Exhibit 99.1
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON
BRADLEY I. KING et al., |
| NO. CV-09-3110-EFS
Plaintiffs, |
|
v. | ORDER ENTERING COURT'S RULINGS FROM
| DECEMBER 14-15 HEARING
KESSELRING HOLDING CORPORATION, |
a Delaware corporation, et al., |
|
Defendants. |
A hearing occurred in the above-captioned matter on December 14-15, 2009 in
Richland and Yakima. D.R. Case and James Berg appeared on Plaintiffs' behalf;
Robert Boggs and Bryan Myre appeared for Defendants. The Court granted a
temporary restraining order ("TRO") on November 24, 2009, which expired on
December 15, 2009. (Ct. Rec. 29.) In that TRO, the Court directed Defendants to
refrain from taking certain actions with respect to the business and banking
operations of King Bros. Woodworking LLC ("King Bros."). The Court considered
the memoranda and declarations submitted by the parties and the testimony of
Gary King, Candace Broadfoot, Joseph Silva, and Charles Rockwood. This
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abbreviated ruling serves to memorialize and supplement the Court's oral
rulings. A more substantive Order explaining the Court's basis for granting the
preliminary injunction will follow.
"A preliminary injunction is not a preliminary adjudication on the merits:
it is an equitable device for preserving the status quo and preventing the
irreparable loss of rights before judgment." TEXTILE UNLIMITED V. A..BMHAND CO.,
240 F.3d 781, 786 (9th Cir. 2001). To obtain a preliminary injunction,
Plaintiffs must demonstrate that they are likely to succeed on the merits, that
they are likely to suffer irreparable harm in the absence of preliminary relief,
that the balance of equities tips in their favor, and a preliminary injunction
is in the public interest. See AM. TRUCKING ASS'NS, INC. V. CITY OF LOS ANGELES,
559 F.3d 1046, 1052 (9th Cir. 2009).
The Court finds that the Plaintiffs hold a majority of Holding shares.
Plaintiffs' actions on November 16, 2009 were proper and did not violate any SEC
regulations. Therefore, they validly voted out Silva and Sandifer from their
positions with Holding and replaced them with new board members and officers.
Although the selection of officers is a matter for the newly-elected Board of
Directors, the choices of David Wise as attorney and HJ & Associates to perform
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the end-of-year audit appear to be appropriate. Because Silva lacked authority
to issue 2,000,000 shares of Holding stock to Southtech Solutions, Inc. on
November 20, 2009, the issuance of those shares was invalid.
The Court also finds that Plaintiffs met their burden of showing that they
are likely to succeed on the merits, that they are likely to suffer irreparable
harm if an injunction does not issue while this case is pending, that the
balance of the equities tips sharply in their favor, and that a preliminary
injunction is in the public interest. Accordingly, the Court extends the TRO to
grant a preliminary injunction until this case is resolved.
For the reasons given above, IT IS HEREBY ORDERED:
1. A preliminary injunction is GRANTED.
2. Defendants are prohibited from taking or attempting to take the
following actions with respect to Holding: a) issuing additional stock; b)
hiring or terminating any board members and/or officers of Holding; c) hiring or
terminating any employees, contractors, board members, and/or officers of King
Brothers; d) changing any banking arrangements involving Holding; e) changing
any banking arrangements involving King Brothers; f) signing or renegotiating
contracts; g) seizing funds held in any bank account of King Brothers; h)
seizing or exerting control over any payments received or to be received by King
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Brothers; i) issuing any payment to Searchlight, Inc.; j) declaring or issuing
any dividends; and/or k) engaging in any other drastic or material change that
would or could affect the operation of Corp. or King Brothers.
3. Defendants are prohibited from taking or attempting to take any of the
following actions with respect to Corp.: a) issuing additional stock; b) hiring
or terminating any board members and/or officers of Corp.; c) hiring or
terminating any employees, contractors, board members, and/or officers of King
Brothers; d) changing any banking arrangements involving Corp.; e) changing any
banking arrangements involving King Brothers; f) seizing funds held in any bank
account of King Brothers; g) seizing or exerting control over any payments
received or to be received by King Brothers; h) declaring or issuing any
dividends; and/or i) engaging in any other drastic or material change that would
or could affect the operation of Corp. or King Brothers.
4. Banner Bank is directed to continue honoring checks written against the
King Brothers accounts that are/were either a) written and signed prior to
today's date, and/or b) written and signed by a true officer of King Brothers
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(Gary King, Greg Aff, or Teddy Sparling), and/or c) written and signed by King
Brothers' controller, Candace Broadfoot.
IT IS SO ORDERED. The District Court Executive is directed to enter this
Order and provide a copy to counsel.
DATED this 16th day of December 2009.
s/ Edward F. Shea
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EDWARD F. SHEA
United States District Judge
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