PROXY STATEMENT
DAVENPORT MANAGEMENT CORPORATION
SPECIAL MEETING OF LIMITED PARTNERS
OF
PRIME MOTOR INNS LIMITED PARTNERSHIP
TO BE HELD ON JANUARY 29, 1998
GENERAL INFORMATION
This Proxy Statement and the accompanying GOLD Proxy Card are furnished by
Davenport Management Corporation ("DMC"), a Delaware corporation, to the
limited partners, holders of depositary receipts and holders of units of
limited partnership interests ("Units") in Prime Motor Inns Limited
Partnership, a Delaware limited partnership (the "Partnership"), in connection
with the solicitation of proxies to be voted at a Special Meeting of Limited
Partners scheduled to be held on Thursday, January 29, 1998, at 2:30 P.M.
local time, at the Holiday Inn, Harmon Meadows Sportsplex, 300 Plaza Drive,
Secaucus, New Jersey 07094 and at any adjournment or postponement thereof (the
"Special Meeting").
The accompanying Notice of Special Meeting is given by Prime-American Realty
Corp., the general partner of the Partnership, which states that the Special
Meeting is being called pursuant to Sections 1002(a) and 1504(b)(i) of the
Amended and Restated Agreement of Limited Partnership of the Partnership (the
"Partnership Agreement").
At the Special Meeting, limited partners of the Partnership ("Limited
Partners"), will vote upon DMC's proposals: 1) to remove Prime-American Realty
Corp. as the general partner of the Partnership; 2) to elect DMC as the
substitute general partner of the Partnership, with the substitution to take
effect only if the present general partner is removed; 3) to request that the
present general partner prepare and submit for approval to the Unit holders a
proposal to convert the Partnership (and its subsidiary limited partnership)
to a corporation; and 4) to adjourn the Special Meeting in the event that
there are not sufficient votes to remove the present general partner so that
additional votes may be solicited in favor of such action.
This Proxy Statement and the enclosed GOLD Proxy Card are being furnished to
Limited Partners on or about December 23, 1997.
Voting Securities and Record Date; Quorum
The Partnership, at the request of DMC, has fixed the close of business on
December 5, 1997, as the record date (the "Record Date") for determination of
Limited Partners entitled to notice of and to vote at the Special Meeting.
Based on information provided by the Partnership, as of the Record Date, there
were 4,000,000 Units issued and outstanding. Under the Partnership Agreement,
the presence in person or by proxy of Limited Partners collectively holding
more than 50% of the Units shall constitute a quorum for the Special Meeting.
Each Unit entitles the record holder thereof to one vote; Unit holders do not
have cumulative voting rights. Abstentions with respect to any proposal will
be counted and will have the effect of votes in opposition to such proposal.
Broker non-votes are not counted as votes cast on any proposal, if any, to
which they relate, but will have the effect of votes in opposition to such
proposal. The Partnership has no other class of voting securities entitled to
vote at the Special Meeting.
Persons who are deemed to be participants in this solicitation and certain
related persons own a total of approximately 7.2% of the Units outstanding on
the Record Date. DMC owns no Units; on the Record Date, Jerome S. Sanzo, the
sole officer, director and stockholder of DMC, beneficially owned a total of
7,000 Units, constituting less than two-tenths of one percent of the Units
then outstanding, and another participant in this proxy solicitation, Martin
W. Field, beneficially owned a total of 157,500 Units, constituting
approximately 3.9%
of the Units then outstanding. (As more fully described in Appendix I to this
Proxy Statement, on the Record Date, a trust organized by Mr. Field in 1993
for the benefit of his children (the "Trust") held 117,600 Units, constituting
approximately 2.9% of the Units then outstanding. The trustee of the Trust,
who is unaffiliated with Mr. Field, has sole dispositive and voting power with
respect to Units held by the Trust. Accordingly, Mr. Field disclaims
beneficial ownership of the Units held by the Trust.) (Certain additional
information regarding the beneficial ownership of Units by Messrs. Sanzo and
Field is set forth below in Appendix I.)
Solicitation and Voting of Proxies
Limited Partners may vote at the Special Meeting in person or by means of
the enclosed GOLD Proxy Card. You may specify your voting choices by marking
the appropriate boxes on the Proxy Card. The persons named on the enclosed
Proxy Card, Jerome S. Sanzo and Martin W. Field, have been designated as
proxies by DMC. The proxy solicited hereby, if properly signed and returned to
and not revoked prior to or at the Special Meeting, will be voted by the
proxies in accordance with the instructions specified thereon. If you properly
sign and return your Proxy Card, but do not specify your choices, your Units
will be voted by the proxy holders FOR each of the proposals as recommended by
DMC.
DMC encourages you to complete and return the GOLD Proxy Card in the
enclosed envelope as soon as possible even if you intend to attend the Special
Meeting. You must return a signed Proxy Card if you want the proxy holders to
vote your Units. Any Limited Partner may revoke such holder's proxy at any
time before it is voted at the Special Meeting by giving written notice of
revocation to DMC c/o Regan & Associates, Inc., 15 Park Row, New York, NY
10038, by submission of a proxy bearing a later date to Regan & Associates,
Inc. or by attending the Special Meeting in person and casting a ballot. A
beneficial owner of Units behind a broker or bank would need to vote or modify
such owner's vote through its respective broker or bank.
The GOLD Proxy Card also authorizes the proxy holders to vote the Units
represented with respect to any matters not known at the time this Proxy
Statement was printed which may properly be presented for consideration at the
Special Meeting.
Solicitation Expenses
The solicitation of proxies will be made principally by mail, and, in
addition, following the mailing of proxy solicitation materials, proxies may
be solicited by directors, officers and employees of DMC personally, by
telephone or otherwise. Such persons will not receive fees or other
compensation for solicitation. DMC has also retained Regan & Associates, Inc.
to assist it in the solicitation of proxies in connection with the Special
Meeting. DMC has agreed to pay Regan & Associates, Inc. a fee of up to $13,000
in connection with this solicitation and to reimburse it for certain expenses.
DMC has also agreed to indemnify Regan & Associates, Inc. against certain
liabilities and expenses in connection with its engagement, including certain
liabilities under the Federal securities laws. DMC also will reimburse
brokers, banks, custodians and nominees at current New York Stock Exchange
approved rates for sending proxy materials to the beneficial owners of Units
and in obtaining their proxies. DMC will bear the entire cost of soliciting
proxies in connection herewith, estimated by DMC to be up to approximately
$80,000. Certain of the expenses incurred to date by or on behalf of DMC,
including certain fees paid to Regan & Associates, Inc., have been advanced to
DMC by Martin W. Field, a Unit holder. DMC may seek reimbursement from the
Partnership for such fees and expenses, and, in such event, does not intend to
seek Limited Partner approval for such reimbursement at a subsequent meeting
unless such approval is required under Delaware law.
Davenport Management Corporation
DMC was incorporated in September 1997 in the State of Delaware. DMC's
activities to date have consisted of the preparation of this Proxy Statement
and other activities related to the solicitation by DMC of proxies to be voted
at the Special Meeting. Jerome S. Sanzo, a Connecticut resident, is the sole
officer, director and stockholder of DMC. Mr. Sanzo provided DMC with its
initial capitalization of $10,000.00.
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Certain Information Regarding the Partnership
The Partnership, a Delaware limited partnership, is the sole limited partner
of its 99%-owned subsidiary, AMI Operating Partners, L.P. ("Operating
Partners"), also a Delaware limited partnership. Prime-American Realty Corp.
("Prime-American"), a subsidiary of Prime Hospitality Corporation, is the
general partner of and holds as its principal assets a 1% partnership interest
in each of the Partnership and Operating Partners (together, the
"Partnerships"). The business of the Partnerships is to operate and maintain
full-service hotels (the "Inns"), which are presently franchised as part of
the "Holiday Inn" system.
Except as otherwise expressly indicated below, all information regarding the
Partnerships set forth in this Proxy Statement has been taken from or based
upon publicly available reports and other documents on file with the
Securities and Exchange Commission (the "Commission") and other sources.
Although DMC does not have any knowledge that would indicate that any
statement contained herein based upon such reports or other documents is
untrue, DMC does not take any responsibility for the accuracy or completeness
of the information contained in such reports and other documents, or for any
failure by the Partnership to disclose events that may affect the significance
or accuracy of any such information.
PROPOSAL 1--TO REMOVE THE GENERAL PARTNER
DMC requests that you consent to the proposal to remove Prime-American
Realty Corp. ("Prime-American") as general partner of the Partnership,
pursuant to Section 1002(a) of the Partnership Agreement, for the reasons set
forth below under "Reasons for the Proposals." The effective date of the
removal would be determined subsequent to the Special Meeting by DMC; notice
of the removal date would be given to Prime-American in accordance with the
provisions of Section 1002(b) of the Partnership Agreement, as described
below.
Under the terms of Section 1002(a) of the Partnership Agreement, the general
partner of the Partnership may be removed, with or without cause, only upon
the written consent of Limited Partners who collectively hold the right to
vote more than 80% of the Units.
Section 1002(a) further provides that the right of the Limited Partners to
remove the general partner shall not exist or be exercised unless the
Partnership shall have received an opinion of independent counsel (who may be
regular counsel to the Partnership or its general partner) acceptable to the
general partner that removal of the general partner and the selection of a
successor general partner will not result in (i) the loss of limited liability
of the Partnership as a limited partner in Operating Partners, or of any
Limited Partner in the Partnership; or (ii) the treatment of the Partnership
or Operating Partners as an association taxable as a corporation for federal
income tax purposes (unless the Partnership or Operating Partners is already
treated in all material respects as an association taxable as a corporation as
a result of changes in federal income tax laws). As more fully described under
Proposal 3 below, the Partnership has reported that the Partnership, as a
publicly-traded partnership, will be taxable as a corporation after December
31, 1997. DMC has, through its counsel, requested that Brown & Wood LLP,
counsel to the Partnership and Operating Partners, render the required opinion
prior to the Special Meeting. In an informal discussion, Brown & Wood LLP
advised counsel to DMC that, based on information then available, it
anticipated that the required opinion would be rendered.
Under Section 1002(b) of the Partnership Agreement, notice of the proposed
removal and the removal of the general partner must be served upon the general
partner. The notice must set forth the date on which the removal shall become
effective, which date shall not be less than 60 days after the service of the
notice upon the general partner.
Pursuant to Section 1004 of the Partnership Agreement, in the event that
Prime-American shall have been removed as general partner of the Partnership
pursuant to Section 1002, as contemplated by Proposal 1, Prime-American shall
also be removed as the general partner of Operating Partners. The interest of
Prime-American as general partner of the Partnership and its interest as
general partner of Operating Partners (its "combined
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interest") would then be converted into the number of Units determined by
dividing the fair market value of its combined interest as of the effective
date of such removal by the Unit Price (as defined in the Partnership
Agreement) as of such date.
PROPOSAL 2--TO ELECT DMC AS A SUBSTITUTE GENERAL PARTNER
DMC requests that you vote to elect DMC as the substitute general partner of
the Partnership, with the substitution to take effect in the event that
Proposal 1, as described above, is approved and Prime-American is removed as
general partner. That is, Proposal 1 must be approved and implemented as a
condition to DMC becoming the substitute general partner. As provided in
Section 1002(d) of the Partnership Agreement, if DMC were elected as the
substitute general partner, DMC would be admitted to the Partnership
immediately prior to the effective date of the removal of Prime-American as
general partner and shall continue the business of the Partnership without
dissolution.
Under the terms of Section 1002(d) of the Partnership Agreement, a
substitute general partner may be elected only upon the written consent of
Limited Partners who collectively hold the right to vote more than 50% of the
Units. In addition, the person designated to be the substitute general partner
must accept and agree to be bound by all of the terms of the Partnership
Agreement and shall have provided the Partnership with satisfactory evidence
of its authority to become a general partner of the Partnership. DMC intends
to satisfy such requirements on or before the date on which the Special
Meeting is held.
Finally, under Section 1002(d), DMC may be elected as a substitute general
partner only if counsel to the Partnership shall have rendered an opinion that
the admission of DMC to the Partnership is in conformity with the Delaware
Revised Uniform Limited Partnership Act ("RULPA") and that none of the actions
to be taken in connection with the admission of DMC as a substitute general
partner will cause the termination or dissolution of the Partnership or will
cause it to be classified other than as a partnership for federal income tax
purposes. DMC has, through its counsel, requested that Brown & Wood LLP,
counsel to the Partnership, render the required opinion prior to the Special
Meeting. In an informal discussion, Brown & Wood LLP advised counsel to DMC
that, based on information then available, it anticipated that the required
opinion would be rendered.
As noted above, Prime-American serves as general partner of each of the
Partnership and Operating Partners. If Prime-American is removed as the
general partner of the Partnership and DMC is elected as the substitute
general partner, DMC will be deemed for all purposes to be elected successor
general partner of Operating Partners under Section 1004 of the Amended and
Restated Agreement of Limited Partnership of AMI Operating Partners, L.P. (the
"AMI Partnership Agreement"). However, as more fully described below, such
action might require the consent of the lenders under certain credit
agreements to which Operating Partners is a party. (See "The DMC Plan of
Action--Removal of Prime-American as General Partner of Operating Partners.")
PROPOSAL 3--REGARDING CONVERSION OF THE PARTNERSHIP TO A CORPORATION
In Item 2 of its Quarterly Report on Form 10-Q for the quarter ended June
30, 1997 (the "Second Quarter 10-Q"), the Partnership reported that, under the
Internal Revenue Code, the Partnership, as a publicly traded partnership, will
be taxable as a corporation after December 31, 1997. The Partnership stated
that, as a publicly-traded partnership, it would be exempt from taxation as a
corporation if it satisfied certain conditions, including making payment in
the amount of 3.5% of its gross revenues. The Partnership also indicated that
it "believes that, as a result of its operating losses, it should not have any
tax liability for a substantial period of time and such 3.5% of gross revenues
payment would be substantially in excess of any corporate income tax that the
Partnership might foreseeable [sic] pay." (DMC believes that, accordingly, it
would be advantageous from a tax standpoint for the Partnership to be taxed as
a corporation rather than as a partnership after December 31, 1997.) The
Partnership further stated that the general partner was "........evaluating the
consequences of the transition to
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corporate form" including, among others, the possibility that transfer of
title to the Inns might be required and the possible effect of the conversion
on the franchise agreements and the liquor licenses for the Inns.
The Partnership further reported in the Second Quarter 10-Q that the
"General Partner expects to submit to the Limited Partners a proposal for the
merger of the Partnership into Operating Partners and for the conversion of
the surviving partnership to a corporation owned by, and managed by a Board of
Directors elected by, the Unitholders and the General Partner." However, no
such proposal has been submitted to date. The Partnership reported
substantially the same information in its Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997 (the "Third Quarter 10-Q"), with the
exception that the Partnership omitted a statement that it expected to submit
a proposal regarding the conversion to the Limited Partners. Counsel to the
Partnership has informally advised DMC that, in their view, in light of a
pending offer to purchase substantially all of the Partnership's assets
submitted to the Partnership by Servico, Inc., it would not be appropriate to
make preparations for the conversion at the present time inasmuch as, if the
sale of substantially all of the Partnership's assets to Servico, Inc. were
approved and consummated, it would be unnecessary for the Partnership to
convert to corporate form. (See "Background of DMC's Proxy Solicitation--The
Servico Offer.")
DMC proposes that, for the reasons set forth below, the Limited Partners
recommend and request that, as contemplated by the Second Quarter 10-Q, Prime-
American prepare and submit a conversion proposal to the Limited Partners for
approval as promptly as possible. The vote on this Proposal 3 is not a vote on
the conversion, but only a recommendation and request that a proposal to
approve the conversion be prepared and presented at a future time to the
Limited Partners, together with the relevant material information regarding
the conversion as required under applicable laws. Approval of this Proposal 3
would require the approval of Limited Partners owning more than 50% of the
Units.
Based on publicly available information regarding the Partnership, DMC does
not believe that it would be in the interests of the Partnership or the Unit
holders for the Partnership to continue to operate as a partnership while
being taxed as a corporation after December 31, 1997. It is generally
recognized that the corporate form affords certain advantages over the
partnership form with respect to financing, liquidity and acquisition matters.
It is also generally recognized that equity holders in a corporation have
greater voice in the selection of management than in a limited partnership. In
addition, DMC believes that it is likely that the Partnership would incur
fewer costs of tax reporting and compliance. Specifically:
1. The conversion would be expected to provide the corporate successor to
the Partnership with potentially greater access to capital markets at a
potentially lower cost of capital and thereby enhance its ability to
fund operations and future growth. It is generally recognized that
lenders, for example, are more hesitant to lend to limited partnerships
than to corporations.
2. The conversion might have the effect of expanding the Partnership's
potential investor base to a broader array of investors (e.g. pension
plans, mutual funds and other institutional investors) which often do
not invest in publicly traded limited partnerships because of tax, risk
and other considerations. Conversion also could result in increased
research coverage of the Partnership by investment analysts. These
factors might result in greater trading activity and liquidity for the
common stock of the successor corporation, as compared to the Units.
3. Operating in corporate form should provide the Partnership with greater
flexibility to consummate acquisitions, including the use of capital
stock as acquisition consideration.
4. The conversion would simplify the Partnership's organizational structure
and reduce significantly the costs of tax reporting for the Partnership
and Unit holders. The conversion would, e.g., eliminate the costs
incurred annually by the Partnership to prepare and send individual Form
K-1s to each Unit holder.
5. Management would be the responsibility of the board of directors of the
successor corporation, rather than of a general partner of the
Partnership. The board of directors would be elected on an annual basis
directly by holders of the common stock of the successor corporation. In
contrast, the general partner
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of the Partnership does not stand for election, although, as provided in
the Partnership Agreement, the general partner may be removed and
substitute general partners may be elected.
Neither DMC nor anyone acting on its behalf has conducted or is conducting
an analysis regarding the tax savings, if any, which could potentially be
realized from being taxed as a corporation rather than as a partnership. DMC
has no knowledge as to whether Prime-American has made or caused to be made
such an analysis.
Pursuant to credit agreements relating to the Partnership's long-term
indebtedness (referred to below as the "Loan Agreements"), no merger or
consolidation involving Operating Partners may occur unless the unanimous
consent of the lenders and mortgage note holders is obtained. If a merger or
consolidation were to occur without such consent and the merger or
consolidation was not otherwise corrected or reversed within 30 days (or,
under certain circumstances, such additional period of up to 30 or 60 days as
the relevant Loan Agreement may permit) of receipt by Operating Partners of a
notice from the relevant agent or servicer under the Loan Agreements
specifying the default and requiring it to be remedied, an event of default
will exist. In addition, certain events representing a change in control of
Operating Partners (including the ownership of 50% or more of the limited
partnership interest in the Partnership by an entity that is not a "permitted
transferee") will constitute an event of default if the consent of the
necessary number of lenders and mortgage note holders under the Loan
Agreements is not received or if the change in control is not otherwise
remedied within 10 days after a notice of default is received. In case of a
default under the Loan Agreements: (a) the lenders are relieved of any
obligations to make further advances under the Priming Loan Agreement without
regard to any required notice and cure period and (b) upon the expiration of
any applicable cure period, the lenders and mortgage note holders are entitled
(but not required) to take various other actions, including acceleration of
the loans and foreclosure against collateral.
Depending upon the manner in which the proposed conversion may be effected,
such conversion to corporate form might be deemed to involve a merger or
consolidation of Operating Partners and/or a concentration of ownership of the
limited partnership interest in the Partnership. In that event, DMC
anticipates that the necessary consents of the lenders and mortgage note
holders, as outlined above, would be sought in advance of such transaction.
PROPOSAL 4--ADJOURNMENT OF THE SPECIAL MEETING
In the event that there are not sufficient votes to remove the present
general partner at the time of the Special Meeting, Limited Partners will be
asked to consider and vote upon a proposal to adjourn the Special Meeting in
order to permit further solicitation of proxies. In order to allow proxies
that have been received by DMC at the time of the Special Meeting to be voted
for such adjournment, if necessary, DMC has submitted the question of
adjournment under such circumstances to Limited Partners as a separate matter
for their consideration. A majority of the Units present or represented at the
Special Meeting is required in order to approve any such adjournment. DMC
recommends that Limited Partners vote their proxies in favor of such
adjournment so that their proxies may be used for such purpose in the event it
should become necessary. If it is necessary to adjourn the Special Meeting, no
notice of the time and place of the adjourned meeting is required to be given
to Limited Partners other than an announcement of such time and place at the
Special Meeting.
REASONS FOR THE PROPOSALS
Introduction
The troubled history of the Partnership and its operating difficulties, its
poor financial condition and weak prospects are described in detail in the
publicly available annual and quarterly reports which the Partnership has
filed with the Securities and Exchange Commission, including the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1996 (the "1996 10-
K") and, most recently, the Third Quarter 10-Q. DMC believes that the removal
of Prime-American as general partner of the Partnership is necessary in order
to end
6
the conduct of the Partnership's business and affairs in a manner which has
resulted, and would, if not halted, continue to result in the diminishment of
Unit holder value as evidenced by the dramatic increase through recent years
in the negative net worth of the Partnership, as noted below. The
deteriorating situation calls for immediate and decisive action to improve the
Partnership's prospects and to return the Partnership to profitability.
However, the Partnership does not appear to have a viable plan to accomplish
these objectives. Recently, however, the Partnership entered into a definitive
agreement with Servico, Inc. to sell substantially all of the Partnership's
assets to Servico, Inc. (See "Background of the Proposals--The Servico
Offer.")
The following examples indicate the extremely poor condition of the
Partnership's business, operations and financial condition:
1. The Partnership has recorded a net loss in each of the past five years,
and no distributions were paid to Unit holders during that period.
2. The total partners' deficit increased from $15,733,000 at December 31,
1995, to $17,921,000 at December 31, 1996. The deficit increased further
to $18,461,000 at June 30, 1997, as reported in the Second Quarter 10-Q.
(The total partners' deficit decreased by approximately 13% to
$16,105,000 at September 30, 1997.) The magnitude of these deficits
reflects substantial increases in total partners' deficit through the
years. For example, the present total partners' deficit is more than
twice the total partners' deficit at December 31, 1992, which was
$7,565,000. (The year 1992 is useful for comparative purposes inasmuch
as Operating Partners filed for reorganization under Chapter 11 of the
Bankruptcy Code in February 1992; its prepackaged reorganization plan
was approved in May 1992.)
3. The Partnership's independent accountants, Coopers & Lybrand L.L.P., in
their report dated February 21, 1997, on the Partnership's consolidated
financial statements for the year ended December 31, 1996, stated that
"the Partnerships have incurred significant operating losses and have a
capital deficit at December 31, 1996. These matters raise substantial
doubt about the Partnerships' ability to continue as a going concern."
4. The Units were delisted by the New York Stock Exchange ("NYSE")
effective June 20, 1997, and presently trade on the Nasdaq Over-the-
Counter Bulletin Board. The Units were delisted because the aggregate
market value of the Units, the three-year average net income of the
Partnership and the net tangible assets of the Partnership available to
the Units fell below the NYSE's continued listing criteria.
5. Holiday Inns, Inc. ("HII"), the franchisor for the Inns, has informed
the Partnership that it might not renew the franchise agreements for a
majority of the Inns because the Inns no longer meet the required
standards under the franchise agreements. As more fully described below
under "The DMC Plan of Action," the HII Property Improvement Plans
("PIPs") would require capital expenditures for the Inns whose
franchises expire in 1997 in the aggregate amount of approximately
$13,000,000. (However, the Partnership has listed for sale two of the
Inns.) As reported in the Third Quarter 10-Q, it is anticipated that
capital improvements for the PIPs will be funded through additional
financing, if available, but that there can be no assurance that
additional financing will be available. Without additional financing,
the Partnership may lose its franchises.
In addition to the apparent lack of any viable plan to return the
Partnership to profitability, the Partnership, as noted above, has reported
that, as a publicly traded partnership, it will be taxable as a corporation
after December 31, 1997, and that Prime-American expected to submit to the
Limited Partners a proposal for the conversion of the Partnership and
Operating Partners to a corporation in a multi-step transaction. As noted
above, Prime-American has in fact not submitted any such proposal, and a
representative of Prime-American has indicated to DMC's representatives that
no such proposal is currently being prepared.
DMC and Mr. Sanzo believe that the Unit holders require more active and
attentive management focused on enhancing the value of the Unit holders'
investment. Given the poor financial and operational performance of the
Partnership, the lack of any apparent viable plan by Prime-American and its
management for the survivability and future development of the enterprise, and
the fact that the taxation status of the Partnership remains
7
unaddressed, DMC recommends that the present general partner be removed
immediately as a first step to improving the status of the Unit holders'
investment.
Jerome S. Sanzo has devoted considerable time and energy to evaluating the
affairs of the Partnership based upon publicly available information regarding
the Partnership and upon his extensive knowledge of and experience in the
hotel industry, hotel finance and the capital markets. (See "Certain
Information Regarding Participants in the Solicitation--Jerome S. Sanzo.") Mr.
Sanzo has developed a plan of action for the Partnership, the essential
elements of which consist of:
. Refinancing or restructuring the senior indebtedness of the Partnership.
. The sale or other disposition of the Partnership's underperforming
properties and their replacement with stronger properties.
. Renegotiation of the Partnership's franchise agreements with HII
relating to certain of the Partnership's properties.
. A review of the performance of the Managing Director of Prime-American
in his capacity as consultant to the Partnership and of the current
operational manager of the Partnership.
. An attempt to increase the efficiency of the operation of the
Partnership's properties, particularly through expense reduction and
control. However, neither DMC nor any person acting on its behalf has
performed or caused to be performed any analysis of the extent to which
expense reduction and control could be effected.
. Conversion of the Partnership and Operating Partners to corporate form.
A description of each of these elements is set forth below. (However, DMC
does not, at the present time, have access to the books and records of the
Partnership and Operating Partners. Accordingly, the plan is subject to
modification by DMC to reflect additional information DMC would obtain if it
were elected general partner of the Partnership.) Based on a number of
factors, including Mr. Sanzo's knowledge and experience and informal
discussions which Mr. Sanzo has had with representatives of the Partnership's
lenders and major international investment banks, DMC believes that there is a
significant likelihood that at least some of the objectives described above
could be achieved if promptly and aggressively pursued. However, there can be
no assurance that any of the objectives could be attained.
DMC is aware that, as reported in the Third Quarter 10-Q, Prime-American has
taken and desires to take certain action which would be consistent with the
plan of action proposed by DMC. For example, the Partnership reported that it
sold the Glen Burnie South Inn in 1997, has entered into a contract to sell
another Inn and "has planned" to sell six other Inns which have a dated
appearance and which are either losing money or, in the opinion of Prime-
American, will not produce a sufficient return to justify the costs to
complete the PIPs required by HII and the franchise fees for renewal of their
franchises. In addition, the Partnership reported that, commencing in August
1997, Prime-American accelerated its efforts to arrange financing for the PIPs
and the franchise renewal fees or to enter into another transaction (including
the sale of Inns) to protect the interests of the Unit holders and will
continue to seek to make arrangements with HII for the renewal of the
franchises for the Inns which the Partnership desires to retain. However, DMC
believes that the efforts of Prime-American on behalf of the Partnership have
not been timely or adequate, as indicated by, among other things, the dramatic
increases in the total partners' deficit over many years, the lack of
distributions to Unit holders during that period and the fact that the
Partnership continues to be threatened with the loss of the HII franchises for
the Inns. DMC further believes that, in view of the serious difficulties faced
by the Partnership over many years, the efforts of Prime-American to address
the Partnership's difficulties should have been "accelerated" long before
August 1997. (As more fully described below under "Background of DMC's Proxy
Solicitation," it was in August 1997 that Mr. Sanzo met with representatives
of Prime-American for the second time to discuss the future of the
Partnership.)
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THE DMC PLAN OF ACTION
If the Limited Partners remove Prime-American as the general partner of the
Partnership and, thereafter, DMC becomes the substitute general partner, DMC
will immediately act to implement the plan described below. As noted above,
the plan will be subject to modification by DMC to reflect, among other
factors, additional information regarding the business, operations and
financial condition of the Partnership and Operating Partners DMC would obtain
after gaining access to the books and records of the Partnership, and changing
market and economic conditions.
1. Refinancing or Restructuring of Senior Indebtedness
At September 30, 1997, the Partnership had long-term indebtedness in the
amount of $63,556,000, consisting of Mortgage Notes in the amount of
$54,227,000 and borrowings under a Priming Loan in the amount of $9,329,000.
(These credit facilities are more fully described in the 1996 10-K.) The
Partnership reported in the 1996 10-K that it then was currently in compliance
with all covenants and requirements of the Restated Loan Agreement for the
Mortgage Notes and of the Priming Loan Agreement (referred to below
collectively as the "Loan Agreements").
The Partnership incurred interest expense in the amount of $4,472,000 for
the nine months ended September 30, 1997. DMC believes that the onerous level
of debt service has hindered the Partnership's growth and performance. Mr.
Sanzo has already had several informal discussions with representatives of the
Mortgage Note holders concerning the status of the Partnership's senior debt
and DMC's proposed plan of action for the Partnership. No agreement or
commitment has resulted from these discussions.
Mr. Sanzo also has had discussions with representatives of several major
international investment banks concerning their potential interest in
refinancing all of the Partnership's outstanding long-term indebtedness and
financing the acquisition of additional hotels by the Partnership (or a
corporate successor, in the event of a conversion of the Partnership to
corporate form). Such financing might be accomplished through a conduit or
securitized mortgage program and also might involve the conversion of some of
the Partnership's senior secured debt to equity. DMC believes that in the
current state of the capital markets, it may be possible to reach agreement
with existing and/or new lenders to refinance the Partnership's existing debt
at interest rates more favorable than those currently incurred by the
Partnership. While no commitments or agreements have been obtained, Mr. Sanzo
believes, based on the tenor of his informal discussions and his knowledge of
both the capital markets and of the hotel industry and hotel finance, that
obtaining such financing might be possible in connection with the
implementation of DMC's business plan. DMC intends to pursue aggressively such
financing in the event that it is elected as general partner of the
Partnership.
2. Sale and Replacement of Underperforming Properties
A key element of revamping the Partnership's operations is the replacement
of the Inns which are not profitable with physically and financially more
attractive properties. These dispositions may, subject to any required
consents of lenders under the Loan Agreements, include the Holiday Inns known
as Pikesville, Lancaster Route 501, York-Market Street, Moravia and Hazleton.
DMC would also consider a disposition of the hotel at Frederick, Maryland. In
its Third Quarter 10-Q the Partnership stated that:
Operating Partners sold the Glen Burnie South Inn in July, 1997,
has entered into a purchase contract for the Baltimore Pikesville
Inn, and has planned to sell the Baltimore Moravia Road, Baltimore
Belmont, Frederick MD, Lancaster Rt. 501, York Market Street and
the Hazleton Inns, which are "highway oriented" properties which,
having exterior corridors and being older properties (generally
over 20 years old), have a dated appearance. These Inns are either
losing money or, in the opinion of the General Partner [Prime-
American], will not produce a sufficient return to justify the
costs to complete the HII PIPs and the franchise fees for renewal
of their franchises.
The Partnership further reported that the net proceeds of the sale of these
Inns would be applied to reduce the outstanding principal balance of the
Priming Loan, as required by the Priming Loan Agreement (referred to below).
9
In conjunction with restructuring or refinancing the existing debt of the
Partnership, and conversion of the Partnership to a corporation (as discussed
below), DMC believes that the successor corporation would be well positioned
to bid for and acquire additional suitable properties either in exchange for
shares of common stock or other equity securities of the successor corporation
or with proceeds of financing obtained for such purpose. DMC believes such a
course of action, coupled with the improved operating efficiencies proposed
below, if achieved, would be advantageous to the shareholders of the successor
corporation. Such acquisitions would provide the new corporation with the
opportunity to expand its revenue base, create greater economies of scale in
its operations, improve the net income allocable to shareholders, and enhance
the market value of the enterprise. DMC has already explored certain hotel
properties within the Eastern United States as potential acquisition
candidates, although Mr. Sanzo did not indicate to their owners that he was
acting on behalf of the Partnership or the proposed successor corporation. Mr.
Sanzo has had discussions with Martin W. Field, a Unit holder, concerning
several profitable hotels owned or controlled by him. (See "Certain
Information Regarding Participants in the Solicitation--Martin W. Field" and
"--Certain Related Interests of Participants in the Solicitation.") Although
an intensive analysis of these potential acquisition candidates has not been
completed, DMC believes that such potential acquisitions might be made on
terms favorable to the enterprise and can enhance shareholder value. However,
there can be no assurance that these or subsequent efforts to identify
potential acquisition candidates and thereafter to consummate any such
acquisition on terms favorable to the successor corporation will be
successful.
Under the provisions of RULPA, the Partnership Agreement, and the AMI
Partnership Agreement, the holders of Units are not required or entitled to
vote upon the anticipated sale by Operating Partners of Inns, as described
above. As a general matter, the AMI Partnership Agreement authorizes the
general partner of Operating Partners to sell or transfer one or more Inns
provided that such sale or transfer: (a) does not represent the sale or
transfer of all or substantially all of the assets of Operating Partners, and
(b) is approved by a majority vote of the limited partners of Operating
Partners. Accordingly, as the sole limited partner of Operating Partners, the
Partnership must consent to any sale of Inns by Operating Partners. Neither
the Partnership Agreement nor the AMI Partnership Agreement requires the
consent of Limited Partners in order for the Partnership, as an entity, to
approve the anticipated sale of Inns by Operating Partners. Therefore, if DMC
is elected as the new general partner of the Partnership, it anticipates that
it would exercise its authority on behalf of the Partnership to approve any
proposed sale by Operating Partners of underperforming or older Inns.
3. Renegotiations of Arrangements with Holiday Inns, Inc.
In the Second Quarter 10-Q and the Third Quarter 10-Q, the Partnership
reported that the "Holiday Inn" franchises of ten of the Inns were to expire
on June 30, 1997 and the franchises of two additional Inns will expire on
December 31, 1997. Before the renewal of an expiring franchise for any
"Holiday Inn" property, the property is inspected by HII and that inspection
forms the basis for a PIP, the completion of which is a condition to the
renewal of the franchise for the property. Prior to December 31, 1995, HII had
inspected and prepared PIPs for ten of the Inns whose franchises expire in
1997. During the second quarter of 1996, HII inspected and prepared PIPs for
the remaining two Inns whose franchises expire in 1997 (though HII had
previously indicated that it might not renew those franchises and,
accordingly, had not prepared PIPs for those Inns). Based on those PIPs, and
on analyses by the manager of the Inns, Operating Partners estimated the cost
of the capital expenditures to be in the range of $13,000,000, although
Operating Partners believed that the scope of work and related costs would be
subject to negotiation. As reported in the Third Quarter 10-Q, in June 1997,
the Partnership requested that HII extend the expiration of the ten Inns. HII
agreed to a number of extensions of the franchise expirations for the ten
Inns, most recently to November 14, 1997. As further reported therein,
Operating Partners and Servico, Inc. have requested an additional extension of
the franchises and HII has verbally granted an additional six week extension.
During the process of disposition and acquisition of hotels, DMC would
attempt to negotiate appropriate arrangements with HII. These arrangements
would include short term franchise extensions for the hotels proposed to be
sold and long term extensions for the retained hotels. An agreement with HII
will also be necessary regarding its PIPs. As noted above, Mr. Sanzo has
discussed with representatives of the Partnership's lenders and potential new
lenders financing the PIP requirements for retained hotels as part of the
general refinancing of the senior secured debt.
10
4. Review of Contracts with Operational Manager and Consulting Services
Agreement
Operating Partners entered into a management agreement with Winegardner &
Hammons, Inc. ("W&H") pursuant to which W&H manages the Inns. Effective
January 4, 1997, the initial term of the W&H Management Agreement was extended
for four years, through 2000, and a provision was added to the W&H Management
Agreement which grants to either the Partnership or W&H the right to terminate
the agreement, without penalty, at any time without cause, upon at least 90
days prior written notification to the other party. However, under certain
credit agreements to which Operating Partners is a party (referred to below as
the "Loan Agreements"), approval by the lenders would be required for the
Partnership to elect to terminate the W&H Management Agreement.
In its 1996 10-K, the Partnership reported that, in 1994, S. Leonard Okin,
Managing Director of Prime-American, entered into a Consulting Services
Agreement (the "Consulting Services Agreement") with the Partnership,
Operating Partners and Prime-American, giving him authority to make day-to-day
operating decisions for the Inns. Under the Consulting Services Agreement, Mr.
Okin, as an independent contractor, performs on behalf of the Partnership,
Operating Partners and Prime-American, the services normally performed by, and
exercises the authority normally assumed or undertaken by, the chief executive
officer of a corporation. The Consulting Services Agreement has been extended
on a yearly basis for a current term ending December 31, 1997. Unless the
parties to the Consulting Services Agreement or the lenders under the Loan
Agreements exercise their rights to terminate the Consulting Services
Agreement, it will be extended automatically for successive twelve-month
periods. The Consulting Services Agreement is terminable, among other reasons,
for cause; by 30 days prior written notice from the Partnership, Operating
Partners, or the general partner to Mr. Okin of their election not to renew
the agreement at the expiration of the initial or any renewal term; or by 60
days prior written notice from Mr. Okin to the general partner of Mr. Okin's
election at any time to terminate the agreement. In addition, if the lenders
under the Loan Agreements shall foreclose on substantially all of the assets
of the Partnership and Operating Partners, such lenders may cause the
termination of the Consulting Services Agreement by notice to Mr. Okin given
within ten days after any actions to begin such foreclosure have been taken.
Considering the required PIP renovations, dispositions of underperforming
hotels and potential acquisition of new hotels, DMC anticipates that it would
review the W&H Management Agreement and the Consulting Services Agreement to
determine whether each of the agreements should remain in effect or be
terminated. However, DMC has not conducted such review and cannot predict the
outcome of the review, if conducted.
5. Increased Efficiency of Operations
DMC believes that new, aggressive management is needed to work toward
enhancement of Unit holder value through a fresh and vigorous approach to the
improvement of the Partnership's operations. Although there can be no
assurance given, DMC believes that those of the existing properties which
would not be disposed might be operated more efficiently through expanded and
more thorough attention to expense controls and reductions. DMC notes that, as
reported in the 1996 10-K, "Other" expenses increased 8.43%, from $7,718,000
at December 31, 1995 to $8,369,000 at December 31, 1996, while Total Revenues
increased at a significantly slower rate of 4.45% during the same period. In
the Third Quarter 10-Q, the Partnership reported "Other" expenses in the
amount of $6,624,000 for the nine months ended September 30, 1997, which
represents an increase of 8.9% from the "Other" expenses in the amount of
$6,082,000 for the nine months ended September 30, 1996.
Notwithstanding the magnitude of the expenses under the category "Other,"
neither the 1996 10-K nor the Third Quarter 10-Q disclosed the nature of the
expenses reflected in the category of "Other" expenses. Furthermore, the
Partnership provided no explanation in the 1996 10-K for the much higher rate
of increase of "Other" expenses than the increase in revenues. If DMC were
elected general partner of the partnership, DMC would immediately evaluate the
"Other" category of expenses. However, in the absence of information regarding
the nature of the "Other" category of expenses, no assurance can be given that
the amount of such expenses could be decreased.
11
6. Removal of Prime-American as General Partner of Operating Partners.
Certain restrictions on the change in control of Operating Partners are set
forth in: (a) the Amended and Restated Loan Agreement among Massachusetts
Mutual Life Insurance Company, Century Life of America and Jackson National
Life Insurance Company, as lenders, AMI Operating Partners, L.P., as borrower,
and Norwest Bank Minnesota, N.A., as agent, dated as of June 12, 1992 (the
"Priming Loan Agreement") and (b) the Amended and Restated Loan Agreement
dated as of June 12, 1992, among AMI Operating Partners, L.P., as issuer,
certain mortgage note holders, and IBJ Schroder Bank and Trust Company, as
servicer (the "Mortgage Loan Agreement") (collectively, the Priming Loan
Agreement and the Mortgage Loan Agreement are referred to herein as the "Loan
Agreements"). However, based on a review of the Loan Agreements, DMC does not
believe that a change in the general partner of the Partnership alone would
violate any provision of either of the Loan Agreements.
Pursuant to each of the Loan Agreements, no change in the ownership interest
of any partner in Operating Partners may occur without the consent of lenders
having aggregate "percentage interests" of not less than 75% under the Priming
Loan Agreement (the "Required Lenders") and the consent of the holders of
certificates representing at least 51% of the aggregate unpaid principal
amount of the mortgage notes under the Mortgage Loan Agreement (the "Required
Holders"). (This restriction does not apply to transfers of limited
partnership interests in the Partnership, unless, as a result of such
transfer, any entity that is not a "permitted transferee" owns or controls 50%
or more of the limited partnership interest in the Partnership.)
If an unauthorized change in ownership interest of any partner in Operating
Partners shall occur and not be corrected within 30 days (or, under certain
circumstances, such additional period of up to 30 or 60 days as the relevant
Loan Agreement may permit) of receipt by Operating Partners of a notice from
the agent or servicer under the Loan Agreements specifying the default and
requiring it to be remedied, then an event of default will exist. In case of a
default under the Loan Agreements: (a) the lenders are relieved of any
obligations to make further advances under the Priming Loan Agreement without
regard to any required notice and cure period and (b) upon the expiration of
any applicable cure period, the lenders and mortgage note holders are entitled
(but not required) to take various other actions, including acceleration of
the loans and foreclosure against collateral. At September 30, 1997, as
reported in the Third Quarter 10-Q, the long-term debt outstanding under the
Loan Agreements was $63,556,000, all of which would potentially be subject to
acceleration.
DMC is seeking the removal of Prime-American as general partner of the
Partnership and the appointment of DMC as the new general partner of the
Partnership. As described above under "Proposal 1--To Remove the General
Partner," pursuant to the Partnership Agreement, in the event that Prime-
American shall be removed as general partner of the Partnership, Prime-
American shall also be removed as general partner of Operating Partners. As
further described above under "Proposal 2--To Elect DMC as a Substitute
General Partner," if DMC were elected as substitute general partner of the
Partnership, DMC, pursuant to the AMI Partnership Agreement, would also become
substitute general partner of Operating Partners. To the extent that any such
action could be deemed to constitute a "change in the ownership interest of
any partner in Operating Partners," such action would require the consents of
the Required Lenders and the Required Holders under the Loan Agreements. DMC
anticipates that the requisite consents to the change in general partner of
Operating Partners would be sought in advance of the effectiveness of such
removal and substitution; however, there can be no assurance that such
consents, if sought, would be obtained.
7. Conversion of Partnership to a Corporation
As noted above, DMC believes that it would be in the best interests of Unit
holders for the Partnership and Operating Partners to convert into a
corporation. DMC anticipates that, in order to effect such a conversion, a
Delaware corporation ("Newco") will be formed into which the Partnership and
Operating Partners would be merged in a multi-step transaction. Shares of
common stock of Newco will be issued proportionally to the Unit holders of the
Partnership. A substantial amount of additional common stock would be
authorized and would be available for use in acquisitions and other
transactions.
12
Newco would be managed by a board of directors elected by the former Unit
holders who had received common stock in the conversion. Mr. Sanzo would seek
to be nominated to serve on the board of directors of Newco and to serve as an
executive officer of Newco.
Neither DMC nor Mr. Sanzo has made any agreements or arrangements whatsoever
with any person regarding the operation of the Partnership or the management
of any successor corporation.
BACKGROUND OF DMC'S PROXY SOLICITATION
Prior Discussions with Partnership
Mr. Sanzo first became aware of the Partnership in the early 1990's while
performing his duties as a senior officer of Banque Indosuez, where he was
responsible for the lending to the hotel industry of his employer. The
Partnership and its troubled status were first brought to the attention of
Martin W. Field in 1996 by a friend of Mr. Field who was also a Unit holder.
(As more fully described below, Mr. Field is an owner, developer and manager
of real estate, including Holiday Inns.) Thereafter, Mr. Field reviewed
certain publicly available information regarding the Partnership and the Inns
and had a meeting with Mr. Okin, the Managing Director of Prime-American, to
discuss the Partnership and the Inns. Mr. Field subsequently brought the
troubled status of the Partnership to the attention of Mr. Sanzo. Thereafter,
in 1997 Mr. Sanzo reviewed and analyzed publicly available information
regarding the business and operations of the Partnership. (As more fully
described below, Mr. Sanzo had met Mr. Field during the performance of Mr.
Sanzo's duties as an executive and credit officer at Banque Indosuez.) Based
on his analysis, Mr. Sanzo believed, and continues to believe, that the
Partnership would have the potential for good long-term prospects in the hands
of new management.
During 1997, Mr. Sanzo had two meetings (most recently in August 1997) and
several discussions with Mr. Okin and with representatives of Prime-American
and the Partnership to discuss the troubled financial condition and poor
prospects of the Partnership. During these discussions, Mr. Sanzo requested
the resignation of Prime-American and proposed a plan of action essentially
similar to the DMC Plan of Action described in this Proxy Statement. Prime-
American has not responded positively to Mr. Sanzo's request for the
resignation of Prime-American or to certain other elements of Mr. Sanzo's
proposed plans.
The Special Meeting
By letter to Prime-American dated June 19, 1997, on behalf of persons
holding more than 25% of the Units, a special meeting of Limited Partners was
requested for: (i) consideration of the question of the removal of the general
partner of the Partnership pursuant to Section 1002 of the Partnership
Agreement; and (ii) the election of a new general partner as provided in
Section 1002(d). In a separate letter of the same date, counsel to the
Partnership was informed that certain individuals intended to propose that the
general partner be replaced by a new corporate general partner to be owned and
controlled by Mr. Sanzo.
After an exchange of correspondence between representatives of DMC and
Prime-American, in late September 1997, Prime-American gave notice that a
special meeting of all partners of the Partnership would be held on November
5, 1997, at the request of certain Unit holders to vote upon the removal of
Prime-American as general partner, and if Prime-American is removed, the
election of DMC as the substitute general partner.
By letter dated October 9, 1997, counsel to DMC requested that Prime-
American amend the notice to state that, at the special meeting, a proposal
would be voted upon to request that the general partner put the conversion
before the Unit holders for consideration and vote.
In late October 1997, at the request of representatives of DMC, Prime-
American consented to the postponement of the special meeting to a date to be
mutually agreed upon so that, in the event that Prime-American should
determine that a special meeting should be held to consider and vote upon the
Servico Offer, as described below, a single special meeting might (but would
not necessarily) be held to vote upon both the
13
proposal for the removal of Prime-American and related proposals and the
Servico Offer. Thereafter, representatives of DMC selected, with the
concurrence of Prime-American, the date of January 29, 1998, for the Special
Meeting.
By letter dated December 10, 1997, from counsel to DMC, DMC requested that
the Partnership provide it with a list of Unit holders as of December 5, 1997;
the list was provided to counsel to DMC on December 15, 1997.
Invitation to Mr. Sanzo to Bid for Hotels.
By letter dated September 11, 1997, sent to Mr. Sanzo by W&H on behalf of
Prime-American (the "Offer Letter"), W&H offered to sell to Mr. Sanzo the Inns
owned by the Partnership by permitting him to acquire the equity in the
Partnerships that own the Inns. Mr. Sanzo rejected the offer by letter to
Prime-American dated September 25, 1997. Mr. Sanzo stated, among other things,
that he firmly believed that
...the highest value to the unit holders would be achieved
through a restructure of the Partnership's affairs. Such a
restructure could include, but might not be limited to,
changes in the Partnership's debt structure, asset mix and
operations.
A sale of the hotel properties at this time would most
likely be regarded by the market as a distress or "fire" sale,
and accordingly, could not be expected to generate full value
for the Unit holders.
The Partnership is presently attempting to sell a number of Inns at a time
when the Partnership has not been able to refinance its existing long-term
indebtedness on more favorable terms and when it is faced with the imminent
expiration of the HII franchises for the Inns. Moreover, it is a matter of
public record that many of the Partnership's properties are in distressed
condition and that the Partnership does not have resources sufficient to fund
the PIPs required by HII. Mr. Sanzo believes that, under such circumstances,
the Partnership could not receive value for the Inns which would reflect the
long-term prospects of the Partnership under new management.
The Servico Offer
On September 30, 1997, Servico, Inc., an owner and operator of hotels
("Servico"), announced that it had made an offer (the "Servico Offer") to
purchase the 99% partnership interest which the Partnership owns in Operating
Partners for $8,000,000 in cash. Servico also made an offer to purchase the
remaining one percent of Operating Partners which is not owned by the
Partnership.
In the Third Quarter 10-Q, the Partnership reported that, on November 7,
1997, it had signed a definitive agreement with Servico to sell to Servico the
Partnership's 99% limited partnership interest in Operating Partners. In a
Current Report on Form 8-K (the "Form 8-K"), filed with the Commission on or
about November 21, 1997, the Partnership provided certain additional
information regarding the proposed transaction with Servico and filed as an
exhibit thereto a copy of the definitive Acquisition Agreement dated as of
November 7, 1997.
In the Form 8-K, the Partnership reported that, under the terms of the
Acquisition Agreement, Servico Acquisition Corp., a wholly-owned subsidiary of
Servico ("SAC"), will acquire the 99% limited partnership interest of the
Partnership in Operating Partners, for a cash payment to the Partnership of
$8,000,000 and certain undertakings by Servico. Under the Acquisition
Agreement, SAC will take the Partnership's 99% limited partnership interest in
Operating Partners subject to the existing indebtedness and other obligations
of Operating Partners.
The Partnership further reported that it understands that Servico has agreed
with Prime Hospitality, Inc. ("Prime"), the parent company of Prime-American,
to acquire Prime-American's 1% general partnership interest in Operating
Partners in exchange for a warrant to acquire stock of Servico. The
Partnership understands that, as part of such transaction, Prime-American and
Prime will waive any rights that they may have to receive any distributions by
the Partnership of the proceeds of the sale of the Partnership's limited
partnership interest in
14
Operating Partners. The Partnership also understands that Servico has agreed
to retain S. Leonard Okin, a Vice President of Prime-American, as a consultant
following the transaction.
The Partnership reported that the transaction with Servico is subject to the
approval of holders of a majority of the "Depositary Units" and that a meeting
of Unit holders will be scheduled to consider the transaction. As of the date
hereof, the Partnership had not yet filed preliminary proxy solicitation
materials with the Commission regarding the transaction and DMC has no
knowledge as to when the Partnership will solicit votes on such matter.
Mr. Sanzo has informed Prime-American that he opposes the Servico Offer.
CERTAIN INFORMATION REGARDING PARTICIPANTS IN THE SOLICITATION
Jerome S. Sanzo
Mr. Sanzo, age 44, has worked for nearly two decades in banking and the
capital markets in the United States and internationally. His experience has
included work in senior and subordinated debt underwriting, real estate
finance, real estate investment management, hotel management, project finance,
corporate finance, and other related activities. Mr. Sanzo has worked in the
capital markets in the United States, Asia, and the South Pacific, and in
particular, has over 13 years experience in real estate matters in this
country and abroad.
Mr. Sanzo is presently a business consultant whose activities are conducted
through his wholly-owned company, Bennelong Holdings LLC, 52 Davenport Ridge
Road, Stamford, CT 06903. He is also the sole officer and director of DMC,
which was organized primarily to conduct this proxy solicitation.
During the past eight years, until June 1997, Mr. Sanzo initially was head
of all North American real estate finance and then Manager of all asset based
and corporate finance activities in North America for Banque Indosuez, now
known as Credit Agricole Indosuez ("Indosuez"). In the latter function, Mr.
Sanzo was responsible for all commercial and corporate finance activities, in
addition to all real estate debt and equity activities, in North America for
Indosuez. This included at its peak a loan portfolio of approximately $2
billion, and portfolios of real estate properties owned by clients of
Indosuez, and by Indosuez directly, aggregating over $90 million in value as
measured by property sales.
Further, during the period of 1989 through 1997, all North American hotel
related financing activities for Indosuez reported to Mr. Sanzo. At its peak,
an aggregate of over $250 million in loans and letters of credit for borrowers
and developers in the hospitality industry were the responsibility of Mr.
Sanzo.
In addition, during the period of 1990 through 1997, as part of Mr. Sanzo's
duties as an executive of Indosuez, Mr. Sanzo served as President and a
director of a number of Indosuez subsidiaries which owned buildings in Texas,
Illinois, Michigan, Virginia, New Jersey, and New York. These included office
buildings, warehouses, shopping centers, and hotels. In addition, on behalf of
a group of foreign financial institutions including Indosuez, Mr. Sanzo was
President and a director of Conference Center Interests, Inc. ("CCI"), which
from 1992 through 1994 owned a 340 room, luxury conference center/resort near
a major airport in Virginia. During this period, Mr. Sanzo had ultimate
responsibility over all management negotiation, hiring and termination issues,
budgets, marketing efforts, operational issues, and capital expenditure
requests. (Mr. Sanzo did not receive compensation from such subsidiaries of
Indosuez or from CCI.)
During the 1990's, two of the Indosuez subsidiaries of which Mr. Sanzo was
President and a director, owned hotels: Emily Morgan Properties, Inc., which
owned an approximately 135 room hotel in Texas, and Airport Hotel, Inc., which
owned an approximately 100 room airport hotel in Michigan. He had essentially
the same responsibilities with respect to these properties, i.e., control and
responsibility of all management, operational, capital expenditure, and
divestment issues.
15
In 1994, Mr. Sanzo was also named the executive in charge of all North
American restructuring and workout activities, including corporate and real
estate debtors in non-performing or underperforming situations.
In addition to those activities, Mr. Sanzo was named Managing Director and
elected to the Managing Board of two real estate investment funds which were
owned by overseas investors and publicly traded on the Amsterdam Stock
Exchange. These funds, IPNA II N.V. and IPNA III N.V., owned real properties
across the United States, and as Managing Director, Mr. Sanzo was responsible
for formulating and executing all business and capital strategies, including
leasing, operations, capital structure, tax, capital expenditure, property
management, and all other related activities of these funds.
While at Indosuez, Mr. Sanzo served as the bank officer in charge of certain
credit facilities for two of Mr. Field's hotels.
Mr. Sanzo has a net worth of not less than $500,000. Mr. Sanzo is not
obligated to provide additional capital to DMC. In addition, Mr. Sanzo does
not believe that he would, in his capacity as sole stockholder, officer and
director of DMC, be liable for any indebtedness or other obligations of DMC.
Martin W. Field
Mr. Field is an independent real estate owner, developer and manager who has
more than 30 years of experience in the ownership, management and renovation
of hotels. Mr. Field presently owns or controls five hotels in Pennsylvania
and New York, four of which are part of the Holiday Inn Worldwide system; two
of the four are Holiday Inns, one is a Holiday Inn Crown Plaza and the other
is a Holiday Inn Express. The fifth hotel is a Hilton hotel. All five of the
hotels are operating profitably. Mr. Field's executive offices are located at
c/o Valley Forge Hilton, 251 West DeKalb Pike, King of Prussia, PA 19406. Mr.
Field manages the five hotels through New Penn Management, Inc., a New York
Corporation ("New Penn"), of which Mr. Field is the senior executive officer.
The address of New Penn is 104-04 Ditmars Boulevard, East Elmhurst, NY 11369.
Further information regarding beneficial ownership of Units and other
matters with respect to the participants in this proxy solicitation is set
forth in Appendix I to this Proxy Statement.
Certain Related Interests of Participants in the Solicitation
The following paragraphs describe certain arrangements or understandings
regarding future employment or future transactions. Except as disclosed below
or elsewhere in this Proxy Statement, no participant or associate of a
participant has any arrangement or understanding with any person with respect
to any future employment by the Partnership or its affiliates, including
Operating Partners, or with respect to any future transactions to which the
Partnership or any of its affiliates will or may be a party.
In the event that the Partnership and Operating Partners convert into a
corporation, referred to herein as "Newco," Mr. Sanzo would seek to be
nominated to serve on the Board of Directors of Newco and to serve as an
executive officer of Newco.
As noted above, Mr. Field has more than 30 years of experience in the
ownership, management and renovation of hotels. He presently owns or operates
five hotels located in Pennsylvania and New York; two of the hotels operate as
Holiday Inns. In view of Mr. Field's experience and his present ownership of
hotels, including two Holiday Inns, DMC might consider engaging the services
of Mr. Field, either directly or through entities controlled by Mr. Field, to
manage or participate in the management of the Partnership's Inns. In the
event that the Partnership and Operating Partners convert into a corporation,
referred to above as "Newco," Mr. Field may be considered as a potential
candidate to serve on the Board of Directors of Newco or as a consultant to
Newco. Neither DMC nor Mr. Sanzo have made any commitments to or agreements
with Mr. Field regarding these matters. Furthermore, there can be no assurance
that Mr. Field would accept any management role or
16
position with the Partnership, Operating Partners or Newco, if offered to him.
(See "The DMC Plan of Action--Review of Contracts with Operational Manager and
Consulting Services Agreement.")
DMC would seek to replace the Partnership's underperforming and older hotels
with physically and financially more attractive properties with the object of
increasing the Partnership's revenues and profits. Mr. Sanzo has had informal
discussions with certain hotel owners, including Mr. Field, concerning the
potential acquisition of profitable hotels owned by them. However, no
arrangements have been made or agreements entered into with Mr. Field
regarding the potential sale of any hotels owned by him to either the
Partnership or Newco. Furthermore, there can be no assurance that Mr. Field
would consider or accept any offer made by the Partnership or Newco to
purchase any of his hotels. (See "The DMC Plan of Action--Sale and Replacement
of Underperforming Properties.")
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT OF THE PARTNERSHIP
As reported by the Partnership in the 1996 10-K, the following table sets
forth, as of December 31, 1996, the number of Units owned by the officers and
directors of the General Partner and by all persons owning of record or, to
the knowledge of the Partnership, beneficially, more than 5% of the
outstanding Units.
OWNERSHIP OF UNITS
----------------------------------
NUMBER PERCENTAGE
OF UNITS TOTAL NO. OF OF UNITS
NAME AND ADDRESS OF OWNER HELD UNITS HELD OUTSTANDING
------------------------- -------- ------------ -----------
S. Leonard Okin c/o Prime-American Realty
Corp., P.O. Box 230, Hawthorne, NJ 07507-
0230...................................... 1,000 1,000 0.025%
Jerome & Marcella Yunger, as Trustees, 5039
Mesa View Drive,
Las Vegas, NV 89120....................... 174,800
Roxanne Rose Yunger, 5039 Mesa View Drive,
Las Vegas, NV 89120....................... 129,400 304,200(1) 7.605%(1)
- --------
(1) Includes 174,800 Units held of record by Mr. & Mrs. Yunger as
Trustees of the Jerome J. and Marcella M. Yunger Family Trust and 129,400
Units held of record by Roxanne Rose Yunger. The Partnership has no
knowledge as to the beneficial ownership of such Units.
DMC has been informed by Martin W. Field that, on the Record Date, Mr. Field
and his wife, Kathleen P. Field, may be deemed to have held beneficially a
total of 157,500 Units.
DMC further understands that, on the Record Date, a trust organized by Mr.
Field in 1993 for the benefit of his children (the "Trust") held 117,600
Units, constituting approximately 2.9% of the Units then outstanding. The
trustee of the Trust, who is unaffiliated with Mr. Field, has sole dispositive
and voting power with respect to Units held by the Trust. Accordingly, Mr.
Field disclaims beneficial ownership of the Units held by the Trust. (See
Appendix I.)
17
ADDITIONAL INFORMATION REGARDING THE PARTNERSHIP
Certain additional information regarding the Partnership and its business
and financial condition and concerning Prime-American, the general partner of
the Partnership, and the officers and directors of the general partner is set
forth in the 1996 10-K. Reference is also made to the Partnership's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997.
PLEASE INDICATE YOUR SUPPORT OF DMC'S PROPOSALS BY COMPLETING, SIGNING AND
DATING THE ENCLOSED GOLD PROXY CARD AND RETURNING IT IN THE ENCLOSED ENVELOPE.
(NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES).
If you have any questions or require any additional information concerning
this Proxy Statement or the Special Meeting, please contact Regan &
Associates, Inc., 15 Park Row, New York, New York 10038, tel. no. (800) 737-
3426. If any of your Units are held in the name of a brokerage firm, bank,
bank nominee or other institution, only it may vote such shares and only upon
receipt of your specific instructions. Accordingly, please contact the person
responsible for your account and instruct that person to indicate a vote "FOR"
DMC's proposals and to sign, date and return the enclosed proxy card as soon
as possible.
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND MAIL THE ACCOMPANYING GOLD PROXY
CARD PROMPTLY.
18
APPENDIX I
A. Set forth below is certain information with respect to ownership of Units
by the participants in this proxy solicitation and associates of the
participants.
Jerome S. Sanzo
On the Record Date, Mr. Sanzo owned beneficially a total of 7,000 Units
(which constituted less than two-tenths of one percent of the Units then
outstanding), of which 5,000 Units are held by Mr. Sanzo individually and
2,000 Units are held by Mr. Sanzo jointly with his wife. Mr. Sanzo does not
presently own any Units of record but not beneficially. Mr. Sanzo has made the
following purchases and sales of Units during the past two years:
DATE PURCHASE OR SALE NUMBER OF UNITS
---- ---------------- ---------------
November 25, 1996........................ Purchase 1,000 *
June 19, 1997............................ Purchase 700
August 15, 1997.......................... Purchase 1,000
August 26, 1997.......................... Purchase 5,000
August 27, 1997.......................... Sale (1,000)*
August 27, 1997.......................... Purchase 300
------------
Total: 7,000
--------
*For the account of a minor child of Mr. Sanzo.
Martin W. Field
On the Record Date, Mr. Field owned beneficially a total of 157,500 Units,
all of which are held jointly by Mr. Field and his wife, Kathleen P. Field
(which constituted approximately 3.9% of the Units then outstanding). Mr.
Field does not presently own any Units of record but not beneficially. Mr.
Field and associates of Mr. Field have made the following purchases and sales
of Units during the past two years:
Martin W. Field and Kathleen P. Field:
DATE PURCHASE OR SALE NUMBER OF UNITS
---- ---------------- ---------------
October 6,
1997........... Purchase 85,000
October 15,
1997........... Purchase 14,500
October 17,
1997........... Purchase 5,000
-------
Total: 104,500
CLBW Associates, LP:
DATE PURCHASE OR SALE NUMBER OF UNITS
---- ---------------- ---------------
November 6,
1997........... Purchase 2,500
November 7,
1997........... Purchase 7,500
November 13,
1997........... Purchase 2,000
November 19,
1997........... Purchase 16,000
------
Total: 28,000
Prussia Associates, LP:
DATE PURCHASE OR SALE NUMBER OF UNITS
---- ---------------- ---------------
October 22,
1997........... Purchase 10,000
October 27,
1997........... Purchase 8,000
October 28,
1997........... Purchase 7,000
------
Total: 25,000
19
As the sole general partner of CLBW Associates, LP and Prussia Associates,
LP, Martin W. Field has sole voting and dispositive power over the Units held
by such entities. CLBW Associates, LP and Prussia Associates, LP are
"associates" of Mr. Field, as defined in Rule 14a-1 under the Securities
Exchange Act of 1934, as amended. Each of these limited partnerships was
organized to own one of the hotels controlled by Mr. Field. The business
address of CLBW Associates, LP is 4100 Presidential Boulevard, Philadelphia,
PA 19131. The business address of Prussia Associates, LP is 251 West DeKalb
Pike, King of Prussia, PA 19406. The holdings of CLBW Associates, LP and
Prussia Associates, LP identified above represent the total number of Units
beneficially owned by such entities at present.
On the Record Date, a son-in-law of Mr. Field beneficially held a total of
5,000 Units. Mr. Field disclaims beneficial ownership of such Units.
On the Record Date, a family trust established by Mr. Field for the benefit
of his children (the "Trust") beneficially held a total of 117,600 Units,
which constituted approximately 2.9% of the Units then outstanding. Robert
Broder, the sole trustee of the Trust, has sole power to vote, or to direct
the vote, and to dispose, or to direct the disposition of, all Units held by
the Trust. Mr. Broder caused the Trust to acquire such Units at the request of
Mr. Field. Mr. Broder will make independent determinations regarding the
voting, holding and disposition of the Units held by the Trust based, in part,
on the advice of Mr. Field. Mr. Field disclaims beneficial ownership of the
Units held by the Trust.
B. All of the Units described above in Paragraph A were purchased with
personal funds or working capital, and not with funds borrowed or otherwise
obtained for the purpose of acquiring or holding such Units.
C. Except as disclosed below or elsewhere in this Proxy Statement, none of
the participants is, or was within the past year, a party to any contract,
arrangements or understandings with any person with respect to Units.
At the request of Mr. Field, Joseph Selig purchased a total of 117,600 Units
on behalf of Mr. Field during the period from June 13, 1997 through October 3,
1997, with the informal understanding that Mr. Field or his designee could
purchase such Units from Mr. Selig upon Mr. Field's request. (Certain
information regarding the purchases effected by Mr. Selig is set forth below
in this Paragraph C.) Mr. Field subsequently recommended to Robert Broder, the
trustee of the Trust, that the Trust purchase such Units from Mr. Selig. After
evaluating considerations which he deemed relevant, in addition to Mr. Field's
recommendation, Mr. Broder determined to cause the Trust to purchase the Units
from Mr. Selig. The purchase was effected on October 15, 1997. As indicated
above, Mr. Field disclaims beneficial ownership of the Units held by the
Trust. Messrs. Field (together with his spouse) and Selig filed a Statement on
Schedule 13D dated October 17, 1997 (the "Statement"), reporting beneficial
ownership as a "group," but only until October 15, 1997 (the date of the
purchase of Units from Mr. Selig by the Trust), of a total of 217,000 Units,
then constituting approximately 5.4% of the outstanding Units. The Statement
further reported that, as of October 15, 1997, Mr. Field ceased to be the
beneficial owner of more than five percent of the outstanding Units.
20
Purchases and sales of Units by Mr. Selig during the past two years are as
follows:
DATE PURCHASE OR SALE NUMBER OF UNITS
---- ---------------- ---------------
June 13, 1997 Purchase 300
June 16, 1997 Purchase 19,700
June 16, 1997 Purchase 10,000
June 17, 1997 Purchase 2,000
June 18, 1997 Purchase 21,000
June 18, 1997 Purchase 9,200
June 18, 1997 Purchase 200
August 15, 1997 Sale (20,000)
August 26, 1997 Purchase 46,000
September 16, 1997 Purchase 12,700
September 22, 1997 Purchase 10,000
September 23, 1997 Purchase 4,000
October 3, 1997 Purchase 2,500
October 15, 1997 Sale (117,600)
D. No participant owns beneficially, directly or indirectly, any securities
of any parent or subsidiary of the Partnership.
E. None of the participants or associates of the participants has had any
transaction, or series of similar transactions, since January 1, 1996, or any
currently proposed transaction, or series of similar transactions, to which
the Partnership or any of its subsidiaries was or is to be a party, in which
the amount involved exceeds $60,000 and in which such participant (or
associate) had, or will have, a direct or indirect material interest. See also
"Certain Information Regarding Participants in the Solicitation--Certain
Related Interests of Participants in the Solicitation."
21
DAVENPORT MANAGEMENT CORPORATION
DECEMBER 23, 1997
To the Limited Partners, Holders of Depositary Receipts and Unit Holders of
Prime Motor Inns Limited Partnership:
The undersigned, Davenport Management Corporation ("DMC"), is seeking your
support to approve the removal of the present general partner of Prime Motor
Inns Limited Partnership (the "Partnership") at a Special Meeting of Limited
Partners to be held on January 29, 1998, at 2:30 P.M. local time, at the
Holiday Inn, Harmon Meadows Sportsplex, 300 Plaza Drive, Secaucus, New Jersey
07094. The Special Meeting is being called pursuant to Sections 1002(a) and
1504(b)(i) of the Amended and Restated Agreement of Limited Partnership of the
Partnership.
DMC believes that this action is necessary to revitalize the Partnership and
direct it toward a more viable future. DMC believes that the manner in which
the business and affairs of the Partnership have been conducted by the present
general partner has been a principal cause of the Partnership's poor financial
performance and deprived the Partnership of the opportunity to grow and become
profitable. (See "Reasons for the Proposals" in the accompanying Proxy
Statement.)
You will also be asked: (1) to elect DMC as the substitute general partner
of the Partnership, with the substitution to take effect only if the present
general partner is removed; (2) to approve a proposal to request that the
current general partner prepare and submit to the Limited Partners a proposal
for the conversion of the Partnership to a corporation; and (3) to adjourn the
Special Meeting in the event that there are not sufficient votes to remove the
present general partner so that additional votes may be solicited in favor of
such action.
WE URGE YOU TO VOTE "FOR" EACH OF THE PROPOSALS DESCRIBED ABOVE BY
COMPLETING, SIGNING, DATING AND RETURNING PROMPTLY THE ENCLOSED GOLD PROXY
CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED.
Very truly yours,
DAVENPORT MANAGEMENT CORPORATION
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Prime Motor Inns Limited Partnership
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Davenport Management Corporation
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
LOGO
PROXY
DAVENPORT MANAGEMENT CORPORATION
THIS PROXY IS BEING SOLICITED ON BEHALF OF DAVENPORT MANAGEMENT CORPORATION
FOR USE AT A SPECIAL MEETING OF LIMITED PARTNERS OF PRIME MOTOR INNS LIMITED
PARTNERSHIP SCHEDULED TO BE HELD ON JANUARY 29, 1998.
The undersigned hereby appoints Jerome S. Sanzo and Martin W. Field, and each
of them, as proxies of the undersigned, with full power of substitution, to
vote, as specified herein, all units of limited partnership interest ("Units")
of Prime Motor Inns Limited Partnership (the "Partnership") owned on the record
date by the undersigned at the Special Meeting of Limited Partners to be held
at 2:30 P.M., local time, on January 29, 1998, and any postponement or
adjournment thereof.
DAVENPORT MANAGEMENT CORPORATION RECOMMENDS A VOTE "FOR" EACH OF THE
FOLLOWING PROPOSALS:
1. PROPOSAL TO REMOVE PRIME-AMERICAN REALTY CORP. AS CURRENT GENERAL PARTNER OF
THE PARTNERSHIP
[_] FOR [_] AGAINST [_] ABSTAIN
2. PROPOSAL TO APPOINT DAVENPORT MANAGEMENT CORPORATION AS THE SUBSTITUTE
GENERAL PARTNER OF THE PARTNERSHIP, WITH THE SUBSTITUTION TO TAKE EFFECT
ONLY IF PRIME-AMERICAN REALTY CORP. IS REMOVED AS GENERAL PARTNER
[_] FOR [_] AGAINST [_] ABSTAIN
3. PROPOSAL TO REQUEST THAT THE GENERAL PARTNER PREPARE AND SUBMIT TO THE
LIMITED PARTNERS A PROPOSAL FOR THE CONVERSION OF THE PARTNERSHIP TO A
CORPORATION
[_] FOR [_] AGAINST [_] ABSTAIN
4. PROPOSAL TO ADJOURN THE SPECIAL MEETING TO PERMIT FURTHER SOLICITATION OF
PROXIES IN THE EVENT THAT THERE ARE NOT SUFFICIENT VOTES TO REMOVE PRIME-
AMERICAN REALTY CORP. AS GENERAL PARTNER OF THE PARTNERSHIP
[_] FOR [_] AGAINST [_] ABSTAIN
THE PROXIES NAMED ABOVE ARE HEREBY AUTHORIZED, IN THEIR DISCRETION, TO VOTE
UPON ANY AND ALL OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT OR POSTPONEMENT THEREOF.
THE UNITS REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED UNIT HOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED "FOR" THE PROPOSALS SET FORTH ABOVE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
Dated: ,199
--------------------------
---------------------------------------
(Signature)
---------------------------------------
(Title)
---------------------------------------
(Signature)
---------------------------------------
(Title)
IMPORTANT: Each joint owner should
sign. Executors, administrators,
trustees and others signing in a
representative capacity should give
full title. If a corporation, please
sign in full corporate name by
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
PLEASE MARK, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.