WHALEHAVEN CAPITAL FUND LIMITED v. HIGHLINE TECHNICAL INNOVATIONS, INC.
(This has been OCR’d)
Filed 1.06.2011
Grushko & Mittman, P .C. Eliezer Drew, Esq. (ED0625) Attorneys for Plaintiff 515 Rockaway Avenue Valley Stream, New York 11581 (212) 697-9500• UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
WHALEHAVEN CAPITAL FUND LIMITED Plaintiff,
-against-
HIGHLINE TECHNICAL INNOVATIONS, INC., Defendant.
11civ 0105
Index No. 11 Civ. __ L)
COMPLAINT Plaintiff, Whalehaven Capital Fund Limited, by its attorneys, for its Com respectfully alleges:
THE PARTIES 1. Plaintiff Whalehaven Capital Fund Limited ("Whalehaven" or "Plaintiff'), is a Bermuda corporation with its principal place of business in Hamilton, Bermuda.
2. Upon information and belief, Highline Technical Innovations, Inc. f/kJa Systems Evolution, Inc. ("Highline" or "Defendant") is an Idaho corporation with its principal place of business in Farmington, Arkansas.
JURISDICTION AND VENUE 3. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332(a)(2) in that the action is between citizens of a state and citizens of a foreign state and the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs.
4. Venue is proper in this District pursuant to 28 U.S.C. §1391(a), in that it is the exclusive district in which the parties agreed that the claims hereafter set forth can be brought.
FACTS COMMON TO ALL CLAIMS 5. On or about August 31, 2004, Whalehaven Capital, L.P. and Whalehaven Fund Limited (each an "Original Holder" collectively the "Original Holders") entered into a Note and Warranty Purchase Agreement with Highline.
6. According to the terms of the Securities Purchase Agreement, on August 31, 2004, Highview sold and each Original Holder bought a note dated August 31, 2004, with a maturity date of August 31,2007, in the principal amount of $100,000.00 (the "Notes").
7. The purchase of the Notes was made upon the terms and conditions set forth in the Notes and the Securities Purchase Agreement entered into between the parties. Other investors also purchased Highline' s notes at the same time that the Original Holders made their purchases.
8. Among other terms, the Notes provided that the Plaintiff, at any time and from time to time, at its option, could convert all or part of the Notes into shares of Highline common stock upon submission of a Conversion Notice. Thus §3.1 of the Notes provides: "Section 3.1 Conversion Option.
(a) At any time on or after the Issuance Date, this Note shall be convertible (in whole or in part), at the option of the Holder (the "Conversion Option"), into such number of fully paid and non-assessable shares of Common Stock (the "Conve rsion Rate") as is determined by dividing (x) that portion of the outstanding principal balance under this Note as of such date that the Holder elects to convert by (y) the Conversion Price (as hereinafter defined) then in effect on the date on which the Holder faxes a notice of conversion (the "Conversion Notice"), duly executed, to the Maker (facsimile number (281) 265-7577, Attn.: Chief Financial Officer) (the "Conversion Date"), provided, however, that the Conversion Price shall be subject to adjustment as described in Section 3.6 below. The Holder shall deliver this Note to the Maker at the address designated in the Purchase Agreement at such time that this Note is fully converted. With respect to partial conversions of this Note, the Maker shall keep written records of the amount of this Note converted as of each Conversion Date."
9. The Notes were convertible at the Conversion Price. The initial Conversion Price of the Notes was $0.05 per share. The Conversion Price for the Notes was subject to downward revision upon the occurrence of certain events. Upon receipt of a Conversion Notice, Highline was required to deliver the stock to the holder within three Trading Days after delivery of the Conversion Notice.
10. In order to induce the Original Holders to purchase the Notes, Highline agreed to adjust downward the Conversion Price if it offered or sold any stock at a price lower than the initial Conversion Price. Thus §3.6(a)(vi) of the Notes provides: "(vi) Adjustments for Issuance of Additional Shares of Common Stock. In the event the Maker, shall, at any time, from time to time, issue or sell any shares of additional shares of common stock (otherwise than as provided in the foregoing
23. As set forth herein, Highline is obligated to reserve at least 4,785,000,000 shares of its common stock to meet its current obligations to Whalehaven to reserve shares, subject to further increase under the terms of the Note. According to its articles of incorporation, Highline in only authorized to issue 2,000,000,000. A copy of the Articles of Incorporation are attached hereto as Exhibit H.
24. Therefore by definition Highline has not reserved any shares to comply with that obligation and must increase the amount of shares it is authorized to issue to comply with its obligations~
25. Highline is, therefore, in clear default of its contractual obligations to the Plaintiff.
FIRST CLAIM FOR RELIEF (Breach of Contract, Relief Sought - Preliminary and Permanent Injunctions)
26. Plaintiff re-alleges paragraphs 1 through 25.
27. As a result of Highline' s failure to honor the Conversion Notice duly submitted on October 13,2010, Highline has breached the terms of the Notes and the Securities Purchase Agreement.
28. As a result of Highline's breach of said agreements, Plaintiff has been damaged.
29. Plaintiff has no adequate remedy Oat law.
30. Plaintiff, therefore, is entitled to preliminary and permanent injunctive relief to remedy Highline's breach of contract and require Highline to issue the shares pursuant to the Conversion Notice and a declaratory judgment that the current Conversion Price of the Notes is $0.0004 per share, subject to further adjustment as set forth in the Securities Purchase Agreement and the Notes.
39. As a result of High line's failure to deliver the 75,000,000 shares of stock to which Plaintiff is entitled pursuant to the duly submitted Conversion Notice, therefore, Highline has converted those shares.
40. As a result of Highline conversion of those shares, Plaintiff has been damaged.
41. Plaintiff has no adequate remedy at law.
42. Plaintiff is, therefore, entitled to preliminary and permanent injunctive relief to remedy such conversion.
FIFTH CLAIM FOR RELIEF (Conversion, Relief Sought - Damages)
43. Plaintiff re-alleges paragraphs 1 through 42.
44. As a result thereof, Plaintiff is entitled to damages in an amount to be determined
SIXTH CLAIM FOR RELIEF (Breach of Contract, Relief Sought - Preliminary and Permanent Injunctions)
45. Plaintiff re-alleges paragraphs 1 through 44.
46. Highline's failure to reserve sufficient shares to comply with its obligations under the Notes and must increase the amount of shares it is authorized.
47. As a result thereof,. the Plaintiff is entitled to preliminary and permanent injunctive relief restraining Highline from issuing any shares of its common stock to anyone other than the Plaintiff, until it has complied with its obligations to reserve shares in accordance with the Note.
SEVENTH CLAIM FOR RELIEF (Attorney's Fees) 48. Plaintiff re-allege paragraphs 1 through 47.
49. In accordance with Section 4.5 of the Notes, the Plaintiff is entitled to an award of reasonable attorney's fees, in an amount to be determined at trial. Wherefore Plaintiff demands judgment against Defendant Highline Technical Innovations, Inc. as follows:
a. On the First Claim for Relief, for an order, preliminarily and permanently:
i) directing Highline to deliver immediately 75,000,000 shares of its common stock to Plaintiff; and
ii) declaring that the conversion price of the Notes held by Plaintiff is $0.00004 per share, or such lower amount as may be determined during the course of this lawsuit; and
b. On the Second Claim for Relief for damages as may be determined at trial; and
c. On the Third claim for Relief for a preliminary and permanent injunction directing Highline to honor all future conversion requests duly submitted by the Plaintiff in accordance with the agreements between the parties; and
d. On the Fourth Claim for Relief for preliminary and permanent injunctive relief directing Highline to issue and deliver the 75,000,000 shares of stock to which Plaintiff is entitled pursuant to the du1y submitted Conversion Notice; and
e. On the Fifth Claim for Relief for damages in the amount to be determined at trial; and
f. On the Sixth Claim for Relief for preliminary and permanent injunctive relief restraining Highline from issuing any shares of its common stock to anyone other than the Plaintiff, until it has complied with its obligations to reserve shares in accordance with the Note; and
g. On the Seventh Claim for Relief for reasonable attorneys' fees in an amount to be determined at trial; and
h. On all claims for relief, for interest, attorneys' fees, the costs and disbursements of this action and such other, further and different relief as the court deems just and proper.
Dated: Valley Stream, New York January 4, 2011 By:
GRUSHKO & MITTMAN, P.C. Eliezer Drew, Esq. (ED0625) Attorneys for Plaintiff 515 Rockaway Avenue Valley Stream, New York 11581 (212) 697-9500
Can't wait to hear how the hive-mind spins this into a good thing for Hlnt.
BTW on 1.19.2011 this: (last docket entry): ENDORSED LETTER addressed to Judge Colleen McMahon from Eliezer Drew, dated 1/18/2011, re: Counsel for plaintiff Whalehaven Capital Fund, Ltd. writes to request an adjournment with respect to an Order to Show Cause currently returnable on January 20, 2011 at 2:00 PM. This Order to Show Cause was already adjourned once from January 14, 2011, to the current date. The parties have agreed in principal to a settlement covering all claims raised in this case including the issues raised in the Order to Show Cause. I have spoke with opposing counsel and both parties agree that we request that the Court grant an adjournment until the first available date after January 28, 2011, so that the parties can enter into a final settlement agreement and arrange for all deliveries that will be required by such agreement. Opposing counsel and myself spoke with your law clerk Matthew Jossen and he advised that we write to the Court to let you know about this development and to make this requested adjournment in writing. ENDORSEMENT: OK. (Signed by Judge Colleen McMahon on 1/19/2011) (lnl) (Entered: 01/19/2011)
We're entitled to our own opinions --but not our own facts.
AI
