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Filing # 116381075 E-Filed 11/09/2020 04:11:38 PM
IN THE CIRCUIT COURT OF THE 197! JUDICIAL CIRCUIT
IN AND FOR ST. LUCIE COUNTY, FLORIDA
MADELINE AND WILLIAM MCCONNELL,
Plaintiffs,
vs. CASE NO.: 562017CA1650AXXXHC
P.D.K., INC., a Florida corporation
Defendant.
PLAINTIFFS’ MOTION AND INCORPORATED MEMORANDUM OF LAW FOR
STAY
Plaintiffs Madeline and William McConnell (“Plaintiffs”) hereby file this Motion for
Stay against defendant P.D.K., Inc.’s (“PDK”) issuance of a “cash call” during the pendency of
this books and records litigation. PDK, despite a simple initial request three years ago, has failed
to provide Plaintiffs with any information to (1) determine the value of their investment and (2)
ascertain whether PSK’s cash call is based on any shred of reality. As a result, any cash call,
which goes to the heart of Plaintiffs’ basis for filing this action, is prejudicial to Plaintiffs. In
support thereof, Plaintiffs state as follows:
MEMORANDUM OF LAW
This action was commenced by Plaintiffs for books and records of PDK under Fla. Stat.
607.1602 three years ago. After investing $121,526.72 in PDK in 2005, Plaintiffs received little
to no financial information about their investment. That has not changed to date.
In or about December 2017, PDK responded to Plaintiffs’ books and records complaint
by challenging to Plaintiffs’ status as shareholders. Plaintiffs ultimately prevailed on a Motion
for Summary Judgment. PDK immediately appealed. Upon losing its appeal, PDK filed aMotion for Reconsideration, which was also denied. Currently, PDK is seeking discretionary
review from the Florida Supreme Court on this issue.
To date, Plaintiffs still do not have the records in hand to value their investment in the
Company. PDK, in its attempt to substantiate its entitlement to make this “cash call”, cites the
initial Shareholder’s Agreement between PDK and Plaintiffs. See Ex. A, copy of the “cash call”
letter (the “Letter”) to Plaintiffs.! PDK cites the portion of the referenced Shareholder’s
Agreement that states that all new shareholders (the McConnells) are required “to pay, on an as
needed basis, money toward maintenance, repairs, improvements, [and] conversion to
condominium.” Jd. However, the remainder to the Letter fails to (1) demonstrate that the
requested payment is actually needed and (2) provide any information that would allow Plaintiffs
to determine whether the requested sum of money (if even necessary and/or appropriate) as PDK
has spent three years refusing to provide any information to Plaintiffs that would allow them to
even begin to determine if any of the requested money is actually reasonable, appropriate,
necessary, accurate and required. Moreover, from a cursory glance at the Letter, it is clear that
the majority of the requested funds are absolutely inappropriate and not only barred by the
relevant statute of limitations, but also this Court’s prior decision on May 15, 2018 dismissing, in
part, the Third Party Complaint for breach of contract, which now is res judicata (Dkt 28).?
PDK has issued this “cash call” seeking $125,814.60 from Plaintiffs. PDK claims
that money needed and spent to meet maintenance, repairs and improvements from 2005-2011
| Plaintiffs dispute the bona fides of the “cash call” on multiple grounds. See Ex. B hereto, letter
from undersigned counsel to counsel for PDK.
? As the Court may recall, when PDK initially answered the Complaint, it advanced a Third Party
Complaint for breach of contract against all of the McConnells. That Third Party Complaint
(indeed, the entire Answer) was dismissed and never reasserted or appealed.total $251,600. While it is impossible to know whether this is even true because PDK has spent
years refusing to provide Plaintiffs with any information regarding the expenses of the Company,
it is irrelevant regardless due to the time referenced. Still, Plaintiffs cannot understand how
these expenses could ever be argued as “needed” from the shareholders (rather than the funds of
the Company) approximately fifteen to ten years after the fact. The Letter instead claims to
reference all money spent on maintenance, repairs, improvements, etc. and claims that Plaintiffs
are obligated to pay a pro-rata share of ALL of the money spent, most likely by the corporation
itself. That demonstrates either a major misunderstanding on the part of PDK as to how a
corporation functions or, more likely, simply an attempt to harass Plaintiffs with bizarre claims
for funds that are not based in reality.
Most importantly, while PDK claims it has spent over $1.75M on maintenance, repairs,
improvements, conversion, and more over the years, it does not provide Plaintiffs with any
information to substantiate that. It is precisely this kind of information that Plaintiffs have sought
for three years and that PDK has evaded providing at every step that would allow Plaintiffs to at
least begin to determine whether the numbers that PDK claims to have spent on these items are
even accurate.
The issue of whether Plaintiffs are obligated to even invest any further money into this
corporation is unresolved. But the “cash call” implicates the very heart of this litigation-what is
the value of Plaintiffs’ investment and is the corporation being properly managed (Complaint, {
13). Thus, any cash call is inextricably intertwined with this action. Absent the complete
production of books and records (which PDK has yet to fully lodge with the Court), a cash call is
prejudicial to Plaintiffs.Accordingly, Plaintiffs seek a stay of any attempt by PDK to follow up on the cash call
for a period of at least 90 days after the books and records are received by Plaintiffs*, in order to
review, assess and ascertain the value of their investment in PDK. A court has broad discretion
on issuing a stay. Air Comfort Mechanical, Inc. v. Simmons, 252 So. 2d 285, 285 (Fla. 2d DCA
1971); Ricigliano v. Peat, Marwick, Main & Co.,585 So. 2d 387, 387 (Fla. 4% DCA 1991) (trial
courts are afforded broad discretion in granting or denying stays). A stay can be obtained “in
equity on considerations which would warrant similar stays at law, especially when a stay is
shown to be necessary to avoid an inequitable result.” Neale v. Aycock, 340 So. 2d 535, 536
(Fla. 1* DCA 1976).
Here, any attempt by PDK to enforce a cash call would directly implicate the basis of this
litigation, after PDK itself has failed to produce all the Court-ordered documents. Accordingly,
Plaintiffs respectfully request the Court order PDK to refrain from taking any steps to enforce the
“cash call” for a period of 90 days from the date Plaintiffs obtain a// the court-ordered documents
in this litigation, and review and digest in order to ascertain the value of their investment in
PDK.‘ A form of Proposed Order is attached hereto as Ex. C.
Dated: November 9, 2020
KOMLOSSY LAW, P.A.
By: Emily C. Komlossy
Emily C. Komlossy (FL Bar No. 7714)
eck@komlossylaw.com
4700 Sheridan St., Suite J
Hollywood, FL 33021
(954) 842-2021
(954) 416-6223
3 Including any additional documents that the Plaintiffs may seek after a review of the initial
production by PDK.
* Plaintiffs are simultaneously filing a Motion to Compel and for Sanctions to obtain the check
detail and a Motion to Obtain the Books and Records Lodged with the Court.CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing document was filed
via the Florida E-Portal which served counsel for defendant PDK this 9th day of November,
2020.
/s/_Emily C. Komlossy
Emily C. Komlossy
FBN 7714EXHIBIT APDK INC CORPORATE CASH CALL October 27" 2020
The current World wide pandemic has directly affected Crystal Trace Apts. Our collected rents and income are
down significantly and are projected to remain unstable thru year end and beyond. in addition the Board of
Directors want all obligations to become current.
Pursuant to the Shareholders Agreement for P.D.K., inc. (the Company), the Board of Directors has voted to
initiate a cash call. The Shareholders Agreement dated March 31, 2005, requires all New Shareholders (the
Mcconnells} to pay, on an as needed basis, money toward maintenance, repairs, improvements, conversion
to condominium, including ail costs and fees, etc. Accordingly, the Board of Directors hereby requires your
payment by Nov 13, 2020 in the amount of One Hundred Twenty-Five Thousand One Hundred and Sixty Dollars
($125,160). As per corporate rules, If you are unable to pay, your presumptive shares presently valued at 5% in
PDK will have to be watered down and reduced accordingly to your amount of payment, as was the case in
2011. Thus the aferementioned cash call is established by shareholder requirements and percentage of
ownership.
As a reminder, please be aware that in 2011 all shares were diluted by half when the Company required a
critical cash call and had to sell a 50% stake of PDK in order to keep the company solvent. Thus as you were
then noticed at a Corporate meeting in May 2011, capital was acquired from an outside source, a conditional
investment from Robert Leite, for 50% of ALL OUTSTANDING SHARES and major ownership stake in the
company. The result of same, is that the value(s) of all outstanding shares (your investment) in the Company at
that time was diluted by half (reducing your shares to five percent 5%}, or one-half of the vatue of all
outstanding shares of initial investment. Please be reminded the Katchmere family suffered the SAME v2
DILUTION resulting in a catastrophic $600,000 loss of their initial investment.
Thus, the cash call is based upon the following calculations and percentage of ownership:
Money needed and spent to meet the maintenance, repairs, improvements of the property, including costs and
fees from 2005-2011 totaling $251,600.00. thus your initial 10% share before 2011 dilution of shares requires
a $25,160.00 obligation.
Money spent toward maintenance, repairs, improvements, conversion to condominium, inciuding ail costs and
fees for the conversion totaling $500,000. thus your initial 10% share ownership before 2011 is a $50,000.00
obligation
Money spent to meet the maintenance, repairs, improvements of the property, including costs and fees from
2011 forward totals in the amount of $1,013,091.93. thus your presumptive shares at 5% ownership is a
$50,654.00 obligation
Total cash cali required: $125,814.60 from the Mcconnells
Please forward payment via cashier's check to PDK Inc., 1722 Sheridan St. Hollywood Fl. 33020 if you have any
questions please feel free to contact me @ &
Robert Leite, Treasurer, PDK Inc.EXHIBIT B4700 Sheridan St., Suite J
Hollywood, FL 33021
(954) 842-2021 Main
KOMLOSSY (954) 416-6223 Fox
Cs
LAW P,
November 4, 2020
Louis Arslanian
5800 Sheridan Si.
Hollywood, FL 33021
Re: MeConnell v. PDK
Dear Louis:
Lam not sure if you or Ed Holodak were provided with the attached missive from P.D.K,
Inc. (“PDK or the “Company”), again sent directly to my clients and not through me, so I
provide you with the attached copy.
With respect to the proposed shareholder meeting on November 17, 2020 at 1:30 p.m.
referenced in the PDK letter, I will again request a zoom meeting as I did on August 10 in
connection with PDK’s earlier communications sent directly to my clients. Please let me know
by the end of the week, In advance of any meeting on November 17, 2020, I will again request,
as I did on August 10, 2020, that the draft minutes of last October’s shareholder meeting be
corrected to reflect the fact that, in connection with the vote on the suspension of dividends, the
McConnells abstained from voting due to lack of information. The draft of the minutes currently
states that the vote passed unanimously; that is incorrect. Please confirm that change will be
made.
I will again note that the McConnells have not been provided with the 2019 tax return for
PDK or the income statements that the board determined to provide to all shareholders at the
2019 shareholder meeting. I again request, as I did on August 10, that those documents be
provided promptly.
With regard to the “cash call”, the recitation contained therein is so incorrect and false,
that rather than go through a litany of the issues, I will simply try to address the major points. As
you know, the McConnells commenced this books and records litigation to obtain financial and
other information to, in part, value their investment. In October 2019, Ed Holodak informed me
that the Company was working on a settlement proposal. That never materialized.
In the meantime, you continue to fail to lodge with the Court the court-ordered check
detail. Absent that information, there is simply no way to assess the veracity of the information
in the cash call. Moreover, to be generous, | will presume that your clients do not understand
how a corporation works vis-a-vis other types of business entities such as LLCs and partnerships.
www, komlossylaw.comInitially, the McConnells owned, as of 2011, 12% of PDK, not the 10% referenced in the
cash call. Affidavit of William McConnell, € 8, filed June 4, 2018. That can be verified by a
simple mathematical computation using the McConnells’ investment and the closing statement
on the property. For purposes of the 2019 shareholder meeting, however, I agreed to 10% to
make the calculations easier.
The cash call letter also references a May 2011 “corporate” meeting (earlier in this
litigation referred to as a shareholder meeting), the subject of which remains disputed. Now, for
the very first time in the past three years, PDK asserts that the McConnells’ shares were reduced
to 5% (again, an incorrect mathematical amount based on the above). That never happened. As
evident in the voluminous record in this case, in the letter sent to Bill McConnell by PDK’s then
attorney. Mr. Royer dated May 27, 2011, PDK offered 9% as a settlement amount when the
apartment building sold, thus this 5% assertion is ridiculous. Moreover, there is no provision in
the Shareholder’s Agreement which would provide for the dilution as being attempted here.
It is also clear from the record that at the May 2011 meeting, the identity and agreement
with Mr, Leite was not disclosed to the McConnells, which belies the narrative set forth by PDK.
Indeed, Mr. Katchmere indicates after the May 2011 “corporate” meeting, in a June 28, 2011
email to Bill McConnell (the veracity of which was never disputed during this litigation), that “I
am still trying to put a deal together with a potential investor”. Thus, the false narrative in the
“cash call” is precisely that-false.
Thereafter, on July 20, 2011, PDK entered into a General Management Services
Agreement (“Agreement”) with RJL Realty, of which Mr. Leite is manager. The Agreement,
signed by Mr. Katchmere of PDK, provided that Mr. Leite would invest $100,000 for 50% of
PDK. The McConnells were not consulted by PDK about Mr. Leite, the MeConnells were not
asked to and did not vote to approve the Agreement, nor did the McConnells even know the
name of the investor. And, as indicated therein, Mr. Katchmere contracted to give away 50% of
the ownership of the Company, rather than issue new stock. Under this scenario, the 50% of the
stock that Mr. Katchmere bargained away represents a portion of the Katchmere holdings, not
the McConnells. Accordingly. the shareholdings of PDK at this point are Leite, 50%: the
Katchmeres, 38%; and the McConnells 12%.
Further, the cash call is apparently based, in large part, on amounts supposedly due from
2005-2011.! As you know, in connection with PDK’s Answer to the Complaint, PDK interposed
a Third Party Complaint asserting a breach of contract claim against the McConnells for monies
owed from this period. As you also know that Third Party Complaint was dismissed (after the
Court cautioned you and PDK of your obligation not to advance frivolous claims under Fla. Stat.
57.105 when permitting an Amended Answer to be filed). The dismissal of the Third-Party
Complaint was never appealed. Thus, any breach of contract claim is foreclosed not only by the
statute of limitations, but also by res judicata.
‘ l will note for the record that the dispute which arose in May 2011 involved $10,000, not the $75,160.00 PDK now
claims,
www.komlossylaw.comWith respect to the 2011-forward expenses, I assume that you have copies of all check,
wire transfers and the like totaling $1,013,091.93 that indicate that Mr. Leite (other than his
initial investment) and the Katchmeres personally contributed that amount into the corporation,
rather than it being funded by the corporation itself? If so, please provide me with copies so that
can review. Again, giving your clients the benefit of a doubt, I believe they have a
fundamental misunderstanding of the corporate form and the costs and expenses they now claim.
All of the foregoing demonstrates why it is important to let the MeConnells have access
to the books and records which two courts have now awarded. In this way, we can attempt to
value their holdings, and put an end to this.
Please provide this letter to your clients. [ would like confirmation by the end of the
week that this cash call is being withdrawn. If it is not, | will be filing a motion fora TRO. At
that same time, I will be requesting the documents lodged with the Court and will file a motion
for sanctions for the failure to file the check detail, which has been requested repeatedly.
Sincerely,
/)
ehubirs aaa a
Emily C. Komlossy
Ce: Ed Holodak (via email)
www.komlo:EXHIBIT CIN THE CIRCUIT COURT OF THE 19™ JUDICIAL CIRCUIT
IN AND FOR ST. LUCIE COUNTY, FLORIDA
MADELINE AND WILLIAM MCCONNELL,
Plaintiffs,
vs. CASE NO.: 562017CA1650AXXXHC
P.D.K., INC., a Florida corporation
Defendant.
[PROPOSED] ORDER ON PLAINTIFFS’ MOTION FOR STAY
THIS CAUSE having come before the Court on Plaintiffs’ Motion for Stay, and the Court
having reviewed the motions and responses, hearing the argument of counsel and otherwise being
duly advised in the premises; it is
ORDERED AND ADJUDGED that:
1. The Motion to Stay is GRANTED.
2. PDK shall not take any steps to dilute, commence legal action or the like against
the McConnells for a period of at least 90 days after PDK certifies that it produced all documents
sought by, and ordered to be produced by this Court.
3. Once all documents are produced, PDK and its counsel shall both certify that a
diligent effort was made to obtain such documents, and that no other responsive documents exist.
4. Should Plaintiffs be unable to meet the 90 day period, they shall advise the Court,
and upon good cause shown, may be granted an additional period of time within which to
comply.11. To the extent any issues arise, the Court retains jurisdiction to resolve them and issues
should be brought to the Court’s attention within an expedited time-frame.
DONE AND ORDERED in Indian River County, Florida on this__ day of November, 2020.
JUDGE JANET C. CROOM
Circuit Court Judge
Copies to: L. Arslanian; E. Komlossy
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Filing # 116381075 E-Filed 11/09/2020 04:11:38 PM IN THE CIRCUIT COURT OF THE 197! JUDICIAL CIRCUIT IN AND FOR ST. LUCIE COUNTY, FLORIDA MADELINE AND WILLIAM MCCONNELL, Plaintiffs, vs. CASE NO.: 562017CA1650AXXXHC P.D.K., INC., a Florida corporation Defendant. PLAINTIFFS’ MOTION AND INCORPORATED MEMORANDUM OF LAW FOR STAY Plaintiffs Madeline and William McConnell (“Plaintiffs”) hereby file this Motion for Stay against defendant P.D.K., Inc.’s (“PDK”) issuance of a “cash call” during the pendency of this books and records litigation. PDK, despite a simple initial request three years ago, has failed to provide Plaintiffs with any information to (1) determine the value of their investment and (2) ascertain whether PSK’s cash call is based on any shred of reality. As a result, any cash call, which goes to the heart of Plaintiffs’ basis for filing this action, is prejudicial to Plaintiffs. In support thereof, Plaintiffs state as follows: MEMORANDUM OF LAW This action was commenced by Plaintiffs for books and records of PDK under Fla. Stat. 607.1602 three years ago. After investing $121,526.72 in PDK in 2005, Plaintiffs received little to no financial information about their investment. That has not changed to date. In or about December 2017, PDK responded to Plaintiffs’ books and records complaint by challenging to Plaintiffs’ status as shareholders. Plaintiffs ultimately prevailed on a Motion for Summary Judgment. PDK immediately appealed. Upon losing its appeal, PDK filed aMotion for Reconsideration, which was also denied. Currently, PDK is seeking discretionary review from the Florida Supreme Court on this issue. To date, Plaintiffs still do not have the records in hand to value their investment in the Company. PDK, in its attempt to substantiate its entitlement to make this “cash call”, cites the initial Shareholder’s Agreement between PDK and Plaintiffs. See Ex. A, copy of the “cash call” letter (the “Letter”) to Plaintiffs.! PDK cites the portion of the referenced Shareholder’s Agreement that states that all new shareholders (the McConnells) are required “to pay, on an as needed basis, money toward maintenance, repairs, improvements, [and] conversion to condominium.” Jd. However, the remainder to the Letter fails to (1) demonstrate that the requested payment is actually needed and (2) provide any information that would allow Plaintiffs to determine whether the requested sum of money (if even necessary and/or appropriate) as PDK has spent three years refusing to provide any information to Plaintiffs that would allow them to even begin to determine if any of the requested money is actually reasonable, appropriate, necessary, accurate and required. Moreover, from a cursory glance at the Letter, it is clear that the majority of the requested funds are absolutely inappropriate and not only barred by the relevant statute of limitations, but also this Court’s prior decision on May 15, 2018 dismissing, in part, the Third Party Complaint for breach of contract, which now is res judicata (Dkt 28).? PDK has issued this “cash call” seeking $125,814.60 from Plaintiffs. PDK claims that money needed and spent to meet maintenance, repairs and improvements from 2005-2011 | Plaintiffs dispute the bona fides of the “cash call” on multiple grounds. See Ex. B hereto, letter from undersigned counsel to counsel for PDK. ? As the Court may recall, when PDK initially answered the Complaint, it advanced a Third Party Complaint for breach of contract against all of the McConnells. That Third Party Complaint (indeed, the entire Answer) was dismissed and never reasserted or appealed.total $251,600. While it is impossible to know whether this is even true because PDK has spent years refusing to provide Plaintiffs with any information regarding the expenses of the Company, it is irrelevant regardless due to the time referenced. Still, Plaintiffs cannot understand how these expenses could ever be argued as “needed” from the shareholders (rather than the funds of the Company) approximately fifteen to ten years after the fact. The Letter instead claims to reference all money spent on maintenance, repairs, improvements, etc. and claims that Plaintiffs are obligated to pay a pro-rata share of ALL of the money spent, most likely by the corporation itself. That demonstrates either a major misunderstanding on the part of PDK as to how a corporation functions or, more likely, simply an attempt to harass Plaintiffs with bizarre claims for funds that are not based in reality. Most importantly, while PDK claims it has spent over $1.75M on maintenance, repairs, improvements, conversion, and more over the years, it does not provide Plaintiffs with any information to substantiate that. It is precisely this kind of information that Plaintiffs have sought for three years and that PDK has evaded providing at every step that would allow Plaintiffs to at least begin to determine whether the numbers that PDK claims to have spent on these items are even accurate. The issue of whether Plaintiffs are obligated to even invest any further money into this corporation is unresolved. But the “cash call” implicates the very heart of this litigation-what is the value of Plaintiffs’ investment and is the corporation being properly managed (Complaint, { 13). Thus, any cash call is inextricably intertwined with this action. Absent the complete production of books and records (which PDK has yet to fully lodge with the Court), a cash call is prejudicial to Plaintiffs.Accordingly, Plaintiffs seek a stay of any attempt by PDK to follow up on the cash call for a period of at least 90 days after the books and records are received by Plaintiffs*, in order to review, assess and ascertain the value of their investment in PDK. A court has broad discretion on issuing a stay. Air Comfort Mechanical, Inc. v. Simmons, 252 So. 2d 285, 285 (Fla. 2d DCA 1971); Ricigliano v. Peat, Marwick, Main & Co.,585 So. 2d 387, 387 (Fla. 4% DCA 1991) (trial courts are afforded broad discretion in granting or denying stays). A stay can be obtained “in equity on considerations which would warrant similar stays at law, especially when a stay is shown to be necessary to avoid an inequitable result.” Neale v. Aycock, 340 So. 2d 535, 536 (Fla. 1* DCA 1976). Here, any attempt by PDK to enforce a cash call would directly implicate the basis of this litigation, after PDK itself has failed to produce all the Court-ordered documents. Accordingly, Plaintiffs respectfully request the Court order PDK to refrain from taking any steps to enforce the “cash call” for a period of 90 days from the date Plaintiffs obtain a// the court-ordered documents in this litigation, and review and digest in order to ascertain the value of their investment in PDK.‘ A form of Proposed Order is attached hereto as Ex. C. Dated: November 9, 2020 KOMLOSSY LAW, P.A. By: Emily C. Komlossy Emily C. Komlossy (FL Bar No. 7714) eck@komlossylaw.com 4700 Sheridan St., Suite J Hollywood, FL 33021 (954) 842-2021 (954) 416-6223 3 Including any additional documents that the Plaintiffs may seek after a review of the initial production by PDK. * Plaintiffs are simultaneously filing a Motion to Compel and for Sanctions to obtain the check detail and a Motion to Obtain the Books and Records Lodged with the Court.CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing document was filed via the Florida E-Portal which served counsel for defendant PDK this 9th day of November, 2020. /s/_Emily C. Komlossy Emily C. Komlossy FBN 7714EXHIBIT APDK INC CORPORATE CASH CALL October 27" 2020 The current World wide pandemic has directly affected Crystal Trace Apts. Our collected rents and income are down significantly and are projected to remain unstable thru year end and beyond. in addition the Board of Directors want all obligations to become current. Pursuant to the Shareholders Agreement for P.D.K., inc. (the Company), the Board of Directors has voted to initiate a cash call. The Shareholders Agreement dated March 31, 2005, requires all New Shareholders (the Mcconnells} to pay, on an as needed basis, money toward maintenance, repairs, improvements, conversion to condominium, including ail costs and fees, etc. Accordingly, the Board of Directors hereby requires your payment by Nov 13, 2020 in the amount of One Hundred Twenty-Five Thousand One Hundred and Sixty Dollars ($125,160). As per corporate rules, If you are unable to pay, your presumptive shares presently valued at 5% in PDK will have to be watered down and reduced accordingly to your amount of payment, as was the case in 2011. Thus the aferementioned cash call is established by shareholder requirements and percentage of ownership. As a reminder, please be aware that in 2011 all shares were diluted by half when the Company required a critical cash call and had to sell a 50% stake of PDK in order to keep the company solvent. Thus as you were then noticed at a Corporate meeting in May 2011, capital was acquired from an outside source, a conditional investment from Robert Leite, for 50% of ALL OUTSTANDING SHARES and major ownership stake in the company. The result of same, is that the value(s) of all outstanding shares (your investment) in the Company at that time was diluted by half (reducing your shares to five percent 5%}, or one-half of the vatue of all outstanding shares of initial investment. Please be reminded the Katchmere family suffered the SAME v2 DILUTION resulting in a catastrophic $600,000 loss of their initial investment. Thus, the cash call is based upon the following calculations and percentage of ownership: Money needed and spent to meet the maintenance, repairs, improvements of the property, including costs and fees from 2005-2011 totaling $251,600.00. thus your initial 10% share before 2011 dilution of shares requires a $25,160.00 obligation. Money spent toward maintenance, repairs, improvements, conversion to condominium, inciuding ail costs and fees for the conversion totaling $500,000. thus your initial 10% share ownership before 2011 is a $50,000.00 obligation Money spent to meet the maintenance, repairs, improvements of the property, including costs and fees from 2011 forward totals in the amount of $1,013,091.93. thus your presumptive shares at 5% ownership is a $50,654.00 obligation Total cash cali required: $125,814.60 from the Mcconnells Please forward payment via cashier's check to PDK Inc., 1722 Sheridan St. Hollywood Fl. 33020 if you have any questions please feel free to contact me @ & Robert Leite, Treasurer, PDK Inc.EXHIBIT B4700 Sheridan St., Suite J Hollywood, FL 33021 (954) 842-2021 Main KOMLOSSY (954) 416-6223 Fox Cs LAW P, November 4, 2020 Louis Arslanian 5800 Sheridan Si. Hollywood, FL 33021 Re: MeConnell v. PDK Dear Louis: Lam not sure if you or Ed Holodak were provided with the attached missive from P.D.K, Inc. (“PDK or the “Company”), again sent directly to my clients and not through me, so I provide you with the attached copy. With respect to the proposed shareholder meeting on November 17, 2020 at 1:30 p.m. referenced in the PDK letter, I will again request a zoom meeting as I did on August 10 in connection with PDK’s earlier communications sent directly to my clients. Please let me know by the end of the week, In advance of any meeting on November 17, 2020, I will again request, as I did on August 10, 2020, that the draft minutes of last October’s shareholder meeting be corrected to reflect the fact that, in connection with the vote on the suspension of dividends, the McConnells abstained from voting due to lack of information. The draft of the minutes currently states that the vote passed unanimously; that is incorrect. Please confirm that change will be made. I will again note that the McConnells have not been provided with the 2019 tax return for PDK or the income statements that the board determined to provide to all shareholders at the 2019 shareholder meeting. I again request, as I did on August 10, that those documents be provided promptly. With regard to the “cash call”, the recitation contained therein is so incorrect and false, that rather than go through a litany of the issues, I will simply try to address the major points. As you know, the McConnells commenced this books and records litigation to obtain financial and other information to, in part, value their investment. In October 2019, Ed Holodak informed me that the Company was working on a settlement proposal. That never materialized. In the meantime, you continue to fail to lodge with the Court the court-ordered check detail. Absent that information, there is simply no way to assess the veracity of the information in the cash call. Moreover, to be generous, | will presume that your clients do not understand how a corporation works vis-a-vis other types of business entities such as LLCs and partnerships. www, komlossylaw.comInitially, the McConnells owned, as of 2011, 12% of PDK, not the 10% referenced in the cash call. Affidavit of William McConnell, € 8, filed June 4, 2018. That can be verified by a simple mathematical computation using the McConnells’ investment and the closing statement on the property. For purposes of the 2019 shareholder meeting, however, I agreed to 10% to make the calculations easier. The cash call letter also references a May 2011 “corporate” meeting (earlier in this litigation referred to as a shareholder meeting), the subject of which remains disputed. Now, for the very first time in the past three years, PDK asserts that the McConnells’ shares were reduced to 5% (again, an incorrect mathematical amount based on the above). That never happened. As evident in the voluminous record in this case, in the letter sent to Bill McConnell by PDK’s then attorney. Mr. Royer dated May 27, 2011, PDK offered 9% as a settlement amount when the apartment building sold, thus this 5% assertion is ridiculous. Moreover, there is no provision in the Shareholder’s Agreement which would provide for the dilution as being attempted here. It is also clear from the record that at the May 2011 meeting, the identity and agreement with Mr, Leite was not disclosed to the McConnells, which belies the narrative set forth by PDK. Indeed, Mr. Katchmere indicates after the May 2011 “corporate” meeting, in a June 28, 2011 email to Bill McConnell (the veracity of which was never disputed during this litigation), that “I am still trying to put a deal together with a potential investor”. Thus, the false narrative in the “cash call” is precisely that-false. Thereafter, on July 20, 2011, PDK entered into a General Management Services Agreement (“Agreement”) with RJL Realty, of which Mr. Leite is manager. The Agreement, signed by Mr. Katchmere of PDK, provided that Mr. Leite would invest $100,000 for 50% of PDK. The McConnells were not consulted by PDK about Mr. Leite, the MeConnells were not asked to and did not vote to approve the Agreement, nor did the McConnells even know the name of the investor. And, as indicated therein, Mr. Katchmere contracted to give away 50% of the ownership of the Company, rather than issue new stock. Under this scenario, the 50% of the stock that Mr. Katchmere bargained away represents a portion of the Katchmere holdings, not the McConnells. Accordingly. the shareholdings of PDK at this point are Leite, 50%: the Katchmeres, 38%; and the McConnells 12%. Further, the cash call is apparently based, in large part, on amounts supposedly due from 2005-2011.! As you know, in connection with PDK’s Answer to the Complaint, PDK interposed a Third Party Complaint asserting a breach of contract claim against the McConnells for monies owed from this period. As you also know that Third Party Complaint was dismissed (after the Court cautioned you and PDK of your obligation not to advance frivolous claims under Fla. Stat. 57.105 when permitting an Amended Answer to be filed). The dismissal of the Third-Party Complaint was never appealed. Thus, any breach of contract claim is foreclosed not only by the statute of limitations, but also by res judicata. ‘ l will note for the record that the dispute which arose in May 2011 involved $10,000, not the $75,160.00 PDK now claims, www.komlossylaw.comWith respect to the 2011-forward expenses, I assume that you have copies of all check, wire transfers and the like totaling $1,013,091.93 that indicate that Mr. Leite (other than his initial investment) and the Katchmeres personally contributed that amount into the corporation, rather than it being funded by the corporation itself? If so, please provide me with copies so that can review. Again, giving your clients the benefit of a doubt, I believe they have a fundamental misunderstanding of the corporate form and the costs and expenses they now claim. All of the foregoing demonstrates why it is important to let the MeConnells have access to the books and records which two courts have now awarded. In this way, we can attempt to value their holdings, and put an end to this. Please provide this letter to your clients. [ would like confirmation by the end of the week that this cash call is being withdrawn. If it is not, | will be filing a motion fora TRO. At that same time, I will be requesting the documents lodged with the Court and will file a motion for sanctions for the failure to file the check detail, which has been requested repeatedly. Sincerely, /) ehubirs aaa a Emily C. Komlossy Ce: Ed Holodak (via email) www.komlo:EXHIBIT CIN THE CIRCUIT COURT OF THE 19™ JUDICIAL CIRCUIT IN AND FOR ST. LUCIE COUNTY, FLORIDA MADELINE AND WILLIAM MCCONNELL, Plaintiffs, vs. CASE NO.: 562017CA1650AXXXHC P.D.K., INC., a Florida corporation Defendant. [PROPOSED] ORDER ON PLAINTIFFS’ MOTION FOR STAY THIS CAUSE having come before the Court on Plaintiffs’ Motion for Stay, and the Court having reviewed the motions and responses, hearing the argument of counsel and otherwise being duly advised in the premises; it is ORDERED AND ADJUDGED that: 1. The Motion to Stay is GRANTED. 2. PDK shall not take any steps to dilute, commence legal action or the like against the McConnells for a period of at least 90 days after PDK certifies that it produced all documents sought by, and ordered to be produced by this Court. 3. Once all documents are produced, PDK and its counsel shall both certify that a diligent effort was made to obtain such documents, and that no other responsive documents exist. 4. Should Plaintiffs be unable to meet the 90 day period, they shall advise the Court, and upon good cause shown, may be granted an additional period of time within which to comply.11. To the extent any issues arise, the Court retains jurisdiction to resolve them and issues should be brought to the Court’s attention within an expedited time-frame. DONE AND ORDERED in Indian River County, Florida on this__ day of November, 2020. JUDGE JANET C. CROOM Circuit Court Judge Copies to: L. Arslanian; E. Komlossy