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`ERIC A. VERES
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`Abrams & Bayliss llp
`20 Montchanin Road, Suite 200
`Wilmington, DE 19807
`Main: 302-778-1000
`Fax: 302-778-1001
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`DIRECT DIAL NUMBER
`302-778-1181
`VERES@ABRAMSBAYLISS.COM
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`June 25, 2024
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`BY HAND DELIVERY AND FILE & SERVEXPRESS
`The Honorable Kathaleen St. Jude McCormick
`Court of Chancery
`Leonard L. Williams Justice Center
`500 North King Street, Suite 11400
`Wilmington, Delaware 19801
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`Re: Kuramo Capital Management, LLC v. Larry Seruma, et al.,
`C.A. No. 2021-0323-KSJM (Del. Ch.)
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`Dear Chancellor McCormick:
`I write on behalf of the Nile Fund Parties in response to the Kuramo Parties’
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`May 29, 2024 letter. See Dkt. No. 311.
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`The Opinion contemplates “restor[ing] the parties to the bargain Seruma told
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`Kuramo he was executing—where Kuramo holds 97.16% of KN Agri Series B, and
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`KN Agri Series B holds Feronia KNM, which holds the PHC asset,”1 i.e., ~76% of
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`PHC’s Class A shares (the “PHC Shares”).2 That is the relief Kuramo requested.3
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`1 Opinion at 92-93.
`2 Nile-Br. 25, 56, 84, 121-22; Nile-Ans-Br. 4. “Nile-Br.” refers to Dkt. 291. “Nile-
`Ans-Br.” refers to Dkt. 296
`3 Opinion at 90.
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`EFiled: Jun 25 2024 05:44PM EDT
`Transaction ID 73483971
`Case No. 2021-0323-KSJM
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`The Honorable Kathaleen St. Jude McCormick
`June 25, 2024
`Page 2
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`Kuramo now seeks more than what the parties bargained for: “an order compelling
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`Seruma to redeem Kuramo’s interests in both KN Agri and Nile Global in-kind.”4
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`Kuramo seeks to compel Feronia KNM to turn over the PHC Shares.5 Kuramo’s
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`request should be denied.
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`First, Kuramo is not entitled to a redemption “in kind” under the Nile Capital
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`Agreement6— the only provision Kuramo invokes.7 Consistent with Delaware law,8
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`Kuramo admittedly has “no interest in specific company property.”9 Rather,
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`Kuramo has a Distributive Interest in Nile Capital, i.e., “the right to receive
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`distributions.”10 Distributions “shall be made to each Member as outlined in
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`4 Kuramo letter dated May 29, 2024 (“Letter”) at 3 (emphasis supplied).
`5 A distribution “in-kind” is one made in property instead of cash. See In re P3
`Health Gp. Hldgs., LLC, 2022 WL 16548567, at *19 (Del. Ch. Oct. 31, 2022) (where
`permissible, distributions “can take the form of property distributed in kind”).
`6 Nile-Ans-Br. 64, 66-67.
`7 Kuramo contends (Nile-Br. 64, ns.298-99) that Section 15.6 overrides all other
`provisions governing distributions or redemptions in other Nile-Kuramo contracts (see,
`e.g., Nile-Br. 123-24, ns.582-84; Nile-Ans-Br. 65, ns. 300-304).
`8 6 Del. C. § 18-701 (“A member has no interest in specific limited liability company
`property.”).
`9 JX1609.0014 (Nile Capital Agreement) § 8.7 (Partition) (“A Member has no
`interest in specific company property”); see also JX1662.0003 (Kuramo’s Response to
`Interrogatory 1).
`10 JX1609.0002 § 1.1 (Definitions); see also JX1609.0007 § 4.3 (Company
`Interests).
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`The Honorable Kathaleen St. Jude McCormick
`June 25, 2024
`Page 3
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`Exhibit B.”11 Exhibit B provides that “Distributions to Members” “will be subject” to
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`certain “terms and conditions,” including Nile’s ability to “secur[e] the funding”—i.e.,
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`borrow any funds necessary to make a cash distribution—and otherwise complete a
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`distribution on a “best efforts [basis] within six months.”12 Section 15.6 is not to the
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`contrary. Section 15.6 merely imposes “penalties”13 on Kuramo for attempting to
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`“redeem its assets before the lock up period.14 Any attempt to construe Section 15.6
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`as entitling Kuramo to a distribution in-kind would render the distribution provisions
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`“meaningless or illusory.”15
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`Second, far from restoring the parties to any bargain they struck or mutually
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`contemplated, an order compelling Feronia KNM to redeem the PHC Shares
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`“in kind” would validate Kuramo’s improper self-help16 in seizing control of PHC
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`11 JX1609.0016 § 10.1 (Distributions) (“distributions by the Company shall be made
`to each Member as outlined in Exhibit B”); see also id. § 10.2 (Limitations on Distribution);
`id. § 12.4 (tax related limitations on distribution); id. § 13.9 (Lockup Period); id. § 13.10
`(Redemptions) (“any redemption from the company will be done only after a complete
`redemption from underlying managers”).
`12 JX1609.0030, Exhibit B; see also id. § 13.9 (“requesting Party must provide not
`less than 6 month’s notice to the extent [any] withdrawal will exceed 20% of the fund”).
`13 Opinion at 8.
`14 JX1609.0026-27 § 15.6.
`15 Est. of Osborn v. Kemp, 991 A2d 1153, 1159 (Del. 2010) (“We will not read a
`contract to render a provision or term ‘meaningless or illusory.’”).
`16 Nile-Br. 143-144, ns.658-64; 128-30; Nile-Ans-Br. 55-57, ns.249-65.
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`The Honorable Kathaleen St. Jude McCormick
`June 25, 2024
`Page 4
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`from Nile17 and usurping Nile’s right to earn fees from managing PHC.18 Ownership
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`of the PHC Shares is the key to controlling PHC.19 For example, Feronia KNM, as
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`the owner of the PHC Shares, has the right to nominate PHC’s DG and appoint a
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`majority of PHC’s Board.20 Kuramo knows this.21 That is why Kuramo
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`(i) misrepresented to PHC’s Board that Kuramo owned and controlled Feronia
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`KNM;22 (ii) misrepresented to its auditor that KKM2, not Feronia KNM, owned and
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`controlled the PHC Shares;23 (iii) misrepresented to its investors, that the “KKM
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`17 Nile-Br. 91-96; 98-101; 128-30; Nile-Ans-Br. 2-10; 59-63.
`18 In November 2021, Kuramo projected receiving $180 million in management fees
`and distributions from PHC. Nile-Br. 116-19, ns.573-74. The notion that Seruma is using
`PHC “assets” as a “personal defense fund” (Letter at 5) is backwards: Kuramo seized
`control of PHC (Nile-Ans-Br. 9, n.4) and has been collecting millions in management fees
`that rightfully belong to Nile ever since (Nile-Br. 99, n.488).
`19 JX1311.0014 (Articles of Association), Art. 12.4 (“rights and obligations attached
`to the share follow the equity in whatever hand it passes”) see also TT_(Seruma)_901:20-
`905:17.
`20 Nile-Br. 72, n.365; JX1311, Art. 9.2 (Special Rights), Art. 14 (“[PHC] is
`administered by a Board of Directors and managed by a Managing Director.”); see also
`JX1817 (Lamek Dep. Tr.) at 44:16-20; 49:12-20; 50:15-51:4; 68:19-69:9 (discussing
`JX749); 96:15-97:8; 109:16-110:8; 115:6-24; 133:9-135:25; 171:12-173:21 (discussing
`JX1425); 184:25-185:6; 213:15-214:15; 253:6-254:8.
`21 Nile-Br. 72, n.368; Nile-Br. 80, n.406; JX1262.0001 (“Only [Seruma] has the
`right to appoint [PHC] directors. I have confirm[ed] this.”).
`22 Nile-Br. 79-80, n.403, n.406, n.408, n.409; Nile-Br. 82-83, ns.416-418; Nile-Ans-
`Br. 41-43, ns.193-98; 55, ns.251-53.
`23 Nile-Br. 96, n.473; Nile-Ans-Br. 43-44, ns.199-205; see also TT_(Pallan)_398:3-
`402:13.
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`The Honorable Kathaleen St. Jude McCormick
`June 25, 2024
`Page 5
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`Consortium,” not Feronia KNM (supposedly “an illegal entity”), owned and
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`controlled PHC,24 and why Kuramo’s co-conspirator25 (iv) misrepresented to a DRC
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`Court that KKM2, not Feronia KNM, rightfully owned PHC Shares.26 And that is
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`why Kuramo now seeks an order compelling Feronia KNM to distribute the PHC
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`Shares “in kind” to Kuramo.
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`****
`Kuramo does not seek supplemental relief. Kuramo seeks a reversal of this
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`Court’s holding that Feronia KNM is the rightful owner of the PHC Shares and
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`validation of its misappropriation of Nile’s contractual right to manage and earn fees
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`from managing PHC.27 Kuramo’s request should be denied.
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`We are available at the Court’s call should Your Honor have any questions.
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`Respectfully,
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` /s/ Eric A. Veres
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`Eric A. Veres (#6728)
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`Words: 995
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`Word Limit: 1,000
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`24 Nile-Ans-Br. 45-46, ns.206-11.
`25 Nile-Br. 102-04, ns.499-509; Nile-Ans-Br. 59-63, ns.274-89.
`26 Nile-Br. 95-96, ns.470-75.
`27 Nile-Br. 98, n. 480.
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`The Honorable Kathaleen St. Jude McCormick
`June 25, 2024
`Page 6
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`EAV/jbf
`cc: Register in Chancery (via File & ServeXpress)
`Bruce E. Jameson, Esq. (via File & ServeXpress)
`Mary S. Thomas, Esq. (via File & ServeXpress)
`Margaret M. DiBianca, Esq. (via File & ServeXpress)
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