-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MunU/YPmr7P/xp+kkf5cFvJyvFAvIGFVnFxP6vK44NP/zZEQ4P2VISGIY5XZDkLZ cm9GMdkXtzhRN5V7oU/lSw== 0000921749-96-000175.txt : 19961010 0000921749-96-000175.hdr.sgml : 19961010 ACCESSION NUMBER: 0000921749-96-000175 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19961009 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL REAL ESTATE FUND IX LTD CENTRAL INDEX KEY: 0000276326 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 942491437 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-39644 FILM NUMBER: 96641056 BUSINESS ADDRESS: STREET 1: 13760 NOEL RD STE 700 STREET 2: LB70 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 2144485800 MAIL ADDRESS: STREET 1: 13760 NOEL ROAD SUITE 700 LB 70 CITY: DALLAS STATE: TX ZIP: 75240 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ICAHN CARL C ET AL CENTRAL INDEX KEY: 0000921669 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1/A BUSINESS ADDRESS: STREET 1: 100 SOUTH BEDFORD ROAD CITY: MT KISCO STATE: NY ZIP: 10549 BUSINESS PHONE: 9142427700 MAIL ADDRESS: STREET 1: 200 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10166 SC 14D1/A 1 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) and Amendment No. 7 to Schedule 13D MCNEIL REAL ESTATE FUND IX, LTD. (Name of Subject Company [Issuer]) HIGH RIVER LIMITED PARTNERSHIP CARL C. ICAHN (Bidders) LIMITED PARTNERSHIP UNITS (Title of Class of Securities) 582568 10 1 (CUSIP Number of Class of Securities) Keith L. Schaitkin, Esq. Gordon Altman Butowsky Weitzen Shalov & Wein 114 West 47th Street, 20th Floor New York, New York 10036 (212) 626-0800 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidder) Calculation of Filing Fee - ------------------------------------------------------------------ Transaction Valuation*: $18,366,840 Amount of filing fee: $3,674 - ------------------------------------------------------------------ * For purposes of calculating the filing fee only. This amount assumes the purchase of 102,038 Units of the Partnership (consisting of all outstanding Units other than Units owned by the Bidder and its affiliate) at $180.00 in cash per Unit. The amount of the filing fee, calculated in accordance with Rule 0-11(d) under the Securities Exchange Act of 1934, as amended, equals 1/50th of one percent of the aggregate of the cash offered by the bidder. [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: $3,674 Form or Registration No.: Schedule 14D-1 Filing Party: High River Limited Partnership, Riverdale LLC, Unicorn Associates Corporation and Carl C. Icahn Dated Filed: September 20, 1996 * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. AMENDMENT NO 2. TO SCHEDULE 14D-1 This Amendment No. 2 amends the Tender Offer Statement on Schedule 14D-1 filed with the Commission on September 20, 1996 (the "Schedule 14D-1") by High River Limited Partnership, a Delaware limited partnership (the "Purchaser"), Riverdale LLC, a New York limited liability company, Unicorn Associates Corporation, a New York corporation ("Unicorn"), and Carl C. Icahn (collectively, the "Reporting Persons") relating to the tender offer by the Purchaser to purchase any and all limited partnership units (the "Units") of McNeil Real Estate Fund IX, Ltd., a California limited partnership, other than Units owned by the Purchaser and Unicorn, at a purchase price of $180.00 per Unit, net to the seller in cash, without interest, less the amount of distributions per Unit, if any, declared or made by the Partnership between August 15, 1996 and the date of payment of the Purchase Price by the Purchaser, upon the terms and subject to the Offer to Purchase dated September 20, 1996 (the "Offer to Purchase") and in the related Assignment of Partnership Interest, as each may be supplemented and amended from time to time (which together constitute the "Offer"), to include the information set forth below. This Amendment also constitutes Amendment No. 7 to the Schedule 13D filed by the Reporting Persons on November 13, 1995, as amended by Amendment Nos. 1 through 6 thereto filed on November 15, 1995, January 16, 1996, May 24, 1996, August 5, 1996, September 20, 1996 and September 25, 1996, respectively. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Schedule 14D-1 and the Offer to Purchase. Item 10. Additional Information. Item 10(f) is hereby supplemented and amended as follows: The Partnerships amended their complaint in the California Federal Action to include claims arising out of the Purchaser's Offers. Among the relief sought in the Partnerships' amended complaint is declaratory and injunctive relief against the Purchaser Defendants seeking, among other things, to enjoin the Offers on the grounds that they violate the Partnerships' partnership agreements and federal securities laws and to declare that, as a result, the Partnerships are not required to provide the Purchaser with a current list of unitholders. The Partnerships' amended complaint also added as plaintiffs in the action two additional partnerships for which the Purchaser has made tender offers. The Purchaser Defendants filed an answer to the Partnerships' amended complaint in the California Federal Action denying the allegations contained therein. The Partnerships' amended complaint and the Purchaser Defendants' answer thereto are annexed as exhibits to this amendment. Item 11. Materials to Be Filed as Exhibits. Item 11 is hereby supplemented and amended to add the following: (c) Exhibit 24. Supplemental And Amended Complaint For Declaratory and Injunctive Relief filed by MCNEIL PACIFIC INVESTORS FUND 1972, MCNEIL REAL ESTATE FUND IX, LTD., MCNEIL REAL ESTATE FUND X, LTD., MCNEIL REAL ESTATE FUND XI, LTD., MCNEIL REAL ESTATE FUND XIV, LTD., MCNEIL REAL ESTATE FUND XV, LTD., MCNEIL REAL ESTATE FUND XX, L.P., MCNEIL REAL ESTATE FUND XXIV, L.P. MCNEIL REAL ESTATE FUND XXV, L.P., MCNEIL REAL ESTATE FUND XXVI, L.P. and MCNEIL REAL ESTATE FUND XXVII, L.P. (filed herewith, without exhibits). Exhibit 25. Defendants' Answer To Supplemental And Amended Complaint for Declaratory And Injunctive Relief Filed by High River Limited Partnership, Riverdale Investors Corp., Inc. Carl C. Icahn and Unicorn Associates Corporation (filed herewith, without exhibits). SIGNATURES 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: October 9, 1996 HIGH RIVER LIMITED PARTNERSHIP By: Riverdale LLC, General Partner and RIVERDALE LLC By: /s/ Robert J. Mitchell Robert J. Mitchell Title: Manager, Vice President and Treasurer /s/Theodore Altman Carl C. Icahn By: Theodore Altman as Attorney-in-fact UNICORN ASSOCIATES CORPORATION By:/s/ Edward Mattner Edward Mattner Title: President [Signature Page for Amendment No. 2 to McNeil Pacific Investors Fund 1972 Schedule 14D-1 and Amendment No. 5 to Schedule 13D; Amendment No. 2 to McNeil Real Estate Fund IX, Ltd. Schedule 14D-1 and Amendment No. 7 to Schedule 13D; Amendment No. 2 to McNeil Real Estate Fund X, Ltd. Schedule 14D-1 and Amendment No. 8 to Schedule 13D; Amendment No. 2 to McNeil Real Estate Fund XI, Ltd. Schedule 14D-1 and Amendment No. 7 to Schedule 13D; Amendment No. 2 to McNeil Real Estate Fund XIV, Ltd. Schedule 14D-1 and Amendment No. 8 to Schedule 13D; Amendment No. 2 to McNeil Real Estate Fund XV, Ltd. Schedule 14D-1 and Amendment No. 7 to Schedule 13D; Amendment No. 2 to McNeil Real Estate Fund XX, L.P. Schedule 14D-1 and Amendment No. 7 to Schedule 13D; Amendment No. 2 to McNeil Real Estate Fund XXIV, L.P. Schedule 14D-1 and Amendment No. 7 to Schedule 13D; and Amendment No. 2 to McNeil Real Estate Fund XXV, L.P. Schedule 14D-1 and Amendment No. 7 to Schedule 13D] EXHIBIT INDEX Page Number ___________ Exhibit 24. Supplemental And Amended Complaint For Declaratory and Injunctive Relief filed by MCNEIL PACIFIC INVESTORS FUND 1972, MCNEIL REAL ESTATE FUND IX, LTD., MCNEIL REAL ESTATE FUND X, LTD., MCNEIL REAL ESTATE FUND XI, LTD., MCNEIL REAL ESTATE FUND XIV, LTD., MCNEIL REAL ESTATE FUND XV, LTD., MCNEIL REAL ESTATE FUND XX, L.P., MCNEIL REAL ESTATE FUND XXIV, L.P. MCNEIL REAL ESTATE FUND XXV, L.P., MCNEIL REAL ESTATE FUND XXVI, L.P. and MCNEIL REAL ESTATE FUND XXVII, L.P. Exhibit 25. Defendants' Answer To Supplemental And Amended Complaint for Declaratory And Injunctive Relief Filed by High River Limited Partnership, Riverdale Investors Corp., Inc. Carl C. Icahn and Unicorn Associates Corporation. EX-99 2 FRANK ROTHMAN (CA State Bar No. 22890) HARRIET S. POSNER (CA State Bar No. 116097) STEVEN A. VELKEI (CA State Bar No. 160561) SKADDEN, ARPS, SLATE, MEAGHER & FLOM 300 South Grand Avenue, Suite 3400 Los Angeles, California 90071 (213) 687-5000 Attorneys for Plaintiffs/ Counterdefendants MCNEIL PACIFIC INVESTORS FUND 1972, ET AL. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION MCNEIL PACIFIC INVESTORS FUND ) Case No. CV-96-5680 SVW 1972, LTD., MCNEIL REAL ESTATE ) (CWx) FUND IX, LTD., MCNEIL REAL ) ESTATE FUND X, LTD., MCNEIL REAL ) ESTATE FUND XI, LTD., MCNEIL ) [PROPOSED] SUPPLEMENTAL AND REAL ESTATE FUND XIV, LTD., ) AMENDED COMPLAINT FOR DE- MCNEIL REAL ESTATE FUND XV ) CLARATORY AND INJUNCTIVE LTD., MCNEIL REAL ESTATE FUND ) RELIEF XX, L.P., MCNEIL REAL ESTATE ) FUND XXIV, L.P. MCNEIL REAL ) ESTATE FUND XXV, L.P., MCNEIL ) REAL ESTATE FUND XXVI, and ) MCNEIL REAL ESTATE FUND XXVII, ) ) Plaintiffs, ) ) v. ) ) HIGH RIVER LIMITED PARTNER- ) SHIP, RIVERDALE INVESTORS ) CORP., INC. CARL C. ICAHN ) and UNICORN ASSOCIATES CORPO- ) RATION, ) Defendants. ) __________________________________ ) AND RELATED COUNTERCLAIMS ) __________________________________) Plaintiffs, McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund IX, Ltd. McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd. McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., McNeil Real Estate Fund XXVI, L.P. and McNeil Real Estate Fund XXVII, L.P. (collectively, the "Partnerships") by their attorneys, Skadden, Arps, Slate, Meagher & Flom, for their [Proposed] Supplemental and Amended Complaint for Declaratory and Injunctive Relief against defendants High River Limited Partnership, Riverdale Investors Corp., Inc., Carl C. Icahn, and Unicorn Associates Corporation, allege as follows: JURISDICTION ------------ 1. The jurisdiction of this Court is invoked pursuant to 28 U.S.C. Section 1332 (federal question jurisdiction); 15 U.S.C. Section 78aa (jurisdiction over claims arising under the Securities Exchange Act of 1934); and 28 U.S.C. Section 1367 (supplemental jurisdiction). SUMMARY OF SUPPLEMENTAL AND AMENDED COMPLAINT --------------------------------------------- 2. This is an action to enjoin a series of ongoing illegal tender offers by affiliates of the well-known corporate raider, Carl Icahn, for eleven real estate limited partnerships. 3. In early August, defendants unlawfully made a public announcement of their intention to conduct a series of tender offers for limited partnerships units in ten California limited partnerships (the "Original Ten Partnerships"). As a matter of law under SEC Rule 14d-2, this unlawful announcement caused tender offers to be commenced at that time. Yet, for more than six weeks, the bidders failed to provide the unitholders, the partnerships and Securities and Exchange Commission with the required information to which they were entitled under the federal securities laws. One effect (or, indeed, possibly the intention) of defendants' unlawful announcement was to predispose the unitholders with specific promises concerning purported tender offers -- a manipulative device the SEC has expressly barred pursuant to its authority to make rules to protect investors form the manipulative devices employed during tender offers. 4. For more than six weeks after August 5, 1996, defendants allowed its unlawful tender offers to remain pending, without either (i) disseminating tender offer materials to the partnerships' unitholders, or (ii) withdrawing or discontinuing the tender offers. Finally, on September 20, 1996 defendant High River Limited partnership ("High River") finally commenced it tender offers for nine of the Original Ten Partnerships -- omitting one partnership that was in the process of being liquidated, with substantially greater financial benefit to unitholders than they would have received from defendants' lowball offers -- together with two additional partnerships. However, High River's belated commencement of its formal tender offers fails to cure its blatant and continuous pattern of illegality. 5. Among other defects, High River's current tender offers for "any and all units" in the Partnerships are under- taken in violation of the applicable Partnership Agreements, each of which precludes transfers of Partnership units that would have the effect of dissolving or terminating the Partnership. As High River has itself acknowledged, the Internal Revenue Code and applicable IRS regulations provide that the transfer of more than 50% of partnership interests within any 12-month period results in termination of the Partnership for federal tax purposes. Accordingly, High River should not be permitted to conduct, let alone consummate, coercive tender offers that threaten to cause the Partnerships to terminate, with potentially serious, harmful tax consequences for non-tendering limited partners and the Partnerships themselves, and the offers should be enjoined. Additionally, High River's Schedule 14D-1 disclosures are false, misleading and omissive in several other respects, including such material matters as the time when unitholders can expect to receive payment for their units and the price to be received. The defects in High River's disclosures, individually and cumulatively, warrant injunctive relief against continuation and consummation of the tender offers pending fair and complete correct disclosures and the passage of a reasonable time thereafter. 6. As an aid to their illegal offers, defendants have served the Original Ten Partnerships with demands for lists of unitholders, allegedly made pursuant to the California Limited Partnership Act. Admittedly, defendants' purpose in requesting these lists is to facilitate the pending High River tender offers that not only are being pursued in violation of the federal securities laws, but would also, if successful, destroy the Partnerships and damage thousands of unitholders. Because defendants' request for the lists is illegal and made for an improper purpose, the Partnerships are further entitled to a declaratory judgement that they are under no obligation to furnish defendants (or any other person or entity acting in concert with them) with the unitholder lists under these circumstances. PARTIES ------- 7. Each of the plaintiff Partnerships (McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd. McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., McNeil Real Estate Fund XXVI, L.P. and McNeil Real Estate Fund XXVII, L.P.) is a limited partnership. All the plaintiffs except McNeil Real Estate Fund XXVII, L.P. ("Fund XXVII") are California limited partnerships. Fund XXVII is a Delaware limited partnership. 8. Defendant High River is a Delaware limited partnership and is one of the bidders in the unlawful tender offers for the Partnerships. 9. Defendant Riverdale is a Delaware corporation and is the general partner of High River and is another bidder in the unlawful tender offers. 10. Defendant Icahn is a natural person who is another bidder in the unlawful tender offers. Upon information and belief, Icahn controls his co-defendants High River, Riverdale and Unicorn. 11. Defendant Unicorn is a New York corporation. 12. All the defendants have acted in concert in connection with all the matters that form the subject of this action. FACTS ----- A. Icahn's Prior Tender Offers. ---------------------------- 13. On August 3, 1995, High River launched a series of ten unsolicited tender offers seeking to acquire up to 45% of the units in each of Original Ten Partnerships. 14. Unitholders in each of the Partnerships over- whelmingly rejected High River's 1995 tender offers. When these tender offers closed on October 6, 1995, High River received tenders of less than approximately 10% of the outstanding limited partnership units in each of the Original Ten Partnerships. 15. Soon after Icahn commenced his tender offers of last year, the proverbial bevy of class action law suits were reflexively filed in California, New York and Texas, purportedly seeking to "protect" the Partnerships' unitholders. As the Partnerships allowed Icahn's tender offers to be consummated without seeking judicial assistance to impede them, these purported "defenders" of unitholder interests found no occasion to do anything in connection with Icahn's tender offers that would justify any recovery, judicial relief, or, critically, any legal fees. While the actions in New York and Texas were abandoned by these plaintiffs, they have expressed their intention to consolidate all their alleged grievances in a pending action in California state court, principally to press contrived claims of breach of fiduciary duty by the Partnerships and their general partner. 16. The units tendered to High River in each of the Ten Original Partnerships have been transferred to High River, or, at High River's designation, to Unicorn. High River is now, and has been throughout 1996, a limited partner of each of the Ten Original Partnerships, and is bound by the Partnership Agreement governing each of the Partnerships. B. The 1996 Schedule 13D Amendment. -------------------------------- 17. On August 5, 1996, the Icahn Group filed with the Securities and Exchange Commission Amendment No. 4 to its joint Schedule 13D with respect to the Original Ten Partnerships. A copy of this Amendment to Schedule 13D is annexed hereto as Exhibit A. The contents of the amendment have routinely been placed on databases that are accessible throughout the United States, including this District, and have also been the subject of wire service coverage. 18. The Icahn Group's Amendment to Schedule 13D was filed for the purpose, INTER ALIA, of disclosing the terms of an extraordinary letter agreement between High River and counsel for the purported class plaintiffs who, as noted above, have brought class or derivative claims against the Partnerships and their general partner. 19. Under Item 6 ("Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer"), the Icahn Group disclosed: The Letter Agreement . . . provides, among things, that . . . HIGH RIVER WILL COMMENCE, AS SOON AS possible, but in no event more than 6 months, the TENDER OFFERS FOR ANY AND ALL OF THE OUTSTANDING UNITS OF THE PARTNERSHIPS AT A PRICE THAT IS NOT LESS THAN 75% OF THE ESTIMATED LIQUIDATION VALUE OF THE UNITS (AS DETERMINED BY UTILIZING THE SAME METHODOLOGY THAT WAS USED TO DETERMINE THE LIQUIDATION VALUES IN HIGH RIVER'S PREVIOUS TENDER OFFERS FOR THE PARTNERSHIPS), which Tender Offers may be subject to such other terms and conditions as High River determines in its sole discretion . . . . [Emphasis added.] 20. In apparent exchange for this unenforceable "promise", High River's letter agreement with the class plaintiffs also contained an unprecedented -- and probably illegal and unenforceable -- provision under which counsel for the putative class purportedly agreed not to settle the pending California state-court litigation against the Partnerships and their general partner for less than a specified (and exorbitant) amount of consideration. C. Defendants' August 5 Filings Commenced Tender Offers. ---------------------------------------------------- 21. As a matter of law, the disclosure made by defendants on August 5, 1996, constituted the commencement of tender offers for any or all outstanding limited partnership units in each of the Original Ten Partnerships, by each of the defendants, who together constitute a "group" under Section 13(d). 22. SEC Rule 14d-2(a)(5), 15 C.F.R. Section 240.14d- 2(a)(5), provides that a tender offer is commenced for purposes of Section 14(d) at 12:01 a.m. on the date when "[t]he tender offer is first published or given to security holders by the bidder. . . ." Under Rules 14d-2(b) and (c), a public announcement by bidder "shall be deemed to constitute the commencement of a tender offer" if the announcement includes "(1) [t]he identity of the bidder; (2) [t]he identity of the subject company; and (3) [t]the amount and class of securities being sought and the price or range of prices being offered therefor." 23. The Icahn Group's Amendment to Schedule 13D contained all the information sufficient to satisfy each and every element of Rule 14d-2, including the identity of the bidder (High River), the identity of the target (the Original Ten Partnerships), the quantity of securities to be acquired (any and all limited partnership units) and the "range of prices" to be offered (not less than a stated percentage of the Partnerships' liquidation values). The announced price range referred to methodology that had been expressly used and disclosed by High River in the 1995 tender offers for the same Partnerships, and therefore not only constituted part of the public record but was also known to the very unitholders whom the Icahn Group's disclosure was intended to reach and effect. 24. Accordingly, the Icahn Group's amended Schedule 13D constituted a "public announcement" of High River's commencement of tender offers for the Original Ten Partnerships, effective August 5, 1996. Thereafter, within five (5) business days after August 5, 1996, i.e., August 12, 1996, the Icahn Group was required either to (1) publicly announce that it had determined not to continue with the tender offers, or (2) disseminate all information to which unitholders are entitled to evaluate the tender offers and determine whether to tender, as set forth in SEC Schedule 14D-1. SEC Rule 14d-2(b), 15 C.F.R. Section 240.14d-2(b). 25. For more than six weeks after August 5, 1996, High River undertook neither of the two legally permissible alternatives. High River Failed either to discontinue its tender offers or to make Schedule 14D-1 disclosure to investors even after the Partnerships filed their initial Complaint in this action asking this Court to enjoin defendants' blatant Rule 14d-2 violation and manipulative tactics. Throughout this time, High River was, therefore, in violation of the SEC Rules governing tender offers: If the bidder makes the subsequent announcement contemplated by the first option, the initial announcement will not be deemed to commence an offer. If the bidder complies with the filing, disclosure and dissemination requirements of the second option, the tender offer will commence on the date of such compliance, rather than the date of the earlier public announcement . . . . IF THE BIDDER EXERCISES NEITHER OPTION, THE TENDER OFFER COMMENCES ON THE DATE OF THE INTIMAL ANNOUNCEMENT, RESULTING, HOWEVER, IN FILING AND DISCLOSURE VIOLATION. As a result, it is not anticipated that a bidder making such a public announcement will select the "do nothing" alternative. SEC Exchange Act Release No. 16384, Fed. Sec L. Rep. (CCH) paragraph 82,373, at 82,583 (Dec. 19, 1979) (emphasis added). 26. Although High River belatedly filed its Schedules 14D-1 on September 20, 1996, and provided tender offer materials to the Partnerships for mailing on September 30, 1996, High River, as a matter of law, could not and, as a matter of fact, did not even attempt to "unring the bell" of its Rule 14d-2 violation. Rather, during those six weeks between August 5 and September 20, 1996, the unlawful information in the Schedule 13D filing was allowed to remain publicly available to influence unitholders with respect to its offers. D. High River's Schedule 14D-1 Filings. ----------------------------------- 27. On September 20, 1996, at long last, High River finally filed Schedules 14D-1 with the SEC, purportedly commencing tender offers for "any and all units" in the eleven plaintiff Partnerships, including nine of the Original Ten Partnerships affected by the August Schedule 13D Amendments, together with McNeil Real Estate Funds XXVI, L.P. ("Fund XXVI") and Fund XXVII. A copy of the Schedule 14D-1 for Fund XXIV, which is representative of all these filings, is annexed hereto as Exhibit B. 28. High River's Schedule 14D-1 filings disclosed that High River had entered into two more unusual agreements with the plaintiffs' attorneys in the putative class actions against the partnerships. First, defendants committed themselves to make tender offers for units in two additional Partnerships Fund XXVI and Fund XXVII, in addition to the Ten Original Partnerships. On the other hand, Plaintiffs' Counsel released High River from its obligation to commence a tender offer for McNeil Real Estate Limited Fund V, Ltd. ("Fund V"), which was in the process of liquidating on terms substantially more favorable than those reflected in High River's lowball offer made in 1995 or the price that would have been offered in 1996. 29. High River's tender offers are for "any and all units" in the eleven Partnerships that are the present plaintiffs herein. However, these tender offers violate the Partnership Agreements that are organic documents for these Partnerships. 30. Section 708(b)(1)(B) of the United States Internal Revenue Code, 26 U.S.C. Section 708(b) (1)(B), provides that if more than 50% of the partnership interests in a partnership change hands within a 12-month period, the partnership shall terminate under the tax laws. High River's Schedules 14D-1 acknowledge that should High River complete its tender offers in accordance with their terms, Section 708(b) (1) (B) would be triggered, with negative consequences for non-tendering limited partners. 31. The Partnership Agreements that govern these Partnerships preclude limited partners from taking any actions that would dissolve or terminate the Partnership. Section 16.6 of the Partnership Agreement for each Partnership except for McNeil Pacific Investors Fund 1972, Ltd. ("Fund 1972") provides that: No Limited Partner shall have the right or power to. . . (iii) cause the termination and dissolution of the Partnership by court decree or otherwise, except as set forth in this Partnership Agreement. . . Termination of the Partnerships for tax purposes by act of the limited partners is not among the bases for dissolution or termination authorized by the Partnership Agreements. Thus, successful consummation of High River's tender offers in whole or significant part would contravene and violate the Partnership Agreements. 32. In the 1995 tender offers, High River (and its affiliate, Unicorn) acquired between 5% and 10% of the limited partnership units in the Ten Original Partnerships. Moreover, there have been and will continue to be ongoing transfers of limited partnership interests in the ordinary course. Thus, pursuant to the express terms of the Partnership Agreements asked above, High River may not acquire, other limited partners may not transfer, and McNeil may not recognize the transfer of, more than 50 percent of the outstanding limited partnership units in any 12 month period -- much less "any and all units" in each Partnership. Moreover, by failing to disclose that High River may not validly tender for and acquire "any and all units" in the Partnerships, High River's tender offer materials are false and misleading. E. High River's False Misleading and Misleadingly Omissive Schedules 14D-1 ------------------------------------------------------- 1. High River's Failure to Disclose Delays In Payments. ---------------------------------------------------- 33. The Schedules 14D-1 filed by High River are also false and misleading in numerous other respects. First, High River has failed to disclose that, notwithstanding the reasonable expectations of investors and SEC Rule 14e-1(c), it does not pay investors for units that are tendered to them "promptly" after a tender offer closes. 34. High River closed its 1995 offers on October 6, 1995. Transfer of most partnership units to High River (and Unicorn) occurred on December 31, 1995. Yet, High River failed to pay many limited partners for their units for several months after December 1995. McNeil and High River each received numerous communications from limited partners complaining of High River's inexcusable failure to make timely payments to unitholders. High River has never publicly disclosed any of these delays or the reason for such delays. 35. High River's prior record of unlawful delay in paying for the units acquired would be highly significant to a reasonable investor considering whether to tender units in the presently pending tender offers. Yet, far from disclosing that it previously delayed in paying for units, High River now claims in its tender offer materials that it will pay for units tendered to it "as promptly as possible following the Expiration Date". Under the circumstances, High River's disclosure is misleading and fails to disclose facts that are necessary to make the statements that are disclosed not misleading. 2. High River's Misleading Disclosure Of The Tender Offer Prices ------------------------------------------------------ 36. With respect to six partnerships, High River's disclosure of the price to be paid for each unit -- the single most material disclosure imaginable -- is materially false and misleading, in that High River discloses in prominent text on the cover of its tender offer materials the price it will pay for units, while only disclosing in the clause thereafter that that price is to be REDUCED by the (unspecified) amount of distributions that the Partnerships made recently (but well before High River's Schedules 14D-1 were filed) to the unitholders. 37. For example, in the case of Fund XXVII, High River initially asserts that its offer price is $6.190 per unit. However, given that Fund XXV11 made a distribution to unitholders of $0.56884 per unit in August 1996, High River's REAL offer price for units in Fund XXVII is the lesser sum of $5.6312 -- or a reduction of almost 9.2% from the prominently displayed price. Similarly misleading "prices" are disclosed with respect to distributions made by Funds XV, XX, XXIV, XXV and XXVI. As the August 1996 distributions to unitholders were made approximately one month ago, High River certainly had had sufficient time to disclose, in the bold print on the front page of their tender offer materials, the REAL prices it will pay for tendered units. 3. Defendants' Failure to Adequately Disclose Their Financial Condition. ------------------------------------------------ 38. Finally, the Schedules 14D-1 filed by High River are also insufficient because they fail to adequately disclose the present financial position of High River and its affiliates. 39. High River's Schedules 14D-1 contain only unaudited financial statements as of June 30, 1996 for High River, but do not contain any other additional financial information concerning High River, although such information is material to investors who are entitled to know (i) whether High River is likely to be able to pay for the units it contracts to purchase, and (ii) the financial position of a party that concededly may seek to take control of the Partnerships. Moreover, the Schedules 14D-1 contain NO financial information concerning Riverdale, which is High River's general partner. Icahn and/or Unicorn. F. High River's Demand for Unitholder Lists. ---------------------------------------- 40. On August 12, 1996, High River wrote to each of the Ten Original Partnerships making a demand for lists of the unitholders fin each Partnership. Specifically, High River's letter indicated: We request permission to inspect and copy, no later than August 19, 1996, during normal business hours, a current list, for each Partnership, of the full name and list known business or residence address of each partner, set forth in alphabetical order together with the contributions and the share in profits and losses of each partner (collectively, the Unitholder Lists"). THE UNDERSIGNED, OR AN AFFILIATE OF THE UNDERSIGNED INTENDS TO MAKE A TENDER OFFER FOR UNITS OF EACH OF THE PARTNERSHIPS. [Emphasis added.] A copy of High River's demand letter is annexed hereto as Exhibit C. 41. As demonstrated by the contents and timing of its August 12 letter, High River sought to obtain the unitholder lists for the purpose of facilitating tender offers for the Ten Original Partnerships. However, as demonstrated above, the tender offers are palpably illegal in that, INTER ALIA, (i) they are being conducted in gross violation of the applicable SEC Rules designed to prevent market manipulation and to ensure that unitholders receive all the information they need in order to make informed investment decisions, and (ii) they seek tenders that would cause termination of the Partnerships, in violation of the Partnership Agreements and to the extreme detriment of other unitholders. California state law, which under other circumstances might require the Partnerships to provide High River with the information it seeks, does not require the Partnerships to provide shareholders lists for the purpose, as here, of facilitating the conduct of tender offers that violate both the federal securities laws and the Partnership Agreements, and which offers themselves must be enjoined. FIRST CLAIM FOR RELIEF ---------------------- [For Violation of Sections 14(d) and 14(e) Of The Exchange Act And The Rules And Regulations Promulgated Thereunder -- Premature Commencement Of Offers Under Rules 14d-2] 42. Plaintiffs repeat and reallege the allegations of the preceding paragraphs as if fully set forth herein. 43. Sections 14 (d) and (e) of the Exchange Act, 15 U.S.C. Section 78n(d) -(e), require that in connection with a tender offer, full disclosure must be made of the information specified in Section 14(d) and the rules and regulations promulgated thereunder, and make it unlawful to engage in any fraudulent deceptive or manipulative act in connection with any tender offer. 44. Sections 14(d) and (e) and the SEC regulations thereunder are thus intended to insure that security holders confronted with a tender offer are provided with all the information about the offeror and the offer necessary for them to make an informed investment decision whether to tender or hold their securities. 45. Under Rule 14d-2, High River commenced tender offers from all outstanding units of the Partnerships for August 5, 1996, yet High River Failed for weeks thereafter either (i) to disclose or disseminate to shareholders virtually any of the information required to be disclosed on Schedule 14D-1, and (ii) also failed, as the only other permissible alternative to announce within five business days that it was discontinuing the tender offers. High River's manipulation of the marketplace continued until September 20, 1996, when High River belatedly filed its Schedules 14D-1 which, in any event, were themselves materially false and omissive. 46. Defendants' Schedule 13D Amendment purporting to disclose an intention to commence tender offers was calculated improperly to condition the Unitholders and interfere with trading in limited partnership units that would otherwise take place. As defendants, who are veteran, sophisticated tender offerors with years of experience in tender offer matters, well know, the avoidance of such manipulative abuses is the very purpose of Rule 14d-2. 47. By reason of the foregoing, defendants should be preliminarily and permanently joined from any further violations of the federal securities laws, including without limitations Sections 14(d) and (e) of the Exchange Act and the SEC Rules promulgated thereunder. In particular, High River and any other offeror should be mandatorily enjoined to promptly cure their prior violation of Rule 14d-2 by discontinuing the ongoing, unlawful tender offers for the Partnerships, without acquiring any units pursuant thereto, and waiting least 60 days thereafter, to allow the market to recover from defendants' unlawful "gun- jumping," before commencing any further tender offers. 48. The partnerships and their limited partners have no adequate remedy at law. SECOND CLAIM FOR RELIEF ----------------------- [For Breach Of The Partnership Agreements And For Participating In, Aiding And Abetting, And Soliciting Breaches Of The Partnership Agreements] 49. Plaintiffs repeat and reallege the allegations of the preceding paragraphs as if fully set forth herein. 50. Section 708(b) (1) (B) of the United States Internal Revenue Code, 26 U.S.C. Section 708(b)(1)(B), provides that if more than 50% of the partnership interests in a partnership change hands within a 12-month period, the partnership shall be treated as having been terminated for tax purposes. High River's Schedule 14D-1 acknowledges that should High River succeed with its tender offers, Section 708 would be triggered, with potential negative consequences for non-tendering limited partners. 51. The Partnership Agreement for each Partnership precludes limited partners from taking actions that would dissolve or terminate the Partnership. Section 16.6 of the Partnership Agreement for each Partnership (except McNeil Pacific Investors Fund 1972, Ltd.) provides that: No Limited partner shall have the right or power to . . . (iii) cause the termination and dissolution of the Partnership by court decree or otherwise except as set forth in this Partnership Agreement. . 52. High River has offered to acquire "any and all" units in each of the Partnerships would result in the transfer, within a 12-month period, of more than 50% of the units of each Partnership. Such transfer would result in the application of Section 708 to each Partnership, with resulting potentially disastrous tax consequences to each limited partner who elects not to tender units. 53. By proposing to engage in conduct that would result in the tax termination of the Partnerships, High River has breached the Partnership Agreements with respect to each of the Partnerships in which it is a limited partner, which include all the Partnerships as to which High River made its 1995 tender offers. 54. Additionally, any limited partner transferring units that would result in the overall transfer of more than 50% of the outstanding units in a 12-month period would, unwittingly thereby breach the Partnership Agreement. By seeking to induce unitholders to effect such transfers, High River is intentionally participating in, aiding and abetting and soliciting such breaches. 55. High River's conduct concededly threatens irreparable harm not only to the Partnerships but to their limited partners who may choose not to tender units to High River, many of whom chose to invest in the Partnership, in part, as the result of tax considerations. It is fundamentally unfair and illegal for High River to be permitted to destroy, for many limited partners, the Partnerships' favorable tax treatment, in violation of the Partnership Agreements that are the Partnerships' organic documents. 56. By reason of the foregoing, High River should be preliminarily and permanently enjoined from continuing and consummating its pending tender offers for "any and all units" in the Partnerships, or offers for any number of units that, when combined with the units previously transferred in the preceding 12 months (including those previously acquired by High River and Unicorn), and/or when combined with the units that can be expected to be transferred by other unitholders in the (next) 12 months, would result in the transfer of more than 50% of outstanding units and the triggering of Section 708(b)(1)(B). 57. The Partnerships and their limited partners have no adequate remedy at law. THIRD CLAIM FOR RELIEF ---------------------- [For Violation of Sections 14(d) and 14(e) Of The Exchange Act And The Rules And Regulations Promulgated Thereunder -- False, Misleading And Misleadingly Omissive Schedules 14D-1 And Tender Offer Materials] 58. Plaintiffs repeat and reallege the allegations of the preceding paragraphs as if fully set forth herein. 59. High River has purported to commence tender offers for "any and all units" in each of the Partnerships and had filed Schedules 14D-1 and disseminated tender offer materials purporting to offer to purchase "any and all units." Yet, for the reasons discussed above, High River may not, consistent with the Partnership Agreements, acquire units that would cause the transfer of more than 50% of the outstanding units in any Partnership, and should be enjoined from doing so. In fact, the number of units that High River may validly acquire in each Partnership is, in light of its prior tender offers and other transfers that occur in the ordinary course, substantially less than 50% of the outstanding units -- not 100%, as High River depicts. 60. High River's tender offer materials are false, misleading and misleadingly omissive in failing to disclose that High River is not entitled to acquire "any and all units" and that transfer of units that would cause tax termination of the Partnerships under Section 708 would be in breach of the Partnership Agreements and, therefore, cannot take place. 61. High River's tender offer materials are also false, misleading and omissive in that: (a) While stating that unitholders will be paid for their units as promptly as possible following consummation of the offers, they fail to disclose that in the previous tender offers for these Partnerships, High River unreasonably and without excuse delayed for up to several months in making payment for units it purchased and thereby violated SEC Rule 14e-1(c), 17 C.F.R. Section 240.14e-1(c); (b) With respect to six Partnerships, while High River discloses on the cover of its tender offer materials the price it will pay for units, High River discloses only in a later clause that that price to be paid is to be REDUCED by amounts of distributions that the Partnerships made recently to unitholders; and (c) The Schedules 14D-1 filed by High River fail to adequately disclose the financial position of High River and its affiliates. 62. By reason of the foregoing, defendants should be preliminarily and permanently enjoined from continuing or consummating their tender offers for the Partnerships until they disseminate amended materials containing full, fair and complete supplemental disclosures with respect to each false, misleading or misleadingly omissive statement contained in their Schedules 14D-1 and unitholders mailings, and for a reasonable time (and in no event less than 60 days) thereafter to permit investors to consider and evaluate the contents of such curative disclosures. 63. The Partnerships and their limited partners have no adequate remedy at law. FOURTH CLAIM FOR RELIEF ----------------------- [For Violation of Section 13(d) Of The Exchange Act And The Rules And Regulations Promulgated Thereunder 64. Plaintiffs repeat and reallege the allegations of the preceding paragraphs as if fully set forth herein. 65. Section 13(d) of the Exchange Act, 15 U.S.C. Section 78m(d), and the SEC Rules promulgated thereunder make it unlawful for any person to file a Schedule 13D (including an amendment thereto) containing any materially false or misleading statement or omission. 66. Amendment No. 4 to Icahn Group's Schedule 13D, filed August 5, 1996, is materially false, misleading and emissive in that it fails to disclose that under the SEC Rules, the filing of the Amended Schedule 13D constituted the commencement of tender offers with respect to each Partnership, and that the Icahn Group intended within five business days nether to discontinue the tender offers nor to disclose and disseminate the information required to be disclosed so that unitholders could make informed decisions as to whether to tender their units. 67. By reason of the foregoing, defendants should be preliminarily and permanently enjoined from any further violations of the federal securities laws, including without limitation "Section 13(d) of the Exchange Act. In particular, defendants should be mandatorily enjoined promptly further to amend its Schedule 13D to disclose that on August 5, 1996, High River (and any other offerors) commenced tender offers for the Partnerships and that they have discontinued such tender offers without acquiring any units from any limited partners. 68. The Partnerships and their limited partners have no adequate remedy at law. FIFTH CLAIM FOR RELIEF ---------------------- [Against High River For A Declaratory Judgement That The Partnerships Are Not Required To Provide High River With Unitholders Lists To Aid It In Pursuing Its Illegal Tender Offers] 69. The Partnership repeat and reallege that allegations of the preceding paragraphs as if fully set forth herein. 70. This claim is brought on behalf of the Ten Original Partnerships (except for Fund V). 71. On August 12, 1996, High River wrote to each of the Ten Partnerships making a demand for lists of the unitholders in each Partnership. 72. As demonstrated by the contents and timing of its August 12 letter, High River is seeking to obtain the unitholder lists for the express and conceded purpose of conducting tender offers for the Ten Original Partnerships. However, as demonstrated above, these tender offers are palpably illegal in that they (i) are being conducted in plain violation of the applicable SEC Rules designed to prevent market manipulation, and (ii) could trigger termination of the Partnerships in violation of the Partnership Agreements. Under California law, the Partnerships should not be required to provide shareholders lists for the purpose of facilitating the conduct of tender offers that violate the federal securities laws and the Partnership Agreements, to the manifest detriment of the Partnerships and unitholders, and themselves must therefore be enjoined. 73. By reason of the foregoing, the Partnerships are entitled to a declaratory judgement that High River is not entitled to be provided unitholder lists, or any other information, pursuant to High River's letter of August 12, 1996 or which would otherwise be used in connection with illegal tender offers, other conduct in violation of the Partnership Agreements, or any attempt, to profit from unlawful market manipulation. WHEREFORE, plaintiffs respectfully demand judgement: I. Declaring that defendants have violated Sections 14(d) and (e) and 13(d) of the Securities Exchange Act of 1934, 15 U.S.C. Section 78n(d)-(e), 78m(d), and the SEC Rules promulgated thereunder in connection with their commencement and continuation of tender offers for the Partnerships on and after August 5, 1996 and September 20, 1996; II. Granting plaintiffs injunction relief commanding High River to withdraw, discontinue and acquire no units pursuant to its existing tender offers for "any and all units" of the Partnerships, or any of them; III. Granting plaintiffs injunction relief against defendants and defendants' respective officers, directors, employees, agents and affiliates, and all other persons acting in concert with defendants or on their behalf, directly or indirectly: (a) enjoining them from committing any further violations of the Securities Exchange Act and SEC tender offer rules in connection with the Partnerships and their affiliates; (b) enjoining then from continuing or consummating their pending tender offers, which were commenced in violation of Rule 14d-2, and enjoining them from commencing any new tender offer for the Partnerships for a reasonable period (not less than 60 days) to dissipate the effects of defendants' unlawful conduct; (c) enjoining them from continuing or consummating their pending tender offers or any other tender offers for "any and all" units of the Partnerships or any number of units that could have the effect of causing the Partnerships to terminate, for tax purposes or otherwise, in violation of Section 16.6 of the Partnership Agreement; (d) in the alternative, enjoining consummation for the tender offers pending accurate and complete corrective disclosure with respect to each and every false, misleading and/or misleading omissive matter contained in High River's Schedules 14D-1 and tender offer materials disseminated to unitholders; III. Requiring defendants and their affiliates to divest themselves of all Partnership Units beneficially owned by them, acquired after the start of their unlawful tender offers and the filing of their false and misleading Schedule 13D Amendment and, later, Schedules 14D-1; IV. Granting a declaratory judgement that the Partnerships are not required to provide High River with unitholder lists, or any other information, pursuant to High River's letter of August 12, 1996 or which would otherwise be used in connection with illegal tender offers, tender offers conducted in violation of the Partnership Agreements, or any attempt to profit from unlawful market manipulation; and V. Granting the Partnerships such other and further relief as the Court may deem just and proper, together with the costs, disbursements and attorneys' fees of this action. DATED: September 30, 1996 FRANK ROTHMAN HARRIET S. POSNER STEVEN A. VELKEI SKADDEN, ARPS, SLATE, MEAGHER & FLOM By /s/ Hariett S. Posner Harriet S. Posner Attorneys for Plaintiffs/ Counterdefendants McNEIL PACIFIC INVESTORS FUND 1972, ET AL. EX-99 3 RONALD C. PETERSON (Bar No. 54312) MICHAEL L. CHARLSON (Bar No. 122125) ALEXANDER G. ARATO (Bar No. 140512) HELLER, EHRMAN, WHITE & McAULIFFE 601 South Figueroa Street, 40th Floor Los Angeles, California 90017-5758 Telephone: (213) 689-0200 Facsimile: (213) 614-1868 THEODORE ALTMAN, ESQ. HOWARD S. KOH, ESQ. LISA A. STANCATI, ESQ. GORDON ALTMAN BUTOWSKY WEITZEN SHALOV & WEIN 114 West 47th Street New York, New York 10036 Telephone: (212) 626-0800 Facsimile: (212) 626-0799 Attorneys for Defendants RIVERDALE INVESTORS CORP. INC., CARL C. ICAHN and UNICORN ASSOCIATES CORPORATION and Defendant and Counterclaimant HIGH RIVER LIMITED PARTNERSHIP UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA McNEIL PACIFIC INVESTORS FUND ) Case No. CV-96-5680 SVW (CWx) 1972, LTD., ET AL., ) ) Plaintiffs, ) DEFENDANTS' ANSWER TO ) SUPPLEMENTAL AND AMENDED v. ) COMPLAINT FOR DECLARATORY ) AND INJUNCTIVE RELIEF HIGH RIVER LIMITED PARTNERSHIP, ) ET AL., ) ) Defendants. ) ___________________________________) ) AND RELATED COUNTERCLAIMS ) ___________________________________) Defendants High River Limited Partnership ("High River"); Riverdale Investors Corp, Inc. ("Riverdale"); Carl C. Icahn ("Icahn"); and Unicorn Associates Corporation ("Unicorn") (the defendants being referred to collectively in this Answer as the "Defendants"), by and through their counsel, answer the Supplemental and Amended Complaint for Declaratory and Injunctive Relief (the "Amended Complaint") as follows: JURISDICTION ------------ 1. Answering the allegations in Paragraph 1 of the Amended Complaint, Defendants admit that this Court has jurisdiction, pursuant to 28 U.S.C. Section 1332 and 15 U.S.C. Section 78aa, over the purported claims for violation of the federal securities acts that are asserted in the Amended Complaint. Except as expressly admitted, Defendants deny the allegations in Paragraph 1 of the Amended Complaint. 2. Answering the allegations in Paragraph 2 of the Amended Complaint, Defendants admit that the Amended Complaint purports to seek to enjoin certain tender offers, but denies that plaintiffs are entitled to such relief. Except as expressly admitted, Defendants deny the allegations of Paragraph 2 of the Amended Complaint. 3. Defendants deny the allegations in Paragraph 3 of the Amended Complaint. 4. Answering the allegations in Paragraph 4 of the Amended Complaint, Defendants admit that on September 20, 1996 High River commenced tender offers for the plaintiff partnerships. Except as expressly admitted, Defendants deny the allegations of Paragraph 4 of the Amended Complaint. 5. Defendants deny the allegations of Paragraph 5 of the Amended Complaint and aver that the Internal Revenue Code and applicable IRS regulations speak for themselves. 6. Answering the allegations in Paragraph 6 of the Amended Complaint, Defendants admit that High River, on August 12, 1996 made a request for a current list of partners of the Original Ten Partnerships. Defendants further admit that these requests were made pursuant to provisions of the California Uniform Limited Partnership Act (the "Old California Act"), in the case of those Original Ten Partnerships organized under that law, and pursuant to the provisions of the Revised California Limited Partnership Act (the "New California Act"), in the case of those Original Ten Partnerships organized under that law. Except as expressly admitted, Defendants deny the allegations in Paragraph 6 of the Amended Complaint. Without limiting the generality of the foregoing, Defendants aver that High River is a limited partner of each of the Original Ten Partnerships, that both the Old California Act and the New California Act include provisions granting partners the unconditional and unwaivable right to a current list of partners and that the plaintiff Partnerships' denial to High River of the current list of partners is unlawful and without justification. PARTIES ------- 7. Defendants admit the allegations in Paragraph 7 of the Amended Complaint. 8. Answering the allegations in Paragraph 8 of the Amended Complaint, Defendants admit that High River is a Delaware limited partnership. Except as expressly admitted, Defendants deny the allegations of Paragraph 8 of the Amended Complaint. 9. Answering the allegations in Paragraph 9 of the Amended Complaint, Defendants admit that Riverdale is a Delaware corporation. Except as expressly admitted, Defendants deny the allegations in Paragraph 9 of the Amended Complaint. 10. Answering the allegations in Paragraph 10 of the Amended Complaint, Defendants admit that Icahn is a natural person. Defendants further admit that Icahn may be deemed to control the other Defendants. Except as expressly admitted, Defendants deny the allegations in Paragraph 10 of the Amended Complaint. 11. Defendants admit the allegations in Paragraph 11 of the Amended Complaint. 12. Defendants deny the allegations in Paragraph 12 of the Amended Complaint. (PURPORTED) FACTS ----------------- 13. Answering the allegations in Paragraph 13 of the Amended Complaint, Defendants admit that on August 3, 1995 High River commenced ten tender offers each seeking to acquire up to 45% of the units in each of the Original Ten Partnerships. Except as expressly admitted, Defendants deny the allegations in Paragraph 13 of the Amended Complaint. 14. Answering the allegations in Paragraph 14 of the Amended Complaint, Defendants admit that High River's 1995 tender offer for units of the Original Ten Partnerships closed on October 6, 1995. Defendants further admit that High River received units in each of the plaintiff Partnerships as a result of High River's 1995 tender offer for units of the Partnerships. Except as expressly admitted, Defendants deny the allegations in Paragraph 14 of the Amended Complaint. 15. Answering the allegations in Paragraph 15 of the Amended Complaint, Defendants admit that, after High River's 1995 tender offers were commenced, one or more lawsuits was filed alleging, among other things, breach by McNeil Partners of its fiduciary obligations to the plaintiff Partnerships. Except as expressly admitted, Defendants deny the allegations in Paragraph 15 of the Amended Complaint. 16. Defendants admit the allegations in Paragraph 16 of the Amended Complaint. 17. Answering the allegations in Paragraph 17 of the Amended Complaint, Defendants admit that on August 5, 1996, Defendants filed with the SEC amendments to the Schedules 13D that relate to High River's ownership of certain of the Original Ten Partnerships; and Defendants aver that the documents speak for themselves. Defendants further admit that Exhibit A to the Amended Complaint is a copy of Amendment 4 to Defendant's Schedule 13D relating to High River's ownership of units of plaintiff McNeil Real Estate Fund XXIV, L.P. Defendants aver that they are without knowledge or information sufficient to form a belief as to the truth of the allegations contained in the final sentence of Paragraph 17, and on that basis deny the allegations contained in that sentence. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 17 of the Amended Complaint. 18. Answering the allegations in Paragraph 18 of the Amended Complaint, Defendants admit that on August 5, 1996, Defendants filed with the SEC amendments to the Schedules 13D that relate to High River's ownership of certain of the Original Ten Partnerships; and Defendants aver that the documents speak for themselves. Defendants further admit that High River has entered into an agreement (the contents of which have been included in a filing required to be made with the SEC) with counsel for persons who are suing the Original Ten Partnerships; and Defendants aver that the agreement speaks for itself. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 18 of the Amended Complaint. 19. Answering the allegations in Paragraph 19 of the Amended Complaint, Defendants admit that on August 5, 1996, Defendants filed with the SEC amendments to the Schedules 13D that relate to High River's ownership of certain of the Original Ten Partnerships; and Defendants aver that the documents speak for themselves. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 19 of the Amended Complaint. 20. Answering the allegations in Paragraph 20 of the Amended Complaint, Defendants admit that High River has entered into an agreement (the contents of which have been included in a filing required to by made with the SEC) with counsel for persons who are suing the Original Ten Partnerships; and Defendants aver that the agreement speaks for itself. Except as expressly admitted or averred Defendants deny the allegations in Paragraph 20 of the Amended Complaint. 21. Defendants deny the allegations in Paragraph 21 of the Amended Complaint. 22. Answering the allegations in Paragraph 22 of the Amended Complaint, Defendants admit that the SEC has issued rules concerning the conduct of tender offers; and Defendants aver that those rules speak for themselves. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 22 of the Amended Complaint. 23. Answering the allegations in Paragraph 23 of the Amended Complaint, Defendants admit that on August 5, 1996, Defendants filed with the SEC amendments to the Schedules 13D that relate to High River's ownership of certain of the Original Ten Partnerships; and Defendants aver that the documents speak for themselves. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 23 of the Amended Complaint. 24. Defendants deny the allegations in Paragraph 24 of the Amended Complaint. 25. Answering the allegations in Paragraph 25 of the Amended Complaint, Defendants admit that the SEC has issued certain rules and other documents concerning the conduct of tender offers; and Defendants aver that the rules and other documents speak for themselves. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 25 of the Amended Complaint. 26. Answering the allegations in Paragraph 26 of the Amended Complaint, Defendants admit that High River filed certain Schedules 14D-1 with the SEC on September 20, 1996 and provided certain materials to Plaintiffs, for mailing to unitholders of the Plaintiffs on September 30, 1996; and aver that the documents speak for themselves. Defendants further admit that the amendments to the Schedule 13Ds were filed on August 5, 1996. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 26 of the Amended Complaint. 27. Answering the allegations in Paragraph 27 of the Amended Complaint, Defendants admit that High River filed certain Schedules 14D-1 with the SEC on September 20, 1996 and aver that the documents speak for themselves. Defendants further admit that Exhibit B to the Amended Complaint is a copy of Schedule 14D-1 for McNeil Real Estate Fund XXIV, L.P. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 27 of the Amended Complaint. 28. Answering the allegations in Paragraph 28 of the Amended Complaint, Defendants admit that High River filed certain Schedules 14D-1 with the SEC on September 20, 1996 and aver that the documents speak for themselves. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 28 of the Amended Complaint. 29. Answering the allegations in Paragraph 29 of the Amended Complaint, Defendants admit that High River filed certain Schedules 14D-1 with the SEC on September 20, 1996 and aver that the documents speak for themselves. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 29 of the Amended Complaint. 30. Answering the allegations in Paragraph 30 of the Amended Complaint, Defendants admit that High River filed certain Schedules 14D-1 with the SEC on September 20, 1996 and aver that the documents and 26 U.S.C. Section 708(b)(1)(B) speak for themselves. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 30 of the Amended Complaint. 31. Answering the allegations in Paragraph 31 of the Amended Complaint, Defendants admit that each of the plaintiff partnerships is governed by a Partnership Agreement and aver that the Partnership Agreements that govern the plaintiff partnerships speak for themselves. Except as expressly admitted or averred, plaintiffs deny the allegations in Paragraph 31 of the Amended Complaint. 32. Answering the allegations in Paragraph 32 of the Amended Complaint, Defendants admit that in the 1995 tender offers High River (and its affiliate Unicorn) acquired between 5% and 10% of the limited partnership units in nine of the Original Ten Partnerships and that there have been transfers of limited partnership interests. Except as expressly admitted, Defendants deny the allegations in Paragraph 32 of the Amended Complaint. 33. Answering the allegations in Paragraph 33 of the Amended Complaint, Defendants admit that High River filed certain Schedules 14D-1 with the SEC on September 20, 1996 and aver that the documents speak for themselves. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 33 of the Amended Complaint. 34. Answering the allegations of Paragraph 34 of the Amended Complaint, Defendants admit that High River closed its 1995 tender offers on October 6, 1995. Except as expressly admitted, Defendants deny the allegations in Paragraph 34 of the Amended Complaint. 35. Answering the allegations in Paragraph 35 of the Amended Complaint, Defendants admit that High River filed certain Schedules 14D-1 with the SEC on September 20, 1996 and aver that the documents speak for themselves. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 35 of the Amended Complaint. 36. Answering the allegations in Paragraph 36 of the Amended Complaint, Defendants admit that High River filed certain Schedules 14D-1 with the SEC on September 20, 1996 and aver that the documents speak for themselves. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 36 of the Amended Complaint. 37. Answering the allegations in Paragraph 37 of the Amended Complaint, Defendants admit that High River filed certain Schedules 14D-1 with the SEC on September 20, 1996 and aver that the documents speak for themselves. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 37 of the Amended Complaint. 38. Defendants deny the allegations in Paragraph 38 of the Amended Complaint. 39. Answering the allegations in Paragraph 39 of the Amended Complaint, Defendants admit that High River filed certain Schedules 14D-1 with the SEC on September 20, 1996 and aver that the documents speak for themselves. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 39 of the Amended Complaint. 40. Answering the allegations in Paragraph 40 of the Amended Complaint, Defendants admit that on August 12, 1996, High River exercised its unconditional statutory right to obtain a current list of partners of each of the plaintiff partnerships. Defendants further admit that High River requested the partner lists in a letter, a copy of which is appended to the Amended Complaint as Exhibit C; and Defendants aver that the request letter speaks for itself. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 40 of the Amended Complaint. 41. Answering the allegations in Paragraph 41 of the Amended Complaint, Defendants admit that High River intends to use the partner lists it obtains in connection with its current tender offers or any future tender offers for additional units of one or more of the Original Ten Partnerships, although Defendants aver that High River's motivation in seeking a list of its fellow partners is irrelevant as its statutory right to that list is unconditional. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 41 of the Amended Complaint. Without waiving the generality of the foregoing, Defendants aver that the Partnerships' conceded withholding from High River a current list of its fellow partners is a violation of unconditional mandates of California law and is wrongful and without justification. FIRST (PURPORTED) CLAIM FOR RELIEF ---------------------------------- [For (Alleged) Violation of Sections 14(d) and 14(e) of the Exchange Act and the Rules and Regulations Promulgated Thereunder -- Premature Commencement of Offers Under Rule 14d-2] 41. Defendants incorporate, as though fully set forth, it responses to paragraphs 1-41 above. 43. Defendants aver that the assertions in Paragraph 43 of the Amended Complaint purport to state propositions of law that do not require a response from Defendants. To the extent any assertion in Paragraph 43 constitutes a factual allegation, Defendants deny any and all such allegations that may be included in Paragraph 43 of the Amended Complaint. 44. Defendants aver that the assertions in Paragraph 44 of the Amended Complaints purport to state propositions of law that do not require a response from Defendants. To the extent any assertions in Paragraph 44 constitutes a factual allegation, Defendants deny any and all such allegations that my be included in Paragraph 44 of the Amended Complaint. 45. Defendants deny the allegations of Paragraph 45 of the Amended Complaint. 46. Defendants deny the allegations of Paragraph 46 of the Amended Complaint. 47. Defendants deny the allegations of Paragraph 47 of the Amended Complaint. 48. Defendants deny the allegations of Paragraph 48 of the Amended Complaint. SECOND (PURPORTED) CLAIM FOR RELIEF ----------------------------------- [For (Alleged) Brief of the Partnership Agreements And For Participating In, Aiding and Abetting, And Soliciting Breaches of The Partnership Agreements] 49. Defendants incorporate, as though fully set forth, its responses to Paragraphs 1-48. 50. Answering the allegations in Paragraph 50 of the Amended Complaint, Defendants admit that High River filed certain Schedules 14D-1 with the SEC on September 20, 1996 and aver that the documents speak for themselves. Defendants further aver that the assertions in Paragraph 50 of the Amended Complaint concerning section 708 of the United States Internal Revenue Code purport to state propositions of law that do not require a response from Defendants. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 50 of the Amended Complaint. 51. Answering the allegations of Paragraph 51 of the Amend Complaint, Defendants aver that the Partnership Agreements speak for themselves. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 51 of the Amended Complaint. 52. Answering the allegations of Paragraph 52 of the Amended Complaint, Defendants admit that in the event that more than 50% of the units of each Partnership are transferred within a 12-month period section 708 of the Internal Revenue Code may be triggered. Defendants aver that this risk was disclosed to the investing public in certain Schedules 14d-1 which High River filed with the SEC on September 20, 1996 and in High River's tender offer materials that were provided to plaintiffs for distribution to unitholders of the Partnerships. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 52 of the Amended Complaint. 53. Defendants deny the allegations of Paragraph 53 of the Amended Complaint. 54. Defendants deny the allegations of Paragraph 54 of the Amended Complaint. 55. Defendants deny the allegations of Paragraph 55 of the Amended Complaint. 56. Defendants deny the allegations of Paragraph 56 of the Amended Complaint. 57. Defendants deny the allegations of Paragraph 57 of the Amended Complaint. THIRD (PROPOSED) CLAIM FOR RELIEF --------------------------------- [For Violation Of Sections 14(d) and 14 (e) Of the Exchange Act And The Rules And Regulations Promulgated Thereunder -- False, Misleading and Misleadingly Omissive Schedules 14D-1 And Tender Offer Materials] 58. Defendants incorporate, as though fully set forth, it responses to Paragraphs 1 through 57 above. 59. Answering the allegations in Paragraph 59 of the Amended Complaint, Defendants admit that High River filed certain Schedules 14D-1 with the SEC on September 20, 1996 and aver that the documents speak for themselves. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 59 of the Amended Complaint. 60. Defendants deny the allegations of Paragraph 60 of the Amended Complaint. 61. Defendants deny the allegations of Paragraph 61 of the Amended Complaint. 62. Defendants deny the allegations of Paragraph 62 of the Amended Complaint. 63. Defendants deny the allegations of Paragraph 63 of the Amended Complaint. FOURTH (PURPORTED) CLAIM FOR RELIEF ----------------------------------- [For (Alleged) Violation Of Section 13(d) Of the Exchange Act And The Rules And Regulations Promulgated Thereunder] 64. Defendants incorporate, as though fully set forth, its responses to Paragraphs 1 through 64 above. 65. Defendants aver that the assertions in Paragraph 65 of the Amended Complaint purport to state propositions of law that do not require a response from Defendants. To the extent any assertion in Paragraph 65 constitutes a factual allegation, Defendants deny any and all such allegations that may be included in Paragraph 65 of the Amended Complaint. 66. Defendants deny the allegations of Paragraph 66 of the Amended Complaint. 67. Defendants deny the allegations of Paragraph 67 of the Amended Complaint. 68. Defendants deny the allegations of Paragraph 68 of the Amended Complaint. Without limiting the generality of the foregoing, Defendants deny that the plaintiff Partnerships are entitled to any remedy or relief of any kind by reason of any act or omission of Defendants, or any of them. FIFTH (PURPORTED) CLAIM FOR RELIEF ---------------------------------- [Against High River for a Declaratory Judgment That the Partnership (Supposedly) Are Not Required to Provide High River with Unitholder Lists to Aid it in Pursuing its (Allegedly) Illegal Tender Offers] 69. Defendants incorporate, as though fully set forth, its responses to Paragraphs 1 through 68 above. 70. Answering the allegations in Paragraph 70 of the Amended Complaint, Defendants admit this claim is purportedly brought on behalf of the Original Ten Partnerships (except for Fund V). Except as expressly admitted, Defendants deny the allegations in Paragraph 70 of the Amended Complaint. 71. Defendants admit the allegations of Paragraph 71 of the Amended Complaint. 72. Answering the allegations in Paragraph 72 of the Amended Complaint, Defendants admit that High River intends to use the partner lists it obtains in connection with its current tender offers or any future tender offer for additional units of one or more of the plaintiff Partnerships, although Defendants aver that High River's motivation in seeking a list of its fellow partners is irrelevant as its statutory right to that list is unconditional. Except as expressly admitted or averred, Defendants deny the allegations in Paragraph 72 of the Amended Complaint. Without limiting the generality of the foregoing, Defendants aver that the Partnerships' conceded withholding from High River of a current list of its fellow partners is in violation of unconditional mandates of California law and is wrongful and without justification. 73. Defendants deny the allegations of Paragraph 73 of the Amended Complaint. AFFIRMATIVE DEFENSES -------------------- 74. By alleging matters set forth below under the heading "Affirmative Defenses", Defendants do not thereby allege or admit that Defendants have the burden of proof with respect to any of these matters. As and for separate affirmative defenses, Defendants aver as follows: FIRST AFFIRMATIVE DEFENSE ------------------------- 75. Defendants aver that the Amended Complaint, and each and every purported claim for relief therein, fails to state a claim upon which relief may be granted. SECOND AFFIRMATIVE DEFENSE -------------------------- 76. Defendants aver that this Court lacks subject matter jurisdiction over the Second and Fifth Claims for Relief purportedly set forth in the Amended Complaint. THIRD AFFIRMATIVE DEFENSE ------------------------- 77. Defendants aver that the plaintiff Partnerships are not entitled to the declaration that they seek in their purported Fifth Claim for Relief because the statutory right of a limited partner of a California limited partnership to obtain a current list of its fellow partners is unconditional; and the plaintiff Partnerships have alleged that High River is a limited partner of each of the Partnerships. FOURTH AFFIRMATIVE DEFENSE -------------------------- 78. Defendants aver that, even if there were deficiencies in the disclosure documents they have filed with the SEC in connection with Defendants' ownership of units of the Partnerships (which there are not), the remedies that the plaintiff Partnerships seek, including without limitation divestiture by High River of its ownership interest in the Partnerships, are not authorized remedies for the purported statutory and regulatory violations that plaintiffs allege. WHEREFORE, Defendants respectfully pray that the Court: A. Deny the plaintiff Partnerships the declaratory and injunctive relief that the Partnerships seek by their Complaint; B. Grant Defendants their costs of suit, including reasonable attorneys' and expert witness fees; and C. Grant Defendants such additional and further relief as the Court may deem just and proper. Dated: October __, 1996 HELLER, EHRMAN, WHITE & McAULIFFE By_______________________________ Ronald C. Peterson and GORDON ALTMAN BUTOWSKY WEITZEN SHALOV & WEIN By:___________________________ Theodore Altman Howard S. Koh Lisa A. Stancati Attorneys for Defendants HIGH RIVER LIMITED PARTNERSHIP; RIVERDALE INVESTORS CORP., INC.; CARL C. ICAHN; and UNICORN ASSOCIATES CORPORATION -----END PRIVACY-ENHANCED MESSAGE-----