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Gordon J. Finwall, SB#141777
FINWALL LAW OFFICES, APC
1056 Lincoln Avenue
San Jose, CA 95125
(408) 350-4041 (phone)
(408) 350-4042 (fax)
Gordon@Finwalllaw.com
Attorneys for Plaintiff
IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF SANTA CLARA
MARK HACKER, ) NO.
)
Plaintiff, ) VERIFIED COMPLAINT FOR
) INVOLUNTARY DISSOLUTION OF
vs. ) ENCORE INDUSTRIES
)
ENCORE INDUSTRIES, a California )
corporation, and DOES 1 through 20, )
inclusive, )
Defendants. )
)
Plaintiff MARK HACKER alleges:
1. Defendant ENCORE INDUSTRIES is a corporation duly organized and existing
under the laws of the State of California, with its principal office located in San Jose, County of Santa
Clara, California.
2. Defendant ENCORE INDUSTRIES is not subject to the Banking Law, Public
Utilities Law, Savings and Loan Association Law, or Insurance Code sections 1010-1062.
3. Mr. HACKER is an individual residing in the County of Santa Clara, California.
Mr. HACKER is a director and shareholder of ENCORE INDUSTRIES.
4. Mr. HACKER is ignorant of the names of the defendants sued herein as DOES 1
through 20, respectively, who are so designated for that reason.
5. Mr. HACKER has standing to bring this complaint for involuntary dissolution of
ENCORE INDUSTRIES pursuant to Corporations Code section 1800. He is the holder of an aggregate
Complaint for Involuntary Dissolution 1of 29,400 shares of common stock of the defendant corporation. The total number of shares of ENCORE
INDUSTRIES stock, which are issued and outstanding, is 60,000 shares. The shares held by Mr.
HACKER therefore constitute in excess of one-third of the outstanding common shares of the corporation.
6. The remaining 30,600 shares of ENCORE INDUSTRIES stock are owned by Gary
- Vogel and Bonnie J. Vogel, trustees of the Vogel 2007 Revocable Trust dated 4/24/07 (collectively,
the “Vogels”).
7. ENCORE INDUSTRIES was incorporated in 1997. It designs and builds custom
abrication products. Until 2010, Mr. Vogel had been ENCORE INDUSTRIES’ Chief Executive Officer
(“CEO”) and President.
8. Mr. HACKER joined ENCORE INDUSTRIES in 2009. In 2010, Mr. HACKER
agreed to become ENCORE INDUSTRIES’ CEO and President. Mr. Vogel retired from day-to-day
operations, leaving Mr. HACKER to run ENCORE INDUSTRIES’ operations.
9. In 2010, there was a discussion about the long term goals of the company. Mr.
HACKER and the Vogels, with input from ENCORE INDUSTRIES’ Chief Financial Officer (“CFO”),
Don Potter, agreed that Mr. HACKER would acquire an ownership interest in ENCORE INDUSTRIES,
and he would reorganize the company and attempt to improve its value, with the intent that it would be
sold in ten years time. It was agreed that the ENCORE INDUSTRIES would convert from a C corporation
to an S corporation for its eventual sale.
10. While the agreements were made in 2010, Mr. HACKER and the Vogels did not
sign a stock purchase agreement until 2015. Said stock purchase agreement, dated January 1, 2015,
provides: (1) that there are 60,000 shares of issued and outstanding common stock of ENCORE
INDUSTRIES, all (at the time) owned by the Vogels as trustees of the Vogel 2007 Revocable Trust dated
4/24/07, (2) the Vogels agreed to sell Mr. HACKER 29,400 shares of the stock, and (3) Mr. HACKER
agreed to pay $477,000 for the 29,400 shares pursuant to a promissory note (the “Promissory Note”). Mr.
HACKER and the Vogels agreed that when the company sold, the balance on the Promissory Note owed
by Mr. HACKER would be forgiven.
11. In 2016, Mr. HACKER and the Vogels agreed to enter into a buy-sell agreement
concerning the stock shares, and ENCORE INDUSTRIES’ attorney prepared the agreement. Mr.
Complaint for Involuntary Dissolution 2HACKER signed the buy-sell agreement. The Vogels, however, refused to sign the buy-sell agreement.
12. Between 2010 and 2016, under Mr. HACKER’s leadership, ENCORE
INDUSTRIES prospered. Its revenues and profits increased, resulting in substantial distributions to Mr.
HACKER and the Vogels.
13. In 2016, Mr. HACKER suffered a serious health issue, and he began to think about
retiring and divesting his interest in ENCORE INDUSTRIES. He stepped down as CEO and President,
but remained as head of sales and marketing. Mr. Vogel resumed a more active role in the company.
14. Atall relevant times herein mentioned, ENCORE INDUSTRIES had the following
directors: Mr. HACKER, Mr. Vogel, and Mr. Potter, the aforementioned CFO. In or about April 2016,
Mr. HACKER found a company interested in purchasing ENCORE INDUSTRIES. He presented the
opportunity to ENCORE INDUSTRIES’ board of directors, and the board unanimously agreed to pursue
the opportunity. However, as negotiations proceeded, Mr. Vogel became resistant to the sale and derailed
the negotiations. The potential buyer withdrew its offer.
15. Inor about June 2019, another company expressed interest in purchasing ENCORE
INDUSTRIES. Two of the three directors, Mr. HACKER and Mr. Potter, were in favor of a sale.
However, Mr. Vogel stated that he was not interested in selling the company.
16. Over the last several years, when Mr. HACKER and others have approached Mr.
Vogel about selling ENCORE INDUSTRIES, his frequent response has been that rather than selling the
company, he would just “shut it down,” leaving the shareholders with no consideration for the value of
the company.
17. From the time that Mr. Vogel assumed management control of ENCORE
INDUSTRIES in 2016, key employees have left the company. Expenses, particularly in labor, have
increased. Pricing has not been monitored and adjusted as necessary, and unnecessary expenses have been
incurred. As a consequence, sales and profits have suffered.
18. Mr. Vogel is verbally abusive to employees and is prone to irrational decisions,
causing a toxic work environment and deterioration of morale within the company. This has contributed
to a decline in company productivity and lessening of the value of the company.
19. Concerned about the value of his shares and the direction of the company, Mr.
Complaint for Involuntary Dissolution 3HACKER has tried to address aspects of the company with Mr. Vogel which would improve company
productivity, sales and revenues. Mr. Vogel, however, has frozen Mr. HACKER out and ignored his
advice.
20. Mr. HACKER is a 49% shareholder, and a member of the board of directors; thus
he has the right to corporate records and information, such as financial information and board meeting
minutes. Despite Mr. HACKER’ request for said information, Mr. Vogel refuses to share the information
with Mr. HACKER.
21. Mr. Vogel, who with Mrs. Vogel is the controlling shareholder, and the President
and CEO, has been guilty of and/or knowingly countenanced mismanagement of the company as described
above, driving down the profitability and value the company, hence, the value of the shares of the
company. Since 2016, when Mr. Vogel took over, the company has lost business, lost key personnel, its
assets have deteriorated, and it has suffered the destruction of good will, and been operated as Mr. Vogel’s
private affair due to Mr. Vogel’s persistent mismanagement. There have been reasonable offers to
purchase ENCORE INDUSTRIES, but Mr. Vogel has refused to sell the company.
22. Additionally, Mr. Vogel has been guilty of and/or knowingly countenanced unfair
treatment of Mr. HACKER, the 49% shareholder, of the company by: (1) refusing to provide corporate
information he was entitled to, and (2) by refusing to sell the company as previously agreed. Mr.
HACKER purchased a 49% interest in the company based upon his understanding that the company was,
over a ten-year period, to be prepared for sale. Mr. Vogel now refuses to sell the company, and has stated
that he would just shut the company down, rather than sell it. Mr. Vogel has received value for the shares
he sold to Mr. HACKER, but he now refuses to allow Mr. HACKER to realize any value from the shares
he purchased.
23. ENCORE INDUSTRIES has less than 35 shareholders, and liquidation is
reasonably necessary for the protection and rights of Mr. HACKER, in that he purchased 49% of the shares
of the company, and reorganized and operated the company, with the understanding that ENCORE
INDUSTRIES would be sold in approximately ten years so that he could realize the value of his shares.
Mr. Vogel now no longer wishes to sell the company and has indicated that he would rather see the
business shut down whereupon the shares would have no value, rather than sell it. The threats to shut
Complaint for Involuntary Dissolution 4down the business are irrational, and indicative of Mr. Vogel’s present approach to the business. Mr.
Vogel also refuses to allow Mr. HACKER any access to corporate information despite Mr. HACKER’s
right to such as a director and shareholder. If matters continue to proceed as they are, Mr. HACKER’s
shares, and the company as a whole, will have no value.
PRAYER
WHEREFORE, plaintiff MARK HACKER prays judgment as follows:
il That the Court decree a winding up and dissolution of the defendant corporation
in the manner provided by law;
2: That the Court entertain such proceedings as may be necessary or proper for the
involuntary winding up or dissolution of the defendant corporation and, in that regard, make such orders
for winding up and dissolution of defendant corporation as justice and equity require;
3. For costs of suit incurred; and,
4. For such other and further relief as the court may deem proper.
DATED: August 31, 2020 FINWALL LAW OFFICES, APC
Complaint for Involuntary Dissolution 5VERIFICATION
I, Mark Hacker, am the plaintiff in this action. I have read the foregoing complaint and
know the contents thereof. The same is true of my own knowledge, except as those matters which are
stated therein on information and belief, and as to those matters, I believe it to be true.
I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct. Executed this _% day of August 2020 at Los Gatos, California.
YD Arhe Ax thi!
MARK HACKER
Complaint for Involuntary Dissolution 6
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Gordon J. Finwall, SB#141777 FINWALL LAW OFFICES, APC 1056 Lincoln Avenue San Jose, CA 95125 (408) 350-4041 (phone) (408) 350-4042 (fax) Gordon@Finwalllaw.com Attorneys for Plaintiff IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SANTA CLARA MARK HACKER, ) NO. ) Plaintiff, ) VERIFIED COMPLAINT FOR ) INVOLUNTARY DISSOLUTION OF vs. ) ENCORE INDUSTRIES ) ENCORE INDUSTRIES, a California ) corporation, and DOES 1 through 20, ) inclusive, ) Defendants. ) ) Plaintiff MARK HACKER alleges: 1. Defendant ENCORE INDUSTRIES is a corporation duly organized and existing under the laws of the State of California, with its principal office located in San Jose, County of Santa Clara, California. 2. Defendant ENCORE INDUSTRIES is not subject to the Banking Law, Public Utilities Law, Savings and Loan Association Law, or Insurance Code sections 1010-1062. 3. Mr. HACKER is an individual residing in the County of Santa Clara, California. Mr. HACKER is a director and shareholder of ENCORE INDUSTRIES. 4. Mr. HACKER is ignorant of the names of the defendants sued herein as DOES 1 through 20, respectively, who are so designated for that reason. 5. Mr. HACKER has standing to bring this complaint for involuntary dissolution of ENCORE INDUSTRIES pursuant to Corporations Code section 1800. He is the holder of an aggregate Complaint for Involuntary Dissolution 1of 29,400 shares of common stock of the defendant corporation. The total number of shares of ENCORE INDUSTRIES stock, which are issued and outstanding, is 60,000 shares. The shares held by Mr. HACKER therefore constitute in excess of one-third of the outstanding common shares of the corporation. 6. The remaining 30,600 shares of ENCORE INDUSTRIES stock are owned by Gary - Vogel and Bonnie J. Vogel, trustees of the Vogel 2007 Revocable Trust dated 4/24/07 (collectively, the “Vogels”). 7. ENCORE INDUSTRIES was incorporated in 1997. It designs and builds custom abrication products. Until 2010, Mr. Vogel had been ENCORE INDUSTRIES’ Chief Executive Officer (“CEO”) and President. 8. Mr. HACKER joined ENCORE INDUSTRIES in 2009. In 2010, Mr. HACKER agreed to become ENCORE INDUSTRIES’ CEO and President. Mr. Vogel retired from day-to-day operations, leaving Mr. HACKER to run ENCORE INDUSTRIES’ operations. 9. In 2010, there was a discussion about the long term goals of the company. Mr. HACKER and the Vogels, with input from ENCORE INDUSTRIES’ Chief Financial Officer (“CFO”), Don Potter, agreed that Mr. HACKER would acquire an ownership interest in ENCORE INDUSTRIES, and he would reorganize the company and attempt to improve its value, with the intent that it would be sold in ten years time. It was agreed that the ENCORE INDUSTRIES would convert from a C corporation to an S corporation for its eventual sale. 10. While the agreements were made in 2010, Mr. HACKER and the Vogels did not sign a stock purchase agreement until 2015. Said stock purchase agreement, dated January 1, 2015, provides: (1) that there are 60,000 shares of issued and outstanding common stock of ENCORE INDUSTRIES, all (at the time) owned by the Vogels as trustees of the Vogel 2007 Revocable Trust dated 4/24/07, (2) the Vogels agreed to sell Mr. HACKER 29,400 shares of the stock, and (3) Mr. HACKER agreed to pay $477,000 for the 29,400 shares pursuant to a promissory note (the “Promissory Note”). Mr. HACKER and the Vogels agreed that when the company sold, the balance on the Promissory Note owed by Mr. HACKER would be forgiven. 11. In 2016, Mr. HACKER and the Vogels agreed to enter into a buy-sell agreement concerning the stock shares, and ENCORE INDUSTRIES’ attorney prepared the agreement. Mr. Complaint for Involuntary Dissolution 2HACKER signed the buy-sell agreement. The Vogels, however, refused to sign the buy-sell agreement. 12. Between 2010 and 2016, under Mr. HACKER’s leadership, ENCORE INDUSTRIES prospered. Its revenues and profits increased, resulting in substantial distributions to Mr. HACKER and the Vogels. 13. In 2016, Mr. HACKER suffered a serious health issue, and he began to think about retiring and divesting his interest in ENCORE INDUSTRIES. He stepped down as CEO and President, but remained as head of sales and marketing. Mr. Vogel resumed a more active role in the company. 14. Atall relevant times herein mentioned, ENCORE INDUSTRIES had the following directors: Mr. HACKER, Mr. Vogel, and Mr. Potter, the aforementioned CFO. In or about April 2016, Mr. HACKER found a company interested in purchasing ENCORE INDUSTRIES. He presented the opportunity to ENCORE INDUSTRIES’ board of directors, and the board unanimously agreed to pursue the opportunity. However, as negotiations proceeded, Mr. Vogel became resistant to the sale and derailed the negotiations. The potential buyer withdrew its offer. 15. Inor about June 2019, another company expressed interest in purchasing ENCORE INDUSTRIES. Two of the three directors, Mr. HACKER and Mr. Potter, were in favor of a sale. However, Mr. Vogel stated that he was not interested in selling the company. 16. Over the last several years, when Mr. HACKER and others have approached Mr. Vogel about selling ENCORE INDUSTRIES, his frequent response has been that rather than selling the company, he would just “shut it down,” leaving the shareholders with no consideration for the value of the company. 17. From the time that Mr. Vogel assumed management control of ENCORE INDUSTRIES in 2016, key employees have left the company. Expenses, particularly in labor, have increased. Pricing has not been monitored and adjusted as necessary, and unnecessary expenses have been incurred. As a consequence, sales and profits have suffered. 18. Mr. Vogel is verbally abusive to employees and is prone to irrational decisions, causing a toxic work environment and deterioration of morale within the company. This has contributed to a decline in company productivity and lessening of the value of the company. 19. Concerned about the value of his shares and the direction of the company, Mr. Complaint for Involuntary Dissolution 3HACKER has tried to address aspects of the company with Mr. Vogel which would improve company productivity, sales and revenues. Mr. Vogel, however, has frozen Mr. HACKER out and ignored his advice. 20. Mr. HACKER is a 49% shareholder, and a member of the board of directors; thus he has the right to corporate records and information, such as financial information and board meeting minutes. Despite Mr. HACKER’ request for said information, Mr. Vogel refuses to share the information with Mr. HACKER. 21. Mr. Vogel, who with Mrs. Vogel is the controlling shareholder, and the President and CEO, has been guilty of and/or knowingly countenanced mismanagement of the company as described above, driving down the profitability and value the company, hence, the value of the shares of the company. Since 2016, when Mr. Vogel took over, the company has lost business, lost key personnel, its assets have deteriorated, and it has suffered the destruction of good will, and been operated as Mr. Vogel’s private affair due to Mr. Vogel’s persistent mismanagement. There have been reasonable offers to purchase ENCORE INDUSTRIES, but Mr. Vogel has refused to sell the company. 22. Additionally, Mr. Vogel has been guilty of and/or knowingly countenanced unfair treatment of Mr. HACKER, the 49% shareholder, of the company by: (1) refusing to provide corporate information he was entitled to, and (2) by refusing to sell the company as previously agreed. Mr. HACKER purchased a 49% interest in the company based upon his understanding that the company was, over a ten-year period, to be prepared for sale. Mr. Vogel now refuses to sell the company, and has stated that he would just shut the company down, rather than sell it. Mr. Vogel has received value for the shares he sold to Mr. HACKER, but he now refuses to allow Mr. HACKER to realize any value from the shares he purchased. 23. ENCORE INDUSTRIES has less than 35 shareholders, and liquidation is reasonably necessary for the protection and rights of Mr. HACKER, in that he purchased 49% of the shares of the company, and reorganized and operated the company, with the understanding that ENCORE INDUSTRIES would be sold in approximately ten years so that he could realize the value of his shares. Mr. Vogel now no longer wishes to sell the company and has indicated that he would rather see the business shut down whereupon the shares would have no value, rather than sell it. The threats to shut Complaint for Involuntary Dissolution 4down the business are irrational, and indicative of Mr. Vogel’s present approach to the business. Mr. Vogel also refuses to allow Mr. HACKER any access to corporate information despite Mr. HACKER’s right to such as a director and shareholder. If matters continue to proceed as they are, Mr. HACKER’s shares, and the company as a whole, will have no value. PRAYER WHEREFORE, plaintiff MARK HACKER prays judgment as follows: il That the Court decree a winding up and dissolution of the defendant corporation in the manner provided by law; 2: That the Court entertain such proceedings as may be necessary or proper for the involuntary winding up or dissolution of the defendant corporation and, in that regard, make such orders for winding up and dissolution of defendant corporation as justice and equity require; 3. For costs of suit incurred; and, 4. For such other and further relief as the court may deem proper. DATED: August 31, 2020 FINWALL LAW OFFICES, APC Complaint for Involuntary Dissolution 5VERIFICATION I, Mark Hacker, am the plaintiff in this action. I have read the foregoing complaint and know the contents thereof. The same is true of my own knowledge, except as those matters which are stated therein on information and belief, and as to those matters, I believe it to be true. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed this _% day of August 2020 at Los Gatos, California. YD Arhe Ax thi! MARK HACKER Complaint for Involuntary Dissolution 6