PARAGON REAL ESTATE EQUITY AND INVESTMENT TRUST
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE
13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT RULE 13d-2(a)
(Amendment No. 1 )*
Paragon Real Estate Equity and Investment Trust
(Name of Issuer)
(Title of Class of Securities)
(CUSIP Number)
Christopher
J. Hubbert
Kohrman Jackson & Krantz P.L.L. 1375 East
9th Street, 20th Floor, Cleveland, OH 44114; 216-736-7215
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
(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(e), 13d-1(f) or 13d-1(g), check the following box. o
Note: Schedules filed
in paper format shall include a signed original and five copies of
the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent.
1 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).
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CUSIP No. |
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69912Y 30 5 |
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NAMES OF REPORTING PERSONS |
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S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
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James C. Mastandrea |
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
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(a) o |
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(b) þ |
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SEC USE ONLY: |
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SOURCE OF FUNDS (SEE INSTRUCTIONS): |
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OO |
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): |
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CITIZENSHIP OR PLACE OF ORGANIZATION: |
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United States of America
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SOLE VOTING POWER: |
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794,179 |
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SHARED VOTING POWER: |
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| OWNED BY |
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SOLE DISPOSITIVE POWER: |
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787,512 |
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SHARED DISPOSITIVE POWER: |
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: |
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794,179 |
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): |
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): |
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77.5% |
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TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): |
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IN |
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CUSIP No. |
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69912Y 30 5 |
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NAMES OF REPORTING PERSONS
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S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
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John J. Dee |
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
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(a) o |
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(b) þ |
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SEC USE ONLY: |
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SOURCE OF FUNDS (SEE INSTRUCTIONS): |
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OO |
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): |
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CITIZENSHIP OR PLACE OF ORGANIZATION: |
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United States of America
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SOLE VOTING POWER: |
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| NUMBER OF |
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130,333 |
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| SHARES |
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SHARED VOTING POWER: |
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| OWNED BY |
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SOLE DISPOSITIVE POWER: |
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130,333 |
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SHARED DISPOSITIVE POWER: |
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: |
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130,333 |
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): |
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): |
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24.6% |
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TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): |
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| CUSIP Nos. 69912Y 30 5
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Page 4 of 7 |
Introduction.
This Amendment No. 1 to Schedule 13D Statement relates to common shares, par value $0.01 per
share (the “Common Shares”), of Paragon Real Estate Equity and Investment Trust, a Maryland trust
(the “Company”), and is filed by James C. Mastandrea, the Company’s Chairman of the Board, Chief
Executive Officer and President, and John J. Dee, the Company’s Senior Vice President and Chief
Financial Officer.
Item 3. Source and Amount of Funds or Other Consideration.
The consideration for Mr. Mastandrea’s purchase of Class C Convertible Preferred Shares (the
“Class C Preferred Shares”) pursuant to the Subscription Agreement, as further described in Item
5(c) of this Amendment No. 1 to Schedule 13D, is Mr. Mastandrea’s services as an officer of the
Company for September 29, 2006 through September 29, 2008. The consideration for the issuance of
restricted Class C Preferred Shares to each of Mr. Mastandrea and Mr. Dee pursuant to the
Restricted Share Agreements, also as further described in Item 5(c), is in lieu of receiving fees
in cash for service as a trustee for the two years ending September 29, 2008.
Item 5. Interest in Securities of the Issuer.
(a) Based solely on information provided by the Company, there are currently 404,425 Common
Shares of the Company outstanding, excluding 38,130 Common Shares held in treasury.
Mr. Mastandrea beneficially owns 794,179 Common Shares, including: (i) 6,667 restricted Common
Shares issuable to an independent third party which Mr. Mastandrea has the right to vote; (ii)
163,117 Common Shares held by Paragon Real Estate Development, LLC (“Paragon Development”), of
which Mr. Mastandrea is the managing member; (iii) 4,000 restricted Common Shares; (iv) 1,333
options to purchase Common Shares which are currently exercisable; (v) 49,243 Common Shares
issuable upon conversion of 161,410 Class A Preferred Shares held by Paragon Development which are
currently convertible into Common Shares at any time; and (vi) 569,440 Common Shares issuable upon
conversion of 56,944 restricted Class C Preferred Shares (each Class C Preferred Share is
convertible into Common Shares at any time by dividing the sum of $10.00 and any accrued but unpaid
dividends on the Class C Preferred Shares by the conversion price of $1.00), or approximately 77.5%
of the outstanding Common Shares. Mr. Dee beneficially owns 130,333 Common Shares, including: (i)
4,000 restricted Common Shares; (ii) 1,333 options to purchase Common Shares which are currently
exercisable; and (iii) 125,000 Common Shares issuable upon conversion of 12,500 restricted Class C
Preferred Shares (each Class C Preferred Share is convertible into Common Shares at any time by
dividing the sum of $10.00 and any accrued but unpaid dividends on the Class C Preferred Shares by
the conversion price of $1.00), or approximately 24.6% of the outstanding Common Shares.
(b) Mr. Mastandrea has sole power to vote, or to direct the voting of, the Common Shares and
Class C Preferred Shares held by him and the Common Shares and Class A Preferred Shares held by
Paragon Development and an independent third party. Mr. Mastandrea has sole power to
dispose, or to direct the disposition of, the Common Shares and Class C Preferred Shares held by
him and the Common Shares and Class A Preferred Shares held by Paragon Development. Mr.
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Page 5 of 7 |
Mastandrea disclaims beneficial ownership of the 6,667 restricted Common Shares owned by an
independent third party.
Mr. Dee has sole power to vote, or to direct the voting of, and sole power to dispose or to
direct the disposition of, the Common Shares and Class C Preferred Shares owned by him.
(c) On September 29, 2006, Mr. Mastandrea and Mr. Dee were each awarded 12,500 restricted
Class C Preferred Shares, which are currently convertible into 125,000 Common Shares, pursuant to a
Restricted Share Agreement with the Company in lieu of receiving fees in cash for service as a
trustee for the two years ending September 29, 2008. Each Class C Preferred Share is convertible
into Common Shares at any time by dividing the sum of $10.00 and any accrued but unpaid dividends
on the Class C Preferred Shares by the conversion price of $1.00. The restrictions on the Class C
Preferred Shares will be removed upon the latest to occur of a public offering to liquidate the
Class C Preferred Shares, an exchange of the Company’s Common Shares for another company’s shares,
or September 29, 2008.
Also on September 29, 2006, Mr. Mastandrea purchased 44,444 restricted Class C Preferred
Shares, which are currently convertible into 444,440 Common Shares, pursuant to a Subscription
Agreement with the Company. Each Class C Preferred Share is convertible into Common Shares at any
time by dividing the sum of $10.00 and any accrued but unpaid dividends on the Class C Preferred
Shares by the conversion price of $1.00. The consideration for the purchase of Class C Preferred
Shares is Mr. Mastandrea’s services as an officer of the Company for September 29, 2006 through
September 29, 2008. The Class C Preferred Shares are subject to forfeiture and restricted from
being sold by Mr. Mastandrea until the latest to occur of a public offering by the Company
sufficient to liquidate the Class C Preferred Shares, an exchange of Paragon’s existing shares for
new shares, or September 29, 2008.
Neither Mr. Mastandrea or Mr. Dee has effected any other transactions in the Company’s shares
in the past 60 days.
Item 7. Material to be Filed as Exhibits.
Exhibit 7.1 Joint Filing Agreement
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I certify that the
information set forth in this statement is true, complete and correct.
Date: November 8, 2006
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/s/ James C. Mastandrea
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James C. Mastandrea |
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/s/ John J. Dee
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John J. Dee |
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Page 6 of 7
EXHIBIT 7.1
AGREEMENT OF JOINT FILING
Pursuant to Rule 13d-1(k) promulgated under the Securities Exchange Act of 1934, as amended,
the undersigned persons hereby agree to file with the Securities and Exchange Commission, the
Statement on Schedule 13D (the “Statement”) to which this Agreement is attached as an exhibit, and
agree that such Statement, as so filed, is filed on behalf of each of them.
This Agreement may be executed in counterparts, each of which when so executed shall be deemed
to be an original, and all of which together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement.
Date: November 8, 2006
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/s/ James C. Mastandrea
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James C. Mastandrea |
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/s/ John J. Dee
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John J. Dee |
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