<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Triad Park, LLC
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
TRIAD PARK, LLC
3055 TRIAD DRIVE
LIVERMORE, CA 94550
MARCH 20, 1998
DEAR SHAREHOLDER:
THE SPECIAL MEETING OF SHAREHOLDERS OF TRIAD PARK, LLC (THE "COMPANY")
PREVIOUSLY SCHEDULED FOR MARCH 25, 1998 HAS BEEN MOVED TO SATURDAY, MARCH 28,
1998 AT 4:00 P.M. SO THAT YOU MAY CONSIDER THE RECENT DEVELOPMENTS DESCRIBED IN
THE MATERIALS LISTED BELOW. THE MEETING WILL CONTINUE TO BE HELD AT THE OFFICES
OF THE COMPANY, 3055 TRIAD DRIVE, LIVERMORE, CALIFORNIA. IF YOU HAVE SENT YOUR
PROXY PRIOR TO RECEIVING THIS LETTER AND YOU WISH TO CHANGE YOUR VOTE, YOU MAY
DO SO BY FOLLOWING THE INSTRUCTIONS AT THE END OF THIS LETTER.
Pursuant to an order of the Chancery Court of the State of Delaware
dated March 19, 1998, the Company has been ordered to send you the materials
listed below.
<TABLE>
<S> <C>
March 11, 1998 letter from Richard C. Blum & Associates, L.P. Attachment A
March 12, 1998 letter from The Kontrabecki Group, Inc. Attachment B
March 13, 1998 letter from Richard C. Blum & Associates, L.P. Attachment C
March 13, 1998 letter from Richard C. Blum & Associates, L.P. Attachment D
March 14, 1998 letter from The Kontrabecki Group, Inc. Attachment E
March 14, 1998 letter from Richards, Layton & Finger Attachment F
March 14, 1998 letter from Triad Park, LLC Attachment G
March 16, 1998 Complaint filed in Delaware Court of Chancery Attachment H
March 19, 1998 Order of the Delaware Court of Chancery Attachment I
March 19, 1998 Press Release of Triad Park, LLC Attachment J
</TABLE>
In addition, shareholders may obtain from the Company or The Kontrabecki Group,
Inc. a copy of a complaint filed by The Kontrabecki Group, Inc. against Richard
C. Blum & Associates, L.P. and certain related parties in the United States
District Court for the Northern District of California.
These additional soliciting materials and the attachments are for your
review and consideration. We encourage you to read these documents carefully.
These documents are to supplement the information previously provided in the
Proxy Statement mailed to you on or about March 10, 1998.
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. IF YOU HAVE NOT VOTED OR WISH TO CHANGE YOUR PREVIOUS VOTE, PLEASE
COMPLETE AND 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. TIME IS VERY SHORT; IF YOU WISH TO TAKE ANY ACTION YOU
MUST DO SO IMMEDIATELY.
<PAGE> 3
Sincerely,
The Members of the Advisory Board
Triad Park, LLC
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED ON THE FAIRNESS OR MERITS OF
SUCH ACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN
THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
<PAGE> 4
ATTACHMENT A
RICHARD C. BLUM & ASSOCIATES, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133-4625
Fax: (415) 434-3130
Telephone: (415) 434-1111
By Facsimile
March 11, 1998
Mr. Stanley F. Marquis
Triad Park, LLC
3055 Triad Drive
Livermore, CA 94550-9559
Dear Mr. Marquis:
Richard C. Blum & Associates, L.P. ("RCBA") hereby offers, subject to
the terms and conditions set forth in this letter, to have its acquisition
vehicle acquire all of the outstanding shares of Triad Park, LLC ("Triad Park")
for $1.70 per share. At our closing of the transaction, all Triad Park's
liabilities will be assumed including, without limitation, any Termination Fee
to be paid by Triad Park to The Kontrabecki Group, Inc. ("TKG"). Capitalized
terms in this letter are as defined in that certain Merger Agreement entered
into on February 1, 1998 by Triad Park and TKG.
This offer clearly offers more consideration to all Triad Park
shareholders than the current bid by TKG, and it should be accepted forthwith by
the Advisory Board using the process set forth in the Merger Agreement.
RCBA expects Triad Park to treat this offer as an "Acquisition
Proposal" as that term is defined in Section 7.6 of the Merger Agreement. Since
RCBA offers approximately $1 million additional consideration to the Triad Park
shareholders above the current TKG bid, without any material detriment to the
shareholders from the Merger Agreement, our offer constitutes a "Superior
Proposal." Pursuant to Section 7.6(d), the Advisory Board should immediately
advise TKG that the Advisory Board has received a Superior Proposal, and intends
to terminate the Merger Agreement and enter into an Acquisition Agreement with
RCBA five business days from the date of the Superior Proposal Notice.
Contemporaneous with the execution of the Acquisition Agreement by Triad Park,
RCBA's acquisition vehicle will enter into irrevocable arrangements to have the
Termination Fee paid at our closing. A condition of our offer is that Triad Park
send TKG the Superior Proposal Notice no later than tomorrow, March 12, 1998.
The terms of our Acquisition Agreement will mirror Triad Park's Merger
Agreement with TKG, except for certain conforming changes. For instance, our
Acquisition
<PAGE> 5
Mr. Stanley F. Marquis
March 11, 1998
Page 2
Agreement would adjust the dates set forth in Sections 9.1 and 9.2 from March 31
and July 31, respectively, to May 31 and September 30.
Our acquisition would be effected by TPL Acquisition, LLC ("TPL"),
which was previously formed by RCBA for the purpose of acquiring Triad Park. TPL
and Triad Park would be the exclusive parties to the agreement; RCBA would not
be a party to the contract or guaranty TPL's performance or obligations. This
change reflects our understanding, based on the auction process conducted by
Triad Park on February 1, 1998, that the Advisory Board is primarily interested
in securing the maximum price for the Triad Park shareholders and places no
material value on RCBA being a contracting party unless the price per share
offered by RCBA and a competing bidder are absolutely identical. It is also
fundamentally fair since the TKG bid is not supported by a meaningful financial
source; the preliminary proxy statement recently filed by Triad Park states that
"TKG expects [Lehman Brothers] will provide financing for the Merger," and
Lehman is not a contracting party or otherwise responsible for the transaction.
We look forward to being in contract, once again, to acquire Triad
Park. For the record, RCBA is greatly disappointed that the Advisory Board
terminated our merger agreement and ended the auction process on February 1,
1998 as it did. We believe the Advisory Board, by terminating the bidding
process when it did, deprived Triad Park shareholders of additional value. The
Advisory Board now has the opportunity to maximize shareholder value by
accepting RCBA's offer.
Consistent with our obligations under the federal securities laws, RCBA
expects to file this letter promptly with the Securities & Exchange Commission.
Should you have any questions, please feel free to contact me.
Sincerely,
/s/ Murray A. Indick
Murray A. Indick
cc: Edward S. Merrill, Esq., McCutchen, Doyle, Brown & Enersen, LLP
2
<PAGE> 6
ATTACHMENT B
TKG International Letterhead
March 12, 1998
Mr. Stanley F. Marquis
Advisory Board Member
Triad Park, LLC
3055 Triad Drive
Livermore, CA 94550
RE: MARCH 11, 1998 LETTER TO TRIAD PARK FROM RICHARD C. BLUM & ASSOCIATES,
L.P.
Dear Stan:
We have reviewed RCBA's March 11 letter and are confident that Triad
Park share holders will see that it is nothing but smoke and mirrors. RCBA's
letter is a transparent attempt to sow confusion and to disrupt the imminent
share holder approval of the merger with TKG. In no way is it a "superior
proposal" to the pending transaction with TKG, either as a matter of financial
common sense or within the meaning of our Merger Agreement with Triad Park.
Let's look at the facts.
Six months after making a lowball offer of $1.32 per share, RCBA now
says it will offer $1.70 per share. But look closely -- RCBA's letter is an
offer without substance behind it. RCBA wants Triad Park to sign an agreement
with a shell company -- TPL Acquisition -- with no history, operations or
assets, and to walk away from a nearly completed deal with TKG, an operating
company with a history of successful deal making, which has the financial
backing of Lehman Brothers, a globally recognized investment bank. If this
weren't enough, RCBA wants Triad Park and its share holders to wait at least two
months more to complete a deal, with no assurance that a deal will ever be done.
And for what? 4.875 cents -- less than three percent (3%). This wouldn't even
cover the cost of the delay, let alone the risk of ending up with far less or
nothing at all.
TKG's firm $1.65 1/8 per share offer is clearly superior to the
illusory offer proposed in RCBA's March 11 letter. Financing for the TKG
transaction is to come from Lehman Brothers. The proxy statement for the TKG
transaction has received SEC clearance and has been mailed to share holders. A
share holder vote in favor of the TKG transaction on March 25 (less than two
weeks away) assures share holders that they will receive their $1.65 1/8 per
share payment promptly.
By comparison, RCBA's March 11 letter identifies no financing source
for the TPL Acquisition proposal. What's more, RCBA's letter specifically states
that RCBA will not be a party to or guaranty the obligations or performance of
the TPL Acquisition proposal. Furthermore, TPL Acquisition is not prepared to
close the proposed transaction until more than two months after share holders
will receive their money from the TKG transaction. This schedule could be even
further delayed if RCBA is unable to clear the SEC review process or is delayed,
as it was in its first attempt to buy Triad Park. As an insider of Triad Park,
RCBA (and its shell entity, TPL Acquisition) will face close review by the SEC.
Therefore, the timely receipt of the money offered in this proposal is highly
speculative and questionable. For these reasons, it should be clear to Triad
Park share holders and the Advisory Board that the TKG transaction is the best
alternative for maximizing share holder value.
We look forward to continuing our joint effort to deliver real,
immediate value to Triad Park share holders.
Very truly yours,
/s/ John T. Kontrabecki
John T. Kontrabecki
<PAGE> 7
ATTACHMENT C
RICHARD C. BLUM & ASSOCIATES, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133-4625
Fax: (415) 434-3130
Telephone: (415) 434-1111
By Facsimile
March 13, 1998
Mr. Stanley F. Marquis
Triad Park, LLC
3055 Triad Drive
Livermore, CA 94550-9559
Dear Mr. Marquis:
Richard C. Blum & Associates, L.P. ("RCBA") hereby withdraws its letter
dated March 11, 1998 and submits the following offer to have RCBA through its
acquisition vehicle acquire all of the outstanding shares of Triad Park, LLC
("Triad Park"). Capitalized terms in this letter are as defined in that certain
Merger Agreement entered into on February 1, 1998 by Triad Park and The
Kontrabecki Group, Inc. ("TKG").
We offer to pay (1) $1.74 per share to the shareholders for all Triad
Park shares (approximately $1.75 million in excess of the offer of TKG), and (2)
$1.2 million to Triad Park that the company will use to pay the Termination Fee
to TKG, our payment to be made to Triad Park contemporaneous with the execution
of our Acquisition Agreement with Triad Park and Triad Park's termination of the
Merger Agreement with TKG.
RCBA expects Triad Park to treat this offer as an "Acquisition
Proposal" and a "Superior Proposal" as those terms are defined in Section 7.6 of
the Merger Agreement. Pursuant to Section 7.6(d), the Advisory Board should
immediately advise TKG that the Advisory Board has received a Superior Proposal,
and intends to terminate the Merger Agreement and enter into an Acquisition
Agreement with RCBA five business days from the date of the Superior Proposal
Notice. RCBA reserves the right to withdraw this offer if Triad Park fails to
send TKG the Superior Proposal Notice promptly, and we request that the Superior
Proposal Notice be sent no later than March 13, 1998.
The terms of our Acquisition Agreement will mirror Triad Park's Merger
Agreement with TKG, except for certain conforming changes. For instance, our
Acquisition Agreement would adjust the dates set forth in Sections 9.1 and 9.2
from March 31 and July 31, respectively, to May 31 and September 30. The parties
from our side of the transaction will be as they were when we were in contract
with Triad Park (i.e., RCBA and its acquisition vehicle, TPL Acquisition, LLC).
Our Acquisition Agreement will also require Triad Park to pay our $1.3
<PAGE> 8
Mr. Stanley F. Marquis
March 13, 1998
Page 2
million termination fee before it enters into any agreement with a third party
that would top our transaction.
We look forward to being in contract, once again, to acquire Triad
Park.
Clearly each of Triad Park and RCBA has disclosure obligations under
the federal securities laws. For your information, RCBA expects to file this
letter promptly with the Securities & Exchange Commission.
Should you have any questions, please feel free to contact me.
Sincerely,
/s/ Murray A. Indick
Murray A. Indick
cc: Edward S. Merrill, Esq., McCutchen, Doyle, Brown & Enersen, LLP
<PAGE> 9
ATTACHMENT D
RICHARD C. BLUM & ASSOCIATES, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133-4625
Fax: (415) 434-3130
Telephone: (415) 434-1111
By Facsimile
March 13, 1998
Mr. Stanley F. Marquis
Triad Park, LLC
3055 Triad Drive
Livermore, CA 94550-9559
Dear Mr. Marquis:
Richard C. Blum & Associates, L.P. ("RCBA") hereby responds to the
comments of the Advisory Board of Triad Park, LLC ("Triad Park") concerning the
termination fee we proposed.
This morning, I clarified in a conversation with Triad Park's counsel
that we intended the termination fee expressed in our earlier March 13 letter to
be $1.3 million plus the reimbursement of certain significant additional
expenses. In light of the comments from the Advisory Board on this issue and in
a good-faith effort to resolve the matter, our proposal concerning our
termination fee is amended as follows: our termination fee will be the actual,
out-of-pocket expenses we have paid to third parties or for which we are
responsible, said expenses not to exceed $1.75 million. Examples of covered
expenses would be (i) legal fees of the McCutchen law firm (for which we have
already paid approximately $100,000), (ii) accounting fees of Coopers & Lybrand,
auditor to Triad Park, (iii) printing fees of Bowne & Company, (iv) the
termination fee paid to the company and forwarded to TKG ($1.2 million), and (v)
professional fees paid to RCBA's advisors. If, at the time the termination fee
was due to RCBA, these expenses were less than $1.75 million, that lower amount
would be the amount payable as our termination fee; conversely, if these
expenses exceeded $1.75 million, our termination fee would be capped at $1.75
million.
RCBA believes this resolution is more than fair and fully justifiable
under applicable Delaware law.
<PAGE> 10
Mr. Stanley F. Marquis
March 13, 1998
Page 2
Our restated offer is enclosed.
Sincerely,
/s/ Murray A. Indick
Murray A. Indick
cc: Edward S. Merrill, Esq., McCutchen, Doyle, Brown & Enersen, LLP
<PAGE> 11
RICHARD C. BLUM & ASSOCIATES, L.P.
909 Montgomery Street, Suite 400
San Francisco, CA 94133-4625
Fax: (415) 434-3130
Telephone: (415) 434-1111
By Facsimile
March 13, 1998
Mr. Stanley F. Marquis
Triad Park, LLC
3055 Triad Drive
Livermore, CA 94550-9559
Dear Mr. Marquis:
Richard C. Blum & Associates, L.P. ("RCBA") hereby withdraws its prior
letters dated March 11 and March 13, 1998 and submits the following offer to
have RCBA through its acquisition vehicle acquire all of the outstanding shares
of Triad Park, LLC ("Triad Park"). Capitalized terms in this letter are as
defined in that certain Merger Agreement entered into on February 1, 1998 by
Triad Park and The Kontrabecki Group, Inc. ("TKG").
We offer to pay (1) $1.74 per share to the shareholders for all Triad
Park shares (approximately $1.75 million in excess of the offer of TKG), and (2)
$1.2 million to Triad Park that the company will use to pay the Termination Fee
to TKG, our payment to be made to Triad Park contemporaneous with the execution
of our Acquisition Agreement with Triad Park and Triad Park's termination of the
Merger Agreement with TKG.
RCBA expects Triad Park to treat this offer as an "Acquisition
Proposal" and a "Superior Proposal" as those terms are defined in Section 7.6 of
the Merger Agreement. Pursuant to Section 7.6(d), the Advisory Board should
immediately advise TKG that the Advisory Board has received a Superior Proposal,
and intends to terminate the Merger Agreement and enter into an Acquisition
Agreement with RCBA five business days from the date of the Superior Proposal
Notice. RCBA reserves the right to withdraw this offer if Triad Park fails to
send TKG the Superior Proposal Notice promptly, and we request that the Superior
Proposal Notice be sent no later than March 14, 1998.
The terms of our Acquisition Agreement will mirror Triad Park's Merger
Agreement with TKG, except for certain conforming changes. For instance, our
Acquisition Agreement would adjust the dates set forth in Sections 9.1 and 9.2
from March 31 and July 31, respectively, to May 31 and September 30. The parties
from our side of the transaction will be as they were when we were in contract
with Triad Park (i.e., RCBA and its acquisition vehicle, TPL Acquisition, LLC).
Our Acquisition Agreement will also require Triad Park to pay us a termination
fee before it enters into any agreement with a third party that would top our
<PAGE> 12
Mr. Stanley F. Marquis
March 13, 1998
Page 2
transaction. The amount of our termination fee would be the actual,
out-of-pocket expenses we have paid to third parties or become responsible for
(including, for example, the Termination Fee to TKG and professional fees to
Triad Park's counsel and advisors), capped at $1.75 million.
We look forward to being in contract, once again, to acquire
Triad Park.
Clearly each of Triad Park and RCBA has disclosure obligations
under the federal securities laws. For your information, RCBA expects to file
this letter promptly with the Securities & Exchange Commission.
Should you have any questions, please feel free to contact me.
Sincerely,
/s/ Murray A. Indick
Murray A. Indick
cc: Edward S. Merrill, Esq., McCutchen, Doyle, Brown & Enersen, LLP
<PAGE> 13
ATTACHMENT E
TKG International Letterhead
March 14, 1998
Mr. Stanley F. Marquis
Advisory Board Member
Triad Park, LLC
3055 Triad Drive
Livermore, CA 94550
RE: MARCH 13, 1998 LETTER TO TRIAD PARK FROM RICHARD C. BLUM & ASSOCIATES,
L.P.
Dear Stan:
We have reviewed the letter from Richard C. Blum & Associates, L.P.
("RCBA") dated March 13. In no way is it a "superior proposal" to the pending
transaction with TKG, either as a matter of financial common sense or within the
meaning of our Merger Agreement with Triad Park. I previously stated the reasons
why this is a phony offer in my letter to you dated March 12, 1998 written in
response to RCBA's letter dated March 11, 1998.
I THINK IT IS TIME TO DO A REALITY CHECK AND PUT THIS GAMESMANSHIP INTO
PERSPECTIVE. RCBA'S ACTIONS ARE DAMAGING TRIAD PARK AND ERODING THE VALUE OF THE
SHAREHOLDERS' INTEREST IN THE COMPANY. Please allow me to explain.
A. Risk of Insolvency and Bankruptcy
The Advisory Board acts as a trustee for the benefit of the
shareholders. Paramount among its obligations as a trustee is the duty to
preserve the assets of the company and the value of the shareholders' interests.
Over the past three years, Triad Park has lost money. In fiscal 1997, the
company lost $324,000. According to current projections, the company will have
only $659,000 in cash in the bank at the end of March. AT THE RATE THE COMPANY
IS CONSUMING CASH, BASED UPON PROJECTED ACCOUNTS PAYABLE, IT WILL BE INSOLVENT
IN APRIL. THE COMPANY WILL NOT BE ABLE TO MEET ITS OBLIGATIONS AS THEY BECOME
DUE AND WILL BE TECHNICALLY BANKRUPT. The Advisory Board will then face the real
possibility of filing for Chapter 11 Bankruptcy protection. There is one land
sale that was scheduled to close in March. Triad Park management and the
purchaser have informed me that it will not be closing this month. There is also
a receivable owed by the City of Livermore that was anticipated in March. Triad
Park management has informed me that it will not be received as planned. It is
not known with any certainty when these payments will be received. Triad Park is
running out of cash. A COMPANY IN BANKRUPTCY IS WORTH A LOT LESS THAN A
FINANCIALLY HEALTHY SOLVENT COMPANY.
THE MOST PRUDENT COURSE FOR THE ADVISORY BOARD TO TAKE FOR THE BENEFIT
OF THE SHAREHOLDERS IS TO STAND BY TKG AND ALLOW THE MERGER TO PROCEED TO
COMPLETION BY THE END OF MARCH. THIS WILL ALLOW THE SHAREHOLDERS TO RECEIVE FULL
VALUE FOR THE COMPANY BEFORE IT CRASHES INTO INSOLVENCY.
B. Perils of Further Delay
RCBA has demonstrated through its previous attempts that it is unable
to process a proxy statement through the SEC without extreme difficulty. By its
own admission, RCBA cannot be ready to close the proposed transaction until more
than two and one-half months from now. This schedule could be even further
delayed if RCBA is unable to clear the SEC review process or is delayed, as it
was in its first attempt to buy Triad Park. As an insider of Triad Park, RCBA
(and its shell entity, TPL Acquisition) will face close review by the SEC.
Before they could get SEC clearance, the company will be insolvent and possibly
in bankruptcy. This would cause further
<PAGE> 14
delay because the company's proxy statement would need to include a thorough
discussion and explanation of the insolvency. THEREFORE, THE TIMELY RECEIPT OF
THE MONEY OFFERED IN THEIR PROPOSAL IS HIGHLY SPECULATIVE AND QUESTIONABLE AT
BEST.
THE RCBA STRATEGY APPEARS TO BE CALCULATED TO GET TKG OUT OF THE WAY SO
THAT RCBA CAN, AT A LATER DATE, RENEGOTIATE THE PURCHASE PRICE. I WONDER IF RCBA
WOULD BE PREPARED TO CLOSE THE TRANSACTION AT THE PRICE IT IS CURRENTLY OFFERING
IF TRIAD PARK WERE INSOLVENT? THIS WOULD BE THE PERFECT OPENING FOR RCBA TO
REDUCE THE PURCHASE PRICE BY CLAIMING A MATERIAL CHANGE IN CONDITIONS.
C. You Cannot Bank On RCBA's Representations About Financing
You know, or you should have known, that when RCBA was previously under
contract to purchase Triad Park, it did not have financing in place. You may
recall that RCBA, using carefully chosen words, was telling the Advisory Board
that its funding was lined up. However, simply put, they were not funded and
ready to complete the transaction. If you observe how they do business, you will
realize that they do not have their funding in place now. NEITHER THEIR LETTER
OF MARCH 11 NOR MARCH 13 SAY ONE WORD ABOUT WHERE THE MONEY IS COMING FROM.
Being "lined up" is not the same as being fully committed and ready to complete.
They have committed the sin of omission by failing to tell you material
information that you need to know. Their current proposal is a perfect example
of this. It is silent on both the source and the extent of their financing and
it asks the Advisory Board to make a leap of faith based upon the name of RCBA.
D. Risks of the Deal and Price
Over the past 45 days, I have become intimately familiar with the
operating risks facing Triad Park. These risks make the purchase of Triad Park
more risky than it first appeared to me. In fact, now that I have a better
understanding of the risks, I have had to lower my expectations about the future
profit potential of Triad Park. The returns I am now projecting are barely
within the range that is considered appropriate for a real estate investment
with this risk profile. I am confident that, once the people at RCBA fully
understand the problems with the company, it will also look more risky to them.
For this reason, I wish to inform you that, if the Advisory Board terminates our
Merger Agreement and signs an agreement with RCBA that does not close, I will
not be willing to pay the price to which I have previously agreed. While I may
still have an interest in acquiring Triad Park, it will be at a significantly
lower price to reflect the risks. IF YOU TERMINATE THE MERGER AGREEMENT, YOU
WILL LOOSE THE DEAL YOU HAVE WITH ME AND DENY THE SHAREHOLDERS THE VALUE THAT IT
REPRESENTS.
WHEN YOU ADD IT ALL UP, I THINK IT IS CLEAR TO THE ADVISORY BOARD AND
THE SHAREHOLDERS THAT THE PRUDENT ACTION IS TO STAY THE COURSE AND PROCEED WITH
THE SHAREHOLDER VOTE ON MARCH 25, 1998.
We look forward to continuing our joint effort to deliver real,
immediate value to Triad Park shareholders.
Very truly yours,
/s/ John T. Kontrabechi
John T. Kontrabecki
<PAGE> 15
ATTACHMENT F
[Letterhead of Richards, Layton & Finger]
March 14, 1998
VIA FACSIMILE
Edward "Doc" Merrill, Esq.
McCutchen, Doyle, Brown & Enersen
3 Embarcadero Center
San Francisco, CA
Re: Triad Park LLC/TKG International
Dear Doc:
Eleven days. In just eleven days, Share Holders will be ale to choose
whether they want to receive an immediate cash payment from TKG or to risk this
money on more promises from the same RCBA camp that low-balled them last
November and could not complete the deal. Even if RCBA could deliver on this
latest promise, it would come at a steep price - delay and the risk of getting
nothing or far less than the current deal. Share Holders would have to wait at
least two additional months to receive payment from RCBA. And what do Share
Holders get for dragging this process out? At most, if ever delivered, a modest
per share increase of only about 5%. Five percent is not a sufficient reward to
justify the risk of terminating the TKG merger agreement, or to pay for the
delay inherent in doing so. Roll the dice with RCBA's latest promise, and Share
Holders could end up with nothing. Lets review where we stand.
Just how good are RCBA's promises this time? Surely, we need not remind
you that this is the same bidder who convinced the Triad Park Board to accept a
low ball bid of only $1.32 per share some seven months ago, and then was unable
to clear the SEC, even given a five month period to do so. Then too, this is the
same group that just a few days ago made an entirely illusory offer through a
shell affiliate, apparently believing that the Triad Park Board was willing to
dance to the tune of a former insider regardless of whether or not its bid had
any substance whatsoever.
<PAGE> 16
Having seen this Board in action first hand, the TKG Group certainly
gives you and your clients more credit than RCBA. You were absolutely correct to
decline to accept Blum's March 11 sham proposal, and, we submit, upon further
and mature consideration of Blum's latest proposal, you will be equally
justified in allowing the Share Holders of Triad Park to determine whether they
would prefer cash now or another extended ride through the SEC and maybe, just
maybe, cash later.
Of course, even RCBA's latest letter makes clear that Mr. Blum and his
colleagues anticipate a delay of almost two and one half months before being
able to deliver anything to Triad Park Share Holders, in light of the proposed
'adjustment' of the date set forth in Section 9.1 of the Merger Agreement from
March 31 to May 31. Apparently the Blum Group believes that this is a
"conforming change[]" to the Merger Agreement. We anticipate that, like us, you
will conclude otherwise.
Then too, the latest RCBA letter says nothing whatsoever about
financing of the proposed transaction. Of course, we need not remind you of the
requirements of our Merger Agreement, which provides that a "Superior Proposal"
is one as to which "financing, to the extent required, is then committed."
(Section 7.6(d)). In our view, any appropriate due diligence investigation of
this proposal from RCBA must include a demand that RCBA produce, in writing,
either an undertaking that no financing will be required to complete its
proposed transaction, or alternatively, a signed, final and binding financing
commitment letter from a reputable and financially responsible source. Anything
less would be to blink at the plain language of our binding Merger Agreement,
and potentially leave the Share Holders of Triad Park without a financed
transaction.
Finally, I would be remiss if I did not point out my client's concern
that the plain language of RCBA's latest offer itself invites the Triad Park
Board to breach our contract. Clearly, as you know, Section 7.6(d) of our Merger
Agreement requires that the Company must, if it were to seek to terminate our
agreement for a Superior Proposal (and for the reasons outlined above the latest
Blum proposal is in no way a "Superior Proposal"), "make[] irrevocable
arrangements for Acquisition to be paid the amounts contemplated by Section
9.2(b) upon the termination of the Merger Agreement." In our view, the Blum
letter's suggestion that RCBA (or its shell acquisition entity TPL Acquisition ,
LLC), would pay $1.2 million to Triad Park to be used to pay TKG's fee
"contemporaneous with the execution of our Acquisition Agreement...and Triad
Park's termination of the Merger Agreement with TKG" is inadequate in several
respects. First, as noted above, the Company's obligation is to make
"irrevocable arrangements" for such payment prior to termination, and we do not
view this proposal as such. Second, the Merger Agreement itself makes the
payment of our fee a condition precedent to your right to termination (assuming,
of course a "Superior Proposal"). (Section 9.1(g)). Put simply, should Blum
eventually come up with a "Superior Proposal", Triad Park's right to terminate
our contract arises only after TKG is paid its fee. Thus, Blum's proposed
disposition of this matter is inadequate and would lead the Board into a breach
of its contract.
Let me finish where we started: in only eleven days, the Share Holders
of Triad Park will be able to make their own decision whether they want
immediate cash for their Triad
<PAGE> 17
Edward "Doc" Merrill, Esq.
March 14, 1998
Page 3
Park shares, or prefer to continue to wait for at
least a few months to receive the fifth, (or is it the sixth?) version of the
Blum proposal. We firmly believe that the choice for the Triad Park Advisory
Board is clear. Let the Share Holders make their own decision. Don't cast away
the "bird in the hand" for Blum's latest promises.
Yours very truly,
/s/ Gregory V. Varallo
Gregory V. Varallo
GVV/gvv
cc: Mr. John Kontrabecki
Rod Howard, Esq.
<PAGE> 18
ATTACHMENT G
TRIAD PARK, LLC
3055 Triad Drive
Livermore, CA 94550
March 14, 1998
VIA FACSIMILE
Mr. John T. Kontrabecki
President
TKG International, Inc.
2755 Campus Drive, Suite 100
San Mateo, CA 94403
Re: Superior Proposal Notice pursuant to Section 7.6(d) of the
Agreement of Merger by and among The Kontrabecki Group, Inc.,
TKG Acquisition Company, LLC and Triad Park, LLC (the
"Company"), dated as of February 1, 1998 (the "Merger
Agreement")
Dear John:
This letter is notice to TKG Acquisition Company, LLC ("Acquisition")
pursuant to Section 7.6(d) of the Merger Agreement that the Company has received
the attached proposal, comprised of two letters dated March 13, 1998 (the "RCBA
Proposal"), from Richard C. Blum & Associates, L.P. ("RCBA") which the Company's
Advisory Board has determined to be a "Superior Proposal" as that term is
defined in the Merger Agreement.
It is the Company's current intention to negotiate with RCBA to
finalize all details of the definitive merger agreement and to convene a meeting
of the Advisory Board after March 20, 1998 (the expiration of five business
days) to take final action. Barring changes in circumstances, the Advisory Board
intends to accept the RCBA Proposal, terminate the Merger Agreement pursuant to
Section 9.1(g) and pay to Acquisition the Termination Fee in accordance with
Section 9.2(c).
Very truly yours,
TRIAD PARK, LLC
/s/ Stanley F. Marquis
Stanley F. Marquis, Secretary
cc: Rod J. Howard, Esq.
Edward S. Merrill, Esq.
<PAGE> 19
ATTACHMENT H
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
THE KONTRABECKI GROUP, INC. a California )
corporation, )
)
Plaintiff, )
) Civil Action No. 16256
v. )
)
TRIAD PARK, LLC, a Delaware limited liability )
company, )
)
Defendant. )
VERIFIED COMPLAINT FOR INJUNCTIVE RELIEF AND SPECIFIC
PERFORMANCE
Plaintiff The Kontrabecki Group, Inc., ("Plaintiff" or "TKG") by and
through its attorneys, Richards, Layton & Finger, P.A., upon knowledge as to its
own conduct and upon information and belief as to all other matters, alleges for
its Verified Complaint for Injunctive Relief and Specific Performance as
follows:
NATURE OF THE ACTION
1. Plaintiff TKG brings this action to halt the threatened and
imminent breach of a binding and enforceable merger agreement (the "Merger
Agreement") between TKG and defendant Triad Park, LLC ("Triad" or the "Company")
and to assure that the owners of the membership interests of Triad (the "share
holders") have an opportunity just days from now to decide for themselves
whether they prefer the all cash merger consideration offered to them by TKG or
instead the uncertain and apparently unfinanced proposal put forth by Richard C.
Blum & Associates, L.P. ("Blum" or "RCBA" and its acquisition vehicle TPL
Acquisition, LLC (collectively the "Blum Group").
<PAGE> 20
THE PARTIES
2. Plaintiff TKG is an international real estate investment and
development firm with interests in the United States and Eastern Europe
headquartered in San Mateo, California. TKG has been in business since 1983.
3. Defendant Triad is a Delaware limited liability company with
its principal place of business in Livermore, California. Triad's primary asset
consists of approximately 220,000 square feet of office space in three buildings
and improvements situated on 15 acres in Triad Park, Livermore, California, and
approximately 303 acres of undeveloped land (the "Property"). Triad was formed
in February, 1997 as a spin off in connection with an unrelated transaction. The
sole purpose of Triad is to hold and eventually liquidate the Property.
4. Under the Limited Liability Company Agreement of Triad, dated
as of February, 1997 (the "Triad LLC Agreement") the "business and affairs of
the Company shall be managed by the Manager." The Manager of Triad is 3005
Management Corporation.
5. Although the ownership interests in Triad are held of record
by approximately 1,396 share holders, these interests are not registered
securities and under the Triad LLC Agreement, the Manager has the right to
impose restrictions on the right of share holders to transfer shares.
6. Triad also maintains an "Advisory Board", the function of
which is to provide advice to the Manager. In certain limited circumstances,
including the sale or merger of the Company, the Triad LLC Agreement provides
that the Manager will not alone have discretion, and the Advisory Board must
approve such action before it is taken.
BACKGROUND TO THE ACTION
2
<PAGE> 21
7. Prior to early August, 1997 the Manager was jointly owned and
operated by three individuals, one of whom, Richard C. Blum, is the President
and Chairman of RCBA.
8. On August 8, 1997, Mr. Blum resigned his positions as Vice
President and Director of the Manager in order to make a proposal to purchase
all of the ownership interests of Triad.
9. Notwithstanding his resignation as an officer and director of
the Manager, by early September, 1997, Mr. Blum continued to own one-third of
the shares of the Management. Mr. Blum assigned those shares to one of the
co-owners of the Manager on September 5, 1997.
10. The Blum Group's first proposal to purchase the Company was
made on August 11, 1997, at a price level of $1.20 per share. The Company
rejected this proposal as inadequate.
11. On August 15, 1997, the Blum Group made its second offer to
acquire the Company at a price of $1.30 per share.
12. Following further negotiation, Mr. Blum and the Company
settled on a price of $1.32 per share and a merger agreement was eventually
executed on September 9, 1997 (the "First Blum Merger Agreement").
13. Pursuant to the terms of the First Blum Merger Agreement, the
parties were to complete the transaction no later than January 31, 1998, or some
five months after executing the agreement.
14. Notwithstanding having five full months to prepare and clear proxy
materials and to hold a meeting of Triad share holders, RCBA, apparently in part
due to its status as an "insider" for purposes of the federal securities laws,
was unable to satisfy concerns expressed by
3
<PAGE> 22
the Securities Exchange Commission and did not clear proxy materials in time to
hold a meeting of share holders by January 31, 1998.
15. Following the announcement of the First Blum Merger Agreement,
TKG became interested in Triad. Having analyzed the First Blum Merger Agreement
and concluded that RCBA had negotiated a "low-ball" transaction that was
enormously favorable to it, TKG expressed an interest in providing a higher bid,
which interest was conditioned upon, among other things, due diligence.
16. During late 1997 and early 1998, TKG conducted extensive due
diligence, and concluded that Triad was worth substantially more than Blum and
RCBA had agreed to pay.
17. Thereafter, TKG and the Blum Group engaged in a bidding war
for the Property. TKG initially topped Blum's $1.32 offer by bidding $1.45 per
share. Thereafter, Blum responded by offering $1.47 per share, and TKG responded
by offering $1.50 per share.
18. Following TKG's $1.50 per share bid, representatives of RCBA
advised the Company that they would not be in a position to top TKG's $1.50 per
share offer without seeking additional authority from their financing sources.
Thereafter, on January 31, 1998, Mr. Marquis telephoned Mr. Kontrabecki,
informed him that TKG had won the bidding, advised that Triad would terminate
the First Blum Merger Agreement at 12:01 a.m. on February 1, and scheduled a
meeting at the Company for 8:00 a.m. that same day to sign the Merger Agreement.
19. On the morning of February 1, 1998, Mr. Kontrabecki and his
counsel presented themselves at the Company to sign the Merger Agreement.
4
<PAGE> 23
20. During the course of an ensuing meeting, Mr. Murray Indick,
managing director of RCBA and Mr. Blum's representative, entered and announced
that RCBA was prepared to bid $1.55 per share.
21. Before the Company responded, the Blum Group unilaterally
increased its offer to $1.60 per share.
22. TKG responded that it was prepared to submit a topping bid,
but only on a "best and final" sealed basis. Triad's representatives and the
Blum Group agreed to this procedure.
23. Both parties then submitted "best and final" sealed bids.
TKG's bid of $1.65125, when opened, was declared to be the successful, high bid.
TKG and Triad then entered into the Merger Agreement.
24. TKG's winning bid of $1.65125 per share was roughly 25% higher
than the offer which Triad had accepted in the First Blum Merger Agreement.
25. The Merger Agreement is substantially unconditional in form,
and contemplates a cash merger (the "Merger") occurring on or before March 31,
1998. Although TKG's earlier bids contained a financing contingency, that
contingency was removed in the final rounds of bidding, and TKG does not have a
financing "out" under the Merger Agreement.
26. Between February 1, 1998 and the date of this Verified
Complaint, TKG has cooperated with the Company to take all steps necessary to
assure that a meeting of share holders of Triad is convened prior to March 31,
1998, as it was required to do by the Merger Agreement.
27. In fact, as of the date of this pleading, the SEC had cleared
the proxy materials for the meeting, and such materials have been mailed to all
Triad share holders. The meeting of
5
<PAGE> 24
share holders to consider the Merger has been set to take place next week, on
March 25. At this very moment, the share holders of Triad are voting on whether
or not to approve the Merger.
THE BLUM GROUP ATTEMPTS TO DERAIL THE SCHEDULED
SHARE HOLDERS MEETING
28. On March 11, 1998, as proxy materials for the March 25 meeting
were being mailed to share holders, Blum prepared and sent a letter to the Triad
Advisory Board (the "March 11 Proposal"). The March 11 Proposal, which is
attached hereto as Exhibit A, purported to offer an additional 4 7/8 cents per
share over the Merger price, provided that the Advisory Board immediately took
steps to terminate the Merger Agreement.
29. Importantly, although RCBA was a party which had committed
itself to the First Blum Merger Agreement, the March 11 Proposal expressly
states that RCBA would not be a party to any transaction which resulted from it.
Instead an apparently unfinanced shell entity would enter into a contract with
Triad. The March 11 Proposal went so far as to say that RCBA would not guarantee
any obligations of its shell entity in connection with any transaction which
would result from the proposal.
30. In addition to making the March 11 Proposal through an
unfinanced shell, the March 11 Proposal also makes clear that the Blum Group
would need at least an additional two months in order to consummate its proposed
transaction.
31. The March 11 Proposal was a highly illusory sham bid,
apparently designed solely to derail the March 25 share holder vote on the
Merger.
32. Following receipt of the March 11 Proposal, Mr. Kontrabecki
wrote to Mr. Marquis of the Triad Advisory Board, expressing TKG's view that the
March 11 Proposal was an
6
<PAGE> 25
ill conceived sham which did not give the Company the right to terminate the
Merger Agreement and pointing out its more obvious deficiencies.
33. Thereafter, TKG was advised that the Company had not deemed
the March 11 Proposal a "Superior Proposal" under the Merger Agreement, and
would not seek to terminate the Merger Agreement by virtue of the March 11
Proposal.
BLUM TRIES AGAIN . . .
34. Apparently undeterred, on March 13, 1998, the Blum Group
provided a new proposal to the Company, this time proposing to enter into a
transaction with the Company which involved RCBA at a price of $1.74 per share.
35. The March 13 proposal contains no reference to the basis upon
which the proposal, if accepted, would be financed by the Blum Group or RCBA.
36. The March 13 proposal continues to contemplate an extension of
the time to complete the transaction (and thus the time at which the share
holders of the Company would receive consideration for their shares) until at
least May 31, 1998, more than two full months later than cash would be available
to them under the Merger Agreement.
. . . AND AGAIN
37. Thereafter, the Blum Group sent yet another proposal, also
dated March 13, which purports to supersede its earlier proposal (the "Second
March 13 Proposal"). This new proposal further clarifies the circumstances under
which RCBA would receive a termination fee.
7
<PAGE> 26
38. The Second March 13 Proposal continues to be conspicuously
silent as to how the transaction it contemplates is to be financed.
39. The Second March 13 Proposal continues to expressly
contemplate that Triad share holders will be forced to wait at least another two
months to receive cash in a merger, provided that RCBA is able to clear the SEC
in that time and finance its latest proposal.
TKG RESPONDS TO BLUM'S LATEST ATTEMPT TO DERAIL ITS MERGER
40. The following day, March 14, TKG, through its counsel, wrote
to counsel for the Company and set forth its position with respect to the Blum
Group's March 13 proposals. A copy of this correspondence is attached hereto as
Exhibit B.
41. Specifically, TKG noted that the scheduled meeting of Triad
share holders would take place in only 11 days, and that the Blum proposal
expressly contemplated that it would take more than two months for share holders
to receive their money. Likewise, the TKG March 14 letter pointed to the lack of
any reference to financing whatsoever in the March 13 proposals, and the virtual
certainty that RCBA and its affiliates would need to finance the transaction.
42. In light of these facts, TKG argued that the March 13
proposals could not be considered economically superior to the existing Merger
Agreement, and that, in light of the impending meeting of share holders, it was
appropriate to allow the share holders to make their own decision as to whether
they preferred cash in hand now, or the possibility of more cash later, subject
to the risks and uncertainties inherent in Blum's ability to finance the
transaction and the significant delays built into the Blum proposals.
TRIAD IGNORES ITS CONTRACT WITH TKG
8
<PAGE> 27
43. Notwithstanding the exceedingly specific and clear
requirements of the Merger Agreement currently in effect, on March 14 the Triad
Advisory Board gave notice to TKG that it had concluded that Blum's March 13
proposal was a "Superior Proposal" under the contract, thus purporting to
trigger its right to terminate its agreement with TKG upon prior payment of the
termination fee. A copy of the notice sent by the Triad Advisory Board on March
14, which includes the March 13 proposals, is attached hereto as Exhibit C.
COUNT I
44. Plaintiff hereby repeats and realleges and incorporates by
reference paragraphs 1 through 43 as if fully set forth herein.
45. Under the Merger Agreement, Triad may terminate its Merger
Agreement with TKG only under specific and narrow circumstances.
46. In order for Triad to terminate its agreement with TKG under
the circumstances, the Second March 13 Proposal must be a "Superior Proposal" as
defined in the Merger Agreement.
47. As defined by Section 7.6(d) of the Merger Agreement, a
"Superior Proposal" is one which the Triad Advisory Board determines is more
favorable from a financial point of view than the existing Merger Agreement. The
Board must also conclude, in good faith, that it is "necessary" to accept the
proposal in order to avoid a breach of its fiduciary duties for it to be a
"Superior Proposal". In short, the Advisory Board may only deem a second
proposal "superior" when it is financially superior and when the fiduciary law
imposes a requirement that it do so.
48. In light of the uncertainties inherent in the ability of RCBA
to clear proxy materials with the SEC, the long time lag between the acceptance
of the Second March 13
9
<PAGE> 28
Proposal and the date on which share holders will be able to receive
consideration for their shares and the definitive nature of the existing Merger
Agreement, which is scheduled to be voted upon by share holders on March 25, the
fiduciary duties of the Advisory Board of this limited liability company, to the
extent that they exist, do not require the Advisory Board to accept the Second
March 13 Proposal.
49. In addition to the foregoing, in order to terminate the
existing Merger Agreement between the parties, the Triad Advisory Board had to
conclude that the Second March 13 Proposal was one as to which "financing, to
the extent required, is then committed". (Merger Agreement, Section 7.6(d)).
50. On information and belief, based upon the size of the proposed
transaction and the financial wherewithal of RCBA, as well as the financing
plans for the First Blum Merger Agreement, RCBA or its shell entity will require
financing in order to consummate the transaction contemplated by the Second
March 13 Proposal.
51. Under the terms of the existing Merger Agreement, Triad is
required to keep TKG informed of its communications with RCBA.
52. To date, Triad has not informed TKG that it has received
evidence of committed financing by RCBA or its affiliated entities.
53. On information and belief, RCBA and its affiliates have not
delivered any definitive financing commitment to the Company in connection with
their proposed transaction.
54. Under the plain language of the Merger Agreement an unfinanced
merger proposal is not a "Superior Proposal" which would permit Triad to seek to
terminate the Merger Agreement.
10
<PAGE> 29
55. Notwithstanding the binding contract between Triad and TKG,
Triad has purported to deliver a "Superior Proposal Notice" with respect to the
Second March 13 Proposal, thus serving notice of its intent to breach its
contract with TKG.
56. Under Section 11.5 of the Merger Agreement, the parties agreed
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 . . ."
57. By reason of the acts set forth above, TKG is threatened with
imminent and irreparable harm.
58. TKG has no adequate remedy at law.
COUNT II
59. Plaintiff repeats, realleges and incorporates by reference
each of the allegations of paragraphs 1 through 58 of the Complaint as if fully
set forth herein.
60. Under the Merger Agreement, even in the presence of a
"Superior Proposal", which the Second Blum March 13 Proposal is not, Triad may
not terminate the Merger Agreement without first paying a termination fee in the
amount of $1.2 million to TKG.
61. The terms of the Second March 13 Proposal contemplate a
payment of the amount of the termination fee to Triad upon the termination of
the Merger Agreement and execution of a new merger agreement with RCBA.
11
<PAGE> 30
62. Triad does not have the right to terminate the Merger
Agreement under these circumstances, even if, contrary to fact, the Second March
13 Proposal were a Superior Proposal.
63. Triad itself does not have sufficient liquidity to pay the TKG
termination fee without rendering itself insolvent.
64. TKG will suffer irreparable harm in the event that its
contractual rights are ignored by the Company.
65. TKG has no adequate remedy at law.
COUNT III
66. Plaintiff hereby repeats, realleges and incorporates by
reference as if fully set forth herein the allegations of paragraphs 1 through
65 of the Complaint.
67. Under Section 7.6(d) of the Merger Agreement in order to
accept a Superior Proposal, Triad is under an obligation to make "irrevocable
arrangements" assuring the payment of the termination fee provided by the
contract.
68. Assuming, arguendo, that the Second March 13 Proposal is
otherwise a "Superior Proposal" -- which it is not -- it does not constitute an
"irrevocable arrangement" assuring TKG the payment of its termination fee.
69. Absent making "irrevocable arrangements" assuring TKG the
payment of its termination fee, Triad does not have the right under the Merger
Agreement to terminate the contract to accept a "Superior Proposal".
70. Absent injunctive and other equitable relief, TKG will suffer
irreparable harm as a result of this breach of the contract.
71. TKG has no adequate remedy at law.
12
<PAGE> 31
WHEREFORE, plaintiff The Kontrabecki Group demands that the Court enter
its Orders, Judgments and Decrees:
a. temporarily, preliminarily and permanently enjoining
Triad from taking any action to terminate the Merger Agreement based on the
Second March 13 Proposal;
b. temporarily, preliminarily and permanently enjoining
Triad from taking any action to frustrate the right of the share holders of
Triad from considering and voting upon the Merger Agreement at the scheduled
March 25 meeting;
c. specifically enforcing all of the terms and
conditions of the Merger Agreement, including those described above;
d. awarding such other and further relief as may
appropriate and just in the circumstances; and
13
<PAGE> 32
e. awarding plaintiff its costs of bringing this action,
including its attorneys' fees.
/s/ Gregory V. Varallo
Gregory V. Varallo
Catherine G. Dearlove
Richards, Layton & Finger
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
(302) 658-6541
Attorneys for Plaintiff
OF COUNSEL:
Shirli F. Weiss
Gray Cary Ware & Freidenrich LLP
401 "B" Street, Suite 1700
San Diego, California 92101
(619) 699-2700
Dated: March 16, 1998
14
<PAGE> 33
STATE OF CALIFORNIA )
) SS:
COUNTY OF SAN MATEO )
VERIFICATION
John T. Kontrabecki, President of The Kontrabecki Group, Inc., the
plaintiff in this action, being duly sworn, hereby verifies that I have read the
foregoing complaint, and that the facts recited therein are true and correct to
the best of my knowledge, information and belief.
/s/ John T. Kontrabecki
-----------------------------------------
John T. Kontrabecki
President
The Kontrabecki Group, Inc.
SWORN TO AND SUBSCRIBED before me
this 16th day of March, 1998.
/s/
- --------------------------------
My Commission Expires: _____________
15
<PAGE> 34
ATTACHMENT I
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
THE KONTRABECKI GROUP, INC., a )
California corporation, )
)
Plaintiff, )
)
v. ) C.A. No. 16256
)
TRIAD PARK, LLC, a Delaware limited )
liability company, )
)
Defendant. )
ORDER ON PLAINTIFF'S MOTION
FOR A TEMPORARY RESTRAINING ORDER
Upon the motion of plaintiff The Kontrabecki Group, Inc., ("TKG") for a
temporary restraining order, the Court having considered the motion and the
papers submitted in support of and in opposition to the motion, having heard and
considered the argument of counsel, and good cause having been shown therefor,
IT IS HEREBY ORDERED, this 18th day of March, 1998, as follows:
1. Defendant Triad Park, LLC ("Triad"), its Advisory Board,
Manager, officers, agents, employees, and attorneys are ordered to facilitate a
decision by share holders of Triad to approve or reject the Agreement and Plan
of Merger between Triad, TKG and Acquisition LLC (the "Merger Agreement") after
having been fully advised of the March 13, 1998 merger proposal (the "RCBA
Proposal") from Richard C. Blum & Associates, L.P. and TPL Acquisition
(collectively "RCBA").
-1-
<PAGE> 35
2. Triad, its Advisory Board, Manager, officers, agents,
employees and attorneys, and all other persons in active concert or
participating with Triad, are hereby enjoined, until further Order of this
Court, from taking any steps to terminate the Merger Agreement based on either
or both of the two March 13, 1998 proposals from RCBA.
3. Triad, its Advisory Board, Manager, officers, agents,
employees and attorneys, and all other persons in active concert or
participating with Triad, are hereby enjoined, until further Order of this
Court, from taking any action to cancel the meeting of share holders of Triad
currently scheduled for March 25, 1998 (the "Meeting"), or to postpone the
Meeting beyond March 28, 1998 at 5:00 p.m. (California time).
4. Triad, its Advisory Board, Manager, officers, agents,
employees and attorneys are ordered to comply with applicable law and shall
promptly disseminate disclosure of the following information in any manner
reasonably calculated to inform Triad share holders:
a. that Triad received on March 11, 1998 a proposal from
RCBA, contemplating the acquisition of Triad, the terms of such proposal, and
TKG's letter of March 12, 1998 in response thereto;
b. that Triad on March 13, 1998 received from RCBA two
revised proposals for the acquisition of Triad, the terms of such proposals, and
the letters of TKG and its counsel dated March 14, 1988 in response thereto;
c. that, believing the March 13 proposals from RCBA to
be "Superior Proposals" within the definition of that term under the Merger
Agreement, the Triad Advisory Board caused its counsel to send to TKG a
"Superior Proposal Notice," contemplating the termination of the Merger
Agreement in favor of the March 13 proposals from RCBA, and that
-2-
<PAGE> 36
TKG brought litigation in respect thereof, including a full and fair description
of the claims in litigation;
d. that upon consideration of TKG's motion to restrain
the termination of the Merger Agreement, the Court, notwithstanding the Advisory
Board's determination, concluded that plaintiff TKG had demonstrated a colorable
claim that the RCBA proposal did not constitute a "Superior Proposal" under the
Merger Agreement and restrained the Company from terminating the Merger
Agreement, and from canceling or postponing the share holders' meeting beyond
March 28, 1998; and
e. that the Court determined that in deciding whether to
accept or reject the Merger Agreement, it would be appropriate for share holders
to be informed of the receipt of the RCBA proposals and the other matters set
forth in this Order so as to be in a position to make a fully informed choice on
the Merger Agreement.
5. The Advisory Board, by providing the Triad share holders with
the information reflecting its actions in regard to the TKG Merger Agreement and
the RCBA proposal as set forth above and reflected on Exhibit A hereto, and its
attachments, shall not be deemed to have breached the TKG Merger Agreement.
6. Nothing contained herein shall be construed to prevent TKG or
RCBA from communicating, in any manner, including any manner utilized by Triad,
their position with respect to the RCBA proposals to the share holders of Triad.
7. By complying with the terms of this Order, the Advisory Board
shall not be in a breach of its fiduciary duties to the Triad share holders with
respect to the RCBA proposal.
-3-
<PAGE> 37
8. This order shall be effective immediately, subject to the
filing or service upon opposing counsel by plaintiffs of a cash bond or a bond
of a corporate surety in the amount of One Hundred Thousand Dollars
($100,000.00) on or before March 23, 1998, at 5:00 p.m.
/s/ Myron T. Steele
---------------------------------------
Vice Chancellor
-4-
<PAGE> 38
ATTACHMENT J
News From:
TRIAD PARK, LLC
Contact: Stan Marquis
510 449-0606, ext. 6300
TRIAD PARK, LLC RECEIVES NEW MERGER PROPOSAL; DELAWARE CHANCERY COURT ORDERS
SHAREHOLDERS' MEETING
LIVERMORE, Calif., March 19, 1998 -- The Advisory Board of Triad Park, LLC
("Triad Park") today announced it has received a new merger proposal from TPL
Acquisition, LLC ("TPL") and Richard C. Blum & Associates, L.P. (collectively
with TPL, "RCBA"). Under the new proposal from RCBA, all outstanding membership
interests in Triad Park would be exchanged for $1.74 per share in cash. Under
the current merger agreement with TKG Acquisition Company, LLC ("TKG
Acquisition"), Triad Park's outstanding membership interests are to be exchanged
for $1.65125 per share in cash.
Triad Park has previously entered into a merger agreement with TKG Acquisition
and its sole and managing member, The Kontrabecki Group, Inc. (d/b/a TKG
International)("TKG") on February 1, 1998 (the "Merger Agreement"). The merger
contemplated by the Merger Agreement is subject to approval by Triad Park's
shareholders and a special shareholders' meeting is scheduled for March 25,
1998. However, under the terms of the Merger Agreement, if the Advisory Board of
Triad Park receives a proposal which it determines to be more favorable from a
financial point of view to Triad Park's shareholders than the TKG Acquisition
proposal, Triad Park must give notice to TKG Acquisition of the superior
proposal and observe a five business day waiting period before terminating the
Merger Agreement and entering into a new merger agreement with RCBA. Triad Park
determined that RCBA's offer constituted a "superior proposal" under the Merger
Agreement and delivered notice of the RCBA proposal to TKG Acquisition on
Saturday, March 14.
On Monday, March 16, TKG Acquisition filed suit with the Delaware Court of
Chancery seeking a temporary restraining order to prevent Triad Park's
termination of the Merger Agreement. On Tuesday, March 17, the Court issued a
temporary restraining order which prevents Triad Park from terminating the
Merger Agreement until further order of the court. The Court noted that,
although the Advisory Board had determined that RCBA's offer constituted a
"superior proposal" under the Merger Agreement, TKG Acquisition had nevertheless
demonstrated a colorable claim that the RCBA proposal did not constitute a
"superior proposal" under the Merger Agreement. The Court also ordered that
Triad Park hold a shareholders' meeting no later than March 28, 1998 and ordered
disclosure of the RCBA proposal.
Triad Park will mail to its shareholders supplemental proxy solicitation
materials, including copies of this press release, correspondence with RCBA and
TKG, the complaint filed by TKG in Delaware, and the Delaware Court of
Chancery's written restraining order. In addition, upon request, Triad Park will
provide to shareholders a copy of the TKG complaint filed against RCBA in the
United States District Court for the Northern District of California.
<PAGE> 39
If the Merger Agreement is approved by the shareholders at the meeting, the
merger with TKG Acquisition at $1.65125 per share will close promptly. If the
Merger Agreement is rejected by Triad Park's shareholders, Triad Park will enter
into a new merger agreement with RCBA at $1.74 per share. Under a new RCBA
merger agreement, a closing would likely not occur prior to May 31, 1998.
Triad Park was created in February 1997 upon the acquisition of Triad Systems
Corporation by Cooperative Computing, Inc., of Austin, Texas. Shareholders of
Triad System Corporation received one Triad Park membership share for each share
of Triad Systems Corporation common stock. Triad Park's assets consist of
approximately 300 acres of property formerly owned by Triad Systems Corporation
and the company's 220,000-square-foot headquarters facility. Triad Park also
assumed approximately $20.7 million of indebtedness previously secured by the
spun-off real estate and was formed to liquidate its real estate portfolio, with
proceeds used to pay expenses (including taxes), repay secured debt and
distribute any remaining proceeds to holders of Triad Park membership interests.
2
<PAGE> 40
TRIAD PARK, LLC
3055 TRIAD DRIVE
LIVERMORE, CALIFORNIA 94550
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS MARCH 25, 1998
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 February 20, 1998, at the
Special Meeting of Shareholders of the Company, to be held on March 25, 1998 at
10:00 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 February 1, [ ] FOR THE MERGER [ ] AGAINST THE MERGER [ ] ABSTAIN
1998, by and among The Kontrabecki Group, Inc.,
TKG Aquisition Company, LLC and Triad Park, LLC,
as amended
</TABLE>
(continued, and to be dated and signed, on other side)
<PAGE> 41
2. To adjourn the meeting to permit further solicitation of proxies in the event
there are not sufficient votes to approve and adopt the Merger Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. 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.)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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" ITEMS 1, 2 AND 3.
SIGNATURE(S)
-----------------------------------
-----------------------------------
Dated: , 1998
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.
