EFiled: Jul 01 2016 08:45PM EDT
Transaction ID 59224354
Case No. 12447-VCL

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
OXBOW CARBON LLC,

)
)
Plaintiff,
)
)
)
v.
)
)
CRESTVIEW-OXBOW
ACQUISITION, LLC, CRESTVIEW- )
OXBOW (ERISA) ACQUISITION,
)
LLC, BARRY VOLPERT, ROBERT J. )
)
HURST,CHRISTINA WING
O’DONNELL, and ERIC P. JOHNSON, )
)
Defendants.
)

C.A. No. 12509-VCL
PUBLIC VERSION
E-FILED JULY 1, 2016

VERIFIED COMPLAINT
This case involves claims by Plaintiff Oxbow Carbon LLC (the “Company”
or “Oxbow”) against two of its members, Crestview-Oxbow Acquisition, LLC and
Crestview-Oxbow (ERISA) Acquisition, LLC, which are investment vehicles for a
private equity fund, for breaches of the Company’s Limited Liability Company
Agreement. Oxbow also brings claims against two of its current directors, Barry
Volpert and Robert Hurst, who are Crestview’s two designees on the Board of
Directors, and two of its former Directors, Christina O’Donnell and Eric Johnson,
for breaches of fiduciary duty.

-2-

 This case – and the impetus for Crestview’s inequitable conduct and
breaches of the LLC Agreement – centers on Crestview’s dissatisfaction with the
limited exit rights it secured when negotiating the Company’s LLC Agreement at
the initial time of its investment in 2007. The LLC Agreement provided Crestview
with a “Put Right” where it could request that the Company redeem its units. But
because the LLC Agreement also required quarterly distributions of all of its net
cash flow to its members –

–a

full and immediate redemption of this Put Right was dependent on the Company
raising sufficient outside financing. The LLC Agreement also gave the Company
(and not Crestview) an unqualified right to reject the Put Right, which would then
provide Crestview an opportunity – governed by several key limitations – to drag
the Company’s other members along in an “Exit Sale.”
When Crestview exercised its Put Right in 2015, the Company was already
working on securing financing to redeem Crestview’s units because it had
determined that an Exit Sale under current market conditions was not in the
Company’s or the other members’ best interests. The Crestview Directors,
however, secretly manipulated this critical minority financing process in an attempt
to force William Koch, the Company’s founder, majority investor, Chairman of the
Board, and Chief Executive Officer (“CEO”) to resign as CEO and sell his
-3-

 majority stake in the Company. The motivation for this plot? Simple greed for the
two ring leaders. The Crestview Directors, Robert Hurst and Barry Volpert,
believed that they could get a premium for Crestview’s minority investment if Mr.
Koch were removed as CEO and ceased to be a majority owner of Oxbow. The
Crestview Directors pursued this plot and did so despite the fact that, under Mr.
Koch’s leadership, Oxbow made cash distributions to the Crestview Directors over
the past nine years totaling
approximately

, which they represented as constituting

their fund’s original investment. The two other (now former)

Directors who participated in this undisclosed plot, Christina O’Donnell and Eric
Johnson, were motivated by personal financial gain and career advancement that
would result from Mr. Koch’s removal and divesture of his majority stake.

After their coup attempt was unsuccessful, Crestview and the Crestview
Directors engaged in scorched earth tactics to undermine, and ultimately corrupt,
the Put Right minority interest financing.

-4-

 making baseless threats of
personal liability to the other Directors; threatening to unilaterally disclose the
Company’s most sensitive confidential information to its competitors, suppliers,
and customers; attempting to inflate the value that the Company would be required
to buy them out at by rigging the valuation process; and, ultimately, leaking to the
market that investors should not participate in the minority financing process
because if they waited, they would be able to bid for the Company as part of an
entire company sale.

Crestview’s corruption of the minority financing and Put Right process
contributed to the Company’s decision to reject the Put Right. The Company made
this decision, however, without realizing the full extent of Crestview’s
manipulation and ultimate destruction of the minority financing process, and
without foresight into how Crestview would ignore the LLC Agreement’s
requirements for an Exit Sale, and secretly try to rig the Exit Sale process in a
manner designed to secure for itself a quick fire sale of the Company.

-5-

 As part of the Exit Sale process, the Crestview Directors usurped the
Company’s Board of Directors authority to control the process, secretly solicited
potential purchasers, and secretly disclosed confidential Company information to
potential purchasers, including the minimum price that Crestview is now arguing
entitles it to drag along every other member in an Exit Sale under the LLC
Agreement. But Crestview’s argument with respect to what constitutes the
minimum price for an Exit Sale rests upon an erroneous reading of the LLC
Agreement.
The LLC Agreement defines an Exit Sale to be “a Transfer of all, but not
less than all, of the then outstanding Equity Securities of the Company….” LLC
Agreement, Art. I, pg. 5. This means that an Exit Sale cannot, by definition, occur
without the participation of every member. Crestview’s ability to drag other
members along in an Exit Sale has two critical constraints:
(1) it cannot require any member to participate in an Exit Sale unless the
Exit Sale is at or above the Company’s “Fair Market Value” (as determined by a
valuation process defined in the LLC Agreement), id. at Art. XIII, § 8(e); and
(2) it cannot require any member to participate in an Exit Sale “unless the
resulting proceeds to such Member (when combined with all prior distributions to

-6-

 such Member) equal at least 1.5 times such Member’s aggregate Capital
Contributions through such date.” Id. at Art. XIII, § 8(e).
Crestview concedes that there are certain members who together purchased
worth of units from the Company in 2011 and 2012 at
who would not clear this 1.5x threshold with respect to any current indications of
interest from potential purchasers. Frustrated by this reality, Crestview has
advanced numerous arguments as to why it should still be able to force an Exit
Sale. Crestview first would have this Court disregard the clear definition of “Exit
Sale,” which requires participation of all members, by arguing that the members
who do not receive 1.5x can opt out of an Exit Sale. Realizing the futility of this
argument, Crestview has also argued that members who would not otherwise
receive 1.5x from an Exit Sale can somehow receive more proceeds for their units
as part of the Exit Sale to get them over the 1.5x threshold. But this argument
ignores the plain language in the LLC Agreement requiring that “each Unit
Transferred in such…Exit Sale shall be Transferred on the same terms and
conditions as each other Unit so Transferred….” Id. at Art. XIII, § 7(d). And it
also ignores the language requiring the proceeds from any Exit Sale to be
distributed to members “in accordance with their Percentage Interests.” Id. at Art.
XIII, § 9(b), and Art. XI, § 1.
-7-

 Crestview understood the clear implications of this plain language back in
2011 and 2012 when the Crestview Directors voted to issue units to the new
members at

per-unit. But, at the time, the Crestview Directors did not

perceive the 1.5x threshold as having any possible impact on its ultimate ability to
drag all of the Company’s members along in an Exit Sale for several reasons.
First, at the time of the issuances, Crestview did not intend to seek an exit
for another several years. Second, at the time of the issuances, the Company’s
market conditions were extremely favorable and the Company’s value was
increasing; as Crestview has recognized, the Company’s value rose to
approximately

per- unit within a couple of years of the issuances at

per-

unit. Third, the Company was also making substantial cash distributions to its
members at that point in time. As set forth above, these cash distributions count
towards the 1.5x threshold and so the more cash distributions the Company made
to these new members, the less those members would need to receive in an Exit
Sale to get them over the 1.5x threshold. Crestview certainly knew that

its ability to exit the Company could be delayed by operation of this 1.5x
requirement.

-8-

 Simply put, Crestview’s current attempt to force an Exit Sale of the
Company is directly contrary to the plain language of the LLC Agreement, and the
misconduct of Crestview and the Crestview Directors in first corrupting the
minority interest financing and then corrupting the Exit Sale process makes it
inequitable for them to force a full Company sale under the current circumstances.

INTRODUCTION
1.

In May 2007, Defendants Crestview-Oxbow Acquisition, LLC and

Crestview-Oxbow (ERISA) Acquisition, LLC (collectively with all other
Crestview defendants, “Crestview”), on behalf of, among others, a private equity
fund named Crestview Partners, L.P. made a total investment in Oxbow of
approximately

. In exchange, Crestview received an approximate
stake in Oxbow, and secured two Board of Directors seats that it

filled by appointing Barry Volpert and Robert Hurst, both of whom have
ownership in and control over Crestview Partners GP, L.P., the general partner of
Crestview Partners, L.P. Mr. Volpert and Mr. Hurst also have ownership in and
control over Crestview Advisors, LLC, the investment adviser that manages the
Crestview funds.

-9-

 2.

Simultaneously, Load Line Capital LLC (“Load Line”) acquired an

approximate

. Load Line is an investment

vehicle for the Coumantaros family.
3.

Following the Crestview and Load Line investments, Oxbow Carbon &

Minerals Holdings, Inc. (“OCMHI”), Oxbow’s majority investor, held
approximately
approximately

of Oxbow’s outstanding units, with the remaining
held by several trusts for family members of OCMHI’s largest

shareholder and Oxbow’s founder, William I. Koch:

4.

This proportionality of the respective equity stakes has remained

materially the same, having been subject to dilution by additional issuances to a
few new members, including Oxbow employees as part of a Long Term Incentive
Plan program.
5.

In connection with Crestview’s and Load Line’s investments in 2007,

they and the other Oxbow members entered into a Third Amended and Restated

- 10 -

 Limited Liability Company Agreement of Oxbow Carbon LLC as amended (the
“LLC Agreement,” attached as Exhibit A).
6.

The LLC Agreement provided Crestview and Load Line with limited, but

not absolute, exit rights.
7.

Specifically, the LLC Agreement provided that – after the passage of a

certain amount of time or the occurrence of certain triggering events – Crestview
would have the right to request that the Company repurchase its units. Id. at Art.
XIII, § 8(a).
8.

To exercise this right, Crestview may send an irrevocable “Put Notice” to

the Company indicating that it wished to sell units back to the Company at “Fair
Market Value,” and identifying the amount of units (up to 100% of its units) that it
wished to sell. Load Line had the opportunity to “tag-along” with Crestview’s Put
Notice and participate on the same terms and conditions as Crestview’s Put. Id. at
Art. XIII, § 8.
9.

Crestview understood that the Company’s ability to provide a full and

immediate redemption in response to the Put Right depended on the Company
securing outside financing. This is because the LLC Agreement contemplates that
any redemption pursuant to an exercise of the Put Right would be contingent on
the Company obtaining outside financing. Specifically, the LLC Agreement
- 11 -

 provides unequivocal requirements for how the Company must use its available
cash. Under the LLC Agreement, the Company is required to first apply its cash to
pay operating expenses, capital expenditures, third party indebtedness, royalty
obligations, lease commitments, reserve amounts required by lenders, all budgeted
cash expenditures actually incurred, reasonable working capital reserves, and any
other cash capital expenditures approved by the Directors. Id. at Art. XI, § 1, and
Art. I, at p. 7. After doing so, the LLC Agreement requires that any excess cash be
used to make mandatory tax distributions to the members (to cover any tax liability
from their investment). Id. at Art. XI, § 1. The LLC Agreement then requires
quarterly distributions of any remaining available cash to the members in
proportion to their respective ownership interests. Id. The Company’s Board of
Directors cannot modify these flow-of-funds provisions, except for (upon a
supermajority vote) being able to reserve up to

of the cash that would

otherwise have been used to make quarterly distributions to instead be used to
reduce the Company’s third-party debt earlier than otherwise required under its
credit agreements. Id.
10.

The LLC Agreement, therefore, leaves the Company unable to retain or

accumulate the amount of excess cash needed for an immediate and full
redemption pursuant to any exercise of the Put Right. Unsurprisingly, Crestview,
- 12 -

 , never sought to
amend the LLC Agreement to alter these mandatory flow-of-funds provisions,
which necessarily meant that any full and immediate redemption of its units would
be contingent on the Company obtaining outside financing for that purpose.
11.

The LLC Agreement included a valuation process to follow for

determining the “Fair Market Value” for the Put Right. Pursuant to that process,
Crestview and OCMHI would each engage an investment bank to provide a
valuation. If those two valuations were within 10% of one another, the average of
those two valuations would be the “Fair Market Value” of the units. If the two
initial valuations were more than 10% apart, then those two investment banks
would choose a third investment bank to conduct a valuation, and the “Fair Market
Value” would be the median (i.e., the middle) of the three valuations. Id. at Art.
XIII, § 8(b).
12.

The LLC Agreement gave the Company (and not Crestview) the choice

of whether to accept or reject the Put Notice. If the Company were to accept the
Put Notice, it would have an obligation to redeem Crestview’s equity position at a
Fair Market Value price. But, if the Company rejected or ignored the Put Notice,
Crestview could request the Company to pursue an Exit Sale, and would then have
- 13 -

 a limited ability to drag the Company’s other members along in that Exit Sale.
LLC Agreement, Art. XIII, § 8(d), (e).
13.

Crestview’s ability to drag along the Company’s other members in an

Exit Sale has the following key limitations:
a. First, the Exit Sale must be one “in which the aggregate consideration
to be received by such Members at the closing of such Exit Sale
equal[s] or exceed[s] Fair Market Value.” Id. at Art. XIII, § 8(e).
b. Second, “the Exercising Put Party may not require any other member
to engage in such Exit Sale unless the resulting proceeds to such
Member (when combined with all prior distributions to such Member)
equal[s] at least 1.5 times such Member’s aggregate Capital
Contributions through such date.” Id. at Art. XIII, § 8(e).
c. Third, because the LLC Agreement defined an Exit Sale to be “a
transfer of all, but not less than all” of the Company’s then
outstanding units, such an Exit Sale cannot occur, by definition,
without the participation of all members. See id. at Art. I, pg. 5.
d. Fourth, the LLC Agreement also makes it clear that any Exit Sale
elected by Crestview to have the Company undertake is subject to
Section 7(d) of the LLC Agreement, id. at Art. XIII, § 8(e), which
- 14 -

 requires that “each Unit Transferred in such…Exit Sale shall be
Transferred on the same terms and conditions as each other Unit so
Transferred….” Id. at Art. XIII, § 7(d).
e. Finally, the LLC Agreement states that that any Exit Sale requested by
Crestview is subject to Section 9(b) of the LLC Agreement, which
states that “[a]llocation of the aggregate purchase price payable in an
Exit Sale will be determined by assuming that the aggregate purchase
price was distributed to OCMH and the remaining Members in
accordance with Article XI, Section 1.” That section of the LLC
Agreement, in turn, requires that cash distributions to the members be
“in accordance with their Percentage Interests.” Id. at Art. XI, § 1.
14.

These provisions in the LLC Agreement make it clear that every member

must participate in an Exit Sale and that every member must receive the same perunit amount as every other member in connection with any Exit Sale.
15.

The import of these provisions is that the minimum price needed to drag

along all members in an Exit Sale is the higher of the (a) Fair Market Value, or (b)
the per-unit price needed to get every member over the 1.5x threshold.
16.

After the Crestview and Load Line investments in 2007, the Company’s

business prospered and, as required by the LLC Agreement, it made substantial
- 15 -

 cash distributions to all of its members, including Crestview and Load Line.
Specifically, Crestview received a total of approximately

in tax

distributions and cash distributions. Crestview Advisors has represented that these
cash distributions alone constitute
grows to

its original investment, and that this number

when taking into account the value of its equity remaining in the

Company.
17.

By 2014, however, Crestview’s fund that held the Oxbow investment was

nearing the end of its life, and Crestview desired to exit its Oxbow investment.

18.

Mr. Volpert and Mr. Hurst, the two Crestview Directors on Oxbow’s

board, believed that they could sell Crestview’s equity position in Oxbow for a
premium in a change in control transaction, and realized that being able to do so
would require them to replace Mr. Koch as CEO.

- 16 -

 19.

But they did not have sufficient Board support to replace Mr. Koch, and

so they embarked on a secret “mission” (to use Mr. Hurst’s word) by conspiring
with several of Mr. Koch’s senior managers to overthrow him.
20.

This secret “mission” came to a head on March 31, 2014 when Mr. Hurst

and Christina O’Donnell (another Director) ambushed Mr. Koch at a dinner
meeting, sprung part of their secretly pre-formulated succession plan on him.
21.

Although Mr. Koch resisted this ambush, this failed secret “mission”

damaged the Company by undermining Mr. Koch’s leadership within the
Company, especially among senior management, and by creating a poisonous
environment in the board room.
22.

The Crestview Directors, however, did not stop their secret attempts to

force Mr. Koch to step down as CEO.
23.

In late 2014, Crestview began threatening the Company that it would

exercise its Put Right under the LLC Agreement.
24.

In 2014, as a result of Crestview’s earlier coup attempt and as a result of

its increasing threats to exercise its Put Right, the Company began planning a
search for replacement capital.
25.

In March 2015, the Company instructed Defendant Christina O’Donnell,

one of its Directors, and Defendant Eric Johnson, its President and also a Director,
- 17 -

 to approach a broad range of potential financial sponsors who would be willing to
finance the purchase of Crestview’s and Load Line’s units.
26.

The Crestview Directors knew of and supported this plan because they

had secretly co-opted Mrs. O’Donnell and Mr. Johnson to their cause.
27.
and the Crestview Directors provided her with mentoring, introductions and
connections to powerful people in the industry. More egregiously, in the Spring of
2015 the Crestview Directors secretly promised that they would have the Company
pay her a “success bonus” if she were able to arrange for a financing that would
finance their exit at a value acceptable to them.
28.

As a result of this seduction, Mrs. O’Donnell secretly pledged allegiance

to Crestview’s interests – over those of the Company – as evidenced by her writing
to Mr. Volpert that she would “do my best for you with this investment and
always.”
29.

With respect to Mr. Johnson, the Crestview Directors had been

instrumental in his promotion to President of the Company in January 2015,
despite Mr. Koch’s objection that Mr. Johnson was not yet seasoned enough. At
that same time, Mr. Hurst, together with Mrs. O’Donnell and Mr. Coumantaros
(the Load Line designated Director) as the three members of the Company’s
- 18 -

 compensation committee, provided Mr. Johnson with an extremely lucrative grant
of equity.
30.

31.

Beyond this serious problem, the grant to Mr. Johnson also included a

very unusual term: it provided that

This created a financial incentive for Mr. Johnson to finalize a
financing that would benefit Crestview, regardless of the impact the financing
would have on the Company or the other unit holders. Finally, the Crestview
Directors also frequently told Mr. Johnson that they would support him as Mr.
Koch’s replacement as CEO as part of the refinancing.
32.

Crestview used these close relationships cultivated with Mrs. O’Donnell

and Mr. Johnson to surreptitiously participate in the minority financing process and
to attempt to use that process to force Mr. Koch to step down as CEO. Crestview’s
plan early on was to only sell half of its units as part of the minority financing
process that – it hoped – would result in Mr. Koch’s ouster, and then it would be
- 19 -

.

 able to sell its remaining shares later at a premium it believed it could obtain with
Mr. Koch no longer in the picture.
33.

Specifically, during the initial part of the minority financing process, and

with the knowledge and encouragement of the Crestview Directors, Mrs.
O’Donnell and Mr. Johnson told potential investors that Mr. Koch was incapable
of running the Company, that he would agree to step down upon the close of any
financing, that he needed to or would sell below 50% total ownership, and that any
indications of interest should include these as conditions.
34.

None of these statements were true, and all of them damaged the

Company by reducing the number of investors willing to submit an indication of
interest, and by resulting in indications of interest that were less favorable to the
Company from a valuation and governance standpoint.
35.

In addition, as part of their negotiations with at least one potential

investor, Mr. Johnson and Mrs. O’Donnell – without authorization from or
disclosure to the Board of Directors – attempted to simultaneously negotiate a twoyear employment contract to keep Mr. Johnson at the Company, if the transaction
with that investor were to close. These negotiations led Mr. Johnson to admit to
Mrs. O’Donnell that he did not try to drive the value of the Company up as high as

- 20 -

 he thought he could during the negotiations with this investor because

36.

Mr. Johnson even negotiated with a potential financial sponsor without

disclosing to Mr. Koch or the Board of Directors that

37.

The Crestview Directors, knowing the dangerous game being played by

their co-conspirators, took affirmative steps to conceal their involvement with this
process, and affirmatively misrepresented to Company representatives that they
had no involvement with or insight into the minority financing process. This was
not true, as they were in routine communication with Mrs. O’Donnell and Mr.
Johnson about the process, and communicated with and solicited select potential
investors who they believed could be co-opted into their plan.
38.

In April and May 2015, the Company received

interest from potential investors. Each of these

indications of

indications – either on their

face or pursuant to contemporaneous oral communications – was conditioned on
Mr. Koch’s stepping down as CEO and selling down to below 50% ownership of
the Company.

- 21 -

 39.

While these conditions represented exactly what Crestview wanted, none

of the indications of interest satisfied Crestview’s other express requirement: that it
receive
40.

per-unit for selling its units as part of the minority financing process.
The Company attempted to get the potential investors to raise their

indications of interest to this valuation, but was unsuccessful in doing so, with one
investor walking away because the proposed valuation of

per-unit was so far

from where they were, and another potential investor calling the

per-unit

demand
41.

As the minority financing process stretched on through the summer of

2015, 1/ the Crestview Directors realized that the process would not result in Mr.
Koch’s stepping down as CEO or their getting a firm offer for their shares at their
preferred (and inflated) price.
42.

At that point, Crestview decided to formally exercise its Put Right, and

on September 28, 2015, sent its Put Notice to the Company indicating that it would
put 100% of their units back to the Company at a to-be-determined “Fair Market
Value.” Load Line promptly exercised its tag-along rights.

1/

In June 2015, the Company had hired a boutique investment bank whose
principals had deep ties and experience in the energy sector to give the Company
independent advice, and to take over the ineffective process run by Mrs. O’Donnell
and Mr. Johnson with the secret and undisclosed involvement by Crestview.
- 22 -

 43.

Upon receiving the Put Notice, the Company – pursuant to the LLC

Agreement, as amended – had until January 19, 2016 to accept, reject, or ignore
the Put Notice.
44.

Accompanying Crestview’s Put Notice was its purported valuation

prepared by Duff & Phelps Corporation (“Duff & Phelps”) in August 2015 that
valued the Company’s membership units at

each, which was more than

higher than any indication of interest the Company had received in its
minority financing process.
45.

This purported valuation was inflated because Duff & Phelps had used

stale Company forecasts from May 2015 and stale financial results of the Company
from the first quarter of 2015.

. But
Crestview had its valuation firm rely on the stale information anyway in order to
inflate the amount the Company would be obligated to pay it for its units. Not
surprisingly and despite the Company’s request, Crestview refused to provide any
of the analysis or back-up information that Duff & Phelps developed to support its
valuation.

- 23 -

 46.

In November 2015, OCMHI engaged Evercore Partners (“Evercore”) to

prepare its valuation of the Company pursuant to the LLC Agreement’s valuation
process.
47.

On November 24, 2015, Evercore completed its valuation and concluded

that each Oxbow unit was worth

. Because this valuation differed by more

than 10% from the Duff & Phelps valuation of

, the two investment banks

were required to select a third bank to perform a valuation pursuant to the LLC
Agreement.
48.

Crestview – from the start – improperly and in bad faith interfered with

the selection of the third investment bank by vetoing suggestions made by
Evercore. Crestview even vetoed an investment bank that was mutually acceptable
to both Evercore and Duff & Phelps after Evercore and Duff & Phelps were in
negotiations with that bank on an engagement.
49.

Eventually, Moelis & Company (“Moelis”) was engaged to conduct the

third valuation.
50.

While the valuation process was proceeding, the Company continued to

search for financing that it could use to satisfy the Put Right. In October 2015, the
Company engaged Goldman Sachs & Co. (“Goldman Sachs”) as its investment
bank, and explored a full range of financing options, including use of debt
- 24 -

 financing and the continued pursuit of a new equity investment in an attempt to be
able to satisfy the Put Right.
51.

The Crestview Directors, however, undermined this financing process

because they believed they had a better chance of getting a premium for their
Oxbow investment from a full Company sale instead of a buyout at a Fair Market
Value price, which is all they were entitled to receive if the Company accepted the
Put Notice.
52.

For example, in November 2015 during Crestview’s annual meeting for

its limited partners,

53.

Around that same time, the Company learned that potential investors had

been told – either as a result of Mr. Volpert’s statements at Crestview’s annual
meeting, or other statements made by Mrs. O’Donnell, Mr. Johnson, or the
Crestview Directors – that they should not participate in the minority financing
process because if they waited a few months they would be able to buy the entire
Company.

- 25 -

 54.

Leading up to January 19, 2016, when the Company needed to accept or

reject the Put Notice,

55.

The Company made it clear to Crestview that – without securing the

outside financing that it had been pursuing – it could not fully redeem Crestview
on January 19, 2016

56.

57.

The Crestview Directors also threatened that if the Company accepted

Crestview’s Put Right but did not immediately redeem Crestview, then they would
begin disclosing the Company’s confidential information to the Company’s
- 26 -

 competitors, suppliers, and customers in connection with their seeking to exit from
Oxbow.
58.

Crestview knew this threat would have a significant impact on Mr. Koch

who had been vocal in insisting that the Company’s financing process not cause
harm to the Company through disclosure of its most confidential information
to the market.
59.

On January 14, 2016, Moelis completed its valuation and informed

Oxbow and Crestview that each Oxbow unit was worth
the median between the Crestview valuation

. Because this was
and the OCMHI valuation

, this per-unit price became the “Fair Market Value” for purposes of the Put
Right pursuant to the LLC Agreement. See LLC Agreement, Art. XIII, § 8(b).
60.

On January 19, 2016, the Company formally rejected Crestview’s and

Load Line’s Put Notice.
61.

As set forth above, the LLC Agreement provides that rejection of the Put

Notice gives Crestview the right to elect that the Company engage in an Exit Sale.
LLC Agreement, Art. XIII, § 8(e). Crestview communicated this election to the
Company on January 20, 2016.
62.

In response to this election, the Company notified Crestview that an Exit

Sale at the Fair Market Value would not get every member over the 1.5x threshold,
- 27 -

 and reminded Crestview about the issuances the Board of Directors had
unanimously approved in 2011 and 2012.
63.

Specifically, the Board of Directors, by unanimous vote that included Mr.

Volpert and Mr. Hurst, authorized the issuance of
unit to members of Mr. Koch’s family, and the issuance of

units at

per-

Oxbow units at

per-unit to the executives of a company that Oxbow had recently purchased.
64.

Because each of these entities only received a fraction of the cash

distributions that Crestview and the other members had been receiving since 2007,
the per-unit price to ensure that they each receive at least 1.5x their aggregate
capital contribution was more than the Fair Market Value.
65.

When reminded of this fact, Crestview made various changing and

inconsistent arguments as to why it could disregard the plain language of the LLC
Agreement in trying to force an Exit Sale. For example, Crestview argued at
various points in time that, among other things:
a. Any members not receiving 1.5x from the proceeds of any Exit Sale
could opt-out of the sale and keep their units, even though the LLC
Agreement very clearly defines an “Exit Sale” to be “a transfer of all,
but not less than all” of the Company’s membership units. LLC
Agreement, Art. I, pg. 5;
- 28 -

 b. The issuances at

per-unit were somehow fraudulent, even though

both the issuances and the valuation was approved by unanimous
written consent of all the Directors, including the Crestview Directors;
and
c. Despite the express requirement in the LLC Agreement that all
members receive equal consideration for their units, the members who
would not otherwise receive 1.5x from Exit Sale proceeds could
somehow be made whole by receiving either more money for their
units than the other members, or otherwise receiving more in proceeds
from the Exit Sale than their percentage interests would otherwise
allow, including receiving proceeds that would have otherwise been
payable to OCMHI and the other unit holders.
66.

The other fact that Crestview self-servingly attempted to ignore is that

the LLC Agreement is clear that the Company – and not Crestview or any other
individual member – has overall control of the Exit Sale process. For example,
pursuant to the LLC Agreement:
a. The Directors are vested with: “the overall management, direction and
control of the business and affairs of the Company shall be vested in a
Board of Directors,” and the Directors “shall have full and complete
- 29 -

 authority, power and discretion to manage and control the business,
affairs and property of the Company….” LLC Agreement, Art. III, §
1.
b. Members have no ability to conduct the Company’s business or
control its affairs: “[n]o Member, in its capacity as a Member, shall
have the power to act for, or on behalf of, or to bind, the Company.”
Id. at Art. IV, § 6.
67.

The LLC Agreement does not exempt the Exit Sale process from the

broad grant of authority to the Board. In fact, the Exit Sale provisions state that the
Company must engage and pay for “a nationally recognized investment banking
firm mutually acceptable to Crestview, Load Line and OCMH to initiate a process
for the orderly sale of the Company….,” id. at Art. XIII, § 8(f), confirming that the
Company controls the Exit Sale process.
68.

In addition, the LLC Agreement does not allow any member to share the

Company’s confidential information as part of an Exit Sale process. See id. at Art.
XVI. As a result, it would be impossible for a member to conduct the Exit Sale
process as that process necessarily requires the sharing of confidential Company
information with potential investors.

- 30 -

 69.

The LLC Agreement also lacks a provision giving Crestview a springing

right to board control in an Exit Sale scenario, which is one common technique by
which similar LLC agreements provide control of the exit sale process to the
dragging party.
70.

In violation of these provisions of the LLC Agreement, Crestview

secretly usurped and undermined the Company’s authority to control the Exit Sale
process. For example, Crestview solicited and negotiated with potential
purchasers, and shared confidential information with them, including the Fair
Market Value threshold that Crestview argues is all a potential purchaser needs to
clear in order for an Exit Sale to occur.
71.

For these reasons, and those set forth below, the Company now brings

breach of fiduciary duty claims against Mrs. O’Donnell, Mr. Johnson, Mr. Volpert
and Mr. Hurst; breach of contract and breach of the covenant of good faith and fair
dealing against Crestview-Oxbow Acquisition, LLC, and Crestview-Oxbow
(ERISA) Acquisition, LLC; and claims seeking declaratory relief with respect to
the disputed Exit Sale provisions in the LLC Agreement.
72.

Among other relief for these claims, Oxbow seeks:
a. A judicial declaration that Crestview-Oxbow Acquisition, LLC, and
Crestview-Oxbow (ERISA) Acquisition have forfeited their rights to
- 31 -

 require other members to participate in an Exit Sale because of their
material breaches of the LLC Agreement’s Exit Sale provisions and
because of their (and their agents’) other inequitable conduct and
breaches of fiduciary duty, or, in the alternative, that because
Crestview and its agents corrupted the Put Right financing and then
the Exit Sale process, the Company’s only obligation to accommodate
their exit is through a redemption of their equity that is subject to the
Delaware common law limitations on redemptions of equity as set
forth in this Court’s decision in SV Inv. Partners, LLC v.
ThoughtWorks, Inc., 7 A.3d 973, 985-986 (Del. Ch. 2010), aff’d, 37
A.3d 205 (Del. 2011);
b. A judicial declaration that an Exit Sale cannot occur without the
participation of all of the Company’s members;
c. A judicial declaration that the LLC Agreement requires that the
minimum per-unit price for an Exit Sale is the greater of (a) the Fair
Market Value, or (b) the per-unit price required to ensure that each
member receives from Exit Sale proceeds (when combined with all
prior distributions to each member) at least 1.5 times such member’s
aggregate Capital Contributions;
- 32 -

 d. A judicial declaration that the LLC Agreement does not require the
Company to consider or pursue any offer to purchase the Company
from the investors Crestview or the Crestview Directors secretly
solicited, negotiated with, or disclosed confidential information to,
because such offers would not be consistent with the LLC
Agreement’s requirements that the Exit Sale be controlled by the
Company; be a bona-fide and arms’-length transaction; result from an
“orderly sale” process; and result from a sales process “initiate[d]” by
the Company’s investment bank.
e. A judicial declaration that the Company controls the Exit Sale
process, and, accordingly, permanently enjoining Crestview from
contacting, soliciting, or negotiating with potential purchasers, or
disclosing confidential Company information, other than as expressly
authorized by Board resolution;
f. An order that the April 30, 2015 Unit Rights Agreement between the
Company and Eric P. Johnson is null and void, and that the Company
can clawback any awards or compensation paid or payable with
respect to those awards, and an order permitting the Company to

- 33 -

 clawback any awards or compensation paid or payable with respect to
awards associated with Mr. Johnson’s LTIPs from 2012 through 2014;
g. Damages and disgorgement in amounts to be determined at trial
resulting from the breaches of duty, breaches of contract, breaches of
the covenant of good faith and fair dealing, and breaches of loyalty set
forth herein;
h. An award of costs and expenses, including reasonable attorneys’ fees,
incurred by the Company in connection with this action; and
i. Other such and further relief that the Court deems necessary or
appropriate.
PARTIES
73.

Plaintiff Oxbow Carbon LLC is a limited liability company organized

under the Delaware Limited Liability Company Act. Oxbow is one of the world
leaders in marketing, upgrading, and distributing petroleum coke (“petcoke”),
calcined petcoke, Sulphur products, and activated carbon. Petcoke and Sulphur are
byproducts of oil refining and gas processing that Oxbow upgrades and sells for
various industrial and agricultural uses. Oxbow’s administrative offices are
located in West Palm Beach, Florida, and its primary operations office is based in

- 34 -

 The Woodlands, Texas. Overall, Oxbow has approximately 1,300 employees
operating in 65 locations throughout the world and services over 500 customers.
74.

Defendant Crestview-Oxbow Acquisition, LLC was formed under the

Delaware Limited Liability Company Act by, upon information and belief,
Defendant Crestview Advisors, LLC (or one of its affiliates) to acquire and hold
membership units in Oxbow for the benefit of, among others, Crestview Partners,
L.P., which is a private equity fund under the management of Crestview Advisors,
LLC.
75.

Defendant Crestview-Oxbow (ERISA) Acquisition, LLC was formed

under the Delaware Limited Liability Act by, upon information and belief,
Defendant Crestview Advisors, LLC (or one of its affiliates) to acquire and hold
membership units in Oxbow for the benefit of, among others, Crestview Partners,
L.P.
76.

Defendant Robert Hurst is a partner of Crestview Advisors and is on its

investment committee. Mr. Hurst has been one of Crestview’s two designees on
Oxbow’s Board of Directors since Crestview made its original investment in 2007.
77.

Defendant Barry Volpert is CEO and a partner of Crestview Advisors,

and serves as the chair of its investment committee. Mr. Volpert has been one of

- 35 -

 Crestview’s two designees on Oxbow’s Board of Directors since Crestview made
its original investment in 2007.
78.

Mr. Hurst and Mr. Volpert are referred to herein as the “Crestview

Directors,” where appropriate. The Crestview defendants are hereinafter referred
to collectively as “Crestview,” and individuals or entities are identified by their full
name, when and to the extent necessary to avoid any confusion.
79.

Non-party Crestview Advisors, LLC does business under the name

Crestview Partners, and is an investment advisor registered with the United States
Securities and Exchange Commission. As set forth above, Crestview Advisors,
LLC is the entity that manages Crestview Partners, L.P., the private equity fund
that indirectly holds the minority investment in Oxbow. Crestview Advisors, LLC
is organized under the Delaware Limited Liability Company Act, with its primary
place of business in New York, New York. According to its most recently filed
Form-ADV, Crestview Advisors, LLC manages approximately

in

assets.
80.

Defendant Christina Wing O’Donnell served as one of OCMHI’s

designees on the Oxbow Board of Directors from approximately February 2014
until February 1, 2016. She also served as CEO and Director of Renegade

- 36 -

 Management, Inc., an entity that serves as Mr. Koch’s family office to manage his
personal affairs, from August 2014 until her termination on February 1, 2016.
81.

Defendant Eric Johnson originally joined Oxbow as an employee in

2003. From January 2015 to June 10, 2016, he served as Oxbow’s President and
Chief Operating Officer until his termination for

He served on

the Oxbow Board of Directors as one of OCMHI’s designees from approximately
July 2014 until June 10, 2016.
82.

Oxbow’s current ownership structure is approximately as follows:
a.

of its membership units are owned by Oxbow Carbon &
Mineral Holdings, Inc. (“OCMHI”), which is majority-owned and
controlled by William I. Koch;

b.

of its membership units are owned by defendants CrestviewOxbow Acquisition, LLC and Crestview-Oxbow (ERISA)
Acquisition, LLC;

c.

of its membership units are owned by defendant Load Line
Capital LLC;

d.

of its membership units are owned by the Joan Granlund 2008
Trust, which is controlled by Mr. Koch;

- 37 -

 e.

of its membership units are owned by other family trusts under
the control of Mr. Koch;

f.

of its membership units are owned by Ingraham Investments
LLC, which is controlled by Mr. Koch;

g.

of its membership units are owned by Oxbow Carbon
Investment Company LLC, which is managed by an entity controlled
by Mr. Koch; and

h.

of its membership units are owned by its employees (with most
of these units currently set aside for grants as part of the Company’s
Long Term Incentive Plan).

83.

In total, Mr. Koch controls approximately

of the Company’s

membership units, and Crestview and Load Line collectively own and control
approximately
FACTUAL BACKGROUND
A. Crestview’s Investment in Oxbow.
84.

In 1984, Mr. Koch founded a company called Oxbow Carbon and

Minerals (“OCM”). Over the next several years, he built OCM into a market
leader in sourcing, marketing, upgrading, and distributing petcoke.
- 38 -

 85.

As OCM’s business grew, it underwent several structural and operational

changes, and by on or about January 18, 2005, OCM’s business was being
operated through an entity called Oxbow Mining Holdings, LLC, which on or
about March 6, 2007, changed its name to Oxbow Carbon and Minerals Holdings
LLC (“OCMH LLC”).
86.

In 2007, OCMH LLC had an opportunity to expand into the petcoke

calcining market through a strategic acquisition of Great Lakes Carbon USA, Inc.
Calcined petcoke is a primary ingredient in the production of anodes used in the
aluminum smelting process.
87.

In order to help finance the acquisition of Great Lakes Carbon and other

strategic initiatives, OCMH LLC entered into negotiations with several potential
financial partners, including Crestview Partners, L.P., a private equity fund
managed by Crestview Advisors, LLC.
88.

In the spring of 2007, OCMH LLC changed its name to Oxbow Carbon

LLC, and it and Crestview began finalizing the terms of Crestview’s investment,
including negotiating the language of the LLC Agreement.
89.

Crestview was represented by sophisticated counsel throughout these

negotiations.

- 39 -

 90.

Around that time, OCMH LLC also entered into discussions with another

potential minority investor, Load Line.
91.

Effective May 8, 2007, the following parties executed the LLC

Agreement: OCMHI, Crestview-Oxbow Acquisition, LLC, Crestview-Oxbow
(ERISA) Acquisition, LLC, Load Line Capital LLC, Joan E. Granlund, Wyatt I.
Koch 2000 Trust, and the William I. Koch Family Trust.
B. The LLC Agreement Vests the Board of Directors With Comprehensive
Control of Oxbow.
92.

The LLC Agreement provides that “the overall management, direction

and control of the business and affairs of the Company shall be vested in a Board
of Directors.” LLC Agreement, Art. III, § 1.
93.

It also provides that the Directors “shall have full and complete authority,

power and discretion to manage and control the business, affairs and property of
the Company, to make all decisions regarding those matters and to perform any
and all acts or activities customary or incident to the management of the
Company’s business.” Id.
94.

Under the LLC Agreement, “each Director shall have fiduciary and other

duties with respect to the Company as would apply to such Director if such
Director were a Director of a Delaware corporation….” Id. at Art. IV, § 3(b).

- 40 -

 95.

The LLC Agreement contemplated a total of up to nine Directors: six

Directors appointed by OCMHI, two Directors appointed by Crestview, and one
Director appointed by Load Line.
96.

William I. Koch, David W. Clark, Richard P. Callahan, David A. Rosow,

Peter C. Morse, and Thomas W. Garges, Jr. currently serve as OCMHI’s
designated Directors.
97.

Defendants Robert Hurst and Barry Volpert currently serve as

Crestview’s designated Directors.
98.

John G. Coumantaros currently serves as Load Line’s designated

Director.
99.

The LLC Agreement also requires that certain, specified actions

pertaining to the Company’s business operations can only occur through a
“Supermajority Vote” of the Directors, which is defined as a majority vote that
must include the vote of at least one Crestview Director and the vote of the Load
Line Director. LLC Agreement, Art. I, pg. 9.
100. With respect to management of the Company, the LLC Agreement also
provides that, “[t]he Company shall have a Chief Executive Officer, a Chief
Financial Officer, a President, a Secretary, and a Treasurer (collectively, the
‘Executive Management Team’), each of whom shall be appointed by the
- 41 -

 Directors; provided, that in the appointment of each of the Chief Executive Officer,
the President and the Chief Financial Officer will require approval by
Supermajority Vote.” Id. at Art. V, § 1 (emphasis original).
101. Pursuant to the LLC Agreement, the CEO “shall have general and active
management of the business and affairs of the Company, subject to the discretion
of the Directors.” Id. at Art. V, § 1(a).
102. All other officers report to the CEO, who reports to the Board of
Directors.
103. At the time Crestview made its original investment, Mr. Koch served as
the CEO and President of the Company. Since January 2015 (when Mr. Johnson
became President), Mr. Koch has served as the CEO and the Chairman of the
Board of Directors.
104. William Parmelee currently serves as the Chief Financial Officer
(“CFO”) for the Company.
C. The LLC Agreement Provides Limited Exit Rights for Certain of
Oxbow’s Members.
105. The LLC Agreement contains certain mechanisms to accommodate a
potential exit by OCMHI, Crestview and Load Line. LLC Agreement, Art. XIII.
106. For example, the LLC Agreement gives OCMHI the right to drag along
all other members in an Exit Sale so long as the Exit Sale results in “proceeds to
- 42 -

 each of Crestview and Load Line (when combined with all prior distributions to
Crestview and Load Line, respectively) equal to at least

their respective

aggregate Capital Contributions through such date.” Id. at Art. XIII, § 9(a).
107. The LLC Agreement also provides Crestview and Load Line with a “Put
Right.” Under this Put Right, Crestview had the option – after passage of a certain
amount of time or certain triggering events – to offer to sell its units back to the
Company. Id. at Art. XIII, § 8(a).
108. To exercise this Put Right, the LLC Agreement requires Crestview to
provide a written notice to the Company of its irrevocable election to exercise its
Put Right and have the Company redeem some or all of Crestview’s units at the
Fair Market Value. Load Line is entitled to tag-along with Crestview’s Put Notice
and participate in the redemption on the same terms and conditions as set forth in
Crestview’s Put Notice. Id. at Art. XIII, § 8(c).
109. The LLC Agreement defines “Fair Market Value” to be:
the average of the respective fair market valuations of such asset
determined by two nationally recognized investment banks (with one
selected by the Exercising Put Party, and one selected by OCMH);
provided, that if such investment banks provide valuations that vary
by more than 10%, a third nationally recognized investment bank
selected by such other two investment banks shall also determine the
fair market valuation, and fair market value shall be the median of the
three valuations; provided, further that the “Fair Market Value” of any
Member Interest or Equity Securities (including Units) shall be
determined on a going concern basis, without any discount for lack of
- 43 -

 liquidity (including the absence of a public market and the presence of
transfer restrictions) or minority interest.
Id. at Art. XIII, § 8(b) (emphasis original).
110. Upon transmittal by Crestview of the Put Notice to the Company, the
LLC Agreement provides the Company with an unqualified right to accept the Put
Notice, reject the Put Notice, or fail to respond to the Put Notice. Id. at Art. XIII, §
8(d),(e).
111. If the Company rejects or fails to respond to the Put Right, then
Crestview has the option to request that all members of Oxbow “engage in an Exit
Sale” of the Company. Id. at Art. XIII, § 8(e).
112. But the LLC Agreement provides several express limitations on
Crestview’s ability to drag other members along in an Exit Sale.
113. First, the LLC Agreement requires that as part of any Exit Sale “the
aggregate consideration to be received by such Members at the closing of such Exit
Sale equal or exceed Fair Market Value.” LLC Agreement, Art. XIII, § 8(e).
114. Second, Crestview’s ability to require other Oxbow members to
participate in an Exit Sale has a critical exception: “the Exercising Put Party may
not require any other Member to engage in such Exit Sale unless the resulting
proceeds to such Member (when combined with all prior distributions to such

- 44 -

 Member) equal at least 1.5 times such Member’s aggregate Capital Contributions
through such date.” LLC Agreement, Art. XIII, § 8(e), Amendment No. 3.
115. To the extent that any member who has not received 1.5 times its
“aggregate Capital Contributions” exercises this clear contractual right and refuses
to participate in the Exit Sale, then an Exit Sale cannot occur because the LLC
Agreement makes clear that an Exit Sale can only occur upon “a Transfer of all,
but not less than all, of the then-outstanding Equity Securities of the Company
and/or all of the assets of the Company to any non-Affiliated Person(s) in a bona
fide arms’-length transaction….” Id. at Art. I, pg. 5.
116. This limitation also works in tandem with two other express provisions in
the LLC Agreement to establish a minimum price – potentially above the Fair
Market Value – for any Exit Sale.
117. The LLC Agreement makes it clear that any Exit Sale that Crestview
seeks to require members to engage in is specifically subject to “the terms set forth
in Section 7(c), Section 7(d), and Section 9(b).” LLC Agreement, Art. XIII, § 8(e).
118. Section 7(d) states that “each Unit Transferred in such…Exit Sale shall
be Transferred on the same terms and conditions as each other Unit so
Transferred….” Id. at Art. XIII, § 7(d).

- 45 -

 119. This provision clearly prohibits members from receiving different
consideration for their membership units in any Exit Sale. Put another way, every
unit holder must receive the same per-unit price for its units in any Exit Sale.
120. Section 9(b), meanwhile, states that “[a]llocation of the aggregate
purchase price payable in an Exit Sale will be determined by assuming that the
aggregate purchase price was distributed to OCMH and the remaining Members in
accordance with Article XI, Section 1 hereof.” LLC Agreement, Art. XIII, § 9(b).
121. Article XI covers “Distributions” to members and requires that
distributions “shall be distributed on a quarterly basis to the Members in
accordance with their Percentage Interests…” Id. at Art. XI, § 1. The import of
this provision is that Exit Sale proceeds must be distributed pro rata in accordance
with the Members’ Percentage Interests. This provision clearly prohibits a
member from receiving any proceeds from an Exit Sale that are more (or less) than
its percentage of ownership in the Company. This means that proceeds from an
Exit Sale could not be paid disproportionately to members who would not
otherwise clear the 1.5x threshold.
122. These two provisions make it clear that the minimum per-unit price
required for all members as part of any Exit Sale is the greater of (a) the Fair

- 46 -

 Market Value, and (b) the per-unit price needed to be paid to ensure that every
member clears the 1.5x threshold.
123. The LLC Agreement also vests control of the Exit Sale process with the
Company.
124. As set forth above, the LLC Agreement gives very broad and
comprehensive power to the Board of Directors to “manage and control the
business, affairs and property of the Company.” LLC Agreement, Art. III, § 1.
Nothing in the Exit Sale provisions or the rest of the LLC Agreement carves the
Exit Sale process out from this broad and comprehensive grant of power to the
Directors. Moreover, it makes sense to have the Board of Directors control the
Exit Sale process that could have a profound effect on both the Company and all of
the other members, including the more than 60 individual employees who are
members of the Company by virtue of the units they hold as a result of the
Company’s Long Term Incentive Plan.
125. In fact, the Exit Sale provisions themselves confirm that it is the
Company – and not Crestview or Load Line – that controls the Exit Sale process.
Specifically, the LLC Agreement states: “at the request of such Exercising Put
Party, the Company shall engage a nationally recognized investment banking firm
mutually acceptable to Crestview, Load Line and OCMH to initiate a process for
- 47 -

 the orderly sale of the Company, as well as one law firm for the Company
mutually acceptable to Crestview, Load Line and OCMH. The Company agrees
to pay all customary and reasonable fees and expenses of such investment bank
and law firm in connection with such Exit Sale.” Id. at Art. XIII, § 8(f) (emphasis
added).
126. By requiring the Company to both engage and pay the investment bank,
this Exit Sale provision makes it clear that the investment bank assisting with the
“orderly sale of the Company” works for and answers to the Company, and not
Crestview or Load Line. Reading the LLC Agreement to give Crestview or Load
Line some independent and separate right to initiate and run their own parallel
process makes little sense.
127. In addition, the LLC Agreement expressly states that “[n]o Member, in
its capacity as a Member, shall have the power to act for, or on behalf of, or to
bind, the Company.” LLC Agreement, Art. IV, § 6. This provision further
undermines any attempt by Crestview or Load Line to argue that they – as
members – have the ability to unilaterally control the Exit Sale process.
128. Finally, when limited liability company agreements actually do vest
control of a drag along or exit sale process to a member, they typically contain
carve-outs from their confidentiality provisions in order to allow that member to
- 48 -

 disclose the Company’s confidential information as it solicits and negotiates with
potential purchasers. Without such a carve-out, a member would not be able to
control an Exit Sale because it would not be allowed to share confidential
information with potential investors.
129. The LLC Agreement here contains no such carve-out that would allow
Crestview to disclose confidential information as part of an Exit Sale; rather, it
contains a comprehensive confidentiality provision that requires Crestview and
Load Line to maintain the confidentiality of the Company’s information regardless
of whether an Exit Sale process has been initiated. LLC Agreement, Art. XVI.
130. The LLC Agreement as a whole, therefore, including the specific Exit
Sale provisions, makes it clear that the Company, and not Crestview or Load Line,
controls any Exit Sale process.
D. Despite Receiving Substantial Cash Distributions from Oxbow Under
Mr. Koch’s Leadership, the Crestview Directors, Mrs. O’Donnell, and
Mr. Johnson Engaged in a Secret Plot to Replace Mr. Koch as Oxbow’s
CEO.
131. After Crestview made its investment in Oxbow in 2007, the Company –
under Mr. Koch’s leadership – flourished and paid very substantial cash
distributions to its members.
132. From the date of its initial investment in 2007 until April 2014
, Crestview
- 49 -

 received a total of

from the Company. Crestview Advisors has

represented that these cash distributions alone constitute more than a
Crestview’s original investment, and that this multiple grows to

return on
when taking

into account the value of Crestview’s equity remaining in the Company.
133. Since Crestview’s initial investment, Oxbow has also reimbursed
Crestview and the Crestview Directors for at least

in expenses.

134. By 2014, however, Crestview’s first fund, which held the Oxbow
investment, was

135.

136. In 2014, therefore, Crestview became increasingly interested in a
potential exit from its Oxbow investment.

- 50 -

 137. But the Crestview Directors wanted to replace Mr. Koch as CEO prior to
selling any of Crestview’s units. This is because the Crestview Directors believed
that Mr. Koch was an obstacle to their desire to sell their units as part of a change
in control transaction (that would yield them higher value), and they also believed
that the value of Crestview’s membership units would increase with a new CEO in
place, despite the fact that the Company – which Mr. Koch built and operated as
CEO – had already provided the Crestview fund with approximately

its original

investment in cash distributions.
138. Because the Crestview Directors did not have sufficient Board support to
replace Mr. Koch as CEO, they secretly plotted a “mission,” to use Mr. Hurst’s
word, to replace him, while simultaneously (and repeatedly) telling Mr. Koch and
the Company’s Board of Directors what “good partners” Crestview was with the
Company.
139. In early 2014, the Crestview Directors approached one of Oxbow’s other
Directors, Christina Wing O’Donnell, to enlist her support in their “mission” to
replace Mr. Koch.
140. Throughout February and March 2014, the Crestview Directors
communicated with Mrs. O’Donnell and Oxbow’s then-Chief Operating Officer,
Steve Fried, and let Mr. Fried know they planned to support him as Mr. Koch’s
- 51 -

 replacement as CEO. The first step in this two-step plan was to get Mr. Koch to
relinquish his role as Company President to Mr. Fried with the goal of Mr. Fried
then later replacing Mr. Koch as CEO as well.
141. Mrs. O’Donnell, Mr. Hurst, and Mr. Volpert enlisted the Company’s
general counsel, Michael McAuliffe, and its then Chief Commercial Officer, Eric
Johnson, as part of this secret “mission.”
142. For example, they developed a proposed new management structure for
Oxbow, and recruited Mr. Johnson to stay on at the Company and report to Mr.
Fried, who would ultimately become the new CEO.
143. This secret succession plan was fully developed without any disclosure to
Mr. Koch or any other Directors of the Company.
144. On March 31, 2014, Mrs. O’Donnell and Mr. Hurst had dinner with Mr.
Koch in New York City. Mrs. O’Donnell, Mr. Fried, and Mr. Hurst viewed this
dinner as the culmination of their secret efforts to have Mr. Fried replace Mr. Koch
as CEO of the Company.
145. Neither Mrs. O’Donnell nor Mr. Hurst told Mr. Koch that the purpose of
the meeting would be to pressure him to make Mr. Fried President, and that this
was only the first step in a process intended to replace him as CEO too. Rather,
they sprung their plan on Mr. Koch without any warning.
- 52 -

 146. But during the dinner, Mr. Koch resisted this pre-formulated ambush, and
refused to step aside as President in favor of Mr. Fried.
147. Mr. Koch subsequently confronted Mr. Fried about this secret mission,
and Mr. Fried resigned.
148. This conspiracy by the Crestview Directors, Mrs. O’Donnell and
eventually also Mr. Johnson, damaged the Company by undermining the ability
and authority of the CEO in the eyes of senior management, splitting the Company
into two diametrically opposed camps, and by creating a poisonous environment
where management saw possible rewards in actively working against the
Company’s CEO to advance Crestview’s agenda. As discussed in more detail
below, Crestview later secretly leveraged this schism to advance its own interests.
149. After the experience of being ambushed, Mr. Koch became wary of the
poisonous environment the Crestview Directors were creating for the Company,
and so he began to entertain and later explore steps to accommodate Crestview’s
exit on terms that would not be harmful to the Company or its other members.
E. The Company Begins a Critical Search for Replacement Capital for the
Crestview and Load Line Investments.
150. In the summer of 2014, Oxbow began exploring the possibility of a
financing

to provide Crestview with liquidity and a

possible exit.
- 53 -

 151. Crestview’s Put Right did not mature until January 1, 2015, but
Crestview began to threaten that it would exercise its Put Right to exert leverage to
force Oxbow to buy out its ownership interest.
152. Accordingly, in the summer and fall of 2014, Oxbow met with

– to get a better understanding of the market for replacement capital for
Crestview and Load Line.
153. Oxbow also prepared a draft Confidential Information Memorandum in
anticipation of a search for new investors.
154.

155. In December 2014, Crestview solicited a term sheet from

156.

- 54 -

 157.

eventually presented a term sheet by which it offered to provide

replacement capital to Oxbow for

of Crestview’s units through a preferred

equity investment.
158. But the Company’s Credit Agreements contain limitations on the
Company’s ability to issue preferred securities with a mandatory cash-pay
dividend requirement, which presented an initial problem with the

term sheet.

159. In addition, the preferred equity structure was too expensive for the
Company.
160. Because of these factors, the

term sheet did not present a viable

option for financing Crestview’s desired exit, and the Board of Directors did not
authorize continued discussions or negotiations with

.

161. Nevertheless, without the authorization or knowledge of Mr. Koch or the
rest of the Directors, the Crestview Directors and Mrs. O’Donnell stayed engaged
with

about a potential transaction through February 2015.

162. By March 2015, it became clear that Crestview would be an impediment
to the Company’s ability to focus on its operations and growth because of
Crestview’s single-minded desire for an exit.
163. Not fully appreciating the depth of Mrs. O’Donnell’s and Mr. Johnson’s
prior conspiracy and alignment with Crestview and the extent of their disloyalty,
- 55 -

 the Company authorized them in March 2015 to approach a wide range of potential
investors in order to obtain replacement capital for the buyout of the minority
investments held by Crestview and Load Line, which had also expressed its desire
to exit.
164. Having a successful minority interest financing process was critical to the
prospects for the Company because it would allow the Company to, among other
things, redeem Crestview, which had intentionally become a disruptive threat to
the Company’s operations, in a manner that would not require the Company to take
on additional debt, sell assets, or otherwise impair its business.
165. Over the course of the next few months, Mrs. O’Donnell and Mr.
Johnson approached several potential investors as part of this key minority interest
financing process.
F. The Crestview Directors Secretly Co-Opt Mrs. O’Donnell and Mr.
Johnson to Pursue Crestview’s Interests as Part of the Minority
Financing Process.
166. The Crestview Directors fully supported the decision to have Mrs.
O’Donnell and Mr. Johnson run this minority financing process because it gave
them an opportunity to secretly influence and control the process, as they had – by
that point in time – further co-opted Mrs. O’Donnell and Mr. Johnson to do their
bidding.
- 56 -

 167. In January 2015, when the Company was interviewing another candidate
to serve as its President, Mr. Johnson threatened to quit.
168. In response, Mrs. O’Donnell and the Crestview Directors demanded that
the Company promote Mr. Johnson to be the President, and falsely told the
Company that Mr. Johnson would leave if his wish to become President was not
granted. In addition, Mrs. O’Donnell stated that Mr. Johnson told her that he
would not only leave, but that he would take the top business unit heads with him,
as well as the Company’s top customers.
169. Mr. Koch only assented to this promotion because of the duress imposed
and deceit practiced upon him by the parties involved, and notwithstanding his
skepticism that Mr. Johnson was ready to ascend to the role of President.
However, he did not at that time fully understand the depths of intrigue and
conspiracy aimed at ousting him from his position as CEO and majority ownership.
170.

In addition, the Compensation Committee for the Company, which at the

time consisted of Mrs. O’Donnell, Mr. Hurst, and Mr. Coumantaros, began
negotiating an additional grant of equity to Mr. Johnson.
171. Crestview viewed this as an opportunity to further enlist Mr. Johnson to
their cause and incentivize him to pursue Crestview’s interests, and so Mr. Hurst
and the rest of the Compensation Committee included several atypical provisions
- 57 -

 in Mr. Johnson’s 2015 Long-Term Incentive Plan Unit Rights Agreement to
advance this goal:
a.

b.

This provision provided Mr. Johnson with a personal incentive to
pursue an exit for Crestview, regardless of the exit’s impact on the
Company.
c.

This provision helped ensure that Mr.
- 58 -

 Johnson, Crestview’s ally, would remain ensconced as President,
Chief Operating Officer, and as a Director.
d.

172. In addition to Mr. Hurst, Mr. Volpert and Mrs. O’Donnell played key
roles in these negotiations. For example, Mr. Volpert traveled with Mrs.
O’Donnell to visit and negotiate with Mr. Johnson in person. Mrs. O’Donnell,
meanwhile, was directly involved in the negotiations with Mr. Johnson and served
as point-person with the Company’s lawyers who were charged with documenting
the key financial terms she and the rest of the Compensation Committee had
purportedly negotiated with Mr. Johnson.
173.

- 59 -

 174. Upon the Compensation Committee’s approval of the award to Mr.
Johnson, Mrs. O’Donnell transmitted a final version of it to Mr. Koch.
175. Mrs. O’Donnell falsely told Mr. Koch that this was the bare minimum
that Mr. Johnson would accept to remain at the Company, and reminded him that
Mr. Johnson had threatened to take key Company employees and customers with
him if he left.
176. In April 2015, the Compensation Committee formally approved Mr.
Johnson’s award.
177.

178. After the Crestview Directors pushed through Mr. Johnson’s promotion
and his generous retention package, Mr. Johnson emailed a Crestview
representative complaining about how much he disliked working for Mr. Koch,
and confirmed the conspiracy to oust Mr. Koch from power by saying that he
would not have agreed to become President “without knowing I have you guys to
help me manage us out of this,” with “this” being a clear reference to Mr. Koch’s
leadership of the Company.

- 60 -

 179. By the start of the minority financing process in March 2015, Crestview
had also already seduced Mrs. O’Donnell to its cause.
180. As set forth above, Crestview had previously cooperated with Mrs.
O’Donnell in attempting to replace Mr. Koch as CEO with Mr. Fried.
181. Since that initial collaboration, Crestview had continued to cultivate Mrs.
O’Donnell’s favor.
182. Crestview took Mrs. O’Donnell under its wing and provided her with
mentoring, as well as introductions and access to other powerful political and
financial figures.
183. As a result of this seduction, by January 2015, Mrs. O’Donnell expressly
pledged her allegiance to the Crestview Directors – and not the Company – by
writing to Mr. Volpert thanking him for all of his attention and pledging that she
would “do my best for you with this investment and always.”
184. The timing of this statement was significant because, as discussed in
more detail below, Mrs. O’Donnell and Mr. Johnson were at that point in time
secretly coordinating with Crestview on the anticipated minority financing process.
185. The capstone of Crestview’s seduction of Mrs. O’Donnell occurred in the
spring of 2015 at the start of the minority financing process, when Mr. Hurst
secretly promised that Oxbow would pay Mrs. O’Donnell a “success fee” if the
- 61 -

 financing process she was leading (with the Crestview Directors’ undisclosed
involvement) was successful.
186. Crestview did not disclose this inveiglement to the rest of the Board of
Directors, Oxbow’s CEO and Chairman, or its majority member.
187. In an attempt to conceal yet another inappropriate plot, Mrs. O’Donnell
expressly replied to Mr. Hurst’s email and purported to decline Crestview’s
enticement. But even after expressly declining this offer in her email (solely for
show), she told several individuals that she was still expecting to get paid a “huge
success fee” by Crestview if she was able to close a financing that worked to their
advantage.
188. In addition to the incentives Crestview provided Mrs. O’Donnell, she had
additional personal incentives – that conflicted with the Company’s interests – with
respect to the minority interest financing.
189. Mrs. O’Donnell wanted Mr. Koch to step down as CEO in favor of Mr.
Johnson,

, with whom she expected to work with in exerting an

increased level of control over Oxbow. She also had a personal interest in Mr.
Koch liquidating as many of his Oxbow units as possible and transferring the
resulting proceeds to his family office, which she managed. This would result in
her managing more money, which would likely lead to an increase in her personal
- 62 -

 compensation from Mr. Koch, and which would allow her to place investments
with and entertain visits from the players in the private equity investment world
that she wanted to enter.
G. The Crestview Directors, Mrs. O’Donnell, and Mr. Johnson Secretly
Manipulate and Undermine the Minority Financing Process in an
Attempt to Force Mr. Koch to Step Down as CEO and Sell Below 50%.
190. Throughout January, February, March, and April 2015, Crestview had
substantial communications with Mrs. O’Donnell and Mr. Johnson about the
minority financing process, including discussing strategy and specific investors to
approach.
191. A vast majority of these communications were not disclosed to the rest of
the Board of Directors or Mr. Koch, and many of them took place even before Mrs.
O’Donnell and Mr. Johnson were authorized to approach potential investors.
192. The Crestview Directors solicited several potential investors on their own
and provided introductions to Mrs. O’Donnell and Mr. Johnson, rather than first
presenting these potential candidates to the Company’s Board of Directors.
193. Mrs. O’Donnell, Mr. Johnson, and the Crestview Directors worked so
closely together on the minority financing process that Mrs. O’Donnell referred to
them all as the “team” in her various emails.

- 63 -

 194. Because Crestview had not been authorized by the Board of Directors to
participate in the minority financing process or be part of the “team,” given its
conflict of interest, it concealed its level of involvement from the rest of the
Company’s Directors, and even frequently misrepresented to the Board of
Directors and other Company representatives that it was not involved in the
process at all, had not been talking with any potential investors, and lacked any
insight into how the process purportedly being led by Mrs. O’Donnell and Mr.
Johnson was proceeding.
195. In order to conceal Crestview’s involvement, a majority of the many
substantive communications between Mrs. O’Donnell, Mr. Johnson, and the
Crestview Directors concerning the minority financing process occurred by text,
through private email, over the phone, and in person.
196. The Crestview Directors used Mrs. O’Donnell’s private email so
frequently that on one message they had intended to send to her Renegade email
address, their email program’s auto-complete feature incorrectly directed the email
to Mrs. O’Donnell’s private account.
197. As discussed in more detail below, the Crestview Directors concealed
their level of involvement because they were manipulating the process in a manner
to try to force Mr. Koch to step down as CEO and sell his stake in the Company to
- 64 -

 below 50%, in order to earn what they believed would be an increase for their
equity position as a result.
198. Throughout March and April 2015, Mrs. O’Donnell and Mr. Johnson –
with Crestview’s undisclosed assistance and involvement – contacted several
potential investors in an attempt to solicit indications of interest for an investment
in the Company.
199. As part of this solicitation process, and with the knowledge and
encouragement of the Crestview Directors, Mrs. O’Donnell and Mr. Johnson:
a. Denigrated Mr. Koch’s abilities as CEO and communicated to
potential investors that he was incapable of running the Company
anymore; and
b. Told potential investors that Mr. Koch was willing to step down as
CEO in favor of Mr. Johnson as part of any financing, and that Mr.
Koch needed or wanted to sell enough units to drop below 50%
ownership of the Company.
c. Told potential investors that Mr. Johnson would not work with Mr.
Koch and that if he left the entire senior management team would
leave with him

- 65 -

 200. These statements were not true and were not authorized by Mr. Koch;
rather they were made in an attempt to set the terms for the critical minority
financing process that Mrs. O’Donnell, Mr. Johnson, and the Crestview Directors
knew the Company needed to close..
201. Also at the same time, Mrs. O’Donnell and Mr. Johnson exaggerated Mr.
Johnson’s importance to the Company in an attempt to get potential investors to
back him as part of a succession plan developed by Mrs. O’Donnell, Mr. Johnson,
and the Crestview Directors.
202. Mrs. O’Donnell and Mr. Johnson, with the knowledge and
encouragement of the Crestview Directors, even went so far as to tell certain
potential investors that any written indications of interest submitted to them should
expressly:
a. Be contingent on Mr. Koch stepping down as CEO in favor of Mr.
Johnson;
b. Offer to purchase sufficient units to ensure that Mr. Koch would drop
below 50% ownership or make any investment contingent on Mr.
Koch dropping below 50% ownership; and
c. Include a requirement that Mr. Johnson receive a two-year
employment contract.
- 66 -

 203. These communications were damaging to the Company because they not
only dissuaded potential investors from even submitting an indication of interest as
part of this crucial financing effort, but also had the effect of making the
indications of interest that were submitted less attractive to the Company from a
valuation and governance perspective.
204. In or about late-April or early-May, 2015, Mrs. O’Donnell and Mr.
Johnson received their first indication of interest from a potential investor. Despite
their prior communications to this investor that any indication of interest should
require a majority sale or change of control transaction as well as Mr. Koch to
resign as CEO, the term sheet this potential investor provided did not include the
CEO resignation as an express requirement, but did purport to offer to buy
sufficient units to have Mr. Koch drop below 50% ownership stake and therefore
lose control of the Board of Directors, which, as discussed above could remove the
CEO upon a simple majority vote.
205. But because the term sheet did not expressly require that Mr. Koch step
down as CEO, Mrs. O’Donnell held back the indication of interest and did not
initially show it to Mr. Koch or the rest of the Board of Directors.

- 67 -

 206. Instead, Mrs. O’Donnell, Mr. Johnson, and the Crestview Directors
intensified their efforts to get a written indication of interest from another investor
expressly requiring that Mr. Koch step down as CEO.
207. These efforts paid off on May 22, 2015 when Bidder 1 submitted a Letter
of Intent to Mr. Johnson to acquire

of Oxbow’s membership units.

208. This Letter of Intent included a specific requirement that “the
management transition plan naming Eric Johnson as CEO has been completed by
closing.”
209. Neither Mr. Koch nor the Board of Directors, however, had ever
discussed – much less authorized – such a “transition” plan, and, in fact, such a
plan did not exist. The myth of such a transition plan, as discussed above, was
created by Mrs. O’Donnell, Mr. Johnson, and the Crestview Directors to advance
their own interests – and not those of the Company and its other members –
through the minority financing process.
210. But even though Bidder 1’s Letter of Intent was conditioned on Mr. Koch
stepping down as CEO, it presented a problem for Mrs. O’Donnell and Mr.
Johnson: the Company enterprise valuation of

- 68 -

was

 211. To remedy this issue, Mrs. O’Donnell and Mr. Johnson met with Bidder
1 and discussed with it the need to increase the value of its Letter of Intent.
212. But Mr. Johnson admitted to Mrs. O’Donnell that he did not try to drive
the price to a level as high as he thought he could because he had a sense he would
be working for Bidder 1 (as the presumed new majority investor in the Company)
soon, and so did not want to antagonize them during the negotiation process.
213. In fact, while he was negotiating a potential investment by Bidder 1, he

214. Neither the Company, nor the full Board of Directors, was aware of this
conflict because none of Mr. Johnson, Mrs. O’Donnell, or the Crestview Directors
disclosed to the rest of the Board of Directors that Mr. Johnson, who was supposed
to be running the minority financing process to advance the Company’s interests of
getting the highest price and best terms, was also working directly with Crestview
to position himself as the choice CEO for the new investors.
215. On May 28, 2015, Bidder 1 resubmitted its Letter of Intent.
216. The primary change between this May 28, 2015 Letter of Intent and the
May 22, 2015 Letter of Intent was that the enterprise valuation increased to
from

, and the inclusion of a more express
- 69 -

 indication that Bidder 1 would be willing to purchase a majority stake in the
Company.
217. Also on May 28, 2015, another bidder submitted a preliminary proposal
through Mrs. O’Donnell. On its face, this proposal did not require Mr. Koch to
step down as CEO or sell below 50%, but this bidder communicated to Mrs.
O’Donnell over the phone that these would be two requirements for its investment.
218. But because this bidder’s proposal did not – on its face – expressly
require Mr. Koch to step down, as the Bidder 1 proposal did, Mrs. O’Donnell and
Mr. Johnson strongly advocated that the Company enter into an exclusive
negotiation period with Bidder 1, as proposed by the Bidder 1 Letter of Intent.
219. In addition, as Mr. Johnson was negotiating with and advocating for the
Bidder 1 Letter of Intent, he never disclosed to Mr. Koch or the full Board of
Directors that

220.

The primary problem with all of the offers that Mrs. O’Donnell and Mr.

Johnson brought the Company, however, was that the proposed valuations were
significantly below what Crestview said it would accept for its units.

- 70 -

 221. Specifically, throughout the minority financing process, Crestview
insisted that it would not sell its units for less than

per-unit, but none of the

offers approached this valuation.
222. For example, the initial Term Sheet Mrs. O’Donnell and Mr. Johnson
procured had the highest valuation range of

, and

translated (per that potential investor’s calculation) to an initial per-unit price of
approximately

.

223. Assuming the Company redeemed all of Crestview’s units at

per-

unit, Crestview’s gross payment from its Oxbow investment would be
approximately

; its return would be

its original investment; and

its gross annual internal rate of return would be approximately

.

224. So while Crestview wanted to use the minority financing process to
remove Mr. Koch, it was not willing to do so if it was unable to get its

per-

unit mark for its units because it felt that it could get in excess of that amount if it
ultimately decided to exercise its Put Right – even though accepting less than
per-unit would yield Crestview a very substantial return on its investment.
225.

- 71 -

 H. The Company Tries to Negotiate with Crestview on a Redemption, but
Crestview Refuses to Compromise.
226. By early June 2015, Mrs. O’Donnell and Mr. Johnson (with the secret
involvement of the Crestview Directors) had been unable to elicit an indication of
interest near the per-unit price Crestview was insisting it be paid.
227. Consequently, on or about June 10, 2015, Oxbow retained
to provide independent advice, assist in analyzing
potential financing options, and help locate and negotiate with potential financial
partners in connection with a redemption of Crestview’s and Load Line’s units.
228.

229. Shortly after its engagement,

conducted a due diligence

investigation of the Company, provided its views of the capital markets with
respect to Oxbow, and presented an analysis of potential financing options.
230. Through the spring and summer of 2015, Intrepid worked with the
Company to identify additional potential investors to contact, explored and
analyzed various debt and equity financing options, and provided strategic advice
to the Company in its ongoing negotiations with Bidder 1 and another bidder
(“Bidder 2”).
- 72 -

 231. For example, on June 26, 2015, with assistance from

, Oxbow

sent a response to Bidder 1’s May 22, 2015 and May 28, 2015 Letters of Intent.
232.

worked with and reported directly to Mr. Koch in his capacity as

CEO and Chairman of the Board.
233. Unsurprisingly, the Company’s engagement of

caused

significant frustration to Mrs. O’Donnell, Mr. Johnson, and the Crestview
Directors, who lost control of the financing process they were using to attempt to
force Mr. Koch to resign as CEO and sell down to below 50%.
234. Almost from the start, Mrs. O’Donnell, and Mr. Johnson began
undermining the key Company financing process that

had taken over from

them. For example, Mrs. O’Donnell and Mr. Johnson, among other things:
a. Continued to have undisclosed communications with potential
investors, including some of the same investors that Intrepid was
attempting to engage in dialogue on behalf of the Company;
b. Withheld critical information from

relevant to the Company

and the prior financing efforts; and
c. Tried to poison

relationship with Mr. Koch by criticizing

competence, analysis, and approach, as well as its

- 73 -

 negotiations with potential investors, and its efforts to solicit
investors.
235. On July 1, 2015, the Crestview Directors indicated that Crestview had
approved of the financing process that had been run by Mrs. O’Donnell and Mr.
Johnson (without disclosing their manipulation of the process
), and that they did not agree with Oxbow retaining

to assist

with the search for replacement capital and otherwise advise the Company on
options with respect to a redemption.
236. Crestview also joined in the unwarranted criticism of
and not
taking a professional approach to the financing. At the same time, Crestview
began to more regularly threaten that it would exercise its Put Right in an effort to
get Mr. Koch to participate in a financing that would require him to step down as
CEO.
237. During July and August 2015, Oxbow, and

on its behalf,

continued negotiations with Bidder 1 and Bidder 2 in an effort to get them to
increase their bids closer to the

per-unit mark that Crestview was insisting on

receiving for a full redemption of its units.

- 74 -

 238. For example, on July 29, 2015,
submit a revised term sheet at

sent Bidder 1 a letter asking it to

per-unit and with a proposed CEO succession

plan.
239. And on August 21, 2015,

sent Bidder 2 a written

counterproposal to Bidder 2’s original Draft Preliminary Investment Proposal.
240. As part of these conversations,

advised Bidder 2 and Bidder 1

that Crestview was insisting that it would not negotiate a full redemption for
anything less than

per-unit, and that its proposals needed to come much

closer to this value in order to garner serious consideration.
241. Bidder 1 told

that it thought

was too high given the

Company’s then-current financial performance, and that it would be stepping away
from the negotiations because they were too far apart on valuation.
242. Bidder 2 also rejected Crestview’s

per-unit valuation as

.

243. Oxbow communicated these reactions from Bidder 1 and Bidder 2 to
Crestview, but Crestview maintained that it would not participate in a full
redemption for less than

per-unit.

244. By that point in time, Crestview was already contemplating a switch in
strategy from being bought out as minority investors to trying to force an entire
Company sale. This is because Crestview was beginning to see that there was
- 75 -

 insufficient support in the market to finance a buyout of its minority position at the
price it wanted, and that it had lost control of the process it had manipulated in
order to get Mr. Koch to step down as CEO. In addition, Crestview believed it
could earn an even higher premium for a full company sale. Mr. Johnson
confirmed Crestview’s sentiment when he emailed the Company’s CFO in midAugust noting that he now believed that Crestview would only sell its units as part
of a full company sale.
245. Through August and September 2015, Oxbow renewed discussions with
and initiated discussions with Bidder 3, both of which expressed an interest
in providing replacement capital for Crestview’s units.
246. Also in August and September, Oxbow began interviewing larger
investment banks as possible candidates to assist with an even broader search for
replacement capital.
247. At the same time it was looking for a potential equity investor or
investors throughout the summer of 2015, Oxbow spent a considerable amount of
time and resources, with the assistance of Intrepid and its outside counsel,
exploring the possibility of a debt financing solution.
248. Crestview was aware that Oxbow was pursuing possible debt financing
solutions in addition to a possible equity financing.
- 76 -

 249. Oxbow and its advisors assessed numerous debt financing options,
including whether Oxbow could:
a.
b.

c.

250.

251. And, as described in more detail below,

252. Finally, the Company with its advisors also began exploring less
traditional forms of equity financing,

253. On or about September 1, 2015, Crestview communicated to an Oxbow
representative that it would consider a redemption process that would not require
all of its units to be redeemed at its

per-unit mark.

- 77 -

 254. Specifically, Crestview proposed that if the Company used
of its revolver to redeem Crestview and Load Line, on a pro rata basis, at

per-

unit, and if Mr. Koch agreed to step down as CEO, it would agree to sell into a
minority financing at the price the new investor was willing to pay.
255. But the primary problem with this proposal, as Crestview was well
aware, was that it required the Company to t

256. On September 4, 2015, the Company consulted with Mr. Johnson to
determine how much debt the Company could take on

257.

(Mr. Johnson had no personal incentive to go along with this
proposal by Crestview, and, in fact, a covenant breach could have rendered his
equity worthless, and so it represents one of the only times when he did not back
his secret ally).
258.

- 78 -

  

-79-

263. Mr. Johnson reluctantly stated that, if absolutely necessary, the Company
could possibly use

of its revolver for a redemption, but that there were

several significant risks in drawing down even this amount.
264. The Company encouraged Mr. Johnson to reach out to Crestview to
provide Crestview with his detailed analysis of why the Company was not in a
position to be able to take on more debt to fund a partial redemption.
265. On September 5, 2015, Mr. Johnson spoke with Mr. Hurst. Mr. Johnson
walked Mr. Hurst through his analysis as to why taking on any more debt at that
point in time would be “dangerous” for the Company.
266. Mr. Hurst responded that he thought Mr. Johnson was overstating the
risks of taking on more debt. Mr. Hurst added that he did not think a breach of the
Company’s financial covenants should be any reason for concern, and that
Crestview had dealt with such breaches in other companies. Mr. Hurst stated that
he believed that Oxbow was strong enough to be able to survive such a breach, and
suggested that it should risk such a breach in order to satisfy Crestview’s partial
redemption.
267. Mr. Johnson was shocked by this position and reported to Mr. Koch that
Mr. Hurst’ approach “could never be considered in the Company’s best

- 80 -

 interest. Crestview would get cash out and we’d be left running a company that
just defaulted on its bank debt.”
268. Over the course of the following week, Oxbow and Crestview discussed
whether an immediate redemption using the Company’s revolver still made sense,
given Mr. Johnson’s concerns and the fact that – after further thought and analysis
and consultation with his management team – he lacked confidence that the
Company could even afford to use the

he had previously thought could

be feasible.
269. The Company continued to engage with Crestview to see if a negotiated
resolution could occur over the following couple of weeks.
270. Just prior to and throughout the minority financing process, the
Crestview Directors insisted that the Company take steps that would prop up the
near-term value of their units, but which clouded the Company’s longer-term
prospects for success. For example:
a. The Crestview Directors persistently advocated for the Company to
use all of its available cash to pay down its debt, rather than investing
in the Company’s growth or using it to improve operations, such as
upgrading the Company’s information management and reporting

- 81 -

 system. Unsurprisingly, Crestview never made this suggestion while
it was receiving massive cash distributions from the Company.
b. The Crestview Directors also began to advocate for otherwise
unwarranted cuts to SG&A and headcount, including

. Again, unsurprisingly,
Crestview never advocated for such a step in the earlier years of its
investment, indicating that it knew this recommendation had no longterm benefit for the Company, but that it provided them with a
possible short-term boost.
c. The Crestview Directors insisted on shuttering the Company’s
relatively new activated carbon division, which represented the
Company’s division with the greatest potential for growth (not
dependent on the normal economic cycles) in a market without many
competitors but with high margins.
, and so the Crestview
Directors saw it as an opportunity to once again save costs in the short
term without regard to the long-term prospects of the Company. The
- 82 -

 Crestview Directors applied this pressure not long after the Board
approved entering into the activated carbon line of business. In
addition, the Crestview Directors even went so far as to falsely claim
that at an informal meeting of the Board of Directors in March 2015,
every single Director (except Mr. Koch) had voted to shutter activated
carbon’s operations.
271. As the minority financing process was proceeding, the Crestview
Directors continued their assault on Mr. Koch’s position as CEO. For example,
Mr. Hurst, as Chair of the Audit Committee of the Board of Directors misused his
authority by requiring the Company to reverse its prior position on how to allocate
expenses for the Company plane that the Company leased from an entity owned by
Mr. Koch.
272. In 2011, the Company’s Board of Directors had discussions about how to
restructure its use of private planes in order to accommodate executive travel in
connection with several new business needs. As part of those discussions, the
Company determined to lease an airplane owned by an entity controlled by Mr.
Koch. The Company then entered into a separate agreement with Mr. Koch’s
entity through which Mr. Koch would reimburse the Company for any personal use
of the plane.
- 83 -

 273. This plan was fully discussed at Board of Directors meetings, and none
of the Directors objected to this plan. In addition, this plan was consistent with the
LLC Agreement, all applicable IRS and FAA rules and regulations, and was fully
disclosed by the Company in its audited financial statements. Mr. Koch, and his
entity that owned the plane, fully complied with all aspects of this leasing
arrangement.
274. In or about late 2014 or early 2015, however, Mr. Hurst – in casting
about for ways to seek to remove Mr. Koch for cause or to further denigrate him –
decided to attempt to retroactively reverse the Company’s prior agreement with
respect to leasing of the aircraft in order to make it appear as if Mr. Koch had not
been appropriately reimbursing the Company for his personal use of the plane. As
part of this scheme, Mr. Hurst needed to disregard the former and lawful
agreement reached between the Company and Mr. Koch’s entity with respect to
use of the plane. He attempted to enlist the Company’s auditors as part of this
scheme, but the audit partner

275. Undeterred, Mr. Hurst – using the fact that he controlled the Audit
Committee – sought to re-write history by simply ordering the Company’s
financial personnel to go back and recalculate the amounts Mr. Koch would owe
- 84 -

 the Company under an entirely different formula from what had been in the
effective and lawful agreements between the Company and Mr. Koch’s entity.
This calculation resulted in a liability to Mr. Koch of just over

. Under

pressure from the audit committee and wanting to avoid an unnecessary conflict,
Mr. Koch paid the amount to the Company.
276.

277.

I. Crestview Abruptly Breaks Off Negotiations with the Company and
Exercises its Put Right.
278. On Friday September 25, 2015, the parties were still engaged in
negotiations on a potential solution to Crestview’s desire to be redeemed. On that
day, Oxbow’s outside counsel informed Crestview that he would be traveling on
another matter and unavailable over the weekend.
- 85 -

 279. Crestview never stated or suggested that it was unwilling to wait until the
following week to resume discussions.
280. But on September 28, 2015, Crestview-Oxbow Acquisition, LLC
provided notice to Oxbow that Crestview was exercising its Put Right.
281. Shortly thereafter, and also on September 28, 2015, Load Line provided
notice that it was exercising its right to tag along with Crestview’s exercise of its
Put Right.
282. Based on the September 28, 2015 exercise of the Put Right and pursuant
to Amendment No. 5 to the LLC Agreement, the date for the Put Closing became
January 19, 2016. See LLC Agreement, Amendment No. 5.
283. When it gave its Put Notice, Crestview understood that a full and
immediate redemption of its units would

Crestview also knew that the
Company’s existing Credit Agreements restricted the source of proceeds and
correspondingly the amount of any such payment that may be made at any given
time to redeem Crestview’s and Load Line’s units pursuant to the Put Right.

- 86 -

 284. As set forth above, the LLC Agreement provides the Company with an
unqualified right to accept the Put Notice, reject the Put Notice, or fail to respond
to the Put Notice. LLC Agreement, Art. XIII, § 8(d),(e).
285. If the Company accepted the Put Notice, it would need to work toward
redeeming Crestview’s units. If the Company rejected or ignored the Put Notice,
Crestview had the right to request that the Company undertake an Exit Sale
process.
J. Crestview’s Valuation Was Prepared in Bad Faith and Manipulated by
Crestview in Order to Artificially Inflate the Fair Market Value of the
Company.
286. Accompanying Crestview’s notice of exercise of its Put Right was an
“appraisal report” prepared by Duff & Phelps (the “Duff & Phelps Report”) that
purportedly served as the valuation to be prepared by an investment bank selected
by Crestview pursuant to the valuation process set forth in the Put Right provision
in the LLC Agreement.
287. With respect to the valuation process, the Company and Crestview were
adverse. Because the obligation to redeem Crestview’s units upon the acceptance
of the Put Notice was a Company obligation, the Company was interested in
having a lower valuation at a reasonable level in order to minimize its obligation.

- 87 -

 288. Crestview, on the other hand, was motivated to make the valuation as
high as possible.
289. The Duff & Phelps Report provided

290. The Duff & Phelps Report

291. The scant information that Duff & Phelps did disclose

292. For example, the Duff & Phelps Report, dated August 10, 2015,

- 88 -

 293. By July and August 2015, when Duff & Phelps was preparing its report,

294.

295. But by August 2015 when Duff & Phelps was preparing its report,
Oxbow’s financial results for the quarter ended June 30, 2015 (“Q2 2015”) were
available.
296.

297.

298. Upon information and belief, Crestview instructed Duff & Phelps to
make this assumption,
- 89 -

 299. Between mid-June and September 30, 2015 alone, the S&P500 index
declined approximately 9%; Oxbow’s publicly-traded comparables were down
approximately 35%, the Bank of America US High Yield Index was down
approximately 15%; the Alerian Index (which tracks energy infrastructure
investments) was down approximately 24%; WTI oil prices were down
approximately 26%; aluminum prices were down approximately 7%; and the S&P
Goldman Sachs Commodity Index was down approximately 18%. Crestview was
generally aware of this widespread deterioration in the relevant markets.
300.

- 90 -

 301. Based on the August 10, 2015 date of the Duff & Phelps report, it
appears that Crestview engaged Duff & Phelps and began the valuation process in
the summer of 2015

302. Completing a valuation before exercising the Put Right in an attempt to
lock in a higher value in a deteriorating market, and then submitting that state
valuation with the notice of exercise of the Put Right, was not in good faith and is
inconsistent with the express valuation process set forth in the LLC Agreement,
which contemplates first the exercise of the Put Right, and then the retention of
two investment banks to simultaneously conduct the initial round of valuations.
See LLC Agreement, Art. XIII, § 8(a),(b).
303. In this manner, Crestview breached the LLC Agreement and acted in bad
faith in connection with the valuation process in a manner designed to increase the
Company’s potential liability under the Put Right.

- 91 -

 K. Oxbow Engages Goldman Sachs to Assist it in Seeking a New Equity
Investor.
304. As discussed above, in August and September 2015, and before
Crestview exercised its Put Right, Oxbow was in the process of interviewing large
investment banks to run a comprehensive search for replacement capital for
Crestview’s and Load Line’s membership units.
305. In connection with this process, Oxbow interviewed

306. On October 14, 2015, Oxbow – with the unanimous support from its
Board of Directors – formally retained Goldman Sachs to serve as its financial
advisor in seeking investors. (Mr. Hurst and Mr. Volpert are former senior
Goldman Sachs partners).
307. Also in October 2015,

308. But Crestview and its outside counsel maintained that
was inapplicable and that, if Oxbow accepted the Put
- 92 -

 Notice but did not make a full and immediate redemption of Crestview’s units,
Crestview would initiate litigation and seek an immediate sale of the entire
Company. The Crestview Directors also threatened the other Oxbow Directors
with personal liability if those Directors voted to accept the Put Notice without
Oxbow being able to fully and immediately redeem Crestview’s membership units.
309. While Crestview was attacking the
from the outside, the Company’s general counsel –
with the encouragement and under the direction of Mr. Johnson – was attempting
to undermine its position from the inside.
310. Despite the fact that Mr. Johnson and the Company’s then General
Counsel, Mr. McAuliffe, knew the Company had already hired outside counsel to
analyze the Put Right issue and the Company’s legal obligations thereunder, they
secretly engaged two other law firms in an attempt to undercut the advice the
Company was receiving from its outside counsel. They never disclosed to Mr.
Koch or the Board of Directors that they had hired two other firms and were
conducting

.

311. In addition, Mr. Johnson and the General Counsel did not hire outside
counsel to provide an objective view of the situation; rather they hired outside
counsel to specifically provide an opinion that supported
- 93 -

 to any redemption of equity pursuant to the Put
Right.
312. The General Counsel was motivated to force the Company to an Exit
Sale process

In addition, the General Counsel had become a close
personal friend of Mr. Johnson and – at that time – it did not appear that Mr.
Johnson would become CEO of the Company as part of a successful minority
financing process. Mr. McAuliffe, therefore, wished to steer the Company toward
a scenario in which his friend would become CEO.
313.

- 94 -

 L. Goldman Sachs Continues its Search for A New Equity Investor.
314. Starting with its engagement by the Company in October, Goldman
Sachs began the search for financing to assist the Company in redeeming
Crestview’s and Load Line’s units as part of the Put process.
315. As part of this minority financing process,

Prior to finalization of this CIM, Crestview insisted that it state that Mr. Koch
would step down as CEO upon the close of any financing and that Eric Johnson
was the presumptive CEO.
316. Yielding to the unrelenting and extended pressure of Crestview and its
allies, Mr. Koch agreed to this concession upon the condition that he would
become Executive Chairman of the Company.
317. Around this time, and even with this concession, Crestview decided it
would rather attempt to engage in an Exit Sale of the entire Company than
participate in a sale of its minority interest because it would receive a premium for
its units in a full Company sale.
318. The problem with this plan was that the Company had a right to buy
Crestview’s interests out at the Fair Market Value price pursuant to the Put Right
process.
- 95 -

 319. The only way for Crestview to get to a full Company sale, therefore,
would be to undermine the minority financing process, which Crestview knew was
intended to allow the Company to raise sufficient funds to buy Crestview’s
minority interest as part of the Put Right and thereby retain the significant future
upside for the Company’s other members.
320. As discussed above, the Crestview Directors held a very strong belief that
they could get more than the Fair Market Value for their units if they were able to
conduct a full Company sale, and so they were motivated to undermine the
Company’s ongoing attempts to find replacement capital that would result in
Crestview being bought out at Fair Market Value as part of the Put Right process.
321. In November 2015, the Company learned two disturbing, but related,
facts detailing how the Crestview Directors were successful in undermining – if
not entirely destroying – any prospect of raising capital as part of the minority
financing process.
322. First, the Company learned that at Crestview’s annual meeting for its
limited partners, on or about November 18, 2015, Mr. Volpert

- 96 -

 323.

324. Second, and within days of Crestview’s annual meeting, the Company
began to hear from Mrs. O’Donnell and other sources that investors had been told
that they should not participate in the minority financing process because, if they
waited a few months, they would be able to buy the entire Company for a
favorable price in a forced sale scenario.
325. In the week after Crestview’s annual meeting and Mr. Volpert’s remarks,
Goldman Sachs received unsolicited communications from several of the potential
investors it had been communicating with during the minority financing process.
These investors informed Goldman Sachs that they were no longer interested in the
minority financing process, and that they would wait until the entire Company was
available for sale

326.

M. Crestview Improperly Interferes with the Valuation Process.
327. As set forth above, and as part of the valuation process under the LLC
Agreement, OCMHI was required to retain an investment bank to provide a
- 97 -

 valuation that would then be compared to the Duff & Phelps valuation procured by
Crestview. See LLC Agreement, Art. XIII, § 8(b).
328. If these two valuations were within 10% of one another, the average
would be the “Fair Market Value” for purposes of the Put Right. Id. at Art. XIII, §
8(b).
329. If these two valuations were more than 10% apart, however, “a third
nationally recognized investment bank selected by such other two investment
banks shall also determine the fair market valuation, and fair market value shall be
the median of the three valuations…” Id. at Art. XIII, § 8(b).
330. In October 2015, OCMHI retained Evercore, a nationally recognized
investment bank, to provide the OCMHI valuation as required under the LLC
Agreement.
331. On November 25, 2015, OCMHI transmitted Evercore’s valuation, which
was dated November 24, 2015, to Crestview and Load Line, and copied the
Company’s in-house and outside counsel.
332.

- 98 -

 333. Evercore’s valuation report

334. Evercore’s

335. Because the Evercore and Duff & Phelps valuations were more than 10%
apart, the LLC Agreement required that Evercore and Duff & Phelps select a third
“nationally recognized investment bank” to conduct a valuation. LLC Agreement,
Art. XIII, § 8(b).
336. From the start, however, Crestview inserted itself into the selection
process, recommending certain firms to Evercore and rejecting other firms
proposed by Evercore.
337. Crestview even went so far as to reject a firm, Centerview Partners, that
both Duff & Phelps and Evercore had already agreed to engage.
338. Crestview’s interference with the selection process of the third valuation
firm violated the LLC Agreement, which very clearly provides that the third firm
would be “selected by such other two investment banks,” and not by either
OCMHI or Crestview. LLC Agreement, Art. XIII, § 8(b).

- 99 -

 339. Despite Crestview’s improper actions to influence the selection process
for the investment bank, the parties finally agreed on a third firm, and engaged
Moelis on or about December 28, 2015 to conduct the third valuation.
340. During the process of engaging Moelis, Crestview insisted on securing
the right to submit to Moelis its own information and analysis about the
Company’s value.
341. It is not customary for Moelis to take direction or input from a third
party, such as Crestview, in connection with valuation work on a company.
342.

N. The Moelis Valuation and the Company’s Rejection of the Put Notice.
343. On January 6, 2016, Oxbow scheduled a special meeting of the Board of
Directors to be held on January 15, 2016. By that point in time the Company
expected to have the Moelis valuation, which was to be provided on or about
January 13, 2016.
344. The agenda for the meeting was for the Directors to receive a brief
business update, and to review the status of the Goldman Sachs financing process.

- 100 -

 The non-Crestview and non-Load Line Directors would also review the
Company’s options with respect to the Put Right.
345. Prior to receiving the Moelis valuation and knowing what the “Fair
Market Value” was for the Put Right, the Board of Directors did not have sufficient
information to determine whether it would be in the best interests of the Company
and its members to accept the Put Notice and work toward a redemption or to
reject the Put Notice.
346. On January 14, 2016, Moelis concluded its valuation process and
communicated its valuation to OCMHI and Crestview.
347. The mid-point of Moelis’ enterprise valuation range for Oxbow was
, which Moelis calculated amounted to
Phelps valued the units at

per-unit, whereas Duff &

per-unit, and Evercore valued the units at

per-unit.
348. Because the Moelis per-unit valuation of

was the median of these

three valuations, it was the per-unit price to be used to determine the “Fair Market
Value” for purposes of the Put Right under the LLC Agreement. See LLC
Agreement, Art. XIII, § 8(b).
349. The Put Price, therefore, for a full redemption of Crestview’s and Load
Line’s units was approximately

.
- 101 -

 350. Being redeemed at this “Fair Market Value” would result in Crestview’s
receiving

its original investment and an approximate

annual internal rate

of return on its original investment.
351. The gap between the Put Price and the amount the highest bidder
indicated that it would be willing to pay Oxbow to finance a buyout of Crestview’s
and Load Line’s units was approximately

.

352. On January 15, 2016, Oxbow held its previously scheduled Board of
Directors meeting.
353. Leading up to this Board of Directors meeting, Crestview reiterated its
position that it expected to be fully redeemed out on January 19, 2016, and that it
would file suit against Oxbow on January 20, 2016, if Oxbow failed to redeem all
of Crestview’s units and did not agree to give Crestview the right to conduct an
Exit Sale.
354. Crestview also threatened that, if it was not fully redeemed out on
January 19, 2016, it would begin distributing confidential information about the
Company to the Company’s customers, suppliers, and competitors – ostensibly as
part of a process to locate a purchaser as part of an Exit Sale process.

- 102 -

 355. This threat by Crestview not only demonstrated that Crestview was
prepared to violate the strict confidentiality provisions in the LLC Agreement, but
was also prepared to harm the Company in order to force an exit. Crestview knew
very well that the release of such information would not only harm the Company,
but would also antagonize Mr. Koch, who had frequently expressed concern about
making sure that the Company’s confidential information did not end up in the
hands of its competitors, suppliers, and customers as part of any financing process.
356. On January 19, 2016, a majority of the Board of Directors voted to reject
Crestview’s Put Notice, and the Company communicated this decision to
Crestview that same day.
O. Crestview Undermines the Exit Sale Process Required by the LLC
Agreement by Secretly Soliciting and Negotiating with Potential
Purchasers and Sharing Confidential Information with Them.
357. On January 19, 2015, Mr. Koch and Mr. Hurst spoke by phone. During
the call, Mr. Koch told Mr. Hurst

- 103 -

 358. Mr. Hurst voiced agreement with this recommendation and also voiced
agreement with retaining Goldman Sachs to run the Exit Sale process.
359. On January 25, 2016, Mr. Hurst wrote Mr. Koch and requested that the
Company formally engage Goldman Sachs to be the investment banking firm to
coordinate the Exit Sale process.
360. On January 28, 2016, Mr. Hurst and Mr. Volpert met with Mr. Koch,
David Rosow (another of Oxbow’s Directors), and Bob Hale (a former Oxbow
Director who was representing Load Line at the meeting) at Oxbow’s corporate
headquarters in Florida to discuss the Exit Sale process.
361. During that meeting, the Directors discussed the engagement of an
investment banking firm; the Crestview Directors insisted that Goldman Sachs be
engaged without any further deliberation or thought, but Mr. Koch expressed the
need to be certain of the choice given the importance of the matters involved, and
that he wanted to test whether Goldman Sachs still had sufficient interest and
enthusiasm to initiate the orderly sale process.
362. The day after this meeting, Crestview’s in-house counsel sent the
Company a threatening letter stating that, if Crestview did not believe OCMHI was
cooperating with it on an Exit Sale, it would “pursue an Exit Sale immediately on
our own to protect our investors.”
- 104 -

 363. Crestview’s letter once again ignored that it had no rights to conduct the
Exit Sale under the LLC Agreement, which, as set forth above, clearly vests this
authority in the Board of Directors, and requires the process for an orderly sale to
be initiated by the investment bank, working on behalf of the Company. The threat
also underscored the Crestview Directors’ repeated pattern, described above, of
putting their interests, and those of Crestview’s “investors,” ahead of the
Company’s and its other members’ best interests.
364. On February 1, 2016, the Company terminated the employment of
Michael McAuliffe, its General Counsel, for

. Also

on February 1, 2016, Mr. Koch removed Mrs. O’Donnell as one of his designated
Directors (and also terminated her employment with his family office)

365. OCMHI then appointed Peter C. Morse as one of its designated
Directors, in place of Mrs. O’Donnell.
366. The Crestview Directors renewed their assault on Mr. Koch’s position as
CEO when they accused Mr. Koch of misconduct in connection with the removal
- 105 -

 of Mrs. O’Donnell as a Director and the termination of Mr. McAuliffe. But, as set
forth above, Mr. Koch had legitimate bases for making these personnel changes,
and neither change has adversely impacted the Company in any way. In fact, the
Board of Directors is stronger with the addition of Peter Morse, and reports are that
morale and functionality of the legal department have increased since Mr.
McAuliffe’s departure.
367. On February 5, 2016, the Company contacted Goldman Sachs and
requested that Goldman Sachs send a draft proposed engagement letter for the Exit
Sale process.
368. On February 9, 2016, Mrs. O’Donnell mistakenly sent an email to the
Company’s outside counsel, Robert Popeo, that she had intended to send to Robert
Hurst. The email read: “Bob, Maybe I should call Popeo – he might get chatty
with me…” Prior to Mrs. O’Donnell sending that email, Mr. Hurst had reached
out to her seeking additional information about the position the Company was
taking with respect to the Exit Sale process.
369. Mrs. O’Donnell’s email confirms that Mrs. O’Donnell had – with
Crestview’s consent and encouragement – been secretly plying the Company and
its counsel for information in order to pass that information on to the Crestview
Directors.
- 106 -

 370. Because the Company and Crestview had been adverse to one another
with respect to the Put Right process, Mrs. O’Donnell and Crestview used her
position as a non-Crestview Company Director to surreptitiously acquire for
Crestview confidential and privileged information about the Company’s positions
that Crestview was not otherwise entitled to receive.
371. On February 10, 2016, the Company’s Board of Directors had a meeting
at the Company’s headquarters in Florida.
372. Prior to the meeting,

373.

a.
b.
c.
d.

374. Upon reviewing this presentation,
, the Company’s Board of Directors –
- 107 -

 including the Crestview Directors – decided unanimously to authorize the
Company to begin negotiating an engagement letter with Goldman Sachs.
375. The Company immediately began this process, received a first draft from
Goldman Sachs and allowed Crestview the opportunity to provide its feedback on
the terms of the engagement.
376. Early on in the negotiation process, Crestview attempted to insert a
provision in the engagement letter that would allow Goldman Sachs to directly
advise Crestview on the Exit Sale process. Not only was this provision
inconsistent with the LLC Agreement, which provided that the Company was to
engage and pay for the investment bank (meaning that investment bank would
report directly to the Company), but it was also inconsistent with Goldman Sachs’
standard engagement practice.
377. Accordingly, Goldman Sachs struck this proposed revision from the
drafts that were being exchanged and negotiated.
378. The negotiation of the engagement letter took a few weeks to finalize for
several legitimate reasons, including:
a. A comprehensive and firm negotiation, with Crestview’s input, of the
amount of the fee and the fee structure; and

- 108 -

 b. Gathering and compiling input from several of the Company’s
officers (including its CEO, CFO, and General Counsel), Crestview,
and outside counsel on numerous draft versions. For example,
Crestview was still suggesting changes to the draft versions as late as
March 8, 2016 and Goldman Sachs requested changes, which needed
to be negotiated, right down to the date of signature,.
379. The Company and Goldman Sachs executed a finalized engagement
letter dated March 18, 2016.
380. While Crestview and the Company were negotiating the engagement
letter with Goldman Sachs, which, pursuant to the LLC Agreement, would “initiate
a process for the orderly sale of the Company,” LLC Agreement, Art. XIII, § 8(f),
Crestview was taking secret steps to solicit and negotiate a transaction with its
preferred counterparty, Bidder 1.
381. On March 8, 2016, Mr. Hurst left a voicemail for the Company’s CFO,
William Parmelee. That same day, Mr. Parmelee emailed Mr. Hurst, and copied
Mr. Koch, letting Mr. Hurst know he was tied up, and that any requests for
information to the Company from Crestview should go through Mr. Koch.
382. On March 9, 2016, Mr. Hurst stated that Crestview was interested in
receiving “the exact share count as of today,” and “the current number of shares
- 109 -

 granted under employee stock plan(s), number of shares currently vested, and the
number of shares that vest with a change in control.”
383. Crestview did not disclose why it needed this information, which was not
relevant to any pending Company business that the Crestview Directors needed to
address.
384. On March 9, 2016, that same day, the Company responded to Mr. Hurst
and assured him that it would not be difficult to track the information down for
Crestview but that the member of the accounting staff who maintains the requested
information was occupied assisting with the finalization of the draft audited
financial statements to get to the Company’s auditors, and was answering
questions that the CFO had with respect to the February flash report that had just
come out.
385. On March 10, 2016, and despite the Company’s explanation for why it
would take a little longer than usual to gather the requested information, Mr. Hurst
wrote a more scathing email, accusing the Company of dragging its feet in not
immediately getting him the requested information, and concluding that “[w]e have
talked about transparency and a cooperative effort and this doesn’t bode well for
those objectives.”

- 110 -

 386. Ironically, Mr. Hurst accused the Company of not being transparent or
cooperating, despite the fact that the Company was very clear with Crestview as to
why its internal accounting staff had indisputably higher priorities, and despite the
fact that Crestview was requesting information as part of its undisclosed
solicitation of Bidder 1 as a potential buyer of the Company.
387. On March 14, 2016 (just three business days after Crestview’s original
request), the Company provided Mr. Hurst with the requested information.
388. On March 16, 2016, OCMHI, Crestview, and Load Line received a nonbinding Letter of Intent to acquire 100% of the membership units of Oxbow at a
proposed equity valuation of
to

, which Bidder 1 calculated to amount

per-unit, which was a

389. None of OCMHI, Goldman Sachs, and the Company had been in touch
with Bidder 1 about a full Company sale, and none of them solicited the Letter of
Intent or knew that it was coming prior to its receipt.
390. Soon after this Letter of Intent was received, and only after direct
questioning by Company representatives, the Crestview Directors admitted that
Mr. Volpert had solicited the Letter of Intent from Bidder 1.

- 111 -

 391. Upon information and belief, Mr. Volpert also shared the highly
confidential “Fair Market Value” of

392. This is apparent from the fact that the share price proposed in the March
16, 2016 Bidder 1 Letter of Intent was

higher than the implied share

price that Bidder 1 provided in its bid to Goldman Sachs in December 2015 in
connection with the minority interest financing process. There appears to be no
legitimate basis for this increase given that Bidder 1 did not receive any new or
additional information from or about the Company. This demonstrates that the
increase only occurred because Bidder 1 had been informed regarding the
confidential Fair Market Value threshold Crestview now argues it needs to exceed
to force an Exit Sale.
P. The March 16, 2016 Bidder 1 Letter of Intent Did Not Clear the Fair
Market Value Threshold or the 1.5x Threshold Set Forth in the LLC
Agreement.
393. Upon receiving the Bidder 1 Letter of Intent, both Goldman Sachs and
the Company analyzed the proposed valuation and the other proposed terms to see
if the Letter of Intent cleared the Fair Market Value threshold.

- 112 -

 394.

a.

b.

c.

d.

395. When presented with these analyses, Crestview did not specifically
object to any of the adjustments or calculations.
396. In addition, the Bidder 1 offer did not satisfy the minimum 1.5x payment
threshold necessary to compel all members to engage in an Exit Sale under the
LLC Agreement.
397. Specifically, and as set forth above, the LLC Agreement provides that
“the Exercising Put Party may not require any other member to engage in such Exit
- 113 -

 Sale unless the resulting proceeds to such Member (when combined with all prior
distributions to such Member) equal at least 1.5 times such Member’s aggregate
Capital Contributions through such date.” LLC Agreement, Art. XIII, § 8(f).
398. In 2011, two members, Ingraham Investments, LLC and Oxbow Carbon
Investments Company LLC (“OCIC”), made their initial investments in the
Company at

per-unit. These issuances were authorized by the Board of

Directors at a Board-authorized value that was unanimously approved by all
Directors, including Crestview and Load Line Directors.
399. Specifically, on April 28, 2011 the Oxbow Board of Directors
unanimously approved the issuance of up to

in units, at

per-unit,

to members of Mr. Koch’s family.
400. Ingraham, whose members consist of Mr. Koch’s individual family
members and entities set up to benefit family members of Mr. Koch, purchased
units at

per-unit on or about December 30, 2011.

401. Also on April 28, 2011, the Oxbow Board of Directors unanimously
approved issuance of up to

in units to former International

Commodities Export Corporation (“ICEC”) executives. ICEC was a company that
Oxbow had acquired. The ICEC executives did not make any such purchases at
that time and later, on November 9, 2011, the Board of Directors unanimously
- 114 -

 approved the purchase by the former ICEC executives of up to

at

per-unit.
402. On or about March 12, 2012, the ICEC executives, through OCIC,
purchased

Oxbow units at

per-unit.

403. The Board of Directors, including the Crestview Directors, were well
aware how these new issuances could potentially set a new floor for the minimum
price needed to be paid to all members in any Exit Sale under the LLC Agreement.
But, at the time, this issue did not concern the Crestview Directors for several
reasons, including:
a. The Company’s value was on an upward trajectory at that point in
time, and, as Mr. Volpert recognized, went as high as

a unit after

these issuances;
b. The cash distributions to members were still continuing at that time
with no signs of slowing down, and so it was expected that Ingraham
and OCIC would earn most of the 1.5x back in cash distributions over
the coming years; and
c. Crestview was not looking to exit its investment for another several
years at that point, and so thought that setting this new price floor
would not impede its exit because of the upward trajectory of the
- 115 -

 Company’s value and its continued payment of cash distributions to
members.
404. Subsequent to the investments by Ingraham and OCIC:
a. Ingraham received approximately

in distributions from the

Company; and
b. OCIC received approximately

in distributions from the

Company.
405. In order to receive 1.5x times their Capital Contributions from Exit Sale
proceeds, as required by the LLC Agreement:
a. Ingraham would need to receive a per-unit price of

for all of its

units; and
b. OCIC would need to receive a per-unit price of

for all of its

units.
406. As set forth above, the Exit Sale provisions in the LLC Agreement
require that:
a. All units in an Exit Sale must be “transferred on the same terms and
conditions as each other unit so transferred” LLC Agreement, Art.
XIII, § 7(d); and

- 116 -

 b. All Exit Sale proceeds must be distributed in accordance with each
Member’s Percentage Interest. Id. at Art. XIII, §§ 8(e), 9(b), and Art.
XI, § 1.
407. This means that the

per-unit price needed to get OCIC over the 1.5x

threshold is the price that all members must receive as part of the Exit Sale process
because – as set forth above – the LLC Agreement makes it clear that all members
must get the same per-unit price, and makes it clear that Exit Sale proceeds must
be distributed to members according to their percentage interest in the Company.
408. Starting in mid-March 2016, when the Company counsel and OCMHI’s
counsel reminded Crestview of the 1.5x requirement and its implication on the Exit
Sale process, Crestview made numerous, bad-faith, and shifting arguments as to
why the plain language of the LLC Agreement did not provide this clear protection
to all of the Company’s members:
a. First, Crestview argued that members who were not slated to receive
1.5x their Capital Contributions in Exit Sale proceeds could opt out of
the Exit Sale, despite the fact that the LLC Agreement defines Exit
Sale as a transfer of all but not less than all of the Company’s units,
meaning that such a sale cannot – by definition – occur without the
participation of all members.
- 117 -

 b. Second, Crestview argued that the units issued to Ingraham and OCIC
were not properly issued, despite the clear unanimous written consent
by all the Directors, including Mr. Volpert and Mr. Hurst, that
authorized the issuances at

per-unit.

c. Third, Crestview argued that the LLC Agreement’s requirement that
all “Members” receive 1.5x their investment in Exit Sale proceeds
should not apply to entities who are members, but rather that
Crestview should be allowed to disregard the corporate form and look
at the underlying members and beneficiaries of any member to see if
any of them have received – directly or indirectly – any other cash
distributions from the Company.
d. Fourth, Crestview maintained that extra payments could be made to
Ingraham and OCIC in order to get them above the 1.5x threshold,
despite that the LLC Agreement requires the transfer of units to occur
on the same terms and conditions, and requires that Exit Sale proceeds
be distributed according to a member’s percentage interests.
e. Fifth, Crestview even suggested that OCMHI should be on the hook
for making extra payments to the members who would not get 1.5x
their investment.
- 118 -

 409. These various and shifting arguments demonstrate Crestview’s bad faith
in resisting application of the plain language of the LLC Agreement it negotiated
with the assistance of highly sophisticated counsel in 2007, and under which it has
profited handsomely to date.
Q. Crestview Advocates that the Company Negotiate Exclusively With
Bidder 1 Instead of Launching a Broad Exit Sale Process, and Secretly
Solicits Another Investor and Reveals Confidential Information to that
Investor.
410. On March 18, 2016 (a Friday), Crestview emailed the Company stating
that it planned “to send Bidder 1 a revised draft of the Letter of Intent on the
following Monday. To signal our interest in Bidder 1’s proposal, we plan to sign
the Letter of Intent when we send it across.”
411. The import of this email was clear: Crestview intended to unilaterally
attempt to bind the Company in an exclusive negotiation period with Bidder 1 and
conduct the Exit Sale negotiations itself.
412. On March 19, 2016, Crestview’s outside counsel wrote to the Company’s
outside counsel that the LLC Agreement does not require Crestview to “obtain the
maximum price per share.” In a subsequent call, Crestview’s in-house counsel
reiterated this position by stating that, even if the Company received an offer to
purchase units at

per unit and another offer to purchase units at

- 119 -

per unit,

 Crestview would have the ability to force the Company to take the lower,
per-unit price because it controlled the Exit Sale process.
413. Crestview’s interpretation of the LLC Agreement, however, essentially
seeks to disclaim the applicability of the covenant of good faith and fair dealing
with respect to the Exit Sale process.
414. In addition, Crestview’s attempt to force a quick sale to its preferred
purchaser that it secretly solicited using confidential Company information
violated several express provisions of the LLC Agreement, including:
a. The provisions granting broad and comprehensive control of the
Company and its affairs, which necessarily includes the Exit Sale
process, to the Board of Directors as a whole. Id. at Art. III, § 1.
b. The provision stating that no member “shall have the power to act for,
or on behalf of, or to bind, the Company.” Id. at Art. IV, § 6.
c. The strict confidentiality provision in the LLC Agreement that
prohibits members from disclosing confidential Company
information, id. at Art. XVI, which includes the amount of the Fair
Market Value.
d. The provision requiring that Goldman Sachs “initiate” the Exit Sale
process. See id. at Art. XIII, § 8(f).
- 120 -

 Crestview’s decision to subvert Goldman Sachs is especially ironic
considering that, during the minority financing process, Crestview
advocated that the Company speak to the market with one voice in
order to avoid market confusion.
e. The provision that the Exit Sale be an “orderly sale.” Id. at Art. XIII,
§ 8(f). This requirement certainly does not mean that the Company is
required to conduct a fire sale of its units or assets, or that it is
required to grant exclusivity to the first investor that expresses interest
without testing the broader markets. Crestview has never attempted to
explain how its secret solicitation of a potential purchaser
constitutes the type of “orderly sale”
required by the LLC Agreement.
f. The definition of an Exit Sale that requires such a sale to be both
“bona fide” and “arms’-length.” Id. at Art. I, pg. 5. Crestview’s
sharing of the Fair Market Value with Bidder 1, and its collusion with

- 121 -

 Bidder 1 in getting Bidder 1 to submit its Letter of Intent means that
the Bidder 1 offer is neither “bona fide” nor truly “arms’-length.”
415. On April 6, 2016, the Company held a Board of Directors meeting to
discuss how to proceed with the Exit Sale process in light of the Bidder 1 Letter of
Intent.
416.
a.

b.

417.

- 122 -

 418.

419. At the conclusion of the meeting, the Directors passed the following
resolution
RESOLVED, that Goldman Sachs be, and it hereby is, authorized and
directed to immediately proceed with a broad sale process, including
both financial and strategic investors; and
FURTHER RESOLVED, that Goldman Sachs be, and it hereby is,
authorized and directed to simultaneously approach [Bidder 1] with
updated information regarding the Company, seek clarification of
[Bidder 1’s] March 16, 2016 letter of intent, and advise [Bidder 1] that
the Company believes that the indication of interest set forth in that
letter of intent was not preemptive.
420. The Crestview Directors and the Load Line Director were the only
Directors to vote against this resolution authorizing a broad sales process intended
to maximize the Exit Sale proceeds to the Company’s members.
421. Also during the April 6, 2016 meeting, the Board of Directors authorized
the Company to engage a law firm to serve as transactional counsel for any
potential Exit Sale, as required by the LLC Agreement.
422. Following the meeting,
, the Company began finalizing its first-quarter financial results in order to

- 123 -

 share those with Bidder 1 pursuant to the Board resolution

423. On April 18, 2016, Goldman Sachs provided a brief update on the Exit
Sale process to the Crestview and Load Line Directors.
424.

425. On April 21, 2016, the managing partner and Chairman for Bidder 2
emailed Michael Carr from Goldman Sachs, and stated: “I understand that GS
may now have been authorized to take Oxbow as an investment opportunity to
.... By Partnering with

, we feel there may be some real room to

get to a value that represents a clearing price.” Nobody from the Company and
nobody from Goldman Sachs disclosed to Bidder 2
. The only other parties aware of this
authorization were the Crestview and Load Line Directors. In addition, nobody
- 124 -

 from Goldman Sachs and nobody from the Company disclosed the amount of the
“clearing price” for any transaction.
426. This email closed with a statement demonstrating how Mr. Volpert had
been the source of the confidential information: “It is also important for you to
know that I believe Barry would also support this path.”
427. Subsequent to this call, and once the first-quarter financial results were
finalized, Goldman Sachs sent a copy to Bidder 1 and set up due diligence
meetings between Bidder 1 and Oxbow’s senior management.
428. Mr. Koch attended this initial diligence meeting because neither
Goldman Sachs nor Bidder 1 told him not to attend. Mr. Koch then granted Bidder
1’s request that it have private follow-up meetings with certain individual members
of senior management, including Mr. Johnson.
429. Goldman Sachs also set up due diligence meetings between Oxbow’s
senior management and another potential purchaser.
430. During this timeframe, Goldman Sachs also communicated with other
potential investors that had been referred to it by the Company and other Directors.
431. On May 9, 2016, the Company had another meeting of the Board of
Directors.

- 125 -

 432. At this meeting, Goldman Sachs updated the Directors on the Exit Sale
process, and mentioned that it would need a 2016 forecast and five-year
projections from the Company prior to launching a broad sales process.
433. During the meeting, the Company noted that it would prepare those
materials.
434. On May 27, 2016, and prior to the Company’s completion of its 2016
forecast and five-year projections, Bidder 1 submitted another Letter of Intent.
435.

a.

b.
c.
d.
436. On June 10, 2016 the Company had another meeting of the Board of
Directors to discuss the Bidder 1 Letter of Intent. At that meeting,

- 126 -

 437. Despite the improving market and the likelihood that a broad sale process
would result in higher valuations, Crestview indicated that it was willing to vote to
sign the Letter of Intent with no further revisions.
438. But because the Letter of Intent

, the Board of Directors, at the suggestion of Mr. Hurst,
decided to recess the meeting to June 14, 2016 in order to allow

439. As a result of statements made during the June 10, 2016 Board of
Directors meeting, unit holder OCMHI initiated litigation over a dispute
concerning the meaning of and compliance with the LLC Agreement’s Exit Sale
provisions. At that meeting, Mr. Volpert repeatedly asserted, as Crestview had
claimed since late January, that not every member needed to receive 1.5x its
investment from an Exit Sale and that Crestview could take control of the Exit Sale
process if the Company did not proceed to negotiate with Bidder 1 along the lines
demanded by Crestview.
440. Despite Crestview’s efforts to get

- 127 -

 441. Subsequent to the June 10, 2016 meeting, the Company terminated the
employment of Mr. Johnson, for

442. To date, Mr. Johnson has never challenged or disputed his termination
for
443. During the June 14, 2016 reconvened Board of Directors meeting,

Consequently, the Board of Directors, upon
Mr. Volpert’s motion,

444. Also during the June 14, 2016 meeting, Mr. Koch provided an overview
of the several reasons why Mr. Johnson had been terminated for
including a description of much of the conduct set forth herein. He also stated that
the termination was also due to a lack of trust he, as CEO, had in Mr. Johnson

- 128 -

 based on the fact that Mr. Johnson frequently withheld information from Mr. Koch
or affirmatively misrepresented facts to him.
445. Mr. Rosow added that Mr. Johnson’s performance as President had been
less than stellar with respect to

446. Mr. Koch also explained how he had traveled to the Company’s
operational headquarters in The Woodlands, Texas to measure the impact of Mr.
Johnson’s termination and interview potential internal candidates to assume some
of Mr. Johnson’s operational responsibilities.
447. He reported that morale in The Woodlands appeared unaffected by Mr.
Johnson’s termination and that no other employees threatened to leave or
expressed uncertainty with respect to the Company’s ability to continue its
operations in any way.
448. Consequently, the Board of Directors then voted to formally remove Mr.
Johnson as President. The Crestview Directors and the Load Line Director,
however, voted against his removal.
449. In order to further ensure that Mr. Johnson’s termination would have no
impact on the Company’s operations, Mr. Koch moved the Board of Directors to

- 129 -

 promote three of Mr. Johnson’s previous reports to the level of Executive Vice
President. The Board of Directors approved this motion.
450. On June 15, 2016, during the reconvened Board of Directors meeting,

451. Also during the June 15, 2016 meeting, Mr. Koch reported on a
conversation he had had with one of Bidder 1’s partners, including that he had
advised the Bidder 1 about the unit holder litigation and Mr. Johnson’s
termination.
452. In response, Bidder 1’s partner indicated that Bidder 1 was interested in
the Company and its business, that the litigation would not adversely impact its
interest, and that it was willing to wait until the litigation was resolved.
453. Also in response, Bidder 1’s partner made it clear that the Company’s
termination of Mr. Johnson did not make Bidder 1 any less interested, and that
Bidder 1 was comfortable with the heads of the operational business units who
were still in place.
454. Soon after Mr. Koch made this report to the Board of Directors, the
meeting was recessed until June 17, 2016

- 130 -

 455. Prior to reconvening the meeting on June 17, 2016,

456.

457.

458. But because the language that the Board of Directors was willing to
accept
, Crestview voted against sending the revised Letter of Intent back to
Bidder 1.

- 131 -

 459. Specifically, the Crestview Directors and the Load Line Director voted
against sending the revised Letter of Intent back to Bidder 1 because it did not
contain the following highlighted language:

460. Other than these highlighted words, the Crestview Directors and Load
Line Director voiced no other concern with any of the language in the revised
Letter of Intent.
461. By refusing to approve a revised Letter of Intent to be sent back to Bidder
1 because of a completely immaterial wording choice with respect to the
description of the unit holder litigation, Crestview demonstrated that it has no
legitimate concern that Bidder 1 is going to abandon its pursuit of the Company.
462. In addition, Crestview’s refusal to allow the Company to continue to
engage with Bidder 1 completely undercuts its attempts to claim that Mr. Koch and

- 132 -

 the Company are the ones who have acted in bad faith in not moving the Exit Sale
process forward.
463. On June 17, 2016,

464.
, Mr. Koch signed the revised
Letter of Intent on behalf of the Company and sent it to Bidder 1.
CLAIMS
Count I:
Breach of Contract against Crestview-Oxbow Acquisition, LLC
and Crestview-Oxbow (ERISA) Acquisition, LLC
465. Plaintiff repeats and realleges the allegations set forth above as if fully set
forth herein.
466. The LLC Agreement is a valid and binding contract.
467. The LLC Agreement was executed by Crestview-Oxbow Acquisition,
LLC, and Crestview-Oxbow (ERISA) Acquisition, LLC.

- 133 -

 468. For the reasons set forth above, Crestview-Oxbow Acquisition, LLC, and
Crestview-Oxbow (ERISA) Acquisition, LLC materially breached the LLC
Agreement.
469. The Company has suffered both irreparable harm and money damages as
a result of such breaches.
Count II:
Breach of the Covenant of Good Faith and Fair Dealing against CrestviewOxbow Acquisition, LLC and Crestview-Oxbow (ERISA) Acquisition, LLC
470. Plaintiff repeats and realleges the allegations set forth above as if fully set
forth herein.
471. The LLC Agreement is a valid and binding contract.
472. The LLC Agreement was executed by Crestview-Oxbow Acquisition,
LLC, and Crestview-Oxbow (ERISA) Acquisition, LLC.
473. The LLC Agreement executed by Crestview included express terms and
conditions and certain other terms and conditions which, although not formally
expressed, are implied by law, including the covenant of good faith and fair
dealing.
474. For the reasons set forth above, Crestview-Oxbow Acquisition, LLC, and
Crestview-Oxbow (ERISA) Acquisition, LLC breached the LLC Agreement’s
covenant of good faith and fair dealing.
- 134 -

 475. The Company has suffered both irreparable harm and money damages as
a result of such breaches.
Count III:
Breaches of Fiduciary Duties against Christina O’Donnell
476. Plaintiff repeats and realleges the allegations set forth above as if fully set
forth herein.
477. Defendant Christina O’Donnell served as a Director of Oxbow from
February 2014 until February 2016.
478. The LLC Agreement states that Directors of Oxbow shall owe Oxbow
fiduciary duties as if the Directors were Directors of a corporation organized under
the laws of Delaware.
479. Based on the allegations set forth above, Mrs. O’Donnell breached her
fiduciary duties to Oxbow.
480. The Company has suffered both irreparable harm and money damages as
a result of such breaches.
Count IV:
Breaches of Fiduciary Duties against Eric Johnson
481. Plaintiff repeats and realleges the allegations set forth above as if fully set
forth herein.

- 135 -

 482. Defendant Eric Johnson served as an officer of Oxbow at all relevant
times, and a Director of Oxbow from July 2014 until June 10, 2016.
483. The LLC Agreement states that Directors of Oxbow shall owe Oxbow
fiduciary duties as if the Directors were Directors of a corporation organized under
the laws of Delaware.
484. Based on the allegations set forth above, Mr. Johnson breached his
fiduciary duties to Oxbow.
485. The Company has suffered both irreparable harm and money damages as
a result of such breaches.
Count V:
Specific Performance: Clawback of LTIP Awards
and Compensation against Eric Johnson
486. Plaintiff repeats and realleges the allegations set forth above as if fully set
forth herein.
487. Defendant Eric Johnson received LTIP Awards pursuant to the
Company’s Long Term Incentive Plans (“LTIPs”) for years 2012-2014.
488. With respect to those awards, Mr. Johnson agreed – pursuant to standard
provisions in each year’s LTIP – that the Company could clawback any awards or
amounts paid or payable pursuant to or with respect to those awards if he was
terminated for
- 136 -

 489.
490.

491.

492. Consequently, the Company is entitled to clawback all awards and any
amounts paid or payable under those awards for award years 2012-2014.
Count VI:
Breaches of Fiduciary Duties against Barry Volpert
493. Plaintiff repeats and realleges the allegations set forth above as if fully set
forth herein.
494. Defendant Barry Volpert has served as a Director of Oxbow from May
2007 through the present date.
495. The LLC Agreement states that Directors of Oxbow shall owe Oxbow
fiduciary duties as if the Directors were Directors of a corporation organized under
the laws of Delaware.
496. Based on the allegations set forth above, Mr. Volpert breached his
fiduciary duties to Oxbow.
497. The Company has suffered both irreparable harm and money damages as
a result of such breaches.
- 137 -

 Count VII:
Breaches of Fiduciary Duties against Robert Hurst
498. Plaintiff repeats and realleges the allegations set forth above as if fully set
forth herein.
499. Defendant Robert Hurst has served as a Director of Oxbow from May
2007 through the present date.
500. The LLC Agreement states that Directors of Oxbow shall owe Oxbow
fiduciary duties as if the Directors were Directors of a corporation organized under
the laws of Delaware.
501. Based on the allegations set forth above, Mr. Hurst breached his fiduciary
duties to Oxbow.
502. The Company has suffered both irreparable harm and money damages as
a result of such breaches.
Count VIII:
Declaratory Judgment (Exit Sale Requirement)
503. Plaintiff repeats and realleges the allegations set forth above as if fully set
forth herein.
504. As set forth above, an actual controversy exists between Oxbow and
Defendants Crestview-Oxbow Acquisition, LLC, and Crestview-Oxbow (ERISA)
Acquisition, LLC over the meaning of the LLC Agreement’s Exit Sale provisions.
- 138 -

 505. One such controversy is whether an Exit Sale, which is defined as being a
“Transfer of all, but not less than all, of the then-outstanding Equity Securities of
the Company,” can occur without the transfer of all of the then-outstanding Equity
Securities of the Company.
506. Based on the allegations set forth above, Oxbow is entitled to a
declaration that an Exit Sale cannot occur unless there is a “Transfer of all, but not
less than all, of the then-outstanding Equity Securities of the Company.”
Count IX:
Declaratory Judgment (1.5x Threshold)
507. Plaintiff repeats and realleges the allegations set forth above as if fully set
forth herein.
508. As set forth above, an actual controversy exists between Oxbow and
Defendants Crestview-Oxbow Acquisition, LLC, and Crestview-Oxbow (ERISA)
Acquisition, LLC over the meaning of the LLC Agreement’s Exit Sale provisions.
509. Based on the allegations above, Oxbow is entitled to a declaratory
judgment that the LLC Agreement requires that the minimum per-unit price for an
Exit Sale is the greater of (a) the Fair Market Value, or (b) the per-unit price
required to ensure that all members receive from Exit Sale proceeds (when
combined with all prior distributions to each member) equal at least 1.5 times such
member’s aggregate Capital Contributions.
- 139 -

 Count X:
Declaratory Judgment (Treatment of Bidder 1 and Bidder 2)
510. Plaintiff repeats and realleges the allegations set forth above as if fully set
forth herein.
511. As set forth above, an actual controversy exists between Oxbow and
Defendants Crestview-Oxbow Acquisition, LLC, and Crestview-Oxbow (ERISA)
Acquisition, LLC over the meaning of the LLC Agreement’s Exit Sale provisions.
512. Based on the allegations above, Oxbow is entitled to a declaratory
judgment that the LLC Agreement does not obligate the Company to consider or
pursue any offer to purchase the Company from the investors Crestview secretly
solicited, negotiated with, or disclosed confidential information to, because such
offers resulted from a breach of the LLC Agreement, and would not be consistent
with the LLC Agreement’s requirements that the Exit Sale be a bona-fide and
arms’-length transaction, resulting from an “orderly sale” process initiated by the
Company’s investment bank.
Count XI:
Declaratory Judgment (Control of the Exit Sale)
513. Plaintiff repeats and realleges the allegations set forth above as if fully set
forth herein.

- 140 -

 514. As set forth above, an actual controversy exists between Oxbow and
Defendants Crestview-Oxbow Acquisition, LLC, and Crestview-Oxbow (ERISA)
Acquisition, LLC over the meaning of the LLC Agreement’s Exit Sale provisions.
515. Based on the allegations above, Oxbow is entitled to a declaratory
judgment that the LLC Agreement requires that the Company, through its Board of
Directors, has oversight and control of the Exit Sale process.
RELIEF REQUESTED
WHEREFORE, Oxbow requests that the Court issue:
a. A judicial declaration that Crestview-Oxbow Acquisition, LLC, and
Crestview-Oxbow (ERISA) Acquisition have forfeited their rights to
require other members to participate in an Exit Sale because of their
material breaches of the LLC Agreement’s Exit Sale provisions and
because of their (and their agents’) other inequitable conduct and
breaches of fiduciary duty, or, in the alternative, that because
Crestview and its agents corrupted the Put Right financing and then
the Exit Sale process, the Company’s only obligation to accommodate
their exit is through a redemption of their equity that is subject to the
Delaware common law limitations on redemptions of equity as set
forth in this Court’s decision in SV Inv. Partners, LLC v.
- 141 -

 ThoughtWorks, Inc., 7 A.3d 973, 985-986 (Del. Ch. 2010), aff’d, 37
A.3d 205 (Del. 2011);
b. A judicial declaration that an Exit Sale cannot occur without the
participation of all of the Company’s members;
c. A judicial declaration that the LLC Agreement requires that the
minimum per-unit price for an Exit Sale is the greater of (a) the Fair
Market Value, or (b) the per-unit price required to ensure that each
member receives from Exit Sale proceeds (when combined with all
prior distributions to each member) at least 1.5 times such member’s
aggregate Capital Contributions;
d. A judicial declaration that the LLC Agreement does not require the
Company to consider or pursue any offer to purchase the Company
from the investors Crestview or the Crestview Directors secretly
solicited, negotiated with, or disclosed confidential information to,
because such offers would not be consistent with the LLC
Agreement’s requirements that the Exit Sale be controlled by the
Company; be a bona-fide and arms’-length transaction; result from an
“orderly sale” process; and result from a sales process “initiate[d]” by
the Company’s investment bank.
- 142 -

 e. A judicial declaration that the Company controls the Exit Sale
process, and, accordingly, permanently enjoining Crestview from
contacting, soliciting, or negotiating with potential purchasers, or
disclosing confidential Company information, other than as expressly
authorized by Board resolution;
f. An order that the April 30, 2015 Unit Rights Agreement between the
Company and Eric P. Johnson is null and void, and that the Company
can clawback any awards or compensation paid or payable with
respect to those awards, and an order permitting the Company to
clawback any awards or compensation paid or payable with respect to
awards associated with Mr. Johnson’s LTIPs from 2012 through 2014;
g. Damages and disgorgement in amounts to be determined at trial
resulting from the breaches of duty, breaches of contract, breaches of
the covenant of good faith and fair dealing, and breaches of loyalty set
forth herein;
h. An award of costs and expenses, including reasonable attorneys’ fees,
incurred by the Company in connection with this action; and
i. Other such and further relief that the Court deems necessary or
appropriate.
- 143 -

 MORRIS NICHOLS ARSHT & TUNNELL LLP

/s/ Thomas W. Briggs, Jr.
Kenneth J. Nachbar (#2067)
Thomas W. Briggs, Jr. (#4076)
Lindsay M. Kwoka (#5772)
Richard Li (#6051)
1201 N. Market Street
P.O. Box 1347
Wilmington, DE 19899-1347
(302) 658-9200
Attorneys for Plaintiff
OF COUNSEL:
R. Robert Popeo, Esq.
Michael S. Gardener, Esq.
Breton Leone-Quick, Esq.
MINTZ, LEVIN, COHN,
FERRIS, GLOVSKY &
POPEO, P.C.
One Financial Center
Boston, MA 02111
(617) 542-6000
RRPopeo@mintz.com
MSGardener@mintz.com
Bleone-quick@mintz.com
(Pro hac vice applications
forthcoming)
June 28, 2016

- 144 -

 CERTIFICATE OF SERVICE
I hereby certify that on July 1, 2016 a copy of the foregoing document
was served by File & Serve Xpress on the following attorneys of record:
Steven C. Norman, Esq.
Jaclyn C. Levy, Esq.
POTTER ANDERSON & CORROON LLP
Hercules Plaza
1313 North Market Street, 6th Floor
Wilmington, DE 19801
J. Clayton Athey, Esq.
John G. Day, Esq.
PRICKETT, JONES & ELLIOT, P.A.
1301 N. King Street
Wilmington, DE 19801
Brock E. Czeschin, Esq.
Matthew D. Perri, Esq.
Sarah A. Galetta, Esq.
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square
920 North King Street
Wilmington, DE 19801
Kevin G. Abrams, Esq.
J. Peter Shindel, Jr., Esq.
Daniel R. Ciarrocki, Esq.
April M. Ferraro, Esq.
ABRAMS & BAYLISS LLP
20 Montchanin Road, Suite 200
Wilmington, DE 19807

/s/ Richard Li
Richard Li (#6051)