FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`INDEX NO. 159131/2022
`RECEIVED NYSCEF: 06/14/2024
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`
`
`
`
`
`
`
`
`EXHIBIT A
`EXHIBIT A
`
`

`

`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`
`
` Index No.: 159131/2022
`
`
`[PROPOSED]
`VERIFIED THIRD
`AMENDED COMPLAINT
`
`JURY TRIAL DEMANDED
`
`SUPREME COURT OF THE STATE OF NEW YORK
`COUNTY OF NEW YORK
`
`
`ELEANORA KENNEDY; MICHAEL KENNEDY
`FAMILY TRUST UNDER SECTION 2.4 OF THE
`MICHAEL KENNEDY REVOCABLE TRUST
`(ELEANORA KENNEDY, TRUSTEE); NON-EXEMPT
`MARITAL TRUST UNDER SECTION 2.3 OF THE
`MICHAEL KENNEDY REVOCABLE TRUST
`(ELEANORA KENNEDY, TRUSTEE); EXEMPT
`MARITAL TRUST UNDER SECTION 2.3 OF THE
`MICHAEL KENNEDY REVOCABLE TRUST
`(ELEANORA KENNEDY, TRUSTEE),
`
`and
`
`Plaintiffs,
`
`HIGHTIMES HOLDING CORP.,
`
`Derivative Plaintiff,
`
`- against -
`
`HIGHTIMES HOLDING CORP.; TRANS-HIGH
`CORPORATION; ADAM LEVIN, SHAUN JARVIS;
`PAUL HENDERSON; and DOE DEFENDANTS 1–10,
`
`
`Defendants.
`
`
`
`Plaintiffs Eleanora Kennedy, The Michael Kennedy Family Trust Under Section 2.4 Of
`
`The Michael Kennedy Revocable Trust (Eleanora Kennedy, Trustee) (“Family Trust”), The Non-
`
`Exempt Marital Trust Under Section 2.3 Of The Michael Kennedy Revocable Trust (Eleanora
`
`Kennedy, Trustee) (“Non-Exempt Marital Trust”), and The Exempt Marital Trust Under Section
`
`2.3 Of The Michael Kennedy Revocable Trust (Eleanora Kennedy, Trustee) (“Exempt Marital
`
`Trust”), and Derivative Plaintiff HighTimes Holding Corporation (with the Family Trust and Non-
`
`Exempt Marital Trust, the “Kennedy Trusts” and, collectively with Kennedy, “Plaintiffs”), by and
`
` 1
`
`
`
`
`
`

`

`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`through their undersigned counsel, Greenspoon Marder LLP, pursuant to CPLR Section 3025(b),
`
`respectfully submit this Verified Third Amended Complaint1 against Defendants Hightimes
`
`Holding Corp. (“HighTimes” or the “Company”), Trans-High Corporation (“THC”), Adam Levin,
`
`Shaun Jarvis, Paul Henderson, and such other Doe Director Defendants who may also be liable,
`
`and allege as follows:
`
`INTRODUCTION
`
`When former President of the United Mexican States Vicente Fox resigned from
`
`1.
`
`the HighTimes Board of Directors, a spokesman explained that Mr. Fox stepped down because
`
`“[b]eing a former head of state, we couldn’t let him get splattered with any malfeasance.”
`
`2.
`
`HighTimes and its Board of Directors—particularly its now-former Executive
`
`Chairman, Defendant Adam Levin2—indeed have been “splattered” with “malfeasance” for many
`
`years now.
`
`3.
`
`That multifarious malfeasance includes myriad frauds and breaches of fiduciary
`
`duty that have damaged HighTimes’s shareholders, including Plaintiffs here, and HighTimes itself,
`
`which is the Derivative Plaintiff to this action.
`
`4.
`
`Defendants’ gross mismanagement and likely self-dealing have diminished
`
`HighTimes’s brand, reputation, standing in the marketplace, and the value of its business. Indeed,
`
`HighTimes is hardly recognizable today as a going business. As just one example: HighTimes,
`
`
`1 Plaintiffs also bring claims derivatively on behalf of Hightimes Holding Corp. against current
`and former HighTimes Directors Adam Levin, Shaun Jarvis, Paul Henderson, and the Doe
`Defendants.
`
` 2
`
` Levin became the former Executive Chairman on September 6, 2023, pursuant to the terms of an
`SEC settlement that prohibited him from acting as an officer or director of certain issuers for a
`period of three years. See Ex. 1, Consent to Entry of Final Judgment by Adam E. Levin, dated
`September 6, 2023, ¶ 2(d).
`
` 2
`
`
`
`
`
`

`

`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`ostensibly a magazine periodical that regularly publishes magazine editions, has not published an
`
`issue in 2023.
`
`5.
`
`But the full extent of the damage done to HighTimes has been impossible for
`
`Plaintiffs to understand even at this juncture because HighTimes evidently does not maintain the
`
`most basic of financial records.
`
`6.
`
`In response to Plaintiff’s shareholder books and records request made in accordance
`
`with Delaware law in July of 2023, HighTimes produced a single draft SEC filing for the 2019
`
`fiscal year. Relatedly, HighTimes has not made required filings with the United States Securities
`
`and Exchange Commission (“SEC”) for many years. And apparently HighTimes does not keep
`
`audited or even finalized financial records, because it did not provide any in response to the
`
`shareholder books and records request, nor did it produce any in response to Plaintiff’s discovery
`
`demands.
`
`7.
`
`These fundamental failures of basic disclosures make it impossible without a proper
`
`accounting (one of the remedies sought by this action) to understand the harm caused by
`
`Defendants. Those same failures themselves also have damaged the Company and its shareholders
`
`by further harming the business, dissuading and preventing further investment, and making it
`
`virtually impossible for the Company to make an initial public offering and become listed on a
`
`public exchange, as its former Executive Chairman Levin has been stating is the Company’s goal
`
`for many years now.
`
`8.
`
`The SEC itself investigated all the malfeasance by Levin and HighTimes and fined
`
`the Company over $558,000 for violations of the Securities Act of 1933 (“Securities Act”) and
`
`Securities Exchange Act of 1934 (“Exchange Act”). See Ex. 2, SEC Order dated September 27,
`
`2023, at § IV.B. The SEC also filed an action for the same violations against Levin individually,
`
` 3
`
`
`
`
`
`

`

`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`who consented to pay the SEC a monetary civil penalty of over $111,000, among other penalties.
`
`See Ex. 1 ¶ 2(c); Ex. 3, SEC Complaint against Adam E. Levin dated September 27, 2023.
`
`9.
`
`Levin—upon information and belief the effective, if not direct, majority
`
`shareholder of HighTimes—dominates the Company, controls and elects the Board of Directors,
`
`and uses HighTimes and its significant cash inflows (actual paper currency) from HighTimes’s
`
`still-popular Cannabis Cup events for his own personal enrichment.
`
`10.
`
` Owing to Levin’s dominance of HighTimes and its Board of Directors, and further
`
`due to the substantial likelihood of liability for each current and former board member of
`
`HighTimes who has breached their fiduciary duties during the relevant time period in which the
`
`Company has fundamentally failed to keep financial records (the Company’s auditor resigned in
`
`July 2022), Plaintiffs brought this lawsuit without first making a futile demand upon the Board.
`
`11.
`
`Following Plaintiffs’ Second Amended Complaint filed in December 2023, the
`
`inevitable finally occurred: HighTimes and its related entities were placed into a receivership in
`
`California state court on or about April 4, 2024.3 The Receiver does not expect to be able to pay
`
`all of the Company’s secured creditors, meaning HighTimes’ unsecured creditors will likely
`
`receive nothing and the value of HighTimes equities will be wiped out, leaving Company
`
`stockholders emptyhanded.
`
`
`3 See Ex. 4, Superior Court Receiver’s Initial Report and Notice of Intent to Pay Receiver’s Fees
`and Expenses, Presented by Kevin Singer, Superior Court Receiver, Kunkel ex rel. ExWorks
`Capital Fund I, L.P. v. Hightimes Holding Corp., No. 24SMCV01568 (Cal. Super. Ct. L.A. Cty.
`May 21, 2024); see also Ex. 5, Superior Court Receiver’s May 2024 Report and Notice of Intent
`to Pay Receiver’s Fees and Expenses, Presented by Kevin Singer, Superior Court Receiver, Kunkel
`ex rel. ExWorks Capital Fund I, L.P. v. Hightimes Holding Corp., No. 24SMCV01568 (Cal. Super.
`Ct. L.A. Cty. June 11, 2024).
`
` 4
`
`
`
`
`
`

`

`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`12.
`
`This travesty was directly caused by the gross and potentially criminal malfeasance
`
`of Defendants, especially Adam Levin.
`
`13.
`
`Indeed, through further investigation, Plaintiffs discovered even more wrongdoing
`
`by Levin and his cronies. Upon information and belief, Levin directed and/or caused monies
`
`(including mostly cash) from the Cannabis Cup events, which were run by HighTimes and/or THC,
`
`to be illicitly funneled directly to an entity called Fiesta Event Inc. (“Fiesta”). Later, upon
`
`information and belief, Levin directed and/or caused HighTimes affiliate Trans-High Corporation
`
`to license the Cannabis Cup intellectual property to Fiesta pursuant to a sham, non-disinterested
`
`agreement that was in no way arms-length. See Ex. 6, Licensing Agreement by and between Trans-
`
`High Corporation and Fiesta Event Inc. dated October 31, 2024 (“Licensing Agreement”). In fact,
`
`HighTimes/THC purported to license the Cannabis Cup IP to Fiesta at a valuation several million
`
`dollars below its actual market value. Upon information and belief, Fiesta is owned and/or
`
`controlled, directly or indirectly, by Levin, through his family relationships.
`
`14. What is more, part of the supposed “payment” by Fiesta for the Cannabis Cup
`
`licensing was purported “forgiveness” of a worthless debt from an entity (Whistling Pines Capital,
`
`LLC (“Whistling Pines”)) owned by Levin’s stepbrother, Maxx Abramowitz, who was also a
`
`HighTimes employee when the Licensing Agreement was consummated.4 The Licensing
`
`Agreement states that:
`
`
`4 See Debra Borchardt, Shenanigans Continue as Receivers Try to Sell High Times Assets,
`Greenmarketreport.com,
`May
`30,
`2024,
`available
`at
`https://www.greenmarketreport.com/shenanigans-continue-as-receivers-try-to-sell-high-times-
`assets/ (explaining that “Adam Levin’s stepbrother Maxx Abramowitz” owns Whistling Pines
`Capital, LLC, and that a large portion of the “initial licensing fee” that HighTimes/THC received
`from the Licensing Agreement was “the forgiveness of $393,000 of debt to Whistling Pines
`Capital, LLC”).
`
` 5
`
`
`
`
`
`

`

`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`The Initial Licensing Fee shall be Eight Hundred and Ninety-Three
`Thousand Dollars ($893,000 USD), which shall be paid by the forgiveness
`of $393,000 of debt to Whistling Pines Capital, LLC and the remainder split
`into two equal payments semi-annual payments of Two Hundred Fifty
`Thousand Dollars ($250,000). The first payment shall be due within five (5)
`Business Days of the Effective Date and a second payment of two Hundred
`Fifty Thousand Dollars ($250,000) due on June 30, 2024.
`
`Id. sched. B at 21.
`
`15.
`
`Upon information and belief, Abramowitz knew that HighTimes/THC was in dire
`
`financial straits and hurtling towards either receivership or bankruptcy, meaning it would never
`
`pay back the loan to Abramowitz’s entity, Whistling Pines. Abramowitz also understood, upon
`
`information and belief, that Whistling Pines was unlikely to recover any of the $393,000 debt from
`
`HighTimes/THC if the Company declared bankruptcy or entered into a receivership. In other
`
`words, based on his inside knowledge of HighTimes’ financial situation, Abramowitz knew that
`
`the supposed forgiveness of the $393,000 debt was not really consideration or remuneration at all,
`
`since Whistling Pines would never see a cent of this money in any scenario. Upon information and
`
`belief, Abramowitz agreed to Whistling Pines’ purported $393,000 debt forgiveness to deceptively
`
`make it appear that HighTimes/THC was receiving a $393,000 benefit, when it was actually not
`
`receiving any such value at all. Abramowitz did this, upon information and belief, because Levin
`
`was making money (much of it in cash) through Fiesta, and Fiesta is and was an entity separate
`
`from HighTimes that would not be (and was not, in fact) included in any Company receivership.
`
`16. Moreover, as of the Receiver’s May 2024 Report disseminated on June 11, 2024,
`
`the Receiver could not confirm that Fiesta even made its $250,000 initial payment to Trans-High
`
`Corporation pursuant to the Licensing Agreement. See Ex. 5 at 17, 20. This further underscores
`
`that the Licensing Agreement was, upon information and belief, a sham transaction made for the
`
`true purpose of allowing Levin to continue to make money from the Cannabis Cup events using
`
` 6
`
`
`
`
`
`

`

`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`the Fiesta entity, to the detriment of HighTimes, THC, and those entities’ debtholders and
`
`shareholders.
`
`17.
`
`Upon information and belief, Levin has personally and meaningfully benefited
`
`from Fiesta’s ill-gotten receipt of the Cannabis Cup monies and intellectual property.
`
`NATURE OF THE ACTION
`
`This is partly an action for breaches of contracts and promissory notes concerning
`
`18.
`
`debts owed to Plaintiffs by certain Defendants, namely Trans-High Corporation, which is, upon
`
`information and belief, wholly owned by HighTimes. Under those agreements, Defendants owe
`
`Plaintiffs millions of dollars. But Defendants have long taken action to delay payment of debts
`
`that are indisputably owed to Plaintiffs.
`
`19.
`
`This also is an action for breach of contract arising from Defendants’ complete
`
`failure to abide the terms of an unequivocal settlement agreement with Plaintiff Eleanora Kennedy,
`
`executed on October 27, 2016 (“Settlement Agreement”).
`
`20.
`
`This also is an action for fraud and negligent misrepresentation. Those claims arise
`
`out of Defendants’ intentional and/or negligent misrepresentations regarding the present financial
`
`status and viability of Defendants. Defendant Adam Levin, on behalf of Defendants, made these
`
`false statements of present fact to Mrs. Kennedy to induce Plaintiffs to agree to convert their debts
`
`to shares, based upon the false promise of a future public listing on a stock exchange of shares in
`
`Defendants’ companies, which Levin knew at the time was not going to happen, and did not expect
`
`that it could happen under the then-current circumstances of the Company.
`
`21.
`
`And, lastly, this is in part a derivative action brought on behalf of HighTimes.
`
`Adam Levin and other members of the Board of Directors both past and present have breached
`
`their fiduciary duties to Plaintiffs, to the companies they control, and to their shareholders.
`
` 7
`
`
`
`
`
`

`

`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`Specifically, they have failed to act in the interests of HighTimes and its shareholders and to avoid
`
`personal conflicts of interest or taking actions that compromised their abilities to act in the best
`
`interests of HighTimes.
`
`22.
`
`Accordingly, this action seeks to remedy the many breaches of fiduciary duty that
`
`have damaged HighTimes and its shareholders, and to seek an equitable accounting of HighTimes
`
`so that Plaintiffs and other shareholders may have an appraisal of the financial health of the
`
`company. Currently, such an appraisal is impossible because Defendants do not keep proper
`
`financial records of HighTimes, and, upon information and belief, have not for many years.
`
`THE PARTIES
`
`Plaintiff Mrs. Eleanora Kennedy is a resident and citizen of the State of New York,
`
`23.
`
`residing in New York, New York.
`
`24.
`
`Plaintiff The Michael Kennedy Family Trust Under Section 2.4 Of The Michael
`
`Kennedy Revocable Trust (Eleanora Kennedy, Trustee) is a trust organized under the laws of the
`
`State of New York.
`
`25.
`
`Plaintiff The Non-Exempt Marital Trust Under Section 2.3 Of The Michael
`
`Kennedy Revocable Trust (Eleanora Kennedy, Trustee) is a trust organized under the laws of the
`
`State of New York.
`
`26.
`
`Plaintiff The Exempt Marital Trust Under Section 2.3 Of The Michael Kennedy
`
`Revocable Trust (Eleanora Kennedy, Trustee) is a trust organized under the laws of the State of
`
`New York.
`
`27.
`
`Defendant Hightimes Holding Corp. (also the derivative Plaintiff) is a foreign, for-
`
`profit corporation organized under the laws of the State of Delaware and authorized to do business
`
` 8
`
`
`
`
`
`

`

`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`within the State of New York with a principal place of business at of 2110 Narcissus Court, Venice,
`
`California 90291.
`
`28.
`
`HighTimes’s authorized agent for service of process in New York is URS Agents,
`
`Inc. 99 Washington Avenue, Suite 805A, Albany, New York 12210.
`
`29.
`
`Defendant Trans-High Corporation is a domestic, for-profit corporation organized
`
`under the laws of the State of New York with a principal address of 2110 Narcissus Court, Venice,
`
`California 90291.
`
`30.
`
`THC’s authorized agent for service of process in New York is URS Agents, Inc. 99
`
`Washington Avenue, Suite 805A, Albany, New York 12210.
`
`31.
`
`Defendant Adam Levin (“Levin”) is an individual with an address of 2110
`
`Narcissus Court, Venice, California 90291.
`
`32.
`
`33.
`
`Levin is the former Executive Chairman of HighTimes.
`
`Defendant Shaun Jarvis (“Jarvis”) is an individual who resides, upon information
`
`and belief, in the State of Oregon.
`
`34.
`
`Jarvis was appointed an Independent Director of HighTimes on December 18, 2022
`
`and Interim Chief Executive Officer on August 23, 2023. He currently serves on the Board of
`
`Directors of HighTimes.
`
`35.
`
`Defendant Paul Henderson (“Henderson”) is an individual who resides, upon
`
`information and belief, in the State of Utah.
`
`36.
`
`Henderson was appointed President and Interim Chief Financial Officer of
`
`HighTimes on January 16, 2020 and Chief Executive Officer and Director on January 25, 2022.
`
`On August 23, 2023, he resigned from all of these positions.
`
` 9
`
`
`
`
`
`

`

`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`37.
`
`The Doe Defendants, whose identities are unknown, are the current and former
`
`Directors of HighTimes other than Levin, whose identities are unknown to Plaintiffs (“Doe
`
`Director Defendants” and, with Levin, Jarvis, and Henderson, the “Director Defendants”). The
`
`names of these Defendants are unknown with certainty because HighTimes has not consistently
`
`made appropriate public disclosures and SEC filings concerning its business, including who are
`
`and were the members of its Board of Directors, and when they served.
`
`JURIDICTION AND VENUE
`
`38.
`
`This Court has personal jurisdiction over Defendants pursuant to Sections 301 and
`
`302 of the Civil Practice Law and Rules (“CPLR”). Defendants are authorized to conduct business
`
`in New York and regularly transact business within New York, thereby consenting to this Court’s
`
`jurisdiction. THC is incorporated in New York, Levin regularly travels to New York to conduct
`
`business, and the contractual breaches and tortious acts occurred in and had a foreseeable effect in
`
`New York.
`
`39. Moreover, Defendants, in the subject Settlement Agreement, submitted to this
`
`Court’s jurisdiction and agreed that “[a]ny dispute, claim, or controversy arising out of or relating
`
`to this [Settlement] Agreement shall be adjudicated in courts of the State of New York, New York
`
`County. The Parties agree that the Court retains jurisdiction to resolve any dispute, claim, or
`
`controversy arising under or relating to this Agreement.” Settlement Agreement ¶ 19.
`
`Furthermore, the other breaches and tortious acts giving rise to this lawsuit, including the myriad
`
`breaches of fiduciary duty that have injured HighTimes and its shareholders, arise from many of
`
`the same operative facts as the breach of the Settlement Agreement.
`
`40.
`
`The basis of venue in New York County is CPLR Section 501 because the parties
`
`consented to venue in New York County. Settlement Agreement ¶ 19.
`
`
`
`
`10
`
`

`

`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`GENERAL ALLEGATIONS
`
`41.
`
`As set forth in more detail below, the causes of action Plaintiffs asserts against
`
`Defendants are: (1) breaches of contract; (2) breaches of fiduciary duty; (3) fraudulent inducement;
`
`(4) negligent misrepresentation; (5) equitable accounting; and (6) equitable disgorgement of ill-
`
`gotten gains.
`
`42.
`
`Plaintiff Kennedy is one of the largest shareholders and holders of debt in
`
`HighTimes. Kennedy also is a former member of the Board of Directors. She resigned from the
`
`Board of Directors of HighTimes on or about December 11, 2019.
`
`43.
`
`44.
`
`Kennedy is the trustee for all three of the Kennedy Trusts.
`
`For many years, Kennedy was actively involved in the operation and management
`
`of THC, until the Company’s sale, in early 2016, to a private equity entity owned and controlled
`
`by Defendant Levin.
`
`45.
`
`There are numerous facets to Plaintiffs’ claims against Defendants. But the relevant
`
`story generally begins with a consulting agreement to which Kennedy and THC—HighTimes’s
`
`predecessor—agreed.
`
`The February 2016 Consulting Agreement
`
`46.
`
`In or about February 29, 2016, Kennedy, on her own behalf and for the Kennedy
`
`Trusts, along with certain other individuals, entered into an agreement with THC regarding her
`
`continuing services for Defendant THC, in connection with its acquisition by Defendant
`
`HighTimes (“Consulting Agreement”).
`
`47.
`
`The Consulting Agreement provided that Kennedy would (1) affirm the validity of
`
`a resolution passed on February 26, 2016 by the THC shareholders approving the election of
`
`certain company directors; (2) agree to turn over administrative credentials and passwords for the
`
`
`
`
`11
`
`

`

`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`HighTimes email servers; and (3) provide access codes to THC’s storage units. Consulting
`
`Agreement ¶ 1.
`
`48.
`
`In exchange for the above, the Consulting Agreement granted Kennedy the right to
`
`appoint three (3) company directors and provided that THC would, among other obligations, hire
`
`Kennedy to provide consulting services to the company for a period of five years, at a salary of
`
`$700,000 per year, with the exact terms of payment and schedule to be determined within thirty
`
`(30) days of signing of the Consulting Agreement. Consulting Agreement ¶¶ 1–2.
`
`49.
`
`The Consulting Agreement also provides that THC would pay Kennedy $2,620 per
`
`month for car, garage, and health insurance expenses, and $2,500 per month for general expenses.
`
`Consulting Agreement ¶ 2.
`
`50.
`
`The Consulting Agreement was governed by and was to be construed in accordance
`
`with the laws of the State of New York. Consulting Agreement ¶ 4.
`
`51.
`
`Defendant THC breached the Consulting Agreement by failing to make even the
`
`first payment to Kennedy under the Consulting Agreement.
`
`52.
`
`Defendant THC did not abide any of its obligations under the Consulting
`
`Agreement, giving rise to a lawsuit and a settlement agreement regarding that lawsuit, described
`
`next.
`
`The October 2016 Settlement Agreement
`
`53.
`
`After Defendants completely breached their obligations to Plaintiff Kennedy under
`
`the Consulting Agreement—by failing to make even the first payment owed under it—Kennedy
`
`sued Defendants for breach of contract on July 11, 2016, in New York Supreme Court, New York
`
`
`
`
`12
`
`

`

`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`County, as Kennedy, et al. v. Trans-High Corp., et al., case number 155718/2016 (“July 2016
`
`Lawsuit”).
`
`54.
`
`On October 27, 2016, to resolve the claims asserted in the July 2016 Lawsuit,
`
`Kennedy, on behalf of herself and the Kennedy Trusts, along with certain other individuals, entered
`
`into a Settlement Agreement with THC (“Settlement Agreement”).
`
`55.
`
`The Settlement Agreement provided that, in exchange for Kennedy’s dismissal of
`
`the July 2016 lawsuit over the Consulting Agreement and a general release of claims, Defendants
`
`agreed to pay Kennedy $221,447.31 in “Past Due Payments,” representing consulting fees and
`
`monthly stipends payable pursuant to the Consulting Agreement, and an additional $63,453.33 per
`
`month in “Additional Payments” until the closing of a then-contemplated acquisition of THC by a
`
`Levin-led financing group, at the time envisioned to be Vert Capital Corporation (“Vert”).
`
`Settlement Agreement ¶¶ 2–3.
`
`56.
`
`The Settlement Agreement was expressly contingent upon the closing of the
`
`anticipated acquisition. The Settlement Agreement provided that THC would pay Kennedy on the
`
`closing date of the anticipated transaction. Settlement Agreement ¶ 3.
`
`57.
`
`The anticipated transaction with a Levin-led entity, this time called Oreva Capital
`
`(“Oreva”), did occur. But Defendants did not pay Kennedy as promised, in blatant and complete
`
`violation of the Settlement Agreement.
`
`58.
`
`Defendants have provided no reason or justification for why the payments were not
`
`made in accordance with the Settlement Agreement.
`
`
`
`
`13
`
`

`

`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`The February 2017 Stock Purchase Agreement
`
`59. What follows is a convoluted yet important series of transactions that relate to
`
`HighTimes’s false promises, fraudulent statements, and failures with respect to Mrs. Kennedy,
`
`other shareholders, and HighTimes itself.
`
`60.
`
`On February 14, 2017, HighTimes entered into an Amended and Restated Stock
`
`Purchase Agreement (“SPA”) with THC, to complete HighTimes’s purchase of sixty percent
`
`(60%) of all stock held by THC’s shareholders.
`
`61.
`
`At the time of entering into the SPA, Kennedy owned approximately 25.50 shares
`
`of THC stock representing approximately a 30.722892% interest in THC.
`
`62.
`
`The SPA provided that the total purchase price for all outstanding shares of THC
`
`was $42,200,000 plus the issuance of common stock in HighTimes.
`
`63.
`
`The $42,200,000 was to be paid pro rata to all shareholders of THC, with
`
`$12,200,000 payable immediately upon closing and the remaining $30,000,000 payable over time
`
`at eight percent (8%) interest secured by purchase notes (“Purchase Notes”).
`
`64.
`
`Pursuant to the SPA, the Kennedy Trusts were owed their proper portion of money,
`
`after accounting for the initial $12,200,000 payment.
`
`65.
`
`Section 7.6(b) of the SPA states that any legal proceedings related to the SPA or
`
`the enforcement of the SPA “may be brought or otherwise commenced in . . . the Supreme Court
`
`of the State of New York . . . .”
`
`
`
`
`14
`
`

`

`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`The February 2017 Convertible Notes
`
`66.
`
`On February 28, 2017, HighTimes executed Convertible Note agreements in favor
`
`of Kennedy, memorializing the amounts due (“Convertible Notes”).
`
`67.
`
`The Convertible Notes stated that HighTimes would pay Kennedy nine, equal,
`
`quarterly principal installments, commencing six months after February 28, 2017.
`
`68.
`
`The remaining principal balance under the Convertible Notes plus accrued interest
`
`was to be paid on the maturity date of February 28, 2020 (“Maturity Date”).
`
`69.
`
`The Convertible Notes provided that interest totaling eight percent (8%) per year
`
`would be due and payable quarterly.
`
`70.
`
`The Convertible Notes provided that a default would occur under the Convertible
`
`Notes should HighTimes fail to make any payments due under the Convertible Notes within five
`
`days of written notice.
`
`71.
`
`In the event of a default under the Convertible Notes, a default interest rate of
`
`twelve percent (12%) compounded monthly was to be applied to any unpaid, due, and owing
`
`amounts.
`
`72.
`
`Section 10 of the Convertible Notes stated that HighTimes was responsible for
`
`attorneys’ fees and costs incurred by Plaintiffs in connection with enforcing HighTimes’s
`
`obligations under the Convertible Notes.
`
`73.
`
`THC executed a guaranty in favor of Kennedy for the amounts due under the
`
`Convertible Notes (“Guaranty”).
`
`74.
`
`After making the first payment due under the Convertible Notes, HighTimes
`
`defaulted on its obligations to make the second payment to Plaintiffs, and never made any further
`
`payments to Plaintiffs in accordance with the Convertible Notes.
`
`
`
`
`15
`
`

`

`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`The October 2017 Agreement
`
`75.
`
`On October 31, 2017, HighTimes reached an “October 31 Agreement” with the
`
`Kennedy Trusts, agreeing to issue shares of voting Class A common stock upon conversion of the
`
`Purchase Notes issued pursuant to the SPA.
`
`76.
`
`The October 31 Agreement provided that HighTimes agreed to increase the interest
`
`rate on deferred principal installments of the Purchase Notes from eight percent (8%) to ten percent
`
`(10%), with default interest remaining at twelve percent (12%).
`
`77.
`
`Upon information and belief, Defendants never made any payments in accordance
`
`with the October 31 Agreement, and never paid the increased interest rate or default interest on
`
`deferred principal payments.
`
`The May 2018 Default Waiver Letter
`
`78.
`
`On May 24, 2018, HighTimes issued a “Default Waiver Letter” to Kennedy,
`
`confirming that it was in default under the Convertible Notes.
`
`79.
`
`The Default Waiver Letter admitted that HighTimes failed to make the February
`
`28, 2018 quarterly payment as required by the Convertible Notes.
`
`80.
`
`The Default Waiver Letter also stated that HighTimes was “unlikely” to make the
`
`May 28, 2018 quarterly payment required by the Convertible Notes.
`
`81.
`
`The Default Waiver Letter further confirmed that HighTimes had not made any of
`
`the twelve percent (12%) default interest rate payments which had begun to accrue as of August
`
`29, 2017.
`
`82.
`
`The Default Waiver Letter provided that the Kennedy Trusts agreed to defer all
`
`amounts due, including the then-upcoming May 28, 2018 payment, to September 12, 2018, subject
`
`to HighTimes making full payment, including payment of all default interest, of all amounts due
`
`
`
`
`16
`
`

`

`FILED: NEW YORK COUNTY CLERK 06/14/2024 11:23 PM
`NYSCEF DOC. NO. 142
`
`INDEX NO. 159131/2022
`
`RECEIVED NYSCEF: 06/14/2024
`
`
`
`at the earlier of the consummation of a United States Securities and Exchange Commission
`
`(“SEC”) Regulation A+ Tier II Offering (the “Reg A+ Offering”), or a merger with Origo
`
`Acquisition Corp. (“Origo”).5
`
`83.
`
`The Kennedy Trusts agreed to defer payments due and owing pursuant to the
`
`Default Waiver Letter.
`
`84.
`
`The Kennedy Trusts agreed to these terms because Levin represented, in or around
`
`July 2022 that Kennedy’s and the Kennedy Trusts’ Class B shares were “illiquid and therefore
`
`valueless,” and thus Plaintiffs needed to waive the defaults by Defendants and convert the shares.
`
`85.
`
`HighTimes once again failed to comply with its payment obligations and made no
`
`payments to Kennedy or the Kennedy Trusts.
`
`The September 2018 Payment Waiver Letter
`
`86.
`
`On September 7, 2018, HighTimes issued a “Payment Waiver Letter” to Kennedy,
`
`which confirmed that HighTimes did not pay the February 28, 2018, May 28, 2018, or August 28,
`
`2018, quarterly payments, including the required original or default interest amounts.
`
`
`5 In July 2017, HighTimes announced that it had entered into a merger agreement with Origo, a
`special purpose acquisition company, in support of its efforts to become a publicly-traded
`company. Origo was to have acquired 100% of HighTimes’s equity in exchange for over 23
`million newly-issued shares of Origo, with two Origo board members joining HighTimes as
`independent directors. See High Times Holding Corp. Seeks Public Listing Through Business
`Combination with Origo Acquisition Corporation, HIGH TIMES
`(July 27, 2017),
`https://hightimes.com/news/high-times-holding-corp-seeks-public-listing-through-business-
`combination-with-origo-acquisition-corporation/. In August 2018, HighTimes announced that it
`was ending the proposed merger and proceeding toward a public listin