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. 6 to Schedule 13D
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 20 0
(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*: $10,907,320 Amount of filing fee: $2,182
- -----------------------------------------------------------------
* For purposes of calculating the filing fee only. This
amount assumes the purchase of 127,571 Units of the Partnership
(consisting of all outstanding Units other than Units owned by the
Bidder and its affiliate) at $85.50 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: $2,182
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.
<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 X, Ltd., a California limited partnership,
other than Units owned by the Purchaser and Unicorn, at a purchase
price of $85.50 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. 6 to the Schedule 13D filed by the Reporting Persons
on November 13, 1995, as amended by Amendment Nos. 1 through 5
thereto filed on February 13, 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).
<PAGE>
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]
<PAGE>
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.
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 )
__________________________________)
<PAGE>
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,
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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."
<PAGE>
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
<PAGE>
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.
<PAGE>
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
-------------------------------------------------------
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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%
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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,
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
