Case 1:16-Cv-00015-ER Document 6 Filed 01/05/16 Page 1 of 20

Case 1:16-cv-00015-ER Document 6 Filed 01/05/16 Page 1 of 20

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

MAJED SOUEIDAN, Individually and On Behalf of All Others Similarly Situated,

Plaintiff, Civil Action No.______v.

BREEZE-EASTERN CORPORATION, BRAD PEDERSEN, ROBERT J. KELLY, NELSON OBUS, WILLIAM M. SHOCKLEY, and SERGE DUPUIS,

Defendants.

CLASS ACTION COMPLAINT

Plaintiff, by his undersigned attorneys, for his Class Action Complaint, alleges upon personal knowledge with respect to himself, and upon information and belief as to all other allegations based upon, inter alia, the investigation of counsel, as follows:

NATURE OF THE ACTION

1. This is a stockholder class action brought by plaintiff on behalf of the public

stockholders of Breeze-Eastern Corporation (the “Company”) against the Company, Brad

Pedersen, the Company’s Chief Executive Officer, Serge Dupuis, its Treasurer and Chief

Financial Officer, and three of its conflicted directors – Robert J. Kelly, Nelson Obus, and

William M. Shockley, arising out of the proposed acquisition of the Company by TransDigm

Group Incorporated (“TransDigm”) through a subsidiary created for the acquisition (the “Merger

Sub”) (the “Proposed Transaction”). In pursuing the Proposed Transaction, each defendant has

made material misrepresentations and breached his fiduciary duties owed to plaintiff and the

proposed Class (as defined below). Case 1:16-cv-00015-ER Document 6 Filed 01/05/16 Page 2 of 20

2. The Company designs, develops, manufactures, sells, and services sophisticated

engineered mission equipment for specialty aerospace and defense applications.

3. TransDigm is a leading global designer, producer, and supplier of highly

engineered aircraft components, systems and subsystems for use on nearly all commercial and

military aircraft.

4. On November 19, 2015, the Company announced it had entered into a merger

agreement with TransDigm and the Merger Sub (the “Merger Agreement”) pursuant to which

TransDigm would acquire all the outstanding common stock of the Company by means of a

Tender Offer (the “Tender Offer”) for $19.61 per share in cash (“Offer Price”), for a total transaction value of approximately $206 million.

5. Concurrent with its entry into the Merger Agreement, the Company disclosed two

Tender and Support Agreements (“Support Agreements”) between TransDigm, Merger Sub, and certain Company stockholders affiliated with Tinicum Inc. (“Tinicum”) and Wynnefield Capital,

Inc. (“Wynnefield”). As a result of the Support Agreements, defendants TransDigm and Merger

Sub had “the power to cause up to 5,421,284 shares of Company Common Stock (or approximately 54.7% of all outstanding shares of Company Common Stock as of November 16,

2015) to support the Offer and the Merger. . . .” See Schedule 13D (at 5), filed on November

25, 2015. Under the terms of the Merger Agreement, the agreement of these stockholders to tender their shares, as memorialized in the Support Agreements, rendered the Proposed

Transaction a fait accompli. See Merger Agreement, Preliminary Statements, D.; see also id.,

Article 1.1(b); id., Article 5.24. As noted below (at ¶¶ 18-20), defendants Kelly, Obus, and

Shockley are affiliates of either Tinicum or Wynnefield. Tinicum and Wynnefield are not members of the Class, as defined below.

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6. The Tender Offer was commenced on December 3, 2015 and was subject to the

minimum condition requiring at least a majority of the Company’s shares to be tendered, which

was accomplished through the tender of the shares that were the subject of the Support

Agreements.

7. On December 3, 2015, defendants delivered to the Company’s stockholders a

Schedule 14D-9 (the “Initial Schedule 14D-9”) and on December 23, 2015, a Second Amended

Schedule 14D-9 (the “Amended Schedule 14D-9”).

8. The Proposed Transaction price was woefully inadequate because it was based on

material misstatements contained in both the Initial and Amended Schedules 14D-9. Those

misstatements related to the purported basis for the discounted cash flow analysis in the Initial

Schedule 14D-9 which ignored certain of the Company’s actual financials and substituted, on a

specious basis, a forecast that significantly reduced the Company’s value, thereby causing Class

members to tender their shares at an artificially deflated price.

9. Plaintiff herein commenced an action in the Delaware Chancery Court in an effort

to enjoin the Proposed Transaction. No injunction was forthcoming, due primarily to defendants

squeezing the transaction into the year-end holiday period. In the Amended Schedule 14D-9, the

Company purported to describe that Complaint. While doing so, the Company repeated the

material misstatements about the Company’s valuation.

10. Instead of providing stockholders the premium to which they are routinely entitled in a change of control transaction, defendants’ misstatements forced the Class members to sell their stock at a discount. That discount results in large part from the defendants’ material misstatements about, and disavowal of, the Company’s own reported financial results. Instead of relying on the Company’s published actual results, the Company invented financial metrics on

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which to justify the Offer Price. See ¶ 33, et seq. The justification for ignoring the actual results is a garbled and incomprehensible management discussion in the Company’s Form 10-Q for the period ended September 30, 2015 (the “September 30 Form 10-Q”), reliance on which in the

Initial and Amended Schedules 14D-9 was the basis of the material misstatements.

JURISDICTION AND VENUE

11. The claims asserted herein arise under and pursuant to § 14 of the Securities

Exchange Act of 1934 (the “1934 Act”) (15 U.S.C. §§78n), and Rules 14e-2 and e-3 promulgated thereunder by the SEC (17 C.F.R. § 240.14e-2 and 14e-3) and pendent jurisdiction.

12. This Court has jurisdiction over the subject matter of this action pursuant to 28

U.S.C. § 1331 and § 27 of the 1934 Act (15 U.S.C. § 78aa) and 28 U.S.C. § 1367.

13. Venue is proper in this District pursuant to § 27 of the 1934 Act and 28 U.S.C. §

1391(b), as the Company’s stock is traded on the New York Stock Exchange and many of the acts and practices complained of herein occurred in substantial part in this District.

14. In connection with the acts alleged in this Complaint, defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, including, but not limited to, the mails, interstate telephone communications and the facilities of the national securities markets.

PARTIES

15. Plaintiff owns and has owned Company stock continuously since prior to the wrongs complained of herein.

16. The Company is a Delaware corporation with its principal executive offices located in Whippany, New Jersey. Its shares trade on the New York Stock Exchange under the symbol BZC.

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17. Defendant Brad Pedersen has served as the company’s President, Chief Executive

Officer, and a director since May 2012.

18. Defendant Robert J. Kelly is the Company’s Chairman of the Board and had been a director since 2011. Kelly is affiliated with Tinicum. He has been employed since 1991 by

Tinicum Capital Partners II, L.P., on whose behalf Kelly executed one of the two Support

Agreements.

19. Defendant Nelson Obus has been a Company director since 2012. Obus is affiliated with Wynnefield. He has served since 1992 as an officer of a Wynnefield affiliate.

Obus executed one of the two Support Agreements.

20. Defendant William M. Shockley has been a Company director since 2006.

Defendant Shockley is affiliated with Tinicum. He has been an officer of a Tinicum affiliate since 2004 and an officer of another since 2005.

21. Defendant Serge Dupuis has served as the Company’s Treasurer and Chief

Financial Officer since 2014. He signed the Company’s Initial and Amended Schedules 14D-9.

CLASS ALLEGATIONS

22. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil

Procedure 23(a) and (b)(3) on behalf of a class consisting of all of the Company’s stockholders during the time the Initial and Amended Schedules 14D-9 were filed (the “Class”). Excluded from the Class are the defendants, the officers and directors of the Company, Tinicum, and

Wynnefield, members of their immediate families and their legal representatives, heirs, successors or assigns, and entities in which defendants have or had a controlling interest.

23. The members of the Class are so numerous that joinder of all members is impracticable. The Company’s common stock was actively traded on the NYSE. While the

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exact number of Class members is unknown to plaintiff at this time and can only be ascertained through appropriate discovery, plaintiff believes that there are thousands of members in the proposed Class. Record owners and other members of the Class may be identified from records maintained by the Company or its transfer agent and may be notified of the pendency of this action by mail, using the form of notice similar to that customarily used in securities class actions.

24. Plaintiffs’ claims are typical of the claims of the members of the Class as all members of the Class were similarly affected by defendants’ wrongful conduct in violation of federal law that is complained of herein.

25. Plaintiff will fairly and adequately protect the interests of the members of the

Class and has retained counsel competent and experienced in class and securities litigation.

26. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to the Class are:

a. whether the federal securities laws were violated by defendants’ acts and

omissions as alleged herein;

b. whether statements made by defendants to the investing public during the

Class Period misrepresented and omitted material facts about the business and operations of the

Company;

c. whether defendants breached their Delaware fiduciary duties; and

d. to what extent the members of the Class have sustained damages and the

proper measure of damages.

27. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Furthermore, as

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the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation make it impossible for members of the Class to individually redress the wrongs done to them. There will be no difficulty in the management of this action as a class action.

FACTUAL ALLEGATIONS

28. At the time the Company announced the Proposed Transaction, its prospects were

excellent. According to Zacks Equity Research:

Breeze-Eastern boasts a customer base comprising of top-notch firms like The Boeing Company, BA, Sikorsky, AgustaWestland, Airbus as well as the U.S. government. The company serves different platforms like Airbus A400M transport, HH-65 Dolphin, UH-60 Blackhawk and CH-47 Chinook. Notably, Breeze-Eastern has huge exposure to military markets, with roughly 75% of revenues garnered from there.

“TransDigm to Acquire Breeze-Eastern in a $206M Deal,” Zacks Equity Research, Nov. 20,

2015, available at http://finance.yahoo.com/news/transdigm-acquire-breeze-eastern-206m-

155003207.html.

29. On October 28, 2015, when the parties were well into price negotiations, the

Company announced results for its three and six months ended September 30, 2015 (i.e., the first

half of its fiscal year ending March 31, 2016). Year-over-year, in its second quarter: (a) net

sales increased 35%; and (b) net income rose $2.9 million. Year-over-year, in its first half: (a)

net sales increased 23%; (b) net income increased by $4.8 million; and (c) bookings increased

24%.

30. The press release announcing the Company’s results stated:

‘Breeze-Eastern again achieved strong operating performance this quarter, as the Company continues to strengthen its financial position heading into 2016,’ stated Brad Pedersen, President and Chief Executive Officer of Breeze-Eastern Corporation. ‘Higher new product shipments and spare part sales helped drive top line revenue. The Company’s performance for the first six months of fiscal 2016

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reflects favorable timing, product mix, customer mix, solid industry demand, and improved margins.’

‘We closed the quarter with a strong cash position and are confident that we can deliver solid results in the months ahead.’

Emphasis added.

31. Because of the Company’s consistently positive financial performance, its shares

had risen 73% in the prior 12 months. On November 18, 2015 (the day before the Proposed

Transaction was announced), the Company’s stock closed at $21.00 (a 6.6% premium to the

Offer Price).

32. Notwithstanding the Company’s actual financial performance and all previous

public statements, the individual defendants denigrated the Company’s financial future and

prospects in the Initial Schedule 14D-9 by materially misleading the Class by refusing to use actual financial results in computing DCF, substituting subjective, and less favorable, forecasts.

Its reasons for doing so, as set forth below, are both contradictory and incomprehensible.

33. After a table including actual fiscal 2015 figures, actual LTM 2016 figures, and projections for fiscal 2016-21, the Company, in contradiction to its recent filings, continued:

As previously noted, the development of the Forecasts by the Company’s senior management team was based on a detailed review of a wide variety of factors that could potentially impact the future operational and financial performance of the Company. In their review and discussion of the Forecasts, the Company Board and the Company’s senior management team highlighted aspects of the Company’s performance during the twelve months ended September 30, 2015 (the “9/30 LTM Performance”) that were not necessarily indicative of the potential future financial results of the Company for the remainder of the Company’s 2016 fiscal year and beyond. In particular, the Company Board and the Company’s senior management team noted that the 9/30 LTM Performance was favorably impacted by the exceptionally strong performance of the Company during the first two quarters of its 2016 fiscal year, which was driven by a combination of (i) unusual timing when considering the Company shipped a number of customer orders that either historically have tended to (a) occur more often during the last two quarters of the Company’s fiscal year or (b) ship more often across multiple fiscal years, (ii) product mix when considering the

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percentage of revenue generated by highly profitable spare products and overhaul and repair services provided to the Company’s aftermarket customers was greater than usual, and (iii) customer mix when considering the percentage of revenue generated by shipments to specific customers whose contracts generate relatively higher levels of profitability. The confluence of these factors, as illustrated in the table above, convinced both the Company Board and the Company’s senior management team that the Forecasts, and not the 9/30 LTM Performance, was [sic] a more meaningful indicator of the Company’s future financial results.

Initial Schedule 14D-9 at 18-19 (emphasis added).

34. But each of Management’s Discussion and Analysis of Financial Condition and

Results of Operation, contained in virtually all of the Company’s Forms 10-Q over the past year,

belied the claim “that the Forecasts, and not the 9/30 LTM Performance, was a more meaningful

indicator of the Company’s future financial results.” And it is that one inconsistent statement, in

the September 30 Form 10-Q, that rendered it impossible for the stockholders to judge the

appropriateness of the Offer Price, misleading them to a much lower valuation.

35. In the Company’s Form 10-Q for the third quarter of fiscal 2015 (period ended

December 31, 2014), the MD&A stated (after the figures for the 3-month period):

The timing of U.S. Government awards, availability of U.S. Government funding, and product delivery schedules are among the factors that affect the period of recording revenues. Over the past several years, revenues in the second half of the fiscal year exceeded revenues in the first half of the fiscal year. We expect fiscal 2015 revenues will be consistent with this historical pattern.

At 19 (emphasis added). There is not a hint that there was anything unusual about reported

financial results.

36. The December 31, 2014 Form 10-Q also stated (after the figures for the 9-month

period at 21):

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fiscal year; we believe fiscal 2015 revenues will be consistent with this historical pattern.

At 22 (emphasis added). Still no hint of anything unusual about reported financial results. The

March 31, 2015 Form 10-K, filed May 29, 2015, similarly states:

The timing of U.S. Government awards, availability of U.S. Government funding, and product delivery schedules are among the factors that affect the period of recording revenues. Fiscal 2015 was consistent with recent years with revenues in the second half of the fiscal year exceeding revenues in the first half of the fiscal year; we believe fiscal 2016 revenues will be consistent with this historical pattern.

At 20 (emphasis added). Yet again, nothing unusual about reported financial results.

37. Similar language appears in the June 30, 2015 Form 10-Q, filed July 29, 2015:

The timing of U.S. Government awards, availability of U.S. Government funding, and product delivery schedules are among the factors that affect the period of recording revenues. Over the past several years, revenues in the second half of the fiscal year exceeded revenues in the first half of the fiscal year. We expect fiscal 2016 revenues will be consistent with this historical pattern.

At 20 (emphasis added). Again there is no indication that the results were anamolous.

38. The September 30 Form 10-Q, filed on October 28, 2015, less than a month prior to the announcement of the Tender Offer, broke this pattern, but only in one of two places, and then with language that can best be described as garbled and incomprehensible.

39. The Company’s September 30 Form 10-Q read in language reminiscent of the previous year, after the figures for the 3-month period, in the MD&A section:

The timing of U.S. Government awards, availability of U.S. Government funding, and product delivery schedules are among the factors that affect the period of recording revenues. Over the past several years, revenues in the second half of the fiscal year exceeded revenues in the first half of the fiscal year. We expect fiscal 2016 revenues will be consistent with this historical pattern.

At 20 (emphasis added).

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40. The text after the 6-month figures, however, contained language that at first,

contradicted what the 3-month language said, but then became garbled and incomprehensible.

The statement read as follows:

The timing of U.S. Government awards, availability of U.S. Government funding, and product delivery schedules are among the factors that affect the period of recording revenues. Fiscal 2015 was consistent with recent years with revenues in the second half of the fiscal year exceeding revenues in the first half of the fiscal year. We believe fiscal 2016 revenues will not follow this historical pattern with revenues ion the second half of fiscal 2016 be consistent with this historical pattern.1

At 22 (emphasis added).

41. Thus, for the three-month period, the September 30 Form 10-Q contained the by-

now standard: “We expect fiscal 2016 revenues will be consistent with this historical pattern.”

After the 6-month period, however, came the opening of a contradictory statement: “We believe

fiscal 2016 revenues will not follow this historical pattern. . . ,” but the rest of the sentence

trailed into meaninglessness: “ . . . with revenues ion the second half of fiscal 2016 be consistent with this historical pattern.”

MATERIALLY FALSE AND MISLEADING STATEMENTS IN THE SCHEDULES 14D-9

42. On October 28, 2015 the Company, therefore, stated both that it expected the fiscal

2016 revenues would follow the historical pattern and that the fiscal revenues would not follow

the historical pattern as to whether revenues were backloaded. On December 3, 2015, when the

Initial Schedule 14D-9 was filed, the Company advised its stockholders “that the Forecasts, and not the 9/30 LTM Performance, was [sic] a more meaningful indication of the Company’s future results.” This conclusion enabled TransDigm’s tender at a price discounted from the public

1 This is exactly the language used in the September 30 Form 10-Q.

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trading price. These garbled statements fail adequately to inform stockholders of the reasons the

Company departed from its actual financial results and all previous public statements in constructing its projections and concealed the Company’s actual financial condition.

43. HW&Co., the Company’s financial advisor with regard to the Proposed

Transaction, prepared certain financial analyses in connection with rendering its “fairness” opinion. Faced with the Company’s two contradictory statements in the September 30 Form 10-

Q of whether fiscal 2016 revenues would be historically consistent, HW&Co. did not use the actual revenues but chose the forecasts as an operating metric for preparing its DCF analyses.

Schedule 14D-9 at 20. As such, the financial analyses performed in connection with the

Proposed Transaction resulted in the Company’s lower valuation, thereby facilitating the Tender

Offer at the lower price.

44. As one analyst wrote, the Company was underselling itself to TransDigm.

According to Jan Svenda:

Previously, I covered BZC in these articles . . ., where I stated that the company is a perfect undervalued play for patient value investors. It has a dominant position in a market that is not going anywhere, as well as strong financial fundamentals and very limited downside, as it has no debt, almost no extra liabilities and is capable of creating significant cash flow.

Most recently, I have written an in-depth report where I show why I think that Breeze-Eastern is underselling itself to Transdigm [sic] Group. TDG is going to acquire BZC for a discount of 6.6% as the offer price is $19.61 per share, while the closing stock price before the announcement was $21 per share. We must bear in mind that excluding cash TDG is getting a great business for $17.23 per share, increasing the discount to 18%.

This ridiculous offer could have only been backed up by BZC’s management losing faith in the future outlook. This has not been supported by any arguments presented in the merger documents as the financial projections were pointing to increased revenue and margins. Additionally, there was no sign of any new information that would change my perception of the company. Moreover, the offer price was derived from a dubious DCF and I end the report by showing that all this was most likely the work of the main BZC shareholders (Tinicum and

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Wynnfield [sic]), who probably only want to liquidate their positions and exit their investments. This creates a huge conflict of interest and thus the shareholders should do all it takes to try to oppose the ‘takeunder.’

“First Shareholders Step Out To Oppose The Dubious TakeUnder Of Breeze-Eastern,” Seeking

Alpha, Dec. 14, 2015, available at http://seekingalpha.com/article/3752776-first-shareholders-

step-out-to-oppose-the-dubious-takeunder-of-breeze-

eastern?li_source=LI&li_medium=liftigniter-widget (emphasis added).

45. VN Capital, the Company’s third largest stockholder (which owns about 12.6% of

the Company’s stock), issued a press release on December 8, which stated:

We firmly believe Breeze-Eastern should not accept a 6.6% sale discount. The Company’s closing stock price was $21 on November 18, 2015; the day prior to the announcement. Breeze-Eastern holds dominant market share, excellent cash flow generation capability and compelling growth prospects. As such, it should receive a premium to its pre-merger announcement level,” said James Vanasek, Principal at VN Capital.

Just as the plaintiff here and Mr. Svenda, VN Capital also questioned the DCF analyses.

46. The Svenda analysis provides an explanation as to why the Tender Offer was at a

discounted price. Tinicum and Wynnefield, with three of their employees on the eight-member

board, apparently wanted to liquidate their position in the stock as soon as possible. The

Company’s average share volume for the three months prior to the announcement of the

Proposed Transaction was approximately 35,000 shares per day. To sell their approximately 5.4

million shares into the open market without collapsing the price would have taken Tinicum and

Wynnefield many years. This transaction gave them a quick out.

47. Furthermore, Pedersen, the Company’s CEO and a fourth director, stands to reap

a windfall of over $6 million dollars as a result of the Proposed Transaction, due to the Company

stock he owns and his golden parachute. Initial Schedule 14D-9 at 25.

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48. Four of the eight board members protected their personal interests or those of their respective employers. The minority stockholders were thus left to fend for themselves in trying to value the Company and determine from a materially misleading set of filings whether to tender their shares.

49. The Initial Schedule 14D-9 was therefore materially misleading as it was based on

the September 30 Form 10-Q that was both inconsistent and internally garbled and

incomprehensible. It was materially misleading to state in the Initial Schedule 14D-9 “that the

forecasts, and not the 9/30 LTM Performance, was a more meaningful indicator of the

Company’s future financial results” when in relation to the three months ended September 30,

2015, the Company stated: “We expect fiscal 2016 revenues will be consistent with this historical pattern.” (Emphasis added.)

50. The Initial Schedule 14D-9 not only materially misstated the language concerning the three-month analysis in the September 30 Form 10-Q, but apparently sought to rely on the garbled language under the six-month figures: “We believe fiscal 2016 revenues will not follow

this historical pattern with revenues ion the second half of fiscal 2016 be consistent with this historical pattern.”

51. Relying on one of two contradictory statements (and the reliance is on the one that is garbled) to achieve a lower tender price for the benefit of Tinicum and Wynnefield was purposely materially misleading. That the material misstatement was purposeful became evident from the Amended Schedule 14D-9. Even after plaintiff pointed out in the Delaware action the material misstatement and garbled language, the Company reiterated:

This complaint generally alleges breaches of fiduciary duty by the members of the Company Board in connection with disclosures related to the transactions contemplated by the Merger Agreement, and also raises certain questions about disclosures made by the Company in a previous quarterly public filing regarding

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anticipated revenue trends as between the first half and second half of the Company’s fiscal year. The complaint seeks injunctive relief, including an order enjoining the defendants from completing the transactions contemplated by the Merger Agreement until certain supplemental disclosures are made by the Company and attorneys’ and experts’ fees. The Company believes this lawsuit is wholly without merit and intends to vigorously defend against it. Furthermore, the Company and the Company Board confirm the disclosures set forth in Item 4 of this Schedule 14D-9, including the Forecasts and the assumptions on which they were developed (see “Certain Projections” on page 17 for further details). The Company also confirms that these disclosures represent the most up to date disclosures made by the Company with respect to the same subject matter.

Emphasis added.

52. On January 4, 2016, the Company announced that 7,203,868 shares had been tendered. These included the 5,421,284 shares tendered by Tinicum and Wynnefield. Since there were 9,916,242 subject to the Tender Offer, only 1,782,584 (approximately 40%) of the 4,494,958 publicly held shares were tendered.

SCIENTER

53. As alleged herein, defendants acted with scienter in that defendants knew that the

public documents and statements issued or disseminated in the name of the Company were

materially false and misleading; knew that such statements or documents would be issued or

disseminated to the investing public; and knowingly and substantially participated or acquiesced

in the issuance or dissemination of such statements or documents as primary violations of the

federal securities laws. If they could not figure it out themselves, plaintiff’s Delaware complaint

provided a roadmap. Rather than attempt to correct their garbled disclosure, defendants elected

to proceed in brazen disregard of the best interests of the minority stockholders. By virtue of

their knowledge of the true facts regarding the language in the September 30 Form 10-Q, the

discounted cash flow analysis in the initial Schedule 14D-9, and the repetition of the misleading

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statements about the September 30 Form 10-Q in the Amended Schedule 14D-9, defendants participated in the fraudulent scheme alleged herein.

PROXIMATE LOSS CAUSATION/ECONOMIC LOSS

54. During the Class Period, as detailed herein, defendants engaged in a scheme to deceive investors and the market and a course of conduct that artificially deflated the price of the

Company’s common stock and operated as a fraud or deceit on the Class members by issuing false statements during the Class Period in the Schedules 14D-9 to benefit Tinicum, Wynnefield, and defendant Pedersen to the detriment of the Class members. As a result of these misstatements and the fact that Tinicum and Wynnefield held sufficient shares on their own to effect the Merger, plaintiff and other members of the Class suffered significant economic loss, i.e., damages, under the federal securities laws and by virtue of the individual defendants’ fiduciary duty breaches under Delaware law.

55. Defendants' false statements and omissions had the intended effect and caused the

Company’s stock to be tendered at an artificially deflated level.

BREACH OF FIDUCIARY DUTY ALLEGATIONS

56. By reason of their positions as officers and/or directors of the Company, the individual defendants are fiduciaries for plaintiff and the other public stockholders, and owe them the highest duties of loyalty, good faith, fair dealing, and candor.

57. When the directors of a publicly-traded corporation undertake a transaction that will result in a change in corporate control, they have an affirmative fiduciary obligation to obtain the highest value reasonably available for the corporation’s stockholders. If such transaction will result in a change of corporate control, the stockholders are entitled to receive a significant premium, not a discount, as here. In all events, corporate fiduciaries owe

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stockholders the duty of complete candor, which includes explaining in an intelligible manner their reasons for entering the Proposed Transaction and setting the Offer Price.

58. At all times relevant hereto the individual defendants had the power to control and direct the Company. The individual defendants’ fiduciary obligations required them to act in the best interest of plaintiff and the Company’s minority stockholders.

CLAIM I

Violation of § 14 of the 1934 Act Promulgated Thereunder Against All Defendants

59. Plaintiff repeats and realleges each and every allegation contained above as if fully set forth herein.

60. During the Class Period, defendants disseminated or approved the materially false and misleading statements specified above, which they knew or deliberately disregarded were false.

61. Defendants: (a) employed devices, schemes and artifices to defraud; (b) made untrue statements of material fact and/or omitted to state material facts necessary to make the statements made not misleading; and (c) engaged in acts, practices and a course of business which operated as a fraud and deceit upon the purchasers or acquirers of the Company's publicly traded securities in an effort to maintain artificially high market prices for the Company’s common stock in violation of § 14 of the 1934 Act and Rules 14e-2 and 14e-3. All defendants are sued either as primary participants in the wrongful and illegal conduct charged herein.

62. Defendants had actual knowledge of the misrepresentations and omissions of material facts set forth herein, or acted with reckless disregard for the truth in that they failed to ascertain and to disclose such facts, even though such facts were available to them. As such, defendants' material misrepresentations and/or omissions were made knowingly or with a

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reckless disregard for the truth and for the purpose and effect of creating the artificially deflated price of the Company’s common stock.

63. As a result of the dissemination of the materially false and misleading information and failure to disclose material facts, as set forth above, the Company’s Tender Offer price was artificially deflated during the Class Period. In ignorance of the fact that the Company’s market price was artificially deflated, and relying directly or indirectly on the false and misleading statements made by defendants, or upon the integrity of the markets in which the securities trade and/or on the absence of material adverse information that was known to or recklessly disregarded by defendants, but not disclosed in public statements by defendants during the Class

Period, plaintiff and the other Class members tendered their Company common stock at an artificially deflated price and were damaged.

64. At the time of defendants' false and misleading statements, Class members were ignorant of their falsity and believed them to be true. Had the Class members known the truth regarding the company’s financial condition, that was not disclosed by defendants, they would not have tendered their shares, but instead sought appraisal under Delaware law.

65. As a direct and proximate result of defendants' wrongful conduct, plaintiff and the other Class members suffered damages in connection with their tender of the Company's common stock during the Class Period.

CLAIM II

CLAIM FOR BREACHES OF FIDUCIARY DUTIES AGAINST THE INDIVIDUAL DEFENDANTS

66. Plaintiff repeats and re-alleges each allegation set forth above

67. The individual defendants have failed to act in good faith and violated their fiduciary duties of loyalty and candor owed to the Class members by adopting an idiosyncratic

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valuation methodology, without adequately explaining the reasons for doing so, in order to benefit themselves.

68. As a result of defendants’ breaches of fiduciary duty, plaintiff and the Class members have been damaged.

PRAYER FOR RELIEF

WHEREFORE, plaintiff respectfully prays for judgment, as follows:

A. determining that this action is a proper class action, and certifying plaintiff as class representative under Federal Rule of Civil Procedure 23;

B. awarding compensatory damages in favor of plaintiff and the other Class members against all defendants, jointly and severally, for all damages sustained as a result of defendants' wrongdoing, in an amount to be proven at trial, including interest thereon;

C. awarding plaintiff and the Class their reasonable costs and expenses, including counsel fees and expert fees; and

D. such further relief as may be just and proper.

JURY DEMAND

Plaintiff demands a trial by jury for all claims so triable.

Dated: January 4, 2016

By: _____s/Samuel K. Rosen______Joel C. Feffer Samuel K. Rosen HARWOOD FEFFER LLP 488 Madison Avenue New York, NY 10022 Telephone: (212) 935-7400 Facsimile: (212) 753- 3630

Attorneys for Plaintiff

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