EXHIBIT (a)(5)(ii)
IN THE CIRCUIT COURT FOR GREENE COUNTY, TENNESSEE
JOHN PIAZZA, On Behalf of Himself ) Case No. 02cv824
and All Others Similarly Situated, )
)
Plaintiff, )
) CLASS ACTION
)
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 John Piazza ("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.
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30. Unless the Proposal is enjoined by the Court, the defendants
will continue to 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
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.
--------------------------------
SCHIFFRIN & BARROWAY, LLP
Marc A. Topaz
Three Bala Plaza East, Suite 400
Telephone: (610) 667-7706
Fax: (610) 667-7056
--------------------------------
PAUL KENT BRAMLETT
BRAMLETT LAW OFFICES
P. O. Box 150734
Nashville, TN 37215
(615) 248-2882
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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
JOHN PIAZZA )
)
Plaintiff(s) )
)
vs. ) No. _________
)
LANDAIR CORPORATION et al. )
)
Defendant(s) )
COST BOND
I, JOHN PIAZZA, 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/ JOHN PIAZZA
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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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