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CAUSE NO. 1
HILL WOOD INVESTMENT PROPERTIES, § IN THE DISTRICT COUR,
III, LTD., individually and on behalf of
DALLAS BASKETBALL LIMITED D/B/A §
DALLAS MAVERICKS,

Plaintiff,
192Mi
JUDICIAL DISTRICT
VS.

RADICAL MAVERICKS MANAGEMENT, §

LLC and DALLAS BASKETBALL LIMITED §
DiB/A DALLAS MAVERICKS

Defendants. DALLAS COUNTY, TEXAS

PLAINTIFF'S ORIGINAL PETITION

Plaintiff Hillwood Investment Properties, III, Ltd. ("Hillwood"), individually and

on behalf of Dallas Basketball Limited d/b/a Dallas Mavericks ("DBL"), files this

Original Petition against Defendants Radical Mavericks Management, LLC ("RMM")

and DBL, and states:

INTRODUCTION

1 DBL operates the Dallas Mavericks, a professional basketball team,

pursuant to a franchise from the National Basketball Association (the "NBA"). Entities

controlled by and affiliated with Mark Cuban ("Cuban") acquired a majority ownership

interest in DBL in 2000. Since that time, Cuban has led the Dallas Mavericks to success

on the basketball court. However, this success has come at a great cost. DBL has made a

litany of questionable business, financial, and personnel decisions through the years that

have placed DBL in the position of not being able, through its own revenues, to pay its

PLAINTIFF'S ORIGINAL PETITION - Page 1

debts as they become due, thereby forcing DBL to rely heavily on borrowings (which

DBL does not have the financial resources to repay) to meet ongoing financial

obligations, and putting its long-term viability in serious question. Despite the fact that

DBL's revenue has increased during Cuban's tenure, DBL has not been profitable. In the

fiscal year ended June 2009, DBL incurred a net loss of more than $50 million. Under

Cuban's stewardship, DBL's debt has steadily increased and now likely exceeds $200

million. DBL's internal financial projections show that downward spiral continuing at an

alarming pace through the four year period ending June 2013, with the projected interest

bearing debt balance reaching more than $281 million during that period.

2. Also contributing to DBL's dire financial condition are numerous related

party transactions it has entered into with other Cuban-related entities, for which DBL

has not received fair value, to the benefit of those Cuban-related entities and to the

detriment of DBL.

3. Buried underneath this mountain of debt, mismanagement, and non-

competitive affiliated transactions are the interests of Hillwood, one of the DBL minority

owners. Cuban's conduct has not only caused DBL to repeatedly violate the minority

owners' contractual and statutory rights to information, but has also caused the minority

owners in DBL to lose substantial investment value. Hillwood brings this suit to redress

these wrongs.

DISCOVERY CONTROL PLAN

4. Hillwood requests a Level 3 discovery control plan.

II
st 0 ail §, - Page 2
 PARTIES. JURISDICTION. AND VENUE

5. Hillwood is a Texas limited partnership with its principal place of business

in Dallas, Texas. Hillwood is currently a limited partner of DBL and was a limited

partner of DBL at the time of the transactions that are the subject of this suit.

6. RMM is a Texas limited liability company with its principal place of

business in Dallas, Texas and may be served with process by serving its registered agent,

Capitol Corporate Services, Inc., at 800 Brazos, Suite 400, Austin, Texas 78701.

7. DBL is a Texas limited partnership with its principal place of business in

Dallas County, Texas and may be served with process by serving its registered agent,

Capitol Corporate Services, Inc., at 800 Brazos, Suite 400, Austin, Texas 78701.

8. The Court has jurisdiction over this dispute, the amount in question being

in excess of the jurisdictional minimum of this Court.

9. Venue is appropriate in Dallas County, Texas, pursuant to TEx. CIV. PRAC.

& REM. CODE § 15.002.

BACKGROUND FACTS

A. DB L.
10. Hillwood DBL, Ltd. ("Hillwood DBL") is the former majority interest

owner of DBL. In April 2000, Hillwood DBL sold its controlling interest in DBL to

entities owned and controlled by Cuban, d these Cuban-related entities remain the

majority and controlling interest owners of DBL. Currently, Cuban-controlled entities

collectively own an approximate 76% interest in DBL. RMM, a Cuban owned and

PLAINTIFF'S ORIGINAL PETITION - Page 3

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controlled entity, serves as the general partner of DBL, and, therefore, Cuban controls

and makes all business and operational decisions for DBL.

B. The Partnership

11. The relationship between RMM and the DBL limited partners (including

Hillwood) is governed by the Third Amended and Restated Agreement of Limited

Partnership, effective July 1, 1996 (the "Partnership Agreement"). The primary business

purpose of DBL is to operate the Dallas Mavericks professional basketball team pursuant

to the NBA franchise.

12. While the Partnership Agreement gives Cuban (through the general partner,

RMM) broad discretion to run the day-to-day operations of DBL, his powers are not

unlimited. Specifically, Section 7.1 of the Partnership Agreement limits RMM to

conducting business only within the scope of the stated business purpose. Moreover,

Section 7.6 of the Partnership Agreement expressly requires that the terms of any

transaction, agreement, or contract involving DBL with any DBL partner or with any

person that is an affiliate of a DBL partner, including the amount of fees to be paid by

DBL to such partner, or partner affiliate, must be competitive with the terms of similar

transactions, agreements, or contracts obtained by persons in the same business as DBL

in arms-length agreements with unrelated parties.

C. The Mavericks' Operating Losses and Mounting Debt.

13. Since the Cuban-related entities acquired control of DBL, DBL has

maintained one of the highest payrolls in the NBA, so high that DBL has been required to

pay nearly $75 million in net NBA luxury tax (with DBL projecting an additional $26

PLAINTIFF'S ORIGINAL PETITION, - Page 4

million in net luxury tax payments through June 2013), amounts that are distributed to

(and, essentially, subsidize the operating costs of) other NBA teams competing against

the Dallas Mavericks. By virtue of such spending, DBL has incurred substantial

operating losses while under the control of RMM. During the fiscal years 2001 through

2009, DBL generated a deficit (net cash used) in operating cash flow activities of over

$176 million. For the nine years that Cuban has conducted the business operations of

DBL, the total net losses were over $273 million, resulting in the DBL's partners' deficit

of approximately $289 million as of June 30, 2009, nearly a seven-fold increase in the

negative account during that nine-year period. DBL projects that its operating losses will

continue to accumulate for the next four fiscal years ending June 2013, totaling an

additional $92 million. DBL's financial statements show future cash commitments for

deferred compensation in excess of $300 million as of June 30, 2009. To provide the

liquidity necessary to operate and fund the substantial shortfalls between its revenues and

the costs of its operations, DBL maintains a bank line of credit (the "LOC"), in addition

to other loans by entities that are the owners of the company operating the American

Airlines Center, Center Operating Company, LLC, and by a Cuban-related entity.

Through the years, the borrowing capacity under these and former financing sources has

steadily increased at an alarming rate. As of December 31, 2009, DBL had outstanding

interest bearing debt in excess of $200 million. There is no assurance or unqualified

commitment that DBL's existing lenders will make additional loan proceeds available to

DBL to fund these projected continuing operating losses. During the fiscal years 2001

through 2009, DBL's total operating losses were approximately $254 million. DBL

PLAINTIFF'S ORIGINAL PETITION - Page 5

currently does not have revenues sufficient to pay its operating costs, and without

additional borrowings, DBL will not be able to fund its projected operating losses or to

pay its obligations as they become due. Further, those projections indicate that DBL does

not have the financial ability to repay existing loans by their stated maturities. These

conditions render DBL insolvent on a book basis with an equity deficit of negative $289

million, and negative working capital of over $75 million, as of June 30, 2009.

14. Hillwood is a co-owner of and has a substantial investment in DBL. The

manner in which DBL has been operated since April 2000, including the on-going

incurrence of operating costs and debt not capable of being funded or repaid by operating

revenues as the result of the business decisions made solely by RMM under the direction

of Cuban, has substantially diminished the value of Hillwood's investment in DBL.

Further, notwithstanding numerous requests, Cuban has refused to hold regular meetings

with the DBL limited partners for the purpose of providing information regarding DBL's

operations. Hillwood has only been able to perform a limited inspection of DBL's books

and records by making a demand to exercise its contractual and statutory rights to do so.

D. Related Party Transactions with Cuban-Related Affiliates.

15. Based upon information and belief, RMM has caused DBL to deliver value

to affiliates of RMM and Cuban on terms that were not competitive with the terms of

similar transactions that could be obtained by others in similar transactions conducted on

an arms-length basis. In particular, based on information and belief, (a) DBL provided

cash payments and other value to MLW Aviation, LLC (in which Cuban directly or

indirectly has an ownership interest) for which that company did not deliver equivalent

PLAINTIFF'S ORIGINAL PETITION - Page 6

value to DBL, and (b) DBL provided television content, office space, staff, bartering

arrangements, and other resources to HDNet, LLC (in which Cuban directly or indirectly

has an ownership interest) for which that company did not deliver equivalent value to

DBL. These related party transactions provided value to these RMM or Cuban-related

affiliates at the expense of DBL due to them not being made on competitive, arm's-length

terms. That absence of fair value has contributed to the current poor financial condition

of DBL.

E. Derivative Action.

16. Hillwood has demanded that RMM and Cuban provide to DBL binding

commitments to fund future DBL operating deficits and debt repayments to address the

financial consequences of their decisions that have so adversely affected the value and

continuing financial viability of DBL and the value Hillwood's investment in DBL. That

demand has been expressly rejected. Although Hillwood has not requested RMM to

initiate suit on behalf of DBL, any such effort would have been futile and is thus excused.

That is, Cuban (through entities that he owns and/or controls) is the majority owner of

DBL, and he makes all major business and operational decisions. Therefore, RMM

would not agree to initiate suit against itself, or any other Cuban-related entity, for

entering into the above-described transactions. Accordingly, Hillwood now brings this

derivative action on behalf of DBL, and in its own capacity as a limited partner, to

address these wrongs.

PLAINTIFF'S ORIGINAL PETITION - Page 7

 FIRST CAUSE OF ACTION: BREACH OF CONTRACT
17. Hillwood adopts and incorporates by reference paragraphs 1 through 16

above at this point as if same were set forth in full.

18. The Partnership Agreement is a binding and enforceable contract to which

Hillwood is a party and under which it has fulfilled all of its obligations. As set forth

more fully above, RMM breached the Partnership Agreement by entering into the above-

described related party transactions. As a result of these breaches, Hillwood has suffered

economic damages in an amount in excess of the minimum jurisdictional limits of this

Court, for which it now sues.

SECOND CAUSE OF ACTION: MINORITY OPPRESSION

19. Hillwood adopts and incorporates by reference paragraphs 1 through 16

above at this point as if same were set forth in full.

20. RMM, acting individually and on behalf of DBL, has managed DBL's

finances and operations in such a reckless manner with indifference and disregard to

prudent practices, to the value of DBL and the investments of its owners and to the rights

of minority owners, that the value to and rights of Hillwood have been materially and

adversely impacted to the improper benefit of RMM and Cuban at the substantial expense

to Hillwood.

21. As a result of this wrongful oppression, Hillwood has suffered damages in

an amount in excess of the minimum jurisdictional limits of this Court, for which it now

sues.

PLAINTIFF'S ORIGINAL PETITION - Page 8

 THIRD CAUSE OF ACTION: BREACH OF FIDUCIARY DUTY

22. Hillwood adopts and incorporates by reference paragraphs 1 through 16

above at this point as if same were set forth in full.

23. A fiduciary relationship exists between RMM, on the one hand, and

Hillwood, on the other hand. The above-described course of conduct violates the

fiduciary duties that RMM owes to Hillwood and constitutes willful misconduct. By way

of example only, RMM breached its duty of care and good faith by operating the business

of DBL in a careless and reckless manner in disregard of sound and prudent financial

practices by (a) continually burdening DBL with operating and debt obligations far

beyond the financial capabilities of DBL to satisfy, (b) failing to keep Hillwood and the

other partners properly and regularly informed regarding the business of DBL, (c)

causing DBL to enter into transactions in violation of the terms of the Partnership

Agreement requiring competitive and arms-length transactions, and (d) causing harm to

Hillwood and the other limited partners as the result of the above acts. In addition, RMM

breached its duty of loyalty by placing the personal interests of its direct or indirect

owner, Cuban, above and to the detriment of the interests of DBL. As a result of these

acts, Hillwood has suffered damages in an amount in excess of the minimum

jurisdictional limits of this Court, for which it now sues.

FOURTH CAUSE OF ACTION: APPOINTMENT OF RECEIVER

24. Hillwood adopts and incorporates by reference paragraphs 1 through 16

above at this point as if same were set forth in full.

PLAINTIFF'S ORIGINAL PETITION - Page 9

 25. As set forth above, the economic purpose of DBL has been unreasonably

frustrated, as it is insolvent and/or in imminent danger of insolvency. Moreover, an

irreconcilable conflict exists between the limited partners, on the one hand, and RMM

and Cuban, on the other hand, regarding the courses of action DBL might take to

ameliorate its financial condition. Accordingly, Hillwood is entitled to the appointment

of a receiver to take charge of the management and control of DBL in order to avoid

further damage to the parties at interest pursuant to TEX. Bus. ORGS. CODE § 11.404

and/or TEX. CIV. PRAC. & REM. CODE § 64.001.

FIFTH CAUSE OF ACTION: ACCOUNTING

26. Hillwood adopts and incorporates by reference paragraphs 1 through 16

above at this point as if same were set forth in full.

27. Hillwood requests that the Court appoint an independent forensic

accountant, at RMM's sole cost and expense, to investigate and make a report regarding

the matters described herein (including payroll, employee benefits, and other expenses

incurred by DBL for the benefit of other Cuban entities), and that the Court order RMM

and DBL to cooperate with this investigation and allow full access to all of the records in

its possession, custody, or control and to facilitate the accomplishment of such an

accounting.

SIXTH CAUSE OF ACTION: ATTORNEY'S FEES

28. Hillwood adopts and incorporates by reference paragraphs 1 through 16

above at this point as if same were set forth in full.

PLAINTIFFS ORIGINAL PETITION - Page 10

 29. As a result of RMM's wrongful acts and omissions, Hillwood retained the

undersigned attorneys to represent it and agreed to pay their reasonable and necessary

fees. Hillwood seeks recovery of its reasonable and necessary attorney's fees, court

costs, and expenses through trial and all appeals under applicable law, including, but not

limited to, TEX. CIV. PRAC. & REM. CODE § 38.001, et seq., the express agreements

among the parties, and as otherwise authorized by law.

SEVENTH CAUSE OF ACTION: EXEMPLARY DAMAGES

30. Hillwood adopts and incorporates by reference paragraphs 1 through 16

above at this point as if same were set forth in full.

31. Hillwood seeks exemplary damages from RMM based on its willful,

wrongful, and malicious conduct described above.

MISCELLANEOUS

32. All conditions precedent to the filing of Hillwood's claims in this action

have been performed or have already occurred.

33. By filing these claims, Hillwood does not waive or release any rights,

claims, causes of action, or defenses, or make any election of remedies, but rather

expressly reserves all such rights, claims, causes of action, and defenses, whether or not

the same have been asserted or may hereafter be asserted in this or any other proceeding.

JURY DEMAND

34. Hillwood requests that all issues of fact be tried before a jury.

PLAINTIFF'S ORIGINAL PETITION - Page 11

 RELIEF REQUESTED
35. Hillwood respectfully requests the following relief:

(a) That the Defendants be served with process and be required

to answer in the time and manner prescribed by law;

(b) That the Court award judgment against Defendants, jointly

and severally, for Hillwood and DBL's actual and exemplary
damages;

(c) That the Court appoint a receiver to take charge of the

management and control of DBL and appoint a forensic
accountant to investigate the finances of DBL and make a
report to the Court;

(d) That Hillwood recover its reasonable and necessary attorney's

fees, court costs, and expenses (including, but not limited to,
expert witness fees and expenses) incurred through the trial of
this cause and any appeal;

(e) That Hillwood recover pre-judgment and post-judgment

interest at the highest rate and to the maximum extent
permitted by law; and

(f) That Hillwood have all such other and further relief, both
general and special, at law and in equity, to which it may
show itself justly entitled.

PLAINTIFF'S ORIGINAL PETITION - Page 12

 Respectfully submitted,

FIGARI & DAVENPORT, L.L.P.

BY: .6416.4711.1W
T. Davenport
State Bar No. 05418000
Don Colleluori
State Bar No. 04581950
Ryan K. McComber
State Bar No. 24041428

3400 Bank of America Plaza

901 Main Street, LB 125
Dallas, Texas 75202-3796
Tel: 214/ 939-2000
Fax: 214/ 939-2090

ATTORNEYS FOR PLAINTIFF

HILLWOOD INVESTMENT
PROPERTIES, III, LTD., Individually and
on behalf of DALLAS BASKETBALL
LIMITED D/B/A DALLAS MAVERICKS

PLAINTIFF'S ORIGINAL PETITION - Page 13