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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. 1)
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 (S) 240.14a-11(c) or (S) 240.14a-12
Brauvin Corporate Lease Program IV L.P., a Delaware limited partnership
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(Name of Registrant as Specified in its Charter)
John C. Archbold
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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 applied:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[X] 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:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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Revision 1
PRELIMINARY MATERIALS
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JOHN C. ARCHBOLD
c/o The Mills Firm
300 Drake's Landing
Suite 155
Greenbrae, California 94904
Telephone: 415-464-4770
Fax: 415-464-4777
SOLICITATION STATEMENT
Relating to the Special Meeting of Limited Partners
of Brauvin Corporate Lease Program IV, L.P.
To Be Held November 8, 1996
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Revision 1
PRELIMINARY MATERIALS
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INTRODUCTION
GENERAL
This Solicitation Statement are being first mailed to the beneficial owners
("Limited Partners") of the limited partnership interests ("Units") of Brauvin
Corporate Lease Program IV, L.P., a Delaware limited partnership (the
"Partnership"), on or about [November 4], 1996 by the undersigned Limited
Partner (the "Dissenting Partner") regarding the revocation of proxies that may
have been granted to Jerome J. Brault and Brauvin Realty Advisors, Inc.
(collectively, the "Corporate General Partners") for use at a special meeting of
the Limited Partners (the "Special Meeting") to be held at the offices of the
Partnership, 150 South Wacker Drive, Chicago, Illinois 60606, on Friday,
November 8, 1996, at 10:30 a.m., Central Standard Time. As you are probably
aware, together with Dissenting Partners from Brauvin High Yield Fund L.P.,
Brauvin High Yield Fund L.P. II, and Brauvin Income Plus L.P. III, the
Dissenting Partner has commenced class action litigation against the Corporate
General Partners and the Purchaser in the United States District Court, Northern
District of Illinois, Eastern Division, for breach of fiduciary duty (the "Class
Action Lawsuit"). As part of the Class Action Lawsuit, on September 20, 1996,
the Court delayed the original date for the Special Meeting to October 9, 1996
and authorized The Mills Firm to communicate with the other Limited
Partners.
On September 27, 1996, The Mills Firm, sent a letter requesting that you
revoke proxies that you may have granted to the Corporate General Partners of
our Partnership regarding the proposal (the "Proposal") to sell the assets of
the Partnership to Brauvin Real Estate Fund, LLC, a Delaware limited liability
company ("Purchaser") ("September 27 Letter"). A number of Limited Partners
responded favorably to the September 27 Letter and sent in revocations
("REVOCATIONS") as requested. The exact number of REVOCATIONS that were sent in
is not known to the Dissenting Partner, but, according to an October 21, 1996
communication from Jerome J. Brault (the "Managing General Partner"), the
Partnership does not have the necessary votes to consummate the proposed
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transactions.
SEC COMPLIANCE
The September 27 Letter was hurriedly prepared in order for the Limited
Partners to have a meaningful opportunity to act before the Special Meeting
rescheduled by the Court to October 9, 1996. This letter was not submitted to
the Securities and Exchange Commission ("SEC") in accordance with its proxy
rules prior to being sent to the Limited Partners by The Mills Firm. This
Solicitation Statement is designed to correct such omission.
The Corporate General Partners have asserted that the September 27 Letter
contained a number of misleading statements or omissions. Those assertions have
been stated in filings made with the Court, and are repeated in October 4, 1996
and October 21, 1996 letters from Mr. Brault which have been mailed to the
Limited Partners. The validity of those assertions has not been finally
resolved by the Court.
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This Solicitation Statement supersedes the September 27 Letter, and has a
threefold purpose: first, to urge Limited Partners not to cancel REVOCATIONS
which have already been submitted to the Corporate General Partners; second, to
correct any omissions from, or misstatements in, the September 27, 1996 Letter;
and third, to give Limited Partners a chance to cancel REVOCATIONS submitted in
response to the September 27 Letter, if, after reading this document, they deem
such cancellation appropriate.
For the reasons described in the next section of this Solicitation
Statement, the Dissenting Partner STRONGLY URGES ALL LIMITED PARTNERS WHO HAVE
REVOKED PREVIOUSLY SUBMITTED PROXIES NOT TO CANCEL SUCH REVOCATIONS.
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REASONS TO VOTE AGAINST THE PROPOSAL
Conflicts of Interest
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The Corporate General Partners which are recommending the Proposal will
control the entity into which will purchase the assets of the Partnership as
described in the first Proposal. While they assert that ultimately they may own
no more than 20% of the Purchaser, the fact is that today they control 100% and
there is no assurance that they will not maintain effective management control
of, and a significant equity interest in, the Purchaser even after equity
financing is raised.
Neither the Corporate General Partners nor the Partnership have taken
additional steps necessary to support the price being paid to the Limited
Partners (such as obtaining confirming appraisals from other than Cushman &
Wakefield), or, indeed, to obtain a higher price for Limited Partners, such as
attempting to market the property to third parties or subjecting the property to
an auction procedure. The Corporate General Partners appear to want to maintain
an equity interest in the Partnership's assets for themselves, creating the
ultimate conflict of interest.
General partners of limited partnerships are obligated to exercise the
highest standard of care in connection with transactions entered into by the
partnership, particularly in connection with related party transactions and
self-dealing. Mere disclosure of self-dealing is not adequate. Thus, a vote
against the Proposal would obtain time during which to test alternative means
for determining the value of the Partnership's assets and the Units in unrelated
third party transactions and procedures.
In addition, if the sale is completed as proposed by the Corporate General
Partners, any significant increase in the value of the Partnership's assets
would inure totally to the benefit of the Corporate General Partners, as it
would in a sale to an unrelated third party. This possibility should be
considered in deciding how to vote. You may want to continue to share in the
potential appreciation. Leaving in place a REVOCATION of any proxies approving
the Proposal will allow you to continue as ultimate "owners" of the
properties.
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The Valuation Process
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The Corporate General Partners have obtained an appraisal from Cushman &
Wakefield which is based on only one of the recommended method of appraising
properties. In addition, Cushman & Wakefield was asked to render a financial
"fairness" opinion with respect to the transaction contemplated by the Proposal
as a whole. It would have provided more comfort to the Limited Partners had a
reputable independent investment banking firm been engaged to evaluate the
overall transaction and render the fairness opinion based on Cushman &
Wakefield's appraisal. While the offered price may be "reasonable," the process
selected by the Corporate General Partners was not designed to assure the
Limited Partners of the "best price."
Leaving in place a REVOCATION of your vote for the Proposal would allow for
the process of obtaining a more complete appraisal and a wholly independent
fairness opinion.
Failure of Recommendation by Independent General Partners
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In the August 23, 1996 proxy material prepared by the Corporate General
Partners and distributed to you, disclosure is made that two of the individual
General Partners who are not related to Mr. Brault or Brauvin Realty Advisors,
Inc., Cezar M. Froelich and David M. Strosberg (the "Independent General
Partners"), are not recommending the Proposal "since they believe that the most
advantageous methodology for a fair price for the assets would be to seek third-
party offers through an arm's-length bidding process." In fact, as also
disclosed in the August 23, 1996 proxy material, both Independent General
Partners have announced their respective intention to resign as a General
Partner of the Partnership.
While Limited Partners may, of course, amend the Partnership Agreement, the
affiliated Corporate General Partners are asking for your consent to amend the
Partnership Agreement to eliminate the necessity for the exercise of judgment on
the part of the Independent General Partners of the Partnership. Frankly, they
are also asking you to override the judgment of the Independent General Partners
that this is not the best course of action to be taken now.
Leaving in place the REVOCATION of a prior "yes" vote on the second
Proposal therefore, would be a confirmation that you, as Limited Partners,
desire the protection originally afforded to you by the Partnership
Agreement.
CANCELLATION OF YOUR EARLIER SUBMITTED REVOCATION WILL HAVE THE EFFECT OF
VOTING "YES" FOR THE PROPOSAL. YOU ARE URGED NOT TO CANCEL YOUR REVOCATION.
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PENDING LITIGATION
As noted in the Introduction, the Dissenting Partner has filed the Class
Action Lawsuit to protect the interests of all of the Limited Partners. The
Dissenting Partner has been certified by the Court as the class representative.
The Dissenting Partner has been successful in delaying the
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original date of the Special Meeting to allow additional information about the
Proposal to be supplied to the Limited Partners. In such lawsuit, the Corporate
General Partners challenged the September 27 Letter and the revocations
submitted in response to it. They have described their position in the October
4, 1996 and October 21, 1996 communications to the Limited Partners.
The Court has refused to invalidate REVOCATIONS submitted in response to
the September 27 Letter. The U.S. Circuit Court for the Seventh Circuit has
refused to hear an appeal of this ruling on an emergency basis and the Corporate
General Partners have appealed that ruling.
In the meantime, on October 17, 1996, the Dissenting Partner filed a motion
for partial summary judgment to invalidate the proxies solicited by the
Corporation General Partners to vote in favor of the Proposal. The basis for
such motion is that a proxy voting procedure is not authorized by Delaware law
absent specific language in the partnership agreement which does not exist in
the Partnership's Partnership Agreement. The Corporate General Partners'
response is due November 4, 1996, with the Dissenting Partner having the right
to submit a reply by November 12, 1996. If the Court rules favorably on this
motion, the entire special meeting voting process will be invalidated, and all
solicitations to date from the Corporate General Partners and the Dissenting
Partner would be of no effect.
CORRECTIONS AND CLARIFICATIONS OF SEPTEMBER 27 LETTER
In order to bring this solicitation into compliance with the SEC's proxy
rules, in addition to other clarifications in "Reasons To Vote Against the
Proposal," the following corrections to, or clarifications of, the September 27,
1996 Letter should be noted:
1. As previously stated in the September 30 Letter from The Mills Firm,
the Court did not review or approve or disapprove the text of the September 27
Letter.
2. The statement in the September 27 Letter that the cover letter to the
August 23, 1996 solicitation statement implies that the appraisal and the
fairness opinion come from separate entities was inaccurate. The September 27
Letter was not intended to impugn the integrity of Cushman & Wakefield, or
misrepresent its appraisal. The key point was that, while "reasonable," the
price was not necessarily the best available.
3. In asserting that the Partnership's assets may be worth more than the
pending offer from the Purchaser, no projection of future value of Partnership
assets was intended. However, the Dissenting Partner is aware of at least one
offer from a third party for the Partnership's assets at a higher price which
offer has been rejected by the Corporate General Partners. This offer has not
been disclosed to the Limited Partners. The corporate General Partners contend
that the basis for the rejection is that normally a sale to a third party must
take into account possible
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outstanding liabilities of the Partnership, which would not be true for a sale
to the proposed Brauvin Purchaser.
INFORMATION ABOUT DISSENTING PARTNER
The Dissenting Partner is John C. Archbold of Bonita, California. He is
retired and holds 30 Units of the Partnership. Mr. Archbold has been certified
as class representative for the Limited Partners of the Partnership in the above
described Class Action Lawsuit. His only interest in the Proposal is to see
that the value of the Units is maximized by the General Partners of the
Partnership in any transaction, or series of transactions, in which the
Partnership properties are disposed of.
INFORMATION CONCERNING THE MILLS FIRM
The Mills Firm is a law firm located in Greenbrae, California, specializing
in litigation matters. It began its involvement in this transaction as counsel
for the Dissenting Partner in the commencement of the Class Action Lawsuit.
Prior to the Dissenting Partner being certified as a class representative for
the other Limited Partners in the Class Action Lawsuit, The Mills Firm had a
contingent fee agreement with the Dissenting Partner. As a part of that
agreement, The Mills Firm agreed to advance the costs of the preparation and
dissemination of this Solicitation Statement and the September 27 Letter. If
such Class Action Lawsuit is successful, The Mills Firm will be entitled to such
fee for its services as the Court deems appropriate to be paid out of any
recovery from the defendants or out of any proceeds from the sale of the
Partnership's assets at a price in excess of that proposed by the Corporate
General Partners. Except for the potential receipt of such attorneys' fees, The
Mills Firm has no interest in the transactions described in the Proposals. The
Mills Firm has no interest in the outcome of the vote being sought by the
Corporate General Partners. If the vote sought by the Corporate General
Partners is obtained, and if there is no recovery against the Corporate General
Partners and other defendants in such Class Action Lawsuit, The Mills Firm will
receive no compensation for its efforts in representing either the Dissenting
Partner or the class of Limited Partners of the Partnership.
GENERAL
The REVOCATION was solicited by and on behalf the Dissenting Partner. The
Dissenting Partner encourages you not to revoke it. This Solicitation Statement
will be transmitted to the Limited Partners by mail.
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Each Unit is entitled to one vote. The number of Units outstanding is as
stated in the General Partners' August 23, 1996 Solicitation Statement. A
majority of the Units must be voted in favor of the Proposals for them to be
approved. Revocation of a "yes" vote, as well as failure to vote affirmatively,
is effectively a "NO" vote. The effect of a cancellation of a REVOCATION will
be a "yes" vote for the Proposals.
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"Dissenting Partner"
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SPECIAL MEETING - NOVEMBER 8, 1996
THE REVOCATION OF YOUR APPROVAL VOTE IS EXTREMELY IMPORTANT
YOU ARE STRONGLY URGED NOT TO CANCEL IT.
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1. If you wish to cancel a Revocation previously submitted in response to the
September 27 Letter, you must submit a Cancellation of Revocation to The
Herman Group, Inc. at or before the time of the special meeting or November
8, 1996.
2. If you have any questions or require any additional information concerning
this Solicitation Statement, please contact :
The Mills Firm
300 Drake's Landing
Suite 155
Greenbrae, California 94904
Telephone: 415-464-4770
Fax: 415-464-4777
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