As filed with the Securities and Exchange Commission on
February 19, 1997 Registration No. 1-10359
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:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
CRI Liquidating REIT, Inc.
Payment of Filing Fee:
[ ] $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).
[x] Fee computed on the table below per Exchange Act Rules 14a(6)-(i)(4) and 0-
11.
1) Title of Each Class of securities to which transaction applies:
Common Stock
2) Aggregate Number of Securities to which transaction applies:
30,422,711
3) Per Unit price or other underlying value of transaction computed
pursuant to
Exchange Act Rule 0-11: $3,900,000 (aggregate estimated liquidation
proceeds)
4) Proposed maximum aggregate value of transaction: $3,900,000
5) Total fee paid: $780.00
[ ] 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 Number:
3) Filing Party:
4) Date Filed:
CRI LIQUIDATING REIT, INC.
11200 Rockville Pike
Rockville, Maryland 20852
March 13, 1997
Dear Shareholder:
You are cordially invited to attend a Special Meeting of shareholders of
CRI Liquidating REIT, Inc. to be held on April 23, 1997. The formal Notice of
the meeting and a Proxy Statement describing the purposes of the Special Meeting
are enclosed. Please give them your prompt and careful attention.
Please read the Proxy Statement and complete, sign and return your proxy in
the enclosed envelope promptly. No postage is necessary if mailed in the United
States. Your vote is important regardless of the number of shares you own.
If you have any questions about the enclosed proxy materials, please call
MacKenzie Partners Inc., the Corporation s agent, at (800) 322-2885.
Thank you for your cooperation and prompt reply.
Sincerely,
WILLIAM B. DOCKSER
Chairman of the Board
Enclosures
CRI LIQUIDATING REIT, INC.
_______________
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
_______________
To the Shareholders of CRI Liquidating REIT, Inc.:
A Special Meeting of Shareholders of CRI Liquidating REIT, Inc. (the
Corporation ) will be held on Wednesday, April 23, 1997 at 11:00 a.m., Eastern
Time, at the offices of the Corporation, 11200 Rockville Pike, Rockville,
Maryland, for the following purposes:
1. To act upon a proposed Plan of Complete Liquidation and Dissolution of
the Corporation.
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on March 10, 1997 as
the record date for shares entitled to vote at the meeting.
You are requested, if you cannot be present at the meeting, to complete,
sign and return the proxy in the enclosed business reply envelope promptly.
By Order of the Board of Directors,
H. William Willoughby
Secretary
March 13, 1997
IMPORTANT: PLEASE FILL IN, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY IN
THE POSTAGE-PAID ENVELOPE PROVIDED TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT
THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO
DO SO EVEN THOUGH YOU HAVE PREVIOUSLY SENT IN YOUR PROXY.
CRI LIQUIDATING REIT, INC.
11200 Rockville Pike
Rockville, Maryland 20852
(800) CMM-0535
_______________
PROXY STATEMENT
_______________
This proxy statement and the enclosed form of proxy are being mailed on or
about March 13, 1997, to shareholders of the Corporation in connection with the
solicitation by the Board of Directors (the Board ) of proxies for use at a
Special Meeting of Shareholders to be held on April 23, 1997, and at any
adjournments thereof (the Meeting ), for the purpose of considering and voting
on the proposed Plan of Complete Liquidation and Dissolution of the Corporation
(the Plan of Liquidation or the Plan ).
Only shareholders of record on March 10, 1997 are entitled to vote at the
Meeting. On that date there were outstanding 30,422,711 shares of the
Corporation s common stock, $.01 par value per share (the Common Shares ), and
the holders of record thereof on that date will be entitled to one vote for each
share held by them. The adoption of the Plan of Liquidation requires the
affirmative vote of both (a) the shareholders holding a majority of the
outstanding Common Shares and (b) the shareholders holding a majority of the
outstanding Common Shares excluding votes cast by CRIIMI MAE Inc. ( CRIIMI MAE )
or its affiliates. As of such date, CRIIMI MAE owned 17,199,307 Common Shares,
representing approximately 56.5% of the outstanding Common Shares. Of the
Common Shares held by CRIIMI MAE, 2,447,500 Common Shares, representing 8.0% of
the outstanding Common Shares (the Pledged Shares ), have been pledged by
CRIIMI MAE to Signet Bank to secure certain indebtedness of CRIIMI MAE.
However, Signet Bank has acknowledged that it does not have the right to vote
the Pledged Shares for or against the Plan at the Meeting, and that CRIIMI MAE
may vote the Pledged Shares in favor of the Plan at the Meeting. For the
purposes of the foregoing vote, the Pledged Shares are deemed to be held by
CRIIMI MAE. See Beneficial Ownership of Common Shares , below.
If a proxy is properly executed and returned, the Common Shares which it
represents will be voted at the Meeting in accordance with the instructions
noted thereon. If no direction is indicated, such Common Shares will be voted:
(1) FOR the Plan of Liquidation; and (2) for or against such other matters as
may properly come before the Meeting in the discretion of the proxy holders.
The Corporation s management knows of no matter to be brought before the Meeting
which is not referred to in the Notice of Meeting and this Proxy Statement. If,
however, any other matter comes before the Meeting, the proxy will be voted in
accordance with the judgment of the person or persons voting such proxy, unless
the proxy contains instructions to the contrary. Any shareholder executing a
proxy has the power to revoke it at any time before it is voted by submitting a
duly executed proxy bearing a later date, by submitting to the Corporation s
Secretary a duly executed instrument of revocation or by attending the Meeting
and voting in person or orally withdrawing the proxy.
Abstentions will be considered Common Shares that are present and entitled
to vote for purposes of determining the presence of a quorum but as not voted
for purposes of determining the approval of any matter submitted to shareholders
for a vote. If a broker indicates on a proxy that such broker does not have
discretionary authority as to certain Common Shares to vote on a particular
matter, such Common Shares will not be considered as present and entitled to
vote with respect to that matter.
PROPOSED PLAN OF LIQUIDATION
General
The Board, by unanimous written consent dated as of February 14, 1997, has
approved the Plan of Liquidation in the form attached to this Proxy Statement as
Annex A. The affirmative vote of both (a) the shareholders holding a majority
of the outstanding Common Shares and (b) the shareholders holding a majority of
the outstanding Common Shares excluding votes cast by CRIIMI MAE or its
affiliates are required for adoption of the Plan. The Board believes that
adoption of the Plan is in the best interests of the shareholders and recommends
that the shareholders vote FOR adoption of the Plan.
CRIIMI MAE and its affiliates, which as of January 31, 1997, collectively
held approximately 56.5% of the outstanding Common Shares, have indicated their
intent to vote for the Plan. However, Signet Bank has acknowledged that it does
not have the right to vote the Pledged Shares for or against the Plan at the
Meeting, and that CRIIMI MAE may vote the Pledged Shares in favor of the Plan at
the Meeting. For the purposes of the foregoing vote, the Pledged Shares are
deemed to be held by CRIIMI MAE. The Corporation therefore anticipates that the
Plan will receive the necessary affirmative vote of the shareholders holding a
majority of the outstanding Common Shares (part (a) of the voting requirement
set forth in the preceding paragraph). See Beneficial Ownership of Common
Shares , below.
Reasons for the Plan
Article Ninth of the Corporation s Articles of Incorporation states that
the Corporation is to dissolve no later than December 31, 1997, and that,
subject to certain supermajority voting requirements related to transactions
with affiliates (which requirements are not applicable to the Plan), the
Corporation may be dissolved at any time upon the affirmative vote of both (a)
the shareholders holding a majority of the outstanding Common Shares and (b) the
shareholders holding a majority of the outstanding Common Shares excluding votes
cast by CRIIMI MAE or its affiliates. Since the Corporation s inception in
1989, it has been the Corporation s stated business plan to dispose of its
remaining investments by the end of 1997 through an orderly liquidation. Under
the Corporation s existing investment policies, net proceeds from the
dispositions of mortgage investments are not reinvested by the Corporation in
other mortgage investments, but instead are distributed to the Corporation s
shareholders.
As of December 31, 1996, the Corporation s portfolio (the Portfolio )
consisted of (A) 11 federally insured mortgage loans (the Mortgage Loans ) with
an aggregate fair market value of $54.4 million, (B) three investments in
limited partnerships ( Participations ) with no book value for financial
statement purposes and a tax basis value of approximately $2.36 million, $1.18
million, and $135,000, and (C) cash and other net assets with an aggregate book
value of approximately $4 million. On January 17, 1997, the Corporation sold
all the Mortgage Loans remaining in the Portfolio for proceeds of $54.7 million.
As of January 31, 1997, the Portfolio consisted solely of: (A) cash in the
amount of $54.7 million, representing the proceeds of the sale of the Mortgage
Loans, (B) three Participations, with aggregate estimated liquidation values of
$3.2 million, as discussed below (as compared to aggregate tax basis values of
$3.7 million and no book value for financial statement purposes), (C) a $1.2
million Incentive Fee payable to the Adviser related to the aforementioned sale,
and (D) cash and other net assets with a book value of approximately $4.5
million. It is anticipated that the net cash proceeds from the disposition of
the Mortgage Loans, along with other available cash, will be distributed to the
shareholders as a quarterly dividend on March 31, 1997, subject to declaration
by the Board. Once the dividend distribution is made, the Portfolio will
consist solely of the Participations, cash and other net assets.
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Due to the reduced size and profitability of the Portfolio, the stated
provision of the Corporation s Articles of Incorporation which provides for
dissolution of the Corporation by December 31, 1997, and the Corporation s
existing business plan which has contemplated that the Corporation would dispose
of its remaining assets by the end of 1997 through an orderly liquidation, the
Board authorized the Corporation s adviser, CRI Insured Mortgage Associates
Adviser Limited Partnership (the Adviser ), to explore the Corporation s
alternatives to continued operations. The Adviser reviewed a number of factors,
including the Corporation s historical financial results, the size and nature of
the Portfolio, current and future anticipated operating expenses and the market
price for, and liquidity of, the Common Shares, and presented its findings to
the Board. The Board evaluated the information provided by the Adviser and
considered alternative courses of action, including liquidating the Corporation
and continuing the Corporation s operations in accordance with current policies.
In considering these alternatives, the Board found the following factors to be
particularly significant.
Participations. The following are summary descriptions of the
Participations.
Laurel Investors Limited Partnership. The Corporation is the
beneficial owner of a fifty percent (50%) limited partnership interest (the
Laurel Participation ) in Laurel Investors Limited Partnership, a Delaware
limited partnership ( Laurel L.P. ). Laurel L.P. is the owner of a 420-
unit multifamily rental apartment complex located in Laurel, Maryland. The
general partner of Laurel L.P. (the Optionee ) holds options to purchase
all of the Laurel Participation from the Corporation at an estimated price
of $2.4 million, and, although there can be no assurance, the Corporation
believes that it will be able to sell the Laurel Participation to the
Optionee at the option price. The Adviser has informed the Corporation
that it estimates the liquidation value of the Laurel Participation at
approximately $2 million.
Santa Clara Village Green Associates Limited Partnership. The
Corporation is also the beneficial owner of a fifty percent (50%) limited
partnership interest (the Village Green Participation ) in Santa Clara
Village Green Associates Limited Partnership, a Delaware limited
partnership ( Village Green L.P. ). Village Green L.P. was the owner of a
96-unit multifamily rental apartment complex located in Santa Clara,
California (the Village Green Property ). Village Green L.P. sold all of
its interest in the Village Green Property in January 1997, but the general
partners have not yet distributed the full proceeds of the sale to the
limited partners. The Corporation has received approximately $1.13 million
from the Village Green L.P. representing disbursement of undisputed net
proceeds from the disposition of the Village Green Property. The
Corporation filed a complaint in the Delaware Court of Chancery in February
1997 seeking to recover, among other things, additional net proceeds in the
amount of approximately $450,000, to which the Corporation believes it is
entitled under the terms of the Village Green L.P. partnership agreement.
White Oak Enterprises Limited Partnership. The Corporation is also
the beneficial owner of a fifty percent (50%) limited partnership interest
(the White Oak Participation ) in White Oak Enterprises Limited
Partnership, a Maryland limited partnership ( White Oak L.P. ). White Oak
L.P. is the owner of a 111-unit multifamily rental apartment complex
located in Silver Spring, Maryland. The Adviser has informed the
Corporation that the White Oak Participation has a liquidation value of $0.
Market Value Versus Net Asset Value of Common Shares. On January 31, 1997,
the closing price for the Common Shares on the New York Stock Exchange ( NYSE )
was $1.75 per share. Management estimates that as of January 31, 1997, upon
consideration of its future obligations and income sources, the Corporation s
net asset value was approximately $61.2 million, or approximately $2.01 per
share, which is approximately 15% greater than the closing price of the shares
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on the NYSE on that date. The forgoing value estimates include liquidation
costs, and additional expenses the Corporation will pay in connection with the
adoption and implementation of the Plan of Liquidation, totaling approximately
$550,000, or approximately $0.02 per share. See -- Transaction Costs , below.
Although there is no ready market for the Participations, the Adviser has
estimated their value at their undisputed January 31, 1997 liquidation values.
See -- Participations , above. All other assets (except the deferred asset
costs which have been adjusted to zero) and liabilities are based on their book
values as of January 31, 1997.
Notwithstanding the foregoing estimate, the Corporation cannot predict the
amount which ultimately will be distributed to the Corporation s shareholders if
the Plan is adopted, and there can be no assurance that the liquidating
distribution to shareholders will equal the amount estimated above. The amount
actually distributed will depend, among other things, upon market conditions and
the supply and demand for investments such as the Participations, at the time
the Corporation s Participations are liquidated. See -- Description of the
Plan--Disposition of Assets.
Expenses of Operation. Several of the Corporation s expenses are
relatively fixed and are not directly related to total assets and therefore have
not declined at the same rate as the Corporation s Portfolio. Accordingly, the
Corporation has become less profitable. During the first quarter of 1997, the
disposition of the Corporation s remaining Mortgage Loans further reduced
profitability. Accordingly, operating expenses during 1997 are expected to
exceed 1996 operating expenses as a percentage of average invested assets and
net tax basis income.
Transaction Costs. Adoption of the Plan of Liquidation will enable
shareholders to avoid the transaction costs associated with the sale of the
Common Shares, though this benefit will be offset in part by certain liquidation
costs and additional expenses the Corporation will pay in connection with the
adoption and implementation of the Plan of Liquidation. Such expenses are
estimated at approximately $0.02 per share. See -- Market Value Versus Net
Asset Value of Common Shares, above. In evaluating the Plan of Liquidation,
shareholders should compare such expenses with brokerage costs and any other
costs they would incur in connection with the sale of their Common Shares.
In evaluating the available alternatives, the Board noted that the Plan of
Liquidation provides shareholders the greatest opportunity to maximize the value
of the Participations and that none of the other alternatives adequately
addressed the expenses of continued operation in relation to the size of the
remaining Portfolio. Based upon all of the foregoing factors and information,
the Board concluded that adoption of the Plan of Liquidation was in the best
interest of the shareholders and the Corporation and recommended the approval of
the Plan by the shareholders.
Description of the Plan
If the Plan of Liquidation is approved by the Corporation s shareholders,
the Corporation will, pursuant to the Plan of Liquidation, dissolve the
Corporation and proceed to dispose of the Corporation s assets after providing
for the liabilities of the Corporation. The following describes generally
certain material provisions of the Plan and is qualified in its entirety by
reference to such Plan, a copy of which is attached to this Proxy Statement as
Annex A.
Dissolution. The Plan of Liquidation provides for the filing of documents
with the Maryland State Department of Assessments and Taxation and elsewhere as
required to terminate the existence of the Corporation immediately after the
Board has determined that all requirements have been met under Maryland law. It
is anticipated that the Corporation will file its Articles of Dissolution
promptly following the Meeting. After the Articles of Dissolution have been
accepted by the State Department of Assessments and Taxation, the Corporation
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will be deemed dissolved but will continue to exist under Maryland law for the
purposes of paying, satisfying and discharging any existing debts or
obligations, collecting and distributing its assets, and doing all other acts
required to liquidate and wind up its business affairs. The directors of the
Corporation will be deemed trustees of the Corporation s assets for the purpose
of liquidation.
There is no time period required by the Plan or law within which the
Corporation must wind up its affairs and complete its liquidation. However, the
Corporation believes this process will be substantially complete by December 31,
1997.
If the Plan is approved by the shareholders, the stock transfer books of
the Corporation will be permanently closed upon acceptance of the Articles of
Dissolution by the Maryland State Department of Assessments and Taxation.
Shareholders of record of the Common Shares on such date will be entitled to a
pro rata share of the aggregate beneficial interests in the net proceeds of the
liquidation, and will be required to surrender their stock certificates in order
to be entitled to receive liquidating distributions from the Corporation.
If the shareholders approve the Plan, the Corporation intends to request
the Securities and Exchange Commission ( SEC ) for relief from certain of the
Corporation s periodic reporting obligations under the Securities Exchange Act
of 1934, as amended (the Exchange Act ). Regardless of whether this relief is
granted, the Corporation anticipates that it will continue to be obligated to
file reports with the SEC under the Exchange Act until the Corporation s
liquidation is completed. Following the liquidation, the shareholders of the
Corporation would no longer have any economic or legal interest in the
Corporation as an ongoing entity. See Effect Upon Trading and Registration ,
below.
Disposition of Assets. The Plan authorizes the Corporation to begin
concluding the affairs of the Corporation on the date the Plan has been approved
by the shareholders (the Effective Date ). The sale of the Corporation s
assets by the Corporation may be to one or more persons, at public or private
sales. Although the Board currently anticipates that the Corporation s assets
will be sold to more than one person in more than one transaction, the Board may
receive proposals from persons interested in purchasing all of the Corporation s
assets. The Plan authorizes the Board, and the Board currently intends, to
evaluate such proposals and any similar proposals. The Plan prohibits the sale
or other disposition of the Corporation s assets to CRIIMI MAE, any of CRIIMI
MAE s affiliates, or any other affiliate of the Corporation. Currently, the
Board contemplates the Participations will be disposed of by the end of December
1997.
The prices obtained upon sale of the Corporation s assets will depend upon
the market conditions at the time of each sale, which generally will be beyond
the Corporation s control. The prices obtained upon sale of the Participations
will depend upon factors affecting an equity investment in real estate
generally, including general and local economic conditions, the condition of the
property, the property s occupancy, results of operations and financial
condition, competition, legal matters, including zoning and environmental
issues, and the availability of financing.
Board Authority. After the Effective Date, the Directors then in office
will become the trustees of the Corporation s assets for the purposes of
collecting and distributing the assets of the Corporation, applying them to the
payment, satisfaction and discharge of the existing debts and obligations of the
Corporation, including the necessary expenses of liquidation, and the director-
trustees may, by majority vote, distribute the remaining assets among the
shareholders, carry out the contracts of the Corporation, sell all or any part
of the assets of the Corporation at a public or private sale, sue or be sued in
their own names as trustees or in the name of the Corporation and do all other
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acts consistent with law and the Articles of Incorporation necessary and proper
to liquidate the Corporation and wind up its affairs.
Provisions for Liabilities. All liabilities of the Corporation are to be
paid, provided for, settled, or otherwise satisfied in the manner determined by
the Board. A reserve fund of cash or other assets, if required, will be
retained in an amount determined by the Board to be necessary for the payment of
estimated liabilities.
Distributions to Shareholders. Distributions to the Corporation s
shareholders will be made at such times and upon such terms as determined by the
Board. While no assurances can be given as to the amounts to be distributed or
the timing of distributions, the Board intends to dispose of the Corporation s
assets as promptly as practicable in a manner which preserves, throughout the
liquidation period, the Corporation s status, for Federal income tax purposes,
as a real estate investment trust ( REIT ). See -- REIT Status and Certain
United States Federal Income Tax Considerations below.
In addition to the factors discussed above affecting the Corporation s net
asset value, the amount actually distributed to shareholders will depend upon
the amounts deemed necessary or appropriate by the Board to pay or provide
adequately for all of the Corporation s debts and liabilities, fixed or
contingent, and for the payment of the expenses of adopting and implementing the
Plan. It is anticipated that funds received from sales or other dispositions
will be invested in high quality short-term money market instruments pending
distribution to shareholders.
The Board also will have the authority to transfer assets and liabilities
of the Corporation to a liquidating trust designated by the Board. It is
expected that a liquidating trust would be employed only in the event that the
liabilities of the Corporation could not be paid or provided for by means of a
reserve fund or if the assets of the Corporation could not be converted into a
form appropriate for distribution to the shareholders before December 31, 1998.
It is intended that the transfer of assets or liabilities to a liquidating
trust, if one were employed, and the distribution to shareholders of the non-
transferable beneficial interests therein would constitute a part of the final
liquidating distribution by the Corporation to its shareholders of their pro
rata interest in the remaining assets of the Corporation.
REIT Status. The Board currently intends to maintain the Corporation s
status as a REIT under the Internal Revenue Code of 1986, as amended (the
Code ), through the final liquidating distribution. The Plan permits the Board
to terminate the Corporation s status as a REIT, which would result in the
Corporation being subject to Federal income tax as a regular corporation and
reduce the amount of cash available for distribution to the shareholders by the
amount of tax paid by the Corporation. The Board would consider terminating
such status only if it determined such action to be in the best interest of the
Corporation and its shareholders. See Certain United States Federal Income Tax
Considerations.
Indemnification. Article VII, Section 1 of the Corporation s Bylaws
currently provides for the Corporation to indemnify, to the extent permitted by
Maryland law, persons who have incurred liability by reason of the fact that
they are or were directors, officers, employees or certain affiliates of the
Corporation. Such rights of indemnification may be satisfied only out of the
assets of the Corporation or proceeds of insurance therefor, but not from
distributions to the Corporation s shareholders. The Plan of Liquidation
provides that such rights of indemnification will survive the termination of the
Corporation and may be satisfied only out of the assets of any reserve fund or
liquidating trust which has assumed the liability of the Corporation therefor or
out of the proceeds of insurance, but not from distributions to the
Corporation s shareholders.
Modification and Abandonment. The Plan of Liquidation may be amended by
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the Board if it determines that such action would be in the best interests of
the Corporation and its shareholders. Any amendment which appears necessary but
would materially and adversely affect the interests of the shareholders must be
approved by both (a) the shareholders holding a majority of the outstanding
Common Shares and (b) the shareholders holding a majority of the outstanding
Common Shares excluding votes cast by CRIIMI MAE or its affiliates. While the
Board does not anticipate taking such action, Maryland law also authorizes the
Board to abandon the Plan at any time, including after a vote of the
shareholders approving the Plan, if it determines that abandonment would be in
the best interests of the Corporation or its shareholders.
BENEFICIAL OWNERSHIP OF COMMON SHARES
The following table sets forth certain information regarding the beneficial
ownership of Common Shares as of January 31, 1997 by each person known by the
Corporation to own beneficially more than 5% of the outstanding Common Shares,
as well as certain information concerning ownership of Common Shares by
directors or officers of the Corporation. Unless otherwise indicated, the
voting and investment powers for the Common Shares listed are held solely by the
named holder.
<TABLE>
<CAPTION>
Percent of Outstanding Common
Name, Title Common Shares Shares Beneficially Owned
- ----------- ------------- -----------------------------
<S> <C> <C>
CRIIMI MAE Inc. 17,199,307 56.5%
William B. Dockser,
Chairman of the Board of
Directors 0 --
H. William Willoughby,
Director and Chief Executive
Officer 0 --
Garrett G. Carlson, Sr.,
Director 0 --
Larry H. Dale,
Director 1,000 Less than 1%
G. Richard Dunnells,
Director 615 Less than 1%
Robert F. Tardio,
Director 0 --
Cynthia O. Azzara,
Chief Financial Officer
and Senior Vice President 0 --
Jay R. Cohen, Executive Vice
President and Treasurer 0 --
Frederick J. Burchill,
Executive Vice President 0 --
All Directors and Executive
Officers as
a Group (9 persons) 1,615 Less than 1%
</TABLE>
To the best of the Corporation s knowledge, as of January 31, 1997, no
other person owned more than 5% of the outstanding Common Shares, and no other
officer or director of the Corporation owned any Common Shares.
Based solely on its review of Forms 3 and 4 and amendments thereto
furnished to the Corporation, and written representations from certain reporting
persons that no Forms 5 were required for those persons, the Corporation
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believes that all directors, officers and beneficial owners of more than 10% of
the Common Shares have filed on a timely basis Forms 3, 4 and 5 as required in
the fiscal year ended December 31, 1996.
In connection with the incurrence by CRIIMI MAE of certain indebtedness,
CRIIMI MAE has pledged the Pledged Shares to Signet Bank. Under the agreements
relating to the foregoing indebtedness, Signet Bank is entitled to direct the
voting of the Pledged Shares on any fundamental change item (which excludes any
election of directors or other housekeeping matters, but includes any matter
which may adversely affect the rights of holders of Common Shares or their right
to receive distributions thereon or the timing of such distributions). If
CRIIMI MAE defaults on its obligations under such agreements, Signet Bank may
direct the voting of the Pledged Shares on all matters. However, Signet Bank
has acknowledged that it does not have the right to vote the Pledged Shares for
or against the Plan at the Meeting, and that CRIIMI MAE may vote the Pledged
Shares in favor of the Plan at the Meeting. Except as described above, the
voting and investment powers for the Common Shares owned by CRIIMI MAE are held
solely by CRIIMI MAE.
EFFECT UPON TRADING AND REGISTRATION
The Common Shares are currently traded on the New York Stock Exchange
( NYSE ). See Market Prices and Dividends below. It is expected that the
NYSE will halt trading in the Common Shares some time between announcement of
the Corporation s next quarterly distribution and the date of such distribution,
which is currently contemplated to be made on March 31, 1997, subject to
declaration by the Board. If the Plan is approved by the shareholders, the
stock transfer books of the Corporation will be permanently closed upon
acceptance of the Articles of Dissolution by the Maryland State Department of
Assessments and Taxation. See Proposed Plan of Liquidation -- Description of
the Plan -- Dissolution , above.
The Board anticipates that the Common Shares will remain registered under
the Exchange Act. However, if the Plan is approved by the shareholders, the
Corporation intends to seek relief from certain of the periodic reporting
requirements of the Exchange Act.
CERTAIN TRANSACTIONS
The Corporation has entered into an agreement (the Advisory Agreement )
with the Adviser under which the Adviser is obligated to provide administrative
services for the Corporation, evaluate and negotiate voluntary dispositions of
mortgage investments and conduct the Corporation s day-to-
day affairs. Under the Advisory Agreement, the Adviser is entitled to receive
annual fees based on amounts invested by the Corporation in mortgage investments
and incentive fees based on proceeds of dispositions of certain mortgage
investments by the Corporation. Pursuant to the Advisory Agreement, in 1996,
the Corporation paid the Adviser annual fees of $382,050 and incentive fees of
$568,638. In connection with the sale of mortgages in January 1997, incentive
fees of $1.2 million were earned and are payable on March 31, 1997. C.R.I.,
Inc. ( CRI ) is the general partner of the Adviser and William B. Dockser, the
Corporation s Chairman of the Board, and H. William Willoughby, the
Corporation s President and Chief Executive Officer and a director of the
Corporation, are all of the shareholders and directors of CRI. Messrs. Dockser
and Willoughby also own a majority of the limited partnership interest in the
Adviser.
The Advisory Agreement may be terminated by the Corporation or the Adviser
solely for cause (as defined in the Advisory Agreement). If the Corporation
terminates the Advisory Agreement other than for cause or the Adviser terminates
the Advisory Agreement for cause, in addition to compensation otherwise due, the
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Corporation would be required to pay the Adviser a fee equal to the annual fee
paid or payable to the Adviser with respect to the previous fiscal year.
On June 30, 1995, CRIIMI MAE acquired the mortgage servicing, origination
and advisory businesses conducted by CRI and its affiliates, including certain
of the physical assets and work force of the Adviser (the Merger ). The
Adviser has continued to perform advisory services under the Advisory Agreement
following the Merger. However, pursuant to a reimbursement agreement (the
Reimbursement Agreement ) entered into in connection with the Merger between
the Adviser and CRIIMI MAE Management, Inc., a wholly owned subsidiary of CRIIMI
MAE (the Management Corporation ), the employees of the Management Corporation
perform certain functions on behalf of the Adviser under the Advisory Agreement.
Neither the Management Corporation nor CRIIMI MAE, which as of January 31, 1997
owns approximately 56.5% of the Corporation s outstanding Common Shares, receive
advisory fees under the Advisory Agreement. However, commencing July 1, 1995,
the Management Corporation has been reimbursed, at cost, for its employees time
and expenses pursuant to the Reimbursement Agreement. During 1996, the
Corporation did not reimburse CRI any amounts in connection with the Advisory
Agreement and reimbursed the Management Corporation $115,920 for functions
performed on the Corporation s behalf pursuant to the Reimbursement Agreement.
The Advisory Agreement and the Reimbursement Agreement each will be carried
out by the Directors after dissolution, to the extent necessary to complete the
liquidation of the Corporation. However, no additional fees will be payable to
the Adviser other than those payable pursuant to the disposition of the Mortgage
Loans in January 1997. See Proposed Plan of Liquidation -- Reasons for the
Plan , above.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion provides a brief summary of the principal United
States Federal income tax considerations relating to the Plan of Liquidation and
related transactions.
Taxation of Shareholders in General. The amount of any cash and the fair
market value of any property (including a pro rata share of the fair market
value of any assets contributed to a liquidating trust, as discussed below)
distributed to a shareholder in liquidation of the Corporation will in general
be applied first to reduce the shareholder s basis in such shareholder s Common
Shares. Any liquidating distribution in excess of the shareholder s basis will
constitute capital gain if the Common Shares are held as a capital asset. If
the sum of all liquidating distributions with respect to Common Shares held as a
capital asset is less than the shareholder s basis therein, the difference will
constitute a capital loss. A shareholder s gain or loss on liquidating
distributions will be calculated separately with respect to Common Shares with
different bases or holding periods. Any capital gain realized by a shareholder
will be long-term capital gain if the shareholder has held the Common Shares for
more than one year at the time of the liquidating distribution resulting in such
gain. The long-term or short-term character of any capital loss realized by a
shareholder will also be determined by reference to the shareholder s holding
period ending at the time of the liquidating distribution.
Taxation of the Corporation. The Corporation has elected to be treated
under the Code as a REIT, and as indicated above, the Board currently intends to
maintain such status through the final liquidating distribution. See Proposed
Plan of Liquidation -- Description of the Plan -- REIT Status. However, no
assurance can be given that the Corporation will not lose or terminate its
status as a REIT as a result of unforeseen circumstances or because the Board
determines that such loss or termination is in the best interests of the
Corporation and its shareholders. In general, so long as the Corporation
continues to qualify as a REIT, it will be subject to tax only upon any income
it does not distribute to shareholders on a current basis. The Corporation will
generally be subject to federal income tax at normal corporate rates on its
- 9 -
undistributed income and to a four percent (4%) excise tax under the Code on the
amount, if any, by which eighty-five percent (85%) of its REIT taxable income
(including accrued but unpaid interest income) and ninety-five percent (95%) of
any net capital gain exceed the amount actually distributed to its stockholders
during the year (or declared as a dividend during October, November or December
of a calendar year, if distributed during the following January as ordinary
income dividends). If the Corporation were to fail to qualify as a REIT during
any taxable year, unless certain remedial provisions of the Code were to apply,
all of its income for that taxable year would be subject to the regular
corporate income tax (currently imposed at a 34% rate with respect to most
income up to $10,000,000 per year), which would reduce the amount of any
liquidating distributions that could be made to the Corporation s shareholders.
Furthermore, if the Corporation were to fail to qualify as a REIT in any taxable
year, it would not be entitled to elect REIT status during the following four
years unless the disqualification were due to reasonable cause and not due to
willful neglect.
In order to maintain its status as a REIT, the Corporation must continue to
satisfy various technical requirements imposed by the Code, including
requirements that it derive its gross income from qualified sources, that it
hold qualifying assets and that it make certain distributions to the
shareholders. The Board expects that the Corporation will be able to satisfy
those requirements during the liquidation process.
As a REIT, the Corporation may be subject to a penalty tax at the rate of
100% on any net gain derived from any prohibited transaction. Under the Code,
prohibited transaction means, in general, the sale of property held primarily
for sale to customers in the ordinary course of business. Whether property is
held for sale to customers so as to result in a prohibited transaction is a
complex factual and legal issue, and while management believes that it is
unlikely, no assurance can be given that the Internal Revenue Service would not
characterize the gain from the sale of assets by the Corporation as income from
prohibited transactions.
Possible Use of a Liquidating Trust. In order to satisfy the distribution
requirement for REIT status during the liquidation period, the Corporation must
distribute all its assets within 24 months after the Effective Date. While
unlikely, it is possible that the Corporation will not have completed the
liquidation of all its assets within the required period. In that event, the
Board might, if it determines it to be in the best interest of the Corporation
and its shareholders, contribute the remaining assets to a liquidating trust and
distribute to shareholders the beneficial interests therein. Upon the
distribution of such beneficial interests, the Corporation would recognize gain
or loss equal to the difference between the Corporation s adjusted gain in the
assets contributed to the liquidating trust and the fair market value of such
assets as if such assets had been sold. The shareholders would be required to
recognize gain upon receipt of the liquidating trust interests to the extent the
fair market value of the interests in the liquidating trust exceeds their basis
in the shares in the Company they exchange for such interests. This would
require shareholders to recognize gain and incur a tax liability upon the
receipt of the liquidating trust interests even though they have received no
cash with which to pay these taxes.
The Board intends that any liquidating trust established with respect to
assets of the Corporation qualify as a grantor trust under the Code.
Shareholders of the Corporation who receive beneficial interests in a
liquidating trust qualifying as a grantor trust will be deemed to own a pro
rata portion of the liquidating trust s assets and will be required to report on
their own Federal income tax returns their pro rata portion of any income, gain,
deduction and loss realized by the liquidating trust. The long-term or short-
term character of any capital gain or loss attributable to shareholders from any
liquidating trust will be determined based upon a holding period commencing at
the time of the acquisition by the shareholders of their beneficial interest in
the liquidating trust. An individual shareholder who itemizes deductions
- 10 -
generally will be entitled to deduct the amount of any miscellaneous itemized
deductions attributed to such shareholder s from the liquidating trust only to
the extent that such amount, together with the shareholder s other
miscellaneous itemized deductions, exceeds two percent (2%) of such
shareholder s adjusted gross income. It is possible that shareholders that are
tax-exempt organizations would realize unrelated business taxable income if
assets contributed to the liquidating trust (including the assets underlying the
Participations) are encumbered by debt obligations, such that assets held by the
liquidating trust constitute debt financed property under Section 514 of the
Code.
Special Considerations for Foreign Shareholders. The Corporation qualifies
as a domestically controlled REIT under the Foreign Investment in Real
Property Tax Act of 1980 ( FIRPTA ). Accordingly, a foreign shareholder of
Common Shares will not be subject to United States Federal income or withholding
taxes on the gain, if any, realized on the disposition of such Common Shares in
the liquidation of the Corporation, unless (i) such gain is otherwise
effectively connected with the conduct by such foreign shareholder of a trade or
business in the United States, or (ii) in the case of gain realized by an
individual foreign shareholder, the shareholder is present in the United States
for 183 days or more in the taxable year of the disposition and certain other
conditions are met.
If a liquidating trust is used, as described above, any gain allocable to
foreign shareholders that results from the sale or exchange by the liquidating
trust of United States real property interests ( USRPIs ) will be subject to
Federal income tax, and distributions by the liquidating trust to foreign
shareholders of the proceeds of any such sale or exchange will be subject to
thirty-five percent (35%) withholding tax to the extent such distributions are
attributable to such gain (although the non-U.S. holder can claim a refund from
the Internal Revenue Service ( IRS ) of any excess amount withheld over the
actual tax due). Certain other types of income realized by the liquidating
trust also may be subject to Federal income tax or withholding tax.
In addition, if a non-U.S. holder of beneficial interests in the
liquidating trust subsequently sells USRPIs or interests in the liquidating
trust (to the extent attributable to USRPIs) received in the liquidation, gains
on such sales generally will be taxable as U.S. trade or business income.
Therefore, non-U.S. holders generally will be taxed at the capital gain rates
applicable to U.S. holders (subject to applicable alternative minimum tax and a
special alternative minimum tax in the case of nonresident alien individuals).
Moreover, a buyer of such USRPI would be required to withhold ten percent (10%)
of the gross purchase price paid, although the non-U.S. holder can claim a
refund from the IRS of any excess amount withheld over the actual tax due.
In order to assure that they will not be subject to Federal income tax or
withholding, foreign shareholders may wish to consider disposing of their Common
Shares before the Effective Date.
THE ABOVE DISCUSSION DOES NOT ATTEMPT TO COMMENT UPON ALL TAX MATTERS THAT
MAY AFFECT THE CORPORATION OR ITS SHAREHOLDERS IN THE COURSE OF THE LIQUIDATION
NOR TO CONSIDER THE VARIOUS FACTS OR LIMITATIONS THAT MAY BE RELEVANT TO ANY
PARTICULAR SHAREHOLDER. SHAREHOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISERS WITH RESPECT TO THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES TO THEM
OF THE LIQUIDATION.
NONAPPROVAL OF THE PLAN
If the shareholders do not approve the Plan, the Board currently intends to
continue to transact business as a qualified REIT and to consider alternative
courses of action. The Board has identified among the possible alternatives to
the Plan (i) continuing operations until December 1997 or the earlier
disposition of the Corporation s assets in the ordinary course of business, at
- 11 -
which time the Corporation would seek shareholder approval for the final
dissolution of the Corporation; and (ii) soliciting shareholder approval for
amending the Corporation s Articles of Incorporation and investment policies to
become an infinite life REIT, but for the reasons discussed under Reasons for
the Plan, believes that these alternatives are less favorable to shareholders
than adoption of the Plan of Liquidation.
DISSENTERS RIGHTS
Under Maryland law, shareholders of the Corporation will not have rights of
appraisal or similar dissenters rights with respect to the Plan of Liquidation.
MARKET PRICES AND DIVIDENDS
The Common Shares are traded on the NYSE under the symbol CFR. On
January 31, 1997, the last reported sale price of the Common Shares on the NYSE
was $1.75. As of January 31, 1997, there were 30,422,711 Common Shares
outstanding held by approximately 8,800 shareholders of record. The following
table sets forth the high and low sale prices of the Common Shares on the NYSE
and the dividends per Common Share for the periods shown:
- 12 -
<TABLE>
<CAPTION>
1995
-------------------------------
Sales Price Dividends
-------------------------------
High Low Per Share*
---- --- ---------
<S> <C> <C> <C>
Quarter Ended
- -------------
March 31 $5 $4 3/8 $ 1.74
June 30 3 5/8 3 1/4 0.08
September 30 3 3/4 3 3/8 0.10
December 31 3 5/8 3 3/8 0.08
-------
$ 2.00
=======
1996
-------------------------------
Sales Price Dividends
-------------------------------
High Low Per Share*
---- --- ---------
<S> <C> <C> <C>
Quarter Ended
- -------------
March 31 $3 7/8 $3 1/2 $ 1.94
June 30 2 1/8 1 5/8 0.04
September 30 1 7/8 1 3/4 0.03
December 31 1 7/8 1 3/4 0.04
-------
$ 2.05
=======
- --------------------------------
* Dividends declared and paid for the period.
</TABLE>
The Corporation anticipates that it will make its regular quarterly
dividend for the first quarter of 1997 on March 31, 1997, subject to declaration
by the Board. The Corporation currently anticipates that following approval of
the Plan it will declare a single final liquidating dividend. However, future
dividends by the Corporation are subject to the discretion of the Board and
would depend on the earnings of the Corporation, its financial condition and
other relevant factors.
SELECTED FINANCIAL DATA
Selected financial data is presented in the Corporation s audited financial
statements which are included in the Corporation s Annual Report on Form 10-K
for the year ended December 31, 1996, a copy of which is attached hereto as
Annex B and which is incorporated herein by reference.
- 13 -
MANAGEMENT S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For a discussion of the Corporation s financial condition and results of
operations during the three most recent fiscal years, see Management s
Discussion and Analysis of Financial Condition and Results of Operations in the
Corporation s Annual Report on Form 10-K for the year ended December 31, 1996, a
copy of which is attached hereto as Annex B and which is incorporated herein by
reference.
BUSINESS OF THE CORPORATION
The Corporation was formed to acquire, hold, sell, dispose of and otherwise
deal with government insured mortgage loans, mortgage-backed securities and
participating mortgage investments. It has been the stated intention of the
Corporation to dissolve no later than December 31, 1997. For a more detailed
description of the Corporation s business operations, see the discussion of the
Corporation s business in the Corporation s Annual Report on Form 10-K for the
year ended December 31, 1996, a copy of which is attached hereto as Annex B and
which is incorporated herein by reference.
INDEPENDENT PUBLIC ACCOUNTANTS
The Corporation s financial statements for the fiscal year ended December
31, 1996 were audited by Arthur Andersen LLP. A representative of Arthur
Andersen LLP will be present at the Meeting. This representative will have an
opportunity to make a statement, and will be available to respond to questions
by shareholders.
OTHER MATTERS
The Board knows of no other business which will be presented at the
Meeting. If other matters properly come before the Meeting, the persons named
as proxy holders will vote on them in accordance with their best judgment.
The cost of this solicitation of proxies will be borne by the Corporation.
The Corporation has retained the firm of MacKenzie Partners, Inc., to assist in
the solicitation of proxies from shareholders at a fee of $10,000, plus out-of-
pocket expenses. In addition to the use of the mails, some of the officers or
agents of the Corporation (other than MacKenzie Partners, Inc.), for no
additional compensation, may solicit proxies by telephone, facsimile or by other
means. The Corporation will request brokerage houses and other custodians,
nominees and fiduciaries to forward soliciting materials to the beneficial
owners of Common Shares held of record by such persons and may verify the
accuracy of marked proxies by contacting record and beneficial owners of the
Common Shares. The Corporation will reimburse such persons for their reasonable
expenses incurred in forwarding such soliciting materials.
- 14 -
1997 AND 1998 ANNUAL MEETINGS
It is anticipated that the Corporation will be dissolved before May 1997,
thus eliminating the need for Annual Meetings of Shareholders in 1997 and 1998.
However, if the Corporation is not dissolved and the 1998 Annual Meeting of
Shareholders is to be held, shareholders may present proposals to be considered
for inclusion in the Proxy Statement for the 1998 Annual Meeting of shareholders
provided such proposals are received by the Corporation no later than December
1, 1997.
H. WILLIAM WILLOUGHBY
Secretary
March 13, 1997
- 15 -
Annex A
Plan of Complete Liquidation and Dissolution
PLAN OF COMPLETE LIQUIDATION
AND DISSOLUTION OF
CRI LIQUIDATING REIT, INC.
This Plan of Complete Liquidation and Dissolution (the Plan ) of CRI
Liquidating REIT, Inc., a Maryland corporation (the Corporation ), has been
recommended by the Corporation s Board of Directors (the Board ) as being in
the best interests of the Corporation and its shareholders. The Board has
directed that this Plan be submitted to the shareholders for its adoption or
rejection at a special meeting of shareholders. Upon such adoption, the
Corporation shall completely liquidate and voluntarily dissolve in accordance
with the laws of the State of Maryland as follows:
1. Effective Date. The effective date of the Plan (the Effective Date )
shall be the date on which it is adopted by the affirmative vote of both (a) the
holders of record of a majority of the Corporation s outstanding Common Stock,
par value $.01 per share (the Common Stock ), and (b) the holders of record of
Common Stock other than Common Stock held by CRIIMI MAE Inc. or its affiliates.
2 Dissolution. At such time as the Board has determined that all necessary
requirements for dissolution have been satisfied under Maryland law, the
appropriate officers of the Corporation immediately shall execute and cause to
be filed in the State Department of Assessments and Taxation of the State of
Maryland and elsewhere as may be required or deemed appropriate such documents
as may be required to effectuate the dissolution of the Corporation. From and
after the date such documents are accepted by the State Department of
Assessments and Taxation, the Corporation will be deemed to be completely
dissolved, but will continue to exist under Maryland law for the purposes of
paying, satisfying and discharging any existing debts or obligations, collecting
and distributing its assets, and doing all other acts required to liquidate and
wind up its business affairs. The directors in office at the time the Articles
of Dissolution are accepted for filing shall be deemed to be trustees of the
assets of the Corporation for the purposes of liquidation and shall have all
powers provided to them by Section 3-410 of the Maryland General Corporation
Law. The stock transfer books of the Corporation shall be permanently closed
upon acceptance of the Articles of Dissolution by the Maryland State Department
of Assessments and Taxation.
3. Management and Disposition of Assets. Following approval of the Plan, the
Corporation shall not engage in any further business activities except for
activities incident to the dissolution, liquidation and winding up of the
affairs of the Corporation and such other activities incident thereto which a
majority of the directors, in their sole discretion, consider to be necessary,
proper and consistent with the powers granted the director-trustees by Section
3-410 of the Maryland General Corporation Law and the Plan. The Corporation
shall not sell or dispose of any of its assets to CRIIMI MAE Inc., any of CRIIMI
MAE Inc. s affiliates, or any other affiliate of the Corporation.
4. Provisions For Liabilities. All liabilities of the Corporation shall be
paid, provided for, settled or otherwise satisfied in the manner determined by
the Board. There may be set aside and retained in cash or other assets a
reserve fund or reserve funds in an amount or amounts determined by the Board to
be necessary for the payment of estimated liabilities, taxes and expenses,
including the expenses related to the effectuation of the Plan.
5. Liquidating Trust. In the event that (a) in the opinion of the Board, it
should not be feasible for the Corporation to pay, or adequately provide for,
all liabilities of the Corporation (including costs and expenses incurred and
anticipated to be incurred in connection with the effectuation of the Plan) at
the time the final liquidating distribution is made pursuant to Section 6
hereof, or (b) the Board shall determine that it is not advisable to distribute
at such time any other property held by or for the account of the Corporation
- 1 -
because such property is not reasonably susceptible for distribution to
shareholders or otherwise, the Corporation shall transfer and assign to a
liquidating trust designated by the Board (the Liquidating Trust ) sufficient
cash and property to pay or adequately provide for all such debts and
liabilities and such other property as the Board shall have determined is
appropriate. The Liquidating Trust shall be constituted pursuant to a
Liquidating Trust Agreement in such form as the Board may approve, it being
intended that the transfer and assignment to the Liquidating Trust pursuant
hereto and the distribution to shareholders of the non-transferrable beneficial
interests therein shall constitute a part of the final liquidating distribution
by the Corporation to the shareholders of their pro rata interest in the
remaining amount of cash and other property held by or for the account of the
Corporation. From and after the date of the Corporation s transfer of cash and
property to the Liquidating Trust, (i) the Corporation shall have no interest of
any character in and to any such cash and property and (ii) all of such cash and
property shall thereafter by held by the Liquidating Trust solely for the
benefit of and ultimate distribution to the Corporation s shareholders, subject
to any unsatisfied debts, liabilities and expenses.
6. Distributions to Shareholders. The assets of the Corporation which, in the
opinion of the Board, no longer need be retained as a reserve fund to meet
liabilities, shall, subject to Section 4 hereof, be distributed to the
shareholders on a pro rata basis, with each share of Common Stock sharing
equally with respect to distributions at the times and under the conditions
determined by the Board. The Board shall make such provisions, if any, as it
may deem appropriate regarding the surrender and transfer of the share
certificates in connection with the making of distributions hereunder.
7. REIT Status. In the course of the liquidation, the Board shall have the
authority to terminate the Corporation s status as a real estate investment
trust under the Internal Revenue Code of 1986, as amended, if the Board
determines that such action is in the best interests of the Corporation and its
shareholders.
8. Authorization of Board. On and after the Effective Date, the directors
then in office shall become trustees of the Corporation s assets for the
purposes of collecting and distributing the Corporation s assets, applying them
to the payment, satisfaction and discharge of the existing debts and obligations
of the Corporation, including the necessary expenses of liquidation, and the
director-trustees may, by majority vote, distribute the remaining assets among
the shareholders, carry out the contracts of the Corporation, sell all or any
part of the assets of the Corporation at public or private sale, sue or be sued
in their own names as trustees or in the name of the Corporation and undertake
all other acts consistent with law and the Corporation s Articles of
Incorporation necessary and proper to liquidate the Corporation and wind up its
affairs.
9. Indemnification. The obligation of the Corporation to indemnify and
reimburse its directors, officers, employees or affiliates pursuant to
applicable law and/or Article VII, Section 1 of the Corporation s Bylaws or
otherwise shall survive the liquidation and dissolution of the Corporation and
may be satisfied only out of the assets of any reserve fund or Liquidating Trust
which has assumed the liability of the Corporation therefor or the proceeds of
insurance therefor, but not from distributions to shareholders.
10. Modification and Abandonment. The Board may modify or amend this Plan if
it determines that such action would be in the best interests of the Corporation
and its shareholders. In the event that a modification or amendment appears
necessary and will, in the judgment of the Board, materially and adversely
affect the interests of the shareholders, such amendment or modification will be
submitted to the shareholders for approval by both (a) the shareholders holding
a majority of the Common Shares then outstanding and entitled to vote thereon
and (b) the shareholders holding a majority of the Common Shares then
outstanding and entitled to vote thereon excluding votes cast by CRIIMI MAE Inc.
- 2 -
or its affiliates. The Board may abandon this Plan without shareholder approval
at any time if it determines that abandonment would be in the best interests of
the Corporation or its shareholders.
- 3 -
Annex B
Annual Report on Form 10-K for Fiscal Year ended December 31, 1997
Incorporated herein by reference to Corporation s Annual Report on Form 10-
K dated February 19, 1997.
CRI LIQUIDATING REIT, INC.
Proxy for Special Meeting of Shareholders on April 23, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of CRI Liquidating REIT, Inc. appoints William B.
Dockser and H. William Willoughby, and each of them, with full power of
substitution, as proxy to vote all shares of the undersigned in CRI Liquidating
REIT, Inc. at the Special Meeting of Shareholders to be held on April 23, 1997
and at any adjournments thereof (the Special Meeting ), with like effect and as
if the undersigned were personally present and voting, upon the following
matters:
1. The proposed Plan of Complete Liquidation and Dissolution.
For Against Abstain
2. Such other matters as may properly come before the Special Meeting at
the discretion of the proxy holders.
PROXIES WILL BE VOTED AS DIRECTED OR SPECIFIED, IF NO CHOICE IS SPECIFIED, THIS
PROXY WILL BE VOTED (1) FOR PROPOSAL 1 AND (2) FOR OR AGAINST ANY OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING AT THE DISCRETION OF THE PROXY
HOLDERS.
Dated:________________________, 1997
__________________________________
Signature of Shareholder
__________________________________
Signature of Shareholder
SIGNATURE(S) MUST CORRESPOND EXACTLY WITH NAME(S)
AS IMPRINTED HEREON. When signing as attorney,
executor, administrator, trustee or guardian,
please give the full title as such, and if the
signer is a corporation, please sign with the full
corporate name by a duly authorized officer. If
stock is held in the name of more than one person,
all named holders must sign the proxy.
PLEASE VOTE AT ONCE. It is important.
- 5 -
