<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
SCHEDULE 14D-1
(Amendment No. 2)
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
----------------------
ARVIDA/JMB PARTNERS, L.P.
(Name of Subject Company)
WALTON STREET CAPITAL ACQUISITION CO. III, L.L.C.
(Bidder)
LIMITED PARTNERSHIP INTERESTS
AND ASSIGNEE INTERESTS THEREIN
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
----------------------
Edward J. Schneidman
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
(312) 782-0600
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
CALCULATION OF FILING FEE
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Transaction Valuation* Amount of Filing Fee
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<S> <C>
$85,672,240 $17,134.44
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</TABLE>
* For purposes of calculating the filing fee only. This amount assumes the
purchase of 185,840 Limited Partnership Interests and Assignee Interests
therein ("Interests") of the subject company at $461 in cash per Interest.
[x] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: $15,610.56
Form or Registration Number: Schedule 14D-1
Filing Party: Walton Street Capital Acquisition Co. III., L.L.C.
Date Filed: June 28, 1996
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<PAGE> 2
Amendment No. 2 to Schedule 14D-1
This Amendment No. 2 to Schedule 14D-1 amends the Schedule 14D-1 filed by
Walton Street Capital Acquisition Co. III, L.L.C. with the Commission on June
28, 1996, as amended by Amendment No. 1 filed with the Commission on July 26,
1996. All capitalized terms used herein but not otherwise defined shall have
the meanings ascribed to such terms in the Offer to Purchase dated June 27,
1996 (the "Offer to Purchase") and the related Letter of Acceptance (the
"Letter of Acceptance," as each may be supplemented, modified or amended from
time to time, which together constitute the "Offer").
ITEM 1. SECURITY AND SUBJECT COMPANY.
Item 1(b) is hereby amended by the following:
The Purchase Price for the Interests has been increased to $461 per
Interest, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase and in the related
Letter of Acceptance, as each may be supplemented, modified or amended from
time to time. In connection with such increase, the Purchaser has extended the
Expiration Date of its Offer until 12:00 Midnight Eastern Time, on Thursday,
August 15, 1996.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 4(a) is hereby amended by the following:
The total amount of funds necessary to purchase the maximum number of
Interests pursuant to the Offer and to pay related fees and expenses has been
increased to approximately $89,000,000.
The Financing Agreement has been amended by a letter dated August 1, 1996
to provide that Whitehall shall, subject to the terms and conditions of the
Financing Agreement, purchase, or cause a designated affiliate to purchase,
from Purchaser a number of Interests equal to approximately 80% of the
Interests purchased by Purchaser pursuant to the Offer for a price in cash
equal to the Purchase Price. The amendment to the Financing Agreement also
deleted the provisions requiring an annual payment by Whitehall to Purchaser on
the outstanding amount of Whitehall's investment. The information set forth in
the amendment to the Financing Agreement, a copy of which is attached hereto as
Exhibit (c)(3), is incorporated herein by reference.
The amount of funds that the Purchaser has been informed by Whitehall that
Whitehall expects will be necessary to purchase, pursuant to the Financing
Agreement, the number of Interests equal to approximately 80% of the tendered
Interests and to pay its share of related fees and expenses has been increased
to approximately $71,200,000.
Section 14 of the Offer to Purchase is hereby supplemented and amended by
deleting the words "and (v)" appearing immediately prior to the words "other
customary conditions" under the caption "Conditions of the Financing Agreement"
and inserting the following language in lieu thereof:
(v) that no action, suit, investigation or proceeding shall be
pending or threatened that could result in any loss, claim, expense,
damage or liability except for those which present risks or potential
costs that Whitehall, in its sole discretion, determines it is willing to
bear, and (vi)
ITEM 10. ADDITIONAL INFORMATION.
Item 10(e) is hereby amended to add the following:
2
<PAGE> 3
On June 24, 1996, Irvin Weiss v Arvida/JMB Managers, Inc., Neil G. Bluhm,
Lehman Brothers Inc. and Arvida/JMB Partners, L.P. (Case No. 96CH 6627) was
filed in the County Department, Chancery Division of the Circuit Court of Cook
County Illinois. This complaint is brought derivatively on behalf of the
Partnership and individually on behalf of Irvin Weiss and a purported class of
all other Holders of Interests (excluding current or former management or
affiliates of the General Partner) to bar (i) the General Partner and Mr. Bluhm
from taking any action to chill tender offers from non-affiliates, (ii) the
officers, directors and shareholders of the defendants from participating in
any special committee on tender offers, (iii) Lehman from advising any such
special committee, and (iv) defendants and their affiliates from making tender
offers. The complaint alleges, inter alia, that the General Partner and Mr.
Bluhm breached their fiduciary duty owed plaintiff and members of the purported
class by chilling tender offers for Interests by non-affiliates, failing to
provide non-affiliated offerors with information and stifling competition for
such Interests, and that Lehman participated in such breaches of fiduciary duty
by colluding with them. In addition to seeking the relief described above,
plaintiff seeks damages in a sum to be determined at trial and such other and
further relief as the Court may deem just and proper and the award of
attorneys' fees and costs. The Purchaser believes this action is without merit
and understands that Mr. Bluhm intends to vigorously defend the action. A copy
of the complaint has been filed as Exhibit (g)(1) to this Amendment No. 2 and
is incorporated herein by reference.
A complaint was filed in the County Department, Chancery Division in the
Circuit Court of Cook County, Illinois on July 1, 1996, and amended on July 8,
1996, in the matter of Jack M. Carlstrom and Lynne M. Carlstrom v. Arvida/JMB
Managers, Inc., Neil G. Bluhm, Walton Street Capital Acquisition Co. III,
L.L.C., Whitehall Street Real Estate Limited Partnership VII, Lehman Brothers
Inc. and Arvida/JMB Partners L.P. (Case No. 96CH 6892). This complaint, as
amended, is brought derivatively on behalf of the Partnership and individually
on behalf of Jack M. Carlstrom and Lynne M. Carlstrom and a purported class of
all other Holders of Interests (excluding current or former management or
affiliates of the General Partner) and seeks to (i) bar the General Partner and
Mr. Bluhm from taking any action to chill tender offers from non-affiliates,
(ii) bar the officers, directors and shareholders of the defendants from
participating in any special committee on tender offers, (iii) bar Lehman from
advising any such special committee, (iv) bar defendants and their affiliates
from making tender offers, (v) compel defendants to foster bidding for control
of the Partnership and (vi) enjoin tender offers by controlling persons and
affiliates of the General Partner. The complaint alleges, inter alia, that the
General Partner breached its fiduciary duty owed plaintiffs and members of the
purported class by tilting the playing field in favor of itself and against
potential bidders for the Partnership, preferring the Purchaser's tender offer
over those of other bidders, failing to disclose non-public information to
other bidders to prevent them from making competing offers, discouraging a fair
bidding contest and entrenching the defendants, and that Whitehall and Lehman
participated in such breaches of fiduciary duty. In addition to seeking the
relief described above, plaintiffs on behalf of themselves and members of the
purported class and the Partnership seek damages in a sum to be determined at
trial, such other and further relief as the Court may deem just and proper and
the award of attorneys' fees and costs. The Purchaser, for itself, believes
this action is without merit and intends to vigorously defend the action. A
copy of the complaint has been filed as Exhibit (g)(2) to this Amendment No. 2
and is incorporated herein by reference.
A hearing has been scheduled for August 8, 1996 to consider the
Plaintiffs' motion to consolidate the two complaints and to appoint lead
counsel.
* * * * *
Item 10(f) is hereby amended to add the following:
(f) The information set forth in the Press Release dated August 2, 1996,
a copy of which is attached as Exhibit (a)(8), is incorporated herein by
reference.
3
<PAGE> 4
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
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99.(a)(8) Press Release dated August 2, 1996
99.(c)(3) Amendment to the Financing Agreement dated August 1, 1996
99.(g)(1) Class Action Complaint as filed on June 24, 1996 with the Circuit Court of Cook County, Illinois
99.(g)(2) Amended Class Action and Derivative Complaint as filed on July 8, 1996 with the Circuit Court of Cook
County, Illinois
</TABLE>
4
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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: August 2, 1996. WALTON STREET CAPITAL ACQUISITION CO. III, L.L.C.
By:/s/ Jeffrey S. Quicksilver
----------------------------------------------
Jeffrey S. Quicksilver
Manager
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
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<S> <C>
99.(a)(8) Press Release dated August 2, 1996.
99.(c)(3) Amendment to the Financing Agreement dated August 1, 1996
99.(g)(1) Class Action Complaint as filed on June 24, 1996 with the Circuit Court of Cook County, Illinois
99.(g)(2) Amended Class Action and Derivative Complaint as filed on July 8, 1996 with the Circuit Court of Cook
County, Illinois
</TABLE>
6
<PAGE> 1
EXHIBIT 99.(a)(8)
CHICAGO, ILLINOIS, August 2, 1996 -- Walton Street Capital Acquisition Co. III,
L.L.C. ("Walton Street") today announced that it has increased the price at
which it will purchase the limited partnership interests and interests held by
any assignee of limited partnership interests (the "Interests") of Arvida/JMB
Partners, L.P. (the "Partnership") to $461 per Interest, net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in the Offer to Purchase and in the related Letter of Acceptance, as each may
be supplemented, modified or amended from time to time. Holders who have
tendered their Interests to Walton Street will automatically receive the
benefit of the increased purchase price and need not take any further action.
Walton Street's purchase price is the same as the July 23, 1996 offer to
purchase Interests by Raleigh Capital Associates L.P. In connection with such
increase, Walton Street has extended the expiration date of its tender offer
for Interests in the Partnership until 12:00 Midnight Eastern Time, on
Thursday, August 15, 1996. As of the close of business on August 1, 1996,
according to information provided by the Depositary, approximately 2,840
Interests of the Partnership had been tendered to the Depositary, and not
withdrawn, pursuant to the terms of the tender offer.
Copies of any of the tender offer materials may be obtained from the Trust
Company of America, the Information Agent/Depositary for the tender offer, at
(800) 797-6812.
Contact: Ira J. Schulman (312) 915-2800
<PAGE> 1
EXHIBIT 99.(c)(3)
August 1, 1996
Whitehall Street Real Estate Limited
Partnership VII
85 Broad Street
New York, New York 10004
Attention: David T. Hamamoto
Re: Amendment to Financing Agreement (the "Amendment") dated as of
June 26, 1996
This Amendment will confirm our agreement to amend the Financing
Agreement dated as of June 26, 1996 (the "Agreement") among Walton Street
Capital Acquisition Co. III, L.L.C. (the "Bidder"), Walton Street Capital,
L.L.C. ("Walton") and Whitehall Street Real Estate Limited Partnership VII
("Whitehall"), whereby Whitehall agreed to finance a portion of the purchase
price for the Interests to be purchased pursuant to the Offer by purchasing or
causing a designated Affiliate to purchase a portion of such Interests from
Bidder. Capitalized terms used in this Amendment and not otherwise defined
have the same meanings as in the Agreement.
In the Agreement, the Bidder agreed, upon the terms and subject to the
conditions set forth in the Agreement, to sell to Whitehall or an Affiliate of
Whitehall designated by Whitehall and Whitehall agreed to purchase or to cause
such a designated Affiliate to purchase from Bidder, for a price of $420 per
Interest (subject to adjustment as set forth in the Agreement), an aggregate
number of Interests equal to the Purchased Interests. The parties now wish,
among other things, to correct the date of the Agreement, increase the price
per Interest to be paid by Whitehall and amend and restate certain provisions
in Article VI.
1. Date. The date of the Agreement, as stated in the first
sentence of the Agreement, is hereby changed from June 26, 1996 to June 27,
1996.
2. Financing. The first sentence of "Section 1.1 Financing the
Offer" of the Agreement is revised to read in its
<PAGE> 2
David T. Hamamoto
August 1, 1996
Page 2
entirety as follows: In order to finance a portion of the Aggregate Purchase
Price, the parties hereto agree, upon the terms and subject to the conditions
set forth in this Agreement, that the Bidder shall sell to Whitehall or an
Affiliate of Whitehall designated by Whitehall, and Whitehall shall purchase or
cause such a designated Affiliate to purchase from Bidder, for a price in cash
equal to $461 per Interest (less the aggregate amount of distributions per
Interest, if any, made or declared by the Target Partnership after the date
hereof and on or prior to the Closing Date (as hereinafter defined)), an
aggregate number of Interests equal to the lesser of (a) .80 times the
aggregate number of Interests purchased by Bidder in the Offer or (b) 148,672
(the "Purchased Interests").
3. Fees and Expenses. Sections 6.1, 6.2 and 6.3 of Article VI
are hereby amended and restated in their entirety as follows:
Section 6.1 Acquisition Fee. At Closing, Whitehall shall pay or
cause to be paid to Walton a fee (the "Acquisition Fee") equal to 2 1/2% of the
aggregate purchase price paid by Whitehall or its designated Affiliate for the
Purchased Interests plus the portion of the Initial Expenses covered by Section
6.4 which are borne by Whitehall and its Affiliates; provided, that for
purposes of this Section 6.1, the Initial Expenses covered by Section 6.4 shall
be deemed not to exceed $700,000. Notwithstanding the foregoing, the
Acquisition Fee to be paid by Whitehall to Walton shall not exceed $500,000.
Section 6.2 Reserved
Section 6.3 Exit Payment. The parties agree that Whitehall will pay
Walton or its designated Associate fees from distributions of Returned Amounts,
upon receipt of Returned Amounts in an amount equal to 5% of the excess over a
16% internal rate of return, compounded annually. For purposes hereof, the
term "Returned Amounts" means the aggregate of all amounts received from third
parties unaffiliated with Whitehall in respect of the Purchased Interests
(including distributions on and proceeds from the sale of Purchased Interests).
To accomplish the foregoing, the parties agree as follows:
(a) Reserved.
(b) Upon receipt by Whitehall and its Affiliates on any
day of Returned Amounts which exceed the then applicable 16%
<PAGE> 3
David T. Hamamoto
August 1, 1996
Page 3
Return Amount, Whitehall shall pay to Walton 5% of the amount by which such
Returned Amounts exceed such 16% Return Amount.
(c) Walton agrees that, if Whitehall or its Affiliates
shall, after making any payment required under Section 6.3(b), be required to
pay any amounts of a type covered by clause (A)(y) of the definition of "16%
Return Amount" below, any amounts due under Section 6.3(b) shall be
recalculated to take proper account of such payments and Walton shall, if
necessary, repay to Whitehall any overpayments by Whitehall (or underpayments
by Walton) thereunder.
(d) As used herein, the following terms have the meanings
specified below:
(i) "16% Return Amount" means on any day the
greater of (I) the amount which, if received as Returned Amounts on
such day, would result in (A)(x) the aggregate of all Returned Amounts
received by Whitehall and its Affiliates, in each case discounted from
the respective dates of receipt to the Closing Date at a 16% per annum
discount rate, minus (y) the aggregate of all amounts paid or payable
by Whitehall and its Affiliates to third parties unaffiliated with
Whitehall as a result of owning or selling the Purchased Interests
(including fees paid or payable pursuant to any litigation or other
liabilities or expenses resulting from Whitehall's entering into this
Agreement and transactions contemplated hereby, but excluding fees and
other amounts paid or payable pursuant to Section 6.1 or 6.3 and the
portion of the Initial Expenses covered by Section 6.4 which are borne
by Whitehall and its Affiliates), in each case discounted from the
respective dates of payment to the Closing Date at a 16% per annum
discount rate, exactly equalling (B) the Initial Investment and (II)
zero. For purposes of this definition, discounting an amount from the
date of receipt or payment to the Closing Date at a 16% per annum
discount rate means dividing such amount by 1.16 raised to a power
equal to the number of years (expressed as a fraction if not a whole
number of years) elapsed during the period from and including the
Closing Date to but excluding such date of receipt or payment.
(ii) Reserved.
<PAGE> 4
David T. Hamamoto
August 1, 1996
Page 4
(iii) "Initial Investment" means the aggregate price
paid for the Purchased Interests pursuant to Article I plus the fee
paid at Closing pursuant to Section 6.1 plus the portion of the
expenses covered by Section 6.4 which were borne by Whitehall and its
Affiliates.
(iv) Reserved.
4. Miscellaneous. Section 8.10 of the Agreement is hereby
amended by adding the following sentence at the end thereof:
Each of Bidder and Walton agrees that it will not, and that it will
cause each of its Affiliates not to, sell or otherwise dispose of any
Interests that Bidder acquires pursuant to the Offer, or make any
distributions of any proceeds from the sale or other disposition of,
or any distributions on, any such Interests, to any Affiliate of
Bidder or Walton unless, prior to any such sale or other disposition,
or any such distribution, such Affiliate agrees in a writing entered
into with Whitehall to be bound by all of the provisions of this
Agreement.
Each of Bidder, Walton and Whitehall acknowledges that this letter
agreement constitutes an effective amendment to the Agreement. Except as
otherwise specifically amended hereby, the Agreement is hereby ratified and
confirmed in all respects, and, except as otherwise specifically amended
hereby, all terms and conditions of the Agreement remain in full force and
effect.
<PAGE> 5
David T. Hamamoto
August 1, 1996
Page 5
If this Agreement is satisfactory to you, please sign in the
appropriate place below.
WALTON STREET CAPITAL ACQUISITION CO.
III, L.L.C.
By:/s/ Jeffrey S. Quicksilver
-------------------------------------
Manager
WALTON STREET CAPITAL, L.L.C.
By:/s/ Jeffrey S. Quicksilver
-------------------------------------
Manager
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP VII
By: WH Advisors, L.P. VII,
its General Partner
By: WH Advisors, Inc. VII,
its General Partner
By:/s/ Ralph F. Rosenberg
----------------------------
Name: Ralph F. Rosenberg
Title: Vice-President
<PAGE> 1
EXHIBIT 99.(g)(1)
IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS
COUNTY DEPARTMENT, CHANCERY DIVISION
IRVIN WEISS, individually and as )
representative of a class of similarly ) No.
situated persons, )
)
Plaintiff, )
)
v. )
)
ARVIDA/JMB MANAGERS, INC.; NEIL G. )
BLUHM;, LEHMAN BROTHERS INC. AND )
ARVIDA/JMB PARTNERS, L.P.; )
)
Defendants. )
CLASS ACTION COMPLAINT
Plaintiff Irvin Weiss, individually and as representative of a class
of similarly situated persons, by his attorneys, complaining of defendants
Arvida/JMB Managers, Inc., Neil G. Bluhm, Lehman Brothers Inc. and Arvida/JMB
Partners, L.P., states:
NATURE OF THE ACTION
1. This is a case about an ongoing breach of fiduciary duty by
the general partner of a limited partnership, Arvida/JMB Partners, L.P., (the
"Partnership"), in participation with others. Plaintiff is a limited partner;
defendants are the general partner and (nominally) the Partnership. Plaintiffs
asserts claims for equitable relief and damages, derivatively on behalf of the
Partnership and individually on behalf of himself and other limited partners.
Plaintiff alleges that the general partner is involved with affiliates in a
scheme to benefit the affiliates, to the detriment of limited partners, by
chilling
<PAGE> 2
tender offers for limited partnership interests by non-affiliates and stifling
competition for such interests.
PARTIES
2. Plaintiff Irvin Weiss is a holder of two units of limited
partnership interests in the Partnership ("Units").
3. Defendant Arvida/JMB Managers, Inc., a Delaware corporation
("Managers" or the "General Partner"), is the general partner of the
Partnership. Managers' principal executive offices are in Cook County,
Illinois.
4. Defendant Neil G. Bluhm ("Bluhm") is a controlling person in
Managers.
5. Defendant Lehman Brothers Inc. ("Lehman") is an investment
banking firm that has colluded with other defendants in the scheme as alleged
herein.
6. Arvida/JMB Partners, L.P., a Delaware limited partnership, is
a nominal defendant.
JURISDICTION AND VENUE
7. This Court has jurisdiction as a court of general
jurisdiction.
8. Venue is proper in this county, pursuant to 735 ILCS 5/2-101
and 1-102, because the General Partner's offices are in this county and many of
the transactions or parts thereof as alleged herein occurred in this county.
FACTS
9. On June 20, 1996, Raleigh Capital Associates L.P. ("Raleigh"),
a Delaware limited partnership not affiliated with
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<PAGE> 3
the General Partner, announced a tender offer to purchase up to 185,000 Units
(46 percent) at $411 per Unit less the amount of any distributions declared or
made after the offer date (June 19, 1996).
10. On June 21, 1996, the General Partner (on behalf of the
Partnership) issued a press release, describing the Raleigh tender offer and
indicating the following about the other tender offers: that the Partnership
was aware of other tender offers that had been made or were expected from other
non-affiliates; and that an affiliate of a director and officer of the General
Partner (the "Affiliate") intended to make a tender offer for Units and that
the Partnership had provided the Affiliate with non-public information about
the Partnership (on a non-exclusive basis).
11. The press release stated that a "special committee of the
board of directors of the Partnership's general partner" was reviewing the
Raleigh tender offer and would advise holders of Units ("Unitholders") as to
any recommendations, and that the Partnership had engaged Lehman as a financial
advisor to assist the special committee in evaluating and responding to the
Raleigh offer and any others. The press release urged Unitholders to "refrain
from making a decision" as to any offer or to tender their interests until they
were advised "of the special committee's position."
12. On information and belief: The special committee consists
entirely of officers and directors of the General
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<PAGE> 4
Partner or its affiliates (or persons controlled by them) and includes no other
persons. The special committee was conceived of and planned before the Raleigh
offer was received. The special committee was formed in order to create the
appearance of objective evaluation of offers and to give a stamp of approval to
the Affiliate's offer. Lehman colluded with Managers in the scheme.
13. The General Partner has not provided to non-affiliate bidders
or potential bidders the non-public information it provided to Affiliate.
14. The General Partner and its affiliates have attempted to
discourage bids for Units from third-parties (non-affiliates), and thus to
chill tenders and to stifle competition, by advising one or more potential
bidders that an affiliate of the General Partner would make a tender offer at a
price that non-affiliates could not beat. Moreover, the General Partner has
intentionally failed to provide non-affiliate tender offerors with information
to enable them to increase their tender offers; the General Partner's aim is
allow the Affiliate's tender offer to go forward, without effective competition
from non-affiliates' offers and to tilt the playing field for control of the
Partnership.
15. Defendants' participation in the scheme described above is
contrary to and detrimental to the interests of limited partners of the
Partnership and reflects the preference of the
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<PAGE> 5
General Partner for the interests of its affiliates over the interests of
limited partners.
16. It is a breach of fiduciary duty for a general partner to
prefer its affiliates' interests over the interests of limited partners.
CLASS ALLEGATIONS
17. Plaintiff seeks to represent a class comprised of all
Unitholders, excluding current or former management or affiliates of Managers.
18. A class action is proper in that:
(a) The class consists of large numbers of Unitholders,
many of whom reside in the Chicago metropolitan area, and is so
numerous that joinder of all members is impracticable;
(b) There are question of fact of law common to the
class, which common questions predominate over all questions affecting
only individual class members. Among the questions of law and fact
common to the class are whether Managers and Bluhm breached fiduciary
duties to class members and whether Lehman participated in the
breaches of fiduciary duties, whether plaintiff and members of the
class have been damaged as a result thereof, and the measure of such
damages;
(c) The representative party will fairly and adequately
protect the interests of the class and retained
-5-
<PAGE> 6
counsel who are experienced in complex class action litigation; and
(d) A class action is an appropriate method for the fair
and efficient resolution of the controversy.
COUNT I
(BREACH OF FIDUCIARY DUTY)
19. Paragraphs 1-17 above are incorporated in this Count I, which
is directed only against Managers and Bluhm.
20. Managers, as the general partner of the Partnership, and
Bluhm, as controlling person of Managers, owed plaintiff and members of the
class a fiduciary duty, encompassing the duty of exercising good faith,
honesty, and fairness in their dealings with Unitholders, the limited partners
of the Partnership.
21. Through the scheme described above, Managers and Bluhm
breached their fiduciary duties to the Unitholders.
22. By virtue of Managers and Bluhm's breaches of fiduciary
duties, plaintiff and members of the class have been damaged in an amount to be
determined at trial.
COUNT II
(PARTICIPATION IN BREACH OF FIDUCIARY DUTY)
23. Paragraphs 1-21 above are incorporated in this Count II, which
is directed against defendant Lehman.
24. On information and belief, Lehman has participated in Managers
and Bluhm's breaches of fiduciary duties as set forth above, by colluding with
them, and continues to do so.
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<PAGE> 7
25. By virtue of the participation of Lehman in the breaches of
fiduciary duties, plaintiff and members of the class have been damaged in an
amount to be determined at trial.
COUNT III
(INEQUITY)
26. Paragraphs 1-24 above are incorporated in this Count III,
which is directed against all defendants.
27. By virtue of the inequitable scheme described above,
Unitholders will be irreparably harmed by the loss of opportunities for sale of
Units to potential bidders.
28. Plaintiff and members of the class have no adequate remedy at
law.
WHEREFORE, Irvin Weiss, individually and as representative of a class
of similarly situated persons, prays for judgment for him and the class and
against defendants as follows:
(a) That the Court adjudge and decree that this case may be
properly maintained as a nation-wide class action and appoint plaintiffs'
counsel as class counsel;
(b) That the Court award plaintiff and members of the class
damages in a sum to be determined at trial;
(c) That the Court grant plaintiff and members of the class
equitable relief, including the following:
(1) barring Managers and Bluhm from taking any actions to
chill tender offers from non-affiliates;
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<PAGE> 8
(2) barring officers, directors and shareholders of
defendants from participating in any special committee on tender
offers;
(3) barring Lehman from advising any special committee on
tender offers;
(4) barring defendants and their affiliates from making
tender offers or bidding on Units.
(d) That the Court award plaintiff and the members of the class
their attorneys' fees and costs; and
(e) That the Court award such other and further relief as the
Court may deem just and proper.
Respectfully submitted,
IRVIN WEISS, individually and as
representative of a class of
similarly situated persons,
By ________________________________
One of his attorneys
Herbert Beigel
Leigh R. Lasky
Norman Rifkind
Philip Fertik
Beigel Schy Lasky Rifkind
Fetik & Gelber
250 South Wacker Drive
Suite 1500
Chicago, Illinois 60606
(312) 466-9444
Attorney No.: 50039
Attorneys for Plaintiff and the Plaintiff Class
Dated: June 24, 1996
-8-
<PAGE> 1
EXHIBIT 99.(g)(2)
IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS
COUNTY DEPARTMENT, CHANCERY DIVISION
JACK M. CARLSTROM AND LYNNE M. )
CARLSTROM, individually and )
as representatives of a class of )
similarly situated persons, )
)
Plaintiffs, )
)
v. ) No. 96 CH 6892
)
ARVIDA/JMB MANAGERS, INC.; )
NEIL G. BLUHM; WALTON STREET )
CAPITAL ACQUISITION CO. III.; )
WHITEHALL STREET REAL ESTATE )
LIMITED PARTNERSHIP VII; )
LEHMAN BROTHERS INC. and )
ARVIDA/JMB PARTNERS, L.P.; )
)
Defendants. )
AMENDED CLASS ACTION AND DERIVATIVE COMPLAINT
Plaintiffs Jack M. Carlstrom and Lynne M. Carlstrom, individually and
as representatives of a class of similarly situated persons, complaining of
defendants Arvida/JMB Managers, Inc., Neil G. Bluhm, Walton Street Capital
Acquisition Co. III, L.L.C., Whitehall Street Real Estate Limited Partnership
VII, Lehman Brothers Inc., and Arvida/JMB Partners, L.P., on information and
belief, state:
NATURE OF THE ACTION
1. This is a case about breach of fiduciary duty by the general
partner of a limited partnership, Arvida/JMB Partners, L.P., (the
"Partnership"), in participation with others. Plaintiffs are limited partners.
Defendants are (a) the general partner, (b) the acquisition vehicle being used
by the general
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partner to facilitate a self-dealing tender offer, (c) other participants in
the scheme, and (d) (nominally) the Partnership. Plaintiffs assert claims for
injunctive and other equitable relief and damages, derivatively on behalf of
the Partnership and individually on behalf of themselves and a class of
similarly situated persons. Plaintiffs allege that the general partner, in
breach of its fiduciary duties to both the Partnership and the Class, is
tilting the playing field for control of the Partnership by (a) failing to give
potential bidders information vital to their being able to make a bid for
control of the Partnership, including Partnership lists and information
concerning the value of the units, so that (b) defendants can go forward with
an inadequate tender offer which will allow them to take control without
offering a premium, and precluding a bidding war for control of the
Partnership.
PARTIES
2. Plaintiffs Jack M. Carlstrom and Lynne M. Carlstrom hold 75
units of limited partnership interests in the Partnership ("Units").
3. Defendant Arvida/JMB Managers, Inc., a Delaware corporation
("Managers" or the "General Partner"), is the general partner of the
Partnership. Managers' principal executive offices are in Cook County,
Illinois.
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4. Defendant Walton Street Capital Acquisition Co. III, L.L.C.
("Walton Street") is a Delaware limited liability company with its principal
executive offices located in Chicago, Illinois, which was formed for the
purpose of making a tender offer for limited partnership interests in the
Partnership, among other things.
5. Defendant Neil G. Bluhm ("Bluhm") is a controlling person in
Managers.
6. Defendant Whitehall Street Real Estate Limited Partnership VII
("Whitehall") is a Delaware limited partnership formed by partners in Goldman
Sachs & Co. and is a participant in the financing of Walton Street's tender
offer and in the scheme as alleged herein.
7. Defendant Lehman Brothers Inc. ("Lehman") is an investment
banking firm that has colluded with other defendants in the scheme as alleged
herein.
8. Arivida/JMB Partners, L.P., a Delaware limited partnership, is
a nominal defendant.
JURISDICTION AND VENUE
9. This Court has jurisdiction as a court of general jurisdiction.
10. Venue is proper in this county, pursuant to 735 ILCS 5/2-101
and 1-102, because the General Partner's offices are in this county and many of
the transactions or parts thereof, as alleged herein, occurred in this county.
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FACTS
11. On June 20, 1996, Raleigh Capital Associates L.P. ("Raleigh"),
a Delaware limited partnership not affiliated with the General Partner,
announced a tender offer to purchase up to 185,000 Units (46 percent) at $411
per Unit less the amount of any distributions declared or made after the offer
date (June 19, 1996).
12. On June 21, 1996, the General Partner (on behalf of the
Partnership) issued a press release, describing the Raleigh tender offer and
indicating: that the Partnership was aware of other tender offers that had been
made or were expected from other non-affiliates; and that an affiliate of a
director and officer of the General Partner (the "Affiliate") intended to make
a tender offer for Units and that the Partnership had provided the Affiliate
with non- public information about the Partnership (on a non-exclusive basis).
The Affiliate later identified itself as Walton Street, as described more fully
below.
13. The press release stated that a "special committee of the
board of directors of the Partnership's general partner" was reviewing the
Raleigh tender offer and would advise holders of Units ("Unitholders") as to
any recommendations, and that the Partnership had engaged Lehman as a financial
advisor to assist the special committee in evaluating and responding to the
Raleigh offer and any other offers. The press release urged Unitholders to
"refrain from making a decision" as to any offer or to tender their interests
unit until they were advised "of the special committee's position."
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14. Effective May 31, 1996, the board of directors of the General
Partner was expanded to provide for six directors. Judd D. Malkin, defendant
Neil G. Bluhm, Burton E. Glazov, Stuart C. Nathan, A. Lee Sacks and John G.
Schreiber were elected to the board of directors of the General Partner, and
Gary Nickele resigned as director of the General Partner. The board of
directors of the General Partner has established a special committee consisting
of Messrs. Malkin, Glazov, Nathan, Sacks and Schreiber to consider matters
relating to tender offers for interests in the Partnership.
15. Thus, the special committee consists entirely of directors of
the General Partner and includes no other persons. The special committee was
formed in order to create the appearance of objective evaluation of offers and
to give a stamp of approval to the Affiliate's offer.
16. In the press release dated June 21, 1996, the General Partner
announced, among other things, that it had hired Lehman to assist it in
evaluating any offers from third parties that may be made for the Units.
Lehman has colluded with Managers by furthering the appearance of an objective
evaluation of offers.
17. The General Partner has thus far not provided to non-affiliate
bidders or potential bidders the non- public information (including
confidential projections) that it provided to Affiliate.
18. The General Partner and its affiliates have attempted to
discourage bids for Units from third-parties (non-affiliates) and, thus, to
chill tenders and to stifle competition, by advising one
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or more potential bidders that an affiliate of the General Partner would make a
tender offer at a price that non- affiliates could not beat.
19. The General Partner has intentionally failed to provide
non-affiliate tender offerors with information available to the affiliate
tender offerors but not to non-affiliates, and necessary to enable
non-affiliate tender offerors to determine whether to increase their tender
offers substantially. In the case of at least one bidder, Raleigh, the General
Partner has insisted on unreasonable conditions on access to the information.
20. The General Partner has also obstructed competing offers from
non-affiliates by denying access to lists of limited partners or by providing
only inferior lists. In the case of one potential bidder, Longacre Corp.
("Longacre"), the General Partner has refused to provide any lists so that an
offer can be made to the limited partners. (On June 26, 1996, Longacre filed
an action in the Court of Chancery, Delaware, to compel the General Partner to
provide it with the limited partner lists). The General Partner has provided
at least one tender offeror. Raleigh, with a list containing (as to Units held
by brokerage firms or others a nominees) the names and addresses of custodians
of Units instead of the actual Unitholders; as a result, offers and other
documents disseminated by the bidder may not be received by the Unitholders
themselves until much later--possibly too late to be used. The lists provided
to the Affiliate, Walton Street, are lists of actual Unitholders.
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21. The General Partner's aims include allowing the Affiliate's
tender offer to go forward, without effective competition from non-affiliates'
offers at substantially higher prices, in order to tilt the playing field for
control of the Partnership so that the General Partner and its affiliates can
gain control of the Partnership without offering a premium and it can entrench
itself as general partner.
22. The General Partner has responded to Raleigh's request for
non-public information respecting the finances of the Partnership with delaying
tactics, including insistence on unreasonable conditions. As a result, Raleigh
has thus far not obtained the information.
23. On June 27, 1996, Walton Street, the Affiliate, announced that
it intended to make a tender offer to purchase up to 46 percent of all of the
outstanding limited partnership interests and assignee interests therein of the
Partnership at a price of $420 per interest. Walton Street stated that it is
acquiring the interests for investment purposes and that it has no current
intention of changing the management or operations of the Partnership.
24. On June 28, 1996, Walton Street filed a Schedule 14D-1,
formally setting forth the terms of its tender offer, as described above.
Specifically, Walton Street offered to purchase up to 185,840 of the Units
outstanding as of July 26, 1996, 12:00 midnight, the Expiration Date, at a
price of $420 per Unit.
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25. Walton Street's filing revealed additional conflicts of
interest of the General Partner as to Walton Street's tender offer, arising
from the fact that the success of that tender offer would benefit directly the
General Partner and certain affiliates (to the detriment of Unitholders) by
reducing their obligations under the "clawback" provision of the Partnership
Agreement. As admitted in the filing:
[I]f upon completion of a liquidation and termination of the
Partnership and final distribution of all Partnership funds,
the aggregate capital contributions with respect to all
[Units] exceed the sum of distributions of cash flows to
Unitholders over the life of the Partnership plus any
distributions during the liquidation (such difference, the
Excess Amount), then the General Partner [and certain
affiliates] must make aggregate payments to [Unitholders,
except for an affiliate] in an amount equal to the lesser of
the Excess Amount or the aggregate amount of certain cash
flows received by the General Partner [and the affiliates] . .
. .
The clawback provision is highly likely to be triggered in actual market
conditions. If the Walton Street tender offer succeeds, the highly likely
result will be to reduce by an enormous sum the amount otherwise owed by the
General Partner and its affiliates to the Unitholders upon liquidation. The
General Partner thus has a powerful incentive to make the Walton Street tender
offer succeed--rather than to encourage (or at least not obstruct) competing
bids from non- affiliates that would benefit its limited partners, the
Unitholders.
26. The Walton Street filing discloses that the tender offer is to
be financed through Whitehall. The Financing Agreement provides for an equity
position and voting rights for Whitehall.
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Thus Whitehall is operating as a co-tender-offeror in the Walton Street tender
offer.
27. On June 28, 1996, in response to the Walton Street tender
offer, Raleigh amended its tender offer, increasing the purchase price from
$411 per Unit to $421 (a dollar more than the Walter Street offer).
28. On July 3, 1996, the General Partner announced the special
committee's recommendation: that Unitholders who have the expectation of
retaining their Units through an anticipated orderly liquidation of the
Partnership's assets by October 31, 2002, and who have no current or
anticipated need for liquidity, reject both the Raleigh tender offer and the
Walton Street tender offer and not tender their Units pursuant to either of the
offers. (The special committee expressed no opinion as to what other
Unitholders should do.) The General Partner further announced that Lehman had
reported to the special committee on July 2, 1996, that Lehman estimated the
present discounted value of the Units (assuming the Partnership commences an
orderly liquidation in October 1997 and completes it in five years) as ranging
from $565 to $610 per Unit.
29. Also on July 3, 1996, the General Partner filed an SEC
Schedule 14D-9 in which it disclosed that all of its outstanding shares are
owned by Northbrook Corporation, a Delaware corporation ("Northbrook"), and
that substantially all of Northbrook's outstanding shares are owned by JMB
Realty Corporation, a Delaware corporation ("JMB"), and certain of JMB's
officers, directors, members of their families and their affiliates.
Northbrook appears
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to have been recently inserted between the General Partner and the persons
controlling the General Partner. The Partnership Agreement provides that the
General Partner maintain a net worth of at least $25 million; yet there is no
indication in the General Partner's filing of whether it has maintained the
required net worth, or of the purpose and intended legal effect of inserting
Northbrook as direct owner.
30. Defendants' participation in the scheme described above is
contrary to and detrimental to the interests of limited partners and to the
Partnership, as it is directed at preferring the General Partner's tender offer
over those of other bidders. The General Partner is preferring the interests
over the interests of the limited partners and the Partnership.
DEMAND EXCUSED ALLEGATIONS
31. Counts II through IV are brought derivatively in the right of
and on behalf of the Partnership. Plaintiffs have not made a demand upon the
General Partner as such demand would not have been likely to succeed and is,
therefore, futile and excused by reason of the following:
(a) The General Partner is alleged to have breached its
fiduciary duties to plaintiffs, limited partners of the Partnership, and the
Partnership by tilting the playing field in favor of itself and its tender
offer and against non-affiliate bidders and potential bidders for the Units,
failing to disclose non-public information to other bidders to prevent them
from making
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competing tender offers and thus discouraging any effective bidding contest and
entrenching the defendants.
(b) The General Partner is liable for breaching its
fiduciary duties, giving rise to a substantial basis for liability against it
and participants in its scheme. Where there is a substantial basis for
liability against the General Partner, it cannot independently adequately
consider a demand for action from Unitholders. Therefore, it could not
independently consider Unitholders' demands for action and there is no
independent entity that could impartially consider a demand for action.
(c) Moreover, given the Affiliate's tender offer, the
General Partner has a direct pecuniary interest (the spread between the tender
offer price and the Unit price) in the wrongdoing alleged herein. The
existence of such a conflict of interest disqualifies the General Partner from
acting.
CLASS ALLEGATIONS
32. Plaintiffs seek to represent a class comprised of all
Unitholders, excluding current or former management or affiliates of Managers.
33. A class action is proper in that:
(a) The class consists of large numbers of Unitholders,
many of whom reside in the Chicago metropolitan area, and is so numerous that
joinder of all members is impracticable;
(b) There are question of fact of law common to the
class, which common questions predominate over all questions affecting only
individual class members. Among the questions of
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law and fact common to the class are whether Managers and Bluhm breached
fiduciary duties to class members and whether Whitehall and Lehman participated
in the breaches of fiduciary duties, whether plaintiffs and members of the
class have been damaged as a result thereof, and the measure of such damages;
(c) The representative parties will fairly and adequately
protect the interests of the class and retained counsel who are experienced in
complex class action litigation; and
(d) A class action is an appropriate method for the fair
and efficient resolution of the controversy.
COUNT I
(BREACH OF FIDUCIARY DUTY ON BEHALF OF THE CLASS)
34. Paragraphs 1 through 33 above are incorporated in this Count
I, which is directed only against Managers and Bluhm.
35. Managers, as the general partner of the Partnership, and
Bluhm, as controlling person of Managers, owed plaintiff and members of the
class a fiduciary duty, encompassing the duty of exercising good faith,
honesty, and fairness in their dealings with Unitholders, the limited partners
of the Partnership.
36. Through the scheme described above, Managers and Bluhm
breached their fiduciary duties to the Unitholders.
37. By virtue of Managers and Bluhm's breaches of fiduciary
duties, plaintiffs and members of the class have been damaged in an amount to
be determined at trial.
COUNT II
(BREACH OF FIDUCIARY DUTY ON BEHALF OF THE PARTNERSHIP)
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38. Paragraphs 1 through 37 above are incorporated in this Count
II, which is directed only against Managers and Bluhm.
39. The Defendants' actions will result in (a) their entrenchment;
and (b) a sale of control of the Partnership at an inadequate price.
40. The Defendants' actions constitute a breach of their fiduciary
duties to the Partnership.
COUNT III
(PARTICIPATION IN BREACH OF FIDUCIARY DUTY
ON BEHALF OF THE CLASS AND THE PARTNERSHIP)
41. Paragraphs 1 through 40 above are incorporated in this Count
III, which is directed against Whitehall and Lehman.
42. Whitehall has participated in Managers and Bluhm's breaches of
fiduciary duties as set forth above, as a co-tender-offeror, and continues to
do so.
43. On information and belief, Lehman has participated in Managers
and Bluhm's breaches of fiduciary duties as set forth above, by colluding with
them, and continues to do so.
44. By virtue of the participation of Whitehall and Lehman in the
breaches of fiduciary duties, plaintiff and members of the class have been
damaged in an amount to be determined at trial.
COUNT IV
(INJUNCTION ON BEHALF OF THE CLASS AND THE PARTNERSHIP)
45. Paragraphs 1 through 44 above are incorporated in this Count
IV, which is directed against all defendants.
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46. By virtue of the inequitable scheme described above,
Unitholders will be irreparably harmed by the loss of opportunities for sale of
Units to potential bidders.
47. Plaintiff and members of the class have no adequate remedy at
law.
48. Until a full hearing is held on the merits of the case, the
status quo must be preserved to prevent irreparable injury to plaintiff and
members of the class.
WHEREFORE, plaintiffs Jack M. Carlstorm and Lynne M. Carlstrom,
individual and as representatives of a class of similarly situated persons,
pray for judgment for themselves and the class and derivatively for the
Partnership, and against defendants, as follows:
(a) That the Court adjudge and decree that this case may
be properly maintained as a nation-wide class action and appoint plaintiffs'
counsel as class counsel;
(b) That the Court adjudge and decree that Counts II-IV
may be properly maintained as derivative claims on behalf of the Partnership;
(c) That the Court award plaintiffs, members of the Class
and the Partnership damages in a sum to be determined at trial;
(d) That the Court grant plaintiffs and members of the
class a temporary restraining order (effective until such time as a hearing on
preliminary injunction can be held) and preliminary
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and permanent injunctive relief, and other equitable relief, including the
following:
(i) barring Managers and Bluhm from taking any
actions to chill tender offers from non- affiliates;
(ii) barring officers, directors and shareholders
of defendants from participation in any special committee on tender offers;
(iii) barring Lehman from advising any special
committee on tender offers;
(iv) barring defendants and their affiliates from
making tender offers or bidding on Units;
(v) compelling defendants to foster bidding for
control of the Partnership by, inter alia, providing non-affiliated bidders
with all the information to which the General Partner and its affiliates are
privy;
(vi) enjoining tender offers for Units by
affiliates of the General Partner and all persons controlling the General
Partner, unless and until the General Partner has provided to Raleigh and other
non-affiliate bidders the non-public information provided to Walton.
(e) That the Court award plaintiffs and the members of
the class their attorneys' fees and costs; and
(f) That the Court award such other and further relief as
the Court may deem just and proper.
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Respectfully submitted,
JACK M. CARLSTROM and LYNNE M. CARLSTROM,
individually and as representatives of a
class of similarly situated persons,
By_____________________________________
One of their attorneys
Laurence M. Landsman, Esq.
Alan F. Block, Esq.
BLOCK & LANDSMAN
180 North LaSalle
Chicago, Illinois 60606
(312) 251-1144
Attorney No. 32350
Lawrence A. Sucharow, Esq.
Lynda J. Grant, Esq.
Robert N. Cappucci, Esq.
GOODKIND LABATON RUDOFF & SUCHAROW LLP
100 Park Avenue
12th Floor
New York, New York 10017
(212) 907-0700
Michael A. Hanzman, Esq.
Michael E. Criden, Esq.
HANZMAN, CRIDEN, KORGE,
HERTZBERG & CHAYKIN
200 South Biscayne Blvd.
Suite 2100
Miami, Florida 33131
(305) 579-1222
Attorneys for Plaintiffs
Dated: July 8, 1996
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