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. 4)*
MCNEIL REAL ESTATE FUND X, LTD.
(Name of Subject Company [Issuer])
HIGH RIVER LIMITED PARTNERSHIP
CARL C. ICAHN
(Bidders)
LIMITED PARTNERSHIP UNITS
(Title of Class of Securities)
582568 87 9
(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 Amount of filing fee: $1,118.55
Valuation*: $4,376,952
-------------------------------------------------------------------
* For purposes of calculating the fee only. This amount
assumes the purchase of 60,791 units of limited partnership
interest (the "Units") of the subject partnership for $92.00 per
Unit (notwithstanding a subsequent reduction in the purchase
price). 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: $1,118.55
Form or Registration No.: Schedule 14D-1, dated August 3, 1995
Filing Party: High River Limited Partnership & Carl C. Icahn
Date Filed: August 4, 1995
*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.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18 of
the Securities Exchange Act of 1934 ("Act") or otherwise subject to
the liabilities of that section of the Act but shall be subject to
all other provisions of the Act (however, see the Notes).<PAGE>
<PAGE>
AMENDMENT NO. 4 TO SCHEDULE 14D-1
This Amendment No. 4 to Schedule 14D-1 amends and supplements
the Tender Offer Statement on Schedule 14D-1 filed by High River
Limited Partnership, a Delaware limited partnership ("High River"),
Riverdale Investors Corp., Inc., a Delaware corporation
("Riverdale"), and Carl C. Icahn, a citizen of the United States
(collectively, the "Reporting Persons") with the U.S. Securities
and Exchange Commission (the "Commission") on August 4, 1995, as
amended by Amendment No. 1 filed with the Commission on August 9,
1995, Amendment No. 2 filed with the Commission on August 14, 1995
and Amendment No. 3 filed with the Commission on August 18, 1995.
All capitalized terms used herein but not otherwise defined shall
have the meanings ascribed to such terms in the Offer to Purchase
dated August 3, 1995, as amended through August 7, 1995 (the "Offer
to Purchase") and the related Assignment of Partnership Interest,
as amended through August 7, 1995 (collectively with the Offer to
Purchase, the "Offer").
Item 10. Additional Information
Item 10(e) is hereby amended and restated in its entirety as
follows:
(e) The information set forth in Exhibits 13 and 14 attached
hereto is incorporated herein by reference.
Item 11. Materials to be Filed as Exhibits.
The following documents are filed as exhibits to this Schedule
14D-1:
(g)
Exhibit 13 Complaint filed by High River Limited
Partnership, as Plaintiff, against McNeil
Partners L.P., McNeil Investors, Inc., McNeil
Pacific Investors Fund 1972, Ltd., McNeil Real
Estate Fund V, 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., Robert A. McNeil
and Carole J. McNeil, as Defendants
Exhibit 14 Counterclaim and Answer of McNeil Partners
L.P., McNeil Investors, Inc., McNeil Pacific
Investors Fund 1972, Ltd., McNeil Real Estate
Fund V, 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., Robert A. McNeil and
Carole J. McNeil, as Defendants/
Counterclaimants McNeil Partners, L.P., et al.
<PAGE>
<PAGE>
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 21, 1995
HIGH RIVER LIMITED PARTNERSHIP
By: Riverdale Investors Corp., Inc.
Title: General Partner
By: /s/ Robert J. Mitchell
Robert J. Mitchell
Title: Vice President and Treasurer
RIVERDALE INVESTORS CORP., INC.
By: /s/ Robert J. Mitchell
Robert J. Mitchell
Title: Vice President and Treasurer
/s/ Carl C. Icahn
Carl C. Icahn
[Signature Page for Amendment No. 4 to
McNeil Real Estate Fund X, Ltd. Schedule 14D-1]<PAGE>
<PAGE>
EXHIBIT INDEX
Page Number
-----------
Exhibit 13 Complaint filed by High River
Limited Partnership, as Plaintiff,
against McNeil Partners L.P., McNeil
Investors, Inc., McNeil Pacific
Investors Fund 1972, Ltd., McNeil
Real Estate Fund V, 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., Robert
A. McNeil and Carole J. McNeil, as
Defendants
Exhibit 14 Counterclaim and Answer of McNeil
Partners L.P., McNeil Investors,
Inc., McNeil Pacific Investors Fund
1972, Ltd., McNeil Real Estate Fund
V, 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., Robert A. McNeil and Carole J.
McNeil, as Defendants/
Counterclaimants McNeil Partners,
L.P., et al.
<PAGE>
EXHIBIT 13
THEODORE ALTMAN (TA 8368)
GORDON ALTMAN BUTOWSKY WEITZEN
SHALOV & WEIN
114 West 47th Street
New York, New York 10036
Telephone: (212) 626-0800
Attorneys for Plaintiff
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------X
HIGH RIVER LIMITED PARTNERSHIP, :
a Delaware Limited Partnership,
:
Plaintiff,
:
- against -
: COMPLAINT
McNEIL PARTNERS L.P., McNEIL
INVESTORS, INC., McNEIL :
PACIFIC INVESTORS FUND 1972, LTD.,
McNEIL REAL ESTATE FUND V, 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., :
ROBERT A. McNEIL and CAROLE J.
McNEIL, :
Defendants.
-----------------------------------X
Plaintiff, High River Limited Partnership ("High
River"), by its attorneys, Gordon Altman Butowsky Weitzen
Shalov & Wein hereby alleges, upon personal knowledge as to
its own acts and upon information and belief as to all other
matters, as follows:
NATURE OF THE ACTION
1. Plaintiff High River has made tender offers
for up to 45% of the outstanding units of ten California
limited partnerships (the "California Limited Partnerships"
or the "Partnerships"), as described below. This is an
action, brought pursuant to Rule 14d-5 of the Securities
Exchange Act of 1934, to compel the general partner of those
partnerships, McNeil Partners, L.P., ("McNeil Partners" or
the "General Partner"), and the remaining defendants (all of
which are affiliated with or controlled by defendant Robert
A. McNeil) to comply with the specific provisions of Rule
14d-5 which require it to promptly provide the tender
offeror with a list of the unit holders and their addresses
or to promptly mail copies of High River's tender offers to
the limited partners. By letter of August 9, 1995 -- a day
after the time period during which it was required to
respond to plaintiff's request -- defendant McNeil Partners
indicated its refusal to comply with this provision, in an
attempt to deny the limited partners access to the terms of
High River's tender offers.
2. It is apparent from an examination of
recently filed public documents pertaining to the
Partnerships that the defendants may have a very good --
albeit improper and unlawful -- reason for attempting to
deny the limited partners access to crucial information
regarding High River's tender offers, in violation of
federal securities laws. For the past several years, the
General Partner has been operating the Partnerships for its
own benefit, and at the expense of the limited partners.
The General Partner's improper conduct regarding the
Partnerships includes, but is not limited to:
* paying itself and entities owned and
controlled by it exorbitant fees and so-
called reimbursements of general and
administrative expenses while permitting the
Partnerships to sustain staggering continued
losses so that the Partnerships' current
value is now a fraction of its original
value;
* trafficking in control of the Partnerships
for its own benefit, by selling and
repurchasing its general partnership
interests, at great profit, without regard to
the substantial detriment suffered by the
Partnerships and their limited partners; and
* managing the Partnerships so as to
extend indefinitely the fat fee
arrangements enjoyed by the General
Partner and its affiliates.
3. After having soaked the Partnerships of over
$12 million dollars in fees in 1994 alone, defendants now
seek to perpetuate their unconscionable and excessive fee
schemes by denying the limited partners access to
information about High River's tender offers, which may be
the limited partners' last and only chance to get some value
for their units. This suit seeks to compel defendants to
comply with their obligations under Rule 14d-5 in providing
limited partner lists to High River so that the plaintiff
might inform the limited partners of the terms of its offer.
JURISDICTION AND VENUE
4. Jurisdiction of this Court is conferred by
Section 27 of the Securities Exchange Act of 1934 (15 U.S.C.
Section 78aa).
5. Venue is appropriate in this jurisdiction
pursuant to 28 U.S.C. Section 1391 and 15 U.S.C. Section
78aa because the improper actions of defendants, in
violation of federal securities laws, took place and will
have a substantial impact within this district.
PARTIES
6. Plaintiff High River is a limited partnership
organized pursuant to the laws of Delaware, and is located
in New York, c/o Riverdale Investors Corp., Inc., 100 South
Bedford Road, Mount Kisco, New York 10549. High River is an
entity controlled by Carl C. Icahn.
7. Defendant McNeil Partners is a Delaware
Limited Partnership, with offices in Dallas, Texas. McNeil
Partners is in the business of real estate management, and
is general partner of all of the California Limited
Partnerships defendants, as described below.
8. Defendant McNeil Investors, Inc. ("McNeil
Investors") is a Delaware Corporation which is the general
partner of McNeil Partners.
9. Defendant Robert A. McNeil ("McNeil") is the
Chairman of the Board and sole limited partner of the McNeil
Partners. McNeil is also Chairman of McNeil Investors.
10. Defendant Carole J. McNeil is Co-Chairman of
the Board of McNeil Investors and is McNeil's wife.
11. The defendants McNeil Pacific Investor Fund
1972 ("McNeil Pacific"), McNeil Real Estate Fund V, Ltd.
("McNeil V"), McNeil Real Estate Fund IX, Ltd. ("McNeil
IX"), McNeil Real Estate Fund X, Ltd. ("McNeil X"), McNeil
Real Estate Fund XI, Ltd. ("McNeil XI"), McNeil Real Estate
Fund XIV, Ltd. ("McNeil XIV"), McNeil Real Estate Fund XV,
Ltd. ("McNeil XV"), McNeil Real Estate Fund XX, L.P.
("McNeil XX"), McNeil Real Estate Fund XXIV, L.P. ("McNeil
XXIV"), and McNeil Real Estate Fund XXV, L.P. ("McNeil XXV")
are limited partnerships organized under California Law.
BACKGROUND FACTS
12. On August 4, 1995, High River commenced a
series of tender offers for up to 45% of the units of the
California Limited Partnerships (the "Tender Offers"). (The
specific prices tendered for the units of the various
partnerships are described, infra, at paragraph 25.) In
connection with the Tender Offer, High River requested by
telecopied letter of August 3, 1995, that the General
Partner comply with Rule 14d-5 of the Securities Exchange
Act of 1934 (the "Act"), which requires that pursuant to a
request by a tender offeror, that the subject company (here,
the Partnerships) must either mail the tender offer
materials to the limited partners, or supply the offeror
with a list of the limited partners and their addresses.
The Rule also provides that:
No later than the second business day
after the date of the bidder's request,
the subject company shall orally notify
the bidder, which notification shall be
confirmed in writing, of the subject
company's election [to mail or to
provide a limited partner list].
13. High River received no response to its
request until four business days later, and three days after
the Tender Offers were filed with the S.E.C., when it
received two telecopied letters from New York Counsel
Skadden, Arps, Slate, Meagher & Flom ("Skadden Arps").
14. One of the letters, dated August 8, 1995 (but
received on August 9), signed by defendants Robert A. McNeil
and Carole J. McNeil, demanded that High River and Carl C.
Icahn sign a certificate stating that they had not received
any confidential information relating to the Partnerships
from an unnamed former lawyer of the McNeils. The
accompanying letter, signed by Patrick J. Foye of Skadden
Arps, indicated that the General Partner would not supply
the limited partner list, nor would it begin to mail the
Tender Offers to any limited partners, until it received the
signed certificate that had been attached to the letter from
the McNeils. High River, through its counsel, responded on
the same day by stating that there was no basis for
defendants' claims that it had obtained confidential
information and that, in any event, there was no excuse for
the defendants' refusal to honor their 14d-5 obligation.
15. The immediate notification of the limited
partners of the details of the pending Tender Offers is
absolutely essential to allowing them a full and fair
opportunity to weigh the merits of the offers, which are for
amounts substantially in excess of the market price for the
limited partnership units. Defendants' foot-dragging in
complying with the unambiguous terms of the federal
securities laws is a transparent and pretextual attempt to
deny the limited partners this essential information.
16. The General Partner's brazen violation of the
requirements of Rule 14d-5 comes as no surprise in light of
the recent history of the Partnerships. Over the past
several years, the General Partner has set up an egregious
and unconscionable scheme of compensation benefiting only
itself, all while the Partnerships have suffered stunning
losses.
THE HISTORY OF THE PARTNERSHIPS
17. The California Limited Partnerships were
formed between 1971 and 1985 for the purpose of investing,
holding, managing and disposing of real estate and real-
estate related investments.
18. Most of the California Limited Partnerships
were founded by Robert A. McNeil, who is a member of the
California bar and has been actively involved in the
management of real estate for at least 25 years. McNeil and
The Robert A. McNeil Corporation ("Ramco"), a corporation
McNeil controlled, acted as the general partner for most of
the Partnerships that McNeil founded. In the mid-1980s,
McNeil sold his interest in Ramco to a corporation called
Southmark Investment Group, Inc. ("Southmark"). In 1989
Southmark filed for bankruptcy. During 1991 and 1992,
McNeil, acting through business entities he controlled,
repurchased the general partnership interests of the
California Limited Partnerships that he sold to Southmark,
along with the general partnership interests of the few of
the Partnerships that Southmark created.
19. Since reacquiring the general partnership
interests in the name of McNeil Partners, the General
Partner has operated the Partnerships as its own personal
piggy bank, through an unconscionable compensation and
"reimbursement" scheme, and an incestuous web of self-
dealing with affiliated entities.
EXCESSIVE FEES
20. The General Partner has paid its affiliates
enormous property management fees -- in amounts wholly
disproportionate with the services actually performed. At
the same time, the General Partner has caused the
Partnerships to reimburse its affiliates for certain general
and administrative expenses and has received certain other
distributions in the form of both cash and other
consideration. As a result, much of the property management
and other fees represent pure profit. All the while the
limited partners suffered with a thankless, losing
investment.
21. The property management fees, expenses
resulting from payment of general and administrative
expenses and other distributions paid to McNeil Partners or
its affiliates from each Partnership for the fiscal year
ended December 31, 1994, and the distributions to limited
partners for the same year are compared below:
* The General Partner took $66,285 in general and
administrative expenses and $72,765 in property
management fees from McNeil Pacific. The limited
partners of McNeil Pacific have not received
distributions since 1990.
* The General Partner took $30,000 in general and
administrative expenses and $193,145 in property
management fees from McNeil V. The same year the
limited partners of McNeil V received
distributions of $570,008.
* The General Partner took $719,703 in general and
administrative expenses and $915,989 in property
management fees from McNeil IX. The General
Partner also received $973,023 as a "Contingent
Management Incentive Distribution." Distributions
to the limited partners of McNeil IX have been
suspended since 1986 and will remain suspended for
the foreseeable future.
* The General Partner took $609,197 in general and
administrative expenses and $868,408 in property
management fees from McNeil X. The General
Partner also received $634,802 as a "Contingent
Management Incentive Distribution." Distributions
to the limited partners of McNeil X have been
suspended since 1986 and will remain suspended for
the foreseeable future.
* The General Partner took $434,577 in general and
administrative expenses and $671,785 in property
management fees from McNeil XI. The General
Partner also received $769,448 as a "Contingent
Management Incentive Distribution." Distributions
to the limited partners of McNeil XI have been
suspended since 1986 and will remain suspended for
the foreseeable future.
* The General Partner took $346,327 in general and
administrative expenses and $441,082 in property
management fees from McNeil XIV. The General
Partner also received $573,908 as a "Contingent
Management Incentive Distribution." Distributions
to the limited partners of McNeil XIV have been
suspended since 1986 and will remain suspended for
the foreseeable future.
* The General Partner took $236,077 in general and
administrative expenses and $376,559 in property
management fees from McNeil XV. The General
Partner also received $508,862 as a "Contingent
Management Incentive Distribution." The same year
the limited partners received distributions of
$499,993.
* The General Partner took $199,786 in general and
administrative expenses and $57,289 in property
management fees from McNeil XX. The General
Partner also received a $167,194 "Asset Management
Fee." The same year the limited partners received
distributions of $249,933.
* The General Partner took $291,507 in general and
administrative expenses and $235,662 in property
management fees from McNeil XXIV. The General
Partner also received a $316,808 "Asset Management
Fee." No distributions have been paid to the
limited partners since 1991 and none are
anticipated in 1995.
* The General Partner took $269,869 in general and
administrative expenses and $534,044 in property
management fees from McNeil XXV. The General
Partner also received a $626,282 "Asset Management
Fee." The same year the limited partners were
paid $400,207.
22. In total, the General Partner and its
affiliates received approximately $12 million in cash and
other consideration as property management fees,
"reimbursements" for general and administrative expenses,
and other distributions in 1994. By contrast, the limited
partners, the owners of the enterprises, received
approximately only $1.7 million during the same year.
23. McNeil Partners' scheme to pay itself
excessive compensation is especially egregious because of
the decline in the value of the units of the Partnerships.
The original offering price per unit of most of the
Partnerships is listed below:
Partnership Original Offering Price
___________ _______________________
McNeil V $1000
McNeil IX $500
McNeil X $500
McNeil XI $500
McNeil XIV $500
McNeil XV $500
McNeil XX $500
McNeil XXIV $1000
McNeil XXV $1
24. Because there is no established market for
the trading of units of interest in these limited
partnerships it is difficult to determine a current value of
the units. Nevertheless, High River recently purchased
units of limited partnership interest in McNeil IX, McNeil
XI, McNeil XV, McNeil XXIV and McNeil XXV on the Chicago
Partnership Board, Inc. (the "Chicago Board"), an
organization which attempts to facilitate the sale of
limited partnership interests to potential buyers through an
auction process. The Chicago Board price at which High
River purchased its units of limited partnership interest
was substantially lower than the original offering price.
The Chicago Board price of each of these partnerships and
the Partnership's original offering price is listed below:
Chicago Board Original
Partnership Purchase Price Offering Price
___________ ______________ ______________
McNeil IX $133.00 500
McNeil XI $55.00 500
$58.00 500
McNeil XV $80.01 500
McNeil XXIV $126.00 1000
McNeil XXV $.23 1
The Chicago Board price for the other Partnerships suffered
similar steep discounts from their original offering prices.
25. High River, which is currently making a
tender offer for up to 45% of the units of the Partnerships,
believes that the remaining Partnerships have suffered
similar decreases in value. High River's offering prices in
the tender offer for each of the Partnerships are listed
below:
McNeil Pacific $110.00
McNeil V $400.00
McNeil IX $143.00
McNeil X $ 92.00
McNeil XI $ 63.00
McNeil XIV $ 95.00
McNeil XV $ 95.00
McNeil XX $100.00
McNeil XXIV $150.00
McNeil XXV $ .24
TRAFFICKING IN CONTROL OF THE PARTNERSHIPS
26. In 1986, McNeil sold his general partnership
interests in the seven California Limited Partnerships that
he had founded to Southmark. As part of the sale of the
assets of the Partnerships, McNeil received substantial
compensation, and remained a co-general partner in most of
the Partnerships, along with Southmark. McNeil also
received an indemnification from Southmark, insulating him
from liability for claims brought against the general
partners for mismanagement of the Partnerships.
27. A mere three years after McNeil sold his
general partnership interests to it, Southmark filed for
bankruptcy protection. After having received substantial
compensation for his general partnership interests from
Southmark in 1986, McNeil approached Southmark to repurchase
the general partnership interests in 1990, proposing to pay
only a small fraction of what Southmark had paid for them.
28. McNeil's attempts to repurchase the general
partnership interests should be viewed against the backdrop
of a $5.4 million claim for indemnification that he had
brought against Southmark in 1989, that apparently arose out
of claims against McNeil and Southmark by third parties.
Thus, McNeil had substantial leverage in exercising control
from Southmark. Indeed, when McNeil repurchased the general
partnership interests from Southmark, he agreed to settle
his claims for indemnification as part of the deal.
29. Further, when McNeil reacquired the general
partner's interests in the Partnerships, he not only greatly
increased his own compensation from the majority of the
Partnerships, as described above, but he also imposed
amendments to the partnership agreements, varying in
specifics from partnership to partnership, substantially
insulating himself from liability for misconduct as a
general partner, and severely restricting the ability of the
limited partners to remove him for cause.
30. McNeil, therefore, through his sales and
repurchases of the general partner's interests in the
various Partnerships, trafficked in control of the
Partnerships for his own personal gain and without regard to
the detriment that he caused to the Partnerships and the
Limited Partners.
THE GENERAL PARTNER'S PERPETUATION
OF THE EXCESSIVE FEE ARRANGEMENTS
31. Upon reacquiring the general partners'
interest in the Partnerships, McNeil coupled his
unconscionable boost of the Partnerships' payment
obligations to him with an extension of the dates for the
sale of the Partnerships' assets. The purpose stated by the
General Partner for extending the time period was to allow
the real estate market and the performance of the
Partnership's investment to improve. It is apparent,
however, that the General Partner intends to prolong for as
long as possible the unconscionable and excessive
compensation, fees and reimbursement schemes that the
General Partner and its affiliated entitles are enjoying at
the Partnerships' expense, and at the expense of the limited
partners.
32. The General Partner's plans for the
Partnerships are apparent from the latest "10-K" filings
that the General Partner has filed with the Securities
Exchange Commission (the "SEC"), which describe an intention
to continue to operate the Partnerships indefinitely, and
only consider sale of some or all of their assets at some
indefinite time in the future. The most recent 10-Ks
therefore demonstrate that the General Partner intends to
extend for as long as possible the gravy-train provided by
its unconscionable compensation and reimbursement schemes.
33. The Tender Offer constitutes a rare and
unique opportunity for limited partners to sell and consider
the sale of their otherwise illiquid investment. This Court
should not countenance the defendants' unlawful and
pretextual attempts to place conditions on their ethical
obligations and compliance with the federal securities laws.
This Court should not countenance such unethical and
unlawful conduct.
WHEREFORE, plaintiff demands judgment:
1. Granting a temporary restraining order,
preliminary and permanent injunctive relief, compelling
defendants to immediately turn over the limited partner
lists of the ten California Limited Partnerships;
2. Awarding costs of the suit, including
reasonable attorneys' fees, and such other and further
relief as the Court deems proper.
Dated: New York, New York
August 10, 1995
GORDON ALTMAN BUTOWSKY WEITZEN
SHALOV & WEIN
By:___________________________
Theodore Altman (TA 8368)
Charles S. Beal (CB 0123)
Howard S. Koh (HK 4730)
114 West 47th Street
New York, New York 10036
(212) 626-0800
Attorneys for Plaintiff
<PAGE>
EXHIBIT 14
Macro E. Schnabl (MS9845)
IRA B. Matetsky (IM181)
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
919 Third Avenue
New York, New York 10022
(212) 735-3000
Attorneys for Defendants/
Counterclaimants
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------X
HIGH RIVER LIMITED PARTNERSHIP, :
A DELAWARE LIMITED PARTNERSHIP,
: 95 Civ 6019 (PKL)
Plaintiff/
Counterclaim- :
Defendant,
:
- against -
: COUNTERCLAIM AND ANSWER
McNEIL PARTNERS L.P., McNEIL OF DEFENDANTS/COUNTER-
INVESTORS, INC., McNEIL PACIFIC : CLAIMANTS MCNEIL
INVESTORS FUND 1972, LTD., PARTNERS, L.P., ET AL.
McNEIL REAL ESTATE FUND V, 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., :
ROBERT A. McNEIL and CAROLE J.
McNEIL, :
Defendants/ :
Counterclaimants.
-------------------------------------X
COUNTERCLAIM
Defendants/Counterclaimants, McNeil Partners, L.P. (the
"General Partner"), McNeil Investors, Inc., McNeil Pacific
Investors Fund 1972, Ltd. ("Fund 1972"), McNeil Real Estate Fund
V, Ltd. ("Fund V"), McNeil Real Estate Fund IX, Ltd. ("Fund IX"),
McNeil Real Estate Fund X, Ltd. ("Fund X"), McNeil Real Estate
Fund XI, Ltd ("Fund XI"), McNeil Real Estate Fund XIV, Ltd.
("Fund XIV"), McNeil Real Estate Fund XV, Ltd. ("Fund XV"),
McNeil Real Estate Fund XX, L.P. ("Fund XX"), McNeil Real Estate
Fund XXIV, L.P. ("Fund XXIV"), McNeil Real Estate Fund XXV, L.P.
("Fund XXV"), Robert A. McNeil and Carole J. McNeil
(collectively, "McNeil"; Funds 1972, V, IX, X, XI, XIV, XV, XX,
XXIV, and XXV, hereafter collectively referred to as the
"Partnerships"), by their undersigned attorneys, allege, upon
knowledge with respect to themselves and their own acts, and upon
information and belief as to all other matters, as follows:
SUMMARY OF COUNTERCLAIM
1. This is an action to enjoin ten separate unsolicited
tender offers (the "Tender Offers") recently commenced by High
River Limited Partnership ("High River"), a Delaware limited
partnership, for up to 45k of the limited partnership interests
(the "Units") in each of the ten Partnerships. The Tender Offers
have been undertaken in violation of the federal securities laws,
on the basis of material, non-public, secret, privileged and
confidential information that defendants' long-time former
counsel ("Disclosing Counsel") has made available, and may
continue to make available, to High River and to Carl C. Icahn
("Icahn"), the controlling principal of High River and a
well-known corporate raider, in connection with the Tender
Offers.
2. Disclosing Counsel, a tax and real estate lawyer, was
for more than twenty years the principal legal architect of the
Partnerships. Counsel designed the legal structure of these
Partnerships, drafted their constituent agreements, regularly
discussed the Partnerships' businesses and strategies, and was
intimately familiar with their most sensitive strategic
commercial, tax and legal information. Over the course of
Disclosing Counsel's representation of the defendants, these
Partnerships expended millions of dollars for Disclosing
Counsel's services. The services of Disclosing Counsel were
terminated following an acrimonious dispute over legal fees.
3. Approximately one week before Icahn launched his tender
offer for the Partnerships, the representatives of the General
Partner of the Partnerships were contacted by Disclosing Counsel
and Icahn, who stated that Disclosing Counsel had contacted him
to "broker a deal" relating to the Partnerships. Shortly after
McNeil rebuffed Icahn's overtures, Icahn initiated the Tender
Offers.
4. Disclosing Counsel's exchanges and discussions with
Icahn in connection with, or in anticipation of, the Tender
Offers are plainly the result of his unique knowledge of the
Partnerships, gleaned from his more than twenty-year fiduciary
relationship with McNeil. Disclosing Counsel provided material,
confidential, and privileged information to High River and Carl
Icahn that was used to inform, and make decisions with respect
to, the Tender Offers. It is well-settled law that tender offers
thus infected with material, confidential and nonpublic
information may not be allowed to proceed.
5. In addition, High River's Tender Offer documents (the
"Offering Materials") omit and/or misrepresent certain material
information about High River's Tender Offers. In particular:
* The Offering Materials are false and misleading
because they fail to disclose that High River has
benefitted from confidential, secret and proprie-
tary material information improperly obtained from
Disclosing Counsel.
* The Offering Materials are false and misleading
because they fail to disclose that the offers were
in whole or in part prompted by Disclosing
Counsel's improper statements.
* The Offering Materials are false and misleading
because they fail to disclose Icahn's true
intentions to seek control of the Partnerships,
but rather falsely assert that Icahn has no
present intention to remove the General Partner.
* The Offering Materials are false and misleading
because they fail to disclose material financial
information about High River's or Icahn's exper-
ience in the field of real estate management.
* The Offering Materials are false and mis-
leading because they fail to disclose Icahn's
long record of self-enrichment at the expense
of the equityholders of the targets of
Icahn's hostile acquisitions.
6. Counterclaimants hereby seek, among other relief, (i) a
preliminary and permanent injunction barring High River from
proceeding with Tender Offers that are contaminated with
information improperly obtained from Disclosing Counsel, and (ii)
in the alternative, an injunction requiring High River to make
full and fair disclosure in its Offering Materials of the
information improperly withheld from the investors to whom the
Tender Offers are addressed.
JURISDICTION
7. The jurisdiction of this Court is conferred by Section
27 of the Securities Exchange Act of 1934, 15 U.S.C. Section
78aa. In addition, pursuant to Fed. R. Civ. P. 13(a),
defendants' counterclaim falls within the ancillary jurisdiction
of the Court and therefore does not require an independent basis
of federal subject matter jurisdiction.
THE PARTIES
8. Defendant/Counterclaimant McNeil Partners, L.P.
(herein, the "General Partner") is a Delaware limited partnership
with offices in Dallas, Texas. McNeil Partners is the general
partner of each of the ten limited partnerships that are the
targets of High River's Tender Offers.
9. Defendant/Counterclaimant McNeil Investors, Inc.
("McNeil Investors") is a Delaware corporation and is the general
partner of the General Partner.
10. Defendants/Counterclaimants McNeil Pacific Investors
Fund 1972, Ltd., McNeil Real Estate Fund V, 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., and McNeil Real Estate
Fund XXV, L.P. (herein, the "Partnerships") are California
limited partnerships that are the targets of High River's tender
offers.
11. Defendant/Counterclaimant Robert A. McNeil is the
Chairman of the Board and sole limited partner of the General
Partner and Chairman of the General Partner.
12. Defendant/Counterclaimant Carole J. McNeil is
Co-Chairman of the Board of McNeil Investors.
13. Plaintiff/Counterclaim-Defendant High River is a
Delaware limited partnership. High River's sole general partner
is Riverdale Investors Corp., Inc. ("Riverdale"), and its sole
limited partner is Highcrest Investors Corp. ("Highcrest"). High
River is controlled by Carl C. Icahn, who directly owns Riverdale
and indirectly owns Highcrest.
BACKGROUND
14. The Partnerships were formed in the 1970's and through
the mid-1980's to invest in, hold, manage and dispose of real
estate and real estate-related investments.
15. Disclosing Counsel was the legal architect of many of
the Partnerships. A tax and real estate lawyer, Disclosing
Counsel designed the legal structure of these Partnerships,
drafted their constituent agreements, regularly discussed the
Partnerships' businesses and strategies, and was intimately
familiar with their most sensitive strategic, commercial, tax and
legal information.
16. In early 1990, Disclosing Counsel drafted amended and
restated partnership agreements for each of the Partnerships,
effecting a substantial restructuring of the Partnerships. This
intricate process took more than two years, and placed Disclosing
Counsel at the very center of discussions about the structure,
purpose and strategies envisioned by McNeil for the Partnerships
that are now under attack.
17. Accordingly, throughout his more than twenty-year
history of representing the Partnerships, Disclosing Counsel
acquired confidential, secret, proprietary and privileged
material information about the Partnerships.
18. Disclosing Counsel obtained this confidential, secret,
proprietary and privileged material information as a result of
his fiduciary relationship with the Partnerships and other
Counterclaimants. As past Counsel for the Partnerships and other
Counterclaimants, Disclosing Counsel has, and at all relevant
times had, a fiduciary duty, as well as a legal and ethical
obligation under the relevant Canons of Ethics governing the
conduct of attorneys, to maintain the secrecy of this information
and to refrain from using it except in the interest of McNeil.
19. The confidential, secret, proprietary and privileged
information known to Disclosing Counsel would be extremely
valuable to competitors of the Partnerships and, of course, to
High River and Icahn in making the Tender Offers. Disclosure of
such competitively sensitive information would cause immediate
and irreparable harm to the Partnerships and would be a violation
of the foregoing duties and obligations.
MISAPPROPRIATION OF MATERIAL, CONFIDENTIAL,
SECRET, PROPRIETARY AND PRIVILEGED INFORMATION:
THE HOSTILE TENDER OFFERS
20. Shortly before the Tender Offers were commenced,
Disclosing Counsel wrongfully disclosed to High River
confidential, secret, proprietary and privileged information he
learned in his years as McNeil's lawyer.
21. Moreover, in violation of his duty of loyalty to the
General Partner, the Partnerships and the McNeils, his former
clients, Disclosing Counsel (with the knowledge and/or
encouragement of High River) acted adversely to McNeil to promote
the making of hostile Tender Offers.
22. At all relevant times, High River and Icahn knew -- or
at the very least should have known - of Disclosing Counsel's
prior relationship with McNeil, and his breaches of duty.
23. On or about Wednesday, July 26, 1995, Robert A. and
Carole J. McNeil (the "McNeils") received an unsolicited
telephone call from Disclosing Counsel. During this call,
Disclosing Counsel told the McNeils that he wanted to arrange a
conference call with Carl Icahn to explore a transaction
regarding some of the California limited partnerships.
24. In the next several days, Icahn and Disclosing Counsel
participated in conversations in which Icahn made an offer to
acquire a controlling interest in the General Partner -- and,
thus, control of each of the Partnerships and several affiliated
partnerships -- which was rejected by the McNeils.
25. Thereafter, Icahn advised the McNeils that, if they did
not enter into a transaction with him immediately, he would
launch hostile tender offers for the Partnerships.
26. In a conversation with McNeil's counsel on August 1,
1995. in which Disclosing Counsel and Icahn participated, Icahn
stated that Disclosing Counsel had called Icahn to "broker a
deal" relating to the Partnerships. Icahn reiterated his wish to
buy certain limited partnerships, including the Partnerships.
27. During that same telephone conversation, in violation
of his fiduciary, legal and ethical obligations, Disclosing
Counsel referred to privileged and confidential tax information
concerning the Partnerships and Mr. McNeil.
28. Additionally, Disclosing Counsel -- without the
knowledge or consent of the General Partner, the Partnerships
and/or the McNeils -- has spoken with representatives of other
potential acquirors and investors about the possibility of a
takeover of the Partnerships.
29. It is apparent that Disclosing Counsel, in possession
of many years' worth of confidential, privileged and proprietary
information about McNeil, has consulted with High River and
provided it with material confidential knowledge and advice with
which to inform, and make decisions about, the Tender Offers.
30. At no time did Disclosing Counsel request, much less
receive, permission from McNeil to disclose to High River, Icahn
or any other person any confidential or privileged information
relating to McNeil.
31. A few days after the foregoing conversation involving
Disclosing Counsel and Icahn, High River commenced its Tender
Offers for the Partnerships. These Tender Offers were directly
informed by advice or information improperly provided by
Disclosing Counsel.
32. On August 8, 1995, McNeil requested that High River and
Icahn certify in writing that they had not received any
confidential information from Disclosing Counsel, and that the
Tender Offers and their plans for the Partnerships were not based
on any such information. High River and Icahn refused to sign
such certification.
33. Rather, High River responded (through its counsel) on
August 9, 1995, merely to the effect that High River had been
"advised" by Disclosing Counsel that Disclosing Counsel had not
breached any privilege owed to McNeil. However, High River's
response also stated that it "and its affiliates were not aware
that any information received from the attorney is or was
non-public, confidential, privileged or proprietary." The
response did not set forth any efforts by High River to ascertain
whether the information -- provided to it by an attorney who it
knew had represented McNeil for well over twenty years -- was
being provided with the consent of McNeil.
34. Attorneys are under ethical obligations to preserve the
confidences and secrets of a client. Under governing law, a
lawyer is prohibited from disclosing information acquired in the
course of representation of a client to the disadvantage of the
client. Moreover, the obligation to protect confidences and
secrets of a client continues after the termination of the
attorney/client relationship.
35. The making of the Tender Offers based on, or
reflecting, such ill-gotten information subjects McNeil to
immediate irreparable harm.
HIGH RIVER'S OFFERING MATERIALS ARE
MATERIALLY MISLEADING AND OMISSIVE
36. The Tender Offers violate the federal securities laws
for the additional reason that the Offering Materials are false,
misleading and omissive.
37. The Offering Materials fail to disclose that
confidential, secret and proprietary material information about
the Partnerships was used by High River in the Tender Offers and
that High River received such information from Disclosing Counsel
in violation of Disclosing Counsel's fiduciary duty to the
Partnerships.
38. In addition, the Offering Materials fail to disclose
that High River's offer to purchase 45k of the Units is, in fact,
intended ultimately to wrest control of the Partnerships away
from the General Partner and place it in Icahn's hands.
39. Rather, the Offering Materials misleadingly state as to
each Partnership that High River is seeking to purchase Units as
an investment vehicle, but that High River "may, if successful,
be in a position, and may later determine. to seek to acquire
control of the Partnership." The Offering Materials also falsely
state that the Purchaser has no present intention of removing the
General Partner.
40. However, High River's true intentions to take prompt
control of the Partnerships are illustrated by Icahn's repeated
offers, shortly before launching the Tender Offers, to purchase
control of the McNeils' general partnership interests.
41. Additionally, the Offering Materials are misleading
because they fail adequately to disclose material financial
information about (i) High River, (ii) its sole limited partner,
Highcrest, (iii) High Rivers sole general partner, Riverdale, and
(iv) Icahn, who controls High River and its affiliates.
42. The Offering Materials disclose only sketchy, unaudited
balance sheets for High River as at June 30, 1995, and December
31, 1994. The High River financial statements lack footnotes, do
not purport to be prepared in accordance with generally accepted
accounting principles and provide absolutely no information about
High River's income or cash flow, or detail about its assets. The
balance sheets provide no explanation of the nature of High
River's debts and obligations.
43. High River's financial disclosures are insufficient to
enable the limited partners to determine whether High River has
the financial ability to fund the Tender Offers and to run the
business of the Partnerships when, as it inevitably will, it
completes its ongoing effort to become the general partner of the
Partnerships.
44. The Offering Materials disclose only an unaudited
income statement and balance sheet for Highcrest, High River's
sole limited partner, for (and as at) the year ended December 31,
1994. These are unaccompanied by explanatory footnotes or
discussion and lack any comparative information to historical
data. No financial disclosures are provided about Riverdale,
High River's sole general partner, which is liable for High
River's debts and obligations. Likewise, no financial
disclosures are provided about Icahn, the controlling person of
High River, Highcrest and Riverdale. The absence of financial
information about High River and Highcrest, renders particularly
significant the financial information about Icahn.
45. The lack of meaningful financial disclosures by High
River, Highcrest or Riverdale -- privately owned entities with no
audited, let alone publicly available, financial information --
leaves limited partners, who may well remain as partners in
Partnerships controlled by Icahn, unable to make an informed
decision regarding whether to tender their Units.
46. Limited partners are entitled to detailed information
regarding the financial condition of High River, its affiliates
and Icahn, regardless of whether they tender their Units. Each
of the Tender Offers is for a maximum of 45k of the outstanding
limited partnership Units, but provides that, if any of the
Tender Offers are oversubscribed, Units will be accepted on a pro
rata basis. Accordingly, even limited partners who tender all
their Units cannot be certain whether at the conclusion of the
Tender Offers they may not be "partners" with Icahn and his
controlled entities. The value of any Unit not tendered or
bought out necessarily will be affected by High River's future
management of the Partnerships and its financial predicament.
47. Icahn has a long history of using the takeover process
to obtain short-term profits at the expense of the interests of
the targets' other shareholders, their employees and the
communities that they serve. Icahn has repeatedly extracted quick
profits from his corporate targets, even at the cost of forcing
the complete or partial liquidation of their business, to the
detriment of other equity holders, customers, employees and
suppliers.
48. The Offering Materials, however, disclose nothing about
Icahn's history as a corporate raider. This history is plainly
material to any decision whether to tender Units or risk
remaining a partner in an Icahn controlled Partnership.
FIRST CLAIM FOR RELIEF
[FOR VIOLATIONS OF SECTIONS 14(D) AND
14(E) OF THE EXCHANGE ACT AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER]
49. McNeil repeats and realleges the allegations of the
preceding paragraphs as if fully set forth herein.
50. Section 14(d)(1) of the Exchange Act, 15 U S.C. Section
78n(d)(1), requires 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.
Section 14(e) of the Exchange Act, 15 U.S.C. Section 78n(e),
additionally prohibits any person from making any untrue
statement of material fact or omitting to state any material fact
necessary in order to make the statements made not misleading, or
from engaging in any fraudulent, deceptive or manipulative acts
in connection with any tender offer. SEC Rule 14e, 17 C.F.R.
Section 240.14e-3, requires a bidder to disclose all material
non-public information in its possession relating to a tender
offer. Thus, Sections 14(d) and (e) and SEC Rule 14e-3 prohibit
High River from making the Tender Offers for the Partnerships
without disclosing all material, non-public information which
High River received from Disclosing Counsel.
51. However, such information may not be publicly-disclosed
without the consent of McNeil) because to do so would constitute
a further violation of the fiduciary, legal and ethical duties to
maintain client confidences and to act with complete loyalty to
McNeil. Any public disclosure of such improperly obtained
information would only compound the breaches of the duties owed
to McNeil that have already occurred.
52. Under these circumstances, where it would be improper
for High River to disclose the material nonpublic information
wrongfully provided to it, the Tender Offers cannot lawfully be
continued and should therefore be preliminarily and permanently
enjoined by the Court.
53. McNeil and the limited partners of the Partnerships
have no adequate remedy at law.
SECOND CLAIM FOR RELIEF
[FOR VIOLATIONS OF SECTIONS 14(D) AND
14(E) OF THE EXCHANGE ACT AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER]
54. McNeil repeats and realleges the allegations of the
preceding paragraphs as if fully set forth herein.
55. In violation of Sections 14(d) and 14(e) of the
Exchange Act, 15 U.S.C. Section 78n(d) and (e), and the SEC Rules
promulgated thereunder, the Offering Materials fail fully and
accurately to disclose (a) High River's purpose in making the
Tender Offers for such Units and its plans with respect to the
Partnerships; (b) the financial information required to be
disclosed concerning High River, Icahn, and their affiliates; and
(c) the long experience of Icahn and his affiliates in making
hostile acquisitions to the detriment of other equityholders, all
as set forth herein. In particular, and without limitation, the
Offering Materials (a) fail to disclose that the purpose of the
Tender Offers is to gain control over the Partnerships, (b) fail
meaningfully to disclose financial information about High River,
Highcrest, Riverdale and Icahn and (c) fail to provide any back-
ground information regarding Icahn's notorious activities as a
corporate raider over at least a fifteen-year period.
56. McNeil and the limited partners of the Partnerships
have no adequate remedy at law.
THIRD CLAIM FOR RELIEF
[VIOLATIONS OF SECTION 10(B) OF
THE EXCHANGE ACT AND RULE 10B-5
PROMULGATED THEREUNDER]
57. McNeil repeats and realleges the allegations of the
preceding paragraphs as if fully set forth herein.
58. Section 10(b) of the Exchange Act and Rule 10b-5
promulgated thereunder prohibit any person from engaging in any
fraudulent, deceptive or manipulative acts, in connection with
the purchase or sale of securities. Section 10(b) and Rule 10b-5
prohibit the purchasing or selling securities on the basis of
material non-public information.
59. As a recipient of material non-public information from
Disclosing Counsel, High River is subject to the prohibition
against trading on undisclosed material information. Therefore,
High River is prohibited from making or consummating a tender
offer based on, or informed by, such information. To consummate
a tender offer based on, or informed by, such information
violates Section 10(b) of the Exchange Act and Rule 10b-5.
60. McNeil and the limited partners of the Partnerships
have no adequate remedy at law.
IRREPARABLE HARM TO MCNEIL
AND THE LIMITED PARTNERS
OF EACH OF THE PARTNERSHIPS
61. McNeil and the limited partners of the Partnerships are
being and, unless High River preliminarily and permanently
enjoined as requested herein, will continue to be immediately and
irreparably injured as a result of the above-described actions of
High River, in that, INTER ALIA:
a. Each of the foregoing omitted or misstated facts
is material in that each would be considered important by a
limited partner in the Partnerships in determining whether
to accept the Tender Offers;
b. The limited partners have been and will continue to
be denied material information to which they are lawfully
entitled and which is essential to the making of an informed
decision with respect to whether to tender, hold or sell in
the market their Units of the Partnerships; and
c. The disclosure of confidential and privileged
information, in High River's possession solely by reason of
the improper conduct of Disclosing Counsel, would also
irreparably harm McNeil and the limited partners.
62. Counterclaimants have no adequate remedy at law and are
entitled to injunctive relief against High River.
ANSWER
Defendants, McNeil Partners, L.P., McNeil Investors, Inc.,
McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund
V, 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., Robert A. McNeil, and Carole
J. McNeil, answer plaintiff's Complaint as follows:
1. Deny each and every allegation of the first sentence of
paragraph 1, except admit that High River has made tender offers
for up to 45% of the outstanding Units of ten California limited
partnerships. Deny each and every allegation of the second
sentence of paragraph 1, except admit that plaintiff purports to
bring an action as described therein. Deny each and every
allegation of the third sentence of paragraph 1.
2. Deny each and every allegation of paragraph 2.
3. Deny each and every allegation of paragraph 3.
4. State that the allegations of paragraph 4 constitute
legal conclusions to which no response is required.
5. State that the allegations of paragraph 5 constitute
legal conclusions to which no response is required.
6. Deny knowledge or information sufficient to form a
belief as to the truth of the allegations contained in paragraph
6, except admit, upon information and belief, that High River is
controlled by Carl C. Icahn.
7. Admit the allegations of paragraph 7.
8. Admit the allegations of paragraph 8.
9. Admit the allegations of paragraph 9.
10. Admit the allegations of paragraph 10.
11. Admit the allegations of paragraph 11.
12. Admit the allegations of the first sentence of paragraph
12. Deny knowledge or information sufficient to form a belief as
to the truth of the allegations of the second sentence of
paragraph 12. Deny each and every allegation of the third
sentence of paragraph 12, except admit that on August 3, 1995,
High River sent a letter to McNeil Partners, L.P., and
respectfully refer the Court to that letter for its complete
contents. State that the fourth sentence of paragraph 12 consti-
tutes a legal conclusion to which no response is required, and
respectfully refer the Court to SEC Rule 14d-5 for its complete
contents.
13. Deny each and every allegation of paragraph 13, except
admit that High River received two telecopied letters from
defendants' counsel, and respectfully refer the Court to those
letters for their complete contents.
14. Deny each and every allegation of paragraph 14, except
admit that defendants' counsel transmitted a letter to High River
on August 8, 1995, and that High River responded by letter dated
August 9, 1995, and respectfully refer the Court to those
respective letters for their complete terms.
15. Deny each and every allegation of paragraph 15.
16. Deny each and every allegation of paragraph 16.
17. Deny each and every allegation of paragraph 17.
18. Admit the allegations of paragraph 18.
19. Deny each and every allegation of paragraph 19.
20. Deny each and every allegation of paragraph 20.
21. Responding to paragraph 21, respectfully refer the
Court to the public filings of the Partnerships with the SEC for
information concerning the financial performance of the
Partnerships.
22. Responding to paragraph 22, respectfully refer the
Court to the public filings of the Partnerships with the SEC for
information concerning the financial performance of the
Partnerships.
23. Responding to the second sentence of paragraph 23, deny
each and every allegation of the first sentence of paragraph 23.
Respectfully refer the Court to the public filings of the
Partnerships with the SEC.
24. Deny knowledge or information sufficient to form a
belief as to the truth of the allegations contained in paragraph
24.
25. Deny knowledge or information sufficient to form a
belief as to the truth of the allegations contained in paragraph
25, except admit that the prices offered in High River's tender
offers are as set forth therein.
26. Admit the allegations contained in the first sentence
of paragraph 26. Deny each and every allegation contained in the
second and third sentences of paragraph 26.
27. Deny each and every allegation of paragraph 27, except
admit that Southmark filed for bankruptcy protection and McNeil
entered into an asset purchase agreement with Southmark.
28. Deny each and every allegation of paragraph 28.
29. Deny each and every allegation of paragraph 29.
30. Deny each and every allegation of paragraph 30.
31. Deny each and every allegation of paragraph 31.
32. Deny each and every allegation of the first sentence of
paragraph 32 and respectfully refer the Court to the General
Partner's latest SEC filings on Form 10-K for their
complete contents. Deny each and every allegation of the second
sentence of paragraph 32.
33. Deny each and every allegation of paragraph 33.
FIRST AFFIRMATIVE DEFENSE
The Complaint fails to state a claim upon which relief may
be granted.
SECOND AFFIRMATIVE DEFENSE
The allegations of the Complaint and the relief sought
therein are moot.
WHEREFORE, Counterclaimants seek judgment:
I. Preliminarily and permanently enjoining High River, its
officers, directors, employees, agents and affiliates, and all
other persons acting in concert with High River or on High
River's behalf, directly or indirectly, from:
a. continuing or consummating the Tender Offers for
Units of the Partnerships;
b. making any other tender offer or request or
invitation for tenders of any Units of the Partnerships or
of any other limited partnerships affiliated with McNeil;
c. acquiring or attempting to acquire any Units of
the Partnerships or of any other limited partnerships
affiliated with McNeil;
d. soliciting or arranging for the solicitation of
orders to sell any Units of the Partnerships or other
limited partnerships affiliated with McNeil group;
e. voting in person or by proxy any Units of the
Partnerships;
f. publicly disclosing any material nonpublic
information concerning McNeil acquired, directly or
indirectly, from Disclosing Counsel;
g. making or disseminating any false or misleading
statements in connection with High River's Tender Offers;
h. otherwise using or attempting to use any Units of
the Partnerships or of other McNeil limited partnerships as
a means of affecting the management of any of the
Partnerships, the General Partner, or any of their
affiliates; or
i. exercising or attempting to exercise, directly or
indirectly, any influence upon the management of any of the
Partnerships, the General Partner, or any of their
affiliates.
II. Preliminarily and permanently enjoining High River to
make, in the alternative, appropriate corrective disclosures to
cure all the materially false and misleading statements and
omissions made by High River in connection with the Tender Offers
and ordering that the Tender Offers remain open until such
corrective disclosures are properly disseminated in the market;
III. Requiring High River and its affiliates to divest
themselves of all Partnership Units beneficially owned by them;
IV. Awarding Defendant/Counterclaimants damages in an
amount to be determined at trial and interest thereon, and
awarding defendants their costs and disbursements in this action,
including reasonable attorneys' fees;
V. Dismissing the Complaint in all respects with
prejudice; and
VI. Granting Defendant/Counterclaimants such other and
further relief as the Court may deem just and proper.
Dated: August 18, 1995
New York, New York
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
By:_________________________
Marco E. Schnabl (MS9845)
Ira B. Matetsky (IM1881)
919 Third Avenue
New York, New York 10022
(212) 735-3000
Attorneys for Defendants/
Counterclaimants
McNeil Partners, L.P. ET AL.
