To defendants SI Management L.P., et al. and their attorneys of record: NOTICE IS HEREBY GIVEN that, on August 21, 1998, at 10:00 a.m., plaintiff will and hereby does move to amend and supplement his complaint. This motion is based on this Motion and Memorandum of Points and Authorities in Support Thereof, and the [Proposed] Second Amended and Supplemental Complaint attached hereto.

Plaintiff moves for leave of court to amend and supplement his complaint.

I. THE PROPOSED AMENDED AND SUPPLEMENTAL COMPLAINT ADDS NO NEW CAUSES OF ACTION AND ONLY MAKES MODIFICATIONS RELATING TO RELIEF

A copy of plaintiff's [Proposed] Second Amended and Supplemental Complaint ("SASC") is attached hereto as Exhibit A. A redlined version of the SASC, which indicates the differences between the SASC and plaintiff's First Amended and Supplemental Complaint ("FAC") is attached hereto as Exhibit B.

The SASC amends and supplements the FAC pursuant to Fed. R. Civ. P. 15(a) and 15(d). However, the SASC does not add any new causes of action and actually deletes some causes of action. The main changes from the FAC to the SASC concern the issue of relief.

With respect to damages, the SASC describes how the Partnership and the Limited Partners were damaged after the FAC was submitted on October 31, 1997. As stated in the SASC, the defendants' securities violations caused the Limited Partners to approve the GP Plan on November 7, 1997, thereby causing the Partnership to incur expenses/debts relating to the GP Plan between November 7, 1997 and March 14, 1998. SASC ¶¶ 67, 69, 82, 88, 121, 131, 168.

The SASC also describes in detail how the Partnership, the Limited Partners, and the plaintiff were damaged by defendants' securities violations prior to November 7, 1997. Specifically, the SASC explains that the Partnership incurred expenses/debts in connection with two "curative disclosures" and a resolicitation of proxies caused by one of defendants' misrepresentations. SASC ¶¶ 63, 77, 169. The SASC also requests damages on behalf of plaintiff Wininger for the costs of preparing, filing, and disseminating communications to the Limited Partners designed to counter defendants' violations. SASC ¶¶ 52, 54, 66, 83, 122, 132, 139, 143, 160. While the FAC requested damages for defendants' violations "as according to proof" (FAC ¶ 148), it did not describe how the damages were suffered.

In addition, the SASC updates the plaintiff's requests for injunctive relief to reflect the changed circumstances of this litigation. After the FAC was filed, the defendants withdrew the GP Plan and Limited Partner Sutherland proposed the Sutherland Plan. Accordingly, plaintiff no longer seeks injunctive relief aimed at the GP Plan. Instead, with a proxy battle over the Sutherland Plan looming, plaintiff seeks a permanent injunction to prevent the defendants from violating the securities laws in the future, and a preliminary injunction to prohibit defendants from making solicitations in opposition to the Sutherland Plan unless they refrain from repeating their prior misrepresentations and nondisclosures and making new ones. SASC ¶¶ 123, 166, 172, 173.

As it is Limited Partner Sutherland who has proposed the Sutherland Plan, the SASC adds Limited Partner Sutherland as a named plaintiff pursuant to Rule 20(a). SASC ¶ 7. The SASC also adds the Partnership as a nominal defendant so that damages may be recovered derivatively on its behalf. See Fed. R. Civ. P. 23.1; SASC ¶¶ 8, 32-37. The SASC further describes the events that have occurred since the signing of the FAC and makes certain other minor changes.

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

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 the SASC adds no new causes of action and only either requests additional relief based on events that occurred after the submission of the FAC or describes in detail relief previously requested.

Moreover, in the procedural posture of this case, where defendants have filed a motion to dismiss as moot, it is appropriate for the Court to grant plaintiff's motion to amend the complaint before analyzing defendants' mootness motion, so that the Court can evaluate the viability of plaintiff's claims as they stand now, not as they stood when the FAC was filed. For example, in CNW Corp. v. Japonica Partners, L.P., 776 F. Supp. 864, 867 (D. Del. 1990), the court granted the plaintiff's then-pending motion to amend his complaint prior to deciding the defendants' then-pending motion to dismiss (which motion was based on mootness and other grounds). Cf. Harrell v. McCarthy, 1995 WL 232408 at *1 (N.D. Cal. Apr. 17, 1995) (after defendant moved to dismiss as moot, court found that plaintiff could have continued claim for damages, and granted plaintiff leave to amend, while denying without prejudice defendant's motion to dismiss).

III. CONCLUSION

For the foregoing reasons, plaintiff respectfully requests that his motion to amend and supplement be granted.

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