OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES AND PREFERRED SHARES
OF
MERIDIAN POINT REALTY TRUST VIII CO.
AT
$8.50 NET PER COMMON SHARE
AND
$10.00 NET PER PREFERRED SHARE
BY
EASTGROUP-MERIDIAN, INC.
A WHOLLY-OWNED SUBSIDIARY
OF
EASTGROUP PROPERTIES, INC.
-------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, MARCH 20, 1998, UNLESS THE OFFER IS EXTENDED.
-------------------------------------------------------------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
COMMON SHARES AND PREFERRED SHARES (BOTH AS HEREINAFTER DEFINED) THAT, WHEN
ADDED TO THE PREFERRED SHARES BENEFICIALLY OWNED BY EASTGROUP PROPERTIES, INC.
ON THE DATE OF THE MERGER AGREEMENT (AS HEREINAFTER DEFINED), WILL CONSTITUTE
TWO-THIRDS OF THE TOTAL NUMBER OF SHARES OF THE CAPITAL STOCK OF MERIDIAN
POINT REALTY TRUST VIII CO. (THE "COMPANY") ENTITLED TO VOTE ON A MERGER UNDER
THE COMPANY'S CERTIFICATE OF INCORPORATION, AS AMENDED (THE "CHARTER"), AND
THE MISSOURI GENERAL AND BUSINESS CORPORATION LAW ("GBCL").
THE BOARD OF TRUSTEES OF THE COMPANY HAS DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
SHAREHOLDERS, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, AND
RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
----------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
shares should either (1) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, mail or deliver it and any other required documents to the
depositary and either deliver the certificate(s) for such tendered shares to
the depositary along with the Letter of Transmittal or tender such shares
pursuant to the procedures for book-entry transfer set forth in Section 2 of
this offer to purchase, or (2) request such shareholder's broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
the shareholder. Shareholders having shares registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact
such broker, dealer, commercial bank, trust company or other nominee if they
desire to tender such shares.
A shareholder who desires to tender shares and whose certificate(s) for
shares are not immediately available, or who cannot comply with the procedures
for book-entry transfer on a timely basis, may tender such shares by following
the procedures for guaranteed delivery set forth in Section 2 of this Offer to
Purchase.
Questions and requests for assistance may be directed to the information
agent at its address and telephone number set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase,
the Letter of Transmittal and the Notice of Guaranteed Delivery may be
directed to the information agent or to brokers, dealers, commercial banks or
trust companies.
----------------
THE DEALER MANAGER FOR THE OFFER IS:
PAINEWEBBER INCORPORATED
February 23, 1998
TABLE OF CONTENTS
PAGE
-----
INTRODUCTION.......................................................... 1
THE TENDER OFFER...................................................... 2
1. TERMS OF THE OFFER; EXTENSION OF TENDER PERIOD; TERMI-
NATION; AMENDMENTS.................................... 2
2. PROCEDURE FOR TENDERING SHARES........................ 4
3. WITHDRAWAL RIGHTS..................................... 6
4. ACCEPTANCE FOR PAYMENT AND PAYMENT OF OFFER PRICE..... 7
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES............... 8
6. PRICE RANGE OF SHARES; DIVIDENDS...................... 9
7. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; STOCK
QUOTATIONS; REGISTRATION UNDER THE EXCHANGE ACT....... 9
8. CERTAIN INFORMATION CONCERNING THE COMPANY............ 10
9. CERTAIN INFORMATION CONCERNING EASTGROUP AND THE
PURCHASER............................................. 13
10. SOURCE AND AMOUNT OF FUNDS............................ 15
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER.... 15
12. PURPOSE OF THE OFFER; SHORT FORM MERGER; PLANS FOR THE
COMPANY; DISSENTERS' RIGHTS; GOING PRIVATE
TRANSACTIONS.......................................... 21
13. THE MERGER AGREEMENT.................................. 22
14. DIVIDENDS AND DISTRIBUTIONS........................... 29
15. CERTAIN CONDITIONS OF THE OFFER....................... 29
16. CERTAIN LEGAL MATTERS................................. 31
17. FEES AND EXPENSES..................................... 32
18. MISCELLANEOUS......................................... 33
Annex I Certain Information Concerning the Directors and Executive
Officers of EastGroup Properties, Inc....................... I-1
Annex II Certain Information Concerning the Directors and Executive
Officers of EastGroup-Meridian, Inc......................... II-1
Annex III Recent Transactions in Shares............................... III-1
i
TO THE HOLDERS OF COMMON SHARES AND PREFERRED SHARES OF MERIDIAN POINT REALTY
TRUST VIII CO.
INTRODUCTION
EastGroup-Meridian, Inc., a Missouri corporation (the "Purchaser") and a
wholly-owned subsidiary of EastGroup Properties, Inc., a Maryland corporation
("EastGroup"), hereby offers to purchase all outstanding common shares, par
value $0.001 per share (the "Common Shares"), and all outstanding preferred
shares, par value $0.001 per share (the "Preferred Shares") (collectively the
Common Shares and the Preferred Shares are referred to herein as the
"Shares"), of Meridian Point Realty Trust VIII Co., a Missouri corporation
(the "Company"), at a price per Common Share of $8.50 net to the seller in
cash (the "Common Share Offer Price"), and at a price per Preferred Share of
$10.00 net to the seller in cash (the "Preferred Share Offer Price"), both
upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which together constitute
the "Offer").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the purchase of Shares by the Purchaser pursuant to the
Offer. However, any tendering shareholder or other payee who fails to complete
and sign the Substitute Form W-9 that is included in the Letter of Transmittal
may be subject to a required backup federal income tax withholding of 31% of
the gross proceeds payable to such shareholder or other payee pursuant to the
Offer. See Section 2. The Purchaser will pay all charges and expenses of
Beacon Hill Partners, Inc., as Information Agent (the "Information Agent"),
Xxxxxx Trust Company of New York, as Depositary (the "Depositary"), and
PaineWebber Incorporated ("PaineWebber") as the Dealer Manager (the "Dealer
Manager"), incurred in connection with the Offer. See Section 17.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
COMMON SHARES AND PREFERRED SHARES THAT, WHEN ADDED TO THE PREFERRED SHARES
BENEFICIALLY OWNED BY EASTGROUP ON THE DATE OF THE MERGER AGREEMENT (AS
DEFINED BELOW), WILL CONSTITUTE TWO-THIRDS OF THE TOTAL NUMBER OF SHARES OF
THE CAPITAL STOCK OF THE COMPANY ENTITLED TO VOTE ON A MERGER UNDER THE
COMPANY'S CERTIFICATE OF INCORPORATION, AS AMENDED (THE "CHARTER") AND THE
GBCL (AS DEFINED BELOW). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND
CONDITIONS SET FORTH IN SECTION 15.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 18, 1998 (the "Merger Agreement"), among EastGroup, the
Purchaser and the Company. The Merger Agreement provides, among other things,
that upon the terms and subject to the conditions therein, as soon as
practicable after the consummation of the Offer, the Purchaser will be merged
with and into the Company (the "Merger"), with the Company being the
corporation surviving the Merger (the "Surviving Corporation"). At the
effective time of the Merger (the "Effective Time"), each outstanding Share
(other than Shares with respect to which appraisal rights are properly
exercised ("Dissenting Shares") under the Missouri General and Business
Corporation Law (the "GBCL")) not held in the treasury of the Company or owned
by any subsidiary of the Company, EastGroup or the Purchaser, will be
converted into and represent the right to receive in cash, without interest,
the price per Common Share or Preferred Share, as appropriate, paid pursuant
to the Offer. The Merger Agreement and its terms are further described in
Section 13.
THE BOARD OF TRUSTEES OF THE COMPANY HAS DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
SHAREHOLDERS, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, AND
RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
Prudential Securities Incorporated, the Company's financial advisor
("Prudential"), has delivered to the Company's Board of Trustees its written
opinion that the consideration to be received by the shareholders of the
Company pursuant to the Offer and the Merger is fair to such shareholders from
a financial point of view. A copy of such opinion is contained in the
Company's Solicitation/Recommendation Statement on Schedule 14D-9 which is
being distributed to the Company's shareholders herewith.
The Company has informed the Purchaser that as of February 20, 1998 there
were 1,709,937 Common Shares outstanding and 5,273,927 Preferred Shares
outstanding. As of the date hereof, EastGroup beneficially owns 1,469,556
Preferred Shares (27.9% of the outstanding Preferred Shares and 21.0% of all
outstanding Shares). Based on such number of outstanding Shares, if the
Purchaser acquires at least 3,186,354 Shares as a result of the Offer,
EastGroup will beneficially own two-thirds of the outstanding Shares. In such
event, EastGroup would have sufficient voting power to approve the Merger
without the affirmative vote of any other shareholder. If EastGroup
beneficially owns 90% or more of the outstanding Common Shares and 90% or more
of the outstanding Preferred Shares, the Merger could be effected pursuant to
the short form merger provisions of the GBCL, without the action of any
shareholder of the Company other than EastGroup. The Company has granted the
Purchaser options to acquire sufficient Shares so that, under certain
circumstances, the Purchaser may increase its percentage ownership of Common
Shares and/or Preferred Shares to the 90% level. See Section 13.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER; EXTENSION OF TENDER PERIOD; TERMINATION;
AMENDMENTS. Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
any such extension or amendment), the Purchaser will accept for payment and
pay for all Shares which are validly tendered on or prior to the Expiration
Date (as hereinafter defined) and not theretofore withdrawn as permitted by
Section 3. The term "Expiration Date" means 12:00 Midnight, New York City
time, on Friday, March 20, 1998, unless and until the Purchaser (subject to
the terms and conditions of the Merger Agreement) shall have extended the
period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as
so extended by the Purchaser, shall expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition (as defined in Section 15). Subject to the provisions of the
Merger Agreement, the Purchaser reserves the right (but shall not be
obligated) to waive or reduce the Minimum Condition or to waive any or all of
the other conditions of the Offer. If, by 12:00 Midnight, New York City time,
on Friday, March 20, 1998, or any subsequent Expiration Date, any or all of
such conditions have not been satisfied or waived, subject to the provisions
of the Merger Agreement, the Purchaser may elect to (i) terminate the Offer
and return all tendered Shares to tendering shareholders; (ii) waive all of
the unsatisfied conditions and, subject to any required extension, purchase
all Shares validly tendered by the Expiration Date and not withdrawn; (iii)
extend the Offer and, subject to the right of shareholders to withdraw Shares
until the Expiration Date, retain the Shares that have been tendered until the
expiration of the Offer as extended; or (iv) delay acceptance for payment of,
or payment for, the Shares, subject to complying with applicable law, until
the satisfaction or waiver of the conditions of the Offer.
Under the terms of the Merger Agreement, the Purchaser may not (except as
described in the next sentence), without the prior written consent of the
Company, (i) reduce the number of Common Shares and Preferred Shares to be
purchased in the Offer; (ii) reduce the Common Share Offer Price or the
Preferred Share Offer Price except as otherwise provided by the Merger
Agreement; (iii) modify or add any conditions to the Offer in any manner that
the Board of Trustees of the Company, in the exercise of its fiduciary
obligations, determines to be adverse to the holders of Common Shares or
Preferred Shares; (iv) extend the Offer other than as provided in the Merger
Agreement; (v) change the form of consideration payable in the Offer; or (vi)
amend any other term of the Offer in a manner that the Board of Trustees of
the Company, in the exercise of its fiduciary obligations, determines to
2
be adverse to the holders of Common Shares or Preferred Shares.
Notwithstanding the foregoing, the Purchaser may, without the consent of the
Company, (i) extend the Offer beyond the Expiration Date for a period not to
exceed 20 business days, if at the Expiration Date any of the conditions to
the Purchaser's obligation to accept for payment, and pay for, Common Shares
and Preferred Shares shall not be satisfied or waived, until such time as such
conditions are satisfied or waived; or (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "Commission") or the staff thereof applicable to
the Offer.
Subject to the applicable regulations of the Commission and the provisions
of the Merger Agreement, the Purchaser also expressly reserves the right, in
its sole discretion, at any time or from time to time, to (i) delay acceptance
for payment of or, regardless of whether such Shares were theretofore accepted
for payment, payment for any Shares; (ii) terminate the Offer (whether or not
any Shares have theretofore been accepted for payment) if any of the
conditions referred to in Section 15 have not been satisfied or upon the
occurrence of any of the events specified in Section 15; and (iii) waive any
condition or otherwise amend the Offer in any respect, in each case by giving
oral or written notice of such delay, termination, waiver or amendment to the
Depositary and by making a public announcement thereof. If the Purchaser
accepts for payment any Shares pursuant to the terms of the Offer, it will
accept for payment all Shares validly tendered prior to the Expiration Date
and not withdrawn and, subject to clause (i) above, will promptly pay for all
Shares so accepted for payment. The Purchaser acknowledges that its
reservation of the right to delay payment for Shares that it has accepted for
payment is limited by Rule 14e-l(c) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), which requires the Purchaser to pay the
consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer.
The rights reserved by the Purchaser in the preceding paragraph are in
addition to the Purchaser's rights pursuant to Section 15. Any extension,
delay, termination or amendment of the Offer will be followed as promptly as
practicable by public announcement thereof, such announcement in the case of
an extension to be issued no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date, in
accordance with the public announcement requirements of Rule 14e-1(d) under
the Exchange Act. Subject to applicable law (including Rules 14d-4(c) and 14d-
6(d) under the Exchange Act, which require that any material change in the
information published, sent or given to shareholders in connection with the
Offer be promptly disseminated to shareholders in a manner reasonably designed
to inform shareholders of such change), and without limiting the manner in
which the Purchaser may choose to make any public announcement, the Purchaser
shall have no obligation to publish, advertise or otherwise communicate any
such public announcement other than by making a release to the PRNewswire.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer (including the Minimum Condition), the Purchaser will disseminate
additional tender offer materials (including by public announcement as set
forth above) and extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an
offer must remain open following material changes in the terms of the Offer,
other than a change in price, percentage of securities sought or inclusion of
or change to a dealer's soliciting fee, will depend upon the facts and
circumstances, including the materiality, of the changes. In the Commission's
view, an offer should remain open for a minimum of five business days from the
date the material change is first published, sent or given to shareholders,
and, if material changes are made with respect to information that approaches
the significance of price and share levels, a minimum of ten business days may
be required to allow for adequate dissemination and investor response. With
respect to a change in price or, subject to certain limitations, a change in
the percentage of securities sought or inclusion of or change to a dealer's
soliciting fee, a minimum ten business day period from the date of such change
is generally required to allow for adequate dissemination to shareholders.
Accordingly, if, prior to the Expiration Date, the Purchaser decreases the
number of Shares being sought or increases or decreases the consideration
offered pursuant to the Offer, and if the Offer is scheduled to expire at any
time earlier than the period ending on the tenth business day from the date
that notice of such increase or decrease is first published, sent or given to
holders of Shares, the Offer will be
3
extended at least until the expiration of such ten business day period. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or a federal holiday and consists of the time period from 12:01 a.m.
through 12:00 midnight, New York City time.
In connection with the Offer, the Company has provided or will provide the
Purchaser with the names and addresses of all record holders of Shares and
security position listings of Shares held in stock depositories. This Offer to
Purchase, the related Letter of Transmittal and other relevant materials will
be mailed to registered holders of Shares and will be furnished to brokers,
dealers, commercial banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the shareholder list or, if applicable,
who are listed as participants in a clearing agency's security position
listing, for subsequent transmittal to beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES. Except as set forth below, in order for
Shares to be validly tendered pursuant to the Offer, the Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, together with
any required signature guarantees, or an Agent's Message (as hereinafter
defined) in connection with a book-entry transfer of Shares, and any other
documents required by the Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase on or prior to the Expiration Date, and either (i) certificates
representing tendered Shares must be received by the Depositary, or such
Shares must be tendered pursuant to the procedure for book-entry transfer set
forth below (and confirmation of receipt of such delivery must be received by
the Depositary), in each case on or prior to the Expiration Date; or (ii) the
guaranteed delivery procedures set forth below must be complied with. No
alternative, conditional or contingent tenders will be accepted.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if such Letter of Transmittal is signed by the registered
holder of the Shares tendered therewith, unless such holder has completed
either the box entitled "Special Delivery Instructions" or the box entitled
"Special Payment Instructions" in the Letter of Transmittal; or (ii) if Shares
are tendered for the account of a firm that is a member in good standing of
the Security Transfer Agent's Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program (each
being hereinafter referred to as an "Eligible Institution"). See Instruction 1
of the Letter of Transmittal.
If a certificate representing Shares is registered in the name of a person
other than the signer of the Letter of Transmittal (or a facsimile thereof),
or if payment is to be made, or Shares not accepted for payment or not
tendered are to be returned to a person other than the registered holder, the
certificate must be endorsed or accompanied by an appropriate stock power, in
either case signed exactly as the name(s) of the registered holder(s) appears
on the certificate, with the signature(s) on the certificate or stock power
guaranteed by an Eligible Institution. If the Letter of Transmittal or stock
powers are signed or any certificate is endorsed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should
so indicate when signing and, unless waived by the Purchaser, proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
See Instruction 5 of the Letter of Transmittal.
Book-Entry Transfer. The Depositary will establish accounts with respect to
the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date
of this Offer to Purchase, and any financial institution that is a participant
in the Book-Entry Transfer Facility's system may make book-entry delivery of
the Shares by causing the Book-Entry Transfer Facility to transfer such Shares
into the Depositary's account in accordance with the Book-Entry Transfer
Facility's procedure for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at the Book-Entry Transfer
Facility, a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees, or an Agent's
Message and any other required documents, must, in any case, be transmitted to
and received by the Depositary at one of its addresses set forth on the back
cover
4
of this Offer to Purchase prior to the Expiration Date, or the guaranteed
delivery procedures described below must be complied with. The term "Agent's
Message" means a message transmitted through electronic means by the Book-
Entry Transfer Facility to, and received by, the Depositary and forming a part
of a book-entry confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the participant in the
Book-Entry Transfer Facility tendering the Shares that such participant has
received, and agrees to be bound by, the terms of the Letter of Transmittal.
Delivery of documents to the Book-Entry Transfer Facility in accordance with
the Book-Entry Transfer Facility's procedures does not constitute delivery to
the Depositary.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates representing Shares are not
immediately available (or the procedures for book-entry transfer cannot be
completed on a timely basis) or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, such Shares may
nevertheless be tendered, provided that all of the following conditions are
satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) the Depositary receives, prior to the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in
the form provided by the Purchaser; and
(iii) the certificates representing all tendered Shares in proper form
for transfer (or confirmation of a book-entry transfer of such Shares into
the Depositary's account at the Book-Entry Transfer Facility), together
with a properly completed and duly executed Letter of Transmittal (or
facsimile hereof) with any required signature guarantees (or, in connection
with a book-entry transfer, an Agent's Message) and any other documents
required by the Letter of Transmittal are received by the Depositary within
three Trading Days after the date of such Notice of Guaranteed Delivery. A
"Trading Day" is any day on which the New York Stock Exchange, Inc.
("NYSE") is open for trading.
The Notice of Guaranteed Delivery may be delivered by hand, or may be
transmitted by telegram, telex, facsimile transmission or mail, to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates representing such Shares (or timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at the Book-Entry
Transfer Facility); (ii) properly completed and duly executed Letter(s) of
Transmittal (or facsimile(s) thereof), together with any required signature
guarantees (or, in connection with a book-entry transfer, an Agent's Message);
and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering shareholders may be paid at different times depending
upon when certificates representing Shares or confirmations of book-entry
transfers of such Shares are actually received by the Depositary.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL
BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Determination of Validity. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance for payment
of any tendered Shares will be determined by the Purchaser in its sole
discretion, and its determination shall be final and binding on all parties.
The Purchaser reserves the absolute right to reject any or all tenders of any
Shares that it determines are not in appropriate form or the acceptance for
payment of or payment for which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any of the conditions of the Offer or any defect or irregularity in any
5
tender with respect to any particular Shares or any particular shareholder,
and the Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the Instructions thereto) will be
final and binding on all parties. No tender of Shares will be deemed to have
been validly made until all defects or irregularities relating thereto have
been expressly waived or cured to the satisfaction of the Purchaser. None of
the Purchaser, EastGroup, the Depositary, the Information Agent, the Dealer
Manager or any other person will be under any duty to give notification of any
defects or irregularities in tenders, nor shall any of them incur any
liability for failure to give any such notification.
Other Requirements. By executing the Letter of Transmittal, a tendering
shareholder irrevocably appoints designees of the Purchaser as such
shareholder's proxies, in the manner set forth in the Letter of Transmittal,
each with full power of substitution, to the full extent of such shareholder's
rights with respect to the Shares tendered by such shareholder and accepted
for payment by the Purchaser (and any and all other Shares or other securities
or rights issued, issuable, which detach from or become exercisable in respect
of such Shares on or after February 23, 1998), effective if, when and to the
extent that the Purchaser accepts such Shares for payment pursuant to the
Offer. Upon such acceptance for payment, all prior proxies given by such
shareholder with respect to such Shares or other securities accepted for
payment will, without further action, be revoked, and no subsequent proxies
may be given by such shareholder nor any subsequent written consents executed
(and, if given or executed, will not be deemed effective). Such designees of
the Purchaser will, with respect to such Shares and other securities or rights
issuable in respect thereof, be empowered to exercise all voting and other
rights of such shareholder as they, in their sole discretion, may deem proper
in respect of any annual, special or adjourned meeting of the Company's
shareholders, action by written consent in lieu of any such meeting or
otherwise. The Purchaser reserves the right to require that, in order for
Shares to be deemed validly tendered, immediately upon the Purchaser's
acceptance for payment of such Shares the Purchaser must be able to exercise
full voting rights with respect to such Shares.
The Purchaser's acceptance for payment of Shares tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering shareholder and the Purchaser upon the terms and subject to the
conditions of the Offer. Purchaser shall have no rights as a shareholder of
tendered Shares until such time as the Purchaser accepts tendered Shares for
payment. Any dividend paid by the Company with a record date prior to the date
on which the Purchaser accepts Shares for payment (which can be no earlier
than the Expiration Date) shall be payable to the tendering shareholder.
TO PREVENT BACKUP WITHHOLDING OF FEDERAL INCOME TAX ON PAYMENTS MADE TO
SHAREHOLDERS WITH RESPECT TO SHARES PURCHASED PURSUANT TO THE OFFER, EACH
SHAREHOLDER MUST PROVIDE THE DEPOSITARY WITH HIS OR HER CORRECT TAXPAYER
IDENTIFICATION NUMBER ("TIN") AND CERTIFY THAT HE OR SHE IS NOT SUBJECT TO
BACKUP WITHHOLDING OF FEDERAL INCOME TAX BY COMPLETING THE SUBSTITUTE FORM W-9
INCLUDED IN THE LETTER OF TRANSMITTAL. FOREIGN HOLDERS MUST SUBMIT A COMPLETED
FORM W-8 TO AVOID BACKUP WITHHOLDING. THIS FORM MAY BE OBTAINED FROM THE
DEPOSITARY. SEE INSTRUCTIONS 10 AND 11 OF THE LETTER OF TRANSMITTAL.
3. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer will be
irrevocable, except that Shares tendered may be withdrawn at any time prior to
the Expiration Date, and, unless theretofore accepted for payment by the
Purchaser as provided herein, may also be withdrawn on or after April 30,
1998.
For a withdrawal of Shares tendered to be effective, a written, telegraphic,
telex or facsimile transmission notice of withdrawal must be timely received
by the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase. Any notice of withdrawal must specify the name of the
person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name(s) in which the certificate(s) representing such Shares
are registered, if different from that of the person who tendered such Shares.
If
6
certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, the name of the registered holder and the serial
numbers shown on the particular certificates evidencing such Shares to be
withdrawn must also be furnished to the Depositary prior to the physical
release of the Shares to be withdrawn. The signature(s) on the notice of
withdrawal must be guaranteed by an Eligible Institution (except in the case
of Shares tendered by an Eligible Institution). If Shares have been tendered
pursuant to the procedures for book-entry transfer set forth in Section 2, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with such withdrawn Shares and
must otherwise comply with the Book-Entry Transfer Facility's procedures.
If the Purchaser extends the Offer, is delayed in its acceptance for payment
of any Shares tendered, or is unable to accept for payment or pay for Shares
tendered pursuant to the Offer, for any reason whatsoever, then, without
prejudice to the Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of the Purchaser, retain tendered Shares, and such
Shares may not be withdrawn except to the extent that the tendering
shareholder is entitled to and duly exercises withdrawal rights as described
in this Section 3 and as otherwise required by Rule 14e-1(c) under the
Exchange Act. Any such delay will be accompanied by an extension of the Offer
to the extent required by law.
Withdrawals of tenders of Shares may not be rescinded, and Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following the
procedures described in Section 2 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, and its determination will be final and binding on all parties.
None of the Purchaser, EastGroup, the Depositary, the Information Agent, the
Dealer Manager or any other person will be under any duty to give notification
of any defects or irregularities in any notice of withdrawal, nor shall any of
them incur any liability for failure to give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT OF OFFER PRICE. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any extension or amendment), the
Purchaser will accept for payment and will pay for all Shares validly tendered
prior to the Expiration Date (and not properly withdrawn in accordance with
Section 3 above) as soon as practicable after the latest to occur of (i) the
expiration or termination of any waiting period applicable to the acquisition
of the Shares pursuant to the Offer under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"); (ii) the Expiration
Date; and (iii) subject to compliance with Rule 14e-1(c) under the Exchange
Act, the satisfaction or waiver of the conditions of the Offer set forth in
Section 15. Any determination concerning the satisfaction of such terms and
conditions shall be within the sole discretion of the Purchaser, and such
determination shall be final and binding on all tendering shareholders. See
Section 15.
The Purchaser expressly reserves the right to delay acceptance for payment
of, or payment for, Shares in order to comply in whole or in part with any
applicable law. If the Purchaser desires to delay payment for Shares accepted
for payment pursuant to the Offer, and such delay would otherwise be in
contravention of Rule 14e-1(c) of the Exchange Act, the Purchaser will
formally extend the Offer. In all cases, payment for Shares accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates representing such Shares (or a timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility, as described in Section 2); (ii)
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees (or, in connection with a
book-entry transfer, an Agent's Message); and (iii) any other documents
required by the Letter of Transmittal.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, tendered Shares when, as and if the Purchaser
gives oral or written notice to the Depositary, as agent
7
for the tendering shareholders, of the Purchaser's acceptance for payment of
such Shares. Payment for Shares so accepted for payment will be made by the
deposit of the purchase price therefor with the Depositary, which will act as
agent for the tendering shareholders for the purpose of receiving such payment
from the Purchaser and transmitting such payment to tendering shareholders.
If, for any reason whatsoever, acceptance for payment of any Shares tendered
pursuant to the Offer is delayed, or the Purchaser is unable to accept for
payment Shares tendered pursuant to the Offer, then, without prejudice to the
Purchaser's rights under Section 1, the Depositary may, nevertheless, on
behalf of the Purchaser, retain tendered Shares, and such Shares may not be
withdrawn, except to the extent that the tendering shareholders are entitled
to withdrawal rights as described in Section 3 and as otherwise required by
Rule 14e-1(c) under the Exchange Act. Under no circumstances will interest be
paid on the purchase price by reason of any delay in making such payments.
If any tendered Shares are not accepted for payment and paid for,
certificates representing such Shares will be returned (or, in the case of
Shares delivered by book-entry transfer with the Book-Entry Transfer Facility
as permitted by Section 2, such Shares will be credited to an account
maintained with the Book-Entry Transfer Facility) without expense to the
tendering shareholder as promptly as practicable following the expiration or
termination of the Offer.
The Purchaser reserves the right to transfer or assign in whole or in part
to one or more affiliates of the Purchaser or EastGroup the right to purchase
all or any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve the Purchaser of its obligations under
the Offer and will in no way prejudice the rights of tendering shareholders to
receive payment for Shares validly tendered and accepted for payment pursuant
to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Shares
pursuant to the Offer (or in the Merger) will be a taxable transaction for
federal income tax purposes (and may also be a taxable transaction under
applicable state, local or other tax laws). In general, a shareholder will
recognize gain or loss for such purposes equal to the difference between such
shareholder's adjusted tax basis for the Shares such shareholder sells in such
transaction (or surrenders in the Merger) and the amount of cash received
therefor. Gain or loss must be determined separately for each block of Shares
(i.e., Shares acquired at the same cost in a single transaction) sold pursuant
to the Offer or converted to cash in the Merger. Such gain or loss will be
capital gain or loss if the Shares are a capital asset in the hands of the
shareholder and will be long term capital gain or loss if the Shares were held
for more than one year on the date of sale (in the case of the Offer) or the
Effective Time of the Merger (in the case of the Merger). The receipt of cash
for Shares pursuant to the exercise of dissenters' rights, if any, will
generally be taxed in the same manner described above. An individual
shareholder's long-term capital gain will be taxed at the lowest applicable
rate (generally 20%) if such shareholder held the Shares for more than
eighteen months on the date of sale or the Effective Time of the Merger,
whichever is the relevant date.
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a rate of 31%. Backup withholding generally applies if
the shareholder (i) fails to furnish such shareholder's social security number
or TIN; (ii) furnishes an incorrect TIN; or (iii) under certain circumstances,
fails to provide a certified statement, signed under penalties of perjury,
that the TIN provided is such shareholder's correct number and that such
shareholder is not subject to backup withholding. Backup withholding is not an
additional tax but merely an advance payment, which may be refunded to the
extent it results in an overpayment of tax. Certain persons generally are
entitled to exemption from backup withholding, including corporations and
financial institutions. Certain penalties apply for failure to furnish correct
information and for failure to include reportable payments in income. Each
shareholder should consult with his own tax advisor as to such shareholder's
qualification for exemption from backup withholding and the procedure for
obtaining such exemption. Tendering shareholders may be able to prevent backup
withholding by completing the Substitute Form W-9 included in the Letter of
Transmittal.
8
The foregoing discussion may not be applicable to a shareholder who acquired
Shares pursuant to the exercise of employee stock options or otherwise as
compensation, or to a shareholder who is not a citizen or resident of the
United States or who is otherwise subject to special tax treatment under the
Internal Revenue Code. In addition, the foregoing discussion does not address
the tax treatment of holders of options or warrants to acquire Shares.
The federal income tax discussion set forth above is included for general
information only and is based upon present law. Shareholders are urged to
consult their tax advisors with respect to the specific tax consequences of
the Offer and the Merger to them, including the application and effect of the
alternative minimum tax, and state, local or foreign income and other tax
laws.
6. PRICE RANGE OF SHARES; DIVIDENDS. The principal market on which the
Common Shares and Preferred Shares are traded is the American Stock Exchange
("AMEX") under the symbols "MPH" and "MPHpr," respectively. The following
table sets forth, for the periods indicated, the high and low per Common Share
and per Preferred Share closing sales prices, each as reported by published
financial sources, and the cash distributions paid by the Company for the
calendar quarters specified.
COMMON SHARES PREFERRED SHARES DISTRIBUTIONS
----------------- --------------------- PAID
HIGH LOW HIGH LOW PER SHARE (1)
------- ------ -------- -------- -------------
Fiscal Year Ended Decem-
ber 31, 1996:
First Quarter......... $ 2 1/8 $ 1 3/4 $ 6 1/4 $ 4 3/4 $0.07
Second Quarter........ 2 1/2 2 6 1/8 4 3/8 0.07
Third Quarter......... 3 1/4 2 1/4 5 1/8 4 1/2 0.07
Fourth Quarter........ 3 2 1/4 5 3/8 4 3/4 0.07
Fiscal Year Ending De-
cember 31, 1997:
First Quarter......... 3 1/2 2 5/8 5 7/8 5 0.07
Second Quarter........ 4 1/2 3 1/8 8 1/8 5 1/2 0.07
Third Quarter......... 6 3/4 3 13/16 9 1/4 7 0.07
Fourth Quarter........ 6 5/8 4 1/2 9 7 3/4 0.08
Fiscal Year Ending De-
cember 31, 1998:
First Quarter (through
February 20, 1998)... 8 3/8 5 1/8 9 7/8 8 5/8 --
--------
(1)Holders of Common Shares and Preferred Shares received equal
distributions in all periods presented.
On February 18, 1998, the last trading day prior to the public announcement
of the terms of the Offer and the Merger, the closing sales price per Common
Share was $7.25 and the closing sales price per Preferred Share was $9.375. On
February 20, 1998, the last trading day prior to commencement of the Offer,
the closing sales price per Common Share was $8.375 and the closing sales
price per Preferred Share was $9.875. Shareholders are urged to obtain a
current market quotation for the Common Shares and Preferred Shares.
7. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; STOCK QUOTATIONS;
REGISTRATION UNDER THE EXCHANGE ACT. The purchase of Shares pursuant to the
Offer will reduce the number of holders of Shares and the number of Shares
that might otherwise trade publicly. Consequently, depending upon the number
of Shares purchased and the number of remaining holders of Shares, the
purchase of Shares pursuant to the Offer may adversely affect the liquidity
and market value of the remaining Shares held by the public. The Purchaser
cannot predict whether the reduction in the number of Shares that might
otherwise trade publicly would have an adverse or beneficial effect on the
market price for, or marketability of, the Shares or whether it would cause
future market prices to be greater or less than the Offer price.
Both the Common Shares and the Preferred Shares are currently listed and
traded on AMEX, which constitutes the principal trading market for the Shares.
Depending upon the aggregate market value and the number of Common Shares or
Preferred Shares not purchased pursuant to the Offer, either or both classes
may
9
no longer meet the quantitative maintenance criteria of AMEX for continued
inclusion on AMEX and may cease to be authorized for quotation on such market.
If, as a result of the purchase of Common Shares or Preferred Shares pursuant
to the Offer or otherwise, the Common Shares or the Preferred Shares no longer
meet the requirements of AMEX for continued inclusion in AMEX, and such shares
are no longer included in AMEX, the market for such shares could be adversely
affected.
In the event that the Common Shares or the Preferred Shares no longer meet
the requirements of AMEX for continued inclusion in AMEX, it is possible that
such shares would trade in the over-the-counter market and that price
quotations would be reported by other sources. The extent of the public market
for the Common Shares or the Preferred Shares and the availability of such
quotations would, however, depend upon the number of holders of Common Shares
or Preferred Shares remaining at such time, the interest in maintaining a
market in Common Shares or Preferred Shares on the part of securities firms,
the possible termination of registration of the Common Shares or Preferred
Shares under the Exchange Act, as described below, and other factors.
The Common Shares and Preferred Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application of the
Company to the Commission if such Common Shares or Preferred Shares are not
listed on a national securities exchange and there are fewer than 300 holders
of record of such shares. The termination of the registration of the Common
Shares or Preferred Shares under the Exchange Act would substantially reduce
the information required to be furnished by the Company to its shareholders
and to the Commission, and would make certain of the provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b) and the requirement of furnishing a proxy statement in connection with
shareholders' meetings and the related requirement of an annual report to
shareholders, and the requirements of Rule 13e-3 with respect to going private
transactions, no longer applicable with respect to such shares or to the
Company. Furthermore, if registration of the Common Shares or Preferred Shares
under the Exchange Act were terminated, the ability of "affiliates" of the
Company and persons holding "restricted securities" of the Company to dispose
of such securities pursuant to Rule 144 promulgated under the Securities Act
of 1933, as amended, may be impaired or, with respect to certain persons,
eliminated. According to the Company, as of February 19, 1998, there were 817
holders of record of Common Shares and 1,252 holders of record of Preferred
Shares.
8. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise set forth
herein, the information concerning the Company contained in this Offer to
Purchase, including financial information, has been furnished by the Company
or has been taken from or based upon publicly available documents and records
on file with the Commission and other public sources. Although neither the
Purchaser nor EastGroup has any knowledge that would indicate that the
statements contained herein based on such information are untrue, neither the
Purchaser nor EastGroup takes any responsibility for the accuracy or
completeness of the information concerning the Company furnished by the
Company or contained in such documents and records or for any failure by the
Company to disclose events or information which may have occurred or may
affect the significance or accuracy of any such information but which are
unknown to the Purchaser or EastGroup.
The Company was incorporated in December 1987 under the laws of the State of
Missouri under the name "Sierra Capital Realty Trust VIII Co." and changed its
name to "Meridian Point Realty Trust VIII Co." in September 1993. The
Company's principal executive offices are located at 000 Xxxxxxxxxx Xxxxxx,
Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, and its telephone number is (415)
274-1808. The following description of the Company's business has been taken
from the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996:
"The Company was organized to qualify as a real estate investment trust
("REIT") under Sections 856-860 of the Internal Revenue Code of 1986, as
amended (the "Code"). Under the Code, a REIT must meet certain criteria,
including requirements (a) that certain percentages of its gross income be
derived from specific sources, (b) that it distribute annually to its
shareholders at least 95% of its REIT taxable income (as defined in the
Code), and (c) that it not have five or fewer shareholders who own more
than 50% of the total value of its stock. The Company did not qualify as a
REIT for the years ended December 31, 1992
10
and 1993 because of the failure to satisfy requirement (c) above. However,
the Revenue Reconciliation Act of 1993 added a provision which allows stock
held by a qualified trust to be treated as held directly by its
beneficiaries in proportion to their actuarial interest; this new "look-
through" rule allows the Company to satisfy requirement (c) above. The
Internal Revenue Service permitted the Company to re-elect its REIT status
beginning in the 1994 tax year.
The Company was formed for the purpose of making equity investments in
income-producing industrial and commercial real estate in selected areas of
projected growth in the United States. At December 31, 1996, the Company
had nine real estate equity investments consisting of twenty-four
properties. The Company's principal objectives are to preserve, protect and
grow the shareholders' capital, provide shareholders with cash dividends,
and achieve capital appreciation through potential appreciation in the
values of the Company's properties. There is no guarantee that the
Company's objectives will be met.
The Company was formed as a self-liquidating finite-life REIT. At the
annual meeting held on June 14, 1996, the shareholders approved an
amendment to the Company's Bylaws related to investment policy which
allowed the Company to reinvest proceeds from the sale of property into the
purchase of new property, thereby converting the Company to an infinite-
life REIT. The general purpose of the Company is to seek income that
qualifies under the REIT provisions of the Code. At such time as it is in
the best interests of the Company's shareholders to do so, the Board of
Directors intends to make investments in such a manner as to comply with
the requirements of the REIT provisions of the Code with respect to the
composition of the Company's investments and the derivation of its income.
The Directors' decision to acquire or sell properties would be based on a
number of factors such as: (i) the vitality of the real estate and money
markets; (ii) the economic climate; (iii) potential environmental
liabilities; and (iv) the income tax consequences to the Company and its
shareholders."
Set forth below is a summary of certain consolidated financial information
with respect to the Company and its consolidated subsidiaries, excerpted or
derived from the information contained in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996 and its Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997. More comprehensive
financial information is included in such reports and other documents filed by
the Company with the Commission. The financial information summary set forth
below is qualified in its entirety by reference to such reports and other
documents filed with the Commission and all of the financial information and
related notes contained therein. Such reports and other documents may be
inspected and copies may be obtained from the offices of the Commission in the
manner set forth below.
11
MERIDIAN POINT REALTY TRUST VIII CO.
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------- -------------------
1996 1995 1994 1997 1996
-------- -------- -------- --------- ---------
(UNAUDITED)
INCOME STATEMENT DATA:
Total operating revenues.. $ 10,221 $ 11,195 $ 12,081 $ 7,921 $ 6,992
Funds from operations
("FFO") (1).............. 3,736 3,755 3,890 2,931 2,387
Net income (loss)......... 1,352 (274) (1,875) 2,113 649
PER SHARE INFORMATION:
Net income (loss) per
Common Share............. (.08) (1.09) (1.89) .62 (.28)
Dividends per Common and
Preferred Shares......... .28 .28 .22 .21 .21
Common Shares
Outstanding.............. 1,610 1,610 1,610 1,610 1,610
Preferred Shares
Outstanding.............. 5,274 5,274 5,274 5,274 5,274
AS OF DECEMBER 31, AS OF SEPTEMBER 30,
---------------------------- -------------------
1996 1995 1994 1997 1996
-------- -------- -------- --------- ---------
(UNAUDITED)
BALANCE SHEET DATA:
Real estate, net.......... $ 66,682 $ 68,777 $ 72,337 $ 74,397 $ 67,383
Total assets.............. 71,594 76,494 91,758 79,353 74,698
Total debt................ 27,613 32,042 44,731 33,872 31,193
Total shareholders'
equity................... 42,466 43,041 45,243 43,133 42,245
--------
(1) Industry analysts generally consider FFO to be an appropriate measure of
the performance of an equity REIT. FFO is defined by the National
Association of Real Estate Investment Trusts ("NAREIT") as net income
(computed in accordance with generally accepted accounting principles
("GAAP")) before allocation to minority interests, plus real estate
depreciation and after adjustments for significant nonrecurring items, if
any. It is generally believed that FFO is helpful to investors as a
measure of the performance of an equity REIT because, along with cash
flows from operating activities, financing activities and investing
activities, it provides investors an understanding of the ability of the
equity REIT to incur and service debt and to make capital expenditures.
FFO in and of itself does not represent cash generated from operating
activities in accordance with GAAP and therefore should not be considered
an alternative to net income as an indicator of an equity REIT's
performance or to net cash flows from operating activities as determined
by GAAP as a measure of liquidity and is not necessarily indicative of
cash available to fund cash needs.
Other Information. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational filing requirements
of the Exchange Act and, in accordance therewith, is obligated to file
periodic reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information,
as of particular dates, concerning the Company's trustees and officers, their
remuneration, stock options granted to them, the principal holders of the
Company's securities and any material interest of such persons in transactions
with the Company is required to be disclosed in such proxy statements and
distributed to the Company's shareholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities at the Commission's principal
office at 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, and at the regional
offices of the Commission in New York, New York (7 World Trade Center, 13th
Floor, New York, New York 10048) and in Chicago, Illinois (Suite 1400,
Citicorp Center, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000). The
Commission maintains a site on the World Wide Web, and the reports, proxy
statements and other information
12
filed by the Company with the Commission may be accessed electronically on the
Web at xxxx://xxx.xxx.xxx. Copies of such material may also be obtained by
mail, upon payment of the Commission's customary fees, from the Commission's
principal office at 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000.
9. CERTAIN INFORMATION CONCERNING EASTGROUP AND THE PURCHASER. The Purchaser
is a newly formed Missouri corporation and a wholly-owned subsidiary of
EastGroup. To date, the Purchaser has not conducted any business other than
incident to its formation, the execution and delivery of the Merger Agreement
and the commencement of the Offer.
Until immediately prior to the time that the Purchaser purchases Shares
pursuant to the Offer, it is not anticipated that the Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Since the Purchaser is newly formed and has
minimal assets and capitalization, no meaningful financial information is
available. The address of the principal office of the Purchaser is 000 Xxx
Xxxxxxx Xxxxx, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxx 00000.
EastGroup is a self-administered REIT focused principally on the ownership,
acquisition and selective development of industrial properties in major
Sunbelt markets throughout the United States. As of February 18, 1998,
EastGroup's industrial property portfolio included 48 properties in nine
states comprising approximately 9.4 million square feet of leasable space, and
three industrial development properties under construction comprising
approximately 234,000 square feet of space. As of December 31, 1997, the
industrial portfolio (excluding the three properties currently under
development) was 97% leased.
EastGroup's principal executive offices are located at 000 Xxx Xxxxxxx
Xxxxx, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxx 00000-0000. Its telephone
number is (000) 000-0000.
The following table was derived from EastGroup's Annual Report on Form 10-K
(the "EastGroup 1996 Form 10-K") for the fiscal year ended December 31, 1996
("Fiscal 1996"), and sets forth selected consolidated financial information of
EastGroup for the nine month period ended September 30, 1997. More
comprehensive financial information is included in the EastGroup 1996 Form 10-
K and other documents filed by EastGroup with the Commission, and the
following summary is qualified in its entirety by reference to such report and
such other documents and of the financial information (including any related
notes) contained therein. Such report and other documents should be available
for inspection and copies thereof should be obtainable in the manner set forth
in Section 8. Such report and other documents are also available for
inspection at the offices of the NYSE, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, where the shares of common stock, $0.0001 par value per share, of
EastGroup (the "EastGroup Stock") is listed for trading.
13
EASTGROUP PROPERTIES, INC.
SELECTED CONSOLIDATED FINANCIAL DATA OF EASTGROUP
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------- -------------------
1996 1995 1994 1997 1996
-------- -------- -------- --------- ---------
(UNAUDITED)
INCOME STATEMENT DATA:
Total operating revenues....... $ 39,765 $ 30,264 $ 24,895 $ 38,200 $ 27,627
FFO (1)........................ 14,820 9,847 8,913 17,265 10,193
Net income..................... 12,509 7,711 7,168 16,540 7,250
PER SHARE INFORMATION:
Net income per share........... 1.44 1.22 1.16 1.34 .90
Dividend per share............. 1.28 1.23 1.16 1.00 .95
Average number of common shares
outstanding................... 8,677 6,338 6,170 12,364 8,051
AS OF DECEMBER 31, AS OF SEPTEMBER 30,
-------------------------- -------------------
1996 1995 1994 1997 1996
-------- -------- -------- --------- ---------
(UNAUDITED)
BALANCE SHEET DATA:
Real estate, net............... $269,585 $143,733 $151,039 $ 352,892 $ 280,039
Total assets................... 281,455 157,955 154,860 376,786 289,219
Total debt..................... 129,078 71,562 68,229 181,886 138,665
Total stockholders' equity..... 145,326 82,900 82,176 185,919 143,387
--------
(1) EastGroup defines FFO, consistent with NAREIT's definition, as net income
(loss) (computed in accordance with GAAP), excluding gains (or losses)
from debt restructuring and sales of property, plus real estate related
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. EastGroup believes FFO is helpful to
investors as a measure of the performance of an equity REIT because, along
with cash flows from operating activities, financing activities and
investing activities, it provides investors with an understanding of the
ability of EastGroup to incur and service debt and make capital
expenditures. EastGroup computes FFO in accordance with standards
established by EastGroup, which may differ from the methodology for
calculating FFO utilized by other equity REITs, and, accordingly, may not
be comparable to such other REITs. Further, FFO does not represent amounts
available for management's discretionary use because of needed capital
replacement or expansion, debt service obligations, or other commitments
and uncertainties. FFO should not be considered as an alternative to net
income (determined in accordance with GAAP) as an indication of
EastGroup's financial performance or to cash flows from operating
activities (determined in accordance with GAAP) as a measure of
EastGroup's liquidity, nor is it indicative of funds available to fund
EastGroup's cash needs, including its ability to make distributions.
The name, citizenship, business address, present principal occupation or
employment and five year employment history of each of the directors and
executive officers of EastGroup and the Purchaser are set forth in Annex I and
Xxxxx XX hereto, respectively.
EastGroup beneficially owns 1,469,556 Preferred Shares. Except as set forth
on Annex III, none of EastGroup, the Purchaser or, to the best of their
knowledge, any of the persons listed on Annex I or Annex II hereto, or any
associate or majority-owned subsidiary of EastGroup, the Purchaser or any of
the persons so listed, owns or has the right to acquire any Shares or has
effected any transaction in the Shares during the past 60 days.
Except as set forth in this Offer to Purchase, none of EastGroup, the
Purchaser or, to the best of their knowledge, any of the persons listed in
Annex I or Annex II hereto, (i) has any contract, arrangement,
14
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the
voting of any securities of the Company, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss, or
the giving or withholding of proxies; (ii) has engaged in contacts,
negotiations or transactions with the Company or its affiliates concerning a
merger, consolidation, acquisition, tender offer or other acquisition of
securities, election of trustees or directors or a sale or other transfer of a
material amount of assets; or (iii) has had any other transaction with the
Company or any of its executive officers, trustees or affiliates that would
require disclosure under the rules and regulations of the Commission
applicable to the Offer.
10. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by
EastGroup and the Purchaser to purchase all Shares that may be tendered
pursuant to the Offer, and to pay related fees and expenses, is estimated to
be approximately $54.3 million. As of the date hereof, EastGroup has used
approximately $13.9 million (including brokerage commissions) to purchase the
Preferred Shares owned by it. The source of those funds was EastGroup's
working capital, which includes the credit facilities described in the next
paragraph.
The Purchaser will obtain all such funds from EastGroup or its affiliates.
EastGroup has sufficient financial resources to satisfy its and the
Purchaser's obligations under the Offer and the Merger Agreement. This Offer
and the Merger are not conditioned upon any financing arrangements. EastGroup
intends to finance the transactions using its $65.0 million acquisition
facility (the "Acquisition Facility") and its $35.0 million working capital
facility (the "Working Capital Facility"), both with Deposit Guaranty National
Bank, Jackson, Mississippi. Through March 31, 1998, the maximum principal
amount of the Acquisition Facility is $65.0 million and then will be $50.0
million from April 1, 1998 through September 30, 2000. Through March 31, 1998,
the first $48.75 million advanced under the Acquisition Facility will bear
interest at LIBOR plus 1.50% and any advances in excess of $48.75 million will
bear interest at LIBOR plus 1.75%. Effective April 1, 1998, all advances under
the Acquisition Facility will bear interest at LIBOR plus 1.50%. Through March
31, 1998, the maximum principal amount of the Working Capital Facility is
$35.0 million and then will be $25.0 million from April 1, 1998 through
September 30, 1998. Through March 31, 1998, the first $26.25 million advanced
under the Working Capital Facility will bear interest at LIBOR plus 1.50% and
any advances in excess of $26.25 million will bear interest at LIBOR plus
1.75%. Effective April 1, 1998, all advances under the Working Capital
Facility will bear interest at LIBOR plus 1.50%. The Working Capital Facility
may be utilized by the Company for general working capital purposes, including
the acquisition of additional properties. Nine of EastGroup's properties, the
stock of one of EastGroup's wholly-owned subsidiaries and EastGroup's equity
interest in two limited partnerships secure EastGroup's revolving credit
facilities. As of February 16, 1998, EastGroup had borrowed a total of
approximately $41.0 million under the revolving credit facilities described
above.
The Company is presently negotiating to increase the amount available under
its revolving credit facilities, reduce the interest rates on such facilities
and extend the maturity dates thereof; however, no such increase in
availability, reduction in interest rates or extension of maturity will be
necessary to finance the Offer. As of the date hereof, the Company has made no
other plans with respect to the repayment or refinancing of the debt incurred
in connection with the Offer.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER.
In August 1995, the Chairman of the Board of EastGroup received and signed
on behalf of EastGroup a confidentiality agreement which included provisions
restricting EastGroup's ability for a period of two years to acquire
securities of the Company, make or participate in the solicitation of proxies
with respect to the Company, make any offer or proposal with respect to the
Company's securities or join with others to accomplish any of the above
objectives (the "Standstill Agreement"). At that time, the Company had
retained an investment banking firm to advise the Company with respect to its
strategic alternatives and the Company was soliciting indications of interest
regarding a possible business combination, acquisition or other similar
transaction. After EastGroup signed the Standstill Agreement, EastGroup was
provided with certain information with respect to the Company, its properties
and its financial performance and prospects.
15
In connection with the process in which the Company was engaged in 1995 and
1996, EastGroup conducted additional due diligence with respect to the Company
and made a series of three preliminary proposals to merge with the Company. In
early 1996, the Company's Board of Trustees determined that a business
combination transaction was not in the best interests of the Company's
shareholders at that time and the process in which EastGroup was participating
was terminated.
Despite the termination of this process, EastGroup remained interested in
entering into a business combination transaction with the Company.
Representatives of EastGroup from time to time contacted members of the Board
of Trustees of the Company to discuss the possibility of such a business
combination. Representatives of EastGroup attended the Company's annual
meeting of shareholders in 1997. As noted above, however, EastGroup's ability
to take any actions with respect to the Company were limited by the Standstill
Agreement.
In April 1997, EastGroup became aware that an individual named Xxxx Xxxxxxxx
had entered into an agreement to purchase 1,183,556 Preferred Shares from the
Massachusetts Bay Transportation Authority Retirement Fund ("MBTA") for $7.675
per share. After a review of this agreement, EastGroup believed that the
agreement could be terminated by MBTA if MBTA received an offer for its
Preferred Shares that was higher than the price to be paid under the
agreement. Representatives of EastGroup contacted representatives of the
Company to request that EastGroup be released from the Standstill Agreement.
After discussions between representatives of EastGroup and representatives of
the Company and counsel to EastGroup and counsel to the Company, EastGroup was
released from the Standstill Agreement for the sole purpose of contacting and
negotiating with MBTA regarding the purchase of the Preferred Shares held by
MBTA. EastGroup made proposals to MBTA pursuant to which EastGroup would
purchase the Preferred Shares held by MBTA, in one instance for $7.86 per
share and in one instance for $8.02 per share, but was not able to reach an
agreement with MBTA with respect thereto. The agreement between MBTA and Xx.
Xxxxxxxx was amended and assigned to Turkey Vulture Fund XIII, Ltd. ("Turkey
Vulture") which eventually purchased the MBTA Preferred Shares for $8.00 per
share on June 3, 1997.
EastGroup continued to request that it be released completely from the
Standstill Agreement. On May 30, 1997, EastGroup was released from the
Standstill Agreement for the sole purpose of contacting and negotiating with
Massachusetts State Teachers' and Employees' Retirement Systems Trust
("Masters") regarding the purchase of the 1,560,754 Preferred Shares owned by
Masters. Similarly, on June 2, 1997 EastGroup was released from the Standstill
Agreement for the purpose of contacting and negotiating with the Chicago Truck
Drivers, Helpers & Warehouse Workers Union (Independent) Pension Fund
("Chicago") regarding the purchase of the 521,164 Preferred Shares owned by
Chicago. EastGroup had discussions with both Masters and Chicago with respect
to their Preferred Shares. EastGroup also made proposals to Masters to
purchase its Preferred Shares for $8.02 per share and $8.55 per share but was
unable to reach agreement with Masters with respect to the purchase thereof.
After Turkey Vulture's purchase of shares from the MBTA, a group of
individuals, including Turkey Vulture's manager, began a proxy solicitation to
elect five of their nominees to the Company's Board of Trustees. In connection
with the vote at the Company's annual meeting, the Company invoked the excess
share provisions of Section 6.5 of the Company's Bylaws (which prohibit any
person, from owning, directly or indirectly, more than 9.8% of the outstanding
Shares) to deny Turkey Vulture voting rights with respect to Preferred Shares
owned in excess of the 9.8% limit. As a result of the limitation on voting
rights, only one of their nominees was elected to the Board of Trustees.
Litigation ensued between the Company and Turkey Vulture with respect to the
Company's limitation on Turkey Vulture's voting, dividend and other rights
with respect to the Preferred Shares Turkey Vulture owned in excess of the
9.8% limit. The Company had previously informed EastGroup that it was not
presently aware of any basis to argue that EastGroup's ownership of more than
9.8% of the Shares would result in a violation of the Company's Bylaws, and
that the Company had no present intention of asserting such a position with
respect to
16
EastGroup. Counsel to EastGroup requested that EastGroup be released from the
Standstill Agreement for purposes of inquiring whether Turkey Vulture would be
interested in selling its Shares and counsel to the Company informed counsel
to EastGroup that the Company would have no objection to EastGroup making such
inquiry. A representative of EastGroup made an inquiry to a representative of
Turkey Vulture to determine whether Turkey Vulture might be interested in
selling the Preferred Shares owned by it to EastGroup. A meeting between a
representative of EastGroup and a representative of Turkey Vulture took place
in August 1997 and an agreement in principle was reached pursuant to which
Turkey Vulture and certain affiliated parties would sell their Preferred
Shares to EastGroup for $9.50 per share. These transactions were closed on
August 27, 1997, and in a separate transaction the litigation between the
Company and Turkey Vulture was settled.
In its statement on Schedule 13D filed on August 27, 1997 with respect to
the purchase of the Preferred Shares previously held by Turkey Vulture (the
"Schedule 13D"), EastGroup indicated that it anticipated proposing to the
Board of Trustees of the Company a negotiated business combination transaction
between the Company and EastGroup in which EastGroup would be the surviving
entity. EastGroup also indicated that it might pursue a tender offer or
similar transaction involving the Company, but that it had not yet formulated
a definitive proposal with respect to any possible business combination or
offer. Shortly after the filing of the Schedule 13D, representatives of
EastGroup contacted representatives of the Company and counsel to EastGroup
contacted counsel to the Company to inform them that EastGroup was in the
process of making a number of significant real estate acquisitions and
planning financing for such acquisitions and that it would be several weeks
before it would be possible for EastGroup to focus on its plans with respect
to the Company.
On November 14, 1997, the Company issued a press release indicating that it
had implemented a Shareholder Rights Plan and that it had retained Prudential
to advise it with respect to its strategic alternatives.
On December 2, 1997 representatives of EastGroup met with representatives of
the Company. At that meeting the EastGroup representatives reviewed the
history of EastGroup's dealing with the issuer, including EastGroup's
participation in the process instituted by the Company in 1995 and early 1996
in which EastGroup made the proposals outlined above. The EastGroup
representatives stated EastGroup's desire to promptly enter into negotiations
with the Company with respect to a business combination transaction between
EastGroup and the Company. The representatives of the Company indicated to
EastGroup that the Company was in the process of evaluating the Company's
strategic alternatives and that the Company had retained Prudential to help
the Company in such evaluation. The EastGroup representatives informed the
Company representatives that EastGroup believed that a merger between
EastGroup and the Company was in the best interest of all parties, and that it
was EastGroup's present intention to oppose and vote its Preferred Shares
against any strategic alternative of the Company that would delay or frustrate
such transaction. Further, in light of EastGroup's position and EastGroup's
significant holdings in the Company, the EastGroup representatives indicated
their view that is was impractical and not necessary for the Company to
explore such strategic alternatives. At the December 2, 1997 meeting (and on
several occasions subsequent thereto), representatives of the Company
requested that EastGroup sign a confidentiality agreement containing a limited
standstill provision with respect to receiving non-public information of the
Company. EastGroup reiterated its desire to promptly enter into negotiations
with the Company with respect to a business combination transaction.
Representatives of the Company at the meeting indicated that they would
discuss EastGroup's proposal with the Board of Trustees of the Company at a
regularly scheduled meeting later in December.
In mid-December, counsel to the Company informed counsel to EastGroup that
the Company would be interested in holding discussions with EastGroup with
respect to a negotiated business combination transaction, but that the Company
would not be in a position to commence such discussions until mid-January.
Counsel to EastGroup indicated that EastGroup would prefer to start such
negotiations at an earlier date, but offered the Company the opportunity to
perform a due diligence investigation with respect to EastGroup prior to the
beginning of discussions with respect to a business combination transaction.
On January 8, 1998 representatives of the Company and Prudential visited
EastGroup's offices in Jackson, Mississippi to perform a preliminary due
17
diligence investigation with respect to EastGroup's business, assets and
prospects. In connection with this investigation, the Company executed a
confidentiality agreement with respect to the receipt of non-public
information from EastGroup.
Representatives of the Company were scheduled to meet with representatives
of EastGroup to discuss a negotiated business combination transaction during
the week of January 12, 1998. It became apparent, however, that the Company,
although willing to hold discussions and negotiations with EastGroup, did not
believe it would be in a position to make a final decision with respect to
such a proposed transaction at that time. Accordingly, the meeting never took
place. The Company again encouraged EastGroup to execute a confidentiality
agreement with a limited standstill provision and to receive the Company's
non-public information so that EastGroup could remove as many contingencies as
possible from any proposal that EastGroup might make with respect to a
business combination transaction with the Company.
EastGroup did not want to execute a confidentiality agreement because of the
limitations it would put on EastGroup's ability to deal with the Company and
EastGroup's investment in Preferred Shares. After careful consideration,
management of EastGroup decided to recommend to EastGroup's Board of Directors
that EastGroup make a proposal to merge with the Company. At a meeting on
January 16, 1998, EastGroup's Board of Directors approved the making of such
an offer. Shortly after the Board of Directors meeting, EastGroup sent the
following letter to the Company (the "Offer to Merge") and disclosed the Offer
to Merge in an amendment to its Schedule 13D:
"[Letterhead of EastGroup]
Meridian Point Realty Trust VIII Co. 000 Xxxxxxxxxx Xxxxxx, Xxxxx 000 Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Re: Meridian Point Realty Trust VIII Co.
Ladies and Gentlemen:
This letter will serve as an offer by EastGroup Properties, Inc.
("EastGroup") to engage in a transaction (the "Merger") in which Meridian
Point Realty Trust VIII Co. ("Meridian VIII") would be merged with and into a
wholly-owned subsidiary of EastGroup ("Sub"). In the Merger, each share of
preferred stock of Meridian VIII (the "Preferred Shares") will be converted
into EastGroup shares with a value of $9.75 and each share of common stock of
Meridian VIII (the "Common Shares") will be converted into EastGroup shares
with a value of $6.75. Meridian VIII shareholders will have the option to
exchange their Preferred Shares or Common Shares for $9.75 and $6.75 in cash,
respectively, provided that the total number of Preferred Shares and Common
Shares surrendered for cash, including shares surrendered pursuant to the
exercise of dissenters' rights, may not exceed 30% of all issued and
outstanding Preferred Shares (excluding Preferred Shares currently held by
EastGroup) and 30% of all issued and outstanding Common Shares.
Our offer is not subject to any financing or due diligence contingencies and
is subject only to the preparation and negotiation of a definitive merger
agreement and the approval of such agreement by EastGroup's Board of
Directors. We believe that our offer represents an extremely attractive
opportunity for your shareholders and intend to complete the Merger with a
minimum of delay. We are prepared to begin immediately negotiating a
definitive agreement containing mutually agreeable terms and conditions for
the Merger on the financial terms specified above.
Simultaneously with the delivery of this letter, we are filing an amendment
to our statement on Schedule 13D. We will advise the New York Stock Exchange
and the American Stock Exchange of this proposal prior to the opening of
business on January 20, 1998.
18
Our objective is to work with you in a professional and constructive manner
to complete this transaction so that its full potential can be realized and
the best interests of all of your shareholders can be served. We encourage you
to consider our offer as a basis for, and not an obstacle to, meaningful
discussions between us, and we invite you to confirm your willingness to enter
discussions promptly for the benefit of your shareholders.
Since this matter is of the utmost importance, we feel compelled to ask for
a response to our proposal from your Board of Trustees no later than 12:00
noon, Central Standard Time on Friday, January 30, 1998, after which time our
proposal will expire unless extended in writing.
We are available to discuss these important matters with you at any time.
This matter has the highest priority for all of us at EastGroup and we look
forward to hearing from you promptly.
Very truly yours,
EastGroup Properties, Inc.
/s/ Xxxxxx X. Speed
Xxxxxx X. Speed
Chairman"
On January 20, 1998, the Company issued a press release in response to the
Offer to Merge that read, in relevant part, as follows:
"Jan. 20, 1998--Meridian Point Realty Trust VIII Co. (AMEX:MPH and MPHPR)
today acknowledged that on January 16, 1998, it had received an Offer to
Merge from EastGroup Properties Inc. In the Merger Offer, each share of
preferred stock of Meridian would be converted into EastGroup shares with a
value of $9.75, and each share of common stock of Meridian VIII would be
converted into EastGroup shares with a value of $6.75. Meridian VIII
shareholders would have the option to exchange their Preferred Shares or
Common Shares for $9.75 and $6.75 in cash, respectively, provided that the
total number of Preferred Shares and Common Shares surrendered for cash,
including shares surrendered pursuant to the exercise of dissenters'
rights, would not exceed 30 percent of all issued and outstanding Preferred
Shares (excluding Preferred Shares currently held by EastGroup) and 30
percent of all issued and outstanding Common Shares. On January 8, 1998,
the Company entered into a Standstill and Confidentiality Agreement with
EastGroup and began the process of reviewing certain financial and other
confidential information regarding EastGroup in order to evaluate any
information necessary to evaluate the EastGroup Offer to Merge.
Furthermore, EastGroup has refused a request from the Company that it
execute a Confidentiality and Standstill Agreement. The Company intends to
review the EastGroup Offer to Merge with its financial advisor, Prudential
Securities Inc., which has previously been retained to assist the Company
in evaluating its strategic options. The Company anticipates providing a
response to the EastGroup Offer to Merge on or before January 30, 1998. In
the meantime, the Company will continue to review all of its strategic
options with the assistance of Prudential Securities Inc."
After the issuance of the press release, conversations occurred between
representatives of EastGroup and representatives of the Company,
representatives of PaineWebber, financial advisor to EastGroup, and
representatives of Prudential, and counsel to EastGroup and counsel to the
Company. Counsel to EastGroup sent counsel to the Company a draft of a
proposed Agreement and Plan of Merger pursuant to which the Offer to Merge
would be effected.
On January 29, 1998, the Company sent the following letter to EastGroup and
the Chief Executive Officer of the Company telephoned the Chairman of
EastGroup to inform EastGroup of the letter's contents:
19
"[Letterhead of the Company]
Xxxxxx X. Xxxxx
Chairman
EASTGROUP PROPERTIES
300 Xxx Xxxxxxx Xxxxx
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
RE: EastGroup Offer to Merge
Dear Mr. Xxxxx:
Thank you for you letter of January 16, 1998 and the Offer to Merge
contained therein. The Board of Directors of Meridian Point Realty Trust VIII
Co. (the "Company") has reviewed the Offer and the proposed Agreement and Plan
of Merger recently forwarded by your attorney. We very much appreciate your
continuing interest in the Company.
The Company is not prepared to accept your offer at this time, but is
willing to meet and discuss the specifics of the offer at your earliest
convenience. In general, we have reason to believe the value of the Company is
in excess of your offer. In addition, the cash component of your offer may be
problematic for the Company's shareholders, particularly in view of the
absence of proposed board representation. In addition, the price protection
mechanisms are inadequate, although they can likely be resolved through
discussion. Finally, there are certain due diligence contingencies in your
proposed Agreement that are not acceptable. In that regard, we believe a
complete due diligence review would allow you to remove those contingencies
from the proposed Agreement.
The Company repeats its request that EastGroup execute a limited
Confidentiality and Standstill Agreement so that you might obtain the benefit
of more complete information regarding the Company, including the relevant
economics of the proposed transaction.
We look forward to meeting with you or your representatives as soon as
possible in order to continue our discussions.
Very truly yours,
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Chief Executive Officer"
The Company also released a press release on January 29, 1998 that read, in
relevant part, as follows:
"Jan. 29, 1998--Meridian Point Realty Trust VIII Co. (AMEX:MPH)
(AMEX:MPHPR) today announced that it is not in a position to accept the
merger offer of EastGroup Properties at this time. As part of the company's
review of its strategic alternatives, the company has received favorable
indications of interest from several other potential investors. As a
result, the company intends to continue to review its strategic
alternatives at this time, including alternatives that may exist with
EastGroup Properties and those with other potential investors."
On January 30, 1998, a representative of PaineWebber had discussions with a
representative of Prudential. During these discussions, the PaineWebber
representative indicated that he believed EastGroup might be willing to
increase the amount of its offer and the cash portion of the consideration to
be paid to the Company's shareholders. The PaineWebber representative gave the
Prudential representative a range of what he thought EastGroup might be
prepared to offer to the Company's shareholders. The Prudential representative
indicated
20
that he believed that if EastGroup could make a proposal in the dollar range
of the proposal outlined by the PaineWebber representative, he thought that
there could be a basis for an agreement.
During the period from January 30, 1998 through February 18, 1998,
discussions continued between and among representatives of EastGroup and
PaineWebber and counsel to EastGroup and representatives of the Company and
Prudential and counsel to the Company. These discussions included the amount
and kind of consideration to be paid to holders of Common Shares and Preferred
Shares, the conditions of a proposed Agreement and Plan of Merger, and whether
EastGroup would execute a confidentiality agreement with respect to the
receipt of non-public information. On February 10, 1998, EastGroup did execute
a limited confidentiality agreement with no standstill provision and was given
access to certain of the Company's non-public information (mostly relating to
the structural and environmental conditions of the Company's properties) on
February 10 and 11, 1998. On February 13, 1998, the EastGroup Board of
Directors met and authorized the management of EastGroup to propose to the
Company a business combination transaction in which EastGroup would pay $8.00
for each Common Share and $10.00 for each Preferred Share in cash. On February
17, 1998, representatives of Prudential contacted representatives of
PaineWebber and indicated that the Company had received a proposal from a
third party pursuant to which holders of Common Shares would receive more than
$8.00 per Common Share. After consideration, EastGroup determined to increase
its proposal so that EastGroup would pay $8.50 for each Common Share. The
Board of Directors of EastGroup approved the Merger Agreement on February 17,
1998 and the Board of Trustees of the Company approved it on February 17,
1998.
Other Transactions Between EastGroup and the Company. In June 1997, in an
arms-length transaction unrelated to the Offer or the Merger, EastGroup
purchased a 67,275 square foot industrial property in Richland, Mississippi
from the Company for $3,050,000. EastGroup became interested in the purchase
of this property from the Company because EastGroup already owned another
industrial property in the same business park.
12. PURPOSE OF THE OFFER; SHORT FORM MERGER; PLANS FOR THE COMPANY;
DISSENTERS' RIGHTS; GOING PRIVATE TRANSACTIONS.
Purpose of the Offer. The purpose of the Offer is for the Purchaser to
acquire control of, and a majority equity interest in, the Company. The
purpose of the Merger is to acquire all outstanding Shares not tendered and
purchased pursuant to the Offer. The acquisition of the entire equity interest
in the Company has been structured as a cash tender offer followed by a merger
in order to provide a prompt and orderly transfer of ownership of the Company
from the public shareholders to EastGroup and to provide shareholders with
cash for all of their Shares.
Under the GBCL and the Company's Charter, the approval of the Board of
Trustees of the Company and the affirmative vote of two-thirds of the total
number of outstanding shares of capital stock of the Company entitled to vote
on a merger are required to approve and adopt the Merger Agreement and the
Merger. The Board of Trustees of the Company has approved the Offer, the
Merger and the Merger Agreement and the transactions contemplated thereby,
and, unless the Merger is consummated pursuant to the short-form merger
provisions under the GBCL described below, the only remaining required
corporate action of the Company is the approval and adoption of the Merger
Agreement and the Merger by the affirmative vote of the holders of two-thirds
of the outstanding Shares. If the Minimum Condition is satisfied, EastGroup
will have sufficient voting power to cause the approval and adoption of the
Merger Agreement and the Merger without the affirmative vote of any other
shareholder.
The Merger Agreement provides that, if approval of the Merger by the
shareholders of the Company is required by law, the Company will, as soon as
possible following payment for Shares in the Offer, duly call and hold a
meeting of shareholders for the purpose of obtaining shareholder approval of
the Merger, and the Company, through its Board of Trustees, will recommend to
shareholders that such approval be given.
Short Form Merger. Under the GBCL, if EastGroup beneficially owns at least
90% of the outstanding Common Shares and 90% of the outstanding Preferred
Shares, the Merger could be effected without the action
21
of any shareholder other than EastGroup. The Merger Agreement provides that if
the Purchaser acquires at least 90% of the outstanding Common Shares and 90%
of the outstanding Preferred Shares, EastGroup, the Purchaser and the Company
will take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
meeting of shareholders of the Company, in accordance with Section 351.447 of
the GBCL. If the Purchaser does not acquire at least 90% of the outstanding
Common Shares and 90% of the outstanding Preferred Shares, a significantly
longer period of time may be required to effect the Merger, because a vote of
the Company's shareholders would be required under the GBCL.
Plans for the Company. EastGroup will integrate the operations of the
Company with the operations of EastGroup after the Merger. The Company's
present trustees and officers will no longer serve in such positions and the
business and assets of the Company will be managed by the officers and
directors of EastGroup. Except as described in this Offer to Purchase, neither
EastGroup nor the Purchaser has any present plans or proposals that would
relate to or result in (i) any extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the Company or any of its
subsidiaries; (ii) a sale or transfer of a material amount of assets of the
Company or any of its subsidiaries; (iii) any change in the Company's Board of
Trustees or management; (iv) any material change in the Company's
capitalization or dividend policy; (v) any other material change in the
Company's corporate structure or business; (vi) a class of securities of the
Company being delisted from a national securities exchange or ceasing to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association; or (vii) a class of equity securities of the
Company becoming eligible for termination of registration pursuant to Section
12(g) of the Exchange Act.
Dissenters' Rights. No dissenters' rights are available in connection with
the Offer. However, if the Merger is consummated, shareholders of the Company
may have certain rights under the GBCL to dissent, and demand appraisal of,
and to obtain payment for the fair value of their Shares. Such rights, if the
statutory procedures were complied with, could lead to a judicial
determination of the fair value of the Shares (excluding any element of value
arising from the accomplishment or expectation of the Merger) to be required
to be paid in cash to such dissenting holders for their Shares. In determining
the fair value of the Shares, a Missouri court would be required to take into
account all relevant factors. Accordingly, such determination could be based
upon considerations other than, or in addition to, the market value of the
Shares, including, among other things, asset value and earning capacity.
Therefore, the value so determined in any appraisal proceeding could be
different from the price being paid in the Offer and the Merger.
Going Private Transactions. The Merger would have to comply with any
applicable Federal law operative at the time. The Commission has adopted Rule
13e-3 under the Exchange Act which is applicable to certain "going private"
transactions and which may under certain circumstances be applicable to the
Merger or another business combination following the purchase of Shares
pursuant to the Offer in which the Purchaser or EastGroup seeks to acquire the
remaining Shares not held by it. The Purchaser believes, however, that Rule
13e-3 will not be applicable to the Merger. If applicable, Rule 13e-3
requires, among other things, that certain financial information concerning
the Company and certain information relating to the fairness of such
transaction and the consideration offered to minority shareholders in such
transaction be filed with the Commission and disclosed to shareholders prior
to the consummation of such transaction.
13. THE MERGER AGREEMENT.
The Merger Agreement. The following summary of certain provisions of the
Merger Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1
referred to in Section 18, is qualified in its entirety by reference to the
text of the Merger Agreement. Capitalized terms used in the following summary
and not otherwise defined in this Offer to Purchase shall have the meanings
set forth in the Merger Agreement.
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, the Purchaser will purchase all Shares
validly tendered pursuant to the Offer. The Merger Agreement provides that,
without the written
22
consent of the Company, the Purchaser will not (i) reduce the number of Common
Shares and Preferred Shares to be purchased in the Offer; (ii) reduce the
Common Share Offer Price or the Preferred Share Offer Price, except as
otherwise provided in the Merger Agreement; (iii) modify or add to the
conditions of the Offer in any manner that the Board of Trustees of the
Company, in the exercise of its fiduciary obligations, determines to be
adverse to the holders of Common Shares or Preferred Shares; (iv) except as
provided in the Merger Agreement, extend the Offer; (v) change the form of
consideration payable in the Offer; or (vi) amend any other term of the Offer
in a manner that the Board of Trustees of the Company, in the exercise of its
fiduciary obligations, determines to be adverse to the holders of Common
Shares and Preferred Shares. The Merger Agreement provides that,
notwithstanding the foregoing, the Purchaser may, without the consent of the
Company, (i) extend the Offer beyond the Expiration Date for a period not to
exceed 20 business days, if at the Expiration Date any of the conditions to
the Purchaser's obligation to accept for payment, and pay for, Common Shares
and Preferred Shares shall not be satisfied or waived, until such time as such
conditions are satisfied or waived; or (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Commission
or the staff thereof applicable to the Offer.
The Merger. The Merger Agreement provides that, following the consummation
of the Offer and subject to the terms and conditions thereof, at the Effective
Time the Purchaser shall be merged with and into the Company and, as a result
of the Merger, the separate corporate existence of the Purchaser shall cease,
and the Company shall continue as the Surviving Corporation and a wholly-owned
subsidiary of EastGroup.
The respective obligations of EastGroup and the Purchaser, on the one hand,
and the Company, on the other hand, to effect the Merger are subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions: (i) the Merger Agreement shall have been approved by the requisite
vote of the shareholders, if required by applicable law, in order to
consummate the Merger; (ii) no temporary restraining order, preliminary or
permanent injunction or other order by any United States federal or state
court or governmental body which prohibits the consummation of the
transactions contemplated by the Merger Agreement shall have been issued;
provided, however, that the Purchaser, EastGroup and the Company shall have
used all reasonable efforts to have such order or injunction vacated or
reversed; and (iii) if applicable, the waiting period under the HSR Act shall
have expired or shall have been terminated.
At the Effective Time of the Merger, each Preferred Share issued and
outstanding (other than Dissenting Shares representing Preferred Shares and
those Preferred Shares held by the Company, any subsidiary of the Company,
EastGroup or the Purchaser which are to be canceled pursuant to the Merger
Agreement) shall be converted into the right to receive in cash, without
interest, the price per Preferred Share paid pursuant to the Offer (the
"Preferred Merger Price").
At the Effective Time of the Merger, each Common Share issued and
outstanding (other than Dissenting Shares representing Common Shares and those
Common Shares held by the Company, any subsidiary of the Company, EastGroup or
the Purchaser which are to be canceled pursuant to the Merger Agreement) shall
be converted into the right to receive in cash, without interest, the price
per Common Share paid pursuant to the Offer (the "Common Merger Price").
Also as of the Effective Time, each issued and outstanding share of the
capital stock of the Purchaser shall be converted into and become one fully
paid and nonassessable common share, $0.001 par value per share, of the
Surviving Corporation.
The Company's Board of Trustees. The Merger Agreement provides that promptly
upon the purchase by the Purchaser or EastGroup of Preferred Shares and Common
Shares pursuant to the Offer, EastGroup shall be entitled to designate three
persons to serve as trustees on the Company's Board of Trustees, subject to
compliance with Section 14(f) of the Exchange Act, if applicable. At such
time, if requested by EastGroup, the
23
Company will also cause each committee of the Board of Trustees of the Company
to include persons designated by EastGroup constituting the same percentage of
each such committee as EastGroup's designees are of the Board of Trustees of
the Company. The Company shall, upon request by EastGroup, promptly exercise
reasonable best efforts to secure the resignations of such number of trustees
as is necessary to enable EastGroup's designees to be elected to the Board of
Trustees of the Company in accordance with the terms of the Merger Agreement
and to cause EastGroup's designees so to be elected. In no event shall the
Company expand the Board of Trustees so that the total number of trustees
shall exceed seven persons. The Company shall promptly take all action
necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under the Merger
Agreement and shall include in the Schedule 14D-9 mailed to shareholders
promptly after the commencement of the Offer (or in an amendment thereof or
the information statement to be filed by the Company in connection with the
Offer pursuant to Rule 14f-1 promulgated under the Exchange Act (the
"Information Statement") if EastGroup has not theretofore designated trustees)
such information with respect to the Company and its officers and trustees as
is required under Section 14(f) and Rule 14f-1 in order to fulfill its
obligations under the Merger Agreement.
Shareholders' Meeting. Pursuant to the Merger Agreement, the Company will,
at EastGroup's request, duly call, give notice of, convene and hold a meeting
of its shareholders if such meeting is required by applicable law for the
purpose of approving the Merger Agreement and the transactions contemplated
thereby. The Merger Agreement provides that the Company will, at EastGroup's
request, prepare and file with the Commission and, when cleared by the
Commission, will mail to shareholders, a proxy statement with respect to the
Company's shareholders' meeting to vote upon the Merger Agreement and Merger
transactions, or the Information Statement, as appropriate, satisfying all
requirements of the Exchange Act.
If the Purchaser acquires at least 3,186,354 Shares as a result of the
Offer, EastGroup will beneficially own two-thirds of the outstanding Shares.
In such event, EastGroup would have sufficient voting power to approve the
Merger, even if no other shareholder votes in favor of the Merger.
The Merger Agreement provides that in the event that the Purchaser acquires
at least 90% of the Common Shares outstanding and 90% of the Preferred Shares
outstanding, pursuant to the Offer or otherwise, EastGroup, the Purchaser and
the Company will take all necessary and appropriate action to cause the Merger
to become effective as soon as practicable after such acquisition, without a
meeting of shareholders of the Company, in accordance with the GBCL. For a
discussion of certain terms of the Merger Agreement that increase the
likelihood that the Purchaser could acquire at least 90% of the outstanding
Common Shares and 90% of the outstanding Preferred Shares, see the discussion
of the Contingent Options in the immediately following paragraph.
Contingent Options of the Purchaser. Pursuant to the Merger Agreement, the
Company has granted the Purchaser irrevocable options (the "Contingent
Options") to (i) purchase for a price of $8.50 per Common Share (the "Per
Common Share Price") in cash a number of Common Shares (the "Optioned Common
Shares") equal to the Applicable Common Share Amount (as defined below) and
(ii) purchase for a price of $10.00 per Preferred Share (the "Per Preferred
Share Price") in cash a number of Preferred Shares (the "Optioned Preferred
Shares") equal to the Applicable Preferred Share Amount (as defined below).
The "Applicable Common Share Amount" is the number of Common Shares which,
when added to the number of Common Shares owned by EastGroup and the Purchaser
immediately prior to the exercise of the option, would result in the Purchaser
owning immediately after the exercise of the option 90% of the then
outstanding Common Shares. The "Applicable Preferred Share Amount" is the
number of Preferred Shares owned by EastGroup and the Purchaser which, when
added to the number of Preferred Shares owned by EastGroup and the Purchaser
immediately prior to the exercise of the option, would result in the Purchaser
owning immediately after the exercise of the option 90% of the then
outstanding Preferred Shares. The Purchaser may exercise the Contingent
Options only if at the time of exercise, it (i) shall have accepted Common
Shares or Preferred Shares, as appropriate, for payment pursuant to the Offer;
and (ii) the Minimum Condition has been satisfied.
24
Interim Operations; Covenants. Prior to the Effective Time, except as
specifically permitted by the Merger Agreement, unless the other party has
consented in writing thereto, EastGroup and the Company (i) shall use their
reasonable best efforts, and shall cause each of their respective subsidiaries
to use their reasonable best efforts, to preserve intact their business
organizations and goodwill and keep available the services of their respective
officers and employees; (ii) shall confer on a regular basis with one or more
representatives of the other to report operational matters of materiality and,
subject to the Merger Agreement, any proposals to engage in material
transactions; (iii) shall promptly notify the other of any material emergency
or other material change in the condition (financial or otherwise), business,
properties, assets, liabilities, prospects or in the normal course of their
businesses or in the operation of their properties, any material governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated), or the breach in any material respect of any
representation or warranty contained herein; and (iv) shall promptly deliver
to the other true and correct copies of any report, statement or schedule
filed with the Commission subsequent to the date of the Merger Agreement.
Pursuant to the Merger Agreement, the Company has agreed that, unless agreed
to by EastGroup, after the date of the Merger Agreement and prior to the
Effective Time, the Company (i) shall conduct, and it shall cause the Company
subsidiaries to conduct, its or their operations according to their usual,
regular and ordinary course in substantially the same manner as conducted
prior to the date of the Merger Agreement; (ii) shall not, and shall cause
each Company subsidiary not to, acquire, enter into an option to acquire or
exercise an option or contract to acquire additional real property, incur
additional indebtedness, encumber assets or commence construction of, or enter
into any agreement or commitment to develop or construct, any other type of
real estate projects except for the transactions contemplated in the
Disclosure Schedule; (iii) shall not amend the Charter or the Bylaws of the
Company, and shall cause each Company subsidiary not to amend its charter,
bylaws, joint venture documents, partnership agreements or equivalent
documents except as contemplated by the Merger Agreement; (iv) shall not (a)
issue any shares of its capital stock, effect any stock split, reverse stock
split, stock dividend, recapitalization or other similar transaction, (b)
grant, confer or award any option, warrant, conversion right or other right
not existing on the date hereof to acquire any shares of its capital stock,
(c) increase any compensation or enter into or amend any employment agreement
with any of its present or future officers or trustees, or (d) adopt any new
employee benefit plan (including any stock option, stock benefit or stock
purchase plan) or amend any existing employee benefit plan in any material
respect, except for changes which are less favorable to participants in such
plans; (v) shall not, and shall not permit any of the Company subsidiaries to,
except in accordance with and as permitted under the Merger Agreement, sell,
lease or otherwise dispose of (A) any Company Properties or any portion
thereof or any of the capital stock of or partnership or other interests in
any of the Company subsidiaries or (B) except in the ordinary course of
business, any of its other assets which are material, individually or in the
aggregate; (vi) shall not, and shall not permit any of the Company
subsidiaries to, make any loans, advances or capital contributions to, or
investments in, any other person; (vii) shall not, and shall not permit any of
the Company subsidiaries to, pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by,
the most recent consolidated financial statements (or the notes thereto) of
the Company included in the Company Public Reports or incurred in the ordinary
course of business consistent with past practice; (viii) shall not, and shall
not permit any of the Company subsidiaries to, enter into any material
commitment, contractual obligation, borrowing, capital expenditure or
transaction (each, a "Commitment") which may result in total payments or
liability by or to it in excess of $50,000 other than Commitments for expenses
of attorneys, accountants and investment bankers incurred in connection with
the Merger; (ix) shall not, and shall not permit any of the Company
subsidiaries to, enter into any Commitment with any officer, trustee,
director, consultant or affiliate of the Company or any of the Company
subsidiaries; and (x) shall use its best efforts to assist the Purchaser in
making contact with the financial institutions that are lenders to the Company
for the purpose of obtaining any necessary consents.
In addition, the Company shall not, without the written consent of
EastGroup, which consent may not be unreasonably withheld, (i) effect any
material change in any lease or occupancy agreement currently in effect
25
which affects the Company Properties (together with such additional leases
approved or permitted pursuant to the Merger Agreement, the "Leases"); (ii)
renew or extend the term of any Lease, unless the same is an extension or
expansion permitted pursuant to the terms of an existing Lease; or (iii) enter
into any new Lease or cancel or terminate any Lease. Notwithstanding anything
in the Merger Agreement to the contrary, the Company may cancel or terminate
any Lease or commence collection, unlawful detainer or other remedial action
against any tenant without EastGroup's consent upon the occurrence of a
default by the tenant under said Lease.
No Solicitation. The Merger Agreement provides that unless and until the
Merger Agreement shall have been terminated in accordance with its terms, the
Company agrees and covenants that (i) neither it nor any Company subsidiary
shall, and each of them shall direct and use its best efforts to cause its
respective officers, trustees, directors, employees, agents and
representatives (including, without limitation, any investment banker,
attorney or accountant retained by it or any of the Company subsidiaries) not
to, directly or indirectly, initiate, solicit or knowingly encourage any
inquiries or the making or implementation of any proposal or offer (including,
without limitation, any proposal or offer to its shareholders) with respect to
a merger, acquisition, tender offer, exchange offer, consolidation or similar
transaction involving, or any purchase, sale, lease, issuance or other
disposition (except as permitted under the Merger Agreement) of (a) 10% or
more of the assets; (b) any equity securities (or options, rights or warrants
to purchase, or securities convertible into, such securities) representing 10%
or more of the voting power; (c) partnership interests; or (d) any transaction
in which any person shall acquire beneficial ownership (as such term is
defined in Rule 13d-3 under the Exchange Act), or the right to acquire
beneficial ownership, of 10% or more of the equity securities, of the Company
or any Company subsidiary, other than the transactions contemplated by the
Merger Agreement (any such proposal or offer being hereinafter referred to as
an "Acquisition Proposal") or engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions with,
any person relating to an Acquisition Proposal, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal; (ii) the
Company will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing and will take the necessary steps to
inform the individuals or entities referred to above of the obligations
undertaken in the Merger Agreement; and (iii) the Company will notify
EastGroup immediately if any such inquiries or proposals are received by, any
such information is requested from, or any such negotiations or discussions
are sought to be initiated or continued with, the Company and such
notification will include the specific details with respect to any such
inquiries, proposals, requests, negotiations or discussions.
Notwithstanding anything set forth in the Merger Agreement to the contrary
(i) the Board of Trustees of the Company may furnish information to or enter
into discussions or negotiations with any person or entity that makes an
unsolicited bona fide Acquisition Proposal, if, and only to the extent that,
the Board of Trustees of the Company, after consultation with and based upon
the advice of Xxxxxx Xxxxxx & Xxxxxxxxx, LLP or another nationally recognized
law firm selected by the Board of Trustees of the Company, determines in good
faith that such action is required for the Board of Trustees to comply with
its fiduciary duties to shareholders under applicable law, provided that prior
to furnishing such information to, or entering into discussions or
negotiations with, such person or entity, the Company provides written notice
to EastGroup to the effect that it is furnishing information to, or entering
into discussions or negotiations with, such person or entity, and the Company
keeps EastGroup regularly informed of the status of any such discussions or
negotiations; and (ii) the Board of Trustees of the Company may, to the extent
applicable, comply with Rules 14d-9 and 14e-2 promulgated under the Exchange
Act with regard to an Acquisition Proposal.
Indemnification and Insurance. The Merger Agreement provides that in the
event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, including, without
limitation, any such claim, action, suit, proceeding or investigation in which
any person who is now, or has been at any time prior to the date hereof, or
who becomes prior to the Effective Time, a director, trustee, officer,
employee, fiduciary or agent of the Company or any of its subsidiaries (the
"Indemnified Parties") is, or is threatened to be, made a party based in whole
or in part on, or arising in whole or in part out of, or pertaining
26
to (i) the fact that he, she or it is or was a director, trustee, officer,
employee or agent of the Company or any of its subsidiaries, or is or was
serving at the request of the Company or any of its subsidiaries as a
director, trustee, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise; or (ii) the Merger
Agreement or any of the transactions contemplated thereby, whether in any case
asserted or arising before or after the Effective Time, the parties to the
Merger Agreement agreed to cooperate and use their reasonable best efforts to
defend against and respond thereto. The Company shall indemnify and hold
harmless, and after the Effective Time EastGroup shall indemnify and hold
harmless, as and to the full extent permitted by applicable law, each
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including attorneys' fees and expenses), judgments, fines and
amounts paid in settlement in connection with any such threatened or actual
claim, action, suit, proceeding or investigation, and in the event of any such
threatened or actual claim, action, suit, proceeding or investigation (whether
asserted or arising before or after the Effective Time), (i) the Company, and
EastGroup after the Effective Time, shall promptly pay expenses in advance of
the final disposition of any claim, suit, proceeding or investigation to each
Indemnified Party to the full extent permitted by law; (ii) the Indemnified
Parties may retain counsel satisfactory to them, and the Company, and
EastGroup after the Effective Time, shall pay all fees and expenses of such
counsel for the Indemnified Parties within thirty days after statements
therefor are received; and (iii) the Company and EastGroup will use their
respective reasonable best efforts to assist in the vigorous defense of any
such matter; provided, that neither the Company nor EastGroup shall be liable
for any settlement effected without its prior written consent (which consent
shall not be unreasonably withheld); and provided further that EastGroup shall
have no obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination
shall have become final and non-appealable, that indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. Any Indemnified Party wishing to claim indemnification under
the Merger Agreement, upon learning of any such claim, action, suit,
proceeding or investigation, shall notify the Company and, after the Effective
Time, EastGroup, thereof, provided that the failure to so notify shall not
affect the obligations of the Company or EastGroup except to the extent such
failure to notify materially prejudices such party.
EastGroup agreed that all rights to indemnification existing in favor, and
all limitations on the personal liability, of the Indemnified Parties provided
for in the Company's Charter or the Company's Bylaws or the charter or bylaws
or similar organizational documents of any of its subsidiaries as in effect as
of the date of the Merger Agreement with respect to matters occurring prior to
the Effective Time shall survive the Merger and shall continue in full force
and effect for a period of not less than three years from the Effective Time;
provided, however, that all rights to indemnification in respect of any claim
(a "Claim") asserted or made within such period shall continue until the
disposition of such Claim. At or prior to the Effective Time, EastGroup shall
purchase directors' and officers' liability insurance coverage for the
Company's trustees and officers in a form acceptable to the Company which
shall provide such trustees and officers with $10,000,000 of aggregate
coverage for three years following the Effective Time and which shall have a
retention of no more than $250,000. EastGroup may satisfy these obligations
under the Merger Agreement by maintaining in force the Company's present
directors' and officers' liability insurance coverage.
Representations and Warranties. Pursuant to the Merger Agreement, the
Company has made representations and warranties to EastGroup and the Purchaser
with respect to, among other things, its organization, capitalization,
authority relative to the Merger, financial statements, public filings,
conduct of business, employee benefit plans, employment matters, compliance
with laws, tax matters, litigation, environmental matters, material contracts,
brokers' fees and other matters.
Termination; Fees. The Merger Agreement provides that it may be terminated
at any time prior to the Effective Time, whether before or after approval of
the shareholders of the Company:
(i) by mutual consent of the Board of Directors of EastGroup and the
Board of Trustees of the Company;
(ii) by either EastGroup or the Company if the Merger shall not have been
consummated on or before August 31, 1998 (provided the terminating party is
not otherwise in material breach of its representations, warranties or
obligations under the Merger Agreement);
27
(iii) by the Company if any of the conditions precedent specified in the
Merger Agreement have not been met or waived by the Company at such time as
such condition is no longer capable of satisfaction as long as the Company
is not in breach of the Merger Agreement;
(iv) by EastGroup or the Purchaser if (a) any of the conditions precedent
specified in the Merger Agreement have not been met or waived by EastGroup
at such time as such condition is no longer capable of satisfaction or (b)
there shall not have been a sufficient number of Common Shares and
Preferred Shares tendered pursuant to the Offer in order to satisfy the
Minimum Condition on or before April 30, 1998, as long as EastGroup is not
in breach of the Merger Agreement;
(v) by EastGroup or the Purchaser if either EastGroup or the Purchaser is
entitled to terminate the Offer as a result of the occurrence of (a) the
Board of Trustees of the Company or any committee thereof shall have
withdrawn or modified in a manner adverse to EastGroup or the Purchaser its
approval or recommendation of the Offer, the Merger or the Merger
Agreement, or approved or recommended any takeover proposal or (b) the
Company shall have entered into any agreement with respect to any
Acquisition Proposal in accordance with the Merger Agreement;
(vi) by the Company, if the Board of Trustees of the Company recommends
to the Company's shareholders approval or acceptance of an Acquisition
Proposal in accordance with the Merger Agreement; and
(vii) by the Company, if either EastGroup or the Purchaser is in material
breach of its obligations under the Merger Agreement and such material
breach shall not have been cured by EastGroup or the Purchaser within five
days after EastGroup or the Purchaser receives notice thereof.
If (A) EastGroup terminates the Merger Agreement pursuant to section (v)
above, or pursuant to (ii) above as a result of a willful breach by the
Company; or
(B) the Company terminates the Merger Agreement pursuant to section (vi)
above; or
(C) during the pendency of the Offer a third party announces or proposes an
Acquisition Proposal and EastGroup terminates the Merger Agreement under
(iv)(b) above and the Company thereafter consummates or enters into an
agreement to consummate an Acquisition Proposal (with such third party or
otherwise) within the one year period after such termination of the Merger
Agreement;
then the Company shall pay to EastGroup an amount (the "Termination Amount")
in cash equal to the sum of (i) $2,500,000, plus (ii) EastGroup's reasonable
out-of-pocket costs and expenses in connection with the Merger Agreement and
the transactions contemplated hereby, evidenced by documentation reasonably
acceptable to the Company, in accordance with the provisions of the Merger
Agreement.
In the event that (i) EastGroup or the Purchaser are in material breach of
the Merger Agreement and the Offer or the Merger are not consummated; or (ii)
the Company terminates the Merger Agreement under (vii) above, EastGroup shall
pay to the Company an amount in cash equal to $2,500,000 (the "Damage
Amount"). The parties to the Merger Agreement agreed that in the event
EastGroup or the Purchaser breaches the Merger Agreement, actual damages would
be difficult to determine and that the Damage Amount is a liquidated damage
payment in lieu of such actual damages. Payment of the Damage Amount shall be
the Company's sole and exclusive remedy for any material breach of the Merger
Agreement by EastGroup or the Purchaser; provided, however, that the Company
may elect to seek the remedies described in the next paragraph in which case
the Company's sole and exclusive remedy for any material breach of the Merger
Agreement will be as described below and the Company will waive any and all
rights to collection of the Damage Amount.
The parties to the Merger Agreement agreed that irreparable damage could
occur to the Company in the event that any of the provisions of the Merger
Agreement were not performed in accordance with their specific terms or were
otherwise breached. The parties therefore agreed that the Company shall be
entitled to an injunction or injunctions to prevent breaches of the Merger
Agreement and to enforce specifically the terms and provisions of the Merger
Agreement in any court of the United States or any state having jurisdiction;
provided,
28
however, that in the event the Company elects to collect or attempt to collect
the Damage Amount from EastGroup or the Purchaser, payment of the Damage
Amount shall be the Company's sole and exclusive remedy for any material
breach of the Merger Agreement by EastGroup or the Purchaser.
Funding. EastGroup has agreed, subject to the terms and conditions of the
Offer, to provide or cause to be provided to the Purchaser on a timely basis
the funds necessary to accept for payment, and pay for, Common Shares and
Preferred Shares that the Purchaser becomes obligated to accept for payment,
and pay for, pursuant to the Offer.
14. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement provides that without
the prior written consent of EastGroup, which consent may be withheld for any
reason, between the date of the Merger Agreement and the Effective Time, the
Company shall not declare, set aside or pay any dividends or distributions
whether in cash or property. Notwithstanding anything to the contrary set
forth in the Merger Agreement, nothing in the Merger Agreement shall prohibit
the Company or any Company subsidiary from taking any action at any time or
from time to time that in the reasonable judgment of the Company is necessary
for the Company to maintain its qualification as a REIT within the meaning of
Sections 856-860 of the Code for any period or portion thereof ending on or
prior to the Effective Time including making dividend or distribution payments
to shareholders; provided, however, that no dividends or distributions
required to avoid the excise tax on undistributed REIT income under Section
4981 of the Code shall be deemed to be necessary for the Company to maintain
its qualification as a REIT within the meaning of Sections 856-860 of the
Code. In addition, the Company may declare, set aside and pay distributions to
its shareholders (i) in an amount not to exceed $0.08 per Common Share and
$0.08 per Preferred Share per calendar quarter which distributions will have
record dates and payment dates substantially similar to such dates in 1997; or
(ii) as required by the Company's Charter. To the extent any dividends or
distributions in excess of $0.08 per Common Share and $0.08 per Preferred
Share per quarter are paid, the Common Share Offer Price, the Preferred Share
Offer Price, the Common Merger Price and the Preferred Merger Price shall be
reduced by the cumulative per share amount of such excess.
Prior to the Effective Time, unless EastGroup has consented to the contrary,
the Company shall take any such actions as may be necessary to maintain the
Company's status as a REIT for any period or portions thereof ending on or
prior to the Effective Time. Following the Effective Time, EastGroup shall use
its best efforts to take any such actions as may be necessary to maintain the
Company's status as a REIT for any period or portion thereof ending on or
prior to the Effective Time.
In addition, prior to the Effective Time, unless EastGroup has consented,
the Company shall not (i) issue any shares of its capital stock, effect any
stock split, reverse stock split, stock dividend, recapitalization or other
similar transaction or (ii) grant, confer or award any option, warrant,
conversion right or other right not existing on the date hereof to acquire any
shares of its capital stock.
In the event of any change in the number of outstanding Common Shares or
Preferred Shares by reason of any stock dividend, stock split,
recapitalization, combination, exchange of shares, merger, consolidation,
reorganization or the like or any other change in the corporate or capital
structure of the Company that would have the effect of diluting EastGroup's
rights hereunder, the number of Optioned Common Shares or the number of
Optioned Preferred Shares and the Per Common Share Price or the Per Preferred
Share Price, respectively, shall be adjusted appropriately so as to restore
EastGroup to its rights hereunder with respect to such option; provided,
however, that nothing in this paragraph shall be construed as permitting the
Company to take any action or enter into any transaction prohibited by the
Merger Agreement.
15. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other term of the
Offer or the Merger Agreement, the Purchaser shall not be required to accept
for payment or, subject to any applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act (relating to the
Purchaser's obligation to pay for or return tendered Common Shares or
Preferred Shares after the termination or withdrawal of the Offer), to pay for
any Common Shares or Preferred Shares tendered pursuant to the Offer unless,
(i) there
29
shall have been validly tendered and not withdrawn prior to the expiration of
the Offer such number of Common Shares and Preferred Shares that, when added
to Preferred Shares beneficially owned by EastGroup on the date of the Merger
Agreement, will constitute two-thirds of the total number of shares of the
capital stock of the Company entitled to vote on a merger under the Company's
Charter and the GBCL (the "Minimum Condition"); and (ii) any waiting period
under the HSR Act applicable to the purchase of Common Shares and Preferred
Shares pursuant to the Offer shall have expired or been terminated (the "HSR
Condition"). Furthermore, notwithstanding any other term of the Offer or the
Merger Agreement, the Purchaser shall not be required to accept for payment
or, subject as aforesaid, to pay for any Common Shares and Preferred Shares
not theretofore accepted for payment or paid for, and may terminate the Offer
if, at any time on or after the date of the Merger Agreement and before the
acceptance of such shares for payment or the payment therefor, any of the
following conditions exist (other than as a result of any action or inaction
of EastGroup or any of its subsidiaries which constitutes a breach of the
Merger Agreement):
(i) there shall be threatened or pending by any governmental entity any
suit, action or proceeding, (a) challenging the acquisition by EastGroup or
the Purchaser of any Common Shares or Preferred Shares under the Offer,
seeking to restrain or prohibit the making or consummation of the Offer or
the Merger or the performance of any of the other transactions contemplated
by the Merger Agreement, or seeking to obtain from the Company, EastGroup
or the Purchaser any damages that are material in relation to the Company
and its subsidiaries taken as a whole; (b) seeking to prohibit or limit the
ownership or operation by the Company, EastGroup or any of their respective
subsidiaries of a material portion of the business or assets of the Company
and its subsidiaries, taken as a whole, or EastGroup and its subsidiaries,
taken as a whole, or to compel the Company or EastGroup to dispose of or
hold separate any material portion of the business or assets of the Company
and its subsidiaries, taken as a whole, or EastGroup and its subsidiaries,
taken as a whole, as a result of the Offer or any of the other transactions
contemplated by the Merger Agreement; (c) seeking to impose material
limitations on the ability of EastGroup or the Purchaser to acquire or
hold, or exercise full rights of ownership of, any Common Shares or
Preferred Shares accepted for payment pursuant to the Offer including,
without limitation, the right to vote such Common Shares and Preferred
Shares on all matters properly presented to the shareholders of the
Company; (d) seeking to prohibit EastGroup or any of its subsidiaries from
effectively controlling in any material respect the business or operations
of the Company and its subsidiaries, taken as a whole; or (e) which
otherwise is reasonably likely to have a material adverse effect on the
business, financial condition or results of operations of the Company and
its subsidiaries, taken as a whole;
(ii) there shall be any statute, rules, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
governmental entity or court, other than the application to the Offer or
the Merger of applicable waiting periods under the HSR Act, that is
reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (a) through (e) of paragraph (i) above;
(iii) (a) the Board of Trustees of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to EastGroup or the
Purchaser its approval or recommendation of the Offer, the Merger or the
Merger Agreement, or approved or recommended any takeover proposal or (b)
the Company shall have entered into any agreement with respect to any
Acquisition Proposal in accordance with the Merger Agreement;
(iv) there shall have occurred (a) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market in the United States (excluding any
coordinated trading halt triggered solely as a result of a specified
decrease in a market index); (b) any extraordinary or material adverse
change in the financial market or major stock exchange indices in the
United States; (c) any material adverse change in United States currency
exchange rates or a suspension of, or limitation on, the markets therefor;
(d) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States; (e) any limitation (whether or not
mandatory) by any governmental entity on, or other event that might
materially affect, the extension of credit by banks or other lending
institutions; or (f) in the case of any of the foregoing existing on the
date of the Merger Agreement, a material acceleration or worsening thereof;
30
(v) any of the representations and warranties of the Company set forth in
the Merger Agreement that are qualified as to materiality shall not be true
and correct and any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each
case as of the date of the Merger Agreement and as of the scheduled
Expiration Date of the Offer;
(vi) the Company shall have failed to perform in any material respect any
material obligation or to comply in any material respect with any material
agreement or covenant of the Company to be performed or complied with by it
under the Merger Agreement;
(vii) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of EastGroup and the
Purchaser and may, subject to the terms of the Merger Agreement, be waived by
EastGroup and the Purchaser in whole or in part at any time and from time to
time in their sole discretion. The failure by EastGroup or the Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right, the waiver of any such right with respect to particular
facts and circumstances shall not be deemed a waiver with respect to any other
facts and circumstances and each such right shall be deemed an ongoing right
that may be asserted at any time and from time to time.
16. CERTAIN LEGAL MATTERS.
General. Except as described in this Section 16, based on a review of
publicly available filings by the Company with the Commission and other
publicly available information concerning the Company, neither EastGroup nor
the Purchaser is aware of any license or regulatory permit that appears to be
material to the business of the Company and that might be adversely affected
by the Purchaser's acquisition of Shares pursuant to the Offer, or of any
approval or other action by any governmental, administrative or regulatory
agency or authority, domestic or foreign, that would be required for the
acquisition or ownership of Shares by the Purchaser pursuant to the Offer.
Should any such approval or other action be required, it is presently
contemplated that such approval or action would be sought, except as described
below under "State Takeover Laws." While the Purchaser does not currently
intend to delay acceptance for payment of Shares tendered pursuant to the
Offer pending the outcome of any such matter, there can be no assurance that
any such approval or other action, if required, would be obtained without
substantial conditions or that adverse consequences would not result to the
Company's business or that certain parts of the Company's business would not
have to be disposed of in the event that such approvals were not obtained or
such other actions were not taken or in order to obtain any such approval or
other action. If certain types of adverse action are taken with respect to the
matters discussed below, the Purchaser may decline to accept for payment or
pay for any Shares tendered. See Section 15.
State Takeover Laws. The Company and certain of its subsidiaries conduct
business in a number of states throughout the United States, some of which
have adopted laws and regulations applicable to offers to acquire shares of
corporations that are incorporated or have substantial assets, shareholders
and/or a principal place of business in such states. The Company is
incorporated under the laws of the State of Missouri. In general, Section
351.459 of the GBCL ("Section 459") prevents an "interested shareholder"
(including a person who is the beneficial owner, directly or indirectly, of
20% or more of a "resident domestic corporation's" outstanding voting stock)
from engaging in a "business combination" (defined to include mergers and
certain other actions) with a Missouri corporation for a period of five years
following the date such person became an interested shareholder. The Company
is not a "resident domestic corporation" for purposes of Section 459 and
therefor Section 459 does not apply to this transaction.
Neither EastGroup nor the Purchaser has determined whether any other state
takeover laws and regulations will by their terms apply to the Offer, and,
except as set forth above, neither EastGroup nor the Purchaser has presently
sought to comply with any state takeover statute or regulation. EastGroup and
the Purchaser reserve the right to challenge the applicability or validity of
any state law or regulation purporting to apply to the Offer or the Merger,
and neither anything in this Offer nor any action taken in connection herewith
is intended as a
31
waiver of such right. In the event it is asserted that one or more state
takeover statutes is applicable to the Offer or the Merger and an appropriate
court does not determine that such statute is inapplicable or invalid as
applied to the Offer or the Merger, EastGroup or the Purchaser might be
required to file certain information with, or to receive approval from, the
relevant state authorities, and the Purchaser might be unable to accept for
payment or pay for Shares tendered pursuant to the Offer, or be delayed in
consummating the Offer.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the U.S. Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. EastGroup and the Purchaser believe that the Purchaser may
acquire Shares pursuant to the Offer and the Merger may be consummated without
notification being given or certain information being furnished to the FTC or
the Antitrust Division pursuant to the HSR Act, and that no waiting period
requirements under the HSR Act are applicable to the Merger. However, there
can be no assurance that the consummation of the Merger will not be delayed by
reason of the HSR Act. At any time before or after consummation of the Merger,
the Antitrust Division or the FTC could take such action under the antitrust
laws as it deems necessary or desirable in the public interest, including
seeking to enjoin the consummation of the Merger or seeking divestiture of
substantial assets of EastGroup, the Purchaser or the Company. At any time
before or after the Effective Time, any state could take such action under its
own antitrust laws as it deems necessary or desirable. Such action could
include seeking to enjoin the consummation of the Merger or seeking
divestiture of the Company or assets of EastGroup, the Purchaser or the
Company by EastGroup or the Purchaser. Private parties may also seek to take
legal action under antitrust laws under certain circumstances. See Section 15.
17. FEES AND EXPENSES. EastGroup and PaineWebber have entered into an
engagement letter (the "Engagement Letter"), pursuant to which PaineWebber has
agreed to act as financial advisor to EastGroup in connection with the
proposed acquisition transaction with the Company. EastGroup and the Purchaser
have also retained PaineWebber as the exclusive dealer manager in connection
with the Offer and EastGroup, the Purchaser and PaineWebber have entered into
a separate dealer manager agreement (the "Dealer Manager Agreement"). The
Dealer Manager Agreement has been filed as an exhibit to the Schedule 14D-1
described below.
Pursuant to the Engagement Letter, EastGroup has agreed to pay PaineWebber a
transaction fee of $875,000, payable promptly in cash upon the closing of an
acquisition transaction (as defined in the Engagement Letter), including the
Offer. In the event that an acquisition transaction is not consummated under
certain circumstances, PaineWebber will be entitled to 50% of the transaction
fee.
In addition to any fees payable to PaineWebber, EastGroup will reimburse
PaineWebber, upon request made from time to time, for all of its out-of-pocket
expenses incurred in connection with the engagement of PaineWebber, including
the fees, disbursements and other charges of its legal counsel, which expenses
shall not exceed an aggregate of $75,000, without the prior consent of
EastGroup. EastGroup and the Purchaser have agreed to indemnify PaineWebber
against certain liabilities in connection with PaineWebber's engagement,
including certain liabilities under the federal securities laws. PaineWebber
has from time to time, and continues to, render various investment banking and
financial advisory services to EastGroup, for which PaineWebber is paid
customary fees.
The Purchaser has retained Beacon Hill Partners, Inc. to act as the
Information Agent and Xxxxxx Trust Company of New York to act as the
Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telex, telecopy and personal interview
and may request brokers, dealers and other nominee shareholders to forward the
Offer materials to beneficial owners. The Information Agent and the Depositary
will receive $5,000 and $10,000, respectively, for services relating to the
Offer and will be reimbursed for certain out-of-pocket expenses. The Purchaser
and EastGroup have also agreed to indemnify the Information Agent and the
Depositary against certain liabilities and expenses in connection with the
Offer, including certain liabilities under the federal securities laws.
32
Neither EastGroup nor the Purchaser will pay any fees or commissions to any
broker or dealer or any other person (other than to the Information Agent) for
soliciting tenders of Shares pursuant to the Offer. Brokers, dealers,
commercial banks and trust companies will, upon request, be reimbursed by the
Purchaser for customary mailing and handling expenses incurred by them in
forwarding offering materials to their customers.
18. MISCELLANEOUS. The Offer is being made to all holders of Shares. The
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, the
Purchaser will make a good faith effort to comply with any such state statute
or seek to have such statute declared inapplicable to the Offer. If, after
such good faith effort, the Purchaser cannot comply with any such state
statute, the Offer will not be made to (nor will tenders be accepted from or
on behalf of) the holders of Shares in such state. In any jurisdiction where
the securities, Blue Sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of
the Purchaser by one or more registered brokers or dealers licensed under the
laws of such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of EastGroup, the Purchaser or the Company not
contained in this Offer to Purchase or in the related Letter of Transmittal
and, if given or made, such information or representation must not be relied
upon as having been authorized.
EastGroup and the Purchaser have filed with the Commission a Tender Offer
Statement on Schedule 14D-1, together with all exhibits thereto, pursuant to
Rule 14d-3 of the General Rules and Regulations under the Exchange Act,
furnishing certain additional information with respect to the Offer. Such
Tender Offer Statement and any amendments thereto, including exhibits, may be
inspected and copies may be obtained from the offices of the Commission in the
manner set forth in Section 8 (except that they will not be available at the
regional offices of the Commission).
EASTGROUP-MERIDIAN, INC.
February 23, 1998
33
ANNEX I
CERTAIN INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF EASTGROUP PROPERTIES, INC.
The following table sets forth the name, current business address, present
principal occupation or employment, and material occupations, positions,
offices or employment for the past five years of each director and executive
officer of EastGroup Properties, Inc. ("EastGroup"). Each such person is a
citizen of the United States of America. None of the listed persons, during
the past five years, has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which such person was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws.
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND FIVE-YEAR
NAME AND POSITION HELD CURRENT BUSINESS ADDRESS EMPLOYMENT HISTORY
---------------------- ------------------------ ----------------------------
Xxxxxxxxx X. Xxxxxxx.... 000 Xxxx 00xx Xxxxxx, Financial Advisor with
Director 24th Floor W.R. Family
New York, New York 10168 Associates.
X.X. Xxxxxx, Xx......... P.O. Box 22704 President of X.X. Xxxxxx
Director Jackson, Mississippi 39225 Company (real estate
development and
investment).
Xxxxxx X. Xxxxxx........ Xxx Xxxxx Xxxxx, Suite 2600 Senior partner in the
Director 000 Xxxxx Xxxxxx law firm of Xxxxx &
New Orleans, Louisiana 70130 Judell (municipal bond
attorneys); Vice
President and Treasurer
of Dauphine Orleans
Hotel Corp.
Xxxx X. Xxxxxx.......... P.O. Box 2469 Chairman of Mobile
Director Jackson, Mississippi 39225 Telecommunications
Technologies Corp.
Xxxxx X. Xxxxx.......... 0000 Xxxxxxxxxxx Xxxxxx, X.X. Partner in the law firm
Director Washington, D.C. 20036 of Arent, Fox,
Xxxxxxx, Xxxxxxx & Xxxx.
Xxxxxx X. Speed......... 000 Xxx Xxxxxxx Xxxxx Chairman of the Board of
Director and Chairman 000 Xxxx Xxxxxxx Xxxxxx XxxxXxxxx and Parkway
of the Board Jackson, Mississippi 39201 Properties, Inc.
("Parkway"); Chief
Executive Officer of
EastGroup and Parkway
until 1997; Chief
Executive Officer of LNH
REIT, Inc. ("LNH") until
1996; Chief Executive
Officer of Eastover
Corporation
("Eastover"), Congress
Street Properties, Inc.
("Congress Street") and
Rockwood National
Corporation ("Rockwood")
until 1994, and EB, Inc.
("EB") until 1995.
I-1
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND FIVE-YEAR
NAME AND POSITION HELD CURRENT BUSINESS ADDRESS EMPLOYMENT HISTORY
---------------------- ------------------------ ----------------------------
Xxxxx X. Xxxxxx XX...... 300 One Jackson Place Chief Executive Officer of
President, Chief 000 Xxxx Xxxxxxx Xxxxxx XxxxXxxxx since 1997,
Executive Jackson, Mississippi President of EastGroup since
Officer and Director 39201 1993 and Executive Vice
President of EastGroup until
1993; President of LNH from
1995 to 1996 and its Executive
Vice President from 1992 to
1995; Executive Vice President
of Congress Street, Eastover,
The Parkway Company
(predecessor to Parkway), and
Rockwood from 1988 to 1994,
Citizens Growth Properties
from 1988 to 1993 and EB from
1993 to 1994.
X. Xxxxx XxXxx.......... 300 One Xxxxxxx Place Executive Vice President of
Executive Vice 000 Xxxx Xxxxxxx Xxxxxx XxxxXxxxx since 1993, Chief
President, Jackson, Mississippi Financial Officer and
Chief Financial 39201 Secretary since 1992 and
Officer, Treasurer since 1997; Senior
Treasurer and Secretary Vice President of LNH from
1992 until 1996; Senior Vice
President of Congress Street,
Eastover, EB, Parkway and
Rockwood until 1994.
Xxxxx X. Xxxxxx......... 300 One Xxxxxxx Place Controller of EastGroup.
Controller 000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx
00000
Xxxxxxxx X. Xxxx........ 300 One Jackson Place Vice President of EastGroup
Vice President 000 Xxxx Xxxxxxx Xxxxxx since 1995; Asset Manager of
Jackson, Mississippi EastGroup and Parkway from
39201 1992 to 1995.
Xxxx X. Xxxxxxx......... 000 Xxx Xxxxxxx Xxxxx Vice President of EastGroup
Vice President 000 Xxxx Xxxxxxx Xxxxxx since 1995; Asset Manager of
Jackson, Mississippi EastGroup and Parkway from
39201 1992 to 1995.
Xxxxxxx X. Xxxxx........ 000 Xxx Xxxxxxx Xxxxx Vice President of EastGroup
Vice President 000 Xxxx Xxxxxxx Xxxxxx since 1997; Vice President of
Jackson, Mississippi Merry Land & Investment (an
39201 apartment REIT) from 1993 to
1997; Asset Manager of GE
Capital (real estate finance)
from 1991 to 1993.
I-2
ANNEX II
CERTAIN INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF EASTGROUP-MERIDIAN, INC.
The following table sets forth the name, current business address, present
principal occupation or employment, and material occupations, positions,
offices or employment for the past five years of each director and executive
officer of EastGroup-Meridian, Inc. (the "Purchaser"). Each such person is a
citizen of the United States of America. None of the listed persons, during
the past five years, has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which such person was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws.
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND POSITION HELD CURRENT BUSINESS ADDRESS EMPLOYMENT HISTORY
---------------------- ------------------------ -------------------------------
Xxxxxx X. Speed......... 000 Xxx Xxxxxxx Xxxxx Chairman of the Board of
Director and Chairman 000 Xxxx Xxxxxxx Xxxxxx XxxxXxxxx Properties, Inc.
of the Board Jackson, Mississippi ("EastGroup") and Parkway
39201 Properties, Inc. ("Parkway");
Chief Executive Officer of
EastGroup and Parkway until
1997; Chief Executive Officer
of LNH REIT, Inc. ("LNH") until
1996; Chief Executive Officer
of Eastover Corporation
("Eastover"), Congress Street
Properties, Inc. ("Congress
Street") and Rockwood National
Corporation ("Rockwood") until
1994, and EB, Inc. ("EB") until
1995.
Xxxxx X. Xxxxxx XX...... 300 One Xxxxxxx Place Chief Executive Officer of
Director, President and 000 Xxxx Xxxxxxx Xxxxxx XxxxXxxxx since 1997, President
Chief Executive Officer Jackson, Mississippi of EastGroup since 1993 and
39201 Executive Vice President of
EastGroup until 1993; President
of LNH from 1995 to 1996 and
its Executive Vice President
from 1992 to 1995; Executive
Vice President of Congress
Street, Eastover, The Parkway
Company (predecessor to
Parkway), and Rockwood from
1988 to 1994, Citizens Growth
Properties from 1988 to 1993
and EB from 1993 to 1994.
X. Xxxxx XxXxx.......... 000 Xxx Xxxxxxx Xxxxx Executive Vice President of
Director, Vice 000 Xxxx Xxxxxxx Xxxxxx XxxxXxxxx since 1993, Chief
President, Treasurer Jackson, Mississippi Financial Officer and Secretary
and Secretary 39201 since 1992 and Treasurer since
1997; Senior Vice President of
LNH from 1992 until 1996;
Senior Vice President of
Congress Street, Eastover, EB,
Parkway and Rockwood until
1994.
II-1
ANNEX III
RECENT TRANSACTIONS IN THE SHARES
During the 60 days prior to the date of the Offer, EastGroup made the
following purchases of Preferred Shares in open market transactions effected on
AMEX.
DATE OF PURCHASE NUMBER OF PREFERRED SHARES PRICE PER PREFERRED SHARE (1)
---------------- -------------------------- -----------------------------
1/14/98............ 3,000 $9.035
1/14/98............ 2,000 9.095
1/14/98............ 2,000 9.165
1/23/98............ 2,900 9.285
1/26/98............ 4,200 9.535
1/27/98............ 5,000 9.41
1/29/98............ 500 9.41
--------
(1) Price per Preferred Share includes brokerage commissions.
III-1
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. Letters of Transmittal and certificates for Shares should be sent or
delivered by each shareholder of the Company or his or her broker, dealer,
commercial bank or trust company to the Depositary at one of its addresses set
forth below:
The Depositary for the Offer is:
XXXXXX TRUST COMPANY OF NEW YORK
By Mail: By Hand/Overnight
Wall Street Station Delivery:
P.O. Box 1023 Receive Window
New York, New York 00000-0000 Xxxx Xxxxxx Xxxxx
00 Xxxx Xxxxxx, 00xx
Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
By Xxxxxxxxx:
(000) 000-0000
Confirm by Telephone:
(000) 000-0000
Any questions or requests for assistance may be directed to the Information
Agent at its address and telephone numbers set forth below. Requests for
additional copies of this Offer to Purchase and the Letter of Transmittal may
be directed to the Information Agent or the Depositary. Shareholders may also
contact their brokers, dealers, commercial banks or trust companies for
assistance concerning the Offer.
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
00 XXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
TOLLFREE: (000) 000-0000
OR
BANK AND BROKERAGE FIRMS PLEASE CALL:
(000) 000-0000
The Dealer Manager for the Offer is:
PAINEWEBBER INCORPORATED
0000 XXXXXX XX XXX XXXXXXXX
XXX XXXX, XXX XXXX 00000
