SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
AJW PARTNERS, LLC; AJW OFFSHORE,
LTD.; AJW QUALIFIED PARTNERS, LLC;
NEW MILLENNIUM CAPITAL PARTNERS
II, LLC; AJW MASTER FUND, LTD.; AJW
PARTNERS II, LLC; AJW OFFSHORE II,
LTD.; AJW QUALIFIED PARTNERS II, LLC;
NEW MILLENNIUM CAPITAL PARTNERS
III, LLC; and AJW MASTER FUND II, LTD.,
Plaintiffs,
-against-
INGEN TECHNOLOGIES, INC.,
Defendant.
COMPLAINT 09601918
Plaintiffs, by their attorneys, Olshan Grundman Frome Rosenzweig & Wolosky LLP, for their Complaint, allege:
The Parties
1, Plaintiff AJW Partners, LLC (“AJW Partners” or “AJWP) is a limited liability company organized under the laws of the State of Delaware, with its principal office in Roslyn, New York.
2. Plaintiff AJW Offshore, Ltd. (“AJW Offshore” or “AJWO”) is a corporation organized under the laws of the Cayman Islands, which is managed from Roslyn, New York.
3. Plaintiff AJW Qualified Partners, LLC (“AJW Qualified” or “AJWQP”) is a limited liability company organized under the laws of New York, with its principal office in Roslyn, New York.
4. Plaintiff New Millennium Capital Partners II, LLC (“‘New Millennium” or “NMCP”) is a limited liability company organized under the laws of the State of New York, with its principal office in Roslyn, New York.
5. Plaintiff AJW Master Fund, Ltd. (“AJW MF”) is a corporation organized under the laws of the Cayman Islands, which is managed from Roslyn, New York.
6. Plaintiff AJW Partners II, LLC (‘AJW Partners II” or “AJWP II”) is a limited liability company organized under the laws of the State of Delaware, with its principal office in Roslyn, New York.
7. Plaintiff AJW Offshore II, Ltd. (“AJW Offshore II”) is a corporation organized under the laws of the Cayman Islands, which is managed from Roslyn, New York.
8. AJW Qualified Partners II, LLC (“AJW Qualified II” or “AJWQPII”) is a limited liability company organized under the laws of New York, with its principal office in Roslyn, New York.
9. Plaintiff New Millennium Capital Partners II, LLC (“New Millennium III” or “NMCP III”) is a limited liability company organized under the laws of the State of New York, with its principal office in Roslyn, New York.
10. Plaintiff AJW Master Fund II, Ltd. (“AJW MF II”) is a corporation organized under the laws of the Cayman Islands, which is managed from Roslyn, New York.
11. Defendant Ingen Technologies, Inc. (“Ingen” or “Defendant”) is a corporation organized under the laws of the State of Georgia, with its principal place of business in Yucaipa, California. Ingen's common stock was registered with the United States Securities and
Exchange Commission (the “SEC”), but Ingen terminated such registration by filing a Form 15 with the SEC on December 4,2008. Ingen’s shares are publicly traded under the symbol “IGNT.PK”
Jurisdiction and Venue
12. Ingen has consented to be sued in this County. Ingen also has had sufficient contacts for such jurisdiction, from which contacts the claims asserted herein arise.
The June 2008 Securities Purchase Agreement
13. On June 16,2008, plaintiffs AJWP, NMCP, and AJMF entered into a Securities Purchase Agreement (the “June 2008 SPA”) and related agreements with Ingen. Pursuant to the June 2008 SPA, as amended, those plaintiffs purchased certain Callable Secured Convertible
Notes (the “Notes”) from Ingen in the aggregate principal amount of $300,000, among other securities.
14. A key provision in the June 2008 SPA assured plaintiffs that Ingen would not engage in any future financings without notice to, or consent from, plaintiffs. Section 4(E) of the SPA provides in‘pertinent part:
E. FUTURE OFFERINGS. Subject to the exceptions described
below, the Company will not, without the prior written consent of a
majority-in-interest of the Buyers, not to be unreasonably withheld,
negotiate or contract with any party to obtain additional equity financing (including debt financing with an equity component) that involves (A) the issuance of Common Stock at a discount to the market price of the Common Stock on the date of issuance (taking into account the value of any warrants or options to acquire Common Stock issued in connection therewith) or (B) the issuance of convertible securities that are convertible into an indeterminate number of shares of Common Stock .. . . In addition, subject to the exceptions described below, the Company will not conduct any equity financing (including debt with an equity component) (“FUTURE OFFERINGS”) during the period beginning on the Closing Date and ending two (2) years after the end of the Lock-up Period unless it shall have first delivered to each Buyer, at least twenty (20) business days
prior to the closing of such Future Offering, written notice describing the proposed Future Offering, including the terms and conditions thereof and proposed definitive documentation to be entered into in connection therewith, and providing each Buyer an option during the fifteen (15) day period following delivery of such notice to purchase its pro rata share (based on the ratio that the aggregate principal amount of Notes purchased by it hereunder bears to the aggregate principal amount of Notes purchased hereunder) of the securities being offered in the Future Offering on the same terms as contemplated by such Future Offering (the limitations referred to in this sentence and the preceding sentence are collectively referred to as the “CAPITAL RAISING LIMITATIONS”) . . .
15. These protections were and are vital to plaintiffs, who had previously loaned, along with their affiliates, in excess of $2 million to Ingen.
16. Plaintiffs have learned that Ingen is currently conducting equity financings in violation of Section 4(E) of the June 2008 SPA. According to Ingen’s SEC filings, it conducted offerings of common stock on April 16 and April 28,2009. Ingen failed, however, to give
plaintiffs written notice of these financings, depriving them of their right of first refusal. Because no notice was given, and these offerings are being made under a questionable exemption from registration, plaintiffs believe that Ingen is selling securities below market.
17. These sales will likely continue, since Ingen is cash starved and, as set forth below, is blocking plaintiffs from receiving shares pursuant to their Notes.
The Original Securities Purchase Agreement and the Notes Issued to Plaintiffs
18. The June 2008 SPA was one of several offerings of Notes by Ingen to plaintiffs. On July 25,2006, Ingen first entered into a Securities Purchase Agreement with plaintiffs, under which it agreed to issue, for good and valuable consideration, Notes. Pursuant to this offering,
plaintiffs purchased Notes in the aggregate principal amount of $1,500,000. All of these Notes are in substantially similar form as those under the June 2008 SPA.
19. At this time, plaintiffs also entered into a Security Agreement, Intellectual Property Security Agreement, and other agreements with Ingen.
20. On March 15,2007, plaintiffs AJWP, AJWQP, AJWO, and NMCP entered into another Securities Purchase Agreement and related agreements with Ingen, pursuant to which they purchased Notes in the aggregate principal amount of $450,000 from Ingen.
21. On July 30,2007, under the same terms as Ingen issued the Notes referred to in paragraph 20 herein, Ingen issued to plaintiffs AJWP, NMCP, AJW MF, and AJW MF II a callable secured convertible note in the principal amount of $1 10,000 in consideration of their payment of that amount to Ingen.
22. In lieu of paying, in cash, interest accrued through November 30,2007 on those of the Notes, which were issued prior to December 1,2007, Ingen issued on or about January 31,2008 three additional Notes to plaintiffs AJWP, NMCP, and AJW MF in the aggregate principal
amount of $132,301.17. Additionally, Ingen owed, as of June 15,2009, and still owes to plaintiffs over $354,000 in interest which has accrued on the Notes after December 3 1,2007.
The Security Agreements
23. Pursuant to the Security Agreements and Intellectual Property Security Agreements, Ingen granted plaintiffs a first priority security interest in all of Ingen’s goods, inventory, contract rights, general intangibles, patents, trademarks, copyrights, receivables, and documents. The Security Agreements and Intellectual Property Security Agreements provide that if an Event of Default under the Notes occurs, plaintiffs shall have all rights available under the Uniform Commercial Code, plus the right to immediate possession of the collateral and the right to operate Ingen’s business using the collateral.
24. Plaintiffs duly perfected their security interests under the Security Agreements and Intellectual Property Security Agreements in connection with each of the transactions.
Assignments
25. Plaintiffs AJWP, AJWQP, AJWO, NMCP, AJWMF have assigned certain of
their rights under the Notes, Securities Purchase Agreements, Security Agreements, and related agreements to plaintiffs AJWP II, AJW Offshore II, AJW Qualified II, NMCP III, and AJMF II.
Default of the Notes
26. Each of the Notes is convertible into Ingen common stock at plaintiffs’ election. Section 3.2 of the Notes defines as an Event of Default, inter alia, Ingen’s failure to honor its obligations regarding plaintiffs’ conversion rights under the Notes and its failure to retract any threat to not honor such obligations, after ten days notice to cure.
27. On May 29, June 8, June 10, and June 11,2009, plaintiffs submitted conversion notices to convert some of the debt owed to them under the Notes to shares of Ingen’s common stock, which Ingen did not honor. On June 3, 2009, plaintiffs provided Notice of Default to
Ingen under Section 3.2 of the Notes. Ingen has failed to cure its default regarding plaintiffs’ conversion rights and has indicated that it will not honor future conversions.
28. Pursuant to Section 3.10 of the Notes, upon an Event of Default under any Note, an Event of Default occurs under every other Note.
29. As a result of the foregoing defaults, plaintiffs have exercised their rights under the Notes to accelerate and demand payment in full of the Default Sum or Default Amount, as defined in Section 3.10 of the Notes, plus appropriate interest and penalties.
Attorneys’ Fees
30. In addition to the foregoing, upon a default of the Notes or breach of the Securities Purchase Agreements, plaintiffs are entitled to their costs of collection, including an award of attorneys’ fees, pursuant to Section 4.5 of the Notes and Section 8(a) of the Securities Purchase Agreements.
First Claim for Relief
(Specific Performance/ Preliminary and Permanent Injunction)
31. Plaintiffs restate the allegations in paragraphs 1 through 30.
32. Based upon the foregoing, Ingen has breached its covenants and contractual obligations to plaintiffs under the June 2008 SPA by offering shares in violation of Section 4(E).
33. Plaintiffs have fully performed their obligations under the June 2008 SPA.
34. Plaintiffs are therefore entitled to an order directing Ingen to comply with Section 4(E) and enjoining any offering by Ingen that does not comply with Section 4(E).
35. Plaintiffs have no adequate remedy at law.
36. Plaintiffs will suffer irreparable harm without the aforesaid order.
Second Claim for Relief
(Breach of Contract)
37. Plaintiffs restate the allegations in paragraphs 1 through 30.
38. Based upon the foregoing, Ingen has breached its obligations to AJW Partners under the Notes, As a direct, approximate and foreseeable result of Ingen’s breach, AJW Partners is entitled to recover from Ingen an amount to be determined at trial, representing the Default Sum or Default Amount as defined in Section 3.10 of the Notes, plus all interest and penalties, and attorneys’ fees.
Third Claim for Relief
(Breach of Contract)
39. Plaintiffs restate the allegations in paragraphs 1 through 30.
40. Based upon the foregoing, Ingen has breached its obligations to AJW Offshore under the Notes. As a direct, approximate and foreseeable result of Ingen’s breach, AJW Offshore is entitled to recover from Ingen an amount to be determined at trial, representing the Default Sum or Default Amount as defined in Section 3.10 of the Notes, plus all interest and penalties, and attorneys’ fees.
Fourth Claim for Relief
(Breach of Contract)
41. Plaintiffs restate the allegations in paragraphs 1 through 30.
42. Based upon the foregoing, Ingen has breached its obligations to AJW Qualified under the Notes. As a direct, approximate and foreseeable result of Ingen’s breach, AJW Qualified is entitled to recover from hgen an amount to be determined at trial, representing the Default Sum or Default Amount as defined in Section 3.10 of the Notes, plus all interest and penalties, and attorneys’ fees.
FiRh Claim for Relief
(Breach of Contract)
43. Plaintiffs restate the allegations in paragraphs 1 through 30.
44. Based upon the foregoing, Ingen has breached its obligations to New Millennium under the Notes, As a direct, approximate and foreseeable result of Ingen’s breach, New Millennium is entitled to recover from Ingen an amount to be determined at trial, representing
the Default Sum or Default Amount as defined in Section 3.10 of the Notes, plus all interest and penalties, and attorneys’ fees.
Sixth Claim for Relief
(Breach of Contract)
45. Plaintiffs restate the allegations in paragraphs 1 through 30.
46. Based upon the foregoing, Ingen has breached its obligations to AJW Master Fund under the Notes. As a direct, approximate and foreseeable result of Ingen’s breach, AJW Master Fund is entitled to recover from Ingen an amount to be determined at trial, representing
the Default Sum or Default Amount as defined in Section 3.10 of the Notes, plus all interest and penalties, and attorneys’ fees.
Seventh Claim for Relief
(Breach of Contract)
47. Plaintiffs restate the allegations in paragraphs 1 through 30.
48. Based upon the foregoing, Ingen has breached its obligations to AJW Partners II under the Notes. As a direct, approximate and foreseeable result of Ingen’s breach, AJW Partners II is entitled to recover from Ingen an amount to be determined at trial, representing the the Default Sum or Default Amount as defined in Section 3.10 of the Notes, plus all interest and penalties, and attorneys’ fees.
Eighth Claim for Relief
(Breach of Contract)
49. Plaintiffs restate the allegations in paragraphs 1 through 30.
50. Based upon the foregoing, Ingen has breached its obligations to AJW Offshore II under the Notes. As a direct, approximate and foreseeable result of Ingen’s breach, AJW Offshore II is entitled to recover from Ingen an amount to be determined at trial, representing the Default Sum or Default Amount as defined in Section 3.10 of the Notes, plus all interest and penalties, and attorneys’ fees.
Ninth Claim for Relief
(Breach of Contract)
51. Plaintiffs restate the allegations in paragraphs 1 through 30.
52. Based upon the foregoing, Ingen has breached its obligations to AJW Qualified II under the Notes. As a direct, approximate and foreseeable result of Ingen’s breach, AJW Qualified II is entitled to recover from Ingen an amount to be determined at trial, representing
the Default Sum or Default Amount as defined in Section 3.10 of the Notes, plus all interest and penalties, and attorneys’ fees.
Tenth Claim for Relief
(Breach of Contract)
53. Plaintiffs restate the allegations in paragraphs 1 through 30.
54. Based upon the foregoing, Ingen has breached its obligations to New Millennium III under the Notes. As a direct, approximate and foreseeable result of Ingen’s breach, New Millennium III is entitled to recover from Ingen an amount to be determined at trial, representing the Default Sum or Default Amount as defined in Section 3.10 of the Notes, plus all interest and penalties, and attorneys’ fees.
Eleventh Claim for Relief
(Breach of Contract)
55. Plaintiffs restate the allegations in paragraphs 1 through 30.
56. Based upon the foregoing, Ingen has breached its obligations to AJW Master Fund II under the Notes. As a direct, approximate and foreseeable result of Ingen’s breach, AJW Master Fund I1 is entitled to recover fiom Ingen an amount to be determined at trial, representing the Default Sum or Default Amount as defined in Section 3.10 of the Notes, plus all interest and penalties, and attorneys’ fees.
Twelfth Claim for Relief
(Marshalling of Assets)
57. Plaintiffs restate the allegations in paragraphs 1 through 30.
58. Based upon the foregoing, plaintiffs are entitled to an Order
directing Ingen to marshal, in preparation for foreclosure, all of its assets in which Plaintiffs have a security interest under the Security Ajgeements and Intellectual Property Security Agreements, and deliver promptly to plaintiffs a list of those assets and their locations.
59. Plaintiffs have no adequate remedy at law.
WHEREFORE, plaintiffs pray that judgment be entered against Defendant:
A. Awarding plaintiffs all sums due under the Notes, plus
prejudgment interest, attorneys’ fees, costs and disbursements, in
an amount to be determined at trial but believed to be in excess of
$2,500,000.
B. Ordering that Ingen, in preparation for foreclosure, marshal all of
the assets in which plaintiffs have a security interest under the
Security Agreements and Intellectual Property Security Agreements, and deliver promptly to plaintiffs a list of those assets and their location.
C. Preliminarily and permanently enjoining Ingen from:
(1) negotiating or contracting for any equity financing which
includes (a) the issuance of shares of Defendant’s common stock at a discount to its market price on the date of issuance or (b) the issuance of convertible securities that are convertible into an indeterminate number of shares of Defendant’s common stock without first securing the written consent of the majority-in-interest of
plaintiffs; and conducting any equity financing (including debt with an equity component), during the period extending two years
and 180 days after the Closing Date under the June 2008 SPA, Without (i) delivering to plaintiffs at least twenty (20) business days' prior written notice describing the financing, including its terms and conditions and the proposed definitive documentation to be entered into in connection with the financing, and (ii) providing each of plaintiffs an option, during the fifteen days following
delivery of such notice, to purchase its pro rata share of the securities being offered in the future financing on the same terms as contemplated by such future financing.
D. Granting such other and further relief as the Court deems just and
proper.
Dated: New, York, New York
June 19,2009
OLSHAN GRUNDMAN FROME
ROSENZWEIG & WOLOSKY LLP
Thomas J. Fleming
Herbert C. Ross
Attorneys for Plaintiffs
Park Avenue Tower
65 East 55th Street
New York, New York 10022
(212) 451-2300 |
