
in its entirety because it, and not this summary, is the legal document that
governs the rights and obligations of the parties under the post-closing
covenant agreement.
Restrictions on Sales. We will agree that for a one year period
following the date of the post-closing covenant agreement we will not sell,
transfer or assign any shares owned by us other than to transferees agreed to in
writing by the Company.
Governing Instruments. The Company will include in its next annual
proxy statement proposals to amend the Company's Declaration of Trust as
necessary so that the terms of the Declaration of Trust will not conflict with
any provisions of the post-closing covenant agreement, the Stock Purchase
Agreement, or any other agreement contemplated thereby. These proposals will
include, but not be limited to (i) a proposal to amend Section 8.1 of the
Declaration of Trust to eliminate the classification of the Board into three
classes and (ii) a proposal to amend the limitations set forth in Section 8.10
which restricts directors, officers or affiliates of a real estate company that
competes for investments with the Company from serving as a trustee. The form
and substance of each amendment proposed to shareholders will be determined by
the board and reasonably acceptable to us. At the shareholders' meeting relating
to the above-described proposals, we will vote all shares owned by us in favor
of such proposals.
In addition, the board will effect amendments to the by-laws of the
Company as may be necessary to make the by-laws conform to the terms of the
Covenant Agreement, the Stock Purchase Agreement and agreements which are
annexed to the Stock Purchase Agreement. Each amendment adopted by the board
will be in the form and substance proposed by the board, after our approval and
the approval by a majority of the independent trustees.
Corporate Governance Covenants. We will covenant with the Company
that during the period from the date of the post-closing covenant agreement
through the later of such time as (i) Xxxxxxx X. Xxxxxx is no longer serving as
either Chairman or Chief Executive Officer of the Company and (ii) Xx. Xxxxxx,
the Purchaser or other affiliates of Xx. Xxxxxx (the "Xxxxxx affiliates") are no
longer beneficial owners of at least 10% of the outstanding shares:
o We will not propose, and will vote all of our shares against, any
action which would impair the Company's status as a real estate
investment trust unless a majority of independent trustees then in
office determine that it would be in the Company's best interest to
do so;
o We will not take any affirmative action which would cause the shares
to cease to be subject to the reporting requirements of the Exchange
Act, except as approved by a majority of the independent trustees;
o We will not take any action which would cause the shares to cease to
be listed for trading on a major stock exchange, except as approved
by a majority of the independent trustees;
18
o So long as the Company has 300 or more shareholders, we will not
take any affirmative action which would cause the Company to fail to
comply with the corporate governance provisions applicable to a
listed company including, in all cases, Section 303A of the New York
Stock Exchange Listing Standards (whether or not such rule would
otherwise apply to the Company) except as otherwise approved by a
majority of independent trustees.
o To the extent compliance with the previous two described corporate
governance covenants would require an amendment to the Company's
Declaration of Trust, the board will call and hold a meeting to
approve the amendment and the Purchaser and all Xxxxxx affiliates
will vote all their shares in favor of such amendment.
o We will not take any action to amend the provisions of Section 11.13
of the Company's Declaration of Trust, which requires all
transactions between the Company and the Company's officers,
trustees or advisor (or their affiliates) to be approved by a
majority of the board, including a majority of the independent
trustees;
o The Purchaser, Xx. Xxxxxx and all Xxxxxx affiliates will vote all
their shares in proportion to the votes cast by other shareholders
at any meeting of shareholders with respect to any proposal by such
persons or any trustee of the Company affiliated with such persons
relating to a transaction in which the Purchaser, Xx. Xxxxxx or any
Xxxxxx affiliate have an economic interest. This restriction will
not apply, however, to (i) the proposals described under "Proxy
Statement" above, (ii) the election to the board of up to two
nominees designated by the Purchaser, (iii) any election of
qualified independent directors and (iv) any transaction approved
and recommended by a majority of the independent trustees, if a
majority of the independent trustees has determined that the
Purchaser, Xx. Xxxxxx and any Xxxxxx affiliate may vote their shares
in such manner as the Purchaser, Xx. Xxxxxx and any Xxxxxx affiliate
determines.
Termination. We will have the right to terminate the post-closing
covenant agreement at any time after the advisory agreement (described above) or
the exclusivity services agreement (described below) is terminated or voided in
whole or in material part without our prior consent.
Exclusivity Services Agreement. The following is a summary of the material
provisions of the exclusivity services agreement to be entered into between us
and the Company. For more complete information, please refer to the full text of
the exclusivity services agreement, a copy of which is attached to the Company's
Current Report on Form 8-K filed with the Securities and Exchange Commission on
December 1, 2003. We encourage you to read the exclusivity services agreement in
its entirety because it, and not this summary, is the legal document that
governs the rights and obligations of the parties under the exclusivity services
agreement.
Pursuant to the exclusivity services agreement, Xx. Xxxxxx will agree that
any business opportunity related to real estate investments (other than as
described below) offered to him during the time that he is serving either as an
executive officer of the Company or as a member of the board will be offered to
the Company. Neither Xx. Xxxxxx nor his affiliates will be permitted to invest
in a business opportunity that has been offered to the Company.
None of the following are considered to be business opportunities for
purposes of the exclusivity services agreement and Xx. Xxxxxx is therefore
permitted to participate in such transactions without regard to the terms of the
exclusivity services agreement:
o investments in equity securities of publicly traded real estate
entities in an amount not to exceed 2% of the outstanding equity
securities of such entity other than Atlantic Realty Trust in which
Xx. Xxxxxx will be permitted to own up to a 2.8% equity interest;
o passive investments in real estate entities where the investment
does not represent the greater of a 10% equity interest in the
entity or $1,500,000; and
o investments which relate to assets that are currently held by
certain entities associated with Xx. Xxxxxx that are set forth on a
schedule to the exclusivity services agreement or investments in
assets owned or controlled by such entities.
19
Termination. Xx. Xxxxxx will have the right to terminate the exclusivity
services agreement from and after the date that the advisory agreement or the
post-closing covenant agreement is terminated by the Company or voided, in whole
or material part.
Section 12. Purpose of the Offer; Plans For First Union
We are seeking to acquire shares in the offer, and in the newly issued
share purchase, for investment purposes. We anticipate owning as much as
approximately 32.2% of the outstanding shares of the Company as a result of the
offer and the newly issued share purchase. Following the offer and newly issued
share purchase, our affiliate will be retained by the Company to provide
management and advisory services to the Company and to manage the day to day
operations of the Company and our manager, Xxxxxxx X. Xxxxxx, will become
President and Chief Executive Officer of the Company. As the external advisor to
the Company, our affiliate will manage the Company's operations in a manner
intended to maximize the value of the common shares, including by seeking
attractive investment opportunities for the Company. Other than limitations
pertaining to maintenance by the Company of its status as a real estate
investment trust, the Company is not limited to any particular type of
investment. Instead, our affiliate, as external advisor to the Company, will
seek investments that offer the opportunity for positive returns to the Company
and that are appropriate for the Company given its then existing investment
portfolio, availability of capital and other relevant criteria.
Except as this Offer to Purchase sets forth, we have no present plans or
proposals that would relate to or result in any extraordinary corporate
transaction involving First Union (such as a merger, reorganization or
liquidation), any purchase, sale or transfer of a material amount of assets of
First Union, any change in the board of trustees or management of First Union,
any material change in First Union's indebtedness, capitalization or dividend
policy, any other material change in First Union's corporate structure or
business, a class of securities of First Union being delisted from a national
securities exchange or ceasing to be authorized to be quoted in an automated
quotations system operated by a national securities association or a class of
equity securities of First Union becoming eligible for termination of
registration under Section 12(g) of the Exchange Act.
Section 13. Conditions to the Offer
Notwithstanding any other term of the offer, we shall not be required to
accept for payment or to pay for any shares tendered unless all authorizations
or approvals of, or expirations of waiting periods imposed by, any court,
administrative agency or other governmental authority necessary for the
consummation of the transactions contemplated by the offer shall have been
obtained or occurred on or before the expiration date.
We shall not be required to accept for payment any shares tendered and
may, subject to the terms of the Stock Purchase Agreement, terminate or amend
the offer if at any time on or after the date of the offer and prior to the
expiration date, any of the following conditions exists:
(a) there shall have been instituted and remain pending any
litigation, suit, claim, action or proceeding brought by any Governmental
Authority (as defined in the Stock Purchase Agreement) of competent jurisdiction
over the Company (i) challenging or seeking to make illegal or otherwise
directly or indirectly restrain or prohibit the offer or the newly issued share
purchase, (ii) seeking to impose material limitations on our ability to exercise
effectively full rights of ownership of any shares, including, without
limitation, the right to vote any shares acquired or owned by us on all matters
properly presented to the shareholders of the Company, or (iii) seeking to
require divestiture by us of any shares;
(b) there shall have been any judgment, order or injunction entered
or issued by any Governmental Authority of competent jurisdiction that results
in any of the consequences referred to in clauses (i), (ii) and (iii) of
paragraph (a) above;
(c) the board, or any committee thereof, shall have withdrawn or
modified, in a manner adverse to us, its approval of the Stock Purchase
Agreement, the newly issued share purchase or the Board Recommendation (as
defined in the Stock Purchase Agreement), shall have recommended that
shareholders not tender their shares in the offer, shall have approved or
recommended any Acquisition Proposal (as defined in the Stock Purchase
Agreement) or any other material acquisition of shares other than the offer or
the newly issued share purchase or (ii) the board, or any committee thereof,
shall have resolved to do any of the foregoing;
(d) any representation or warranty of the Company in the Stock
Purchase Agreement shall not be true and correct as if such representation or
warranty was made as of such time on or after the date of the Stock Purchase
Agreement, except as would not have a Material Adverse Effect (as defined in the
Stock Purchase Agreement) or prevent or materially delay consummation of the
Transactions (as defined in the Stock Purchase Agreement), or otherwise prevent
the Company from performing its obligations under the Stock Purchase Agreement;
20
(e) the Company shall have failed to perform any material obligation
or to comply with any material agreement or covenant of the Company to be
performed or complied with by it under the Stock Purchase Agreement;
(f) the Stock Purchase Agreement shall have been terminated in
accordance with its terms;
(g) there shall have occurred a Material Adverse Effect;
(h) we and the Company shall have agreed that we shall terminate the
offer;
(i) there shall have occurred any act of terrorism against the
United States of America that shall have resulted in (i) the simultaneous
closing of three or more domestic international airports for a period of at
least 24 consecutive hours or (ii) the simultaneous closing of the three largest
stock exchanges in the United States for a period of at least 6.5 consecutive
trading hours; or
(j) the application for the listing of the newly issued shares, as
provided under the Stock Purchase Agreement, shall not have been approved,
subject to notice of issuance of the newly issued shares.
Section 14. Legal Matters
General. Except as set forth in this Section 14, we are not aware of any
filings, approvals or other actions by any domestic of foreign governmental or
administrative agency that would be required prior to the acquisition of shares
by us pursuant to the offer. Should any such approval other action be required,
it is our present intention that such additional approval or action would be
sought. While there is no present intent to delay the purchase of shares
tendered pursuant to the offer pending receipt of any such additional approval
or the taking of any such action, there can be no assurance that any such
additional approval or action, if needed, would be obtained without substantial
conditions or that adverse consequences might not result to the Company's
business, or that certain parts of the Company's business might not have to be
disposed of or held separate or other substantial conditions complied with in
order to obtain such approval or action, any of which could cause us to elect to
terminate the offer without purchasing shares thereunder. Our obligation to
purchase and pay for shares is subject to certain conditions, including
conditions related to the legal matters discussed in this Section 14.
Antitrust. We do not believe that the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of shares
pursuant to the offer.
Margin Requirements. The shares are "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, such regulations are applicable to the offer.
State Takeover Laws. A number of states have adopted anti-takeover laws
which purport, to varying degrees, to be applicable to attempts to acquire
securities of corporations which are incorporated in such states or which have
substantial assets, security holders, principal executive offices or principal
places of business therein. These laws are directed at the acquisition of
corporations and not trusts. Accordingly, we do not believe that any
anti-takeover laws apply to the transactions contemplated by the offer.
Although we have not attempted to comply with any state anti-takeover
statutes in connection with the offer, we reserve the right to challenge the
validity or applicability of any state law allegedly applicable to the offer and
nothing in this offer nor any action taken in connection herewith is intended as
a waiver of such right. If any state anti-takeover statute is applicable to the
offer, we might be unable to accept for payment or purchase shares tendered
pursuant to the offer or be delayed in continuing or consummating the offer. In
such case, we may not be obligated to accept for purchase or pay for any shares
tendered.
Section 15. Fees and Expenses
We have retained National City Bank to act as depositary and MacKenzie
Partners, Inc. to act as information agent in connection with the offer. We will
pay the depositary and the information agent reasonably and customary
compensation for their services in connection with the offer, plus reimbursement
for out-of-pocket expenses, and will indemnify the depositary and the
information agent against certain liabilities and expenses in connection
therewith, including any liabilities under the federal securities laws. We will
pay all costs and expenses of printing, publication and mailing of the offer.
21
Section 16. Miscellaneous
The offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of shares in any jurisdiction in which the making of the
offer or the acceptance thereof would not comply with the laws of that
jurisdiction. In any jurisdiction the securities, blue sky or other laws of
which require the offer to be made by a licensed broker or dealer, the offer is
being made on our behalf by one or more registered brokers or dealers licensed
under the laws of that jurisdiction.
No person has been authorized to give any information or to make any
representation on our behalf not contained herein or in the letter of
transmittal and, if given or made, that information or representation must not
be relied on as having been authorized.
We have filed with the Securities and Exchange Commission a tender offer
statement on Schedule TO, together with exhibits, furnishing additional
information with respect to the offer, and may file amendments thereto. That
schedule and any amendments thereto, including exhibits, should be available for
inspection and copies should be obtainable in the manner described in Section 8
of this Offer to Purchase, except that this material will not be available at
the regional offices of the Securities and Exchange Commission.
FUR INVESTORS, LLC
December 1, 2003
22
SCHEDULE I
CERTAIN INFORMATION REGARDING THE PURCHASER'S SOLE MANAGER
Xx. Xxxxxx, age 51, serves as the Chief Executive Officer of Winthrop
Financial Associates and its affiliates, a position he has held since January
15, 1996. Since August 2002, Xx. Xxxxxx has also served as the Chief Executive
Officer and a Director of Shelbourne Properties I, II and III, three separate
publicly traded real estate investment trusts, each of which is currently being
liquidated under a plan of liquidation. Since January 1, 2002, Xx. Xxxxxx has
also served as the Chief Executive Officer of the general partner of The Xxxxxxx
Master Limited Partnership, a Delaware limited partnership that owns various
properties and other real-estate related assets. Since 1981, Xx. Xxxxxx has been
Chairman of Exeter Capital Corporation, a firm that has organized and
administered real estate limited partnerships. Since August 2001, Xx. Xxxxxx has
also served as Chief Executive Officer of AP-Fairfield GP, LLC, the general
partner of Fairfield Inn By Marriott Limited Partnership, an entity that owns
and operates 50 Fairfield Inns. He has also served since February 2001 as Chief
Executive Officer of GFB-AS Manager Corp., the general partner of various
entities that own and operate 21 senior assisted-living facilities. Xx. Xxxxxx
also currently serves on the Boards of Directors of the following publicly
traded companies: Greate Bay Hotel and Casino Inc., a hotel and casino operator,
and NBTY Inc., a manufacturer, marketer and retailer of nutritional supplements.
Xx. Xxxxxx is a United States citizen.
23
SCHEDULE II
INDEPENDENT AUDITORS' REPORT
To the Member of FUR Investors, LLC
We have audited the accompanying balance sheet of FUR Investors, LLC (a
development stage company) as of November 25, 2003. This financial statement is
the responsibility of the Company's management. Our responsibility is to express
an opinion on this financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the balance sheet
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the balance sheet. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall balance sheet
presentation. We believe that our audit of the balance sheet provides a
reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of FUR Investors, LLC as of November
25, 2003, in conformity with accounting principles generally accepted in the
United States of America.
November 25, 2003
XXXXXX & XXXXXX, P.C.
FUR INVESTORS, LLC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
NOVEMBER 25, 2003
ASSETS
Cash $ 25,000
============
LIABILITIES AND MEMBER'S EQUITY
Accounts payable $ 7,350
------------
Member's capital 25,000,000
Deficit accumulated during the development stage (7,350)
Subscription receivable (24,975,000)
------------
17,650
------------
TOTAL LIABILITIES AND MEMBER'S EQUITY $ 25,000
============
See independent auditors' report and accompanying notes to the financial
statement.
2
FUR INVESTORS, LLC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
NOVEMBER 25, 2003
NOTE A - ORGANIZATION
FUR Investors, LLC (the "Company"), a limited liability company, was organized
on July 7, 2003 under the laws of the State of Delaware to acquire a common
stock investment in First Union Real Estate Equity and Mortgage Investments, a
publicly-traded entity. As of November 25, 2003 the Company is still in the
development stage as principal operations have not yet commenced.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial Statements
The Company prepares its balance sheet on an accrual basis in accordance with
generally accepted accounting principles.
Income Taxes/Limited Liability Company
The Company is taxed as a partnership for federal income tax purposes and, thus,
no liability for income taxes is reflected in the accompanying balance sheet
since income taxes are assessed at the individual member level. As a limited
liability company, each member's liability is limited to amounts reflected in
their respective member accounts.
Use of Estimates
The timely preparation of the balance sheet requires management to make
estimates and assumptions that affect certain reported amounts and disclosures.
Actual results could differ from those estimates.
NOTE C - SUBSCRIPTION RECEIVABLE
The subscription receivable from the sole member of the Company is due on
demand, accrues interest at the rate for demand loans as set forth in Internal
Revenue Code Section 7872, and is unsecured.
NOTE D - ALLOCATION OF PROFITS AND LOSSES
Profits and losses of the Company are allocated 100% to its sole member.
3
IMPORTANT
Any shareholder desiring to tender any or all of such shareholder's shares
should, prior to December 29, 2003, either (i) mail, deliver or telecopy to
National City Bank (the "depositary") at the address or facsimile number set
forth below (a) a properly completed and duly executed Letter of Transmittal (a
copy of which is enclosed with this Offer to Purchase, printed on cream paper),
including any required signature guarantees, (b) the stock certificates
representing the shares tendered and (c) any other documents required by the
Letter of Transmittal, (ii) cause such shareholder's broker, dealer, commercial
bank, trust company or custodian to tender applicable shares pursuant to the
procedures for book-entry transfer or (iii) comply with the guaranteed delivery
procedures.
Via U.S. Mail: National City Bank
Corporate Actions Processing Center
P.O. Box 859208
000 Xxx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000-0000
Via Overnight Courier: National City Bank
Corporate Actions Processing Center
000 Xxx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Via Hand: c/o The Depository Trust Company
Transfer Agent Drop Service
00 Xxxxx Xxxxxx
Xxxxxxxx Xxxx Entrance
Xxx Xxxx, XX 00000
or
National City Bank
Corporate Trust Operations
3rd Floor--North Annex
0000 Xxxx 000xx Xxxxxx
Xxxxxxxxx, XX 00000
Via Facsimile: 0-000-000-0000
Questions or requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to MacKenzie Partners,
Inc. (the "Information Agent"), at the address or facsimile number set forth
below.
[LOGO]
MACKENZIE
PARTNERS, INC.
000 Xxxxxxx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
xxxxx@xxxxxxxxxxxxxxxxx.xxx
(000) 000-0000 (call collect)
or
Toll-Free (000) 000-0000
