Alison D Masters, Et Al. V. Gas Natural Inc., Et Al. 16-CV-02880-Verified
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Case: 1:16-cv-02880-PAG Doc #: 1-1 Filed: 11/28/16 1 of 71. PageID #: 8 EXHIBIT A Case: 1:16-cv-02880-PAG Doc #: 1-1 Filed: 11/28/16 2 of 71. PageID #: 9 NAILAH K. BYRD CUYAHOGA COUNTY CUERK OF COURTS 1200 Ontario Street Cleveland, Ohio 44113 Court of Common Pleas New Case Electronically Filed: November 3, 2016 16:17 By: SETH J. LINNICK 0083494 Confirmation Nbr. 900876 ALISON D. iSUNNYi MASTERS CV 16 871400 vs. Judge: MICHAEL B. BENDER ET. AL., ET AL JOSE' A. VILLANUEVA Pages Filed: 31 Electronically Filed 11/03/2016 16:17/ / CV 16 871400 / Confirmation Nbr. 900876/CLAHJ Case: 1:16-cv-02880-PAG Doc #: 1-1 Filed: 11/28/16 3 of 71. PageID #: 10 IN THE COURT OF COMMON PLEAS CUYAHOGA COUNTY, OHIO ALISON D. “SUNNY” MASTERS, on behalf ) of herself and all other similarly situated ) CASE NO.: shareholders of GAS NATURAL, ) 608 Birchwood Drive ) Willoughby, OH 44094 ) JUDGE: ) Plaintiff, ) ) v. ) ) MICHAEL B. BENDER, JAMES P. ) CARNEY, RICHARD K. GREAVES, ) VERIFIED DERIVATIVE AND ROBERT B. JOHNSTON, GREGORY J. ) CLASS ACTION COMPLAINT OSBORNE, MICHAEL R. WINTER, KEVIN ) J. DEGENSTEIN, JENNIFER HABERMAN, ) JAMES E. SPRAGUE, ) (Jury Demand Endorsed Hereon) c/o Gas Natural, Inc. ) 1375 East Ninth Street ) Suite 3100 ) Cleveland, OH 44114 ) ) JED D. HENTHORNE, ) c/o Energy West Montana, Inc. ) 1 1st Avenue South ) Great Falls, MT 59401 ) ) VINCENT A. PARISI, ) c/o Nisource Inc. ) 801 East 86th Avenue ) Merrillville, IN 46410 ) ) FR BISON HOLDINGS, INC., ) c/o Corporation Service Company ) Statutory Agent ) 2711 Centerville Rd., Suite 400 ) Wilmington, DE 19808 ) ) FR BISON MERGER SUB, INC., ) c/o CSC-Lawyers Incorporating Service ) Statutory Agent ) 50 West Broad Street, Suite 1800 ) Columbus, OH 43215 ) ) FIRST RESERVE ENERGY ) INFRASTRUCTURE FUND II,L.P., ) One Lafayette Place ) Greenwich, CT 06830 ) ) ANITA G. ZUCKER (Individually), ) 4838 Jenkins Avenue ) Electronically Filed 11/03/2016 16:17 / / CV 16 871400 / Confirmation Nbr. 900876 / CLAHJ Case: 1:16-cv-02880-PAG Doc #: 1-1 Filed: 11/28/16 4 of 71. PageID #: 11 North Charleston, SC 29405 ) ) ANITA G. ZUCKER (Trustee of the Article 6 ) Marital Trust Under the First Amended and ) Restated Jerry Zucker Revocable Trust Dated ) April 2, 2007), ) 4838 Jenkins Avenue ) North Charleston, SC 29405 ) ) THE INTERTECH GROUP, INC., ) c/o Michael Bender ) Statutory Agent ) 4838 Jenkins Avenue ) North Charleston, SC 29405 ) ) NIL FUNDING CORPORATION, ) c/o Corporation Service Company ) Statutory Agent ) 2711 Centerville Rd., Suite 400 ) Wilmington, DE 19808 ) ) Defendants, ) ) GAS NATURAL, INC., ) c/o 1600 CNB Corp. ) Statutory Agent ) 1375 East Ninth Street, 29th Floor ) Cleveland, OH 44114 ) ) Nominal Defendant. VERIFIED DERIVATIVE AND CLASS ACTION COMPLAINT Plaintiff,Alison D. “Sunny ” Masters (“Plaintiff”), by her attorneys, on behalf of herself and all other similarly situated public shareholders of Gas Natural, Inc. (“Gas Natural” or the “Company”), and for the benefit of nominal defendant Gas Natural, brings the following Verified Derivative and Class Action Complaint (the “Complaint”) against: • Members of Gas Natural’s Board of Directors (the “Board”), Michael B. Bender, James P. Carney, Richard K. Greaves, Robert B. Johnston, Gregory J. Osborne, and Michael R. Winter (collectively referred to herein as the “Board Members,” “Directors,” or “Director Defendants”) • Certain past and all present officers of Gas Natural, Kevin J. Degenstein, Jed D. Henthorne, Jennifer Haberman, James E. Sprague, and Vincent A. Parisi (collectively referred to herein as the “Officers” or “Officer Defendants”) 2 Electronically Filed 11/03/2016 16:17 / / CV 16 871400 / Confirmation Nbr. 900876 / CLAHJ Case: 1:16-cv-02880-PAG Doc #: 1-1 Filed: 11/28/16 5 of 71. PageID #: 12 • FR Bison Holdings, Inc., FR Bison Merger Sub, Inc., and First Reserve Energy Infrastructure Fund II, L.P. (collectively referred to herein as “First Reserve”) • Anita G. Zucker, individually and as Trustee of the Marital Trust under The First Amended andRestated Jerry Zucker Revocable Trust (collectively referred to herein as “Defendant Zucker”) • The InterTech Group, Inc., and NIL Funding Corporation (collectively referred to herein as the “Zucker Affiliates”) The allegation of the Complaint are based upon personal knowledge of Plaintiff with respect to herself, and upon information and belief based upon the investigation of counsel as to all other allegations herein as follows. NATURE OF THE ACTION 1. This is a shareholder derivative class action brought by Plaintiffon behalf of herself and all other similarly situated public shareholders of Gas Natural, against the Directors, the Officers, and Defendant Zucker for breaches of fiduciary duty in connection with the proposed merger of the Company with and into FR Bison Merger Sub,Inc., a wholly-owned subsidiary of FR Bison Holdings, the terms of which provide that the outstanding shares of the Company will be converted into the right to receive $13.10 per share (the “Proposed Transaction”), pursuant to an Agreement and Plan of Merger dated asof October 8, 2016 (the “Merger Agreement”), and against Defendant Zucker, the Zucker Affiliates, and First Reserve for colluding with the Directors and Officers and aiding and abetting in such breaches of fiduciary duty. The Defendants expect to complete the Proposed Transaction by the last half of 2017. 2. As set forth herein, the members ofthe Company’s Board failed to fulfill their fiduciary duties and acted in bad faith by succumbing to the efforts of a self-interested shareholder and self-dealingofficers to steer the sale of the Company to a private equity buyer and away from strategic buyers, resulting in a flawed and inadequate process. This process is 3 Electronically Filed 11/03/2016 16:17 / / CV 16 871400 / Confirmation Nbr. 900876 / CLAHJ Case: 1:16-cv-02880-PAG Doc #: 1-1 Filed: 11/28/16 6 of 71. PageID #: 13 poised to deliver the Company to a buyer on terms that failto maximize shareholder value for Plaintiff and other Gas Natural public shareholders. 3. This flawed and inadequate process is largely reflected in the Merger Agreement, which contains preclusive deal protection devices that are not contemplated to benefit the Company or its shareholders, but instead, benefit the Defendants. For example, under the Merger Agreement, the Board agreed to, among other terms, provisions that: (i) provide for either the retention of, or significant severance agreements with, the Defendant Officers in the event of a change in control; (ii) accelerate all unvested stock awards upon a change in control; (iii) necessitate the repayment of debt with NIL Funding; (iv) give First Reserve a right of first refusal over any competing proposal in the event one is made; (v) require the Company to pay First Reserve a termination fee of approximately $4.8 million in order to enter into a transaction with a superior bidder; and (vi) provide First Reserve the right of specific performance, but deny the Company that same right in the event that First Reserve fails to consummate the transaction. These provisions substantially and improperly limit the Board’s ability to act in the Company’s best interests with respect to investigating and pursuing superior proposals and alternatives for the sale of Gas Natural. 4. Because of the Individual Defendants’ breaches of their fiduciary duties, Plaintiff, the Class, and the Company have been and will continue to be foreseeably and materially damaged, and may not receive the fair value of Gas Natural’s assets. 5. First Reserve and the Zucker Affiliates colluded with the Officers and Directors by engineering a Merger Agreement that included inappropriate deal protection devices and repaid NIL Funding’soutstanding loan with the Company. Defendant Zucker executed a support agreement with First Reserve in which Defendant Zucker pledged to vote her shares in favor of 4 Electronically Filed 11/03/2016 16:17 / / CV 16 871400 / Confirmation Nbr. 900876 / CLAHJ Case: 1:16-cv-02880-PAG Doc #: 1-1 Filed: 11/28/16 7 of 71. PageID #: 14 the Merger Agreement. Defendant Zucker and FirstReserve have unlawfully failed to file the support agreement with the Securities and Exchange Commission (the “SEC”). 6. Therefore, Plaintiff seeks preliminary injunctive relief preventing the Director Defendants and Officer Defendants, who have conspired with and are aided and abetted by First Reserve, Defendant Zucker, and the Zucker Affiliates, from inequitably and unlawfully depriving Plaintiff and the Class of their rights to realize full and fair value for their Gas Natural shares, and to compel the Individual Defendants to carry out their fiduciary duties to permit a fair process and maximize shareholder value on a sale of the Company. THE PARTIES 7. Plaintiff is, and has been at times relevant hereto, an owner and holder of common shares of Gas Natural. 8. Nominal Defendant Gas Natural is an Ohio corporation, withits headquarters located at 1375 East Ninth Street, Suite 3100, Cleveland, Ohio 44114. 9. Defendant Gregory J. Osborne (“Defendant Osborne”) is the President and Chief Executive Officer of the Company and has served as a Director of the Company since September 2009. Defendant Osborne was promoted to the position of Chief Executive Officer on May 14, 2014 after his father, Richard M. Osborne, was ousted as the Company’s Chief Executive Officer and Chairman. Upon information and belief, Defendant Osborne isa citizen of the State of Ohio. 10. Defendant Michael B. Bender (“Defendant Bender”) has beena director since February 2015 and is the Chairman of the Governance and Nominating Committee. Defendant Bender is also the Corporate Secretary, Corporate Counsel, and a Director of the InterTech Group, Inc. Upon information and belief, Defendant Bender is a citizen of the State of South Carolina. 5 Electronically Filed 11/03/2016 16:17 / / CV 16 871400 / Confirmation Nbr. 900876 / CLAHJ Case: 1:16-cv-02880-PAG Doc #: 1-1 Filed: 11/28/16 8 of 71.