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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
---------------
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
(Name of Subject Company)
AQUARIUS ACQUISITION, L.P.
(Bidder)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
---------------
AQUARIUS ACQUISITION, L.P.
C/O NOMURA ASSET CAPITAL CORPORATION
TWO WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10005
(212) 667-2250
(Name, Address, and Telephone Numbers of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
---------------
Copy to:
RICHARD J. SABELLA, ESQ.
CAHILL GORDON & REINDEL
80 PINE STREET
NEW YORK, NEW YORK 10005
(212) 701-3000
CALCULATION OF FILING FEE
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TRANSACTION AMOUNT OF
VALUATION* FILING FEE
- ------------- ------------
$23,364,000 $4,673
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* The maximum number of limited partnership units which may be purchased
pursuant to the Offer is 328. Any remaining tendered units would remain
owned by the tendering limited partners but be pledged to secure a loan from
the Bidder. The maximum aggregate consideration to be paid upon consummation
of the Offer would equal 328 Units (the maximum number of Units which may be
purchased upon consummation of the Offer) multiplied by the $36,000 purchase
price per unit. The remainder of the transaction value represents the
maximum amount to be paid out in the form of loans in respect of the
remaining 321 Units which may be transferred to the Bidder one year and one
day from the date of consummation of the Offer in payment of such loans.
[ ] 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:$4,673 Filing Party:AQUARIUS ACQUISITION, L.P.
Form or Registration No.:SCHEDULE 14D-1 Date Filed:FEBRUARY 1, 1995
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<PAGE>
This Amendment No. 2 amends and supplements the Tender Offer Statement on
Schedule 14D-1 dated February 1, 1995, as amended, of Aquarius Acquisition,
L.P., a Delaware limited partnership (the "Purchaser"), with respect to the
offer by the Purchaser to purchase outstanding units in Springhill Lake
Investors Limited Partnership, a Maryland limited partnership (the
"Partnership"), upon the terms and subject to the conditions of the Offer to
Purchase, dated February 1, 1995 (including the annexes thereto, the "Offer to
Purchase") and the related Letter of Transmittal (which together constitute the
"Offer"). Capitalized terms used herein shall have the definitions set forth in
the Offer to Purchase as amended and supplemented unless otherwise provided
herein.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
AND
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
Item 3 and Item 7 are hereby amended and supplemented as follows:
On February 7, 1995, Lerner, on his own behalf and on behalf of the
Operating Partnerships, and two Limited Partners, on their behalf and on the
behalf of the Partnership, filed a lawsuit in the Circuit Court for Montgomery
County, Maryland alleging that Three Winthrop breached its fiduciary obligations
by taking action to terminate the Lerner Agreement and to appoint Winthrop
Management as the new managing agent of the Project. Three Winthrop has not yet
responded to this lawsuit.
On February 28, 1995, Lerner moved for preliminary injunction seeking to
enjoin Three Winthrop from replacing Lerner as managing agent of the Project
with an affiliate.
On February 14, 1995, the Circuit Court for Montgomery County, Maryland
issued an order ruling in favor of Three Winthrop, as managing general partner
of the Partnership and as general partner of the Operating Partnership, in its
request to declare the Lerner Agreement terminable by its terms as of January
31, 1995. On February 22, 1995, Three Winthrop made a motion to make explicit
the consequences of such order.
On February 28, 1995, Three Winthrop filed an answer to Lerner's
complaint for money damages of $50,000 denying the substance of the allegations.
ITEM 10. ADDITIONAL INFORMATION.
Item 10 is hereby amended and supplemented as follows:
On February 27, 1995, a Limited Partner filed a lawsuit against Three
Winthrop, NACC and the Purchaser in the United States District Court for the
District of Maryland, on its behalf and derivatively on behalf of the
Partnership, alleging that Three Winthrop is in violation of Rule 13e-3 and
that Three Winthrop has breached its fiduciary duty to the Limited Partners.
A hearing has been scheduled for March 7, 1995. On February 27, 1995,
Greenbelt made a motion in the United States District Court for the District
of Maryland to intervene as plaintiff in the above action. Three Winthrop,
NACC and the Purchaser have not yet responded to these lawsuits.
The Expiration Date has been extended to 5:00 P.M., New York Time, on
March 14, 1995, and as of February 28, 1995 27 Units were tendered.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 is hereby amended and supplemented as follows:
(c)(5) Order Granting Motion for Partial Summary Judgment in the case
styled Three Winthrop Properties, Inc. v. Lerner Corporation, Case No.
129192-V (Cir. Ct. Montgomery Cty., Md.).
(c)(6) Complaint for Breach of Fiduciary Duty in the case styled
Montgomery, et al. v. Three Winthrop Properties, Inc., Case No. 132222 (Cir.
Ct. Montgomery Cty., Md.).
(c)(7) Complaint for Failure to Disclose under Rule 13e-3 and Breach of
Fiduciary Duty in the case styled LER 8, et al. v. Three Winthrop Properties,
Inc., et al., Case No. DKC 95-555 (D. Md.).
(c)(8) Motion of Greenbelt Residential Limited Partnership to Intervene in
the case styled LER 8, et al. v. Three Winthrop Properties, Inc., et al. Case
No. DKC 95-555 (D. Md.).
1
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SIGNATURES
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.
Dated: March 1, 1995
AQUARIUS ACQUISITION, L.P.
By: Partnership Acquisition Trust I,
its General Partner
By: WILMINGTON TRUST COMPANY,
as Trustee and not in its individual capacity
By: /s/ David A. Vanaskey, Jr.
---------------------------------
Name: David A. Vanaskey, Jr.
Title: Senior Financial Services Officer
2
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE
EXHIBIT DESCRIPTION NUMBER
- ----------- ----------- ----------
<S> <C> <C>
*(a)(1) Offer to Purchase dated February 1, 1995
*(a)(2) Letter of Transmittal
*(a)(3) Letter to Limited Partners dated February 1, 1995
*(a)(4) Press release dated February 1, 1995
*(a)(5) Letter to Limited Partners dated February 27, 1995
*(a)(6) Press Release dated February 27, 1995
*(b)(1) Form of Acquisition Loan Agreement between Nomura Asset Capital Corporation
and the Purchaser
*(b)(2) Form of Pledge and Security Agreement between Nomura Asset Capital
Corporation and the Purchaser
*(c)(1) Greenbelt Residential Limited Partnership Consent Solicitation Statement
dated January 19, 1995 and related solicitation materials
*(c)(2) Complaint to Enforce Contract in the case styled Three Winthrop Properties,
Inc. v. Lerner Corporation, Case No. 129192-V (Cir. Ct. Montgomery Cty.,
Md.), dated Nov. 17, 1994
*(c)(3) Motion for Partial Summary Judgment in the case styled Three Winthrop
Properties, Inc. v. Lerner Corporation, Case No. 129192-V (Cir. Ct.
Montgomery Cty., Md.)
*(c)(4) Complaint For Money Damages, An Accounting And Other Relief in the case
styled Theodore N. Lerner v. Three Winthrop Properties, Inc., (D. Md. 1994),
filed Dec. 27, 1994
(c)(5) Order Granting Motion for Partial Summary Judgment in the case styled Three
Winthrop Properties, Inc. v. Lerner Corporation, Case No. 129192-V (Cir. Ct.
Montgomery Cty., Md.)
(c)(6) Complaint for Breach of Fiduciary Duty in the case styled Montgomery, et al.
v. Three Winthrop Properties, Inc., Case No. 132222 (Cir. Ct. Montgomery
Cty., Md.)
(c)(7) Complaint for Failure to Disclose under Rule 13e-3 and Breach of Fiduciary
Date in the case styled LER 8, et al. v. Three Winthrop Properties, Inc., et
al., Case No. DICC 95-555 (D. Md.).
(c)(8) Motion of Greenbelt Residential Limited Partnership to Intervene in the case
styled LER 8, et al. v. Three Winthrop Properties, Inc., et al., Case No.
DICC 95-555 (D. Md.).
<FN>
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*Previously filed.
</TABLE>
<PAGE>
EXHIBIT (C)(5)
IN THE CIRCUIT COURT FOR MONTGOMERY COUNTY, MARYLAND
THREE WINTHROP PROPERTIES, INC.
Plaintiff
vs. Case No. 129192-V
LERNER CORPORATION
Defandant
ORDER
The above matter having come before the Court on the Motion of the
Plaintiff Three Winthrop Properties, Inc. for Summary Judgment as to Count I
and it appearing that good cause has been shown, it is by the Court this 14th
day of February, 1995,
ORDERED that the Motion be and the same is hereby granted, and it is
further,
ORDERED that the Court declares that Paragraph 14(b) of the Management and
Leasing Agreement is unambiguous and means that Three Winthrop Properties,
Inc. can terminate the agreement as of January 31, 1995, provided it gave
ninety (90) days notice of its intent prior thereto, and it is further,
ORDERED that the Notice of such intent given to Lerner Corporation October
17, 1994, was adequate and did satisfy that notice requirement, and it is
further,
ORDERED that the Court expressly determines that there is no just reason
for delay and directs entry of final judgment as to Count I pursuant to Rule
2-602(b).
/s/ Michael D. Mason
JUDGE, CIRCUIT COURT FOR
MONTGOMERY COUNTY, MARYLAND
Michael D. Mason
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<PAGE>
COPIES TO:
Albert D. Brault, Esq.
Brault, Graham, Scott & Brault
101 S. Washington Street
Rockville, MD 2850
Stephen M. Sacks, Esq.
George E. Covucci, Esq.
Peter G. Neiman, Esq.
Arnold & Porter
1200 New Hampshire Avenue, N.W.
Washington, D.C., 20036
Seth D. Greenstein, Esq.
McDermott, Will & Emery
1850 K Street, N.W., Suite 500
Washington, D.C., 20006
John J. Tumilty, Esq.
Cooley, Manion, Moore & Jones, P.C.
21 Custom House Street
Boston, MA 02110
<PAGE>
EXHIBIT (C)(6)
IN THE CIRCUIT COURT FOR MONTGOMERY COUNTY, MARYLAND
- -----------------------------------------------------------------------------
MITCHEL R. MONTGOMERY, 9000 Regency Square
Blvd., Suite 201, Jacksonville, FL 32211,
and PETER J. BURNHAM, 3623 Edgewood Road,
Columbus, GA 31907,
in their individual capacity and on behalf
of SPRINGHILL LAKE INVESTORS
LIMITED PARTNERSHIP, and THEODORE N.
LERNER, 11501 Huff Court, North Bethesda,
MD 20895-1094, in his individual capacity
and on behalf of FIRST SPRINGHILL LAKE
LIMITED PARTNERSHIP, SECOND SPRINGHILL LAKE
LIMITED PARTNERSHIP, THIRD SPRINGHILL LAKE
LIMITED PARTNERSHIP, FOURTH SPRINGHILL LAKE
LIMITED PARTNERSHIP, FIFTH SPRINGHILL LAKE
LIMITED PARTNERSHIP, SIXTH SPRINGHILL LAKE
LIMITED PARTNERSHIP, SEVENTH SPRINGHILL LAKE
LIMITED PARTNERSHIP, EIGHTH SPRINGHILL LAKE
LIMITED PARTNERSHIP, NINTH SPRINGHILL LAKE
LIMITED PARTNERSHIP, AND SPRINGHILL
COMMERCIAL LIMITED PARTNERSHIP,
Plaintiffs,
v. No. 132222
THREE WINTHROP PROPERTIES, INC. filed 2-7-95
One International Place
Boston, Massachusetts 02110
Defendant.
- -----------------------------------------------------------------------------
COMPLAINT FOR BREACH OF FIDUCIARY DUTY
Plaintiffs, by the undersigned attorneys, for their Complaint against the
above-named defendant state as follows.
A. THE PARTIES
1. Springhill Lake Investors Limited Partnership ("Springhill LP") is a
limited partnership organized and
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<PAGE>
existing under the laws of the State of Maryland, with a usual place of
business at One International Place, Boston, Massachusetts.
2. Plaintiff Mitchell R. Montgomery currently resides in Jacksonville,
Florida and is a citizen of the State of Florida. Plaintiff Peter J. Burnham
currently resides in Columbus, Georgia and is a citizen of the State of
Georgia. Plaintiffs Montgomery and Burnham bring this action in their
individual capacity and derivatively on behalf of Springhill LP.
3. Plaintiff Theodore N. Lerner currently resides in Montgomery County,
Maryland and is a citizen of the State of Maryland. Lerner brings this action
in his individual capacity and derivatively on behalf of ten limited
partnerships organized under the laws of the State of Maryland: First
Springhill Lake Limited Partnership, Second Springhill Lake Limited
Partnership, Third Springhill Lake Limited Partnership, Fourth Springhill
Lake Limited Partnership, Fifth Springhill Lake Limited Partnership, Sixth
Springhill Lake Limited Partnership, Seventh Springhill Lake Limited
Partnership, Eighth Springhill Lake Limited Partnership, Ninth Springhill
Lake Limited Partnership, and Springhill Commercial Limited Partnership
(collectively the "Operating Partnerships").
2
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4. Defendant Three Winthrop Properties, Inc., ("Three Winthrop") is a
corporation organized under the laws of the State of Massachusetts with its
principal place of business at One International Place, Boston,
Massachusetts.
B. JURISDICTION AND VENUE
5. This Court has subject matter jurisdiction over this case pursuant to
Md. Cts. & Jud. Proc. Code Ann. Section 1-501.
6. Venue is proper in this Court pursuant to Md. Cts. & Jud. Proc. Code
Ann. Section 6-201(a).
C. BACKGROUND INFORMATION
7. This case concerns the Springhill Lake Apartments in Greenbelt,
Maryland (the "Project"). The Project consists of a 96 building, 2,899 unit
garden apartment complex, approximately 154 acres of land, an eight-story
shopping center, a day care center, two swimming pools, six tennis courts and
a clubhouse.
8. The day to day operations of the Project are run by a managing agent,
Lerner Corporation.
9. The Project is owned by the Operating Partnerships.
10. Springhill LP is the general partner of each of the Operating
Partnerships. Springhill LP owns a 90% interest in each of the Operating
Partnerships. Subject to certain special allocations contained in the
3
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<PAGE>
partnership agreements of the Operating Partnerships, the remaining interest
in each of the Operating Partnerships has, since 1985, been owned by Theodore
Lerner, as limited partner.
11. Three Winthrop is the managing general partner of Springhill LP and is
charged with the responsibility for carrying out the business of Springhill
LP.
12. Except for certain ownership interests held by Three Winthrop and by
an affiliated company, Linnaeus-Lexington Associates Limited Partnership
("Linnaeus"), Springhill LP is owned by individuals or entities who own as
limited partners approximately 649 units of interest in Springhill LP (the
"Investor Limited Partners"). The Investor Limited Partners purchased their
interests in Springhill LP through a confidential offering memorandum dated
January 16, 1985.
13. Plaintiff Mitchell R. Montgomery owns a one unit (.146379%) limited
partnership share of Springhill LP. Montgomery acquired this interest on
February 28, 1985, and has owned the interest continuously since then.
14. Plaintiff Peter J. Burnham owns a one unit (.146379%) limited
partnership share of Springhill LP. Burnham acquired this interest prior to
1986, and has owned the interest continuously since then.
4
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<PAGE>
15. Three Winthrop, acting as managing general partner of Springhill LP
(which in turn is general partner of the Operating Partnerships), has certain
fiduciary obligations to the Investor Limited Partners, to Springhill LP, to
the Operating Partnerships, and to Theodore Lerner.
D. THREE WINTHROP'S MISCONDUCT
16. Three Winthrop has a fiduciary responsibility to assure that a
suitable managing agent is appointed for the Project under appropriate terms
and conditions. In addition, section 2.4(vi) of the limited partnership
agreement for each of the Operating Partnerships requires that, if Three
Winthrop appoints a managing agent to manage the Project, it may only pay
that managing agent "reasonable compensation" for its services.
17. In October 1994, in breach of these fiduciary and other obligations,
Three Winthrop embarked on a scheme to enrich itself at the expense of
Springhill LP and the Operating Partnerships, by moving to discharge the
current managing agent, Lerner Corporation, and to appoint Winthrop
Management, an affiliate of Three Winthrop, as the new managing agent of the
Project. As part of that scheme, Three Winthrop has refused to open the
managing agent position to competitive bidding, and has refused to employ any
5
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mechanism to insure that the compensation of the managing agent is
reasonable.
18. It is in the best interests of Springhill LP and the Operating
Partnerships to have the Property managed by an entity controlled by a person
with an economic interest in the performance of the Property. Lerner
Corporation meets this requirement; Winthrop Management does not.
19. There is a contest underway for ownership of the Property. It is
disruptive, irresponsible and incompatible with the best interests of
Springhill LP and the Operating Partnerships to appoint a new managing agent
for the Property before the ownership of the Property is resolved.
FIRST CAUSE OF ACTION
BREACH OF FIDUCIARY DUTY TO
MONTGOMERY, BURNHAM AND SPRINGHILL LP
20. Plaintiffs repeat and reallege the allegations of paragraphs 1 to 19.
21. Three Winthrop, acting as managing general partner of Springhill LP,
has breached its fiduciary duty to Montgomery, Burnham and to Springhill LP
in various ways, including by moving to appoint its affiliate as managing
agent of the Property, without opening the position to competitive bidding.
6
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<PAGE>
SECOND CAUSE OF ACTION
BREACH OF FIDUCIARY DUTY TO
THEODORE LERNER AND THE OPERATING PARTNERSHIPS
22. Plaintiffs repeat and reallege the allegations of paragraphs 1 to 19.
23. Three Winthrop, acting as managing general partner of Springhill LP
which is in turn the general partner of the Operating Partnerships, has
breached its fiduciary duty to Theodore Lerner and the Operating Partnerships
in various ways, including by moving to appoint its affiliate as managing
agent of the Property, without opening the position to competitive bidding.
WHEREFORE, plaintiffs respectfully request that this Court:
(1) enjoin Three Winthrop from appointing itself or an affiliate as
managing agent of the Property;
(2) order Three Winthrop to pay damages to plaintiffs for its breaches of
fiduciary duty in an amount to be determined at trial; and
(3) award plaintiffs such other relief as the Court deems just and proper.
Respectfully submitted,
/s/ Mitchell R. Montgomery
Mitchell R. Montgomery, pro se
7
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<PAGE>
/s/ Peter J. Burnham
Peter J. Burnham, pro se
/s/ Albert D. Brault
BRAULT, GRAHAM, SCOTT & BRAULT
Albert D. Brault (#01041)
101 S. Washington St.
Rockville, MD 20850
(301) 424-1060
Counsel for Theodore Lerner
OF COUNSEL:
Stephen M. Sacks
George E. Covucci
Peter G. Neiman
ARNOLD & PORTER
1200 New Hampshire Ave., N.W.
Washington, D.C. 20036
(202) 872-6681
8
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
- --------------------------------------------
LER 8, a Maryland General Partnership,
on its behalf and on behalf of
SPRINGHILL LAKE INVESTORS LIMITED
PARTNERSHIP
c/o Robert G. Brewer
3 Bethesda Metro Center, Suite 380
Bethesda, Maryland 20814
Plaintiffs,
v. No. DKC 95-555
THREE WINTHROP PROPERTIES, INC.,
One International Place
Boston, MA 02110
Serve: Arthur J. Halleran, Jr.
NOMURA ASSET CAPITAL CORPORATION, and
2 World Financial Center
New York, New York 10005
Serve: Ethan Penner, President
AQUARIUS ACQUISITION, L.P.
c/o Nomura Asset Capital Corporation
2 World Financial Center
New York, New York 10005
Serve: Ethan Penner, President
Defendants.
- -------------------------------------------
COMPLAINT
Plaintiffs, by their undersigned attorneys, for their
Complaint state as follows.
INTRODUCTION
1. This case concerns a contest for control of Springhill
Lake Investors Limited Partnership ("Springhill LP") and/or
certain real property in Greenbelt, Maryland, which Springhill LP
owns (the "Project"). Greenbelt Residential Limited Partnership
("Greenbelt") has offered to purchase the interest of the
<PAGE>
<PAGE>
limited partners and has asked the limited partners of Springhill
LP to consent to dissolution of the partnership, so that the
property can be sold to the highest bidder. Greenbelt hopes to
be the highest bidder. Three Winthrop Properties, Inc. ("Three
Winthrop"), the managing general partner of Springhill LP, has,
through an affiliate, launched a tender offer for Springhill LP.
It is believed that Three Winthrop has failed to comply with the
federal securities laws governing such tender offers, and has
breached its fiduciary obligations to the limited partners of
Springhill LP in a variety of ways. LER 8 brings this action in
its own right and on behalf of Springhill LP, and asks this Court
to enjoin Three Winthrop (and its affiliates) from continuing
with its tender offer and to affirmatively order Three Winthrop
to set up a fair and independent procedure, free of conflict of
interest, to affirmatively look for, and consider all possible
offers.
A. THE PARTIES
2. Springhill LP is a limited partnership organized and
existing under the laws of the State of Maryland, with a usual
place of business at One International Place, Boston,
Massachusetts.
3. LER 8 is a limited partner of Springhill LP. LER 8
currently resides in Maryland and is a citizen of Maryland. LER
8 purchased a .1464% limited partnership interest in Springhill
LP in 1985 and has owned that interest continuously since then.
2
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<PAGE>
LER 8 brings this action in its own right and derivatively on
behalf of Springhill LP.
4. Defendant Three Winthrop is a corporation organized
under the laws of the State of Massachusetts with its principal
place of business at One International Place, Boston,
Massachusetts.
5. Defendant Aquarius Acquisition, L.P. ("Aquarius") is
a newly formed Delaware limited partnership, whose general
partner, Partnership Acquisition Trust I, is a Delaware business
trust owned and controlled by defendant Nomura Asset Capital
Corporation ("NACC"). It is believed that NACC, a Delaware
corporation, also owns and/or controls Three Winthrop.
B. JURISDICTION AND VENUE
6. This Court has subject matter jurisdiction over
plaintiffs' federal securities law claims pursuant to 26 U.S.C. Section
1331 and over plaintiffs' state law breach of fiduciary duty
claim pursuant to 28 U.S.C. Section 1367.
7. Venue is proper in this Court pursuant to 28 U.S.C. Section
1391(b)(2).
C. BACKGROUND INFORMATION
8. The Project, the Springhill Lake Apartments in
Greenbelt, Maryland, consists of a 96 building, 2,899 unit garden
apartment complex, approximately 154 acres of land, an
eight-store shopping center, a day care center, two swimming
pools, six tennis courts and a clubhouse.
3
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<PAGE>
9. The Project is owned by ten limited partnerships
organized under the laws of the State of Maryland: First
Springhill Lake Limited Partnership, Second Springhill Lake
Limited Partnership, Third Springhill Lake Limited Partnership,
Fourth Springhill Lake Limited Partnership, Fifth Springhill Lake
Limited Partnership, Sixth Springhill Lake Limited Partnership,
Seventh Springhill Lake Limited Partnership, Eighth Springhill
Lake Limited Partnership, Ninth Springhill Lake Limited
Partnership, and Springhill Commercial Limited Partnership
(collectively the "Operating Partnerships").
10. Springhill LP is the general partner of each of the
Operating Partnerships. Springhill LP owns a 90% interest in
each of the Operating Partnerships. Subject to certain special
allocations contained in the partnership agreements of the
Operating Partnerships, the remaining interest in each of the
Operating Partnerships has, since 1985, been owned by Theodore
Lerner, as limited partner. He has an interest in Greenbelt.
11. Three Winthrop is the managing general partner of
Springhill LP and is charged with the responsibility for carrying
out the business of Springhill LP.
12. Except for certain minor ownership interests held by
Three Winthrop and by an affiliated company, Linnaeus-Lexington
Associates Limited Partnership ("Linnaeus"), Springhill LP is
owned by individuals or entities who own as limited partners 649
units of interest in Springhill LP (the "Investor Limited Part-
4
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<PAGE>
ners"). The Investor Limited Partners purchased their interests
in Springhill LP through a confidential offering memorandum dated
January 16, 1985. Those interests constitute securities for
purposes of the Securities Exchange Act of 1934 (the "Exchange
Act"), and are registered under Section 12(g) of the Exchange Act.
13. Three Winthrop, acting as managing general partner of
Springhill LP, has certain fiduciary obligations to the Investor
Limited Partners and to Springhill LP.
D. GREENBELT'S OFFER TO PURCHASE THE PROPERTY
14. Greenbelt has offered to purchase the Springhill LP
interest in the Project and has solicited consents from the
Investor Limited Partners of Springhill LP to a resolution
dissolving Springhill LP, thereby requiring a sale of its only
asset, the Project, to the highest bidder. Greenbelt
simultaneously advised the Investor Limited Partners that if the
Project is put up for sale, Greenbelt will purchase it.
Greenbelt's offer may be in the interest of the Investor Limited
Partners and Springhill LP.
E. AQUARIUS' TENDER OFFER
15. On February 1, 1995 Aquarius, which, like Three
Winthrop, is controlled by NACC, commenced a tender offer for the
units of limited partnership interests in Springhill LP. On that
date, Aquarius provided the Investor Limited Partners an Offering
Circular which set out the terms of the tender offer.
5
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<PAGE>
16. The tender offer is being made by an affiliate of
Springhill LP and, if successful, will cause the limited
partnership interests to be held by fewer than 300 people.
Accordingly, Rule 13e-3 (promulgated under Section 13(e) of the
Exchange Act) imposes certain disclosure obligations on Three
Winthrop, Aquarius, and NACC.
17. Under Rule 13e-3 (and Schedule 13E-3 thereto), Three
Winthrop must state whether it believes the transaction is "fair
or unfair" to unaffiliated security holders and must discuss the
factors supporting that stated belief. Three Winthrop has
advised the Investor Limited Partners that it has a conflict and
has refused to make these required disclosures, in breach of both
the Exchange Act and its fiduciary duty to the Investor Limited
Partners.
F. THREE WINTHROP'S BREACHES OF ITS FIDUCIARY DUTY
18. Though purporting to remain neutral, Three Winthrop
has apparently supported the Aquarius tender offer. On
information and belief, Three Winthrop has provided NACC and
Aquarius with extensive information about Springhill LP which
Aquarius and NACC have used in putting together the tender offer.
19. Three Winthrop has also breached its fiduciary duty by
refusing to hire an independent entity and to establish an
independent procedure to evaluate all offers and to advise the
Investor Limited Partners as to the appropriate course of action.
6
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<PAGE>
Upon information and belief, Three Winthrop has not sought other
offers to determine the fair market value of the Project.
FIRST CAUSE OF ACTION
VIOLATION OF RULE 13e-3
20. Plaintiffs repeat and reallege the allegations of
paragraphs 1 to 19.
21. Because Three Winthrop has not made the disclosures
required by Rule 13e-3, the Investor Limited Partners are unable
to properly evaluate the fairness of the Aquarius/Three Winthrop
tender offer.
SECOND CAUSE OF ACTION
BREACH OF FIDUCIARY DUTY
22. Plaintiffs repeat and reallege the allegations of
paragraphs 1 to 21.
23. Three Winthrop has breached its fiduciary duty to LER
8 and to Springhill LP by failing to disclose information as
required by the securities laws, and because of its conflict of
interest, by failing to establish a procedure for the fair and
independent evaluation of the different proposals.
24. These breaches have injured plaintiffs by preventing
plaintiffs from obtaining from its managing general partner a
proper evaluation of the competing offers for Springhill LP.
WHEREFORE, plaintiffs respectfully request that this
Court:
(1) enjoin NACC, Aquarius and Three Winthrop from
continuing to pursue their tender offer, and requiring them to
7
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<PAGE>
employ an independent entity to be paid by Three Winthrop to
establish a fair and independent procedure to evaluate all
proposals; and
(2) award plaintiffs such other relief as the Court deems
just and proper.
Respectfully submitted,
LERCH, EARLY & BREWER
By /s/ R. Dennis Osterman
-------------------------
R. Dennis Osterman
3 Bethesda Metro Center
Suite 380
Bethesda, Maryland 20814
(301) 986-1300
Attorneys for Plaintiff
8
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<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
- -----------------------------------------------------------------------------
LER 8, a Maryland General Partnership,
on its behalf and on behalf of
SPRINGHILL LAKE INVESTORS LIMITED
PARTNERSHIP
Plaintiffs,
Case No. DKC 95-555
v.
THREE WINTHROP PROPERTIES, INC.,
NOMURA ASSET CAPITAL CORPORATION, and
AQUARIUS ACQUISITION, L.P.
Defendants.
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PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION
Plaintiffs hereby move this Court for a preliminary
injunction in the form indicated in the attached proposed order.
In support of this motion, plaintiffs rely upon the
complaint filed in this action, the memorandum of law which
accompanies this motion, and the affidavit of Robert G. Brewer,
Jr.
Respectfully submitted,
LERCH, EARLY & BREWER
By /s/ R. Dennis Osterman
----------------------
R. Dennis Osterman
3 Bethesda Metro Center
Suite 380
Bethesda, Maryland 20814
(301) 986-1300
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<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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LER 8, a Maryland General Partnership,
on its behalf and on behalf of
SPRINGHILL LAKE INVESTORS LIMITED
PARTNERSHIP
Plaintiffs,
Case No. DKC 95-555
v.
THREE WINTHROP PROPERTIES, INC.,
NOMURA ASSET CAPITAL CORPORATION, and
AQUARIUS ACQUISITION, L.P.
Defendants.
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MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS'
MOTION FOR A PRELIMINARY INJUNCTION
INTRODUCTION
There is an ongoing contest for control of Springhill Lake
Investors Limited Partnerhip ("Springhill LP") between Greenbelt
Residential Limited Partnership ("Greenbelt") and defendant
Aquarius Acquisition Ltd. ("Aquarius"). That contest is now at a
critical stage. Greenbelt has an open offer to purchase the
interest of Springhill LP in the Springhill project and a tender
offer presented to the limited partners by Aquarius will expire on
March 2, 1995.
The limited partners of Springhill LP need to know whether
the Aquarius offer is fair and preferable to the Greenbelt offer,
to other offers that could be obtained by Winthrop in the
marketplace, or to declining to sell at this time.
Normally, the limited partners would get advice in this
regard from the managing general partner, who has access to all
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financial information and a fiduciary responsibility to the
limited partners. However, the managing general partner is Three
Winthrop Properties Inc. ("Three Winthrop"), an affiliate of
Aquarius. Three Winthrop has a conflict and has given the limited
partners no guidance.
Despite a request from limited partners, Three Winthrop has
not agreed to a procedure to provide the limited partners an
independent analysis of the different offers, free of any conflict
of interest. To all appearances Three Winthrop has taken
advantage of its position as managing general partner of
Springhill LP and has provided assistance to Aquarius. By so
doing, the limited partners have no assurance they will receive
fair and unbiased information, which is a violation of its
fiduciary duties to the limited partners of Springhill LP.
To protect the interests of the limited partners of Springhill LP,
this Court should enjoin the Aquarius tender offer and order Three
Winthrop to set up a fair and independent procedure for allowing
the limited partners to evaluate the competing offers.
FACTS
The property at issue is the Springhill Lake Apartments in
Greenbelt, Maryland, comprising a 96-building, 2,899-unit garden
apartment complex on approximately 154 acres of land. It contains
an eight-store shopping center, a day care center, two swimming
pools, six tennis courts and a clubhouse (the "Project"). The
Project is owned by ten limited partnerships organized under the
laws of the State of Maryland (the "Operating Partnerships").
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Springhill LP is the general partner of each of the ten Operating
Partnerships and owns a 90% interest in each of the ten Operating
Partnerships. Theodore Lerner owns the remaining 10% limited
partnership interest in each of the ten Operating Partnerships.
Three Winthrop is the managing general partner of Springhill
LP and is charged with the responsibility for carrying out the
business of Springhill LP. Except for the minor ownership
interests held by Three Winthrop and by an affiliated company,
Springhill LP is owned by individuals or entities who own as
limited partners approximately 649 units of interest in Springhill
LP (the "Investor Limited Partners"). LER 8 is an investor limited
partner.
The Greenbelt Offer
Greenbelt has distributed proxies to the Investor Limited
Partners of Springhill LP seeking approval of a resolution
dissolving Springhill LP, thereby requiring a sale of its only
asset, the Project, to the highest bidder. Greenbelt
simultaneously advised the Investor Limited Partners that if the
Project is put up for sale, Greenbelt would attempt to purchase
the Project. Greenbelt's and Three Winthrop's offers may or may
not be in the interest of the Investor Limited Partners and
Springhill LP. Three Winthrop has not established a procedure to
provide a fair assessment of either offer.
On February 1, 1995, Aquarius, which, like Three Winthrop, is
controlled by defendant Nomura Asset Capital Corporation ("NACC"),
commenced a tender offer for the units of limited partnership
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interest in Springhill LP. It is believed that Three Winthrop opposes the
Greenbelt offer and has actively supported the Aquarius tender offer by
providing NACC and Aquarius with extensive information about Springhill LP
which Aquarius and NACC have used in putting together the tender offer.
Three Winthrop's conduct is irreparably injuring the Investor Limited
Partners. Rather than providing the Investor Limited Partners with the
impartial advice and information they are entitled to expect from their
fiduciary, Three Winthrop is apparently throwing its weight behind the
Aquarius offer. Three Winthrop's conduct raises the prospect that a majority
of the Investor Limited Partners will be forced to accept an offer without
having the opportunity to consider other offers and without receiving
independent advice.
ARGUMENT
THE COURT SHOULD GRANT PLAINTIFF'S MOTION
FOR A PRELIMINARY INJUNCTION
In determining whether to grant a preliminary injunction, the Court must
weigh four factors:
(1) the likelihood of irreparable harm to the plaintiff if the preliminary
injunction is denied;
(2) the likelihood of harm to the defendant if the requested relief is
granted;
(3) the likelihood that the plaintiff will succeed on the merits; and
(4) the public interest.
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<PAGE>
Direx Israel Ltd v. Breakthrough Medical Corp., 952 F.2d 802, 812 (4th
Cir. 1994). As we show below, here all four factors favor granting a
preliminary injunction.
First, plaintiffs will clearly be irreparable harmed if the Aquarius/Three
Winthrop tender offer is allowed to proceed without the Investor Limited
Partners ever receiving a neutral assessment of all offers.
The Investor Limited Partners have only a few days to evaluate the
competing offers. Unless Three Winthrop promptly sets up a procedure for
providing the Investor Limited Partners with an independent evaluation (as
its fiduciary obligations require), the opportunity for the Investor Limited
Partners to properly evaluate the competing offers will be lost forever. This
lost opportunity plainly constitutes irreparable harm. See In re W.T. Grant
Co., 6 B.R. 762, 766 (Bkr. S.D.N.Y. 1980) (enjoining misleading proxy
solicitation because loss of "unique opportunity as investors to make an
informed judgment with respect to the offer" constitutes irreparable harm).
Second, while plaintiffs face irreparable injury, granting the injunction
will not harm defendants. Defendants will still be able to pursue their
tender offer in a timely fashion.
Third, plaintiffs are likely to succeed on the merits. Three Winthrop has
conceded, as it must, that it has a fiduciary duty to the Investor Limited
Partners. Under Maryland law, a managing general partner must act with
"utmost good faith" towards passive limited partners and owes a duty to make
full disclosure of
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information important to limited partners. Dixon v. Trinity Joint Venture, 49
Md. App. 1361, 431 A.2d 1361, 1366 (1981). Three Winthrop has violated that
fiduciary duty by providing crucial funding and information to support the
Aquarius tender, by refusing to comment on the competing tenders, and by
failing to set up a procedure for providing the Individual Limited Partners
with a neutral assessment of the offers. Maryland partnership law as to the
fiduciary duties of managing general partners is analogous to the duties of
officers and directors of a corporation. Dixon, supra. In Walter J. Schloss
Assoc. v. Chesapeake and Ohio R'way Co., 73 Md. App. 727, 536 A.2d 147, 154
(1988) (quoting Weinberger v. UOP, Inc., 457 A.2d 721 (Del. 1983), the court
recognized in a corporate context the appropriateness of a corporation
obtaining independent advice on valuation in a merger where a conflict could
be present).
Finally, the public interest favors the injunction, requiring offerors to
honor their fiduciary duties is in the public interest.
CONCLUSION
Unless the Court acts now, it will be too late for the Investor Limited
Partners of Springhill LP. Plaintiffs respectfully request that this Court
preliminarily enjoin the tender
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<PAGE>
offer until a fair and independent procedure is established for evaluating
the proposals.
LERCH, EARLY & BREWER
By /s/ R. Dennis Osterman
------------------------
R. Dennis Osterman
3 Bethesda Metro Center
Suite 380
Bethesda, Maryland 20814
(301) 986-1300
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<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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LER 8, a Maryland General Partnership,
on its behalf and on behalf of
SPRINGHILL LAKE INVESTORS LIMITED
PARTNERSHIP
Plaintiffs,
No. DKC 95-555
v.
THREE WINTHROP PROPERTIES, INC.,
NOMURA ASSET CAPITAL CORPORATION, and
AQUARIUS ACQUISITION, L.P.
Defendants.
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ORDER
Upon consideration of the motion of plaintiffs for a
preliminary injunction, it is hereby
ORDERED, that said motion is hereby granted; and it is
further
ORDERED, that defendants Three Winthrop Properties, Inc.,
Aquarius Acquisition, L.P., and Nomura Asset Capital Corporation
are hereby preliminarily enjoined from continuing to pursue their
tender offer for Springhill Lake Investors Limited Partnership;
and it is further
ORDERED, that defendants Three Winthrop Properties, Inc.
shall promptly employ an independent entity to evaluate any and
all proposals for the sale of Springhill Lake Investors Limited
Partnership, including whether or not to list it for sale on the
open market, and it is further
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<PAGE>
ORDERED, that plaintiffs post a nominal bond of $2,500.00.
_______________________
Judge
Dated: ___________, 1995
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<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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LER 8, a Maryland General Partnership,
on its behalf and on behalf of
SPRINGHILL LAKE INVESTORS LIMITED
PARTNERSHIP
Plaintiffs,
No. DKC 95-555
v.
THREE WINTHROP PROPERTIES, INC.,
NOMURA ASSET CAPITAL CORPORATION, and
AQUARIUS ACQUISITION, L.P.
Defendants.
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AFFIDAVIT OF ROBERT G. BREWER, JR.
Robert G. Brewer, Jr., being duly sworn, deposes and says:
1. I am a general partner of a Maryland general partnership,
LER 8, which is a limited partner in Springhill Lake Investors
Limited Partnership ("Springhill LP"), which is one of the
plaintiffs in this action. I make this affidavit in support of
plaintiff's motion for a preliminary injunction. I am fully
familiar with the facts set forth herein.
2. I currently reside in Chevy Chase, Maryland, and am a
citizen of Maryland. LER 8 purchased a .1464% limited partnership
interest in Springhill LP in 1985 and has owned that interest
continuously since then.
3. Springhill LP is a limited partnership organized and
existing under the laws of the State of Maryland, with a usual
place of business at One International Place, Boston,
Massachusetts.
<PAGE>
<PAGE>
4. Defendant Three Winthrop is a corporation organized
under the laws of the State of Massachusetts with its principal
place of business at One International Place, Boston,
Massachusetts.
5. Upon information and belief, defendant Aquarius
Acquisition, L.P. ("Aquarius") is a newly formed Delaware limited
partnership, whose general partner, Partnership Acquisition Trust
I, is a Delaware business trust owned and controlled by defendant
Nomura Asset Capital Corporation ("NACC"), which also controls
Three Winthrop.
Background Information
6. The sole asset of Springhill LP is a 90% general
partnership interest in ten limited partnerships which in turn own
the Springhill Lake Apartments in Greenbelt, Maryland (the
"Project"). The Project consists of a 96-building, 2,899-unit
garden apartment complex, approximately 154 acres of land, an
8-store shopping center, a day care center, two swimming pools, six
tennis courts and a clubhouse.
7. Three Winthrop is the managing general partner of
Springhill LP and is charged with the responsibility for carrying
out the business of Springhill LP. As managing general partner,
Three Winthrop has received (directly or through affiliates) fee
income for oversight management of the Project and for other
services.
8. Except for certain minor ownership interests held by
Three Winthrop and by an affiliated company, Springhill LP is
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owned by individuals or entities who own as limited partners 649 units of
interest in Springhill LP (the "Investor Limited Partners"). LER 8 is one of
the 649 Investor Limited Partners. (Attached as Exhibit A is a diagram of the
ownership of the Project).
THE GREENBELT OFFER
9. The Investor Limited Partners have received from Greenbelt Residential
Limited Partnership proxy solicitations seeking approval of a resolution
dissolving Springhill LP, thereby requiring a sale of its only asset, the
Project, to the highest bidder. Greenbelt simultaneously advised the Investor
Limited Partners that if the Project is put up for sale, Greenbelt will seek
to purchase the Project. Greenbelt has also offered to purchase Springhill
LP's interest in the Project.
10. Greenbelt's offer may be in the interest of the Investor Limited
Partners and Springhill LP. The Investor Limited Partners are entitled to a
neutral assessment of that offer from their fiduciary, Three Winthrop.
THE AQUARIUS TENDER OFFER
11. Three Winthrop has, through affiliates, put together a tender offer
without providing the Investor Limited Partners with a fair assessment of all
offers. Three Winthrop has not remained neutral nor has it established a
procedure to provide a fair assessment of Greenbelt's offer.
12. On February 1, 1995, Aquarius, which, like Three Winthrop, is
controlled by defendant Nomura Asset Capital
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<PAGE>
Corporation ("NACC"), commenced a tender offer for the units of limited
partnership interests in Springhill LP. On that date, Aquarius provided the
investor limited partners an offering circular which set out the terms of the
tender offer. Three Winthrop has acknowledged its conflict and has refused to
comment on the offers. (A copy of the February 2, 1995 letter is attached as
Exhibit B).
13. The tender offer expires on March 2, 1995.
14. Following the distribution of the Offering Circular, Greenbelt raised
the value of its offer to purchase the Project if the partnership is
dissolved.
15. Three Winthrop apparently opposes the Greenbelt offer and is
apparently supporting the Aquarius tender offer. Three Winthrop has also
apparently provided NACC and Aquarius with extensive information about
Springhill LP which Aquarius and NACC have used in putting together the
Aquarius tender offer.
IRREPARABLE HARM
16. Three Winthrop's conduct is irreparably injuring the Investor Limited
Partners. In the next few days, the Investor Limited Partners will have to
decide whether to accept one of the two offers or continue to hold their
interests. Because the Investor Limited Partners have only limited access to
the relevant financial information, we need neutral advice in assessing the
proposed transactions. Rather than providing the Investor Limited Partners
with the impartial advice and information we are entitled to expect from our
fiduciary, Three Winthrop is apparently
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throwing its weight behind the Aquarius offer. Three Winthrop's conduct
raises the very real prospect that a majority of the Investor Limited
Partners will have to act without having independent advice as to other
offers, and without receiving sufficient financial information. Three
Winthrop has not responded to a written request for an independent mechanism
to advise the Investor Limited Partners.
17. So as to avoid irreparable injury, on behalf of all the Investor
Limited Partners, I respectfully request that this court enjoin the Aquarius
tender offer until Three Winthrop establishes a neutral mechanism for fairly
evaluating the competing offers and whether or not to obtain other offers.
I affirm under the penalties of perjury that the above is true. Subscribed
to this 27th day of February, 1995.
/s/ Robert G. Brewer, Jr.
-------------------------
Robert G. Brewer, Jr.
General Partner, LER 8, a Maryland
General Partnership, and limited
partner in Springhill Lake Investors
Limited Partnership
Sworn to before me this
27th day of February, 1995
/s/ Christine E. Hampton
- ---------------------------
Notary Public
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Springhill Lake Development
154 Acres
96 buildings
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10 L.P.s
(Operating P.)
(Theodore Lerner is a 10% Limited
Partner in each Operating Partnership.)
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Springhill Lake Investors L.P.
is a 90% general partner in
each of the 10 L.P.s
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General Partners 649 Individual Investors
(95%) --Limited Partners
Three Winthrop Properties, Inc.
(.1%)
Managing General Partner
Linnaeus--Lexington Associates
Limited Partnership (4.9%)
General Partner
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[The above information is displayed in a graph of the Ownership Structure.]
<PAGE>
<PAGE>
(LETTERHEAD OF WINTHROP)
To: Investor Limited Partners
From: Beverly L. Bergman
Date: February 1, 1995
Re: Springhill Lake Investors Limited Partnership (the "Partnership")
On January 24, 1995, we wrote to you regarding the materials sent to you
by Theodore Lerner seeking your consent to a dissolution of the Partnership
(the "Lerner Solicitation"). On February 1, 1995, Aquarius Acquisition, L.P.
("Aquarius") commenced a tender offer (the "Aquarius Offer") to acquire
limited partnership units of the Partnership. As set forth in the enclosed
Schedule 14D-9 filed with the Securities and Exchange Commission by the
Partnership in response to the Aquarius Offer, Three Winthrop Properties,
Inc. ("Three Winthrop"), the managing general partner of the Partnership, is
an affiliate of Aquarius and, because of the conflict of interest inherent in
such affiliation, the Partnership is making no recommendation and is
remaining neutral as to whether Limited Partners should tender their limited
partnership interests pursuant to the Aquarius Offer. Similarly, Three
Winthrop is not taking a position with respect to the Lerner Solicitation.
Should you have any questions, please feel free to contact me at
800-333-4556.
cc: Account Executive
[Exhibit B]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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LER 8, a Maryland General Partnership, on
its behalf and on behalf of
SPRINGHILL LAKE INVESTORS LIMITED
PARTNERSHIP,
Plaintiff,
GREENBELT RESIDENTIAL LIMITED PARTNERSHIP DKC 95-555
11501 Huff Court, North Bethesda,
MD, 20895-1094, Plaintiff-Intervenor
v.
THREE WINTHROP PROPERTIES, INC., et al.,
Defendants.
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MOTION
Greenbelt Residential Limited Partnership hereby
moves to intervene in the above captioned action as a
plaintiff pursuant to Rule 24 of the Federal Rules of
Civil Procedure.
The grounds for this motion are set forth in the
memorandum of law which accompanies this motion. A
proposed complaint is attached to this motion.
<PAGE>
<PAGE>
Respectfully submitted,
/s/ Albert D. Brault
----------------------------------
BRAULT, GRAHAM, SCOTT & BRAULT
Albert D. Brault (#01041)
101 S. Washington St.
Rockville, MD 20850
(301) 424-1060
Counsel for Greenbelt
Residential Limited Partnership
OF COUNSEL:
Stephen M. Sacks
George E. Covuoci
Peter G. Neiman
ARNOLD & PORTER
1200 New Hampshire Ave., N.W.
Washington, D.C. 20036
(202) 872-6681
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<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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LER 8, a Maryland General Partnership, on
its behalf and on behalf of
SPRINGHILL LAKE INVESTORS LIMITED
PARTNERSHIP,
Plaintiff,
GREENBELT RESIDENTIAL LIMITED PARTNERSHIP,
11501 Huff Court, North Bethesda,
MD, 20895-1094, Plaintiff-Intervenor
DKC 95-555
v.
THREE WINTHROP PROPERTIES, INC., et al.,
Defendants.
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COMPLAINT OF GREENBELT
RESIDENTIAL LIMITED PARTNERSHIP
Plaintiff, by the undersigned attorneys, for its
Complaint against the above-named defendants states as
follows.
INTRODUCTION
1. This case concerns a contest for control of
Springhill Lake Investors Limited Partnership
("Springhill LP") and/or certain real property in
Greenbelt, Maryland which Springhill LP owns (the
"Project"). Plaintiff Greenbelt Residential Limited
Partnership ("Greenbelt") has asked the limited partners
of Springhill LP to consent to dissolution of the
partnership, so that the property can be sold to the
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<PAGE>
highest bidder. Greenbelt hopes to be the highest
bidder. If the Project is sold, defendant Three
Winthrop Properties ("Three Winthrop"), the managing
general partner of Springhill LP, will lose significant
fee income. In an effort to prevent such a sale, Three
Winthrop has, through an affiliate, launched a tender
offer for Springhill LP. Three Winthrop has failed to
comply with the federal securities laws governing such
tender offers, and has breached its fiduciary
obligations to the limited partners of Springhill LP in
a variety of ways, thereby injuring both the Investor
Limited Partners and Greenbelt. Greenbelt asks this
Court to enjoin Three Winthrop (and its affiliates) from
continuing with its tender offer until it complies with
the federal securities laws.
A. THE PARTIES
2. Plaintiff Greenbelt Residential Limited
Partnership is a limited partnership organized under the
laws of Maryland.
3. Defendant Three Winthrop is a corporation
organized under the laws of the State of Massachusetts
with its principal place of business at One
International Place, Boston, Massachusetts.
4. Defendant Aquarius Acquisition, L.P.
("Aquarius") is a newly formed Delaware limited
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partnership, whose general partner, Partnership
Acquisition Trust I is a Delaware business trust owned
and controlled by defendant Nomura Asset Capital
Corporation ("NACC"). NACC also controls Three
Winthrop.
B. JURISDICTION
5. This Court has jurisdiction over Greenbelt's
claims pursuant to 28 U.S.C. Sections 1331 and 1367.
C. BACKGROUND INFORMATION
6. The Project, the Springhill Lake Apartments
in Greenbelt, Maryland, consists of a 96 building, 2,899
unit garden apartment complex, approximately 154 acres
of land, an eight-story shopping center, a day care
center, two swimming pools, six tennis courts and a
clubhouse.
7. The Project is owned by ten limited
partnerships organized under the laws of the State of
Maryland: First Springhill Lake Limited Partnership,
Second Springhill Lake Limited Partnership, Third
Springhill Lake Limited Partnership, Fourth Springhill
Lake Limited Partnership, Fifth Springhill Lake Limited
Partnership, Sixth Springhill Lake Limited Partnership,
Seventh Springhill Lake Limited Partnership, Eighth
Springhill Lake Limited Partnership, Ninth Springhill
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Lake Limited Partnership, and Springhill Commercial
Limited Partnership (collectively the "Operating
Partnerships").
8. Springhill LP is the general partner of each
of the Operating Partnerships. Springhill LP owns a 90%
interest in each of the Operating Partnerships. Subject
to certain special allocations contained in the
partnership agreements of the Operating Partnerships,
the remaining interest in each of the Operating
Partnerships has, since 1985, been owned by Theodore
Lerner, as limited partner.
9. Three Winthrop is the managing general
partner of Springhill LP and is charged with the
responsibility for carrying out the business of
Springhill LP. As managing general partner, Three
Winthrop has received (directly or through affiliates)
payments for oversight management of the Project and
syndication of the partnership in excess of $15 million.
10. Except for certain minor ownership interests
held by Three Winthrop and by an affiliated company,
Linnaeus-Lexington Associates Limited Partnership
("Linnaeus"), Springhill LP is owned by individuals or
entities who own as limited partners approximately 649
units of interest in Springhill LP (the "Investor
Limited Partners"). The Investor Limited Partners
purchased their interests in Springhill LP through a
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confidential offering memorandum dated January 16, 1985. Those interests
constitute securities for purposes of the Securities Exchange Act of 1934
(the "Exchange Act"), and are registered under Section 12(g) of the Exchange
Act.
11. Three Winthrop, acting as managing general partner of Springhill LP,
has certain fiduciary obligations to the Investor Limited Partners and to
Springhill LP.
D. GREENBELT'S OFFER TO PURCHASE THE PROPERTY
12. On January 19, 1995, Grenbelt began soliciting consents from the
Investor Limited Partners of Springhill LP. The purpose of the consent
solicitation was to seek approval of a resolution dissolving Springhill LP,
thereby requiring a sale of its only asset, its interest in the Project, to
the highest bidder. Greenbelt simultaneously advised the Investor Limited
Partners that if the Project is put up for sale, Greenbelt will purchase its
interest in the Project. Greenbelt complied with Rule 14a-6(a) by filing the
proxy materials with the Securities and Exchange Commission ("SEC") prior to
making the consent solicitation.
13. While Greenbelt's offer is in the interest of the Investor Limited
Partners and Springhill LP, it is
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not in the interest of Three Winthrop. Virtually all of Three Winthrop's stake
in the Project is in the form of management and other fees paid to Three
Winthrop's affiliates, which will cease if Greenbelt purchases the Project.
There is thus a conflict of interest between Three Winthrop and the Investor
Limited Partners to whom Three Winthrop has a fiduciary responsibility to
consider the Greenbelt offer.
E. AQUARIUS' TENDER OFFER
14. Despite its conflict of interest, and despite professions of
neutrality in securities filings, Three Winthrop has not remained neutral and
allowed the Investor Limited Partners to evaluate Greenbelt's consent
solicitation and offer or provided a fair procedure by which this may be
done. Instead, Three Winthrop has, through affiliates, put together a tender
offer designed to thwart Greenbelt's offer, preserve Three Winthrop's fees,
and prevent the Investor Limited Partners from receiving the maximum return
on their investment.
15. As part of that plan, on February 1, 1995 Aquarius, which, like Three
Winthrop, is controlled by NACC, commenced a tender offer for the units of
limited partnership interest in Springhill LP. On that date, Aquarius
provided the Investor Limited Partners an
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<PAGE>
Offering Circular which set out the terms of the tender offer and attempted to
persuade the Investor Limited Partners to vote against Greenbelt's consent
solicitation. Aquarius did not file its Offering Circular with the SEC, as
required by Rule 14a-6(a).
16. The tender offer is being made by an affiliate of Springhill LP and,
if successful, will cause the limited partnership interests to be held by
fewer than 300 people. Accordingly, Rule 13e-3 (promulgated under Section
13(e) of the Exchange Act) imposes certain disclosure obligations on Three
Winthrop, Aquarius, and NACC.
17. Under Rule 13e-3 (and Schedule 13E-3 thereto), Three Winthrop must
state whether it believes the transaction is "fair or unfair" to unaffiliated
security holders and must discuss the factors supporting that stated belief.
In other words, Three Winthrop must explain how it could believe the tender
offer is fair when alternative transactions that could result in more value
to the Investor Limited Partners have been blocked; when the offer is not the
product of arm's length negotiation; and when no competitive bids have been
sought. Three Winthrop has refused to make these required disclosures, in
breach of both the Exchange Act and its fiduciary duty to the individual
limited partners.
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<PAGE>
F. THREE WINTHROP'S BREACHES
OF ITS FIDUCIARY DUTY
18. Though purporting to remain neutral, Three Winthrop has in fact
supported the Aquarius tender offer. Three Winthrop has indirectly provided
crucial funding for the offer by delaying a planned distribution to the
Investor Limited Partners until after the offer is completed, at which point
the funds will go to Aquarius/Three Winthrop, rather than to the Investor
Limited Partners. On information and belief, Three Winthrop has also provided
NACC and Aquarius with extensive information about Springhill LP which
Aquarius and NACC have used in putting together the tender offer.
19. The Aquarius/Three Winthrop offer is contrary to the interests of the
Investor Limited Partners in a variety of ways. First, by preventing the
Investor Limited Partners from dissolving Springhill LP and placing the
Project or all of the partnerships interest therein up for sale to the
highest bidder, the tender offer prevents the Investor Limited Partners from
seeking the maximum return on their investment. Second, the tender offer is
effectively a "take it or leave it" proposal to the Investor Limited
Partners. Upon obtaining control, Aquarius/Three Winthrop will, as a limited
partner, be able to control all decisions made by Springhill LP without a
fiduciary duty to the other
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<PAGE>
Investor Limited Partners. Third, the tender offer would result in Springhill
LP no longer being regulated by the SEC, and thus would leave those Investor
Limited Partners who do not tender without access to much of the information
currently available to them. Fourth, the tender offer would result in
Aquarius/Three Winthrop being able to set the fees going to its affiliate for
managing the project, and to allocate management costs without supervision.
20. By supporting the tender offer, Three Winthrop has breached its
fiduciary duty to the Investor Limited Partners, injuring both the Investor
Limited Partners and Greenbelt.
21. Three Winthrop has also breached its fiduciary duty by refusing to
cooperate with Greenbelt's offer. Three Winthrop has refused to negotiate in
good faith with Greenbelt; has refused to seek other offers to determine the
fair market value of the Project; and has refused to obtain the consent of
the Project's lender to the assumption of the mortgage.
FIRST CAUSE OF ACTION
VIOLATION OF RULE 13e-3
22. Plaintiff repeats and realleges the allegations of paragraphs 1 to 21.
23. Because Three Winthrop has not made the disclosures required by Rule
13e-3, the Investor Limited
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Partners are unable to properly evaluate the unfairness of the Aquarius/Three
Winthrop tender offer as compared to Greenbelt's offer. This threatens to
irreparably harm Greenbelt. Aquarius, NACC and Three Winthrop should
therefore be enjoined from pursuing that tender offer unless and until proper
disclosures are made.
SECOND CAUSE OF ACTION
VIOLATION OF RULE 14a
24. Plaintiffs repeat and reallege the allegations of paragraphs 1 to 23.
25. The Offering Circular constitutes a proxy solicitation within the
meaning of Rule 14a-1(1). Defendants failed to submit the proxy solicitation
materials to the SEC, as required by Rule 14a-6(a), and failed to provide the
Investor Limited Partners with the materials required by Rule 14a-3(a). This
gives defendants an unfair advantage in the contest for control of Springhill
LP, irreparably injuring Greenbelt. Aquarius, NACC and Three Winthrop should
be enjoined from pursuing the tender offer unless and until they comply with
Rule 14a.
THIRD CAUSE OF ACTION
BREACH OF FIDUCIARY DUTY
26. Plaintiffs repeat and reallege the allegations of paragraphs 1 to 25.
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<PAGE>
<PAGE>
27. Three Winthrop has breached its fiduciary duty to the Investor Limited
Partners and to Springhill LP in various ways, including by making a coercive
tender offer for Springhill LP through its affiliate Aquarius, by failing to
disclose information as required by the securities laws, by refusing to
cooperate with Greenbelt, given its conflict of interest, and by failing to
establish a procedure for the fair and independent evaluation of the
different proposals.
28. Aquarius and NACC have aided and abetted the Three Winthrop's
breaches.
29. These breaches have injured Greenbelt by preventing the Investor
Limited Partners from properly evaluating Greenbelt's offer vis-a-vis the
tender offer.
WHEREFORE, plaintiff Greenbelt respectfully requests that this Court:
(1) enjoin NACC, Aquarius and Three Winthrop from continuing to pursue
their tender offer until a fair and independent procedure is established to
evaluate all proposals;
(2) order Three Winthrop, NACC and Aquarius to pay damages to plaintiff
for their breaches of fiduciary duty and violations of the federal securities
laws in an amount to be determined at trial, including reasonable attorneys'
fees; and
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<PAGE>
(3) award plaintiff such other relief as the Court deems just and proper.
BRAULT, GRAHAM, SCOTT & BRAULT
/s/ Albert D. Brault
-----------------------------
Albert D. Brault (#01041)
101 S. Washington St.
Rockville, MD 20850
(301) 424-1060
OF COUNSEL:
Stephen M. Sacks
George E. Covucci
Peter G. Neiman
ARNOLD & PORTER
1200 New Hampshire Ave., N.W.
Washington, D.C. 20036
(202) 872-6681
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<PAGE>
CERTIFICATE OF SERVICE
I hereby certify that on February 27, 1995, true
and correct copies of the foregoing Motion to Intervene,
the accompanying proposed complaint, and the memorandum
in support thereof were served by telecopier and first
class United States mail, postage prepaid, upon Seth D.
Greenstein, Esq., McDermott, Will & Emery, 1850 K
Street, N.W., Washington, D.C., 20006-2296, telecopier
number (202) 778-8087, and upon Barbara L. Moore, Esq.,
Cooley, Manion, Moore & Jonas, P.C., 21 Custom House
Street, Boston, MA, 02110, telecopier number (617) 737-
3113.
Dated: February 27, 1995
/s/ Albert D. Brault
-----------------------
Albert D. Brault
101 S. Washington St.
Rockville, MD 20850
(301) 424-1060
Attorney for Greenbelt
Residential Limited
Partnership
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<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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LER 8, a Maryland General Partnership, on
its behalf and on behalf of
SPRINGHILL LAKE INVESTORS LIMITED
PARTNERSHIP,
Plaintiff,
GREENBELT RESIDENTIAL LIMITED PARTNERSHIP DKC 95-555
11501 Huff Court, North Bethesda,
MD, 20895-1094, Plaintiff-Intervenor
v.
THREE WINTHROP PROPERTIES, INC., et al.,
Defendants.
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MEMORANDUM OF LAW IN SUPPORT OF
GREENBELT RESIDENTIAL LIMITED
PARTNERSHIP'S MOTION TO INTERVENE
Greenbelt Residential Limited Partnership
("Greenbelt") is in a battle with defendants to acquire
the interest in certain property (the "Project") owned
by Springhill Lake Investors Limited Partnership
("Springhill L.P.")
Greenbelt has solicited proxies asking the
partners of Springhill L.P. to consent to dissolving the
partnership and putting the partnership's sole asset,
its interest in the Project, up for sale. The deadline
for returning those proxies is March 7, 1995. Greenbelt
has offered to purchase Springhill L.P.'s interest if it
is put up for sale.
<PAGE>
<PAGE>
In an effort to block Greenbelt's efforts to
acquire the property, defendants have commenced a tender
offer to acquire Springhill L.P. That tender offer
expires on March 2.
This action was filed by a limited partner of
Springhill L.P., seeking to enjoin defendants' tender
offer on the grounds that (1) Three Winthrop Properties,
Inc. ("Three Winthrop") (which is both an affiliate of
the company making the tender offer, defendant Aquarius
Acquisitions, L.P. and also the general partner of the
target, Springhill L.P.) was violating its fiduciary
duties to the limited partners of Springhill L.P. by
aiding the tender offer and failing to set up a neutral
procedure for evaluating the competing offers, and (2)
that Three Winthrop had violated the securities laws by
failing to make the disclosures required under Rule 13-a3.
Plaintiff's preliminary injunction motion will
determine whether or not defendants' tender offer goes
forward, and thus whether or not the limited partners of
Springhill, L.P. (the "Investor Limited Partners") will
have a full and fair chance to consider Greenbelt's
proxy solicitation. Moreover, defendants' breaches of
fiduciary duty and securities law violations are
injuring Greenbelt by making it less likely that the
Investor Limited Partners will choose Greenbelt's offer
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<PAGE>
over defendants'. Greenbelt therefore respectfully moves to intervene as of
right in this action as a plaintiff pursuant to
Rule 24(a) of the Federal Rules of Civil Procedure.
ARGUMENT
Under Rule 24(a), the Court should grant a timely motion to intervene
where (1) "the applicant claims an interest relating to the property or
transaction which is the subject of the action" and (2) "the applicant is so
situated that the disposition of the action may as a practical matter impair
or impede the applicant's ability to protect that interest" unless (3) "the
applicant's interest is adequately represented by existing parties." Fed. R.
Civ. P. 24(a); Gould v. Alleco, Inc., 883 F.2d 281 (4th Cir. 1989), cert.
denied, 493 U.S. 1056 (1990). The Court should view motions to intervene
liberally, in favor of granting intervention. Feller v. Brock, 802 F.2d 722,
729 (1986). Under these standards, the Court should grant Greenbelt's motion
here.
First, Greenbelt has an interest in the transactions which are the subject
of this action. This action will determine how the Investor Limited Partners
evaluate Greenbelt's consent solicitation vis-a-vis the
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<PAGE>
Aquarius tender offer. See Feller, 802 F.2d at 730 (interest of competitor
sufficient for intervention).
Second, if this court were to deny the injunctive relief sought by the
Investor Limited Partners, that would impair Greenbelt's ability to protect
its interest in seeing that its offer is fairly weighed against the Aquarius
tender offer. While not technically binding on Greenbelt, as a practical
matter such an order would make it impossible for Greenbelt to get relief in
the few days before the Aquarius tender offer expires.
Finally, Greenbelt's interest in the transaction is not adequately
represented by the Investor Limited Partners. Greenbelt has far more at stake
than any of the Investor Limited Partner plaintiffs, who own only relatively
small interests. Greenbelt should be allowed to intervene to pursue this
litigation more aggressively than the plaintiffs may be willing to do.
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<PAGE>
<PAGE>
CONCLUSION
For the reasons set forth above, this Court should grant Greenbelt's
motion to intervene.
Respectfully submitted,
BRAULT, GRAHAM, SCOTT & BRAULT
/s/ Albert D. Brault
---------------------------------
Albert D. Brault (#01041)
101 S. Washington St.
Rockville, MD 20850
(301) 424-1060
OF COUNSEL:
Stephen M. Sacks
George E. Covucci
Peter G. Neiman
ARNOLD & PORTER
1200 New Hampshire Ave., N.W.
Washington, D.C. 20036
(202) 872-6681
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<PAGE>
<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
LER 8, a Maryland General Partnership, on
its behalf and on behalf of
SPRINGFIELD LAKE INVESTOR LIMITED
PARTNERSHIP
Plaintiff DKC-95-555
GREENBELT RESIDENTIAL LIMITED PARTNERSHIP
11501 Buff Court, North Bethesda
MD, 20895-1094,
Plaintiff-Intervenor
v.
THREE WINTHROP PROPERTIES, INC., et al.
Defendants
ORDER
UPON CONSIDERATION of the Plaintiff's, Greenbelt Residential Limited
Partnership's, Motion to Intervene and the Complaint attached thereto, and
any opposition thereto, it is this day of , 1995,
by the United States District Court for the District of Maryland,
ORDERED that the Motion to Intervene be GRANTED and that the Intervenor
should promptly file the proposed Complaint.
_______________________________
JUDGE, CIRCUIT COURT FOR
MONTGOMERY COUNTY, MARYLAND
COPIES TO:
Albert D. Brault, Esq.
101 S. Washington Street
Rockville, MD 20850
<PAGE>
<PAGE>
Stephen M. Sacks, Esq.
Arnold & Porter
1200 New Hampshire Avenue, N.W.
Washington, D.C., 20036
Seth D. Greenstein, Esq.
McDermott, Will & Emery
1850 K Street, N.W.
Washington, D.C., 20006-2296
Barbara L. Moore, Esq.
Cooley, Manion, Moore & Jones, P.C.
21 Custom House Street
Boston, MA 02110
