Defendant Composite Technology Corporation (CTC) moves, pursuant to CPLR 3211 (a) (1) and (7), for an order dismissing plaintiffs' complaint. [*2]

This is an action for damages, declaratory relief and injunctive relief arising out of two financing transactions. Plaintiffs Enable Growth Partners, LP (EGP), Enable Opportunity Partners, LP (EOP), and Pierce Diversified Strategy Master Fund, LLC (Pierce) are corporate investors in securities. Defendant CTC is a public company, engaged in the business of selling electrical transmission systems and wind turbines.

On or about May 5, 2005, CTC filed for bankruptcy under the Bankruptcy Code. On September 23, 2005, CTC, together with EGP, EOP and five other investors, entered into Securities Purchase Agreements for debtor-in-possession financing (the DIP SPA). In accordance with the terms of the DIP SPA, CTC sold to the investors certain convertible notes and warrants (the DIP Warrants).^[FN1] On March 6, 2006, CTC and the plaintiffs entered into other Securities Purchase Agreements (the Bridge SPA), including a Registration Rights Agreement (Bridge RRA). Pursuant to the Bridge SPA, EGP, EOP, Pierce, and three other investors each purchased certain convertible notes and warrants from CTC (the Bridge Warrants).^[FN2]

The DIP Warrants and the Series A Warrants both contain an anti-dilution provision whereby the number of shares and the exercise prices of the warrants would be adjusted if CTC issues additional securities. On or about September 5, 2006, CTC converted the notes of two non-party note holders into 854,840 shares of its common stock, and also issued an additional 1,276,939 shares of CTC common stock to these two note holders (the Additional Shares), in consideration of the investors waiving certain rights relating to the notes.^[FN3] Thereafter, CTC adjusted the exercise prices and the number of warrant shares to reflect the Additional Shares (the anti-dilution adjustment calculation). Plaintiffs claim that they contacted CTC to object to the method CTC used in arriving at its anti-dilution adjustment calculation, and that these objections were ignored.

In or about March 2007, CTC sent plaintiffs certain Selling Security Questionnaires in connection with an SEC registration statement that CTC was intending to file. Plaintiffs were requested to identify the number of shares that each of the plaintiffs beneficially owned. Applying a different valuation of the non-cash consideration that CTC received for the Additional Shares, plaintiffs responded that they beneficially owned millions more shares than CTC claimed they owned. CTC thereafter registered plaintiffs' shares based on CTC's anti-dilution adjustment calculation, not on plaintiffs' calculations. [*3]

On or about April 2, 2007, EGP submitted to CTC a notice of cashless exercise for 8,750,000 warrant shares, which CTC refused to honor. Following CTC's rejection of plaintiffs' valuation, and its refusal to allow the non-cash consideration to be valued by a jointly-selected appraiser, this action ensued.

The complaint asserts four causes of action, to wit: breach of contract for failure to comply with the anti-dilution provisions set forth in the DIP Warrants and the Series A Warrants; (2) breach of contract for failure to comply with EGP's notice of conversion (asserted by EGP only); (3) breach of the registration rights provisions under the DIP SPA and the Bridge RRA; and (4) a declaratory judgment adjusting the number of shares of common stock and the exercise prices for each DIP Warrant and Series A Warrant, as determined by the plaintiffs.

Plaintiffs claim that CTC, in breach of the procedures set forth in the DIP Warrants and the Series A Warrants, unilaterally and arbitrarily calculated the fair value of the non-cash consideration it received in exchange for issuing the Additional Shares.^[FN4] Plaintiffs argue that under the terms of the Warrants, the fair value of any consideration other than cash must be determined jointly by CTC and the majority holders of the warrant shares, which CTC failed to do. Plaintiffs explain that the fair value determination is critical in calculating the number and price of additional warrants plaintiffs are entitled to. The complaint alleges that CTC understated the number of adjusted warrant shares and overstated the exercise prices, thereby diminishing the value of plaintiffs' warrants by millions of dollars.

In support of its motion to dismiss the complaint, CTC urges that the documentary evidence submitted clearly establishes that it did not breach any agreements with plaintiffs. CTC argues that plaintiffs failed to comply with the notice provisions of the Warrants, and that plaintiffs, as minority holders of the outstanding shares of common stock underlying the Warrants, do not have standing to object to CTC's anti-dilution adjustment calculation.

Although generally, on a motion to dismiss a complaint for failure to state a cause of action (CPLR 3211 [a] [7]), the court must assume as true the facts alleged in the complaint (Kronos, Inc. v AVX Corp., 81 NY2d 90, 92 [1993]), when the movant offers matter extrinsic to the pleading, the court need not assume the truthfulness of the asserted claims (Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]). On a motion to dismiss the complaint on the basis of documentary evidence (CPLR 3211 [a] [1], dismissal is appropriate if the documents definitively dispose of the claim (Excel Graphics Technologies, Inc. v CFG/AGSCB 75 Ninth Avenue, L.L.C., 1 AD3d 65 [1st Dept 2003], lv denied 2 NY3d 794 [2004]; Mark Hampton, Inc. v Bergreen, 173 AD2d 220 [1st Dept 1991], appeal denied 80 NY2d 788 [1992]).

"A written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms" (Excel Graphics Technologies, Inc. v CFG/AGSCB 75 Ninth Avenue, L.L.C., 1 AD3d at 69; see also Matter of Wallace v 600 Partners Co., 86 NY2d 543, 548 [1995]; W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162 [1990]). It is well settled that when the intention of the parties is expressed in plain and unambiguous terms, the question of intent is one of law which may be decided on a motion for summary judgment (Chimart Assoc. v Paul, 66 NY2d 570 [1986]). The test for ambiguity is whether an agreement on its face is reasonably susceptible [*4]to more than one interpretation (Republic Natl. Bank of New York v Zimmcor U.S.A. Corp., 203 AD2d 107, 110 [1st Dept 1994]). Merely because plaintiffs offer a different interpretation for a clear provision does not render it ambiguous (Bethlehem Steel Co. v Turner Constr. Co., 2 NY2d 456, 460 [1957]). Here, the language of the relevant provisions contained in the Warrants is clear.

Section 2 (a) (iv) of both the DIP Warrants and the Series A Warrants provides the holder with certain anti-dilution rights, i.e., that the number of warrant shares available under the warrants and their exercise prices would be adjusted if CTC issued or sold additional shares of common stock or convertible securities. If these shares were issued or sold for cash, the readjustment would be based upon the value of the consideration received by CTC for the additional securities. If, as here, the consideration received by CTC for the Additional Shares was "for a consideration other than cash, the amount of such consideration received by [CTC] will be the fair value of such consideration . . . ."^[FN5] This section further provides, in relevant part, that:

The fair value of any consideration other than cash or securities will be determined jointly by [CTC] and the Required Holders. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation ("the Valuation Event"), the fair value of such consideration will be determined within five (5) Business Days after the tenth day following the Valuation Event by an independent, reputable appraiser jointly selected by [CTC] and the Required Holders.

Section 15 of the Series A Warrants and the DIP Warrants defines "Required Holders" as "the holders of the SPA Warrants representing at least a majority of shares of Common Stock underlying the SPA Warrants then outstanding."

Here, "the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law" (Leon v Martinez, 84 NY2d 83, 88 [1994]; see also Biondi v Beekman Hill House Apartment Corp., 257 AD2d 76, 81 [1st Dept 1999], affd 94 NY2d 659 [2000]). The clear language of the Warrants demonstrates, as a matter of law, that the parties did not intend that minority holders of the SPA Warrants, such as plaintiffs herein, have the contractual right to participate in the determination of the fair value of the consideration received by CTC for issuing shares of its common stock or convertible securities for a consideration other than cash. Consequently, plaintiffs have no right to object to the anti-dilution adjustment calculation.

It is undisputed that CTC's issuance of the Additional Shares to two of the note holders triggered the anti-dilution provisions in the Warrants. It is also undisputed that the Additional Shares were issued for consideration other than cash, which, in turn, triggered the joint Fair Value Determination requirement set forth in subsection 2 (a) (iv) of the Warrants. Finally, it is undisputed that plaintiffs are not holders of the SPA Warrants representing at least a majority of shares of CTC's common stock underlying the Series A Warrants then outstanding.

Finally, plaintiffs fail to point to any provision in the Warrants which would give them the right to challenge the fair value determination and, consequently, the anti-dilution adjustment calculation. Because these written agreements were clearly negotiated between sophisticated, [*5]counseled businessmen dealing at arms' length (see JMD Holding Corp. v Congress Fin. Corp., 4 NY3d 373 [2005]; Chimart Assoc. v Paul, 66 NY2d at 571), and the Warrants unambiguously provide that only CTC and the Required Holders have the right to make a fair value determination, plaintiffs cannot defeat this motion to dismiss by arguing that, at the least, there is a triable issue of fact relating to the proper interpretation of the agreements and the parties' intent. Under the terms of the Warrants, plaintiffs do not have standing to object to CTC's anti-dilution adjustment calculation.^[FN6] Plaintiffs' other arguments have been considered, and found to be without merit.

Inasmuch as plaintiffs' claims are all based on CTC's alleged breach of the anti-dilution provisions in the Warrants, and this court has determined that plaintiffs have no standing to object to the anti-dilution adjustment calculation, CTC's motion to dismiss the entire complaint is granted.

Accordingly, it is

ORDERED that defendant Composite Technology Corporation's motion to dismiss is granted and the complaint is dismissed with costs and disbursements to defendant as taxed by the Clerk of the Court; and it is further

ORDERED that the Clerk is directed to enter judgment accordingly.

DATED: May 13, 2008

ENTER:

______________________________

J.S.C.