<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Western Investment Real Estate Trust
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
WESTERN INVESTMENT REAL ESTATE TRUST
3450 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94118
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 14, 1998
Notice is hereby given that the annual meeting of the shareholders of
Western Investment Real Estate Trust will be held at the Bank of America Center,
Bankers Club of San Francisco, Pacific Room, 52nd Floor, 555 California Street,
San Francisco, California, at 10:00 a.m., on Thursday, May 14, 1998, for the
following purposes:
(1) To elect two trustees to Class I for three-year terms to expire at the
conclusion of the 2001 annual meeting.
(2) To approve the adoption of the 1998 Equity Incentive Plan.
(3) To approve the amendment of the Declaration of Trust to increase the
maximum number of trustees on the Board of Trustees from seven to nine.
(4) To approve the amendment of the Declaration of Trust to change the
required date, time and place of the annual meeting of shareholders.
(5) To ratify the appointment of independent auditors for the Company.
(6) To transact any other business that may properly come before the
meeting.
All shareholders of record at the close of business on March 18, 1998, are
entitled to vote at the meeting.
A majority of the outstanding shares must be represented at the meeting in
person or by proxy in order to transact business. TO ASSURE A PROPER
REPRESENTATION AT THE MEETING PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND
MAIL IT PROMPTLY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. Your proxy will not be
used if you are personally present at the meeting and you indicate a desire to
revoke such proxy or if a subsequently dated proxy of yours is delivered prior
to or at the meeting.
Dated: San Francisco, California
March , 1998
[SIGNATURE]
Barbara J. Donham
Secretary
If your shares are held in the name of a brokerage firm, bank, nominee or other
institution, only it can vote your shares. Please PROMPTLY CONTACT the person
responsible for your account and GIVE INSTRUCTIONS for your shares to be voted.
<PAGE>
WESTERN INVESTMENT REAL ESTATE TRUST
3450 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94118
PROXY STATEMENT
THIS STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES
BY THE MANAGEMENT OF WESTERN INVESTMENT REAL ESTATE TRUST, hereinafter called
"Western" or "the Company," for use at the annual meeting of shareholders to be
held on Thursday, May 14, 1998, at 10:00 a.m., at the Bank of America Center,
Bankers Club of San Francisco, Pacific Room, 52nd Floor, 555 California Street,
San Francisco, California, and at any and all adjournments thereof, for the
purposes set forth in the Notice of Annual Meeting of Shareholders. The cost of
soliciting proxies will be borne by the Company. In addition to solicitation by
mail, proxies may be solicited personally or by telephone by trustees, officers
or other employees of the Company. To assist in the solicitation process,
Western has retained Beacon Hill Partners, Inc. The fee for such services will
be approximately $6,000.
Only shareholders of record of Western at the close of business on March 18,
1998, will be entitled to vote at the annual meeting. The approximate date on
which the proxy statement and form of proxy are first sent or given to
shareholders will be March 25, 1998.
You are requested to sign, date and return the accompanying proxy in the
enclosed envelope. Proxies duly executed and received by the Company on or
before 10:00 a.m. on May 14, 1998, will be voted in accordance with the
instructions thereon. Such proxies may be revoked by executing and delivering to
Western a written revocation or by executing and delivering a subsequently dated
proxy before or at the meeting or by voting by ballot at the meeting.
As of the record date, shares of the Company's shares of beneficial
interest were issued and outstanding, each of which is entitled to one vote at
the annual meeting. There will be no cumulative voting for the election of
trustees.
ELECTION OF TRUSTEES
NOMINEES
Two members of the Board of Trustees (Class I) are to be elected at the 1998
annual meeting. Under the terms of the Declaration of Trust, the trustees who
are not up for election this year will continue to serve until they stand for
election as provided in the Declaration of Trust. In 1999, two of such trustees
(Class II) will stand for election for a three-year term. In 2000, the remaining
trustees (Class III) will stand for election for a three-year term. All proxies
received by the Company will be voted in accordance with the specifications on
the proxy. Unless the proxy specifies otherwise, proxies held by the trustees
will be voted in the manner described below under "Voting" for the election of
the two nominees listed under "Trustees and Executive Officers," to hold office
until the expiration of their three-year term and until their respective
successors shall be elected and qualified. In the unanticipated event that
either of the current nominees declines to or cannot be a candidate at the
annual meeting, all proxies held by the trustees will be voted in favor of the
remaining nominee and for such substitute nominee (if any) as shall be
designated by the trustees.
1
<PAGE>
Each of the two nominees, if elected, will serve for a three-year term to
expire at the conclusion of the 2001 annual meeting of shareholders and until
their respective successors shall be elected and qualified.
VOTING
Each shareholder will be entitled to cast one vote for each share registered
in his or her name on the record date of March 18, 1998, for each of the trustee
positions to be filled. There will be no cumulative voting for the election of
trustees.
All shares represented by proxies solicited by the trustees will be voted in
equal shares for the two nominees named hereafter, unless a proxy specifies
otherwise. The two nominees receiving the greatest number of affirmative votes
shall be elected to the office of trustee. The withholding of a vote for a
nominee will have the practical effect of voting against that nominee.
TRUSTEES AND EXECUTIVE OFFICERS
Information regarding the two Class I trustees nominated for election as
trustees this year for a term of three years expiring at the conclusion of the
2001 annual meeting of shareholders is set forth below:
<TABLE>
<CAPTION>
TRUSTEE TERM TO
NAME PRINCIPAL OCCUPATION SINCE EXPIRE
- -------------------------- -------------------------------------------------------------------- --------- -----------
<S> <C> <C> <C>
Dennis D. Ryan Mr. Ryan, 42, is the Executive Vice President and Chief Financial 1994 1998
Officer of Western. Prior to joining the Company 1993, Mr. Ryan was (Class I)
a financial and real estate consultant to a variety of clients.
Prior to 1992, he was a Vice President and Chief Financial Officer
of Reininga Corporation, a shopping center development, leasing and
property management firm.
Robert J. McLaughlin Mr. McLaughlin, 64, has been the President and owner of The Sutter 1997 1998
Group, a management consulting firm for the past sixteen years. He (Class I)
currently serves on the Board of Directors of Grubb & Ellis Company,
a commercial real estate brokerage and asset management company. He
is also the Chairman of the Board of Coating Technologies
International.
</TABLE>
2
<PAGE>
Information regarding the trustees who are not standing for election this
year is set forth below:
<TABLE>
<CAPTION>
TRUSTEE TERM TO
NAME PRINCIPAL OCCUPATION SINCE EXPIRE
- -------------------------- -------------------------------------------------------------------- --------- -----------
<S> <C> <C> <C>
James L. Stell Mr. Stell, 74, is the retired Vice Chairman of the Board of Lucky 1985 1999
Stores, Inc. During the past five years his principal occupation has (Class II)
been trustee of Western.
Bradley N. Blake Mr. Blake, 39, was appointed the President, Chief Executive Officer 1998 1999
and trustee of Western in January 1998. Prior to that, he was a (Class II)
Managing Director of Pacific Retail Trust, a private real estate
investment trust, and prior to December 1996, he was Senior Vice
President of Spieker Properties, a public real estate investment
trust.
Chester R. MacPhee, Jr. Mr. MacPhee, 64, is the acting Chairman of the Board and is the 1971 2000
retired Executive Vice President and Chief Financial Officer of (Class III)
Western. During the past five years his principal occupation has
been officer and trustee of Western.
Reginald B. Oliver Mr. Oliver, 59, is a private investor. He was Executive Vice Presi- 1984 2000
dent of the Pershing Division of Donaldson, Lufkin & Jenrette (Class III)
Securities Corporation, an investment banking firm, and continues to
be associated with the firm as a consultant.
Information regarding the current executive officers of the Company is set forth below:
Josh Smith Mr. Smith, 34, was appointed Senior Vice President, Investments, of
the Company in February 1998. Prior to that, he was Senior Vice
President of Pacific Retail Trust, and prior to December 1996, he
was a Vice President of Spieker Properties.
L. Gerald Hunt Mr. Hunt, 32, was appointed Senior Vice President, Operations, of
the Company in February 1998. Prior to that, he was a Vice Presi-
dent of Pacific Retail Trust, and prior to December 1996, he was a
project director at Spieker Properties.
</TABLE>
BOARD AND COMMITTEE MEETINGS
During 1997, the Board of Trustees held 8 meetings and the Executive
Committee of the Board of Trustees held 13 meetings. The Executive Committee
presently comprises Chester R. MacPhee, Jr., Bradley N. Blake and Dennis D.
Ryan. The Committee maintains such powers and exercises such duties of the Board
of Trustees in the management of the business of Western as are delegated to it
from time to time by the Board of Trustees.
Western has no standing nominating committee. It does have an Audit
Committee that meets with the Company's auditors at least annually to review
accounting and auditing procedures, to report to the Board of Trustees any
recommended changes in auditing procedures and to recommend to the Board of
Trustees at the close of each fiscal year the independent auditing firm to be
selected for the ensuing fiscal year. The Audit Committee presently comprises
James L. Stell, Reginald B. Oliver, Chester R. MacPhee, Jr., and Robert J.
McLaughlin. The committee held two meetings in 1997.
3
<PAGE>
The Compensation Committee is responsible for administering and approving
compensation for trustees and officers and certain other employees. The
Compensation Committee held two meetings in 1997. The Committee presently
comprises Reginald B. Oliver, James L. Stell, Chester R. MacPhee, Jr. and Robert
J. McLaughlin.
During 1997, each of the trustees attended at least 75% of the total number
of board meetings and meetings of committees on which they served for the period
they were in office.
OWNERSHIP OF SHARES
Western currently has one outstanding class of voting securities, comprising
shares of beneficial interest without par value.
As of December 31, 1997, no person known to the Company was a beneficial
owner of more than 5% of its outstanding shares, based on information publicly
reported to the Securities and Exchange Commission.
CEDE, a stock depository for brokers and other nominees, as of the record
date, holds approximately shares, or of the Company's outstanding
shares, in its capacity as a stock depository.
The following table sets forth the number of shares of beneficial interest
beneficially owned by each trustee, by each nominee for trustee and by trustees
and executive officers in office, and the percentage of the Company's
outstanding shares represented by such beneficial ownership. Such persons had
sole voting and investment power with respect to the shares listed except as
otherwise noted.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
DIRECTLY OR INDIRECTLY AS
NAME OF BENEFICIAL OWNER OF MARCH 1, 1998(1)
- ------------------------------------------------- -------------------------
<S> <C>
Dennis D. Ryan 35,249(0.21%)(2)
Robert J. McLaughlin 3,000(0.00%)
James L. Stell 19,000(0.11%)(3)
Bradley N. Blake 51,600(0.30%)
Chester R. MacPhee, Jr. 244,692(1.42%)
Reginald B. Oliver 95,550(0.56%)(4)
Josh Smith(5) 14,818(0.09%)
L. Gerald Hunt(6) 10,800(0.06%)
Douglas S. Button(7) 6,966(0.04%)(7)
William A. Talmage(8) 39,876(0.23%)
O.A. Talmage(9) 203,744(1.19%)
All nominees, trustees and executive officers (11
persons) 725,295(4.22%)
</TABLE>
- ---------
(1) The number and percentage of shares shown in this table reflect beneficial
ownership in accordance with Rule 13d-3 of the Securities Exchange Act of
1934, including shares that are not owned but as to which options are
outstanding and may be exercised within 60 days of the date of this proxy
statement. Shares owned in certain cases reflect the lapse of stock options
that were included in the prior-year proxy.
4
<PAGE>
(2) Includes beneficial ownership of 20,000 shares that may be acquired within
60 days pursuant to stock options awarded under the Trust's Nonqualified
Stock Option Plan.
(3) Includes 4,000 shares held by Mr. Stell as Trustee for family trust. Mr
Stell disclaims any ownership of such shares.
(4) Includes 4,000 shares held by Mr. Oliver's adult children and 31,550 shares
held by Mr. Oliver as Trustee and Custodian for a minor child under his
custodial care. Mr. Oliver disclaims any ownership of such shares.
(5) Mr. Smith joined the Company in February 1998 and was named an executive
officer at that time.
(6) Mr. Hunt joined the Company in February 1998 and was named an executive
officer at that time.
(7) During the past five years, Mr. Button's principal occupation has been an
officer of the Company. Mr. Button has been Senior Vice President, Asset
Management, until his resignation effective February 28, 1998. Includes
3,400 shares that may be acquired within 60 days pursuant to stock options
awarded under the Company's Nonqualified Stock Option Plan.
(8) During the past five years, Mr. William Talmage's principal occupation has
been an officer of the Company. Mr. Talmage was a trustee and President and
Chief Operating Officer, until his resignation effective January 31, 1998.
Includes 12,000 shares that may be acquired within 60 days pursuant to stock
options awarded under the Company's Nonqualified Stock Option Plan.
(9) During the past five years, Mr. O.A. Talmage's principal occupation has
been an officer of the Company. Mr. Talmage was Chairman of the Board and
Chief Executive Officer until his retirement effective January 28, 1998.
Includes 66,600 shares that may be acquired within 60 days pursuant to stock
options awarded under the Company's Nonqualified Stock Option Plan.
5
<PAGE>
COMPENSATION OF TRUSTEES
During 1997, Reginald B. Oliver, James L. Stell, and Chester R. MacPhee,
Jr., each received an annual independent trustee fee of $14,000 and $500 for
each Board meeting or Board committee meeting attended, other than Executive
Committee meetings. Robert J. McLaughlin, who was appointed a trustee in
November 1997, received a pro-rated annual fee. Mr. MacPhee was paid $500 per
quarter for serving on the Executive Committee. Management trustees and officers
receive no compensation from the Company other than that shown in the
Compensation Table set forth hereafter for serving as trustees or attending
meetings.
The independent trustees may be awarded stock options pursuant to the
Company's Nonqualified Stock Option Plan. During 1997, options to purchase 5,000
shares of beneficial interest were granted by the Board to each of the
independent trustees.
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows for the fiscal years ending December 31, 1997,
1996 and 1995, certain compensation paid by Western to its Chief Executive
Officer and the other most highly compensated executive officers whose
compensation exceeded $100,000 at December 31, 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------------------- AWARDS
OTHER ANNUAL ------------ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS COMPENSATION ($)(1)
- ------------------------------ ---- ----------- ---------- -------------------- ------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
O.A. Talmage(2)(3) 1997 $275,000 -- $21,220(4) -- --
CEO & Chairman 1996 275,000 $31,250 -- -- --
of the Board 1995 275,000 30,000 -- 51,000 --
William A. Talmage(5) 1997 $190,000(6) -- $19,221(4)(7) 3,000 $9,500(8)
President & Chief 1996 185,750(6) $15,630 $ 909(7) 5,000 9,000(8)
Operating Officer 1995 148,000(6) 15,000 909(7) 5,000 8,850(8)
Dennis D. Ryan 1997 $175,000(6) -- $ 338(7) 3,000 $9,500(8)
Executive Vice President & 1996 172,500(6) $15,630 325(7) 5,000 9,000(8)
Chief Financial Officer 1995 132,500(6) 15,000 285(7) 5,000 7,950(8)
Douglas S. Button(9) 1997 $100,000(6) -- $15,833(4)(7) 2,000 $6,469(8)
Vice President, 1996 109,442(6) $ 7,810 451(7) 5,000 6,567(8)
Asset Management 1995 -- (9) -- (9) -- (9) -- (9) -- (9)
</TABLE>
- ---------
(1) None of the named individuals received perquisites that exceeded the lesser
of 10% of annual compensation or $50,000.
(2) O.A. Talmage retired effective 1/28/98.
(3) As of 12/31/97, O.A. Talmage entered into an agreement with the Trust as
described hereinafter in "Compensation Pursuant to Plans."
(4) Includes compensation related to the exercise of stock options.
(5) William A. Talmage resigned effective 1/31/98.
(6) Includes amounts earned but deferred under Western's 401(k) Plan at the
election of the executive.
(7) Includes life insurance paid for the benefit of the named executives.
(8) Comprises employer matching contribution and discretionary contribution
under 401(k) Plan.
(9) Douglas S. Button became an executive officer in 1996 and resigned effective
2/28/98.
6
<PAGE>
COMPENSATION PURSUANT TO PLANS OR ARRANGEMENTS
During 1997, Western had a Trustee Emeritus Program, a Death and Disability
Program (together, the "Programs") and a Nonqualified Stock Option Plan, each of
which were approved and adopted by the shareholders. The Company also had a Tax
Qualified Retirement Plan pursuant to Section 401(k) of the Internal Revenue
Code, which was adopted during 1990. In addition, in 1997, the Company
established a bonus pool to be available to certain key employees provided the
Company achieved a target level of funds from operations for the year 1997.
Since the target level was not met, no distribution was made. During 1997, the
Company had no other bonus, profit-sharing, stock purchase, deferred
compensation or other remuneration or incentive plan in effect or in effect
since the date of its organization except as described below. The Board has
approved a new equity incentive plan that will replace the Nonqualified Stock
Option Plan if it is approved by the shareholders. A full description of the
1998 Equity Incentive Plan is set forth hereafter in the proposal to adopt the
plan.
As of December 31, 1997, one person, Bernard Etcheverry, a former trustee of
Western, had elected to become a trustee emeritus for purposes of the Programs,
and two persons, O.A. Talmage and Chester R. MacPhee, Jr. were or would become
eligible to elect to become participants in the Programs. Effective as of
December 31, 1997, each of Messrs. Etcheverry, Talmage and MacPhee (each, a
"Recipient") gave up all of his obligations and rights to participate in the
Programs in exchange for entering an agreement with the Company with the
following terms.
Each agreement provides that the Company will pay the Recipient, or his
eligible spouse, a monthly stipend of $5,000 until the later of (i) the death of
the Recipient or (ii) the death of the Recipient's eligible spouse. The
Recipient or his eligible spouse, as the case may be, will receive an
accelerated payment of the amounts due under the agreement if the net assets of
the Company fall below $15 million. The accelerated payment will be equal to the
sum of (i) the present value of the total amount the Recipient or his eligible
spouse would have received under the agreement (based on the life expectancy of
the Recipient and his eligible spouse according to an actuarial table and
discounted at a rate of seven percent per annum), and (ii) an amount sufficient
to cover the income tax payable by such Recipient or his eligible spouse on
receipt of the accelerated payment.
Compensation under these agreements is expensed as earned by the Recipient
or his eligible spouse. The agreements are unfunded; however the costs for such
agreements have been accrued.
NONQUALIFIED STOCK OPTION PLAN
Under the Nonqualified Stock Option Plan (the "Plan") for trustees, officers
and employees of Western, the Compensation Committee of the Board of Trustees
determines the persons to whom options are granted, the time at which options
are granted to each person, and the terms and conditions of exercise of options.
The Company may grant options to purchase up to a maximum of three hundred
thousand (300,000) shares of beneficial interest under the Plan. The exercise
price per share is the fair market value at the date of the grant. Each option
vests and becomes exercisable as to
7
<PAGE>
20% of the shares covered by each grant at the end of each year for five years.
No option is exercisable after six years from the date of the grant. Options to
purchase shares that have been granted and have not lapsed are as follows:
<TABLE>
<CAPTION>
TOTAL NO.
OF UNEXPIRED
OPTIONS PRICE PER
GRANT DATE GRANTED SHARE
- ---------- ------------- ---------
<S> <C> <C>
11/23/92 6,400 $ 12.63
11/11/93 61,000 13.81
6/28/94 25,000 13.88
11/11/94 67,600 12.31
11/13/95 23,800 11.00
11/12/96 26,000 13.31
11/18/97 36,300 13.59
</TABLE>
In each instance, the option price was 100% of the fair market value at the
date of the grant.
STOCK OPTION GRANTS AND EXERCISES
Stock options were granted to the executive officers during 1997 as shown on
the following table:
STOCK OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL ANNUAL RATES OF
OPTIONS SHARE
GRANTED TO PRICE APPRECIATION
EMPLOYEES EXERCISE FOR OPTION TERM
OPTIONS IN FISCAL OR BASE EXPIRATION --------------------
NAME GRANTED(1) YEAR PRICE DATE 5% 10%
- ------------------------------------------- ----------- ----------- ---------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
O.A. Talmage -- -- -- -- -- --
William A. Talmage 3,000 8.3% $ 13.59 11/18/2003 $ 13,900 $ 31,400
Dennis D. Ryan 3,000 8.3% 13.59 11/18/2003 13,900 31,400
Douglas S. Button 2,000 5.5% 13.59 11/18/2003 9,200 20,900
</TABLE>
- ---------
(1) Options are exercisable as to 20% of the shares covered by the grant at the
end of each year for five years. No option is exercisable after six years
from the date of grant. No SARs have been granted.
The number and value of unexercised options at year-end 1997 are shown on
the following table:
FISCAL YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT DECEMBER 31, 1997 AT DECEMBER 31, 1997(1)
-------------------------------- --------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------------------------------- -------------------------------- --------------------------
<S> <C> <C>
O.A. Talmage 85,600/10,400 $ 22,464/$14,976
William A. Talmage 12,000/16,000 $ 18,900/$19,130
Dennis D. Ryan 22,000/16,000 $ 18,900/$19,130
Douglas S. Button 6,000/11,000 $ 6,065/$13,210
</TABLE>
- ---------
(1) The fair market value of shares at December 31, 1997 was $13.75.
8
<PAGE>
TAX QUALIFIED RETIREMENT PLAN PURSUANT TO IRS CODE SECTION 401(k)
Western adopted a Tax Qualified Retirement Plan pursuant to Section 401(k)
(the "401(k) Plan") in 1990. Under the 401(k) Plan, the Company makes
contributions as follows: (a) the total amount of compensation deferred by all
eligible employees through salary-deferral contributions to the 401(k) Plan; (b)
a discretionary matching contribution equal to a percentage of the amount of
employee salary-deferral contributions, which percentage will be determined each
year by the Company; and (c) a discretionary contribution determined each year
by the Company. All salaried employees are eligible to become 401(k) Plan
participants on completion of six months of employment and the attainment of age
21; however, under the 401(k) Plan the Company did not make discretionary
matching contributions or discretionary profit-sharing contributions on behalf
of O.A. Talmage, inasmuch as he was eligible to participate in the Trustee
Emeritus Program and Death and Disability Program through December 31, 1997.
Compensation deferrals and discretionary matching contributions are fully vested
and any discretionary contributions become vested as follows: 20% at 2 years of
service; 40% at 3 years of service; 60% at 4 years of service; 80% at 5 years of
service and 100% at 6 years of service. For the year 1997, the Company made
approximately $100,000 of discretionary contributions for all eligible
employees. Inasmuch as the 401(k) Plan is a defined contribution plan, rather
than a defined benefit plan, it is not possible to definitively estimate annual
benefits upon retirement.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Trustees ("Committee"), is
responsible for administering and approving salaries for management trustees,
officers and department heads. In addition, the Committee reviews the general
compensation strategy and approves the percentage-range increases for the entire
employee group. The review process includes performance evaluation as well as
consideration for promotion and succession. During 1997, the Committee comprised
the undersigned, all of whom are non-employee trustees.
COMPENSATION PHILOSOPHY AND OBJECTIVES
It is the philosophy of the Committee and the Company that in order to meet
Western's goal to increase long-term shareholder value, the Company must develop
and maintain a compensation program that attracts, motivates and retains
qualified executives.
The compensation program includes a base salary, bonus, 401(k) plan and
stock option plan. The Committee reviews the entire program annually. The
Committee consults several sources of information and data related to salary
trends in similar companies and other real estate investment trusts. The
Committee also evaluates the Company's operating performance, financial position
and the results compared with the industry and real estate in general. The
primary measure of performance reviewed by the Committee is the level of funds
from operations generated and available for distribution to shareholders.
BASE SALARY AND BONUS
Executive salaries are determined through an evaluation of the
responsibilities of the position held and the experience of the individual, and
by reference to salary levels paid in comparable
9
<PAGE>
companies for comparable positions. The Committee monitors on an annual basis
certain operating ratios of other real estate investment trusts, including total
administrative expenses as a percentage of assets and revenue.
In 1997, the Committee approved a bonus pool to be available to certain key
employees provided the Company achieved a target level of funds from operations
for the year 1997. Since the target level of funds from operations was not met
for 1997, no distributions were made.
STOCK OPTIONS
The Committee believes that the best interest of shareholders and executives
will be closely aligned by providing executives, as well as other key officers
and employees who have substantial responsibility for the management of the
Company and its assets, an opportunity to increase their ownership in Western.
Stock option award levels are based on the recipient's responsibilities, ability
to influence shareholder value and total compensation. Stock options provide a
long-term incentive for the creation of shareholder value because a stock option
provides a benefit only from appreciation in the price of the Company's shares
of beneficial interest over the term of the option.
During 1997, eighteen employees received stock option grants. The Committee
did not grant stock options to Mr. Talmage, the CEO, during 1997.
Submitted by the Compensation
Committee
Reginald B. Oliver, CHAIRMAN
Chester R. MacPhee, Jr.
James L. Stell
10
<PAGE>
COMPANY PERFORMANCE
PERFORMANCE MEASUREMENT COMPARISON
TOTAL RETURN
WESTERN INVESTMENT REAL ESTATE TRUST
NAREIT EQUITY INDEX AND S&P 500 INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WIRET NAREIT EQUITY INDEX (2) S&P 500 INDEX
<S> <C> <C> <C>
1992 $100.00 $100.00 $100.00
1993 $112.41 $119.65 $109.99
1994 $122.40 $123.45 $111.43
1995 $112.46 $142.30 $153.13
1996 $148.83 $192.48 $188.29
1997 $171.17 $231.47 $251.13
</TABLE>
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(1) The total return on investment assumes dividends reinvested on dividend
payment dates for each of the periods for the Trust, the NAREIT Equity Index
(peer group) and the S&P 500 Index.
(2) The NAREIT Equity Index includes 176 tax-qualified REITS (all of which are
listed on either the New York Stock Exchange, American Stock Exchange or the
NASDAQ National Market System). The 176 REITS have a total market
capitalization of $128 billion. The NAREIT Equity Index is maintained by the
National Association of Real Estate Investment Trusts, Washington, D.C.
11
<PAGE>
PROPOSAL TO ADOPT A NEW
EQUITY INCENTIVE PLAN
Western's current Nonqualified Stock Option Plan (the "1988 Plan")
authorizes the Board to grant nonqualified stock options ("NSOs") for up to a
maximum of 300,000 shares of beneficial interest. To date, the Company has
granted 299,420 NSOs to eligible persons under the 1988 Plan. The 1988 Plan
requires that Western shareholders approve any increase in the number of options
available to be granted under the 1988 Plan.
Since 1988, more and more companies in the REIT industry have adopted equity
incentive plans that provide for a variety of equity incentives, including
incentive stock options ("ISOs"), restricted stock grants, unrestricted stock
grants and stock appreciation rights ("SARs"). The Board of Trustees believes
that Western's long-term success is dependent on its ability to attract and
retain outstanding individuals who, by virtue of their ability and
qualifications, make important contributions to the Company. Rather than
increase the number of shares available for grants under the 1988 Plan, the
Board has determined that adopting a broader, more flexible plan will enable the
Company to increase its ability to provide its employees, trustees and officers
with meaningful awards and incentives commensurate with their contributions and
competitive with those offered by other employers. The Board of Trustees has
unanimously approved a 1998 Equity Incentive Plan (the "1998 Plan") subject to
shareholder approval, that will permit the Company to grant ISOs, restricted
stock, unrestricted stock and SARs in addition to NSOs. The Board of Trustees
recommends that the shareholders vote "FOR" approval of the 1998 Plan. If the
shareholders approve the 1998 Plan, the Board will terminate the 1988 Plan and
will not make further grants under it.
The following discussion summarizes the material features of the 1998 Plan
and is qualified in its entirety by reference to it. A copy of the 1998 Plan is
attached hereto as Exhibit A.
ADMINISTRATION
The 1998 Plan will be administered by the Compensation Committee (the
"Committee"). The Committee will determine the persons to whom awards will be
made under the 1998 Plan, when awards will be granted, the amount of the awards,
and other terms and conditions of the awards. The Committee may also waive or
modify any restriction with respect to an award. The Committee will promulgate
rules and regulations for the operation of the 1998 Plan, will interpret the
1998 Plan and related agreements and will generally supervise the administration
of the 1998 Plan.
ELIGIBILITY
Employees, officers and trustees (including nonemployee trustees) of the
Company and its subsidiaries are eligible to participate in the 1998 Plan. Only
employees are eligible to receive ISOs.
At the date of this Proxy Statement, approximately 47 employees (including
officers) and 4 nonemployee trustees of the Company and its subsidiary are
eligible to participate in the 1998 Plan. Each person selected by the Committee
to receive an award under the 1998 Plan will be a person the Committee believes
has made or will contribute to the management, growth or profitability of the
Company and its subsidiaries. In determining to make awards under the 1998 Plan,
the Committee
12
<PAGE>
may take into account the nature of the services rendered by the individual, the
person's present and potential contribution to the success of the Company, and
such other factors as the Committee deems relevant.
NUMBER OF SHARES OF COMPANY BENEFICIAL INTEREST COVERED BY PLAN
Western may issue up to 850,000 shares of beneficial interest under the 1998
Plan, including 37,500 shares of restricted stock and options to purchase
396,000 shares of beneficial interest issuable to the following executive
officers, subject to shareholder approval of the 1998 Plan: Bradley N.
Blake--15,000 shares of restricted stock and options to purchase 250,000 shares
of beneficial interest; Dennis D. Ryan--7,500 shares of restricted stock and
options to purchase 50,000 shares of beneficial interest; Josh Smith--7,500
shares of restricted stock and options to purchase 48,000 shares of beneficial
interest; and L. Gerald Hunt--7,500 shares of restricted stock and options to
purchase 48,000 shares of beneficial interest.
TERM OF PLAN; AMENDMENT OF PLAN
Subject to shareholder approval, the 1998 Plan was approved by the Board of
Trustees in February 1998 and will remain in effect until all awards granted
under the 1998 Plan have been satisfied or expired. However, no awards may be
granted under the 1998 Plan after February , 2008. To the extent that an award
lapses, terminates or is forfeited, the shares of beneficial interest subject to
such award generally will again be available for the grant of an award under the
1998 Plan.
Generally, the Board of Trustees may amend, modify or terminate the 1998
Plan at any time subject to the requirement for shareholder approval of certain
material changes.
STOCK OPTIONS
The 1998 Plan permits the granting of both options to purchase shares of
beneficial interest intended to qualify as ISOs under Section 422 of the
Internal Revenue Code (the "Code") and options that do not so qualify. The term
of each option granted under the 1998 Plan shall be as specified by the
Committee at the date of grant, except that no ISO will have a term of more than
ten years from the date of grant. No ISO will be granted to an individual who
owns more than 10% of the total combined voting power of all classes of stock of
Western unless the exercise price is at least 110% of the fair market value of
the shares of beneficial interest at the time of the grant and the term of the
option is no more than five years from the date of grant.
The Committee will determine the exercise price for all stock options. The
exercise price for ISOs will be not less than the fair market value of the
underlying shares of beneficial interest on the date of grant but NSOs may be
granted at less than fair market value. The exercise price of an option or
portion thereof shall be paid in full at the time of exercise in the manner
prescribed by the Committee which may include cash, a check, a note to Western
or tender of Shares previously owned by the optionee.
The Committee will determine at what time or times each option may be
exercised. In the event of the termination of employment, the optionee must
exercise the options that are exercisable by such person within ninety (90) days
of the termination. For a termination of employment due to the retirement, death
or disability of the optionee, the optionee or his or her beneficiary may
exercise the
13
<PAGE>
options that were exercisable on the date of such termination within twelve (12)
months of the terminating event. Options may be made exercisable in
installments, and the exercisability of options may be accelerated by the
Committee.
STOCK APPRECIATION RIGHTS
The Committee has the discretion to grant a SAR in tandem with any option or
may grant a SAR independently. A SAR entitles a participant to surrender a SAR
to the Company and to receive in exchange therefor the number of shares of
beneficial interest having an aggregate value equal to the excess of the fair
market value of one share on the date of exercise over the purchase price per
share specified in such SAR, times the number of shares called for by the SAR
(or portion thereof) surrendered. In addition, the Committee may elect to settle
the Company's obligation with respect to the exercise of an SAR by the payment
of cash equal to the aggregate fair market value of the shares it would
otherwise be obligated to give. Any such SAR is subject to such terms and
conditions, not inconsistent with the 1998 Plan, as the Committee may impose.
Any SAR granted in tandem with an option is only exercisable to the extent that
the related option is exercisable. Further, a SAR is only exercisable upon
consent of the Committee. A SAR not granted in tandem with an option shall
expire not more than 10 years from the date of its grant, and a SAR granted in
tandem with an option shall expire or terminate whenever the option to which it
relates expires or terminates.
RESTRICTED STOCK
The Committee may grant awards of restricted shares of beneficial interest
("restricted stock") under the 1998 Plan. The Committee will determine the
persons to receive restricted stock awards and will determine the amount and
form of any payment due for the restricted stock. The Committee also will
establish a restriction period for such awards during which the holder will have
rights to receive dividends, vote the shares of beneficial interest, and enjoy
all other shareholder rights except custody of the stock certificate and
transfer rights. The restricted stock awards will be subject to such other
restrictions as the Committee may determine. Such awards are subject to
forfeiture for breach of the terms and conditions of the restricted stock
agreement entered into at the time of such award.
UNRESTRICTED STOCK
The Committee may also grant awards of shares of beneficial interest (at no
cost or for a purchase price determined by the Committee) which are free from
any restrictions under the 1998 Plan ("unrestricted stock"). Unrestricted stock
may be issued to employees in recognition of past services or other valid
consideration, and may be issued in lieu of cash bonuses to be paid to such
employees.
TRANSFERABILITY
An award will not be transferable otherwise than by will or the laws of
descent and distribution, and shall be exercisable during the lifetime of the
participant only by such participant.
CHANGES IN CAPITAL STRUCTURE
If any recapitalization, reclassification, stock split, combination of
shares or stock dividend causes the Company's outstanding shares of beneficial
interest to increase or decrease or to be changed into a different number or
kind of securities of Western or any other corporation, the Committee may make
appropriate adjustments in the number and kind of shares available for awards
under the 1998 Plan and in the number and kind of shares as to which outstanding
options will be exercisable.
14
<PAGE>
In the event of a change in control of Western (as defined in the 1998
Plan), awards granted under the 1998 Plan shall automatically vest in full and
become immediately exercisable unless the Board determines otherwise.
FEDERAL TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS
Certain options authorized to be granted under the 1998 Plan are intended to
qualify as "incentive stock options" for federal income tax purposes. Under
federal income tax law in effect as of the date of this Proxy Statement, an
optionee will recognize no income upon the grant or exercise of an ISO. If an
employee exercises an ISO and does not dispose of any of the shares acquired
within two years following the date of grant and within one year following the
date of exercise, capital gain or loss will be realized upon the subsequent
disposition of the shares. The exercise of an ISO will give rise to an item of
tax adjustment that may result in alternative maximum tax liability for the
employee. If an employee disposes of shares acquired upon exercise of an ISO
before the expiration of either the one-year or the two-year holding period
specified above (a "disqualifying disposition"), the employee will realize
ordinary income in an amount equal to the lesser of: (i) the excess of the fair
market value of the shares on the date of exercise over the exercise price; or
(ii) the excess of the fair market value of the shares on the date of
disposition over the exercise price. Any additional gain realized upon the
disqualifying disposition will constitute a capital gain. Western will not be
allowed any deduction for federal income tax purposes at either the time of
grant or the time of exercise of an incentive stock option. Upon any
disqualifying disposition by an employee, Western will be entitled to a
deduction to the extent the employee realizes ordinary income.
NONSTATUTORY STOCK OPTIONS
Certain options authorized to be granted under the 1998 Plan will be treated
as nonstatutory stock options for federal income tax purposes. Under federal
income tax law in effect as of the date of this Proxy Statement, no income is
realized by the holder of a nonstatutory stock option until the option is
exercised, provided that the option is subject to a substantial risk of
forfeiture. At the time of exercise, the optionee will realize income, and the
Company will be entitled to a deduction, in the amount by which the fair market
value of the shares subject to the option at the time of exercise exceeds the
exercise price. The Company's deduction is conditioned upon Western withholding
income taxes on such income. Upon the sale of shares acquired upon exercise of a
nonstatutory stock option, the optionee will realize capital gain or loss equal
to the difference between the amount realized from the sale and the fair market
value of the shares on the date of exercise.
SARS
An optionee who receives a SAR will not recognize any taxable income upon
receipt of the SAR, but upon exercise of the SAR, the appreciation inherent in
the fair market value of the shares of beneficial interest (or the cash in lieu
of such shares) received must be treated as ordinary income by the optionee for
that year. Under such circumstances, the Company will, in general, be entitled
to a deduction equal to the amount taxable to the optionee as ordinary income.
If the optionee receives shares of beneficial interest upon the exercise of a
SAR and thereafter disposes of such shares in a taxable transaction, the
difference between any amount realized on such disposition and the amount
15
<PAGE>
treated as ordinary income upon the exercise of the SAR will be treated as a
capital gain or loss (provided the shares of beneficial interest were held as a
capital asset on the date of disposition), which will be a long or short-term
capital gain or loss depending on the holding period of the shares.
RESTRICTED STOCK
Restricted stock awarded under the 1998 Plan, which is transferable or not
subject to a substantial risk of forfeiture, will be taxable as ordinary income
equal to the excess of the fair market value of the shares received (determined
as of the date of the award) over the amount, if any, paid for the shares by the
participant. Western will be entitled to a tax deduction in the same amount, if
the Company timely complies with applicable W-2 reporting requirements under
section 6041 of the Code.
In the case of restricted shares that are not transferable and are subject
to a substantial risk of forfeiture on the date of issuance, the participant
will generally recognize ordinary income equal to the excess of the fair market
value of shares received (determined as of the date on which the shares either
become transferable or are not subject to a substantial risk of forfeiture) over
the amount, if any, paid for the shares. Western will be entitled to a tax
deduction in the same amount, if Western timely complies with applicable W-2
reporting requirements under section 6041 of the Code. A participant may elect
to recognize income when the shares are received, rather than upon the
expiration of the transfer restriction or risk of forfeiture, and, in such
event, the amount of ordinary income will be determined as of the date of
issuance rather than upon expiration of the applicable restriction. Western's
tax deduction will be determined at the same time.
EXPENSES
Western will pay all the costs and expenses of administering the 1998 Plan.
FUTURE AWARDS UNDER THE 1998 PLAN
The Committee has granted shares of restricted stock and options to purchase
shares under the 1998 Plan, subject to shareholder approval of the 1998 Plan.
These grants are described on page 13 of this Proxy Statement. As of the date of
this Proxy Statement, the Committee has not decided to make any other awards
under the 1998 Plan. Therefore, except for the restricted shares and options
granted as described herein in February 1998, the number and type of awards to
be granted under the 1998 Plan to any particular individual cannot be determined
at this time.
SHAREHOLDER APPROVAL
The affirmative vote of the holders of a majority of the shares of
beneficial interest is required to approve the 1998 Plan. In determining whether
the 1998 Plan has received the requisite number of affirmative votes, unexecuted
proxies, abstentions and broker nonvotes are deemed present at the meeting and,
therefore, will have the same effect as a vote against the proposal.
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS VOTE TO APPROVE THE
1998 PLAN.
16
<PAGE>
PROPOSAL TO AMEND WESTERN'S DECLARATION OF TRUST TO
INCREASE THE MAXIMUM NUMBER OF TRUSTEES
The Board of Trustees of Western has unanimously approved, and recommends
that the shareholders approve, an amendment to Section 8.1 of Western's
Declaration of Trust to increase the maximum number of trustees on the Board
from seven to nine. Section 8.1 now provides for the Board to consist of not
less than three trustees nor more than seven, with the exact number to be
determined by the Board from time to time. If this amendment is approved by the
shareholders, the Board may consist of not less than three nor more than nine
trustees, with the exact number to be determined by the Board from time to time.
Many publicly traded REITs of comparable size to Western have a greater
number of board members than Western currently has. The Board believes that the
ability to appoint a greater number of trustees will give Western access to more
diverse and experienced people who can contribute to the future progress and
profitability of the Company. Currently, the Board of Trustees is composed of
six trustees.
The full text of Article 8.1 of the Declaration of Trust reflecting this
amendment is attached as Exhibit B.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding shares
of beneficial interest of Western is required to adopt the proposed amendment to
the Declaration of Trust.
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE PROPOSAL
TO APPROVE THE AMENDMENT TO THE DECLARATION OF TRUST.
PROPOSAL TO AMEND WESTERN'S DECLARATION OF TRUST TO
CHANGE THE REQUIRED DATE, TIME AND PLACE OF THE ANNUAL
MEETING OF SHAREHOLDERS
The Board of Trustees of Western has also unanimously approved, and
recommends that the shareholders approve, an amendment to Section 7.1 of the
Declaration of Trust. Currently, Section 7.1 requires that the annual meeting of
shareholders be held on the second Thursday of the fifth calendar month of the
fiscal year between the hours of 9:00 a.m. and 9:00 p.m. in the city of San
Francisco, California. The proposed amendment will permit the Board to determine
the date, time and place of the annual meeting of shareholders, provided that
such date must fall after the end of the Company's fiscal year and prior to the
16th day of the fifth calendar month after the end of the fiscal year.
The full text of Article 7.1 of the Declaration of Trust reflecting this
amendment is attached as Exhibit C.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding shares
of beneficial interest of Western is required to adopt the proposed amendment to
the Declaration of Trust.
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE PROPOSAL
TO APPROVE THE AMENDMENT TO THE DECLARATION OF TRUST.
17
<PAGE>
APPOINTMENT OF AUDITORS
KPMG Peat Marwick LLP, Certified Public Accountants, were the auditors for
the Company for the year ended 1997. The Board of Trustees has appointed KPMG
Peat Marwick LLP as auditors for the year ending December 31, 1998, and
recommends to the shareholders that such appointment be ratified.
Representatives of KPMG Peat Marwick LLP are expected to attend the annual
meeting with the opportunity to make a statement if desired and are also
expected to be available to respond to appropriate questions from the
shareholders at the annual meeting.
OTHER BUSINESS
The management of Western knows of no matters to be brought before the
meeting other than those set forth in the Notice of Annual Meeting of
Shareholders. If, however, any other matters of which management is not now
aware are presented for action, it is the intention of the proxy holders named
in the enclosed proxy to vote in accordance with their discretion on such
matters. The giving of the proxy does not preclude the right to vote in person
should the shareholder giving it so desire, as the proxy may be revoked at any
time prior to its having been exercised.
SHAREHOLDER PROPOSALS
Any shareholder proposal to be submitted for inclusion in proxy-soliciting
material for the 1999 annual shareholder's meeting must be received by the
Secretary of the Company no later than December 1, 1998.
Dated: San Francisco, California
March , 1998
[SIGNATURE]
Barbara J. Donham
Secretary
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A COPY OF THE TRUST'S 1997 ANNUAL REPORT ON FORM 10-K FILED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION, INCLUDING FINANCIAL STATEMENTS,
SCHEDULES AND EXHIBITS, WILL BE PROVIDED WITHOUT CHARGE TO EACH SHAREHOLDER WHO
SENDS A WRITTEN REQUEST TO INVESTOR RELATIONS, WESTERN INVESTMENT REAL ESTATE
TRUST, AT 3450 CALIFORNIA STREET, SAN FRANCISCO, CALIFORNIA 94118.
- --------------------------------------------------------------------------------
18
<PAGE>
EXHIBIT A
WESTERN INVESTMENT REAL ESTATE TRUST
1998 EQUITY INCENTIVE PLAN
1. Purpose
The purpose of the Western Investment Real Estate Trust 1998 Equity
Incentive Plan (the "Plan") is to advance the interests of Western Investment
Real Estate Trust ("Western" or the "Company"), a California real estate
investment trust, and its Affiliates (as defined below) by providing share
ownership opportunities to employees, officers and trustees of Western and its
Affiliates who contribute significantly to the performance of Western. In
addition, the Plan is intended to enhance the ability of Western and its
Affiliates to attract and retain individuals of superior ability and to motivate
such people to exert their best efforts toward the future progress and
profitability of Western.
For purposes of the Plan, an Affiliate shall be any corporation in which
Western has a direct or indirect ownership interest of 50% or more of the total
combined voting power of all classes of stock of such corporation.
2. Administration and Interpretation
a. ADMINISTRATION. The Plan shall be administered by a committee (the
"Committee") consisting of not less than three members of the Board of Trustees
(the "Board") of Western appointed by and serving at the pleasure of the
Trustees. All members of the Committee shall be "disinterested persons" within
the meaning of Rule 16b-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended. The Board may from time to time
remove and appoint members of the Committee in substitution for or in addition
to members previously appointed and may fill vacancies, however caused, in the
Committee. The Committee may prescribe, amend and rescind rules and regulations
for administration of the Plan and shall have full power and authority to
construe and interpret the Plan. A majority of the members of the Committee
shall constitute a quorum, and the acts of a majority of the members present at
a meeting or the acts of a majority of the members evidenced in writing shall be
the acts of the Committee. The Committee may correct any defect or any omission
or reconcile any inconsistency in the Plan or in any award or grant made
hereunder in the manner and to the extent it shall deem desirable.
The Committee shall have the full and exclusive right to grant all share
options ("Options"), share appreciation rights ("SARs") and share awards, which
may be awards of unrestricted shares or restricted shares of beneficial interest
("Restricted Shares") under the Plan. The Options, SARs and share awards are
collectively referred to as "Awards." In granting Awards, the Committee shall
take into consideration the contribution the participant has made or may make to
the success of Western or its Affiliates and such other factors as the Committee
shall determine. The Committee shall also have the authority to consult with and
receive recommendations from trustees, officers and other employees of Western
and its Affiliates with regard to these matters. In no event shall any
participant, his or her legal representatives, heirs, legatees, distributees, or
successors have any right to participate in the Plan except to such extent, if
any, as the Committee shall determine.
A-1
<PAGE>
The Committee may from time to time in granting Awards under the Plan
prescribe such other terms and conditions concerning such Awards as it deems
appropriate, including, without limitation, the achievement of specific goals
established by the Committee, provided that such terms and conditions are not
more favorable to a recipient than those expressly set forth in the Plan.
The day-to-day administration of the Plan may be carried out by such
officers and employees of Western or its Affiliates as shall be designated from
time to time by the Committee.
b. INTERPRETATION. The interpretation and construction by the Committee of
any provisions of the Plan or of any grant under the Plan and any determination
by the Committee under any provision of the Plan or any such grant shall be
final and conclusive for all purposes.
c. LIMITATION ON LIABILITY. Neither the Committee nor any member thereof
shall be liable for any act, omission, interpretation, construction or
determination made in connection with the Plan in good faith, and the members of
the Committee shall be entitled to indemnification and reimbursement by Western
in respect of any claim, loss, damage or expense (including counsel fees)
arising therefrom to the full extent permitted by law. The members of the
Committee shall be named as insureds under any directors and officers (or
similar) liability insurance coverage which Western may have in effect from time
to time.
3. Shares Subject to Grants Under the Plan
a. LIMITATION ON NUMBER OF SHARES. The shares subject to grants of Awards
shall be authorized but unissued common shares of beneficial interest in Western
("Shares"). Subject to adjustment as hereinafter provided, the aggregate number
of Shares as to which Awards may be granted under the Plan shall not exceed
850,000. Shares ceasing to be subject to an Award because of the exercise of an
Option or SAR or the vesting of an Award shall no longer be subject to any
further grant under the Plan. However, if any outstanding Option or SAR, in
whole or in part, expires or terminates unexercised or is cancelled or any
Award, in whole or in part, expires or is terminated or forfeited, for any
reason prior to February , 2008, the Shares allocable to the unexercised,
terminated, cancelled or forfeited portion of such Award may again be made the
subject of grants under the Plan; provided, however, that if the participant
receives the benefits of ownership of any Shares (which includes the receipt of
dividends, but does not include the right to vote such Shares), such Shares may
not again be made the subject of grants under the Plan.
b. ADJUSTMENTS OF AGGREGATE NUMBER OF SHARES. The aggregate number of
Shares stated in Section 3.a. shall be subject to appropriate adjustment, from
time to time, in accordance with the provisions of Section 7 hereof.
4. Eligibility
The individuals who shall be eligible to receive Awards under the Plan shall
be such employees, officers or trustees of Western or any Affiliate (each, a
"participant") as the Committee from time to time shall determine.
5. Options and Sars
a. GRANTS OF OPTIONS. Options granted under the Plan may be either
incentive stock options ("ISOs") or nonqualified stock options. The term ISO
shall mean an option which is intended to
A-2
<PAGE>
qualify as an incentive stock option under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"). With respect to an Option that is
intended to be an ISO, the aggregate market value (determined at the date such
Option was granted) of the Shares with respect to which such ISO is exercisable
for the first time by the optionee during any calendar year (under all such
plans of Western and its parent and subsidiary corporations, if any) shall not
exceed $100,000.
No ISO shall be granted to any person who, at the time of the grant, owns
Shares possessing more than 10% of the total combined voting power of Western or
any parent or subsidiary of Western, unless (i) on the date such ISO is granted
the option price is at least 110% of the Market Value Per Share (as hereinafter
defined) of the Shares subject to the ISO and (ii) such ISO by its terms is not
exercisable after the expiration of five years from the date such ISO is
granted.
Options granted under the Plan shall be of such type (i.e., a nonqualified
stock option or an ISO), for such number of Shares, and be subject to such terms
and conditions, which may include, without limitation, the achievement of
specific goals, as the Committee shall designate. Options may be granted by the
Committee to any individual eligible to receive the same at any time and from
time to time.
b. GRANTS OF SARS. The term SAR shall mean the right to receive from
Western an amount equal to (i) the Market Value Per Share on the exercise date,
over (ii) the Market Value Per Share on the date of grant (i.e., the "spread"),
multiplied by the total number of Shares for which the SAR is exercised. The
amount payable by Western upon the exercise of a SAR may be paid in cash or in
Shares or in any combination thereof as the Committee in its sole discretion
shall determine; however, no fractional Shares shall be issuable pursuant to any
SAR.
SARs may be granted by the Committee to any individual eligible to receive
the same at any time and from time to time before February , 2008. A SAR may,
but need not, relate to a specific Option granted under this Plan. If a SAR
relates to a specific Option, it may be granted either concurrently with the
Option or, if a nonqualified stock option, at any time prior to the exercise,
termination, cancellation or expiration of such Option.
The Committee may fix such waiting periods, exercise dates or other
limitations as it shall deem appropriate with respect to SARs granted under the
Plan including, without limitation, the achievement of specific goals; provided,
however, that each SAR granted hereunder shall be exercisable only upon consent
of the Committee; and provided further, that a SAR that relates to a specific
Option shall be exercisable only when and to the extent that the Option to which
it relates is exercisable and if such Option is an ISO, only at such times that
there is a positive spread.
c. TERMS OF OPTIONS AND SARS. Options and SARs granted pursuant to this
Plan shall be evidenced by written agreements (separate agreements shall be used
with respect to grants of nonqualified stock options and grants of ISOs) which
shall comply with and be subject to the following terms and conditions and may
contain such other provisions, consistent with the terms of this Plan, as the
Committee shall deem advisable. SARs that relate to a specific Option may be
evidenced by and form a part of the Option agreement to which the SAR relates.
References herein to agreements shall include, to the extent applicable, any
amendments to such agreements.
A-3
<PAGE>
(1) PAYMENT OF OPTION EXERCISE PRICE. Upon exercise of an Option, the
full option purchase price for the Shares with respect to which the
Option is being exercised shall be payable to Western (i) in cash or by
check payable and acceptable to Western or (ii) subject to the approval of
the Committee, by tendering to Western Shares owned by the optionee having
an aggregate Market Value Per Share as of the date of exercise and tender
which is not greater than the full option purchase price for the Shares with
respect to which the Option is being exercised and by paying the remainder
of the option purchase price as provided in (i) above; however, the
Committee may, upon confirming that the optionee owns the number of
additional Shares being tendered, authorize the issuance of a new
certificate for the number of Shares being acquired pursuant to the exercise
of the Option less the number of Shares being tendered upon the exercise and
return to the optionee (or not require surrender of) the certificate for the
Shares being tendered upon the exercise. Payment instructions will be
received subject to collection. If permitted by applicable law, the
Committee may provide that the Company may make loans to recipients of
Options in order to pay the Option exercise price. Such loans may be subject
to such terms and conditions as determined by the Committee.
(2) NUMBER OF SHARES. Each agreement shall state the total number of
Shares which are subject to the Option and/or SAR.
(3) EXERCISE PRICE. The exercise price for each ISO and SAR shall be
fixed by the Committee at the date of grant, but in no event may such
exercise price per Share be less than the Market Value Per Share on the date
of the grant of the ISO or SAR. The exercise price for each nonqualified
stock option shall be fixed by the Committee at the date of grant. Such
option price may be less than the Market Value Per Share on the date of the
grant of the nonqualified stock option.
(4) MARKET VALUE PER SHARE. The Market Value Per Share as of any
particular date shall mean the average of the daily high and low sales
prices of the Company's Shares reported on the principal stock exchange upon
which such shares are listed on the date the Option or SAR is granted. If
there is no regular public trading market for such Shares, the Market Value
Per Share shall be determined by any fair and reasonable means determined by
the Committee.
(5) TERM. The term of each Option and SAR shall be determined by the
Committee at the date of grant; provided, however, that each Option that
is an ISO shall, notwithstanding anything in the Plan or an agreement to the
contrary, expire not more than ten years from the date the Option is granted
(except as provided in Section 5.a.) or, if earlier, the date specified in
the agreement at the date of grant of such Option. An Option that is a
nonqualified stock option shall expire not more than ten years from the date
the Option is granted, or if earlier, the date specified in the agreement at
the date of grant of such Option. A SAR not granted in tandem with an Option
shall expire not more than ten years from the date the SAR is granted or, if
earlier, the date specified in the SAR agreement; however, a SAR granted in
tandem with an Option shall terminate whenever the Option to which it
relates terminates.
(6) DATE OF EXERCISE. Each agreement may, in the discretion of the
Committee, state that the Option or SAR granted therein may not be
exercised in whole or in part for a period or periods
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of time specified in such agreement and except as so specified therein, any
Option or SAR may be exercised in whole at any time or in part from time to
time during its term. The Committee may, in its discretion, accelerate the
exercisability of all or part of an individual's Options or SARs.
(7) TERMINATION OF EMPLOYMENT. In the event that an individual's
employment with Western and its Affiliates shall terminate, for reasons
other than (i) retirement pursuant to a retirement plan or policy of Western
or one of its Affiliates ("retirement"), (ii) permanent disability as
determined by the Committee based on the opinion of a physician selected or
approved by the Committee ("permanent disability") or (iii) death, the
individual's Options and SARs shall be exercisable by him or her, subject to
subsections (5) and (6) above, only within ninety days (90) after such
termination, but only to the extent the Option or SAR was exercisable
immediately prior to such termination of employment.
If, however, any termination of employment is due to retirement or permanent
disability, the individual shall have the right, subject to the provisions of
subsections (5) and (6) above, to exercise his or her Option and SARs at any
time within the 12-month period commencing on the day next following after such
termination of employment to the extent that the individual was entitled to
exercise the same on the day immediately prior to such termination. Whether any
termination of employment is due to retirement or permanent disability and
whether an authorized leave of absence or absence on military or government
service or for other reasons shall constitute a termination of employment for
the purposes of the Plan shall be determined by the Committee.
If an individual shall die while entitled to exercise an Option or SAR, the
individual's estate, personal representative or beneficiary, as the case may be,
shall have the right, subject to the provisions of subsections (5) and (6)
above, to exercise the Option at any time within 12 months from the date of the
optionee's death, to the extent that the optionee was entitled to exercise the
same on the day immediately prior to the optionee's death.
d. OPTIONS GRANTED BY OTHER CORPORATIONS. Options may be granted under the
Plan from time to time in substitution for stock options held by employees of
corporations who become key employees of Western or of any Affiliate as a result
of any "corporate transaction" as defined in the Treasury Regulations
promulgated under Section 424 of the Code.
e. AMENDMENT. The Committee may, with the consent of the person or persons
entitled to exercise any outstanding Option, amend such Option. The Committee,
in its absolute discretion, may grant to holders of outstanding Options, in
exchange for the surrender and cancellation of such Options, new Options having
exercise prices lower (or higher) than the exercise price provided in the
Options so surrendered and canceled and containing such other terms and
conditions as the Committee may deem appropriate.
6. Share Awards
a. AWARDS OF SHARES. Shares may be awarded by the Committee to any
individual eligible to receive the same, at any time and from time to time
before February , 2008. An award may be a (i) a
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grant of Shares, (ii) contingent award of Shares to be issued such individual in
the future after the individual has met the terms and conditions of the
contingent award set by the Committee at the time of the contingent award or
(iii) a Restricted Share Award.
b. DESCRIPTION OF SHARE AWARDS. A Restricted Share is a share that may not
be sold, exchanged, pledged, transferred, assigned or otherwise encumbered or
disposed of until the terms and conditions set by the Committee at the time of
the award of the Restricted Shares have been satisfied. A Share award shall be
subject to such restrictions, terms and conditions as the Committee may
establish, which may include, without limitation, "lapse" and "non-lapse"
restrictions (as such terms are defined in regulations promulgated under Section
83 of the Code) and the achievement of specific goals. The Committee may entitle
the participant to receive a Share award at no cost or for a purchase price
determined by the Committee. A participant who is granted a Share award shall
have no rights with respect to such Award unless the participant shall have
accepted the Award within 60 days (or such date as the Committee may specify)
following the award date by making payment to the Company, if required, by
certified or bank check or other instrument or form of payment acceptable to the
Committee in an amount equal to the specified purchase price, if any, of the
Shares covered by the award and by executing and delivery to the Company a
written instrument setting forth the terms and conditions of the Restricted
Share award in such form as the Committee shall determine.
If a participant receives a Share award (whether or not escrowed as provided
below), the participant shall be the record owner of such Shares and shall have
all the rights of a shareholder with respect to such Shares (unless the
agreement specifically provides otherwise), including the right to vote and the
right to receive dividends or other distributions made or paid with respect to
such Shares. Any certificate or certificates representing a Share award which is
a contingent award or a Restricted Share award shall bear a legend similar to
the following:
"The shares represented by this certificate have been issued pursuant to
the terms of the Western Investment Real Estate Trust 1998 Equity
Incentive Plan and may not be sold, pledged, transferred, assigned or
otherwise encumbered in any manner except as is set forth in the terms
of such award dated , 199 ."
In order to enforce the restrictions, terms and conditions that may be
applicable to a participant's Share award, the Committee may require the
participant, upon the receipt of a certificate or certificates representing such
shares, or at any time thereafter, to deposit such certificate or certificates,
together with stock powers and other instruments of transfer, appropriately
endorsed in blank, with Western or an escrow agent designated by Western under
an escrow agreement, which may be a part of a Restricted Share agreement, in
such form as shall be determined by the Committee.
After the satisfaction of the terms and conditions set by the Committee at
the time of a Share award to a participant, which award is not subject to a
non-lapse feature, a new certificate, without the legend set forth above, for
the number of shares that are no longer subject to such restrictions, terms and
conditions shall be delivered to the participant. If such terms and conditions
are satisfied as to a portion, but fewer than all, such Shares, the remaining
shares issued with respect to such award shall
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either be reacquired by Western or, if appropriate under the terms of the award
applicable to such shares, shall continue to be subject to the restrictions,
terms and conditions set by the Committee at the time of award.
c. PAYMENT OF SHARE AWARDS. The satisfaction of the terms and conditions
set by the Committee at the time of an award and the delivery of a certificate,
without the legend set forth above, for the portion of such award that is no
longer subject to such restrictions, terms and conditions is hereinafter
referred to as the "payment" of such portion of the award. Subject to the
provisions above, each award shall be paid at the time and in the manner
specified by the Committee at the time of the award.
d. PAYMENT IN THE EVENT OF TERMINATION OF EMPLOYMENT. If the employment
with Western and its Affiliates of an employee to whom a Share award has been
made is terminated for any reason before satisfaction of the terms and
conditions for the payment of all or a portion of the award, then only such
portion of the award, if any, that is payable pursuant to its terms and
conditions as of the date of the employee's termination shall be paid, and the
remaining portion of such award shall be reacquired by Western and forfeited;
provided, however, if the termination is due to the employee's death, permanent
disability or retirement, the Committee may, in its sole discretion, deem that
the terms and conditions have been met for all or part of such remaining
portion. If Shares issued shall be reacquired by Western and forfeited as
provided above, the employee, or in the event of the employee's death his or her
personal representative, shall forthwith deliver to the Secretary of Western the
certificates for the Shares awarded pursuant to the Plan to the employee,
accompanied by such instrument of transfer, if any, as may reasonably be
required by the Secretary of Western.
If an employee to whom Shares have been awarded dies after satisfaction of the
terms and conditions for the payment of all or a portion of the award but prior
to the actual payment of all or such portion thereof, such payment shall be made
to the employee's estate, personal representative or beneficiary or
beneficiaries at the time and in the same manner that such payment would have
been made to the employee.
7. Recapitalization
The aggregate number of Shares stated in Section 3.a., the number of Shares
to which each outstanding Award relates, the exercise price in respect of each
Option or SAR and the number of Shares subject to an Award, may be
proportionately adjusted in an equitable manner determined by the Committee, in
its sole discretion and without liability to any person, for any increase or
decrease in the number of issued Shares resulting from the payment of a Share
dividend, a Share split or any transaction which is a "corporation transaction"
(as defined in the Treasury Regulations promulgated under Section 424 (formerly
Section 425) of the Code).
8. Merger or Consolidation
Except as otherwise provided in Section 9 below, after a merger of one or
more entities into the Company in which the Company shall survive, or after a
consolidation of the Company and one or more entities, in which the resulting
entity remains as an independent, publicly-owned entity, a participant shall, at
the same cost, be entitled upon the exercise of an Option or SAR or the
settlement of an Award or the settlement of an Award to receive (subject to any
required action by shareholders and the discretion of the Committee as to the
payment of cash with respect to a SAR) such stock, cash
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and/or securities of the surviving or resulting entity as the board of directors
of such entity, in its sole discretion and without liability to any person,
shall determine to be equivalent, as nearly as practicable, to the nearest whole
number and class of Shares or other securities that were then subject to such
Award and such shares of stock or other securities shall, after such merger or
consolidation, be deemed to be Shares for all purposes of the Plan and any
agreement.
9. Change in Control
In the event of a Change in Control (as defined below), then,
notwithstanding any other term of this Plan (except as set forth in any
agreement to the contrary), any and all outstanding Awards not fully vested
shall automatically vest in full and all Options and SARs shall be immediately
exercisable. The date on which such accelerated vesting and immediate
exercisability shall occur (the "Acceleration Date") shall be the date of the
occurrence of the Change in Control.
A "Change in Control" shall be deemed to have occurred if:
(a)any "person," as such term is used in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (other
than the Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any company owned, directly or
indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of shares of the Company) together with its
"Affiliates" and "Associates," as such terms are defined in Rule 12b-2 of the
Exchange Act, makes a tender or exchange offer for or is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of, securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities;
(b)during any period of two consecutive years (not including any period
prior to the effective date of this Plan), individuals who at the
beginning of such period constitute the Board, and any new trustee (other than a
trustee designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (a), (c) or (d) of this
definition) whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds of the
trustees then still in office who either were trustees at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(c)the shareholders of the Company approve a merger or consolidation of the
Company with any other company other than (i) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 80% of the combined voting power of the voting securities of
the Company (or such surviving entity) outstanding immediately after such merger
or consolidation or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no "person"
(as hereinabove defined) acquires more than 25% of the combined voting power of
the Company's then outstanding securities; or
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(d)the shareholders of the Company adopt a plan of complete liquidation of
the Company or approve an agreement for the sale, exchange or disposition
by the Company of all or a significant portion of the Company's assets. For
purposes of this clause (d), the term "the sale, exchange or disposition by the
Company of all or a significant portion of the Company's assets" shall mean a
sale or other disposition transaction or series of related transactions
involving assets of the Company or any subsidiary of the Company (including the
stock of any subsidiary of the Company) in which the value of the assets or
stock being sold or otherwise disposed of (as measured by the purchase price
being paid therefore or by such other method as the Board determines is
appropriate in a case where there is no readily ascertainable purchase price)
constitutes more than 50% of the fair market value of the Company (as
hereinafter defined). For purposes of the preceding sentence, the "fair market
value of the Company" shall be the aggregate market value of the outstanding
Shares of the Company (on a fully diluted basis) plus the aggregate market value
of the Company's other outstanding equity securities. The aggregate market value
of the Shares of the Company shall be determined by multiplying the number of
Shares (on a fully diluted basis) outstanding on the date of the execution and
delivery of a definitive agreement with respect to the transaction or series of
related transactions (the "Transaction Date") by the average closing price of
the Shares of the Company for the ten trading days immediately preceding the
Transaction Date. The aggregate market value of any other equity securities of
the Company shall be determined in a manner similar to that prescribed in the
immediately preceding sentence for determining the aggregate market value of the
Shares of the Company or by such other method as the Board shall determine is
appropriate.
Notwithstanding the foregoing however, (except as stated otherwise in an
Award agreement) a Change in Control shall not be deemed to have occurred if,
prior to the time a Change in Control would otherwise be deemed to have occurred
pursuant to the above provisions, the Board determines otherwise.
10. Recipient's Agreement
If, at the time of the exercise of any Option or SAR or the making or
vesting of an Award, in the opinion of counsel for Western, it is necessary or
desirable, in order to comply with any then applicable laws or regulations
relating to the sale of securities, that the individual exercising the Option or
SAR or receiving the Award shall agree to hold any Shares issued to the
individual for investment and without any present intention to resell or
distribute the same and that the individual will dispose of such Shares only in
compliance with such laws and regulations, the individual will, upon the request
of Western, execute and deliver to Western a further agreement to such effect.
11. Withholding for Taxes
No Option or SAR may be exercised or distribution of Shares be made under
the Plan until appropriate arrangements have been made by the individual with
the Company for the payment of any amounts that the Company may be required to
withhold with respect thereto, which arrangements may include, if set forth in
the agreement relating to such Award, the tender of owned Shares or the
withholding of Shares issuable pursuant to such Award.
12. Termination of Authority to Make Grant
No Awards will be granted pursuant to this Plan after February , 2008.
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13. Amendment and Termination
The Board may from time to time and at any time alter, amend, suspend,
discontinue or terminate this Plan and any grants or awards hereunder; provided,
however, that no such action of the Board may, without the approval of the
shareholders of Western, alter the provisions of the Plan so as to (i) increase
the maximum number of Shares which may be subject to awards and grants and
distributed in the payment of awards and exercises under the Plan (except as
provided in Section 3.b.); (ii) extend beyond ten years the maximum terms of
options granted under the Plan or extend the term of the Plan; or (iii) change
the class of employees eligible to receive awards and grants under the Plan. The
Committee may, in its discretion, accelerate the vesting of all or part of an
Award. The Committee may, in its discretion, provide for events causing the
acceleration of vesting of all or part of an Award in the agreement relating to
such Award.
14. Preemption by Applicable Laws and Regulations
Anything in the Plan or any agreement entered into pursuant to the Plan to
the contrary notwithstanding, if, at any time specified herein or therein for
the making of any determination or payment of the issue or other distribution of
Shares, any law, regulation or requirement of any governmental authority having
jurisdiction in the premises shall require either Western or the participant (or
the participant's beneficiary), as the case may be, to take any action in
connection with any such determination, payment, issuance or distribution, the
issue or distribution of such Shares or the making of such determination or
payment, as the case may be, shall be deferred until such action shall have been
taken.
15. Change in Control Limitation
Notwithstanding any other provision in the Plan, to the extent that the
acceleration of exercisability or payment of an Award under this Plan following
a Change in Control (a "Penalized Benefit"), when aggregated with other payments
or benefits to the participant, whether or not payable pursuant to this Plan,
would, as determined by a tax counsel selected by the Company, result in "excess
parachute payments" (as defined in Section 280G of the Code), such Penalized
Benefit shall be reduced to the extent necessary so that no portion thereof
shall be subject to the excise tax imposed by Section 4999 of the Code, but only
if, and to the extent that, by reason of such reduction, the participant's net
after tax benefit shall exceed the net after tax benefit if such reduction were
not made. "Net after tax benefit" shall mean the sum of (i) all payments and
benefits which a participant receives or is then entitled to receive that would
constitute a "parachute payment" within the meaning of Section 280G of the Code,
less (ii) the amount of federal income taxes payable with respect to the
payments and benefits described in (i) above calculated at the maximum marginal
income tax rate for the year in which such payments and benefits shall be paid
to the participant (based upon the rate for such year as set forth in the Code
at the time of the first payment of the foregoing), less (iii) the amount of
excise taxes imposed with respect to the payments and benefits described in (i)
above by Section 4999 of the Code.
16. Miscellaneous
a. NO EMPLOYMENT CONTRACT. Nothing contained in the Plan shall be
construed as conferring upon any employee the right to continue in the employ of
Western or any Affiliate.
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b. EMPLOYMENT WITH AFFILIATES. Employment by Western for the purpose of
this Plan shall be deemed to include employment by, and to continue during any
period in which an employee is in the employment of, any Affiliate.
c. NO RIGHTS AS A SHAREHOLDER. A participant shall have no rights as a
shareholder with respect to Shares covered by the participant's Award until the
date of the issuance of such Shares to the participant pursuant thereto. No
adjustment will be made for dividends or other distributions or rights for which
the record date is prior to the date of such issuance.
d. NO RIGHT TO TRUST ASSETS. Nothing contained in the Plan shall be
construed as giving a participant, the participant's estate, personal
representative or beneficiaries or any other person any equity or interest of
any kind in any assets of Western or an Affiliate or as creating a trust of any
kind or a fiduciary relationship of any kind between Western or an Affiliate and
any such person.
e. NO RESTRICTION ON TRUST ACTION. Nothing contained in the Plan shall be
construed to prevent Western or any Affiliate from taking any action that is
deemed by Western or such Affiliate to be appropriate or in its best interest,
whether or not such action would have an adverse effect on the Plan or any grant
made under the Plan. No participant, beneficiary or other person shall have any
claim against Western or any Affiliate as a result of any such action.
f. NONASSIGNABILITY. Neither a participant nor a participant's estate,
personal representative or beneficiary shall have the power or right to sell,
exchange, pledge, transfer, assign or otherwise encumber or dispose of such
participant's estate's, personal representative's or beneficiary's interest
arising under the Plan otherwise than by will or the laws of descent and
distribution. Any Award granted under this Plan shall be exercisable, during the
lifetime of the participant, only by such participant.
g. APPLICATION OF FUNDS. The proceeds received by Western from the sale of
Shares pursuant to the Plan will be used for its general business purposes.
h. GOVERNING LAW; CONSTRUCTION. All rights and obligations under the Plan
shall be governed by, and the Plan shall be construed in accordance with, the
laws of the State of California without regard to the principles of conflicts of
laws. Titles and headings to Sections herein are for purposes of reference only,
and shall in no way limit, define or otherwise affect the meaning or
interpretation of any provisions of the Plan.
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EXHIBIT B
SECTION 8.1 ACTION AS BOARD
In managing the business, affairs and assets of the Trust, the trustees
shall act as a board of trustees. The initial number of trustees shall be four.
Thereafter, the number of trustees shall be such as may be fixed from time to
time by the board of trustees, but in any event, shall be not less than three
nor more than nine.
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EXHIBIT C
SECTION 7.1 ANNUAL MEETING
Annual meetings of the shareholders shall be held each year on the date, and
at the time and place determined by the trustees, provided that such date shall
be after the end of the Trust's fiscal year and prior to the 16th day of the
fifth calendar month after the end of the fiscal year.
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WESTERN INVESTMENT REAL ESTATE TRUST
ANNUAL MEETING OF SHAREHOLDERS
MAY 14, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Chester R. MacPhee, Jr., Reginald B.
Oliver, James L. Stell, Dennis D. Ryan, Robert J. McLaughlin and Bradley N.
Blake as Proxies, each with the power to appoint his substitute, and hereby
authorizes each of them to represent and to vote, as designated below, all
the shares of beneficial interest of Western Investment Real Estate Trust
held of record by the undersigned on March 18, 1998 at the annual meeting of
shareholders to be held on May 14, 1998 or any adjournment thereof.
Should the undersigned be present and choose to vote at the meeting or at
any adjournment or postponements thereof, and after notification to the
Secretary of the Company at the meeting of the shareholder's decision to
terminate this proxy, then the power of the attorneys or proxies shall be
deemed terminated and of no further force and effect. This proxy may also be
revoked by filing a written notice of revocation with the Secretary of the
Company or by duly executing a proxy bearing a later date.
IMPORTANT: PLEASE DATE AND SIGN ON REVERSE SIDE.
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* FOLD AND DETACH HERE *
<PAGE>
This proxy will be voted as directed, but if no instructions are specified, this
proxy will be voted FOR each of the propositions stated.
Please mark
your votes as /X/
indicated in
this example
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSITIONS.
VOTE
FOR WITHHELD
1. The election as trustees all nominees / / / /
listed below
(except as marked to the contrary).
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
DENNIS D. RYAN and ROBERT J. MCLAUGHLIN
FOR AGAINST ABSTAIN
2. Approval of the adoption of the / / / / / /
1998 Equity Incentive Plan.
FOR AGAINST ABSTAIN
3. Approval of the amendment of the Declaration / / / / / /
of Trust to increase the maximum number of
trustees on the Board of Trustees from seven
to nine.
FOR AGAINST ABSTAIN
4. Approval of the amendment of the Declaration / / / / / /
of Trust to change the required date, time and
place of the annual meeting of shareholders.
FOR AGAINST ABSTAIN
5. Ratification of the appointment of KPMG Peat / / / / / /
Marwick LLP as auditors for the fiscal year
ending December 31, 1998.
6. In their discretion, the Proxies are authorized
to vote upon such other business as may properly
come before the meeting or any adjournment or
postponement thereof.
If any other business is presented at the meeting, this proxy will be voted by
those named in this proxy in their best judgement. At the present time, the
Board of Trustees knows of no other business to be presented at the meeting.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE
The undersigned acknowledges receipt from the Company, prior to the execution of
this proxy, of notice of the Meeting, a Proxy Statement dated March , 1998 and
an Annual Report to shareholders.
I plan to attend the meeting. / /
Signature(s) __________________________________ Dated____________, 1998
Please sign exactly as your name(s) appear(s) to the left. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
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* FOLD AND DETACH HERE *
