typenex v. olde monmouth stock transfer co

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

TYPENEX CO-INVESTMENT, LLC, a Utah limited liability company,

Plaintiff, v. OLDE MONMOUTH STOCK TRANSFER CO., INC., a New Jersey corporation,

Defendant.

COMPLAINT

Case No. _______________

Judge _______________________

Plaintiff Typenex Co-Investment, LLC, by and through undersigned counsel, hereby

complains against Defendant Olde Monmouth Stock Transfer Co., Inc. and alleges as follows:

DESCRIPTION OF THE PARTIES

1. Typenex Co-Investment, LLC (Typenex) is a Utah limited liability company

with its principal place of business in Cook County, Illinois.

2. Red Cliffs Investments Inc. (Red Cliffs) is Typenexs sole manager and

member and is a Utah corporation with its principal place of business in Chicago, Illinois. JFV

Holdings, Inc. (JFV) is Red Cliffs sole shareholder and is an Illinois corporation with its

principal place of business in Chicago, Illinois. John Fife is JFVs sole shareholder and is

domiciled in and a citizen of Chicago, Illinois.

Case: 1:15-cv-04720 Document #: 1 Filed: 05/28/15 Page 1 of 8 PageID #:1

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3. Defendant Olde Monmouth Stock Transfer Co., Inc. (Olde Monmouth), is, and

at all times relevant hereto was, a New Jersey corporation with its principal place of business in

New Jersey.

JURISDICTION AND VENUE

4. Jurisdiction in this Court is proper pursuant to 28 U.S.C. 1332(a) because there

is diversity of citizenship and the amount in controversy exceeds $75,000.00, exclusive of

interest and costs.

5. Venue is proper in this Court pursuant to 28 U.S.C. 1391(b)(2), and the

contracts out of which the causes of action arise were entered into in Cook County, Illinois.

GENERAL ALLEGATIONS

Typenex purchases a Warrant from DNA Precious Metals.

6. On April 28, 2014, Typenex and DNA Precious Metals, Inc. (DNA) entered

into a Securities Purchase Agreement (the Purchase Agreement) whereby DNA agreed to sell

and Typenex agreed to buy, among other things, a Secured Convertible Promissory Note (the

Note) and a Warrant to Purchase Shares of DNAs Common Stock (the Warrant).

7. Under the terms of the Purchase Agreement and the Warrant, DNA granted

Typenex, among other things, the right to acquire shares of DNAs common stock, based on the

specific formula set forth in the Warrant.

8. Sometime in 2015 and after entering into the agreements at issue, DNA changed

its name to, and/or merged with, Breathe eCig Corp. (eCig). Hereafter, DNA will be referred

to simply as eCig.


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eCig issues irrevocable instructions to Olde Monmouth

9. In addition to entering into the Securities Purchase Agreement and issuing the

Warrant, and by express reference thereto, eCig also issued irrevocable instructions to its transfer

agent Olde Monmouth by way of a letter dated April 28, 2014 (the Transfer Instructions). (A

true and correct copy of the Transfer Instructions is attached hereto as Exhibit A.)

10. eCig and its transfer agent, Olde Monmouth, both signed the Transfer Instructions

acknowledging that both will be bound by those terms and conditions contained in the Transfer

Instructions and further acknowledging that Typenex is the intended third-party beneficiary of

the Transfer Instructions.

11. The Transfer Instructions both authorize and require that Olde Monmouth issue

shares of eCigs common stock to Typenex (or its broker) upon delivery to Old Monmouth of a

notice of exercise of the Warrant (Notice of Exercise) and a legal opinion from Typenexs

counsel that the issuance of the Warrant Shares to [Typenex] is exempt from registration under

the 1933 Act or otherwise as to the free transferability of the Warrant Shares.

12. Specifically, upon receipt of a conversion notice from Typenex, Olde Monmouth

is required to issue the requested shares to Typenex within three (3) Trading Days after its

receipt of the Notice of Exercise.

13. Moreover, and in issuing shares requested in a Notice of Exercise, Olde

Monmouth expressly agreed to disregard any contrary instruction received by or on behalf of

[eCig] or any other person purporting to represent [eCig].

14. Finally, in the Transfer Instructions, Olde Monmouth


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specifically acknowledge[d]and agree[d] that in the event of a breach or threatened breach by a party hereto of any provision hereof, [Typenex] will be irreparably damaged, and that damages at law would be an inadequate remedy if this Letter were not specifically enforced. Therefore, in the event of a breach or threatened breach of this Letter, [Typenex] shall be entitled, in addition to all other rights or remedies, to an injunction restraining such breach, without being required to show any actual damage or to post any bond or other security, and/or to a decree for a specific performance of the provisions of this Letter.

15. The Transfer Instructions contain a Utah choice of law provision.

Olde Monmouth breaches the Transfer Instructions

16. On or around May 12, 2015, Typenex delivered a Notice of Exercise, together

with the required legal opinion, to Olde Monmouth. (A copy of the Notice of Exercise is attached

as Exhibit B.)

17. As set forth in the Notice of Exercise, Typenex elected to exercise a portion of its

rights under the Warrant and receive 7,541,511 shares (the Warrant Shares) of eCigs

common stock.

18. Despite having received the Notice of Exercise and required legal opinion, Olde

Monmouth has failed and/or refused to deliver the Warrant Shares as required by the Transfer

Instructions.

FIRST CAUSE OF ACTION (Breach of the Transfer Instructions)

19. Typenex incorporates by this reference the allegations set forth above.

20. The Transfer Instructions constitutes a valid, binding, and enforceable contract

between Typenex and Olde Monmouth with Typenex as an express intended third-party

beneficiary.


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21. Olde Monmouth materially breached the Transfer Instructionsand the implied

covenant of good faith and fair dealing thereinby failing and/or refusing to honor the Notice of

Exercise and by failing and/or refusing to act in accordance with the instructions contained in the

Transfer Instructions.

22. As a direct and proximate result of Olde Monmouths breach of the Transfer

Instructions, Typenex has incurred damages in an amount to be established at trial but at least the

value of those shares requested in the Notice of Exercise, together with all other charges, fees,

and collection costs provided for in the relevant agreements.

23. Moreover, the Transfer Instructions specifically provide for injunctive relief

preventing Olde Monmouth from further violating the Transfer Instructions by delaying issuance

of the requested shares to Typenex.

24. Thus, Typenex is entitled to judgment against Defendants as set forth in

paragraph one of the Prayer for Relief.

SECOND CAUSE OF ACTION (Failure to Register Transfer in Violation of UCC)

25. Typenex incorporates by this reference the allegations set forth above.

26. The Uniform Commercial Code Investment Securities (the UCC) imposes a

duty upon an issuer to register transfer of stock when presented with a request to register

transfer. The UCC also extends this duty to those entities employed as transfer agents for a

given issuer.

27. If the issuer (and/or its transfer agent) unreasonably delays or refuses to register a

transfer, the UCC establishes liability for the issuer and transfer agent to the requesting party for

any loss resulting from the delay or refusal.


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28. In this matter, eCig is an issuer and Olde Monmouth is its transfer agent.

29. Typenex presented a proper request to register transfer, in the form of the Notice

of Exercise, to Olde Monmouth.

30. After receiving the Notice of Exercise, Olde Monmouth (as eCigs transfer agent)

has unreasonably delayed and/or refused to register the requested transfer.

31. In the Transfer Instructions, Olde Monmouth acknowledged that a delay in

transferring the Conversion Shares would result in damages to Typenex.

32. As a direct and proximate result of Olde Monmouths unreasonable delay and/or

refusal to register the requested transfer, Typenex has incurred damages in an amount to be

established at trial.

33. Typenex is entitled to judgment against Olde Monmouth as set forth in paragraph

two of the Prayer for Relief.

THIRD CAUSE OF ACTION

(Specific Performance) 34. Typenex incorporates by this reference the allegations set forth above.

35. The Transfer Instructions constitutes a valid, binding, and enforceable contract,

whereby, among other things, Olde Monmouth agreed to honor Typenexs Notice of Exercise.

The Transfer Instructions allow Typenex to enforce specifically the terms and provisions of that

agreement.

36. Typenex is an express third-party beneficiary of the Transfer Instructions.

37. Olde Monmouth has failed to honor the Notice of Exercise, as required by the

Transfer Instructions.


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38. Typenex is unable to obtain the Warrant Shares without Olde Monouths

cooperation and performance.

39. Monetary damages alone cannot make Typenex whole.

40. Typenex is entitled to judgment against Olde Monmouth as set forth in paragraph

three of the Prayer for Relief.

PRAYER FOR RELIEF

WHEREFORE, Typenex prays for judgment against Olde Monmouth as follows:

1. On Typenexs First Cause of Action, asserting a breach of the Transfer

Instructions, for judgment against Olde Monmouth as follows:

a. For damages in an amount to be established at trial but at least the value of

those shares requested in the Notice of Exercise, together with pre- and post-judgment interest as

provided for by law;

b. For consequential and indirect damages; and

c. For an order enjoining Olde Monmouth from further breaching the

Transfer Instructions by delaying issuance of the Warrant Shares.

2. On Typenexs Second Cause of Action, asserting failure to register transfer in

violation of the UCC against Olde Monmouth, for damages in an amount to be established at

trial, together with interest, charges, attorney fees, costs, and injunctive relief requiring Olde

Monmouth to comply with the Transfer Instructions, honor the Notice of Exercise, and deliver

the Warrant Shares.


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3. On Typenexs Third Cause of Action, asserting a specific performance claim

against Olde Monmouth, for a judgment ordering Olde Monmouth to comply with the Transfer

Instructions and to honor the Notice of Exercise.

4. For such other and further relief as the Court deems just, equitable, or as allowed

by law.

DATED the 28th day of May 2015. Respectfully submitted, TYPENEX CO-INVESTMENT, LLC By: s/Jeremy C. Reutzel One of its Attorneys

Jeremy C. Reutzel (pro hac vice admission pending) Brigman L. Harman (pro hac vice admission pending) Bennett Tueller Johnson & Deere 3165 East Millrock Drive, Suite 500 Salt Lake City, Utah 84121-5027 Telephone: (801) 438-2000 Email: [email protected]; [email protected] Scott L. Warner (06231380) Sunghee Sohn (06314038) Franczek Radelet P.C. 300 S. Wacker Dr., Suite 3400 Chicago, Illinois 60606 Telephone: (312) 986-0300 Facsimile: (312) 986-9162 Email: [email protected]; [email protected]


1. Typenex Co-Investment, LLC (Typenex) is a Utah limited liability company with its principal place of business in Cook County, Illinois.2. Red Cliffs Investments Inc. (Red Cliffs) is Typenexs sole manager and member and is a Utah corporation with its principal place of business in Chicago, Illinois. JFV Holdings, Inc. (JFV) is Red Cliffs sole shareholder and is an Illinois corporat3. Defendant Olde Monmouth Stock Transfer Co., Inc. (Olde Monmouth), is, and at all times relevant hereto was, a New Jersey corporation with its principal place of business in New Jersey.Jurisdiction AND Venue4. Jurisdiction in this Court is proper pursuant to 28 U.S.C. 1332(a) because there is diversity of citizenship and the amount in controversy exceeds $75,000.00, exclusive of interest and costs.5. Venue is proper in this Court pursuant to 28 U.S.C. 1391(b)(2), and the contracts out of which the causes of action arise were entered into in Cook County, Illinois.GENERAL ALLEGATIONSTypenex purchases a Warrant from DNA Precious Metals.6. On April 28, 2014, Typenex and DNA Precious Metals, Inc. (DNA) entered into a Securities Purchase Agreement (the Purchase Agreement) whereby DNA agreed to sell and Typenex agreed to buy, among other things, a Secured Convertible Promissory Note (the7. Under the terms of the Purchase Agreement and the Warrant, DNA granted Typenex, among other things, the right to acquire shares of DNAs common stock, based on the specific formula set forth in the Warrant.8. Sometime in 2015 and after entering into the agreements at issue, DNA changed its name to, and/or merged with, Breathe eCig Corp. (eCig). Hereafter, DNA will be referred to simply as eCig.eCig issues irrevocable instructions to Olde Monmouth9. In addition to entering into the Securities Purchase Agreement and issuing the Warrant, and by express reference thereto, eCig also issued irrevocable instructions to its transfer agent Olde Monmouth by way of a letter dated April 28, 2014 (the Transfe10. eCig and its transfer agent, Olde Monmouth, both signed the Transfer Instructions acknowledging that both will be bound by those terms and conditions contained in the Transfer Instructions and further acknowledging that Typenex is the intended third-pa14. Finally, in the Transfer Instructions, Olde Monmouth15. The Transfer Instructions contain a Utah choice of law provision.Olde Monmouth breaches the Transfer Instructions16. On or around May 12, 2015, Typenex delivered a Notice of Exercise, together with the required legal opinion, to Olde Monmouth. (A copy of the Notice of Exercise is attached as Exhibit B.)17. As set forth in the Notice of Exercise, Typenex elected to exercise a portion of its rights under the Warrant and receive 7,541,511 shares (the Warrant Shares) of eCigs common stock.18. Despite having received the Notice of Exercise and required legal opinion, Olde Monmouth has failed and/or refused to deliver the Warrant Shares as required by the Transfer Instructions.34. Typenex incorporates by this reference the allegations set forth above.35. The Transfer Instructions constitutes a valid, binding, and enforceable contract, whereby, among other things, Olde Monmouth agreed to honor Typenexs Notice of Exercise. The Transfer Instructions allow Typenex to enforce specifically the terms and pr36. Typenex is an express third-party beneficiary of the Transfer Instructions.37. Olde Monmouth has failed to honor the Notice of Exercise, as required by the Transfer Instructions.38. Typenex is unable to obtain the Warrant Shares without Olde Monouths cooperation and performance.39. Monetary damages alone cannot make Typenex whole.40. Typenex is entitled to judgment against Olde Monmouth as set forth in paragraph three of the Prayer for Relief.

typenex v. olde monmouth stock transfer co

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