The City Of Pontiac General Employees’ Retirement System lodged the legal action in Davidson County Chancery Court today. It seeks to act on behalf of all owners of the company's more than 15 million shares. Named as defendants along with the company are directors Michael S. Hyatt (CEO of Nelson), Brownlee O. Currey, Jr., W. Lipscomb Davis, Jr., Sam Moore (the company's founder), S. Joseph Moore, Millard V. Oakley and Ronald W. Blue. Jerry Martin of Barrett, Johnston & Parsley in Nashville is representing the plaintiffs.
The lawsuit asserts that equity fund Intermedia Partners VII is not paying a high enough premium to take the company private. The plaintiffs object to what they term "draconian and improper mechanisms" in the merger agreement, "including a no-shop clause and a multi-million dollar termination fee of $14 million plus expenses up to $2.5 million."
The filing also cites as excessive the pay and perks extended to founder Sam Moore in the deal, including a large cash payout, the right to buy his company car at cost and the right to buy the company's share in a corporate aircraft.
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