-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GVSkoli+LaK9YWnuxKXdoog7kp0lmVJT6i3snOz/d/CN/ZkFo2CZYJEs7WMrIb46 c/a1wkOEOEi+GJKU+WCvxg== 0000898822-02-001524.txt : 20021223 0000898822-02-001524.hdr.sgml : 20021223 20021223165544 ACCESSION NUMBER: 0000898822-02-001524 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20021223 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: FIRST UNION REAL ESTATE EQUITY & MORTGAGE INVESTMENTS CENTRAL INDEX KEY: 0000037008 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 346513657 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-19676 FILM NUMBER: 02867402 BUSINESS ADDRESS: STREET 1: 551 FIFTH AVE STREET 2: STE 1416 CITY: NEW YORK STATE: NY ZIP: 10176 BUSINESS PHONE: 2129051104 MAIL ADDRESS: STREET 1: 551 FIFTH AVE STREET 2: SUITE 1416 CITY: NEW YORK STATE: NY ZIP: 10176 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION REALTY DATE OF NAME CHANGE: 19691012 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GOTHAM PARTNERS LP /NY/ CENTRAL INDEX KEY: 0000899983 IRS NUMBER: 363593298 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 110 EAST 42ND ST 18TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2122860300 MAIL ADDRESS: STREET 1: 110 EAST 42 ND ST 18TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 SC 13D/A 1 december23form13da.txt DECEMBER 23, 2002 - SCHEDULE 13 D/A ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------------------- SCHEDULE 13D/A Under the Securities Exchange Act of 1934 (Amendment No. 49) ----------------------------------------- First Union Real Estate Equity and Mortgage Investments (Name of Issuer) Shares of Beneficial Interest, $1.00 par value (Title of Class of Securities) 337400105 (CUSIP Number) ----------------------------------------- David S. Klafter, Esq. Gotham Partners Management Co., LLC 110 East 42nd Street New York, New York 10017 (212) 286-0300 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) ----------------------------------------- December 23, 2002 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ] Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). ================================================================================ - ------------------------------ ------------------------- CUSIP No. 337400105 SCHEDULE 13D (Page 2 of 9) - ------------------------------ ------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON/ S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Gotham Partners, L.P - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC; OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York - -------------------------------------------------------------------------------- Number of 7. SOLE VOTING POWER 0 Shares ------------------------------------------------------------ Beneficially 8. SHARED VOTING POWER Owned By 7,424,903 Each ------------------------------------------------------------ 9. SOLE DISPOSITIVE POWER Reporting 0 Person With ------------------------------------------------------------ 10. SHARED DISPOSITIVE POWER 7,424,903 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,424,903 - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 21.3%** - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON REPORTING* PN - -------------------------------------------------------------------------------- * See Instructions ** By virtue of the Voting Agreement, each Reporting Person may be deemed to share with the other Shareholders voting and dispositive power over the Shares subject to the previously described and disclosed Voting Agreement. Accordingly, the combined interest of the Reporting Persons may be deemed to be 7,424,903 Shares, which, in the aggregate, represents approximately 21.3% of the outstanding Shares of the Issuer. Each Reporting Person expressly disclaims beneficial ownership of the Shares subject to the Voting Agreement, other than the Shares held by such Reporting Person. None of Section H Partners, L.P., Karenina Corporation, DPB Corporation, Mr. Ackman, Mr. Berkowitz, Gotham Advisors or Gotham Management beneficially owns any Shares (other than the Shares beneficially owned by Gotham, Gotham III, Gotham International and Holdings II). - ------------------------------ ------------------------- CUSIP No. 337400105 SCHEDULE 13D (Page 3 of 9) - ------------------------------ ------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON/ S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Gotham International Advisors, L.L.C. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC; OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- Number of 7. SOLE VOTING POWER 0 Shares ------------------------------------------------------------ Beneficially 8. SHARED VOTING POWER Owned By 7,424,903 Each ------------------------------------------------------------ 9. SOLE DISPOSITIVE POWER Reporting 0 Person With ------------------------------------------------------------ 10. SHARED DISPOSITIVE POWER 7,424,903 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,424,903 - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 21.3%** - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON REPORTING* OO; IA - -------------------------------------------------------------------------------- * See Instructions ** By virtue of the Voting Agreement, each Reporting Person may be deemed to share with the other Shareholders voting and dispositive power over the Shares subject to the previously described and disclosed Voting Agreement. Accordingly, the combined interest of the Reporting Persons may be deemed to be 7,424,903 Shares, which, in the aggregate, represents approximately 21.3% of the outstanding Shares of the Issuer. Each Reporting Person expressly disclaims beneficial ownership of the Shares subject to the Voting Agreement, other than the Shares held by such Reporting Person. None of Section H Partners, L.P., Karenina Corporation, DPB Corporation, Mr. Ackman, Mr. Berkowitz, Gotham Advisors or Gotham Management beneficially owns any Shares (other than the Shares beneficially owned by Gotham, Gotham III, Gotham International and Holdings II). - ------------------------------ ------------------------- CUSIP No. 337400105 SCHEDULE 13D (Page 4 of 9) - ------------------------------ ------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON/ S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Gotham Partners III, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC; OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York - -------------------------------------------------------------------------------- Number of 7. SOLE VOTING POWER 0 Shares ------------------------------------------------------------ Beneficially 8. SHARED VOTING POWER Owned By 7,424,903 Each ------------------------------------------------------------ 9. SOLE DISPOSITIVE POWER Reporting 0 Person With ------------------------------------------------------------ 10. SHARED DISPOSITIVE POWER 7,424,903 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,424,903 - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 21.3%** - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON REPORTING* PN - -------------------------------------------------------------------------------- * See Instructions ** By virtue of the Voting Agreement, each Reporting Person may be deemed to share with the other Shareholders voting and dispositive power over the Shares subject to the previously described and disclosed Voting Agreement. Accordingly, the combined interest of the Reporting Persons may be deemed to be 7,424,903 Shares, which, in the aggregate, represents approximately 21.3% of the outstanding Shares of the Issuer. Each Reporting Person expressly disclaims beneficial ownership of the Shares subject to the Voting Agreement, other than the Shares held by such Reporting Person. None of Section H Partners, L.P., Karenina Corporation, DPB Corporation, Mr. Ackman, Mr. Berkowitz, Gotham Advisors or Gotham Management beneficially owns any Shares (other than the Shares beneficially owned by Gotham, Gotham III, Gotham International and Holdings II). - ------------------------------ ------------------------- CUSIP No. 337400105 SCHEDULE 13D (Page 5 of 9) - ------------------------------ ------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON/ S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Gotham Holdings II, L.L.C. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC; OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York - -------------------------------------------------------------------------------- Number of 7. SOLE VOTING POWER 0 Shares ------------------------------------------------------------ Beneficially 8. SHARED VOTING POWER Owned By 7,424,903 Each ------------------------------------------------------------ 9. SOLE DISPOSITIVE POWER Reporting 0 Person With ------------------------------------------------------------ 10. SHARED DISPOSITIVE POWER 7,424,903 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,424,903 - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 21.3%** - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON REPORTING* PN - -------------------------------------------------------------------------------- * See Instructions ** By virtue of the Voting Agreement, each Reporting Person may be deemed to share with the other Shareholders voting and dispositive power over the Shares subject to the previously described and disclosed Voting Agreement. Accordingly, the combined interest of the Reporting Persons may be deemed to be 7,424,903 Shares, which, in the aggregate, represents approximately 21.3% of the outstanding Shares of the Issuer. Each Reporting Person expressly disclaims beneficial ownership of the Shares subject to the Voting Agreement, other than the Shares held by such Reporting Person. None of Section H Partners, L.P., Karenina Corporation, DPB Corporation, Mr. Ackman, Mr. Berkowitz, Gotham Advisors or Gotham Management beneficially owns any Shares (other than the Shares beneficially owned by Gotham, Gotham III, Gotham International and Holdings II). This Amendment No. 49 (this "Amendment") amends and supplements the Statement on Schedule 13D, as amended (the "Schedule 13D"), relating to the shares of beneficial interest, par value $1.00 per share (the "Shares"), of First Union Real Estate Equity and Mortgage Investments, an Ohio business trust (the "Issuer"), previously filed by Gotham Partners, L.P. ("Gotham") and Gotham Partners III, L.P. ("Gotham III"), New York limited partnerships, and Gotham Holdings II, L.L.C. ("Holdings II") and Gotham International Advisors, L.L.C. ("Gotham International"), Delaware limited liability companies (Gotham, Gotham III, Holdings II and Gotham International together on behalf of themselves and their controlled affiliates, the "Reporting Persons"). This Amendment is being filed to update the Schedule 13D in light of certain recent events. Capitalized terms used and not defined in this Amendment have the meanings set forth in the Schedule 13D. Except as specifically provided herein, this Amendment does not modify any of the information previously reported on the Schedule 13D. ITEM 4. PURPOSE OF THE TRANSACTION Item 4 is hereby amended and supplemented to add the following information: (a) - (j) On December 23, 2002, Gotham and Gotham Golf Corp. ("Gotham Golf") delivered a letter to the special committee to the Issuer's board of trustees in connection with the proposed merger of the Issuer with and into Gotham Golf. The letter outlined an alternative, restructured merger transaction that, in Gotham's and Gotham Golf's view, would allay the concerns of the Issuer's preferred shareholders and would be a superior transaction to the Issuer's security holders including, senior debt holders, preferred shareholders and common shareholders. The terms of the restructured merger transaction are set forth in the December 23, 2002 letter, a copy of which is attached as Exhibit 99.1 and incorporated herein by reference. Except as set forth above, the prior disclosure as set forth on the Schedule 13D remains in full force and effect. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit 99.1 Letter, dated December 23, 2002, from Gotham Partners, L.P. and Gotham Golf Corp. to the Special Committee to the Board of Trustees of First Union Real Estate Equity and Mortgage Investments. After reasonable inquiry and to the best of our knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. December 23, 2002 GOTHAM PARTNERS, L.P. By: Section H Partners, L.P., its general partner By: Karenina Corporation, a general partner of Section H Partners, L.P. By: /s/ William A. Ackman ------------------------------ President William A. Ackman GOTHAM PARTNERS III, L.P. By: Section H Partners, L.P., its general partner By: Karenina Corporation, a general partner of Section H Partners, L.P. By: /s/ William A. Ackman ------------------------------ President William A. Ackman GOTHAM INTERNATIONAL ADVISORS, L.L.C. By: /s/ William A. Ackman ------------------------------ Senior Managing Member William A. Ackman GOTHAM HOLDINGS II, L.L.C. By: Gotham Holdings Management LLC, the Manager By: /s/ William A. Ackman ------------------------------ Senior Managing Member William A. Ackman EX-99 3 december23letterproposal.txt DECEMBER 23, 2002 - EXHIBIT 99.1 GOTHAM PARTNERS, L.P. 110 EAST 42ND STREET NEW YORK, NEW YORK 10017 GOTHAM GOLF CORP. 575 EAST CHOCOLATE AVENUE HERSHEY, PENNSYLVANIA 17033 December 23, 2002 Special Committee to Board of Trustees First Union Real Estate Equity and Mortgage Investments c/o Mr. Daniel Altobello, Chairman of the Special Committee 125 Park Avenue New York, New York To the Special Committee: We write in response to your request for a written proposal. In light of the New York Supreme Court's December 6, 2002 ruling continuing the preliminary injunction in Kimeldorf v. First Union, et. al., it appears that the parties to the First Union/Gotham Golf merger transaction should substantially restructure the transaction. Enclosed please find a summary term sheet outlining the terms of a proposed restructured transaction. We believe that the restructured transaction would permit consummation of a transaction and would represent a significant increase in the value that First Union common shareholders could expect to receive given the practical alternatives. In addition, it would (1) respond to the Court's concerns, (2) improve the position of First Union's security holders, including its common shareholders, preferred shareholders and senior noteholders, (3) achieve some, but far from all, of the benefits of a transaction to Gotham Golf and (4) avoid protracted, costly and burdensome litigation. As directed by the Court, we have engaged, and continue to engage, the Kimeldorf plaintiffs in constructive negotiations. Based on our conversations with representatives of the Kimeldorf plaintiffs, we believe that the proposed restructured transaction, substantially in the form outlined in the attached, will be acceptable to the plaintiffs and to the First Union preferred shareholders as a class. We believe that it would be in the best interest of First Union and all of its stakeholders to engage in a constructive dialogue aimed at arriving at a restructured transaction that places all parties in their respective best possible economic positions given the practical alternatives. We ask that First Union begin to make a good-faith effort to engage in such a dialogue. It should be obvious to all, and certainly a matter of sound business judgement, that First Union Real Estate Equity and Mortgage Investments December 20, 2002 Page 2 the goals of receiving certain value, on certain terms and in a certain timeframe are far more likely achieved through negotiation. We would welcome and request a meeting as soon as possible so that we can expeditiously proceed to a resolution of these issues. This letter and the attached proposal are not and should not be deemed a termination of our or First Union's currently effective contractual obligations. Of course, nothing in this letter is to be construed as conceding or waiving any of Gotham Partner's, Gotham Golf's or their respective affiliates' rights under the Merger Agreement, in respect of any actions or omissions of First Union, or otherwise. Thank you for your consideration. Sincerely, /s/ William A. Ackman ----------------------- William A. Ackman Principal Gotham Partners, L.P. /s/ William A. Ackman ----------------------- William A. Ackman Chairman of the Board of Directors Gotham Golf Corp. Cc: Bruce Berkowitz Thomas H. McCormick Thomas J. Plotz Michael J. Garvin F. Ronald O'Keefe Robert L. Plotz SUMMARY TERM SHEET THIS DOCUMENT IS INTENDED SOLELY TO FACILITATE DISCUSSIONS AMONG THE PARTIES. THIS DOCUMENT DOES NOT CONTAIN ALL MATTERS UPON WHICH AGREEMENT MUST BE REACHED IN ORDER FOR DEFINITIVE AGREEMENTS TO BE EXECUTED OR THE RESTRUCTURED TRANSACTION TO BE CONSUMMATED, AND, THEREFORE, THIS DOCUMENT IS NOT INTENDED TO CREATE NOR WILL IT BE DEEMED TO CREATE A LEGALLY BINDING OR ENFORCEABLE OFFER OR AGREEMENT OF ANY TYPE OR NATURE. TRANSACTION Tender Offer for Preferred Shares. First Union Real Estate Equity and Mortgage Investments ("First Union") shall conduct a tender offer for all of its Series A Cumulative Convertible Redeemable Preferred Shares of Beneficial Interests, par value $25 per share ("First Union Preferred Shares"), at $22 per share plus any accrued dividends payable as of January 30, 2003. In connection with settling all claims, First Union Preferred Shareholder plaintiffs' attorneys' fees shall be paid in the amount of $700,000. Tender Offer for Senior Notes. First Union shall conduct a tender offer for the full principal amount of its 8 7/8% senior notes, due 2003. Tender Offer for Common Shares. First Union shall conduct a tender/exchange offer for approximately 41.6% of the First Union common shares, for (a) $2.20 per share or (b) $1.85 per share and approximately 1/174th of a Note (as defined in the Merger Agreement) or (c) any combination of Notes and cash with a total value of $2.20 per share (with each 1/174th of a Note valued at $0.35). o Gotham Partners, L.P. ("Gotham") and certain of its affiliates, which hold approximately 16.8% of the outstanding First Union common shares, will not tender any of their shares in the tender offer/exchange offer, thereby ensuring that at holders of least 50% of the balance of the remaining First Union common shares will have the opportunity to tender their shares. o Holders of Notes will not have the right to put the Notes to SSCC. Merger and Contribution. After the completion of the tender offers, First Union shall merge with and into Gotham Golf Corp. ("GGC"), with GGC as the surviving corporation. FUR MERGER In the merger, each First Union common share be CONSIDERATION entitled to receive one GGC common share. GGP CONTRIBUTION & Immediately prior to the merger, Gotham and certain MERGER CONSIDERATION other parties shall contribute to GGC all of their equity interests in Gotham Golf Partners, L.P. ("GGP") in exchange for 4,545,000 GGC common shares. Florida Golf Properties, Inc. shall contribute its general partnership interests in GGP to Golf LLC, a wholly owned subsidiary of GGC, in exchange for one GGC common share. SHAREHOLDER VOTE The terms of the transaction would be subject to the vote of the majority of the First Union common shareholders other than First Union trustees and their affiliates and Gotham and its affiliates. CONDITIONS TO THE Except as outlined below and other than the common RESTRUCTURED shareholder vote as outlined above, the parties' TRANSACTION respective obligations to consummate the restructured transaction will subject to substantially identical closing conditions as outlined in the current Merger Agreement. ADDITIONAL TERMS At signing, First Union shall provide a $6 million senior credit facility to GGP. If the restructured merger agreement is terminated, GGP shall be obligated to repay amounts drawn under the credit facility within 12 months of termination. At signing, First Union shall reimburse Gotham's and its affiliates and Gotham Golf's reasonable and documented out-of-pocket fees and expenses. At signing, the First Union Preferred Shareholder plaintiffs shall enter into a class settlement and release of the First Union preferred shareholder plaintiffs' claims. The parties to the current Merger Agreement shall execute mutual releases. MANAGEMENT After the merger, GGC's board of directors and management shall replace the First Union board of trustees. 2 -----END PRIVACY-ENHANCED MESSAGE-----