Free MEMORANDUM in Support - District Court of Delaware - Delaware

ii Case 1 :04-cv-01339-SLR 2 Filed 06/03/2005 Page 1 er 4
c 1 LAW o1=F1cEs
` 1 NEUBERGER, QU1NN, GIELEN, RUBIN & GrBBER, P.A.
2 7 th F L O O R
ONE SOUTH STREET .
BALTIMORE, MARYLAND é1202-3282 J
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(410) 332·855O
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E-MAIL ADDRESS:
[email protected]
July 12, 2004
VIA E-MAIL: [email protected] VIA E-MAIL: [email protected]
AND FEDERAL EXPRESS p AND FEDERAL EXPRESS
Mr. Stanley P. Gold J Mr., Eugene Krieger
Shamrock Holdings of Califomia, Inc. Shamrock Holdings of California, Inc.
4444 Lakeside Drive 4444 Lakeside Drive
2"d Floor 2"d Floor .
Burbank, California 91505 g Burbank, California 91505
VIA E-MAIL: [email protected] ‘
AND FEDERAL EXPRESS _
Mr. George J. Buchler
Shamrock Holdings of California, Inc.
4444 Lakeside Drive
2“d Floor
Burbank, California 91505
Dear Mr. Gold, Mr. Buchler and Mr. Krieger: l
Avie Arenson has forwarded to the other Class B shareholders (and _to me, as their counsel)
a copy of George Buchler's e-mail of July 1, regarding a Levitt Homes proposal to purchase MHI.
Obviously, the entire ALH situation is now a disaster. Unfortunately it does not come as
a surprise. Vlfhen Avie and I met with you in North Carolina, after it was clear that ALH faced a
"busted auction" of itself, as a going concern, we warned you that your efforts to dismantle ALH,
piecemeal, could only lead to calamity.
Then and again, at the sale of Jacksonville, we sounded the alarm. Shamrock and the
individual directors of ALH in a single minded effort to extricate Shamrock from what it felt was a`
time consuming involvement in an investment that Shamrock had lost interest in, went about trying
to shed themselves of their obligations, freely assumed by their own acts, by destroying any
shareholder value that ALH may have had, to a point that Shamrock now presents a picture of
ALH as reflected in Levitt's offer. _

_, Case 1 :04-cv—O1339-SLR Document 41 -2` Filed 06/O3/2005 Page 2 of 4
I NEUBERGER, QU1NN, GIELEN, RUBJN & GIBBER, P.A.
Mr. Stanley P. Gold ·
Mr. Eugene Krieger
Mr. George J. Buchler
July l2, 2004
Page 2
This is nothing more than an egregious breach by Shamrock and the individuals appointed
by Shamrock and their A allies, as directors of ALH, of` their collective fiduciary obligations to the
Class B "minority" shareholders.
To be sure, it is clear that Shamrock's course of conduct to date has been driven by
a stated intention to rid itself of ALH and at the same time to attempt to protect the repayment of its
loans to ALH hom being disgorged as voidable preferences. It is our view, however, that unlike the
Class B loans, whose repayment might too have been preferences, but for the passage of time, that -
Shamrock's loans are recoverable even after the one year period, as they are equitably subordinated
to the claims of ALH's Class B shareholders (and possibly others, as well) as a result of` a series of
predicate acts and pattems of misconduct, intentional breaches of fiduciary duty and wanton
disregard of duties and obligations. In addition to the recovery hom Shamrock of the loan
repayments, we are exploring the rights of the Class B shareholders to seek recovery of their equity
and damages, as well.
In addition to the gross and wanton behavior and attitudes to which the Class B shareholders
_ have been treated, we advise you that Fried Frank's involvement is under scrutiny as well. It is
ridiculous for the entrenched control, who have conflicts with ALH and its shareholders to believe
that they can willy nilly waive conflicts of interest between a law firm engaged by ALH and z
themselves and even more absurd that Fried Frank did not appreciate the untenable position that L
they were in and continued to act for both Shamrock, their principal client and ALH, at the same
time, knowing full well that an actual, unwaiveable conflict existed. The waivers that the Class B
shareholders executed are only evidence ofthe problem and are of no legal force or effect.
We all understand and anticipate the indignation and anger that Shamrock and the individual.
ALH directors appointed by Shamrock will express upon receipt of this communication. Shamrock
and its principals have made a very loud effort at Disney about the "high road" in corporate
govemance. Fried Frank has been a part of that game plan too. Please spare us. I suggest that if and
when it becomes known how Shamrock has treated the Class B shareholders in ALH, that at least
Michael Eisner will be the only one smiling. Certainly not the Class B investors. This is all a
tragedy from their perspective.
We all know and appreciate the history and circumstances. Once Shamrock decided that it
wanted to control ALH, it assumed a myriad of obligations to the Class B shareholders.
Shamrock allowed the Memphis situation to arise, where, if the sale had not occurred, the
then management would have driven Memphis further into the ground. Now, Shamrock is
proposing that we cast our lot with the very same group, all in an effort to neatly "bury" ALH and
Shamrock's exposures. I ·

I Case 1 :04-cv—O1339-SLR Document 41 -2 Filed 06/O3/2005 Page 3 of 4
I i NEUBERGER, QUIENN, GIELEN, RUBIN & GIBBER, P.A.
Stanley P. Gold g .
Mr. Eugene Krieger
Mr. George J. Buchler . ~
July 12, 2004
Page 3 `
The Class B shareholders (with counsel) are prepared to meet with Shamrock and their
counsel (provided it is other than Fried Frank) to seek some acceptable resolution of the current
situation.
I must advise you that any communications from Shamrock or the individual directors with
Fried Frank on these matters, following receipt of this communication, are NOT protected and may
constitute further actionable acts that may be raised if further formal action is necessary.
I have also been asked by Avie and the other Class B investors to request that all
communications regarding this matter be directed through me and that you not attempt to
communicate directly.
This is a very serious situation and one in which millions of dollars may have been lost by
_ what we feel is actionable behavior.
i Very truly yours,
Isaac M. Neuberger
ll\/IN/tem ·
cc: DA Gardens, LTD.
The Erica J esselson 1984 CLAT
SELK, LLC

Case 1 :04-cv-01339-SLR Document 41 -2 Filed 06/O3/2005 Page 4 of 4
i N EUBERGER, QUINN, GIELEN, RUBJN & GIBBER, P.A.
Mr. Stanley P. Gold
Mr. Eugene Krieger
Mr. George J. Buchler
July l2, 2004 ‘
Page 4
bcc: Michel Konig (via e-mail: kor1ig@[email protected])
Avie Arenson (via e-mail: [email protected])
Benjamin J. J esselson (via e-mail: [email protected])
Michael G. J esselson (via e-mail: [email protected])
Chesky Frankel (via e-mail: sta1]`[email protected])
Mark Frankel (via e-mail: [email protected])