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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(E) OF THE SECURITIES EXCHANGE ACT OF 1934)
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TRIAD PARK, LLC
(Name of the Issuer)
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TPL ACQUISITION, LLC
(Name of Person(s) Filing Statement)
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MEMBERSHIP INTERESTS, NO PAR VALUE
(Title of Class of Securities)
895814101
(CUSIP Number of Class of Securities)
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MURRAY A. INDICK, ESQ.
MANAGING DIRECTOR, GENERAL COUNSEL
RICHARD C. BLUM & ASSOCIATES, L.P.
900 MONTGOMERY STREET, SUITE 400
SAN FRANCISCO, CALIFORNIA 94133
TELEPHONE: (415) 434-1111
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Person(s) Filing Statement)
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This Statement is filed in connection with (check the appropriate box):
a. [ ] The filing of solicitation materials or an information statement subject
to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under the Securities
Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of 1933.
c. [X] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials statement referred to
in checking box (a) are preliminary copies. [ ]
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
$31,852,737 $6,370.55
</TABLE>
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* Estimated for purposes of calculating the amount of the filing fee only.
The amount assumes the purchase by TPL ACQUISITION, LLC of 17,695,965
Shares (defined below) of the Issuer at a price per Share of $1.80 net to
the seller in cash. Such number of Shares represents all of the Shares
outstanding as of March 28, 1998, other than Shares held directly or
indirectly by Richard C. Blum & Associates, L.P. and Richard C. Blum.
** 1/50th of 1% of Transaction Valuation.
[ ] Check box if any part of the fee is offset as provided by 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 the Form
or Schedule and the date of its filing.
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Amount Previously Paid: N/A
Form or Registration No.: N/A
Filing Party: N/A
Date Filed: N/A
</TABLE>
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TENDER OFFER
This Rule 13e-3 Transaction Statement is filed by TPL Acquisition, LLC, a
Delaware limited liability company (the "Purchaser"), relating to the offer by
the Purchaser to purchase all of the outstanding membership interests, no par
value (the "Membership Interests") of Triad Park, LLP (the "Issuer"), including
the associated rights to purchase Membership Interests issued pursuant to the
Company's Rights Plan (as such term is defined in the Offer to Purchase, dated
April 1, 1998 (the "Offer to Purchase")) (the "Rights" and together with the
Membership Interests, the "Shares"), at a price of $1.80 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase and in the related Letter of Transmittal, copies of which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively (which, as may be
thereafter amended, collectively constitute the "Offer").
The cross reference sheet below is being supplied pursuant to Instruction F
to Schedule 13E-3 and shows the location in the Schedule 14D-1, filed by the
Purchaser with the Securities and Exchange Commission contemporaneously herewith
(the "Schedule 14D-1"), of the information required to be included in response
to Items of this Schedule 13E-3. The information in the Schedule 14D-1 is
incorporated herein by reference.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings ascribed to such terms in Exhibit (a)(1) hereto, the
Offer to Purchase.
CROSS REFERENCE SHEET
WHERE LOCATED IN THE SCHEDULE
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<CAPTION>
ITEM IN SCHEDULE 13E-3 14D-1
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<S> <C>
Items 1(a)-(c).............................................. Items 1(a)-(c)
Items 1(d)-(f).............................................. *
Item 2...................................................... Item 2
Item 3(a)(1)................................................ Item 3(a)
Item 3(a)(2)................................................ Item 3(b)
Item 3(b)................................................... *
Item 4(a)................................................... *
Item 4(b)................................................... **
Item 5...................................................... Item 5
Item 6(a)................................................... Item 4(a)
Item 6(b)................................................... *
Item 6(c)................................................... Item 4(b)
Item 6(d)................................................... Item 4(c)
Item 7(a)................................................... Item 5
Item 7(b)................................................... **
Items 7(c)-(d).............................................. *
Items 8(a)-(e).............................................. *
Item 8(f)................................................... **
Items 9(a)-(c).............................................. *
Item 10(a).................................................. Item 6(a)
Item 10(b).................................................. Item 6(b)
Item 11..................................................... Item 7
Item 12..................................................... *
Item 13(a).................................................. *
Items 13(b)-(c)............................................. **
Item 14(a).................................................. *
Item 14(b).................................................. **
Item 15(a).................................................. **
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<TABLE>
<CAPTION>
ITEM IN SCHEDULE 13E-3 14D-1
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<S> <C>
Item 15(b).................................................. Item 8
Item 16..................................................... Item 10(f)
Item 17(a).................................................. *
Items 17(b)-(c)............................................. Items 11(b)-(c)
Item 17(d).................................................. *
Item 17(e).................................................. *
Item 17(f).................................................. Item 11(f)
</TABLE>
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* Information in response to these Items of this Schedule 13E-3 is not required
to be included in the Schedule 14D-1.
** Not applicable.
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a) The name of the issuer is Triad Park, LLP, a Delaware limited liability
company (the "Company"). The address of the Company's principal executive
offices is 3055 Triad Drive, Livermore, California 94550.
(b) The class of equity security to which this Rule 13e-3 Transaction
Statement relates is the membership interests, no par value, of the Company (the
"Membership Interests"), including the associated rights to purchase Membership
Interests issued pursuant to the Company's Rights Plan (the "Rights" and
together with the Membership Interests, the "Shares"). As of February 20, 1998,
the Company had approximately 1,400 shareholders of record. The information set
forth in the Offer to Purchase under "Introduction" is incorporated herein by
reference.
(c) The information set forth in the Offer to Purchase under "The Tender
Offer -- Price Range of Shares; Distributions on the Shares" is incorporated
herein by reference.
(d) The information set forth in the Offer to Purchase under "The Tender
Offer -- Price Range of the Shares; Distributions on the Shares" is incorporated
herein by reference. To the best of RCBA's and the Purchaser's knowledge, there
are no restrictions on the Issuer's present or future ability to pay dividends.
(e) Not applicable
(f) None.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(g) The answer to Item 2 of the Schedule 14D-1 is incorporated herein
by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a)-(b) The answer to Item 3 of the Schedule 14D-1 is incorporated herein
by reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a) The information set forth in the Offer to Purchase under "Introduction"
and "The Tender Offer -- Terms of the Offer" is incorporated herein by
reference.
(b) None.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a)-(g) The answer to Items 5(a)-(g) of the Schedule 14D-1 is incorporated
herein by reference.
ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS.
(a) The answer to Item 4 of the Schedule 14D-1 is incorporated herein by
reference.
2
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(b) The information set forth in the Offer to Purchase under "The Tender
Offer -- Fees and Expenses" is incorporated herein by reference. The Company has
not paid and will not be responsible for paying any of the expenses incurred or
estimated to be incurred in connection with the Rule 13e-3 transaction.
(c) The information set forth in the Offer to Purchase under "The Tender
Offer -- Source and Amount of Funds" is incorporated herein by reference.
(d) Not applicable.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
(a) The information set forth in the Offer to Purchase under
"Introduction," "Special Factors -- Purpose and Structure of the Offer" and "The
Tender Offer -- Effect of the Offer on the Market for the Shares; Exchange Act
Registration" is incorporated herein by reference.
(b)-(c) The information set forth in the Offer to Purchase under
"Introduction," "Special Factors -- Background," "-- Discussions with Third
Parties" and "-- Purpose and Structure of the Offer" is incorporated herein by
reference.
(d) The information set forth in the Offer to Purchase under
"Introduction," "Special Factors -- Purpose and Structure of the Offer,"
"-- Certain Effects of the Offer," "-- Certain Federal Income Tax Consequences"
and "The Tender Offer -- Effect of the Offer on the Market for the Shares,
Exchange Act Registration" is incorporated herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a)-(b) The Information set forth in the Offer to Purchase under "Special
Factors -- Background," "-- Discussions with Third Parties," "-- Sedway Report,"
"Board Approval of RCBA Merger Agreement and TKG Merger Agreement," "-- No
Fairness Opinion," "-- No Recommendation" and "-- Perspective of the Managers
and the Purchaser on the Offer" is incorporated herein by reference.
(c) The transaction is not structured such that approval of at least a
majority of unaffiliated security holders is required. The Rule 13e-3
transaction is based on a waivable condition that there be validly tendered and
not withdrawn prior to the expiration date of the Offer that number of Shares
that would constitute a majority of all outstanding Shares when combined with
the Shares held by Richard C. Blum & Associates, L.P., a California Limited
Partnership ("RCBA") and Richard C. Blum.
(d) The information set forth in the Offer to Purchase under "Special
Factors -- Perspective of the Managers and the Purchaser on the Offer" is
incorporated herein by reference.
(e) The information set forth in the Offer to Purchase under "Special
Factors -- No Recommendation" is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase under "Special
Factors -- Background" and "-- Discussions with Third Parties" is incorporated
herein by reference.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a) The information set forth in the Offer to Purchase under "Special
Factors -- Background," "-- Discussions with Third Parties," "-- Sedway Report,"
"-- No Fairness Opinion" and "-- Board Approval of RCBA Merger Agreement and TKG
Merger Agreement" is incorporated herein by reference.
(b) The information set forth in the Offer to Purchase under "Special
Factors -- Sedway Report," and "-- Board Approval of RCBA Merger Agreement and
TKG Merger Agreement" is incorporated herein by reference.
(c) The Sedway Report shall, upon request, be made available for inspection
and copying at the principal executive offices of RCBA during its regular
business hours by any interested holder of Shares or any such holder's
representative who has been so designated in writing.
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ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b) The information set forth under "The Tender Offer -- Certain
Information Concerning the Company -- Certain Interests in the Shares" is
incorporated herein by reference.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES.
The information set forth in the Offer to Purchase under "The Tender
Offer -- Certain Information Concerning the Company -- Certain Interests in the
Shares" is incorporated herein by reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION.
(a) After making reasonable inquiry, neither the Purchaser nor RCBA knows
whether any executive officer, director or affiliate of the Company or any
person enumerated in General Instruction C to Schedule 13E-3 will tender Shares
owned by such person or entity pursuant to the Offer.
(b) The information set forth in the Offer to Purchase under "Special
Factors -- No Recommendation" and " -- Perspective of the Managers and the
Purchaser on the Offer" is incorporated herein by reference.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTIONS.
(a) The information set forth in the Offer to Purchase under "Introduction"
is incorporated herein by reference.
(b)-(c) Not applicable.
ITEM 14. FINANCIAL INFORMATION.
(a)(1)-(2) The information set forth in the "Item 7. Financial Statements"
section of Annex I to the Offer to Purchase is incorporated herein by reference.
(a)(3)-(4) The information set forth in the Offer to Purchase under "The
Tender Offer -- Certain Information Concerning the Company -- Certain Financial
Information" is incorporated herein by reference.
(b) Not Applicable.
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a) None.
(b) The answer to Item 8 of the Schedule 14D-1 is incorporated herein by
reference.
ITEM 16. ADDITIONAL INFORMATION.
The answer to Item 10 of the Schedule 14D-1 is incorporated herein by
reference.
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ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
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(a) None.
(b) Sedway Report, dated July 27, 1997.
(c) None.
(d)(1) Offer to Purchase, dated April 1, 1998.
(d)(2) Letter of Transmittal with respect to the Shares.
(d)(3) Letter from Georgeson & Company Inc. to brokers, dealers,
banks, trust companies and nominees.
(d)(4) Letter to be sent by brokers, dealers, banks, trust
companies and nominees to their Clients.
(d)(5) Notice of Guaranteed Delivery.
(d)(6) IRS Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(e) Not applicable.
(f) Not applicable.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Dated: April 1, 1998
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<S> <C>
RICHARD C. BLUM & ASSOCIATES, L.P. RICHARD C. BLUM & ASSOCIATES, INC.
By: /s/ MURRAY A. INDICK By: /s/ MURRAY A. INDICK
---------------------------------- ----------------------------------
Murray A. Indick Murray A. Indick
Managing Director Managing Director, General Counsel
and General Counsel and Secretary
By: /s/ MURRAY A. INDICK
TPL ACQUISITION, LLC ---------------------------------------
By: Richard C. Blum & Associates, L.P. RICHARD C. BLUM
Its Managing Member
By: Murray A. Indick, Attorney-in-Fact
By: Richard C. Blum & Associates, Inc.,
its sole general partner
By: /s/ MURRAY A. INDICK
------------------------------
Murray A. Indick
Managing Director
and General Counsel
PELL DEVELOPMENT COMPANY
By: /s/ JOSEPH PELL
By: /s/ JOSEPH PELL ---------------------------------------
------------------------------- Joseph Pell
Joseph Pell
Owner By: /s/ EDA PELL
----------------------------------------
Eda Pell
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INDEX TO EXHIBITS
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SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGES
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<S> <C> <C>
(a) None.
(b) Sedway Report, dated July 27, 1997.
(c) None.
(d)(1) Offer to Purchase, dated April 1, 1998.
(d)(2) Letter of Transmittal with respect to the Shares.
(d)(3) Letter from Georgeson & Company Inc. to brokers, dealers,
banks, trust companies and nominees.
(d)(4) Letter to be sent by brokers, dealers, banks, trust
companies and nominees to their Clients.
(d)(5) Notice of Guaranteed Delivery.
(d)(6) IRS Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(e) Not applicable.
(f) Not applicable.
</TABLE>
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EXHIBIT (b)
SEDWAY GROUP
REAL ESTATE AND URBAN ECONOMICS
TRIAD PARK REAL
ESTATE ASSET
STRATEGY
PREPARED FOR:
BOARD OF DIRECTORS,
TRIAD PARK, LLC
JULY 22, 1997
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[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
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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>
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Use Gross Size Net Size
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<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
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</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
<PAGE> 10
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
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING MEMBERSHIP INTERESTS, NO PAR VALUE
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE
ADDITIONAL MEMBERSHIP INTERESTS (COLLECTIVELY, THE "SHARES"))
OF
TRIAD PARK, LLC
AT $1.80 NET PER SHARE
BY
TPL ACQUISITION, LLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, APRIL 29, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE OFFER THAT NUMBER
OF SHARES AS WOULD CONSTITUTE, WHEN COMBINED WITH THE SHARES OWNED BY RICHARD C.
BLUM & ASSOCIATES, L.P. ("RCBA") AND RICHARD C. BLUM AS OF THE DATE HEREOF, A
MAJORITY OF ALL OUTSTANDING SHARES OF TRIAD PARK, LLC (THE "COMPANY"), (II)
REDEMPTION OR WAIVER BY THE COMPANY OF ITS RIGHTS PLAN, AND (III) TERMINATION BY
THE COMPANY OF THE MERGER AGREEMENT BY AND AMONG THE COMPANY, THE KONTRABECKI
GROUP, INC. ("TKG") AND TKG ACQUISITION COMPANY, LLC PURSUANT TO WHICH TKG
OFFERED TO ACQUIRE THE SHARES OF THE COMPANY FOR $1.65125 PER SHARE.
THE OFFER IS NOT CONDITIONED UPON THE RECEIPT OF FINANCING.
---------------------
IMPORTANT
Any share holder (hereinafter, "shareholder") of the Company desiring to
tender all or any portion of such shareholder's Shares should either (i)
complete and sign the Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions in the Letter of Transmittal, have such
shareholder's signature thereon guaranteed if required by Instruction 1 to the
Letter of Transmittal, mail or deliver the Letter of Transmittal (or such
facsimile), or, in the case of a book-entry transfer effected pursuant to the
procedure set forth in "Tender Offer -- Procedure for Tendering Shares," an
Agent's Message (as defined herein) and any other required documents to the
Depositary and either deliver the certificates for such Shares to the Depositary
along with the Letter of Transmittal (or facsimile) or deliver such Shares
pursuant to the procedure for book-entry transfer set forth in "Tender
Offer -- Procedure for Tendering Shares" prior to the expiration of the offer,
or (ii) request such shareholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for such shareholder. A
shareholder having Shares registered in the name of a broker, dealer, commercial
bank, trust company or other nominee must contact such broker, dealer,
commercial bank, trust company or other nominee if such shareholder desires to
tender such Shares.
If a shareholder desires to tender Shares and such shareholder's
certificates for Shares are not immediately available or the procedure for
book-entry transfer cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, such shareholder's tender may be effected by following the procedure for
guaranteed delivery set forth in "Tender Offer -- Procedure for Tendering
Shares."
Questions and requests for assistance may be directed to Georgeson &
Company, Inc., the Information Agent, at its address and telephone numbers set
forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from the Information Agent or from
brokers, dealers, commercial banks and trust companies.
---------------------
The Information Agent for the Offer is:
GEORGESON & COMPANY INC.
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.
April 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION....................................................... 1
SPECIAL FACTORS.................................................... 2
BACKGROUND....................................................... 2
DISCUSSIONS WITH THIRD PARTIES................................... 3
PURPOSE AND STRUCTURE OF THE OFFER............................... 9
PLANS FOR THE COMPANY AFTER THE OFFER............................ 10
SEDWAY REPORT.................................................... 10
BOARD APPROVAL OF RCBA MERGER AGREEMENT AND TKG MERGER
AGREEMENT..................................................... 11
NO FAIRNESS OPINION.............................................. 12
NO RECOMMENDATION................................................ 12
PERSPECTIVE OF THE MANAGERS AND THE PURCHASER ON THE OFFER....... 12
CERTAIN EFFECTS OF THE OFFER..................................... 13
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES..................... 14
THE TENDER OFFER................................................... 16
1. TERMS OF THE OFFER.......................................... 16
2. PROCEDURES FOR TENDERING SHARES............................. 17
3. WITHDRAWAL RIGHTS........................................... 20
4. ACCEPTANCE FOR PAYMENT AND PAYMENT.......................... 20
5. PRICE RANGE OF SHARES; DISTRIBUTIONS ON THE SHARES.......... 21
6. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE
ACT REGISTRATION.......................................... 22
7. CERTAIN INFORMATION CONCERNING THE COMPANY.................. 22
8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND THE
MANAGERS.................................................. 25
9. SOURCE AND AMOUNT OF FUNDS.................................. 26
10. DISTRIBUTIONS............................................... 26
11. CERTAIN CONDITIONS OF THE OFFER............................. 26
12. CERTAIN LEGAL MATTERS....................................... 29
13. FEES AND EXPENSES........................................... 31
14. MISCELLANEOUS............................................... 32
15. ADDITIONAL INFORMATION...................................... 32
SCHEDULE I
MANAGEMENT OF THE COMPANY, RCBA, RCBA, INC. AND PELL............. 33
ANNEX I
FORM 10-KSB OF THE COMPANY....................................... I-1
</TABLE>
i
<PAGE> 3
INTRODUCTION
TPL Acquisition, LLC, a Delaware limited liability company (the
"Purchaser"), currently solely managed by Richard C. Blum & Associates, L.P., a
California limited partnership ("RCBA"), and, upon consummation of the Offer,
intended to be co-managed with Pell Development Company, a California sole
proprietorship ("Pell" and, together with RCBA, the "Managers"), hereby offers
to purchase all outstanding membership interests, no par value (the "Membership
Interests") of Triad Park, LLC, a Delaware limited liability company (the
"Company"), including the associated rights to purchase Membership Interests
issued pursuant to the Rights Plan (as such term is defined herein) (the
"Rights" and together with Membership Interests, the "Shares"), at a price of
$1.80 per Share, net to the seller in cash, without interest thereon (the "Offer
Price"), upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which, as amended from time
to time, together constitute the "Offer").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions. Except as set forth in Instruction 6 of the Letter of Transmittal,
tendering shareholders will not be obligated to pay transfer taxes on the
purchase of Shares pursuant to the Offer. The Purchaser will pay all charges and
expenses of Harris Trust Company of New York, as Depositary (the "Depositary"),
and Georgeson & Company Inc., as Information Agent (the "Information Agent"),
incurred in connection with the Offer. See "Tender Offer--Fees and Expenses."
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE OFFER THAT NUMBER
OF SHARES AS WOULD CONSTITUTE, WHEN COMBINED WITH THE SHARES OWNED BY RCBA AND
RICHARD C. BLUM AS OF THE DATE HEREOF, A MAJORITY OF ALL OUTSTANDING SHARES OF
TRIAD PARK LLC (THE "MINIMUM CONDITION"), (II) REDEMPTION OR WAIVER BY THE
COMPANY OF ITS RIGHTS PLAN, AND (III) TERMINATION BY THE COMPANY OF THE MERGER
AGREEMENT BY AND AMONG THE COMPANY, THE KONTRABECKI GROUP INC. ("TKG") AND TKG
ACQUISITION COMPANY, LLC PURSUANT TO WHICH TKG OFFERED TO ACQUIRE THE SHARES OF
THE COMPANY FOR $1.65125 PER SHARE. THE OFFER IS NOT CONDITIONED UPON THE
RECEIPT OF FINANCING. The Purchaser reserves the right (subject to the
applicable rules of the Securities and Exchange Commission (the "Commission")),
which it presently has no intention of exercising, to waive or reduce the
Minimum Condition. See "Special Benefits -- Purpose and Structure of the Offer,"
"Tender Offer -- Terms of the Offer" and "-- Certain Conditions of the Offer."
Certain other conditions to this Offer are described in "Tender Offer -- Certain
Conditions of the Offer." The Purchaser expressly reserves the right, in its
sole discretion, to waive any one or more of the conditions to the Offer. See
"Tender Offer -- Terms of the Offer," "-- Certain Conditions of the Offer" and
"-- Certain Legal Matters."
The purpose of the Offer is to gain control of the Company so to effect a
merger (the "Merger") of the Purchaser with and into the Company on or after
August 1, 1998, without requiring the affirmative vote of any other shareholder
of the Company. If the Offer is successful and the Merger occurs, each
outstanding Share (other than Shares owned by the Purchaser or the Company or
any of their subsidiaries) will be converted into the right to receive an amount
in cash equal to the price per Share paid pursuant to the Offer, without
interest thereon. See "Special Conditions -- Purpose and Structure of the Offer"
and "-- Plans for the Company after the Offer."
No appraisal rights are provided for the Company's shareholders under the
Delaware Limited Liability Company Act or under the Company's limited liability
company agreement in the event of a merger of the Company in which each
outstanding Share will be converted into the right to receive cash. If the
Merger is effected, neither the Company, the Purchaser nor the Managers intend
to provide appraisal rights to the Company shareholders who object to the
transactions contemplated by the Merger. Neither the Company, the Purchaser, nor
the Managers is aware of any appraisal rights available under applicable law to
any shareholder who objects to the Merger.
The Company has informed the Purchaser that, as of March 28, 1998, there
were 19,708,123 Shares issued and outstanding. Based upon the foregoing and
assuming that no additional Shares are issued after
1
<PAGE> 4
March 28, 1998, there would be 19,708,123 Shares outstanding on a fully diluted
basis. As of April 1, 1998, RCBA owns 1,998,158 Shares and Richard C. Blum owns
14,000 Shares of the Company, for a total of 2,012,158 Shares. Thus, assuming
that no additional Shares are issued after March 28, 1998, 7,841,904 Shares
would need to be tendered by shareholders other than RCBA and Richard C. Blum in
order for the Minimum Condition to be satisfied. The actual number of Shares
required to be tendered to satisfy the Minimum Condition will depend upon the
number of Shares outstanding on the date that the Purchaser accepts Shares for
payment pursuant to the Offer. If the Minimum Condition is satisfied and the
Purchaser accepts for payment Shares tendered pursuant to the Offer, the Share
holdings of the Purchaser, RCBA and Richard C. Blum would, together, represent
not less than 50.0% of the total number of Shares outstanding. Thus, the
Purchaser, together with RCBA and Richard C. Blum, would be able to elect a
majority of the members of the Company's Advisory Board and to effect the Merger
without the affirmative vote of any other shareholder of the Company. See
"Special Factors -- Purpose and Structure of the Offer" and "-- Plans for the
Company after the Offer."
The information concerning the Company contained in this Offer to Purchase
has been taken from or based upon publicly available documents on file with the
Commission and other publicly available information. Although the Purchaser does
not have any knowledge that any such information is untrue, the Purchaser takes
no responsibility for the accuracy or completeness of such information or for
any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
Certain U.S. federal income tax consequences of the sale of Shares pursuant
to the Offer are described in "Special Conditions -- Certain Federal Income Tax
Consequences."
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
SPECIAL FACTORS
BACKGROUND
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."). As of December 31, 1997, these assets
consisted primarily 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 292 acres of undeveloped land
located in Triad Park (the "Land", the Land and the Headquarters, collectively
the "Property"). 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 to purchase
all of the outstanding shares of common stock of Triad. CCI's 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 CCI's offer. The Company was organized
under the laws of the State of Delaware as a limited liability company on
February 10, 1997 as part of the 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. The dividend of
the Company's shares to Triad's stockholders was declared on February 26, 1997.
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").
The Company's manager is 3055 Management Corp., a California corporation
("Management Corp."). As of the date of the Company's formation, the Company's
Shares were owned 99% by the former shareholders of Triad and 1% by Management
Corp. Management Corp. is the exclusive operator of the
2
<PAGE> 5
Company's business except that certain actions require the approval of its
Advisory Board (the "Advisory Board"). The members of the Company's Advisory
Board are Stanley F. Marquis, James R. Porter, William W. Stevens and Martin W.
Inderbitzen. Additional information regarding each member of the Advisory Board
may be found on Schedule I.
RCBA's President and Chairman, Richard C. 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 the
Company's common stock.
When Management Corp. was formed in February 1997, all of the outstanding
stock was issued in equal amounts to Richard C. Blum, William W. Stevens and
James R. Porter, three former directors of the Company. Richard C. Blum was also
a vice president and director of Management Corp. On August 8, 1997, Richard C.
Blum resigned from the Board of Directors and also resigned as vice president of
Management Corp. On September 5, 1997, Richard C. Blum assigned his shares in
Management Corp. over to Messrs. Stevens and Porter. Richard C. Blum was never a
member of the advisory board of Management Corp.
DISCUSSIONS WITH THIRD PARTIES
In addition to the negotiations with RCBA, the Company has had discussions
with several other parties as described below.
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 have not resulted in
any formal actions by the Company's Advisory Board.
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 purchase 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, General Partner of T.V.O.B. General Partnership
("TVOB"), met with Stanley F. Marquis, a member of the Company's Advisory Board,
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 and Mr.
Marquis met with Mr. Kendall and Joseph A. Duffel, General Partner of TVOB. The
parties discussed general due diligence issues and certain contingent
liabilities of the Company. Mr. Marquis 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.
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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, to clarify Lincoln's position with respect to the
Company's other 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. ("PeopleSoft"), 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 have
been assuming the Company's 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 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 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, 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 (see "-- Contracts and Negotiations with RCBA")
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.
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
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<PAGE> 7
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.
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 an
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 delivered to McCutchen, Doyle, Brown & Enersen, LLP, the Company's
outside legal counsel ("McCutchen"), a draft merger agreement which contemplated
a transaction whereby the Purchaser 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, L.L.C. (a potential investor with RCBA), Rick Mariano,
an employee of RCBA, Mr. McReynolds, Mr. Marquis, Patrick J. Kernan, legal
counsel to the Company 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
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 would lease 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
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
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
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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 liabilities.
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 Edward S. 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 such
merger agreement was executed on September 9, 1997 (the "RCBA Merger
Agreement").
On November 7, 1997, after the Company had entered into the RCBA Merger
Agreement, the Company received a preliminary proposal from The Kontrabecki
Group ("TKG") dated November 6, 1997 at a price of $28.5 million which, after
payment of the termination fee to RCBA, would result in a per Share price to the
shareholders of $1.38, or $0.06 per Share in excess of the price in the RCBA
Merger Agreement. Because the proposal could have led to a "Superior Proposal"
under the RCBA Merger Agreement, which would allow termination of the Merger
Agreement, the Company entered into a confidentiality agreement with TKG on
November 25, 1997 and provided TKG detailed due diligence information regarding
the Company and its properties.
During the fall of 1997, the Company and RCBA prepared and filed a joint
Schedule 13e-3 Transaction Statement with the Commission in connection with the
proposed acquisition of the Company by RCBA (the "Joint Schedule 13e-3
Transaction Statement").
On December 16, 1997, the Company received a revised proposal letter from
TKG with different conditions. This revised proposal was accompanied by a draft
definitive merger agreement under separate cover. This revised proposal remained
subject to conditions precedent based upon further satisfactory due diligence
and the continued availability of financing which TKG orally claimed to be
available. The revised proposal also contained a condition that the proposal
would cease to be effective if the termination fee in the RCBA Merger Agreement
were triggered.
On December 29, 1997, the Company received another letter from TKG dated
December 26, 1997, which stated it intended to clarify the December 16, 1997
letter. The December 26 letter expressed an expectation of the finalization of
all due diligence and financing arrangements prior to any meeting of the
shareholders. It also stated that if the RCBA Merger Agreement were terminated
without incurring a termination fee, the financing and due diligence conditions
would be automatically waived and TKG would be contractually bound, subject to
an affirmative vote of the shareholders, to acquire the Company by merger
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under the terms of their offer. The TKG proposal continued the condition that it
would cease to be effective if a termination fee to RCBA was triggered or paid.
In addition to the contact with TKG, the Company received a request for
information from Manchester Securities Corp. ("Manchester") on November 28,
1997. The Company provided a form of confidentiality agreement to Manchester,
but has not received an executed version from Manchester. Manchester holds 9.7%
of the Company's outstanding Shares.
From November 1997 through early January 1998, the Company and RCBA
received and responded to comments and questions from the Commission. On January
6, 1998, the Commission notified the Company and RCBA by letter that the current
draft of their Joint Schedule 13e-3 Transaction Statement (which was filed with
the Commission on December 30, 1997) required further disclosure regarding TKG
and its proposals before the proxy statement regarding the RCBA Merger Agreement
could be mailed to the Company shareholders. Ultimately, due in large part to
the changing circumstances surrounding the proposed transactions, the parties
were unable to resolve these comments and questions in time to finalize and mail
proxy materials to the Company's shareholders and to hold a meeting of the
Company's shareholders, as contemplated by the RCBA Merger Agreement, on or
before January 31, 1998.
Between January 6 and January 30, 1998, representatives of TKG visited the
Company's Headquarters several times and conducted due diligence on the Company.
During the afternoon of Friday, January 30, 1998, RCBA advised the Company that
it planned to increase its offer to $1.47 per Share or approximately $0.02 more
than TKG's offer as then in effect. Representatives of the Company advised TKG
of RCBA's proposed increase. During the afternoon of January 30, shortly before
a scheduled meeting of the Company's Advisory Board, TKG transmitted a letter to
the Advisory Board stating that TKG would deliver a topping offer to the Company
following the expiration of the January 31 "drop dead" date under the RCBA
Merger Agreement. Following receipt of TKG's letter, representatives of the
Company and the Advisory Board held a telephonic discussion with representatives
of TKG to clarify TKG's offer. During that discussion, TKG advised the Company
that it was raising its offer to $1.50 per Share.
The Advisory Board discussed the new offers at its meeting and thereafter
advised TKG and RCBA of the level of the two sides' bids. On the morning of
Saturday, January 31, RCBA advised the Company by telephone that it would be
unable to respond to TKG's $1.50 per Share bid over the weekend. Later the same
day, RCBA advised the Company that it would be prepared to deliver a topping bid
to the Company on Sunday morning, February 1, 1998.
On the morning of February 1, 1998, the Company, with approval of the
Advisory Board, notified RCBA that it was terminating the RCBA Merger Agreement
on the grounds that the transaction had not been consummated prior to January
31, 1998. The RCBA Merger Agreement contained a provision that allowed either
party to terminate the RCBA Merger Agreement if the merger contemplated therein
was not consummated by January 31, 1998, provided that the party seeking to
terminate pursuant to this provision had not failed to perform in any material
respect any covenant under the RCBA Merger Agreement that caused or resulted in
the failure of the merger to be consummated before such date.
On February 1, representatives of RCBA and TKG met with representatives of
the Company and the Company's outside legal counsel in the offices of the
Company's outside legal counsel. The Company then initiated a bidding process
during which both parties submitted bids for the Company's outstanding Shares.
RCBA understood that the Company was to consider four material terms of the
competing offers of RCBA and TKG: (i) amount of the offer, (ii) the termination
fee, (iii) the "tail" period, and (iv) the nature of the contracting party.
RCBA's initial bid on February 1 was $1.55 per Share, $0.05 more than TKG's
previous bid, and indicated a willingness to accept a shorter "tail" period than
RCBA had previously requested.
The Company told TKG about RCBA's bid. TKG then approached RCBA and
proposed that the auction procedures be changed and that each bidder submit
final sealed bids to the Company. RCBA rejected this proposal. TKG then advised
the Company that it wanted to change the auction procedures in such a manner.
The Company informed RCBA of the proposal and RCBA urged the Company to reject
it. In the meantime, RCBA increased its offer to $1.60 per share and reduced the
"tail" to a four-month period that
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RCBA understood was acceptable to the Company. RCBA hoped to provide the Company
with further grounds to reject TKG's proposal to change the auction procedures.
TKG then submitted a sealed bid to the Company, advising the Company that
the bid would be effective only if the Company simultaneously received and
opened a sealed bid from RCBA. The Company told RCBA that TKG had represented
that its bid was in excess of $1.60 per Share. The Company then requested that
RCBA submit a sealed bid. RCBA registered its objections, stating that the
ground-rules previously agreed upon by both bidders were designed to enhance
shareholder value. However, the Company urged RCBA to comply with the sealed bid
process. RCBA delivered a sealed bid increasing the price per share offered to
$1.631. After the sealed bids were submitted, the Company informed RCBA that
TKG's bid, which RCBA later learned was for $1.65125 per share with a raised
termination fee and a four-month "tail," had won the auction. Representatives of
the Company and TKG then negotiated the final terms of a definitive merger
agreement and the Advisory Board unanimously approved the merger and the merger
agreement with TKG (the "TKG Merger Agreement").
On February 2, 1998, RCBA amended its Schedule 13D to indicate that the
merger deal between RCBA and the Company had been terminated and that RCBA was
deciding what further action, if anything, it planned to take. In addition, on
March 6, 1998, the Company and RCBA filed a similar amendment to their Joint
Schedule 13e-3 Transaction Statement.
On March 11, 1998, RCBA wrote a letter to the Company submitting another
offer. Pursuant to this letter, RCBA offered to cause the Purchaser to acquire
all of the outstanding shares of the Company for $1.70 per share, including
assumption of liabilities. On March 12, 1998, TKG wrote a letter to the Company
explaining why TKG believed the offer was not a "Superior Proposal" as that term
was defined under the merger agreement between TKG and the Company. If such
offer were a "Superior Proposal," the Company would have been entitled to
terminate the TKG Merger Agreement (subject to the payment to TKG of a
termination fee). The Company informed RCBA that the Advisory Board was not
inclined to declare the March 11th bid of RCBA a Superior Proposal.
On March 13, 1998, RCBA withdrew its March 11, 1998 letter and increased
its previous bid to $1.74 per share, plus $1.2 million to cover any termination
fee of TKG, if one arose. RCBA also proposed a new termination fee and
reimbursement provisions.
Later in the day on March 13, 1998, in response to comments from the
Company, RCBA sent a subsequent letter to the Company withdrawing its earlier
March 13th letter, modifying its proposed termination fee and otherwise offering
$1.74 per share, plus $1.2 million to cover any termination fee of TKG, if one
arose.
On March 14, 1998, TKG sent a letter to the Company objecting to RCBA's
offer on various grounds.
On March 14, 1998, the Advisory Board declared RCBA's March 13th offer a
"Superior Proposal" and the Company sent a Superior Proposal Notice to TKG
pursuant to the TKG Merger Agreement.
On March 16, 1998, TKG commenced a lawsuit against the Company in Delaware
Chancery Court seeking a temporary restraining order enjoining the Company from
taking any action to terminate the TKG Merger Agreement and mandating that the
Company hold the approaching shareholders' meeting at which time the
shareholders would vote on the TKG Merger Agreement. On March 17, 1998, the
Court granted the temporary restraining order enjoining the "Advisory Board,
Manager, officers, agents, employees and attorneys, and all other persons in
active concert or participating with [the Company]" until further order of the
Court from "taking any steps to terminate the [TKG] Merger Agreement based on
either or both of the two March 13, 1998 proposals from RCBA." The Court also
enjoined the Company's "Advisory Board, Manager, officers, agents, employees and
attorneys, and all other persons in active concert or participating with [the
Company]" until further order of the Court from "taking any action to cancel the
meeting of share holders of [the Company] currently scheduled for March 25, 1998
(the "Meeting"), or to postpone the Meeting beyond March 28, 1998 at 5:00 p.m.
(California time)." The Company thereafter rescheduled the shareholders' meeting
from March 25, 1998 to March 28, 1998.
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On March 26, 1998, RCBA withdrew its March 13th bid and announced that it
intended to commence a tender offer for all of the outstanding shares of the
Company at $1.74 per share. On the same day, the United States District Court
for the Northern District of California, where TKG had also filed a complaint
similar to that described above, granted TKG's temporary restraining order
request in part, requiring RCBA to disclose certain financing information and
information regarding contracts or understandings between RCBA and any person
regarding any securities of the Company. RCBA issued a press release responding
to this order.
On March 27, 1998, TKG issued a press release stating that it had entered
into discussions with Lehman Brothers for financing to increase its bid to $1.74
per share to match that of RCBA. Later the same day, TKG issued a press release
announcing that it would pay $1.74 per share to complete its acquisition of the
Company. RCBA then issued a press release increasing the price of its tender
offer to $1.80 per share. Also on March 27, 1998, the Company issued a press
release stating: (i) that a special shareholders meeting was scheduled for 4:00
p.m. on March 28, 1998 to consider a merger agreement with TKG at $1.65125 a
share, and (ii) that the meeting's agenda would not include a tender offer of
RCBA at $1.74 a share, or the discussions of TKG with respect to an offer at
$1.74 a share.
On March 28, 1998, the Company held a shareholders' meeting. The
shareholders were asked to vote upon a proposal to approve an Agreement of
Merger dated February 1, 1998 and amended as of February 12, 1998, by and among
Triad Park, LLC, TKG and TKG Acquisition Company, LLC. The merger would have
converted each outstanding share into the right to receive $1.65125 in cash.
With 81.5% of Triad Park's outstanding shares voting, the final results
certified by the independent inspector of elections were, approximately 60%
against approval of the proposal, and 21% in favor of approving the merger, with
the remainder being abstentions. Although the rejection of the Agreement of
Merger by Triad Park's shareholders does not automatically terminate the
Agreement of Merger, it does give the Triad Park Advisory Board a right of
termination. According to a press release issued by the Company, the Advisory
Board expects to address this issue in the next several days.
On April 1, 1998, the Purchaser commenced the Offer.
Source of Information. Information concerning the Company and its contacts
and discussions with bidders for the Company other than RCBA and its affiliates
prior to December 30, 1997 contained in this Section was supplied or approved by
the Company for the Joint Schedule 13e-3 Transaction Statement prepared by the
Company and RCBA in connection with the RCBA Merger Agreement and filed with the
Commission (see "Background of the Offer; Past Contacts, Transactions or
Negotiations with the Company -- Discussions with Third Parties -- Contracts and
Negotiations with RCBA and The Kontrabecki Group Since the Execution of the RCBA
Merger Agreement"). Such statement 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,
400 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can also be obtained from the Public Reference Section of the
Commission at its Washington, D.C. address at prescribed rates. The Commission
also maintains a Web site address, http://www.sec.gov.
PURPOSE AND STRUCTURE OF THE OFFER
The Managers and the Purchaser have determined that a "going private"
transaction would provide certain benefits to Managers, the Purchaser and the
Company, as well as the current shareholders of the Company. The primary benefit
to the Company's shareholders is the opportunity to sell their Shares for cash
at a significant premium above the market price that existed prior to the
announcement of the Offer and above the price set forth in the TKG Merger
Agreement, which merger price was set at $1.65125 per Share (TKG subsequently
indicated a willingness to increase its merger price to $1.74 per Share).
The Offer is the first step in the acquisition of all of the Shares. If the
Offer is successful, the Purchaser intends that on or after August 1, 1998, it
will effect the Merger to acquire all remaining Shares not owned by it for the
same price per Share as offered in the Offer, without requiring the affirmative
vote of any other shareholder of the Company. Upon consummation of the Merger,
the entire equity interest of the Company
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would be owned by the Purchaser, and the current shareholders would have no
continuing interest in the Company. Therefore, following the Merger, the current
shareholders of the Company (other than RCBA) would no longer benefit from any
increases in the value of the Company and would no longer bear the risk of any
decreases in the value of the Company. Following the Merger, the Purchaser and
its affiliates would own 100% of the Company and would 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.
The Managers and the Purchaser have structured this transaction as a tender
offer for all Shares of the Company other than those held by RCBA and Richard C.
Blum because they believe that a tender offer for Shares is the most expedient
means by which the Purchaser can gain control of the Company. The tender offer
requires neither Advisory Board approval nor the requirements of a shareholder
vote and allows each shareholder individually to determine whether or not to
accept the price per Share offered by the Purchaser.
The Managers' and the Purchaser's purpose and reasons for engaging in the
transactions contemplated by the Offer 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 sales of
assets, strategic undeveloped lot dispositions, and developments of other lots
for the Company's own account or for third parties, depending on market
conditions. The Purchaser will receive the benefits, if any, of its decisions
and will also bear the risk of loss.
PLANS FOR THE COMPANY AFTER THE OFFER
Upon consummation of the Offer, the Managers and the Purchaser intend to
evaluate the assets of the Company to determine the best strategy to maximize
the value of the Property. Based upon the results of its evaluation, the
Managers and the Purchaser may develop the Property or may cause the Company to
sell some or all of its assets. Except as otherwise indicated in this Offer to
Purchase, neither the Managers nor the Purchaser has 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 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.
SEDWAY REPORT
General. 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 Mr.
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 Offer or the fairness of the
Offer, or the fairness of the Offer to the Company, the Purchaser, the Managers
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 consideration by the Company's Advisory Board in connection
with its approval of the RCBA Merger Agreement at $1.32 per Share in September
1997.
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.
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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.
Although the Purchaser believes all material analyses performed by and
conclusions of Sedway Group are disclosed in the summary set forth above, the
summary 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 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 Offer or similar type of transaction.
Source of Information. Information concerning the Sedway Report contained
in this Section was supplied or approved by the Company for the Joint Schedule
13e-3 Transaction Statement prepared by the Company and RCBA in connection with
the RCBA Merger Agreement and filed with the Commission (see "Background of the
Offer; Past Contacts, Transactions or Negotiations with the
Company -- Discussions with Third Parties -- Contracts and Negotiations with
RCBA and The Kontrabecki Group Since the Execution of the RCBA Merger
Agreement"). The Sedway Report was also attached as Exhibit (b)(1) to the Joint
Schedule 13e-3 and is attached as Exhibit (b) to the Schedule 13e-3 filed as of
the date hereof. Such Joint Schedule 13e-3 Transaction Statement and the
Schedule 13e-3 as of the date hereof 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,
400 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can also be obtained from the Public Reference Section of the
Commission at its Washington, D.C. address at prescribed rates. The Commission
also maintains a Web site address, http:// www.sec.gov. A copy of the Sedway
Report will, upon request, be made available for inspection and copying at the
principal executive offices of RCBA during its regular business hours by any
interested shareholder or any such shareholder's representative who has been so
designated in writing.
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BOARD APPROVAL OF RCBA MERGER AGREEMENT AND TKG MERGER AGREEMENT
The Advisory Board of the Company, by unanimous vote, on September 8, 1997
determined that the transactions contemplated by the RCBA Merger Agreement were
fair from a financial point of view to and in the best interests of the
unaffiliated shareholders of the Company. The price per Share to be received by
the Company's shareholders was equal to $1.32. On February 1, 1998, the Advisory
Board of the Company, by unanimous vote, determined that the transactions
contemplated by the TKG Merger Agreement, which merger price was set at $1.65125
per Share following an auction process, was fair from a financial point of view
to and in the best interests of the unaffiliated shareholders of the Company. In
both instances, the Advisory Board resolved to recommend that the Company's
shareholders approve each such merger agreement. The price per Share to have
been received by the Company shareholders in both of those merger transactions
is less than the price per Share being offered to Company shareholders in the
Offer.
NO FAIRNESS OPINION
No opinion from an independent financial advisor regarding the fairness of
the consideration to be received by unaffiliated shareholders in the Offer has
been delivered.
NO RECOMMENDATION
Neither the Company's Advisory Board nor any of its executive officers have
made any recommendations concerning the Offer to shareholders.
PERSPECTIVE OF THE MANAGERS AND THE PURCHASER ON THE OFFER
Although RCBA and the Purchaser may be considered "affiliates" of the
Company under Rule 13e-3(a)(1) of the Securities Exchange Act of 1934, the
Managers and the Purchaser believe that the Offer is an arm's-length one. The
Company sought offers from a number of potential buyers, and made public Company
information available to all parties. The Company had negotiations with four
other potential buyers and conducted a bidding process between RCBA and TKG. See
"Special Factors -- Discussions with Third Parties."
Ultimately, the Managers and the Purchaser decided to commence this Offer
to acquire the Company for a price of $1.80 per Share. In determining such
price, the Managers and the Purchaser analyzed the real estate market in
Northern California generally, the development of the Company-owned sites in
particular, taking into account current market conditions and the TKG Merger
Agreement at the price of $1.65125 per Share and TKG's stated willingness to pay
$1.74 per Share.
The Managers and the Purchaser believe that the Offer is fair to
unaffiliated shareholders. In determining the fairness of the term to the
unaffiliated shareholders, the Managers and the Purchaser considered the
following factors, each of which, in their view, supports the determination:
(i) Because the Company's limited purpose is to sell a finite amount
of real estate over a limited period of time, the going concern value of
the Company is difficult to assess. The Company's main objective is to
liquidate its investment in the Property and it will not remain a viable
entity if forced to rely on its sole source of income, the lease with
CCI/Triad. To assess its value in this limited operations mode, the Company
consulted a real estate advisor regarding a rapid, but realistic, sales
program for the Property. The sales program was projected to produce total
revenues of approximately $31 million over a four year period. The net
present value of these amounts using a 15% discount rate was $25.6 million,
or $1.30 per Share. Further, if the Property was sold for these amounts
under the disposition plan, the Company would retain material contingent
liabilities. Therefore the results from operations in a manner consistent
with the Company purpose would result in shareholder value less than the
price per Share offered by the Purchaser in the Offer;
(ii) The net book value of the Company (based upon the financial
statements contained in its Form 10-QSB for the quarter ended September 30,
1997), which on a per Share basis is calculated at $1.22 per Share, less
than the price per Share being offered by the Purchaser in the Offer;
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(iii) The liquidation value of the Company (based upon the appraisal
report prepared by Carneghi-Bautovich & Partners, Inc., dated November 18,
1996, as amended on February 18, 1997), which on a per Share basis is
calculated at $0.72 per Share, less than the price per Share being offered
by the Purchaser in the Offer;
(iv) The fact that when the Company redeemed Shares from Messrs.
Porter and Stevens, two members of the Advisory Board, in August 1997, the
redemption price was $0.72 per Share, less than the price per Share being
offered by the Purchaser in the Offer;
(v) The historical market prices of the Company's Shares, particularly
the fact that the Offer will enable the shareholders of the Company to
realize a significant premium over the prices at which the Shares traded
prior to the announcement of execution of each of the merger agreements;
(vi) 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 Offer will
result in proceeds of over $35 million;
(vii) The terms and conditions of the Offer and the relatively few
substantive closing conditions;
(viii) The fact that the Company after consummation of the Offer and
the related transactions will retain all contingent liabilities of the
Company, including those related to tax matters and construction of
improvements on the Property and those relating to the potential obligation
to indemnify CCI/Triad against any claims relating to environmental costs
and liabilities associated with the Land or the Headquarters prior to the
Contribution (as discussed in "The Tender Offer -- Certain Information
Concerning the Company -- Assumption of Liabilities"); and
(ix) The fact that the Offer from the Purchaser, when considered on a
net basis, was higher than the firm offers received from all other
potential acquirors received over an extended period.
In considering the fairness of the Offer to unaffiliated shareholders, the
Managers and the Purchaser gave primary consideration to factor (ix) above. They
also gave consideration to factors (i) through (viii) in determining whether the
Offer was fair. The Managers and the Purchaser 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 Offer is structured such that its consummation requires that there be
tendered and not withdrawn prior to the Expiration Date that number of Shares,
when combined with the Shares owned by RCBA and Mr. Blum as of the date hereof,
as would constitute a majority of all outstanding Shares of the Company. The
Minimum Condition requires that at least 7,841,904 Shares be tendered and not
withdrawn by shareholders other than RCBA and Mr. Blum prior to the Expiration
Date, representing approximately 39.8% of all outstanding Shares of the Company.
CERTAIN EFFECTS OF THE OFFER
The Shares are currently registered under the Exchange Act. Upon
consummation of the Offer, the Managers and the Purchaser intend to seek
deregistration of the Shares under the Exchange Act upon application of the
Company to the Commission, which application should be approved if the Shares
are not listed on a national securities exchange and there are fewer than 300
holders of record 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. Termination
would also make certain provisions of the Exchange Act no longer applicable to
the Company, such as the short-swing profit recovery provisions of Section 16(b)
of the Exchange Act, the requirement of furnishing a proxy statement pursuant to
Section 14(a) of the Exchange Act in connection with shareholders' meetings and
the related requirement of furnishing an annual report to shareholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities in compliance with Rule 144 or 144A promulgated under the Securities
Act of 1933, as amended, may be
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impaired or eliminated. The Purchaser intends to seek to cause the Company to
apply for termination of registration of the Shares under the Exchange Act as
soon after the completion of the Offer as the requirements for such termination
are met. If the Offer is consummated and the registration of the Shares has not
been terminated prior to the Merger, the registration of the Shares under the
Exchange Act will be terminated following the consummation of the Merger.
If consummated, the Offer and the subsequent Merger will result in an
increase of the Purchaser's interest in the net book value of the Company by
approximately $21.6 million or 89.8%, and an increase in the Purchaser's
interest in the earnings (loss) of the Company for the year ended December 31,
1997 by approximately ($291,000) or 89.8%.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following summary discusses certain material U.S. federal income tax
consequences of a sale of Shares pursuant to the Offer. The summary does not
address all of the U.S. federal income tax consequences that may be relevant to
a shareholder in light of such shareholder's particular tax situation or to
shareholders that may be subject to special treatment under U.S. federal income
tax laws (for example, dealers in securities, banks, insurance companies,
subchapter S corporations, nonresident aliens, foreign corporations, tax exempt
organizations, employee stock ownership plans, individual retirement and other
tax-deferred accounts and persons who hold Shares as part of a hedge, who have
otherwise hedged the risk of holding Shares or who hold the Shares a part of a
straddle with other investments). In addition, the summary does not consider the
effect of any foreign, state, local or other tax laws, or any U.S. tax
considerations (e.g., estate or gift tax) other than U.S. federal income tax
considerations that may be applicable to particular shareholders. The summary is
directed solely to shareholders who are "United States persons" as that term is
defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended
(the "Code"), and it assumes that the Shares are held as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Code.
This summary is based upon the Code, the Treasury Regulations promulgated
thereunder, Internal Revenue Service ("IRS") rulings and judicial decisions, all
as in effect on the date hereof, and all of which are subject to change or
differing interpretations, possibly with retroactive effect. No assurance can be
given that the treatment described herein of cash payments pursuant to the Offer
will be accepted by the IRS or, if challenged, by a court. Shareholders
(including shareholders who do not tender their Shares) are urged to consult
their own tax advisors with respect to the tax consequences to them, including
the tax consequences under state, local, foreign and other laws, of tendering
their Shares pursuant to the Offer.
Tax Status of the Company. The Company has been structured to qualify as a
partnership for U.S. federal income tax purposes, and it is assumed for purposes
of this summary that the Company has met and continues to meet the requirements
for partnership classification.
Recognition of Gain or Loss. The receipt of cash in exchange for Shares
pursuant to the Offer will be a taxable transaction under the Code. A
shareholder will generally recognize gain or loss on the exchange in the amount
of the difference between the amount realized and the shareholder's adjusted
basis in the tendered Shares. The amount realized will equal the amount of cash
received by a shareholder plus the shareholder's allocable share of the
Company's liabilities as of the date of the sale. Because a shareholder's
adjusted basis also includes the shareholder's allocable share of the Company's
liabilities, the gain or loss will generally equal the difference between the
shareholder's adjusted equity basis (the shareholder's adjusted tax basis
exclusive of that shareholder's allocable share of Company liabilities) and the
amount of cash received. The adjusted equity basis of certain shareholders may
be less than zero, in which case their recognized gain would exceed the amount
of cash received.
The precise amount of a shareholder's gain or loss on the sale of Shares
pursuant to the Offer cannot be determined until after such sale is completed
because the calculation of gain or loss requires a determination of the
Company's liabilities as of the sale date and each shareholder's share of the
Company's income, gain, loss, deduction, and credit for the taxable year in
which the sale occurs. Following acceptance of the tendered Shares, shareholders
will receive the information required to determine the adjusted basis of their
Shares and
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their amount realized on the exchange. Shareholders should consult their tax
advisors to determine the amount of gain or loss they would recognize upon the
tender of their shares pursuant to the Offer.
Character of Gain or Loss. Gain or loss on the exchange of Shares for cash
pursuant to the Offer will be treated as capital gain or loss, except that gain
or loss attributable to unrealized receivables (including depreciation
recapture) or inventory items (including real property held for sale to
customers) of the Company will be treated as ordinary gain or loss. The precise
amount of a shareholder's income or loss that will be treated as ordinary income
or loss cannot be determined until after the closing of the Offer because the
activities of the Company will affect the amount of such ordinary income or
loss. Following the closing of the Offer, shareholders will receive the
information required to determine the amount of ordinary income or loss from the
sale of their Shares.
For certain noncorporate shareholders, including individuals, the rate of
taxation of capital gain will depend upon (a) the shareholder's holding period
for the Shares, and (b) the shareholder's marginal tax rate for ordinary income.
If such noncorporate shareholders have not held their Shares for more than 18
months on the date they sell their Shares pursuant to the Offer, they will not
qualify for the 20 percent capital gains rate; however, they will qualify for a
28 percent capital gains rate if they have held their Shares for more than 12
months but not more than 18 months. Any capital gain on Shares held by such
shareholders for 12 months or less will be short term capital gain and will be
subject to tax at the rates applicable to ordinary income.
Passive Loss Rules. Shares in the Company should generally be treated as
subject to the limitations of the passive loss rules, under which a
shareholder's share of the Company's losses is deductible only against income
from the Company. Thus, a shareholder's share of Company losses may in some
cases be suspended until the shareholder disposes of his entire interest in the
Company. Shareholders that sell all of their Shares pursuant to the Offer would
be entitled to deduct against passive income from other investments as well as
against nonpassive income (subject to ordering rules) passive losses from the
Company that were suspended in 1997 or generated in 1998. Shareholders who
tender only a portion of their Shares will not be permitted to deduct unused
Company passive losses until they dispose of all of their Shares.
"At Risk" and Basis Rules. Shareholders who recognize a net gain from the
sale of all or a portion of their Shares pursuant to the Offer will be able to
offset against and to the extent of such gain any losses from the Company that
were previously disallowed because of the "at risk" or adjusted basis
limitation. Shareholders who recognize a net loss on the exchange will
necessarily have had sufficient basis in their Shares so that they would not
have had suspended losses under the "at risk" limitation. Shareholders who
tender only a portion of their Shares should consult their tax advisors to
determine the extent to which they will be "at risk" or retain adjusted basis
following the exchange.
Possible "Bunching" of Income or Loss. Shareholders who have a taxable year
other than the Company's taxable year may be required to include on their U.S.
federal income tax returns for the taxable year that includes the closing date
of the Offer their share of more than 12 months of the Company's income or loss
if (a) they sell all of their Shares pursuant to the Offer, or (b) they do not
sell all of their Shares and either (i) the Purchaser acquires 50 percent or
more of the outstanding Shares pursuant to the Offer, or (ii) the Shares
acquired by the Purchaser taken together with other Shares sold or exchanged
within any 12 month period ending on or including the date of the closing of the
Offer equal at least 50 percent of the outstanding Shares.
Backup Withholding. Payments made to a shareholder tendering Shares
pursuant to the Offer may be subject to backup withholding at a 31 percent rate.
Backup withholding generally applies if the shareholder (a) fails to furnish
such shareholder's social security number or other TIN, (b) furnishes an
incorrect TIN, (c) is notified by the IRS that such shareholder has failed to
properly report payments of interest or dividends, or (d) under certain
circumstances, fails to provide a certified statement, signed under penalties of
perjury, that the shareholder has furnished a correct TIN and has not been
notified by the IRS that such shareholder is subject to backup withholding.
Exemptions are available for shareholders that are corporations and for certain
foreign individuals and entities. A shareholder that does not furnish a required
TIN may be subject to a penalty imposed by the IRS. For the measures required to
avoid backup withholding, see "Tender Offer -- Procedures for Tendering Shares."
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If backup withholding applies to a payment to a shareholder, the amount
withheld can be credited against the U.S. federal income tax liability of the
person subject to backup withholding, provided that the required information is
given to the IRS. If backup withholding results in overpayment of tax, a refund
can be obtained by the shareholder upon filing an income tax return.
THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Shares validly
tendered and not withdrawn prior to the Expiration Date and not theretofore
withdrawn in accordance with "The Tender Offer -- Withdrawal Rights". The term
"Expiration Date" means 12:00 Midnight, New York City time, on Wednesday, April
29, 1998, unless and until the Purchaser, in its sole discretion, shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by the Purchaser, will expire.
The Purchaser expressly reserves the right, in its sole discretion, at any
time or from time to time, regardless of whether or not any of the events set
forth in "Tender Offer -- Certain Conditions of the Offer" shall have occurred
or shall have been determined by the Purchaser to have occurred, (i) to extend
the period of time during which the Offer is open and thereby delay acceptance
for payment of, and the payment for, any Shares, by giving oral or written
notice of such extension to the Depositary and (ii) to amend the Offer in any
respect by giving oral or written notice of such amendment to the Depositary.
The rights reserved by the Purchaser in this paragraph are in addition to the
Purchaser's rights to terminate the Offer pursuant to "Tender Offer -- Certain
Conditions of the Offer." UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS
RIGHT TO EXTEND THE OFFER.
If by 12:00 Midnight, New York City time, on Wednesday, April 29, 1998 (or
any date or time then set as the Expiration Date), any or all of the conditions
to the Offer have not been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated), subject to the applicable rules and regulations of
the Commission, to (i) terminate the Offer and not accept for payment or pay for
any Shares and return all tendered Shares to tendering shareholders, (ii) waive
all the unsatisfied conditions and accept for payment and pay for all Shares
validly tendered prior to the Expiration Date and not theretofore withdrawn,
(iii) extend the Offer and, subject to the right of shareholders to withdraw
Shares until the Expiration Date, retain the Shares that have been tendered
during the period or periods for which the Offer is extended or (iv) amend the
Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement. In the case of an extension,
Rule 14e-1(d) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires that the announcement be issued no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
shareholders in a manner reasonably designed to inform shareholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service. As used in this Offer to
Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its acceptance for
payment of or payment for Shares or is unable to pay for
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Shares pursuant to the Offer for any reason, then, without prejudice to the
Purchaser's rights under the Offer, the Depositary may retain tendered shares on
behalf of the Purchaser, and such Shares may not be withdrawn except to the
extent tendering shareholders are entitled to withdrawal rights as described in
"Tender Offer-Withdrawal Rights." However, the ability of the Purchaser to delay
the payment for Shares which the Purchaser has accepted for payment is limited
by Rule 14e-l(c) under the Exchange Act, which requires that a bidder pay the
consideration offered or return the securities deposited by or on behalf of
holders of securities promptly after the termination or withdrawal of the Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14(e)-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the terms or information. With respect to a change
in price or a change in percentage of securities sought, a minimum ten business
day period is generally required to allow for adequate dissemination to
shareholders. If, prior to the Expiration Date, the Purchaser should decide to
increase the price per Share being offered in the Offer, such increase will be
applicable to all shareholders whose Shares are accepted for payment pursuant to
the Offer.
The Company has provided the Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed by Purchaser to record holders of
Shares, and will be furnished to brokers, dealers, banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder lists, or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. PROCEDURES FOR TENDERING SHARES
Valid Tender. For a shareholder to validly tender Shares pursuant to the
Offer, either (i) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees, or, in
the case of a book-entry transfer, an Agent's Message (as defined below), and
any other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates for tendered Shares ("Share
Certificates") must be received by the Depositary at one of such addresses or
such Shares must be delivered pursuant to the procedures for book-entry transfer
set forth below (and a Book-Entry Confirmation (as defined below) received by
the Depositary), in each case prior to the Expiration Date, or (ii) the
tendering shareholder must comply with the guaranteed delivery procedures set
forth below.
Book-Entry Transfer. The Depositary will establish accounts with respect to
the Shares at The Depository Trust Company and The Philadelphia Depository Trust
Company (the "Book-Entry Transfer Facilities") for purposes of the Offer within
two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in any of the Book-Entry Transfer Facilities'
systems may make book-entry delivery of Shares by causing a Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account in accordance
with such Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of Shares may be effected through book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message (as defined below), and
any other required documents, must, in any case, be transmitted to, and received
by, the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase prior to the Expiration Date, or the tendering shareholder
must comply with the guaranteed delivery procedures described below. The
confirmation of a book-entry transfer of Shares into the Depositary's account at
a Book-Entry Transfer Facility as described above is referred to herein as a
"Book-Entry Confirmation."
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DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARE
CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS WILL BE
DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN
THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered holder
(which term, for purposes of this Section, includes any participant in any of
the Book-Entry Transfer Facilities' systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal or (ii) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instructions 1
and 5 to the Letter of Transmittal. If Share Certificates are registered in the
name of a person other than the signer of the Letter of Transmittal, or if
payment is to be made or Share Certificates for Shares not tendered or not
accepted for payment are to be returned to a person other than the registered
holder of the Share Certificates surrendered, the tendered Share Certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered holders appear on the
Share Certificates, with the signatures on the Share Certificates or stock
powers guaranteed as described above. See Instructions 1 and 5 to the Letter of
Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such shareholder's tender may be
effected if all the following conditions are met:
a. the tender is made by or through an Eligible Institution:
b. a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
c. the Share Certificates representing all tendered Shares, in proper
form for transfer (or a Book-Entry Confirmation with respect to all such
Shares), together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents are received by the Depositary within three trading days
after the date of execution of such Notice of Guaranteed Delivery.
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<PAGE> 21
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) Share Certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering shareholders may be paid at different times depending
upon when Share Certificates or Book-Entry Confirmations with respect to Shares
are actually received by the Depositary.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE
SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING SUCH PAYMENT.
The Purchaser's acceptance for payment of Shares validly tendered pursuant
to the Offer will constitute a binding agreement between the tendering
shareholder and the Purchaser upon the terms and subject to the conditions of
the Offer.
Appointment as Proxy. By executing a Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of the Purchaser
as such shareholder's attorneys-in-fact and proxies in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of such shareholder's rights with respect to the Shares tendered by such
shareholder and accepted for payment by the Purchaser (and any and all other
Shares or other securities issued or issuable in respect of such Shares). All
such proxies will be irrevocable and considered coupled with an interest in the
tendered Shares. Such appointment will be effective when, and only to the extent
that, the Purchaser accepts such Shares for payment pursuant to the Offer. Upon
such acceptance for payment, all prior powers of attorney, proxies and consents
given by such shareholder with respect to such Shares or other securities will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be deemed
effective). The designees of the Purchaser will thereby be empowered to exercise
all voting and other rights with respect to such Shares and other securities in
respect of any annual, special, adjourned or postponed meeting of the Company's
shareholders, actions by written consent in lieu of any such meeting or
otherwise, as they in their sole discretion deem proper. The Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of such Shares, the
Purchaser must be able to exercise full voting, consent and other rights with
respect to such Shares and other securities or rights, including voting at any
meeting of shareholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Purchaser, in its sole discretion, whose
determination will be final and binding on all parties. The Purchaser reserves
the absolute right to reject any or all tenders determined by it not to be in
proper form or the acceptance for payment of or payment for which may, in the
opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the
absolute right to waive any defect or irregularity in the tender of any Shares
of any particular shareholder whether or not similar defects or irregularities
are waived in the case of other shareholders. No tender of Shares will be deemed
to have been validly made until all defects or irregularities relating thereto
have been cured or waived. None of the Purchaser, the Managers, the Depositary,
the Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. The Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding on all parties.
Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a shareholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such shareholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such shareholder is not subject to backup withholding. If a
shareholder does not provide such shareholder's correct TIN or fails
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<PAGE> 22
to provide the certifications described above, the Internal Revenue Service (the
"IRS") may impose a penalty on such shareholder and the payment of cash to such
shareholder pursuant to the Offer may be subject to backup withholding of 31% of
the amount of such payment. All shareholders surrendering Shares pursuant to the
Offer should complete and sign the main signature form and the Substitute Form
W-9 included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to the Purchaser and the
Depositary). Noncorporate foreign shareholders should complete and sign the main
signature form and a Form W-8, Certificate of Foreign Status, a copy of which
may be obtained from the Depositary, in order to avoid backup withholding. See
Instruction 9 to the Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except as
otherwise provided in this Section 3. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date. If the Purchaser extends
the Offer, is delayed in its purchase of or payment for Shares or is unable to
purchase or pay for Shares for any reason, then, without prejudice to the rights
of the Purchaser hereunder, tendered Shares may be retained by the Depositary on
behalf of the Purchaser and may not be withdrawn except to the extent that
tendering shareholders are entitled to withdrawal rights as set forth in this
Section 3.
The reservation by the Purchaser of the right to delay the purchase of or
payment for Shares is subject to the provisions of Rule 14e-1(c) under the
Exchange Act, which requires the Purchaser to pay the consideration offered or
return Shares deposited by or on behalf of shareholders promptly after the
termination or withdrawal of the Offer.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If Share Certificates have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such Share
Certificates, the serial numbers shown on such Share Certificates must be
submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been delivered pursuant to
the procedure for book-entry transfer as set forth in Section 2, any notice of
withdrawal must also specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Shares may be retendered by again following one
of the procedures described in "Tender Offer -- Procedures for Tendering Shares"
at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. None
of the Purchaser, the Managers, the Depositary, the Information Agent or any
other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered and not properly withdrawn in accordance with "Tender Offer --
Withdrawal Rights" promptly after the Expiration Date. All questions as to the
satisfaction of such terms and conditions will be determined by the Purchaser,
in its sole discretion, whose determination will be final and binding on all
parties. See "Tender Offer -- Terms of the Offer" and "-- Certain Conditions of
the Offer."
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<PAGE> 23
The Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of or payment for Shares in order to comply in whole or
in part with any applicable law. See Section 15. Any such delays will be
effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to a
bidder's obligation to pay for or return tendered securities promptly after the
termination or withdrawal of such bidder's offer).
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) Share
Certificates for (or a timely Book-Entry Confirmation with respect to) such
Shares, (ii) a Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and (iii) any other documents required
by the Letter of Transmittal. The per Share consideration paid to any
shareholder pursuant to the Offer will be the highest per Share consideration
paid to any other shareholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered to the Purchaser as,
if and when the Purchaser gives oral or written notice to the Depositary of the
Purchaser's acceptance for payment of such Shares. Payment for Shares accepted
for payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for validly tendering
shareholders for the purpose of receiving payment from the Purchaser and
transmitting payment to tendering shareholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT. Upon the deposit of funds with the Depositary for the purpose of making
payments to tendering shareholders, the Purchaser's obligation to make such
payment shall be satisfied and tendering shareholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer. The Purchaser will pay
any transfer taxes with respect to the transfer and sale to it or its order
pursuant to the Offer, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, as well as any charges and expenses of the Depositary and
the Information Agent.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-l(c) under the Exchange Act),
the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent tendering
shareholders are entitled to exercise, and duly exercise, withdrawal rights as
described in "Tender Offer -- Withdrawal Rights."
If any tendered Shares are not purchased pursuant to the Offer for any
reason, Share Certificates for any such unpurchased Shares will be returned,
without expense to the tendering shareholder (or, in the case of Shares
delivered by book-entry transfer of such Shares into the Depositary's account at
a Book-Entry Transfer Facility pursuant to the procedure set forth in "Tender
Offer -- Procedures for Tendering Shares," such Shares will be credited to an
account maintained at the appropriate Book-Entry Transfer Facility), as promptly
as practicable after the expiration, termination or withdrawal of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to the Managers, or to one or more direct or indirect
wholly owned subsidiaries of the Managers, the right to purchase Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering shareholders to receive payment for Shares validly tendered
and accepted for payment pursuant to the Offer.
5. PRICE RANGE OF SHARES; DISTRIBUTIONS ON THE SHARES
The Shares are traded in the over-the-counter market and the bid and asked
prices have been quoted under the symbol "TDPK." The following table sets forth,
for each of the periods indicated (which periods are from the date of formation
of the Company on February 10, 1997), the range of high and low bid quotations
per Shares as quoted on the OTC Bulletin Board. The quotations reflect
inter-dealer prices, without retail
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<PAGE> 24
mark-up, mark-down or commission and may not represent actual transactions, as
reported by the Company in its 1997 Form 10-KSB and as reported by Dow Jones
News/Retrieval(R).
TRIAD PARK, LLC
BID QUOTATIONS
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
FISCAL YEAR ENDED DECEMBER 31, 1997:
First Quarter (February 10 through March 31, 1997)........ * *
Second Quarter............................................ * *
Third Quarter (July 31 through September 30, 1997)........ $1.26 $0.75
Fourth Quarter............................................ $1.30 $1.25
FISCAL YEAR ENDED DECEMBER 31, 1998:
First Quarter............................................. $1.80 $1.26
</TABLE>
- ---------------
* No trading of Shares reported.
On March 25, 1998, the last full trading day before the public announcement
of RCBA's intention to commence a tender offer, the last reported bid price of
the Shares was $1.58 per Share. On March 31, 1998, the last full trading day
before commencement of the Offer, the last reported bid price of the Shares was
$1.78 per Share. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR
THE SHARES.
The Company has informed the Purchaser that it has never made any
distributions on the Shares.
6. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE ACT
REGISTRATION
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade in the over-the-counter market and could adversely affect the
liquidity and market value of the remaining Shares held by the public. As of
February 20, 1998, the Company had approximately 1,400 shareholders of record.
Exchange Act Registration. The Shares are currently registered 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
neither listed on a national securities exchange nor held by 300 or more holders
of record. 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. Termination would also make
certain provisions of the Exchange Act no longer applicable to the Company, such
as the short-swing profit recovery provisions of Section 16(b) of the Exchange
Act, the requirement of furnishing a proxy statement pursuant to Section 14(a)
of the Exchange Act in connection with shareholders' meetings and the related
requirement of furnishing an annual report to shareholders and the requirements
of Rule 13e-3 under the Exchange Act with respect to "going private"
transactions. Furthermore, the ability of "affiliates" of the Company and
persons holding "restricted securities" of the Company to dispose of such
securities in compliance with Rule 144 or 144A promulgated under the Securities
Act of 1933, as amended, may be impaired or eliminated. The Purchaser intends to
seek to cause the Company to apply for termination of registration of the Shares
under the Exchange Act as soon after the completion of the Offer as the
requirements for such termination are met.
7. CERTAIN INFORMATION CONCERNING THE COMPANY
Properties. 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 and 292 acres (as of December 31,
1997) of undeveloped land located in Triad Park. The Company's main
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<PAGE> 25
objective is to liquidate its investment in the Property. Pending liquidation,
the Company will own, operate, improve and maintain the Property.
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 292 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 103.7 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. Several of the vacant land sites are in
escrow and most of the remaining sites are subject to a first right of refusal
contract.
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 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.
Assumption of Liabilities. 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 laws, the Comprehensive Environmental Response, Compensation, 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.
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<PAGE> 26
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.
Certain Financial Information. The ratio of earnings to fixed charges for
the Company for the fiscal year ended December 31, 1997 was 0.79. The net book
value per Share for the fiscal year ended December 31, 1997 was approximately
$1.22. The audited financial statements of the Company for the fiscal years
ended December 31, 1997 are attached as Annex I to the Offer to Purchase.
Certain Interests in the Shares. The following sets forth certain
information, as of December 31, 1997, regarding the beneficial ownership, if
any, of Shares by (i) each member of the Company's Advisory Board, (ii) each
executive officer of the Company, (iii) the Purchaser, RCBA or RCBA, Inc., (iv)
any associates or majority-owned subsidiaries of the Purchaser, RCBA or RCBA,
Inc. and (v) any pension, profit-sharing or similar plan of the Company or an
affiliate thereof. 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.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF SHARES PERCENTAGE OF SHARES
BENEFICIAL OWNER(1) BENEFICIALLY OWNED BENEFICIALLY OWNED
------------------- --------------------------- --------------------
<S> <C> <C>
Richard C. Blum........................... 2,012,158(2) 10.2%
909 Montgomery Street, Suite 400
San Francisco, CA 94133
James R. Porter........................... 828,664 4.2%
3055 Triad Drive
Livermore, CA 94550
William W. Stevens........................ 324,154(3) 1.6%
3055 Triad Drive
Livermore, CA 94550
3055 Management Corp...................... 199,072(4) 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
</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 is a controlling person and Chairman of Richard C. Blum &
Associates, Inc. ("RCBA, Inc."), which is the general partner of Richard
Blum & Associates L.P. ("RCBA"). These Shares are directly owned by three
limited partnerships for which RCBA 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) Includes 324,154 Shares held as tenant-in-common with Virda J. Stevens.
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<PAGE> 27
(4) 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.
Except as described in this Offer to Purchase, none of the Purchaser, RCBA,
RCBA, Inc. or Pell or, to the best of their knowledge, any of the persons listed
in the table above, has effected any transaction of the Shares during the last
60 days.
Except as described below in the Offer to Purchase none of the Purchaser,
RCBA, or RCBA, Inc., has any contract, arrangement, understanding or
relationship (whether or not legally enforceable) with any other person with
respect to any securities of the Company, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any such securities, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss, or the giving or
withholding of proxies.
Headquarters. The principal executive office of the Company is located at
3055 Triad Drive, Livermore, California 94550.
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 copied 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, 400 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can also be obtained from the Public Reference Section of the
Commission at its Washington, D.C. address at prescribed rates. Such material
also can be reviewed through the Commission's Electronic Data Gathering,
Analysis and Retrieval System, which is publicly available through the
Commission's Web site, http://www.sec.gov.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the commission and other publicly
available information. Although the Purchaser and the Managers do not have any
knowledge that any such information is untrue, neither the Purchaser nor the
Managers take any responsibility for the accuracy or completeness of such
information or for any failures by the Company to disclose events that may have
occurred and may affect the significance or accuracy of any such information.
8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND THE MANAGERS
The Purchaser is a Delaware limited liability company which was organized
to acquire the Company and has not conducted any unrelated activities since its
organization. The Purchaser's principal executive office is located at 909
Montgomery Street, Suite 400, San Francisco, California 94133. RCBA is currently
the manager of the Purchaser. It is anticipated that upon successful completion
of the Offer, Pell will be appointed as a manager of the Purchaser and the
Purchaser will be managed by both RCBA and Pell. While RCBA previously believed
and reported to the Commission that the Purchaser would be jointly controlled by
RCBA and Westmark Realty Advisors L.L.C. ("Westmark"), an indirect wholly-owned
subsidiary of CB Commercial Real Estate Services Group, Inc. ("CBC"), Westmark
and CBC are no longer involved in the present transaction.
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 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.
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Pell is a California sole proprietorship. Its principal executive office is
located at 100 Smith Ranch Road, Suite 325, San Rafael, California 94903. Pell
is co-owned by Joseph Pell and Eda Pell.
During the past five years, none of the Purchaser, RCBA, RCBA, Inc., or
Pell has been convicted of any criminal proceeding (excluding traffic violations
or similar misdemeanors), nor been a 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
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Additional information about the Management of the Company, RCBA, RCBA,
Inc. and Pell is attached as Schedule I.
9. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required to purchase all of the Shares pursuant
to the Offer is estimated to be $31,852,737. The Purchaser has received, from
various investors, all funds necessary to purchase all of the Shares pursuant to
this Offer (with the exception of the amount needed to cover the increase in the
Offer Price from $1.74 to $1.80) and is not borrowing any funds to purchase such
Shares. In addition, the Purchaser has commitments necessary to fund the amount
needed as a result of the Offer Price increase to $1.80 per share
(approximately, $1.2 million).
The estimated costs and fees of the Purchaser in connection with the Offer
shall be $258,371. The Purchaser will finance these fees and expenses with
capital contributions received from investors and does not intend to borrow any
funds to cover such fees and expenses. The Purchaser will be responsible for the
payment of all fees and expenses connected with the Offer.
10. DISTRIBUTIONS
If the Company should (a) split, combine or otherwise change the Shares or
its capitalization, (b) acquire or otherwise cause a reduction in the number of
outstanding Shares or other securities or (c) issue or sell additional Shares,
shares of any other class of capital stock, other voting securities or any
securities convertible into, or rights, warrants or options, conditional or
otherwise, to acquire any of the foregoing, then, subject to the provisions of
Section 14, Purchaser, in its sole discretion, may make such adjustments as it
deems appropriate in the Offer Price and other terms of the Offer, including
without limitation, the number or type of securities offered to be purchased.
If, on or after April 1, 1998, the Company expects to allocate, declare or
pay any distribution on the Shares, or issue with respect to the Shares any
additional Shares, shares of any other class of capital stock, other voting
securities or any securities convertible into, or rights, warrants or options,
conditional or otherwise, to acquire, any of the foregoing, payable or
distributable to stockholders of record on a date prior to the transfer of the
Shares purchased pursuant to the Offer to Purchase, or their nominees or
transferees on the Company's stock transfer records, then, subject to the
provisions of "Tender Offer -- Certain Conditions of the Offer," (a) the Offer
Price may, in the sole discretion of Purchaser, be reduced by the amount of any
such cash distribution and (b) the whole of any such noncash distribution or
issuance to be received by the tendering stockholders will (i) be received and
held by the tendering stockholders for the account of Purchaser and will be
required to be promptly remitted and transferred by each tendering stockholder
to the Depositary for the account of Purchaser, accompanied by appropriate
documentation of transfer, or (ii) at the direction of Purchaser, be exercised
for the benefit of Purchaser, in which case the proceeds of such exercise will
promptly be remitted to Purchaser. Pending such remittance and subject to
applicable law, Purchaser will be entitled to all rights and privileges as owner
of any such noncash dividend, distribution, issuance or proceeds and may
withhold the entire Offer Price or deduct from the Offer Price the amount or
value thereof, as determined by Purchaser in its sole discretion.
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<PAGE> 29
11. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Purchaser's rights to extend and amend the Offer at
any time in its sole discretion, the Purchaser will not be required to accept
for payment or, subject to any applicable rules and regulations of the
Commission, including Rule 14e-l (c) under the Exchange Act (relating to the
Purchaser's obligation to pay for or return tendered securities promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, may terminate or amend the Offer, if (i) the Minimum
Condition shall not have been satisfied, (ii) the Company shall not have timely
redeemed its rights agreement (the "Rights Plan"), in accordance with the terms
and conditions of the Rights Plan or waived the applicability of the Rights Plan
to the Offer in accordance with the terms and conditions of the Rights Plan,
(iii) the Company shall not have terminated the TKG Merger Agreement, (iv) the
Transfer Agent (as such term is defined in the Company's limited liability
company agreement) shall not have received, or the Company and the Transfer
Agent shall not have accepted, all of the Transfer Applications (as such term is
defined in the Company's limited liability company agreement) with respect to
all Shares tendered in the Offer or shall not have recognized the transfer of
the Shares to the Purchaser, or (v) at any time on or after commencement of the
Offer and before the acceptance of such Shares for payment or the payment
therefor, any of the following conditions exists or shall be deemed by Purchaser
to exist or any of the following events shall occur or be deemed by Purchaser to
have occurred:
(a) there shall be threatened, instituted or pending any action,
proceeding, application or counterclaim by any government or governmental,
regulatory or administrative authority or agency, domestic, foreign or
supranational (each, a "Governmental Entity"), or by any other person,
domestic or foreign, before any court or Governmental Entity, (i) (A)
challenging or seeking to, or which is reasonably likely to, make illegal,
delay or otherwise directly or indirectly restrain or prohibit, or seeking
to, or which is reasonably likely to, impose voting, procedural, price or
other requirements, in addition to those required by U.S. federal
securities laws (each as in effect on the date of this Offer to Purchase),
in connection with the making of the Offer, the acceptance for payment of,
or payment for, some of or all the Shares by Purchaser, the Managers or any
other affiliate of the Managers, (B) seeking to obtain material damages or
(c) otherwise directly or indirectly relating to the Offer, (ii) seeking to
prohibit the ownership or operation by Purchaser, the Managers or any other
affiliate of the Managers of all or any portion of the Shares or of the
business or assets of Purchaser, the Managers or any other affiliate of the
Managers or to compel Purchaser, the Managers or any other affiliate of the
Managers to dispose of or hold separate the Shares or all or any portion of
the business or assets of Purchaser, the Managers or any other affiliate of
the Managers or seeking to impose any limitation on the ability of
Purchaser, the Managers or any other affiliate of the Managers to conduct
such business or own such assets, (iii) seeking to impose or confirm
limitations on the ability of Purchaser, the Managers or any other
affiliate of the Managers effectively to exercise full rights of ownership
of the Shares, including, without limitation, the right to vote any Shares
acquired or owned by Purchaser, the Managers or any other affiliate of the
Managers on all matters properly presented to the Company's shareholders,
(iv) seeking to require divestiture by Purchaser, the Managers or any other
affiliate of the Managers of any Shares, (v) seeking any material
diminution in the benefits expected to be derived by Purchaser, the
Managers or any other affiliate of the Managers as a result of the Offer,
or (vi) otherwise directly or indirectly relating to the Offer or which
otherwise, in the sole judgment of Purchaser, might materially adversely
affect the Company or Purchaser, the Managers or any other affiliate of the
Managers or the value of the Shares;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed,
enacted, enforced, promulgated, amended, issued or deemed applicable to (i)
the Purchaser, the Managers or any other affiliate of the Managers or the
Company or (ii) the Offer by any government, legislative body or court, or
Governmental Entity, that, in the sole judgment of Purchaser, might,
directly or indirectly, result in any of the consequences referred to in
clauses (i) through (vi) of paragraph (a) above;
(c) there shall have occurred any change (or any condition, event or
development that, insofar as reasonably can be foreseen, is reasonably
likely to result in any change) in the business, properties, assets,
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liabilities, capitalization, condition (financial or otherwise),
operations, licenses or franchises, results of operations or prospects of
the Company that, individually or in the aggregate with any other such
changes, in the sole judgment of the Purchaser, is or may be materially
adverse to the business, properties, financial condition or results of
operations of the Company, or the Purchaser shall have become aware of any
facts that, in the sole judgment of the Purchaser, have or may have
material adverse significance with respect to either the value of the
Company or the value of the Shares to the Purchaser;
(d) there shall have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States, (ii) any extraordinary or material adverse change in the
financial markets or major stock exchange indices in the United States,
(iii) any material change in United States currency exchange rates or any
other currency exchange rates or a suspension of, or limitation on, the
markets therefor, (iv) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (v) any
limitation (whether or not mandatory) by any government, domestic, foreign
or supranational, or Governmental Entity on, or other event that, in the
sole judgment of Purchaser, might affect the extension of credit by banks
or other lending institutions, (vi) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States or (vii) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(e) the Company shall have (i) split, combined or otherwise changed,
or authorized or proposed a split, combination or other change of the
Shares or its capitalization, (ii) acquired or otherwise caused a reduction
in the number of, or authorized or proposed the acquisition or other
reduction in the number of, outstanding Shares or other securities, (iii)
issued or sold, or authorized or proposed the issuance, distribution or
sale of, additional Shares, shares of any other class of the Company, other
voting securities or any securities convertible into, or rights, warrants
or options, conditional or otherwise, to acquire, any of the foregoing,
(iv) allocated, declared or paid, or proposed to allocate, declare or pay,
any distribution, whether payable in cash, securities or other property, on
or with respect to any shares of the Company, (v) altered or proposed to
alter any material term of any outstanding security, (vi) authorized,
recommended, proposed or entered into an agreement, agreement in principle
or arrangement or understanding with respect to any release or
relinquishment of any material contractual or other right of the Company,
or (vii) amended or authorized or proposed any amendment to, the Company's
Limited Liability Company Agreement or By Laws, or Purchaser shall become
aware that the Company shall have proposed or adopted any such amendment
that was not disclosed in publicly available filings prior to the date
hereof;
(f) a tender or exchange offer for any Shares shall have been made or
publicly proposed to be made by any other person (including the Company or
any of its subsidiaries or affiliates), or it shall have been publicly
disclosed or Purchaser shall have otherwise learned that (i) any person or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) shall
have acquired or proposed to acquire beneficial ownership of more than 5%
of any class or series of capital stock of the Company (including the
Shares), through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted any right, option or warrant,
conditional or otherwise, to acquire beneficial ownership of more than 5%
of any class or series of capital stock of the Company (including the
Shares), other than acquisitions for bona fide arbitrage purposes only and
other than as disclosed in a Schedule 13D or 13G on file with the
Commission prior to April 1, 1998, (ii) any such person, entity or group
that prior to April 1, 1998, had filed such a Schedule with the Commission
has acquired or proposes to acquire, through the acquisition of stock, the
formation of a group or otherwise, beneficial ownership of 1% or more of
any class or series of capital stock of the Company (including the Shares),
or shall have been granted any right, option or warrant, conditional or
otherwise, to acquire beneficial ownership of 1% or more of any class or
series of capital stock of the Company (including the Shares), (iii) any
person or group shall have entered into a definitive agreement or an
agreement in principle or made a proposal with respect to a tender offer or
exchange offer or a merger, consolidation or other business combination
with or involving the Company or (iv) any person, other than the Purchaser,
if not filed prior to the date hereof, shall have filed a
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<PAGE> 31
Notification and Report Form under the HSR Act (or amended a prior filing
to increase the applicable filing threshold set forth therein) or made a
public announcement reflecting an intent to acquire the Company or any
assets or subsidiaries of the Company;
(g) any approval, permit, authorization or consent of any Governmental
Entity (including those described or referred to in "The Tender
Offer -- Certain Legal Matters") shall not have been obtained on terms
satisfactory to Purchaser in its sole discretion; or
(h) Purchaser shall have reached an agreement or understanding with
the Company providing for termination of the Offer;
which, in the sole judgment of Purchaser in any such case, and regardless of the
circumstances (including any action or inaction by Purchaser, the Managers or
any other affiliate of the Managers) giving rise to any such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment or
payment.
The foregoing conditions are for the sole benefit of Purchaser and the
Managers and may be asserted by Purchaser and the Managers regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser
and the Managers in whole or in part at any time and from time to time in its
sole discretion. The failure by Purchaser and the Managers at any time to
exercise any of the foregoing rights will not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances will not be deemed a waiver with respect to any other facts and
circumstances and each such right will be deemed an ongoing right that may be
asserted at any time and from time to time. Any determination by Purchaser
concerning the events described in this Section 15 will be final and binding
upon all parties.
12. CERTAIN LEGAL MATTERS
General. Except as otherwise disclosed herein, based on a review of
publicly available information filed by the Company with the Commission and
discussions of representatives of the Managers with representatives of the
Company, neither the Company nor the Purchaser is aware of (i) any license or
regulatory permit that appears to be material to the business of the Company and
its subsidiaries, taken as a whole, that might be adversely affected by the
acquisition of Shares by the Purchaser pursuant to the Offer or (ii) any
approval or other action, by any governmental, administrative or regulatory
agency or authority, domestic, foreign or supranational, that would be required
for the acquisition or ownership of Shares by the Purchaser as contemplated
herein. Should any such approval or other action be required or desirable, the
Purchaser currently contemplates that such approval or action would be sought,
except as described below under "State Takeover Laws." While the Purchaser does
not currently intend to delay the acceptance for payment of Shares tendered
pursuant to the Offer pending the outcome of any such matter, there can be no
assurance that any such approval or action, if needed, would be obtained or
would be obtained without substantial conditions or that adverse consequences
might not result to the business of the Company, the Purchaser or the Managers
or that certain parts of the businesses of the Company, the Purchaser or the
Managers might not have to be disposed of in the event that such approvals were
not obtained or any other actions were not taken. The Purchaser's obligation
under the Offer to accept for payment and pay for Shares is subject to certain
conditions. See "Tender Offer -- Certain Conditions of the Offer."
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining
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stockholders, provided that such laws were applicable only under certain
conditions. Subsequently, a number of federal courts ruled that various state
takeover statutes were unconstitutional insofar as they apply to corporations
incorporated outside the state of enactment.
The Purchaser has not attempted to comply with any state takeover statutes
in connection with the Offer. The Purchaser reserves the right to challenge the
validity or applicability of any state law allegedly applicable to the Offer and
nothing in this Offer to Purchase nor any action taken in connection herewith is
intended as a waiver of that right. In the event that any state takeover statute
is found applicable to the Offer, The Purchaser might be unable to accept for
payment or pay for the Shares tendered pursuant to the offer or be delayed in
continuing or consummating the Offer. In such case, the Purchaser may not be
obligated to accept for payment or pay for any Shares tendered. See "Tender
Offer -- Certain Conditions of the Offer."
Antitrust. The Purchaser believes that the Hart-Scott-Rodino Antitrust Act
(the "HSR Act") is inapplicable to the Offer in light of Rule 802.2 of the
Rules, Regulations, Statements and Interpretations Under the HSR Act (16 C.F.R.
sec. 802.2), which exempts the acquisition of certain types of real property
assets. If the provisions of the HSR Act were applicable to the Offer, the
acquisition of Shares under the Offer could be consummated only following the
expiration of a 15-calendar day waiting period following the filing by the
Purchaser of a Notification and Report Form with respect to the Offer, unless
the Purchaser received a request for additional information or documentary
material from the Antitrust Division or the FTC or early termination of the
waiting period is granted. If, within the initial 15-day waiting period, either
the Antitrust Division or the FTC requested additional information or material
from the Purchaser concerning the Offer, the waiting period would be extended
and would expire at 11:59 p.m., New York City time, on the tenth calendar day
after the date of substantial compliance by the Purchaser with such request.
Only one extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, such waiting period may be
extended only by court order or with the consent of the Purchaser. In practice,
complying with a request for additional information or material can take a
significant amount of time. In addition, if the Antitrust Division or the FTC
raises substantive issues in connection with a proposed transaction, the parties
frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions. At any time before or after Purchaser's
acquisition of the Shares pursuant to the Offer, the Antitrust Division or the
FTC could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
the Shares pursuant to the Offer or seeking the divestiture of the Shares
acquired by Purchaser. Private parties may also bring legal action under the
antitrust laws under certain circumstances. There can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such a
challenge is made, of the result thereof.
Proceedings Involving TKG and the Company. On March 16, 1998, TKG filed a
complaint in the Court of Chancery of the State of Delaware against the Company
seeking a temporary restraining order enjoining the Company from taking any
action to terminate the TKG Merger Agreement and from taking any action to
"frustrate the right of the shareholders of [the Company] from considering and
voting upon the Merger Agreement" at the impending March 25th meeting of the
Company's shareholders.
In its complaint, TKG alleged that a breach by the Company of the TKG
Merger Agreement was imminent. The Company had notified TKG that it had received
a "Superior Proposal" (as defined in the TKG Merger Agreement) from RCBA. Under
the TKG Merger Agreement, the receipt of a "Superior Proposal" could, in certain
circumstances, give the Company the right to terminate the agreement. TKG
alleged that RCBA's bid was not a "Superior Proposal" because of uncertainties
with regard to financing and timing of payments. In addition, TKG alleged that,
even if RCBA's bid were a "Superior Proposal," the Company could not properly
terminate the TKG Merger Agreement since it did not have the funds necessary to
pay the related termination fee and had not made "irrevocable arrangements" to
assure such payment, as required by the TKG Merger Agreement.
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On March 17, 1998, the Court granted the requested injunction. The Court
ordered the Company, its Advisory Board members, directors, officers, agents,
employees and attorneys to "facilitate a decision by share holders of [the
Company] to approve or reject" the TKG Merger Agreement and enjoined such
persons (and any persons in active concert or participating with the Company)
from canceling the impending shareholders' meeting or postponing it beyond March
28, 1998. The Court also enjoined such persons from taking any steps to
terminate the TKG Merger Agreement based on the relevant proposals received by
the Company from RCBA and ordered the Company to inform its shareholders of the
Court's ruling and of certain correspondence that had occurred between each of
RCBA and TKG and the Company.
Pursuant to the Order, the Company held the shareholders' meeting on March
28, 1998, at which a majority of the shareholders of the Company voted against
the proposed TKG Merger Agreement.
On March 26, 1998, TKG had filed a substantively similar complaint against
the Company in the United States District Court for the Northern District of
California. The Court issued an order on March 27, 1998, refusing to require
RCBA to withdraw its merger offer and refusing to enjoin RCBA from engaging in
further efforts to advance merger offers with the Company. However, the Court
required the Company to supplement certain of its disclosures under the federal
securities laws with information regarding transactions in the Company's
securities and financing for their offer.
Proceedings Involving TKG and RCBA. On March 17, 1998, TKG sued Mr. Blum,
RCBA, RCBA, Inc. and the Purchaser in the United States District Court for the
Northern District of California. TKG's complaint claimed that the defendants had
violated the Williams Act by failing to disclose certain information concerning
the offer made to Triad Park's Advisory Board on March 13, 1998. Shortly after
filing the complaint, TKG moved for a temporary restraining order, for an order
to show cause why a preliminary injunction should not issue pending trial, and
for permission to conduct expedited discovery. The defendants opposed the TKG
requests on many grounds including the fact that the defendants had amended
their filings under the federal securities laws to disclose the information
requested by TKG (whether or not required by the federal securities laws). On
March 26, 1998, the United States District Court granted in part TKG's request
for a temporary restraining order and denied all other requests made by TKG. The
United States District Court ordered the defendants to make certain information
available no later than March 27, 1998. The defendants complied with the Court
order by issuing a press release on March 26 and by taking other actions
required by the Court. The defendants have also answered TKG's complaint,
denying all material allegations of wrong-doing. It is unknown at this time
whether TKG will continue to pursue this lawsuit. The defendants believe the
lawsuit is without merit.
13. FEES AND EXPENSES
Georgeson & Company Inc. has been retained by the Purchaser as Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, facsimile and personal interview and may request
brokers, dealers and other nominee shareholders to forward material relating to
the Offer to beneficial owners of Shares. The Purchaser will pay the Information
Agent reasonable and customary compensation for all such services in addition to
reimbursing the Information Agent for reasonable out-of-pocket expenses in
connection therewith. The Purchaser has agreed to indemnify the Information
Agent against certain liabilities and expenses in connection with the Offer,
including, without limitation, certain liabilities under the U.S. federal
securities laws.
Harris Trust Company of New York has been retained as the Depositary. The
Purchaser will pay the Depositary reasonable and customary compensation for its
services in connection with the Offer, will reimburse the Depositary for its
reasonable out-of-pocket expenses in connection therewith and will indemnify the
Depositary against certain liabilities and expenses in connection therewith,
including, without limitation, certain liabilities under the federal securities
laws.
Neither Purchaser nor the Managers will pay any fees or commissions to any
brokers, dealers and other persons (other than the Information Agent) in
connection with the solicitation of tenders of Shares of their clients pursuant
to the Offer. Brokers, dealers, commercial banks and trust companies and other
nominees
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will, upon request, be reimbursed by the Purchaser for customary clerical and
mailing expenses incurred by them in forwarding offering materials to their
clients.
The estimated costs and fees of the Purchaser in connection with the Offer
are as follows:
<TABLE>
<S> <C>
Legal Fees.................................................. $150,000
Printing and Mailing Expenses............................... $ 50,000
Filing Fees................................................. $ 6,371
Depository Fees............................................. $ 20,000
Information Agent Fees...................................... $ 12,000
Miscellaneous............................................... $ 20,000
TOTAL............................................. $258,371
</TABLE>
14. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the securities,
blue-sky or other laws of such jurisdiction. Neither the Purchaser nor the
Managers is aware of any jurisdiction in which the making of the Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction. If the Purchaser or the Managers becomes aware of any jurisdiction
where the making of the Offer or the tender of Shares is not in compliance with
any applicable law, the Purchaser will make a good faith effort to comply with
such law. If, after such good faith effort, the Purchaser cannot comply with
such law, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of Shares residing in such jurisdiction. To the extent
the Purchaser becomes aware of any state law that would limit the class of
offerees in the Offer, the Purchaser may amend the Offer and, depending on the
timing of such amendment, if any, may extend the Offer to provide adequate
dissemination of such information to such holders of Shares prior to the
expiration of the Offer. In any jurisdiction the securities, blue sky or other
laws of which require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of the Purchaser by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED HEREIN OR IN THE LETTER
OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
15. ADDITIONAL INFORMATION
This Tender Offer 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 RCBA Merger Agreement, RCBA owned 1,998,158 Shares
which represented approximately 10.1% of the voting power of the Company's
Shares. This Tender Offer Statement does not contain all of the information set
forth in the Rule 13e-3 Transaction Statement filed concurrently with the Offer
(the "Schedule 13e-3"), parts of which are omitted in accordance with the
regulations of the Commission.
In addition, the Purchaser and the Managers have filed with the Commission
a Schedule 14d-1 (the ("Schedule 14d-1") pursuant to Rule 14d-3 under the
Exchange Act, together with exhibits, furnishing certain additional information
with respect to the offer, and may file amendments thereto.
The Schedule 13e-3 and Schedule 14d-1, and any amendments thereto,
including exhibits filed as part thereof, will be available for inspection and
copying at the offices of the Commission set forth above.
TPL ACQUISITION, LLC
April 1, 1998
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SCHEDULE I
MANAGEMENT OF THE COMPANY, RCBA, RCBA, INC. AND PELL
Certain information concerning the directors and executive officers of the
Company, RCBA, RCBA, Inc. and Pell 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, RCBA, Inc or Pell, as the case
may be.
THE COMPANY
The names and 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 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 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 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 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 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 ITS AFFILIATES
RCBA. The names and 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 has been President and Chairman of RCBA since 1994 and has
been President and Chairman of RCBA, Inc. since 1985.
Nils Colin Lind 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 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.
33
<PAGE> 36
William C. Johnston 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 has been a Managing Director of RCBA since April 1997. Prior
to that, he held various positions with Pexco Holdings, Inc. from October 1992
until March 1997.
Murray A. Indick 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. 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 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 has been a Director of RCBA, Inc. since May 1985. He has
been Chairman of Loeb Partners Corp. since December 1979.
RCBA, INC. The names and, unless already set forth under "-- RCBA" above,
the principal occupations and employment history for the past five years of the
directors and executive officers of RCBA, Inc. are set forth below.
Richard C. Blum, President, Chairman and Director. Mr. Blum is the majority
shareholder of RCBA, Inc.
Nils Colin Lind, Managing Director and Director.
Jeffrey W. Ubben, Managing Director of Investments.
Murray A. Indick, Managing Director, General Counsel and Secretary.
George F. Hamel, Jr., Managing Director of Marketing.
Marc T. Scholvinck, Managing Director and Chief Financial Officer.
Thomas L. Kempner, Director.
PELL
The names and principal occupations and employment history for the past
five years of the co-owners of Pell are set forth below.
Eda Pell has been co-owner of Pell for at least the past five years.
Joseph Pell has been co-owner of Pell for at least the past five years.
34
<PAGE> 37
ANNEX I
FORM 10-KSB OF THE COMPANY
I-1
<PAGE> 38
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
COMMISSION FILE NUMBER 0-22343
TRIAD PARK, LLC
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 94-3264115
(STATE OR OTHER JURISDICTION OF INCORPORATION (IRS EMPLOYER
OR ORGANIZATION) IDENTIFICATION NO.)
3055 TRIAD DRIVE
LIVERMORE, CA 94550
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
Registrant's telephone number, including area code: (510) 449-0606
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Membership
Interests, no par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes [ ] No
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
The issuer's revenues for its most recent fiscal year were $4,176,000.
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 6, 1998 was $25,900,694 (computed by reference to the
average bid and asked prices of such stock on March 6, 1998 as reported in the
over-the-counter market.)
As of December 31, 1997, the registrant had outstanding 19,708,123
membership interests ("shares") with no par value.
================================================================================
<PAGE> 39
PART I
ITEM 1. DESCRIPTION OF THE BUSINESS
SUMMARY
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 292 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.
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 members of the Company's Advisory
Board are Stanley F. Marquis, James R. Porter, William W. Stevens and Martin W.
Inderbitzen. Information regarding each member may be found under Part III, Item
9.
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.
2
<PAGE> 40
ITEM 2. DESCRIPTION OF PROPERTY:
Pursuant to the 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" 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 laws, the Comprehensive Environmental
Response, Compensation, 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.
As of December 31, 1997, the Property consisted of approximately 292 acres
of unimproved land and the 220,000 (approximate) square feet of office space
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 292 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 six lots and contains
approximately 103.7 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.
3
<PAGE> 41
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.
The Livermore City Council by resolution has accepted the offer to dedicate
the 4.54 acre parcel for transportation improvements. Thus, once the dedication
is complete the Company will own approximately 287.5 acres of unimproved land.
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 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.
ITEM 3. LEGAL PROCEEDINGS
The Company was not a party to any lawsuit during the reporting period.
On Monday, March 16, 1998, TKG Acquisition Company, LLC ("TKG Acquisition")
filed suit against the Company in the Delaware Court of Chancery (the "Court").
The lawsuit was related to the Company's attempt to terminate the merger
agreement between the company, TKG Acquisition, LLC and its sole and managing
member, The Kontrabecki Group, Inc. ("TKG") dated February 1, 1998 (the "Merger
Agreement"). In its suit, TKG Acquisition sought an order: (i) temporarily,
preliminarily and permanently enjoining the Company from taking any action to
terminate the Merger Agreement based on a new acquisition proposal the Company
received from Richard C. Blum & Associates, L.P. ("RCBA"), (ii) temporarily,
preliminarily and permanently enjoining the Company from taking any action to
frustrate the right of the company's shareholders from considering and voting
upon the Merger Agreement at a scheduled March 25, 1998, shareholders' meeting
and (iii) specifically enforcing all of the terms and conditions fo the Merger
agreement. TKG argued, among other things, that RCBA's financing is not fully
committed and therefore the RCBA proposal cannot be considered a "Superior
Proposal" (as defined in the Merger Agreement) because the language of Section
7.6(d) states that a Superior Proposal is one "for which financing, to the
extent required, is then committed."
On Tuesday, March 17, 1998, the Court held a telephonic conference call
regarding TKG's motion for a temporary restraining order. The Court granted
TKG's request for a temporary restraining order on the basis that TKG had
presented a "colorable claim" that the RCBA proposal did not constitute (i) a
Superior Proposal, and (ii) that terminating the Merger Agreement based upon the
RCBA proposal would constitute a breach of the Merger Agreement. On March
19,1998, the Court entered an order on TKG's motion for a temporary restraining
order.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
4
<PAGE> 42
PART II
ITEM 5. MARKET FOR MEMBERS EQUITY AND RELATED SHAREHOLDER MATTERS
(a) Market Information
The Shares are publicly traded, although the Shares are not registered
for trading on any exchange. The Company is aware that bid and asked 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
---------------
1997 HIGH LOW
- ---- ------ ------
<S> <C> <C>
Third Quarter (July 31 through September 30)................ $1.26 $0.75
Fourth Quarter.............................................. $1.30 $1.25
</TABLE>
(b) Holders
As of February 20, 1998, the Company had approximately 1,396
shareholders of record.
(c) Dividends
The Company has never paid a cash distribution on the Shares and does
not anticipate paying any such distribution in the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The following Management's Discussion and Analysis is based upon and should
be read in conjunction with the Company's financial statements and notes thereto
included elsewhere in this annual report.
RESULTS OF OPERATIONS
Revenues generated from the leasing of the facilities located at 3055 Triad
Drive were $2.5 million in the years ended September 30, 1996 and December 31,
1997 and $.6 million for the three month periods ended December 31, 1996 and
1995. These revenues are pursuant to a lease agreement in effect through
February 2002. See "Management's Discussion and Analysis-Liquidity and Capital
Resources." Revenues from land sales were $3.8 million during the year ended
September 30, 1996. There were two land sales totaling $1.7 million during the
year ended December 31, 1997. Revenues from land sales were $640,000 for the
three months ended December 31,1996 with no land sales during the comparable
period in the prior year. Overall gross margin was $2.4 million in the year
ended December 31, 1997, a decrease of 31% compared to the gross margin of $3.5
million in the year ended September 30, 1996. The difference was attributed to a
decline in the land sale revenue as well as lower margins in 1997. Gross margin
for the three months ended December 31, 1996 was $678,000 compared to $491,000
for the three months ended December 31, 1995. The increase was directly
attributed to land sales.
The Company had a net loss of $324,000 for the year ended December 31, 1997
compared to net income of $521,000 for the year ended September 30, 1996. The
decrease is due principally to the reduction in land sale revenue as well as
higher general and administrative expenses in 1997. The increase from a loss of
$130,000 for the three months ended December 31, 1995 to a loss of $8,000 for
the three months ended December 31, 1996 was due to the absence of land sales in
the earlier period.
5
<PAGE> 43
LAND SALES
As of December 31, 1997, the Company had approximately 292 acres of
unimproved land remaining to be sold. Approximately 35.9 acres are zoned for
retail/commercial use, 28.1 acres for residential use, and 103.7 acres for
retail/light industrial/office use. The remaining acres are zoned for open
space/agricultural and transportation purposes. The Company sold two parcels
totaling 10.6 acres for $1.7 million during the year ended December 31, 1997.
Four parcels totaling 25.5 acres were sold during the year ended September 30,
1996 for $3.8 million and one parcel of 4.1 acres for $640,000 during the three
months ended December 31, 1996. There were no land sales during the three months
ended December 31, 1995.
GROSS MARGIN
Land sale gross margins were 41% for the year ended September 30, 1996
compared to 29% for the year ended December 31, 1997. The percentage decline
resulted from the cost of a required street extension and increased net
assessment improvements. Likewise, there was a 29% gross margin on land sales
for the three months ended December 31, 1996. Gross margins on rental income
were approximately the same for all periods as the properties are subject to a
triple net lease whereby substantially all operating expenses are paid by the
tenant.
COSTS AND EXPENSES
Land-related sales expenses include broker commissions, escrow fees, etc.,
and totaled $369,000 for the year ended September 30, 1996 and $64,000 for the
three months ended December 31, 1996. The sales expenses for the year ended
December 31, 1997 were $108,000. The decrease from the year ended September 30,
1996 is a result of fewer land sales.
General and administrative expenses consist of property taxes and other
general management and operational costs including costs necessary to maintain
the appearance of the land in a marketable condition and personnel and overhead
expenses required for the development, management and marketing of the
properties. These expenses were $.7 million for the year ended September 30,
1996 compared to $1.1 million for the year ended December 31, 1997 with the
increase attributed to increased legal and professional expenses. Operating
expenses were similar for the quarters ending December 31, 1995 and 1996.
Interest expense consists of mortgage interest in the buildings and the
bonded indebtedness incurred in connection with the development improvements and
community services. Interest expense was approximately $1.9 million for the year
ended September 30, 1996, compared to $1.6 million for the year ended December
31, 1997. The reduction is due to normal debt maturation. Interest expense for
the quarters ending December 31, 1995 and 1996 was relatively unchanged at
$472,000 and $449,000, respectively. See "Management's Discussion and
Analysis-Liquidity and Capital Resources."
FUTURE OPERATING RESULTS
Future operating results are dependent upon the Company's ability to
dispose of its real estate assets. Risks that affect real estate sales include,
but are not limited to, the relative illiquidity of real estate investments, the
ability to obtain entitlements from governmental agencies, changing tax
assessments, compliance with environmental requirements, and general risks such
as changes in interest rates and changes in local market conditions which affect
real estate values. The future operating results may also be affected by the
Company's relationship with CCI/Triad. These risks include, but are not limited
to, the indemnification agreement between the Company and CCI/Triad, potential
conflicts of interest within the management and representation of the Company
and CCI/Triad, and reliance upon CCI/Triad lease payments for the Company's
financial performance.
On September 9, 1997, the Company entered into an Agreement of Merger with
TPL Acquisition, LLC and Richard C. Blum Associates, LP, a California limited
partnership ("RCBA"), subject to approval of the Members, in which TPL
Acquisition, LLC would have merged with and into the Company and each share
would have been converted into the right to receive a cash payment of $1.32 per
share from RCBA or TPL
6
<PAGE> 44
Acquisition, LLC. On February 1, 1998, the Company notified RCBA that it was
terminating the Merger Agreement pursuant to a provision contained in the Merger
Agreement allowing either party to terminate should the merger fail to be
consummated on or prior to January 31, 1998.
On February 1, 1998, the Company entered into an Agreement of Merger with
The Kontrabecki Group, Inc., a California corporation("TKG"), and TKG
Acquisition Company LLC, a Delaware limited liability corporation whose sole and
managing member is TKG ("Acquisition LLC"), subject to approval of the Members,
in which Acquisition LLC will be merged with and into the Company and each
outstanding share will be converted into the right to receive a cash payment of
$1.65125 per share from TKG or Acquisition LLC. Following the merger of
Acquisition LLC and Triad Park, LLC, all obligations and contingent liabilities
of Triad Park, LLC will remain with Triad Park, LLC as the surviving company in
the merger and will not become obligations or liabilities of the Members. If the
Merger is not consummated on or before March 31, 1998, either Acquisition LLC or
the Company may terminate the Agreement of Merger provided that certain
conditions are met. Under certain circumstances, the Company is obligated to pay
a termination fee of $1.2 million to Acquisition LLC. A copy of the Agreement of
Merger was included as Exhibit 2.1 to the Company's Form 8-K filed with the
Securities and Exchange Commission on February 9, 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's ability to continue funding its current business will depend
upon the timing and volume of land sales, without taking the merger of the
Company and TKG into account. Receipts from rental of its buildings under the
existing lease agreements are expected to be sufficient to fund mortgage
obligations for the foreseeable future. Currently, there is a lease agreement
for the Company's buildings in effect through February 2002 with an option to
renew for an additional term of five years. All expenses related to the
buildings are paid by the tenant as required by the "triple net lease". The
Company's ability to repay the remaining assessment district debt and operating
expenses are dependent in part on making future land sales. To the extent
additional working capital is required, management expects that it will have
sufficient borrowing capacity to finance any needs which may arise in the
ordinary course of business.
On March 24, 1997, the City of Livermore completed the sale of Mello-Roos
bonds which raised a total of $9,070,000 in new funds, of which approximately
$6,944,000 encumbered property owned by the Company. The proceeds were
designated to refinance $2,255,000 of prior bonded indebtedness, to fund the
reimbursement to the Company of approximately $2,045,000 of previously completed
improvements, to provide funds of approximately $3,700,000 to complete
improvements required by various agreements with the City of Livermore and
others, to pay financing expenses of $610,000 and to create a reserve fund of
approximately $673,000. Of the indebtedness, approximately $5,218,000 was an
additional encumbrance to the property owned by the Company and $1,726,000
refinanced existing debt. In the quarter ended June 30, 1997, the Company
received approximately $1,485,000 from the City of Livermore as reimbursement
for previously completed projects totaling $2,085,000, net of a surety deposit
of $600,000. In the quarter ended December 31, 1997, the Company received an
additional $177,000 for completion of a designated project. The amounts received
were recorded as reductions to the assessment receivable.
In addition, the Company is obligated to undertake an estimated additional
$7,000,000 in improvements to its land in connection with its approved
development plan. The City of Livermore is expected to issue bonds to reimburse
the Company for such improvements. Improvements are funded as projects are
completed. The current estimates for the required improvements indicate that
bonded funding limits are expected to be adequate to cover the remaining items
of improvement. However, the actual costs 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 effect on the value of the land.
7
<PAGE> 45
ITEM 7. FINANCIAL STATEMENTS
TRIAD PARK, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
BALANCE SHEETS
(AMOUNTS SHOWN IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
ASSETS
Cash........................................................ $ -- $ 1,249
Land........................................................ 27,876 27,634
Property, plant and equipment............................... 12,362 12,520
Assessments receivable...................................... 2,091 1,667
Property development commitments............................ -- 3,031
Prepaid expenses and other assets........................... -- 477
------- -------
Total assets................................................ $42,329 $46,578
======= =======
LIABILITIES AND MEMBERS' EQUITY
Debt........................................................ $18,840 $21,891
Other liabilities........................................... -- 631
------- -------
Total liabilities........................................... 18,840 22,522
------- -------
Commitments and contingencies (Note 9)......................
Members' shares; no par value; 19,708,123 shares outstanding
at December 31, 1997...................................... -- --
Members' equity............................................. 23,489 24,056
------- -------
Total liabilities and members' equity....................... $42,329 $46,578
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 46
TRIAD PARK, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
STATEMENTS OF OPERATIONS
(AMOUNTS SHOWN IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED FOR THE
YEAR ENDED DECEMBER 31, YEAR ENDED
SEPTEMBER 30, ------------------- DECEMBER 31,
1996 1995 1996 1997
------------- -------- -------- ------------
UNAUDITED
<S> <C> <C> <C> <C>
Revenues:
Rental income................................ $ 2,506 $ 627 $ 627 $ 2,506
Land sales................................... 3,795 -- 640 1,670
------- ------- ------- -------
Total revenues............................... 6,301 627 1,267 4,176
Depreciation of rental property.............. 547 136 137 557
Cost of land sold............................ 2,231 -- 452 1,192
------- ------- ------- -------
Gross Margin................................. 3,523 491 678 2,427
------- ------- ------- -------
Costs and Expenses:
Sales expenses............................... 369 -- 64 108
General and administrative................... 723 162 174 1,075
------- ------- ------- -------
Total costs and expenses..................... 1,092 162 238 1,183
------- ------- ------- -------
Operating income............................. 2,431 329 440 1,244
Interest expense.................................. 1,857 472 449 1,577
------- ------- ------- -------
Income (loss) before provision for (benefit
from) income taxes......................... 574 (143) (9) (333)
Provision for (benefit from) income taxes......... 53 (13) (1) (9)
------- ------- ------- -------
Net income (loss)............................ $ 521 $ (130) $ (8) $ (324)
======= ======= ======= =======
Net income (loss) per share.................. $ 0.03 $ (0.01) $ (0.00) $ (0.02)
======= ======= ======= =======
Shares used in per share calculation (a)..... 19,708 19,708 19,708 19,708
======= ======= ======= =======
</TABLE>
- ---------------
(a) The number of shares used to compute earnings per share assumes that shares
issued in connection with the spin-off were outstanding for all periods
presented.
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 47
TRIAD PARK, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
STATEMENTS OF MEMBERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1996
AND DECEMBER 31, 1997 AND THE THREE
MONTHS ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
UNDISTRIBUTED
UNALLOCATED EARNINGS TOTAL MEMBERS'
CAPITAL (LOSSES) EQUITY
------------- -------- --------------
<S> <C> <C> <C>
Balance, September 30, 1995............................... $29,319 $(5,222) $24,097
Distributions........................................ (988) -- (988)
Net income........................................... 521 521
------- ------- -------
Balance, September 30, 1996............................... 28,331 (4,701) 23,630
Distributions........................................ (133) -- (133)
Net loss............................................. (8) (8)
------- ------- -------
Balance, December 31, 1996................................ 28,198 (4,709) 23,489
Contributions........................................ 891 -- 891
Net loss............................................. (324) (324)
------- ------- -------
Balance, December 31, 1997................................ $29,089 $(5,033) $24,056
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 48
TRIAD PARK, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
STATEMENTS OF CASH FLOWS
(AMOUNTS SHOWN IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, YEAR ENDED
SEPTEMBER 30, ------------------- DECEMBER 31,
1996 1995 1996 1997
------------- -------- -------- ------------
UNAUDITED
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).................................... $ 521 $(130) $ (8) $ (324)
Gain from sale of land............................... (1,194) -- (124) (490)
Depreciation and amortization........................ 567 141 143 640
Provision for doubtful accounts...................... -- -- -- 65
Changes in assets and liabilities:
Increase in prepaid expenses and other assets... -- -- -- (539)
Increase in other liabilities................... -- -- -- 631
------- ----- ------ -------
Net cash provided by (used in) operating
activities.................................... (106) 11 11 (17)
------- ----- ------ -------
Cashflows from investing activities:
Land sales........................................... 3,523 -- 576 1,561
Investment in property, plant and equipment.......... (15) (3) -- (113)
Acquisition of land.................................. (972) -- -- --
Land improvements.................................... (146) (38) (30) (14)
Assessment district improvements..................... (214) (80) (18) (1,303)
------- ----- ------ -------
Net cash provided by (used in) investing
activities.................................... 2,176 (121) 528 131
------- ----- ------ -------
Cash flows from financing activities:
Repayment of debt.................................... (1,082) (443) (406) (1,418)
Reimbursement for property improvements.............. -- -- -- 1,662
Members' contribution (distribution) net of note
receivable......................................... (988) 553 (133) 891
------- ----- ------ -------
Net cash provided by (used in) financing
activities.................................... (2,070) 110 (539) 1,135
------- ----- ------ -------
Net increase in cash................................. -- -- -- 1,249
Cash, beginning of period............................ -- -- -- --
------- ----- ------ -------
Cash, end of period.................................. $ -- $ -- $ -- $ 1,249
======= ===== ====== =======
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest............................................. $ 1,857 $ 472 $ 449 $ 1,735
------- ----- ------ -------
Income taxes......................................... $ 53 $ -- $ 5 $ --
------- ----- ------ -------
Noncash Investing and Financial Activity:
Land reclassified from (to) property, plant and
equipment to (from) land for resale................ $ -- $ -- $5,672 $ (444)
------- ----- ------ -------
Bond issuance resulting in increased assessment
district improvements and related debt............. $ -- $ -- $ -- $ 5,218
------- ----- ------ -------
Assessment district improvements and related debt
transferred upon sale.............................. $ 1,348 $ -- $ 224 $ 850
------- ----- ------ -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE> 49
TRIAD PARK, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION:
Triad Park, LLC (the Company) is a Delaware limited liability company
organized to effect the spin-off of certain real estate assets and related
liabilities of Cooperative Computing, Inc., a Delaware Corporation, formerly
known as Triad Systems Corporation (Triad). On October 17, 1996 Triad signed a
definitive merger agreement with Cooperative Computing, Inc. (CCI), a Texas
corporation, and its affiliate, CCI Acquisition Corp. (CAC), a Delaware
corporation, under which CCI, through CAC, would acquire Triad. Pursuant to the
terms of the merger agreement, CCI, through CAC, commenced a cash tender offer
for all outstanding shares of Triad at a price of $9.25 per share on October 23,
1996. As a condition precedent to completion of the merger, Triad arranged for
the spin-off of certain real estate assets and related liabilities (the
Predecessor Business) to Triad stockholders.
On February 27, 1997, immediately prior to completion of the tender offer,
Triad contributed such assets and related liabilities to the Company which were
recorded by the Company based on historical cost of the Predecessor Business.
Under the terms of the Real Estate Distribution Agreement (the Agreement), all
indebtedness of Triad or any of its subsidiaries secured, in whole or in part,
by any of the contributed assets have been assumed by the Company. Stockholders
of Triad received one Triad Park LLC membership interest for each share of Triad
common stock held as of February 26, 1997, the Distribution Record Date.
The Company's operations include the ownership and management of the
spun-off real estate assets, all of which are located in Livermore, California,
for their orderly liquidation and distribution of related net proceeds to the
holders of membership interests ("Members"). The Company's shares are owned 99%
by the former shareholders of Triad and 1% by 3055 Management Corp ("the
Manager"). The Manager is responsible for management and control of the business
of the Company, subject to certain required approvals of the Advisory Board. The
Members may elect or vote to remove members of the Advisory Board.
The Company will be dissolved upon the earlier of a majority vote to
dissolve the Company or upon the sale or other disposition of all or
substantially all of the assets and properties of the Company and distribution
of the proceeds to the members. The financial statements presented herein
include the financial position, results of operations and cash flows of the
Predecessor Business through February 27, 1997 as if the Company had existed as
a corporation separate from Triad with all periods presented on a historical
basis and may not be indicative of actual results of operations and financial
position of the Company as an independent stand-alone entity. The statements of
operations through February 27, 1997 reflect certain expense items incurred by
Triad which are allocated to the Company on a basis which management believes
represents a reasonable allocation of such costs. These allocations consist
primarily of corporate expenses such as management and accounting services.
Expenses related to the normal recurring management activities of the Company
through February 27, 1997 have been allocated based on an estimate of Triad
personnel time dedicated to the operations and management of the Company.
Separate information for the period from January 1, 1997 to February 27, 1997 is
not presented due to the immateriality of operating results and changes in
financial position during this period.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the reported
periods. Actual results could differ from those estimates.
12
<PAGE> 50
TRIAD PARK, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
LAND:
Land held for resale includes developed lots, land underdeveloped and raw
land. Land held for resale is carried at the lower of cost or market. The cost
of development of building lots includes the land, the related costs of
development (planning, survey, engineering and other) and interest costs during
development, all of which are capitalized. The carrying costs of property held
for resale, interest expense, property taxes and other are expensed. Common
costs are allocated based on square footage and relative market value.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment are stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the related
assets. Leasehold improvements are amortized using the straight-line method over
their estimated useful lives or the lease term, whichever is less. As property,
plant and equipment are disposed of, the asset cost and related accumulated
depreciation or amortization are removed from the accounts, and the resulting
gains or losses are reflected in operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS:
Carrying amounts of certain of the Company's financial instruments
including cash, assessments receivable, accounts payable and other accrued
liabilities approximate fair value due to their short maturities. Based on
borrowing rates currently available to the company for loans with similar terms,
the carrying value of mortgage obligations and assessment district improvement
bond obligations also approximate fair value.
DEBT ISSUANCE COSTS:
The unamortized costs associated with the issuance of debt are recorded
with the associated liability. Amortization is computed according to the
interest method for debt issuance costs and is included in interest expense.
Upon retirement of remaining principal balances, the associated unamortized
costs are reflected in operations.
REVENUE RECOGNITION:
Profits on sale of developed lots, developed land and raw land are
recognized in accordance with standards established for the real estate industry
which generally provide for deferral of all or part of the profit on a sale if
the buyer does not meet certain down payment requirements or certain other tests
of the buyer's financial commitment to the purchase, or the Company is required
to perform significant obligations subsequent to the sale. Cost of land sold
includes an allocated portion of acquisition and development costs along with
sales commissions, closing costs and other costs specifically related to the
sale.
INCOME TAXES:
The Company does not provide for income taxes as all income and losses are
allocated to the members for inclusion in their respective state and federal tax
returns. Prior to the quarter ending December 31, 1997, the company had elected
to be treated as a taxable entity in the state of California. During the
calendar quarter ending December 31, 1997, legislation was enacted retroactive
to January 1, 1997 requiring an entity to use the same election for both federal
and state purposes. The Company changed its election to comply with this
legislation.
13
<PAGE> 51
TRIAD PARK, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
UNAUDITED INTERIM PERIOD ENDED DECEMBER 31, 1995:
In the opinion of management, the unaudited interim financial statements
for the three months ended December 31, 1995 include all adjustments, consisting
only of those of a normal recurring nature, necessary for fair presentation.
FISCAL YEAR:
As a limited liability corporation, the Company is treated as a partnership
for federal income tax purposes and is therefore required to use a calendar
based fiscal year end whereas Triad had a fiscal year based on the twelve months
ending on September 30 of each year. Accordingly, the accompanying financial
statements include audited financial statements for the three-month transition
period ending December 31, 1996. Unaudited financial statements are presented
for the three-month period ended December 31, 1995 for comparative purposes
only.
NET INCOME (LOSS) PER SHARE:
The number of shares used to compute earnings per share assumes that shares
issued in connection with the spin-off were outstanding for all periods
presented. Net income (loss) per share has been computed in accordance with SFAS
128. Basic net income (loss) per share is computed using the weighted average
common shares outstanding during the period and are presented for all periods as
if the spin-off had occurred at the beginning of the earliest period presented.
Basic and diluted net income per share are the same for all periods presented.
3. RELATED PARTY AGREEMENT:
The Company's developed commercial property, consisting of three buildings
and improvements on approximately 15 acres, is occupied by Triad under a lease
agreement that provides for annual rent of $2,505,720 payable monthly in advance
through February 1999 and prevailing market rate thereafter, providing that
annual rental shall not fall below the rate in effect at the date of
renegotiation nor exceed 120% of such rental rate. Payments under the lease are
on a "net lease" basis, free of any impositions and with out abatement,
deduction or set-off. The tenant is required to pay all impositions (e.g. taxes,
assessments, water and sewer charges, excises, levies, etc.) in addition to the
annual rent.
Certain officers of the Company are also officers or employees of Triad.
The stock of 3055 Management Corp. is owned by two of Triad's current or former
directors. In February 1997, in connection with the Company's capitalization, a
promissory note of $142,000 was received from 3055 Management Corp. for purchase
of 1% of the membership interests. This note was redeemed as of the quarter
ended December 31, 1997.
14
<PAGE> 52
TRIAD PARK, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. LAND:
Land consists of property in Livermore, California, classified by planned
use as follows (Dollars shown are in thousands and acreage is approximate.):
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1997
USE CLASSIFICATION ACREAGE/COST ACREAGE/COST
------------------ ------------------- -------------------
<S> <C> <C> <C> <C>
Residential....................................... 28.1 $ 4,029 28.1 $ 4,311
Retail/commercial................................. 35.9 4,797 35.9 5,788
Retail/industrial/office.......................... 114.3 17,925 103.7 16,570
Open space/agricultural........................... 112.0 -- 112.0 --
Transportation.................................... 12.3 1,125 12.3 965
----- ------- ----- -------
302.6 $27,876 292.0 $27,634
===== ======= ===== =======
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1997
----------------- -----------------
<S> <C> <C>
Building and leasehold improvements.................. $16,317 $16,429
Less accumulated depreciation........................ (4,932) (5,488)
------- -------
11,385 10,941
Land................................................. 977 1,579
------- -------
$12,362 $12,520
======= =======
</TABLE>
The above facilities and land are all subject to a lease agreement with
Triad for use as their headquarters (see Note 3).
During 1997, assessment projects were funded and the prorata portion,
$158,000, was capitalized to land included in property, plant and equipment. In
addition, a change in the valuation by the tax assessor resulted in a $444,000
reclassification which increased the land associated with property, plant, and
equipment and decreased land for resale by the same amount.
6. DEBT:
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1997
----------------- -----------------
<S> <C> <C>
Mortgage loan payable, bearing interest at 9.9% and
maturing through 2003.............................. $ 9,749 $ 8,680
Assessment district improvement bonds bearing
interest rates ranging from 4.5% to 7.25% and
maturing through 2022.............................. 9,228 13,328
Unamortized debt issuance costs...................... (137) (117)
------- -------
$18,840 $21,891
======= =======
</TABLE>
The interest rate on the mortgage financing for the Livermore headquarters
facility may be adjusted at the option of the lender in 1998 and could impact
the interest rate from 1999 to its maturity in 2003. Borrowings are
collateralized by the land and buildings and are payable in monthly
installments.
15
<PAGE> 53
TRIAD PARK, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
A portion of the Company's land for resale and the parcel retained for its
facilities are part of assessment districts and are subject to bonded
indebtedness incurred in connection with the development of improvements and
community services. Semiannual principal and interest payments on the bonds are
required as long as the parcels are owned by the Company. As the Company sells
land, the corresponding obligation will be assumed by the new owners.
On March 24, 1997, the City of Livermore entered into a Bond Indenture and
issued an additional $9,070,000 in new funds from the sale of community facility
bonds. At that time the Company owned 76.56% of the property related to this
Issuance. The Company's portion of the bond issuance was designated for
approximately $5,218,000 of additional debt and $1,726,000 for the refinancing
of existing debt. The Company recorded the net additional debt as a liability.
7. MEMBERS EQUITY:
Members have the right to vote on certain matters of the Company including
the election and removal of Advisory Board members, merger with or into another
business entity and dissolution of the Company. All the issued and outstanding
membership interests are fully paid and nonassessable. Holders of membership
interests do not have preemptive or conversion rights, nor rights to redemption
or sinking fund provisions by the Company. In the event of any liquidation,
dissolution or winding up of the Company, the holders of the membership
interests are entitled to distribution in any assets remaining after payment of
all debts and liabilities.
8. SIGNIFICANT CUSTOMERS:
The Company had land sales to four customers during the year ended
September 30, 1996 and one customer during the three months ended December 31,
1996. The Company had land sales to two customers during the year ended December
31, 1997.
9. CONTINGENCIES:
Under the terms of the Distribution Agreement (see Note 1), the Company
will indemnify and hold Triad and its subsidiaries harmless from and against
loss, cost, damage or expense arising out of or related to any failure of the
Company to discharge the obligations specified in the Agreement. The Company
will indemnify and hold Triad and its subsidiaries harmless from and against any
taxes attributed to, arising out of or relating to the Company, its formation,
the transfer of contributed assets, the assumption or refinancing of liabilities
with respect to the contributed assets, the sale, exchange, distribution,
dividend or other disposition of interests of the Company by Triad or its
subsidiaries.
To support its ability to fund the indemnity commitment to Triad, the
Company has agreed to maintain net assets with a minimum market value of
$2,350,000 based upon the most recent appraised value of the Company's then
existing real property assets until 60 days after the expiration of all statutes
of limitation related to the collection of taxes related to the transactions
contemplated by the Agreement (estimated to be approximately four years). Triad
may cause the real property to be appraised at any time and the Company must pay
one half of the expense if the most current calculation of net worth is less
than $4,000,000. Compliance with these requirements may limit the Company's
ability to make distributions to members.
The Company is obligated to undertake an estimated additional $7,000,000 in
improvements to its land held for resale in connection with its approved
development plan. The City of Livermore has indicated that it is willing to
reimburse the Company for such improvements by means of a bond financing.
Historically, the City of Livermore has been able to successfully sell its bond
offerings and the current estimates for required improvements indicate that
bonded funding limits will be adequate to cover the remaining items of
improvement. However, the actual costs of the improvements may be greater than
estimated and may exceed
16
<PAGE> 54
TRIAD PARK, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
the bond funding limit. Alternatively, if the City of Livermore is unsuccessful
in completing a bond offering, it is possible the Company would not receive any
reimbursement for such improvements. Any shortfall in the bond funding will be
borne by the Company or by purchasers of lots, which may have an adverse effect
on the value of the land.
10. RECENT ACCOUNTING PRONOUNCEMENTS:
In July 1997, the Financial Accounting Standards Board issued Statement of
Accounting Standard No. 130 (SFAS 130), "Reporting Comprehensive Income", which
requires a separate financial statement showing changes in comprehensive income,
is effective for financial statements issued for fiscal years beginning after
December 15, 1997. SFAS 130 requires reclassification of all prior-period
financial statements for comparative purposes. The Company is evaluating
alternative formats for presenting this information, but does not expect this
pronouncement to materially impact the Company's results of operations.
In July 1997, the Financial Accounting Standards Board issued Statement of
Accounting Standards No. 131 (SFAS 131), "Disclosures about Segments of an
Enterprise and Related Information", which requires companies to report certain
information about operating segments, including certain information about their
products, services, the geographic areas in which they operate and their major
customers. This statement supersedes FASB Statements Nos. 14, 18, 24, 30. SFAS
131 is effective for financial statements for fiscal years beginning after
December 15, 1997. The Company is evaluating the requirements of SFAS 131 and
the effects if any, on the Company's current reporting and disclosures.
11. SUBSEQUENT EVENT
On September 9, 1997, the Company entered into an Agreement of Merger with
TPL Acquisition, LLC and Richard C. Blum Associates, LP, a California limited
partnership ("RCBA"), subject to approval of the Members, in which TPL
Acquisition, LLC would have merged with and into the Company and each share
would have been converted into the right to receive a cash payment of $1.32 per
share from RCBA or TPL Acquisition, LLC. On February 1, 1998, the Company
notified RCBA that it was terminating the Merger Agreement pursuant to a
provision contained in the Merger Agreement allowing either party to terminate
should the merger fail to be consummated on or prior to January 31, 1998.
On February 1, 1998, the Company entered into an Agreement of Merger with
The Kontrabecki Group, Inc., a California corporation("TKG"), and TKG
Acquisition Company LLC, a Delaware limited liability corporation whose sole and
managing member is TKG ("Acquisition LLC"), subject to approval of the Members,
in which Acquisition LLC will be merged with and into the Company and each
outstanding share will be converted into the right to receive a cash payment of
$1.65125 per share from TKG or Acquisition LLC. Following the merger of
Acquisition LLC and Triad Park, LLC, all obligations and contingent liabilities
of Triad Park, LLC will remain with Triad Park, LLC as the surviving company in
the merger and will not become obligations or liabilities of the Members. If the
Merger is not consummated on or before March 31, 1998, either Acquisition LLC or
the Company may terminate the Agreement of Merger provided that certain
conditions are met. Under certain circumstances, the Company is obligated to pay
a termination fee of $1.2 million to Acquisition LLC. A copy of the Agreement of
Merger was included as Exhibit 2.1 to the Company's Form 8-K filed with the
Securities and Exchange Commission on February 9, 1998.
17
<PAGE> 55
REPORT OF INDEPENDENT ACCOUNTANTS
To the Members of
Triad Park, LLC:
We have audited the accompanying balance sheet of Triad Park, LLC (a
Delaware limited liability company) as of December 31, 1997, and the related
statements of operations, changes in members' equity and cash flows for the year
then ended. We have also audited the balance sheet at December 31, 1996 and the
related statements of operations, changes in members' equity and cash flows of
the Predecessor Business (See Note 1) for the year ended September 30, 1996 and
the three months ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Triad Park, LLC (a Delaware
limited liability company) as of December 31, 1997 and the results of its
operations and cash flows for the year then ended, in conformity with generally
accepted accounting principles. Also in our opinion, the financial statements of
the Predecessor Business referred to above present fairly, in all material
respects, the financial position of the Predecessor Business as of December 31,
1996 and the results of its operations and its cash flows for the year ended
September 30, 1996 and the three months ended December 31, 1996, in conformity
with generally accepted accounting principles.
/s/ COOPERS & LYBRAND LLP
San Jose, California
February 27, 1998
18
<PAGE> 56
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT
Certain information concerning the directors and executive officers of the
Company 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. 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.
ITEM 10. EXECUTIVE COMPENSATION
The Manager is entitled to receive an annual fee from the Company equal to
2% of the net income, if any, allocated to the Manager (in its capacity as a
Share Holder) for the preceding fiscal year. This fee is intended to compensate
the Manager for the additional California corporate income tax it will pay on
its share of the Company's income. The LLC Agreement permits the payment of
additional compensation to the Manager, with the approval of the Advisory Board.
No additional compensation has been approved and none is contemplated at the
present time. There was no fee owed or paid for the period ending December 31,
1997.
Members of the Advisory Board are entitled to receive reimbursement of
expenses and an annual retainer fee of $10,000, payable quarterly, plus a fee of
$750 for each meeting and $250 for each telephonic meeting of the Advisory Board
which they attend, as compensation for their services as members of the Advisory
Board.
19
<PAGE> 57
The following table sets forth the executive compensation paid by the
Company. The President of the company is also the facilities director for
CCI/Triad, and splits his time equally between the Company and CCI/Triad. The
Company reimburses CCI/Triad for 50% of his salary and 100% of his earned bonus.
The reimbursement paid by the Company for the period from inception to December
31, 1997 is presented below. There are no other executive officers of the
Company.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS
--------------------------- ---- ------- ------
<S> <C> <C> <C>
Larry D. McReynolds, President...................... 1997 $45,000 $7,308
</TABLE>
ITEM 11. SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information, as of December 31,
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
NAME AND ADDRESS OF OF BENEFICIAL OWNERSHIP
BENEFICIAL OWNER OF SHARES PERCENT OF CLASS
------------------- ----------------------- ----------------
<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
Mentor Partners, L.P....................................... 1,384,563(5) 7.0%
500 Park Avenue
New York, NY 10022
Pioneering Management Corporation.......................... 1,237,950 6.3%
60 State Street
Boston, MA 02109
Gabelli Funds, Inc. ....................................... 1,031,200(6) 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(7) 1.6%
3055 Triad Drive
Livermore, CA 94550
3055 Management Corp....................................... 199,072(8) 1.0%
3055 Triad Drive
Livermore, CA 94550
</TABLE>
20
<PAGE> 58
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF OF BENEFICIAL OWNERSHIP
BENEFICIAL OWNER OF SHARES PERCENT OF CLASS
------------------- ----------------------- ----------------
<S> <C> <C>
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
Blum & Associates LP ("LP"). These Shares 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. ("FCP")
and 206,700 Shares held by Tinicum Partners, L.P. ("Tinicum"). Farallon F.
Partners, L.L.C. ("FPLLC") is the General Partner of FCP and Tinicum. Thomas
Steyer is the senior managing member of FPLLC.
(5) Mentor Partners, L.P. is a limited partnership whose general partner is WTG
& Co., L.P. (the "General Partner"). The general partner of the General
Partner is D.Tisch & Co., Inc., all of the common stock of which is owned by
Daniel R. Tisch.
(6) 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.
(7) Includes 324,154 Shares held as tenant-in-common with Virda J. Stevens.
(8) 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.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 9, 1997, the Company entered into an Agreement of Merger with
TPL Acquisition, LLC and Richard C. Blum Associates, LP, a California limited
partnership ("RCBA"), subject to approval of the Members, in which TPL
Acquisition, LLC would have merged with and into the Company and each share
would have been converted into the right to receive a cash payment of $1.32 per
share from RCBA or TPL Acquisition, LLC. On February 1, 1998, the Company
notified RCBA that it was terminating the Merger Agreement pursuant to a
provision contained in the Merger Agreement allowing either party to terminate
should the merger fail to be consummated on or prior to January 31, 1998. RCBA
and related entities hold 10.2% of the outstanding shares of the Company.
21
<PAGE> 59
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
ITEM 13 (A) EXHIBIT INDEX
The exhibits filed herewith are listed in the "Index to Exhibits" on page
29 of this Form 10-KSB and are incorporated here by reference.
ITEM 13 (B) REPORTS ON FORM 8-K
The Company filed a Current Report on Form 8-K with the Securities and
Exchange Commission (the Commission) on December 9, 1997, which disclosed that
the Company had changed its fiscal year end from one ending on September 30 to a
fiscal year ending December 31. Revised financial statements were filed
concurrently with the Form 8-K in the Company's amended Schedule 14A.
22
<PAGE> 60
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TRIAD PARK, LLC
Date: March 27, 1998
--------------------------
By: 3055 Management Corp., its Manager
--------------------------------------
By: /s/ JAMES R. PORTER
--------------------------------------
James R. Porter
Vice President, Secretary and
Chief Financial Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
<TABLE>
<S> <C>
By: /s/ LARRY D. MCREYNOLDS March 27, 1998
-----------------------------------------------
Larry D. McReynolds
President
By: /s/ STANLEY F. MARQUIS March 27, 1998
-----------------------------------------------
Stanley F. Marquis
Advisory Board Member
By: /s/ JAMES R. PORTER March 27, 1998
-----------------------------------------------
James R. Porter
Advisory Board Member
By: /s/ WILLIAM W. STEVENS March 27, 1998
-----------------------------------------------
William W. Stevens
Advisory Board Member
By: /s/ MARTIN W. INDERBITZEN March 27, 1998
-----------------------------------------------
Martin W. Inderbitzen
Advisory Board Member
</TABLE>
<PAGE> 61
EXHIBIT INDEX
<TABLE>
<CAPTION>
NO. DESCRIPTION
- ---- -----------
<S> <C>
3. Charter and By-Laws
3.1 Limited Liability Company Agreement of Triad Park, LLC
(incorporated by reference to Exhibit 2.1 to Form 10-SB
(Amendment No. 1) of the Company, filed with the Securities
and Exchange Commission on June 20, 1997).
3.2 By-laws of Triad Park, LLC (incorporated by reference to
Exhibit 2.2 to Form 10-SB (Amendment No. 1) of the Company,
filed with the Securities and Exchange Commission on June
20, 1997).
4. Instruments defining the rights of security holders
4.1 Limited Liability Company agreement of Triad Park, LLC (see
Exhibit 3.1)
4.2 By Laws of Triad Park, LLC (see Exhibit 3.2)
4.3 Form of Rights Plan of Triad Park, LLC (incorporated by
reference to Exhibit 3.3 to Form 10-SB (Amendment No. 1) of
the Company, filed with the Securities and Exchange
Commission on June 20, 1997).
10. Material contracts
10.1 Real Estate Distribution Agreement, dated as of February 26,
1997, by and between Triad Systems Corporation, 3055 Triad
Dr. Corp., 3055 Management Corp. and Triad Park, LLC
(incorporated by reference to Exhibit 6.1 to Form 10-SB
(Amendment No. 1) of the Company, filed with the Securities
and Exchange Commission on June 20, 1997).
10.2 Project Lease Agreement, dated as of August 1, 1988, between
3055 Triad Dr. Corp. and Triad Systems Corporation
(incorporated by reference to Exhibit 6.2 to Form 10-SB
(Amendment No. 1) of the Company, filed with the Securities
and Exchange Commission on June 20, 1997).
10.3 First Amendment to Project Lease Agreement, dated as of
February 26, 1997, by and between Triad Park, LLC, 3055
Triad Dr. Corp. and Triad Systems Corporation (incorporated
by reference to Exhibit 6.3 to Form 10-SB (Amendment No. 1)
of the Company, filed with the Securities and Exchange
Commission on June 20, 1997).
10.4 Conflict Agreement, dated as of February 26, 1997, by and
between Triad Systems Corporation, 3055 Triad Dr. Corp.,
Triad Park, LLC and Cooperative Computing, Inc.
(incorporated by reference to Exhibit 12.3 to Form 10-SB
(Amendment No. 1) of the Company, filed with the Securities
and Exchange Commission on June 20, 1997).
10.5 Agreement of Merger dated as of September 9, 1997, by and
between TPL Acquisition, LLC, Richard C. Blum & Associates,
LP and Triad Park, LLC (incorporated by reference to Exhibit
2.1 to Form 8-K(Amendment No. 1) of the Company, filed with
the Securities and Exchange Commission on September 15,
1997).
10.6 Agreement of Merger dated as of February 1, 1998, by and
among The Kontrabecki Group, Inc., TKG Acquisition Company,
LLC, and Triad Park, LLC (incorporated by reference to
Exhibit 2.1 to Form 8-K filed with the Securities and
Exchange Commission on February 9, 1998).
</TABLE>
FINANCIAL DATA SCHEDULE
<TABLE>
<S> <C>
27.1 Financial Data Schedule
</TABLE>
<PAGE> 62
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each shareholder of the
Company or such shareholder's broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Mail: By Hand/Overnight Delivery:
Wall Street Station 88 Pine Street
P.O. Box 1023 19th Floor
New York, NY 10268-1023 New York, NY 10005
</TABLE>
By Facsimile (For Eligible Institutions Only):
(212) 701-7636
(212) 701-7637
Telephone:
(212) 701-7624
Questions and requests for assistance should be directed to the Information
Agent at its respective address or telephone numbers set forth below. Additional
copies of this Offer to Purchase, the Letter of Transmittal and all other tender
offer materials may be obtained from the Information Agent as set forth below,
and will be furnished promptly at the Purchaser's expense. You may also contact
your broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, New York 10005
(800) 223-2064
(TOLL FREE)
(212) 440-9800
(CALL COLLECT)
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER MEMBERSHIP INTERESTS,
INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE
ADDITIONAL MEMBERSHIP INTERESTS
(COLLECTIVELY, THE "SHARES")
OF
TRIAD PARK, LLC
AT
$1.80 NET PER SHARE
BY
TPL ACQUISITION, LLC
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, APRIL 29, 1998,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Facsimile By Registered or Certified Mail: By Hand/Overnight Delivery:
(For Eligible Institutions Only) Wall Street Station 88 Pine Street
(212) 701-7636 P.O. Box 1023 19th Floor
(212) 701-7637 New York, NY 10268-1023 New York, NY 10005
Confirm Receipt of Facsimile For Information Call
by Telephone (212) 701-7624
(212) 701-7624
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
YOU MUST SIGN THIS LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE
SUBSTITUTE FORM W-9 PROVIDED BELOW.
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEARS SHARE CERTIFICATE(S) AND SHARE(S)
TENDERED ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------
SHARES EVIDENCED
SHARE CERTIFICATE BY SHARE SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
TOTAL SHARES
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by shareholders delivering Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by
each Share Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
- --------------------------------------------------------------------------------
<PAGE> 2
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by shareholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or if delivery of Shares is to be made by book-entry transfer to the
Depositary's account at The Depository Trust Company ("DTC") or the Philadelphia
Depository Trust Company ("PDTC") (each a "Book-Entry Transfer Facility" and
collectively, the "Book-Entry Transfer Facilities") pursuant to the book-entry
transfer procedure described in Section 2 of the Offer to Purchase (as defined
below). Delivery of documents to a Book-Entry Transfer Facility does not
constitute delivery to the Depository.
Shareholders whose certificates evidencing Shares ("Share Certificates")
are not immediately available or who cannot deliver their Share Certificates and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) or who cannot complete
the procedure for delivery by book-entry transfer on a timely basis and who wish
to tender their Shares must do so pursuant to the guaranteed delivery procedure
described in Section 2 of the Offer to Purchase. See Instruction 2.
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
---------------------------------------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility: (CHECK ONE)
[ ] DTC
[ ] PDTC
Account Number:
-----------------------------------------------------------
Transaction Code Number:
---------------------------------------------------
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
-------------------------------------------
Window Ticket No. (if any):
------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
------------------------
Name of Institution which Guaranteed Delivery:
-----------------------------
If delivered by book-entry transfer: (CHECK ONE)
[ ] DTC
[ ] PDTC
Account Number:
------------------------------------------------------------
Transaction Code Number:
---------------------------------------------------
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to TPL Acquisition, LLC, a Delaware limited
liability company ("Purchaser") managed by Richard C. Blum & Associates, L.P., a
California limited partnership, the above described membership interests,
together with the associated rights to purchase additional membership interests
(collectively, the "Shares"), of Triad Park, LLC, a Delaware limited liability
company (the "Company") pursuant to Purchaser's offer to purchase all
outstanding Shares, at $1.80 per Share, net to the seller in cash, without
interest thereon (the "Offer Price"), upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated April 1, 1998 (the "Offer
to Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer"). The undersigned understands that the Purchaser reserves the right to
transfer or assign, in whole or from time to time in part, to one or more of its
affiliates, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, Purchaser all right, title and interest in and to all the Shares that
are being tendered hereby and all distributions and allocations (including,
without limitation, distributions of additional Shares) and rights declared,
paid or distributed in respect of such Shares on or after April 1, 1998
(collectively, "Distributions"), and irrevocably appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares and all Distributions, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver Share Certificates evidencing such Shares and all Distributions,
or transfer ownership of such Shares and all Distributions on the account books
maintained by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company, (iii) seek to transfer ownership of such Shares in the
Share Registry maintained by the Company's transfer agent (and execute and
deliver any accompanying evidences of transfer and authenticity any of them may
deem necessary or appropriate in connection therewith, including, without
limitation, any documents or instruments required to be executed under the
Limited Liability Company Agreement, or a "Transfer Application" and (iv)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Shares and all Distributions, all in accordance with the terms of the
Offer.
If legal title to the Shares is held through an IRA, KEOGH or similar
account, the Shareholder understands that this Letter of Transmittal must be
signed by the custodian of such IRA or KEOGH account and the Shareholder hereby
authorizes and directs the custodian of such IRA or KEOGH to confirm this Letter
of Transmittal. This Power of Attorney shall not be affected by the subsequent
mental disability of the Shareholder, and the Purchaser shall not be required to
post bond in any nature in connection with this Power of Attorney. The Purchaser
may assign such Power of Attorney to any person with or without assigning the
related Shares with respect to which such Power of Attorney was granted.
By executing this Letter of Transmittal, the undersigned represents that
either (a) the undersigned is not a plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"), or an entity deemed
to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101 of any
such plan; or (b) the tender and acceptance of Shares pursuant to the Offer will
not result in a nonexempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code.
By executing this Letter of Transmittal, the undersigned irrevocably
appoints Murray A. Indick and Mark T. Scholvinck of the Purchaser as proxies of
the undersigned, each with full power of substitution, to the full extent of the
undersigned's rights with respect to the Shares tendered by the undersigned and
accepted for payment by the Purchaser (and any and all Distributions). All such
proxies shall be considered coupled with an interest in the tendered Shares.
This appointment will be effective if, when, and only to the extent that the
Purchaser accepts such Shares for payment pursuant to the Offer. Upon such
acceptance for payment, all prior proxies given by the undersigned with respect
to such Shares (and such other Shares and securities) will, without further
action, be revoked, and no subsequent proxies may be given nor any subsequent
written consent executed by the undersigned (and, if given or executed, will not
be deemed to be effective) with respect thereto. The designees of the Purchaser
named above will, with respect to the Shares and other securities for which the
appointment is effective, be empowered to exercise all voting and other rights
of the undersigned as they in their sole discretion may deem proper at any
annual or special meeting of the shareholders of the Company or any adjournment
or postponement thereof, by written consent in lieu of any such meeting or
otherwise, and the Purchaser reserves the right to require that, in order for
Shares or other securities to be deemed validly tendered, immediately upon
3
<PAGE> 4
the Purchaser's acceptance for payment of such Shares, the Purchaser must be
able to exercise full voting rights with respect to such Shares.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, and that when such Shares are accepted
for payment by Purchaser, Purchaser will acquire good, marketable and
unencumbered title thereto and to all Distributions, free and clear of all
liens, restrictions, charges and encumbrances, and that none of such Shares and
Distributions will be subject to any adverse claim. The undersigned, upon
request, shall execute and deliver all additional documents deemed by the
Depository or Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby and all Distributions. In
addition, the undersigned shall remit and transfer promptly to the Depositary
for the account of Purchaser all Distributions in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer, and, pending such
remittance and transfer or appropriate assurance thereof, Purchaser shall be
entitled to all rights and privileges as owner of each such Distribution and may
withhold the entire purchase price of the Shares tendered hereby or deduct from
such purchase price, the amount or value of such Distribution as determined by
Purchaser in its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as otherwise stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer, including, without
limitation, the undersigned's representation and warranty that the undersigned
owns the Shares being tendered.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered, in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that either the box
entitled "Special Payment Instructions" and/or "Special Delivery Instructions"
are completed, please issue the check for the purchase price of all Shares
purchased and return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of, and/or mail such check and Share Certificates
to, the person(s) so indicated. The undersigned recognizes that Purchaser has no
obligation, pursuant to the Special Payment Instructions, to transfer any Shares
from the name of the registered holder(s) thereof if Purchaser does not purchase
any of the Shares tendered hereby.
4
<PAGE> 5
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased
or Share Certificates evidencing Shares not tendered or not purchased are to be
issued in the name of someone other than the undersigned.
Issue: [ ] check [ ] Share Certificate(s) to:
Name:
--------------------------------------------------------------
(PLEASE PRINT)
Address:
-----------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
(INCLUDE ZIP CODE)
- -------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased
or Share Certificates evidencing Shares not tendered or not purchased are to be
mailed to someone other than the undersigned, or to the undersigned at an
address other than that shown under "Description of Shares Tendered."
Issue: [ ] check [ ] Share Certificate(s) to:
Name:
--------------------------------------------------------------
(PLEASE PRINT)
Address:
-----------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
(INCLUDE ZIP CODE)
IMPORTANT
SIGN HERE
(ALSO PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Dated:
--------------------------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Share Certificates or on a security position listing or by a person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please provide the following information.
See Instruction 5.)
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (Full Title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.
-----------------------------------------------------
Taxpayer Identification or Social Security No.:
---------------------------------
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
-----------------------------------------------------------
Name:
---------------------------------------------------------------------------
(Please Type or Print)
Address:
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(Include Zip Code)
Name of Firm:
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Dated:
---------------------, 1998
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<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or by a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"), unless (i) this Letter of Transmittal is signed by the
registered holder(s) of the Shares (which term, for purposes of this document,
shall include any participant in a Book-Entry Transfer Facility whose name
appears on a security position listing as the owner of Shares) tendered hereby
and such holder(s) has (have) completed neither the box entitled "Special
Payment Instructions" nor the box entitled "Special Delivery Instructions" on
the reverse hereof or (ii) such Shares are tendered for the account of an
Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or if Shares are to be delivered by book-entry transfer pursuant to the
procedure set forth in Section 2 of the Offer to Purchase. Share Certificates
evidencing all physically tendered Shares, or a confirmation of a book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility of all
Shares delivered by book-entry transfer, as well as a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) and any other
documents required by this Letter of Transmittal, or an Agent's Message in the
case of book-entry transfers, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date (as defined in Section 1
of the Offer to Purchase). If Share Certificates are forwarded to the Depositary
in multiple deliveries, a properly completed and duly executed Letter of
Transmittal must accompany each such delivery. Shareholders whose Share
Certificates are not immediately available, who cannot deliver their Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date or who cannot complete the procedure for delivery by book-entry
transfer on a timely basis may tender their Shares pursuant to the guaranteed
delivery procedure described in Section 2 of the Offer to Purchase. Pursuant to
such procedure: (i) such tender must be made by or through an Eligible
Institution; (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, must be
received by the Depositary prior to the Expiration Date; and (iii) the Share
Certificates evidencing all physically delivered Shares in proper form for
transfer by delivery, or a confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of all Shares delivered
by book-entry transfer, in each case together with a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by this Letter of
Transmittal, or an Agent's Message in the case of book-entry transfers, must be
received by the Depositary within three trading days after the date of execution
of such Notice of Guaranteed Delivery, all as described in Section 2 of the
Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering shareholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such cases, new Share Certificate(s) evidencing the remainder of
the Shares that were evidenced by the Share Certificates delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" set forth herein, as soon as practicable after the expiration or
termination of the Offer. All Shares evidenced by Share Certificates delivered
to the Depositary will be deemed to have been tendered unless otherwise
indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
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<PAGE> 7
enlargement or any other change whatsoever. If any Share tendered hereby is
owned of record by two or more persons, all such persons must sign this Letter
of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted. Except as provided in this Instruction 6, it will not
be necessary for transfer tax stamps to be affixed to the Share Certificates
evidencing the Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" set forth herein, the appropriate
boxes on the reverse of this Letter of Transmittal must be completed.
8. WAIVER OF CONDITIONS. The conditions to the Offer may be waived by the
Purchaser in whole or in part at any time and from time to time in its sole
discretion.
9. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent at its
address or telephone number set forth below. Additional copies of the Offer to
Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.
10. SUBSTITUTE FORM W-9. Each tendering shareholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9, which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such shareholder is not subject to backup withholding of U.S. federal income
tax. If a tendering shareholder has been notified by the Internal Revenue
Service that such shareholder is subject to backup withholding, such shareholder
must cross out item (2) of the Certification box of the Substitute Form W-9,
unless such shareholder has since been notified by the Internal Revenue Service
that such shareholder is no longer subject to backup withholding. Failure to
provide the information on the Substitute Form W-9 may subject the tendering
shareholder to 31% U.S. federal income tax withholding on the payment of the
purchase price of all Shares purchased from such shareholder. If the tendering
shareholder has not been issued a TIN and has applied for one or intends to
apply for one in the near future, such shareholder should write "Applied For" in
the space provided for the TIN in Part I of the Substitute Form W-9, and sign
and date the Substitute Form W-9. If "Applied For" is written in Part I and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% on all payments of the purchase price to such shareholder until a
TIN is provided to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND
SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED
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<PAGE> 8
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS
DEFINED IN THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under U.S. federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payor)
with such shareholder's correct TIN on Substitute Form W-9 below. If such
shareholder is an individual, the TIN is such shareholder's social security
number. If the Depositary is not provided with the correct TIN, the shareholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such shareholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding of 31%.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a Form W-8, Certificate of Foreign
Status, signed under penalties of perjury, attesting to such individual's exempt
status. Forms of such statements can be obtained from the Depositary. See the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such shareholder is awaiting a TIN), and (b) that
(i) such shareholder has not been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding as a result of a failure to
report all interest or dividends or (ii) the Internal Revenue Service has
notified such shareholder that such shareholder is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering shareholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the shareholder should write "Applied For" in the space provided for the
TIN in Part 1, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the purchase price to such
shareholder until a TIN is provided to the Depositary.
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<PAGE> 9
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT Social Security Number
RIGHT AND CERTIFY BY SIGNING AND DATING BELOW OR Employee Identification Number
FORM W-9
----------------------------------------
------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART 2 -- Certification -- Under penalties of PART 3 --
INTERNAL REVENUE SERVICES perjury, I certify that:
(1) The number shown on this form is my correct Awaiting TIN [ ]
Taxpayer Identification Number (or I am
waiting for a number to be issued to me)
and
(2) I am not subject to backup withholding Please complete the Certificate of
PAYER'S REQUEST FOR TAXPAYER either because I have not been notified Awaiting Taxpayer Identification Number
IDENTIFICATION NUMBER (TIN) by the Internal Revenue Service ("IRS") below.
that I am subject to backup withholding
as a result of failure to report all
interest or dividends, or the IRS has
notified me that I am no longer subject
to backup withholding.
------------------------------------------------------------------------------------------
Certificate Instructions -- You must cross out item (2) in Part 2 above if you have been
notified by the IRS that you are subject to backup withholding because of underreporting
interest or dividends on your tax return. However, if after being notified by the IRS that
you were subject to backup withholding you received another notification from the IRS
stating that you are no longer subject to backup withholding, do not cross out item (2).
SIGNATURE -------------------------------- DATE------------------------ , 1998
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (i) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Securities Administration Office or
(ii) I intend to mail or deliver an application in the near future. I understand
that if I do not provide a Taxpayer Identification Number within 60 days, 31% of
all reportable payments made to me thereafter will be withheld until I provide a
Taxpayer Identification Number to the Depositary.
- ---------------------------------- ---------------------------------------
Signature Date
- ----------------------------------
Name (Please print)
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<PAGE> 10
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, New York 10005
Bankers and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
April 1, 1998
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ANY AND ALL MEMBERSHIP INTERESTS,
INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE
ADDITIONAL MEMBERSHIP INTERESTS,
(COLLECTIVELY, THE "SHARES")
OF
TRIAD PARK, LLC
AT
$1.80 NET PER SHARE
BY
TPL ACQUISITION, LLC
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT
NEW YORK CITY TIME, ON WEDNESDAY, APRIL 29, 1998,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
April 1, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by TPL Acquisition, LLC (the "Purchaser"), a Delaware
limited liability company managed by Richard C. Blum & Associates, L.P.
("RCBA"), a California limited partnership, to act as Information Agent in
connection with the Purchaser's offer to purchase all membership interests,
including the associated rights to purchase additional membership interests
(collectively, the "Shares"), of Triad Park, LLC (the "Company"), at a price of
$1.80 per Share, net to the seller in cash, without interest thereon (the "Offer
Price"), upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated April 1, 1998 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which, as amended from time to time, together constitute
the "Offer") enclosed herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE OFFER THAT NUMBER
OF SHARES THAT WOULD CONSTITUTE, WHEN COMBINED WITH THE SHARES OWNED BY RCBA AND
RICHARD C. BLUM AS OF THE DATE HEREOF, A MAJORITY OF ALL OUTSTANDING SHARES OF
THE COMPANY (THE "MINIMUM CONDITION"), (II) REDEMPTION OR WAIVER BY THE COMPANY
OF ITS RIGHTS PLAN, AND (III) TERMINATION BY THE COMPANY OF THE MERGER AGREEMENT
BY AND AMONG THE COMPANY, THE KONTRABECKI GROUP, INC. ("TKG") AND TKG
ACQUISITION COMPANY, LLC PURSUANT TO WHICH TKG OFFERED TO ACQUIRE THE SHARES OF
THE COMPANY FOR $1.65125 PER SHARE. THE OFFER IS NOT CONDITIONED UPON THE
RECEIPT OF FINANCING.
THE PURCHASER WILL, UPON REQUEST, REIMBURSE YOU FOR CUSTOMARY MAILING AND
HANDLING EXPENSES INCURRED BY YOU IN FORWARDING THE ENCLOSED MATERIALS TO YOUR
CLIENTS.
<PAGE> 2
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, or who hold
Shares registered in their own names, we are enclosing the following documents:
1. The Offer to Purchase, dated April 1, 1998;
2. The Letter of Transmittal to be used by holders of Shares in
accepting the Offer and tendering Shares;
3. The Notice of Guaranteed Delivery to be used to accept the Offer if
the certificates evidencing such Shares (the "Share Certificates") are not
immediately available or time will not permit all required documents to
reach the Depositary (as defined in the Offer to Purchase) prior to the
Expiration Date (as defined in the Offer to Purchase) or the procedure for
book-entry transfer cannot be completed on a timely basis;
4. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominees, with
space provided for obtaining such clients' instructions with regard to the
Offer;
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. A return envelope addressed to the Depositary.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary and certificates representing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the instructions set forth in the Letter of Transmittal and the
Offer to Purchase. Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of any
such extension or amendment), the Purchaser will purchase, by accepting for
payment, and will pay for the Shares validly tendered and not withdrawn prior to
the Expiration Date promptly after the Expiration Date. For purposes of the
Offer, the Purchaser will be deemed to have accepted for payment, and thereby
purchased, tendered Shares as, if and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance of such Shares for
payment pursuant to the Offer. In all cases, payment for Shares purchased
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) the Share Certificates or timely confirmation of a book-entry transfer of
such Shares, if such procedure is available, into the Depositary's account at
The Depository Trust Company or the Philadelphia Depository Trust Company
pursuant to the procedures set forth in Section 2 of the Offer to Purchase, (ii)
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message (as
defined in Section 2 of the Offer to Purchase) and (iii) any other documents
required by the Letter of Transmittal.
If holders of Shares wish to tender Shares, but it is impracticable for
them to forward their Share Certificates or other required documents to the
Depositary prior to the Expiration Date or to comply with the Procedures for
book-entry transfer on a timely basis, a tender may be effected by following the
guaranteed delivery procedures specified under Section 2 of the Offer to
Purchase.
The Purchaser will pay any stock transfer taxes incident to the transfer to
it of validly tendered Shares, except as otherwise provided in Instruction 6 of
the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON APRIL 29, 1998 UNLESS THE OFFER IS EXTENDED.
2
<PAGE> 3
Any inquiries you may have with respect to the Offer should be addressed to
Georgeson & Company Inc, the Information Agent, at its address and telephone
number set forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed materials may be obtained by calling
Georgeson & Company Inc., the Information Agent, collect at (212) 440 9800.
Very truly yours,
Georgeson & Company Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS AN AGENT OF THE PURCHASER, THE DEPOSITARY, THE INFORMATION
AGENT, OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER
PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN
CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED AND THE STATEMENTS
CONTAINED THEREIN.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ANY AND ALL MEMBERSHIP INTERESTS,
INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE
ADDITIONAL MEMBERSHIP INTERESTS,
(COLLECTIVELY, THE "SHARES")
OF
TRIAD PARK, LLC
AT
$1.80 NET PER SHARE
BY
TPL ACQUISITION, LLC
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT
NEW YORK CITY TIME, ON WEDNESDAY, APRIL 29, 1998,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
April 1, 1998
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated April 1,
1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") in connection with
the Offer by TPL Acquisition, LLC, ("Purchaser"), a Delaware limited liability
company managed by Richard C. Blum & Associates, L.P. ("RCBA"), a California
limited partnership, to purchase membership interests, including the associated
rights to purchase additional membership interests, (collectively, the "Shares")
of Triad Park, LLC (the "Company"), at a price of $1.80 per Share, net to the
seller in cash, without interest thereon (the "Offer Price"), upon the terms and
subject to the conditions set forth in the Offer to Purchase.
THE MATERIAL IS BEING SENT TO YOU AS THE BENEFICIAL OWNER OF SHARES HELD BY
US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE THE HOLDER OF RECORD
OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY
BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF
TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY
YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer to Purchase.
Your attention is invited to the following:
1. The tender price is $1.80 per Share, net to the seller in cash,
without interest thereon.
2. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on April 29, 1998, unless the Offer is extended.
3. The Offer is being made for any and all outstanding Shares.
4. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration date of the
Offer that number of shares that would constitute, when combined with the
Shares owned by RCBA and Richard C. Blum as of the date hereof, a majority
of all outstanding shares of the Company (the "Minimum Condition"), (ii)
redemption or waiver by the
<PAGE> 2
Company of its rights plan, and (iii) termination by the Company of the
Merger Agreement by and among the Company, The Kontrabecki Group, Inc.
("TKG") and TKG Acquisition Company, LLC pursuant to which TKG offered to
acquire the Shares of the Company for $1.65125 per Share. The Offer is not
conditioned upon the receipt of financing.
5. Tendering shareholders will not be obligated to pay brokerage fees
or commissions. Except as set forth in Instruction 6 of the Letter of
Transmittal, tendering shareholders will not be obligated to pay stock
transfer taxes on the purchase of Shares by the Purchaser pursuant to the
Offer.
6. The Purchaser will, upon request, reimburse us for customary
mailing and handling expenses incurred by us in forwarding the endorsed
materials to our clients.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal. The Offer is not being made to (nor will tenders be accepted from
or on behalf of) holders of Shares in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. The Purchaser is not
aware of any jurisdiction in which the making of the Offer or the acceptance
thereof would not be in compliance with the laws of such jurisdiction. To the
extent the Purchaser becomes aware of any state law that would limit the class
of offerees in the Offer, the Purchaser will amend the Offer and, depending on
the timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to such holders of shares prior to the
expiration of the Offer. In any jurisdiction the securities, blue sky or other
laws of which require the Offer to be made by a licensed broker or dealer, the
Offer is intended to be made on behalf of the Purchaser by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified on the instruction form contained in this
letter. Your instructions should be forwarded to us in ample time to permit us
to submit a tender on your behalf prior to the expiration of the Offer.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING
MEMBERSHIP INTERESTS, TOGETHER WITH RIGHTS TO PURCHASE ADDITIONAL MEMBERSHIP
INTERESTS (COLLECTIVELY, "SHARES") OF TRIAD PARK, LLC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated April 1, 1998, and the related Letter of Transmittal
(which, as amended from time to time, together constitute the "Offer"), in
connection with the Offer by TPL Acquisition LLC (the "Purchaser"), a Delaware
limited liability company managed by Richard C. Blum & Associates, L.P., a
California limited partnership, to purchase all membership interests, together
with associated rights to purchase additional membership interests,
(collectively, the "Shares"), of Triad Park, LLC, a Delaware limited liability
company (the "Company"), at a price equal to $1.80 per Share, net to the seller
in cash.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or, if no number is indicated below, all Shares) held by you
for the account of the undersigned, upon the terms and subject to the conditions
set forth in the Offer to Purchase.
Number of Shares to be Tendered*:
Shares
-----------------------------
Account Number:
------------------------------------
Dated:
------------------------------------
SIGN HERE
------------------------------------
Signature(s)
------------------------------------
Please type or print name(s)
------------------------------------
Please type or print address(es)
here
Area Code and Telephone Number
------------------------------------
Taxpayer Identification or
Social Security Number(s)
------------------------------------
- ---------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
3
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR OFFER TO PURCHASE FOR CASH
ANY AND ALL MEMBERSHIP INTERESTS,
INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE
ADDITIONAL MEMBERSHIP INTERESTS
(COLLECTIVELY, THE "SHARES")
OF
TRIAD PARK, LLC
AT
$1.80 NET PER SHARE
BY
TPL ACQUISITION, LLC
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates for membership interests, including the
associated rights to purchase additional membership interests (collectively, the
"Shares"), of Triad Park, LLC, a Delaware limited liability company (the
"Company") are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Depositary prior to the Expiration Date (as
defined in the Offer to Purchase). This form may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmissions or mail to the
Depositary and must include a guarantee by an Eligible Institution (as defined
in the Offer to Purchase). See Section 2 of the Offer to Purchase.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Mail: By Hand/Overnight Delivery:
Wall Street Station 88 Pine Street
P.O. Box 1023 19th Floor
New York, NY 10268-1023 New York, NY 10005
</TABLE>
Fax:
(212) 701-7636
(212) 701-7637
Telephone:
(212) 701-7624
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instruction thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
LADIES AND GENTLEMEN:
The undersigned hereby tenders to TPL Acquisition, LLC (the "Purchaser"), a
Delaware limited liability company managed by Richard C. Blum & Associates,
L.P., a California limited partnership, upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase dated April 1, 1998
(the "Offer to Purchase") and the related Letter of Transmittal, receipt of
which is hereby acknowledged, the number of Shares (as such term is defined in
the Offer to Purchase) set forth below, all pursuant to the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase.
Number of Shares
---------------------------------------------------------------
Name(s) of Record Holder(s):
----------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Certificate Nos. (if available):
------------------------------------------------
PLEASE PRINT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address(es):
--------------------------------------------------------------------
ZIP CODE
Area Code and Tel. No.:
---------------------------------------------------------
(Check one box if Shares will be tendered by book-entry transfer)
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Signature(s):
-------------------------------------------------------------------
- --------------------------------------------------------------------------------
Account Number
------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated:
----------------------------------------
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agent's Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation with respect to such
Shares, in any such case together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or an Agent's Message, and any other required documents within three
trading days after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
All terms used herein have the meanings set forth in the Offer to Purchase.
(PLEASE PRINT)
Name of Firm:
-------------------------------------------------------------------
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
Address:
------------------------------------------------------------------------
(ZIP CODE)
Name:
---------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------
Area Code and
Tel No.:
------------------------------------------------------------------------
Dated:
--------------------------------------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE; CERTIFICATES
FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. Individual Taxpayer Identification numbers
have nine digits and are used solely for tax purposes by individuals who are
required to have a taxpayer identification number but who do not have one and
are not eligible to obtain a Social Security number. The table below will help
determine the number to give the payer.
<TABLE>
<CAPTION>
=========================================================
FOR THIS TYPE OF ACCOUNT:
GIVE THE
IDENTIFICATION
NUMBER OF --
- ---------------------------------------------------------
<C> <S> <C>
1. An individual's account. The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor, or
guardian or committee for a incompetent person(3)
designated ward, minor, or
incompetent person
7. a The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also trustee)
b So-called trust account The actual owner(1)
that is not a legal or
valid trust under State
law
8. Sole proprietorship account The Owner(4)
9. A valid trust, estate, or The legal entity (Do
pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(5)
10. Corporate account The Corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered The broker or nominee
nominee
15. Account with the Department The public entity
of Agriculture in the name
of a public entity (such as
a State or local government,
school district, or prison)
that receives agricultural
program payments
=========================================================
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE:If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, Form
W-7, Application for Individual Taxpayer Identification Number, or Form SS-4,
Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(2)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to Partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
