To defendants SI Management L.P., et al. and their attorneys of record: NOTICE IS HEREBY GIVEN that, on December 5, 1997, plaintiffs will and hereby do move to amend and supplement their complaint. This motion is based on this Motion and Memorandum of Points and Authorities in Support Thereof, the Declaration of Alex J. Luchenitser in Support Thereof, the Declarations of Alex J. Luchenitser in Support of Motion for TRO and Preliminary Injunction (which were filed on October 1, 1997 and October 14, 1997), and the Declarations of Dwight E. Wininger and Jeffrey Evans (which were filed on October 15, 1997).

Plaintiffs move for leave of court to amend and supplement their complaint.

I. FACTS AND PROCEEDINGS

Plaintiffs filed their original complaint ("the Original Complaint") on May 1, 1997. The Original Complaint alleged that defendants violated federal securities laws by advocating in favor of a proposed "Plan of Withdrawal and Dissolution for the Partnership" ("the Proposed Plan"), in a March 21, 1997 letter, before disseminating a proxy statement.

On September 19, 1997, defendants mailed out definitive solicitation materials ("the Definitive Solicitation Materials"), which included a proxy statement, relating to the Proposed Plan. Luchenitser Decl., filed Oct. 1, 1997, Ex. A through I. One week later, on September 26, 1997, defendants mailed out an additional solicitation ("the Additional Solicitation") relating to the Proposed Plan. Luchenitser Decl., filed Oct. 1, 1997, Ex. J. The Definitive Solicitation Materials and the Additional Solicitation contain numerous false and misleading statements, fail to disclose many material facts, and violate the securities laws in other ways.

In response to these securities violations, plaintiffs filed an ex parte motion to amend and supplement their complaint, which was accompanied by a proposed First Amended and Supplemental Complaint ("the First Proposed Amended Complaint"), on October 1, 1997. At the same time as that motion was filed, plaintiffs also filed a Motion for a Temporary Restraining Order and a Preliminary Injunction. That motion seeks to remedy the securities violations committed by defendants in connection with the Definitive Solicitation Materials and the Additional Solicitation.

Defendants sent out more proxy solicitations, which contain false and misleading statements and fail to disclose important material facts, on October 10, October 16, October 17, and October 24, 1997. Wininger & Evans Declarations, filed on October 15, 1997, Ex. A, B, C; Luchenitser Decl., filed on October 31, 1997, Ex. BB, CC, DD. Reacting to new events and additional evidence, plaintiffs filed supplemental briefs in support of their motion for a TRO and preliminary injunction on October 15 and October 17, 1997. On October 15, 1997, this Court issued an order ruling that good cause did not appear to amend plaintiffs' complaint ex parte and that plaintiffs' motion to amend was denied without prejudice to being refiled as a regularly scheduled motion.

On October 17, 1997, in an attempt to correct the violation pointed out by plaintiffs in their supplemental brief of October 15, the defendants invalidated all Proxies they had previously received and issued a revised Proxy. Luchenitser Decl., filed Oct. 31, 1997, Ex. CC at 2-3. The defendants, however, have made no effort to remedy the numerous other violations pointed out in plaintiffs' briefs or plaintiffs' First Proposed Amended Complaint. On October 17, the defendants also postponed the Special Meeting at which the Proposed Plan would be voted on from October 24 to November 7. Luchenitser Decl., filed Oct. 31, 1997, Ex. CC at 3.

On October 23, 1997, the Delaware Court of Chancery issued a preliminary injunction enjoining the implementation of defendants' Proposed Plan. Luchenitser Decl., filed Oct. 31, 1997, Ex. EE. The Chancery Court ruled that plaintiffs are probably correct on their claims that the Proposed Plan violates the Partnership Agreement in several respects. Luchenitser Decl., filed Oct. 31, 1997, Ex. FF at 9-10. However, the Chancery Court did not prohibit the defendants from continuing to solicit proxies or holding the Special Meeting on November 7. Luchenitser Decl., filed Oct. 31, 1997, Ex. FF at 12-13.

As is the case with any decision by a trial court granting a preliminary injunction, it is possible that the Chancery Court's ruling may be reversed by a higher court or reconsidered by the Chancery Court itself upon final adjudication. The defendants intend to appeal the Chancery Court's ruling to the Delaware Supreme Court. Luchenitser Decl., filed Oct. 31, 1997, Ex. DD at 1. The defendants are continuing to solicit proxies for the Proposed Plan and intend to hold the Special Meeting as scheduled. Luchenitser Decl., filed Oct. 31, 1997, Ex. DD at 1.

II. PURSUANT TO THE LIBERAL RULES ON AMENDMENT, GOOD CAUSE EXISTS TO ALLOW LEAVE TO AMEND AND SUPPLEMENT

A copy of the proposed amended and supplemental complaint ("the Revised Proposed First Amended and Supplemental Complaint") is attached to the Declaration of Alex J. Luchenitser (filed on October 31, 1997) as Exhibit AA. The Revised Proposed First Amended and Supplemental Complaint differs from the First Proposed Amended Complaint in that the Revised version contains additional claims and makes certain changes based on events that occurred, information that was discovered, and legal theories that were identified after the filing of the Original Proposed Amended Complaint.

The Revised Proposed First Amended and Supplemental Complaint describes in detail the numerous ways in which the defendants have violated the federal securities laws in connection with their Proposed Plan and the proxy solicitations they sent out on or after September 19, 1997. The Revised Proposed First Amended and Supplemental Complaint also adds claims of securities violations relating to a press release the defendants issued on June 9, 1997 and a quarterly report the defendants issued on August 14, 1997. In addition, the Revised Proposed First Amended and Supplemental Complaint also adds Synthetic Industries, Inc. as a defendant, pursuant to Fed. R. Civ. P. 15(a), 15(d), and 20(a). Furthermore, the Revised Proposed First Amended and Supplemental Complaint also makes certain minor, technical changes to the Original Complaint.

Rule 15(a) states that leave to amend "shall be freely given when justice so requires." This rule provides for a "liberal amendment policy." United States ex rel. McCoy v. California Medical Review, Inc., 723 F. Supp. 1363, 1366 (N.D. Cal. 1989). No reason exists to deny leave to amend and supplement in this case, as all of plaintiffs' additional claims are based on events which occurred after the filing of the Original Complaint.

III. CONCLUSION

For the foregoing reasons, plaintiffs respectfully request that this motion be granted.

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