EXHIBIT 99.2
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
CYNTHIA R. MAY and BIGMAR, :
INC., a Delaware corporation, :
:
Plaintiffs, :
:
v. : Civil Action No. 19289-NC
:
JOHN G. TRAMONTANA, :
MASSIMO PEDRANI, PHILIPPE :
J.H. ROHRER, BERNARD KRAMER, :
DECLAN SERVICE, CHRIS EFIRD, :
and FRANK DeLAPE, :
:
Defendants. :
COMPLAINT UNDER 8 DEL.C.ss.225
NATURE OF THE ACTION
1. Plaintiffs Cynthia R. May and BigMar, Inc., a Delaware corporation
("BigMar" or the "Company"), bring this action pursuant to 8 Del. C.ss.225 for a
summary determination of the proper directors and officers of BigMar and the
invalidity of certain actions purportedly taken by defendants as directors of
BigMar.
PARTIES
2. Plaintiff Cynthia R May is a director, president and, through
entities she controls, the controlling stockholder of BigMar. BigMar is a
publicly held Delaware corporation with its principal offices at 9711 Sportsmen
Club Road Johnstown, Ohio. 1. As of November 12, 2001, BigMar had outstanding
10,168,973 shares of common stock, each entitled to one vote per share. As of
November 2, 2001, plaintiff May was the beneficial owner and had voting control
of
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approximately 5,107,805 outstanding shares of BigMar common stock, which was
more than 50% of the total outstanding common shares. The Company's common stock
is traded in the over-the-counter market.
3. Defendants Tramontana, Pedrani, Rohrer, Kramer and Service (the
"Former Directors") are former directors of BigMar who were removed by written
consents executed by the holders of a majority of BigMar's outstanding stock.
Defendants DeLape and Efird were purportedly added to the BigMar board by the
Former Directors at the invalid board meeting discussed below. Even assuming
(contrary to fact and law) that DeLape and Efird were validly appointed, they
were removed by written consents executed by the holders of the majority of
BigMar's stock on November 28, 2001. Defendant John G. Tramontana was the
chairman of the board of BigMar prior to his removal as a director. Subject to
his impending removal by BigMar's duly constituted board of directors, Mr.
Tramontana remains chief executive officer of the Company. Subject to their
impending removal by the duly constituted board, defendant Massimo Pedrani is
Vice President-Research and Development of the Company, defendant Philippe J.H.
Rohrer is chief financial officer and treasurer of the Company and defendant
Bernard Kramer is Vice President-Marketing of the Company. Thus, all the Former
Directors are officers and employees with an economic self-interest in
preserving their jobs and corporate perquisites.
4. Prior to the removal of the Former Directors, BigMar had a board of
directors consisting of nine members, including plaintiff May, the five Former
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Directors and Timothy K. Carroll, John S. Hodgson and Kevin Ryan. Messrs.
Carroll, Hodgson and Ryan continue as directors and are not parties to this
action.
PERTINENT BY-LAW PROVISIONS
5. Article III, Section 7, of BigMar's Restated By-laws (the "By-Laws")
provides in pertinent part:
Notice of each special meeting of the Board of Directors...
shall be given by the Secretary as hereinafter provided in
this Section 7, in which Notice shall be stated the time and
place of the meeting. Except as otherwise required by these
By-laws, such Notice need not state the purpose of such
meeting. Notice of each such meeting shall be mailed, postage
prepaid, to each director, addressed to him at his residence
or usual place of business, by first-class mail, at least two
days before the day on which such meeting is to be held, or
shall be sent addressed to him at such place by telegraph,
cable, telex, telecopier, or other similar means, or be
delivered to him personally or be given to him by telephone or
other similar means, at least twenty-four hours before the
time at which such meeting is to be held... (Emphasis added.)
Article III, Section 3, of the By-laws provides:
Meetings of the Board of Directors shall be held at such place
or places, within or without the State of Delaware, as the
Board of Directors may from time to time determine or as shall
be specified in the Notice of any such meeting.
6. Article III, Section 8, of the By-laws provides in pertinent part:
A majority of the entire Board of Directors shall constitute a
quorum for the transaction of business at any meeting of the
Board of Directors and, except as otherwise expressly required
by statute or the Certificate of Incorporation or these
By-laws, the act of a majority of the Directors present at any
meeting at which a quorum is present shall be the act of the
Board of Directors. In the absence of a quorum at any meeting
of the Board of
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Directors, a majority of the Directors present thereat may
adjourn such meeting to another time and place. Notice of the
time and place of any adjourned meeting shall be given to all
of the Directors unless such time and place were announced at
the meeting at which the adjournment was taken, in which case
such Notice shall only be given to the Directors who were not
present thereat. At any adjourned meeting at which a quorum is
present, any business may be transacted which might have been
transacted at the meeting as originally called.
THE DEFECTIVE AND MISLEADING NOTICE OF MEETING
7. On November 14, 2001, defendant Tramontana purported to issue by
e-mail a Notice of Special Meeting of the BigMar Board of Directors to be held
on November 16, 2001. The Notice stated that the meeting would he held "by
teleconference on November 16, 2001 at 10:00 a.m. Eastern Daylight Time." The
Notice did not, as required by Article III, Section 7, and the Article III,
Section 3, of the By-Laws, state the place of the meeting. The Notice stated
that it was given "BY THE ORDER OF THE CHAIRMAN OF THE BOARD" and bore the name
"John Tramontana". Thus, the Notice was not given "by the Secretary" as required
by Article III, Section 7, of the By-Laws.
8. The Notice also provided that the meeting would be held:
for the following purposes:
(1) To discuss the illiquidity situation of the corporation;
(2) To discuss and approve the sale of $2,000,000 of shares of
BigMar to BDG;
(3) To discuss and approve each other matters as may be
properly brought before the meeting.
The Notice did not indicate that the Board was to act on (i) an increase in the
size of the Board, to eleven directors, (ii) a request by an investor group led
by Banca del
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Gottardo ("BDG") to appoint two directors to the Board, (iii) termination of the
Company's counsel, retention of Mr. Tramontana's counsel as Company counsel and
payment of legal fees and a retainer to that new counsel, (iv) removal of
plaintiff May as president, secretary and a member of the Executive Committee of
the Company, (v) appointment of Mr. Tramontana as president and Mr. Rohrer as
secretary, (vii) postponement of the corporation's Annual Meeting of
Stockholders scheduled to be held on December 14, 2001, and (vii) amendments to
the Company's By-Laws to require a vote of 66 2/3% of all shares entitled to
vote in order to amend the By-Laws or remove directors.
9. Plaintiff May objected to the convening of a board meeting on
November 16, 2001, citing the By-Law notice requirements, the desirability of
considering other issues if a board meeting were to be held, including possible
termination of Mr. Tramontana and the fact that the issuance of stock Mr.
Tramontana was proposing might cause a change of control that would threaten
termination of existing commercial agreements involving the company. Plaintiff
May indicated that a board meeting should only be held with a full agenda and
with proper documents submitted for review by the directors beforehand. She
proposed that the board meeting be held on the Monday after Thanksgiving or on
December 3. Ms. May specifically requested documents regarding all proposals
which would be presented, at the board meeting. She also sought documentation
regarding the claims against the Company which purportedly necessitated the
proposed stock issuance to BDG referred to in the November 14 e-mail, This
information was not
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supplied. Indeed, no documents were provided to the directors prior to the
supposed board meeting on November 16-18, 201
10. On November 14, 2001, defendant Tramontana sent an e-mail to
plaintiff May and the other directors acknowledging Ms. May's objections to the
notice of the meeting and stating:
BUT IF YOU WANT CHANGE WITH A COUPLE DAYS MORE FROM ME IS
OKAY.
Mr. Tramontana's e-mail also indicated he was not sure whether the proposed
stock issuance would cause a change of control. Neither Tramontana nor any of
the other Former Directors advised the other directors that the meeting was
going to proceed on November 18, despite Ms. May's objections.
THE INVALID NOVEMBER 16-18 BOARD MEETING
11. Despite Mr. Tramontana's agreement that it was okay with him to put
off the board meeting, a special meeting of the BigMar board was purportedly
convened on November 16, 2001 at 10:00 a.m. (EDT). According to draft minutes of
the purported meeting, the meeting "was held in Barbengo, Switzerland." The
draft minutes state that defendants Tramontana, Kramer and Pedrani were present
in person at the meeting and defendants Rohrer and Service purportedly
participated by telephone conference call. However, in telephone calls with
plaintiff May on November 27, 2001 defendants Kramer and Rohrer both confirmed
to plaintiff that defendant Service, who was traveling, actually did not attend
the meeting. Since Mr. Service supposedly attended the meeting by telephone, the
absence of phone records will establish that he was not in attendance at the
meeting.
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12. The draft minutes of the purported November 18 meeting state:
The first item to come before the Board was the
request of the investor group led by Banca del Gottardo, a
bank organized under the laws of Switzerland ("BDG"), to
appoint two (2) directors designated by BDG to serve as
members of the Board in accordance with the terms and
provisions of the financing arrangement between the Company
and BDG, thus increasing the size of the Board to eleven (11)
directors to accommodate BDG nominees to the Board. The Board
reviewed and considered the qualifications and backgrounds of
the two (2) director nominees identified by BDG, Messrs. Frank
DeLape and Chris Efird, and concluded that it would be in the
best interests of the Company's shareholders to appoint these
director nominees to the Board.
The draft minutes then recite resolutions enlarging the size of the board to
eleven directors and appointing defendants DeLape and Efird to the Board.
Significantly, neither Mr. DeLape nor Mr. Efird was at the November 16 board
meeting. Thus, even assuming, arguendo, that their appointment as directors was
valid, a majority of the board was not present at the balance of the meeting and
there was no quorum.
13. The draft minutes indicate that the Former Directors next discussed
and purportedly approved the issuance of 4 million shares of BigMar common stock
to BDG for "an aggregate maximum consideration of Two Million Dollars." No
proposed agreement for this stock sale at a price below the market price, was
provided to the directors before or at the meeting. There is no explanation of
why $2 million is the "maximum" consideration or the circumstances in which or
extent to which the consideration may be less than $2 million.
14. The draft minutes of November 16 conclude with the following:
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The Chairman then stated that he would like to confer with
counsel before ending the meeting and he suggested that the Board
consider a temporary adjournment of the meeting until Sunday evening,
so that the company would have the benefit of legal counsel in
connection with certain other matters of concern to him. Whereupon
discussion ensued; and upon completion of the same upon a motion duly
made, seconded and unanimously approved, the Board of Directors
resolved to adjourn the meeting until Sunday evening, November 18, 2001
at 3 p.m. (EDT).
Significantly, the draft minutes do not reflect that the directors were provided
with any documents, before or during the meeting, related to any of the matters
presented at the November 16th session.
15. Several hours after the adjournment of the purported board meeting
on November 16, defendant Tramontana sent an e-mail to plaintiff May discussing
BigMar's need for funds. Also on November 16 after the meeting, defendant Kramer
sent plaintiff May e-mails requesting that the board meeting proposed to be held
on December 3 in New York be rescheduled because of a business related
scheduling conflict. These e-mails said nothing about a board meeting having
just been held, new directors having been appointed, or 4 million shares having
been issued for $2 million. These e-mails also failed to mention that this
meeting of the board would reconvene on November 18. Indeed, no effort was made
to give plaintiff or the other three directors who were not in attendance at the
purported board meeting on November 16 notice of (i) the actions purportedly
taken at that meeting (ii) the adjournment of that meeting to November 18 or
(iii) when and where the meeting would reconvene.
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16. The bogus board meeting was supposedly reconvened on November 18,
2001 in Barbengo, Switzerland. The draft minutes of the meeting were apparently
prepared before the meeting was even held, as they reflect that the meeting was
held "at [time] (EST), [time] local time."
17. The draft minutes of November 18 recite that defendants Tramontana,
Kramer and Pedrani were present in person and that defendants Rohrer and Service
participated by telephone conference call. The minutes reflect that plaintiff
May and directors Hodgson, Carroll and Ryan were not present at the meeting.
Thus, the drafter of the prefabricated minutes knew ahead of time that those
directors would not be present at the meeting. Though the meeting was adjourned
on November 16 to obtain the benefit of counsel, the directors could not have
received any legal advice at the meeting on any of the matters presented since
the draft minutes indicate that neither the counsel being terminated nor new
counsel attended the meeting. The absence of any reference in the draft minutes
to the two new directors purportedly appointed on November 16 (i.e. DeLape and
Efird) indicates that those persons were also not present at the meeting.
Accordingly, if their appointment on November 16 were valid, there would have
been no quorum present on November 18, even assuming that reconvened meeting was
otherwise valid. Nevertheless, the minutes recite that defendant Tramontana took
a role call of the members of the board present and "announced that a quorum was
present."
18. The meeting first "confirmed" the actions supposedly taken on
November 16. Next, the Former Directors claimed to have terminated the
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Company's current counsel, Quarles & Brady, and retained new counsel, DeMartino,
Finkelstein, Rosen & Virga, who had been identified a week earlier by defendant
Tramontana as his personal counsel. Defendant Tramontana was, according to the
draft minutes, authorized to execute a retainer agreement with the DeMartino
firm and promptly wire a $25,000 retainer and an additional $10,000 "to
compensate DFRV for the legal services rendered and expenses incurred to date."
The DeMartino firm was purportedly authorized to determine whether "there are
deficiencies in the Company's governing corporate documents" including its
certificate and by-laws, and to make remedial recommendations.
19. According to the draft minutes on November 18, the Former Directors
purported to remove Ms. May as president, secretary and a member of the
Executive Committee and to appoint Mr. Tramontana as president and Mr. Rohrer as
secretary. They also voted to delay the annual meeting of stockholders scheduled
to be held on December 14, 2001.
20. Finally, the defendants purported to amend the Company's by-laws to
require a 66-2/3% vote for the stockholders to amend the by-laws or remove
directors. Obviously, these amendments were intended to prevent plaintiff May,
who controlled a majority of the voting power of BigMar's stock from removing
the former Directors or amending the bylaws. A proposed by-law amendment "to
preclude stockholder action by consent" was not voted on, supposedly because
"[i]t was determined that precluding shareholders' action by consent is not
appropriate and would unfairly constrain shareholders" Apparently, the Former
Directors did
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not realize that under 8 Del. C.ss.228(a), any restrictions on the stockholders'
ability to act by written consent would have to be contained in the certificate
of incorporation, not the By-Laws. The Former Directors also apparently did not
realize that, because 8 Del. C.ss.141(k) specifies that the holders of a
majority of the corporations shares entitled to vote may remove directors with
or without cause, any increase in that voting requirement would, under 8 Del.
C.ss.102(b)(4), require an amendment to the Company's Certificate of
Incorporation under 8 Del. C.ss.242. Accordingly, even if the November 18
actions were otherwise proper (and they were not), the by-law amendment
purporting to increase the stockholder vote to remove directors was invalid as a
matter of law.
21. The defendants' deceptive conduct continued after the November
16-18 illegal meeting. Despite communicating with plaintiff May, defendant
Tramontana never mentioned the purported board meeting or the actions defendants
claimed to have taken thereat until nearly a week later. Indeed, plaintiff May
communicated further with her fellow board members concerning the request by
defendant Kramer to change the date for the proposed board meeting in New York.
However, none of the Former Directors who received this communication responded
by acknowledging that they claimed to have already held a board meeting without
Ms. May and the other directors.
22. Over the Thanksgiving weekend, plaintiff May and directors Hodgson,
Ryan and Carroll belatedly learned of the purported board meeting by an e-mail
from the supposed new counsel to BigMar on Sunday, November 25. Messrs. Ryan
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and Carroll both complained to their fellow directors that they were not
notified or aware of the purported November 16 arid 18 board meeting. Mr.
Carroll noted that he was not made aware that the board meeting discussed in Mr.
Tramontana's November 14 e-mail was ever formalized and knew only that Mr.
Tramontana and Ms. May were attempting to properly schedule and notify all board
members.
THE CONSENTS REMOVING DEFENDANTS AS DIRECTORS
23. On November 26, 2001, the record holders of a majority of the
outstanding common stock of BigMar executed written consents removing defendants
Tramontana, Kramer, Podrani, Rohrer and Service from the BigMar board. These
consents were delivered to the Company's principal place of business and to its
registered agent in Delaware on November 27, 2001. However, it was subsequently
learned that the BigMar's transfer agent had issued additional shares on
November 26, 2001, which arguably resulted in the consents reflecting less then
a majority of the shares of the Company's common stock outstanding on November
27.
24. On November 28, 2001, two sets of written consents executed by the
record holders of a majority of BigMar's outstanding common stock, even
including the shares issued on November 28, were delivered to the Company's
principal place of business and to its registered agent in Delaware. The first
set of consents removed defendants Tramontana, Kramer Pedrani, Rohrer and
Service from the BigMar board of directors. The second set of consents removed
defendants DeLape and Efird from the BigMar board, to the extent they had ever
been validly appointed as directors (which they had not).
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COUNT I
INVALIDITY OF THE NOVEMBER 16-18 BOARD MEETING AND ACTIONS
25. Plaintiffs repeat and reallege the allegations above as if fully
set forth herein.
26. The purported board meeting on November 16-18, 2001 was not
properly noticed for the following reasons:
(a) The notice of meeting was defective because it did not comply
with the by-laws, including (i) the notice was not sent by the
Secretary of the Company (ii) the notice failed to specify a
place for the meeting, (iii) the statement of purposes in the
notice was incomplete and misleading and (iv) the notice was
sent by e-mail.
(b) Plaintiff May and Messrs. Hodgson, Ryan and Carroll were not
properly notified of the meeting.
(c) Defendant Tramontana and the other directors who attended the
meeting used trickery and deception to cause plaintiff May and
directors Ryan, Carroll and Hodgson to be absent from the
meeting. The Former Directors had an undisclosed agenda which
was not shared with these other directors. Consequently, these
directors, and particularly Ms. May, were disadvantaged by the
failure of the former Directors to communicate their
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plans, which prevented Ms. May and the others from taking
protective actions.
27. Even if it had been properly noticed, the November 16-18 board
meeting was still invalid. There was no quorum present because, on information
and belief, defendant Service was not present at the meeting.
28. The actions purportedly taken at the November 16-18 board meeting
were also invalid even if the meeting had been validly convened. The first
action purportedly taken at the meeting was to increase the board of directors
by two directorships and to appoint defendants DeLape and Efird to those
directorships. Assuming this expansion of the board and addition of directors
was valid, a quorum of the board was not present thereafter because even the
draft minutes acknowledge that only the five Former Directors (assuming Service
was in attendance) were present and that Messrs. DeLape and Efird were not at
the meeting.
29. The reconvened meeting on November 18 was invalid because plaintiff
and Messrs. Ryan, Hodgson and Carroll were not given notice of the time and
place for the reconvening of the meeting. Defendant Tramontana and Kramer
deliberately failed to inform plaintiff May concerning the meeting despite
having direct contact with her on November 16 -after the meeting had been
adjourned to November 18 at 3 p.m. Though Mr. DeLape and Mr. Efird had
purportedly been added to the board, on information and belief, no effort was
made to give them notice of the reconvened meeting either. Moreover, as the
pre-drafted minutes of
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the November 18 session demonstrate, the defendant directors well knew what was
planned for that session, including removal of Ms. May from various offices, but
did not disclose that information to plaintiff May or the other directors.
Finally, assuming, arguendo, that the Former Directors had validly appointed
Messrs. DeLape and Efird to the board on November 16, no quorum was present on
November 18 since the draft minutes reflect that only five directors were in
attendance.
30. Though the November 16 meeting supposedly had been adjourned so the
board would have "the benefit of legal council" on certain matters, no legal
counsel attended the November 18 session. Perhaps for those reasons, the
defendant directors purported to amend the by-laws to require a 66 2/3 vote to
remove directors. This was in violation of 8 Del. C.ss.141(k), 8 Del.
C.ss.102(b)(4) and 8 Del. C.ss.242.
31. The actions of the Former Directors at the November 16-18 meeting
were also invalid because (i) the defendant directors were uninformed concerning
the matters acted upon and did not act with due care, and (ii) they were self
interested in the actions purportedly taken at that meeting. Furthermore, their
actions were intended primarily to entrench themselves in office, including (i)
calling off the previously scheduled annual meeting of stockholders for the
election of directors (ii) purportedly issuing stock to deprive BigMar's
controlling stockholders of control, and (iii) purporting to restrict the
stockholders from amending the By-Laws or removing directors (and, in
particular, seeking to deprive
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plaintiff May, as the controlling stockholder of the Company, of the ability to
amend the By-Laws and remove directors). The Former Directors also continued to
engage in deceptive conduct by not disclosing promptly to their fellow directors
that a purported board meeting had been held or the actions that supposedly were
taken at that meeting.
COUNT II
REMOVAL OF THE DEFENDANTS AS DIRECTORS
32. Plaintiffs repeat and reallege the allegations above as if fully
set forth herein.
33. As a result of written consents executed by the holders of a
majority of the outstanding stock of BigMar, defendants Tramontana, Kramer,
Pedrani, Rohrer and Service have been removed as directors from BigMar board. To
the extent defendants DeLape and Efird are determined to have been properly
appointed to the BigMar board by the Former Directors, they were also removed
from the board by written consents executed by the holders of a majority of the
outstanding common stock of BigMar.
COUNT III
DEFECTIVE REMOVAL OF PLAINTIFF MAY AS AN OFFICER
34. Plaintiffs repeat and reallege the allegations above as if fully
set forth herein.
35. The Former Directors' purported removal of Ms. May as BigMar's
president, secretary and Executive Committee member at the invalid November 16-
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18 board meeting violated Delaware law and was not effective. Ms. May continues
as president and secretary of the Company and a member of its Executive
Committee.
36. Plaintiffs have no adequate remedy at law.
Wherefore plaintiffs pray for an order:
A. Declaring that no valid board meeting was held on November 16-18,
2001.
B. Declaring that none of the actions purportedly taken at the invalid
November 16-18 meeting were validly taken and that such actions are a nullity.
C. Declaring that defendants Tramontana, Kramer, Rohrer, Pedrani and
Service were removed as directors of the Company pursuant to written stockholder
consents.
D. Declaring that defendants DeLape and Efird were not validly
appointed to the BigMar board or, if appointed, were removed as directors of the
Company pursuant to written stockholder consents.
E. Declaring that the duly constituted board of BigMar is comprised of
plaintiff May and Messrs. Ryan, Hodgson and Carroll.
F. Declaring that plaintiff May is president, secretary and a member of
the Executive Committee of the Company.
G. Awarding plaintiffs their attorneys fees and cost of this action.
H. Granting such other and further relief as the court deems just and
proper.
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Prickett, Jones & Elliott, P.A.
/s/ Michasel Hanrahan
-----------------------------
Michael Hanrahan
John H. Small
Gary F. Traynor
1310 King Street
Wilmington, DE 19801
(302) 888-6500
Attorneys for Plaintiffs
Cynthia R. May and BigMar, Inc.
OF COUNSEL
For Plaintiff Cynthia R. May:
Frederic T. Spindel
Pillsbury Winthrop LLP
1600 Tysons Boulevard
McLean, VA 22101
(703) 905-2188
Dated: November 29, 2001
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