EFiled: Sep 09 2015 03:10AM EDT
Transaction ID 57834209
Case No. 11483-

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
CAPITAL LINK FUND I, LLC; CT
HORIZON LEGACY FUND, LP;
CAPITAL POINT PARTNERS, LP; and
SEMA4 USA, INC., as General Partner of
CAPITAL POINT PARTNERS, LP,
Plaintiffs,
v.
CAPITAL POINT MANAGEMENT, LP;
CAPITAL POINT ADVISORS, LP;
PRINCETON CAPITAL
CORPORATION; PRINCETON
INVESTMENT ADVISORS, LLC;
PRINCETON ADVISORY GROUP,
INC.; ALFRED JACKSON; MUNISH
SOOD; GREGORY J. CANNELLA;
THOMAS JONES, JR; TRENNIS L.
JONES; MARTIN TUCHMAN,

Defendants.

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C.A. No. ____

VERIFIED COMPLAINT
Capital Point Partners, LP (“CPP” or “the Partnership”); Sema4 USA, Inc.
(“Sema4”), as the current General Partner of CPP; and Limited Partners of CPP
Capital Link Fund I, LLC (“CLFI”) and CT Horizon Legacy Fund, LP
(“Connecticut Fund”) bring this action against Capital Point Management, LP
(“CPMLP”), Capital Point Advisors, LP (“CPA”); Alfred Jackson; Princeton
Capital Corporation (“Princeton Capital”); Princeton Investment Advisors, LLC

 (the “Princeton Advisors”); Princeton Advisory Group, Inc. (“PAG”); Munish
Sood; Gregory J. Cannella; Thomas Jones, Jr.; Trennis L. Jones; and Martin
Tuchman (collectively, the “Defendants”), seeking relief from this Court: (1) a
declaration confirming that the limited partners of CPP (the “Limited Partners”)
have properly removed CPMLP as the general partner of CPP (the “General
Partner”) and that Sema4 is now the General Partner; (2) a declaration confirming
that Princeton Capital can take no further affirmative action that would adversely
affect CPP’s assets or interests in those assets; (3) and ultimately to rescind the
transaction, including unwinding the sale of all of CPP’s assets to Princeton
Capital because that transaction was ultra vires, and was accomplished by fraud,
breach of fiduciary duties, and in violation of express terms of the Capital Point
Partners, L.P., Amended and Restated Limited Partnership Agreement (the
“Partnership Agreement”).
I.

NATURE OF THE ACTION
1.

In August 2008, Plaintiffs and CPMLP entered into an investment

partnership known as CPP (the “Partnership”). CPMLP was the General Partner
of the Partnership, and Plaintiffs, CLFI, and Connecticut, are among the Limited
Partners of the Partnership. The Partnership Agreement contained provisions
granting various rights to the Limited Partners and restricting the powers of the
General Partner in various respects. CPMLP, purporting to act as General Partner,

2

 transferred all of the assets of the Partnership to Princeton Capital in exchange for
stock in Princeton Capital, without putting the transaction to a vote of the Limited
Partners, as the Partnership Agreement requires. By transferring the assets to
Princeton Capital, CPMLP completely changed the contractual relationship of
these parties—as embodied in the Partnership Agreement—to the advantage of
CPMLP and to the detriment of the Limited Partners.
2.

Based upon the effectuation of this transfer, with CPMLP purporting

to continue to act as General Partner,

the Defendants have recently noticed

meetings of the stockholders and directors of Princeton Capital, at which
stockholders’ meeting CPMLP threatens to vote the stock of Princeton Capital held
by the Partnership in favor of various matters that will further effectuate the
wrongful asset transfer and further consolidate the new governance powers that
CPMLP granted to itself and its affiliates by transferring the assets to Princeton
Capital.
3.

Limited Partners holding approximately 81.59% of the Partnership

Interests, including the plaintiffs brining this suit, removed CPMLP as General
Partner as of September 8, 2015, by written notice of termination. The same
Limited Partners consented to the appointment of Sema4 as the new General
Partner of CPP. This action has been brought to seek a declaration confirming that
CPMLP is no longer the General Partner of the Partnership, that Sema4 is the

3

 General Partner of the Partnership, to prevent Defendants from taking any further
actions that will irreparably harm or otherwise injury Plaintiffs, and, ultimately, to
rescind the wrongful asset transfer and related actions and agreements.
A.

The Capital Point Partners Partnership.

4.

Pursuant to Delaware Revised Uniform Limited Partnership Act, 6

Del. C. § 17-101 et seq., Capital Point Partners, LP was formed on November 21,
2005. The Capital Point Partners, LP Amended and Restated Limited Partnership
Agreement (the “Partnership Agreement”) states that the sole purpose of the
Partnership is to invest in Securities. (Partnership Agreement § 1.8, attached as
Ex. A.)
5.

The Partnership Agreement grants the Limited Partners the absolute

right to remove the General Partner upon a showing that a sufficient percentage of
the Limited Partners wish to do so. The Partnership Agreement provides that
“Seventy Percent in Interest of the Limited Partners may remove the General
Partner and/or the Investment Manager at any time without cause.” (Partnership
Agreement § 2.8(a).) In addition, a majority of the Limited Partners may remove
the General Partner or the Investment Manager for Cause. (Partnership Agreement
§ 2.8(b).)
6.

In order to further protect their interests, the Limited Partners

negotiated for certain contractual provisions governing transactions. Under the

4

 Partnership Agreement, a majority vote of the Limited Partners is required before
the General Partner can cause the Partnership to commit a large percentage of its
assets to one portfolio investment, hold a majority of the voting shares of a
portfolio investment, or participate in a Blind Pool Investment, among other
restrictions.

(Partnership Agreement § 1.8(c)(i), (vi), (vii).)

The Partnership

Agreement also requires that, without a majority vote, the General Partner cannot
commit a large percentage of the assets to equity securities or publicly traded
securities. (Partnership Agreement § 1.8(c)(v), (viii).)
B.

Defendants’ Unauthorized and Fraudulent Transfer.

7.

CPMLP engaged in a self-dealing transaction in violation of the

Partnership Agreement by causing the creation of Princeton Capital, a Maryland
business development company providing substantially different rights to its
directors and investors than the Partnership, and causing the Partnership to transfer
substantially all of the Partnership assets from the Partnership to Princeton Capital.
CPMLP did not disclose to the Limited Partners its plan to transfer all of the
Partnership’s assets to Princeton Capital before effecting the transfer. CMLP did
not seek, let alone obtain, the Limited Partners’ approval of the transfer, as
required by the Partnership Agreement. Instead, CPMLP simply transferred the
Partnership’s assets to Princeton Capital, and Jackson and the other individual
defendants installed themselves as directors and officers of Princeton Capital and

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 engaged their own affiliate, Princeton Advisors, as investment advisor to Princeton
Capital.
8.

The ultra vires sale of the Partnership assets (“the ultra vires sale”)

closed on March 13, 2015. But the transaction was concealed from the Limited
Partners and they only learned of it on or around April 14, 2015, after it was
reported in the press. The Connecticut Fund noticed reference to the ultra vires
sale in the press and asked CPMLP for information about the conveyance.
CPMLP stonewalled, promising to provide information, but delayed and provided
very little information and no specific details of the transaction. CPMLP’s first
notice to the Limited Partners, of any kind, about the conveyance came on May 14,
2015, through the “Quarterly Performance Report” for December 2014, which was
not delivered to the Limited Partners until May 14, 2015. Upon receiving that
partial notice, the Limited Partners again sought more information from CPMLP.
CPMLP continued to drag its feet.
9.

Princeton Capital’s 2015 annual stockholders’ meeting (the “Annual

Meeting”) was scheduled for August 11, 2015, as of July 30, 2015. On July 31,
2015, the Annual Meeting was rescheduled to September 10, 2015. Under the
Articles of Incorporation and bylaws of Princeton Capital, which CPMLP
negotiated in connection with the transaction, any nominations of directors or other

6

 proposals by shareholders to be voted on at the Annual Meeting had to be
submitted by or around July 23, 2015.
10.

The Partnership owns 87% of the stock to be voted at the Annual

Meeting. Using that voting power, the new General Partner will be able to elect
directors and effect substantial changes to protect the Partnership at the Annual
Meeting, but CPMLP did not notify the Limited Partners of the Annual Meeting
until August 17, 2015. CPMLP waited until the Partnership was precluded by
Princeton Capital’s advance notice bylaw from taking any action other than those
planned by CPMLP to disclose the date of the Annual Meeting to the Limited
Partners. The Annual Meeting is now scheduled to take place on September 10,
2015.
11.

CLFI and the Connecticut Fund, together with other Limited Partners

holding, collectively, approximately 82% of the voting rights of the Partnership,
executed written consents removing CPMLP as the General Partner and appointing
Sema4 as the new General Partner of the Partnership as of September 8, 2015.
(Notice of Removal as General Partner of Capital Point Management, L.P.,
attached as Ex. B.)
12.

The Princeton Capital Annual Meeting is scheduled to take place in

Houston, Texas, at 9:30AM on Thursday, September 10, 2015. Sema4, in its
capacity as the new General Partner of the Partnership, revoked any Partnership

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 proxies for the Annual Meeting and informed Princeton Capital that the
Partnership would not be attending the Annual Meeting or otherwise voting its
shares at the Annual Meeting. (Sept. 8, 2015 Letter from Sema4 to Princeton
Capital, attached as Ex. C.) Without the shares held by the Partnership, there can
be no quorum at the purported Annual Meeting. (Proxy Statement, 2015 Annual
Meeting of Stockholders, Princeton Capital Corporation (“Proxy Statement”),
attached as Ex. D.) Despite that fact, neither the Partnership nor Sema4 has
received confirmation that Princeton Capital will cancel or postpone the Annual
Meeting. The Limited Partners have reason to believe that, barring emergency
relief from this Court, the Annual Meeting will occur and the shareholders will be
asked to vote to: elect two directors of Princeton Capital, Defendants Alfred
Jackson and Martin Tuchman, for three-year terms; approve amendments to the
Articles of Incorporation effecting a reverse stock split; and thereby irreparably
harming the interests of the Limited Partners.
13.

In addition, pursuant to the bylaws of Princeton Capital, the board of

directors of Princeton Capital (the “Board of Directors” or “Board”) is also
scheduled to meet on September 10, 2015. (Princeton Capital Corporation Bylaws,
attached as Ex. E). Barring emergency relief from this Court, the Board could take
any number of actions, including actions to dilute the Partnership’s economic or
voting rights, to increase the size of the Board, or to amend the bylaws.

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 II.

PARTIES
A.

Plaintiffs

14.

Capital Point Partners, LP is a Delaware limited partnership with a

registered office at c/o The Corporation Trust Company, Corporation Trust Center
1209 Orange Street, Wilmington, Delaware 19801.
15.

Sema4 is a Massachusetts corporation with principal corporate

offices at 800 Turnpike Street, Suite 300, North Andover, Massachusetts 01845.
Sema4 became the General Partner of CPP immediately upon removal of CPP’s
former General Partner, CPMLP, by CPP’s Limited Partners effective on
September 8, 2015.
16.

Plaintiff Capital Link Fund I, LLC is a Delaware limited liability

company with a registered office at c/o Corporation Service Company, 2711
Centerville Road, Suite 400, City Wilmington, Delaware 29808. CLFI holds a
20.20% interest in CPP.
17.

Plaintiff CT Horizon Legacy Fund, LP is a Delaware limited

partnership with a registered office at c/o Corporation Service Company, 2711
Centerville Road, Suite 400, Wilmington, Delaware 19808. The Connecticut Fund
holds a 6.14% interest in CPP.

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 B.

Defendants

18.

Defendant Capital Point Management, LP is the former General

Partner of Capital Point Partners LP. Capital Point Management, LP is a Delaware
limited partnership with a registered office at c/o The Corporation Trust Company,
Corporation Trust Center 1209 Orange Street, Wilmington, Delaware 19801.
19.

Defendant Capital Point Advisors, LP is a Texas partnership with

offices located at 4801 Woodway, Suite 300 East, Houston, Texas 77056. CPA
was founded by Alfred Jackson, and Gregory Cannella is CPA’s Chief Financial
Officer.
20.

Defendant Alfred Jackson controls Capital Point Management, LP,

which was formerly the General Partner of Capital Point Partners, LP. Jackson is
the founder of Defendant CPA, the Chairman of the Board of Defendant Princeton
Capital, and the Chairman and Managing Partner of PAG.
21.

Defendant Princeton Capital Corporation is a Maryland corporation

with its principal executive offices at One Riverway, Suite 2020, Houston, Texas
77056. Princeton Capital Corporation is regulated as a business development
company under the Investment Company Act of 1940.
22.

Defendant Princeton Investment Advisors, LLC is a Delaware limited

liability company. Princeton Advisors has managed the investment activities of
Princeton Capital Corporation since March 13, 2015. It is headquartered at One

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 Riverway, Suite 2020, Houston, Texas 77056. Princeton Advisors’ Chairman and
Managing Partner is Alfred Jackson, who owns a controlling interest in the
company.
23.

Princeton Advisory Group, Inc. is a New Jersey corporation registered

with the Securities and Exchange Commission to provide investment advice. It is
headquartered at 4422 Route 27, Kingston New Jersey 08528.

PAG’s Chief

Executive Officer is Munish Sood. On information and belief, PAG is owned, at
least in part, by Alfred Jackson.
24.

Defendant Gregory Cannella serves as Chief Financial Officer of

CPMLP and CPA, and Princeton Capital.
25.

Defendant Munish Sood is the CEO and a director of Princeton

Capital Corporation. Sood is a Managing Partner of Princeton Advisors and owns
an interest in that company. Sood also serves as CEO of PAG.
26.

Defendant Thomas Jones, Jr. is a director of Princeton Capital

Corporation.
27.

Defendant Trennis L. Jones is a director of Princeton Capital

Corporation.
28.

Defendant Martin Tuchman is as a director of Princeton Capital

Corporation.

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 III.

JURISDICTION
29.

This Complaint is filed under the Delaware Declaratory Judgments

Act, 10 Del. C. § 6501, Sections 17-109, 17-110, and 17-111 of the Delaware
Revised Uniform Limited Partnership Act, and the equitable jurisdiction of this
Court, 10 Del. C. § 341.
IV.

FACTUAL ALLEGATIONS
A.

Limited Partners Invest in the Partnership for a Limited
Duration To Secure Returns for State Pension Funds.

30.

A large majority of the Limited Partners in CPP are public pension

funds. These public pension funds manage state and local government assets
designated to support public sector workers, such as fire and law enforcement
officials and public school teachers and their beneficiaries in retirement. Given the
public nature of the assets, public pension funds take great care in selecting
investment vehicles and in bargaining for a degree of control over how the assets
are invested, as well as ensuring that the liquidity profile of the invested assets are
part of an overall portfolio designed to meet their ongoing obligations to public
sector retirees.
31.

CPP’s Limited Partners are: the New Haven Police & Fire Pension

Fund, the General Retirement System of the City of Detroit, the Little Rock Police
Pension & Relief Fund, the Little Rock Firemen’s Relief & Pension Fund, the City
of Austin Police Retirement System, the Seattle City Employee’ Retirement
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 System, Aldus/New York Fire Fund, LP, Capital Link Fund I, LLC, CT Horizon
Legacy Fund, L.P (f/k/a Aldus/Connecticut Emerging Manager Fund, L.P.), and
Amegy Holding Delaware, Inc.
32.

The Limited Partners invested pursuant to the Capital Point Partners,

LP Amended and Restated Limited Partnership Agreement, as amended, which
states that the purpose of the partnership is “to invest in Securities for long-term
appreciation, including, without limitation, (i) to invest in Securities of entities
requiring capital to fund business growth; (ii) to acquire the Securities of business
entities in connection with, among other things, leveraged buyouts of such entities
in order to facilitate corporate restructurings, acquisitions, asset sales and other
major corporate transactions; (iii) to fund recapitalizations; and (iv) to engage in
other merchant banking activities that provide opportunities for long-term
appreciation.” (Partnership Agreement § 1.8(a).)
33.

The term for CPP was to be ten years, and capital contributions to

finance new investments were to be made only in the first five. (Partnership
Agreement §§ 1.4, 3.1(c).) Presently, it is contemplated that the Partnership will be
wound-up by sometime in 2017. The fund was intended to make mezzanine
investments in privately held companies, which were advertised to the Limited
Partners as allowing for a “Broad Universe of Transaction Types” with “Shorter
Duration and Different Return Profile than Equity,” with an investment strategy

13

 that includes “Broadly Diversified Investments.”

(Capital Point Partners, L.P

Memorandum of Offering at 5, attached as Ex. F.) Accordingly, the Partnership
Agreement includes limitations on the extent of equity investments that the
Partnership may make, and on investment in publicly held companies. (Partnership
Agreement § 1.8(c).) Prior to the ultra vires sale, CPP’s assets primarily included
debt and equity positions in small- to mid-cap privately held companies that do not
require active management from the General Partner.
34.

The Partnership Agreement gives certain rights to the Limited

Partners to ensure that the partnership will invest only in assets that are consistent
with the purpose of the partnership and the Limited Partners’ expectations. Under
Section 1.8(c) of the Agreement, a majority vote of the Limited Partners is required
in order for the partnership to engage in several types of transactions, including to:
(i) acquire any Portfolio Securities of any Person if, after giving effect
to such acquisition, the aggregate Cost Basis (before Write Downs) of
all investments of the Partnership in such Person is . . . more than 15%
of aggregate Commitments;
(v) acquire any Equity Securities if, after giving effect to such
acquisition, (A) the aggregate Cost Basis (before Write Downs) of all
investments of the Partnership in Equity Securities is more than 20%
of the aggregate Commitments or (B) the Cost Basis (excluding
expenses associated therewith) of such acquired Equity Security
(together with any Equity Securities then held in a respective Portfolio
Company) is in excess of 35% of the aggregate Cost Basis of the
investment (including the Loan) in such respective Portfolio
Company; but excluding, in each instance, Equity Securities received
in exchange, substitution or restatement in connection with a workout, restructure or recapitalization of an existing Portfolio Company or
14

 as a result of existing non-public Equity Securities and/or Equity
Participations held by the Partnership becoming Marketable Securities
subsequent to their acquisition by the Partnership;
(vi) make an initial investment in a Portfolio Company if the result of
such initial investment would cause the Partnership to (A) hold a
majority of the voting securities of such Portfolio Company, and (B)
hold a majority of the seats on the board of directors of such Portfolio
Company;
(viii) make any investment in any Marketable Security if, immediately
after giving effect to such investment, the aggregate Cost Basis
(before Write Downs) of the Partnership’s investments in all
Marketable Securities would be more than 10% of the aggregate
Commitments excluding, however, Marketable Securities received
(A) in connection with a restructure or other involuntary transaction
relating to an existing Portfolio Company, or (B) as a result of
existing non-public Equity Securities and/or Equity Participations
held by the Partnership becoming Marketable Securities subsequent to
their acquisition by the Partnership; [or]
(xii) make a Loan to, acquire a Loan in, and/or acquire an Equity
Security and/or an Equity Participation in a Blind Pool Investment;
provided, however, the acquisition of a Portfolio Investment shall not
be deemed to violate this restriction.
35.

The Partnership Agreement provides for the creation of a board of

advisors (a “Board of Advisors” or “Advisory Board”), to consist of “five
members, that will consist of representatives of the Limited Partners and other
persons unaffiliated with the General Partner.”

(Partnership Agreement

§ 2.3(b)(i).) The purpose of the Board of Advisors is not to substitute for a
majority vote of the Limited Partners with respect to matters within the power of
the Limited Partners to approve, but to review any transactions or conduct which

15

 may involve an actual or potential conflict of interest on the part of the General
Partner. The Board of Advisors shall “resolve such conflict of interest, determine
the appropriate action to be taken, or determine the terms to be provided,
considering, in each case, the relative interest of each party to such conflict,
agreement, transaction or situation and the benefits and burdens relating to such
interest, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles.” The Board of Advisors is
to “advise the Limited Partners both as to the existence of any such conflict and as
to the Board of Advisors’ determination hereunder.”
36.

Under the Partnership Agreement, “Seventy Percent in Interest of the

Limited Partners may remove the General Partner and/or the Investment Manager
at any time without cause.” (Partnership Agreement § 2.8(a).) In addition, a
majority of the Limited Partners may remove the General Partner or the Investment
Manager for cause. (Partnership Agreement § 2.8(b).)
37.

The Partnership Agreement provides that “the removal of the General

Partner and/or the Investment Manager, as the case may be, shall be effective upon
delivery to the General Partner and the Investment Manager of written notice with
evidence sufficient to show that an appropriate percentage of the Limited Partners
had acted to remove the General Partner or Investment Manager, as the case may

16

 be,” pursuant to the terms of the Partnership Agreement. (Partnership Agreement
§ 2.8(c).)
38.

The Partnership Agreement further provides that, upon removal of the

General Partner, “Eighty Percent in Interest of Limited Partners” may “designate a
successor general partner within 90 days after the effective date of such removal.”
(Partnership Agreement § 2.8(d).)
39.

As discussed further below, the Limited Partners have voted to

immediately remove CPMLP without case and have notified CPMLP of its
removal as General Partner.
B.
CPMLP Causes the Partnership to Transfer Substantially All of
the Partnership Assets to Princeton Capital, which Is Controlled by
Jackson and His Affiliates.
40.

In November 2013, CPMLP informed the Limited Partners that it had

for the first time appointed a Board of Advisors. CPMLP invited a representative
from Plaintiffs CLFI and Connecticut Fund to serve on that Board of Advisors.
CPMLP also invited representatives of another limited partner, The City of Austin
Retirement System, and two other individuals, Dwight Jefferson and Rene Nunez,
to serve.
41.

CPMLP asserted that Jefferson and Nunez were independent.

42.

Soon after CPMLP established the Board of Advisers, CPMLP sent

summary materials to the newly appointed Board of Advisors members asking for

17

 their approval of a transaction between the Partnership and a new business
development company that CPMLP said it planned to create, Capital Point
Investment Corporation (“CPIC”), which would be an affiliate of CPMLP.
(Advisory Board Presentation, Feb. 7, 2014, attached as Ex. G.)
43.

The materials CPMLP sent to the Board of Advisors members

provided little information about the proposed transaction.

The information

provided did indicate, however, that the transaction would involve the sale of all or
substantially all of the assets of the Partnership to CPIC, in exchange for shares of
common stock in CPIC. Thus, in addition to being a related-party transaction, the
transaction would result in all or a large majority of the holdings of the Partnership
being equity securities in a newly formed business development company. The
information provided demonstrated that the proposed transaction would require
approval from a majority of the Limited Partners.
44.

Both CLFI and the Connecticut Fund raised concerns about the

proposed transaction and about CPMLP’s attempt to seek approval of the
transaction from the newly constituted Board of Advisors, rather than from the
Limited Partners, as the Partnership Agreement required. Despite those objections,
CPMLP persuaded The City of Austin Retirement System and the two non-limited
partner members of the Board of Advisors, Nunez and Jefferson, to provide written
consents purporting to approve of the proposed transaction with CPIC.

18

 45.

That transaction never took place.

46.

Instead, without any further notice or disclosure to either the Board of

Advisors or the Limited Partners, and without seeking the approval of either the
Board of Advisors or a majority of the Limited Partners, in July 2014 CPMLP
caused the Partnership to enter into an asset purchase agreement with a publicly
held business development company, Regal One Corporation, and its newly
created subsidiary, Princeton Capital.

In March 2015, the transaction was

consummated and Regal One was then merged with and into Princeton Capital,
with Princeton Capital being the surviving corporation of such merger. CPMLP
purportedly caused the Partnership to sell all of its assets to Princeton Capital. In
return, the Partnership purportedly received shares of common stock in Princeton
Capital. As part of the transaction, the principals of CPMLP caused the newly
constituted Board of Princeton Capital to enter into an Investment Advisor
Agreement with another CPMLP affiliate, Princeton Advisors. In that Agreement,
Princeton Capital pre-approved any related-party transactions.

In addition to

providing broader authority than the Partnership Agreement provides, the
Investment Advisor Agreement provides CPMLP’s affiliate with fees for managing
the same underlying assets that CPMLP is already receiving fees to manage.
47.

The stock of Princeton Capital is traded publicly, over the counter.

Before it acquired the assets of CPP, on information and belief, Princeton Capital

19

 had only about $1 million in assets.

The Partnership’s assets were worth

approximately $50 million at the time of the ultra vires sale.
48.

The principals of CPMLP went to work entrenching themselves in the

control of Princeton Capital. At a special meeting on March 6, 2015, before the
Limited Partners learned of the transaction, the Chairman and Managing Partner of
CPMLP, Alfred Jackson and his partner in the scheme to transfer CPP’s assets,
Sood, were elected Directors of Princeton Capital. Three “independent” directors,
Thomas Jones, Jr., Trennis L. Jones, and Martin Tuchman were elected. The Chief
Financial Officer of CPMLP, Gregory Canella, was installed as CFO of Princeton
Capital, and Sood as CEO of the company. (Regal One Corporation, Minutes of
the Special Meeting of Shareholders, Mar. 6, 2015, attached as Ex. H.)
49.

As part of the ultra vires sale CPMLP, putatively on behalf of the

Partnership, obtained an opinion letter from Delaware counsel, Richards Layton &
Finger (“RLF”). Among other things, RLF was asked to assume “that the Board of
Advisors . . . has approved the execution, delivery and performance of the Asset
Purchase Agreement,” and that “the execution, delivery and performance of the
Asset Purchase Agreement [by CPP] does not violate Sections 1.8(c)(v) or
1.8(c)(viii)” of the Partnership Agreement. (Mar. 13, 2015 Opinion Letter of RLF
(“Opinion Letter”) at 3, attached as Ex. I.) RLF “express[ed] no opinion with

20

 respect to the satisfaction of fiduciary duties of any Person or to fairness of any
consideration.” (Opinion Letter at 4.)
50.

Jackson and CPMLP procured the use of Princeton Capital, a

Maryland corporation, for the purpose of transferring the Partnership’s assets to
Princeton Capital. Jackson, who controls CPMLP, then caused himself and his
affiliate, Sood, to become directors of Princeton Capital, caused the CFO of
CPMLP to become the CFO of Princeton Capital, caused Sood to become the CEO
of Princeton Capital, and selected three other persons to serve on the board of
Princeton Capital. Jackson and CPMLP plan to replace the Limited Partner’s
interest in the Partnership with some lesser interest in Princeton Capital. Jackson,
CPMLP and Princeton Capital acted as one for purposes of the transaction. The
transaction was not an arms’ length transaction but rather a self-interested
transaction by Jackson, who personally profited from the transaction at the expense
of the Partnership and the rights of Limited Partners, and who used Princeton
Capital as the vehicle for the wrongful transaction.
51.

The ultra vires sale of all CPP’s assets closed on March 13, 2015.

The Limited Partners of CPP learned of the transaction only after the fact. On or
around April 14, 2015, the Connecticut Fund came across a public news article
announcing that Princeton Capital had acquired CPP’s assets, and shared that

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 information with CLFI.

When those Limited Partners asked CPMLP for

information, CPMLP stonewalled and did not provide any details.
52.

The transaction was first “disclosed” to the Limited Partners on May

14, 2015, in the “Quarterly Portfolio Review” of the Partnership for December
2014, which was belatedly delivered to the partners by Gregory Cannella, CPP’s
CFO. The Quarterly Portfolio Review omitted material information about the ultra
vires sale, including that, in conjunction with its purchase of CPP’s assets,
Princeton Capital had amended its Articles of Incorporation and bylaws to entrench
the powers of its board of directors vis-à-vis its shareholders, including by
reincorporating in Maryland; that Princeton Capital’s governing documents do not
contain limits comparable to the Partnership’s on the types of investments
Princeton Capital can make or a comparable 10-year horizon; and that Princeton
Capital’s governing documents permit it to issue new shares, including preferred
shares, that could greatly reduce the Limited Partners’ control over their assets.
53.

At that point, the Limited Partners sought more information about the

transaction. CPMLP, however, delayed providing such information. Specifically,
CLFI attempted to reach Jackson following receipt of the December 2014
Quarterly Performance Report, but Jackson was unresponsive. On May 19, 2015,
Cannella responded to CLFI, but failed to provide any specific information;
instead, Cannella referred CLFI back to the December 2014 Quarterly Performance

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 Report and to Princeton Capital’s website. (May 19, 2015 Email from Gregory J.
Cannella, attached as Ex. J.)
54.

On July 30, 2015, Princeton Advisors circulated to only the Advisory

Board an invitation, dated July 17, to the 2015 Annual Meeting of Stockholders of
Princeton Capital Corporation, which was to be held on August 11, 2015, including
a proxy card announcing that votes would be taken to elect Jackson and Martin
Tuchman to the Princeton Capital Board through 2018, to approve amendments to
Princeton Capital’s charter to effect a reverse stock split, and to ratify the
appointment of Crowe Horwath LLP as the independent registered public
accounting firm for Princeton Capital.

(Proxy Card, Annual Meeting of

Stockholders of Princeton Capital Corporation, August 11, 2015, attached as Ex.
K.)
55.

Under the certificate of incorporation for Princeton Capital, any

nominations or items proposed by shareholders to be voted on at the Annual
Meeting needed to be proposed by or around July 23, 2015. Because CPMLP
waited to notify any of the Limited Partners of the Annual Meeting until the end of
July, CPMLP ensured that no Limited Partner action could affect any item to be
voted on at the Annual Meeting.
56.

Although the Limited Partners did not receive notification from either

CPMLP or Princeton Capital, CLFI learned independently that the date of the

23

 Princeton Capital Annual Meeting had been changed and contacted Princeton
Advisors to confirm, as well as to inquire again about CLFI’s outstanding requests
for information related to the transaction, including, among other things, copies of
Princeton Capital’s financial statements.

In response, on August 5, 2015,

Princeton Advisors confirmed that the Annual Meeting had been “pushed out” to
September 10, 2015. (Aug. 5, 2015 Email from Jennifer Tanguy, attached as Ex.
L.) Princeton Advisors did not respond to CLFI’s substantive inquiries but rather
referred CLFI to CPP’s Quarterly Portfolio Review. (Id.) Princeton Advisors
indicated that the Princeton Capital’s financial statements were “almost finished”
and stated that it would inform CLFI “when we have a concrete release date.” (Id.)
57.

Finally, on August 17, 2015, in response to CLFI’s and the

Connecticut Fund’s ongoing demands for information, CPMLP delivered to the
Limited Partners a “Transaction Chronology” explaining CLPMP’s version of the
events leading up to the ultra vires sale, and a notice of the Princeton Capital
Annual Meeting scheduled for September 10, 2015. (Aug. 17, 2015 Email from
Jennifer Tanguy, attached as Ex. M.)

Princeton Capital has announced that,

shortly after the Annual Meeting, shares of stock in Princeton Capital will be
issued to each of the Limited Partners of CPP, which will effectively leave the
Partnership largely without any investment assets and will render it a mere shell.

24

 58.

The materials delivered to the Limited Partners show that CPMLP

relied upon the votes of three members of the Advisory Board (only one of which
was a limited partner of the Partnership) in favor of the previously proposed CPIC
transaction as satisfying all approvals necessary under the Partnership Agreement.
The Princeton Capital transaction was never presented to the Advisory Board; nor
was it presented to the Limited Partners for their consideration and approval.
C.
The Transfer of the Partnership Assets to Princeton Capital Is a
Self-Dealing Transaction That Violates the Partnership Agreement and
Deprives the Limited Partners of their Rights and Protections.
59.

The ultra vires sale of all of the assets of CPP to Princeton Capital

was invalid under the terms of the Partnership Agreement. For multiple reasons,
the transaction required the vote of a majority of the Limited Partners.
(Partnership Agreement § 1.8(c).) No such vote was taken. Even if Advisory
Board approval had been obtained—and it was not—the Advisory Board’s
approval could not substitute for the required approval by a majority in interest of
the Limited Partners. (Partnership Agreement § 1.8(c)(i), (v), (viii).)
60.

The transaction was self-dealing on CPMLP’s part because Jackson

controls both CPMLP and Princeton Capital. According to the proxy materials for
Princeton Capital’s 2015 Annual Meeting of Stockholders, Jackson and his
affiliates—co-Defendants Sood, Thomas Jones, Jr., Trennis L. Jones, and
Tuchman—replaced the previous Princeton Capital board of directors in a special

25

 meeting on March 6, 2015 and reincorporated Princeton Capital from Florida to
Maryland “in connection with [its] acquisition of the debt and equity investments
and certain other assets of [CPP] and CPP II.”
61.

Princeton Capital’s proxy materials further indicate that, “by virtue of

(i) [Jackson’s] position as manager of Capital Point Advisors, LLC, a Delaware
limited liability company, the investment advisor to and (ii) control of the general
partners of each of [CPP] and CPP II, may be deemed to beneficially own (i)
104,562,000 shares of [Princeton Capital’s] common stock held by CPP, and (ii)
10,922,327 shares of our common stock held by CPP II. Mr. Jackson disclaims
beneficial ownership of any shares directly held by these entities, except to the
extent of his pecuniary interest therein.”
62.

Given Jackson’s financial stake in Princeton Capital, an entity over

which, on information and belief, Jackson exercises almost exclusive control—
paired with Jackson’s acknowledged control of CPMLP—CPMLP’s execution of
the related-party transaction transferring CPP’s assets to Principal Capital was self
dealing.
63.

Due to the self-dealing nature of the transaction, Advisory Board

approval was also required (Partnership Agreement § 2.6(b)(iii)), but the
transaction was not presented to the Advisory Board. The presentation of a
different transaction to the Advisory Board in 2014 could not satisfy the

26

 requirement to present the Transaction to the Advisory Board for several reasons.
First, the prior transaction was not validly approved by the Advisory Board
because the information provided was inadequate. Second, the ultra vires sale is
materially different from the prior transaction. The ultra vires sale involves a preexisting corporation whose shares are already publicly traded—over the counter.
By transferring CPP’s assets in exchange for shares of a pre-existing corporation,
the ultra vires sale exposed the transferred assets (and by extension the returns to
the Limited Partners) to the pre-existing liabilities of that corporation. And the
ultra vires sale involves pre-existing shareholders who now have economic rights
to assets which rightfully belong to the Limited Partners of CPP. Third, upon
information and belief, the purported Advisory Board approval occurred before
the current transaction involving Princeton Capital was conceived. The Advisory
Board never received any of the transaction documents underlying this
transaction.

In particular, the Advisory Board was never presented with the

Princeton Capital’s draft articles of incorporation and bylaws, demonstrating the
massive governance changes; the sale agreement, setting forth the price paid for
the assets; or the Investment Advisor Agreement, documenting CPMLP’s
affiliates additional compensation, pre-approval of all related-party transactions
and expanded investment rights. In short, there was no Advisory Board approval.

27

 64.

The transfer of the partnership assets to Princeton Capital violates the

clear tenants of the Partnership Agreement for several reasons.
65.

First, the Partnership Agreement requires approval by a majority-in-

interest vote of the Limited Partners in order for the Partnership to “acquire any
Portfolio Securities of any Person if, after giving effect to such acquisition, the
aggregate Cost Basis (before Write Downs) of all investments of the Partnership in
such Person is . . . more than 15% of aggregate Commitments.” (Partnership
Agreement § 1.8(c)(i).)
66.

Second, the Partnership Agreement requires approval by a majority

vote of the Limited Partners in order for the Partnership to “acquire any Equity
Securities if, after giving effect to such acquisition, (A) the aggregate Cost Basis
(before Write Down) of all investments of the Partnership in Equity Securities is
more than 20% of the aggregate Commitments or (B) the Cost Basis (excluding
expenses associated therewith) of such acquired Equity Security (together with any
Equity Securities then held in a respective Portfolio Company) is in excess of 35%
of the aggregate Cost Basis of the investment (including the Loan) in such
respective Portfolio Company.” (Partnership Agreement § 1.8(c)(v).)
67.

Third, the Partnership Agreement requires approval by a majority vote

of the Limited Partners in order for the Partnership to “make any investment in any
Marketable Security if, immediately after giving effect to such investment, the

28

 aggregate Cost Basis (before Write Downs) of the Partnership’s investments in all
Marketable Securities would be more than 10% of aggregate Commitments.”
(Partnership Agreement § 1.8 (c)(viii).)
68.

Fourth, the ultra vires sale fundamentally alters the nature of the

Limited Partners’ investment. The Limited Partners invested in a Delaware limited
partnership which was to have a definite and limited life. Liquidity for their
investment was to come from the partnership making and then eventually exiting
investments in a number of portfolio companies, all within a finite time period.
The governance structure of the Partnership included numerous terms restricting
the types of permissible investments for the Partnership. (Partnership Agreement
§ 1.8(c).) Instead, without their consent, their former General Partner has, in
essence, taken all of the partnership assets and used them to “seed” a new
investment vehicle, depriving the Limited Partners of the protections of Delaware
law and entrenching itself as manager of that vehicle and establishing an entirely
new governance structure that was unilaterally set by CPMLP and materially
differs from the governance structure of the Partnership. For example, in the new
vehicle, there is no requirement of exiting the current investments.

To the

contrary, the plan is to raise new capital to make even more investments.
Princeton Capital has indicated that it intends to borrow up to $1 of debt for every
$1 of equity that it controls.

(Princeton Capital Corporation, Form 10-K at 27-28,

29

 attached as Ex. N.) The ultra vires sale thus fundamentally alters the risk profile of
the Limited Partners’ investment under the Partnership Agreement, which requires
in most instances majority-in-interest approval from the Limited Partners before
the Partnership may incur debt. (Partnership Agreement § 1.8(c)(iii).)
69.

Fifth, as a result of the ultra vires sale of CPP’s assets, the

Partnership’s liquidity profile has changed fundamentally. Absent action from this
Court, the Limited Partners will be left only with stock in a thinly traded business
development company with rights that differ hugely from their rights in the
Partnership in which they invested, which was advertised in the Memorandum of
Offering provided by CPMLP and Jackson to the Limited Partners. If additional
public stockholders invest, the Limited Partners’ rights to enforce the liquidity
events they bargained for when investing in the Limited Partnership will be pruned
away. As a result of the ultra vires sale, the Limited Partner’s rights are severely
restricted.
70.

Sixth, by transferring all of CPP’s assets to Princeton Capital, which

is governed by its own separate charter, and which was reincorporated in Maryland
specifically in conjunction with the ultra vires sale, CPMLP has effectively
eviscerated the various protections afforded to the Limited Partners in the
Partnership agreement, as well as the protections of Delaware law.

30

 71.

The terms of the governing charter of Princeton Capital, which now

holds all of CPP’s assets, differ dramatically from those under the Partnership.
Specifically:
a. the Partnership Agreement gives the Limited Partners the right to remove
the General Partner and/or Investment Manager without case upon the
agreement of seventy percent in interest of the Limited Partners, and for
cause upon the agreement of a majority-in-interest of the Limited
Partners, but Princeton Capital’s charter provides that directors may be
removed only for cause and even then only by an affirmative vote of at
least two-thirds of the votes entitled to be cast generally in the election of
directors, “subject to the rights of holders of one or more classes or series
of Preferred Stock” (Charter of Princeton Capital Corporation § 4.9,
attached as Ex. O);
b. the Partnership Agreement provides Limited Partners the exercise of
authority over the Partnership according to their percentage-in-interest of
the Partnership, yet Princeton Capital’s charter allows Princeton Capital
to create classes and series of stock, including preferred stock, and to
designate the rights and preferences (including general and exclusive
voting rights) for those classes and series of stock (Id. §§ 5.2-5.4);

31

 c. whereas the Partnership Agreement does not give the General Partner the
authority to impose binding interpretations of the Partnership Agreement,
Princeton Capital’s charter gives the Defendant officers and directors the
authority to make final, conclusive, and binding determinations regarding
“any provision of the Charter . . . or any other matter relating to the
business and affairs of the Corporation or required or permitted by
applicable law, the Charter or Bylaws or otherwise to be determined by
the Board of Directors” (Id. § 4.8);
d. the Partnership Agreement constitutes the entire agreement governing the
partnership and may not be amended except by an instrument in writing
executed by, at a minimum the General Partner and by a majority-ininterest of the Limited Partners, and in certain circumstances two-thirds
in interest of the Limited Partners, but Princeton Capital’s Charter gives
Princeton Capital’s Board of Directors the “exclusive power, at any time,
to make, alter, amend or repeal [Princeton Capital’s] Bylaws” (Id. § 5.6);
e. whereas the Partnership Agreement provides for liability of Covered
Persons, including the General Partner, in circumstances of bad faith,
gross negligence, willful misconduct, breach of fiduciary duty, violation
of applicable securities laws, or willful and material breach of the
Partnership Agreement, subject to certain exceptions, Princeton Capital’s

32

 charter provides for no such liability. Instead, it shields the Defendant
officers and directors from liability “[to] the maximum extent that
Maryland Law . . . permits” (Id. § 7.1);
f. whereas the Partnership Agreement provides for indemnification of
Indemnified Persons, including the General Partner, only when, among
other requirements, such person (i) acted in good faith; (ii) reasonably
believed that its conduct was in the partnership’s best interest, (iii) the
conduct does not constitute fraud, willful and material breach of the
Partnership Agreement, breach of fiduciary duty, gross negligence,
willful misconduct, or a violation of federal or state securities laws
prohibiting fraud, manipulation, or deception, Princeton Capital’s charter
provides no such limitation, and allows Princeton Capital to indemnify
the Defendant officers and directors “to the maximum extent permitted
by Maryland law” (Id. § 7.2).
72.

Seventh, the ultra vires sale and the resulting transfer of substantially

all of CPP’s assets to Princeton Capital exposes CPP and, in turn, the Limited
Partners to net increased cost on investment. Effectively, CPMLP unilaterally
increased its own compensation at the Limited Partners’ expense.
Partnership Agreement, after CPP

Under the

has distributed profits from realized

investments and current income to the Limited Partners as a return on such Limited

33

 Partners’ capital contributions with respect to these realized investments and a
preferred return, CPP then distributes 20% of the profits from such realized
investments and income (the “Carried Interest”) to the General Partner, formerly
CPMLP and now Sema4. (Partnership Agreement § 3.8(b).) The Partnership
Agreement, however, includes a “clawback” provision entitling the Partnership to
recoup at the termination of the Partnership any “Excess Distribution” to the
General Partner (i.e., if the distribution to the General Partner exceeds the Carried
Interest). (Partnership Agreement § 3.8(k).).
73.

The Advisor Agreement between Princeton Capital and Princeton

Advisors includes a similar fee arrangement, providing for 20% from realized
investment and income, meaning that CPP and the Limited Partners are exposed to
“double-dipping” by CPMLP and Princeton Advisors.

Moreover, unlike the

distribution arrangement under the Partnership Agreement, the Advisor Agreement
does not include a clawback agreement, with the result that the Limited Partners
have lost their right to recoup any over-payment to the advisors. (Investment
Advisory Agreement between Princeton Capital and Princeton Advisors, attached
as Ex. P.)

34

 D.
CPP Removes CPMLP as General Partner with Cause or without
Cause, Appoints Sema4 as New General Partner, and Unwinds the Ultra
Vires Sale
74.

Effective September 8, 2015, the vast majority of CPP’s Limited

Partners—including many who are not parties to this action—collectively
representing 81.59% of the capital contributed to CPP, executed written consents
removing CPMLP as the General Partner of the Partnership under Section 2.8(a) of
the Partnership Agreement. The Limited Partners of CPP that voted in favor of
removal of CPMLP as General Partner, each Limited Partner’s capital
commitment, and the percentage of each Limited Partner’s percentage-in-interest is
as follows:

35

 Limited Partner

Percentage-In-Interest of
Limited Partnership

New Mexico State Investment Council
Holdings

24.55%

Capital Link Fund I

20.20%

General Retirement System of the City
of Detroit

12.28%

City of Austin Police Retirement
System

12.28%

Seattle City Employees’ Retirement
System

6.14%

CT Horizon Legacy Fund

6.14%

TOTAL PERCENTAGE-ININTEREST VOTING IN FAVOR
OF REMOVAL OF CPMLP
75.

81.59%

The Limited Partners’ written consents removing CPMLP were

effective upon delivery to CPMLP under Section 2.8(c) of the Partnership
Agreement.
76.

Under the terms of the Partnership Agreement, cause is not necessary

to remove CPMLP as General Partner, given the Limited Partners’ overwhelming
demand for CPMLP’s removal. Nonetheless, cause exists for CPMLP’s removal
in light of CPMLP’s breach of the Partnership Agreement, its breach of fiduciary
duty, and its willful misconduct relating to the management of CPP, including by

36

 (i) failing to notify the Limited Partners of the ultra vires sale, (ii) ignoring the
requirement of a vote of the Limited Partners and (iii) engaging in related-party
transactions without approval of an independent advisory committee. Thus, in
their notice of removal, the Limited Partners reserve all rights and remedies to
remove for cause, even though cause is not necessary given the overwhelming
majority-in-interest that consented to CPMLP’s removal.
77.

As part of the same written consent, CPP’s Limited Partners

consented to the appointment of Sema4 as successor to CPMLP as General Partner
of CPP, effective immediately upon the removal of CPMLP as General Partner.
78.

CPP’s Limited Partners effected the removal of CPMLP as General

Partner on September 8, 2015. (Ex. B.)
79.

On September 8, 2015, Sema4, in its capacity as General Partner,

informed Princeton Capital that CPP’s shares would not be present at the
upcoming Princeton Capital shareholders meeting on September 10, 2015, either in
person or by proxy, and revoked any proxies that may previously have been
delivered. CPP beneficially owns 104,562,000 of 120,486,061 total shares of
Princeton Capital. Princeton Capital’s bylaws require that at least 60,363,517
shares be present at an annual meeting to constitute a quorum. Accordingly, given
that CPP’s shares will not be represented at the September 10 meeting, Princeton
Capital will lack a quorum and may not properly proceed with any business.

37

 Sema4 further informed Princeton Capital that the transfer of CPP’s assets to
Princeton Capital was ultra vires and therefore invalid. Sema4 further demanded
that the board of Princeton Capital (1) immediately return all of the Partnership’s
assets, rescinding the transaction, and (2) abstain from any action other than the
return of all of the Partnership’s assets until the rescission has been completed.
80.

To date, neither CPP nor Sema4 has received confirmation that

Princeton Capital will, in fact, cancel or postpone the previously scheduled
September 10, 2015 shareholders’ meeting or abstain from board action, or that
Princeton Capital acknowledges that the ultra vires sale was unauthorized.
Count 1
Declaration of Removal of CPMLP as General Partner of CPP pursuant to 10
Del. C. § 6501 and 6 Del. C. § 17-110 (CPMLP)
81.

Plaintiffs incorporate foregoing paragraphs by reference.

82.

As set forth above, Limited Partners of CPP representing 81.59% of

the interest in CPP, executed a written consent removing CPMLP as the General
Partner of the Partnership under Section 2.8(a) of the Partnership Agreement,
effective upon delivery to CPMLP of notice of its removal, in compliance with
Section 2.8(c) of the Partnership Agreement.
83.

As part of the same written consent, the same Limited Partners

consented to the appointment of Sema4 as successor to CPMLP as General Partner
of CPP, effective immediately upon the removal of CPMLP as General Partner.

38

 84.

CPP’s Limited Partners effected the removal of CPMLP as General

Partner on September 8, 2015. (Ex. B.)
85.

Plaintiffs have a legal interest in a declaration that CPMLP has been

removed as General Partner and that the new General Partner, Sema4 has full
authority, subject to the terms of the Partnership Agreement, to act on CPP’s
behalf.
86.

CPMLP has an interest in contesting that it has been removed as

General Partner. Specifically, CPMLP has an interest in attempting to remain as
General Partner so that it can prevent the rescission and unwinding of the ultra
vires sale and receive the benefit of that putative transaction.
87.

Plaintiffs and CPMLP have a real and adverse conflict over whether

removal of CPMLP as General Partner has been validly effected.
88.

The determination of whether the Limited Partners have effected

removal of CPMLP is ripe because CPMLP has either been removed as General
Partner or it has not.
89.

Based on the foregoing facts and the terms of the Partnership

Agreement, Plaintiffs are entitled to a declaration that the CPMLP has been
removed as General Partner and has been replaced by Sema4.

39

 Count 2
Declaration of Cancellation of Princeton Capital’s Shareholder’s Meeting
pursuant to 10 Del. C. § 6501 and 6 Del. C. § 17-110 (CPMLP, Princeton
Capital, Jackson, Sood, Thomas Jones, Jr., Trennis L. Jones, and Tuchman)
90.

Plaintiffs incorporate foregoing paragraphs by reference.

91.

As set forth above, CPP will not attend the currently scheduled

September 10, 2015 Annual Meeting, and Princeton Capital will therefore lack the
necessary quorum to proceed with the meeting. Sema4 has informed Princeton
Capital that CPP’s shares of Princeton Capital will not be present, either in person
or by proxy, at the September 10, 2015 Annual Meeting, and that Princeton Capital
will lack the necessary quorum to conduct any business.

Princeton Capital,

however, has failed to confirm, as requested by the Sema4, that the Annual
Meeting will not take place.
92.

CPP, as a shareholder of Principal Capital, has a legal interest in a

declaration that the Annual Meeting currently scheduled for September 10, 2015
will not go forward in its absence, its presence being necessary to establish a
quorum.
93.

Princeton Capital has an interest in contesting whether the currently

scheduled Annual Meeting will go forward. Specifically, Princeton Capital has an
interest in preventing CPP from taking action that would thwart Princeton Capital’s
efforts to further entrench its control over CPP’s assets.

40

 94.

Plaintiffs and the Princeton Capital Defendants have a real and

adverse conflict over whether the currently scheduled Annual Meeting may take
place
95.

The determination of whether the currently scheduled Annual Meeting

has been cancelled is ripe.

At this point, no additional intervening event is

necessary before the Court may determine that the Annual Meeting may not go
forward.
96.

Based on the foregoing facts, the Limited Partners are entitled to a

declaration that the shareholders meeting has been cancelled and that Princeton
Capital may conduct no business at the putative meeting.
Count 3
Breach of the Partnership Agreement (CPMLP)
97.

Plaintiffs incorporate foregoing paragraphs by reference.

98.

As described above, the Limited Partners of CPP and CPMLP

executed the Partnership Agreement on August 22, 2008 for the purpose of
creating a Delaware limited partnership to make mezzanine investments in
privately held companies. The Partnership Agreement includes limitations on the
extent of equity investments the Partnership may make and grants certain rights to
the Limited Partners to ensure that the Partnership operates in accordance with
their expectations. The Limited Partners have performed under the terms of the
Partnership Agreement.
41

 99.

CPMLP breached multiple terms of the Partnership Agreement as set

forth below, specifically Section 1.8(c)(i); Section 1.8(c)(v); Section 1.8(c)(vi);
Section 1.8(c)(viii); Section 1.8(c)(xii); Section 2.3(b)(i); and Section 3.1(c).
100. Section 1.8(c)(i) of the Partnership Agreement requires consent of a
Majority-in-Interest of the Limited Partners before the Partnership may “acquire
any Portfolio Securities of any Person if, after giving effect to such acquisition, the
aggregate Cost Basis (before write Downs) of all investments of the Partnership in
such Person is . . . more than 15% of aggregate Commitments.” The Partnership
Agreement defines Majority-in-Interest to mean the Limited Partners who have
made a majority of all Capital Contributions that have been made to the
Partnership. “Person is defined as “any individual, corporation (including a
business trust), limited liability company, partnership… or other entity.”
“Commitments” are defined as the assets the Limited Partners have committed to
the Partnership.
101. Section 1.8(c)(i) operates to ensure that the Partnership’s investments
are diversified.
102. CMLP breached Section 1.8(c)(i) by investing substantially all of the
Partnership’s assets in the BDC, without seeking or obtaining the approval of a
Majority-In-Interest of the Limited Partners.

42

 103. Section 1.8(c)(v) of the Partnership Agreement requires consent of a
Majority-in-Interest of the Limited Partners before the Partnership may “acquire
any Equity Securities if, after giving effect to such acquisition, (A) the aggregate
Cost Basis (before Write Downs) of all investments of the Partnership in Equity
Securities is more than 20% of the aggregate Commitments or (B) the Cost Basis
(excluding expenses associated therewith) of such acquired Equity Security
(together with any Equity Securities then held in a respective Portfolio Company)
is in excess of 35% of the aggregate Cost Basis of the investment (including the
Loan) in such respective Portfolio Company; but excluding, in each instance,
Equity Securities received in exchange, substitution or restatement in connection
with a work-out, restructure or recapitalization of an existing Portfolio Company or
as a result of existing non-public Equity Securities and/or Equity Participations
held by the Partnership becoming Marketable Securities subsequent to their
acquisition by the Partnership.”
104. Section 1.8(c)(v) operates to ensure that (A) no more than
approximately 20% of the Partnership’s portfolio consists of equity securities (as
opposed to loans or other instruments) and (B) no more than approximately 35% of
the Partnership’s investment in any single portfolio company consists of equity
securities.

43

 105. CPMLP breached subsection (A) of Section 1.8(c)(v) by investing
substantially all of the Partnership’s assets in Princeton Capital’s equity securities
without seeking the consent of a Majority-in-Interest of the Limited Partners, and
breached subsection (B) of Section 1.8(c)(v) because that investment in Princeton
Capital consists entirely of Princeton Capital’s equity securities.
106. Section 1.8(c)(vi) of the Partnership Agreement requires consent of a
Majority-in-Interest of the Limited Partners before the Partnership may “make an
initial investment in a Portfolio Company if the result of such initial investment
would cause the Partnership to (A) hold a majority of the voting securities of such
Portfolio Company, and (B) hold a majority of the seats on the board of directors
of such Portfolio Company.”
107. Section 1.8(c)(vi) operates to ensure that the Partnership is principally
a passive investment vehicle and does not assume responsibility for the control of
companies
108. CPMLP breached Section 1.8(c)(vi) through the ultra vires sale
because the Partnership now holds well in excess of a majority of the voting
securities of Princeton Capital’s by virtue of its initial investment, and
consequently holds the right to elect a majority of members of Princeton Capital’s
board of directors, albeit subject to a classified board that entrenches Defendants’
current control for years.

44

 109. Section 1.8(c)(viii) of the Partnership Agreement requires consent of a
majority-in-interest of the Limited Partners before the Partnership may “make any
investment in any Marketable Security if, immediately after giving effect to such
investment, the aggregate Cost Basis (before Write Downs) of the Partnership’s
investments in all Marketable Securities would be more than 10% of the aggregate
Commitments excluding [circumstances not present here.]”

A “Marketable

Security” is defined as, among other things, a security “traded over-the-counter,”
as shares of Princeton Capital are.
110. Section 1.8(c)(viii) operates to ensure that the Partnership invests
primarily in mezzanine investments in privately held companies.
111. CPMLP breached Section 1.8(c)(viii) by transferring substantially all
of the Partnership’s assets to Princeton Capital in exchange for equity shares of
Princeton Capital, which are Marketable Securities that clearly now constitute
more than 10% of the Partnership’s aggregate commitments.
112. Section 2.3(b)(i) provides that when a conflict of interest or potential
conflict of interest arises between the General Partner and the Partnership or any
Limited Partner, a “Board of Advisors” shall resolve the conflict, determine the
appropriate action to be taken, and report to the Limited Partners. Section 2.6(a)
provides that this Board of Advisors must comprise “five members, that will
consist of representatives of the Limited Partners and other persons unaffiliated

45

 with the General Partner.” As described above, the ultra vires sale clearly
presented a conflict of interest because an affiliate of CPMLP serves as investment
adviser to Princeton Capital and receives fees for doing so. Nevertheless, CPMLP
never presented the ultra vires sale to a Board of Advisors, and thus breached
Section 2.3(b)(i).
113. Section 3.1(c) provides that “[n]o notice for a Capital Contribution
shall be made after the expiration or termination of the Commitment Period . . .
except to the extent necessary to cover . . . (iii) the cost of making any Add-On
Investments so long as the aggregate cost of all Portfolio Securities acquired
pursuant to this clause (iii) shall not exceed 10% of aggregate Commitments and
such Add-On Investment is consummated on or prior to [the] third anniversary of
the end of the Commitment Period.” An “Add-On Investment” is defined as an
“additional investment in a Portfolio Company that the Partnership makes with
respect to an existing Loan, Equity Security and/or Equity Participation.” Section
3.1(c) operates to generally ensure that, after Year 5, Limited Partners are not
required to commit further resources to the Partnership except to finance limited
additional investments in portfolio companies in which the Partnership had already
invested.
114. CPMLP effectively abrogated, and thus breached, Section 3.1(c) by
transferring substantially all of the Partnership’s assets to Princeton Capital, which

46

 has no comparable restrictions on what capital contributions can be demanded of
the Limited Partners to finance new investments.
115. The fact that CPMLP obtained an opinion letter from RLF prior to the
ultra vires sale cannot shield CPMLP from the conclusion that its conduct
breached the Partnership Agreement. Indeed, in its opinion letter, RLF was careful
to assume, rather than opine as to, all of the key facts and legal conclusions. In
particular, RFL assumed “that the Board of Advisors . . . has approved the
execution, delivery and performance of the Asset Purchase Agreement”; that “the
execution and delivery [by CPP] . . . of the Asset Purchase Agreement and the
performance by [CPP] . . . of its obligations thereunder have been duly authorized
by all necessary partnership action on the part of” CPP, and that the execution and
performance of the agreement do not violate the Partnership Agreement. (Opinion
Letter at 4 (emphasis added).) Because RFL assumed away the central questions,
RFL’s opinion letter has no bearing on whether the ultra vires sale violated
Partnership Agreement.
116. Plaintiffs have been directly and proximately damaged by each of
CPMLP’s breaches of the Partnership Agreement described above. Each breach
was material and caused a material adverse effect on the Partnership.
Count 4
Beach of the Covenant of Good Faith and Fair Dealing (CPMLP)
117. Plaintiffs incorporate foregoing paragraphs by reference.
47

 118. Plaintiffs plead this count in the alternative, if the Court were to
determine that Plaintiffs have failed to support an independent claim of breach of
the Partnership Agreement.
119. The Partnership Agreement is a contract that imposes upon CPMLP
an implied covenant of good faith and fair dealing. The covenant of good faith and
fair dealing requires that CPMLP refrain from any arbitrary or unreasonable
conduct that has the effect of preventing Plaintiffs from receiving the fruits of the
bargain.
120. Even if the transfer of CPP’s assets from the Partnership to Princeton
Capital does not constitute a violation of the express terms of the Partnership
Agreement, it nevertheless constitutes a breach of the covenant of good faith and
fair dealing because it frustrates the Limited Partners’ reasonable expectations with
regard to the management of the CPP assets and the limitations placed on the
investment of the CPP assets.
121.

Plaintiffs have been substantially damaged as a direct and proximate

result CPMLP’s breach of the covenant of good faith and fair dealing as set forth
fully herein.
Count 5
Equitable Rescission (CPMLP, Jackson, and Princeton Capital)
122. Plaintiffs incorporate foregoing paragraphs by reference.

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 123. The ultra vires sale was void because not accomplished in accordance
with the Partnership’s Partnership Agreement.
124. Upon information and belief, Princeton Capital was aware that the
ultra vires sale was void when it entered into the putative transaction.
125. Equitable relief is appropriate to unwind and rescind the ultra vires
sale by which CPMLP transferred CPP’s assets to Princeton Capital.
126. By breaching the provisions of the Partnership Agreement and
CPMLP’s fiduciary duties to CPP, CPMLP and Jackson have deprived Plaintiffs of
the bargained-for protections contained in the Partnership Agreement.
127. Plaintiffs have no adequate remedies at law, as legal remedies would
not afford them full, fair, or equitable relief.
Count 6
Breach of Fiduciary Duties (CPMLP and Jackson)
128. Plaintiffs incorporate foregoing paragraphs by reference.
129. While the General Partner the Partnership, CPMLP owed the
Partnership fiduciary duties of loyalty, good faith, and disclosure.
130. The Partnership Agreement did not waive or eliminate CPMLP’s
fiduciary duties.
131. Because Jackson controlled CPMLP, CPMLP’s fiduciary duties to the
Partnership extended to him.

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 132. CPMLP and Jackson were obligated by their duty of loyalty to place
the Partnership’s interest above any interest of theirs that was not shared by the
Partnership generally.
133. CPMLP and Jackson had an obligation to disclose material
information concerning the Partnership’s assets and transactions quarterly.
CPMLP and Jackson were further obligated to fully and fairly disclose all material
information within their control whenever seeking Limited Partner action, and
were obligated to afford the Limited Partners the approval rights required by the
Partnership Agreement.
134. CPMLP’s sale of the Partnership’s assets to Princeton Capital, an
entity from which Jackson receives investment advisory and incentive fees, was a
self-dealing transaction that called upon CPMLP to scrupulously observe its duty
of loyalty, be entirely fair to the Partnership and the Limited Partners, and comply
with the duty of disclosure.

As described above, the Partnership Agreement

provided that such a transaction could only be entered into with the approval of a
Board of Advisors composed of five representatives of the Limited Partners.
CPMLP did not seek or obtain approval from a duly constituted Board of Advisors
for the ultra vires sale, and thereby breached its duty of loyalty. CPMLP did not
provide all material information to the Board of Advisors and therefore breached

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 its duty of disclosure. As the party who exercised control over CPMLP, Jackson
breached his fiduciary duties in the same manner and to the same extent.
135. The sale of the Partnership assets to Princeton Capital also required
the approval of a majority of the Limited Partners of the Partnership. CPMLP and
Jackson breached their fiduciary duties by effecting the transaction without
approval of the Limited Partners.
136. CPMLP’s sale of the Partnership’s assets to Princeton Capital also
stripped the Limited Partners of multiple critical protections present in the
Partnership Agreement.
137. As described above, the Partnership Agreement created a mediumterm investment vehicle that contemplated the gradual winding down of
investment activity over years 5 through 10 of its existence. To this end, Section
3.1(c) of the Partnership Agreement provides that after Year 5 the Partnership can
generally only require Limited Partners to make Capital Contributions to finance
additional investments in Portfolio Companies in which the Partnership had
already invested. Furthermore, Section 1.4 provides that the Partnership will be
dissolved within 10 years of its formation, except in the event extensions are
necessary to permit an orderly dissolution.
138. These provisions operate to discourage further investment in the
Partnership after its fifth year of operation—which passed in August 2013—since

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 there are relatively few circumstances in which investors would seek to enter a
vehicle that cannot raise funds to invest in new portfolio companies and plans to
exit all its investments within five years.
139. In contrast to the Partnership Agreement, Princeton Capital has no
such restrictions on future investments or investment horizons, creating the risk
that new investors could dilute the Limited Partners’ control rights and
fundamentally change the nature of their contemplated investment.

Princeton

Capital can accept new investments indefinitely and, according to its 10-K,
“intend[s] to access the capital markets periodically to issue debt or equity
securities.” Of particular note, the 10-K further states that Princeton Capital has
currently authorized 50,000,000 shares of total preferred stock and can endow
those shares with preferential voting rights. Thus, the very real risk exists that
Princeton Capital could issue preferred shares to new investors who could
immediately gain control and invest Princeton Capital’s assets in ways that were
not contemplated or permissible when the Limited Partners signed the Partnership
Agreement.
140. The differences between the Limited Partnership Agreement and the
Certificate of Incorporation and Bylaws of Princeton Capital further provide
Jackson with substantially greater control over every aspect of Princeton Capital’s

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 operations as compared to his control over the operations of the Limited
Partnership, as set forth above.
141. The Limited Partners received no apparent benefit in exchange for
assuming this risk and surrendering this control. Indeed, as described above, the
ultra vires sale created further risk for the Limited Partners by negating provisions
in the Partnership Agreement that restricted the types of assets the Partnership
could acquire, such as limits on the percentage of equity securities and restrictions
to ensure diversification. (Partnership Agreement § 1.4.)
142. In contrast, Jackson and the other defendants clearly benefited from
obtaining this control and forcing the Limited Partners to assume this risk. In
addition to the increased control rights, Jackson’s investment advisor affiliate
receives greater management fees under the new Investment Advisory Agreement.
Moreover, Jackson’s new affiliate is now able to solicit new investments, using the
Limited Partners’ assets as a springboard, to thereby increase its assets under
management and receive higher advisory fees on a correspondingly larger asset
base. Indeed, the conscription of the Partnership’s assets into Princeton Capital
allows Jackson to misleadingly portray Princeton Capital to new investors as an
established fund with over $50 million in assets, when 98% of those assets were
misappropriated and subject to rescission.

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 143. Jackson and CPMLP devised and orchestrated the ultra vires sale to
advance Jackson’s self-interest at the cost of greatly increasing the risk profile
faced by the Limited Partners, in violation of their duties of loyalty and good faith.
144. Given the significance of the ultra vires sale—which fundamentally
changed the rights of the Limited Partners and attempts to strip them of the
protections of Delaware law—CPMLP and Jackson had, at a minimum a duty to
fully disclose the material aspects of the ultra vires sale to the Limited Partners.
They did not do so. Rather, Jackson and CPMLP disclosed the ultra vires sale to
the Limited Partners only after the Transaction had closed.

The “Quarterly

Performance Report” of the Partnership for December 2014, the first disclosure of
the ultra vires sale, was not delivered to the Limited Partners until May 14, 2015
and omitted numerous material details about the ultra vires sale.
145. After receiving the Quarterly Performance Report, Plaintiffs sought
the missing information about the transaction but CPMLP delayed providing
further information until August 17, 2015, when CPMLP finally delivered to the
Limited Partners notice of the upcoming shareholders meeting scheduled for
September 10, 2015. That shareholders meeting had been in the works since July
13, 2015, at the latest, when Princeton Capital filed a related proxy statement with
the SEC.

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 146. CPMLP violated its duty of disclosure by concealing the ultra vires
sale from the Limited Partners.

CPMLP was only able to accomplish that

transaction by hiding it from the Limited Partners, who had a right to veto the ultra
vires sale and, upon information and belief, would have removed CPMLP as
General Partner before allowing the ultra vires sale to occur.
147. As the party who exercised control over CPMLP, and as Chairman
and Managing Partner of CPMLP, Jackson breached his duty of disclosure in the
same manner and to the same extent.
148. In providing an opinion regarding the ultra vires sale, as requested by
CPMLP, the Delaware law firm RFL specifically declined “to express an opinion
with respect to the fiduciary duties of any Person or to fairness of any
consideration.” RFL’s opinion letter, therefore, offers CPMLP and Jackson no
justification or excuse for their breach of duties.
149. Plaintiffs have been substantially damaged as a direct and proximate
result of CPMLP’s and Jackson’s breach of fiduciary duties as set forth herein.
150. Accordingly, Plaintiffs are entitled to seek equitable remedies and to
recover damages from CPMLP in an amount to be determined at trial.
Count 7
Aiding and Abetting CPMLP and Jackson’s Breaches of Fiduciary Duties
(Princeton Capital, Princeton Advisors, PAG, CPA, Sood, Cannella, Thomas
Jones Jr., Trennis L. Jones, Tuchman)
151. Plaintiffs incorporate the foregoing paragraphs by reference.
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 152. As alleged above, CPMLP and Jackson breached their fiduciary duties
to CPP and the Limited Partners.
153. The remaining Defendants, CAP, Princeton Capital, Princeton
Advisors, PAG, Sood, Cannella, Thomas Jones, Jr., Trennis L. Jones, and
Tuchman, knew Jackson and CPMLP had fiduciary duties to CPP and the Limited
Partners, and knowingly and/or actively participated in CPMLP and Jackson’s
predicate breaches.
154. Princeton Capital, as the entity to which CPP’s assets were putatively
conveyed, participated in CPMLP and Jackson’s breach, which resulted from the
ultra vires sale of CPP’s assets to Princeton Capital. Princeton Capital approved
the putative purchase at a special meeting on March 6, 2015.On information and
belief, Princeton Capital is controlled by Jackson, who knew that his and CPMLP’s
actions related to the ultra vires sale breached his fiduciary duties of care, loyalty,
and disclosure to CPP, and Jackson’s knowledge is imputed to Princeton Capital.
155. Princeton Advisors participated in CPMLP and Jackson’s breach of
fiduciary duties to CPP by, among other actions, entering into an Investor
Advisory Agreement with Princeton Capital, under which Princeton Advisors
receives fees and distributions for the management of CPP’s assets. Because
Jackson owns a controlling interest in Princeton Advisors and serves as Princeton

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 Advisors’ Chairman and Managing Partner, Jackson’s knowledge that he and
CPMLP breached their fiduciary duties to CPP is imputed to Princeton Advisors.
156. PAG participated in CPMLP and Jackson’s breach of fiduciary duties
to CPP and the Limited Partners.

On August 17, 2015, when CPMLP first

circulated the material details to the Limited Partners regarding the ultra vires sale,
CPMLP included in its transmission PAG’s SEC investment adviser registration.
On information and belief, PAG is a participant in the investment of CPP’s assets
as a result of the ultra vires sale. Because PAG’s CEO is Sood, and because, on
information and belief, PAG is owned, at least in part, by Jackson, Sood’s and
Jackson’s knowledge that CPMLP and Jackson breached their fiduciary duties to
CPP can be imputed to PAG.
157. On information and belief, CPA participated in CPMLP and Jackson’s
breach of fiduciary duties to CPP and the Limited Partners. CPA is the Investment
Advisor to CPP and shares the same management as Princeton Capital, Princeton
Advisors, and PAG. Jackson is CPA’s founder and Cannella is CPA’s CFO. On
information and belief, CPA actively took steps as CPP’s investment manager to
facilitate the ultra vires sale.
158. On information and belief, Defendant Sood participated in CPMLP
and Jackson’s breach of fiduciary duty to CPP in his capacities as CEO/Director of
Princeton Capital and as a Managing Partner of Princeton Advisors.

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On

 information and belief, Sood assisted Jackson in effecting changes to Princeton
Capital’s bylaws that entrenched the power of the board of directors with respect to
the shareholders and reincorporated Princeton Capital in Maryland in order to
prevent CPP from rescinding the ultra vires sale. Given Sood’s position as
CEO/Director at Princeton Capital and as a Managing Partner at Princeton
Advisors, on information and belief, Sood knew that CPMLP and Jackson’s
orchestration of the ultra vires sale violated their fiduciary duties to CPP.
159. Defendant Cannella participated in CPMLP and Jackson’s breach of
fiduciary duties to CPP both in his capacity as CPP’s CFO and as the CFO of
Princeton Capital. On information and belief, Cannella assisted Jackson in
effecting changes to Princeton Capital’s bylaws that entrenched the power of the
board of directors with respect to the shareholders and reincorporated Princeton
Capital in Maryland in order to prevent CPP from rescinding the ultra vires sale.
Further, in response to requests from CLFI to Jackson following CLFI’s receipt of
the December 2014 Quarterly Progress Report in May 2015, Cannella responded to
CLFI but declined to provide any specific information; instead, Cannella referred
CLFI back to the December 2014 Quarterly Performance Report and to Princeton
Capital’s website, delaying the Limited Partners from discovering the full details
of the ultra vires sale.

Given Cannella’s position as CFO at both CPP and

Princeton Capital, on information and belief, Cannella knew that CPMLP and

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 Jackson’s orchestration of the ultra vires sale violated their fiduciary duties to
CPP.
160. Defendants Thomas Jones, Jr., Trennis L. Jones, and Tuchman
participated in CPMLP and Jackson’s breach of their fiduciary duties to CPP in
their capacities as directors of Princeton Capital, by actively facilitating the
fraudulent scheme. On information and belief, Thomas Jones, Jr., Trennis L.
Jones, and Tuchman assisted Jackson in effecting changes to Princeton Capital’s
bylaws that entrenched the power of the board of directors with respect to the
shareholders and reincorporated Princeton Capital in Maryland in order to prevent
CPP from rescinding the ultra vires sale. Given their positions as Directors at
Princeton Capital, on information and belief, Thomas Jones, Jr., Trennis L. Jones,
and Tuchman each knew that CPMLP and Jackson’s orchestration of the ultra
vires sale violated CPMLP and Jackson’s fiduciary duties to CPP.
161. Plaintiffs have been substantially damaged as a direct and proximate
result of the actions of the Princeton Capital, Princeton Advisors, PAG, Sood,
Cannella, Thomas Jones, Jr., Trennis L. Jones, and Tuchman in aiding and abetting
CPMLP and Jackson’s breaches of fiduciary duties as set forth fully herein.
Count 8
Fraud (CPMLP and Jackson)
162. Plaintiffs incorporate foregoing paragraphs by reference.

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 163. As alleged above, CPMLP and Jackson concealed from the Limited
Partners the plan to transfer substantially all of CPP’s assets to Princeton Capital.
Moreover, after the ultra vires sale took place on March 13, 2015, CPMLP did not
disclose that fact to the Limited Partners at the time. Despite repeated inquiries
from the Limited Partners, CPMLP and Jackson stonewalled, failing to respond to
inquiries and providing only limited information to the Limited Partners while
Jackson entrenched his control of Princeton Capital. CPMLP did not disclose the
material details of the ultra vires sale to the Limited Partners until August 17,
2015.
164. Moreover, at the upcoming Annual Meeting of Princeton Capital, CPP
will control 87% of the stockholder vote. The Partnership would be able to select,
nominate, and elect its chosen individuals as directors, but for CPMLP’s
concealment of the upcoming Annual Meeting until August 2015, long after the
advance notice period for action at the Annual Meeting had passed.
165. On information and belief, from at March 13, 2015 at the latest and
through August 17, 2015, CPMLP and Jackson deliberately or with reckless
indifference to the truth withheld material information regarding the ultra vires
sale from the Limited Partners in an attempt to prevent them from objecting to the
transaction and in order to present it as a fait accompli, knowing that the Limited
Partners would take action if they were aware of the ultra vires sale. Indeed, on

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 information and belief, CPMLP obtained an opinion letter from RLF, a Delaware
law firm, in an attempt (albeit an ineffectual one) to deceive the Limited Partners
to present the ultra vires sale as consistent with the Partnership Agreement and
with CPMLP and Jackson’s fiduciary duties to CPP. Yet, the contents of the
opinion letter—and specifically the assumptions that RLF was forced to make in
order to green light the ultra vires sale—belie that conclusion, as set forth above.
166. As a result of CPMLP and Jackson’s concealment of material facts
regarding the ultra vires sale, the Limited Partners did not take actions that they
otherwise would have to prevent the transfer of CPP’s assets under the terms of the
Partnership including, if necessary, removal of CPMLP as General Partner.
167. Plaintiffs have been substantially damaged as a direct and proximate
result of CPMLP and Jackson’s deliberate concealment of material facts.
Count 9
Civil Conspiracy to Commit Fraud (CPMLP, CPA, Jackson, Princeton
Capital, Princeton Advisors, PAG; Sood, Cannella, Thomas Jones, Jr.,
Trennis L. Jones, and Tuchman)
168. Plaintiffs incorporate foregoing paragraphs by reference.
169. As set forth above, CPMLP and Jackson defrauded the Limited
Partners by concealing the ultra vires sale both before and after the transaction.
170. On information and belief, CPMLP and Jackson conspired with
Defendants Princeton Capital, Princeton Advisors, PAG, Sood, Cannella, Thomas
Jones Jr, Trennis L. Jones, and Tuchman to accomplish that fraud.
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 171. On March 6, 2015, one week before the close of the unauthorized and
fraudulent transaction at issue in this litigation, Princeton Capital (then called
Regal One) held a special meeting, at which Princeton Capital’s shareholders voted
to approve the acquisition of CPP’s assets. At that same meeting, the shareholders
approved proposals to elect Jackson, Sood, Thomas Jones, Jr, Trennis L. Jones,
and Tuchman as directors and to approve proposals that would entrench the power
of the board of directors with respect to the shareholders. Specifically, Princeton
Capital’s board of directors was divided into three classes with staggered three
year terms of office; Princeton Capital’s bylaws were amended to remove the
ability of shareholders to take action by less than unanimous written consent;
Princeton Capital’s articles of incorporation were amended to increase the number
of votes a shareholder must possess to call a special meeting; and the board of
directors was authorized to increase or decrease the number of authorized shares
and the number of shares of any class or series. On information and belief,
Jackson, Sood, Cannella, Thomas Jones, Jr., Trennis L. Jones, and Tuchman
orchestrated these actions by Princeton Capital for the purpose of furthering
CPMLP and Jackson’s fraud against the Limited Partners and to prevent CPP and
the Limited Partners from rescinding the ultra vires sale once CPMLP disclosed its
existence.

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 172. On information and belief, Princeton Advisors was created, at least in
part, for the purpose of defrauding the Limited Partners of the CPP assets, as a
vehicle for Jackson and Sood to profit from the assets fraudulently obtained from
CPP. Under Princeton Advisors’ advisor agreement, Princeton Advisors receives
20% of all realized investment and income from the assets of Princeton Capital that
it manages, which increased dramatically from approximately $1 million before the
ultra vires sale to approximately $50 million after. Moreover, unlike the terms of
CPP’s Partnership Agreement, Princeton Advisors’ advisor agreement with
Princeton Capital does not provide for the clawback of distributions to account for
subsequent losses over the life of the investment as a whole. Princeton Advisors,
therefore, is not only able to obtain distributions from CPP’s assets above and
beyond what CPP would already pay to its General Partner (previously CPMLP
and now Sema4) but it is also able to retain the full value of those distributions
even if they are not justified by the overall returns on the Limited Partners’
investment. Moreover, Princeton Advisors’ Advisory Agreement pre-approves all
related party transactions, permitting CPMLP, Jackson and their affiliates to
engage at will in interested transactions.
173. On information and belief, PAG is a participant in the investment
structure of Princeton Advisors and participated in the conspiracy to defraud the
Limited Partners through the ultra vires sale. On August 17, 2015, when CPMLP

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 first circulated the material details to the Limited Partners regarding the ultra vires
sale, CPMLP included in its transmission PAG’s SEC investment adviser
registration. In addition, PAG’s CEO is Sood and, on information and belief, PAG
is owned, at least in part, by Jackson.
174. On information and belief, CPA participated in the conspiracy to
defraud the Limited Partners in its role as Investment Advisor to CPP. Jackson is
CPA’s founder and Cennella serves as CPA’s CFO. On information and belief,
CPA used its position as Investment Advisor to and its associations with Princeton
Capital, Princeton Advisors, and PAG to actively promote the conspiracy to
defraud the Limited Partners.
175. Defendants Jackson and Sood are members of Princeton Advisors’
Executive Management team and, on information and belief, receive proceeds
from the distributions made under Princeton Advisors’ advisor agreement.
176. Further, on information and belief, Defendant Cannella conspired with
CPMLP and Jackson to conceal the ultra vires sale from CPP’s Limited Partners
and took steps to advance that conspiracy. At the time of the ultra vires sale,
Cannella was the Chief Financial Officer of CPP, and it was Cannella who first
“disclosed” the ultra vires sale to the Limited Partners on May 14, 2015 by sending
them the December 2014 Quarterly Progress Report. When CLFI attempted to
reach Jackson regarding the ultra vires sale, it was Cannella who responded,

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 without providing substantive information, referring CLFI back to the Quarterly
Performance Report and to Princeton Capital’s website.
177. Plaintiffs have been substantially damaged as a direct and proximate
result of CPMLP, Jackson, Sood, Canella Thomas Jones, Jr., Trennis L. Jones, and
Tuchman’s conspiracy to commit fraud.
Prayer for Relief
WHEREFORE, Plaintiffs request the Court to:
A.

Declare that, by executing the written consent of over seventy

percent in interest of the Partnership, CPP’s Limited Partners have
removed CPMLP as General Partner and that CPMLP no longer
exercises any authority to act on behalf of CPP or its Limited Partners;
B.

Declare that Sema4 is the General Partner of CPP;

C.

Declare that the 2015 Annual Meeting of Princeton Capital may

not go forward and that Princeton Capital may conduct no business at the
putative meeting or at any board meeting or by any board action;
D.

Rescind the ultra vires sale;

E.

Award the Partnership damages in an amount to be proven at

trial;
F.

Award CPP the transaction costs incurred by CPMLC to effect

the ultra vires sale;

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 G.

Award Plaintiffs their fees and expenses, including reasonable

attorneys’ fees incurred in this action; and
H.

Grant such other relief as the Court may deem just and proper.
Respectfully submitted,

YOUNG CONAWAY STARGATT
& TAYLOR, LLP
OF COUNSEL
Terri L. Mascherin
Andrew W. Vail
Shaun M. Van Horn
JENNER & BLOCK, LLP
353 North Clark Street
Chicago, IL 60654-3456
(312) 222-9350
(312) 527-0484 Fax

/s/ Martin S. Lessner
David C. McBride (#408)
Martin S. Lessner (#3109)
Tammy L. Mercer (#4957)
Emily V. Burton (#5142)
Richard J. Thomas (#5073)
Rodney Square
1000 North King Street
Wilmington, DE 19801
(302) 571-6600

Dated: September 8, 2015

Counsel for Plaintiffs

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