Dear ESOP Participant,
As our July 1 Special Meeting of Shareholders approaches, we want you to have
all the information you need to make the decision to vote your shares in favor
of the merger with Highwoods. Your Board of Directors continues to believe this
merger serves the best interests of all shareholders, including ESOP
participants.
There are four key reasons to vote for the merger:
1. Superior value for your J.C. Nichols shares, now
2. Highwoods is the best partner, with a strong record of delivering shareholder
value
3. Highwoods is the best and only offer
4. Highwoods is committed to Kansas City
Our first letter to you explained these points in detail. Since then, there have
been two new developments you should be aware of.
First, we are very pleased to inform you that the Trustee has now agreed to
permit you to choose the percentage of your J.C. Nichols shares for which you
would like to receive cash for in the Highwoods transaction. You should have
received a cash election form that you must use to register your choice. If you
have not received this form, please call Bill Bell at (816) 960-6240 to request
one immediately.
Second, on June 16, Columbia Financial Advisors. informed the Company that it
had timely completed its analysis of Nichols as of 12/31/97 and valued the
Company for ESOP purposes at $65 per share. As you know, this valuation is
conducted annually solely for Plan administration purposes. The Trustee has
acknowledged to the Company that Columbia is a highly qualified financial firm
and is totally independent. Because Columbia's conclusions affirm the fairness
of the merger price, we see no reason for the Trust to spend an additional
$125,000 of your money - - beyond the $1.2 million of Trust expenses already
incurred over the last year -- on yet another opinion from Duff and Phelps. That
is one reason why we have not agreed to provide unprecedented and unlimited
indemnification for Duff and Phelps.
We believe the question you must decide is very simple: do you want the superior
value of the Highwoods offer paid to you by August 31, or do you want to wait
for an uncertain future? In our view, the Highwoods offer serves your best
interests. We hope you will agree.
Following are the answers to additional questions received from many of you
since our last
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mailing. We hope they will be helpful as you reach your decision.
1. I am still confused about how much cash I can receive. Am I
guaranteed to receive 40% cash no matter what happens?
Assuming you and all other shareholders make the cash election, you are
guaranteed to receive 40% in cash of what you will get for your J. C. Nichols
shares. Based on current information, you are likely to receive more than 40%
cash, but we cannot predict how much more. Please note that in order to receive
at least 40% cash, you must elect to receive cash for 100% of your shares on
your cash election form.
Also, it is important to understand that if you want only cash, but you do
receive some Highwoods stock, any stock broker can easily and quickly sell that
stock in the stock market once you receive the shares from the Trust.
2. May I elect whether my ESOP account will receive cash or Highwoods
stock in the Highwoods merger?
Yes. The Company has finally convinced the Trustee to give you the right to
decide. You should have received a yellow Cash Election Form to use to make this
election. Please call Bill Bell at (816) 960-6240 if you have not yet received
the Form.
3. When will I get my money?
Highwoods has and will take every possible step necessary to terminate the Trust
and distribute assets as quickly as possible. We are confident that the Trustee
will cooperatie and that you will receive the proceeds from your account by
August 31, 1998.
4. Does Highwoods have to issue more stock to give to those who elect
to receive it? Will that have a negative impact on the price of Highwoods?
Highwoods will issue more shares of its stock. Highwoods does not believe that
should have any adverse impact on its stock price because it will only happen
after the merger closes. Then, J.C. Nichols= underlying value will be added to
Highwoods= which the market will factor into the pricing of Highwoods stock.
5. Has the Trustee issued an opinion on the merger?
Since the proxy became public, the Trustee has not issued an opinion on the
merger. The Board of Directors, representing the interests of all shareholders,
continues to believe the merger is in their best interests. That includes ESOP
participants. We are confident that the Trustee will agree, particularly now
that it has rejected the notion of exercising appraisal rights.
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6. Can the Trustee override my vote on the merger:
No. In our view, the law requires the Trustee to vote your shares in accordance
with your instructions.
7. If I receive stock, can I roll that over into an IRA, 401K, etc.?
Yes. Both cash and stock can be rolled over into an IRA, 401K, or similar tax
qualified retirement plan.
8. If the Highwoods merger is approved, will all ESOP accounts be fully
vested?
On May 27, 1998, the J.C. Nichols board of directors, at the request of
Highwoods, resolved to terminate the ESOP if the Highwoods merger closes. This
means that all ESOP account balances in existence on that date will become fully
vested if the Highwoods merger closes. However, any unvested portion of an
account that was forfeited prior to that time must remain forfeited and may not
be restored.
9. I understand the Trust will need to use some of its assets for
payment of debt. How many shares does this involve?
Approximately 11% of the Trust assets will be needed to pay Trust debt.
10. Why is the Trust in debt?
The Trust borrowed to pay 1997 distributions in cash. The stock that was for the
participants who received distribution is still in the Trust and must be
allocated to all remaining participants for voting purposes. This debt must be
paid regardless of whether the Highwoods merger is approved. This debt has not
adversely affected your ESOP benefit.
11. Has the Trustee incurred expenses that will be deducted from my
account?
Yes. The Trustee has indicated that they have incurred expenses in excess of
$1.2 million.
12. Why am I receiving so many forms and what do I do with them?
Each form has a specific purpose. Also, you have been receiving more than one
copy of the same form. This is simply to assure that you have that form
available when you decide to fill it out and send it in.
These are the only two forms you need and you only need to send in one of each:
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a. Blue Voting Instruction Form
Direct INTRUST to vote your shares.
This form must be received by INTRUST by noon, June 30, 1998.
b. Yellow Cash Election Form
Indicate the percentage of your ESOP shares for which you
would like to receive cash. It must be received by William M.
Mercer, Incorporated on or before 10:00 a.m. June 23, 1998.
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We hope the answers to these questions will help you decide to instruct the ESOP
Trustee to vote your shares in favor of the merger. Please fill out and send in
your Voting Instruction Form today.
Thank you for your support.
