HomeMy WebLinkAbout10-7624COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY, PENNSYLVANIA
HENRY SCANLON, JUDY CURIALE,
R. MICHAEL STUCKEY
Plaintiffs, Civil No.
V. Civil Action-Equity t:;r~
GREGG R. AVERSA,
Defendant
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f1 J 0 C "J"
899590 1
COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY, PENNSYLVANIA
HENRY SCANLON, JUDY CURIALE,
R. MICHAEL STUCKEY
Plaintiffs, Civil No.
V.
Civil Action-Equity
GREGG R. AVERSA,
Defendant
AVISO
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CUMBERLAND COUNTY LAWYER REFERRAL SERVICE
Cumberland County Bar Association
32 S. Bedford Street
Carlisle, PA 17013
717-249-3166 or 800-990-9108
8995901
COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY, PENNSYLVANIA
HENRY SCANLON, JUDY CURIALE,
R. MICHAEL STUCKEY
Plaintiffs,
V.
GREGG R. AVERSA,
Defendant
Civil No. ?`
Civil Action-Equity
COMPLAINT IN EQUITY
NOW COME Plaintiffs, Henry Scanlon, Judy Curiale and R. Michael Stuckey, by and
through their attorneys, Dilworth Paxson LLP, and file their Complaint in Equity as follows:
PARTIES
1. Plaintiff Henry Scanlon is an adult individual who is the owner of 36% of the
shares of The Sage Corporation, a Pennsylvania statutory close corporation ("the Corporation"),
which has its principal place of business at 4242 Carlisle Pike, Suite 177, Camp Hill,
Pennsylvania 17011.
2. Plaintiff Judy Curiale is an adult individual who is the owner of 9% of the shares
of the Corporation.
3. Plaintiff R. Michael Stuckey is an adult individual who is the owner of 9% of the
shares of the Corporation.
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4. Collectively, plaintiffs own 54% of the shares of the Corporation, and will
sometimes be referred to herein as the majority shareholders.
5. Defendant Gregg R. Aversa is the President of the Corporation, who maintains a
business address at 4242 Carlisle Pike, Suite 177, Camp Hill, Pennsylvania 17011, and who also
resides in Cumberland County. He is a minority shareholder in the Corporation, owning 41% of
the shares of the Corporation.
JURISDICTION AND VENUE
6. This Court has jurisdiction over the parties and claim presented herein.
7. Venue is appropriate in the Court of Common Pleas of Cumberland County,
Pennsylvania in that it is where Defendant resides and regularly conducts business.
NATURE OF ACTION
8. This case is about a corporate officer who refuses to accept and abide by the
actions of the majority shareholders of the Corporation, who, under the Articles of Incorporation
have the right and power to manage the business and affairs of the Corporation, rather than a
board of directors.
FACTUAL BACKGROUND
9. The Corporation was formed in 1989. A copy of the Articles of Incorporation
("Articles") are attached hereto as Exhibit A. In the Articles, the Corporation elected, pursuant
to predecessor to the statutory provision now known as § 2332 of the Pennsylvania Business
Corporation Law of 1988, as amended (the "BCL"), to be managed by or under the direction of
the shareholders rather than by a board of directors. 15 Pa. C.S.A. § 2332. Defendant Aversa
was one of the incorporators who signed the Articles.
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10. Since its inception, Aversa has acted as President and conducted the affairs of the
Corporation on a day-to-day basis.
11. Plaintiffs are investors who have placed their trust in fellow shareholder,
defendant Aversa, to manage the day-to-day affairs of the Corporation.
12. Although the Corporation at some point adopted bylaws that provide for a board
of directors, to the extent that the bylaws conflict with the provisions of the Articles, the Articles
govern, because Section 1504 (a) of the BCL permits bylaws to contain provisions not
inconsistent with the Articles. 15 Pa. C.S.A. §1504 (a).
13. Over the course of the past several months, the plaintiff majority shareholders
have become aware, in connection with a due diligence examination for potential sale, that
defendant Aversa interfered and undermined the ability to have a complete and thorough due
diligence analysis performed at that time. However, even the limited and cursory examination
that was performed cast a spotlight on certain irregularities alarming to the plaintiff majority
shareholders.
14. Through the course of the cursory and limited access to information provided by
defendant Aversa, it has become known to the plaintiff majority shareholders that defendant
Aversa, despite his duties to plaintiffs, the Corporation and his fellow minority shareholders, is
running the Corporation as his own personal cash cow. Defendant Aversa has named several of
his relatives on the Corporation payroll, including his wife, daughter, son-in-law and one relative
who does not reside in Pennsylvania and has another full-time job. Although Aversa has
historically had certain family members on the payroll who were performing services for the
Corporation, it was only recently revealed that in fact, there were additional family members of
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his, and others on the payroll, and that the assets of this Corporation had become akin to
Aversa's personal checking account. The Corporation is footing the bill for defendant Aversa's
personal luxurious country club membership, his cars, the country club membership for one of
his relatives, and is paying generous bonuses to him and his family members on the payroll, all
to the detriment of the Corporation and its shareholders. In addition, plaintiffs believe that
Aversa has been manipulating the profits of the Corporation otherwise accruing to the benefit of
all shareholders by paying excessive year-end bonuses.
15. On October 14, 2010, by Consent of Shareholders in Lieu of Meeting pursuant to
§1766 (b) of the BCL ("First Consent of Shareholders"), signed by all plaintiffs, constituting the
holders of a majority of the shares of the Corporation, Tom Madden was elected as Vice
President, Treasurer and Chief Financial Officer. The First Consent of Shareholders created
audit and compensation committees of the Corporation, of which plaintiffs are the members.
Pursuant to § 1766 (c) of the BCL, the actions taken by Consent became effective ten days after
written notice of such Consent has been delivered to each shareholder entitled to vote thereon
who has not consented thereto. Notice of the First Consent of Shareholders was sent to the
minority shareholders.
16. By their appointment of Tom Madden as Chief Financial Officer, plaintiff
majority shareholders sought to put in place personnel, and appropriate committees, for the
important purpose of overseeing the financial affairs of the Corporation, to detect improper
management of the Corporation and/or use of the Corporation's assets, and to assist in the
orderly elimination of any irregularities Mr. Madden may find.
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17. Written notice of the First Consent of Shareholders was provided to both minority
shareholders, defendant Aversa, and non-party Lewis Grill, by letter dated October 20, 2010.
18. There can be no legitimate reason to oppose the actions undertaken by the
plaintiff majority shareholders, as they were taken in the best interest and for the protection of
the Corporation, its employees, and the shareholders as a whole. Defendant Aversa, not only a
shareholder, but the Corporation's President and CEO, has nonetheless refused to comply with
the resolutions of the shareholders, and continuing to use the Corporation's assets for his own
purposes, and has refused Tom Madden any entry onto the premises of the Corporation.
19. Consistent with their obligations to the Corporation, and their right to manage the
business and affairs of the Corporation as set forth in the Articles of Incorporation, the plaintiff
majority shareholders did, on October 21, 2010, through a lawful "Consent of Shareholders in
Lieu of Meeting", adopt, and consent to the adoption of resolutions amending the bylaws of the
Corporation as it relates to removal of directors, and removing former shareholder and director
Tom Grill from the board of directors ("the Second Consent of Shareholders"). Written notice of
the Second Consent of Shareholders was provided to defendant Aversa, and non-party minority
shareholder Lewis Grill, by letter dated November 1, 2010.
20. Again, Mr. Aversa has failed and refused to abide by the resolutions set forth in
the Second Consent of Shareholders.
21. The plaintiff Majority Shareholders did, on December 3, 2010, through a lawful
"Consent of Shareholders in Lieu of Meeting", adopt, and consent to the adoption of resolutions
amending the bylaws of the Corporation to restate and reflect that the Corporation's Articles of
Incorporation provides that the business and affairs of the Corporation shall be managed by its
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shareholders instead of a board of directors; that the shareholders are vested with the sole and
exclusive authority to manage the Corporation; and abolishing the Board of Directors of the
Corporation (the "Third Consent of Shareholders"). Written notice of the Third Consent of
Shareholders was provided to all minority shareholders, and again, defendant Aversa has refused
to abide by the resolutions set forth in the Third Consent of Shareholders.
22. Pursuant to the direction of the Shareholders, Tom Madden reported to the offices
of the Corporation to commence his duties on Monday, December 6, 2010. By letters dated
November 30 and December 3, 2010, notice that Mr. Madden would be reporting to the
Corporation for work on this date was provided to Mr. Aversa and his counsel.
23. Mr. Madden reported to the offices of the Corporation on Monday, December 6,
2010 as stated that he would. Upon arriving at the lobby of the Corporation, Mr. Madden
provided his name to the receptionist/security, who then refused him entry and promptly turned
him away.
24. In that notice of Mr. Madden's arrival had been provided to Mr. Aversa and his
counsel, the direction to turn Mr. Madden away and refuse him entry to the offices of the
Corporation could only have been provided, and upon information and belief, was provided by
defendant Aversa.
25. Through his attorney, Aversa has refused to acknowledge the validity of the
above mentioned actions of the majority shareholders and, unless restrained and enjoined, will
continue to frustrate the will and the lawful actions of the shareholders, and will continue to
conduct the affairs of the Corporation for the sole benefit of himself and members of his family.
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COUNT I - INJUNCTIVE RELIEF
26. Plaintiffs repeat the allegations set forth in the foregoing paragraphs 1 through 25.
27. Because Aversa refuses to acknowledge and abide by the lawful actions of the
shareholders, the plaintiffs, as majority shareholders, are being deprived of the right and power
to manage the business and affairs of the Corporation.
28. The loss of this right is causing immediate and irreparable harm to their lawful
interests, in part because they are unable to monitor expenditures of the Corporation's funds
which, if improperly or unwisely dissipated, may not be subject to recovery.
WHEREFORE, Plaintiffs demand that an injunction issue:
1. Compelling defendant Aversa, in his capacity as President of the Corporation, to
comply with and abide by the actions of the shareholders of the Corporation;
2. Enjoining defendant Aversa from taking actions contrary to the actions of the
shareholders of the Corporation;
3. Compelling defendant to provide access to the premises of the Corporation, and
provide full cooperation to Tom Madden, Chief Financial Officer, in the discharge of his
responsibilities as CFO of the Corporation, in accordance with the actions of the shareholders of
the Corporation,
4. Enjoining Aversa from paying any employee bonuses not required under a pre-
existing contractual obligation; and
5. that plaintiffs be awarded costs and such other and further relief as the Court
deems just and proper.
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Respectfully Submitted,
DIL RTH PAXSON LLP
Victor P. Stabile, Esquire
I.D. No. 37449
Elizabeth J. Goldstein, Esquire
Of Counsel: I.D. No. 73779
Sharron E. Ash, Esquire 112 Market Street, 8th Floor
Hamburger Law Firm LLC Harrisburg, PA 17101
61 West Palisade Avenue Tel.: (717) 236-4812
Englewood, NJ 07631 Fax: (717) 236-7811
Tel: 201-705-1200
Fax: 201-705-1201 James J. Rodgers, Esquire
Id. No. 21635
1500 Market Street
Suite 3500E
Philadelphia, PA 19102-2101
Tel: 215-575-7000
Fax: 215-575-7200
Attorneys for Plaintiffs
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A
Ir-V
COMMONWEALTH OF PENNSYLVANIA
OCTOBER 5, 2010
TO ALL WHOM THESE PRESENTS SHALL COME, GREETING:
THE SAGE CORPORATION
I, Basil L Merenda, Secretary of the Commonwealth of Pennsylvania
do hereby certify that the foregoing and annexed is a true and correct
copy of
ARTICLES OF INCORPORATION filed on August 28, 1989
DEPARTMENT OF STATE
which appear of record in this department.
7
r
IN TESTIMONY WHEREOF, I have
hereunto set my hand and caused
the Seal of the Secretary's Office to
be affixed, the day and year above
written.
4-j Z..
Secretary of the Commonwealth
I y
Oif8?9W (R@? Sti
ARTICLES OF INCORPORATION
COMMONWEALTH OF PENNSYLVANIA
ONAMUM OF =TATS - CORMRATION SUREAU
NORTH OPPIC! /UILDING, !M"UURG. PA 17190
014 NAME OF CORPORATION (MUST CONTAIN A CMRM
T Rage Cor oration
vIi AliOwps OF 04E94TIRED OFFICI IN E LVAN
__2_9 East Laurer Lane
.A 4 M
PLEASE INDICATE (CHECK ONr) TYPE CORPORATION:
13, DOMESTIC MINEq CORPORATION
FEE
DOMESTIC SVSINESS CORPORATION $75.00
L :f A CUQ$f CORPORATION - COMPLETE BACK
DOMESTIC PR(P[SSIONAL CORPORATION
ENTER WAND LICENU NO.
RICA UNL "M EXEMPT UNDER IQ P.S. 29M SI
Hill ?' ""'••• • uw "Te _-?ZW=
...?
Cumberland 3 Pennsylvania 17011
To engage in providing consultation, technical, marketing, and other
services and productb to business, i-,lustry,,and to the general public.
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A4,N-4M x 11 !MIST IF NECESSARY)
WxnM? of SMrw, mum or
=or Pw V"-*' SMMM MN M tll`'C WPW*tlM-1WI Ma AVthWIW to IwA.
:iW`:1?fWM ow am of own --- 041 stow ?M VNw hr? ( _ - -
Gregg R. Aversa
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se D AfND&LED THE AIITICLO-OF INCORPORATION
M
8963-1303
PIK" By LOO IN r?TTLo
890'313,04, ,
1. The following provisions shalt regulate the status of the corporation as a close corporation:
(a) (Strike out(i) or (11) below, wMehever is not applicable.)
XXI[xXXDCD17t81 " fiYiyKlGYdi7faZi0M iXMWfrBd6N %
X9GDC138R147141??i?iIIQ4l94I?CX
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(?i) All of the issued shares of the corporation of all classes, exclusive of treasury shares, shall be held of record by
not more than the smaller of twenty.tlve "shareholders" within the meaning of Subchapter S of the Internal
Revenue Code of 1954, as amended, or 30 persons,
(b) All of the issued shares of all classes of the corporation shall be subject to one or more of the restrictions oa transfer
pormitted by section 613.1 of the Business Corporation Law (IS P.S. ;1613.1),
(c) The corporation shall meke no oftas of any of its shares of any class which would constitute a "public offering"
within the meaning ifie Securities Act of 1933, as amended.
2. (Optional: BCL f 3728) A person (other than an eatate) who is not an "htdividuai" or who is a "non-resident alien," in
either sae within the meaning of the lnWaal Revenue Code of 1954, as amended ("Code"), shag not be entitled to be a
holder of record of sham of the corporadon. Only a person whose consent Is currently in effect to the dection of the
corporation to be treated as alt-!electing small business corporation under Subchapter S of the C*6 sW a shanhelder wbe
bas sot ainnusi rely rofta ti eeasm to the dsetlon wlthltr a" days after be + *im Us glean, shall be *added to be
a holder of record of shares of 6- corporation.
3. (Options!: SCL ; 382) The bu;il)ttew and aft o of the corporation shall be nunaged by the shareholders of the eorpondon
rather darn by a board of directors.
4. (Optional: 13769) The santp-qf the oorporatipn s"Ickm corporation" witltln the meaning -of the Business Corporaton
Law shall not be terminated *itttout the an, rnuasli" vgate or wdU tt con tt of (all hokin ofl (ilba cholders holding
of 014- sham of all degas of the norpondon.
IFaAC M AT LEAST rWo-
5. (Optional: SCL 13849) (Ally h&mhoWt) ?sh#MM*1" holding of the shun) of the eorpantian may
I ACfldiNl
apply for the appointment of a oviaiottsldiratnor of the corporation In thOVUbrter-and upon the cimuttntat ew provided by
statute,
d. (Optional: BCL 1386) (Any s"hoiddlr) (ftNh,0Id_M holding .....`.r,,,. ?af-O Slang) of the corpm0on shall
have the right at will to gttle ib0 +n rpq tttldlQ tp'b0"di OjVW by v aci, fit
VAV p 'R tri* provided by aAtute.
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of
Departma t,,.s#
CERTIFICATE OF INCORPORATION
OFFICE OF THE SECRETARY OF THE CONWNWEALTH
TO ALL TO WHOM THESE PRESENTS SHALL CON=, GREETING:
n
M
e
W$XNAS, UNDER THE PROVISIONS OF THE LAMS OF THE COMMONWEALTH, THE SECRETARY OF THE
COt0i0NMEALTH IS AUTHORIZEDIAND REQUIRED TO ISSUE A "CERTIFICATE OF INCORPORATION"
EVIDLNCING THE INCORPORATON OF AN ENTITY.
NUM. 9, THE STIPULATIONS` AND CONDITIONS OF THE LAW HAVE BEEN FILLY COMPLIED WITH BY
Om CORPORATION THE (s t:wsh: CORPOUTI ON )
"HIRMFORE, KNOW YE, THAI' SUBJECT TO THE CONSTITUTION OF THIS COMMONWEALTH, AND UNDER
THE AUTHORITY OF THE LAWS EOF, 1, Do BY THESE pMENTS, WHICH I HAVE CAUSED TO BE
SEALED WITH THE GREAT SEAL I9F THE CMONWf1:TH, DECLARE AND CERTIFY THE CREATION,
•EWTION AND INCORPORATION'OF THE ABOVE TIt DEED AND IN LAW BY THE NAME CHOSEN
M-11NBEFORE SPECIFIED.
SUCH CORPORATION SHALL HAVE A-RD ENJOY AND SQL BE SUBJECT TO ALL THE POWERS, DUTIES,
REQUIREMENTS, AND RESTRICTIONS, SPECIFIER ANt1'ENJOINED IN AND BY THE APPLICABLE LAWS OF
THIS COMMONWEALTH.
GRIGG AVERSA
245 E LAURER LANE
CAMP HILL , PA 17011-0000
QI'VEN UNDER NY HAND AND THE GREAT SEAL
OF THE COMMONWEALTH, AT THE CITY
Of HAR1tISBURG, THIS 28TH DAY OF
AUGUST IN THE YEAR OF OUR LORD
ONE THOUSAND NINE HUNDRED AND
EIGHTY-NINE AND OF THE
COMMONWEALTH THE TWO HUNDRED
FOURTEENTH.
Gr.
BECRIh? iY OF l p"ONWEALTH
1523331
38963
1303-1305
VERIFICATION
I, R. Michael Stuckey, hereby state that I am a shareholder in The Sage Corporation, and
one of the plaintiff Majority Shareholders herein. I verify that the statements set forth in the
foregoing Complaint are true and correct to the best of my knowledge, information and belief. I
understand that these statements are made subject to the penalties set forth in IS Pa.C.S. § 4904
relating to unsworn falsification to authorities.
December, 2010 R. Michael S
T"- F
COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY, PENNSYLVANIA
HENRY SCANLON, JUDY CURIALE,
R. MICHAEL STUCKEY
Plaintiffs, .
V.
GREGG R. AVERSA,
Defendant .
Civil No. _Ii.?
Civil Action-Equity
PETITION FOR SPECIAL AND PRELIMINARY INJUNCTION
Plaintiffs Henry Scanlon, Judy Curiale and R. Michael Stuckey, by and through their
undersigned counsel, respectfully petitions this Court for an Order granting a Special and
Preliminary Injunction pursuant to Pennsylvania Rule of Civil Procedure 1531, and in support
thereof alleges as follows:
Background
1. Frustrated with defendant Aversa's insupportable refusal to abide by the
authorized actions of the shareholders, plaintiffs have been forced to seek this emergency
injunctive relief to compel Aversa to abide by the actions of the shareholders.
2. The Sage Corporation ("the Corporation") is a Pennsylvania statutory close
corporation, engaged directly and through its various subsidiary and affiliated companies
primarily in the operation of truck driver training schools throughout the country including in
Pennsylvania. Pursuant to § 382 of the Pennsylvania Business Corporation Law of 1933 (which
2
is the source of the current §2332 of the Business Corporation Law of 1988, as amended) (the
"BCL"), the Corporation elected to be governed by its shareholders, and specifically provided in
its Articles of Incorporation: "The business and affairs of the corporation shall be managed by
the shareholders of the corporation rather than by a board of directors." A copy of the
Corporation's Articles of Incorporation is annexed hereto as Exhibit "A".
3. Since initially investing in the Corporation, plaintiffs Scanlon, Curiale and
Stuckey have consistently been, and continue to be, the majority shareholders of the Corporation,
collectively owning fifty-four (54%) percent of the shares. Of the remaining forty-six (46%)
percent minority of shares, forty-one (41%) percent is owned by defendant Gregg R. Aversa.
The remaining five (5%) percent minority share is owned by non-party minority shareholder,
Lewis Grill.
4. At the crux of this matter is the important distinction that in this case, the
Corporation voluntarily elected to be managed by its shareholders, rather than the Board, and
affirmatively provided for this election in its Articles of Incorporation. (Exhibit "A'") Although
the Corporation at some point adopted bylaws that provide for a board of directors, to the extent
that the bylaws conflict with the provisions of the Articles, the Articles govern, because § 1504
(a) of the BCL permits bylaws to contain provisions not inconsistent with the Articles. 15 Pa.
C.S.A. §1504 (a).
5. Consistent with their election that the Corporation be shareholder-managed,
plaintiffs Scanlon, Curiale and Stuckey ("plaintiff majority shareholders") placed their trust and
confidence in minority shareholder and defendant herein, Aversa, to manage the Corporation as
the Corporation's President and CEO. Over the years, that management has produced little fiscal
reward for the plaintiff majority shareholders, in some years requiring plaintiffs to cover their tax
3
obligations out of pocket. More recently, upon demand, plaintiffs' have received enough to
cover their tax obligations and little more, to avoid raising any red flags.
6. Over the course of the past several months, the plaintiff majority shareholders
have become aware, in connection with a due diligence examination for potential sale, that
defendant Aversa interfered and undermined the ability to have a complete and thorough due
diligence analysis performed at that time. However, even the limited and cursory examination
that was performed cast a spotlight on certain irregularities alarming to the plaintiff majority
shareholders.
7. Through the course of the cursory and limited access to information provided by
defendant Aversa, it has become known to the plaintiff majority shareholders that defendant
Aversa, despite his duties to plaintiffs, the Corporation and his fellow minority shareholders, is
running the Corporation as his own personal cash cow. Defendant Aversa has named several of
his relatives on the Corporation payroll, including his wife, daughter, son-in-law and one relative
who does not reside in Pennsylvania and has another full-time job. Although Aversa has
historically had certain family members on the payroll who were performing services for the
Corporation, it was only recently revealed that in fact, there were additional family members of
his, and others on the payroll, and that the assets of this Corporation had become akin to
Aversa's personal checking account. The Corporation is footing the bill for defendant Aversa's
personal luxurious country club membership, his cars, the country club membership for one of
his relatives, and is paying generous bonuses to him and his family members on the payroll, all
to the detriment of the Corporation and its shareholders.
8. Alarmed by this information, consistent with their obligations to the Corporation,
and their right to manage the business and affairs of the Corporation as set forth in the Articles of
4
Incorporation, the plaintiff majority shareholders did, on October 14, 2010, through a lawful
"Consent of Shareholders in Lieu of Meeting", adopt, and consent to the adoption of the
following resolutions ("the First Consent of Shareholders"):
RESOLVED, that the Corporation elect Tom Madden as Vice President,
Treasurer and Chief Financial Officer ("CFO"), such officer to hold office until
the next annual meeting of the shareholders of the Corporation and until his
successor is elected and qualified; and it is further
RESOLVED, that the CFO shall have check signing authority on all checks of the
Corporation along with the current authorized officers of the Corporation and that
any disbursements by the Corporation in excess of $5,000 shall require the prior
written approval of the CFO; and it is further
RESOLVED, that the CFO shall be provided with a private office at the
Corporation's offices and shall have full access to all of the books and records of
the Corporation; and it is further
RESOLVED, that the CFO shall report directly to the audit committee of the
Corporation; and it is further
RESOLVED, that an audit committee of the Corporation be created, the members
of which shall be Henry Scanlon, R. Michael Stuckey and Judy Curiale, such
committee being authorized to act on behalf of the Board of Directors to hire and
coordinate with the auditors for the Corporation and perform such other functions
as are customary for an audit committee; and it is further
RESOLVED, that a compensation committee of the Corporation be created, the
members of which shall be Henry Scanlon, R. Michael Stuckey and Judy Curiale,
such committee being authorized to act on behalf of the Board of Directors of the
Corporation to address compensation matters including, without limitation, the
compensation package of the CFO; and it is further
RESOLVED, that the Board of Directors of the Corporation is hereby authorized
to take any action in furtherance of the foregoing resolutions.
A full and complete copy of the First Consent of Shareholders is annexed hereto as Exhibit "B."
9. By their appointment of Tom Madden as Chief Financial Officer, plaintiff
majority shareholders sought to put in place personnel, and appropriate committees, for the
important purpose of overseeing the financial affairs of the Corporation, to detect improper
5
management of the Corporation and/or use of the Corporation's assets, and to assist in the
orderly elimination of any irregularities he found.
10. Written notice of the First Consent of Shareholders was provided to both minority
shareholders, defendant Aversa, and non-party Lewis Grill, by letter dated October 20, 2010. A
copy of that notice is annexed hereto as part of Exhibit "B".
11. There can be no legitimate reason to oppose the actions undertaken by the
plaintiff majority shareholders, as they were in the best interest and for the protection of the
Corporation, its employees, and the shareholders as a whole. Defendant Aversa, not only a
shareholder, but the Corporation's President and CEO, has nonetheless refused to comply with
the resolutions of the shareholders, and using the Corporation for his own purposes, has refused
Tom Madden any entry onto the premises of the Corporation.
12. Consistent with their obligations to the Corporation, and their right to manage the
business and affairs of the Corporation as set forth in the Articles of Incorporation, the plaintiff
majority shareholders did, on October 21, 2010, through a lawful "Consent of Shareholders in
Lieu of Meeting", adopt, and consent to the adoption of resolutions amending the bylaws of the
Corporation as it relates to removal of directors, and removing former shareholder and director
Tom Grill from the board of directors ("the Second Consent of Shareholders"). The mere fact
that the shareholders adopted bylaws effecting the removal of directors does not amount to a
concession that the Corporation's governance rested with those directors. The sole right of the
shareholders to manage the Corporation remains in effect. The board of directors, even if it had
not been effectively later abolished by amendment of the bylaws, it could not frustrate the will of
the shareholders. Written notice of the Second Consent of Shareholders was provided to
6
defendant Aversa, and non-party minority shareholder Lewis Grill, by letter dated November 1,
2010. (Second Consent of Shareholders, with Exhibit and notice annexed hereto as Exhibit "C")
13. Again, Mr. Aversa has failed and refused to abide by the resolutions set forth in
the Second Consent of Shareholders.
14. The plaintiff majority shareholders did, on December 3, 2010, through a lawful
"Consent of Shareholders in Lieu of Meeting", adopt, and consent to the adoption of resolutions
amending and restating the bylaws of the Corporation to reflect that the Corporation's Articles of
Incorporation provides that the business and affairs of the Corporation shall be managed by its
shareholders instead of a board of directors; that the shareholders are vested with the sole and
exclusive authority to manage the Corporation; and abolishing the board of directors of the
Corporation (the "Third Consent of Shareholders"). Written notice of the Third Consent of
Shareholders was provided to all minority shareholders, and again, defendant Aversa objected to
(through his attorney) and refused to abide by the resolutions set forth in the Third Consent of
Shareholders. A copy of the Third Consent of Shareholders is attached hereto as Exhibit "D".
The Lockout
15. Pursuant to the direction of the shareholders, Tom Madden reported to the offices
of the Corporation to commence his duties on Monday, December 6, 2010. By letters dated
November 30 and December 3, 2010, notice that Mr. Madden would be reporting to the
Corporation for work on this date was provided to Mr. Aversa and his counsel. Copies of these
letters are annexed hereto as Exhibit "E". (Portions of these letters have been redacted to omit
reference to confidential communications between the parties, not relevant to the matters
presented herein.)
7
16. Mr. Madden reported to the offices of the Corporation on Monday, December 6,
2010 as stated that he would. Upon arriving at the lobby of the Corporation, Mr. Madden
provided his name to the receptionist/security, who then refused him entry and promptly turned
him away.
17. In that notice of Mr. Madden's arrival had been provided to Mr. Aversa and his
counsel, the direction to turn Mr. Madden away and refuse him entry to the offices of the
Corporation could only have been provided, and upon information and belief, was provided by
defendant Aversa.
18. Defendant's failure and refusal to permit Mr. Madden to assume his duties as
Vice President, Treasurer and CFO, was in direct contravention of the lawful Consent of the
Shareholders, as well as the united best interests of the Corporation, the employees, and the
shareholders as a whole. Without doubt, everyone concerned with the affairs of the Corporation
would reap the benefits of the appointed CFO's impartial oversight of the management of the
Corporation and/or use of the Corporation's assets, and the orderly elimination of any
irregularities he found - with the apparent exception of defendant Aversa, whose conduct would
fall under Mr. Madden's scrutiny.
19. Plaintiff majority shareholders have sought to address the concerns recently
brought to light regarding defendant Aversa's use of the Corporation as his personal cash cow,
and have taken actions within their rights as the majority shareholders of the Corporation, for the
united benefit of the Corporation, its employees and shareholders.
20. However, through his attorney, Aversa has refused to acknowledge the validity of
the above mentioned actions of the shareholders and, unless restrained and enjoined, will
continue to frustrate the will and the lawful actions of the shareholders, and will continue to
8
conduct the affairs of the Corporation for the sole benefit of himself and certain members of his
family. Defendant Aversa's refusal to abide by the lawful actions and directions of the
shareholders, including, but not limited to, refusing to allow Mr. Madden to assume his duties as
CFO, or even set foot within the offices of the Corporation, leaves plaintiffs with no alternative
but to seek the emergent injunctive relief requested herein.
21. On December 13, 2010, Plaintiffs filed their Verified Complaint with this Court.
A true and correct copy of the Complaint is attached hereto as Exhibit "F". Plaintiffs incorporate
the allegations of the Complaint herein by reference as if fully set forth at length.
Injunctive Relief
22. Unless the requested Special and Preliminary Injunction is granted, Plaintiffs will
suffer immediate and irreparable harm which cannot be compensated by damages by reason of
Defendant's conduct, specifically:
(1) Because Aversa refuses to acknowledge and abide by the lawful actions of the
shareholders, the plaintiffs, as majority shareholders, are being deprived of the right and
power to manage the business and affairs of the Corporation.
(2) The loss of this right is causing immediate and irreparable harm to their
lawful interests, in part because they are unable to monitor expenditures of the
Corporation's funds which, if improperly or unwisely dissipated, may not be subject to
recovery.
23. Plaintiffs have no adequate remedy at law.
24. Defendant will not suffer any appreciable injury if this Petition is granted because
the status quo will be restored and Defendant will merely be restrained from his unlawful
activities.
9
25. Defendant's wrongful conduct is actionable, the rights of Plaintiffs are clear and
Plaintiffs are likely to succeed on the merits of their claims.
WHEREFORE, Plaintiffs respectfully request that this Honorable Court enter an Order
in the form attached hereto.
Of Counsel:
Sharron E. Ash, Esquire
Hamburger Law Firm LLC
61 West Palisade Avenue
Englewood, NJ 07631
Tel: 201-705-1200
Fax: 201-705-1201
Respectfully Submitted,
DIL ORTH AXSON LLP
Victor P. Stabile, Esquire
I.D. No. 37449
Elizabeth J. Goldstein, Esquire
I.D. No. 73779
112 Market Street, 8th Floor
Harrisburg, PA 17101
Tel.: (717) 236-4812
Fax: (717) 236-7811
James J. Rodgers, Esquire
Id. No. 21635
1500 Market Street
Suite 3500E
Philadelphia, PA 19102-2101
Tel: (215) 575-7000
Fax: (215) 575-7200
Attorneys for Plaintiffs
10
•
0
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
OCTOBER 5, 2010
TO ALL WHOM THESE PRESENTS SHALL COME, GREETING:
THE SAGE CORPORATION
I, Basil L Merenda, Secretary of the Commonwealth of Pennsylvania
do hereby certify that the foregoing and annexed is a true and correct
copy of
ARTICLES OF INCORPORATION filed on August 28, 1989
which appear of record in this department.
?HE o IN TESTIMONY WHEREOF, I have
o/ M hereunto set my hand and caused
/ ^\0 the Seal of the Secretary's Office to
be affixed, the day and year above
written.
NSecretary of the Commonwealth-
DECE7Gt liba 11l •
ARTICLES OF INCORPORATION
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE - CORMRATION BUREAU
309 NORTH OFFICE BUILDING. HARRIWURG. PA 17170
("a NAME OF CO111PORATION (MUST CONTAIN A CORPORATE
The Sage Corporation
East Laurer Lane
PLEASE INDICATE (CHECK OW) TYPE CORPORATION:
C DOMESTIC SUSINM CORPORATION
FEE
X DOMESTIC BUSINESS CORPORATION
A CUM CORPORATION - COMPLETE BACK
DOMESTIC PROPESSIONAL CORPORATION
INTER BOARD LICENSE N0.
fDICATOR UNLIN EXINAMT UNDER 1B F.S. 2011-1
033 Hill COUNTY
Cumberland 26 Pennsylvania 17011
THE PLIAR?i M w nrfwff. w? r.
To engage in providing consultation, technical, marketing, and other
services and products to business, i:°lustry,,and to the general public.
i It 11 DIM IF NECOWY)
*?r-.-?- ?w•+.. v. Warne GROW of Shwirond PW VNw of 610414,01 WINM the Ce?PwatlOn BhNi hxw Awh e?1!Y to INw?
i11d A?w of INM 041 OMW q/ VMw }N
200 Shw If ArW $ 1 , 000 042 TeW AYMM>td COW 001 Tom of ExbWm
200 000. ndefinite
'`rtIIO?S?r rrd Addiwr of E'xol+ tnoavor?, and tM N(unbN wId Ciw of ilw« illbrmibx0 to by tdI Ir?ppep f
Oi1,OSZ
' Now { i t1NM' AdINN1 lftlNt, QW0 MAN, zip coal
,
Nwi*w III taw of am"
Gregg R. Aversa 245 East Laurer Lane, Camp Hill, =PA 1701 10
Tom Grill 301 E.47th St. New York, New York 10017 72
E+ I?'A'I"MAM HAS 414AVII SIGNED AND,?ALEO THE ARTICLES-OF INCORPORATION
. , 1 DAB.+00pi iis3 ?y
Ire Aversa
t
E ,
AUG 2 8 1909
.d M- ?- - -
J
896`33,94,,
The following provisions shalt regulate the status of the corporation as a closo corporation:
(a) (Strike out(i) or (ii) below, whichever is not applicable.)
XXAXXJMWF iBblidi ? 09 l?tiiii?l??7l ?fe MilmWa mft
X4D1X]R9R4Q7tblAMU YOWgIQ4144I4XX
(?i) All of the issued shares of the corporation of all classes. exclusive of treasury shares, shall be held of record by
not more than the smaller of twenty-five "shareholders" within the meaning of Subchapter S of the Internal
Revenue Code of 1954, as amended, or 30 persons.
(b) All of the issued sharp of an classes of the corporation shall be subject to one or more of the restrictions on transfer
permitted by section 613.1 of the Business Corporation Law (IS P.S. 11613. 1).
(c) The corporation shall make no offering of any of its shares of any class which would constitute a "public offering"
within the meaning of the Securities Act of 1933, as amended.
2. (Optional: BCL S 372B) A person (other than an estate) who is not an "individwl" or who is a "non-rosidant slim," in
either case within the meaning of the internal Revenue Code of 1954, as amended ("Code"), shall not be entitled to be a
holder of record of shares of the corpomdon. Only a person whose eorwnt is currently in effect to the election of the
corporation to be treated as an electing small business corporation under Subdtapter 3 of the code ad a ab eeWnWer wbe
bar scat afBrusathely re[heedlr esrtet* to the eleetln wlthis sixty days after be a*Im bb sleeks shalt be entitled to be
a holder of record of share of rte corporation.
3. (Optional: BCL f 382) The businm and affitirs of the corporation shall
rather ttun by a board of directors be managed by the shareholders of the corporation
.
4. (Optional: 13769) The status-'of the corporation as s "close corporation" within the meaning-of the Business Corporation
Law shall not be terminated riithout the Arnutdve vote or written consent of (an holders of) (w arshoidere holding
(FK755N AT LEAST r O4114Ros of the) shares of all ciessee of the corporation.
S. (Optional: BCL § 384B) (Any t MM11oltlwr) (ehsrohdldere holding A,?dtorr ) of the Ohara) of the corporation my
apply for the appointment of a grovlsional director of the corporation in the manner and upon the chcun stances provided by
statute.
6. (Optional: BCL 1386) (Any sgtreholdar) (AWholders holding._... ,,, of tM eltaree) of the corporation elsll
11-
Al .. -
have the right at will to causw 6e corpbtt tlon to.br djssolvpd by protseftle thrmtittntirprovided by statute.
k
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CERTIFICATE OF INCORPORATION
OFFICE OF THE SECRETARY OF THE COMMONWEALTH
TO ALL TO WHOM THESE PRESENTS SHALL CONS, GREETING:
MMRU, S, UNDER THE PROVISIONS OF THE LAWS OF THE COMMONWEALTH, THE SECRETARY OF THE
COMMONWEALTH IS AUTHORIZED;AND REQUIRED TO ISSUE A "CERTIFICATE OF INCORPORATION"
EVIDENCING THE INCORPORATION OF AN ENTITY.
MUMS, THE STIPULATIONS' AND CONDITIONS OF THE LAW HAVE BEEN FULLY COMPLIED WITH BY
CORPORATION THE (A CL08 CORPORATION)
TRRUFORE, KNOW YE, THAT SUBJECT TO THE CONSTITUTION OF THIS COMMONWEALTH, AND UNDER
THE AUTHORITY OF THE LAWS THEREOF, I DO BY THESE PRESENTS, WHICH I HAVE CAUSED TO BE
SEALED WITH THE GREAT SEAL OF THE COMMONWEALTH, DECLARE AND CERTIFY THE CREATION,
ERECTION AND INCORPORATION'OF THE ABOVE IN DEED AND IN LAW BY THE NAME CHOSEN
HEREI14BEFORE SPECIFIED.
SUCH CORPORATION SHALL HAVE AND ENJOY AND SHALL BE SUBJECT TO ALL THE POWERS, DUTIES,
REQUIREMENTS, AND RESTRICTIONS, SPECIFIED AND'ENJOTNED IN AND BY THE APPLICABLE LAWS OF
THIS COMMONWEALTH.
GIVEN UNDER MY HAND AND THE GREAT SEAL
OF THE COMMONWEALTH, AT THE CITY
OF HARRISBURG, THIS 28TH DAY OF
AUGUST IN THE YEAR OF OUR LORD
ONE THOUSAND NINE HUNDRED AND
EIGHTY-NINE AND OF THE
COMMONWEALTH THE TWO HUNDRED
FOURTEENTH.
GREGG AVERSA
245 E LAURER LANE
CARP HILL , PA 17011-0000
Q-UMA.P
SZCR .Y OF , W ONWEALTH
1523331
38963
1303-1305
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`fill'. SAGI: CORPORATION'
CONSEN`1` ()I- SHAR1-'I-101 DFAS
IN 1,11't 0 h11:L*FlNCi
Che undi rigncd he ing a majority of the. shareholders of The `urge Corpe.tration. a
Pennsylvania Cc)rporation (the "Corporation"), acting without a sleeting pursuant to Scction
l 766tbl the Pennsylvania Business Corporation Law (tire -BC I."), do hereby adapt, and consent
to the adoption 1-f", the tollowing resolutions:
P I?SOI,VF D, that the. Corporation elect `I'onr Madden as Vicc ['resident,
I rcasurer and C'h'ief Financial Officer ("Ch("). such ofticcr? to hc)Id office until thu next
arrnrtal meeting of the shareholders ofthe (.'urporation and until his sticccssor is etec€cd
and qualitied_ and it is further
I?.I?:SC)l_,Vfa), that the C1,0 shall have check signing <Authorit4 on all checka t?f tk?r?°
Corporation along, vN ith the current authorized officers of the Corporalian and that an..
disbursements by the Corporation in excess of 5-5,000 shall require the prior written
approvak ofthe (1,41, and it is further
Rl"SOL.VI I), that the CFO shall be provided ,vith a private office at the
Corpor Uon's offices and shall havc bill access to .ill of the hooks and rccordl, of the
t?urporution; and it is further
1%,1?;SC)LVF?.1), that the. C F0 shall report directly to the audit committee (11-01c
Corporation,, and it is further
RFSOL.VED, that an audit committee of the Corporation be created. the members
c)f which shall be Henry Scanlon, R. Michael Stuckey and Judy CurI ale. such coninuttec
heins, authorized to) act on behalf of the Board of Directors to hire and coordinate with the
auditors for the Corporation and pcrfornr such other functions as are. customary for "m
audit cf,}mrnittcc:, and it is further
R1?;SOl_VEI). that a compensation committee of the C m-poration be eructed, the
members c)t ti+hi?a) shall he llenry Scanlan, R. Nlichacl Stuckey and Judy Curial:.. stkc:h
comini.twe bring authorised to act on behalf ofthe Board of Direcu)rs ofthe C'oiporatu)n
to address Corn PeiIstrtion matters including, without limitation, the c,,)mpensation packaq.,c
ofthc: CH). and it is further
1USO INIA), that the. Nmrd of Directors of the. O)rporation is herch, authorized
to ta§;c anti action in furtherance of the foregoing resolutions.
1 '-u1_T E011l'tLOS ) l s? l XI'3sm Belie E_`ot le R;( t79=' f)St i ?
CICI to each
efTectlve tei davs futlOwi"P, the dAte that notice of these rc,scifutions has been haven
ttlfl(Y-}1t iiC{t't 4se'?ii? itA`' g7i5i C4)fl?.dillk'? ?i+?t'E?iO
JW,ti Cur:°=1-
::. 'Vt2rtl?Gt C'tEd=
IN 4 ITNESS WHFREOF, the undersigned have executed this consent as of the 14"' da.y.
of October, 1}113. In accordance with Section 1766(c) of BCL, these resolutions shall be
effective ten days following the date that notice of these resolutions has been given to cacti
shareholder who has not consented hereto.
Henry Scanlon
i
Jody C iirialc
1t. Michael smckey
IN VJI 1 m.; s W1 f FRE ,01 undersigned hav C e xecutcd till" COHS', rtt a5 o' the 1 •f``? if ?e
,wt' ()c(oher. 2(') l u In accordance with SUM 176 Mc ; o B CL. these: resowtion ; ;hall h4.
effective ten dLiys following the d3tc that twticc of these resc?lutios?« has Ixet? +'?,'e?? W each
hareiic?Idct tix>1i?? has nOt ck)nseiitcd heretic.
Henn Scanlan
Jriclr (:'uriale
R. Michael Stuckd+
( )c sober 0, 201()
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The Sage Corporation
4242 CARLISLE PIKE STE 177
CAMP HILL. PA 17011
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%Vl ll RFAS, the Corporation < Artit,'lc, till 11',:-1roraticnt ithc -,Articles-i prm ides ilea, the
hug>inca and alTair of Ow t'Aqxw.:a bw shall he nmm nd by its sh,acholijcps instead oI it board of
directors:
WlIl•.RI-AS. comrar? tr3 Artiulcs, the Corporation !on aloud Innyh a hood oQwkw:
VVlll,lz.EAK I on7 grill is m, longer it shatrel": c a oF Kc t"rl> Ymnon Ima i5 still a incmbct-
of the hoard (4 direct ors:
Al Rd:AS, ih;: to N11W' C I+. M {hill 1r0r1 111C hoald t?I?Giireet;?r,:
and
` l111"Rk' S, tlh, r<l?rErc?lu?l?..lcr? Jesire to ankh th rtl,iw ri?dw Uqxmm to yovidc,
that the rctlim al ol" a dirc k:lt.fr :hall re?..luirc the con,? , i ? w1- majoritti ()i the sharcholclc,,rs
Corporation.
RFSUI.VM that the ±'ytilaws oftlw ('(?rporation hc: am--ndi(l a,) pro\ idcd in
t:xhihtt A allacll:d hcv,:tt - arsai it is further
IZI:S(A XI I )- than Io n W H be rc,rt n cd x o director Mw ( `ti,rlmnitwn,
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of ()clobcar, ^201 O Iii acc.ordi " with `•+edion I766(c) ol'i (L, thu:;c i%:.s;>luliwis t)uls k:
? e.ctive ten days f Aloakg dw dw that mAce of ths; -<e re°;a:siutiCrtls has been given to each
shareholder who has iiot cow,,?ivc !,,e veto,
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iHF SAGE CORF'C)i',A`rION
{,^ Pennsylvania r:,,xporation).
AMENDMENT TO hYLAWS
Section =1,05(a) of the BylawF, is restated in its entirety to read is follows:
Removal by the shareholders. The rentir{;, hoard of directors, or any class of the board, of, any individual
y - , se by the vote of a majority of thr=
III tall
director may be removed from otfice w thout assignir.,
shareholders, or the holders of a class o, series of shat es entitled to elect directors of a clan, of directors
of the Corporation !n case, the trs.i,rrd, o a_ :lass of the t;o,asd or any one or more dir ectr)r5 are !?!7 winoved,
new directors nnay be ele(Ud a*,. 1 ne saute meeting.
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LAW F1Rh1 LLC
via facsimile
via facsimile only
? original to follow
TO: Gregg rlversa 717-975-3522
Lewis Grill 406-652-3129
The Sage Corporation
COPY TO:
This 17 page facsimile was sent to you on December 6, 2010 regarding
The Sage Corporation Shareholder Consent
FROM: Sandra Honegan-Pounder
REPLY FAX: (201) 705-1201
TELEPHONE: (201) 705-1200
memo
Our clients have requested drat we send you the attached documents.
CONFIDENTIALITY NOTICE
The document(s) contained in this transmission Is (are) confidential and may be protected by attorney-client privilege. It is
intended only for the use of the individual or entity named in the "To' field of this transmission cover sheet. If you are not
the intended recipient, be advised that any disclosure, copying, distribution, or action taken in reliance of the contents of
this information is strictly prohibited. If you have received this telecopy in error, please notify us immediately by telephone
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In compliance with iRS regulations, any tax advice contained or attached to this communication was not intended or
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promoting, marketing or recommending to another party any matters addressed in this communication.
Thank you.
61 WEST PALISADE AVENUE I ENGLEWOOD, NEW JERSEY 07631-2706 1 tel: 201.705-1200 iax 201.705-1201
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LAw FIRbf LLC
via facsimile
® catacs!m0e orgy
[] od9lral b fa:!ow
TO: Gregg Averse 717-715.3522
Lewis G%M 405.652-3129
The Sage Corp mdoa
COPY TO:
This 17 page facsimile was sent to you on December 6, 2010 regarding;
The Sage Corporation Shareholder Consent
FROM Saud= Hoaegaa-Pounder
PXMY rAX (201) 705.1201
TELEPHONE: {201)705-1200
memo
our clients Lace requested drat we send you the atmchad documeam
CONFIDENTIALITY NOTICE
The deccmen!(4 ccrta!rod h Ih:s transwEt:on is (xe}eonLdonYd and may ho prdeuted sy owmeyi :.r1 pdr:lna. I! Is
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t}• Ir!xdad redptem, to advised fist spy d edow", eopyiap, dstTfal;on, or sdlwf IAA In nefanee d Its cor3onIA of
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la OOrf#ahn;@ a3h IRS resuh4ans, any tax Woo cad3hted or VzOod to this awrinnivsatton was not Intended or
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LAW FIRM LLC
via facsimile
rIa tacd+r:? orcy
C09:010 so 10e71
TO: Gregg Averss 717.975-3522
Lcuas Grill 406.652.3129
The Ssgo Corpondon
COPY TO:
This 17 page facsimile was sent to you on December 6, 20 10 regazding;
The Sege Corporation Shareholder Consent
M14, SAUdas Honegan•Pouudcr
REPLY PAY_' (201) 705.1201
TELEPHONE- (201) 705.1200
memo
?Cuu dtcats have requested that we send you the atrachod documears.
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THE SAGE CORPORATION
CONSENT OF SHAREHOLDERS
IN LIEU OF MEETING
The undersigned being a majority of the shareholders of The Sage Corporation, a
Pennsylvania Corporation (the "Corporation"), acting without a meeting pursuant to Section
1766(b) the Pennsylvania Business Corporation Law (the "BCL"), do hereby adopt, and consent
to the adoption of, the following resolutions:
WHEREAS, the Corporation's Articles of Incorporation (the "Articles") provides
that the business and affairs of the Corporation shall be managed by its shareholders
instead of a board of directors;
WHEREAS, the shareholders are vested with the sole and exclusive authority to
manage the corporation; and
WHEREAS, the bylaws need to be amended and restated to reflect the foregoing.
NOW, THEREFORE, IT IS RESOLVED, that the amended and restated bylaws
attached hereto as Exhibit A be adopted as the bylaws of the Corporation; and it is further
RESOLVED, that the Corporation shall distribute $100,000 to its shareholders
effective immediately, and the officers of the Corporation, including Tom Madden, are
hereby authorized to make such distribution; and it is further
RESOLVED, that anyone purporting to act as a director shall have no authority to
manage the affairs of the corporation or to bind the corporation.
. have a eC Ws consent a s "t ' day
pArX
IN TINESS ?? , the y
of> l 2010. I a nd wifih ?`a ' 766Ea) No -hest resoltiu
e hve -ft days fo%% hsg lie date lbof, dot 'Ofthese? ns beO gs a ch
Aifebalder akoa atat wnsentvdbWdO.
I
i
3
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i
1 i
IN WITNESS WH REOF, the undersigned have executed this consent as of the 10 day
of October, 2010. In accordance with Section 1766(c) of BCL, these resolutions shall be
effective ten days following the date that notice of these resolutions has been given to each
shareholder who has not consented hereto.
Henry Scanlon
Judy' W
R. Michael Stuckey
IN WITNESS Vi HEREOF, the undersigned have executed this consent as of the 3`d day
of December, 2010. In accordance with Section 1766(c) of BCL, these resolutions shall be
effective ten days following the date that notice of these resolutions has been given to each
shareholder who has not consented hereto.
Henry Scanlon
Judy Curiale
R. Michael S ey
Exhibit A
TIIE SAGE CORPORATION
BYLAWS
ARTICLE I. - OFFICES
1. Registered Office. The registered office of this corporation in Pennsylvania shall be
at 4242 Carlisle Pike, Suite 111, Camp Hill, PA 17011, until otherwise established by an
amendment of the Articles or by the shareholders and a record of such change is filed with the
Department of State in the manner provided by law.
2. Additional Offices. This corporation may also have offices at such other places as the
shareholders may from time to time appoint or the business of this corporation may require.
ARTICLE II. - SEAL
1. CoMorate Seal. The corporate seal shall have inscribed thereon the name of this
corporation, the year of its organization and the words "Corporate Seal, PENNSYLVANIA."
The corporate seal may be affixed and attested but the affixation or attestation of the corporate
seal shall not be necessary for the valid execution, assignment or endorsement of any filing or
any document or any other purpose by this corporation under the statutes.
ARTICLE III. - MANAGEMENT OF COMPANY
1. Mangement of Corporation. The corporation is a statutory close corporation. The
Corporation's Articles of Incorporation provide that the business and affairs of the corporation
shall be managed by the shareholders.
2. Liability of Shareholders. Pursuant to Section 2332 of the Pennsylvania Business
Corporation Law of 1988, as amended (the "Pennsylvania BCL"), the shareholders of a close
corporation that is run by its shareholders act in the capacity of directors. The shareholders shall
not be personally liable, as such, for monetary damages for any action taken when acting in such
capacity, except as provided in the Pennsylvania BCL.
ARTICLE IV. - SHAREHOLDERS' MEETING
1. Location of Shareholders Meeting. Meetings of shareholders may be held at the
registered office of this corporation or at such other place within or without the Commonwealth
of Pennsylvania as may from time to time be selected.
2. Date of Annual Shareholder Meetings. The President may fix the date and the time of
the annual meeting of the shareholders but if no such date and time is fixed by the President, the
meeting shall be held on the 1st day of October in each year if not a legal holiday, and if a legal
holiday, then on the next secular day following at 10:00A.M. in each year, at which time the
shareholders shall transact such business as may properly be brought before the meeting. If the
annual meeting is not called and held within six months after the designated time, any
shareholder may call the meeting at anytime thereafter.
8992652
3. Failure to hold Annual Meeting. Failure to hold the annual or other regular meeting
of the shareholders at the designated time shall not work a dissolution of this corporation or
affect otherwise valid corporate acts.
4. Annual Meeting Notice. otice. Written notice of the annual meeting shall be given by or at
the direction of the Secretary or other authorized person to each shareholder entitled to vote
thereat, at least five days prior to the meeting unless a greater period is required by statute in a
particular case.
5. Special Meetings of Shareholders.
(a) Call of Special Meeting. Special meetings of the shareholders may be
called at any time by (i) the President or (ii), unless otherwise provided in the Articles, by
shareholders entitled to cast at least 20% of the votes that all shareholders are entitled to cast.
(b) Fixing of Time for Meeting. At any time, upon written request of any
person who has called a special meeting, it shall be the duty of the Secretary to fix the time of the
meeting which, if the meeting is called pursuant to a statutory right, shall be held not more than
sixty days after receipt of the request. If the Secretary neglects or refuses to fix the time of the
meeting, the person or persons calling the meeting may do so.
6. Business Transacted at Special Meetings of Shareholders. Business transacted at all
special meetings shall be confined to the objects stated in the notice and matters germane thereto.
7. Notice of Special Meetings of Shareholders. Written notice of a special meeting of
shareholders stating the time and place and object thereof, shall be mailed, postage prepaid, to
each shareholder entitled to vote thereat at such address as appears on the books of this
corporation, at least five days before such meeting, unless a greater period of notice is required
by statute in a particular case.
8. Quorum.
(a) General Rule. A meeting of shareholders of the corporation duly called
shall not be organized for the transaction of business unless a quorum is present, The presence
of shareholders, in person or by proxy, entitled to cast at least a majority of the votes that all
shareholders are entitled to cast on a particular matter to be acted upon at the meeting shall
constitute a quorum for the purposes of consideration and action on the matter.
(b) Withdrawal of a Quorum. The shareholders present, in person or by
proxy, at a duly organized meeting can continue to do business until adjournment
notwithstanding the withdrawal of enough shareholders to leave less than a quorum.
(c) Adjournment for Lac of OuM . If a meeting cannot be organized
because a quorum has not attended, those shareholders present and entitled to vote may, except
as otherwise provided in this section, adjourn the meeting to such time and place as they may
determine.
(d) Adjournments Generall . Those shareholders entitled to vote, in person or
2
8982652
by proxy, who attend a meeting of shareholders that has been previously adjourned for lack of a
quorum, for one or more periods aggregating at least fifteen days, although such shareholders
constitute less than a quorum as fixed in this section or in these bylaws, shall nevertheless
constitute a quorum for the purpose of acting upon any matter set forth in the notice of the
meeting if the notice states that those shareholders who attend the adjourned meeting shall
nevertheless constitute a quorum for the purpose of acting upon the matter. When a meeting of
shareholders is adjourned, it shall not be necessary to give any notice of the adjourned meeting
or the business to be transacted at an adjourned meeting, other than by announcement at the
meeting at which the adjournment is taken, unless the President fixes a new record date for the
adjourned meeting.
(e) Electing Officers at Adjourned Mep?=. In the case of any regular or
special meeting called for the election of officers, adjournment or adjournments may be taken
only from day to day, or for such longer periods, not exceeding fifteen days each, as the
shareholders present and entitled to vote, in person or by proxy, shall direct, until such officers
have been elected. Those shareholders entitled to vote who attend a meeting called for the
election of officers that has been previously adjourned for lack of a quorum, although such
shareholders constitute less than a quorum as fixed in this section or in these bylaws, shall
nevertheless constitute a quorum for the purpose of electing officers.
9. Shareholder Action. Unless otherwise provided in the Articles or these bylaws,
whenever any corporate action is to be taken by a vote of the shareholders of this corporation,
such action shall be authorized upon receiving the affirmative vote of a majority of the votes cast
by all of the shareholders entitled to vote thereon.
14. Proxies.
(a) General Rule. Every shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent to corporate action in writing without a meeting
may authorize another person to act for him by proxy. The presence of, or vote or other action at
a meeting of shareholders, or the expression of consent or dissent to corporate action in writing,
by a proxy of a shareholder shall constitute the presence of, or vote or action by, or written
consent or dissent of the shareholder for the purposes of this section. Where two or more proxies
of a shareholder are present, this corporation shall, unless otherwise expressly provided in the
proxy or proxies, accept as the vote of all shares represented thereby the vote cast by a majority
of such proxies and, if a majority of the proxies cannot agree whether the shares represented
shall be voted or upon the manner of voting the shares, the voting of the shares shall be divided
equally among those persons.
(b) Minimum Requirements. Every proxy shall be executed in writing by the
shareholder or by his duly authorized attorney-in-fact and filed with the Secretary of this
corporation. A photographic, facsimile or digital reproduction of a writing executed by a
shareholder or attorney-in-fact:
(1) may be treated as properly executed for purposes of this
subsection; and
8982652
(2) shall be so treated if it sets forth a confidential and unique
identification number or other mark furnished by the corporation to the shareholder for the
purposes of a particular meeting or transaction.
(c) Revocation. A proxy, unless coupled with an interest, shall be revocable
at will, notwithstanding any other agreement or any provision in the proxy to the contrary, but
the revocation of a proxy shall not be effective until written notice thereof has been given to the
Secretary of this corporation. An unrevoked proxy shall not be valid after three years from the
date of the execution unless a longer time is expressly provided therein. A proxy shall not be
revoked by death or incapacity of the maker unless, before the vote is counted or the authority is
exercised, written notice of the death or incapacity is given to the Secretary of this corporation.
11. Voting.
(a) Voting Rights of Shareholders Generally. Every shareholder of the
corporation shall be entitled to one vote for every share standing in his name on the books of the
corporation. In elections for officers, voting need not be by ballot unless required by vote of the
shareholders before the voting for election of officers begins. Except as otherwise provided in
the articles, in each election of officers every shareholder entitled to vote shall have the right to
multiply the number of votes to which he may be entitled by the total number of officers to be
elected in the same election by the holders of the class or classes of shares of which his shares
are a part and he may cast the whole number of his votes for one candidate or he may distribute
them among any two or more candidates.
(b) Voting b Fiduciaries and Pledgee . Shares of this corporation standing in
the name of a trustee or other fiduciary and shares held by an assignee for the benefit of creditors
or by a receiver may be voted by the trustee, fiduciary, assignee or receiver. A shareholder
whose shares are pledged shall be entitled to vote the shares until the shares have been
transferred into the name of the pledgee, or a nominee of the pledgee, but nothing in this section
shall affect the validity of a proxy given to a pledgee or nominee.
(c) Voting by Joint Holders of Shares. Where shares of this corporation are
held jointly or as tenants in common by two or more persons, as fiduciaries or otherwise: (i) if
one or more of such persons is present in person or by proxy, all of the shares standing in the
names of such persons shall be deemed to be represented for the purpose of determining a
quorum and this corporation shall accept as the vote of all the shares the vote cast by him or a
majority of such persons; and (ii) if the persons are equally divided upon whether the shares held
by them shall be voted or upon the manner of voting the shares, the voting of the shares shall be
divided equally among the persons without prejudice to the rights of the joint owners or the
beneficial owners thereof among themselves. If there has been filed with the Secretary of this
corporation a copy, certified by an attorney at law to be correct, of the relevant portions of the
agreement under which any shares are held or the instrument by which the trust or estate was
created or the order of court appointing them or of any order of court directing the voting of the
shares, the persons specified as having such voting power in the latest document so filed, and
only those persons, shall be entitled to vote the shares but only in accordance therewith.
(d) Voting by Corporate Shareholders. Any domestic or foreign corporation
4
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for profit or not-far-profit that is a shareholder of this corporation may vote by any of its officers
or agents, or by proxy appointed by any officer or agent, unless some other person is appointed
as its general or special proxy, by resolution of the shareholders of the corporation or a provision
of its articles or bylaws, a copy of which resolution or provision certified to be correct by one of
its officers has been filed with the Secretary of this corporation, in which case that person so
appointed shall be entitled to vote the shares.
12. Judges of Election. In advance of any meeting of shareholders, the President may
appoint judges of election, who need not be shareholders, to act at such meeting or any
adjournment thereof. If judges of election are not so appointed, the presiding officer of the
meeting may, and on the request of any shareholder or his proxy, shall, make such appointment
at the meeting. The number of judges shall be one or three. A person who is a candidate for
office to be filled at the meeting shall not act as a judge. In case any person appointed as a judge
fails to appear or fails or refuses to act, the vacancy may be filled by appointment made by the
President in advance of the convening of the meeting or at the meeting by the presiding officer
thereof. The judges of election shall determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, receive votes or ballots, hear and determine all challenges and
questions in any way arising in connection with the right to vote, count and tabulate all votes,
determine the result and do such acts as may be proper to conduct the election or vote with
fairness to all shareholders. The judges of election shall perform their duties impartially, in good
faith, to the best of their ability and as expeditiously as is practical. If there are three judges of
election, the decision, act or certificate of a majority shall be effective in all respects as the
decision, act or certificate of all. On request of the chairman of the meeting, or of any
shareholder or his proxy, the judges shall make a report in writing of any challenge or question
or matter determined by them, and execute a certificate of any fact found by them. Any report or
certificate made by them shall be prima facie evidence of the facts stated therein.
13. Shareholder Lists. The officer or agent having charge of the transfer books shall
make a complete list of the shareholders entitled to vote at any meeting of shareholders, arranged
in alphabetical order, with the address of and the number of shares held by each. The list shall
be produced and kept open at the time and place of the meeting and shall be subject to inspection
by any shareholder during the whole time of the meeting for the purposes thereof. Failure to
comply with the requirements of this section shall not affect the validity of any action taken at a
meeting prior to a demand at the meeting by any shareholder entitled to vote thereat to examine
the list. The original share register or transfer book, or duplicate thereof kept in this
Commonwealth, shall be prima facie evidence as to who are the shareholders entitled to examine
the list or share register or transfer book or to vote at any meeting of shareholders.
14. Action by Unanimous Consent of Shareholders in Lieu of a Meeting. Any action
required or permitted to be taken at a meeting of the shareholders or of a class of shareholders of
this corporation may be taken without a meeting if, prior or subsequent to the action, a consent or
consents thereto by all the shareholders who would be entitled to vote at a meeting are filed with
the Secretary.
15. Action by Majority Consent of Shareholders in Lieu of a Meeting. Any action
required or permitted to be taken at a meeting of the shareholders or of a class of shareholders
8982652
5
may be taken without a meeting upon the written consent of shareholders who would have been
entitled to cast the minimum number of votes that would be necessary to authorize the action at a
meeting at which all shareholders entitled to vote thereon were present and voting. Any
shareholder action effected by the procedures set forth in this subsection shall not become
effective until at least ten days after written notice of the action has been given to each
shareholder entitled to vote thereon who has not consented thereto. The written consent required
by this subsection may be given by proxy.
ARTICLE V.- OFFICERS
1. Officers. The executive officers of this corporation shall be elected or appointed by
the shareholders and shall be a President, Secretary, and Treasurer. The shareholders may also
choose one or more Vice-Presidents and such other officers, assistant officers and agents as it
may authorize from time to time, who shall hold their offices for such terms and shall have such
authority and shall perform such duties as from time to time shall be prescribed by the
shareholders. The President and Secretary shall be natural persons of full age. The Treasurer
may be a corporation, but, if a natural person, shall be of full age. Any number of offices may be
held by the same person. It shall not be necessary for the officers to be shareholders. The
corporation may secure the fidelity of any or all of the officers by bond or otherwise.
2. Resignations. Any officer may resign at any time upon written notice to the
corporation. The resignation shall be effective upon receipt thereof by the corporation or at such
subsequent time as may be specified in the notice of resignation.
3. Removal of Officers and Agents. Any officer or agent of the corporation may be
removed by the shareholders with or without cause. The removal shall be without prejudice to
the contract rights, if any, of any person so removed. Election or appointment of an officer or
agent shall not of itself create contract rights.
4. Standard of Care. Except as otherwise provided in these Bylaws, an officer shall
perform his or her duties as an officer in good faith, in a manner he or she reasonably believes to
be in the best interests of the corporation and with such care, including reasonable inquiry, skill
and diligence, as a person of ordinary prudence would use under similar circumstances. A
person who so performs his or her duties shall not be liable by reason of having been an officer
of the corporation.
5. Compensation. The salaries of all officers and agents of this corporation shall be
fixed by the shareholders. No officer shall be prevented from receiving a salary or other
compensation by reason of the fact that the officer is also a shareholder of the corporation.
6. Term of Office. The officers of this corporation shall hold office for one year and
until their successors are chosen and shall have qualified or until their earlier death, resignation
or removal. Any officer elected or appointed by the shareholders may be removed by the
shareholders whenever in their judgment the best interests of this corporation will be served
thereby.
7. The President. The President shall be the chief executive officer of this corporation;
he shall preside at all meetings of the shareholders; he shall have general and active management
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of the business of this corporation, and shall see that all orders and resolutions of the
shareholders are carried into effect, subject, however, to the right of the shareholders to delegate
any specific powers, except such as may be by statute exclusively conferred on the President, to
any other officer or officers of this corporation. He shall have the general powers and duties of
supervision and management usually vested in the office of President of a corporation. He shall
report to the shareholders on all matters which are material to, or have a material effect on, the
corporation.
8. The Secretary. The Secretary shall attend all meetings of the shareholders and act as
cleric thereof, and record all the votes of this Corporation and the minutes of all its transactions in
a book to be kept for that purpose. He shall give, or cause to be given, notice of all meetings of
the shareholders, and shall perform such other duties as may be prescribed by the shareholders or
President, and under whose supervision he shall be. He shall keep in safe custody the corporate
seal of this corporation, and when authorized by the shareholders, affix the same to any
instrument requiring it.
9. The Treasurer. The Treasurer shall have custody of the corporate funds and securities
and shall keep full and accurate accounts of receipts and disbursements in books belonging to
this corporation and shall keep the moneys of this corporation in a separate account to the credit
of this corporation. He shall disburse the funds of this corporation as may be ordered by the
shareholders, taking proper vouchers for such disbursements, and shall render to the President
and shareholders, at the annual meetings of the shareholders, or whenever they may require it, an
account of all his transactions as Treasurer and of the financial condition of this corporation.
ARTICLE VI. -VACANCIES
1. Vacancies in Offices, A vacancy in any office because of death, resignation,
removal, disqualification, or any other cause, shall be filled by the shareholders or by the officer
to which the power to fill such office has been delegated, as the case may be, and if the office is
one for which these bylaws prescribe a term, shall be filled for the unexpired portion of the term.
ARTICLE VII. -CORPORATE RECORDS
1. Minute Books and Share Register. The corporation shall keep complete and accurate
books and records of minutes of the proceedings of the incorporators and shareholders. Any
books, minutes or other records may be in written or electronic form or any other form capable
of being converted into written form within a reasonable time. The officer or agent having
charge of the transfer books for shares of the corporation shall make a complete list of the
shareholders entitled to vote at any meeting of shareholders, arranged in alphabetical order., with
the address of and the number of shares held by each. The share register shall be kept at either
the registered office of the corporation in this Commonwealth or at its principal place of business
wherever situated or at the office of its registrar or transfer agent. The list shall be produced and
kept open at the time and place of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting for the purposes thereof.
2. Inspection of Corporate Documents. Every shareholder shall, upon written verified
demand stating the purpose thereof, have a right to examine, in person or by agent or attorney,
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during the usual hours of business for any proper purpose, the share register, books and records
of account, and records of the proceedings of the incorporators and shareholders and to make
copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to the
interest of the person as a shareholder. In every instance where an attorney or other agent is the
person who seeks the right of inspection, the demand shall be accompanied by a verified power
of attorney or other writing that authorizes the attorney or other agent to so act on behalf of the
shareholder. The demand shall be directed to the corporation at its registered office in this
Commonwealth or at its principal place of business wherever situated.
ARTICLE VIII. - SHARE CERTIFICATES, DIVIDENDS, ETC.
1. Share Certi ates. The share certificates, if any, of this corporation shall be in such
form as approved by the shareholders, and shall state that the Corporation is incorporated under
the laws of the Commonwealth of Pennsylvania, the name of the person to whom issued, and the
number and class of shares and the designation of the series, if any, that the certificate represents.
The certificates shall be numbered and registered in the share ledger and transfer books of this
corporation, as they are issued. Every share certificate shall be executed, by facsimile or
otherwise, by or on behalf of this corporation in any manner approved by the shareholders. In
case any officer who has signed, or whose facsimile signature has been placed upon any share
certificate shall have ceased to be such officer because of death, resignation or otherwise before
the certificate is issued, it may be issued by the corporation with the same effect as if the officer
had not ceased to be such at the date of its issue.
2. Transfers of Shares. Transfers of shares shall be made on the books of this
corporation upon surrender of the certificates therefor, endorsed by the person named in the
certificate or by attorney, lawfully constituted in writing. No transfer shall be made inconsistent
with the provisions of Article 8 of the Uniform Commercial Code, and its amendments and
supplements.
3. Fixin of Rec rd Date.
(a) The President may fix a time prior to the date of any meeting of
shareholders, or the date fixed for the payment of any dividend or distribution, or the date for the
allotment of rights, or the date when any change or conversion or exchange of shares will be
made or go into effect, as a record date for the determination of the shareholders entitled to
notice of, or to vote at, any such meeting, or entitled to receive payment of any such dividend or
distribution, or to receive any such allotment of rights, or to exercise the rights in respect to any
such change, conversion, or exchange of shares, which time, except in the case of an adjourned
meeting, shall be not more than 90 days prior to the date of the meeting of shareholders. Only
shareholders of record on the date fixed shall be so entitled to notice of, or to vote at, such
meeting, or to receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights as the case may be, notwithstanding any transfer of any shares on the books
of this corporation after any record date fixed, as aforesaid. When a determination of
shareholders of record has been made as provided in this section for purposes of a meeting, the
determination shall apply to any adjournment thereof unless the President fixes a new record date
for the adjourned meeting.
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(b) If a record date is not fixed:
(1) The record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be at the close of business on the day next preceding
the day on which notice is given or, if notice is waived, at the close of business on the day
immediately preceding the day on which the meeting is held.
(2) The record date for determining shareholders entitled to (i) express
consent or dissent to corporate action in writing without a meeting; (ii) to call a special meeting
of the shareholders; or (iii) propose an amendment of the Articles, shall be the close of business
on the day on which the first written consent or dissent, request for a special meeting or petition
proposing an amendment of the Articles is filed with the Secretary.
4. Record Holder of Shares. The corporation shall be entitled to treat the person in
whose name any share or shares of the corporation stand on the books of the corporation as the
absolute owner thereof, and shall not be bound to recognize any equitable or other claim to, or
interest in, such share or shares on the part of any other person.
5. Lost. Destroyed or Mutilated Stock Certificate. The holder of any shares of the
corporation shall immediately notify the corporation of any loss, destruction or mutilation of the
certificate therefor, and the President may, in its discretion, cause a new certificate of certificates
to be issued to such holder, in case of mutilation of the certificate, upon the surrender of the
mutilated certificate or, in the case of loss or destruction of the certificate, upon satisfactory
proof of such loss or destruction and, if the President shall so determine, the deposit of a bond in
such form and in such sum, and with such surety or sureties, as it may direct.
6. Dividends. Subject to applicable law, the shareholders may declare and pay
dividends upon the outstanding shares of this corporation from time to time and to such extent as
they deem advisable, in cash, property or in shares of this corporation.
ARTICLE IX. - MISCELLANEOUS PROVISIONS
1. Check . All checks, notes, bills of exchange or other orders in writing of this
corporation shall be signed by such officer or officers as the shareholders may from time to time
designate.
2. fiscal Year. The fiscal year shall end on the 31 s' day of December of each year.
3. Notice. Whenever written notice is required to be given to any person by statute or
by the Articles of Incorporation or these Bylaws, it may be given to such person, either
personally or by sending a copy thereof by first class or express mail, postage prepaid, or by
telegram (with messenger service specified), or courier service, charges prepaid, or by telecopier,
to the facsimile number) or by email (to the email address) of the person appearing on the books
of this corporation, or in the case of shareholders, supplied by the shareholder to this corporation
for the purpose of notice. If the notice is sent by mail, telegraph or courier service, it shall be
deemed to have been given to the person entitled thereto when deposited in the United States
mail or with a telegraph office or courier service for delivery to that person or if sent by
telecopier or email, when sent. A notice of meeting shall specify the place, day and hour of the
8982652
meeting and, in the case of a special meeting, the general nature of the business to be transacted.
4. Waiver of Notice. Whenever any written notice is required to be given by statute, or
by the Articles or the Bylaws of this corporation, a waiver thereof in writing, signed by the
person or persons entitled to the notice, whether before or after the time stated therein, shall be
deemed equivalent to the giving of the notice. Except as otherwise provided by statute and in
these bylaws, neither the business to be transacted at, nor the purpose of, a meeting need be
specified in the waiver of notice of the meeting. In the case of a special meeting of shareholders,
the waiver of notice shall specify the general nature of the business to be transacted. Attendance
of a person, either in person or by proxy, at any meeting shall constitute a waiver of notice of the
meeting except where a person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting was not
lawfully called or convened.
5. Participation in Meetings by Telephone Conference Call. One or more persons may
participate in a meeting of the incorporators or of the shareholders, by means of conference
telephone or similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in a meeting pursuant to this section shall
constitute presence in person at such meeting.
ARTICLE X. - ANNUAL STATEMENT
1. Annual Business Statement. The President and Shareholders shall present at each
annual meeting a frill and complete statement of the business and affairs of this corporation for
the preceding year. Such statement shall be prepared and presented in whatever manner the
shareholders shall deem advisable and need not be verified by a certified public accountant.
2. Annual Financial Statement. Unless otherwise agreed between this corporation and a
shareholder of this corporation, the corporation shall furnish annual financial statements to the
shareholders, including at least a balance sheet as of the end of each fiscal year and a statement
of income and expenses for the fiscal year. The financial statements shall be mailed by the
corporation to each shareholder entitled thereto within 120 days after the close of each fiscal year
and, after the mailing and upon the written request, shall be mailed by this corporation to any
shareholder to whom a copy of the most recent annual financial statements have not previously
been mailed.
ARTICLE XI. - AMENDMENTS
1. Amendments to Bylaws. These Bylaws may be altered, amended, or repealed or new
bylaws may be adopted by the affirmative vote of a majority of the shareholders at any annual,
regular or special meeting of the shareholders, subject to the power of the shareholders to change
such action.
ARTICLE XII. - INDEMNIFICATION OF OFFICERS AND EMPLOYEES
1. Third Party Actions. Any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or proceeding, whether civil, criminal,
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administrative or investigative (other than an action by or in the right of this corporation) by
reason of the fact that he is or was an officer, employee, or agent of this corporation, or is or was
serving at the request of this corporation as a director, officer, employee or agent of another
domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or
other enterprise, shall be indemnified by this corporation against expenses (including attorneys'
fees) judgments, fines and amounts paid in settlement actually and reasonably incurred by him in
connection with such action or proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of this corporation, and, with
respect to any criminal action or proceedings, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceedings by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he reasonably
believed to be in, or not opposed to, the best interests of this corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.
2. Derivative Actions. Any person who was or is a party, or is threatened to be made a
party to any threatened, pending or completed action by or in the right of this corporation to
procure a judgment in its favor by reason of the fact that he is or was an officer, employee or
agent of this corporation, or is or was serving at the request of this corporation as a director,
officer, employee or agent of another domestic or foreign corporation for profit or not-for-profit,
partnership, joint venture, trust or other enterprise, shall be indemnified by this corporation
against expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of this corporation; except,
however, that no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to this corporation unless and only to
the extent that the Court of Common Pleas of the county in which the registered office of this
corporation is located or the court in which such action was brought shall determine upon
application that, despite the adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such expenses which the
Court of Common Pleas or such other court shall deem proper.
3. Mandatory Indemnification. To the extent that an officer, employee or agent as
above described has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in paragraph 1 or 2 of this Article or in defense of any claim, issue or
matter therein, they shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by them in connection therewith.
4. Procedure for Effectin Indemnification. Unless ordered by a court, any
indemnification under sections 1 or 2 of this Article shall be made only as authorized in the
specific case upon a determination that indemnification of the officer, employee or agent is
proper in the circumstances because they have met the applicable standard of conduct set forth in
such subsections. Such determination shall be made:
(a) By the shareholders by a majority vote of a quorum consisting of
shareholders who were not parties to such action or proceedings; or
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(b) If such quorum. is not obtainable, or if obtainable and a majority vote of a
quorum of disinterested shareholders so directs, by independent legal counsel in a written
opinion, or
5. Advancing Ex eases. Expenses (including attorney's fees) incurred in defending any
action or proceeding may be paid by this corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer,
employee or agent to repay such amount if it is ultimately determined that they are not entitled to
be indemnified by this corporation as authorized in this Article or otherwise.
6. Supplementary Coverage. The indemnification and advancement of expenses
provided by this Article shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote
of shareholders or disinterested shareholders or otherwise, both as to action in their official
capacity and as to action in another capacity while holding such office, and shall continue as to a
person who has ceased to be an officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
7. When Indemnification Not Made. Indemnification pursuant to this Article shall not
be made in any case where the act or failure to act giving rise to the claim for indemnification is
determined by a court to have constituted willful misconduct or recklessness.
8. Grounds. Indemnification pursuant to this Article, under any bylaw, agreement, vote
of shareholders or otherwise, may be granted for any action taken or any failure to take any
action and may be made whether or not this corporation would have the power to indemnify the
person under any provision of law except as provided in this Article and whether or not the
indemnified liability arises or arose from any threatened, pending or completed action by or in
the right of this corporation. Such indemnification is declared to be consistent with the public
policy of the Commonwealth of Pennsylvania.
9. Power to Purchase Insurance. This corporation may, by action of the shareholders,
purchase and maintain insurance on behalf of any person who is or was an officer, employee or
agent of this corporation, or is or was serving at the request of this corporation as a director,
officer, employee or agent of another domestic or foreign corporation for profit or not-for-profit,
partnership, joint venture, trust or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such, whether or not this
corporation would have the power to indemnify him against such liability under the provisions of
this Article. Such insurance is declared to be consistent with the public policy of this
Commonwealth.
10. Creation of a Fund to Secure or Insure Indemnification. This corporation may create
a fund of any nature, which may, but need not be, under the control of a trustee, or otherwise
secure or insure in any matter its indemnification obligations, whether arising under or pursuant
to this Article or otherwise.
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0 0
? ?"? I- -r
ll
1,AW FIRM L L C
November .30. 2010
1/7,1 F,'AlAIL ,6,-1-11,I) RA 1.i3t'1 Rj,.S.S
Bruce R. Spicer
McNees Wallace & Nurit:lt, I-L.(.;
100I'ine Street, RO. BOX 1'106
Harrisburg, 'PA 17108-1166
RE: The Satre Corporation
De=ir Mr. Spicer
I.his is in response to your letters dated (..)ctober 26, 2010 and October 28, 2010 and your
ern,uled proposal dated November 15, 2010.
Your October 28 letter asserts that Tom Grill was elected by cumulative votuig. However,
we have no evidence of this. For our records, please provide us with evidence that Tom Grill ,vas
elected by cumulative voting, In my event, dais is irrelcwant as the Articles of Incorporation provide
that the business and affairs of the corporation shall be managed by rte shareholders rattier than a
board of directors. Desyite operating tluouglt 'A 1)011-d in the Past, the ultitnaW authority to manage
the corporation lids with the shareholders. The creation of an audit committee of the corpotatiorn;
creation of a compensation a>rrtrrurtee of the cotporatiou; election of Torn Maddeta as tic
corporation's vice president and chief lanarimil officer and anieud.ment co the hylaws of the
corporation were. validly audtor_ized by the written conscm of the shareholders and, under
Pcstns}dea.nia law, such actions becanit: effective ten days after such consents were sent to the ncm-
conscnhug, shareholders.
A:, dw properly elected Chef FinancW Officer of the corporation, `l'iArt Madden will slm:t
his employment on Monday December 6 in the cotporation' main office. Please inform your client.
.%4r. Madden should be pro-,ndc:d with an office, access to all of the corporation's book; and reconls
and any assistance necessary or required for him to perform ltis duties to dte corporation as sc.t
forth in the shareholders consent.
Y! WV-', 'I VAL1%A,)F AVLNUk I LNG -1-WOOD, NCW )Y.101:1" U-6 il270J 1 al. 2,'), 1200 1 4,; Gut-,!ty5-12u1
PAGE 2 ov 2
Very truly yours,
HANMuRG$R LAw Fim, nc
By:
Corey S. Kupfer
cc: Henry Scanlon
Judy Curiale
I Michael Stuckey
LA?ILLC
December 3, 2M 1)
1 1. 11:.11. U1.(
Bruce K. Spict•r
?lc'?ccs WAIIarc & Nurick, 1.1.(:
M0 Pint, titrcc t, i1.( ). Box 1 166
1 Llrrisburg, 11.1 1711 IS 1166
Itl',: The S:sgc Cm-poration
Dva .1I1. Sptccr
This IClll'r responds to \our letter dated December', 2010. Your conclusion that The Sagc-
t W,por moll (thc "Corporarlon") is managed by a board of directors because the Bylaws so provides
and because tiles Corporation's share certificates have nn such notice is errorlrous.
I:Irst, %.ou correctly point to Section 3332(a) of the Business Corporation l.:tw of 1988, :uS
antendccl (thc'Ili(which provides that a bylaw may provide That the corporation he manar cd h1
its sh:urholders rather than by a board of directors. I Iowever, \()u misconstrue the effect of ?,ccn„rl
2332(a) by assuming; rh;it such prwlsion must be ul the bylaw, ()f• the orporanon. I 'ndcr ?-ecttl In
I--)04(c) (,f tics it•('I., arlt pi-twision of the li(:I. that refers to a rule its sel forth u1 the bcl,m> of .1
c41rpiamion shall bc• c•onstrncd to include and be satisfied hr :1111 such rule ua set forth u1 rile
\rticlcs. 'I'bis is ncw caw cc•Ith the Corporation, the arnele, of which provide I'm- manago.-mcm be this
Sharcholdcrs ralhcr than by a hoard of directors. Note also that Section 1504(a) does not pcrrml
b1hm." to contain provisions inconsistent with thc• amities, rcltdenng ncc prorisiom.? it1 tilt-
(.(lrporamin's Bylaws wg-irdilIg tilt board of directors invalid. Further, your references to ticcnoll
1I31;1,; on anu•ndnrcnls to (hc arricic.s of bylaws are irrelevant because the provision was, cmmlineci
u1 the, riginaI article, I)I 11u-I,rpUration.
, '?crotltl, foil 11111111 t„ Ihc• Lick. I,I :1 1111IRT (,II tilt' ;hare ccrtltwaic•s as a further tvjm 11 II,
Inval)(1a1c nit, prorision rCLI11tring imimigenlcnt b1 shareholders. 'lit our knowlcdt;c there \cerc 1111 't I*
share cerrill-mcs Issued. In any event, ditto is I whing In Sccuon 2132(ct ihlu iug"t.."ts Ihl. -dull.
NIc,rcm,c•r, ?mcc• tour chem xns one of Ili(- original Two incorporators and signed the arrlclc's of
Incorp(mation containing nce provision rcyutrung managenurnr by the sharchroldcrs, he rim hard] 1•
cl:unl not to be I'm nonce. I hct•cforc•, your argumcnr rhar the Corporation is managed by a hoard (,t
directors fails under both Iww and tact.
A \\I II 1'tl l:•11„ 111 \'I I l"(11.1 A11(Ili. \I'\i 111141.1 ?,%ii.!"??i? :I•h :I I.'I .l:"', 1. r!
Na. 2 or 2
Stncc [lie Corporation is n?ailiged by its shareholder's and the Bylaw, contain n?c'xhd
provisions rc}ardiny; a ho:?rd of dirt•c:tors, eru-lnscd is a st?tu•cholder consent clmtirminI, than tha•
(:orporaraon has no directors and :anundinf, and rewiring tilt: Bylaws to comply with the M.,I.. I'llc
resolution al,) approves :a nr:utdatory d?strihuuon to sharvii,,lders.
You claim ?n tour letter thou dlr. Madden's c•n?plovme•nt was ttc,t properly- authorized and that
it is nor producrn•e" for hire to :arrive at the C:orpora?tion's offices on Nlonday, Dccumber G.
Because it is clear that tile shareholders have sole management authority over the Corporation and
have property authot•ind his employment, rest assured that lie will :arrive on Monday. U*c expect that
he he giver? Complete access to the Owporuions books and records in his calrnciry as 1'u;e
President, Treasurer and Chief Financial Officer, mid that no unauthorized disbursements will be
made in violation of the earlier shareholder consent.
1'c1, v truly yours,
I hNmt'wGltlt 1..11\' 1 IIt11, l.La
C;orcy S. Ktrl rr
Atmchc•d:
Ct•• I lentt• Scanlon
lush (:uncle'
11, Michael Stuckey
tCf?2iJtG69 '< !'/'
COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY, PENNSYLVANIA
HENRY SCANLON, JUDY CURIALE,
R. MICHAEL STUCKEY
Plaintiffs, Civil No.
V.
Civil Action-Equity
GREGG R. AVERSA,
Defendant
NOTICE
You have been sued in court. If you wish to defend against the claims set forth in the following
pages, you must take action within twenty (20) days after this complaint and notice are served,
by entering a written appearance personally or by attorney and filing in writing with. the court
your defenses or objections to the claims set forth against you. You are warned that if you fail to
do so the case may proceed without you and a judgment may be entered against you by the court
without further notice for any money claimed in the complaint or for any other claim or relief
requested by the plaintiff. You may lose money or property of other rights important to you.
YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT
HAVE A LAWYER GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS
OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER. IF
YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO
PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL
SERVICES TO ELIGIBLE PERSONS AT A REDUCED FEE OR NO FEE.
LAWYER REFERENCE SERVICE
CUMBERLAND COUNTY LAWYER REFERRAL SERVICE
Cumberland County Bar Association
32 S. Bedford Street
Carlisle, PA 17013
717-249-3166 or 800-990-9108
8995901
COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY, PENNSYLVANIA
HENRY SCANLON, JUDY CURIALE,
R. MICHAEL STUCKEY
Plaintiffs, Civil No.
V.
Civil Action-Equity
GREGG R. AVERSA,
Defendant
AVISO
Le han demandado en corte. Si usted desea defender contra las demandas dispuestas en las
paginas siguientes, usted debe tomar la accion en el plazo de veinte (20) dias despues de esta
queja y se sirve el aviso, incorporando un aspecto escrito personalmente o y archivando en
escribir con la corte sus defensas u objeciones a las demandas dispuestas contra usted el abogado
le advierte que que si usted no puede hacer asi que el caso puede proceder sin usted y un juicio se
puede incorporar contra usted compra la corte sin aviso adicional para cualquier, dinero
demandado en la queja o para cualquier otra demanda o relevacion pedida por el demandante.
Usted puede perder el dinero o la caracteristica de otra endereza importante a usted.
USTED DEBE LLEVAR ESTE PAPEL SU ABOGADO INMEDIATAMENTE. SI USTED NO
HACE QUE UN ABOGADO VAYA A O LLAME POR TELEFONO LA OFICINA
DISPUESTA ABAJO. ESTA OFICINA PUEDE PROVEER DE USTED LA INFORMACION
SOBRE EMPLEAR A UN ABOGADO. SI USTED NO PUEDE PERMITIRSE AL HIRE A
UN ABOGADO, ESTA OFICINA PUEDE PODER PROVEER DE USTED LA
WFORMACION SOBRE LAS AGENCIAS QUE LOS SERVICIOS JURIDICOS DE LA
OFERTA DE MAYO A LAS PERSONAS ELEGIBLES EN UN HONORARIO REDUCIDO O
NINGUN HONORARIO
SERVICIO DE REFERENCIA LEGAL
CUMBERLAND COUNTY LAWYER REFERRAL SERVICE
Cumberland County Bar Association
32 S. Bedford Street
Carlisle, PA 17013
717-249-3166 or 800-990-9108
8995901
COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY, PENNSYLVANIA
HENRY SCANLON, JUDY CURIALE,
R. MICHAEL STUCKEY
Plaintiffs,
V.
GREGG R. AVERSA,
Defendant
Civil No.
Civil Action-Equity
COMPLAINT IN EQUITY
NOW COME Plaintiffs, Henry Scanlon, Judy Curiale and R. Michael Stuckey., by and
through their attorneys, Dilworth Paxson LLP, and file their Complaint in Equity as follows:
PARTIES
1. Plaintiff Henry Scanlon is an adult individual who is the owner of 36°X0 of the
shares of The Sage Corporation, a Pennsylvania statutory close corporation ("the Corporation"),
which has its principal place of business at 4242 Carlisle Pike, Suite 177, Camp Hill,
Pennsylvania 17011.
2. Plaintiff Judy Curiale is an adult individual who is the owner of 9% of the shares
of the Corporation.
3. Plaintiff R. Michael Stuckey is an adult individual who is the owner of 90Xi of the
shares of the Corporation.
8995901
4. Collectively, plaintiffs own 54% of the shares of the Corporation, and will
sometimes be referred to herein as the majority shareholders.
5. Defendant Gregg R. Aversa is the President of the Corporation, who maintains a
business address at 4242 Carlisle Pike, Suite 177, Camp Hill, Pennsylvania 17011, and who also
resides in Cumberland County. He is a minority shareholder in the Corporation, owning 41 % of
the shares of the Corporation.
JURISDICTION AND VENUE
6. This Court has jurisdiction over the parties and claim presented herein.
7. Venue is appropriate in the Court of Common Pleas of Cumberland County,
Pennsylvania in that it is where Defendant resides and regularly conducts business.
NATURE OF ACTION
8. This case is about a corporate officer who refuses to accept and abide by the
actions of the majority shareholders of the Corporation, who, under the Articles of Incorporation
have the right and power to manage the business and affairs of the Corporation, rather than a
board of directors.
FACTUAL BACKGROUND
9. The Corporation was formed in 1989. A copy of the Articles of Incorporation
("Articles") are attached hereto as Exhibit A. In the Articles, the Corporation elected, pursuant
to predecessor to the statutory provision now known as § 2332 of the Pennsylvania Business
Corporation Law of 1988, as amended (the "BCL"), to be managed by or under the direction of
the shareholders rather than by a board of directors. 15 Pa. C.S.A. § 2332. Defendant Aversa
was one of the incorporators who signed the Articles.
8995901 2
10. Since its inception, Aversa has acted as President and conducted the affairs of the
Corporation on a day-to-day basis.
11. Plaintiffs are investors who have placed their trust in fellow shareholder,
defendant Aversa, to manage the day-to-day affairs of the Corporation.
12. Although the Corporation at some point adopted bylaws that provide for a board
of directors, to the extent that the bylaws conflict with the provisions of the Articles, the Articles
govern, because Section 1504 (a) of the BCL permits bylaws to contain provisions not
inconsistent with the Articles. 15 Pa. C.S.A. §1504 (a).
13. Over the course of the past several months, the plaintiff majority shareholders
have become aware, in connection with a due diligence examination for potential sale, that
defendant Aversa interfered and undermined the ability to have a complete and thorough due
diligence analysis performed at that time. However, even the limited and cursory examination
that was performed cast a spotlight on certain irregularities alarming to the plaintiff majority
shareholders.
14. Through the course of the cursory and limited access to information provided by
defendant Aversa, it has become known to the plaintiff majority shareholders that defendant
Aversa, despite his duties to plaintiffs, the Corporation and his fellow minority shareholders, is
running the Corporation as his own personal cash cow. Defendant Aversa has named several of
his relatives on the Corporation payroll, including his wife, daughter, son-in-law and one relative
who does not reside in Pennsylvania and has another full-time job. Although Aversa has
historically had certain family members on the payroll who were performing services for the
Corporation, it was only recently revealed that in fact, there were additional family members of
899590 1 3
his, and others on the payroll, and that the assets of this Corporation had become akin to
Aversa's personal checking account. The Corporation is footing the bill for defendant Aversa's
personal luxurious country club membership, his cars, the country club membership for one of
his relatives, and is paying generous bonuses to him and his family members on the payroll, all
to the detriment of the Corporation and its shareholders. In addition, plaintiffs believe that
Aversa has been manipulating the profits of the Corporation otherwise accruing to the benefit of
all shareholders by paying excessive year-end bonuses.
15. On October 14, 2010, by Consent of Shareholders in Lieu of Meeting pursuant to
§ 1766 (b) of the BCL ("First Consent of Shareholders"), signed by all plaintiffs, constituting the
holders of a majority of the shares of the Corporation, Tom Madden was elected as Vice
President, Treasurer and Chief Financial Officer. The First Consent of Shareholders created
audit and compensation committees of the Corporation, of which plaintiffs are the members.
Pursuant to § 1766 (c) of the BCL, the actions taken by Consent became effective ten days after
written notice of such Consent has been delivered to each shareholder entitled to vote thereon
who has not consented thereto. Notice of the First Consent of Shareholders was sent to the
minority shareholders.
16. By their appointment of Tom Madden as Chief Financial Officer, plaintiff
majority shareholders sought to put in place personnel, and appropriate committees, for the
important purpose of overseeing the financial affairs of the Corporation, to detect improper
management of the Corporation and/or use of the Corporation's assets, and to assist in the
orderly elimination of any irregularities Mr. Madden may find.
8995901 4
17. Written notice of the First Consent of Shareholders was provided to both minority
shareholders, defendant Aversa, and non-party Lewis Grill, by letter dated October 20., 2010.
18. There can be no legitimate reason to oppose the actions undertaken by the
plaintiff majority shareholders, as they were taken in the best interest and for the protection of
the Corporation, its employees, and the shareholders as a whole. Defendant Aversa, not only a
shareholder, but the Corporation's President and CEO, has nonetheless refused to comply with
the resolutions of the shareholders, and continuing to use the Corporation's assets for his own
purposes, and has refused Tom Madden any entry onto the premises of the Corporation.
19. Consistent with their obligations to the Corporation, and their right to manage the
business and affairs of the Corporation as set forth in the Articles of Incorporation, the plaintiff
majority shareholders did, on October 21, 2010, through a lawful "Consent of Shareholders in
Lieu of Meeting", adopt, and consent to the adoption of resolutions amending the bylaws of the
Corporation as it relates to removal of directors, and removing former shareholder and director
Tom Grill from the board of directors ("the Second Consent of Shareholders"). Written notice of
the Second Consent of Shareholders was provided to defendant Aversa, and non-party minority
shareholder Lewis Grill, by letter dated November 1, 2010.
20. Again, Mr. Aversa has failed and refused to abide by the resolutions set forth in
the Second Consent of Shareholders.
21. The plaintiff Majority Shareholders did, on December 3, 2010, through a lawful
"Consent of Shareholders in Lieu of Meeting", adopt, and consent to the adoption of resolutions
amending the bylaws of the Corporation to restate and reflect that the Corporation's Articles of
Incorporation provides that the business and affairs of the Corporation shall be managed by its
899590 1 5
shareholders instead of a board of directors; that the shareholders are vested with the sole and
exclusive authority to manage the Corporation; and abolishing the Board of Directors of the
Corporation (the "Third Consent of Shareholders"). Written notice of the Third Consent of
Shareholders was provided to all minority shareholders, and again, defendant Aversa has refused
to abide by the resolutions set forth in the Third Consent of Shareholders.
22. Pursuant to the direction of the Shareholders, Tom Madden reported to the offices
of the Corporation to commence his duties on Monday, December 6, 2010. By letters dated
November 30 and December 3, 2010, notice that Mr. Madden would be reporting to the
Corporation for work on this date was provided to Mr. Aversa and his counsel.
23. Mr. Madden reported to the offices of the Corporation on Monday, December 6,
2010 as stated that he would. Upon arriving at the lobby of the Corporation, Mr. Madden
provided his name to the receptionist/security, who then refused him entry and promptly turned
him away.
24. In that notice of Mr. Madden's arrival had been provided to Mr. Aversa and his
counsel, the direction to turn Mr. Madden away and refuse him entry to the offices of the
Corporation could only have been provided, and upon information and belief, was provided by
defendant Aversa.
25. Through his attorney, Aversa has refused to acknowledge the validity of the
above mentioned actions of the majority shareholders and, unless restrained and enjoined, will
continue to frustrate the will and the lawful actions of the shareholders, and will continue to
conduct the affairs of the Corporation for the sole benefit of himself and members of his family.
899590 1 6
COUNT I - INJUNCTIVE RELIEF
26. Plaintiffs repeat the allegations set forth in the foregoing paragraphs 1 through 25.
27. Because Aversa refuses to acknowledge and abide by the lawful actions of the
shareholders, the plaintiffs, as majority shareholders, are being deprived of the right and power
to manage the business and affairs of the Corporation.
28. The loss of this right is causing immediate and irreparable harm to their lawful
interests, in part because they are unable to monitor expenditures of the Corporation's funds
which, if improperly or unwisely dissipated, may not be subject to recovery.
WHEREFORE, Plaintiffs demand that an injunction issue:
1. Compelling defendant Aversa, in his capacity as President of the Corporation, to
comply with and abide by the actions of the shareholders of the Corporation;
2. Enjoining defendant Aversa from taking actions contrary to the actions of the
shareholders of the Corporation;
3. Compelling defendant to provide access to the premises of the Corporation, and
provide full cooperation to Tom Madden, Chief Financial Officer, in the discharge of his
responsibilities as CFO of the Corporation, in accordance with the actions of the shareholders of
the Corporation;
4. Enjoining Aversa from paying any employee bonuses not required under a pre-
existing contractual obligation; and
5. that plaintiffs be awarded costs and such other and further relief as the Court
deems just and proper.
899590 1 7
Respectfully Submitted,
DIL RTH PAXSON LLP
Victor P. Stabile, Esquire
I.D. No. 37449
Of Counsel: Elizabeth J. Goldstein, Esquire
I.D. No. 73779
Sharron E. Ash, Esquire 112 Market Street
8th Floor
Hamburger Law Firm LLC ,
Harrisburg
PA 17101
61 West Palisade Avenue ,
Tel.: (717) 236-4812
Englewood, NJ 07631 Fax: (717) 236-7811
Tel: 201-705-1200
Fax: 201-705-1201 James J. Rodgers, Esquire
Id. No. 21635
1500 Market Street
Suite 3500E
Philadelphia, PA 19102-2101
Tel: 215-575-7000
Fax: 215-575-7200
Attorneys for Plaintiffs
899590 1
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
OCTOBER 5, 2010
TO ALL WHOM THESE PRESENTS SHALL COME, GREETING:
THE SAGE CORPORATION
I, Basil L Merenda, Secretary of the Commonwealth of Pennsylvania
do hereby certify that the foregoing and annexed is a true and correct
copy of
ARTICLES OF INCORPORATION filed on August 28, 1989
which appear of record in this department.
HE Cc IN TESTIMONY WHEREOF, I have
0
hereunto set my hand and caused
Y ?oy the Seal of the Secretary's Office to
\m1i be affixed, the day and year above
written.
r
\___ •
?N?Y1.V AN Secretary of the Commonwealth
MMM4 IAwa oil
ARTICLES OF INCORPORATION
COMMhNMALTH OF PENNSYLVANIA
OEPA IMIS t OP STATE - CORPORATION BUREAU
106 NQ" OFFICE BUILDING, ?HAII URG, PA 17190
014 14"d OP CORPORATION (MUBT CONTAIN A OORPORATB 1
The Sages Corporation
East Laurer Lane
PLEASE INDICATE (CHIN( ON) lrypE COAPORA'now
C3 DOMESTIC BUSINESS CORPORATION
X DOMESTIC BUSINESS CORPORATION DOMESTIC BUSINESS CORPORATION
A CUQU CORPORATION - COMPLETE BACK
DOMESTIC PROPE8410NAL CORPORATION
ENTER BOARD LICENBE N0.
UNLeii EXEWT UNDER IS P.B. 9909 11
FEE
$76,00
%IWHill . Vwl? I T 913 WTATF-,
?? 11 Cumberland Pennsylvania 17011
To engage in providing consultation, technical, marketing, and other
services and products to business, i:°''ustry,,and to the general public.
AGN'ON x 11 MW IP NECEBBARY)
a? of Slww, CIaMM of Sl W4W#nd Par Vi1W of 114M VVINO M"ilnPfl OMR-ShN1 hrw Al wWwft to IMw,
i ENM iba? lrrd CIs, of tHia,w 041 emw Pn vow;;;
`
200 srw. If Any $1,000 a9 To1 A'I*wInd CSI W
?Il??ilWilil;-n??r .. 200 OQ
1 1°NwrN arld Addrw d EaoA I"Oorpo,ow, a 0lft mwrA frdnd CIM of illrrw
1 4wd ojbw%w to by am Inreepp or
wwai .
low
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nvv fI - 1?74w
001 Twmof Ex'Iw m
[ndefinite
NunNla? a CIaM Of Won
10
BlgNib AND MA
LBD TNB ARTICLU-01; INCORPORATION
.e 63,1303
1 '
? 9 6 "313D4,
1. The following provisions shall regulate the status of the corporation as a clone corporation:
(a) (Strike out(l) or (ii) below, whichever is not applicable.)
Xa[IMAC IXIM iiii?sllY ]iRtiiC l@ti6iitYiKr ilGYdi7 QQ?i Iq[ rBdfi)F?bi?
(;h) All of the issued shoe: of the corporation of all classes, exclusive of treasury Shares, shall be held of record by
not more than the smaller of twenty-five "shareholders" within the meaning of Subchapter S of the Internal
Revenue Code of 1954, as amended, or 30 persons.
(b) A11 of the issued shares of all classes of the corporation stall be sutdw to one or more of the restrictions on trans or
f
permitted by section 613.1 of the Business Corporation Law ( I S PS. 11613. 1).
(c) Tbo corporation shall take no offering of any of its shares of any class which would constitute a "public offering"
withbt the meaning of the Securities Act of 1933, as amended.
2. (Optional: BCL § 3726) A person (other than an auto) who Is not an " htdlvidual" or who is a "tan-resident alien," in
either sae within the meaning of the internal Revenue Code of 1954, a amended ("Code"), shall not be entitled to be a
balder of record of stares of the corporation. Only a person whose mom Is currently In affea to the election of the
corporation to be treated as an-electing anon business corporation under Subchapter S of the Code awl l a slWrobsider wt e
baa°s o rely reftoft mumwi to the elaedn withisr sixty days after he act im bis s%014 shall be entitled to be
a holder of record of shares Z& corporstlon.
3. (Optional: BCL ; 382) The buftess and affsirs of the corporation ahdi be managed by the shareholders of the corporation
rather titan by a board of directors.
4. (Optional:; 3768) The ststup-of the W lion as a "close corporation" within the meaning-of the $usiness Corporation
Law shall not be terminated *ithout the Armative vote or wtltten com lent of (an holders on (rbarmoldtm holding
Corr AT LFAST rwo of the) sham of 69 claseee of the corporation.
3. (Optional: SCL § 3848) (Any shueholder) (shamh8lden holding of the that") of the corporation may
statere. for the appointment of s t!'sAtCrtOl
firovisfotal°dltector of the corporation in them Aftrand .upon the clremmtancaa provided by
statute.
ti. (Optional: BCL 1386) (way sb rehs>k#ar). (tilMrlhoklers holding..,,,.,., orlow dwat) of the corporation shau
have the right at wtu to cause she cerptlftft to -1b#! 4111101 td by tt! t t
a ln,ttl?' ntinttir provided by stittuts.
c?nonluealtli
of v prftp/bd Tj?4
39epart nt Mate
CERTIRiC ATE OF INCORPORATION
OFFICE OF THE SECRETARY OF THE COMMONWEALTH
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WUMS, UNDER THE PROVISIONS OF THE LAWS OF THE COMMONWEALTH, THE SECRETARY OF THE
COMONWEALTH IS AUTHORIZED;.AND REQUIRED TO. ISSUE A "CERTIFICATE OF INCORPORATION"
EVIDENCING THE INCORPORATION OF AN ENTITY.
NORBAS, THE STIPULATIONS AND CONDITIONS OF THE LAW HAVE BEEN FULLY COMPLIED WITH BY
OMM CORPORATION THE (,A OLOft G01tPo0pAT 1 ON )
TOMMORE, KNOW YS, THAW SUBJECT TO THE CONSTITUTION OF THIS COMMONWEALTH, AND UNDER
THE AUTHORITY OF THE LAWS TWIEREOF, I'DO BY THESE PRESENTS, WHICH I.HAVE CAUSED TO BE
SEALED WITH THE GREAT SEAL OF THE COlOiONVULTH, DECLARE AND CERTIFY THE CREATION,
ERECTION AND INCORPORATION'OF THE ABOVE IN DEED AND IN LAW BY THE NAME CHOSEN
HEREINBEFORE SPECIFIED.
SUCH CORPORATION SHALL HAVE AND ENJOY AND S94L HE SUBJECT TO ALL THE POWERS, DUTIES,
REQUIREMENTS, AND RESTRICTIONS, SPECIFIED AND'?ENJOINED IN AND BY THE APPLICABLE LAWS OF
THIS COMMONWEALTH.
GIVEN UNDER MY HAND AND THE GREAT SEAL
OF THE COMMONWEALTH, AT THE CITY
OF HARRISBURG, THIS 28TH DAY OF
AUGUST IN THE YEAR OF OUR LORD
ONE THOU$AND NINE HUNDRED AND
EIGHTY-NINE AND OF THE
COMMONWEALTH THE TWO HUNDRED
FOURTEENTH.
GUGG AVERSA
243 E LAUKIR LANE
CAMP HILL , PA 170110000
Cog.,
4
U S96' Y OF WONWEALTH
1523331
38963
1303-1305
VERIFICATION
I, R. Michael Stuckey, hereby state that I am a shareholder in The Sage Corporation, and
one of the plaintiff Majority Shareholders herein. I verify that the statements set forth in the
foregoing Complaint are true and correct to the best of my knowledge, information and belief. I
understand that these statements are made subject to the penalties set forth in IS Pa.C.S. § 4904
relating to unsworn falsification to authorities.
December 41 2010 R Michael S
VERIFICATION
I, R. Michael Stuckey, hereby state that I am a shareholder in The Sage Corporation, and
one of the plaintiff majority Shareholders herein. I verify that the statements set forth in the
foregoing Petition for Special Injunction are true and correct to the best of my knowledge,
information and belief. I understand that these statements are made subject to the penalties set
forth in 18 Pa.C.S. § 4904 relating to unworn falsification to authorities.
December, 2 2010 R. Michael Stu e
b
HENRY SCANLON, JUDY CURIALE,
R. MICHAEL STUCKEY,
Plaintiffs
vs.
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY,
PENNSYLVANIA
No. 10-7624
GREGG R. AVERSA,
Defendant CIVIL ACTION - LAW
ENTRY OF APPEARANCE
Please enter the appearance of James P. DeAngelo on behalf of Defendant in
the above-referenced matter.
McNEES WALLACE & NURICK LLC
By
Aames P. DeA to
I.D. No. 62377
100 Pine Street
P.O. Box 1166
Harrisburg, PA 17108-1166
(717) 232-8000
Date: December 14, 2010
Attomeys for Defendant
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CERTIFICATE OF SERVICE
The undersigned hereby certifies that on the 14th day of December 2010, a true
and correct copy of the foregoing document was served upon the following by U.S. mail,
postage prepaid:
Elizabeth J. Goldstein, Esq.
Victor P. Stabile, Esq.
Dilworth Paxson LLP
112 Market Street, 8th Floor
Harrisburg, PA 17101
James J. Rodgers, Esq.
Dilworth Paxson LLP
1500 Market Street, Suite 3500E
Philadelphia, PA 19102-2101
James P. DeAngelo
to Defendant
. J
HENRY SCANLON,
JUDY CURIALE,
R. MICHAEL STUCKEY,
PLAINTIFFS
V.
GREGG R. AVERSA,
DEFENDANT
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
: NO. 10-7624 CIVIL
ORDER OF COURT
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AND NOW, this 16th day of December, 2010, upon consideration of Plaintiffs'
Complaint in Equity and Petition for Special and Preliminary Injunction,
IT IS HEREBY ORDERED AND DIRECTED that:
1. A Rule shall issue upon Gregg R. Aversa to show cause why the preliminary
injunction should not be granted;
2. Defendant shall file an Answer to Plaintiffs' Petition for Special and
Preliminary Injunction on or before December 22, 2010;
3. A preliminary hearing on the Petition for Special and Preliminary Injunction
will be held on Monday, December 27, 2010, at 10:00 a.m. in Courtroom No.
2 of the Cumberland County Courthouse, Carlisle, Pennsylvania.
IT IS FURTHER ORDERED AND DIRECTED that pending further Order of Court
the Defendant is enjoined from:
A. Taking any action, contrary to the actions of the shareholders of the
corporation or failing to comply with and abide by the actions of the
shareholders of the corporation;
B. Dispersing year end or other bonus compensation to any employees of
the corporation;
C. From removing any books, records or other property belonging to
the
corporation from any premises owned or leased by the corporation to
include the principle place of business at 4242 Carlisle Pike, Suite 177,
Camp Hill, Pennsylvania 17011.
By the Court,
lizabeth J. Goldstein, Esquire
Attorney for Plaintiffs
Fax: 236-7811
/James DeAngelo, Esquire
Attorney for Defendant
Fax: 237-5300
bas
CO -
ICE rrt,3 t `z
M. L. Ebert, Jr.,
J.
DEC 13 2010
COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY, PENNSYLVANIA
HENRY SCANLON, JUDY CURIALE,
R. MICHAEL STUCKEY
Plaintiffs,
V.
GREGG R. AVERSA,
Defendant
Civil No. 10 -;62`f
Civil Action-Equity
MEMORANDUM OF LAW IN SUPPORT OF
PETITION FOR SPECIAL AND PRELIMINARY INJUNCTION
1. INTRODUCTION
The parties to this action are all shareholders in The Sage Corporation ("the
Corporation"). Unique in circumstance, this case presents a minority shareholder refusing to
abide by the actions of the majority shareholders, thereby depriving them of their right and
power to manage the business and affairs of the Corporation. Without any support in applicable
law, and directly contrary to the Corporation's Articles of Incorporation, the minority
shareholder, also the Corporation's President and Chief Executive Officer, has abused his power
to exert exclusive control over the Corporation's operations and assets, to the exclusion of the
majority shareholders.
Having become aware of certain alarming operational and financial irregularities, and
before coming to this Court to request special and preliminary injunctive relief, plaintiffs
attempted, in a peaceable and orderly manner, to exercise their right to oversee and manage the
Corporation, lawfully appointing a Chief Financial Officer, Audit Committee and Compensation
Committee. Apparently motivated by self-interest, defendant Aversa has rebuffed each of
plaintiffs' efforts, going so far as to lock out the Chief Financial Officer on Monday, December
6, 2010, refusing him entry to the offices of the Corporation, and depriving him of any
opportunity to oversee the operations and assets of the Corporation. Left with no alternative,
plaintiffs request special and preliminary injunctive relief from this Court, to compel defendant
to abide by the lawful actions of the shareholders, including permitting the Chief Financial
Officer to commence work, and enjoining defendant from paying year-end bonuses or otherwise
squandering the assets of the Corporation.
II. FACTUAL BACKGROUND'
The Sage Corporation ("the Corporation") is a Pennsylvania statutory close corporation,
engaged directly and through its various subsidiary and affiliated companies primarily in the
operation of truck driver training schools throughout the country including in Pennsylvania.
Pursuant to § 382 of the Pennsylvania Business Corporation Law of 1933 (which is the source of
the current §2332 of the Business Corporation Law of 1988, as amended) (the "BCL"), the
Corporation elected to be governed by its shareholders, and specifically provided in its Articles
of Incorporation: "The business and affairs of the corporation shall be managed by the
shareholders of the corporation rather than by a board of directors."z Since initially investing in
the Corporation, plaintiffs Scanlon, Curiale and Stuckey have consistently been, and continue to
be, the majority shareholders of the Corporation, collectively owning fifty-four (54%) percent of
the shares. Of the remaining forty-six (46%) percent minority of shares, forty-one (41%) percent
' All facts stated herein are set forth in the accompanying Verified Petition for Special and Preliminary Injunction.
2 A copy of the Corporation's Articles of Incorporation annexed as Exhibit "A" to the accompanying verified
Petition for Special and Preliminary Injunction.
2
is owned by defendant Gregg R. Aversa. The remaining five (5%) percent minority share is
owned by non-party minority shareholder, Lewis Grill.
At the crux of this matter is the important distinction that in this case, the Corporation
voluntarily elected to be managed by its shareholders, rather than by a board of directors, and
affirmatively provided for this election in its Articles of Incorporation ("the Articles"). Although
the Corporation at some point adopted bylaws that provide for a board of directors, to the extent
that the bylaws conflict with the provisions of the Articles, the Articles govern, because § 1504
(a) of the BCL permits bylaws to contain provisions not inconsistent with the Articles. 15 Pa.
C.S.A. §1504 (a). Consistent with their election that the Corporation be shareholder-managed,
plaintiffs Scanlon, Curiale and Stuckey, the majority shareholders, placed their trust and
confidence in minority shareholder and defendant herein, Aversa, to manage the Corporation as
the Corporation's President and CEO. Over the years, that management has produced little fiscal
reward for the plaintiff majority shareholders, in some years requiring plaintiffs to cover their tax
obligations out of pocket. More recently, upon demand, plaintiffs have received enough to cover
their tax obligations and little more.
Over the course of the past several months, the plaintiff majority shareholders have
become aware, in connection with a due diligence examination for potential sale, that defendant
Aversa interfered and undermined the ability to have a complete and thorough due diligence
analysis performed at that time. However, even the limited and cursory examination that was
performed cast a spotlight on certain irregularities alarming to the plaintiff majority shareholders.
Through the course of the cursory and limited access to information provided by
defendant Aversa, it has become known to the plaintiff majority shareholders that defendant
Aversa, despite his duties to plaintiffs, the Corporation and his fellow minority shareholders, is
3
running the Corporation as his own personal cash cow. Defendant Aversa has placed several of
his relatives on the Corporation payroll, including his wife, daughter, son-in-law and one relative
who does not reside in Pennsylvania and has another full-time job. Although Aversa has
historically had certain family members on the payroll who were performing services for the
Corporation, it was only recently revealed that in fact, there were additional family members of
his, and others on the payroll, and that the assets of this Corporation had become akin to
Aversa's personal checking account. The Corporation is footing the bill for defendant Aversa's
personal luxurious country club membership, his cars, the country club membership for one of
his relatives, and is paying generous bonuses to him and his family members on the payroll, all
to the detriment of the Corporation and its shareholders.
Alarmed by this information, consistent with their obligations to the Corporation, and
their right to manage the business and affairs of the Corporation as set forth in the Articles of
Incorporation, the plaintiff majority shareholders did, on October 14, 2010, through a lawful
"Consent of Shareholders in Lieu of Meeting", adopt, and consent to the adoption of the
following resolutions ("the First Consent of Shareholders"):
RESOLVED, that the Corporation elect Tom Madden as Vice President,
Treasurer and Chief Financial Officer ("CFO"), such officer to hold office until
the next annual meeting of the shareholders of the Corporation and until his
successor is elected and qualified; and it is further
RESOLVED, that the CFO shall have check signing authority on all checks of the
Corporation along with the current authorized officers of the Corporation and that
any disbursements by the Corporation in excess of $5,000 shall require the prior
written approval of the CFO; and it is further
RESOLVED, that the CFO shall be provided with a private office at the
Corporation's offices and shall have full access to all of the books and records of
the Corporation; and it is further
RESOLVED, that the CFO shall report directly to the audit committee of the
Corporation; and it is further
4
RESOLVED, that an audit committee of the Corporation be created, the members
of which shall be Henry Scanlon, R. Michael Stuckey and Judy Curiale, such
committee being authorized to act on behalf of the Board of Directors to hire and
coordinate with the auditors for the Corporation and perform such other functions
as are customary for an audit committee; and it is further
RESOLVED, that a compensation committee of the Corporation be created, the
members of which shall be Henry Scanlon, R. Michael Stuckey and Judy Curiale,
such committee being authorized to act on behalf of the Board of Directors of the
Corporation to address compensation matters including, without limitation, the
compensation package of the CFO; and it is further
RESOLVED, that the Board of Directors of the Corporation is hereby authorized
to take any action in furtherance of the foregoing resolutions.3
By their appointment of Tom Madden as Chief Financial Officer, plaintiff majority
shareholders sought to put in place personnel, and appropriate committees, for the important
purpose of overseeing the financial affairs of the Corporation, to detect improper management of
the Corporation and/or use of the Corporation's assets, and to assist in the orderly elimination of
any irregularities Mr. Madden may find. Written notice of the First Consent of Shareholders was
provided to both minority shareholders, defendant Aversa, and non-party Lewis Grill, by letter
dated October 20, 2010.4
There can be no legitimate reason to oppose the actions undertaken by the plaintiff
majority shareholders, as they were taken in the best interest and for the protection of the
Corporation, its employees, and the shareholders as a whole. Defendant Aversa, not only a
shareholder, but the Corporation's President and CEO, has nonetheless refused to comply with
' A full and complete copy of the First Consent of Shareholders annexed as Exhibit "B" to the accompanying
Verified Petition for Special and Preliminary Injunction.
a Copy of Notice annexed as part of Exhibit "B" to accompanying Verified Petition for Special and Preliminary
Injunction.
5
the resolutions of the shareholders, and continues to use the Corporation's assets for his own
purposes, has refused Tom Madden any entry onto the premises of the Corporation.
Consistent with their obligations to the Corporation, and their right to manage the
business and affairs of the Corporation as set forth in the Articles of Incorporation, the plaintiff
majority shareholders did, on October 21, 2010, through a lawful "Consent of Shareholders in
Lieu of Meeting", adopt, and consent to the adoption of resolutions amending the bylaws of the
Corporation as it relates to removal of directors, and removing former shareholder and director
Tom Grill from the board of directors ("the Second Consent of Shareholders"). The mere fact
that the shareholders adopted bylaws effecting the removal of directors does not amount to a
concession that the Corporation's governance rested with those directors. The sole right of the
shareholders to manage the Corporation remains in effect. The board of directors, even if it had
not been effectively later abolished by amendment of the bylaws, it could not frustrate the will of
the shareholders.
Written notice of the Second Consent of Shareholders was provided to defendant Aversa,
and non-party minority shareholder Lewis Grill, by letter dated November 1, 2010.5 Again, Mr.
Aversa has failed and refused to abide by the resolutions set forth in the Second Consent of
Shareholders.
The plaintiff majority shareholders did, on December 3, 2010, through a lawful "Consent
of Shareholders in Lieu of Meeting", adopt, and consent to the adoption of resolutions amending
and restating the bylaws of the Corporation to reflect that the Corporation's Articles of
Incorporation provides that the business and affairs of the Corporation shall be managed by its
s Second Consent of the Shareholders with Exhibit and Notice annexed as Exhibit "C" to accompanying Verified
Petition for Special and Preliminary Injunction.
6
shareholders instead of a board of directors; that the shareholders are vested with the sole and
exclusive authority to manage the Corporation; and abolishing the board of directors of the
Corporation (the "Third Consent of Shareholders"). Written notice of the Third Consent of
Shareholders was provided to all minority shareholders, and again, defendant Aversa objected to
(through his attorney) and refused to abide by the resolutions set forth in the Third Consent of
Shareholders.b
The Lockout
Pursuant to the direction of the shareholders, Tom Madden reported to the offices of the
Corporation to commence his duties on Monday, December 6, 2010. By letters dated November
30 and December 3, 2010, notice that Mr. Madden would be reporting to the Corporation for
work on this date was provided to Mr. Aversa and his counsel.' Notice of Mr. Madden's arrival
was communicated only to Mr. Aversa, as the President and CEO. In accordance with the
notices provided, Mr. Madden reported to the offices of the Corporation on Monday, December
6, 2010. Upon arriving at the lobby of the Corporation, Mr. Madden provided his name to the
receptionist/security, who then refused him entry and promptly turned him away. In that notice
of Mr. Madden's arrival had been provided to Mr. Aversa, the direction to turn Mr. Madden
away and refuse him entry to the offices of the Corporation could have been provided only, and
upon information and belief, was provided by defendant Aversa.
6 Third Consent of Shareholders annexed as Exhibit "D" to accompanying Verified Petition for Special and
Preliminary Injunction.
Copies of these letters are annexed as Exhibit "E" to the accompanying Verified Petition for Special and
Preliminary Injunction. These letters have been redacted to omit reference to confidential communications between
the parties, not relevant to the matters presented herein.
7
Defendant's failure and refusal to permit Mr. Madden to assume his duties as Vice
President, Treasurer and CFO, was in direct contravention of the lawful Consent of the
shareholders, and is also contrary to the best interests of the Corporation, the employees, and the
shareholders as a whole. Without doubt, everyone concerned with the affairs of the Corporation
would reap the benefits of the appointed CFO's impartial oversight of the management of the
Corporation and/or use of the Corporation's assets, and the orderly elimination of any
irregularities he found - with the apparent exception of defendant Aversa, whose conduct would
fall under Mr. Madden's scrutiny.
Plaintiff majority shareholders have sought to address the concerns recently brought to
light regarding defendant Aversa's use of the Corporation as his personal cash cow, and have
taken actions within their rights as the majority shareholders of the Corporation, for the united
benefit of the Corporation, its employees and shareholders. However, through his attorney,
Aversa has refused to acknowledge the validity of the above mentioned actions of the
shareholders and, unless restrained and enjoined, will continue to frustrate the will and the lawful
actions of the shareholders, and will continue to conduct the affairs of the Corporation for the
sole benefit of himself and members of his family. Defendant Aversa's refusal to abide by the
lawful actions and directions of the shareholders, including, but not limited to, refusing to allow
Mr. Madden to assume his duties as CFO, or even set foot within the offices of the Corporation,
leaves plaintiffs with no alternative but to seek the emergent injunctive relief requested herein.
8
III. ARGUMENT
a. Standard for GrantinE an Injunction
In general, a petition for the entry of an injunction should be granted where:
• The requested injunction is necessary to prevent immediate
and irreparable harm that cannot be adequately
compensated by damages;
• Greater injury would result from refusing an injunction
than from granting it and that issuance of the requested
injunction will not harm other interested parties in the
proceedings;
• The requested injunction will properly restore the parties to
their status as it existed immediately prior to the alleged
wrongful conduct;
• The petitioner can demonstrate that it is likely to prevail on
the merits of its case;
• The injunction sought is reasonably suited to abate the
offending activity; and
• The requested injunction will not adversely affect the
public interest.$
Where, as here, officers of a company have engaged in conduct inconsistent with
obtaining the "highest value reasonably available" for a Corporation, the Courts of this State
have granted preliminary injunctive relief. The Court of Common Pleas of Allegheny County
recently granted a preliminary injunction to block a tender offer based on a breach of fiduciary
duty by a company's board chairman. In re Portec Rail Products, Inc. Shareholders Litigation,
158 PLJ 279 (C. P. Allegheny 2010) the court there granted an injunction, based on the failure
of the board to maximize shareholder value, such as Aversa's conduct has, and threatens to
a The York Group, Inc. v. Yorktowne Caskets, Inc., 924 A.2d 1234, 1241 (Pa. Super. Ct. 2007) (citing to
Summit Towne Centre, Inc. v. Shoe Show of Rocky Mt., Inc., 828 A.2d 995, 1001 (Pa. 2003)).
9
continue to do, unless restrained. Citing Delaware cases, the Portec Rail court, noted that
"[c]ourts have frequently found injunctive relief to be appropriate where, ...[directors] have
failed to obtain the highest value reasonably available." There can be no reasonable doubt that
the shareholders' resolutions being rebuffed by the defendant, also President of the Corporation,
would protect the assets and the efficient operation of the Corporation, protect the investment of
the shareholders, and maximize the value of the Corporation. Aversa's actions are contrary to
the best interests of the Corporation, serve only his desire to continue a luxurious lifestyle on the
company tab, and are not consistent with his duty to maximize the value of the Corporation. As
such, special and preliminary injunctive relief is essential.
b. Plaintiff Maiority Shareholders Face Immediate and Irreparable
Harm if Aversa Is Not Compelled to Abide by Their Lawful Actions,
and Enjoined from Ignoring and Otherwise Frustrating Their Right
to Participate in the Management of the Corporation
Unless the requested Special and Preliminary Injunction is granted, Plaintiffs will suffer
immediate and irreparable harm which cannot be compensated by damages by reason of
Defendant's conduct. Because Aversa refuses to acknowledge and abide by the lawful actions of
the majority shareholders, the plaintiffs, as majority shareholders, are being deprived of the right
and power to manage the business and affairs of the Corporation. The actions of defendant
Aversa in refusing to acknowledge and abide by the actions of the majority shareholders causes
irreparable harm, as it frustrates the shareholders' right to vote, which our Supreme Court has
described as "among the most fundamental rights of ownership of voting shares." Reifsnyder v.
Pittsburgh Outdoor Advertising Co., 173 A.2d 319, 322 (Pa. 1961). As the court noted in
Jewelcor ,Management, Inc. v. Thistle Group Holdings, Inc., 60 D.&C. 4th 391, 400-402 (C.P.
Phila. 2002), "Interference with a shareholder's election rights has been held to constitute
10
immediate and irreparable harm by courts both inside and outside the Commonwealth." 60
D.&C. 4th at 408 (citations omitted). See Blasius Indus. Inc. v. Atlas Corp., 564 A.2d 651 (Del.
Ch. 1988).
Defendant Aversa is squarely interfering with the shareholders' rights, by failure to abide
by their lawfully proclaimed resolutions. Moreover, Aversa's defiant actions are exacting
immediate and irreparable harm to their lawful interests, by preventing their lawful and
authorized monitoring of expenditures of the Corporation's funds which, if improperly or
unwisely dissipated, may not be subject to recovery. This is perhaps never more true than now,
as the end of the year approaches, and, it is anticipated, defendant Aversa will significantly
dissipate the assets of the Corporation, paying significant bonuses to himself, and his family
members on the Corporation's payroll in the handful of days that remain in this year.
Plaintiffs have no adequate remedy at law. While the defendant's underlying
management of the Corporation generally, as well as its assets, may be the subject of months, if
not years, of litigation between the parties, if defendant Aversa is permitted to continue to pilfer
this Corporation, to fill its payroll ledger with names of his family members and to fund his
luxurious lifestyle - including country club memberships for him and at least one of his relatives
- the damage to the Corporation and its shareholders will be incalculable and the dissipated
funds may be beyond recovery.
Unless enjoined, defendant Aversa's defiant actions, including refusing to allow the
Chief Financial Officer to enter the offices of the Corporation and commence his job duties, will
continue. Aversa will be emboldened to continue his pattern of conduct designed to disrupt and
impede the implementation of the resolutions of the shareholders, endangering the fiscal health
of the Corporation in the process.
c. Plaintiff Maiority Shareholders Have a Clear Right to Relief
The Articles of Incorporation clearly demonstrate that responsibility for the management
and oversight of the Corporation rests exclusively with the shareholders. Defendant Aversa's
refusal, as a minority shareholder, President and CEO of the Corporation, to abide by the lawful
actions of the majority shareholders in exercising these rights is without foundation in law or
fact.
While a corporation is ordinarily managed by a board of directors, Pennsylvania
corporation law expressly allows a "statutory close corporation," by definition a corporation with
a small number of shareholders, to elect to be managed by its shareholders rather than through a
board of directors. This right to make this election existed under the law in effect at the time of
the formation of the Corporation, the Business Corporation Law of 1933, § 382, and has been
continued in § 2332(a) of the Business Corporation Law of 1988, as amended ("BCL"), which
came into effect after the formation of the Corporation.9 The election was made in the Articles,
as the optional provision under § 382 in effect at the time, and appears clearly on the document.
There can be no doubt that the Corporation's election, in its original Articles of Incorporation,
placing the exclusive right to manage the corporation in the hands of the shareholders is valid
and enforceable.
While § 2332(a) provides that the election for shareholder management may be provided
in the bylaws, it is beyond dispute that when such an election is included in the Articles, it is
equally effective. For example, § 2332(b) notes that "Such a provision may be inserted in the
articles or bylaws..." Moreover, under § 1504(c) of the BCL, any provision of the BCL that
9 Pursuant to Section 2301, the current law is applicable to corporations that exercised the right to be governed as a
close corporation under the Business Corporation Law of 1933.
12
refers to a rule as set forth in the bylaws of a corporation shall be construed to include and be
satisfied by any such rule as set forth in the Articles. See Committee Comment to § 2332:
"Under 15 Pa.C.S. § 1504(c), the provisions that this section authorizes to be set forth in the
bylaws may also be set forth in the articles." This is the case with the Corporation, the articles of
which provide for management by the shareholders rather than by a board of directors.
When they adopted bylaws for the Corporation, the shareholders decided to establish a
board of directors, consisting of all of the shareholders, to operate the Corporation. Initially, all
of the directors were shareholders, and all of the shareholders were directors, meaning that the
presence of a board of directors had the same effect as § 2332 of the BCL, which provides that
shareholders who manage a statutory close corporation are deemed to be directors. 15 Pa. C.S. §
2332(a)(2). However, several years ago, the shares owned by director Tom Grill were acquired
by Aversa. The majority shareholders had the erroneous impression that Grill resigned from the
board at that time, since he was no longer a shareholder.
After receipt of the First Consent and a corresponding notice of a board meeting,
Aversa's counsel objected to the failure to send notice to Tom Grill. The majority shareholders
responded through the Second Consent, removing Tom Grill from the board, as he was no longer
a shareholder, and his continuing as a director would therefore be inconsistent with the prior
practice of the shareholders managing the Corporation through a board composed of
shareholders.
Aversa's counsel responded to this action of the shareholders by claiming that cumulative
voting provisions of the bylaws prevented the removal of Tom Grill as a director. The majority
shareholders then adopted the Third Consent, abolishing the board altogether.
13
At all times, the actions of the majority shareholders have been consistent with Articles
and the intention that the Corporation be managed by its shareholders. Because of the Articles,
the board's only status was to exercise authority delegated by the shareholders, subject to being
revoked. The shareholders at all times retained the right and the power to manage the
Corporation.
In contrast, all of Aversa's actions have been inconsistent with, and intended to frustrate,
the will of the majority and in furtherance of his goal to continue to control of the operations of
the Corporation for his personal benefit.
Although § 2232(c) provides that the existence of such a provision in the Articles or
bylaws shall be noted on the share certificates issued by the corporation, a claimed lack of a
notice on the share certificates provides no reason to invalidate or avoid the clear election
requiring management by shareholders. Nothing in Section 2332(c) suggests that the election is
invalid if not noted on the certificates. Moreover, since defendant Aversa was one of the original
two incorporators and signed the articles of incorporation containing the provision requiring
management by the shareholders, he can hardly claim not to be on notice. Therefore, the
argument that the Corporation is managed by a board of directors fails under both law and fact.
Since the Corporation is managed by its shareholders, having a minority shareholder and
director attempt to block the will of the majority is inconsistent with that authority. To rectify
this untenable position, plaintiffs executed a shareholder consent amending and restating the
bylaws to abolish the board of directors and to be consistent with the Articles of the Corporation.
Defendant Aversa has similarly refused to recognize and abide by this action of the majority
shareholders.
14
Because it is clear that the shareholders have sole management authority over the
Corporation, the majority shareholders have, pursuant to that authority, properly authorized the
employment of Tom Madden as Vice President, Treasurer and Chief Financial Officer. Mr.
Madden was properly authorized to begin his employment duties this past Monday, December 6,
2010. Having no basis in the law or facts, defendant Aversa's extreme defiance of shareholders
and refusal to permit Mr. Madden entry to the offices of the Corporation cannot be countenanced
by this Court. It is clear from the foregoing that plaintiffs have a clear right to relief on the
merits of their case challenging Aversa's actions, therefore their request for special and
preliminary injunctive relief should be granted in full.
d. Greater iniurv would result from refusing the iniunction than
from arantina it and issuance of the requested iniunction will
not harm other interested parties in the proceedings
If the Court does not grant the injunctive relief sought and compel defendant Aversa to
abide by the directions of the shareholders, Aversa will remain free to operate and manage the
Corporation, and expend its financial resources, in a manner that is inconsistent with the best
interests of the Corporation, its employees and shareholders. It has come to light that defendant
Aversa treats the Corporation's checking account as his own, and operates this Corporation as
his own personal lifestyle company, without regard to the fact that he has shareholders -namely
plaintiffs - that own a majority of the Corporation. Without the requested injunctive relief,
Aversa will continue - unchecked -- to use the Corporation's assets for his personal country club
membership, cars, bonuses to him and his family members, and even the country club
membership of one of his employee-relatives. These facts, discerned from minimal documents
made available by Aversa in connection with a due diligence examination, lay bare a litany of
mismanagement and fiscal irregularities under the command of defendant Aversa. However,
15
without the injunctive relief requested, Aversa will continue these practices, continue to refuse to
acknowledge and abide by the lawful actions of the shareholders, all to the irreparable detriment
of the Corporation and shareholders. In sharp contrast, defendant will not suffer any appreciable
injury if this Petition is granted because the status quo will be restored and Defendant will
merely be restrained from his unlawful activities.
e. Granting Injunctive Relief Will Do No More than Preserve the Status Quo
and Abate the Wrongful Activity
The shareholders of this Corporation clearly have the authority to hire employees, as part
of their exclusive right to manage and oversee the affairs of the Corporation. As such, Tom
Madden was properly hired as Vice President, Treasurer and Chief Financial Officer, pursuant to
this authority vested in the shareholders. The improper actions in this case occurred after Mr.
Madden was hired, when defendant Aversa refused to allow him entry into the offices of the
Corporation, and prohibited him from commencing the duties for which he was lawfully hired by
the shareholders. Therefore, by the Court granting the special and preliminary injunctive relief
urged by plaintiffs, it will do no more than put an end to defendant Aversa's wrongful conduct
by enjoining his wrongful actions, compel him to abide by the lawful actions of the shareholders,
including their hiring of Mr. Madden, and return the parties to the status quo, as it existed before
defendant Aversa's lock-out of Mr. Madden.
In Sheridan Broadcasting Networks, Inc. v. NBN Broadcasting, Inc., 693 A.2d 989 (Pa.
Super. 1997), the Superior Court upheld in pertinent part a preliminary injunction to prevent a
50% shareholder from interfering with a management committee's decision to hire two
employees. The court found that the management committee had a clear right to relief to enjoin
16
such an interference with the prerogatives of management, and that an injunction was necessary
to preserve the status quo and prevent irreparable harm.
f. Grantine Injunctive Relief Will Serve the Public Interest
As long as the entry of a preliminary injunction will not adversely affect the public
interest, an injunction is proper.10 In this case, the entry of the relief sought will not adversely
affect the public interest, in that this is a purely private dispute, between the shareholders of the
Corporation. Furthermore, the injunctive remedy sought from this court will not be at all
disruptive to the operations of the Corporation, and may in fact help save jobs for employees of
the Corporation. In stark comparison, if the injunctive relief requested is not granted, plaintiffs
will have no choice but to consider alternative paths to cease defendant's failure to comply with
the directions of the majority shareholders. One such alternative, and likely the most viable
alternative, would be the termination of defendant Aversa's employment. This could
conceivably disrupt the operation of the Corporation, and perhaps ultimately endanger the jobs of
its employees. Clearly, it would serve the Corporation at issue in this case, and the public
interest in keeping the Corporation's employees at work, to grant the injunctive relief requested.
10 The York Group, Inc., 924 A.2d at 1241.
17
IV. CONCLUSION
The plaintiff majority shareholders have a clear right to manage the affairs and oversee
the operations of this Corporation. Their efforts to utilize lawful resolutions to effectively
discharge their rights, consistent with the best interests of the Corporation, have been ignored
and frustrated at every turn by defendant Aversa. Absent the special and preliminary injunctive
relief they seek from this court, defendant Aversa will continue to operate this Corporation and
utilize its assets to suit his own luxurious needs and the needs of his family members on the
Corporation's payroll, all to the detriment of the Corporation and its shareholders.
For all of the reasons set forth above, plaintiffs' request for special and preliminary
injunctive relief should be granted in all respects.
Of Counsel:
Sharron E. Ash, Esquire
Hamburger Law Firm LLC
61 West Palisade Avenue
Englewood, NJ 07631
Tel: 201-705-1200
Fax: 201-705-1201
Respectfully Submitted,
DIL ORTH AXSON LLP
Victor P. Stabile, Esquire
I.D. No. 37449
Elizabeth J. Goldstein, Esquire
I.D. No. 73779
112 Market Street, 8th Floor
Harrisburg, PA 17101
Tel.: (717) 236-4812
Fax: (717) 236-7811
James J. Rodgers, Esquire
Id. No. 21635
1500 Market Street
Suite 3500E
Philadelphia, PA 19102-2101
Tel: 215-575-7000
Fax: 215-575-7200
Attorneys for Plaintiffs
Dated: December 13, 2010
18
HENRY SCANLON, JUDY CURIALE,
R. MICHAEL STUCKEY,
Plaintiffs
V.
GREGG R. AVERSA,
Defendant
IN THE COURT OF COMMON PLEAS QF f-)
CUMBERLAND COUNTY
PENR0$ V IIA
;
, ...
No. 10-7624 CIVIL;'
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MOTION FOR EMERGENCY RELIEF
Defendant, Gregg R. Aversa, by his undersigned counsel, respectfully moves the
Court for emergency relief in the nature of a clarification or amendment of its Order
entered December 16, 2010 in the above matter, and in support of this emergency
motion, avers as follows.
1. Plaintiffs' complaint alleges that this matter is a dispute concerning
management of Sage Corporation (the "Corporation").
2. Plaintiffs are shareholders who seek, in part, to impose on the corporation
a new employee, Tom Madden, whom they wish to hire as Chief Financial Officer
("CFO") for the Corporation, a position that does not presently exist.
3. Defendant is the President and Chief executive officer of the Corporation,
a position he has occupied for 21 years.
4. Mr. Madden has never been employed by the Corporation, his
qualifications are unknown to Defendant, and the propriety of his exercise of control
over the Corporation's finances is one of the ultimate factual and legal issues in this
case.
5. The degree of control the shareholders are entitled to exercise over the
corporation's operations is also one of the ultimate issues in this case. A collection of
correspondence reflecting the recent business negotiations and disagreements is
attached as Exhibit A to this Motion, and incorporated herein by reference.
6. Plaintiffs filed their complaint on December 13, 2010 and
contemporaneously filed a petition for special and preliminary injunctive relief.
7. In conjunction with their petition for injunctive relief, Plaintiffs filed a
proposed order, paragraphs 7 and 8 of which requested the Court to direct that:
7. Defendant is ordered to provide access to the premises of the
Corporation, and provide full cooperation to Tom Madden, Chief Financial
Officer, in the discharge of his responsibilities as CFO of the Corporation, in
accordance with the actions of the shareholders of the Corporation;
8. Defendant is further ordered to provide a private office to Mr.
Madden, and to facilitate the effective discharge of his duties, that office shall be
located within the "heart of the Corporation" in physical proximity to the offices of
the Corporations' President and Controller.
8. In its Order of December 16, 2010, this Court scheduled a preliminary
injunction hearing for December 27, 2010 and issued an interim ex parte injunction that
did not include Plaintiffs' proposed paragraphs 7 and 8; however, the Court enjoined
Defendant from: "Taking any action, contrary to the actions of the shareholders of the
corporation or failing to comply with and abide by the actions of the shareholders of the
corporation...."
9. Despite the absence of the language they requested in paragraphs 7 and
8 of their proposed order, Plaintiffs have taken the position that the Court's ex parte
injunction order still requires Defendant to comply with the provisions of their proposed
order as "actions of the shareholders."
2
10. Thus, Plaintiffs have demanded that Defendant recognize Mr. Madden as
CFO, grant him access to the Corporation, and provide him an office, beginning
Monday, December 20, 2010.
11. The Corporation's premises have no available office for Mr. Madden.
12. Mr. Madden's presence and assertion of alleged authority over the
finances of the Corporation will seriously alter the status quo and cause confusion and
disruption in the conduct of the Corporation's affairs.
13. Plaintiffs' attempt to force Defendant and the Corporation to admit and
cooperate with Mr. Madden as the Corporation's CFO, without notice and a hearing,
amounts to an improper assertion of a mandatory injunction in the guise of a prohibitive
injunction. Cf. Allen v. Colautti, 53 Pa. Cmwlth. 392, 400, 417 A.2d 1303, 1307 (1980)
(request for injunction to prevent respondents "from refusing to inspect, license, and
regulate personal care homes..." sought affirmative relief that was, by nature, a
mandatory injunction).
14. Plaintiffs have not shown any entitlement to special mandatory injunctive
relief. See Shanaman v. Yellow Cab Co., 491 Pa. 516, 519, 421 A.2d 664, 666 (1980)
("a mandatory preliminary injunction... 'should be used only in rare cases and certainly
more sparingly than one which is merely prohibitory"') (citation omitted); Allen, 53 Pa.
Cmwlth. at 400, 417 A.2d at 1307 ("Petitioners seeking a mandatory injunction must
present a stronger case than that required for restraining-type injunction") (citation
omitted).
15. An ex parte mandatory injunction should only be issued to maintain the
status quo, not to alter it as Plaintiffs are seeking to do. See Shanaman, 491 Pa. at
3
519, 421 A.2d 666 ("the mandatory preliminary injunction is designed to restore the
status quo to the 'last actual, peaceable [and] noncontested status which preceded the
pending controversy"') (emphasis original) (citations omitted).
16. The status quo in this matter, pending the outcome of the preliminary
hearing, will be maintained by allowing Defendant to continue the normal business
operations of the Corporation without introducing the disruptive presence of Mr.
Madden.
17. Defendant believes, and therefore avers, that the Court's issuance of its
December 16, 2010 Order, without the language of paragraphs 7 and 8 of Plaintiffs'
proposed order, demonstrated the Court's intent not to impose a pre-hearing
requirement of affirmative conduct by Defendant in relation to Mr. Madden's
employment, presence, or status with the Corporation.
18. Plaintiffs have not concurred in the relief requested by Defendant in this
motion.
4
WHEREFORE, Defendant, Gregg R. Aversa, respectfully requests that the Court
grant emergency relief and issue an amended interim Order clarifying that pending the
outcome of the preliminary hearing scheduled for December 27, 2010, Defendant is not
required to comply with the directives proposed by Plaintiffs in paragraphs 7 and 8 of
their proposed order.
Respectfully submitted,
MCNEES WALLACE & NURICK LLC
es P. DeAngelo',I.D. No. 62377
4?ebra P. Fourlas, I.D. No. 62047
Bruce R. Spicer, I.D. No. 72998
100 Pine Street, P.O. Box 1166
Harrisburg, PA, 17108-1166
(717) 232-8000 (telephone)
(717) 237-5300 (facsimile)
Attorneys for Defendant, Gregg R. Aversa
Date: December 20, 2010
5
October 20, 20 10
1/1111 t?lil)E'.IC.?Ii E PRL's.S'
Gregg :iversa
'I'lie Sa};e (:)rpo ration
4242 Carlisle Pike, Ste. 171
Carnp I lill, RA 17011
1108 Grill
Ile Sage Corporation
3044 Plesper NO
I; tl.f ngN Mt' 59102
lu ;: 1be Sage Owp iradon
Dear ,Messrs. Aversa (aril.l,
At the reyUeSt <:>f <n.tr clients, please find enckwnl an cx,ecuted shareholder oA sent. (W Ile
Sage Corporation.
Verv truly weirs,
I-1ARIBURGL R 1Vw FIR:NO IJ&
135:`" ? ?=-
Sand ra I Iones;;an-Pounder
1 "Ticlosed:
` HF SAGE CORPORATION
CONSENT OF SHAREHOLDERS
IN LIEU OF MF ETING
The undersigned being a majority of the shareholders of The Sage Corporation, a
Pennsylvania Corporation (the "Corporation"), acting without a meeting pursuant to Section
1766(b) the Pennsylvania Business Corporation Law (the. "BCL"), do hereby adopt, and consent
to the adoption of, the following resolutions:
RESOLVEI), that the Corporation elect Tom Madden as Vice President,
Treasurer and Chief Financial Officer ("CFO"), such officer to hold office until the next
annual meeting of the shareholders of the Corporation and until his successor is elected
and qualified; and it is further
RI-.SOLVED, that the CFO shall have check signing at?thority° on all checks of the
Corporation along with the current. authorized officers of the Corporation and that any
disbursemetits by the Corporation in excess of $5,000 shall require the prior vvritten
approval ofthe CFO; and it is further
RI,SOLVLD, that the CFO shall be provided with a private office at the
C'orporation's offices and shall have full access to all of the books and records of the.
Corporation; and it is further
RESOLVED, that the CFO shall report directly to the audit committee of the
("orporation; and it is further
RESOLVED, that an audit committed of the. Corporation be created, the members
of which shall be Henry Scanlon, R. Michael Stuckey and Judy Curiale, such committee
being authorized to act on behalf of the board of Directors to hire and coordinate with the
auditors for the Corporation and perform such other functions as are customary fear an
audit committee, and it is further
RI;SOLVED, that a compensation committee of the Corporation be created, the
members of which shall be Henry Scanlon, R. Michael Stuckey and Judy C'uriale, such
committee being authorized to act on behalf of the board of Directors of the Corporation
to address compensation matters including, without limitation, the compensation packaL.,c
of the CFO: and it is further
RES01-VED, that the Board of Directors of the Corporation is hereby authorized
to take any action in furtherance of the foregoing resolutions.
(PAX)2792 8511 P 003!003
13-OCT-c010(LUN) 11.34 LUX65M Belle E*_olle
,s'f1ri..tt,-r 'TTi(1?te. •.?:^nr.ian.^a....,it: tiara.rr. t 4Ct1LAeaC11
effective ten days following the date that notice of these resolutions has been l?
=#tRfC}n? iicK ?cLC ;1?p ri," cr*"Se.nlec hrreio-
MAN, Curir.'3
FN WITNESS WHEREOF, the undersigned have executed this consent as of the 14"' day
of October, 2010. In accordance with Section 1766(c) of $CL, these resolutions shall be
effective ten days following the date that notice of these resolutions has been given to each
shareholder who has not consented hereto.
Henry Scanlon
Judy C?2ttria.lc i
R. Michael Stuckey
IN Wl`TN SS WHFR1?OF, the undersigned have executed this consent as ofthe 14`11 dad
of October. 2010. In accordance with Section 1766(c) of BC 1., these resolutions shall be
eflective ten days following the date that notice of these resolutions has hmn given to each
sltareholder %vho has not consented hereto.
Henry Scanlan
Judy Curiale
R. Michael Stu7kc
McNees
Wallace & Nurick LLc
100 Fine Street • PQ Box 1166 • Harrisburg, PA 17108-1166
Tel: 717.232.8000 • Fax: 717.237,5300
October 26, 2010
Bruce R. Spicer
Direct Dial: 717.237.5331
Direct Fax: 717.260.1746
bspicer@mwn.com
VIA E-MAIL AND FIRST-CLASS MAIL
Sandra Honegan-Pounder, Esquire
Hamburger Law Firm, LLC
61 West Palisade Avenue
Englewood, NJ 07631-2706
RE: The Sage Corporation (the "Corporation")
Dear Ms. Honegan-Pounder:
This is to respond to your letter dated October 20, 2010, received by us on October 21,
2010.
Your letter enclosed a written consent by three of the shareholders, which purported to (i)
elect a new officer of the Corporation, and (ii) appoint an audit committee and a compensation
committee for the Corporation.
Section 1766(b) of the Pennsylvania Business Corporation Law permits "partial consents"
of shareholders, if the bylaws so provide, and as to those actions which are required or permitted
to be taken at a meeting of the shareholders.
Section 3.15(b) of the Bylaws of the Corporation permits partial written consents of
shareholders, again as to actions which are required or permitted to be taken at a meeting of the
shareholders.
Section 4.01(a) of the Bylaws sets forth the general rule that the business and affairs of
the Corporation are to be under the direction of the Board of Directors. More specifically, Section
5.03 of the Bylaws provides that the Board of Directors has the power to elect "subordinate"
officers, and to appoint committees. In other words, these are powers (electing officers, and
appointing committees) expressly given to the Board of Directors, not to the shareholders.
www.mwn.com
HARRISBURG, PA 9 LANCASTER, PA • STATE COLLEGE, PA • HAZLETON, PA • COLUMBUS, OH 0 WASHINGTON, DC
Sandra Honegan-Pounder, Esquire
October 26, 2010
Page 2
To the extent the Bylaws are applicable here, (i) the actions in your written consent are
actions that are not required or permitted to be taken at a meeting of the shareholders", and (ii),
therefore, the actions described in your partial written consent are invalid and ineffective. To the
extent the Bylaws are not applicable here, the actions in your written consent are again invalid
and ineffective;' because the statute only authorizes action by partial written consent of
shareholders when Bylaws so provide.
Very truly yours,
McNEES WALLACE & NURICK LLC
By ? //?
Bruce R. Spicer
c: Gregg Aversa (via e-mail)
McNees
Wallace & Nurick uc
10`J Pine Strset • PO Box 1166 • Harrisburg, PA 17108-1166
lei: 717.232.8000 • Fax: 717.237.5300
October 28, 2010
VIA E-MAIL
Corey S. Kupfer, Esquire
Hamburger Law Firm, LLC
61 West Palisade Avenue
Englewood, NJ 07631-2706
RE: The Sage Corporation (the "Corporation")
Dear Mr. Kupfer:
Bruce R. Spicer
Direct Dial: 717.237.6331
Direct Fax: 717.260.1746
bspicer@mwn.com
This is to respond to your letter dated October 22, 2010, sent to our client, Gregg Aversa.
Our client has shared a copy of this letter with us.
Your letter enclosed a written consent by three of the shareholders, which purported to (i)
remove Tom Grill as a director of the Corporation, and (ii) amend the Bylaws of the Corporation.
The consent references an Exhibit "A" which was not delivered to our client. However, the text of
the consent suggests that the amendment to the Bylaws was intended to permit the removal of a
director on the vote of a majority of the shareholders.
With respect to removal of Mr. Grill as a director, please note that:
• Section 4.06(c) of the Bylaws provides that an individual director shall not be
removed if sufficient votes are cast against the resolution of removal which, if
cumulatively voted at a meeting for the election of directors, would be sufficient
to elect one or more directors.
• The other shareholders (including our client) were not given prior notice of, or
the opportunity to vote on, the proposed action. However, please be advised
that (i) our client opposes the proposed removal of Mr. Grill as a director, and
(ii) our client's vote is sufficient to elect one or more directors.
• Accordingly, the attempt to remove Tom Grill as a director is ineffective.
1,1.1. ll ??+1-117
HARRISBURG, PA • LANCASTER, PA a STATE COLLEGE, PA 9 HAZLETON, PA • COLUMBUS, OH 0 WASHINGTON, DC
Corey S. Kupfer, Esquire
Hamburger Law Firm, LLC
October 28, 2010
Page 2
With respect to amending the Bylaws, it is difficult to provide a specific comment without
seeing the proposed amendment. However, please note that Section 1504(d)(1) of the
Pennsylvania Business Corporation Law in effect provides that amendments to bylaws that affect
voting rights require the approval of the affected shareholders. Accordingly, to the extent the
proposed amendment to the Bylaws affects our client's voting rights, that amendment is
ineffective.
Finally, as indicated in Richard Stevenson's letter to you of August 20, 2010, we believe
Section 6.06 of the Bylaws is enforceable notwithstanding the lack of a shareholders agreement.
The letter of intent that was provided to our client on May 17, 2010 (dated May 12, 2010) stated
that the provisions of the letter did not constitute an offer capable of being accepted. We have
not been provided with information regarding the outcome of your clients' discussions with the
buyer (Glenn Holck or his nominee) identified in the May 12, 2010 letter of intent. Please provide
copies of (or, if not in writing, descriptions of) any offers that your clients have made or accepted
with respect to a sale of their stock.
Very truly yours,
McNEES WALLACE & NURICK LLC
By
Bruce R. Spicer
c: Gregg Aversa
Richard W. Stevenson, Esq.
DeAngelo, Jim
From: Spicer, Bruce
Sent: Monday, November 15, 2010 3:08 PM
To: 'ckupfer@hamburgerlaw.com'
Cc: Gregg Aversa ; Stevenson, Rich
Subject: RE: Sage Corporation
Mr. Kupfer:
Our client has authorized us to make the following proposal:
Our client (and certain designees) would purchase the 108 shares of The Sage Corporation which are issued and
outstanding to your clients, at a per-share price of $8,833.465, or an aggregate price of $954,014.22. This amount has
been calculated based on 54% of the stockholders' equity of the corporation.
This proposal is not an offer to purchase, but is merely an indication of interest. However, we would appreciate a
response no later than the close of business on Friday, November 19, 2010.
Any purchase would be subject to customary terms and conditions, including a financing contingency. However, our
client anticipates receiving a written term sheet (if not commitment) from a lender in the near future.
Please advise.
Bruce R. Spicer
McNees Wallace & Nurick LLC
100 Pine Street, P.O. Box 1166
Harrisburg, PA 17108-1166
Direct Telephone: 717.237.5331
Fax: 717.260.1746
bspicer(a)-mwn.com
McNees
Wallace & Nurck Lime
The foregoing message may be protected by the attorney-client privilege. If you believe it has been sent to you in error, do not read it.
Please reply to the sender that you have received the message in error, then delete it. Thank you.
Pursuant to U.S. Treasury Department Circular 230, unless we expressly state otherwise, any tax advice contained in this
communication (including any attachments) was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding
tax-related penalties or (ii) promoting, marketing or recommending to another party any matter(s) addressed herein.
From: Corey Kupfer Imailto:ckupfer@hambur4erlaw.com]
Sent: Monday, November 15, 2010 12:36 PM
To: Stevenson, Rich
Subject: Sage Corporation
Importance: High
Rich,
It has been approximately two weeks since you told me that your client would be making a settlement/buy-out proposal
and yet we have not received anything. This is consistent with my clients experience with past attempts at negotiation
with your client.
My clients have not authorized me to stop pursuing their rights in anticipation of the promised proposal. We intend to
continue to move forward aggressively and will not assume a resolution until there is one. In fact, it has only been my
schedule that has delayed our further action.
I strongly suggest that if your client is serious about a resolution that you send me the proposal today.
Yours truly,
Corey S. Kupfer, Esq.
tel. 201.705.1200 direct 201.705.1228 fax. 201.705.1201
The information contained in this electronic communication is confidential and
may be protected by attorney-client privilege. It is intended only for the use
ofthe named recipient. If the reader of this message is riot the named
recipient,he or she may not distribute or copy any of this communication,
including its attachments. If you have received this communication in error,
please notify the sender by return email and delete the original message and any
copy of it from your computer systems.In compliance with IRS regulations, any tax
advice contained or attached to this communication was not intended or written to
be used, and cannot be used,for the purpose of (i) avoiding penalties under the
Internal Revenue Code or (ii) promoting, marketing or recommending to another
party any matters addressed in this communication.
Thank you.
2
LAW FIRM LLC
November 30, 2010
117A EMAIL & FEDEB,41, EXPRESS
Bruce R. Spicer
McNees Wallace & Nurick, LLC
100 Pine Street, P.O. Box 1166
Harrisburg, PA 17108-1166
RE: The Sage Corporation
Dear Mr. Spicer
This is in response to your letters dated October 26, 2010 and October 28, 2010 and your
emailed proposal dated November 15, 2010.
Your October 28 letter asserts that Tom Grill was elected by cumulative voting. However,
we have no evidence of this. For our records, please provide us with evidence that Tom Grill was
elected by cumulative voting. In any event, this is irrelevant as the Articles of Incorporation provide
that the business and affairs of the corporation shall be managed by the shareholders rather than a
board of directors. Despite operating through a board in the past the ultimate authority to manage
the corporation lies with the shareholders. The creation of an audit committee of the corporation;
creation of a compensation committee of the corporation; election of Tom Madden as the
corporation's vice president and chief financial officer and amendment to the bylaws of the
corporation were validly authorized by the written consent of the shareholders and, under
Pennsylvania law, such actions became effective ten days after such consents were sent to the non-
consenting shareholders.
As the properly elected Chief Financial Officer of the corporation, Tom Madden will start
his employment on Monday December 6 in the corpotation' main office. Please inform your client.
Mr. Madden should be provided with an office, access to all of the corporation's books and records
and any assistance necessary or required for hire to perform his duties to the corporation as set
forth in the shareholders consent.
With respect to your settlement proposal (or "indication of interest"), we have the following
responses:
Although the offer in unacceptable, our clients are open to continuing good faith
discussions.
61 WEST PALISADE AVENUE ENGLEwoov, NTW JERSEY o7631-2,7o6 I n/.. 201-705-1200 fax: 20I-705-1201
%'.'W %'. H ASt H C A C L R L.% W. C 0M
PAGE 2of2
2. Our clients will not postpone their actions to pursue proper corporate governance and
review of the books and records of the corporation during any ongoing settlement
discussions.
3. Our client will not consider any offer that does not start at the $1.2M in cash at closing
that they would have received from the stock purchase transaction that was not
consummated due to your clients' actions. In addition, my clients require some
compensation for the non-dilutable warrants that they would have received in that deal
(although they are not expecting to receive the full value of the warrants which they
believe could have quantified to millions of dollars). Finally, they require a right to share
in the proceeds of any sale of the corporation that occurs within up to ten years of their
buyout. The greater the compensation your client is willing to pay them for the value of
the warrants, the shorter the period of post-closing deal participation they would agree
to accept.
4. Our client will not accept any financing contingency in the agreement. They are not
willing to go through the hassle and cost of an agreement that is contingent as they do
not have a high level of faith in your client's true intention to close.
The bottom line is that my clients are very willing to come to a fair purchase agreement but
will not stop or slow their efforts to protect their investment and ensure proper governance of Sage
while any discussions or negotiations proceed.
Very truly yours,
HAN BURGER I- Aw Iron, LLC
By:
Corey S. ICupfer
cc: Henry Scanlon
Judy Curiale
R. Michael Stuckey
0%",?4m,2 !'LAW FIRM ?L!2
McNees
Wallace & Nurick Llc
100 Pine Street • PO Box 1166 • Harrisburg: PA 17108-1166
Tel: 717.232.8000 • Fax: 71 T237.5300
December 2, 2010
VIA E-MAIL
Corey S. Kupfer, Esquire
Hamburger Law Firm, LLC
61 West Palisade Avenue
Englewood, NJ 07631-2706
RE: The Sage Corporation (the "Corporation")
Dear Mr. Kupfer:
This is to respond to your letter dated November 30, 2010.
Bruce R. Spicer
Direct Dial: 717.237.5331
Direct Fax: 717.260.1746
bspicer@mwn.com
• In the second paragraph of your letter, you state that my letter of October 28, 2010
asserted that Tom Grill was elected by cumulative voting. You then ask for evidence
that Mr. Grill was elected by cumulative voting.
Your statement and request reflect a misunderstanding of my earlier letter. I
did not indicate-that Mr. Grill was elected by cumulative voting. Rather, the
point of my letter was that the Bylaws (§ 4.06(c)) provide that a director (here,
Mr. Grill) cannot be removed if votes would be cast against the removal which
would be sufficient to elect one or more directors on a cumulative basis. In this
case, votes against the removal would have been sufficient (if the issue had
been properly raised) to elect at least one director on a cumulative basis.
Accordingly, the attempt to remove Tom Grill as a director was ineffective.
In the second paragraph of your letter, you state that it is irrelevant whether Mr. Grill
was elected by cumulative voting, "as the Articles of Incorporation provide that the
business and affairs of the corporation shall be managed by the shareholders rather
than a board of directors." You then state that various items were properly authorized
by the written consent of your clients, as shareholders. Your apparent position is that
the Corporation has no directors.
www.mwn.com
HARRISBURG, PA • LANCASTER, PA • STATE COLLEGE, PA 9 HAZLETON, PA 9 COLUMBUS, OH 0 WASHINGTON, DC
Corey S. Kupfer, Esquire
December 2, 2010
Page 2
• As an initial matter, it is clear that the parties have for many years operated
utilizing a board of directors. Recent correspondence from your office
evidences this (t.&, a purported notice of a special meeting of the board sent
via e-mail by your office on October 13, 2010).
• Please note the following sections of the Pennsylvania Associations Code:
• Section 2301(a)(1) of Chapter 23 provides that Chapter 23 applies to
business corporations that elected to become a close corporation under the
Business Corporation Law of 1933 (e.g., the Corporation).
• Section 2301(d) addresses certain transitional items not relevant here.
• Section 2332(a) provides that a bylaw may provide that the business and
affairs of the corporation shall be managed by the shareholders rather than
a board of directors.
• Section 2332(b) provides that such a provision may be inserted in the
articles or bylaw by amendment of all shareholders.
• Section 2332(c) provides that such a provision must be evidenced by
conspicuous notice on the share certificates.
• In the present situation, the bylaws do not provide for management by
shareholders, nor do the share certificates evidence management by
shareholders. As a result, the Corporation is managed by the board of
directors.
• Accordingly, for the reasons stated in our previous correspondence, the items
described in the written consent signed by your clients, as shareholders, were
not validly approved.
• Related to this, for the reasons stated in our previous correspondence, any attempt
to amend the bylaws in a way that affects voting rights is invalid and ineffective.
• In the third paragraph of your letter, you state that Mr. Madden intends to start his
employment on Monday, December 6. For the reasons stated above, Mr. Madden's
employment was not properly authorized. As a result, we respectfully suggest that it is
not productive for Mr. Madden to present himself at the corporate offices on Monday.
Corey S. Kupfer, Esquire
December 2, 2010
Page 3
• Your letter then rejects our client's proposal to purchase your clients' shares of stock of
the Corporation.
Your letter states that your clients will not consider any offer that does not start at
$1,200,000 in cash at closing. However, your letter does not contain a specific
proposal as to a monetary amount. For obvious reasons, our client does not wish
to "negotiate against himself." Accordingly, if your clients are interested in
pursuing a transaction, we ask that your clients provide a proposal with a specific
monetary amount.
• Your letter references the $1,200,000 as the amount your clients "would have
received from the stock purchase transaction that was not consummated due to
your clients' [sic] actions."
• We are not aware of any basis for the view that a transaction was not
consummated due to our client's actions. Our client exhibited a high degree of
cooperation in due diligence and other matters.
We previously requested information regarding offers to purchase (or sell) your
clients' stock, but have not received any response. Presumably, no such offers
were made. If so, then any stock purchase transaction would have been purely
speculative (and subject to the terms and conditions of Section 6.06 of the
bylaws). Further, the recent, highly-publicized regulations proposed by the
Department of Education must certainly have had an impact on any proposed
transaction.
• Your letter states that your clients "require some compensation for the non-
dilutable warrants they would have received in that deal...." We do not believe
your clients are entitled to "compensation" for a transaction that was apparently,
speculative, would have triggered Section 6.06 of the bylaws, and in any event
would have been impacted by political events.
• Your letter states that your clients "require the right to share in the proceeds of any
sale of the corporation that occurs within ten years of their buy-out." To the extent
you wish to make a "counter-proposal" that includes this concept, our client is
willing to entertain that proposal, although please be advised that a ten-year period
is, in our view, unacceptably long. In addition, any such "look-back" would have to
reflect a declining share percentage over the applicable time period.
Corey S. Kupfer, Esquire
December 2, 2010
Page 4
• Your letter states that your clients "will not accept any financing contingency in the
agreement." Our client advises that financing will be available if and when the
parties come to terms.
• Finally, your letter states that your clients "do not have a high level of faith" in our
client's "true intention to close. In the interest of brevity, we say only that our client
remains very interested in pursuing a transaction that has reasonable terms and
conditions.
Please advise.
Very truly yours,
McNEES WALLACE & NURICK LLC
By
Bruce R. Spicer
c: Gregg Aversa
December 3, 2010
I'LI 1:-;11,-111, ONLY
Bruce It. Spicer
N cNees Wallace c' Nurick, ITC
100 pine Street, V0. Box 1166
Harrisburg, RA 17108--11. 60
Kl:; The Sage Corporation
Il ar Mr. Spwcr
This ]crter responds to your letter dated December 1% 3010. 1.'c>ur conclusion that Ile Sage
(Anymatum (the "C:;orpomdo !') is managed by a boatel of directors because the Bylaws so probde
and because the Corporation's share certificates have no such notice is erronums.
First, you correctly Imirtt to Section 2332(4 of the Bi sines Corporation Law of 1988, as
amended (the "B(11:1, which provides that a bylaw tnay provide that the corporation be tnanal,ccl by
its shareholders rather tl?an by a board of dirc:crors. I KWCVCr, y'ou .nlisc(.anst:rue the effect of Sccrtort
2332(x) by assuming that such provision must be in the Bylaws of the Corporation. I'ndcr Section
1504(c) of the BCL.,, any provision of the BCI., that: refers to a rule as set forth in the bvhvvs of x
corporation shall be construed to include and he satisfied by any such rule as wet Glib in the
articles. This is the case with the Corporat.iot:a, the articles of which provide for mataaLement by the
Shareholders rather than by a hoard of d mcuns. Now also dnt Section 15040Q dams not permit
by-lavx's to contain provisions inconsistent Willi the articles, rendering the provisions in the
Owporatioril Bylaws regarding the hoard of directors invalid. norther, your references to Section
2332(b) ina atncnc6cnts to the articles of bylaws are irrelevant because the provision was Contained
in the or ginal articles of' incorporation.
Second, you point to the lack of a notice on the share certificates as a further reason to
invalidate the provision requiring rnanagenaent by sbateholdmrs. '16 our knowledge therm were no
share certificates issuecl. In arn,v even% there is nod ing it Sectini 23320) that miggests this remelt.
Morco Ver, since your client was one of the original two inco rporato rs and signed the article-, of
incorporation Containing the provision requiring uaanagenient by the. shareholders, he can hardly
claim not to be • it notice. I he.reknn yat?r argument that the Corporation is tnanaWd by a hoard of
directors fails under both law and fact:.
1i11•"iiK?iJ.!il
61 AIM! PALO Dl- AVENUE ENGLEtC( OD, NF1'S' 67t,31-2106 wl: f-
PAGE 2OF2
Si.racc the Corporation is managed by its shareholders ,laid the Bylaws contain invalid
provisions regarding a hoard of directors, enclosed is a shareholder consent confirming that the
Corporation has no directors and amending; and restating the Bylaws to comply with the BCL. The
rrsciluricm also approves .t mandatory distril:nazion to shareholde.rs.
)'MI claim in yocir letter that Mr. ill.adden's eniplovment was not properly authorized and that
,,it is not productive" for hint to arrive at the Corporation's offices on Munday, December Cz.
Because it is clear that the shareholders have s<.zle management authority= over the Corporation and
have properly authorized his employment, rest assured that he will arrive can Monday. VA- c-ypecr that
lie be given complete access to the Corporation's books and records in his capacity as Vice
President, `1"reasurer and Chief Financial Officer, and that no unauthorized dishursuni nts will be
made ill violation of the earlier shareholder consent.
finally, 1 will discuss your settlement proposals with env clients and get back to ymi.
Very truly yours,
I1XMBU'R(;VR la:yW h1101, tats;:
Carey S. Kut r
Attached:
cr..: I-letiry ;;carrion
Judy Curiale
It. Michael Stuckey
e74-elAz'I flj'Cell
12/19/2010 17:26 FAX 7179753522 THE SAGE CORP
i
VERIFICATION
I, Gregg R. Aversa, the Defendant in the above action, hereby verify that the
facts averred in the foregoing document are true and correct to the best of my
16002
knowledge, information, and belief. I understand that this verification is made subject to
the provisions of 18 Pa. C.S. § 4904, relating to unsworn falsifications to authorities.
i;gg R. Aversa
Date: December 20, 2010
.1,1
CERTIFICATE OF SERVICE
I certify that on this date, I am serving a copy of the foregoing document upon the
persons listed below, both by electronic transmission and by United States mail, first
class postage prepaid, addressed as follows:
Victor P. Stabile, Esquire
Elizabeth J. Goldstein, Esquire
DILWORTH PAXSON LLP
112 Market Street, 8th Floor
Harrisburg, PA 17101
James J. Rodgers, Esquire
DILWORTH PAXSON LLP
1500 Market Street
Suite 3500E
Philadelphia, PA 17102-2101
ames P. DeAngelo
:ounse! for Defendant
Date: December 20, 2010
. -4
rCO n
cz)
IN THE COURT OF COMMON PLEAS ? ? -,, rr--
OF CUMBERLAND COUNTY, PENNSYLVANIA _`f N
HENRY SCANLON, JUDY CURIALE
and R. MICHAEL STUCKEY, "r'
Plaintiffs Civil No. 10-7624
V. Civil Action-Equity
(Judge Ebert)
GREGG AVERSA,
Defendant
MOTION TO ADMIT SHARRON ASH PRO HAC VICE
The undersigned, Victor P. Stabile, Esquire, a member of the bar of the Commonwealth
of Pennsylvania, hereby moves under Rule 1012.1 for the admission pro hac vice of Sharron
Ash, Esquire to represent Henry Scanlon, Judy Curiale and R. Michael Stuckey, plaintiffs in the
above-captioned matter. In support of this Motion, Attorney Stabile states as follows:
1. The verified statements required by Rule 1012.1(c) and (d)(2) are attached hereto.
2. The undersigned has entered an appearance on behalf of Henry Scanlon, Judy
Curiale and R. Michael Stuckey and will remain the attorney of record in accordance with Rule
1012.1(d)(1).
3. The fee required by § 81.505(c) has been paid and the information required by §
81.504 has been provided to the IOLTA Board.
WHEREFORE, the undersigned respectfully requests that this Court grant this motion
and:
A. ORDER that Sharron Ash, Esquire, be admitted pro hac vice; and
B. GRANT such further relief as is just and proper.
295651
Respectfully submitted,
DILWORTH PAXSON LLP
I
actor P. S ale, li?quire
Pa. Atty. ID No. 37449
112 Market Street, Suite 800
Harrisburg, PA 17101
Tel.: (717) 236-4812
Fax: (717) 236-7811
Email: vstabile ,dilworthlaw.com
Dated: December /S 2010 Attorney for Plaintiffs
295651
•1
Verified Statement
of
Victor P. Stabile
and
Affadavit
of
Sharron Ash
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY, PENNSYLVANIA
HENRY SCANLON, JUDY CURIALE,
and R. MICHAEL STUCKEY,
Plaintiffs Civil No. 10-7624
V. Civil Action-Equity
(Judge Ebert)
GREGG AVERSA,
Defendant
VERIFIED STATEMENT OF VICTOR P. STABILE IN SUPPORT OF
MOTION TO ADMIT SHARRON ASH PRO .LAC VICE
I, Victor P. Stabile, Esquire, submit this verified statement under Rule 1012.1(d)(2) in
support of the Motion to Admit Sharron Ash Pro Hac Vice in the above-captioned matter.
1. I have conducted a reasonable investigation and reasonably believe Attorney Ash
to be a reputable and competent attorney. I recommend her admission pro hac vice in this
matter.
2. This is the only case in which I am sponsoring a candidate for admission pro hac
vice.
3. The proceeds, if any, from the settlement of this matter shall be received, held,
distributed, and accounted for in accordance with Rule 1.15 of the Pennsylvania Rules of
Professional Conduct, including the IOLTA provisions thereof, if applicable.
295631
Respectfully submitted,
DILWORTH PAXSON LLP
Victor P. bi e, quire
Pa. Atty. ID No. 37449
112 Market Street, Suite 800
Harrisburg, PA 17101
Tel.: (717) 236-4812
Fax: (717) 236-7811
Email: vstabile@dilworthlaw.com
Dated: December /f, 2010 Attorney for Plaintiffs
VERIFICATION
Subject to the penalties for falsification to authorities prescribed by 18 Pa.C.S. §4904, I
hereby certify that the facts stated in the foregoing are true and correct to the best of my personal
knowledge, information and belief.
Victor P. i
Dated: December ??2010
COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY, PENNSYLVANIA
HENRY SCANLON, JUDY CURIALE,
R. MICHAEL STUCKEY
Plaintiffs,
V.
GREGG R. AVERSA,
Defendant
Civil No. 10-7624
Civil Action-Equity
AFFIDAVIT OF SHARRON ASH, ESQUIRE IN SUPPORT OF
MOTION FOR ADMISSION PRO HAC VICE
I, Sharron Ash, on oath, do hereby swear and state as follows:
1. I am a member in good standing of the bar of the courts of New Jersey with bar license
number 041141991 and New York with bar license number 2497634, having been duly admitted to
practice in 1991. I have never been suspended, disbarred, or otherwise disciplined, nor am I currently
subject to disciplinary proceedings.
2. I am currently applying for admission pro hac vice in the instant matter. I have never
been denied admission pro hac vice.
3. I have not applied for pro hac vice in any other matters in Pennsylvania.
4. The Plaintiffs, desires that I participate in the trial of this matter in Pennsylvania. I am
presently associated with Victor P. Stabile, Esquire, of Dilworth Paxson LLP, 112 Market Street, Suite
800; Harrisburg, PA 17101, in this matter, and consent to his appointment as agent for service of process
for all actions against me, including disciplinary actions.
5. I submit to the jurisdiction of the Pennsylvania courts and the Pennsylvania Disciplinary
Board with respect to acts and omissions occurring during my appearance in this matter.
6. I understand that I will be bound by and will comply with the Pennsylvania Rules of
Procedure and Professional Conduct.
7. I will comply with and be bound by the applicable statutes, case law, and procedural rules
of the Commonwealth of Pennsylvania.
-?
Signed and sworn to under the penalties of perjurv this (W day of December 2010.
Sharron Ash
Sworn to and subscribed before me this Vday of December, 2010.
. G
Notary Public
DESIREE N. WARWE
ID # 2398676
NOTARY PUBLIC OF NEW JERSEY
W Canny M L*W 78713016
nocumenC
I . .1
CERTIFICATE OF SERVICE
I, Victor P. Stabile, Esquire, hereby certify that on this 2b"4day of December, 2010, a
true and correct copy of the foregoing "Motion to Admit Sharron Ash Pro Hac Vice" was served
via postage-prepaid, first-class mail upon the following:
James P. DeAngelo, Esquire
McNees Wallace & Nurick LLC
100 Pine Street
PO Box 1166
Harrisburg, PA 17108-1166
r
ictor P. Sta i e, squire
295651
HENRY SCANLON, JUDY CURIALE, : IN THE COURT OF COMMON PLEAS OF
R. MICHAEL STUCKEY, CUMBERLAND COUNTY, PENNSYIRAf
Plaintiffs ;; -.;
F'rJ
No. 10-7624 CIVIL,
-
V. 7)
C", r r--
' Aj +
GREGG R. AVERSA ° c?„
-?
,
Defendant
ANSWER TO PETITION FOR SPECIAL AND PRELIMINARY INJUNC71014.)
Defendant, Gregg R. Aversa ("Defendant" or "Mr. Aversa"), by his counsel,
McNees Wallace & Nurick LLC, answers Plaintiffs' petition for special and preliminary
injunction as follows:
Background
Denied. To the contrary, as explained in Mr. Aversa's answer to Plaintiffs'
complaint, which is incorporated herein by reference, and as explained further below,
this action was filed by Plaintiffs during the course of their business negotiations to sell
their shares in the Sage Corporation (the "Corporation") to Mr. Aversa. This action is an
attempt to gain an improper advantage in those negotiations. The Corporation has
been a successful venture and has provided significant and substantial returns to
Plaintiffs. It is denied that Plaintiffs' actions have been properly "authorized." It is
denied that Defendant's refusal to comply with Plaintiffs' demands is "insupportable." It
is denied that Plaintiffs have been "forced" to seek injunctive relief. It is denied that
Plaintiffs are entitled to such relief.
2. Admitted in part and denied in part. It is admitted that Sage Corporation is
engaged in operating truck driving schools. It is admitted that Exhibit A to Plaintiffs'
petition appears to be a copy of the Corporation's Articles of Incorporation. It is
A -1
admitted that the articles contain the quoted language, without the emphasis added in
Plaintiffs' pleading. It is denied that the Corporation was formed or subsequently
operated as a statutory close corporation. It is denied that the Corporation validly
elected to be governed by its shareholders. It is denied that the Corporation has been
governed by its shareholders at any time since its 1989 incorporation.
3. Admitted in part and denied in part. The parties to this action are all
shareholders. Plaintiffs have been shareholders since 1989, when they purchased
shares at a per-share price of $1,000. Plaintiffs' characterization of themselves as "the
majority shareholders" is a conclusion of law to which no response is required.
4. Admitted in part and denied in part. The Corporation's bylaws provide for
a board of directors. It is denied that Plaintiffs' alleged "distinction" is the "crux of this
matter." Rather, Plaintiffs have manufactured this dispute in order to pressure
Defendant into buying their shares at an inflated price. It is denied that the purported
election for shareholder management was validly accomplished. It is denied that the
shareholders have managed the Corporation's affairs at any time since its 1989
incorporation. It is denied that the Articles and bylaws are in conflict. It is denied that
the purported election of shareholder management in the Articles "governs" the bylaws.
5. Admitted in part and denied in part. Defendant has managed the
Corporation as its President and CEO since its inception. It is denied that Defendant's
service as the Corporation's President and CEO was "consistent" with any alleged
election by Plaintiffs to have the Corporation managed by its shareholders. It is denied
that Defendant's management "has produced little fiscal reward" for Plaintiffs. Under
Mr. Aversa's management, Plaintiffs have received a tremendous return on their
2
investment. A schedule of that return is attached as Exhibit A and incorporated by
reference. It is denied that the Corporation covered Plaintiffs' tax obligations "to avoid
raising any red flags." The Corporation operates as an S-corporation for purposes of
income taxation. As such, the shareholders are responsible for filing and paying the
income tax on the tax attribute of allocated income related to the Corporation. Plaintiffs
have received distributions of cash to provide them a return of 10% for many years, plus
distributions to cover tax obligations. Plaintiffs have received over $600,000 on their
initial investment , a substantial rate of return.
6. Denied. Earlier in 2010, Plaintiffs sought to sell their shares to a third
party. That proposed transaction was never more than speculative and was not
completed. Plaintiffs have filed this action in the course of business negotiations to sell
their shares to Mr. Aversa. During many months of due diligence, Plaintiffs and the
prospective buyer of their shares were provided with unprecedented access to the
Corporation's staff and records and received thousands of pages of documents. It is
denied that Defendant interfered with or undermined the due diligence process. It is
denied that the due diligence analysis was less than complete and thorough. It is
denied that Plaintiffs were able only to perform a "limited and cursory examination." It is
denied that the due diligence process revealed any irregularities.
7. Denied. The answer in paragraph 6 above is incorporated by reference.
The Corporation has been very successful under Mr. Aversa's management. Mr.
Aversa is being fairly compensated for his successful leadership. It is denied that
Defendant is "running the corporation as his own personal cash cow." It is denied that
the Corporation's payroll includes any employees not performing services for the
3
Corporation. It is denied that the Corporation's assets have "become akin to Aversa's
personal checking account." It is denied that Defendant has caused the Corporation to
pay any improper expenses or bonuses. It is denied that Defendant improperly
manipulated the Corporation's profits or paid excessive year-end bonuses.
8. Admitted in part and denied in part. After 21 years of successful
management by its Board of Directors and Mr. Aversa as President and CEO, Plaintiffs
have attempted to improve their negotiating position in the business deal to sell their
shares, by improperly undertaking a series of ineffective corporate actions designed to
change the long standing management of the Corporation. As part of that process,
Plaintiffs have attempted to appoint Tom Madden as Vice President, Treasurer, and
Chief Financial Officer of the Corporation, and to appoint themselves as audit and
compensation committees of the Corporation. It is denied that those actions are valid.
It is admitted that Defendant has received notice of the "First Consent of Shareholders."
The remaining averments of this paragraph set forth conclusions of law to which no
responses are required. By way of further response, it is denied that Plaintiffs acted
properly under § 1766(b) of the BCL. It is denied that Plaintiffs' purported actions ever
became legally effective.
9. Denied. It is denied that Plaintiffs' attempted appointment of Mr. Madden
as CFO is proper or valid. It is denied that Plaintiffs are attempting to put in place either
personnel or committees that are appropriate or necessary for overseeing the
Corporation's financial affairs. It is denied that there has been any improper
management of the Corporation and/or use of its assets. It is denied that there are any
"irregularities" needing elimination. It is denied that Plaintiffs' stated purpose for their
4
actions is their true purpose; rather, Plaintiffs are using their attempted appointment of
Mr. Madden and this legal action to pressure Defendant into increasing the amount of
his offer to purchase Plaintiffs' shares of the Corporation.
10. Admitted, upon information and belief.
11. Admitted in part and denied in part. It is admitted that Defendant, as
President and CEO of the Corporation, has refused to comply with Plaintiffs' improper
acts and has refused to recognized Plaintiff's improper and invalid attempted
appointment of Mr. Madden as a corporate officer. It is denied that Defendant has used
or is using the Corporation's assets for his own purposes. The remaining averments of
this paragraph set forth conclusions of law to which no responses are required. By way
of further response, it is denied that Defendant lacks a legitimate reason to oppose
Plaintiffs' actions. It is denied that Plaintiffs are acting in the best interest or for the
protection of the Corporation, its employees, or its shareholders.
12. Admitted in part and denied in part. It is admitted that Plaintiffs have
attempted to amend the Corporation's bylaws and to remove Tom Grill from the
Corporation's board of directors. It is admitted that Defendant has received notice of
these attempted acts by Plaintiffs. The remaining averments of this paragraph set forth
conclusions of law to which no responses are required. By way of further response, it is
denied that Plaintiffs' conduct was consistent with their obligations to the Corporation. It
is denied that Plaintiffs have the right to manage the business and affairs of the
Corporation. It is denied that any such right is conveyed by the Articles of Incorporation.
It is denied that the "Consent of Shareholders in lieu of meeting" that Plaintiffs signed on
October 21, 2010 was lawful. It is denied that any right of the shareholders to manage
5
the Corporation ever was or currently "remains" in effect. It is denied that the Board of
Directors was effectively abolished by Plaintiffs' attempted amendment of the bylaws.
13. Admitted. By way of further answer, Plaintiffs' resolutions were improper
and invalid.
14. Admitted in part and denied in part. It is admitted that Plaintiffs have
attempted to amend the Corporation's bylaws to describe Plaintiffs' interpretation of the
Articles of Incorporation, and to alter the Corporation's long-standing management
structure. It is admitted that Defendant received notice of Plaintiffs' attempted acts. It is
admitted that Defendant did not comply with Plaintiffs' attempted bylaw amendment. It
is denied that Plaintiffs' attempted amendment either restated or reflected the actual or
current effect of the provisions of the Articles of Incorporation.
The Alleged "Lockout"
15. Admitted in part and denied in part. It is admitted that Mr. Madden sought
admission to the Corporation's premises on December 6, 2010. It is admitted that
Defendant received notice stating that Mr. Madden would be arriving and indicating that
Plaintiffs expected Mr. Madden to begin serving as the Corporation's CFO. It is denied
that Mr. Madden had any valid authority or duties to the Corporation. It is denied that
the redacted portions of Exhibit E to Plaintiffs' petition were either confidential or
irrelevant. To the contrary, the omitted portions of Plaintiffs' correspondence evidence
their attempt to use the threat of baseless actions to coerce Defendant into buying their
corporate shares at an inflated price. A copy of relevant correspondence is attached as
Exhibit B and incorporated by reference.
6
16. Admitted. By way of further response, Mr. Madden was not lawfully
entitled to entry.
17. Admitted. By way of further response, Defendant acted in his capacity as
President and CEO of the Corporation.
18. Denied. It is denied that Mr. Madden has any valid duties or authority with
the Corporation. It is denied that Plaintiffs' attempted acts as shareholders were lawful.
It is denied that Mr. Madden's presence would serve "the united best interests of the
Corporation, the employees, and the shareholders as a whole." To the contrary, Mr.
Madden's presence would add a substantial and needless financial drain on the
Corporation and disruption of its operations, and is intended solely to benefit the
Plaintiffs as individuals, by coercing Defendant into overpaying them to purchase their
shares. It is denied that anyone concerned with the Corporation's affairs would reap
any benefits from Mr. Madden's oversight or use of the Corporation's assets. It is
denied that his proposed oversight would be "impartial." It is denied that any
"irregularities" exist. It is denied that Mr. Madden is intended to act in an "orderly"
fashion in any activity he undertakes on the Corporation's premises.
19. Denied. It is denied that Plaintiffs have any legitimate concerns regarding
Defendant. It is denied that Defendant has used the Corporation "as his personal cash
cow." It is denied that Plaintiffs' attempted actions are within their rights. It is denied
that Plaintiffs' attempted actions are "for the united benefit of the Corporation, its
employees and shareholders," or anyone else other than the individual Plaintiffs.
20. Admitted in part and denied in part. It is admitted that Defendant does not
acknowledge any validity in Plaintiffs' attempted actions. It is denied that Plaintiffs'
7
attempted actions are lawful. It is denied that the Corporation's affairs have been or will
be conducted "for the sole benefit of [Defendant] and members of his family."
21. Admitted that Plaintiffs filed their complaint on December 13, 2010.
Defendant incorporates herein his answer to the complaint.
Injunctive Relief
22. Denied. It is denied that Plaintiffs will suffer any immediate or irreparable
harm in the absence of an injunction. The Corporation has been successfully managed
by Mr. Aversa for 21 years. The Corporation, its shareholders, employees, and
students have benefited from this management. Plaintiffs' attempts to change the
corporate management structure threaten what has been a successful business venture
which has provided outstanding returns to its shareholders, employment to its 180
employees, and education to many students, including approximately 250 current
students.
(1) It is denied that Plaintiffs' conduct is lawful. It is denied that
Plaintiffs have the right or power to manage the Corporation's business and
affairs.
(2) It is denied that Plaintiffs are losing any right or are suffering any
immediate or irreparable harm to any lawful interest. It is denied that any
corporate assets have been or will be "improperly or unwisely dissipated." It is
denied that any alleged loss to Plaintiffs or the Corporation "may not be subject
to recovery."
23. Denied. Whether Plaintiffs have an adequate remedy at law is a legal
conclusion to which no response is required. By way of further response, this action is
8
solely about Plaintiffs' attempt to negotiate a higher price for their shares. Even as
characterized by Plaintiffs themselves, this action is all about money. All of the
damages asserted by Plaintiffs are money damages allegedly incurred by reason of
alleged improper expenditures of corporate funds. To the extent that Plaintiffs have
suffered any legally cognizable financial loss, they may pursue a financial remedy,
without seeking injunctive relief.
24. Denied. The status quo in this matter is Defendant's continued
management of the Corporation as he has done since 1989. Plaintiffs are not
attempting to restore the status quo, but to alter it dramatically. It is denied that any
activity of Defendant is unlawful. Moreover, Plaintiffs are not seeking to "restrain"
Defendant from activity; rather, they are actually seeking a mandatory injunction to
compel Defendant's affirmative acts related to Mr. Madden's purported employment.
25. Denied. Defendant has not engaged in any actionable conduct; Plaintiffs
have no right to relief, clear or otherwise; and Plaintiffs have no likelihood of success in
asserting their claim.
WHEREFORE, Defendant respectfully requests that Plaintiffs' petition for special
and preliminary injunctive relief be DENIED in its entirety.
9
NEW MATTER
1. Defendant incorporates his responses contained in his answers to the
complaint and to the petition for special and preliminary injunction.
2. Plaintiffs are not entitled to injunctive relief because the Court lacks
jurisdiction over this action, in that the Corporation, a necessary party, has not been
joined.
3. Plaintiffs are not entitled to injunctive relief because the Court lacks
jurisdiction over this action, in that the members of the Board of Directors, necessary
parties to this action, have not been joined.
4. Plaintiffs are not entitled to injunctive relief because they are not entitled to
maintain this action, in that the harm they claim to be suffering is solely derivative of
alleged harm to the Corporation.
5. Plaintiffs are not entitled to injunctive relief because this action is barred
by the applicable statute of limitations.
6. Plaintiffs are not entitled to injunctive relief because this action is barred
by the doctrine of laches.
7. Plaintiffs are not entitled to injunctive relief because this action is barred
by the doctrine of waiver.
8. Plaintiffs are not entitled to injunctive relief because this action is barred
by the doctrine of unclean hands.
10
WHEREFORE, Defendant respectfully requests that Plaintiffs' petition for special
and preliminary injunctive relief be DENIED in its entirety.
Respectfully submitted,
MCNEES WALLACE & NURICK LLC
By
a es P. DeAngelo, .D. No. 62377
bra P. Fourlas, I.D. No. 62047
Bruce R. Spicer, I.D. No. 72998
100 Pine Street, P. 0. Box 1166
Harrisburg, PA 17108-1166
(717) 232-8000 (telephone)
(717) 237-5300 (facsimile)
Attorneys for Defendant, Gregg R. Aversa
Date: December Z Z", 2010
11
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October 211, 20 1 ()
I'7.1 1?1i1)1IZ. 11.1:.\•1'EZl i.S'.1'
Gregg Aversst
The Sage Corporation
4242 Carlisle Pike, Ste 177
Camp 11111, RA 17011
L.eAvis Grill
"flee Sage Corporation
3044 Flespcr Road
Billings, NH 59102
R 1 "! flue gage Corporatio m
l )cat Messrs..\vc•rsa (361.1,
At the rcduest of our clients, please tincl e•rulosed an executed shareholder consent 4)f The
Sap
Vcrv truly vours,
FILM UR(;vlR I,m" FIRM, J.D.
0, 0)
S:u(Ira I Iunet;an-Ponndcr
1 •:nclusc•d:
THE SAGE CORPORATION
CONSENT Or SHAREHOLDERS
IN I.11?U or MEIETINO
The undersigned being a majority of the shareholders of"The sage Corporation, a
Pennsylvania Corporation (the "Corporation"), acting without a meeting pursuant to Section
1766(b) the Pennsylvania Business Corporation Law (the "BCL"), do hereby adopt, and consent
to the adoption of, the following resolutions:
RESOLVED, that the Corporation elect Tom Madden as Vice President,
'treasurer and Chief Financial Officer ("CFO"), such officer to hold office until the next
annual meeting of the shareholders of the Corporation and until his successor is elected
and qualified, and it is further
RE.SOL..V11.), that the CFO shall have check signing authority on all checks oaf the
Corporation along with the current authorized officers of the Corporation and that any
disbursements by the Corporation in excess of $500 shall require the prior written
approval of the CFO, and it is further
RI. SOLVI D, that the CFO shall be provided with a private Office at the
C'orporation's offices and shall have full access to all ofthe hooks and records ofthe
Corporation, and it is further
RESOLVED, that the CFO shall report directly to the audit committee of the
Corporation, and it is further
RESOLVED, that an audit committee of the Corporation be created, the members
of which shall be Henry Scanlon, It. Michael Stuckey and Judy Curiale, Such committee
heing authorized to act on behalf of the Board of Directors to hire and coordinate \6111 the
auditors I'm- the Corporation and perform such other functions as are customary for an
audit committee, and it is further
RESOLVED. that a compensation committee of the Corporation be created, the
members of which shall be Henry Scanlon, R. Michael Stuckey and Judy Cunale, such
committee being authorized to act on behalf of the Board of Directors of the Corporation
to address compensation matters including, without limitation, the compensation package
of the CF0-, and it is further
RES01-.VI'.1), that the Board of Directors of the Corporation is hereby authorized
to take any action in furtherance of the foregoing resolutions.
(FRX)2792 8511 P 003/003
IB-OCT-•c010 MW ) 11 3E LUXG5M Belle E'_otle
_r'_. '- 'IhP> r:.anl..!ilnc ?hnil 1t,!
,f (lrt..l++T ?n;(1 Tr •.rr?••lonrr ••• t:: \vrtt ,r. t +??rl .• !vW to each
e[rudve im davs foilowinn the date that notice of these moo! utions has becn
dlaret+r? icy `; hrA n,! c+xt rIjted hrrolo
? MIR'
w ?
Judy
UCL
IN waNI3SS WHEREOF, the undersigned have executed this consent as of the 10' day
of October, 2010. In accordance with Section 1766(c) of BCL, these resolutions shall be
effective ten days following the date that notice of these resolutions has been given to each
shareholder who has not consented hereto.
Henry Scanlon
------------
Judy Oria.l )
R. Michael Stuckey
[N WT'TNFiSS WHF?RE?T?, the undersigned have ??ecuted this consent as of the la`" clad
oft.>ctober. ?010. In accordance with Section 1766(c) of RC'l., these resolutions shall be
effective ten days li?FFowing the date (Fiat ??oticc ofthese resolutions has tvcn given to each
shareholder who has not consented hereto.
F1enry Scanlon
1udv C: uriale
R. Micla:acl Stuckey _
McNees
Wallace & Nurick uc
100 Pine Street • PO Box 1166 • Harrisburg, PA 17108-1166
Tel: 717.232.8000 • Fax: 717.237.5300
October 26, 2010
Bruce R. Spicer
Direct Dial: 717.237.5331
Direct Fax: 717.260.1746
bspicer(Mmm.com
VIA E-MAIL AND FIRST-CLASS MAIL
Sandra Honegan-Pounder, Esquire
Hamburger Law Firm, LLC
61 West Palisade Avenue
Englewood, NJ 07631-2706
RE: The Sage Corporation (the "Corporation")
Dear Ms. Honegan-Pounder:
This is to respond to your letter dated October 20, 2010, received by us on October 21,
2010.
Your letter enclosed a written consent by three of the shareholders, which purported to (i)
elect a new officer of the Corporation, and (ii) appoint an audit committee and a compensation
committee for the Corporation.
Section 1766(b) of the Pennsylvania Business Corporation Law permits "partial consents"
of shareholders, if the bylaws so provide, and as to those actions which are required or permitted
to be taken at a meeting of the shareholders.
Section 3.15(b) of the Bylaws of the Corporation permits partial written consents of
shareholders, again as to actions which are required or permitted to be taken at a meeting of the
shareholders.
Section 4.01(a) of the Bylaws sets forth the general rule that the business and affairs of
the Corporation are to be under the direction of the Board of Directors. More specifically, Section
5.03 of the Bylaws provides that the Board of Directors has the power to elect "subordinate"
officers, and to appoint committees. In other words, these are powers (electing officers, and
appointing committees) expressly given to the Board of Directors, not to the shareholders..
www.mwn.com
HARRISBum, PA 9 LANCASTER, PA • STATE COLLEGE, PA 9 HAZLETON, PA a CoLumous, OH • WASHwGToN, DC
Sandra Honegan-Pounder, Esquire
October 26, 2010
Page 2
To the extent the Bylaws are applicable here, (i) the actions in your written consent are
actions that are not required or permitted to be taken at a meeting of the shareholders", and (ii),
therefore, the actions described in your partial written consent are invalid and ineffective. To the
extent the Bylaws are not applicable here, the actions in your written consent are again invalid
and ineffective; because the statute only authorizes action by partial written consent of
shareholders when Bylaws so provide.
Very truly yours,
McNEES WALLACE & NURICK LLC
By 4?
Bruce R. Spicer
c: Gregg Aversa (via e-mail)
McNees
Wallace & Nurick i_I.c
100 Pine Street • PO Box 1166 • Harrisburg PA 1710:8-1166
Tal: 717.232.8000 • Fax: 717.237.5300
October 28, 2010
VIA E-MAIL
Corey S. Kupfer, Esquire
Hamburger Law Firm, LLC
61 West Palisade Avenue
Englewood, NJ 07631-2706
RE: The Sage Corporation (the "Corporation")
Dear Mr. Kupfer:
Bruce R. Spicer
Direct Dial: 717.237.5331
Direct Fax: 717.260.1746
bspicer&rnm.com
This is to respond to your letter dated October 22, 2010, sent to our client, Gregg Aversa.
Our client has shared a copy of this letter with us.
Your letter enclosed a written consent by three of the shareholders, which purported to (i)
remove Tom Grill as a director of the Corporation, and (ii) amend the Bylaws of the Corporation.
The consent references an Exhibit "A" which was not delivered to our client. However, the text of
the consent suggests that the amendment to the Bylaws was intended to permit the removal of a
director on the vote of a majority of the shareholders.
With respect to removal of Mr. Grill as a director, please note that:
• Section 4.06(c) of the Bylaws provides that an individual director shall not be
removed if sufficient votes are cast against the resolution of removal which, if
cumulatively voted at a meeting for the election of directors, would be sufficient
to elect one or more directors.
• The other shareholders (including our client) were not given prior notice of, or
the opportunity to vote on, the proposed action. However, please be advised
that (i) our client opposes the proposed removal of Mr. Grill as a director, and
(ii) our client's vote is sufficient to elect one or more directors.
• Accordingly, the attempt to remove Tom Grill as a director is ineffective.
www.mwn.com
HARRISBURG, PA 9 LANCASTER, PA • STATE COLLEGE, PA 9 HAZLETON, PA 9 COLUMBUS, OH 0 WASHINGTON, OC
Corey S. Kupfer, Esquire
Hamburger Law Firm, LLC
October 28, 2010
Page 2
With respect to amending the Bylaws, it is difficult to provide a specific comment without
seeing the proposed amendment. However, please note that Section 1504(dK1) of the
Pennsylvania Business Corporation Law in effect provides that amendments to bylaws that affect
voting rights require the approval of the affected shareholders. Accordingly, to the extent the
proposed amendment to the Bylaws affects our client's voting rights, that amendment is
ineffective.
Finally, as indicated in Richard Stevenson's letter to you of August 20, 2010, we believe
Section 6.06 of the Bylaws is enforceable notwithstanding the lack of a shareholders agreement.
The letter of intent that was provided to our client on May 17, 2010 (dated May 12, 2010) stated
that the provisions of the letter did not constitute an offer capable of being accepted. We have
not been provided with information regarding the outcome of your clients' discussions with the
buyer (Glenn Holck or his nominee) identified in the May 12, 2010 letter of intent. Please provide
copies of (or, if not in writing, descriptions of) any offers that your clients have made or accepted
with respect to a sale of their stock.
Very truly yours,
McNEES WALLACE & NURICK LLC
By FX?
Bruce R. Spicer
c: Gregg Aversa
Richard W. Stevenson, Esq.
DeAngelo, Jim
From: Spicer, Bruce
Sent: Monday, November 15, 2010 3:08 PM
To: 'ckupfer@hamburgedaw.com'
Cc: Gregg Averse ; Stevenson, Rich
Subject: RE: Sage Corporation
Mr. Kupfer:
Our client has authorized us to make the following proposal:
Our client (and certain designees) would purchase the 108 shares of The Sage Corporation which are issued and
outstanding to your clients, at a per-share price of $8,833.465, or an aggregate price of $954,014.22. This amount has
been calculated based on 54% of the stockholders' equity of the corporation.
This proposal is not an offer to purchase, but is merely an indication of interest. However, we would appreciate a
response no later than the close of business on Friday, November 19, 2010.
Any purchase would be subject to customary terms and conditions, including a financing contingency. However, our
client anticipates receiving a written term sheet (if not commitment) from a lender in the near future.
Please advise.
Bruce R. Spicer
McNees Wallace & Nurick LLC
100 Pine Street, P.O. Box 1166
Harrisburg, PA 17108-1166
Direct Telephone: 717.237.5331
Fax: 717.260.1746
bspicerO-)mwn. com
Melees
Wallace & Nurick LLc
The foregoing message may be protected by the attorney-client privilege. If you believe it has been sent to you in error, do not read it.
Please reply to the sender that you have received the message in error, then delete it. Thank you.
Pursuant to U.S. Treasury Department Circular 230, unless we expressly state otherwise, any tax advice contained in this
communication (including any attachments) was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding
tax-related penalties or (ii) promoting, marketing or recommending to another party any matter(s) addressed herein.
From: Corey Kupfer jmeilto:ckupfer(&hamburgerlaw.com1
Sent: Monday, November 15, 2010 12:36 PM
To: Stevenson, Rich
Subject: Sage Corporation
Importance: High
Rich,
It has been approximately two weeks since you told me that your client would be making a settlement/buy-out proposal
and yet we have not received anything. This is consistent with my clients experience with past attempts at negotiation
with your client.
My clients have not authorized me to stop pursuing their rights in anticipation of the promised proposal. We intend to
continue to move forward aggressively and will not assume a resolution until there is one. In fact, it has only been my
schedule that has delayed our further action.
I strongly suggest that if your client is serious about a resolution that you send me the proposal today.
Yours truly,
Corey S. Kupfer, Esq.
e ! [lllllf.Jltl
tel. 201.705.1200 direct 201.705.1228 fax. 201.705.1201
The information contained in this electronic communication is confidential and
may be protected by attorney-client privilege. It is intended only for the use
ofthe named recipient. If the reader of this message is not the named
recipient,he or she may not distribute or copy any of this communication,
including its attachments. If you have received this communication in error,
please notify the sender by return email and delete the original message and any
copy of it from your computer systems.In compliance with IRS regulations, any tax
advice contained or attached to this communication was not intended or written to
be used, and cannot be used,for the purpose of (i) avoiding penalties under the
Internal Revenue Code or (ii) promoting, marketing or recommending to another
party any matters addressed in this communication.
Thank you.
2
P/y'
LAW FIRM LLC
November 30, 2010
VIA EMAIL & FEDERAL EXPRESS
Bruce R. Spicer
McNees Wallace & Nurick, LLC
100 Pine Street, P.O Box 1166
Harrisburg, PA 17108-1166
RE: The Sage Corporation
Dear Mr. Spicer
This is in response to your letters dated October 26, 2010 and October 28, 2010 and your
entailed proposal dated November IS, 2010.
Your October 28 letter asserts that Tom Grill was elected by cumulative voting. However,
we have no evidence of this. For our records, please provide us with evidence that Tom Grill was
elected by cumulative voting. In any event, this is irrelevant as the Articles of Incorporation provide
that the business and affairs of the corporation shall be managed by the shareholders rather than a
board of directors. Despite operating through a board in the past, the ultimate authority to manage
the corporation lies with the shareholders. The creation of an audit committee of the corporation;
creation of a compensation committee of the corporation; election of Tom Madden as the
corporation's vice president and chief financial officer and amendment to the bylaws of the
corporation were validly authorized by the written consent of the shareholders and, under
Pennsylvania law, such actions became effective ten days after such consents were sent to the non-
consenting shareholders.
As the properly elected Chief Financial Officer of the corporation, Tom Madden will start
his employment on Monday December 6 in the corporation' main office. Please inform your client.
Mr. Madden should be provided with an office, access to all of the corporation's books and records
and any assistance necessary or required for him to perform his dudes to the corporation as set
forth in the shareholders consent.
With respect to your settlement proposal (or "indication of interest"), we have the following
responses:
1. Although the offer in unacceptable, our clients are open to continuing good faith
discussions.
61 WEST PALISADE AVENl1E 1 ENGLEWOOD, NrW JERSEY 07631-2706 I n1.' 201-705-1200 1 ?+c 201-705-izm
\: W W. H AAI 5 C It C L R LAW. C: 0%1
2oF2
2. Our clients will not postpone their actions to pursue proper corporate governance and
review of the books and records of the corporation during any ongoing settlement
discussions.
3. Our client will not consider any offer that does not start at the $1.21A in cash at closing
that they would have received from the stock purchase transaction that was not
consummated due to your clients' actions. In addition, my clients require some
compensation for the non-dilutable warrants that they would have received in that deal
(although they are not expecting to receive the full value of the warrants which they
believe could have quantified to millions of dollars). Finally, they require a right to share
in the proceeds of any We of the corporation that occurs within up to ten years of their
buyout. The greater the compensation your client is willing to pay them for the value of
the warrants, the shorter the period of post-closing deal participation they would agree
to accept.
4. Our client will not accept any financing contingency in the agreement. They are not
willing to go through the hassle and cost of an agreement that is contingent as they do
not have a high level of faith in your client's true intention to close.
The bottom line is that my clients are very willing to come to a fair purchase agreement but
will not stop or slow their efforts to protect their investment and ensure proper governance of Sage
while any discussions or negotiations proceed.
Very truly yours,
HAMBURGER L.Aw FIRM, LLC
By:
Corey S. Kupfer
cc: Henry Scanlon
Judy Curiale
R. Michael Stuckey
tl!!/j" P/?"
LA VI' 7 1Rbt LLC
10, V-aii y
McNees
Wallace & Nurick LLc
100 Pine Street • PO Box 1166 • Harrisburg PA 17108-1166
Tel: 717.232,8000 • Fax: 717.237.5300
December 2, 2010
VIA E-MAIL
Corey S. Kupfer, Esquire
Hamburger Law Firm, LLC
61 West Palisade Avenue
Englewood, NJ 07631-2706
RE: The Sage Corporation (the "Corporation")
Dear Mr. Kupfer:
This is to respond to your letter dated November 30, 2010.
Bruce R. Spicer
Direct Dial: 717.237.5331
Direct Fax: 717.260- 1748
bspicerQmwn.com
• In the second paragraph of your letter, you state that my letter of October 28, 2010
asserted that Tom Grill was elected by cumulative voting. You then ask for evidence
that Mr. Grill was elected by cumulative voting.
Your statement and request reflect a misunderstanding of my earlier letter. I
did not indicate that Mr. Grill was elected by cumulative voting. Rather, the
point of my letter was that the Bylaws (§ 4.06(c)) provide that a director (here,
Mr. Grill) cannot be removed if votes would be cast against the removal which
would be sufficient to elect one or more directors on a cumulative basis. In this
case, votes against the removal would have been sufficient (if the issue had
been properly raised) to elect at least one director on a cumulative basis.
Accordingly, the attempt to remove Tom Grill as a director was ineffective.
In the second paragraph of your letter, you state that it is irrelevant whether Mr. Grill
was elected by cumulative voting, "as the Articles of Incorporation provide that the
business and affairs of the corporation shall be managed by the shareholders rather
than a board of directors." You then state that various items were properly authorized
by the written consent of your clients, as shareholders. Your apparent position is that
the Corporation has no directors.
www.mwn.com
HARRISBURG, PA 9 LANCASTER, PA • STATE COLLEGE, PA 9 HAZLETON, PA 9 COLUMBUS, OH 0 WASHINGTON, DC
Corey S. Kupfer, Esquire
December 2, 2010
Page 2
• As an initial matter, it is clear that the parties have for many years operated
utilizing a board of directors. Recent correspondence from your office
evidences this (e.g., a purported notice of a special meeting of the board sent
via e-mail by your office on October 13, 2010).
• Please note the following sections of the Pennsylvania Associations Code:
• Section 2301(a)(1) of Chapter 23 provides that Chapter 23 applies to
business corporations that elected to become a close corporation under the
Business Corporation Law of 1933 (e.g_, the Corporation).
• Section 2301(d) addresses certain transitional items not relevant here.
• Section 2332(a) provides that a bylaw may provide that the business and
affairs of the corporation shall be managed by the shareholders rather than
a board of directors.
• Section 2332(b) provides that such a provision may be inserted in the
articles or bylaw by amendment of all shareholders.
• Section 2332(c) provides that such a provision must be evidenced by
conspicuous notice on the share certificates.
• In the present situation, the bylaws do not provide for management by
shareholders, nor do the share certificates evidence management by
shareholders. As a result, the Corporation is managed by the board of
directors.
• Accordingly, for the reasons stated in our previous correspondence, the items
described in the written consent signed by your clients, as shareholders, were
not validly approved.
• Related to this, for the reasons stated in our previous correspondence, any attempt
to amend the bylaws in a way that affects voting rights is invalid and ineffective.
• In the third paragraph of your letter, you state that Mr. Madden intends to start his
employment on Monday, December 6. For the reasons stated above, Mr. Madden's
employment was not properly authorized. As a result, we respectfully suggest that it is
not productive for Mr. Madden to present himself at the corporate offices on Monday.
Corey S. Kupfer, Esquire
December 2, 2010
Page 3
• Your letter then rejects our client's proposal to purchase your clients' shares of stock of
the Corporation.
Your letter states that your clients will not consider any offer that does not start at
$1,200,000 in cash at closing. However, your letter does not contain a specific
proposal as to a monetary amount. For obvious reasons, our client does not wish
to "negotiate against himself." Accordingly, if your clients are interested in
pursuing a transaction, we ask that your clients provide a proposal with a speck
monetary amount.
• Your letter references the $1,200,000 as the amount your clients "would have
received from the stock purchase transaction that was not consummated due to
your clients' [sic] actions."
• We are not aware of any basis for the view that a transaction was not
consummated due to our client's actions. Our client exhibited a high degree of
cooperation in due diligence and other matters.
We previously requested information regarding offers to purchase (or sell) your
clients' stock, but have not received any response. Presumably, no such offers
were made. If so, then any stock purchase transaction would have been purely
speculative (and subject to the terms and conditions of Section 6.06 of the
bylaws). Further, the recent, highly-publicized regulations proposed by the
Department of Education must certainly have had an impact on any proposed
transaction.
Your letter states that your clients "require some compensation for the non-
dilutable warrants they would have received in that deal...." We do not believe
your clients are entitled to "compensation" for a transaction that was apparently,
speculative, would have triggered Section 6.06 of the bylaws, and in any event
would have been impacted by political events.
Your letter states that your clients "require the right to share in the proceeds of any
sale of the corporation that occurs within ten years of their buy-out." To the extent
you wish to make a "counter-proposal" that includes this concept, our client is
willing to entertain that proposal, although please be advised that a ten-year period
is, in our view, unacceptably long. In addition, any such "look-back" would have to
reflect a declining share percentage over the applicable time period.
Corey S. Kupfer, Esquire
December 2, 2010
Page 4
• Your letter states that your clients "will not accept any financing contingency in the
agreement." Our client advises that financing will be available if and when the
parties come to terms.
• Finally, your letter states that your clients "do not have a high level of faith" in our
client's "true intention to close." In the interest of brevity, we say only that our client
remains very interested in pursuing a transaction that has reasonable terms and
conditions.
Please advise.
Very truly yours,
McNEES WALLACE & NURICK LLC
By ?1? / ?,
Bruce R. Spicer
c: Gregg Aversa
DeceInbc1- 3, 3010
Bruce It. Spicer
McNees Wallace & Nurick, JJ.C:
I mi pine Strcct, 1'.O. lbx 1166
I larriskurg, PA 17104- 1 166
itI',: The Sage Corporation
Dear Nlr. Spwvt-
'I his letter responds to your letter dated December 3,'_010. lour conclusion that The Sale
(:I,rporali(>n (tile "Corporation") is msulaged by a board of directors because the Bylaws o provide
and because the C:orporatiun',s share certificates have no such notice is erroneous.
First, you correctly point to Section 33330) of the Business (:ordination lam, of 1944, os
amended (the "liUTY which provides dint a bylaw tray promic, that the corporation he managed by
its shareholders rather than by a hoard of directors. I lows ver, you.misconstrue the effect of Section
2333(x) by assuming that such prorision must be in the Bylaws of file Ct)rporation. I'ndcr Section
I 5114(c) of the 11C] , any provision of file 130. char refers to a We as set forth in file bvbw of a
corporation shall be construed ro include and he satisftcd by Ally such rule ;ts set f0rtll itt [lie
Articlcs• This is [lie case \vitlh the Corporation, the arriclcs of which provide for management bi (he
tih:trcholders rather thin by :1 board ()f directors. Note also that Section 1304(x) clots not hermit
bylaws to contain provisions inconsistent with the arriclcs, rendering the provisit,ns in the
(,(,rporation's Bylaws regarding the hoard of directors invalid. Further, your references u, Section
333?1?) on anundtncnrs to the arch es or bbl:nvs are irrelevant because the pt•ovisil)n was courained
in file original articles of incotpor-ition.
ScCoud, yon point to the lack of a notice on ill(, share ccrtiticatcs as a further reason to
invalidme the prorision requiring management he shareholders. To our knt,wlcdge there \rcre no
sh:u•c certificates issued. In ant' event, there is nothing in Scctiou 2333(c) that suggests this result.
liore(,ye•r, since your client was one of the original two inuwprators and si wd the arncles of
incorporation Containing Tilt- provision regutnng management by the shareholders, he (:ut hardly
claim not to be on notice. Therefore, your argument that the Corporation is m; triaged by ;t hoard of
dir(TtOTS fails (ri)dct• both law and fxC1.
"I \N ES11, %IA.,%1)11 A%LNI I, ISNGLh:\C U(jTI•YF\\ tF.1i 51: 107,•sl.)',!, Art 'uI•?o:•I: ?Gt ...,!nW.A-P"li
PAGE 2or2
tii.rtcc the (:orlxnat un is managc(l 1), its shareholders and the liyl.rns contain in?:tlid
provisions regarding a hoard of directors, urrt-losrtl is a Shareholder consent confirminiv char the
Corporation has no directors and amending and restating the Bylaws rc? Comply with thu W.A.. The
rrsolurion also apprln•es ft nr+ndatory distribution to shareholders.
You claim 117 t'ollr letter that dlr. Madden's employuu•ut was not properly authorized and that
it is nor productive" for him I() arrive .ii the Corlxlratlort's offices on Monday, December G.
Because it is clear that the shareholders have sole management authonty over the C'ttrpor:ttiott and
hay e properly authorised 11is employment, rest asst?ted that he will arrive on Mcmday. VA. (.\Pct't that
hr be riven complete access to the C;orporailon's books and records in his capacity as Pict:
President, Treasurer artd (thief Financial Officer, and Char no unauthorized dishurscmenis will hr
made in violation of the earlier shareholder consent.
1 in:illy, I will dlscllss VOW scttlcrnc•nt proposals with nit' clients and gcr bade to v,m.
Very truh• Fours,
1h1\iJtl'JtGJ?R I,.\W I?IR?t, l.J,t
liv:
Core). S. Kti r
.\ tr:u-hrd:
r c: I lcllrt Scanlon
ludo Curiale
R. Michael Stt.u-kcy
17,
a 12,'22/2010 15:49 FAX 7179753522 THE SAGE CORP
VERIFICATION
I, Gregg R. Aversa, the Defendant in the above action, hereby verify that the
facts averred in the foregoing document are true and correct to the best of my
Z006
knowledge, information, and belief. I understand that this verification is made subject to
the provisions of 18 Pa. C.S. § 4904, relating to unsworn falsifications to authorities.
G g Avers
Date: December 22, 2010
r .
CERTIFICATE OF SERVICE
I certify that on this date, I am serving a copy of the foregoing document upon the
persons listed below, both by electronic transmission and by United States mail, first
class postage prepaid, addressed as follows:
Victor P. Stabile, Esquire
Elizabeth J. Goldstein, Esquire
DILWORTH PAXSON LLP
112 Market Street, 8th Floor
Harrisburg, PA 17101
James J. Rodgers, Esquire
DILWORTH PAXSON LLP
1500 Market Street
Suite 3500E
Philadelphia, PA 17102-2101
C 'l
flames P. DeAngelo
Counsel for Defendant
Date: December 2'Z` , 2010
O/
COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY, PENNSYLVANIA
HENRY SCANLON, JUDY CURIALE,
R. MICHAEL STUCKEY
Plaintiffs,
V.
GREGG R. AVERSA,
Defendant
Civil No. 10-7624
Civil Action-Equity
C11) N.1 -Z)
M. J
'? rv w'a
OPPOSITION TO DEFENDANT'S MOTION
FOR EMERGENCY RELIEF
1. The parties to this action are all shareholders in The Sage Corporation ("the
Corporation"). From the date of its organization, this Corporation elected to be governed by its
shareholders, and specifically provided in its Articles of Incorporation ("Articles"): "The
business and affairs of the corporation shall be ruanaged by the shareholders of the corporation
rather than by a board of directors." (Copy of Articles annexed as Exhibit A to plaintiff's
Petition dated December 13, 2010.) There is, and can be, no reasonable doubt that this includes
such basic actions as the hiring and firing of employees of the Corporation.
2. After becoming aware of certain financial and operational irregularities, including the use
of assets of the Corporation for his own use, using the Corporation's funds as his own checking
account, and "hiring" of family members by Defendant Aversa, the majority shareholders,
plaintiffs herein, established through their lawful authority as set forth in the Articles, a
Compensation Committee, an Audit Committee, and hired Tom Madden as Vice President, Chief
Financial Officer and Treasurer of the Corporation. The lawful resolutions of the shareholders
establishing these committees, and the hiring of Mr. Madden, are set forth in the First Consent
of the Shareholders (annexed as Exhibit B to plaintiff's Petition dated December 13, 2010)
3. Pursuant to this lawful action of the shareholders, on December 5, 2010, Mr. Madden
arrived at the Corporation to commence his duties, but was refused entri,, by Defendant Aversa.
Defendant Aversa's wrongful and self-serving decision to disregard the lawful actions of the
shareholders and lock Mr. Madden out of the Corporation's offices formed the basis for
plaintiff's emergent petition to this Court. By that emergent petition, plaintiffs sought special
and preliminary injunctive relief from this Court, seeking to compel defendant Aversa, a
minority shareholder, to abide by the lawful actions of the shareholders, including permitting the
Chief Financial Officer to commence work, and enjoining defendant from paying year-end
bonuses or otherwise squandering the assets of the Corporation.
4. By Order dated December 16, 2010, this Court granted plaintiffs' request, and entered a
special injuunction, providing in pertinent part: "Defendant is enjoined from: Taking any action,
contrary to the actions of the shareholders of the corporation or failing to comply with and abide
by the actions of the shareholders of the corporation...."' (Emphasis added.)(Copy of Order
annexed hereto as Exhibit A) This restraint by the Court is essential to maintaining the status
quo.
5. Under the reuse of simply seeking to "clarify" that Order, defendant Aversa is actually
seeking permission from this Court to again lock out Mr. Madden - an action directly contrary to
the actions of the shareholders, and directly contrary to the Articles, providing for management
1 Defendant Aversa snakes much of the fact that the Court chose to craft its own Order, rather than entering the
proposed order pro-,nded by plaintiffs with their petition. It is axiomatic that the Court may choose to enter an Order
using whatever language it deems appropriate and useful under the circumstances. Moreover, by presenting this
red-herring. defendant apparently hopes to distract the Court, and have the restrictive language it did include in its
Order of December 13, 2010, forgotten. That clear and ambiguous Order restrains defendant Aversa from
continuing any longer his pattern of running this Corporation as his personal lifestyle company. and ignoring the
actions of the shareholders when they interfere or endanger his own self-serving goals.
2
E_1Memo Sage 2.doc
by the shareholders, and directly contrary to the restrain placed upon him pending the hearing
scheduled for Monday, December 270' in this case. There is no basis for this Court to disturb or
modify its restraint as urged by defendant Aversa now.
6. Based on the Articles, the shareholders of this Corporation clearly have the authority to
hire employees, as part of their exclusive right to manage and oversee the affairs of the
Corporation. As such, Tom Madden was properly hired as Vice President, Treasurer and Chief
Financial Officer, pursuant to this authority vested in the shareholders. The improper actions in
this case occurred after Mr. Madden was hired, when defendant Aversa refused to allow him
entry into the offices of the Corporation, and prohibited him from commencing the duties for
which he was lawfiully hired by the shareholders. Therefore, by the Court granting the special
injunctive relief urged by plaintiffs, the Court has done no more than put an end to defendant
Aversa's wrongf l conduct by enjoining his wrongful actions. The other side of the coin of
restraint can of course be stated as a compulsion to abide by the lawfid actions of the
shareholders. However, that neither changes the restraint placed upon defendant Aversa, nor
does it provide a back door opportunity for him to continue his wrongful actions and lock-out
Mr. Madden.
7. The restraint unposed by this Court is aptly supported by the precedent offered in
Sheridan Broadcasting Networks, Inc. v. NBN Broadcasting, Inc., 693 A.2d 989 (Pa. Super.
I997), where the Superior Court upheld in pertinent part a prelinunary injunction to prevent a
50% shareholder from interfering with a management committee's decision to hire two
employees. The court found that the management committee had a clear right to relief to enjoin
such an interference with the prerogatives of management, and that an injunction was necessary
to preserve the status quo and prevent irreparable harm. Such is the case here, and this Court
3
E-Wemo Sage z_doc
should not disturb its Order pending the hearing on the preliminary injunction, scheduled for
Monday. December 27th.
8. Furthennore, the need for this Court's interim special injunction pending that hearing, has
been exacerbated by defendant Aversa's actions - even in the face of the interim Order issued on
December 16th. Yesterday, on Monday, December 20th, Mr. Madden arrived at the offices of the
Corporation. To avoid surprise and minimize disruption to the Corporation, plaintiffs' counsel
provided defendant Aversa's counsel with notice on Thursday, December 16th that he would be
arriving on Monday, December 20th, late morning.
9. Despite Aversa's claims to the contrary in his motion, there was no chaos, "confusion and
disruption" by Mr. Madden's presence. He quietly met with Mr. Aversa, and two other
executive employees of the Corporation. However, in a demonstration of his obvious
dissatisfaction with the Order of this Court, Aversa provided Mr. Madden with a folding table in
the file room. Although Mr. Madden was provided with a computer to utilize in performing his
duties, in a further effort to thwart this Court's Order, defendant Aversa prohibited Mr. Madden
from accessing the Corporation's electronic financial records, claiming they needed to obtain a
cable to enable his connection to those records. Meanwhile, defendant's counsel was preparing
the instant motion in an attempt to get Madden off the premises of the Corporation. This was a
blatant effort to forestall Mr. Madden's access to the financial records of the Corporation, and
scrutiny of expenditures and operations of the Corporation by Aversa, who has come to run this
Corporation for his own benefit and that of his family members, to the exclusion and detriment
of the Corporation itself and the shareholders as a whole.
WHEREFORE, plaintiffs Henry Scanlon, Judy Curiale and R. Michael Stuckey, majority
shareholders in this Corporation, respectfirlly request that defendant Aversa's motion be denied
4
E_Wemo Sage 2.doc
in its entirety, and the Court continue its restraint of defendant Aversa, as stated in its Order of
December 16, 2010, until the preliminary hearing scheduled for December 27, 2010.
Respectfully Submitted,
DIL ORTH P SON LLP
Victor P. Stabile, Esquire
I.D. No. 37449
Elizabeth J. Goldstein, Esquire
Of Counsel: I.D. No. 73779
Sharron E_ Ash, Esquire 112 Market Street, 8th Floor
Hamburger Law Firm LLC Harrisburg, PA 17101
61 West Palisade Avenue Tel.: (717) 236-4812
Englewood, NJ 07631 Fax: (717) 236-7811
TeL 201-705-1200
Fax: 201-705-1201 James J. Rodgers, Esquire
Id. No. 21635
1500 Market Street
Suite 3500E
Philadelphia, PA 19102-2101
Tel: 215-575-7000
Fax: 215-575-7200
Dated: December 11, 2010
E_Wemo Sage Z_doc
Attorneys for Plaintiffs
5
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HENRY SCANLON,
JUDY CURIALE,
R. MICHAEL STUCKEY,
PLAINTIFFS
V.
: IN THE COURT OF COMMON PLEAS OF
: CUMBERLAND COUNTY, PENNSYLVANIA
GREGG R. AVERSA, :
DEFENDANT NO. 14-7624 CIVIL
OMER OF COURT
AND NOW, this 16t' day of December, 2010, upon consideration of Plaintiffs`
Complaint in Equity and Petition for Special and Preliminary Injunction,
IT 13 HEREBY ORDERED AND DIRECTED that:
1. A Rule shall issue upon Gregg R. Aversa to show cause why the preliminary
injunction should not be granted;
2. Defendant shall file an Answer to Plaintiffs' Petition for Special and
Preliminary Injunction on or before December 22, 2010;
3. A preliminary hearing on the Petition for Special and Preliminary injunction
will be held on Monday, December 27, 2010, at 10:00 a.m. in Courtroom No.
2 of the Cumberland County Courthouse, Carlisle, Pennsylvania.
IT IS FURTHER ORDERED AND DIRECTED that pending further Order of Court
the Defendant is enjoined from:
A. Taking any action, contrary to the actions of the shareholders of the
corporation or failing to comply with and abide by the actions of the
shareholders of the corporation;
B. Dispersing year end or other bonus compensation to any employees of
the corporation;
RECEIVED TIME DEC. 16, 8:34AM PRINT TIME DEC. 16. 8:34AM
C. From removing any books, records or other property belonging to the
corporation from any premises owned or leased by the corporation to
include the principle place of business at 4242 Carlisle Pike, Suite 177,
Camp Hill, Pennsylvania 17011 _
By the Court,
M. L. Ebert, Jr., J.
Elizabeth J. Goldstein, Esquire
Attorney for Plaintiffs
Fax: 236-7811
James DeAngelo, Esquire
Attorney for Defendant
Fax. 237-6304
bas
RECEIVED TIME DEC, 16, 8:34AM PANT TIME DEC, lb. 8:34AM
CERTIFICATE OF SERVICE
I hereby certify that on this 21st day of December 2010, I served a true and correct copy
of the foregoing document on the following individual via postage-prepaid, first class mail and
addressed as follows:
James DeAngelo, Esquire
McNees Wallace & Nurick LLC
100 Pine Street, P.O. Box 1166
Harrisburg, PA 17108-1166
Elizabeth J. Goldstein
HENRY SCANLON,
JUDY CURIALE,
R. MICHAEL STUCKEY,
PLAINTIFFS
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
V.
GREGG R. AVERSA,
DEFENDANT
: NO. 10-7624 CIVIL
ORDER OF COURT
AND NOW, this 21St day of December, 2010, upon consideration of Greg
Aversa's Motion for Emergency Relief in the form of clarification of the this Court's
Order dated December 16, 2010;
IT IS HEREBY ORDERED AND DIRECTED that pending the outcome of the
hearing set for December 27, 2010, Defendant, Greg Aversa, will not be required to
provide access for Tom Madden to enter the premises of Sage Corporation, nor will he
be required to provide private office space to Tom Madden.
Elizabeth J. Goldstein, Esquire
Attorney for Plaintiffs
Fax: 236-7811
James DeAngelo, Esquire
Attorney for Defendant
Fax: 237-5300
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By the Court,
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IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY, PENNSYLVANIA
DEC 2 2
12010
HENRY SCANLON, JUDY CURIALE
and R. MICHAEL STUCKEY,
Plaintiffs Civil No. 10-7624
V. Civil Action-Equity
(Judge Ebert)
GREGG AVERSA, ,
Defendant
ORDER GRANTING MOTION FOR
ADMISSION PRO IHAC VICE OF SHARRON ASH
AND NOW, this I I sr day of 1) #_r.f, 2010, it is hereby
ORDERED that Sharron Ash, Esquire, is admitted pro hac vice in the above-captioned case to
represent Plaintiffs Henry Scanlon, Judy Curiale and R. Michael Stuckey.
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HENRY SCANLON, JUDY CURIALE, IN THE COURT OF COMMON PLEAS OF
R. MICHAEL STUCKEY, CUMBERLAND COUNTY, PENNSYLVANIA
Plaintiffs
No. 10-7624 CIVIL
V.
GREGG R. AVERSA,
Defendant
NOTICE TO PLEAD
You are hereby notified to file a written response to the enclosed New Matter
within twenty (20) days from service hereof or a judgment may be entered against you.
MCNEES WALLACE & NURICK LLC
BY
Vbbes P. DeAngelo, I.D. No. 62377
ra P. Fourlas, I.D. No. 62047
Bruce R. Spicer, I.D. No. 72998
100 Pine Street, P.O. Box 1166
Harrisburg, PA 17108-1166
(717) 232-8000 (telephone)
(717) 237-5300 (facsimile)
Attorneys for Defendant, Gregg R. Aversa
Date: December Z', 2010
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HENRY SCANLON, JUDY CURIALE, IN THE COURT OF COMMON PLEAS OF
R. MICHAEL STUCKEY, CUMBERLAND COUNTY, PENNSYLVANIA
Plaintiffs
No. 10-7624 CIVIL
V.
GREGG R. AVERSA,
Defendant
ANSWER WITH NEW MATTER TO COMPLAINT
Defendant, Gregg R. Aversa ("Defendant" or "Mr. Aversa"), by his counsel,
McNees Wallace & Nurick LLC, answers Plaintiffs' complaint as follows:
Parties
1. Admitted.
2. Admitted.
3. Admitted.
4. Admitted that Plaintiffs collectively own 54% of the shares of Sage
Corporation (the "Corporation"). The remaining averment of this paragraph requires no
response.
5. Admitted. By way of further response, Mr. Aversa is the President and
Chief Executive Officer ("CEO") of the Corporation, a position he has held for 21 years.
Jurisdiction and Venue
6. The averment of this paragraph sets forth a conclusion of law to which no
response is required. By way of further response, the Court lacks jurisdiction over the
claim in this action because the Corporation and Board Members are necessary parties
and have not been joined. Further, Plaintiffs lack standing to assert their complaint
r
because any alleged injury to them is purely derivative of alleged harm to the
Corporation.
7. Admitted that Defendant resides in Cumberland County, Pennsylvania.
The remaining averment of this paragraph sets forth a conclusion of law to which no
response is required.
Nature of Action
8. Denied. It is denied that Plaintiffs have the right or the power to manage
the business and affairs of the Corporation. It is further denied that this case is about
management of the Corporation's affairs. Rather, it is Plaintiffs' attempt to pressure
Defendant into increasing the amount of his offer to purchase Plaintiffs' corporate
shares.
Factual Backaround
9. Admitted in part and denied in part. It is admitted that the Corporation was
formed in 1989, that Exhibit A to the complaint appears to be a copy of the
Corporation's Articles, and that Defendant was one of the incorporators. The remaining
averment of this paragraph sets forth a conclusion of law to which no response is
required. By way of further response, it is denied that the Corporation properly elected
shareholder management. It is further denied that the Corporation has been managed
by its shareholders at any time since its 1989 incorporation.
10. Admitted.
11. Denied as stated. Plaintiffs are shareholders of the Corporation. They
occupy no other position with the Corporation. Earlier in 2010, Plaintiffs sought to sell
their shares in the Corporation to a third party. That proposed transaction was never
2
more than speculative and was not completed. Plaintiffs have filed this action in the
course of business negotiations to sell their shares to Mr. Aversa. A copy of relevant
correspondence is attached as Exhibit A and incorporated by reference.
12. Admitted that the Corporation's bylaws provide for a board of directors.
The remaining averment of this paragraph sets forth a conclusion of law to which no
response is required.
13. Denied. It is denied that Defendant interfered with or undermined the due
diligence process. It is denied that the due diligence analysis was less than complete
and thorough. It is denied that Plaintiffs were able only to perform a "limited and cursory
examination." It is denied that the due diligence process revealed any irregularities.
14. Denied. To the contrary, the Corporation has been a very successful
venture and has provided significant returns to Plaintiffs year after year under Mr.
Aversa's leadership. A schedule of those returns is attached as Exhibit B and
incorporated by reference. Plaintiffs are in the process of selling their shares, and they
have filed this action in an attempt to gain leverage in those business negotiations. It is
denied that plaintiffs' access to information in the due diligence process was "cursory
and limited." It is denied that Defendant has violated any alleged duty to Plaintiffs, the
Corporation, or other shareholders. It is denied that Defendant is "running the
corporation as his own personal cash cow." It is denied that the Corporation's payroll
includes any employees not performing services for the Corporation. It is denied that
the Corporation's assets have "become akin to Aversa's personal checking account." It
is denied that Defendant has caused the Corporation to pay any improper expenses or
3
bonuses. It is denied that Defendant improperly manipulated the Corporation's profits
or paid excessive year-end bonuses.
15. Admitted in part and denied in part. It is admitted that Plaintiffs have
attempted to appoint Tom Madden as Vice President, Treasurer, and Chief Financial
Officer of the Corporation, and to appoint themselves as audit and compensation
committees of the Corporation. It is denied that those actions are valid. It is admitted
that Defendant has received notice of the "First Consent of Shareholders." The
remaining averments of this paragraph set forth conclusions of law to which no
responses are required. By way of further response, it is denied that Plaintiffs acted
properly under § 1766(b) of the BCL. It is denied that Plaintiffs' purported actions ever
became legally effective.
16. Denied. It is denied that Plaintiffs' attempted appointment of Mr. Madden
as CFO is proper or valid. It is denied that Plaintiffs are attempting to put in place either
personnel or committees that are appropriate or necessary for overseeing the
Corporation's financial affairs. It is denied that there has been any improper
management of the Corporation and/or use of its assets. It is denied that there are any
"irregularities" needing elimination. It is denied that Plaintiffs' stated purpose for their
actions is their true purpose; rather, Plaintiffs are using their attempted appointment of
Mr. Madden and this legal action to pressure Defendant into increasing the amount of
his offer to purchase Plaintiffs' shares of the Corporation.
17. Admitted, upon information and belief.
18. Admitted in part and denied in part. It is admitted that Defendant, as
President and CEO of the Corporation, has refused to comply with Plaintiffs' improper
4
acts and has refused to recognize Plaintiffs improper and invalid attempted
appointment of Mr. Madden as a corporate officer. It is denied that Defendant has used
or is using the Corporation's assets for his own purposes. The remaining averments of
this paragraph set forth conclusions of law to which no responses are required. By way
of further response, it is denied that Defendant lacks a legitimate reason to oppose
Plaintiffs' actions. It is denied that Plaintiffs are acting in the best interest or for the
protection of the Corporation, its employees, or its shareholders.
19. Admitted in part and denied in part. It is admitted that Plaintiffs have
attempted to amend the Corporation's bylaws and to remove Tom Grill from the
Corporation's board of directors. It is admitted that Defendant has received notice of
these attempted acts by Plaintiffs. The remaining averments of this paragraph set forth
conclusions of law to which no responses are required. By way of further response, it is
denied that Plaintiffs' conduct was consistent with their obligations to the Corporation. It
is denied that Plaintiffs have the right to manage the business and affairs of the
Corporation. It is denied that any such right is conveyed by the Articles of Incorporation.
It is denied that the "Consent of Shareholders in lieu of meeting" that Plaintiffs signed on
October 21, 2010 was lawful.
20. Admitted. By way of further response, Plaintiffs' resolutions were
improper and invalid.
21. Admitted in part and denied in part. It is admitted that Plaintiffs have
attempted to amend the Corporation's bylaws to describe Plaintiffs' interpretation of the
Articles of Incorporation, and to alter the Corporation's management structure, which
has been in place for 21 years. It is admitted that Defendant received notice of
5
Plaintiffs' attempted acts. It is admitted that Defendant did not comply with Plaintiffs'
attempted bylaw amendment. It is denied that Plaintiffs' attempted amendment either
restated or reflected the actual or current effect of the provisions of the Articles of
Incorporation.
22. Admitted in part and denied in part. It is admitted that Mr. Madden sought
admission to the Corporation's premises on December 6, 2010. It is admitted that
Defendant received notice stating that Mr. Madden would be arriving and indicating that
Plaintiffs expected Mr. Madden to begin serving as the Corporation's CFO. It is denied
that Mr. Madden had any valid authority or duties to the Corporation.
23. Admitted. By way of further response, Mr. Madden was not lawfully
entitled to entry.
24. Admitted. By way of further response, Defendant acted in his capacity as
President and CEO of the Corporation.
25. Admitted in part and denied in part. It is admitted that Defendant does not
acknowledge any validity in Plaintiffs' attempted actions. It is denied that Plaintiffs'
attempted actions are lawful. It is denied that the Corporation's affairs have been or will
be conducted "for the sole benefit of [Defendant] and members of his family."
Count I - Injunctive Relief
26. Defendant incorporates his responses in paragraphs 1-25 above.
27. The averment of this paragraph sets forth a conclusion of law to which no
response is required. By way of further response, it is denied that Plaintiffs' actions are
lawful. It is denied that Plaintiffs have the right or power to manage the business and
affairs of the Corporation.
6
28. The averment of this paragraph sets forth a conclusion of law to which no
response is required. By way of further response, it is denied that Plaintiffs are suffering
immediate or irreparable harm to any lawful interest. It is denied that Plaintiffs are
unable to obtain all information concerning corporate expenditures to which they are
entitled. It is denied that the Corporation's assets have been or will be "improperly or
unwisely dissipated." It is denied that Plaintiffs would be unable to obtain compensation
in money damages for any allegedly improper or "unwise" expenditures, if they could
prove any entitlement to such compensation.
WHEREFORE, Defendant demands judgment in his favor and against Plaintiffs
for all relief demanded in the complaint, together with Defendant's costs incurred in
defending this action, and such other and further relief as the Court deems just.
NEW MATTER
1. Defendant incorporates his responses contained in his answer to the
complaint.
2. The Court lacks jurisdiction over this action because the Corporation, a
necessary party, has not been joined.
3. The Court lacks jurisdiction over this action because the members of the
Board of Directors, necessary parties to this action, have not been joined.
4. Plaintiffs are not entitled to maintain this action because the harm they
claim to be suffering is solely derivative of alleged harm to the Corporation.
5. This action is barred by the applicable statute of limitations.
6. This action is barred by the doctrine of laches.
7. This action is barred by the doctrine of waiver.
7
8. This action is barred by the doctrine of unclean hands.
WHEREFORE, Defendant demands judgment in his favor and against Plaintiffs
for all relief demanded in the complaint, together with Defendant's costs incurred in
defending this action, and such other and further relief as the Court deems just.
Respectfully submitted,
MCNEES WALLACE & NURICK LLC
J es P. DeAngej6, I.D. No. 62377
ebra P. Fourlas, I.D. No. 62047
Bruce R. Spicer, I.D. No. 72998
100 Pine Street, P.O. Box 1166
Harrisburg, PA 17108-1166
(717) 232-8000 (telephone)
(717) 237-5300 (facsimile)
Attorneys for Defendant, Gregg R. Aversa
Date: December ?Z" , 2010
8
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October 20, 20 10
11-1 rlil)1 R-11,1*'XPR1 .VS
Uregg .Wersa
The Sage Corporation
4242 Carlisle 111hc, Sic. 177
Camp hill, RA 17011
Lewis Gtill
The Sale Corporation
3044 Flespcr Road
Billings, ,tit"1' 5910
RI :: Fhc Sige Cnrpeiradon
I kar Mcssrs..\vc•rsa (31711,
At the rcquest of our clients, please find enclosed an eSCcuted shardmIder Consent of The
Sage (a Mpon on.
Vcr% n•UIF PUUr,,
1L?.rtt rw;1;R I.kw I,IioI, I.LI.
01 L-4
Sant ra I loner an-PotIndcr
1:1 whist-ki:
THE SAGE CoRPORKHON
CONSENT of SHAR.F..HOLDERS
IN 1.1.1?U or MELTING
"fhe undersigned being a majority of the shareholders of The Sage Corporatism, a
Pennsylvania Corporation (the "Corporation"), acting without a meeting pursuant to Section
1766(b) the Pennsylvania Business Corporation Law (the "BCL"), do hereby adopt, utd consent
to the adoption of, the following resolutions:
RESOLVED, that the Corporation elect 't'om Madden as Vice ['resident,
Treasurer and Chief Financial Officer ("CFO"), such officer to hold office until the next
annual meeting of the shareholders of the Corporation and until his successor is elected
and qualified. and it is further
R1l..S(')1...VI D, that the CFO shall have check signing, authority on all checks of the
Corporation along with the current authorized officers ofthe Corporation and that any
disbursements by the Corporation in excess of $5,000 shall require the prior written
approval of the CFO; and it is further
Rt?SOLV[aD, that the CFO shall be provided with a private office at the
Corporation's offices and shall have full access to all of the hooks and records of the
Corporation; and it is further
RI S(:)I.,VE1), that the CFO shall report directly to the audit committee of the
Corporation; and it is further
RESOLVED, that an audit committee of the Corporation be created, the n1e?nbers
of which shall be Henry Scanlon, R. Michael Stuckey and Judy Curiale, such committee
hying authorized to act on behalf of the Board of Directors to hire and coordinate Frith the
auditors for the Corporation and perlo nt such 1)ther 1111101ons aS Urt cus(on?ary lirr an
audit committer: and it is further
RESOLVED. that a compensation committee of the Corporation be created, the
members of which shall be Henry Scanlon, R. Michael Stuckey and Judy Curiale, such
committee being authorized to act on behalf of the Board of'Directors of the Corporation
to address compensation matters including, without limitation, the coniper?sation package
of the Cl:(')-, and it is further
RESOI..V 1?1), that the Board of Directors of the ('orporation is hereby authorized
to take any action in furtherance ofthe foregoing resolutions.
(rRX)2792 8511 P 003/003
18-01f_T-2010(lUN) 11 34 1UX654 Belie E*olle
... .. .. .::vrt Ftr! ::tha? rran:..ti?n? :hn)t 1?,
.j!'llr,..h,.r 1(1i(1^i.. ,.r?n..lanrr....ttt t?d..,t T • i
effective ten davs followinn the date tbut aotice of these resolutions has beW 14ven to each
eltlrreholder w'`.'. t11!S nni Ck;",.- ed T1rroo.
,
._..-
Jud- Cariala
IN WITNESS WHEREOF, the undersigned have executed this consent as of the 14111 day
of October, 2010. In accordance with Section 1766(c) of BCL, these resolutions shall be
effective ten days rollo%inb the date that notice of these resolutions has been given to each
shareholder who has not consented hereto.
Henry Scanlon
Judy t?titria.lc?
R. Miehnel Stuckey
[tip Vd1TTJE:SS W'i?FRi=C)F, the undersigned htivc executed th s consent as of the 141" dad
of October. 2010. In accordance with Section 1766(c) of 11CL. these resolutions shall he
effective ten days following the date that no6cc of these resolutions has hmn given to each
shareholder who his not consented hereto.
Ilenry Scanlon
Jude Curiale
R. Michael Stuckey
McNees
Wallace & Nurick LLc
100 Fine Street • PO Box 1166 • Harrisburg, PA 17108-1166
Tel: 717.232.8000 • Fax: 717.237.5300
October 26, 2010
Sandra Honegan-Pounder, Esquire
Hamburger Law Firm, LLC
61 West Palisade Avenue
Englewood, NJ 07631-2706
RE: The Sage Corporation (the "Corporation")
Dear Ms. Honegan-Pounder:
Bruce R. Spicer
Direct Dial: 717.237.5331
Direct Paz: 717.260.1746
bspicer®mwn.com
VIA E-MAIL AND FIRST-CLASS MAIL
This is to respond to your letter dated October 20, 2010, received by us on October 21,
2010.
Your letter enclosed a written consent by three of the shareholders, which purported to (i)
elect a new officer of the Corporation, and (ii) appoint an audit committee and a compensation
committee for the Corporation.
Section 1766(b) of the Pennsylvania Business Corporation Law permits "partial consents"
of shareholders, if the bylaws so provide, and as to those actions which are required or permitted
to be taken at a meeting of the shareholders.
Section 3.15(b) of the Bylaws of the Corporation permits partial written consents of
shareholders, again as to actions which are required or permitted to be taken at a meeting of the
shareholders.
Section 4.01(a) of the Bylaws sets forth the general rule that the business and affairs of
the Corporation are to be under the direction of the Board of Directors. More specifically, Section
5.03 of the Bylaws provides that the Board of Directors has the power to elect "subordinate"
officers, and to appoint committees. In other words, these are powers (electing officers, and
appointing committees) expressly given to the Board of Directors, not to the shareholders.
www.mwn.com
HARFdssuRG, PA 9 LANCASTER, PA • STATE COLLEGE, PA • HAZLETON, PA • COLUMBUS, 01'1 a WAswjGTON, DC
Sandra Honegan-Pounder, Esquire
October 26, 2010
Page 2
To the extent the Bylaws are applicable here, (i) the actions in your written consent are
actions that are not required or permitted to be taken at a meeting of the shareholders", and (ii),
therefore, the actions described in your partial written consent are invalid and ineffective. To the
extent the Bylaws are not applicable here, the actions in your written consent are again invalid
and ineffective; because the statute only authorizes action by partial written consent of
shareholders when Bylaws so provide.
Very truly yours,
McNEES WALLACE & NURICK LLC
By
Bruce R. Spicer
Gregg Aversa (via e-mail)
McNees
Wallace & Nurick LLc
100 Pine Street • PO Box 1166 • Harrisburg, PA 17108-1166
Tel: 717.232.8000 • Fax: 717.237.5300
October 28, 2010
VIA E-MAIL
Corey S. Kupfer, Esquire
Hamburger Law Firm, LLC
61 West Palisade Avenue
Englewood, NJ 07631-2706
RE: The Sage Corporation (the "Corporation")
Dear Mr. Kupfer:
Bruce R. Spicer
Direct Dial: 717.237.5331
Direct Fax: 7117.2150. 1746
bspicer&rwm.com
This is to respond to your letter dated October 22, 2010, sent to our client, Gregg Aversa.
Our client has shared a copy of this letter with us.
Your letter enclosed a written consent by three of the shareholders, which purported to (i)
remove Tom Grill as a director of the Corporation, and (ii) amend the Bylaws of the Corporation.
The consent references an Exhibit "A" which was not delivered to our client. However, the text of
the consent suggests that the amendment to the Bylaws was intended to permit the removal of a
director on the vote of a majority of the shareholders.
With respect to removal of Mr. Grill as a director, please note that:
• Section 4.06(c) of the Bylaws provides that an individual director shall not be
removed if sufficient votes are cast against the resolution of removal which, if
cumulatively voted at a meeting for the election of directors, would be sufficient
to elect one or more directors.
• The other shareholders (including our client) were not given prior notice of, or
the opportunity to vote on, the proposed action. However, please be advised
that (i) our client opposes the proposed removal of Mr. Grill as a director, and
(ii) our client's vote is sufficient to elect one or more directors.
• Accordingly, the attempt to remove Tom Grill as a director is ineffective.
www.mwn.com
HARRISBURG, PA 9 LANCASTER, PA a STATE COLLEGE, PA • HAZLETON, PA • COLUMBUS, OH 0 WASHINGTON, DC
Corey S. Kupfer, Esquire
Hamburger Law Firm, LLC
October 28, 2010
Page 2
With respect to amending the Bylaws, it is difficult to provide a specific comment without
seeing the proposed amendment. However, please note that Section 1504(dx1) of the
Pennsylvania Business Corporation Law in effect provides that amendments to bylaws that affect
voting rights require the approval of the affected shareholders. Accordingly, to the extent the
proposed amendment to the Bylaws affects our client's voting rights, that amendment is
ineffective.
Finally, as indicated in Richard Stevenson's letter to you of August 20, 2010, we believe
Section 6.06 of the Bylaws is enforceable notwithstanding the lack of a shareholders agreement.
The letter of intent that was provided to our client on May 17, 2010 (dated May 12, 2010) stated
that the provisions of the letter did not constitute an offer capable of being accepted. We have
not been provided with information regarding the outcome of your clients' discussions with the
buyer (Glenn Holck or his nominee) identified in the May 12, 2010 letter of intent. Please provide
copies of (or, if not in writing, descriptions of) any offers that your clients have made or accepted
with respect to a sate of their stock.
Very truly yours,
McNEES WALLACE & NURICK LLC
By &al
Bruce R. Spicer
c: Gregg Aversa
Richard W. Stevenson, Esq.
DeAngelo, Jim
From: Spicer, Bruce
Sent: Monday, November 15, 2010 3:08 PM
To: 'ckupfer@hamburgerlaw.com'
Cc: Gregg Aversa ; Stevenson, Rich
Subject: RE: Sage Corporation
Mr. Kupfer:
Our client has authorized us to make the following proposal:
Our client (and certain designees) would purchase the 108 shares of The Sage Corporation which are issued and
outstanding to your clients, at a per-share price of $8,833.465, or an aggregate price of $954,014.22. This amount has
been calculated based on 54% of the stockholders' equity of the corporation.
This proposal is not an offer to purchase, but is merely an indication of interest. However, we would appreciate a
response no later than the close of business on Friday, November 19, 2010.
Any purchase would be subject to customary terms and conditions, including a financing contingency. However, our
client anticipates receiving a written term sheet (if not commitment) from a lender in the near future.
Please advise.
Bruce R. Spicer
McNees Wallace & Nurick LLC
100 Pine Street, P.O. Box 1166
Harrisburg, PA 17108-1166
Direct Telephone: 717.237.5331
Fax: 717.260.1746
bsoicer(&-mwn.com
McNees
Wallace & Nurick LLC
The foregoing message may be protected by the attorney-client privilege. If you believe it has been sent to you in error, do not read it.
Please reply to the sender that you have received the message in error, then delete it. Thank you.
Pursuant to U.S. Treasury Department Circular 230, unless we expressly state otherwise, any tax advice contained in this
communication (including any attachments) was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding
tax-related penalties or (ii) promoting, marketing or recommending to another party any matter(s) addressed herein.
From: Corey Kupfer jmailto:ckupfer0hamburgedaw.com]
Sent: Monday, November 15, 2010 12:36 PM
To: Stevenson, Rich
Subject: Sage Corporation
Importance: High
Rich,
it has been approximately two weeks since you told me that your client would be making a settlement/buy-out proposal
and yet we have not received anything. This is consistent with my clients experience with past attempts at negotiation
with your client.
My clients have not authorized me to stop pursuing their rights in anticipation of the promised proposal. We intend to
continue to move forward aggressively and will not assume a resolution until there is one. In fact, it has only been my
schedule that has delayed our further action.
I strongly suggest that if your client is serious about a resolution that you send me the proposal today.
Yours truly,
Corey S. Kupfer, Esq.
??(/11111.?1t l Y ?!'
tel. 201.705.1200 direct 201.705.1228 fim. 201.705.1201
The information contained in this electronic communication is confidential and
may be protected by attorney-client privilege. It is intended only for the use
ofthe named recipient. If the reader of this message is not the named
recipient,he or she may not distribute or copy any of this communication,
including its attachments. If you have received this communication in error,
please notify the sender by return email and delete the original message and any
copy of it from your computer systems.In compliance with IRS regulations, any tax
advice contained or attached to this communication was not intended or written to
be used, and cannot be used,for the purpose of (i) avoiding penalties under the
Internal Revenue Code or (ii) promoting, marketing or recommending to another
party any matters addressed in this communication.
Thank you.
2
LAW FIRM LLC
November 30, 2010
KA EMAIL & FEDERAL EXPRESS
Bruce R Spicer
McNees Wallace & Nurick, LLC
100 Pine Street, P.O. Box 1166
Harrisburg, PA 17108-1166
RE: The Sage Corporation
Dear Mr. Spicer
This is in response to your letters dated October 26, 2010 and October 28, 2010 and your
emailed proposal dated November 15, 2010.
Your October 28 letter asserts that Tom Grill was elected by cumulative voting. However,
we have no evidence of this. For our records, please provide us with evidence that Tom Grill was
elected by cumulative voting In any event, this is irrelevant as the Articles of Incorporation provide
that the business and affairs of the corporation shall be managed by the shareholders rather than a
board of directors. Despite operating through a board in the past, the ultimate authority to manage
the corporation lies with the shareholders. The creation of an audit committee of the corporation;
creation of a compensation committee of the corporation; election of Tom Madden as the
corporation's vice president and chief financial officer and amendment to the bylaws of the
corporation were validly authorized by the written consent of the shareholders and, under
Pennsylvania law, such actions became effective ten days after such consents were sent to the non-
consenting shareholders.
As the properly elected Chief Financial Officer of the corporation, Tom Madden will start
his employment on Monday December 6 in the corporation' wain office. Please inform your client.
Mr. Madden should be provided with an office, access to all of the corporation's books and records
and any assistance necessary or required for him to perform his duties to the corporation as set
forth in the shareholders consent.
With respect to your settlement proposal (or "indication of interest"), we have the following
responses:
1. Although the offer in unacceptable, our clients are open to continuing good faith
discussions.
61 w sT PA mim AVENUE I ENGLzvw% Nrw JERSEY 07 631-27 0 6 I Irk 201-705-1200 1 1- Z01-705-1201
CQVWW. H. IM B V n(: L R LAW. C(1-1
PAGE 2 oP
2. Our clients will not postpone their actions to pursue proper corporate governance and
review of the books and records of the corporation during any ongoing settlement
discussions.
3. Out client will not consider any offer that does not start at the $1.2M in cash at closing
that they would have received from the stock purchase transaction that was not
consummated due to your clients' actions. In addition, my clients require some
compensation for the non-dilutable warrants that they would have received in that deal
(although they are not expecting to receive the full value of the warrants which they
believe could have quantified to millions of dollars). Finally, they require a right to share
in the proceeds of any We of the corporation that occurs within up to ten years of their
buyout The greater the compensation your client is willing to pay them for the value of
the warrants, the shorter the period of post-closing deal participation they would agree
to accept.
4. Out client will not accept any financing contingency in the agreement. They are not
willing to go through the hassle and cost of an agreement that is contingent as they do
not have a high level of faith in your client's true intention to close.
The bottom line is that my clients are very willing to come to a fair purchase agreement but
will not stop or slow their efforts to protect their investment and ensure proper governance of Sage
while any discussions or negotiations proceed.
Very truly yours,
HAMBURGER LAw Finf, LLC
By:
Corey S. Kupfer
cc: Henry Scanlon
Judy Cutiale
K Michael Stuckey
LAU' FIRbf LLC
McNees
Wallace & Nurick LLc
100 Pine Street • PO Box 1166 • Harrisburg: PA 17108-1166
Tel: 717.232.8000 • Fax: 717.237.5300
December 2, 2010
VIA E-MAIL
Corey S. Kupfer, Esquire
Hamburger Law Firm, LLC
61 West Palisade Avenue
Englewood, NJ 07631-2706
RE: The Sage Corporation (the "Corporation")
Dear Mr. Kupfer:
This is to respond to your letter dated November 30, 2010.
Bruce R. Spicer
Direct Dial: 717.237.5331
Dired Fax: 717.260.1748
bspicer@mwn.com
• In the second paragraph of your letter, you state that my letter of October 28, 2010
asserted that Tom Grill was elected by cumulative voting. You then ask for evidence
that Mr. Grill was elected by cumulative voting.
Your statement and request reflect a misunderstanding of my earlier letter. I
did not indicate that Mr. Grill was elected by cumulative voting. Rather, the
point of my letter was that the Bylaws (§ 4.06(c)) provide that a director (here,
Mr. Grill) cannot be removed if votes would be cast against the removal which
would be sufficient to elect one or more directors on a cumulative basis. In this
case, votes against the removal would have been sufficient (if the issue had
been properly raised) to elect at least one director on a cumulative basis.
Accordingly, the attempt to remove Tom Grill as a director was ineffective.
In the second paragraph of your letter, you state that it is irrelevant whether Mr. Grill
was elected by cumulative voting, "as the Articles of Incorporation provide that the
business and affairs of the corporation shall be managed by the shareholders rather
than a board of directors." You then state that various items were properly authorized
by the written consent of your clients, as shareholders. Your apparent position is that
the Corporation has no directors.
www.mwn.com
HARRISBURG, PA • LANCASTER, PA • STATE COLLEGE, PA • HAZLETON, PA • COLUMBUS, OH • WASHINGTON, DC
Corey S. Kupfer, Esquire
December 2, 2010
Page 2
• As an initial matter, it is clear that the parties have for many years operated
utilizing a board of directors. Recent correspondence from your office
evidences this (e.g , a purported notice of a special meeting of the board sent
via e-mail by your office on October 13, 2010).
• Please note the following sections of the Pennsylvania Associations Code:
• Section 2301(a)(1) of Chapter 23 provides that Chapter 23 applies to
business corporations that elected to become a close corporation under the
Business Corporation Law of 1933 (es., the Corporation).
• Section 2301(d) addresses certain transitional items not relevant here.
• Section 2332(a) provides that a bylaw may provide that the business and
affairs of the corporation shall be managed by the shareholders rather than
a board of directors.
• Section 2332(b) provides that such a provision may be inserted in the
articles or bylaw by amendment of all shareholders.
• Section 2332(c) provides that such a provision must be evidenced by
conspicuous notice on the share certificates.
• In the present situation, the bylaws do not provide for management by
shareholders, nor do the share certificates evidence management by
shareholders. As a result, the Corporation is managed by the board of
directors.
• Accordingly, for the reasons stated in our previous correspondence, the items
described in the written consent signed by your clients, as shareholders, were
not validly approved.
• Related to this, for the reasons stated in our previous correspondence, any attempt
to amend the bylaws in a way that affects voting rights is invalid and ineffective.
• In the third paragraph of your letter, you state that Mr. Madden intends to start his
employment on Monday, December 6. For the reasons stated above, Mr. Madden's
employment was not properly authorized. As a result, we respectfully suggest that it is
not productive for Mr. Madden to present himself at the corporate offices on Monday.
Corey S. Kupfer, Esquire
December 2, 2010
Page 3
• Your letter then rejects our client's proposal to purchase your clients' shares of stock of
the Corporation.
Your letter states that your clients will not consider any offer that does not start at
$1,200,000 in cash at closing. However, your letter does not contain a specific
proposal as to a monetary amount. For obvious reasons, our client does not wish
to "negotiate against himself." Accordingly, if your clients are interested in
pursuing a transaction, we ask that your clients provide a proposal with a specific
monetary amount.
• Your letter references the $1,200,000 as the amount your clients "would have
received from the stock purchase transaction that was not consummated due to
your clients' [sic] actions."
• We are not aware of any basis for the view that a transaction was not
consummated due to our client's actions. Our client exhibited a high degree of
cooperation in due diligence and other matters.
We previously requested information regarding offers to purchase (or sell) your
clients' stock, but have not received any response. Presumably, no such offers
were made. If so, then any stock purchase transaction would have been purely
speculative (and subject to the terms and conditions of Section 6.06 of the
bylaws). Further, the recent, highly-publicized regulations proposed by the
Department of Education must certainly have had an impact on any proposed
transaction.
• Your letter states that your clients "require some compensation for the non-
dilutable warrants they would have received in that deal...." We do not believe
your clients are entitled to "compensation" for a transaction that was apparently,
speculative, would have triggered Section 6.06 of the bylaws, and in any event
would have been impacted by political events.
Your letter states that your clients "require the right to share in the proceeds of any
sale of the corporation that occurs within ten years of their buy-out." To the extent
you wish to make a "counter-proposal" that includes this concept, our client is
willing to entertain that proposal, although please be advised that a ten-year period
is, in our view, unacceptably long. In addition, any such "look-back" would have to
reflect a declining share percentage over the applicable time period.
Corey S. Kupfer, Esquire
December 2, 2010
Page 4
• Your letter states that your clients "will not accept any financing contingency in the
agreement." Our client advises that financing will be available if and when the
parties come to terms.
• Finally, your letter states that your clients "do not have a high level of faith" in our
client's "true intention to close." In the interest of brevity, we say only that our client
remains very interested in pursuing a transaction that has reasonable terms and
conditions.
Please advise.
Very truly yours,
McNEES WALLACE & NURICK LLC
By
Bruce R. Spicer
c: Gregg Aversa
e .! C CL J?Z/?L1?1'Y. G'l''
Dcccinhcr 3, 3010
I T,1 I --Al.- Ill. ONLY
Bruce It. Sl,ieC?•
McNees Wallace & Nutick, IJ,C
1011 Dine Street, }I.(.). Box 1166
I larrishurg, PA 171()8_1166
R1:: The Sage Corporation
Dcar,%Ir. Spicer
This k•tter resllnn[Is f/l %our Icucr dated December ?, 2010. Your conclusion that The S:19c
(:orporation (tile "Corporation "j is managed by a board of directors because the Bylaws so provide
and because rile Corporations share certificates have no such notice is erro nc(ms.
l:irst, you correctly paint to Section 3333(x) of the Business Corporation I'a-w of 1944, as
amended (the "B(A."), which provides that a bylaw may provide that the corporation he nl:anagcd h4
its shareholders rather than In a board of directors. I (owever, you ti-isconstruc the effect of Sectacm
2332(a) by assuming that such provision must be in the ByLtws of the Corporation. I_'ndcr Section
I50-Itc) of the WA, any provision of tine BCL, that refers to a title as set forth ill the bylaws of a
corporation shall be construed to include and be satisfied by :111p such rule as set forth ill flic
Articics. This is the case with the Corporation, the articles of which provide for nlanagctncnr bti file
Shareholders rather than I)v a board of director;,. Nuts :also that Section 1504(1) does not permit
bylav s to contain provisions inconsistent with the amities, rendering the provisions ill tile
Corporation's Bylaws reprding the board of directors invalid. Furthcr, your references to Section
3 )3201) (m anivii(Imcnrs to the articles or bylaws are irrelevant because the provision was contained
in the an-iginal articles (,f incotporation.
Second, poll point to the lack of a notice on dic share certificates as a further reason to
invalidate the provision requiring [1a:111agenlCnt by shareholders. To our kw Avlcdge there \vrre nc
sll:lrc certificate, issued. Ll any event, there is nothing in Section 3332(0 that stjggc•sts rlus result.
MorC(,vc•r, since l•ollr client was one of the original two incorporators and Signed rile :Irricle•s of
incorporation containing rile provision requiring ulanageulent Ily the share•hoklers, hr can Imid }'
('131111 non to bC on notice. There fore., your ;rrgunlcnt that nce Corporation is managed by :t board of
directors tails under both law and tact.
"I\\E.+.I lttl.h el, l: I•. IiNGI.I:\\U(IQ, tiI?\\ j1QlSI?1117i,.t1.1'0o rr!'ul.'u3•C??l ..., RII•'??i. vul
M
PA(,,[ 2 or 2
Since [lac Corporatiun is managed by its shareholders and the Bylaws contain invalid
provisions regarding a hoard of directors, cuc..lowd is a shareholder consent confirming that the
Corporation has no directors and amending and restating the Bylaws to comply with the W.A.. The
IVSol iriota also approves a mandatory distribution ro shareholders.
You claim in your letter [liar ,Mr. Madder's employment was not properly audit,rized and that
,.it is nor productive" for him to arrive at the C:og)oration's offices on Monday, December G.
Because it is clear that the shareholders have sole management authutity over the ('orporation and
have properly authorized his employment, rest assured that lie will arrive on Monday. We expect than
he be }liven Cc,mlalcae acceSS to the Corpumtion's books and records in his capacity as Tice
President, 'I"reasurer and Chief Financial Officer, and thor no unauthorized dishur ctnents will hr
nude in violation of the earlier shareholder consent.
Finally, I will discuss your settlement proposals xvtth my clients ;tnd tact bock to v, oil.
Very trine yours,
I l \att•ucr.x 1. kw VmM, i.D
Gorey. S. I`uli r
A nached:
CC: Ilcnn Scanlon
ludo Curiale
It. ldich;tel Stucker
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4 '.12/e2/2010 13:49 FAX 7179753522 THE SAGE CORP 10007
I, Gregg R. Aversa, the Defendant in the above action, hereby verify that the
facts averred in the foregoing document are true and correct to the best of my
knowledge, information, and belief. I understand that this verification is made subject to
the provisions of 18 Pa. C.S. § 4904, relating to unsworn falsifications to authorities.
Gregg R. rersi?/
Date: December 22, 2010
y
CERTIFICATE OF SERVICE
I certify that on this date, I am serving a copy of the foregoing document upon the
persons listed below, both by electronic transmission and by United States mail, first
class postage prepaid, addressed as follows:
Victor P. Stabile, Esquire
Elizabeth J. Goldstein, Esquire
DILWORTH PAXSON LLP
112 Market Street, 8th Floor
Harrisburg, PA 17101
James J. Rodgers, Esquire
DILWORTH PAXSON LLP
1500 Market Street
Suite 3500E
Philadelphia, PA 17102-2101
mes P. DeAhtfelo
)unsel for Defendant
Date: December .7-7? , 2010
SHERIFF'S OFFICE OF CUMBERLAND COUNTY
Ronny R Anderson
Sheriff FILED-OFFICE
Jody S Smith OF THE PROTHONOTARY
Chief Deputy f 2010 DEC 2$
?t AM 8: 4 4
Richard W Stewart
Solicitor OFF CE CUMBERLAND ? - ":'F COUNTY
PENNSYLVANIA
nenry ocanion
vs.
Gregg R. Aversa
Case Number
2010-7624
SHERIFF'S RETURN OF SERVICE
12/16/2010 10:00 AM - Robert Bitner, Deputy Sheriff, who being duly sworn according to law, states that on December
16, 2010 at 1000 hours, he served a true copy of the within Complaint and Notice, Petition and
Memorandum of Law, upon the within named defendant, to wit: Gregg R. Aversa, by making known unto
Lori Miller, Desk Supervisor for PNC Realty Services at 4242 Carlisle Pike, Suite 177, Camp Hill,
Cumberland County, Pennsylvania 17011 its contents and at the same time handing to her personally the
said true and correct copy of the same.
SHERIFF COST: $41.94
December 17, 2010
e?
ROB T BITNER, DEP TY
SO ANSWERS,
RON R ANDERSON, SHERIFF
!cl CCUriySuile Snelift. I-e'eso't. lnC.
COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY, PENNSYLVANIA
HENRY SCANLON, JUDY CURIALE,
R. MICHAEL STUCKEY
Plaintiffs,
V.
GREGG R. AVERSA,
Defendant
Civil No. 10-7624
Civil Action-Equity
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PLAINTIFFS' REPLY TO NEW MATTER
Plaintiff reply to defendant's new matter, as follows:
1. Paragraph One merely incorporates the allegations of defendant's Answer and
therefore requires no response.
2. Plaintiffs admit that the Corporation has not been joined as a party, but state that
this allegation regarding jurisdiction is a conclusion of law to which no response
is required.
3. Plaintiffs admit that the members of the former board of directors have not been
joined as parties, but state that this allegation regarding jurisdiction is a
conclusion of law to which no response is required.
4. This allegation is a conclusion of law to which no response is required.
5. This allegation is a conclusion of law to which no response is required.
6. This allegation is a conclusion of law to which no response is required.
7. This allegation is a conclusion of law to which no response is required.
8. This allegation is a conclusion of law to which no response is required.
WHEREFORE, plaintiffs pray that judgment be entered in their favor.
Respectfully Submitted,
tTH PAXSON LLP
Stabile, Esquire
Of Counsel:
Sharron E. Ash, Esquire
Hamburger Law Firm LLC
61 West Palisade Avenue
Englewood, NJ 07631
Tel: 201-705-1200
Fax: 201-705-1201
Dated: January 11, 2011
112 Market Street, 8th Floor
Harrisburg, PA 17101
Tel.: (717) 236-4812
Fax: (717) 236-7811
James J. Rodgers, Esquire
Id. No. 21635
1500 Market Street
Suite 3500E
Philadelphia, PA 19102-2101
Tel: 215-575-7000
Fax: 215-575-7200
Attorneys for Plaintiffs
9025991
Victor P.
I.D. No. 37449
Elizabeth J. Goldstein, Esquire
I.D. No. 73779
VERIFICATION
I, R. Michael Stuckey, hereby state that I am a shareholder in The Sage Corporation, and
one of the plaintiff Majority Shareholders herein. I verify that the statements set forth in the
foregoing Reply to New Matter are true and correct to the best of my knowledge, information
and belief. I understand that these statements are made subject to the penalties set forth in 18
Pa.C.S. § 4904 relating to unsworn falsification to authorities.
January,& , 2011 R. Michael ckey
902599_2
CERTIFICATE OF SERVICE
I, Elizabeth J. Goldstein, Esquire, hereby certify that on this 11th day of January 2011, a
true and correct copy of the foregoing "Reply to New Matter" was served via postage-prepaid,
first-class mail upon the following:
James P. DeAngelo, Esquire
McNees Wallace & Nurick LL(:
100 Pine Street
PO Box 1166
Harrisburg, PA 17108-1166
Eliz eth J. oldstein, Esquire
9025991
F ?
HENRY SCANLON, IN THE COURT OF COMMON PLEAS OF
JUDY CURIALE, CUMBERLAND COUNTY, PENNSYLVANIA
R. MICHAEL STUCKEY,
PLAINTIFFS ,.r
V.:r -c
GREGG R. AVERSA, -E ?C?
DEFENDANT NO. 10-7624 CIVIL `-:IN RE: PETITION FOR SPECIAL AND PRELIMINARY INJUNCTION-,
ORDER OF COURT
AND NOW, this 14th day of January, 2011, upon consideration of Plaintiffs
Petition for Special and Preliminary Injunction, Defendant's Answer thereto, the
Proposed Findings of Fact and Memorandum of Law submitted by the Parties and after
hearing, the Court finds:
1. The requested Preliminary Injunction is not necessary to prevent immediate
and irreparable harm.
2. Greater injury will not result by refusing to grant the preliminary injunction then
by granting it;
3. The majority shareholders have other remedies available to them for
exercising corporate governance of the Sage Corporation;
Accordingly, IT IS HEREBY ORDERED AND DIRECTED that the Petition for
Special and Preliminary Injunction is DENIED.
By the Court,
1k I udl
M. L. Ebert, Jr., J.
J
'Elizabeth J. Goldstein, Esquire
Attorney for Plaintiffs
James DeAngelo, Esquire
Attorney for Defendant
bas
`0
`AM
I"
C,Oe-s 111+111
' r
HENRY SCANLON, JUDY CURIALE,
R. MICHAEL STUCKEY,
Plaintiffs
- v.
GREGG R. AVERSA,
Defendant
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY,
PENNSYLVANIA r?
3
No. 10-7624 CIVIL
cn r' t
: -C J
air L
Y?? W
PRAECIPE TO DISCONTINUE WITH PREJUDICE
TO: PROTHONOTARY
Please mark the above-captioned action discontinued with prejudice under Pa.
R.C.P. 229, with each party bearing his or her own costs.
DILWORTH PAXSON LLP
By 4&a?
Vi or P. Stab Ile
I.D. No. 37449
Elizabeth J. Goldstein
I.D. No. 73779
112 Market Street, 8t' Floor
Harrisburg, PA 17101
(717) 236-4812 (telephone)
(717) 236-7811 (facsimile)
James J. Rodgers
I.D. No. 21635
1500 Market Street, Suite 3500E
Philadelphia, PA 19102-2101
(215) 575-7000 (telephone)
(215) 575-7200 (facsimile)
Attomeys for Plaintiffs
_os--
?rn
4 CD
Al
Dated: a.7-//
CERTIFICATE OF SERVICE
I, Elizabeth J. Goldstein, Esquire, hereby certify that on this 7th day of February 2011, a
true and correct copy of the foregoing "Praecipe to Discontinue with Prejudice" was served via
postage-prepaid, first-class mail and e-mail upon the following:
James P. DeAngelo, Esquire
jdeangelo@mwn.com
McNees Wallace & Nurick LLC
100 Pine Street
PO Box 1166
Harrisburg, PA 17108-1166
Eliza eth J. Goldstein, Esquire
50295811