PINCKNEY, HARRIS & WEIDINGER, LLC

________________________________________________

MEMORANDUM
TO: FROM: CC: DATE: RE:

Bob King Elizabeth Wilburn Joyce Stewart Fried and Brian Lederer August 8, 2012 DAG SPE Managing Member Complaint and issues related thereto

I.

REVIEW OF RECORDER OF DEEDS DOCUMENTS

I have reviewed the Recorder of Deeds documents that Brian provided. The way the Certificate of Incorporation is drafted, DAG was permitted to transact business associated with the properties subject to the FFCA Loan Agreements as of December 15, 2000. Based on the December 21, 2000 Memorandum of Master Lease, it looks to me that there were 14 properties subject to the FFCA Loan Documents. If they transacted business outside of those 14 properties, then they needed the unanimous consent of the Board, including the Independent Director. I am assuming that the FFCA Loan Docs were still in place as of March 28 and April 1, 2003 otherwise they would not have asked your consent in the first place. The other documents that Brian found at the Recorders office between 2000 and 2003 all relate to the initial 14 properties, therefore the conduct likely was permissible, unless the Lender FFCA was expecting the Independent Director to be looking out for their interest with respect to those properties (as the Certificate of Incorporation would seem to suggest), and they never consulted you about any of them. I think that they deleted the authorizing resolution with regard to the sale of the Georgia Avenue property to Howard University in the April 1 Written Consent because they didnt think they needed your authority if it was part of the original FFCA 14 parcels (my guess as to the changes between the March 28 and April 1 written consents). I have ordered a search of UCC Financing Statements between 2000-2003 to see if there are any others for DAG Realty and DAG Petroleum Suppliers. II. NATURE OF SERVICE OF INDEPENDENT DIRECTOR

You should know that whoever drafted the Certificate of Incorporation and the Certificate of Correction does not seem to have been familiar with Delaware law. The language about who the Independent Director owed fiduciary duties to is unenforceable under Delaware corporate law. Under Delaware law, all directors, including independent directors, owe duties to the corporation and its stockholders. The difference with an Independent Director is that he or she is not supposed to be beholden to management, but would act independently of management and in

the overall best interests of the corporation even if those interests are not aligned with management. The only time a corporate director owes fiduciary duties to a creditor is if the company is on the verge of bankruptcy. Ordinarily, a company can pay director fees to its directors based upon the time that they spend on Company business or the number of meetings per year. Director fees can be paid in cash compensation and attendance fees, as well as more complex packages, which can also include stock-based compensation, incentive plans and other forms of compensation. If the Company did not pay the other directors for their service as a director between 2000 and 2003, then you will not have a claim for unpaid director fees (assuming any such claim is not barred by the three (3) year statute of limitations for such claims in Delaware).

III.

LITIGATION RISKS

If the documents that Brian found are all that there is then they may not have breached the Certificate of Incorporation. If we are successful, what we will want to see is how the Certificate of Incorporation came to be drafted in that manner in the first place back in December 2000 and we will want to see all of the initial loan documents with FFCA, i.e., did they tell the lender FFCA anything about you in particular? I would think that if the Lender was requiring an Independent Director, it would have wanted to know exactly who the person was going to be. I could be wrong. But if the Court finds that the statute of limitations has run on any possible claims related to the time period 2000-2003, then we could lose. The wild card is the continuing effectiveness of the Certificate of Incorporation, as corrected, identifying you as an Independent Director from 2000 to the present. We dont know whether or not any lenders, buyers, sellers or others that DAG has done business with has relied on the Certificate of Incorporation or if DAG has made any representations about who is on its Board. To my mind, any Secretarys Certificate provided by DAG to a lender, buyer or seller that certifies the accuracy of the Certificate of Incorporation after the date of your removal in December 2003 (assuming it was effective) would be inaccurate without disclosing your removal. Such Secretarys or other officers Certificates are common in such transactions in my experience. The correspondence between Brian and Marjorie Fisher in 2011 claims that if you had known you were a director for one of Mamos companies between 2000 and 2003, you would have had to disclose that to the ANC and City Council on those occasions when you advocated on behalf of him, and/or recused yourself from consideration of the matter. You and I discussed yesterday that you now recall Joe Mamo calling you on or about March 28, 2003 and telling you that he was going to list you as a director and asking you to sign the written consent authorizing the sale to Howard University. You also indicated that you publicly supported Joe Mamo on different projects between 2003 and 2009. Stewart, Brian and I believe that the only leverage Mamo has is with respect to your reputation. If he were to go public in some way, particularly with respect to the $5 million

demand, it could be damaging to you given your public support of Mamo between 2003 and 2009 and that you did not disclose to the ANC that Joe asked to list you as a director in March 2003. That is why Stewart, Brian and I recommended that you make a retroactive disclosure of your role with DAG. You have indicated that you do not believe that Mamo will go public because he would not want to risk jeopardizing an important vote coming up at the Council that is currently deadlocked 6-6. We want to make sure that you understand the risk in not making a retroactive disclosure of your role in DAG even if it is limited to the March 28 resolutions. This entire effort could backfire if (A) Mamo goes public and tries to imply that you acted inappropriately in supporting him between 2003 and 2009 and/or makes public your $5 million demand; and/or (B) DAG did not engage in any transactions outside the terms of the FFCA loan documents, did not say anything about you to FFCA when you were named initial director in December 2000, and has not made any representations about you or the members of its Board since 2000.