SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |_|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
ML-LEE ACQUISITION FUND, L.P.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No Fee Required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
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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):
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4. Proposed maximum aggregate value transaction:
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5. Total fee paid:
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|_| 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 number, or
the Form or Schedule and the date of its filing.
1. Amount previously paid:
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2. Form, Schedule or Registration Statement No.:
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ML-LEE ACQUISITION FUND, L.P.
-----------------------------------------
NOTICE OF 2000 ANNUAL MEETING
OF LIMITED PARTNERS
June 21, 2000
-----------------------------------------
To the Limited Partners of
ML-LEE ACQUISITION FUND, L.P.
Notice is hereby given that the 2000 Annual Meeting of Limited Partners
(the "Meeting") of ML-Lee Acquisition Fund, L.P. (the "Fund") will be held at
the offices of Hutchins, Wheeler & Dittmar, 101 Federal Street, 31st Floor,
Boston, Massachusetts 02110, on June 21, 2000, at 2:00 P.M. for the following
purposes:
1. To elect four Individual General Partners to serve until the next
Annual Meeting of Limited Partners or the liquidation and termination of the
Fund, if earlier;
2. To elect one Managing General Partner to serve until the next Annual
Meeting of Limited Partners or the liquidation and termination of the Fund, if
earlier;
3. To consider and act upon the proposal to ratify the selection of
PricewaterhouseCoopers LLP as independent accountants of the Fund for its fiscal
year ending December 31, 2000; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Individual General Partners of the Fund have fixed the close of
business on May 1, 2000 as the record date for the determination of Limited
Partners entitled to notice of and to vote at the Meeting or any adjournment
thereof.
A complete list of the Limited Partners of the Fund entitled to vote at
the Meeting will be available and open to the examination of any Limited Partner
of the Fund for any purpose germane to the Meeting during ordinary business
hours from and after May 1, 2000 at a mutually agreed upon time, at the office
of the Fund, 2 World Financial Center, New York, New York 10281.
<PAGE>
You are cordially invited to attend the Meeting. All Limited Partners,
even those planning to attend the Meeting, are urged to complete, date and sign
the enclosed form of proxy and return it promptly in the envelope provided for
that purpose. Since mail delays may occur, it is important that the proxy be
returned well in advance of the meeting. If you decide to attend the Meeting and
wish to vote personally, you may revoke your proxy at any time before it is
exercised. The enclosed proxy is being solicited by the Individual General
Partners of the Fund.
By Order of the Individual
General Partners
THOMAS H. LEE
Individual General Partner
Boston, Massachusetts
Dated: May 10, 2000
LIMITED PARTNERS ARE URGED TO VOTE, SIGN AND DATE
THE ENCLOSED FORM OF PROXY AND TO RETURN IT IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
ML-LEE ACQUISITION FUND, L.P.
2 World Financial Center
New York, New York 10281
---------------------------------------
2000 Annual Meeting of Limited Partners
June 21, 2000
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INTRODUCTION
ML-Lee Acquisition Fund, L.P. (the "Fund") is a limited partnership
organized under the Delaware Revised Uniform Limited Partnership Act. The Fund,
a business development company under the Investment Company Act of 1940,
commenced operations on October 19, 1987, following the initial closing of its
public offering. As of May 1, 2000, the Fund had outstanding 487,489 units of
limited partnership interest (the "Units"). The Fund is managed by five General
Partners, consisting of four Individual General Partners and the Managing
General Partner, described below. In accordance with the terms of its Amended
and Restated Agreement of Limited Partnership, as amended (the "Partnership
Agreement"), the Fund is required to hold annual meetings of the Limited
Partners of the Fund to approve certain Fund matters.
This Proxy Statement is furnished in connection with the solicitation of
proxies to be voted at the 2000 Annual Meeting of Limited Partners of the Fund
(the "Meeting"), to be held at the offices of Hutchins, Wheeler & Dittmar, 101
Federal Street, 31st Floor, Boston, Massachusetts 02110, on June 21, 2000, at
2:00 P.M. The enclosed proxy is being solicited on behalf of the Individual
General Partners of the Fund. The approximate mailing date of this Proxy
Statement is May 12, 2000.
All properly executed proxies received prior to the Meeting will be voted
at the Meeting in accordance with the instructions marked thereon or otherwise
as provided therein. Unless instructions to the contrary are marked, proxies
will be voted for the election of four Individual General Partners, for the
election of one Managing General Partner and for the ratification of the
selection of independent accountants. Any proxy may be revoked at any time prior
to the exercise thereof by giving notice to the Fund at its principal office.
The Fund has retained Automatic Data Processing Investor Communications to
tabulate the votes in connection with the matters to be acted upon at the
Meeting. Abstentions and broker "no votes" will be counted as present in
determining whether the Meeting's quorum requirement is satisfied. When any
matter to be acted upon at the Meeting requires a favorable vote by the Limited
Partners entitled to vote at the Meeting who hold at least a majority of the
Units outstanding, abstentions and broker "no votes" will be considered a vote
"Against" the matter;
1
<PAGE>
otherwise, abstentions and broker "no votes" will have no effect on the outcome,
that is, they will not be considered.
The Individual General Partners have fixed the close of business on May 1,
2000 as the record date for the determination of Limited Partners entitled to
notice of and to vote at the Meeting and at any adjournment thereof. Limited
Partners on the record date will be entitled to one vote for each interest held
in the Fund represented by a $1,000 capital contribution to the Fund (a "Unit").
The following table sets forth as of May 1, 2000 the only persons known to
the management of the Fund who may be deemed to be beneficial owners of more
than five percent of the outstanding Units of limited partnership interest of
the Fund.
Percent of Units
of the Fund
Amount of Beneficially
Name and Address Beneficial Owned at
of Beneficial Owner Ownership May 1, 2000
------------------- --------- -----------
Yale University 31,537(1) 6.5%
Investment Office
230 Prospect Street
New Haven, CT 06511
Farallon Capital Partners, L.P. 23,977(2) 4.9%
One Maritime Plaza, Suite 1325
San Francisco, CA 94111
Tinicum Partners, L.P. 6,510(2) 1.3%
c/o Farallon Partners, L.L.C.
One Maritime Plaza, Suite 1325
San Francisco, CA 94111
- ----------
(1) Based upon a statement on Schedule 13G dated February 8, 1995.
(2) Based upon a statement on Schedule 13D/A dated June 15, 1998. As the
general partner of Farallon Capital Partners, L.P. ("FP") and Tinicum
Partners, L.P. ("Tinicum"), Farallon Partners, L.L.C. ("FPLLC") may, for
purposes of Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), be deemed to own beneficially the 30,487
Units of limited partnership interest held in aggregate by FCP and
Tinicum. As managing members of FPLLC, each of Enrique Boilini, David I.
Cohen, Joseph F. Downes, William F. Duhamel, Fleur E. Fairman, Jason M.
Fish, Andrew B. Fremder, Richard B. Fried, William F. Mellin, Stephen L.
Millham, Meridee A. Moore and Thomas F. Steyer may, for purposes of Rule
13d-3 under the Exchange Act, be deemed to own beneficially the Units
attributed to FPLLC. FPLLC and each managing member thereof disclaims any
beneficial ownership of such Units. All of the above-mentioned entities
and persons disclaim group attribution.
The Individual General Partners of the Fund know of no business other than
that mentioned in Items 1 through 3 of the Notice of Meeting which will be
presented for consideration at the Meeting. If any other matter is properly
presented, it is the intention of the persons named in the enclosed proxy to
vote in accordance with their best judgment.
2
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ELECTION OF GENERAL PARTNERS
The five General Partners of the Fund, who are elected annually by the
Limited Partners, are responsible for the management and administration of the
Fund. The General Partners consist of four Individual General Partners and the
Managing General Partner. As required by the Investment Company Act of 1940, a
majority of the General Partners must be individuals who are not "interested
persons" of the Fund as defined in the Investment Company Act of 1940. In 1987,
the Securities and Exchange Commission issued an order declaring that three
Individual General Partners of the Fund (the "Independent General Partners"),
excluding Thomas H. Lee, are not "interested persons" of the Fund as defined in
the Investment Company Act of 1940 solely by reason of their being general
partners of the Fund. Mr. Lee and the Managing General Partner are considered
interested persons, as described below.
The Individual General Partners provide overall guidance and supervision
with respect to the operations of the Fund and perform the various duties
imposed on the directors of business development companies by the Investment
Company Act of 1940. The Individual General Partners supervise the Managing
General Partner. The Fund's term expired on June 15, 1998 and the Fund is
currently in dissolution. Accordingly, no further investments in Qualified
Investments will be made. Moreover, the Fund has liquidated or written off as
worthless all of its investments in Portfolio Securities. The Partnership
Agreement provides that the Individual General Partners shall have a period of
five years from dissolution to wind up the affairs of the Fund.
The Managing General Partner is responsible for investing and managing
Temporary Investments. As of March 31, 2000, the Fund's only assets consisted of
cash invested in Temporary Investments, which have been reserved to pay known
and contingent liabilities of the Fund. The Fund also holds a $1 million
principal amount promissory note, which it has determined to be worthless, from
Lajara, LLC.
The only remaining activities of the Fund will consist of winding up its
affairs, liquidating known and contingent obligations and making a final
distribution of any remaining assets to the partners.
Individual General Partners
At the Meeting, four Individual General Partners will be elected to serve
until the next Annual Meeting of Limited Partners and until their successors are
elected and qualified, or the liquidation and termination of the Fund, if
earlier. Although the Fund is in dissolution, it is necessary for the Individual
General Partners to continue to supervise the winding up and final liquidation
process. In the election of Individual General Partners, the four candidates
receiving the highest number of votes cast shall be so elected. It is the
intention of the persons named in the enclosed proxy to nominate and vote in
favor of the election of the persons listed below.
3
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Each nominee listed below has consented to continue to serve as an
Individual General Partner. The Individual General Partners of the Fund know of
no reason why any of these nominees will be unable to serve, but in the event of
any such unavailability, the proxies received will be voted for such substitute
nominees as the Individual General Partners may recommend.
Certain information concerning the nominees, as of May 1, 2000, is set
forth below.
Units of
Individual the Fund Principal Occupation
General Beneficially During the Past
Name and Address Partner Owned as of Five Years and
of Nominees Age Since May 1, 2000(1) Directorships
----------- --- ----- -------------- -------------
Vernon R. Alden(2) 77 1987 -50- Individual General Partner of
20 Park Plaza the Fund, ML-Lee Acquisition
Suite 1010 Fund II, L.P. ("Fund II") and
Boston, MA 02116 ML-Lee Acquisition Fund
(Retirement Accounts) II, L.P.
(the "Retirement Fund"; and
together with Fund II, the
"New Funds"; and together with
the Fund and Fund II the
"Funds"). Director of Sonesta
International Hotels
Corporation. Chairman of the
Japan Society of Boston,
Trustee Emeritus of the Boston
Symphony Orchestra and the
Boston Museum of Science and
Honorary Consul General of the
Royal Kingdom of Thailand.
4
<PAGE>
Units of
Individual the Fund Principal Occupation
General Beneficially During the Past
Name and Address Partner Owned as of Five Years and
of Nominees Age Since May 1, 2000(1) Directorships
----------- --- ----- -------------- -------------
Joseph L. Bower(2) 61 1987 -25- Individual General Partner
Harvard University of the Funds. Donald Kirk
Graduate School of David Professor of Business
Business Administration Administration, Harvard
Cambridge, MA 02163 Business School. Faculty
member since 1963. Director
of Anika Therapeutics,
Inc., Brown Shoe Co., Inc.,
New America High Income
Fund, Sonesta International
Hotels Corporation and The
Lincoln Foundation. Trustee
of the DeCordova & Dana
Museum and Sculpture Park
and Vice-Chairman of the
New England Conservatory of
Music.
Stanley H. Feldberg(2) 75 1987 -25- Individual General Partner
One Sanderling Court of the Funds. Chairman of
Hilton Head, SC 29926 the Board of Storm Eye
Institute at Medical
University of South
Carolina. Past Director of
the TJX Companies, Inc. and
Waban Inc. Trustee Emeritus
of Brandeis University,
Honorary Trustee of Beth
Israel Deaconess Medical
Center.
5
<PAGE>
Units of
Individual the Fund Principal Occupation
General Beneficially During the Past
Name and Address Partner Owned as of Five Years and
of Nominees Age Since May 1, 2000(1) Directorships
----------- --- ----- -------------- -------------
Thomas H. Lee(3) 55 1987 -20- Individual General Partner
75 State Street of the Funds. Chairman of
Boston, MA 02109 the Invest- ment Adviser to
the Fund since 1987;
Chairman of the
Administrative General
Partner of the Investment
Adviser to the New Funds
since 1989; Chairman of the
Administrative General
Partner of Thomas H. Lee
Equity Partners L.P. since
1989. Chairman of the
Administrative General
Partner of Thomas H. Lee
Equity Fund III, L.P. since
1996. General Director of
Thomas H. Lee Partners,
L.P., which controls the
general partner of Thomas
H. Lee Equity Fund IV, L.P.
and the general partner of
Thomas H. Lee Equity Fund
V, L.P. Founder of the
Thomas H. Lee Company (the
"Lee Company") and its
President since 1974.
Director of Big Flower
Holdings, Inc., Finlay
Enterprises Inc., Metris
Companies, Inc., Miller
Import Corporation,
Safelite Glass Corporation,
The Smith & Wollensky
Restaurant Group, Inc. and
Vail Resorts, Inc.
General Partners and
Officers as a Group
(10 persons) -185-(4)
- ----------
(1) In each case, represents less than 1% of Units outstanding.
(2) Member of Audit Committee of the Individual General Partners.
(3) Mr. Lee is the Chairman, a Trustee and a majority shareholder of the
Investment Adviser; therefore, he is deemed to be an interested person, as
defined in the Investment Company Act of 1940, of the Fund.
(4) Does not include Capital Contributions made by the Managing General
Partner, which are described in "Managing General Partner."
Committee and Individual General Partners' Meetings
The Individual General Partners have a standing Audit Committee which
consists of the Independent General Partners. The purposes of the Audit
Committee are (i) to recommend to the Independent General Partners the firm of
independent pub-
6
<PAGE>
lic accountants that conducts the Fund's annual audit and (ii) to review the
scope of the annual audit conducted by the Fund's independent public accountants
and the evaluation by such accountants of the accounting procedures followed by
the Fund. The Audit Committee held two meetings in 1999. The Individual General
Partners do not have a nominating or compensation committee.
During the fiscal year ended December 31, 1999, the Individual General
Partners held ten meetings. Each Individual General Partner nominated for
election attended at least 75% of (i) the meetings of the Individual General
Partners and (ii) if a member of the Audit Committee, the meetings of the Audit
Committee held during such fiscal year, except for Mr. Lee who did attend at
least 75% of the meetings of the Individual General Partners at which he was
entitled to vote on the action taken.
Compensation. As compensation for services rendered to the Fund, each
Independent General Partner is entitled to receive an annual fee of $40,000 in
quarterly installments plus $1,000 per meeting of the Individual General
Partners attended, together with all actual out-of-pocket expenses relating to
attendance at meetings. Each Independent General Partner is entitled to receive
$1,000 for each committee meeting attended unless such committee meeting is held
on the same day as a meeting of the Individual General Partners. In such case,
the Independent General Partner is entitled to receive $500 for each committee
meeting attended. In order to reduce administrative costs to the Fund, the
Independent General Partners agreed to waive their compensation (but not
reimbursable expenses) outlined above, beginning October 1, 1999, unless and
until such waiver is rescinded. The aggregate fees and expenses incurred by the
Fund to the Independent General Partners totaled $103,679 (net of $33,000
waived) for the fiscal year ended December 31, 1999. Thomas H. Lee, as an
interested Individual General Partner, does not receive any additional
compensation therefor.
Set forth below is a chart showing the aggregate fees and expenses paid by
the Fund to each of the Individual General Partners during the fiscal year ended
December 31, 1999, as well as the aggregate fees and expenses paid to each
Individual General Partner by the Fund, Fund II and the Retirement Fund
(collectively, the "Fund Complex") for their services as Individual General
Partners to the Funds during the fiscal year ended December 31, 1999:
Pension or Total Compensation
Retirement from Fund and
Aggregate Benefits Accrued Fund Complex
Compensation as Part of Fund Paid to Individual
Name From Fund Expenses General Partners
- -------------------- -------------- ----------------- -------------------
Vernon R. Alden $ 34,500 $ 0 $ 83,500
Joseph L. Bower 34,500 0 83,500
Stanley H. Feldberg 34,679 0 92,866
Thomas H. Lee 0 0 0
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Managing General Partner
At the Meeting, a Managing General Partner will be elected to serve until
the next Annual Meeting of Limited Partners, and until its successor is elected
and qualified, or the liquidation and termination of the Fund, if earlier. In
the election of Managing General Partner, the one candidate receiving the
highest number of votes cast shall be so elected. The Managing General Partner
will receive reimbursement of certain expenses and the distributions and
allocations described below. The Fund considers its relationship with the
Managing General Partner to be an investment advisory relationship. It is the
intention of the persons named in the enclosed proxy to nominate and vote in
favor of the election of the Managing General Partner discussed below, which
will receive the compensation, distributions and allocations described below.
The nominee discussed below has consented to continue to serve as Managing
General Partner.
Information Concerning the Managing General Partner. Mezzanine
Investments, L.P. (the "Managing General Partner") is a limited partnership
organized under the Delaware Revised Uniform Limited Partnership Act. The
Managing General Partner maintains its principal office at 2 World Financial
Center, New York, New York 10281. The Managing General Partner has acted as the
managing general partner of the Fund since the Fund commenced operations on
October 19, 1987. The Managing General Partner is engaged in no other activities
at the date of this proxy statement.
The sole general partner of the Managing General Partner is ML Mezzanine
Inc. ("ML Mezzanine"), an indirect wholly-owned subsidiary of Merrill Lynch &
Co., Inc. ("ML"). ML Mezzanine maintains its principal office at 2 World
Financial Center, New York, New York 10281 and ML maintains its principal office
at 4 World Financial Center, New York, New York 10080. ML Fund Administrators
Inc. (the "Fund Administrator"), a Delaware corporation and an indirect
wholly-owned subsidiary of ML, provides administrative services for the Fund
pursuant to an Administrative Services Agreement between the Fund and the Fund
Administrator, dated June 30, 1989 (the "Administrative Services Agreement").
Information concerning the Fund Administrator is set forth below under
"Information Concerning the Fund Administrator." The sole limited partner of the
Managing General Partner is Thomas H. Lee Advisors I (the "Investment Adviser").
Information concerning the Investment Adviser is set forth below under "The
Management Agreement." The Managing General Partner's unaudited balance sheet at
December 31, 1999 is appended to this proxy statement as Exhibit A.
The Partnership Agreement obligates the Managing General Partner to
contribute cash to the capital of the Fund so that the Managing General
Partner's Capital Contribution at all times will be equal to one percent (1%) of
the aggregate Capital Contributions of all Partners of the Fund. The Managing
General Partner has contributed $4,924,136 to the capital of the Fund.
8
<PAGE>
The following table sets forth information concerning the directors and
executive officers of ML Mezzanine Inc. Unless otherwise noted, the address of
each such person is 2 World Financial Center, New York, New York 10281.
Officer Principal Occupation
or During Past
Director Five Years and
Name Age Title Since* Directorships
---- --- ----- ------ -------------
Kevin K. Albert(1) 47 Chairman, 1990 Vice President and a
4 World Financial Center President, 1987 Managing Director of the
New York, NY 10080 Director Investment Banking Group
("ML Investment Banking")
and of the Private Sales
and Divestitures Group of
Business Financial Services
of Merrill Lynch, Pierce,
Fenner & Smith Incorporated
("Merrill Lynch"). Mr.
Albert's work in the Equity
Private Placement Group of
ML Investment Banking is
involved in structuring and
placing a diversified array
of private equity
financings including common
stock, preferred stock,
limited partnership
interests and other
equity-related securities.
His work in the Private
Sales and Divestitures
Group involves managing a
team of investment bankers
executing middle-market
exclusive sales
transactions. Mr. Albert is
also a director of ML Media
Management Inc. ("ML
Media"), an affiliate of
the Managing General
Partner and a joint
venturer of Media
Management Partners, the
general partner of ML Media
Partners, L.P.; a director
of ML Opportunity
Management Inc. ("ML
Opportunity"), an affiliate
of the Managing General
Partner and a joint
venturer in Media
Opportunity Management
Partners, the general
partner of ML Media
Opportunity Partners, L.P.;
a director of ML Mezzanine
II Inc. ("ML Mezzanine
II"), an affiliate of the
Managing General Partner
and the sole general
partner of the managing
general partner of the New
Funds; a director of
Merrill Lynch Venture
Capital Inc. ("ML
Venture"), an affiliate of
the Managing General
Partner and the general
partner of the managing
general partner of ML
Venture Partners
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Officer Principal Occupation
or During Past
Director Five Years and
Name Age Title Since* Directorships
---- --- ----- ------ -------------
II, L.P. ("Venture II") and
ML Oklahoma Venture
Partners Limited
Partnership; and a director
of Merrill Lynch R&D
Management Inc. ("ML R&D"),
an affiliate of the
Managing General Partner
and the general partner of
the general partner of ML
Technology Ventures, L.P.;
Mr. Albert also serves an
as independent general
partner of Venture II. Mr.
Albert joined Merrill Lynch
in 1981.
James V. Caruso 48 Executive 1993 Director of ML Investment
Vice Banking. Mr. Caruso is the
President, Director of Technology for
Director the Global Investment
Banking Group of Merrill
Lynch. He is responsible
for ensuring that the
business requirements of
Investment Banking are
supported by managing the
development of new
technologies and enhancing
existing systems. He is
also responsible for
certain merchant banking
business related
activities. Mr. Caruso is
also a director of ML
Media, ML Opportunity, ML
Venture, ML R&D, ML
Mezzanine II and MLH
Property Managers Inc., an
affiliate of the Managing
General Partner and the
general partner of MLH
Income Realty Partnership
VI. Mr. Caruso joined
Merrill Lynch in 1975.
Rosalie Y. Goldberg 62 Vice 1987 First Vice President and
President, Senior Director of Merrill
Director Lynch Private Client Group
and the Director of its
Special Investments Group.
Ms. Goldberg has held a
number of management
positions in the Special
Investments area, including
the position of Manager for
Product Development and
Origination from 1983 to
1989. Ms. Goldberg is also
a director of ML Mezzanine
II, ML Media and ML
Opportunity. Ms. Goldberg
joined Merrill Lynch in
1975.
10
<PAGE>
Officer Principal Occupation
or During Past
Director Five Years and
Name Age Title Since* Directorships
---- --- ----- ------ -------------
Diane T. Herte 39 Vice 1999 Vice President of ML
President, Investment Banking since
Director 1996 and previously an
Assistant Vice President of
Merrill Lynch & Co.
Corporate Credit Group
since 1992. Ms. Herte's
responsibilities include
controllership, financial
management and
administrative functions
for partnerships for which
subsidiaries of Merrill
Lynch are the general
partner or manager. Ms.
Herte is also a director of
ML Mezzanine II. Ms. Herte
joined Merrill Lynch in
1984.
Kevin T. Seltzer 33 Vice 1999 Vice President of ML
President, Investment Banking. Mr.
Treasurer Seltzer manages certain
accounting, financial
reporting and
administrative functions
for certain partnerships
for which subsidiaries of
Merrill Lynch are the
general partner or manager.
From 1993 to 1995, Mr.
Seltzer was employed by
Coopers & Lybrand L.L.P.,
where he was an associate
in their Real Estate
Auditing Practice. Mr.
Seltzer joined Merrill
Lynch in 1995.
- -------
(1) As of May 1, 2000, Mr. Albert beneficially owned 25 Units, which
represents less than 1% of Units outstanding.
* Officers of ML Mezzanine serve at the pleasure of its Board of Directors.
Distributions. The Fund made no cash distributions to the Managing General
Partner during the Fund's fiscal year ended December 31, 1999. There were no MGP
Distributions, as defined below, by the Fund with respect to the Fund's fiscal
year ended December 31, 1999. All distributions to Partners are made according
to the following formula:
1. Current Returns. All cash dividends, interest and other income received
by the Fund in excess of the Fund's expenses and reserves for expenses and
Follow-On investments are distributed to the Limited Partners and to the
Managing General Partner quarterly, within 45 days after the end of each
calendar quarter, as follows:
a. From Mezzanine Investments,
first, 99% to the Limited Partners and 1% to the Managing General
Partner, until the Limited Partners, as a class, have received from
cumu-
11
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lative distributions from Mezzanine Investments, an amount equal to an
aggregate return (cumulative but not compounded) of 10% per annum on
the average daily amount of Gross Capital Contributions represented by
Mezzanine Investments (the "Priority Return"), and any outstanding
unpaid Compensatory Payment balance (defined below),
second, 100% to the Managing General Partner until the Managing
General Partner shall have received an amount equal to any outstanding
Deferred Distribution Amount (defined below),
third, 69% to the Limited Partners and 31% to the Managing General
Partner (30% being an incentive distribution, an "MGP Distribution")
until the Managing General Partner has received from all distributions
with respect to Mezzanine Investments then or theretofore made (other
than as a return of capital), an amount equal to 21% of all such
distributions, and
fourth, thereafter, 79% to the Limited Partners and 21% to the
Managing General Partner (20% being an MGP Distribution).
b. From all Other Sources,
99% to the Limited Partners and 1% to the Managing General Partner.
2. Capital Transactions. The net proceeds from the disposition of
Qualified Investments and Temporary Investments, including distributions
of returns of capital from investments, and proceeds of any refinancing
("Capital Transactions"), that are not applied against outstanding debts
of the Fund or reserved for follow-on investments or Fund expenses, will
be distributed as soon as practicable after such Capital Transaction as
follows:
a. From Mezzanine Investments,
first, 99% to the Limited Partners and 1% to the Managing General
Partner, until the Limited Partners, as a class, have received from
cumulative distributions from Mezzanine Investments, an amount equal to
the Priority Return and any outstanding unpaid Compensatory Payment
balance,
second, 100% to the Managing General Partner until the Managing
General Partner shall have received an amount equal to any outstanding
Deferred Distribution Amount,
third, 99% to the Limited Partners and 1% to the Managing General
Partner until the Limited Partners, as a class, have received an amount
equal to the amount of their Net Capital Contributions represented by
Mezzanine Investments then or theretofore liquidated together with the
Priority Return and any outstanding Compensatory Payment,
fourth, 69% to the Limited Partners and 31% to the Managing General
Partner (30% being an MGP Distribution), until the Managing General
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<PAGE>
Partner has received from all distributions with respect to Mezzanine
Investments then or theretofore made, 21% of all distributions, and
fifth, thereafter, 79% to the Limited Partners and 21% to the
Managing General Partner (20% being an MGP Distribution).
b. From all Other Sources,
99% to the Limited Partners and 1% to the Managing General Partner.
For purposes of the distributions described above, Gross Capital
Contributions represented by Mezzanine Investments is the proportionate amount
of the Fund's equity that is invested in Mezzanine Investments (the "Net Capital
Contributions represented by Mezzanine Investments"), grossed up for the related
selling commissions (assuming no discounts), marketing and sales expenses and
organization and offering expenses of the Fund.
Compensatory Payment means an amount equal to the aggregate of: (i) the
cumulative amount by which the Distributable Capital Proceeds related to the
Sales of Qualified Investments are less than the Fund's cost of such Qualified
Investments, but only to the extent of the excess of cumulative MGP
Distributions then or theretofore made over the cumulative amounts of payments
then or theretofore made as Compensatory Payments pursuant to the distribution
process summarized above and (ii) the cumulative amount of MGP Distributions
with respect to those portions of Bridge Investments which were expected to
become Mezzanine Investments at liquidation within nine months, but which did
not actually become Mezzanine Investments within nine months, or with the
approval of the Individual General Partners within twelve months.
In addition, to the extent that making any MGP Distribution from sales
would result in the Managing General Partner receiving cumulative MGP
Distributions from dispositions of Qualified Investments in excess of 20% of the
cumulative capital gains realized by the Fund (net of realized capital losses
and unrealized net capital depreciation), such distribution will instead be
deferred (the "Deferred Distribution Amount").
Allocations of Profits and Losses. Profits and Losses for tax and
accounting purposes are determined and allocated as of, and within sixty days
after, the end of each calendar year. Profits and Losses are allocated
consistently with, and generally in the same proportions as, cash distributions
(other than as to distributions of capital). All unrealized gains and losses at
the termination of the Fund will be deemed realized at that time. Unrealized
gains and losses attributable to any securities distributed in kind to Partners
will be deemed realized upon such distribution.
Removal of the Managing General Partner. The Managing General Partner may
be removed from the Fund either (i) by a majority of the Independent General
Partners of the Fund, (ii) by failure to be re-elected by the Limited Partners
or (iii) with the consent of a majority in interest of the Limited Partners.
13
<PAGE>
Information Concerning the Fund Administrator. Pursuant to the
Administrative Services Agreement, the Fund Administrator is responsible for the
day-to-day administrative affairs of the Fund and for the management of the
accounts of Limited Partners. The Fund Administrator also provides the Fund, at
the Fund Administrator's expense (except as provided below), with office space,
facilities, equipment and personnel necessary to carry out its obligations under
such agreement and such other services as the Fund Administrator, subject to
supervision by the Individual General Partners, from time to time determines to
be necessary and appropriate.
The Fund Administration Fee. As of October 19, 1995, the Fund is required
to pay the Fund Administrator a quarterly fee payable in advance (the "Fund
Administration Fee") at the annual rate of $300,000 plus all actual
out-of-pocket expenses incurred on behalf of the Fund (other than extraordinary
legal and related expenses and certain expenses of insurance and bonding which
have been and will continue to be borne by the Fund), but in no event exceeding
in aggregate the annual amount of $2.0 million. In order to reduce
administrative costs to the Fund, the Fund Administrator has waived payment of
the Fund Administration Fee (but not any reimbursable expenses), beginning
October 1, 1999, unless and until such waiver is rescinded. The officers and
directors of the Fund Administrator do not receive any compensation for their
services from the Fund. The Fund Administration Fees and expenses incurred by
the Fund to the Fund Administrator for the fiscal year ended December 31, 1999
totaled $225,000 (net of $75,000 waived) and $599,798, respectively.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Fund's
officers and Individual General Partners and persons owning more than 10% of the
outstanding Units of the Fund to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, General
Partners and greater than 10% holders of Units are required by SEC regulation to
furnish the Fund, through its Managing General Partner, with copies of all
Section 16(a) Forms they file.
Based solely on copies of such Forms furnished as provided above, or
written representations that no Forms 5 were required, the Fund believes that
during 1999 through the date hereof all Section 16(a) filing requirements
applicable to its officers, General Partners and owners of greater than 10% of
its Units were complied with.
SELECTION OF INDEPENDENT ACCOUNTANTS
At their meeting held in person on December 14, 1999, the Independent
General Partners of the Fund unanimously selected the firm of
PricewaterhouseCoopers LLP, independent accountants, to audit the financial
statements of the Fund for the fiscal year ending December 31, 2000. The Fund
knows of no direct or indirect financial interest of such firm in the Fund. Such
appoint-
14
<PAGE>
ment is subject to ratification or rejection by the Limited Partners of the
Fund. Unless a contrary specification is made, the accompanying proxy will be
voted in favor of ratifying the selection of such accountants.
Representatives of PricewaterhouseCoopers LLP are expected to be present
at the Meeting and will have the opportunity to respond to questions from
Limited Partners and to make a statement if they so desire.
REPORTS
The Fund has received relief from the Securities and Exchange Commission
(the "Commission") pursuant to which the Fund is no longer required to file
quarterly and annual reports on Forms 10-Q and 10-K with the Commission.
However, the Fund will continue to deliver annual and interim reports to its
partners as required by the Partnership Agreement.
CERTAIN TRANSACTIONS
Subject to any policies established by the Individual General Partners,
the Investment Adviser was responsible for the management of the Fund's
Mezzanine Investments and Bridge Investments and was responsible for conducting
the negotiations with respect to the acquisition of such investments on behalf
of the Fund. Certain of the investments which were made by the Fund involved
co-investments with entities affiliated with the Investment Adviser. Such
co-investments were generally prohibited absent exemptive relief from the
Commission. As a result of these affiliations and the Fund's expectations of
engaging in such co-investments, the Fund sought an exemptive order from the
Commission allowing such co-investments, which was received on September 23,
1987. An additional exemptive order, allowing co-investment with the New Funds
was received from the Commission on September 1, 1989.
There were no transactions involving the Fund and affiliates of the
Investment Adviser, including co-investments pursuant to the above exemptive
orders, which were consummated during the period from January 1, 1999 through
December 31, 1999.
General Information
The Managing General Partner is responsible for the management of the
Fund's Temporary Investments. In placing orders for money market securities, it
is the policy of the Managing General Partner to obtain the best net results
taking into account such factors as price (including the applicable dealer
spread), the size, type and difficulty of the transaction involved, the firm's
general execution and operational facilities, and the firm's risk in positioning
the securities involved. While the Managing General Partner generally seeks
reasonably competitive spreads or commissions, the Fund will not necessarily be
paying the lowest spread or commission available. Affiliates of the Fund may not
serve as the Fund's dealer in connection with such transactions.
15
<PAGE>
The Fund will provide, without charge, upon the oral or written request of
any Limited Partner entitled to submit a proxy to whom this Proxy Statement was
delivered, a copy of any and all information (excluding exhibits, except such
exhibits as have been specifically incorporated by reference) that has been
incorporated by reference into this Proxy Statement which is not presented
herein or delivered herewith. Requests for such information should be directed
to the Fund, Monday through Friday, 10:00 a.m. to 1:00 p.m. and from 2:00 p.m.
to 5:00 p.m. by calling 800-288-3694.
ADDITIONAL INFORMATION
The expense of preparation, printing and mailing of the enclosed form of
proxy and accompanying Notice and Proxy Statement will be borne by the Fund. The
Fund will pay all reasonable expenses in forwarding proxy solicitation material
to the beneficial owners of the Units.
Approval of the selection of accountants requires the vote (a) of 67% or
more of the Units in the Fund present at the Meeting if the holders of more than
50% of the outstanding Units are present or represented by proxy, or (b) of more
than 50% of the outstanding Units, whichever is less. The Individual General
Partners and Managing General Partner will be elected if they receive more votes
than any other candidate at a meeting at which a majority of the Limited
Partners who hold a majority of the outstanding Units are present in person or
by proxy. In order to obtain the necessary quorum at the Meeting, supplementary
solicitation may be made by mail, telephone, telegraph, or personal interview by
officers of the Investment Adviser or the Fund Administrator. It is anticipated
that the cost of such supplementary solicitation, if any, will be nominal and
will be borne by the Fund.
The Partnership Agreement provides that the Limited Partners of the Fund
are prohibited from exercising certain rights of Limited Partners, including the
right to elect General Partners and to approve certain Fund matters, unless
prior to the exercise of such rights, counsel for the Fund has delivered to the
Fund an opinion to the effect that neither the existence of such rights nor the
exercise thereof will violate the provisions of the Revised Uniform Limited
Partnership Act of the State of Delaware, as amended, or the applicable laws of
the jurisdictions in which the Fund is then formed or qualified, will adversely
affect the limited liability of the Limited Partners or will adversely affect
the classification of the Fund as a partnership for federal income tax purposes.
Counsel to the Fund will deliver an opinion to the Fund with respect to the
foregoing. In rendering such opinion, counsel for the Fund may rely as to
matters of Delaware law upon the opinion of special Delaware counsel to the
Fund.
By Order of the Individual General Partners
THOMAS H. LEE
Individual General Partner
Dated: May 10, 2000
16
<PAGE>
EXHIBIT A
MEZZANINE INVESTMENTS, L.P.
BALANCE SHEET
December 31, 1999
(Unaudited)
ASSETS Notes
-----
Investments in ML-Lee Acquisition Fund, L.P. ... $ 371,432
-----------
Total Assets .............................. $ 371,432
===========
PARTNERS' CAPITAL
General Partner ........................... 1,3 $ 2,408,134
Limited Partner ........................... (2,036,702)
-----------
Total Partners' Capital ................... $ 371,432
===========
See Accompanying Notes to Balance Sheet.
A-1
<PAGE>
MEZZANINE INVESTMENTS, L.P.
NOTES TO BALANCE SHEET
December 31, 1999
(Unaudited)
1. Organization
Mezzanine Investments, L.P. (the "Managing General Partner") was formed
and the Certificate of Limited Partnership was filed under the Delaware Revised
Uniform Limited Partnership Act on February 1, 1985. The Managing General
Partner is a registered investment adviser and the Managing General Partner of
ML-Lee Acquisition Fund, L.P. (the "Fund") and is responsible for supervising
the Fund's investments. The Managing General Partner is a limited partnership in
which ML Mezzanine Inc. ("ML Mezzanine"), an indirect subsidiary of Merrill
Lynch & Co., Inc., acts as the general partner. ML Mezzanine performs the
responsibilities of the Managing General Partner with respect to the Fund. The
Limited Partner of the Managing General Partner is Thomas H. Lee Advisors I (the
"Investment Adviser"), which is an affiliate of the Thomas H. Lee Company, a
sole proprietorship owned by Thomas H. Lee.
The Fund has elected to operate as a business development company under
the Investment Company Act of 1940. Its primary investment objective is to
provide current income and long-term capital appreciation by investing in
mezzanine securities usually issued in connection with leveraged acquisitions
and recapitalizations of businesses.
2. Investment in Fund
Under the terms of the Amended and Restated Agreement of Limited
Partnership of the Fund, as amended (the "Partnership Agreement"), the Managing
General Partner on October 19, 1987, admitted additional limited partners to the
Fund at the Fund's first closing. The total capital contributions of all such
limited partners were $403,383,350, reflecting $132,650 of volume discounts. On
November 20, 1987, the Managing General Partner admitted additional limited
partners to the Fund at the Fund's second closing. The total capital
contributions of all such limited partners were $19,862,000, reflecting $15,000
of volume discounts. On May 20, 1988, the Managing General Partner admitted an
additional limited partner to the Fund at the Fund's third closing. The total
capital contribution of such limited partner was $49,999,688, reflecting
$3,333,312 of volume discounts. On June 15, 1988, the Managing General Partner
admitted additional limited partners to the Fund at the Fund's fourth closing.
The total capital contributions of all such limited partners were $10,124,720,
reflecting $638,280 of volume discounts. As of December 31, 1999, the aggregate
capital contributions of all limited partners were $483,369,758, reflecting
$4,119,242 of volume discounts. The Managing General Partner has acquired an
interest in the Fund in exchange for its cash contributions. The Managing
General Partner contributed $4,924,136 to the Fund and will con-
A-2
<PAGE>
tribute or withdraw cash, if necessary, so that it will maintain a one percent
interest in the total capital contributions to the Fund.
3. Capital Requirements
The General Partner shall remain at all times a net worth at a level that
is sufficient to meet all requirements of currently applicable U.S. income tax
regulations.
4. Cash Distributions
For the year ended December 31, 1999, the Managing General Partner
received no cash distributions from the Fund.
A-3
<PAGE>
ML - LEE ACQUISITION FUND
2 WORLD FINANCIAL CENTER
NEW YORK, NY 10281-6123
ML-LEE ACQUISITION FUND, L.P.
2 World Financial Center New York, NY 10281-6123
This proxy is solicited on behalf of the Individual General Partners
The undersigned hereby appoint THOMAS H. LEE and JOSEPH L. BOWER and each of
them as Proxies, each with the power to appoint his substitute, and hereby
authorizes each of them to represent and to vote as designated herein, all units
of limited partnership interest ("Units") of the ML-Lee Acquisition Fund, L.P.
(the "Fund") held of record by the undersigned on May 1, 2000 at the Annual
Meeting of the Limited Partners of the Fund to be held on June 21, 2000 or any
adjournment thereof.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned partner. If this Proxy is signed and returned without specific
direction, this Proxy will be voted for Proposals 1, 2 and 3.
- --------------------------------------------------------------------------------
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow
the simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow
the simple instructions.
- --------------------------------------------------------------------------------
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: MLLEE1
KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
ML - LEE ACQUISITION FUND, L.P.
PLEASE CHECK HERE if you plan to attend the Annual Meeting. |_|
Election of Individual General Partners
1. NOMINEES: 01) Vernon R. Alden, 02) Joseph L. Bower,
03) Stanley H. Feldberg, 04) Thomas H. Lee
For Withhold For All
All All Except:
|_| |_| |_|
To withhold authority to vote, mark "For All Except" and write the nominee's
number on the line below.
- --------------------------------------------------------------------------------
Vote On Proposals For Against Abstain
2. ELECTION OF MANAGING GENERAL PARTNER
NOMINEE: Mezzanine Investments, L.P. |_| |_| |_|
3. Proposal to ratify the selection of
PricewaterhouseCoopers LLP as
independent 00 0 accountants of the
Fund for its fiscal year ending
December 31, 2000. |_| |_| |_|
- -------------------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date
In the discretion of such proxies, upon such other business as may properly come
before the meeting or any adjournment hereof.
- -------------------------------------------------------
Signature (Joint Owners) Date
- --------------------------------------------------------------------------------
