Here is the filing made yesterday by CCGI... an amended version of their side of the story... and likely a steaming pile of horse hooey:
IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION
CAR CHARGING GROUP, INC. a Nevada Corporation, 350 HOLDINGS, LLC, a Florida limited liability company, and 350 GREEN, LLC, a Virginia limited liability company, Plaintiffs, vs. Case No. 13-cv-03124 JNS HOLDING CORPORATION, Hon. Elaine E. Bucklo a Delaware corporation, and JNS POWER & CONTROL SYSTEMS, INC., an Illinois Corporation,
Jury Demand
Defendants.
AMENDED COMPLAINT AND JURY DEMAND
Plaintiffs CAR CHARGING GROUP, INC (“CCGI”), 350 HOLDINGS, LLC (“350
Holdings”) and 350 GREEN, LLC (“350 Green”)(collectively, “Plaintiffs”) for their complaint against, defendants, JNS HOLDING CORPORATION (“JNS Holdings”) and JNS POWER & CONTROL SYSTEMS, INC., (collectively, “JNS” or “Defendants”), allege as follows:
JURISDICTION AND VENUE
1. This is an action for damages exceeding $75,000, exclusive of interest, costs, and attorney’s fees, and is within this Court’s jurisdiction pursuant to 28 U.S.C. §1332.
2. Plaintiff CCGI is a Nevada corporation with a principal place of business in Miami, Florida.
3. Plaintiff 350 Holdings is a Florida limited liability company whose sole member, Car Charging, Inc., is a Delaware corporation and subsidiary of Car Charging Group, Inc.
4. Plaintiff 350 Green is a Virginia limited liability company whose sole member, 350 Holdings, is a is a Florida limited liability company whose sole member is a citizen of the State of Florida and the State of Nevada.
5. Defendant JNS Holding Corp. is a Delaware corporation with a principal place of business in Arlington Heights, Illinois.
6. Defendant JNS Power & Control Systems, Inc. is an Illinois corporation with a principal place of business in Arlington Heights, Illinois. Upon information and belief, JNS Power & Control Systems, Inc. is a wholly owned subsidiary of JNS Holdings Corporation.
7. This Court has jurisdiction pursuant to 28 U.S.C. §1332.
8. Diversity jurisdiction is proper because Plaintiff and Defendants are residents of different states.
9. Venue is proper in this district pursuant to 28 U.S.C. §1391(a) because a substantial part of the events or omissions giving rise to the claims occurred, and/or a substantial part of the property that is the subject of the action is situated in this district.
INTRODUCTION
10. CCGI is a service provider for electric vehicle (“EV”) charging stations across the United States.
11. CCGI and 350 Green, a company which also provides service for EV charging stations, began negotiation for CCGI’s purchase of all the stock (and via such acquisition, the de facto purchase of all assets) of 350 Green on or about July 5, 2012, via the execution of a binding term sheet agreement (the “July Term Sheet”) based on 350 Green’s contention that it was having trouble with meeting its financial obligations.
12. The July Term Sheet allowed for CCGI to conduct due diligence on 350 Green to determine if it wished to proceed forward with the negotiation and execution of a final binding agreement for CCGI to purchase all of the issued and outstanding membership interests of 350Green (the “Transaction”), as long as a due diligence investigation was completed in a manner satisfactory to CCGI.
13. During the course of the parties’ negotiations, CCGI became aware that the 350 Defendants faced potential federal investigations into criminal activities, and had further failed to abide by almost all of their contractual obligations with vendors and/or clients.
14. Specifically, 350 Green had been awarded grant for $1,911,000 by the City of Chicago, to install a network of Electric Vehicle (“EV”) charging stations in the Chicago area (the “Chicago Project”). 350 Green and the City of Chicago executed a contract on October 18, 2010, which called for the Chicago Project to be completed on or about December 31, 2013.
15. However, 350 Green came under investigation due to questionable accounting practices related to the Chicago Project.
16. In light of certain criminal investigations by the FBI into 350 Green and its members, and what due diligence by CCGI evidenced as improper accounting activities, CCGI requested that 350 Green enter into a new binding Term Sheet which was executed on August
29, 2012 (the “August Term Sheet”) and which contained, among other provisions, the parties agreement to extend the due diligence period and time for the negotiation and execution of a final binding agreement for CCGI to acquire 350 Green.
17. The August Term Sheet contained an Exclusivity provision that had not been present in the July Term Sheet which prohibited 350 Green from taking, directly or indirectly, any action to initiate, solicit, negotiate or accept any offer from any person or entity to sell 350Green.
18. After the August Term Sheet was signed, CCGI continued its due diligence investigation of 350 Green throughout the rest of 2012 and into the beginning of 2013. Throughout the due diligence process, CCGI was not provided by 350 Green with the documents required for the necessary audits, which delayed the parties’ ability to enter into a final binding agreement.
19. Further, CCGI was required to obtain the City of Chicago’s approval of the Transaction as a condition of closing. Negotiating the terms and conditions of the assignment with the City of Chicago took an extensive amount of time, which delayed the ability of CCGI to close the Transaction.
20. However, notwithstanding the foregoing, on February 11, 2013, in direct violation of the ‘no-shop’ provision of the August Term Sheet, a press release was issued by Defendant JNS Holdings announcing that JNS Power had entered into a Formal Letter of Intent with 350Green to acquire “certain assets which consists of the Chicago area Grant Agreement, only.”
21. 350 Green never advised CCGI that it had entered into negotiations with any other bidders for any part of 350 Green.
22. After discovering the existence of the aforementioned press release, CCGI contacted 350 Green. 350 Green indicated it mistakenly thought that the August Term Sheet had expired and that the “no shop” provision contained therein was no longer in effect.
23. However, the parties determined that the August Term Sheet was still in effect, and the “no shop” provision had not expired, as 350 Green had not completed its production of documents required for a company audit.
24. Consequently, CCGI and 350 Green continued their negotiations, and CCGI continued with its due diligence period.
25. The final analysis of the due diligence by CCGI determined that the acquisition of 350 Green (without the negative liabilities) would be a favorable risk/reward transaction for CCGI and would be crucial in assisting CCGI in meeting the qualifying requirements to submit its application for the trading of its stock on the NYSE or NASDAQ.
26. Plaintiffs subsequently obtained approval from the City of Chicago to take over the operations of the Chicago Project from 350 Green.
27. Therefore, on March 8, 2013, after the aforesaid extensive period of due diligence and negotiation, 350 Green and its members, Mariana Gerzanych (“Gerzanych”) and Timothy Mason (“Mason”),(collectively, the “350 Members”), and CCGI and 350 Holdings executed the Exchange Agreement which was a final binding agreement to purchase the membership interests of 350 Green (hereinafter, the “Exchange Agreement” or “Agreement”). The Exchange Agreement, among other things, called for the transfer of the membership interests of 350 Green (the “350 Interests”) in exchange for 1,111,111 shares of CCGI common stock (the “CCGI Shares”) to be provided to the 350 Members. The Exchange Agreement did not fix a definite closing date, but only indicated that the closing was to take place within ten (10) business days after execution, which at the latest would have been March 22, 2013.
28. CCGI believed that any confusion on the part of 350 Green with regard to the Chicago Project was rectified, as the assets in the Chicago Project were included in the negotiations and were specifically referenced in the final version of the Exchange Agreement.
29. In conjunction with the intended purchase of 350 Green, CCGI made certain representations to shareholders (including the issuance of a press release when the July Term Sheet was executed) which resulted in third-party investment into CCGI that otherwise would not have been made.
30. On or about March 21, 2013, CCGI requested that the parties enter into an agreement extending the date of closing, and circulated an amendment to the Exchange Agreement (the “Amendment”) requesting a right of first refusal on any of the 350 Members’ future business opportunities for one year, and a non compete agreement between the 350 Members and CCGI, which is a standard provision in acquisition agreements of this kind, and the signing of the Amendment was not a condition of closing the Transaction.
31. CCGI fully intended to close the Transaction even if the 350 Members did not agree to the Amendment. However, because they were out of the country and unreachable, the Amendment and the extension were neither acknowledged nor signed.
32. Despite the CCGI and 350 Holdings’ desire to close on the Transaction under the Exchange Agreement, the 350 Members failed to consummate the closing as contemplated under the Exchange Agreement despite the fact that the Exchange Agreement did not contain any terms that allowed the 350 Members to terminate the Exchange Agreement, nor did the Exchange Agreement indicate that time was of the essence.
33. Further, not only were CCGI and 350 Holdings not served with any default under the Exchange Agreement with reasonable notice comply as required under Florida law, during the week of March 25 – 29, 2013, the 350 Members and CCGI continued to engage in negotiations with regard to the Equity Exchange, and the audit of 350 Green commenced, as per the terms of the Exchange Agreement.
34. As a result of the 350 Members’ refusal to close the Transaction, on April 9, 2013, CCGI and 350 Holdings filed suit against 350 Green, the 350 Members, and JNS in the United States District Court for the Southern District of New York in the case entitled Car Charging Group, Inc., et al. v. 350 Green, LLC and JNS Holdings Corporation, under Case No.:13-cv-2389 (the “350 Lawsuit”).
35. CCGI and 350 Holdings filed an eight (8) count complaint seeking the following:(i) damages based on counts of breach of contract and breach of the implied covenant of good faith and fair dealing; against 350 Green and the 350 Members (collectively, “350”), (ii) specific performance by 350 under the terms of the Exchange Agreement; (iii) a permanent injunction against 350 selling any assets to JNS; and (iv) sought damages due to JNS’ tortious interference with the CCGI and 350 Holdings’ contractual relations with 350.
36. CCGI and 350 Holdings argued that under Florida law, which governed the Exchange Agreement, 350 breached the terms of the Exchange Agreement by refusing to close, as Florida law holds that time is not of the essence unless a contract expressly provides. Therefore, as the Exchange Agreement did not contain a “time is of the essence” clause and 350 did not fix a definite date in the future for performance and notify CCGI and 350 Holdings of same, under Florida law, there was a binding contract between CCGI and 350 Holdings and 350, even though the Transaction did not close by the time allotted in the Exchange Agreement.
37. In conjunction with the 350 Lawsuit, CCGI and 350 Holdings moved, on an emergency basis, for the District Court to temporarily enjoin 350 from selling any assets to JNS (who was named as a party to the case) pending the outcome of the underlying litigation. The basis of CCGI and 350 Holdings’ request for the temporary injunction was that: (a) 350’s actions were extremely prejudicial and detrimental to CCGI, because, in conjunction with the intended purchase of 350 Green, CCGI made certain representations to shareholders (including the issuance of a press release when the July Term Sheet was executed) which resulted in third-party investment into CCGI that otherwise would not have been made; (b) the refusal of 350 to close could cause (x) permanent damage to the reputation of CCGI and the corresponding impairment of any chance of CCGI becoming an effective player in the EV industry; (y) the erosion the business relationships between CCGI and its currently existing and potential investors; and (z) the impairment CCGI’s ability to become listed on the NYSE or NASDAQ. Lastly, there was concern by the CCGI and 350 Holdings that if 350 Green’s assets were sold, based on the financial state of 350 Green at the time of the closing, 350 Green’s assets would be completely depleted should any sale to any other party occur.
38. A conference regarding CCGI and 350 Holdings’ motion for temporary injunctive relief was held on April 15, 2013 before the Honorable Jesse Furman at which time counsel for both 350 and JNS appeared. Judge Furman ordered that the parties conduct limited discovery based on the allegations set forth in Plaintiff’s motion seeking temporary injunctive relief, and scheduled a hearing on Plaintiff’s Motion for temporary injunctive relief to take place on April 29, 2013.
39. CCGI and 350 Holdings and 350 entered into subsequent settlement negotiations, which culminated on April 22, 2013, with CCGI and 350 Holdings and 350 closing the Transaction as contemplated under the Exchange Agreement. The Chicago Assets, as well as certain liabilities associates with the Chicago Project, were specifically included in the addendum to the Exchange Agreement.
40. However, due to the negotiations that took place during the period of litigation, the parties executed an addendum to the Exchange Agreement, wherein CCGI and 350 Holdings were forced to pay the 350 Members a significant amount of cash, and a reduced amount of stock. The original Exchange Agreement called for merely an exchange of stock.
41. As part of the Exchange Agreement, CCGI agreed to guaranty certain obligations of 350 Green and such guaranty was based solely on the fact that the assets at issue was being transferred to 350 Holdings, a subsidiary of Car Charging, Inc., which is a wholly owned subsidiary of CCGI.
42. 350 Holdings now owns all of the interests of 350 Green.
43. 350 Holdings is a wholly owned subsidiary of Car Charging, Inc., which is a wholly owned subsidiary of CCGI.
44. 350 Green currently has no employees. 350 Green is no longer soliciting any new business.
45. CCGI is in the process of moving all of 350 Green’s contracts and operations out of 350 Green and into CCGI and its subsidiaries.
46. CCGI and 350 Holdings’ ultimate goal is to cease 350 Green’s operations and have said operations ultimately assumed by CCGI or one of its related entities.
47. However, during the pendency of the lawsuit, it was discovered that on April 17,2013 after JNS’s counsel of record (Randall S. Newman, Esq.) had both been served with the 350 Lawsuit, thereby placing JNS on actual notice of the existence of a binding contract between CCGI and 350 Holdings and 350 and had appeared in Court as Ordered by Judge Fruman, 350Green and JNS Power entered into an Asset Purchase Agreement (the “APA”) wherein JNS Power agreed to purchase the one hundred sixty-eight (168) installed electric car chargers an fifty-one (51) chargers that were to be installed for the Chicago Project (the “Chicago Assets”). It was further learned that, in an effort to thwart an unfavorable ruling on CCGI and 350 Holdings’ motion for a temporary injunction that might prevent 350 Green and JNS Power from consummating their transaction, the closing of the APA was set to take place on April 29, 2013, the same day that the hearing on CCGI and 350 Holdings’ motion for temporary injunctive relief in the 350 Lawsuit was to be conducted.
48. The refusal of the 350 Members to close the transaction and the subsequent execution of an agreement with JNS Power is evidence that notwithstanding the “no shop” provision of the August Term, JNS and the 350 Members had engaged in solicitation and negotiation for JNS to acquire 350 Green during the period 350 Green was to be negotiating exclusively with CCGI.
49. Further JNS has intentionally interfered with the contract between 350 and CCGI and 350 Holdings, to which it was fully aware in an attempt to damage Plaintiffs.
COUNT I
(Tortious Interference with Contractual Relations)
50. Plaintiffs hereby re-allege and re-assert the allegations set forth in paragraphs 1 - 49, as if fully set forth herein.
51. On August 29, 2012, CCGI and 350 entered into the August Term sheet, wherein the parties agreed that during the Investigation Period, 350 would not take any action to initiate, solicit, negotiate or accept any offer from any person to sell the 350 Green assets.
52. However, on February 11, 2013 a press release was issued by JNS announcing that JNS had entered into a Formal Letter of Intent with 350 Green to acquire “certain assets which consists of the Chicago area Grant Agreement, only.”
53. 350 purposely failed to inform CCGI that they had entered into negotiations with any other bidders for any part of 350 Green, and CCGI only found out about it by coming across the press release issued by JNS Holdings.
54. 350 Green entered into an agreement with JNS Power even though CCGI did not, and in fact could not complete its due diligence investigation of 350 Green due to 350 Green’s failure and refusal to provide CCGI and its accountants with certain documents required for CCGI’s audit of 350 Green. Therefore, the terms and conditions of the August Term Sheet were still in effect between 350 Green and CCGI at the time 350 Green entered into an agreement with JNS Power.
55. On March 8, 2013 CCGI and 350 Holdings and 350 entered into the Exchange Agreement wherein the 350 Defendants would transfer 350 Interests (and by default, all assets owned by 350, inclusive of the Chicago Assets) in exchange for the CCGI Shares to be provided to the 350 Members.
56. Upon information and belief, prior to the time of closing, JNS continued to negotiate with 350 and its creditors for the sale of the Chicago Assets.
57. At the time JNS negotiated with 350 for the Chicago Assets, JNS knew that 350 had a binding agreement with CCGI and 350 Holdings for CCGI and 350 Holdings’ purchase of the 350 Membership Interests and which included, the Chicago Assets.
58. On April 17, 2013, JNS Power executed the APA wherein JNS Power purchased the Chicago assets from 350 Green.
59. In fact, JNS was completely cognizant of the situation with regard to 350 Green’s relationship with CCGI, as evidenced by Section 1.3 of the APA which disingenuously states that JNS Power “represents that it has not contributed in any way to the termination of that relationship or interfered with the CCGI relationship.”
60. JNS acted for a wrongful purpose and/or used unfair or improper means in seeking to interfere with CCGI and 350 Holdings’ contractual relationship with 350 with reckless disregard for the consequences of their actions and potential repercussions of the Transaction failing to close and the harmful effect of same on the stock price of GCCI, the confidence of CCGI’s current and potential investors and the ability of CCGI to apply for listing on the NASDAQ or NYSE.
61. The Defendants’ wrongful actions have resulted in CCGI and 350 Holdings being forced to expend significant legal fees in the 350 Litigation which CCGI and 350 Holdings were required to file to protect their rights under the Exchange Agreement in an attempt to avert any damage to any contractual and business relationships, including the ability of CCGI to become listed on NASDAQ or NYSE, which application and listing is time sensitive and the complete damage caused by such lost opportunity as a direct and proximate cause of actions of JNS will be impossible to ascertain and will not be recoverable.
62. The Defendants’ wrongful conduct has resulted in CCGI and 350 Holdings entering into an Amendment of the Exchange Agreement whereby CCGI and 350 Holdings have to now make cash payments to the 350 Members, which will cause difficulty for CCGI, a relatively new company that is trying to establish itself as a significant force in the EV industry.
63. As a direct and proximate result of the conduct of Defendants, Plaintiffs have suffered general and special pecuniary and non-pecuniary damages in an amount to be proven at trial.
64. Defendants’ actions were undertaken willfully, wantonly, maliciously and in reckless disregard for Plaintiffs’ rights, and as a direct and proximate result thereof Plaintiffs suffered economic damage in a total amount to be proven at trial, therefore Plaintiffs seek exemplary and punitive damages in an amount sufficient to deter said Defendants and others from similar future wrongful conduct.
WHEREFORE, Plaintiffs demand judgment against Defendants JNS Holdings and JNS Power for tortuous interference with contract in a total amount to be proven at trial, as well as exemplary and punitive damages in an amount sufficient to deter said Defendants JNS Holdings and JNS Power, and others from similar future wrongful conduct as well as costs and legal fees and such other and further relief as this Court deems just and proper.
COUNT II
(Declaratory Judgment)
65. Plaintiffs hereby re-allege and re-assert the allegations set forth in paragraphs 1 - 49, as if fully set forth herein.
66. On March 8, 2013, CCGI and 350 Holdings and 350 entered into the Exchange Agreement wherein the 350 Members would transfer the 350 Interests in exchange for the CCGI Shares to be paid to the 350 Members.
67. The Exchange Agreement is governed by the laws of the State of Florida.
68. The Exchange Agreement states, in pertinent part, “…Closing shall take place no later than ten (10) business days after the Effective Date.” The Effective Date, as defined under the Agreement, is March 8, 2013. Therefore, under the terms of the Agreement, the closing was to occur on or before March 22, 2013.
69. 350 Green and the 350 Members went as far as to provide CCGI and 350 Holdings with their executed signature pages, thereby wholly accepting all terms of the deal, which evinced its intention to enter into the terms of the agreement with CCGI and 350 Holdings as was the parties’ understanding.
70. On or about March 21, 2013, CCGI and 350 Holdings circulated an amendment to the Exchange Agreement requesting a right of first refusal on any of the 350 Members’ future business opportunities for one year, and a non-compete agreement between the 350 Members and CCGI.
71. 350 failed to respond to CCGI’s request regarding the execution of the Amendment until after the proposed closing date of March 22, 2013 had passed.
72. At no time on or prior to March 22, 2013 did CCGI and 350 Holdings ever indicate they did not intend to close the Transaction with 350.
73. No written demand to close or notice of default had been provided from 350 to CCGI, and all of the final closing documents were delivered between the parties.
74. CCGI and 350 Holdings performed all of the conditions of the Exchange Agreement that were required, and were willing to accept 350’s acknowledgment of the closing of the Transaction, and were read to issue the CCGI Shares to the 350 Members.
75. However, despite delivery of all such documents and CCGI’s intent to close on that date, the 350 Members informed CCGI of their intent to terminate the Exchange Agreement and to renew their discussion with other companies for the sale of 350 Green.
76. Moreover, 350 failed to provide CCGI and 350 Holdings notice of any default under the Exchange Agreement demanding closing and providing a reasonable time after demand for performance by CCGI and 350 Holdings as required under applicable Florida law by which the Exchange Agreement is governed.
77. Therefore, neither the terms of Exchange Agreement nor applicable Florida law permitted 350 to terminate the Exchange Agreement. Consequently, Plaintiffs contend that under Florida law, the Exchange Agreement has always remained valid, and any agreements that 350 executed to sell any of the assets after the execution of the Exchange Agreement of 350Green are void as a matter of law.
78. Notwithstanding the foregoing, on April 17, 2013, 350 Green and JNS Power executed the APA, wherein 350 Green agreed to sell the Chicago Assets to JNS Power. The transaction between JNS Power and 350 Green is set to close on April 29, 2013.
79. However, on April 22, 2013, CCGI and 350 Holdings and 350 executed an Amendment to the Exchange Agreement and closed the Transaction. The Chicago Assets and liabilities associated therewith were specifically contemplated by the parties and included in CCGI’s purchase price of the 350 Membership Interests.
80. As a result, CCGI and 350 Holdings now own all interests of 350 Green.
81. A dispute has arisen and exists between Plaintiffs and Defendants concerning the validity of the APA.
82. Specifically, Plaintiffs assert that the pursuant to the terms of the Exchange Agreement, under Florida law, the Exchange Agreement was always been binding on 350. Consequently, any agreement 350 entered into to sell any of 350 Green’s assets after the execution of the Exchange Agreement are null and void because 350 did not have authority to enter into any such agreement.
83. Defendants plan on moving forward with the purchase of the Chicago Assets pursuant to the terms of the APA.
84. Defendants are not holders in due course as they were fully aware of the existence of the Exchange Agreement and the pending 350 Lawsuit prior to executing their April 17, 2013 agreement with 350.
85. Consequently, declaratory relief is presently necessary and appropriate so that Plaintiffs may determine their rights under the APA.
86. Specifically, Plaintiffs are entitled to a decree from this Court that the Asset Purchase Agreement executed by JNS Power and 350 is void as a matter of law, as under Florida law, the Exchange Agreement was always been binding on 350 and the Chicago Assets delineated therein were already pledged to CCGI and 350 Holdings, who now own the Chicago Assets in accordance with the Exchange Agreement.
WHEREFORE, Plaintiffs respectfully request this Court declare that the Asset Purchase Agreement executed by JNS Power and 350 Green is void as a matter of law, as well as such other and further relief this Court deems just and proper.
JURY DEMAND
DEMAND is hereby made for a trial by jury of all issues so triable.
Dated: June 25, 2013 CAR CHARGING GROUP, INC., 350 HOLDINGS, LLC
and 350 GREEN, LLC
