EXHIBIT 1.3
AMENDMENT NO. 2
TO THE
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MHC T1000 TRUST
(f/k/a MHC THOUSAND TRAILS TRUST)
THOUSAND TRAILS ACQUISITION, INC.
KTTI HOLDING COMPANY, INC.
AND
THOUSAND TRAILS OPERATIONS HOLDING COMPANY, L.P.
This Amendment, dated as of November 9, 2004 (this "AMENDMENT"), is among
MHC T1000 Trust (f/k/a MHC Thousand Trails Trust), Thousand Trails Acquisition,
Inc., KTTI Holding Company, Inc. and Thousand Trails Operations Holding Company,
L.P. The Parties hereby agree as follows:
1. Merger Agreement; Definitions. This Amendment amends the Agreement
and Plan of Merger by and among the Parties, dated as of August 2, 2004, as
amended by Amendment No. 1 ("Amendment No. 1") thereto by and among the Parties,
dated September 30, 2004 (as in effect prior to giving effect to this Amendment,
the "MERGER AGREEMENT"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. Amendment of Merger Agreement. Effective as of the date hereof, the
Merger Agreement is hereby amended as follows:
2.1. Amendment of Recital B.
(a) Recital B of the Merger Agreement is amended and
restated to read in its entirety as follows:
"B. Prior to the Effective Time, the Company and its subsidiary
companies shall have effected a reorganization (the "TRAILS
REORGANIZATION") in accordance with the agreements substantially in the
form attached hereto as Exhibit A-1 (together with the Notes, the
"REORGANIZATION DOCUMENTS"), pursuant to which,
inter alia, (a) the subsidiaries of the Company listed on Exhibit A
attached hereto (each, an "ACQUIRED SUBSIDIARY" and collectively, the
"ACQUIRED SUBSIDIARIES") shall remain as direct or indirect subsidiaries
of the Company (the Company, together with the Acquired Subsidiaries,
each, an "ACQUIRED COMPANY" and collectively, the "ACQUIRED COMPANIES"),
(b) the Company shall transfer to Operations ownership of all of the
capital stock and equity interests of each of the subsidiaries of the
Company listed on Exhibit B attached hereto (each, a "DISTRIBUTED COMPANY"
and collectively, the "DISTRIBUTED COMPANIES"), (c) the Company shall
transfer to Operations the other specified assets and all liabilities of
operating and managing (i) membership campgrounds, (ii) reciprocal use and
affiliation programs for use of campgrounds, and (iii) campgrounds for
third parties, including the United States Forest Service (the "OPERATING
BUSINESS"), and (d) the Company shall distribute to its stockholders
equity interests of Operations, cash and notes in the form attached hereto
as Exhibit A-2 (the "NOTES") in redemption of a portion of the outstanding
Company Common Stock."
(b) The Reorganization Documents attached hereto as Exhibit
A shall be the Reorganization Documents attached to the Amended Merger Agreement
as Exhibit A-1.
(c) The form of Note attached hereto as Exhibit B shall be
the form of Note attached to the Amended Merger Agreement as Exhibit A-2.
2.2. Amendment of Recital F. Recital F of the Merger Agreement is
amended and restated to read in its entirety as follows:
"F. At the Closing, pursuant to an agreement between MHC Operating
Limited Partnership (or an Affiliate thereof other than MHC or any direct
or indirect subsidiary of MHC (such entity, the "NOTE PURCHASER")) and the
stockholders of the Company (the "NOTE PURCHASE AGREEMENT"), the Note
Purchaser will purchase the Notes from the stockholders for an aggregate
amount equal to $49,200,000 (the "NOTE PURCHASE PRICE")."
2.3. Amendment of Section 1.2. Section 1.2 of the Merger Agreement
is amended and restated to read in its entirety as follows:
"1.2 Closing and Closing Date. (a) Subject to the terms and conditions of
this Agreement, the closing of the Merger (the "Closing") shall take place
at the offices of Xxxxxx Xxxxxx Xxxxx Xxxxxxxx, 000 Xxxx Xxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, at 10:00 a.m. local time, on the
later of (a) the next business day after the last to be fulfilled or
waived of the conditions set forth in Article VII hereof, (b) the next
business day after the last of the permits and licenses set forth on
Schedule 1.2 ("Extension Permits") have been obtained, but in no event
shall the Closing be extended beyond November 30, 2004 as a result of this
clause (b), or (c) at such other time, date or place as the Company and
MHC may agree in writing. The date on which the Closing occurs is referred
to
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herein as the "Closing Date." The Parties hereby acknowledge and agree
that the Closing shall be a standard "New York style" real estate
transaction without imposing additional substantive obligations on the
Parties. Notwithstanding anything contained herein to the contrary, (i) if
the Company and Operations have received (in their sole and absolute
discretion as evidenced by a written notice provided by the Company and
Operations to MHC) verbal confirmation from the state regulators for (I)
the states of Arizona, Indiana, Nevada, North Carolina, Oregon,
Pennsylvania, Texas, Virginia and Washington that there is no deficiency
in the application submitted by Operations or any of its subsidiaries
seeking permits to market under the statutes regulating membership
campgrounds in such states that would preclude the issuance of the permits
to market sought by Operations or any of its subsidiaries and (II) each
state where Operations or any of its subsidiaries is seeking a broker of
record or similar license (or a transfer of any such license previously
issued to the Company or any of its subsidiaries) that there is no
deficiency in the application submitted by Operations or any of its
subsidiaries seeking such broker of record license under the statutes
regulating membership campgrounds in such states that would preclude the
issuance or transfer of the license sought by Operations or any of its
subsidiaries, and the only unsatisfied condition precedent contained in
Sections 7.1 and 7.3 hereof is the failure to obtain any of the Operations
Authorizations set forth as item 1 or 2 on Schedule 4.20(a), then MHC and
Acquisition shall have the right, at their option, exercised no later than
November 21, 2004 by written notice from MHC and Acquisition to the
Company and Operations, to consummate the Closing on December 1, 2004 (the
"ACCELERATED CLOSING") and the Company and Operations shall waive the
satisfaction of such conditions precedent contained in Section 7.3 hereof
relating to items 1 and 2 of Schedule 4.20(a) and (ii) MHC and Operations
may elect to consummate the Closing on such date as is agreed to by MHC
and Operations and prior to the receipt of the Operations Authorizations
set forth in items 1 and 2 of Schedule 4.20(a) or the satisfaction of any
other condition precedent contained in Section 7.2 or Section 7.3 (any
such closing, a "JOINT ACCELERATED CLOSING"). Upon consummation of any
Joint Accelerated Closing the Company, Operations, MHC and Acquisition
shall each be deemed to have waived the satisfaction of any conditions
precedent contained in Sections 7.1, 7.2 and 7.3 not previously satisfied.
(b) On the date of any Joint Accelerated Closing, (i) MHC shall pay to
Operations $20,000.00 by wire transfer of immediately available funds to
an account designated by Operations as consideration for the waiver of any
conditions precedent contained in Sections 7.1 or 7.3 not satisfied prior
to the Joint Accelerated Closing and (ii) Operations shall provide to MHC
(or its designee), at no charge, 10 national camping memberships as
consideration for the waiver of any conditions precedent contained in
Sections 7.1 or 7.2 not satisfied prior to the Joint Accelerated Closing.
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2.4 Amendment of Sections 3.3 and 6.1. Each of Section 3.3 and
Section 6.1 of the Merger Agreement is hereby amended to delete "Two business
days" from the first sentence of each such section.
2.5 Amendment of Section 6.2. Section 6.2 is hereby amended to
include the following phrase at the end of the sentence:
", provided further, however, that any such fees and expenses incurred or
payable by the Company or Operations may be paid by the Stockholders with
a portion of the Aggregate Conversion Amount."
2.6 Amendment of Section 6.5(a). Section 6.5(a) of the Merger
Agreement is amended and restated to read in its entirety as follows:
"MHC Actions. MHC agrees that the Notes will not be repaid other than with
cash from assets or continuing, separate operations of the Company, from
loans against the Company's assets or in connection with a refinancing of
the Notes. The Company agrees that, to the extent MHC satisfies the
covenants contained in this Section 6.5(a), as of the Effective Time, the
aggregate "earnings and profits" (within the meaning of, and calculated in
accordance with, the Code) of the Acquired Companies shall not be in
excess of $12,000,000 (such amount, the "RESIDUAL AMOUNT"). "
2.7. Amendment of Section 6.17. Section 6.17 of the Merger
Agreement is amended and restated to read in its entirety as follows:
"6.17 Consents. If the Closing extends beyond December 1, 2004 as a result
of the failure to obtain any of (a) the consents, approvals and lien
releases set forth on Schedule 7.2(h), (b) the Conditional Use Permits
specified in Section 7.2(m) and Section 7.3(g) or (c) the Operations
Authorizations listed on Schedule 4.20(a) and the Accelerated Closing has
not occurred, the Parties shall, no later than December 30, 2004, attempt
to mutually agree upon an alternative arrangement which alternative
arrangement will, at no additional material cost or detriment to MHC,
Acquisition, the Company or Operations, provide the Parties with the same
rights and benefits the Parties would have received had such consents,
approvals, lien releases, permits and authorizations been obtained.
Notwithstanding the foregoing, with respect to the consents of the
applicable third party lessors to the ground leases listed as item 3 on
Schedule 4.20(a), the Parties agree to attempt, simultaneously with the
efforts to obtain such consents and until the Closing Date, to mutually
agree upon an alternative arrangement in the event such consents are not
obtained, which alternative arrangement will, at no additional material
cost or detriment to MHC, Acquisition, the Company or Operations, provide
the Parties with the same rights and benefits the Parties would receive if
such consents are obtained. The conditions precedent contained in Sections
7.2(h), 7.2(m) and 7.3(g) hereof shall be deemed satisfied and fulfilled
upon the Parties' mutual agreement to such alternative arrangement. "
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2.8 Addition of Section 6.19. A new Section 6.19 is added to the
Merger Agreement as follows:
"6.19 Financial Information. Following the Closing, Operations covenants
and agrees, upon the request of MHC Inc. and subject to the provisions of
this Section 6.19, to use its commercially reasonable efforts to assist
MHC Inc., the Surviving Corporation and their auditors in (i) obtaining
access at all reasonable times to all financial and other financial
information in the possession of Operations and its subsidiaries relating
to the Acquired Companies that is necessary for MHC Inc., the Surviving
Corporation and their auditors to prepare audited financial statements or
other financial information covering periods or portions of periods ending
on or prior to the Closing Date in conformity with Regulation S-X of the
Securities and Exchange Commission ("SEC"), in each case to the extent
such financial statements or other financial information is required to be
included in a registration statement, report or other disclosure that is
required to be filed by MHC Inc. with the SEC or necessary for MHC Inc. to
comply with any SEC rule, regulation or request applicable to it, (ii)
requesting not more than one executed representations letter of management
personnel covering periods or portions of periods ending on or prior to
the Closing Date, to the extent that such representations letter is
required to enable an independent public accountant to render an opinion
on any financial statements or other financial information referred to in
clause (i) above that are required to be included in a registration
statement, report or other disclosure to be filed by MHC Inc. with the
SEC; provided, however, that the provisions of this clause (ii) are
conditioned upon such representations letter containing no representations
or other agreements that were not contained in the representations letter
that was provided by Thousand Trails management personnel to its
independent public accountant in connection with the most recent audit of
the financial statements of Thousand Trails prior to the Closing Date, and
(iii) requesting the consent of Deloitte and Touche LLP or Xxxxx Xxxxxxxx
LLP, as applicable, to file the audit report of such firm with the SEC in
respect of any financial statements referred to in clause (i) above that
have been audited by such accounting firm and that are required to be
included in a report or other disclosure to be filed by MHC Inc. with the
SEC pursuant to any law, rule, regulation or request of the SEC. For the
avoidance of doubt, the failure to obtain any representations letter or
consent referred to in clauses (ii) or (iii) above, after Operations has
used commercially reasonable efforts in accordance with the terms of this
Section 6.19, shall not give rise to any claim for a breach of this
Section 6.19. MHC and the Surviving Corporation shall be responsible for,
and shall pay to Operations promptly upon request therefor (and in any
event no later than five (5) days following a request therefor), all
actual costs and expenses incurred by or on behalf of Operations in
performing its obligations under this Section 6.19. In addition, MHC and
the Surviving Corporation shall indemnify and hold harmless Operations,
each person, if any, who controls Operations and each officer or partner
of Operations from and against any Losses incurred by any of them as a
result of any action taken in good
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faith in accordance with this Section 6.19. The obligations of the Parties
under this Section 6.19 shall survive the Closing."
2.9 Addition of Section 6.20. A new Section 6.20 is added to the
Merger Agreement as follows:
"Section 6.20 Audit of June 30, 2004 Financial Statements. Following the
Closing Date, Operations covenants and agrees to use commercially
reasonable efforts to cause an audit report to be delivered by Deloitte
and Touche LLP as soon as reasonably practicable with respect to the June
30, 2004 financial statements of Thousand Trails. Except for those three
items described in the e-mail from Xxxx Xxxxxxxx to Xxxxxx Xxxxxxxx and
Xxxxxxx Xxxxxx on November 8, 2004 which transmitted a draft audit report
with respect to the June 30, 2004 financial statements of Thousand Trails,
the Parties are not aware of any reason that the final audit report and
financial statements will not be substantially similar to the draft audit
report and financial statements delivered to MHC on November 8, 2004.
Operations agrees to deliver a copy of the audit report and financial
statements to MHC within five days of receipt of such audit report and
financial statements by Operations."
2.10 Addition of Section 6.21. A new Section 6.21 is added to the
Merger Agreement as follows:
"Section 6.21 Post-Closing Cooperation. After the Closing, Operations
covenants and agrees to use commercially reasonable efforts to assist MHC
and its affiliates in obtaining the information, data, financial
statements, tax returns and any other documents in the possession of
Operations or any of its subsidiaries, and to cause Operations and its
subsidiaries, and the employees, representatives, consultants and
accountants of Operations and its subsidiaries to provide reasonable
cooperation to the extent requested by MHC and its affiliates, in order to
enable MHC and its affiliates to complete, by July 1, 2005, the
calculation of the final amount of earnings and profits of Thousand Trails
and all of its subsidiaries as of the Effective Time. MHC and the
Surviving Corporation, on the one hand, and Operations, on the other hand,
shall share equally the costs and expenses of third party accountants and
consultants incurred in connection with the calculation of the final
amount of earnings and profits.
2.11. Amendment of Section 8.4. The reference to "10 days" in line
seven of Section 8.4 of the Merger Agreement is amended to read "21 days."
3. Ground Lease. The Ground Lease attached hereto as Exhibit C shall
replace the Ground Lease that was attached to Amendment No. 1 to the Merger
Agreement as Exhibit B and, as of and following the date of this Amendment, the
definition of Ground Lease referred to in Section 7.2(g) of the Merger Agreement
shall refer to the Ground Lease attached hereto as Exhibit C.
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4. Joint Venture Agreement. The Parties acknowledge that, in accordance
with Section 6.15 of the Merger Agreement, they have mutually agreed to the form
of Joint Venture Agreement and that such form of Joint Venture Agreement shall
be in the form attached hereto as Exhibit D.
5. General. The Merger Agreement as amended hereby (as so amended, the
"AMENDED MERGER AGREEMENT") is confirmed as being in full force and effect. The
Amended Merger Agreement constitutes the entire understanding of the parties
with respect to the subject matter hereof and thereof and supersedes all prior
understandings and agreements, whether written or oral. This Amendment may be
executed in any number of counterparts, which together shall constitute one
instrument, and shall bind and inure to the benefit of the Parties and their
respective successors and assigns. This Amendment shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
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IN WITNESS WHEREOF, MHC, Acquisition, the Company and Operations have
caused this Amendment to be signed and delivered by their respective duly
authorized officers, all as of the date first written above.
MHC:
MHC T1000 TRUST (f/k/a MHC THOUSAND
TRAILS TRUST)
By:__________________________________________
Name:_____________________________________
Title:____________________________________
ACQUISITION:
THOUSAND TRAILS ACQUISITION, INC.
By:__________________________________________
Name:_____________________________________
Title:____________________________________
THE COMPANY:
KTTI HOLDING COMPANY, INC.
By:__________________________________________
Name: Xxxx Xxxxxxxx
Title: Vice President
OPERATIONS:
THOUSAND TRAILS OPERATIONS HOLDING
COMPANY, L.P.
By: KTTI GP, LLC, its general partner
By: KTTI HOLDING COMPANY, LLC., its
sole member
By:__________________________________
Name: Xxxx Xxxxxxxx
Title: Vice President
