Supreme Court Records Online Library - Page 1 of 18: Ed On 81512010

FILED: NEW YORK COUNTY CLERK 08/05/2010 INDEX NO.
110349/2010
ED ON 81512010
NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 08/16/2010
SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK
AJW PARTNERS, LLC, AJW OFFSHORE, LTD,

AJW QUALIFIED PARTNERS, LLC, AJW
MASTER FUND, LTD., AJW PARTNERS 11, LLC,
AJW OFFSHORE 11, LTD. AJW QUALIFIED
PARTNERS 11, LLC, NEW MILLENNIUM
CAPITAL PARTNERS 111, LLC AND AJW
MASTER FUND 11, LTD.,
SUMMONS
Plaintiff,
-against-
ADMIRALTY HOLDING COMPANY (FWA

RUBY MINING COMPANY), ADMIRALTY
CORPORATION, ADMIRALTY MARINE
OPERATIONS, LTD., UNDERSEA RECOVERY
CORPORATION (F/WA LEGAL ACCESS
TECHNOLOGIES, INC.),AND HERBERT C .
LEEMING,
Defendant.
To the Above Named Defendants:

YOU ARE HEREBY SUMMONED and required to serve upon plaintiffs’ undersigned
attorneys an answer to plaintiffs’ complaint in this action within twenty (20) days after the
service of this summons, exclusive of the day of service (or within thirty (30) days after the
service is complete if this sumrnons is not personally delivered to you within the State of New
York), and in the case of your failure to appear or answer, judgment will be taken against you by
default for the relief demanded in the complaint.
990931-1
Supreme Court Records OnLine Library - page 1 of 18

Dated: New, York, New York
August 3,2010
OLSHAN GRUNDMAN FROME
ROSENZWEIG & WOLOSKY LLP
By:
Thomas J . Fleming
Christine Wong
Attorneysfor Plaintiffs
Park Avenue Tower
65 East 5Sth Street
New York, New York 10022
(212) 451-2300
2
990931- 1

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
AJW PARTNERS, LLC, AJW OFFSHORE, LTD,

AJW QUALIFIED PARTNERS, LLC, AJW Index No.
MASTER FUND, LTD., AJW PARTNERS 11, LLC,
AJW OFFSHORE 11, LTD. AJW QUALIFIED
PARTNERS 11, LLC, NEW MILLENNIUM
CAPITAL PARTNERS 111, LLC AND AJW COMPLAINT
MASTER FUND 11, LTD.,
349
Plaintiffs,
-against- .
I
ADMIRALTY HOLDING COMPANY (F/K/A

RUBY MINING COMPANY), ADMIRALTY
CORPORATION, ADMIRALTY MARINE
FILED
OPERATIONS, LTD., UNDERSEA RECOVERY A M OS 2010
CORPORATION (F/WA LEGAL ACCESS
TECHNOLOGIES, INC.), AND HERBERT C. COUNlY CLERKS OFFICE
LEEMING, NEW YORK
Defendants.
Plaintiffs AJW Partners, LLC, AJW Offshore Ltd., AJW Qualified Partners, LLC, AJW
Master Fund, Ltd., AJW Partners 11, LLC, AJW Offshore 11, Ltd., AJW Qualified Partners 11,
LLC, New Millennium Capital Partners 111, LLC and AJW Master Fund 11, Ltd. (collectively, the
“Plaintiffs”) by their attorneys, Olshan Grundman Frome Rosenzweig & Wolosky LLP, for their
Complaint, allege:
The Parties
1. Plaintiff AJW Partners, LLC (“AJW Partners” or “AJWP”) is a limited liability
company organized under the laws of the State of Delaware, with its principal office in Roslyn,
New York.
820944-1

2, Plaintiff AJW Offshore, Ltd. (“AJW Offshore” or “AJWO”) is a corporation
organized under the laws of the Cayman Islands, managed by an advisor with principal office in
Roslyn, New York.
3. Plaintiff AJW Qualified Partners LLC (“AJW Qualified” or “AJWQP”) is a
limited liability company organized under the laws of New York, with its principal office in
Roslyn, New York.
4. Plaintiff AJW Master Fund, Ltd. (“AJW MF”) is a corporation organized under
the laws of the Cayman Islands, managed by an advisor whose principal office is in Roslyn, New
York, New York.
5. Plaintiff AJW Partners 11, LLC (“AJW Partners 11” or “AJWP 11”) is a limited
liability company organized under the laws of the State of Delaware, with its principal office in
Roslyn, New York.
6. Plaintiff AJW Offshore 11, Ltd. (“AJW Offshore 11”) is a corporation organized
under the laws of the Cayman Islands, which is managed from Roslyn, New York.
7. Plaintiff AJW Qualified Partners 11, LLC (“AJW Qualified 11” or “AJWQPII”) is
a limited liability company organized under the laws of New York, with its principal office in
Roslyn, New York.
8. Plaintiff New Millennium Capital Partners 111, LLC (“‘NewMillennium 111” or
“NMCP 111”) is a limited liability company organized under the laws of the State of New York,
with its principal office in Roslyn, New York. New Millennium Capital Partners I11 is the
assignee of Notes purchased by New Millennium Capital Partners 11, LLC.
9. Plaintiff AJW Master Fund 11, Ltd, (“AJW MF 11”) is a corporation organized
under the laws of the Cayman Islands, which is managed from Roslyn, New York.
2
820944-1

10. Upon information and belief, defendant Admiralty Holding Company (“ADMH”),
formerly known as Ruby Mining Company, is organized under the laws of Colorado and
headquartered in Atlanta, Georgia. ADMH’s common stock is registered with the United States
Securities and Exchange Commission (the “SEC”) and its shares are publicly traded under the
symbol “ADMH”. ADMH, through its wholly-owned subsidiaries Admiralty Corporation and
Admiralty Marine Operations, Ltd. (collectively, the “Admiralty Defendants”), is engaged in the
business of locating and recovering cargoes from historic shipwrecks by use of a proprietary and
trademarked detection technology called ATLIS,
11. Upon information and belief, defendant Undersea Recovery Corporation
(“URC”), formerly known as Legal Access Technologies, Inc., is a corporation organized under
the laws of Nevada and headquartered in Atlanta, Georgia.
12. Upon information and belief, Herbert C. Leeming is a co-founder of ADMH and
its current Chief Executive Officer. Leeming also has been the President of URC since 2005.
As CEO of ADMH, Leeming negotiated the terms of the Notes and various agreements between
Plaintiffs and defendant ADMH and signed such agreements on behalf of ADMH.
Jurisdiction and Venue
13. The Admiralty Defendants have consented to be sued in this County pursuant to
the Security Agreements and the Intellectual Property Security Agreements between Plaintiffs
and ADMH. All of the defendants are also subject to personal jurisdiction in this County
pursuant to CPLR 302(a)(l), as they transact or have transacted business within this State, and/or
contracted to supply goods or services in this State, from which transactions or contacts the
claims asserted herein arise.
3
820944-1

The Notes Issued to Plaintiffs
14. On June 23,2005, ADMH entered into a Securities Purchase Agreement (“SPA”)
and Registration Rights Agreement with plaintiffs AJW Partners,AJW Offshore, and AJW
Qualified, and New Millennium Capital Partners 11, LLC (“New Millennium 11” or “NMCP”),
under which ADMH agreed to issue, for good and valuable consideration, certain Callable
Secured Convertible Notes, in the aggregate principal amount of up to $850,000.
15. As of June 23,2005, such plaintiffs also entered into agreements related to the
SPA entered into on that same date, including a Security Agreement, Intellectual Property
Security Agreement (“IP Security Agreement”), and other agreements with ADMH.
16. Through July 2008, Plaintiffs thereafter loaned additional funds to ADMH on
similar terms, pursuant to similar agreements. All of the Notes referenced herein are in
substantially the same form (the “Notes”).
17. For good and valuable consideration paid to ADMH, plaintiff AJW Partners
received Notes in the aggregate principal amount of $593,321.61,inclusive of the Note issued in
I June 2005. These Notes are in the following amounts:
Issue Date I Maturitv I Princival

June 23,2005 June 23,2008 $122,400
Smtember 28.2005 Satember 28.2008 $1 15.200
December 2 1,2005 December 21,2008 $122,400
Smtember 28.2006 Smtember 28.2009 $54.000
June 7,2007 June 7,2010 $22,000
November 9.2007 November 9.2010 $39.600
December 3 1,2007 ’ December 3 1,2010 $561594.69
February 8,2008 February 8,201 1 $24,645
Julv 30.2008 Julv 30.201 1 $26.481.92
18. For good and valuable consideration paid to ADMH, plaintiff AJW Qualified
received Notes in the aggregate principal amount of $1,195,750.
4
820944-1

Issue Date Maturity Principal
June 23,2005 June 23,2008 $287,300
September 28,2005 September 28,2008 $270,400
December 21,2005 December 21,2008 $287,300
June 7,2007 June 7,2010 $70,750
19. For good and valuable consideration paid to ADMH, plaintiff AJW Offshore
received Notes in the aggregate principal amount of $1,767,000.
Issue Date Maturitv Princbal

June 23,2005 June 23,2008 $425,850
December 21,2005 December 21,2008 $425,8 50
June 7,2007 June 7,20 10 $154,500
20. For good and valuable consideration paid to ADMH, New Millennium I1 received
Notes in the aggregate principal amount of $8 1,483.
Issue Date Maturity Principal

June 23,2005 June 23,2008 $14,450
December 2 1,2005 December 2 1,2008 $14,450
May 30,2007 May 30,201 0 $5,000
November 9.2007 November 9.2010 $4.950
December 3 1,2007 December 3 1,201 0 $6,545.42
Februarv 8.2008 Februarv 8.201 1 $6.045
21. For good and valuable Consideration paid to ADMH, plaintiff AJW Master Fund
received Notes in the aggregate principal amount of $1,913,5 16.68.
Issue Date Maturitv Princival

May 30,2007 May 30,2010 $535,000
November 9,2007 November 9,2010 $405,450
December 3 1.2007 December 3 1.20 10 $358.937.13
February 8,2008 February 8,201 1 $434,3 10
July 30,2008 July 30,201 1 $179,819.55
5
820944-1

22. In lieu of paying, in cash, interest accrued on the Notes, ADMH issued, on or
about December 3 1,2007 and July 30,2008, additional Notes to certain plaintiffs, which Notes
are included in the above figures.
23. In total, Plaintiffs loaned in excess of $4.8 million to ADMH over the course of
three years.
24. Each of the Notes matured, by their terms, within three years of the date of issue.
To date, six Notes (dated June 2005 through June 2007) have matured and become due. These
Notes remain unpaid.
The Security Ameements
25. Pursuant to a Security Agreement and IP Security Agreement, dated June 23,
2005 and June 20,2005, respectively, ADMH induced Plaintiffs to purchase the Notes by
granting them a first priority security interest in all of ADMH’s goods, inventory, contract rights,
receivables, documents, general intangibles, software intellectual property (including software
programs, computers, documentation and all rights associated with such software, computers and
documentation), copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses and trade secrets. The Security Agreement and IP Security Agreement provide that if an
Event of Default under the Notes occurs, Plaintiffs shall have all rights available under the
Uniform Commercial Code, plus the right to immediate possession of the collateral and the right
to operate ADMH’s business using the collateral.
26. Plaintiffs duly perfected their security interests under the Security Agreement and
IP Security Agreement in connection with each of the transactions.
27. A key provision in both the IP Security Agreement and Security Agreement
assured Plaintiffs that ADMH would not sell, transfer, pledge any of its intellectual property
6
820944-1

. . . , -.. . .. ... . , .,. . .
.. . .
assets, without notice to or consent from Plaintiffs. Paragraphs 2 and 3 of the IP Security
Agreement and Security Agreements provide in pertinent part:
[The Admiralty Defendants] unconditionally and irrevocably,

pledge[], grant[] and hypothecate[] to the [N.I.R. Affiliates], a
continuing security interest in, a continuing first lien upon, an
unqualified right to possession and disposition of and a right of set-
off against, in each case to the fullest extent permitted by law, all
of the [Admiralty Defendants’] right, title and interest of
whatsoever kind and nature in and to the [Intellectual Property].
***
The [Admiralty Defendants] will not transfer, pledge, hypothecate,
encumber, license (except for non-exclusive licenses granted by
the [Admiralty Defendants] in the ordinary course of business), sell
or otherwise dispose of any of the Intellectual Property without the
prior written consent of [Pluint@s]. (emphasis added)
28. Further, the Security Agreement grants Plaintiffs a security interest and first lien
on “all the [Admiralty Defendants’] goods,”
29. Further, the IP Security Agreement provides that “all rights of [Plaintiffs] and all
obligations of the [Admiralty Defendants] hereunder shall be absolute and unconditional.”
The 2007 Litigation
30. In May 2007, Plaintiffs commenced an action against the Admiralty Defendants
and others for defaults under the Notes issued in 2005 and 2006. The parties subsequently
entered into a settlement agreement whereby the 2005 and 2006 Notes were reinstated, the
defaults were waived, and additional secured convertible notes and warrants were issued
(“Settlement Agreement”).
3 1. The Settlement Agreement granted Plaintiffs a first priority security interest in all
of Admiralty Defendants’ assets, including the ship itself, to secure all of Admiralty Defendants’
obligations to the Plaintiffs,
7
820944-1

32. All parties to the Settlement Agreement agreed that, in the event of an uncured
default under the promissory note, all of Admiralty Defendants’ assets would be sold and
distributed according to an intercreditor agreement entered into concurrently with the Settlement
Agreement.
33. Plaintiffs and the Admiralty Defendants also executed a security agreement that
granted Plaintiffs a security interest in essentially all of Admiralty Defendants’ assets and
intellectual property.
The Improper Licensing of ATLIS Technolow to Undersea Recovery Corporation
34. Plaintiffs have learned through a press release that the Admiralty Defendants have
entered an agreement with Defendant URC that purports to license to URC, in perpetuity, the
exclusive worldwide rights to use the proprietary ATLIS technology, including associated patent
rights.
35. URC is controlled by Defendant Leeming, who co-founded ADMH and is well
aware of the existence of the IP Security Agreements and subsequent similar agreements
restraining conveyance of the ATLIS technology.
36. As CEO of ADMH, Leeming was intimately aware of the restrictions placed on
the licensing of the ATLIS technology by the 2005 IP Security Agreement and subsequent
agreements, including the Settlement Agreement. Leeming was also very well aware, having
been an active and integral participant in the many negotiations with Plaintiffs in connection with
the SPAS and Notes, that Plaintiffs would be left with greatly diminished security and no remedy
at law if the ATLIS technology was licensed, encumbered or otherwise conveyed away.
Leeming intentionally procured the breach of the IP Security Agreement, which has damaged
Plaintiffs.
8
820944-1

37. The Admiralty Defendants did not, as required by the IP Security Agreement,
seek Plaintiffs’ permission (written or otherwise) to enter into any agreements with third-parties
with respect to the ATLIS technology. The Admiralty Defendants did not even bother to notify
Plaintiffs about the agreement with URC.
Assignments
38. Plaintiffs AJWP, AJWQP, AJWO, and AJW MF have assigned certain of their
rights under the Notes, SPA, Security Agreements and related agreements to Plaintiffs AJWP 11,
AJW Offshore 11, AJW Qualified 11, AJMF I1 and New Millennium 111. Additionally, New
Millennium I1 has assigned all of its right, title and interest in the Notes to plaintiff New
Millennium 111.
Default of the Notes
39. Section 3.1 of the Notes defines as an Event of Default, inter alia, ADMH’s
failure to pay principal and interest when due.
40. To date, ADMH has defaulted on six Notes, which were issued between June
2005 and June 2007 and matured three years later, by failing to pay the principal and interest
when due.
41, Section 3.5 of the Notes defines as an Event of Default, inter alia,ADMH’s
breach of any representation or warranty made in any Note or other agreement.
42. ADMH breached the representations and warranties under the Security
Agreements and IP Security Agreements not to sell, transfer or pledge any of its intellectual
property assets without notice to or consent from Plaintiffs by entering into a licensing
agreement with defendant URC whereby URC obtained the exclusive right to used ADMH’s
proprietary ATLIS technology.
9
820944-1

43. Pursuant to Section 3.9 of the Notes, upon an Event of Default under any Note, an
Event of Default occurs under every other Note.
44. ADMH has failed to honor its obligations regarding Plaintiffs’ Notes and other
agreements, and has failed to cure this defect, despite having received a default notice by letter
dated October 15,2008 and a notice to cure by letter dated February 2,2009.
45. As a result of the foregoing defaults, Plaintiffs have exercised their rights under
the Notes to accelerate and immediately demand payment in full of the Default Sum or Default
Amount, as defined in Section 3.9 of the Notes, plus appropriate interest and penalties. Plaintiffs
have given ADMH the requisite Default Notice, also as defined in Section 3.9 of the Notes,
Attorneys’ Fees
46. In addition to the foregoing, upon a default, Plaintiffs are entitled to their costs of
collection, including an award of attorneys’ fees pursuant to Section 4.5 of the Notes and Section
S(a) of the SPA.
First Claim for Relief

(Breach of Contract as Against Admiralty Defendants)
47. Plaintiffs restate the allegations in paragraphs 1 through 46.
48. Based upon the foregoing, ADMH has breached its obligations to AJW Partners
under the Notes, As a direct, approximate and foreseeable result of ADMH’s breach, AJW
Partners is entitled to recover from ADMH an amount to be determined at trial, representing the
Default Sum or Default Amount as defined in Section 3.10 of the Notes, plus all interest and
penalties, and attorneys’ fees.
Second Claim for Relief

10
820944-1

50. Based upon the foregoing, ADMH has breached its obligations to AJW Qualified
under the Notes, As a direct, approximate and foreseeable result of ADMH’s breach, AJW
Qualified is entitled to recover from ADMH an amount to be determined at trial, representing the
Third Claim for Relief

5 1. Plaintiffs restate the allegations in paragraphs 1 through 46.
52. Based upon the foregoing, ADMH has breached its obligations to AJW Offshore
under the Notes. As a direct, approximate and foreseeable result of ADMH’s breach, AJW
Offshore is entitled to recover from ADMH an amount to be determined at trial, representing the
Default Sum or Default Amount as defined in Section 3,lO of the Notes, plus all interest and
Fourth Claim for Relief

[Breach of Contract as Against Admiralty Defendants)
54. Based upon the foregoing, ADMH has breached its obligations to AJW Master
Fund under the Notes. As a direct, approximate and foreseeable result of ADMH’s breach, AJW
Master Fund is entitled to recover from ADMH an amount to be determined at trial, representing
the Default Sum or Default Amount as defined in Section 3.10 of the Notes, plus all interest and
Fifth Claim for Relief

JBreach of Contract as Against Admiralty Defendants)
55. Plaintiffs restate the allegations in paragraphs 1 through 46,
11
820944-1

56. Based upon the foregoing, ADMH has breached its obligations to AJW Partners I1
under the Notes. As a direct, approximate and foreseeable result of ADMH’s breach, AJW
Partners I1 is entitled to recover fiom ADMH an amount to be determined at trial, representing
penalties, and attorney’s fees,
Sixth Claim for Relief

58. Based upon the foregoing, ADMH has breached its obligations to AJW Offshore
I1 under the Notes. As a direct, approximate and foreseeable result of ADMH’s breach, AJW
Offshore I1 is entitled to recover from ADMH an amount to be determined at trial, representing
penalties, and attorney’s fees.
Seventh Claim for Relief

60. Based upon the foregoing, ADMH has breached its obligations to AJW Qualified
I1 under the Notes. As a direct, approximate and foreseeable result of ADMH’s breach, AJW
Qualified I1 is entitled to recover from ADMH an amount to be determined at trial, representing
Eighth Claim for Relief

12
820944-1

62. Based upon the foregoing, ADMH has breached its obligations to New
Millennium I11 under the Notes. As a direct, approximate and foreseeable result of ADMH’s
breach, New Millennium I11 is entitled to recover from ADMH an amount to be determined at
trial, representing the Default Sum or Default Amount as defined in Section 3.10 of the Notes,
plus all interest and penalties, and attorney’s fees.
Ninth Claim for Relief

63. Plaintiffs restate the allegations in paragraphs 1 through 46,
64. Based upon the foregoing, ADMH has breached its obligations to AJW MF I1
under the Notes. As a direct, approximate and foreseeable result of ADMH’s breach, AJW MF
I1 is entitled to recover from ADMH an amount to be determined at trial, representing the
Tenth Claim for Relief

[Marshalling of Assets as Against Admiralty Defendants)
66, Based upon the foregoing, Plaintiffs are entitled to an Order directing ADMH to
marshal, in preparation for foreclosure, all of its assets in which Plaintiffs have a security interest
under the Settlement Agreement, Security Agreements and IP Security Agreements, and deliver
promptly to Plaintiffs a list of those assets and their locations.
67. Plaintiffs have no adequate remedy at law.
Eleventh Claim for Relief

(Tortious Interference with Contract as Against URC and Lemming)
13
820944-1

69. Based upon the foregoing, defendants URC and Lemming had knowledge of the
Notes and related agreements between Plaintiffs and the Admiralty Defendants, and intentionally
induced the Admiralty Defendants to breach such agreements by entering into a licensing
agreement with URC over the ATLIS technology. As a direct, proximate and foreseeable result
of this breach, Plaintiffs are entitled to recover an amount to be determined at trial, plus all
interest, penalties and attorneys’ fees,
Twelfth Claim for Relief

(Fraudulent Conveyance as Against All Defendants)
71. Based on the foregoing, Plaintiffs bargained for and relied upon their security
interest and first lien in the Admiralty Defendants’ intellectual property, including but not limited
to the ATLIS technology, in agreeing to loan the Admiralty Defendants millions of dollars.
72. Defendants had knowledge of the Notes and related agreements, specifically the
provisions granting Plaintiffs a first lien and requiring Plaintiffs’ written consent for any transfer,
pledge or sale of the intellectual property.
73. Defendants acted intentionally to defraud Plaintiffs by having the Admiralty
Defendants to enter into a licensing agreement with URC without first seeking the written
consent of Plaintiffs.
74. As a direct, proximate and foreseeable result of this fraudulent conveyance,
Plaintiffs have a greatly diminished security interest and no remedy at law.
75. Based on the foregoing, Plaintiffs are entitled to an order setting the fraudulent
transfer aside.
WHEREFORE, Plaintiffs pray that judgment be entered against defendants:
14
820944-1

A. Awarding Plaintiffs all sums due under the Notes, plus prejudgment
interest, attorney’s fees, costs and disbursements, in an amount to be determined at trial but
believed to be in excess of $4.8million.
13. Ordering that ADMH marshal,in preparation for foreclosure, all of their
assets in which Plaintiffs have a security interest under the Settlement Agreement, Security
Agreements and IP Security Agreements, and deliver promptly to Plaintiffs a list of those assets
and their location.
C. Setting aside the license agreement between the Admiralty Defendants and
defendant URC.
D, Granting such other and further relief as the Court deems just and proper.
Dated: New, York, New York

August 3,2010
OLSHAN GRUNDMAN FROME
ROSENZWEIG & WOLOSKY LLP
By:
Thomas J. Fleming
Christine Wong
Attorneysfar Plaint&
\
Park Avenue Tower
65 East 55* Street
New York, New York 10022
(212) 451-2300
15
820944-1

...”
I
.. .

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FILED: NEW YORK COUNTY CLERK 08/05/2010 INDEX NO.

SUPREME COURT OF THE STATE OF NEW YORK

AJW PARTNERS, LLC, AJW OFFSHORE, LTD,

ADMIRALTY HOLDING COMPANY (FWA

To the Above Named Defendants:

default for the relief demanded in the complaint.

Supreme Court Records OnLine Library - page 1 of 18

Supreme Court Records OnLine Library - page 2 of 18

AJW PARTNERS, LLC, AJW OFFSHORE, LTD,

ADMIRALTY HOLDING COMPANY (F/K/A

1. Plaintiff AJW Partners, LLC (“AJW Partners” or “AJWP”) is a limited liability

Supreme Court Records OnLine Library - page 3 of 18

Roslyn, New York.

3. Plaintiff AJW Qualified Partners LLC (“AJW Qualified” or “AJWQP”) is a

Roslyn, New York.

York, New York.

Roslyn, New York.

Roslyn, New York.

8. Plaintiff New Millennium Capital Partners 111, LLC (“‘NewMillennium 111” or

assignee of Notes purchased by New Millennium Capital Partners 11, LLC.

Supreme Court Records OnLine Library - page 4 of 18

trademarked detection technology called ATLIS,

11. Upon information and belief, defendant Undersea Recovery Corporation

the laws of Nevada and headquartered in Atlanta, Georgia.

Jurisdiction and Venue

claims asserted herein arise.

Supreme Court Records OnLine Library - page 5 of 18

Secured Convertible Notes, in the aggregate principal amount of up to $850,000.

substantially the same form (the “Notes”).

I June 2005. These Notes are in the following amounts:

Issue Date I Maturitv I Princival

received Notes in the aggregate principal amount of $1,195,750.

Supreme Court Records OnLine Library - page 6 of 18

received Notes in the aggregate principal amount of $1,767,000.

Issue Date Maturitv Princbal

Notes in the aggregate principal amount of $8 1,483.

Issue Date Maturity Principal

received Notes in the aggregate principal amount of $1,913,5 16.68.

Issue Date Maturitv Princival

Supreme Court Records OnLine Library - page 7 of 18

are included in the above figures.

Notes remain unpaid.

The Security Ameements

receivables, documents, general intangibles, software intellectual property (including software

documentation), copyrights, copyright licenses, patents, patent licenses, trademarks, trademark

to operate ADMH’s business using the collateral.

IP Security Agreement in connection with each of the transactions.

Supreme Court Records OnLine Library - page 8 of 18

Agreement and Security Agreements provide in pertinent part:

[The Admiralty Defendants] unconditionally and irrevocably,

on “all the [Admiralty Defendants’] goods,”

obligations of the [Admiralty Defendants] hereunder shall be absolute and unconditional.”

The 2007 Litigation

obligations to the Plaintiffs,

Supreme Court Records OnLine Library - page 9 of 18

The Improper Licensing of ATLIS Technolow to Undersea Recovery Corporation

restraining conveyance of the ATLIS technology.

Supreme Court Records OnLine Library - page 10 of 18

Plaintiffs about the agreement with URC.

Default of the Notes

failure to pay principal and interest when due.

breach of any representation or warranty made in any Note or other agreement.

proprietary ATLIS technology.