Free MEMORANDUM in Support - District Court of Delaware - Delaware

- C ’ I Case 1 :04-cv-01339-SLR Document 41 -3 Filed 06/03/2005 Page 1 of 3
` I EXHIBIT B
. GREGORY P. JOSEPH LAW OFFICES 1.Lc
_ , . _ 805 THIRD- AVENUE p
· U _ _ . NEW YORK. NEW YORK 10022 — 2
‘ _ · U (212) 407-1200v _ U _ I
WWW.JOSEPHNYC.COM
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DEE; §212; 407-1278 (212) 407*299
EMAIL: [email protected]
July 26, 2004
By Fax {41 0-332-8511) and First Class Mail
Isaac M. Neuberger, Esq.
Neuberger, Quinn, Gielen, Rubin & Gibber, P.A.
One South Street, 27th Floor
Baltimore, Maryland 21202
Re: ALH Holdings LLC ("ALH"[
Dear Isaac:
In response to your July 21, 2004 email and other recent communications suggesting
a meeting between the parties, I am writing to let you know that my clients and l are willing
to meet with you, Avie Arenson and any of your other Class B clients. (Are you now acting
for all of the Class B investors, and if not, which ones?) As you know, my firm is new to this
matter and still in the process of "getting up to speed." Because of vacation plans and other
previously scheduled commitments in August, it appears that the earliest feasible time for a
meeting would be in September. I propose that we all meet in my firm’s offices on Tuesday,
September 14, 2004. Kindly let me know at your earliest convenience whether this is '
feasible for you and your clients.
In the meantime, however, it is essential f`or your clients to decide whether they are
going to propose an alternative to the existing offer from Levitt Homes to purchase
Mulvaney Homes ("MI-II"). Paragraph 3 of George Buchler’s July 1, 2004 email to Avie
Arenson asks for your clients’ feedback on the Levitt offer, including whether your clients
have an alternative transaction to propose. Your July 12, 2004 letter to Shamrock refers to
the July l email and expresses general unhappiness with the Levitt offer, but contains no
specific response to paragraph 3.
As you and your clients well know, ALH must act immediately with respect to MHI.
Taking no action is simply not an option. None of ALH’s investors is under any obligation
to put any additional capital into the Company. (Regardless of your clients’ views — now or
at any other time — regarding the desirability of` additional capital contributions, Section 3.3
ofthe Operating Agreement expressly provides that "no Member shall have any personal

Case 1 :04-cv-01339-SLR Document 41 -3 Filed 06/O3/2005 Page 2 of 3
Gnnconr R J osnruat Law Onnrcns ur:
Isaac M. Neuberger, Esq.
July 26, 2004
Page 2
. liability to the Company, to any other Member ofthe Company, or to any other person" for
deciding not to make a further investment in the Company.) However, if someer all of the
Class B investors would like to contribute additional capital, Shamrock would certainly be
willing to discuss possible terms for, eg., reducing or even eliminating Shamrock’s equity
interest in the Company.
, Indeed, as you know, Shamrock has, over the years, repeatedly and consistently
expressed this willingness to you and your clients. The Class B investors may now believe,
in hindsight, that they should have handled their investment in ALI-I differently, ag., by
buying out some or all ofthe Class A equity, by offering to take on a more active role in the
- management role ofthe Company, or by presenting concrete alternative plans for meeting the
Company’s tinancial obligations and needs, all as requested or suggested by Shamrock. But
such a hindsight belief is hardly sufficient to support a legal claim against Shamrock-—— let
alone the kind of claim for “bad faith" or "gross negligence" contemplated by Section 6.2(t)
of the Operating Agreement.
Moreover, the claims threatened in your July 12 letter appear to concern the services
rendered by Shamrock Capital Advisors, Inc. (“SCA") under the July l, 2001 consulting
agreement between ALH and SCA. This agreement, which was approved by Avie as Class B
representative, expressly provides that SCA "shall have no liability to the Company or any
other person in connection with" such services, except to tl1e extent that it is "iinally
judicially determined" that the alleged harm "result[ed] ptimarily" nom SCA's bad faith,
gross negligence or willful misconduct. This agreement also correspondingly indemniftes
and holds harmless SCA, its afliliates, and their employees and other representatives.
_ As the single largest investor in the Company, Shamrock has at all times sought to
maximize value for all investors- Your recent communications have suggested that .
Shamrock somehow benehted at the expense ofthe Class B investors. This is just not so.
Regardless of any differences in business judgment, the economic interests of the Class A
and Class B investors have always been iitlly aligned. Any negative impact on the Class B
investors was and is proportionally shared by Shamrock —— the only diiference is that
Shamrock’s share of the downside is necessarily larger because its investment is larger. In
simplest terms, nothing could hurt the Class B investors without hurting Shamrock more.
For these and other reasons, we are coniident that your clients will see that any
"investment" in litigation against Shamrock would be wasted. However, the "arrricable
resolution" referred to in your July 2l email may be achievable on a transactional basis. In

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GREGo12Y P. J osmprr LAW OFFICES me
Isaac M. Neuberger, Esq.
July 26, 2004
Page 3
anticipation of the September meeting, we think it would be worthwhile for both parties to
give serious thought to the formulation of one or more specific transactional resolution
proposals.
With regard to MHI and the Levitt offer, however, your clients' response is needed
right away. If your clients have a concrete alternative proposal, they should make -
immediately. If not, ALH will have no choice but to proceed with the Levitt deal, rather than
allowing MHI to disintegrate and causing further erosion of ALH's financial position by,
among other things, giving up $7 million cash for paying down the Swiss Re debt.
We look forward to hearing from you.
Yours truly,
Pamela Jarvis
PJ/
555716