SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11-(c) or 240.14a-12
____________________________________________________________________
CAPITAL REALTY INVESTORS TAX EXEMPT FUND LIMITED PARTNERSHIP
and
CAPITAL REALTY INVESTORS TAX EXEMPT FUND III LIMITED PARTNERSHIP
_____________________________________________________________________
Name of Registrant as Specified in Its Certificate of Limited Partnership
MARTIN C. SCHWARTZBERG
___________________________________________
Name of Person(s) Filing Proxy Statement
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6-(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee Paid previously with preliminary materials.
[X] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $31,759
2) Form, Schedule or Registration Statement No.: Schedule 14A
3) Filing Party: Capital Realty Investors Tax Exempt Fund Limited
Partnership and Capital Realty Investors Tax
Exempt Fund III Limited Partnership
4) Date Filed: March 18, 1996
<PAGE>
Preliminary Proxy Statement
SPECIAL MEETINGS OF HOLDERS OF BENEFICIAL ASSIGNEE CERTIFICATES
OF
CAPITAL REALTY INVESTORS TAX EXEMPT FUND
LIMITED PARTNERSHIP
AND
CAPITAL REALTY INVESTORS TAX EXEMPT FUND III
LIMITED PARTNERSHIP
_________________________________________
PROXY STATEMENT
OF
MARTIN C. SCHWARTZBERG
_________________________________________
IN OPPOSITION TO THE PROPOSED MERGERS OF
CAPITAL REALTY INVESTORS TAX EXEMPT FUND LIMITED PARTNERSHIP
AND CAPITAL REALTY INVESTORS TAX EXEMPT FUND III LIMITED PARTNERSHIP
WITH AND INTO AFFILIATES OF CAPITAL APARTMENT PROPERTIES, INC.
AND OTHER RELATED PROPOSALS
_________________________________________________________________________
TO TAKE ACTION AT THE SPECIAL MEETINGS, AMONG OTHER THINGS, TO APPOINT
MARTIN C. SCHWARTZBERG AS AN ADDITIONAL GENERAL PARTNER
AND TO DESIGNATE HIM AS THE MANAGING GENERAL PARTNER OF EACH OF
CAPITAL REALTY INVESTORS TAX EXEMPT FUND LIMITED PARTNERSHIP AND
CAPITAL REALTY INVESTORS TAX EXEMPT FUND III LIMITED PARTNERSHIP
OR, IF SUCH ACTIONS ARE NOT TAKEN AT THE SPECIAL MEETINGS,
TO SEEK THE SUPPORT OF THE HOLDERS OF
BENEFICIAL ASSIGNEE CERTIFICATES OF EACH OF THESE FUNDS
TO REQUEST THAT ANOTHER SPECIAL MEETING OF EACH FUND BE CALLED
(OR, IN THE ALTERNATIVE, A CONSENT SOLICITATION BE COMMENCED)
TO TAKE THESE ACTIONS
_________________________________________
INTRODUCTION
This Proxy Statement, dated as of April [ ], 1996, which is
first being mailed to holders ("BAC Holders") of Beneficial Assignee
Certificates ("BACs") on or about [mailing date], 1996, is furnished
by Martin C. Schwartzberg in opposition to the proposed mergers
(each a "Proposed Merger;" and collectively the "Proposed Mergers")
of each of Capital Realty Investors Tax Exempt Fund Limited Partnership
("CRITEF") and Capital Realty Investors Tax Exempt Fund III Limited
Partnership ("CRITEF III;" and together with CRITEF, the "CRITEF
Funds") with and into two separate entities formed by Capital
Apartment Properties, Inc. ("CAPREIT") and other related proposals.
<PAGE>
Preliminary Proxy Statement
The Proposed Mergers are each proposed to become effective pursuant
to the terms of separate Amended and Restated Agreements and Plans of
Merger for each CRITEF Fund, dated as of March 14, 1996 (each a "Merger
Agreement;" and collectively the "Merger Agreements"). Pursuant to the
Agreement of Limited Partnership for CRITEF, approval of the Proposed
Merger relating to CRITEF requires the affirmative vote of a majority in
interest of Holders CRITEF, Series I and II BACs voting as a single class.
Pursuant to the Agreement of Limited Partnership for CRITEF III, approval
of the Proposed Merger relating to CRITEF III requires the affirmative
vote of a majority in interest of holders of the outstanding CRITEF III,
Series III BACs.
This Proxy Statement and the enclosed [color] proxy card are being
furnished to the BAC Holders in connection with the solicitation of proxies
by Martin C. Schwartzberg to vote against the Proposed Mergers at the
special meetings of BAC Holders, CRITEF and CRITEF III to be held at
10:00 a.m. and 11:00 a.m., respectively, on [meeting date], 1996 at
[location] and at any adjournments or postponements thereof (each a
"Special Meeting;" and collectively the "Special Meetings").
This Proxy Statement also is furnished to the BAC Holders to seek
proxies for use at the Special Meetings, among other things, to appoint
Martin C. Schwartzberg as an additional general partner and to designate
Martin C. Schwartzberg as the managing general partner of each of the
CRITEF Funds (and vesting in him all obligations, responsibilities and
rights attendant to these positions) or, if such actions are not taken
at the Special Meetings, to seek their proxies to request that another
special meeting of the BAC Holders of each CRITEF Fund be called (or,
in the alternative, a consent solicitation be commenced) to take these
actions.
Reference is made to the Joint Proxy Statements of the CRITEF Funds
for soliciting proxies at the Special Meetings, dated [ ], 1996
(the "CRITEF Funds Proxy Statements"), for information concerning the
BACs, the beneficial ownership of such BACs by the principal holders
thereof, other information concerning the CRITEF Funds management, the
background of the Proposed Mergers, a description of the terms of the
Proposed Mergers, the rights of appraisal or similar rights of dissenting
BAC Holders, if any, recent trading prices for the BACs and certain other
matters regarding the BACs and the Special Meetings. Certain of the
information discussed in this Proxy Statement has been obtained from
the disclosures set forth in the CRITEF Funds Proxy Statements. Martin C.
Schwartzberg assumes no responsibility for the accuracy or completeness
of any such information.
Each BAC Holder is entitled to one vote for each BAC held of record
by such BAC Holder at the close of business on [ ], 1996 (the
"Record Date"), with respect to each of the proposals described in this
Proxy Statement to be voted upon by such BAC Holder.
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<PAGE>
Preliminary Proxy Statement
REASONS TO VOTE AGAINST THE PROPOSED MERGERS
I, Martin C. Schwartzberg, am both a general and limited
partner in CRITEF Associates Limited Partnership ("CRITEF Associates"),
the general partner of CRITEF, and a limited partner in CRITEF III
Associates Limited Partnership ("CRITEF III Associates;" and together
with CRITEF Associates, the "General Partners"), the general partner
of CRITEF III. As such, I have a financial interest in the Proposed
Mergers and, I believe, a fiduciary obligation to act in the best
interests of the BAC Holders. I do not hold any BACs. I am opposing
the Proposed Mergers (and related proposals) for the following principal
reasons:
1. NOW IS NOT THE TIME TO SELL.
Over the last several years, I believe the properties that
comprise the assets of the CRITEF Funds have done well in
light of the current real estate environment. For the
year ended December 31, 1995, CRITEF Series I, CRITEF
Series II and CRITEF III BAC Holders received distributions
on a tax exempt basis aggregating $1.08, $1.08 and
$1.20, respectively. On the basis of the closing price
of each of these series of BACs on September 8, 1995,
the last full trading day prior to the public announcement
of the initial execution of the Merger Agreements, the
annualized after-tax rate of return realized by the BAC
Holders for 1995 was 9.19%, 9.93% and 10.0% for CRITEF
Series I, CRITEF Series II and CRITEF III, respectively
(7.56%, 7.67% and 7.99%, respectively, on the basis of
the consideration to be paid in the proposed mergers after
deducting fees and expenses of counsel in two Class Action
suits (the "Class Actions") brought by certain BAC Holders
alleging that the price offered to the BAC Holders in the
initial Merger Agreements was inadequate but before any
cash flow adjustments). Given these historical rates of
return, selling the CRITEF Funds at this time may not be
in the best interests of the BAC Holders. I believe that
the existing debt held by CRITEF Funds can be refinanced
on terms that are more favorable to the BAC Holders than
the existing debt and that retain the tax exempt status
for distributions to the BAC Holders (although there can
be no assurance that such refinancing can be achieved).
If the Proposed Mergers are consummated, all BAC Holders
-- whether or not they voted in favor of the Proposed
Mergers -- will be forced to dispose of their interests
in the BACs for the consideration to be paid in the Proposed
Mergers. There is no statutory right for BAC Holders
to be paid the appraised value of their BACs nor do the
Merger Agreements provide for any such right.
The CRITEF Funds Proxy Statements suggest that the Proposed
Mergers are necessary since ". . . the full amount of BAC
Holder invested capital may not be recoverable . . ." on
most of the debt held by the CRITEF Funds when such debt
matures within the next several years (1998 through
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<PAGE>
Preliminary Proxy Statement
2000). But you must remember that invested capital is not
being recovered in the Proposed Mergers. In fact, assuming
the consideration to be paid to the BAC Holders for each
BAC is $14.14, $13.93 and $14.88 in the case of the CRITEF
Series I, CRITEF Series II and CRITEF III, respectively (as
discussed above), the percentage of invested capital recovered
per BAC in the Proposed Mergers (based upon an initial
purchase price of $25 per BAC) will only be 56.56%, 55.72%
and 59.52%, respectively, and in the Proposed Mergers an
initial investor would be taking a loss of $10.86, $11.07
and $10.22 per BAC, respectively.
The General Partners state in the CRITEF Funds Proxy Statements
that any renewal of the debt held by the CRITEF Funds may not
be on terms that maintain the tax exempt status of distributions
to the BAC Holders. It is my opinion that there is a strong
possibility that the tax exempt status can be maintained on
renewal or refinancing -- although I agree that there can be
no certainty. Given the skepticism of the General Partners
as to the future tax exempt status of the debt, I find it
interesting that the financing source contemplated by
CAPREIT to fund the acquisition of the Proposed Mergers
is tax exempt bonds (although the CRITEF Funds Proxy
Statements do not disclose this fact, it is clearly stated
in the CAPREIT commitment letter referred to in the
Merger Agreements). How can CAPREIT be so certain that
its financing will be tax exempt? Are the General Partners
implying that CAPREIT's ability to consummate the Proposed
Mergers is in question? Ask yourself, why shouldn't the
General Partners have attempted to seek to refinance the
debt held by the CRITEF Funds without the BAC Holders
being required to dispose of their BAC interests (and if
the General Partners have made such attempts, why haven't
they made any disclosures to that effect in the CRITEF
Funds Proxy Statements)?
2. I BELIEVE THAT WILLIAM DOCKSER AND H. WILLIAM WILLOUGHBY (WHO CONTROL
THE GENERAL PARTNERS) HAVE CONFLICTS OF INTEREST IN THE PROPOSED MERGERS
THAT PROVIDE THEM WITH SIGNIFICANT ECONOMIC INCENTIVES TO CONSUMMATE THE
PROPOSED MERGERS.
The Proposed Mergers are one of a series of transactions
in which Messrs. Dockser and Willoughby and their affiliates
have engaged with affiliates of CAPREIT, including a
transaction that closed just months before the Merger
Agreements initially were executed (and while the Proposed
Mergers were being considered) in which a $4.75 million
payment to Messrs. Dockser and Willoughby was made with
respect to the redemption of certain contingent limited
partnership interests in a CAPREIT affiliate. I believe
that these prior transactions may have been a significant
factor in Messrs. Dockser and Willoughby deciding to
recommend the Proposed
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<PAGE>
Preliminary Proxy Statement
Mergers. It should be noted that two senior officers of
CAPREIT (including its President and Chief Executive Officer)
are former employees of C.R.I., Inc. ("CRI"), Messrs. Dockser's
and Willoughby's wholly-owned corporation, and that CAPREIT
and CRI have their offices in the same office building.
Given the following interests of Messrs. Dockser and
Willoughby in the Proposed Mergers, ask yourself whether you
think the terms of the Proposed Mergers were negotiated at
arm's length:
Upon the consummation of the Proposed Mergers, CRI will
receive $1,950,000 for accrued mortgage servicing and
administrative fees (under the terms of the Merger
Agreements, as originally executed, CRI would have received
approximately $4 million) and CRIIMI MAE Services Limited
Partnership (whose general partner is a subsidiary of a
publicly held corporation of which Messrs. Dockser and
Willoughby are the beneficial owners of 5.1% and 4.7% of the
outstanding equity, respectively, and are directors and
Chairman of the Board and President, respectively) will
receive $1,223,940 for accrued mortgage servicing and
administrative fees (which amount will be increased by
$101,995 for each month after June 1996 that the
consummation of the Merger is delayed). It should be
emphasized that in the absence of the Proposed Mergers,
these accrued fees would not be paid in the foreseeable
future. As set forth in the financial statements
accompanying the CRITEF Funds Proxy Statements, "[t]he
unpaid fees are payable from available cash flow after
payment of all current and delinquent base interest and
accrued interest on delinquent base interest. If available
cash flow from the borrower is insufficient to pay the fee,
it is payable on the earlier of prepayment or maturity of
the loan, after debt repayment." Ask yourself, should
Messrs. Dockser and Willoughby receive any of these fees
when BAC Holders are being asked to accept as full payment
for their interests in the BACs a significant discount from
the initial purchase price for the BACs?
If the Proposed Mergers are consummated, affiliates of
Messrs. Dockser and Willoughby will be relieved of a
potential obligation to repay an affiliate of CAPREIT
$1,313,864 related to certain property management contracts
for 13 of the properties that secure the debt held by the
CRITEF Funds (the amount of this potential repayment would
be reduced to $1,149,631 on June 30, 1996).
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<PAGE>
Preliminary Proxy Statement
Through their general partnership interests in the CRITEF
Funds, Messrs. Dockser and Willoughby will receive an
aggregate of approximately $505,000 for the sale of these
general partnership interests. (I will receive $250,000 for
my partnership interests.) The CRITEF Funds Proxy Statements
states that these payments ". . . represent substantially
more than the General Partners would receive on account of
their general partner interests in the event of the
liquidation . . ." of the CRITEF Funds (if liquidated on
December 31, 1996, the General Partner of CRITEF would
receive only a nominal amount for its interest and the
General Partner of CRITEF III would receive nothing for its
interest). Why should the General Partners receive any
payments for their interests if the BAC Holders must accept
a significant discount from the initial purchase price for
the BACs?
Messrs. Dockser and Willoughby also may receive through
affiliates a further payment from a limited partnership
interest being retained in the properties that secure the
debt held by the CRITEF Funds. CAPREIT has an option to
purchase this limited partnership interest at its fair
market value (defined as the proportionate interest
represented by such limited partnership interest of the fair
market value of the partnership property as encumbered by
the mortgage loans). Why should Messrs. Dockser and
Willoughby receive benefits from any post-merger
appreciation of these properties while the BAC Holders are
being cashed-out without any such upside potential?
CAPREIT has agreed to indemnify Messrs. Dockser and
Willoughby and certain affiliates for a period of 3 1/2
years after the consummation of the Proposed Mergers to
the same extent they are presently indemnified by the
CRITEF Funds.
In reviewing these benefits to be received by Messrs. Dockser
and Willoughby, it should be noted that Oppenheimer & Co., Inc.
("Oppenheimer"), the investment banking firm that was retained
by the CRITEF Funds to render fairness opinions, stated in these
fairness opinions that at the request of the General Partners it
". . . has not taken into account any consideration paid to or
other benefits to be received by the General Partners and its
affiliates . . . in connection with the [Proposed] Merger[s] and
Oppenheimer expresses no opinion thereon." The reasons for this
request by the General Partners are not provided. Ask Messrs.
Dockser and Willoughby for an explanation.
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<PAGE>
Preliminary Proxy Statement
3. IN MY VIEW, MESSRS. DOCKSER AND WILLOUGHBY FAILED TO FULFILL THEIR
FIDUCIARY OBLIGATIONS TO THE BAC HOLDERS IN NEGOTIATING AND EXECUTING
THE MERGER AGREEMENTS.
The Merger Agreements initially were executed prior to the
CRITEF Funds having obtained opinions from an investment
banking firm as to the fairness of the consideration to be
received by the BAC Holders in the Proposed Mergers (which
opinions are required under the terms of the Merger Agreements
to be obtained prior to the consummation of the Proposed
Mergers). This is particularly troublesome since discussions
concerning the Proposed Mergers had been held for nine months
prior to the initial execution of the Merger Agreements on
September 11,1995 -- thus, there was ample time for the CRITEF
Funds to have received fairness opinions. The failure to have
obtained fairness opinions at that time is inconsistent with my
understanding of the general practice of receiving fairness
opinions prior to the execution of a merger agreement. In fact,
I believe it is reasonable to imply from the disclosures
contained in the CRITEF Funds Proxy Statements that prior to the
execution of the Merger Agreements, the General Partners had not
even received assurances that a fairness opinion was obtainable.
In October 1995, Oppenheimer advised the General Partners that
the consideration initially being offered to the BAC Holders
". . . would not support a fairness determination by
Oppenheimer." Moreover, after the consideration to be paid to
the BAC Holders in the Proposed Mergers was increased in January
1996, Oppenheimer still was unable to render a fairness opinion
as to the consideration to be paid to the CRITEF Series II BAC
Holders until the aggregate consideration to be paid to these BAC
Holders was further increased by $260,000. I believe that it is
not unreasonable to surmise from this development that, at least
with respect to the CRITEF Series II BAC Holders, the
consideration to be received in the Proposed Mergers is, in the
view of Oppenheimer, on the low-end range of fairness. Yet,
Messrs. Dockser and Willoughby publicly have characterized the
consideration before the increases as representing "full" value.
Ask yourself why Messrs. Dockser and Willoughby were so anxious
to sign the Merger Agreements without having first obtained the
requisite fairness opinions and why they agreed to terms that
their own investment banking firm later told them could not
support a fairness determination.
You also should ask yourself why the Merger Agreements were
entered into without Messrs. Dockser and Willoughby having first
more actively considered alternative transactions to the Proposed
Mergers -- particularly since the Merger Agreements prohibit
CRITEF and CRITEF III from seeking higher bids from third parties
or initiating discussions or negotiations with such third parties
concerning any other possible
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<PAGE>
Preliminary Proxy Statement
transactions involving the CRITEF Funds (although, under the
terms of the Merger Agreements, the CRITEF Funds can respond to
unsolicited proposals made by third parties to the extent their
fiduciary obligations to the BAC Holders require such a response).
Until the CRITEF Funds Proxy Statements were mailed, CAPREIT had
the right to terminate the Merger Agreements -- without financial
penalty -- if it decided for any reason not to proceed with the
Proposed Mergers. Why couldn't CAPREIT have completed its due
diligence before signing the Merger Agreements -- particularly
given the length of the negotiation process? The obligation of
CAPREIT to consummate the Proposed Mergers is subject to various
conditions, including a financing condition. Accordingly, there
can be no certainty that the Proposed Mergers will be consummated
even if approved by the BAC Holders. Why were Messrs. Dockser
and Willoughby so anxious to sign the Merger Agreements?
By executing the Merger Agreements, the CRITEF Funds became
subject to various restrictions relating to the conduct of their
businesses,including limitations on the amount of distributions
that are permitted to be paid to the BAC Holders. Even if the
BAC Holders determine not to approve the Proposed Mergers (or
fairness opinions have not been obtained), a break-up fee of
$2.25 million in the case of each of the CRITEF Funds is required
under certain circumstances to be paid to CAPREIT -- including if
a more favorable transaction is entered into within 270 days
after termination of the Merger Agreements. While these types
of provisions are not uncommon in merger agreements, what I find
objectionable is that Messrs. Dockser and Willoughby agreed,
prior to obtaining fairness opinions, to subject the CRITEF Funds
to these restrictions and obligations -- particularly given the
subsequent determination by Oppenheimer that the consideration to
be paid to the BAC Holders under the initial terms of the Merger
Agreements would not have supported a fairness determination.
Again, ask yourself why Messrs. Dockser and Willoughby were so
anxious to execute the Merger Agreements.
Before entering into the Merger Agreements, why didn't Messrs.
Dockser and Willoughby discuss the terms of the Proposed Mergers
with an independent person who wasn't receiving personal
financial benefits as a result of the consummation of the
Proposed Mergers? As a general and limited partner of one of the
General Partners and a limited partner of the other, why weren't
the terms of the Proposed Mergers discussed with me prior to
entering into the Proposed Mergers?
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<PAGE>
Preliminary Proxy Statement
4. IN MY VIEW, THE TERMS OF THE PROPOSED MERGERS DO NOT REPRESENT FULL
VALUE TO BAC HOLDERS.
In a September 11, 1995, press release announcing the
Proposed Mergers, Mr. Dockser stated that the Proposed Mergers
represented "full value" to the BAC Holders. Yet, on February
1, 1996, Messrs. Dockser and Willoughby issued another press
release on behalf of the CRITEF Funds announcing they had
renegotiated the Proposed Mergers to increase the consideration
to be paid to the BAC Holders by $8.5 million, for a total of
$158.5 million. I believe that this increase resulted from a
number of events including: (i) the Class Actions brought by
certain BAC Holders alleging that the price offered to the BAC
Holders in the initial Merger Agreements was inadequate, and that
Messrs. Dockser and Willoughby, among others, breached their
fiduciary duty to the BAC Holders or aided and abetted such a
breach, engaged in self-dealing and misled BAC Holders in
connection with the Proposed Mergers; (ii) the determination by
Oppenheimer that the consideration initially offered to the BAC
Holders ". . . would not support a fairness determination;" and
(iii) the litigation commenced by me against CRI and Messrs.
Dockser and Willoughby in the Circuit Court of Montgomery County,
Maryland (see "Certain Litigation Relating to the Proposed
Mergers"). The fact that an additional $8.5 million became
available between September and February in my view calls into
question how the original $150 million consideration that was
proposed to be paid to the BAC Holders could have been described
as "full value" by Mr. Dockser in the September press release.
As mentioned above, even after the February 1, 1996 press release
was issued, an additional $260,000 was added to the consideration
to be paid to the CRITEF Series II BAC Holders in order for
Oppenheimer to render its fairness opinion. Ask Messrs. Dockser
and Willoughby when "full value" really becomes "full."
Further, I am concerned that the value of the assets of the
CRITEF Funds (the underlying properties) may be substantially
undervalued at $158.5 million. In fact, the $158.5 million does
not represent the actual consideration to be paid to BAC Holders.
Approximately $1.7 million of this amount is anticipated to be
paid to the counsel for the Class Action plaintiffs and up to
approximately an additional $1.5 million may be retained by
CAPREIT if certain specified cash flow amounts are not achieved
(on the other hand, the consideration may be increased by up to
an equal amount if these cash flows are achieved). Accordingly,
the consideration to be paid to the BAC Holders for each BAC may
be as low as $14.14, $13.93 and $14.88 in the case of CRITEF
Series I, CRITEF Series II, and CRITEF III, respectively. The
BACs originally were issued in 1986-1988 (CRITEF Series I and II
in 1986 and 1987, CRITEF III in
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Preliminary Proxy Statement
1988) for an aggregate value of $268 million or $25 per BAC.
Ask yourself why $1.7 million that otherwise would have been
distributed to the BAC Holders in the Proposed Mergers is being
given to counsel for the Class Action plaintiffs, when some or
all of the $8.5 million increase resulted from Oppenheimer's
inability to render fairness opinions.
Buried in the disclosures made in the CRITEF Funds Proxy
Statements is the fact that the BAC Holders in the aggregate
may recognize a $15 million capital loss upon the consummation
of the Proposed Mergers, which capital loss would reduce the tax
basis of the BACs. This reduction in tax basis may result in the
taxable gain recognized per BAC to be increased by $1.39
(assuming the loss is equally distributed among the outstanding
BACs), thus reducing the net consideration being received in the
Proposed Mergers for certain BAC Holders by approximately $.39
per BAC (assuming a 28% federal tax rate on capital gains),
without considering further reductions due to state or local
taxes.
5. WE DO NOT HAVE COMPLETE AND ADEQUATE INFORMATION WITH WHICH
TO EVALUATE THE PROPOSED MERGERS.
In my role as a general and limited partner of CRITEF
Associates and a limited partner in CRITEF III Associates, I
sought to obtain from CRI and Messrs. Dockser and Willoughby
additional information about the Proposed Mergers and the values
of each of the properties that secure the debt held by the
CRITEF Funds, and even brought litigation at my own expense in
order to obtain such information and the lists of BAC Holders to
permit me to communicate with the BAC Holders as to my concerns
about the Proposed Mergers and the management of the CRITEF Funds
(See "Certain Litigation Relating to the Proposed Mergers"). I
was denied this information and the General Partners vigorously
are defending that lawsuit to prevent me from obtaining this
information as well as the BAC Holder lists. In my opinion, as a
result, at least in part, of these demands, the CRITEF Funds
publicly have filed the financial statements of the individual
properties that secure the debt held by the CRITEF Funds with the
Securities and Exchange Commission (the "SEC"). However, these
financial statements are not being mailed to BAC Holders and can
only be obtained at prescribed rates from the SEC or the American
Stock Exchange. Moreover, reference to these financial statements
are not made until page 90 of the 97 page CRITEF Funds Proxy
Statements (not including several hundred pages of exhibits).
Why can't these financial statements be made available by the
General Partners, without cost, to any interested BAC Holder?
Why haven't these financial statements previously been made
publicly available so that other potential acquirors could
utilize them? Further, certain information provided to
Oppenheimer
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Preliminary Proxy Statement
in connection with rendering its fairness opinions have not been
made publicly available, including certain financial forecasts
that were represented to Oppenheimer as being reasonable
projections as to the future financial forecast of the CRITEF
Funds. Shouldn't the BAC Holders be shown these projections
before they vote on whether to dispose of their interests in the
BACs?
6. I, AS A GENERAL PARTNER OF CRITEF ASSOCIATES, HAVE NOT APPROVED THE
PROPOSED MERGERS.
The Merger Agreements state that the General Partners of each
of the CRITEF Funds have approved and adopted the Proposed
Mergers, have determined that the Proposed Mergers are fair to
the BAC Holders, and have recommended that the BAC Holders
approve the Proposed Mergers. Although I am a general partner of
CRITEF Associates, the general partner of CRITEF, I never have
expressed approval of the Proposed Mergers, never have determined
that the Proposed Mergers are fair to the BAC Holders, and never
have recommended that the BAC Holders approve the Proposed
Mergers. Shouldn't my objections to the Proposed Mergers have
been disclosed in a prominent section of the CRITEF Funds Proxy
Statements?
For the foregoing reasons, I urge you on the [color] proxy card to vote
AGAINST the Proposed Mergers and the related proposals being recommended by the
General Partners.
REASONS TO SUPPORT ACTIONS AT THE SPECIAL MEETINGS,
AMONG OTHER THINGS, TO APPOINT MARTIN C. SCHWARTZBERG
AS AN ADDITIONAL GENERAL PARTNER AND TO DESIGNATE MARTIN C.
SCHWARTZBERG AS THE MANAGING GENERAL PARTNER OF
EACH OF THE CRITEF FUNDS OR, IF SUCH ACTIONS ARE NOT TAKEN
AT THE SPECIAL MEETINGS, TO SEEK THE SUPPORT OF THE
BAC HOLDERS OF EACH CRITEF FUND TO REQUEST THAT
ANOTHER SPECIAL MEETING OF EACH FUND BE CALLED
(OR, IN THE ALTERNATIVE, A CONSENT SOLICITATION BE COMMENCED)
TO TAKE THESE ACTIONS
For the reasons discussed above, I believe that Messrs. Dockser and
Willoughby placed their own interests before those of the BAC Holders when
approving the Proposed Mergers and have a significant financial incentive for
the Proposed Mergers to be consummated. In light of these conflicts, if the
Proposed Mergers are not approved by the BAC Holders, I urge the BAC Holders
to appoint me as an additional general partner of each of CRITEF and CRITEF
III and to
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Preliminary Proxy Statement
designate me at the same time as the managing general partner of each of
CRITEF and CRITEF III (and vesting in me all obligations, responsibilities and
rights attendant to these positions).
Therefore, I am asking for your proxy for use at the Special Meetings to
appoint me as an additional general partner of each of CRITEF and CRITEF III
and to designate me at the same time as the managing general partner of each
of CRITEF and CRITEF III. If I am appointed as an additional general partner
and designated as the managing general partner of each of the CRITEF Funds,
the text of the applicable Partnership Agreements will be amended to reflect
such appointment and designation and to make all the conforming changes to
effect the same. By appointing me an additional general partner and
designating me as the managing general partner of each of the CRITEF Funds,
you also will be voting to appoint me as true and lawful attorney-in-fact with
full power and authority to do such acts and executed such documents as may be
necessary and appropriate to carry out the provision of the CRITEF Funds
Partnership Agreements, replacing CRI and its Chairman of the Board, President
and any Vice Presidents previously appointed as attorney-in-fact for such
purposes. Designating me as an additional general partner and managing
general partner of each of the CRITEF Funds will have no adverse effect on the
legal or tax structure of the CRITEF Funds. This conclusion has been
confirmed, at my request, by the legal opinion of [firm to be retained] that
such appointment and designation (1) is in conformity with the Delaware Revised
Uniform Limited Partnership Act ("Act") and is not in violation of the Act;
(2) will not impair the limited liability of the BAC Holders; (3) will not
cause the termination or dissolution of the CRITEF Funds; and (4) will not
cause the CRITEF Funds to be classified as other than a partnership for
federal income tax purposes. This legal opinion is required under the CRITEF
Funds Partnership Agreements. By designating this law firm on the enclosed
[color] proxy card, you are appointing them to render the required opinion.
If, for any reason, the action to appoint me as an additional general
partner of each of the CRITEF Funds and to designate me as the managing
general partner thereof is not taken at the Special Meetings, I am seeking
your proxy to request that another special meeting of the BAC Holders of each
CRITEF Fund be called (or, in the alternative, a consent solicitation be
commenced) to take such action. Your proxy to request another special meeting
will not obligate you to vote to appoint me as an additional general partner
or to designate me as the managing general partner of each of the CRITEF Funds
at this additional special meeting. Rather, you merely are consenting to
allow me to bring these issues to a vote of BAC Holders either at another
special meeting of each of the CRITEF Funds or through a consent solicitation.
If I am appointed the managing general partner of either of the CRITEF
Funds, I will explore all reasonable options to protect and maximize the value
of the BACs to the BAC Holders of that CRITEF Fund, in particular exploring
possible refinancings of the existing debt held by that CRITEF Fund on terms
that are more favorable to the BAC Holders than the existing debt and that
retain the tax exempt status of the distributions to the BAC Holders. There
can be no assurance that any such refinancing can be achieved.
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Preliminary Proxy Statement
For the foregoing reasons, I urge you on the [color] proxy card to vote
FOR appointing me as an additional general partner of each of CRITEF and
CRITEF III and designating me as the managing general partner of each
CRITEF Fund at the Special Meetings and the other matters related thereto or,
if such actions are not taken at the Special Meetings, to vote FOR supporting
the request that another special meeting of the BAC Holders of each CRITEF
Fund be called (or, in the alternative, a consent solicitation be commenced)
for purposes of taking these actions.
BACKGROUND OF THE PROPOSED MERGERS
PARTIES TO THE MERGER
C.R.I., Inc. ("CRI"), a real estate asset management and financial
services company based in Rockville, Maryland, is a Delaware corporation owned
and controlled by William B. Dockser and H. William Willoughby founded in
1974. CRI is a general and limited partner of CRITEF Associates, the general
partner of CRITEF, and the general partner of CRITEF III Associates, the
general partner of CRITEF III. By its control of CRITEF Associates and CRITEF
III Associates, CRI and Messrs. Dockser and Willoughby have controlled the
management - as well as the negotiation of the Merger Proposals -- of the
CRITEF Funds. Prior to June 1994, Messrs. Dockser and Willoughby and CRI
also had significant holdings in CAPREIT, the prospective purchaser of the
CRITEF Funds.
CRITEF and CRITEF III are Delaware limited partnerships. During 1986 -
1988, the CRITEF Funds separately issued Beneficial Assignee Certificates
("BACs") (in the case of CRITEF, Series I and II; and in the case of CRITEF
III, Series III), the securities that you hold, which are traded on the
American Stock Exchange.
CRITEF Associates Limited Partnership ("CRITEF Associates") and CRITEF
III Associates Limited Partnership ("CRITEF III Associates"), Delaware limited
partnerships, are the general partners of CRITEF and CRITEF III, respectively.
I, along with CRI and Messrs. Dockser and Willoughby own all of the 1.00%
general partnership interest (of which I own beneficially a 33% interest) and
all of the 99% limited partnership interest (of which I own beneficially a
24.6% interest) in CRITEF Associates. Additionally CRI owns all of the 1.00%
general partnership interest, and I, along with CRI and Messrs. Dockser and
Willoughby, own all of the 99% limited partnership interest (of which I own
beneficially a 24.6% interest) in CRITEF III Associates.
Capital Apartment Properties, Inc. ("CAPREIT"), the general partner of
each of Watermark Partners, L. P. and Watermark III Partners, L.P., is a
self-managed, self-administered private real estate investment trust formed in
the Fall of 1993 by CRI and Messrs. Dockser and Willoughby. An affiliate of
CAPREIT ("CAPREIT Residential") currently manages a majority (13 out of 18) of
the multifamily properties securing the mortgage revenue bonds held by the
CRITEF Funds. CAPREIT issued all of its outstanding shares to AP CAPREIT
Partners, L.P.
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<PAGE>
Preliminary Proxy Statement
("AP CAPREIT"), an affiliate of Apollo Advisers Real Estate Investment Fund,
L.P., on January 31, 1994. According to the CRITEF Funds Proxy Statements, AP
CAPREIT holds 99.83% of the outstanding capital stock of CAPREIT.
Watermark Partners L.P. and Watermark III Partners L.P. are Delaware
limited partnerships and affiliates of CAPREIT. These two partnerships were
formed specifically for purposes of consummating the Proposed Mergers.
ADDITIONAL INFORMATION CONCERNING THE PROPOSED MERGERS
BAC Holders are urged carefully to read the CRITEF Funds Proxy Statements
for details concerning the terms of the Proposed Mergers and related matters,
including "No Dissenter's Rights," "BAC Ownership," and "The Merger
Proposals." Martin C. Schwartzberg assumes no responsibility for the accuracy
or completeness of any such information.
INFORMATION ABOUT MARTIN C. SCHWARTZBERG
I am both a limited and general partner of CRITEF Associates, the general
partner of CRITEF. I also am a limited partner of CRITEF III Associates, the
general partner of CRITEF III. I am Chairman and Chief Executive Officer of
Capital Management Strategies, Inc., ("CMS") an asset management company
specializing in low and moderate income housing. I am a general partner (and
in some instances managing general partner) in over 125 private limited
partnerships specializing in low and moderate income housing investments. On
January 17, 1996, I commenced a consent solicitation of the limited partners
of 102 of these private limited partnerships to designate me the managing
general partner of these limited partnerships, replacing CRI. (I later
solicited the consent of the limited partners of another 3 such partnerships.)
As of [date], 1996, I have received the requisite number of consents from
limited partners of [ ] of these partnerships to designate me the managing
general partner. In connection with these efforts, I currently am engaged in
litigation with CRI and Messrs. Dockser and Willoughby regarding the consent
solicitations in the Circuit Court of Montgomery County, Maryland and the
Superior Court of the District of Columbia (see "Certain Litigation Relating
to the Proposed Mergers"). I founded and am currently pro bono chair of the
National Foundation for Affordable Housing Solutions, a non-profit
organization committed to devising and implementing creative and practical
solutions to preserve, improve and augment the nation's stock of affordable
housing and enlist private sector service providers to privatize and overhaul
the welfare system.
Prior to January 1, 1990, I was President and Director of CRI which I
co-founded in 1974. I left CRI in 1990. Since I left CRI, I have not been
involved in the management of the General Partners or the CRITEF Funds.
I held various advisory positions at HUD from 1968 to 1971, including
two years of service on the staff of Secretary George Romney as liaison to the
private sector. In this capacity,
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<PAGE>
Preliminary Proxy Statement
I worked to foster the production of low and moderate income housing by
non-traditional rental housing developers and assisted in the creation of
private/public joint ventures.
VOTE REQUIRED FOR MERGER APPROVAL
SPECIAL MEETINGS
This Proxy Statement is being furnished to the BAC Holders by Martin C.
Schwartzberg in connection with the solicitation of proxies for use at each of
the Special Meetings of the CRITEF Funds to be held, in the case of CRITEF
Series I and II, at 10:00 a.m. and in the case of CRITEF III, at 11:00 a.m.,
on [date], 1996 at [location] and at any adjournments or postponements
thereof.
RECORD DATE
Only BAC Holders of record as of the close of business on [ ], 1996 (the
"Record Date") are entitled to notice of and to vote at the Special Meetings.
According to the CRITEF Funds Proxy Statements, as of the Record Date, there
were 2,280,000 CRITEF Series I BACs, 3,238,760 CRITEF Series II BACs and
5,258,268 CRITEF III BACs outstanding. According to the CRITEF Funds Proxy
Statements, as of the Record Date, there were approximately [ ] and [ ]
registered holders of BACs in CRITEF Series I and Series II, respectively, and
approximately [ ] registered holders of BACs in CRITEF III.
VOTE REQUIRED
According to the CRITEF Funds Partnership Agreements, each BAC Holder is
entitled to one vote per BAC (through the Assignor Limited Partners, who shall
vote on behalf of and at the instruction of the BAC Holders). Pursuant to the
terms of the CRITEF Funds Partnership Agreements, the affirmative vote of a
majority in interest (i.e., 50.01%) of the BAC Holders of CRITEF Series I and
Series II, voting together as a single class, is required to approve the
CRITEF Proposed Merger. Thus, if a majority in interest of CRITEF BAC Holders
approve the CRITEF Proposed Merger, the CRITEF Proposed Merger will be deemed
approved regardless of whether a majority in interest of the BAC Holders in
either Series I or Series II votes against the CRITEF Proposed Merger. The
affirmative vote of a majority in interest (i.e., 50.01%) of the BAC Holders
of CRITEF III is required to approve the CRITEF III Proposed Merger.
Pursuant to the terms of the CRITEF Partnership Agreement, the
affirmative vote of a majority in interest (i.e., 50.01%) of the BAC Holders
of CRITEF Series I and II voting together as a single class is required to
appoint me as an additional general partner and to designate me as the
managing general partner of CRITEF and to take the other related actions
described above.
Pursuant to the terms of the CRITEF III Partnership Agreement, the
affirmative vote of a majority in interest (i.e., 50.01%) of the BAC Holders
of CRITEF III is required to appoint me as
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<PAGE>
Preliminary Proxy Statement
an additional general partner and to designate me as the managing general
partner of CRITEF III and to take the other related actions described above.
If for any reason action to appoint me as an additional general partner
and to designate me as the managing general partner of each of the CRITEF Funds
is not taken at the Special Meetings, then I am seeking your support in
requesting that another special meeting of each of the CRITEF Funds be called
(or, in the alternative, that a consent solicitation be commenced) to consider
appointing me as an additional general partner and designating me as the
managing general partner of the CRITEF Funds and taking the other related
actions described above. In that instance, pursuant to the terms of the
CRITEF Funds Partnership Agreements, the affirmative vote of 10% or more in
interest of the BAC Holders of either CRITEF Fund is required to request that
another special meeting of that CRITEF Fund be called (or in the alternative,
that a consent solicitation be commenced).
DISSENTER'S RIGHTS
According to the CRITEF Funds Proxy Statements, there are no rights of
appraisal or similar rights for BAC Holders of CRITEF or CRITEF III.
PRINCIPAL BAC OWNERSHIP
Martin C. Schwartzberg knows of no person or "group" (as such term
is used in Section 13(d) of the Securities Exchange Act of 1934, as amended)
who, as of __________ __, 1996 beneficially owned more than 5% of the BACs
outstanding with respect to CRITEF or CRITEF III.
VOTING PROCEDURES
HOW TO VOTE YOUR BACS
Enclosed with this Proxy Statement is a [color] Proxy Card. Each BAC
Holder, whether voting in person or by proxy, may either vote "for," "against"
or "abstain" as to each of the proposals set forth therein.
The CRITEF Funds have three Series of BACs outstanding. CRITEF issued
BACs in Series I and Series II. CRITEF III issued one series of BACs, Series
III. If a BAC Holder has BACs in more than one Fund, separate proxy cards
should be completed for each Fund.
You may revoke any Proxy you submit (whether a proxy solicited by the
General Partners of the CRITEF Funds or the [color] Proxy Card which I am
soliciting) at any time prior to its exercise by (i) attending the
appropriate Special Meeting and voting your BACs in person, (ii) submitting
a duly executed later dated proxy, or (iii) submitting a written notice of
revocation. Unless revoked in the manner set forth above, duly executed
Proxies in the form
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<PAGE>
Preliminary Proxy Statement
enclosed will be voted in accordance with your instructions as indicated on
the [color] Proxy Card. In the absence of such instructions, such Proxies
will be voted (1) AGAINST the Proposed Mergers and other related proposals;
(2) in FAVOR of appointing me as an additional general partner and
designating me as the managing general partner of each of the CRITEF Funds
and taking the related actions as described above; and (3) if such actions are
not taken at the Special Meetings, in FAVOR of requesting another special
meeting (or commencement of a consent solicitation) to take the actions
referred to in clause (2) above.
Except as provided above, I am not aware of any other matters to be
considered at the Special Meetings. However, if any other matters are
properly brought before either of the Special Meetings, such Proxies will be
voted on such matters as I, in my sole discretion, may determine, including,
without limitation, with respect to any adjournments or postponements of the
appropriate Special Meeting from time to time.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETINGS OF BAC HOLDERS,
AND NO MATTER HOW FEW BACS YOU MAY OWN, I URGE YOU TO SUPPORT ME IN MY ATTEMPT
TO DEFEAT THE PROPOSED MERGERS AND MY EFFORTS TO BECOME MANAGING GENERAL
PARTNER OF EACH OF THE CRITEF FUNDS. PLEASE SIGN, DATE AND MAIL THE FULLY
COMPLETED [COLOR] PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
You may do this even if you have already sent in a different proxy
solicited by the General Partners of the CRITEF Funds. It is the latest dated
Proxy that counts. Execution and delivery of a Proxy by a record holder of
BACs of either of the CRITEF Funds will be presumed to be a Proxy with respect
to all BACs of that CRITEF Fund held by such record holder unless the Proxy
specifies otherwise.
SOLICITATION EXPENSES AND PROCEDURES
The entire expense of preparing, assembling, printing and mailing this
Proxy Statement and the accompanying forms of proxies and the cost of
soliciting proxies (including, without limitation, costs, if any, related to
advertising, printing, fees of attorneys, financial advisers, and public
relations firms) will be borne by me. The total amount of expenditures made
in connection with this solicitation is estimated to be [$____]. The total
amount of expenditures made to date in connection with this solicitation is
estimated to be [$____].
In addition to use of the mails, proxies may be solicited by certain
employees or agents of mine by telephone, telegram and personal solicitation,
for which no compensation will be paid to such individuals. Banks, brokerage
houses and other custodians, nominees and fiduciaries will be requested to
forward the solicitation material to the customers for whom they hold BACs
and I will reimburse them for their reasonable out-of-pocket expenses.
I have retained D.F. King & Co., Inc. ("D.F. King") for advisory services
and the solicitation of proxies[, for which they will receive [$ ]]. D.F.
King will solicit proxies from
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<PAGE>
Preliminary Proxy Statement
individuals, brokers, nominees and other institutional holders. Approximately
[ ] persons will be used by D.F. King in its solicitation efforts. I have
agreed to indemnify D.F. King and certain related persons against certain
liabilities and expenses in connection with their services, including certain
liabilities under the federal securities laws.
If the Proposed Mergers are not approved by the BAC Holders, I anticipate
requesting the approval of the BAC Holders for the CRITEF Funds to reimburse
me for my out-of-pocket expenses incurred in connection with this Proxy
Statement and the solicitation of proxies hereunder [up to a maximum of
$________] at a subsequent special meeting of the BAC Holders of each of the
CRITEF Funds.
CERTAIN LITIGATION RELATING TO THE PROPOSED MERGERS
DELAWARE COURT OF CHANCERY
On February 15, 1996, I filed suit against CRITEF Associates and CRITEF
III Associates in the Delaware Court of Chancery seeking an order compelling
those entities (in which I am a limited and/or general partner) to provide me
with current lists of the BAC Holders and certain other books and records so
that I may evaluate the fairness of the Proposed Mergers and to communicate
with the BAC Holders regarding the possible removal of CRITEF Associates and
CRITEF III Associates as managing general partners of the CRITEF Funds. [A
trial on this matter was heard before Chancellor William Allen on March 6 and
7, 1996. A decision is pending.]
SOUTHERN DISTRICT OF NEW YORK
On February 16, 1996, a suit was filed against me by the CRITEF Funds,
CRITEF Associates, CRITEF III Associates and CRI in the Southern District of
New York ("New York Action"). In the suit, the plaintiffs allege two press
releases issued by me in February 1996 violated the proxy rules in that
these releases were "solicitations" and were being made without complying with
the federal proxy rules. Further, the plaintiffs allege that the press
releases contained false and misleading statements in violation of the federal
proxy rules.
On March 15, 1996, I filed an answer to the complaint in the New York
Action and counterclaims against CRITEF Associates, CRITEF III Associates,
and CRI, asserting that their press releases were solicitations that were made
without complying with the federal proxy rules and further, that the press
releases were false and misleading in violation of the federal proxy rules.
On March 18, 1996, the Court entered a preliminary injunction against me
and granted plaintiff's motion "to the extent that [I am] enjoined, pending
the hearing and determination of this action, from (1) making any
solicitation within the meaning of Rule 14a-1(l)(1) [definition of
solicitation under the federal proxy rules], without regard to Rule
14a-1(l)(2)(iv), without complying with the provisions of Regulation 14A under
the Securities Exchange Act of 1934
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<PAGE>
Preliminary Proxy Statement
[the federal proxy rules], and (2) committing any violation of Rule 14a-9
[the antifraud provisions relating to proxy statements] in connection with any
solicitation relating to the [CRITEF] Funds."
CIRCUIT COURT OF MONTGOMERY COUNTY, MARYLAND
On January 18, 1996, I filed suit against CRI and Messrs. Dockser and
Willoughby alleging, among other claims, breach of fiduciary duties with
respect to the Proposed Mergers and the earlier merger of CAPREIT and AP
CAPREIT. In my suit, I allege certain conflicts of interest by Messrs.
Dockser and Willoughby with respect to the CAPREIT/AP CAPREIT Merger and the
Proposed Mergers, as well as other, unrelated claims.
In February 1996, my suit against CRI and Messrs. Dockser and Willoughby
was consolidated with a declaratory judgment action originally brought by CRI
regarding a matter wholly unrelated to the Proposed Mergers. In connection
with certain motions for preliminary injunctive relief unrelated to the
Proposed Mergers, an evidentiary hearing will be held on April 29, 1996. The
subject matter of CRI's suit, as originally pleaded, is an asset management
agreement ("AMA") and related budget in private District of Columbia limited
partnerships ("CRI AMA Suit"). On February 7, 1996, CRI amended its complaint
to add additional claims, including claims for breaches of contracts, tortious
interference of economic relations, fraud, negligent misrepresentation, breach
of fiduciary duty, defamation and violation of the Maryland Trade Secrets Act.
On February [9], 1996, the Court denied motions for ex parte injunctive relief
brought by both sides except in so far as the Court entered an order that
precluded me from using information that I obtained pursuant to the AMA. CRI
and Messrs. Dockser and Willoughby thereafter filed a motion seeking to
declare certain communications with the private limited partners in violation
of the judge's earlier order. An evidentiary hearing on this motion is
scheduled for April 3, 1996.
SUPERIOR COURT OF THE DISTRICT OF COLUMBIA
In February 1996, CRI filed suit against me in the Superior Court of the
District of Columbia seeking a declaratory judgment that the process by which
I had solicited consents to designate me as managing general partner,
replacing CRI, in 7 private District of Columbia limited partnerships was
defective under the relevant partnership agreements. (I have since filed a
motion to consolidate these 7 suits.)
I answered these suits and counterclaimed for injunctive relief, seeking
immediate possession of the books and records for the partnerships in which
I had obtained the consent of the requisite number of limited partners to
designate me as managing general partner. On February 21, 1996, the Court
granted my motion for a temporary restraining order, directing that CRI turn
over to me the books and records of one such limited partnership. On March 1,
1996, the temporary restraining order was converted to a preliminary
injunction. I now have filed a motion seeking a temporary restraining order
and preliminary injunctive relief in the other 6 limited partnerships and an
amended counterclaim in one of the 7 suits, seeking injunctive relief
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Preliminary Proxy Statement
with respect to 15 other limited partnerships in which the requisite number of
limited partners had consented to designate me managing general partner to
replace CRI.
On March 8, 1996, CRI filed a motion to compel arbitration in the 7 suits
it initially brought before the Court. I have opposed CRI's motion.
* * * * * * * * * * * *
PLEASE SIGN, DATE AND RETURN THE ENCLOSED [COLOR] PROXY CARD PROMPTLY IN
THE POSTAGE-PAID ENVELOPE PROVIDED. BY SIGNING, DATING AND MAILING THE
ENCLOSED [COLOR] PROXY, ANY PROXY PREVIOUSLY SIGNED BY YOU RELATING TO THE
SUBJECT MATTER HEREOF AUTOMATICALLY WILL BE REVOKED.
If you have any question about the voting of BACs, please call me COLLECT
at (301) 231-0300 or D.F. King & Co., Inc. TOLL FREE at (800) 669-5550.
Thank you for your support and consideration.
Sincerely,
MARTIN C. SCHWARTZBERG
Dated: April ___, 1996
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<PAGE>
Preliminary Proxy Statement
IMPORTANT
YOUR PROXY IS IMPORTANT. No matter how many or how few BACs you own,
please sign, date and mail the enclosed [color] proxy card promptly. If you
own your BACs in the name of a brokerage firm, bank or other institution, that
broker or institution cannot vote your BACs unless he receives your specific
instructions. Please contact your broker or institution to vote any BACs you
hold in street name. If you own BACs in both CRITEF Funds, please sign, date
and mail proxy cards for each Fund.
If you have any questions or need assistance in the procedures to vote
your BACs, please call me at [(301) 231-0300] (Collect) or my proxy solicitor,
D.F. King & Co., Inc.:
D.F. King & Co., Inc.
One North LaSalle Street 77 Water Street 9841 Airport Boulevard
Chicago, IL 60602 New York, NY 10005 Los Angeles, CA 90045
(312) 236-5882 (Collect) (212) 269-5550 (Collect) (213) 215-3861 (Collect)
or
Call Toll-Free (800) 669-5550
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