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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 12b-25
NOTIFICATION OF LATE FILING
SEC FILE NUMBER
CUSIP NUMBER
(Check One): /x/ Form 10-K / / Form 20-F / / Form 11-K
/ / Form 10-Q / / Form N-SAR
For Period Ended: December 31, 1996
/ / Transition Report on Form 10-K
/ / Transition Report on Form 20-F
/ / Transition Report on Form 11-K
/ / Transition Report on Form 10-Q
/ / Transition Report on Form N-SAR
For the Transition Period Ended:
Read Instruction (on back page) Before Preparing Form. Please Print or Type.
NOTHING IN THIS FORM SHALL BE CONSTRUED TO IMPLY THAT THE COMMISSION HAS
VERIFIED ANY INFORMATION CONTAINED HEREIN.
If the notification relates to a portion of the filing checked above, identify
the Item(s) to which the notification relates:
PART I - REGISTRANT INFORMATION
United Petroleum Corporation
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Full Name of Registrant
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Former Name if Applicable
4867 North Broadway
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Address of Principal Executive Office (Street and Number)
Knoxville, Tennessee 37918
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City, State and Zip Code
PART II - RULES 12b-25(b) AND (c)
If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following should
be completed. (Check box if appropriate)
/x/ (a) The reasons described in reasonable detail in Part III of this form
could not be eliminated without unreasonable effort or expense;
/x/ (b) The subject annual report, semi-annual report, transition report on
Form 10-K, Form 20-F, 11-K or Form N-SAR, or portion thereof, will be
filed on or before the fifteenth calendar day following the prescribed
due date; or the subject quarterly report or transition report on Form
10-Q, or portion thereof will be filed on or before the fifth calendar
day following the prescribed due date; and
/x/ (c) The accountant's statement or other exhibit required by Rule 12b-25(c)
has been attached if applicable.
PART III - NARRATIVE
State below in reasonable detail the reasons why Forms 10-K, 11-K, 10-Q, N-SAR,
or the transition report or portion thereof, could not be filed within the
prescribed time period.
Registrant is unable to complete its financial statements in time
to file by March 31, 1997 filing date
PART IV - OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
Morton S. Robson (212) 949-1860
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(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or 15(d) of the
Securities Exchange Act of 1934 or Section 30 of the Investment Company Act
of 1940 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) been filed? If answer is no,
identify report(s). /X/ Yes / / No
(3) Is it anticipated that any significant change in results of operations from
the corresponding period for the last fiscal year will be reflected by the
earnings statements to be included in the subject report or portion thereof?
/X/ Yes / / No
If so, attach an explanation of the anticipated change, both narratively and
quantitatively, and, if appropriate, state the reasons why a reasonable
estimate of the results cannot be made.
See Attached Rider
United Petroleum Corporation
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(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
hereunto duly authorized.
Date: March 28, 1997 By /s/ L. Douglas Keene, Jr.
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L. Douglas Keene, Jr. Executive Vice-Pres.
INSTRUCTION: The form may be signed by an executive officer of the registrant or
by any other duly authorized representative. The name and title of the person
signing the form shall be typed or printed beneath the signature. If the
statement is signed on behalf of the registrant by an authorized representative
(other than an executive officer), evidence of the representative's authority to
sign on behalf of the registrant shall be filed with the form.
ATTENTION
INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL
CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001).
GENERAL INSTRUCTIONS
1. This form is required by Rule 12b-25 (17 CFR 240.12b-25) of the General
Rules and Regulations under the Securities Exchange Act of 1934.
2. One signed original and four conformed copies of this form and amendments
thereto must be completed and filed with the Securities and Exchange
Commission, Washington, D.C. 20549, in accordance with Rule 0-3 of the
General Rules and Regulations under the Act. The information contained in or
filed with the form will be made a matter of public record in the Commission
files.
3. A manually signed copy of the form and amendments thereto shall be filed with
each national securities exchange on which any class of securities of the
registrant is registered.
4. Amendments to the notifications must also be filed on form 12b-25 but need
not restate information that has been correctly furnished. The form shall be
clearly identified as an amended notification.
5. Electronic Filers. This form shall not be used by electronic filers unable
to timely file a report solely due to electronic difficulties. Filers unable
to submit a report within the time period prescribed due to difficulties in
electronic filing should comply with either Rule 201 or Rule 202 of
Regulation S-T (section 232.201 or section 232.202 of this chapter) or apply
for an adjustment in filing date pursuant to Rule 13(b) of Regulation S-T
(section 232.13(b) of this chapter).
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RIDER TO FORM 12b-25
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United Petroleum Corporation (hereinafter the "Company") is a holding
company with two operating divisions. Its retail division operates over 30
convenience stores, oil change facilities or full service car wash facilities in
the Southeast. Its E & P division has land and mineral rights for oil and gas
properties, including 20 producing wells. The Company's shares of stock are
publicly traded on the NASDAQ, Small Capitalization Exchange under the ticker
Symbol, "UPET."
The Company expects to have a loss for the fiscal year ended December 31,
1996 in excess of $13,500,000. The size of the loss, which is a combination of
operating results and one-time charges, is largely attributable to the cost of
the Company's funding efforts with respect to the issuance of convertible
debentures and a reserve for bad debts.
The unusually large loss for the year is largely attributable to three
separate items. First, the Company expects an operating loss of approximately
$600,000. Secondly, approximately $2,000,000 in one-time charges related to the
issuance of convertible debentures will be charged to earnings. Lastly, the
Company expects to reserve approximately $11,000,000 for bad debts. The bad
debts are primarily related to a note receivable from Strategic Holdings
Corporation. The events related to the note receivable were fully disclosed on a
Current Report filed on Form 8-K on November 15, 1996 and are further set forth
in detail in a complaint recently filed by the Company in the United States
District Court for the Eastern District of Tennessee, a copy of which is
attached hereto as Exhibit A. Any amounts ultimately recovered on the note
receivable will be reported as income in the period of recovery. The Company
expects to report continued operating losses for at least the first quarter of
fiscal year 1997 and possibly the second quarter.
The Company undertook significant funding efforts raising a total of
$17,919,850 from the issuance of convertible debentures having a face value of
approximately $27,500,000. A total of approximately $10,000,000 in face value of
the debentures issued have subsequently been converted to common shares of the
Company's stock resulting in the issuance of approximately 6,637,011 shares of
stock. The Company currently has debentures outstanding in the amount of
approximately $17,500,000.
As a result of the Company's 1996 performance, management is currently
evaluating plans for reducing its needs for additional capital, restructuring
its debentures, selling certain assets or operations, and generally seeking to
return the Company to profitability. In addition, the Company's Board of
Directors is continuing to evaluate various operations to improve earnings and
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to maximize shareholder value.
A press release issued by the Company on January 29, 1997 indicated the
anticipated losses of the Company for 1996.
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EXHIBIT A to RIDER
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IN THE UNITED STATES COURT
FOR THE EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE
UNITED PETROLEUM CORPORATION,
Plaintiff, CASE NO: 3:97-CV-202
vs.
TAJ GLOBAL EQUITIES, INC.,
WILLBUR JURDINE and NATIONAL
FINANCIAL SERVICE CORPORATION,
Defendants,
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COMPLAINT
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Plaintiff, United Petroleum Corporation, by its attorneys, Neal S. Melnick,
Esq. and Robson & Miller, LLP, as for their complaint against the Defendants,
alleges as follows:
PARTIES
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1. Plaintiff, United Petroleum Corporation (hereinafter "UPET"), is a
corporation duly organized and existing under the laws of the State of Delaware
with its principal place of business at 4867 North Broadway, Knoxville,
Tennessee 37918.
2. Upon information and belief, Defendant TAJ Global Equities, Inc.
("hereinafter "TAJ") is a corporation organized and existing under the laws of
the State of Florida with its principal place of business at 2502 N. Rocky Point
Drive, Suite 745, Tampa,
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Florida and is a registered broker dealer with the Securities and Exchange
Commission pursuant to section 15 of The Securities Exchange Act of 1934 and a
member of the National Association of Securities Dealers.
3. Upon information and belief, Defendant Wilbur Jurdine (hereinafter
"Jurdine") is a citizen and resident of the State of Florida and was, at all
times relevant herein, the president and principal shareholder of TAJ.
4. Upon information and belief, Defendant National Financial Service
Corporation (hereinafter "NFS") is a Delaware Corporation with its principal
place of business at 82 Devonshire Place, L4B, Boston, Mass. 02109 and is a
registered broker dealer with the Securities and Exchange Commission pursuant to
section 15 of The Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers. At all times relevant herein, NFS acted as
TAJ's clearing broker.
JURISDICTION AND VENUE
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5. Jurisdiction of this Court over the subject matter of this complaint is
predicated upon 28 U.S.C. 1332 (a)(1) based upon the diversity of citizenship of
the parties and the amount in controversy, exclusive of costs and interest,
which exceeds $50,000.
6. Venue is appropriate in this district pursuant to 28 U.S.C. 1391 (b)
because the acts and transactions constituting and in furtherance of the
violations alleged herein occurred in this
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district.
FACTS
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7. Plaintiff is engaged in the business of owning and operating convenience
stores, gas stations, lubrication centers and car washes in Tennessee and
Georgia, and in the exploration, development and drilling of oil and gas wells.
Its shares of stock are publicly traded on the NASDAQ, Small Capitalization
Exchange under the ticker Symbol, "UPET."
8. In or about April, 1996, Plaintiff determined to offer for sale
unregistered debentures convertible into common stock of the Plaintiff (the
"Debentures") pursuant to an exemption from registration afforded by Regulation
S ("Regulation S") as promulgated by the Securities and Exchange Commission
("SEC"), under the Securities Act of 1933, as amended, Code of Federal
Regulations 230.901-904.
9. Plaintiff, in connection with the offer and sale of the Debentures,
required all purchasers thereof (the "Debenture Holders") to execute an Offshore
Debenture Securities Subscription Agreement (the "Subscription Agreement").
10. The Subscription Agreement requires each Debenture Holder to represent
and warrant, among other things, that the purchaser is a foreign person or
entity, that neither the purchaser nor any of its affiliates will directly or
indirectly maintain any short position in securities of the Plaintiff from the
date of acquisition of the Debentures through the applicable conversion
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dates, including the selling short of Plaintiff's stock in anticipation of
conversion of the debentures and that each Debenture Holder was acquiring the
Debentures for investment purposes and had no present intention to sell the
Debentures or to convert the Debentures and sell the shares received on
conversion.
11. In June, 1996 Plaintiff was introduced to TAJ and Jurdine. Jurdine
represented to Plaintiff that TAJ had the ability to make a market in the
Plaintiff's stock and that it could assist the Plaintiff in raising additional
capital by underwriting a secondary public offering of Plaintiff's securities in
the amount of $20,000,000.
12. On June 27, 1996, Plaintiff entered into an agreement with TAJ for
underwriting and other services. In connection therewith, Plaintiff paid TAJ a
$100,000 fee.
13. Thereafter, TAJ became active in the Plaintiff's stock as a market
maker.
14. At the request of Jurdine, Plaintiff opened an account with TAJ.
15. Despite the representations in the Subscription Agreement executed by
the Debenture Holders that they were acquiring the Debentures for investment
purposes and would not sell Plaintiff's stock short, commencing in the middle of
June 1996 and continuing during the period from July 1996 through September 1996
the Debenture Holders, at the earliest date possible, converted large amounts of
the Debentures to large quantities of Plaintiff's common stock which they
immediately then sold and in many cases
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they sold short large quantities of Plaintiff's stock prior to converting their
Debentures and then upon conversion, sold shares short to cover their short
positions.
16. During the period from July 1996 through September 1996 Plaintiff
issued 1,533,183 shares of its common stock to Debenture Holders who had
exercised their conversion rights under the terms of the Debentures at prices
ranging from $2.93 to $4.00 per share.
17. Upon information and belief, most, if not all of the aforesaid
1,533,183 shares of Plaintiff's stock issued were immediately sold by the
Debenture Holders or used by the Debenture Holders to cover their short
positions.
18. The unauthorized selling and improper short selling by the Debenture
Holders, placed enormous pressure on Plaintiff's stock causing the price of the
stock to decrease sharply.
19. On or about July 11, 1996, the Board of Directors of Plaintiff, in an
effort to send a clear message to the marketplace that the Plaintiff was serious
about shareholder value, authorized the Plaintiff to purchase up to one million
(1,000,000) shares of the Plaintiff's stock in the open market. The public was
notified of the decision by Plaintiff's Board of Directors by a press release
and the filing of a Current Report on Form 8-K with the SEC.
20. Plaintiff employed TAJ as a stockbroker, agent, depository and
fiduciary to purchase the aforesaid shares for Plaintiff through the account it
had opened with TAJ. Plaintiff
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ordered TAJ to purchase the shares at the then prevailing market price for its
stock.
21. Thereafter, at the direction of Defendants Jurdine and TAJ, Plaintiff,
commencing on July 16, 1996 and continuing through August 14, 1996, advanced, by
means of four wire transfers sent to the account of TAJ, the sum of
$1,725,997.40 for use by TAJ in the repurchase of Plaintiff's shares.
22. During the period from July 16, 1996 through August 14, 1996 when
Plaintiff was wiring money to TAJ, Jurdine and TAJ represented to Plaintiff that
TAJ was, as instructed by Plaintiff, using those funds to purchase Plaintiff's
stock and the stock was being held in Plaintiff's account with TAJ.
23. In fact, TAJ did not use any of the funds advanced to it to repurchase
Plaintiff's shares for Plaintiff's account as instructed. Instead, TAJ and
Jurdine converted those funds to their own uses, including the purchase of
Plaintiff's stock for their own account.
24. During August and September, 1996 the Debenture Holders continued their
pattern of converting their Debentures and selling large amounts of Plaintiff's
stock and/or selling short large volumes of Plaintiff's stock in anticipation of
conversion of their Debentures.
25. During the same period of August and September 1996, TAJ, as a market
maker of Plaintiff's stock, purchased for its own trading account and its retail
customers large shares of Plaintiff's stock.
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26. In August 1996 TAJ purchased 1,259,843 shares of Plaintiff's stock and
in September 1996 it purchased 1,940,187 shares (collectively hereinafter
referred to as the "Shares") with the knowledge and approval of NFS. Upon
information and belief, most, if not all, of these purchases were repurchases
from customers of TAJ who had purchased Plaintiff's shares upon the
recommendation of TAJ and Burdine. TAJ did not consult with Plaintiff when it
made these purchases and did not advise Plaintiff of these purchases until after
they were made.
27. Thereafter, TAJ attempted to sell the Shares it had purchased to its
customers, but it was unsuccessful. TAJ's customers refused to pay the price TAJ
had paid for the Shares since the price of Plaintiff's stock continued to
decline due to the enormous amount of selling and short selling of the Debenture
Holders and the selling off by TAJ's retail customers of large amounts of shares
of Plaintiff's stock that they had purchased. As a result, TAJ was not able to
pay for the Shares.
28. When TAJ did not pay for these shares within seven days, NFS was
required by Regulation T promulgated by the Federal Reserve Board to sell the
shares in the open market. NFS, however, failed to sell the Shares as required.
29. By virtue of its failure to pay for the Shares, TAJ was under an
obligation to cease doing business and file a notice with the Securities and
Exchange Commission ("SEC"), pursuant to SEC Rule Rule 17a-11, that it was not
within the net capital compliance requirements of the SEC.
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30. Instead, TAJ contacted Plaintiff and demanded that Plaintiff advance
the funds to pay for the Shares and threatened that if it did not, NFS, in
accordance with the regulatory requirements of the SEC and NASD, would be
compelled to force TAJ to commence selling the Shares in the open market. If the
Shares were dumped in the open market in this manner it would have caused a
substantial and dramatic drop in the price of Plaintiff's stock.
31. In order to avoid the liquidation of the Shares, Plaintiff, at the
direction of TAJ and Burdine, on August 19, August 25, 1996 and September 5,
1996 wire transferred to NFS's account a total of $4,300,000 to cover a portion
of the purchase price of the Shares.
32. In a further effort to circumvent the rules and regulations of the SEC
and the National Association of Securities Dealers, TAJ, with the knowledge and
approval of NFS, transferred to and/or purchased a portion of the Shares for the
account of Strategic Holdings Corp. (hereinafter "Strategic") which acted as a
consultant to Plaintiff and maintained an account with TAJ.
33. The sale of the Shares from TAJ to Strategic and/or purchase of the
Shares by TAJ for Strategic's account was accomplished through TAJ's use of a
power of attorney that had been given to it by Strategic. Strategic claims that
it never authorized the transfer or purchase of the Shares. At the time of these
transactions, TAJ and Burdine knew that Strategic had no assets and was unable
to pay for any of the Shares.
34. Despite the fact that the price of Plaintiff's stock
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had decreased significantly since the dates on which TAJ purportedly purchased
the Shares, TAJ sold the Shares to Strategic and/or purchased the Shares for
Strategic's account for prices far greater than the market price or the price it
had paid for the Shares. TAJ and Burdine represented to Plaintiff that the
prices at which it had sold the Shares into the account of Strategic were bona
fide prices arrived at by arms length negotiations. In fact, they were prices
that TAJ and Burdine had created in order to cover their commissions on the
original sales, purchases and repurchases and purported sales to Strategic
together with substantial mark-ups.
35. TAJ and/or NFS knew or should have known that Strategic lacked the
financial resources to pay for the Shares sold to it by TAJ and/or purchased for
it by TAJ.
36. Rather than selling the Shares in the open market at prevailing prices
as required by Regulation T since neither TAJ or Strategic had paid for the
Shares which would have resulted in a significant loss to TAJ, as well as NFS
since TAJ had insufficient funds to pay for the Shares, NFS continued to permit
TAJ and/or Strategic to retain the Shares in Strategic's account.
37. Thereafter, TAJ and NFS made numerous telephone calls and faxed
numerous letters to Plaintiff demanding that it advance the money to pay for the
Shares TAJ had purchased and then sold to Strategic and/or purchased for
Strategic's account in the form of a loan to Strategic or else it would
liquidate Strategic's account and dump the Shares in the open market.
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38. TAJ represented to Plaintiff that the "loan" to Strategic would be
repaid within a short period of time from the proceeds received from the sale of
shares in Strategic's account.
39. In response to the demands of TAJ and NFS, and, in order to protect its
shareholders' interests, Plaintiff agreed to advance the funds needed to pay for
the balance of the Shares and during the period from September 9, 1996 to
October 21, 1996, arranged for wire transfers to TAJ's account in the aggregate
amount of $1,617,959.53 and wire transfers to NFS in the amount of $3,102,713.96
to pay for the Shares in Strategic's account with TAJ.
AS AND FOR A FIRST CAUSE OF ACTION AGAINST ALL DEFENDANTS
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40. Plaintiff repeats and realleges each and every allegation set forth in
paragraphs "1" through "39" hereof with the same force and effect as if fully
set forth at length herein.
41. During the period from July 16, 1996 through October 21, 1996, TAJ,
Burdine and NFS in Tennessee and various other places within the United States
conspired amongst themselves and with other persons presently unknown to
Plaintiff to wrongfully, unlawfully, maliciously and intentionally engage in a
course of fraudulent misconduct intended to defraud Plaintiff.
42. In furtherance of the aforesaid conspiracy Defendants, among other
things, did the following:
(a) Represented and stated to Plaintiff during the course of several
telephone conversations that funds wired to TAJ's
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account during the period from July 16, 1996 through August 14, 1996 would be
used by TAJ to purchase shares of Plaintiff's stock for Plaintiff's account.
(b) As a result of these representations during the period from July 16,
1996 through August 14, 1996 Plaintiff caused four wire transfers to be made to
TAJ's account in the aggregate sum of $1,725,997.41.
(c) During the period from August 19, 1996 through September 5, 1996,
Defendants represented to Plaintiff during numerous telephone calls and fax
transmitted letters that it was unable to pay for large amounts of Plaintiff's
stock it had purchased for Plaintiff's account and NFS would be forced, pursuant
to regulatory requirements, if Plaintiff did not immediately pay for the stock,
to sell it on the open market, thereby, causing severe damage to the price of
Plaintiff's stock.
(d) As a result of the representations made by Defendants, during the
period from August 19, 1996 through September 5, 1996, Plaintiff caused three
wire transfers to be made to the account of NFS in the aggregate amount of
$4,330,000 to pay for the shares of Plaintiff's stock Plaintiff believed TAJ had
purchased for Plaintiff's account.
(e) The aforesaid representations made by Defendants are now, and were when
made, false, and Defendants knew them to be false at the time the
representations were made.
(f) Defendants intentionally, wilfully, maliciously and unlawfully made
such representations to Plaintiff to cause
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Plaintiff to advance the aforementioned wire transfers of funds to TAJ and NFS.
(g) In so acting, Plaintiff was not aware of the falsity of the
representations by TAJ and Jurdine, and reasonably believed the representations
to be true.
(h) In truth and fact, Jurdine and TAJ, never intended to purchase the
aforesaid shares of stock on behalf of Plaintiff and shares of Plaintiff's stock
that were purchased were not, as Defendants represented for Plaintiff's account,
but for TAJ's account.
(i) Defendants arranged for the purported sale of the Shares to Strategic
and/or purchase of the Shares for the account of Strategic without the
authorization to do so and despite the fact that they knew that Strategic was
unable to pay for the Shares.
(j) Defendants arranged for the purported sale of the Shares to Strategic
and/or purchase of the Shares for the account of Strategic in order to
circumvent the regulatory requirements imposed upon them by the SEC and NASD.
(k) Defendants arranged for the purported sale of the Shares to Strategic
and/or purported purchase of the Shares for the account of Strategic at prices
far greater than the prices paid for the Shares by TAJ or the prevailing market
prices.
(l) After Defendants had arranged for the purported sale of the Shares to
Strategic and/or purported purchase of the Shares for the account of Strategic
at such excessive prices, demanded
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that Plaintiff advance the purchase price for such Shares in the form of a
"loan" to Strategic or else NFS would liquidate Strategic's account and dump the
Shares in the open market.
(m) At the time Defendants made such demands upon Plaintiff, they knew, or
should have known that Strategic had not authorized the purchase of the Shares
and did not have the financial ability to repay such loans.
(n) Defendants represented to Plaintiff that the "loans" to Strategic to
pay for the Shares would be repaid to Plaintiff within a short period of time
from the sale of the Shares.
(o) Defendants intentionally, wilfully, maliciously and unlawfully made
such representations to Plaintiff to cause Plaintiff to advance the funds to
them in the form of a "loan" to Strategic to pay for the Shares.
(p) Defendants knew that Plaintiff would not be able to recover the amount
of the "loan" to Strategic from the sale of the Shares.
(q) As a result of Defendants intentional, wilful and unlawful acts,
Plaintiff during the period from September 19, 1996 through October 21, 1996,
caused the sum of $4,720,672 to be wire transferred to TAJ and NFS to pay for
the Shares in Strategic's account.
(r) Plaintiff has never received any payment from Strategic for the "loan"
it made or from any of the Defendants for any of the monies it advanced to TAJ
and NFS to pay for shares of Plaintiff's stock purchased by TAJ.
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43. By virtue of the foregoing there is now due and owing from Defendants
to Plaintiff the sum of $10,776,670.90.
AS AND FOR A SECOND CAUSE OF ACTION AGAINST ALL DEFENDANTS
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44. Plaintiff repeats and realleges each and every allegation as set forth
in paragraphs "1" through "39", "41" through "43" hereof with the same force and
effect as if fully set forth at length herein.
45. Beginning on or about July 16, 1996 and continuing to date, Defendants
intentionally, maliciously, wilfully and unlawfully converted to their own use
and benefit the sum of $10,776,670.90 advanced by Plaintiff to TAJ and NFS for
TAJ's purchase of the shares of Plaintiff's stock for its account and the "loan"
made to Strategic to pay for the Shares in Strategic's account.
46. By reason of the foregoing, there is now due and owing from Defendants
to Plaintiff the sum of $10,776,670.90.
AS AND FOR A THIRD CAUSE OF ACTION AGAINST TAJ AND NFS
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47. Plaintiff repeats and realleges each and every allegation set forth in
paragraphs "1" through "39", "41" through "43" and "45" through "46" hereof with
the same force and effect as if fully set forth at length herein.
48. As a result of the failure of TAJ to purchase for and deliver shares of
Plaintiff's stock to Plaintiff as instructed or to return to Plaintiff the funds
it advanced to it to purchase said
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shares and the failure of TAJ and NFS to repay the funds Plaintiff advanced to
them to pay for the Shares in Strategic's account, TAJ and NFS have been
unjustly enriched in the amount of $10,776,670.90.
49. By reason of the foregoing, there is due and owing from TAJ to
Plaintiff the sum of $10,776,670.90.
AS AND FOR A FOURTH CAUSE OF ACTION AGAINST TAJ AND NFS
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50. Plaintiff repeats and realleges each and every allegation set forth in
paragraphs "1" through "39", "41" through "43", "45" through "46" and "48"
through "49" hereof with the same force and effect as if fully set forth at
length herein.
51. TAJ and NFS improperly and unlawfully threatened Plaintiff that if it
did not loan the money to Strategic to pay for the Shares in Strategic's account
it would immediately liquidate Strategic's account and dump all the Shares in
the open market. Such unlawful acts by the Defendants would have caused the
price of Plaintiff's stock to plummet and thereby destroy the market for the
stock.
52. If not for the improper and unlawful acts of TAJ and NFS in refusing to
sell the Shares when they were not timely paid for by TAJ, and selling the
Shares to Strategic and/or purchasing the Shares for Strategic's account with
TAJ without the consent or knowledge of Strategic for an excessive price based
upon the use of an alleged power of attorney, and with knowledge that Strategic
had no assets with which to pay for the Shares, TAJ and NFS would not
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have been in a position to make their improper and unlawful demands upon
Plaintiff.
53. TAJ and NFS had no legal right to demand and receive from Plaintiff the
amounts Plaintiff advanced to TAJ and NFS to pay for the Shares in Strategic's
account. Their wilful insistence on those amounts which allowed TAJ to make a
substantial profit on the Shares in Strategic's account as a condition to not
dumping the Shares on the market was unconscionable and unlawful.
54. As a result of the improper and unlawful threats and demands of TAJ and
NFS, Plaintiff had no alternative in order to protect the interests of its
shareholders and prevent the Plaintiff from being ruined, but to agree to
advance the funds to TAJ and NFS as a "loan" to Strategic to enable TAJ to pay
for the Shares in Strategic's account.
55. The Plaintiff's agreement to make such advances to TAJ and NFS was
involuntary and the result of economic duress and the apprehension of serious
financial damage to Plaintiff and its shareholders. Such agreement was made
without the knowledge that the alleged cost to Strategic was grossly inflated.
56. Consequently, Plaintiff's agreement to advance money to TAJ and NFS in
the form of a "loan" to Strategic to enable TAJ to pay for the Shares in
Strategic's account was without consideration, unjustified, unconscionable and
unlawful and the result of economic duress.
57. By reason of the foregoing, there is due and owing from TAJ and NFS to
Plaintiff, the sum of $4,720,673.59
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AS AND FOR A FIFTH CAUSE OF ACTION AGAINST TAJ AND JURDINE
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58. Plaintiff repeats and realleges each and every allegation as set forth
in paragraphs "1" through "39", "41" through "43", "45" through "46", "48"
through "49" and "51" through "57" hereof with the same force and effect as if
fully set forth at length herein.
59. At all times relevant herein, Plaintiff relied upon and gave its full
trust and confidence to TAJ and Jurdine in connection with the purchase of the
shares of its stock for its account.
60. By virtue of this relationship, Taj and Jurdine had a fiduciary
obligation to deal honestly, fairly, equitably and in good faith in the
execution of the purchase of shares of stock of Plaintiff for Plaintiff's
account and with respect to the $6,055,997.41 that was advanced by Plaintiff and
placed in the custody and control of said Defendants to effectuate such
transactions.
61. TAJ and Jardine intentionally, maliciously, wilfully and unlawfully
failed to execute the orders of Plaintiff as set forth above and return the
$6,055,997.41 advanced by Plaintiff, thus breaching the fiduciary duty they owed
to Plaintiff.
62. By reason of the foregoing, there is due and owing from TAJ and Jardine
to Plaintiff the sum of $6,055,997.41.
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AS AND FOR A SIXTH CAUSE OF ACTION AGAINST TAJ
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63. Plaintiff repeats and realleges each and every allegation as set forth
in paragraphs "1" through "39", "41" through "43", "45" through "46", "48"
through "49", "51" through "57" and "59" through "62" hereof with the same force
and effect as if fully set forth at length herein.
64. TAJ failed to purchase for and/or deliver to Plaintiff shares of
Plaintiff's stock as instructed, and for which Plaintiff advanced to TAJ the sum
of $6,055,997.41.
65. TAJ has failed to refund to Plaintiff the $6,055,997.41 which Plaintiff
advanced to it purchase said shares.
66. By reason of the foregoing, there is due and owing from TAJ to
Plaintiff the sum of $6,055,997.41.
WHEREFORE, Plaintiff demands judgment as follows:
(a) On the first cause of action against all Defendants, jointly and
severally, in the amount of $10,776,670.09 together with punitive damages of
$100,000,000;
(b) On the second cause of action against all Defendants, jointly and
severally, in an amount of $10,776,670.90 together with punitive damages of
$100,000,000;
(c) On the third cause of action against all Defendants, jointly and
severally, in an amount of $10,776,670.90;
(d) On the fourth cause of action against TAJ and NFS, jointly and
severally, in an amount of $4,720,673.59 together with punitive damages of
$100,000,000;
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(e) On the fifth cause of action against TAJ and Jurdine, jointly and
severally, in an amount of $6,055,997.41 together with punitive damages of
$100,000,000;
(f) On the sixth cause of action against TAJ and Jurdine, jointly and
severally, in an amount of $6,055,997.41;
(g) all with applicable interest thereon; (h) the costs and disbursements
of this action; and (i) such other and further relief as the Court may deem
just and proper.
Dated: Knoxville, Tennessee
March 18, 1997
s/Neal S. Melnick
-----------------------
Neal S. Melnick, Esq.
Attorney for Plaintiff
1518 Broadway, N.
P.O. Box 2681
Knoxville, Tennessee 37901
(423) 525-3900
Robson & Miller, LLP
Attorneys for Plaintiff
666 Third Avenue
New York, New York 10017
(212) 949-1860
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