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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
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FILED BY REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
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Check the appropriate box: [ ] Definitive Additional Materials
[ ] Preliminary Proxy Statement [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
[x] Definitive Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[x] 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: $___________________
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:
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UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
June 1, 1998
Dear Unit Holder or Limited Partner:
We are very pleased to announce what we believe is an attractive opportunity for
the Partnership to refinance its existing variable-rate financing into a
fixed-rate financing. The refinancing, if effected, should enable the
Partnership to increase quarterly cash distributions and to make a substantial
payment to the Unit Holders and Limited Partners toward the shortfall in their
10% Cumulative Preferred Return.
The attached Proxy Statement describes the proposals to implement the
refinancing.
Before voting, we encourage Unit Holders and Limited Partners to examine
carefully the attached Proxy Statement for a description of the proposals. In
particular, Unit Holders and Limited Partners should read "INTRODUCTION--EFFECT
OF THE PROPOSALS" and "MATERIAL DIFFERENCES AND RISK FACTORS."
Your approval or disapproval can be given by completing, signing, and returning
the enclosed proxy card. In order for your vote to be effective, your signed
proxy card must be received by the General Partner prior to the Special Meeting
of the Partnership at 10 o'clock a.m. Eastern Daylight Savings Time on August 3,
1998, or any adjournments thereof. For your convenience, a self-addressed,
postage-paid return envelope has been enclosed.
We recommend you vote FOR all of the proposals. NONE OF THE PROPOSALS WILL BE
ADOPTED UNLESS ALL OF THE PROPOSALS ARE ADOPTED. See "CONFLICTS OF INTEREST"
regarding the General Partner's conflicts of interest in recommending the
proposals.
If you have any questions about completing the proxy card or any other aspect of
the proposals, please call 1-800-541-7767.
Sincerely,
Paul M. Zlotoff
Paul M. Zlotoff,
as general partner of Genesis Associates
Limited Partnership,
General Partner of Uniprop Manufactured
Housing Communities Income Fund II
<PAGE> 3
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
A MICHIGAN LIMITED PARTNERSHIP
280 DAINES STREET, SUITE 300, BIRMINGHAM, MICHIGAN 48009
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NOTICE OF SPECIAL MEETING OF THE UNIT HOLDERS AND LIMITED PARTNERS TO
BE HELD ON AUGUST 3, 1998.
NOTICE IS HEREBY GIVEN that a special meeting of the unit holders and limited
partners (collectively, the "Limited Partners") of Uniprop Manufactured Housing
Communities Income Fund II, a Michigan limited partnership (the "Partnership"),
will be held at the principal executive offices of the Partnership at 280 Daines
Street, Suite 300, Birmingham, Michigan 48009, on August 3, 1998, at 10:00 a.m.
Eastern Daylight Savings Time, or at any postponement or adjournment thereof
(the "Special Meeting"), for the following purposes, as more fully described in
the attached Proxy Statement (the "Proxy Statement"):
THE PROPOSALS
1. To consider and act upon the following Proposals (each, a "Proposal"):
- to authorize the Partnership to borrow up to an aggregate principal
amount not to exceed $30,000,000 (the "Refinancing"), the proceeds of
which will be used to refinance the Partnership's outstanding
indebtedness of approximately $30,045,000 (the "Existing Indebtedness"),
and to secure the indebtedness incurred by the Partnership under and
pursuant to the agreements, documents and instruments evidencing the
proposed Refinancing, including, without limitation, all accrued and
unpaid interest thereon, with a lien and security interest on seven of
its nine manufactured home communities (such properties subject to such
liens and security interests, collectively the "Mortgaged Properties")
and the proceeds thereof (together with the Mortgaged Properties, the
"Collateral");
- to authorize the Partnership to liquidate the Partnership's interest in
two of the Uniprop MHC Mortgage Pass-Through Certificates, Series 1993-1
(the "Mortgage-Backed Securities") issued to the Partnership by a grantor
trust designed to take advantage of pass-through tax treatment (the
"Trust") in connection with the transactions contemplated by the Existing
Indebtedness, and to distribute the proceeds of such liquidation, net of
a fee and expenses, to the Limited Partners; specifically, to liquidate
all of its right, title and interest in and to (a) its residual interest
in the Trust, which interest has a liquidation value of approximately
$2,300,000 and is represented by the Partnership's interest in the
Uniprop MHC Mortgage Pass-Through Certificate, Series 1993-1, Class R,
issued by the Trust to Uniprop MHC Residual L.L.C., a Michigan limited
liability company of which the Partnership is a member ("Uniprop MHC")
(the "Class R Security" and said liquidation, the "Residual Interest
Liquidation"), and (b) the Uniprop MHC Mortgage Pass-Through Certificate,
Series 1993-1, Class D, issued by the Trust to the Partnership and valued
at $1,502,250 (the "Class D Security" and said liquidation, the "Class D
Liquidation"), and distribute the aggregate gross proceeds of the
Residual Interest Liquidation (after the payment of (i) the "Refinancing
Fee" (as defined below), and (ii) up to $600,000, in the aggregate, for
legal fees, underwriting fees, accountants' fees, fees of other
professionals, closing costs, filing fees and other similar fees, costs
and expenses incurred by the Partnership in connection with the
consummation of the transactions contemplated by the proposed Refinancing
and the related Proposals) and the aggregate gross proceeds of the Class
D Liquidation to the Limited Partners pursuant to and in accordance with
Section 11 of the Partnership's Agreement of Limited Partnership (as in
effect on the date hereof, the "Partnership Agreement");
- to authorize the Partnership to pay a fee of approximately $300,000 from
the aggregate gross proceeds of the Residual Interest Liquidation to an
affiliate of Genesis Associates Limited Partnership, the general partner
of the Partnership (the "General Partner"), for its services in arranging
the proposed Refinancing (the "Refinancing Fee"); and
- to approve the "Second Amendment" to the Partnership Agreement (as
defined in the Proxy Statement) and authorize the execution, delivery and
filing thereof.
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<PAGE> 4
and to consider and approve such actions as are necessary or appropriate to
effectuate the foregoing Proposals, all as more fully described in the Proxy
Statement.
THE EFFECTIVENESS OF EACH PROPOSAL IS CONDITIONED ON THE APPROVAL OF ALL OF THE
OTHER PROPOSALS. ACCORDINGLY, A VOTE AGAINST ONE PROPOSAL WILL HAVE THE EFFECT
OF A VOTE AGAINST ALL OF THE PROPOSALS AS A GROUP.
THE EFFECTIVENESS OF EACH PROPOSAL IS FURTHER CONDITIONED ON THE TRUST'S (1)
APPLYING THE AGGREGATE PROCEEDS OF PREPAYMENTS BY SOME OR ALL OF THE "BORROWERS"
(AS DEFINED IN THE PROXY STATEMENT) OF THEIR INDEBTEDNESS UNDER THE MORTGAGE
NOTES, DATED AS OF DECEMBER 1, 1993, EXECUTED BY SUCH BORROWERS AND PAYABLE TO
THE ORDER OF NEUTRON-UNIPROP, INC. ("NEUTRON") AND ASSIGNED BY NEUTRON TO THE
TRUST (EACH SUCH MORTGAGE NOTE, A "MORTGAGE NOTE") TO THE PAYMENT OF THE CLASS
A, CLASS B, AND CLASS C MORTGAGE-BACKED SECURITIES, (2) PAYING IN FULL ALL
AMOUNTS DUE AND PAYABLE UNDER THE CLASS D SECURITY AND THE CLASS R SECURITY OR
THE PARTNERSHIP'S OTHERWISE REALIZING THE VALUE OF THE CLASS D SECURITY AND THE
CLASS R SECURITY, AND (3) RELEASING AND TERMINATING THE "MORTGAGES" (AS DEFINED
IN THE PROXY STATEMENT). THE PARTNERSHIP WILL NOT BE ABLE TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED BY THE PROPOSALS UNLESS THE FOREGOING CONDITIONS ARE
FULLY SATISFIED EVEN IF IT OBTAINS THE REQUISITE NUMBER OF VOTES OF THE LIMITED
PARTNERS TO THE PROPOSALS. SEE "INTRODUCTION--VOTING REQUIREMENTS AND OTHER
CONDITIONS--CONDITIONS."
2. To consider and act upon such other matters, if any, as may properly come
before the Special Meeting.
If the Proposals are adopted and implemented, the Partnership interests
of the Limited Partners would be materially modified. Specifically, the
Proposals:
- will, in the event the proposed Refinancing is for a 30 year term (i.e.
the maximum term contemplated by the Proposals), require the Partnership
to make payments on indebtedness for borrowed money for a period of six
years longer than that contemplated by the Existing Indebtedness and
thus: (a) increase the risk that the portion of the Limited Partners'
investment in the Partnership that has not been returned will be lost or
reduced in value; (b) increase the Partnership's operating costs during
such six year period; and (c) reduce the amount of cash distributions
from the Partnership to the Limited Partners during such six year period;
- will, in the event the proposed Refinancing is for a term of less than 30
years but is structured with an amortization longer than the term with a
final payment due and payable on the last day of such term in an amount
equal to the outstanding indebtedness under the proposed Refinancing (the
"Balloon Payment"), result in the Partnership's having insufficient funds
to make the Balloon Payment which could in turn cause the Limited
Partners' investment in the Partnership to be lost unless the Partnership
is able to refinance the indebtedness evidenced by the Balloon Payment;
and
- will, contrary to the current provisions of the Partnership Agreement,
authorize the Partnership to:
(i) borrow up to an aggregate principal amount not to exceed $30,000,000,
the proceeds of which will be used to refinance the Existing
Indebtedness, and to secure the indebtedness incurred by the
Partnership under and pursuant to the agreements, documents and
instruments evidencing the proposed Refinancing, including, without
limitation, all accrued and unpaid interest thereon, with a lien and
security interest on the Collateral;
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<PAGE> 5
(ii) liquidate all of its right, title and interest in and to the Class
R Security and the Class D Security and distribute the aggregate
gross proceeds of the Residual Interest Liquidation (after the
payment of (a) the Refinancing Fee of approximately $300,000, and
(b) up to $600,000, in the aggregate, for legal fees, underwriting
fees, accountants' fees, fees of other professionals, closing
costs, filing fees and other similar fees, costs and expenses
incurred by the Partnership in connection with the consummation of
the transactions contemplated by the proposed Refinancing and the
related Proposals) and the aggregate gross proceeds of the Class D
Liquidation to the Limited Partners pursuant to and in accordance
with Section 11 of the Partnership Agreement; and
(iii) pay the Refinancing Fee of approximately $300,000 from the
aggregate gross proceeds of the Residual Interest Liquidation to
Uniprop, Inc., the managing general partner of the General Partner,
for its services in arranging the proposed Refinancing, with the
result that the Limited Partners will receive approximately $0.09
less per unit of beneficial assignment of limited partnership
interest (a "Unit") from the aggregate net proceeds of the proposed
Residual Interest Liquidation than they otherwise would.
GENERAL PARTNER'S CONFLICTS OF INTEREST
The General Partner is subject to conflicts of interest in connection with the
Proposals since Uniprop, Inc., the managing general partner of the General
Partner, will be receiving the Refinancing Fee of approximately $300,000 from
the aggregate gross proceeds of the Residual Interest Liquidation for its
services in arranging the proposed Refinancing. Several of the Borrowers under
the Existing Indebtedness are affiliated with the general partner of the General
Partner. If the Refinancing is approved and accomplished, it is likely that the
loans to these affiliated Borrowers will be refinanced concurrently as part of
the same financing package. While the Collateral will not serve as collateral
for a loan to any Borrower other than the Partnership, it is likely that the
affiliated Borrowers will obtain better terms on their refinancings as a result
of the inclusion of the Collateral in the Refinancing.
The General Partner has not retained an unaffiliated representative to act on
behalf of the Limited Partners.
See "Conflicts of Interest" in the accompanying Proxy Statement for a more
detailed discussion of these matters.
THE CONSULTANT
Manufactured Housing Services, Inc., a New York corporation and a consultant to
the Partnership (the "Consultant"), pursuant to a Consulting Agreement, dated
December 23, 1986 and amended as of January 9, 1998, entered into between Hutton
Manufactured Housing Services, Inc., a predecessor in interest of the
Consultant, and the Partnership at the time the Units were offered to the
public, has issued a Consultant's Statement dated May 8, 1998 (the "Consultant's
Statement") with respect to the Proposals. The Consultant has recommended that
the Limited Partners vote FOR the implementation of the Proposals. The
Consultant's statement is subject to certain assumptions and limitations. See
"Consulting Agreement and Consultant's Statement" in the Proxy Statement.
The General Partner has fixed 5:00 p.m., local time, on May 13, 1998 as the
record date for determining the Limited Partners entitled to notice of, and to
vote at, the Special Meeting or at any adjournment thereof.
You are cordially invited to attend the Special Meeting in person. To ensure
your representation at the Special Meeting, however, please promptly complete,
date, sign and return the enclosed proxy in the accompanying envelope. If you
should decide to attend the Special Meeting and vote your Partnership interests
in person, you may revoke your proxy at that time.
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<PAGE> 6
Requests for information regarding the attached Proxy Statement can be directed
to the General Partner's Investor Relations Department, at 280 Daines Street,
Suite 300, Birmingham, Michigan 48009, telephone number (800) 541-7767.
Paul M. Zlotoff
Paul M. Zlotoff,
as general partner
of Genesis Associates
Limited Partnership,
General Partner of Uniprop
Manufactured Housing
Communities Income Fund II
Birmingham, Michigan
June 1, 1998
YOUR VOTE IS IMPORTANT. PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY,
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE SPECIAL MEETING.
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PROXY STATEMENT
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
A MICHIGAN LIMITED PARTNERSHIP
280 DAINES STREET, SUITE 300, BIRMINGHAM, MICHIGAN 48009
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SPECIAL MEETING OF UNIT HOLDERS AND LIMITED PARTNERS
TO BE HELD ON AUGUST 3, 1998
INTRODUCTION
This Proxy Statement is being furnished in connection with the solicitation of
proxies from the unit holders and limited partners (collectively, the "Limited
Partners") of Uniprop Manufactured Housing Communities Income Fund II, a
Michigan limited partnership (the "Partnership"), by Genesis Associates Limited
Partnership, the general partner of the Partnership (the "General Partner"), on
behalf of the Partnership for use at a special meeting of the Limited Partners
to be held at the principal executive offices of the Partnership at 280 Daines
Street, Suite 300, Birmingham, Michigan 48009, on August 3, 1998, at 10:00 a.m.
Eastern Daylight Savings Time or at any postponement or adjournment thereof (the
"Special Meeting"). This Proxy Statement and the enclosed revocable proxy are
first being mailed to the Limited Partners on or about June 8, 1998. The date of
this Proxy Statement is June 1, 1998.
THE PROPOSALS
At the Special Meeting, the Limited Partners will be asked to act upon the
following Proposals (each, a "Proposal"):
- To authorize the Partnership to borrow up to an aggregate principal
amount not to exceed $30,000,000 (the "Refinancing"), the proceeds of
which will be used to refinance the Partnership's outstanding
indebtedness of $30,045,000 (the "Existing Indebtedness"), and to
secure the indebtedness incurred by the Partnership under and
pursuant to the agreements, documents and instruments evidencing the
proposed Refinancing, including, without limitation, all accrued and
unpaid interest thereon, with a lien and security interest on seven
of its nine manufactured home communities (such properties subject to
such liens and security interests, collectively the "Mortgaged
Properties") and the proceeds thereof (together with the Mortgaged
Properties, the "Collateral"). If the Refinancing is approved, the
Refinancing will be structured as a conventional loan within the
parameters set forth in this Proxy Statement.
- To authorize the Partnership to liquidate the Partnership's interest
in two of the Uniprop MHC Mortgage Pass-Through Certificates, Series
1993-1 (the "Mortgage-Backed Securities") issued to the Partnership
by a grantor trust designed to take advantage of pass-through tax
treatment (the "Trust") in connection with the transactions
contemplated by the Existing Indebtedness, and to distribute the
proceeds of such liquidation, net of a fee and expenses, to the
Limited Partners; specifically, to liquidate all of its right, title
and interest in and to (a) its residual interest in the Trust, which
interest has a liquidation value of approximately $2,300,000 and is
represented by the Partnership's interest in the Uniprop MHC Mortgage
Pass-Through Certificate, Series 1993-1, Class R, issued by the Trust
to Uniprop MHC Residual L.L.C., a Michigan limited liability company
of which the Partnership is a member ("Uniprop MHC") (the "Class R
Security" and said liquidation, the "Residual Interest Liquidation"),
and (b) the Uniprop MHC Mortgage Pass-Through Certificate, Series
1993-1, Class D, issued by the Trust to the Partnership and valued at
$1,502,250 (the "Class D Security" and said liquidation, the "Class D
Liquidation"), and distribute the aggregate gross proceeds of the
Residual Interest Liquidation (after the payment of (i) the
"Refinancing Fee" (as defined below), and (ii) up to $600,000, in the
aggregate, for legal fees, underwriting fees, accountants' fees, fees
of other professionals, closing costs, filing fees and other similar
fees, costs and expenses (the "Transaction Costs") incurred by the
Partnership in connection with the consummation of the transactions
contemplated by the proposed Refinancing and the related Proposals)
and the aggregate gross proceeds of the
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Class D Liquidation to the Limited Partners pursuant to and in
accordance with Section 11 of the Agreement of Limited Partnership of
the Partnership as in effect on the date hereof (the "Partnership
Agreement").
- To authorize the Partnership to pay a fee, in an amount not to
exceed 1% of the gross aggregate principal amount of the proposed
Refinancing (i.e. approximately $300,000), from the aggregate gross
proceeds of the Residual Interest Liquidation to Uniprop, Inc., the
managing general partner of the General Partner, for its services in
arranging the proposed Refinancing (the "Refinancing Fee").
- To approve the "Second Amendment" (as defined below) and authorize
the execution, delivery and filing thereof.
IT IS A CONDITION TO THE IMPLEMENTATION OF EACH OF THE PROPOSALS, AND THE
CORRESPONDING AMENDMENTS TO THE PARTNERSHIP AGREEMENT, THAT ALL OF THE PROPOSALS
BE APPROVED BY THE LIMITED PARTNERS. ACCORDINGLY, A VOTE AGAINST ONE PROPOSAL
WILL HAVE THE EFFECT OF A VOTE AGAINST ALL OF THE PROPOSALS AS A GROUP. See "The
Proposals" for more detailed information regarding each of the Proposals.
THE EFFECTIVENESS OF EACH PROPOSAL IS FURTHER CONDITIONED ON THE TRUST'S (1)
APPLYING THE AGGREGATE PROCEEDS OF PREPAYMENTS BY SOME OR ALL OF THE "BORROWERS"
(AS DEFINED IN THE PROXY STATEMENT) OF THEIR INDEBTEDNESS UNDER THE MORTGAGE
NOTES, DATED AS OF DECEMBER 1, 1993, EXECUTED BY SUCH BORROWERS AND PAYABLE TO
THE ORDER OF NEUTRON-UNIPROP, INC. ("NEUTRON") AND ASSIGNED BY NEUTRON TO THE
TRUST (EACH SUCH MORTGAGE NOTE, A "MORTGAGE NOTE") TO THE PAYMENT OF THE CLASS
A, CLASS B, AND CLASS C MORTGAGE-BACKED SECURITIES, (2) PAYING IN FULL ALL
AMOUNTS DUE AND PAYABLE UNDER THE CLASS D SECURITY AND THE CLASS R SECURITY OR
THE PARTNERSHIP'S OTHERWISE REALIZING THE VALUE OF THE CLASS D SECURITY AND THE
CLASS R SECURITY, AND (3) RELEASING AND TERMINATING THE "MORTGAGES" (AS DEFINED
HEREIN). THE PARTNERSHIP WILL NOT BE ABLE TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED BY THE PROPOSALS UNLESS THE FOREGOING CONDITIONS ARE FULLY
SATISFIED EVEN IF IT OBTAINS THE REQUISITE NUMBER OF VOTES OF THE LIMITED
PARTNERS TO THE PROPOSALS. SEE "INTRODUCTION--VOTING REQUIREMENTS AND OTHER
CONDITIONS--CONDITIONS."
AMENDMENTS TO THE PARTNERSHIP AGREEMENT
A copy of the proposed Second Amendment to the Agreement of Limited Partnership
(the "Second Amendment") containing the amendments to the Partnership Agreement
is attached hereto as Exhibit A and made a part hereof. The information in this
Proxy Statement is qualified in its entirety by the provisions of the
Partnership Agreement and the Second Amendment, and the Limited Partners are
urged to review carefully such documents with their attorneys, accountants and
investment advisers.
EFFECT OF THE PROPOSALS
If the Proposals are adopted and implemented, the Partnership interests of the
Limited Partners would be materially modified. Specifically, the Proposals:
- will, in the event the proposed Refinancing is for a 30 year term
(i.e. the maximum term contemplated by the Proposals), require the
Partnership to make payments on indebtedness for borrowed money for a
period of six years longer than that contemplated by the Existing
Indebtedness and thus (a) increase the risk that the portion of the
Limited Partners' investment in the Partnership that has not been
returned will be lost or reduced in value, (b) increase the
Partnership's operating costs during such six year period, and (c)
reduce the amount of cash distributions from the Partnership to the
Limited Partners during such six year period;
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<PAGE> 9
- will, in the event the proposed Refinancing is for a term of less
than 30 years but is structured with an amortization longer than the
term with a final payment due and payable on the last day of such
term in an amount equal to the outstanding indebtedness under the
proposed Refinancing (the "Balloon Payment"), result in the
Partnership's having insufficient funds to make the Balloon Payment
which could in turn cause the Limited Partners' investment in the
Partnership to be lost unless the Partnership is able to refinance
the indebtedness evidenced by the Balloon Payment; and
- will, contrary to the current provisions of the Partnership
Agreement, authorize the Partnership to:
(i) borrow up to an aggregate principal amount not to exceed
$30,000,000, the proceeds of which will be used to refinance the
Existing Indebtedness, and to secure the indebtedness incurred
by the Partnership under and pursuant to the agreements,
documents and instruments evidencing the proposed Refinancing,
including, without limitation, all accrued and unpaid interest
thereon, with a lien and security interest on the Collateral;
(ii) liquidate all of its right, title and interest in and to the
Class R Security and the Class D Security and distribute the
aggregate gross proceeds of the Residual Interest Liquidation
(after the payment of (a) the Refinancing Fee of approximately
$300,000, and (b) up to $600,000, in the aggregate, in
Transaction Costs) and the aggregate gross proceeds of the Class
D Liquidation to the Limited Partners pursuant to and in
accordance with Section 11 of the Partnership Agreement; and
(iii)pay the Refinancing Fee of approximately $300,000 from the
aggregate gross proceeds of the Residual Interest Liquidation to
Uniprop, Inc., the managing general partner of the General
Partner, for its services in arranging the proposed Refinancing,
with the result that the Limited Partners will receive
approximately $0.09 less per unit of beneficial assignment of
limited partnership interest (a "Unit") from the aggregate net
proceeds of the proposed Residual Interest Liquidation than they
otherwise would.
See "Material Differences and Risk Factors" for a more detailed discussion of
these matters.
GENERAL PARTNER'S CONFLICTS OF INTEREST
The General Partner is subject to conflicts of interest in connection with the
Proposals. Uniprop, Inc., the managing general partner of the General Partner,
will be receiving the Refinancing Fee of approximately $300,000 from the
aggregate gross proceeds of the Residual Interest Liquidation for its services
in arranging the proposed Refinancing. Several of the Borrowers under the
Existing Indebtedness are affiliated with the general partner of the General
Partner. If the Refinancing is approved and accomplished, it is likely that the
loans to these affiliated Borrowers will be refinanced concurrently as part of
the same financing package. While the Collateral will not serve as collateral
for a loan to any Borrower other than the Partnership, it is likely that the
affiliated Borrowers will obtain better terms on their refinancings as a result
of the inclusion of the Collateral in the Refinancing.
The General Partner has not retained an unaffiliated representative to act on
behalf of the Limited Partners.
See "Conflicts of Interest" for a more detailed discussion of these matters.
ADVANTAGES OF THE PROPOSALS
The General Partner believes that the proposed Refinancing would offer the
following advantages to the Limited Partners:
- The proposed Refinancing should enable the Partnership to increase
quarterly cash distributions to Limited Partners by approximately 15%
(i.e. an annual increase of approximately $0.11 per Unit). If the
Refinancing is not accomplished, the General Partner does not expect
to
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<PAGE> 10
be able to increase quarterly cash distributions in the foreseeable
future. The Existing Indebtedness would require the Partnership to
commence making principal payments of approximately $337,081 per
annum (i.e., 1.107% of the outstanding principal amount of the
Existing Indebtedness) beginning January 1, 1999, thus precluding a
current increase in quarterly cash distributions notwithstanding the
increase in the Partnership's net operating income in 1997.
- The proposed Refinancing would lock in a fixed interest rate which
would be lower than the variable interest rate currently payable with
respect to the Existing Indebtedness and thus decrease the
Partnership's debt service obligations. Furthermore, a fixed interest
rate will permit the Partnership to predict its debt service
obligations and plan accordingly. The interest rate on the Existing
Indebtedness is variable and could increase to as high as 9.9% per
annum through December 1, 2003 and to as high as 10.9% per annum
thereafter if market interest rates increased. Under such formula,
the Partnership paid an average of approximately 9% per annum in
interest during 1997. See "--Interest Rate on Existing Indebtedness,"
below.
- Two relatively high risk securities currently held by the
Partnership, the Class D Security and the Class R Security, would be
liquidated. After payment of the Refinancing Fee and the Transaction
Costs, the proceeds of the liquidation of these securities,
approximately $2.5 million, would be distributed to the Limited
Partners as a partial payment against the current shortfall in their
10% Cumulative Preferred Return. Limited Partners would receive
approximately $0.75 per Unit.
The General Partner believes that the proposed Refinancing offers these
advantages because: (i) market interest rates will be more favorable when the
proposed Refinancing is consummated than they were when the Existing
Indebtedness was incurred; and (ii) the increase in value and improvement in
operating performance of the Mortgaged Properties since 1993 will cause the
interest rate on the proposed Refinancing to be lower than the interest rate
currently charged on the Existing Indebtedness. See "The Proposals--The
Refinancing and Granting of Mortgages on the Partnership's
Properties--Background."
The General Partner believes that the Proposals are fair to the Limited Partners
and that, as a result of the proposed structure of the proposed Refinancing, the
interest costs to the Partnership under the proposed Refinancing will be lower
than such costs under the Existing Indebtedness. The General Partner believes
that the Proposals are more advantageous to the Partnership than other
alternatives considered by the General Partner, namely, structuring the proposed
Refinancing as a financing involving the issuance of mortgage-backed securities,
liquidating the Partnership, or continuing the business of the Partnership in
accordance with its existing business plan. See "Recommendations of General
Partner" for a more detailed discussion of certain of these matters.
INTEREST RATE ON EXISTING INDEBTEDNESS
The Existing Indebtedness bears interest at the "Effective Interest Rate" (as
hereinafter defined). The "Effective Interest Rate" equals the "Weighted
Average" (as hereinafter defined) of the interest rates payable under each of
the Mortgage-Backed Securities plus (a) 1.35% per annum during the period
between December 1, 1993 (the "Closing Date") and the day immediately preceding
the tenth anniversary of that date (the "First Period"), and (b) 2.35% per annum
during the period between the tenth anniversary of the Closing Date and December
1, 2023 (the "Second Period"); provided, however, that the Effective Interest
Rate (i) in the First Period shall not exceed 9.9% or fall below 7%; and (ii) in
the Second Period shall not exceed 10.9% or fall below 8%. Under such formula,
the Partnership paid an average of approximately 9% per annum in interest during
1997. If the Partnership is able to realize the value of the Class R Security,
some portion of the amounts paid as interest by the Partnership under the
Existing Indebtedness may inure to the benefit of the Partnership. The ability
of the Partnership to realize any value from the Class R Security is dependent,
among other things, on the continued performance by the Borrowers of their
obligations under the Mortgage Notes.
The Weighted Average of the interest rates payable under the Mortgage-Backed
Securities is equal to the sum of the products derived by multiplying the
interest rate applicable to each of the Mortgage-Backed Securities for any
"Interest Accrual Period" (as hereinafter defined) by the percentage that the
outstanding principal balance of each class of Mortgage-Backed Securities bears
to the aggregate principal balances
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of all of the Mortgage-Backed Securities. The "Interest Accrual Period" is the
period commencing on the first day of each month and ending on (but not
including) the first day of the next month.The interest rates payable under each
of the Mortgage-Backed Securities is as follows:
Class A Securities: variable rate equal to "Base LIBOR" (as hereinafter
defined) plus 1.67% per annum, but not to exceed 9.74% for the First Period
and 10.74% for the Second Period.
Class B Securities: fixed rate equal to 7.04% per annum.
Class C Securities: variable rate equal to Base LIBOR plus 2.5% per annum,
but not to exceed 9.74% for the First Period and 10.74% for the Second
Period.
Class D Securities: fixed rate equal to 7.5% per annum.
The "Base LIBOR" rate for an Interest Accrual Period is determined as follows:
(i) if on any "Interest Determination Date" (as hereinafter defined) two or more
"Reference Banks" (as hereinafter defined) provide such offered quotations, the
Base LIBOR rate shall mean the arithmetic mean of such offered quotations
(rounding such arithmetic mean upwards if necessary to the nearest whole
multiple of 1/14%); and (ii) if on any Interest Determination Date only one or
none of the Reference Banks provides such offered quotations, the Base LIBOR
rate shall be whichever is the higher of (x) the Base LIBOR rate as determined
on the previous Interest Determination Date; and (y) the "Reserve Interest Rate"
(as hereinafter defined). The "Reserve Interest Rate" is the rate per annum that
the paying agent, which is appointed by the trustee of the Trust (the "Paying
Agent") for the purpose of making distributions to holders of the
Mortgage-Backed Securities, determines to be either: (i) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 1/14%) of the
one-month U.S. dollar lending rates that New York City banks selected by the
Paying Agent are quoting, on the relevant Interest Determination Date, to the
principal London offices of at least two of the Reference Banks to which such
quotations are, in the opinion of the Paying Agent, being so made; or (ii) in
the event that the Paying Agent can determine no such arithmetic mean, the
lowest one-month United States dollar lending rate which New York City banks
selected by such Paying Agent are quoting on such Interest Determination Date to
leading European banks. The "Interest Determination Date" is the second LIBOR
Business Day (i.e., the day on which banks are open for dealing in foreign
currency and exchange in New York and London) of each calendar month prior to
the 15th day of such calendar month. A "Reference Bank" is a bank that: (i) is a
leading bank engaged in transactions in Eurodollar deposits in the international
Eurocurrency market; (ii) has an established place of business in London; and
(iii) does not control, is not controlled by and is not under common control
with Neutron, in its capacity as originator or previous owner of the Mortgage
Notes. The initial Reference Banks will be the Bank of Tokyo, Ltd., Barclay's
Bank Plc, National Westminster Bank, Plc, and Bankers Trust Company; provided,
that if any of the above-referenced banks are not offering LIBOR quotations, or
if the Reuters Screen LIBOR Page is unavailable for any reason, the trustee
under the Trust may designate alternative Reference Banks.
THE CONSULTANT
Manufactured Housing Services, Inc., a New York corporation and a consultant to
the Partnership (the "Consultant"), pursuant to a Consulting Agreement, dated
December 23, 1986 and amended as of January 9, 1998, entered into between Hutton
Manufactured Housing Services, Inc., a predecessor in interest of the
Consultant, and the Partnership at the time the Units were offered to the
public, has issued a Consultant's Statement dated May 8, 1998 (the "Consultant's
Statement") with respect to the Proposals. The Consultant has recommended that
the Limited Partners vote FOR the implementation of the Proposals.
See "Consulting Agreement and Consultant's Statement" for a more detailed
discussion of these matters. A copy of the Consultant's Statement is attached
hereto as Exhibit B and made a part hereof.
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VOTING REQUIREMENTS AND OTHER CONDITIONS
Vote under the Partnership Agreement. Under the Partnership Agreement, the
affirmative vote of Limited Partners holding more than 50% of the outstanding
Units is necessary for the adoption of each of the Proposals. None of the
Proposals will be implemented unless all of the other Proposals are approved by
the Limited Partners. Accordingly, a vote against one Proposal will have the
effect of a vote against all of the Proposals as a group.
Conditions. In 1992, the Partnership, affiliates of the General Partner and
affiliates of an unrelated third party (the "Borrowers") established Neutron
which in turn established the Trust in order to obtain financing for the
Borrowers (the "Existing Financing"). In connection with the transactions
contemplated by the Existing Financing, each Borrower issued a Mortgage Note to
Neutron which was secured by certain manufactured home communities owned by such
Borrower (collectively, the "Mortgages"). The Mortgage Note issued by the
Partnership is secured by the Collateral. Immediately upon the execution and
delivery of the Mortgage Notes to Neutron, Neutron assigned the Mortgage Notes
to the Trust, which then issued the Mortgage-Backed Securities to the Borrowers
and other investors. The proceeds of the Mortgage-Backed Securities were used by
Neutron to fund the Mortgage Notes. In addition, the right to receive payments
under each Mortgage was assigned by Neutron to the Trust. As payments are
received by the Trust on the Mortgages, the proceeds thereof are distributed to
the holders of the Mortgage-Backed Securities pursuant to the terms of the
Pooling and Servicing Agreement, dated as of December 1, 1993, among Neutron,
Union Bank as trustee under the Trust, and Bankers Trust Company (the "Servicing
Agreement"). See "The Proposals--The Refinancing and Granting of Mortgages on
the Partnership's Properties--Background" for the background and a description
of the Existing Financing.
The Partnership will not consummate the proposed Refinancing unless the
following conditions are satisfied: the Trust must (i) apply the proceeds from
the prepayment of the Mortgage Notes to pay down the Class A, Class B and Class
C Mortgage-Backed Securities, (ii) pay in full all amounts due and payable under
the Class D Security and the Class R Security or the Partnership must otherwise
realize the value of the Class D Security and the Class R Security, and (iii)
release and terminate the Mortgages. The terms of the Mortgage Notes permit the
Borrowers to prepay the outstanding indebtedness evidenced by the Mortgage
Notes. Such prepayment is not prohibited by the Servicing Agreement. See "The
Proposals--The Refinancing and Granting of Mortgages on the Partnership's
Properties--Background." The Partnership will not consummate the transactions
contemplated by the Proposals unless the foregoing conditions are fully
satisfied even if it obtains the requisite number of votes of the Limited
Partners to the Proposals.
Borrowers who are affiliates of the General Partner have orally consented to the
prepayment of their indebtedness under the Mortgage Notes executed by them.
The Borrowers which are unaffiliated with the General Partner (the "Unaffiliated
Borrowers") are expected to refinance their mortgages with a lender other than
the Lender that will be providing the Refinancing. Unless the Unaffiliated
Borrowers refinance their Mortgage Notes prior to or concurrently with the
Refinancing, the Partnership may not be able to liquidate its interest in the
Class D Security and the Class R Security at the time of the Refinancing.
Consequently, the Partnership will not undertake the Refinancing, even if the
Proposals are approved, unless the Unaffiliated Borrowers have already
refinanced their Mortgage Notes or will refinance their Mortgage Notes
concurrently with the Refinancing or unless the Partnership can realize the
value of the Class D Security and the Class R Security by other means.
APPRAISAL RIGHTS AND ACCESS TO PARTNERSHIP RECORDS
Neither the Partnership Agreement nor Michigan law provides any right for
Limited Partners to have their respective Units appraised or redeemed in
connection with or as a result of the implementation of the Proposals.
Therefore, while each Limited Partner has the opportunity to make an individual
decision on whether to vote for any of the Proposals, a Limited Partner who
votes against the Proposals will have no right to have its Units redeemed for
cash if the Proposals are approved.
Under Michigan law any Limited Partner is entitled, upon reasonable request and
at such Limited Partner's expense, to inspect and copy, during the Partnership's
normal business hours, a list of the names and
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<PAGE> 13
addresses of each partner of the Partnership. Under the Partnership Agreement,
any Limited Partner is entitled: (i) to inspect and examine the Partnership's
books and records of account upon reasonable notice (e.g., written or telephonic
notice received one week in advance of proposed examination) during business
hours; and (ii) to receive by mail, upon written request to the Partnership and
at such Limited Partner's sole cost and expense, a copy of a list of names and
addresses of the Limited Partners and the number of Units owned by each of them.
Under the federal proxy rules a Limited Partner may request that the Partnership
provide such Limited Partner with a list of Limited Partners or mail soliciting
materials to other Limited Partners. The Partnership may either provide the list
or mail the materials, at the Partnership's option. If the Partnership provides
such a list, the Limited Partner must undertake that such Limited Partner will
not use the list information for any purpose other than to solicit Limited
Partners with respect to the subject matter of the meeting. The Limited Partner
must also return the list without retaining any copies thereof.
MATERIAL DIFFERENCES AND RISK FACTORS
If the Proposals are adopted and implemented, the Partnership interests of the
Limited Partners will be modified or affected in the following material ways:
EXTEND MATURITY DATE OF FINANCING
The Existing Indebtedness provides for payments of principal and interest
through 2023. If the Proposals are approved and implemented, the terms of the
proposed Refinancing may extend the maturity date and could require the
Partnership to make payments of principal and interest through 2029. In the
event the proposed Refinancing is for a 30 year term (i.e. the maximum term
contemplated by the Proposals), the Partnership will be required to make
payments on indebtedness for borrowed money for a period of six years longer
than that contemplated by the Existing Indebtedness and thus: (a) increase the
risk that the portion of the Limited Partners' investment in the Partnership
that has not been returned will be lost or reduced in value; (b) increase the
Partnership's operating costs during such six year period; and (c) reduce the
amount of cash distributions from the Partnership to the Limited Partners during
such six year period.
REMAINING INVESTMENT MAY BE APPLIED TO BALLOON PAYMENT
In the event the proposed Refinancing is for a term of less than 30 years but is
structured with an amortization longer than the term with a final payment due
and payable on the last day of such term in an amount equal to the Balloon
Payment, the Partnership may have insufficient funds to make the Balloon
Payment. This would in turn cause part or all of the Limited Partners'
investment in the Partnership to be lost unless the Partnership is able to
refinance the indebtedness evidenced by the Balloon Payment. There can be no
assurance that the Partnership will be able to obtain such refinancing. Such
refinancing could not be accomplished without an additional amendment to the
Partnership Agreement effected with the approval of a majority in interest of
the Limited Partners.
MAKE ADDITIONAL PAYMENT TO AFFILIATE OF GENERAL PARTNER
The Partnership will be authorized to pay the Refinancing Fee of approximately
$300,000 to Uniprop, Inc., the managing general partner of the General Partner,
for its services in arranging the proposed Refinancing. The Refinancing Fee will
be paid from the aggregate gross proceeds of the Residual Interest Liquidation.
Under the Partnership Agreement there is no specific authorization for the
payment of the Refinancing Fee. Accordingly, the payment of the Refinancing Fee
must be authorized in an amendment to the Partnership Agreement. If the payment
of the Refinancing Fee to Uniprop, Inc. were not authorized, the Partnership
would be required to distribute the amount of the Refinancing Fee (approximately
$300,000) to the Limited Partners. If the Refinancing Fee is authorized, the
aggregate amount of the Residual Interest Liquidation proceeds that will be
distributed to the Limited Partners will be reduced by an amount equal to the
Refinancing Fee. See "The Proposals--Proposal No. 2: The Liquidation" and "The
Proposals--Proposal No. 3: Payment of Refinancing Fee to Affiliate of General
Partner and Payment of Transaction Costs."
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<PAGE> 14
REDUCE DISTRIBUTION TO LIMITED PARTNERS; INCREASE CAPITAL REMAINING AT RISK
The Partnership will be authorized to pay from the aggregate gross proceeds of
the Residual Interest Liquidation up to $600,000, in the aggregate, in
Transaction Costs. Under the Partnership Agreement, there is no specific
authorization for the payment of such costs. Accordingly, the payment of such
costs must be authorized in an amendment to the Partnership Agreement. If the
payment of such costs was not authorized, the Partnership would be required to
distribute the amount of such costs to the Limited Partners. If the Proposals
are approved, the aggregate amount of the Residual Interest Liquidation proceeds
that will be distributed to the Limited Partners will be reduced by an amount
equal to such costs. See "The Proposals--Proposal No. 2: The Liquidation."
ABILITY TO ACCOMPLISH REFINANCING MAY DEPEND ON REFINANCING BY UNAFFILIATED
BORROWERS
The Partnership will not undertake the Refinancing, even if the Proposals are
approved, unless certain conditions are satisfied. See "Introduction--Voting
Requirements and Other Conditions." Certain of the Borrowers under the Existing
Financing, which are not affiliates of the General Partner (the "Unaffiliated
Borrowers"), may not refinance their Mortgage Notes with the same lender that is
providing the Refinancing. The General Partner expects the Unaffiliated
Borrowers to refinance their Mortgage Notes through a lender other than the
Lender which is providing the Refinancing. If the Unaffiliated Borrowers do not
refinance their Mortgage Notes prior to or concurrently with the Refinancing,
there will be no prepayment proceeds available from the Unaffiliated Borrowers
to make it possible for the Partnership to realize the value of the Class D
Security and the Class R Security. In such event, the General Partner would seek
an alternative method of realizing the value of the Class D Security and the
Class R Security. If no alternative method can be implemented, then the
Refinancing could not occur even if the Proposals are approved.
GENERAL PARTNER'S CONFLICTS OF INTEREST
The General Partner is accountable to the Partnership as a fiduciary and
consequently must exercise good faith and integrity in handling Partnership
affairs. The General Partner has conflicts of interest in recommending the
Proposals. The General Partner has not retained an unaffiliated representative
to act on behalf of the Limited Partners. See "Conflicts of Interest."
VOTING RIGHTS AND PROXIES
As described in more detail below, you may vote (i) by attending the meeting, or
(ii) by delivering your proxy. Since the Partnership Agreement requires the
affirmative vote of Limited Partners holding more than 50% of the outstanding
Units to adopt a Proposal, the failure by a Limited Person to vote, in person or
by Proxy, on such Proposal, a broker "non-vote" (as described below under
"--Record Date and Vote Required") or the return of a Proxy by a Limited Partner
with directions to abstain with respect to such Proposal, will have the effect
of a vote against such Proposal. Limited Partners, therefore, are urged to vote
either in person or by completing, signing, dating and returning the enclosed
Proxy by the date of the Special Meeting to ensure the presence at the Special
Meeting of a quorum.
COMPLETION OF PROXIES
The Proxy accompanies this Proxy Statement. THE PROXY SHOULD BE COMPLETED,
EXECUTED, DATED AND RETURNED AS SOON AS POSSIBLE TO THE GENERAL PARTNER IN THE
ENCLOSED, SELF-ADDRESSED POSTAGE-PREPAID ENVELOPE WHICH IS ADDRESSED AS FOLLOWS:
Uniprop, Inc. c/o Resource/Phoenix
2401 Kerner Boulevard
San Rafael, CA 94901-5529
Returned Proxies fully completed will be voted by the General Partner as
directed in the Proxies. Returned Proxies that do not give directions as to a
Proposal will be voted FOR the Proposals. Limited Partners may also transmit
Proxies via facsimile to the General Partner at (415) 485-4553, Attention: Proxy
Tabulation of Resource/Phoenix.
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<PAGE> 15
REVOCATION OF PROXY
A Limited Partner may revoke a Proxy as to any or all of the Proposals at any
time before it is exercised by: (i) filing with the General Partner before the
Special Meeting an instrument revoking the Proxy before the Proxy is exercised;
(ii) duly executing and filing with the General Partner before the Special
Meeting a Proxy bearing a later date; or (iii) attending the Special Meeting and
voting in person.
RECORD DATE AND VOTE REQUIRED
The General Partner has fixed 5:00 p.m., local time, on May 13, 1998 as the
record date (the "Record Date") for determining which Limited Partners are
entitled to notice of, and to vote at, the Special Meeting. Each Limited Partner
will be entitled to one vote for each Unit held of record by the Limited Partner
on the Record Date. As of the close of business on the Record Date, 3,303,387
Units were issued and outstanding, all of which are held by the Limited
Partners. The presence at the Special Meeting of the Limited Partners holding a
majority (i.e., 1,651,694) of the outstanding Units, whether represented in
person or by Proxy, will constitute a quorum for the transaction of business.
Units represented by Proxies which contain one or more abstentions or broker
"non-votes" are counted as present for purposes of determining the presence or
absence of a quorum for this Special Meeting but are not considered to have
voted FOR a Proposal. A "non-vote" occurs when a broker or other nominee holding
Units for a beneficial owner votes on one Proposal but does not vote on another
Proposal because such broker or other nominee does not have discretionary voting
power and has not received instructions from the beneficial owner. Provided a
quorum is present, the affirmative vote of Limited Partners holding more than
1,651,694 Units will be sufficient for approval of each of the Proposals.
However, none of the Proposals will be implemented unless all of the other
Proposals are approved.
Each Limited Partner is urged to vote either in person or by completing,
signing, dating and returning the enclosed Proxy by the date of the Special
Meeting to ensure the presence at the Special Meeting of a quorum. If a quorum
is not present at the Special Meeting, the General Partner will vote the
returned Proxies to adjourn the Special Meeting to a time and place to be
announced.
EXPENSES OF SOLICITATION
The Partnership will bear the expenses of soliciting the Proxies. Proxies may be
solicited by mail, telephone or telegraph by the General Partner and its regular
employees and affiliates, none of whom will receive any additional compensation
for his or her services. The General Partner will request brokers, nominees and
other fiduciaries and custodians who hold Units in their names to furnish this
Proxy Statement and any accompanying materials to the beneficial owners of such
Units. The Partnership will reimburse such persons, if requested, for their
reasonable fees and expenses incurred in completing the mailing of such material
to the beneficial owners. If appropriate, the Partnership may retain the
services of an independent proxy solicitor or other professionals, with an
estimated cost of approximately $20,000 plus expenses, to assist in the
solicitation of proxies.
CONFLICTS OF INTEREST
A number of conflicts of interest are inherent in the relationships among the
Partnership, the General Partner and the Limited Partners, as they relate to the
Proposals. Certain of these conflicts of interest are summarized below.
FIDUCIARY DUTIES OF GENERAL PARTNER
The General Partner has fiduciary duties to the Partnership that go beyond the
specific duties and obligations imposed upon it under the Partnership Agreement.
The General Partner in handling the affairs of the Partnership is expected to
exercise good faith, to use care and prudence and to act with an undivided duty
of loyalty to the Partners. Under these fiduciary duties, the General Partner is
obligated to ensure that the Partnership is treated fairly and equitably in
transactions with third parties, especially where consummation of such
transactions may result in the interests of the General Partner being opposed
to, or not totally consistent with, the interests of the Limited Partners.
Accordingly, the General
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Partner is required to assess whether the Proposals are fair and equitable. As
discussed in detail under "Recommendations of General Partner," after
consideration of each of the Proposals, the General Partner is recommending that
the Limited Partners vote in favor of each of the Proposals.
SUBSTANTIAL BENEFITS TO GENERAL PARTNER AND AFFILIATES
The General Partner and certain affiliates of the General Partner have
participated in the initiation and structuring of the proposed Refinancing and
the related Proposals and will realize substantial economic benefits if the
Proposals are implemented. Because the General Partner and such affiliates have
a financial interest in the consummation of the proposed Refinancing and the
related Proposals, there is an inherent conflict of interest in their
structuring the terms and conditions of the proposed Refinancing and the related
Proposals. Such terms and conditions may have been structured differently by
persons having no financial interest in the implementation of the Proposals. The
General Partner is subject to conflicts of interest in connection with the
Proposals since Uniprop, Inc., the managing general partner of the General
Partner, will be receiving a fee of approximately $300,000 for its services in
arranging the proposed Refinancing (the "Refinancing Fee") from the aggregate
gross proceeds of the Residual Interest Liquidation. Since the Refinancing Fee
is not currently permitted under the Partnership Agreement, the amount of such
proceeds to be used to pay the Refinancing Fee would otherwise be distributed to
the Limited Partners.
Several of the Borrowers under the Existing Indebtedness are affiliated with the
general partner of the General Partner. If the Refinancing is approved and
accomplished, it is likely that the loans to these affiliated Borrowers will be
refinanced concurrently as part of the same financing package. While the
Collateral will not serve as collateral for a loan to any Borrower other than
the Partnership, it is likely that the affiliated Borrowers will obtain better
terms on their refinancings as a result of the inclusion of the Collateral in
the Refinancing.
LACK OF INDEPENDENT REPRESENTATION
The General Partner has not retained an independent representative to act on
behalf of the Limited Partners in designing the overall structure of the
proposed Refinancing and the related Proposals. No group of Limited Partners was
empowered to negotiate the terms and conditions of the proposed Refinancing and
the related Proposals or to determine what procedures should be in place to
safeguard the rights and interests of the Limited Partners. In addition, no
investment banker, attorney, financial consultant or expert was engaged to
represent the interests of the Limited Partners. On the contrary, the General
Partner and certain of its affiliates have been the parties responsible for
structuring all the terms and conditions of the proposed Refinancing and the
related Proposals. If an independent representative or representatives had been
retained for the Partnership, the terms of the proposed Refinancing and the
related Proposals might have been different and possibly more favorable to the
Limited Partners.
The General Partner did not believe it was necessary to engage an independent
representative to represent the interests of the Limited Partners in order to
structure a refinancing fair to the Limited Partners. The General Partner, prior
to determining the structure of the proposed Refinancing and the related
Proposals, consulted with a number of investment bankers, financial consultants
and experts, and legal counsel. These deliberations were critical to the
structuring of the proposed Refinancing and the related Proposals and, though
the advice and counsel of such advisors, experts and consultants was not binding
upon the General Partner, it did affect the manner in which the proposed
Refinancing and the related Proposals were structured.
In accordance with the Consulting Agreement, pursuant to which the Partnership
is required to consult with the Consultant and the Consultant is required to
advise the Partnership with respect to the terms of all capital transactions,
the Consultant has issued the Consultant's Statement. In the Consultant's
Statement, the Consultant has recommended that the Limited Partners vote FOR the
implementation of the Proposals. See "Consulting Agreement and Consultant's
Statement."
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THE PROPOSALS
INTRODUCTION
If each Proposal is approved by the requisite affirmative vote of the Limited
Partners, the Partnership will be permitted to:
(i) incur the indebtedness contemplated by the proposed Refinancing and
secure such indebtedness with the Collateral;
(ii) liquidate all of the Partnership's right, title and interest in and
to the Class R Security;
(iii) liquidate all of the Partnership's right, title and interest in and
to the Class D Security;
(iv) use the proceeds of the Residual Interest Liquidation to (a) pay
the $300,000 Refinancing Fee to Uniprop, Inc., the managing general
partner of the General Partner, for its services in arranging the
proposed Refinancing, and (b) pay up to $600,000, in the aggregate,
in Transaction Costs; and
(v) adopt, execute, deliver and file the Second Amendment.
In addition, after setting aside approximately $300,000 of the gross proceeds of
the Residual Interest Liquidation for the payment of the Refinancing Fee and up
to $600,000, in the aggregate, for payment of the Transaction Costs, the
Partnership will distribute the balance of the aggregate gross proceeds of the
Residual Interest Liquidation and the aggregate gross proceeds of the Class D
Liquidation entirely to the Limited Partners. Of this amount, approximately $2.5
million, or $0.75 per Unit, would be distributed to the Limited Partners as a
partial payment against the current shortfall in their 10% Cumulative Preferred
Return.
THE REFINANCING AND GRANTING OF MORTGAGES ON THE PARTNERSHIP'S PROPERTIES
BACKGROUND
The Partnership was formed in November 1986. Through December 1987, the
Partnership raised $66,067,740 from investors through the sale of 3,303,387
Units. Out of those proceeds, after deducting sales commissions, advisory fees
and other organization and offering costs, the Partnership used $58,044,000 to
acquire nine manufactured home communities which include the seven manufactured
home communities currently securing the indebtedness evidenced by the "Existing
Financing" (as defined below). In investing and managing its assets, the
Partnership's primary investment objectives have been: (i) to obtain net cash
from operations; (ii) to obtain capital appreciation; and (iii) to preserve
capital. Based on the most recent appraisals of its properties, dated March
1998, the properties are estimated to have a fair market value of $77,200,000.
Since the acquisition of the nine manufactured home communities, the Partnership
has made distributions to the Limited Partners at an average annual rate of 7.6%
of their original capital contributions. Through December 31, 1997, there was an
aggregate shortfall of approximately $14,696,000 in the Limited Partners' 10%
Cumulative Preferred Return.
In approximately the first quarter of 1992, the General Partner and its
affiliates began discussions with investment bankers regarding the feasibility
of obtaining financing through the issuance of mortgage-backed securities for
the Partnership's manufactured home communities as well as for other
manufactured home community properties owned by the General Partner's affiliates
(the "Existing Financing"). In September 1992, the General Partner and certain
of its affiliates retained Goldman, Sachs & Co. to formally explore and pursue
such financing. In addition, in September 1992, it was determined that an
unaffiliated group of manufactured home communities would participate in the
Existing Financing so as to increase the economies of scale involved in such
financing.
The Existing Financing and the "Existing Indebtedness" (as defined below) were
approved by the Limited Partners at a Special Meeting held on August 6, 1993 and
were consummated as of December 1, 1993. The Existing Financing involves not
only the 7 manufactured home communities owned by the Partnership but also 13
other manufactured home communities owned in part by affiliates of the General
Partner and
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<PAGE> 18
8 other manufactured home communities owned by affiliates of an unrelated third
party (together with the Partnership, the "Borrowers"). The Existing Financing
is secured by liens and security interests in the Collateral and such 21 other
manufactured home communities (together with the Collateral, the "Existing
Collateral") and was funded through the issuance of mortgage-backed securities
(collectively, the "Mortgage-Backed Securities"). As of December 1, 1993, the
Partnership borrowed $30,045,000 of the proceeds of the issuance of the
Mortgage-Backed Securities (together with accrued and unpaid interest thereon,
the "Existing Indebtedness").
The Mortgage-Backed Securities were issued by a newly created REMIC Trust (that
is, a grantor trust designed to take advantage of pass-through tax treatment)
(the "Trust") whose primary purpose was to hold the Mortgage Notes and the
Existing Collateral securing such Notes. The Mortgage-Backed Securities are
comprised of (i) Uniprop MHC Mortgage Pass-Through Certificate, Series 1993-1,
Class A securities (the "Class A Securities"), (ii) Uniprop MHC Mortgage
Pass-Through Certificate, Series 1993-1, Class B securities (the "Class B
Securities"), (iii) Uniprop MHC Mortgage Pass-Through Certificate, Series
1993-1, Class C securities (the "Class C Securities"), and (iv) Uniprop MHC
Mortgage Pass-Through Certificate, Series 1993-1, Class D securities (the "Class
D Securities"), and were issued for an aggregate original principal amount of
approximately $143,167,719. There is an independent trustee of the Trust;
neither the General Partner nor any of its affiliates has any control over the
Trust. The mortgages relating to the Partnership's properties have terms similar
to the mortgages on the other properties involved in the Existing Financing. The
Partnership's seven mortgaged manufactured home communities and the proceeds
thereof serve as collateral for the indebtedness evidenced by the Mortgage Note
executed by the Partnership; otherwise, none of the properties of the
Partnership serves as collateral for any loan.
As part of the transactions contemplated by the Existing Financing and to
enhance its attractiveness to outside investors and its benefits to the
Partnership, as described below, the Partnership was required to purchase Class
D Securities for an aggregate original principal amount equal to $1,502,250. The
principal amount of the Class D Securities which the Partnership (and each of
the other Borrowers) was required to purchase was equal to 5% of the amount of
the gross proceeds of the Existing Financing borrowed by it. To the extent that
the Trust has insufficient money to make timely principal payments on all of the
classes of the Mortgage-Backed Securities which it has issued, the Class D
Securities held by the Partnership and the other Borrowers will be the first
class not to receive principal payments. The use of the Class D Securities was
considered to have several advantages for the overall transactions contemplated
by the Existing Financing, specifically to increase the likelihood of a
favorable rating of the Class A Securities and Class B Securities from the
rating agencies and to enhance the marketability, and lower the cost, of the
overall Existing Financing. However, it did lower the amount of the proceeds of
the Existing Financing that the Partnership initially obtained and carried with
it significant risks. The Class D Securities are unrated securities with a fixed
interest rate and are subordinate to the Class A Securities, Class B Securities
and Class C Securities. The original principal amount of the Mortgage-Backed
Securities was approximately as follows:
<TABLE>
<CAPTION>
CLASS AGGREGATE PRINCIPAL
BALANCES AT ISSUANCE
<S> <C>
Class A Securities $105,944,000
Class B Securities $7,158,000
Class C Securities $22,907,000
Class D Securities $7,158,719
</TABLE>
In connection with the transactions contemplated by the Existing Financing, the
Trust issued the Class R Security representing the residual interest in the
Trust to Uniprop MHC. The Class R Security represents 99.9999% of the residual
interests in the Trust. The Partnership, as a member of Uniprop MHC, holds a
beneficial interest equal to approximately 21% in the Class R Security.
Accordingly, upon liquidation of the Class R Security, the Partnership would be
entitled to approximately 21% of the proceeds of such liquidation.
-12-
<PAGE> 19
If the Mortgage Notes are prepaid prior to December 1, 1998, each Borrower would
be required to pay a prepayment premium equal to 1% of the outstanding principal
amount of the Mortgage Notes issued by it. However, since the aggregate proceeds
of the prepayment of the Mortgage Notes net of such prepayment premiums is
sufficient to pay the Mortgage-Backed Securities in full and all other costs and
expenses provided for in the Servicing Agreement, the General Partner expects
that any prepayment premium paid by the Partnership will be returned to it as
part of the proceeds of the Residual Interest Liquidation. The liquidation value
of the Partnership's interest in the Class R Security, after giving effect to
such prepayment premium, is currently valued at approximately $2,300,000.
In June, 1997 the General Partner and its affiliates began discussions with
Newman & Associates Inc. regarding the feasibility of refinancing the Existing
Indebtedness. Since the time that the Existing Indebtedness was incurred, the
Partnership has been required to make payments of interest only with respect to
the Existing Indebtedness. Commencing January 1, 1999, however, the Partnership
will be required to make payments of principal and interest with respect to the
Existing Indebtedness. Although the Partnership's net operating income increased
in 1997 such that it expects to be able to satisfy its debt service obligations
in 1999 and make quarterly cash distributions to the Limited Partners at current
levels, there can be no guaranty that the Partnership's net operating income
will so permit in subsequent years.
The General Partner expects that the proposed Refinancing would enable the
Partnership to increase quarterly cash distributions to the Limited Partners by
approximately 15% (i.e., an annual increase of approximately $0.11 per Unit),
whereas under the Existing Financing the General Partner expects to be able to
continue only the current level of quarterly distributions once principal
payments become due commencing January 1, 1999. Unlike the Existing Financing,
the proposed Refinancing would provide for level payments of principal and
interest subject, however, to a possible Balloon Payment in the event the term
of the proposed Refinancing is for less than 30 years. The monthly amount of
these payments (other than the Balloon Payment, if any) would be less than the
amount being paid solely for interest under the Existing Financing. In addition,
the proposed Refinancing would enable the Partnership to lock in a fixed rate of
interest which is lower than the variable interest rate currently payable with
respect to the Existing Indebtedness. The interest rate on the Existing
Indebtedness, which is calculated as provided in "Introduction--Interest Rate on
Existing Indebtedness," is variable and could increase to as high as 9.9% per
annum through 2003 and to as high as 10.9% per annum thereafter if market
interest rates increased. Under such formula, the Partnership paid an average of
approximately 9% per annum in interest during 1997.
PROPOSAL NO. 1: AUTHORIZATION TO REFINANCE AND MORTGAGE THE PROPERTIES
Under this Proposal the Partnership would be authorized to refinance the
Existing Indebtedness and to grant liens and security interests in the
Collateral as security for the indebtedness incurred under the proposed
Refinancing.
TERMS OF THE PROPOSED REFINANCING
The proposed Refinancing, if approved, will be structured as a conventional
loan. As part of this Proposal the General Partner would be authorized to obtain
the proposed Refinancing and mortgage seven of the Partnership's nine
manufactured home communities within the following parameters:
Terms of the Proposed Refinancing
Principal Amount: Not to exceed $30,000,000
Loan to Value Ratio: Not greater than 50:100*
Debt Service Coverage Ratio: Between 1.4:1 and 1.6:1
Amortization: 30 year schedule
Term: A minimum of 10 years and a maximum
of 30 years
-13-
<PAGE> 20
Prepayment Penalty: Yield maintenance or other customary
provisions
Stated Interest Rate: Not to exceed 8% per annum, fixed for the
duration of the loan
- --------------------------------------------------------------------------------
*An independent appraiser has determined that the value of the Partnership's
properties results in a loan-to-value ratio not greater than 50:100.
If the Refinancing is accomplished, it is likely that the lender will later
assign the loan to a securitization pool; in such event, the loan would continue
to conform to the terms set forth above.
COSTS OF REFINANCING; DISTRIBUTION OF NET PROCEEDS OF THE PROPOSED REFINANCING;
AND DISTRIBUTION OF NET PROCEEDS OF RESIDUAL INTEREST LIQUIDATION AND CLASS D
LIQUIDATION
Set forth below are estimates of the costs associated with the proposed
Refinancing and the distribution of the net proceeds thereof:
<TABLE>
<CAPTION>
SOURCES:
<S> <C>
Loan Proceeds $ 30,000,000
Liquidation of Class R Security $ 2,300,000
Liquidation of Class D Security $ 1,502,250
Total: $ 33,802,250
============
USES:
Pay-off Current Mortgage Note* $ 30,345,450
Transaction Costs $ 600,000
Refinancing Fee $ 300,000
Distribution to Limited Partners $ 2,556,800
Total: $ 33,802,250
============
</TABLE>
*$300,450 of this amount represents the 1% prepayment premium required by the
Mortgage Notes. See "The Refinancing and Granting of Mortgages on the
Partnership's Properties--Background."
The Partnership Agreement currently prohibits the Partnership from incurring
additional indebtedness for borrowed money and, subject to certain exceptions,
granting liens and security interests with respect to the Collateral. This
Proposal seeks the authorization of the Limited Partners to the incurrence by
the Partnership of the indebtedness contemplated by the proposed Refinancing and
the granting of liens and security interests in the Collateral to secure such
indebtedness.
If the Proposed Refinancing is approved, the Partnership will be authorized to
borrow an aggregate principal amount not to exceed $30,000,000 secured by the
Collateral. The other principal terms of this proposed structure are set forth
above in the table entitled "Terms of the Proposed Refinancing." As a
consequence of this structure of the proposed Refinancing, the Class D
Securities held by the Partnership and the Class R Security held by Uniprop MHC
will be liquidated, generating gross proceeds of $1,502,250 and approximately
$2,300,000, respectively. The proceeds of the Class D Liquidation will be
distributed to the Limited Partners and the proceeds of the Residual Interest
Liquidation will be distributed to the Limited Partners after deduction of the
Refinancing Fee and up to $600,000, in the aggregate, for payment of Transaction
Costs.
-14-
<PAGE> 21
The General Partner believes that the proposed Refinancing would offer the
following advantages to the Limited Partners:
- The proposed Refinancing should enable the Partnership to increase
quarterly cash distributions to Limited Partners by approximately 15%
(i.e. an annual increase of approximately $0.11 per Unit). If the
Refinancing is not accomplished, the General Partner does not expect
to be able to increase quarterly cash distributions in the
foreseeable future. The Existing Indebtedness would require the
Partnership to commence making principal payments of approximately
$337,081 per annum (i.e., 1.107% of the outstanding principal amount
of the Existing Indebtedness) beginning January 1, 1999, thus
precluding a current increase in quarterly cash distributions
notwithstanding the increase in the Partnership's net operating
income in 1997.
- The proposed Refinancing would lock in a fixed interest rate which
would be lower than the variable interest rate currently payable with
respect to the Existing Indebtedness and thus decrease the
Partnership's debt service obligations. Furthermore, a fixed interest
rate will permit the Partnership to predict its debt service
obligations and plan accordingly. The interest rate on the Existing
Indebtedness, which is calculated as provided in
"Introduction--Interest Rate on Existing Indebtedness," is variable
and could increase to as high as 9.9% per annum through 2003 and to
as high as 10.9% per annum thereafter if market interest rates
increased. Under such formula, the Partnership paid an average of
approximately 9% per annum in interest during 1997. See
"Introduction--Interest Rate on Existing Indebtedness."
- Two relatively high risk securities currently held by the
Partnership, the Class D Security and the Class R Security, would
be liquidated. After payment of the Refinancing Fee and the
Transaction Costs, the proceeds of the liquidation of these
securities, approximately $2.5 million, would be distributed to the
Limited Partners as a partial payment against the current shortfall
in their 10% Cumulative Preferred Return. Limited Partners would
receive approximately $0.75 per Unit.
The Proposed Refinancing subjects the Partnership and the Limited Partners to
certain risks which are described under "Material Differences and Risk Factors"
herein.
The proposed Refinancing and the grant of a lien and security in the Collateral
are not permitted under the Partnership Agreement. Thus, to implement this
Proposal, the Partnership Agreement must be amended to authorize specifically
such transactions.
PROPOSAL NO. 2: THE LIQUIDATION
This Proposal provides for the liquidation by the Partnership of all of its
right, title and interest in and to (i) its residual interest in the Trust,
which interest has a liquidation value of approximately $2,300,000 and is
represented by the Partnership's interest in the Class R Security issued by the
Trust to Uniprop MHC (the "Residual Interest Liquidation"), and (ii) the Class D
Security issued by the Trust to the Partnership and valued at $1,502,250 (the
"Class D Liquidation"). For more information on the Class R Security and the
Class D Security, see "--The Refinancing and Granting of Mortgages on the
Partnership's Properties--Background." See also "--Proposal No. 1: Authorization
to Refinance and Mortgage the Properties" and "--Proposal No. 3: Payment of
Refinancing Fee to Affiliate of General Partner and Payment of Transaction
Costs" for a more detailed discussion on the use of the proceeds of the Residual
Interest Liquidation and the Class D Liquidation.
The Residual Interest Liquidation and the Class D Liquidation, required to
consummate the Proposed Refinancing, may not be permitted under the Partnership
Agreement. Thus, to implement this Proposal, the Partnership Agreement must be
amended to authorize specifically each such liquidation.
-15-
<PAGE> 22
PROPOSAL NO. 3: PAYMENT OF REFINANCING FEE TO AFFILIATE OF GENERAL PARTNER AND
PAYMENT OF TRANSACTION COSTS
This Proposal provides for the payment (i) to Uniprop, Inc., the managing
general partner of the General Partner, of a fee, in an amount not to exceed one
percent (1%) of the gross aggregate principal amount of the proposed
Refinancing, for its services in arranging the proposed Refinancing (the
"Refinancing Fee"), and (ii) of up to $600,000, in the aggregate, for legal
fees, underwriting fees, accountants' fees, fees of other professionals, closing
costs, filing fees and other similar fees, costs and expenses (the "Transaction
Costs") incurred by the Partnership in connection with the consummation of the
transactions contemplated by the proposed Refinancing and the related Proposals.
The Refinancing Fee and Transaction Costs will be paid from the proceeds of the
Residual Interest Liquidation. Assuming the gross aggregate principal amount of
the proposed Refinancing is $30,000,000, the Refinancing Fee would equal
$300,000. The Refinancing Fee is payable to Uniprop, Inc., the managing general
partner of the General Partner, upon the closing of the proposed Refinancing for
services provided by Uniprop, Inc. relating to the investigation, analysis and
negotiation of the terms and conditions of the proposed Refinancing.
The Partnership Agreement currently provides for the payment to the General
Partner or its affiliates of various fees in connection with its management of
the business and affairs of the Partnership and permitted payment in 1992 of a
$300,000 fee in connection with the Existing Financing. The Partnership
Agreement does not, however, permit the payment to Uniprop, Inc. of the
Refinancing Fee in connection with the transactions contemplated by the proposed
Refinancing. In addition, the Partnership Agreement provides that the proceeds
of the Residual Interest Liquidation and the Class D Liquidation are to be
distributed to the Limited Partners. Thus, before the proceeds of the Residual
Interest Liquidation and the Class D Liquidation can be used for purposes other
than distributions to the Limited Partners, the Partnership Agreement will have
to be amended to authorize specifically such payments.
PROPOSAL NO. 4: APPROVAL AND ADOPTION OF SECOND AMENDMENT
This Proposal provides for approval of the Second Amendment and authorization of
the execution and delivery thereof. A copy of the Second Amendment is attached
hereto as Exhibit A and the Limited Partners are urged to review carefully the
same with their attorneys, accountants and investment advisers.
------------------------------------------------------------------------------
The General Partner will not cause the Partnership to enter into the proposed
Refinancing unless all of the above Proposals are approved by the Limited
Partners. See "Material Differences and Risk Factors" for additional information
regarding the risks relating to these Proposals.
COMPENSATION TO GENERAL PARTNER AND AFFILIATES
The following table sets forth the compensation payable to the General Partner
and its affiliates and the distributions to the General Partner and Limited
Partners for the years 1995, 1996 and 1997, as actually paid and distributed
and, in the Pro Forma estimate columns, as they would have been paid and
distributed had the proposed Refinancing been consummated as of January 1, 1995:
<TABLE>
<CAPTION>
------------- ------------- ------------- -------------- ------------- ------------
1995 1995 1996 1996 1997 1997
(Pro Forma) (Actual) (Pro Forma) (Actual) (Pro Forma) (Actual)
------------- ------------- ------------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Capital returned
to Limited Partners $0 $0 $0 $0 $0 $0
- ---------------------------------------------------------------------------------------------------------------
Net cash from $2,311,293 $2,195,720 $1,812,059 $1,783,868 $2,134,184 $2,114,171
operations
distributed to ($0.70 per ($0.66 per ($0.55 per ($0.54 per ($0.65 per ($0.64 per
Limited Partners Unit) Unit) Unit) Unit) Unit) Unit)
- ---------------------------------------------------------------------------------------------------------------
Distributed to
General Partner
from loan proceeds $0 $0 $0 $0 $0 $0
- ---------------------------------------------------------------------------------------------------------------
Net cash from
operations
distributed
to General Partner $0 $0 $0 $0 $0 $0
===============================================================================================================
</TABLE>
-16-
<PAGE> 23
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Property management
fee paid to
affiliate of Same as 1995 Same as 1996 Same as 1997
General Partner Actual $524,609 Actual $552,346 Actual $585,394
- ---------------------- ------------- ------------- -------------- ------------- ------------- --------------
Refinancing fee paid
to
affiliate of General
Partner $300,000 $0 $0 $0 $0 $0
- ---------------------- ------------- ------------- -------------- ------------- ------------- --------------
Reimbursement of
expenses of General
Partner and
Affiliates $0 $0 $0 $0 $0 $0
- ---------------------- ------------- ------------- -------------- ------------- ------------- --------------
Payments by Partner-
ship to employees of Same as 1995 Same as 1996 Same as 1997
General Partner Actual $164,657 Actual $196,491 Actual $177,046
- ---------------------- ------------- ------------- -------------- ------------- ------------- --------------
Shortfall
Distributions to
Limited Partners from
Loan Proceeds $2,500,000 $0 $0 $0 $0 $0
====================== ============= ============= ============== ============= ============= ==============
</TABLE>
CONSULTING AGREEMENT AND CONSULTANT'S STATEMENT
Pursuant to the Consulting Agreement, the Partnership is required to consult
with the Consultant and the Consultant is required to advise the Partnership
with respect to the terms of certain transactions, including financing
transactions. The Consultant is a New York corporation. Affiliates of the
Consultant directly or indirectly own a 1% general partner interest and an 11.8%
limited partner interest in Exodus Associates Limited Partnership, which owns a
23.968% limited partnership interest in the General Partner. The Partnership
Agreement provides that the General Partner will not take any action with
respect to such matters contrary to the recommendations of the Consultant or
where the Consultant cannot, for reasonable cause, make a recommendation with
respect to such matters, unless it obtains the approval of Limited Partners
holding a majority of the Units.
The Consultant's Statement to the General Partner and the Partnership is
attached hereto as Exhibit B and is incorporated herein by this reference. The
Consultant's Statement states, in relevant part, that, subject to and based upon
the matters set forth therein, the Consultant affirmatively recommends FOR the
Proposals.
Limited Partners are urged to read the Consultant's Statement carefully and in
its entirety. The Consultant's Statement sets forth the procedures followed, the
assumptions made, the matters considered and the limits of the Consultant's
review. The Consultant assumed, among other things, that no Partnership property
will be sold prior to the expiration of five years from the date of the
transactions contemplated by the Proposals. In rendering the Consultant's
Statement, the Consultant relied on the accuracy and completeness of all
financial and other information that was publicly available or furnished to it
by the General Partner.
The Consultant was asked only to consider the proposals as described in this
Proxy Statement. The Consultant was not asked to, and did not, participate in
the General Partner's decision to undertake (or in the structuring of) any of
the Proposals described herein. The Consultant was not asked to solicit
alternate transactions to the Proposals or to evaluate whether the Refinancing
will be consummated.
The Consultant's Statement is necessarily based upon financial and economic data
existing as of the date thereof. The Consultant did not make an independent
appraisal of the Partnership's assets and was not asked to do so. The Consultant
does not have a duty to update (and does not intend to update) the Consultant's
Statement to reflect facts arising or information learned by the Consultant
after the date thereof.
The foregoing description of the Consultant's Statement is not intended to be
complete and is qualified in its entirety by reference to the Consultant's
Statement.
-17-
<PAGE> 24
RECOMMENDATIONS OF GENERAL PARTNER
FAIRNESS OF THE PROPOSALS
The General Partner believes that the Proposals are fair and in the best
interest of the Partnership although they would, if adopted, financially benefit
the General Partner and involve some economic costs to the Limited Partners.
The proposed Refinancing and the related Proposals benefit the Limited Partners
as follows:
- The proposed Refinancing should enable the Partnership to increase
quarterly cash distributions to Limited Partners by approximately 15%
(i.e. an annual increase of approximately $0.11 per Unit). If the
Refinancing is not accomplished, the General Partner does not expect
to be able to increase quarterly cash distributions in the
foreseeable future. The Existing Indebtedness would require the
Partnership to commence making principal payments of approximately
$337,081 per annum (i.e., 1.107% of the outstanding principal amount
of the Existing Indebtedness) beginning January 1, 1999 thus
precluding a current increase in quarterly cash distributions
notwithstanding the increase in the Partnership's net operating
income in 1997.
- The proposed Refinancing would lock in a fixed interest rate which
would be lower than the variable interest rate currently payable with
respect to the Existing Indebtedness and thus decrease the
Partnership's debt service obligations. Furthermore, a fixed interest
rate will permit the Partnership to predict its debt service
obligations and plan accordingly. The interest rate on the Existing
Indebtedness, which is calculated as provided in
"Introduction--Interest Rate on Existing Indebtedness," is variable
and could increase to as high as 9.9% per annum through 2003 and to
as high as 10.9% per annum thereafter if market interest rates
increased.
- Two relatively high risk securities currently held by the Partnership,
the Class D Security and the Class R Security, would be liquidated.
After payment of the Refinancing Fee and the Transaction Costs, the
proceeds of the liquidation of these securities, approximately $2.5
million, would be distributed to the Limited Partners as a partial
payment against the current shortfall in their 10% Cumulative
Preferred Return. Limited Partners would receive approximately $0.75
per Unit.
By entering into the transactions contemplated by the Proposals now, the
Partnership can take advantage of the existing favorable low interest rate
environment. The Partnership has attempted to obtain refinancing at a lower rate
than the terms of the proposed Refinancing described in "The Proposals--Proposal
No. 1: Authorization to Refinance and Mortgage the Properties" but was unable to
do so.
The General Partner acknowledges that the Proposals impose some costs and risks
to the Partnership. The General Partner estimates that the Partnership will
incur fees and costs equal to approximately 3% of the gross aggregate principal
amount of the proceeds of the proposed Refinancing. In addition, as a result of
the proposed Refinancing, the Partnership may be required to make debt service
payments for six years after the time when such payments would cease to be
required to be made under the Existing Financing. For a more detailed discussion
of risks relating to the Proposals, see "Material Differences and Risk Factors."
As provided in the Partnership Agreement, the General Partner intends to seek
the approval of Limited Partners holding more than 1,651,694 Units to the
Proposals. The Consultant has recommended that Limited Partners vote for the
adoption of the Proposals. See "Consulting Agreement and Consultant's
Statement."
-18-
<PAGE> 25
ALTERNATIVES TO THE REFINANCING
Initially, the Partnership received refinancing proposals from several financial
firms and institutions. One such proposal was to structure the proposed
Refinancing as a financing involving the issuance of mortgage-backed securities.
This structure would have been similar to the current structure of the Existing
Financing, with additional properties possibly added to, and certain of the
properties currently in the Trust removed from, the pool of mortgages held by
the Trust. The General Partner chose the structure of the proposed Refinancing
over the mortgage-backed security structure for two major reasons. First, the
General Partner determined that the interest rate that would have been
applicable to a mortgage-backed financing would have been higher than the
interest rate the General Partner expects to obtain on the proposed Refinancing.
Second, if the proposed Refinancing were structured as a mortgage-backed
financing, the Partnership would likely be required to purchase a subordinated
security similar to the Class D Security. If such structure were used, the
General Partner would have to use the aggregate gross proceeds of the Class D
Liquidation to purchase such securities, thus reducing the return to the Limited
Partners upon consummation of the proposed Refinancing.
Among the other alternatives to the proposed Refinancing considered by the
General Partner were: (i) the liquidation of the Partnership's assets and the
distribution of the net proceeds thereof to the Limited Partners and others, in
accordance with the Partnership Agreement; and (ii) the continuation of the
Partnership in accordance with its existing business plan with the Existing
Financing.
Liquidation. In lieu of consummating the proposed Refinancing, the Partnership
could sell its real estate assets, pay off existing liabilities and debts, and
distribute the net liquidation proceeds to the Limited Partners and others in
accordance with the terms and conditions of the current Partnership Agreement.
The Partnership would then be dissolved after the final distribution of net
proceeds. The General Partner calculates the estimated net asset value of each
Unit by dividing (i) the amount of distributions that would be made to the
Limited Partners if the Partnership's properties were sold at their current
appraised value, less sales expenses (but without consideration to tax
consequences of the sale), by (ii) 3,303,387. In March, 1998, the Partnership's
properties were appraised at an aggregate fair market value of $77,200,000, and
the estimated net asset value of the Units was $13.57.
The primary advantage of this alternative strategy is that it allows for a final
liquidation of the Limited Partners' investment in the Partnership. Following
the liquidation, the Limited Partners would be at liberty to use the funds
received for investment, business, personal or other purposes. The
attractiveness of this alternative depends in part on whether the Partnership
will be able to realize on the sale of its properties the aggregate amount at
which the properties were most recently appraised. Another factor to consider is
whether the continued holding of the investment by the Limited Partners is apt
to yield them a greater return than may be available to them after liquidation
through other investment vehicles.
The principal disadvantage of this strategy is that a sale at this time is
unlikely to enable the Partnership to return the Limited Partners' remaining
invested principal, which is currently $17.11 per Unit, nor would it enable the
Partnership to make up the remaining shortfall in the Limited Partners' 10%
Cumulative Preferred Return, which is currently $4.45 per Unit. Since the
valuation of the Partnership's properties has been increasing significantly in
recent years, the General Partner considers it advisable to continue to hold the
properties and to attempt to achieve the Partnership's original objective of
preserving and returning capital. It is not certain whether market conditions
will continue to improve in the next several years to permit more favorable
sales of real estate, but historically real estate has been considered a stable
long-term investment, despite periodic market fluctuations.
Continuation of Partnership. The last alternative considered by the General
Partner is to continue the business of the Partnership in accordance with its
existing business plan and the Existing Financing. The General Partner does not
believe that there are material risks to Limited Partners if the proposed
Refinancing is not implemented. However, the General Partner does believe, as
described above, that the proposed Refinancing presents the best available
alternative for increasing quarterly cash distributions to the Limited Partners.
In addition, the General Partner considers the fixed rate financing now
available to the Partnership in the proposed Refinancing to be more attractive
than the variable rate under the Existing Financing.
THE GENERAL PARTNER RECOMMENDS THAT THE LIMITED PARTNERS
VOTE "FOR" ALL OF THE PROPOSALS.
-19-
<PAGE> 26
PRO FORMA FINANCIAL STATEMENTS
The pro forma financial statements of the Partnership for the fiscal year ended
December 31, 1997 are attached hereto as Exhibit C and made a part hereof.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Partnership is a limited partnership duly formed pursuant to the Uniform
Limited Partnership Act, as amended, of the State of Michigan. The General
Partner is vested with full authority as to the general management and
supervision of the business and other affairs of the Partnership, subject to
certain constraints in the Partnership Agreement and in the Consulting
Agreement. Limited Partners have no right to participate in the management of
the Partnership and have limited voting privileges only on certain matters of
fundamental significance. No person owns of record or beneficially more than
five percent of the Units.
The Partnership, as an entity, does not have any officers or directors. The
General Partner of the Partnership is Genesis Associates Limited Partnership.
Genesis Associates Limited Partnership is a Michigan limited partnership and its
general partners are Paul M. Zlotoff and Uniprop, Inc.
Paul M. Zlotoff is 48 and has been an individual general partner of Genesis
Associates Limited Partnership since its inception in November, 1986. Mr.
Zlotoff became the Chairman and Chief Executive Officer of Uniprop, Inc. in May,
1986 and has been its President since 1979. He is also an individual general
partner of P.I. Associates Limited Partnership, the general partner of Uniprop
Manufactured Housing Communities Income Fund, a limited partnership which owns
and operates four manufactured home communities. Mr. Zlotoff currently acts and
has acted in the past as the general partner for various other limited
partnerships owning manufactured home communities and some commercial
properties.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following discussion describes all of the types of compensation, fees or
other distributions paid by the Partnership or others to the General Partner or
its affiliates from the operations of the Partnership during the last fiscal
year, as well as certain of such items which may be payable during the next
fiscal year. Certain of the following arrangements for compensation and fees
were not determined by arm's length negotiations between the General Partner,
its affiliates and the Partnership.
The sellers of all the properties acquired by the Partnership, in some of which
sellers Paul M. Zlotoff has an interest, may be entitled to a contingent
purchase price payable by the Partnership with respect to each property, when
and if the properties are sold. The maximum amounts which could be payable to
the sellers are as follows: Sunshine Village, $1,108,260; and Ardmor Village
$946,236. Each seller will become entitled to any unpaid contingent purchase
price upon the sale, financing or other disposition of one or more properties,
but only after the receipt by each Limited Partner of certain distributions,
including the return of his or her cash contribution to the Partnership. The
actual amounts to be received, if any, will depend upon the results of the
Partnership's operations and the amounts received upon a sale, financing or
other disposition of the Partnership's properties and are not determinable at
this time. However, under the terms of the Proposals, no portion of the
contingent purchase price will be due or paid as a result of the proposed
Refinancing.
The Partnership has paid and will pay an incentive management interest to the
General Partner for managing the Partnership's affairs, including: determining
distributions, negotiating agreements, selling or financing properties,
preparing records and reports, and performing other ongoing Partnership
responsibilities. This incentive management interest could be up to 15% of the
Partnership's distributable cash from operations in any quarter. However, in
each quarter the General Partner's right to receive any distributable cash from
operations is subordinated to the extent necessary to first provide the Limited
Partners with certain specified returns. Any such amounts not paid to the
General Partner in a taxable year will be accumulated and paid from
distributable cash from certain Partnership transactions, including financing
transactions, but only after each Limited Partner has received its 10%
Cumulative Preferred
-20-
<PAGE> 27
Return and 125% of its capital contributions to the Partnership. While the
General Partner is not entitled to receive any incentive management interest
upon consummation of the Proposals, one of the Proposals does provide for the
payment to Uniprop, Inc., the managing general partner of the General Partner,
of a Refinancing Fee equal to 1% of the amount borrowed. During the last fiscal
year, the General Partner received no distribution on account of its incentive
management interest from operations because distributions were approximately
$3,538,000 less than the 10% Cumulative Preferred Return due to the Limited
Partners. For 1997, approximately $400,000 was accumulated for the General
Partner, and the General Partner's aggregate accumulated incentive management
interest as of December 1997 was approximately $6,100,000. The actual amount to
be received during the 1998 fiscal year will depend upon the results of the
Partnership's operations and is not determinable at this time.
Uniprop, Inc., the managing general partner of the General Partner, received and
will receive property management fees for each property of the Partnership
managed by it. Uniprop, Inc. is primarily responsible for the day-to-day
management of the properties and for the payment of the costs of operating each
property out of the rental income collected. The property management fees are
equal to the lesser of 5% of the annual gross receipts from the properties
managed by Uniprop, Inc., or the amount which would be payable to an
unaffiliated third party for comparable services. During the 1997 fiscal year,
Uniprop, Inc. received the following property management fees totaling $585,394:
Ardmor Village, $56,791; Camelot Manor, $55,433; Country Roads, $38,701; Dutch
Hills, $45,230; El Adobe, $81,229; Paradise Village, $71,965; Stonegate Manor,
$50,893; Sunshine Village, $74,669; and West Valley, $110,483.
In addition, certain employees of the Partnership are also employees of the
General Partner. During the last fiscal year, these employees received $177,046
for performing on-site property management, data processing and investor
relations services for the Partnership. The actual amounts to be received during
the 1998 fiscal year will depend upon the results of the Partnership's
operations.
Uniprop, Inc. would receive the Refinancing Fee (specifically, an amount equal
to one percent (1%) of the gross aggregate principal amount of the proposed
Refinancing) for its services in arranging the proposed Refinancing.
FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following discussion summarizes the material aspects of the Federal income
taxation of the Limited Partners that should be considered by the Limited
Partners in connection with the Refinancing. Such discussion is not intended as
personal tax advice, but merely as an aid to the Limited Partners in
understanding certain tax consequences of the Refinancing. Moreover, such
discussion does not attempt to address the tax consequences that may be
applicable to a particular group of investors, such as foreign investors,
tax-exempt entities, banks and insurance companies, nor does it attempt to
address the tax consequences to a Limited Partner due to such Partner's
particular tax situation. This discussion is based on the Internal Revenue Code
of 1986, as amended, Treasury regulations promulgated thereunder, and
administrative and judicial decisions, all of which are subject to change,
possibly with retroactive effect. This discussion does not consider state, local
and foreign income and other tax aspects of the Refinancing, and does not deal
with Federal tax consequences other than Federal income tax consequences.
The Partnership has not requested and has no intention of requesting a ruling
from the Internal Revenue Service on any of the tax matters discussed herein. No
assurance can be given that the Internal Revenue Service will not take a
contrary position or that a court will not find in a contrary manner. The
following discussion represents merely the views of the General Partner as to
the Federal income tax consequences of the Refinancing under existing law and
can in no way be taken as an assurance that the Internal Revenue Service will
agree with these views.
LIMITED PARTNERS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS IN ORDER TO
UNDERSTAND FULLY THE FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX
CONSEQUENCES OF THE REFINANCING.
-21-
<PAGE> 28
DISTRIBUTIONS
In general, a distribution of cash to a Limited Partner is not taxable unless
such distribution exceeds a Limited Partner's basis in its Units.
A Limited Partner's tax basis in its Units will generally equal the amount paid
for such Units, (i) increased by (A) the amount of money and the adjusted basis
of any property subsequently contributed by the Limited Partner to the
Partnership and (B) such Partner's allocable share of Partnership taxable income
and gain and tax-exempt income, and (ii) decreased by (A) the amount of money
and the adjusted basis of any property distributed by the Partnership to the
Limited Partner and (B) such Partner's allocable share of Partnership losses and
deductions and nondeductible Partnership expenses not properly chargeable to
such Partner's capital account. Moreover, any increase in a Limited Partner's
share of the liabilities of the Partnership, or any increase in the Limited
Partner's individual liabilities by reason of the assumption by such Limited
Partner of Partnership liabilities, will generally be considered as a
contribution of money by such Limited Partner to the Partnership, thereby
increasing the Limited Partner's tax basis in its Units. Conversely, any
decrease in a Limited Partner's share of the liabilities of the Partnership, or
any decrease in a Limited Partner's individual liabilities by reason of the
assumption by the Partnership of such individual liabilities, will generally be
considered as a distribution of money to the Limited Partner by the Partnership,
thereby decreasing the Limited Partner's tax basis in its Units.
If the Refinancing is accomplished, a Limited Partner that receives a
distribution that exceeds such Partner's tax basis in its Units will recognize
gain in the amount of such excess. Such gain will be capital gain if the Limited
Partner has held its Units as capital assets, and such capital gain will be
long-term capital gain if the Limited Partner has held its Units for more than
one year. Individual investors that hold Units for more than 18 months may be
taxed on their capital gains at a lower rate.
SPECIAL FEDERAL INCOME TAX CONSIDERATIONS
FOR TAX-EXEMPT ENTITIES
Tax-exempt organizations, including qualified pension, profit-sharing and stock
bonus plans and IRAs, are generally exempt from Federal income taxation but are
subject to taxation on their "unrelated business taxable income" as defined in
Section 512 of the Code and may be required to file Federal income tax returns
for any taxable year in which they have gross unrelated business income (whether
or not any tax is due). Unrelated business taxable income is income from an
unrelated trade or business regularly carried on, excluding certain items
including dividends, interest, royalties, certain rents and gains from the sale
of property that is neither inventory nor held primarily for sale to customers
in the ordinary course of business, adjusted by deductions directly connected
with such income. The unrelated business tax is imposed directly on, and is paid
out of the assets of, the tax-exempt organization. The rate of tax depends upon
the type of organization. In addition to possible Federal income taxation,
unrelated business taxable income might also be subject to state and local
income taxation, which may differ in method of computation and amount from the
Federal tax.
A tax-exempt entity is engaged in an unrelated trade or business if it carries
on a trade or business unrelated to its exempt purpose or is a partner in a
partnership which carries on such business. The unrelated business taxable
income of a tax-exempt organization from an investment in a limited partnership
is determined with reference to the various types of income realized by the
partnership.
The Partnership will derive all but minor portions of its income from real
property rents and gains from sale of real property investments. While these
types of income are generally excluded from unrelated business taxable income,
such income will be unrelated business taxable income if the Partnership's
property is financed with "acquisition indebtedness." Acquisition indebtedness
is defined as indebtedness incurred by a tax-exempt organization directly or
through a partnership: (i) in acquiring or improving a property; (ii) prior to
acquiring or improving a property if the indebtedness would not have been
incurred but for such acquisition or improvement; or (iii) after acquiring or
improving a property if the indebtedness would not have been incurred but for
such acquisition or improvement and the incurrence was reasonably foreseeable at
the time of the acquisition or improvement. The law is not clear as to the
circumstances under which indebtedness incurred by the Partnership subsequent to
the acquisition of the properties but not specifically arranged or contemplated
at the time the properties were acquired would be deemed to
-22-
<PAGE> 29
have been "reasonably foreseeable" and therefore "acquisition indebtedness."
Accordingly, there is no assurance that the income allocated to a tax-exempt
Partner would not be treated as unrelated business taxable income by the IRS.
TAX-EXEMPT ORGANIZATIONS ARE STRONGLY URGED TO CONSULT THEIR LEGAL AND TAX
ADVISERS CONCERNING THE POSSIBLE TAX CONSEQUENCES OF AN INVESTMENT IN THE
PARTNERSHIP AND THE EFFECTS OF THE PROPOSALS ON THEIR EXISTING INVESTMENTS IN
THE PARTNERSHIP.
OTHER MATTERS
The only matters that the General Partner intends to present at the Special
Meeting are set forth in this Proxy Statement, and the General Partner knows of
no other matters that will be brought before the Limited Partners at the Special
Meeting. However, if any other matters are properly presented at the Special
Meeting, the General Partner will vote the Proxies on such matters in accordance
with its best judgment.
A representative of the Partnership's independent certified public accountants,
BDO Seidman LLP, is expected to be present at the Special Meeting to respond to
appropriate questions and will have the opportunity to make a statement if so
desired.
INFORMATION INCORPORATED BY REFERENCE
Incorporated by reference in and accompanying this Proxy Statement is a copy of
the Partnership's Annual Report on Form 10-K (including Schedules 5 and 6) for
the fiscal year ended December 31, 1997 (without exhibits), as filed with the
Securities and Exchange Commission. All documents filed by the Partnership
pursuant to sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended, prior to August 3, 1998 (or any later date to which the
Special Meeting is postponed or adjourned) shall be deemed to be incorporated by
reference into this Proxy Statement. Copies of any document incorporated by
reference herein and not attached hereto may be obtained without cost by any
person to whom this Proxy Statement is delivered by written or oral request to
the General Partner's Investor Relations Department at 280 Daines Street, Suite
300, Birmingham, Michigan 48009, telephone no. (800) 541-7767.
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
BY: GENESIS ASSOCIATES LIMITED
PARTNERSHIP, ITS GENERAL PARTNER
BY: PAUL M. ZLOTOFF
---------------------------------
PAUL M. ZLOTOFF, GENERAL PARTNER
Birmingham, Michigan
June 1, 1998
-23-
<PAGE> 30
EXHIBIT A
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
SECOND AMENDMENT TO
AGREEMENT OF LIMITED PARTNERSHIP
This Second Amendment to Agreement of Limited Partnership (this "Amendment") is
made as of ________________, 1998 by Genesis Associates Limited Partnership, a
Michigan limited partnership ("Genesis"), as general partner of Uniprop
Manufactured Housing Communities Income Fund II, a Michigan limited partnership
(the "Partnership," and Genesis in such capacity as a general partner, the
"General Partner"), for itself and as attorney-in-fact for the Partnership's
unit holders and limited partners, upon the approval of a majority in interest,
as a group, of "Unit Holders" and "Limited Partners" (each as defined in the
"Agreement" (as defined below)), in accordance with Section 19b of that certain
Agreement of Limited Partnership of the Partnership, dated November 7, 1986, by
and among the General Partner, Uniprop Beneficial Corporation, a Michigan
corporation, and the unit holders and limited partners of the Partnership
parties thereto, as amended by that certain First Amendment to Agreement of
Limited Partnership, made as of September 15, 1993, by the General Partner and a
majority in interest, as a group, of the unit holders and limited partners of
the Partnership (the "Agreement"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed thereto in the
Agreement.
1. AMENDMENTS.
Effective as of the date hereof the Agreement is amended as follows:
1.1 Section 1 of the Agreement is hereby amended to delete the term
"Class D Securities" in its entirety and to substitute the
following therefor:
"Class D Security" means that certain Uniprop MHC Mortgage
Pass-Through Certificate, Series 1993-1, Class D, issued to the
Partnership on or about December 27, 1993 for an aggregate
principal amount equal to $1,502,250.
1.2 Section 1 of the Agreement is hereby amended to add the following
definitions thereto in the correct alphabetical order:
"Class R Security" means that certain Uniprop MHC Mortgage
Pass-Through Certificate, Series 1993-1, Class R, issued to
Uniprop MHC Residual
L.L.C., a Michigan limited liability company of which the
Partnership is a member, on or about December 27, 1993.
"Liquidation" means the liquidation by the Partnership of all of
its right, title and interest in and to the Class D Security and
the Class R Security.
"Refinancing" means the borrowing of up to an aggregate principal
amount of $30,000,000, secured by a lien and security interest on
seven of the Partnership's nine manufactured home communities and
the proceeds thereof, the proceeds of which will be used to
refinance the Partnership's Borrowing; provided, that the terms of
the Refinancing are within the following parameters:
Principal Amount: Not to exceed $30,000,000
Loan to Value Ratio: Not greater than 50:100
Debt Service Coverage: Between 1.4:1 and 1.6:1 Ratio:
-1-
<PAGE> 31
Amortization: 30 year schedule
Term: A minimum of 10 years and a
maximum of 30 years
Prepayment Penalty: Yield maintenance or other
customary provisions
Stated Interest Rate: Not to exceed 8% per annum,
fixed for the duration of the
loan
"Refinancing Documents" means all agreements, documents and
instruments (including, without limitation, all mortgages,
security agreements and other collateral documents), together with
all amendments, supplements, extensions, renewals, replacements,
restatements or other modifications thereto (in each case whether
in whole or in part), evidencing the Refinancing or the
transactions contemplated thereby, or any part thereof.
"Refinancing Fee" means that certain fee to be paid by the
Partnership to Uniprop, Inc. upon the consummation of the
Refinancing which fee shall be in an aggregate amount not to
exceed one percent (1%) of the aggregate principal amount of the
Refinancing.
"Transaction Costs" means the legal fees, underwriting fees,
accountants' fees, fees of other professionals, closing costs,
filing fees and other similar fees, costs and expenses relating to
the Refinancing and incurred by the Partnership in connection with
the consummation of the transactions contemplated by the
Refinancing.
1.4 Section 14b of the Agreement is hereby amended to add the
following at the end thereof:
"Notwithstanding anything to the contrary set forth in this
Section 14 or elsewhere in this Agreement, in addition to the
rights and powers granted to the General Partner in this
Agreement, the General Partner is authorized and empowered, for
and on behalf of the Partnership, to take all appropriate action
in connection with the following without any further approval of
the Consultant, any Unit Holder or any Limited Partner:
(a) To consummate the Refinancing and enter into the applicable
Refinancing Documents; and
(b) To consummate the Liquidation; provided that the proceeds of
the Liquidation of the Class R Security shall be applied as
follows:
(i) up to $300,000 to Uniprop, Inc., as payment in full of
the Refinancing Fee; and
(ii) up to $600,000 to pay the Transaction Costs;
(iii) and the balance thereof, together with the proceeds of
the liquidation of the Class D Security, shall
constitute Distributable Cash From Capital
Transactions and shall be distributed to the Unit
Holders and the Limited Partners as provided in
Section 11c of this Agreement.
2. REFERENCE TO AND EFFECT UPON THE AGREEMENT.
2.1 Except as specifically amended above, the Agreement shall remain
in full force and effect and is hereby ratified and confirmed.
2.2 Upon the effectiveness of this Amendment each reference in (i) the
Agreement to "this Agreement," "hereunder," "hereof," "herein" or
words of similar import shall mean and be a reference to the
Agreement as amended hereby, and (ii) any other agreement,
document or instrument to the Agreement shall mean and be a
reference to the Agreement as amended hereby.
-2-
<PAGE> 32
3. SECTION TITLES.
The section titles contained in this Amendment are and shall be without
substance, meaning or content of any kind whatsoever and are not a part
of the agreement among the parties hereto.
4. GOVERNING LAW.
The terms and provisions of this Amendment and any dispute arising
hereunder shall be governed by the laws of the State of Michigan without
giving effect to its conflict of laws provisions. The courts of the State
of Michigan shall have the sole and exclusive jurisdiction in any case or
controversy arising under this Amendment or by reason of the Agreement.
IN WITNESS WHEREOF, the General Partner, the Unit Holders, and the Limited
Partners have duly executed and delivered this Amendment as of the day and year
first above written.
GENERAL PARTNER:
GENESIS ASSOCIATES LIMITED PARTNERSHIP
BY: PAUL M. ZLOTOFF, GENERAL PARTNER
BY: UNIPROP, INC., A MICHIGAN CORPORATION AND A GENERAL PARTNER OF
GENESIS ASSOCIATES LIMITED PARTNERSHIP
BY: PAUL M. ZLOTOFF, PRESIDENT
UNIT HOLDERS AND LIMITED PARTNERS:
BY: GENESIS ASSOCIATES LIMITED PARTNERSHIP,
A MICHIGAN LIMITED PARTNERSHIP,
AS ATTORNEY-IN-FACT FOR ALL UNIT HOLDERS AND LIMITED PARTNERS
BY: PAUL M. ZLOTOFF, GENERAL PARTNER
-3-
<PAGE> 33
EXHIBIT B
CONSULTANT'S STATEMENT
MANUFACTURED HOUSING SERVICES INC.
May 8, 1998
Uniprop Manufactured Housing Communities Income Fund II and Genesis Associates
Limited Partnership 280 Daines Street Suite 300 Birmingham, Michigan 48009
Attention: Mr. Paul M. Zlotoff
Re: First Amended and Restated Consulting Agreement, dated as of January 9,
1998 (the "Consulting Agreement"), among Uniprop Manufactured Housing
Communities Income Fund II (the "Partnership"), Genesis Associates Limited
Partnership (the "General Partner") and Manufactured Housing Services Inc.
(the "Consultant")
Dear Mr. Zlotoff:
Pursuant to the Consulting Agreement, the General Partner has requested that the
Consultant provide its written recommendation as to the General Partner's
Proposals (defined below) set forth in the drafts provided to us on May 5, 1998
of the "Notice of Special Meeting of the Unit Holders and Limited Partners to be
Held on August 3, 1998" and the "Proxy Statement" associated therewith
(collectively, the "Proxy Materials"). This letter sets forth a brief summary of
the Proposals, a description of the scope of our engagement, certain of those
assumptions which form the basis of the recommendation contained in this letter
and our recommendation.
THE PROPOSALS
The Proposals for which our recommendation is sought are (a) to authorize the
Partnership to borrow up to $30,000,000, the proceeds of which will be used to
refinance the Partnership's existing indebtedness and to secure such
indebtedness of up to $30,000,000 with mortgages on seven of its nine
properties; (b) to authorize the Partnership to liquidate its interest in two of
the Uniprop MHC Mortgage Pass-Through Certificates, Series 1993-1 issued to the
Partnership in connection with a prior financing, and to distribute the proceeds
of such liquidation, net of fees and expenses, to the Limited Partners; (c) to
authorize the Partnership to pay a fee of approximately $300,000 to an affiliate
of the General Partner; and (d) to approve the Second Amendment to the
Partnership Agreement.
This summary of the Proposals is qualified in its entirety by the description of
the Proposals in the Proxy Materials. The Proxy Materials should be carefully
reviewed for a more complete description of the matters contemplated thereby.
(The terms "Proposal" and "Proposals" shall have the meanings set forth in the
Proxy Materials.)
SCOPE OF ENGAGEMENT
The Consulting Agreement provides, among other things, that we shall review all
proposals submitted to us by the General Partner for those transactions listed
in the Consulting Agreement, and that we shall provide the General Partner and
the Partnership with a written recommendation with respect to such proposals.
In connection with our consideration of the Proposals, we have been provided
with and have reviewed, among other things, copies of the following items: (a)
the Proxy Materials; (b) the Consulting Agreement; (c) the partnership agreement
of the Partnership; (d) the audited financial statements of the Partnership for
the year ended December 31, 1997; (e) the General Partner's budgets for each
Partnership property for the year ending December 31, 1998; (f) preliminary
financing proposals, applications or bids from Nomura Asset Capital Corporation,
Deutsche Bank Morgan Grenfell and Greentree (Commercial Lending
<PAGE> 34
Division); (g) the property operating statements for 1996 and 1997; (h) certain
charts and schedules, prepared by the General Partner, relating to appraised
values, average rents and net operating income growth for various periods; (i)
the 1998 year to date operating statement for each Partnership property; (j)
five year refinancing pro forma, prepared by the General Partner, for each of
the Partnership properties; (k) the Partnership's Annual Report on Form 10-K for
the year ended December 31, 1997; and (l) the Partnership's prospectus, dated
December 23, 1986.
We have not independently verified the accuracy or completeness of the
information supplied to us with respect to the transactions and other actions
contemplated by the Proposals and we do not assume any responsibility with
respect thereto.
Our engagement is limited to responding with a recommendation to the Proposals.
We were not engaged and do not purport (a) to develop, consider, solicit or
evaluate alternate proposals; (b) to broaden, negotiate or restructure the
Proposals; (c) to consider the relative merits of a disposition of Partnership
assets, in whole or in part; (d) to evaluate or to comment on the reasonableness
of the various fees and expenses to be incurred by the Partnership or paid to
the General Partner or its affiliates in consummating the transactions and other
actions contemplated by the Proposals; (e) to evaluate or to comment on whether
the consummation of the transactions and other actions contemplated by the
Proposals are consistent with the fiduciary responsibility of the General
Partner to the Partnership and the Limited Partners; (f) to evaluate or to
comment on the adequacy, accuracy or completeness of the description of the
Proposals and each of the matters set forth in the Proxy Materials, including
without limitation the manner in which this letter is characterized, described
or excerpted; (g) to evaluate or comment on the probability that the
transactions and actions contemplated by the Proposals will be consummated; (h)
to perform or to obtain an independent evaluation or appraisal of the
Partnership's assets; and (i) to evaluate the reasonableness of the assumptions
contained in the Proxy Materials and the materials provided to us by the General
Partner.
This letter should not be construed as investment or tax advice to any of the
Limited Partners of the Partnership. We understand that the Partnership and the
Limited Partners will seek their own investment and tax advice regarding their
vote on the Proposals.
ASSUMPTIONS
In making the recommendation set forth below, we have assumed, among other
things, that (a) the various assumptions contained in the Proxy Materials are
true and accurate; (b) all the Proposals are approved and all the transactions
and actions contemplated by all the Proposals are consummated; (c) all
conditions precedent, as set forth in the Proxy Materials, to the consummation
of the transactions and actions contemplated by the Proposals, have been or will
be satisfied; (d) all information provided to us by the General Partner,
including the Proxy Materials, do not make any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made, in light of the circumstances under which they are made, not misleading;
(e) the General Partner has provided to us such information as the Partnership
possesses that is directly or indirectly related to the Proposals; and (f) that
no Partnership property will be sold prior to the expiration of five years from
the date of the transactions contemplated by the Proposals. Changes in the
assumptions made by us in preparing this recommendation, contained in the Proxy
Materials or contained in any of the materials provided to us by the General
Partner may result in a conclusion different from the recommendation set forth
below.
RECOMMENDATION
BASED UPON AND SUBJECT TO THE ASSUMPTIONS, QUALIFICATIONS AND LIMITATIONS SET
FORTH HEREIN, WE AFFIRMATIVELY RECOMMEND FOR THE PROPOSALS.
We alert you to the fact that the principal of the Consultant is the holder of
an indirect limited partner interest in the General Partner in the approximate
amount of 2.8%, and, accordingly, may indirectly benefit from the transactions
described in the Proxy Materials.
<PAGE> 35
This letter is furnished to you solely in connection with the Consulting
Agreement and is not to be used, circulated, quoted or otherwise referred to for
any other purpose without our express prior written consent.
Very truly yours,
MANUFACTURED HOUSING SERVICES INC.
By: /s/ Donald E. Petrow
------------------------------
Donald E. Petrow, President
<PAGE> 36
EXHIBIT C
PRO FORMA FINANCIAL STATEMENTS
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following pro forma balance sheet as of December 31, 1997 and pro forma
statements of income and cash flows for the year then ended have been prepared
to reflect the Proposed Refinancing and the related adjustments described in the
accompanying notes. The pro forma information is based on the historical
financial statements of Uniprop Manufactured Housing Communities Income Fund II
and should be read in conjunction with the notes thereto. The pro forma
statements of income and cash flows were prepared as if the Proposed Refinancing
had occurred on January 1, 1997. The pro forma financial information is
unaudited and not necessarily indicative of the results of operations and cash
flows which actually would have occurred if the Proposed Refinancing has been
consummated at the beginning of 1997, nor does it purport to represent the
financial position, results of operations and cash flows for future periods. The
pro forma balance sheet was prepared as if the Proposed Refinancing had occurred
at December 31, 1997.
<PAGE> 37
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
PRO FORMA BALANCE SHEET
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
- ------------------------------------------------- -------------------- --------------------- ------------------------
<S> <C> <C> <C>
ASSETS
Net property and equipment $ 46,137,846 - $ 46,137,846
Cash and cash equivalents 1,630,552 (174,730) (A) 1,455,822
Marketable securities 875,859 - 875,859
Mortgage-backed securities 1,502,250 (1,502,250) (B) -
Unamortized financing costs 891,000 9,000 (C) 900,000
Investment 998,995 (998,995) (D) -
Other assets 615,736 - 615,736
- ------------------------------------------------- -------------------- --------------------- ------------------------
$ 52,652,238 $ (2,666,975) $ 49,985,263
================================================= ==================== ===================== ========================
LIABILITIES AND PARTNERS' EQUITY
Notes payable $ 30,045,000 (45,000) (E) $ 30,000,000
Accounts payable 126,063 - 126,063
Other liabilities 1,220,472 (229,730) (F) 990,742
- ------------------------------------------------- -------------------- --------------------- ------------------------
TOTAL LIABILITIES 31,391,535 (274,730) 31,116,805
- ------------------------------------------------- -------------------- --------------------- ------------------------
PARTNERS' EQUITY
Unit holders 21,030,515 (2,393,323) 18,637,192
General partner 230,188 1,078 231,266
- ------------------------------------------------- -------------------- --------------------- ------------------------
TOTAL PARTNERS' EQUITY 21,260,703 (2,392,245) (G) 18,868,458
- ------------------------------------------------- -------------------- --------------------- ------------------------
$ 52,652,238 $ (2,666,975) $ 49,985,263
================================================= ==================== ===================== ========================
</TABLE>
NOTES
(A) The net decrease relates to the assumed payment of $229,730 of historical
accrued interest on the existing indebtedness, and the receipt of $55,000
in cash reserves as a result of the refinancing.
(B) Represents proceeds from liquidation of mortgage-backed securities
("Class D").
(C) The net increase is as a result of the write-off of $891,000 historical
financing costs related to the existing indebtedness, and the payment of
$900,000 in financing costs related to the refinancing.
(D) Represents a portion of the proceeds from the liquidation of the
investment ("Class R Security"). See also (G) below.
(E) The net decrease is as a result of the pay-off of the existing
indebtedness of $30,045,000 and the receipt of $30,000,000 in loan
proceeds from the refinancing.
(F) See (A) above.
(G) The net decrease has four components: 1. The expense related to the
write-off of $891,000 in financing costs (See (C) above). 2. The gain of
$1,298,755 ($2,297,750 total proceeds less $998,995 cost - see (D) above)
from the liquidation of the investment ("Class R Security"). 3. Payment
of $2,500,000 to the limited partners using available proceeds of the
refinancing. 4. Payment of $300,000 prepayment penalty on the existing
indebtedness.
<PAGE> 38
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
PRO FORMA STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
- ------------------------------------------------------ ------------------- -------------------- ---------------------
<S> <C> <C> <C>
INCOME
Rental $ 11,340,654 -- $ 11,340,654
Interest 203,570 (112,675) (a) 90,895
Gain on liquidation of investment ("Class R Security") -- 1,298,755 (b) 1,298,755
Other 378,302 -- 378,302
- ------------------------------------------------------ ------------------- -------------------- ---------------------
11,922,526 1,186,080 13,108,606
- ------------------------------------------------------ ------------------- -------------------- ---------------------
OPERATING EXPENSES
Property Operations 4,347,873 -- 4,347,873
Depreciation and Amortization 1,850,779 (9,139) (c) 1,841,640
Administrative 998,950 -- 998,950
Write-off of financing costs -- 1,230,139 (d) 1,230,139
Property taxes 896,103 -- 896,103
Interest 2,661,565 (263,377) (e) 2,398,188
- ------------------------------------------------------ ------------------- -------------------- ---------------------
10,755,270 957,623 11,712,893
- ------------------------------------------------------ ------------------- -------------------- ---------------------
NET INCOME $ 1,167,256 228,457 $ 1,395,713
====================================================== =================== ==================== =====================
INCOME PER LIMITED PARTNERSHIP UNIT $ .35 $ .42
DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $ .64 $ 1.40
BOOK VALUE PER LIMITED PARTNERSHIP UNIT $ 6.37 $ 5.67
NUMBER OF LIMITED PARTNERSHIP UNITS 3,303,387 3,303,387
NET INCOME ALLOCABLE TO GENERAL PARTNER $ 11,673 $ 13,957
DISTRIBUTIONS ALLOCABLE TO GENERAL PARTNER -- --
BOOK VALUE ALLOCABLE TO GENERAL PARTNER $ 230,188 $ 232,472
RATIO OF EARNINGS TO FIXED CHARGES (F) 1.44 1.58
====================================================== =================== ==================== =====================
</TABLE>
NOTES
(A) ELIMINATION OF INTEREST EARNINGS ON MORTGAGE-BACKED SECURITIES ("CLASS D")
THAT WERE INCLUDED IN HISTORICAL INTEREST INCOME.
(B) REPRESENTS THE GAIN RECOGNIZED ON LIQUIDATION OF INVESTMENT ("CLASS R
SECURITY").
(C) NET DECREASE RESULTS FROM THE ELIMINATION OF $39,139 IN AMORTIZATION OF
FINANCING COSTS RELATED TO THE EXISTING INDEBTEDNESS, AND THE ADDITION OF
AMORTIZATION TOTALLING $30,000 RELATED TO FINANCING COSTS INCURRED IN THE
REFINANCING. (FINANCING COSTS ARE AMORTIZED OVER A 30-YEAR PERIOD USING
THE STRAIGHT-LINE METHOD.)
(D) WRITE-OFF OF FINANCING COSTS OF $930,139 AS OF JANUARY 1, 1997 RELATING
TO THE EXISTING INDEBTEDNESS AND THE PAYMENT OF A $300,000 PREPAYMENT
PENALTY ON THE EXISTING INDEBTEDNESS.
(E) THE DECREASE REPRESENTS THE ESTIMATED INTEREST EXPENSE REDUCTION AS A
RESULT OF THE REFINANCING, CALCULATED AS FOLLOWS:
ELIMINATION OF HISTORICAL INTEREST EXPENSE ON EXISTING INDEBTEDNESS
$(2,654,320) - INTEREST EXPENSE AS A RESULT OF REFINANCING 2,390,943
(F) CALCULATED AS FOLLOWS: (NET INCOME + INTEREST EXPENSE) / INTEREST EXPENSE.
<PAGE> 39
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
PRO FORMA STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS (A) PRO FORMA
- ---------------------------------------------------------------------- -------------- ---------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,167,256 $ 228,457 $ 1,395,713
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation 1,792,127 - 1,792,127
Amortization 58,652 (9,139) 49,513
Write-off of financing costs - 1,230,139 1,230,139
Gain on liquidation of investment ("Class R Security") - (1,298,755) (1,298,755)
Gain on sale of property and equipment (18,850) - (18,850)
Increase in other assets (178,077) - (178,077)
Decrease in accounts payable (29,826) - (29,826)
Increase (decrease) in other liabilities 26,085 (31,256) (5,171)
- ---------------------------------------------------------------------- -------------- ---------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,817,367 119,446 2,936,813
====================================================================== ============== ================ ==============
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (982,115) - (982,115)
Proceeds from sale of property and equipment 822,721 - 822,721
Purchase of marketable securities (507,677) - (507,677)
Proceeds from redemption of marketable securities 450,000 - 450,000
Proceeds from liquidation of mortgage-backed securities
("Class D") - 1,502,250 1,502,250
Proceeds from liquidation of investment ("Class R Securities") - 2,297,750 2,297,750
- ---------------------------------------------------------------------- -------------- ---------------- --------------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (217,071) 3,800,000 3,582,929
====================================================================== ============== ================ ==============
CASH FLOWS FROM FINANCING ACTIVITIES
Prepayment penalty on existing indebtedness - (300,000) (300,000)
Payment for financing costs - (900,000) (900,000)
Proceeds from notes payable - refinancing - 30,000,000 30,000,000
Payment of notes payable - existing indebtedness - (30,045,000) (30,045,000)
Repayment of notes payable - refinancing debt - (228,953) (228,953)
Distributions to unit holders (2,114,171) (2,500,000) (4,614,171)
- ---------------------------------------------------------------------- -------------- ---------------- --------------
NET CASH USED IN FINANCING ACTIVITIES (2,114,171) (3,973,953) (6,088,124)
====================================================================== ============== ================ ==============
NET INCREASE IN CASH AND CASH EQUIVALENTS 486,125 (54,507) 431,618
CASH AND CASH EQUIVALENTS, AT BEGINNING OF YEAR 1,144,427 - 1,144,427
- ---------------------------------------------------------------------- -------------- ---------------- --------------
CASH AND CASH EQUIVALENTS, AT END OF YEAR $ 1,630,552 $ (54,507) $ 1,576,045
====================================================================== ============== ================ ==============
</TABLE>
NOTES
(A) See notes to pro forma balance sheet and pro forma statement of income
for the explanation of these adjustments.
<PAGE> 40
PROXY
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
SPECIAL MEETING OF UNIT HOLDERS AND LIMITED PARTNERS TO BE HELD ON AUGUST 3,
1998
THIS PROXY IS SOLICITED ON BEHALF OF THE PARTNERSHIP
The undersigned, revoking all prior proxies, hereby appoints Genesis
Associates Limited Partnership, the general partner of the Partnership (the
"General Partner"), with full power of substitution, as proxy to represent and
vote all units of beneficial assignment of limited partnership interest (each, a
"Unit") of Uniprop Manufactured Housing Communities Income Fund II, a Michigan
limited partnership (the "Partnership"), which the undersigned would be entitled
to vote if personally present at the Special Meeting of Unit Holders and Limited
Partners to be held on August 3, 1998, at 10:00 a.m. Eastern Daylight Savings
Time, or at any postponement or adjournment thereof, at the offices of the
Partnership at 280 Daines Street, Suite 300, Birmingham, Michigan 48009, upon
the matters set forth in the Notice of Special Meeting of the Unit Holders and
Limited Partners and Proxy Statement dated June 1, 1998, a copy of which has
been received by the undersigned (the "Proxy Statement"). The proxy is further
authorized to vote, in its discretion, upon such other business as may properly
come before the meeting or any postponements or adjournments thereof.
Unit holders and limited partners are referred to collectively as the
"Limited Partners." Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed thereto in the Proxy Statement.
The General Partner recommends a vote FOR each of the proposals. THE
EFFECTIVENESS OF EACH PROPOSAL IS CONDITIONED ON THE APPROVAL OF ALL OF THE
OTHER PROPOSALS. ACCORDINGLY, A VOTE AGAINST ONE PROPOSAL WILL HAVE THE EFFECT
OF A VOTE AGAINST ALL OF THE PROPOSALS AS A GROUP.
SEE REVERSE SIDE
<PAGE> 41
[X]Please mark votes as in this example.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED UNIT HOLDERS OR LIMITED PARTNER(S). IF NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS.
1. To authorize the Partnership to borrow up to an aggregate principal
amount not to exceed $30,000,000 (the "Refinancing"), the proceeds of
which will be used to refinance the Partnership's outstanding
indebtedness of approximately $30,045,000, and to secure the
indebtedness incurred by the Partnership under and pursuant to the
agreements, documents and instruments evidencing the proposed
Refinancing, including, without limitation, all accrued and unpaid
interest thereon, with a lien and security interest on seven of its
nine manufactured home communities and the proceeds thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To authorize the Partnership to liquidate all of its right, title and
interest in and to (a) its residual interest in the "Trust" (as defined
in the Proxy Statement), which interest has a liquidation value of
approximately $2,300,000 and is represented by the Partnership's
interest in the Uniprop MHC Mortgage Pass-Through Certificate, Series
1993-1, Class R, issued by the Trust to Uniprop MHC Residual L.L.C., a
Michigan limited liability company of which the Partnership is a member
(the "R Security" and said liquidation, the "Residual Interest
Liquidation"), and (b) the Uniprop MHC Mortgage Pass-Through
Certificate, Series 1993-1, Class D, issued by the Trust to the
Partnership and valued at $1,502,250 (the "Class D Security" and said
liquidation, the "Class D Liquidation"), and distribute the aggregate
gross proceeds of the Residual Interest Liquidation (after the payment
of (a) the "Refinancing Fee" (as defined below), and (b) up to
$600,000, in the aggregate, for legal fees, underwriting fees,
accountants' fees, fees of other professionals, closing costs, filing
fees and similar fees, costs and expenses incurred by the Partnership
in connection with the consummation of the transactions contemplated by
the proposed Refinancing and the related proposals) and the aggregate
gross proceeds of the Class D Liquidation to the Limited Partners
pursuant to and in accordance with Section 11 of the Agreement of
Limited Partnership of the Partnership, as amended.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To authorize the Partnership to pay a fee in an amount not to exceed 1%
of the gross aggregate principal amount of the proposed Refinancing
(approximately $300,000) from the aggregate gross proceeds of the
Residual Interest Liquidation to Uniprop, Inc., the managing general
partner of the General Partner, for its services in arranging the
proposed Refinancing (the "Refinancing Fee").
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 42
4. To approve the "Second Amendment" (as defined in the Proxy Statement)
and authorize the execution, delivery and filing thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To transact such other business as may properly come before the meeting
and any adjournment thereof.
[ ] MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW
_____________________________
_____________________________
_____________________________
_____________________________
Please sign exactly as name appears below. Joint owners must both sign.
Attorney, executor, administrator, trustee or guardian must give full title as
such. A corporation, partnership or other legal entity must sign its full name
by authorized person.
_____________________________
Signature of Limited Partner
Date: _____________________ , 1998
_____________________________
Signature if held jointly
PLEASE COMPLETE, SIGN DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
I/We will attend the meeting: [ ] YES [ ] NO
2
