Legal Proceedings
As indicated above in “Business of TEC — Overview,” a third party raised a claim with respect to ownership of 2.7 million shares of common stock of Tandem that were purportedly transferred to the third party by an affiliate of Mr. MORTENSEN, these being a portion of the same shares that the board of directors of Tandem cancelled in 2005. The third party claims that these shares were received in connection with the partial satisfaction of a judgment against Mr. Ronald G. WILLIAMS and his co-defendants (including Select Capital Advisors, of which Mr. MORTENSEN is believed to be a principal) in a case otherwise unrelated to Tandem. Tandem is vigorously contesting the ownership claims of this third party and filed a lawsuit in the District Court of the State of Nevada, Tandem’s state of incorporation, on May 23, 2006, against the third party, Mr. WILLIAMS, Mr. MORTENSEN, Mr. MORTENSEN’s affiliate and Tandem’s transfer agent. The third party, as well as Messrs. WILLIAMS and MORTENSEN and Mr. MORTENSEN’s affiliate, contested the personal jurisdiction of the Nevada District Court, and were able to obtain a court order dismissing the lawsuit as to them. Notwithstanding the dismissal of the third party and Messrs. WILLIAMS and MORTENSEN and Mr. MORTENSEN’s affiliate, Tandem proceeded with the lawsuit against the transfer agent and obtained a judgment in this action declaring that the certificates evidencing the shares are invalid and void and directed Tandem’s transfer agent to void the certificates if presented for transfer, as well as enjoined the transfer agent from transferring the certificates if so presented.
The third party also filed a lawsuit in the Florida Circuit Court on or about June 14, 2006, against Tandem and Platinum seeking a declaration by the court that Tandem’s cancellation of the shares was improper and that the third party is the rightful owner of the shares, and an injunction prohibiting Tandem and Platinum from taking any action in detriment to his alleged rights in and to the shares. Tandem and Platinum have no contacts with the State of Florida and have filed a motion seeking dismissal of the lawsuit on the grounds that the Florida courts have no jurisdiction over them. A hearing on the motion was held on November 7, 2006, and the court subsequently issued an order dismissing the lawsuit without prejudice against Tandem and Platinum. The third party filed a motion seeking clarification of the court’s order, and the court issued an order on February 22, 2007, upholding its prior ruling. The third party then filed a second motion for clarification, and the court issued another order on May 1, 2007, declaring once again that it had dismissed the entire complaint filed by the third party on the grounds that it did not have jurisdiction over the matter. The third party is now seeking approval of the court to file an amended complaint, and Tandem and Platinum intend to vigorously contest any such action. Tandem and Platinum are also seeking sanctions against the third party for filing a frivolous lawsuit.
On September 25, 2006, Tandem filed a lawsuit against Mr. MORTENSEN and Mr. MORTENSEN’s corporate affiliate in the Judicial District Court in Tarrant County, Texas, the domicile of Mr. MORTENSEN and his affiliate, seeking a declaration by the court that the certificates issued to Mr. MORTENSEN and subsequently transferred to his affiliate are void, that the certificates were properly cancelled by Tandem and that the transfer agent is authorized to cancel and destroy the certificates. In addition, Tandem is seeking a temporary and permanent injunction against Mr. MORTENSEN, his affiliate and any other person in possession of the certificates prohibiting any transfer or other disposition of the certificates and ordering that they be cancelled. An answer in this lawsuit was filed by Mr. MORTENSEN and his affiliate, and Tandem is now proceeding with a vigorous prosecution of this case.
