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`Case 1:21-cv-07727 Document 1 Filed 09/15/21 Page 1 of 9
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`Case No. ___________
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`JURY TRIAL DEMANDED
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`v.
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`SANDERSON FARMS, INC., FRED
`BANKS, JR., DAVID BARKSDALE, JOHN
`BIERBUSSE, LAMPKIN BUTTS, MIKE
`COCKRELL, TONI D. COOLEY,
` BEVERLY HOGAN, EDITH KELLY-
`GREEN, PHIL K. LIVINGSTON,
`SUZANNE MESTAYER, SONIA PEREZ,
`GALL JONES PITTMAN, and JOE F.
`SANDERSON, JR.,
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`Defendants.
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`ALEX CICCOTELLI,
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`Plaintiff,
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`COMPLAINT FOR VIOLATION OF THE SECURITIES EXCHANGE ACT OF 1934
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`Plaintiff, by his undersigned attorneys, for this complaint against defendants, alleges upon
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`personal knowledge with respect to himself, and upon information and belief based upon, inter
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`alia, the investigation of counsel as to all other allegations herein, as follows:
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`NATURE OF THE ACTION
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`1.
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`This action stems from a proposed transaction announced on August 9, 2021 (the
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`“Proposed Transaction”), pursuant to which Sanderson Farms, Inc. (“Sanderson Farms” or the
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`“Company”) will be acquired by Walnut Sycamore Holding LLC (“Parent”), Wayne Farms LLC
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`(“Wayne Farms”), and Sycamore Merger Sub LLC (“Merger Sub”).
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`2.
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`On August 8, 2021, Sanderson Farms’ Board of Directors (the “Board” or
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`“Individual Defendants”) caused the Company to enter into an agreement and plan of merger (the
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`“Merger Agreement”) with Parent, Wayne Farms, and Merger Sub. Pursuant to the terms of the
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`Merger Agreement, Sanderson Farms’ stockholders will receive $203.00 in cash for each share of
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`Case 1:21-cv-07727 Document 1 Filed 09/15/21 Page 2 of 9
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`Sanderson Farms common stock they own.
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`3.
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`On September 13, 2021, defendants filed a proxy statement (the “Proxy Statement”)
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`with the United States Securities and Exchange Commission (the “SEC”) in connection with the
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`Proposed Transaction.
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`4.
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`The Proxy Statement omits material information with respect to the Proposed
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`Transaction, which renders the Proxy Statement false and misleading. Accordingly, plaintiff
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`alleges herein that defendants violated Sections 14(a) and 20(a) of the Securities Exchange Act of
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`1934 (the “1934 Act”) in connection with the Proxy Statement.
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`JURISDICTION AND VENUE
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`5.
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`This Court has jurisdiction over the claims asserted herein pursuant to Section 27
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`of the 1934 Act because the claims asserted herein arise under Sections 14(a) and 20(a) of the 1934
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`Act and Rule 14a-9.
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`6.
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`This Court has jurisdiction over defendants because each defendant is either a
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`corporation that conducts business in and maintains operations within this District, or is an
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`individual with sufficient minimum contacts with this District so as to make the exercise of
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`jurisdiction by this Court permissible under traditional notions of fair play and substantial justice.
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`7.
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`Venue is proper under 28 U.S.C. § 1391(b) because a portion of the transactions
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`and wrongs complained of herein occurred in this District.
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`PARTIES
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`8.
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`Plaintiff is, and has been continuously throughout all times relevant hereto, the
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`owner of Sanderson Farms common stock.
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`9.
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`Defendant Sanderson Farms is a Mississippi corporation and a party to the Merger
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`Agreement. Sanderson Farms’ common stock is traded on the NASDAQ, which is headquartered
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`Case 1:21-cv-07727 Document 1 Filed 09/15/21 Page 3 of 9
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`in New York, New York, under the ticker symbol “SAFM.”
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`10.
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`Defendant Joe F. Sanderson is Chief Executive Officer and Chairman of the Board
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`of the Company.
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`11.
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`12.
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`13.
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`14.
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`Defendant Fred Banks, Jr. is a director of the Company.
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`Defendant David Barksdale is a director of the Company.
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`Defendant John Bierbusse is a director of the Company.
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`Defendant Lampkin Butts is President, Chief Operating Officer, and a director of
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`the Company.
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`15.
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`Defendant Mike Cockrell is Treasurer, Chief Financial Officer, and a director of
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`the Company.
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`16.
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`17.
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`18.
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`19.
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`20.
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`21.
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`22.
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`23.
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`Defendant Toni D. Cooley is a director of the Company.
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`Defendant Beverly Hogan is a director of the Company.
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`Defendant Edith Kelly-Green is a director of the Company.
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`Defendant Phil K. Livingston is a director of the Company.
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`Defendant Suzanne Mestayer is a director of the Company.
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`Defendant Sonia Perez is a director of the Company.
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`Defendant Gail Jones Pittman is a director of the Company.
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`The defendants identified in paragraphs 10 through 22 are collectively referred to
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`herein as the “Individual Defendants.”
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`Background of the Company and the Proposed Transaction
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`SUBSTANTIVE ALLEGATIONS
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`24.
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`Sanderson Farms is engaged in the production, processing, marketing, and
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`distribution of fresh, frozen, and minimally prepared chicken.
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`Case 1:21-cv-07727 Document 1 Filed 09/15/21 Page 4 of 9
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`25.
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`On August 8, 2021, Sanderson Farms’ Board caused the Company to enter into the
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`Merger Agreement.
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`26.
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`Pursuant to the terms of the Merger Agreement, Sanderson Farms’ stockholders
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`will receive $203.00 in cash per share.
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`27.
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`According to the press release announcing the Proposed Transaction:
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`Cargill, Continental Grain Company, and Sanderson Farms, Inc. (NASDAQ:
`SAFM) announced today they have reached a definitive agreement for a joint
`venture between Cargill and Continental Grain to acquire Sanderson Farms for
`$203 per share in cash, representing a total equity value for Sanderson Farms of
`$4.53 billion. The purchase price represents a 30.3% premium to Sanderson Farms’
`unaffected share price of $155.74 on June 18, 2021, the last full trading day prior
`to media speculation about the potential sale of Sanderson Farms; a 22.8% premium
`to the Sanderson Farms 30-day volume weighted average price (“VWAP”) as of
`June 18, 2021, and a 15.2% premium to the all-time high share price as of June 18,
`2021. Upon completion of the transaction, Cargill and Continental Grain will
`combine Sanderson Farms with Wayne Farms, a subsidiary of Continental Grain,
`to form a new, privately held poultry business. . . .
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`Transaction Details
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`The transaction is expected to close by the end of 2021 or early 2022, and will be
`subject to regulatory and Sanderson Farms stockholder approval, and other
`customary closing conditions.
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`The acquisition consortium has committed equity and debt financing in place to
`complete the transaction.
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`Wayne Farms CEO Clint Rivers will lead the combined company.
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`Upon the completion of the transaction, Sanderson Farms will become a private
`company, and its shares will no longer be traded on NASDAQ.
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`Advisors
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`BofA Securities acted as the financial advisor to Cargill and Freshfields Bruckhaus
`Deringer (US) LLP acted as legal counsel. Gibson Dunn & Crutcher acted as tax
`counsel.
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`Centerview Partners LLC acted as financial advisor to Sanderson Farms and
`Wachtell, Lipton, Rosen & Katz and Fishman Haygood LLP acted as legal counsel.
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`Case 1:21-cv-07727 Document 1 Filed 09/15/21 Page 5 of 9
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`Lazard acted as the financial advisor for Wayne Farms and Continental Grain, and
`Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal counsel.
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`The Proxy Statement Omits Material Information, Rendering It False and Misleading
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`28.
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`Defendants filed the Proxy Statement with the SEC in connection with the Proposed
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`Transaction.
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`29.
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`30.
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`As set forth below, the Proxy Statement omits material information.
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`First, the Proxy Statement omits material information regarding the Company’s
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`financial projections.
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`31. With respect to the Company’s financial projections, the Proxy Statement fails to
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`disclose: (i) all line items used to calculate the projections; and (ii) a reconciliation of all non-
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`GAAP to GAAP metrics.
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`32.
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`The disclosure of projected financial information is material because it provides
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`stockholders with a basis to project the future financial performance of a company, and allows
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`stockholders to better understand the financial analyses performed by the company’s financial
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`advisor in support of its fairness opinion.
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`33.
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`Second, the Proxy Statement omits material information regarding the analyses
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`performed by the Company’s financial advisor, Centerview Partners LLC (“Centerview”).
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`34. With respect to Centerview’s Selected Public Company Analysis, the Proxy
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`Statement fails to disclose: (i) the Company’s net cash; and (ii) the number of fully-diluted shares
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`of Company common stock outstanding.
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`35. With respect to Centerview’s Selected Transactions Analysis, the Proxy Statement
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`fails to disclose: (i) the closing dates for the transactions; and (ii) the total values of the
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`transactions.
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`Case 1:21-cv-07727 Document 1 Filed 09/15/21 Page 6 of 9
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`36. With respect to Centerview’s Discounted Cash Flow Analysis, the Proxy Statement
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`fails to disclose: (i) the individual inputs and assumptions underlying the discount rates and
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`perpetuity growth rates; (ii) the terminal values; (iii) the Company’s net cash; and (iv) the number
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`of fully-diluted shares of Company common stock outstanding.
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`37. With respect to Centerview’s Analyst Price Target Analysis, the Proxy Statement
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`fails to disclose: (i) the price targets observed in the analysis; and (ii) the sources thereof.
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`38. When a banker’s endorsement of the fairness of a transaction is touted to
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`shareholders, the valuation methods used to arrive at that opinion as well as the key inputs and
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`range of ultimate values generated by those analyses must also be fairly disclosed.
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`39.
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`Third, the Proxy Statement fails to disclose the timing and nature of the past
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`services Centerview provided to the Company and its affiliates.
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`40.
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`The omission of the above-referenced material information renders the Proxy
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`Statement false and misleading.
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`41.
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`The above-referenced omitted information, if disclosed, would significantly alter
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`the total mix of information available to the Company’s stockholders.
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`COUNT I
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`Claim for Violation of Section 14(a) of the 1934 Act and Rule 14a-9 Promulgated
`Thereunder Against the Individual Defendants and Sanderson Farms
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`42.
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`43.
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`Plaintiff repeats and realleges the preceding allegations as if fully set forth herein.
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`The Individual Defendants disseminated the false and misleading Proxy Statement,
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`which contained statements that, in violation of Section 14(a) of the 1934 Act and Rule 14a-9, in
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`light of the circumstances under which they were made, omitted to state material facts necessary
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`to make the statements therein not materially false or misleading. Sanderson Farms is liable as the
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`issuer of these statements.
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`Case 1:21-cv-07727 Document 1 Filed 09/15/21 Page 7 of 9
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`44.
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`The Proxy Statement was prepared, reviewed, and/or disseminated by the
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`Individual Defendants. By virtue of their positions within the Company, the Individual Defendants
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`were aware of this information and their duty to disclose this information in the Proxy Statement.
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`45.
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`The Individual Defendants were at least negligent in filing the Proxy Statement
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`with these materially false and misleading statements.
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`46.
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`The omissions and false and misleading statements in the Proxy Statement are
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`material in that a reasonable stockholder will consider them important in deciding how to vote on
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`the Proposed Transaction. In addition, a reasonable investor will view a full and accurate
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`disclosure as significantly altering the total mix of information made available in the Proxy
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`Statement and in other information reasonably available to stockholders.
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`47.
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`The Proxy Statement is an essential link in causing plaintiff to approve the Proposed
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`Transaction.
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`48.
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`By reason of the foregoing, defendants violated Section 14(a) of the 1934 Act and
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`Rule 14a-9 promulgated thereunder.
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`49.
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`Because of the false and misleading statements in the Proxy Statement, plaintiff is
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`threatened with irreparable harm.
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`COUNT II
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`Claim for Violation of Section 20(a) of the 1934 Act
`Against the Individual Defendants
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`50.
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`51.
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`Plaintiff repeats and realleges the preceding allegations as if fully set forth herein.
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`The Individual Defendants acted as controlling persons of Sanderson Farms within
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`the meaning of Section 20(a) of the 1934 Act as alleged herein. By virtue of their positions as
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`officers and/or directors of Sanderson Farms and participation in and/or awareness of the
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`Company’s operations and/or intimate knowledge of the false statements contained in the Proxy
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`Case 1:21-cv-07727 Document 1 Filed 09/15/21 Page 8 of 9
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`Statement, they had the power to influence and control and did influence and control, directly or
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`indirectly, the decision making of the Company, including the content and dissemination of the
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`various statements that plaintiff contends are false and misleading.
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`52.
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`Each of the Individual Defendants was provided with or had unlimited access to
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`copies of the Proxy Statement alleged by plaintiff to be misleading prior to and/or shortly after
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`these statements were issued and had the ability to prevent the issuance of the statements or cause
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`them to be corrected.
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`53.
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`In particular, each of the Individual Defendants had direct and supervisory
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`involvement in the day-to-day operations of the Company, and, therefore, is presumed to have had
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`the power to control and influence the particular transactions giving rise to the violations as alleged
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`herein, and exercised the same. The Proxy Statement contains the unanimous recommendation of
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`the Individual Defendants to approve the Proposed Transaction. They were thus directly involved
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`in the making of the Proxy Statement.
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`54.
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`By virtue of the foregoing, the Individual Defendants violated Section 20(a) of the
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`1934 Act.
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`55.
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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) of the 1934 Act and
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`Rule 14a-9, by their acts and omissions as alleged herein. By virtue of their positions as controlling
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`persons, these defendants are liable pursuant to Section 20(a) of the 1934 Act. As a direct and
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`proximate result of defendants’ conduct, plaintiff is threatened with irreparable harm.
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`PRAYER FOR RELIEF
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`WHEREFORE, plaintiff prays for judgment and relief as follows:
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`Case 1:21-cv-07727 Document 1 Filed 09/15/21 Page 9 of 9
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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;
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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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`Directing the Individual Defendants to disseminate a Proxy Statement that does not
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`contain any untrue statements of material fact and that states all material facts required in it or
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`necessary to make the statements contained therein not misleading;
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`D.
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`Declaring that defendants violated Sections 14(a) and/or 20(a) of the 1934 Act, as
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`well as Rule 14a-9 promulgated thereunder;
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`E.
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`Awarding plaintiff the costs of this action, including reasonable allowance for
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`plaintiff’s attorneys’ and experts’ fees; and
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`F.
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`Granting such other and further relief as this Court may deem just and proper.
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`Plaintiff hereby requests a trial by jury on all issues so triable.
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`JURY DEMAND
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`Dated: September 15, 2021
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`By:
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`RIGRODSKY LAW, P.A.
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`/s/ Gina M. Serra
`Seth D. Rigrodsky
`Timothy J. MacFall
`Gina M. Serra
`Vincent A. Licata
`825 East Gate Boulevard, Suite 300
`Garden City, NY 11530
`Telephone: (516) 683-3516
`Email: sdr@rl-legal.com
`Email: tjm@rl-legal.com
`Email: gms@rl-legal.com
`Email: vl@rl-legal.com
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`Attorneys for Plaintiff
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