EMA Fin. LLC v. NFusz Inc.

MEMORANDUM AND ORDER   This litigation, between lender EMA Financial, LLC (“EMA” or “plaintiff”) and borrower NFusz, Inc. (“NFusz” or “defendant”), concerns two substantially similar transactions whereby plaintiff provided defendant with cash in exchange for (1) a one-year note bearing interest convertible into shares of NFusz common stock and (2) a warrant agreement granting plaintiff a five-year option to purchase shares of NFusz common stock at a fixed price (the “exercise price”).¹ Both transactions consist of a Securities Purchase Agreement (the “SPAs”), a Convertible Promissory Note (the “Notes”), and a Stock Purchase Warrant (the “Warrant Agreements”), (collectively, the “Agreements”).² In April 2018, after NFusz had repaid the Notes in full, EMA initiated this action to enforce its right to certain shares of NFusz common stock pursuant to the “cashless exercise” procedure as set forth in the Warrant Agreements. EMA now moves for partial summary judgment seeking a declaration regarding the validity of the formula pursuant to which EMA’s entitlement to NFusz common stock is calculated, and dismissal of defendant’s affirmative defenses and counterclaims. Defendant cross-moves for summary judgment on the grounds that the transactions are usurious and thus void ab initio under New York law. In the alternative, defendant seeks rescission of the Warrant Agreements or reformation of the cashless exercise formulas therein. For the reasons that follow, the Court grants EMA’s motion for partial summary judgment as to NFusz’s usury defense, but denies EMA’s motion insofar as it seeks a declaration regarding the cashless exercise formula as written in the Warrant Agreements.³ Indeed, notwithstanding the plain terms of the cashless exercise formula, the Agreements read in their entirety reveal that NFusz’s position regarding the proper cashless exercise formula is the only sensible one and that the cashless exercise formula must be enforced accordingly. I. Background⁴ EMA is a Delaware limited liability company with a principal office in New York City. ECF No. 65