Looks like the shareholders are demanding to see the stock ledger and financial report like they are entitled to annually.
Looks like that Nevada action requesting a vote is moving forward too.
??A.?Legal Standard
?Nevada Rule of Civil Procedure (“NRCP”) 56(c) provides that a Motion for Summary Judgment should be granted where “any pleading, affidavit, deposition, interrogatory, answer, admission, or other evidence” shows there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. All such evidence, and reasonable inferences there from, must be construed in the light most favorable to the non-moving party. Lipps v. Southern Nevada Paving, 998 P.2d 1183, 1184 (2000) (citing Butler v. Bogdanovich, 705 P.2d 662, 663 (1985)). In opposing a properly supported motion for summary judgment, the non-moving party “must, by affidavit or otherwise, set forth specific facts demonstrating the existence of a genuine factual issue.” Wood v. Safeway, Inc., 121 P.3d 1026, 1030-1031 (Nev. 2005). Here, there is a genuine issue of material fact as to whether Exobox properly increased the number of its outstanding shares. Moreover, even if that increase was proper, Plaintiffs are entitled to judgment as a matter of law because they held the statutorily required voting power to receive the relief requested in their Complaint. Thus, Defendant’s Motion should be denied and summary judgment should be entered in favor of Plaintiffs.
??B.?Argument
?Exobox has not held an election since the year 2011. Complaint at ¶ 33. Additionally, the former Chairman of the Board, Jacob Cukjati, was an illegal holdover, whose term had expired. Id. at ¶ 36. Cukjati then appointed the current Chairman, Shaun Irvine, before “resigning,” but had no authority to do so because of his holdover status. See SEC Form 8-K, October 5, 2010, Item 5.02, attached hereto as Exhibit A. Exobox also improperly increased the number of outstanding shares, creating a genuine issue of material fact. In its Motion, Exobox argues that summary judgment in its favor is warranted because Plaintiffs did not hold 15% of the voting power to force an election, as required by NRS 78.345(1). In support, Exobox states that its current number of issued and outstanding common shares is 897,520,923. MSJ at 7. It further claims that the total voting power for Exobox shares is 897,658,723. Id. at 8. Because Plaintiffs alleged they held 96,979,131 shares of Exobox stock, Exobox argues that they do not have the requisite voting power to request an election of directors since they only have approximately 10% of the voting power. Id.
?However, Exobox improperly increased the number of issued and outstanding common shares after Plaintiffs filed their Complaint. In the “Amended and Restated Articles of Incorporation,” attached as Exhibit A to Defendant’s Motion, it is clear that the total number of shares that Exobox is authorized to issue is 510,000,000, 500,000,000 of which may be common stock. See Art. V, Paragraph A of Articles of Incorporation, attached hereto as Exhibit B. After Plaintiffs filed their Complaint, Exobox increased the number of issued and outstanding common shares to 897,520,923 on or around December 22, 2014. See Statement on issued and outstanding shares of Exobox from Action Stock Transfer, attached hereto as Exhibit C. This is at least 387,520,923 more shares than Exobox is authorized to issue as evidenced by the very Articles of Incorporation Exobox attached to its Motion. This constitutes a genuine issue of material fact and Exobox’s Motion should therefore be summarily denied. This is only one instance in a larger pattern of unethical and illegal behavior for Exobox. For example, Shaun Irvine was issued 5,000 shares of Series D Convertible Preferred Stock on January 29, 2014 for $50,000.00. See SEC Form 8-K, January 29, 2014, Item 3.02, attached hereto as Exhibit D. The most recent 8-K filed by Exobox reflects that Irvine converted the Series D Stock into 500 million shares of Common Stock. See SEC Form 8-K, December 5, 2014, Item 3.02, attached hereto as Exhibit E. In light of the current value of Exobox common stock, Irvine’s initial $50,000.00 investment is now worth approximately $400,000.00 due to this conversion and likely constitutes insider trading, given Irvine’s position of power and influence in Exobox.
?In the alternative, an evidentiary hearing should be held to determine whether Exobox’s increase in shares was proper. In its Motion, Exobox raises arguments related to its recent increase in shares, contending that it is entitled to summary judgment because Plaintiffs do not hold the requisite voting power. As outlined above, Plaintiff contends that the increase in shares was improper, creating and issue of fact. The summary judgment standard does not allow this Court to make further factual determinations, including whether the increase in shares here was proper. Cf. Wyler Summit Partnership v. Turner Broadcasting Sys., Inc., 135 F.3d 658, 663 (9th Cir. 1998) (stating that a trial court may not resolve the factual issue of whether an installment payment provision was included solely for the plaintiff’s benefit and was “not authorized to make such a factual determination”). See also Bowyer v. Taack, 107 Nev. 625 (1991) (holding federal court interpretations of the Federal Rules of Civil Procedure persuasive authority when interpreting their counterparts in the NRCP). The gist of Exobox’s arguments turn on whether the increase in shares was proper, but this is a factual issue. Exobox’s arguments are improperly placed in a motion for summary judgment. Thus, the Motion should be denied in its entirety and this Court should hold an evidentiary hearing on the issue of the propriety of Exobox’s increase in shares.
?II.?COUNTERMOTION FOR SUMMARY JUDGMENT
??A. Legal Standard
?A party is entitled to summary judgment upon motion where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Wood v. Safeway, Inc., 121 P.3d 1026, 1031 (Nev. 2005). To withstand summary judgment, the nonmoving party cannot rely solely on general allegations and conclusions set forth in the pleadings, but must instead present specific facts demonstrating the existence of a genuine factual issue supporting his claims. NRCP 56(e); see also Wood, 121 P.3d at 1030-31. Here, assuming that Exobox’s increase in the number of common stock shares was proper, there is no genuine issue of material fact as to whether Plaintiffs held the requisite voting power to seek an election from this Court and are therefore entitled to the declaratory relief provided under Nevada law. Thus, their instant Countermotion for Summary Judgment should be granted.
??B. Argument
?As stated above, Exobox contends that Plaintiffs do not hold the requisite voting power in order to request an election pursuant to NRS 78.345(1). That statute provides:
“If any corporation fails to elect directors within 18 months after the last election of directors required by NRS 78.330, the district court has jurisdiction in equity, upon application of any one or more stockholders holding stock entitling them to exercise at least 15 percent of the voting power, to order the election of directors in the manner required by NRS 78.330.”
Where “a statute is clear on its face, [this Court] will not look beyond its plain language.” Wheble v. Eighth Judicial Dist. Court, 272 P.3d 134, 136 (Nev. 2012). The plain language of this statute contemplates that Plaintiffs need only hold 15% voting power at the time they make their application to the Court. The statute vests authority in Nevada district courts to order the election of directors “upon application [by stockholders holding enough stock] entitling them to exercise 15 percent of the voting power.” These operative words are important, as they govern when a district court has jurisdiction to order a corporate election.
Moreover, the statute makes no mention that a district court shall be divested of jurisdiction to order an election in the event that the petitioning shareholders lose the required 15% voting power after filing the petition. Construing NRS 78.345 to require petitioners to continue to hold 15% voting power even after filing their petition would be absurd and defeat the purpose of the statute because the corporation could then simply increase their shares to avoid an election. Indeed, this is exactly the situation before the Court in the instant matter and this Court “should always avoid an absurd result” when engaging in statutory construction. Sheriff, Clark Cnty. v. Burcham, 198 P.3d 326, 329 (2008). Thus, it is clear from the face of the statute that 15% voting power need only be held at the time of filing the petition.
Here, Plaintiffs held 96,979,131 shares at the time of filing their Complaint. See Complaint at ¶¶ 1-27. Although Exobox approved an Amended Articles of Incorporation that allowed it to issue up to 3 billion shares of common stock, the maximum amount of common stock Exobox was authorized to issue at the time of filing the Complaint was 5 million. This gave a total number of stocks (common stock plus Series A preferred stock) of 5,001,378. As outlined in Exobox’s Motion, this gave 5 million votes for each share of common stock and 137,800 votes for all shares of Series A preferred stock for a total of 5,137,800 votes. Hence, Plaintiffs had the statutory minimum voting power at the time of filing their Complaint because they held almost 19%, even if Exobox’s increase in total shares was proper. Thus, Defendant’s Motion should be denied and, for the same reason, Plaintiffs’ instant Countermotion for Summary Judgment should be granted.
CONCLUSION
?Exobox’s recent increase in the number of common stock shares brings into question whether doing so was proper in the first place. If it was not, there is a genuine issue of material fact and their Motion should be denied. Alternatively, if that recent increase was proper, there are no genuine issues of material fact relative to whether Plaintiffs had the requisite voting power to seek an election pursuant to NRS 78.345 because the increase occurred after Plaintiffs filed their Complaint, at which time they held almost 19% of the voting power. For the foregoing reasons, Plaintiffs respectfully request this Court deny Defendant’s Motion for Summary Judgment and enter summary judgment in their favor.
? DATED: January 22, 2015
WILLIAMSON LAW OFFICE, PLLC
By:_______________________
Airene Williamson, Esq.
Nevada State Bar # 11594
California State Bar #277101
Attorney for Plaintiff
CERTIFICATE OF SERVICE
?I hereby certify that the foregoing PLAINTIFF’S OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND COUNTERMOTION FOR SUMMARY JUDGMENT was submitted electronically for filing and/or service with the Eighth Judicial District Court on January 22, 2015. I further certify that I served a copy of this document by mailing a true and correct copy thereof, postage prepaid, addressed to:
Michael V. Infuso
Zachary P. Takos
GREENE INFUSO, LLP
3030 South Las Vegas Blvd., Suite 101
Las Vegas, NV 89146
Counsel for Defendant Exobox Technologies Corp.
????????_______________________
????????Erica Allen, an employee of
