Exhibit (a)(1)(PPP)
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
DOLPHIN LIMITED PARTNERSHIP I, L.P., :
RAMESH MEHAN, RENEE MEHAN, RENEE MEHAN IRA, :
SAROJ MEHAN, MANEESCH MEHAN, RAHUL MEHAN, :
JOEL MEHAN, LAJIA MEHAN, DARSHAN MEHAN IRA, : Civil Action
DARSHAN MEHAN (ROLLOVER IRA), ARSH N. MEHAN, : No. 20101
ARSH N. MEHAN (ROTH IRA), ASHOK K. MEHAN, :
ASHOK K. MEHAN IRA, ROBERT M. MILES, and :
GUILLERMO MARTI, :
:
Plaintiffs, :
:
v. :
:
NCS ACQUISITION CORP. and OMNICARE, INC., :
:
Defendants. :
NOTICE OF MOTION
TO: Donald J. Wolfe, Jr., Esquire
Potter Anderson & Corroon LLP
1313 North Market Street
Wilmington, DE 19801
PLEASE TAKE NOTICE that plaintiffs will present the attached motion for
temporary restraining order to the Court at the earliest convenience of the
Court and counsel.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Joseph A. Rosenthal
--------------------------------
Suite 1401, 919 N. Market Street
P.O. Box 1070
Wilmington, DE 19899
(302) 656-4433
CHIMICLES & TIKELLIS LLP
One Rodney Square
Wilmington, DE 19899
(302) 656-2500
Attorneys for Plaintiffs
OF COUNSEL:
LOWEY DANNENBERG BEMPORAD & SELINGER, P.C.
The Gateway
One N. Lexington Avenue
White Plains, NY 10601
BEATIE and OSBORN
34th FLOOR
521 Fifth Avenue
New York, NY 10175
CAULEY GELLER BOWMAN & COATES, LLP
One Boca Place
2255 Glades Road, Suite 421A
Boca Raton, FL 33431
(561) 750-3000
SCHIFFRIN & BARROWAY, LLP
Three Bala Plaza East, Suite 400
Bala Cynwyd, PA 19004
(610) 667-7706
WOLF HALDENSTEIN ADLER FREEMAN & HERZ
270 Madison Avenue
New York, NY 10016
(212) 545-4600
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
DOLPHIN LIMITED PARTNERSHIP I, L.P., :
RAMESH MEHAN, RENEE MEHAN, RENEE MEHAN IRA, :
SAROJ MEHAN, MANEESCH MEHAN, RAHUL MEHAN, :
JOEL MEHAN, LAJIA MEHAN, DARSHAN MEHAN IRA, : Civil Action
DARSHAN MEHAN (ROLLOVER IRA), ARSH N. MEHAN, : No. 20101
ARSH N. MEHAN (ROTH IRA), ASHOK K. MEHAN, :
ASHOK K. MEHAN IRA, ROBERT M. MILES, and :
GUILLERMO MARTI, :
:
Plaintiffs, :
:
v. :
:
NCS ACQUISITION CORP. and OMNICARE, INC., :
:
Defendants. :
MOTION FOR TEMPORARY RESTRAINING ORDER
Plaintiffs hereby move the Court for an Order (1) temporarily restraining
defendants NCS Acquisition Corp. ("NCS Acquisition") and Omnicare, Inc.
("Omnicare") and their agents and affiliates from paying out or distributing
$13.5 million (the "escrow fund") of the monies they would otherwise pay or
distribute to the shareholders of NCS Healthcare, Inc. ("NCS") to acquire all
outstanding NCS stock pursuant to an Agreement and Plan of Merger by and among
Omnicare, NCS Acquisition and NCS dated December 17, 2002 ("Merger Agreement"),
pending this Court's determination of the application of plaintiffs and their
counsel for an allowance of attorneys' fees and reimbursement of expenses in the
related litigation, In Re NCS Healthcare, Inc. Shareholders Litigation, Cons.
C.A. No. 19786 (the "Shareholders Action"), and (2) requiring NCS Acquisition
and Omnicare to deposit the escrow fund in an interest bearing account to be
drawn upon only pursuant to further Order of this Court.
The grounds for this motion, which are more fully set forth in the
Affidavit of Joseph A.
Rosenthal and plaintiffs' supporting memorandum of law filed herewith are that
(a) plaintiffs' prosecution of C.A. No. 19786 benefitted NCS shareholders
thereby entitling plaintiffs and their counsel to an allowance of attorneys'
fees and expenses, (b) the monies to be paid out and distributed to NCS
shareholders in payment for NCS shares pursuant to the Merger Agreement
constitutes a common fund from which any attorneys' fees and expenses would be
paid, and (3) immediate relief is necessary to preserve the escrow fund for
payment of any allowance of attorneys' fees and expenses the Court may grant.
WHEREFORE, plaintiffs respectfully request the Court to enter an Order in
the form attached hereto as Exhibit A.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Joseph A. Rosenthal
-----------------------------------
Suite 1401, 919 N. Market Street
P.O. Box 1070
Wilmington, DE 19899
(302) 656-4433
CHIMICLES & TIKELLIS LLP
One Rodney Square
Wilmington, DE 19899
(302) 656-2500
Attorneys for Plaintiffs
OF COUNSEL:
LOWEY DANNENBERG BEMPORAD & SELINGER, P.C.
The Gateway
One N. Lexington Avenue
White Plains, NY 10601
BEATIE and OSBORN
34th FLOOR
521 Fifth Avenue
New York, NY 10175
CAULEY GELLER BOWMAN & COATES, LLP
One Boca Place
2255 Glades Road, Suite 421A
Boca Raton, FL 33431
(561) 750-3000
SCHIFFRIN & BARROWAY, LLP
Three Bala Plaza East, Suite 400
Bala Cynwyd, PA 19004
(610) 667-7706
WOLF HALDENSTEIN ADLER FREEMAN & HERZ
270 Madison Avenue
New York, NY 10016
(212) 545-4600
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTRY
<Table>
DOLPHIN LIMITED PARTNERSHIP I, L.P., :
RAMESH MEHAN, RENEE MEHAN, RENEE MEHAN IRA, :
SAROJ MEHAN, MANEESCH MEHAN, RAHUL MEHAN, :
JOEL MEHAN, LAJIA MEHAN, DARSHAN MEHAN IRA, : Civil Action
DARSHAN MEHAN (ROLLOVER IRA), ARSH N. MEHAN, : No. 20101
ARSH N. MEHAN (ROTH IRA), ASHOK K. MEHAN, :
ASHOK K. MESHAN IRA, ROBERT M. MILES and :
GUILLERMO MARTI, :
:
Plaintiffs, :
:
v. :
:
NCS ACQUISITION CORP. and OMNICARE, INC., :
Defendants.
</Table>
O R D E R
Plaintiffs having moved the Court for a Temporary Restraining Order, for the
reasons stated on the record on , 200 ,
IT IS this day of , 200 , ORDERED as
follows:
1. Defendants NCS Acquisition Corp. ("NCS Acquisition") and Omnicare, Inc.
("Omnicare") and their directors, officers, agents, servants, employees,
attorneys, parents and subsidiaries are hereby temporarily restrained and
enjoined from paying to the shareholders of NCS Healthcare, Inc. ("NCS") the sum
of $ (the "escrow fund") in connection with the closing of defendants'
pending tender offer for the stock of NCS
and related merger, pursuant to the Agreement and Plan of Merger by and among
Omnicare, NCS Acquisition Corp. and NCS dated December 17, 2002.
2. The escrow fund shall be withheld by proration among all NCS shares NCS
Acquisition and Omnicare acquire in the tender offer and merger, i.e., the same
amount shall be withheld from payment for each NCS share acquired pursuant to
the tender offer and merger.
3. NCS Acquisition and Omnicare shall deposit the escrow fund in an interest
bearing escrow account pending further Order of this Court.
4. This Temporary Restraining Order shall be effective only upon the posting
of a bond without surety by plaintiffs in the sum of $ for such
costs and damages as may be incurred or suffered by any party who is found to
have been wrongfully enjoined or restrained.
-----------------------------------
Vice Chancellor
2
CERTIFICATE OF SERVICE
I, Joseph A. Rosenthal, Esquire, do hereby certify that on this 27th day of
December, 2002, I caused copies of the foregoing document to be served via hand
delivery upon:
Donald J. Wolfe, Jr., Esquire
Potter Anderson & Corroon LLP
1313 North Market Street
Wilmington, DE 19801
/s/ Joseph A. Rosenthal
-------------------------------
Joseph A. Rosenthal
cc: Edward B. Welch, Esquire
David C. McBride, Esquire
Elizabeth Ann Brown, Esquire
Jon E. Abramczyk, Esquire
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
DOLPHIN LIMITED PARTNERSHIP I, L.P., :
RAMESH MEHAN, RENEE MEHAN, RENEE MEHAN IRA, :
SAROJ MEHAN, MANEESCH MEHAN, RAHUL MEHAN, :
JOEL MEHAN, LAJIA MEHAN, DARSHAN MEHAN IRA, : Civil Action
DARSHAN MEHAN (ROLLOVER IRA), ARSH N. MEHAN, : No. 20101
ARSH N. MEHAN (ROTH IRA), ASHOK K. MEHAN, :
ASHOK K. MEHAN IRA, ROBERT M. MILES and :
GUILLERMO MARTI, :
:
Plaintiffs, :
:
v. :
:
NCS ACQUISITION CORP. and OMNICARE, INC., :
:
Defendants. :
AFFIDAVIT OF JOSEPH A. ROSENTHAL
IN SUPPORT OF APPLICATION
FOR A TEMPORARY RESTRAINING ORDER
STATE OF DELAWARE )
) ss.:
COUNTY OF NEW CASTLE )
Joseph A. Rosenthal, being sworn, deposes and says:
1. I am a member of Rosenthal, Monhait, Gross & Goddess, P.A., one of
plaintiffs' counsel in this action and in related litigation in this Court
entitled "In re NCS Healthcare, Inc. Shareholders Litigation," Consolidated C.A.
No. 19786 (the "Shareholders Action"). I submit this affidavit in support of
plaintiffs' application for a temporary restraining order restraining defendants
from paying or distributing the sum of $13,500,000 to the shareholders of NCS
Healthcare, Inc. ("NCS") in connection with the acquisition of NCS by defendant
Omnicare, Inc. ("Omnicare") pursuant to the Agreement and Plan of Merger by and
among Omnicare, NCS Acquisition Corp. and NCS dated December 17, 2002, so that a
fund is available to pay the fees and expenses of plaintiffs' attorneys whose
services in the Shareholders Action benefitted NCS' shareholders.
2. The Shareholders Action resulted in an injunction barring the proposed
acquisition by Genesis Health Ventures, Inc. ("Genesis") of all of the
outstanding common stock of NCS through a merger agreement and related Voting
Agreements with the controlling stockholders of NCS, Jon H. Outcalt and Kevin
Shaw. Each of those agreements was dated as of July 28, 2002 (collectively, the
"Genesis Merger Agreements") and provided that the stockholders of NCS would
receive 0.1 share of Genesis common stock worth about $1.60 per NCS share. As
a direct result of the entry by the Delaware Supreme Court of an Order on
December 10, 2002 on an appeal from the November 22, 2002 decision of this Court
in the Shareholders Action, the Genesis Merger Agreements were enjoined, a
bidding contest for NCS ensued and NCS entered into the Agreement and Plan of
Merger with Omnicare and its wholly owned subsidiary, NCS Acquisition Corp.
(collectively, "Omnicare") for NCS to be acquired at a price of $5.50 cash per
share (the "Acquisition") -- approximately $102 million (340%) more than the
$1.60 per NCS share consideration in the Genesis Merger Agreements. The
Acquisition is being accomplished through a tender offer scheduled to expire at
12:00 midnight (EST) on January 7, 2002 (the "Tender Offer"), to be followed by
a merger to acquire any NCS
shares that remain outstanding.
3. This affidavit, together with the accompanying memorandum of law, is
submitted in support of plaintiffs' application for a temporary restraining
order in this action.
4. Plaintiffs and their counsel do not complain of the Acquisition, but
only seek a temporary restraining order requiring defendants to withhold
$13,500,000 from the monies which defendants would otherwise pay out or
distribute to NCS stockholders, until the right of plaintiffs and their counsel
to an award of attorneys' fees and reimbursement of expenses can be determined
by this Court. Omnicare has represented in its offering materials for the Tender
Offer that it will be purchasing 26,233,391 NCS shares in the Acquisition.
Accordingly, the amount sought to be withheld is less than $.52 per share, about
13% of the $102 million benefit achieved for the NCS stockholders through the
successful prosecution of the Shareholders Action (the "common fund").
Plaintiffs will be filing a motion for determination of attorneys' fees and
expenses shortly.
5. Plaintiffs' counsel have communicated with counsel for NCS, its
directors and Omnicare seeking payment for the fees and expenses of plaintiffs'
counsel in an effort to avoid the necessity for this action and the restraining
order plaintiffs seek. Those communications have not obviated the need for this
application.
6. Plaintiffs and their counsel will suffer imminent and irreparable injury
if this application is denied. Despite the direct and substantial benefits
conferred upon the shareholders of
NCS in the Shareholders Action, if this application is denied and the Court
determines that the common fund is the sole source of payment of an award to
plaintiffs' counsel, counsel would be put in the untenable position of having to
attempt to collect those fees and expenses from thousands of geographically
dispersed shareholders. Such an approach might well deny counsel any fee at all
and would be highly inequitable, in view of the total success achieved in the
Shareholders Action and the creation of a fund exceeding $102 million for the
benefit of the NCS stockholders.
7. Moreover, no harm will be incurred by defendants if this application is
granted. Omnicare will be able to complete its Acquisition and acquire NCS.
Defendants will simply be required to withhold a small portion of the aggregate
payment until counsels' entitlement to fees and expenses has been determined by
this Court.
8. In addition, the NCS shareholders will not suffer any detriment as any
money withheld which this Court determines should not be awarded to plaintiffs'
counsel can be distributed promptly to the shareholders. Thus, the imminent and
irreparable harm to counsel clearly outweighs the slight inconvenience which may
be incurred by defendants or the NCS shareholders.
9. The urgency surrounding this application and requiring the immediate
relief requested herein is an outgrowth of the timing of the Acquisition.
Omnicare has publicly represented that the holders of most of the outstanding
shares of NCS have tendered to Omnicare. That Tender Offer is scheduled to close
on January 7,
2003, with payment to be made promptly thereafter. Omnicare has further
represented that it hopes to complete the Acquisition through a short-form or
other merger as soon as practicable after the expiration of the Tender Offer.
10. Without the relief sought herein, defendants can (and probably will)
distribute the Tender Offer proceeds to NCS shareholders shortly after January
7, 2003, potentially leaving plaintiffs' counsel with no alternative practical
means of being paid compensation or reimbursed expenses. Defendants may, on
behalf of themselves and as successor in interest to NCS, deny any liability or
obligation to pay fees or reimburse expenses to plaintiffs' counsel. Therefore,
the common fund created through the efforts of plaintiffs' counsel may be the
only source from which plaintiffs' counsel can obtain payment of fees and
expenses.
11. For the foregoing reasons, I respectfully request that the temporary
restraining order be granted in all respects.
/s/ Joseph A. Rosenthal
--------------------------------------
Joseph A. Rosenthal
SWORN TO AND SUBSCRIBED
BEFORE ME this 27th day
of December, 2002.
/s/ Mary C. McMonigal
- ----------------------------------
Notary Public
MARY C. McMONIGAL
NOTARY PUBLIC
STATE OF DELAWARE
My Commission Expires May 11, 2005
CERTIFICATE OF SERVICE
I, Joseph A. Rosenthal, Esquire, do hereby certify that on this 27th day of
December, 2002, I caused copies of the foregoing document to be served via hand
delivery upon:
Donald J. Wolfe, Jr., Esquire
Potter Anderson & Corroon LLP
1313 North Market Street
Wilmington, DE 19801
/s/ Joseph A. Rosenthal
----------------------------------
Joseph A. Rosenthal
cc: Edward B. Welch, Esquire
David C. McBride, Esquire
Elizabeth Ann Brown, Esquire
Jon E. Abramczyk, Esquire
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
<Table>
- -----------------------------------------------X
DOLPHIN LIMITED PARTNERSHIP I, L.P.,
RAMESH MEHAN, RENEE MEHAN, RENEE MEHAN IRA, :
SAROJ MEHAN, MANEESCH MEHAN, RAHUL MEHAN, Civil Action
JOEL MEHAN, LAJIA MEHAN, DARSHAN MEHAN IRA, : No. 20101
DARSHAN MEHAN (ROLLOVER IRA), ARSH N. MEHAN,
ARSH N. MEHAN (ROTH IRA), ASHOK K. MEHAN, :
ASHOK K. MESHAN IRA, ROBERT M. MILES and
GUILLERMO MARTI, :
Plaintiffs, :
v. :
NCS ACQUISITION CORP. and OMNICARE, INC., :
Defendants. :
- -----------------------------------------------X
</Table>
PLAINTIFFS' MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR
TEMPORARY RESTRAINING ORDER
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
Suite 1401, 919 N. Market Street
P.O. Box 1070
Wilmington, DE 19899
(302) 656-4433
CHIMICLES & TIKELLIS LLP
One Rodney Square
Wilmington, DE 19899
(302) 656-2500
Attorneys for Plaintiffs
OF COUNSEL:
LOWEY DANNENBERG BEMPORAD & SELINGER, P.C.
The Gateway
One N. Lexington Avenue
White Plains, NY 10601
BEATIE AND OSBORN
34th FLOOR
521 Fifth Avenue
New York, NY 10175
Plaintiffs' Co-Lead Counsel
DATED: DECEMBER 27, 2002
TABLE OF CONTENTS
<Table>
TABLE OF AUTHORITIES.....................................................ii
PRELIMINARY STATEMENT.................................................... 1
STATEMENT OF FACTS....................................................... 2
ARGUMENT................................................................. 3
A. Plaintiffs' Counsel Will Suffer Imminent And
Irreparable injury If A Reasonable Portion
Of The Tender Offer/Merger Proceeds Is Not Escrowed............... 3
B. Shareholders' Counsel Can Demonstrate A Reasonable
Probability of Success On The Merits Of The Fee Application....... 5
CONCLUSION............................................................... 7
</Table>
TABLE OF AUTHORITIES
<Table>
Allied Artists Pictures Corp. v. Baron, 413 A.2d 867 (Del.
1980).............................................................5
In Re Anderson-Clayton Shareholder Litigation, Del. Ch.,
Cons. C.A. No. 8387, Allen, C. (Sept. 19, 1988).............2, 5, 6
Barton v. Drummond Co., 636 F.2d 978 (5th Cir. 1981)................6
Chrysler Corp. v. Dann, 223 A.2d 384 (Del. 1966).................1, 5
Cottle v. Carr, 1988 WL 10415 (Del.Ch.).............................2
In re First Interstate Bancorp. Consol. Shareholders
Litigation, 756 A.2d 353 (Del. Ch. 1999),
aff'd, 755 A.2d 388 (Del. 2000)...................................5
Kahan v. Rosenstiel, 424 F.2d 161 (3d Cir. 1970)..............2, 4, 6
Koppel v. Wien, 743 F.2d 129 (2d Cir. 1984).........................4
Krinsky v. Helfand, 156 A.2d 90 (Del. 1959).........................6
McDonnell Douglas Corp. v. Palley, 310 A.2d 635 (Del.
1973).............................................................5
Mentor Graphics Corporation v. Quickturn Design Systems,
Inc., 789 A.2d 1216 (Del. Ch. 2001)...............................4
Perrine v. Pennroad Corp., 51 A.2d 327 (Del. Ch. 1947)..............4
Ramey v. Cincinnati Enquirer, Inc., 508 F.2d 1188 (6th Cir.
1974), cert. denied, 422 U.S. 1048 (1975).........................6
Smith v. Van Gorkom, 1985 WL 22040 (Del. Ch.).......................6
Sugarland Industries, Inc. v. Thomas, 420 A.2d 142 (Del.
1980).......................................................1, 5, 6
Weinberger v. UOP, Inc., 517 A.2d 653 (Del. Ch. 1986).........1, 4, 5
Zlotnick v. Metex, Inc., C.A. No. 9781, Hartnett, V.C. (Del. Ch.
Mar. 2, 1989).....................................................4
</Table>
PRELIMINARY STATEMENT
Plaintiffs submit this memorandum of law in support of their application to
temporarily restrain Omnicare, Inc., and its wholly owned subsidiary, NCS
Acquisition Corp. (collectively, "Omnicare") from disbursing $13.5 million of
the funds otherwise payable to the shareholders of NCS Healthcare, Inc. ("NCS")
pursuant to a December 17, 2002 merger agreement between Omnicare and NCS.
Plaintiffs ask that the restraining order remain in place and effect until such
time as the Court determines plaintiffs' counsels' right to, and amount of, an
award of attorneys' fees and reimbursement of expenses for their services in the
related action styled "In re NCS Healthcare, Inc. Shareholders Litigation,"
Consolidated C.A. No. 19786 (the "Shareholders Action").
The efforts of plaintiffs' counsel resulted in an Order from the Delaware
Supreme Court directing that this Court enjoin implementation of a merger
agreement between NCS and Genesis Health Ventures, Inc. ("Genesis") that NCS
entered into even though Omnicare, a competing bidder, had expressed a
willingness to offer a superior price. A bidding contest ensued after the
Supreme Court's decision resulting in the current NCS-Omnicare merger agreement
in which NCS shareholders will receive more than three times the price for their
stock than they would have received under the NCS-Genesis merger. The aggregate
benefit exceeds $102 million.
Under well-established Delaware law, when a party is successful in creating
a "common fund" for the benefit of other stockholders, attorneys' fees may be
paid from the common fund. Sugarland Industries, Inc. v. Thomas, 420 A.2d 142
(Del. 1980); Chrysler Corp. v. Dann, 223 A.2d 384, 386 (Del. 1966); Weinberger
v. UOP, Inc., 517 A.2d 653, 654 (Del. Ch. 1986). If the Court determines that
the transaction proceeds are the only source of payment, unless a portion of the
merger proceeds, or "common fund," is withheld from distribution, plaintiffs'
counsels'
1
collection of any fees and expenses for their services in achieving the benefit
will be a practical impossibility, and plaintiffs' counsel will be irreparably
harmed. The only practical alternative, as sought here, is the escrowing of a
fund prior to distribution. See Kahan v. Rosenstiel 424 F.2d 161, 168 n.8 (3d
Cir. 1970).
The amount which plaintiffs request to be withheld is relatively small
compared to the total cash benefit conferred upon NCS's shareholders. The $13.5
million requested to be withheld represents approximately 13% of the additional
$102 million in consideration that NCS stockholders will receive.
Plaintiffs' counsel have attempted to resolve this issue without resorting
to litigation. However, in the absence of a commitment by Omnicare to pay the
fees and expenses awarded to plaintiffs' counsel (see In Re Anderson-Clayton
Shareholder Litigation, Del. Ch. Cons. C.A. No. 8387, Allen, C. (Sept. 19,
1988)("Anderson-Clayton")), plaintiffs are left with no practical alternative to
the instant motion.
STATEMENT OF FACTS
The relevant facts are set forth in the Affidavit of Joseph A. Rosenthal,
sworn to December 27, 2002 submitted herewith (the "Moving Affidavit"), and the
Complaint in this action. Plaintiffs will also file more detailed papers in
support of their fee application in the Shareholders Action.
As detailed in the Complaint and Moving Affadavit, the diligent efforts of
plaintiffs' counsel caused the Genesis merger agreement and related voting
agreements to be enjoined, and enabled competitive bidding for NCS to ensue
between Genesis and Omnicare. The Shareholders Action, by blocking the Genesis
merger, opened up the "playing field" and permitted the emergence of a
competitive bidding process in which Genesis offered $3.50 per
2
share in Genesis stock to counter Omnicare's pending bid, and Omnicare promptly
upped its bid to $5.50 cash per share. As a result, the stockholders of NCS will
receive approximately $3.90 per share (340%) more than they would have received
under the Genesis merger as a result of the successful prosecution of the
Shareholders Action. The tender offer for NCS shares is scheduled to close on
January 7, 2003, thus requiring that this application be made on an expedited
basis.
ARGUMENT
The standards applicable to this motion for a temporary restraining order
("TRO") are clear: the moving party must show a threat of imminent irreparable
injury and claims that are colorable, litigable, or that raise questions
deserving serious attention. Cottle v. Carr, 1988 WL 10415 at *2 (Del. Ch.) (on
a TRO, the Court's focus "is not importantly upon an assessment of the
probability of ultimate success, but is primarily upon the injury to plaintiff
that is threatened and the possible injury to defendant if the remedy is
improvidently granted"). Each of these elements is satisfied by the instant
application.
A. Plaintiffs' Counsel Will Suffer Imminent And Irreparable
Injury If A Reasonable Portion Of The Tender Offer/Merger
Proceeds Is Not Escrowed
The rights of plaintiffs' counsel to reasonable attorneys' fees and
reimbursement of expenses may be completely frustrated if the tender
offer/merger consideration is paid to NCS' shareholders without first
withholding a reasonable amount for plaintiffs' attorneys' fees. Plaintiffs'
counsel may have no other source of compensation for their successful efforts
because it is a practical impossibility to assess the many thousands of
geographically dispersed shareholders individually after payment has been made.
See Weinberger v. UOP, Inc., 517 A.2d 653 (Del. Ch. 1986).
In this case, no harm will befall Omnicare if it is required to withhold
temporarily a small
3
portion of the more than $460 million in cash earmarked for distribution to NCS'
shareholders and creditors. The NCS shareholders also will not be harmed because
the portion to be withheld is small, and, to the extent ultimately allowed for
fees and expenses by this Court, will simply represent just compensation
reasonably owed by the NCS stockholders to counsel.
Under these circumstances, it is clear that the requested TRO should be
granted. Indeed, in Kahan v. Rosenstiel, supra, the Court stated that filing an
application for a TRO in circumstances such as these is the appropriate way to
proceed:
Plaintiff also argued that he had an attorney's lien on the
fund [created by the tender offer] which the defendants
could not defeat by giving the money directly to the
shareholders....It should be noted that if plaintiff
believed he was entitled to a lien on the amount that [the
bidder] paid to the shareholders for their stock, he could
have sought an injunction to enjoin the payment and to
assert his claim against it in court.
424 F.2d at 168 n.8 (emphasis added). Likewise, in Weinberger v. UOP, Inc.,
supra, 517 A.2d at 658, then Vice Chancellor Berger recognized the
appropriateness of the procedure sought here--partial withholding of the fund
until appropriate attorneys' fees are determined and satisfied. See also Perrine
v. Pennroad Corp., 51 A.2d 327, 343 (Del. Ch. 1947) (court retains jurisdiction
over settlement fund to extent of amount awarded as attorney fee); Koppel v.
Wien, 743 F.2d 129, 134-35 (2d Cir. 1984). And in Zlotnick v. Metex, Inc., Del.
Ch., C.A. No. 9781, Hartnett, V.C. (Mar. 2, 1989) (Order), the Court granted a
restraining order on a payout to shareholders to secure counsel fees.(1) See
also Mentor Graphics Corporation v. Quickturn Design Systems, Inc.,
- ----------
(1) The Court's Order permitted the Metex defendants to assume
responsibility for the counsel fee in lieu of withholding payment to the
Class. In In Re Macmillan Inc. Shareholders Litig., C.A. No. 9909, In
Re Dunkin' Donuts Shareholders Litig., C.A. No. 10825, and In Re Wilson
Foods Corporation Shareholders Litig., C.A. No. 10106, counsel made an
application like the instant one, the defendants agreed to be responsible
for such counsel fees as the Court might award, and the need for ruling on
the TRO application was thus obviated. Here plaintiffs' counsel have sought
but not yet received such a commitment.
4
789 A.2d 1216, 1233 (Del. Ch. 2001).
B. Shareholders' Counsel Can Demonstrate A Reasonable Probability
of Success On The Merits Of The Fee Application
Shareholders' counsel who obtain a recovery for the benefit of others are
entitled to reasonable attorneys' fees and reimbursement of expenses from the
beneficiaries of the actions under the "common fund" doctrine, The Delaware
Supreme Court held in Chrysler Corp. v. Dann, 223 A.2d 384 (Del. 1966):
. . . when the litigation results in benefit to all members of a
class, the successful litigant is entitled to an allowance for counsel
fees to be paid from the fund or property which his efforts have
created, the amount to be fixed in the sound discretion of the
Chancellor.
Id. at 386 (emphasis supplied). Allied Artists Pictures Corp. v. Baron, 413 A.2d
867 (Del. 1980); Sugarland Industries, Inc. v. Thomas, 420 A.2d 142 (Del. 1980);
McDonnell Douglas Corp. v. Palley, 310 A.2d 635 (Del. 1973); Anderson-Clayton,
supra, mem. op. at 3. See also Weinberger v. UOP, Inc., supra, 517 A.2d 652; In
re FirstInterstate Bancorp. Consol. Shareholders Litigation, 756 A.2d 353 (Del.
Ch. 1999), aff'd, 755 A.2d 388 (Del. 2000).
Here, the efforts of plaintiffs' counsel have conferred a benefit of more
than $102 million upon the shareholders. Courts have readily approved the award
of fees in analogous situations where plaintiffs' claims were mooted by
defendants' correction of underpriced tender offers or abandonment of risky
acquisition plans. See Sugarland Industries, Inc. v. Thomas, 420 A.2d 142,
148-149 (Del. 1980) (fee awarded where plaintiffs challenged an acquisition
offer as inadequate, contributed to the creation of a syndicate which made a
higher offer, obtained an injunction preventing the company from accepting the
inadequate offer and requiring it to conduct an auction, all of which resulted
in the acceptance of the highest offer); Anderson-Clayton, supra; Ramey v.
Cincinnati Enquirer, Inc. 508 F.2d 1188, 1194-1196 (6th Cir. 1974),
5
cert. denied, 422 U.S. 1048 (1975) (derivative suits caused defendant to
terminate a risky repurchase plan and allowed outside companies to make more
favorable bids); Barton v. Drummond Co., 636 F.2d 978 (5th Cir. 1981)
(plaintiff may be entitled to fees where the challenged merger was abandoned
subsequent to his lawsuit); Kahan v. Rosenstiel, supra, 424 F.2d 161 (plaintiff
may be entitled to fees where the acquiring company improved the terms of its
offer after institution of the suit).
The fees to be requested by plaintiffs' counsel are reasonable when
compared to the huge, direct benefit created for NCS shareholders. A fee and
expense application of $13.5 million would constitute approximately 13% of the
benefit created for the stockholders. The courts of this State have awarded fees
in excess of this percentage of recovery in shareholder litigation. See, e.g.,
Sugarland Industries, Inc., supra, ($15 million value of benefit and 20% fee of
$3 million); Krinsky v. Helfand, 156 A.2d 90, 95 (Del 1959) (20% fee); Smith v.
Van Gorkom, 1985 WL 22040 (Del. Ch.) (23.4% of the fund awarded).
6
CONCLUSION
Plaintiffs' counsels' clear entitlement to substantial compensation would
be empty indeed if the common fund was disbursed to thousands of stockholders,
and it became impossible, as a practical matter, to enforce whatever award this
Court might ultimately make. Accordingly, plaintiffs' counsel request that this
Court temporarily restrain Omnicare from distributing $13.5 million in cash to
NCS' shareholders and direct Omnicare to deposit that sum in an interest-bearing
escrow account subject to the jurisdiction of this Court until plaintiffs'
counsels application for attorneys' fees and reimbursement of expenses in C.A.
No. 19786 has been determined.
ROSENTHAL, MONHAIT, GROSS
Of Counsel: & GODDESS, P.A.
LOWEY DANNENBERG BEMPORAD By: /s/ Joseph A. Rosenthal
& SELINGER, P.C. -----------------------------
The Gateway, 11th Floor Suite 1401, 919 N. Market Street
On North Lexington Avenue Wilmington, Delaware 19801
White Plains, New York, 10601-1714 Tel: (302) 656-4433
(914) 997-0500
BEATIE AND OSBORN LLP CHIMICLES & TIKELIS LLP
521 Fifth Avenue, 34th Floor One Rodney Square
New York, New York 10175 Wilmington, Delaware 19801
Tel: (212) 888-9000 (302) 656-2500
Plaintiffs' Co-lead Counsel
Attorneys for Plaintiffs
CAULEY GELLER BOWMAN & COATES, LLP
One Boca Place
2255 Glades Road, Suite 421A
Boca Raton, FL 33431
(561) 750-3000
7
SCHIFFRIN & BARROWAY, LLP
Three Bala Plaza East, Suite 400
Bala Cynwyd, PA 19004
(610) 667-7706
WOLF HALDENSTEIN ADLER FREEMAN & HERZ
270 Madison Avenue
New York, NY 10016
(212) 545-4600
8
TABLE OF UNREPORTED CASES
EXHIBIT
In Re Anderson-Clayton Shareholder Litigation, Del. Ch., Cons. C.A.
No. 8387, Allen, C. (Sept. 19, 1988) ....................................A
Cottle v. Carr, 1988 WL 10415 ................................................B
Smith v. Van Gorkom, 1985 WL 22040 (Del. Ch.) ...............................C
Zlotnick v. Metex, Inc., Del. Ch., C.A. No. 9781, Harnett, V.C.
(Mar. 2, 1989) ..........................................................D