WINTHROP
REALTY TRUST
7
Bulfinch Place
Suite
500
Boston,
Massachusetts 02114
(617)
570-4614
PROXY
STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
MAY
21, 2009
______________
GENERAL
INFORMATION
We are
sending this Proxy Statement in connection with the solicitation of proxies by
our Board of Trustees for the 2009 Annual Meeting of Shareholders to be held at
the 11
th
Floor
Conference Center in the offices of Katten Muchin Rosenman, 575 Madison Avenue,
New York, New York 10022, on Thursday May 21, 2009 at 11:00 A.M., and at any
adjournment or adjournments thereof, which we refer to as the “Annual
Meeting”. We are first mailing this Proxy Statement and the
accompanying form of proxy to Shareholders on or about April 21,
2009. In this Proxy Statement, all references to the “Trust,” “we,”
“our” and “us” mean Winthrop Realty Trust, an Ohio business
trust. All references to “Shareholder” and “you” refer to a holder of
record of our beneficial interests designated as common shares, par value $1.00
per share, which we refer to as Common Shares.
At the
meeting you will be asked to consider and vote on the following
matters:
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1.
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To
elect seven Trustees to our Board of Trustees to serve for a term of one
year and until their respective successors shall be elected and shall
qualify;
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2.
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To
amend Section 1.3 of the Declaration of Trust to clarify the purpose of
the Trust;
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3.
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To
amend Section 3.3 of the Declaration of Trust to modify the
indemnification rights of Trustees, officers, employees and agents of the
Trust;
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4.
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To
amend Section 4.1 of the Declaration of Trust to more clearly set forth
the rights of the Trust to issue shares of beneficial
interest;
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5.
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To
amend Section 7.1 of the Declaration of Trust to modify the timing of the
Trust’s annual meeting and permit additional persons to call special
meetings of holders of beneficial
interests;
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6.
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To
amend Article VIII of the Declaration of Trust to modify, among other
things, the voting requirement for election of
Trustees;
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7.
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To
amend Section 10.1 of the Declaration of Trust to permit certain
amendments to the Declaration of Trust to be made without the consent of
holders of beneficial interests;
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8.
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To
amend Article XI of the Declaration of Trust to correct inconsistencies
set forth therein and to clarify the rights of the
Trust;
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9.
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To
ratify the selection of PricewaterhouseCoopers LLP as our independent
registered public accounting firm for the 2009 fiscal
year;
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10.
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To
consider and act upon such other matters as may properly come before the
Annual Meeting or any adjournment
thereof.
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Record
Date and Voting Securities
This
Proxy Statement is being furnished to all holders of record of Common Shares as
of the close of business on April 1, 2009, which we refer to as the “Record
Date”.
Only
Shareholders of record as of the close of business on the Record Date are
entitled to notice of and to vote at the Annual Meeting. Shareholders
as of the Record Date are entitled to one vote per Common Share on each matter
properly submitted at the Annual Meeting. On the Record Date, there
were issued and outstanding 15,815,876 Common Shares. There was no
other class of voting securities outstanding at the Record
Date. However, in accordance with the terms of the Certificate of
Designations pursuant to which we issued our Series B-1 Cumulative Convertible
Redeemable Preferred Shares of Beneficial Interest, which we refer to as “Series
B-1 Shares”, so long as there are at least 1,000,000 Series B-1 Shares
outstanding the holders of the Series B-1 Shares are entitled to elect one
Trustee to our Board of Trustees, which we refer to as the
“Board”. The Trustee elected by the holders of the Series B-1 Shares
is not being voted upon at the Annual Meeting.
Attending the Annual
Meeting
If you
would like to attend the Annual Meeting in person, you will need to bring an
account statement or other evidence acceptable to us of ownership of your Common
Shares as of the close of business on the Record Date. If you hold
Common Shares in “street name” (i.e., through a bank, broker or other nominee)
and wish to vote at the Annual Meeting, you will need to contact your nominee
and obtain a proxy from your nominee and bring it to the Annual
Meeting.
Solicitation
of Votes
The Board
is soliciting a proxy in the form accompanying this Proxy Statement for use at
the Annual Meeting, and will not vote the proxy at any other meeting.
Mr. Michael L. Ashner and Ms. Carolyn Tiffany, or each acting individually,
are the persons named as proxies on the proxy card accompanying this Proxy
Statement, who have been selected by the Board to serve in such
capacity. Both Mr. Ashner and Ms. Tiffany are members of the Board
and executive officers of the Trust.
We will
pay the cost of soliciting proxies. We have hired Mackenzie Partners, Inc. to
solicit proxies. In addition to solicitation by mail, by telephone
and by e-mail or the Internet, arrangements may be made with brokerage houses
and other custodians, nominees and fiduciaries to send proxies and proxy
materials to their principals and we may reimburse them for their expenses in so
doing. If you hold shares in “street name” (i.e., through a bank,
broker or other nominee), you will receive instructions from your nominee which
you must follow in order to have your proxy authorized or you may contact your
nominee directly to request these instructions.
Voting
Shareholders
may vote on the matters to be voted upon at the Annual Meeting either in person
at the Annual Meeting or by proxy. If you choose to vote by proxy,
you may do so in one of three ways, over the Internet, by telephone or by
executing and returning the enclosed proxy card. Once you authorize a
proxy, you may revoke that proxy by (1) executing and submitting a later
dated proxy card, (2) subsequently authorizing a proxy through the Internet
or by telephone, (3) sending a written revocation of proxy to our Secretary
at our principal executive office, 7 Bulfinch Place, Suite 500, Boston,
Massachusetts 02114, or (4) attending the Annual Meeting and voting in
person. Attending the Annual Meeting without submitting a new proxy
or voting in person will not automatically revoke your prior authorization of
your proxy. Only the last vote of a Shareholder will be
counted.
Quorum;
Method of Tabulation
The
holders of a majority of the outstanding Common Shares as of the close of
business on the Record Date, present in person or by proxy, will constitute a
quorum for the transaction of business at the Annual
Meeting. Abstentions and broker “non-votes” are included in the
determination of the number of shares present at the Annual Meeting for quorum
purposes but broker “non-votes” are not counted in the tabulations of the votes
cast on proposals presented to Shareholders. A broker “non-vote”
occurs when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power
with respect to that item and has not received instructions from the beneficial
owner.
A proxy,
in the accompanying form, which is properly executed, duly returned to us and
not revoked, will be voted in accordance with the instructions contained therein
and, in the absence of specific instructions, will be voted (i) FOR the
election, as Trustees, of the seven persons who have been nominated by the
Board, (ii) FOR the amendments to the Trust’s Declaration of Trust, which we
refer to as the “Declaration of Trust”, set forth in Proposals 2 through 8,
(iii) FOR the ratification of the selection of PricewaterhouseCoopers LLP, who
we refer to as “PwC”, as the independent registered public accounting firm to
audit and report upon the consolidated financial statements of the Trust for the
2009 fiscal year, and (iv) in accordance with the judgment of the person or
persons voting the proxies on any other matter that may be properly brought
before the Annual Meeting.
Vote
Required
The seven
nominees for election as Trustees who receive the greatest number of votes
properly cast for the election of Trustees shall be elected
Trustees. The affirmative vote of a majority of the votes permitted
to be voted at the Annual Meeting (at which a quorum is present), present in
person or represented by proxy, that are properly cast is necessary to (i)
approve each of the amendments to the Declaration of Trust described in this
proxy statement and (ii) to ratify PwC as the Trust’s independent registered
public accounting firm to audit and report upon the consolidated financial
statements of the Trust for the 2009 fiscal year.
Annual
Report
Our
Annual Report to Shareholders, which includes financial statements for the
fiscal year ended December 31, 2008, is being mailed together with this Proxy
Statement to Shareholders entitled to vote at the Annual Meeting. The
Annual Report is not to be regarded as proxy soliciting material.
PROPOSAL
NO. 1
ELECTION
OF TRUSTEES
General
The Board
currently consists of eight members, seven of which are elected by the holders
of Common Shares and one of which is elected by the holders of the Series B-1
Shares. The Board has determined, in accordance with our By-laws, to
increase the number of members of the Board to nine persons, one of which is
elected by the holders of the Series B-1 Shares. Accordingly, the
Board nominated eight persons for election to the Board. On April 16,
2009, Talton Embry informed the Nominating and Corporate Governance Committee of
the Board of his decision to withdraw as a nominee for re-election as a
Trustee. In light of the timing, the Board is not in a position
to present a replacement nominee at the Annual Meeting. The Board will
either fill this position once an appropriate candidate has been identified or
reduce the number of Trustees to its current number of eight
members.
Shareholders
will be voting at the Annual Meeting for seven persons, which constitutes
all of the members of the Board who are elected by the holders of Common Shares,
to serve for a term of one year and until their respective successors shall have
been elected and shall qualify. The Board of Trustees has nominated
Michael L. Ashner, Arthur Blasberg, Jr., Howard Goldberg, Thomas McWilliams,
Carolyn Tiffany and Steven Zalkind for re-election as Trustees, and has
nominated Lee Seidler for election to the Board to fill the vacancy created by
the increase in the number of members of the Board.
Shareholders
do not have cumulative voting rights with respect to the election of
Trustees. It is the intention of the persons named in the enclosed
Proxy Card to vote such proxy "FOR" the election of the named nominees for
Trustee unless authorization is withheld on the Proxy Card. Should
any nominee be unable or unwilling to serve as a Trustee, which is not
anticipated, it is intended that the named proxies will vote for the election of
such other person or persons as they, in their discretion, may
choose. Each of the nominees has represented that they are
willing to serve as a Trustee if elected.
Information
as to Trustees
Set forth below is the business
experience of, and certain other information regarding, the nominees for
election as Trustees as well as Mr. Bradley Scher who is a Trustee elected by
the holders of the Series B-1 Shares. There are no family
relationships among our Trustees and executive officers.
Name
and year first appointed or
nominated as a
Trustee
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Age
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Principal Occupation
during the past Five Years
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Michael
L. Ashner
2004
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56
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Mr.
Ashner has been the Chief Executive Officer of the Trust since December
31, 2003 and Chairman since April 2004. Mr. Ashner also served as the
Executive Chairman and a trustee of Lexington Realty Trust (“Lexington”),
a New York Stock Exchange listed real estate investment trust, from
December 31, 2006 when Newkirk Realty Trust, Inc. (“Newkirk”) was merged
into Lexington to March 20, 2008. Mr. Ashner previously served
as a director and the Chairman and Chief Executive Officer of Newkirk
until it was merged into Lexington. Mr. Ashner also currently
serves as the Chief Executive Officer of Winthrop Realty Partners, L.P., a
real estate investment and management company, positions he has held since
1996. Mr. Ashner previously served as a director and Chief
Executive Officer of Shelbourne Properties I, Inc., Shelbourne Properties
II, Inc. and Shelbourne Properties III, Inc. (collectively, the
“Shelbourne Entities”), three real estate investment trusts, from August
2002 until their liquidation in April 2004. Mr. Ashner serves on the Board
of Directors of NBTY, Inc., a manufacturer and distributor of nutritional
supplements.
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Arthur
Blasberg, Jr.
2003
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81
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Mr.
Blasberg's activities for the past five years include serving as a
receiver appointed by the Superior Court in Massachusetts and as a trustee
of various businesses, including real estate investment firms and
industrial companies. Mr. Blasberg was a director and chairman
of the audit committee of each of the Shelbourne Entities from August 2002
to their liquidation in April 2004. Mr. Blasberg also has served as
a director of several private companies. He is an attorney
admitted to practice in the Supreme Court of the United States, various
federal courts and state courts and served for five years in the general
counsel's office of the Securities and Exchange
Commission.
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Howard
Goldberg
2003
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63
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Mr.
Goldberg has been a private investor in both real estate and start-up
companies and has provided consulting services to start-up companies
since 1999. From 1994 through 1998, Mr. Goldberg served as
President, CEO, and Board member of Player’s International, a
publicly-traded company in the gaming business prior to its sale to
Harrah's Entertainment Inc. From 2003 through 2005, Mr.
Goldberg served as a part-time consultant to Laser Lock Technologies,
Inc., LLTI.OB, a publicly-traded development stage company, engaged in the
development and marketing of technologies for the prevention of product
and document counterfeiting and electronic article surveillance. From 1995
through 2000, Mr. Goldberg served on the board of directors and audit
committee of Imall Inc., a publicly-traded company that provided
on-line shopping prior to its sale to Excite-at-Home. Mr.
Goldberg served as a member of the board of directors and the
audit committees of the Shelbourne Entities from August 2002 until
their liquidation in April 2004. Mr. Goldberg has a law degree
from New York University and was previously the managing partner of a New
Jersey law firm where he specialized in gaming regulatory law and
real estate from 1970 through
1994.
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Name
and year first appointed or
nominated as a
Trustee
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Age
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Principal Occupation
during the past Five Years
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Thomas
F. McWilliams
2008
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66
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Mr.
McWilliams is currently a managing partner and member of the investment
committee of Court Square Capital Partners, a private equity company that
manages approximately $6 billion in capital, a position he has held since
2006 when Court Square Capital Partners was formed. From 1983
to 2006, Mr. McWilliams held a similar position with Citigroup Venture
Capital, the private equity arm of Citigroup.
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Bradley
Scher
2009
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48
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Mr.
Scher is currently the Managing Member of Ocean Ridge Capital Advisors,
LLC, a privately held consulting firm formed in 2002 to provide financial
and operating consultative services to institutional investors, boards of
directors of public and private companies and to managements of public and
private companies. Prior to the formation of Ocean Ridge, Mr.
Scher was a Managing Director for PPM America, Inc., managing in excess of
$1 billion of investments for a special situations
fund. Previously he was a Director with TIAA-CREF in the
special loans unit of the investing arm of this insurance and pension
company. Prior to TIAA-CREF, Mr. Scher was an Investment
Manager in the Private Placements division of The Travelers and was a
middle market lending officer with Chemical Bank, where he graduated from
the bank’s highly acclaimed credit training program
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Lee
Seidler
2009(nominated)
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74
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Dr.
Seidler is currently a private investor. Dr. Seidler serves
frequently as an expert witness in accounting and finance cases for
various plaintiffs and defendants as well as the U.S. Securities and
Exchange Commission. He testified in 2002 before the Senate
Committee on Banking, Housing and Urban Affairs on regulation of the
accounting profession and consulted with staff drafting Sarbanes-Oxley
which produced the Public Company Accounting Oversight Board
(PCAOB). He was a member of the PCAOB’s Standing Advisory
Group. Mr. Seidler served as a General Partner and Senior Managing
Director of Bear, Stearns & Co. from 1981 to
1989
. Dr. Seidler
was elected to
Institutional
Investor’s
” All Star" first team of financial analysts for 14
consecutive years (until his retirement) for his analysis of the impacts
of accounting and financial reporting and taxes on the decisions of
investors. He was also director of the firm’s 55 person internal
audit staff for two years and represented Bear, Stearns in Washington D.C.
on legislative issues. Dr. Seidler is a CPA and has been a member of
the boards of directors of numerous public and private companies and has
served as chair of the audit committees of these companies. Dr.
Seidler was a professor of accounting and the Price Waterhouse professor
of auditing at New York University Graduate School of Business
Administration for 22 years.
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Name
and year first appointed or
nominated as a
Trustee
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Age
|
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Principal Occupation
during the past Five Years
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Carolyn
Tiffany
2009
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42
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Ms.
Tiffany has been the Trust’s President since January 1, 2009 and served as
the Trust’s Chief Operating Officer and Secretary from January 8, 2004 to
January 31, 2007. From February 2007 through March 2008 Ms.
Tiffany served as a principal and the Chief Operating Officer for High
Street Equity Advisors, a private equity real estate firm. From
April 2008 to December 31, 2008, Ms. Tiffany was a private
investor. In addition, Ms. Tiffany served as the Chief
Operating Officer and Secretary of Newkirk and its predecessor entities
from 1996 to December 31, 2006
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Steven
Zalkind
2008
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67
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Mr.
Zalkind has been a principal of Resource Investments Limited, LLC
(“Resource”), a real estate investment firm, since 1975 acting as either
an officer of the General Partner or Managing Member in the acquisition of
over 26,000 multi-family apartment units and 2,000,000 square feet of
commercial shopping centers and office buildings. Mr. Zalkind
currently serves as the Chairman and Chief Executive Officer of
Resource. Mr. Zalkind was a director of each of the Shelbourne
Entities from August 2002 to their liquidation in April 2004 and a
director of Newkirk from November 2005 until its merger with Lexington in
December 2006.
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Recommendation
of the Board
The Board
unanimously recommends a vote in favor of the election of Messrs. Ashner,
Blasberg, Goldberg, McWilliams, Seidler and Zalkind and Ms. Tiffany to the
Board. Unless otherwise indicated, the accompanying form of proxy
will be voted for the nominees listed above.
EXECUTIVE
OFFICERS
All
officers serve at the discretion of the Board. Set forth below is
certain information regarding our executive officers at April 1, 2009
(biographical information with respect to Mr. Ashner and Ms. Tiffany is set
forth above under Information as to Trustees):
Name
|
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Age
|
|
Current
Position
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Michael
L. Ashner
|
|
56
|
|
Chairman
and Chief Executive Officer
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Carolyn
Tiffany
|
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42
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President
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Peter
Braverman
|
|
57
|
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Executive
Vice Chairman
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Thomas
Staples
|
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53
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Chief
Financial Officer
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John
Alba
|
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38
|
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Chief
Investment Officer and Secretary
|
Mr.
Braverman currently serves as the Executive Vice Chairman of the
Trust. Mr. Braverman previously served as the President and as
Trustee of the Trust. Mr. Braverman also currently serves as the
Executive Vice President of Winthrop Realty Partners, L.P., a real estate
investment and management company, a position he has held since January
1996. Mr. Braverman served as a director and President of Newkirk
until it was merged into Lexington and as a director and Executive Vice
President of each Shelbourne Entity from August 2002 until their liquidation in
April 2004.
Mr.
Staples has been our Chief Financial Officer since January 8,
2004. Mr. Staples has been with Winthrop Realty Partners, L.P. since
1994 and has served as its Chief Financial Officer since January
1999. He also served as the Chief Financial Officer of Newkirk until
December 31, 2006 when it was merged into Lexington. Mr. Staples also served as
Assistant Treasurer of the Shelbourne Entities from August 2002 until their
liquidation in April 2004. Mr. Staples is a certified public
accountant.
Mr. Alba
was appointed our Chief Investment Officer in October 2005 and Secretary in May
2007. He has served as a Vice President of Winthrop Realty Partners,
L.P. since January 1998.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information as of March 16, 2009 (except as
otherwise indicated) regarding the ownership of our Common Shares by (i) each
person who is known to us to be the beneficial owner of more than 5% of the
outstanding shares of our Common Shares, (ii) each Trustee and nominee for
Trustee, (iii) each executive officer named herein, and (iv) all current
executive officers and Trustees as a group. Except as otherwise
indicated, each such Shareholder has sole voting and investment power with
respect to the shares beneficially owned by such Shareholder.
Name
and Address
of Beneficial
Owner
|
|
Position
with
the
Trust
|
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Amount
and Nature of
Beneficial
Ownership
|
|
|
Percent
of
Class
|
FUR
Investors, LLC (1)
FUR
Holdings LLC
WEM-FUR
Investors LLC
|
|
--
|
|
2,442,000
|
|
|
15.4%
|
John
Alba (1)
|
|
Chief
Investment Officer
|
|
--
|
(4)
|
|
(4)
|
Michael
L. Ashner(1)
|
|
Chairman
and CEO
|
|
2,532,256
|
(2)
|
|
16.0%
|
Arthur
Blasberg, Jr. (3)
|
|
Trustee
|
|
28,000
|
|
|
*
|
Peter
Braverman(1)
|
|
Executive
Vice Chairman
|
|
6,166
|
(4)
|
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(4)
|
Talton
Embry (5)
|
|
Trustee
|
|
232,255
|
(5)
|
|
1.5%
|
Howard
Goldberg (3)
|
|
Trustee
|
|
48,619
|
|
|
*
|
Thomas
F. McWilliams(3)
|
|
Trustee
|
|
--
|
|
|
*
|
Bradley
E. Scher(3)
|
|
Trustee
|
|
--
|
|
|
*
|
Lee
Seidler
|
|
Trustee
Nominee
|
|
2,000
|
|
|
*
|
Thomas
Staples(3)
|
|
Chief
Financial Officer
|
|
--
|
(4)
|
|
(4)
|
Carolyn
Tiffany(3)
|
|
President
and Trustee
|
|
9,410
|
|
|
*
|
Steven
Zalkind(3)
|
|
Trustee
|
|
10,613
|
|
|
*
|
All
Trustees, Trustee nominees and executive officers as a group
|
|
|
|
2,870,319
|
|
|
18.1%
|
Fairholme
Capital Management, LLC(6)
Bruce
R. Berkowitz
|
|
--
|
|
1,699,160
|
(6)
|
|
10.4%(6)
|
Abrams
Capital, LLC (7)
Pamet
Capital Management, LLC
Pamet
Capital Management, L.P.
David
Abrams
|
|
--
|
|
1,499,998
|
(7)
|
|
9.5%
|
The
Vangaurd Group Inc.(8)
|
|
--
|
|
947,114
|
(8)
|
|
6.0%
|
Barclays
Global Investors, NA(9)
|
|
--
|
|
820,393
|
(9)
|
|
5.2%
|
*Less
than 1%
(1)
|
The
address for each of FUR Investors LLC, FUR Holdings LLC, WEM-FUR Investors
LLC, Mr. Alba, Mr. Ashner and Mr. Braverman is Two Jericho Plaza, Wing A,
Suite 111, Jericho, NY 11753
|
(2)
|
Comprised
of 2,442,000 shares owned by FUR Investors LLC, 60,256 shares held
directly by Mr. Ashner and 30,000 shares held by The Ashner Family
Evergreen Foundation, a New York not for profit corporation (the
“Foundation”). Mr. Ashner is the managing member of WEM-FUR Investors LLC,
the managing member of FUR Holdings, LLC, the sole member of FUR Investors
LLC. As such, Mr. Ashner may be deemed to beneficially own all shares
owned by Investors. Mr. Ashner is a director of the Foundation
and, as such, may be deemed to beneficially own all shares owned by the
Foundation.
|
(3)
|
The
address for each of Messrs. Blasberg, Goldberg, McWilliams, Scher, Staples
and Zalkind and Ms. Tiffany is c/o of Winthrop Realty Trust, 7 Bulfinch
Place, Suite 500, Boston, MA 02114.
|
(4)
|
Messrs.
Alba, Braverman, and Staples are members of WEM-FUR Investors LLC, the
managing member of FUR Holdings, LLC, the sole member of FUR Investors
LLC. Accordingly, Messrs. Alba, Braverman and Staples have an
indirect pecuniary interest in approximately 25,396.8, 60,073.2 and
29,304, respectively, of the Common Shares owned by FUR Investors
LLC. However, Messrs. Alba, Braverman and Staples do not
exercise investment control over the shares held by FUR Investors
LLC. Accordingly, Messrs. Alba, Braverman and Staples are not
deemed to beneficially own any of such shares under Section 13 or Section
16 of the Securities Exchange Act of 1934, as
amended.
|
(5)
|
The
address for Mr. Embry is c/o Magten Asset Management Corp., 7 East 89
th
Street, New York, New York 10128. The number of shares reported
consists of (i) 192,698 shares held in an IRA for the benefit of Mr.
Embry, (ii) 20,687 shares held in an IRA for the benefit of Mr. Embry’s
spouse, (iii) 11,880 shares held by Mr. Embry’s son who shares a residence
with Mr. Embry, and (iv) 7,960 shares held by Mr. Embry’s daughter who
shares a residence with Mr. Embry. Amount excludes 31,652
shares owned in discretionary accounts in which Mr. Embry has no pecuniary
interest.
|
(6)
|
The
address for Fairholme Capital Management, LLC (“Fairholme”) and Mr.
Berkowitz is c/o Fairholme Capital Management, LLC, 4400 Biscayne
Boulevard, 9th Floor, Miami, FL 33137. Number of shares
includes 444,444.48 Common Shares issuable upon the conversion of the
400,000 Series B-1 Shares held by Fairholme. Percentage based
on outstanding Common Shares at March 16, 2009 plus 444,444 Common Shares
issuable upon conversion of the 400,000 Series B-1 Shares held by
Fairholme. Information is derived from the 13-G/A filing by
Fairholme and Mr. Berkowitz with the SEC on February 13,
2009.
|
(7)
|
The
address for Abrams Capital, LLC, Pamet Capital Management, LLC, Pamet
Capital Management, L.P. and David Abrams (collectively, “Abrams”) is c/o
Pamet Capital Management, L.P., 222 Berkeley Street, 22nd Floor, Boston,
MA 02116. Information is derived from the 13-G/A filing by
Abrams with the SEC on February 13,
2009.
|
(8)
|
The
address for The Vanguard Group Inc. (“Vanguard”) is 100 Vanguard Avenue,
Malvern, Pennsylvania 19355. Information is derived from the
13-G filing by Vanguard with the SEC on February 13,
2009.
|
(9)
|
The
address for Barclays Global Investors, NA. (“Barclays”) is 400 Howard
Street, San Francisco, California 94105. Information is derived
from the 13-G filing by Vanguard with the SEC on February 2,
2009.
|
THE
BOARD, ITS COMMITTEES AND
OTHER
CORPORATE GOVERNANCE INFORMATION
Board
Meetings
During
2008, the Board met or acted through written consent 24 times. Each
of the Trustees attended either in person or telephonically 75% or more of the
aggregate number of meetings of the Board and Board committees on which the
Trustee served in 2008. It is the policy of the Board to have all
members of the Board in attendance at the Annual Meeting, or if unavailable to
attend in person, to make arrangement, if possible, to participate by telephone
or video conference. All members of the Board attended, either in
person or by telephone conference call, the 2008 Annual Meeting of
Shareholders.
Board
Committees
The
Declaration of Trust and our By-laws give the Board the authority to delegate
its powers to a committee appointed by the Board. All committees are
required to conduct meetings and take action in accordance with the directions
of the Board and the provisions of our By-laws. The Board has appointed four
standing committees: an audit committee, a compensation committee, a nominating
and corporate governance committee, and a conflicts
committee. Certain of the committees' principal functions are
described below.
Audit
Committee
The Audit
Committee:
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·
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reviews
annual and quarterly consolidated financial statements with our management
and independent registered public accounting
firm;
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·
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recommends
the appointment and reviews the performance, independence, and fees of our
independent registered public accounting firm and the professional
services they provide;
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oversees
our system of internal accounting controls and the internal audit
function; and
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·
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discharges
such other responsibilities specified in the listing standards of the New
York Stock Exchange for audit
committees.
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The Board
has adopted a written charter for the Audit Committee, which is available at our
website www.winthropreit.com, under the link “Corporate
Governance”. A printed copy of the charter is also available to any
Shareholder who requests it in writing to the Trust’s Secretary at 7 Bulfinch
Place, Suite 500, Boston, Massachusetts 02114.
From
January 1, 2008 through March 14, 2008, the Audit Committee consisted of Arthur
Blasberg, Jr. (Chairman), Bruce Berkowitz and Howard
Goldberg. Following Mr. Berkowitz’ resignation as a Trustee effective
March 14, 2008, and Mr. Zalkind’s election as Trustee on March 17, 2008, Mr.
Zalkind was appointed to the Audit Committee. The Audit Committee
meets periodically throughout the year both through formal meetings and written
consents as well as through informal discussions as necessary. During
the 2008 fiscal year, the Audit Committee met or acted through unanimous written
consent six times. All members of the Audit Committee attended either
in person or by telephone conference call all meetings of the Audit Committee
other than one meeting which Mr. Berkowitz did not
attend. Representatives of PwC, our independent registered public
accounting firm for the year ended December 31, 2008, attended all meetings of
the Audit Committee. The Audit Committee met on February 24, February
26 and March 3, 2009 with representatives of PwC to discuss our 2008
consolidated financial statements.
The Board
has concluded that each member of the Audit Committee is “financially literate”
as such term is defined in the listing standards of the New York Stock Exchange
and that Mr. Blasberg, the chairman of the Audit Committee, meets the Securities
and Exchange Commission definition of "audit committee financial
expert". We are currently in compliance with the listing requirements
of the New York Stock Exchange relating to audit committee qualification, and
the Board has determined that its Audit Committee possesses sufficient financial
expertise to effectively discharge its obligations.
For
further information with respect to the Audit Committee, see “AUDIT COMMITTEE
REPORT” which begins on page 15 of this Proxy Statement.
Compensation
Committee
The
Compensation Committee:
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recommends
to the Board the compensation policies and arrangements for our officers,
Trustees, advisors and affiliates;
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discharges
such other responsibilities specified in the listing standards of the New
York Stock Exchange for compensation committees;
and
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·
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reviews
the “Compensation Discussion and Analysis” section of this Proxy Statement
set forth on page 13 of this Proxy Statement and issues its report which
can be found on page 14 of this Proxy
Statement.
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The Board
has adopted a written charter for the Compensation Committee, which is available
at our website www.winthropreit.com, under the link “Corporate
Governance”. A printed copy of the charter is also available to any
Shareholder who requests it in writing to the Trust’s Secretary at 7 Bulfinch
Place, Suite 500, Boston, Massachusetts 02114.
From
January 1, 2008 through March 14, 2008, the Compensation Committee consisted of
Talton Embry (Chairman), Bruce Berkowitz, Arthur Blasberg, Jr., Howard Goldberg
and Steven Mandis. From March 17, 2008 through November 11, 2008, the
Compensation Committee consisted of Talton Embry (Chairman), Arthur Blasberg,
Jr., Howard Goldberg, Steven Mandis and Steven Zalkind. Effective
November 11, 2008, the Compensation Committee was reconstituted and Messrs.
Embry (Chairman), McWilliams and Zalkind were appointed as the only members of
the Compensation Committee. The Compensation Committee acted through
unanimous written consent twice during the 2008 fiscal year.
Nominating
and Corporate Governance Committee
The
Nominating and Corporate Governance Committee:
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reviews
the qualifications of current and potential Trustees including determining
whether they are “independent” under the listing standards of the New York
Stock Exchange;
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reviews
each Trustee's continued service on the
Board;
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reviews
outside activities of Board members and resolves, to the extent not
referred to the Conflicts Committee, any issue of possible conflict of
interest related thereto;
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considers
nominees for Trustees submitted in writing to the Chairman of the
Nominating Committee (along with other information submitted in accordance
with our By-laws and the Declaration of Trust), which are submitted by our
executive officers, current Trustees, search firms engaged by the
Nominating Committee, if any, by others in its discretion and, nominees
for Trustee proposed by a Shareholder in accordance with the terms of our
By-laws and the Declaration of
Trust;
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considers
proposals submitted by Shareholders for inclusion in the proxy statement
for our Annual Meeting of Shareholders if they are submitted in writing to
the Chairman of the Nominating Committee at our principal address in
accordance with the provisions of our By-laws and the Declaration of Trust
and so long as the submitting Shareholder meets the qualifications and
complies with the procedures provided in the proxy rules of the Securities
and Exchange Commission. All such proposals shall be
accompanied by information with respect to the submitting Shareholder
sufficient for the committee to determine whether such qualifications are
met;
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reviews
any other Shareholder communications intended for our management unless
such communication is directed to a specific Trustee or
Trustees;
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recommends
nominations for members of the
Board;
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reviews
and assesses the adequacy of the charters of the Audit Committee,
Compensation Committee and Conflicts Committee;
and
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discharges
such other responsibilities specified in the listing standards of the New
York Stock Exchange for nominating and corporate governance
committees.
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The Board
has adopted a written charter for the Corporate Governance and Nominating
Committee, which is available at our website www.winthropreit.com, under the
link “Corporate Governance”. The Board has also adopted Corporate
Governance Guidelines which is also available at our website
www.winthropreit.com, under the link “Corporate Governance.” A
printed copy of the charter and the guidelines are also available to any
Shareholder who requests it in writing to the Trust’s Secretary at 7 Bulfinch
Place, Suite 500, Boston, Massachusetts 02114.
From
January 1, 2008 through March 14, 2008, the Nominating and Corporate Governance
Committee consisted of Bruce Berkowitz (Chairman), Arthur Blasberg, Jr., Talton
Embry and Howard Goldberg. Following Mr. Berkowitz’ resignation as a
Trustee effective March 14, 2008, Mr. Goldberg was appointed the Chairman of the
Nominating and Corporate Governance Committee. Effective November 11,
2008, the Nominating and Corporate Governance Committee was reconstituted and
Messrs. Goldberg (Chairman), Blasberg, Embry and McWilliams were appointed as
the only members of the Nominating and Corporate Governance
Committee. The Nominating and Corporate Governance Committee met or
acted through unanimous written consent two times during the 2008 fiscal
year. All members of the Nominating and Corporate Governance
Committee attended either in person or by telephone conference call all meetings
of the Nominating and Corporate Governance Committee.
Conflicts
Committee
In
November 2005, the Board determined to establish a Conflicts
Committee. The Conflicts Committee:
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considers
and approves, on behalf of the Trust, all material transactions that
relate to conflicts of interests between us and our affiliates, on the one
hand, and (i) FUR Advisors LLC, which we refer to as “FUR Advisors”, our
external advisor (and any successor advisor), Michael Ashner, and any of
their affiliates, (ii) Lexington Realty Trust, The Lexington Master
Limited Partnership, or Apollo Real Estate Investment Fund III, L.P. or
any of their respective affiliates, (iii) a beneficial owner of more than
4.9% of the issued and outstanding Common Shares, either directly or upon
the conversion of any of our preferred shares of beneficial interest, or
(iv) a beneficial owner of more than 4.9% of any other entity in which we
hold a 10% or greater interest; and
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advises
the Board on actions to be taken by us or matters related to us upon
request of the Board or the Nominating or Corporate Governance Committee,
which may include conflicts of
interest.
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The Board
has adopted a written charter for the Conflicts Committee, which is available at
our website www.winthropreit.com, under the link “Corporate
Governance”. A printed copy of the charter is also available to any
Shareholder who requests it in writing to the Trust’s Secretary at 7 Bulfinch
Place, Suite 500, Boston, Massachusetts 02114.
The
Conflicts Committee consists of all non-management Trustees of the
Board. At each meeting, the members of the Conflicts Committee choose
a presiding member for such meeting, based upon the topics to be
discussed. The Conflicts Committee held three meetings during the
2008 fiscal year which was attended either in person or by telephone conference
call by all members of the Conflicts Committee.
Independence
of Trustees
Pursuant to the Nominating and
Corporate Governance Committee’s Charter, the Committee undertook its annual
review of Trustee independence in March 2009. During this review, the
Committee considered transactions and relationships between each Trustee or any
member of his or her immediate family and the Trust and its subsidiaries and
affiliates, including those reported under “Certain Relationships and Related
Transactions” below. The Committee also examined transactions and relationships
between Trustees or their affiliates and members of our senior management or
their affiliates. The purpose of this review was to determine whether
any such relationships or transactions were inconsistent with a determination
that the Trustee is independent in accordance with Section 303A.02(a) and (b) of
the listing standards of the New York Stock Exchange. In particular,
the Committee reviewed with counsel responses given by the Trustees in their
Trustee Questionnaires, asked counsel if it was aware of any relationships
between the Trustees and us or our affiliates and reviewed the bright-line
independence tests set forth in Section 303A.02(b).
As a
result of this review, the Board affirmatively determined that each of Messrs.
Blasberg, Embry, Goldberg, McWilliams, Scher, Seidler and Zalkind are
independent of the Trust and its management in accordance with Section
303A.02(a) and (b) of the listing standards of the New York Stock
Exchange. Mr. Ashner and Ms. Tiffany are not considered independent
because of their acting as our executive officers as well as their ownership
interest in FUR Advisors. See “Certain Relationships and Related
Transactions” below.
Meetings
of Non-Management Trustees
The
non-management Trustees meet without management present from time and time as
they deem appropriate including, without limitation, prior to or following every
regular quarterly meeting of the Board. There is not a predetermined
non-management Trustee who presides over all such meetings. At each
meeting, the non-management Trustees choose a presiding member for such meeting,
based upon the topics to be discussed. "Non-management" Trustees are
all those Trustees who are not executive officers, and may include Trustees who
are not considered to be independent under regulations issued by the SEC or the
New York Stock Exchange.
Communication
with Trustees
Shareholders
and any other interested party wishing to communicate with the Board may do so
in one of four ways: in person at our annual Shareholders meeting, by mail, by
telephone or via the internet. Any Shareholder can mail
correspondence to any Trustee, or the Board as a whole, by addressing it to our
outside general counsel, Post Heymann & Koffler, LLP, Two Jericho Plaza,
Wing A, Suite 211, Jericho, New York 11753, Attention: David J.
Heymann. After the mail is opened and screened for security purposes,
it will be logged in, and (other than mail that Mr. Heymann determines to be
trivial or obscene) then forwarded to the particular Trustee identified, or the
Board as a whole, as requested in the Shareholder's
correspondence. Trivial items will be delivered to the Trustees at
the next scheduled Board meeting. Obscene items will not be
forwarded.
Shareholders
and any other interested party wishing to communicate only with non-management
Trustees may do so in the manner described above or by calling toll free at
866-241-4955 or via the internet through the Investor Relations page on our
website, www.winthropreit.com
.
All
communications through the toll-free number or our website are forwarded solely
to Mr. Heymann and will be handled in the same manner as written correspondence
described above.
Compensation
of Trustees
The
following table sets forth a summary of the compensation received by our
non-officer Trustees during 2008:
Name
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|
Fees
Earned or Paid in Cash
|
|
Stock
Awards
|
|
Option
Awards
|
|
All
Other Compensation
|
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Total
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Bruce
Berkowitz(1)
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$11,750
|
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-
|
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-
|
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-
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$11,750
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Arthur
Blasberg, Jr.
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|
$79,000
|
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-
|
|
-
|
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-
|
|
$79,000
|
Talton
Embry
|
|
$30,000
|
|
-
|
|
-
|
|
-
|
|
$30,000
|
Howard
Goldberg
|
|
$49,000
|
|
-
|
|
-
|
|
-
|
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$49,000
|
Steven
Mandis(2)
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$30,000
|
|
-
|
|
-
|
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-
|
|
$30,000
|
Thomas
McWilliams(3)
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|
$22,500
|
|
|
|
|
|
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$22,500
|
Bradley
Scher(4)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Steven
Zalkind(5)
|
|
$35,750
|
|
-
|
|
-
|
|
-
|
|
$35,750
|
(1) Resigned
as a Trustee effective March 14, 2008.
(2) Resigned
as a Trustee effective November 11, 2008
(3) Elected
as a Trustee effective May 21, 2008
(4) Elected
as a Trustee effective February 12, 2009
(5) Elected
as a Trustee effective March 17, 2008.
The
current non-officer Trustees, Messrs. Blasberg, Embry, Goldberg, McWilliams,,
Scher and Zalkind, each receive $30,000 annually for their services as
Trustees. In addition, each member of the audit committee received
$15,000 for serving on the Audit Committee in 2008, $500 for each committee
meeting they attend and the chairman of the Audit Committee receives an
additional $30,000 annually. Trustees who are also our officers
receive no compensation for serving on the Board. However, all
Trustees are reimbursed for travel expenses and other out-of-pocket expenses
incurred in connection with their service on the Board.
CODE
OF ETHICS
We have
adopted a Code of Ethics, which is applicable to all Trustees and our executive
officers, including the principal executive officer, the principal financial
officer and the principal accounting officer, as well as FUR Advisors and its
employees. The Code of Ethics can be obtained upon request from our
Secretary and at our website www.winthropreit.com under the link “Corporate
Governance”.
COMPENSATION
DISCUSSION AND ANALYSIS
General
As
described above under “Board of Trustees-Board Committees-Compensation
Committee” on page 10 of this Proxy Statement, the Compensation Committee is
responsible for recommending to the Board the compensation policies and
arrangements for the Trust's officers, Trustees, advisors and
affiliates. The Compensation Committee acts pursuant to the
Compensation Committee Charter and is comprised of three members who were
independent within the meaning of Section 303A.02 of the listing standards of
the New York Stock Exchange. A copy of the Compensation Committee
Charter is available upon request from the Trust’s Secretary at 7 Bulfinch
Place, Suite 500, Boston, Massachusetts 02114 and at our website
www.winthropreit.com.
Executive
Compensation Principles
We do not
provide any remuneration to our executive officers and do not have any direct
employees. We retain FUR Advisors to provide substantially all of our
asset management, accounting and investor services.
At
present, the Compensation Committee reviews annually the terms of the advisory
agreement with FUR Advisors to determine their consistency with market terms and
whether the retention of an outside advisor is more favorable to us than
retaining direct employees. The Compensation Committee reviews the
fees payable to FUR Advisors in comparison to the general and administration
costs of other public real estate investment trusts. Based on its
review, the Compensation Committee recommended to the Board that the advisory
agreement with FUR Advisors be renewed.
In light
of the recent market downturn and resulting decline in value to our shareholders
equity, FUR Advisors made a proposal to the Compensation Committee during the
first quarter of 2009 to reduce the base management fee. The proposal
was approved by the Compensation Committee, the result of which will be to
reduce the fees payable to FUR Advisors in 2009 by approximately
$2,445,000.
If we
were to retain our executive officers directly, the Compensation Committee
would, in making its compensation recommendations to the Board likely consider
(1) the potential holding periods of our assets, (2) the number of individual
investments held by us, (3) the amount of asset management required with respect
to our assets, (4) our overall investment prospects and our short and long-term
business plan, and (5) with respect to a specific executive officer, such
officer's responsibilities, experience and overall performance. The
Compensation Committee would further seek to attract and retain highly qualified
executives and to motivate them to work together as a team to maximize our
financial performance on an annual and long-term basis thereby resulting in
increased shareholder value.
Share
Options/Grants
From
March 2005 to May 2007, we did not maintain any share option or share grant
plans in effect pursuant to which we could issue options. In May
2007, our Shareholders approved the Winthrop Realty Trust 2007 Long Term
Incentive Plan pursuant to which share options or share grants can be
granted. No such share options or share grants were granted during
the year ended December 31, 2008.
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee is comprised entirely of independent
directors. The Compensation Committee has reviewed the Compensation
Discussion and Analysis required by Item 402(b) of Regulation S-K with
management and, based on such review and discussions, the Compensation Committee
recommended to the Board that the Compensation Discussion and Analysis be
included in this Proxy Statement.
Members
of the Compensation Committee
Talton
Embry (Chairman)
Thomas
McWilliams
Steven
Zalkind
The
preceding “Compensation Committee Report” shall not be deemed soliciting
material or to be filed with the Securities and Exchange Commission, nor shall
any information in this report be incorporated by reference into any past or
future filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent we specifically
incorporate it by reference into such filing.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There
were no relationships among members of the Compensation Committee, members of
the Board or our executive officers who served during our 2008 fiscal year that
require disclosure under Item 407(e)(4) of Regulation S-K promulgated
under the Securities Exchange Act of 1934, as amended. All current
members of the Compensation Committee are considered independent under our
Corporate Governance Guidelines.
AUDIT
COMMITTEE REPORT
The Audit
Committee acts pursuant to the Audit Committee Charter and is comprised of three
members who are independent within the meaning of Section 303A.02 of the listing
standards of the New York Stock Exchange. A copy of the Audit
Committee Charter can be obtained upon request from our Secretary at 7 Bulfinch
Place, Suite 500, Boston, Massachusetts 02114 and at the Trust’s website
www.winthropreit.com.
The Audit
Committee is responsible for the appointment, compensation, retention and
oversight of the accounting firm engaged as the Trust's independent registered
public accounting firm. Management is responsible for the Trust's
internal controls and financial reporting process. The independent
registered public accounting firm is responsible for performing an independent
audit of the Trust's consolidated financial statements in accordance with
generally accepted auditing standards and for issuing a report thereon and
expressing an opinion on the effectiveness of the Trust’s internal control over
financial reporting. The Audit Committee's responsibility is to
oversee these processes.
In
carrying out these responsibilities, the Audit Committee meets each quarter and
several other times during the year to, among other things:
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monitor
preparation of, and reviews, the quarterly and annual financial reports by
the Trust’s management;
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•
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supervise
the relationship between the Trust and its independent registered public
accounting firm, including having direct
responsibility for
their appointment, compensation and retention; reviewing the scope of
their audit services; approving non-audit services; and confirming the
independence of the independent registered public accounting
firm;
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•
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review
and discuss the Trust’s policies with respect to risk assessment and risk
management; and
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•
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oversee
management’s implementation and maintenance of effective systems of
internal and disclosure controls, including review of the Trust’s policies
relating to legal and regulatory compliance, ethics and conflicts of
interest and review of the Trust’s internal auditing
program.
|
In this
context, the Audit Committee has met and held discussions with management and
PricewaterhouseCoopers LLP, the Trust’s independent registered public accounting
firm for 2008, regarding the fair and complete presentation of the Trust’s
financial results and the assessment of the Trust’s internal control over
financial reporting. The Audit Committee has discussed significant
accounting policies applied by the Trust in its consolidated financial
statements, as well as alternative treatments. Management represented
to the Audit Committee that the Trust’s consolidated financial statements were
prepared in accordance with accounting principles generally accepted in the
United States of America, and the Audit Committee has reviewed and discussed the
consolidated financial statements with management and the independent registered
public accounting firm.
The Audit
Committee met, discussed and reviewed with PricewaterhouseCoopers LLP all
matters required to be discussed by
Statement on Auditing Standards No.
61, as amended (Communication with Audit Committees)
. The
Audit Committee also discussed with PricewaterhouseCoopers LLP matters relating
to its independence, including a review of audit and non-audit fees and the
written disclosures and letter from Pricewaterhouse Coopers LLP to the Audit
Committee pursuant to
Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees)
,
"Communication with Audit Committees". The Audit Committee also has
considered whether PricewaterhouseCoopers LLP’s provision of non-audit services
to the Trust is compatible with its independence. The Audit Committee
has concluded that PricewaterhouseCoopers LLP is independent from the Trust and
its management.
The Audit
Committee discussed with the Trust’s internal auditor and the independent
registered public accounting firm the overall scope and plans for their
respective audits. The Audit Committee met with the internal auditor
and the independent registered public accounting firm, with and without
management present, to discuss the results of their examinations of the Trust’s
consolidated financial statements for the year ended December 31, 2008, the
evaluations of the Trust’s internal controls, and the overall quality of the
Trust’s financial reporting.
In
reliance upon the Audit Committee's reviews and discussions referred to above
and the Audit Committee's review of the representations of management, and the
report of the independent registered public accounting firm, the Audit Committee
recommended that the Board of Trustees include the audited consolidated
financial statements in the Trust's Annual Report on Form 10-K for the year
ended December 31, 2008, as filed with the Securities and Exchange
Commission. The Audit Committee believes that it has satisfied its
responsibilities under its charter.
Members
of the Audit Committee
Arthur
Blasberg, Jr. (Chairman)
Howard
Goldberg
Steven
Zalkind
The
preceding “Audit Committee Report” shall not be deemed soliciting material or to
be filed with the Securities and Exchange Commission, nor shall any information
in this report be incorporated by reference into any past or future filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except to the extent the Trust specifically incorporates it by
reference into such filing.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our executive
officers, Trustees and persons who beneficially own greater than 10% of a
registered class of our equity securities to file certain reports which we refer
to as “Section 16 Reports” with the Securities and Exchange Commission with
respect to ownership and changes in ownership of our Common Shares and other
equity securities. Based solely on our review of the Section 16
Reports furnished to us as well as written representations from certain
reporting persons, our officers, Trustees and greater than 10% beneficial
owners, such persons have complied with all Section 16(a) requirements
applicable to them.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
FUR
Advisors administers our business pursuant to the terms of an advisory
agreement. FUR Advisors is controlled by and partially owned by our
executive officers. Pursuant to the terms of the advisory agreement,
FUR Advisors is responsible for providing asset management services to us and
coordinating with our Shareholder transfer agent and property
managers. During 2008, the quarterly base management fee payable to
FUR Advisors for providing such services equaled the lesser of an asset based
fee or an equity based fee as determined in accordance with the terms of the
advisory agreement which are calculated as follows:
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Asset
based fee equals 1% of our gross asset value up to $100,000,000, 0.75% of
our gross asset value between $100,000,000 and $250,000,000, 0.625% of our
gross asset value between $250,000,000 and $500,000,000 and 0.50% of our
gross asset value in excess of $500,000,000 (in light of the net lease
nature of our 16 net lease properties, FUR Advisors agreed to reduce its
fee for these properties to 0.25% of the gross asset value for the portion
of that portfolio that is subject to
leverage).
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·
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Equity
based fee equals (i) 1.5% of our issued and outstanding equity securities
plus (ii) .25% of any equity contribution by a third party to a joint
venture managed by us. For purposes of the equity based
calculation, the 6,211,783 Common Shares outstanding at January 1, 2005
are to be valued as follows: $11.50 (FUR Investors LLC’s tender offer
price in its December 2003 tender offer) with respect to 5,211,783 Common
Shares and $13.00 (the purchase price paid by FUR Investors LLC) with
respect to the 1,000,000 Common Shares acquired on December 31,
2003. Our Common Shares issued upon the conversion of our
Series A Preferred Shares were valued at $25.4125 per Common Share, the
conversion price.
1
|
In March
2009 the base management fee was modified effective as of January 1,
2009. As modified, the asset based fee calculation has been
eliminated and the equity based fee is based on a price of $11.00 per Common
Share outstanding at December 31, 2008 and $25.00 per Series B-1 Share with
respect to the 1,496,000 Series B-1 Shares outstanding after giving effect to
the repurchases of Series B-1 Shares during the fourth quarter of 2008 and the
first quarter of 2009. Any additional future conversions, redemptions
or repurchases of the Series B-1 Shares will not reduce the base equity for
purposes of the base management fee calculation. The fee with respect
to any future issuances of Common Shares or preferred shares of beneficial
interest will be based on the issuance price.
FUR
Advisors is also entitled to receive (i) property and construction management
fees at commercially reasonable rates as determined by the independent Trustees
and (ii) an incentive fee. The incentive fee entitles FUR Advisors to
receive (a) an amount equal to 20% of all distributions paid on our Common
Shares after December 31, 2003 in excess of the Threshold Amount, hereinafter
defined, and, (b) upon the termination of the advisory agreement, an amount
equal to 20% of our “liquidation value” in excess of the Threshold Amount at the
termination date. As defined in the advisory agreement, the Threshold
Amount is equal to (x) $71,300,000, increased by the net issuance price of all
of our Common Shares, with an adjustment for preferred shares converted, issued
after December 31, 2003, and decreased by the redemption price of all our Common
Shares redeemed after December 31, 2003, plus (y) a return on the amount, as
adjusted, set forth in (x) equal to 7% per annum compounded annually. The
incentive fee is reduced by any direct damages to us if the advisory agreement
is terminated by us for cause. No incentive fee was payable
during the year ended December 31, 2008.
Winthrop
Management L.P., an affiliate of FUR Advisors and our executive officers,
provides property management responsibilities for certain of our
properties. Pursuant to the terms of the property management
agreement, Winthrop Management L.P. receives a fee equal to 3% of the monthly
revenues of such properties.
The
following table sets forth the fees and reimbursements paid by us for the years
ended December 31, 2008, 2007 and 2006 to FUR Advisors and Winthrop Management
L.P. (in thousands):
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
Asset
Management (1)
|
|
$5,616,000
|
(3)
|
|
$5,263,000
|
(4)
|
|
$3,681,000
|
(5)
|
Property
Management (2)
|
|
264,000
|
|
|
269,000
|
|
|
217,000
|
|
Construction
Management (2)
|
|
23,000
|
|
|
9,000
|
|
|
-
|
|
(1)
Payable to FUR Advisors
(2)
Payable to Winthrop Management L.P.
(3)
Before credit of $1,763,000, described below
(4)
Before credit of $189,000, described below
(5)
Before credit of $4,400,000, described below
In
connection with the resignation by Michael L. Ashner, the Trust’s Chairman and
Chief Executive Officer, as an officer and Trustee of Lexington which was
effective March 20, 2008, the Trust consented to FUR Advisors entering into a
consulting agreement with Lexington pursuant to which FUR Advisors was to
provide consulting services to Lexington through December 31, 2008. For
providing these services, FUR Advisors was entitled to a fee of $1,500,000,
which we refer to as the “Consulting Fee”, which was to be paid in monthly
installments of approximately $167,000, and the Trust received a credit against
the base management fee payable by the Trust to FUR Advisors equal to the
Consulting Fee. Accordingly, the Trust received a credit of $1,500,000 for
the year ended December 31, 2008.
|
|
1
All share amounts and
prices give effect to the one for five reverse stock split effected in
December 2008.
|
WRP
Sub-Management LLC, which we refer to as “WRP Sub-Management”, an affiliate of
FUR Advisors, has been retained to provide accounting, collateral management and
loan brokerage services to Lex-Win Concord LLC, which we refer to as Concord,
and its subsidiaries. WRP Sub-Management received reimbursement of
direct and indirect expenses totaling $1,402,000 and $2,571,000 for the years
ended December 31, 2008 and 2007, respectively, in accordance with the terms of
the agreement. Of these amounts, $526,000 and $378,000 were paid to
reimburse it for costs associated with providing accounting and other
“back-office” services for the benefit of Concord, which we refer to as the
“Affiliate Amount”. Because the Trust pays an advisory fee to FUR
Advisors whereas the other member in Concord does not, the advisory fee payable
to FUR Advisors by the Trust is reduced by 50% of the Affiliate Amount to ensure
equal treatment of the Trust with respect to the reimbursements paid by
Concord. For the years ended December 31, 2008 and 2007, the Trust
received and utilized a credit of $263,000 and $189,000, respectively, against
the base management fee.
In
connection with the merger of Newkirk with and into Lexington Corporate
Properties Trust, the advisory agreement between NKT Advisors (an affiliate of
FUR Advisors) and Newkirk was terminated, and NKT Advisors received a payment of
$5,500,000 attributable to its incentive fee. As a result of the
incentive fee being paid by Newkirk and in accordance with our advisory
agreement with FUR Advisors, we received a $4,400,000 credit (80% of total fee
paid) to be utilized on a go forward basis in offsetting the quarterly advisory
fees payable under the advisory agreement or in cash if the credit was not fully
utilized. We utilized $3,241,000 and $1,159,000 of this amount to offset the
base management fee payable for the years ended December 31, 2007 and 2006,
respectively. As of December 31, 2007, we had fully utilized the
credit to offset future base management fees.
AMENDMENTS
TO THE DECLARATION OF TRUST
The Board
has approved the amendments to the Declaration of Trust set forth below, and is
recommending each of these amendments to Shareholders for
approval. In the description of each proposal below, the applicable
Section of the Declaration of Trust is presented after giving effect to the
relevant proposal. Pursuant to the Declaration of Trust, each
amendment proposed under Proposals 2 through 8 requires the affirmative vote of
a majority of the Common Shares outstanding on the Record Date.
Unless otherwise indicated, the
accompanying form of proxy will be voted FOR adoption of Proposals 2 through
8.
PROPOSAL
NO. 2
AMENDMENT
TO SECTION 1.3 OF THE DECLARATION OF TRUST
Section
1.3 of the Declaration of Trust sets forth the purpose provision of the
Trust. Over time the Declaration of Trust has been modified to permit
the Trust to invest in effectively all types of real estate related assets and
to mortgage, pledge or otherwise encumber such assets. Accordingly,
although the current Section 1.3 is rather broad, it does not specifically
encompass all of the various rights of the Trust set forth elsewhere in the
Declaration of Trust. As a result, the Board has approved, subject to
obtaining the consent of a majority in interest of the Common Shares, an
amendment to the Declaration of Trust to modify Section 1.3 of the Declaration
of Trust so that it encompasses all of the various rights of the Trust to
acquire all types of real estate related assets and to mortgage, pledge or
otherwise encumber such assets found elsewhere in the Declaration of
Trust. Accordingly, your consent is sought to amend Section 1.3 of
the Declaration of Trust to read in its entirety as follows:
Section
1.3. Purposes
of the Trust.
Notwithstanding
anything to the contrary contained in this Declaration of Trust, the purposes of
the Trust hereby created shall be:
(1) To
engage in the real estate business (including, without limitation, the
acquisition, holding, improving, leasing, selling, mortgaging and otherwise
encumbering real property and personal property associated therewith, equity and
debt securities in entities whose primary business is the real estate business
and loans and other debt instruments secured, directly or indirectly, by real
estate related assets of entities whose primary business is the real estate
business);
(2) To
receive the income, interest, rents and profits thereof, and to reinvest them or
distribute them, in accordance with the provisions of this Declaration of Trust,
to the holders of beneficial interests in the Trust; to acquire, own, hold, use,
lease, mortgage, pledge, exchange and dispose of property of all kinds, wherever
situated, including shares of stock, bonds, debentures, notes, scrip,
securities, interests in real estate, evidences of indebtedness, contracts and
obligations of any corporation, association, firm or individual;
(3) To
enter into, promote or conduct any kind of business, contract or undertaking and
for such purpose to acquire, take over and dispose of any or all of the assets
of any corporation, association, firm or individual, to assume their rights and
liabilities, guarantee or become surety for the performance of their
obligations, and participate in any way in their affairs;
(4) To
possess and exercise without restriction as fully as a natural person might do
all of the powers and authorities conferred upon or permitted to real estate
investment trusts under the laws of the State of Ohio; and
(5) To
engage in any lawful act or activity for which real estate investment trusts may
be formed under the laws of the State of Ohio; and to do any and all things
incidental to the accomplishment of the purposes hereinbefore set forth or
incidental to the protection and benefit of the Trust.
Recommendation
of the Board
The Board
unanimously recommends a vote in favor of Proposal No. 2.
PROPOSAL
NO. 3
AMENDMENT
TO SECTION 3.3 OF THE DECLARATION OF TRUST
Section
3.3 of the Declaration of Trust sets forth the rights of the Trustees, officers,
employees and agents of the Trust to be indemnified by the Trust. In
reviewing Section 3.3 as well as the indemnification provisions set forth in the
charter documents of other real estate investment trusts, the Board sought to
more fully set forth the indemnification rights of Trustees, officers, employees
and agents in a manner consistent with the indemnification rights provided by
the Trust in the past. In this regard, the Board approved, subject to
obtaining the consent of a majority in interest of the Common Shares, an
amendment to the Declaration of Trust to modify Section 3.3 of the Declaration
of Trust which: (i) more clearly provides that expenses incurred by a
person entitled to indemnification will be advanced by the Trust as incurred so
long as (1) such person provides an undertaking to repay any amounts if it is
determined that indemnification is not permitted and (2) there is not
substantial evidence indicating that such person will not be entitled to
indemnification; (ii) provides that a plea, judgment, settlement, conviction or
similar event with respect to or by a person entitled to indemnification is not
a presumption that such person acted not in good faith or in a manner he or she
reasonably believed not to be in or opposed to the best interests of the Trust;
(iii) provides that if a person is entitled to be indemnified, such person will
be indemnified for the costs of enforcing the indemnity obligations; and (iv)
that the Trust may purchase and maintain insurance to cover its indemnification
obligations.
Accordingly,
your consent is sought to amend Section 3.3 of the Declaration of Trust to read
in its entirety as follows:
|
Section
3.3.
|
Trustee’s
Liability to Trust and Beneficiaries - Indemnification and Expense - Bond
and Security.
|
The Trust
shall indemnify any person who was or is a party, or is threatened to be made a
party, to any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative, other than an action
by or in the right of the Trust, by reason of the fact that such person is or
was a trustee, officer, employee or agent of the Trust, or is or was serving at
the request of the Trust as a trustee, officer, employee, or agent of another
trust, corporation, nonprofit or for profit, partnership, limited liability
company, joint venture, or other enterprise, against expenses, including
attorneys’ fees, judgments, fines, and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit, or
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the Trust,
and with respect to any criminal action or proceeding, had no reasonable cause
to believe the conduct was unlawful. The termination of any action,
suit, or proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which was reasonably
believed to be in or not opposed to the best interests of the Trust, and with
respect to any criminal action or proceeding, had reasonable cause to believe
that the conduct was unlawful.
The Trust
shall indemnify any person who was or is a party, or is threatened to be made a
party to any threatened, pending, or completed action or suit by or in the right
of the Trust to procure a judgment in its favor by reason of the fact that such
person is or was a trustee, officer, employee or agent of the Trust, or is or
was serving at the request of the Trust as a trustee, officer, employee, or
agent of another trust, corporation, nonprofit or for profit, partnership,
limited liability company, joint venture, or other enterprise against expenses,
including attorneys’ fees, actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the Trust, except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the Trust unless, and only to the extent that the
Court of Common Pleas, or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability,
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the Court of Common Pleas
or such court shall deem proper.
To the
extent that a trustee, officer, employee, or agent has been successful on the
merits or otherwise in defense of any action, suit, or proceeding referred to in
this Section 3.3, or in defense of any claim, issue, or matter therein, such
person shall be indemnified against expenses, including attorneys’ fees,
actually and reasonably incurred by such person in connection therewith or in
connection with enforcing such person’s rights hereunder.
Expenses,
including attorneys’ fees, incurred in defending any action, suit, or proceeding
referred to in this Section 3.3 shall, absent substantial evidence indicating
that such person shall not be entitled to indemnification hereunder, be paid by
the Trust as incurred by such person in advance of the final disposition of such
action, suit, or proceeding as authorized by the Trustees in any specific case
upon receipt of an undertaking by or on behalf of the trustee, officer,
employee, or agent to repay such amount, in the event that it shall ultimately
be determined that such person was not entitled to be indemnified by the Trust
as authorized in this Section 3.3.
The
indemnification provided by this Section 3.3 shall not be deemed exclusive of
any other rights to which those seeking indemnification may be entitled under
this Declaration of Trust or the By-laws or any agreement, vote of Beneficiaries
or disinterested trustees, or otherwise, both as to action in their official
capacity and as to action in another capacity while holding such office and
shall continue as to a person who has ceased to be a trustee, officer, employee,
or agent and shall inure to the benefit of the heirs, executors, and
administrators of such person.
In order
to carry out the intent and purposes of this section, and to assure the Trust’s
performance of its obligations hereunder, the Trust shall have the power to
enter into agreements with such trustees, officers, employees or agents as may
be designated by the Trustees, without specific approval thereof by the
Beneficiaries. The terms of any such agreements need not be identical
to the terms of any other such agreement and any such agreement which had been
entered into may subsequently be amended or changed by mutual agreement of the
parties thereto, without specific approval thereof by the
Beneficiaries.
The Trust
shall have the power to dedicate the assets of the Trust to establish
arrangements for funding its indemnification obligations under this section,
including but not limited to depositing assets in trust funds, obtaining bank
letters of credit in favor of indemnified persons or entities, establishing
specific reserve accounts and otherwise funding special self-insurance
arrangements for these purposes.
The Trust
may purchase and maintain insurance an behalf of any person who is or was a
trustee, officer, employee, or agent of the Trust, or is or was serving at the
request of the Trust as a trustee, officer, employee, or agent of another Trust,
domestic or foreign, nonprofit or for profit, partnership, joint venture, trust,
or other enterprise against any liability asserted against such person and
incurred in any such capacity, or arising out of said status of such person,
whether or not the Trust would have the power to indemnify such person against
such liability under the provisions of this Section 3.3 or applicable
law.
No
Trustee shall be obligated to give any bond or surety or other security for the
performance of any duties.
Recommendation
of the Board
The Board
unanimously recommends a vote in favor of Proposal No. 3.
PROPOSAL
NO. 4
AMENDMENT
TO SECTION 4.1 OF THE DECLARATION OF TRUST
Section
4.1 of the Declaration of Trust sets forth the rights of the Trust to issue
beneficial interests in the Trust as well as provides for the initial transfer
agent and registrar of the Trust. The Board has approved, subject to
obtaining the consent of a majority in interest of the Common Shares, an
amendment to the Declaration of Trust to modify Section 4.1 of the Declaration
of Trust which more clearly sets forth (i) the rights of the Common Shares and
(ii) the ability of the Trust to issue beneficial interests of such classes,
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption as the Trustees deem advisable. Accordingly, your consent
is sought to amend Section 4.1 of the Declaration of Trust to read in its
entirety as follows:
Section
4.1. Shares $1
Par Value; Non-Assessable and Not Limited in Number.
The total
number of shares of beneficial interest of all classes which the Trust has the
authority to issue is unlimited with a par value $1.00 per share. All
such shares shall be non-assessable and non-redeemable. At the date
hereof, the Trust has issued and outstanding common shares of beneficial
interest which are referred to as “Common Shares,” and preferred shares of
beneficial interest, issuable in one or more series, which are referred to as
“Preferred Shares.” Shares of the following series of Preferred
Shares are outstanding on the date hereof: “Series B-1 Cumulative Convertible
Redeemable Preferred Shares” (the “Series B-1 Preferred Shares”). The
Trustees may classify and reclassify any unissued common or preferred shares of
beneficial interest by setting or changing, in any one or more respects, the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms or conditions of redemption
of such shares of beneficial interest.
The
following is a description of the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption of the Common Shares of the
Trust:
(1) Each
Common Share shall have one vote; and, except as otherwise provided in respect
of any other class of shares hereunder classified or reclassified, the exclusive
voting power for all purposes shall be vested in the holders of the Common
Shares. Common Shares shall not have cumulative voting
rights.
(2) Subject
to the provisions of law and any preferences of any shares of beneficial
interest of the Trust, dividends or other distributions, including dividends or
other distributions payable in shares of another class of the Trust’s shares,
may be paid on the Common Shares at such time and in such amounts as the
Trustees may deem advisable.
The
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption of any series of Preferred Shares shall be set forth in a certificate
of designations approved by the Trustees and referencing this
Declaration.
Recommendation
of the Board
The Board
unanimously recommends a vote in favor of Proposal No. 4.
PROPOSAL
NO. 5
AMENDMENT
TO SECTION 7.1 OF THE DECLARATION OF TRUST
Section
7.1 of the Declaration of Trust provides for the timing of the Trust’s annual
meeting and the right to request that a special meeting of the Trust’s
beneficiaries be called. The Board has approved, subject to obtaining
the consent of a majority in interest of the Common Shares, an amendment to the
Declaration of Trust to modify Section 7.1 of the Declaration of Trust to
provide that (i) the Trust’s annual meeting is to be held in the month of May
which has traditionally been the month in which the annual meeting has been
held, (ii) makes clear that the Trust’s Board of Trustees will be elected at the
annual meeting, as well as any other business properly brought before the
meeting, and (iii) in addition to the persons or groups of persons currently
entitled to call a special meetings of beneficiaries, the Trust’s Chairman of
the Board, Chief Executive Officer and President may also call for a special
meeting of the beneficiaries. Accordingly, your consent is sought to
amend Section 4.1 of the Declaration of Trust to read in its entirety as
follows:
Section
7.1. Annual and
Special Meetings Call.
An annual
meeting of the Beneficiaries will be held during the month of May at such date
and time as may be designated from time to time by the Trustees, at which
meeting the Beneficiaries will elect Trustees to succeed those Trustees whose
terms expire at such meeting and will transact such other business as may be
brought properly before the meeting in accordance with the By-laws and/or
applicable law.
Special
meetings of Beneficiaries may be called by (i) the Chairman of the Board, (ii)
the Chief Executive Officer, (iii) the President, (iv) a majority of the
Trustees acting with or without a meeting, or (v) the holders of record of not
less than twenty-five percent (25%) of the voting power of the Trust and
entitled to vote on any proposal to be submitted at said meeting. In
the event the annual meeting is not held or if Trustees are not elected thereat,
a special meeting may be called and held for that purpose.
Recommendation
of the Board
The Board
unanimously recommends a vote in favor of Proposal No. 5.
PROPOSAL
NO. 6
AMENDMENTS
TO ARTICLE VIII OF THE DECLARATION OF TRUST
Article
VIII of the Declaration of Trust sets forth a number of provisions relating to
the Trustees including the number of Trustees, votes required to elect a
Trustee, filling of vacancies, Board committees and the ability of Trustee’s to
engage in other business activities. The Board has approved, subject
to obtaining the consent of a majority in interest of the Common Shares, certain
amendments to Article VIII. The most substantive change to Article
VIII is to provide that in order for a Trustee to be elected as Trustee such
person must receive both (i) the vote of at least a majority of the outstanding
shares entitled to vote and (ii) a number of votes sufficient to place such
person in the top number of vote getters equal to the Board seats to be
filled. Currently, for a person to be elected as a Trustee such
person need only receive a number of votes sufficient to place such person in
the top number of vote getters equal to the Board seats to be
filled. The following summarizes the changes, if any, to each Section
in Article VIII (the full text of Article VIII after giving effect to this
proposal No. 6 is set forth in Exhibit A hereto):
Declaration of Trust
Section
|
|
Proposed Declaration
of Trust Changes
|
|
|
|
8.1. Number
of Trustees
|
|
Eliminate
provision permitting an entity to serve as a Trustee.
|
|
|
|
8.2 Election
of Trustees; Term of Office
|
|
Provides
that only persons nominated in accordance with the Trust’s By-laws are
eligible for election as a Trustee. Provision currently permits
an entity to be a Trustee.
Changes
vote requirement for election as a Trustee from those nominees receiving
the most votes at the meeting so long as a quorum is present to those
nominees receiving the most votes at the meeting so long as a quorum is
present
and such person
must receive the vote of at least a majority of the outstanding shares
entitled to vote
.
|
|
|
|
Section
8.3 Resignation and Removal
|
|
No
changes
|
|
|
|
Section
8.4 Filling Vacancies
|
|
Eliminates
the provision that an appointment or election of a Trustee does not become
effective until such person signs the Declaration of
Trust.
|
|
|
|
Section
8.5 Trust Continues
|
|
No
changes
|
|
|
|
Section
8.6 Trustees’ Meetings and Actions
|
|
Fixes
an inconsistency in the provision by adding the phrase “except as
otherwise provided in this Declaration of Trust or the By-laws of the
Trust” before the statement that the vote or written action by a majority
of the Trustees is sufficient to constitute an action of the
Board. Certain actions by the Board require more than a
majority vote.
|
|
|
|
Section
8.7 Trustees’ Compensation
|
|
No
changes
|
|
|
|
Section
8.8 By-Laws of the Trust
|
|
Eliminates
the requirement that the By-laws be attached to the Declaration of
Trust.
|
|
|
|
Section
8.9 Committees
|
|
Provides
that a majority of the Trustees can establish committees of the
Trustees. Provision currently requires unanimity. It
further makes clear that a Trustee may serve on more than one committee of
the Board and lists the current committees of the Board
|
|
|
|
Section
8.10 Trustee’s Other Business Activities
|
|
This
provision has been eliminated as the Trust’s Conflicts Committee charter
is currently more restrictive than this provision
|
|
|
|
Recommendation
of the Board
The Board
unanimously recommends a vote in favor of Proposal No. 6.
PROPOSAL
NO. 7
AMENDMENT
TO SECTION 10.1 OF THE DECLARATION OF TRUST
Section
10.1 of the Declaration of Trust provides that amendments to the Declaration of
Trust may only be made with the consent of the requisite percentage of shares of
the Trust. The Board has approved, subject to obtaining the consent
of a majority in interest of the Common Shares, an amendment to Section 10.1 (i)
to clarify that the vote of only those shares entitled to vote with respect to
amendments of the Declaration of Trust is required and (ii) to permit the
Trustees, without the vote of any shares, to amend the Declaration of Trust in a
non-substantive manner or as required to cure an ambiguity, provide for the
respective rights of shares issued by the Trust or to comply with applicable
law. Accordingly, your consent is sought to amend Section 10.1 of the
Declaration of Trust to read in its entirety as follows:
Section
10.1. Amendment.
At any
time when no shares in the Trust are outstanding, the Trustees may amend any
provisions of this Declaration. A certificate signed by a majority of
the Trustees, setting forth such amendment and reciting that it was duly adopted
by the Trustees, or a copy of the Declaration as amended executed by a majority
of the Trustees, shall be recorded as provided in Section 11.5 hereof and lodged
among the records of the Trust and shall be conclusive evidence of such
amendment.
At any
time when shares in the Trust are outstanding, the Trustees may amend the
Declaration in any particular, except with respect to the liability of
beneficiaries, with the approval of the owners of a majority of all the shares
in the Trust entitled to vote on such matters, in writing or by vote at a
meeting of the Beneficiaries, provided that the notice of the meeting shall have
set forth the nature of the proposed amendment. A certificate signed
by a majority of the Trustees setting forth an amendment and reciting that it
was duly adopted by the Trustees and approved as aforesaid, or a copy of the
Declaration as amended executed by a majority of the Trustees, shall be recorded
as provided in Section 11.5 hereof and lodged among the records of the Trust and
shall be conclusive evidence of such amendment. Notwithstanding the
foregoing, the consent of holders of shares in the Trust shall not be required
to modify this Declaration to (i) set forth and reflect in the designations,
rights, powers, duties, and preferences of the holders of any shares issued by
the Trust from and after the date hereof, (ii) to reflect a change that is of an
inconsequential nature and does not adversely affect the beneficiaries in any
material respect, or (iii) to cure any ambiguity, correct or supplement any
provision in this Declaration not inconsistent with law or with other
provisions, or make other changes with respect to matters arising under this
Declaration that will not be inconsistent with law or with the provisions of
this Declaration and (iv) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or regulation of a federal or
state agency or contained in federal or state law.
Notwithstanding
the foregoing (and notwithstanding the fact that some lesser percentage may be
permitted by Law), the approval of the owners of at least 70% of the outstanding
shares of the Trust shall be required to amend or repeal Sections 5.9, 8.1, 8.2,
8.4, 11.19, 12.2 and this Section 10.1 of this Declaration unless at least 70%
of the Trustees have voted to amend or repeal such sections, in which event the
approval of the owners of only a majority of the outstanding shares shall be
required.
Recommendation
of the Board
The Board
unanimously recommends a vote in favor of Proposal No. 7.
PROPOSAL
NO. 8
AMENDMENT
TO SECTIONS 11.10 THROUGH 11.27 OF THE DECLARATION OF TRUST
Sections
11.10 through 11.27 of the Declaration of Trust contains a number of provisions
relating to the rights of the Trust and the Trustees which, as noted in Proposal
2, over time have created inconsistencies in the Declaration of
Trust. In effect, a number of the provisions set forth in Sections
11.10 through 11.27 of the Declaration of Trust either are superfluous to
existing provisions already provided elsewhere in the Declaration of Trust or
contradict each other in that they provide in one instance that the Trust is not
permitted or permitted take certain actions or make certain investments and then
in a later provision provide that notwithstanding anything in the Declaration of
Trust to the contrary, otherwise not permitted actions or investments are
permitted or permitted actions or investments are not permitted. In
this regard, the Board has approved, subject to obtaining the consent of a
majority in interest of the Common Shares and the passing of Proposal 2, certain
amendments to Sections 11.10 through 11.27 to simplify and clarify these
provisions. The following summarizes the changes, if any, to Section
11.10 through 11.27 (the full text of Article XI after giving effect to this
proposal No. 8 is set forth in Exhibit B hereto):
Declaration of Trust
Section
|
|
Proposed Declaration
of Trust Changes
|
|
|
|
11.10. Contingent
Powers of Beneficiaries
|
|
Deleted
in its entirety.
|
|
|
|
11.11. Investment
Policy
|
|
Provides
that the assets acquired by the Trust will be consistent with the Trust’s
purpose.
|
|
|
|
11.12. Notices
on Distributions
|
|
Deleted
in its entirety.
|
|
|
|
11.13 Transactions
with Interested Parties
|
|
Deletes
the requirement that all commissions and remuneration received by the
Trust’s advisor, if any, in connection with a transaction entered into by
the Trust is to be deducted from the advisory fee.
|
|
|
|
11.14. Advisors
|
|
No
changes.
|
|
|
|
11.15. Limitations
on Expenses
|
|
Deleted
in its entirety.
|
|
|
|
11.16. Appraisals
|
|
Previously
deleted by vote of Shareholders.
|
|
|
|
11.17. Prohibited
Investments
|
|
Deleted
in its entirety.
|
|
|
|
11.18. Prohibited
Activities
|
|
Deleted
in its entirety.
|
|
|
|
11.19. Qualification
as a Real Estate Investment Trust
|
|
No
changes.
|
|
|
|
Declaration of Trust
Section
|
|
Proposed Declaration
of Trust Changes
|
11.20. Purposes
of Article and Section Heading
|
|
No
changes.
|
|
|
|
11.21. Controlling
Effect of Article XI
|
|
No
changes.
|
|
|
|
11.22 Trustees’
Power to Incur Indebtedness and Other Obligations - Limitations
Thereon
|
|
Eliminates
certain debt restrictions on the Trust.
|
|
|
|
11.23. Trustees’
Power to Invest in New Buildings and Partnerships, Joint Ventures and
Unimproved Land for New Buildings
|
|
Deleted
in its entirety.
|
|
|
|
11.24 Trustees’
Power to Invest in Real Estate Mortgages and in Certain Evidences of
Indebtedness
|
|
Deleted
in its entirety.
|
|
|
|
11.25 Options
Respecting Trust’s Securities
|
|
No
changes.
|
|
|
|
11.26 Authority
of Trustees to Authorize Additional Restrictions
|
|
Deleted
in its entirety.
|
|
|
|
11.27 Authority
of Trustees to Authorize Certain Investment, Financing and Other
Activities
|
|
Deleted
in its entirety.
|
|
|
|
Recommendation
of the Board
The Board
unanimously recommends a vote in favor of Proposal No. 8.
PROPOSAL
NO. 9
SELECTION
OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
At the
recommendation of the Audit Committee, the Board has selected PwC to serve as
the independent registered public accounting firm of the Trust for its fiscal
year ending December 31, 2009.
During
our past two fiscal years, there were: (i) no disagreements with PwC our
independent registered public accounting firm for the years ended December 31,
2008 and 2007, on any matter of accounting principle or practice, financial
statement disclosure, or auditing scope or procedure which disagreements, if not
resolved to PwC’s satisfaction, would have caused them to make reference to the
subject matter in connection with its report on the Trust’s financial statements
for such year; and (ii) no reportable events as defined in Item 304(a)(1)(v) of
Regulation S-K promulgated under the Securities Exchange Act of 1934, as
amended. Further, PwC’s report on our consolidated financial
statements as of and for the years ended December 31, 2008 and 2007 did not
contain any adverse opinion or a disclaimer of opinion nor were they qualified
or modified as to uncertainty, audit scope, or accounting
principles.
Although
Shareholder ratification of the Board’s action in this respect is not required,
the Board considers it desirable for Shareholders to pass upon the selection of
the independent registered public accounting firm and, if the Shareholders
disapprove of the selection, the Board would consider other firms for selection
as the independent registered public accounting firm for the current fiscal
year.
It is
expected that representatives of PwC will be present either in person or by
telephone conference at the Annual Meeting.
Aggregate
fees billed to us for the year ended December 31, 2008 and 2007 represents fees
billed by PwC for audit and audit related fees.
Type of
Fee
|
|
Fiscal
2008
|
|
|
Fiscal
2007
|
|
Annual
Audit and Quarterly Review Fee
|
|
$
|
1,035,000
|
|
|
$
|
775,000
|
|
Audit
Related Fees
|
|
|
83,000
|
|
|
|
200,000
|
|
Tax
Fees
|
|
|
93,000
|
|
|
|
133,000
|
|
Total
|
|
$
|
1,192,000
|
|
|
$
|
1,108,000
|
|
Audit
fees for the years
ended December 31, 2008 and 2007 were for professional services rendered in
connection with the integrated audit of our consolidated financial statements
and internal control over financial reporting.
Audit
Related
fees for
the year ended December 31, 2008 were for services related to review of our
Registration Statements on Form S-3 during 2008 and assisting in the response to
the SEC’s comment letter relating to our 2007 financial statements.
Audit
Related fees for the year ended December 31, 2007 were for services related to
responding to an SEC comment letter and the restatement of our financial
statements for the year ended December 31, 2006.
Tax
fees as of the years
ended December 31, 2008 and 2007 were for services related to tax compliance,
tax planning and strategies, and state and local tax advice.
Recommendation
of the Board
The Board
unanimously recommends a vote in favor of the ratification of the election of
PwC to serve as the independent registered public accounting firm of the Trust
for its fiscal year ending December 31, 2009.
Procedures
for Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Registered Public Accountant
We have a
policy of requiring that the Audit Committee pre-approve all audit and non-audit
services provided to us by the independent registered public accounting
firm. During 2008, the Audit Committee approved all of the fees paid
by us to PwC.
SHAREHOLDER
PROPOSALS
Any
Shareholder proposals intended to be presented at the 2010 Annual Meeting of
Shareholders must be received by us for inclusion in our proxy statement and
form of proxy relating to that meeting on or before January 22,
2010. In addition, under our By-laws, Shareholders must comply with
specified procedures to nominate persons for election as Trustees or introduce
an item of business at an annual meeting. Trustee nominations or an
item of business to be introduced at an annual meeting must be submitted in
writing and received by us not less than 120 days in advance of an annual
meeting. To be in proper written form, a Shareholder’s notice must
contain the specific information required by our By-laws. A copy of
our By-laws, which specifies the advance notice procedures, can be obtained from
us by request to the Trust’s Secretary. Any Shareholder who wishes to
submit a Shareholder proposal, should send it to, Winthrop Realty Trust, 7
Bulfinch Place, Suite 500, Boston, Massachusetts 02114,
Attention: Secretary.
ANNUAL
REPORT
Copies of our Annual
Report for the fiscal year ended December 31, 2008 are being mailed to
Shareholders of record on the Record Date together with this Proxy
Statement. Additionally, a
copy of our Annual Report on Form
10-K for the fiscal year ended December 31, 2008, as filed with the Securities
Exchange Commission, is available to Shareholders on our website
,
www.winthropreit.com
under the link “SEC
Filings”
, and also may be obtained by Shareholders without charge by
written request to Beverly Bergman, c/o FUR Advisors LLC, 7 Bulfinch Place,
Suite 500, Boston, Massachusetts 02114.
MISCELLANEOUS
As of the
date of this Proxy Statement, the Board does not know of any other matter to be
brought before the Annual Meeting. However, if any other matters not
mentioned in the Proxy Statement are brought before the Annual Meeting or any
adjournments thereof, the persons named in the enclosed Proxy or their
substitutes will have discretionary authority to vote proxies given in said form
or otherwise act, in respect of such matters, in accordance with their best
judgment.
We have
retained MacKenzie Partners, Inc. to aid in the solicitation of proxies
.
MacKenzie
Partners, Inc. will receive a fee as well as reimbursement for certain out of
pocket expenses incurred by them in connection with their services, all of which
will be paid by us. All of the costs and expenses in connection with
the solicitation of proxies with respect to the matters described herein will be
borne by us. In addition to solicitation of proxies by use of the mails, our
Trustees, officers and employees (who will receive no compensation therefor in
addition to their regular remuneration) may solicit the return of proxies by
telephone, telegram or personal interview. We will request banks, brokerage
houses and other custodians, nominees and fiduciaries to forward copies of the
proxy materials to their principals and to request instructions for voting the
proxies. We may reimburse such banks, brokerage houses and other custodians,
nominees and fiduciaries for their expenses in connection
therewith.
It is
important that proxies be returned promptly. Shareholders are,
therefore, urged to fill in, date, sign and return the Proxy immediately. No
postage need be affixed if mailed in the enclosed envelope in the United
States.
By order
of the Board of Trustees
Michael
L. Ashner
Chairman
and Chief Executive Officer
April 17,
2009
Exhibit
A
ARTICLE
VIII
Trustees
Section
8.1. Number of
Trustees
The
number of Trustees shall be not less than three nor more than fifteen, as from
time to time determined either by a majority of the Trustees then in office or
at an annual or special meetings of the Beneficiaries by affirmative vote of the
holders of a majority of the shares represented and entitled to vote at such
meetings. Trustees shall be all of one class. A Trustee may be any
individual who is a citizen of the United States and not a
minor. Whenever there shall be a vacancy, until such a vacancy is
filled, the continuing or surviving Trustee or Trustees then in office shall
have all the powers granted to the Trustees and discharge all the duties imposed
upon the Trustees by this Declaration. A majority of the Trustees shall not be
affiliated with an adviser of the Trust or any organization affiliated with an
adviser of the Trust. The term "majority of the Trustees" whenever used herein
shall include one Trustee if only one Trustee is at the time in office
regardless of the fixed number of Trustees.
Section
8.2. Election
of Trustees; Terms of Office
The term
of office for each Trustee shall be one year and each Trustee shall be elected
annually to serve for such term. A Trustee so elected shall hold
office until the next Annual Meeting of Beneficiaries and until his successor
shall be elected and qualified or until his earlier resignation, removal from
office or death.
At any
meeting of the Beneficiaries at which Trustees are to be elected, only persons
nominated in accordance with the Trust’s-By-laws shall be eligible for election
as Trustees. The election as Trustee of a person who, at the time of
his election, fails to meet the qualifications for Trustees specified in this
Declaration of Trust shall be null and void and the vacancy in the number of
Trustees so created may be filled by the Trustees as provided in Section 8.4
hereof.
At all
elections of Trustees, those candidates receiving the greatest number of votes
shall be elected as Trustees; provided, however, that only those candidates
receiving a number of votes at least equal to a majority of the votes entitled
to be cast at the meeting at which such vote is taken shall be elected as
Trustees.
Section
8.3. Resignation
and Removal.
Any
Trustee may resign his trust in instrument in writing signed by him and
delivered or mailed to the other Trustees at the principal office of the Trust,
and such resignation shall take effect immediately or at a later date according
to the terms of the instrument. Any Trustee may be removed at any
time by written instrument signed by all the other Trustees specifying the date
when such removal shall become effective; provided, however, that such removal
shall not be effective until approved by affirmative vote of the holders of a
majority of the shares present or represented and entitled to vote at a duly
held meeting of the Beneficiaries call for the purpose.
Any
Trustee may also be removed by affirmative vote for his removal cast by a
majority of Trustees then in office if such Trustee does not meet the
qualifications for Trustees specified in this Declaration of Trust for more than
thirty (30) consecutive days during his term of office.
Section
8.4. Filling
Vacancies.
In case a
vacancy in the number of Trustees shall occur, the remaining Trustees, though
less than a majority of the whole authorized number of Trustees, may, by a vote
of a majority of their number, fill any vacancy in the Board of Trustees for the
unexpired term of the Trustee whose office has become
vacant. Thereupon the Trust property shall vest in the new Trustee
jointly with the continuing Trustee or Trustees without further act or
conveyance.
Section
8.5. Trust
Continues.
The
death, resignation, incompetency or removal of any one or more of the Trustees
shall not operate to annul the Trust or to revoke any existing agency created
pursuant to the terms of this Declaration or invalidate any action theretofore
taken by the Trustees.
Section
8.6. Trustees’
Meetings and Action.
The
Trustees may act with or without a meeting. Meetings of the Trustees
shall be called and held as provided in the By-Laws. Notice of any
meetings may be waived by any Trustee either before or after such
meeting. The concurrence of all the Trustees shall not be necessary
for the validity of any action taken by them, but, except as otherwise provided
in this Declaration or the By-laws of the Trust, a decision expressed in a vote
passed at a meeting by a majority of the Trustees present, or expressed in
writing signed by a majority of the Trustees without a meeting, shall constitute
the action of the Trustees and have the same effect as if assented to by
all. At any meeting, a majority of the Trustees then in office shall
constitute a quorum. Any deed, mortgage, lease or other instrument or
writing executed by any Trustee or officer of the Trust shall be valid and
binding upon the Trustees and upon the Trust if such Trustee or officer acted
under authority granted by the Trustees by a vote or writing passed or signed as
above provided.
In the
event that any Trustee or Trustees shall notify the other Trustees in writing
that they do not wish to participate in the approval or disapproval of any
particular matter presented to the Trustees, a majority of the other Trustees
shall have authority to act for the Trust with respect to such
matter.
Section
8.7. Trustees’
Compensation.
The
Trustees shall receive reasonable compensation for their services as Trustees
and officers hereunder as fixed by the Trustees.
Section
8.8. By-Laws of
Trust.
The
Trustees may from time to time amend or repeal the By-Laws of the Trust which
may, among other things, provide for the conduct of their business, define the
duties of the officers, agents, employees and representatives and provide for
their appointment, number and qualification, fix the time, place and notice of
meetings of the Trustees, provide for the form of certificates representing
shares of beneficial interest and regulate or restrict issuance or transfer of
shares as provided in Section 5.9 of this Declaration.
Section
8.9. Committees.
The
Trustees, acting by a majority of their number, may appoint from among their own
number one or more persons to serve as members of one or more committees, which
may be created by the Trustees and to which may be delegated such of the powers
herein given to the Trustees as they may deem expedient, except as herein
otherwise provided. Such committees may include, without limitation,
an Audit Committee, Compensation Committee, Conflicts Committee and Nominating
and Corporate Governance Committee.
Exhibit
B
Section
11.10. [Intentionally
Omitted].
Section
11.11. Investment Policy.
The Trust
shall invest in such assets as the Trustees may from time to time determine, and
as are consistent with the purposes of the Trust as set forth in Article I,
Section 1.3 of this Declaration.
Section
11.12. Notices on
Distributions.
All
distributions to beneficiaries shall be accompanied by a written statement
advising of the sources of funds or properties so distributed. In
case there is any doubt as to such source the communication may so state, and,
in such event, a further statement shall be mailed to Beneficiaries not later
than sixty (60) days after the close of the fiscal year of the Trust in which
the distribution was made. Such statements may be based on the
figures shown by the books of account of the Trust.
Section
11.13. Transactions with Interested
Parties.
No
Trustee, officer or adviser of the Trust, or any person affiliated with any such
persons, shall sell any property or assets to the Trust or purchase any property
or assets from the Trust, directly or indirectly, nor shall any such person
receive any commission or any other remuneration, directly or indirectly, in
connection with the purchase or sale of Trust assets, except pursuant to
transactions that are fair and reasonable to the Beneficiaries of the Trust or
those that relate to: (a) the acquisition by the Trust of federally insured or
guaranteed mortgages at prices not exceeding the currently quoted prices at
which the Federal National Mortgage Association is purchasing comparable
mortgages; (b) the acquisitions of other mortgages on terms no less favorable
than similar transactions involving unaffiliated parties; or (c) the acquisition
by the Trust of other property at prices not exceeding the fair value thereof as
determined by independent appraisal. All such transactions and all
other transactions in which any such persons have any direct or indirect
interest shall be approved by a majority of the Trustees, including a majority
of the independent Trustees.
Section
11.14. Advisers.
Subject
to the provisions of this Declaration, the Trustees may employ any person, firm
or corporation as adviser. Any advisory contract shall be for a
period not longer than one year. Any such advisory contract shall
provide that it may be terminated at any time, without penalty, by the Trustees
or by the holders of majority of the outstanding shares of beneficial interest
upon not less than 60 days’ written notice to the adviser.
Section
11.15. [Intentionally
Omitted].
Section
11.16. [Intentionally
Omitted].
Section
11.17. [Intentionally
Omitted].
Section
11.18. [Intentionally
Omitted].
Section
11.19. Qualification as a Real Estate
Investment Trust.
No
Trustee and no Beneficiary shall take any action which would cause the Trust to
abandon its purpose of providing an investment vehicle for numerous shareholders
with small holdings or which would, in the opinion of counsel for the Trust,
furnished prior to such action, prevent the Trust from qualifying or continuing
to qualify as a “real estate investment trust” under the Internal Revenue Code
and the Regulations (proposed or in effect) thereunder unless at least a
majority of the Trustees then in office have approved such action. No
Beneficiary shall have any power to control the Trustees or the affairs of this
Trust, or to exercise any voting or approval powers, if such powers would at the
time in the opinion of counsel for the Trust (a) prevent the Beneficiaries from
being free from personal liability for the obligations of the Trust under any
applicable law, or (b) cause the Trust to be an illegal or invalid organization
under the law of any jurisdiction in which it owns property or does
business.
Section
11.20. Purpose of Article and Section
Headings.
The
Article and Section headings inserted in this Declaration are for convenience of
reference and are not to be taken or affect the meaning, construction, or effect
of any provision hereof.
Section
11.21. Controlling Effect of Article
XI.
The
provisions of this Article XI shall be controlling in all respects over any
other provisions of this Declaration.
Section
11.22. Trustees’ Power to Incur
Indebtedness and Other Obligations - Limitations Thereon.
Notwithstanding
anything to the contrary in this Declaration of Trust, the Trustees may issue,
assume, incur or secure Indebtedness or shares or other securities of any class
or classes which may or may not have preferences or restrictions not applicable
to Common Shares or Preferred Shares of the Trust.
Section
11.23. [Intentionally
Omitted].
Section
11.24. [Intentionally
Omitted].
Section
11.25. Options Respecting Trust
Securities.
Notwithstanding
anything to the contrary contained in this Declaration of Trust, the Trust may
from time to time grant options, warrants or other rights to purchase securities
of the Trust. The Trustees are hereby empowered, whether by amendment
to this Section by action of the Trustees or otherwise, to place limitations on
the authorizations set forth in the first sentence hereof if in their judgment
such limitations are necessary or desirable in connection with the incurring of
indebtedness or issuance of securities by the Trust, or in connection with
qualification by the Trust to do business in any state. To the extent
that this provision is inconsistent with the other terms of this Declaration of
Trust, including without limitation Article X (Amendment of Trust), this
provision shall prevail.
Section
11.26. [Intentionally
Omitted].
Section
11.27. [Intentionally
Omitted].