AGREEMENT OF MERGER
BY AND AMONG
THE KONTRABECKI GROUP, INC.
TKG ACQUISITION COMPANY, LLC
AND
TRIAD PARK, LLC
DATED AS OF FEBRUARY 1, 1998
AGREEMENT OF MERGER
AGREEMENT OF MERGER dated as of February 1, 1998 (this "Merger
Agreement") by and among THE KONTRABECKI GROUP, INC. (d/b/a/ TKG
INTERNATIONAL) a California corporation ("TKG"), TKG ACQUISITION COMPANY,
LLC, a Delaware limited liability company in the process of formation
("Acquisition"), and TRIAD PARK, LLC, a Delaware limited liability
company (the "Company").
W I T N E S S E T H:
WHEREAS, Section 18-209 of the Delaware Limited Liability Company
Act (the "LLCA") authorizes the merger of one Delaware limited liability
company with and into another Delaware limited liability company;
WHEREAS, TKG, which will be the manager of Acquisition (the
"Acquisition Manager"), has determined, and the holders of membership
interests in Acquisition (the "Acquisition Share Holders") will determine
that it is advisable and in the best interests of Acquisition and the
Acquisition Share Holders, for Acquisition to merge with and into the
Company with the result that the Acquisition Share Holders shall acquire
all of the membership interests in the Company (the "Company Shares");
WHEREAS, in furtherance of such acquisition, TKG has approved a
merger (the "Merger") of Acquisition with and into the Company in
accordance with the LLCA upon the terms and subject to the conditions set
forth herein, and the manager (the "Company Manager") and advisory board
(the "Advisory Board") of the Company have approved the Merger in
accordance with the LLCA, upon the terms and subject to the conditions
set forth herein, and recommend that the Merger be accepted by the
holders of the Company Shares (the "Company Share Holders");
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, the parties
hereto agree as follows:
SECTION 1. MERGER
1.1. MERGER. Upon the terms and subject to the conditions hereof,
on the Effective Time (as defined below in Section 1.2), Acquisition
shall be merged into the Company and the separate existence of
Acquisition shall thereupon cease, and the name of the Company, as the
limited liability company surviving in the Merger (the "Surviving LLC"),
shall by virtue of the Merger remain "Triad Park, LLC."
1.2. EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective when a properly executed Certificate of Merger is duly filed
with the Secretary of State of the State of Delaware, or at such later
date and time as may be specified therein, which filing shall be made
contemporaneously with (or as soon as practicable after) the closing of
the transactions contemplated by this Merger Agreement in accordance with
Section 3.6. When used in this Merger Agreement, the term "Effective
Time" shall mean the date and time at which such filing shall have been
made or such later date and time as may be specified in such filing.
1.3. EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the applicable provisions of the LLCA. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time,
except as otherwise provided herein, all of the property, rights,
privileges, powers and franchises of Acquisition and the Company shall
vest in the Surviving LLC, and all debts, liabilities and duties of
Acquisition and the Company shall become the debts, liabilities and
duties of the Surviving LLC.
1.4. CERTAIN EXPENSES. Subject to the requirements of this
Section 1.4 and beginning with the date of this Merger Agreement,
Acquisition shall promptly pay its and the Company's attorneys' fees and
costs and all legitimate costs of the transaction, including but not
limited to printing and mailing fees and filing fees with the Securities
and Exchange Commission (the "Commission"), as incurred, in connection with
the preparation of documents and solicitation of proxies required under
the federal securities laws. In the event that the Company retains its
counsel for the solicitation of proxies, Acquisition's obligations under
this Section 1.4 shall be limited to $100,000 for attorney's fees and
costs, assuming one round of comments from the Commission to the
submitted documents. Acquisition shall pay actual time and expenses for
work arising out of additional rounds of comments.
SECTION 2. THE SURVIVING LLC
2.1. LIMITED LIABILITY COMPANY AGREEMENT. The limited liability
company agreement of Acquisition as in effect immediately prior to the
Effective Time shall be the limited liability company agreement of the
Surviving LLC after the Effective Time except that Section 1.2 thereof
shall be amended to state that the name of the company is Triad Park,
LLC, and subject to Section 7.4(c), thereafter may be amended in
accordance with its terms and as provided by law and this Merger
Agreement.
2.2. BY-LAWS. The by-laws of Acquisition as in effect on the
Effective Time shall be the by-laws of the Surviving LLC.
2.3. MANAGER; ADVISORY BOARD. The Acquisition Manager immediately
prior to the Effective Time shall be the manager of the Surviving LLC.
The Surviving LLC shall not have an advisory board.
SECTION 3. CONVERSION OF SECURITIES
3.1. CONVERSION. As of the Effective Time, by virtue of the Merger
and without any action on the part of any Company Share Holder:
(a) All Company Shares that are held by the Company shall be
canceled.
(b) Each remaining Company Share issued and outstanding
immediately prior to the Effective Time shall be converted into the right
to receive a cash amount equal to the quotient obtained by dividing
$32,543,038.10 by the sum of (i) the total number of Company Shares
issued and outstanding as of the Effective Time (other than Company
Shares to be canceled pursuant to this Agreement) and (ii) the total
number of Company Shares issuable pursuant to all options, warrants,
rights, convertible debt instruments and securities, and other equity or
debt securities or obligations outstanding as of the Effective Time,
whether vested or unvested, which are exerciseable for or convertible
into Company Shares (hereafter referred to as the "Merger Consideration"
whether on a per share or per Share Holder basis or in the aggregate, as
the context may require). In no event shall the Merger Consideration
payable by TKG and Acquisition for the total equity interest of the
Company exceed $32,543,038.10.
(c) Each issued and outstanding membership interest in
Acquisition ("Acquisition Share") shall be converted into and become one
membership interest in the Surviving LLC.
3.2. DISBURSEMENT OF MERGER CONSIDERATION.
(a) Pursuant to an irrevocable agreement to be entered into on
or before the Effective Time between Acquisition and a disbursing agent
(the "Disbursing Agent") for the benefit of the Company Share Holders
(which shall be a commercial bank or trust company with capital of at
least $350,000,000 or otherwise reasonably satisfactory to the Company
and Acquisition), Acquisition or the Surviving LLC shall deposit or cause
to be deposited with the Disbursing Agent, in trust for the benefit of
the Company's Share Holders, at the Closing, the Merger Consideration
consisting of the cash (in immediately available funds) to which the
Company Share Holders shall be entitled pursuant to Section 3.1(b).
Pending any payments of cash pursuant to Section 3.1(b) of this Merger
Agreement, such funds shall be held and invested by the Disbursing Agent
in interest bearing investments with minimal or no risk to capital as
directed by the Surviving LLC, and any earnings with respect to such
funds shall be paid to the Surviving LLC when requested by the Surviving
LLC. Any funds remaining with the Disbursing Agent one year after the
Effective Time shall be released by the Disbursing Agent to the Surviving
LLC after which time persons entitled thereto may look, subject to
applicable escheat and other similar laws, only to the Surviving LLC for
delivery thereof.
(b) Promptly upon the Effective Time the Surviving LLC shall
notify the Disbursing Agent of the effectiveness of the Merger and shall
cause the Disbursing Agent, pursuant to the irrevocable instructions, to
mail to each person who was, immediately prior to the Effective Time, a
record holder of an outstanding certificate or certificates which prior
thereto represented Company Shares ("Certificates") a notice and
transmittal form advising such holder of the effectiveness of the Merger
and the procedure for surrendering to the Disbursing Agent Certificates
for exchange for the Merger Consideration. Each holder of Certificates,
upon proper surrender thereof to the Disbursing Agent together with such
transmittal form, duly completed and validly executed in accordance with
the instructions thereto, shall be entitled to receive the Merger
Consideration evidenced by such Certificates, without any interest
thereon, in exchange for such Certificates and such Certificates shall
forthwith be canceled. Until properly surrendered and exchanged,
Certificates shall, from and after the Effective Time, be deemed for all
purposes to evidence only the right to receive the Merger Consideration.
Notwithstanding the foregoing, neither the Disbursing Agent nor any party
hereto shall be liable to a holder of Certificates for any amount which
may be required to be paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(c) If delivery of the Merger Consideration in respect of
canceled Company Shares is to be made to a person other than the person
in whose name a surrendered Certificate is registered, it shall be a
condition to such delivery or payment that the Certificate so surrendered
shall be properly endorsed or shall be otherwise in proper form for
transfer and that the person requesting such a delivery or payment shall
have paid any transfer and other taxes required by reason of such
delivery or payment in a name other than that of the registered holder of
the Certificate surrendered or shall have established to the satisfaction
of the Surviving LLC and the Disbursing Agent that such tax either has
been paid or is not payable.
3.3. COMPANY SHARE HOLDERS' MEETING. Unless this Merger Agreement
has been terminated pursuant to Section 9.1, the Company shall take all
action necessary, in accordance with applicable law and its limited
liability company agreement and by-laws, to convene a special meeting of
the Company Share Holders entitled to vote thereat (the "Company
Meeting") as promptly as practicable for the purpose of considering and
taking action upon this Merger Agreement. Subject to Section 7.6(c), the
Company Manager and Advisory Board will recommend that Company Share
Holders entitled to vote thereon vote in favor of and approve the Merger
and the adoption of this Merger Agreement at the Company Meeting. At the
Company Meeting, all of the Company Shares then owned by Acquisition, or
with respect to which Acquisition holds the power to direct the voting,
shall be voted in favor of approval of the Merger and adoption of this
Merger Agreement.
3.4. CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the close of
business on the Effective Time, the Company Share transfer books shall be
closed and no transfer of any Company Shares shall be made thereafter. In
the event that, after the Effective Time, Certificates are presented to
the Surviving LLC, they shall be canceled and exchanged for the Merger
Consideration as provided in Sections 3.1(b).
3.5. ASSISTANCE IN CONSUMMATION OF THE MERGER. Each of Acquisition
and the Company shall provide all reasonable assistance to, and shall
cooperate with, each other to bring about the consummation of the Merger
as soon as possible in accordance with the terms and conditions of this
Merger Agreement.
3.6. CLOSING. The closing of the transactions contemplated by this
Merger Agreement shall take place (i) at the offices of The Kontrabecki
Group, Inc., 0000 Xxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000 at 10:00
A.M. local time or as soon as practicable (but in any event within three
business days) after the day on which the last of the conditions set
forth in Section 8 is fulfilled or waived, but in no event later than
March 31, 1998, unless extended by mutual agreement, or (ii) at such
other time and place as Acquisition and the Company shall agree in
writing.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF ACQUISITION & TKG
Acquisition and TKG represent and warrant to the Company as follows:
4.1. EXISTENCE; GOOD STANDING; AUTHORITY. Acquisition is (or will
prior to the Effective Time be) a limited liability company organized,
validly existing and in good standing under the laws of the State of
Delaware, and will be, by the Effective Time, duly licensed or qualified
to do business as a foreign limited liability company in, and in good
standing under the laws of, the State of California, which constitutes
all of the jurisdictions in which the character of the properties owned
or leased by it therein or in which the transaction of its business makes
such qualification necessary, except where the failure to be so qualified
would not materially and adversely affect the ability of Acquisition to
consummate the transactions contemplated by this Merger Agreement. TKG
is a corporation organized, validly existing and in good standing under
the laws of the State of California, and is in good standing under the
laws of California. Acquisition and TKG have all requisite power and
authority to own, operate and lease their respective properties and carry
on their respective business as and where conducted at the respective
time of its execution of this Merger Agreement. The copies of the limited
liability company agreement and by-laws of Acquisition to be delivered to
the Company prior to the Effective Time will be true and correct and are
in full force and effect, and there will not be any amendments or
alterations to such documents.
4.2. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. TKG has, and
Aquisition will have, the requisite power and authority to execute and
deliver this Merger Agreement and to perform their respective obligations
hereunder. The execution and delivery of this Merger Agreement by
Acquisition and TKG, and consummation by Acquisition of the transactions
contemplated hereby, have been (or, in the case of Acquisition, will be)
duly authorized by all requisite action under Acquisition's limited
liability company agreement, TKG's articles of incorporation, their
respective by-laws and applicable law. The Acquisition Manager is (or
prior to the Closing will be) authorized as it deems appropriate to
execute, acknowledge, verify, deliver, file and record, for and in the
name of Acquisition, the Certificate of Merger and any and all other
documents and instruments required to consummate the transactions
contemplated hereunder. This Merger Agreement constitutes (or will
constitute) a valid and binding obligation of Acquisition and TKG
enforceable against Acquisition and TKG in accordance with its terms. No
other proceedings on the part of TKG (or, when this Agreement is signed
by Acquisition, on the part of Acquisition) are necessary to authorize
this Merger Agreement and the transactions contemplated hereby.
4.3. PROXY STATEMENT. None of the information supplied in writing
by Acquisition and its affiliates specifically for inclusion in the proxy
statement of the Company (the "Proxy Statement") required to be mailed to
the Company Share Holders in connection with the Merger shall, at the
time the Proxy Statement is mailed, at the time of the Company Meeting or
at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.4. CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution
and delivery of this Merger Agreement by Acquisition nor the consummation
of the transactions contemplated hereby will (i) conflict with or result
in any breach of any provision of the limited liability company
agreement, articles of incorporation or the respective by-laws of
Acquisition or TKG, (ii) require any consent, approval, authorization or
permit of, or filing with or notification to, any court, administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign (each a "Governmental Entity"), except (A) pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(B) the filing of the Certificate of Merger pursuant to the LLCA or
(C) where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not prevent or
delay consummation of the Merger or would not otherwise prevent
Acquisition from performing its obligations under this Merger Agreement;
(iii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or
provisions of any note, license, agreement or other instrument or
obligation to which Acquisition is a party or by which it or any of its
assets may be bound, except for such defaults (or rights of termination,
cancellation or acceleration) as to which requisite waivers or consents
have been obtained or which, in the aggregate, would not materially and
adversely affect the ability of Acquisition to consummate the
transactions contemplated by this Merger Agreement; or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable
to Acquisition, or any of its assets, except for violations which would
not materially and adversely affect the ability of Acquisition to
consummate the transactions contemplated by this Merger Agreement.
4.5. FINANCING. Acquisition at the Effective Time will have or will
have deposited with the Disbursing Agent (as appropriate) the funds
necessary to consummate the Merger and the transactions contemplated
hereby, and to pay related fees and expenses.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as provided to the contrary in the attached disclosure
schedule, which shall be in a form mutually acceptable to the parties
(the "Disclosure Schedule") and the specific Schedules referenced in this
Section 5, the Company makes the representations and warranties to
Acquisition in the following subsections of this Section. For purposes
of this Section 5, "to the best of the Company's knowledge" or "known to
the Company" or the like shall mean the actual knowledge (without any
obligation of further investigation and without any personal liability)
of Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxx X. XxXxxxxxxx and Xxxxxxx
X. Xxxxxx.
5.1. EXISTENCE; GOOD STANDING; AUTHORITY. The Company is a limited
liability company organized, validly existing and in good standing under
the laws of the State of Delaware, and is duly licensed or qualified to
do business as a foreign limited liability company in, and is or will be
in good standing under the laws of California which constitute all of the
jurisdictions in which the character of the properties owned or leased by
it therein or in which the transaction of its business makes such
qualification necessary, except where the failure to be so qualified
would not have a Material Adverse Effect (as defined below). The Company
has all requisite power and authority to own, operate and lease its
properties and carry on its business as and where now conducted. The
copies of the limited liability company agreement and by-laws of the
Company delivered to Acquisition are true and correct and are in full
force and effect, and there have not been any amendments or alterations
to such documents. As used in this Merger Agreement, "Material Adverse
Effect" shall mean a material adverse effect on the business, assets,
liabilities, condition (financial or otherwise), prospects or results of
operations of the Company.
5.2. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. The Company
has the requisite power and authority to execute and deliver this Merger
Agreement and to perform its obligations hereunder. The execution and
delivery of this Merger Agreement by the Company, and consummation by the
Company of the transactions contemplated hereby, have been duly
authorized by all requisite action under the Company's limited liability
company agreement, by-laws and the LLCA, subject only, in the case of
this Merger Agreement, to the requisite approval of this Merger Agreement
by the holders of a majority of the Company Shares. The Company Manager
is authorized as it deems appropriate to execute, acknowledge, verify,
deliver, file and record, for and in the name of the Company, the
Certificate of Merger and any and all other documents and instruments
required to consummate the transactions contemplated hereunder. This
Merger Agreement constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.
Except for the requisite approval by the holders of Company Shares, no
other proceedings on the part of the Company are necessary to authorize
this Merger Agreement and the transactions contemplated hereby.
5.3. CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Merger Agreement by the Company nor the consummation of
the transactions contemplated hereby will (i) conflict with or result in
any breach of any provision of the limited liability company agreement or
by-laws of the Company, (ii) require any consent, approval, authorization
or permit of, or filing with or notification to, any Governmental Entity,
except (A) pursuant to the Exchange Act, (B) the filing of the
Certificate of Merger pursuant to the LLCA or (C) where the failure to
obtain such consent, approval, authorization or permit, or to make such
filing or notification, would not cause a Material Adverse Effect;
(iii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or
provisions of any note, license, agreement or other instrument or
obligation to which the Company is a party or by which it or any of its
assets may be bound, except for such defaults (or rights of termination,
cancellation or acceleration) as to which requisite waivers or consents
have been obtained or which, in the aggregate, would not materially and
adversely affect the ability of the Company to consummate the
transactions contemplated by this Merger Agreement; or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable
to the Company or any of its assets, except for violations which would
not cause a Material Adverse Effect.
5.4. CAPITALIZATION. As of the date hereof, 19,708,123 Company
Shares were validly issued and outstanding. As of the date hereof, there
are no bonds, debentures, notes, other indebtedness or any other interest
having the right to vote on any matters on which the Company's Share
Holders may vote issued or outstanding. As of the date hereof, there are
no options, warrants, calls or other rights, agreements or commitments
presently outstanding obligating the Company to issue, deliver or sell
Company Shares or debt securities, or obligating the Company to grant,
extend or enter into any such option, warrant, call or other such right,
agreement or commitment, other than pursuant to the Rights Agreement
("Rights Agreement") dated as of April 28, 1997, between the Company and
GEMISYS Corporation, as Rights Agent.
5.5. NO SUBSIDIARIES. The Company does not directly or indirectly
own any securities of or any other interest in any other corporation,
partnership, joint venture or other business association or entity.
5.6. REPORTS AND FINANCIAL STATEMENTS. The Company has previously
furnished Acquisition with true and complete copies of (i) its
Registration Statement on Form 10-SB, as filed with the Commission,
(ii) its Quarterly Reports on Form 10-QSB for the quarters ended June 30,
1997 and September 30, 1997, as filed with the Commission, (and, if available,
its Annual Report on Form 10-KSB for the year ended December 31, 1997),
and (iii) all other reports or registration statements filed by the
Company with the Commission that the Company was required to file with
the Commission (the documents listed in clauses (i) through (iii) being
referred to herein collectively as the "Company SEC Reports"). As of
their respective dates, the Company SEC Reports complied in all material
respects with the requirements of the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations of the Commission
thereunder applicable to such Company SEC Reports. As of their respective
dates, the Company SEC Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial
statements of the Company included in the Company SEC Reports comply as
to form in all material respects with applicable accounting requirements
and with the published rules and regulations of the Commission with
respect thereto, and the financial statements included in the Company SEC
Reports have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis (except as
may be indicated therein or in the notes thereto) and fairly present in
all material respects the financial position of the Company at the dates
thereof and the results of its operations and changes in financial
position for the periods then ended, subject, in the case of the
unaudited interim financial statements, to normal year-end audit
adjustments and any other adjustments described therein.
5.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Company SEC Reports filed prior to the date hereof or in the
Disclosure Schedule, since February 10, 1997, the date the Company was
organized, there has not been (i) any transaction, commitment, dispute or
other event or condition (financial or otherwise) of any character
(whether or not in the ordinary course of business), individually or in
the aggregate, having a Material Adverse Effect; (ii) any damage,
destruction or loss, whether or not covered by insurance, which, insofar
as reasonably can be foreseen, in the future would be likely to have a
Material Adverse Effect; (iii) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or
property) with respect to the Company Shares; (iv) any material increase
in the benefits under, or the establishment or amendment of, any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, performance awards, Company Share purchase or other employee
benefit plan, or any increase in the compensation payable or to become
payable to any of the employees of the Company, except for increases in
salaries or wages payable or to become payable in the ordinary course of
business and consistent with past practice; (v) any change by the Company
in its significant accounting policies; or (vi) any entry into any
commitment or transaction material to the Company (including, without
limitation, any borrowing or sale of assets) except in the ordinary
course of business consistent with past practice.
5.8. PROPERTIES.
(a) The title reports identified in the Disclosure Schedule
list all real property owned (the "Owned Property") or leased as lessor
or lessee (the "Leased Property" and collectively with the Owned
Property, the "Property") by the Company.
(b) Except as stated in the Disclosure Schedule, none of the
Property is subject to any purchase options, rights of first refusal or
other preferential purchase rights.
(c) The Leased Property has been leased by the Company on the
terms and conditions stated in the lease and amendments identified in the
Disclosure Schedule. All obligations towards the lessors arising from the
lease agreements referred to before have been complied with in all
material respects. There are no disputes regarding those agreements
pending or, to the knowledge of the Company, threatened.
(d) To the best of the Company's knowledge, except as set
forth on the Disclosure Schedule, no adjacent buildings or improvements
extend across the boundaries of the Owned Property and no buildings or
improvements forming part of the Owned Property extend onto any adjacent
sites.
(e) Other than properties in the Triad Business Park which
have been sold, the Company has not owned or leased any Property except
the Property.
(f) The Disclosure Schedule contains a true, correct and
complete list of all leases, subleases, tenancies, licenses and other
rights of occupancy or use for all or any portion of any Property, and
all guarantees and other agreements in respect thereof, all as amended,
renewed and extended to the date thereof, whether oral or written (the
"Leases").
(g) The Company has heretofore delivered to Acquisition a
true, correct and complete copy of each Lease (or written summary thereof
in the case of oral Leases).
(h) Each current tenant (the "Tenant") is in actual possession
of its leased premises. No Rents violate any applicable law. For purposes
of this Section 5, the term "Rents" is defined to mean the basic, and
additional and percentage rents, all pass-throughs of taxes, expenses or
other items, and all other sums payable by the Tenant to the lessor
(including, without limitation, utility charges) during the original and
any renewal terms thereof.
(i) The following is true with respect to each Lease:
(1) the Lease is valid and subsisting and in full
force and effect strictly in accordance with its terms and has not been
modified, in writing or otherwise, except as set forth on the Disclosure
Schedule;
(2) no Lease contains any purchase or similar
option;
(3) all obligations of the lessor thereunder which
accrue prior to the Effective Time shall have been performed and paid for
in full by the Company;
(4) to the best of the Company's knowledge, there
has been no default or event which, with the giving of notice or the
lapse of time, or both, would constitute a default, on the part of the
Tenant or the lessor thereunder, and the Tenant has not asserted and has
no defense to, offset or claim against, its Rent or the performance of
its other obligations under the Lease;
(5) the Tenant has not prepaid any Rent; and the
Rents have been assigned to the Company's lender as additional security.
There are no material construction, management, leasing, service,
equipment, supply, maintenance or concession agreements (oral or written,
formal or informal) with respect to or affecting all or any portion of
the Property except as set forth on Schedule 5.21 (the "Property
Contracts"). A current, complete and correct copy of each Property
Contract has been delivered to Acquisition. Each Property Contract is
valid and subsisting and all amounts due thereunder have been paid.
Except as set out in the Disclosure Schedule, neither the Company nor any
of its agents is in default under any Property Contract or, to the best
of the Company's knowledge, has received any notice from any party to any
Contract claiming the existence of any default or breach hereunder and no
event or omission has occurred which, with the giving of notice or the
lapse of time would constitute a default. Except as set out in the
Disclosure Schedule, all Property Contracts are terminable without cause
on thirty (30) days' notice or less without payment of any penalty or
termination payment.
(j) To the best of the Company's knowledge, the continued
maintenance, operation and use of any buildings, structures or other
improvements on each Property for their respective present purposes will
not violate any federal, state, county or municipal laws, ordinances,
orders, codes, regulations or requirements in certificates of occupancy
relating to housing, building, safety, health, fire or zoning (together
"Applicable Laws") affecting all or any portion of each improved
Property.
(k) To the best of the Company's knowledge, no written or oral
notice has been given to the Company by any holder of any mortgage or
deed of trust on any Property, by any insurance company which has issued
a policy with respect to any of any Property, or by any board of fire
underwriters (or other body exercising similar functions), any of which
notices claim any defect or deficiency or request the performance of any
repairs, alterations or other work to any Property.
(l) All state, township, county, school district and other
taxes levied or assessed against any Property and any penalties or
interest due and payable thereon prior to the Effective Time, and all
assessments of any kind levied prior to the Effective Time, if any, will
have been paid in full by the Company and all appropriate tax returns
relating to the same have been filed with the proper authorities.
(m) The Company has no notice of any proposed increase in the
assessed valuation. To the best of the Company's knowledge, there is no
proceeding pending for the reduction of the assessed valuation of all or
any portion of any Property.
(n) The Company has not received any written or oral notice
for assessments for public improvements against any Property which remain
unpaid, and to the best of the Company's knowledge, no such assessment
has been proposed.
5.9. CONDEMNATION. There is no pending condemnation, expropriation,
eminent domain or similar proceeding affecting all or any portion of any
Property and, to the best of the Company's knowledge, no such proceeding
is contemplated.
5.10. ENVIRONMENTAL MATTERS. For the purposes of this Merger
Agreement:
"Environmental Matters" means any matter arising out of, relating to
or resulting from pollution, protection of the environment and human
health or safety, health or safety of the public or employees,
sanitation, and any matters relating to emissions, discharges, Releases
or threatened Releases of Environmentally Relevant Materials or otherwise
arising out of, resulting from or relating to the presence, manufacture,
packaging, labeling, processing, distribution, use, generation,
treatment, storage, disposal, transport or handling of or exposure to
Environmentally Relevant Materials or arising out of, resulting from, or
relating to compliance with Environmental Laws.
"Environmental Costs" means, without limitation, any costs of
investigation, remediation, removal, or other response actions, losses,
liabilities, obligations, payments, damages (including, but not limited
to, bodily injury, death or property damage), civil or criminal fines or
penalties, costs of shutdown, diminution in operations, product
withdrawals or discontinuance of distribution of products (including, but
not limited to, direct or indirect damages), judgments, settlements,
interest, costs and expenses (including attorney's fees and costs)
arising out of, relating to or resulting from any Environmental Matter.
"Environmental Laws" means, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42
U.S.C. Sections 9601 et seq., the Emergency Planning and Community Right-
to-Know Act of 1986, 42 U.S.C. Sections 11001 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq., the Toxic
Substances Control Act, 15 U.S.C. Sections 2601 et seq., the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Sections 136 et
seq., the Clean Air Act, 42 U.S.C., Sections 7401 et seq., the Clean
Water Act (Federal Water Pollution Control Act), 33 U.S.C. Sections 1251
et seq., the Safe Drinking Water Act, 42 U.S.C. Sections 300f et seq.,
the Occupational Safety and Health Act, 29 U.S.C., Sections 641 et seq.,
the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801 et
seq., as any of the above statutes have been or may be amended from time
to time, all rules and regulations promulgated pursuant to any of the
above statutes, and any other federal, state or local law, statute,
ordinance, rule or regulation governing Environmental Matters, as the
same have been or may be amended from time to time, including any common
law cause of action providing any right or remedy with respect to
Environmental Matters, and all applicable judicial and administrative
decisions, orders, and decrees relating to Environmental Matters.
"Environmentally Relevant Materials" means any pollutants,
contaminants, or hazardous or toxic substances, materials, wastes,
residual materials, constituents or chemicals that are regulated by, or
form the basis for liability under any Environmental Laws, including but
not limited to petroleum products, asbestos and radioactive materials.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, injecting, discharging, escaping, leaching, dumping or
disposing (or threat of the same occurring) into the environment.
(a) To the best of the Company's knowledge, the Company is in
material compliance with all applicable Environmental Laws. There are no
claims, notices, civil, criminal or administrative actions, suits,
hearings, investigations, penalty assessments, inquiries or proceedings
pending, asserted or, to the knowledge of the Company, threatened by any
governmental or other entity that are based on or related to any
Environmental Matters including, without limitation, the violation of any
Environmental Laws or the violation of or the failure to have any
required permits, licenses, authorizations, certificates, registrations
and other governmental consents and approvals related to the handling,
storage or disposal of Environmentally Relevant Materials ("Environmental
Permits"). There are presently no outstanding judgments, decrees or
orders of any court or governmental or administrative agency against or
affecting the Company or Property arising from, relating to or resulting
from Environmental Matters.
(b) To the best of the Company's knowledge, the Company has
obtained and is in material compliance with all Environmental Permits
required to be obtained by it under applicable Environmental Laws in
order for the Company to conduct its business and operations, except
where the failure to obtain any Environmental Permit would not cause a
Material Adverse Effect. All such Environmental Permits are owned by or
in the name of the Company, are in full force and effect and the Company
has made in a timely manner all appropriate filings for issuance or
renewal of such Environmental Permits. No application, action or
proceeding is pending for the renewal or modification of any
Environmental Permit; and no claim, application, complaint, action or
proceeding is pending, asserted or, to the knowledge of the Company,
threatened that may result in the denial of an application for renewal or
transfer or the revocation, modification, non-renewal, restriction, or
suspension of any Environmental Permit. The continued validity and
existence of each of the Environmental Permits is only subject to the
conditions set forth in each such Environmental Permit, and no additional
expenditures are required to be made by the Company or any third party to
maintain or comply with such Environmental Permits (except as
specifically disclosed in such Environmental Permits and except for
changes in applicable Environmental Laws after Closing). The continued
validity of such Environmental Permits is not related to the continued
association of one or more individuals or corporations or other entities
with the Company.
(c) To the best of the Company's knowledge, no Environmentally
Relevant Materials have been Released or are present in connection with,
arising from or relating to any of the Company's operations or businesses
or at, on, about or under any Property either (a) in violation of
applicable Environmental Law or (b) which require or would require
investigation, remediation or other response action under applicable
Environmental Law. No Property is listed or, to the best of the Company's
knowledge, proposed for listing (for which any of the Company or the
Manager has received notice of such listing or such listing is otherwise
publicly disseminated or a matter of public record) on the National
Priority List pursuant to CERCLA (NPL), CERCLIS or any similar foreign,
federal or state list of sites requiring investigation, remediation or
other response action. To the best of the Company's knowledge, there are
no underground storage tanks, polychlorinated biphenyls, asbestos-
containing materials or surface impoundments at, on, under or within any
Property, and there have been no underground storage tanks removed from
or closed in place at any Property. The Company has not used any
treatment, storage or disposal site for Environmentally Relevant
Materials, or otherwise treated, stored, disposed of, transported, or
arranged for the treatment, storage or disposal of any Environmentally
Relevant Materials used, generated, handled, or managed by or on behalf
of the Company or in connection with the business or Property to any
place or location which (a) is listed or, to the best of the Company's
knowledge, proposed for listing on the NPL, CERCLIS or any similar
foreign, federal or state list; (b) to the best of the Company's
knowledge, is in violation of any Environmental Laws; or (c) is the
subject of enforcement action or other investigations which could lead to
Environmental Costs to be incurred by any of the Company or the Surviving
LLC. The Company has not, nor, to the best of the Company's knowledge has
any other person reported or received any oral or written notice of a
Release of any Environmentally Relevant Material used, generated or
handled by or for the Company or in connection with the business or
Property. Neither the Company, nor, to the best of the Company's
knowledge, any other person has received any notice, demand, claim or
request for information asserting that the Company is or may be a
potentially responsible party at any location used for the storage,
treatment or disposal of Environmentally Relevant Materials or where
there has been a Release of any Environmentally Relevant Materials.
(d) Except as listed in the Disclosure Schedule, there have
been no investigations, reports, studies, inspections, audits, tests,
reviews or other analyses conducted by the Company, the Manager, their
respective employees or outside contractors at the direction of any such
person in relation to the following matters: (i) Environmental Matters,
including without limitation potential or actual soil or groundwater
conditions at any Property or business now or previously owned, operated
or leased by the Company; or (ii) the compliance of the Company's
business or Property with applicable Environmental Laws ("Environmental
Reports").
(e) To the best of the Company's knowledge, the Company is not
aware of any facts or circumstances related to Environmental Matters
concerning the Company, the business or operations of the Company or the
Property which could reasonably be expected to cause the Surviving LLC or
the Company to incur Environmental Costs.
5.11. LITIGATION. Except as listed in the Disclosure Schedule, there
is no suit, action or proceeding pending or, to the best of the Company's
knowledge, threatened against or affecting the Company which, either
alone or in the aggregate, is likely to have a Material Adverse Effect,
nor is there any judgment, decree, injunction, rule or order of any
court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against the Company having, or which, in the
future is likely to have, either alone or in the aggregate, any Material
Adverse Effect.
5.12. INFORMATION IN DISCLOSURE DOCUMENTS. None of the information
supplied or to be supplied by the Company for inclusion or incorporation
by reference in the Proxy Statement or any amendments or supplements
thereto, at the time of the mailing of the Proxy Statement and any
amendments or supplements thereto and at the time of the Company Meeting,
will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading. The Proxy Statement will comply as to form in
all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder.
5.13. LABOR MATTERS. No labor organization or group of employees of
the Company has made a pending demand for recognition or certification,
and there are no representation or certification proceedings or petitions
seeking a representation proceeding presently pending or threatened to be
brought or filed, with the National Labor Relations Board or any other
labor relations tribunal or authority. There are no organizing
activities, strikes, work stoppages, slowdowns, lockouts, material
arbitrations or material grievances, or other material labor disputes
pending or threatened against or involving the Company.
5.14. EMPLOYEE BENEFIT PLANS; ERISA. There are no employee benefit
plans, programs, policies, practices, and other arrangements providing
benefits to any employee or former employee (or beneficiary or dependent
thereof) sponsored or maintained by the Company to which the Company
contributes or is obligated to contribute ("Company Plans").
5.15. COMPANY ACTION. The Company Manager and the Company Advisory
Board (at a meeting duly called and held) has by the requisite vote (i)
determined that the Merger is advisable and fair and in the best
interests of the Company and its Share Holders, (ii) approved the Merger
in accordance with the provisions of Section 18-209 of the LLCA, (iii)
recommended the approval of this Merger Agreement and the Merger by the
Company Share Holders and directed that the Merger be submitted for
consideration by the Company's Share Holders entitled to vote thereon at
the Company Meeting and (iv) adopted any necessary resolution having the
effect of causing the Company not to be subject, to the extent permitted
by applicable law, to any state anti-takeover law that may purport to be
applicable to the Merger and the transactions contemplated by this Merger
Agreement.
5.16. NO FAIRNESS OPINION. The Company has not received an opinion
of any financial advisors to the Company to the effect that the
consideration to be received by the Company's Share Holders in the Merger
is fair to the Share Holders of the Company.
5.17. FINANCIAL ADVISOR. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the Merger or the transactions contemplated by this
Merger Agreement based upon arrangements made by or on behalf of the
Company.
5.18. COMPLIANCE WITH APPLICABLE LAWS. To the best of the Company's
knowledge, the Company holds all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities for the
Properties in their current condition (the "Company Permits"). However
the real property development business involves a continuous governmental
permitting process and the Company makes no representation or warranty
that the Company holds all permits of Governmental Entities (including
discretionary permits and ministerial permits such as building permits)
that (a) are additional, supplemental, or ancillary to approval that the
Company currently holds for real property being developed and that would
ordinarily be required or obtained only from time to time as such
development proceeds or (b) would be required for the development of
parts of the Property not yet being developed. The Company is in
compliance with the terms of the Company Permits, except for such
failures to comply which, singly or in the aggregate, would not have a
Material Adverse Effect. To the best of the Company's knowledge, the
businesses of the Company are not being, and have not been, conducted in
violation of any law, ordinance or regulation of any Governmental Entity,
except for possible violations which, individually or in the aggregate,
do not and would not have a Material Adverse Effect. To the best of the
Company's knowledge, no investigation or review by any Governmental
Entity with respect to the Company is pending or threatened, nor has any
Governmental Entity indicated an intention to conduct the same, other
than those the outcome of which would not have a Material Adverse Effect.
5.19. LIABILITIES. Except as set forth in the Disclosure Schedule,
as of September 30, 1997, the Company did not have any liability or
obligation (absolute, accrued, contingent or otherwise, in contract, tort
or otherwise and whether or not required by GAAP to be reflected in the
Company's balance sheet or other books and records) (a "Liability"),
other than such Liabilities which, individually or in the aggregate,
would not have a Material Adverse Effect. From and after September 30,
1997, the Company has not incurred, suffered, permitted to exist or
otherwise become subject to any Liability, other than Liabilities
incurred in the ordinary course of business in accordance with past
practice which, individually or in the aggregate, would not have a
Material Adverse Effect.
5.20. TAXES. The Company has filed all material tax returns,
declarations and reports required to be filed by any of them (taking into
account all valid extensions of filing dates) and has paid, or has set up
an adequate liability reserve in accordance with GAAP for the payment of,
all taxes required to be paid in respect of the periods covered by such
returns, declarations and reports. The information contained in such tax
returns, declarations and reports is true, complete and accurate in all
material respects. The Company is not delinquent in the payment of any
tax, assessment or governmental charge, except where such delinquency has
not had or would not reasonably be expected to have, a Material Adverse
Effect. No material deficiencies for any taxes have been proposed,
asserted or assessed against the Company that have not been finally
settled or paid in full and no requests for waivers of the time to assess
any such tax are pending. No tax return, declaration or report is
currently under audit by any taxing authority, and as of the date hereof
no written notice of any such audit has been received. For the purposes
of this Merger Agreement, the term "tax" shall include all federal,
state, local and foreign income, profits, franchise, gross receipts,
payroll, sales, employment, use, property, withholding, excise and other
taxes, duties and assessments of any nature whatsoever together with all
interest, penalties and additions imposed with respect to such amounts.
5.21. CERTAIN AGREEMENTS. Except as set forth on Schedule 5.21, the
Company is not a party or subject to any oral or written (i) agreement,
contract, indenture or other instrument relating to Indebtedness (as
defined below) in an amount exceeding $100,000; (ii) joint venture
agreement or arrangement or any other agreement which has involved or is
expected to involve a sharing of revenues; (iii) lease for real or
personal property in which the amounts of payments which the Company or
any subsidiary is required to make on an annual basis exceeds $25,000;
(iv) agreement, contract, policy, license, document, instrument,
arrangement or commitment that limits in any material respect the freedom
of the Company to compete in any line of business or with any person or
in any geographical area or which would so limit the freedom of the
Company after the Effective Time; (v) employment, consulting, severance,
termination, or indemnification agreement, contract or arrangement
providing for future payments with any current or former officer,
consultant or employee which (A) exceeds $10,000 per annum or (B)
requires aggregate annual payments or total payments over the life of
such agreement, contract or arrangement to such current or former
officer, consultant or employee in excess of $10,000 or $25,000,
respectively, and is not terminable before and after the Merger by it on
30 days' notice or less without penalty or obligation to make payments
related to such termination; (vi) agreement, contract, arrangement,
commitment or obligation with or in favor of (or calling for any payment
to) any member, Share Holder, officer, manager, Advisory Board member or
affiliate of the Company or the manager thereof; or (vii) other
agreement, contract, policy, license, document, instrument, arrangement
or commitment not made in the ordinary course of business that is
material to the Company. "Indebtedness" means any liability in respect of
(A) borrowed money, (B) capitalized lease obligations, (C) the deferred
purchase price of property or services (other than trade payables in the
ordinary course of business) and (D) guarantees of any of the foregoing.
The Company is not in default (or would be in default with notice or
lapse of time, or both) under any indenture, note, credit agreement, loan
document, lease, contract, policy, license, document, instrument,
arrangement or commitment (a "Contract") whether or not such default has
been waived, which default, alone or in the aggregate with other such
defaults, would have a Material Adverse Effect. The Company is not a
party to or bound by any Contract which upon execution of this Merger
Agreement or consummation of the transactions contemplated hereby will
(either alone or upon the occurrence of additional acts or events) result
in the loss of any material benefit, the termination thereof or any
payment becoming accelerated or due from the Company or the Surviving LLC
which loss, termination or acceleration would have a Material Adverse
Effect.
SECTION 6. CONDUCT OF BUSINESS PENDING THE MERGER
6.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. Prior
to the Effective Time, unless Acquisition shall otherwise agree in
writing:
(a) the Company shall carry on its business in the usual,
regular and ordinary course in substantially the same manner as
heretofore conducted, and shall use its diligent efforts to preserve
intact its present business organizations, keep available the services of
its present officers and employees and preserve their relationships with
customers, suppliers and others having business dealings with them to the
end that their goodwill and ongoing businesses shall be unimpaired at the
Effective Time. The Company shall (A) maintain insurance coverages and
its books, accounts and records in the usual manner consistent with prior
practices; (B) comply in all material respects with all laws, ordinances
and regulations of Governmental Entities applicable to the Company; (C)
maintain and keep its properties and equipment in good repair, working
order and condition, ordinary wear and tear excepted; and (D) perform in
all material respects its obligations under all contracts and commitments
to which it is a party or by which it is bound, in each case other than
where the failure to so maintain, comply or perform, either individually
or in the aggregate, would not result in a Material Adverse Effect;
(b) except as required by this Merger Agreement, the Company
shall not and shall not propose to (A) sell or pledge or agree to sell or
pledge any membership interest; (B) amend its limited liability company
agreement or by-laws; (C) split, combine or reclassify its outstanding
membership interests or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for shares
of membership interests of the Company, or declare, set aside or pay any
dividend or other distribution payable in cash, securities or other
property; or (D) directly or indirectly redeem, purchase or otherwise
acquire or agree to redeem, purchase or otherwise acquire any Company
Shares;
(c) the Company shall not (A) except as contemplated by this
Merger Agreement, issue, deliver or sell or agree to issue, deliver or
sell any additional shares of, or rights of any kind to acquire any
shares of, its membership interest of any class, any Indebtedness or any
options, rights or warrants to acquire, or securities convertible into
membership interests; (B) acquire, lease or dispose of, or agree to
acquire, lease or dispose of, any capital assets or any other assets
other than in the ordinary course of business; (C) incur additional
Indebtedness or encumber or grant a security interest in any asset or
enter into any other material transaction other than in each case in the
ordinary course of business (other than as set forth in Schedule 6.1);
(D) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, in each case in this clause (D) which
are material, individually or in the aggregate, to the Company; or (E)
enter into any contract, agreement, commitment or arrangement with
respect to any of the foregoing;
(d) the Company shall not, except as required to comply with
applicable law, (A) adopt, enter into, terminate or amend any bonus,
profit sharing, compensation, severance, termination, stock option,
pension, retirement, deferred compensation, employment or other Company
Plan, agreement, trust, fund or other arrangement for the benefit or
welfare of any current or former officer, employee or independent
contractor; (B) other than as set forth in Schedule 6.1, increase in any
manner the compensation or fringe benefit of any officer, employee or
independent contractor; (C) other than as set forth in Schedule 6.1, pay
any benefit not provided under any existing plan or arrangement; (D)
other than as set forth in Schedule 6.1, grant any awards under any
bonus, incentive, performance or other compensation plan or arrangement
or Company Plan (including, without limitation, the grant of equity based
or related awards, performance units or restricted equity, or the removal
of existing restrictions or the acceleration of exerciseability in any
Company Plan or agreements or awards made thereunder); (E) take any
action to fund or in any other way secure the payment of compensation or
benefits under any employee plan, agreement, contract or arrangement or
Company Plan; or (F) adopt, enter into, amend or terminate any contract,
agreement, commitment or arrangement to do any of the foregoing;
(e) the Company shall not make any investments in non-
investment grade securities; and
(f) the Company shall not, except as required by law or GAAP,
change any of its significant accounting policies or make or rescind any
express or deemed election relating to taxes, settle or compromise any
claim, action, suit, litigation, proceeding, arbitration, investigation,
audit or controversy relating to taxes, or change any of its methods of
reporting income or deductions for federal income tax purposes from those
employed in the preparation of the federal income tax returns for the
last taxable year.
6.2. NOTICE OF BREACH. Each party shall promptly give written
notice to the other party upon becoming aware of the occurrence or, to
its knowledge, impending or threatened occurrence, of any event which
would cause or constitute a breach of any of its representations,
warranties or covenants contained or referenced in this Merger Agreement
and will use its best efforts to prevent or promptly remedy the same. Any
such notification shall not be deemed an amendment of any Schedule
hereto.
SECTION 7. ADDITIONAL AGREEMENTS
7.1. ACCESS AND INFORMATION. Subject to the limitations imposed by
third party confidentiality agreements, the Company shall afford to
Acquisition and its accountants, counsel and other representatives full
access during normal business hours (and at such other times as the
parties may mutually agree) throughout the period prior to the Effective
Time to all of its properties, books, contracts, commitments, records and
personnel and, during such period, the Company shall furnish promptly to
Acquisition (i) a copy of each report, schedule and other document filed
or received by it pursuant to the requirements of federal or state
securities laws, and (ii) all other information concerning its business,
properties and personnel as Acquisition may reasonably request. The
Company and Acquisition shall hold, and shall cause its employees and
agents to hold, in confidence all such information in accordance with the
terms of the Confidentiality Agreement, effective November 25, 1997,
between Acquisition and the Company (the "Confidentiality Agreement").
Acquisition shall indemnify and hold the Company harmless from any and
all claims, liens, losses or damage, including attorneys' fees, arising
out of the physical presence of employees, agents or contractors of
Acquisition or TKG at the Company and out of any tests or inspections of
the Company's Property by or on behalf of Acquisition or TKG.
7.2. PROXY STATEMENT.
(a) As promptly as practicable after the execution of this
Merger Agreement, the Company and Acquisition shall prepare and the
Company shall file with the Commission preliminary proxy materials which
shall constitute the preliminary Proxy Statement. As promptly as
practicable after comments are received from the Commission with respect
to the preliminary proxy materials and after the furnishing by the
Company and Acquisition of all information required to be contained
therein, the Company shall file with the Commission the definitive Proxy
Statement.
(b) Acquisition and the Company shall make all necessary
filings with respect to the Merger under the Securities Act and the
Exchange Act and the rules and regulations thereunder and under
applicable blue sky or similar securities laws and shall use all
reasonable efforts to obtain required approvals and clearances with
respect thereto.
7.3. MEETING. As promptly as possible, the Company shall notice a
Share Holder's meeting for the purpose of approving the Merger. The
Company shall solicit management proxies to vote in favor of the Merger
in connection with this meeting.
7.4. INDEMNIFICATION.
(a) All rights to indemnification existing in favor of the
current or former officers or employees of the Company as provided in the
limited liability company agreement or by-laws, as in effect as of the
date hereof, with respect to matters occurring through the Effective
Time, shall survive the Merger and shall continue in full force and
effect for a period of not less than six years from the Effective Time,
provided, however, that, prior to the Effective Time and with
Acquisition's prior consent (such consent not required if the cost does
not exceed $110,000), the Company may purchase additional policies of
directors' and officers' liability insurance of at least the same
coverage as currently maintained by the Company, such policies to be pre-
paid and in effect for a period of six years from the Effective Time.
(b) In the event that any action, suit, proceeding or
investigation relating hereto or to the transactions contemplated by this
Merger Agreement is commenced, whether before or after the Effective
Time, the parties hereto agree to cooperate and use their respective
reasonable efforts to vigorously defend against and respond thereto.
(c) The provisions of the limited liability company agreement
and by-laws of the Surviving LLC pertaining to indemnification of current
and former directors, officers and employees shall not be amended,
repealed or otherwise modified for a period of six years after the
Effective Time (or, in the case of matters which are pending but which
have not been resolved prior to the sixth anniversary of the Effective
Time, until such matters are finally resolved), in any manner that would
adversely affect the rights thereunder of individuals who at any time on
or prior to the Effective Time were directors, officers or employees of
the Company in respect of actions or omissions occurring on or prior to
the Effective Time (including, without limitation, the transactions
contemplated by this Merger Agreement).
7.5. ADDITIONAL AGREEMENTS.
(a) Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use all reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Merger Agreement, including using all reasonable efforts to obtain all
necessary waivers, consents and approvals, to effect all necessary
registrations and filings (including, but not limited to, filings with
all applicable Governmental Entities) and to lift any injunction or
other legal bar to the Merger, subject to the appropriate vote of the
Share Holders. Notwithstanding the foregoing, Acquisition shall not be
required to take any action, and without Acquisition's prior written
consent the Company shall agree not to take any action, that would in
any way restrict or limit the conduct of business from and after the
Effective Time by the Surviving LLC of either (including, without
limitation, any divestiture of any business, product line or asset).
(b) In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Merger
Agreement, the proper officers and/or directors of the Surviving LLC
shall take all such necessary action.
7.6. NO SOLICITATION.
(a) As used herein, the term "Acquisition Proposal" means any
proposed (i) merger, consolidation or similar transaction involving the
Company, (ii) sale, lease or other disposition directly or indirectly by
merger, consolidation, share exchange or otherwise of either (A) assets
of the Company representing 75% or more of the consolidated assets of the
Company (based upon the valuations contained in the confidential report
of the Sedway Group dated July 22, 1997 (the "Sedway Report")) in one
transaction (but not solicitation of unrelated sales of individual
parcels of the Property which are not material in amount either
individually or in the aggregate), or (B) all or substantially all of the
undeveloped Property in one transaction (but not solicitation of
unrelated sales of individual parcels of the undeveloped Property which
are not material in amount either individually or in the aggregate), or
(C) any other material amount of assets or Property of the Company,
(iii) issue, or other acquisition or disposition of (including by way of
merger, consolidation, share exchange or any similar transaction)
securities (or options, rights or warrants to purchase, or securities
convertible into, such securities) representing 20% or more of the voting
power of the Company or (iv) transaction in which any person shall or
would acquire beneficial ownership (as such term is defined in Rule 13d-3
under the Exchange Act), or the right to acquire beneficial ownership, or
any "group" (as such term is defined under the Exchange Act) shall have
been formed which beneficially owns or would own or has or would have the
right to acquire beneficial ownership of 20% or more of the outstanding
Company Common Stock, other than transactions contemplated by this Merger
Agreement.
(b) The Company shall not, nor shall the Company authorize or
permit its officers, employees, representatives, investment bankers,
attorneys, accountants or other agents or affiliates to, take any action
to solicit, initiate or encourage the submission of any Acquisition
Proposal; provided, however, that if, at any time prior to the obtaining
of Company Share Holder approval of the Merger, the Advisory Board
determines in good faith by a majority vote, with the advice of outside
counsel, that it is necessary to do so to avoid a breach of its fiduciary
duties to Share Holders under applicable law, the Company may, in
response to a written request for information, furnish information with
respect to the Company to any person pursuant to a customary
confidentiality agreement containing terms at least as favorable to the
Company as those contained in the confidentiality agreements in place
between the Company and Acquisition. The Company may discuss and
negotiate terms with parties making unsolicited Acquisition Proposals.
(c) The Company may continue marketing parcels of the Property
as part of its normal business operations. The Company shall provide
Acquisition with a copy of any proposed agreement for any sale, exchange
or other disposition of any part of the Property and consult with
Acquisition before entering into any binding agreement. After the
approval of this Agreement by the Advisory Board of the Company and
except as provided in Section 7.6(d), the Company will not, without the
express written consent of Acquisition, enter into any agreement for the
disposition of any part of the Property.
(d) Except as expressly permitted by this Section 7.6, neither
the Advisory Board nor the Company Manager shall (i) withdraw or modify,
or propose publicly to withdraw or modify, in a manner adverse to
Acquisition, its approval or recommendation of the adoption and approval
of the matters to be considered at the Company Meeting, (ii) approve or
recommend, or propose publicly to approve or recommend, any Acquisition
Proposal, or (iii) cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement
or understanding (written or otherwise) related to any Acquisition
Proposal (each, an "Acquisition Agreement"). Notwithstanding the
foregoing, in the event that prior to the obtaining of Company Share
Holder approval of the Merger, there exists a Superior Proposal (as
defined herein), the Advisory Board may, if it determines in good faith
by a majority vote, with the advice of outside counsel, that it is
necessary to do so to avoid a breach of its fiduciary duties to Company
Share Holders under applicable law, approve or recommend such Superior
Proposal and terminate this Merger Agreement, provided (x) the Company
shall have given Acquisition written notice (a "Superior Proposal
Notice") at least five business days prior to such termination advising
Acquisition that the Advisory Board has received a Superior Proposal
which the Advisory Board has authorized and intends to effect, specifying
the material terms and conditions of such Superior Proposal and
identifying the person making such Superior Proposal, and (y) the
Company, prior to terminating this Merger Agreement, makes irrevocable
arrangements for Acquisition to be paid the amounts contemplated by
Section 9.2(b) upon the termination of this Merger Agreement. For
purposes of this Merger Agreement, a "Superior Proposal" means a
definitive unconditioned agreement with a third party, with all due
diligence investigations completed, to acquire, directly or indirectly,
more than 50% of the membership interests of the Company, assets of the
Company representing 75% or more of the real estate assets of the Company
(based upon the valuations contained in the Sedway Report) in one
transaction (but not solicitation of sales of individual parcels of the
Property) or all or substantially all of the undeveloped Property in one
transaction (but not solicitation of sales of individual parcels of the
undeveloped Property), and otherwise on terms which the Advisory Board
determines in its good faith judgment to be more favorable from a
financial point of view to the Company Share Holders than this Merger
Agreement, the Merger and the transactions contemplated hereby and for
which financing, to the extent required, is then committed.
(e) In addition to the obligations set forth in paragraphs (b)
and (d) of this Section 7.6, the Company will promptly communicate to
Acquisition a copy of any requests for information or proposals,
including the identity of the person and its affiliates making the same,
that it may receive.
(f) Nothing contained in this Section 7.6 shall prohibit the
Company from taking and disclosing to the Company Share Holders a
position contemplated by Rule 14e-2(a) promulgated under the Exchange Act
or from making any disclosure to the Company Share Holders if, in the
good faith judgment of the Advisory Board, with the advice of outside
counsel, failure so to disclose would result in a violation of applicable
law; provided, however, that neither the Company, the Company Manager nor
the Advisory Board shall withdraw or modify, or propose publicly to
withdraw or modify, its position with respect to the matters to be
considered at the Company Meeting or approve or recommend, or propose
publicly to approve or recommend, an Acquisition Proposal, except as
provided in Section 7.6(d).
7.7. REDEMPTION OF RIGHTS. The Company shall, immediately prior to
the Effective Time, cause the redemption of the rights issued under the
Rights Agreement so that thereafter the holders of such rights shall have
no rights thereunder other than the right to receive the redemption price
therefor. The Company shall not amend the Rights Agreement in any manner
that has the effect of rendering the Rights Agreement inapplicable, in
whole or in part, to any third party unless, prior to or concurrently
therewith, the Company takes substantially equivalent action with respect
to Acquisition and in addition releases Acquisition from any limitations
or restrictions imposed by the Confidentiality Agreement, including
without limitation, restrictions upon the purchase of Company Shares,
that prohibits Acquisition from purchasing Company Shares to the same
extent and upon substantially equivalent terms as such third party.
SECTION 8. CONDITIONS PRECEDENT
8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the
following conditions:
(a) This Merger Agreement and the transactions contemplated
hereby shall have been approved and adopted by the requisite vote of the
Company Share Holders.
(b) No temporary restraining order, preliminary or permanent
injunction or other order by any court or other judicial or
administrative body of competent jurisdiction (each, an "Injunction")
which prohibits or prevents the consummation of the Merger shall have
been issued and remain in effect (each party agreeing to use its best
efforts to have any such Injunction lifted), and there shall not be any
action taken, or any statute, rule, regulation or order (whether
temporary, preliminary or permanent) enacted, entered or enforced which
makes the consummation of the Merger illegal or prevents or prohibits the
Merger.
8.2. CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE MERGER.
The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the additional
following conditions, unless waived by the Company:
(a) Acquisition shall have performed in all material respects
its agreements contained in this Merger Agreement required to be
performed on or prior to the Effective Time and the representations and
warranties of Acquisition contained in this Merger Agreement shall be
true in all material respects when made and on and as of the Effective
Time as if made on and as of such date, except for representations and
warranties that are by their express provisions made as of a specific
date or dates, which were or will be true in all material respects at
such time or times as stated therein, and the Company shall have received
a certificate of the Acquisition Manager to that effect.
(b) Intentionally Omitted.
(c) The Merger Consideration shall have been deposited with
the Dispersing Agent with irrevocable instructions to exchange the
Company Shares for the Merger Consideration in accordance with Section
3.2(b) immediately upon notification by the Company and Acquisition of
the Effective Time.
8.3. CONDITIONS TO OBLIGATIONS OF ACQUISITION TO EFFECT THE MERGER.
The obligation of Acquisition to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the additional
following conditions, unless waived by Acquisition:
(a) The Company shall have performed in all material respects
its agreements contained in this Merger Agreement required to be
performed on or prior to the Effective Time and the representations and
warranties of the Company contained in this Merger Agreement shall be
true in all material respects (except for any such representations or
warranties which are qualified as to Material Adverse Effect, which shall
be true and correct in all respects) when made and on and as of the
Effective Time as if made on and as of such date, except for
representations and warranties that are by their express provisions made
as of a specific date or dates which were or will be true in all material
respects (except for any such representations or warranties which are
qualified as to Material Adverse Effect, which were or will be true and
correct in all respects) at such date or dates, and Acquisition shall
have received a certificate of the Company Manager to that effect.
(b) Intentionally Omitted.
(c) The Company shall have obtained all consents, appeals,
releases or authorizations from, and shall have made all filings and
registrations to or with, any person, including but not limited to any
Governmental Entity, necessary to be obtained or made in order to
consummate the transactions contemplated by this Merger Agreement.
SECTION 9. TERMINATION, AMENDMENT AND WAIVER
9.1. TERMINATION. This Merger Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval by the
Company Share Holders:
(a) by mutual consent of the Board of Directors of Acquisition
and the Advisory Board;
(b) by either Acquisition or the Company, if the Merger shall
not have been consummated on or before March 31, 1998; provided that the
right to terminate this Agreement pursuant to this Section 9.1(b) shall
not be available to any party whose failure to perform in any material
respect any covenant under this Merger Agreement has been the cause of or
resulted in whole or in part in the failure of the Merger to be
consummated before such date;
(c) by either Acquisition or the Company, if there shall be
any Order which is final and nonappealable preventing the consummation
of the Merger;
(d) by either Acquisition or the Company, if this Merger
Agreement and the transactions contemplated hereby shall fail to receive
the requisite vote for approval and adoption by the Company Share Holders
at the Company Meeting;
(e) by Acquisition if this Merger Agreement and the
transactions contemplated hereby shall not have been submitted for
approval and adoption by the Company Share Holders at the Company Meeting
prior to March 31, 1998 unless the meeting is held later solely due to
delays in obtaining approval of the Proxy Statement by the Commission;
(f) by Acquisition, if the Advisory Board withdraws, modifies
in a manner adverse to Acquisition, or refrains from making its
recommendation concerning the Merger referred to in Section 3.3, or the
Advisory Board shall have recommended to the Company Share Holders any
Acquisition Proposal or the Company shall have entered into an
Acquisition Agreement, or, other than in connection with the Company's
delivery of a Superior Proposal Notice, the Advisory Board shall have
resolved to do any of the foregoing; or
(g) by the Company, if, pursuant to Section 7.6(d), (A) the
Advisory Board has delivered to Acquisition a Superior Proposal Notice,
(B) the Company has paid the Termination Fee (as defined in Section 9.2),
and (C) five business days have passed since Acquisition received the
Superior Proposal Notice.
9.2. EFFECT OF TERMINATION; FEES.
(a) In the event of termination of this Merger Agreement by
either Acquisition or the Company, as provided above, this Merger
Agreement shall forthwith become void and (except for the willful breach
of this Merger Agreement by any party hereto) there shall be no liability
on the part of either the Company or Acquisition or their respective
officers or employees; provided that the last sentence of Section 7.1 and
Sections 9.2, 11.3 and 11.7 shall survive the termination.
(b) The Company shall pay to Acquisition a Termination Fee (as
defined below) if: (i) Acquisition terminates this Merger Agreement
pursuant to Section 9.1(e) or (f); or (ii) within three business days
after the receipt by Acquisition of the Superior Proposal Notice, the
Company terminates this Merger Agreement pursuant to Section 9.1(g) and
executes the agreement contemplating the Superior Proposal; or (iii) so
long as Acquisition has not materially defaulted under Sections 1, 3 and
10 of this Agreement, on or prior to July 31, 1998 the Company (directly
or indirectly through the Company Manager or the Advisory Board) accepts,
recommends, consummates, or enters into or announces an agreement with
respect to, an Acquisition Proposal.
(c) The Termination Fee shall be equal to $1,200,000. The
Termination Fee shall be paid as promptly as practicable and in no event
later than (A) in the event of termination by the Company as described in
clause (ii) of Section 9.2(b), upon termination of the Merger Agreement
and the execution of the Superior Proposal; or (B) in the event of
termination by Acquisition as described in clause (i) of Section 9.2(b),
five business days after such termination; or (C) in the event of any of
the actions or events described in clause (iii) of Section 9.2(b), upon
and (unless otherwise due pursuant to clause (A) or clause (B) of this
Section 9.2(c)) only upon consummation of the transaction contemplated by
the Acquisition Proposal.
9.3. AMENDMENT. This Merger Agreement may be amended by the parties
hereto, by or pursuant to action taken by the Acquisition Manager and the
Advisory Board, at any time before or after approval hereof by the
Company Share Holders, but, after such approval, no amendment shall be
made which changes the amount or form of Merger Consideration or which in
any way materially adversely affects the rights of the Company Share
Holders, without the further approval of such Company Share Holders. This
Merger Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
9.4. WAIVER. At any time prior to the Effective Time, the parties
hereto, by or pursuant to action taken by the Acquisition Manager and
Advisory Board, may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in
any documents delivered pursuant hereto, and (iii) waive compliance with
any of the agreements or conditions contained herein; provided, however,
that no such waiver shall materially adversely affect the rights of the
Company Share Holders and Acquisition. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid if set forth
in an instrument in writing signed on behalf of such party.
SECTION 10. COMMITMENTS OF TKG
Promptly following the execution and delivery of this Merger
Agreement, TKG shall cause Acquisition to be formed and to ratify the
execution and delivery of this Merger Agreement. TKG shall cause
Acquisition to be capitalized with all funds necessary for Acquisition to
fulfill its obligations under the Merger Agreement and the transactions
contemplated hereby. TKG shall indemnify and hold the Company harmless
from any and all claims, liens, losses or damage, including attorneys'
fees, arising out of the physical presence of employees, agents or
contractors of Acquisition or TKG at the Company, out of any tests or
inspections of the Company's Property by or on behalf of Acquisition or
TKG or out of a failure of Acquisition to pay the costs and expenses as
provided for in Section 1.4.
SECTION 11. GENERAL PROVISIONS
11.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. No
representations, warranties or agreements in this Merger Agreement shall
survive the Merger, except for the agreements contained in Sections 3.1,
3.2 and 3.4 and the agreements referred to in Sections 7.4, 7.5, 11.1,
11.3 and 11.7. No claims for any breach of any representation or warranty
may be brought by either party after the Effective Time.
11.2. NOTICES. All notices or other communications under this Merger
Agreement shall be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person, by cable,
telegram, telex, telecopy or other standard form of telecommunications,
or by registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
If to the Company:
Xx. Xxxxxxx X. Xxxxxxx
Triad Park, LLC
0000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Telecopy No.: 000-000-0000
With a copy to:
McCutchen, Doyle, Xxxxx & Enersen, LLP
0000 Xxxxxx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy No.: 650-849-4800
If to Acquisition or TKG:
TKG International, Inc.
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxxxxx
Telecopy No.: 000-000-0000
With a copy to:
Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxx X. Xxxxxx, Esq.
Telecopy No.: 000-000-0000
or to such other address as any party may have furnished to the other
parties in writing in accordance with this Section 11.2.
11.3. EXPENSES. All costs and expenses incurred in connection with
this Merger Agreement and the transactions contemplated hereby
(regardless of whether the Merger is consummated) shall be paid by the
party incurring such expenses, and the incurrence and payment of
transaction expenses by the Company shall not affect the Merger
Consideration.
11.4. PUBLICITY. So long as this Merger Agreement is in effect,
Acquisition and the Company agree to consult with each other in issuing
any press release or otherwise making any public statement with respect
to the transactions contemplated by this Merger Agreement, and none of
them shall issue any press release or make any public statement prior to
such consultation, except as may be required by law.
11.5. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of
this Merger Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Merger Agreement and to enforce specifically the terms
and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which
they are entitled at law or in equity.
11.6. INTERPRETATION. The headings contained in this Merger
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Merger Agreement.
11.7. MISCELLANEOUS. This Merger Agreement (including the documents
and instruments referred to herein) (a) constitute the entire agreement
and supersede all other prior agreements and understandings, both written
and oral, among the parties, or any of them, with respect to the subject
matter hereof (other than as provided in the Confidentiality Agreement,
as the same may be amended); (b) except as provided in Section 7.4 of
this Merger Agreement, are not intended to confer upon any other person
any rights or remedies hereunder; (c) except for an assignment by
Acquisition to one of its affiliates, shall not be as assigned by
operation of law or otherwise; and (d) shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State
of Delaware (without giving effect to the provisions thereof relating to
conflicts of law). This Merger Agreement may be executed in two or more
counterparts which together shall constitute a single agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Merger
Agreement to be signed by their respective officers thereunder duly
authorized all as of the date first written above.
TKG ACQUISITION COMPANY, LLC THE KONTRABECKI GROUP, INC.
(in formation)
By: THE KONTRABECKI GROUP, INC.,
its Manager By: /S/ XXXX X. XXXXXXXXXXX
------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: President
By: /S/ XXXX X. XXXXXXXXXXX
------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: President
TRIAD PARK, LLC
By: 3055 MANAGEMENT CORP.,
its Manager
By: /S/ XXXXXXX X. XXXXXXX
-----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
