Case 1:21-cv-02048-NRN Document 1 Filed 07/28/21 USDC Colorado Page 1 of 15
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLORADO
`
`
`Civil Action No.
`
`MATT OPPEN,
`
`Plaintiff,
`
`v.
`
`HARVEST HEALTH & RECREATION INC.,
`MARK N. BARNARD, STEVEN M. WHITE,
`ELROY P. SAILOR, ANA DUTRA, EULA L. ADAMS,
`and MICHAEL SCOTT ATKISON,
`
`
`Defendants.
`______________________________________________________________________________
`
`COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS AND
`JURY DEMAND
`_____________________________________________________________________________
`
`Plaintiff Matt Oppen (“Plaintiff”), by Plaintiff’s undersigned attorneys, for Plaintiff’s
`
`complaint against Defendants (defined below), alleges the following based upon personal
`
`knowledge as to Plaintiff and Plaintiff’s own acts, and upon information and belief as to all other
`
`matters, based upon, inter alia, the investigation conducted by and through Plaintiff’s attorneys.
`
`NATURE OF THE ACTION
`
`1.
`
`This is an action against Harvest Health & Recreation Inc. (“Harvest” or the
`
`“Company”) and its Board of Directors (the “Board” or the “Individual Defendants”) for their
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`violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange
`
`Act”), 15 U.S.C. §§ 78n(a) and 78t(a), and Rule 14a-9 promulgated thereunder by the SEC, 17
`
`C.F.R. § 240.14a-9, in connection with the proposed acquisition (the “Proposed Transaction”) of
`
`Harvest by Trulieve Cannabis Corp. (“Truelieve”).
`
`
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`Case 1:21-cv-02048-NRN Document 1 Filed 07/28/21 USDC Colorado Page 2 of 15
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`JURISDICTION AND VENUE
`
`2.
`
`The claims asserted herein arise under and pursuant to Sections 14(a) and 20(a) of
`
`the Exchange Act (15 U.S.C. §§ 78n(a) and 78t(a)) and Rule 14a-9 promulgated thereunder by the
`
`SEC (17 C.F.R. § 240.14a-9).
`
`3.
`
`This Court has jurisdiction over the subject matter of this action pursuant to 28
`
`U.S.C. § 1331, and Section 27 of the Exchange Act, 15 U.S.C. § 78aa.
`
`4.
`
`Venue is proper in this District pursuant to 28 U.S.C. § 1391(b) and Section 27 of
`
`the Exchange Act (15 U.S.C. § 78aa(c)) as a substantial portion of the transactions and wrongs
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`complained of herein had an effect in this District, the alleged misstatements entered and the
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`subsequent damages occurred in this District, and the Company conducts business in this District.
`
`5.
`
`In connection with the acts, conduct and other wrongs alleged in this complaint,
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`Defendants, directly or indirectly, used the means and instrumentalities of interstate commerce,
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`including but not limited to, the United States mails, interstate telephone communications and the
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`facilities of the national securities exchange.
`
`PARTIES
`
`6.
`
`Plaintiff is, and has been at all relevant times hereto, an owner of Harvest common
`
`stock.
`
`7.
`
`Defendant Harvest, together with its subsidiaries, cultivates, processes, sells, and
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`retails inhalable, ingestible, and topical cannabis products in the United States. The Company is
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`incorporated in British Columbia. The Company’s common stock trades on the OTCQX tier of
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`the OTC Markets under the ticker symbol, “HRVSF.”
`
`8.
`
`Defendant Mark N. Barnard (“Barnard”) is Chairman of the Board of the
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`Company.
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`Case 1:21-cv-02048-NRN Document 1 Filed 07/28/21 USDC Colorado Page 3 of 15
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`9.
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`Defendant Steven M. White (“White”) is Founder, Chief Executive Officer, and a
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`director of the Company.
`
`10.
`
`Defendant Elroy P. Sailor (“Sailor”) is Chief Strategy Officer and a director of the
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`Company.
`
`11.
`
`12.
`
`13.
`
`14.
`
`Defendant Ana Dutra (“Dutra”) is a director of the Company.
`
`Defendant Eula L. Adams (“Adams”) is a director of the Company.
`
`Defendant Michael Scott Atkison (“Atkison”) is a director of the Company.
`
`Defendants Barnard, White, Sailor, Dutra, Adams, and Atkison are collectively
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`referred to herein as the “Individual Defendants.”
`
`15.
`
`Defendants Harvest and the Individual Defendants are collectively referred to
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`herein as the “Defendants.”
`
`SUBSTANTIVE ALLEGATIONS
`
`A. The Proposed Transaction
`
`16.
`
`On May 10, 2021, Harvest and Truelieve announced that they had entered into a
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`definitive arrangement agreement pursuant to which Trulieve would acquire all of the issued and
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`outstanding subordinate voting shares, multiple voting shares and super voting shares of Harvest.
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`Under the terms of the agreement, Harvest shareholders will receive 0.1170 of a subordinate voting
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`share of Trulieve for each Harvest subordinate voting share (or equivalent) held. The press release
`
`announcing the Proposed Transaction states, in pertinent part:
`
`Trulieve Announces the Largest US Cannabis Transaction; Acquisition of
`Harvest Health & Recreation Inc., Creates the Most Profitable Multi-State
`Operator in the World's Largest Cannabis Market
`
`
`NEWS PROVIDED BY
`Harvest Health & Recreation Inc.
`May 10, 2021, 07:05 ET
`
`
`3
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`Combined Company Will Maintain Industry Leading Scale in Retail, Cultivation
`& Production
`
`Footprint Provides National Scale with a Deep Regional Focus in Attractive
`Markets
`
`Expanded Runway for Growth with new Southwest Hub and Expanded
`Northeast and Southeast Hubs
`
`Combined Consensus 2021E Revenue of $1.2 Billion
`
`Trulieve and Harvest to Host a Joint Conference Call and Webcast today
`at 8:30 a.m. ET
`
`TALLAHASSEE, Fla. and PHOENIX, May 10, 2021 /PRNewswire/ -- Trulieve
`Cannabis Corp. ("Trulieve" or the "Company") (CSE: TRUL) (OTC: TCNNF)
`("Harvest")
`and Harvest Health &
`Recreation
`Inc.
`(CSE:
`HARV,OTCQX: HRVSF) are pleased to announce they have entered into a
`definitive arrangement agreement (the "Arrangement Agreement") pursuant to
`which Trulieve will acquire all of the issued and outstanding subordinate voting
`shares, multiple voting shares and super voting shares (the "Harvest Shares") of
`Harvest (the "Transaction"). Under the terms of the Arrangement Agreement,
`shareholders of Harvest (the "Harvest Shareholders") will receive 0.1170 of a
`subordinate voting share of Trulieve (each whole share, a "Trulieve Share") for
`each Harvest subordinate voting share (or equivalent) held (the "Exchange Ratio"),
`representing total consideration of approximately $2.1 billion based on the closing
`price of the Trulieve Shares on May 7, 2021.
`
`
`
`Terms of the Transaction
`
`The Transaction will be effected by way of a plan of arrangement pursuant to
`the Business Corporations Act (British Columbia). Under the terms of the
`Arrangement Agreement, Trulieve will acquire all of the issued and outstanding
`Harvest Shares, with each Harvest Shareholder receiving 0.1170 of a Trulieve
`Share for each Harvest Share, implying a price per Harvest Share of US$4.79,
`which represents a 34% premium to the May 7, 2021 closing price of the Harvest
`Shares. After giving effect to the Transaction, Harvest Shareholders will hold
`approximately 26.7% of the issued and outstanding pro forma Trulieve Shares (on
`a fully-diluted basis). The Exchange Ratio is subject to adjustment in the event that
`Harvest completes certain interim period refinancing measures, with the potential
`adjustment in proportion to the incremental costs from such financing relative to
`the Transaction value. Additional details of the Transaction will be described in the
`management information circular and proxy statement (the "Circular") that will be
`mailed to Harvest Shareholders in connection with a special meeting of Harvest
`
`*
`
`*
`
`*
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`Shareholders (the "Meeting") expected to be held in the third quarter to approve
`the Transaction.
`
`The Transaction has been unanimously approved by the Boards of Directors of each
`of Trulieve and Harvest. Harvest Shareholders holding more than 50% of the voting
`power of the issued and outstanding Harvest Shares have entered into voting
`support agreements with Trulieve to vote in favor of the Transaction.
`
`The Arrangement Agreement provides for certain customary provisions, including
`covenants in respect of non-solicitation of alternative transactions, a right to match
`superior proposals, US$100 million reciprocal termination fees under certain
`circumstances and reciprocal expense reimbursement provisions in certain
`circumstances.
`
`The Transaction is subject to, among other things, the approval of the necessary
`approvals of the Supreme Court of British Columbia, the approval of two-thirds of
`the votes cast by Harvest Shareholders at the Special Meeting, receipt of the
`required regulatory approvals, including, but not limited, approval pursuant to the
`Hart–Scott–Rodino Antitrust Improvements Act, and other customary conditions
`of closing. Approval of Trulieve Shareholders is not required. Additional details of
`the Transaction will be provided in the Circular.
`
`The Board of Directors of Harvest (the "Harvest Board") has unanimously
`determined, after receiving financial and legal advice and following the receipt and
`review of a unanimous recommendation of a special committee of independent
`directors (the "Special Committee"), that the Transaction is in the best interests of
`Harvest, and that, on the basis of the Fairness Opinion (as defined herein), that the
`consideration to be received by the Harvest Shareholders is fair, from a financial
`point of view, to the Harvest Shareholders.
`
`The Harvest Board unanimously recommends that Harvest Shareholders vote in
`favour of the resolution to approve the Transaction. The Special Committee
`obtained a fairness opinion from Haywood Securities Inc., (the "Fairness
`Opinion") which provides that, as at the date of such opinion and based upon and
`subject to the assumptions, procedures, factors, limitations and qualifications set
`forth therein, the consideration to be received by the Harvest Shareholders pursuant
`to the Transaction is fair, from a financial point of view, to the Harvest
`Shareholders.
`
`Financial and Legal Advisors
`
`Canaccord Genuity Corp. acted as exclusive financial advisor and DLA Piper
`(Canada) LLP and Fox Rothschild LLP acted as Canadian and United States legal
`counsel, respectively, to Trulieve. Canaccord Genuity Corp. also provided a
`fairness opinion to the Board of Directors of Trulieve.
`
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`*
`
`*
`
`*
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`Moelis & Company LLC acted as financial advisor and Bennett Jones LLP and
`Troutman Pepper LLP acted as Canadian and United States legal counsel,
`respectively, to Harvest. Haywood Securities Inc. provided a fairness opinion to the
`Special Committee.
`
`
`
`About Harvest Health & Recreation Inc.
`
`Headquartered in Tempe, Arizona, Harvest Health & Recreation Inc. is a vertically
`integrated cannabis company and multi-state operator. Since 2011, Harvest has
`been committed to expanding its retail and wholesale presence throughout the U.S.,
`acquiring, manufacturing, and selling cannabis products for patients and consumers
`in addition to providing services to retail dispensaries. Through organic license
`wins, service agreements, and targeted acquisitions, Harvest has assembled an
`operational footprint spanning multiple states in the U.S. Harvest's mission is to
`improve lives through the goodness of cannabis. We hope you'll join us on our
`journey: https://harvesthoc.com.
`
`About Trulieve
`
`Trulieve is primarily a vertically integrated "seed-to-sale" company in the U.S. and
`is the first and largest fully licensed medical cannabis company in the State of
`Florida. Trulieve cultivates and produces all of its products in-house and distributes
`those products to Trulieve-branded dispensaries throughout the State of Florida, as
`well as directly to patients via home delivery. Trulieve is also a licensed operator
`in California, Massachusetts, Connecticut, Pennsylvania,
`and West Virginia.
`Trulieve is listed on the Canadian Securities Exchange under the symbol TRUL
`and trades on the OTCQX Best Market under the symbol TCNNF.
`
`17.
`
`On July 13, 2021, the Company filed a Schedule 14A Definitive Proxy Statement
`
`under Section 14(a) of the Exchange Act (the “Proxy Statement”) with the SEC in connection with
`
`the Proposed Transaction.
`
`B. The Proxy Statement Contains Materially False and Misleading Statements and
`Omissions
`
`18.
`
`The Proxy Statement, which recommends that Harvest shareholders vote in favor
`
`of the Proposed Transaction, omits and/or misrepresents material information concerning: (i)
`
`Harvest’s and Trulieve’s financial projections; (ii) the financial analyses performed by Harvest’s
`
`financial advisors, Moelis & Company LLC (“Moelis”) and Haywood Securities Inc.
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`(“Haywood”), in connection with their fairness opinions; (iii) potential conflicts of interest
`
`involving Haywood; and (iv) the sales process leading up to the Proposed Transaction.
`
`19.
`
`The omission of the material information (referenced below) renders the following
`
`sections of the Proxy Statement false and misleading, among others: (i) Background to the
`
`Arrangement; (ii) Harvest’s Reasons for the Arrangement; (iii) Recommendations of the Harvest
`
`Board; (iv) Opinions of Harvest’s Financial Advisors; and (v) Harvest’s Unaudited Financial
`
`Projections.
`
`20.
`
`Unless and until the material misstatements and omissions (referenced below) are
`
`remedied before the August 11, 2021 shareholder vote on the Proposed Transaction, Harvest
`
`shareholders will be forced to make a voting decision on the Proposed Transaction without full
`
`disclosure of all material information. In the event the Proposed Transaction is consummated,
`
`Plaintiff may seek to recover damages resulting from Defendants’ misconduct.
`
`1. Material Omissions Concerning Harvest’s and Trulieve’s Financial
`Projections
`
`21.
`
`The Proxy Statement omits material information concerning Harvest’s and
`
`Trulieve’s financial projections.
`
`22. With respect to the “Management Financial Projections by Harvest,” the Proxy
`
`Statement fails to disclose: (1) all line items underlying (i) Revenue, (ii) Gross Profit, (iii)
`
`EBITDA, and (iv) Unlevered Free Cash Flow; (2) Harvest’s net income projections; and (3) a
`
`reconciliation of all non-GAAP to GAAP metrics.
`
`23. With respect to the “Trulieve Adjusted Management Projections by Harvest,” the
`
`Proxy Statement fails to disclose: (1) all line items underlying (i) Revenue, (ii) Gross Profit, (iii)
`
`EBITDA, and (iv) Unlevered Free Cash Flow; (2) Trulieve’s net income projections; and (3) a
`
`reconciliation of all non-GAAP to GAAP metrics.
`
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`24.
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`The disclosure of this information is material because it would provide the
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`Company’s shareholders with a basis to project the future financial performance of the Company
`
`and combined company and would allow shareholders to better understand the financial analyses
`
`performed by the Company’s financial advisors in support of their fairness opinions. Shareholders
`
`cannot hope to replicate management’s inside view of the future prospects of the Company.
`
`Without such information, which is uniquely possessed by Defendant(s) and the Company’s
`
`financial advisors, the Company’s shareholders are unable to determine how much weight, if any,
`
`to place on the Company’s financial advisors’ fairness opinions in determining whether to vote for
`
`or against the Proposed Transaction.
`
`25. When a company discloses non-GAAP financial metrics in a Proxy Statement that
`
`were relied upon by its board of directors in recommending that shareholders exercise their
`
`corporate suffrage rights in a particular manner, the company must also disclose, pursuant to SEC
`
`Regulation G, all projections and information necessary to make the non-GAAP metrics not
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`misleading, and must provide a reconciliation (by schedule or other clearly understandable
`
`method) of the differences between the non-GAAP financial metrics disclosed or released with the
`
`most comparable financial metrics calculated and presented in accordance with GAAP. 17 C.F.R.
`
`§ 244.100.1
`
`26.
`
`The above-referenced omitted information, if disclosed, would significantly alter
`
`
`1 Mary Jo White, Keynote Address, International Corporate Governance Network Annual
`Conference: Focusing the Lens of Disclosure to Set the Path Forward on Board Diversity, Non-
`GAAP, and Sustainability (June 27, 2016), https://www.sec.gov/news/speech/chair-white-icgn-
`speech.html (footnotes omitted) (last visited July 28, 2021) (“And last month, the staff issued
`guidance addressing a number of troublesome practices which can make non-GAAP disclosures
`misleading: the lack of equal or greater prominence for GAAP measures; exclusion of normal,
`recurring cash operating expenses; individually tailored non-GAAP revenues; lack of consistency;
`cherry-picking; and the use of cash per share data. I strongly urge companies to carefully consider
`this guidance and revisit their approach to non-GAAP disclosures.”).
`
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`the total mix of information available to the Company’s shareholders.
`
`2. Material Omissions Concerning the Financial Advisors’ Analyses
`
`27.
`
`In connection with the Proposed Transaction, the Proxy Statement omits material
`
`information concerning analyses performed by Moelis and Haywood.
`
`28.
`
`The Proxy Statement fails to disclose the following concerning Moelis’
`
`“Discounted Cash Flow Analyses” of Harvest and Trulieve: (1) all line items underlying the
`
`estimated future unlevered free cash flows projected by Harvest management to be generated by
`
`Harvest and Trulieve; (2) the estimated terminal value of each of Harvest and Trulieve; and (3) the
`
`individual inputs and assumptions underlying the (i) discount rates of 9.75% to 13.5% and 8.75%
`
`to 11.75%, (ii) perpetuity growth rates of 2.5% to 7.7% and 2.8% to 7.3%, and (iii) range of
`
`multiples of 9.0x to 12.0x and 10.0x to 14.0x.
`
`29.
`
`The Proxy Statement fails to disclose the following concerning Moelis’ analysis of
`
`analyst price targets for shares of Harvest and Truelieve: (1) the individual price targets observed
`
`by Moelis in its analysis; and (2) the sources thereof.
`
`30. With respect to Haywood’s “Analysis of Select Publicly Traded Companies,” the
`
`Proxy Statement fails to disclose the individual multiples and financial metrics of each company
`
`Haywood observed in its analysis.
`
`31.
`
`The Proxy Statement fails to disclose the following concerning Haywood’s
`
`Discounted Cash Flow Analyses of Harvest and Trulieve: (1) the individual inputs and assumptions
`
`underlying the discount rate ranges and multiple ranges used in the analyses; (2) the terminal
`
`values; and (3) the implied per share ranges for Harvest and Trulieve resulting from the analyses.
`
`32.
`
`The Proxy Statement fails to disclose the following concerning Haywood’s analysis
`
`of analyst price targets for shares of Harvest and Truelieve: (1) the individual price targets
`
`observed by Haywood in its analysis; and (2) the sources thereof.
`
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`33.
`
`The valuation methods, underlying assumptions, and key inputs used by
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`Moelis and Haywood in rendering their purported fairness opinions must be fairly disclosed to
`
`Harvest shareholders. The description of Moelis’ and Haywood’s fairness opinions and analyses,
`
`however, fail to include key inputs and assumptions underlying those analyses. Without the
`
`information described above, Harvest shareholders are unable to fully understand Moelis’ and
`
`Haywood’s fairness opinions and analyses, and are thus unable to determine how much weight, if
`
`any, to place on them in determining whether to vote for or against the Proposed Transaction. This
`
`omitted information, if disclosed, would significantly alter the total mix of information available
`
`to the Company’s shareholders.
`
`3. Material Omissions Concerning Potential Conflicts of Interest Involving
`Haywood
`
`
`The Proxy Statement omits material information concerning potential conflicts of
`
`34.
`
`interest involving Haywood.
`
`35.
`
`The Proxy Statement fails to disclose the timing and nature of the past services
`
`Haywood and/or its affiliates provided Harvest, Trulieve, and/or their affiliates, including the
`
`amount of compensation Haywood received or expects to receive for providing each service within
`
`the past two years of the date of its fairness opinion. See 17 C.F.R. § 229.1015(b)(4) (requiring
`
`disclosure of all material relationships between a company and its financial advisors and the
`
`compensation received by the advisors during the past two years).
`
`36.
`
`Disclosure of a financial advisor’s compensation and potential conflicts of interest
`
`to shareholders is required due to their central role in the evaluation, exploration, selection, and
`
`implementation of strategic alternatives and the rendering of any fairness opinions. Disclosure of
`
`a financial advisor’s potential conflicts of interest may inform shareholders on how much weight
`
`to place on that analysis.
`
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`37.
`
`The omission of the above-referenced information renders the Proxy Statement
`
`materially incomplete and misleading. This information, if disclosed, would significantly alter the
`
`total mix of information available to the Company’s shareholders.
`
`4. Material Omissions Concerning the Sales Process Leading up to the Proposed
`Transaction
`
`The Proxy Statement omits material information concerning the sales process
`
`
`38.
`
`leading up to the Proposed Transaction.
`
`39.
`
`The Proxy Statement provides that, during the sales process, the Company entered
`
`into confidentiality agreements with potential buyers.
`
`40.
`
` The Proxy Statement, however, fails to disclose the terms of the Company’s
`
`confidentiality agreements, including whether such agreements contained standstill provisions
`
`with “don’t ask, don’t waive” (DADW) provisions (including their time of enforcement) that
`
`would preclude potentially interested parties from making superior offers for the Company.
`
`41. Without this information, Harvest shareholders may have the mistaken belief that
`
`potential suitors are or were permitted to submit superior proposals for the Company, when in fact
`
`they are or were contractually prohibited from doing so. This information is material because a
`
`reasonable Harvest shareholder would want to know, prior to voting for or against the Proposed
`
`Transaction, whether other potential buyers are or were foreclosed from submitting a superior
`
`proposal.
`
`42.
`
`The Proxy Statement also fails to disclose whether the Company’s Special
`
`Committee was empowered to (a) reject a transaction with Trulieve, and/or (b) conduct any market
`
`outreach.
`
`43.
`
`The Proxy Statement further fails to disclose: (1) the valuations in Trulieve’s letters
`
`of intent, dated January 8, 2021 and January 11, 2021; (2) Trulieve’s concerns with Harvest’s
`
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`February 3, 2021 financial analysis; (3) the valuations in Trulieve’s proposal letter, dated February
`
`26, 2021; and (4) the specific terms and values set forth in Company A’s proposal.
`
`44.
`
`The above-referenced omitted information, if disclosed, would significantly alter
`
`the total mix of information available to the Company’s shareholders.
`
`COUNT I
`For Violations of Section 14(a) and Rule 14a-9 Promulgated Thereunder
`Against All Defendants
`Plaintiff repeats and realleges each and every allegation contained above as if fully
`
`45.
`
`set forth herein.
`
`46.
`
`During the relevant period, Defendants, individually and in concert, directly or
`
`indirectly, disseminated or approved the false and misleading Proxy Statement specified above,
`
`which failed to disclose material facts necessary in order to make the statements made, in light of
`
`the circumstances under which they were made, not misleading, in violation of Section 14(a) of
`
`the Exchange Act and Rule 14a-9 promulgated thereunder by the SEC.
`
`47.
`
`Each of the Individual Defendants, by virtue of his/her positions within the
`
`Company as officers and/or directors, were aware of the omitted information but failed to disclose
`
`such information, in violation of Section 14(a) of the Exchange Act. Defendants, by use of the
`
`mails and means and instrumentalities of interstate commerce, solicited and/or permitted the use
`
`of their names to file and disseminate the Proxy Statement with respect to the Proposed
`
`Transaction. The Defendants were, at minimum, negligent in filing the materially false and
`
`misleading Proxy Statement.
`
`48.
`
`The false and misleading statements and omissions in the Proxy Statement are
`
`material in that a reasonable shareholder would consider them important in deciding how to vote
`
`on the Proposed Transaction.
`
`49.
`
`By reason of the foregoing, Defendants have violated Section 14(a) of the Exchange
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`Act and Rule 14a-9 promulgated thereunder.
`
`50.
`
`Because of the false and misleading statements and omissions in the Proxy
`
`Statement, Plaintiff is threatened with irreparable harm.
`
`COUNT II
`Violations of Section 20(a) of the Exchange Act
`Against the Individual Defendants
`
`Plaintiff repeats and realleges each and every allegation contained in the foregoing
`
`
`51.
`
`paragraphs as if fully set forth herein.
`
`52.
`
`The Individual Defendants acted as control persons of the Company within the
`
`meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their senior positions
`
`as officers and/or directors of the Company and participation in and/or awareness of the
`
`Company’s operations and/or intimate knowledge of the false statements contained in the Proxy
`
`Statement filed with the SEC, they had the power to and did influence and control, directly or
`
`indirectly, the decision-making of the Company, including the content and dissemination of the
`
`false and misleading Proxy Statement.
`
`53.
`
`Each of the Individual Defendants was provided with or had unlimited access to
`
`copies of the Proxy Statement and other statements alleged by Plaintiff to be misleading prior to
`
`and/or shortly after these statements were issued and had the ability to prevent the issuance of the
`
`statements or cause the statements to be corrected. As officers and/or directors of a publicly owned
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`company, the Individual Defendants had a duty to disseminate accurate and truthful information
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`with respect to the Proxy Statement, and to correct promptly any public statements issued by the
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`Company which were or had become materially false or misleading.
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`54.
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`In particular, each of the Individual Defendants had direct and supervisory
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`involvement in the operations of the Company, and, therefore, is presumed to have had the power
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`Case 1:21-cv-02048-NRN Document 1 Filed 07/28/21 USDC Colorado Page 14 of 15
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`to control or influence the particular transactions giving rise to the securities violations as alleged
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`herein, and exercised the same. The Individual Defendants were provided with or had unlimited
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`access to copies of the Proxy Statement and had the ability to prevent the issuance of the statements
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`or to cause the statements to be corrected. The Proxy Statement at issue contains the
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`recommendation of the Individual Defendants to approve the Proposed Transaction. Thus, the
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`Individual Defendants were directly involved in the making of the Proxy Statement.
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`55.
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`In addition, as the Proxy Statement sets forth at length, and as described herein, the
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`Individual Defendants were involved in negotiating, reviewing, and approving the Proposed
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`Transaction. The Proxy Statement purports to describe the various issues and information that they
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`reviewed and considered—descriptions which had input from the Individual Defendants.
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`56.
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`By virtue of the foregoing, the Individual Defendants have violated Section 20(a)
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`of the Exchange Act.
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`57.
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`As set forth above, the Individual Defendants had the ability to exercise control
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`over and did control a person or persons who have each violated Section 14(a) and Rule 14a-9
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`promulgated thereunder, by their acts and omissions as alleged herein. By virtue of their positions
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`as controlling persons, the Individual Defendants are liable pursuant to Section 20(a) of the
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`Exchange Act. As a direct and proximate result of Defendants’ conduct, the Company’s
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`shareholders will be irreparably harmed.
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`PRAYER FOR RELIEF
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`WHEREFORE, Plaintiff prays for judgment and relief as follows:
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`A.
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`Preliminarily and permanently enjoining Defendants and all persons acting in
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`concert with them from proceeding with, consummating, or closing the Proposed Transaction and
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`Case 1:21-cv-02048-NRN Document 1 Filed 07/28/21 USDC Colorado Page 15 of 15
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`any vote on the Proposed Transaction, unless and until Defendants disclose and disseminate the
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`material information identified above to Company shareholders;
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`B.
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`In the event Defendants consummate the Proposed Transaction, rescinding it and
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`setting it aside or awarding rescissory damages;
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`C.
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`Declaring that Defendants violated Sections 14(a) and 20(a) of the Exchange Act,
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`and Rule 14a-9 promulgated thereunder;
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`D.
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`Awarding Plaintiff reasonable costs and expenses incurred in this action, including
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`counsel fees and expert fees; and
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`E.
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`Granting such other and further relief as the Court may deem just and proper.
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`JURY TRIAL DEMANDED
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`Plaintiff hereby demands a trial by jury.
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`Dated: July 28, 2021
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`
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` Respectfully submitted,
`
`
`
`
`
`
`
`HALPER SADEH LLP
`
`/s/ Daniel Sadeh
`Daniel Sadeh, Esq.
`Zachary Halper, Esq. (to be admitted pro hac
`vice)
`667 Madison Avenue, 5th Floor
`New York, NY 10065
`Telephone: (212) 763-0060
`Facsimile: (646) 776-2600
`Email: sadeh@halpersadeh.com
` zhalper@halpersadeh.com
`
`Counsel for Plaintiff
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`15
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`