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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE ) ) Plaintiff, ) ) v. ) ) BRETT J. CORMICK and ELAN SUISSE ) INTERNATIONAL HOLDINGS (USA) ) LLC, ) ) Defendants. ) ____________________________________) ELAN SUISSE, LTD., ) ) Plaintiff, ) ) v. ) ) ROBERT D. CHRIST, ) ) Defendant. ) ____________________________________) ROBERT D. CHRIST,
C.A. No. 06-275-GMS
C.A. No. 07-60-GMS
OPENING MEMORANDUM OF BRETT J. CORMICK, ELAN SUISSE INTERNATIONAL HOLDINGS (USA) LLC AND ELAN SUISSE LTD,. IN SUPPORT OF THEIR MOTION TO DETERMINE APPLICABLE LAW Brett J. Cormick and Elan Suisse International Holdings (USA) LLC, defendants in Civil Action No. 06-275-GMS, and Elan Suisse, Ltd., plaintiff in Civil Action No. 07-60-GMS, respectfully submit this opening memorandum in support of their Motion to Determine Applicable Law, in accordance with paragraph 7 of the Scheduling Order in the above-caption actions, and state as follows:
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I.
INTRODUCTION. Robert D. Christ ("Christ"), plaintiff in Civil Action No. 06-265-GMS, and defendant in
Civil Action No. 07-60-GMS, was, at the time of the actions complained of, a resident of Pennsylvania. After filing suit, Christ moved to Louisiana. Dr. Brett J. Cormick ("Cormick") is a citizen of Australia whose legal residence is Zimbabwe. Elan Suisse International Holdings (USA) LLC ("ESUSA") is a Delaware limited liability company. Elan Suisse, Ltd. ("ESRSA") is a South African business entity. Christ has asserted two contract claims (promissory estoppel and breach of contract) and one tort claim (fraud). Cormick has asserted several tort claims (defamation, false imprisonment/false institution of legal proceedings, intentional infliction of emotional distress), one federal statutory claim (the Alien Tort Claims Act), and a claim for breach of contract/declaratory relief. As this Court has recognized, a federal court, sitting in diversity, follow's the forum state's choice of law rules to determine which jurisdiction's rules apply to a given claim. Christ v. Cormick, C.A. No. 06-275, 2007 WL 2022053, WL Op. at *6, Sleet, J. (D. Del. July 10, 2007). For contract-based causes of action: Delaware courts follow the `most significant relationship" approach of the Restatement (Second) of Conflict of Laws. Under Restatement section 188, the rights and duties of the parties with respect to an issue in contract are determined by the local law of the state with the most significant relationship to the transaction and the parties by reference to the following principles: a) the place of contracting, b) the place of negotiation of the contract, c) the place of performance, d) the location of the subject matter of the contract, and e) the domicile, residence, or place of incorporation and place of business of the parties.
2
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Nagihu v. Inter-Continental Hotels Group, Inc., 165 F.R.D. 413, 419-20 (D. Del. 1996) (citations omitted). For tort claims: Delaware courts have followed "the principle of lex loci delicti, and [have] appl[ied] the law of the place of the injury." However, "[i]n the case of intentional torts, such as fraud, the lex loci deliciti rule requires a court to apply the substantive law of the state or, in this case, country where the defendant's wrongful conduct primarily occurred." The rationale follows that, where there is an action based upon an intentional tort, "the punitive element is dominant, [and the] state finds [the] conduct wrongful because its people regard it as sinful or offensive to public morals and the conduct, not the injury, is critical for applying the applicable law. The aforementioned policy appears to be in accord with the Delaware Supreme Court's adoption of the most significant relationship test, "set forth in the Restatement (Second) of Conflict of Law § 145(1) (1971) for analyzing choice of law questions relating to tort claims." Christ, WL Op. at * 6 (citations omitted). In making that determination, however, where, as here, the injury claimed is purely financial, the law of the state where the economic injury is felt applies. Deutschman v. Beneficial Corp., 132 F.R.D. 359, 379 (D. Del. 1990), recons. denied, 761 F.Supp. 1080 (D. Del. 1991) (negligent misrepresentation). II. CHRIST'S CLAIMS. A. CONTRACT CLAIMS.
Christ has asserted two contract claims: (i) promissory estoppel, claiming that he was not given an equity interest in ESUSA and written confirmation of such interest, as he claims was promised in exchange for his contribution of $250,000 (Am. Compl. ¶¶22-24), and (ii) breach of a promise to liquidate Christ's investment and return the $250,000. (Id. ¶¶26-28).
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1.
Promissory Estoppel.
In applying the Restatement factors, although there were preliminary discussions about Christ's possible investment in ESUSA via e-mail between Cormick in Zimbabwe and Christ in Pennsylvania, the actual terms of the investment were negotiated at multiple in-person meetings over several days between the two of them in South Africa. (Cormick Decl. ¶¶2-3). The place of "performance" can be seen as Pennsylvania (from where Christ wired the money) or London (to where the money was wired). (Cormick Decl. ¶4). As Christ obtained his equity interest (which is incorporeal property) automatically as a matter of law upon payment, there was no place of "performance" in that regard.1 However, Christ assumed the title of Vice President and began developing a website for Elan Suisse from Pennsylvania. (Cormick Decl. ¶12 & Ex. 6). The location of the subject matter of the lawsuit is complicated by the different views of the parties as to what exactly was the subject matter. Christ's view is that he was purchasing equity in both ESUSA (a Delaware limited liability company) and Elan Suisse, Ltd., a South African entity ("ESRSA"). (Am. Compl. ¶22). Cormick's position is that Christ was purchasing an equity position in ESUSA, with the right to receive a share of the money obtained upon the sale or liquidation of ESRSA, but without any actual ownership interest in ESRSA. (Counterclaim ¶¶41, 43-46). Also relevant is the fact that the Elan Suisse business was all related to the sale of investment products in South Africa (with ESUSA holding the U.S. product based intellectual property and managing the U.S. investment products). (Counterclaim ¶¶21-23; Cormick Decl. ¶8).
1
Under Delaware corporate law, shares of stock of a Delaware corporation are deemed to have a situs in Delaware. 8 Del. C. §169. Delaware's Limited Liability Company Act, by contrast, does not affix ownership to any situs, and, indeed, does not even contemplate issuing certificates demonstrating ownership. 4
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Given the numerous locales involved, Cormick and ESUSA respectfully submit that since the investment was negotiated in South Africa and the business was to be marketed and conducted in South Africa, with revenues to be derived from South Africa, and given that Christ claims (albeit incorrectly) that he was promised an equity interest in ESRSA, the South African entity, South African law should apply to the promissory estoppel claim. 2. Breach of Contract.
Christ's breach of contract claim is that Cormick agreed to liquidate Christ's position2 and return his money, and failed to do so. The parties apparently agree that this agreement took place in e-mails between Cormick in Zimbabwe and Christ in Pennsylvania. If, as Christ suggests, he asked Cormick to liquidate his position (Cormick Decl. ¶5 & Ex. 2), and Cormick agreed, then the contract was formed in Zimbabwe, where Cormick allegedly accepted the offer. Restatement (Second) of Conflicts of Law §188, comment e ("the place of contracting is the place where occurred the last act necessary , under the forum's rules of offer and acceptance , to give the contract binding effect..."); Century Industries, Inc. v. Benoit, C.A. No. 5964, 1979 WL 174445, WL Op. at *2, Hartnett, V.C. (Del. Ch. Aug. 29, 1979) (acceptance is last act forming a contract, and law of forum from which acceptance is sent is the applicable law, whether or not such acceptance was received). Under these authorities, therefore, the breach of contract claim should be governed by Zimbabwe law.
2
It appears that the promissory estoppel claim and the breach of contract claim are inconsistent with one another. If Christ requested, and Cormick offered, to liquidate Christ's interest, that means Christ had received an interest in ESUSA which he was now seeking to liquidate, and so there was no failure of performance permitting the estoppel claim. 5
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B.
FRAUD CLAIM .
What law governs Christ's fraud claim is somewhat muddied by the fact that Christ has not been forthcoming about the details of the alleged fraud. In interrogatories, Cormick asked Christ to (i) identify the fraudulent statements upon which he claims to have relied, and (ii) identify the location(s) where such statements were allegedly made. Christ's response was to invoke Federal Rule of Civil Procedure 33(d), and refer Cormick to documents Christ had produced. (Cormick Decl. ¶6 & Ex. 3). To date, Christ has produced three disks containing 12,946 pages. Through counsel, Cormick requested that, as to each of the interrogatories Christ responded by relying on Rule 33(d), that he specify which documents respond to each such interrogatory, as is required by Rule 33(d). (Cormick Decl. ¶6 & Ex. 4). As of the date of filing of this memorandum, Christ has not done so, but has merely stated that he would "consider" doing do after he finished producing documents (with no assurance of when that would be). (Cormick Decl. ¶6 & Ex. 5). In light of Christ's failure to cooperate in discovery, Cormick can only speculate that, in referring to documents, Christ is relying on statements in e-mails sent by Cormick in Zimbabwe to Christ in Pennsylvania. Where the tort claim involves allegations of false statements, the place where the false statements operated to cause reliance by the recipient is more important than the location from whence the statements were sent. Autrey v. Chemtrust Industries Corp., 362 F.Supp. 1085, 1090 (D. Del. 1973); Restatement (Second) of Torts §148, comment g ("the place where a plaintiff acted in reliance on defendant's representation is more important than the place where the defendant made or the plaintiff received the representations").
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Christ appears to claim that he received false statements in e-mails from Cormick. Those emails would appear to be received in Pennsylvania, Christ's state of residence. Christ claims that he relied on such statements in that he caused $250,000 to be sent to Cormick. Presumably, Christ acted in Pennsylvania to cause such transfer. Christ's alleged economic injury is based in Pennsylvania, where Christ resided at the time. All of these factors support applying Pennsylvania law to the fraud claim. III. CLAIMS OF CORMICK AND ESRSA. The parties agree that Cormick's claim for false imprisonment and infliction of emotional distress arise under Zimbabwean law, as they relate to his arrest and torture in Zimbabwe. The parties also agree that the federal statutory claim, the Alien Tort Claims Act, is governed by the "law of nations." 28 U.S.C. §1350. This leaves the defamation claims and the declaratory judgment claim. A. DEFAMATION.
Although Cormick is a legal resident of Zimbabwe (although since his wrongful arrest and torture he has had to seek residence outside of Zimbabwe for the time being), the damage to his reputation was most affected outside of Zimbabwe, in the Republic of South Africa. First, although Cormick started Elan Suisse in Zimbabwe as a Zimbabwean entity for the purpose of testing the concept, the primary target market for the Elan Suisse business was always South Africa. Following a successful operational text in Zimbabwe, Cormick incorporated ESRSA in South Africa, and began recruiting financial organizations throughout South Africa and neighboring countries. Cormick was the sole individual making contacts with banks, brokerages and investors in these countries, and the
7
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success of Elan Suisse depended on the soundness of Cormick's professional reputation. (Cormick Decl. ¶¶8-9). Prior to Christ's destructive actions, Cormick had built up a network of financial institutions throughout South Africa, based on the soundness of his business plan and his good name. As a consequence of Christ's conduct of (i) publicly and wrongfully suggesting that Cormick was involved in a Zimbabwean financial scandal, (ii) filing suit against Cormick in South Africa (thereby showing Christ's belief that South Africa was the most relevant jurisdiction), and (iii) publishing numerous false and defamatory statements on his website about Cormick and the Elan Suisse project, Cormick's reputation throughout the African continent was shattered. His connections refused to deal with Elan Suisse or him, and his ability to do business in South Africa (or indeed anywhere in the world) has been destroyed. (Cormick Decl. ¶10). Because ESRSA was incorporated in South Africa, and because that was the center of and primary market for the Elan Suisse project, and because Cormick was the "face" of Elan Suisse in Africa, and because the largest percentage of Elan Suisse's target market would have been located in South Africa, the central locus of injury to Cormick's professional reputation and the reputation of Elan Suisse, is South Africa. (Cormick Decl. ¶11). As such, South African law should govern the defamation claims of Cormick and ESRSA. See Abadian v. Lee, 117 F.Supp. 481, 485-86 (D. Md. 2000) (law of forum where business opportunities were lost as a result of defamation governs); Osby v. A&E Television Networks, C.A. No. 96-7347, 1997 WL 338855, WL Op. at *3, Shapiro, J. (E.D. Pa. June 17, 1997) (law of forum where business reputation suffered governs).
8
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B.
BREACH OF CONTRACT/DECLARATORY JUDGMENT CLAIM.
Count V of the Counterclaim asserts that Christ, by his actions, violated the terms of the Articles of Association3, and is therefore subject to the forfeiture provisions thereof. (Counterclaim ¶¶146-53). Christ has indicated that he will deny ever having agreed to the terms of the Articles of Association. That is a fact question not implicating any choice of law issue. To the extent it does implicate a choice of law question, it would be under South African law, as that is where Cormick claims that Christ reviewed and approved the terms. (Cormick Decl. ¶3). If a jury determines that the parties agreed upon the terms of the Articles of Association, then enforcement of its terms should be governed by Zimbabwe law, as that is the law provided for in the Articles of Association. (Cormick Decl. Ex. 7), except to the extent that Christ claims that enforcement of the Articles of Association are for some other reason prohibited by the terms of the Delaware Limited Liability Act. See 6 Del. C. §18-1104 ("[i]n any case not provided for in this chapter, the rules of law and equity, including the law merchant, shall govern").
3
The operating agreement of a limited liability company may go by any name. 6 Del. C. §18101(7). 9
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CONCLUSION WHEREFORE, for the foregoing reasons, Brett J. Cormick, Elan Suisse International Holdings (USA), LLC and Elan Suisse Ltd. respectfully request that the Court enter an Order holding that" 1. 2. 3. 4. 5. Christ's promissory estoppel claim is governed by South African law; Christ's breach of contract claim is governed by Zimbabwe law; Christ's fraud claim is governed by Pennsylvania law; Cormick's and ESRSA's defamation claims are governed by South African law; and Cormick's breach of contract law, to the extent it is not governed by Delaware's
Limited Liability Company Act, is governed by Zimbabwe law.
Dated: August 21, 2007
Respectfully submitted,
/s/ David L. Finger David L. Finger (DE Bar ID #2556) Finger & Slanina, LLC One Commerce Center 1201 Orange Street, Suite 725 Wilmington, DE 19801-1155 (302) 884-6766 Attorney for Brett J. Cormick, Elan Suisse International Holdings (USA) LLC, and Elan Suisse Ltd.
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CERTIFICATE OF SERVICE I, David L. Finger, hereby certify that on this 21st day of August, 2007, I electronically filed the foregoing document with the Clerk of the Court using CM/ECF which will send electronic notification to the following counsel of record:
Thad J. Bracegirdle, Esq. Reed Smith LLP 1201 Market Street, Suite 1500 Wilmington, DE 19801
/s/ David L. Finger David L. Finger (DE Bar ID #2556) Finger & Slanina, LLC One Commerce Center 1201 Orange Street, Suite 725 Wilmington, DE 19801-1155 (302) 884-6766
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
ROBERT D. CHRIST, Plaintiff, v. BRETT J. CORMICK, ELAN SUISSE INTERNATIONAL HOLDINGS (USA) LLC, Defendants. )
) ) ) ) ) )
)
)
)
)
C.A. No. 06-00275 GMS
DECLARATION OF DR. BRETT J. CORMICK 1. My name is Dr. Brett J. Cormick. I make this declaration in support of my
Motion to Determine Applicable Law. 2. The idea of Mr. Christ purchasing an interest in Elan Suisse International
Holdings (USA) LLC ("ESUS.Lt\") had been discussed informally in e-mails between Mr. Christ from Pennsylvania and me from Zimbabwe. However, as evidenced by an e-mail I sent to Mr. Christ on March 1, 2004, attached hereto as Exhibit 1, I was not going to allow Mr. Christ to invest in Elan Suisse until he attended the meeting in London with PNB Paribas Fund ("BNP"), which was interested in partnering with Elan Suisse, so he could see that.the proposed business was legitimate. 3. Prior to the meeting with BNP, Mr. Christ met me in South Africa in
2004, where we worked out the terms of his investment. However, his actual investment did not occur until after he engaged in thorough due diligence in South Africa and London in 2004, including reviewing the paperwork, investigating my credentials, meeting with BNP, approving the terms of the operating agreement (called the Articles of Association), etc.
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4. 5.
Mr. Christ wired his payments to Londol1. In e-mails between me (in Zimbabwe) and Mr. Christ (in Pennsylvania), I
agreed to liquidate his position in ESUSA (as he requested in an e-mail date September 17,2004, appended hereto as Exhibit 2). 6. Of course, I deny all of Mr. Christ's claims of fraud. By interrogatories, I
asked Mr. Christ to identify the specific statements he claims to be false and upon which he claims to have relief, and to identify the location where the alleged statements were made. He responded only by citing Federal Rule of Civil Procedure 33(d) and referring to documents he has produced in discovery. (Exhibit 3 at 5). Although, as of the date this brief was filed, he has indicated through his counsel that production is not yet completed (Exhibit 4), he has to date produced 12,946 pages of documents (including duplicates and spam e-mails). When my counsel asked Mr. Christ's counsel to specify which documents respond to the Interrogatory, as required by Rule 33(d) (Ex. 5), Mr. Christ's counsel said that he would "consider the request" after production was completed. 7. As such, I cannot state at this point with any assurance that any of the
statements which Mr. Christ purports to claim as the basis for his fraud claim were in any e-mails or other documents. If they were, however, they would have been sent from Zimbabwe to Pennsylvania. Otherwise, any claimed oral statements from me to Mr. Christ would have occurred in South Africa or London. 8. As for the defamation claim, although I am a legal resident of Zimbabwe
(although since my wrongful arrest and torture I have had to seek residence outside of Zimbabwe), the damage to my reputation was most affected outside of Zimbabwe. First,
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although I started Elan Suisse as a test of concept in Zimbabwe as a Zimbabwean entity, the primary target market for the project was always South .Lt\frica, due to the fact that the isolation from the apartheid era had left South Africa with a shortage of financial services products that are taken for granted in the rest of the world. 9. Following a successful test launch in Zimbabwe, I incorporated Elan
Suisse (Pty) Ltd. in South Africa, and began recruiting financial organizations throughout South Africa. I was the sole individual making contacts with banks, brokerages and investors in these countries, and the success of Elan Suisse depended on the soundness of my professional reputation. 10. Prior to the destructive actions of Mr. Christ, I had built up a network of
financial institutions throughout these countries, based on the soundness of my business plan and my good name. As a consequence of Mr. Christ's conduct of (i) publicly and wrongfully suggesting that I was involved in a Zimbabwean financial scandal, (ii) filing suit against me in South Africa, and (iii) publishing numerous false and defamatory statements on his website about me and the Elan Suisse project, my reputation throughout the African continent was shattered, my connections refused to deal with Elan Suisse or me, and my ability to do business on the African continent (or indeed anywhere in the world) has been destroyed. 11. Because Elan Suisse was incorporated in South Africa, and because that
was the center of the Elan Suisse project, and because I was the "face" of Elan Suisse in Africa, and because the largest percentage of Elan Suisse's target market would have been located in South Africa, the central locus of injury to my reputation and the reputation of Elan Suisse, is South Africa.
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12.
Attached hereto as Exhibit 6 is an e-mail from Mr. Christ to David Batzner
dated March 26, 2004, where Mr. Christ identifies himself as Vice President of Elan Suisse. 13. Attached hereto as Exhibit 7 are the Articles of Association of Elan Suisse
International Holdings (USA) LLC and Elan Suisse (Pty) Ltd. 14. I declare, under penalty of perjury under the laws of the United States and
of Delaware, pursuant to 28 U.S.C. § 1748, that the foregoing is true and correct. Executed on this 20th day of August, 2007.
Dr. Brett J. Cormick
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Exhibit 1
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From: Sent: To: SUbject:
Dr Brett Cormick [[email protected] Monday, March 01 , 2004 3:15 AM Bob Christ
Re: "The Open Komono Agreement"
Bob We are mates We look after each other I am not even letting you anywhere near the company until you walk out of BNP going .. "erh
; -)
OK you know what
this could just be real"
Brett ---- Original message --- >Date: Sun, 29 Feb 2004 13:48:10 -0500
>From: "Bob Christ"
>Subject: "The Open Komono Agreement"
>To~ "Brett Cormick"
>
>You've heard of Open Skies? Well ...
>
>I'm thinking we can just sign the e-mail, but I think a simple one page >document will do the job. I just want something in writing in case Mr. >IRS man comes a-knockin' at my door and asked why I was trying to >launder all that money. > >Let me know your feedback asap. I'm ready to roll. I ' l l send over >money to the appointed accounts this week (as soon as I can find where >the fuck MetLife put my $200k).
>
>If this thing takes off, it is because of you. I could never have
>pulled this off. If it tanks, well, then I have only myself to blame.
>1 know the risks. With that said, let's rock-n-roll. I got some
>mountains to climb, some Poles to jump and some money to make. This is gonna be fun!
> >
Dr Brett Cormick elan capital 2 Lansdowne Row Berkely Square Mayfair London W1J 6HL Tel: +44 (0) 20 691 7890 Fax: +44 (0)20 7493 4935 Email: [email protected]
"The contents of this electronic message and any attachments relating to the official business of elan capital and subsidiaries ("elan capital") are proprietary to elan capital. They are confidential, legally privileged and protected by law. Views and opinions are those of the sender and do not represent elan capital's views and opinions nor constitute any commitment by or obligation on elan capital unless otherwise stated or agreed to in writing by elan capital.
1
ROC 07378
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Exhibit 2
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Exhibit 3
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
ROBERT D. CHRIST, Plaintiff,
v.
BRETT J. CORMICK, ELAN SUISSE INTERNATIONAL HOLDINGS (USA) LLC, ELAN SUISSE (PTY) LTD., NICOGEL LTD., JOHN WALTERS, DIANNE MARSHALL and MERCARI FINANCIAL SERVICES (PTY) LTD.,
Defendants. ELAN SUISSE LTD., Plaintiff,
v.
ROBERT D. CHRIST, Defendant
) ) ) )
) ) ) ) ) )
) )
)
) ) ) ) ) ) ) ) ) )
C.A. No. 06-275-GMS
C.A. No. 07-60-GMS
ROBERT D. CHRIST'S RESPONSES TO FIRST SET OF INTERROGATORIES
AND FIRST REQUEST FOR PRODUCTION OF DOCUMENTS PROPOUNDED
BY BRETT J. CORMICK, ELAN SUISSE INTERNATIONAL HOLDINGS (USA) LLC,
ELAN SUISSE (PTY) LTD., AND ELAN SUISSE, LTD.
Pursuant to Federal Rules of Civil Procedure 26,33 and 34, plaintiff Robert D. Christ ("Plaintiff'), by his undersigned attorneys, hereby objects and responds to the First Set of
... ::.
Interrogatories (the "Interrogatories") and First Request for Production of Documents (the "Request") propounded by Brett J. Cormick, Elan Suisse International Holdings (USA) LLC, Elan Suisse (Pty) Ltd and Elan Suisse Ltd:
General Objections
1. Plaintiff objects to the Interrogatories and the Request to the extent they seek to
impose requirements that are greater than or different from those imposed by the Federal Rules
WILLlB-54909.3
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RESPONSE: In addition to the foregoing General Objections, Plaintiff objects to this
interrogatory on the grounds that it seeks infonnation that is neither relevant to these actions nor
reasonably calculated to lead to the discovery of admissible evidence in these actions. 8. State each specific false statement you claim Cormick made and upon which you
claim you relied in delivering $250,000 to Connick.
RESPONSE: Subject to and without waiving the foregoing General Objections, and
pursuant to Federal Rule of Civil Procedure 33(d), Plaintiff hereby refers to the documents produced in response to the Request.
9.
As to each statement identified in response to Interrogatory 8, state the date(s)
each such representation was made, the location(s) where each such representation was made, and the name and last know address, e-mail address and telephone number of any person who was present when any such statement was made.
RESPONSE: Subject to and without waiving the foregoing General Objections, and
pursuant to Federal Rule of Civil Procedure 33(d), Plaintiff hereby refers to the documents produced in response to the Request. 10. List any and all investments you have made prior to sending $250,000 to
Connick, and as to each state specifically the nature and degree of investigation you undertook before making each such investment.
RESPONSE: In addition to the foregoing General Objections, Plaintiff objects to this
interrogatory on the grounds that it seeks infonnation that is neither relevant to these actions nor reasonably calculated to lead to the discovery of admissible evidence in these actions.
11.
As to the statement on your website, "From discussions with people close to
Brett, I understand that this incident ruined his business operations and caused him to move to
-5
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RESPONSE: In addition to the foregoing General Objections, Plaintiff objects to this request to the extent it seeks the production of documents and information protected by the attorney-client privilege and/or the work product doctrinev Subject to and without waiver of the foregoing objections, Plaintiff will produce all non-privileged documents responsive to this request within his possession, custody or controL 8. All documents provided to you by Alan and/or Allyson Dean, as referred to in
your e-mail to Cormick dated June 28, 2007.
RESPONSE: In addition to the foregoing General Objections, Plaintiff objects to this
request on the grounds that it seeks the production of documents that are neither relevant to these actions nor reasonably calculated to lead to the discovery of admissible evidence in these actions. AS TO OBJECTIONS TO INTERROGATORIES AND RESPONSES
TO REQUESTS FOR PRODUCTION OF
DOCUMENTS:
REED SMITH LLP
Thad J. egirdle 1201 Market Street Suite 1500 Wilmington, Delaware 19801 (302) 778-7500
Attorneys for Robert Ow Christ
Dated: August 6, 2007
- 45
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VERIFICATION
STATE OF LOUISIANA PARlSH OF TANGIPAHOA)
)
) ss:
Robert D.. Christ, being duly sworn, hereby deposes and says: I am the plaintiff in this action. I have reviewed the foregoing RESPONSES TO FIRST
SET OF INTERROGATORIES AND FIRST REQUEST FOR PRODUCTION OF DOCUMENTS
PROPOUNDED BY BRETT J CORMICK, ELAN SUISSE INTERNATI0~VALHOLDINGS (USA) LLC, ELAN SUISSE (PIT) LTD., AND ELAN SUISSE LTD. and the responses to
t
interrogatories set forth therein are true and correct to the best of my knowledge~ information and belief.
Subscribed and sworn to before me this 6TH day of August, 2007 My commission expires a"f- rle£.. f-i
I
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Exhibit 4
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FINGER & SLANINA, LLC f\ rr rT~ () I~N r~ '{ S j\ r-r l~ j\ \\l
David L. Finger, Resident, Wilmington Office: One Commerce Center, 1201 Orange St., Suite 725 Wilmington, Delaware 19801-1155 Ph: (302) 884-6766 I Fax: (302) 984-1294 E-mail: [email protected] www.delawgroup.com
August 8, 2007 Via fax and first class mail Thad J. Bracegirdle, Esq. Reed Smith LLP 1201 N. Market St., Ste. 1500 Wilmington, DE 19801 Re: Dear Thad: This letter sets forth Dr. Cormick's objection to Mr. Christ's responses to the Interrogatories: 1. As to Interrogatories 1,2,3,4,5,6,7,11,12,14,15,17,18,19,20,21,22, 23,24 (first and second), 25 (first and second), 26, 27, 28,29, 30, 31, 32, 33, 34, 35, 36, 37,40,43, 45,46,47,48,49,50,51,52,53,54,55,56,57,59,60,68,69, 75, 76,77,78, 79, please advise if Mr. Christ will stipulate to the following points: a. Mr. Christ agrees to subject himself to a "strict liability" standard for Dr. Cormick's defamation claims; The burden is on Mr. Christ to prove the truth of the statements; Mr. Christ in reality has no basis in fact for the information posted on his website; Mr. Christ knows that anyone who claimed to be a source ofany such information had no first hand knowledge, was not an eye-witness and lacks any basis for knowledge of the true facts; Mr. Christ knowingly, falsely, maliciously and in bad fath attributed the statements published on his website to non-existent or unreliable sources for the purpose ofmisleading readers into believing that there were reliable sources for his information about Dr. Cormick, when such was not the case. Christ v. Cormick
b. c.
d.
e.
Case 1:06-cv-00275-GMS
Document 52-2
Filed 08/21/2007
Page 17 of 35
Thad J. Bracegirdle, Esq. August 8, 2007 2
If Mr. Christ is willing to stipulate to these points on the record, then his objections may have merit. If not, then the information requested is material and relevant to Dr. Cormick's claims, and Dr. Cormick is entitled to full and complete responses to these interrogatories. 2. As to any interrogatories Mr. Christ answered by referencing Federal Rule of Civil Procedure 33(d), such reference is insufficient. The rule requires that Mr. Christ provide a "specification ... in sufficient detail to permit the interrogating party to locate and to identify, as readily as can the party served, the records from which the answer may be ascertained." As such, any response relying on Rule 33(d) must identify with specificity which documents contain the answers to the interrogatory in question." Please amend the responses to provide such specification. Additionally, as to any documents for which you rely on Rule 33(d), to the extent that the documents do not answer the interrogatories in full (for example, they fail to provide all known contact information, actions Mr. Christ took to verify the truth of the statements in the documents, etc.), please amend the answers to provide complete responses. 3. Interrogatory 10 asks Mr. Christ to list his investment history and what related due diligence he undertook. Although Mr. Christ is a CPA with Big 8 experience, on his website and in e-mails he represents himself as a "dumb redneck." He is claiming fraud in connection with this investment, and so what he did or knew he should have done in terms of due diligence, and his degree of financial sophistication, are clearly at issue. Please answer this question. 4. Your objection to producing documents available on the website ww\v.elansuisse.co.za, is without merit, unless Mr. Christ is willing to provide a sworn statement that the documents posted o~ his website are complete and unedited, unaltered and unredacted (which he cannot do, as clearly some of the documents are redacted). Please produce these documents. 5. As to Interrogatories 2,69, 70, 71 and 74, Dr. Cormick has the right to know the identity of any investigator, as well as anyone else who has knowledge of facts relevant to this lawsuit. E.g., FDIC v. St. Paul Fire & Marine Ins. ("0., 53 F.R.D. 260 (W.D. Okla. 1971). Please amend the response to this interrogatory. 6. As to Interrogatory 7, Mr. Christ has stated on his website that he has traveled to other countries gathering information for his website. Therefore, the statement that information about such trips is not relevant is false and made in bad faith. Please amend the response to this interrogatory. 7. The response to Interrogatory 25 (the first) is incomplete, as it provides no contact information, and no response to sections (b) and (c). Please provide a complete and tllorough response.
Case 1:06-cv-00275-GMS
Document 52-2
Filed 08/21/2007
Page 18 of 35
Thad J. Bracegirdle, Esq.
August 8, 2007 3 8. The response to Interrogatory 53 is incomplete, as it does not contain any responses to parts (b) and (c). Please amend it to provide a complete response. 9. Request for Production No.6 is clearly relevant, as there is a claim of false imprisonment, and false statements made to police authorities. Mr. Christ's objection is frivolous, dilatory and made in bad faith. Please produce these documents. 10. Request for Production No.8 is clearly relevant, as (i) Mr. Christ has posted false and defamatory statements regarding Mr. Dean's dealings with Dr. Cormick, and (ii) Mr. Christ has indicated that Mr. and Mrs. Dean have offered to come to the trial to testify. Mr. Christ's objection is frivolous, dilatory and made in bad faith. Please produce these documents. As the responsive docum_ents have not yet been produced, Dr. Cormick reserves the right to supplement his objections depending on the review ofthe produced documents. Dr. Connick also reserves the right to tender additional objections to the interrogatory responses. Please let me know by noon on Monday, August 13, whether Mr. Christ will be amending his responses to provide the information requested. Otherwise, I will have to seek assistance from the Court.
Very truly yours,
c_~~y/
:
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.
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///'~
David~
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Case 1:06-cv-00275-GMS
Document 52-2
Filed 08/21/2007
Page 19 of 35
Exhibit 5
Case 1:06-cv-00275-GMS
Document 52-2
Filed 08/21/2007
Page 20 of 35
Reed Smith
Thad J. Bracegirdle Direct Phone: +1 302 778 7571 Email: [email protected]
Reed Smith LLP 1201 Market Street Suite 1500 Wilmington, DE 19801-1163 +1 302 778 7500 Fax +1 302 778 7575
August 15, 2007
VIA E-MAIL AND U.S. MAIL
David L. Finger, Esquire Finger & Slanina, LLC Once Commerce Center 1201 Orange Street, Suite 725 Wilmington, DE 19801 Re: Dear David: I write in response to your letter dated August 8, 2007 concerning Mr. Christ's responses and objections to your clients' interrogatories and request for production of documents. I address below each point raised in your letter: 1. Count IV of Mr. Cormick's counterclaim alleges a claim for defamation based on 26 specific statements from the www.elansuisse.co.za website (defined as the "Defamatory Statements") as identified in paragraph 95 of the counterclaim. See Counterclaim ~~ 139-144. As to those interrogatories which seek information relating to those specific statements forming the basis for Mr. Cormick's claim, we provided responses. As to those interrogatories which seek information unrelated to the statements which upon which Mr. Cormick's defamation claim is based, we rightfully objected and stand by those objections. Mr. Christ also declines to enter into the stipulation proposed in your letter. 2. Once Mr. Christ's document production is complete, we will consider in good faith your request that we identify with specificity those documents from which the requested information can be ascertained. 3. While Mr. Christ's "degree of financial sophistication" as of the time of the transactions in question (i.e., in 2004) may be relevant to this action, his conduct in any prior investments has no bearing on what due diligence he did or did not pursue concerning Elan Suisse. As such, Interrogatory No. 10 is overbroad and does not seek information relevant to this action or reasonably calculated to lead to the discovery of admissible evidence. As an aside, while you repeatedly refer to Mr. Christ in letters and pleadings as "a CPA," his certification expired well before his dealings with Mr. Cormick in 2004, a fact of which Mr. Cormick was aware at the time.
Christ v. Cormick, et al., C.A. No. 06-275-GMS
NEW YORK. LONDON. CHICAGO. PARIS. LOS ANGELES. WASHINGTON, D.C.· SAN FRANCISCO. PHILADELPHIA. PITTSBURGH. OAKLAND MUNICH. ABU DHABI. PRINCETON. NORTHERN VIRGINIA. WILMINGTON. BIRMINGHAM. DUBAI · CENTURY CITY. RICHMOND. GREECE
reedsmith.com
WILLlB-551 05.1
Case 1:06-cv-00275-GMS
David L. Finger, Esquire August 15,2007 Page 2
Document 52-2
Filed 08/21/2007
Page 21 of 35
ReedSmith
4. The objection to which you refer was lodged in response to those interrogatories seeking information that is readily and publicly available (in unredacted form) from the www.elansuisse.co.za website. To the extent any documents cited on the website have been redacted, those documents will be produced in response to Document Request No.4. 5. With respect to Interrogatory No.2, it is not evident that the so-called "UK Sleuth" has knowledge of facts relevant to this action and, thus, his identity is not relevant. As for Interrogatories No. 69, 70 and 71, any statements, reports or photographs which those interrogatories seek to identify will be produced (subject to Mr. Christ's objections). Finally, Interrogatory No. 74 seeks the identity of all investigators, regardless of whether or not they possess knowledge of relevant information, and thus Mr. Christ's objection is proper. Nonetheless, we will consider your request to the extent there may be any individuals who fit the description of Interrogatory No. 74 and possess knowledge of facts relevant to this action. 6. Despite your letter's claims, Interrogatory No.7 seeks information relating to trips taken by Mr. Christ "relating to any facts alleged in [his] Amended Complaint" or "in furtherance of pursuit of [his] claims." By its own terms, therefore, Interrogatory No.7 has no relevance to Mr. Christ's website and is not reasonably calculated to lead to the discovery of admissible evidence in this action. Moreover, I fail to see the relevance of such insignificant information as the dates and airlines for flights taken by Mr. Christ. 7-8. I will consult with Mr. Christ and determine whether any additional information is available to supplement his answers to Interrogatories No. 25 and 53. In any event, I anticipate that most, if not all, of the information sought by these interrogatories will be provided by Mr. Christ's document production. 9. Document Request No.6 is not "clearly relevant" since it seeks the production of "[a] II documents ... which were given to any law enforcement authorities in any jurisdiction" and, as such, is overbroad. The allegations of Mr. Cormick's counterclaim relate to only one occasion on which he was incarcerated, and, subject to his objections and to the extent such documents exist, Mr. Christ will produce documents provided to authorities in Zimbabwe which relate to the facts alleged in Mr. Cormick's counterclaim. 10. ,Mr. Cormick's counterclaim does not include among the "Defamatory Statements" as defined in paragraph 139 any statements concerning Mr. Dean and, accordingly, any communications between Mr. Christ and Mr. Dean are not relevant to this action. However, even if Mr. Cormick's defamation claim was based on statements concerning Mr. Dean, any documents provided to Mr. or Mrs. Dean by Mr. Christ have no relevance to that claim. To the extent Mr. or Mrs. Dean will appear as witnesses at trial in this action (a decision which has not yet been made), you will be notified appropriately in accordance with the Federal Rules.
Case 1:06-cv-00275-GMS
David L. Finger, Esquire August 15, 2007 Page 3
Document 52-2
Filed 08/21/2007
Page 22 of 35
ReedSmith
If you have any further questions concerning these issues, please do not hesitate to contact me. Very truly yours,
~egirdl
Case 1:06-cv-00275-GMS
Document 52-2
Filed 08/21/2007
Page 23 of 35
Exhibit 6
Case 1:06-cv-00275-GMS
Document 52-2
Filed 08/21/2007
Page Page 24 of 35 1 of2
David L. Finger
From: To: Sent: Subject:
"Dr Brett Cormick"
"'David L. Finger'"
Sunday, August 19,20076:19 PM
RE: Christ
-----Original Message---- From: Bob Christ [mailto:[email protected]] Sent: 26 March 2884 17:36 To: David Batzner Cc: Brett Cormick Subject: RE: Price Quote for Graphics
David, This is going to be a long and involved process since I have to pick out a whole bunch then forward the low-res jpg~s to South Africa then they pick a few~ Of the 100+ sent yesterday; they picked 5~ I need a total of 21~ The ones that they are are the artwork stuff instead of pictures. That is pretty much how I expect this to go. I think it will be a waste of time to price these out at this point until the list is complete~ I did talk to several of the artist companies on the West Coast last night to get a feeling of pricing~ It seems that they all charge about $70 with the price break at about 24-25~ These graphics are for 1 project and one company~ I am the senior vice president for that company (Elan Suisse) and am able to commit the company_ These graphics; when chosen) will represent the marketing of each of these products~ So this will be an integral part of a larger marketing campaign~ Give me some time to lock in the exact to take this turn when I started~ Thanks for your patience on the next few days.
Bob
this~ I~ll
graphics~
I didnVt know it was going
have exact graphics some time over
-----Original Message---- From: David Batzner [mailto:[email protected]] Sent: Friday, March 26, 2884 18:27 AM To: Bob Christ Subject: Re: Price Quote for Graphics Hey Bob, I have access to the images. There are around 75 or more listed, which 21 are you interested in? I have priced out the first 25 ... David
8/19/2007
Case 1:06-cv-00275-GMS
Document 52-2
Filed 08/21/2007
Page 25 of 35
Exhibit 7
Case 1:06-cv-00275-GMS Document 52-2 BY SHARES
COMPANY LIMITED Filed 08/21/2007
Page 26 of 35
ARTICLES OF ASSOCIATION
OF
ELAN SUISSE INTERNATIONAL HOLDINGS USA LLC
PRIVATE COMPANY
1. The Conlpany is a private company.
SHARES
2. The share capital of the Company is $USIOO divided into 100 Ordinary Shares of $USI each. The Director(s) are authorised to exercise any power of the Company to allot, grant options over or otherwise dispose of shares in the capital of the Company for such consideration and upon such terms and conditions as the Director(s) may determine, unless revoked or varied by Ordinary Resolution of the Company in a General Meeting.
LIEN
3. A lien shall attach to all shares whether fully paid or not and to all shares registered in the name of any person indebted or under liability to the Company for all moneys called or payable at a fixed time by a member or his estate to the Company whether he be the sole registered holder thereof or one of two or more joint holders. The Company's lien on a share shall extend to any expenses incurred by the Company in respect of such non-payment, and to interest on the amount unpaid from the day it became due and payable until it is paid.
PARTICIPATION
4. An investor shall be considered to be a full member and shareholder in the Company from the date of the receipt of his investment capital in any designated account. No other confirmation of his standing is necessary. He shall be required from this date, to comply fully with all of the Articles of Association and Memorandums of Association of the Company from this time, and is subject ,fully to the requirements therein including all conduct and penalty clauses. This condition exists irrespective of pending or completed documentation including subscription agreements, stock purchase agreements, or bank account facilities employed.
THRESHOLD
5. Any person or entity acquiring a ten percent stake in the Company or more, will become responsible from the point of claim for a direct percentage, proportional to their share holding, of all ongoing costs relating to product financial engineering, architecture, structuring, development, listing, promoting, administration, servicing, regulatory, legal, accounting, statutory, compliance and any other cost associated with all aspects of product creation, distribution and management. The person or entity will be required to prove that these costs are able to be met from their own specific resources. Failure to meet these costs, or to prove adequate source of resources to do
Case 1:06-cv-00275-GMS Document 52-2and Filed 08/21/2007 Page 27 of 35 share entitlements being permanently revoked returned to the Company without financial compensation.
CONDUCT
6. Any action by any member who is deemed by the Director(s) to have made a false, misleading or orchestrated financial or other claim against the Company or any of its Director(s) shall have his shares or share entitlements permanently revoked and returned to the Company without financial compensation. The Company will then be paid within seven days a penalty from the member equal to the amount of his full investment. This penalty will also apply with respect to multiple infringements, where the respective penalties will be added together to create a final lump sum due the company. 6.1 Any member who instigates legal action of any nature against the Company or any of its Director(s) shall have his shares or share entitlements permanently revoked and returned to the Company without financial compensation. The Company will then be paid within seven days a penalty from the member equal to the amount of his full investment. This penalty will also apply with respect to multiple infringements, where the respective penalties will be added together to create a final lump sum due the company. 6.2 Any member who through any action causes a loss of business, capital, reputation, income, revenues, or any other benefit to the Conlpany or its Director(s) shall have his shares or share entitlements permanently revoked and returned to the Company without financial compensation. The Company will then be paid within seven days a penalty from the member equal to the amount of his full investment plus any losses incurred as a result of the members actions. This penalty will also apply with respect to multiple infringements, where the respective penalties and losses will be added together to create a final lump sum due the company. 6.3 Any member who through any action or inference, be it written or verbal which impugns the professional or personal reputation of the Company or its Director(s) shall have his shares or share entitlements permanently revoked and returned to the Company without financial compensation. The Company will then be paid within seven days a penalty from the member equal to the amount of his full investment. This penalty will also apply with respect to multiple infringements, where the respective penalties will be added together to create a final lump sum due the company. 6.4 Any member who makes misleading, selective, contradictory, inflammatory, deceptive, ambiguous or disingenuous claims or statements to third parties concerning the Company or its Director(s) shall have his shares or share entitlements permanently revoked and returned to the Company without financial compensation. The Company will then be paid within seven days a penalty from the member equal to the amount of his full investment. This penalty will also apply with respect to multiple infringements, where the respective penalties will be added together to create a final lump sum due the company.
6.5 Any member involved in any legal dispute with the Company or its Director(s) will be required to cover the Companies or Director(s) legal costs. Not withstanding section 5.1 which will additionally result in the permanent revocation of shares and share entitlements, as well as the requirement to pay within seven days a penalty from the member equal to the amount of his full investment.
Case 1:06-cv-00275-GMS PREEMPTION
Document 52-2
Filed 08/21/2007
Page 28 of 35
7. A member wishing to liquidate some or all of his shares, or to seek a return of his investment capital, after he has deposited his investment capital in a designated account, and thus qualifies as a full member and shareholder in the Company, notwithstanding any subsequent execution of subscription agreements, stock purchase agreements, and any other forms, and irrespective of the designated bank account facilities, shall give written notice to the Directors of his desire to sell his shares and such notice shall constitute the Company as agent of the transferor member. Unless the Company in General Meeting shall otherwise direct, all such shares authorised shall be offered to the remaining members in proportion to their existing holdings at the date of the offer and such offer is to be made in writing specifying the number of shares to which the member is entitled and limiting the period within which the offer, if not accepted, will be deemed to be declined. After the expiration of that period those shares so deemed to be declined shall be offered in the aforesaid proportions to those members who have accepted all the shares offered to them. The Directors may, at their discretion allot, or otherwise dispose of any such shares not accepted pursuant to such offer or further offers as they think fit. In the event that none of the shares are subscribed to, the member may retain his share holding, save that he has breached a Conduct requirement, in which case his shares or share entitlements will be permanently revoked and returned to the Company without financial compensation and the appropriate financial penalty will apply.
SERVICES
8. Any member of the company providing approved and authorised services to the company of a professional, consulting or administrative function, or sub contracting to outside third parties these functions, including but not restricted to design, marketing, internet design, information, communication or any other service or function on behalf of the Company, shall be compensated for their cash expenditure in Company shares, with a maximum cash compensation of 10% of the members cash expenditure, at the Director(s) discretion.
NOTICES OF MEETINGS
9. Every notice calling a General meeting shall comply with the provisions of the Companies Act of South Africa as to giving information to members in regard to their right to appoint proxies to attend and vote on their behalf and that such proxy need not be a member of the Company. Notices and other communications relating to any General Meeting which any member is entitled to receive shall be sent to the Directors and Auditors of the Company
PROCEEDINGS AT GENERAL MEETINGS
10. All business at a General meeting shall be deemed to be special business and shall be notified in the notice convening the meeting.
Case 1:06-cv-00275-GMS DIRECTORS
Document 52-2
Filed 08/21/2007
Page 29 of 35
11. Unless and until otherwise determined by special resolution of the Company in a General Meeting, there shall be no more than three directors and the minimum number shall be one. The appointment of the additional two directors shall be optional A sole Director shall have authority to exercise all the powers and authorities vested in the Directors by these Articles and Regulations. With the exception of the founding member, who will hold a permanent Directorship, the additional two Directors, if appointed, will retire by rotation every twelve months. New appointees, if recommended not less than fourteen or more than thirty five clear days before the date of a meeting, notice signed by a member qualified to vote at that meeting has been given to the company of the intention to propose that person for appointment, together with a notice signed by that person of his willingness to be appointed. Not less than fourteen days notice of meetings of the Directors shall be given to each of the Directors at their address. A Director need not hold any shares of the company to qualify him as a Director but he shall be entitled to receive notice of and attend and speak at all general meetings of the Company. The Directors may exercise all the powers of the Company to borrow money as to amount and upon such terms and in such a manner as they think fit and to grant any mortgage, charge or standard security over its undertaking, property, and uncalled capital and to issue debenture stock and other securities whether outright or as security for any debt, liability or obligation of the Company or of any third party. A Director may vote at a meeting, on any resolution, in respect of any matter in which he has, directly or indirectly, any kind of interest and if he shall do so his vote shall be counted, and he may form part of a quorum for any meeting at which such voting occurs.
VOTING
12. All voting on all matters at the Company General Meetings, Directors Meetings and any other meetings will be counted in relation to the percentage of shares held in the Company by the eligible member or by his designated proxy. A minimum of fifty one percent of the percentage of the shares held in the Company when voting is required to pass any resolution, proposal, amendment, alteration to Memorandum and Articles, company name, accounting reference data, change of objects, adoption of new articles and re - registration as a public limited company, board meeting proposals and resolutions, appointment and removal of Directors, Officers of the Company, Company Secretary, Auditors and Bankers, issue and transfer and disposal of shares, bonus shares, debentures, vary classes of shares, sale of the Company, increase or reduction in share capital, purchase own shares, proposal and payment of dividends, pre emption deeds and shareholder deeds of agreement, shareholder resolutions, and elective resolutions
Case 1:06-cv-00275-GMS INDEMNITY
Document 52-2
Filed 08/21/2007
Page 30 of 35
13. Every Director, Secretary or other officer of the Company shall be indemnified out of the assets of the Company against all losses or liabilities incurred by him in the execution of the duties of his office LAW 14. These articles are governed by the law of The Republic of Zimbabwe
Dr Brett Cormick 2 Lansdowne Row Berkeley Square Mayfair London WIJ6HL
UK
Dated this 22nd day of March 2004
THE COMPANIES ACT SOUTH AFRICA Case 1:06-cv-00275-GMS Document 52-2OF Filed 08/21/2007 Page 31 of 35 COMPANY LIMITED BY SHARES ARTICLES OF ASSOCIATION OF ELAN SUISSE (PTY) LTD
PRIVATE COMPANY
1. The Company is a private company.
SHARES
2. The share capital of the Company is RIOO divided into 100 Ordinary Shares ofRI each. The Director(s) are authorised to exercise any power of the Company to allot, grant options over or otherwise dispose of shares in the capital of the Company for such consideration and upon such terms and conditions as the Director(s) may determine, unless revoked or varied by Ordinary Resolution of the Company in a General Meeting.
LIEN
3. A lien shall attach to all shares whether fully paid or not and to all shares registered in the name of any person indebted or under liability to the Company for all moneys called or payable at a fixed time by a member or his estate to the Company whether he be the sole registered holder thereof or one of two or more joint holders. The Company's lien on a share shall extend to any expenses incurred by the Company in respect of such non-payment, and to interest on the amount unpaid from the day it became due and payable until it is paid.
PARTICIPATION
4. An investor shall be considered to be a full member and shareholder in the Company from the date of the receipt of his investment capital in any designated account. No other confirmation of his standing is necessary. He shall be required from this date, to comply fully with all of the Articles of Association and Memorandums of Association of the Company from this time, and is subject fully to the requirements therein including all conduct and penalty clauses. This condition exists irrespective of pending or completed documentation including subscription agreements, stock purchase agreements, or bank account facilities employed.
THRESHOLD
5. Any person or entity acquiring a ten percent stake in the Company or more, will become responsible from the point of claim for a direct percentage, proportional to their share holding, of all ongoing costs relating to product financial engineering, architecture, structuring, development, listing, promoting, administration, servicing,
regulatory, legal, accounting, statutory, compliance and any other cost associated with Case 1:06-cv-00275-GMS Document 52-2 Filed 08/21/2007 Page 32 of 35 all aspects of product creation, distribution and management. The person or entity will be required to prove that these costs are able to be met from their own specific resources. Failure to meet these costs, or to prove adequate source of resources to do so, from the time of the claim on shares, within seven days will result in the shares or share entitlements being permanently revoked and returned to the Company without financial compensation.
CONDUCT
6. Any action by any member who is deemed by the Director(s) to have made a false, misleading or orchestrated financial or other claim agaillst the Company or any of its Director(s) shall have his shares or share entitlements permanently revoked and returned to the Company without financial compensation. The Company will then be paid within seven days a penalty from the member equal to the amount of his full investment. This penalty will also apply with respect to multiple infringements, where the respective penalties will be added together to create a final lump sum due the company. 6.1 Any member who instigates legal action of any nature against the Company or any of its Director(s) shall have his shares or share entitlements permanently revoked and returned to the Company without financial compensation. The Company will then be paid within seven days a penalty from the member equal to the amount of his full investment. This penalty will also apply with respect to multiple infringements, where the respective penalties will be added together to create a final lump sum due the company. 6.2 Any member who through any action causes a loss of business, capital, reputation, income, revenues, or any other benefit to the Company or its Director(s) shall have his shares or share entitlements permanently revoked and returned to the Company without financial compensation. The Company will then be paid within seven days a penalty from the member equal to the amount of his full investment plus any losses incurred as a result of the members actions. This penalty will also apply with respect to multiple infringements, where the respective penalties and losses will be added together to create a final lump sum due the company. 6.3 Any member who through any action or inference, be it written or verbal which impugns the professional or personal reputation of the Company or its Director(s) shall have his shares or share entitlements permanently revoked and returned to the Company without financial compensation. The Company will then be paid within seven days a penalty from the member equal to the amount of his full investment. This penalty will also apply with respect to multiple infringements, where the respective penalties will be added together to create a final lump sum due the company. 6.4 Any member who makes misleading, selective, contradictory, inflammatory, deceptive, ambiguous or disingenuous claims or statements to third parties concerning the Company or its Director(s) shall have his shares or share entitlements permanently revoked and returned to the Company without financial compensation. The Company will then be paid within seven days a penalty from the member equal to the amount of his full investment. This penalty will also apply with respect to multiple infringements, where the respective penalties will be added together to create a final lump sum due the company.
?
Case 1:06-cv-00275-GMS Document 52-2 Filed 08/21/2007 Page 33 of 35 6.5 Any member involved in any legal dispute with the Company or its Director(s) will be required to cover the Companies or Director(s) legal costs. Not withstanding section 5.1 which will additionally result in the permanent revocation of shares and share entitlements, as well as the requirement to pay within seven days a penalty from the member equal to the amount of his full investment.
PREEMPTION
7. A member wishing to liquidate ~ome or all of his shares, or to seek a return of his investment capital, after he has deposited his investment capital in a designated account, and thus qualifies as a full member and shareholder in the Company, notwithstanding any subsequent execution of subscription agreements, stock purchase agreements, and any other forms, and irrespective of the designated bank account facilities, shall give written notice to the Directors of his desire to sell his shares and such notice shall constitute the Company as agent of the transferor member. Unless the Company in General Meeting shall otherwise direct, all such shares authorised shall be offered to the remaining members in proportion to their existing holdings at the date of the offer and such offer is to be made in writing specifying the number of shares to which the member is entitled and limiting the period within which the offer, if not accepted, will be deemed to be declined. After the expiration of that period those shares so deemed to be declined shall be offered in the aforesaid proportions to those members who have accepted all the shares offered to them. The Directors may, at their discretion allot, or otherwise dispose of any such shares not accepted pursuant to such offer or further offers as they think fit. In the event that none of the shares are subscribed to, the member may retain his share holding, save that he has breached a Conduct requirement, in which case his shares or share entitlements will be permanently revoked and returned to the Company without financial compensation and the appropriate financial penalty will apply.
SERVICES
8. Any member of the company providing approved and authorised services to the company of a professional, consulting or administrative function, or sub contracting to outside third parties these functions, including but not restricted to design, mark
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