Loading...
HomeMy WebLinkAbout94-01188 ~ - en , ., -,- <I, _4~ m .-t ."" = , t'T''') W , .... .=.;;. z ~ ~ !- 2::t E ~olJVi5 ~~ H:! ~ ~!:: o~d:i~,.. . < = . 7. 1M j~l!~.e~ . Z ';::l Q . w co _ ~ .... 1t . ... . "' c ::I: :z: . of .. .. v. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY. PENNSYLVANIA IN EQUITY - DERIVATIVE ACTION NO. 1188 Equity 1994 r ~ FOR YOUR INFORMATION, INC. by JEFFREY T. PERKINS, Derivatively Plaintiff KENNETH PODD and ANN GRIFFITHS, Defendants PRAECIPE TO THE PROTHONOTARY: Please discontinue the above-captioned action with prejudice and mark the docket satisfied in full. HEPFORD, SWARTZ & MORGAN By: 111 N. Front st.. P.O. Box 889 Harrisburg, PA 17108-0889 717/234-4121 ATTORNEYS FOR PLAINTIFF Dated: December 28, 1994 .J 1'-' ,.... . CERTIFICATE OF SERVICE AND NOW, this ~ day of December, 1994, I, LEE C. SWARTZ, ESQUIRE, for the firm of Hepford, Swartz & Morgan, hereby certify that I have this day served the within Praecipe to discontinue by depositing a copy of the same in the United States Mail, postage prepaid, at Harrisburg, pennsylvania, to the individual addressed below: Donna M. J. Clark, Esquire Nauman, Smith, Shissler & Hall P. O. Box 1146 Harrisburg, Pennsylvania 17108 Charles W. Rubendall, II, Esquire Keefer, Wood, Allen & Rahal P. O. Box 11963 Harrisburg, PA 17108 -tii.. (9~w.~ Le C. Swartz -:r ~ - ~.... -tl- ,_or. ~n:'.T...t '"':r.'-'-;" .;:- !::i\'>~l ,~ __C"J .. Ot.-;r.:;.! :. ~ ,..}~J , 't_ _:~ :..: - ;.;,,,:,-: ~. 'r. l~.. .l..l.l . ~.x: - '--;J o iE ..... ::r IJ') ...... U => '"'" z ! < Cl '" 0 C ~ ::e w E . eall <ii 5 . ~ w . ~I:! 7- ~ ... 0 . w'" .:: .il w ;:: 0< .. .. 0 7- W . ~ 7- 7- W W 0 jcn . 0: 0. ~ 0 Q z .; ::l . = ~ ~ '" . It ~ . 0. . . "' :: ::c . . /~sr2/wp/~jl/~yi.ansmot FOR YOUR INFORMATION, INC., by JEFFREY T. PERKINS, derivatively Plaintiff IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA IN EQUITY - DERIVATIVE ACTION NO. 1188 Equity 1994 v. KENNETH PODD and ANN GRIFFITHS, Defendants VERIFICATION I, THOMAS P. GACKI, ESQUIRE, of HEPFORD, SWARTZ & MORGAN, acknowledge that the foregoing facts set forth in Plaintiff's Answer to Defendants' Motion for Stay of Proceeding are true and correct to the best of my knowledge, information and belief. I understand that any false statements contained herein are made subject to the penalties of 18 Pa.C.S.A. Section 4904, relating to unsworn falsification to authorities. DATE: 9; /.23 /9> / AND NOW, this Jd!I2ay of August, 1994, I, PENELOPE J. CERTIFICATE OF SERVICE DEITZLER, Legal for the firm of Hepford, Swartz & Morgan, hereby certify that I have this day served the within Document by depositing a copy of the same in the United States Mail, postage prepaid, at Harrisburg, Pennsylvania, to the individual addressed below: Charles W. Rubendall, II, Esquire KEEFER, WOOD, ALLEN & RAHAL 210 Walnut Street Harrisburg, Pennsylvania 17101 ~ ~ - ~>- ...- w~~ .... ...., ."'; .~ :;:-z':"":' ...00"" .....:r ' '-:I!E L...jZ .~ .;.1\.1 ,._ :r a. I... ;:) cl~" ::>e:' c... .... ::r N g - ~ ~ E ! ~" ;:: N e~~=~! e.... ~OO.c~ o~&f ~ a!:: ~ < :z CC III r-- j~=O~~ CI)~oa.:&tg ::i Z d" 0: 7. ::l 0- i': ... ~ 0. . "' ~ ::c :: . /usr2/wpftdl/fyi.ansmot FOR YOUR INFORMATION, INC., by JEFFREY T. PERKINS, derivatively Plaintiff v. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA IN EQUITY - DERIVATIVE ACTION NO. 1188 Equity 1994 KENNETH PODD and ANN GRIFFITHS, Defendants PLAINTIFF'S ANSWER TO DEFENDANTS' MOTION FOR STAY OF PROCEEDING AND NOW comes Plaintiff, For Your Information, Inc., by Jeffrey T. Perkins, derivatively, by their attorneys, Hepford, Swartz & Morgan, and answers Defendants' Motion for Stay of Proceedings as follows: 1. Admitted. 2. Admitted. 3. Admitted. By way of further answer, Perkins also brought other claims against podd and FYI, although the breach of contract action and the action for breach of fiduciary duty by a minority shareholder to a minority shareholder were the only claims that went to the jury. 4. Admitted. 5. Admitted. i, "'''1r-'~ ., H'([. ,,- ..b........,._. t ~;"'. '<fA ~ /usr2/wp/.tdl/fyi.ansmot 6. It is admitted that Defendants so seek to have this action stayed; it is denied that this action should be stayed. 7. Denied. In fact, the derivative suit seeks to benefit FYI, as amounts recovered in the derivative suit will be paid to FYI and will inure to the benefit of FYI and all its creditors and shareholders. Any financial situation forcing FYI to file for bankruptcy protection is the fault of Defendant Podd in any event. 8. Denied. It is denied that FYI is entitled to pay Podd's legal fees in this derivative action. Assuming Podd and Griffiths pay their own legal fees, FYI can only benefit from the derivative action. Podd has already been adjudicated to have breached his fiduciary duties to a minority shareholder, and he therefore is not entitled to have FYI pay his legal fees in this action. 9. Admitted in part and denied in part. It is admitted that the present derivative action is on behalf of FYI. It is denied that the net effect of moving forward with this action will complicate an already difficult financial situation. 10. Denied. The present derivative suit can only benefit FYI. /usr2/wp/tdl/fyi.ansmot 11. Denied. Any delay may prejudice FYI's ability to recover deferred payments paid to the Defendants for the benefit of all FYI's creditors and shareholders. 12. Denied. Perkins claims that Griffiths and Podd, as individuals, should return the funds improperly received by them. 13. Admitted in part and denied in part. It is admitted that Perkins' judgment has not been appealed. It is admitted that part of Perkins' judgment against the corporation in the prior civil action included Perkins' deferred compensation, which he has not yet received. Perkins is in no way assured of receiving his deferred compensation, as podd has not yet submitted a bankruptcy plan and has in fact threatened to liquidate the corporation and distribute considerably less than 100 cents on the dollar to creditors of FYI. 14. Admitted in part and denied in part. It is admitted that Perkins has not yet received payment of any part of his judgment against FYI. After reasonable investigation, Plaintiff is without knowledge or information sufficient to form a belief as to whether FYI intends to pay its obligation to Perkins in full, although such an assertion in the Defendants' Petition is contradicted by numerous prior communications between Podd's counsel and Perkins' counsel. It is admitted that Perkins is recognized by FYI as a creditor in the pending bankruptcy proceedings. /usr2/wPttdl/fyi.ansmot 15. Denied. Any judgment recovered by FYI in the derivative action will simply be paid to FYI, and Perkins will receive whatever distribution he is entitled to from FYI under the supervision of the Bankruptcy Court. This will not "complicate issues" in any fashion. 16. Denied. Perkins is questioning in the validity of payment of deferred compensation to Podd and Griffiths. By way of further answer, Perkins incorporates herein the relevant allegations of Plaintiffs' Complaint. 17. Denied. Whether or not Perkins actually receives his deferred compensation is irrelevant to the question of whether FYI's payment of deferred compensation to Podd and Griffiths is proper. Perkins, as a judgment holder, has received an adjudication that he is entitled to be paid the deferred compensation. It is highly probable that the Court could nevertheless determine that payment of deferred compensation to podd and Griffiths is improper. 18. Denied. Any lapse in time may result in prejudice to FYI's ability to recover defense expenses advanced on behalf of Podd in the prior civil action. 19. Denied as a conclusion of law. I ...- ~ -......._- /usr2/wp;'tdl/fyi.ansmot 20. Denied. podd and ~YI ignored the requirements of the Business Corporation Law of 1988 in regards to advancing expenses on account of the prior litigation. Perkins incorporates herein the relevant allegations of Perkins' Complaint in this matter. Absent Podd actually paying amounts advanced for his defense back to the corporation, a stay of this derivative suit would not allow FYI to comply with the statutory provisions regarding indemnification and/or eliminate this issue in the derivative action. WHEREFORE, For Your Information, Inc., by Jeffrey T. Perkins, derivatively, respectfully requests that this action not be stayed. Respectfully submitted, HEPFORD, SWARTZ & MORGAN DATE: 7;09/QY /1 /;- rJ By: 7L I. ~<I THOMAS P. GACKI I.D. No. 44864 111 North Front Street P.O. Box 889 Harrisburg, PA 17108-0889 (717) 234-4121 ATTORNEYS FOR PLAINTIFF CERTIFICATE OF SERVICE AND NOW, left this r--" ,) lay of July, 1994, I, PENELOPE J. DEITZLER, for the firm of Hepford, Swartz & Morgan, hereby certify that I have this day served the within Document by depositing a copy of the same in the United States Mail, postage prepaid, at Harrisburg, Pennsylvania, to the individual addressed below: Craig J. Staudenmaier, Esquire NAUMAN, SMITH, SHISSLER & HALL 122 Market Street Harrisburg, Pennsylvania 17101 ) J !\.-lfj[ I ;7 -', ;,' , UJLL\DLf /(( II PENELOPE J. DEIT~ER\., U FOR YOUR INFORMATION, INC., by JEFFREY T. PERKINS, derivatively, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA vs. CIVIL ACI'ION - EQUITY (Derivative Action) KENNETH PODD and ANN GRIFFITHS, Defendants NO. 1188 EQUITY 1994 IN RE: DEFENDANTS'MOTION FOR STAY OF PROCEEDINGS ORDER AND NOW, this II' day of July, 1994, a Rule is issued on the plaintiff to show cause why the relief requested in the within motion should not be granted. This Rule returnable twenty (20) days after service. BY THE COURT, -AIL ; JUt II :3 57 PH '9~ , i , , ;rl} .,'1:-" . '. ' K~i:"ER, WooO.,AI.I.EN & RAHAl.. .' " laq WALNUT eT"CCT : " ", , _uNO~.lo.o._Il"~ . 'HMlmaavllO.M. moe..Ha . C" .." ~ .....>'1::,,'.':'; ':1Orr:';'6' '19'9 ' " "':'J . .',::,,:) .' ~~ .."..~,....:,:::.tl:~{N~C~ h"OR , ...,.. " . " ::.;';jR':J~kj(~:;:0;:~1~~;#::'.;;!~; '-. . ;; ;) I' FOR YOUR INFORMATION, INC. , . IN THE COURT OF COMMON PLEAS OF . by JEFFREY T. PERKINS, . CUMBERLAND COUNTY, PENNSYLVANIA . derivatively, . . Plaintiff . CIVIL ACTION - EQUITY . v. : (Derivative Action) . . KENNETH PODD and ANN . . GRIFFITHS, . . Defendants No. 1188 Equity 1994 DEFENDANTS' MOTION FOR STAY OF PROCEEDINGS NOW COME defendants, Kenneth Podd ("Podd") and Ann Griffiths ("Griffithsll) (also referred to collectively as "defendants"), by and through their attorneys, Keefer, Wood, Allen & Rahal, to file this motion for stay of proceedings, averring as follows: 1. On or about March 9, 1994, For Your Information, Inc. ("FYI"), by and through Jeffrey T. Perkins ("Perkins"), an FYI shareholder, filed a derivative action seeking to require Podd and Griffiths to reimburse FYI for (1) costs advanced by FYI in defense of Podd in a prior civil action, (2) excessive salary, bonus, and perquisites paid to podd, and (3) deferred salary paid to Podd and Griffiths in 1993. 2. Perkins is a minority shareholder of FYI and served as its vice president of marketing and sales until his termination in 1991. 3. Because of his termination, Perkins filed suit against the corporation for breach of his employment contract. He also filed suit against podd individually for breach of fiduciary duty filed suit against Podd individually for breach of fiduciary duty by a majority shareholder to a minority shareholder. These claims were combined into one action, which was docketed to No. 639 civil 1992, in the Court of common Pleas of Cumberland County, Pennsylvania. 4. Perkins was awarded a judgment against FYI in the amount of $255,035.00 for unpaid compensation and a judgment against podd in the amount of $79,000 for the value of Perkins' stock. FYI paid the legal fees to defend itself and Podd in the above action. 5. FYI has filed for reorganization under Chapter 11 of the federal bankruptcy laws, largely as a result of the judgment against FYI in the prior civil action. 6. In view of the bankruptcy proceeding and the judgment from the prior civil action referenced above, defendants now seek to have this derivative suit stayed. 7. This derivative suit creates a great financial hardship on FYI, as it is simply an off-shoot of the prior civil action, and has created a financial situation forcing FYI to file for bankruptcy protection. 8. The cost of maintaining further litigation based on the same set of circumstances only increases the financial difficulties already experienced by FYI. As it is entitled to do, FYI has agreed to pay defendants' counsel for the defense of -2- I".F.';:",". t.'!:" ,'~::~.",;".,;...".....,;",;;.......~.. this derivative action, subject to defendants' undertakings to reimburse the corporation as appropriate at the end of the litigation. 9. Indeed, the present derivative action is not against, but rather is on behalf of FYI; yet, the net effect of moving forward with this action will complicate an already difficult financial situation. 10. The present derivative suit is overly burdensome to FYI during a period in which it is trying to gain financial stability. 11. with regard to the issue of wrongfully distributed deferred payments, little harm will occur if the present derivative suit is stayed. 12. Perkins claims that FYI's Board of Directors should return money that was unfairly distributed to Podd and Griffiths in the form of deferred payments in 1993. 13. Because Perkins' judgment has not been appealed, and because part of his judgment in the prior civil action awarded Perkins similar deferred payment, all the FYI employees entitled to deferred compensation, including Perkins, will receive it. 14. Although Perkins has not yet received payment of his judgment, FYI intends to pay its obligation in full, and Perkins is recognized by FYI as a creditor in the pending bankruptcy proceedings. -3- 15. To allow this derivative action to continue at this time, before payment of the judgment from the prior civil action, will create complicated issues with regard to the portion of the judgment awarded to Perkins containing deferred payment. 16. Additionally, Perkins is not questioning the validity of the deferred payments to podd and Griffiths, only his lack of payment under the same deferred compensation arrangement. 17. Once Perkins is paid deferred compensation by FYI, it is highly likely this claim will disappear, for there would no longer be an inequality among the parties with respect to this issue. 18. with regard to the claim that defense expenses of podd in the prior civil action were inappropriately paid by FYI, no harm or prejudice will result from staying this proceeding, and simplification of the issues may be accomplished by a stay. 19. Under Pennsylvania statutory provisions, FYI may indemnify Podd for the expenses reasonably incurred in the prior civil action. See 15 Pa.C.S. SS 1741-46. 20. A stay of the derivative suit would allow FYI to comply with the statutory provisions regarding indemnification, and possibly eliminate this issue in the derivative action. -4- WHEREFORE, Defendants respectfully request that this Honorable Court grant a stay of proceedings. KEEFER, WOOD, ALLEN & RAHAL Dated: July 5, 1994 Cw-{-a. Charles W. Rubendall II I.D. I 23172 Gretchen C. Hanrahan I. D. I 623S0 210 Walnut street P. O. Box 11963 Harrisburg, PA 17108-1963 717-255-8010 By Attorneys for defendants -5- ... VERIFICATION The undersigned, Kenneth Podd, hereby verifies and states that: 1. He is one of defendants herein; 2. The facts set forth in the foregoing motion are true and correct to the best of his knowledge, information, and belief; and 3. He is aware that false statements herein are made subject to the penalties of 18 Pa.C.S. Sec. 4904, relating 10 unsworn falsification to authorities. J;;i;J Kenneth Podd Dated: June 30,1994 z < Cl '" o c ::e = ddVioo e I:! ~ ::g ~ ~ ~ ~ o<....a ~ ~ ~ 0 ...IV)a~ OZ 0: 0- ... 0. "' ::c ! ;:; ~~ ~ !:: .. ... 7. IOl ;r. Oil': A: ~ .; ~ . ~ i ~ ~ . . . :: -:r en - - ..r". ,:; ~.:: ;';'1 " ~ ... " N = ~ ..::; VERIFICATION I, JEFFREY T. PERKINS, acknowledge that the facts set forth in the foregoing Document are true and correct to the best of my knowledge, information and belief. I understand that any false statements contained herein are made subject to the penalties of 18 Pa.C.S.A. Section 4904, relating to unsworn falsification to authorities. J?14/1SF Z DATE;~ //?'.P'$/f ~~ ATTORNEYS FOR PLAINTIFF /usr2/wp/td~/fyi.reply WHEREFORE. Plaintiff's demand judgment as prayed for in Plaintiff's Complaint. Respectfully submitted, DATE: ~/6/qLj HEPFORD, SWARTZ ~.& ORGAN By: /) /. d. THOMAS P. GACKI C I.D. No. 44864 111 North Front Street P.O. Box 889 Harrisburg, PA 17108-0889 (717) 234-4121 CERTIFICATE OF SERVICE AND NOW, this 9th day of June, 1994, I, PENELOPE J. DEITZLER, for the firm of Hepford, Swartz & Morgan, hereby certify that I have this day served the within Document by depositing a copy of the same in the United States Mail, postage prepaid, at Harrisburg, Pennsylvania, to the individual addressed below: Craig J. Staudenmaier, Esquire NAUMAN, SMITH, SHISSLER & HALL 122 Market Street Harrisburg, Pennsylvania 17101 ~~~'fF PENELOPE J. DEI LE .' /usr2/wp/tdljfyi.reply FOR YOUR INFORMATION, INC., by JEFFREY T. PERKINS, derivatively Plaintiff v. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY,PENNSYLVANIA IN EQUITY - DERIVATIVE ACTION NO. 1188 Equity 1994 KENNETH PODD and ANN GRIFFITHS, Defendants PLAINTIFF'S REPLY TO NEW MATTER OF DEFENDANTS AND NOW comes Plaintiff, For Your Information, Inc., by Jeffrey T. Perkins , derivatively, and sets forth the following Reply to New Matter of Defendants. 53. Plaintiff incorporates herein by reference the allegations of paragraphs 1 through 52 of Plaintiff's Complaint. 54. Denied as a conclusion of law. 55. Denied. By way of further answer, Plaintiff incorporates herein all relevant averments of Plaintiff's Complaint. It is specifically denied that Podd and Griffiths acted reasonably, prudently, in good faith, or within their discretion as directors of the Plaintiff Corporation. 56. Denied as a conclusion of law. 57. Denied. By way of further answer, Plaintiff incorporates herein all relevant allegations of Plaintiff's Complaint. It is .-........-.,.-.. . . /usr2/wp/td~/fyi.reply specifically denied that the payment of deferred compensation to Defendants podd and Griffiths was justified and not excessive under the circumstances. 58. Admitted in part and denied in part. It is admitted that Perkins agreed that compensation was to be deferred to a point at which the Plaintiff Corporation was reasonably able to make such payments. It is denied that this standard means when the Plaintiff Corporation showed an annualized profit. By way of further answer, plaintiff incorporates herein by reference the relevant allegations of Plaintiff's Complaint. In any event, Defendants Podd and Griffiths by their actions in paying themselves the deferred compensation acknowledged that the corporation was financially able to make deferred compensation payments. 59. Admitted. 60. Denied. plaintiff in this case is For Your Information, Inc., filing derivatively by Jeffrey T. Perkins. In this action, any reimbursement of deferred compensation by Defendants Ann Griffiths and Kenneth podd would be paid to the Corporation and not to Mr. perkins, thereby avoiding any double payment. /usr2/wp/tdl/fyi.reply specifically. denied that the payment of deferred compensation to Defendants podd and Griffiths was justified and not excessive under the circumstances. 58. Admitted in part and denied in part. It is admitted that Perkins agreed that compensation was to be deferred to a point at which the Plaintiff Corporation was reasonably able to make such payments. It is denied chat this standard means when the Plaintiff Corporation showed an annualized profit. By way of further answer, plaintiff incorporates herein by reference the relevant allegations of Plaintiff's Complaint. In any event, Defendants podd and Griffiths by their actions in paying themselves the deferred compensation acknowledged that the Corporation was financially able to make deferred compensation payments. 59. Admitted. 60. Denied. Plaintiff in this case is For Your Information, Inc., filing derivatively by Jeffrey T. Perkins. In this action, any reimbursement of deferred compensation by Defendants Ann Griffiths and Kenneth podd would be paid to the Corporation and not to Mr. Perkins, thereby avoiding any double payment. a; . :c a... ... :r >-~ ..r..... ~' l'" al .,U" (.l.,r;....... fl~~: - - ,,, , Lr> ::,~l "" I>- """ " :'. '_1 r<..::: r r,lF>C!........ Cl .... 1'I Ul'::: ..... -+I s...... r:;> " "., .... 0 as .J . lJl <~"~.d1lO < 0-1>1 u .... >iJ ~. as ~ ..,. tl.Ul Z .... C .... 0 ~, i'" ' " a> ~'&l ~... ~ (.'"'d .. H a> Z H ..-1 ctI a: .. " ~ 815 " >iJ '0 +J '().'.-4 CD ~ = .. "Ul C c co::1r:: :-r. "G! >. ~tl. zz ..-1 ~ Q) ~~ .M (, ci rH I. d) to- 0 ":' J OH ctI .... ctI ._1 ~ Ql ... "'alai ..-j o " H:': ... .::: Q) ~,.. Cl ~1 C ~ ~ ci ~ ~ ::l u>< J~ tl. Q ....1 ."= 04 " l1J E-t . '0 VI .- 0' ~! C;+'iCt'J C( .. c . W r<.Z > c 00 ctI ~CO r..c k~cn a. I" ex> 0 0 . " . iJ \Ill .... :>, Q3~.; t ex> E-tU r<. E-t >. Q . ::-,~) llII 11l rJ ~g~ ~ I>: Z ... Q ffi~ <;.!ll,)')('::-,O OQ H>< V 0 " = Co' c: >C ~ Oal ii? !! < !!! OZ W> tl.Ul tl~ _I-oO!",... Ill\) It . U.::: 1>:1>:'.-1 :I: H (J n. s:: i Zit 0 wli! Or<.>iJ :I:E-t Q t.; .::: (,j - IV - < Z Of:l ctI En;: 0> 0 F.l f ~% :I:W >< > H ClII-o C\l1lO E-tl%l ,.,..-1 zr<. D: 1-0 r:: -'0 ::: % :E 0: I-t ZH I!J al n. 'i: :>, ~ zo 0>' Q) WI>: HU r<..c'O :':l.'l . ::I~r')+J'" ~ ......c Eo< CQ . VERIFICATION The undersigned, Kenneth podd, hereby verifies and states that: 1. He is one of defendants herein; 2. The facts set forth in the foregoing answer with new matter are true and correct to the best of his knowledge, information, and belief; and 3. He is aware that false statements herein are made subject to the penalties of 18 Pa.C.S. Sec. 4904, relating to unsworn falsification to authorities. Dated: APril~, 1994 FOR YOUR INFORMATION, INC., by JEFFREY T. PERKINS, derivatively, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff v. CIVIL ACTION - EQUITY (Derivative Action) KENNETH PODD and ANN GRIFFITHS, Defendants : No. 1188 Equity 1994 DEFENDANTS' ANSWER WITH NEW MATTER NOW COME defendants, by their counsel, Keefer, Wood, Allen & Rahal, to answer plaintiff's complaint, as follows: 1. Admitted in part and denied in part. Defendants admit that the plaintiff corporation has been properly identified, but deny that it has a claim, derivative or otherwise, against them. On the contrary, defendants have committed no wrongdoing that would provide the plaintiff corporation with a claim against either one of them. 2. Admitted in part and denied in part. Defendants admit that Mr. Perkins has been properly identified, but deny that he has a claim, derivative or otherwise, against them. On the contrary, defendants have committed no wrongdoing that would provide the plaintiff corporation or Mr. Perkins with a claim against either one of them. 3. Admitted. 4. Admitted. 5. Admitted. . 6. Admitted. 7. Admitted in part and denied in part. Defendants admit that defendant Podd's stock ownership provides him with voting control as a shareholder of the plaintiff corporation. It is denied, however, that defendant podd controls the plaintiff corporation. On the contrary, the board of directors has been "in control" of the plaintiff corporation at all times relevant to this action. 8. Admitted. 9. Admitted in part and denied in part. It is admitted that defendant Griffiths has been a director and the secretary of the plaintiff corporation since January 1991- It is denied, however, that the time relevant to this lawsuit is necessarily limited to the period from January 1991 through the present. On the contrary, based upon the averments of the complaint, the relevant time period may be determined to extend to earlier years. 10. Admitted in part and denied in part. Defendants admit that they have been the only two directors of the plaintiff corporation since March 1991. It is denied, however, that the time relevant to this lawsuit is necessarily limited to that period. On the contrary, based upon the averments of the complaint, the relevant time period may be determined to extend to earlier years. -2- 11. Admitted. 12. Admitted. 13. Admitted. 14. Denied. It is denied that defendant Podd caused the plaintiff corporation to terminate Mr. perkins' employment. On the contrary, Mr. Perkins' complete failure to perform his job responsibilities led the board of directors to decide that Mr. Perkins' employment would be terminated. 15. Admitted in part and denied in part. Defendants admit that Mr. Perkins initiated the civil actions described in this paragraph and that those actions were docketed to No. 639 civil 1992 in the Court of Common Pleas of Cumberland County, Pennsylvania. It is denied, however, that the actions brought by Mr. Perkins have any merit whatsoever. 16. Admitted. 17. Admitted in part and denied in part. It is admitted that the verdicts described in this paragraph were rendered by a jury. It is denied, however, that any iudaments have been entered against the plaintiff corporation or defendant podd, as the verdicts are now the subject of unresolved motions for post- trial relief. Furthermore, it is denied that the jury verdicts recited in this paragraph were based on substantial evidence or otherwise justified. -3- 18. Denied. Defendants incorporate by reference herein the responses of the plaintiff corporation and defendant Podd to paragraphs 8 through 68 and 110 through 112 of their answer to the complaint in the prior suit (the one docketed to No. 639 Civil 1992). By way of further answer, defendants deny that the facts alleged by Mr. Perkins in the prior suit were accurate or that those facts were "proven" at trial. Last, defendants deny that the facts alleged by Mr. Perkins in the prior suit and offered as evidence at trial established a breach of fiduciary duty by defendant podd. On the contrary, the facts alleged by Mr. Perkins in the prior suit and offered as evidence at trial do not demonstrate that defendant podd breached any fiduciary duty owed to Mr. Perkins. 19. Denied. Defendants incorporate by reference herein the responses of the plaintiff corporation and defendant podd to paragraphs 8 through 68 and 110 through 112 of their answer to the complaint in the prior suit (the one docketed to No. 639 Civil 1992). By way of further answer, defendants deny that the facts alleged by Mr. Perkins in the prior suit were accurate or that those facts were "proven" at trial. Last, defendants deny that the facts alleged by Mr. Perkins in the prior suit and offered as evidence at trial established a breach of fiduciary duty by defendant podd. On the contrary, the facts alleged by Mr. Perkins in the prior suit and offered as evidence at trial do -4- not demonstrate that defendant Podd breached any fiduciary duty owed to the plaintiff corporation. 20. Denied. Defendants deny that any acts of defendant podd constituted bad faith or willful misconduct or self-dealing. On the contrary, defendant Podd's conduct at all relevant times has been in good faith and has been free of willful misconduct or self-dealing. 21. Denied. Defendants deny that defendant podd, either on his own behalf or on behalf of the plaintiff corporation, has refused to engage in good faith settlement negotiations with Mr. Perkins. It is further denied that there is any legitimate debt owed by the plaintiff corporation to Mr. Perkins. On the contrary, defendants assert that the jury verdicts described in paragraph 17 of the complaint in this action are not based on substantial evidellce or otherwise justified; thus, there is no legitimate debt owed by the plaintiff corporation or by defendant Podd to Mr. Perkins. Furthermore, without conceding that Mr. Perkins is owed any money whatsoever, defendant Podd has, subsequent to trial of the prior suit, sought to achieve an overall settlement of Mr. Perkins' claims against the plaintiff corporation and defendant Podd individually. To date, the parties have not reached a suitable compromise. 22. Denied. Defendants deny that defendant podd made the statement that he will bankrupt the corporation rather than pay a -5- legitimate debt owed to Mr. Perkins. On the contrary, defendants assert that no legitimate debt is owed to Mr. Perkins and that defendant Podd has not threatened to initiate a bankruptcy proceeding not otherwise required by the financial status of the plaintiff corporation. 23. Denied. The compensation package provided to defendant Podd by the plaintiff corporation is not excessive, whether measured against the financial condition of the plaintiff corporation or against compensation packages payable to the presidents of similar companies engaged in the same or similar businesses. 24. Admitted. 25. Admitted. 26. Admitted. 27. Admitted. 28. Admitted in part and denied in part. Defendants admit that the jury verdict in the prior suit against the plaintiff corporation included damages for deferred compensation allegedly owed but not paid to Mr. Perkins. It is denied, however, that Mr. Perkins is owed deferred compensation by the plaintiff corporation or that the jury verdict awarding him deferred compensation is based upon substantial evidence or otherwise justified. On the contrary, Mr. Perkins is owed no deferred compensation by the plaintiff corporation at this time. -6- -~:~....,,- 29. Admitted. 30. Admitted. 31. Admitted. 32. Admitted. 33. Denied. Defendants deny that the plaintiff corporation has paid an amount in excess of $75,000 for the defense of the plaintiff corporation and defendant podd in the prior suit. On the contrary, the amount paid for the defense of the prior suit is substantially less than $75,000, although an exact accounting of that amount has not yet been prepared. 34. Admitted in part and denied in part. Defendants admit that Mr. Staudenmaier's billings have not sought to segregate time and expenses devoted to the defense of the plaintiff corporation from time and expenses devoted to the defense of defendant Podd alone. It is denied, however, that any such segregation would have been possible, even if it had been required, because the issues relating to the defense of both defendants in the prior suit are extensively intertwined. Furthermore, defendants deny that there was or is any requirement that Mr. Staudenmaier's billings be segregated to show the cost of defending the plaintiff corporation as a separate item from the cost of defending defendant Podd in the prior suit. 35. Denied. Defendants deny that defendant Podd or the plaintiff corporation have violated the requirements of section -7- 1745 of the Business corporation Law. On the contrary, the bylaws of the plaintiff corporation allowed it to advance funds to defend defendant podd in the prior suit. To date, there has been no showing that any amounts advanced for the defense of defendant Podd have been wrongfully paid by the plaintiff corporation. On the contrary. there has been no final decision at the lower court level in the prior suit, and an appeal of the trial court rulings on evidence admitted or excluded, etc. has yet to be pursued. 36. Admitted. 37. Admitted. 38. Denied. Defendants deny that defendant Podd has engaged in willful misconduct or self-dealing or has breached any fiduciary duty owed to the plaintiff corporation. Furthermore, defendants deny that defendant podd is not entitled to be defended at the expense of the plaintiff corporation for legal and accounting fees incurred in the defense of the claims against him individually in the prior suit. On the contrary, defendant podd was and is entitled to a defense, both in the form of legal and accounting fees, in the claims brought against him individually by Mr. Perkins. 39. Admitted. 40. Admitted. -8- 41. Admitted in part and denied in part. Defendants admit that the resolutions introduced by Mr. Gacki were defeated. It is denied, however, that any resolutions offered by Mr. Gacki were ignored by the shareholders. 42. Denied. After reasonable investigation, defendants are without knowledge or information sufficient to form a belief as to the truth of the averment, and proof thereof is hereby demanded at trial, if relevant. 43. Admitted in part and denied in part. Defendants admit that Mr. Gacki wrote the letter of February 18, 1994, that is attached to the complaint as Exhibit B. It is denied, however, that this letter was written as a consequence of Mr. Gacki's learning at the shareholders meeting of January 21, 1994, that deferred compensation had been paid to defendants. By way of further answer, defendants incorporate herein by reference their response to paragraph 42 above. 44. Admitted in part and denied in part. Defendants admit that Mr. Gacki has received no response from the plaintiff corporation to his letter of February 18, 1994. It is further admitted that the plaintiff corporation does not intend to institute a suit against defendant Griffiths to recover the amount of deferred salary paid to her. It is denied, however, that the plaintiff corporation has any valid reason to seek a recovery of deferred salary from defendant Griffiths. -9- ... COUNT I 45. Defendants incorporate by reference herein their responses to paragraphs 1 through 44 above as if the sam. were set forth below. 46. Denied. Defendants deny that defendant Podd has aoted in bad faith, has engaged in willful misconduct or self-dealing, or that he has breached any fiduciary duty owed by him to the plaintiff corporation. On the contrary, defendant Podd's conduct at all relevant times has been in good faith and has been free of willful misconduct and self-dealing~ furthermore, defendant podd has breached no fiduciary duties owed by him to the plaintiff corporation. 47. Denied. The averments of this paragraph state legal conclusions to which no response is necessary. Should a response be deemed necessary, the same are denied. By way of further answer, defendants assert that there is no valid basis to require defendant Podd to reimburse the corporation for costs advanced in defense of Mr. Perkins' suit Against defendant podd individually or to reimburse any claimed excessive salary, bonus, or other benefits of employment paid to defendant Podd or to return the deferred salary paid in 1993 to defendant Podd and defendant Griffiths. -10- ~- WHEREFORE, defendants respectfully request this Honorable Court to dismiss plaintiff's complaint and to enter judgment in their favor and against plaintiff, together with costs of suit. COUNT II 48. Defendants incorporate by reference herein their responses to paragraphs 1 through 47 above as if the same were set forth below. 49. Admitted. 50. Admitted in part and denied in part. Defendants admit that defendant Griffiths explicitly or tacitly approved the payment of deferred salary to defendants, but not to Mr. Perkins. It is denied, however, that Mr. Perkins is entitled to any payment of deferred compensation at this time. 51. Denied. The actions of defendant Griffiths do not breach any fiduciary duty owed to the corporation as a director; nor do they constitute bad faith, willful misconduct, or self- dealing. On the contrary, the conduct of defendant Griffiths has been at all pertinent times in good faith and free of willful misconduct and self-dealing. 52. Denied. This averment states a legal conclusion to which no response is necessary. Should a response be deemed necessary, the same is denied. By way of further answer, defendants assert that there is no valid basis to require -11- defendant Griffiths to repay to the plaintiff corporation any deferred compensation paid to her or to defendant podd in 1993. WHEREFORE, defendants respectfully request this Honorable Court to dismiss plaintiff's complaint and to enter judgment in their favor and against plaintiff, together with costs of suit. NEW MATTER 53. Defendants incorporate by reference herein their responses to paragraphs 1 through 52 above as if the same were set forth below. 54. Plaintiff's complaint fails to state a claim for which relief can be granted. 55. At all times relevant to this action, defendants Podd and Griffiths acted reasonably, prudently, in good faith, and within their discretion as directors of the plaintiff corporation. 56. The pertinent statute, 15 Pa.C.S. S 1742, allows a business corporation to indemnify any person who is a party to a pending action against expenses actually and reasonably incurred by him, regardless whether a jury verdict has been rendered against him. 57. At all times relevant to this action, the payment of deferred compensation to defendants Podd and Griffiths was justified and not excessive under the circumstances. -12- 58. By an agreement in which Mr. Perkins joined, payment of deferred compensation was to be made only when the plaintiff corporation was financially able to make such payments; this undefined standard has been consistently interpreted to mean when the plaintiff corporation showed an annualized profit. 59. Defendants believe, and therefore aver, that the jury verdict in the prior suit (No. 639 civil 1992) included reimbursement to Mr. Perkins for unpaid deferred compensation. 60. Under these circumstances, payment to Mr. Perkins of deferred compensation claimed to be due and owing in the present action would result in an inappropriate double payment. WHEREFORE, defendants respectfully request this Honorable Court to dismiss plaintiff's complaint and to enter judgment in their favor and against plaintiff, together with costs of suit. Dated: April 14, 1994 KEEFER, WOOD, ALLEN & RAHAL By c(r~ RU::ll II I.D. # 23172 Gretchen C. Hanrahan I.D. # 62380 210 Walnut street P. O. Box 11963 Harrisburg, PA 17108-1963 717-255-8010 Attorneys for defendants -13- ~~ ><., ~IE><'" Z I-l", o 0.- !! !il' >. o J.J C,) I."" ~~.~~ E>< t1= g;; ol: ~ o ..:I'- C,) I-l III >0 :t: I-lz E>< C,) Z I-l ':r" ~ - ~).- ":~ l..l....t.. ~..' ~t (.) Z "~-;r ~ClO.-L ~.. ~i..""t'~ :') ~-;:: ~ L,' ..,..n , ""~:i ,,,1.1 " j 1_~1 ,I. :~. 'l. I':'') 0,'-' :0: "'- N N N - - "" "- """ - I ~ ol: 'tl s:: III C C o p., :t: t1 z Z rz:I :.: rz:I ~ ~ . C,) Z I-l ... ... 'ri .... s:: ori III .... p., i ~ i ~ [:l -l <t J: ~ :l Oll'l .. = 1O '" )( II Z..O~ Wtima a: ' 0 .J .... 0;;: 0 .J U) ~ ": g <(.... . <C I CI ::l III .. ," O.Z U) . :: .J LI.I 0 r: OOag e 0" 3: g <: !!! N"a: ri !~ W = % lL <: W :E W :s:: - III J -Ul ZZ Ol-l I-l:': E><l>:: ~~ o . - r.-E><>' Z .... 1-l><Q) rz:I:> l>:: l>::ori Or.-.... Or.-Ill ><rz:I:> "'ori l>:: l-o o >'Q) r.- .c'tl . :> . 0- III rz:I - I-l I-l .... .... III 'tl s:: Q) .c :3 l>:: . :3: III Q) .... l-o III .s:: ! FOR YOUR INFORMATION, INC., by JEFFREY T. PERKINS, derivatively, : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA plaintiff CIVIL ACTION - EQUITY (Derivative Action) v. KENNETH PODD and ANN GRIFFITHS, Defendants No. 1188 Equity 1994 PRAECIPE FOR ENTRY OF APPEARANCE To: Lawrence E. Welker, Prothonotary Please enter the appearance of Keefer, Wood, Allen & Rahal by Charles W. Rubendall II and Gretchen C. Hanrahan on behalf of defendants, Kenneth podd and Ann Griffiths, reserving their right to respond to plaintiff's complaint pursuant to the Pennsylvania Rules of civil Procedure. A single copy of all items sent by your office to the attention of Mr. Rubendall alone will be satisfactory. KEEFER, WOOD, ALLEN & RAHAL Dated: April 1, 1994 (~ ~ By: ~ Charles W. Rubendall II (23172) Gretchen C. Hanrahan (62380) 210 Walnut Street P.O. Box 11963 Harrisburg, PA 17108-1963 (717) 255-8010 and 255-8037 SHERIFF'S RETURN CXM10NWElILTH OF PENNSYLVANIA: COUNTY OF ClI1BERLAND In The Court of Common Pleas of Cumberland County, Pennsylvania NO. 1188 Equity Term 1994 Complaint in Equity and Notice For Your Information, Inc., by Jeffrey T. Perkins. Derivatively VS Kenneth podd and Ann Griffiths Timothy Reitz , ~~~~ Deputy Sheriff of Cunberland County, Pennsylvania, who being duly sworn according to law, says, that he served the within Complaint in Equity and Notice upon Kenneth podd and Ann Griffit,hlthe defendant, at 11:36 o'clock A .M. EST / un on the day of March , 1994at 16 3314 Market St., Camp Hill . Cunberland County. Pennsylvania, by handing to Kenneth podd and Ann Griffiths a true and attested copy of the Complaint in Equity and Notice and at the same time directing their attention to the contents thereof and the "Notice to Plead" endorsed thereon. Sheriff's Costs: Docketing Service Affidavit Surcharge So answers: r~-r"-<-7'~~ R. Thomas Kline. Sheriff 18.00 8.40 4.00 30.40 Pd. by Atty. 3-17-94 by Sworn and subscribed to before roo this oJ I At day of 1"1-<.01- 19 tJY A.D. il /') )-- . 't~/Ll- ....,. - )'t-<-/('I_,-_ . 10-'1'-1" Prothonotary z ~ E !- 211I E!:! all W s! ~I:!i~g~ o a: : as :;; .... it < Z . or. w j~ii~.e~ Q ~ g ~ ~= ~t- ... 7. eI ~ ::c :: <::> - . .' u .-.t..:.... ... .:.;J ~;l.) ~\ r>l\ V) , 'C)- ~ I.r) \ \~ ~.~ ~ , "'-.) ~ ~ -> ~~ - ~ '" \..... ~ Q t'- -:r ~ - ~.~ -'~ .':.:- !u.. "., .:"'X;.:: . , = n_ N r-l ("t') .., ~. = ~ ....., -...J \h'- .:,. ""- ~. '.. ~ ' C0~ '~ ~ ~, ~ . . ., . /usr2/wp/tdl/fyi.comp v. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA IN EQUITY - DERIVATIVE ACTION ~-uJ.. /q,,'1 NO. 1/ rr Cz -- , FOR YOUR INFORMATION, INC., by JEFFREY T. PERKINS, derivatively Plaintiff KENNETH PODD and ANN GRIFFITHS, Defendants COMPLAINT AND NOW comes Plaintiff, For Your Information, Inc., derivatively by its shareholder, Jeffrey T. Perkins, and sets forth the following Complaint: 1. Plaintiff is For Your Information, Inc., a Pennsylvania Corporation, which does business at 3314 Market Street, Camp Hill, Cumberland County, Pennsylvania. 2. This action is brought on behalf of Plaintiff Corporation by Jeffrey T. Perkins. Jeffrey T. Perkins is an adult individual who resides at 206 Berkley Drive, Mechanicsburg, Cumberland County, Pennsylvania. 3. At all times relevant hereto, Jeffrey T. Perkins was and is the owner of 500 shares of common stock of Plaintiff Corporation. 4. The remaining 1520 shares of Plaintiff corporation issued and outstanding are owned by Defendant, Kenneth Podd. ......-....."'...,.~ .-....,........., - /usr2/wp!tdl/fyi.comp 5. Defendant, Kenneth Podd, is an adult individual who resides at 6344 Stephen's Crossing, Hampden Township, Cumberland County, Pennsylvania. 6. At all times relevant hereto, Defendant Podd has been and is President and a member of the Board of Directors of Plaintiff corporation. 7. By virtue of owning greater than 75% of the stock of Plaintiff Corporation, Defendant Podd has been in control of Plaintiff corporation at all times relevant hereto. 8. Defendant, Ann Griffiths, is an adult individual who resides at 4 Scott Cove, East Berlin, Adams County, Pennsylvania. 9. At all times relevant hereto, Defendant Griffiths has been the corporate secretary for Plaintiff Corporation and has served on the Board of Directors of Plaintiff Corporation with Defendant Podd. lO. Defendant Podd and Defendant Griffiths, at all times relevant hereto, have been the only two directors of Plaintiff Corporation. /usr2/wp/tdl/fyi.comp 11. Plaintiff Corporation is in the business of providing customized computer programming services to large corporations and government agencies. 12. Plaintiff technical writing applications. Corporation is and technical also in the documentation business of for computer 13. Perkins was previously employed as a vice President for sales and marketing of Plaintiff Corporation. 14. In November of 1991, Defendant Podd caused the Corporation to terminate Perkins' employment. 15. FOllowing his termination, Perkins brought suit against Plaintiff corporation for, inter alia, breach of his employment contract. Perkins also brought suit against Kenneth Podd individually for, inter alia, breach of fiduciary duty by a majority shareholder to a minority shareholder. These claims were brought in a single suit ("Prior Suit") docketed to No. 639 civil 1992, in the Court of Common Pleas of Cumberland County, Pennsylvania. 16. The Prior suit proceeded to a jury trial, which concluded on Friday, October 1, 1993. /usr2/wp/tdl/fyi.comp 17. The jury in the Prior suit awarded Mr. Perkins a judgment of $255,035.00, plus attorneys' fees and costs, against Plaintiff Corporation for breach of the employment contract. The jury also found that Defendant podd had breached his fiduciary duty to minority 13hareholder Perkins, and awarded Defendant Perkins the sum of $79,000.00 as compensation for the value of his stock, to be paid by Defendant Podd. 18. plaintiff incorporates herein by reference paragraphs 8 through 68 and 110 through 112 of the complaint in the prior suit, which document the facts alleged by Plaintiff and proven at trial in the Prior suit establishing breach of fiduciary duty by Defendant Podd to Perkins. 19. The aforesaid facts also constitute breach of the fiduciary duty owed to Plaintiff Corporation by podd in Podd I s capacity as Director, President and controlling shareholder of Plaintiff Corporation. 20. The aforesaid acts of podd constitute bad faith, willful misconduct, and self-dealing by Defendant podd. 21. subsequent to the jury verdict in the Prior suit, Defendant Podd, on behalf of himself and on behalf of Plaintiff Corporation, has refused to engage in good faith settlement /usr2/wp/tdl/fyi.comp negotiations with perkins to make arrangements to pay the legitimate debt owing by the Corporation to Perkins. 22. Defendant podd has stated that it is his intent to bankrupt the Corporation rather than pay the legitimate debt owing to Plaintiff Perkins. 23. At all times up to and subsequent to the trial in the Prior suit, podd has continued to draw a salary, bonuses and perquisites from Plaintiff Corporation which are excessive relative to the financial condition of the corporation. 24. An annual and special shareholders meeting of the Plaintiff corporation occurred on January 21, 1994. 25. Perkins' counsel, Thomas P. Gacki, attended the shareholders meeting with a proxy from Perkins. Also in attendance at the shareholders meeting were Kenneth podd and Neil Hendershot, Esquire, counsel for the corporation. 26. Hendershot prepared minutes of the meeting of shareholders, which minutes are attached hereto and incorporated herein by reference as Exhibit "A". (. /usr2/wp/tdl/fyi.comp 27. As noted on page 2 of the minutes of the meeting of shareholders, deferred salary was paid in 1993 to Griffiths and Podd. 28. Plaintiff Perkins is also owed deferred salary by Plaintiff Corporation, and the jury verdict in the Prior suit against the corporation included damages for deferred compensation accrued but not paid to Perkins. 29. At trial in the Prior suit, Defendant Podd testified that the reason deferred compensation had not been paid to Perkins was that the Corporation was financially unable to pay such deferred compensation. Podd also testified, under oath, that compensation deferred and owing to Griffiths and himself had not been paid either. 30. Throughout the course of the Prior Suit, both Podd and the Corporation have been represented by Craig Staudenmaier, Esquire, of the firm of Nauman, smith, Shissler & Hall. 31. It is believed and therefore averred that Staudenmaier's services in the Prior Suit have been billed to and paid by the Corporation on an hourly basis. 32. The Corporation has paid for defense of both the claims against itself and the claims against Mr. Podd, individually. /usr2/wp/tdl/fyi.comp 33. It is believed and therefore averred that the total costs of the defense of the Corporation and Podd in the Prior Suit paid by the Corporation to date are in excess of $75,000.00. 34. It is believed and therefore averred that Mr. Staudenmaier has not segregated his billings between defense of the claims against Mr. Podd individually and defense of the claims against the Corporation, rather, Staudenmaier's billings for these services are lumped together in each invoice. 35. podd and Plaintiff Corporation have violated the requirements of section 1745 of the Business Corporation Law, 15 Pa.C.S. ~1745, requiring an undertaking by Podd to repay the Corporation for amounts advanced in his defense, if such amounts are found to have been wrongfully paid by the Corporation. 36. As part of defense of the claims against him individually, Podd utilized the Corporation's accountant as an expert witness. 37. The accountant's fees for services rendered in defense of the claims against Podd individually were paid by Plaintiff Corporation. 38. Because of his course of willful misconduct, self- dealing, and breach of fiduciary duty to the Corporation, Podd is /usr2/wp/tdl/fyi.comp not entitled to be reimbursed by the corporation for legal and accounting fees incurred in defense of the claims against him individually in the Prior suit. 39. At the Shareholders' meeting on January 21, 1994, Gacki, on behalf of Perkins, introduced a resolution that Plaintiff Corporation institute suit against Mr. Podd to recover the costs of defense of claims brought against him individually, which costs were advanced by the Corporation, including legal and accounting fees. 40. Gacki also introduced a resolution that the corporation institute suit against Mr. podd to recover excessive and illegal salary and bonus payments made by the corporation or shown on the books of the corporation as owing to Mr. podd. 41. These resolutions were either defeated or ignored by Mr. Podd. 42. The Shareholders' meeting on January 21, 1994 was the first time that Perkins or his counsel had learned that deferred salary had been paid to Griffiths and podd. 43. Consequently, on February 18, 1994, Gacki wrote a letter to corporate counsel and to Mr. Staudenmaier demanding that the Corporation institute suit against Ms. Griffiths to recover the ..- ---~-_."~..,,,-- /usr2/wp/tdl/fyi.comp deferred salary received by her. A true and correct copy of this letter is attached hereto and incorporated herein by referenced as Exhibit "B". 44. Gacki received no response to the attached letter, and it is assumed that the corporation has no intent to institute suit against Ms. Griffiths to recover the amount of the deferred salary paid to her. COUNT I FOR YOUR INFORMATION. INC. V. POnD 45. Paragraphs 1 through 44 are incorporated herein by reference. 46. All the aforesaid actions of podd constitute bad faith, willful misconduct, self-dealing, and breach of the fiduciary duty owing by Podd to the Plaintiff Corporation. 47. Under these circumstances, Podd should be required to reimburse the Corporation for the following: (a) All costs advanced by the Corporation in defense of the suit against Podd individually, including attorneys I fees, accountant fees, and other out- of-pocket costs. (b) Excessive salary, bonus, and perquisites paid to Defendant Podd. /usr2/wp/tdl/fyi.comp (c) Deferred salary paid in 1993 to podd and Griffiths. WHEREFORE, Plaintiff corporation demands judgment against Defendant podd for the amounts itemized in the previous paragraph, together with interest and costs. COUNT II FOR YOUR INFORMATION. INC. V. GRIFFITHS 48. Paragraphs 1 through 47 are incorporated herein by reference. 49. Defendant Griffiths attended the trial of the Prior suit and was aware that Podd had testified under oath that the reason that deferred salary was not paid to himself, Griffiths, or Perkins was the financial condition of Plaintiff corporation. 50. It is believed and therefore averred that as a member of the Board of Directors of Plaintiff Corporation, Griffiths either explicitly or tacitly approved the payment of deferred salary to herself and to Podd, but not to Perkins. 5l. The actions of Griffiths are in breach of her fiduciary duty to the Corporation as a Director of the Corporation, and constitute bad faith, willful misconduct and self-dealing. /usr2/wp/tdl/fyi.comp 52. Griffiths should be required to repay deferred salary received by her and Podd in 1993 to the Plaintiff Corporation. WHEREFORE, Plaintiff corporation demands judgment against Defendant Griffiths in the amount of deferred compensation paid to her and Defendant podd in 1993. Respectfully submitted, DATE: -~/1 /rlj HEPFORD, SWARTZ & MORGAN .,/.) / (~_/ I' '. L By: l ~.~./~ THOMAS P.' GACKI I.D. No. 44864 111 North Front Street P.O. Box 889 Harrisburg, PA 17108-0889 (717) 234-4121 ATTORNEYS FOR PLAINTIFF knowledge, information and belief. I understand that any false VERIFICATION I, JEFFREV T. PERKINS, acknowledge that the facts set forth in the foregoing Document are true and correct to the best of my statements contained herein are made subject to the penalties of 18 Pa.C.S.A. Section 4904, relating to unsworn falsification to authorities. DATE: h/!~ 8" 1774 , ~)R ;~ - ' (/",;Jf}EY - .li""NS Exhibit A FOR YOUR INFORMATION ANNUAL AND SPECIAL MEETINGS OF SHARKHOLDF.RS FRIDAY. JANUARY 21. 1994 Notice of Meetine and Attendance: Attached is a copy of the Notice of these Meetings, being a letter dated December 20, 1993, from Kenneth POOd, President of For Your Infonnation, Inc. (the "Corporation") to J. T. Perkins, a shareholder of the Corporation. The Notice scheduled an Annual Meeting of the Shareholders, and also a Special Meeting of the Shareholders. The meeting commenced at 3:40 p.m. on Friday, January 21, 1994, at the law offices of Goldberg, Katzman & Shipman, P.C., counsel for the Corporation. Present were: Kenneth POOd, shareholder; Thomas P. Gacki, Esquire, Attorney for Jeffrey T. Perkins, a shareholder, who held a proxy from Perkins; and Neil Hendershot, Esquire, counsel for the Corporation. The proxy by Perkins to Gacki was reviewed and accepted. Neil Hendershot was elected by a claim as Secretary of the Meetings. Kenneth POOd acted as president of the Corporation and Chainnan of the meetings. POOd introduced a "list of shareholders" for the Corporation, stated as of January 21, 1994 (a copy of which is attached), which was accepted by acclaim. Annual ReJ)Ort of the Cor:poration: POOd presented an "Annual Report" for the Corporation for the year 1993 (a copy of which is attached). The Report contained certain unaudited draft accounting statements stated as of December 31, 1993, including a Balance Sheet and an Income Statement. These were presented strictly as unaudited internal statements subject to further review and revision not only by Corporate personnel, but also by the outside auditors. Gacki asked a number of questions regarding the financial infonnation. Points resulting from the discussion included the following. No reserves are shown on the statements for income tax, since these are only internal statements. . The November and December results are traditionally low. The statements reflect that expenses are generally accrued throughout the entire year, and not paid in the last few months of the year. 1 The statements reflect payments to outside subcontractors, who are providing specialized limited services. In addition, the statements have a line item for inside subcontractors. This latter item represents personnel costs under different legal arrangements with staff. These arrangements generally reduce employment costs otherwise carried under other line items. Employee morale is good, as evidenced by the celebration for the 10th year anniversary for the Corporation. Fees to accountants have increased due to the retention of a specialized insolvency accountant. Direct reimbursable costs are listed as a line item. These represent a past-through of out- of-pocket expenses or costs incurred for outside vendors that are for the benefit of clients and that are later billed directly to the clients. Deferred salary was paid in 1993 to Griffiths and Podd. Election of Directors: Gacki nominated Perkins. Podd nominated himself and Ann Griffiths. There being no further nominations, the nominations were closed. By acclaim, cumulative voting was used for the shareholders to cast votes for the nominees for the Board of Directors. Based on the "list of shareholders", Perkins, having 500 shares was entitled to 1,000 votes, and Podd, having 1,520 shares, was entitled to 3,040 votes. Gacki voted all of Perkins' votes for Perkins; Podd voted 1,520 votes for Poddand 1,520 votes for Griffiths. Based on the voting, Podd and Griffiths were elected. Special Meetinll of Shareholders: At this point, the Annual Meeting of Shareholder was declared recessed, and the Special Meeting of Shareholders, previously called by Perkins, was opened. Gacki, on behalf of Perkins, introduced the following resolution: "Resolved that the Corporation satisfy the jury verdict awarded against it in favor of Jeffrey T. Perkins." Podd spoke against the resolution on the basis that the verdict is not final, since post-trial motions are still pending before the Cumberland County Court, and since appeal options remain available to the Corporation, which may be pursued. Accordingly, Podd declined to consider the resolution as inappropriate. Gacki, on behalf of Perkins, then introduced a resolution stated as follows: "Resolved, that Kenneth Podd be removed as a director of the Corporation for breach of his fiduciary duties to the Corporation, bad faith, willful misconduct, and self-dealing." 2 Upon vote, this resolution was not adopted, with Podd voting 1,520 and Perkins, through Gacki, voting 500 against. The Special Meeting of the Shareholders was declared adjourned, and the Annual Meeting of Shareholders was declared resumed. Resolutions QY Perkins: Gacki, on behalf of Perkins, introduced the following resolution: "Resolved, that the Board of Directors of FYI is hereby directed to institute suit on behalf of the Corporation against Mr. Podd to recover the costs of defense of claims brought by Mr. Perkins against Mr. Podd individually, which costs were advanced by the Corporation, including legal and accounting fees. " Upon vote, the resolution was not adopted, with Podd voting 1,520 and Perkins, through Gacki, voting 500 against. Gacki, on behalf of Perkins, introduced the following resolution: "Resolved, that the Board of Directors of FYI is hereby directed to institute suit on behalf of the Corporation against Mr. Podd to recover excessive and illegal salary and bonus payments made by the Corporation or shown on the books of the Corporation as owing to Mr. Podd." Podd responded that this resolution is inappropriate, since there is no basis for suggesting that any salaries or bonuses paid to employees of the Corporation were excessive. The resolution was not brought to a vote. General Discussion: Podd and Gacki generally discussed numerous questions posed by Gacki on behalf of Perkins. Adiournment: The Annual Meeting of Shareholders adjourned at 4:30 p.m. Date: January 21, 1994 Respectfully submitted, ~/r4~/..r Neil Hendershot, Secretary of the Meetings -- 3 Exhibit B 4 ______ ( (' HErFORD SWAim. t6 MORGAN FILE COpy Il JOWII'lurooD. r.c La c. 5'M\lTZ. iAMU G. Mot&\N, I~ SAND<<A L MUUON SllnllN M. GluaUR.IJL RJCllAlO r. Ml1unn DlNNIl R. SUEArn. TlIOMAS r. GAeJ.1 RJCHAID ^. f..If/wC1O MICUAlL II. ",-u SIANUY If. SllCll Or COUNUL L\w OfflCU III No.". fllONT srun m Box M!) February 18, 1994 H...".u,"" Il\ 11IO&oO/l/l9 nUl'll"'" 7112.l4-4121 "Cr"Alln.u.\ CMt.1'lW.AOl.'OCA11 Irntl N.\lION.\Lr.n,IU Of b.t'l ArM.'C"X't fAX,n7 m.c>l!02 blL Flu.. roo.257-l121 Craig J. Staudenmaier, Esquire 122 Market Street Harrisburg, Pennsylvania 17101 Neil Hendershot, Esquire 320-E Market Street Harrisburg, Pennsylvania 17101 ~ Re: For Your Information, Inc. Gentlemen: llWlS10WN Or'leu As you may have gathered from resolutions presented at the For Your Information, Inc. shareholders' meeting of January 21, 1994, we will be instituting a derivative action pursuant to 15 Pa.C.S. S1782 against Mr. Podd to recover excessive salary and perquisites paid to Mr. podd by For Your Information, Inc. In particular, we will seek to recover the deferred compensation that Mr. podd admitted he has now collected from the corporation. In addition, the derivative action will seek to recover attorneys' fees paid by the corporation in defense of the claims against Mr. podd personally, on the grounds that he did not act in good faith and in a manner he reasonably believed to be in the best interest of the corporation. This action is particularly well founded in light of the fact, Craig, that you have apparently not segregated your billings between defense of the claims against Mr. podd personally and defense of the claims against the corporation. It is also apparent that Mr. Podd and the corporation have ignored the provisions of 15 Pa.C.S. S1745 requiring an undertaking by Mr. podd to pay any amounts advanced in his defense if it is ultimately determined that he is not entitled to be indemnified by the corporation. 12 Scum MAIN SIREn "- Finally, it is also apparent that a derivative action by the corporation now lies against Ann Griffiths, since she has also wrongfully received deferred r.a Ilax 1167 llWl'1OWN, "^ 17044-0867 TEL'"""" 71724ll-391J r> '"'," ..-.....~.;;;'~.;.. ( c Page 2 February 18, 1994 compensation while Mr. Perkins has not been paid his own deferred compensation. ThIs letter will serve as formal demand for the corporation to institute suit against Ann Griffiths as to recover the amount of deferred compensation received by her. Although I assume this demand will be futile, I will wait for five days from the date of this letter before instituting the derivative action against Ms. Griffiths. If we do not hear from you within the five day period indicating that the corporation will institute such an action against her, we will proceed pursuant to 15 Pa.C.S. S1742. Very truly yours, HEPFORD, SWARTZ & MORGAN ~"1J2//}tPu\\ (J. (/.]0 c,/:i-/ rq:::> Thomas P. Gacki TPG/pjd CCI Jeffrey Perkins '" I" /usr2/wp/tdl/fyi.comp FOR YOUR INFORMATION, INC., by JEFFREY T. PERKINS, derivatively Plaintiff IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA v. IN EQUITY - NO. /I rf DERIVATIVE ACTION ['';riM' 7}" 19q4- KENNETH PODD and ANN GRIFFITHS, Defendants NOTICE TO DEFEND AND CLAIM RIGHTS 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 or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP. Court Administrator Cumberland county Courthouse 1 Courthouse Square carlisle, PA 17013 NOTICIA /usr2/wpJtdl/fyi.comp Le han demandado a usted en la corte. si usted quiere defenderse de estas demandas expuestas en las paginas siguientes, usted tiene viente (20) dias de plazo al partir de la fecha de la demanda y la notificacion. Usted debe presentar una apariencia escrita 0 en persona 0 por abogado y archivar en la corte en forma escrita sus defensas 0 sus objeciones alas demand as en contra de su persona. Sea avisado que si usted no se defiende, la corte tomara medidas y puede entrar una orden contra usted sin previo aviso 0 notificacion y por cualquier queja 0 alivio que es pedido en la peticion de demanda. Usted puede perder dinero 0 sus pro- piedades 0 otros derechos importantes para usted. LLEVE ESTA DEMANDA A UN ABODAGO INMEDIATAMENTE. SI NO TIENE ABOGADO o SI NO TIENE EL DINERO SUFICIENTE DE PAGAR TAL SERVICIO, VAYA EN PERSONA 0 LLAME POR TELEFONO A LA CFICINA CUYA DIRECCION SE ENCUENTRA ESCRITA ABAJO PARA AVERIGUAR DONDE SE PUEDE CONSEGUIR ASISTENCIA LEGAL. Court Administrator Cumberland County Courthouse 1 Courthouse square Carlisle, PA 17013 Respectfully submitted, HEPFORD, SWARTZ & MORGAN , / DATE: '3 If! / if,/ -~ By: / i- / THOMAS P. GACKI LD. No. 44864 111 North Front street P.O. Box 889 Harrisburg, PA 17108-0889 (717) 234-4121 / '--c'~2 . / -. , /,. , /' /"., -j f ATTORNEYS FOR PLAINTIFF