SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------------
SCHEDULE 14D-9
Solicitation/Recommendation Statement Pursuant to Section 14(d)(4)
of the Securities Exchange Act of 1934
(AMENDMENT No. 1)
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AETNA REAL ESTATE ASSOCIATES, L.P.
(Name of Subject Company)
AETNA REAL ESTATE ASSOCIATES, L.P.
(Name of Person Filing Statement)
Limited Partnership Depository Units
(Title of Class of Securities)
008171 1 10 0
(CUSIP Number of Class of Securities)
------------------------------------------
Paul L. Abbott Daniel R. Leary
AREA GP CORPORATION AETNA/AREA CORPORATION
3 World Financial Center, 29th Floor 242 Trumbull Street
New York, New York 10285 Hartford, Connecticut 06156
(212) 526-3237 (860) 275-2178
(Name, Address, and Telephone Number of Persons Authorized to Receive
Notices and Communications on Behalf of the Person(s) filing Statement)
Copies to:
Patrick J. Foye, Esq. John D. Capers, Esq.
SKADDEN, ARPS, SLATE, KING & SPALDING
MEAGHER & FLOM LLP 191 Peachtree Street, N.E.
919 Third Avenue Atlanta, Georgia 30303-1763.
New York, New York 10022 (404) 572-4600
(212) 735-2274
AMENDMENT NO. 1 TO SCHEDULE 14D-9
This Amendment No. 1 amends the Tender Offer Solicita-
tion/Recommendation Statement on Schedule 14D-9, filed with the Commission
on October 31, 1996 (the "Schedule 14D-9") by Aetna Real Estate Associates,
L.P., a Delaware limited partnership (the "Partnership"), relating to the
unsolicited tender offer by Acorn Hill Partners L.L.C., a Delaware limited
liability company (the "Bidder"), to purchase from holders ("Unitholders")
of Limited Partnership Depositary Units of the Partnership (the "Units") up
to 3,176,136 of the issued and outstanding Units of the Partnership, upon
the terms and subject to the conditions set forth in the Bidder's Offer to
Purchase dated October 30, 1996 and the Letter of Transmittal.
Unless otherwise indicated herein, each capitalized term
used but not defined herein shall have the meaning assigned to such term in
the Schedule 14D-9.
Item 8. Additional Information to be Furnished.
Item 8 is hereby amended to add the following:
A purported class action lawsuit (the "Action") was filed on
or about November 25, 1996 in the Court of Chancery of the State of
Delaware in and for New Castle County by a purported Unitholder of the
Partnership (the "Plaintiff") against the Partnership and the General
Partners (the "Defendants"). The Action alleges, among other things, that
the Defendants have breached the fiduciary duties they owe the Unitholders
and violated certain provisions of the Partnership Agreement. The Action
seeks, among other things, the dissolution of the Partnership and
appointment of an independent liquidating trustee and monetary damages,
including attorney's fees and expenses.
Item 9. Material to be Filed as Exhibits
Item 9 is hereby supplemented and amended by adding the
following, a copy of which is attached hereto as an exhibit:
(c)(3) Complaint in connection with Larry L. Bobbitt v. Aetna Real Estate
Associates, L.P. et al., filed in the Court of Chancery in
Delaware on or about November 25, 1996.
SIGNATURE
After reasonable 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: November 27, 1996
AETNA REAL ESTATE ASSOCIATES, L.P.
By: Aetna/AREA Corporation
General Partner
By: /s/ Daniel R. Leary
Name: Daniel R. Leary
Title: President
By: AREA GP Corporation
General Partner
By: /s/ Paul S. Abbott
Name: Paul L. Abbott
Title: President
EXHIBIT INDEX
Exhibit Description Page
(c)(3) Complaint in connection with Larry L. Bobbitt
v. Aetna Real Estate Associates, L.P. et al.,
filed in the Court of Chancery in Delaware
on or about November 25, 1996.
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
------------------------------------- x
LARRY L. BOBBITT, :
:
Plaintiff, : Civil Action No.
:
v. :
:
AETNA REAL ESTATE ASSOCIATES, L.P., :
AREA GP CORPORATION and AETNA/AREA :
CORPORATION, :
:
Defendants. :
:
------------------------------------- x
CLASS ACTION COMPLAINT FOR BREACHES OF FIDUCIARY
DUTIES, DISSOLUTION OF LIMITED PARTNERSHIP
AND APPOINTMENT OF LIQUIDATING TRUSTEE
Plaintiff, on behalf of himself and similarly
situated unitholders of Aetna Real Estate Associates,
L.P. (the "Partnership"), by and through his undersigned
counsel, hereby brings this action which seeks (1)
redress for breaches of fiduciary duties and violations
of the Amended and Restated Limited Partnership Agreement
of Aetna Real Estate Associates, L.P. (the "Partnership
Agreement"), and (2) a dissolution of the Partnership and
appointment of an independent liquidating trustee under 6
Del. C. SECTIONS 17-802 and 17-803.
A. SUMMARY OF THE ACTION
This Complaint seeks, among other things, the
dissolution of a ten-year old real estate Partnership
capitalized by nearly 20,000 Unitholders who invested
more than one-quarter billion dollars but who have
received distributions during the life of the Partnership
amounting to only approximately 3% per annum. In
contrast, the General Partners, who invested virtually
nothing in the Partnership, have garnered $47 million in
fees. The Unitholders, who purchased their interests in
reliance on sales representatives' promises of a steady
income stream of 8-9% per annum and the preservation of
capital, have instead observed an uninterrupted history
of monies flowing to the General Partners and a trickle
to themselves, and a diminution of capital (which has
become apparent despite General Partners' persistent
practice of inflating asset value for the purpose of
duping Class Members as to the value of their investment
and enhancing their annual asset value-based fees). The
Complaint seeks monetary damages from the General
Partners for the breaches of fiduciary duty that have
characterized their management of the Partnership for
their own aggrandizement rather than for the benefit of
the Class Members. This Complaint would be compelling if
nothing further was alleged or if no additional relief
was sought, but the General Partners' insidious conduct
has become more pronounced in light of recent events
mandating the dissolution of the Partnership and other
relief. The General Partners, confronted with an
expression of interest by at least one, third party
purchaser/tender offeror ("Tender Offeror") for the
Units, effectively entrenched themselves by negotiating
in August 1996 a Standstill Agreement with the Tender
Offeror which capped the number of Units that would be
the subject of any tender offer. With a single stroke,
the General Partners set the stage for the continued
exploitation of the Unitholders in at least two ways: (a)
it permitted a potential threat to the General Partners,
namely, the Tender Offeror, to offer a bargain basement
price for the Units, and given the Unitholders' thirst
for some liquidity, the General Partners could anticipate
that some significant number of the Unitholders would
tender their Units no matter how deficient the
consideration, and (b) it allowed the General Partners to
remain in control of management of the Partnership
without interruption to their fee income flow for at
least two years. These events compel the dissolution of
the Partnership, which may be the only time during the
life of the Partnership that the interests of the
Unitholders will be protected and maximized.
B. PARTIES
1. Plaintiff Larry L. Bobbitt is and has at
all relevant times been an owner of 1113 units of the
Partnership. Plaintiff purchased his Units of the
Partnership in 1990.
2. Defendant Aetna Real Estate Associates,
L.P., is a Delaware limited partnership with its
principal place of business at City Place, Hartford,
Connecticut 06156. As of March 1, 1996, the Partnership
had approximately 12,724,547 Limited Partnership
Depository units ("Units") outstanding held by
approximately 19,657 unitholders ("Unitholders")
scattered throughout the United States.
3. Defendant AREA GP Corporation, a Delaware
corporation, is a general partner of the Partnership with
executive offices located at 3 World Financial Center,
New York, New York 10285. Defendant Aetna/AREA
Corporation, a Connecticut corporation, also is a general
partner of the Partnership with executive offices at 242
Trumbull Street, Hartford, Connecticut 06156. The
general partners of the Partnership are collectively
referred to herein as the "General Partners." The General
Partners are responsible for the management of the
Partnership's business. As general partners of a
Delaware limited partnership, the General Partners owe
fiduciary duties of good faith, fair dealing, due care,
loyalty and complete disclosure to the Partnership and
its Unitholders. In addition, SECTION 6.3 (v) of the
Partnership Agreement provides that "[t]he General
Partner shall conduct the affairs of the Partnership in
the best interest of the Partnership and the Recognized
Owners, including the safekeeping and use of all
Partnership funds and assets for the exclusive benefit of
the Partnership."
4. Non-party Acorn Hill Partners, L.L.C.
("Acorn") is a Delaware limited liability company which
was organized for the purpose of acquiring Units of the
Partnership pursuant to a tender offer which is described
more fully below. The principal executive offices of
Acorn are at 1301 Avenue of the Americas, New York, New
York 10019. The managing member of Acorn is AP-GP from
Partners, Inc., a newly-formed Delaware corporation,
ultimately controlled by Apollo Real Estate Capital
Advisors II, Inc., as general partner of Apollo Real
Estate Advisors II, L.P., the general partner of Apollo
Real Estate Investment Fund II, L.P., a recently formed
private real estate investment fund and sole shareholder
of AP-GP Prom Partners, Inc.
5. Non-party Liquidity Financial is a
registered investment advisor, and is acting as financial
advisor to, and is an affiliate of, Acorn in connection
with the Acorn Tender Offer (described below). Liquidity
Financial Group, L.P. ("LFG"), is an affiliate of
Liquidity Financial.
C. CLASS ACTION ALLEGATIONS
6. Plaintiff brings this action on his own
behalf and as a class action on behalf of all Unitholders
of the Partnership (except defendants herein and their
affiliates) as of the close of business on November 25,
1996, who have been or will be adversely affected by the
conduct of defendants alleged herein.
7. This action is properly maintainable as a
class action for the following reasons:
(a) The class of Unitholders for whose
benefit this action is brought is so numerous that
joinder of all class members is impracticable. As of
June 30, 1996, there were approximately 12.75 million
Units outstanding owned by over 19,000 Unitholders
scattered throughout the United States.
(b) There are questions of law and fact
which are common to members of the Class and which
predominate over any questions affecting any individual
members. The common questions include, inter alia, the
following:
i. Whether the General Partners
have breached their fiduciary duties and the Partnership
Agreement;
ii. Whether the General Partners
have failed to conduct an adequate process to explore
alternatives to the Acorn Tender Offer (defined below);
iii. Whether a dissolution and
appointment of a trustee for the Partnership are
warranted pursuant to 6 Del. C. SECTIONS 17-802 and 17-803; and
iv. Whether plaintiff and the other
members of the Class will be irreparably damaged by the
conduct complained of herein.
8. Plaintiff is committed to prosecuting this
action and has retained competent counsel experienced in
litigation of this nature. The claims of plaintiff are
typical of the claims of the other members of the Class
and plaintiff has the same interest as the other members
of the Class. Accordingly, plaintiff is an adequate
representative of the Class and will fairly and
adequately protect the interests of the Class.
9. Defendants have acted or refused to act on
grounds generally applicable to the Class, thereby making
appropriate injunctive relief with respect to the Class
as a whole.
10. The prosecution of separate actions by
individual members of the Class could create a risk of
inconsistent or varying adjudications with respect to
individual members of the Class which would establish
incompatible standards of conduct for defendants or
adjudications with respect to individual members of the
Class which would as a practical matter be dispositive of
the interests of the other members not parties to the
adjudications.
11. Plaintiff anticipates that there will not
be any difficulty in the management of this litigation.
12. For the reasons stated herein, a class
action is superior to other available methods for the
fair and efficient adjudication of this action.
D. SUBSTANTIVE ALLEGATIONS
1. FACTUAL BACKGROUND
13. The Partnership was formed in 1986.
Pursuant to a Prospectus dated March 5, 1986, the
Partnership offered 15 million preformation Units for
sale to the public at $20 per Unit, with a minimum
purchase (other than purchases pursuant to the
Partnership's distribution reinvestment plan) of 250
Units.
14. From March 1986 through December 31, 1990,
the Partnership sold approximately 12,727,547 Units to
the public, raising a total of $265,521,423. The
Partnership thereafter purchased, on an all-cash basis,
thirteen properties at a total cost of $239.9 million.
The units are relatively illiquid, there being no public
market for them.
15. Section 2.5 of the Partnership Agreement
provides that "[t]he purpose of the Partnership is to
make Investments with respect to income-producing
apartment complexes, office buildings, shopping centers,
and other commercial real estate, and to engage in any
and all other activities related, necessary, appropriate,
or incidental thereto."
16. Section 2.6 of the Partnership Agreement
provides that "[t]he primary investment objectives of the
Partnership are (a) to provide cash distributions from
rental and interest income, (b) to obtain capital
appreciation, (c) to preserve and protect the
Partnership's capital, and (d) to the extent the
Partnership is successful in raising funds from offerings
of Units subsequent to the Initial Offering, to obtain
additional diversification over time in the location,
size and type of its Investments."
17. Under the Partnership Agreement, the
General Partners receive, among other things, an
Investment Portfolio Fee based on the net asset value of
the Partnership's investments. The fee is payable
quarterly from available cash-flow and is equal to 2.5%
per annum of the net asset value of the Partnership
investments.
2. THE GENERAL PARTNERS SELFISHLY ENRICH
THEMSELVES AT THE EXPENSE OF THE
UNITHOLDERS DESPITE CLEAR EVIDENCE THAT
THE PARTNERSHIP CANNOT MEET ITS
OBJECTIVES
18. The General Partners, in breach of their
fiduciary duties to the Unitholders, have operated the
Partnership selfishly to enrich themselves with rich,
substantial fees, when they knew or should have known
that the Partnership could not reasonably operate in
conformity with the purposes and objectives of the
Partnership as set forth in the Partnership Agreement.
19. On information and belief, plaintiff
alleges that the fee structure has been manipulated by
the General Partners to enhance fees to the General
Partners at the expense of the Unitholders. The General
Partners have relied upon appraisal methodologies that
yielded appraisal values far in excess of values that
could reasonably be expected to be realized upon
liquidation of Partnership assets. For example, from
1989 to 1990, cash flow from investments went from
$19,140,000 to $18,198,000. At the same time, however,
the appraised value of the Partnership investments rose
from $238,394,000 to $273,297,000 -- well above the
purchase price of the investments. According to the
Schedule 14D-9 (defined below), for the six months ended
June 30, 1996, the General Partners have reaped fees in
the total amount of $2,421,832. For the year ended
December 31, 1995, the General Partners reaped fees of
over $4.8 million. Over the life of the Partnership, the
General Partners have reaped fees totaling more than $47
million.
20. As early as 1990, the General Partners
knew or should have known that the discounted value of
future cash flow from the Partnership assets and the
residual value of the Partnership assets would not
reasonably begin to approximate the amounts necessary to
meet the purposes and objectives of the Partnership, and
that continuing the Partnership as such would perpetuate
and exacerbate the harm to Unitholders. Further
exacerbating the plight of the Unitholders was that the
investment Portfolio Fee structure has led to the
artificial depression of the value of the Units. Despite
the existence of these conditions, the General Partners
have wrongfully failed to investigate or effect
alternatives to maximize value to the Unitholders and to
mitigate the losses experienced by the Unitholders
through the continued operation of the Partnership.
21. Instead, the General Partners have
continued to reap their substantial fees further
depressing the value of the Units and permitting with the
passage of time the heightening of the vulnerability of
the Unitholders, who are desperate for liquidity, to
opportunistic harmful offers for their Units at
inadequate prices. Unitholders have thus been damaged
not only by an unacceptable rate of return on their
investment, but also by the continued deflation of the
value of the Units.
3. THE GENERAL PARTNERS CONTINUE TO ENTRENCH
THEMSELVES AND IMPEDE ALTERNATIVES TO
MAXIMIZE VALUE TO UNITHOLDERS IN THE FACE
OF INADEQUATE OFFERS FOR UNITS
22. The General Partners failure properly to
explore and engage in alternatives to rescue Unitholders
from the depressed value of the Units has in fact led to
opportunistic inadequate offers for Partnership units.
Instead of appropriately exploring and engaging in
alternative courses of action, such as seeking bids for
all units at a fair price or undertaking an orderly
liquidation of the Partnership assets to maximize value
to the Unitholders, the General Partners have acted
further to entrench themselves in their present positions
which will continue, unless checked, to generate rich
fees at the further expense of the Unitholders.
23. According to the Schedule 14D-1 (defined
below), beginning in late 1994, Liquidity Financial began
exploring potential tender offers for limited partnership
interests. Indeed, Liquidity Financial had used its
position as unitholder in various partnerships to request
unitholder lists. LFG requested in writing a list of the
Unitholders from the Partnership in October 1995.
24. The General Partners ultimately agreed in
August, 1996 to provide LFG with the Unitholder list, but
only on the condition that LFG enter into a Standstill
Agreement which has the effect of impeding possible
alternatives to maximize unitholder value and entrenching
the General Partners in their self-enriching positions.
25. The Standstill Agreement provides that,
for two years, ending in August 1998 (i) neither
Liquidity Fund nor its affiliates may, without prior
consent of the Partnership, acquire, attempt to acquire
or make a proposal to acquire, directly or indirectly,
more than 25% of the outstanding Units of the
Partnership, (ii) seek or propose or enter into, directly
or indirectly, any merger, consolidation, business
combination, sale or acquisition of assets, liquidation,
dissolution or other similar transaction involving the
Partnership, (iii) make, or in any way participate,
directly or indirectly, in any solicitation of proxies or
consents to vote or seek to advise or influence any
person with respect to the voting of any voting
securities of the Partnership, (iv) form, join or
otherwise participate in a group (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934)
with respect to any voting securities of the Partnership,
(v) disclose to any third party any intention, plan or
arrangement inconsistent with the terms of the Standstill
Agreement, or (vi) loan money to, advise, assist or
encourage any person in connection with any action
inconsistent with the Standstill Agreement. The
Standstill Agreement also provides, among other things,
that LFG cannot sell any Units for two years unless each
buyer or transferee agrees in writing with the
Partnership to be bound by the terms and conditions of
the Standstill Agreement for the remainder of its term.
Acorn, LFG and Liquidity Financial agreed to be bound by
the Standstill Agreement.
26. Thus, the General Partners, when faced
specifically with an indication that the Unitholders
would be exposed to an opportunistic low-ball offer
preying upon Unitholders' lack of liquidity and the
depressed value of the Units, failed to act in the best
interests of Unitholders by exploring alternatives such
as dissolution of the Partnership or seeking other
potential bidders for all Units reflecting the true value
of the Units. Rather, in further breach of their
fiduciary duties and the Partnership Agreement, the
General Partners selfishly abused their positions and
control over Partnership assets, including the list of
Unitholders, further to entrench themselves, perpetuate
the generation of their fees at the expense of the
Unitholders, and impede alternatives to the continuation
of the Partnership business under the present conditions.
Indeed, in the Schedule 14D-1, Acorn observes that among
the reasons Unitholders may have for not wishing to
continue in the Partnership is that, based upon Acorn's
experience, the General Partners may make it difficult
for other third parties to obtain a list of Unitholders
which could impede or delay other offers for Partnership
Units.
4. ACORN COMMENCES THE ACORN TENDER OFFER
27. Following execution of the Standstill
Agreement, Acorn advised the Partnership that it would
commence a tender offer for Partnership Units. LFG also
requested, on behalf of Acorn, that the General Partners
agree to recognize Acorn as a Registered Owner of units
upon Acorn's acceptance of tendered units for payment.
Exerting further leverage on LFG and Acorn, the General
Partners responded that the Partnership was not at that
time prepared to agree to recognize Acorn as a Registered
Owner upon consummation of the proposed tender offer.
The General Partners apparently believed they had the
ability to impede Acorn's tender offer by withholding
this recognition of Acorn as the Registered Owner of
tendered shares. Already having extracted the
entrenching Standstill Agreement and having failed to
investigate and effect alternatives which would maximize
value to the Unitholders, the General Partners agreed to
recognize Acorn as Register Owner upon consummation of
the proposed tender offer.
28. On October 30, 1996, Acorn, pursuant to
its Schedule 14D-1, commenced its Offer to Purchase up to
3,176,136 of the issued and outstanding Limited
Partnership Depository Units of Aetna Real Estate
Associates, L.P. for the low-ball price of $10 cash per
Unit net to the seller (the "Acorn Tender Offer").
Unless extended, the Acorn Tender Offer is effective
until midnight, New York City time, November 27, 1996.
The Acorn Tender Offer is not conditioned upon any
minimum number of Units being tendered.
29. In its Schedule 14D-1 disseminated on or
about October 30, 1996, Acorn states, among other things,
that the purpose of the Acorn Tender Offer is to enable
Acorn to acquire a significant interest in the
Partnership for investment purposes based on its
expectation that there may be underlying value in the
properties of the Partnership. The Schedule 14D-1 also
notes that in considering the Tender Offer, Unitholders
are urged to consider, among other things, that "[(t]he
Book Value per unit, as reflected in the Form 10-Q for
the quarter ended June 30, 1996, was $16.04 per Unit;"
and that "[t]he purchaser is making the Offer with a view
to making a profit."
30. In addition, among the factors that Acorn
states may persuade Unitholders to discontinue their
investment in the Partnership, is that Acorn believes
that it may be difficult for other third parties to
obtain a Unitholder list from the General Partners, which
could impede or delay the commencement of other tender
offers for the Units; and that until the August 14, 1998
expiration of the Standstill Agreement, Acorn cannot
remove and replace the General Partners or cause any
extraordinary transaction with respect to the
Partnership, and, therefore, future returns on the Units
will continue to depend, in part, on the actions or
inactions of the General Partners.
31. In response to the Acorn Tender Offer, the
General Partners continued to refuse to undertake
appropriate alternative action that would rescue
Unitholders and maximize the value of the Units. The
Schedule 14D-9 states that following receipt of the Acorn
Tender Offer the General Partners reviewed and considered
the Acorn Tender Offer "and explored various possible
alternative courses of action which might be available to
the Partnership in response to the Acorn Offer."
However, while the General Partners vaguely refer to
"various possible alternative courses of action" which
were purportedly explored, there is no evidence in the
Schedule 14D-9 that any specific "alternatives" were
explored, such as the availability and viability of
alternative transactions including offers or proposals by
other bidders, dissolution of the Partnership, or any
other transaction which would maximize value to
Unitholders and cease the existence of the Partnership
and self-enriching conduct of the General Partners.
Indeed, there is no evidence in the Schedule 14D-9 that
the General Partners even engaged any outside financial
advisor to advise the General Partners with respect to
the Acorn Tender Offer or any alternatives. Further,
there is no statement by the General Partners regarding
their intentions with respect to any available
alternative.
32. Instead of describing available
alternatives and their intentions with respect thereto,
the General Partners state that the Partnership has
determined that the Acorn Tender Offer is inadequate, not
in the best interest of either the Partnership or
Unitholders, and that the Partnership strongly recommends
that Unitholders reject it. The Schedule 14D-9 also
states that the Partnership reached this conclusion after
considering, among other things, that the price per Unit
offered does not reflect the value inherent in the Units,
given that the price offered is less than 65% of the
Partnership's net asset value of $15.55 per Unit as of
June 30, 1996; that the Book value of each Unit, as of
June 30, 1996, was $16.04; that Unitholders accepting the
Tender Offer will no longer receive cash distributions;
and that Acorn is making the Acorn Tender offer with a
view toward making a profit.
33. In response to the Schedule 14D-9, Acorn
issued an amendment to its Schedule 14D-1, on or about
November 12, 1996. Acorn focuses on the illiquidity of
the Units, among other things, noting that the General
Partners state that the Acorn Tender Offer is inadequate,
but that the General Partners have not articulated any
plan to liquidate the Partnership and pay over the
liquidation proceeds; and that the General Partners state
that Unitholders will not receive distributions if they
sell, but that the Partnership is currently only
distributing $.72 per Unit annually or 3.6% of the
original investment price.
34. Thus, instead of properly fulfilling their
fiduciary duties in response to the Acorn Tender Offer,
the General Partners have wrongfully acted to entrench
themselves to continue to reap their substantial fees at
the expense of the Unitholders, to impede potential
efforts to remove the General Partners, to dissolve the
Partnership for the benefit of the Unitholders and to
impede potential third party alternative offers for all
Partnership Units, or for dissolution of the Partnership,
which would maximize the value to the Unitholders.
35. On information and belief, other parties
have interest in making competing bids for all of the
Partnership Units and/or all of the Partnership assets,
which would afford all Class members an opportunity to
maximize the proceeds payable to them on liquidation.
36. The foregoing misconduct by the General
Partners, in breach of their fiduciary duties and the
Partnership Agreement, has damaged and will continue to
damage the Class, by among other things, depressing the
value of the Units and exposing the otherwise captive
Unitholders to grossly inadequate offers for the Units.
Indeed, plaintiff has received an offer from First Trust
Co., L.P., ("First Trust") to purchase up to 623,502
Units at a mere $10.60 per Unit. This Offer is dated
November 14, 1996, and expires on December 16, 1996
("First Trust Tender Offer").
37. Under the present circumstances, it is
impracticable to continue the business of the Partnership
in conformity with the purposes and objectives of the
Partnership as set forth in the Partnership Agreement,
and dissolution of the Partnership and appointment of an
independent liquidity trustee are warranted under 6 Del.
C. SECTIONS 17-802 and 17-803.
38. Plaintiff has no adequate remedy of law.
WHEREFORE, plaintiff demands judgment as
follows:
A. Declaring that this action may be maintained as
a class action;
B. Ordering the General Partners to relinquish any
rights under the Standstill Agreement which have the
effect of impeding maximization of Unitholder value or
entrenching the General Partners;
C. Enjoining the General Partners from taking any
action to transfer or recognize ownership by Acorn, First
Trust, or any other tender offeror of any Unit acquired
pursuant to the Acorn Tender Offer, First Trust Tender
Offer, or any other tender offer pending the full
disclosure of all alternatives available to the
Unitholders;
D. Ordering the General Partners to explore
alternatives, including potential bids for the Units
and/or for the Partnership assets;
E. Ordering dissolution of the Partnership and
appointment of an independent liquidating trustee
pursuant to 6 Del. C. SECTIONS 17-802 and 17-803;
F. Ordering the General Partners to provide access
to the Partnership's books and records in order to permit
all bona fide potential bidders to perform due diligence
in connection with formulating their bids;
G. Requiring the General Partners to compensate
plaintiff and the members of the Class with money damages
for all losses and damages suffered and to be suffered by
them as a result of the breaches of fiduciary duties
complained of herein, together with prejudgment and post-
judgment interest;
H. Awarding plaintiff the costs and disbursements
of this action, including reasonable attorneys',
accountants', and experts' fees; and
I. Granting such other and further relief as may
be just and proper.
Dated: November 25, 1996 CHIMICLES, JACOBSEN & TIKELLIS
Pamela S. Tikellis
James C. Strum
Robert J. Kriner, Jr.
One Rodney Square
P.O. Box 1035
Wilmington, DE 19899
(302) 656-2500
- and -
CHIMICLES, JACOBSEN & TIKELLIS
Nicholas E. Chimicles
One Haverford Centre
361 West Lancaster Avenue
Haverford, PA 19041-0200
(610) 642-8500
Attorneys for Plaintiff
OF COUNSEL:
GOODKIND LABATON RUDOFF & SUCHAROW LLP
Lawrence Sucharow
100 Park Avenue, 12th Floor
New York, New York 10017
HANZMAN CRIDEN KORGE HERTZBERG & CHAYKIN, P.A.
Michael E. Criden
Suite 2100
First Union Financial Center
200 South Biscayne Boulevard
Miami, Florida 33131
