SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
/ / Definitive Proxy Statement Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
Nooney Realty Trust, Inc.
(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)(4) 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:
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(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:
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Nooney Realty Trust, Inc.
1100 Main Street, Suite 2100
Kansas City, Missouri 64105
April 7, 2000
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
to be held at 10:00 A.M. on May 9, 2000, in the 24th Floor Conference Room at
2345 Grand Boulevard, Suite 2400, Kansas City, Missouri. Information regarding
business to be conducted at the meeting is set forth in the accompanying Notice
of Annual Meeting and Proxy Statement.
The Board of Trustees of Nooney Realty Trust, Inc. (the "Trust") is
asking you to consider and vote on the proposals contained in the enclosed Proxy
Statement. In addition to the election of trustees and a proposal to change the
Trust's name, the Board is recommending some changes in the Trust's policies.
These are found in Proposals 1 and 2 (A through D) on the attached Notice of
Annual Meeting, and are referred to herein and in the Proxy Statement as the
"Policy Proposals." The Policy Proposals are designed to
* terminate the Trust's "self-liquidating" policy;
* permit the Trust to acquire equity interests in other
entities;
* permit the Trust to exchange its common stock for
real estate investments;
* permit the Trust to incur indebtedness subject only
to the limitation that aggregate mortgage
indebtedness not exceed 80% of the appraised value of
its properties; and
* permit the Trust to purchase or sell real property
from or to affiliates if approved by unanimous vote
of the disinterested Independent Trustees.
Although organized as a general business corporation with a perpetual
life, the Trust's Articles of Incorporation and Bylaws provide that it is
organized to be a self-liquidating business and it was generally contemplated
that the life of investments in the Trust's portfolio would have a finite life.
Initially, it was intended that the Trust would sell its properties between
eight and twelve years after their acquisition, although there is no obligation
to sell any property at any particular time or within a specified time frame.
The Trust's Bylaws generally state that its policy is to distribute net proceeds
from the sale of a property to shareholders or apply such proceeds to
improvements on, payment of debt with respect to, or purchase of land
underlying, existing investment properties. The Trustees also
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may determine to use net proceeds to pay expenses or establish reserves. This
policy prevents the Trust from using disposition proceeds to acquire new
investment properties.
The Trust's Bylaws also contain a number of other investment
restrictions and limitations on borrowing, some of which may limit its ability
to grow. Under these policies, the Trust may not
* invest in equity securities, including shares of
other REITs;
* issue shares in exchange for any real estate
investment;
* incur total indebtedness in excess of 300% of the
Trust's net asset value;
* borrow on an unsecured basis, if such borrowing would
result in an asset coverage ratio (generally the
ratio of net assets plus unsecured debt to unsecured
debt) of less than 300%; or
* purchase or sell real property from or to affiliates
of the Trust except under very limited circumstances.
Recently, there has been a change in control of the Trust, and the
Trust now has new management and a new Board of Trustees. The new Board of
Trustees believes that securities markets have historically valued shares of
infinite-life REITs more favorably than those of finite-life REITs with
self-liquidating policies such as those of the Trust's. Further, the Board of
Trustees believes that the investment and borrowing policies described above may
prevent the Trust from taking advantage of investment opportunities that may
exist. Accordingly, the Board of Trustees is recommending the Policy Proposals
to shareholders.
If the Policy Proposals are approved, the Trust will have the
opportunity to grow by using proceeds from the sale of properties and stock,
together with proceeds from the incurrence of debt and the issuance of stock, to
make additional investments. In this regard, the Trust is presently negotiating
the sale of one of its properties, and proceeds from any sale that might
otherwise have to be distributed to shareholders could be used to acquire new
properties if the Policy Proposals are approved. Although no specific
acquisition proposals are under consideration, management and the Board of
Trustees will seek to grow the Trust by acquiring additional income-producing
real properties, including multi-family housing and investments in other
entities, primarily other REITs and real estate general or limited partnerships
that own income producing real properties. The Trust may also consider
purchasing income-producing real properties from, or entering into transactions
with, entities affiliated with management of the Trust. The Board of Trustees
anticipates that such actions will help the Trust become more diversified and
will reduce the Trust's dependence on the performance of any single investment.
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The Policy Proposals will subject shareholders to several significant
risks. The most significant risks associated with the Policy Proposals are
summarized below.
* The Trust will no longer be required to distribute proceeds
from sales or refinancings of properties, but will instead be
able to reinvest such proceeds in new investments. Therefore,
shareholders who wish to liquidate their investments will have
to sell their shares, and there can be no assurance that there
will be an active trading market for the Trust's shares at the
time of sale.
* There may be constraints on the Trust's growth opportunities,
such as competition, lack of financing and lack of acceptable
properties.
* The Trust may not be able to operate profitably under the
changed policies. It has reported losses in each of the last
three years.
* Additional borrowings could reduce net income available for
distribution to shareholders.
* Shareholders will be subject to potential dilution from future
equity offerings, which may have an adverse effect on the
market price of the Trust common stock.
* The Policy Proposals may involve conflicts of interest between
the Trust and members of management, in that Maxus Properties,
Inc., which is an affiliate of certain members of management
and which manages the Trust's properties, will receive more
fees if the Trust's gross receipts increase and is more likely
to receive fees over a longer period of time if the Trust's
self-liquidating policy is eliminated. In addition, conflicts
of interest may arise if the Trust desires to purchase or sell
real property from or to, or enter into other transactions
with, affiliates of the Trust.
* Shareholders have no appraisal, dissenters' or similar rights
in connection with the Proposals.
The foregoing is only a summary and shareholders should carefully
consider the risks disclosed under "Risk Factors" in the accompanying Proxy
Statement.
As you can see, these proposals involve potential significant benefits
and risks to the Company's shareholders, as well as certain potential conflicts
of interest with the Trust's affiliates. The accompanying Proxy Statement, which
you are urged to read carefully, provides detailed information concerning the
proposals.
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Whether or not the proposals are adopted by the Company's shareholders, the
Company will continue to operate so as to qualify as a REIT. If the proposals
are adopted, the Company's operations will remain unchanged except as
specifically provided for in the Proxy Statement.
We cannot stress enough the importance of the vote of every shareholder,
regardless of the number of shares owned. THEREFORE, EVEN IF YOU ARE PLANNING TO
ATTEND THE MEETING, WE URGE YOU TO COMPLETE AND RETURN THE ENCLOSED PROXY TO
ENSURE THAT YOUR SHARES WILL BE REPRESENTED. A postage-paid envelope is enclosed
for your convenience. Should you later decide to attend the meeting, you may
revoke your proxy at any time and vote your shares personally at the meeting.
We look forward to seeing many shareholders at the meeting.
Sincerely,
David L. Johnson
Chairman of the Board and
Chief Executive Officer
-----------------------------------------
Special Note Regarding Forward-Looking Statements
Certain statements herein and in the accompanying Proxy Statement
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. When used herein and in the Proxy
Statement , the words "estimate," "project," "anticipate," "expect," "intend,"
"believe," and similar expressions are intended to identify forward-looking
statements. Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual results, performance
and achievements of the Trust, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things, the
following factors, as well as those factors discussed elsewhere in the Trust's
filings with the Commission: the successful implementation of the Policy
Proposals, changes in the real estate market, prevailing interest rates and
general economic conditions, the level of competition confronting the Trust and
other factors referred to in the accompanying Proxy Statement including, without
limitation, under the heading "RISK FACTORS."
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NOONEY REALTY TRUST, INC.
1100 MAIN STREET, SUITE 2100
KANSAS CITY, MISSOURI 64105
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 9, 2000
To the Shareholders of
Nooney Realty Trust, Inc.:
You are hereby notified that the Annual Meeting of Shareholders of
Nooney Realty Trust, Inc. (the "Trust") will be held at 10:00 A.M. on May 9,
2000, in the 24th Floor Conference Room at 2345 Grand Boulevard, Suite 2400,
Kansas City, Missouri, for the following purposes:
1. To consider and vote upon a proposal to amend Article Eight of
the Trust's Articles of Incorporation, Section 6.1 of Article
VI of the Trust's Bylaws and Section 10.8(b) of Article X of
the Trust's Bylaws to eliminate the Trust's "self-liquidating"
policy.
2. To consider and vote upon a proposal to amend provisions of
the Trust's Bylaws to eliminate certain investment and
borrowing restrictions on the Trust. The proposal is to
A. amend Section 6.2 of the Trust's Bylaws by
deleting the text of paragraph (d) thereof;
as a result, the Trust would be permitted to
acquire equity securities of other
companies;
B. amend Section 6.2 of the Trust's Bylaws by
deleting the text of paragraph (i) thereof;
as a result the Trust would be permitted to
exchange its common stock for real estate
investments;
C. amend Section 3.1(e) of the Trust's Bylaws
by deleting clauses (ii) and (iii) thereof,
and amend Section 3.4 of the Trust's Bylaws
by deleting paragraph (e) thereof; as a
result, existing provisions that restrict
(1) total indebtedness of the Trust from
exceeding 300% of the net asset value of the
Trust's assets and unsecured borrowings that
result in an asset coverage of less than
300% and (2) require the Independent
Trustees to monitor such coverages, would be
eliminated;
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D. amend the second paragraph of Section 9.4 of
the Trust's Bylaws by adding a new paragraph
(d) thereto that allows the Trust to
purchase or sell property from or to
affiliates of the Trust if approved by the
unanimous vote of the disinterested
Independent Trustees.
3. To consider and vote upon a proposal to amend Article One of
the Trust's Articles of Incorporation and Section 1.1 of
Article I of the Trust's Bylaws to change the name of the
Trust to Maxus Realty Trust, Inc.
4. To elect five trustees to hold office until the next Annual
Meeting of Shareholders and until their successors are elected
and qualify.
5. To vote upon a proposal to adjourn the Annual Meeting of
Shareholders to allow for additional solicitation of
shareholder proxies or votes in the event that the number of
proxies or votes sufficient to obtain a quorum or to approve
Proposals 1, 2, 3 and/or 4 have not been received by the date
of the Annual Meeting of Shareholders.
6. To consider and act upon such other business as may properly
come before the meeting or any adjournment thereof.
The Trust's Board of Trustees has fixed the close of business on March
28, 2000, as the record date for the determination of shareholders entitled to
receive notice of and to vote at the Annual Meeting.
BY ORDER OF THE BOARD OF TRUSTEES
Christine A. Robinson, Secretary
April 7, 2000
Kansas City, Missouri
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NOONEY REALTY TRUST, INC.
1100 MAIN STREET, SUITE 2100
KANSAS CITY, MISSOURI 64105
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 9, 2000
The Board of Trustees of Nooney Realty Trust, Inc., is soliciting the
enclosed proxy for its use at the Annual Meeting of Shareholders to be held at
10:00 A.M. on May 9, 2000, in the 24th Floor Conference Room at 2345 Grand
Boulevard, Suite 2400, Kansas City, Missouri, or any adjournment thereof, for
the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders. The Board is first mailing this proxy statement and the enclosed
form of proxy on or about April 7, 2000.
Introduction
In addition to asking you to vote on nominees to the Board of Trustees
and recommending a change in the Trust's name, the Board of Trustees is
proposing several amendments to the Trust's Articles of Incorporation and Bylaws
that concern certain of the Trust's policies. These proposals are referred to
herein as the "Policy Proposals " and are described in the accompanying Notice
of Annual Meeting under Proposals 1 and 2 (A through D). If adopted, these
proposals (the "Policy Proposals") will
* terminate the Trust's "self-liquidating" policy;
* permit the Trust to acquire equity interests in other
entities;
* permit the Trust to exchange its common stock for
real estate investments;
* permit the Trust to incur indebtedness subject only
to the limitation that aggregate mortgage
indebtedness not exceed 80% of the appraised value of
its properties; and
* permit the Trust to purchase or sell real property
from or to affiliates if approved by unanimous vote
of the disinterested Independent Trustees.
The Board of Trustees believes these amendments will be favorable to
shareholders primarily because it expects these amendments will help the Trust
to compete more effectively for investment opportunities that may come available
in the market.
There are certain risks associated with these proposals. See "RISK
FACTORS" on page 9.
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Record Date
The Board of Trustees has fixed the close of business on March 28, 2000
as the record date for the determination of shareholders entitled to receive
notice of and to vote at the Annual Meeting. On March 28, 2000, there were
issued and outstanding and entitled to vote 866,624 shares of the Trust's common
stock, par value $1.00 per share. The presence in person or by proxy of the
holders of record of a majority of the shares of Trust common stock entitled to
vote at the Annual Meeting will constitute a quorum for the transaction of
business at the meeting.
Proxies
If you sign and return the enclosed proxy card, the proxies named
therein will vote the shares which it represents in accordance with the
specifications thereon. If you do not indicate the manner in which you want your
shares voted on the proxy card, the proxies will vote them for (a) the Policy
Proposals, (b) the proposed amendments to the Trust's Articles of Incorporation
and Bylaws to change the name of the Trust and (c) the nominees for Trustees
named herein. If you are a participant in the Trust's Dividend Reinvestment
Plan, the proxy card represents the number of full shares in your dividend
reinvestment plan account, as well as shares registered in your name.
You may revoke your proxy at any time before it is voted (i) by
delivering to the Secretary of the Trust written notice of revocation bearing a
later date than the proxy, (ii) by submitting a later dated proxy, or (iii) by
revoking the proxy and voting in person at the Annual Meeting. Attendance at the
Annual Meeting will not in and of itself constitute a revocation of a proxy. Any
written notice revoking a proxy should be sent to Christine A. Robinson,
Secretary, Nooney Realty Trust, Inc., 1100 Main Street, Suite 2100, Kansas City,
Missouri 64105.
Voting
Shareholders are entitled to one vote per share on all matters, except
for the election of Trustees, as to which cumulative voting applies. Under
cumulative voting, each shareholder is entitled to cast that number of votes
equal to the number of shares held by the shareholder multiplied by the number
of Trustees to be elected, and all of such votes may be cast for a single
Trustee or may be distributed among the nominees as the shareholder wishes. If
you want to cumulate your votes, you should mark the accompanying proxy card to
clearly indicate how you want to exercise the right to cumulate votes and
specify how you want votes allocated among the nominees for Trustees. For
example, you may write "cumulate" on the proxy card and write next to the name
of the nominee or nominees for whom you desire to cast votes the number of votes
to be cast for such nominee or nominees. Alternatively, without exercising your
right to vote cumulatively, you may instruct the proxy holders not to vote for
one or more of the nominees by writing the name(s) of such nominee
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or nominees in the space provided after the entry "For All Nominees Except" on
the proxy card. By not marking the proxy card with respect to the election of
Trustees to indicate how you want votes allocated among the nominees, you will
be granting authority to the persons named in the proxy card to cumulate votes
if they choose to do so and to allocate votes among the nominees in such a
manner as they determine is necessary in order to elect all or as many of the
nominees as possible.
Trustees must be elected by a plurality vote. To be elected, a nominee
must be one of the five candidates who receives the most votes out of all votes
cast at the Annual Meeting. The affirmative vote of a majority of the issued and
outstanding shares of the Trust is required to adopt each of the matters
described in Proposal 1, Proposal 2 and Proposal 3. The affirmative vote of the
holders of a majority of the shares which are present in person or represented
by proxy at the Annual Meeting is required to act on any other matters properly
brought before the Meeting.
Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
If you indicate "abstain" or "withheld" on a matter, your shares will be deemed
present for that matter. In tabulating votes cast on the proposals to amend the
Articles of Incorporation and Bylaws (i.e., the Policy Proposals and the change
in the Trust's name), abstentions and broker non-votes will have the same effect
as a negative vote. In tabulating votes on other matters (other than the
election of Trustees), abstentions will have the effect of a negative vote and
broker non-votes will not be counted for purposes of determining whether a
proposal has been approved. In tabulating votes cast on the election of
Trustees, broker non-votes are not counted for purposes of determining the
Trustees who have been elected. Shares withheld will have no impact on the
election of Trustees except to the extent that (i) the failure to vote for an
individual nominee results in another nominee receiving a larger proportion of
the vote and (ii) withholding authority to vote for all nominees has the effect
of abstaining from voting for any nominee.
Discretionary Authority
By executing a proxy, you will be giving the proxies discretionary
authority to vote your shares on any other business that may properly come
before the meeting and any adjournment thereof as to which the Trust did not
have notice a reasonable time prior to the date of mailing this proxy statement.
The Board of Trustees is not aware of any such other business and does not
itself intend to present any such other business. However, if such other
business does come before the meeting, shares represented by proxies will be
voted by the persons named in the proxy in accordance with their best judgment.
A proxy also confers discretionary authority on the persons named therein to
approve minutes of the last Annual Meeting of Shareholders, to vote on matters
incident to the conduct of the meeting and to vote on the election of any person
as a Trustee if a nominee herein named should decline or become unable to serve
as a Trustee for any reason.
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Costs of Solicitation
The Trust will pay all costs of preparing and soliciting proxies for
the Annual Meeting. In addition to solicitation by mail, officers and Trustees
of the Trust may solicit proxies from shareholders personally, or by telephone.
The Trust will also reimburse brokerage firms, banks and other nominees for
their reasonable costs incurred in forwarding proxy materials for shares held of
record by them to the beneficial owners of such shares.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Proxy Statement constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. When used in this Proxy Statement, the words "estimate," "project,"
"anticipate," "expect," "intend," "believe," and similar expressions are
intended to identify forward-looking statements. Such forward-looking statements
involve known and unknown risks, uncertainties, and other factors which may
cause the actual results, performance and achievements of the Trust, or industry
results, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among other things, the following factors, as well as those
factors discussed elsewhere in the Trust's filings with the Commission: the
successful implementation of Policy Proposals, changes in the real estate
market, prevailing interest rates and general economic conditions, the level of
competition confronting the Trust and other factors referred to in this Proxy
Statement including, without limitation, under the heading "RISK FACTORS."
SUMMARY OF POLICY PROPOSALS
The following is a summary of certain information contained in this
Proxy Statement regarding the Policy Proposals (Proposals 1 and 2 (A through D)
on the Notice of Annual Meeting). This summary is qualified in its entirety by
reference to the more detailed information included in this Proxy Statement.
Shareholders are urged to read this Proxy Statement in its entirety.
Summary Risk Factors
Shareholders should carefully consider the matters disclosed under
"RISK FACTORS" at page 9 before deciding whether or not to approve the Policy
Proposals. The following is a summary of the potential material risks and
adverse consequences to the shareholders if the Board of Trustees' new business
plan is implemented upon the Shareholders' adoption of the Policy Proposals.
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* The Policy Proposals will transform the Trust from an entity
with a self-liquidating policy to one with an infinite-life,
growth-oriented policy which will not be obligated to
distribute sales or refinancings proceeds to Shareholders, but
will instead be able to reinvest such proceeds in new
investments. Shareholders who wish to liquidate their
investments will have to sell their shares, and their can be
no assurance that there will be an active trading market for
the Trust's shares at the time of sale.
* The ability of the Trust to realize growth opportunities is
subject to a number of risks, including risks that
** investments may fail to perform in accordance
with expectations;
** competition for investments may increase costs
and reduce return;
** no specific acquisition proposals are under
consideration, and there is no assurance that
suitable properties will become available on
acceptable terms; and
** there is no assurance that financing will be
available on acceptable terms.
* The Trust may not be able to operate successfully as an
infinite-life entity. The Trust has reported net losses for
each of the last three fiscal years and there can be no
assurance that it will become profitable in the future.
* Additional borrowings could reduce net income available for
distribution to shareholders.
* Shareholders may be subject to potential dilution from future
equity offerings, which may have an adverse effect on the
market price of the Trust common stock.
* The Policy Proposals may involve conflicts of interest between
the Trust and members of management, in that Maxus Properties,
Inc., which is an affiliate of certain members of management
and which manages the Trust's properties, will receive more
fees if the Trust's gross receipts increase and is more likely
to receive fees over a longer period of time if the Trust's
self-liquidating policy is eliminated. In addition, conflicts
of interest may arise if the Trust desires to purchase or sell
real property from or to affiliates of the Trust or enter into
other transactions with such affiliates.
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* Shareholders have no appraisal, dissenters' or similar rights
in connection with the Proposals.
The foregoing is only a summary of the more significant risks. For a
more detailed description of the risks, see "RISK FACTORS" on page 9.
Background.
The Trust was formed in 1984 as a Missouri general business corporation
to make equity investments in income-producing real properties, primarily
commercial and light industrial properties.
The Trust was funded through a public offering of common stock. An
aggregate of 855,624 shares were sold at a price of $20 per share for gross
proceeds of approximately $17,112,480 million dollars. The Trust used proceeds
from the offering and borrowings to acquire three properties, two of which are
commercial office buildings and one of which is a warehouse distribution
facility.
Although organized as a general business corporation with a perpetual
life, the Trust's Articles of Incorporation and Bylaws provide that it is
organized to be a self-liquidating business, and it was generally contemplated
that the life of investments in its portfolio would have a finite life.
Initially, it was intended that the Trust would sell its properties between
eight and twelve years after their acquisition, although there is no obligation
to sell any property at any particular time or within a specified time frame.
The Trust's Bylaws generally state that its policy is to distribute net proceeds
from the sale of a property to shareholders or apply such proceeds to
improvements on, payment of debt with respect to, or purchase of land
underlying, existing investment properties. The Trustees also may determine to
use net proceeds to pay expenses or establish reserves. This policy prevents the
Trust from using disposition proceeds to acquire new investment properties.
The Trust's Bylaws also contain a number of other investment
restrictions and limitations on borrowing, some of which may limit its ability
to grow. Under these policies, the Trust may not
* invest in equity securities, including shares of
other REITs;
* issue shares in exchange for any real estate
investment;
* incur total indebtedness in excess of 300% of the
Trust's net asset value;
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* borrow on an unsecured basis, if such borrowing would
result in an asset coverage ratio (generally the
ratio of net assets plus unsecured debt to unsecured
debt) of less than 300%; or
* purchase or sell real property from or to affiliates
of the Trust except under very limited circumstances.
Recently, there has been a change in control of the Trust, and the
Trust now has new management and a new Board of Trustees. The new Board of
Trustees believes that securities markets have historically valued shares of
infinite-life REITs more favorably than those of finite-life REITs with
self-liquidating policies such as those of the Trust. Further, the Board of
Trustees believes that the investment and borrowing policies described above may
prevent the Trust from taking advantage of investment opportunities that may
exist. Accordingly, the Board of Trustees is recommending the Policy Proposals
to shareholders. If the Policy Proposals are approved, the Trustees believe that
the Trust would have the opportunity to grow by using proceeds from the sale of
properties and stock, together with proceeds from the incurrence of debt and the
issuance of stock, to make additional investments.
The Policy Proposals
If approved, the Policy Proposals would:
* eliminate the Trust's "self-liquidating" policy;
* permit the Trust to acquire equity securities of other
companies;
* permit the Trust to exchange common stock for real estate
investments;
* allow the Trust to incur indebtedness subject only to the
limitation that aggregate mortgage indebtedness not exceed 80%
of the appraised value of its properties; and
* permit the purchase or sale of property from or to affiliates
of the Trust if approved by the unanimous vote of the
disinterested Independent Trustees.
Reasons For Recommending the Policy Proposals
The Trustees believe that the Policy Proposals are in the best
interests of the shareholders of the Trust because:
* There is a very limited investor demand for equity interests
in real estate investment trusts with small capitalizations
and limited real estate portfolio
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size, especially where there are substantial and numerous
investment and other restrictions which severely restrict such
entities' potential growth.
* The Trustees believe such investments have limited appeal for
the majority of investors in the market, and almost no appeal
for institutional and other major investors.
* The investment and borrowing policies that the Policy
Proposals would change may prevent the Trust from taking
advantage of investment opportunities that may exist.
* The increase in size and diversity of the Trust's portfolio
would reduce the dependence of the Trust on the performance of
any single investment.
If the Policy Proposals are approved, the Trustees believe the Trust
will have the opportunity to grow by using proceeds from the sale of properties
and stock, together with proceeds from the incurrence of debt and the issuance
of stock, to make additional investments.
Business Plan
If the Policy Proposals are approved, it is expected that the Trust
will begin implementing a growth oriented business plan intended to cause the
Trust to attain greater size and asset diversity. The Board of Trustees believes
that significant opportunities exist in the market to acquire income-producing
real properties and/or controlling ownership interests in entities owning such
properties that the Board believes are likely to provide attractive investment
returns at current market prices. Although no specific acquisition proposals are
under consideration, management and the Board of Trustees will seek to grow the
Trust by acquiring additional income producing real properties, including
multi-family housing, and investments in other entities, primarily other REITs
and real estate general or limited partnerships that own income producing real
properties. The Trust may consider purchasing income-producing real properties
from, or entering into transactions with, entities affiliated with management of
the Trust.
The Trustees intend to grow by using proceeds from the sale of
properties, together with proceeds from the incurrence of debt and the issuance
of stock, as well as issuing stock in exchange for income-producing properties,
to make additional investments. In this regard, the Trust is presently
negotiating the sale of one of its properties; if the Policy Proposals are
approved, proceeds from any sale not used to reduce existing indebtedness with
respect to existing properties that might otherwise have to be distributed to
shareholders could be used to acquire new properties. It is expected that the
Trust may issue stock or sell assets or interests in assets of the Trust in
exchange for interests in other REITs or general and limited partnership
interests in limited partnerships holding income-producing real properties.
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In implementing this plan, the Trust will be subject to its overall
investment objectives and policies, which are described in detail herein under
the heading "INVESTMENT OBJECTIVES AND POLICIES."
Federal Income Tax Consequences
The Trust does not expect that the approval and implementation of the
Policy Proposals and the Trust's new business plan will have any specific
Federal income tax consequences to the Trust's Shareholders. If the Policy
Proposals and the Trust's new business plan are implemented, the Trust will
continue to be structured so as to preserve the Trust's qualification as a REIT
under Federal income tax law.
RISK FACTORS
Although the Board of Trustees recommends approval of the Policy
Proposals, the Trust's shareholders should carefully consider the following
factors in determining whether to approve the Policy Proposals.
Set forth below are certain risks associated with the Policy Proposals
and with the Trust's plan to grow and expand its existing portfolio through the
use of debt, shares of common stock and proceeds from dispositions of existing
properties. This section does not review risks that exist with respect to the
existing portfolio or the aspects of the Trust's operations which are not being
revised as part of the Policy Proposals.
The Trust will no longer be obliged to distribute proceeds of sales or
refinancings of properties. Although the Articles of Incorporation provide that
the Trust has a perpetual existence and there is no requirement that the Trust's
properties be sold by a specific date, the Articles state the Trust is
"self-liquidating". Under the Bylaws, this generally prohibits the Trust from
reinvesting proceeds from the sale, financing or refinancing of a property by
limiting the use of such proceeds not distributed to shareholders to making
capital improvements on, or paying indebtedness with respect to, existing
properties, paying other expenses or creating appropriate reserves. Originally
it was intended that properties acquired by the Trust would be disposed of
within a given time frame and that proceeds not required for such purposes would
be distributed to shareholders. If the Proposed Policy eliminating the
self-liquidating feature of the Trust is approved and properties are sold or
refinanced, net proceeds from their sale or refinancing may be reinvested in new
investments, and the Trust will no longer have an obligation to distribute
proceeds to shareholders. The Trust will be an ongoing entity that is not
expected to liquidate its assets and the only way for shareholders to recoup
their investment will be by selling their shares, the price of which will be
subject to fluctuations in the securities markets.
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There may not be an active trading market for the Trust's shares. As
noted above, if the self-liquidating policy is eliminated, shareholders who wish
to liquidate their investment in the Trust will have to sell their shares. There
can be no assurance there will be an active trading market for the shares at the
time of any sale. During the past twelve months, the average daily trading
volume has been less than 1,000 shares.
Presently the Trust's common stock is listed on The Nasdaq National
Market. Continued listing on the Nasdaq National Market is subject to the
Trust's ability to satisfy various Nasdaq criteria, including that (i) the Trust
has in excess of 750,000 shares that are publicly held and (ii) the market value
of the Trust's public float exceeds $5,000,000. Presently the Trust does not
meet these requirements and the Nasdaq Stock Market has given the Trust until
May 11, 2000 to address these deficiencies.
The Trust is considering various steps to address these deficiencies
but there can be no assurance that the Trust will be successful. If the Trust
fails to address the deficiencies, Nasdaq would determine whether it is
appropriate to transfer the Trust's common stock to the Nasdaq SmallCap Market
or delist it, either of which could make it more difficult for shareholders to
sell their stock.
There may be constraints on the Trust's growth opportunities. If the
proposed changes are approved, the Trust intends to begin implementing a growth
oriented business plan intended to cause the Trust to attain greater size and
asset diversity. The ability of the Trust to accomplish such growth will be
subject to a number of constraints, including:
** Acquisition Risks. Acquisitions of investment properties
entail risks that unforeseen liabilities will be assumed or
that the Trust's investments will fail to perform in
accordance with expectations. In addition, improvements to
acquired properties may be costly and may not result in
increases in revenue or profits.
** Competition Risks. The Trust will have to compete for real
property investments and for tenants with numerous other real
estate investment trusts and partnerships, as well as
individuals, corporations and others engaged in real estate
investment activities. Competition for investments may
increase costs and reduce returns.
** No Properties Identified. The Trust has not identified
specific properties in which it might invest. There is no
assurance that suitable investments will be available or, if
available, will be so on terms acceptable to the Trust.
** No Assurance of Available Capital. The Trust has no
commitments for additional capital to implement its business
plan and there can be no assurance that financing will be
available to it, or, if available, that it would
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be available on acceptable terms. Further, there can be no
assurance that the Trust will be able to refinance its
existing credit facility when it matures in 2001, or, if it
does, that it will be able to do so on favorable terms.
The Trust may not be able to operate successfully as an infinite-life
entity. There can be no assurance that the Trust will be able to operate
successfully as an infinite-life entity. If the Policy Proposals are approved,
the Trustees intend for the Trust to implement a growth-oriented business plan.
The acquisition of new properties entails the risk that investments will fail to
perform in accordance with the Trust's expectations. The Trust has reported net
losses for each of the last three fiscal years. Although such losses have
resulted primarily from litigation which recently has been resolved, other
factors, including loss of a key tenant, contributed to the Trust's results and
there can be no assurance that it will become profitable in the future.
Issuance of Additional Shares May Result in Dilution to Shareholders
and Price Reductions. The Trust expects that it may in the future acquire other
investment properties by issuing Trust shares. The issuance of additional shares
in exchange for investment properties will reduce the ownership percentage of
existing shareholders. The effect of additional equity offerings may be the
dilution of the equity of shareholders of the Trust or the reduction of the
price of shares, or both. The Trust may issue approximately 4.1 million
additional shares under its Articles of Incorporation. If such shares are issued
for investment properties (or otherwise) at a price which is less than the then
market price of the Shares, the Trust's current shareholders' shares would be
diluted. At this time, the Trust is unable to determine the amount, timing or
nature of additional securities issuances.
Additional Borrowings could reduce net income available for
distribution to shareholders. If the Policy Proposals are approved, the Trust
intends to pursue a growth strategy, and in so doing may incur additional debt.
In this regard, the Trust's Bylaws generally permit it to incur mortgaged
indebtedness of up to 80% of the appraised value of all of its properties,
provided, that the aggregate borrowings of the Trust, secured and unsecured,
must be reasonable in relation to the net assets of the Trust and the maximum
amount of the Trust's borrowings in relation to its net assets may not exceed
300% unless such excess borrowing is approved by the Trust's Independent
Trustee's. Further the Trust may not borrow on an unsecured basis if doing so
would result in an asset coverage ratio (the ratio of net assets plus unsecured
debt to unsecured debt) of less than 300%. If the Policy Proposals are approved,
the only restriction on incurring indebtedness will be the 80% of appraised
value limit on mortgage debt. There will be no limit on unsecured debt other
than the requirement that periodically the Independent Trustees review
borrowings to determine they are reasonable in relation to net assets. If the
Trust incurs additional debt, increased interest expense could adversely affect
funds from operations and reduce amounts available for distribution to
shareholders.
No Dissenters' Rights. Under Missouri law, shareholder will have no
appraisal,
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dissenters' or similar rights in connection with the Policy Proposals. Further,
if the Policy Proposals are approved by a majority of the Trust's issued and
outstanding shares, all shareholders will be bound by the decision of the
holders of a majority of the shares.
Conflicts of Interest. The Policy Proposals may involve conflicts of
interest between the Trust and members of management. David L. Johnson, Chairman
of the Board of the Trust, is the principal shareholder and an officer and
director of Maxus Properties, Inc., the company hired by the Trust to manage its
properties ("Maxus"). Daniel W. Pishny and John W. Alvey, executive officers of
the Trust, are also executive officers of Maxus. Maxus is paid a fee based on a
percentage of the monthly gross receipts from the operation of each of the
Trust's properties. Although the Board does not intend to pay Maxus a higher
percentage if the Policy Proposals are adopted, Maxus will receive more fees if
the Trust acquires additional properties and the Trust hires Maxus to manage the
properties. In addition, Maxus is more likely to receive fees over a longer
period of time if the Trust's self-liquidating policy is eliminated. Further,
although the executive officers of the Trust are currently paid salaries by the
Trust, and the Board does not have any current plans to pay such salaries, the
Board could determine in the future that increased responsibilities resulting
from growth of the Trust's portfolio warrants paying the executive officers
salaries, including incentive compensation packages.
If the Policy Proposals are approved, the Trust may consider purchasing
or selling real properties from or to affiliates of the Trust. David L. Johnson,
Chairman of the Board of the Trust, owns and/or controls approximately 60 income
producing real properties, and the Trust may consider purchasing
income-producing real properties from Mr. Johnson or his affiliated entities or
entering into other transactions with such entities. If so, there will be a
conflict of interest between the Trust and its Chairman of the Board. The
proposed Bylaw amendment provides that any such purchase could be made if
approved by all of the disinterested Independent Trustees. Under the present
Bylaws, such transaction could only be undertaken, if at all, if approved by the
shareholders.
Removal of Investment Restrictions. If the Policy Proposals are
approved, the Trust may invest in equity securities of other entities. It is
expected that such investments will be limited to other REITs and real estate
general and limited partnership whose primary purpose is owning or acquiring
income producing real properties or providing services to such entities or such
real properties. To the extent that the Trust makes investments in such
entities, but does not control them, the Trust will be subject to all the risks
associated with being a minority shareholder, including not having control over
the affairs of such entity.
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RECOMMENDATION OF THE TRUSTEES
WITH RESPECT TO THE POLICY PROPOSALS
The Trustees believe that adopting the Policy Proposals is in the best
interests of the Trust and its shareholders and recommend that shareholders vote
FOR the approval of Proposals 1 and 2A through D. In reaching this
determination, the Trustees considered, among other things, the following
factors:
Availability of Attractive Investments; Inability of the Trust to
Capitalize Under Current Structure. The Trustees believe that there are
significant opportunities for the Trust to acquire additional real properties
and ownership interests in entities owning real property in the current market
at prices that are likely to provide attractive investment returns. However, (i)
the Trust's lack of available capital to make such investments and (ii) the
investment policies that prohibit the acquisition of equity securities and the
use of shares and disposition proceeds to acquire investment property make it
difficult for the Trust to engage in such acquisitions and take advantage of
such investment opportunities. The Trustees believe that:
* The Trust's investment policies severely restrict the Trust's
ability to grow.
* There is very limited investor demand for equity interests in
real estate investment entities with small capitalizations and
limited real estate portfolio size, especially where there are
substantial and numerous investment and other restrictions
which severely restrict such entities' potential growth. The
Trustees believe that such investments have limited appeal for
the majority of investors in the market, and almost no appeal
for institutional and other major investors.
Diversification. The Trust's current portfolio of properties is
comprised of a 100% ownership interest in three income producing real
properties. Two of these presently are single tenant properties. If the Policy
Proposals are approved, the Trustees expect that:
* The Trust's portfolio will become more diversified as it
acquires additional properties over time.
* The increased size and diversity of the Trust's portfolio will
reduce the Trust's dependence on the performance of any single
investment, including the effects of increased vacancy rates
at any particular property.
In reaching their determination, the Trustees also considered
potentially negative aspects of the proposed transaction, including the various
factors and information set forth under the heading "Risk Factors" and elsewhere
in this Proxy Statement.
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INVESTMENT OBJECTIVES AND POLICIES
Except as modified by the Policy Proposals, the Trust investment
objectives and policies will remain the same as when the Trust was first formed.
Generally, its objectives are to:
* preserve and protect shareholder's capital;
* provide the maximum possible cash distributions to
shareholders, a portion of which may not be taxable to
shareholders; and
* provide for capital growth through appreciation in property
values.
There can be no assurance that any of the foregoing objectives will be achieved.
The Trust's investment policies are described below.
Types of Investment
The Policy Proposals do not change the Trust's investment policy, which
was and remains to make equity investments in commercial and industrial
income-producing real property, primarily office buildings, and
warehouse/distributor properties. The Trust also may invest in other types of
income-producing real properties such as apartment complexes. The Trust does not
intend to invest in mortgages, but in connection with the sale of properties it
may take back purchase money mortgages.
The Trust expects any future investment would be primarily in existing
operating properties, however, it may also invest in properties which are in the
process of being completed, under construction or under contract for
development. The Trust will not invest in unimproved real property.
The Trust is not limited as to the geographic area in which it may
invest but intends to invest only in property located in the continental United
States. Ownership of a property will normally take the form of fee title but may
take the form of a leasehold estate. The Trust is not limited as to the amount
or percent of assets which may be invested in any one property. If the Trust
purchases land in connection with the acquisition of a property, it may
thereafter sell the land subject to a leaseback arrangement.
The Trust will obtain, in connection with the purchase of each
property, an independent appraisal of the fair market value of the property.
Appraisals are only estimates of value and should not be relied upon as measures
of true worth or realizable value. The Trustees therefore will rely on their own
analysis and not solely on such appraisal in determining whether to acquire a
particular property.
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Borrowing
If the Policy Proposals are approved, certain restrictions on the
incurrence of indebtedness described under "Summary of Policy Proposals -
Background" will be eliminated. However, the Trust will remain subject to a
limitation which provides it may not incur aggregate mortgage indebtedness in
excess of 80% of the appraised value of all of its properties on a combined
basis.
Trust indebtedness may be in the form of temporary or permanent
financing from banks, institutional investors and other lenders, which
indebtedness may be secured by mortgages or other interests in Trust properties
(including "wrap-around" or other "all-inclusive" mortgages). Recourse for any
indebtedness may be limited to the particular property to which the indebtedness
relates or may include all of the Trust's assets. When recourse may be had
against all the Trust's assets, its equity in other properties as well as the
property in question could be reduced or eliminated through foreclosure. Some
financing may involve renegotiable or floating interest rates or balloon
payments. In no event will shareholders have any personal liability for Trust
debts.
Sales of Property
If the Policy Proposals are approved, the Trust will no longer be
self-liquidating. Accordingly, the net proceeds from any sale, financing or
refinancing of Trust property may, in the discretion of the Trustees, be
invested in new acquisitions, distributed to the shareholders, or applied to
capital improvements, the payment of indebtedness with respect to existing
properties, other expenses, the establishment of reserves or other purposes.
The Trust intends to hold investment properties until such time as sale
or other disposition appears to be advantageous to the shareholders with a view
to achieving the Trust's investment objectives or until it appears that its
objectives will not be met. In deciding whether to sell properties, the Trust
will consider such factors as potential capital appreciation, cash flow and
federal income tax considerations. Whether assets will be sold generally will be
determined by the Trustees, except that the shareholders will have to approve
any sale constituting a sale of substantially all the Trust's assets.
Other Policies
Under the current Bylaws, the Trust may invest in joint ventures with
real estate developers, owners and others having similar investment objectives
for the purpose of owning a particular property or properties, provided the
Trust or an affiliate or both taken together have a controlling interest in any
such joint venture and, provided further, that the terms and conditions of any
such joint venture entered into with an Advisor or its affiliates are
unanimously approved by the Trustees. These provisions are not affected by the
Policy Proposals.
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The Trust intends to make investments in accordance with the applicable
requirements of the Internal Revenue Code in order that it may continue to
qualify as a REIT.
Investment Restrictions
If the Policy Proposals are approved, the Trust may invest in equity
securities, including the shares of any other real estate investment trust, and
may exchange shares for an interest in real estate. Other existing restrictions
described in the next paragraph remain in place.
The Trust's Bylaws generally prohibit it from investing in unimproved
real estate, junior mortgage loans, commodities or commodity future contracts.
(See "Types of Investment," above.) The Trust may not engage in the business of
underwriting securities issued by others. In addition, the Trust will not issue
any non-voting, assessable or redeemable equity security or issue debt
securities unless the historical debt service coverage (in the most recent
completed fiscal year), as adjusted for known changes, is sufficient to properly
service the debt. The Trust will not issue options or warrants to purchase
shares at exercise prices less than the fair market value of such shares on the
date of grant and for consideration (which may include services) that in the
judgment of the Independent Trustees has a market value of less than the value
of such options or warrants on the date of grant. In no event shall such options
or warrants be exercisable later than five years from the date of issuance. In
addition, the aggregate number of shares issuable at any time upon exercise of
outstanding options or warrants shall not exceed 10% of outstanding shares on
the date of grant of any options or warrants.
Transactions Between the Trust, the Trustees, the Advisor, and Certain
Affiliates
The existing Bylaws generally provide that a contract between the Trust
and any other person shall be valid even though (a) one or more of the Trustees
or officers are directly or indirectly interested in or connected with, or are
trustees, partners, directors, officers or retired officers of such other
person, or (b) one or more of the Trustees or officers, individually or jointly
with others, is a party or are parties to, or directly or indirectly interested
in, or connected with, such contract, act or transaction, if in either the case
of (a) or (b), such contract is authorized by the vote of a majority of the
disinterested Trustees. No Trustee or officer who is aware of the conflict or
relationship shall have any liability as a result of entering into any such
contract, act or transaction, provided that such interest or connection is
disclosed or known to the Trustees and thereafter the Trustees in good faith
authorize such contract, act or other transaction by the vote of a majority of
the disinterested Trustees.
Under the current Bylaws, the Trust may not sell, directly or
indirectly, any of its real property to any Trustee or officer of the Trust, any
Advisor, or any affiliate thereof, and no such person shall sell any property to
the Trust unless (a) the property was purchased by any
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of the foregoing persons for the purpose of its subsequent acquisition by the
Trust upon completion of the Trust's financing arrangements or (b) the property
or option thereon was purchased or taken by any of the foregoing persons in its
own name and title and was temporarily held in such name for the purpose of
facilitating the Trust's acquisition of such property or facilitating the
Trust's borrowing of money or obtaining of financing or for any other purpose
related to its business and (c) the property or option thereon is purchased by
the Trust for a cash payment no greater than the cost of the property or option
to such person. If the Policy Proposals are approved, the Trust also may acquire
or sell property to such persons in transaction that are approved by the
unanimous vote of the disinterested Independent Trustees, whether or not any of
the foregoing tests are satisfied.
As is the case under the current Bylaws, the Trust may joint venture
with any such persons with respect to its real property as otherwise permitted
in the Bylaws.
PROPOSAL 1
PROPOSAL TO APPROVE AN AMENDMENT TO
ARTICLE EIGHT OF THE TRUST'S ARTICLES OF INCORPORATION AND
SECTIONS 6.1 AND 10.8(b) OF THE TRUST'S BYLAWS, AS DESCRIBED IN
THE ACCOMPANYING NOTICE, TO ELIMINATE THE TRUST'S SELF-
LIQUIDATING POLICY
Proposal
The Board of Trustees recommends to the shareholders that the Trust
eliminate its "self-liquidating" policy. Accordingly, the Board of Directors has
adopted and recommended to the shareholders for their approval and adoption the
following resolutions:
RESOLVED, that Article Eight of the Trust's Articles of
Incorporation be amended to eliminate the Trust's self-liquidating
policy by deleting paragraph 2 thereof and re-numbering existing
paragraph 3 as paragraph 2; as so amended, Article Eight will provide
in its entirety as follows:
"The corporation is formed for the following purposes:
1. To acquire, own, finance, develop, improve, lease,
operate, manage, dispose of, sell, liquidate and
otherwise invest in and deal with real estate
primarily consisting of income-producing property.
2. To engage in any lawful activity for which a
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corporation may be organized under The General and
Business Corporation Law of Missouri."
FURTHER RESOLVED, that the third paragraph of Section 6.1 of
Article VI of the Trust's Bylaws be deleted in its entirety.
FURTHER RESOLVED, that Section 10.8(b) of Article X of the
Trust's Bylaws be amended in its entirety to eliminate the reference to
the Trust's self-liquidating policy, so that as amended, Section
10.8(b) will provide as follows:
"(b) The affirmative vote of the holders of at least
two-thirds (2/3) of the outstanding Shares entitled to vote thereon
shall be required to approve the sale, lease, exchange or other
disposition, other than by mortgage, deed of trust or pledge, of all or
substantially all of the property and assets of the Trust, if such
sale, lease, exchange or other disposition is not made in the usual and
regular course of the business of the Trust."
Effect
The effect of the first resolution is to delete the following text in
paragraph 2 of Article Eight of the Trust's Articles of Incorporation:
"2. To liquidate (when deemed appropriate by the directors) by
sale or other disposition all, or substantially all, of the
properties of the corporation as part of its usual and regular
course of business, the corporation being organized to be a
self-liquidating business."
The effect of the second resolution is to delete the following language
in Section 6.1 of the Trust's Bylaws:
"The Trust is intended to be 'self-liquidating.' Accordingly, it is the
policy of the Trustees that the net proceeds of the sale, financing or
refinancing of each investment property, except as provided below, will
not be reinvested, but will either be distributed to the Shareholders
or applied to such capital improvements to, or the payment of
indebtedness with respect to, existing properties of the Trust or the
payment of any other expenses or the establishment of any reserves, all
as the Trustees deem necessary and appropriate. In addition, the Trust
may utilize the net proceeds of any sale, financing or refinancing of
an investment property to purchase the land underlying any of the
Trust's investment properties in cases where the Trust is not already
the owner. Also, if, within five (5) years from the effective date of
the Trust's registration statement in connection with its initial
public offering of Shares, the Trust sells, finances or refinances an
investment
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property, the Trust may reinvest, during such time period, the proceeds
of such sale, financing or refinancing. The disposition of a property
back to the original seller or an affiliate thereof, whether in the
form of a rescission, exchange or resale or pursuant to an option or
similar arrangement entered into at or prior to the time of taking
title of such property, shall not be deemed a sale, financing or
refinancing for the purposes of the self-liquidating aspect to the
investment policy of the Trustees."
The effect of the third resolution is to delete the following language
in Section 10.8(b) of the Trust's Bylaws:
"Given that the Trust is "self-liquidating" in nature, however, as
provided in Section 6.1 hereof, it is anticipated that most, if not
all, of the sales, leases, exchanges or other dispositions of the Trust
property and assets will be made in the usual and regular course of
business."
If the proposal is approved, the Trust no longer will have a
self-liquidating policy, and proceeds from the sale or refinancing of properties
may be reinvested in new properties.
The affirmative vote of a majority of the outstanding shares entitled
to vote are required to approve the foregoing proposal. Accordingly, abstentions
and broker non-votes will have the same effect of negative votes in determining
whether the proposed amendment has been approved.
The Board of Trustees Recommends a Vote for the above Described
Amendments to the Trust's Articles of Incorporation and Bylaws.
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PROPOSAL 2
PROPOSAL TO APPROVE AMENDMENTS TO
SECTION 6.2, 3.1, 3.4 AND 9.4 OF THE TRUSTS BYLAWS, AS DESCRIBED IN
THE ACCOMPANYING NOTICE, TO ELIMINATE CERTAIN RESTRICTIONS
ON INVESTING AND BORROWING AND TO MODIFY RESTRICTIONS ON
TRANSACTION WITH AFFILIATES.
Proposal 2A.
Presently, Section 6.2(d) of the Trust's Bylaws prohibits the Trust
from investing in any equity Securities.[FN1] The Board of Trustees recommends
to the shareholders that the Trust delete this provision to allow the Trust to
acquire equity securities of other companies. Accordingly, the Board of Trustees
has adopted and recommended to the shareholders for their approval and adoption
the following resolution:
RESOLVED, that Section 6.2 of the Trust's Bylaws be amended by
deleting the text of paragraph (d), thereby eliminating the restriction
on acquiring equity securities of other companies; as so amended,
paragraph (d) will provide as follows:
"(d) [Intentionally omitted];..."
Effect of Proposal 2A
The effect of Proposal 2A is to delete the text in Section 6.2(d) of
the Trust's Bylaws that provides the Trust shall not:
"(d) Invest in any equity Security, including the shares of other
REITs;"
If such provision is eliminated, the Trust may acquire equity interests
in other entities. It is expected that any equity investments by the Trust will
be primarily in other REITs and real estate general and limited partnerships
whose primary purpose is owning or acquiring income producing real properties.
- --------
1 The Trust's Bylaws define "Securities" as any shares of the Trust's
common stock, stock, shares, voting trust certificates, bonds, limited
partnership interests, debentures, notes, or other evidence of indebtedness or
ownership or, in general, any instruments commonly known as "securities" or any
certificates of interest, shares or participation in temporary or interim
certificates for, receipts for, guarantees of, or warrants, options or rights to
subscribe to, purchase or acquire any of the foregoing.
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Proposal 2B.
Presently, Section 6.2(i) of the Trust's Bylaws prohibits the exchange
of shares for any real estate investment. The Board of Trustees recommends to
the shareholders that the Trust eliminate this restriction. Accordingly, the
Board of Trustees has adopted and recommended to the shareholders for their
approval and adoption the following resolution:
RESOLVED, that Section 6.2 of Article VI of the Trust's Bylaws
be amended by deleting the text of paragraph (i), thereby eliminating
the restriction on the Trust's ability to exchange common stock of the
Trust for real estate investments; as amended, paragraph (i) will
provide as follows:
"(i) [Intentionally omitted];"
Effect of Proposal 2B.
The effect of Proposal 2B is to delete the text in Section 6.2(i) of
the Trust's Bylaws that provides the Trust shall not:
"(i) Exchange Shares for any real estate investments;..."
If such provision is eliminated, the Board may consider issuing common
stock of the Trust, or options to acquire such common stock, in exchange for
equity or general partner or limited partner interests in other real estate
companies.
Proposal 2C.
Presently, Sections 3.1(e)(ii) and 3.1(e)(iii) of the Trust's Bylaws
prohibit the Trust from (i) incurring total indebtedness in excess of 300% of
the net asset value of the Trust's assets unless approved by the Independent
Trustees and (ii) borrowing on an unsecured basis if such borrowing would result
in an asset coverage of less than 300%. In addition, Section 3.4(e) requires
that the Independent Trustees review the aggregate borrowings of the Trust on a
quarterly basis to determine whether the net asset value of the Trust exceeds
300%. The Board of Trustees recommends to the shareholders that the Trust
eliminate these restrictions and requirements. Accordingly, the Board of
Trustees has adopted and recommended to the shareholders for their approval and
adoption the following resolutions:
RESOLVED, that Sections 3.1(e) of the Trust's Bylaws be
amended by deleting the text of paragraphs (ii) and (iii) thereof , so
that as amended, Sections 3.1(e) will read as follows:
[3.1 Power and Authority of Trustees. ... (T)he Trustees shall
have the power...]
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"(e) To borrow money and incur indebtedness for the
purposes of the Trust and to cause to be executed and delivered
therefor, in the Trust name, promissory notes, bonds, debentures, deeds
of trust, mortgages, pledges, hypothecations or other evidences of debt
and Securities therefor; to guarantee, indemnify or act as surety with
respect to payment or performance of obligations of third parties; to
enter into other obligations on behalf of the Trust; and to assign,
convey, transfer, mortgage, subordinate, pledge, grant security
interests in, encumber or hypothecate the Trust Estate to secure any of
the foregoing; provided, however, that:
(i) the aggregate borrowing of the Trust,
secured and unsecured, shall be reasonable in relation to the
Net Assets of the Trust and shall be reviewed by the Trustees
at least quarterly;
(ii) [intentionally omitted]; and
(iii) [intentionally omitted]."
FURTHER RESOLVED, that Section 3.4 of the Trust's Bylaws be
amended by deleting the text of paragraph (e) thereof in its entirety,
so that as amended, paragraph (e) will provide as follows:
"(e) [intentionally omitted]."
Effect of Proposal 2C
The effect of the first resolution is to delete the following text in
clauses (ii) and (iii) of Section 3.1(e)of the Trust's Bylaws:
[... provided, however that]
"(ii) the maximum amount of the Trust's borrowing,
secured and unsecured, in relation to the Net Assets shall not
exceed three hundred percent (300%) unless such excess
borrowing is approved by a majority of the Independent
Trustees as being appropriate and is disclosed to the
Shareholders, along with the justification for such excess, in
the first quarterly report provided to the Shareholders
following the date on which such excess borrowing occurs; and
(iii) the Trust will not borrow, on an unsecured
basis, if such borrowing will result in an asset coverage of
less than 300%. "Asset
22
<PAGE>
Coverage," for this purpose, means the ratio which the value
of the Total Assets of the Trust, less all liabilities and
indebtedness of the Trust, except indebtedness for unsecured
borrowing, bears to the aggregate amount of all unsecured
borrowings of the Trust."
If this proposal is approved, the Trust will remain subject to the
existing limitation that aggregate mortgage indebtedness not exceed 80% of the
appraised value of its properties, but will not be limited in the amount of
unsecured indebtedness that it may incur.
The effect of the second resolution is to delete the following text in
Paragraph (e) of Section 3.4 of the Trust's Bylaws:
[3.4. Independent Trustees. Notwithstanding any other
provision of these bylaws, the Independent Trustees, in
addition to their other duties, to the extent that they may
legally do so, shall:]
"(e) Review at least quarterly the aggregate
borrowings of the Trust, secured and unsecured, to determine whether
the relation of such borrowings to the Net Assets of the Trust exceeds
three hundred percent (300%) and, if so, whether such higher level of
borrowing is appropriate."
The Board of Trustees believes that such determination will not be
necessary if the borrowing restrictions referred to in this proposal are
eliminated. The Independent Trustees will remain obligated to review the Trust's
borrowings quarterly to determine if they are generally reasonable in
relationship to the Trust's net assets.
Proposal 2D.
The Board of Trustees recommends to the shareholders that the Trust
amend the second paragraph of Section 9.4 of the Trust's Bylaws to add a new
clause (d) to allow for purchases and sales of real property from and to
affiliates of the Trust if such transactions have been approved by a unanimous
vote of the disinterested Independent Trustees. Accordingly, the Board of
Trustees has adopted and recommended to the shareholders for their approval and
adoption the following resolution:
RESOLVED, that the second paragraph of Section 9.4 of the
Trust's Bylaws be amended by adding a new clause (d); so that as
amended, the second paragraph of Section 9.4 will provide as follows:
"The Trust shall not sell, directly or indirectly,
any of its real property to any Trustee or officer of the Trust, the
Advisor, or any affiliate thereof, and no such Person shall sell any
property to the Trust unless:
23
<PAGE>
(a) the property was purchased by
any of the foregoing Persons for the purpose of
accumulating a portfolio of investments for the Trust
under circumstances which are fully disclosed in the
prospectus by which Shares are initially offered to
the public;
(b) the property was purchased by
any of the foregoing Persons for the purpose of its
subsequent acquisition by the Trust upon completion
of financing arrangements by the Trust;
(c) the property or option thereon
was purchased or taken by any of the foregoing
persons in its own name and title and was temporarily
held in such name for the purpose of facilitating the
acquisition of such property by the Trust or
facilitating the borrowing of money or obtaining of
financing for the Trust or for any other purpose
related to the business of the Trust and the property
or option thereon is purchased by the Trust for a
cash payment no greater than the cost of the property
or option to such person; provided, however, that the
Trust may, if the proceeds of the Trust's sale of
Shares from its initial public offering are
insufficient to make (or repay indebtedness incurred
to make) required cash payments in connection with
the acquisition of any property or properties
acquired prior to the termination of such initial
public offering, sell to the Advisor or any Affiliate
thereof such property or properties (or sell to the
Advisor or an Affiliate of the Advisor an interest
therein) but only on terms which provide for cash
payments to the Trust equal to the Trust's cash
payments made and the assumption of all indebtedness
incurred in connection with the acquisition of such
property or properties by the Trust and only any if,
in the opinion of the Independent Trustees, the Trust
will be unable to obtain a higher price for such
property or properties from an unaffiliated third
party.
(d) the purchase or sale was made on
------------------------------------
terms no less favorable to the Trust than those that
-----------------------------------------------------
could have been obtained in a comparable transaction
-----------------------------------------------------
on an arm's length basis from a person who is not an
-----------------------------------------------------
affiliate of the Trust and the purchase or sale was
-----------------------------------------------------
approved by unanimous vote of the disinterested
-----------------------------------------------------
Independent Trustees.
---------------------
Nothing herein, however, shall be deemed to preclude the Trust from
entering into a joint venture with any such Persons with respect to
Trust real property as otherwise permitted herein."
24
<PAGE>
Effect of Proposal 2D
Under the current Bylaws, the Trust may not sell, directly or
indirectly, any of its real property to any Trustee or officer of the Trust, any
Advisor, or any affiliate thereof, and no such person shall sell any property to
the Trust unless (a) the property was purchased by any of the foregoing persons
for the purpose of its subsequent acquisition by the Trust or upon completion of
the Trust's financing arrangements or (b) the property or option thereon was
purchased or taken by any of the foregoing persons in its own name and title and
was temporarily held in such name for the purpose of facilitating the Trust's
acquisition of such property or facilitating the Trust's borrowing of money or
obtaining of financing or for any other purpose related to its business and (c)
the property or option thereon is purchased by the Trust for a cash payment no
greater than the cost of the property or option to such person. The proposal
would permit such transactions, whether or not any of the current tests imposed
were met, if approved by a unanimous vote of the disinterested Independent
Trustees.
The affirmative vote of a majority of the outstanding shares entitled
to vote are required to approve each of the matters contained in the foregoing
proposal. Accordingly, abstentions and broker non-votes will have the same
effect of negative votes in determining whether the proposed amendments have
been approved.
The Board of Trustees Recommends a Vote for the above Described Amendments to
the Trust's Bylaws.
PROPOSAL 3
PROPOSAL TO APPROVE AN AMENDMENT TO
ARTICLE ONE OF THE TRUST'S ARTICLES OF INCORPORATION AND
SECTION 1.1 OF ARTICLE I OF THE TRUST'S BYLAWS TO CHANGE THE
NAME OF THE TRUST
Proposal 3.
The Board of Trustees recommends to the shareholders that the
Company's name be changed to Maxus Realty Trust, Inc. Accordingly, the Board of
Directors has adopted and recommends to the shareholders for their approval and
adoption the following resolution:
RESOLVED, that Article ONE of the Trust's Articles of
Incorporation be amended in its entirety to provide as follows:
"ARTICLE ONE
The name of the corporation is Maxus Realty Trust, Inc "
25
<PAGE>
FURTHER RESOLVED, that Section 1.1 of Article I of the Trust's
Bylaws be amended in its entirety to change the Trust's name as
follows:
"1.1 Name. The name of the corporation is "Maxus Realty Trust,
Inc." Maxus Realty Trust, Inc. is referred to herein as the "Trust". As
far as practicable and except as otherwise provided in the Articles of
Incorporation and these Bylaws, the Trustees (as defined in Section
1.4(x) hereof) shall manage the business, conduct the affairs of the
Trust and execute all documents in the name of Maxus Realty Trust,
Inc."
Effect of Proposal 3.
If this proposal is approved, then upon the execution and filing of a
certificate of amendment with the Missouri Secretary of State setting forth the
amendment and other information required by law, the name of the Trust will be
changed from Nooney Realty Trust, Inc. to Maxus Realty Trust, Inc.
The affirmative vote of a majority of the outstanding shares entitled
to vote are required to approve the proposed amendment. Accordingly, abstentions
and broker nonvotes will have the same effect of negative votes in determining
whether the proposed amendment has been approved.
The Board of Trustees Recommends a Vote for the above Described
Amendment to the Trust's Articles of Incorporation and Bylaws.
PROPOSAL 4
ELECTION OF TRUSTEES
The Board of Trustees proposes the election of the five nominees listed
below to serve as Trustees of the Trust until the next Annual Meeting of
Shareholders and until their successors have been elected and qualify, or until
their earlier death, resignation or removal. If any vacancy in the list of
nominees shall occur for any reason, the Board of Trustees will select a
substitute nominee to be voted upon at the Annual Meeting.
POSITIONS OR OFFICES
NAME AGE WITH THE TRUST
---- --- -----------------------
David L. Johnson........... 43 Chairman of the Board, Chief
Executive Officer and Trustee
26
<PAGE>
Daniel W. Pishny........... 37 President and Trustee
Chris Garlich.............. 42 Trustee*
Monte McDowell............. 42 Trustee*
Robert B. Thomson.......... 52 Trustee*
- -------
*Independent Trustee as defined in the Trust's Bylaws.
Mr. McDowell and Mr. Thomson have served as Trustees since November 9,
1999. Mr. Johnson, Mr. Pishny and Mr. Garlich have served as Trustees since
November 27, 1999. Each became a Trustee as a result of a settlement
agreement (the "Settlement Agreement") entered into by the Trust relating to a
lawsuit filed in 1997 by the Trust against Mr. Johnson and other parties. See
"Security Ownership of Certain Beneficial Owners and Management - Recent Change
in Control".
The following is a brief summary of the business experience during the
past five years of each of the nominees for election as Trustees of the Trust,
including, where applicable, information regarding other Trusteeships held by
each nominee:
David L. Johnson is Chairman, Chief Executive Officer, and majority
shareholder of Maxus Properties, Inc. ("Maxus"), a Missouri corporation located
at 1100 Main, Suite 2100, Kansas City, Missouri 64105, that specializes in
commercial property management for affiliated owners. He has served in this
capacity since 1988. Maxus employs more than 250 people to manage commercial
properties, including more than 8,000 apartment units and 700,000 square feet of
retail and office space. Mr. Johnson is also Vice President of KelCor, Inc.
("KelCor"), a Missouri corporation that specializes in the acquisition of
commercial real estate.
Daniel W. Pishny is President and Chief Operating Officer of Maxus. He
has served in this capacity since 1995. Mr. Pishny is responsible for the day-
to-day operations of Maxus and its managed properties. Prior to working for
Maxus, Mr. Pishny worked in Bank Midwest, N.A.'s commercial lending department
as a vice president of commercial lending.
Robert B. Thomson , is an attorney in private practice in Kansas City,
Missouri. His practice emphasizes real estate, business and corporate law. Since
1987, Mr. Thomson has served as a Trustee for the Kansas City, Missouri Police
and Civilian Retirement Funds.
Monte McDowell is President, Chief Executive Officer and principal
shareholder of Home Medical Speciality Equipment, Inc., a Missouri corporation
doing business as MED4HOME, which he founded in 1994. This corporation is
involved in capital equipment medical sales.
27
<PAGE>
Chris Garlich is the Executive Vice President and member of Bancorp
Services, LLC, a Missouri limited liability company, specializing in the
development, administration and distribution of life insurance products to the
corporate and high net worth market place. Mr. Garlich has served in this
position for the past five years.
The Board of Trustees Recommends a Vote For The Above Nominees For
Trustees of The Trust
Committees of the Board
Based on the Trust's's minute books, from January 1, 1999 to November
9, 1999, the Board of Trustees of the Trust met 4 times. From November 9, 1999
to December 31, 1999, the Board of Trustees met one time. All of the
incumbent Trustees attended at least seventy-five percent of the meetings of the
Board of Trustees and meetings held by those committees of the Board on which
they served.
Among the standing committees of the Board of Trustees are the
Executive Committee and the Audit Committee. The Trust does not have standing
nominating or compensation committees.
Prior to the change in control in November, 1999 described below, the
Executive Committee was comprised of William J. Carden, Lawrence E. Fiedler and
William C. Geary. Since that date, the Executive Committee has been comprised of
David L. Johnson, Monte McDowell and Robert B. Thomson. The Executive Committee
is empowered to exercise, between regular meetings of the Board of Trustees, all
of the authority of the Board of Trustees in the management of the Trust. The
Executive Committee met 3 times during 1999.
Prior to the change in control in November, 1999 described below, the
Audit Committee was comprised of James P. Ingram, Lawrence E. Fiedler and
William C. Geary. Since that date, the Audit Committee has been comprised of
Robert B. Thomson, Chris Garlich and Monte McDowell. The functions of the Audit
Committee are to recommend to the Board of Trustees the accounting firm to serve
as the independent auditor of the Trust, to monitor and review with the
independent auditor the Trust's financial reporting and accounting procedures
and policies, to supervise the adequacy of the Trust's financial, accounting and
operating controls and to review the scope of any audits conducted by the
independent auditor. The Audit Committee met one time during 1999.
Trustee's Compensation
Pursuant to the Trust's Bylaws, David L. Johnson and Daniel W. Pishny
do not receive compensation for their services as Trustees.
The Trust pays Independent Trustees the following fees: (a) $500 for
each meeting
28
<PAGE>
attended in person and (b) $250 for each meeting conducted by telephone
conference at which a vote was taken. In addition, the Trust reimburses the
Independent Trustees for their travel expenses and other out-of-pocket expenses
incurred in connection with attending meetings and carrying on the Trust's
business.
Except as stated above, the Trustees generally do not receive any fees
from the Trust for their service as Trustees pursuant to any other plan of
compensation. However, in 1998 the prior Board of Trustees awarded 12,500 stock
appreciation rights to the Independent Trustees.
There are no family relationships between any of the Trustees or
executive officers.
Executive Compensation
Annual Compensation. William J. Carden served as Chief Executive
Officer from March 1, 1998 until November 9, 1999, at which time David L.
Johnson became Chief Executive Officer. No other person serving as executive
officer as of the end of or during 1999 received salary and bonuses exceeding
$100,000. The following table presents certain information respecting
compensation paid or awarded to Mr. Carden during 1998 and 1999. Mr. Johnson is
not compensated by the Trust for his services as Chief Executive Officer.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
<S> <S> <C> <C> <C> <C> <C> <C> <C>
Annual Compensation Long-Term Compensation
Awards Payouts
Securities
Other Restricted Under-
Name and Annual Stock Lying All Other
Principal Compen- Award(s) Options/ LTIP Compen-
Position Year Salary Bonus sation ($) SARs Payouts sation
($) ($) ($) (#) ($) ($)
William J. 1998 $166,667 N/A N/A N/A 50,000 N/A N/A
Carden, 1999 $166,667 N/A N/A N/A N/A N/A N/A
CEO
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Mr. Carden's Employment Agreement and Stock Option Agreement provided
for acceleration of deferral or vesting in the event his employment was
terminated except for cause or the Trust was liquidated.
Of the $166, 667 shown as annual compensation to Mr. Carden in each of
1998 and 1999, an aggregate of $283,334 was deferred until a later date pursuant
to his employment agreement described below. In connection with the Settlement
Agreement described below in "Recent Change in Control," the Trust paid $50,000
to an affiliate of Mr. Carden to settle its deferred compensation obligations to
Mr. Carden and Mr. Carden's stock options and stock appreciation rights were
canceled.
Employment Agreements. On March 1, 1998, the Trust entered into an
employment agreement with William J. Carden, as Chief Executive Officer, for a
five-year period. The base compensation was to be $16,666.67 per month, of which
$2,500 was to be payable
29
<PAGE>
monthly and $14,166.67 was to be payable on a deferred basis without interest at
the end of the term. In connection with the Settlement Agreement described under
"Recent Change in Control," the Trust paid $50,000 to an affiliate of Mr. Carden
to settle its deferred compensation obligations to Mr. Carden aggregating
$283,334.
Related Transactions
In connection with the Settlement Agreement, the Trust paid $25,000 to
provide tail coverage under the Trustees and officers insurance policy covering
the Trustees and officers that resigned pursuant to the Settlement Agreement.
Prior to the Settlement Agreement, the Trust reimbursed Nooney, Inc.
for certain general and administrative fees totaling $214,000 for the year ended
December 31, 1999.
For the year ended December 31, 1999, the Trust paid lease commissions
of $33,194 to Nooney, Inc.
In conjunction with the Settlement Agreement, the Trust entered into an
agreement with Maxus to manage the Trust's properties. Management fees of $7,920
payable to Maxus have been accrued in accounts payable and accrued expenses in
the financial statements of the Trust for the year ended December 31, 1999. The
Trust pays Maxus 3.6% of the monthly gross receipts from the operation of two
properties held by the Trust and 2.7% of the monthly gross receipts from the
operation of the other property held by the Trust, such gross receipts to
include all amounts received from the operation of the properties including, but
not limited to, rents, parking fees, deposits, and laundry income and fees. In
addition, the Trust has agreed to pay Maxus all its expenses incurred in
connection with the management agreements.
Robert B. Thomson, an Independent Trustee, performs legal services for
the Trust. The Trust paid Mr. Thomson fees totaling $12,690 in 2000 for legal
services rendered by Mr. Thomson in 1999.
Report of the Independent Trustees
The Trust does not have a compensation committee responsible for
establishing an executive compensation policy and plan for the Trust. In the
place of such a compensation committee, the Independent Trustees are responsible
for establishing the executive compensation policies. The Independent Trustees
review and approve all compensation plans, benefit programs and perquisites for
executives.
Prior to the change in control of the Trust's management that occurred
on November 9, 1999, two executive officers of the Trust received base salaries.
These two executive officers also received stock options. At the time of the
change in control, these two
30
<PAGE>
executive officers resigned, the Trust's compensation obligations were settled
and their stock options were canceled.
At the first meeting of the new Board of Trustees after the change in
control, the Independent Trustees determined not to pay the executive officers a
salary or enter into employment agreements with the executive officers because
the executive officers (i) were already significant shareholders of the Trust
and (ii) were affiliates of the management company hired by the Trust to manage
the properties held by the Trust.
The Independent Trustees have determined that they will review this
compensation policy on an annual basis.
Independent Trustees:
Robert Thomson
Monte McDowell
Chris Garlich
Performance Graph
The following graph shows a five-year comparison of cumulative total
returns (change in stock price plus reinvested dividends) for Nooney Realty
Trust, Inc. ("NRTI"), the NASDAQ Stock Market Total Return Index ("NASDAQ") and
the National Association of Real Estate Investment Trusts ("NAREIT") Total
Return Index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
NOONEY REALTY TRUST, NASDAQ STOCK MARKET TOTAL RETURN INDEX
AND NAREIT TOTAL RETURN INDEX
[GRAPH]
NOONEY REALTY TRUST
Assumes $100 invested on December 31, 1994 in Nooney Realty Trust, Inc.
Common Stock, NASDAQ Stock Market Index and NAREIT Index
DECEMBER 31,
------------------------------------------------
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
NASDAQ................ 139.92 171.69 208.84 291.60 541.17
NAREIT................ 118.31 160.61 190.90 154.97 144.93
NRTI ................. 125.91 180.87 217.23 138.47 114.58
31
<PAGE>
PROPOSAL 5
PROPOSAL TO APPROVE ANY ADJOURNMENT OF THE ANNUAL
MEETING
A vote (i) in person by a shareholder for adjournment of the Annual
Meeting of Shareholders, or (ii) for Proposal 5 on the proxy card authorizing
the named proxies on the proxy card to vote the shares covered by such proxy to
adjourn the Annual Meeting of Shareholders, would allow for additional
solicitation of shareholder proxies or votes in order to obtain a quorum or in
order to obtain more proxies or votes in favor of Proposals 1, 2, 3 and/or 4.
Consequently, it is not likely to be in the interest of shareholders who intend
to vote against Proposals 1, 2, 3 and/or 4 to vote in person to adjourn the
Annual Meeting of Shareholders or to vote for Proposal 5 on the proxy card.
The Board of Trustees Recommends a Vote For Any Proposal to Adjourn The
Annual Meeting to Allow For Additional Solicitation of Shareholder Proxies or
Votes.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Recent Change in Control
On October 19, 1999, the Trust entered into the Settlement Agreement
relating to a lawsuit filed in the Circuit Court of Jackson County, Missouri on
August 18, 1997 entitled Nooney Realty Trust, Inc. v. David Johnson, et al. (the
"Lawsuit"). The closing under the Settlement Agreement occurred on November 9,
1999 (the "Closing").
The Lawsuit was filed by the Trust. Among other claims, the Trust had
asked for a declaratory judgment against certain individuals and entities who
hold shares of the Trust. The Trust initiated the suit to obtain a judicial
determination of the validity and status of some of the Trust's shares (referred
to as "Excess Shares"). On April 27, 1999, the Court entered summary judgment
for the defendants on the Trust's declaratory judgment count and designated its
decision for appeal without awaiting resolution of the Trust's remaining claims.
The Trust appealed the judgment, but on October 19, 1999, the Lawsuit was
settled.
Pursuant to the Settlement Agreement, (i) CGS Real Estate Company, Inc.
("CGS") and certain of its affiliates sold all of their shares of common stock
in the Trust owned beneficially or of record by CGS or its affiliates (75,763
shares) to NKC Associates, L.L.C. (37,881) and Chris Garlich (37,882) at a price
of $10.00 per share, (ii) Lawrence E. Fiedler, and James P. Ingram resigned as
members of the Board of Trustees, and each of William J. Carden, Thomas N.
Thurber, Gregory J. Nooney, Jr., Glenda F. White and Patricia A.
32
<PAGE>
Nooney resigned as officers of the Trust effective as of the Closing, (iii)
Robert B. Thomson and Monte McDowell were elected by the Board of Trustees to
fill the vacancies created by the resignations of Messrs. Fielder and Ingram,
(iv) CGS and its affiliates terminated each of the management and other services
agreements between CGS and its affiliates and the Trust, (v) the Lawsuit was
dismissed pursuant to stipulations of dismissal with prejudice signed by each of
the parties to the Lawsuit and (vi) William J. Carden and Thomas N. Thurber
terminated their employment agreements with the Trust. In connection with the
Settlement Agreement, the Trust paid $50,000 to an affiliate of Mr. Carden and
$25,000 to Mr. Thurber to settle its deferred compensation obligation to Messrs.
Carden and Thurber aggregating $408,334.
Effective November 9, 1999, the Board of Trustees elected the following
officers: David L. Johnson, Chairman; Daniel W. Pishny, President; John W.
Alvey, Vice-President; Christine A. Robinson, Secretary; and Amy Kennedy,
Treasurer.
The Settlement Agreement also required that William J. Carden, Gregory
J. Nooney, Jr. and William W. Geary, Jr. resign as members of the Board.
However, Rule 14f-1 of the Securities Exchange Act of 1934 required the Trust,
at least ten days prior to a change in a majority of the trustees, to file
certain information regarding the new management with the Securities and
Exchange Commission and to transmit this information to all shareholders of the
Trust. Messrs. Carden, Nooney and Geary resigned effective as of November 27,
1999, the expiration of the ten day period. The remaining members of the Board
appointed David L. Johnson, Daniel W. Pishny and Chris Garlich to fill the
vacancies on the Board created by these resignations at that time.
NKC Associates, L.L.C. ("NKC"), which acquired 37,881 shares from CGS,
is a Missouri limited liability company whose members are: Daniel W. Pishny
(22.5%), John W. Alvey (22.5%), Amy Kennedy (22.5%), Christine A. Robinson
(22.5%) and Robert B. Thomson (10%). NKC acts as a limited partner in real
estate limited partnerships. NKC acquired the 37,881 shares of the Trust from
CGS with funds from a demand loan made by Bond Purchase, L.L.C., a Missouri
limited liability company and an affiliate of NKC. The demand loan is secured by
the 37,881 shares of the Trust acquired by NKC, with interest accruing on the
unpaid balance at a rate of eight percent per annum. Chris Garlich acquired the
37,882 shares of the Trust from CGS with personal funds.
NKC, Chris Garlich, David L. Johnson and the other newly appointed
officers and Trustees now beneficially own 253,390 shares of the Trust,
representing 29.2% of the 866,624 issued and outstanding shares of the Trust as
of March 15, 1999.
Holdings of Management and Certain Beneficial Owners
The table below sets forth information as of March 15, 2000, regarding
the number of shares of the Trust beneficially owned by each of the Trustees,
nominees for Trustee and
33
<PAGE>
executive officers of the Trust, by any other person, if any, known to own 5% or
more of the Trust's outstanding shares and by all Trustees, nominees and
officers as a group:
Name of Number of Shares Percent
Beneficial Owner Beneficially Owned (1) of Class (2)
--------------------- ------------------------ --------------
David L. Johnson 80,682 (3) 9.3
Daniel W. Pishny 41,981 (4) 4.8
Robert B. Thomson 41,645 (5) 4.8
Chris Garlich 67,082 7.7
Monte McDowell 4,000 (6) *
John W. Alvey 55,881 (4)(7)(8) 6.4
Trustees and Executive
Officers as a group 253,390 (9) 29.2
(1) Under the rules of the Securities and Exchange Commission, persons who
have power to vote or dispose of securities, either alone or jointly
with others, are deemed to be the beneficial owners of such securities.
Accordingly, shares owned separately by spouses or other family members
are not included. Except as described in the footnotes below, the
Trustee has both sole voting power and sole investment power with
respect to the shares set forth in the table.
(2) An asterisk indicates that the number of shares beneficially owned do
not exceed one percent of the number of shares of common stock issued
and outstanding.
(3) Includes 41,113 shares held by KelCor, Inc., a Missouri corporation,
owned by Mr. Johnson and his wife, Ms. Sandra Castetter.
(4) Includes shared voting and dispositive power of the 37,881 shares held
by NKC Associates, L.L.C., a Missouri limited liability company, in
which each of Mr. Pishny and Mr. Alvey hold a 22.5% equity interest.
(5) These shares are held by FQE, L.L.C., a Missouri limited liability
company. FQE, L.L.C. obtained the funds used to purchase these shares
from proceeds of a loan made to FQE, L.L.C. by David L. Johnson. The
loan is evidenced by a promissory note, due on demand, bearing interest
at a rate of eight percent per annum, and secured by the shares. Mr.
Thomson is the sole member of FQE, L.L.C. Does not include shares
described in note (4) held by NKC Associates, L.L.C., in which Mr.
Thomson has a 10% interest.
34
<PAGE>
(6) These shares are held by Home Medical Speciality Equipment, Inc., a
Missouri corporation. Mr. McDowell is the principal shareholder and
chief executive officer of this corporation.
(7) Mr. Alvey disclaims any beneficial ownership of the 41,113 shares held
by KelCor, Inc.
(8) Substantially all of the shares purchased by Mr. Alvey other than the
shares acquired by NKC Associates, L.L.C. were purchased with funds
loaned to Mr. Alvey by David L. Johnson and his affiliates. These loans
are unsecured.
(9) Includes the 37,881 shares held by NKC Associates, L.L.C.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Trust's officers and
Trustees, and persons who own more than ten percent of the Trust's common stock,
to file reports of ownership and changes in ownership with the SEC. Officers,
Trustees and greater than ten percent shareholders are required by SEC
regulation to furnish the Trust with copies of all Section 16(a) forms they
file.
Based primarily on its review of the copies of such reports received by
it, or written representations from certain reporting persons that no Forms 5
were required for those persons, the Trust believes that, during fiscal 1999,
all filing requirements applicable to its officers, Trustees, and greater than
ten-percent beneficial owners were complied with, except that Chris Garlich did
not file his initial Form 3 within ten (10) days after being appointed to the
Board of Trustees as required under Section 16(a) of the Exchange Act.
OTHER MATTERS
Independent Auditors
The public accounting firm of Deloitte & Touche LLP served as the
Trust's independent auditor for the fiscal year ended December 31, 1998. At the
recommendation of the Audit Committee, the Board of Trustees has selected KPMG
LLP to serve as the Trust's independent auditor for the fiscal year ending
December 31, 1999. Representatives of KPMG LLP will be present at the Annual
Meeting, will have an opportunity to make a statement if they desire to do so,
and will be available to answer questions for the shareholders.
35
<PAGE>
Change in Accountants
On January 18, 2000, the Trust dismissed Deloitte & Touche LLP as the
Trust's independent accountants. Deloitte & Touche LLP's reports on the
financial statements of the Trust for the past two fiscal years did not contain
an adverse opinion or a disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope, or accounting principles. The decision to
dismiss Deloitte & Touche LLP as the Trust's independent accountants was
recommended by the Trust's audit committee.
During the Trust's fiscal years ending December 31, 1997 and December
31, 1998 and the subsequent interim period preceding the dismissal, there were
no disagreements with Deloitte & Touche LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which, if not resolved to the satisfaction of Deloitte & Touche LLP,
would have caused Deloitte & Touche LLP to make reference to the subject matter
of the disagreement(s) in connection with their report.
The Trust provided Deloitte & Touche LLP with a copy of the disclosure
described above, which was filed by the Trust on a Form 8-K on January 25, 2000,
as amended February 14, 2000, and Deloitte & Touche LLP furnished the Trust a
letter addressed to the Securities and Exchange Commission stating that it
agreed with the above statements.
On February 4, 2000, the Trust engaged KPMG LLP as independent
accountants for the fiscal year ending December 31, 1999. The decision to engage
KPMG LLP as independent accountants was recommended by the Trust's audit
committee. Prior to the appointment of KPMG LLP, the Trust did not engage or
consult with KPMG LLP regarding the application of accounting principles to a
specified transaction, either completed or proposed; or the type of audit
opinion that might be rendered on the Trust's financial statements.
Other Business
Other than those items set forth herein, the Board of Trustees knows of
no other business to be presented for consideration at the Annual Meeting.
Should any other matters properly come before the Annual Meeting or any
adjournment thereof, it is the intention of the persons named in the proxies to
vote such proxies in accordance with their best judgment on such matters.
Shareholder Proposals for the 2001 Annual Meeting of Shareholders
Shareholders who wish to present proposals for action at the Annual
Meeting of Shareholders to be held in 2001 should submit their proposals to the
Trust at the address of the Trust set forth on the first page of this Proxy
Statement. Proposals must be received by the Trust no later than December 8,
2000, for consideration for inclusion in the next year's
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Proxy Statement and proxy. In addition, proxies solicited by management may
confer discretionary authority to vote on matters which are not included in the
proxy statement but which are raised at the Annual Meeting by stockholders,
unless the Trust receives written notice at such address of such matters on or
before February 21, 2001.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
A copy of the Trust's Annual Report to Shareholders is being furnished
with this Proxy Statement. The following portions of the Annual Report are
incorporated herein by reference:
(i) "Management's Discussion and Analysis," at pages 3 to 8.
(ii) "Financial Statements" with the independent auditors
report therein, at pages 1 to 13.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for the purposes of this Proxy
Statement to the extent that a statement contained herein or in any other
subsequently filed document that is incorporated by reference herein modifies or
supersedes such earlier statement. Any such statements modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Proxy Statement.
BY ORDER OF THE BOARD OF TRUSTEES
Christine A. Robinson
Secretary
April 7, 2000
Kansas City, Missouri
Requests for Annual Report
A copy of the Trust's Annual Report on Form 10-K as filed with the
Securities and Exchange Commission for fiscal 1999 will be sent to stockholders
upon request without charge. Requests should be made to Nooney Realty Trust,
Inc., Attention: Amy Stephenson, 1100 Main Street, Suite 2100, Kansas City,
Missouri 64105.
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APPENDIX A
[FORM OF PROXY]
PROXY
NOONEY REALTY TRUST, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned does hereby appoint Daniel W. Pishny and Christine A.
Robinson and each of them, the true and lawful attorneys-in-fact and proxies of
the undersigned (acting by a majority hereunder), each with full power of
substitution, to vote all common shares of the undersigned in Nooney Realty
Trust, Inc. at the Annual Meeting of Shareholders to be held on May 9, 2000,
commencing at 10:00 A.M. in the 24th Floor Conference Room at 2345 Grand
Boulevard, Suite 2400, Kansas City, Missouri, and at any adjournment thereof,
upon all matters described in the Proxy Statement furnished herewith, subject to
any directions indicated on the reverse side of this proxy. This proxy revokes
all prior proxies given by the undersigned.
With respect to the election of Trustees (Proposal 4), where no vote is
specified or where a vote for all nominees is marked, the cumulative votes
represented by a proxy will be cast, unless contrary instructions are given, at
the discretion of the proxies named herein in order to elect as many nominees as
believed possible under the then prevailing circumstances. Unless contrary
instructions are given, if the undersigned withholds the undersigned's vote for
a nominee, all of the undersigned's cumulative votes will be distributed among
the remaining nominees at the discretion of the proxies.
________________________________
Date
________________________________
Signature
________________________________
Signature if held jointly
Please sign exactly as name appears
hereon. Joint owners should each
sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such.
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THE BOARD OF TRUSTEES RECOMMENDS
A VOTE FOR THE FOLLOWING:
1. Proposal to amend Article Eight of the Trust's Articles of
Incorporation and Sections 6.1 and 10.8 (b) of the Trust's Bylaws to
eliminate the Trust's "self-liquidating" policy.
FOR / / AGAINST / / ABSTAIN / /
2. Proposals to:
A. Amend Section 6.2 of the Trust's Bylaws by deleting the text
of paragraph (d) thereof; as a result, the Trust would be
permitted to acquire equity securities of other companies.
FOR / / AGAINST / / ABSTAIN / /
B. Amend Section 6.2 of the Trust's Bylaws by deleting the text
of paragraph (i) thereof; as a result, the Trust would be
permitted to exchange its common stock for real estate
investments.
FOR / / AGAINST / / ABSTAIN / /
C. Amend Section 3.1(e) of the Trust's Bylaws by deleting
paragraphs (ii) and (iii) thereof, and amend Section 3.4 of
the Trust's Bylaws by deleting paragraph (e) thereof; as a
result, existing provisions that (1) restrict total
indebtedness of the Trust from exceeding 300% of the net asset
value of the Trust's assets and unsecured borrowings that
result in an asset coverage of less than 300% and (2) require
the Independent Trustees to monitor such coverages, would be
eliminated.
FOR / / AGAINST / / ABSTAIN / /
D. Amend the second paragraph of Section 9.4 of the Trust's
Bylaws by adding a new paragraph (d) thereto that allows the
Trust to purchase or sell property from or to affiliates of
the Trust if approved by the unanimous vote of the
disinterested Independent Trustees.
FOR / / AGAINST / / ABSTAIN / /
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3. Amendments to Articles One of the Trust's Articles of Incorporation and
Section 1.1 of the Trust's Bylaws changing the Trust's name to Maxus
Realty Trust.
FOR / / AGAINST / / ABSTAIN / /
4. Election of Trustees.
Nominees:
David L. Johnson Monte McDowell
Daniel W. Pishny Robert B. Thomson
Chris Garlich
(Cumulative voting applies - See Proxy Statement)
/ / For all Nominees
/ / For all Nominees except ____________________________________
(Write name(s) in blank provided
/ / Withhold authority to vote for all Nominees listed
5. Adjournment of the meeting to allow for additional solicitation of
proxies if necessary to establish a quorum or to obtain additional
votes in favor of the foregoing proposals 1, 2, 3 and/or 4.
FOR / / AGAINST / / ABSTAIN / /
6. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE,
THIS PROXY WILL BE VOTED FOR EACH PROPOSAL AND THE NOMINEES.
IT IS IMPORTANT THAT YOU VOTE, SIGN AND RETURN THE ENCLOSED PROXY AS
SOON AS POSSIBLE. BY DOING SO, YOU MAY SAVE THE TRUST THE EXPENSE OF ADDITIONAL
SOLICITATION.
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APPENDIX B
1. Page 31 of the printed proxy contains a performance graph. The
information in the graph is set forth in the table immediately following the
graph.
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