SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Super 8 Economy Lodging IV, Ltd., a California limited partnership
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction
applies:
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2) Aggregate number of securities to which transaction
applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
-------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[X] Fee paid previously with preliminary materials.
[X] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
$1,520
2) Form, Schedule or Registration Statement No.:
Schedule 14A
3) Filing Party:
Registrant
4) Dated Filed:
May 15, 1998
REVISED PRELIMINARY COPY
INFORMATION STATEMENT
PROPOSED ACTION BY WRITTEN CONSENT
OF LIMITED PARTNERS
OF
SUPER 8 ECONOMY LODGING IV, LTD.,
A CALIFORNIA LIMITED PARTNERSHIP
July ____, 1998
SOLICITATION OF CONSENTS
The limited partners (the "Limited Partners") of SUPER 8 ECONOMY
LODGING IV, LTD., a California limited partnership (the "Partnership"), are
being asked to consider and approve by written consent the proposed sale of all
of the Partnership's interests in real property and related personal property
(the "Property"), for a purchase price of $7,600,000, which proposal is
described hereinafter. If the proposal is approved and the proposed sale is
consummated, among other things, all of the Partnership's assets will be
liquidated and the Partnership will be dissolved. (See "Effects of Approval of
the Proposal" below.)
THE ENCLOSED FORM OF ACTION BY WRITTEN CONSENT OF LIMITED PARTNERS (THE
"CONSENT") IS SOLICITED ON BEHALF OF THE PARTNERSHIP AND GROTEWOHL MANAGEMENT
SERVICES, INC., THE MANAGING GENERAL PARTNER OF THE PARTNERSHIP (THE "MANAGING
GENERAL PARTNER"). This Information Statement and the enclosed Consent were
first sent to the Limited Partners on or about July __, 1998.
Units of limited partnership interest in the Partnership (the "Units")
represented by Consents duly executed and returned to the Partnership on or
before August __, 1998 (unless extended by the Managing General Partner pursuant
to notice mailed to the Limited Partners) will be voted or not voted in
accordance with the instructions contained therein. If no instructions for the
proposal are given on an executed and returned Consent, Units so represented
will be voted in favor of the proposal. The Managing General Partner will take
no action with respect to the proposal addressed herein except as specified in
the duly executed and returned Consents.
The cost of this solicitation of Consents is being borne by the
Partnership. Such solicitation is being made by mail and, in addition, may be
made by officers and employees of the Partnership and the Managing General
Partner, either in person or by telephone or telegram.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
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SPECIAL FACTORS
The Partnership was formed in 1982 and its motel property located in
Pleasanton, California opened for business during 1982.
This Information Statement has been prepared to ask the Limited
Partners to approve the sale of the Property for cash in the amount of the
appraised fair market value of $7,600,000.
It has always been the intention of the Partnership to liquidate the
Property when it became apparent that the best interests of the Limited Partners
would be served by doing so. The Managing General Partner has received inquiries
over the years as to when the Property was to be sold and the Partnership
liquidated. Its response, until recently, has been that because of overbuilt and
depressed motel market conditions, that the time was not right for a sale of the
Property. Conditions have changed, and the Managing General Partner believes
that the Property should be sold now and the Partnership liquidated.
During September and October 1997, Everest Properties II, LLC, a member
of an affiliated group of entities which is the largest investor in the
Partnership (the "Everest Group"), made an offer to purchase the Property and
the motel properties of four other California limited partnerships as to which
the Managing General Partner serves as general partner (the "GMS Partnerships").
The purchase price set forth in the October offer was $6,193,494, a price far
below $7,600,000, the recent appraised value and the price offered in the
current proposal. The Managing General Partner rejected the prior offer.
Conflicts between the Everest Group and the Partnership resulted in lawsuits.
Inasmuch as the Managing General Partner agreed with the Everest Group in
principle that the Property should be sold, a settlement was reached whereby,
among other things, the Managing General Partner agreed to take steps to sell
the Property, and the lawsuits were dismissed.
As discussed more fully below under "Appraisal of the Property/Fairness
Opinion," the Property has been appraised by PKF Consulting, a highly-respected
national hospitality industry specialist. Its conclusion is that the aggregate
fair market value of the Property is $7,600,000, which is the proposed purchase
price of the Property. The purchase price is to be paid in cash, and the net
proceeds thereof will be distributed in accordance with the Partnership
Agreement upon the close of the sales transaction and the concomitant
dissolution of the Partnership. Termination of the Partnership will occur as
soon as the winding up process can be completed.
The Partnership and the Managing General Partner believe that the
proposed transaction is fair to the Limited Partners and are recommending the
approval of the transaction by the Limited Partners for the following reasons:
The Managing General Partner believes that the sale value of the Property
is now at the crest of a seller's market which may not last much longer.
Although there can be no assurance that the Property's value will not
increase over time, the Managing General Partner believes that within the
next five years only modest increases in the Property's value can be
expected to occur. This belief is substantiated by the appraisal. The
Managing General Partner believes that now is the time to sell the
Property.
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Although the motel is in good condition, it is 16 years old and has never
been refurbished. If the Property is to be retained, it would be necessary
for the Partnership to spend large sums for its refurbishment and
modernization. The General Partner believes that the funds for such
expenditures would not be available from cash flow, if at all, without
reducing future distributions.
The Partnership's intention has always been to sell the Property when the
market conditions warranted sale. It was never an investment objective of
the Partnership to hold the Property permanently.
The Managing General Partner understands that the circumstances of many of
the Limited Partners have changed over the life of the Partnership and
believes that the Limited Partners should be presented with an opportunity
to liquidate their investments. In this regard, the Managing General
Partner believes it is important to understand that no true market exists
for the sale of Units. Heretofore, to dispose of their Units, Limited
Partners have had to arrange private sales, or accept tender offers, at
prices well below the correlative value of the underlying assets.
The Property is proposed to be sold to the Buyer for $7,600,000,
approximately $1,406,000 more than was offered for the Properties in
October 1997 by the Everest Group. The sales price is equal to the
appraised value of the Property as determined by PKF Consulting, an
independent real estate advisory firm specializing in the valuation of
lodging properties. The proposed sale will be for all cash. PKF Consulting
has rendered to the Partnership a fairness opinion, stating its opinion
that the sales price is fair to the Partnership. The contract of sale
between the Partnership and the Buyer provides for a closing of the sale
within 30 days after approval of the sale by the Limited Partners. For
these reasons, and because of the length of time that widespread marketing
of the Property might take, the Managing General Partner has not actively
marketed the Property for sale. There can, therefore, be no assurance that
the proposed sale of the Property to the Buyer is at the highest price
attainable for the Property.
As of May 31, 1998, the Limited Partners had already received, over the
life of the Partnership, the sum of $631.04 per Unit in the form of
quarterly distributions. Upon the sale of the Property pursuant to the
proposed transaction, the Limited Partners would receive an additional
pretax distribution in the estimated amount of approximately $796 per Unit.
For a discussion of other effects of the sale of the Property, including
Federal income tax consequences, see "Effects of Approval of the Proposal"
below.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The only outstanding class of voting securities of the Partnership is
the Units. Each Unit entitles its holder to one vote on the proposal.
All Limited Partners as of the date action is taken on the proposal
(the "Record Date") are entitled to notice of and to vote on the proposal. As of
April 13, 1998 there were 10,000 Units outstanding and a total of 1,849 Limited
Partners entitled to vote such Units. With respect to the proposal to be voted
upon, the favorable vote of Limited Partners holding in excess of 50% of the
Units outstanding as of the Record Date will be required for approval.
There are no rights of appraisal or similar rights of dissenters under
California law or otherwise with regard to the proposal to be voted upon.
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Dissenting Limited Partners are protected under California law by virtue of the
fiduciary duty of the Managing General Partner to act with prudence in the
business affairs of the Partnership on behalf of the Partnership and the Limited
Partners.
As of April 13, 1998 no person or group of related persons was known by
the Partnership to be the beneficial owner of more than 5% of the Units, except
the following group of related Unit holders:
Everest Lodging Investors, LLC 182 Units 1.82%
Everest Madison Investors, LLC 497 Units 4.97%
--------- -----
Total 679 Units 6.79%
None of Grotewohl Management Services, Inc. (the Managing General Partner),
Robert J. Dana (the associate general partner), Philip B. Grotewohl, David P.
Grotewohl or Mark Grotewohl, or any of their affiliates, are the beneficial
owners of any Units.
As set forth above, the Everest Group owns 679 Units (6.79% of the
total). In a written agreement dated April 21, 1998, which amended the
settlement agreement dated February 20, 1998 (referred to above under "Special
Factors"), the Everest Group agreed to vote in favor of the proposed transaction
upon satisfaction of the following conditions: (i) execution by the GMS
Partnerships of an exclusive sales agency contract in favor of the Everest
Group; (ii) execution by the GMS Partnerships with an entity affiliated with
Mark Grotewohl not later than April 30, 1998 of purchase agreements for the
properties of the GMS Partnerships providing for sale prices equal to the
respective appraised values of the properties and for full payment in cash at
the time of the closing of escrow; (iii) the grant to the Everest Group of the
first opportunity to arrange financing for the proposed transactions; and (iv)
the diligent preparation and dissemination by the Partnership of this
Information Statement. Condition (i) was satisfied on May 8, 1998 by the
execution of an exclusive sales agency contract granting the Everest Group an
exclusive listing for the sale of the Property and the properties owned by the
other GMS Partnerships for a six-month period. For a discussion of the
commissions payable pursuant to such contract, see "Purchase Agreement" below.
No meeting will be held with regard to this solicitation of the Limited
Partners. Voting may be accomplished by completing and returning to the offices
of the Partnership, at 2030 J Street, Sacramento, California 95814, telephone:
(916) 442-9183, the form of Consent included herewith. Only Consents received
prior to the close of business on the date (the "Action Date") which is the
earlier of (i) the date on which the Partnership receives approval of the
proposal by a majority-in-interest of the Limited Partners, or (ii) August __,
1998 (unless extended by the Managing General Partner pursuant to notice mailed
to the Limited Partners), will be counted toward the vote on the proposal.
However, Limited Partners are urged to return their Consents at the earliest
practicable date.
If a Limited Partner has delivered an executed Consent to the
Partnership, the Limited Partner may revoke such Consent not later than the
close of business on the date immediately prior to the Action Date. As of the
Action Date, the action which is the subject of this solicitation will either be
effective (if the requisite number of executed Consents have been received by
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the Partnership) or the solicitation period will have expired without approval
of the proposal. The only method for revoking a Consent once it has been
delivered to the Partnership is by the delivery to the Partnership prior to the
Action Date of a written instrument executed by the Limited Partner who executed
the Consent which states that the Consent previously executed and delivered is
thereby revoked. Other than the substance of the revocation described above, no
specific form is required for such revocation. An instrument of revocation will
be effective only upon its actual receipt prior to the Action Date by the
Partnership or its authorized agent at the Partnership's place of business as
set forth in the foregoing paragraph.
CONSENT UNDER PARTNERSHIP AGREEMENT
Pursuant to Section 14.1(e) of the Partnership's Certificate and
Agreement of Limited Partnership (the "Partnership Agreement"), a
majority-in-interest of the Limited Partners must approve or disapprove the sale
of all or substantially all of the Partnership's properties. Also, under Section
11.2 of the Partnership Agreement, the Partnership is not permitted to sell its
property to "Affiliates" of the General Partners. (The Partnership Agreement
defines "Affiliate" as (i) any person directly or indirectly controlling,
controlled by, or under common control with another person, (ii) any person
owning or controlling 10% or more of the outstanding voting securities of such
other person, (iii) any officer, director or partner of such person, and (iv) if
such other person is an officer, director or partner, any company for which such
person acts in any such capacity.) Although it might be contended that the Buyer
(as defined herein) is an Affiliate of the Managing General Partner, in the
opinion of the Managing General Partner the Buyer does not come within such
definition. (See "Purchase Agreement" below.) However, recognizing the
possibility that such a relationship might be deemed to exist, and because the
Property constitutes substantially all of the Partnership's property (as
discussed below under "The Property and the Partnership's Business"), the
Managing General Partner is seeking the approval of the proposed sale of the
Property to the Buyer on the terms described herein by a majority-in-interest of
the Limited Partners.
If the proposal is approved by the Limited Partners but the proposed
sale of the Property described herein is not consummated because one or more of
the conditions precedent to the sale (see "Purchase Agreement") is not satisfied
(excluding the condition precedent that the Limited Partners approve the
proposed sale), the Managing General Partner will consider the Limited Partners'
approval of the proposal set forth herein to constitute approval of any purchase
offer for the Property if such purchase offer is reflected in an executed
purchase agreement no later than January 31, 1999, is consummated no later than
June 30, 1999, is for "all cash," and is for an amount equal to or greater than
$7,600,000. If the Managing General Partner should receive more than one such
purchase offer, it would accept the best offer, unless the Managing General
Partner had already entered into a binding contract for a less favorable offer.
However, notwithstanding the preceding, if prior to entering into a binding
contract the Managing General Partner should receive one or more "all cash"
purchase offers and also should receive one or more purchase offers in an amount
greater than that set forth in the highest "all cash" offer but entailing the
receipt by the Partnership of a promissory note for part of the purchase price,
the Partnership would present all such offers to the Limited Partners for
approval.
In the event the Limited Partners do not approve the proposal, the
Partnership will not proceed to implement the proposed sale of the Property.
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THE PROPERTY AND THE PARTNERSHIP'S BUSINESS
The Property consists of land located in Pleasanton, California, the
motel property constructed thereon by the Partnership, and the related personal
property.
Narrative Description of Business
(a) Franchise Agreements
The Partnership operates its motel property as a franchisee of Super 8
Motels, Inc. through a sub-franchise obtained from Super 8 Management
Corporation. In March 1988, Brown & Grotewohl, a California general partnership
that is an Affiliate of the General Partner (the "Manager"), became
sub-franchisor in the stead of Super 8 Management Corporation, another Affiliate
of the General Partner. As of November 10, 1997, Super 8 Motels, Inc. had
franchised a total of 1,619 motels having an aggregate of 98,000 guestrooms in
operation. Super 8 Motels, Inc. is a wholly-owned subsidiary of Hospitality
Franchise Systems, Inc. Neither the Partnership nor the Managing General Partner
has any interest in Hospitality Franchise Systems, Inc.
The objective of the Super 8 Motel chain is to maintain a competitive
position in the motel industry by offering to the public comfortable, no-frills
accommodations at a budget price. Each Super 8 Motel provides its guests with
attractively decorated rooms, free color television, direct dial telephone and
other basic amenities, but eliminates or modifies other items to provide
substantial cost reduction without seriously affecting comfort or convenience.
Some of these savings are accomplished by reductions in room size, elimination
of expensive lobbies, and by substantial economies in building construction.
By the terms of each franchise agreement with Super 8 Motels, Inc., the
Partnership pays monthly franchise fees equal to 4% of its gross room revenues
(half of which is paid to the sub-franchisor) and contributes an additional 1%
of its gross room revenues to a fund administered by Super 8 Motels, Inc. to
finance the national reservation and promotions program.
(b) Operation of the Motel
Brown & Grotewohl, a California general partnership which is an
affiliate of the Managing General Partner (the "Manager"), manages and operates
the Partnership's motel. The Manager's management responsibilities include, but
are not limited to, supervision and direction of the Partnership's employees
having direct responsibility for the operation of the motel, establishment of
room rates and direction of the promotional activities of the Partnership's
employees. In addition, the Manager directs the purchase of replacement
equipment and supplies, maintenance activity and the engagement or selection of
all vendors, suppliers and independent contractors. The Partnership's financial
accounting activities are performed by the motel staff and a centralized
accounting staff, all of which work under the direction of the Managing General
Partner or the Manager. Together, these staffs perform all bookkeeping duties in
connection with the motel, including all collections and all disbursements to be
paid out of funds generated by motel operations or otherwise supplied by the
Partnership.
As of December 31, 1997, the Partnership employed a total of 23
persons, either full or part-time, at its motel, including six desk clerks, 13
housekeeping and laundry personnel, three maintenance personnel, and one general
manager. In addition, and as of the same date, the Partnership employed 11
persons in administrative positions at its central office in Sacramento,
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California, all of whom worked for the Partnership on a part-time basis. They
included accounting, investor service, sales and marketing and motel supervisory
personnel, secretarial personnel, and purchasing personnel.
(c) Competition
As discussed in greater detail below, the Partnership faces intense
competition from motels of varying quality and size, including other budget
motels which are part of nationwide chains and which have access to nationwide
reservation systems.
Properties
On October 4, 1982, the Partnership acquired from Hopyard Associates, a
general partnership, a parcel of 2.037 acres of unimproved real property located
in Pleasanton, California.
The property is located immediately adjacent to Interstate Highway 580,
on the southeast quadrant of the Hopyard Road overpass approximately one mile
east of Interstate Highway 680 and approximately 40 miles east of San Francisco.
Construction of the 102-room motel commenced on October 18, 1982 and
was completed on October 4, 1983, on which date motel operations commenced
The Partnership=s motel achieved the following average occupancy rates
and average room rates during the fiscal years ended September 30, 1997, 1996
and 1995:
1994 - 1995 1995-1996 1996-1997
Annual Average Occupancy 75.4% 76.6% 79.9%
Annual Average Room Rate $51.62 $56.44 $62.51
The following lodging facilities provide direct and indirect
competition to the Partnership's motel:
Approximated Distance From
Number Of Partnership's
Facility Rooms Motel
Sheraton Hotel 216 300 Yards
Marriott Courtyard 145 0.75 Mile
Best Western Dublin Park 230 1.0 Mile
Wyndom Hotel 171 1.5 Miles
Hilton Hotel 300 2.0 Miles
Holiday Inn 248 2.0 Miles
Springtown Inn 127 9.0 Miles
All Star Motel 102 9.0 Miles
Holiday Inn 124 10.0 Miles
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Patrons of the Partnership's motel are primarily commercial or business
travelers, and leisure business. The Pleasanton motel has no single customer the
loss of which would, in the opinion of the Managing General Partner, have a
material adverse effect on the motel's operations.
MANAGEMENT
The Partnership is a California limited partnership which has no
executive officers or directors. The principal business address of the
Partnership is 2030 J Street, Sacramento, CA 95814. The Partnership's general
partners are Grotewohl Management Services, Inc., as managing general partner,
and Robert J. Dana, as associate general partner.
Grotewohl Management Services, Inc. is a California corporation owned
one-half by Philip B. Grotewohl and one-half by his former wife, who is not
involved in the day-to-day operations of Grotewohl Management Services, Inc.,
and who does not serve as a director or executive officer thereof. The directors
of Grotewohl Management Services, Inc. are Philip B. Grotewohl and David P.
Grotewohl, his son, and the executive officers of Grotewohl Management Services,
Inc. are Philip B. Grotewohl, David P. Grotewohl, and Lee Cummings. The
principal business address of Grotewohl Management Services, Inc. is 2030 J
Street, Sacramento, CA 95814. During the past five years Grotewohl Management
Services, Inc. and its affiliate, Brown & Grotewohl, a California general
partnership one-half owned by Philip B. Grotewohl and one-half owned by the
Estate of Dennis A. Brown, principally have been engaged in the business of
managing various limited partnerships which own and operate lodging facilities,
and in the business of managing such lodging facilities. During the past five
years Philip B. Grotewohl's business activities have been conducted solely
through Grotewohl Management Services, Inc. and Brown & Grotewohl. The principal
business address of Philip B. Grotewohl is 2030 J Street, Sacramento, CA 95814.
In addition to serving as an executive officer of Grotewohl Management Services,
Inc., during the past two and one-half years David P. Grotewohl has been engaged
part-time as a sole proprietor in the marketing of consumer products and
services under the business name "The Biscayne Group." The principal business
address of David P. Grotewohl is 2030 J Street, Sacramento, CA 95814.
Robert J. Dana is the associate general partner of the Partnership and,
as such, has no control over the management of the Partnership. During the past
five years Robert J. Dana has been self-employed through D/S Telecom and Telecom
Options as a seller of long-distance telephone services. The principal business
address of Robert J. Dana is 6439 Timber Springs Drive, Santa Rosa, CA 95409.
PURCHASE AGREEMENT
On April 30, 1998, the Partnership entered into an agreement to sell
the Property to Tiburon Capital Corporation, San Francisco, California, or a
nominee of Tiburon Capital Corporation (the "Buyer"), for the sum of $7,600,000,
payable in cash at the close of escrow. Escrow was opened at Chicago Title
Company, San Francisco, California on June 10, 1998.
The following paragraph is based on information provided by the Buyer.
The Buyer is a California corporation formed in 1992. All of its stock has been
owned since its inception equally by William R. Dixon, Jr., Herbert J. Jaffe,
John L. Wright and John F. Dixon. Management and control persons of the Buyer
consist of its stockholders. The Buyer and its related entities, including
Pacific Management Group, Inc., NCM Management Ltd. and Capital Concepts
Investment Corp., are and have been involved in many business transactions,
including the ownership and asset or property management of real estate assets.
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(The owners, management and the control persons of such related entities are two
or more of the owners of the Buyer.) In many instances, the real estate assets
were or are owned by limited partnerships or limited liability companies formed
and syndicated by the Buyer or its related entities for the specific purpose of
owning such assets. The form of an entity owning real estate assets is typically
dictated by investors and/or lenders. In like fashion, it is anticipated that a
nominee of the Buyer, which would be a limited liability company, would actually
purchase the Property instead of the Buyer. It is currently anticipated that the
members of such limited liability company would be two other limited liability
companies, one of which would be formed and syndicated by the Buyer and the
other of which would be formed and wholly-owned by Mark Grotewohl. In such
event, Mark Grotewohl would be entitled to up to a 50% indirect interest in the
owner of the Property, and in some way is expected to share in the management
and control of the owner of the Property and/or the management of the Property.
Mr. Grotewohl's ultimate rights and obligations are the subject of current
negotiation between him and the Buyer.
Mark Grotewohl is the son of Philip B. Grotewohl. During the last five
years, until April 30, 1998, Mark Grotewohl was employed as the marketing and
sales director for the five GMS Partnerships. Since that time, Mark Grotewohl
has been engaged in facilitating the proposed transaction. The home address of
Mark Grotewohl is 1811 11th Avenue, Sacramento, CA 95818. It might be contended
that Mark Grotewohl is, by virtue of his past relationship with the Partnership
and the Managing General Partner, an Affiliate of the Partnership and the
Managing General Partner as defined in its Partnership Agreement. Under Section
11.2 of the Partnership Agreement, the Partnership is not permitted to sell its
real property to "Affiliates" of the General Partners. (The Partnership
Agreement defines "Affiliate" as (i) any person directly or indirectly
controlling, controlled by, or under common control with another person, (ii)
any person owning or controlling 10% or more of the outstanding voting
securities of such other person, (iii) any officer, director or partner of such
person, and (iv) if such other person is an officer, director or partner, any
company for which such person acts in any such capacity.) The Managing General
Partner believes that, based on the facts and circumstances, Mark Grotewohl is
not an Affiliate of the Partnership or the General Partners, because Mark
Grotewohl (i) does not control the Partnership or the General Partners, (ii)
owns no voting securities in the Partnership or the General Partners, and (iii)
is not an officer, director or partner of the General Partners or the
Partnership.
The Buyer has made a contemporaneous offer to purchase the motel
properties of the four other GMS Partnerships. The offers made by the Buyer for
the properties of each of the GMS Partnerships have been evaluated independently
by the Managing General Partner. Other than with respect to the purchase price
of each motel, the offers are on identical terms. If the limited partners of the
other partnerships do not approve the sale of their respective properties to the
Buyer, the Buyer has the right and option not to proceed with the proposed
purchase of the Property from the Partnership, even if the Limited Partners
approve this sale. In this regard, the Partnership has not solicited any offers
to purchase the Property or the motel properties of the other GMS Partnerships,
has not listed the Property or the motel properties of the other GMS
Partnerships for sale with independent brokers, and has not otherwise actively
sought competing offers for the Property or the motel properties of the other
GMS Partnerships. Consequently, the offer presented by the Buyer is the only
offer that the Managing General Partner has received for the Property or the
motel properties of the other GMS Partnerships other than those presented by the
Everest Group.
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There are a number of significant conditions to the consummation of the
proposed sale of the Property; therefore, there can be no assurance as to
whether, or when, such transaction will be consummated. Among these conditions
are the Partnership's receipt of the approval of the Limited Partners; the
Buyer's receipt (at the Partnership's expense) and approval of an ALTA Survey
and preliminary title report for the Property; the absence of any damage or loss
to the Property prior to the closing date in excess of $50,000; the decision by
the Buyer, in its unfettered discretion, to terminate the proposed purchase
prior to June 30, 1998; the Buyer's receipt prior to June 30, 1998 of a loan
commitment for financing in an amount of not less than 90% of the purchase price
of the Property (as of the date hereof the Buyer had not yet received such a
commitment); and receipt by the Partnership of any necessary approvals of the
sale by, among others, the franchisor, and the landlord. The Managing General
Partner expects that such conditions will be satisfied; however, there can be no
assurances in this regard. No federal or state regulatory requirements must be
complied with, or approvals obtained, in connection with the transaction.
The Buyer will deposit the sum of $39,000 into escrow on the later of
the expiration of the Buyer's inspection period referred to above or the date
the Partnership notifies the Buyer that the Limited Partners have approved the
proposed sale of the Property. Should the Buyer default in the performance of
its obligations under the purchase agreement, the Partnership will be entitled
to retain said deposit as its only damages.
The Partnership and the Buyer will share closing costs. The Managing
General Partner anticipates that the Partnership's share of aggregate closing
costs, including real estate brokerage commissions, will be approximately
$285,000. Included therein is a real estate brokerage commission payable to
Everest Financial, Inc., a member of the Everest Group, in an amount equal to
2.75% of the purchase price. Everest Financial, Inc. has agreed to reallow 1.25%
of the purchase price to the Buyer's broker or, at the Buyer's option, the Buyer
will be entitled to a credit against the purchase price in the amount of 1.25%
of the purchase price.
EFFECTS OF APPROVAL OF THE PROPOSAL
General
The consummation of the proposed sale of the Property and the
concomitant dissolution of the Partnership should result in the following
consequences for the Partnership, the Limited Partners and the General Partners:
(i) The Limited Partners are expected to receive the distributions of net cash
proceeds from the sale of the Property as described below.
(ii) The Limited Partners and the General Partners are expected to realize the
Federal income tax consequences as described below.
(iii) All of the Partnership's assets and liabilities will be liquidated, the
Partnership will be dissolved and terminated, and the registration of the Units
under the Securities Exchange Act of 1934 will be terminated.
The consequences stated above are discussed in more detail in the
subsections which follow. Those subsections, in part, include computations as to
the cash proceeds to be received and distributed by the Partnership, and the
taxable gain and allocations thereof to be made by the Partnership, in the event
the proposed sale is consummated. HOWEVER, THIS INFORMATION IS PRESENTED SOLELY
10
FOR THE PURPOSES OF EVALUATING THE PROPOSAL. ALL AMOUNTS ARE ESTIMATES ONLY. ALL
COMPUTATIONS ARE BASED ON ASSUMPTIONS (SUCH AS THE DATE OF SALE, THE EXPENSES OF
THE SALE, AND THE RESULTS OF PARTNERSHIP OPERATIONS THROUGH THE DATE OF SALE)
WHICH MAY OR MAY NOT PROVE TO BE ACCURATE AND SHOULD NOT BE RELIED UPON TO
INDICATE THE ACTUAL RESULTS WHICH MAY BE ATTAINED.
Determination and Use of Net Proceeds
The following is a summary of the projected amount of cash to be
received by the Partnership and the projected amount of cash to be distributed
to the Limited Partners, assuming the Property is sold for a gross sales price
of $7,600,000. This summary has been prepared by the Managing General Partner.
If the proposed transaction is consummated on September 30, 1998, it is
estimated that the Partnership would receive the following net proceeds:
Gross sales price $7,600,000
Less: Real estate commission (209,000)
Estimated escrow and closing costs (76,000)
Net proceeds of sale $7,315,000
==========
Included in closing costs set forth above are, among other items, estimated
legal fees of $37,000, estimated fees in connection with the appraisal and
fairness opinion of $10,000, estimated accounting fees of $16,000 and estimated
fees in connection with solicitation activities of $4,000.
The Partnership's real property taxes are payable twice yearly on April
10 and December 10, partially in arrears, in the current amount of $29,991.49
each. Accordingly, if the proposed transaction is consummated, the actual date
of consummation will determine whether there is a credit to the Buyer for
prorated real property taxes. Similarly, the amount indicated below as the
estimate of reserves available for distribution on dissolution of the
Partnership will vary depending on the actual date of consummation of the
proposed transaction.
The net proceeds of $7,315,000 estimated to be received by the
Partnership from the proposed transaction, in the estimated amount of $731.50
per Unit based on a closing date of September 30, 1998, would be distributed
entirely to the Limited Partners. The Partnership's cash reserves would be
retained for the payment of accounts payable and other liabilities and expenses
incurred to that date or expected to be incurred in connection with the
operation of the Property through the date of sale and the operation and
winding-up of the Partnership through its termination, and the balance,
estimated to be $647,000 or $64.70 per Unit, also would be distributed entirely
to the Limited Partners. Alternatively, if the proposed sale is not approved,
the Partnership would continue to operate the Property for an indeterminate
period pending receipt of another purchase offer which is acceptable to the
Limited Partners. The Managing General Partner estimates that if the Property is
not sold the Partnership will make average annual distributions to the Limited
Partners of from $500,000 ($50.00 per Unit) to $1,250,000 ($125.00 per Unit) for
the foreseeable future. However, there can be no assurance that the Managing
General Partner's estimate in this regard will be borne out.
11
Federal Income Tax Consequences
(a) General. The following is a summary of the Federal income tax
consequences expected to result from consummation of the proposed transaction
based on the Internal Revenue Code of 1986, as amended (the ACode@), existing
laws, judicial decisions and administrative regulations, rulings and practices.
This summary is general in content and does not include considerations which
might affect certain Limited Partners, such as Limited Partners which are
trusts, corporations or tax-exempt entities, or Limited Partners who must pay an
alternative minimum tax. Except as otherwise specifically indicated, this
summary does not address any state or local tax consequences.
Tax counsel to the Partnership, Derenthal & Dannhauser, has delivered
an opinion to the Partnership which states that the following summary has been
reviewed by it and, to the extent the summary involves matters of law,
represents its opinion, subject to the assumptions, qualifications, limitations
and uncertainties set forth therein.
(b) Characterization of Gain. Upon the sale of property, the owner
thereof measures his gain or loss by the difference between the amount of
consideration received in connection with the sale and the owner's adjusted
basis in the property. A gain will be recognized for Federal income tax
purposes. This is so because the depreciation used for Federal income tax
purposes, which decreases adjusted basis, was greater than that used for book
purposes.
The Property should constitute "Section 1231 property" (i.e., real
property and depreciable assets used in a trade or business which are held for
more than one year) rather than "dealer" property (i.e., property which is held
primarily for sale to customers in the ordinary course of business). While it is
possible that the Internal Revenue Service will argue that the Property is
"dealer" property, gain upon the sale of which would be taxed entirely as
ordinary income, tax counsel to the Partnership is of the opinion that it is
more likely than not that such an assertion would not be sustained by a court.
A Limited Partner's allocable share of Section 1231 gain from the sale
of the Property would be combined with any other Section 1231 gains or losses
incurred by him in the year of sale, and his net Section 1231 gains or losses
would be taxed as long-term capital gains or constitute ordinary losses, as the
case may be, except that a Limited Partner's net Section 1231 gains will be
treated as ordinary income to the extent of net Section 1231 losses for the five
most recent years which have not previously been offset against net Section 1231
gains.
Long-term gain on sale of Section 1231 property is taxed as follows:
(i) the excess of accelerated depreciation over straight-line depreciation is
taxed at ordinary income rates, (ii) to the extent that any other gain would be
treated as ordinary income if the property were depreciable personal property
rather than depreciable real property, at a maximum rate of 25%, and (iii) the
balance at a maximum rate of 20%.
Set forth below are the Managing General Partner's estimates of the
total taxable gain for Federal income tax purposes, and the allocations thereof,
which will result if the proposed sale of the Property is consummated, based on
an assumed closing date of September 30, 1998. These estimates do not include
any amounts relating to Partnership operations prior to the sale of the Property
or relating to dissolution of the Partnership. These estimates are not the
subject of an opinion of counsel.
12
Portion
Total Taxed As Portion Portion
Estimated Ordinary Taxed At Taxed At
Gain Income 25% Rate 20% Rate
-------------------------------------------------------
Limited Partners $7,114,000 $ 0 $1,978,000 $5,136,000
General Partner 72,000 0 20,000 52,000
------ ----- ------ ------
Total $7,186,000 $ 0 $1,998,000 $5,188,000
========= ===== ========= =========
Per Unit $711.40 $ 0 $197.80 $513.60
====== ===== ====== ======
Because of different methods of depreciation used for California income
tax purposes than for Federal income tax purposes, the Managing General Partner
anticipates that consummation of the proposed transaction would produce a gain
for California income tax purposes in the amount of approximately $6,511,000, of
which approximately $65,000 and $6,446,000 would be allocated to the General
Partners and to the Limited Partners, respectively.
Dissolution of the Partnership
Section 18.1(e) of the Partnership Agreement provides that the
Partnership shall be dissolved upon the sale of all motel properties or any
interest therein and the conversion into cash of any proceeds of sale originally
received in a form other than cash.
APPRAISAL OF THE PROPERTY/FAIRNESS OPINION
The appraisal of the Property, dated February 20, 1998, was prepared by
PKF Consulting, San Francisco, California, and indicates that the current fair
market value as of January 1, 1998 was $7,600,000. PKF Consulting was selected
by the Managing General Partner based on its expertise in appraising hotel and
motel properties in the State of California. PKF Consulting also prepared
appraisals of the motel properties of the other GMS Partnerships.
The appraised value of the Property was determined through the use of two
methodologies: the sales comparison approach and the income capitalization
approach.
No limitations were imposed by the Managing General Partner on the
appraiser's investigation.
Upon request the Partnership will furnish to a Limited Partner, without
charge, a copy of the appraisal. In this regard Limited Partners are cautioned
to refer to the entire appraisal report, inasmuch as the opinion of value stated
therein is subject to the assumptions and limiting conditions stated therein.
Furthermore, Limited Partners should be aware that appraised values are opinions
and, as such, may not represent the realizable value of the Property.
Neither the appraiser, nor any of its affiliates, has had any prior
relationship with the Partnership, the Managing General Partner or any of their
affiliates other than as an appraiser of the Property and the properties of the
other GMS Partnerships and no future relationship other than as an appraiser is
contemplated.
13
The Partnership has also received an opinion from PKF Consulting to the
effect that the terms of the proposed sale are fair and equitable from a
financial standpoint to the Limited Partners. Upon request, the Partnership will
furnish to a Limited Partner, without charge, a copy of the fairness opinion.
14
FINANCIAL INFORMATION
Selected Partnership Financial Data
The Partnership's book values per Unit as of December 31, 1997 and
March 31, 1998 were $282.77 and $251.45, respectively.
Following are selected financial data of the Partnership for the period
from October 1, 1992 to September 31, 1997.
Year Ended Year Ended Year Ended Year Ended Year Ended
September 30, September 30, September 30, September 30, September 30,
1997 1996 1995 1994 1993
------------ ------------ ------------- ------------- ---------
Guest room income $1,860,287 $1,613,817 $1,510,802 $1,415,308 $1,395,176
Net income $ 857,944 $ 665,100 $ 513,436 $ 419,009 $ 386,643
Per Partnership Unit:
Cash distributions $ 76.25 $ 59.30 $54.60 $48.65 $40.00
Net income $ 84.94 $ 65.84 $50.83 $41.48 $38.28
September 30, September 30, September 30, September 30, September 30,
1997 1996 1995 1994 1993
Total assets $2,951,592 $2,841,572 $2,769,469 $2,786,858 $2,864,030
Long-term debt ---- ---- ---- ---- ----
Management's Discussion and Analysis of Financial Condition and Results of
Operations
I. Fiscal Year Financial Statements.
(a) Liquidity and Capital Resources
The Managing General Partner believes that the Partnership's liquidity,
defined as its ability to generate sufficient cash to satisfy its cash needs, is
adequate. The Partnership's primary source of liquidity is its cash flow from
operations. The Partnership had, as of September 30, 1997, current assets of
$1,147,488, current liabilities of $126,020 and, therefore, an operating reserve
of $1,021,468. The Managing General Partner=s reserves target is 5% of the
adjusted capital contributions, or $455,000.
The Partnership's motel property is unencumbered. Although no assurance
can be had in this regard, the Managing General Partner believes that the
Partnership's equity in its property provides a potential source of external
liquidity (through financing) in the event the Partnership's internal liquidity
is impaired.
During fiscal year 1997, the Partnership spent $54,213 ($32,756 of
which was capitalized) on the refurbishment of its motel and its furnishings.
The capitalized items included $14,165 for guest room carpet and vinyl, $9,742
for game chairs and a sofa, $4,748 for five replacement air-conditioning units,
$2,632 for replacement televisions and $1,470 for guest room lamps. The items
not capitalized included $5,261 for bedspreads, $4,313 for parking lot resealing
and $4,300 for furniture repairs.
During fiscal year 1996, the Partnership spent $56,278 ($33,120 of
which was capitalized) on the refurbishment of its motel and its furnishings.
The capitalized items included $16,241 for replacement guest room carpet,
$11,148 for central office computers, $3,653 for a replacement ice machine and
$2,077 for furniture for the manager's apartment. Included in the $23,158 amount
15
not capitalized were expenditures for tub repair, replacement guest room lamps,
bed sets, televisions, air-conditioning units, landscaping upgrades and parking
lot repairs.
The Partnership currently has no material commitments for capital
expenditures. The Property is in full operation and no further property
acquisitions or extraordinary capital expenditures are planned. If the Property
is not sold the Managing General Partner is aware of no material trends or
changes with respect to the mix or relative cost of the Partnership's capital
resources. If the Property is retained adequate working capital is expected to
be generated by motel operations.
(b) Results of Operations
(i) Overall Financial Results
The Partnership achieved a 29.0% increase in net income for fiscal year
1997 as compared to fiscal year 1996. This result was achieved by an increase in
total income of $254,370 (15.1%) while limiting the increase in total expenses
to $61,526 (6.0%). The revenue increase was due primarily to increased guest
room occupancy to an annual average of 79.9% from 76.6% and by an increase in
the average room rate to $62.51 from $56.44.
The Partnership achieved a 29.5% increase in net income for fiscal year
1996 as compared to fiscal year 1995. This result was achieved by increasing
total income by $175,936 (11.6%) while limiting the increase in total expenses
to $24,272 (2.4%). The revenue increase was due primarily to increased guest
room revenue which was the result of both improved occupancy and average room
rates.
(ii) Pleasanton, California Motel
The following is a comparison of operating results at the Partnership's
Pleasanton motel for the fiscal years 1995, 1996 and 1997:
Average Average Room
Fiscal Year Ended Occupancy Rate Rate
September 30, 1995 75.4% $51.62
September 30, 1996 76.6% $56.44
September 30, 1997 79.9% $62.51
Total Total Partnership Cash
Fiscal Year Ended Revenues Expenditures Flow
(1)
September 30, 1995 $1,510,802 $947,078 $563,724
September 30, 1996 $1,686,738 $928,896 $757,842
September 30, 1997 $1,941,108 $1,003,191 $937,917
(1) While Partnership Cash Flow as it is used here is not an amount found in the
financial statements, it is the best indicator of the annual change in the
amount available, if any, for distribution to the Limited Partners. This
calculation is reconciled to the financial statements in the following table.
16
A reconciliation of Partnership Cash Flow (included in the chart above)
to Net Income as shown on the Statements of Operations (in the audited financial
statements) is as follows:
1995 1996 1997
Partnership Cash Flow $563,724 $757,842 $937,917
Net Additions to Fixed Assets 59,067 21,971 32,756
Depreciation and Amortization (109,175) (114,714) (113,229)
Other Items (180) - 500
Net Income
$513,436 $665,099 $857,944
During fiscal year 1997 as compared to fiscal year 1996, the
Partnership's motel achieved a significant improvement in both its average room
rate and its average occupancy rate. The motel experienced decreased patronage
from the discount and corporate market segments which was offset by increased
occupied rooms from the leisure market segment.
During fiscal year 1996 as compared to fiscal year 1995, the
Partnership's motel achieved a significant improvement in its average room rate
and a slight increase in its average occupancy rate. The motel replaced
approximately 50% of its low-rate discount business with guests in the leisure
and corporate market segments.
During fiscal year 1997 as compared to fiscal year 1996, the
Partnership's motel experienced a $74,295 (8.0%) increase in total expenditures
due to rising occupancy rates. The motel experienced increases of $9,963 in
front desk wages and salaries, and $8,078 in resident manager's salary due
primarily to cost inflation and competition for employees in the area. The motel
experienced $12,254 in increased management fees and $9,859 in increased
franchise fees due to the increased room revenue. The Partnership spent $7,250
for appraisal services during the fiscal year.
During fiscal year 1996 as compared to fiscal year 1995, the
Partnership's motel achieved a decrease of $18,182 (1.9%) in expenditures
notwithstanding increased occupancy. The motel achieved reduced expenditures of
$42,087 in renovations and replacements and $5,250 in maintenance wages and
salaries. The reductions were substantially offset by increases of $15,149 in
front desk wages and salaries, and in proportionate increases in franchise and
management fees.
II. Interim Financial Statements
(a) Liquidity and Capital Resources
As of March 31, 1998, the Partnership=s current assets of $977,489
exceeded its current liabilities of $220,879, providing an operating reserve of
$756,610. The Managing General Partner's reserves target is 5% of the adjusted
capital contributions, or $455,000.
The Partnership expended $13,772 on renovations and replacements during
the six months ended March 31, 1998, of which $9,122 was capitalized.
(b) Results of Operations
Total Partnership income increased $682 or 0.08% for the first two
quarters of fiscal year 1998 as compared to the first two quarters of fiscal
year 1997. Guest room revenue increased $5,503 or 0.7% due to an increase in the
17
average room rate from $53.83 to $65.77. Such increase was partially offset by a
decrease in the average occupancy rate from 71.1% to 69.5%.
Total Partnership expenses increased $170,251 or 32.4% primarily due to
increases in the minimum wage, increases in franchise fees and management fees,
and increases in legal, appraisal and other costs associated with the proposed
sale of the Property and the liquidation of the Partnership.
Other Financial Information
Items 304 and 305 of Regulation S-K promulgated by the Securities and
Exchange Commission are not applicable to the Partnership. Moreover, the
Managing General Partner is unaware of any "Year 2000" problems which could
impact the Partnership's operations.
18
FINANCIAL STATEMENTS
for
INFORMATION STATEMENT
of
SUPER 8 ECONOMY LODGING IV, LTD.
July __, 1998
F-i
INDEX TO FINANCIAL STATEMENTS
SUPER 8 ECONOMY LODGING IV, LTD. Page
----
INDEPENDENT AUDITORS' REPORT ............................................. F-1
FINANCIAL STATEMENTS:
Balance Sheets, September 30, 1997 and 1996............................... F-2
Statements of Operations for the Years Ended
September 30, 1997, 1996 and 1995.................................... F-3
Statements of Partners' Equity for the Years
Ended September 30, 1997, 1996 and 1995.............................. F-4
Statements of Cash Flows for the Years Ended
September 30, 1997, 1996 and 1995.................................... F-5
Notes to Financial Statements............................................. F-7
Balance Sheets, March 31, 1998 and December 31, 1997 (Unaudited).......... F-11
Statements of Operations for the Three Months and Six
Months Ended March 31, 1998 and 1997 (Unaudited)....................... F-12
Statements of Partners' Equity for the Six Months
Ended March 31, 1998 and 1997 (Unaudited).............................. F-13
Statements of Cash Flows for the Six Months
Ended March 31, 1998................................................... F-14
Notes to Financial Statements............................................. F-15
F-ii
REPORT OF CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
Super 8 Economy Lodging IV, Ltd.
We have audited the accompanying balance sheets of Super 8 Economy Lodging IV,
Ltd., a California limited partnership, as of September 30, 1997 and 1996 and
the related statements of operations, partners' equity and cash flows for each
of the three years in the period ended September 30, 1997. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Super 8 Economy Lodging IV,
Ltd. as of September 30, 1997 and 1996 and the results of its operations and its
cash flows for each of the three years in the period ended September 30, 1997,
in conformity with generally accepted accounting principles.
VOCKER KRISTOFFERSON AND CO.
December 4, 1997
San Mateo, California
F-1
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
BALANCE SHEETS
September 30, 1997 and 1996
ASSETS
1997 1996
------------- ---------
Current Assets:
Cash and temporary investments (Notes 1 and 3) $ 1,079,735 $ 938,477
Accounts receivable 54,290 21,563
Prepaid expenses 13,463 12,789
------------ -----------
Total Current Assets 1,147,488 972,829
------------ -----------
Property and Equipment (Notes 2 and 6):
Land 799,311 799,311
Buildings 2,246,419 2,246,419
Furniture and equipment 519,267 530,321
----------- -----------
3,564,997 3,576,051
Accumulated depreciation (1,824,868) (1,755,449)
---------- ----------
Property and Equipment, Net 1,740,129 1,820,602
---------- ----------
Other Assets (Note 2):
Deposit of federal income taxes 63,975 48,141
----------- -----------
Total Assets $2,951,592 $2,841,572
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 117,779 $ 106,979
Due to related parties (Note 4) 8,241 4,465
---------- ------------
Total Liabilities 126,020 111,444
--------- -----------
Partners' Equity:
General Partners (2,128) (10,707)
Limited Partners 2,827,700 2,740,835
---------- ----------
Total Partners' Equity 2,825,572 2,730,128
---------- ----------
Total Liabilities and Partners' Equity $2,951,592 $2,841,572
========== ==========
F-2
The accompanying notes are an integral part of these financial statements
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
Years Ended September 30:
1997 1996 1995
---------- ---------- -------
Income:
Motel room $1,860,287 $1,613,817 $1,448,486
Telephone and vending 42,012 41,244 36,519
Interest 36,351 28,879 22,379
Other 2,458 2,798 3,418
------------ ------------ -----------
Total Income 1,941,108 1,686,738 1,510,802
----------- ---------- ----------
Expenses:
Motel operations (exclusive of depreciation
shown separately below) (Notes 4 and 5) 830,267 789,729 777,015
General and administrative (exclusive of
depreciation shown separately below (Note 4) 44,522 34,302 36,760
Depreciation and amortization (Note 2) 113,229 114,714 109,175
Property management fees (Note 4) 95,146 82,893 74,416
----------- ----------- -----------
Total Expenses 1,083,164 1,021,638 997,366
---------- ---------- ----------
Net Income $ 857,944 $ 665,100 $ 513,436
========= ========= =========
Net Income Allocable to General Partners $ 8,579 $ 6,651 $ 5,134
======= ======= =======
Net Income Allocable to Limited Partners $ 849,365 $ 658,449 $ 508,302
========= ========= =========
Net Income Per Partnership Unit (Note 1) $ 84.94 $ 65.84 $ 50.83
======= ======= =======
Distributions to Limited Partners
Per Partnership Unit (Note 1) $ 76.25 $ 59.30 $ 54.60
======= ======= =======
F-3
The accompanying notes are an integral part of these financial statements
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
Years Ended September 30:
1997 1996 1995
---------- ---------- -------
General Partners:
Balance at beginning of year $ (10,707) $ (17,358) $ (22,492)
Net income 8,579 6,651 5,134
------------ ------------ ------------
Balance at End of Year (2,128) (10,707) (17,358)
------------ ---------- -----------
Limited Partners:
Balance at beginning of year 2,740,835 2,675,386 2,713,084
Net income 849,365 658,449 508,302
Distributions to Limited Partners (762,500) (593,000) (546,000)
----------- ----------- -----------
Balance at End of Year 2,827,700 2,740,835 2,675,386
---------- ---------- ----------
Total Partners' Equity $2,825,572 $2,730,128 $2,658,028
========== ========== ==========
F-4
The accompanying notes are an integral part of these financial statements
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
Years Ended September 30:
1997 1996 1995
------------ ------------ --------
Cash Flows From Operating Activities:
Received from motel operations $1,874,958 $1,658,578 $1,492,593
Expended for motel operations and
general and administrative expenses (972,367) (917,820) (877,067)
Interest received 33,423 28,940 20,953
----------- ----------- ----------
Net Cash Provided by Operating Activities 936,014 769,698 636,479
----------- ----------- ----------
Cash Flows From Investing Activities:
Purchases of property and equipment (32,756) (33,120) (60,317)
Proceeds from sale of equipment 500 - 1,250
------------ -------------- ----------
Net Cash Used by Investing Activities (32,256) (33,120) (59,067)
----------- ----------- ----------
Cash Flows From Financing Activities:
Distributions paid to limited partners (762,500) (593,000) (546,000)
----------- ----------- ---------
Net Cash Used by Financing Activities (762,500) (593,000) (546,000)
----------- ----------- ---------
Net Increase in Cash and Temporary
Investments 141,258 143,578 31,412
Cash and Temporary Investments:
Beginning of year 938,477 794,899 763,487
----------- ----------- -----------
End of Year $1,079,735 $ 938,477 $ 794,899
========== ========== ==========
F-5
The accompanying notes are an integral part of these financial statements
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS (Continued)
Years Ended September 30:
1997 1996 1995
---------- --------- -------
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
Net income $857,944 $665,100 $513,436
-------- -------- --------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 113,229 114,714 109,175
Loss (gain) on disposition of property
and equipment (500) - 1,430
(Increase) decrease in accounts receivable (32,727) 780 2,745
Increase in prepaid expenses (674) (855) (475)
Increase in other assets (15,834) (10,044) (5,006)
Increase (decrease) in accounts payable
and accrued liabilities 10,800 (2,996) 15,174
Increase in due to related parties 3,776 2,999 -
--------- --------- --------
Total Adjustments 78,070 104,598 123,043
--------- -------- --------
Net Cash Provided by
Operating Activities $936,014 $769,698 $636,479
======== ======== ========
F-6
The accompanying notes are an integral part of these financial statements
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - THE PARTNERSHIP
Super 8 Economy Lodging IV, Ltd., is a limited partnership organized under
California law on February 5, 1982, to acquire and operate motel properties in
Pleasanton and Santa Ana, California. The Pleasanton motel was opened in
October, 1983, and the Santa Ana motel was opened in February, 1985. The
Partnership grants credit to customers, substantially all of which are local
businesses in Pleasanton. The Santa Ana property was sold in April, 1992.
The Managing General Partner of the Partnership is Grotewohl Management
Services, Inc., the sole shareholder and officer of which is Philip B.
Grotewohl. The Associate General Partner of the Partnership is Robert J. Dana.
The net income or net loss of the Partnership is allocated 1% to the General
Partners and 99% to the Limited Partners. Net income (loss) and distributions
per partnership unit are based upon 10,000 units outstanding. All partnership
units are owned by the Limited Partners.
The Partnership agreement requires that the Partnership maintain reserves for
normal repairs, replacements, working capital and contingencies in an amount of
at least 5% of adjusted capital contributions. As of September 30, 1997, the
Partnership had a combined balance in cash and temporary investments of
$1,079,735, which was $624,735 in excess of the $455,000 required amount.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Items of Partnership income are passed through to the individual partners for
income tax purposes, along with any income tax credits. Therefore, no federal or
California income taxes are provided for in the financial statements of the
Partnership, except for a deposit of federal income taxes which is required of
partnerships with fiscal year ends other than a calendar year. The amount of the
deposit is based upon the taxable income of the partnership in the prior year.
Property and equipment are recorded at cost. Depreciation and amortization are
computed using the following estimated useful lives and methods:
Description Methods Useful Lives
----------- ------- ------------
Buildings 150% declining balance
and straight-line 10-25 years
Furniture and equipment 200% and 150% declining
balance and straight-line 3-7 years
Costs incurred in connection with maintenance and repair are charged to expense.
Major renewals and betterments that materially prolong the life of assets are
capitalized.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
F-7
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 3 - CASH AND TEMPORARY INVESTMENTS
Cash and temporary investments as of September 30, 1997 and 1996 consist of the
following:
1997 1996
----------- ---------
Cash in bank, non-interest bearing $ 74,738 $ 26,184
Money market accounts 704,997 512,293
Certificates of deposit 300,000 400,000
----------- --------
Total Cash and Temporary Investments $1,079,735 $938,477
========== ========
Temporary investments are recorded at cost, which approximates market value. The
Partnership considers temporary investments and all highly liquid marketable
securities with original maturities of six months or less to be cash equivalents
for purposes of the statement of cash flows.
NOTE 4 - RELATED PARTY TRANSACTIONS
Franchise Fees
Super 8 Motels, Inc., now a wholly-owned subsidiary of Hospitality Franchise
Systems, Inc., is franchisor of all Super 8 Motels. The Partnership pays to the
franchisor monthly fees equal to 4% of the gross room revenues of the motel and
contributes an additional 1% of the gross room revenues to an advertising fund
administered by the franchisor. In return, the franchisor provides the right to
use the name "Super 8," a national institutional advertising program, an advance
room reservation system, and inspection services. These costs ($93,014 in 1997,
$80,691 in 1996 and $72,424 in 1995) are included in motel operations expense in
the accompanying statements of operations. The Partnership operates its motel
property as a franchisee of Super 8 Motels, Inc. through a sub-franchise
agreement with Brown & Grotewohl, a California general partnership, of which
Grotewohl Management Services, Inc., (see Note 1) is a 50% owner. Under the sub-
franchise agreement, Brown & Grotewohl earned 40% of the above franchise fees,
which amounted to $37,206, $32,276 and $28,970 in 1997, 1996 and 1995,
respectively.
Property Management Fees
The General Partner, or its affiliates, handles the management of the motel
property of the Partnership. The fee for this service is 5% of the gross
revenues from Partnership operations as defined in the Partnership agreement,
and amounted to $95,146, $82,893 and $74,416 in 1997, 1996 and 1995,
respectively.
Subordinated Partnership Management Fees
During the Partnership's operational stage, the General Partners are to receive
9% of cash available for distribution for Partnership management services, along
with an additional 1% of cash available for distribution on account of their
interest in the profit and losses, subordinated, however, to receipt by the
Limited Partners of a 10% per annum cumulative pre-tax return on their adjusted
capital contributions. At September 30, 1997 the Limited Partners had not
received the 10% cumulative return, and as no Partnership management fees are
presently payable they are not reflected in these financial statements.
Management believes it is not likely that these fees will become payable in the
future. This fee is payable only from cash funds provided from operations of the
Partnership, and may not be paid from the proceeds of sales or a refinancing. As
of September 30, 1997 the cumulative amount of these fees was $516,715.
F-8
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 4 - RELATED PARTY TRANSACTIONS (Continued)
Subordinated Incentive Distributions
Under the terms of the Partnership agreement, the General Partners are to
receive 15% of distributions of net proceeds from the sale or refinancing of
Partnership property remaining after distribution to the Limited Partners of any
portion thereof required to cause distributions to the Limited Partners from all
sources to be equal to their capital contributions plus a cumulative 10% per
annum pre-tax return on their adjusted capital contributions.
Expenses Shared by the Partnership and its Affiliates
There are certain expenses which are allocated between the Partnership and
affiliated Super 8 partnerships. These expenses, which are allocated based on
usage, are telephone, data processing, rent of the administrative office,
administrative salaries and duplication expenses. The expenses allocated to the
Partnership were approximately $113,000 in 1997, $113,000 in 1996 and $110,000
in 1995 and are included in motel and restaurant operations and general and
administrative expenses in the accompanying statements of operations. Included
in administrative salaries are allocated amounts paid to two employees who are
related to Philip B. Grotewohl, the sole shareholder of Grotewohl Management
Services, Inc., a General Partner of the Partnership.
NOTE 5 - MOTEL OPERATING EXPENSES
The following table summarizes the major components of motel operating expenses
for the years ended September 30, 1997, 1996 and 1995:
1997 1996 1995
----------- ----------- -------
Salaries and related costs $322,022 $308,314 $282,994
Franchise and advertising fees 93,015 80,691 72,424
Utilities 68,243 66,664 70,349
Allocated costs, mainly indirect salaries 90,713 92,355 89,327
Repairs and minor renovations 21,457 23,158 38,047
Other operating expenses 234,817 218,547 223,874
-------- -------- --------
Total Motel Operating Expenses $830,267 $789,729 $777,015
======== ======== ========
NOTE 6 - PROPERTY AND EQUIPMENT
The following is a summary of the accumulated depreciation of property and
equipment:
1997 1996
------------ ------------
Buildings $1,381,389 $1,288,266
Furniture and equipment 443,479 467,183
----------- -----------
Accumulated depreciation $1,824,868 $1,755,449
========== ==========
F-9
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 7 - CONCENTRATION OF CREDIT RISK
The Partnership maintains its cash accounts in nine commercial banks located in
California. Accounts at each bank are guaranteed by the Federal Deposit
Insurance Corporation (FDIC) up to $100,000 per bank. A summary of the total
insured and uninsured cash balances (not reduced by outstanding checks) as of
September 30, 1997 follows:
Total cash in all California banks $1,098,989
Portion insured by FDIC (800,000)
-------
Uninsured cash balances $ 298,989
=========
NOTE 8 - SUBSEQUENT EVENTS
On October 27, 1997 a complaint was filed in the United States District Court by
Grotewohl Management Services, Inc. (a general partner of the Partnership)
naming as defendants Everest/Madison Investors, LLC, Everest Lodging Investors,
LLC, Everest Properties II, LLC, Everest Properties, Inc., W. Robert Kohorst,
David I. Lesser, The Blackacre Capital Group, L.P., Blackacre Capital Management
Corp., Jeffrey B. Citron, Ronald J. Kravit, and Stephen B. Enquist. The
complaint pertains to tender offers directed by certain of the defendants to
limited partners of the Partnerships, and to indications of interest made by
certain of the defendants in purchasing the property of the Partnership. The
complaint alleges that the defendants violated certain provisions of the
Security and Exchange Act of 1934 and seeks injunctive and declarative relief.
Defendants have yet to respond to the complaint.
On October 28, 1997 a complaint was filed in the Superior Court of the State of
California, Sacramento County by Everest Lodging Investors, LLC and
Everest/Madison Investors, LLC as plaintiffs against Philip B. Grotewohl,
Grotewohl Management Services, Inc., Kenneth M. Sanders, Robert J. Dana, Borel
Associates, and BWC Incorporated, as defendants, and the Partnership, along with
four other partnerships of which have common general partners, as nominal
defendants. The complaint pertains to the receipt by the defendants of franchise
fees and reimbursement of expenses, the indications of interest made by the
plaintiffs in purchasing the properties of the nominal defendants, and the
alleged refusal of the defendants to provide information required by the terms
of the Partnership's partnership agreement and California law. The complaint
requests the follow relief: a declaration that the action is a proper derivative
action; an order requiring the defendants to discharge their fiduciary duties to
the Partnerships and to enjoin them from breaching their fiduciary duties;
return of certain profits; appointment of a receiver; and an award for damages
in an amount to be determined. The defendants and nominal defendants have
recently been served and are formulating their response to the complaint.
F-10
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
Balance Sheet
March 31, 1998 and December 31, 1997
3/31/98 9/30/97
------------------- --------------------
ASSETS
Current Assets:
Cash and temporary investments $ 926,680 1,079,735
Accounts receivable 50,138 54,290
Prepaid expenses 671 13,463
------------------- --------------------
Total current assets 977,489 1,147,488
------------------- --------------------
Property and Equipment:
Land 799,311 799,311
Buildings 2,246,419 2,246,419
Furniture and equipment 524,641 519,267
------------------- --------------------
3,570,371 3,564,997
Accumulated depreciation (1,876,693) (1,824,868)
------------------- --------------------
Property and equipment, net 1,693,678 1,740,129
------------------- --------------------
Other Assets: 63,975 63,975
------------------- --------------------
Total Assets $ 2,735,142 2,951,592
=================== ====================
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 220,879 126,020
------------------- --------------------
Total current liabilities 220,879 126,020
------------------- --------------------
Total liabilities 220,879 126,020
------------------- --------------------
Contingent Liabilities (See Note 1)
Partners' Equity:
General Partners (241) (2,128)
Limited Partners 2,514,504 2,827,700
------------------- --------------------
Total partners' equity 2,514,263 2,825,572
------------------- --------------------
Total Liabilities and Partners' Equity $ 2,735,142 2,951,592
=================== ====================
UNAUDITED
The accompanying notes are an integral part of the financial statements.
F-11
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
Statement of Operations
For the Three Months and Six Months Ended March 31, 1998 and 1997
Three Six Three Six
Months Months Months Months
Ended Ended Ended Ended
3/31/98 3/31/98 3/31/97 3/31/97
------------------ ----------------- ------------------ -----------------
Income:
Guest room $ 418,430 848,465 415,746 842,962
Telephone and vending 7,456 17,060 9,633 22,687
Interest 8,403 18,760 8,471 17,641
Other 151 220 237 533
------------------ ----------------- ------------------ -----------------
Total Income 434,440 884,505 434,087 883,823
------------------ ----------------- ------------------ -----------------
Expenses:
Motel operating expenses (Note 2) 206,742 421,702 184,850 391,000
General and administrative 143,248 176,120 7,136 34,614
Depreciation and amortization 27,355 54,710 28,604 56,642
Property management fees 21,306 43,282 21,302 43,307
------------------ ----------------- ------------------ -----------------
Total Expenses 398,651 695,814 241,892 525,563
------------------ ----------------- ------------------ -----------------
Net Income (Loss) $ 35,789 188,691 192,195 358,260
================== ================= ================== =================
Net Income (Loss) Allocable
to General Partners $358 $1,887 $1,922 $3,583
================== ================= ================== =================
Net Income (Loss) Allocable
to Limited Partners $35,431 $186,804 $190,273 $354,677
================== ================= ================== =================
Net Income (Loss)
per Partnership Unit $3.54 $18.68 $19.03 $35.47
================== ================= ================== =================
Distribution to Limited Partners
per Partnership Unit $25.00 $50.00 $18.75 $37.50
================== ================= ================== =================
UNAUDITED
The accompanying notes are an integral part of the financial statements.
F-12
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
Statement of Partners' Equity
For the Six Months Ended March 31, 1998 and 1997
3/31/98 3/31/97
----------------- --------------------
General Partners:
Balance, beginning of year $ (2,128) $ (10,707)
Net income (loss) 1,887 3,583
------------------- --------------------
Balance, End of period (241) (7,124)
------------------- --------------------
Limited Partners:
Balance, beginning of year 2,827,700 2,740,835
Net income (loss) 186,804 354,677
Distributions to Limited Partners (500,000) (375,000)
------------------ --------------------
Balance, End of Period 2,514,504 2,720,512
------------------ --------------------
Total Partners' Equity $ 2,514,263 $ 2,713,388
=================== ====================
UNAUDITED
The accompanying notes are an integral part of the financial statements.
F-13
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
Statement of Cash Flows
For the Six Months Ended March 31, 1998 and 1997
3/31/98 3/31/97
------------------- --------------------
Cash Flows from Operating Activities:
Received from motel revenues $ 868,510 $ 865,505
Expended for motel operations and
general and administrative expenses (532,590) (479,084)
Interest received 20,147 14,977
------------------- --------------------
Net Cash Provided (Used) by Operating Activities 356,067 401,398
------------------- --------------------
Cash Flows from Investing Activities:
Purchases of property and equipment (9,122) (18,607)
Proceeds from sale of land - 500
------------------- --------------------
Net Cash Provided (Used) by Investing Activities (9,122) (18,107)
------------------- --------------------
Cash Flows from Financing Activities:
Distributions to limited partners (500,000) (375,000)
------------------- --------------------
Net Cash Provided (Used) by Financing Activities (500,000) (375,000)
------------------- --------------------
Net Increase (Decrease) in Cash and Temporary Investments (153,055) 8,291
Cash and Temporary Investments:
Beginning of period 1,079,735 938,477
------------------- --------------------
End of period $ 926,680 $ 946,768
=================== ====================
Reconciliation of Net Income (Loss) to Net Cash Provided (Used) by Operating Activities:
Net Income (Loss) $ 188,691 $ 358,260
------------------- --------------------
Adjustments to reconcile net income to net cash used by operating
activities:
Depreciation and amortization 54,710 56,642
(Gain) loss on disposition of property and equipment 863 (500)
(Increase) decrease in accounts receivable 4,152 (3,341)
(Increase) decrease in prepaid expenses 12,792 11,176
(Increase) decrease in other assets - (15,834)
Increase (decrease) in accounts payable 94,859 (5,005)
------------------- --------------------
Total Adjustments 167,376 43,138
Net Cash Provided (Used) by Operating Activities $ 356,067 $ 401,398
=================== ====================
UNAUDITED
The accompanying notes are an integral part of the financial statements.
F-14
SUPER 8 ECONOMY LODGING IV, LTD.
(A California Limited Partnership)
Notes to Financial Statements
March 31, 1998
Note 1:
The attached interim financial statements include all adjustments (consisting of
only normal recurring adjustments) which are, in the opinion of management,
necessary to a fair statement of the results for the period presented.
Users of these interim financial statements should refer to the audited
financial statements for the year ended September 30, 1997 for a complete
disclosure of significant accounting policies and practices and other detail
necessary for a fair presentation of the financial statements.
In accordance with the partnership agreement, the following information is
presented related to fees paid to the General Partners or affiliates for the
period.
Property Management Fees $43,282
Franchise Fees $16,982
Partnership management fees and subordinated incentive distributions are
contingent in nature and none have been accrued or paid during the current
period.
Note 2:
The following table summarizes the major components of motel operating expenses
for the following periods:
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
3/31/98 3/31/98 3/31/97 3/31/97
------------------- ------------------- ------------------- --------------------
Salaries and related costs $ 86,997 $ 176,393 $ 74,954 $ 151,156
Franchise and advertising fees 20,925 42,454 20,809 42,197
Utilities 13,154 30,322 14,760 31,012
Allocated costs,
mainly indirect salaries 24,881 51,718 22,055 46,602
Replacements and renovations 2,754 4,650 2,614 8,265
Other operating expenses 58,031 116,165 49,658 111,768
------------------- ------------------- ------------------- --------------------
Total motel operating expenses $ 206,742 $ 421,702 $ 184,850 $ 391,000
=================== =================== =================== ====================
The following additional material contingencies are required to be stated
in the interim reports under federal securities law: None.
F-15
APPENDIX 1
REVISED PRELIMINARY COPY
SUPER 8 ECONOMY LODGING IV, LTD.,
a California limited partnership
_____________________
Notice of Proposed Action By Written Consent
TO THE LIMITED PARTNERS OF
SUPER 8 ECONOMY LODGING IV, LTD.:
The Limited Partners of SUPER 8 ECONOMY LODGING IV, LTD. , a California limited
partnership, (the "Partnership"), are being asked by the Partnership and the
Managing General Partner to consider and approve by written consent the proposed
sale of substantially all of the Partnership's assets.
The Limited Partners of the Partnership are entitled to vote on the proposal by
completing, executing and returning to the Partnership the enclosed form of
Action by Written Consent of Limited Partners.
PLEASE FILL IN, DATE AND SIGN THE ENCLOSED POSTPAID CONSENT CARD AND RETURN IT
PROMPTLY. ONLY CONSENTS RECEIVED ON OR BEFORE AUGUST___, 1998 (UNLESS EXTENDED
BY THE MANAGING GENERAL PARTNER PURSUANT TO NOTICE MAILED TO THE LIMITED
PARTNERS) WILL BE COUNTED TO DETERMINE WHETHER THE PROPOSAL IS APPROVED.
July ___, 1998
Grotewohl Management Services, Inc.,
a California corporation,
Managing General Partner
APPENDIX 2
REVISED PRELIMINARY COPY
ACTION BY WRITTEN CONSENT OF LIMITED PARTNERS
SUPER 8 ECONOMY LODGING IV, LTD.,
a California limited partnership
2030 J Street
Sacramento, California 95814
(916) 442-9183
THIS CONSENT IS SOLICITED ON BEHALF OF THE PARTNERSHIP AND THE MANAGING GENERAL
PARTNER.
The undersigned votes all the units of limited partnership interest of Super 8
Economy Lodging IV, Ltd., a California limited partnership of record by him, her
or it as follows:
PROPOSAL TO APPROVE THE SALE OF SUBSTANTIALLY ALL OF THE PARTNERSHIP'S
ASSETS, as described in the Information Statement dated July ___, 1998.
Please mark one of the following:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
This Consent, when properly executed and returned to the Partnership, will be
voted in the manner directed herein by the undersigned limited partner.
IF NO DIRECTION IS MADE, THIS CONSENT, IF SO EXECUTED AND RETURNED, WILL BE
VOTED FOR THE PROPOSAL SET FORTH ABOVE.
Please sign exactly as name appears below: When Units are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or
guardian, please give full
title as such. If a corporation,
please sign in full corporate name
by president or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
DATED: , 1998 __________________________________
Signature
__________________________________
Additional signature, if held
jointly
PLEASE MARK, SIGN, DATE AND
RETURN THIS
POSTPAID CONSENT CARD.