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As filed with the Securities and Exchange Commission on October 14, 1997
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
TRIAD PARK, LLC
(Name of Issuer)
TRIAD PARK, LLC
RICHARD C. BLUM & ASSOCIATES, LP
TPL ACQUISITION, LLC
(Name of Person(s) Filing Statement)
MEMBERSHIP INTERESTS, NO PAR VALUE
(Title of Class of Securities)
895814 10 1
(CUSIP Number of Class of Securities)
PATRICK J. KERNAN MURRAY A. INDICK
GENERAL COUNSEL MANAGING DIRECTOR, GENERAL COUNSEL
TRIAD PARK, LLC RICHARD C. BLUM & ASSOCIATES, L.P.
3055 TRIAD DRIVE 909 MONTGOMERY STREET, SUITE 400
LIVERMORE, CALIFORNIA 94550-9559 SAN FRANCISCO, CALIFORNIA 94133
(510) 449-0606 (415) 434-1111
(Name, Address and Telephone Number of Person Authorized
to Receive Notice and Communications on Behalf of Person(s) Filing Statement)
Copies to:
EDWARD S. MERRILL
MCCUTCHEN, DOYLE, BROWN & ENERSEN, LLP
THREE EMBARCADERO CENTER
SAN FRANCISCO, CALIFORNIA 94111-4067
(415) 393-2000
This statement is filed in connection with:
|X| a. The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13d-3(c) under the Securities
Exchange Act of 1934.
[ ] b. The filing of a registration statement under the Securities Act
of 1933.
[ ] c. A Tender Offer
[ ] d. None of the above.
Check the following box if the soliciting materials or information statement
referred to in check box (a) are preliminary copies: |X|
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CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Transaction Valuation* Amount of Filing Fee
- -----------------------------------------------------------------------------
<S> <C>
$23,358,673 $4,672
- -----------------------------------------------------------------------------
</TABLE>
* For purposes of calculating fee only. This amount assumes the purchase
at a price of $1.32 per share of 17,695,965 outstanding shares of
Company Membership Interests. The amount of the filing fee, calculated
in accordance with Regulation 240.0-11 of the Securities Exchange Act of
1934, equals 1/50th of one percent of the value of the membership
interests purchased.
[ ] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED IN RULE
0-11(a)(2) AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS
PREVIOUSLY PAID. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT
NUMBER, OR SCHEDULE AND THE DATE OF ITS FILING.
Amount Previously Paid:
Filing Parties:
Form or Registration No:
Date Filed:
CROSS REFERENCE SHEET
(PURSUANT TO GENERAL INSTRUCTION F TO SCHEDULE 13E-3)
INTRODUCTION
This Rule 13E-3 Transaction Statement is being filed in
connection with the proposed merger (the "Merger") of TPL Acquisition, LLC, a
Delaware limited liability company (the "Acquisition LLC") and an affiliate of
Richard C. Blum & Associates, LP, a California limited partnership ("RCBA"),
with and into Triad Park, LLC, a Delaware limited liability company (the
"Company"), pursuant to the terms and conditions of an Agreement of Merger dated
September 9, 1997 (the "Merger Agreement") among the Company, RCBA and the
Acquisition LLC, a copy of which is attached hereto as Exhibit (c)(1). Upon
consummation of the Merger, (i) the separate corporate existence of the
Acquisition LLC will cease and the Company will continue as the surviving
company, and (ii) each outstanding membership interest, no par value, of the
Company (the "Shares") will be converted into the right to receive $1.32 in
cash.
The Cross Reference Sheet is being supplied pursuant to General
Instruction F to Schedule 13E-3 and shows the location in the Company's
preliminary proxy statement (the "Proxy Statement"), concurrently being filed
with the Securities and Exchange Commission (the "SEC") in connection with the
proposed Merger, of information required to be included in response to items of
this Statement. A copy of the Proxy Statement is attached hereto as Exhibit
(d)(1). The information in the Proxy Statement, including all exhibits thereto,
is hereby expressly incorporated herein by reference and the responses to each
item are qualified in their entirety by the provisions of the Proxy Statement.
All information in, or incorporated by reference in, the Proxy Statement or this
Statement concerning the Company or its advisors, or
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actions or events with respect to any of them, was provided by the Company, and
all information in, or incorporated by reference in, the Proxy Statement or this
Statement concerning RCBA, the Acquisition LLC or their affiliates, or actions
or events with respect to them, was provided by RCBA. The Proxy Statement
incorporated by reference in this filing is in preliminary form and is subject
to completion or amendment. In addition, the information in this preliminary
Proxy Statement is intended to be solely for the information and use of the SEC,
and should not be relied upon by any other person for any purpose. Capitalized
terms used but not defined in this Statement shall have the respective meanings
given them in the Proxy Statement.
As of September 10, 1997, RCBA owned 1,998,158 Shares,
representing approximately 10.1% of the voting power of the total outstanding
Shares of the Company. Neither the Company nor RCBA believes that RCBA or the
Acquisition LLC was then an affiliate of the Company, and the filing of this
Schedule 13E-3 does not constitute an admission by RCBA or the Acquisition LLC
that either entity is an affiliate of the Company.
SCHEDULE 13E-3 ITEM NUMBER AND RESPONSE AND/OR LOCATION IN PROXY
CAPTION STATEMENT
ITEM 1. ISSUER AND CLASS OF
SECURITY SUBJECT TO THE
TRANSACTION
(a) Front Cover Page and "SUMMARY--The
Company," which information is
incorporated herein by this reference.
(b) "SUMMARY--Record Date; Shareholders
Entitled to Vote; Quorum" and "THE
SPECIAL MEETING--Record Date;
Shareholder Approval," which information
is incorporated herein by this
reference.
(c) "SUMMARY--Market Price and Dividend
Data," which information is incorporated
herein by this reference.
(d) "SUMMARY--Market Price and Dividend
Data," which information is incorporated
herein by this reference.
(e)-(f) "SPECIAL FACTORS--Redemption of Shares,"
which information is incorporated herein
by this reference.
ITEM 2.IDENTITY AND
BACKGROUND This Statement is being jointly filed by
the Company (the issuer of the equity
securities that are the subject of the
Merger), RCBA and the Acquisition LLC.
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(a)-(d) "SUMMARY--The Company" and "--RCBA" and
"MANAGEMENT OF THE COMPANY, RCBA AND THE
ACQUISITION LLC," which information is
incorporated herein by this reference.
(e), (f) To the best of the undersigneds'
knowledge, none of the persons with
respect to whom information is
provided in response to this Item was
during the last five years (i) convicted
in a criminal proceeding (excluding
traffic violations or similar
misdemeanors) or (ii) party to a civil
proceeding of a judicial or
administrative body of competent
jurisdiction and as a result of such
proceeding was or is subject to a
judgment, decree or final order
enjoining further violations of, or
prohibiting activities subject to,
federal or state securities laws or
finding any violations of such laws.
ITEM 3. PAST CONTACTS,
TRANSACTIONS OR NEGOTIATIONS
(a)(1) "SPECIAL FACTORS--Background of the
Merger-History of Relationship Between
the Company and RCBA" which information
is incorporated herein by this
reference.
(a)(2) "SPECIAL FACTORS--Background of the
Merger-Contacts and Negotiations with
RCBA" which information is incorporated
herein by this reference.
(b) "SPECIAL FACTORS--Background of the
Merger-Discussions with Third Parties"
which information is incorporated herein
by this reference.
ITEM 4. TERMS OF THE TRANSACTION
(a) Front Cover Page, "SUMMARY--The Merger,"
"THE MERGER AGREEMENT" and "EXHIBIT
A--Agreement of Merger," which
information is incorporated herein by
this reference.
(b) "SPECIAL FACTORS--Purpose and Structure
of the Merger," and "--Interests of
Certain Persons in the Merger," which
information is incorporated herein by
this reference.
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ITEM 5. PLANS OR PROPOSALS OF THE
ISSUER OR AFFILIATE
(a)-(e) "SPECIAL FACTORS--Plans for the Company
After the Merger" and "MANAGEMENT OF THE
COMPANY, RCBA AND THE ACQUISITION LLC,"
which information is incorporated herein
by this reference.
(f), (g) "SPECIAL FACTORS--Certain Effects of the
Merger," which information is
incorporated herein by this reference.
ITEM 6. SOURCE AND AMOUNT OF FUNDS
OR OTHER CONSIDERATION
(a), (b) "SPECIAL FACTORS--Sources and Uses of
Funds," which information is
incorporated herein by this reference.
(c) Not applicable.
(d) Not applicable.
ITEM 7. PURPOSE(S), ALTERNATIVES,
REASONS AND EFFECTS
(a)-(c) "SPECIAL FACTORS--Background of the
Merger," "--Purpose and Structure of the
Merger," "--Recommendation of the
Company's Advisory Board,"
"--Perspective of RCBA on the Merger"
and "--Certain Effects of the Merger,"
which information is incorporated herein
by this reference.
(d) "SUMMARY-The Merger," "--Interests of
Certain Persons in the Merger" and
"--Federal Income Tax Consequences,"
"SPECIAL FACTORS--Background of the
Merger," "--Plans for the Company After
the Merger," "--Certain Effects of the
Merger," "--Interests of Certain Persons
in the Merger" and "--Certain Federal
Income Tax Consequences" and "MANAGEMENT
OF THE COMPANY, RCBA AND THE ACQUISITION
LLC," which information is incorporated
herein by this reference.
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ITEM 8. FAIRNESS OF THE TRANSACTION
(a) "SUMMARY--Special Factors--
Recommendation of the Company's
Advisory Board" and "SPECIAL
FACTORS--Recommendation of the Company's
Advisory Board," which information is
incorporated herein by this reference.
(b) "SUMMARY--Special Factors--
Recommendation of the Company's Advisory
Board" and "--Sedway Report" and
"SPECIAL FACTORS--Background of the
Merger," "--Purpose and Structure of the
Merger," and "--Recommendation of the
Company's Advisory Board," which
information is incorporated herein by
this reference.
(c) "THE SPECIAL MEETING--Record Date;
Shareholder Approval," which information
is incorporated herein by this
reference.
(d)-(e) "SPECIAL FACTORS--Background of the
Merger" and "--Sedway Report," which
information is incorporated
herein by this reference.
(f) "SPECIAL FACTORS--Background of the
Merger," which information is
incorporated herein by this reference.
ITEM 9. REPORTS, OPINIONS,
APPRAISALS AND CERTAIN NEGOTIATIONS
(a)-(c) "SUMMARY--Special Factors--Sedway
Report," "SPECIAL FACTORS--Background of
the Merger" and "--Sedway Report," which
information is incorporated herein by
this reference.
ITEM 10. INTEREST IN SECURITIES OF
THE ISSUER
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(a) "SUMMARY--Voting of Shares Owned by
RCBA," "THE SPECIAL MEETING--Record
Date; Shareholder Approval," "SPECIAL
FACTORS--Background of the Merger" and
"--Interests of Certain Persons in the
Merger" and "SHARE OWNERSHIP OF
MANAGEMENT AND CERTAIN BENEFICIAL
OWNERS," which information is
incorporated herein by this reference.
(b) "SHARE OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS--Transactions
by Certain Persons in the Shares," which
information is incorporated herein by
this reference.
ITEM 11. CONTRACTS, ARRANGEMENTS "SPECIAL FACTORS--Background of the
OR UNDERSTANDINGS WITH RESPECT TO Merger," "--Interests of Certain Persons
THE ISSUER'S SECURITIES in the Merger," and "--Recommendation
of the Company's Advisory Board,"
which information is incorporated herein
by this reference.
ITEM 12. PRESENT INTENTION AND
RECOMMENDATION OF CERTAIN PERSONS
WITH REGARD TO THE TRANSACTION
(a), (b) "THE SPECIAL MEETING--Record Date;
Shareholder Approval," "SPECIAL FACTORS
--Background of the Merger,"
"--Recommendation of the Company's
Advisory Board" and "--Interests of
Certain Persons in the Merger" and
"SHARE OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS," which
information is incorporated
herein by this reference.
ITEM 13. OTHER PROVISIONS OF THE
TRANSACTION
(a) "SUMMARY--Dissenters' Rights," and
"RIGHTS OF DISSENTING SHAREHOLDERS,"
which information is incorporated herein
by this reference.
(b), (c) Not applicable.
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ITEM 14. FINANCIAL INFORMATION The Company's Information Statement on
Form 10-SB dated June 20, 1997 and its
Quarterly Reports on Form 10-QSB for the
quarter ended June 30, 1997 and for the
quarter ended September 30, 1997 (to be
filed on or before November 14, 1997)
are incorporated by reference in the
Proxy Statement and the Forms 10-QSB
will be delivered to shareholders of the
Company with the Proxy Statement. The
Company's audited financial statements
contained in the Form 10-SB and
unaudited financial statements for the
periods covered by the Forms 10-QSB are
incorporated herein by this reference.
ITEM 15. PERSON AND ASSETS
EMPLOYED, RETAINED OR UTILIZED
(a), (b) "THE SPECIAL MEETING--Proxies,"
"SPECIAL FACTORS--Sources and Uses of
Funds" and "THE MERGER
AGREEMENT--Payment for Shares," which
information is incorporated herein by
this reference.
ITEM 16. ADDITIONAL INFORMATION See the text of the Proxy Statement.
ITEM 17. MATERIALS TO BE FILED AS EXHIBIT NUMBER AND DESCRIPTION (EXHIBITS
EXHIBITS MARKED WITH AN ASTERISK (*) ARE FILED
HEREWITH)
(a) Not applicable.
(b) (b)(1) Triad Park Real Estate Asset
Strategy, prepared by Sedway Group,
dated July 22, 1997.*
(c) (c)(1) Agreement of Merger dated as of
September 9, 1997 by and between TPL
Acquisition, LLC, Richard C. Blum &
Associates, LP and the Company, which is
Exhibit A to the Proxy Statement and is
incorporated herein by this reference.
(c)(2) Independent Contractor Services
Agreement, dated February 27, 1997,
between the Company and Larry
McReynolds.*
(d) (d)(1) Preliminary copy of Letter to
Stockholders, Notice of Special Meeting,
Proxy Statement and form of Proxy for
the Special Meeting of Shareholders of
the Company to be held on December __,
1997.*
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(e) Not applicable.
(f) Not applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
October 14, 1997 RICHARD C. BLUM & ASSOCIATES, LP
By: RICHARD C. BLUM & ASSOCIATES, INC.,
its sole general partner
By: /s/ MARC T. SCHOLVINCK
-----------------------------
Name: Marc T. Scholvinck
Title: Managing Director & Chief
Financial Officer
October 14, 1997 TPL ACQUISITION, LLC
RICHARD C. BLUM & ASSOCIATES, LP
By: RICHARD C. BLUM & ASSOCIATES, INC.,
its sole general partner
By: /s/ MARC T. SCHOLVINCK
-----------------------------------
Name: Marc T. Scholvinck
Title: Managing Director & Chief
Financial Officer
October 14, 1997 TRIAD PARK, LLC
By: 3055 Management Corp.,
its Manager
By: /s/ JAMES R. PORTER
-----------------------------------
Name: James R. Porter
Title: Vice President
9
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EXHIBIT INDEX
Exhibit
Number Description
------ -----------
(a) Not applicable.
(b) (b)(1) Triad Park Real Estate Asset Strategy, prepared by
Sedway Group, dated July 22, 1997.
(c) (c)(1) Agreement of Merger dated as of September 9, 1997 by
and between TPL Acquisition, LLC, Richard C. Blum &
Associates, LP and the Company, which is Exhibit A to the
Proxy Statement and is incorporated herein by this reference.
(c)(2) Independent Contractor Services Agreement, dated
February 27, 1997, between the Company and Larry McReynolds.
(d) (d)(1) Preliminary copy of Letter to Stockholders, Notice of
Special Meeting, Proxy Statement and form of Proxy for the
Special Meeting of Shareholders of the Company to be held on
December __, 1997.
(e) Not applicable.
(f) Not applicable.
10
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EXHIBIT (b)(1)
SEDWAY GROUP
REAL ESTATE AND URBAN ECONOMICS
TRIAD PARK REAL
ESTATE ASSET
STRATEGY
PREPARED FOR:
BOARD OF DIRECTORS,
TRIAD PARK, LLC
JULY 22, 1997
<PAGE> 2
[SEDWAY GROUP LETTERHEAD]
July 22, 1997
Board of Directors
Triad Park, LLC
3055 Triad Drive
Livermore, CA 94550
RE: TRIAD PARK REAL ESTATE ASSET STRATEGY
Dear Sirs:
Sedway Group is pleased to present its real estate asset strategy for Triad Park
in Livermore, California. This report has been prepared solely for the use of
the Board of Directors of Triad Park, LLC, and is a confidential document to be
used for decision-making purposes.
As discussed in more detail in the attached report, Sedway Group recommends that
an orderly disposition of the property be implemented immediately in order to
capture the present strong market conditions and the momentum that Lincoln
Technology Park will generate. The disposition strategy is anticipated to take
about three-and-one-half years and result in proceeds with a net present value
of $25.6 million.
The following report includes an overview section, followed by a discussion of
market issues and recommendations, and concludes with a presentation of the
financial analysis of the disposition strategy. The results of our engagement
are also subject to the assumptions and limiting conditions appended to the end
of this report.
We appreciate this opportunity to assist in this important and challenging
assignment and look forward to discussing our findings with the Board at its
July 28, 1997, meeting.
Sincerely,
/s/ MICHAEL J. CONLON /s/ MARY A. SMITHERAM-SHELDON
- --------------------- -----------------------------
Michael J. Conlon, CRE Mary A. Smitheram-Sheldon
Principal Manager
MJC/MASS:nam
Enclosure
<PAGE> 3
SEDWAY GROUP
REAL ESTATE AND URBAN ECONOMICS
CONFIDENTIAL
OVERVIEW
TRIAD PARK HISTORY
Triad Park, totaling 396 gross acres, was purchased by Triad Systems Corporation
(Triad) in 1984 with the vision of creating an environment similar to Stanford
Business Park. At that time, the belief was that, with a tight real estate
market in Santa Clara County, other firms would follow Triad from the expensive
Silicon Valley to the relatively spacious and inexpensive Livermore.
Despite the 1987 completion of 219,800 square feet for Triad, the sale of a few
parcels of land (Wang NMR in 1987, Vista West/Impact and Boulangerie de France
in 1989), and the construction of the Marriott Residence Inn (Boulangerie de
France resale) and Comfort Inn (out-parcel), the original vision was never
realized due to economic and real estate recessions and competition. In the
early 1990s, Triad obtained approval to change the allowed uses to include
commercial/retail and residential.
Sales activity within Triad Park since 1990 is summarized in Exhibit 1 (exhibits
are included at the end of this report). With the exception of the Costco sale
in 1993, all the sales activity took place in 1996. (Exhibit 1 also includes two
resales of portions of Boulangerie de France=s land for informational purposes.)
Triad sold nearly 30 acres in 1996 in five transactions. For all but the Lincoln
sale, Triad financed 75 percent of the sale price. Of these five sales, three
(totaling 9.39 acres) have proposed uses related to the corporate lodging core
established by the Marriott Residence Inn, Comfort Inn and the new Hampton Inn.
Two sites are slated for a Hilton Garden Inn (with a restaurant) and a Marriott
Courtyard. The third site is planned for one or more restaurants or food-related
commercial. The two other sales (totaling 20.2 acres) are for office/R&D uses.
TRIAD PARK B CURRENT SITUATION
Current uses in Triad Park include the Triad complex, other office/R&D/light
industrial facilities (Wang NMR, Vista West/Impact, plus Lincoln Technology Park
under construction), lodging (Marriott Residence Inn, Comfort Inn, Hampton Inn),
and other commercial (Exxon service station with mini-mart, Wendy=s and
Baskin-Robbins; Harley Davidson Dealership; Costco).
The holdings of Triad Park, LLC include the Triad facility located on 15.06
acres and 293.9 acres of undeveloped land. The Triad facility consists of a
three-building complex totaling 219,800 square feet that has been leased to
Triad for five years commencing February 27, 1997. Although there is a five-year
renewal option, the corporate strategy for Triad is uncertain as to its future
commitment to its Livermore presence due to the recent merger.
Of the 293.9 acres of undeveloped land, 110.8 acres are designated for open
space and 4.5 acres are reserved for a future freeway interchange. Triad Park,
LLC owns about 179 gross acres of development land, or 142 net acres, with the
following breakdown (based on the current planned uses):
TRIAD PARK REAL ESTATE STRATEGY 1 JULY 1997
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SEDWAY GROUP
REAL ESTATE AND URBAN ECONOMICS
CONFIDENTIAL
<TABLE>
<CAPTION>
===============================================================================
Use Gross Size Net Size
===============================================================================
<S> <C> <C>
Residential 28.1 acres 24.7 acres
Office/R&D 127.1 acres 93.9 acres
Commercial/Retail 23.4 acres 23.4 acres
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TOTAL 178.6 ACRES 142.0 ACRES
===============================================================================
</TABLE>
Recent potential sales activity within the park has included the following:
- - Lots 1 and 2 (19.4 acres) in escrow to Gibson Speno Company;
- - Discussions with Gibson Speno Company to acquire Lot 3;
- - Discussions with Tom Terrill to acquire a portion of Lot 7 (formerly the
HHH Investments/ Micro Dental option parcel);
- - The first rights agreement with Lincoln Property Company for multiple
parcels, including a Astrike price@ of $4.00 per square foot (net of
bonds) for Lot 9;
- - An offer on Lot 9A at $3.60 per square foot (net of bonds);(1) and
- - A joint venture agreement with Jeffrey Kendall for a retail development
on Lot 16 that included a potential Taco Bell (now expired).
SEDWAY GROUP ENGAGEMENT
Triad Systems Corporation was recently merged with Cooperative Computing, Inc.
into CCI/Triad. As part of the merger, the real estate at Triad Park was spun
off into a separate entity, Triad Park, LLC, and the Board of Directors of this
entity desires to reevaluate the ownership and disposition strategy of its
assets.
Triad Park, LLC retained Sedway Group to provide a strategy to maximize the
value of the real estate assets. As part of this assignment, Sedway Group has
performed the following tasks:
- - Met with Triad Park management and reviewed the current status of the Park;
- - Inspected Triad Park and its environs;
- - Read various documents related to the park, including an appraisal prepared
by Carneghi-Bautovich & Partners, the listing agreement with Grubb & Ellis,
the Gibson Speno Company agreement (portions), the January 1997 Lincoln
Property Company offer, the Lincoln Property Company first rights of
offer clause, the lease and lease amendment pertaining to the Triad
building complex, tax and assessment bond information, etc.
- - Held telephone interviews with members of the Triad Park, LLC Board of
Directors;
- - Held telephone discussions with brokers, developers, and land owners active
in Livermore and the Tri-Valley area;
- - Reviewed market information provided by Grubb & Ellis; and
- ----------
(1) A recent discussion with Grubb & Ellis indicates that the sale price on
this lot has been negotiated up to $3.71 per square foot.
TRIAD PARK REAL ESTATE STRATEGY 2 JULY 1997
<PAGE> 5
SEDWAY GROUP
REAL ESTATE AND URBAN ECONOMICS
CONFIDENTIAL
- - Compiled the information gathered from all sources into a reasonable
disposition program and prepared a cash flow analysis.
MARKET ISSUES
The strategy that maximizes the value of Triad Parks real estate is dependent
upon many market-related issues. The most important of these market issues is
location. Another pertains to the perception of Triad Park. Of course, market
conditions are also very important to the real estate strategy.
LOCATION IN THE CITY OF LIVERMORE
The most important factor influencing Triad Park is its location in Livermore.
To quote one broker, "Livermore is not Pleasanton," or expanded, "Livermore is
not now, nor ever will be, Pleasanton."(2)
Pleasanton is a well-established office and research and development (R&D)
market, with an image as a desirable corporate address. Pleasanton offers an
excellent location at the nexus of I-580 and I-680 and high-quality corporate
park environments. Pleasanton possesses a wide variety of product and currently
has an active speculative market (although many buildings end up becoming
build-to-suits before completion). Companies, especially those that are
image-conscious, are willing to pay a premium to locate or remain in Pleasanton.
In addition, businesses that occupy office and R&D space often view their
employees as their greatest assets. For these firms, real estate occupancy costs
are secondary to their employees and they prefer to locate in an area where they
can attract and retain top talent. Lastly, due to Pleasanton=s established
office and R&D markets, it is a less risky location for owner-users with respect
to their real estate asset exit strategies.
In contrast, Livermore is viewed mainly as a distribution, warehouse, service
center, and light assembly location, capitalizing on its strength of lower land
prices and thus lower occupancy costs (to buy or rent). This occupancy expense
savings is more appealing to space-using businesses such as distributors and
manufacturers (or these divisions of larger firms). As a result, there is
basically no significant multitenant office or R&D product in Livermore, with
such uses considered Apioneering@ by market participants.
Thus, even though Triad Park and Livermore are only a few miles east of the
I-580/I-680 interchange, they possess a vastly different and less desirable
location compared to Pleasanton.
TRIAD PARK PERCEPTION
Although Triad Park is the westernmost business park in Livermore, the park
itself, as it is presently improved, does not convey the image needed in order
to compete with Pleasanton's corporate office and R&D parks. The development
program to date lacks focus, which is evident in the existing and
- ----------
(2) Although Pleasanton is the focus of the Tri-Valley, Dublin and San Ramon
are also important components and competitors in this market area. However,
when comparing Livermore to the rest of the Tri-Valley, the comparison
is often made in reference to Pleasanton.
TRIAD PARK REAL ESTATE STRATEGY 3 JULY 1997
<PAGE> 6
SEDWAY GROUP
REAL ESTATE AND URBAN ECONOMICS
CONFIDENTIAL
proposed mix of uses. This lack of cohesiveness has resulted in "historical
accidents" at the park, such as the conglomeration of corporate lodging
facilities, service station, and Costco, and in a lack of amenities that
indicate a quality corporate environment. More specifically, the issues with
the perception of Triad Park are as follows:
- - The current development in Triad Park is more indicative of a hodgepodge
created to respond to the dire economic conditions of the early 1990s
than of a uniformly planned corporate park.
- - The present pylon sign for Triad Park leads one to believe that it is a
highway rest stop rather than a quality corporate park.
- - There is no entry monument with landscaping to convey to visitors a
sense of arrival at Triad Park (there is no "there" there).
- - The park does not have the amenities needed for a corporate environment.
- - Until the Shea Business Park project moves forward significantly, there
is only one route in and out of the park, which is Airway Boulevard. The
interchange between I-580 and Airway Boulevard requires modernization.
CURRENT MARKET CONDITIONS - RETAIL
The I-580 corridor is already populated by numerous retail centers. The
corridor's demand for retail space is basically saturated, and the market is
generally perceived as being overbuilt. New construction of retail space will
not be speculative but will be driven by the expansion of retail chains.
However, this construction would most logically take place at available
locations near established retail concentrations in the corridor. In some areas
experiencing substantial residential development, a modest amount of
neighborhood-serving retail space may be built. Triad Park does not offer an
appropriate location for either convenience (neighborhood-serving) or comparison
(regional-serving) retail space. For this reason, the proposed Kendall project
on Lot 16 never attracted co-tenants for the Taco Bell.
Triad Park has established itself as a corporate lodging center with three
existing limited service/extended stay hotels, plus two more that were recently
approved. The existing and anticipated lodging space and employee base have
created a modest need for food in the park, which will grow over time as the
park is built-out. However, the sites most logical for food uses are located on
Constitution Way and are controlled by other entities. (There are three
potential food user sites, but we do not expect all three to be developed with
food in the near future.)
CURRENT MARKET CONDITIONS - OFFICE AND R&D
Following Bay Area and Silicon Valley trends, the Tri-Valley office and R&D
markets have improved dramatically in the past two years. According to Grubb &
Ellis in its 1997 market forecast, Tri-Valley Class A office and R&D/flex rents
increased by more than 20 percent in 1996. In addition, Tri-Valley
TRIAD PARK REAL ESTATE STRATEGY 4 JULY 1997
<PAGE> 7
SEDWAY GROUP
REAL ESTATE AND URBAN ECONOMICS
CONFIDENTIAL
R&D/flex land prices increased by 25 percent over 1995 and 1996.3 Net office
absorption in Tri-Valley in 1996 was just over 100,000 square feet; net
industrial space absorption was 29,000 square feet.
Prospects in the Tri-Valley are good through 1997 and 1998. However, with a
significant amount of new construction underway, the potential for continued
dramatic declines in vacancy or increases in rental rates is not as great as was
realized in the past two years (i.e., rents increasing at a decreasing rate).
The market's potential after 1998 is still expected to be healthy, but expected
substantial new construction make this time period less certain.
Pleasanton is the dominant location in the Tri-Valley. Although Pleasanton
presently has a low 3.0 percent office vacancy rate, there is substantial
construction activity and there is still abundant, albeit expensive, vacant land
in Hacienda Business Park and other quality Pleasanton locations. Brittania,
Opus Southwest, Parkway Properties and CM Capital all have office/R&D projects
under construction in Pleasanton. These projects, totaling over 500,000 square
feet (not including the 130,000-square-foot Brittania VI, which is pre-leased to
Pro Business), are predominantly speculative, although it is likely that this
space will be substantially pre-leased before completion.
Dublin and San Ramon similarly have office vacancy rates near 3.0 percent, with
new speculative construction underway in Bishop Ranch totaling over 400,000
square feet.
Livermore has already experienced some benefits related to the tight market in
Pleasanton. The new 115,000-square-foot California State Automobile Association
complex (the first phase of which is completed) on the south side of I-580 is
one example, while the other is the Lincoln Technology Park in Triad Park, which
is currently under construction.
The tight Pleasanton market may result in some users moving to Livermore;
however, it will not cause an exodus of firms. Motivations for companies either
to remain in Pleasanton or move include the following:
- - Some image-conscious tenants are willing to pay a premium for
Pleasanton=s established identity and corporate environment. These firms
are likely to be major name employers.
- - Companies with significant employee assets would likely select
Pleasanton because of its convenient location and greater employee
amenities.
- - On the other hand, some companies may experience sticker shock when
their leases in Pleasanton buildings come up for renewal. The more
price-sensitive and less image-conscious of these firms may consider a
move.
- - In addition, some companies' current and projected growth may result in
space needs that cannot be accommodated in Pleasanton in the required
time frame.
- ----------
(3) Although these statistics are quoted for the Tri-Valley overall, for
office and R&D space, the Tri-Valley basically consists of Pleasanton,
Dublin and San Ramon. As already noted, the main competitor for Livermore
is Pleasanton; however, both Dublin and San Ramon share the same market
strength and desirability as Pleasanton.
TRIAD PARK REAL ESTATE STRATEGY 5 JULY 1997
<PAGE> 8
SEDWAY GROUP
REAL ESTATE AND URBAN ECONOMICS
CONFIDENTIAL
- - Also, back-office (clerical and administrative) components of large
corporations may find that a Livermore location is closer to many of its
employees, who may live in areas such as Livermore, Brentwood, Discovery
Bay, and Tracy.
- - Lastly, in some situations, some companies may grow weary of the
competition for space in Pleasanton and opt to relocate.
Broker consensus is that, if there ever was a time for Livermore and Triad, that
time is now. The current real estate cycle is expected to last about another
three years (more or less, excluding an external shock to the economy or a
dramatic increase in interest rates).(4) However, with significant amounts of
new space under construction and in the planning stages, especially relative to
1996 net absorption, the strongest part of the future market will be in the next
year.
Space is currently tight and expensive in Pleasanton, primarily due to expansion
of Tri-Valley firms. Companies relocating out of the similarly tight (and more
expensive) Silicon Valley and Peninsula markets are creating some additional
demand. However, many of these firms also consider Fremont and nearby
communities when making their relocation decisions. There is a window of
opportunity that must be capitalized on before it closes.(5)
The limited time frame of market opportunity is especially true given the
potential for significant competition by the office and R&D components of the
planned Dublin Ranch and Shea Business Park projects. Shea Business Park has
already started marketing its sites, and Dublin Ranch is expected to start
marketing in the near future. However, both of these projects require major
infrastructure, and any building development will not be possible until after
2000. While both projects represent significant competition to Triad Park,
Dublin Ranch in particular will have a detrimental effect on any unsold land at
Triad Park due to its much superior location (closer to I-580/I-680 and in the
City of Dublin).
RECOMMENDATIONS
Based on its investigations, Sedway Group has prepared a series of
recommendations for Triad Park, LLC regarding the disposition of its real estate
assets, land use issues, park image and environment issues, and marketing
program.
- ----------
(4) Typical real estate cycles last about seven to eight years trough-to-
trough, and one could make the argument that the present Tri-Valley
office and R&D market is about half-way through the present cycle.
(5) It is important to remember that Livermore's nascent office/R&D market
depends on and is secondary to Pleasanton. To the extent Pleasanton has
little space available, Livermore becomes a more viable choice. However,
when vacancies in Pleasanton increase as more space is built than absorbed,
companies will have ample selections and will not be as likely to consider
a move.
TRIAD PARK REAL ESTATE STRATEGY 6 JULY 1997
<PAGE> 9
SEDWAY GROUP
REAL ESTATE AND URBAN ECONOMICS
CONFIDENTIAL
REAL ESTATE ASSET DISPOSITION STRATEGY
Sedway Group recommends an aggressive but orderly real estate asset disposition
program that would likely span about three-and-one-half years. Sedway Group
believes that this strategy would maximize the value of Triad Park, LLC's
holdings. The recommended strategy, with absorption estimates and pricing, is
summarized by Exhibit 2 and is more fully described in this and the following
sections.
We considered a shorter-term disposition, but in our opinion this would be akin
to a fire-sale liquidation that is inappropriate given current strong real
estate market conditions. Such a liquidation is also inappropriate given the
financial capability of Triad Park, LLC to hold the property for a number of
years.
In addition, we considered a longer-term strategy and determined that this would
certainly span the real estate cycle and would likely bring the park=s land in
direct competition with Dublin Ranch and Shea Business Park.
Sedway Group also recommends that the disposition plan be swiftly implemented.
As mentioned above, now is the time to capitalize on very low vacancy levels.
Rents and land/building prices have recently risen so rapidly in Pleasanton that
some tenants may experience sticker shock when their leases come up for renewal.
Less image-conscious and more price-sensitive tenants may give Livermore and
Triad Park serious consideration. Swift implementation of the disposition plan
will also allow Triad Park to build on the momentum expected by the completion
and occupancy of Lincoln Technology Park.
From our perspective, the disposition strategy should contain three key
components B a well-defined site plan and specific land use groupings; a focused
park image repositioning; and an aggressive, sophisticated marketing program
managed by an experienced development team. Each of the three components is
discussed in the following sections.
LAND USE RECOMMENDATIONS
The present Triad Park land use plan includes residential (Lots 1 to 3),
Business Commercial/Light Industrial (Lots 4 to 12), Service Commercial/Retail
(Lots 13 and 16 to 20), and Retail and Office Commercial/Light Industrial (Lots
21 to 25). The discussion below is illustrated by the color-coded land use map
presented as Exhibit 3.
RESIDENTIAL. We recommend that Triad Park, LLC simply follow through the current
agreements, since the majority of the residential component is already under
contract. We recommend that Triad Park, LLC close escrow with Gibson Speno on
Lots 1 and 2, and continue dialogue with respect to Lot 3. Based on discussions
with management and the appraisal, as well as Lot 3's slope restrictions, Sedway
Group believes that it is likely that this lot would be developed with five
large-lot home sites. However, an agreement may be reached with Gibson Speno to
result in the integration of this lot into Lot 2's planned duet home
development. This agreement could change the timing and the sales price of this
lot.
BUSINESS COMMERCIAL/LIGHT INDUSTRIAL. We recommend that Triad Park, LLC
aggregate the business commercial/light industrial land (Lots 4 to 12) into
three components to form a well-defined disposition strategy:
TRIAD PARK REAL ESTATE STRATEGY 7 JULY 1997
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SEDWAY GROUP
REAL ESTATE AND URBAN ECONOMICS
CONFIDENTIAL
- - TRIAD CAMPUS AND EXPANSION LAND. This consists of the 15.1 acres
improved with the three leased Triad buildings, plus Lots 4, 5, 6 and 8
(42.1 acres gross, 27.9 acres net, including 1.5 acres shifted from Lot
7). It is important that this asset is sold as soon as reasonably
possible while there is sufficient time remaining on the Triad lease and
a healthy real estate investment market, based on the uncertainty over
the corporate plans for Triad=s Livermore location.
Lots 5 and 8 are natural expansion areas for current and future users of
the campus (with little potential for other development due to their
location and slope restrictions). Lots 4 and 6 could also be used for
expansion or resold individually.
- - MULTITENANT COMPONENT. This consists of Lots 7, 9 and 9A, which are
anticipated to be developed with a variety of multitenant product
serving a range of user sizes. This multitenant component will bring to
the park vitality from multiple businesses with a variety of sizes and
momentum. We recommend the following for these lots.
- Lot 7 (a 3.5-acre portion, the rest of which is allocated to Lot
8) should be sold to Tom Terrill, who is also reportedly
purchasing the former Micro Dental site, for multitenant
office/R&D product aimed at tenants less than 15,000 square feet
(too small for Lincoln Technology Park).
- Lot 9 is expected to represent Phase II of Lincoln Technology
Park (which Lincoln needs to buy in order to preserve its right
of first offer agreement). Triad Park, LLC should work
proactively with Lincoln so that Lincoln Technology Park is fully
leased and to ensure their acquisition of this lot.
- Lot 9A has received an offer at $3.60 per square foot (which has
been reportedly negotiated up to $3.71 per square foot) from a
developer proposing a technology incubator project. This offer
should be accepted and Triad Park, LLC should work proactively
with the developer to make this project happen. If this deal
falls through, Triad Park, LLC should encourage Lincoln Property
Company to acquire this site for their Lincoln Technology Park
project.
- - CORPORATE USER/DEVELOPER. This consists of Lots 10 to 12. Triad Park,
LLC should continue to work with DES to develop functional design
alternatives for the 27.1-acre net area. The anticipated buyer of this
land would be a corporate user or a built-to-suit developer.
SERVICE COMMERCIAL/RETAIL AND RETAIL AND OFFICE COMMERCIAL/LIGHT INDUSTRIAL. The
most challenging portion of Triad Park is the southeast, with Lots 16 to 25. To
be developable, this portion of the park needs a clear direction regarding land
use, substantial infrastructure improvements, and acquisition of two key
out-parcels.
Sedway Group believes that the Aservice commercial/retail@ component on Lots 16
to 20 is ill-conceived. The retail market discussion presented earlier in this
report indicated that the I-580 retail market is saturated and if any retail
development were to occur, it would take place near existing retail
concentrations. Within Triad Park, the most logical site for retail development,
consisting mainly of food services, is located in the Retail/Lodging Center
noted on Exhibit 3. There are three prime sites
TRIAD PARK REAL ESTATE STRATEGY 8 JULY 1997
<PAGE> 11
SEDWAY GROUP
REAL ESTATE AND URBAN ECONOMICS
CONFIDENTIAL
in this area for such food services, all of which are owned by third parties:
New West Petroleum=s 1.954 acres (listed at $10.00 per square foot net of
bonds), Livermore Partners LLC's 1.4 acres (listed at $10.00 per square foot
net of bonds), and D=Ambrosio Brothers' 1.81 acres (listed at $8.50 per square
foot net of bonds, increasing to $10.00 per square foot as of October 1, 1997,
or may be retained and developed by the owner).
The small parcel sizes and high listing prices of lots 16 to 20 appear
unrealistic. Instead, we recommend that this service commercial/retail land be
combined into larger parcels with lower prices commensurate with other
office/R&D land in the park. In fact, these parcels would benefit if combined
with Lots 21 to 23 and potentially Lots 24 and 25. Thus, there could be one or
two corporate campus sites of either 35.9 acres (one campus) or 16.0 and 19.9
acres (two sites). A small premium is applicable for the land=s freeway
visibility.
Furthermore, the out-parcels adjacent to the park on the west side of Colliers
Canyon Road should be incorporated into the park (primarily the Cabrita and Chu
land and potentially the Davina land also). Inclusion of these out-parcels would
Asquare off@ the site and remove incompatible uses that may detract from its
desirability.
There is one small parcel, Lot 13, that possesses the greatest potential for
service commercial/retail use. However, this site will not have access until the
western portion of North Canyons Parkway is developed, which would take place
after Lots 10 to 12 are sold. The eventual type of user for this site is
speculative at this time.
LAND USE SUMMARY. Therefore, Sedway Group recommends that Triad Park, excluding
the Retail/Lodging Center, be segmented into the following components:
- Residential Land (Lots 1 and 2 B 19.4 acres to Gibson Speno; Lot
3 B 5.28 net acres usable to be sold);
- Triad Campus and Expansion Land (219,800 square feet on 15.1
acres and Lots 4, 5, 6 and 8 B 42.1 gross, 27.9 net, acres);
- Multitenant Component (Lincoln Technology Park B 19.2 acres, with
Lot 9 B 13.8 acres to be sold; Terrill B 14.18 acres, with Lot 7
B 3.5 acres to be sold; and incubator Lot 9A, or more Lincoln,
5.6 acres);
- Corporate User/Developer (Lots 10 through 12 B 46.1 gross, 27.1
net, acres);
- Corporate User/Developer (Lots 16 to 25 B 35.9 acres, could be
split into two: 19.9 and 16.0 acres); and
- Future Service Commercial/Retail (Lot 13 B 3.5 acres).
PARK IMAGE AND ENVIRONMENT ISSUES
Triad Park presently does not have a well-defined image or an environment
consistent with a corporate park. Although these considerations are fairly
intangible compared to land, buildings and occupancy costs, they are very
important for corporate users.
SIGNAGE AND ENTRY STATEMENT. Triad Park needs an entry monument with landscaping
to tell visitors that they have arrived. The current pylon sign identifying the
park from I-580 is detrimental to the
TRIAD PARK REAL ESTATE STRATEGY 9 JULY 1997
<PAGE> 12
SEDWAY GROUP
REAL ESTATE AND URBAN ECONOMICS
CONFIDENTIAL
park's image, as it creates the impression of a highway rest stop, not a
corporate park. This pylon sign should be redesigned or removed, if possible,
and replaced with a monument appropriate for a corporate location.(6) Although
an entry monument and landscaping is essential, it does not need to be of the
quality and scale as those in Pleasanton.
The entry to the park is also not of corporate quality, due to the fact that the
first development one sees when entering the park is the Exxon service station.
In addition, there is an out-parcel to the west of the Exxon station site over
which Triad Park, LLC appears to have no real control. The development of this
parcel could potentially create more issues at the entry. We recommend that the
entry be upgraded as development proceeds.
AMENITIES. Triad Park has one very distinct and plentiful amenity: corporate
lodging. However, there is very little in the way of other amenities for the
park's businesses and employees.
Food services are in need at the park. Presently the only food choices are
Wendy's, Baskin-Robbins and Costco's hot dog and pizza stand. A range of food
services, from sit-down restaurants to delis, are needed at the park. The
logical location for these uses is in the Retail/Lodging Center.
Another needed amenity is business services (overnight delivery, copying,
supplies, ATM, etc.). This type of service could be placed in a multitenant
retail building in the Retail/Lodging Center, or in the ground floor of a
multitenant office/R&D building. The provision of these amenities should be
encouraged, even if they located on a third party's parcel.7
Another image consideration that is entwined with the disposition program is
offering a potential large land purchaser naming rights to the park. Such a
carrot may not only secure a significant land sale but also provide a fresh
start for the park.
MARKETING PROGRAM
Sedway Group recommends that the disposition of the park be based on an
aggressive, sophisticated marketing plan including a clear land use strategy; a
coordinated program of presentations to brokers, developers, and a wide range of
investors including REITs for the buildings; and integration of financing and
other key deal points into the offering.
We also recommend that Triad Park, LLC create an experienced development team to
manage the disposition. The team should include, or have immediate access to,
expertise in brokerage, architecture, construction management, off-balance-sheet
financing, and built-to-suit development.
Finally, we recommend that Triad Park, LLC plan to work with multiple
developers, investors and contractors in the park. Given the size of the park
and the need to absorb a very large inventory of
- ----------
(6) There may be a problem with removing this sign, since it is not located
on Triad Park land and portions of the sign are owned by different
entities. However, we recommend addressing this issue.
(7) This recommendation is made with the recognition that amenities require
a population that requires amenities. This chicken-and-egg situation is not
easily resolved.
TRIAD PARK REAL ESTATE STRATEGY 10 JULY 1997
<PAGE> 13
SEDWAY GROUP
REAL ESTATE AND URBAN ECONOMICS
CONFIDENTIAL
undeveloped land, we suggest that perhaps three or four developers be involved
in different elements of the park to maximize the value of the real estate
assets.
FINANCIAL ANALYSIS OF RECOMMENDED DISPOSITION STRATEGY
Exhibits 4 through 7 present the financial analysis of the recommended
disposition strategy. Exhibit 4 presents a brief summary of the results of the
financial analysis for the various components, while Exhibit 5 presents our land
and price conclusions lot by lot (5A) and use by use group (5B), along with a
comparison with the Carneghi-Bautovich appraisal and Grubb & Ellis listing.
Exhibit 5B also presents other cash flow assumptions. Exhibit 6 illustrates the
cash flow by land use group, including the Triad complex. Exhibit 7 is the
summary cash flow projection. Key assumptions are summarized as follows:
- - LAND PRICES. Prices are net of assessment bonds, which are assumed by
the buyer, and are based on the gross acre. The gross acre is used since
purchasers of partially usable sites assume the bonds based on gross
acreage. Prices are based on sales within the park, current escrows and
offers, listing prices, and information presented in the
Carneghi-Bautovich and Partners appraisal.
- - TRIAD CAMPUS. The projected building rental revenue and reimbursements
for taxes and assessments are based on the current lease agreement. The
sales price for the campus is based on the Carneghi-Bautovich and
Partners appraisal and the recent Lincoln Property Company=s verbal
offer (considered slightly low). Active marketing or a competitive bid
process will likely yield a higher price from either Lincoln or another
aggressively growing real estate entity.
- - ABSORPTION. Absorption is based on outstanding escrows, offers, first
rights agreements, and indication of interest. We also assume that
momentum is created by a full commitment to the disposition program,
with appropriate marketing and exposure, as well as the completion and
occupancy of the Lincoln Technology Park. Sale of the Triad Campus and
Expansion Land is timed to reflect interest, as demonstrated by Lincoln
Property Company's recent verbal offer.
- - COMMISSIONS. Commissions are 6.0 percent on the land sale price (net of
bonds) and 2.0 percent on the buildings' sale price. Although the Grubb
& Ellis listing agreement calls for a sliding scale of commissions, we
used 6.0 percent to reflect the potential for other expenses related to
marketing and selling the land.
- - HOLDING COSTS. Holding costs include real estate taxes (tax rate 1.1849
percent), annual payments on assessment bonds, and overhead, including
payments to the park's maintenance association.
- - DEVELOPMENT COSTS. Development costs are reflected by the increase in
payments on assessment bonds. Due to the short-term nature of the financial
analysis, the actual development costs and city recapture has not been
modeled.
- - BUILDING LOAN. The principal and interest on the existing loan are
assumed to be paid per the amortization schedule. We assume that the
land parcels presently encumbered by the loan are
TRIAD PARK REAL ESTATE STRATEGY 11 JULY 1997
<PAGE> 14
SEDWAY GROUP
REAL ESTATE AND URBAN ECONOMICS
CONFIDENTIAL
released, based on plans for such a release agreement, and that the
building complex is the only encumbered portion of the park.
- - DISCOUNT RATE. An annual discount rate of 15.0 percent is assumed for
both the land sell-out and the building equity cash flow analysis.
Employing the discounted cash flow analysis, as summarized in Exhibit 4, the
total present value is calculated at $25.6 million.
TRIAD PARK REAL ESTATE STRATEGY 12 JULY 1997
<PAGE> 15
SEDWAY GROUP
REAL ESTATE AND URBAN ECONOMICS
CONFIDENTIAL
GENERAL ASSUMPTIONS AND LIMITING CONDITIONS
This report is made subject to the following assumptions and limiting
conditions.
1. No responsibility is assumed for legal matters. Title to the property is
assumed to be marketable and to be free and clear of all liens,
encumbrances and special assessments, unless otherwise noted. Unless
otherwise stated, easements are assumed to not adversely impact
development potential of the property.
2. The factual data utilized in this analysis, including land and building
area, have been obtained from sources deemed to be reliable; however, no
responsibility is assumed for their accuracy.
3. Unless otherwise stated in this report, the existence of hazardous
substances, including without limitation asbestos, polychlorinated
biphenyls, petroleum leakage, or agricultural chemicals, which may or
may not be present on the property, or other environmental conditions,
were not called to the attention of nor did the authors become aware of
such during any inspection undertaken on this assignment. The authors
have no knowledge of the existence of such materials on or in the
property unless otherwise stated.
The authors, however, are not qualified to test such substances or
conditions. If the presence of such substances, such as asbestos, urea
formaldehyde foam insulation, or other hazardous substances or
environmental conditions, may affect the value of the property, the
value estimated is predicated on the assumption that there is no such
condition on or in the property or in such proximity thereto that it
would cause a loss in value. No responsibility is assumed for any such
conditions, nor for any expertise or engineering knowledge required to
discover them.
4. Any projections of income, expenses and economic conditions utilized in
this report are not predictions of the future. Rather, they are
estimates of current market expectations of future income and expenses.
No warranty or representation is made that these projections will
materialize.
5. The compensation for this report is in no way contingent upon any value
estimate contained in this report.
6. Neither all nor any part of the contents of this report shall be
conveyed to the public through advertising, public relations, news,
sales or other media, without the written consent and approval of the
author.
7. No engineering study has been made or is implied by this report on the
condition and size of the subject property. It is assumed that there are
no unusual soils conditions that would constrain development, other than
those specifically stated herein.
TRIAD PARK REAL ESTATE STRATEGY 13 JULY 1997
<PAGE> 16
SEDWAY GROUP
REAL ESTATE AND URBAN ECONOMICS
CONFIDENTIAL
8. No testimony is required or implied on the part of the authors in any
court or before any board of appeals or board of supervisors acting in
such capacity, unless arrangements have been made previously.
9. Due to extraneous and yet undeterminable factors that affect sales
price, any estimate of value stated herein for the subject property is
not necessarily the ultimate sales price for the property.
TRIAD PARK REAL ESTATE STRATEGY 14 JULY 1997
<PAGE> 17
EXHIBIT 1
TRIAD PARK, LLC
TRIAD PARK LAND SALES ACTIVITY
1990 TO 1997 (1)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
SITE SIZE SALE SALE PRICE
IDENTIFICATION (ACRES) DATE BUYER NET OF BONDS
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Costco Site 15.22 7/93 Costco $1,720,802
2850 Constitution 1.99 5/96 Brahma Enterprises $ 465,000
W/S Constitution 2.42 5/96 Livermore Partners $ 575,000
E/S Constitution 3.44 8/96 Duffel/Kendall $ 449,540
E/S Constitution 1.81 9/96 D'Ambrosio Brothers $ 320,000
NEC N. Canyons Pkwy 9.18 9/96 HHH Investment $1,389,087
& Independence
NWC N. Canyons Pkwy 11.02 9/96 Lincoln Property $1,636,267
& Independence
E/S Constitution 4.147 12/96 Patel $ 669,735
- ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
SITE PRICE/SF
IDENTIFICATION NET OF BONDS DEVELOPMENT
- ----------------------------------------------------------
<S> <C> <C>
Costco Site $2.60 Costco Store & offices
2850 Constitution $5.36 Hampton Inn
W/S Constitution $5.45 Harley Davidson (ptn)
Freeway retail (ptn)
E/S Constitution $3.00 Marriott Courtyard
E/S Constitution $4.06 Restaurant(s)
NEC N. Canyons Pkwy $3.47 Office/R&D
& Independence
NWC N. Canyons Pkwy $3.41 Office/R&D
& Independence
E/S Constitution $3.71 Hilton Garden Inn
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
SITE
IDENTIFICATION COMMENTS
- ----------------------------------------------------------------------
<S> <C>
Costco Site
2850 Constitution Resale portion of Boulangerie de France land
W/S Constitution Resale portion of Boulangerie de France land
1.4-ac. portion marketed for resale at
$10.00/SF net of bonds
E/S Constitution Planning Commission approval 7/1/97
E/S Constitution Marketing site for resale at $8.50/SF net of
bonds. Listing price goes up to $10.00/SF as
of 10/1/97. Despite interest, owners are not
accepting offers as they are still considering
developing site with one or more restaurants.
NEC N. Canyons Pkwy Buyer has decided to remain in Dublin and
& Independence has reportedly entered into contract to resell
the site at a price near acquisition cost.
NWC N. Canyons Pkwy Lincoln Technology Park, 145,000 square feet,
& Independence recently commenced construction.
E/S Constitution Planning Commission approval 7/1/97
</TABLE>
NOTES:
(1) Prior to 1990, activity within the park included Wang, NMR (1987), Vista
West and Boulangerie de France (1989)
Sources: Carneghi-Boutovich & Partners; Triad Park LLC; Gateway Commercial;
D'Ambrosio Brothers; brokers; and Sedway Group.
<PAGE> 18
EXHIBIT 2
TRIAD PARK
RECOMMENDED DISPOSITION PROGRAM
PRICING AND ABSORPTION MATRIX
JULY 1997
<TABLE>
<CAPTION>
NET RETAIL SALES PRICE OF GROSS LAND ($/PSF)
GROSS ACRES SOLD
TIME OF SALE
PERCENTAGE 2ND HALF 1ST HALF 2ND HALF 1ST HALF 2ND HALF
LOT NUMBER GROSS ACRE BUILDABLE NET ACRES 1997 1998 1998 1999 1999
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lot 1 13.90 100.0% 13.90 $3.43
Lot 2 5.50 100.0% 5.50 $3.43
Lot 3 8.70 60.7% 5.28
- ----------------------------------------------------------------------------------------------------------------
RESIDENTIAL 28.10 87.8% 24.68 19.40
- ----------------------------------------------------------------------------------------------------------------
Lot 4 5.30 100.0% 5.30 $4.50
Lot 5 22.40 45.2% 10.12 $0.55
Lot 6 4.90 100.0% 4.90 $4.50
Lot 8 9.50 79.8% 7.58 $0.55
- ----------------------------------------------------------------------------------------------------------------
TRIAD CAMPUS/
EXPANSION 42.10 66.3% 27.90 42.10
- ----------------------------------------------------------------------------------------------------------------
Lot 7 3.50 100.0% 3.50 $3.67
Lot 9 13.80 98.3% 13.56 $4.00
Lot 9A (1) 5.60 100.0% 5.60 $3.60
- ----------------------------------------------------------------------------------------------------------------
MULTI-TENANT
COMPONENT 22.90 99.0% 22.66 17.30 5.60
- ----------------------------------------------------------------------------------------------------------------
Lot 10 16.10 58.5% 9.42 $1.00
Lot 11 20.20 48.9% 9.88 $1.00
Lot 12 9.80 79.5% 7.79 $1.00
- ----------------------------------------------------------------------------------------------------------------
CORPORATE USER/
DEVELOPER 46.10 58.8% 27.09 46.10
- ----------------------------------------------------------------------------------------------------------------
Lot 13 3.50 100.0% 3.50
- ----------------------------------------------------------------------------------------------------------------
QUASI COMMERCIAL 3.50 100.0% 3.50
- ----------------------------------------------------------------------------------------------------------------
Lot 14 4.54 100.0% 0.00 $0.00
- ----------------------------------------------------------------------------------------------------------------
ROADS AND
FREEWAY RAMPS 4.54 0.0% 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------
Lot 16 2.60 100.0% 2.60 $4.00
Lot 17 0.80 100.0% 0.80 $4.00
Lot 18 1.30 100.0% 1.30 $4.00
Lot 19 3.00 100.0% 3.00 $4.00
Lot 20 2.80 100.0% 2.80 $4.00
Lot 21 1.00 100.0% 1.00 $4.00
Lot 22 3.60 100.0% 3.60 $4.00
Lot 23 4.80 100.0% 4.80 $4.00
Lot 24 10.50 100.0% 10.50 $4.00
Lot 25 5.50 100.0% 5.50 $4.00
- ----------------------------------------------------------------------------------------------------------------
CORPORATE USER/
DEVELOPER 35.90 100.0% 35.90 35.90
- ----------------------------------------------------------------------------------------------------------------
OPEN SPACE/
AGRICULTURAL 110.80 0.0% 0.00
- ----------------------------------------------------------------------------------------------------------------
OPEN SPACE/
AGRICULTURAL 110.80 0.00
- ----------------------------------------------------------------------------------------------------------------
TOTALS (2) 293.94 48.22% 141.73 36.70 47.70 46.10 0.00 35.90
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
NET RETAIL SALES PRICE OF GROSS LAND ($/PSF)
GROSS ACRES SOLD
TIME OF SALE
<TABLE>
<CAPTION>
1ST HALF 2ND HALF
LOT NUMBER 2000 2000 COMMENTS
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lot 1 Gibson Speno Escrow
Lot 2 Gibson Speno Escrow
Lot 3 $1.06 Residential Developer
- ------------------------------------------------------------------------------------------
RESIDENTIAL 8.7
- ------------------------------------------------------------------------------------------
Lot 4 Competitive Bid
Lot 5 Competitive Bid
Lot 6 Competitive Bid
Lot 8 Competitive Bid
- ------------------------------------------------------------------------------------------
TRIAD CAMPUS/
EXPANSION
- ------------------------------------------------------------------------------------------
Lot 7 Tom Terrill (or affiliate)
Lot 9 Lincoln Technology Park
Lot 9A (1) Speculative Developer or Lincoln Property
- ------------------------------------------------------------------------------------------
MULTI-TENANT
COMPONENT
- ------------------------------------------------------------------------------------------
Lot 10 Corporate User or Developer
Lot 11 Corporate User or Developer
Lot 12 Corporate User or Developer
- ------------------------------------------------------------------------------------------
CORPORATE USER/
DEVELOPER
- ------------------------------------------------------------------------------------------
Lot 13 $4.00
- ------------------------------------------------------------------------------------------
QUASI COMMERCIAL 3.50
- ------------------------------------------------------------------------------------------
Lot 14 Dedicate to City
- ------------------------------------------------------------------------------------------
ROADS AND
FREEWAY RAMPS
- ------------------------------------------------------------------------------------------
Lot 16 Corporate User or Developer
Lot 17 Corporate User or Developer
Lot 18 Corporate User or Developer
Lot 19 Corporate User or Developer
Lot 20 Corporate User or Developer
Lot 21 Corporate User or Developer
Lot 22 Corporate User or Developer
Lot 23 Corporate User or Developer
Lot 24 Corporate User or Developer
Lot 25 Corporate User or Developer
- ------------------------------------------------------------------------------------------
CORPORATE USER/
DEVELOPER
- ------------------------------------------------------------------------------------------
OPEN SPACE/
AGRICULTURAL $0.03 Trust/Public Agency
- ------------------------------------------------------------------------------------------
OPEN SPACE/
AGRICULTURAL 0.00
- ------------------------------------------------------------------------------------------
TOTALS (2) 8.70 3.50
- ------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NET BUILDING VALUE ($/PSF)
NET ACRES SOLD
TIME OF SALE
PERCENTAGE 2ND HALF 1ST HALF 2ND HALF 1ST HALF 2ND HALF
BUILDING GROSS ACRES BUILDABLE NET ACRES 1997 1998 1998 1999 1999
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TRIAD CORPORATE
CAMPUS 15.06 100.0% 15.06 $100
- ----------------------------------------------------------------------------------------------------------------
15.06
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1ST HALF 2ND HALF
BUILDING 2000 2000 COMMENTS
- ----------------------------------------------------
<S> <C> <C> <C>
TRIAD CORPORATE
CAMPUS
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
</TABLE>
Notes:
(1) The sale price for this parcel has been reportedly negotiated up to $3.71
per square foot.
(2) Net acres does not include open space/agricultural of 110.80 acres and
4.54 acres (Lot 14).
Source: Sedway Group.
<PAGE> 19
EXHIBIT 3
RECOMMENDED LAND USE CATEGORIES
[MAP]
<PAGE> 20
EXHIBIT 4
TRIAD PARK
RECOMMENDED DISPOSITION PROGRAM
NET PRESENT VALUE SUMMARY
JULY 1997
<TABLE>
<CAPTION>
TOTAL LAND FOR SALE BEFORE TRIAD SYSTEMS CORPORATION BUILDING AND
PROJECT OVERHEAD
================================================
<S> <C>
Gross Acres (excluding Lot 14 and
open space/agricultural) 178.60
Net Present Value $13,776,441
Net Present Value/PSF of Land Area $1.77
TRIAD SYSTEMS CORPORATION BUILDING
================================================
Gross Acres 15.06
Building Square Footage 219,818
Net Present Value $12,111,214
Net Present Value/PSF of Bldg. Area $55.10
Net Present Value/PSF of Land Area $18.46
PROJECT OVERHEAD
================================================
Net Present Value ($276,859)
TOTAL NET PRESENT VALUE:
================================================
Net Present Value $25,610,796
Net Present Value (Rounded) $25,600,000
===================
</TABLE>
Source: Sedway Group.
<PAGE> 21
EXHIBIT 5A
TRIAD PARK
RECOMMENDED DISPOSITION PROGRAM
DETAILED SALES PRICE ANALYSIS
JULY 1997
<TABLE>
<CAPTION>
PERCENTAGE
LOT NUMBER GROSS ACRES BUILDABLE NET ACRES
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Lot 1 13.90 100.0% 13.90
Lot 2 5.50 100.0% 5.50
Lot 3 8.70 60.7% 5.28
- ---------------------------------------------------------------------
RESIDENTIAL 28.10 87.8% 24.68
- ---------------------------------------------------------------------
Lot 4 5.30 100.0% 5.30
Lot 5 22.40 45.2% 10.12
Lot 6 4.90 100.0% 4.90
Lot 8 9.50 79.8% 7.58
- ---------------------------------------------------------------------
TRIAD CAMPUS/EXPANSION 42.10 66.3% 27.90
- ---------------------------------------------------------------------
Lot 7 3.50 100.0% 3.50
Lot 9 13.80 98.3% 13.56
Lot 9A 5.60 100.0% 5.60
- ---------------------------------------------------------------------
MULTI-TENANT COMPONENT 22.90 99.0% 22.66
- ---------------------------------------------------------------------
Lot 10 16.10 58.5% 9.42
Lot 11 20.20 48.9% 9.88
Lot 12 9.80 79.5% 7.79
- ---------------------------------------------------------------------
CORPORATE USER/DEVELOPER 46.10 58.8% 27.09
- ---------------------------------------------------------------------
Lot 13 3.50 100.0% 3.50
- ---------------------------------------------------------------------
QUASI COMMERCIAL 3.50 100.0% 3.50
- ---------------------------------------------------------------------
Lot 14 4.54 100.0% 0.00
- ---------------------------------------------------------------------
ROADS AND FREEWAY RAMPS 4.54 100.0% 0.00
- ---------------------------------------------------------------------
Lot 16 2.60 100.0% 2.60
Lot 17 0.80 100.0% 0.80
Lot 18 1.30 100.0% 1.30
Lot 19 3.00 100.0% 3.00
Lot 20 2.80 100.0% 2.80
Lot 21 1.00 100.0% 1.00
Lot 22 3.60 100.0% 3.60
Lot 23 4.80 100.0% 4.80
Lot 24 10.50 100.0% 10.50
Lot 25 5.50 100.0% 5.50
- ---------------------------------------------------------------------
CORPORATE USER/DEVELOPER 35.90 100.0% 35.90
- ---------------------------------------------------------------------
Open Space/Agricultur 110.80 0.0% 0.00
- ---------------------------------------------------------------------
OPEN SPACE/AGRICULTURAL 110.80 0.00
- ---------------------------------------------------------------------
TOTALS (1) 293.94 48.2% 141.73
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
PERCENTAGE
BUILDING GROSS ACRES BUILDABLE NET ACRES
- ---------------------------------------------------------------------
<S> <C> <C> <C>
TRIAD CORPORATE CAMPUS 15.06 100.0% 15.06
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SEDWAY GROUP APPRAISAL GRUBB & ELLIS
- ----------------------------------------------------------------------------------------------
NET SALES PRICE OF NET VALUE OF NET LISTING
GROSS LAND GROSS LAND PRICE OF GROSS
LOT NUMBER ($/PSF) ($/PSF) LAND ($/PSF)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lot 1 $3.43 $2.74 N/Av
Lot 2 $3.43 $5.17 N/Av
Lot 3 $1.06 $1.74 N/Av
- ----------------------------------------------------------------------------------------------
RESIDENTIAL $2.70 $2.91 N/AV
- ----------------------------------------------------------------------------------------------
Lot 4 $4.50 $3.90 $5.00
Lot 5 $0.55 $0.00 $2.00
Lot 6 $4.50 $3.92 $5.00
Lot 8 $0.55 $0.20 $2.00
- ----------------------------------------------------------------------------------------------
TRIAD CAMPUS/EXPANSION $1.51 $1.48 $3.10
- ----------------------------------------------------------------------------------------------
Lot 7 $3.67 $3.02 $4.00
Lot 9 $4.00 $2.77 $4.00
Lot 9A $3.60 $2.77 $4.00
- ----------------------------------------------------------------------------------------------
MULTI-TENANT COMPONENT $3.85 $2.81 $4.00
- ----------------------------------------------------------------------------------------------
Lot 10 $1.00 $0.59 $2.00
Lot 11 $1.00 $0.09 $2.00
Lot 12 $1.00 $1.69 $2.00
- ----------------------------------------------------------------------------------------------
CORPORATE USER/DEVELOPER $1.00 $0.60 $2.00
- ----------------------------------------------------------------------------------------------
Lot 13 $6.00 $4.02 $7.00
- ----------------------------------------------------------------------------------------------
QUASI COMMERCIAL $6.00 $4.02 $7.00
- ----------------------------------------------------------------------------------------------
Lot 14 $0.00 $0.00 $0.00
- ----------------------------------------------------------------------------------------------
ROADS AND FREEWAY RAMPS $0.00 $0.00 $0.00
- ----------------------------------------------------------------------------------------------
Lot 16 $4.00 $4.52 $6.50
Lot 17 $4.00 $4.52 $6.50
Lot 18 $4.00 $4.52 $6.50
Lot 19 $4.00 $4.52 $6.50
Lot 20 $4.00 $4.52 $6.50
Lot 21 $4.00 $4.52 $6.50
Lot 22 $4.00 $4.02 $6.50
Lot 23 $4.00 $3.02 $6.50
Lot 24 $4.00 $3.02 $6.00
Lot 25 $4.00 $3.52 $6.00
- ----------------------------------------------------------------------------------------------
CORPORATE USER/DEVELOPER $4.00 $3.68 $6.28
- ----------------------------------------------------------------------------------------------
Open Space/Agricultur $0.03 $0.03 N/Av
- ----------------------------------------------------------------------------------------------
OPEN SPACE/AGRICULTURAL N/AP N/AP N/AP
- ----------------------------------------------------------------------------------------------
TOTALS (1) $2.45 $2.14 N/AV
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
SEDWAY GROUP APPRAISAL GRUBB & ELLIS
- ----------------------------------------------------------------------------------------------
GROSS
BUILDING GROSS SALES PRICE GROSS SALES PRICE SALES PRICE
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TRIAD CORPORATE CAMPUS $22,000,000 $22,000,000 N/AV
- ----------------------------------------------------------------------------------------------
</TABLE>
Notes:
(1) Does not include open space/agricultural of 110.80 acres and 4.54 acres
(Lot 14) for land value calculation purposes.
Sources: Carneghi-Boutovich & Partners; Grubb & Ellis; Triad Park, LLC.;
and Sedway Group.
<PAGE> 22
EXHIBIT 5B
TRIAD PARK
RECOMMENDED DISPOSITION PROGRAM
SALES PRICE ANALYSIS BY LAND USE GROUP
JULY 1997
<TABLE>
<CAPTION>
PERCENTAGE
LOT NUMBER GROSS ACRES BUILDABLE NET ACRES
- ---------------------------------------------------------------------
<S> <C> <C> <C>
- ---------------------------------------------------------------------
Residential 28.10 87.8% 24.68
- ---------------------------------------------------------------------
Triad Campus/Expansion 42.10 66.3% 27.90
- ---------------------------------------------------------------------
Multi-Tenant Component 22.90 99.0% 22.66
- ---------------------------------------------------------------------
Corporate User/Developer 46.10 58.8% 27.09
- ---------------------------------------------------------------------
Quasi Commercial 3.50 100.0% 3.50
- ---------------------------------------------------------------------
Roads and Freeway Ramps 4.54 100.0% 0.00
- ---------------------------------------------------------------------
Corporate User/Developer 35.90 100.0% 35.90
- ---------------------------------------------------------------------
Open Space/Agricultural 110.80 0.0% 0.00
- ---------------------------------------------------------------------
TOTALS (1) 293.94 48.2% 141.73
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
PERCENTAGE
BUILDING GROSS ACRES BUILDABLE NET ACRES
- ---------------------------------------------------------------------
<S> <C> <C> <C>
TRIAD CORPORATE CAMPUS 15.06 100.0% 15.06
- ---------------------------------------------------------------------
OTHER ASSUMPTIONS
Annual Discount Rate: Developable Land Sales 15.00%
Annual Discount Rate - Triad Building: 15.00%
Annual Discount Rate - Project Wide Expenditures: 15.00%
Cost of Sales as % of Gross Sales Price: (2)
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SEDWAY GROUP APPRAISAL GRUBB & ELLIS
- ----------------------------------------------------------------------------------------
NET SALES PRICE OF NET VALUE OF NET LISTING
GROSS LAND GROSS LAND PRICE OF GROSS
LOT NUMBER ($/PSF) ($/PSF) LAND ($/PSF)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Residential $2.70 $2.91 N/Av
Triad Campus/Expansion $1.51 $1.48 $3.10
- ----------------------------------------------------------------------------------------
Multi-Tenant Componen $3.85 $2.81 $4.00
- ----------------------------------------------------------------------------------------
Corporate User/Developer $1.00 $0.60 $2.00
- ----------------------------------------------------------------------------------------
Quasi Commercial $6.00 $4.02 $7.00
- ----------------------------------------------------------------------------------------
Roads and Freeway Ramps $0.00 $0.00 $0.00
- ----------------------------------------------------------------------------------------
Corporate User/Developer $4.00 $3.68 $6.28
- ----------------------------------------------------------------------------------------
Open Space/Agricultural N/Ap N/Ap N/Ap
- ----------------------------------------------------------------------------------------
TOTALS (1) $2.45 $2.14 N/AV
- ----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
SEDWAY GROUP APPRAISAL GRUBB & ELLIS
- ----------------------------------------------------------------------------------------------
GROSS
BUILDING GROSS SALES PRICE GROSS SALES PRICE SALES PRICE
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TRIAD CORPORATE CAMPUS $22,000,000 $22,000,000 N/AV
- ----------------------------------------------------------------------------------------------
</TABLE>
Notes:
(1) Does not include open space/agricultural of 110.80 acres and 4.54 acres
(Lot 14) for land value calculation purposes.
(2) 6 percent for land, 2 percent for building.
Sources: Carneghi-Boutovich & Partners; Grubb & Ellis; Triad Park, LLC.; and
Sedway Group.
<PAGE> 23
EXHIBIT 6
PAGE 1
TRIAD PARK
DEVELOPMENT PROFORMA: SEMI ANNUAL ANALYSIS
CASH FLOW SUMMARY
RECOMMENDED DISPOSITION PROGRAM
JULY 1997
<TABLE>
<CAPTION>
LAND USE
- ----------------------------------
RESIDENTIAL YEAR 2NDHALF97 1STHALF98 2NDHALF98 1STHALF99 2NDHALF99
---- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Percentage of Total Development 78.61% 0.00% 0.00% 0.00% 0.00%
Gross Acres Sold 19.40 0.00 0.00 0.00 0.00
Land Value Annual Growth Rates 0.00% 3.00% 3.00% 3.00% 3.00%
Land Sale Value $2,900,000 $0 $0 $0 $0
Cost of Land Sales (87,000) 0 0 0 0
Net Land Sales Proceeds 2,813,000 0 0 0 0
Holding Costs (6,895) (6,964) (7,034) (7,104) (7,175)
Land Sales Net of Holding Costs 2,806,105 (6,964) (7,034) (7,104) (7,175)
Miscellaneous Revenues 0 0 0 0 0
Miscellaneous Expenses 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Net Cash Flow Before Bldg/Before
Project Wide $2,806,105 ($6,964) ($7,034) ($7,104) ($7,175)
TRIAD CAMPUS EXPANSION YEAR 2NDHALF97 1STHALF98 2NDHALF98 1STHALF99 2NDHALF99
---- --------- --------- --------- --------- ---------
Percentage of Total Development 0.00% 100.00% 0.00% 0.00% 0.00%
Gross Acres Sold 0.00 42.10 0.00 0.00 0.00
Land Value Annual Growth Rates 0.00% 3.00% 3.00% 3.00% 3.00%
Land Sale Value $0 $2,763,664 $0 $0 $0
Cost of Land Sales 0 (165,820) 0 0 0
Net Land Sales Proceeds 0 2,597,844 0 0 0
Holding Costs (137,282) 0 0 0 0
Land Sales Net of Holding Costs (137,282) 2,597,844 0 0 0
Miscellaneous Revenues 0 0 0 0 0
Miscellaneous Expenses 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Net Cash Flow Before Bldg/Before
Project Wide ($137,282) $2,597,844 $0 $0 $0
MULTI-TENANT COMPONENT YEAR 2NDHALF97 1STHALF98 2NDHALF98 1STHALF99 2NDHALF99
---- --------- --------- --------- --------- ---------
Percentage of Total Development 75.29% 24.71% 0.00% 0.00% 0.00%
Gross Acres Sold 17.30 5.60 0.00 0.00 0.00
Land Value Annual Growth Rates 0.00% 3.00% 3.00% 3.00% 3.00%
Land Sale Value $2,964,040 $878,170 $0 $0 $0
Cost of Land Sales (173,797) (52,690) 0 0 0
Net Land Sales Proceeds 2,790,243 825,479 0 0 0
Holding Costs (20,600) 0 0 0 0
Land Sales Net of Holding Costs 2,769,643 825,479 0 0 0
Miscellaneous Revenues 0 0 0 0 0
Miscellaneous Expenses 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Net Cash Flow Before Bldg/Before
Project Wide $2,769,643 $825,479 $0 $0 $0
Source: Sedway Group.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
LAND USE
- ----------------------------------
RESIDENTIAL 1STHALF00 2NDHALF00 1STHALF01 TOTAL
--------- --------- --------- -----
<S> <C> <C> <C> <C>
Percentage of Total Development 0.00% 21.39% 0.00% 100.00%
Gross Acres Sold 0.00 8.70 0.00 28.10
Land Value Annual Growth Rates 3.00% 3.00% 3.00%
Land Sale Value $0 $432,756 $0 $3,332,756
Cost of Land Sales 0 (25,965) 0 (112,965)
Net Land Sales Proceeds 0 406,791 0 3,219,791
Holding Costs (7,247) 0 0 (42,421)
Land Sales Net of Holding Costs (7,247) 406,791 0 3,177,370
Miscellaneous Revenues 0 0 0 0
Miscellaneous Expenses 0 0 0 0
- ---------------------------------------------------------------------------------------------------------
Net Cash Flow Before Bldg/Before
Project Wide ($7,247) $406,791 $0 $3,177,370
TRIAD CAMPUS EXPANSION 1STHALF00 2NDHALF00 1STHALF01 TOTAL
--------- --------- --------- -----
Percentage of Total Development 0.00% 0.00% 0.00% 100.00%
Gross Acres Sold 0.00 0.00 0.00 42.10
Land Value Annual Growth Rates 3.00% 3.00% 3.00%
Land Sale Value $0 $0 $0 $2,763,664
Cost of Land Sales 0 0 0 (165,820)
Net Land Sales Proceeds 0 0 0 2,597,844
Holding Costs 0 0 0 (137,282)
Land Sales Net of Holding Costs 0 0 0 2,460,562
Miscellaneous Revenues 0 0 0 0
Miscellaneous Expenses 0 0 0 0
- ---------------------------------------------------------------------------------------------------------
Net Cash Flow Before Bldg/Before
Project Wide $0 $0 $0 $2,460,562
MULTI-TENANT COMPONENT 1STHALF00 2NDHALF00 1STHALF01 TOTAL
--------- --------- --------- -----
Percentage of Total Development 0.00% 0.00% 0.00% 100.00%
Gross Acres Sold 0.00 0.00 0.00 22.90
Land Value Annual Growth Rates 3.00% 3.00% 3.00%
Land Sale Value $0 $0 $0 $3,842,210
Cost of Land Sales 0 0 0 (226,487)
Net Land Sales Proceeds 0 0 0 3,615,722
Holding Costs 0 0 0 (20,600)
Land Sales Net of Holding Costs 0 0 0 3,595,122
Miscellaneous Revenues 0 0 0 0
Miscellaneous Expenses 0 0 0 0
- ---------------------------------------------------------------------------------------------------------
Net Cash Flow Before Bldg/Before
Project Wide $0 $0 $0 $3,595,122
Source: Sedway Group.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 24
EXHIBIT 6
PAGE 2
TRIAD PARK
DEVELOPMENT PROFORMA: SEMI ANNUAL ANALYSIS
CASH FLOW SUMMARY
RECOMMENDED DISPOSITION PROGRAM
JULY 1997
<TABLE>
<CAPTION>
LAND USE
- -----------------------------------
CORPORATE USER/DEVELOPER YEAR 2NDHALF97 1STHALF98 2NDHALF98
---- --------- --------- ---------
<S> <C> <C> <C> <C>
Percentage of Total Development 0.00% 0.00% 100.00%
Gross Acres Sold 0.00 0.00 46.10
Land Value Annual Growth Rates 3.00% 3.00% 3.00%
Land Sale Value $ 0 $ 0 $ 2,038,238
Cost of Land Sales 0 0 (122,294)
Net Land Sales Proceeds 0 0 1,915,943
Holding Costs (143,517) (175,229) 0
Land Sales Net of Holding Costs (143,517) (175,229) 1,915,943
Miscellaneous Revenues 0 0 0
Miscellaneous Expenses 0 0 0
- -----------------------------------------------------------------------------------------------
Net Cash Flow Before Bldg/Before
Project Wide ($ 143,517) ($175,229) $ 1,915,943
QUASI COMMERCIAL YEAR 2NDHALF97 1STHALF98 2NDHALF98
---- --------- --------- ---------
Percentage of Total Development 0.00% 0.00% 0.00%
Gross Acres Sold 0.00 0.00 0.00
Land Value Annual Growth Rates 0.00% 3.00% 3.00%
Land Sale Value $0 $0 $0
Cost of Land Sales 0 0 0
Net Land Sales Proceeds 0 0 0
Holding Costs (14,778) (17,225) (23,588)
Land Sales Net of Holding Costs (14,778) (17,225) (23,588)
Miscellaneous Revenues 0 0 0
Miscellaneous Expenses 0 0 0
- -----------------------------------------------------------------------------------------------
Net Cash Flow Before Bldg/Before
Project Wide ($14,778) ($17,225) ($23,588)
ROADS AND FREEWAY RAMPS YEAR 2NDHALF97 1STHALF98 2NDHALF98
---- --------- --------- ---------
Percentage of Total Development 100.00% 0.00% 0.00%
Gross Acres Sold 4.54 0.00 0.00
Land Value Annual Growth Rates 0.00% 3.00% 3.00%
Land Sale Value $0 $0 $0
Cost of Land Sales 0 0 0
Net Land Sales Proceeds 0 0 0
Holding Costs 0 0 0
Land Sales Net of Holding Costs 0 0 0
Miscellaneous Revenues 0 0 0
Miscellaneous Expenses 0 0 0
- -----------------------------------------------------------------------------------------------
Net Cash Flow Before Bldg/Before
Project Wide $0 $0 $0
</TABLE>
<TABLE>
<CAPTION>
LAND USE
- -----------------------------------
CORPORATE USER/DEVELOPER 1STHALF99 2NDHALF99 1STHALF00 2NDHALF00 1STHALF01 TOTAL
--------- --------- --------- --------- --------- -----
<S> <C> <C> <C> <C> <C> <C>
Percentage of Total Development 0.00% 0.00% 0.00% 0.00% 0.00% 100.00%
Gross Acres Sold 0.00 0.00 0.00 0.00 0.00 46.10
Land Value Annual Growth Rates 3.00% 3.00% 3.00% 3.00% 3.00%
Land Sale Value $ 0 $ 0 $ 0 $ 0 $ 0 $ 2,038,238
Cost of Land Sales 0 0 0 0 0 (122,294)
Net Land Sales Proceeds 0 0 0 0 0 1,915,943
Holding Costs 0 0 0 0 0 (318,746)
Land Sales Net of Holding Costs 0 0 0 0 0 1,597,198
Miscellaneous Revenues 0 0 0 0 0 0
Miscellaneous Expenses 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Net Cash Flow Before Bldg/Before
Project Wide $ 0 $ 0 $ 0 $ 0 $ 0 $ 1,597,198
QUASI COMMERCIAL 1STHALF99 2NDHALF99 1STHALF00 2NDHALF00 1STHALF01 TOTAL
--------- --------- --------- --------- --------- -----
Percentage of Total Development 0.00% 0.00% 0.00% 100.00% 0.00% 100.00%
Gross Acres Sold 0.00 0.00 0.00 3.50 0.00 3.50
Land Value Annual Growth Rates 3.00% 3.00% 3.00% 3.00% 3.00%
Land Sale Value $0 $0 $0 $985,456 $0 $985,456
Cost of Land Sales 0 0 0 (59,127) 0 (59,127)
Net Land Sales Proceeds 0 0 0 926,329 0 926,329
Holding Costs (23,644) (23,752) (23,808) 0 0 (126,796)
Land Sales Net of Holding Costs (23,644) (23,752) (23,808) 926,329 0 799,533
Miscellaneous Revenues 0 0 0 0 0 0
Miscellaneous Expenses 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Net Cash Flow Before Bldg/Before
Project Wide ($23,644) ($23,752) ($23,808) $926,329 $0 $799,533
ROADS AND FREEWAY RAMPS 1STHALF99 2NDHALF99 1STHALF00 2NDHALF00 1STHALF01 TOTAL
--------- --------- --------- --------- --------- -----
Percentage of Total Development 0.00% 0.00% 0.00% 0.00% 0.00% 100.00%
Gross Acres Sold 0.00 0.00 0.00 0.00 0.00 4.54
Land Value Annual Growth Rates 3.00% 3.00% 3.00% 3.00% 3.00%
Land Sale Value $0 $0 $0 $0 $0 $0
Cost of Land Sales 0 0 0 0 0 0
Net Land Sales Proceeds 0 0 0 0 0 0
Holding Costs 0 0 0 0 0 0
Land Sales Net of Holding Costs 0 0 0 0 0 0
Miscellaneous Revenues 0 0 0 0 0 0
Miscellaneous Expenses 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Net Cash Flow Before Bldg/Before
Project Wide $0 $0 $0 $0 $0 $0
</TABLE>
Source: Sedway Group.
<PAGE> 25
EXHIBIT 6
PAGE 3
TRIAD PARK
DEVELOPMENT PROFORMA: SEMI ANNUAL ANALYSIS
CASH FLOW SUMMARY
RECOMMENDED DISPOSITION PROGRAM
JULY 1997
<TABLE>
<CAPTION>
LAND USE
CORPORATE USER/DEVELOPER Year 2ndHalf97 1stHalf98 2ndHalf98 1stHalf99 2ndHalf99
---- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Percentage of Total Development 0.00% 0.00% 0.00% 0.00% 100.00%
Gross Acres Sold 0.00 0.00 0.00 0.00 35.90
Land Value Annual Growth Rates 0.00% 3.00% 3.00% 3.00% 3.00%
Land Sale Value $ 0 $ 0 $ 0 $ 0 $ 6,639,058
Cost of Land Sales 0 0 0 0 (398,343)
Net Land Sales Proceeds 0 0 0 0 6,240,715
Holding Costs (133,056) (157,964) (223,048) (223,426) 0
Land Sales Net of Holding Costs (133,056) (157,964) (223,048) (223,426) 6,240,715
Miscellaneous Revenues 0 0 0 0 0
Miscellaneous Expenses 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Net Cash Flow Before Bldg/
Before Project Wide $ (133,056) $ (157,964) $ (223,048) $ (223,426) $ 6,240,715
</TABLE>
<TABLE>
<CAPTION>
LAND USE
CORPORATE USER/DEVELOPER 1stHalf00 2ndHalf00 1stHalf01 TOTAL
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Percentage of Total Development 0.00% 0.00% 0.00% 100.00%
Gross Acres Sold 0.00 0.00 0.00 35.90
Land Value Annual Growth Rates 3.00% 3.00% 3.00%
Land Sale Value $ 0 $ 0 $ 0 $ 6,639,058
Cost of Land Sales 0 0 0 (398,343)
Net Land Sales Proceeds 0 0 0 6,240,715
Holding Costs 0 0 0 (737,493)
Land Sales Net of Holding Costs 0 0 0 5,503,221
Miscellaneous Revenues 0 0 0 0
Miscellaneous Expenses 0 0 0 0
----------- ----------- ----------- -----------
Net Cash Flow Before Bldg/
Before Project Wide Expend $ 0 $ 0 $ 0 $ 5,503,221
</TABLE>
<TABLE>
<CAPTION>
OPEN SPACE/AGRICULTURAL Year 2ndHalf97 1stHalf98 2ndHalf98 1stHalf99 2ndHalf99
---- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Percentage of Total Development 0.00% 0.00% 0.00% 0.00% 0.00%
Gross Acres Sold 0.00 0.00 0.00 0.00 0.00
Land Value Annual Growth Rates 0.00% 3.00% 3.00% 3.00% 3.00%
Land Sale Value $ 0 $ 0 $ 0 $ 0 $ 0
Cost of Land Sales 0 0 0 0 0
Net Land Sales Proceeds 0 0 0 0 0
Holding Costs 0 0 0 0 0
Land Sales Net of Holding Costs 0 0 0 0 0
Miscellaneous Revenues 0 0 0 0 0
Miscellaneous Expenses 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Net Cash Flow Before Bldg/
Before Project Wide Expend $ 0 $ 0 $ 0 $ 0 $ 0
</TABLE>
<TABLE>
<CAPTION>
OPEN SPACE/AGRICULTURAL 1stHalf00 2ndHalf00 1stHalf01 TOTAL
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Percentage of Total Development 0.00% 100.00% 0.00% 100.00%
Gross Acres Sold 0.00 110.80 0.00 110.80
Land Value Annual Growth Rates 3.00% 3.00% 3.00%
Land Sale Value $ 0 $ 155,984 $ 0 $ 155,984
Cost of Land Sales 0 (9,359) 0 (9,359)
Net Land Sales Proceeds 0 146,625 0 146,625
Holding Costs 0 0 0 0
Land Sales Net of Holding Costs 0 146,625 0 146,625
Miscellaneous Revenues 0 0 0 0
Miscellaneous Expenses 0 0 0 0
----------- ----------- ----------- -----------
Net Cash Flow Before Bldg/
Before Project Wide Expend $ 0 $ 146,625 $ 0 $ 146,625
</TABLE>
<TABLE>
<CAPTION>
Acres Bldg. SF
----- -------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
TRIAD BUILDING 15.06 219,818 $ 0.48 $ 0.48 $ 0.00 $ 0.00 $ 0.00
REVENUE
Building/Land Sale $ 0 $ 22,000,000 $ 0 $ 0 $ 0
Triad Rental Income 1,252,860 1,252,860 0 0 0
Reimbursement: Assessments 40,270 50,564 0 0 0
Reimbursement: Taxes 124,500 126,990 0 0 0
Total Building Revenue $ 1,417,630 $ 23,430,414 $ 0 $ 0 $ 0
EXPENDITURES
Assessments $ (40,270) $ (50,564) $ 0 $ 0 $ 0
Property Taxes (124,500) (126,990) 0 0 0
Debt Service - Principal (547,819) (8,680,103) 0 0 0
Debt Service - Interest (444,466) (416,854) 0 0 0
Cost of Sales 2.00% 0 (440,000) 0 0 0
Total Building Expenditures $ (1,157,055) $ (9,714,511) $ 0 $ 0 $ 0
TOTAL BUILDING CASH FLOW $ 260,575 $ 13,715,903 $ 0 $ 0 $ 0
NET CASH FLOW: AFTER BLDG/
BEFORE PROJECT WIDE EXPEND $ 5,395,999 $ 16,772,917 $ 1,665,318 $ (251,099) $ 6,212,893
PROJECT WIDE EXPENDITURES
Overhead - Professional Fees (102,759) (78,301) (54,663) (54,663) (21,256)
------------ ------------ ------------ ------------ ------------
TOTAL PROJECT WIDE EXPENDITURES $ (102,759) $ (78,301) $ (54,663) $ (54,663) $ (21,256)
NET CASH FLOW: AFTER BLDG/
AFTER PROJECT WIDE EXPEND $ 5,293,239 $ 16,694,615 $ 1,610,654 $ (305,762) $ 6,191,638
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
TRIAD BUILDING
REVENUE
Building/Land Sale $ 0 $ 0 $ 0 $ 22,000,000
Triad Rental Income 0 0 0 2,505,720
Reimbursement: Assessments 0 0 0 90,834
Reimbursement: Taxes 0 0 0 251,490
Total Building Revenue $ 0 $ 0 $ 0 $ 24,848,044
EXPENDITURES
Assessments $ 0 $ 0 $ 0 $ (90,834)
Property Taxes 0 0 0 (251,490)
Debt Service - Principal 0 0 0 (9,227,922)
Debt Service - Interest 0 0 0 (861,320)
Cost of Sales 0 0 0 (440,000)
Total Building Expenditures $ 0 $ 0 $ 0 $(10,871,566)
TOTAL BUILDING CASH FLOW $ 0 $ 0 $ 0 $ 13,976,478
NET CASH FLOW: AFTER BLDG/BEFORE PROJECT WIDE EXPEND $ (27,919) $ 1,333,120 $ 0 $ 31,101,228
PROJECT WIDE EXPENDITURES
Overhead - Professional Fees (21,256) 0 0 (332,898)
------------ ------------ ------------ ------------
TOTAL PROJECT WIDE EXPENDITURES $ (21,256) $ 0 $ 0 $ (332,898)
NET CASH FLOW: AFTER BLDG/
AFTER PROJECT WIDE EXPEND $ (49,174) $ 1,536,557 $ 56,813 $ 31,028,580
============ ============ ============ ============
</TABLE>
Source: Sedway Group.
<PAGE> 26
EXHIBIT 7
TRIAD PARK
DEVELOPMENT PROFORMA: SEMI ANNUAL ANALYSIS
CASH FLOW SUMMARY
RECOMMENDED DISPOSITION PROGRAM
JULY 1997
<TABLE>
<CAPTION>
LAND USE
TOTAL Year 2ndHalf97 1stHalf98 2ndHalf98 1stHalf99 2ndHalf99
----- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Percentage of Total Development -- -- -- -- --
Gross Acres Sold 41.24 47.70 46.10 0.00 35.90
Land Value Annual Growth Rates -- -- -- -- --
Land Sale Value $ 5,864,040 $ 3,641,834 $ 2,038,238 $ 0 $ 6,639,058
Cost of Land Sales (260,797) (218,510) (122,294) 0 (398,343)
Net Land Sales Proceeds 5,603,243 3,423,324 1,915,943 0 6,240,715
Holding Costs (467,819) (366,310) (250,626) (251,099) (27,822)
Land Sales Net of Holding Costs 5,135,424 3,057,014 1,665,318 (251,099) 6,212,893
Miscellaneous Revenues 0 0 0 0 0
Miscellaneous Expenses 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
Net Cash Flow Before Bldg/
Before Project Wide $ 5,135,424 $ 3,057,014 $ 1,665,318 $( 251,099) $ 6,212,893
</TABLE>
<TABLE>
<CAPTION>
1stHalf00 2ndHalf00 1stHalf01 TOTAL
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Percentage of Total Development -- -- -- --
Gross Acres Sold 0.00 123.00 0.00 293.94
Land Value Annual Growth Rates -- -- -- --
Land Sale Value $ 0 $ 1,574,196 $ 0 $ 19,757,366
Cost of Land Sales 0 (94,452) 0 (1,094,397)
Net Land Sales Proceeds 0 1,479,744 0 18,662,969
Holding Costs (27,919) 0 0 (1,391,595)
Land Sales Net of Holding Costs (27,919) 1,479,744 0 17,271,374
Miscellaneous Revenues 0 0 0 0
Miscellaneous Expenses 0 0 0 0
------------ ------------ ------------ ------------
Net Cash Flow Before Bldg/
Before Project Wide $ (27,919) $ 1,479,744 $ 0 $ 17,271,374
</TABLE>
<TABLE>
<CAPTION>
Acres Bldg. SF
----- --------
<S> <C> <C> <C> <C> <C> <C> <C>
TRIAD BUILDING 15.06 219,818
REVENUE
Building/Land Sale $ 0 $ 22,000,000 $ 0 $ 0 $ 0
Triad Rental Income 1,252,860 1,252,860 0 0 0
Reimbursement: Assessments 40,270 50,564 0 0 0
Reimbursement: Taxes 124,500 126,990 0 0 0
Total Building Revenue $ 1,417,630 $ 23,430,414 $ 0 $ 0 $ 0
EXPENDITURES
Assessments $ (40,270) $ (50,564) $ 0 $ 0 $ 0
Property Taxes (124,500) (126,990) 0 0 0
Debt Service - Principal (547,819) (8,680,103) 0 0 0
Debt Service - Interest (444,466) (416,854) 0 0 0
Cost of Sales 2.00% 0 (440,000) 0 0 0
Total Building Expenditures $ (1,157,055) $ (9,714,511) $ 0 $ 0 $ 0
TOTAL BUILDING CASH FLOW $ 260,575 $ 13,715,903 $ 0 $ 0 $ 0
NET CASH FLOW: AFTER BLDG/
BEFORE PROJECT WIDE EXPEND $ 5,395,999 $ 16,772,917 $ 1,665,318 $ (251,099) $ 6,212,893
PROJECT WIDE EXPENDITURES
Overhead - Professional Fees (102,759) (78,301) (54,663) (54,663) (21,256)
------------ ------------ ------------ ------------ ------------
TOTAL PROJECT WIDE EXPENDITURES $ (102,759) $ (78,301) $ (54,663) $ (54,663) $ (21,256)
NET CASH FLOW: AFTER BLDG/
AFTER PROJECT WIDE EXPEND $ 5,293,239 $ 16,694,615 $ 1,610,654 $ (305,762) $ 6,191,638
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Building/Land Sale $ 0 $ 0 $ 0 $ 22,000,000
Triad Rental Income 0 0 0 2,505,720
Reimbursement: Assessments 0 0 0 90,834
Reimbursement: Taxes 0 0 0 251,490
Total Building Revenue $ 0 $ 0 $ 0 $ 24,848,044
EXPENDITURES
Assessments $ 0 $ 0 $ 0 $ (90,834)
Property Taxes 0 0 0 (251,490)
Debt Service - Principal 0 0 0 (9,227,922)
Debt Service - Interest 0 0 0 (861,320)
Cost of Sales 0 0 0 (440,000)
Total Building Expenditures $ 0 $ 0 $ 0 $(10,871,566)
TOTAL BUILDING CASH FLOW $ 0 $ 0 $ 0 $ 13,976,478
NET CASH FLOW: AFTER BLDG/
BEFORE PROJECT WIDE EXPEND $ (27,919) $ 1,333,120 $ 0 $ 31,101,228
PROJECT WIDE EXPENDITURES
Overhead - Professional Fees (21,256) 0 0 (332,898)
------------ ------------ ------------ ------------
TOTAL PROJECT WIDE EXPENDITURES $ (21,256) $ 0 $ 0 $ (332,898)
NET CASH FLOW: AFTER BLDG/
AFTER PROJECT WIDE EXPEND $ (49,174) $ 1,536,557 $ 56,813 $ 31,028,580
============ ============ ============ ============
</TABLE>
Source: Sedway Group.
<PAGE> 1
EXHIBIT (C)(1)
AGREEMENT OF MERGER
BY AND BETWEEN
TPL ACQUISITION, LLC,
RICHARD C. BLUM & ASSOCIATES, LP
AND
TRIAD PARK, LLC
DATED AS OF SEPTEMBER 9, 1997
<PAGE> 2
AGREEMENT OF MERGER
AGREEMENT OF MERGER dated as of September 9, 1997 (this "Merger
Agreement") between TPL ACQUISITION, LLC, a Delaware limited liability company
("Acquisition"), RICHARD C. BLUM & ASSOCIATES, LP, a California limited
partnership ("RCBA") and TRIAD PARK, LLC, a Delaware limited liability company
(the "Company").
W I T N E S S E T H:
WHEREAS, Section 18-209 of the Delaware Limited Liability Company Act
(the "LLCA") authorizes the merger of one Delaware limited liability company
with and into another Delaware limited liability company;
WHEREAS, the manager of Acquisition (the "Acquisition Manager") and
holders of membership interests in Acquisition (the "Acquisition Share Holders")
have determined that it is advisable and in the best interests of Acquisition
and the Acquisition Share Holders, for Acquisition to merge with and into the
Company with the result that the Acquisition Share Holders shall acquire all of
the membership interests in the Company (the "Company Shares");
WHEREAS, in furtherance of such acquisition, the Acquisition Manager has
approved a merger (the "Merger") of Acquisition with and into the Company in
accordance with the LLCA upon the terms and subject to the conditions set forth
herein, and the manager (the "Company Manager") and advisory board (the
"Advisory Board") of the Company have approved the Merger in accordance with the
LLCA, upon the terms and subject to the conditions set forth herein, and
recommend that the Merger be accepted by the holders of the Company Shares (the
"Company Share Holders");
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
SECTION 1. MERGER
1.1 MERGER. Upon the terms and subject to the conditions hereof, on the
Effective Date (as defined below in Section 1.2), Acquisition shall be merged
into the Company and the separate existence of Acquisition shall thereupon
cease, and the name of the Company, as the limited liability company surviving
in the Merger (the "Surviving LLC"), shall by virtue of the Merger remain "Triad
Park, LLC."
1
<PAGE> 3
1.2 EFFECTIVE DATE OF THE MERGER. The Merger shall become effective when
a properly executed Certificate of Merger is duly filed with the Secretary of
State of the State of Delaware, or at such later date and time as may be
specified therein, which filing shall be made as soon as practicable after the
closing of the transactions contemplated by this Merger Agreement in accordance
with Section 3.6. When used in this Merger Agreement, the term "Effective Date"
shall mean the date and time at which such filing shall have been made or such
later date and time as may be specified in such filing.
1.3 EFFECTS OF THE MERGER. The Merger shall have the effects set forth
in the applicable provisions of the LLCA. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Date, except as otherwise
provided herein, all of the property, rights, privileges, powers and franchises
of Acquisition and the Company shall vest in the Surviving LLC, and all debts,
liabilities and duties of Acquisition and the Company shall become the debts,
liabilities and duties of the Surviving LLC.
1.4 CERTAIN EXPENSES. Subject to the requirements of this Section 1.4
and beginning with the date of this Merger Agreement, Acquisition shall promptly
pay its and the Company's attorneys' fees and costs and all legitimate costs of
the transaction, including but not limited to printing and mailing fees and
filing fees with the Securities and Exchange Commission (the "Commission"), as
incurred, in connection with the preparation of documents and solicitation of
proxies required under the federal securities laws. In the event that the
Company retains its counsel for the solicitation of proxies, Acquisition's
obligations under this Section 1.4 shall be limited to $100,000 for attorney's
fees and costs, assuming one round of comments from the Commission to the
submitted documents. Acquisition shall pay actual time and expenses for work
arising out of additional rounds of comments.
SECTION 2. THE SURVIVING LLC
2.1 LIMITED LIABILITY COMPANY AGREEMENT. The limited liability company
agreement of Acquisition as in effect immediately prior to the Effective Date
shall be the limited liability company agreement of the Surviving LLC after the
Effective Date except that Section 1.2 thereof shall be amended to state that
the name of the company is Triad Park, LLC, and subject to Section 7.4(c),
thereafter may be amended in accordance with its terms and as provided by law
and this Merger Agreement.
2.2 BY-LAWS. The by-laws of Acquisition as in effect on the Effective
Date shall be the by-laws of the Surviving LLC.
2.3 MANAGER; ADVISORY BOARD. The Acquisition Manager immediately prior
to the Effective Date shall be the manager of the Surviving LLC. The Surviving
LLC shall not have an advisory board.
SECTION 3. CONVERSION OF SECURITIES
3.1 CONVERSION. As of the Effective Date, by virtue of the Merger and
without any action on the part of any Company Share Holder:
2
<PAGE> 4
(a) All Company Shares that are held by the Company and any Company
Shares owned by Acquisition shall be canceled.
(b) Each remaining issued and outstanding Company Share issued and
outstanding immediately prior to the Effective Date shall be converted into the
right to receive in cash in the amount of $1.32 per Company Share (the "Merger
Consideration").
(c) Each issued and outstanding membership interest in Acquisition
("Acquisition Share") shall be converted into and become one membership interest
in the Surviving LLC.
3.2 DISBURSEMENT OF MERGER CONSIDERATION.
(a) Pursuant to an irrevocable agreement to be entered into on or before
the Effective Date between Acquisition and a disbursing agent (the "Disbursing
Agent") for the benefit of the Company Share Holders (which shall be a
commercial bank or trust company with capital of at least $350,000,000 or
otherwise reasonably satisfactory to the Company and Acquisition), Acquisition
or the Surviving LLC shall deposit or cause to be deposited with the Disbursing
Agent, in trust for the benefit of the Company's Share Holders, at the Closing,
the Merger Consideration consisting of the cash (in immediately available funds)
to which the Company Share Holders shall be entitled pursuant to Section 3.1(b).
Pending any payments of cash pursuant to Section 3.1(b) of this Merger
Agreement, such funds shall be held and invested by the Disbursing Agent in
interest bearing investments with minimal or no risk to capital as directed by
the Surviving LLC, and any earnings with respect to such funds shall be paid to
the Surviving LLC when requested by the Surviving LLC. Any funds remaining with
the Disbursing Agent one year after the Effective Date shall be released by the
Disbursing Agent to the Surviving LLC after which time persons entitled thereto
may look, subject to applicable escheat and other similar laws, only to the
Surviving LLC for delivery thereof.
(b) Promptly upon the Effective Date the Surviving LLC shall notify the
Disbursing Agent of the effectiveness of the Merger and shall cause the
Disbursing Agent, pursuant to the irrevocable instructions, to mail to each
person who was, at the Effective Date, a record holder of an outstanding
certificate or certificates which prior thereto represented Company Shares
("Certificates") a notice and transmittal form advising such holder of the
effectiveness of the Merger and the procedure for surrendering to the Disbursing
Agent Certificates for exchange for the Merger Consideration. Each holder of
Certificates, upon proper surrender thereof to the Disbursing Agent together
with such transmittal form, duly completed and validly executed in accordance
with the instructions thereto, shall be entitled to receive the Merger
Consideration evidenced by such Certificates, without any interest thereon, in
exchange for such Certificates and such Certificates shall forthwith be
canceled. Until properly surrendered and exchanged, Certificates shall, after
the Effective Date, be deemed for all purposes to evidence only the right to
receive the Merger Consideration. Notwithstanding the foregoing, neither the
Disbursing Agent nor any party hereto shall be liable to a holder of
Certificates for any amount which may be required to be paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
3
<PAGE> 5
(c) If delivery of the Merger Consideration in respect of canceled
Company Shares is to be made to a person other than the person in whose name a
surrendered Certificate is registered, it shall be a condition to such delivery
or payment that the Certificate so surrendered shall be properly endorsed or
shall be otherwise in proper form for transfer and that the person requesting
such a delivery or payment shall have paid any transfer and other taxes required
by reason of such delivery or payment in a name other than that of the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving LLC and the Disbursing Agent that such tax
either has been paid or is not payable.
3.3 COMPANY SHARE HOLDERS' MEETING. Unless this Merger Agreement has
been terminated pursuant to Section 9.1, the Company shall take all action
necessary, in accordance with applicable law and its limited liability company
agreement and by-laws, to convene a special meeting of the Company Share Holders
entitled to vote thereat (the "Company Meeting") as promptly as practicable for
the purpose of considering and taking action upon this Merger Agreement. Subject
to Section 7.6(c), the Company Manager and Advisory Board will recommend that
Company Share Holders entitled to vote thereon vote in favor of and approve the
Merger and the adoption of this Merger Agreement at the Company Meeting. At the
Company Meeting, all of the Company Shares then owned by Acquisition, or with
respect to which Acquisition holds the power to direct the voting, shall be
voted in favor of approval of the Merger and adoption of this Merger Agreement.
3.4 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the close of business on
the Effective Date, the Company Share transfer books shall be closed and no
transfer of any Company Shares shall be made thereafter. In the event that,
after the Effective Date, Certificates are presented to the Surviving LLC, they
shall be canceled and exchanged for the Merger Consideration as provided in
Sections 3.1(b).
3.5 ASSISTANCE IN CONSUMMATION OF THE MERGER. Each of Acquisition and
the Company shall provide all reasonable assistance to, and shall cooperate
with, each other to bring about the consummation of the Merger as soon as
possible in accordance with the terms and conditions of this Merger Agreement.
3.6 CLOSING. The closing of the transactions contemplated by this Merger
Agreement shall take place (i) at the offices of Richard C. Blum & Associates,
L.P ("RCBA"), 909 Montgomery Street, Suite 400, San Francisco, CA 94133 at 10:00
A.M. local time as soon as practicable (but in any event within three business
days) after the day on which the last of the conditions set forth in Section 8
is fulfilled or waived, but in no event later than January 31, 1998, or (ii) at
such other time and place as Acquisition and the Company shall agree in writing.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF ACQUISITION & RCBA
Acquisition and RCBA represent and warrant to the Company as follows:
4.1 EXISTENCE; GOOD STANDING; AUTHORITY. Acquisition is a limited
liability company organized, validly existing and in good standing under the
laws of the State of
4
<PAGE> 6
Delaware, and will be, by October 15, 1997, duly licensed or qualified to do
business as a foreign limited liability company in, and in good standing under
the laws of, the State of California, which constitutes all of the jurisdictions
in which the character of the properties owned or leased by it therein or in
which the transaction of its business makes such qualification necessary, except
where the failure to be so qualified would not materially and adversely affect
the ability of Acquisition to consummate the transactions contemplated by this
Merger Agreement. RCBA is a limited partnership organized, validly existing and
in good standing under the laws of the State of California, and is in good
standing under the laws of California. Acquisition and RCBA have all requisite
power and authority to own, operate and lease its properties and carry on its
business as and where now conducted. The copies of the limited liability company
agreement and by-laws of Acquisition to be delivered to the Company within three
(3) business days of the date of this Merger Agreement are true and correct and
are in full force and effect, and there have not been any amendments or
alterations to such documents.
4.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Acquisition and
RCBA have the requisite power and authority to execute and deliver this Merger
Agreement and to perform their respective obligations hereunder. The execution
and delivery of this Merger Agreement by Acquisition and RCBA, and consummation
by Acquisition of the transactions contemplated hereby, have been duly
authorized by all requisite action under Acquisition's limited liability company
agreement, RCBA's limited partnership agreement, their respective by-laws and
applicable law. The Acquisition Manager is authorized as it deems appropriate to
execute, acknowledge, verify, deliver, file and record, for and in the name of
Acquisition, the Certificate of Merger and any and all other documents and
instruments required to consummate the transactions contemplated hereunder. This
Merger Agreement constitutes a valid and binding obligation of Acquisition and
RCBA enforceable against Acquisition and RCBA in accordance with its terms. No
other proceedings on the part of Acquisition or RCBA are necessary to authorize
this Merger Agreement and the transactions contemplated hereby.
4.3 PROXY STATEMENT. None of the information supplied in writing by
Acquisition and its affiliates specifically for inclusion in the proxy statement
of the Company (the "Proxy Statement") required to be mailed to the Company
Share Holders in connection with the Merger shall, at the time the Proxy
Statement is mailed, at the time of the Company Meeting or at the Effective
Date, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
4.4 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Merger Agreement by Acquisition nor the consummation of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the limited liability company agreement, limited partnership
agreement or the respective by-laws of Acquisition or RCBA, (ii) require any
consent, approval, authorization or permit of, or filing with or notification
to, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (each a "Governmental
Entity"), except (A) pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (B) the filing of the Certificate of Merger pursuant to
the LLCA or (C) where the failure to obtain such
5
<PAGE> 7
consent, approval, authorization or permit, or to make such filing or
notification, would not prevent or delay consummation of the Merger or would not
otherwise prevent Acquisition from performing its obligations under this Merger
Agreement; (iii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, license, agreement or other instrument or obligation to which
Acquisition is a party or by which it or any of its assets may be bound, except
for such defaults (or rights of termination, cancellation or acceleration) as to
which requisite waivers or consents have been obtained or which, in the
aggregate, would not materially and adversely affect the ability of Acquisition
to consummate the transactions contemplated by this Merger Agreement; or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Acquisition, or any of its assets, except for violations which
would not materially and adversely affect the ability of Acquisition to
consummate the transactions contemplated by this Merger Agreement.
4.5 FINANCING. Acquisition at the Effective Date, will have or will have
deposited with the Disbursing Agent (as appropriate) the funds necessary to
consummate the Merger and the transactions contemplated hereby, and to pay
related fees and expenses.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as provided to the contrary in the attached disclosure schedule
(the "Disclosure Schedule") and the specific Schedules referenced in this
Section 5, the Company makes the representations and warranties to Acquisition
in the following subsections of this Section. The qualifications, exceptions and
disclosures in the Disclosure Schedule are applicable regardless of whether or
not the individual representation or warranty is qualified by a reference to all
or any part of the Disclosure Schedule. For purposes of this Section 5, "to the
best of the Company's knowledge" or "known to the Company" or the like shall
mean the actual knowledge (without any obligation of further investigation and
without any personal liability) of James R. Porter, Stanley F. Marquis, Larry D.
McReynolds and Patrick J. Kernan.
5.1 EXISTENCE; GOOD STANDING; AUTHORITY. The Company is a limited
liability company organized, validly existing and in good standing under the
laws of the State of Delaware, and is duly licensed or qualified to do business
as a foreign limited liability company in, and is in good standing under the
laws of, the jurisdictions set forth in Schedule 5.1, which constitute all of
the jurisdictions in which the character of the properties owned or leased by it
therein or in which the transaction of its business makes such qualification
necessary, except where the failure to be so qualified would not have a Material
Adverse Effect (as defined below). The Company has all requisite power and
authority to own, operate and lease its properties and carry on its business as
and where now conducted. The copies of the limited liability company agreement
and by-laws of the Company delivered to Acquisition are true and correct and are
in full force and effect, and there have not been any amendments or alterations
to such documents. As used in this Merger Agreement, "Material Adverse Effect"
shall mean a material adverse effect on the business, assets, liabilities,
condition (financial or otherwise), prospects or results of operations of the
Company.
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5.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. The Company has
the requisite power and authority to execute and deliver this Merger Agreement
and to perform its obligations hereunder. The execution and delivery of this
Merger Agreement by the Company, and consummation by the Company of the
transactions contemplated hereby, have been duly authorized by all requisite
action under the Company's limited liability company agreement, by-laws and the
LLCA, subject only in the case of this Merger Agreement, to the requisite
approval of this Merger Agreement by the holders of a majority of the Company
Shares. The Company Manager is authorized as it deems appropriate to execute,
acknowledge, verify, deliver, file and record, for and in the name of the
Company the Certificate of Merger and any and all other documents and
instruments required to consummate the transactions contemplated hereunder. This
Merger Agreement constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms. Except for the
requisite approval by the holders of Company Shares, no other proceedings on the
part of the Company are necessary to authorize this Merger Agreement and the
transactions contemplated hereby.
5.3 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Merger Agreement by the Company nor the consummation of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the limited liability company agreement or by-laws of the
Company, (ii) require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity, except (A) pursuant to
the Exchange Act, (B) the filing of the Certificate of Merger pursuant to the
LLCA or (C) where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not cause a Material
Adverse Effect; (iii) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, license, agreement or other instrument or obligation to
which the Company is a party or by which it or any of its assets may be bound,
except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained or
which, in the aggregate, would not materially and adversely affect the ability
of the Company to consummate the transactions contemplated by this Merger
Agreement; or (iv) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or any of its assets, except for violations
which would not cause a Material Adverse Effect.
5.4 CAPITALIZATION. As of the date hereof, 19,708,123 Company Shares
were validly issued and outstanding. As of the date hereof, there are no bonds,
debentures, notes, other indebtedness or any other interest having the right to
vote on any matters on which the Company's Share Holders may vote issued or
outstanding. As of the date hereof, there are no options, warrants, calls or
other rights, agreements or commitments presently outstanding obligating the
Company to issue, deliver or sell Company Shares or debt securities, or
obligating the Company to grant, extend or enter into any such option, warrant,
call or other such right, agreement or commitment, other than pursuant to the
Rights Agreement ("Rights Agreement") dated as of April 28, 1997, between the
Company and GEMISYS Corporation, as Rights Agent.
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5.5 NO SUBSIDIARIES. The Company does not directly or indirectly own any
securities of or any other interest in any other corporation, partnership, joint
venture or other business association or entity.
5.6 REPORTS AND FINANCIAL STATEMENTS. The Company has previously
furnished Acquisition with true and complete copies of (i) its Registration
Statement on Form 10-SB, as filed with the Commission, (ii) its Quarterly Report
on Form 10-QSB for the quarter ended June 30, 1997, as filed with the Commission
and (iii) all other reports or registration statements filed by the Company with
the Commission that the Company was required to file with the Commission (the
documents listed in clauses (i) through (iii) being referred to herein
collectively as the "Company SEC Reports"). As of their respective dates, the
Company SEC Reports complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the Commission thereunder applicable to such Company SEC Reports.
As of their respective dates, the Company SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial statements of
the Company included in the Company SEC Reports comply as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the Commission with respect thereto, and the financial
statements included in the Company SEC Reports have been prepared in accordance
with generally accepted accounting principles ("GAAP") applied on a consistent
basis (except as may be indicated therein or in the notes thereto) and fairly
present in all material respects the financial position of the Company at the
dates thereof and the results of its operations and changes in financial
position for the periods then ended, subject, in the case of the unaudited
interim financial statements, to normal year-end audit adjustments and any other
adjustments described therein.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Company SEC Reports filed prior to the date hereof or in the Disclosure
Schedule, since February 10, 1997, the date the Company was organized, there has
not been (i) any transaction, commitment, dispute or other event or condition
(financial or otherwise) of any character (whether or not in the ordinary course
of business), individually or in the aggregate, having a Material Adverse
Effect; (ii) any damage, destruction or loss, whether or not covered by
insurance, which, insofar as reasonably can be foreseen, in the future would be
likely to have a Material Adverse Effect; (iii) any declaration, setting aside
or payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the Company Shares; (iv) any material increase in the
benefits under, or the establishment or amendment of, any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing,
performance awards, Company Share purchase or other employee benefit plan, or
any increase in the compensation payable or to become payable to any of the
employees of the Company, except for increases in salaries or wages payable or
to become payable in the ordinary course of business and consistent with past
practice; (v) any change by the Company in its significant accounting policies;
or (vi) any entry into any commitment or transaction material to the Company
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(including, without limitation, any borrowing or sale of assets) except in the
ordinary course of business consistent with past practice.
5.8 PROPERTIES.
(a) The title reports identified in the Disclosure Schedule list all
real property owned (the "Owned Property") or leased as lessor or lessee (the
"Leased Property" and collectively with the Owned Property, the "Property") by
the Company.
(b) Except as stated in the Disclosure Schedule, none of the Property is
subject to any purchase options, rights of first refusal or other preferential
purchase rights.
(c) The Leased Property has been leased by the Company on the terms and
conditions stated in the lease and amendments identified in the Disclosure
Schedule. All obligations towards the lessors arising from the lease agreements
referred to before have been complied with in all material respects. There are
no disputes regarding those agreements pending or, to the knowledge of the
Company, threatened.
(d) To the best of the Company's knowledge, except as set forth on the
Disclosure Schedule, no adjacent buildings or improvements extend across the
boundaries of the Owned Property and no buildings or improvements forming part
of the Owned Property extend onto any adjacent sites.
(e) Other than properties in the Triad Business Park which have been
sold, the Company has not owned or leased any Property except the Property.
(f) The Disclosure Schedule contains a true, correct and complete list
of all leases, subleases, tenancies, licenses and other rights of occupancy or
use for all or any portion of any Property, and all guarantees and other
agreements in respect thereof, all as amended, renewed and extended to the date
thereof, whether oral or written (the "Leases").
(g) The Company has heretofore delivered to Acquisition a true, correct
and complete copy of each Lease (or written summary thereof in the case of oral
Leases).
(h) Each current tenant (the "Tenant") is in actual possession of its
leased premises. No Rents violate any applicable law. For purposes of this
Section 5, the term "Rents" is defined to mean the basic, and additional and
percentage rents, all pass-throughs of taxes, expenses or other items, and all
other sums payable by the Tenant to the lessor (including, without limitation,
utility charges) during the original and any renewal terms thereof.
(i) The following is true with respect to each Lease:
(1) the Lease is valid and subsisting and in full force and effect
strictly in accordance with its terms and has not been modified, in writing
or otherwise, except as set forth on the Disclosure Schedule;
(2) no Lease contains any purchase or similar option;
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(3) all obligations of the lessor thereunder which accrue prior to
the Effective Date shall have been performed and paid for in full by the
Company;
(4) to the best of the Company's knowledge, there has been no default
or event which, with the giving of notice or the lapse of time, or both,
would constitute a default, on the part of the Tenant or the lessor
thereunder, and the Tenant has not asserted and has no defense to, offset or
claim against, its Rent or the performance of its other obligations under
the Lease;
(5) the Tenant has not prepaid any Rent; and
(6) the Rents have been assigned to the Company's lender as
additional security.
There are no material construction, management, leasing, service,
equipment, supply, maintenance or concession agreements (oral or written,
formal or informal) with respect to or affecting all or any portion of the
Property except as set forth on Schedule 5.21 (the "Property Contracts"). A
current, complete and correct copy of each Property Contract has been
delivered to Acquisition. Each Property Contract is valid and subsisting and
all amounts due thereunder have been paid. Except as set out in the
Disclosure Schedule, neither the Company nor any of its agents is in default
under any Property Contract or, to the best of the Company's knowledge, has
received any notice from any party to any Contract claiming the existence of
any default or breach hereunder and no event or omission has occurred which,
with the giving of notice or the lapse of time would constitute a default.
Except as set out in the Disclosure Schedule, all Property Contracts are
terminable without cause on thirty (30) days' notice or less without payment
of any penalty or termination payment.
(j) To the best of the Company's knowledge, the continued maintenance,
operation and use of any buildings, structures or other improvements on each
Property for their respective present purposes will not violate any federal,
state, county or municipal laws, ordinances, orders, codes, regulations or
requirements in certificates of occupancy relating to housing, building, safety,
health, fire or zoning (together "Applicable Laws") affecting all or any portion
of each improved Property.
(k) To the best of the Company's knowledge, no written or oral notice
has been given to the Company by any holder of any mortgage or deed of trust on
any Property, by any insurance company which has issued a policy with respect to
any of any Property, or by any board of fire underwriters (or other body
exercising similar functions), any of which notices claim any defect or
deficiency or request the performance of any repairs, alterations or other work
to any Property.
(l) All state, township, county, school district and other taxes levied
or assessed against any Property and any penalties or interest due and payable
thereon prior to the Effective Date, and all assessments of any kind levied
prior to the Effective Date, if any, will have been paid in full by the Company
and all appropriate tax returns relating to the same have been filed with the
proper authorities.
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(m) The Company has no notice of any proposed increase in the assessed
valuation. To the best of the Company's knowledge, there is no proceeding
pending for the reduction of the assessed valuation of all or any portion of any
Property.
(n) The Company has not received any written or oral notice for
assessments for public improvements against any Property which remain unpaid,
and to the best of the Company's knowledge, no such assessment has been
proposed.
5.9 CONDEMNATION. There is no pending condemnation, expropriation,
eminent domain or similar proceeding affecting all or any portion of any
Property and, to the best of the Company's knowledge, no such proceeding is
contemplated.
5.10 ENVIRONMENTAL MATTERS. For the purposes of this Merger Agreement:
"Environmental Matters" means any matter arising out of, relating to or
resulting from pollution, protection of the environment and human health or
safety, health or safety of the public or employees, sanitation, and any matters
relating to emissions, discharges, Releases or threatened Releases of
Environmentally Relevant Materials or otherwise arising out of, resulting from
or relating to the presence, manufacture, packaging, labeling, processing,
distribution, use, generation, treatment, storage, disposal, transport or
handling of or exposure to Environmentally Relevant Materials or arising out of,
resulting from, or relating to compliance with Environmental Laws.
"Environmental Costs" means, without limitation, any costs of
investigation, remediation, removal, or other response actions, losses,
liabilities, obligations, payments, damages (including, but not limited to,
bodily injury, death or property damage), civil or criminal fines or penalties,
costs of shutdown, diminution in operations, product withdrawals or
discontinuance of distribution of products (including, but not limited to,
direct or indirect damages), judgments, settlements, interest, costs and
expenses (including attorney's fees and costs) arising out of, relating to or
resulting from any Environmental Matter.
"Environmental Laws" means, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Sections 9601 et seq., the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. Sections 11001 et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. Sections 6901 et seq., the Toxic Substances Control Act, 15
U.S.C. Sections 2601 et seq., the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. Sections 136 et seq., the Clean Air Act, 42 U.S.C.,
Sections 7401 et seq., the Clean Water Act (Federal Water Pollution Control
Act), 33 U.S.C. Sections 1251 et seq., the Safe Drinking Water Act, 42 U.S.C.
Sections 300f et seq., the Occupational Safety and Health Act, 29 U.S.C.,
Sections 641 et seq., the Hazardous Materials Transportation Act, 49 U.S.C.
Sections 1801 et seq., as any of the above statutes have been or may be amended
from time to time, all rules and regulations promulgated pursuant to any of the
above statutes, and any other federal, state or local law, statute, ordinance,
rule or regulation governing Environmental Matters, as the same have been or may
be amended from time to time, including any common law cause of action providing
any right or remedy with respect to Environmental Matters, and all applicable
judicial and administrative decisions, orders, and decrees relating to
Environmental Matters.
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"Environmentally Relevant Materials" means any pollutants, contaminants,
or hazardous or toxic substances, materials, wastes, residual materials,
constituents or chemicals that are regulated by, or form the basis for liability
under any Environmental Laws, including but not limited to petroleum products,
asbestos and radioactive materials.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, injecting, discharging, escaping, leaching, dumping or disposing (or
threat of the same occurring) into the environment.
(a) To the best of the Company's knowledge, the Company is in material
compliance with all applicable Environmental Laws. There are no claims, notices,
civil, criminal or administrative actions, suits, hearings, investigations,
penalty assessments, inquiries or proceedings pending, asserted or, to the
knowledge of the Company, threatened by any governmental or other entity that
are based on or related to any Environmental Matters including, without
limitation, the violation of any Environmental Laws or the violation of or the
failure to have any required permits, licenses, authorizations, certificates,
registrations and other governmental consents and approvals related to the
handling, storage or disposal of Environmentally Relevant Materials
("Environmental Permits"). There are presently no outstanding judgments, decrees
or orders of any court or governmental or administrative agency against or
affecting the Company or Property arising from, relating to or resulting from
Environmental Matters.
(b) To the best of the Company's knowledge, except for ongoing matters
related to various creeks, wetlands and wildlife at the Property, the Company
has obtained and is in material compliance with all Environmental Permits
required to be obtained by it under applicable Environmental Laws in order for
the Company to conduct its business and operations, except where the failure to
obtain any Environmental Permit would not cause a Material Adverse Effect. All
such Environmental Permits are owned by or in the name of the Company, are in
full force and effect and the Company has made in a timely manner all
appropriate filings for issuance or renewal of such Environmental Permits. No
application, action or proceeding is pending for the renewal or modification of
any Environmental Permit; and no claim, application, complaint, action or
proceeding is pending, asserted or, to the knowledge of the Company, threatened
that may result in the denial of an application for renewal or transfer or the
revocation, modification, non-renewal, restriction, or suspension of any
Environmental Permit. The continued validity and existence of each of the
Environmental Permits is only subject to the conditions set forth in each such
Environmental Permit, and no additional expenditures are required to be made by
the Company or any third party to maintain or comply with such Environmental
Permits (except as specifically disclosed in such Environmental Permits and
except for changes in applicable Environmental Laws after Closing). The
continued validity of such Environmental Permits is not related to the continued
association of one or more individuals or corporations or other entities with
the Company.
(c) To the best of the Company's knowledge, no Environmentally Relevant
Materials have been Released or are present in connection with, arising from or
relating to any of the Company's operations or businesses or at, on, about or
under any Property either (a) in violation
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of applicable Environmental Law or (b) which require or would require
investigation, remediation or other response action under applicable
Environmental Law. No Property is listed or, to the knowledge of the Company,
proposed for listing (for which any of the Company or the Manager has received
notice of such listing or such listing is otherwise publicly disseminated or
a matter of public record) on the National Priority List pursuant to CERCLA
(NPL), CERCLIS or any similar foreign, federal or state list of sites requiring
investigation, remediation or other response action. To the best of the
Company's knowledge, there are no underground storage tanks, polychlorinated
biphenyls, asbestos-containing materials or surface impoundments at, on, under
or within any Property, and there have been no underground storage tanks
removed from or closed in place at any Property. The Company has not used
any treatment, storage or disposal site for Environmentally Relevant Materials,
or otherwise treated, stored, disposed of, transported, or arranged for the
treatment, storage or disposal of any Environmentally Relevant Materials used,
generated, handled, or managed by or on behalf of the Company or in connection
with the business or Property to any place or location which (a) is listed or,
to the best of the Company's knowledge, proposed for listing on the NPL, CERCLIS
or any similar foreign, federal or state list; (b) to the best of the Company's
knowledge, is in violation of any Environmental Laws; or (c) is the subject of
enforcement action or other investigations which could lead to Environmental
Costs to be incurred by any of the Company or the Surviving LLC. The Company has
not, nor, to the best of the Company's knowledge has any other person reported
or received any oral or written notice of a Release of any Environmentally
Relevant Material used, generated or handled by or for the Company or in
connection with the business or Property. Neither the Company, nor, to the best
of the Company's knowledge, any other person has received any notice, demand,
claim or request for information asserting that the Company is or may be a
potentially responsible party at any location used for the storage, treatment or
disposal of Environmentally Relevant Materials or where there has been a Release
of any Environmentally Relevant Materials.
(d) Except as listed in the Disclosure Schedule, there have been no
investigations, reports, studies, inspections, audits, tests, reviews or other
analyses conducted by the Company, the Manager, their respective employees or
outside contractors at the direction of any such person in relation to the
following matters: (i) Environmental Matters, including without limitation
potential or actual soil or groundwater conditions at any Property or business
now or previously owned, operated or leased by the Company; or (ii) the
compliance of the Company's business or Property with applicable Environmental
Laws ("Environmental Reports").
(e) To the best of the Company's knowledge, the Company is not aware of
any facts or circumstances related to Environmental Matters concerning the
Company, the business or operations of the Company or the Property which could
reasonably be expected to lead to Environmental Costs by the Surviving LLC or
the Company.
5.11 LITIGATION. Except as listed in the Disclosure Schedule, there is
no suit, action or proceeding pending or, to the best of the Company's
knowledge, threatened against or affecting the Company which, either alone or in
the aggregate, is likely to have a Material Adverse Effect, nor is there any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against
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the Company having, or which, in the future is likely to have, either alone or
in the aggregate, any Material Adverse Effect.
5.12 INFORMATION IN DISCLOSURE DOCUMENTS. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in the Proxy Statement or any amendments or supplements thereto, at
the time of the mailing of the Proxy Statement and any amendments or supplements
thereto and at the time of the Company Meeting, will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder.
5.13 LABOR MATTERS. No labor organization or group of employees of the
Company has made a pending demand for recognition or certification, and there
are no representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened to be brought or
filed, with the National Labor Relations Board or any other labor relations
tribunal or authority. There are no organizing activities, strikes, work
stoppages, slowdowns, lockouts, material arbitrations or material grievances, or
other material labor disputes pending or threatened against or involving the
Company.
5.14 EMPLOYEE BENEFIT PLANS; ERISA. There are no employee benefit plans,
programs, policies, practices, and other arrangements providing benefits to any
employee or former employee (or beneficiary or dependent thereof) sponsored or
maintained by the Company to which the Company contributes or is obligated to
contribute ("Company Plans").
5.15 COMPANY ACTION. The Manager and the Company Advisory Board (at a
meeting duly called and held) has by the requisite vote (i) determined that the
Merger is advisable and fair and in the best interests of the Company and its
Share Holders, (ii) approved the Merger in accordance with the provisions of
Section 18-209 of the LLCA, (iii) recommended the approval of this Merger
Agreement and the Merger by the Company Share Holders and directed that the
Merger be submitted for consideration by the Company's Share Holders entitled to
vote thereon at the Company Meeting and (iv) adopted any necessary resolution
having the effect of causing the Company not to be subject, to the extent
permitted by applicable law, to any state anti-takeover law that may purport to
be applicable to the Merger and the transactions contemplated by this Merger
Agreement.
5.16 NO FAIRNESS OPINION. The Company has not received an opinion of any
financial advisors to the Company to the effect that the consideration to be
received by the Company's Share Holders in the Merger is fair to the Share
Holders of the Company.
5.17 FINANCIAL ADVISOR. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or the transactions contemplated by this Merger Agreement based
upon arrangements made by or on behalf of the Company.
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5.18 COMPLIANCE WITH APPLICABLE LAWS. To the best of the Company's
knowledge, the Company holds all permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities for the Properties in their
current condition (the "Company Permits"). However the real property development
business involves a continuous governmental permitting process and the Company
makes no representation or warranty that the Company holds all permits of
Governmental Entities (including discretionary permits and ministerial permits
such as building permits) that (a) are additional, supplemental, or ancillary to
approval that the Company currently holds for real property being developed and
that would ordinarily be required or obtained only from time to time as such
development proceeds or (b) would be required for the development of parts of
the Property not yet being developed. The Company is in compliance with the
terms of the Company Permits, except for such failures to comply which, singly
or in the aggregate, would not have a Material Adverse Effect. To the best of
the Company's knowledge, the businesses of the Company are not being, and have
not been, conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except for possible violations which, individually or in
the aggregate, do not and would not have a Material Adverse Effect. To the best
of the Company's knowledge, no investigation or review by any Governmental
Entity with respect to the Company is pending or threatened, nor has any
Governmental Entity indicated an intention to conduct the same, other than those
the outcome of which would not have a Material Adverse Effect.
5.19 LIABILITIES. Except as set forth in the Disclosure Schedule, as of
June 30, 1997, the Company did not have any liability or obligation (absolute,
accrued, contingent or otherwise, in contract, tort or otherwise and whether or
not required by GAAP to be reflected in the Company's balance sheet or other
books and records) (a "Liability"), other than such Liabilities which,
individually or in the aggregate, would not have a Material Adverse Effect. From
and after June 30, 1997, the Company has not incurred, suffered, permitted to
exist or otherwise become subject to any Liability, other than Liabilities
incurred in the ordinary course of business in accordance with past practice
which, individually or in the aggregate, would not have a Material Adverse
Effect.
5.20 TAXES. The Company has filed all material tax returns, declarations
and reports required to be filed by any of them (taking into account all valid
extensions of filing dates) and has paid, or has set up an adequate liability
reserve in accordance with GAAP for the payment of, all taxes required to be
paid in respect of the periods covered by such returns, declarations and
reports. The information contained in such tax returns, declarations and reports
is true, complete and accurate in all material respects. The Company is not
delinquent in the payment of any tax, assessment or governmental charge, except
where such delinquency has not had or would not reasonably be expected to have,
a Material Adverse Effect. No material deficiencies for any taxes have been
proposed, asserted or assessed against the Company that have not been finally
settled or paid in full and no requests for waivers of the time to assess any
such tax are pending. No tax return, declaration or report is currently under
audit by any taxing authority, and as of the date hereof no written notice of
any such audit has been received. For the purposes of this Merger Agreement, the
term "tax" shall include all federal, state, local and foreign income, profits,
franchise, gross receipts, payroll, sales, employment, use, property,
withholding, excise
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and other taxes, duties and assessments of any nature whatsoever together with
all interest, penalties and additions imposed with respect to such amounts.
5.21 CERTAIN AGREEMENTS. Except as set forth on Schedule 5.21, the
Company is not a party or subject to any oral or written (i) agreement,
contract, indenture or other instrument relating to Indebtedness (as defined
below) in an amount exceeding $100,000; (ii) joint venture agreement or
arrangement or any other agreement which has involved or is expected to involve
a sharing of revenues; (iii) lease for real or personal property in which the
amounts of payments which the Company or any subsidiary is required to make on
an annual basis exceeds $25,000; (iv) agreement, contract, policy, license,
document, instrument, arrangement or commitment that limits in any material
respect the freedom of the Company to compete in any line of business or with
any person or in any geographical area or which would so limit the freedom of
the Company after the Effective Date; (v) employment, consulting, severance,
termination, or indemnification agreement, contract or arrangement providing for
future payments with any current or former officer, consultant or employee which
(A) exceeds $10,000 per annum or (B) requires aggregate annual payments or total
payments over the life of such agreement, contract or arrangement to such
current or former officer, consultant or employee in excess of $10,000 or
$25,000, respectively, and is not terminable before and after the Merger by it
on 30 days' notice or less without penalty or obligation to make payments
related to such termination; or (vi) other agreement, contract, policy, license,
document, instrument, arrangement or commitment not made in the ordinary course
of business that is material to the Company. "Indebtedness" means any liability
in respect of (A) borrowed money, (B) capitalized lease obligations, (C) the
deferred purchase price of property or services (other than trade payables in
the ordinary course of business) and (D) guarantees of any of the foregoing. The
Company is not in default (or would be in default with notice or lapse of time,
or both) under any indenture, note, credit agreement, loan document, lease,
contract, policy, license, document, instrument, arrangement or commitment (a
"Contract") whether or not such default has been waived, which default, alone or
in the aggregate with other such defaults, would have a Material Adverse Effect.
The Company is not a party to or bound by any Contract which upon execution of
this Merger Agreement or consummation of the transactions contemplated hereby
will (either alone or upon the occurrence of additional acts or events) result
in the loss of any material benefit, the termination thereof or any payment
becoming accelerated or due from the Company or the Surviving LLC which loss,
termination or acceleration would have a Material Adverse Effect.
SECTION 6. CONDUCT OF BUSINESS PENDING THE MERGER
6.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. Prior to the
Effective Date, unless Acquisition shall otherwise agree in writing:
(a) the Company shall carry on its business in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted, and
shall use its diligent efforts to preserve intact its present business
organizations, keep available the services of its present officers and employees
and preserve their relationships with customers, suppliers and others having
business dealings with them to the end that their goodwill and ongoing
businesses shall
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be unimpaired at the Effective Date. The Company shall (A) maintain insurance
coverages and its books, accounts and records in the usual manner consistent
with prior practices; (B) comply in all material respects with all laws,
ordinances and regulations of Governmental Entities applicable to the Company;
(C) maintain and keep its properties and equipment in good repair, working order
and condition, ordinary wear and tear excepted; and (D) perform in all material
respects its obligations under all contracts and commitments to which it is a
party or by which it is bound, in each case other than where the failure to so
maintain, comply or perform, either individually or in the aggregate, would not
result in a Material Adverse Effect;
(b) except as required by this Merger Agreement, the Company shall not
and shall not propose to (A) sell or pledge or agree to sell or pledge any
membership interest; (B) amend its limited liability company agreement or
by-laws; (C) split, combine or reclassify its outstanding membership interests
or issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of membership interests of the
Company, or declare, set aside or pay any dividend or other distribution payable
in cash, securities or other property; or (D) directly or indirectly redeem,
purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire
any Company Shares;
(c) the Company shall not (A) except as contemplated by this Merger
Agreement, issue, deliver or sell or agree to issue, deliver or sell any
additional shares of, or rights of any kind to acquire any shares of, its
membership interest of any class, any Indebtedness or any options, rights or
warrants to acquire, or securities convertible into membership interests; (B)
acquire, lease or dispose of, or agree to acquire, lease or dispose of, any
capital assets or any other assets other than in the ordinary course of
business; (C) incur additional Indebtedness or encumber or grant a security
interest in any asset or enter into any other material transaction other than in
each case in the ordinary course of business (other than as set forth in
Schedule 6.1); (D) acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, in each case in this clause (D) which are
material, individually or in the aggregate, to the Company; or (E) enter into
any contract, agreement, commitment or arrangement with respect to any of the
foregoing;
(d) the Company shall not, except as required to comply with applicable
law, (A) adopt, enter into, terminate or amend any bonus, profit sharing,
compensation, severance, termination, stock option, pension, retirement,
deferred compensation, employment or other Company Plan, agreement, trust, fund
or other arrangement for the benefit or welfare of any current or former
officer, employee or independent contractor; (B) other than as set forth in
Schedule 6.1, increase in any manner the compensation or fringe benefit of any
officer, employee or independent contractor; (C) other than as set forth in
Schedule 6.1, pay any benefit not provided under any existing plan or
arrangement; (D) other than as set forth in Schedule 6.1, grant any awards under
any bonus, incentive, performance or other compensation plan or arrangement or
Company Plan (including, without limitation, the grant of equity based or
related awards, performance units or restricted equity, or the removal of
existing restrictions or the acceleration of exercisability in any Company Plan
or agreements or awards made thereunder); (E) take any action to fund or in any
other way secure the payment of compensation or benefits under any employee
plan,
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agreement, contract or arrangement or Company Plan; or (F) adopt, enter into,
amend or terminate any contract, agreement, commitment or arrangement to do any
of the foregoing;
(e) the Company shall not make any investments in non-investment grade
securities; and
(f) the Company shall not, except as required by law or GAAP, change any
of its significant accounting policies or make or rescind any express or deemed
election relating to taxes, settle or compromise any claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to taxes, or change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the last taxable year.
6.2 NOTICE OF BREACH. Each party shall promptly give written notice to
the other party upon becoming aware of the occurrence or, to its knowledge,
impending or threatened occurrence, of any event which would cause or constitute
a breach of any of its representations, warranties or covenants contained or
referenced in this Merger Agreement and will use its best efforts to prevent or
promptly remedy the same. Any such notification shall not be deemed an amendment
of any Schedule hereto.
SECTION 7. ADDITIONAL AGREEMENTS
7.1 ACCESS AND INFORMATION. Subject to the limitations imposed by third
party confidentiality agreements, the Company shall afford to Acquisition and
its accountants, counsel and other representatives full access during normal
business hours (and at such other times as the parties may mutually agree)
throughout the period prior to the Effective Date to all of its properties,
books, contracts, commitments, records and personnel and, during such period,
the Company shall furnish promptly to Acquisition (i) a copy of each report,
schedule and other document filed or received by it pursuant to the requirements
of federal or state securities laws, and (ii) all other information concerning
its business, properties and personnel as Acquisition may reasonably request.
The Company and Acquisition shall hold, and shall cause its employees and agents
to hold, in confidence all such information in accordance with the terms of the
Confidentiality Agreement, effective August 19, 1997, between Acquisition and
the Company (the "Confidentiality Agreement"). Acquisition shall indemnify and
hold the Company harmless from any and all claims, liens, losses or damage,
including attorneys' fees, arising out of the physical presence of employees,
agents or contractors of Acquisition or RCBA at the Company and out of any tests
or inspections of the Company's Property by or on behalf of Acquisition or RCBA.
7.2 PROXY STATEMENT.
(a) As promptly as practicable after the execution of this Merger
Agreement, the Company and Acquisition shall prepare and the Company shall file
with the Commission preliminary proxy materials which shall constitute the
preliminary Proxy Statement. As promptly as practicable after comments are
received from the Commission with respect to the preliminary proxy materials and
after the furnishing by the Company and Acquisition of all
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information required to be contained therein, the Company shall file with the
Commission the definitive Proxy Statement.
(b) Acquisition and the Company shall make all necessary filings with
respect to the Merger under the Securities Act and the Exchange Act and the
rules and regulations thereunder and under applicable blue sky or similar
securities laws and shall use all reasonable efforts to obtain required
approvals and clearances with respect thereto.
7.3 MEETING. As promptly as possible, the Company shall notice a Share
Holder's meeting for the purpose of approving the Merger. The Company shall
solicit management proxies to vote in favor of the Merger in connection with
this meeting.
7.4 INDEMNIFICATION.
(a) All rights to indemnification existing in favor of the current or
former officers or employees of the Company as provided in the limited liability
company agreement or by-laws, as in effect as of the date hereof, with respect
to matters occurring through the Effective Date, shall survive the Merger and
shall continue in full force and effect for a period of not less than six years
from the Effective Date, provided, however, that, prior to the Effective Time
and with Acquisition's prior consent (such consent not required if the cost does
not exceed $110,000), the Company may purchase additional policies of directors'
and officers' liability insurance of at least the same coverage as currently
maintained by the Company, such policies to be pre-paid and in effect for a
period of six years from the Effective Date.
(b) In the event that any action, suit, proceeding or investigation
relating hereto or to the transactions contemplated by this Merger Agreement is
commenced, whether before or after the Effective Date, the parties hereto agree
to cooperate and use their respective reasonable efforts to vigorously defend
against and respond thereto.
(c) The provisions of the limited liability company agreement and
by-laws of the Surviving LLC pertaining to indemnification of current and former
directors, officers and employees shall not be amended, repealed or otherwise
modified for a period of six years after the Effective Date (or, in the case of
matters which are pending but which have not been resolved prior to the sixth
anniversary of the Effective Date, until such matters are finally resolved), in
any manner that would adversely affect the rights thereunder of individuals who
at any time on or prior to the Effective Date were directors, officers or
employees of the Company in respect of actions or omissions occurring on or
prior to the Effective Date (including, without limitation, the transactions
contemplated by this Merger Agreement).
7.5 ADDITIONAL AGREEMENTS.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Merger Agreement, including
using all reasonable efforts to obtain all necessary waivers, consents and
approvals, to
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effect all necessary registrations and filings (including, but not limited to,
filings with all applicable Governmental Entities) and to lift any injunction
or other legal bar to the Merger, subject to the appropriate vote of the Share
Holders. Notwithstanding the foregoing, Acquisition shall not be required to
take any action, and without Acquisition's prior written consent the Company
shall agree not to take any action, that would in any way restrict or limit
the conduct of business from and after the Effective Date by the Surviving
LLC of either (including, without limitation, any divestiture of any business,
product line or asset).
(b) In case at any time after the Effective Date any further action is
necessary or desirable to carry out the purposes of this Merger Agreement, the
proper officers and/or directors of the Surviving LLC shall take all such
necessary action.
7.6 NO SOLICITATION.
(a) As used herein, the term "Acquisition Proposal" means any proposed
(i) merger, consolidation or similar transaction involving the Company, (ii)
sale, lease or other disposition directly or indirectly by merger,
consolidation, share exchange or otherwise of either (A) assets of the Company
representing 75% or more of the consolidated assets of the Company (based upon
the valuations contained in the confidential report of the Sedway Group dated
July 22, 1997 (the "Sedway Report")) in one transaction (but not solicitation of
sales of individual parcels of the Property), or (B) all or substantially all of
the undeveloped Property in one transaction (but not solicitation of sales of
individual parcels of the undeveloped Property), (iii) issue, or other
acquisition or disposition of (including by way of merger, consolidation, share
exchange or any similar transaction) securities (or options, rights or warrants
to purchase, or securities convertible into, such securities) representing 20%
or more of the voting power of the Company or (iv) transaction in which any
person shall or would acquire beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act), or the right to acquire beneficial
ownership, or any "group" (as such term is defined under the Exchange Act) shall
have been formed which beneficially owns or would own or has or would have the
right to acquire beneficial ownership of 20% or more of the outstanding Company
Common Stock, other than transactions contemplated by this Merger Agreement.
(b) The Company shall not, nor shall the Company authorize or permit its
officers, employees, representatives, investment bankers, attorneys, accountants
or other agents or affiliates to, take any action to solicit, initiate or
encourage the submission of any Acquisition Proposal; provided, however, that
if, at any time prior to the obtaining of Company Share Holder approval of the
Merger, the Advisory Board determines in good faith by a majority vote, with the
advice of outside counsel, that it is necessary to do so to avoid a breach of
its fiduciary duties to Share Holders under applicable law, the Company may, in
response to a written request for information, furnish information with respect
to the Company to any person pursuant to a customary confidentiality agreement
containing terms at least as favorable to the Company as those contained in the
confidentiality agreements in place between the Company and Acquisition. The
Company may discuss and negotiate terms with parties making unsolicited
Acquisition Proposals.
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(c) The Company may continue marketing parcels of the Property as part
of its normal business operations. The Company shall provide Acquisition with a
copy of any proposed agreement for any sale, exchange or other disposition of
any part of the Property and consult with Acquisition before entering into any
binding agreement. After the approval of this Agreement by the Advisory Board of
the Company and except as provided in Section 7.6(d), the Company will not,
without the express written consent of Acquisition, enter into any agreement for
the disposition of any part of the Property.
(d) Except as expressly permitted by this Section 7.6, neither the
Advisory Board nor the Company Manager shall (i) withdraw or modify, or propose
publicly to withdraw or modify, in a manner adverse to Acquisition, its approval
or recommendation of the adoption and approval of the matters to be considered
at the Company Meeting, (ii) approve or recommend, or propose publicly to
approve or recommend, any Acquisition Proposal, or (iii) cause the Company to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement or understanding (written or otherwise) related to
any Acquisition Proposal (each, an "Acquisition Agreement"). Notwithstanding the
foregoing, in the event that prior to the obtaining of Company Share Holder
approval of the Merger, there exists a Superior Proposal (as defined herein),
the Advisory Board may, if it determines in good faith by a majority vote, with
the advice of outside counsel, that it is necessary to do so to avoid a breach
of its fiduciary duties to Company Share Holders under applicable law, approve
or recommend such Superior Proposal and terminate this Merger Agreement,
provided (x) the Company shall have given Acquisition written notice (a
"Superior Proposal Notice") at least five business days prior to such
termination advising Acquisition that the Advisory Board has received a Superior
Proposal which the Advisory Board has authorized and intends to effect,
specifying the material terms and conditions of such Superior Proposal and
identifying the person making such Superior Proposal, and (y) the Company, prior
to terminating this Merger Agreement, makes irrevocable arrangements for
Acquisition to be paid the amounts contemplated by Section 9.2(b) upon the
termination of this Merger Agreement. For purposes of this Merger Agreement, a
"Superior Proposal" means a definitive unconditioned agreement with a third
party, with all due diligence investigations completed, to acquire, directly or
indirectly, more than 50% of the membership interests of the Company, assets of
the Company representing 75% or more of the real estate assets of the Company
(based upon the valuations contained in the Sedway Report) in one transaction
(but not solicitation of sales of individual parcels of the Property) or all or
substantially all of the undeveloped Property in one transaction (but not
solicitation of sales of individual parcels of the undeveloped Property), and
otherwise on terms which the Advisory Board determines in its good faith
judgment to be more favorable from a financial point of view to the Company
Share Holders than this Merger Agreement, the Merger and the transactions
contemplated hereby and for which financing, to the extent required, is then
committed.
(e) In addition to the obligations set forth in paragraphs (b) and (d)
of this Section 7.6, the Company will promptly communicate to Acquisition a copy
of any requests for information or proposals, including the identity of the
person and its affiliates making the same, that it may receive.
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(f) Nothing contained in this Section 7.6 shall prohibit the Company
from taking and disclosing to the Company Share Holders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company Share Holders if, in the good faith judgment of the
Advisory Board, with the advice of outside counsel, failure so to disclose would
result in a violation of applicable law; provided, however, that neither the
Company, the Company Manager nor the Advisory Board shall withdraw or modify, or
propose publicly to withdraw or modify, its position with respect to the matters
to be considered at the Company Meeting or approve or recommend, or propose
publicly to approve or recommend, an Acquisition Proposal, except as provided in
Section 7.6(d).
7.7 REDEMPTION OF RIGHTS. The Company shall, immediately prior to the
Effective Date, cause the redemption of the rights issued under the Rights
Agreement so that thereafter the holders of such rights shall have no rights
thereunder other than the right to receive the redemption price therefor. The
Company shall not amend the Rights Agreement in any manner that has the effect
of rendering the Rights Agreement inapplicable, in whole or in part, to any
third party unless, prior to or concurrently therewith, the Company takes
substantially equivalent action with respect to Acquisition and in addition
releases Acquisition from any limitations or restrictions imposed by the
Confidentiality Agreement, including without limitation, restrictions upon the
purchase of Company Shares, that prohibits Acquisition from purchasing Company
Shares to the same extent and upon substantially equivalent terms as such third
party.
SECTION 8. CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Date of the following conditions:
(a) This Merger Agreement and the transactions contemplated hereby shall
have been approved and adopted by the requisite vote of the Company Share
Holders.
(b) No temporary restraining order, preliminary or permanent injunction
or other order by any court or other judicial or administrative body of
competent jurisdiction (each, an "Injunction") which prohibits or prevents the
consummation of the Merger shall have been issued and remain in effect (each
party agreeing to use its best efforts to have any such Injunction lifted), and
there shall not be any action taken, or any statute, rule, regulation or order
(whether temporary, preliminary or permanent) enacted, entered or enforced which
makes the consummation of the Merger illegal or prevents or prohibits the
Merger.
8.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE MERGER. The
obligation of the Company to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Date of the additional following
conditions, unless waived by the Company:
(a) Acquisition shall have performed in all material respects its
agreements contained in this Merger Agreement required to be performed on or
prior to the Effective Date and the
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representations and warranties of Acquisition contained in this Merger Agreement
shall be true in all material respects when made and on and as of the Effective
Date as if made on and as of such date, except for representations and
warranties that are by their express provisions made as of a specific date or
dates, which were or will be true in all material respects at such time or
times as stated therein, and the Company shall have received a certificate of
the Acquisition Manager to that effect.
(b) Intentionally Omitted.
(c) The Merger Consideration shall have been deposited with the
Dispersing Agent with irrevocable instructions to exchange the Company Shares
for the Merger Consideration in accordance with Section 3.2(b) immediately upon
notification by the Company and Acquisition of the Effective Date.
8.3 CONDITIONS TO OBLIGATIONS OF ACQUISITION TO EFFECT THE MERGER. The
obligation of Acquisition to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Date of the additional following
conditions, unless waived by Acquisition:
(a) The Company shall have performed in all material respects its
agreements contained in this Merger Agreement required to be performed on or
prior to the Effective Date and the representations and warranties of the
Company contained in this Merger Agreement shall be true in all material
respects (except for any such representations or warranties which are qualified
as to Material Adverse Effect, which shall be true and correct in all respects)
when made and on and as of the Effective Date as if made on and as of such date,
except for representations and warranties that are by their express provisions
made as of a specific date or dates which were or will be true in all material
respects (except for any such representations or warranties which are qualified
as to Material Adverse Effect, which were or will be true and correct in all
respects) at such date or dates, and Acquisition shall have received a
certificate of the Company Manager to that effect.
(b) Intentionally Omitted.
(c) The Company shall have obtained all consents, appeals, releases or
authorizations from, and shall have made all filings and registrations to or
with, any person, including but not limited to any Governmental Entity,
necessary to be obtained or made in order to consummate the transactions
contemplated by this Merger Agreement.
(d) Acquisition shall be satisfied, in its sole and absolute discretion,
with the results of its due diligence investigation of the Company; provided,
however, that this condition must be satisfied or waived no later than Monday
September 8, 1997 at noon San Francisco time or the Company may elect to
terminate this Agreement. As of the date of this Merger Agreement, the condition
specified in this Section 8.3(d) has been satisfied.
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SECTION 9. TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION. This Merger Agreement may be terminated at any time
prior to the Effective Date, whether before or after approval by the Company
Share Holders:
(a) by mutual consent of the Board of Directors of Acquisition and the
Advisory Board;
(b) by either Acquisition or the Company, if the Merger shall not have
been consummated on or before January 31, 1998; provided that the right to
terminate this Agreement pursuant to this Section 9.1(b) shall not be available
to any party whose failure to perform in any material respect any covenant under
this Merger Agreement has been the cause of or resulted in whole or in part in
the failure of the Merger to be consummated before such date;
(c) by either Acquisition or the Company, if there shall be any Order
which is final and nonappealable preventing the consummation of the Merger;
(d) by either Acquisition or the Company, if this Merger Agreement and
the transactions contemplated hereby shall fail to receive the requisite vote
for approval and adoption by the Company Share Holders at the Company Meeting;
(e) by Acquisition if this Merger Agreement and the transactions
contemplated hereby shall not have been submitted for approval and adoption by
the Company Share Holders at the Company Meeting prior to January 31, 1998
unless the meeting is held later solely due to delays in obtaining approval of
the Proxy Statement by the Commission;
(f) by Acquisition, if the Advisory Board withdraws, modifies in a
manner adverse to Acquisition, or refrains from making its recommendation
concerning the Merger referred to in Section 3.3, or the Advisory Board shall
have recommended to the Company Share Holders any Acquisition Proposal or the
Company shall have entered into an Acquisition Agreement, or, other than in
connection with the Company's delivery of a Superior Proposal Notice, the
Advisory Board shall have resolved to do any of the foregoing; or
(g) by the Company, if, pursuant to Section 7.6(d), (A) the Advisory
Board has delivered to Acquisition a Superior Proposal Notice, (B) the Company
has paid the Termination Fee (as defined in Section 9.2), and (C) five business
days have passed since Acquisition received the Superior Proposal Notice.
9.2 EFFECT OF TERMINATION; FEES.
(a) In the event of termination of this Merger Agreement by either
Acquisition or the Company, as provided above, this Merger Agreement shall
forthwith become void and (except for the willful breach of this Merger
Agreement by any party hereto) there shall be no liability on the part of either
the Company or Acquisition or their respective officers or employees; provided
that the last sentence of Section 7.1 and Sections 9.2, 11.3 and 11.7 shall
survive the termination.
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(b) The Company shall pay to Acquisition a Termination Fee (as defined
below) if: (i) Acquisition terminates this Merger Agreement pursuant to Section
9.1(e) or (f); or (ii) if Acquisition has waived the condition precedent in
Section 8.3(d) within three business days after the receipt by Acquisition of
the Superior Proposal Notice, the Company terminates this Merger Agreement
pursuant to Section 9.1(g) and executes the agreement contemplating the Superior
Proposal.
(c) The Termination Fee shall be equal to $1.3 million. The Termination
Fee shall be paid as promptly as practicable and in no event later than (A) in
the event of termination by the Company as described in clause (ii) of Section
9.2(b), upon termination of the Merger Agreement and the execution of the
Superior Proposal; or (B) in the event of termination by Acquisition as
described in clause (i) of Section 9.2(b), five business days after such
termination.
9.3 AMENDMENT. This Merger Agreement may be amended by the parties
hereto, by or pursuant to action taken by the Acquisition Manager and the
Advisory Board, at any time before or after approval hereof by the Company Share
Holders, but, after such approval, no amendment shall be made which changes the
amount or form of Merger Consideration or which in any way materially adversely
affects the rights of the Company Share Holders, without the further approval of
such Company Share Holders. This Merger Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto.
9.4 WAIVER. At any time prior to the Effective Date, the parties hereto,
by or pursuant to action taken by the Acquisition Manager and Advisory Board,
may (i) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any documents delivered
pursuant hereto, and (iii) waive compliance with any of the agreements or
conditions contained herein; provided, however, that no such waiver shall
materially adversely affect the rights of the Company Share Holders and
Acquisition. Any agreement on the part of a party hereto to any such extension
or waiver shall be valid if set forth in an instrument in writing signed on
behalf of such party.
SECTION 10. COMMITMENTS OF RCBA
RCBA shall cause Acquisition to be capitalized with all funds necessary
for Acquisition to fulfill its obligations under the Merger Agreement and the
transactions contemplated hereby. RCBA shall indemnify and hold the Company
harmless from any and all claims, liens, losses or damage, including attorneys'
fees, arising out of the physical presence of employees, agents or contractors
of Acquisition or RCBA at the Company, out of any tests or inspections of the
Company's Property by or on behalf of Acquisition or RCBA or out of a failure of
Acquisition to pay the costs and expenses as provided for in Section 1.4.
SECTION 11. GENERAL PROVISIONS
11.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. No
representations, warranties or agreements in this Merger Agreement shall survive
the Merger, except for the agreements contained in Sections 3.1, 3.2 and 3.4 and
the
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agreements referred to in Sections 7.4, 7.5, 11.1, 11.3 and 11.7. No claims
for any breach of any representation or warranty may be brought by either party
after the Effective Date.
11.2 NOTICES. All notices or other communications under this Merger
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by cable, telegram, telex,
telecopy or other standard form of telecommunications, or by registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
If to the Company:
3055 Management Corp.
3055 Triad Drive
Livermore, CA 94550
Attention: James R. Porter
Telecopy No.: 510-455-6917
With a copy to:
McCutchen, Doyle, Brown & Enersen, LLP
Three Embarcadero Center, 18th Floor
San Francisco, CA 94111-4066
Attention: Edward S. Merrill
Telecopy No.: 415-393-2286
If to Acquisition or RCBA:
TPL Acquisition, LLC
c/o Richard C. Blum & Associates, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133
Attention: Murray A. Indick
Telecopy No.: 415-434-3130
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section 11.2.
11.3 EXPENSES. All costs and expenses incurred in connection with this
Merger Agreement and the transactions contemplated hereby (regardless of whether
the Merger is consummated) shall be paid by the party incurring such expenses,
and the incurrence and payment of transaction expenses by the Company shall not
affect the Merger Consideration.
11.4 PUBLICITY. So long as this Merger Agreement is in effect,
Acquisition and the Company agree to consult with each other in issuing any
press release or otherwise making any public statement with respect to the
transactions contemplated by this Merger Agreement, and
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none of them shall issue any press release or make any public statement prior
to such consultation, except as may be required by law.
11.5 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Merger
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Merger Agreement and
to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
11.6 INTERPRETATION. The headings contained in this Merger Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Merger Agreement.
11.7 MISCELLANEOUS. This Merger Agreement (including the documents and
instruments referred to herein) (a) constitute the entire agreement and
supersede all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof
(other than as provided in the Confidentiality Agreement, as the same may be
amended); (b) except as provided in Section 7.4 of this Merger Agreement, are
not intended to confer upon any other person any rights or remedies hereunder;
(c) except for an assignment by Acquisition to one of its affiliates, shall not
be as assigned by operation of law or otherwise; and (d) shall be governed in
all respects, including validity, interpretation and effect, by the laws of the
State of Delaware (without giving effect to the provisions thereof relating to
conflicts of law). This Merger Agreement may be executed in two or more
counterparts which together shall constitute a single agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Merger Agreement
to be signed by their respective officers thereunder duly authorized all as of
the date first written above.
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TPL ACQUISITION, LLC
By: RICHARD C. BLUM & ASSOCIATES, LP
By: RICHARD C. BLUM & ASSOCIATES, INC.,
its sole general partner
By: /s/ MARC T. SCHOLVINCK
-----------------------------
Its: Managing Director &
Chief Financial Officer
TRIAD PARK, LLC
By: 3055 MANAGEMENT CORP.,
its Manager
By: /s/ JAMES R. PORTER
-------------------------------
Its: Vice President
RICHARD C. BLUM & ASSOCIATES, LP
By: RICHARD C. BLUM & ASSOCIATES, INC.,
its sole general partner
By: /s/ MARC T. SCHOLVINCK
-------------------------------
Its: Managing Director &
Chief Financial Officer
28
<PAGE> 1
Exhibit (c)(2)
Triad Park, LLC
- --------------------------------------------------------------------------------
Contractor: Larry McReynolds
Term: From February 27, 1997 to indefinite
INDEPENDENT CONTRACTOR SERVICES AGREEMENT
THIS AGREEMENT ("Agreement") is entered into by and between Triad Park,
LLC, a Delaware Limited Liability Company "Triad Park"); and Larry McReynolds
("Contractor") as of February 27, 1997 (the "Effective Date").
1. ENGAGEMENT OF SERVICES.
1.1 Project Assignments. TRIAD PARK may from time to time issue
Project Assignments to Contractor in the form of the attached Exhibit A. Subject
to the terms of this Agreement, Contractor will render services set forth in
Project Assignments accepted by Contractor. Services will be rendered to the
best of Contractor's ability, by the completion dates set forth in the relevant
Project Assignment.
1.2 Performance of Services. TRIAD PARK selected Contractor to
perform these services based upon TRIAD PARK receiving Contractor's personal
service and therefore Contractor may not subcontract or otherwise delegate its
obligations under this Agreement without TRIAD PARK's prior written consent. If
Contractor is not a natural person, then before any employee, agent, or
consultant of Contractor performs services in connection with this Agreement,
that employee, agent, or consultant must have entered into a written agreement
expressly for the benefit of TRIAD PARK and containing provisions substantially
equivalent to this Section 1.2 and to Section 4 below. Contractor must provide a
signed copy of that agreement to TRIAD PARK.
2. COMPENSATION.
2.1 Fees and Approved Expenses. TRIAD PARK will pay Contractor a
fee for services rendered by Contractor pursuant to this Agreement as set forth
in Exhibit "A". Contractor will not be reimbursed for any expenses incurred in
connection with the performance of services under this Agreement, unless those
expenses are approved in writing by an authorized manager of TRIAD PARK or
expressly authorized in the relevant Project Assignment. Upon termination of
this Agreement by either party for any reason, Contractor will be paid fees and
expenses on a proportional basis as stated in the relevant Project Assignment
for work which has been completed prior to and including the effective date of
such termination.
2.2 Timing. Unless other terms are set forth in the Project
Assignment for the work in progress, TRIAD PARK will pay Contractor for services
and will reimburse Contractor for approved expenses within thirty (30) days
after the date of Contractor's invoice, provided Contractor has furnished such
documentation for those authorized expenses as TRIAD PARK may reasonably
request. Contractor shall not issue an invoice to TRIAD PARK under this
Agreement more often than on a bi-weekly basis.
3. INDEPENDENT CONTRACTOR RELATIONSHIP.
3.1 Nature of Relationship. Contractor and TRIAD PARK understand,
acknowledge and agree that Contractor's relationship with TRIAD PARK will be
that of an independent Contractor and nothing in this Agreement is intended to
or should be construed to create a partnership, joint venture, or employment
- -------------------------------------------------------------------------------
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<PAGE> 2
Triad Park, LLC
- --------------------------------------------------------------------------------
relationship. Since Contractor will not be an employee of TRIAD PARK, Contractor
will not be entitled to any of the benefits which TRIAD PARK may make available
to its employees, including, by way of example, group health or life insurance.
Contractor is not an agent of TRIAD PARK as a result of or in the course of
performing services pursuant to this Agreement and Contractor is not authorized
to make any representation, contract or commitment on behalf of TRIAD PARK
unless specifically requested or authorized in writing to do so by a duly
authorized manager of TRIAD PARK.
3.2 Contractor Responsible for Taxes and Records. Contractor will
be solely responsible for, and will file on a timely basis, all tax returns and
payments required to be filed with or made to any federal, state or local tax
authority with respect to Contractor's performance of services and receipt of
fees under this Agreement. Contractor will be solely responsible for and must
maintain adequate records of expenses incurred in the course of performing
services under this Agreement. No part of Contractor's compensation will be
subject to withholding by TRIAD PARK for the payment of social security,
federal, sate or any other employee payroll tax.
4. TRADE SECRETS -- INTELLECTUAL PROPERTY RIGHTS.
4.1 Representations. Contractor represents that his performance
of all of the terms of this Agreement does not, and will not, breach any
agreement to keep in confidence proprietary information, knowledge or data of a
third party and Contractor will not disclose to TRIAD PARK, or induce TRIAD PARK
to use, any confidential or proprietary information belonging to third parties
unless such use or disclosure is authorized in writing by such owners.
4.2 Confidential Information.
(a) Contractor will maintain in confidence and will not disclose
or use, either during or after the performance of his or her services hereunder,
any proprietary or confidential information or know-how belonging to TRIAD PARK
("Confidential Information"), whether or not in written form, except to the
extent required to perform duties on behalf of TRIAD PARK. Confidential
Information refers to any information, not generally known in the relevant trade
or industry, which was obtained from TRIAD PARK, or which was learned,
discovered, developed, conceived, originated or prepared by Contractor during
the term of this Agreement. Such Confidential Information includes, but is not
limited to, computer programs and routines, technical and business information
relating to TRIAD PARK's inventions or products, research and development,
production processes, manufacturing and engineering processes, machines and
equipment, finances, customers, marketing, and production and future business
plans and any information which is identified as confidential by TRIAD PARK.
Upon the termination of Contractor's services, Contractor will deliver to TRIAD
PARK all written and tangible material in Contractor's possession incorporating
the Confidential Information or otherwise relating to TRIAD PARK's business.
These obligations with respect to Confidential Information extend to information
belonging to third parties from whom information was received in confidence,
including without limitation customers and suppliers of TRIAD PARK, who may have
disclosed such information to Contractor as the result of Contractor's status as
an independent consultant of TRIAD PARK.
(b) All Confidential Information will remain the sole property of
TRIAD PARK, and Contractor will have no rights to the Confidential Information,
except as otherwise provided in this Agreement.
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<PAGE> 3
Triad Park, LLC
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(c) Contractor agrees that it will not use any Confidential
Information except in accordance with the provisions of this Agreement and will
not disclose any Confidential Information to any third party without the prior
written consent of TRIAD PARK. TRIAD PARK hereby consents to such disclosure of
its Confidential Information to the employees of Contractor as is necessary to
allow Contractor to perform this Agreement and to obtain the benefits thereof.
Contractor agrees to treat all Confidential Information in the same manner as it
treats its own confidential information, but in no case will the degree of care
used by Contractor be less than reasonable care.
(d) Notwithstanding the other provisions of this Agreement,
information shall not be deemed Confidential Information, and Contractor shall
have no obligation with respect to any information which: (i) was in the public
domain at the time it was disclosed or falls within the public domain, except
through the fault of the Contractor; (ii) was disclosed after written approval
of TRIAD PARK; or (iii) was rightfully communicated to Licensee from a party
other than TRIAD PARK free of any obligation of confidence subsequent to the
time it was communicated by TRIAD PARK to Contractor.
4.3 Conflict of Interest. Contractor agrees during the term of
this Agreement not to accept work, enter into a contract or accept an
obligation, inconsistent or incompatible with Contractor's obligations or the
scope of services rendered for TRIAD PARK under this Agreement. Contractor
warrants that to the best of his or her knowledge, there is no other contract or
duty on his or her part now in force which is inconsistent with this Agreement.
During the term of the Agreement, Contractor will not enter into any agreement,
whether oral or written, which conflicts with the provisions of this Agreement.
Contractor further agrees not to disclose to TRIAD PARK, or bring onto TRIAD
PARK's premises, or induce TRIAD PARK to use any confidential information that
belongs to anyone other than TRIAD PARK or Contractor. Contractor agrees to
indemnify TRIAD PARK from any and all loss or liability incurred by reason of
alleged breach by Contractor of any confidentiality or services agreement with
any party other than TRIAD PARK. Anything to the contrary in this agreement
notwithstanding, TRIAD PARK recognizes that Contractor is an employee of
CCI/Triad and waves and releases any claims against Contractor arising out of
any conflict of interest due to Contractor's employment with CCI/Triad.
4.4 Injunctive Relief for Breach. Contractor acknowledges and
agrees that the obligations and promises of Contractor under this Agreement are
of a unique, intellectual character that gives them particular value. Contractor
further acknowledges and agrees that his or her breach of any of the promises or
agreements contained in this Agreement will result in irreparable and continuing
damage to TRIAD PARK for which there is no adequate remedy at law and, in the
event of such breach, TRIAD PARK will be entitled to injunctive relief.
4.5 Return of TRIAD PARK's Property. Contractor acknowledges that
the following are TRIAD PARK's sole and exclusive property: all documents, such
as drawings, manuals, notebooks, reports, sketches, records, computer programs,
employee lists, customer lists and the like in his custody or possession,
whether delivered to Contractor by TRIAD PARK or made by Contractor in the
performance of services under this Agreement, relating to the business
activities of TRIAD PARK or its customers or suppliers and containing any
information or data whatsoever, whether or not Confidential Information.
Contractor agrees to promptly deliver all of TRIAD PARK's property and all
copies of TRIAD PARK's property and Confidential Information in Contractor's
possession to TRIAD PARK upon termination or expiration of this Agreement for
any reason, or at any time upon TRIAD PARK's request.
- -------------------------------------------------------------------------------
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<PAGE> 4
Triad Park, LLC
- --------------------------------------------------------------------------------
5. TERM, TERMINATION, NON-INTERFERENCE WITH BUSINESS.
5.1 Term. The term of this Agreement will begin upon the
Effective Date and will continue in force indefinitely, unless terminated
earlier in accordance with Sections 5.2 or 5.3 below.
5.2 Termination by TRIAD PARK. Except while work by Contractor is
in progress under a Project Assignment, TRIAD PARK may terminate this Agreement
with or without cause, at any time upon thirty (30) days prior written notice to
Contractor. TRIAD PARK also may terminate this Agreement immediately in its sole
discretion upon Contractor's material breach of Article 4 and/or Section 5.4 of
this Agreement and/or upon any acts of gross misconduct by Contractor directly
affecting this Agreement or the independent contractor relationship. While work
by Contractor is in progress under any Project Assignment governed by this
Agreement, TRIAD PARK may terminate this Agreement for cause upon thirty (30)
days' prior written notice to Contractor. Cause will be defined as any failure
by Contractor to perform his or her obligations under this Agreement.
5.3 Termination by Contractor. Except while work by Contractor is
in progress under a Project Assignment, Contractor may terminate this Agreement
with or without cause at any time upon thirty (30) days' prior written notice to
TRIAD PARK.
5.4 Non-interference with Business. During and for a period of
two (2) years immediately following termination of this Agreement by either
party, Contractor agrees not t interfere with the business of TRIAD PARK in any
manner. By way of example and not limitation, Contractor agrees not to solicit,
induce or encourage or cause others to solicit, induce or encourage any employee
or independent contractor of TRIAD PARK to terminate or breach any employment,
contractual or other relationship with TRIAD PARK.
6. GENERAL PROVISIONS.
6.1 Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the United States and the State of
California as applied to agreements entered into and to be performed entirely
within California between California residents.
6.2 Entire Agreement. This Agreement and the Exhibits attached
hereto contain the entire agreement between the parties hereto, and supersede
all simultaneous or prior oral or written agreements, regarding the subject
matter of this Agreement. No modifications or amendments to this Agreement shall
be binding upon the parties unless made by a writing signed by both parties.
6.3 Waiver. The waiver by either party of a breach of any
provision contained herein shall not be effective unless in writing signed on
behalf of the party against whom the waiver is asserted. Any waiver shall in no
way be construed as a waiver of any succeeding breach of such provision or the
waiver of the provision itself.
6.4 Assignment. This Agreement may not be assigned by Contractor
without the prior written consent of TRIAD PARK.
6.5 Notices. All notices or reports permitted or required under
this Agreement shall be in writing and shall be delivered by (i) personal
delivery, (ii) telegram, (iii) telex, (iv) telecopier, (v) facsimile
transmission or (vi) by certified or registered mail, return receipt requested,
and shall be deemed given upon
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<PAGE> 5
Triad Park, LLC
- --------------------------------------------------------------------------------
personal delivery, five (5) days after deposit in the mail, or upon
acknowledgment of receipt of electronic transmission. Notices shall be sent to
the addresses set forth at the end of this Agreement or such other address as
either party may specify in writing and in accordance with this Section 6.5.
6.6 Survival. Each of the parties' obligations under Sections 4
and 5.4 will survive the termination or expiration of this Agreement.
6.7 Severability. In the event that any provision of this
Agreement shall be unenforceable or invalid under any applicable law or be so
held by applicable court decision, such unenforceability or invalidity shall not
render this Agreement unenforceable or invalid as a whole, and, in such event,
such provision shall be changed and interpreted so as to best accomplish the
intended objectives and economic effects of such unenforceable or invalid
provision within the limits of applicable law or applicable court decisions.
6.8 Choice of Forum. All disputes arising under this Agreement
may be brought (i) in the Superior Court of the State of California in Alameda
County, Hayward Branch, (ii) in the Municipal Court of the State of California,
County of Alameda, Livermore/Pleasanton Judicial District, or (iii) the United
States District Court for the Northern District of California (collectively the
"Courts"). The Courts shall together have exclusive jurisdiction over disputes
under this Agreement. Contractor hereby consents to personal jurisdiction of the
above courts.
6.9 Attorney's Fees. In the event any proceeding or lawsuit is
brought by TRIAD PARK or Contractor in connection with this Agreement, the
Contractor shall be entitled to receive its costs, expert witness fees and
reasonable attorneys' fees, including costs and fees on appeal.
THE PARTIES, INTENDING TO BE BOUND BY THE TERMS AND CONDITIONS HEREOF,
HAVE CAUSED THIS AGREEMENT TO BE SIGNED BY THEIR DULY AUTHORIZED
REPRESENTATIVES.
TRIAD PARK, LLC CONTRACTOR:
LARRY McREYNOLDS
/s/ JAMES R. PORTER /s/ LARRY McREYNOLDS
- ------------------------------ ------------------------
James R. Porter, Vice President Larry McReynolds
- -------------------------------------------------------------------------------
Page 5
<PAGE> 1
TRIAD PARK, LLC
3055 TRIAD DRIVE
LIVERMORE, CA 94550
NOVEMBER , 1997
DEAR SHAREHOLDER:
You are cordially invited to attend a special meeting of shareholders of
Triad Park, LLC (the "Company") to be held at the offices of the Company, 3055
Triad Drive, Livermore, California, on , December , 1997 at 9:00
a.m. local time (the "Special Meeting"). A Notice of the Special Meeting, a
Proxy Statement, related information about the Company and a proxy card are
enclosed. All holders of the Company's outstanding membership interests (the
"Shares") as of November , 1997 are entitled to notice of and to vote at the
Special Meeting.
At the Special Meeting, you will be asked to consider and to vote upon a
proposal to approve an Agreement of Merger, dated September 9, 1997 (the "Merger
Agreement"), by and among the Company, Richard C. Blum & Associates, LP, a
California limited partnership ("RCBA"), and TPL Acquisition, LLC, a Delaware
limited liability company (the "Acquisition LLC"), an affiliate of RCBA,
pursuant to which the Acquisition LLC will be merged into the Company (the
"Merger"). If the Merger Agreement is approved and the Merger becomes effective,
each outstanding Share will be converted into the right to receive $1.32 in
cash. Approval of the Merger requires the affirmative vote of the holders of a
majority of the voting power of all outstanding Shares. Details of the proposed
Merger and other important information are set forth in the accompanying Proxy
Statement, which you are urged to read carefully.
YOUR ADVISORY BOARD HAS APPROVED THE MERGER AND RECOMMENDS THAT YOU VOTE
FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. Whether or not you plan to
attend the Special Meeting, please complete, sign and date the accompanying
proxy card and return it in the enclosed postage prepaid envelope. If you attend
the Special Meeting, you may revoke such proxy and vote in person if you wish,
even if you have previously returned your proxy card.
Thank you for your interest and participation.
Sincerely,
James R. Porter
Vice President, 3055 Management Corp.,
Manager of the Company
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
<PAGE> 2
TRIAD PARK, LLC
3055 TRIAD DRIVE
LIVERMORE, CALIFORNIA 94550
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON , DECEMBER , 1997
------------------------
To Shareholders of Triad Park, LLC:
The Advisory Board has called a special meeting of the shareholders of
Triad Park, LLC, a Delaware limited liability company (the "Company"), to be
held at the offices of the Company, 3055 Triad Drive, Livermore, California, on
, December , 1997 at 9:00 a.m. local time, including any
adjournments or postponements (the "Special Meeting"), to consider and act upon
the following matters:
1. To consider and vote upon a proposal to approve an Agreement of
Merger, dated September 9, 1997 (the "Merger Agreement"), among the
Company, Richard C. Blum & Associates, LP, a California limited partnership
("RCBA"), and TPL Acquisition, LLC, a Delaware limited liability company
and affiliate of RCBA (the "Acquisition LLC"), pursuant to which, among
other things, (i) the Acquisition LLC will be merged into the Company (the
"Merger"), and (ii) each outstanding membership interest of the Company
(the "Shares") will be converted into the right to receive $1.32 in cash
(the "Merger Consideration"). A copy of the Merger Agreement is attached as
Exhibit A to the accompanying Proxy Statement.
2. To transact such other business as may properly come before the
Special Meeting.
Only holders of record of the Shares at the close of business on November
, 1997 are entitled to notice of and to vote at the Special Meeting. RCBA,
which beneficially holds 1,998,158 Shares (representing approximately 10.1% of
the voting power of the Shares) has notified the Company that it intends to vote
its Shares in favor of the Merger.
No appraisal or dissenters' rights are provided for the Company
shareholders under applicable law, nor will the Company or RCBA be voluntarily
providing appraisal rights to the Company shareholders who object to the
transactions contemplated by the Merger Agreement. Therefore, if the Merger is
approved, shareholders who voted against the Merger will be required to accept
the Merger Consideration in exchange for their interests in the Company. See
"RIGHTS OF DISSENTING SHAREHOLDERS."
Your attention is directed to the Proxy Statement and its Exhibits and the
other materials relating to the Company that have been included in this mailing
for more complete information regarding the Merger Agreement and the Company.
THE ADVISORY BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
By Order of the Advisory Board
James R. Porter
Vice President, 3055 Management Corp.,
Manager of the Company
Livermore, California
November , 1997
YOUR VOTE IS IMPORTANT. ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND
THE SPECIAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE MARK, SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. YOU MAY
NEVERTHELESS VOTE IN PERSON IF YOU ATTEND THE SPECIAL MEETING.
<PAGE> 3
TRIAD PARK, LLC
------------------------
PROXY STATEMENT
------------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON , DECEMBER , 1997
------------------------
This Proxy Statement is being furnished to the shareholders of Triad Park,
LLC, a Delaware limited liability company (the "Company"), in connection with
the solicitation by the Advisory Board of the Company of proxies to be voted at
a special meeting of shareholders of the Company to be held at the offices of
the Company, 3055 Triad Park, Livermore, California, on , December ,
1997 at 9:00 a.m. local time, including any adjournments or postponements (the
"Special Meeting"). At the Special Meeting, the shareholders of the Company will
consider and vote upon a proposal to approve an Agreement of Merger, dated
September 9, 1997 (the "Merger Agreement"), among the Company, Richard C. Blum &
Associates, LP, a California limited partnership ("RCBA"), and TPL Acquisition,
LLC, a Delaware limited liability company and affiliate of RCBA (the
"Acquisition LLC"), pursuant to which, among other things, (i) the Acquisition
LLC will be merged into the Company (the "Merger"), with the result that the
Company will become an affiliate of RCBA, and (ii) each outstanding membership
interest of the Company (the "Shares"), will be converted into the right to
receive $1.32 in cash. See "The Merger Agreement -- Consideration To Be Received
by Shareholders."
This Proxy Statement is accompanied by a copy of the Company's Quarterly
Report on Form 10-QSB for the quarters ended June 30 and September 30, 1997.
These materials are specifically incorporated by reference in this Proxy
Statement and are included to aid shareholders in their consideration of the
Merger.
Only holders of record of the Shares at the close of business on November
, 1997 are entitled to notice of and to vote at the Special Meeting. This
Proxy Statement is first being sent to shareholders on or about November ,
1997.
------------------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY............................................................................... 1
Date, Time and Place of Special Meeting............................................. 1
Record Date; Shareholders Entitled to Vote; Quorum.................................. 1
Purpose of the Meeting.............................................................. 1
The Merger.......................................................................... 1
Effective Time of the Merger........................................................ 2
Voting of Shares Owned by RCBA...................................................... 2
Special Factors..................................................................... 2
Payment for Shares.................................................................. 3
Dissenters' Rights.................................................................. 3
Regulatory Approvals................................................................ 3
The Company......................................................................... 3
RCBA................................................................................ 3
Market Price and Dividend Data...................................................... 4
THE COMPANY........................................................................... 5
History............................................................................. 5
Business of the Company............................................................. 5
Properties of the Company........................................................... 5
THE SPECIAL MEETING................................................................... 8
General............................................................................. 8
Proposal to be Considered at the Special Meeting.................................... 8
Record Date; Shareholder Approval................................................... 8
Proxies............................................................................. 8
SPECIAL FACTORS....................................................................... 9
Background of the Merger............................................................ 9
Purpose and Structure of the Merger................................................. 12
Recommendation of the Company's Advisory Board...................................... 13
Sedway Report....................................................................... 14
Perspective of RCBA on the Merger................................................... 15
Plans for the Company After the Merger.............................................. 15
Certain Effects of the Merger....................................................... 16
Relationship Between the Company and RCBA........................................... 16
Interests of Certain Persons in the Merger.......................................... 16
Sources and Uses of Funds........................................................... 17
Certain Federal Income Tax Consequences............................................. 17
Redemptions of Shares............................................................... 19
Regulatory Approvals................................................................ 19
THE MERGER AGREEMENT.................................................................. 20
General............................................................................. 20
Effective Time...................................................................... 20
Consideration To Be Received by Shareholders........................................ 20
Payment for Shares.................................................................. 20
Operations of the Company Prior to the Merger....................................... 21
Conditions to Consummation of the Merger............................................ 21
Termination......................................................................... 22
</TABLE>
i
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Termination Fee..................................................................... 23
Accounting Treatment................................................................ 23
RIGHTS OF DISSENTING SHAREHOLDERS..................................................... 23
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS........................... 24
Share Ownership..................................................................... 24
Transactions by Certain Persons in the Shares....................................... 25
MANAGEMENT OF THE COMPANY, RCBA AND THE ACQUISITION LLC............................... 26
The Company......................................................................... 26
RCBA and Affiliates................................................................. 26
The Acquisition LLC................................................................. 27
Certain Proceedings................................................................. 27
SHAREHOLDER PROPOSALS................................................................. 27
INDEPENDENT PUBLIC ACCOUNTANTS........................................................ 27
INFORMATION INCORPORATED BY REFERENCE................................................. 28
AVAILABLE INFORMATION................................................................. 28
ADDITIONAL INFORMATION................................................................ 28
EXHIBIT A -- Agreement of Merger...................................................... A-1
</TABLE>
ii
<PAGE> 6
SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement. The following summary is not intended to be complete and
is qualified in its entirety by reference to the more detailed information
contained in this Proxy Statement, in the materials accompanying this Proxy
Statement, in the Exhibits and in the documents incorporated by reference.
Shareholders are urged to review the entire Proxy Statement and accompanying
materials carefully.
DATE, TIME AND PLACE OF SPECIAL MEETING
A Special Meeting of Shareholders of Triad Park, LLC will be held on ,
December , 1997 at 9:00 a.m. local time at the offices of the Company, 3055
Triad Drive, Livermore, California.
RECORD DATE; SHAREHOLDERS ENTITLED TO VOTE; QUORUM
Only holders of record of the Company's membership interests (the "Shares")
at the close of business on November , 1997 (the "Record Date") are entitled
to notice of and to vote at the Special Meeting. On that date, there were
approximately 19,708,123 Shares outstanding, held of record by approximately
1,358 shareholders. Each holder of Shares is entitled to one vote per Share on
the matters to be voted upon at the Special Meeting. See "THE SPECIAL
MEETING -- Record Date; Shareholder Approval." The presence, in person or by
proxy, at the Special Meeting of the holders of a majority of the voting power
of the outstanding Shares is necessary to constitute a quorum at the Special
Meeting.
PURPOSE OF THE MEETING
At the Special Meeting, shareholders will consider and vote upon a proposal
to approve the Merger Agreement, a copy of which is attached as Exhibit A to
this Proxy Statement. See "THE SPECIAL MEETING -- Proposal To Be Considered at
the Special Meeting." The Merger Agreement provides for the merger of the
Acquisition LLC into the Company.
THE MERGER
Pursuant to the Merger Agreement, the Acquisition LLC will merge into the
Company, with the result that the Company, as the surviving company (the
"Surviving Company"), will become an affiliate of RCBA. See "THE MERGER
AGREEMENT -- General." Each outstanding Share will be converted into the right
to receive from the Acquisition LLC or RCBA $1.32 in cash, without interest (the
"Merger Consideration"). See "THE MERGER AGREEMENT -- Consideration To Be
Received by Shareholders." After the Merger, RCBA will own all of the
outstanding membership interests of the Surviving Company. The Shares will no
longer be traded on the open market and the registration of the Shares under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), will be
terminated. See "SPECIAL FACTORS -- Certain Effects of the Merger."
Approval of the Merger requires the affirmative vote of the holders of a
majority of the voting power of all outstanding Shares. See "THE SPECIAL
MEETING -- Record Date; Shareholder Approval."
The Merger is subject to various closing conditions and the absence of any
event that would have a material adverse effect on the assets, properties,
liabilities, obligations, financial condition, results of operations or business
of the Company. See "THE MERGER AGREEMENT -- Conditions to Consummation of the
Merger."
The Merger Agreement may, under specified circumstances, be terminated and
the Merger abandoned at any time prior to the filing of a Certificate of Merger
with the Delaware Secretary of State, notwithstanding approval of the Merger
Agreement by the shareholders of the Company. The Merger Agreement requires the
Company to pay the Acquisition LLC a termination fee of $1.3 million if the
Merger is not consummated and if (i) the Merger Agreement shall not have been
submitted for approval and adoption by the Company shareholders at a shareholder
meeting prior to January 31, 1998 (unless the meeting is held later solely due
to delays in obtaining approval of this proxy statement by the Securities and
Exchange Commission (the
1
<PAGE> 7
"Commission")), (ii) the Advisory Board of the Company recommends to the
Company's shareholders a third party proposal regarding a merger, consolidation,
sale of assets, sale of securities or similar transaction (an "Acquisition
Proposal"), or (iii) the Company enters into an agreement with a third party
regarding an Acquisition Proposal. See "THE MERGER AGREEMENT -- Termination" and
"-- Termination Fee."
EFFECTIVE TIME OF THE MERGER
Unless otherwise agreed by the parties to the Merger Agreement or otherwise
provided by law, the Merger will become effective upon the acceptance for
recording of the Certificate of Merger by the Delaware Secretary of State (the
"Effective Time"). Subject to approval of the Merger at the Special Meeting and
the satisfaction or waiver of the terms and conditions in the Merger Agreement,
the Effective Time is expected to occur as soon as practicable after the Special
Meeting. See "THE MERGER AGREEMENT -- Effective Time."
VOTING OF SHARES OWNED BY RCBA
The General Partner of RCBA, which beneficially holds 1,998,158 Shares
(representing approximately 10.1% of the outstanding Shares), has approved the
Merger and has notified the Company that it intends to vote its Shares in favor
of the Merger. Because RCBA is entitled to vote substantially less than 50.0% of
the voting power of the outstanding Shares, approval of the Merger is not
assured as a result of the voting power held by RCBA. See "THE SPECIAL
MEETING -- Record Date; Shareholder Approval."
SPECIAL FACTORS
In determining whether to vote in favor of the Merger, shareholders of the
Company should consider the following special factors, as well as the other
factors discussed elsewhere in this Proxy Statement under the caption "SPECIAL
FACTORS":
PURPOSE AND STRUCTURE OF THE MERGER. The purpose of the Merger is to effect
the sale of the Company to RCBA in a transaction that will provide the Company
shareholders cash for their Shares at a price that the Advisory Board of the
Company believes to be fair. The Advisory Board believes the Merger is the most
effective means of achieving the purpose of liquidating the shareholders'
investment in a reasonable time at a reasonable price. See "SPECIAL
FACTORS -- Purpose and Structure of the Merger."
RECOMMENDATION OF THE COMPANY'S ADVISORY BOARD. The Advisory Board of the
Company has determined that the Merger is fair from a financial point of view to
and in the best interests of the Company's shareholders (other than RCBA). The
Advisory Board has approved the Merger Agreement and recommends that the
Company's shareholders vote in favor of the proposal to approve and adopt the
Merger Agreement. See "SPECIAL FACTORS--Recommendation of the Company's Advisory
Board."
SEDWAY REPORT. On July 22, 1997, Sedway Group, a real estate and urban
economics firm ("Sedway Group") delivered a written report to the Company's
Advisory Board recommending a disposition strategy for maximization of the
Company's real estate assets. Sedway Group's report forecasted proceeds of $25.6
million if its disposition strategy was followed. See "SPECIAL FACTORS -- Sedway
Report."
INTERESTS OF CERTAIN PERSONS IN THE MERGER. In considering the
recommendation of the Advisory Board of the Company with respect to the Merger
Agreement and the transactions contemplated thereby, shareholders should be
aware that certain officers and Advisory Board members of the Company have
interests in connection with the consummation of the Merger that may conflict
with the interests of the Company's shareholders. See "SPECIAL
FACTORS -- Interests of Certain Persons in the Merger."
FEDERAL INCOME TAX CONSEQUENCES. For federal income tax purposes, the
Merger will be treated as a taxable sale or exchange of Shares for cash by each
holder of the Shares. The amount of gain or loss to be recognized by each
shareholder will be measured by the difference between the amount of cash
received by such shareholder in connection with the Merger plus such
shareholder's share of the Company's liabilities less such shareholder's tax
basis in the Shares at the Effective Time. See "SPECIAL FACTORS -- Certain
Federal Income Tax Consequences."
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PAYMENT FOR SHARES
As promptly as possible after the Effective Time, instructions will be
furnished to holders of Shares regarding procedures to be followed to surrender
their certificates and receive payment for their Shares. See "THE MERGER
AGREEMENT -- Payment for Shares."
DISSENTERS' RIGHTS
No appraisal or dissenters' rights are provided for the Company
shareholders under the Delaware limited liability company act or under the
Company's limited liability company agreement, nor will the Company or RCBA be
voluntarily providing appraisal rights to the Company shareholders who object to
the transactions contemplated by the Merger Agreement. Therefore, if the Merger
is approved, shareholders who voted against the Merger will be required to
accept the Merger Consideration in exchange for their interests in the Company.
See "RIGHTS OF DISSENTING SHAREHOLDERS."
REGULATORY APPROVALS
Although no particular regulatory approval is required in connection with
the proposed Merger, state Attorneys General and private parties may bring legal
actions under the federal or state antitrust laws under certain circumstances.
See "SPECIAL FACTORS -- Regulatory Approvals."
THE COMPANY
The Company was formed on February 10, 1997. The Company's manager is 3055
Management Corp., a California corporation ("Management Corp."). The Company's
primary assets consist of three buildings and improvements (comprising 220,000
square feet) situated on approximately 15 acres of land in Triad Park,
Livermore, California (the "Headquarters") and 303 acres of undeveloped land
located in Triad Park (the "Land", the Land and the Headquarters, collectively
the "Property"). The Company was formed to liquidate its investment in the
Property. In the absence of any liquidation, the Company's principal business
has been to own, operate, improve and maintain the Property.
The principal executive office of the Company is located at 3055 Triad
Drive, Livermore, California 94550, and the Company's telephone number is (510)
449-0606.
RCBA
RCBA is a California limited partnership whose principal business is acting
as general partner for investment partnerships and providing investment advisory
and financial consulting services. RCBA is a registered investment adviser with
the Commission. The sole general partner of RCBA is Richard C. Blum &
Associates, Inc., a California corporation ("RCBA Inc."). RCBA Inc. is in turn
controlled, for purposes of the federal securities laws, by Richard C. Blum, the
Chairman and a substantial shareholder of RCBA Inc.
The principal executive office of RCBA is located at 909 Montgomery Street,
Suite 400, San Francisco, California 94133, and its telephone number is (415)
434-1111.
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<PAGE> 9
MARKET PRICE AND DIVIDEND DATA
The Shares are publicly traded, although the Shares are not registered for
trading on any exchange. The Company is aware that bid and ask prices have been
quoted over the Internet under the symbol "TDPK." The following table sets forth
the range of high and low bid quotations per Share as quoted on the OTC Bulletin
Board. The quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.
<TABLE>
<CAPTION>
BID QUOTATIONS
---------------
HIGH LOW
----- -----
<S> <C> <C>
1997
Third Quarter (July 31 through September 30)............... $1.26 $0.75
Fourth Quarter (through October 9)......................... $1.30 $1.26
</TABLE>
On August 13, 1997, the last full day of trading prior to the filing of the
RCBA Schedule 13D (as defined herein) which disclosed RCBA's interest in
acquiring the Company, such reported high and low bid quotations per Share was
$0.75 in both cases. On November , 1997, the last full day of trading prior to
the printing of this Proxy Statement, the reported high and low bid quotations
per Share were $ and $ , respectively. SHAREHOLDERS ARE URGED
TO OBTAIN A CURRENT MARKET QUOTATION FOR THEIR SHARES.
The Company has never paid a cash distribution on the Shares and does not
anticipate paying any such distribution in the foreseeable future.
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<PAGE> 10
THE COMPANY
HISTORY
Prior to the Company's formation, the real estate assets now owned by the
Company were owned by Triad Systems Corporation, a Delaware corporation
("Triad") and its wholly-owned subsidiary, 3055 Triad Dr. Corp., a California
corporation ("3055 Triad Dr. Corp."). 3055 Triad Dr. Corp. was the owner of the
Headquarters as well as a certain portion of the Land, and Triad was the owner
of the remainder of the Land.
On October 23, 1996, Cooperative Computing, Inc., a Texas corporation
("CCI"), through a wholly owned subsidiary, commenced a tender offer (the
"Offer") to purchase all of the outstanding shares of common stock of Triad. The
Offer contemplated that, among other things, certain real property assets of
Triad and 3055 Triad Dr. Corp. would be spun off to the shareholders of Triad in
a dividend to be declared prior to the consummation of the Offer. The dividend
was declared on February 26, 1997.
The Company was organized under the laws of the State of Delaware as a
limited liability company on February 10, 1997 as a spin-off of Triad. At the
time of the formation of the Company, 3055 Triad Dr. Corp., the owner of the
Headquarters, was merged with and into Triad, with Triad being the surviving
corporation. On February 27, 1997, the Offer was consummated, CCI merged with
Triad, and Triad became known as Cooperative Computing, Inc., a Delaware
corporation, aka CCI/Triad ("CCI/Triad").
BUSINESS OF THE COMPANY
The Company's Shares are owned 99% by the former shareholders of Triad and
1% by Management Corp. The Management Corp. is the exclusive operator of the
Company's business except that certain actions require the approval of its
Advisory Board (the "Advisory Board"). The Advisory Board was responsible for
considering, reviewing and analyzing the Merger Agreement and the other
competing offers.
The Company's main objective is to liquidate its investment in the
Property. In the meantime, the Company will own, operate, improve and maintain
the Property. The Company may enter into joint ventures with third parties for
the purpose of disposing of the Property if the Advisory Board determines that
such arrangements are appropriate to the purposes of the Company.
There can be no assurance that the Company will be successful in its
efforts to dispose of the Property or that the Company will realize a profit
from its activities. The Company will be subject to all of the market forces
which impact the ownership and operation of real property, including market
supply and demand, interest rates, local, regional and national economic
conditions, local land use policies and restrictions, construction costs,
competition from other sellers and landlords, and the effects of inflation. The
Company is unable to predict the amount of time it will take to completely
dispose of the Property and wind up the Company.
PROPERTIES OF THE COMPANY
Pursuant to that certain Real Estate Distribution Agreement dated as of
February 26, 1997 between Triad, 3055 Triad Dr. Corp., Management Corp. and the
Company (the "Distribution Agreement"), Triad contributed to the Company certain
of its real estate assets located in Livermore, California, consisting primarily
of the Headquarters, subject to the existing first deed of trust, and the Land,
subject to existing assessment bonds, and the right to certain refunds for
infrastructure expenditures from the City of Livermore (the "Contribution").
In conjunction with the Contribution, the Company agreed in the
Distribution Agreement to indemnify CCI/Triad against any claims relating to
"Environmental Costs and Liabilities" associated with the Land or the
Headquarters prior to the Contribution. These "Environmental Costs and
Liabilities" include all costs, liabilities, losses, claims and expenses arising
from or under any "environmental law." The term "environmental law" is defined
to include any applicable law regulating or prohibiting releases into any part
of the natural environment, or pertaining to the protection of natural
resources, the environment and public and employee health and safety including,
among other law, the Comprehensive Environmental Response, Compensation,
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<PAGE> 11
and Liability Act (CERCLA), the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act (RCRA), the Clean Water Act, the Clean
Air Act, the Toxic Substances Control Act, and the Occupational Safety and
Health Act, and any applicable state or local statutes.
Subject to certain limitations, the Company also agreed in the Distribution
Agreement to indemnify CCI/Triad against certain taxes arising from, or relating
to, among other things, any sale of the Property after October 17, 1996, the
Company, the formation of the Company, the transfer by Triad or any affiliate of
Triad of the Property to the Company, the assumption or refinancing of any
liabilities with respect to the Property and the sale, exchange or distribution
of interests in the Company by CCI/Triad.
The Property consists of approximately 303 acres of unimproved land and the
220,000 (approximate) square feet of office contained in three separate
buildings situated on 15 acres of land occupied by CCI/Triad. The Property is
located on the north side of Interstate 580 in the City of Livermore,
California. The City of Livermore is located approximately 40 miles southeast of
San Francisco.
All of the buildings are of concrete tilt-up construction and were built in
1987. Building G is a two story office building containing approximately 70,986
square feet. Building K is a 74,064 square foot single story research and
development building and Building F is a single story industrial flex building
of 74,768 square feet. The office build-out in Buildings K and F is 90 percent
and 40 percent, respectively. The Company's management believes that the
Headquarters is adequately insured. There are 689 parking spaces associated with
the Headquarters. The parking area is landscaped and the areas between the
buildings are improved as open courtyards, fenced with iron gates for controlled
access. Although the buildings were primarily designed for owner-occupancy, they
were also designed to be flexible to allow multi-tenant occupancy.
The 303 acres of vacant land is divided into land use categories of
residential, industrial/office flex, retail and open space. The residential
portion consists of three lots comprising approximately 28.1 useable acres. The
industrial/office flex portion is divided into eight lots and contains
approximately 114.6 acres. The retail/commercial portion is divided into ten
lots and contains approximately 35.9 useable acres. The total useable area for
these lots is approximately 141 acres. In addition, there are two lots, one of
approximately 112 acres designated for open space or agricultural use and one
lot of 4.54 acres dedicated for transportation improvements. Finally,
approximately 7.8 acres are to be developed as public roadways. Approximately
half the required offsite improvements are in place, funded through a
combination of assessment bonds and community facility bonds. The construction
of the remaining offsite improvements are expected to be funded through
additional community facility bonds, as further described below in the final
paragraph of this section. Several of the vacant land sites are in escrow and
most of the remaining sites are subject to a first right of refusal contract.
Two residential lots, comprising 19.4 acres, are in escrow to be sold to a
single purchaser for a total price of $2,900,000 plus current assessments and up
to approximately $1,500,000 of future assessments on these lots and an adjacent
lot. This transaction is subject to the satisfaction of several material
conditions, and the closing is not assured.
One 19.3 acre lot is subject to a seven day right of first offer held by
Lincoln Property Co., starting at $3.99 per square foot and increasing 5% per
year, plus assessments. In addition, Lincoln Property Co. has the right of first
offer on 8 lots plus the above mentioned lot. Finally, a previous purchaser of a
lot holds a three year option, commencing September 1996, on 3.4 to 6 acres of
land adjacent to the lot it owns. The option price is $3.60 per square foot plus
assessments for two years, increasing to $5.50 for the third year.
The Property is partially improved with infrastructure improvements,
including curbs, gutters, storm drains and typical utilities. A community
facilities bond issue was completed on March 24, 1997, the proceeds of which
funded the reimbursement to the Company of $1,485,000 for completed
infrastructure, created a $600,000 security fund for future infrastructure
obligations, and will fund $3,700,000 for in-progress infrastructure
improvements. In addition, there are $7,000,000 of new bonds which are planned
to be sold in the future to fund the remaining improvements required for
completion of Triad Park. The current cost estimates for the required
improvements indicate that the community facilities bond funding limits should
be adequate to cover the expenses of the remaining items of improvement.
However, design and engineering is
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<PAGE> 12
not complete and there is a significant possibility that the actual cost of the
improvements may be greater than estimated and may exceed the bond funding
limit. Any shortfall in the bond funding will be borne by the Company or by
purchasers of lots, which may have an adverse impact on the value of the Land.
The remaining required improvements are scheduled to be completed by 2000.
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<PAGE> 13
THE SPECIAL MEETING
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Advisory Board of the Company for a Special Meeting of
Shareholders to be held on December , 1997 at 9:00 a.m. local time at the
offices of the Company, 3055 Triad Drive, Livermore, California, and as may be
adjourned to a later date. Shares represented by properly executed proxies
received by the Company will be voted at the Special Meeting in accordance with
the terms of the proxies, unless the proxies are revoked. See "-- Proxies"
below.
PROPOSAL TO BE CONSIDERED AT THE SPECIAL MEETING
At the Special Meeting, the shareholders of the Company will consider and
vote upon a proposal to approve and adopt the Merger Agreement. Pursuant to the
Merger Agreement, the Acquisition LLC will merge with and into the Company, the
separate corporate existence of the Acquisition LLC will cease, and the Company
will be the Surviving Company. At the Effective Time, each outstanding Share
will be converted into the right to receive $1.32 in cash. A copy of the Merger
Agreement is attached as Exhibit A to this Proxy Statement.
In addition to approval of the Merger Agreement and the Merger,
shareholders of the Company may be asked to approve a proposal to adjourn the
Special Meeting to permit further solicitation of proxies in the event there are
not sufficient votes at the time of the Special Meeting to approve and adopt the
Merger Agreement. It is not anticipated that any other matters will be brought
before the Special Meeting. However, if other matters should come before the
Special Meeting, it is intended that the holders of Proxies will vote upon them
in their discretion, unless that authority is withheld in the Proxy.
RECORD DATE; SHAREHOLDER APPROVAL
Only holders of record of the Shares at the close of business on November
, 1997 are entitled to notice of and to vote at the Special Meeting. On that
date, there were 19,708,123 Shares outstanding, which were held of record by
approximately 1,358 shareholders. Each Share entitles its holder to one vote
concerning all matters properly coming before the Special Meeting. A majority of
the voting power of the Shares entitled to vote, represented in person or by
proxy, will constitute a quorum. Abstentions and broker non-votes (i.e. Shares
held by brokers in street name, voting on certain matters due to discretionary
authority or instructions from the beneficial owner but not voting on other
matters due to lack of authority to vote on those matters without instructions
from the beneficial owner) are counted for the purpose of establishing a quorum
and will have the same effect as a vote against the approval of the Merger. The
Merger must be approved by the holders of at least a majority of the voting
power of all outstanding Shares. RCBA, which beneficially owns 1,998,158 Shares
(representing approximately 10.1% of the voting power of the Shares), has
notified the Company that it intends to vote its Shares in favor of the Merger.
Because RCBA is entitled to vote substantially less than 50.0% of the voting
power of all outstanding Shares, approval of the Merger is not assured as a
result of the voting power held by RCBA.
Although they have not specifically agreed to do so, the Company believes
that each of the Advisory Board members and executive officers of the Company
will vote the Shares with respect to which he has voting power in favor of the
Merger. Such Shares represent less than 8% of the Shares entitled to vote at the
Special Meeting. See "SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL
OWNERS."
PROXIES
Any Company shareholder entitled to vote at the Special Meeting may vote
either in person or by duly authorized proxy. All Shares represented by properly
executed proxies received prior to or at the Special Meeting and not revoked
will be voted in accordance with the instructions indicated in the proxies. IF
NO INSTRUCTIONS ARE INDICATED, THE PROXIES WILL BE VOTED FOR THE PROPOSAL TO
APPROVE AND ADOPT THE MERGER AGREEMENT AND, IN THE DISCRETION OF THE
8
<PAGE> 14
PERSONS NAMED IN THE PROXY, ON SUCH OTHER MATTERS AS MAY PROPERLY BE PRESENTED
AT THE SPECIAL MEETING.
A shareholder may revoke his or her proxy at any time prior to its use by
delivering to the President of the Company a signed notice of revocation or a
later dated and signed proxy or by attending the Special Meeting and voting in
person. Attendance at the Special Meeting will not in itself constitute the
revocation of a proxy.
Expenses in connection with the solicitation of proxies will be paid by
RCBA or the Acquisition LLC. Upon request, RCBA or the Acquisition LLC will
reimburse brokers, dealers and banks, or their nominees, for reasonable expenses
incurred in forwarding copies of the proxy material to the beneficial owners of
the Shares which such persons hold of record. Solicitation of proxies will be
made principally by mail. Proxies may also be solicited in person, or by
telephone or telegraph, by officers and regular employees of the Company.
SPECIAL FACTORS
BACKGROUND OF THE MERGER
HISTORY OF RELATIONSHIP BETWEEN THE COMPANY AND RCBA. The Company was
formed in 1997 as a spin-off of Triad. RCBA's President and Chairman, Richard C.
Blum ("Mr. Blum"), was a director of Triad from August 3, 1992 until February
26, 1997, when Triad was acquired by CCI as part of CCI's successful tender
offer for all outstanding shares of Triad common stock.
When Management Corp. was formed in February, 1997, all of the outstanding
stock was issued in equal amounts to Mr. Blum, William W. Stevens ("Mr.
Stevens") and James R. Porter ("Mr. Porter"), three former directors of Triad.
Mr. Blum was also a vice president and director of Management Corp. On August 8,
1997, Mr. Blum resigned from the Board of Directors and also resigned as vice
president of Management Corp. On September 5, 1997, Mr. Blum assigned his shares
in Management Corp. over to Mr. Stevens and Mr. Porter. Mr. Blum was never a
member of the Advisory Board.
REAL ESTATE LISTING AGENT. On June 1, 1997, the Company engaged the real
estate firm of Grubb & Ellis, the same real estate firm that had been previously
engaged by Triad to represent it in certain real estate matters, to act as its
exclusive listing agent in connection with the potential sale of the Property.
From time to time, representatives of Grubb & Ellis have had discussions with
senior management of the Company and the Company's Advisory Board concerning the
Company's potential strategic alternatives with respect to the sale of the
Property. Such discussions have been general in nature and did not result in any
formal actions by the Company's Advisory Board.
DISCUSSIONS WITH THIRD PARTIES. In addition to the negotiations with RCBA
discussed below, the Company has had discussions with several other parties as
described below.
CONTACTS AND NEGOTIATIONS WITH EVEREST FINANCIAL. On August 28, 1997,
Everest Financial, Inc. ("Everest"), in a letter to the Company, set forth the
terms and conditions upon which it would be willing to acquire the Company. In
the letter, Everest indicated that it was willing to undertake a tender offer
for all of the Company's outstanding Shares at a price of $0.91 per Share (an
aggregate purcase price of less than $18,000,000), subject to due diligence and
other contingencies.
CONTACTS AND NEGOTIATIONS WITH T.V.O.B. GENERAL PARTNERSHIP. On August 25,
1997, Jeffrey S. Kendall ("Mr. Kendall"), General Partner of T.V.O.B. General
Partnership ("TVOB"), met with Stanley F. Marquis, a member of the Company's
Advisory Board ("Mr. Marquis"), in a meeting initiated by Mr. Kendall, to
discuss the general terms of a proposal whereby TVOB would acquire all of the
Company's outstanding Shares. On August 26, 1997, TVOB, in a letter to the
Company, indicated it would be willing to acquire the Company for a total price
of $25,500,000.
On August 29, 1997, Larry D. McReynolds, President of the Company ("Mr.
McReynolds") and Mr. Marquis met with Mr. Kendall and Joseph A. Duffel ("Mr.
Duffel"), General Partner of TVOB. The parties discussed general due diligence
issues and certain contingent liabilities of the Company. Mr. Marquis
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<PAGE> 15
informed the TVOB representatives that their offer was lower than another offer
previously received by the Company. In the course of the meeting, TVOB increased
its offer for the Company to $26,500,000.
On the morning of September 5, 1997, Mr. Kendall telephoned Mr. Marquis and
verbally indicated that TVOB would be increasing its offer price to $27,000,000.
On the afternoon of September 5, 1997, Mr. Duffel, in a letter delivered via
facsimile to Mr. Marquis, changed TVOB's offer price to $26,900,000. In
addition, Mr. Duffel proposed an alternative transaction structure in which the
Company would join TVOB in a joint venture regarding the development of the
Property. This proposal called for the Company to receive $1 million in cash at
closing, with a $25.9 million wrap around mortgage on all of the Property. The
Company would receive 10% imputed interest on $25.9 million, TVOB would
liquidate the Property over three years, and all profits would be split evenly
between TVOB and the Company.
During all of the discussions with TVOB, TVOB never indicated whether it
was willing to assume all of the contingent liabilities of the Company.
On September 10, 1997, Mr. Marquis telephoned Mr. Duffel to inform him of
the Advisory Board's decision to approve the Merger Agreement.
CONTACTS AND NEGOTIATIONS WITH LINCOLN PROPERTY COMPANY. On September 5,
1997, Lincoln Property Company ("Lincoln"), in a letter to Mr. Marquis delivered
via facsimile, indicated that it would be willing to purchase the assets of the
Company for an aggregate purchase price of $30,000,000. The letter indicated
that Lincoln would assume the bond assessments, but was silent as to the
assumption of the Company's liabilities. Mr. Marquis telephoned Steven N. Dunn,
Vice President of Lincoln ("Mr. Dunn"), to clarify Lincoln's position with
respect to the Company's liabilities. Mr. Dunn told Mr. Marquis that the Lincoln
offer contemplated that Lincoln would not assume any of the Company's
liabilities, contingent or otherwise. In light of this clarification by Mr.
Dunn, Mr. Marquis calculated that the aggregate value of Lincoln's offer to the
Company's shareholders, after paying off the existing mortgage and before any
real estate or transactions costs, was approximately $21,000,000.
CONTACTS AND NEGOTIATIONS WITH GRIGGS RESOURCE GROUP. On September 8, 1997,
shortly before a special meeting of the Advisory Board, Griggs Resource Group,
on behalf of PeopleSoft, Inc., sent a letter to the Company that indicated
PeopleSoft was willing to purchase all of the Company's remaining assets for an
aggregate purchase price of $36,000,000, subject to (a) changes being made in
the Company's lease with CCI/Triad (over which the Company had no control) and
(b) a due diligence period of up to 60 days after the execution of a definitive
agreement. Under the terms of this offer, PeopleSoft would not be assuming the
existing mortgage. Thus, after deducting the existing mortgage and applicable
commissions, the net realizable value of the PeopleSoft offer was approximately
$26,000,000. However, PeopleSoft did not contemplate the assumption of the
Company's contingent liabilities. The letter also indicated that PeopleSoft
would be willing to consider a merger or tender offer structure.
On September 10, 1997, Mr. Marquis telephoned Brian Griggs ("Mr. Griggs")
of Griggs Resource Group to inform him of the Board's decision to approve the
Merger Agreement.
On September 12, 1997, Mr. Griggs, in a letter to Mr. Marquis, reiterated
PeopleSoft's interest in acquiring the Company in an all-cash merger
transaction. Subsequent to that date, Mr. Griggs has had several conversations
with members of the Company's management regarding certain liabilities of the
Company.
On October 2, 1997, Mr. Marquis and McReynolds met with Mr. Griggs and
Deborah J. Oxendine, Director of Real Estate and Administrative Services for
PeopleSoft ("Ms. Oxendine"), in a meeting initiated by Mr. Griggs, to discuss
the terms of PeopleSoft's offer. During the meeting, Ms. Oxendine reiterated
PeopleSoft's interest in acquiring the Company and inquired as to what type of
offer would be necessary to merit the Advisory Board's consideration. Mr.
Marquis informed Ms. Oxendine and Mr. Griggs that any offer at this point would
have to be higher than the sum of RCBA's offer plus the $1.3 million termination
fee that the Company would be required to pay to RCBA in the event that the
Advisory Board approved an alternative offer.
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<PAGE> 16
On October 6, 1997, Mr. McReynolds telephoned Mr. Griggs. During the
conversation, Mr. Griggs informed Mr. McReynolds that PeopleSoft had entered
into an exclusive negotiations agreement with Alameda County and the City of
Dublin with the intent of purchasing property in the City of Dublin
(approximately four miles west of Triad Park). Mr. Griggs indicated that
PeopleSoft would not be continuing further discussions with the Company at this
time.
CONTACTS AND NEGOTIATIONS WITH RCBA. On August 8, 1997, in a letter from
Mr. Blum to Mr. Porter, a member of the Company's Advisory Board, RCBA advised
the Company that it was working on an offer to purchase all of the assets or
membership interests of the Company, and that it expected to submit a more
detailed offer to the Company within a week.
On August 11, 1997, RCBA, in a letter from Mr. Blum to Mr. Porter,
submitted a written proposal to the Company which indicated the material terms
and conditions upon which RCBA would be willing to proceed in an acquisition of
all of the assets or stock of the Company. In this letter, RCBA indicated it
would be willing to purchase all of the outstanding Shares at a price of $1.20
per Share, inclusive of the debt on the Property.
On August 12, 1997, the Company, in a letter from Mr. Porter to Mr. Blum,
informed RCBA that the proposed terms were inadequate but that the Company would
be interested in continuing discussions regarding a potential acquisition. In
the letter, Mr. Porter pointed out that any transaction would have to
contemplate RCBA assuming all of the Company's liabilities and, because of Mr.
Blum's prior association with the Company as a member of the Board of Directors
of Management Corp. (but not as a member of the Advisory Board), would have to
include a mechanism whereby the Company could consider other offers that may be
more favorable to the Company's shareholders.
In its Schedule 13D filed with the Commission on August 14, 1997 (the "RCBA
Schedule 13D"), RCBA confirmed the above contacts between RCBA and the Company
and indicated that it was considering a response to the Company's letter of
August 12, 1997.
On August 15, 1997, the Advisory Board held a telephonic board meeting at
which all Advisory Board members were present. The Advisory Board reviewed
RCBA's proposal of August 11, and generally discussed the manner in which the
Company should proceed in negotiating the proposed transaction.
Later that same day, RCBA, in a letter from Mr. Blum to Mr. Porter
delivered via facsimile, increased its offer price to $1.30 per Share. RCBA
indicated that its offer was contingent upon completion of customary due
diligence, including an engineering study of the Company's properties and
environmental review.
On August 18, 1997, the Advisory Board held a telephonic board meeting at
which all Advisory Board members were present to consider RCBA's latest offer.
Mr. Porter was instructed to further negotiate with RCBA in an attempt to obtain
a price above $1.30 per Share.
On August 18, 1997, Mr. Porter telephoned Mr. Blum to further negotiate the
price at which RCBA was willing to purchase the Shares. In the course of the
conversation, Mr. Blum agreed to a price of $1.32 per Share, the equivalent of a
net purchase price of $26,014,722 since RCBA agreed to assume all of the
Company's actual and contingent liabilities subject to negotiation of definitive
documentation and other standard conditions.
On August 25, 1997, Murray A. Indick, Managing Director and General Counsel
of RCBA ("Mr. Indick") delivered to McCutchen, Doyle, Brown & Enersen, LLP, the
Company's outside legal counsel ("McCutchen"), a draft merger agreement which
contemplated a transaction whereby the Acquisition LLC would acquire the
outstanding Shares for $1.32 per Share in cash.
On August 29, 1997, Mr. Indick, Robert Zerbst, Managing Director of
Westmark Realty Advisors LLC ("Mr. Zerbst"), Rick Mariano, an employee of RCBA
("Mr. Mariano"), Mr. McReynolds, Mr. Marquis, Patrick J. Kernan, legal counsel
to the Company ("Mr. Kernan") and representatives of McCutchen met in
McCutchen's offices in San Francisco, California to discuss the draft merger
agreement. The parties discussed the structure of the proposed transaction and
certain provisions contained in the draft merger agreement. Mr. Marquis
disclosed that the Company had received two other proposals regarding the
Property and
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<PAGE> 17
suggested that perhaps a tender offer would be the best structure for the
proposed transaction. Mr. Indick indicated that RCBA was committed to proceeding
with the transaction under a cash-out merger format. The parties also discussed
certain provisions of the lease under which CCI/Triad leases the Headquarters
from the Company. During these discussions pertaining to the CCI/Triad lease,
Mr. McReynolds and Mr. Kernan, both of whom are employees of CCI/Triad, excused
themselves from the meeting. Mr. Indick also submitted comments to the draft
merger agreement.
On September 5, 1997 Mr. Indick, Mr. Zerbst, Mr. Mariano, Mr. McReynolds,
Mr. Marquis, Mr. Kernan and representatives of McCutchen again met in
McCutchen's offices. Mr. Marquis disclosed that the Company was expecting to
receive additional offers for the Property. The parties then negotiated specific
provisions contained in the draft merger agreement, including those related to a
termination fee and payment of the Company's transaction expenses. At the end of
the meeting, the parties had agreed on all provisions in the draft merger
agreement.
On September 8, 1997, at a meeting of the Company's Advisory Board that
included all members in attendance (Messrs. Porter, Stevens, Marquis and Martin
W. Inderbitzen), and was also attended by Mr. Kernan, Mr. McReynolds and
representatives of McCutchen, the parties discussed recent events, including a
review of all proposals received by the Company to date. The Advisory Board
considered the validity of each offer and the reputations of each potential
acquiror, and also considered asking RCBA for a reduced termination fee in
exchange for approving the draft merger agreement.
The Advisory Board rejected Everest's offer because the offering price was
far less than that offered by RCBA. The Advisory Board rejected both offers from
TVOB because neither offer considered assuming all of the Company's contingent
liabilities and because neither offer called for the entire purchase price to be
paid up front at the time of the transaction's closing. In addition, the
Advisory Board members expressed concerns about the ability of TVOB to fund the
potential transaction. The Advisory Board also noted that TVOB had undertaken no
due diligence.
The Advisory Board rejected the offer from Lincoln because it was not in
definitive form and because it did not contemplate assumption of the Company's
current liabilities. In addition, the Lincoln offer was in the form of an asset
sale and therefore did not contemplate assumption of the Company's contingent
liabilities. As a result of not assuming any of the Company's liabilities, the
Advisory Board concluded that the value of the Lincoln offer was significantly
less than the proposal from RCBA.
The Advisory Board rejected the offer from Griggs Resource Group because it
was in preliminary form and was first submitted only minutes before the meeting.
Additionally, the Advisory Board concluded that this offer did not appear to
equal or exceed the value of the RCBA proposal since PeopleSoft would not be
assuming the existing mortgage or the Company's contingent liabilties.
Furthermore, any acquisition would be delayed for up to 60 days while PeopleSoft
conducted due diligence.
In rejecting these offers, the Advisory Board noted that any of the
offerors could submit a more competitive offer at any time.
The Advisory Board ultimately authorized Mr. Marquis and Mr. Edward S.
Merrill ("Mr. Merrill") of McCutchen to contact Mr. Indick and propose that RCBA
drop its request for an environmental due diligence contingency in exchange for
which the Advisory Board would approve the draft merger agreement. The members
of the Advisory Board concluded that a transaction in this form with RCBA
offered significantly more value than the proposals from the other potential
acquirors and consequently did not pursue negotiations with the other parties at
that time. Mr. Marquis and Mr. Merrill telephoned Mr. Indick and advised him of
the Advisory Board's proposal.
Later in the evening on September 8, 1997, Mr. Indick telephoned Mr.
Marquis and Mr. Merrill to inform them that RCBA had accepted the Advisory
Board's proposal. Representatives of McCutchen and Mr. Indick then negotiated
the remainder of the minor terms of the definitive Merger Agreement, and the
Merger Agreement was executed on September 9, 1997.
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<PAGE> 18
PURPOSE AND STRUCTURE OF THE MERGER
The primary benefit of the Merger to the Company's shareholders is the
opportunity to sell all of their Shares at a price which represents a
substantial premium over trading prices in effect immediately prior to the
filing of the RCBA Schedule 13D, which disclosed RCBA's interest in acquiring
the Company. The structure of the transaction as a cash merger provides a cash
payment at a premium price to all holders of outstanding Shares and ensures the
acquisition by the Acquisition LLC of all the outstanding Shares of the Company.
The primary reason for the Company entering into the Merger Agreement is
the Advisory Board's belief that the Merger is the most effective means of
achieving the purpose of liquidating the shareholders' investment in a
reasonable time at a reasonable price. The Advisory Board also believes that
since RCBA is willing to assume the contingent liabilities of the Company, the
Merger is the most advantageous transaction for the Company's shareholders, as
opposed to an asset sale. The Company is obligated to indemnify CCI/Triad for
certain taxes arising from, among other things, any transfer of the Property to
the Company (see "THE COMPANY -- Properties of the Company"). Due to this
indemnification obligation, the Company ordinarily would not be able to make
final distributions to shareholders until after CCI/Triad's audit was complete,
a process that could last up to three years, not including extensions. Instead,
RCBA is prepared to assume all liabilities, contingent or otherwise, of the
Company in conjunction with the Merger. As a result, the Company's shareholders
will receive their proceeds shortly after the consummation of the Merger without
any requirement to hold back contingency reserves.
In addition, the Company is currently obligated to undertake approximately
an additional $7,000,000 in improvements on the Property. The City of Livermore
has indicated that it is willing to reimburse the Company for improvements
undertaken and paid for by the Company by means of bond financings.
Historically, the City of Livermore has fulfilled such reimbursement commitments
to Triad. However, if the City of Livermore is unsuccessful in completing a bond
offering, the Company would not receive any reimbursement for such improvements.
Further, there is a significant chance the cost of the improvements undertaken
by the Company will exceed the amount of the bond financings and the Company
would be responsible for paying any such cost overruns. Again, RCBA is prepared
to assume this potential liability of the Company in conjunction with the
Merger, so the Company's shareholders will receive their full proceeds shortly
after the consummation of the Merger.
The Advisory Board also believes it significant that by entering into the
Merger at this time the Company avoids ongoing operating expenses such as taxes
(which are currently in excess of $1 million annually) and the costs of ongoing
reporting requirements, including those related to securities filings made with
the Commission.
The Advisory Board believes that the Merger is the best available
opportunity to maximize shareholder value at the present time. The $1.32 per
share price to be received by the shareholders represents a premium of
approximately 54% over the reported average closing price of the Shares for all
trades reported during the period prior to the filing of the RCBA Schedule 13D.
RCBA's purpose and reasons for engaging in the transaction contemplated by
the Merger Agreement is to obtain ownership of the Company, thereby becoming
entitled to the benefits of ownership including management and investment
discretion with regard to the future of the real estate assets of the Company.
This includes execution of a business plan that combines strategic undeveloped
lots dispositions and developments of other lots for the Company's own account
or for third parties, depending on market conditions. RCBA will receive the
benefits, if any, of its decisions and will also bear the risk of loss.
RECOMMENDATION OF THE COMPANY'S ADVISORY BOARD
On September 8, 1997, the Company's Advisory Board, by unanimous vote, at a
special board meeting held on that date, determined that the transactions
contemplated by the Merger are fair from a financial point of view to and in the
best interests of the shareholders of the Company other than (i) affiliates of
the Company and (ii) RCBA and its affiliates (the "Unaffiliated Shareholders"),
approved the Merger Agreement and resolved to recommend that the Company's
shareholders approve the Merger Agreement.
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<PAGE> 19
In determining to approve and adopt the Merger Agreement, and in
determining the fairness of the terms of the Merger to the Unaffiliated
Shareholders, the Advisory Board considered the following factors, each of
which, in the view of the Advisory Board, supported the determination to
recommend the Merger:
(i) the going concern value of the Company (as reflected in part by
its historical operating results) and the net book value and liquidation
value of the Company, each of which, on a per Share basis, was projected to
be less than the $1.32 per Share being offered by RCBA;
(ii) the historical market prices of the Company's Shares,
particularly the fact that the Merger will enable the shareholders of the
Company to realize a significant premium over the prices at which the
Shares traded prior to the filing of the RCBA Schedule 13D;
(iii) the conclusion contained in the Sedway Report that following a
three-and-one-half year disposition strategy could result in proceeds with
a net present value of $25.6 million and the fact that the Merger would
result in proceeds of over $26 million (inclusive of Shares beneficially
held by RCBA);
(iv) the terms and conditions of the Merger Agreement, including the
provision negotiated by the Company which allowed the Company to consider
and respond to unsolicited offers after the date of the Merger Agreement;
the fact that the Company may terminate the Merger Agreement in certain
circumstances; the circumstances under which the termination fee is
payable; and the relatively few substantive closing conditions;
(v) the fact that, as discussed above in "-- Purpose and Structure of
the Merger," RCBA is willing to assume all contingent liabilities of the
Company, including those related to tax matters and construction of
improvements on the Property;
(vi) RCBA's positive reputation in the financial industry for its
ability to fund and close transactions in which it has been involved; and
(vii) the fact that the offer from RCBA, when considered on a net
basis, was higher than the offers received from the other potential
acquirors and that none of the other offers considered the assumption of
the Company's liabilities, contingent or otherwise.
In considering the fairness of the Merger to Unaffiliated Shareholders, the
Advisory Board gave primary consideration to factors (i) through (v) above. It
also gave consideration to factors (vi) and (vii) in determining whether to
approve the Merger. The Company's Advisory Board did not find it practicable to,
and did not, quantify or otherwise attempt to assign relative weights to the
specific factors considered in reaching its conclusions.
The executive officers of the Company have made no recommendation with
respect to the Merger.
If the Merger is not approved by the Company's shareholders and the Merger
does not occur, the Company will continue its current operations as an
independent company. However, for the reasons discussed above, it is possible
that the Company would seek a business combination with another company.
SEDWAY REPORT
Shortly after its formation, the Company began considering various methods
in order to effectuate an orderly disposition of the Property. Accordingly, on
May 22, 1997, the Company's Advisory Board authorized Martin W. Inderbitzen, a
member of the Advisory Board, and Mr. McReynolds to engage Sedway Group or a
comparable firm for the purpose of preparing a report exploring various
disposition strategies. On July 22, 1997, Sedway Group delivered its written
report to the Company's Advisory Board (the "Sedway Report").
The Sedway Report does not relate to the Merger Consideration or the
fairness of the Merger Consideration, or the fairness of the Merger to the
Company, RCBA or shareholders who are not affiliates. However, the Sedway Report
does relate to the value of the Company's real estate assets in a liquidation
situation, and as such, was given strong consideration by the Company's Advisory
Board during its decision making process. A copy of the Sedway Report, which
sets forth the assumptions made and matters considered in, and limits on the
review undertaken, is available for inspection and copying at the principal
executive
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<PAGE> 20
offices of the Company during regular business hours by any interested
shareholder or such shareholder's representative who has been so designated in
writing.
In preparing its report, Sedway Group met with Company management and
reviewed the current status of Triad Park, inspected Triad Park and its
environs, read various documents related to Triad Park, including the listing
agreement with Grubb & Ellis and the lease pertaining to the Triad Park building
complex, held telephone interviews with members of the Company's Advisory Board,
held telephone discussions with brokers, developers, and land owners active in
the Livermore area and reviewed market information provided by Grubb & Ellis.
Sedway Group was asked to provide a strategy to maximize the value of the
Company's real estate assets.
The Sedway Report contains a history of Triad Park and a summary of the
current situation at Triad Park. The Sedway Report also contains a market
overview, including current market conditions for retail, office and R&D
properties. The Sedway Report recommends an "aggressive but orderly real estate
disposition program" including certain improvements to the Triad Park area and a
multi-faceted marketing program. According to the Sedway Report, the proposed
strategy should "result in proceeds with a net present value of $25.6 million."
The Sedway Report also includes a presentation of the financial analysis of the
disposition strategy and assumptions and limiting conditions.
GENERAL. The summary set forth above does not purport to be a complete
description of the analyses performed by Sedway Group. The preparation of a
report similar to the Sedway Report involves various determinations and
assumptions and therefore is not readily susceptible to summary description.
Accordingly, Sedway Group believes that its report must be considered as a whole
and that selected portions of its report and the factors considered by it,
without considering all analyses and factors, could create an incomplete view of
the evaluation process underlying its report. In preparing its report, Sedway
Report made numerous assumptions with respect to industry performance, general
business and economic conditions and other matters, many of which are beyond the
control of the Company.
Sedway Group is a nationally recognized full-service real estate and urban
economics consulting firm engaged, among other things, in market research and
analysis, real estate strategy and asset management (including acquisition and
disposition strategies), financial analysis and valuation services. Sedway Group
has substantial experience in major land uses (residential, retail, office,
industrial, hotel and mixed use) and in specialized areas such as entertainment
retail, public/private transactions and economic revitalization.
It was the opinion of the Advisory Board that Sedway Group was very
familiar and experienced with economic analysis in the Tri-Valley region of
Northern California. At the time that the Advisory Board was seeking a firm to
undertake the analysis, Sedway Group was conducting similar analyses in the City
of Livermore and in the Tri-Valley area. Members of the Advisory Board were also
personally familiar with Sedway Group, and all agreed that Sedway Group had a
positive business reputation in the community. All of these factors were
considered by the Advisory Board when it chose Sedway Group to prepare the
economic report.
The Company has paid Sedway Group approximately $15,000 for preparing the
Sedway Report. No portion of the fee payable to Sedway Group is contingent upon
consummation of the Merger or similar type of transaction.
PERSPECTIVE OF RCBA ON THE MERGER
The determination of the Merger Consideration resulted from extensive
arm's-length negotiation between the Company and RCBA and their respective
representatives. See "-- Background of the Merger." At the conclusion of the
negotiation process, RCBA offered to acquire the Company for a price of $1.32
per Share. In determining such price, RCBA analyzed the real estate market in
Northern California generally, and the development of the Company owned sites in
particular, taking into account current market conditions.
RCBA did not undertake any formal or informal evaluation of its own as to
the fairness of the Merger Consideration to the Company shareholders.
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<PAGE> 21
PLANS FOR THE COMPANY AFTER THE MERGER
Effective upon consummation of the Merger, the manager of the Acquisition
LLC will be the initial manager of the Surviving Company. The Surviving Company
will not have an Advisory Board.
Except as otherwise indicated in this Proxy Statement, RCBA does not have
any other present plans or proposals which relate to or would result in an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries, a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries or any material change in the Company's capitalization or any other
material changes in the Company's corporate structure or business or the
composition of the Company's management.
CERTAIN EFFECTS OF THE MERGER
As a result of the Merger, the entire equity interest of the Company will
be owned by RCBA, and the current shareholders will have no continuing interest
in the Company. Therefore, following the Merger, the shareholders of the Company
other than RCBA will no longer benefit from any increases in the value of the
Company and will no longer bear the risk of any decreases in the value of the
Company. Following the Merger, RCBA and its affiliates will own 100% of the
Company and will have complete control over the management and conduct of the
Company's business, all income generated by the Company and any future increase
in the Company's value. Similarly, RCBA will also bear the risk of any losses
incurred in the operation of the Company and any decrease in the value of the
Company.
The Shares are currently registered as a class of securities under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
not listed on a national securities exchange or quoted on the Nasdaq National
Market and there are fewer than 300 record holders of the Shares. Termination of
registration of the 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 provisions of the Exchange Act, such as
the short-swing trading provisions of Section 16(b), the requirement of
furnishing a proxy statement in connection with shareholders' meetings pursuant
to Section 14(a), and the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions, no longer applicable to the Company. It
is the present intention of RCBA to cause the Company to make an application for
the termination of the registration of the Shares under the Exchange Act as soon
as practicable after the Effective Time of the Merger.
RELATIONSHIP BETWEEN THE COMPANY AND RCBA
NO INTERCOMPANY BUSINESS RELATIONSHIP. Not including the Merger Agreement,
the transactions contemplated thereby, or as otherwise disclosed in this Proxy
Statement, there have been no business relationships between the Company and
either RCBA or the Acquisition LLC.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Advisory Board of the Company with
respect to the Merger Agreement and the transactions contemplated thereby,
shareholders should be aware that certain members of the Advisory Board and
management of the Company have certain interests in the Merger in addition to
the interests of shareholders of the Company generally. In connection with the
Advisory Board's determination that the Merger is fair to the Company's
shareholders (excluding RCBA and its affiliates), the Advisory Board carefully
considered conflict of interest issues relating to the matters described below.
INDEPENDENT CONTRACTOR SERVICES AGREEMENT. Larry D. McReynolds, President
of the Company, has an Independent Contractor Services Agreement with the
Company, under which he is currently paid an annual base salary of approximately
$108,000, of which the Company is responsible for 50%. Mr. McReynold's
independent contractor agreement provides for bonus compensation in the event of
certain "changes in control" of the Company, including a merger involving the
Company. Upon consummation of the Merger,
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<PAGE> 22
Mr. McReynolds is entitled to receive a bonus of less than 1% of the net value
paid to the Company's shareholders, which is estimated to be approximately
$200,000.
INDEMNIFICATION OF OFFICERS AND DIRECTORS. The Merger Agreement provides
that, for a period of not less than six years following the Effective Time, the
Surviving Company will maintain in effect all rights of indemnification of the
officers, directors or employees of the Company provided in its limited
liability company agreement or bylaws. RCBA has also agreed to allow the
Company, with the Acquisition LLC's prior consent (such consent is not required
if the cost does not exceed $110,000), to purchase additional policies of
directors' and officers' liability insurance of at least the same coverage as
currently maintained by the Company, such policies to be pre-paid and in effect
for a period of six years from the Effective Time.
SOURCES AND USES OF FUNDS
MERGER CONSIDERATION, FEES AND EXPENSES. RCBA estimates that the total
consideration payable to shareholders other than RCBA and its affiliates upon
consummation of the Merger will be approximately $23,359,000. The estimated fees
and expenses incurred or to be incurred by RCBA in connection with the Merger
are legal fees and expenses of $75,000 and miscellaneous fees of $25,000. RCBA
expects to use working capital funds to make such payments and pay such fees and
expenses.
The estimated fees and expenses incurred or to be incurred by the Company
in connection with the Merger, which will be paid by RCBA or the Acquisition
LLC, are approximately as follows.
<TABLE>
<S> <C>
Legal fees and expenses................................... $ 100,000
Printing and mailing fees................................. 10,000
Commission filing fee..................................... 4,672
Disbursing Agent fees..................................... 7,000
Miscellaneous fees........................................ 5,000
Total Fees and Expenses................................... $ 126,672
</TABLE>
Certain of the Company's officers will receive certain payments if the
Merger is consummated. See "-- Interest of Certain Persons in the Merger."
SOLICITATION FEES AND EXPENSES. Neither RCBA nor the Company will pay any
fees or commissions to any broker or dealer or any other person for soliciting
Company shareholders with respect to the Merger. Brokers, dealers, commercial
banks and trust companies will, upon request, be reimbursed by RCBA or the
Acquisition LLC for reasonable and necessary costs and expenses incurred by them
in forwarding materials to their customers.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Under currently existing provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), the Treasury Regulations promulgated thereunder,
applicable judicial decisions and administrative rulings, all of which are
subject to change, the federal income tax consequences described below are
expected to arise in connection with the Merger. Due to the complexity of the
Code, the following discussion is limited to the material federal income tax
aspects of the Merger for a Company shareholder who is a citizen or resident of
the United States. The general tax principles discussed below are subject to
retroactive changes that may result from subsequent amendments to the Code. The
following discussion does not address potential foreign, state, local and other
tax consequences, nor does it address taxpayers subject to special treatment
under the federal income tax laws, such as insurance companies, tax-exempt
organizations, regulated investment companies, S corporations and taxpayers
subject to the alternative minimum tax. Neither the Company nor RCBA has
requested either the Internal Revenue Service or counsel to rule or issue an
opinion on the federal income tax consequences of the Merger. ALL SHAREHOLDERS
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, FOREIGN,
STATE AND LOCAL TAX CONSEQUENCES OF THE DISPOSITION OF THEIR SHARES IN THE
MERGER.
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<PAGE> 23
Merger as Sale of Shares
Although the transaction will be cast in the form of the merger of the
Company with Acquisition LLC, for federal income tax purposes it is anticipated
that the Merger will be treated as a taxable sale of Shares by each holder of
Shares. Accordingly, each holder of Shares will recognize gain or loss by reason
of the consummation of the Merger.
Measure of Gain or Loss
A shareholder's gain or loss in the Merger will be equal to the difference
between the consideration received in the Merger and the shareholder's adjusted
basis in the shareholder's Shares. The consideration received will be equal to
the sum of the cash received plus the shareholder's allocable share of the
Company's liabilities.
A shareholder's initial basis in the Shares will be the cost of the Shares
plus the shareholder's allocable share of the Company's liabilities. For shares
received in the distribution from Triad, the shareholder's "cost" of the Shares
will be the fair market value of the Shares at the time of the distribution. The
basis of the Shares will be increased by the shareholder's share of Company
income and by any increases in the shareholder's share of Company liabilities.
The basis will be reduced (but not below zero) by distributions from the
Company, by the shareholder's share of Company losses, by decreases in the
shareholder's share of Company liabilities and by the shareholder's share of
expenditures of the Company that are neither deductible in computing taxable
income nor required to be capitalized.
It will not be possible to determine the precise amount of gain or loss on
the sale of the Shares until after the Effective Time, because the calculation
of gain or loss requires a determination of the Company's liabilities as of the
Effective Time and the shareholder's share of the Company's income, gain, loss
and deduction for the taxable year in which the Merger occurs. Following the
Effective Time, the Company's books will be closed and the shareholders will
receive the information they require to determine the adjusted basis of their
Shares and the consideration received in the Merger.
Character of Gain or Loss
The Shares represent interests in the Company, which is taxed as a
partnership for federal income tax purposes. Generally, gain or loss on the sale
of a partnership interest is capital gain or loss under Section 741 of the Code.
An exception to this general rule is provided in Section 751 of the Code, which
treats as ordinary income or ordinary loss any gain or loss on unrealized
receivables or inventory items (including real property held for sale to
customers).
A substantial portion of the Property is land held by the Company for sale
to customers and any gain or loss attributable to such land will be ordinary
income or loss to the shareholders in the Merger. Although the precise amount
cannot be calculated until after the Effective Time, it is estimated that each
shareholder who received Shares from Triad in the distribution will recognize
approximately $ ordinary gain per Share in the Merger. The balance of
gain, if any, will be capital gain.
If a shareholder who is an individual (and any individual who is a partner
in a partnership that is a shareholder) has held the Shares for more than 12
months but less than 18 months as of the Effective Time, any capital gain will
be long term capital gain and will be subject to federal tax at not more than a
28% tax rate. If the Shares have been held for more than 18 months as of the
Effective Time, any capital gain will be subject to federal tax at not more than
a 20% tax rate. However, it is not anticipated that any of the Shares will have
been held for 18 months as of the Effective Time and it is possible that none of
the Shares will have been held for more than 12 months at the Effective Time.
Any capital gain on Shares held for 12 months or less will be short term capital
gain and will be subject to tax at the rates applicable to ordinary income.
Company Income or Loss Prior to the Merger
Each shareholder will receive an allocation of the shareholder's share of
the Company's income or loss for the periods prior to the Merger. Shareholders
should review the discussion in the Company's Information
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<PAGE> 24
Statement mailed to shareholders on or about August 21, 1997 under "Tax
Considerations" for a summary of the federal income tax consequences of the
Company's operations. If the Company has taxable income during the periods prior
to the Merger, it is not anticipated that the Company will make any
distributions to shareholders and shareholders may be required to pay federal
income taxes on Company income.
Reporting and Withholding
Cash payments made pursuant to the Merger will be reported to the extent
required by the Code to shareholders of the Company and the Internal Revenue
Service. The payments will ordinarily not be subject to withholding of federal
income tax. However, backup withholding of such tax at a rate of 31% may apply
to certain shareholders by reason of the events specified in Section 3406 of the
Code and related Treasury Regulations, which include failure of a shareholder to
supply the Company or its agent with the shareholder's taxpayer identification
number. Accordingly, each Company shareholder will be asked to provide the
shareholder's correct taxpayer identification number on a Substitute Form W-9
which is to be included in the letter of transmittal to be sent to shareholders
relating to their Shares. Withholding may also apply to Company shareholders who
are otherwise exempt from such withholding, such as a foreign person, if that
person fails to properly document its status as an exempt recipient.
REDEMPTIONS OF SHARES
In August, 1997, as part of the consummation of a transaction completed as
a part of the formation of the Company, the Management Corp. paid its promissory
note due the Company in full, Messrs. Porter and Stevens paid their respective
promissory notes due the Management Corp. in full, and the Company redeemed
99,536 Shares from each of Mr. Porter and Mr. Stevens at a price of $0.72 per
Share. The net effect of the transaction was to reduce the outstanding Shares of
the Company to 19,708,123, the same as the number of Triad Systems Corporation
shares which existed immediately prior to formation of the Company and to reduce
the number of Shares beneficially owned by Mr. Stevens and Mr. Porter to the
same number of Shares they owned in Triad Systems Corporation immediately prior
to formation of the Company.
REGULATORY APPROVALS
Although no particular regulatory approval is required in connection with
the proposed Merger, state Attorneys General and private parties may bring legal
actions under the federal or state antitrust laws under certain circumstances.
There can be no assurance that a challenge to the proposed Merger on antitrust
grounds will not be made or of the result if such a challenge is made.
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<PAGE> 25
THE MERGER AGREEMENT
The information in this summary is qualified in its entirety by reference
to the full text of the Merger Agreement, a copy of which is attached as Exhibit
A to this Proxy Statement.
GENERAL
The Company, the Acquisition LLC and RCBA entered into the Merger Agreement
effective September 9, 1997. If the shareholders of the Company approve the
Merger Agreement, the Acquisition LLC will be merged with and into the Company,
with the result that the separate corporate existence of the Acquisition LLC
will then cease. The Company will be the Surviving Company and will be an
affiliate of RCBA. At the Effective Time, the Shares will be converted
automatically into the right to receive cash, as described below. See
"-- Consideration to be Received by Shareholders." The Shares will no longer be
listed or traded in any public market, and the registration of the Shares under
the Exchange Act will be terminated.
EFFECTIVE TIME
If the Merger Agreement is adopted by the majority vote of the Company's
shareholders, the Merger will be consummated and become effective upon the
acceptance for record of the Certificate of Merger by the Delaware Secretary of
State on a date as soon as practicable after conditions to the Merger are
satisfied (or waived to the extent permitted), or such other date agreed on by
the parties. It is currently contemplated that the Effective Time will occur on
or about December 31, 1997. There can be no assurance that all conditions to the
Merger will be satisfied. See "-- Conditions to Consummation of the Merger."
CONSIDERATION TO BE RECEIVED BY SHAREHOLDERS
In connection with the Merger, each Share outstanding immediately prior to
the Effective Time will be converted into the right to receive $1.32 in cash,
without interest (the cash consideration per share to be paid to the Company's
shareholders in the Merger being sometimes referred to herein as the "Merger
Consideration")."
PAYMENT FOR SHARES
Payment for Shares. First Trust of California, National Association (the
"Disbursing Agent") will act as the paying agent for payment of the Merger
Consideration to the holders of the Shares. Instructions with regard to the
surrender of certificates formerly representing Shares, together with the letter
of transmittal to be used for that purpose, will be mailed to shareholders as
soon as practicable after the Effective Time. As soon as practicable following
receipt from the shareholder of a duly executed letter of transmittal, together
with certificates formerly representing Shares and any other items specified by
the letter of transmittal, the Disbursing Agent will pay the Merger
Consideration to the shareholder, by check or draft.
After the Effective Time, the holder of a certificate formerly representing
Shares will cease to have any rights as a shareholder of the Company, and the
holder's sole right will be to receive the Merger Consideration with respect to
the Shares. If payment is to be made to a person other than the person in whose
name the surrendered certificate is registered, it will be a condition of
payment that the certificates so surrendered be properly endorsed or otherwise
in proper form for transfer and that the person requesting the payment shall pay
any transfer or other taxes required by reason of the payment or establish to
the satisfaction of the Surviving Company that the taxes have been paid or are
not applicable. No transfer of Shares outstanding immediately prior to the
Effective Time will be made on the stock transfer books of the Surviving Company
after the Effective Time.
To the extent permitted by law, the appointment of the Disbursing Agent may
be terminated at any time by RCBA upon notice to the Disbursing Agent, or by the
Disbursing Agent upon 30 days notice to RCBA. Any portion of the Merger
Consideration remaining undistributed one year after the Effective Time will be
returned to the Surviving Company, and any holders of unsurrendered Share
certificates may surrender them
20
<PAGE> 26
to the Surviving Company and (subject to abandoned property, escheat or similar
laws) receive the Merger Consideration to which they are entitled.
SHAREHOLDERS OF THE COMPANY SHOULD NOT FORWARD THEIR SHARE CERTIFICATES TO
THE DISBURSING AGENT WITHOUT A LETTER OF TRANSMITTAL, AND SHOULD NOT RETURN
THEIR SHARE CERTIFICATES WITH THE ENCLOSED PROXY.
No Interest on Payment Amounts. In no event will holders of Shares be
entitled to receive payment of any interest on the Merger Consideration.
OPERATIONS OF THE COMPANY PRIOR TO THE MERGER
The Company has agreed that, prior to the Effective Time, the business of
the Company will be conducted in accordance with certain restrictions set forth
in the Merger Agreement. Among other things, the Company has agreed that, except
as the Company and the Acquisition LLC may otherwise agree, the Company will
operate only in the ordinary course of business, and the Company will not do any
of the following: (a) take any action which would or could reasonably be
expected to jeopardize any of its material contracts or its good standing with
any applicable governmental agency with jurisdiction over the Company, or (b)
declare, set aside or pay any dividend or other distribution in respect of its
membership interests, whether in securities, cash, or other property, redeem,
repurchase or otherwise acquire any of its outstanding Shares, or issue any
membership interests or any right to acquire or convert into membership
interests.
In addition, the Company has agreed that until the earlier of the
termination of the Merger Agreement or the Effective Time, neither the Company
nor any of its employees or representatives will take any action to solicit,
initiate or encourage the submission of any Acquisition Proposal (as defined
below) or enter into any agreement for or relating to any Acquisition Proposal
(an "Acquisition Agreement"). Notwithstanding the foregoing, at any time prior
to obtaining the approval of the Company shareholders to the Merger, the Company
may, in response to an unsolicited written request for information made by a
third party to the Company, provide information to or have discussions or
negotiations with the third party if the Advisory Board of the Company, after
having considered the advice of outside counsel, has determined in good faith
that it is the fiduciary duty under applicable law of such Advisory Board
members to do so.
An Acquisition Proposal is defined in the Merger Agreement as a proposal
for any (i) merger, consolidation or similar transaction involving the Company,
(ii) sale, lease or other disposition directly or indirectly by merger,
consolidation, share exchange or otherwise of either (a) assets of the Company
representing 75% or more of the consolidated assets of the Company in one
transaction, or (b) all or substantially all of the undeveloped Property on one
transaction (but not including solicitation of sales of individual parcels of
the undeveloped Property), (iii) issuance, or other acquisition or disposition
of (including by way of merger, consolidation, share exchange or any similar
transaction) securities (or options, rights or warrants to purchase, or
securities convertible into, such securities) representing 20% or more of the
voting power of the Company, or (iv) transaction in which any person or group of
persons would acquire beneficial ownership or the right to acquire beneficial
ownership, or any group shall have been formed which beneficially owns or would
own or would have the right to acquire beneficial ownership of 20% or more of
the outstanding Shares, other than transactions contemplated by the Merger
Agreement.
CONDITIONS TO CONSUMMATION OF THE MERGER
The Merger will occur only if the Merger Agreement is approved and adopted
by majority vote of the holders of the Shares. Consummation of the Merger also
is subject to the satisfaction of the following conditions specified in the
Merger Agreement, unless the conditions are waived (to the extent waiver is
permitted by law). The failure of any of these conditions to be satisfied, if
not waived, would prevent consummation of the Merger.
The obligations of the Acquisition LLC to consummate the Merger are subject
to satisfaction of the following conditions: (i) the Merger shall have been
approved by a majority vote of the shareholders of the Company, (ii) no
temporary restraining order, preliminary or permanent injunction or other order
of any court
21
<PAGE> 27
or other judicial or administrative body of competent jurisdiction (each, an
"Injunction") which prohibits or prevents the consummation of the Merger shall
have been issued and remain in effect, (iii) the Company shall have performed in
all material respects its agreements contained in the Merger Agreement required
to be performed on or prior to the Effective Time, (iv) each of the
representations and warranties of the Company contained in the Merger Agreement
shall be true in all material respects when made on and as of the Effective
Time, and (v) the Company shall have obtained all consents, appeals, releases or
authorizations from, and shall have made all filings and registrations to or
with, any person necessary to be obtained or made in order to consummate the
transactions contemplated by the Merger Agreement.
The obligations of Company to consummate the Merger are subject to
satisfaction of the following conditions: (i) the Merger shall have been
approved by a majority vote of the shareholders of the Company, (ii) no
Injunction which prohibits or prevents the consummation of the Merger shall have
been issued and remain in effect, (iii) the Acquisition LLC shall have performed
in all material respects its agreements contained in the Merger Agreement
required to be performed on or prior to the Effective Time, (iv) each of the
representations and warranties of the Acquisition LLC contained in the Merger
Agreement shall be true in all material respects when made on and as of the
Effective Time, and (v) the Merger Consideration shall have been deposited with
the Disbursing Agent with irrevocable instructions to exchange the Shares for
the Merger Consideration in accordance with the terms of the Merger Agreement
immediately upon notification by the Company and the Acquisition LLC of the
Effective Time.
TERMINATION
The Merger Agreement may be terminated and the Merger abandoned at any time
prior to the filing of Certificate of Merger with the Delaware Secretary of
State whether before or after action by the Company's shareholders and without
further approval by the Company's shareholders under any of the following
circumstances: (i) by mutual consent of the Board of Directors of the
Acquisition and the Company's Advisory Board; (ii) by either the Acquisition LLC
or the Company, if the Merger shall have not been consummated on or before
January 31, 1998; provided that this particular right to terminate shall not be
available to any party whose failure to perform in any material respect any
covenant under the Merger Agreement has been the cause of or resulted in whole
or in part in the failure of the Merger to be consummated before January 31,
1998; (iii) by either the Acquisition LLC or the Company, if there shall be any
Injunction or other order by any court which is final and nonappealable
preventing the consummation of the Merger; (iv) by either the Acquisition LLC or
the Company if the Company shareholders do not approve the Merger Agreement and
the transactions contemplated thereby; or (v) by the Acquisition LLC if the
Merger Agreement and the transactions contemplated thereby shall not have been
submitted for approval by the Company's shareholders by January 31, 1998.
In addition, the Merger Agreement may be terminated by (a) the Acquisition
LLC, if the Advisory Board withdraws, modifies in a manner adverse to the
Acquisition LLC, or refrains from making its recommendation concerning the
Merger, or the Advisory Board shall have recommended to the Company shareholders
any Acquisition Proposal or the Company shall have entered into an Acquisition
Agreement, or, other than in connection with the Company's delivery of a
Superior Proposal Notice (as defined below), the Advisory Board shall have
resolved to do any of the foregoing, and (b) by the Company, if by a good faith
vote, with the advice of outside legal counsel, in order to avoid breaching its
fiduciary duties to Company shareholders under applicable law, (1) the Advisory
Board has delivered to the Acquisition LLC a Superior Proposal Notice, (2) the
Company has paid the Termination Fee (as defined below), and (3) five business
days have passed since the Acquisition LLC received the Superior Proposal
Notice. A "Superior Proposal Notice" is written notice advising the Acquisition
LLC that the Advisory Board has received a Superior Proposal (as defined below)
which the Advisory Board has authorized and intends to effect, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making the Superior Proposal. A "Superior Proposal" is a definitive
unconditioned agreement with a third party, with all due diligence
investigations completed, to acquire, directly or indirectly, more than 50% of
the membership interests of the Company, assets of the Company representing 75%
or more of the real estate assets of the Company in one transaction (but not
solicitation of sales of individual parcels of the Property) or all or
22
<PAGE> 28
substantially all of the undeveloped Property in one transaction (but not
solicitation of sales of individual parcels of the undeveloped Property), and
otherwise on terms which the Advisory Board determines in its good faith
judgment to be more favorable from a financial point of view to the Company
shareholders than the Merger Agreement, the Merger and the transactions
contemplated thereby and for which financing, to the extent required, is then
committed.
TERMINATION FEE
The Merger Agreement requires the Company to pay the Acquisition LLC a
termination fee of $1.3 million (the "Termination Fee") if the Board of
Directors of the Company takes the action described in clause (b) above under
the caption "-- Termination," (but only if the Company executes the agreement
contemplating the Superior Proposal within three business days after the receipt
by the Acquisition LLC of the Superior Proposal Notice) or the Merger Agreement
is terminated by the Acquisition LLC for any of the reasons set forth in clauses
(v) or (a) above under such caption.
ACCOUNTING TREATMENT
The Merger will be accounted for under the purchase method of accounting
under which the total consideration paid in the Merger will be allocated among
the Surviving Company's consolidated assets and liabilities based on the fair
values of the assets acquired and liabilities assumed.
RIGHTS OF DISSENTING SHAREHOLDERS
No appraisal rights are provided for the Company shareholders under the
Delaware limited liability company act or under the Company's limited liability
company agreement. Neither the Company, RCBA or the Acquisition LLC will be
voluntarily providing appraisal rights to the Company shareholders who object to
the transactions contemplated by the Merger Agreement. Neither the Company nor
RCBA is aware of any appraisal rights available to objecting shareholders under
applicable law.
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<PAGE> 29
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
SHARE OWNERSHIP
The following table sets forth certain information, as of June 30, 1997,
with respect to the beneficial ownership of Shares by (i) all persons known by
the Company to beneficially own more than 5% of the outstanding Shares, (ii)
each Advisory Board member of the Company, (iii) each executive officer of the
Company, and (iv) all executive officers and directors of the Company as a
group. For purposes of this table, beneficial ownership of securities is defined
in accordance with the rules of the Commission and means generally the power to
vote or dispose of securities, regardless of any economic interest therein.
Except as otherwise indicated, the shareholders listed in the table have sole
voting and investment power with respect to the Shares indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP
BENEFICIAL OWNER OF SHARES PERCENT OF CLASS(1)
- -------------------------------------------------------- -------------------- -------------------
<S> <C> <C>
Richard C. Blum......................................... 2,012,158(2) 10.2%
909 Montgomery Street, Suite 400
San Francisco, CA 94133
Manchester Securities Corp.............................. 1,914,760(3) 9.7%
712 Fifth Avenue
New York, NY 10019
Farallon Capital Management, L.L.C...................... 1,569,900(4) 8.0%
One Maritime Plaza, Suite 1325
San Francisco, CA 94111
Pioneering Management Corporation....................... 1,237,950 6.3%
60 State Street
Boston, MA 02109
Gabelli Funds, Inc...................................... 1,031,200(5) 5.2%
One Corporate Center
Rye, New York 10580-1434
James R. Porter......................................... 828,664 4.2%
3055 Triad Drive
Livermore, CA 94550
William W. Stevens...................................... 324,154(6) 1.6%
3055 Triad Drive
Livermore, CA 94550
3055 Management Corp.................................... 199,072(7) 1.0%
3055 Triad Drive
Livermore, CA 94550
Stanley F. Marquis...................................... 136,824 0.7%
3055 Triad Drive
Livermore, CA 94550
Larry D. McReynolds..................................... 19,317 0.1%
3055 Triad Drive
Livermore, CA 94550
Martin W. Inderbitzen................................... 0 0%
3055 Triad Drive
Livermore, CA 94550
All Executive Officers and Advisory Board Members as a
Group................................................. 1,508,031 7.7%
</TABLE>
- ---------------
(1) Except as indicated in the footnotes to this table, the persons named in the
table have sole voting and investment power with respect to all Shares shown
as beneficially owned by them, subject to community property laws, where
applicable.
(2) Richard C. Blum ("Mr. Blum") is a controlling person and Chairman of Richard
C. Blum & Associates Inc. ("Inc."), which is the general partner of Richard
C. Blum & Associates LP ("LP"). These Shares
24
<PAGE> 30
are directly owned by three limited partnerships for which LP is the general
partner (BK Capital Partners II, 111,111 Shares; BK Capital Partners III,
500,000 Shares; and BK Capital Partners IV, 1,387,047 Shares). Mr. Blum
disclaims beneficial ownership of these securities except to the extent of
his pecuniary interest thereof.
(3) Manchester Securities Corp. is wholly-owned by Elliott Associates, L.P.
("Elliott"). Paul E. Singer ("Singer") and Braxton Associates, L.P., a New
Jersey limited partnership, which is controlled by Singer, are the general
partners of Elliott.
(4) Includes 1,363,200 Shares held by Farallon Capital Partners, L.P. and
206,700 Shares held by Tinicum Partners, L.P.
(5) Includes 205,000 Shares held by GAMCO Investors, Inc., 169,900 Shares held
by Gabelli Performance Partnership L.P. and 656,300 Shares held by Gabelli
Associates Fund. Mario J. Gabelli is the Chairman, Chief Executive Officer
and Chief Investment Officer of Gabelli Funds, Inc.
(6) Includes 324,154 Shares held as tenant-in-common with Virda J. Stevens.
(7) In addition to the totals shown in the above table, Messrs. Porter and
Stevens are deemed to be the beneficial owners of 199,072 Shares by virtue
of their respective 50% equity ownership in 3055 Management Corp.
TRANSACTIONS BY CERTAIN PERSONS IN THE SHARES
No transactions in the Company's Shares were effected by any Advisory Board
member or executive officer of the Company during the 60 day period preceding
the date of this Proxy Statement.
25
<PAGE> 31
MANAGEMENT OF THE COMPANY, RCBA
AND THE ACQUISITION LLC
Certain information concerning the directors and executive officers of the
Company, RCBA and the Acquisition LLC is set forth below. Unless otherwise
indicated, each such person is a citizen of the United States and the address of
each such person is that of the Company, RCBA or the Acquisition LLC, as the
case may be. Such addresses are set forth under the caption "SUMMARY -- The
Company" and "-- RCBA."
THE COMPANY
The names, ages, principal occupations and employment history for the past
five years of the members of the Advisory Board and executive officers of the
Company, and the Board of Directors and executive officers of the Management
Corp. are set forth below.
James R. Porter, 61, has been a member of the Company's Advisory Board
since the Company's inception in February, 1997, and has been a director and
Vice President of the Management Corp. since its inception in February, 1997. He
is Chairman of the Board of CCI/Triad. He was President and Chief Executive
Officer of Triad from September, 1985 until its merger with Cooperative
Computing, Inc. in February, 1997. He is also a director of Silicon Valley Bank,
Brock International, Inc. and Cellular Technical Services, Inc.
William W. Stevens, 65, has been a member of the Company's Advisory Board
since the Company's inception in February, 1997, and has been a director and
Chairman of the Management Corp. since its inception in February, 1997. He was
Chairman of the Board of Triad from 1972 until its merger with Cooperative
Computing, Inc. in February, 1997. He is the founder of Triad and was its
President and Chief Executive Officer from its inception until September, 1985.
Stanley F. Marquis, 54, has been a member of the Company's Advisory Board
since the Company's inception in February, 1997. He was President of Triad
Systems Financial Corporation from August, 1983 until June 30, 1997. Mr. Marquis
was also Treasurer of Triad from September, 1987 until June 30, 1997, and was
its Vice President, Finance from December, 1994 until March, 1997.
Martin W. Inderbitzen, 45, has been a member of the Company's Advisory
Board since March, 1997. He has been a member of the State Bar of California
since 1976, maintaining a private general civil law practice since that time.
His practice has emphasized land use entitlement and zoning work almost
exclusively for the past ten years.
Larry D. McReynolds, 52, has been the President of the Company since its
inception in February, 1997. He joined Triad in September, 1984 as its Manager,
Facilities and became Manager, Real Estate and Facilities in June, 1992. In
July, 1994 he also assumed responsibility for Triad's Office Services. He is
currently employed in similar capacities for CCI/Triad.
RCBA AND AFFILIATES
RCBA. The names, principal occupations and employment history for the past
five years of the directors and executive officers of RCBA are set forth below.
Richard C. Blum, 62, has been President and Chairman of RCBA since 1994 and
has been President and Chairman of RCBA Inc. since 1985.
Nils Colin Lind, 41, has been Managing Director of RCBA since 1994 and has
been Managing Director of RCBA Inc. since 1987. Mr. Lind is a Norwegian citizen.
Jeffrey W. Ubben, 36, has been Managing Director of Investments of RCBA
since April, 1995. Prior to that, he was a portfolio manager for Fidelity
Management and Research Company from March, 1991 until March, 1995.
26
<PAGE> 32
William C. Johnston, 44, has been Managing Director of Investments of RCBA
since August, 1997. Prior to that, he was a Managing Director of APAC Holdings
Ltd., a direct investment firm in Hong Kong, from 1991 until July, 1997.
John C. Walker, 36, has been a Managing Director of RCBA since April, 1997.
Prior to that, he held various positions with Pexco Holdings, Inc. from Ocotber,
1992 until March, 1997.
Murray A. Indick, 38, has been Managing Director and General Counsel of
RCBA since April, 1997. He was a partner with the law firm of Dechert Price &
Rhoads from December, 1996 until March, 1997. He was with the law firm of
Wilmer, Cutler & Pickering from November, 1985 to March, 1992 and from
September, 1993 until November, 1996, and was Deputy General Counsel of First
American Bankshares from April, 1992 until August, 1993.
George F. Hamel, Jr., 40, has been Managing Director of Marketing of RCBA
since April, 1996. He was Vice President of Private Capital Management, Inc.
from March, 1992, until March, 1996.
Marc T. Scholvinck, 40, has been Managing Director and Chief Financial
Officer of RCBA since March, 1996. He was Vice President and Controller of RCBA
from November, 1995 until March, 1996, and was Director of Finance and
Controller of RCBA Inc. from January, 1994 until November, 1995, positions he
also held with RCBA Inc. from August, 1991 until March, 1993. He was a
self-employed financial consultant from March, 1993 until December, 1993 and
served as Financial Director of Leopard Rock Hotel (Pty) Ltd. during that
period.
Thomas L. Kempner, 70, has been a Director of RCBA, Inc. since May, 1985.
He has been Chairman of Loeb Partners Corp. since December, 1979.
THE ACQUISITION LLC
RCBA is the Managing Member of the Acquisition LLC. All information
regarding the directors and executive officers of RCBA may be found in the
preceding section.
CERTAIN PROCEEDINGS
During the past five years, neither the Company, RCBA, the Acquisition LLC,
nor any of the individuals named above with respect to those entities has been
convicted in a criminal proceeding (excluding traffic violations and similar
misdemeanors), or been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
been or become subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws of finding any violation with respect to such laws.
SHAREHOLDER PROPOSALS
In the event the Merger is not consummated for any reason, proposals of
shareholders intended to be presented at the 1998 annual meeting of shareholders
must be received by the Company at its principal executive offices not later
than December 15, 1997 for inclusion in the Company's proxy statement and form
of proxy relating to that meeting. Shareholders should mail any proposals by
certified mail return receipt requested.
INDEPENDENT PUBLIC ACCOUNTANTS
The financial statements of the Company as of September 30, 1996,
incorporated by reference in this Proxy Statement, have been audited by Coopers
& Lybrand LLP, independent public accountants.
A representative of Coopers & Lybrand LLP will be at the Special Meeting to
answer questions by shareholders and will have the opportunity to make a
statement if so desired.
27
<PAGE> 33
INFORMATION INCORPORATED BY REFERENCE
The Company's Information Statement on Form 10-SB dated June 20, 1997,
Quarterly Report on Form 10-QSB for the quarters ended June 30, 1997 and
September 30, 1997 and its Current Reports on Form 8-K dated September 10, 1997
and September 15, 1997 as filed by the Company with the Commission (Commission
File No. 0-22343), are incorporated by reference into this Proxy Statement.
All documents filed by the Company pursuant to sections 13(a), 13(c), 14 or
15(d) or the Exchange Act after the date of this Proxy Statement and prior to
the date of the Special Meeting shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such documents. Copies
of the documents (without exhibits) incorporated by reference in this Proxy
Statement are available without charge upon written or oral request from Larry
D. McReynolds, President, Triad Park, LLC, 3055 Triad Drive, Livermore,
California 94550 (telephone (510)449-0606).
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Exchange Act and, in accordance therewith, files reports, proxy statements and
other information with the Commission. Such reports, proxy statements and other
information can be inspected and copies made at the public reference facilities
of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549
and the Commission's regional offices at Seven World Trade Center, Suite 1300,
New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can also be obtained from
the Public Reference Section of Commission at its Washington, D.C. address at
prescribed rates. The Commission also maintains a Web site address,
http://www.sec.gov.
ADDITIONAL INFORMATION
This Proxy Statement contains information disclosed pursuant to Rule 13e-3
under the Exchange Act, which governs so-called "going private" transactions by
certain issuers and their affiliates. At the time the Company and RCBA entered
into the Merger Agreement, RCBA owned 1,998,158 Shares which represents
approximately 10.1% of the voting power of the Company's Shares. Although
neither the Company nor RCBA believes that RCBA or the Acquisition LLC was than
an "affiliate" of the Company within the meaning of Rule 13e-3(a)(1) of the
Exchange Act, RCBA, the Acquisition LLC and the Company are filing a Rule 13e-3
Transaction Statement ("Schedule 13E-3") with the Commission to furnish
information with respect to the transactions described herein. This Proxy
Statement does not contain all of the information set forth in the Schedule
13E-3, parts of which are omitted in accordance with the regulations of the
Commission. The Schedule 13E-3, and any amendments thereto, including exhibits
filed as part thereof, will be available for inspection and copying at the
offices of the Commission as set forth above.
By Order of the Advisory Board
James R. Porter
Vice President, 3055 Management Corp.,
Manager of the Company
Livermore, California
November , 1997
28
<PAGE> 34
TRIAD PARK, LLC
3055 TRIAD DRIVE
LIVERMORE, CALIFORNIA 94550
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS DECEMBER , 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE ADVISORY BOARD
The undersigned appoints Larry D. McReynolds and Stanley F. Marquis, and
each of them, with power to act without the other and with all the right of
substitution in each, the proxies of the undersigned to vote all shares of Triad
Park, LLC (the "Company") held by the undersigned on November , 1997, at the
Special Meeting of Shareholders of the Company, to be held on December , 1997
at 9:00 a.m. local time at the offices of the Company, 3055 Triad Drive,
Livermore, California 94550, and all adjournments thereof, with all powers the
undersigned would possess if present in person. All previous proxies given with
respect to the meeting are revoked.
Receipt of Notice of Special Meeting of Shareholders and Proxy Statement is
acknowledged by your execution of this proxy. Complete, sign, date, and return
this proxy in the addressed envelope -- no postage required. Please mail
promptly to save further solicitation expenses.
<TABLE>
<S> <C> <C> <C>
1. Approval of Merger Agreement, dated [ ] FOR THE MERGER [ ] AGAINST THE MERGER [ ] ABSTAIN
September 9, 1997, by and between TPL
Acquisition, LLC, Richard C. Blum &
Associates, LP and Triad Park, LLC
</TABLE>
(continued, and to be dated and signed, on other side)
<PAGE> 35
2. To vote with discretionary authority upon such other matters as may come
before the meeting. (Discretionary authority will be only exercised with
respect to votes in favor or abstentions.)
[ ] APPROVED [ ] WITHHELD
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS PROVIDED BY THE
UNDERSIGNED SHAREHOLDER, THIS PROXY WILL BE VOTED "FOR" ITEM 1 LISTED HEREIN,
UPON ALL OTHER MATTERS, THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST
INTERESTS OF THE COMPANY.
SIGNATURE(S)
-----------------------------------
-----------------------------------
Dated: , 1997
INSTRUCTION: When shares are held
by joint tenants, all joint tenants
should sign. When signing as
attorney, executor, administrator,
trustee, custodian, or guardian,
please give full title as such. If
shares are held by a corporation,
this proxy should be signed in full
corporate name by its president or
other authorized officer. If a
partnership holds the shares
subject to this proxy, an
authorized person should sign in
the name of such partnership.
