EXHIBIT(a)(5)(i)
IN THE CIRCUIT COURT FOR GREENE COUNTY, TENNESSEE
DAN PATTON, On Behalf of Himself and ) Case No. 02cr823
All Others Similarly Situated, )
)
Plaintiff, )
) CLASS ACTION
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vs. )
)
LANDAIR CORPORATION, SCOTT M. )
NISWONGER, JOHN A. TWEED, JERRY )
A. ARMSTRONG, C. JOHN LANGLEY, )
JR., ANDREW J. MANTEY, COURTNEY ) DEMAND FOR JURY TRIAL
J. MUNSON, AND RICHARD H. ---------------------
ROBERTS, )
)
)
Defendants. )
COMPLAINT FOR BREACH OF FIDUCIARY DUTY
Plaintiff, by his attorneys, alleges upon information and belief,
except as to paragraph 2 which is alleged upon personal knowledge, as follows:
INTRODUCTION
1. This is a class action on behalf of the public stockholders of
Landair Corporation ("Landair" or the "Company") against Landair and its Board
of Directors arising out of a buy-out proposal received from defendants Scott M.
Niswonger, the Company's Chairman of the Board and Chief Executive Officer, and
John A. Tweed, the Company's President and Chief Operating Officer
(collectively, the "Buyout Group"), to purchase all of the outstanding shares of
common stock of Landair not already owned by them for $13.00 per share (the
"Proposal").
THE PARTIES
2. Plaintiff Dan Patton ("Plaintiff") is the owner of common
stock of Landair and has been the owner of such shares prior to the wrongs
complained of herein.
3. Defendant Landair is a corporation duly existing and organized
under the laws of the State of Tennessee, with its principal offices located at
430 Airport Road, Greeneville, Tennessee. Landair is an irregular route
truckload carrier that transports a wide range of commodities in both intrastate
and interstate commerce. The Company provides dry van common carrier and
dedicated contract carriage for shippers of a variety of products, such as air
freight, automotive parts and supplies, and electronics in the medium and
short-haul markets. As of July 31, 2002, Landair had approximately 4.9 million
shares of common stock outstanding.
4. Defendant Scott M. Niswonger ("Niswonger") is and at all times
relevant hereto was Chairman of the Board and Chief Executive Officer of
Landair. Niswonger beneficially owns approximately 58% of the outstanding shares
of the common stock of Landair.
5. Defendant John A. Tweed ("Tweed") is and at all times relevant
hereto was President, Chief Operating Officer and a director of Landair. Tweed
beneficially owns approximately 13% of the outstanding shares of the common
stock of Landair. The Buyout Group collectively owns approximately 71% of
Landair.
6. Defendant Andrew J. Mantey is and at all times relevant hereto
was Senior Vice President, Chief Financial Officer, Treasurer and a director of
Landair.
7. Defendant Richard H. Roberts ("Roberts") is and at all times
relevant hereto was Senior Vice President, General Counsel, Secretary and a
director of Landair. Roberts beneficially owns approximately 7% of the
outstanding shares of the common stock of Landair.
8. Defendants Jerry A. Armstrong, C. John Langley, Jr., and
Courtney J. Munson are and at all relevant times have been directors of Landair.
9. The defendants in paragraph 4 through 8 are collectively
referred to herein as the "Individual Defendants."
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FIDUCIARY DUTIES OF THE INDIVIDUAL DEFENDANTS
10. By reason of the above Individual Defendants' positions with
the Company as officers and/or directors, and especially Niswonger, as the
majority shareholder, said individuals are in a fiduciary relationship with
plaintiff and the other public stockholders of Landair and owe plaintiff and the
other members of the Class a duty of highest good faith, fair dealing, loyalty
and full, candid and adequate disclosure.
11. Each of the Individual Defendants if required to act in good
faith, in the best interests of a corporation's shareholders and with such care,
including reasonable inquiry, as would be expected of an ordinarily prudent
person. In a situation where the directors of a publicly traded company
undertake a transaction that may result in a change in corporate control
(particularly when it involves a decision to eliminate the shareholders' equity
investment in a company), the Tennessee state law requires the directors to take
all steps reasonably required to maximize the value shareholders will receive
rather than use a change of control to benefit themselves. To diligently comply
with this duty, the directors of a corporation may not take any action that:
a. adversely affects the value provided to the
corporation's shareholders;
b. contractually prohibits them from complying with or
carrying out their fiduciary duties;
c. discourages or inhibits alternative offers to
purchase control of the corporation or its assets; or
d. will otherwise adversely affect their duty to search
and secure the best value reasonably available under the circumstances for the
corporation's shareholders.
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12. As described herein, the Individual Defendants have breached
their fiduciary duties.
CLASS REPRESENTATION ALLEGATIONS
13. Plaintiff brings this action on his own behalf and as a class
action, pursuant to Tenn. Civ. Proc. Rule 23 on behalf of himself and holders of
Landair common stock (the "Class"). Excluded from the Class are defendants
herein and any person, firm, trust, corporation or other entity related to or
affiliated with any of the defendants.
14. This action is properly maintainable as a class action.
15. The Class is so numerous that joinder of all members if
impracticable. As of July 31, 2002, there were 4.9 million shares of common
stock outstanding, held by hundreds of beneficial holders.
16. There are questions of law and fact which are common to the
Class and which predominate over questions affecting any individual Class
members, including the following:
a. whether defendants have breached their fiduciary and other
common law duties owed by them to plaintiff and the other members of
the Class; and
b. whether the Class is entitled to injunctive relief or
damages as a result of the wrongful conduct committed by the
defendants.
17. Plaintiff is committed to prosecuting this action and has
retained competent counsel experienced in litigation of this nature. Plaintiff's
claims are typical of the claims of the other members of the Class and plaintiff
has the same interests as the other members of the Class. Accordingly, plaintiff
is an adequate representative of the Class and will fairly and adequately
protect the interests of the Class.
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18. Plaintiff anticipates that there will be no difficulty in the
management of this litigation.
19. Defendants have acted on grounds generally applicable to the
Class with respect to the matters complained of herein, thereby making
appropriate the relief sought herein with respect to the Class as a whole.
SUBSTANTIVE ALLEGATIONS
20. Landair is an irregular route truckload carrier that
transports a wide range of commodities in both intrastate and interstate
commerce. In November 1993, Landair had its initial public offering at $14.00
per share.
21. On or about October 11, 2002, Landair issued a press release
entitled "Landair Corporation Announces Receipt of Buy-Out Proposal." The press
release stated in part:
Landair Corporation today announced that it has received a
buy-out proposal from Scott M. Niswonger, its Chairman of the
Board and Chief Executive Officer, and John A. Tweed, its
President and Chief Operating Officer. Under the proposal, as
set forth in a letter to Landair's Board of Directors, Messrs.
Niswonger and Tweed would acquire all of the outstanding
shares of common stock of Landair not already owned by them
for $13.00 per share payable in cash, a price that represents
and approximate 25% premium over the closing price of
Landair's common stock on NASDAQ on Thursday, October 10,
2002. Messrs. Niswonger and Tweed currently own approximately
58% and 13% of the outstanding shares of Landair,
respectively. In their letter, Messrs. Niswonger and Tweed
indicated that their offer is contingent upon their ability to
arrange suitable financing for the transaction.
22. Actually, the Proposal price if merely 13% above where the
stock was trading just three weeks prior to the announcement.
23. Under the terms of the Proposal, while plaintiff and the other
public common stock holders will be entirely cashed out, the Buyout Group will
receive disparate consideration (continued ownership) for their interests in the
Company than the public shareholders.
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24. The announcement of the Proposal was timed to freeze out
Landair's public shareholders in order to capture for the Buyout Group Landair's
future potential without paying as adequate or fair price to the Company's
public shareholders.
25. The announcement of the Proposal was timed to place an
artificial lid on the market price of Landair's stock so that the market would
not reflect Landair's improving potential, thereby purporting to justify an
unreasonably low price.
26. The Buyout Group has access to internal financial information
about Landair, its true value, expected increase in true value and the benefits
of continued ownership of Landair to which plaintiff and the Class members are
not privy. The Buyout Group is using such inside information to benefit itself
in this transaction to the detriment of Landair's public stockholders.
27. The Individual Defendants have purportedly initiated an active
sales process and, thus, have assumed enhanced duties to maximize shareholder
value. Prior to agreeing to sell the Company, however, the Buyout Group's desire
to participate in the transaction precluded a bona fide market check or auction
of the Company.
28. The Buyout Group, including the defendants named herein, has
clear and material conflict of interest and is acting to better its own
interests at the expense of Landair's public shareholders.
29. The Buyout Group, with the acquiescence of the directors of
Landair, is engaging in self-dealing and not acting in good faith toward
plaintiff and the other members of the Class. By reason of the foregoing, the
defendants have breached and are breaching their fiduciary duties to the members
of the Class in not acting to maximize shareholder value in a change of control
transaction.
30. Unless the Proposal is enjoined by the Court, the defendants
will continue to
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breach their fiduciary duties owed to plaintiff and the members of the Class to
the irreparable harm of the members of the Class.
31. Plaintiff and the Class have no adequate remedy at law.
CAUSE OF ACTION
BREACH OF FIDUCIARY DUTIES AGAINST ALL DEFENDANTS
32. Plaintiff repeats and realleges each allegation set forth
herein.
33. The Individual Defendants were and are under a duty:
a. to fully inform themselves of the market value of
Landair before taking, or agreeing to refrain from taking, action;
b. to act in the interests of the equity owners;
c. to maximize shareholder value;
d. to obtain the best financial and other terms when the
Company's independent existence will be materially altered by a transaction;
e. to act in accordance with their fundamental duties of
due care and loyalty; and
f. to fully disclose all material terms of the Proposal.
34. By the acts, transactions and courses of conduct alleged
herein, defendants, individually and as part of a common plan and scheme, or in
breach of their fiduciary duties to plaintiff and the other members of the
Class, are implementing and abiding by a process that will deprive plaintiff and
other members of the Class of the true value of their investment in Landair.
35. By reason of the foregoing acts, practices and course of
conduct, the defendants failed to exercise ordinary care and diligence in the
existence of their fiduciary obligations toward plaintiff and Landair's other
public stockholders.
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36. The defendants are not acting in good faith toward plaintiff
and the other members of the Class, and have breached and are continuing to
breach their fiduciary duties to plaintiff and the members of the Class.
37. As a result of the defendant's unlawful actions, plaintiff and
the other members of the Class will be irreparably harmed in that they will not
receive fair value for Landair's assets and business. Unless the defendants'
actions are enjoined by the Court, the defendants will continue to breach their
fiduciary duties owed to plaintiff and the members of the Class, and will engage
in a process that inhibits the maximization of shareholder value.
WHEREFORE, plaintiff prays for judgment and relief as follows:
A. Ordering that this action may be maintained as a class action
and certifying plaintiff as the Class representative;
B. Preliminarily and permanently enjoining defendants and all
persons acting in concert with them, from proceeding with, consummating or
closing the proposed transaction;
C. In the event the proposed buyout is consummated, rescinding it
and setting it aside or awarding rescissory damages to the Class;
D. Awarding plaintiff the costs of this action, including
reasonable allowance for plaintiff's attorneys' and experts' fees;
E. Granting such other and further relief as this Court may deem
just and proper.
JURY DEMAND
Plaintiff hereby demands a trial by jury.
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DATED: October 11, 2002.
GAULEY GELLER BOWMAN &
COATES, LLP
HOWARD K. COATES, JR.
JONATHAN M. STEIN
One Boca Place, Suite 421A
2255 Glades Road
Boca Raton, FL 33431
Telephone: 561/750-3000
PAUL KENT BRAMLETT
BRAMLETT LAW OFFICES
P. O. Box 150734
Nashville, TN 37215
(615) 248-2882
TIMOTHY HOUSHOLDER
GILREATH & ASSOCIATES
550 Main Avenue, Suite 600
Knoxville, TN 37902
(865) 637-2442
Attorneys for Plaintiff
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IN THE CIRCUIT COURT FOR GREENE COUNTY, TENNESSEE
DAN PATTON )
)
Plaintiff(s) )
)
vs. ) No. _________
)
LANDAIR CORPORATION et al. )
)
Defendant(s) )
COST BOND
I, DAN PATTON, as Principal(s) and GILBREATH & ASSOCIATES as Surety,
are held and firmly bound unto the Circuit Court Clerk of Greene County,
Tennessee for the payment of all costs awarded against the principal. To that
end, we bind ourselves, our heirs, executors and administrators.
The Principal(s) is/are commencing legal proceeding in the Circuit
Court of Greene County, Tennessee. If the Principal(s) shall pay all costs which
are adjudged against them then this obligation is void. If the Principal(s) fail
to pay then the surety shall undertake to pay all costs adjudged against the
Principal(s). Mandated at T.C.A. ss.20-12-120 et seq.
PRINCIPAL(S)
/s/ DAN PATTON
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Principal Principal
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Address Address
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Employer Employer
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Employer's Address Employer's Address
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SURETY
GILREATH & ASSOCIATES 550 Main Avenue, Suite 600
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SURETY
Knoxville, TN 37902
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SIGNATURE OF SURETY Address
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