<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
INNSUITES HOSPITALITY TRUST
-------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
XXXXXXXXXXXXXXXX
-------------------------------------------------------------------
(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[TRUST LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of Shareholders of
InnSuites Hospitality Trust will be held at the InnSuites Hotels Phoenix Squaw
Park Resort, 1615 E. Northern Avenue, Phoenix, Arizona, 85020 (phone:
602-997-6285) on Monday, July 12, 1999, at 11:00 a.m., local time, for the
purpose of considering and acting upon:
1. The election of two (2) Trustees, each to hold office until
the 2002 Annual Meeting of Shareholders and until his
successor shall be elected and qualified;
2. The approval of an amendment to Section 1.2 of the Second
Amended and Restated Declaration of Trust of InnSuites
Hospitality Trust; and
3. The transaction of any other business which properly may come
before the meeting and any adjournments thereof.
Shareholders of InnSuites Hospitality Trust of record at the close of
business on May 21, 1999 are entitled to vote at the Annual Meeting and any
adjournments thereof.
By order of the Board of Trustees
MARC E. BERG
Secretary
Phoenix, Arizona
June 1, 1999
- --------------------------------------------------------------------------------
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY
IN THE ENVELOPE PROVIDED WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
- --------------------------------------------------------------------------------
<PAGE> 3
[TRUST LOGO] June 1, 1999
InnSuites Hotels Centre
1625 E. Northern Avenue
Suite 201
Phoenix, Arizona 85020
PROXY STATEMENT
The accompanying proxy is solicited by the Trustees of InnSuites
Hospitality Trust (the "Trust") for use at the Annual Meeting of Shareholders to
be held on July 12, 1999 and any adjournments thereof.
Shareholders of record at the close of business on May 21, 1999 (the
record date) will be entitled to vote at the Annual Meeting and at any
adjournments thereof. At that date the Trust had issued and outstanding
2,303,224 Shares of Beneficial Interest ("Common Shares"). Each such Common
Share is entitled to one vote on all matters properly coming before the Annual
Meeting. At least 1,151,612 Common Shares must be represented at the Annual
Meeting in person or by proxy in order to constitute a quorum for the
transaction of business.
Common Shares represented by properly executed proxies will be voted in
accordance with the specifications made thereon. If no specification is made,
proxies will be voted for the election of the Trustee nominees named herein and
for the approval of an amendment to Section 1.2 of the Second Amended and
Restated Declaration of Trust. The election of Trustees requires the affirmative
vote of a majority of the outstanding Common Shares entitled to vote present in
person or by proxy at the Annual Meeting. The adoption of the amendment to the
Second Amended and Restated Declaration of Trust requires the affirmative vote
of two-thirds of the Common Shares then outstanding and entitled to vote,
whether or not present in person or by proxy at the Annual Meeting. Abstentions
and broker non-votes, unless a broker's authority to vote on a particular matter
is limited, are tabulated in determining the votes present at a meeting.
Consequently, an abstention or a broker non-vote (assuming a broker has
unlimited authority to vote on the matter) has the same effect as a vote against
a Trustee or a proposal, as each abstention or broker non-vote would be one less
vote for a Trustee nominee or for approval of a proposal.
This Proxy Statement and the accompanying form of proxy were first
mailed to shareholders on or about June 1, 1999.
ELECTION OF TRUSTEES
At the Annual Meeting, two Trustees are to be elected to terms of three
years and until their respective successors are duly elected and qualified.
Edward G. Hill and Steven S. Robson will stand for re-election as Trustees to
terms expiring at the 2002 Annual Meeting of Shareholders. Unless a shareholder
requests that voting of the proxy be withheld for any one or more of the
nominees for Trustee in accordance with the instructions set forth on the proxy,
it presently is intended that Common Shares represented by proxies solicited
hereby will be voted FOR the election of Edward G. Hill and Steven S. Robson as
Trustees to terms expiring at the 2002 Annual Meeting of Shareholders. The
nominees have consented to being named in this Proxy Statement and to serve if
elected. Should any nominee subsequently decline or be unable to accept such
nomination or to serve as a Trustee, an event which the Trustees do not now
expect, the persons voting the Common Shares represented by proxies solicited
hereby may either vote
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<PAGE> 4
such Common Shares for a slate of two persons which includes a substitute
nominee or for a reduced number of nominees, as they may deem advisable.
The Trust's Board of Trustees currently has six members and is divided
into three classes:
-- two Trustees in the class whose term expires at the 1999 Annual
Meeting of Shareholders;
-- two Trustees in the class whose term expires at the 2000 Annual
Meeting of Shareholders; and
-- two Trustees in the class whose term expires at the 2001 Annual
Meeting of Shareholders.
Each of the Trustees serves for three years and until his successor is duly
elected and qualified.
Edward G. Hill and Steven S. Robson, whose terms as Trustees expire at
the 1999 Annual Meeting of Shareholders, have chosen to stand for re-election as
Trustees to terms expiring at the 2002 Annual Meeting of Shareholders. The
biographies of Messrs. Hill and Robson and each of the Trustees whose term in
office will continue after the 1999 Annual Meeting of Shareholders are set forth
below. The Board of Trustees of the Trust recommends a vote FOR Edward G. Hill
and Steven S. Robson as Trustees.
The information concerning the Trustees set forth in the following
table is based in part on information received from the respective nominees and
in part on the Trust's records.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
DURING PAST FIVE YEARS,
AGE AS OF MAY 21, 1999 TRUSTEE
NAME AND DIRECTORSHIPS HELD SINCE
- ---- ---------------------- -----
NOMINEES FOR TERMS EXPIRING IN 2002
<S> <C> <C>
Edward G. Hill Former President of ABCO Foods, a division of Fleming January 30, 1998
(1),(2),(3),(4) Companies, Inc., an owner and operator of grocery
stores, since 1984. Mr. Hill retired from this
position on April 30, 1998. Age: 55.
Steven S. Robson President and Director of Robson Communities and President June 16, 1998
(1),(2),(4) of Scott Homes and Scott Homes Multifamily, Inc.,
residential real estate developers, since 1979. Age: 43.
TRUSTEES WHOSE TERMS EXPIRE IN 2001
James F. Wirth(3) Chairman, President and Chief Executive Officer of the Trust January 30, 1998
since January 30, 1998. Chairman of InnSuites
Innternational Hotels, Inc. and affiliated entities,
owners and operators of hotels, since 1980; Chairman
and President of Rare Earth Development Company, a
real estate investment company, since 1973. Age: 53.
</TABLE>
-2-
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C> <C>
Peter A. Thoma* Owner and operator of A&T Verleigh, Hamburg, Germany, April 13, 1999
hospitality service and rental company, since 1997.
Owner and operator of Thoma Zeltsysteme, Hamburg,
Germany, an import and sales company, since 1997. Age: 32.
TRUSTEES WHOSE TERMS EXPIRE IN 2000
Marc E. Berg(3) Executive Vice President, Secretary and Treasurer of the January 30, 1998
Trust since February 10, 1999. Vice President -
Acquisitions of the Trust from December 16, 1998 to
February 10, 1999. Consultant to InnSuites Hotels and
self-employed as a registered investment advisor since
1985. Age: 47.
Lee J. Flory(1),(2),(4) Vice President, Secretary and Director of The Grainger January 30, 1998
Foundation, Inc., a private charitable organization,
since 1972. From 1969 until his retirement in 1991,
Vice President and Secretary of W.W. Grainger, Inc., a
nationwide distributor of maintenance, repair and
operating supplies. Age: 72.
</TABLE>
1. Member of the Audit Committee.
2. Member of the Compensation Committee.
3. Member of the Executive Committee.
4. Member of the Litigation Committee.
* Nominated and approved by the Board of Trustees by unanimous resolution dated
April 13, 1999, to fill the vacancy caused by the resignation of Gregory D.
Bruhn.
The Trustees held six meetings during the fiscal year ended January 31,
1999. The Trustees do not have a standing nominating committee. The nominees for
Trustee, Edward G. Hill and Steven S. Robson, were members of the Board of
Trustees during the last fiscal year.
The Audit Committee has the responsibility of recommending to the
Trustees the selection of the Trust's independent auditors, reviewing the scope
and results of audit and non-audit services and reviewing internal accounting
controls. The Audit Committee met twice during the last fiscal year.
The Compensation Committee has the responsibility of determining the
compensation of senior management, advising the Trustees on the adoption and
administration of employee benefit and compensation plans and administering the
Trust's 1997 Stock Incentive and Option Plan. The Compensation Committee met
twice during the last fiscal year.
The Executive Committee has the responsibility of exercising all of the
powers of the Board of Trustees in the management of the business and affairs of
the Trust, other than filling vacancies among the Trustees or in any committee
of the Trustees, during the intervals between the meetings of the Board of
Trustees. The Executive Committee did not meet during the last fiscal year.
The Litigation Committee has the responsibility of reviewing,
investigating and responding to allegations made against the Trust. The
Litigation Committee did not meet during the last fiscal year.
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<PAGE> 6
COMPENSATION OF TRUSTEES AND EXECUTIVE OFFICERS
The Trust will pay Trustees' fees to each Trustee, other than Messrs.
Wirth and Berg, in the amount of $12,000 per year. The Trust compensates
members of the Litigation Committee $100 per hour for their services in
connection with that committee, up to a maximum of $5,000 per year.
SUMMARY COMPENSATION TABLE
The table below shows individual compensation information for the
Trust's Chief Executive Officer and the other executive officer whose total
annual salary and bonus for the fiscal year ended January 31, 1999 exceeded
$100,000.
NAME AND
PRINCIPAL POSITION ANNUAL SALARY
- ------------------ -------------
James F. Wirth*
President and
Chief Executive Officer --
Gregory D. Bruhn**
Executive Vice President
and Chief Financial Officer $120,000
- ---------------
* Mr. Wirth has served as President, Chief Executive Officer and Chairman
of the Board since January 30, 1998. Mr. Wirth received no salary, as
such, from the Trust during the fiscal year ended January 31, 1999.
Mr. Wirth's Employment Agreement is summarized below.
** Mr. Bruhn served as Executive Vice President and Chief Financial Officer
from January 30, 1998 until his resignation effective February 11, 1999.
James F. Wirth, Chairman, President and Chief Executive Officer of the
Trust, received no salary, as such, from the Trust during the last fiscal year.
Mr. Wirth has entered into an employment agreement with the Trust which
provides that he will receive no compensation from the Trust as long as RRF
Limited Partnership, a Delaware limited partnership of which the Trust is the
sole general partner (the "Operating Partnership"), maintains an Advisory
Agreement with Mid-America ReaFund Advisors, Inc. ("MARA"), a company owned by
Mr. Wirth and his wife. During the fiscal year ended January 31, 1999, the
Operating Partnership paid MARA $364,041 for advisory and management services
pursuant to the Advisory Agreement. The Advisory Agreement was terminated
effective January 1, 1999. Upon the termination of the Advisory Agreement, Mr.
Wirth's employment agreement provides that he is to receive up to the amount
MARA would have received for advisory and management services under the
Advisory Agreement, not to exceed $160,000 per year. Mr. Wirth is currently
receiving $110,000 per year, subject to periodic review by the Compensation
Committee. The relationship among the Trust, MARA and Mr. Wirth is described
below under "Certain Transactions."
STOCK OPTIONS GRANTED DURING FISCAL YEAR ENDED JANUARY 31, 1999
Options granted to executive officers expire on the tenth anniversary
of the grant dates. Option exercise prices were equal to the fair market value
of the Trust's Common Shares on the grant date. The options have no value unless
the Trust's stock price appreciates and the recipient satisfies the applicable
vesting requirements.
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<PAGE> 7
The table below shows the stock options granted during the fiscal year
ended January 31, 1999 to the executive officers listed in the Summary
Compensation Table shown above, and the present value of those grants at the
date of grant determined in accordance with Securities and Exchange Commission
rules.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------
NUMBER OF
SHARES % OF TOTAL
UNDERLYING OPTIONS EXERCISE
OPTIONS GRANTED TO PRICE EXPIRATION GRANT DATE
NAME GRANTED(1) EMPLOYEES ($/SH.) DATE PRESENT VALUE(2)
- ---- ---------- --------- -------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
James F. Wirth 50,000 38.4%(4) 4.31 6/22/08 $63,000
Gregory D. Bruhn 50,000(3) 38.4% 4.31 (3) $63,000
</TABLE>
- ----------
(1) The options vest 33% each year commencing on the second anniversary of the
grant date.
(2) The per share compensation value of the stock options is $1.26 using the
Black-Scholes options-pricing model with the following weighted-average
assumptions used: no dividend yield, expected volatility of 37.5%, risk-free
interest rate of 5% and expected life of 2.5 years.
(3) Upon his resignation, Mr. Bruhn forfeited all options.
(4) Percentage based on the total number of options granted (130,000) to
employees. Excluding the options to purchase 50,000 shares awarded to Mr.
Bruhn that were subsequently forfeited due to his resignation, the grant of
options to purchase 50,000 shares to Mr. Wirth would represent 62.5% of the
total options granted to employees during the fiscal year ended January 31,
1999.
TRUST PERFORMANCE GRAPH
The following graph compares total shareholder returns from the Trust
over the last five fiscal years to the Standard & Poor's 500 Stock Index ("S&P
500") and the National Association of Real Estate Investment Trusts, Inc.'s
Total Return Indexes for mortgage real estate investment trusts ("NAREIT").
Total return values for the S&P 500, NAREIT and the Trust were calculated based
upon market weighting at the beginning of the period and include reinvestment of
dividends. The shareholder return shown on the following graph is not
necessarily indicative of future performance.
The following graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent the Trust specifically incorporates this information
by reference and otherwise shall not be deemed filed under such Acts.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Trust 100 119.28 108.54 84.58 75.18 54.40
S&P 500 100 100.57 139.30 175.99 223.36 295.93
NAREIT 100 76.27 123.82 186.12 194.66 130.15
----- -------- ------- ------- ------- ------
1/31/94 1/31/95 1/31/96 1/31/97 1/31/98 1/31/99
</TABLE>
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<PAGE> 8
CERTAIN TRANSACTIONS
The Trust and the Operating Partnership (each an "Advisee") were
parties to substantially identical Advisory Agreements under which each Advisee
received certain services from MARA, a corporation owned by James F. Wirth and
his wife. The Advisory Agreements provided that MARA, under the supervision of
the Trustees, serve as a consultant in connection with the policy decisions to
be made by each Advisee and as administrator of their day-to-day investment
operations. In return for MARA's services, each Advisory Agreement provided, in
part, that MARA receive (a) a monthly fee of 1/12th of 1% of the appraised value
of the total assets of each Advisee during the next preceding month; (b) 15% of
the commitment fees received by each Advisee for any stand-by or gap commitment
relating to a mortgage loan which is not closed; and (c) an incentive fee equal
to 10% of the amount, if any, by which net profits exceed 8% of the monthly
average net worth of each Advisee for the year, plus 10% of the net realized
capital gains of each Advisee for such year less accumulated net realized
capital loss. MARA was required to refund to each Advisee the amount, if any, by
which the operating expenses in any fiscal year exceeded the lesser of (i) 1.5%
of the appraised value of the total assets of the for such fiscal year or (ii)
25% of the net income of each Advisee for such fiscal year.
The Advisory Agreement between the Trust and MARA expired by its terms
on January 31, 1999. Effective January 1, 1999, the Operating Partnership and
MARA agreed to terminate their Advisory Agreement one year prior to its
expiration. To terminate the Advisory Agreement, on February 15, 1999 the
Operating Partnership paid $256,000 ($225,000 repayment of principal plus
$31,500 of accrued interest) and on February 1, 2000 is obligated to pay
$240,750 ($225,000 repayment of principal plus $15,750 of accrued interest) to
satisfy two promissory notes which were originally issued by Mr. Wirth and his
wife when they acquired MARA in January 1998. Additionally, the Operating
Partnership issued 67,000 Class B limited partnership units to MARA and MARA
forgave $85,331 in net liabilities in exchange for the termination of the
Advisory Agreement. These amounts were reported as one-time fourth quarter
charges to the Operating Partnership. For the twelve months ended January 31,
1999, the Operating Partnership paid MARA $364,041 for advisory and management
services pursuant to the Advisory Agreement.
Mr. Wirth has an employment agreement with the Trust, expiring in
December 2007, which provides that he will receive no compensation from the
Trust in his capacity as Chairman, President and Chief Executive Officer as long
as the Advisory Agreement is in effect. For periods after January 1, 1999, Mr.
Wirth may receive, as long as he continues to be employed pursuant to his
employment agreement, up to $160,000 per year. Currently, Mr. Wirth receives
$110,000 per year in compensation.
As of February 1, 1998, the Operating Partnership acquired all of the
membership interests in Tucson St. Mary's Suite Hospitality LLC, an Arizona
limited liability company owned by Mr. and Mrs. Wirth, which owned and operated
a hotel property. Mr. and Mrs. Wirth contributed their respective 50%
membership interests in Tucson St. Mary's Suite Hospitality LLC to the capital
of the Operating Partnership. The total consideration paid for those membership
interests was $10,820,000, including 28,800 limited partnership interests in
the Operating Partnership paid as advisory fees (of which 21,600, valued at
$93,150, were delivered to Mr. Berg, a Trustee of the Trust). Mr. and Mrs.
Wirth first acquired their membership interests in Tucson St. Mary's Suite
Hospitality LLC in May 1997 for $6,000,000, and have made capital improvements
and operating subsidies of $2,031,201 during the period of their ownership of
such hotel property. The total consideration paid was determined by the parties
as the result of arms-length negotiations and was based upon an independent
appraisal.
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<PAGE> 9
On June 9, 1998, the independent Trustees of the Trust, acting on
behalf of the Trust as the controlling general partner of the Operating
Partnership, approved the exercise by the Operating Partnership of its option
to acquire an 185-suite InnSuites Hotel located in Buena Park, California.
Effective as of June 1, 1998, the Operating Partnership acquired the hotel by
acquiring all of the membership interests of Buena Park Hospitality L.L.C., an
Arizona limited liability company ("Buena Park L.L.C."), pursuant to the terms
of a Contribution Agreement between James F. Wirth, Steven S. Robson and the
Operating Partnership. Pursuant to the terms of the Contribution Agreement,
Messrs. Wirth and Robson contributed their membership interests in Buena Park
L.L.C. to the capital of the Operating Partnership. The total consideration to
acquire this hotel was $7,100,000, paid by the Operating Partnership as
follows: (a) payment of closing costs and the assumption of the hotel's account
payables (net of account receivables) and a $3,384,626 mortgage on Buena Park
L.L.C. property payable to Cathay Bank; (b) 311,326 Class B Partnership Units
in the Operating Partnership (or at the option of the Trust, up to $825,000
worth of Common Shares) delivered to Mr. Wirth; (c) 311,326 Class A Partnership
Units in the Operating Partnership (or at the option of Mr. Robson, Common
Shares) delivered to Mr. Robson; (d) 5,400 Class A Partnership Units in the
Operating Partnership delivered to Mr. Marc E. Berg, Executive Vice President,
Secretary, Treasurer and Trustee of the Trust, 900 Class A Partnership Units in
the Operating Partnership delivered to Mr. Kevin W. Fell, and 900 Class A
Partnership Units in the Operating Partnership delivered to Mr. J. R. Chase,
each as advisory fees; and (e) 49,474 Class B Partnership Units in the
Operating Partnership delivered to InnSuites Hotels, L.L.C. in satisfaction of
advances made by InnSuites Hotels, L.L.C. to Buena Park L.L.C. The Operating
Partnership also agreed that for a period of one year following the completion
of a public offering of $25,000,000 or more by the Trust, Mr. Wirth, Mr. Robson
and InnSuites Hotels, L.L.C. shall each have the right to cause the Operating
Partnership to redeem, for cash, certain amounts of the Operating Partnership
Units received by them, pursuant to formulas described in the Contribution
Agreement. The total consideration received pursuant to the Contribution
Agreement was determined based upon an appraisal conducted by an independent
third party.
Mr. Wirth derives, and in the future will derive, benefits from the
operation of the Trust's hotel properties by InnSuites Hotels, Inc. (formerly
known as Realty Hotel Lessee Corp.), the management of the Trust's hotel
properties by InnSuites Innternational Hotels, Inc. and the license agreements
with InnSuites Licensing Corp. Mr. and Mrs. Wirth are 100% owners of both
InnSuites Innternational Hotels, Inc. and InnSuites Licensing Corp. InnSuites
Innternational Hotels, Inc. is, in turn, the owner of 9.8% of the outstanding
common stock of InnSuites Hotels, Inc. Each of the hotel properties is leased to
InnSuites Hotels, Inc. under substantially identical percentage leases.
InnSuites Hotels, Inc. has contracted for certain property management services
with InnSuites Innternational Hotels, Inc. and has contracted for certain
trademark and licensing services with InnSuites Licensing Corp. InnSuites
Innternational Hotels, Inc. will receive an annual management fee of 2.5% of
gross revenues from InnSuites Hotels, Inc. for its property management services.
InnSuites Licensing Corp. will receive an annual licensing fee of 2.5% of gross
revenues (1.25% for those hotel properties which also carry a third-party
franchise, such as Best Western or Holiday Inn) from InnSuites Hotels, Inc. for
its trademark and licensing services. Such fees were determined through
arms-length negotiations between the Trust and each of InnSuites Hotels, Inc.,
InnSuites Innternational Hotels, Inc. and InnSuites Licensing Corp. The Trust
believes that such fees are commercially reasonable.
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<PAGE> 10
ADOPTION AND APPROVAL OF AN AMENDMENT TO THE SECOND AMENDED AND
RESTATED DECLARATION OF TRUST OF INNSUITES HOSPITALITY TRUST
The Trustees have adopted resolutions approving, and authorizing the
submission to the shareholders for their approval of, an amendment to Section
1.2 of the Second Amended and Restated Declaration of Trust (the "Declaration"),
in the form presented below.
If approved by the Shareholders, Section 1.2 of the Declaration would
be amended and restated in its entirety to read as follows:
1.2 Location. The Trust may maintain an office in Cleveland, Ohio,
or such other location within or without the state of Ohio, as the
Trustees may from time to time determine.
The affirmative vote of two-thirds of the Common Shares then
outstanding and entitled to vote, whether or not present in person or by proxy
at the Annual Meeting, is required to approve the amendment of Section 1.2 of
the Second Amended and Restated Declaration of Trust. Since the Trust's hotels
are currently all located in Arizona and southern California, the Trustees
believe that the Declaration should allow the Trust to maintain an office
outside the State of Ohio in order to potentially lower overhead expenses by
centralizing management functions in Phoenix, Arizona or in another city
selected by the Trustees. The Trustees recommend that the Shareholders vote FOR
this Proposal.
In the event that the amendment to Section 1.2 is not approved by the
required vote of the Shareholders, this section of the Second Amended and
Restated Declaration of Trust would continue to require the Trust to maintain an
Ohio office, and the Trustees will consider what action, if any, should then be
taken.
OWNERSHIP OF COMMON SHARES
The following table sets forth information as of May 21, 1999 in
respect of any persons known to the Trustees to be the beneficial owner of more
than 5% of the Common Shares and the number of the Common Shares owned
beneficially by each Trustee, nominee and executive officer, and the Trustees,
nominees and executive officers as a group.
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<PAGE> 11
FIVE PERCENT BENEFICIAL OWNERS AND
BENEFICIAL OWNERSHIP OF TRUSTEES, NOMINEES AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
% OF
COMMON SHARES OUTSTANDING
NAME BENEFICIALLY OWNED COMMON SHARES
---- ------------------ -------------
<S> <C> <C>
Dan Z. Bochner(l) 234,900 10.20%
Mason E. Anderson(2) 456,853 16.55%
James F. Wirth(3) 777,663 33.76%
Marc E. Berg 111,225 4.83%
Lee J. Flory(4) 152,216 6.29%
Edward G. Hill 10,252 (7)
Steven S. Robson(5) 317,825 12.16%
Peter A. Thoma 300 (7)
Gregory D. Bruhn(6) 7,798 (7)
Trustees, Nominees and Executive
Officers as a group (seven persons) 1,370,081 50.13%
</TABLE>
- ----------------
(1) Pursuant to Amendment No. 2 to Schedule 13-D, dated December 30, 1996,
filed with the Securities and Exchange Commission on December 31, 1996 by
Mr. Bochner. The address for Mr. Bochner is 1618 Cotner Avenue, Los
Angeles, California 90025.
(2) Consists of 456,853 Class A Limited Partnership Units in the Operating
Partnership, which are convertible at any time, at the option of the holder
thereof, into Common Shares. The address for Mr. Anderson is 3024 West
Sahuaro Drive, Phoenix, Arizona 85029.
(3) These Common Shares are owned jointly by Mr. Wirth and his wife or by their
affiliates or children. Mr. and Mrs. Wirth also own 5,246,364 Class B
Limited Partnership Units in the Operating Partnership, the conversion of
which is restricted and permitted only at the discretion of the Board of
Trustees of the Trust.
(4) Consists of 118,344 Class A Limited Partnership Units in the Operating
Partnership, which are convertible at any time, at the option of the holder
thereof, into Common Shares, and 33,872 Common Shares.
(5) Consists of 311,325 Class A Limited Partnership Units in the Operating
Partnership which are convertible at any time, at the option of the holder
thereof, into Common Shares and 6,500 Common Shares.
(6) Mr. Bruhn served as Executive Vice President and Chief Financial Officer
from January 30, 1998 until his resignation effective February 11, 1999.
(7) Less than one percent (1.0%).
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on Trust records and information, the Trust believes that all
Securities and Exchange Commission filing requirements applicable to Trustees
and executive officers under Section 16(a) of the Securities Exchange Act of
1934, as amended, for the fiscal year ended January 31, 1999, were complied
with, except that the conversion of 107,675 Class A Limited Partnership Units in
the Operating Partnership into Common Shares by Mr. Berg was inadvertently
reported late by the Trust on his behalf.
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<PAGE> 12
SELECTION OF ACCOUNTANTS
The Trustees have selected KPMG LLP as independent auditors to examine
the books, records and accounts of the Trust for the fiscal year ending January
31, 2000. KPMG LLP was the independent auditors of the Trust for the fiscal year
ended January 31, 1999 and is considered by the Trustees to be well qualified.
Representatives of KPMG LLP are expected to be present at the Annual
Meeting with the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
Arthur Andersen LLP resigned as principal auditors of the Trust as of
March 18, 1999. Due to the magnitude of certain outstanding invoices payable to
Arthur Andersen LLP for accounting and tax-related services provided to the
Trust and its affiliates, Arthur Andersen LLP informed the Trust that it would
no longer be considered independent with respect to the Trust under
interpretations of the Securities and Exchange Commission and professional
standards. On April 16, 1999 the audit committee of the Board of Trustees of
the Trust approved KPMG LLP to succeed to Arthur Andersen LLP as the principal
auditors of the Trust.
The reports of Arthur Andersen LLP for the fiscal years ended January
31, 1998 and 1997 did not contain an adverse opinion or disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or accounting
principles. In connection with the audits of the Trust's financial statements
for the fiscal years ended January 31, 1998 and 1997, and in the subsequent
interim period, there were no disagreements with Arthur Andersen LLP on any
matters of accounting principles or practices, financial statement disclosure or
auditing scope and procedure which, if not resolved to the satisfaction of
Arthur Andersen LLP, would have caused Arthur Andersen LLP to make reference to
the matter in their reports.
In connection with the audits of the Trust's financial statements for
the fiscal years ended January 31, 1998 and 1997, and through the subsequent
interim period, there were no "reportable events" as that term is defined in
Item 304(a)(1)(v) of Regulation S-K.
During the fiscal years ended January 31, 1998 and 1997, and during all
subsequent interim periods, the Trust did not consult with any other accountant
regarding the application of accounting principles to a specified transaction
either completed or proposed, the type of audit opinion that might be rendered
on the Trust's financial statements, or any of the matters described above.
OTHER MATTERS
The Trustees know of no matters to be presented for action at the
Annual Meeting other than those described in this Proxy Statement. Should other
matters come before the meeting, the Common Shares represented by proxies
solicited hereby will be voted with respect thereto in accordance with the best
judgment of the proxy holders.
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<PAGE> 13
SHAREHOLDER PROPOSALS
If a shareholder intends to present a proposal at the next Annual
Meeting of Shareholders in 2000, it must be received by the Trust for
consideration for inclusion in the Trust's Proxy Statement and form of proxy
relating to that meeting on or before February 2, 2000. A shareholder who
wishes to present a proposal at the 2000 Annual Meeting of Shareholders, but
not to have such proposal included in the Trust's Proxy Statement and form of
proxy relating to that meeting, must notify the Trust of such proposal before
April 17, 2000. If notice of the proposal is not received by the Trust by such
date, then the proposal will be deemed untimely and the Trust will have the
right to exercise discretionary voting authority and vote proxies returned to
the Trust with respect to such proposal.
REVOCATION OF PROXIES
A proxy may be revoked at any time before a vote is taken or the
authority granted is otherwise exercised. Revocation may be accomplished by the
execution of a later proxy with regard to the same Common Shares or by giving
notice in writing or in open meeting.
SOLICITATION OF PROXIES
In addition to the solicitation of proxies by mail, regular officers
and employees of the Trust may solicit the return of proxies by mail, telephone,
telegram or personal contact, for which they will not receive additional
compensation. The Trust will pay the cost of soliciting proxies in the
accompanying form. The Trust will reimburse brokers or other persons holding
Common Shares in their names or in the names of their nominees for their
reasonable expenses in forwarding proxy material to the beneficial owners of
such Common Shares. The Trust has retained Corporate Investor Communications,
Inc. to perform solicitation services in connection with this proxy statement.
For such services, Corporate Investor Communications will receive a fee of
approximately $4,000 and will be reimbursed for certain out-of-pocket expenses
and indemnified against certain liabilities incurred in connection with this
proxy solicitation.
By order of the Board of Trustees
MARC E. BERG
Secretary
June 1, 1999
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<PAGE> 14
INNSUITES HOSPITALITY TRUST P R O X Y
- ------------------------------- THIS PROXY IS SOLICITED ON BEHALF OF
THE TRUSTEES
<TABLE>
<CAPTION>
<S> <C>
PLEASE The undersigned hereby appoints JAMES F. WIRTH AND MARC E. BERG
SIGN AND as proxies, each with the full power to appoint his substitute, and hereby authorizes
RETURN them to represent and to vote, as designated below, all the Shares of Beneficial
THIS Interest of InnSuites Hospitality Trust held of record by the undersigned on May
PROXY 21, 1999, at the annual meeting of shareholders to be held on July 12, 1999, or at
WHETHER any adjournments thereof.
OR NOT
YOU 1. Election of Trustees.
EXPECT FOR all nominees listed below [ ] WITHHOLD AUTHORITY [ ]
TO ATTEND (except as marked to the contrary below) to vote for all nominees listed below
THE
MEETING EDWARD G. HILL and STEVEN S. ROBSON
YOU MAY (Instruction: To withhold authority to vote for any individual nominee, write that
NEVERTHELESS nominee's name on the space provided below.)
VOTE IN
PERSON IF -----------------------------------------------------------------------------------
YOU ATTEND
2. Approval of the amendment to Section 1.2 of the
Second Amended and Restated Declaration of Trust
of InnSuites Hospitality Trust.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, the proxies are authorized to
vote upon such other business as may properly come
before the meeting.
</TABLE>
(Continued, and to be signed, on the other side)
<PAGE> 15
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR ITEMS 1 AND 2.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such. If a corporation,
please sign in full corporate name by
President or other authorized officer. If
a partnership, please sign in partnership
name by authorized person.
Dated: _______________________, 1999
____________________________________
Signature
____________________________________
Signature if held jointly
Please Sign and Return the Proxy Card Promptly
