<PAGE>
SCHEDULE 14A
INFORMATION REQUIRED IN
PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
---------------------
/X/ Filed by the Registrant
/ / Filed by a party other than the Registrant
/X/ Preliminary proxy statement / / Confidential, for use of the
/ / Definitive proxy statement Commission only (as permitted
/ / Definitive additional materials by Rule 14a-6(e)(2))
/ / Soliciting material pursuant to
Rule 14a-11(c) or Rule 14a-12
MISSION WEST PROPERTIES
(Registrant)
Commission File Number 1-8383
Payment of filing fee:
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies: N/A
------
(2) Aggregate number of securities to which transactions applies: N/A
--------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: N/A
-----------------------------------
(4) Proposed maximum aggregate value of transaction: N/A
----------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing
(1) Amount previously paid:
----------------------------------------------
(2) Form, schedule or registration statement no.:
------------------------
(3) Filing party:
--------------------------------------------------------
(4) Date filed:
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<PAGE>
MISSION WEST PROPERTIES
6815 Flanders Drive, Suite 250
San Diego, California 92121-3914
-----------------------------------
-----------------------------------
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JULY __, 1997
-----------------------------------
-----------------------------------
TO THE SHAREHOLDERS:
A special meeting of shareholders of Mission West Properties (the
"Company") will be held at the Company's corporate offices, 6815 Flanders Drive,
Suite 250, San Diego, California on ___________, July __, 1997, at 9:00 a.m. for
the following purposes:
1. To consider a sale of 6,000,000 shares of the Company's
Common Stock for $0.15 per share to a group of private
investors led by Berg & Berg Enterprises, Inc.
2. To transact such other business as may properly come before
the meeting or any adjournment or postponement of the
meeting.
Only shareholders of record at the close of business on June 9, 1997, will
be entitled to vote at the meeting. Each of these shareholders is cordially
invited to be present and vote at the meeting in person.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY. THIS IS IMPORTANT BECAUSE A MAJORITY OF
THE SHARES MUST BE REPRESENTED, EITHER IN PERSON OR BY PROXY, TO CONSTITUTE A
QUORUM. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON EVEN THOUGH YOU HAVE
PREVIOUSLY PROVIDED A PROXY.
By Order of the Directors
Katrina L. Thompson
Secretary
THE DATE OF THIS PROXY STATEMENT IS JUNE 11, 1997.
<PAGE>
MISSION WEST PROPERTIES
6815 Flanders Drive, Suite 250
San Diego, California 92121-3914
------------------------
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JULY __, 1997
------------------------
GENERAL INFORMATION
Your proxy in the enclosed form is solicited by the Board of Directors ("Board"
or "Directors") of Mission West Properties, a California corporation (the
"Company"), for use at the Special Meeting of Shareholders to be held on July
__, 1997, for the purposes set forth in the accompanying notice and at any
adjournment or postponement of that meeting. The mailing of this Proxy
Statement and the accompanying form of proxy to shareholders of the Company is
expected to commence on or about June 11, 1997.
The shares represented by any proxy in the enclosed form will be voted in
accordance with the instructions given on the proxy if the proxy is properly
executed and is received by the Company prior to the close of voting at the
meeting or any adjournment or postponement thereof. Proxies received by the
Company on which no contrary instruction has been given will be voted FOR the
proposed sale of 6,000,000 shares of the Company's Common Stock at $0.15 per
share to a group led by Berg & Berg Enterprises, Inc. A shareholder giving a
proxy has the power to revoke it at any time before it is exercised. A proxy
may be revoked by filing with the Secretary of the Company an instrument
revoking it or a duly executed proxy bearing a later date. The powers of the
proxy holders will be suspended if the person executing the proxy is present at
the meeting and votes in person.
The cost of soliciting proxies in the enclosed form will be borne by the
Company. Solicitation will be made primarily by mail but shareholders may be
solicited by telephone, telegraph, or personal contact. The Directors may
retain the services of a proxy-soliciting firm for soliciting proxies from those
entities holding shares in street name.
<PAGE>
VOTING SECURITIES
The outstanding securities of the Company at June 9, 1997 consisted of 1,533,121
shares of Common Stock. Each shareholder of record at the close of business on
June 9, 1997, is entitled to one (1) vote for each share of Common Stock then
held. Shares of the Company are traded on the American Stock Exchange and on
the Pacific Exchange. The following table sets forth the beneficial ownership
of the outstanding shares of the Company held at June 9, 1997, by the only
persons known to management to be the beneficial owners of more than five (5)
percent of these shares, each of the Directors of the Company, each of the
executive officers of the Company, and the Directors and executive officers as a
group.
<TABLE>
<CAPTION>
Shares Beneficially
Owned As of Percent of
Beneficial Owner June 9, 1997 Class
------------------------------------ --------------------- ------------
<S> <C> <C>
Alarmguard Holdings, Inc. 676,050 44.10%
c/o Michael M. Earley
550 West "C" Street, Suite 1880
San Diego, CA 92101
Byron B. Webb, Jr., Director 170,123 11.10
1026 Wall Street
La Jolla, CA 92037
J. Gregory Kasun 115,114 7.51
9974 Scripps Ranch Blvd. #192
San Diego, CA 92131
Tennenbaum & Co., LLC 87,200(1) 5.69
1999 Avenue of the Stars, Suite 1010
Los Angeles, CA 90067
William E. Nelson, Director 76,311 4.98
7817 Ivanhoe Avenue
La Jolla, CA 92037
Katrina L. Thompson, Chief Financial 10,933 0.71
Officer
Michael M. Earley, President, Chief 0 0.00
Executive Officer, and Director2
Mark G. Foletta, Vice President and 0 0.00
Director2
All Directors and executive officers 933,417(3) 60.88(3)
as a group (5 persons)
</TABLE>
- ------------------------
1 Shares owned as of February 28, 1997, the most recent data
available. Obtained from Form 4 as filed with the
Securities and Exchange Commission.
2 Messrs. Earley and Foletta are the former CEO and CFO,
respectively, of Triton Group Ltd., which merged with
Security Systems Holdings, Inc. effective April 15, 1997 and
changed its name to Alarmguard Holdings, Inc.
3 Includes 676,050 shares held by Alarmguard Holdings, Inc.
-2-
<PAGE>
ALARMGUARD HOLDINGS, INC./TRITON GROUP LTD.
Alarmguard Holdings, Inc. ("Alarmguard"), successor to Security Systems
Holdings, Inc., merged with Triton Group Ltd. ("Triton") effective April 15,
1997; Alarmguard is a publicly owned company, the shares of which are traded on
the American Stock Exchange. Michael M. Earley was president, chief executive
officer, and a director, and Mark G. Foletta was executive vice president, chief
financial officer, and a director of Triton. Messrs. Earley and Foletta
currently provide consulting services to Alarmguard through their wholly owned
company, Triton Group Management, Inc. In addition to being Directors of
Mission West Properties, Messrs. Earley and Foletta provide management services
to the Company through Triton Group Management, Inc.
As of June 9, 1997, the Directors and executive officers of the Company owned in
the aggregate 61,696 shares of Alarmguard.
PROPOSED SALE OF COMMON STOCK
INTRODUCTION
On May 27, 1997, the Company entered into a Stock Purchase Agreement (the
"Agreement") by and among a group of private investors led by Berg & Berg
Enterprises, Inc. (collectively, the "Purchaser"), and the Company, pursuant to
which the Company will sell 6,000,000 shares of the Company's newly issued
Common Stock (the "Shares") to the Purchaser for a purchase price of $900,000 in
cash, or $0.15 per Share (the "Purchase Price"). The Company's shareholders are
being asked to approve the Agreement and the transactions contemplated thereby
(the "Transaction"). The Company's obligations under the Agreement are
conditioned upon, among other things, approval by the Company's shareholders of
the Agreement and the Transaction.
Subsequent to consummation of the Transaction (the "Closing"), the Company is
expected to have net assets of approximately $5,100,000 consisting primarily of
cash and cash equivalents. Pursuant to the Agreement, the Company plans to make
a cash distribution of up to $3.20 per share to shareholders of record (other
than Purchaser) immediately prior to the Closing of the Transaction. Following
the Closing of the Transaction, the Company will be controlled by the Purchaser
(see "Operation of the Company After the Closing" below).
PROPOSED PURCHASER
The Purchaser constitutes a group led by Berg & Berg Enterprises, Inc., whose
principal offices are located at 10050 Bandley Drive, Cupertino, California.
Berg & Berg Enterprises, Inc. and its affiliates (the "Berg Group") comprise
privately held firms that have designed, developed, and leased office, R&D, and
manufacturing buildings and complexes occupied by Silicon Valley technology
companies since 1969. Currently, the Berg Group owns and operates more than
3,500,000 square feet of Santa Clara County, California, properties.
In addition to the Berg Group, the Purchaser may include one or more
sophisticated investors. Under the terms of the Agreement, Berg & Berg
Enterprises, Inc. will identify all such additional participants in the
Transaction prior to the Closing.
There is no affiliation between the Company and any person in the group which
constitutes the Purchaser.
INTENTION TO DECLARE DISTRIBUTION TO SHAREHOLDERS
Pursuant to the Agreement, the Company has undertaken to make a cash
distribution of not more than $3.20 per share of Common Stock to shareholders of
record immediately prior to the Closing Date (the "Distribution"), with the
effect that the Purchaser will not participate in such distribution. The amount
of the contemplated distribution has been determined to represent the value of
the anticipated net tangible assets of the Company following the
-3-
<PAGE>
Purchaser's investment, less $150,000. The distribution is anticipated to be
declared immediately following shareholder approval of the Transaction and the
deposit by the Purchaser of the Purchase Price, which is to be paid at such
time.
BACKGROUND AND REASONS FOR THE TRANSACTION
In contemplation of completion of the sale of all of the Company's real estate
assets, the Board of Directors continued to consider the Company's strategic
alternatives following such transaction. The possible courses considered
included business or asset acquisitions, a sale of the Company, a business
combination with another entity, or an outright liquidation. Representatives of
the Purchaser first expressed an interest in a transaction with the Company in
early 1997, proposing that the Company establish a liquidating trust and
transfer all remaining assets to such an entity prior to an investment by the
Purchaser. Inasmuch as the sale of the remaining real estate assets was
expected to be concluded in early May, Management of the Company believed that
the expense associated with a liquidating trust could be avoided and the
Purchaser proposed an investment in the Company on the terms of the Transaction.
The Board of Directors was advised of the Purchaser's interest prior to a
meeting on April 28, 1997, at which time it was the sense of the meeting that
Management, together with the Company's financial advisor, should continue
discussions with the Purchaser while considering other possible transactions.
As a part of this process, representatives of the Company and the Company's
financial advisor met with the Purchaser at its offices and toured a number of
the Purchaser's real estate holdings. Counsel to the Purchaser and the Company
were at the same time reviewing drafts of a proposed Stock Purchase Agreement.
Inasmuch as it was the Board of Director's desire to agree with Purchaser upon a
finite distribution to shareholders of record immediately prior to the Closing
of the Transaction, representatives of the Company and the Purchaser reviewed
extensive cash flow projections for the Company and the terms of the Transaction
were structured so that, of the $900,000 to be paid by the Purchaser for the
Shares, $750,000 of this amount plus the value of the tangible net assets of the
Company immediately prior to the Closing of the Transaction would be distributed
to shareholders excluding the Purchaser.
At a meeting on May 23, 1997, the Board of Directors again considered the terms
of the Transaction. After hearing presentations from Management, legal counsel,
and the Company's financial advisor, the Board authorized the proper officers of
the Company to execute the Agreement on behalf of the Company. The Board also
set a record date of June 9, 1997 for a special meeting of shareholders to be
held in July and authorized the preparation and filing with the Securities and
Exchange Commission of preliminary proxy material relating to the Special
Meeting.
The Board of Directors has determined unanimously that the Transaction under the
terms of the Agreement is in the best interests of the Company and its
shareholders. In making this determination, the Board considered the other
potential strategic transactions entertained by Management and the Company's
financial advisor, the possible terms of such transactions, the balancing of an
immediate substantial cash distribution to shareholders against the desire by
some potential interested parties in retaining substantial assets in the Company
subsequent to a transaction, the risks and uncertainties associated in
evaluating the business plans of potentially interested parties where
substantial assets of the Company would be at risk to support such other
businesses, and the opinion from the Company's financial advisor that the
Transaction is fair to the Company's shareholders from a financial point of
view. In addition, the Board considered the business background and track
record of the Purchaser, the opportunity for the Company's shareholders to
continue to own a minority interest in the Company following distribution of
substantially all of the Company's tangible net worth (including a majority of
the Purchase Price) to Shareholders other than the Purchaser as well as the
negotiated ability to respond to inquiries from other parties and, ultimately,
to terminate the Transaction by exercising a "fiduciary out" in the event the
Board determines that there exists a superior transaction for the Company and
its shareholders.
OPINION OF FINANCIAL ADVISOR
The Company has retained Slusser Associates, Inc. ("Slusser") as its financial
advisor in connection with the Board's evaluation of the Company's strategic
alternatives. Slusser was selected by the Board of Directors to assist the
Board in reviewing expressions of interest; however, Slusser did not recommend a
particular form of transaction. Slusser has rendered its opinion (the "Fairness
Opinion") that the proposed Transaction is fair to the Company's shareholders
-4-
<PAGE>
from a financial point of view. The full text of the Fairness Opinion, which
includes a description of the procedures employed by Slusser in rendering the
Fairness Opinion, is attached hereto as Exhibit A.
Slusser, as a customary part of its investment banking business, is engaged in
the valuation of businesses and securities in connection with mergers and
acquisitions, private placements, and valuations for estate, corporate, and
other purposes. Slusser will receive a fee for services to the Company in
connection with the Transaction of approximately $150,000, part of which is
contingent upon a closing of the Transaction. Said firm has, in the past,
provided financial advisory services to the Company, including assisting the
Company in its sale of real estate assets to Spieker Properties, L.P., and has
received fees for rendering these services.
SUMMARY OF THE AGREEMENT
The following summary of the terms of the Agreement does not purport to be
complete and is qualified in its entirety by reference to the Agreement, a copy
of which (without the Appendices thereto) is attached hereto as Exhibit B.
CLOSING
The Closing is scheduled to occur in July 1997, subject to extension in certain
cases by both parties.
PURCHASE PRICE
The purchase price for the Shares being sold is $900,000, payable in cash upon
shareholder approval of the Transaction (the "Effective Date").
REPRESENTATIONS AND WARRANTIES
The Agreement contains representations and warranties by the Company customarily
made by issuers in transactions similar to the Transaction, including
representations and warranties relating to (i) the Company's organization and
good standing, (ii) the absence of litigation or any notice of violation of any
applicable regulation or law (including environmental) or undisclosed
liabilities, and (iii) the accuracy and completeness of all documents filed with
the Securities and Exchange Commission.
CERTAIN COVENANTS PRIOR TO CLOSING
The Company and Purchaser have agreed, prior to Closing, to cooperate in the
obtaining of any approvals or consents necessary to close the Transaction.
CONDITIONS TO CLOSING
The obligations of the Purchaser are subject to satisfaction of certain
conditions including (i) accuracy of the Company's representations and
warranties at the time of Closing, (ii) compliance with applicable securities
laws, and (iii) approval for listing of the Shares on the American Stock
Exchange and the Pacific Exchange, Inc.
FIDUCIARY OUT
The Agreement prohibits the Company from actively marketing the Company's stock
but provides that the Company is entitled to respond to unsolicited inquiries
from third parties. The Agreement also provides, however, that until the
Effective Date, the Company may provide financial information about the Company
to third parties who request such information and who have signed a
confidentiality agreement.
In the event any such third party makes an offer to purchase all or
substantially all of the Company's stock or proposes a business combination or
other transaction on terms that the Company's Board of Directors determines are
economically superior to the Purchaser's offer such that acceptance of the offer
would be required in the exercise of the Board's fiduciary obligations to the
Company's shareholders, then the Company shall have the right (the "Fiduciary
Out") to terminate the Transaction.
-5-
<PAGE>
If the Company elects to exercise its Fiduciary Out, the Company will pay to the
Purchaser a fee of $250,000 as compensation for the Purchaser's loss of the
opportunity to purchase the Shares. The $250,000 will be payable within two
days after Purchaser's request therefore following the Company's exercise of its
Fiduciary Out.
SHAREHOLDER AGREEMENTS
The Company's largest shareholder, Alarmguard Holdings, Inc., and Directors
Nelson and Webb holding an aggregate of 922,484 shares (60.17%) of the Company's
issued and outstanding shares, have agreed to vote their shares to approve the
Agreement and the Transaction, subject to the exercise of the Fiduciary Out.
OTHER AGREEMENTS
Alarmguard (see "Voting Securities -- Alarmguard Holdings, Inc./Triton Group
Ltd." above) has agreed that upon a cash distribution to shareholders (see
"Intention to Declare Distribution to Shareholders" above), Alarmguard will
accept a note payable from the Company in lieu of $300,000 cash of the
distribution. This note represents a receivable that the Company will collect
after the anticipated distribution date, but that will be a portion of the
distribution amount. In the event a portion of the receivable is not collected,
the amount payable to Alarmguard will be reduced by the same amount.
FEDERAL INCOME TAX CONSEQUENCES
FEDERAL INCOME TAX CONSEQUENCES TO SHAREHOLDERS
The sale of the Shares to the Purchaser will not have a direct federal income
tax consequence to the Company or its shareholders. Assuming the Company
distributes a significant portion of the resulting cash to the shareholders, as
planned, such distribution will be a taxable transaction to the shareholders for
federal income tax purposes and may also be a taxable transaction under
applicable state, local, foreign, and other tax laws. In general, for federal
income tax purposes, a shareholder would recognize dividend income to the extent
of the Company's current or cumulative earnings and profits; thereafter, the
Distribution would be considered a return of capital, reducing the basis of the
stock owned (capital gain would result if distributions are in excess of the
shareholder's basis in the stock). Any such Distribution would be aggregated
with the distribution made by the Company in February, 1997 for purposes of the
foregoing analysis. A gain or loss on sale would be realized by a shareholder
at the time he/she sells the stock and would be equal to the difference between
the shareholder's sales proceeds and the basis of the stock owned.
The federal income tax discussion set forth above is included for general
information purposes only and may not apply to taxpayers with special
circumstances such as shareholders who are not citizens or residents of the
United States. The tax consequences to shareholders may vary depending on the
actions of the Company following consummation of the Transaction. No
information is provided herein as to state, local, foreign, or other tax
consequences. Shareholders should consult their own tax advisors to determine
the particular federal, state, local, foreign, and other tax consequences to
them of the sale of Shares and Distribution contemplated by the Agreement and
subsequent actions of the Company.
VOTE REQUIRED
The affirmative vote of holders of a majority of the outstanding shares of the
Company's stock, either voting in person or by proxy, is necessary to approve
the Agreement and the Transaction. Shareholders holding an aggregate of 922,484
shares (60.17%) of the Company's outstanding shares have agreed to vote their
shares to approve the Agreement and the Transaction (see "Summary of the
Agreement -- Shareholder Agreements" above). Because approval by a majority of
the outstanding shares is required, broker non-votes and abstentions effectively
will be votes against the Agreement and the proposed Transaction.
-6-
<PAGE>
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company believes the consummation of the
Transaction is in the best interests of the Company and its shareholders, and
recommends that the shareholders of the Company vote to approve the Agreement
and the Transaction. The Board of Directors believes the purchase price for the
Shares is fair and equitable to the Company and its shareholders. In
recommending that shareholders approve the Agreement and the Transaction, the
Board considered the prospects for effecting a business combination transaction,
and expressions of interest in acquiring the Company from independent third
parties as well as advice from the Company's financial advisors and the Fairness
Opinion rendered by Slusser (see "Background and Reasons for the Transaction"
above).
THE BOARD OF DIRECTORS HAS DETERMINED THAT THE PROPOSED TRANSACTION IS IN
THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS A
VOTE IN FAVOR OF THE AGREEMENT AND THE TRANSACTION.
INTEREST OF CERTAIN PERSONS IN THE TRANSACTION
The Company is a party to employment separation agreements with three past or
present executive officers under which such individuals will receive consulting
payments equal to the individual's annual base salary immediately before
termination, paid in a lump-sum or monthly installments for a period of from 12
to 24 months. The individuals are also entitled to receive medical insurance
coverage during the consulting period with the Company paying one-half of the
premium costs. Following the Closing of the Transaction, the Company will pay
all remaining benefits to which the individuals are entitled under the
separation agreements in a lump-sum.
OPERATION OF THE COMPANY AFTER THE CLOSING
As of the Effective Date, after satisfying its accrued liabilities, the Company
will have net assets of approximately $5,100,000 consisting primarily of cash
and cash equivalents, and will have no operating assets. Pursuant to the
Agreement, the Distribution will reduce the Company's net assets to
approximately $150,000, or $0.10 per share, all of which will have been
contributed by the Purchaser.
After the Closing of the Transaction, the Company's current Board of Directors
intends to resign in accordance with the Agreement and a new Board of Directors
will be designated by Purchaser. Purchaser has advised the Company that
Purchaser intends, when reasonably practicable after the Closing, to cause the
Company to engage in the real estate business through the ownership and leasing
of office/R&D real estate, which Purchaser and/or Purchaser's affiliates
presently own and which will be exchanged for equity interests in the Company on
terms negotiated between Purchaser and the Company. Any such future exchanges
of real property will be subject to applicable California and federal law and
the regulations of stock exchanges or other markets on which the Company's
Common Stock is traded.
Certain statements contained in this Proxy Statement, such as statements
concerning the operations of the Company after the Closing and other statements
regarding matters that are not historical facts, are forward-looking statements
(as that term is defined in the Private Securities Litigation Reform Act of
1995) that involve risks and uncertainties. These forward-looking statements
can generally be identified as such because the context of the statement will
include words such as the Company "intends," "anticipates," "expects,"
"believes," or similar words. Similarly, statements that describe the Company's
future plans, objectives, estimates, or goals are forward-looking statements.
Because such statements include risks and uncertainties, actual results may
differ materially from those expressed or implied by such forward-looking
statements.
-7-
<PAGE>
OTHER MATTERS
The Directors know of no other matters to be presented for action at the special
meeting. As to any matter that may properly come before the meeting, the
proxies confer discretionary authority on the persons named therein and those
persons will vote the proxies in accordance with their best judgment with
respect thereto.
By Order of the Directors
Katrina L. Thompson
Secretary
June 11, 1997
San Diego, California
-8-
<PAGE>
SLUSSER ASSOCIATES, INC. EXHIBIT A
One Citicorp Center, Suite 5100
153 East 53rd Street
New York, New York 10022
(212) 355-5233 - Fax (212) 752-3646
Peter Slusser
CONFIDENTIAL
May 23, 1997
Board of Directors
Mission West Properties
6815 Flanders Drive, Suite 250
San Diego, California 92121
Gentlemen:
You have requested our opinion from a financial point of view
concerning the fairness of the transaction described below to the
present stockholders of Mission West Properties (the "Company").
The Company and a Group of Investors led by Berg & Berg
Enterprises, Inc. ("Berg & Berg") plan to enter into a Stock
Purchase Agreement to be dated May 27, 1997 (the "Agreement")
pursuant to which Berg & Berg will acquire from the Company shares
of Common stock representing controlling interest in the Company
with a view to engaging in real estate activities through the
Company as a Real Estate Investment Trust within the meaning of
Section 856 of the Internal Revenue Code of 1986, as amended. We
understand that, pursuant to the Agreement, Berg & Berg will
acquire from the Company, 6,000,000 shares of Common Stock as
fifteen cents ($0.15) per share, for total consideration of
$900,000. It is our understanding that $750,000 of the proceeds of
this sale of stock will be distributed to the presently outstanding
Shares of Mission West (approximately 1,533,000 shares) along with
other cash items net of expenses and repayment of debts which are
held in the Company's balance sheet.
In connection with this opinion, we have made such reviews,
analysis and inquiries as we have deemed necessary and appropriate
under the circumstances. Among other things we have:
1. Reviewed certain publicly available financial statements and
other information of the Company;
2. Made certain inquiries as to the financial status of Berg &
Berg and its primary owner;
3. Reviewed certain internal financial statements and other
financial and operating data concerning the Company prepared
by management, including management's estimate of current
and future cash flows;
4. Reviewed with management their estimates as to the possible
cash distribution available to Shareholders pursuant to the
Agreement;
5. Compared the financial performance of the Company and the
prices and trading activity of the Company's common stock
with that of certain other generally comparable
publicly-traded companies and their securities;
<PAGE>
Mission West Properties
Page Two
May 23, 1997
6. Reviewed the terms of recent negotiations for the value of
the Company without operating assets;
7. Reviewed the terms, to the extent publicly available, or
certain generally comparable transactions;
8. Reviewed the expenses exclusive of underwriting commissions
of selected recent small public offerings;
9. Met with representatives of the Company and Berg & Berg
along with a representative of the Magellan Group, Inc.,
real estate advisors;
10. Reviewed the Agreement; and
11. Conducted such other studies, analysis and inquiries as we
deemed appropriate.
We have assumed and relied upon without independent verification
the accuracy and completeness of the information reviewed by us for
the purposes of this opinion. We have assumed and relied upon the
accuracy of the estimates by management as to the amount of the
cash to be distributed to the Shareholders, without assuming any
responsibility for independent verification or calculation thereof.
In connection with such estimates and with respect to the financial
projections for the Company, we have relied upon and assumed,
without independent verification, that they have been reasonably
prepared and reflect the best currently available data and
judgments of management. We have not performed an appraisal of the
physical assets of the Company or its subsidiaries for the purposes
of this opinion.
We have acted as financial advisor to the Board of Directors of the
Company in respect to the transaction outlined in the Agreement.
We will receive a fee for our services. We have in the past
provided financial advisory services to the Company, and we have
received fees for rendering these services.
Based upon the foregoing, and in reliance thereon, it is our
opinion that the above described proposed transaction is fair from
a financial point of view to the present Mission West shareholders
as of the date of this letter.
Slusser Associates, Inc. as a customary part of its investment
banking business is engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, private
placements, and valuations for estate, corporate and other
purposes. This letter is prepared solely for the use of the Board
of Directors of Mission West Properties.
Very Truly Yours,
Slusser Associates, Inc.
By /s/ Peter Slusser
------------------------
<PAGE>
Exhibit B
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of the 27th day
of May, 1997, by and between a group of private investors identified on Appendix
I to this Agreement, as amended hereunder, (the "Schedule of Purchasers")
(individually a "Purchaser" and collectively "Buyer"), which is led by Berg &
Berg Enterprises, Inc., a California corporation ("Buyer's Representative"), on
one hand, and Mission West Properties, a California corporation (the "Company")
and the shareholders of the Company identified on Appendix II to this Agreement
(the "Holders"), on the other hand.
R E C I T A L S
A. The Company has recently sold substantially all of its operating
assets.
B. Buyer would like to acquire from the Company shares of Common Stock
representing a controlling interest in the Company with a view to engaging in
real estate activities through the Company as a real estate investment trust
within the meaning of Section 856 of the Internal Revenue Code of 1986, as
amended (the "Code").
C. The Holders own, in the aggregate, approximately 60% of the
outstanding voting stock of the Company.
A G R E E M E N T
The parties to this Agreement agree as follows:
1. AUTHORIZATION AND SALE OF COMMON STOCK.
1.1 AUTHORIZATION OF THE SHARES. The Board of Directors of the Company
has approved and authorized for issuance 6,000,000 shares of the Common Stock of
the Company (the "Shares").
1.2 SALE OF THE SHARES. Subject to the terms and conditions hereof, on
the Closing Date, the Company will issue and sell to each Purchaser, and each
Purchaser agrees, severally, to purchase from the Company, the number of Shares
of Common Stock specified opposite such Purchaser's name on the Schedule of
Purchasers as of the Closing Date at a purchase price of Fifteen Cents ($0.15)
per share for the aggregate purchase price set forth opposite each such
Purchaser's name. The Company agrees that Buyer may amend the Schedule of
Purchasers from time to time prior to the Effective Date (as defined in Section
2.1) in the sole discretion of Buyer's Representative.
1.3 SEPARATE AGREEMENTS. The Company's agreement with each Purchaser
is a separate agreement, and the sale of the shares of Common Stock to each
Purchaser is a separate sale.
<PAGE>
2. EFFECTIVE DATE; CLOSING DATE; DELIVERY
2.1 EFFECTIVE DATE. Upon execution and delivery of this Agreement by
the Company and approval of this Agreement and all of the transactions
contemplated hereby by the Board of Directors of the Company (the "Board of
Directors"), the Company, the Board of Directors, and the Holders shall perform
timely all covenants set forth in Sections 5.3, 5.4 and 5.5, and, in particular,
within five (5) business days following the execution and delivery of the
Agreement, they shall set a record date for a meeting of the shareholders of the
Company to consider and vote upon the transactions contemplated by this
Agreement and file with the Securities and Exchange Commission (the "SEC")
preliminary proxy material relating to such meeting. The date of the
shareholders meeting shall be the "Effective Date". Buyer, through Buyer's
Representative, shall advance $900,000 to the Company on the Effective Date, if
the Company or the Holders are not then in default under this Agreement and the
shareholders shall have approved the transactions contemplated hereby. The
amount of such advance shall be credited against the purchase price for the
Shares at the Closing.
2.2 CLOSING DATE. The closing of the purchase and sale of the Shares
hereunder (the "Closing") with each of the Purchasers shall be held at the
offices of Graham & James LLP, 600 Hansen Way, Palo Alto, California, at 10:00
a.m. on the date two (2) business days following the record date for the
dividend declared pursuant to Section 6.5, or at such other time and place to
which the Company and Buyer's Representative may agree upon orally or in writing
(the "Closing Date").
2.3 DELIVERY. At the Closing, the Company will deliver to each
Purchaser a certificate representing the Shares to be purchased by such
Purchaser from the Company (which shall be issued in such Purchaser's name as
set forth on the Schedule of Purchasers) against payment of the purchase price
therefor by credit of the amount advanced by Buyer pursuant to Section 2.1.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to each Purchaser that, subject
to and except as set forth in a Schedule of Exceptions (the "Schedule of
Exceptions") delivered to the Purchasers, specifically identifying the relevant
subsections hereof:
3.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. The Company has all requisite corporate power and authority to
carry on its business as presently conducted and as proposed to be conducted.
The Company is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure to be so qualified would have a material
adverse effect on its business or properties.
3.2 SUBSIDIARIES. Other than Mission West Executive Aircraft Center,
Inc. and MIT Realty, Inc. (the "Company Subsidiaries") which are wholly owned by
the Company, the Company does not own or control, directly or indirectly, any
interest in any other corporation, association, partnership or other business
entity. As used in this Section 3, references to the Company include the
Company Subsidiaries. The Company is not a participant in any joint venture,
partnership, or similar arrangement.
3.3 CAPITALIZATION. The authorized capital stock of the Company as of
the Effective Date will consist of 10,000,000 shares of Common Stock, of which
1,533,121 shares are issued and outstanding. All such issued and outstanding
shares have been duly authorized and validly issued, are fully paid and
nonassessable and have been issued in compliance with all applicable state and
federal laws concerning the issuance of securities. The Company has reserved
6,000,000 shares for issuance hereunder. Except for the foregoing, there are no
outstanding options, warrants, rights (including conversion or
<PAGE>
preemptive rights) or agreements for the purchase or acquisition from the
Company of any shares of its capital stock.
3.4 AUTHORIZATION. All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the performance of all obligations of
the Company hereunder and thereunder, and the authorization, sale and issuance
of the Shares pursuant hereto has been taken or will be taken prior to the
Closing Date. This Agreement, when executed and delivered by the Company, will
constitute a valid and binding obligation of the Company, enforceable in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally, and (ii) as limited by
laws relating to the availability of specific performance, injunctive relief, or
other equitable remedies.
3.5 VALID ISSUANCE OF COMMON STOCK. The Shares that are being
purchased by the Purchasers hereunder, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid, and nonassessable, and will
be free of restrictions on transfer other than restrictions on transfer under
this Agreement, and under applicable state and federal securities laws.
3.6 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation
or default of any term of the Articles of Incorporation, or Bylaws of the
Company, nor is the Company in violation or default of any term of any contract,
agreement, instrument, judgment, decree, order, statute, rule or regulation
(collectively, "Instruments and Laws") to which the Company is subject and a
violation of which would have a material adverse effect on the condition,
financial or otherwise, or operations of the Company. The execution, delivery
and performance of this Agreement, and the consummation of the transactions
pursuant hereto, will not result in a violation of or be in conflict with the
Articles of Incorporation, as amended, or the Bylaws of the Company or
constitute, with or without the passage of time and giving of notice, a material
default under any such Instrument or Law, except where such violations or
defaults, singularly or in the aggregate, would not have a material adverse
effect on the business, operations, property or condition (financial or
otherwise) of the Company, require any consent or waiver (which has not been
obtained) under any such Instrument or Law, or result in the creation of any
lien, encumbrance or charge upon any of the properties or assets of the Company
pursuant to any such Instrument or Law.
3.7 LITIGATION. There are no actions, suits, proceedings or
investigations pending or, to the best of the Company's knowledge, threatened
against the Company.
3.8 GOVERNMENTAL CONSENT, ETC. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing (other than filing a proxy statement with the SEC with, any federal,
state or local governmental authority on the part of the Company is required in
connection with the consummation of the transactions contemplated by this
Agreement.
3.9 COMPANY SEC INFORMATION. As of their respective filing dates
(except as thereafter amended) all documents that the Company has filed with the
SEC ("Company SEC Documents") have complied in all material respects with the
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act") or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and none of the Company SEC Documents has contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading except to
the extent corrected by a subsequently filed Company SEC Document.
3.10 OFFERING. Subject in part to the truth and accuracy of each
Purchaser's representations set forth in Section 4 of this Agreement, the offer,
sale and issuance of the Shares as contemplated by
<PAGE>
this Agreement are exempt from the registration requirements under Section 5 of
the Securities Act, and neither the Company nor any authorized agent acting on
its behalf will take any action hereafter that would cause the loss of such
exemption.
3.11 TITLE TO PROPERTY AND ASSETS. The Company owns its property and
assets free and clear of all mortgages, loans, liens and encumbrances, except
such encumbrances and liens which arise in the ordinary course of business and
do not materially impair the Company's ownership or use of such property or
assets. With respect to the property and assets it leases, the Company is in
compliance with such leases and, to the best of its knowledge, holds a valid
leasehold interest free of any liens, claims or encumbrances.
3.12 TAX RETURNS AND PAYMENTS. The Company has filed all tax returns
and reports as required by law. All such returns and reports are true and
correct in all material respects. The Company has paid in full all taxes and
other assessments due.
3.13 COMPLIANCE WITH APPLICABLE LAWS.
(a) The Company and its properties, assets, operations and
business have been operated and are in compliance with all applicable statutes,
laws, ordinances, administrative orders, rules and regulations of any
Governmental Authority and any filing requirements relating thereto, except for
violations that would not, individually and in the aggregate, have a material
adverse effect on the Company or prevent or materially delay the Closing,
including Environmental and Safety Laws. No investigation or review by any
Governmental Authority with respect to the Company is pending or, to the
knowledge of the Company, threatened.
(b) The Company has obtained all permits, licenses and other
authorizations from Governmental Authorities that are required with respect to
the operation of its business and the ownership of its assets under applicable
laws, including Environmental and Safety Laws, other than any permits, licensees
or authorizations the failure of which to obtain would not, individually or in
the aggregate, have a material adverse effect on the Company or prevent or
materially delay the consummation of the Closing. The Company is in compliance
in all material respects with all terms and conditions of such permits, licenses
and authorizations.
(c) There are no past or present or, to the knowledge of the
Company, future events, conditions, circumstances, activities, practices,
incidents, actions or plans that are reasonably likely to interfere with or
prevent compliance or continued compliance by the Company with any Environmental
and Safety Laws governing the Company's present and currently contemplated
future operations or with any law, judgment, injunction, notice of demand letter
issued, entered, promulgated or approved thereunder, (ii) give rise to any
liability of the Company under any Environmental and Safety Law governing the
Company's past, present and currently contemplated future operations or (iii)
otherwise form the basis of any litigation, hearing, notice of violation, study
or investigation against or affecting the Company, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment, of any Hazardous Substance.
As used in this Section 3.13:
"GOVERNMENTAL AUTHORITY" shall mean any federal, state, local or
foreign court, governmental or administrative agency or commission or other
governmental agency, authority, instrumentality or regulatory body.
"HAZARDOUS SUBSTANCE" shall mean "hazardous substance" as defined
in any law, rule or regulation applicable to such substance of any Governmental
Authority.
<PAGE>
"ENVIRONMENTAL AND SAFETY LAWS" shall mean any and all federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges or releases
of pollutants, contaminants, petroleum or petroleum products, or toxic or
hazardous substances or wastes into the environment, including ambient air,
surface water, groundwater, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, petroleum or petroleum products, or toxic
or Hazardous Substances or Hazardous Wastes or the clean-up or other remediation
thereof.
3.14 APPROVAL BY BOARD OF DIRECTORS. The Board of Directors has
approved this Agreement and all of the transactions contemplated by this
Agreement.
3.15 FINANCIAL STATEMENTS. The Company has delivered to Buyer's
Representative true and accurate copies of (i) the Company's audited balance
sheet as of November 30, 1996 (the "Audited Balance Sheet") and the related
statements of operations and cash flows for the fiscal year then ended (the
"Audited Income Statement"; together with the Audited Balance Sheet, the
"Audited Financial Statements"), (ii) the unaudited balance sheet of the Company
as of February 28, 1997 (the "Unaudited Balance Sheet"), and the related
unaudited statements of operations and cash flows of the Company for the
three-month period ended at the date of the Balance Sheet, all certified by the
Chief Financial Officer (the "Unaudited Income Statement"; together with the
Unaudited Balance Sheet, the "Unaudited Financial Statements"), and (iii) a Pro
Forma Balance Sheet stated as of the Effective Date (the "Pro Forma Balance
Sheet"). (The Audited Financial Statements, the Unaudited Financial Statements,
and the Pro Forma Balance Sheet are referred to collectively as the "Financial
Statements".) The Financial Statements are in accordance with the books and
records of the Company, have been prepared in conformity with generally accepted
accounting principles consistently applied (except as described in the notes
included therein and except that the Unaudited Financial Statements, and the Pro
Forma Balance Sheet do not have notes thereto), and fairly present the financial
condition of the Company as of the dates thereof and the results of its
operations for the periods then ended, subject, in the case of the Unaudited
Financial Statements, to year-end adjustments.
3.16 CASH FORECAST. The Company has delivered to Buyer's Representative
a Monthly Cash Forecast dated as of May 23, 1997 (the "Cash Forecast"), which is
true and accurate in all respects taking into account the past and currently
projected operations of the Company, except for the omission of additional
distributions to the Company's shareholders as contemplated in Section 6.5.
3.17 UNDISCLOSED LIABILITIES. The Company has no liabilities or
obligations of any nature (whether accrued, absolute, contingent, unasserted or
otherwise, except (i) as set forth or reflected on the Financial Statements (or
described in the notes thereto) or the Cash Forecast, (ii) for purchase
contracts and orders for supplies or services in the ordinary course of
business, (iii) for liabilities and obligations incurred in the ordinary course
of business not exceeding $10,000 in the aggregate and not disclosed on the
Schedule of Exceptions; PROVIDED that such Schedule discloses the nature of such
liability.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser severally represents and warrants to the Company as follows:
4.1 EXISTENCE AND POWER. Purchaser, if a corporation, partnership or
limited liability company, is a corporation, partnership or limited liability
company duly organized, validly existing and in good standing under the laws of
the state under which it was organized, with full power and authority to enter
into this Agreement and to perform its obligations under this Agreement.
<PAGE>
4.2 AUTHORIZATION. Purchaser's execution, delivery and performance of
this Agreement, and the consummation by Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all requisite
corporate, partnership or limited liability company action of the Purchaser.
Purchaser has authorized Buyer's Representative to act on Purchaser's behalf in
the manner specified in this Agreement.
4.3 BINDING EFFECT. This Agreement has been duly executed and
delivered by Purchaser, and constitutes a valid and binding agreement of
Purchaser.
4.4 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement by Purchaser nor the consummation by Purchaser of the
transactions contemplated hereby will (a) conflict with or result in any breach
of any provision of the articles of incorporation, bylaws, partnership agreement
or operating agreement of Purchaser; (b) require any filing with, or the
obtaining of any permit, authorization, consent or approval of, any court or
governmental or regulatory authority; (c) to the best knowledge of Purchaser,
result in a default (give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, agreement, lease or other instrument or
obligation to which Purchaser is a party or by which Purchaser or any of its
assets may be bound, except for defaults (or rights of termination, cancellation
or acceleration) as to which requisite waivers or consents have been obtained;
or (d) to the best knowledge of Purchaser, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Purchaser; or any of its
assets; PROVIDED, that the foregoing clauses (b), (c) and (d) shall not apply to
requirements, defaults or violations which would not have a material adverse
effect on the business, operations or financial condition of Purchaser.
4.5 BROKERS' FEES. No investment banker, broker, finder or other
intermediary has been retained by or is authorized to act on behalf of Buyer or
Purchaser who might be entitled to any fee or commission from the Company or any
of the Holders upon consummation of the transactions contemplated by this
Agreement.
4.6 SUITABILITY. Purchaser is an "accredited investor" or is
represented by a "purchaser representative" as defined in Regulation D
promulgated under the Securities Act.
4.7 INVESTMENT. Purchaser is acquiring the number of Shares set forth
opposite Purchaser's name on the Schedule of Purchasers for investment for
Purchaser's own account and not with a view to, or for, resale in connection
with, any distribution of the Shares, and Purchaser has no present intention of
selling or distributing any of such Shares. Purchaser understands that the
Shares have not been registered under the Securities Act by reason of a specific
exemption from the registration provisions of the Securities Act which depends
upon, among other things, the BONA FIDE nature of Purchaser's investment intent
as expressed herein.
4.8 RULE 144. Purchaser acknowledges that, because they have not been
registered under the Securities Act, the Shares constitute "restricted
securities" as defined in Rule 144(a)(3) and must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from such
registration is available. Purchaser is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of securities
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for
the securities, the availability of certain current public information about the
issuer, the resale occurring not less than one year after a party has purchased
and paid for the security to be sold, the sale being through a "broker's
transaction" or in transactions directly with a ""market maker" (as provided by
Rule 144(f)) and the number of securities being sold during any three-month
period not exceeding specified limitations (unless the securities satisfy the
requirements of Rule 144(k)).
<PAGE>
5. ADDITIONAL COVENANTS OF THE COMPANY AND THE HOLDERS
5.1 NON-SOLICITATION; EXCLUSIVITY; BREAK-UP FEE. Neither the Company
nor the Holders shall, directly or indirectly, initiate contact with, solicit
or, encourage any inquiries or proposals by, or negotiations with, any person or
entity (other than Buyer) in connection with any possible proposal (an
"Acquisition Proposal") regarding a sale of all or any of the Shares, nor shall
the Company or the Holders sell, agree to sell or arrange for the sale of any
shares of Common Stock during the term of this Agreement. Notwithstanding the
foregoing, the Company may, if counsel to the Company advises that it is
necessary for the Board of Directors of the Company, in accordance with its
fiduciary duties, (i) furnish information concerning the Company to any
corporation, partnership, person or other entity or group, who or which may
request such information pursuant to appropriate confidentiality agreements; and
(ii) engage in discussions and negotiations with such person or entity;
provided, however, that the Company shall give prior notice to Buyer as promptly
as practicable of its intent to furnish such information or to enter into
discussions and negotiations with such person or entity. The Company shall
promptly thereafter communicate to Buyer the terms of any proposal or inquiry
made with respect to any Acquisition Proposal and the identity of the party
making the Acquisition Proposal. If the Company accepts any Acquisition
Proposal or if the company otherwise terminates this Agreement prior to the
Effective Date, the Company will pay to Buyer a cancellation or "break-up" fee
of Two Hundred Fifty Thousand Dollars ($250,000) within two (2) days after
Buyer's Representative requests in writing the payment of such fee. The Company
agrees that the amount of such fee is reasonable and appropriate in light of the
circumstances existing and applicable to the parties hereto as of the date of
this Agreement. The provisions of this Section 5.1 shall cease to apply after
the Effective Date.
5.2 MATERIAL TRANSACTIONS. Except as otherwise contemplated by this
Agreement, during the term of this Agreement, the Company shall not enter into
any transaction outside the ordinary course and scope of its current business
activity or incur any item or amount of expense that is not set forth in the
Cash Forecast without the prior written consent of Buyer's Representative.
5.3 SHAREHOLDER APPROVAL. Subject to the terms and conditions
contained herein, this Agreement shall be submitted for approval to the holders
of voting stock of the Company at a meeting to be duly held for this purpose by
the Company (the "Company Meeting"). If the Company shall not have terminated
this Agreement pursuant to Section 5.1 prior to the Company Meeting, the
Company, the current Board of Directors, and the Holders shall recommend that
the shareholders of the Company approve and adopt this Agreement and the
transactions contemplated hereby, and such recommendation shall be contained in
a proxy statement acceptable to Buyer's Representative and its legal counsel.
5.4 VOTING AGREEMENTS. If the Company shall not have terminated this
Agreement pursuant to Section 5.1 previously, each Holder severally agrees with,
and covenants to, Buyer at any meeting of shareholders of the Company called to
vote upon the Agreement (the "Company Meeting") or at any adjournment thereof,
or in any other circumstances upon which a vote, consent or other approval with
respect to the Agreement is sought, such Holder shall vote or cause to be voted
such Holder's shares of Company voting stock in favor of the Agreement and the
approval of the terms thereof, and each of the other transactions contemplated
by the Agreement.
5.5 BOARD OF DIRECTORS OF THE COMPANY; OFFICERS. The Board of
Directors shall take action necessary immediately as of the Closing Date to fix
the number of directors constituting the Board of Directors to be at least five
(5) members, and to cause three (3) individuals designated by Buyer's
Representative to be elected as directors of the Company to replace existing
directors who shall resign as of the Closing Date. In addition, all executive
officers of the Company shall resign as of the Closing Date. Katrina Thompson
must agree to stay with the Company for at least thirty (30) days after the
Effective Date, as part of her severance agreement with the Company, to assist
with financial matters of the Company upon request by Buyer's Representative.
<PAGE>
5.6 INVESTIGATION. Upon reasonable notice, the Company shall afford to
Buyer's Representative and to its officers, employees, accountants, counsel and
other authorized representatives full and complete access during normal business
hours, throughout the period prior to the earlier of the Effective Date or the
date of termination of this Agreement, to its plants, properties, contracts,
commitments, books and records (including, but not limited, to tax returns) and
to the employees and accountants of the Company responsible for such matters,
and shall use its reasonable best efforts to cause its representatives to
furnish promptly to Buyer's Representative such additional financial and
operating data and other information as to its businesses and properties as
Buyer's Representative or its duly authorized representatives may from time to
time reasonably request.
5.7 SHELF REGISTRATION. As promptly as practicable upon request by
Buyer's Representative, or any group of Purchasers who are record holders, in
the aggregate of not less than 250,000 shares at any time following the Closing
Date, the Company shall file and cause to be declared effective a "shelf"
Registration Statement on any appropriate form pursuant to rule 415 (or similar
rule that may be adopted by the SEC) under the Securities Act for all the Shares
("Registrable Securities"), which form shall be available for the sale of the
Registrable Securities in accordance with the intended method or methods of
distribution thereof (which shall not include an underwritten offering). The
Company agrees to use its best efforts to keep such Registration Statement
continuously effective and usable for resale of Registrable Securities for a
period of twelve (12) months from the date on which the SEC declares such
Registration Statement effective, or such shorter period which will terminate
when all the Registrable Securities covered by such Registration Statement have
been sold or may be sold pursuant to Rule 144. The Company will pay all
registration expenses in connection with all registrations of Registrable
Securities pursuant to this Agreement upon the written request of any of the
Purchasers, and each Purchaser shall pay all commissions and transfer taxes, if
any, relating to the sale or disposition of such Purchasers' Registrable
Securities pursuant to the Registration Statement. For this purpose:
"REGISTRATION EXPENSES" mean any and all expenses of the Company
incident to performance of or compliance with this Agreement, including, without
limitation, (i) all SEC and securities exchange registration and filing fees,
(ii) all printing, messenger and deliver expenses, (iii) all fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange, and the fees and disbursements of counsel for the Company
and of its independent public accountants, but excluding underwriting discounts
and commissions and transfer taxes, if any.
5.8 TAX RETURNS. Prior to the Effective Date the Company agrees to
prepare and file its federal and all required state income tax returns for the
tax year ended November 30, 1996.
6. CERTAIN MUTUAL COVENANTS.
6.1 CLOSING CONDITIONS. The Company, the Holders and Buyer shall use
their respective best efforts to cause the conditions precedent to the Closing
to be fulfilled.
6.2 CONSENTS AND APPROVALS. Prior to the Closing, the Company, the
Holders and Buyer shall use their respective best efforts to obtain the
authorizations, consents, orders and approvals of federal, state and local
regulatory bodies and officials, courts and other third parties that may be
necessary for the performance of their respective obligations under this
Agreement and the consummation of the transactions contemplated by this
Agreement, and shall cooperate fully with each other in seeking promptly to
obtain such authorizations, consents, orders and approvals as may be necessary
for the performance of their respective obligations pursuant to this Agreement.
<PAGE>
6.3 CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS. Through the Closing Date,
except to the extent required by applicable law or stock exchange rules, and
except for a form of press release acceptable to all parties, no party to this
Agreement shall make any public announcement with respect to this Agreement or
the transactions contemplated in this Agreement or otherwise communicate with
any third party, including, without limitation, news media, without prior
notification to the other party, and the parties shall cooperate as to the
timing and contents of any such announcement.
6.4 FURTHER ACTION. Each of the parties to this Agreement shall
execute such documents and other papers and take such further actions as may be
reasonably required or desirable to carry out the provisions of this Agreement
and the transactions contemplated in this Agreement or, at or after the Closing
Date, to evidence the consummation of the transactions contemplated in this
Agreement. Each of the parties to this Agreement shall take, or cause to be
taken, all actions and to do, or cause to be done, all other things necessary,
proper or advisable to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement, to satisfy the conditions to
this Agreement and to obtain in a timely manner all necessary waivers, consents,
and approvals and to effect all necessary registrations and filings.
6.5 DISTRIBUTION TO COMPANY SHAREHOLDERS. Within two (2) business days
after the Effective Date, the Board of Directors of the Company will declare a
distribution to shareholders which shall not exceed $4,914,000 in the aggregate;
including the distribution of a note payable by the Company in the principal
amount of $300,000 (or such lesser amount as is received from Spieker Properties
by the Company with respect to a note for the same amount subsequent to the date
of this Agreement "the Spieker Properties Note Receivable") to Alarmguard
Holdings, Inc. in lieu of cash of like amount. Such distribution will be
payable to shareholders of record of the Company as of a date as soon as
practicable following the Effective Date (and prior to the Closing Date) such
that Buyer will not be entitled to exercise any portion thereof. Prior to the
Effective Date Alarmguard Holdings, Inc. shall agree in writing to receive a
distribution of the lesser of (i) the face amount of such Company note and (ii)
the net proceeds realized by the Company from the Spieker Properties Note
Receivable in lieu of cash.
6.6 POST-CLOSING OPERATIONS. When reasonably practicable after the
Closing Date, the Buyer will cooperate with the Company to engage in the real
estate business through the ownership and leasing of more than 1,500,000 square
feet of office/R&D real estate, which Buyer and/or Buyer's affiliates presently
own and will be held in an entity in which the Company will receive equity
interests and Buyer and/or Buyer's affiliates will receive equity interests
convertible into shares of the Company's Common Stock, all upon terms and
conditions to be determined by the Company and Buyer, or Buyer's affiliates.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. Except to the extent
expressly waived in writing by Buyer, all obligations of Buyer under this
Agreement are subject to the fulfillment, at or before the Closing, of all of
the following conditions:
7.1 REPRESENTATION AND WARRANTIES TRUE AT CLOSING. Each of the
representations and warranties of the Company contained in this Agreement shall
be true in all material respects on and as of the Closing Date with the same
effect as though made on and as of such date.
7.2 PERFORMANCE. The Company and the Holders shall have performed in
all material respects each of their respective obligations to be performed on or
prior to the Closing pursuant to this Agreement.
7.3 NO CONFLICT. Neither the Company nor any of its assets shall be
subject to or obligated under its Articles of Incorporation or Bylaws or under
any material contract, lease or other instrument or any license, franchise or
permit, or subject to any statute, rule, order or decree, which would be
defaulted, breached, terminated, forfeited or violated by or in conflict (or
upon the failure to give notice or
<PAGE>
the lapse of time, or both, would result in a default, breach, termination,
forfeiture or conflict) with its execution and performance of this Agreement and
the transactions contemplated hereby. Except as contemplated under this
Agreement, no consent of any person not a party to this Agreement, nor consent
of or filing with (including any waiting period) any governmental authority is
required to be obtained or performed on the part of the Company to permit the
consummation of the transactions contemplated by this Agreement.
7.4 SECURITIES LAW COMPLIANCE. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
including, but not limited to, the sale and issuance of the Shares by the
Company to the Purchasers shall comply with and be effected in accordance with
the applicable provisions of all federal and state securities laws.
7.5 AMEX LISTING. The Company shall have complied with all rules and
requirements of the American Stock Exchange and the Pacific Stock Exchange, and
the Shares shall have been listed with the American Stock Exchange and the
Pacific Stock Exchange.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY. Except to the extent
expressly waived in writing by the Company, the obligations of the Company set
forth in this Agreement are subject to the fulfillment, at or before the
Closing, of all of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. Each of the
representations and warranties of each Purchaser contained in this Agreement
shall be true in all material respects on and as of the Closing Date with the
same effect as though made on and as of such date.
8.2 PERFORMANCE. Buyer and each Purchaser shall have performed in all
material respects each of the obligations of Buyer or each such Purchaser to be
performed on or prior to the Closing pursuant to this Agreement.
9. TERMINATION.
9.1 TERMINATION. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned prior to the Effective Date:
(i) at any time, by mutual written agreement of the Company and
Buyer's Representative;
(ii) at any time, by the Company, if the Company accepts an
Acquisition Proposal pursuant to Section 5.1 (NON-SOLICITATION; EXCLUSIVITY;
BREAK-UP FEE) and pays to Buyer the cancellation or break-up fee specified
therein;
(iii) at any time prior to the Effective Date, if Buyer shall
default in the observance, or in the due and timely performance, of any of the
agreements or covenants contained in this Agreement, or if any of the
Purchasers' (and Buyer's ) representations or warranties set forth in this
Agreement were untrue in any material respect as of the date of this Agreement
or became untrue in any material respect as of a subsequent date, the Company
may terminate this Agreement upon five (5) calendar days' notice to Buyer's
Representative, during which time Buyer shall have an opportunity to cure the
default or breach; and
(iv) at any time prior to the Effective Date, if the Company or
any of the Holders shall default in the observance, or in the due and timely
performance, of any of the agreements or covenants contained in this Agreement,
or if the Company's representations or warranties set forth in this Agreement
were untrue in any material respect as of the date of this Agreement or became
untrue in any
<PAGE>
material respect as of a subsequent date, Buyer may terminate this Agreement
upon five (5) calendar days' notice to the Company, during which time the
Company shall have an opportunity to cure the default or breach.
(v) by either party, if such party is not then in default under
this Agreement, at any time after October 31, 1997 if the Closing has not
occurred by then.
9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement, (a) each party shall re-deliver all documents and information of the
other party relating to the transactions completed hereby and all confidential
information received by any party to this Agreement with respect to the other
party shall be treated in accordance with Section 6.3 (CONFIDENTIALITY; PUBLIC
ANNOUNCEMENTS) of this Agreement and the Confidentiality Agreement dated as of
March 27, 1997 between the Company and Berg & Berg Enterprises, Inc.; (b) to the
extent practicable, all filings, applications other submissions with any court
or governmental or regulatory authority made pursuant to this Agreement shall,
at the option of the Company, be withdrawn from the court or governmental or
regulatory authority to which made; and (c) if this Agreement has been
terminated pursuant to either Section 9.1(iii) or Section 9.1 (iv) (TERMINATION)
of this Agreement, the parties shall retain all rights and remedies available to
each of them at law or in equity, including but not limited to the right to
bring an action against the defaulting party for specific performance.
10. GENERAL.
10.1 SURVIVAL. The covenants, representations and warranties of the
parties to this Agreement shall survive the Closing.
10.2 BINDING EFFECT; BENEFITS; ASSIGNMENT. All of the terms of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
and against the successors and permitted assigns of the Company, the Holders and
Buyer. Nothing in this Agreement, express or implied, is intended to confer
upon any other person any rights or remedies under or by reason of this
Agreement except as expressly indicated in this Agreement. Neither the Company,
the Holders nor Buyer shall assign any of their respective rights or obligations
under this Agreement to any other person, firm or corporation without the prior
written consent of the other party to this Agreement, except that Buyer may
assign its rights and delegate its obligations under this Agreement pursuant to
its right to amend the Schedule of Purchasers under Section 1.2.
10.3 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California without regard to its principles governing conflicts of
laws.
10.4 NOTICES. All notices, requests, demands and other communications
to be given pursuant to the terms of this Agreement shall be in writing and
shall be delivered personally, telecopied or sent by nationally recognized
overnight delivery service, and shall be deemed given and effective when so
delivered personally, telecopied or sent, as follows:
(a) If to Buyer or any Purchaser:
Berg & Berg Enterprises, Inc.
10050 Bandley Drive
Cupertino, California
Telecopier: 408/725-1626
Attention: Carl E. Berg
<PAGE>
with a copy to:
Graham & James LLP
600 Hansen Way
Palo Alto, California 94304
Telecopier: 415/856-3619
Attention: Alan B. Kalin
(b) If to the Company:
Mission West Properties
6815 Flanders Drive, Suite 250
San Diego, California 92121-2905
Telecopier: 619/450-1618
Attention: Michael M. Earley
with a copy to
Pillsbury Madison & Sutro LLP
101 West Broadway, Suite 1800
San Diego, California 92101
Telecopier: 619/236-1995
Attention: David R. Snyder
Each party may change its address or telecopier number by prior
written notice to the other parties.
10.5 COUNTERPARTS. This Agreement may be executed by facsimile and in
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute one and the same instrument.
10.6 EXPENSES. Buyer, the Company and the Holders shall pay their own
respective expenses, costs and fees (including, without limitation, attorneys'
and accountants' fees) incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement.
10.7 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
and understanding of the Company, the Holders and Buyer with respect to the
transactions contemplated by this agreement, and supersedes all prior
agreements, arrangements and understandings relating to the subject matter of
this Agreement.
10.8 AMENDMENT AND WAIVER. This Agreement may be amended, modified,
superseded or canceled, and any of the terms, covenants, representations,
warranties or conditions of this Agreement may be waived, only by a written
instrument executed by the Company and Buyer's Representative or, in the case of
a waiver, by or on behalf of the party waiving compliance. The failure of any
party at any time to require performance of any provision of this Agreement
shall in no manner affect the right at a later time to enforce the same. No
waiver by any party of any condition or of any breach of any term, covenant,
representation or warranty contained in this Agreement, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver
of any such condition or of any breach of any such term, covenant,
representation or warranty or any other term, covenant, representation or
warranty set forth in this Agreement.
<PAGE>
10.9 HEADINGS. The headings of the sections and paragraphs of this
agreement have been inserted for convenience or reference only and shall in no
way restrict or otherwise modify any of the terms or provisions of this
Agreement.
10.10 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement, express
or implied, is intended to or shall (a) confer on any person other than the
parties hereto and their respective successors or assigns any rights (including
third-party beneficiary rights), remedies, obligations or liabilities under or
by reason of this Agreement or (b) constitute the parties hereto as partners or
as participants in a joint venture. This Agreement shall not provide third
parties with any remedy, claim, liability, reimbursement, cause of action or
other right in excess of those existing without reference to the terms of this
Agreement. No third party shall have any right, independent of any right that
exists irrespective of this Agreement, under or granted by this Agreement, to
bring any suit at law or equity for any matter governed by or subject to the
provisions of this Agreement.
10.11 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation or rule
of construction providing that ambiguities in any agreement or other document
will be construed against the party drafting such agreement or document.
10.12 SEVERABILITY. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to
replace such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
[Remainder of page intentionally left blank]
<PAGE>
SIGNATURE PAGE FOR STOCK PURCHASE AGREEMENT
IN WITNESS WHEREOF, the Company, each of the Holders and each Purchaser has
executed this Agreement as of the day and year first above written.
BUYER:
Berg & Berg Enterprises, Inc.
--------------------------------------------------------
(Print or type name of Purchaser)
By: /s/ Carl E. Berg
-----------------------------------------------------
(signature)
Name: Carl E. Berg
---------------------------------------------------
(Print or type if signing on Purchaser's behalf)
Title: President
--------------------------------------------------
(if applicable)
THE COMPANY: MISSION WEST PROPERTIES
By: /s/ Michael M. Earley
-----------------------------------------------------
(signature)
Name: Michael M. Earley
---------------------------------------------------
(print or type name)
Title: President
--------------------------------------------------
(if applicable)
THE HOLDERS:
ALARMGUARD HOLDINGS, INC.
By: /s/ Russell R. MacDonnell
-----------------------------------------------------
(signature)
Name: /s/ Russell R. MacDonnell
---------------------------------------------------
(print or type name)
Title: Chairman
--------------------------------------------------
(if applicable)
<PAGE>
ADDITIONAL SIGNATURE PAGE FOR STOCK PURCHASE AGREEMENT
BYRON WEBB, JR.
/s/ Byron B. Webb, Jr.
--------------------------------------------------------
(signature)
WILLIAM E. NELSON
/s/ William E. Nelson
--------------------------------------------------------
(signature)
<PAGE>
APPENDIX I
SCHEDULE OF PURCHASERS
NUMBER OF SHARES
NAME & ADDRESS OF COMMON STOCK PURCHASE PRICE
- -------------- ---------------- --------------
Berg & Berg Enterprises, Inc. 6,000,000 $900,000.00
10050 Bandley Drive
Cupertino, California 95014
Total ---------------- ----------------
6,000,000 $900,000.00
--------- -----------
--------- -----------
<PAGE>
APPENDIX II
SCHEDULE OF HOLDERS
NUMBER OF SHARES
NAME & ADDRESS OF COMMON STOCK PERCENT OWNED
- -------------- ---------------- -------------
Alarmguard Holdings, Inc. 676,050 44.10%
c/o the Company
Byron B. Webb, Jr. 170,419 11.10%
c/o the Company
William E. Nelson 77,361 4.98%
c/o the Company
<PAGE>
MISSION WEST PROPERTIES Please mark
For Special Meeting of Shareholders your vote as
July __, 1997 indicated in
this example
The Board of Directors solicits your proxy for the following items.
FOR AGAINST ABSTAIN
1. Consideration of a proposal to sell
6,000,000 shares of Common Stock to
a group of private investors led by
Berg & Berg Enterprises, Inc. at a
purchase price of $0.15 per share
as set forth in the accompanying
proxy statement.
2. As they shall in their sole judgment determine on any other matter that may
properly come before the meeting or any adjournment or postponement
thereof.
SIGNATURE(S) DATE
---------------------------------------- --------------------
NOTE: Please sign as name appears herein. Joint owners should sign. When
signing as attorney, executor, administrator, trustee, or guardian, please give
full title as such.
- FOLD AND DETACH HERE -
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael M. Earley and William E. Nelson, and
each of them, as his agents and proxies with full power of substitution to vote
any and all shares of Common Stock of Mission West Properties which the
undersigned is entitled to vote at the Special Meeting of Shareholders of said
Company to be held July __, 1997, or any adjournment or postponement thereof, as
specified on the reverse hereof.
This proxy will be voted as the undersigned specifies on the reverse hereof.
UNLESS OTHERWISE MARKED, THIS PROXY WILL BE VOTED FOR THE PROPOSAL TO SELL
6,000,000 SHARES OF COMMON STOCK AS DESCRIBED IN THE ACCOMPANYING PROXY
STATEMENT.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE.)
- FOLD AND DETACH HERE -
