<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
Amendment No. 10
Capital Realty Investors Tax Exempt Fund Limited Partnership ("CRITEF")
Capital Realty Investors Tax Exempt Fund III Limited Partnership ("CRITEF III")
(Names of Issuers)
Watermark Partners, L.P.
Watermark III Partners, L.P.
Capital Apartment Properties, Inc.
Apollo Real Estate Advisors, L.P.
(Names of Persons Filing Statement)
Beneficial Assignee Certificates, CRITEF, Series I and II
Beneficial Assignee Certificates, CRITEF III
(Title of Classes of Securities)
140 437 10 4, CRITEF, Series I
140 437 20 3, CRITEF, Series II
140 438 10 2, CRITEF III
(CUSIP Numbers of Classes of Securities)
Capital Apartment Properties, Inc.
Richard L. Kadish
The CRI Building
11200 Rockville Pike
Rockville, Maryland 20852
(301) 268-8700
and
Apollo Real Estate Advisors, L.P.
Michael D. Weiner
1999 Avenue of the Stars
Los Angeles, California 90057
(310) 201-4100
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of Persons Filing Statement)
Copies to:
Janet C. Walden, Esq.
SCHULTE ROTH & ZABEL
900 Third Avenue
New York, New York 10021
<PAGE>
This statement is filed in connection with (check the appropriate box):
a. /x/ The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities
Exchange Act of 1934.
b. / / The filing of a registration statement under the Securities Act
of 1933.
c. / / A tender offer.
d. / / None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies.
Calculation of Filing Fee
Transaction valuation* Amount of filing fee
$168,800,257 $33760
* Pursuant to the proposed merger, the public holders of beneficial assignee
certificates ("BACs") in CRITEF and CRITEF III, who hold in the aggregate
2,280,000 BACs in CRITEF, Series I, 3,238,760 BACs in CRITEF, Series II, and
5,258,268 BACs in CRITEF III, will be entitled to receive $15.60 per BAC in
CRITEF, Series I, $15.29 per BAC in CRITEF, Series II, and $15.92 per BAC in
CRITEF III, in each case, subject to adjustment.
/x/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount previously Paid: $32,461
Form or Registration No: Schedule 14A
Filing Party: CRITEF and CRITEF III
Dates Filed: March 18, 1996; August 26, 1996, November 12, 1996
<PAGE>
INTRODUCTION
This Amendment No. 10 to the Rule 13e-3 Transaction Statement is being
filed by Capital Realty Investors Tax Exempt Fund Limited Partnership ("Fund
I-II"), Capital Realty Investors Tax Exempt Fund III Limited Partnership ("Fund
III", and together with Fund I-II, the "Funds"), CRITEF Associates Limited
Partnership, the general partner of Fund I-II ("Fund I-II GP"), CRITEF III
Associates Limited Partnership, (the general partner of Fund III, and together
with Fund I-II GP, the "General Partners") , Watermark Partners, L.P.
("Watermark"), Watermark III Partners, L.P. ("Watermark III"), Capital
Apartment Properties, Inc., the general partner of Watermark and Watermark III
("CAPREIT") and Apollo Real Estate Advisors, L.P., the beneficial owner of
99.83% of the outstanding capital stock of CAPREIT ("Apollo"), in connection
with the proposed mergers of Watermark and Watermark III with and into Fund
I-II and Fund III, respectively, and related transactions. Fund I-II and Fund
III are the issuers of the classes of securities which are the subject of the
Rule 13e-3 transaction.
Concurrently with the filing of this Amended Rule 13e-3 Transaction
Statement, Fund I-II and Fund III are filing with the Securities and Exchange
Commission their Supplement to a definitive Proxy Statement relating to the
solicitation of proxies by Fund I-II and Fund III to vote upon : (1) a proposal
to approve and adopt (a) with respect to Fund I-II, the Fourth Amended and
Restated Agreement and Plan of Merger, dated as of August 21, 1996, as amended
by Amendment No. 1 thereto dated November 7, 1996, among Fund I-II, CRITEF
Associates Limited Partnership and Watermark, and others, and (b) with respect
to Fund III, the Fourth Amended and Restated Agreement and Plan of Merger,
dated as of August 21, 1996, as amended by Amendment No. 1 thereto dated
November 7, 1996, among Fund III, CRITEF III Associates Limited Partnership and
Watermark III, and others, and in each case, to approve certain amendments to
the Agreements of Limited Partnership of each of the Funds to authorize
expressly the foregoing, (2) a proposal to approve, with respect to each Fund,
(i) the sale of the 1.01% general partner interest by such Fund's general
partner to CAPREIT GP, Inc., a newly-formed, wholly-owned subsidiary of CAPREIT
("CAPREIT GP"), in exchange for $400,000, and the substitution of CAPREIT GP as
the general partner of such Fund in its stead, and (ii) the issuance of limited
partner interests in each of the Funds to CAPREIT or its designees in exchange
for the contribution of real property or other assets, and the admission of
CAPREIT or its designees as limited partners of each of the Funds, and, in each
case, certain amendments to the Agreements of Limited Partnership of each of
the Funds to authorize expressly the foregoing, (3) any adjournments of the
Special Meetings to allow for the additional solicitation of BAC Holder votes
in order to obtain more votes in favor of the foregoing proposals, and (4) any
other business as may properly come before the Special Meetings or any
adjournments or postponements thereof.
A copy of the Supplement to the definitive Proxy Statement is attached
as Exhibit 17(d)(14) hereto. The definitive Proxy Statement was previously filed
as Exhibit 17(d)(1) to Amendment No. 3 to the Schedule 13e-3. The information
contained in the Proxy Statement, as supplemented by the Supplement, is
incorporated by reference in answer to the items in this Rule 13e-3 Transaction
Statement, and the Cross-Reference Sheet set forth below shows the location in
the Proxy Statement and the Supplement of the information required to be
included in response to the items of this Rule 13e-3 Transaction Statement. The
information contained in the Proxy Statement and the Supplement, including all
exhibits and appendices thereto, is hereby expressly incorporated herein by
reference, and the responses to each item herein are qualified in their entirety
by reference to the information contained in the Proxy Statement and, where
applicable, the Supplement and the exhibits and appendices thereto.
<PAGE>
CROSS REFERENCE SHEET
(Pursuant to General Instruction F to Schedule 13E-3)
<TABLE>
<CAPTION>
Schedule 13E-3 Item
Number and Caption Caption in Proxy Statement and Supplement
- ------------------------------------------ -----------------------------------------
<S> <C>
Item 1 Issuer and Class of Security
Subject to the Transaction
(a).......................... Cover Page; Summary--Purpose of the Special Meetings;
Summary--The Funds and the Merger Partnerships and CAPREIT GP;
Background of the Funds; Supplement Cover Page.
(b).......................... Summary--Purpose of the Special Meetings; General
Information--Time and Place of the Special Meetings; General
Information--Record Date; Required Vote; Supplement--
"Record Date and Required Vote."
(c).......................... Summary--Market Price Data; Market Price Data for Fund I-II;
Market Price Data for Fund III.
(d).......................... The Transaction Proposals--The Merger Proposal--The Merger
Agreements--Conduct of Business Pending the Mergers; Market
Price Data for Fund I-II; Market Price Data for Fund III.
(e).......................... Not Applicable
(f).......................... Not Applicable
</TABLE>
2
<PAGE>
Item 2 Identity and Background
This Rule 13e-3 Transaction Statement is being filed by the issuers of the
classes of securities which are the subject of the Rule 13e-3 transaction, Fund
I-II and Fund III, and the General Partners, Watermark, Watermark III, CAPREIT
and Apollo; information with respect to each of the filing persons can be found
in the Proxy Statement under captions listed below.
<TABLE>
<S> <C>
(a).......................... Summary--The Funds and the Merger Partnerships and CAPREIT GP;
Background of the Funds; Management of the Funds; The Merger
Partnerships and CAPREIT GP; Management of the Merger
Partnerships and CAPREIT GP.
(b).......................... Summary--The Funds and the Merger Partnerships and CAPREIT GP;
Background of the Funds; Management of the Funds; The Merger
Partnerships; Management of the Merger Partnerships and CAPREIT
GP.
(c).......................... Summary--The Funds and the Merger Partnerships and CAPREIT GP;
Background of the Funds; Management of the Funds; The Merger
Partnerships and CAPREIT GP; Management of the Merger
Partnerships and CAPREIT GP.
(d).......................... Summary--The Funds and the Merger Partnerships and CAPREIT GP;
Background of the Funds; Management of the Funds; The Merger
Partnerships and CAPREIT GP; Management of the Merger
Partnerships and CAPREIT GP.
(e), (f)..................... None of the persons with respect to whom information is provided
in response to this Item was, during the last five years,
convicted in a criminal proceeding or a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction which resulted in the person being subject to a
judgment, decree or final order enjoining further violations of,
or prohibiting activities subject to, federal or state
securities laws or finding any violation of such law.
(g).......................... Each of the persons with respect to whom information is provided
in response to this Item is a citizen of the United States.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Item 3 Past Contacts, Transactions
and Negotiations
(a)(1)....................... Summary--Interests of Certain Persons in the Transactions;
Special Factors--Background of the Mergers; Special Factors--
Interests of Certain Persons in the Transactions; Special
Factors--Certain Relationships and Related Transactions.
(a)(2)....................... Summary--Interests of Certain Persons in the Transactions;
Special Factors--Background of the Mergers; Special Factors--
Interests of Certain Persons in the Transactions; Special
Factors--Certain Relationships and Related Transactions.
(b).......................... Summary--Interests of Certain Persons in the Transactions;
Special Factors--Background of the Mergers; Special
Factors--Interests of Certain Persons in the Transactions;
Special Factors--Certain Relationships and Related Transactions;
Supplement--"Recent Developments."
Item 4 Terms of the Transaction
(a).......................... Summary--Purpose of the Special Meetings; Summary--Redemption of
the BACs; Summary--The Mergers; Summary--Conditions to
Consummation of a Merger; Summary--Termination of the Merger
Agreements; Summary--Deposit; Summary--Fees and Expenses;
General Information--Purpose of the Special Meetings; The
Transaction Proposals--The Merger Proposal--The Mergers; The
Transaction Proposals--The Merger Proposal--The Merger
Agreements; The Transaction Proposals--New Partners Proposal;
Certain Federal Income Tax consequences of the Mergers and the
Related Transactions; and Supplement--"Increase in Redemption
Prices Payable to BAC Holders", --"Amendments to the Merger
Agreements", --"The Transaction Proposals."
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
(b).......................... Summary--Purpose of the Special Meetings; Redemption of the
BACs; Summary--Interest of Certain Persons in the Transactions;
General Information--Purpose of the Special Meetings; Special
Factors--Interest of Certain Persons in the Transactions;
Special Factors--Certain Relationships and Related Transactions;
The Transaction Proposals--The Merger Proposals; The Transaction
Proposals--New Partners Proposal; and Supplement--"Increase in
Redemption Prices Payable to BAC Holders", --"Amendments to the
Merger Agreements", --"The Transaction Proposals."
Item 5 Plans or Proposals of the
Issuer or Affiliate
(a).......................... Summary--The Financing; The Transaction Proposals--The Financing.
(b).......................... Summary--The Financing; The Transaction Proposals--The Financing.
(c).......................... Summary--The Financing; The Transaction Proposals--The Financing.
(d).......................... Summary--The Financing; The Transaction Proposals--The Financing.
(e).......................... Summary--The Financing; The Transaction Proposals--The Financing.
(f).......................... Summary-- The Mergers; Summary--Effective Time of the Mergers;
Summary--Redemption of the BACs; The Transaction Proposals-- The
Merger Proposal--The Mergers.
(g).......................... Summary--The Mergers; Summary--Effective Time of Mergers; The
Transaction Proposals--The Merger Proposal--The Mergers.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Item 6 Source and Amount of Funds or
Other Considerations
(a).......................... Summary--The Financing; The Transaction Proposals--The
Financing; and Supplement--"Financing".
(b).......................... Summary--The Financing; Special Factors--Interests of Certain
Persons in the Transactions; The Transaction Proposals--The
Merger Proposal--The Merger Agreements--Fees and Expenses; The
Transaction Proposals--The Financing.
The expenses incurred and to be incurred in connection with the
Rule 13e-3 transaction and the financing therefor are estimated
to be as follows:
Filing Fees -- $ 33,760
Legal Fees (including financing) -- 7,050,000
Accounting Fees -- 350,000
Financing Fees and Closing Costs
(other than legal) -- 5,744,000
Appraisals, engineering and
environmental studies and surveys -- 510,000
Reserves -- 2,800,000
Fairness Opinion Fees -- 633,333
Solicitation Expenses -- 205,000
Printing Costs -- 375,000
Except with respect to legal fees incurred by the Funds in
connection with negotiating the Merger Agreements, the Fairness
Opinion fees and as may be otherwise disclosed in the Proxy
Statement, CAPREIT is responsible for the payment of all fees,
costs and expenses incurred by it and the Funds in connection
with this Rule 13e-3 transaction.
(c).......................... Summary --The Financing; The Transaction Proposals--The Financing.
(d).......................... Not applicable.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Item 7 Purpose(s), Alternatives, Reasons
and Effects
(a).......................... Summary--Recommendations of the General Partners; Special
Factors--Purpose and Effect of the Transactions; Special
Factors--Recommendations of the General Partners; Special
Factors--Fairness of the Transactions.
(b).......................... Special Factors--Alternatives to the Mergers.
(c).......................... Special Factors--Background of the Mergers.
(d).......................... Summary--Purpose of the Special Meetings; Summary--The Mergers;
Summary--Certain Federal Income Tax Consequences; General
Information--Purpose of the Special Meetings; General
Information--Record Date; Required Vote; The Transaction
Proposals--The Merger Proposal--The Mergers; The Transaction
Proposals--New Partners Proposal; Certain Federal Income Tax
Consequences of the Mergers and Related Transactions.
Item 8 Fairness of the Transaction
(a).......................... Summary--Recommendations of the General Partners; Special
Factors--Recommendations of the General Partners; Special
Factors--Fairness of the Transactions; and Supplement--
"General Partners' Recommendations".
(b).......................... Summary--Recommendations of the General Partners; Special
Factors--Recommendations of the General Partners; Special
Factors--Fairness of the Transactions; and Supplement--
"General Partners' Recommendations".
(c).......................... Special Factors--Purpose and Effect of the Transactions; Special
Factors--Fairness of the Transactions; General
Information--Record Date; Vote Required.
(d).......................... Summary--Recommendations of the General Partners; Special
Factors--Recommendations of the General Partners; Special
Factors--Fairness of the Transactions.
(e).......................... Special Factors--Fairness of the Transactions.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
(f).......................... Special Factors--Background of the Mergers; Special
Factors--Alternatives to the Mergers.
Item 9 Reports, Opinions, Appraisals and
Certain Negotiations
(a).......................... Summary--Recommendations of the General Partners; Special
Factors--Background of the Mergers; Special
Factors--Recommendations of the General Partners; Special
Factors--Fairness Opinions of Oppenheimer & Co., Inc.
(b).......................... Special Factors--Fairness Opinions of Oppenheimer & Co., Inc.
(c).......................... Special Factors--Recommendations of the General Partners;
Special Factors--Fairness Opinions of Oppenheimer & Co., Inc.;
Available Information.
Item 10 Interests in Securities of
the Issuer
(a).......................... Security Ownership of Beneficial Holders and Management.
CAPREIT beneficially owns 1,000 BACs in Series I of Fund I-II,
1,000 BACs in Series II of Fund I-II and 1,000 BACs in Fund
III in each case representing less than .01% of the total number
of BACs outstanding. None of Watermark, Watermark III, or
Apollo beneficially owns any BACs in either of the Funds. As
described in the Proxy Statement (see "Security Ownership of
Beneficial Holders and Management"), CAPREIT has the right to
obtain a proxy to vote the 100 BACs in Series I of Fund I-II,
200 BACs in Series II of Fund I-II and 200 BACs in Fund III, in
each case representing less than .01% of the total number of
BACs outstanding in each such Fund, beneficially owned by Mr.
Martin C. Schwartzberg. As described in the Supplement under
the heading "Recent Developments", Dominium Tax Exempt Fund
L.L.P. has agreed with CAPREIT, to vote the 100 BACs it owns in
each of the series of the Funds "For" opposed of the Transaction
Proposals.
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
(b).......................... On October 25, 1996, for structuring purposes in connection with
the financing for the Rule 13e-3 transaction CAPREIT purchased,
in open-market transactions on the American Stock Exchange, 500
BACs in Series I of Fund I-II at a price of $14.25 per BAC, 500
BACs in Series I of Fund I-II at a price of $14.125 per BAC,
1,000 BACs in Series II of Fund I-II at a price of $13.75 per
BAC and 1,000 BACs in Fund III at a price of $14.50 per BAC. In
connection with these purchases, CAPREIT paid approximately $814
in commissions and fees.
Item 11 Contracts, Arrangements of The Transaction Proposals--The Merger Proposal--The Merger
Understandings with Respect to Agreements--Conduct of Business Pending the Mergers; and
the Issuer's Securities Supplement--"Recent Developments".
Item 12 Present Intention and
Recommendation of Certain Persons
with Regard to the Transaction.
(a).......................... Security Ownership of Beneficial Holders and Management--
Management; and Supplement--"Recent Developments".
(b).......................... Summary--Recommendations of the General Partners; Special
Factors--Recommendations of the General Partners; and
Supplement--"General Partners' Recommendations".
Item 13 Other Provisions of the Transaction
(a).......................... Summary--Vote Requirements at the Special Meetings; Summary--No
Dissenter's Rights; General Information; The Transaction
Proposals -- The Merger Proposal--No Dissenter's Rights.
(b).......................... Not applicable.
(c).......................... Not applicable.
Item 14 Financial Information
(a).......................... Financial Statements
(b).......................... Not applicable.
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
Item 15 Persons and Assets Employed,
Retained or Utilized
(a).......................... Not applicable.
(b).......................... General Information--Solicitation of Proxies.
Item 16 Additional Information Reference is hereby made to the Proxy Statement, including each
appendix thereto, which is incorporated herein by reference.
Item 17 Material to be Filed as Exhibits
(a).......................... Commitment Letter, dated March 29, 1996, between Capital
Apartment Properties, Inc. and CentRe Mortgage L.L.C.
(b)(1)....................... Fairness Opinion of Oppenheimer & Co., Inc. delivered to Fund I-
II, Series I, dated March 14,,1996, appears as Appendix B-1 to
the preliminary Proxy Statement filed as Exhibit 17(d) to
Amendment No. 3 to the Rule 13e-3 Transaction Statement.
(b)(2)....................... Fairness Opinion of Oppenheimer & Co., Inc. delivered to Fund
I-II, Series II, dated March 14, 1996, appears as Appendix B-2
to the preliminary Proxy Statement filed as Exhibit 17(d) to
Amendment No. 3 to the Rule 13e-3 Transaction Statement.
(b)(3)....................... Fairness Opinion of the Oppenheimer & Co., Inc. delivered to
Fund III, dated March 14, 1996, appears as Appendix B-3 to the
preliminary Proxy Statement filed as Exhibit 17(d) to Amendment
No. 3 to the Rule 13e-3 Transaction Statement.
(b)(4)....................... Report of Oppenheimer & Co., Inc. in connection with its
Fairness Opinions of March 14, 1996.
(b)(5)....................... Fairness Opinion of Oppenheimer & Co., Inc. delivered to Fund
I-II, Series I, dated September 20, 1996, appears as Appendix
B-1 to the definitive Proxy Statement filed as Exhibit 17(d) to
Amendment No. 3 to the Rule 13e-3 Transaction Statement.
(b)(6)....................... Fairness Opinion of Oppenheimer & Co., Inc. delivered to Fund
I-II, Series II, dated September 20, 1996, appears as
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
Appendix B-2 to the definitive Proxy Statement filed as Exhibit
17(d) to Amendment No. 3 to the Rule 13e-3 Transaction
Statement.
(b)(7)....................... Fairness Opinion of Oppenheimer & Co., Inc. delivered to Fund
III, dated September 20, 1996, appears as Appendix B-3 to the
definitive Proxy Statement filed as Exhibit 17(d) to Amendment
No. 3 to the Rule 13e-3 Transaction Statement.
(b)(8)....................... Report of Oppenheimer & Co., Inc. in connection with its
Fairness Opinions of September 20, 1996.
(c)(1)....................... Fourth Amended and Restated Agreement and Plan of Merger, dated
as of August 21, 1996, among Fund I-II, CRITEF Associates
Limited Partnership, Watermark and others, appears as Appendix
A-1 to the definitive Proxy Statement filed as Exhibit 17(d)(1)
to Amendment No. 3 to the Rule 13e-3 Transaction Statement.
(c)(2)....................... Fourth Amended and Restated Agreement and Plan of Merger, dated
as of August 21, 1996, among Fund III, CRITEF III Associates
Limited Partnership and Watermark III, and others, appears as
Appendix A-2 to the definitive Proxy Statement filed as Exhibit
17(d)(1) to Amendment No. 3 to the Rule 13e-3 Transaction
Statement.
(c)(3)....................... Complaint for Breach of Fiduciary Duty in the case styled Zakin
v. Dockser, et al. (C.A. No. 14558).
(c)(4)....................... Complaint for Breach of Fiduciary Duty in the case styled
Wingard v. Dockser, et al. (C.A. No. 14604).
(c)(5)....................... Stipulation of Settlement, dated as of May 13, 1996, relating to
the cases styled Zakin v. Dockser, et al. and Wingard v.
Dockser, et al.
(c)(6)....................... Amendment to Stipulation of Settlement, dated August 13, 1996,
relating to the cases styled Zakin v. Dockser, et al. and
Wingard v. Dockser, et al.
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
(c)(7)....................... Final Order and Judgment of the Court of Chancery of the State
of Delaware in and for New Castle County, dated August 14, 1996,
approving the Stipulation of Settlement as amended in the cases
styled Zakin v. Dockser, et al. and Wingard v. Dockser, et al.
(c)(8)....................... Complaint for False or Misleading Statements in the case styled
Dominium Tax Exempt Fund, L.L.P. v. Dockser, et al.
(c)(9)....................... Complaint for Preliminary and Permanent Injunction and Relief
against unlawful Proxy solicitation in the case styled Capital
Realty Investors Tax Exempt Fund Limited Partnership, et al. v.
Dominium Tax Exempt Fund L.L.P.
(c)(10)...................... Defendants' Emergency Motion to Enforce Court's Final Order In
Re Capital Realty Investors Tax Exempt Fund Limited
Partnership's Litigation.
(c)(11)...................... Memorandum Opinion in the case styled Capital Realty Investors
Tax Exempt Fund Limited Partnership, et al. v. Dominium Tax
Exempt Fund L.L.P.
(c)(12)...................... Order and Memorandum of Judge Lebedoff in the case styled
Dominium Tax Exempt Fund, L.L.P. v. Dockser, et. al.
(c)(13)...................... Agreement, dated November 6, 1996, between Dominium Tax Exempt
Fund L.L.P. and Capital Apartment Properties, Inc., including
the Escrow Agreement and Mutual Releases.
(c)(14)...................... Amendment No. 1 to the Fourth Amended and Restated Agrement and
Plan of Merger, dated November 7, 1996, among Fund I-II, CRITEF
Associates Limited Partnership, Watermark and others, appears as
Exhibit 1 to the Supplement to the definitive Proxy Statement
filed as Exhibit 17(d)(14) to this Rule 13e-3 Transaction
Statement.
(c)(15)...................... Amendment No. 1 to the Fourth Amended and Restated Agrement and
Plan of Merger, dated November 7, 1996, among Fund III, CRITEF
III Associates Limited Partnership, Watermark III and others,
appears as Exhibit 2 to the Supplement to the definitive Proxy
Statement filed as Exhibit 17(d)(14) to this Rule 13e-3
Transaction
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
Statement.
(d)(1)....................... Letters to BAC Holders, Notice of Special Meetings, definitive
Proxy Statement and forms of Proxy.
(d)(2)....................... October 3, 1996 Letter to BAC Holders from the Funds.
(d)(3)....................... October 4, 1996 Press Release issued by the Funds.
(d)(4)....................... October 3, 1996 Press Release issued by CAPREIT.
(d)(5)....................... October 11, 1996 Letter to BAC Holders from the Funds.
(d)(6)....................... October 14, 1996 Press Release issued by CAPREIT.
(d)(7)....................... October 16, 1996 Press Release issued by CAPREIT.
(d)(8)....................... October 18, 1996 Letter to BAC Holders from the Funds.
(d)(9)....................... October 18, 1996 Press Release issued by CAPREIT.
(d)(10)...................... October 22, 1996 Letter to BAC Holders From the Funds.
(d)(11)...................... October 28, 1995 Press Release issued by the Funds.
(d)(12)...................... October 29, 1996 Letter to BAC Holders from the Funds.
(d)(13)...................... November 6, 1996 Joint Press Release issued by the Funds,
CAPREIT and Dominium Tax Exempt Fund L.L.P.
(d)(14)...................... Letters to BAC Holders, Amended Notice of Special Meetings,
Supplement to definitive Proxy Statement and forms of Proxy.
(e).......................... Not applicable.
(f).......................... At this time no written instruction, form or other material
currently exists with respect to any oral solicitation or
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
recommendation that may be made (on behalf of the persons filing
this statement) to security holders in connection with the Rule
13e-3 transaction. Should any such written instruction, form or
material be generated, it will be supplied to the Commission as
a supplemental filing.
</TABLE>
14
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: November 8, 1996
CAPITAL REALTY INVESTORS TAX EXEMPT FUND LIMITED PARTNERSHIP
By: CRITEF Associates Limited Partnership,
its General Partner
By: C.R.I., Inc.,
its Managing General Partner
By: /s/ William B. Dockser
William B. Dockser
Chairman of the Board
CAPITAL REALTY INVESTORS TAX EXEMPT FUND III LIMITED PARTNERSHIP
By: CRITEF III Associates Limited Partnership,
its General Partner
By: C.R.I., Inc.,
its General Partner
By: /s/ William B. Dockser
William B. Dockser
Chairman of the Board
CRITEF ASSOCIATES LIMITED PARTNERSHIP
By: C.R.I., Inc.,
its Managing General Partner
By: /s/ William B. Dockser
William B. Dockser
Chairman of the Board
15
<PAGE>
CRITEF III ASSOCIATES LIMITED PARTNERSHIP
By: C.R.I., Inc.,
its General Partner
By: /s/ William B. Dockser
William B. Dockser
Chairman of the Board
16
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: November 8, 1996
WATERMARK PARTNERS, L.P.
By: Capital Apartment Properties, Inc.,
its General Partner
By: /s/ Richard L. Kadish
Richard L. Kadish
President and Chief Executive Officer
WATERMARK III PARTNERS, L.P.
By: Capital Apartment Properties, Inc.,
its General Partner
By: /s/ Richard L. Kadish
Richard L. Kadish
President and Chief Executive Officer
CAPITAL APARTMENT PROPERTIES, INC.
By: /s/ Richard L. Kadish
Richard L. Kadish
President and Chief Executive Officer
APOLLO REAL ESTATE ADVISORS, L.P.
By: Apollo Real Estate Management, Inc.,
its General Partner
By: /s/ Michael D. Weiner
Michael D. Weiner
Vice President
17
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Title
- ----------- -----
17(a)........................ Commitment Letter, dated March 29, 1996, between
Capital Apartment Properties, Inc. and CentRe
Mortgage L.L.C.*
17(b)(1)..................... Fairness Opinion of Oppenheimer & Co., Inc.
delivered to Fund I-II, Series I, dated March
14,,1996, appears as Appendix B-1 to the
preliminary Proxy Statement filed as Exhibit
17(d) to Amendment No. 3 to the Rule 13e-3
Transaction Statement.*
17(b)(2)..................... Fairness Opinion of Oppenheimer & Co., Inc.
delivered to Fund I-II, Series II, dated March
14, 1996, appears as Appendix B-2 to the
preliminary Proxy Statement filed as Exhibit
17(d) to Amendment No. 3 to the Rule 13e-3
Transaction Statement.*
17(b)(3)..................... Fairness Opinion of the Oppenheimer & Co.,
Inc. delivered to Fund III, dated March 14,
1996, appears as Appendix B-3 to the preliminary
Proxy Statement filed as Exhibit 17(d) to
Amendment No. 3 to the Rule 13e-3 Transaction
Statement.*
17(b)(4)..................... Report of Oppenheimer & Co., Inc. in connection
with its Fairness Opinions of March 14, 1996.*
17(b)(5)..................... Fairness Opinion of Oppenheimer & Co., Inc.
delivered to Fund I-II, Series I, dated
September 20, 1996, appears as Appendix B-1 to
the definitive Proxy Statement filed as Exhibit
17(d) to Amendment No. 3 to the Rule 13e-3
Transaction Statement.*
17(b)(6)..................... Fairness Opinion of Oppenheimer & Co., Inc.
delivered to Fund I-II, Series II, dated
September 20, 1996, appears as Appendix B-2 to
the definitive Proxy Statement filed as Exhibit
17(d) to Amendment No. 3 to the Rule 13e-3
Transaction Statement.*
17(b)(7)..................... Fairness Opinion of Oppenheimer & Co., Inc.
delivered to Fund III, dated September 20, 1996,
appears as Appendix
<PAGE>
B-3 to the definitive Proxy Statement filed as
Exhibit 17(d) to Amendment No. 3 to the Rule
13e-3 Transaction Statement.*
17(b)(8)..................... Report of Oppenheimer & Co., Inc. in connection
with its Fairness Opinions of September 20,
1996.*
17(c)(1)..................... Fourth Amended and Restated Agreement and Plan
of Merger, dated as of August 21, 1996, among
Fund I-II, CRITEF Associates Limited
Partnership, Watermark and others, appears as
Appendix A-1 to the definitive Proxy Statement
filed as Exhibit 17(d) to Amendment No. 3 to the
Rule 13e-3 Transaction Statement.*
17(c)(2)..................... Fourth Amended and Restated Agreement and Plan
of Merger, dated as of August 21, 1996, among
Fund III, CRITEF III Associates Limited
Partnership and Watermark III, and others,
appears as Appendix A-2 to the definitive Proxy
Statement filed as Exhibit 17(d) to Amendment
No. 3 to the Rule 13e-3 Transaction Statement.*
17(c)(3)..................... Complaint for Breach of Fiduciary Duty in the
case styled Zakin v. Dockser, et al. (C.A. No.
14558).*
17(c)(4)..................... Complaint for Breach of Fiduciary Duty in the
case styled Wingard v. Dockser, et al. (C.A. No.
14604).*
17(c)(5)..................... Stipulation of Settlement, dated as of May 13,
1996, relating to the cases styled Zakin v.
Dockser, et al. and Wingard v. Dockser, et al.*
17(c)(6)..................... Amendment to Stipulation of Settlement, dated
August 13, 1996, relating to the cases styled
Zakin v. Dockser, et al. and Wingard v. Dockser,
et al.*
17(c)(7)..................... Final Order and Judgment of the Court of
Chancery of the State of Delaware in and for New
Castle County, dated August 14, 1996, approving
the Stipulation of Settlement as amended in the
cases styled Zakin v. Dockser, et al. and
Wingard v. Dockser, et al.*
<PAGE>
17(c)(8)..................... Complaint for False or Misleading Statements
in the case styled Dominium Tax Exempt Fund,
L.L.P. v. Dockser, et al.*
17(c)(9)..................... Complaint for Preliminary and Permanent
Injunction and Relief against unlawful Proxy
solicitation in the case styled Capital Realty
Investors Tax Exempt Fund Limited Partnership,
et al. v. Dominium Tax Exempt Fund L.L.P.*
17(c)(10).................... Defendants' Emergency Motion to Enforce Court's
Final Order In Re Capital Realty Investors Tax
Exempt Fund Limited Partnership's Litigation.*
17(c)(11).................... Memorandum Opinion in the case styled Capital
Realty Investors Tax Exempt Fund Limited
Partnership, et al. v. Dominium Tax Exempt Fund
L.L.P.*
17(c)(12).................... Order and Memorandum of Judge Lebedoff in the
case styled Dominium Tax Exempt Fund, L.L.P. v.
Dockser, et. al.*
17(c)(13).................... Agreement, dated November 6, 1996, between
Dominium Tax Exempt Fund L.L.P. and Capital
Apartment Properties, Inc., including the Escrow
Agreement and Mutual Releases.
17(d)(1)..................... Letters to BAC Holders, Notice of Special
Meetings, definitive Proxy Statement and forms
of Proxy.*
17(d)(2)..................... October 3, 1996 Letter to BAC Holders from the
Funds.*
17(d)(3)..................... October 4, 1996 Press Release issued by the
Funds.*
17(d)(4)..................... October 3, 1996 Press Release issued by
CAPREIT.*
17(d)(5)..................... October 11, 1996 Letter to BAC Holders from the
Funds.*
<PAGE>
17(d)(6)..................... October 14, 1996 Press Release issued by
CAPREIT.*
17(d)(7)..................... October 16, 1996 Press Release issued by
CAPREIT.*
17(d)(8)..................... October 18, 1996 Letter to BAC Holders from
the Funds.*
17(d)(9)..................... October 18, 1996 Press Release issued by
CAPREIT.*
17(d)(10).................... October 22, 1996 Letter to BAC Holders From
the Funds.*
17(d)(11).................... October 28, 1995 Press Release issued by the
Funds.*
17(d)(12).................... October 29, 1996 Letter to BAC Holders from
the Funds.*
17(d)(13).................... November 6, 1996 Joint Press Release issued by
the Funds, CAPREIT and Dominium Tax Exempt
Fund L.L.P.*
17(d)(14).................... Letters to BAC Holders, Amended Notice of
Special Meetings, Supplement to definitive
Proxy Statement and forms of Proxy.
- ---------------
*Previously filed.
<PAGE>
EXHIBIT 17(c)(13)
AGREEMENT
---------
This Agreement (the "Agreement") is made this 6th day of November,
1996, by and between Dominium Tax Exempt Fund L.L.P., for itself and on behalf
of its partners and affiliates ("Dominium"), and Capital Apartment Properties,
Inc., for itself and on behalf of its affiliates ("CAPREIT") and on behalf of
Watermark Partners, L.P. and Watermark III Partners, L.P. (all collectively,
the "Parties").
RECITALS
--------
R-1. Capital Realty Investors Tax Exempt Fund Limited Partnership
("CRITEF I-II") and CRITEF Associates Limited Partnership ("CRITEF Associates")
are parties to a certain Fourth Amended and Restated Agreement and Plan of
Merger dated as of August 21, 1996, with CAPREIT and Watermark Partners, L.P.,
an affiliate of CAPREIT and others.
R-2. Capital Realty Investors Tax Exempt Fund III Limited Partnership
("CRITEF III") and CRITEF III Associates Limited Partnership ("CRITEF III
Associates") are parties to a certain Fourth Amended and Restated Agreement and
Plan of Merger dated as of August 21, 1996, with CAPREIT and Watermark III
Partners, L.P., an affiliate of CAPREIT and others.
R-3. CRITEF and CRITEF III together are referred to herein as the
"Funds". CRITEF Associates and CRITEF III Associates together are referred to
herein as the "General Partners." The Fourth Amended and Restated Agreements
and Plans of Merger referred to in Recital 1 and Recital 2 above are
collectively referred to herein as the "Merger Agreements."
R-4. Pursuant to the Merger Agreements, the Beneficial Assignee
Certificates ("BACs") owned by the holders of the beneficial interests in the
Funds (the "BAC Holders") would be redeemed for an aggregate amount of
approximately $160,301,663 (the "Original Merger Consideration"), which is net
of amounts payable to plaintiffs' counsel in certain BAC Holder class action
litigation relating to the Mergers (hereinafter defined) but subject to certain
adjustments relating to Available Cash.
R-5. The Funds have been soliciting proxies, pursuant to a joint
proxy statement dated September 20, 1996 (the "Joint Proxy Statement"), for
approval by BAC Holders of the mergers and related transactions contemplated by
the Merger Agreements (together, the "Mergers").
R-6. On September 27, 1996, Dominium filed suit against the Funds,
the General Partners, and others in the United States District Court for the
District of Minnesota, Court File No. 4-96-956 (the "Minnesota Action"),
alleging, among other things, that the Joint Proxy Statement contains
violations of Section 14(a) of the Securities Exchange Act of 1934.
<PAGE>
R-7. On October 3, 1996, the Funds, the General Partners, and CAPREIT
filed suit against Dominium and others in the United States District Court for
the Southern District of New York, Case No. 96 Civ. 7534 (the "New York
Action"), alleging, among other things, that certain communications by Dominium
violated Section 14(a) of the Securities Exchange Act of 1934, and alleging
tortious interference with the Merger Agreements.
R-8. Dominium has been soliciting proxies in opposition to the
Mergers.
R-9. Dominium has advised CAPREIT that it has incurred substantial
out-of-pocket and other costs for due diligence with respect to the Funds'
assets and certain partnerships that own properties (the "Properties") that
secure the revenue bonds owned by the Funds, including, without limitation,
appraisals; engineering reports; environmental studies; transaction, proxy and
litigation legal work; accounting work; travel costs; consultants; financing
fees and expenses; proxy solicitations; and public relations. Dominium has
further advised CAPREIT that Dominium and its affiliates have devoted
significant resources to the Merger transaction and, as a result, have incurred
significant opportunity costs for matters that it was unable to pursue and take
advantage of due to its involvement with the Mergers. All of the costs and
expenses described herein or otherwise incurred by Dominium are hereinafter
referred to as the "Dominium Costs."
R-10. A meeting to vote on the Mergers by the BAC Holders was
scheduled for October 29, 1996 (the "Meeting," which term includes any
adjournment or postponement thereof).
R-11. On October 28, 1996, the Funds postponed the Meeting to
November 8, 1996.
R-12. The Funds and CAPREIT have agreed to increase the Original
Merger Consideration an aggregate of $6,498,604, allocated as provided for
herein. Dominium has advised CAPREIT and the Funds that, in its opinion, such
increase in the Original Merger Consideration will result in the Mergers being
in the best interests of the BAC Holders and, as a result, that it now endorses
and supports the Mergers.
R-13. To repay and recompense Dominium for the Dominium Costs, and in
consideration of Dominium and its affiliates giving up its claims pursuant to
the Mutual Releases hereinafter described, and the dismissal with prejudice by
Dominium and its affiliates of the Minnesota Action, and in recognition of the
efforts of Dominium leading to an increase in the Original Merger
Consideration, CAPREIT is willing to pay Dominium $3,000,000, subject to
certain conditions (the "Dominium Payment").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. The Parties acknowledge and agree that the foregoing Recitals are
true and correct and are incorporated herein as though set forth herein in
full.
<PAGE>
2. Simultaneously herewith CAPREIT will enter into amendments to the
Merger Agreements with the Funds, the General Partners, and other parties (and
will cause Watermark Partners, L.P., to enter into such amendments), which may
be further amended and revised from time to time (so long as the Improved
Merger Consideration, as hereinafter defined, allocable to each series is not
less than the amounts as provided for below), that, among other things:
A. increase the Original Merger Consideration by an aggregate of
$6,498,604, allocated as follows:
Series I -- $1,368,000
Series II -- $1,975,643
Series III -- $3,154,961
(the "Merger Consideration Increase" which amount, when added to the
Original Merger Consideration, is referred to herein as the "Improved Merger
Consideration");
B. reduce the aggregate consideration to be paid to the General
Partners or their affiliates by $500,000; and
C. cause the aggregate $500,000 reduction under paragraph 1.B. above
to constitute a portion of the Merger Consideration Increase.
3. CAPREIT and the Funds will promptly select a new date for the postponed
Meeting, will disseminate to the BAC Holders a supplement to the Joint Proxy
Statement describing the terms of the Revised Merger Agreements, this Agreement
and other matters, and will diligently solicit proxies for approval of the
revised mergers and the related transactions (together, the "Revised Mergers")
by the BAC Holders pursuant to the Revised Merger Agreements.
4. Simultaneously with the execution of this Agreement:
A. CAPREIT has deposited in escrow $2,500,000 of the Dominium Payment
(the "Escrow Fund") with Commonwealth Land Title Insurance Company, of St.
Paul, Minnesota (the "Escrow Agent"), to be held and disbursed as provided
for in an escrow agreement, a copy of which is attached hereto as Exhibit
"A." The payment of the Escrow Fund to Dominium in accordance with the
escrow agreement shall not be reduced, increased, or otherwise affected by
any subsequent increase in the Improved Merger Consideration.
B. Dominium, Dominium Management Services, Inc., Jack W. Safar, David
L. Brierton, Paul R. Sween, and Armand E. Brachman, for their part, and
CAPREIT, the Funds, the General Partners, C.R.I., Inc. ("CRI"), H. William
- 3 -
<PAGE>
Willoughby, and William B. Dockser, for their parts, have exchanged mutual
releases, copies of which are attached hereto as Exhibit "B."
C. CAPREIT has paid the remaining $500,000 of the Dominium Payment to
Dominium, which amount is non-refundable. Dominium shall be entitled to
retain said amount notwithstanding the defeat of one or both of the
proposals to adopt and approve the Merger Agreements.
D. The Parties will promptly issue a joint press release
substantially in the form attached hereto as Exhibit "C" informing the
public of the improved merger terms and of this Agreement.
5. Promptly after the execution hereof, the parties hereto will execute,
deliver and file with the appropriate courts Stipulations of Dismissal,
dismissing with prejudice the New York Action and the Minnesota Action.
6. For as long as is requested by CAPREIT or the Funds, Dominium, at
CAPREIT's sole cost and expense, will take all necessary action to endorse and
support the approval of the Revised Mergers and to so advise the BAC Holders,
including, without limitation, to:
A. withdraw its opposition to the Mergers and the related
transactions, withdraw its solicitation of proxies in opposition to the
Mergers, and make appropriate filings with the Securities and Exchange
Commission indicating it has withdrawn its opposition and proxy
solicitation;
B. direct its proxy solicitor, Georgeson & Co., Inc. ("Georgeson"),
at CAPREIT's request and expense, to cooperate with CAPREIT and the Funds
in connection with the solicitation of proxies for approval of the Revised
Mergers and the related transactions, including the actions described under
paragraphs 6.C. and 6.E.
C. issue such letters and other forms of communication on Dominium's
letterhead, informing the BAC Holders and the public of Dominium's
endorsement and support of the Revised Mergers and related transactions,
and that Dominium believes that the Merger Consideration Increase,
Improved Merger Consideration, and this Agreement are fair to and in the
best interests of the BAC Holders, subject to Dominium's prior approval of
such letters or communications consistent with this Agreement, which
approval shall not be unreasonably withheld or delayed;
D. vote its BACs in favor of the Revised Mergers and the related
transactions; and
- 4 -
<PAGE>
E. promptly make available to CAPREIT and the Funds copies of all
proxies received by Dominium and its agents as a result of Dominium's
solicitation of proxies in opposition to the Mergers.
Any reasonable out-of-pocket expense incurred by Dominium in connection with
the foregoing after the date of this Agreement will be paid by CAPREIT
forthwith on demand, upon submission to CAPREIT of appropriate supporting
documentation.
7. Dominium shall not take, or cause to be taken, any action which is, or
could be, adverse to the approval of the Revised Mergers and related
transactions.
8. No alleged or actual breach by Dominium or any of its affiliates of any
obligation under this Agreement shall be the basis for any reduction of the
Dominium Payment or any claim of offset against the Dominium Payment.
9. This Agreement is solely for the benefit of the Parties hereto. No
party other than the Parties hereto shall be entitled to make any claim under
this Agreement based upon a theory of being a third party beneficiary or other
like theory.
10. CAPREIT and Dominium shall each provide to the other copies of all
correspondence to BAC Holders, press releases, and filings with the United
States Securities and Exchange Commission immediately upon mailing or filing.
CAPREIT shall give written notice to Dominium of the results of the vote by the
BAC Holders at the Meeting promptly following such vote.
11. Notwithstanding anything to the contrary contained in this Agreement:
A. In the event of a breach of any provision of this Agreement by
Dominium at or prior to the Meeting, CAPREIT shall not be entitled to
damages for such breach (it being agreed that damages would be an
inadequate remedy), but shall be entitled to seek all equitable remedies,
including, without limitation, injunctive relief, specific performance,
and corrective action.
B. Dominium shall not do any act (i) after approval by the BAC
Holders of the Revised Mergers and payment to Dominium of the Dominium
Payment that would obstruct or otherwise interfere with the consummation
of the Revised Mergers; or (ii) after the Meeting that would obstruct or
otherwise interfere with an "Alternative Transaction" as defined in the
Escrow Agreement, including, without limitation, any action, directly or
indirectly, through merger, tender offer, exchange offer, acquisition of
partnership interests or BACs, or otherwise to acquire a material portion
of the assets of the Funds, or any action, directly or indirectly, through
merger, tender offer, exchange offer, acquisition of partnership interests
or BACs, or otherwise to acquire
- 5 -
<PAGE>
any of the Properties or the Owner Partnerships whose mortgages secure
"Non-Performing Bonds" owned by the Funds.
C. In the event of (i) a breach by Dominium arising out of Section
11.B. of this Agreement or (ii) unlawful conduct by either Dominium or
CAPREIT after the Meeting, Dominium and CAPREIT, as the case may be, shall
be entitled to all remedies at law or in equity; provided that if the
Revised Mergers had theretofor been approved by the BAC Holders, but the
Revised Mergers were not consummated, Dominium shall have been paid the
Dominium Payment.
12. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument. Signatures by facsimile shall be effective as
originals.
IN WITNESS WHEREOF, CAPREIT has caused this Agreement to be signed by its
duly authorized officers for itself and on behalf of its affiliates, and on
behalf of Watermark Partners, L.P., and Watermark III Partners, L.P.; and
Dominium has caused this Agreement to be signed by its duly authorized partners
for itself and on behalf of its partners and affiliates, all as of the date
first above written.
CAPITAL APARTMENT PROPERTIES, INC.
By: /s/ Richard L. Kadish
Richard L. Kadish, President
DOMINIUM TAX EXEMPT FUND L.L.P.
By: /s/ Jack W. Safar
Jack W. Safar, General Partner
By: /s/ David L. Brierton
David L. Brierton, General Partner
- 6 -
<PAGE>
ACKNOWLEDGEMENT
---------------
The undersigned, on this 6th day of November, 1996, hereby:
1. Acknowledge the Agreement dated the 6th day of November, 1996, by
and between Dominium Tax Exempt Fund L.L.P., for itself and on behalf of its
partners and affiliates ("Dominium") and Capital Apartment Properties, Inc.
("CAPREIT"), for itself and on behalf of its affiliates, and on behalf of
Watermark Partners, L.P. and Watermark III Partners, L.P. (the "Agreement"); and
2. Agree to take any action reasonably required of each of them to
carry out and effectuate the terms and intent of the Agreement, provided the
undersigned shall not be required to expend money not otherwise required under
the Agreement.
3. This Acknowledgement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument. Signatures by facsimile shall be
effective as originals.
/s/ JACK W. SAFAR
------------------------------------------
JACK W. SAFAR
/s/ DAVID L. BRIERTON
------------------------------------------
DAVID L. BRIERTON
/s/ PAUL R. SWEEN
------------------------------------------
PAUL R. SWEEN
/s/ ARMAND E. BRACHMAN
------------------------------------------
ARMAND E. BRACHMAN
<PAGE>
CAPITAL REALTY INVESTORS TAX
EXEMPT FUND LIMITED PARTNERSHIP
By: CRITEF Associates Limited Partnership,
its general partner
By: C.R.I., Inc., its general partner
By: /s/ H. William Willoughby
---------------------------------------
H. William Willoughby, President
CAPITAL REALTY INVESTORS TAX
EXEMPT FUND III LIMITED PARTNERSHIP
By: CRITEF III Associates Limited Partnership
its general partner
By: C.R.I., Inc., its general partner
By: /s/ H. William Willoughby
---------------------------------------
H. William Willoughby, President
WATERMARK PARTNERS, L.P.
By: Capital Apartment Properties, Inc.,
its general partner
By: /s/ Richard L. Kadish
---------------------------------------
Richard L. Kadish, President
WATERMARK III PARTNERS, L.P.
By: Capital Apartment Properties, Inc.,
its general partner
By: /s/ Richard L. Kadish
---------------------------------------
Richard L. Kadish, President
- 2 -
<PAGE>
CRITEF ASSOCIATES LIMITED
PARTNERSHIP
By: C.R.I., Inc., its general partner
By: /s/ H. William Willoughby
---------------------------------------
H. William Willoughby, President
CRITEF ASSOCIATES III LIMITED
PARTNERSHIP
By: C.R.I., Inc., its general partner
By: /s/ H. William Willoughby
---------------------------------------
H. William Willoughby, President
- 3 -
<PAGE>
C.R.I., INC.
By: /s/ H. William Willoughby
------------------------------------------
H. William Willoughby, President
/s/ WILLIAM B. DOCKSER
------------------------------------------
WILLIAM B. DOCKSER
- 4 -
<PAGE>
EXHIBIT A
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT is dated as of the 6th day of November, 1996,
among CAPITAL APARTMENT PROPERTIES, INC., a Delaware corporation ("CAPREIT"),
DOMINIUM TAX EXEMPT FUND L.L.P., a Minnesota limited liability partnership
("Dominium"), and COMMONWEALTH LAND TITLE INSURANCE COMPANY OF MINNESOTA, a
Pennsylvania corporation (the "Escrow Agent").
R E C I T A L S :
R-1. CAPREIT and Dominium have entered into an agreement dated as of
the 6th day of November, 1996, relating to the proposed mergers of Capital
Realty Investors Tax Exempt Fund Limited Partnership and Capital Realty
Investors Tax Exempt Fund III Limited Partnership (together, the "Funds") with
CAPREIT and affiliates of CAPREIT (the "Agreement").
R-2. The Agreement provides for the deposit by CAPREIT of
$2,500,000.00 into the escrow account established hereby, to be held and
distributed by the Escrow Agent pursuant to the terms hereof.
R-3. Capitalized terms used but not defined herein shall have the
meanings specified in the Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties hereto agree as follows:
1. Establishment of Escrow Fund. Simultaneously with the execution
----------------------------
and delivery of this Escrow Agreement, CAPREIT is depositing with the Escrow
Agent the sum of $2,500,000.00. Such sum, as from time to time invested and
reinvested as provided herein, and any accretion thereto and income or loss
with respect thereto, shall be referred to as the "Escrow Fund." The Escrow
Agent shall hold, invest, and dispose of the Escrow Fund in accordance with the
terms and conditions hereof.
2. Investment of the Escrow Fund.
-----------------------------
2.1. Investment. The Escrow Agent shall invest any or all of the
----------
Escrow Fund as directed in writing by CAPREIT in any of the following:
(i) obligations issued or guaranteed by the United States of
America or any agency or instrumentality thereof, or
(ii) any money market funds invested solely in, or repurchase
agreements collateralized solely by, the obligations described in Section
2.1(i).
<PAGE>
(iii) insured checking or depository accounts at a
federally-insured depository institution, for the limited purpose of
facilitating investments pursuant to Sections (i) or (ii) or paying the
expenses of the Escrow Fund.
2.2. Escrow Ledger. The Escrow Agent shall maintain a ledger (the
-------------
"Escrow Ledger") setting forth (i) the name and address of CAPREIT and
Dominium; (ii) the identity of investments of the Escrow Fund; (iii) all income
or other items added to and distributions from or other items charged against
the Escrow Fund; and (iv) with respect to any distribution pursuant to this
Escrow Agreement, the provisions of this Escrow Agreement pursuant to which
such distribution has been made. The Escrow Agent shall make the Escrow Ledger
available or will provide a copy thereof to CAPREIT or Dominium, as reasonably
requested by either of them.
3. Retention of Income. Any income of the Escrow Fund shall be
-------------------
accumulated and added to the Escrow Fund.
4. Entitlement to the Escrow Fund.
------------------------------
4.1. Dominium shall be entitled to the entire Escrow Fund if, on or
before December 31, 1998, the Revised Merger Agreements, and all related
transactions required to be approved by BAC Holders to consummate the Mergers
(the "Related Transactions") are approved by a vote of holders of a majority in
interest of the BACs of both Funds.
4.2. Dominium shall be entitled to the percentage of the Escrow Fund
below if neither Section 4.1 nor Section 4.4 applies and if, on or before
December 31, 1998, CAPREIT or affiliates of CAPREIT have consummated a
transaction pursuant to which CAPREIT or its affiliates, directly or
indirectly, through merger, tender offer, exchange offer, acquisition of
partnership interests or BACs, or otherwise, have acquired control of either or
both of the Funds (an "Alternative Transaction"). Following are the percentages
of the Escrow Fund to be paid pursuant to this Section 4.2:
100% if control of both Funds is so acquired;
50% if control of only one Fund is so acquired;
0% if control of neither Fund is so acquired.
4.3. Dominium shall be entitled to fifty percent (50%) of the Escrow
Fund if, on or before December 31, 1998, one of the two Revised Mergers is
approved by BAC Holders holding a majority in interest of the BACs of one Fund
and CAPREIT, in its sole discretion, elects to consummate such Revised Merger
with such Fund.
4.4. Dominium shall be entitled to the percentage of the Escrow Fund
set forth below if neither Section 4.1, Section 4.2, nor Section 4.3 applies
and if, on or before December 31, 1998, CAPREIT or affiliates of CAPREIT have
acquired, directly or indirectly,
- 2 -
<PAGE>
through merger, tender offer, exchange offer, acquisition of partnership
interests, or otherwise, one or more of the 18 properties encumbered by
mortgages that secure the bonds owned by the Funds, together with each such
related mortgage (the "Properties") (also an "Alternative Transaction"). The
percentage of the Escrow Fund to be paid pursuant to this Section 4.4 is 5.556%
for each Property so acquired.
4.5. Subject to the proviso contained in subparagraph (iii) of this
Section 4.5, CAPREIT shall be entitled to the entire Escrow Fund if:
(i) By December 31, 1998, the Revised Merger Agreements and all
Related Transactions are not approved by a vote of holders of a majority in
interest of the BACs of both Funds;
(ii) By December 31, 1998, CAPREIT or affiliates of CAPREIT
have not consummated an Alternative Transaction; or
(iii) CAPREIT has announced that it has abandoned the Revised
Mergers and given written notice to Dominium that neither it nor its affiliates
will, prior to December 31, 1998, consummate an Alternative Transaction (the
"Announcement and Notice"); provided, however, in such event, if (x) CAPREIT
collects the "breakup fees" and the reimbursement of expenses as provided for
in the Revised Merger Agreements, CAPREIT shall promptly, upon receipt of such
breakup fees and the reimbursement of expenses, remit to Dominium the amount
distributed to it from the Escrow Fund because of this subparagraph (iii),
together with interest from the date of such distribution at the rate of six
percent (6%) per annum on the amount remitted or (y) prior to December 31,
1998, CAPREIT consummates an Alternative Transaction despite its Announcement
and Notice, CAPREIT shall, promptly upon such consummation, remit to Dominium
the amount distributed to it because of this subparagraph (iii), together with
interest from the date of such distribution at the rate of six percent (6%) per
annum on the amount remitted, which amount shall be deemed liquidated damages
and the sole and exclusive remedy for CAPREIT's breach of its Announcement and
Notice.
5. Disbursement of the Escrow Fund. The Escrow Agent shall hold the
-------------------------------
Escrow Fund until it delivers the same as provided in this Section 5, as
follows:
5.1. At any time, upon joint written instructions of CAPREIT and
Dominium, the Escrow Agent shall distribute all amounts held in the Escrow Fund
as directed by CAPREIT and Dominium.
5.2. If Dominium believes it is entitled to all or some portion of
the Escrow Fund pursuant to Sections 4.1, 4.2, 4.3 or 4.4 above, Dominium shall
deliver a notice (the "Dominium Notice") to the Escrow Agent, with a copy to
CAPREIT, expressly stating the full basis for its belief that it is entitled to
such amounts pursuant to Sections 4.1, 4.2, 4.3 or 4.4
<PAGE>
above. Unless the Escrow Agent shall receive, within ten (10) days of its
receipt of the Dominium Notice and evidence of CAPREIT's receipt of a copy
thereof, a notice of objection by CAPREIT (the "CAPREIT Objection Notice")
stating the full basis for its belief that Dominium is not entitled to the
Escrow Fund pursuant to Sections 4.1, 4.2, 4.3 or 4.4 above, the Escrow Fund
shall be delivered to Dominium. If the Escrow Agent shall receive the CAPREIT
Objection Notice, it shall continue to hold the Escrow Fund until it has
received (i) written instructions signed by both Dominium and CAPREIT, or (ii)
a final, non-appealable order of a court directing delivery of the Escrow Fund,
in which case the Escrow Agent shall deliver the Escrow Fund in accordance with
such instructions or order.
5.3. If CAPREIT believes it is entitled to the Escrow Fund pursuant
to Section 4.5 above, CAPREIT shall deliver a notice (the "CAPREIT Notice") to
the Escrow Agent, with a copy to Dominium, expressly stating the full basis for
its belief that it is entitled to the Escrow Fund pursuant to Section 4.5
above. Unless the Escrow Agent shall receive, within ten (10) days of its
receipt of the CAPREIT Notice and evidence of Dominium's receipt of a copy
thereof, a notice of objection by Dominium (the "Dominium Objection Notice")
stating the full basis for its belief that CAPREIT is not entitled to the
Escrow Fund pursuant to Section 4.5 above, the Escrow Fund shall be delivered
to CAPREIT. If the Escrow Agent shall receive the Dominium Objection Notice, it
shall continue to hold the Escrow Fund until it has received (i) written
instructions signed by both CAPREIT and Dominium, or (ii) a final,
non-appealable order of a court directing delivery of the Escrow Fund, in which
case the Escrow Agent shall deliver the Escrow Fund in accordance with such
instructions or order.
5.4. If neither of a Dominium Notice or a CAPREIT Notice, nor any
other instruction described above, shall have been delivered by the Termination
Date, the Escrow Agent shall deliver the Escrow Fund upon the Termination Date
to CAPREIT.
6. Termination. This Escrow Agreement shall terminate (the
-----------
"Termination Date") upon the sooner to occur of (i) distribution of all of the
Escrow Fund and all other sums held by the Escrow Agent pursuant to this Escrow
Agreement; (ii) December 31, 1998, if neither a CAPREIT Notice nor a Dominium
Notice has theretofore been given; (iii) the receipt by the Escrow Agent of
written instructions signed by CAPREIT and Dominium as provided for in Section
5.2 or 5.3; or (iv) the receipt by the Escrow Agent of a final court order as
provided for in Section 5.2 or 5.3.
7. Duties of Escrow Agent.
----------------------
7.1. Duties Limited. The Escrow Agent shall perform only the
--------------
duties expressly set forth herein.
7.2. Reliance. The Escrow Agent may rely upon, and shall be
--------
protected in acting or refraining from acting upon, any written notice,
instruction, or request furnished to it
- 4 -
<PAGE>
hereunder and reasonably believed by it to be genuine and to have been signed
or presented by the proper party or parties.
7.3. Good Faith. CAPREIT and Dominium shall, jointly and severally,
----------
indemnify the Escrow Agent and hold it harmless against any loss, liability, or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with this Escrow Agreement, including the reasonable costs and
expenses incurred in defending any such claim of liability. The Escrow Agent
may consult with its own counsel, and shall have full and complete
authorization and protection for any action taken or suffered in good faith and
in accordance with the opinion of such counsel.
8. Resignation; Removal; Successor Escrow Agent.
------------
8.1. Resignation. The Escrow Agent may resign at any time by giving
-----------
thirty (30) days' written notice of such resignation to CAPREIT and Dominium.
Thereafter, the Escrow Agent shall have no further obligation hereunder except
to hold the Escrow Fund as depository. In such event, the Escrow Agent shall
not take any further action until CAPREIT and Dominium shall have designated a
banking corporation, trust company, attorney, or other person as successor
Escrow Agent. Upon receipt of such instructions, the Escrow Agent shall
promptly deliver the Escrow Fund to such successor Escrow Agent and shall
thereafter have no further obligation hereunder.
8.2. Removal. CAPREIT and Dominium together may remove the Escrow
-------
Agent at any time upon ten (10) days' written notice specifying the date upon
which such removal shall take effect. In the event of such removal, CAPREIT and
Dominium shall within thirty (30) days of such notice jointly appoint a
successor Escrow Agent, and the Escrow Agent shall turn over to such successor
Escrow Agent all funds in the Escrow Fund and any other amount held by it
pursuant to this Escrow Agreement. Upon receipt of the funds and other amounts,
the successor Escrow Agent shall thereupon be bound by all of the provisions
hereof.
9. Fees and Expenses.
------------------
9.1. Escrow Agent. Dominium and CAPREIT shall each pay and shall
------------
only be liable for one-half of (i) the Escrow Agent's fees, which shall be
$500.00 payable on the date hereof, and an additional $100.00 on each
successive anniversary date of this Escrow Agreement if the Escrow Fund shall
not then have been released; and (ii) all reasonable expenses, disbursements,
and advances (including reasonable attorneys' fees) incurred in carrying out
the Escrow Agent's duties hereunder (the "Escrow Agent's Fees"), payable
monthly upon submission of an itemized invoice therefor to CAPREIT and
Dominium.
9.2. Payment of Fees and Expenses. Each of CAPREIT and Dominium
----------------------------
shall pay its portion of the Escrow Agent's Fees directly to the Escrow Agent as
set forth in
- 5 -
<PAGE>
Section 9.1. If CAPREIT or Dominium shall refuse to pay their respective
portions of the Escrow Agent's Fees upon written demand therefor, the Escrow
Agent's Fees may be deducted by the Escrow Agent from the Escrow Fund, provided
--------
that this sentence shall not affect, as between Dominium and CAPREIT, the
obligation of each to pay one-half of the fees and expenses as set forth in
Section 9.1. The Escrow Fund shall not otherwise be applied to pay the Escrow
Agent's Fees and, notwithstanding anything to the contrary herein, the Escrow
Agent shall not apply amounts in the Escrow Fund to the Escrow Agent's Fees so
as to cause the Escrow Fund to be less than the amount originally deposited by
CAPREIT.
10. Miscellaneous.
-------------
10.1. Notice. Any notice or other communication required or which
------
may be given hereunder shall be in writing and shall be delivered personally,
or sent by facsimile transmission or by certified, registered or express mail,
postage prepaid, and shall be deemed given when so delivered personally, sent
by facsimile transmission, or, if mailed, two days after the date of mailing,
as follows:
(i) if to CAPREIT, to:
-----------------
Capital Apartment Properties, Inc.
11200 Rockville Pike
Rockville, Maryland 20852
Attention: Richard Kadish, President
Facsimile: 301-468-8391
with a copy to:
--------------
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
Attention: Janet C. Walden, Esq.
Facsimile: 212-593-5955
(ii) if to Dominium, to:
------------------
Dominium Tax Exempt Fund L.L.P.
2915 North Niagara Lane
Minneapolis, Minnesota 55441
Attention: Jack W. Safar
Facsimile: 612-559-1783
- 6 -
<PAGE>
with a copy to:
--------------
Faegre & Benson, P.L.L.P.
2200 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
Attention: Thomas L. Kimer, Esq.
Facsimile: 612-336-3026
and with a copy to:
------------------
Ravich Meyer Wilson Kirkman McGrath & Nauman P.A.
4545 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
Attention: Paul H. Ravich, Esq.
Facsimile: 612-332-8302
(iii) if to the Escrow Agent, to:
---------------------------
Commonwealth Land Title Insurance Company
255 Park Square Court
400 Sibley Street
St. Paul, Minnesota 55101
Attention: Toni Reichow
Facsimile: 612-227-1708
10.2. Entire Agreement. This Escrow Agreement is entered into and
----------------
delivered pursuant to the Agreement, and as such contains the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior agreements, written or oral, with respect thereto.
10.3. Waivers and Amendments. This Escrow Agreement may be amended,
----------------------
modified, superseded, canceled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
parties, or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any
party of any right, power or privilege hereunder, nor any single or partial
exercise of any right, power or privilege hereunder, preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder.
- 7 -
<PAGE>
10.4. Litigation. In the event of any dispute as to the distribution
----------
of the Escrow Fund, the Escrow Agent may interplead the funds in dispute, and
CAPREIT and Dominium shall not oppose any reasonable request for such
interpleader relief, with the prevailing party being entitled to reimbursement
of its attorneys' fees and costs in connection with the resolution of such
dispute.
10.5. Assignment. This Escrow Agreement shall be binding upon the
----------
successors and permitted assigns of the parties. No assignment of this Escrow
Agreement may be made by any party unless the assignee agrees to be bound by
the provisions of this Escrow Agreement and the Agreement to the same extent as
the assignor is bound.
10.6. Further Assurances. Each of the parties shall execute such
------------------
documents and other papers and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby.
10.7. Counterparts and Facsimile Signature Pages. This Escrow
------------------------------------------
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument. Signatures by facsimile shall be effective as originals.
10.8. Headings. The headings in this Escrow Agreement are for
--------
reference purposes only and shall not in any way affect meaning or
interpretation of this Escrow Agreement.
IN WITNESS WHEREOF, the parties have caused the execution of this Escrow
Agreement as of the date first above written.
CAPITAL APARTMENT PROPERTIES, INC.
By: /s/ Richard L. Kadish
-----------------------------------
Richard L. Kadish, President
DOMINIUM TAX EXEMPT FUND L.L.P.
By: /s/ Jack W. Safar
-----------------------------------
Jack W. Safar, Partner
- 8 -
<PAGE>
COMMONWEALTH LAND TITLE
INSURANCE COMPANY,
as Escrow Agent
By:
-----------------------------------
- 9 -
<PAGE>
EXHIBIT B
MUTUAL RELEASES
---------------
THESE MUTUAL RELEASES are made as of the 6th day of November, 1996.
1. Definitions. The following terms shall have the assigned meanings:
(a) An AFFILIATE of a party is any person or entity controlled by,
under common control with, or in control of the first party.
(b) DOMINIUM PARTIES means Dominium Tax Exempt Fund L.L.P., Dominium
Management Services, Inc., Jack W. Safar, David L. Brierton, Paul R. Sween, and
Armand E. Brachman (collectively, "Dominium") and their partners, Affiliates,
successors and assigns and each of their officers, directors, employees, agents,
attorneys, accountants, consultants and representatives.
(c) CAPREIT PARTIES means Watermark Partners, L.P., and Watermark III
Partners, L.P. (collectively, "Watermark"), Capital Apartment Properties Inc.
("CAPREIT"), and their partners, Affiliates, successors and assigns and each of
their officers, directors, employees, agents, attorneys, accountants,
consultants and representatives.
(d) CRITEF PARTIES means Capital Realty Investors Tax Exempt Fund
Limited Partnership, Capital Realty Investors Tax Exempt Fund III Limited
Partnership (collectively, the "Funds"), CRITEF Associates Limited Partnership
and CRITEF III Associates Limited Partnership (collectively, the "General
Partners"), C.R.I., Inc., H. William Willoughby, and William B. Dockser, and
their partners, Affiliates, successors and assigns and each of their officers,
directors, employees, agents, attorneys, accountants, consultants and
representatives.
(e) MERGERS means mergers and related transactions involving
Watermark, CAPREIT, the Funds, the General Partners, and other parties pursuant
to two certain Fourth Amended and Restated Agreements and Plans of Merger dated
as of August 21, 1996, as the same may be further amended from time to time,
and all related preceding or succeeding Agreements and Plans of Merger, and the
mergers and transactions contemplated thereby.
(f) AGREEMENT means that certain agreement of even date by and
between Dominium, for itself and on behalf of its partners and affiliates, and
CAPREIT, for itself and on behalf of its affiliates, and on behalf of
Watermark.
(g) ESCROW AGREEMENT means the escrow agreement provided for in the
Agreement.
(h) MINNESOTA ACTION and NEW YORK ACTION have the same meanings given
to them in the Agreement.
<PAGE>
(i) SUBJECT MATTER means the Mergers, solicitations of proxies
relating to the Mergers, any matters raised or that could have been raised in
the Minnesota Action or the New York Action, Dominium's efforts to acquire the
Funds and to oppose the Mergers, and all acts, facts, transactions or
occurrences relating thereto, excluding matters arising out of the breach or
failure to fulfill any obligations under the Agreement and the Escrow
Agreement.
2. Release of Dominium Parties. Each of the CAPREIT Parties and the
CRITEF Parties hereby releases and forever discharges the Dominium Parties from
all actions, causes of action, suits, proceedings, debts, dues, contracts,
judgments, damages, costs, claims and demands of any kind, whether in law,
equity, or mixed, which the CAPREIT Parties or the CRITEF Parties have or may
have, whether known or unknown, against any of the Dominium Parties, arising
out of or in any way relating to the Subject Matter.
3. Release of CRITEF Parties and CAPREIT Parties. Each of the Dominium
Parties hereby releases and forever discharges the CRITEF Parties and CAPREIT
Parties from all actions, causes of action, suits, proceedings, debts, dues,
contracts, judgments, damages, costs, claims and demands of any kind, whether
in law, equity, or mixed, which the Dominium Parties have or may have, whether
known or unknown, against any of the CAPREIT Parties or any of the CRITEF
Parties, arising out of or in any way relating to the Subject Matter.
4. Counterparts and Facsimile Signature Pages. This Mutual Releases may
be executed in two or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
Signatures by facsimile shall be effective as originals.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the date first above written by their duly authorized officers or
general partners.
DOMINIUM TAX EXEMPT FUND L.L.P.
By: /s/ Jack W. Safar
----------------------------------
Jack W. Safar, General Partner
By: /s/ David L. Brierton
----------------------------------
David L. Brierton, General Partner
- 2 -
<PAGE>
/s/ JACK W. SAFAR
----------------------------------
JACK W. SAFAR
/s/ DAVID L. BRIERTON
----------------------------------
DAVID L. BRIERTON
/s/ PAUL R. SWEEN
----------------------------------
PAUL R. SWEEN
/s/ ARMAND E. BRACHMAN
----------------------------------
ARMAND E. BRACHMAN
CAPITAL APARTMENT PROPERTIES, INC.
By: /s/ Richard L. Kadish
----------------------------------
Richard L. Kadish, President
WATERMARK PARTNERS, L.P.
By: Capital Apartment Properties, Inc.,
its general partner
By: /s/ Richard L. Kadish
----------------------------------
Richard L. Kadish, President
- 3 -
<PAGE>
WATERMARK III PARTNERS, L.P.
By: Capital Apartment Properties, Inc.,
its general partner
By: /s/ Richard L. Kadish
----------------------------------
Richard L. Kadish, President
CAPITAL REALTY INVESTORS TAX
EXEMPT FUND LIMITED PARTNERSHIP
By: CRITEF Associates Limited Partnership,
its general partner
By: C.R.I., Inc., its general partner
By: /s/ H. William Willoughby
-----------------------------
H. William Willoughby
CAPITAL REALTY INVESTORS TAX
EXEMPT FUND III LIMITED
PARTNERSHIP
By: CRITEF III Associates Limited
Partnership, its general partner
By: C.R.I., Inc., its general partner
By: /s/ H. William Willoughby
-----------------------------
H. William Willoughby
CRITEF ASSOCIATES LIMITED
PARTNERSHIP
By: C.R.I., Inc., its general partner
By: /s/ H. William Willoughby
-----------------------------
H. William Willoughby
- 4 -
<PAGE>
CRITEF III ASSOCIATES LIMITED
PARTNERSHIP
By: C.R.I., Inc., its general partner
By: /s/ H. William Willoughby
-----------------------------
H. William Willoughby
C.R.I., INC.
By: /s/ H. William Willoughby
-----------------------------
H. William Willoughby
/s/ WILLIAM B. DOCKSER
-----------------------------
WILLIAM B. DOCKSER
- 5 -
<PAGE>
Exhibit 17(d)(14)
<PAGE>
CAPITAL REALTY INVESTORS TAX EXEMPT FUND LIMITED PARTNERSHIP, SERIES I
C/O THE CRI BUILDING
11200 ROCKVILLE PIKE
ROCKVILLE, MARYLAND 20852
November 8, 1996
Dear BAC Holder:
As previously announced, Capital Apartment Properties, Inc. ('CAPREIT') has
INCREASED BY $0.60 PER BAC THE CONSIDERATION payable to holders ('BAC Holders')
of Beneficial Assignee Certificates ('BACs') in Series I issued by Capital
Realty Investors Tax Exempt Fund Limited Partnership ('Fund I-II') in the
proposed merger (the 'Merger') of an affiliate of CAPREIT into Fund I-II.
You are cordially invited to attend the special meeting of the BAC Holders
of Fund I-II, which is scheduled to be held on November 27, 1996 at 1:00 p.m.,
local time, at the Doubletree Hotel, 1750 Rockville Pike, Rockville, Maryland
20852 (the 'Special Meeting') to vote upon the Merger and certain related
transactions.
As a result of the Merger, all of the Series I BACs (other than BACs held
by CAPREIT or its affiliates or Fund I-II, if any) WILL NOW BE REDEEMED FOR THE
IMPROVED PRICE OF $15.42 PER BAC, net to the holder in cash, without interest,
subject to increase based upon Available Cash (as defined) at closing.
Dominium Tax Exempt Fund L.L.P., which played an instrumental role in
securing the increased merger prices, now firmly endorses and supports the
Merger and has publicly announced its belief that the Merger, as improved,
maximizes value for BAC Holders. Please note that the improved Redemption Price
is at the higher end of the range of values for Fund I-II, Series I developed by
the independent investment banking firm that provided the fairness opinion for
the Merger.
YOUR GENERAL PARTNER BELIEVES THAT THE PROPOSED TRANSACTIONS ARE FAIR TO
AND IN THE BEST INTERESTS OF BAC HOLDERS AND THAT THE CONSIDERATION PAYABLE TO
THE BAC HOLDERS IN THE MERGER IS FAIR TO SUCH BAC HOLDERS.
YOUR GENERAL PARTNER RECOMMENDS THAT BAC HOLDERS VOTE 'FOR' APPROVAL OF
EACH OF THE TRANSACTION PROPOSALS.
If you previously returned a WHITE Proxy Card to Fund I-II or its proxy
agent, MacKenzie Partners, or a BLUE Proxy Card to Dominium or its proxy agent,
Georgeson & Co., voting 'FOR' each of the proposals set forth thereon, and such
Proxy Card was the last Proxy Card submitted by you, such Proxy Card will be
deemed to constitute your vote of all BACs held by you as of the Record Date
'FOR' each of the proposals, as amended as described in the accompanying Proxy
Supplement, although you may reaffirm your vote by completing, signing, dating
and returning the enclosed GOLD Proxy Card. If you previously voted on a WHITE
Proxy Card or a BLUE (Dominium) Proxy Card, whether 'FOR' or 'AGAINST,' or to
'ABSTAIN' from a vote on, any or all of the proposals and now wish to change
your vote, you must vote again by completing, signing, dating and returning the
enclosed GOLD Proxy Card. If you last voted 'AGAINST' the proposals or to
'ABSTAIN' on a WHITE Proxy Card or a BLUE (Dominium) Proxy Card and do not now
wish to change your vote to a vote 'FOR' any of the proposals, no further action
need be taken by you.
IF YOU ARE UNSURE HOW YOU LAST VOTED BACS HELD BY YOU, YOU ARE URGED TO
VOTE AGAIN BY COMPLETING, SIGNING, DATING, AND RETURNING THE ENCLOSED GOLD PROXY
CARD.
Please return your Proxy Card in the envelope provided or by faxing your
Proxy Card to MacKenzie Partners, Inc. at (212) 929-0308.
- --------------------------------------------------------------------------------
<PAGE>
BAC Holders are urged to review carefully the accompanying Supplement,
which describes, among other things, the improved Merger terms, the terms of the
Dominium settlement and CAPREIT's agreement to pay Dominium $3 million in
connection therewith, and additional voting procedures for BAC Holders, in
conjunction with the Joint Proxy Statement of the Funds, dated September 20,
1996, a copy of which is included for BAC Holders to whom the Proxy Statement
was not previously mailed. Additional copies of the Joint Proxy Statement may be
obtained by writing to Fund I-II at the above address or by contacting MacKenzie
Partners, Inc. at 1-800-322-2885.
All BAC Holders are cordially invited to attend the Special Meeting.
Whether or not you plan to attend the Special Meeting in person and regardless
of the number of BACs you own, if you have not already voted 'FOR' the
Transaction Proposals, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED GOLD PROXY
CARD AND MAIL IT AS SOON AS POSSIBLE IN THE ENCLOSED STAMPED, ADDRESSED RETURN
ENVELOPE OR FAX YOUR PROXY TO MACKENZIE PARTNERS, INC., AT (212) 929-0308, TO
ENSURE THAT YOUR BACS ARE VOTED AT THE SPECIAL MEETING. You may vote in person
if you wish to do so even though you have previously sent in your proxy.
WE URGE YOU TO VOTE 'FOR' THE IMPROVED CAPREIT OFFER. THE VOTE OF EVERY BAC
HOLDER IS IMPORTANT.
Very truly yours,
CRITEF ASSOCIATES LIMITED PARTNERSHIP,
General Partner
By: C.R.I., Inc., its general partner
/s/ William B. Dockser
William B. Dockser
Chairman of the Board of C.R.I., Inc.
and
/s/ H. William Willoughby
H. William Willoughby
President of C.R.I., Inc.
2
<PAGE>
CAPITAL REALTY INVESTORS TAX EXEMPT FUND LIMITED PARTNERSHIP, SERIES II
C/O THE CRI BUILDING
11200 ROCKVILLE PIKE
ROCKVILLE, MARYLAND 20852
November 8, 1996
Dear BAC Holder:
As previously announced, Capital Apartment Properties, Inc. ('CAPREIT') has
INCREASED BY $0.61 PER BAC THE CONSIDERATION payable to holders ('BAC Holders')
of Beneficial Assignee Certificates ('BACs') in Series II issued by Capital
Realty Investors Tax Exempt Fund Limited Partnership ('Fund I-II') in the
proposed merger (the 'Merger') of an affiliate of CAPREIT into Fund I-II.
You are cordially invited to attend the special meeting of the BAC Holders
of Fund I-II, which is now scheduled to be held November 27, 1996 at 1:00 p.m.,
local time at the Doubletree Hotel, 1750 Rockville Pike, Rockville, Maryland
20852 (the 'Special Meeting') to vote upon the Merger and certain related
transactions.
As a result of the Merger, all of the Series II BACs (other than BACs held
by CAPREIT or its affiliates or Fund I-II, if any) WILL NOW BE REDEEMED FOR THE
IMPROVED MERGER PRICE $15.11 PER BAC, net to the holder in cash, without
interest, subject to increase based upon Available Cash (as defined) at closing.
Dominium Tax Exempt Fund L.L.P. which played an instrumental role in
securing the increased merger price, now firmly endorses and supports the Merger
and the related transactions and has publicly announced its belief that the
Merger, as improved, maximizes value for BAC Holders. Please note that the
improved Redemption Price is at the higher end of the range of values for Fund
I-II, Series II developed by the independent investment banking firm that
provided the fairness opinion for the Merger.
YOUR GENERAL PARTNER BELIEVES THAT THE PROPOSED TRANSACTIONS ARE FAIR TO
AND IN THE BEST INTERESTS OF BAC HOLDERS AND THAT THE CONSIDERATION PAYABLE TO
THE BAC HOLDERS IN THE MERGER IS FAIR TO SUCH BAC HOLDERS.
YOUR GENERAL PARTNER RECOMMENDS THAT BAC HOLDERS VOTE 'FOR' APPROVAL OF
EACH OF THE TRANSACTION PROPOSALS.
If you previously returned a WHITE Proxy Card to Fund I-II or its proxy
agent, MacKenzie Partners, or a BLUE Proxy Card to Dominium or its proxy agent,
Georgeson & Co., voting 'FOR' each of the proposals set forth thereon, and such
Proxy Card was the last Proxy Card submitted by you, such Proxy Card will be
deemed to constitute your vote of all BACs held by you as of the Record Date
'FOR' each of the proposals, as amended as described in the accompanying Proxy
Statement Supplement, although you may reaffirm your vote by completing,
signing, dating and returning the enclosed GOLD Proxy Card. If you previously
voted on a WHITE Proxy Card or a BLUE (Dominium) Proxy Card, whether 'FOR' or
'AGAINST', or to 'ABSTAIN' from a vote on, any or all of the proposals and now
wish to change your vote, you need to vote again by completing, signing, dating
and returning the enclosed GOLD Proxy Card. If you last voted 'AGAINST' the
proposals or to 'ABSTAIN' on a WHITE Proxy Card or a BLUE (Dominium) Proxy Card
and do not now wish to change your vote to a vote 'FOR' any of the proposals, no
further action need be taken by you.
IF YOU ARE UNSURE HOW YOU LAST VOTED BACS HELD BY YOU, YOU ARE URGED TO
VOTE AGAIN BY COMPLETING, SIGNING, DATING, AND RETURNING THE ENCLOSED GOLD PROXY
CARD.
Please return your Proxy Card in the envelope provided or by faxing your
Proxy Card to MacKenzie Partners, Inc. at (212) 929-0308.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
BAC Holders are urged to review carefully the accompanying Supplement,
which describes, among other things, the improved Merger terms, the terms of the
Dominium settlement and CAPREIT's agreement to pay Dominium $3 million in
connection therewith, and additional voting procedures for BAC Holders, in
conjunction with the Joint Proxy Statement of the Funds, dated September 20,
1996, a copy of which is included for BAC Holders to whom the Proxy Statement
was not previously mailed. Additional copies of the Joint Proxy Statement may be
obtained by writing to Fund I-II at the above address or by contacting MacKenzie
Partners, Inc. at 1-800-322-2885.
All BAC Holders are cordially invited to attend the Special Meeting.
Whether or not you plan to attend the Special Meeting in person and regardless
of the number of BACs you own, if you have not already voted 'FOR' the
Transaction Proposal, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED GOLD PROXY
CARD AND MAIL IT AS SOON AS POSSIBLE IN THE ENCLOSED STAMPED, ADDRESSED RETURN
ENVELOPE OR FAX YOUR PROXY TO MACKENZIE PARTNERS, INC., AT (212) 929-0308, TO
ENSURE THAT YOUR BACS ARE VOTED AT THE SPECIAL MEETING. You may vote in person
if you wish to do so even though you have previously sent in your proxy.
WE URGE YOU TO VOTE 'FOR' THE IMPROVED CAPREIT OFFER. THE VOTE OF EVERY BAC
HOLDER IS IMPORTANT.
Very truly yours,
CRITEF ASSOCIATES LIMITED PARTNERSHIP,
General Partner
By: C.R.I., Inc., its general partner
/s/ William B. Dockser
William B. Dockser
Chairman of the Board of C.R.I., Inc.
and
/s/ H. William Willoughby
H. William Willoughby
President of C.R.I., Inc.
2
<PAGE>
CAPITAL REALTY INVESTORS TAX EXEMPT FUND III LIMITED PARTNERSHIP
C/O THE CRI BUILDING
11200 ROCKVILLE PIKE
ROCKVILLE, MARYLAND 20852
November 8, 1996
Dear BAC Holder:
As previously announced, Capital Apartment Properties, Inc. ('CAPREIT') has
INCREASED BY $0.60 PER BAC THE CONSIDERATION payable to holders ('BAC Holders')
of Beneficial Assignee Certificates ('BACs') issued by Capital Realty Investors
Tax Exempt Fund III Limited Partnership ('Fund III') in the proposed merger (the
'Merger') of an affiliate of CAPREIT into Fund III.
You are cordially invited to attend the special meeting of the BAC Holders
of Fund III, which is scheduled to be held November 27, 1996 at 2:00 p.m., local
time at the Doubletree Hotel, 1750 Rockville Pike, Rockville, Maryland 20852
(the 'Special Meeting') to vote upon the Merger and certain related
transactions.
As a result of the Merger, all of the BACs (other than BACs held by CAPREIT
or its affiliates or Fund III, if any) WILL NOW BE REDEEMED FOR THE IMPROVED
PRICE OF $15.73 PER BAC, net to the holder in cash, without interest, subject to
increase based upon Available Cash (as defined) at closing.
Dominium Tax Exempt Fund L.L.P., which played an instrumental role in
securing the increased merger prices, now firmly endorses and supports the
Merger and has publicly announced its belief that the Merger, as improved,
maximizes value for BAC Holders. Please note that the improved Redemption Price
is at the higher end of the range of values for Fund III developed by the
independent investment banking firm that provided the fairness opinion for the
Merger.
YOUR GENERAL PARTNER BELIEVES THAT THE PROPOSED TRANSACTIONS ARE FAIR TO
AND IN THE BEST INTERESTS OF BAC HOLDERS AND THAT THE CONSIDERATION PAYABLE TO
THE BAC HOLDERS IN THE MERGER IS FAIR TO SUCH BAC HOLDERS.
YOUR GENERAL PARTNER RECOMMENDS THAT BAC HOLDERS VOTE 'FOR' APPROVAL OF
EACH OF THE TRANSACTION PROPOSALS.
If you previously returned a WHITE Proxy Card to Fund III or its proxy
agent MacKenzie Partners, or a BLUE Proxy Card to Dominium or its proxy agent,
Georgeson & Co., voting 'FOR' each of the proposals set forth thereon, and such
Proxy Card was the last Proxy Card submitted by you, such Proxy Card will be
deemed to constitute your vote of all BACs held by you as of the Record Date
'FOR' each of the proposals, as amended as described in the accompanying Proxy
Statement Supplement, although you may reaffirm your vote by completing,
signing, dating and returning the enclosed GOLD Proxy Card. If you previously
voted on a WHITE Proxy Card or a BLUE (Dominium) Proxy Card, whether 'FOR' or
'AGAINST', or to 'ABSTAIN' from a vote on, any or all of the proposals and now
wish to change your vote, you need to vote again by completing, signing, dating
and returning the enclosed GOLD Proxy Card. If you last voted 'AGAINST' the
proposals or to 'ABSTAIN' on a WHITE Proxy Card or a BLUE (Dominium) Proxy Card
and do not now wish to change your vote to a vote 'FOR' any of the proposals, no
further action need be taken by you.
IF YOU ARE UNSURE HOW YOU LAST VOTED BACS HELD BY YOU, YOU ARE URGED TO
VOTE AGAIN BY COMPLETING, SIGNING, DATING, AND RETURNING THE ENCLOSED GOLD PROXY
CARD.
Please return your Proxy Card in the envelope provided or by faxing your
Proxy Card to MacKenzie Partners, Inc. at (212) 929-0308.
<PAGE>
BAC Holders are urged to review carefully the accompanying Supplement,
which describes, among other things, the improved Merger terms, the terms of the
Dominium settlement and CAPREIT's agreement to pay Dominium $3 million in
connection therewith, and additional voting procedures for BAC Holders, in
conjunction with the Joint Proxy Statement of the Funds, dated September 20,
1996, a copy of which is included for BAC Holders to whom the Proxy Statement
was not previously mailed. Additional copies of the Joint Proxy Statement may be
obtained by writing to Fund III at the above address or by contacting MacKenzie
Partners, Inc. at 1-800-322-2885.
All BAC Holders are cordially invited to attend the Special Meeting.
Whether or not you plan to attend the Special Meeting in person and regardless
of the number of BACs you own, if you have not already voted 'FOR' the
Transaction Proposal, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED GOLD PROXY
CARD AND MAIL IT AS SOON AS POSSIBLE IN THE ENCLOSED STAMPED, ADDRESSED RETURN
ENVELOPE OR FAX YOUR PROXY TO MACKENZIE PARTNERS, INC., AT (212) 929-0308, TO
ENSURE THAT YOUR BACS ARE VOTED AT THE SPECIAL MEETING. You may vote in person
if you wish to do so even though you have previously sent in your proxy.
WE URGE YOU TO VOTE 'FOR' THE IMPROVED CAPREIT OFFER. THE VOTE OF EVERY BAC
HOLDER IS IMPORTANT.
Very truly yours,
CRITEF III ASSOCIATES LIMITED PARTNERSHIP,
General Partner
By: C.R.I., Inc., its general partner
/s/ William B. Dockser
William B. Dockser
Chairman of the Board of C.R.I., Inc.
and
/s/ H. William Willoughby
H. William Willoughby
President of C.R.I., Inc.
2
<PAGE>
CAPITAL REALTY INVESTORS TAX EXEMPT FUND LIMITED PARTNERSHIP
CAPITAL REALTY INVESTORS TAX EXEMPT FUND III LIMITED PARTNERSHIP
------------------------
AMENDED NOTICE OF SPECIAL MEETINGS
TO BE HELD ON NOVEMBER 27, 1996
NOTICE IS HEREBY GIVEN that the special meetings of the holders (the 'BAC
Holders') of Beneficial Assignee Certificates ('BACs') in Series I and II issued
by Capital Realty Investors Tax Exempt Fund Limited Partnership, a Delaware
limited partnership ('Fund I-II'), and BACs issued by Capital Realty Investors
Tax Exempt Fund III Limited Partnership, a Delaware limited partnership ('Fund
III,' and together with Fund I-II, the 'Funds'), originally scheduled to be held
on October 29, 1996, have been rescheduled and will be held on November 27, 1996
at the Doubletree Hotel, 1750 Rockville Pike, Rockville, Maryland 20852 at 1:00
p.m. and 2:00 p.m., local time, respectively.
The purpose of the special meetings is to consider and vote upon:
1. A proposal (the 'Merger Proposal') to approve and adopt (a) with
respect to Fund I-II, the Fourth Amended and Restated Agreement and Plan of
Merger, dated as of August 21, 1996, as amended by Amendment No. 1 thereto
dated November 7, 1996 (as amended, the 'Fund I-II Merger Agreement'),
among Fund I-II, CRITEF Associates Limited Partnership, a Delaware limited
partnership which is the general partner of Fund I-II ('Fund I-II GP'),
Watermark Partners, L.P. ('Merger Partnership'), a Delaware limited
partnership affiliated with Capital Apartment Properties, Inc., a Maryland
corporation ('CAPREIT'), and others, which provides for the Merger (the
'Fund I-II Merger') of Merger Partnership into Fund I-II pursuant to which,
among other things, each BAC (other than BACs held by CAPREIT or its
affiliates or Fund I-II, if any) will be redeemed for cash in the amount of
$15.42 per BAC, net to the holder in cash, without interest, in the case of
Series I, and $15.11 per BAC, net to the holder in cash, without interest,
in the case of Series II, in each case subject to increase as described
below, and (b) with respect to Fund III, the Fourth Amended and Restated
Agreement and Plan of Merger, dated as of August 21, 1996, as amended by
Amendment No. 1 thereto dated November 7, 1996 (as amended, the 'Fund III
Merger Agreement,' and together with the Fund I-II Merger Agreement, the
'Merger Agreements'), among Fund III, CRITEF III Associates Limited
Partnership, a Delaware limited partnership which is the general partner of
Fund III ('Fund III GP,' and together with Fund I-II GP, the 'General
Partners'), Watermark III Partners, L.P., ('Merger Partnership III,' and
together with Merger Partnership, the 'Merger Partnerships') a Delaware
limited partnership affiliated with CAPREIT, and others, which provides for
the Merger (the 'Fund III Merger,' and together with the Fund I-II Merger,
the 'Mergers,' and individually, a 'Merger') pursuant to which, among other
things, each BAC (other than BACs held by CAPREIT or its affiliates or Fund
III, if any) will be redeemed for cash in the amount of $15.73 per BAC, net
to the holder in cash, without interest, subject to increase as described
below, and in each case, related amendments to the respective Agreement of
Limited Partnership of each Fund to authorize expressly the Mergers and the
Merger Agreements and the transactions contemplated thereby. In each case,
the redemption price per BAC is subject to increase based upon the amount
of Available Cash (as defined in the Merger Agreements) at closing as
described in more detail in the Funds' Joint Proxy Statement, dated
September 20, 1996, as amended and supplemented by the Funds' Supplement
thereto accompanying this amended Notice;
2. A proposal (the 'New Partners Proposal,' and together with the
Merger Proposal, the 'Transaction Proposals') with respect to each Fund, to
approve in connection with a Merger (a) the sale of the 1.01% general
partner interest held by such Fund's General Partner to CAPREIT GP, Inc., a
newly-formed, wholly-owned subsidiary of CAPREIT ('CAPREIT GP') for
$400,000, and the substitution of CAPREIT GP as general partner of such
Fund in its stead, and (b) the issuance of limited partner interests in
such Fund to CAPREIT or its designees in exchange for the contribution to
such Fund of real property or other assets, in each case to occur
concurrently with the consummation of a Merger, and related amendments to
the respective Agreement of Limited Partnership of each Fund to authorize
expressly the foregoing;
3. Any adjournments of the Special Meetings to allow for the
additional solicitation of BAC Holder votes in order to obtain more votes
in favor of the Transaction Proposals; and
4. Such other business as may properly come before the Special
Meetings or any adjournments or postponements thereof.
<PAGE>
THE APPROVAL AND ADOPTION BY THE BAC HOLDERS OF EACH FUND OF EACH
TRANSACTION PROPOSAL TO BE VOTED UPON BY THEM IS CONTINGENT UPON THE APPROVAL
AND ADOPTION BY THE BAC HOLDERS OF SUCH FUND OF THE OTHER TRANSACTION PROPOSAL
TO BE VOTED UPON BY THEM. THE CONSUMMATION OF THE TRANSACTION PROPOSALS BY ONE
FUND IS A CONDITION TO THE CONSUMMATION OF THE TRANSACTION PROPOSALS BY THE
OTHER FUND, WHICH CONDITION MAY BE WAIVED BY CAPREIT IN ITS SOLE AND ABSOLUTE
DISCRETION.
The Transaction Proposals and certain related matters, including, without
limitation, certain benefits to be realized by the General Partners and certain
of their affiliates in connection therewith, are more fully described in the
Joint Proxy Statement, dated September 20, 1996, as amended and supplemented by
the Supplement thereto accompanying this Notice.
Only BAC Holders of record as of the close of business on November 12, 1996
are entitled to notice of and to vote at the Special Meeting of BAC Holders in
the Fund in which they own BACs. Approval of each of the Transaction Proposals
by each Fund will require the affirmative vote of the holders of a majority of
such Fund's BACs voting together as a single class.
Whether or not you plan to attend the Special Meeting in person and
regardless of the number of BACs you own, please complete, sign and date the
enclosed GOLD Proxy Card and mail it as soon as possible in the enclosed
stamped, addressed return envelope or fax it to the Funds' proxy agent,
MacKenzie Partners, Inc., at (212) 929-0308 to ensure that your BACs are voted
at the Special Meeting. You may vote in person if you wish to do so even though
you have previously sent in your Proxy.
By Order of the General Partners:
CRITEF ASSOCIATES LIMITED
PARTNERSHIP
CRITEF III ASSOCIATES LIMITED
PARTNERSHIP
Rockville, Maryland
November 8, 1996
If you have any questions or need assistance in voting your BACs, please
contact MacKenzie Partners, Inc. at the toll-free number listed below.
MACKENZIE PARTNERS
156 Fifth Avenue
New York, NY 10010
(212) 929-5500 (call collect)
or
CALL TOLL FREE (800) 322-2885
THESE TRANSACTIONS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTIONS OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
2
<PAGE>
CAPITAL REALTY INVESTORS TAX EXEMPT FUND LIMITED PARTNERSHIP
CAPITAL REALTY INVESTORS TAX EXEMPT FUND III LIMITED PARTNERSHIP
THE CRI BUILDING
11200 ROCKVILLE PIKE
ROCKVILLE, MARYLAND 20852
------------------------------
SUPPLEMENT
TO
JOINT PROXY STATEMENT
FOR
SPECIAL MEETINGS OF BAC HOLDERS
TO BE HELD ON NOVEMBER 27, 1996
November 8, 1996
This Supplement ('Supplement') amends and supplements the Joint Proxy
Statement of Capital Realty Investors Tax Exempt Fund Limited Partnership ('Fund
I-II') and Capital Realty Investors Tax Exempt Fund III Limited Partnership
('Fund III', and together with Fund I-II, the 'Funds'), dated September 20, 1996
(the 'Proxy Statement'), which was furnished to the holders ('BAC Holders') of
Beneficial Assignee Certificates ('BACs') in each of the Funds in connection
with the solicitation of proxies for use at the special meeting of BAC Holders
of each Fund, originally scheduled for October 29, 1996, and now scheduled to be
held at 1:00 p.m. and 2:00 p.m., local time, respectively, on Wednesday,
November 27, 1996, at the Doubletree Hotel, 1750 Rockville Pike, Rockville,
Maryland 20852, and any adjournments or postponements thereof (the 'Special
Meetings'). Each BAC Holder is entitled to one vote for each BAC held of record
by such Holder at the close of business on November 12, 1996 (the 'Record Date')
with respect to each of the proposals described in the Proxy Statement, as
amended and supplemented by this Supplement. All capitalized terms used and not
otherwise defined in this Supplement have the meanings ascribed to them in the
Proxy Statement.
BAC Holders are urged to review carefully this Supplement and the Proxy
Statement. A copy of the Proxy Statement is included herewith for BAC Holders of
record who were not Holders of record on September 19, 1996, and therefore may
not previously have received the Proxy Statement. Additional copies of the Proxy
Statement, this Supplement, or any other proxy materials may be obtained by any
BAC Holder who requests a copy thereof by writing to either Fund at its address
set forth above or by contacting MacKenzie Partners, Inc., the Funds'
information and proxy agent, at the toll-free number listed below:
MACKENZIE PARTNERS
156 Fifth Avenue
New York, NY 10010
(212) 929-5500 (call collect)
or
CALL TOLL FREE (800) 322-2885
This Supplement is first being mailed to BAC Holders on or about November
9, 1996.
<PAGE>
INCREASE IN REDEMPTION PRICES
PAYABLE TO BAC HOLDERS
CAPREIT HAS INCREASED THE CONSIDERATION IT IS OFFERING TO BAC HOLDERS IN
THE MERGERS BY AN AGGREGATE OF APPROXIMATELY $6.5 MILLION, RESULTING IN AN
INCREASE IN THE REDEMPTION PRICES PAYABLE TO BAC HOLDERS IN THE MERGERS OF
APPROXIMATELY $.60 PER BAC TO $15.42 PER BAC, IN THE CASE OF SERIES I, FUND I-
II, $15.11 PER BAC, IN THE CASE OF FUND I-I, SERIES II, AND $15.73 PER BAC, IN
THE CASE OF FUND III, IN EACH CASE SUBJECT TO INCREASE AS DESCRIBED BELOW.
In connection with the increase in the consideration being offered in the
Mergers, on November 7, 1996, the Funds, CAPREIT and the Merger Partnerships
entered into amendments to the Merger Agreements (hereafter, as so amended, the
'Merger Agreements') providing for the increase in the consideration being
offered pursuant thereto and, among other things, a decrease in the amounts
payable to the General Partners and CRI by an aggregate of $500,000 and an
extension of the Termination Date from December 31, 1996 to February 28, 1997.
See 'Amendments to the Merger Agreements' below.
AS DISCUSSED IN MORE DETAIL BELOW, DOMINIUM, WHICH WAS INSTRUMENTAL IN
NEGOTIATING THE IMPROVED MERGER TERMS ON BEHALF OF THE BAC HOLDERS, NOW ENDORSES
AND SUPPORTS THE MERGERS AND RELATED TRANSACTIONS AND URGES ALL BAC HOLDERS TO
VOTE 'FOR' APPROVAL OF EACH OF THE TRANSACTION PROPOSALS. SEE 'RECENT
DEVELOPMENTS' BELOW.
Upon consummation of each Merger and by virtue thereof, (a) all of the BACs
in the merged Fund (except as provided below) will be redeemed for cash at a
Redemption Price of (i) with respect to Fund I-II, $15.42 per BAC in the case of
Series I and $15.11 per BAC in the case of Series II and (ii) with respect to
Fund III, $15.73 per BAC, in each case subject to increase as described below,
(b) interests in each of the Funds held by the Assignor Limited Partner of each
of the Funds will be canceled and extinguished, (c) interests in each of the
Funds held by CAPREIT or its designees will remain outstanding, and (d) in each
case, BACs held by CAPREIT and its affiliates, if any, will be converted into
limited partner interests in the respective Funds and BACs held by such Fund, if
any, will be canceled and no consideration will be paid therefor.
The cash consideration to be paid to the BAC Holders in the Mergers, in
each case, may be increased by the amount by which Available Cash is greater
than, with respect to Fund I-II, $2,606,482 in the case of Series I, and
$3,869,290 in the case of Series II, and, with respect to Fund III, $5,924,228.
The maximum Adjustment Amount is, with respect to Fund I-II, $476,520 (or
$0.2090 per BAC) in the case of Series I and $676,901 (or $0.2090 per BAC) in
the case of Series II, and, with respect to Fund III, $1,098,978 (or $0.2090 per
BAC). For purposes of calculating the Adjustment Amount, Available Cash means
the amount of cash and cash equivalents held by or at the direction of a Fund
after deducting any amounts then owed, accrued or reserved by such Fund for
goods, services or liabilities of any nature or description (which liabilities
shall not include any liabilities of the properties securing the Mortgage
Revenue Bonds held by the Funds, including accrued real estate taxes and
insurance); provided, that all amounts held in tax and insurance escrows for all
such properties and all amounts held in replacement reserves for the benefit of
the Owner Partnerships shall be deemed to be part of the Available Cash.
Available Cash shall include any additions to tax and insurance escrows for all
of the mortgaged properties and the replacement reserves for the benefit of the
Owner Partnerships, less any withdrawals from such escrows and reserves, in each
case, in the ordinary course of business consistent with past practice.
Under the Merger Agreements, CAPREIT has offered the BAC Holders, in the
aggregate, approximately $168.8 million, or $15.60 per BAC, in the case of
Series I of Fund I-II, $15.29 per BAC, in the case of Series II of Fund I-II,
and $15.92 per BAC, in the case of Fund III, plus, in each case, the Adjustment
Amount, if any. In arriving at the Redemption Prices, the consideration to be
paid to the BAC Holders in the Mergers, in each case, has been reduced by the
amount of fees and expenses awarded by the court to counsel for the plaintiffs
in the Zakin and Wingard Actions relating to the Mergers of, assuming both Funds
consummate the Mergers, $2 million in the aggregate. As a result of the
foregoing, the consideration offered by CAPREIT in the Merger Agreements
(assuming no Adjustment Amount) was reduced $0.18 per BAC, in the case of Series
I of Fund I-II, $0.18 per BAC, in the case of Series II of Fund I-II, and $0.19
per BAC in the case of Fund III in arriving at the respective Redemption Prices.
2
<PAGE>
VOTING PROCEDURES AND PROXIES
If you previously returned a WHITE Proxy Card to the Funds or their proxy
agent, MacKenzie Partners, or a BLUE Proxy Card to Dominium or its proxy agent,
Georgeson & Co., voting 'FOR' each of the proposals set forth thereon and such
Proxy Card was the last Proxy Card submitted by you, such Proxy Card will be
deemed to constitute your vote of all BACs held by you as of the Record Date
'FOR' each of the proposals, as amended as described herein, although you may
reaffirm your vote by completing, signing, dating and returning the enclosed
GOLD Proxy Card. If you last voted on a WHITE Proxy Card or a BLUE Proxy Card,
whether 'FOR' or 'AGAINST', or to 'ABSTAIN' from a vote on, any or all of the
proposals and now wish to change your vote, you must vote again by completing,
signing, dating and returning the enclosed GOLD Proxy Card. If you last voted
'AGAINST' the proposals or to 'ABSTAIN' on a WHITE Proxy Card or a BLUE Proxy
Card and do not now wish to change your vote to a vote 'FOR' any of the
proposals, no further action need be taken by you.
IF YOU ARE UNSURE HOW YOU LAST VOTED BACS HELD BY YOU, PLEASE VOTE AGAIN BY
COMPLETING, SIGNING, DATING, AND RETURNING THE ENCLOSED GOLD PROXY CARD.
Any proxy (whether previously voted on a WHITE Proxy Card or a BLUE
(Dominium) Proxy Card or now voted on a GOLD Proxy Card) may be withdrawn or
changed at any time prior to the date of the Special Meetings by completing,
signing, dating and returning a new proxy indicating your changed vote. Any such
withdrawal will be effective when the appropriate Fund receives a signed proxy
bearing a later date. A BAC Holder may also revoke a previously delivered proxy
by voting in person at the Special Meeting (although attendance at the Special
Meeting will not in and of itself constitute revocation of a proxy) or by giving
notice of revocation of his or her proxy at the Special Meeting. Unless revoked
in the manner set forth above, the latest dated proxies, whether received prior
to the date hereof or after, will be voted at the Special Meetings in accordance
with the BAC Holder's instructions thereon.
IF YOU WISH TO RECEIVE THE IMPROVED REDEMPTION PRICES DESCRIBED HEREIN, THE
GENERAL PARTNERS URGE THAT YOU VOTE YOUR BACS 'FOR' THE MERGER PROPOSAL AND THE
NEW PARTNERS PROPOSAL. A FAILURE TO VOTE YOUR BACS WILL CONSTITUTE A VOTE
'AGAINST' THE TRANSACTION PROPOSALS.
Please return your Proxy Card as soon as possible in the envelope provided
or by faxing your Proxy Card to MacKenzie Partners, Inc. at (212) 929-0308.
GENERAL PARTNERS' RECOMMENDATIONS
FUND I-II GP, BY THE UNANIMOUS VOTE OF ITS GENERAL PARTNERS, HAS APPROVED
THE FUND I-II MERGER AGREEMENT, AS AMENDED BY AMENDMENT NO. 1 THERETO DATED
NOVEMBER 7, 1996, AND HAS DETERMINED THAT THE TRANSACTIONS ARE FAIR TO AND IN
THE BEST INTERESTS OF THE BAC HOLDERS OF EACH OF SERIES I AND SERIES II OF FUND
I-II AND THAT THE REDEMPTION PRICES PAYABLE TO SUCH BAC HOLDERS ARE FAIR. FUND
I-II GP RECOMMENDS THAT ALL BAC HOLDERS IN FUND I-II VOTE 'FOR' EACH OF THE
TRANSACTION PROPOSALS TO BE VOTED ON BY THEM.
FUND III GP, BY THE VOTE OF ITS SOLE GENERAL PARTNER, HAS APPROVED THE FUND
III MERGER AGREEMENT, AS AMENDED BY AMENDMENT NO. 1 THERETO DATED NOVEMBER 7,
1996, AND HAS DETERMINED THAT THE TRANSACTIONS ARE FAIR TO AND IN THE BEST
INTERESTS OF THE BAC HOLDERS OF FUND III AND THAT THE REDEMPTION PRICE PAYABLE
TO SUCH BAC HOLDERS IS FAIR. FUND III GP RECOMMENDS THAT ALL BAC HOLDERS IN FUND
III VOTE 'FOR' EACH OF THE TRANSACTION PROPOSALS TO BE VOTED ON BY THEM.
In determining that the terms of the Transactions, as improved as described
herein, are fair to and in the best interests of the BAC Holders and to
recommend that BAC Holders vote 'FOR' the Transaction Proposals, the General
Partners, in addition to giving due consideration to and reaffirming all of the
factors set forth in the Proxy Statement, noted that the improved Redemption
Prices payable to the BAC Holders in the Mergers are at the high end of the
range of values developed by Oppenheimer in connection with its Fairness
Opinions. The General Partners also gave considerable weight to the fact that
the improved Redemption Prices payable to the BAC Holders in the Mergers
represent a substantial premium of approximately 31%, in the case of Fund I-II,
Series I, 39%, in the case of Fund I-II, Series II, and 31%, in the case of Fund
III, over the market prices of the
3
<PAGE>
BACs as of September 8, 1995, the last trading day prior to the public
announcement of the Mergers, and the fact that the Redemption Prices, in each
case, are higher than the highest trading prices of the BACs since the BACs were
listed on the AMEX in 1993.
In arriving at their fairness determinations, the General Partners reviewed
Dominium's October 16, 1996 proxy statement but did not agree with Dominium's
conclusion that the prior Redemption Prices did not adequately reflect the
values of the Funds. Among other things, the General Partners believe that
Dominium's analysis as presented in its proxy statement of liquidation values of
the properties underlying the 15 non-performing loans misapplies its
consultant's analysis of appropriate capitalization rates by basing the high end
of its range of values on a capitalization rate of 8% for all of the properties,
when in fact, its consultant's analyses applied such capitalization rate to only
two properties. The General Partners also noted that Dominium had not been able
to finance an offer that would have paid BAC Holders as much as CAPREIT's
improved Redemption Prices and that Dominium did not intend to make an offer for
the Funds now. Therefore, the General Partners continued to support the Mergers
with CAPREIT. Nevertheless, the General Partners believed that it would be
reasonable to propose that CAPREIT increase the Merger consideration in view of
the proxy contest and Dominium's arguments concerning the adequacy of the Merger
consideration and to reduce the payments that CAPREIT is making to the General
Partner and CRI by an aggregate of $500,000. The General Partners did not give
any weight to the agreements and arrangements CAPREIT entered into with Dominium
because the General Partners felt the prior Redemption Prices were fair and,
accordingly, the General Partners believe that the improved Redemption Prices
are fair.
No facts or circumstances have come to the attention of the General
Partners which would cause them to believe that any of the factors previously
considered by them in arriving at their fairness determinations and
recommendations are no longer true.
CAPREIT, the Merger Partnerships and Apollo, after giving due consideration
to the factors considered by the General Partners, including those factors
described above, in reaching their determination as to the fairness of the
Mergers, as improved, also reaffirm their conclusion that these factors provide
a reasonable basis for them to conclude, as they do, that the Transactions are
fair to the BAC Holders and that the applicable improved Redemption Prices
payable to such BAC Holders are fair to such BAC Holders.
RECORD DATE AND REQUIRED VOTE
Only BAC Holders of record as of the close of business on the Record Date,
November 12, 1996, are entitled to notice of and to vote at the Special
Meetings. Each BAC Holder is entitled to one vote for each BAC
held of record by him or her on the Record Date. As of November 7, 1996, there
were 2,280,000 Fund I-II, Series I BACs outstanding held by 1,704 BAC Holders of
record, 3,238,760 Fund I-II, Series II BACs outstanding held by 2,427 BAC
Holders of record, and 5,258,268 Fund III BACs outstanding held by 3,778 BAC
Holders of record.
Pursuant to the Partnership Act and the respective Partnership Agreement of
each of the Funds, the approval and adoption of each proposal to be voted on by
the BAC Holders of a Fund will require the affirmative vote of a majority of
such Fund's limited partner interests. The Assignor Limited Partner of each Fund
is the sole limited partner of such Fund. The BAC Holders of each Fund are
entitled to direct the vote of the Assignor Limited Partner of such Fund and,
accordingly, the approval and adoption of each proposal to be voted on by the
BAC Holders of a Fund will require the affirmative vote of BAC Holders holding a
majority of such Fund's BACs entitled to vote at the Special Meetings. In the
case of Fund I-II, approval of each proposal will require the affirmative vote
of the holders of a majority of the combined BACs of Series I and Series II
voting together as a single class (i.e., at least 2,759,381 BACs in Fund I-II
must be voted in favor of each proposal). Accordingly, if the holders of a
majority of the BACs approve a proposal, such proposal will be deemed approved
and adopted by Fund I-II irrespective of whether the holders of a majority of
the BACs in either Series I or Series II failed to vote for such proposal.
At November 8, 1996, CAPREIT held 1,000 BACs in Series I of Fund I-II,
1,000 BACs in Series II of Fund I-II, and 1,000 BACs in Fund III, all of which
BACs were acquired by CAPREIT on October 25, 1996, for structuring purposes in
connection with the Financing, in open-market purchases on the AMEX at a price
of $14.19 per BAC, $13.75 per BAC and $14.50 per BAC, respectively. Pursuant to
the terms of the Merger
4
<PAGE>
Agreements, upon consummation of the Mergers, all BACs held by CAPREIT will be
converted in to limited partner interests in the applicable Funds and no
consideration will be paid therefor.
CAPREIT intends to vote all of the BACs held by it (constituting less than
.01% of the outstanding BACs in each Fund) 'FOR' approval of each of the
proposals to be voted upon by BAC Holders.
The Funds have been advised by Dominium that, in furtherance of its support
for the improved terms of the Mergers and in accordance with its agreement with
CAPREIT described below under 'Recent Developments,' it will vote the 100 BACs
held by it in each of Fund I-II, Series I, Fund I-II, Series II, and Fund III
(in each case, constituting less than .01% of the outstanding BACs in such
Series or Fund), 'FOR' approval of each of the proposals to be voted upon by BAC
Holders.
AMENDMENTS TO THE MERGER AGREEMENTS
On November 7, 1996, the parties to each of the Merger Agreements entered
into an amendment to such Merger Agreement to provide for, among other things,
(i) the increase in the gross consideration being offered by CAPREIT to the BAC
Holders in the Mergers to $15.60 per BAC in the case of Fund I-II, Series I,
$15.29 per BAC in the case of Fund I-II, Series II, and $15.92 per BAC in the
case of Fund III; (ii) a decrease in the amount of consideration payable to each
General Partner for its General Partner interest in its respective Fund from
$500,000 to $400,000; (iii) a decrease in the aggregate amount of consideration
payable to CRI for its Accrued Servicing Fees from $1,950,000 to $1,650,000; and
(iv) an extension of the Termination Date to February 28, 1997 from December 31,
1996 and in connection therewith, an amendment to the condition to each Merger
Partnership's obligation to consummate the Mergers and the related transactions,
which condition must be satisfied or waived, to provide that the aggregate
amount of Available Cash at Closing shall not be less than, from January 1, 1997
through January 31, 1997, $2,322,720, in the case of Fund I-II, Series I,
$3,448,200, in the case of Fund I-II, Series II and $5,279,080, in the case of
Fund III, and from February 1, 1997 through February 28, 1997, $2,312,220, in
the case of Fund I-II, Series I, $3,433,200, in the case of Fund I-II, Series II
and $5,254,580, in the case of Fund III.
The foregoing description of the amendments to the Merger Agreements is a
summary only and is qualified in its entirety by reference to the full text of
such amendments to the Merger Agreements, copies of which are attached to this
Supplement as Exhibits 1 and 2, respectively, and incorporated herein by
reference.
THE TRANSACTION PROPOSALS
In order to include the above-described Amendments to the Merger
Agreements, each of the Merger Proposal and the New Partner Proposal, as
originally set forth in the Proxy Statement and accompanying Notice, is hereby
amended to provide as follows:
1. 'Merger Proposal. A proposal to approve and adopt (a) with respect to
Fund I-II, the Fourth Amended and Restated Agreement and Plan of Merger, dated
as of August 21, 1996, as amended by Amendment No. 1 thereto dated November 7,
1996, among Fund I-II, CRITEF Associates Limited Partnership, a Delaware limited
partnership which is the general partner of Fund I-II , and Watermark Partners,
L.P., a Delaware limited partnership, and others, which provides for the merger
of Merger Partnership into Fund I-II, and (b) with respect to Fund III, the
Fourth Amended and Restated Agreement and Plan of Merger, dated as of August 21,
1996, as amended by Amendment No. 1 thereto dated November 7, 1996, among Fund
III, CRITEF III Associates Limited Partnership, a Delaware limited partnership
which is the general partner of Fund III , and Watermark III Partners, L.P., a
Delaware limited partnership, and others, which provides for the merger of
Merger Partnership III into Fund III and, in each case, certain amendments to
the respective Agreement of Limited Partnership of each of the Funds to
authorize expressly the foregoing;' and
2. 'New Partner Proposal. A proposal to approve, with respect to each
Fund, (a) the sale of the 1.01% general partner interest held by such Fund's
General Partner to a newly-formed, wholly-owned subsidiary of CAPREIT, in
exchange for $400,000 each, and the substitution of CAPREIT GP as general
partner of such Fund in its stead, and (b) the issuance of limited partner
interests in such Fund to CAPREIT or its designees in exchange for the
contribution to such Fund of real property or other assets, which sale of the
general partner
5
<PAGE>
interests and issuance of limited partner interests shall occur concurrently
with the Mergers, and certain amendments to the respective Partnership
Agreements of each of the Funds to authorize expressly the foregoing.' As a
result of the sale of the general partner interest in each Fund by the
respective General Partner and the substitution of CAPREIT GP as general partner
in each of the Funds, the General Partners will cease to have any partnership
interest in the Funds.
RECENT DEVELOPMENTS
The following updates and supplements the sections of the Proxy Statement
captioned 'Background of the Mergers' and 'Litigation' with respect to certain
developments in connection with the Mergers or the Funds since the date of the
Proxy Statement through the date of this Supplement:
The Funds commenced mailing their Proxy Statement and related proxy
materials to BAC Holders in connection with their solicitation of BAC Holder
approval for the Transactions on September 23, 1996.
On September 27, 1996, Dominium sent a letter to all BAC Holders voicing
its opposition to the Mergers. Thereafter, on September 30 and October 1, 1996,
Dominium filed its preliminary proxy materials with the Commission and publicly
announced that it would be soliciting proxies against the Mergers.
In response to Dominium's September 27 letter, on October 3, 1996, the
General Partners, CRI, the Funds and CAPREIT filed an action against Dominium
and its principals in the United States District Court for the Southern District
of New York (Civ. Action No. 96 CIV 7684) alleging, among other things, that
Dominium and its principals were engaged in improper proxy solicitations and had
made false and misleading statements in violation of Federal securities laws.
The plaintiffs sought, among other things, an order barring the defendants from
soliciting BAC Holders prior to providing them with a proxy statement and
requiring Dominium to issue corrective disclosure with respect to, among other
things, its implication that it was intending to propose an alternative offer to
the BAC Holders. On October 11, 1996, the U.S. District Court conducted a
hearing on plaintiffs' motion for a preliminary injunction, and on October 15,
1996, issued its opinion denying the plaintiffs' motion on the grounds that it
found no irreparable harm.
On September 27, 1996, the same day it mailed its first letter to BAC
Holders, Dominium filed an action in Federal District Court for the District of
Minnesota (Civ. Action No. 4-96 CIV 956) against Dockser, Willoughby, CRI, the
Funds and the General Partners alleging that the Proxy Statement was false and
misleading in violation of Federal securities laws. Dominium also moved for
expedited discovery and a briefing order for a preliminary injunction motion
(which it never made). The defendants in the Minnesota action denied the
allegations and asserted various defenses, including, among others, that
Dominium's claims were barred by the settlement of the Zakin and Wingard class
action litigations relating to the Mergers. The defendants also moved to
disqualify Faegre & Benson, Dominium's principal law firm, on the grounds that
Faegre & Benson had a conflict of interest by virtue of its concurrent
representation of Dominium and various entities which are participants in the
Financing for the Mergers.
On October 8, 1996, the defendants in the Minnesota action filed with the
Delaware Court of Chancery an Emergency Motion to Enforce the Court's Final
Order to enjoin Dominium from violating the Final Order entered in the Zakin and
Wingard Actions and for civil contempt on the grounds that Dominium was a class
member in the Zakin and Wingard Actions and had not opposed or opted out of the
proposed class settlement and was therefore bound by the settlement of those
actions.
On October 17, 1996, the Minnesota court issued a decision in the Minnesota
action denying Dominium's motion for expedited discovery, finding, among other
things, that Dominium already had virtually all of the information it sought and
that Dominium was unlikely to prevail in its argument that its claims were not
barred by the settlement reached in the Zakin and Wingard Actions.
On October 17, 1996, counsel for CAPREIT advised the Delaware court that,
in light of the ruling in Minnesota, it no longer sought any relief from the
Delaware court.
On October 16, 1996, Dominium mailed its definitive proxy materials to BAC
Holders. Dominium's proxy materials confirmed that Dominium was not making, and
had no current plans to make, a superior proposal, or indeed any proposal, for
an acquisition of the Funds. In its proxy materials, Dominium stated that it was
soliciting
6
<PAGE>
proxies in opposition to the Mergers because, among other things, it believed
that the consideration then being offered to the BAC Holders in the Mergers did
not maximize BAC Holder values and that it believed there might be alternatives
to the Mergers in which BAC Holders might realize higher values.
On October 28, 1996, the General Partners postponed the Special Meetings,
which had been scheduled to be held on October 29, 1996, until November 8, 1996,
in an effort to afford BAC Holders the opportunity to resolve any confusion
resulting from the competing claims of the General Partners and Dominium and to
provide additional time for BAC Holders to vote their BACs. As of the close of
business on November 6, 1996, the day prior to the Funds' public announcement of
the increase in the Merger consideration, Fund I-II had received proxies from
the holders of approximately 62% of the outstanding BACs in such Fund eligible
to vote, approximately 69.7% of which proxies (representing approximately 43% of
the outstanding BACs of such Fund) had been voted in favor of the Merger, and
Fund III had received proxies from holders of approximately 63% of the
outstanding BACs in such Fund eligible to vote, approximately 71.8% of which
proxies (representing approximately 45% of the outstanding BACs of such Fund)
had been voted in favor of the Merger.
Following the postponement of the Special Meetings, CAPREIT and the General
Partners discussed the possibility of CAPREIT's increasing the consideration
that it was offering to BAC Holders in the Mergers. At this time, CAPREIT also
approached Dominium in an attempt to settle its differences with Dominium and
the outstanding litigations between them and to solicit Dominium's support for
the improved Merger terms it was considering. Over the course of several days,
CAPREIT negotiated with the General Partners and Dominium in an effort to reach
an agreement on improved Merger terms and on November 6, 1996, CAPREIT agreed
with the General Partners to increase the aggregate consideration that it was
offering BAC Holders in the Mergers by approximately $6.5 million (or
approximately $0.60 per BAC) and the General Partners and CRI agreed to reduce
by an aggregate of $500,000 the amounts to be paid the General Partners and CRI
upon the Mergers.
Dominium advised CAPREIT that, in its view, the agreed upon increased
Merger consideration maximized BAC Holder values, and that it would endorse and
support the Mergers if the Merger Agreements were amended to incorporate the
increased consideration.
In connection with CAPREIT's agreement to increase its Merger offer and the
execution of the Amendment to the Merger Agreements, on November 6, 1996,
CAPREIT and Dominium entered into a settlement agreement pursuant to which,
among other things, (i) each of the parties and certain of their affiliates and
the Funds agreed to settle the various lawsuits among them and to release all
claims against the other arising from or relating to such actions, the Mergers
and the related transactions and their respective proxy solicitation efforts;
(ii) CAPREIT agreed to pay Dominium $500,000 upon signing of the Agreement and
to pay $2.5 million into escrow to be held in escrow for a period of up to two
years and to be paid to Dominium upon BAC Holder approval of the Mergers or if
CAPREIT otherwise acquires control of the Funds, in consideration for Dominium's
efforts in negotiating an increase in the consideration being offered by CAPREIT
in the Mergers and the costs Dominium incurred in attempting to make a superior
offer and soliciting proxies in opposition to the Mergers; and (iii) Dominium
agreed to support the Mergers and related transactions, cease its solicitation
of proxies in opposition to the Mergers, and assist CAPREIT and the Funds in
soliciting proxies in favor of the Mergers.
7
<PAGE>
FINANCING
The amount required to pay the increase in the Redemption Prices and
related additional costs and expenses, including additional solicitation costs,
is expected to be approximately $6.8 million. The funds required to pay such
amount, as well as the amounts to be paid to Dominium pursuant to its settlement
agreement with CAPREIT, will be provided by an additional equity contribution by
CAPREIT.
* * * *
THE VOTE OF EVERY BAC HOLDER IS IMPORTANT. THE GENERAL PARTNERS URGE EACH
BAC HOLDER TO VOTE 'FOR' THE TRANSACTION PROPOSALS. ALL BAC HOLDERS ARE URGED TO
VOTE BY COMPLETING, SIGNING AND RETURNING THE ENCLOSED GOLD PROXY CARD PROMPTLY.
ANY BAC HOLDER WHO HAS NOT PREVIOUSLY LAST VOTED 'FOR' THE MERGER PROPOSAL AND
THE NEW PARTNER PROPOSAL ON A WHITE PROXY CARD OR A BLUE PROXY CARD PREVIOUSLY
SENT TO HIM OR HER, MUST VOTE AGAIN ON THE ENCLOSED GOLD PROXY CARD FOR HIS OR
HER VOTE TO COUNT AS A VOTE 'FOR' THE MERGER. ANY BAC HOLDER WHO IS UNSURE AS TO
HIS OR HER LAST PREVIOUS VOTE IS URGED TO VOTE AGAIN ON THE ENCLOSED GOLD PROXY
CARD.
THE GENERAL PARTNERS APPRECIATE YOUR SUPPORT AND COOPERATION.
If you have any questions or need assistance in voting your BACs, please
contact MacKenzie Partners, Inc. at the toll-free number listed below:
MACKENZIE PARTNERS
156 Fifth Avenue
New York, NY 10010
(212) 929-5500 (call collect)
or
CALL TOLL FREE (800) 322-2885
8
<PAGE>
EXHIBIT 1
This AMENDMENT NO. 1 made as of the 7th day of November, 1996, among
WATERMARK PARTNERS, L.P., a Delaware limited partnership, CAPITAL REALTY
INVESTORS TAX EXEMPT FUND LIMITED PARTNERSHIP, a Delaware limited partnership
('CRITEF'), CRITEF ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited
partnership, and the other persons listed on the signature page hereof.
WHEREAS, the parties hereto entered into the Fourth Amended and Restated
Agreement and Plan of Merger, dated as of August 21, 1996 (the 'Merger
Agreement');
WHEREAS, the parties have agreed to increase the redemption prices payable
to the holders of Beneficial Assignee Certificates issued by CRITEF, and in
connection therewith, the parties deem it necessary and appropriate to amend
certain provisions of the Merger Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
1. Section 2.1.1(a) of the Merger Agreement is hereby amended and restated
as follows:
'2.1.1 (a) Each Beneficial Assignee Certificate ('BAC') (other than
any BACs held by CAPREIT or its affiliates or the Partnership) which
represents the assignment of one unit of beneficial interest of the limited
partnership interest in the Partnership issued to the Assignor Limited
Partner, together with the underlying limited partner interest, shall be
canceled and extinguished and converted into and represent the right to
receive an amount per BAC in cash equal to $15.60, in the case of Series I,
and $15.29, in the case of Series II, subject to adjustment, in each case,
as set forth in subsection (b) or (c) below (the 'Merger Consideration').'
2. Section 2.3 of the Merger Agreement is hereby amended and restated as
follows:
'2.3 Purchase of the General Partner Interest. Concurrently with the
Effective Time, the Partnership GP shall sell, convey and transfer to a
newly-formed, wholly-owned subsidiary of CAPREIT (which shall thereupon be
the substitute general partner, with the Partnership GP withdrawing as
general partner), for the sum of $400,000, in cash, the 1.01% general
partner interest in the Partnership held by it. The parties acknowledge
that the obligation of the Partnership GP to transfer such general partner
interest and the withdrawal and substitution of the general partner
pursuant to this Section 2.3 are subject to the closing of the Merger, and
shall not be effective if the Merger shall not occur.'
3. Section 7.12(a) of the Merger Agreement is hereby amended and restated
as follows:
'7.12 Acquisition. (a) On the Closing Date, C.R.I., Inc. ('CRI')
shall sell, assign and transfer to a designee of CAPREIT its rights under
the agreement pursuant to which the mortgage servicing and administrative
fees are payable to CRI by the owners of the Mortgaged Properties,
including the right to all fees thereunder for a price of $432,960, in the
case of Series I, and, $652,245, in the case of Series II, in cash, payable
to CRI for servicing and administrative fees accrued through June 30,
1995.'
4. Section 8.3.13 shall be amended and restated as follows:
'8.3.13 The amount of, Available Cash shall not be less than, (i) from
the date hereof through November 30, 1996, $2,354,240, in the case of
Series I, and $3,494,400 in the case of Series II, (ii) from December 1,
1996 through December 31, 1996, $2,333,220, in the case of Series I, and
$3,463,200, the case of Series II, (iii) from January 1, 1997 through
January 31, 1997, $2,322,720, in the case of Series I, and $3,448,200, the
case of Series II, and (iv) from February 1, 1997 through February 28,
1997, $2,312,220, in the case of Series I, and $3,433,200, the case of
Series II.
5. The definition of Termination Date set forth in Section 10.2 shall be
February 28, 1997.
6. Except as specifically amended hereby, each and every other term of the
Merger Agreement shall remain in full force and effect in accordance with its
terms.
7. This agreement may be executed in any number of counterparts all of
which taken together shall constitute one and the same instrument, and each
party may execute this agreement by signing any such counterpart.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to
be duly executed as of the date first above written.
WATERMARK PARTNERS, L.P.
By: Capital Apartment Properties, Inc.,
its general partner
By: /s/ Richard L. Kadish
Name: Richard L. Kadish
Title: President
CAPITAL REALTY INVESTORS TAX EXEMPT FUND LIMITED PARTNERSHIP
By: CRITEF Associates Limited Partnership,
its general partner
By: C.R.I., Inc., its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
CRITEF ASSOCIATES LIMITED PARTNERSHIP
By: C.R.I., Inc., its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
C.R.I., INC.
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
WILLIAM B. DOCKSER
By: /s/ William B. Dockser
H. WILLIAM WILLOUGHBY
By: /s/ H. William Willoughby
CAPITAL APARTMENT PROPERTIES, INC.
By: /s/ Richard L. Kadish
Name: Richard L. Kadish
Title: President
CRICO OF FOUNTAIN PLACE LIMITED PARTNERSHIP
By: CRICO of Fountain Place, Inc., its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
CRICO OF ROYAL OAKS LIMITED PARTNERSHIP
By: CRICO of Royal Oaks, Inc.,
its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
10
<PAGE>
CRICO OF TRAILWAY POND I LIMITED PARTNERSHIP
By: CRICO of Trailway Pond I, Inc., its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
CRICO OF VALLEY CREEK I LIMITED PARTNERSHIP
By: CRICO of Valley Creek I, Inc.,
its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
CRICO OF WHITE BEAR WOODS I LIMITED PARTNERSHIP
By: CRICO of White Bear Woods I, Inc.,
its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
CRICO OF ETHAN'S I LIMITED PARTNERSHIP
By: CRICO of Ethan's I, Inc.,
its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
CRICO OF JAMES STREET CROSSING LIMITED PARTNERSHIP
By: CRICO of James Steet, Inc.,
its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
CRICO OF TRAILWAY POND II LIMITED PARTNERSHIP
By: CRICO of Trailway Pond II, Inc.,
its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
11
<PAGE>
EXHIBIT 2
This AMENDMENT NO. 1 made as of the 7th day of November, 1996, among
WATERMARK III PARTNERS, L.P., a Delaware limited partnership, CAPITAL REALTY
INVESTORS TAX EXEMPT FUND III LIMITED PARTNERSHIP, a Delaware limited
partnership ('CRITEF III'), CRITEF III ASSOCIATES LIMITED PARTNERSHIP, a
Delaware limited partnership, and the other persons listed on the signature page
hereof.
WHEREAS, the parties hereto entered into the Fourth Amended and Restated
Agreement and Plan of Merger, dated as of August 21, 1996 (the 'Merger
Agreement');
WHEREAS, the parties have agreed to increase the redemption prices payable
to the holders of Beneficial Assignee Certificates issued by CRITEF, and in
connection therewith, the parties deem it necessary and appropriate to amend
certain provisions of the Merger Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
1. Section 2.1.1(a) of the Merger Agreement is hereby amended and restated
as follows:
'2.1.1 (a) Each Beneficial Assignee Certificate ('BAC') (other than
any BACs held by CAPREIT or its affiliates or the Partnership) which
represents the assignment of one unit of beneficial interest of the limited
partnership interest in the Partnership issued to the Assignor Limited
Partner, together with the underlying limited partner interest, shall be
canceled and extinguished and converted into and represent the right to
receive an amount per BAC in cash equal to $15.92, subject to adjustment as
set forth in subsection (b) or (c) below (the 'Merger Consideration').'
2. Section 2.3 of the Merger Agreement is hereby amended and restated as
follows:
'2.3 Purchase of the General Partner Interest. Concurrently with the
Effective Time, the Partnership GP shall sell, convey and transfer to a
newly-formed, wholly-owned subsidiary of CAPREIT (which shall thereupon be
the substitute general partner, with the Partnership GP withdrawing as
general partner), for the sum of $400,000 in cash, the 1.01% general
partner interest in the Partnership held by it. The parties acknowledge
that the obligation of the Partnership GP to transfer such general partner
interest and the withdrawal and substitution of the general partner
pursuant to this Section 2.3 are subject to the closing of the Merger, and
shall not be effective if the Merger shall not occur.'
3. Section 7.12(a) of the Merger Agreement is hereby amended and restated
as follows:
'7.12 Acquisition. (a) On the Closing Date, C.R.I., Inc. ('CRI')
shall sell, assign and transfer to a designee of CAPREIT its rights under
the agreement pursuant to which the mortgage servicing and administrative
fees are payable to CRI by the owners of the Mortgaged Properties,
including the right to all fees thereunder for a price of $564,795, in
cash, payable to CRI for servicing and administrative fees accrued through
June 30, 1995.'
4. Section 8.3.13 shall be amended and restated as follows:
'8.3.13 The amount of Available Cash shall not be less than, (i) from
the date hereof through November 30, 1996, $5,351,360, (ii) from December
1, 1996 through December 31, 1996, $5,303,580, (iii) from January 1, 1997
through January 31, 1997, $5,279,080, and (iv) from February 1, 1997
through February 28, 1997, $5,254,580.'
5. The definition of Termination Date set forth in Section 10.2 shall be
February 28, 1997.
6. Except as specifically amended hereby, each and every other term of the
Merger Agreement shall remain in full force and effect in accordance with its
terms.
7. This agreement may be executed in any number of counterparts all of
which taken together shall constitute one and the same instrument, and each
party may execute this agreement by signing any such counterpart.
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
WATERMARK III PARTNERS, L.P.
By: Capital Apartment Properties, Inc.,
its general partner
By: /s/ Richard L. Kadish
Name: Richard L. Kadish
Title: President
CAPITAL REALTY INVESTORS TAX EXEMPT FUND III LIMITED PARTNERSHIP
By: CRITEF III Associates Limited Partnership,
its general partner
By: C.R.I., Inc., its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
CRITEF III ASSOCIATES LIMITED PARTNERSHIP
By: C.R.I., Inc., its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
C.R.I., Inc.
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
WILLIAM B. DOCKSER
/s/ William B. Dockser
H. WILLIAM WILLOUGHBY
/s/ H. William Willoughby
CAPITAL APARTMENT PROPERTIES, INC.
By: /s/ Richard L. Kadish
Name: Richard L. Kadish
Title: President
GEARY COURTYARD ASSOCIATES
By: CRICO of Geary Courtyard, Inc.,
its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
CRICO OF ETHAN'S II LIMITED PARTNERSHIP
By: CRICO of Ethan's II, Inc., its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
CRICO OF REGENCY WOODS LIMITED PARTNERSHIP
By: CRICO of Regency Woods, Inc.,
its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
CRICO OF OCEAN WALK LIMITED PARTNERSHIP
By: CRICO of Ocean Walk, Inc.,
its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
13
<PAGE>
CRICO OF VALLEY CREEK II LIMITED PARTNERSHIP
By: CRICO of Valley Creek II, Inc., its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
CRICO OF WOODLANE PLACE LIMITED PARTNERSHIP
By: CRICO of Woodlane Place, Inc., its general partner
By: /s/ William B. Dockser
Name: William B. Dockser
Title: Chairman of the Board
14
<PAGE>
PROXY
/x/ PLEASE MARK YOUR VOTE AS IN CAPITAL REALTY INVESTORS TAX EXEMPT FUND
THIS EXAMPLE LIMITED PARTNERSHIP, SERIES I
The General Partner Recommends a Vote FOR
Proposals 1, 2 & 3
The undersigned hereby appoints William B. Dockser and H. William
Willoughby, each with the power to act alone and with full power of substitution
and revocation, to represent and vote, as specified on this Proxy, all
Beneficial Assignee Certificates ("BACs") of Capital Realty Investors Tax Exempt
Fund Limited Partnership ("Fund I-II"), Series I, which the undersigned is
entitled to vote at the Special Meeting of BAC Holders to be held at 1:00 p.m.,
local time, on November 27, 1996, at the Doubletree Hotel, 1750 Rockville Pike,
Rockville, Maryland 20852 and all adjournments and postponements thereof. The
undersigned revokes any previous proxies with respect to the matters covered by
this Proxy.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE JOINT PROXY STATEMENT OF
CAPITAL REALTY INVESTORS TAX EXEMPT FUND LIMITED PARTNERSHIP, SERIES I AND II,
AND CAPITAL REALTY INVESTORS TAX EXEMPT FUND III LIMITED PARTNERSHIP AND THE
SUPPLEMENT THERETO.
Change of address?
/x/ Check this box and insert new address below:
____________________________________________________________
For Against Abstain
1. MERGER PROPOSAL. Approve and adopt the Fourth / / / / / /
Amended and Restated Agreement and Plan of
Merger, dated as of August 21, 1996, as amended
(the "Merger Agreement"), among Fund I-II,
CRITEF Associates Limited Partnership,
Watermark Partners, L.P. and others, and any
amendments to the Agreement of Limited
Partnership of Fund I-II necessary to authorize
expressly the foregoing.
2. NEW PARTNERS PROPOSAL. Approve (a) the sale by / / / / / /
the current general partner of Fund I-II of its
general partner interest in Fund I-II to
CAPREIT GP, Inc., a wholly-owned subsidiary of
Capital Apartment Properties, Inc. ("CAPREIT"),
and (b) the issuance of limited partner
interests in Fund I-II to CAPREIT or its
designees in exchange for the contribution to
Fund I-II of real property or other assets, and
in each case, any amendments to the Agreement
of Limited Partnership of Fund I-II necessary
to authorize expressly the foregoing.
3. APPROVAL OF ADJOURNMENT OF THE SPECIAL MEETING / / / / / /
TO SOLICIT ADDITIONAL VOTES. Approve the
adjournment of the Special Meeting to solicit
additional votes in favor of Proposals 1 and 2.
The approval of the Merger Proposal is conditioned upon the approval of the
New Partners Proposal and the approval of the New Partners Proposal is
conditioned upon the approval of the Merger Proposal. If the BAC Holders in a
Fund approve both the Merger Proposal and the New Partners Proposal to be voted
upon by them, but the BAC Holders in the other Fund do not approve the similar
proposals with respect to such Fund to be voted upon by them, CAPREIT, in its
sole discretion, may elect to consummate the Merger with the Fund whose BAC
Holders have approved the proposals.
Please be sure to sign and date this Proxy in the box below.
____________ _____________________________ _____________________________
Date Stockholder sign above Co-Holder (if any) sign above
- --------------------------------------------------------------------------------
Detach above card, sign, date and mail in postage paid envelope provided.
THE BACS REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO CHOICE
IS SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3. THE PROXIES ARE
AUTHORIZED, IN THEIR DISCRETION, TO VOTE SUCH BACS UPON ANY OTHER BUSINESS THAT
MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
CAPITAL REALTY INVESTORS TAX EXEMPT FUND
LIMITED PARTNERSHIP, SERIES I
Note: Please sign as name appears herein. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardians, please give
full title as such. If a corporation, please sign in full corporate name by
authorized officer. If a partnership, please sign in partnership name by
authorized person.
THE GENERAL PARTNER RECOMMENDS THAT YOU
SIGN, DATE AND MAIL THIS PROXY TODAY
<PAGE>
PROXY
/x/ PLEASE MARK YOUR VOTE AS IN CAPITAL REALTY INVESTORS TAX EXEMPT FUND
THIS EXAMPLE LIMITED PARTNERSHIP, SERIES II
The General Partner Recommends a Vote FOR
Proposals 1, 2 & 3
The undersigned hereby appoints William B. Dockser and H. William
Willoughby, each with the power to act alone and with full power of substitution
and revocation, to represent and vote, as specified on this Proxy, all
Beneficial Assignee Certificates ("BACs") of Capital Realty Investors Tax Exempt
Fund Limited Partnership ("Fund I-II"), Series II, which the undersigned is
entitled to vote at the Special Meeting of BAC Holders to be held at 1:00 p.m.,
local time, on November 27, 1996, at the Doubletree Hotel, 1750 Rockville Pike,
Rockville, Maryland 20852 and all adjournments and postponements thereof. The
undersigned revokes any previous proxies with respect to the matters covered by
this Proxy.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE JOINT PROXY STATEMENT OF
CAPITAL REALTY INVESTORS TAX EXEMPT FUND LIMITED PARTNERSHIP, SERIES I AND II,
AND CAPITAL REALTY INVESTORS TAX EXEMPT FUND III LIMITED PARTNERSHIP AND THE
SUPPLEMENT THERETO.
Change of address?
/x/ Check this box and insert new address below:
____________________________________________________________
For Against Abstain
1. MERGER PROPOSAL. Approve and adopt the Fourth / / / / / /
Amended and Restated Agreement and Plan of
Merger, dated as of August 21, 1996, as amended
(the "Merger Agreement"), among Fund I-II,
CRITEF Associates Limited Partnership,
Watermark Partners, L.P. and others, and any
amendments to the Agreement of Limited
Partnership of Fund I-II necessary to authorize
expressly the foregoing.
2. NEW PARTNERS PROPOSAL. Approve (a) the sale by / / / / / /
the current general partner of Fund I-II of its
general partner interest in Fund I-II to
CAPREIT GP, Inc., a wholly-owned subsidiary of
Capital Apartment Properties, Inc. ("CAPREIT"),
and (b) the issuance of limited partner
interests in Fund I-II to CAPREIT or its
designees in exchange for the contribution to
Fund I-II of real property or other assets, and
in each case, any amendments to the Agreement
of Limited Partnership of Fund I-II necessary
to authorize expressly the foregoing.
3. APPROVAL OF ADJOURNMENT OF THE SPECIAL MEETING / / / / / /
TO SOLICIT ADDITIONAL VOTES. Approve the
adjournment of the Special Meeting to solicit
additional votes in favor of Proposals 1 and 2.
The approval of the Merger Proposal is conditioned upon the approval of the
New Partners Proposal and the approval of the New Partners Proposal is
conditioned upon the approval of the Merger Proposal. If the BAC Holders in a
Fund approve each of the Merger and the New Partners proposals to be voted upon
by them, but the BAC Holders in the other Fund do not approve the similar
proposals with respect to such Fund to be voted upon by them, CAPREIT, in its
sole discretion, may elect to consummate the Merger with the Fund whose BAC
Holders have approved the proposals.
Please be sure to sign and date this Proxy in the box below.
____________ _____________________________ _____________________________
Date Stockholder sign above Co-Holder (if any) sign above
- --------------------------------------------------------------------------------
Detach above card, sign, date and mail in postage paid envelope provided.
THE BACS REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO CHOICE
IS SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3. THE PROXIES ARE
AUTHORIZED, IN THEIR DISCRETION, TO VOTE SUCH BACS UPON ANY OTHER BUSINESS THAT
MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
CAPITAL REALTY INVESTORS TAX EXEMPT FUND
LIMITED PARTNERSHIP, SERIES II
Note: Please sign as name appears herein. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardians, please give
full title as such. If a corporation, please sign in full corporate name by
authorized officer. If a partnership, please sign in partnership name by
authorized person.
THE GENERAL PARTNER RECOMMENDS THAT YOU
SIGN, DATE AND MAIL THIS PROXY TODAY
<PAGE>
PROXY
/x/ PLEASE MARK YOUR VOTE AS CAPITAL REALTY INVESTORS TAX EXEMPT FUND III
IN THIS EXAMPLE LIMITED PARTNERSHIP
The General Partner Recommends a Vote FOR
Proposals 1, 2 & 3
The undersigned hereby appoints William B. Dockser and H. William
Willoughby, each with the power to act alone and with full power of substitution
and revocation, to represent and vote, as specified on this Proxy, all
Beneficial Assignee Certificates ("BACs") of Capital Realty Investors Tax Exempt
Fund III Limited Partnership ("Fund III"), which the undersigned is entitled to
vote at the Special Meeting of BAC Holders to be held at 2:00 p.m., local time,
on November 27, 1996, at the Doubletree Hotel, 1750 Rockville Pike, Rockville,
Maryland 20852 and all adjournments and postponements thereof. The undersigned
revokes any previous proxies with respect to the matters covered by this Proxy.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE JOINT PROXY STATEMENT OF
CAPITAL REALTY INVESTORS TAX EXEMPT FUND LIMITED PARTNERSHIP, SERIES I AND II,
AND CAPITAL REALTY INVESTORS TAX EXEMPT FUND III LIMITED PARTNERSHIP AND THE
SUPPLEMENT THERETO.
Change of address?
/x/ Check this box and insert new address below:
____________________________________________________________
For Against Abstain
1. MERGER PROPOSAL. Approve and adopt the Fourth / / / / / /
Amended and Restated Agreement and Plan of
Merger, dated as of August 21, 1996, as amended
(the "Merger Agreement"), among Fund III,
CRITEF III Associates Limited Partnership,
Watermark III Partners, L.P. and others, and any
amendments to the Agreement of Limited
Partnership of Fund III necessary to authorize
expressly the foregoing.
2. NEW PARTNERS PROPOSAL. Approve (a) the sale by / / / / / /
the current general partner of Fund III of its
general partner interest in Fund III to
CAPREIT GP, Inc., a wholly-owned subsidiary of
Capital Apartment Properties, Inc. ("CAPREIT"),
and (b) the issuance of limited partner
interests in Fund III to CAPREIT or its
designees in exchange for the contribution to
the Fund of real property or other assets, and
in each case, any amendments to the Agreement
of Limited Partnership of Fund III necessary
to authorize expressly the foregoing.
3. APPROVAL OF ADJOURNMENT OF THE SPECIAL MEETING / / / / / /
TO SOLICIT ADDITIONAL VOTES. Approve the
adjournment of the Special Meeting to solicit
additional votes in favor of Proposals 1 and 2.
The approval of the Merger Proposal is conditioned upon the approval of the
New Partners Proposal and the approval of the New Partners Proposal is
conditioned upon the approval of the Merger Proposal. If the BAC Holders in a
Fund approve both the Merger Proposal and the New Partners Proposal to be voted
upon by them, but the BAC Holders in the other Fund do not approve the similar
proposals with respect to such Fund to be voted upon by them, CAPREIT, in its
sole discretion, may elect to consummate the Merger with the Fund whose BAC
Holders have approved the proposals.
Please be sure to sign and date this Proxy in the box below.
____________ _____________________________ _____________________________
Date Stockholder sign above Co-Holder (if any) sign above
- --------------------------------------------------------------------------------
Detach above card, sign, date and mail in postage paid envelope provided.
THE BACS REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO CHOICE
IS SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3. THE PROXIES ARE
AUTHORIZED, IN THEIR DISCRETION, TO VOTE SUCH BACS UPON ANY OTHER BUSINESS THAT
MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
CAPITAL REALTY INVESTORS TAX EXEMPT FUND
LIMITED PARTNERSHIP, SERIES III
Note: Please sign as name appears herein. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardians, please give
full title as such. If a corporation, please sign in full corporate name by
authorized officer. If a partnership, please sign in partnership name by
authorized person.
THE GENERAL PARTNER RECOMMENDS THAT YOU
SIGN, DATE AND MAIL THIS PROXY TODAY
