SACO SMARTVISION INC ("SSV-T")
[formerly TEKNOR INDUSTRIAL COMPUTERS INC ("TIC-TM;TKIDF-L")]
- Launches $10 Million Suit Against Soprodev, Edward Raffo
- And Their Lawyers
Saco Smartvision Inc. (formerly known as Teknor Industrial Computers
Inc.) launched a $10 million suit for damages against the Societe
professionnelle de developpement Soprodev Inc., Edward H. Raffo, the law
firm of Trudel & Johnston and its lawyers Bruce W. Johnston and Philippe H.
Trudel, as well as Gilles Seguin of the law firm of Lafleur Brown.
It will be recalled that Mr. Johnston, acting on Mr. Raffo's behalf,
had demanded access to Teknor's annual shareholders' meeting on July 19,
without having in his possession a proxy in due form. He had then obtained
an interim injunction from the Superior Court suspending all decisions made
at the meeting, a judgement that was subsequently overturned by the Court
of Appeal on July 21. The Court of Appeal then considered that "the right
of the respondent Raffo ... was far from apparent," making mention of "the
weakness of the judgment in the first instance and the severity of the
damages suffered by the petitioner Teknor." Resorting to an interim
injunction and the conclusions of such an action was a totally
inappropriate means to obtain the sanction sought after.
The defendants, who claimed that Teknor's consolidated financial
statements should have contained an accompanying note relative to the
dispute between Saco and Soprodev, were informed in detail before the
meeting that it would have been inappropriate and contrary to generally
accepted Canadian accounting standards and principles to include such a
random, vague and unquantified statement in Teknor's financial statements,
especially since Teknor and Saco did not recognize this claim and were
contesting its legal basis.
The defendants seriously threatened the then pending transaction of the
sale of assets of Teknor's industrial computer division (approved by 99.99%
at the annual meeting); the sale was finally concluded on July 27 with
additional costs. Furthermore, since the meeting, Teknor's stock price has
declined by 25%, a loss directly and exclusively attributable to the
defendants' actions.
According to Fred Jalbout, president and CEO of Saco Smartvision, "the
defendants' malicious and abusive actions with the legal authorities, the
Commission des valeurs mobilieres du Quebec, Saco's customers and the media
had but one objective: to take Saco and Teknor hostage, to cause us harm by
sowing seeds of doubt among our shareholders, board members, employees and
suppliers and, ultimately, to force us to indemnify Raffo and Soprodev for
a frivolous, unreasonable claim that they themselves were unable to
quantify with any seriousness."
"The defendants announced the purported value of their claim to the
media, on July 19-the date of the meeting-when they put forth a figure of
$30 million, totally unfounded in fact or in law. Saco owes nothing to
Soprodev, since it put an end to Soprodev's agent's contract for just
cause. Soprodev was never in a position to carry out its contractual
obligations in that, specifically it had not been able to meet the minimum
sales objectives for the years 1995, 1996, 1997 and 1998."
"Then, in a declaration amended on August 27, as part of the
arbitration process between Saco and Soprodev, the defendants came out with
an equally absurd estimate, which had suddenly ballooned to $47.5 million,
unsubstantiated and unfounded and void of any supporting documentation or
expertise. The defendants publicly and brazenly juggled the figures, with
the sole objective of harming our company. This must end, since the
arbitration process allowed for under the initial contract is already under
way," Mr. Jalbout concluded.
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