-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lc0td4MYj04MTfqdFzUxkER6uONg3e7yiHflLAb4VQZGUsKbZ68um/BOsROGYN5P 3UH8GFFqE+kn91hZ/UUhWg== 0000950117-02-002364.txt : 20021002 0000950117-02-002364.hdr.sgml : 20021002 20021002144538 ACCESSION NUMBER: 0000950117-02-002364 CONFORMED SUBMISSION TYPE: SC TO-T/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20021002 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NCS HEALTHCARE INC CENTRAL INDEX KEY: 0001004990 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 341816187 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC TO-T/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-47039 FILM NUMBER: 02779660 BUSINESS ADDRESS: STREET 1: 3201 ENTERPRISE PKWY STREET 2: STE 2200 CITY: BEACHWOOD STATE: OH ZIP: 44122 BUSINESS PHONE: 2165143350 MAIL ADDRESS: STREET 1: 1400 MCDONALD INVESTMENT CENTER STREET 2: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: OMNICARE INC CENTRAL INDEX KEY: 0000353230 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 311001351 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-T/A BUSINESS ADDRESS: STREET 1: 100 E RIVERCENTER BLVD STREET 2: STE 1600 CITY: COVINGTON STATE: KY ZIP: 41101 BUSINESS PHONE: 6063923300 MAIL ADDRESS: STREET 1: 100 E RIVERCENTER BLVD STREET 2: STE 1600 CITY: COVINGTON STATE: KY ZIP: 41101 SC TO-T/A 1 a33485.txt OMNICARE, INC. ________________________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------- SCHEDULE TO/A (RULE 14d-100) TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 AMENDMENT NO. 14 ------------------- NCS HEALTHCARE, INC. (Name of Subject Company (Issuer)) OMNICARE, INC. NCS ACQUISITION CORP. (Names of Filing Persons (Offerors)) CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE (Title of Class of Securities) 62887410 (CUSIP Number of Class A Common Stock) AND CLASS B COMMON STOCK, PAR VALUE $0.01 PER SHARE (Title of Class of Securities) NOT APPLICABLE (CUSIP Number of Class B Common Stock) PETER LATERZA, ESQ. VICE PRESIDENT AND GENERAL COUNSEL OMNICARE, INC. 100 EAST RIVERCENTER BOULEVARD COVINGTON, KENTUCKY 41011 TELEPHONE: (859) 392-3300 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Filing Persons) COPY TO: MORTON A. PIERCE, ESQ. DEWEY BALLANTINE LLP 1301 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10019 TELEPHONE: (212) 259-8000 ------------------- CALCULATION OF FILING FEE Transaction Valuation* Amount of Filing Fee $91,816,869 $18,363.37
* Estimated for purposes of calculating the amount of the filing fee only. This amount assumes the purchase of (i) 18,460,599 shares of the class A common stock, par value $0.01, of NCS HealthCare, Inc. (the 'Company'), representing all of the outstanding shares of such class as of July 28, 2002 (less 1,000 shares of such class owned by Omnicare, Inc.), (ii) 5,255,210 shares of the class B common stock, par value $0.01, of the Company, representing all of the outstanding shares of such class as of July 28, 2002, (iii) 2,422,724 shares reserved for issuance upon the exercise of outstanding options to purchase class A common stock and (iv) 94,858 shares reserved for issuance upon the exercise of outstanding options to purchase class B common stock. The number of outstanding shares and shares reserved for issuance upon the exercise of options is contained in the Current Report on Form 8-K filed by the Company on July 30, 2002. [X] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: $18,363.37 Filing party: Omnicare, Inc. Form or Registration No.: SC TO Date Filed: August 8, 2002 [ ] Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. Check the appropriate boxes below to designate any transactions to which the statement relates: [x] third-party tender offer subject to Rule 14d-1 [ ] issuer tender offer subject to Rule 13e-4 [ ] going private transaction subject to Rule 13e-3 [ ] amendment to Schedule 13D under Rule 13d-2 Check the following box if the filing is a final amendment reporting the results of the tender offer [ ] ________________________________________________________________________________ This Amendment No. 14 amends and supplements the Tender Offer Statement on Schedule TO filed with the Securities and Exchange Commission (the "Commission") on August 8, 2002 (the "Schedule TO") by Omnicare, Inc., a Delaware corporation ("Omnicare"), and NCS Acquisition Corp., a Delaware corporation ("Purchaser") and a wholly-owned subsidiary of Omnicare. The Schedule TO relates to a tender offer by Purchaser to purchase all of the outstanding shares of class A common stock, par value $0.01 per share, and class B common stock, par value $0.01 per share, of NCS HealthCare, Inc. (the "Company") for a purchase price of $3.50 per share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated August 8, 2002 (the "Offer to Purchase"), and in the related Letter of Transmittal (the "Letter of Transmittal" which, together with the Offer to Purchase, as hereby or hereafter amended or supplemented from time to time, constitute the "Offer"). Copies of the Offer to Purchase and the related Letter of Transmittal are filed with the Schedule TO as Exhibits (a)(1)(A) and (a)(1)(B), respectively. Capitalized terms used and not defined herein shall have the meanings assigned such terms in the Offer to Purchase and the Schedule TO. Item 11. Additional Information. The following is hereby added to the end of Section 18 ("Legal Proceedings") of the Offer to Purchase: Omnicare filed a Motion to Dismiss the First Amended Complaint in the Ohio lawsuit on September 13, 2002. This motion seeks a judgment dismissing the first amended complaint for failure to state a claim under Section 14(e) of the Securities Exchange Act of 1934 (the "Exchange Act") and failure to comply with the pleading requirements of Section 21(D) of the Exchange Act and Rule 9(b) of the Federal Rules of Civil Procedure. On September 30, 2002, the Company filed its opposition to Omnicare's Motion to Dismiss and also filed a Motion for Preliminary Injunction seeking to preliminarily enjoin Omnicare from proceeding with its tender offer until Omnicare makes corrective disclosures to the stockholders of the Company. Item 12. Exhibits. Item 12 is hereby amended and supplemented with the following information: Exhibit (a)(1)(S) Motion to Dismiss the First Amended Complaint filed in the United States District Court for the Northern District of Ohio on September 13, 2002. Exhibit (a)(1)(T) Opposition to Omnicare's Motion to Dismiss and Motion for Preliminary Injunction filed in the United States District Court for the Northern District of Ohio on September 30, 2002. SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: October 2, 2002 OMNICARE, INC. By: /s/ DAVID W. FROESEL, JR. ------------------------------- Name: David W. Froesel, Jr. Title: Senior Vice President and Chief Financial Officer NCS ACQUISITION CORP. By: /s/ DAVID W. FROESEL, JR. ------------------------------ Name: David W. Froesel, Jr. Title: Vice President and Chief Financial Officer EXHIBIT INDEX (a)(1)(A) Offer to Purchase dated August 8, 2002.* (a)(1)(B) Letter of Transmittal.* (a)(1)(C) Notice of Guaranteed Delivery.* (a)(1)(D) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.* (a)(1)(E) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.* (a)(1)(F) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.* (a)(1)(G) Summary Advertisement, published August 8, 2002.* (a)(1)(H) Press Release issued by Omnicare, Inc. on August 8, 2002.* (a)(1)(I) Complaint filed in the Chancery Court, New Castle County, Delaware on August 1, 2002.* (a)(1)(J) Press Release issued by Omnicare, Inc. on August 8, 2002.* (a)(1)(K) First Amended Complaint filed in the Chancery Court, New Castle County, Delaware on August 12, 2002.* (a)(1)(L) Press Release issued by Omnicare, Inc. on August 20, 2002.* (a)(1)(M) First Amended Complaint filed in the United States District Court for the Northern District of Ohio on August 21, 2002.* (a)(1)(N) Press Release issued by Omnicare, Inc. on August 26, 2002.* (a)(1)(O) Press Release issued by Omnicare, Inc. on September 6, 2002.* (a)(1)(P) Selected material from a presentation of Omnicare, Inc. at the Bear Stearns 15th Annual Healthcare Conference on September 17, 2002 at The Waldorf Astoria, New York, New York.* (a)(1)(Q) Press Release issued by Omnicare, Inc. on September 20, 2002.* (a)(1)(R) Motion for Summary Judgment as to Count I of the First Amended Complaint filed in the Chancery Court, New Castle County, Delaware on September 30, 2002.* (a)(1)(S) Motion to Dismiss the First Amended Complaint filed in the United States District Court for the Northern District of Ohio on September 13, 2002. (a)(1)(T) Opposition to Omnicare's Motion to Dismiss and Motion for Preliminary Injunction filed in the United States District Court for the Northern District of Ohio on September 30, 2002. (a)(5)(A) Form of Agreement and Plan of Merger proposed by Omnicare, Inc.* (b)(1) Three-year, $495.0 million Credit Agreement, dated as of March 20, 2001, among Omnicare, Inc., as the Borrower, the Guarantors named therein and the lenders named therein, as the Lenders, Lehman Commercial Paper Inc., as a Syndication Agent, Sun Trust Bank, as a Documentation Agent, Deutsche Banc Alex. Brown, as a Documentation Agent, and Bank One, NA, with its main office in Chicago, Illinois, as the Administrative Agent. (Incorporated by reference to Exhibit 99.3 of Omnicare's Current Report on Form 8-K filed with the Securities and Exchange Commission on March 23, 2001). (c) None. (d)(1) Confidentiality Agreement, dated August 29, 2001, between Omnicare, Inc. and NCS HealthCare, Inc.* (e) None. (f) None. (g) None. (h) None.
- --------------------- * Previously filed. STATEMENT OF DIFFERENCES ------------------------ The section symbol shall be expressed as............................... 'SS' The paragraph symbol shall be expressed as...............................[p] EX-99 3 ex-a1s.txt EXHIBIT (A)(1)(S) Exhibit (a)(1)(S) UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION NCS HEALTHCARE, INC. ) CASE NO. 1:02 CV 1635 ) Plaintiff ) JUDGE PAUL R. MATIA ) v. ) ) NOTICE OF MANUAL FILING OF OMNICARE, INC. ) EXHIBITS 1, 2, 3, AND 4 TO ) DEFENDANT OMNICARE, INC.'S Defendant ) MOTION TO DISMISS THE ) AMENDED COMPLAINT ) Please take notice that on Friday, September 13, 2002, the following Exhibits to the Affirmation of Hugh E. McKay were manually filed: o Exhibit 1: NCS Healthcare, Inc.'s Schedule 14D-9 filed with Securities and Exchange Commission ("SEC") on August 20, 2002. o Exhibit 2: Genesis Health Ventures, Inc.'s Form S-4 filed with SEC on August 29, 2002. o Exhibit 3: Amendment No. 8 to Omnicare's Form TO filed with the SEC on August 28, 2002, enclosing the August 27, 2002, letter from Joel Gemunder to the NCS Board of Directors. o Exhibit 4: Amendment No. 3 to NCS's Schedule 14D-9 filed with the SEC on September 12, 2002. 1 These documents are Exhibits to the Affirmation of Hugh E. McKay in Support of Defendant's Motion to Dismiss the Amended Complaint and are being manually filed due to their voluminous length. Respectfully submitted, /s/ Hugh E. McKay --------------------------------------- Hugh E. McKay (#0023017) Charles W. Zepp (#0068129) PORTER WRIGHT MORRIS & ARTHUR LLP 925 Euclid Avenue, Suite 1700 Cleveland, OH 44115-1483 (216) 443-9000 / FAX (216) 443-9011 hmckay@porterwright.com czepp@porterwright.com Attorneys for Defendant Omnicare, Inc. Of Counsel: Robert C. Myers Seth C. Farber James P. Smith III David F. Owens Melanie R. Moss DEWEY BALLANTINE LLP 1301 Avenue of the Americas New York, NY 10019-6092 (212) 259-8000/ Fax - (212) 259-6333 2 CERTIFICATE OF SERVICE ---------------------- I hereby certify that a true and correct copy of Notice of Manual Filing of Exhibits 1, 2, 3, and 4 to Defendant Omnicare, Inc.'s Motion to Dismiss the Amended Complaint the was filed electronically this 13th day of September, 2002. Notice of this filing will be sent to all parties by operation of the Court's electronic filing system. Parties may access this filing through the Court's system. H. Jeffrey Schwartz Mark A. Phillips BENESCH, FRIEDLANDER, COPLAN & ARONOFF 2300 BP Tower 200 Public Square Cleveland, OH 44114-2378 Edward P. Welch Edward B. Micheletti SKADDEN, ARPS, SLATE, MEAGHER, & FLOM, LLP One Rodney Square P.O. Box Wilmington, DE 19899-0636 Attorneys for NCS Healthcare, Inc. /s/ Hugh E. McKay ---------------------------------- Hugh E. McKay (#0023017) One of the Attorneys for Defendant Omnicare, Inc. -3- IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT FOR OHIO EASTERN DIVISION - ------------------------------------------X : NCS HEALTHCARE, INC., : CASE NO. 1:02CV1635 : Plaintiff, : JUDGE PAUL R. MATIA : -vs.- : : OMNICARE, INC., : MOTION TO DISMISS : THE AMENDED Defendant. : COMPLAINT : - ------------------------------------------X Defendant, by its counsel and for the reasons stated in the accompanying Memorandum of Law and upon the accompanying Affirmation of Hugh E. McKay, respectfully moves this Honorable Court to dismiss the claims of Plaintiff, NCS Healthcare, Inc., pursuant to Rule 12(b) of the Federal Rules of Civil Procedure for failure to state a claim. Dated: Cleveland, Ohio September 13, 2002 /s/ Hugh E. McKay -------------------------------------------- Hugh E. McKay (#0023017) Charles W. Zepp (#0068129) PORTER WRIGHT MORRIS & ARTHUR LLP 925 Euclid Avenue, Suite 1700 Cleveland, OH 44115-1483 (216) 443-9000/ Fax- (216) 443-9011 hmckay@porterwright.com czepp@porterwright.com Attorneys for Omnicare, Inc. -1- Of Counsel: Robert C. Myers Seth C. Farber James P. Smith III David F. Owens Melanie R. Moss DEWEY BALLANTINE LLP 1301 Avenue of the Americas New York, NY 10019-6092 (212) 259-8000/ Fax - (212) 259-6333 -2- CERTIFICATE OF SERVICE ---------------------- I hereby certify that a true and correct copy of Defendant Omnicare, Inc.'s Motion to Dismiss the Amended Complaint the was filed electronically this 13th day of September, 2002. Notice of this filing will be sent to all parties by operation of the Court's electronic filing system. Parties may access this filing through the Court's system. H. Jeffrey Schwartz Mark A. Phillips BENESCH, FRIEDLANDER, COPLAN & ARONOFF 2300 BP Tower 200 Public Square Cleveland, OH 44114-2378 Edward P. Welch Edward B. Micheletti SKADDEN, ARPS, SLATE, MEAGHER, & FLOM, LLP One Rodney Square P.O. Box Wilmington, DE 19899-0636 Attorneys for NCS Healthcare, Inc. /s/ Hugh E. McKay -------------------------------------- Hugh E. McKay (#0023017) One of the Attorneys for Defendant Omnicare, Inc. -3- IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT FOR OHIO EASTERN DIVISION - -------------------------------------------------------X : NCS HEALTHCARE, INC., : CASE NO. 1:02CV1635 : Plaintiff, : JUDGE PAUL R. MATIA : -vs.- : OMNICARE, INC., : AFFIRMATION OF : HUGH E. MCKAY, ESQ. : IN SUPPORT Defendant. : OF DEFENDANT'S : MOTION TO DISMISS - -------------------------------------------------------X Hugh E. McKay, an attorney duly admitted to practice law in the State of Ohio, hereby affirms the following under penalties of perjury: 1. I am a member of the law firm Porter, Wright, Morris & Arthur LLP, attorneys for defendant Omnicare, Inc. ("Omnicare"). I submit this affirmation in support of Omnicare's Motion to Dismiss the Amended Complaint. 2. Attached hereto as Exhibit 1 is a true and correct copy of the NCS Healthcare, Inc. ("NCS") Schedule 14D-9 filed with the Securities and Exchange Commission ("SEC") on August 20, 2002. 3. Attached hereto as Exhibit 2 is a true and correct copy of the Genesis Health Ventures, Inc. Form S-4 filed with the SEC on August 29, 2002. 4. Attached hereto as Exhibit 3 is a true and correct copy of Amendment No. 8 to Omnicare's Form TO filed with the SEC on August 28, 2002 enclosing the August 27, 2002 letter from Joel F. Gemunder to the NCS Board of Directors. 5. Attached hereto as Exhibit 4 is a true and correct copy of Amendment No. 3 to NCS's Schedule 14D-9 filed with the SEC on September 12, 2002. Dated: September 13, 2002 /s/ Hugh E. McKay Cleveland, Ohio ------------------------------------ Hugh E. McKay (#0023017) PORTER, WRIGHT, MORRIS, & ARTHUR LLP 925 Euclid Avenue, Suite 1700 Cleveland, OH 44115-1483 (216) 443-9000 hmckay@porterwright.com IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT FOR OHIO EASTERN DIVISION - -------------------------------------------------------X : NCS HEALTHCARE, INC., : : Plaintiff, : CASE NO. 1:02CV1635 : -vs.- : JUDGE PAUL R. MATIA OMNICARE, INC., : : : Defendant. : : - -------------------------------------------------------X MEMORANDUM OF LAW IN SUPPORT OF OMNICARE'S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT --------------------------------------------- TABLE OF CONTENTS ----------------- TABLE OF AUTHORITIES......................................................ii PRELIMINARY STATEMENT......................................................1 THE COMPLAINT SHOULD BE DISMISSED FOR FAILURE TO STATE A CLAIM...............................................5 A. Section 14(e) And The Standard Of Review..........................5 B. NCS's "Due Diligence" Claims Are Legally Insufficient......................................................8 C. NCS's "Due Diligence" Claims Are Moot.............................9 D. NCS's "Serious Negotiations" Claims Should Be Dismissed......................................................9 E. The Amended Complaint Utterly Fails To Allege The Materiality Of The Claimed Omissions.........................................13 F. NCS Has Failed To Plead Sufficient Facts To Create An Inference, Let Alone A Strong Inference, That Omnicare Acted With Fraudulent Intent.....................................15 CONCLUSION................................................................16 i TABLE OF AUTHORITIES -------------------- CASES - ----- Bovee v. Coopers & Lybrand, 272 F.3d 356 (6th Cir. 2002).............................passim Elec. Specialty Co. v. Int'l Controls Corp., 409 F.2d 937 (2nd Cir. 1969)............................................................7 In re CDNow, Inc. Sec, Litig. 138 F.Supp.2d 624 (E.D. Pa. 2001)..........................14 In re Comshare, Inc. Sec., Litig., 183 F.3d 542 (6th Cir. 1999)..........................15 Isaacs Bros. Co. v. Hibernia Bank, 481, F.2d. 1168 (9th Cir. 1973)........................9 McCormick v. Fund Am Co., 26 F.3d 869 (9th Cir. 1994).....................................8 Piper v. Chris Craft Indus., Inc., 430 U.S. 1 (1977)....................................6,7 Resource Exploration v. Yankee Oil & Gas, Inc., 566 F. Supp. 54 (N.D. Oh. 1983)..................................................5, 6, 14 Rondeau v. Mosinee Paper Comp., 422 U.S. 49 (1975)........................................7 Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434 (6th Cir. 1998)....................6 Schreiber v. Burlington N., Inc., 472 U.S. 1 (1985)...................................5, 15 Starkman v. Marathon Oil Co., 772 F.2d 231 (6th Cir. 1985)...............................14 TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438 (1978)..................................13 CONSTITUTIONAL PROVISIONS - ------------------------- U.S. Const., Art. III.....................................................................9 FEDERAL RULES AND STATUTES - -------------------------- FED R. CIV. P. 9(b)................................................................8, 9, 15 FED R. CIV. P. 12(b)(6)................................................................1, 5 15 U.S.C.A. 'SS' 78u(b)(1)-(3) ..................................................7-8, 9, 15 15 U.S.C.A. 'SS' 78n(e) ..................................................................5
ii SECONDARY SOURCES AND LEGISLATIVE HISTORY - ----------------------------------------- Arthur Linton Corbin & Joseph M. Perillo, Corbin on Contracts 'SS' 1.11 (Rev. Ed. 1993).................................................................8 Restatement (Second) of Contracts, 'SS' 58 (1982).........................................8 S. Rep. No. 550, at 3 (1967) reprinted in 1968 U.S.C.C.A.N. 2811, 2813 .............................................................................6
iii Defendant Omnicare, Inc. ("Omnicare"), by its undersigned counsel, submits this Memorandum of Law in Support of its Motion to Dismiss the First Amended Complaint ("Am. Cplt.") pursuant to Federal Rule of Civil Procedure 12(b)(6). PRELIMINARY STATEMENT --------------------- On August 8, 2002, Omnicare commenced an all-cash tender offer for all outstanding Class A and Class B shares of common stock of NCS Healthcare, Inc. ("NCS") at a price of $3.50 per share (the "Omnicare Tender Offer").(1) (Am. Cplt., [p] 2.) This action, which seeks injunctive relief against the Omnicare Tender Offer, represents one of a number of extraordinary measures taken by NCS and its incumbent management to oppose any offer by Omnicare and instead to sell the company to Genesis Health Ventures, Inc. ("Genesis") at a price significantly lower ($1.60 per share in Genesis common stock) than the amount being offered by Omnicare ($3.50 in cash). (Am. Cplt., [p][p] 2, 15; McKay Aff., Ex. 1, p. 1, 14.) NCS and its board of directors have taken a number of improper steps, including the filing of this litigation, to attempt to - ---------------------- (1) When Omnicare commenced the Omnicare Tender Offer it filed with the Securities Exchange Commission ("SEC") and made public its Form TO and the included Offer to Purchase which is Exhibit A to the First Amended Complaint (the "Offer to Purchase"). Ten business days later, NCS's board of directors issued the NCS Schedule 14D-9, which set forth its recommendation to NCS stockholders, including the board's version of the events leading up to such recommendation. The NCS Schedule 14D-9 is attached as Exhibit 1 to the accompanying Affirmation of Hugh E. McKay, dated September 13, 2002 ("McKay Aff."). On August 29, 2002, Genesis publicly filed with the SEC a registration statement on Form S-4 which contains the preliminary proxy materials to be used in connection with the meeting of NCS stockholders to approve the Genesis Merger Agreement (the "Form S-4"). The Form S-4 is attached as Exhibit 2 to the accompanying McKay Aff. The Form S-4 allows both Genesis and NCS the opportunity to provide NCS stockholders with the information they believe is important. The Court of Appeals has held that this Court may consider the full text of these SEC filings on a motion to dismiss. Bovee v. Coopers & Lybrand L.L.P., 272 F.3d 356, 360-361 (6th Cir. 2002). ensure the success of Genesis' inferior proposal and to deter and defeat Omnicare's superior all cash offer. (McKay Aff., Ex., 1, p. 2, 7, 10.) On July 28, 2002, NCS and Genesis entered into a merger agreement whereby Genesis would acquire 100% of the outstanding common stock of NCS in exchange for Genesis common stock with a value of approximately $1.60 per share (the "Genesis Merger Agreement"). (Am. Cplt., [p][p] 9-10.) The total value of the common stock payable to NCS stockholders by Genesis at the time the merger agreement was entered into was approximately $38 million. (Id., [p] 13.) NCS was aware prior to signing the Genesis Merger Agreement that Omnicare had for some time expressed a strong interest in acquiring NCS, and had first approached NCS about a possible transaction as far back as July 2001. (Id., Ex. A, p. 17.) Indeed, on Friday, July 26, 2002, two days before NCS locked up its $1.60 per share merger with Genesis, Omnicare faxed a letter to Jon H. Outcalt, Chairman of NCS's board of directors, offering to negotiate a merger with NCS whereby NCS stockholders would receive $3.00 per share in cash (the "Omnicare Merger Proposal"). (Id., [p] 14, Ex. A, p. 20-21; McKay Aff., Ex. 1, p. 8.) The total value of the Omnicare Merger Proposal was approximately $71 million. (Am. Cplt., Ex. A, p. 18-21.) NCS and its board of directors completely ignored the Omnicare Merger Proposal. (Id., p. 22.) In fact, NCS and its advisors repeatedly ducked attempts by Omnicare to reach them by telephone over the July 27-28 weekend. (Id., p. 22; McKay Aff., Ex. 1, p. 8.) Without even an attempt to investigate Omnicare's obviously superior proposal, NCS's board of directors rushed headlong into the inferior Genesis Merger Agreement and, in so doing, approved an astonishing array of draconian defensive -2- devices designed to prematurely "lock up" the merger with Genesis and deter any third parties from proposing any transaction, even one offering higher value to NCS stockholders. (Am. Cplt., Ex. A, p. 22-23; McKay Aff., Ex. 1, p. 2, 7, 10.) To this illicit end, NCS and its preferred partner, Genesis, have structured the Genesis Merger Agreement so that NCS stockholders will theoretically have the opportunity to vote on it, while making the outcome of that vote a foregone conclusion: o Two of NCS's directors, Messrs. Outcalt and Shaw, have entered into voting agreements whereby they have granted Genesis an irrevocable proxy to vote all of their shares in favor of the Genesis Merger Agreement and against any other proposal. Because NCS directors Outcalt and Shaw collectively own 451,070 shares of NCS Class A common stock (one vote per share) and 4,617,219 shares of NCS Class B common stock (ten votes per share), Genesis has acquired sufficient voting strength (65% of the outstanding votes) to ensure approval of its inferior merger agreement (the "Director Proxy Lock-Up").(2) o While the voting agreements are ostensibly terminable if the Genesis Merger Agreement is terminated, the Genesis Merger Agreement prohibits the NCS board of directors from terminating it prior to the stockholder vote to approve it (the "No Termination Provision"). o The Genesis Merger Agreement also prevents NCS's board of directors from even discussing a higher bid with Omnicare or anyone else through a draconian "no shop/no talk" provision (the "No-Shop Provision"). - ---------------------- (2) While attempting to foist the inferior Genesis Merger Agreement on their stockholders, NCS directors Outcalt and Shaw nevertheless took care of themselves. Outcalt will receive $400,000 on the closing date of the Genesis Merger comprised of a $200,000 "continuation payment" and a $200,000 "success fee." (McKay Aff., Ex. 1, p. 2.) Genesis has also agreed to pay Outcalt $200,000 one year after closing, $175,000 each year for at least four years, and an "Executive Officer Bonus" of $200,000 "upon [the] change of control." (Id., p. 2-3.) All told, Outcalt will receive $1,300,000. (Id.) In addition, Director Shaw will receive a $200,000 bonus at the closing of the Genesis Merger Agreement. (Id., p. 3.) Moreover, and in any event, the entire "lock-up" scheme proves too clever by half. Because the Director Proxy Lock-Up violates NCS's Amended and Restated Certificate of Incorporation, by transferring the super-voting rights of the Class B shares, Outcalt and Shaw have irrevocably converted their Class B shares into Class A shares. -3- (Am. Cplt., Ex. A, p. 22-23; McKay Aff., Ex. 1, p. 1-2, 7, 8-11.) These and other blatantly illegal agreements entered into between Genesis and the NCS board of directors as well as NCS's refusal to even discuss with Omnicare the terms of its July 26 proposal caused Omnicare to do two things: First, on August 1, 2002, Omnicare instituted litigation in Delaware Chancery Court seeking to set aside the Genesis Merger Agreement, including the No-Shop Provision and the Director Proxy Lockup. Second, on August 8, 2002, Omnicare commenced the Omnicare Tender Offer -- an all cash, fully financed tender offer for all shares of common stock of NCS at a price of $3.50 per share. (Am. Cplt., Ex. A, p. 22-23.) The response of the NCS board of directors was as predictable as it was unfortunate. On August 20, 2002, the NCS board of directors filed a Schedule 14D-9 with the SEC recommending that NCS stockholders reject the Omnicare Tender Offer and not tender their shares. (McKay Aff., Ex. 1, p. 3, 10.) What reason did the NCS board of directors give for deciding to recommend against Omnicare's superior, all cash offer and to cling instead to Genesis' inferior stock deal? According to the NCS board of directors, it was because "the Omnicare tender offer is highly conditional, illusory and many of the conditions of the Omnicare tender offer are not capable of being satisfied as a result of the [Genesis Merger Agreement and the voting agreements.]" (McKay Aff. 1, Ex. A, p. 3, 10-11) (emphasis added). In other words, the Omnicare Tender Offer is, in the opinion of the NCS board of directors, "illusory" because NCS has already locked itself into the Genesis Merger Agreement. (Id., p. 11.) Catch 22. In a further attempt to defeat Omnicare's superior offer, NCS commenced this litigation, making the preposterous assertion that Omnicare's $3.50 per share all cash -4- tender offer is causing NCS stockholders irreparable harm. (Am. Cplt., [p] 42.) Specifically, on August 21, 2002, NCS filed the Amended Complaint in this Court alleging that Omnicare has engaged in securities fraud because, according to NCS, (a) Omnicare failed to disclose that the Omnicare Tender Offer was conditioned on certain due diligence, and (b) Omnicare misled NCS stockholders into believing that NCS had not been interested in serious negotiations with Omnicare. (Id., [p][p] 3-4.) These allegations are wholly without merit. THE COMPLAINT SHOULD BE DISMISSED FOR FAILURE TO STATE A CLAIM -------------------------------------- A. SECTION 14(e) AND THE STANDARD OF REVIEW NCS alleges that Omnicare committed securities fraud by violating Section 14(e) of the Securities Act of 1934 which makes it unlawful for any person to make any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or to engage in any fraudulent, deceptive, or manipulative acts or practices, in connection with any tender offer or request or invitation for tenders, or any solicitation of security holders in opposition to or in favor of any such offer, request, or invitation. 15 U.S.C.A. 'SS' 78n(e). To prove a violation of Section 14(e), a plaintiff must show that there has been a material misstatement or omission that was fraudulently made. See Schreiber v. Burlington N., Inc, 472 U.S, 1, 10 (1985); Resource Exploration v. Yankee Oil & Gas., Inc., 566 F. Supp. 54, 62 (N.D. Oh. 1983). In assessing the sufficiency of a complaint under Rule 12(b)(6), a court ordinarily "must construe the complaint in the light most favorable to the plaintiff, accept all factual allegations as true, and determine whether the plaintiff can prove a set of facts -5- in support of its claims that would entitle it to relief." Bovee, 272 F.3d at 361; Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir. 1988). Although this standard is generally a relaxed one, courts have long recognized the need to apply special scrutiny to targets' claims of disclosure violations in the face of tender offers. In 1968, Congress adopted the Williams Act in order to regulate certain aspects of takeover bids. See Piper v. Chris Craft Industries, 430 U.S. 1, 24 (1977) (Williams Act was adopted in 1968 in response to the growing use of cash tender offers as a means for achieving corporate takeovers). The Act was designed to provide an even-handed approach to takeover bids, so that both the bidder (here, Omnicare) and the target management (here, NCS's board of directors) would have an equal chance to state their case to NCS stockholders.(3) The [Act] avoids tipping the balance of regulation either in favor of management or in favor of the person making the takeover bid. It is designed to require full and fair disclosure for the benefit of investors while at the same time providing the officers and management equal opportunity to fairly present their case. S. Rep. No. 550, at 3 (1967), reprinted in 1968 U.S.C.C.A.N. 2811, 2813. However, the Supreme Court long ago emphasized that Congress, in adopting the Williams Act, - ------------------------ (3) All parties have taken advantage of the ability to communicate with NCS stockholders provided by the Securities Exchange Act, in general, and the Williams Act, in particular. Ten business days after Omnicare made public and issued the Offer to Purchase to NCS stockholders, NCS's board of directors issued the Schedule 14D-9 which set forth its recommendation to NCS stockholders, including the board's version of the events leading up to such recommendation. On August 29, 2002, Genesis publicly filed with the SEC a registration statement on Form S-4 which contains the preliminary proxy materials to be used in connection with the meeting of NCS stockholders to approve the Genesis Merger Agreement. The Form S-4 allows both Genesis and NCS the opportunity to provide NCS stockholders with the information they believe is important. As noted above, the Court of Appeals has held that this Court may consider the full text of these SEC filings on a motion to dismiss. Bovee, 272 F.3d at 360-361. -6- "expressly disclaimed an intention to provide a weapon for management to discourage takeover bids." Rondeau v. Mosinee Paper Comp., 422 U.S. 49, 58 (1975); accord, Piper, 430 U.S. at 30-31. As a result, "district judges must be vigilant against resort to the courts on trumped-up or trivial grounds as a means for delaying and thereby defeating legitimate tender offers." Elec. Specialty Co. v. Int'l Controls Corp., 409 F.2d 937, 947 (2d Cir. 1969). The Amended Complaint is a prime example of what the Court of Appeals for the Second Circuit warned about over 30 years ago. More recently, Congress enacted the Private Securities Litigation Reform Act of 1995 ("PSLRA") in order "to curtail the filing of meritless lawsuits." The PSLRA has dramatically altered the landscape for pleading securities fraud. Under the PSLRA, courts no longer occupy the role of passive reviewer of counsel's artful pleading -- rather courts have now been charged by Congress with the role of proactive gatekeepers, with the responsibility to scrutinize and dismiss securities fraud claims of dubious merit. To that end, the PSLRA requires that: [i]n any private action arising under this chapter in which the plaintiff alleges that the defendant - (a) made an untrue statement of material fact; or (b) omitted to state a material fact necessary to make the statements made, in the light of the circumstances in which they were made, not misleading; the complaint shall specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed. -7- 15 U.S.C. 'SS' 78u-4(b)(1). Section 21D(b)(3)(A) of the PSLRA goes on to require courts to dismiss complaints that fail to meet these requirements. See 15 U.S.C. 78u-4(b)(3)(A). Finally, the Amended Complaint fails to comply with Federal Rule of Civil Procedure 9(b), which states that whenever a complaint contains allegations of fraud, "the circumstances constituting the fraud . . . shall be stated with particularity." B. NCS'S "DUE DILIGENCE" CLAIMS ARE LEGALLY INSUFFICIENT ---------------------------- The Amended Complaint first alleges that Omnicare's Offer to Purchase fails to disclose that the Omnicare Tender Offer "is conditioned on the satisfactory completion by Omnicare of review and investigation of non-public information regarding NCS." (Am. Cplt., [p] 22.) This claim fails because there is no such condition. It is black letter contract law that an undisclosed condition to an offer is not a condition. See Arthur Linton Corbin & Joseph M. Perillo, Corbin on Contracts 'SS' 1.11 (Rev. Ed. 1993) ("In order to be legally operative and to create a power of acceptance, it is necessary that the offer shall contain all the terms of the contract to be made."); Restatement (Second) of Contracts 'SS' 58 (1982) ("An acceptance must comply with the requirements of the offer as to the promise to be made or the performance to be rendered."). To "disclose" such a condition would simply operate to create something that does not exist. See McCormick v. Fund Am. Co., 26 F.3d 869, 879 (9th Cir. 1994) ("[Defendant] can hardly be faulted for omitting to say something that was not true."). Omnicare's Offer to Purchase sets forth all conditions with respect to the Omnicare Tender Offer, and none include or have any relation to due diligence. (Am. Cplt., Ex. A, p. 25-28.) As a result, NCS's claim is frivolous. -8- C. NCS'S "DUE DILIGENCE" CLAIMS ARE MOOT --------------------- In order to eliminate any confusion in the marketplace stemming from NCS's meritless "due diligence" claim, Omnicare sent a letter to the NCS Board of Directors on August 27, 2002 which it simultaneously made public, explaining that there is not now and never was a due diligence condition to the Omnicare Tender Offer, and withdrawing any request for confirmatory due diligence in connection with its July 26 offer to negotiate a merger with NCS. (McKay Aff., Ex. 3.) Accordingly, NCS's "due diligence" claims are also moot and must be dismissed for this reason, as well. See U.S. Const., Art. III; Isaacs Bros. Co. v. Hibernia Bank, 481 F.2d 1168, 1170 (9th Cir. 1973). D. NCS's "SERIOUS NEGOTIATIONS" CLAIMS SHOULD BE DISMISSED ---------------------------- NCS next claims that Omnicare's Offer to Purchase is false and misleading because certain references to the parties' prior dealings "misled NCS shareholders into believing that NCS had not been interested in serious negotiations with Omnicare." (Am. Cplt., [p][p] 25, 27, 30, 34, 37.) In order to maintain this claim, the PSLRA requires NCS to state with particularity all facts demonstrating that NCS was in fact "interested in serious negotiations with Ominicare." See 15 U.S.C. 'SS' 78u-4(b)(1), Fed. R. Civ. P. 9(b). But the Amended Complaint is devoid of any facts demonstrating that NCS ever made an offer to Omnicare in response to the numerous instances referred to in the Amended Complaint where Omnicare made specific proposals, or that NCS ever pursued serious negotiations with Omnicare. Indeed, an examination of the Amended Complaint shows that there are no facts alleged from which this Court could conclude -9- that NCS has properly alleged the basic premise of its claim -- that NCS was interested in serious negotiations with Omnicare. First, the Amended Complaint alleges that Omnicare's statement that "[w]e have tried repeatedly to discuss with NCS HealthCare the potential acquisition of NCS HealthCare by Omnicare" is materially false and misleading because "Omnicare did not submit its initial indication of interest to acquire NCS for $3.00 per share in cash until July 26, 2002" and "[p]rior to that time, [(1)] Omnicare made no effort to communicate directly with NCS for at least five months" and (2) Omnicare's only indications of interest "contemplated a purchase of NCS's assets under Section 363 of the U.S. Bankruptcy Code at a purchase price substantially lower than the amount of NCS's outstanding debt obligations, and which would have provided no recovery to NCS's equity holders." (Am. Cplt., [p][p] 23-24.) At best, these allegations denigrate Omnicare's efforts at pursuing NCS; they certainly do not demonstrate that Omnicare's statement of fact was false or misleading. What is conspicuously absent from the Amended Complaint are allegations of fact supporting the notion that NCS was interested in serious negotiation with Omnicare. For example, where is there any allegation of fact that NCS responded to Omnicare's July 26, 2002 proposal in any manner, serious or not? There is none. Instead, all that NCS offers are unwarranted factual inferences, which this Court may ignore. Bovee, 272 F.3d at 361. Second, the Amended Complaint alleges that Omnicare's statements that it was "frustrated by the slow pace of the negotiation of the confidentiality agreement" and that NCS "requested that Omnicare indicate in writing specifically the limited due diligence materials that it would need to review" also "mislead NCS shareholders into -10- believing that NCS had not been interested in serious negotiations with Omnicare." (Am. Cplt., [p][p] 26-27.) But, NCS does not allege facts demonstrating that either of Omnicare's statements are false and again offers no facts to support the notion that it was interested in serious negotiations. Third, NCS alleges that Omnicare's statement that NCS "never responded to Omnicare's written proposal" dated August 29, 2001 is false and misleading because, according to NCS, it responded by "ultimately execut[ing] a confidentiality agreement with Omnicare." (Am. Cplt., [p][p] 29-31.) Once again, NCS attempts to plead securities fraud by offering non sequiturs. Executing a confidentiality agreement is not a substantive response to an acquisition proposal, and NCS does not allege that it ever made such a response by, for example, putting forward a counteroffer. In any event, Omnicare specifically states in the Offer to Purchase that "[i]n September 2001 . . . advisors to the parties . . . finally agreed to the terms of a confidentiality agreement," so the alleged "omission" of this fact cannot form the basis of a disclosure claim. (Am. Cplt., Ex. A, p. 18.) Fourth, NCS takes issue with Omnicare's statement that it was "[f]rustrated by the lack of any response from the Company's senior management" because "during the period from August to mid-November 2001, the Company failed to respond to Omnicare's repeated requests . . . for information . . . or to engage in any meaningful discussions regarding a potential transaction with Omnicare." (Am. Cplt., [p] 33.) NCS claims this statement is false and misleading because it continued to engage in efforts to discuss a non-bankruptcy transaction with Omnicare in October 2001 and January 2002 and because its financial advisor allegedly attempted to communicate with -11- Omnicare regarding a potential transaction and further review of the due diligence materials provided by NCS, but Omnicare never responded to NCS in "any meaningful manner." (Am. Cplt., [p] 35.) NCS does not explain, however, how the fact that its financial advisor attempted to discuss a potential transaction with Omnicare makes Omnicare's statement that it was frustrated by the lack of response from NCS's senior management false. Indeed, NCS never alleges in the Amended Complaint facts demonstrating that NCS's senior management ever contacted Omnicare during this period and attempted to engage in serious negotiations. Fifth, NCS attacks Omnicare's statement that it "had made repeated requests to discuss its proposal with the Company, the Company was experiencing financial difficulties and Omnicare still had not been able to hold any discussions with the Company regarding Omnicare's interest in acquiring the Company." (Am. Cplt., [p] 36.) NCS claims that this is a false and misleading statement because, prior to July 26, 2002, Omnicare had not directly communicated with NCS about any proposal since February 2002 and Omnicare had never indicated an interest in a non-bankruptcy acquisition of NCS, or an acquisition in which equity holders would receive $3.00 per share in cash. Again, all this parsing of statements made in Omnicare's Offer to Purchase cannot avoid the fact that NCS has not and apparently cannot allege any facts demonstrating the existence of the basic premise of its fraud claim against Omnicare, i.e., that NCS was seriously interested in negotiations with Omnicare. Instead, NCS's disclosures all refute the proposition: o On July 1, 2002 NCS decided to negotiate only with Genesis and executed an "exclusivity agreement" to that effect. (McKay Aff., Ex. 1, p. 7.) -12- o On July 26, 2002 Omnicare faxed a letter to NCS director Outcalt proposing a merger at $3.00 per share in cash. Omnicare's phone calls to Outcalt and his advisors over the ensuing weekend were not returned. (Am. Cplt., Ex. A, p. 20-21.) o Instead of responding to Omnicare's $3.00 per share cash offer, NCS agreed to lock up a merger with Genesis for $1.60 in Genesis common stock. Subsequently, NCS continued its refusal to engage in any discussions with Omnicare. (Id., Ex. A, p. 20-23.) o NCS rejected Omnicare's $3.50 per share all cash tender offer and claims that its existing agreements with Genesis preclude it from having any discussions with Omnicare. (McKay Aff., Ex. 1, p. 11.)(4) If NCS were interested in serious negotiations with Omnicare, it has a very subtle way of expressing such intent. E. THE AMENDED COMPLAINT UTTERLY FAILS TO ALLEGE THE MATERIALITY OF THE CLAIMED OMISSIONS ------------------------------- Even if NCS's allegations that Omnicare falsely implied that NCS was not interested in serious negotiations with Omnicare could otherwise state a claim, the Amended Complaint fails to allege how such statements or omissions were material, especially since it is undisputed that since at least as of July 1, 2002, NCS had decided to deal exclusively with Genesis. The Supreme Court has defined materiality in this regard: An omitted fact is material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote. . . . Put another way, there must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable - -------------------- (4) On Thursday, September 12, 2002, NCS filed Amendment No. 3 to its Schedule 14D-9 wherein it stated that the NCS board of directors had obtained a limited waiver from Genesis from those "no talk" provisions. However, in another odd approach to its fiduciary duties, the board stated that, given NCS's existing agreement with Genesis, ". . . it is unlikely that a business combination with Omnicare may be consummated." (McKay Aff., Ex. 4.) -13- investor as having significantly altered the `total mix' of information made available. TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976); see also Starkman v. Marathon Oil Co., 772 F.2d 231, 238 (6th Cir. 1985). Moreover, "only material facts -- those substantially likely to affect the deliberations of the reasonable shareholder -- must be disclosed, and then only if the nondisclosure of the particular material facts would make misleading the affirmative statements otherwise required by the federal securities laws and SEC regulations." Starkman, 772 F.2d at 238; see also Resource Exploration, Inc., 566 F. Supp. at 63 ("Any inquiry as to whether an omission is material must focus on its effect on a reasonable investor's decision whether to tender his shares. The test is whether a reasonable investor would attach importance to a fact in determining his choice of action."). Although materiality is usually a mixed question of fact and law, the issue may be resolved "as a matter of law" if no reasonable person could differ as to whether a particular fact is material. See In Re CDNow, Inc. Sec. Litig., 138 F. Supp.2d 624, 636 (E.D. Pa. 2001) ("While materiality is traditionally a question for the trier of fact, a court may rule alleged omissions immaterial as a matter of law if the omissions are so obviously unimportant to a reasonable investor that reasonable minds cannot differ on the question of materiality."). Given the "total mix" of information available to NCS stockholders, it is inconceivable that NCS's interest, whether serious or not, in negotiations with Omnicare at some point prior to July 1, 2002 (when it is undisputed that NCS chose to deal exclusively with Genesis) is material to a stockholder decision whether to tender shares to Omnicare. This is particularly true when Omnicare is offering $3.50 per share and the NCS/Genesis merger provides only $1.60 to NCS stockholders. Under the -14- circumstances, no rational NCS stockholder would prefer the Genesis transaction over Omnicare's $3.50 per share offer. F. NCS HAS FAILED TO PLEAD SUFFICIENT FACTS TO CREATE AN INFERENCE, LET ALONE A STRONG INFERENCE, THAT OMNICARE ACTED WITH FRAUDULENT INTENT ------------------------------------- Section 14(e) of the Securities Exchange Act is an antifraud statute. See Schreiber, 472 U.S. at 10. The Amended Complaint does not even attempt to allege scienter, much less comply with the strict pleading standard imposed by Rule 9(b) and the PSLRA -- which requires that the complaint must state with particularity facts giving rise to a strong inference that defendant acted with the required state of mind. 15 U.S.C. 'SS' 78u-4(b)(2). The Court of Appeals for this Circuit has taken a strict approach to this requirement. See In re Comshare, Inc. Sec. Litig., 183 F.3d 542, 551 (6th Cir. 1999) ("under a plain interpretation of the PSLRA as informed by well-settled law on the contours of the `scienter' requirement, we hold that plaintiffs may meet PSLRA pleading requirements by alleging facts that give rise to a strong inference of reckless behavior but not by alleging facts that illustrate nothing more than a defendant's motive and opportunity to commit fraud"). Here, no facts are alleged which even attempt to address this critical element of a fraud claim, and, accordingly, the claim must be dismissed. -15- CONCLUSION ---------- For all of the foregoing reasons, the First Amended Complaint fails to state a claim upon which relief can be granted and should be dismissed. Dated: Cleveland, Ohio September 13, 2002 /s/ Hugh E. McKay -------------------------------------- Hugh E. McKay (#0023017) Charles W. Zepp (#0068129) PORTER WRIGHT MORRIS & ARTHUR LLP 925 Euclid Avenue, Suite 1700 Cleveland, OH 44115-1483 (216) 443-9000/ Fax- (216) 443-9011 hmckay@porterwright.com czepp@porterwright.com Attorneys for Omnicare, Inc. Of counsel: Robert C. Myers Seth C. Farber James P. Smith III David F. Owens Melanie R. Moss DEWEY BALLANTINE LLP 1301 Avenue of the Americas New York, New York 10019-6092 Telephone (212) 259-8000/ Fax (212) 259-6333 -16- CERTIFICATE OF SERVICE ---------------------- I hereby certify that a true and correct copy of the Memorandum of Law in Support of Omnicare's Motion to Dismiss the First Amended Complaint was filed electronically on the 13th day of September, 2002. Notice of this filing will be sent to all parties by operation of the Court's electronic filing system. Parties may access this filing through the Court's system. H. Jeffrey Schwartz Mark A. Phillips BENESCH, FRIEDLANDER, COPLAN & ARONOFF 2300 BP Tower 200 Public Square Cleveland, OH 44114-2378 Edward P. Welch Edward B. Micheletti SKADDEN, ARPS, SLATE, MEAGHER, & FLOM, LLP One Rodney Square P.O. Box Wilmington, DE 19899-0636 Attorneys for NCS Healthcare, Inc. /s/ Hugh E. McKay ---------------------------------- Hugh E. McKay (#0023017) One of the Attorneys for Defendant Omnicare, Inc. -17- EX-99 4 ex99-a1t.txt EXHIBIT (A)(1)(T) Exhibit (a)(1)(T) IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO EASTERN DIVISION NCS HEALTHCARE, INC., ) ) CASE NO. 1:02CV1635 Plaintiff, ) ) JUDGE PAUL MATIA v. ) ) PLAINTIFF'S MOTION FOR OMNICARE, INC., ) PRELIMINARY INJUNCTION ) Defendant. ) Pursuant to Rule 65(a) of the Federal Rules of Civil Procedure, Plaintiff NCS HealthCare, Inc. ("NCS") respectfully moves the Court for an order enjoining Defendant Omnicare, Inc. ("Omnicare") from soliciting additional tenders of shares of NCS stock until such time as Omnicare makes disclosures directly to the stockholders of NCS correcting the misrepresentations and omissions made to date by Omnicare as detailed in the First Amended Complaint of NCS and further mandating that any shareholder who has tendered shares to Omnicare be provided the opportunity to rescind their tender of shares upon notice of such corrective disclosures. The grounds for this Motion are detailed in the First Amended Complaint and in Plaintiff's Combined Memorandum in Opposition to Defendant's Motion to Dismiss the First Amended Complaint and in Support of Plaintiff's Motion for Preliminary Injunction, which Combined Memorandum is being filed contemporaneously herewith and is incorporated herein by reference. Respectfully submitted, /s/ Mark A. Phillips -------------------------------- MARK A. PHILLIPS (0047347) JEFFREY A. CROSSMAN (0063550) BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP 2300 BP Tower, 200 Public Square Cleveland, OH 44114 Telephone: (216) 363-4500 Facsimile: (216) 363-4588 mphillips@bfca.com Of Counsel: Edward P. Welch Edward B. Micheletti SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP One Rodney Square P.O. Box 636 Wilmington, DE 19899-0636 Telephone: (302) 651-3000 Facsimile: (302) 651-3001 ewelch@skadden.com 2 CERTIFICATE OF SERVICE A copy of the foregoing Plaintiff's Motion for Preliminary Injunction was filed electronically this 30th day of September, 2002. Notice of this filing will be sent to all parties by operation of the Court's electronic filing system. Parties may access this filing through the Court's system. /s/ Mark A. Phillips -------------------------------- MARK A. PHILLIPS 3 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO EASTERN DIVISION NCS HEALTHCARE, INC., ) ) CASE NO. 1:02CV1635 Plaintiff, ) ) JUDGE PAUL MATIA v. ) ) OMNICARE, INC., ) ) Defendant. ) PLAINTIFF'S COMBINED MEMORANDUM IN OPPOSITION TO DEFENDANT'S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT AND IN SUPPORT OF PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION MARK A. PHILLIPS (0047347) JEFFREY A. CROSSMAN (0063550) BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP 2300 BP Tower, 200 Public Square Cleveland, OH 44114 Telephone: (216) 363-4500 Facsimile: (216) 363-4588 mphillips@bfca.com Of Counsel: Edward P. Welch Edward B. Micheletti SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP One Rodney Square P.O. Box 636 Wilmington, DE 19899-0636 Telephone: (302) 651-3000 Facsimile: (302) 651-3001 TABLE OF CONTENTS
Page ---- TABLE OF CONTENTS...................................................................................i TABLE OF AUTHORITIES...............................................................................ii I. SUMMARY OF ARGUMENT...........................................................................1 II. STATEMENT OF FACTS............................................................................3 A. NCS's Two-Year Search for Strategic Alternatives to Maximize Stakeholder Value Leads to the Genesis Merger.............................................................3 B. Omnicare's Campaign to Force NCS Into A Bankruptcy Sale.......................................4 C. After Five Months of Silence, Omnicare Resurfaces When it Discovers NCS is About To Execute a Deal With Genesis.......................................................6 D. Omnicare's Illusory Tender Offer and Misleading Offer to Purchase.............................8 1. Omnicare's Offer Fails to Disclose its Negotiation And Due Diligence Conditions.......................................................................8 2. Omnicare's Offer to Purchase Also Contains Materially Misleading Statements.................................................................................9 III. ARGUMENT.....................................................................................10 A. The Amended Complaint States A Section 14(e) Claim...........................................10 1. Omnicare Cannot Avoid the August 8 Letter's Due Diligence Condition.......................12 2. Omnicare's Misleading Statements Violate Section 14(e)....................................13 3. Omnicare's Misleading Statements and Omissions are Material...............................14 4. The Complaint Sufficiently Alleges Scienter...............................................15 B. This Court Should Preliminarily Enjoin Omnicare From Proceeding With its Tender Offer.................................................................................17 1. NCS Has Demonstrated a Substantial Likelihood of Success on the Merits....................19 2. All Other Factors Warrant Injunctive Relief...............................................21 CONCLUSION.........................................................................................22 CERTIFICATE OF SERVICE.............................................................................23
i TABLE OF AUTHORITIES
CASES Page - ----- ---- Adams v. Standard Knitting Mills, Inc., 623 F.2d 422 (6th Cir. 1980)...............................16 Ameribanc Investors Group v. Zwart, 706 E. Supp. 1248 (E.D. Va. 1989)..............................18 American Insured Mortgage Investors v. CRI, Inc., 1990 AWL 192561, (S.D.N.Y. Nov. 26, 1990............................................................................19 Biechele v. Cedar Points, Inc., 747 F.2d 209 (6th Cir. 1984).......................................18 Blanchette v. Providence & Worcester Co., 428 F. Supp. 347 (D. Del. 1977)..........................19 Bovee v. Coopers & Lybrand L. L. P., 272 F. 3d 356, (6th Cir. 2001)................................11 Clearfield Bank & Trust Co. v. Omega Fin. Corp., 65 F. Supp. 2d 325 (W.D. Pa. 1999)........................................................................13, 17, 20, 21 Connecticut Nat'l Bank v. Fluor Corp., 808 F. 2d 957, (2d Cir. 1987)...............................11 Dana Corp. v. Blue Cross & Blue Sheild Mut., 900 F. 2d 882 (6th Cir. 1990).........................11 Electronic Specialty Co. v. International Controls Corp., 409 F. 2d 937, (2d Cir. 1969)......................................................................18 Golden cycle, LLC v. Allan, C. A. No. 16301, 1998 WL 892631 (Del. Ch. Dec. 10, 1998)...............15 Hanna Mining Co. v. Norcen Energy Resources, Ltd., 574 F. Supp. 1172 (N.D. Ohio 1982)................................................................................18-19 Hishon v. King & Spalding, 467 U.S. 69, 73 (1984)..................................................11 J. P. Stevens & Co. Shareholders Litig., 542 A.2d 770, 781 n.6 (1988)..............................15 Piper v. Chris- Craft Indus., 430 U.S. 1 (1977)....................................................17 Polaroid Corp. v. Disney, 862 F.2d 987 (3d Cir. 1988)..............................................21 Semerenko v. Cendant Corp. 223 F. 3d 165 (3d Cir. 2000), 531 U.S. 1149(2001)................................................................................14 Sonesta Int'l Hotels Corp. v. Wellington Assoc., 483 F.2d 247 (2d Cir. 1973).......................18 Summit Health Realtek Indus. V. Nomura Sec., 939 F. Supp. 572 (N.D. Ohio 1996)...................................................................................11
ii Summit Health Ltd. v. Pinhus, 500 U.S. 322 (1991)..................................................11 TSC Indus. V. Northway, Inc. 426 U.S. 438 (1976)...................................................14
STATUTES & CONSTITUTIONAL PROVISIONS Page - ------------------------------------ ---- 15 U.S.C. 'SS'78n(e)...........................................................................Passim 15 U.S.C. 'SS'78u-4(b)(2)..........................................................................16 RULES - ----- Fed. R. Civ. P. 12(b)(6)...........................................................................10 Fed. R. Civ. P. 9(b)...............................................................................11
iii IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO EASTERN DIVISION NCS HEALTHCARE, INC., ) ) CASE NO. 1:02CV1635 Plaintiff, ) ) JUDGE PAUL MATIA v. ) ) OMNICARE, INC., ) ) Defendant. ) PLAINTIFF'S COMBINED MEMORANDUM IN OPPOSITION TO DEFENDANT'S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT AND IN SUPPORT OF PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION I. SUMMARY OF ARGUMENT On August 8, 2002, Omnicare, Inc. ("Omnicare") made a highly conditional purported cash tender offer for NCS Healthcare, Inc. ("NCS") Class A and B common stock (the "Purported Omnicare Offer"). It was, in reality, no offer at all. The same day it commenced the Purported Omnicare Offer, Omnicare's president and chief executive officer, Joel Gemunder, made it clear in a letter to NCS that NCS must negotiate with Omnicare and provide due diligence to satisfy the conditions of the tender offer (the "August 8 Letter"). Omnicare deliberately concealed the due diligence condition and the August 8 Letter from NCS shareholders in an apparent attempt to kill NCS's pending merger with Genesis Health Ventures, Inc. ("Genesis") while leaving Omnicare free to abandon the Purported Omnicare Offer. In order to conceal its true motives from NCS shareholders, Omnicare's August 8, 2002 offer to purchase (the "Offer to Purchase") deliberately misleads shareholders by creating a false impression that Omnicare was a serious long-time suitor of NCS, interested in more than a bankruptcy bargain, and that NCS inexplicably ignored Omnicare's overtures. In reality, however, it was Omnicare that brushed aside NCS's requests that Omnicare consider a transaction that would benefit all of NCS's stakeholders. And it was Omnicare that maneuvered for nearly a year to obtain NCS through a bankruptcy sale that would have left NCS stockholders with nothing. Although difficult to tell from its brief, Omnicare's motion seeks dismissal of the amended complaint for failure to state a claim for relief. Rather than accept as true NCS's well pled factual allegations, as it must on a motion to dismiss, Omnicare attempts to dispute them with conclusory rhetoric and an improperly attached, self-serving press release which Omnicare issued in response to this action.(1) What is most remarkable, however, is that Omnicare continues to ignore altogether its own most damning document -- the August 8 Letter and its deliberately concealed due diligence condition. In the August 8 Letter, Mr. Gemunder apprised the NCS board that the parties must (1) negotiate, and (2) conduct due diligence to resolve most, but not all, of the conditions to the tender offer. Weeks later -- after NCS filed this lawsuit and revealed Omnicare's undisclosed due diligence condition -- Mr. Gemunder professed in a publicly released letter to the NCS board, dated August 27, 2002, that Omnicare's "tender offer is not conditioned on due diligence" (the "August 27 Letter"). (McKay Aff., Ex. 3) The August 27 Letter, however, never mentioned - ---------- (1) Rather than address the allegations of the amended complaint, Omnicare's factual statement summarizes Omnicare's purported grievances with the Genesis Merger (defined below), which is the subject of litigation pending before the Delaware Court of Chancery. (Omnicare Br. at 1-8) The Court must reject Omnicare's self-serving recitation of the "facts" when considering the motion to dismiss. See Realtek Indus. v. Nomura Sec., 939 F. Supp. 572, 578 (N.D. Ohio 1996). 2 Omnicare's August 8 Letter. (Id.) Indeed, Omnicare has never disavowed, withdrawn or ever addressed (not even in its motion to dismiss) the August 8 Letter. The reason is simple - Omnicare cannot deny its own words: the conditions in Omnicare's tender offer can be satisfied only if NCS negotiates and permits additional due diligence. Yet Omnicare refuses to inform NCS shareholders of this fact. Stripped of its bluster, Omnicare's motion to dismiss is nothing more than a ploy to conceal its campaign to acquire the assets of NCS at scavenger prices and pay NCS shareholders nothing. Moreover, the amended complaint, Omnicare's response, and Omnicare's misleading public record, demonstrate the merits of this action and the compelling need for injunctive relief. Accordingly, Omnicare's motion to dismiss should be denied and an injunction ordered in favor of NCS. II. STATEMENT OF FACTS A. NCS's Two-Year Search for Strategic Alternatives to Maximize Stakeholder Value Leads to the Genesis Merger NCS is a Delaware corporation headquartered in Beachwood, Ohio. (Am. Compl. [p] 5) NCS is an independent provider of pharmacy services to long-term care institutions including skilled nursing facilities, assisted living facilities and other institutional health care settings. (Id.) Beginning in 1999, the NCS board of directors and management became concerned about the company's financial condition and future viability given the deteriorating conditions within the health care industry and a general downturn in NCS's business. (Am. Compl. [p] 11) Since 2000, faced with managing a company in default on its debt of approximately $350 million and owing fiduciary duties to both the company's shareholders and creditors, the NCS board and its advisors have painstakingly sought out and examined numerous restructuring alternatives and potential strategic business combinations. (Id.) Throughout this two-year process, NCS has 3 sought to protect the interests of all its stakeholders and ensure the company's long-term viability. (See Am. Compl. [p][p] 11, 12) By July 2002, NCS had engaged in discussions with a number of potential strategic and financial acquirors and investors. (Am. Compl. [p] 12) Finally, on July 28, 2002, this seemingly interminable process culminated in an agreement and plan of merger with Genesis (the "Genesis Merger Agreement") whereby NCS will be merged with a wholly owned subsidiary of Genesis (the "Genesis Merger"). (Am. Compl. [p] 9) The Genesis Merger Agreement provides recovery for all of NCS's creditors and stockholders. (Am. Compl. [p] 10) Each NCS common stockholder will receive 0.1 shares of Genesis common stock, and Genesis will repay all of the outstanding debt of NCS. (Id.) B. Omnicare's Campaign to Force NCS Into A Bankruptcy Sale Omnicare, a Delaware corporation with its principal place of business in Kentucky, is NCS's single largest competitor in the institutional pharmacy business. (Am. Compl. [p] 6) Prior to negotiating the Genesis Merger Agreement, NCS engaged in discussions with Omnicare regarding a potential transaction from mid-2001 until Omnicare suspended direct communications with NCS around February 2002. (Am. Compl. [p][p] 13, 14, 35). These discussions produced three conditional indications of interest by Omnicare to acquire NCS's assets under Section 363 of the Bankruptcy Code at bargain basement prices and in which Omnicare would pay nothing to NCS's shareholders. (Am. Compl. [p] 24) Throughout these discussions, Omnicare rebuffed requests by NCS's financial advisors to consider a nonbankruptcy transaction. Instead, Omnicare focused its energies on negotiating with an ad hoc committee of NCS note holders (the "Ad Hoc Committee") to put pressure on the NCS board to place the company in bankruptcy. (Am. Compl. [p][p] 14, 35, 38) 4 Omnicare's first indication of interest was made by letter dated July 20, 2001, in which it made a conditional low-ball proposal to acquire NCS assets for $225 million -- a price substantially less than NCS's $350 million in outstanding debt. Had NCS accepted this proposal, it would have provided limited recovery to NCS creditors, and NCS stockholders would have received nothing. (Am. Compl. [p] 13; McKay Aff., Ex. 1 at 5) The proposal was conditioned upon, among other things, a due diligence review satisfactory to Omnicare. (Am. Compl. [p] 14; McKay Aff., Ex. 1 at 5) On August 29, 2001, Omnicare raised its offer to purchase NCS assets to $270 million. (McKay Aff., Ex. 1 at 6) Again, the proposed purchase price was well below NCS's outstanding debt and left stockholders with no recovery, and, again, Omnicare conditioned its proposal upon the completion of due diligence. (Id.) Wishing to pursue discussions with Omnicare, NCS requested that Omnicare execute a confidentiality agreement similar to agreements accepted by at least 36 other parties with whom NCS had had discussions. (Am. Compl. [p] 28) Omnicare refused to execute the confidentiality agreement, primarily due to its unwillingness to accept customary restrictions on its ability to solicit NCS's customers and raid NCS employees, use competitively sensitive non-public information and acquire NCS debt securities. (See Am. Compl. [p][p] 28, 31) NCS, however, continued to negotiate with Omnicare and, in September 2001, NCS and Omnicare executed a limited confidentiality agreement. (Am. Compl. [p] 31) Between September 2001 and February 2002, NCS's financial advisors attempted to communicate with Omnicare regarding a potential non-bankruptcy transaction structure and to review the due diligence materials provided by NCS. (Am. Compl. [p][p] 32-35) Omnicare never responded to these requests in any meaningful way. (Am. Compl. [p] 35) Indeed, Omnicare declined to communicate directly with NCS or its advisors and instead turned to the Ad Hoc 5 Committee to ratchet up the pressure on NCS to engage in a bankruptcy sale. (Am. Compl. [p][p] 14, 35, 38; McKay Aff., Ex. 1 at 7) Thereafter, on April 10, 2002, the Ad Hoc Committee gave NCS a draft asset purchase agreement with Omnicare that again provided for a Section 363 bankruptcy sale that did not fully satisfy NCS's creditors, and provided nothing to NCS shareholders. At no time prior to July 26, 2002, when it learned that NCS and Genesis were on the verge of a definitive agreement, did Omnicare express any interest in a non-bankruptcy acquisition of NCS, let alone even attempt to communicate directly with NCS. (Am. Compl. [p][p] 14, 35, 38) C. After Five Months of Silence, Omnicare Resurfaces When it Discovers NCS is About To Execute a Deal With Genesis In June 2002, Genesis proposed a merger with NCS with no associated bankruptcy filing, a full recovery by the senior debt holders, 70% recovery by the note holders, assumption of trade credit obligations, and a recovery of $7.5 million for NCS's equity holders. (McKay Aff., Ex. 1 at 7) Throughout June, NCS and Genesis continued to negotiate and Genesis's proposal increased to provide greater recovery for the note holders and shareholders. (Id.) Genesis conditioned its discussions with NCS on an exclusivity agreement, which was effective from July 1, 2002 through July 19, except that it was automatically extended through July 26 if the parties were still negotiating on July 19. (Id. at 7-8) When NCS executed the exclusivity agreement, it had been months since it had heard directly from Omnicare and NCS was not in discussions with any other party. (Am. Compl. [p][p] 17, 24; McKay Aff., Ex. 1 at 8) On July 26, believing that they were about to strike a definitive deal, an independent committee of the NCS board authorized a five-day extension of the exclusivity agreement. (Id.) Later on July 26, after learning that NCS was about to sign up a merger agreement with Genesis, and after almost five months of silence, Mr. Gemunder faxed a highly conditional 6 indication of interest to NCS suggesting -- for the first time -- a cash acquisition. (Am. Compl. [p] 14) As with its prior indications of interest, and notwithstanding the due diligence already provided by NCS, Omnicare's proposal was subject to the completion of "confirmatory due diligence" involving the review of unspecified non-public information and numerous other conditions. (Id.; Am. Compl., Ex. A at 20, "In addition, since we have not yet been afforded the opportunity to conduct any meaningful due diligence, we would like to conduct an expedited due diligence investigation of NCS....") At almost the same time, Genesis made clear that it intended to terminate discussions if its fully negotiated deal was not immediately executed. (McKay Aff., Ex. 1 at 8) Recognizing the severe risks presented by the Omnicare proposal, the independent committee recommended that the board approve the Genesis transaction. (Id. at 8-9) The NCS board then met and shortly thereafter unanimously recommended that NCS stockholders vote in favor of the Genesis Merger Agreement. (Id. at 10) Both the board and the independent committee were deeply concerned that the Omnicare proposal was predatory, highly conditional and illusory given its numerous conditions, including the completion of satisfactory due diligence. (Id.) If NCS rejected the Genesis proposal, given the illusory nature of the Omnicare indication of interest, NCS would face the real possibility of being left with no merger partner at all. (Id. 10-12; Am. Compl. [p] 41) On July 29, 2002, Mr. Gemunder, by letter, raised Omnicare's purported acquisition proposal from $3.00 per share to $3.50 per share. (Am. Compl., Ex. A at 22) This indication of interest, like the previous ones, was highly conditional and continued to require due diligence. (Am. Compl., Ex. A at 22, "Consequently, we need to do only confirmatory due diligence, which would involve only a review of certain non-public information typical for a transaction of this type.") 7 D. Omnicare's Illusory Tender Offer and Misleading Offer to Purchase 1. Omnicare's Offer Fails to Disclose its Negotiation And Due Diligence Conditions. On August 1, 2002, Omnicare publicly announced its intention to commence a tender offer for NCS common stock at $3.50 per share. (Am. Compl. [p] 15) A week later, on August 8, 2002, Omnicare commenced the Purported Omnicare Offer. (Am. Compl. [p] 16) The Offer to Purchase included an extensive list of conditions. (Am. Compl., Ex. A at 1-3, 25-28) Omnicare further qualified its offer by reserving the right to determine, "in its sole discretion," the "satisfaction or existence of any of the conditions." (Id. at 3) Nowhere in the Offer to Purchase, however, did Omnicare disclose the conditions it made clear to NCS that same day - that, in Omnicare's view, the conditions to the tender offer could be satisfied if NCS negotiated and completed due diligence. (Am. Compl. [p] 17) Indeed, the August 8 Letter is clear: Most of the conditions to our tender offer would be satisfied if we are able to negotiate a transaction with NCS, other than those customary conditions that already are included in the NCS/Genesis Merger Agreement. Although we need to complete confirmatory due diligence, we are confident that our diligence review can be complete in a matter of days if we are provided with reasonable access to certain customary non-public information regarding NCS, which we expect was made available to Genesis. (Emphasis added) Omnicare concealed this due diligence condition from NCS shareholders because its disclosure would have revealed that the Purported Omnicare Offer was no offer at all, but rather a conditional proposal designed to provide Omnicare with an "easy out," namely to renegotiate a lower-priced deal once Genesis was out of the picture. Omnicare has never withdrawn its due diligence demand or even acknowledged the August 8 Letter. Incredibly, even after NCS filed this action specifically addressing the undisclosed conditions contained in that letter, Omnicare simply ignored the letter in its opening brief. Instead, Omnicare appends to its papers a later-crafted litigation and public relations 8 piece, the August 27 Letter, which suggests that no due diligence condition exists because it was not disclosed in the Offer to Purchase.(2) That letter never addresses Omnicare's August 8 admission that the disclosed conditions to Omnicare's tender offer could be satisfied by undisclosed conditions that NCS negotiate and allow future due diligence. Indeed, Omnicare has deliberately avoided addressing the August 8 Letter and its express conditions in any of its public announcements in connection with the Offer to Purchase. 2. Omnicare's Offer to Purchase Also Contains Materially Misleading Statements. Omnicare has also misled shareholders by falsely portraying itself as having been repeatedly and unreasonably shunned by NCS when, in fact, it was Omnicare that resisted all of NCS's requests to consider a transaction that would provide recovery for NCS shareholders. (Am. Compl. [p][p] 23-38) The amended complaint identifies Omnicare's materially misleading statements in detail: o Materially Misleading Statement #1. "We have tried repeatedly to discuss with NCS HealthCare the potential acquisition of NCS Healthcare by Omnicare." (Am. Compl. [p] 23; Am. Compl., Ex. A at 4) o Materially Misleading Statement #2. Omnicare was "[f]rustrated by the slow pace of the negotiation of the confidentiality agreement" apparently because NCS "requested that Omnicare indicate in writing specifically the limited due diligence - ---------- (2) Omnicare cites Bovee v. Coopers & Lybrand L.L.P., 272 F.3d 356, 360-61 (6th Cir. 2001), for the proposition that it can attach to its 12(b)(6) motion any publicly filed document, even those created post-litigation, to dispute factual allegations and dodge legal liability. Bovee states only that a court may consider certain publicly filed documents that are `integral to the complaint' on a motion to dismiss. Id. (quoting I. Meyer Pincus & Assoc. v. Oppenheimer & Co., 936 F.2d 759, 762 (2nd Cir. 1991)). See also Kramer v. Time Warner, Inc. 937 F.2d 767, 774 (2d Cir. 1991) (noting court could take judicial notice of certain SEC documents that were either alleged to be inadequate or related to the adequacy of the disclosure, but cautioning "[w]e stress that our holding relates to public disclosure documents required by law to be filed, and actually filed, with the SEC, and not to other forms of disclosure such as press releases or announcements at shareholder meetings.") (emphasis added). Omnicare would have the Court create a new procedure by which a party may avoid answering a complaint by simply attaching select denials to its motion to dismiss while ignoring any damaging admissions that would otherwise be required. 9 materials that it would need to review" and that the parties communicate through their respective financial advisors. (Am. Compl. [p] 26; Am. Compl., Ex. A at 18) o Materially Misleading Statement #3. NCS "never responded to Omnicare's written proposal" dated August 29, 2001, which proposed a purchase of NCS's assets in a bankruptcy sale. (Am. Compl. [p] 29; Am. Compl., Ex. A at 18) o Materially Misleading Statement #4. Omnicare was "frustrated by the lack of any response from the Company's senior management" apparently because "during the period from August to mid-November 2001, the Company failed to respond to Omnicare's repeated requests for ... information ... or to engage in any meaningful discussions regarding a potential transaction with Omnicare." (Am. Compl. [p] 33; Am. Compl., Ex. A at 18) o Materially Misleading Statement #5. By July 2002, "Omnicare had made repeated requests to discuss its proposal with the Company, the Company was experiencing financial difficulties and Omnicare still had not been able to hold any discussions with the Company regarding Omnicare's interest in acquiring the Company." (Am. Compl. [p] 36; Am. Compl., Ex. A at 19) Moreover, Omnicare's statements in its Offer to Purchase involving the confidentiality agreement (reluctantly entered into by Omnicare) are also misleading. They fail to disclose that the delay in executing a confidentiality agreement was caused by Omnicare's refusal to agree to basic provisions that had been acceptable to at least 36 other parties. Notwithstanding Omnicare's unwillingness to enter into a confidentiality agreement with customary provisions, NCS still engaged in discussions with Omnicare and ultimately executed a confidentiality agreement with Omnicare in September 2001. (Am. Compl. [p][p] 28, 31) III. ARGUMENT A. The Amended Complaint States A Section 14(e) Claim Just as it ignores the August 8 Letter, Omnicare also neglects the familiar standards the Court must apply in deciding a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6). On a motion to dismiss for failure to state a claim for relief, the well-pleaded allegations of the complaint must be accepted as true and construed in a light most favorable to the plaintiff. 10 Bovee v. Coopers & Lybrand L.L.P., 272 F.3d 356, 360 (6th Cir. 2001) (emphasis added); Realtek Indus. v. Nomura Sec., 939 F. Supp. 572, 578 (N.D. Ohio 1996) (citing Summit Health Ltd. v. Pinhas, 500 U.S. 322, 324 (1991), and Dana Corp. v. Blue Cross & Blue Shield Mut., 900 F.2d 882 (6th Cir. 1990)). The motion to dismiss must be denied unless "'it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.'" Realtek, 939 F. Supp. at 578 (quoting Hishon v. King & Spalding, 467 U.S. 69, 73 (1984)). Omnicare erroneously argues that the amended complaint should be dismissed as legally insufficient to state a claim for relief for a violation of Section 14(e) of the Securities Exchange Act of 1934, 15 U.S.C. 'SS'78n(e), as amended ("Section 14(e)"). Omnicare further contends that the amended complaint fails to plead fraud with particularity pursuant to Fed. R. Civ. P. 9(b) and the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). Section 14(e) makes it "unlawful for any person to make any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made not misleading, or to engage in any fraudulent, deceptive, or manipulative acts or practices, in connection with any tender offer, or any solicitation of security holders in opposition to or in favor of any such offer, request or invitation." To state a claim under Section 14(e), a plaintiff must show that: (1) the tender offeror made an untrue statement of fact, or omission of a fact necessary to make statements made in connection with a tender offer not misleading; (2) the misstatement or omission was material; and (3) the statement or omission was made with intent or reckless disregard for the truth. See Connecticut Nat'l Bank v. Fluor Corp., 808 F.2d 957, 961 (2d Cir. 1987). As shown below, the amended complaint adequately pleads that Omnicare violated Section 14(e) of the Exchange Act by deliberately making material misleading statements and omissions in its Offer to Purchase. 11 1. Omnicare Cannot Avoid the August 8 Letter's Due Diligence Condition. In arguing that the Court should dismiss NCS's "due diligence claims," Omnicare completely disregards the August 8 Letter, sent the same day the Offer to Purchase was released. In that letter, Mr. Gemunder explained to the NCS board that "most of the conditions to our tender offer would be satisfied if the parties "negotiate" and NCS permits Omnicare to complete "confirmatory due diligence." (emphasis added) There is no question that Omnicare believed the disclosed conditions to the tender offer could only be satisfied once Omnicare completed due diligence. Like every preceding indication of interest, the Purported Omnicare Offer was conditioned upon due diligence. The August 8 Letter cannot be interpreted any other way. Incredibly, Omnicare argues (in effect) that a tender offeror may conceal a material condition with impunity because it can claim its intended condition became a non-condition solely by virtue of its having been deliberately hidden. (Omnicare Br. at 8, "It is blackletter law that an undisclosed condition to an offer is not a condition.") (emphasis added) To credit such deception would defeat the very purpose of Section 14(e). Omnicare further suggests that claims related to the undisclosed due diligence condition are now "moot" because after NCS commenced this action Omnicare chose, not to disavow the August 8 Letter or to disclose the condition, but to issue a press release stating that the tender offer is not conditioned upon due diligence, without even referencing the August 8 Letter. (Omnicare Br. at 9, McKay Aff., Ex. 3) In other words, Omnicare urges the Court to accept as true (in contravention of general 12(b)(6) standards) a publicity piece drafted in response to NCS's lawsuit. (See Omnicare Br. at 9) As discussed above, Omnicare's reliance on its press release in this manner is improper. However, if the Court considers the August 27 Letter on this 12 motion to dismiss, it must recognize the letter for what it is: Omnicare's misleading attempt to sidestep addressing the August 8 Letter head on. See, e.g., Clearfield Bank & Trust Co. v. Omega Fin. Corp., 65 F. Supp. 2d 325, 344 (W.D. Pa. 1999) (recognizing that similar tactic "is indefensible," especially in light of later purported "'clarification'" letter) (citation omitted) Moreover, even if the Court accepts Omnicare's argument that there is not now a due diligence condition, Omnicare still materially misled shareholders by not disclosing the condition when it commenced the tender offer. Omnicare cannot commit securities fraud and then claim mootness simply because it ambiguously changed its tune when it got caught. Until Omnicare confronts the concealed due diligence condition and the August 8 Letter,(3) shareholders will continue to be misled. 2. Omnicare's Misleading Statements Violate Section 14(e). Omnicare's attempt to mislead NCS shareholders into believing that NCS was not interested in negotiating with Omnicare prior to the Genesis Merger Agreement makes Omnicare's failure to disclose the due diligence condition more deceptive. By misstating the facts surrounding the prior negotiations between Omnicare and NCS, Omnicare creates the misleading impression that NCS was never interested in a deal with Omnicare for the purpose of - ---------- (3) For example, Omnicare should be required to explain why the undisclosed due diligence condition is not embedded as one of the plethora of other conditions in the Offer to Purchase. Specifically, the Offer to Purchase identifies nine of the "most significant" conditions to consummation of the Purported Omnicare Offer which must be satisfied to Omnicare's sole satisfaction or waived in its sole discretion. (Am. Compl., Ex. A at 2-3, 15) These conditions involve, among other things, factors beyond NCS's control, such as the termination of a voting agreement between Genesis, NCS and its two largest shareholders and Omnicare`s finding that a "nonimpairment" condition has been satisfied. (Id.) The "nonimpairment" condition relieves Omnicare from consummating the tender offer if it determines "in its sole discretion" that any of NCS's agreements or transactions could impair Omnicare's ability to acquire NCS or "otherwise diminis[h] the expected economic value to Omnicare of the acquisition." (Am. Compl., Ex. A at 3) There is every reason to believe that Omnicare will rely upon this "nonimpairment" condition to justify its demands of due diligence referenced in the August 8 Letter. 13 undermining NCS's credibility with its own shareholders and hiding Omnicare's true motives. Omnicare cannot omit that all of its prior overtures toward NCS involved attempts to pressure NCS into a bankruptcy sale so it could avoid paying anything to NCS shareholders. Similarly, Omnicare cannot conceal that it ignored NCS's requests that Omnicare consider a transaction that would provide recovery to shareholders, or that Omnicare held discussions with the Ad Hoc Committee in order to pressure NCS into bankruptcy. Omnicare cannot also ignore that it was Omnicare that caused the delay in executing that agreement. These materially misleading statements and half-truths must be corrected. 3. Omnicare's Misleading Statements and Omissions are Material. Omnicare also contends that, even if its statements were misleading, they were immaterial as a matter of law. (Omnicare Br. at 13) A fact is material if there exists a "substantial likelihood that, under all the circumstances, the omitted fact would have assumed actual significance in the reasonable shareholder's deliberations." TSC Indus. v. Northway, Inc., 426 U.S. 438, 450 (1976). In other words, an omission is material if its disclosure would have significantly altered the "total mix" of information available to a reasonable shareholder in deciding whether to tender shares or how to vote on a transaction. Id. at 449. "[T]he issue of materiality typically presents a mixed question of law and fact, and that the delicate assessment of inferences is generally best left to the trier of fact." Semerenko v. Cendant Corp. 223 F.3d 165, 178 (3d Cir. 2000), cert. denied, 531 U.S. 1149 (2001) The issue of materiality should be decided as a matter of law "only if the alleged misrepresentations are so clearly and obviously unimportant that reasonable minds could not differ in their answers to the question." Id. Clearly, that is not the case here. 14 Omnicare's failure to inform NCS's shareholders that the Purported Omnicare Offer was conditioned upon the satisfactory completion of due diligence (involving Omnicare's review of unspecified non-public information) was without question material. The satisfactory due diligence condition is a significant risk to consummation of the Purported Omnicare Offer as well as telling evidence of Omnicare's commitment (or lack thereof) to the purported offer. The risk of non-consummation is a material factor in evaluating a potential transaction. See, e.g., Golden Cycle, LLC v. Allan, C.A. No. 16301, 1998 WL 892631 (Del. Ch. Dec. 10, 1998) (board's rejection of competing higher offer was defensible where offer was conditioned upon satisfactory results of due diligence and the invalidation of a termination fee, and noting material factors other than price include risk of non-consummation) (citing In re J.P. Stevens & Co. Shareholders Litig., 542 A.2d 770, 781 n.6 (1988)). Failure to disclose the due diligence condition is particularly misleading where, as here, shareholders must decide for themselves whether Omnicare's highly conditional "offer" is anything more than an aggressive strategy aimed at removing Genesis as an impediment to Omnicare's planned bankruptcy acquisition of NCS. Omnicare's portrayal of itself as a serious merger partner inexplicably cast aside by NCS from the outset is also misleading. Further, because shareholders are faced with assessing Omnicare's motives and commitment to completing the tender offer, the fact that the delay in negotiating the confidentiality agreement arose from Omnicare's odd refusal to accept customary terms acceptable to at least 36 other parties is also material, particularly given Omnicare's repeated attempts to falsely undercut NCS's credibility and motives in dealing with Omnicare. 4. The Complaint Sufficiently Alleges Scienter. 15 Finally, in support of its motion to dismiss, Omnicare claims that "NCS has failed to plead sufficient facts to create an inference, let alone a strong inference, that Omnicare acted with fraudulent intent" as required by the PSLRA. (Omnicare Br. at 15) Omnicare either misapprehends the pleading standards or has once again chosen to ignore them. The heightened pleading standards for alleging fraud under the PSLRA do not apply to actions seeking only equitable relief. See 15 U.S.C. 'SS'78u-4(b)(2) ("In any private action arising under this chapter in which the plaintiff may recover money damages only on proof that the defendant acted with a particular state of mind, the complaint shall, with respect to each act or omission alleged to violate this chapter, state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind") (emphasis supplied).(4) To allege scienter in a Section 14(e) action, a plaintiff must plead an "intent to deceive" or "reckless disregard for the truth." Adams v. Standard Knitting Mills, Inc., 623 F.2d 422, 431 (6th Cir. 1980). The amended complaint alleges specific factual allegations regarding Omnicare's intent to mislead NCS shareholders as to the uncertainty of the Purported Omnicare Offer by deliberately withholding from them the fact that Omnicare could walk away if it professed unhappiness with NCS's due diligence materials. (Am. Compl. [p][p] 3, 14, 16-20) Here, NCS alleges that Omnicare was careful to expressly include the due diligence condition in its correspondence with NCS management as well as the SEC, but avoided providing the condition directly to shareholders. (Am. Compl. [p][p] 3, 16-18) NCS also alleges that Omnicare concealed this condition from shareholders so they would be misled into believing the Purported Omnicare Offer was a bona fide offer instead of a highly conditional proposal. (Am. Compl. [p][p] 3, 19-20) - ---------- (4) Even if the heightened pleading standard did apply to actions seeking injunctive relief, as discussed, below, NCS has pled facts sufficient to create a strong inference that Omnicare's deceptions were committed with recklessness or fraudulent intent. 16 The only reasonable inference to be drawn from Omnicare's conduct is that it purposely withheld the due diligence condition from NCS shareholders in order to mislead them as to the illusory nature of the Purported Omnicare Offer in an effort to defeat the firm Genesis Merger. See, e.g., Clearfield Bank & Trust Co. v. Omega Fin. Corp., 65 F. Supp. 2d 325, 344 (W.D. Pa. 1999) (issuing injunction in Section 14(e) case where tender offeror urged shareholders, in an effort to "kill the deal," to exercise dissenter's rights, but failed to disclose that by exercising dissenter's rights shareholders could defeat the merger and lose the right to tender their shares) (citations omitted). The amended complaint also specifically identifies at least five misleading statements in Omnicare's Offer to Purchase which are designed to assist Omnicare's attempt to scuttle the Genesis Merger. (Am. Compl. [p][p] 26, 27, 29, 33, 34, 36, 37, 39, 40) The only reasonable inference that can be drawn from Omnicare's misleading statements and omissions is that it purposefully sought to discredit NCS by misleading NCS shareholders into believing that NCS, without good reason, dismissed Omnicare as a potential suitor. The reality is that Omnicare has placed itself in a position to withdraw its tender offer and force NCS to accept terms far less favorable than the Genesis Merger Agreement. Accordingly, the amended complaint sufficiently alleges facts to show that Omnicare intended to mislead NCS shareholders by omitting the due diligence condition from the Offer to Purchase, and misstating the facts about the previous discussions between Omnicare and NCS, as well as Omnicare's reluctance to accept standard provisions during the negotiation of the confidentiality agreement. B. This Court Should Preliminarily Enjoin Omnicare From Proceeding With its Tender Offer The purpose of Section 14(e) is to ensure that shareholders have adequate information in evaluating a tender offer. See Piper v. Chris-Craft Indus., 430 U.S. 1, 31 (1977) ("[T]he sole 17 purpose of the Williams Act was the protection of investors who are confronted with a tender offer."); Biechele v. Cedar Points, Inc., 747 F.2d 209 (6th Cir. 1984) (purpose of Williams Act was to protect shareholders evaluating tender offers by providing adequate information). Until Omnicare makes corrective disclosures, NCS shareholders will not have adequate information upon which to rely in evaluating the Purported Omnicare Offer. In order to protect NCS shareholders, this Court should preliminarily enjoin Omnicare from continuing its tender offer until such corrective disclosures are made, require Omnicare to offer NCS shareholders an opportunity to rescind their tendered shares, and enjoin continuing Section 14(e) violations and any solicitation of receipt of tenders until Omnicare makes the necessary corrective disclosures. There is no question NCS may appropriately bring an action under Section 14(e) for injunctive relief against Omnicare arising out of Omnicare's deceptive Offer to Purchase. See, e.g., Hanna Mining Co. v. Norcen Energy Resources, Ltd., 574 F. Supp. 1172, 1193 (N.D. Ohio 1982) (target corporation has standing to bring Section 14(e) claim to enjoin tender offer); Ameribanc Investors Group v. Zwart, 706 F. Supp. 1248, 1254 (E.D. Va. 1989) ("every court that has considered the issue since Piper has found that a target company had standing under Section 14(e) to pursue corrective disclosures"). Preliminary injunctive relief is the appropriate remedy for Omnicare's Section 14(e) disclosure violations. See, e.g., Piper v. Chris-Craft Indus., 430 U.S. 1, 42 (1977) ("[I]n corporate control contests the stage of preliminary injunctive relief, rather than post-contest lawsuits, `is the time when relief can best be given.'" (quoting Electronic Specialty Co. v. International Controls Corp., 409 F.2d 937, 947 (2d Cir. 1969)); Sonesta Int'l Hotels Corp. v. Wellington Assoc., 483 F.2d 247, 250 (2d Cir. 1973) (preliminary injunction "will normally afford prompt relief against a violation of 'SS'14(e)" and "is a particularly useful remedy for prevention of probable violations of the disclosure requirements of the Act."). 18 In order to obtain a preliminary injunction, the moving party must show: (1) a substantial likelihood of success on the merits; (2) irreparable injury; (3) lack of harm to others if a preliminary injunction is issued; and (4) the public interest favors issuance of a preliminary injunction. Hanna Mining Co. v. Norcen Energy Resources Ltd., 574 F. Supp. 1172, 1193 (N.D. Ohio 1982). 1. NCS Has Demonstrated a Substantial Likelihood of Success on the Merits As discussed above, based upon the record created by Omnicare in support of its motion to dismiss, NCS has demonstrated that Omnicare's non-disclosure of the due diligence condition and misleading representations about the companies' earlier discussions violate Section 14(e). Omnicare has, at every turn, avoided dealing directly with the August 8 Letter. That letter, dated the same day as the Offer to Purchase, expressly conditions Omnicare's tender offer on negotiations and the completion of due diligence. Neither the August 27 Letter nor Omnicare's opening brief disputes that the August 8 Letter did, in fact, condition the tender offer upon due diligence. Indeed, Omnicare has never disavowed the statements in the August 8 Letter or withdrawn the conditions stated therein. What Omnicare continues to hide from shareholders is that it fully intended that the tender offer be conditioned upon negotiation and due diligence, and that it concealed, and continues to conceal, that condition from shareholders. Moreover, Omnicare's attempts to mislead shareholders regarding previous discussions between the two parties also violate Section 14(e) and should be enjoined, and corrective disclosures should be ordered. In order to adequately assess Omnicare's tender offer, shareholders need all of the facts about Omnicare's record of oppressive tactics to throw NCS into bankruptcy to deprive shareholders of receiving any value for their shares. Furthermore, based on the misleading information disseminated by Omnicare and its attempts to tarnish NCS's 19 credibility with its shareholders, the Court should order Omnicare to make corrective disclosures. "A corrective disclosure must call attention specifically to the prior misstatement, telling the investor that the statements were inaccurate and disclose the truth." American Insured Mortgage Investors v. CRI Inc., 1990 WL 192561, at *8 (S.D.N.Y. Nov. 26, 1990). See also Blanchette v. Providence & Worcester Co., 428 F. Supp. 347, 354 (D. Del. 1977) (finding misstatement was not corrected by subsequent disclosure letter which contained correct information because it failed to disavow incorrect statement and inform shareholders that they should disregard incorrect statement in deciding whether to withdraw tendered shares.) In a similar case, Clearfield Bank & Trust Co. v. Omega Fin. Corp., 65 F. Supp. 2d 325 (W.D. Pa. 1999), the district court granted permanent injunctive relief to a target company where a hostile bidder omitted material information related to the viability of its tender offer in an attempt to defeat a merger under shareholder consideration. In Clearfield, which was not addressed in Omnicare's brief, the defendant, Omega, offered to purchase stock in the target company, Clearfield, for $65 per share. Id. at 331. Omega's tender offer, however, was conditioned upon Clearfield shareholders rejecting a merger proposal between Clearfield and another entity, CSB, and further exercising their appraisal rights. Id. Clearfield's merger agreement with CSB provided that the merger would not be consummated if more than 10% of Clearfield shareholders exercised appraisal rights. Id. at 329. Omega's offer materials did not disclose that if a Clearfield shareholder exercised its appraisal rights (which required the shareholder to tender its shares to Clearfield) that it could not also tender shares to Omega. Id. at 341-42. Omega further failed to disclose that its tender offer was subject to regulatory approval and whether or not Omega had sought such approval. Id. at 342. 20 The district court held these omissions -- like here -- directly undercut the viability of the tender offer which was intended to "kill the deal," and were therefore materially misleading in violation of Section 14(e). Id. at 344. The court ordered injunctive relief that included: (1) postponement of Clearfield's shareholder meeting; (2) rescission of any agreement between Omega and Clearfield shareholders based upon the misleading offer; and (3) distribution to shareholders of a summary of the opinion as a corrective disclosure. Id. at 347. 2. All Other Factors Warrant Injunctive Relief. NCS's shareholders will suffer irreparable injury if an injunction does not issue. The Third Circuit explained irreparable harm in the context of a tender offer: Irreparable harm arises because of the difficulty of proving money damages in a suit based upon material misrepresentations by the tender offeror. While Congress has determined that accurate disclosure is important to shareholders, it would often be impossible for shareholders to prove that on the facts of their particular tender offer accurate disclosure would have affected their decision making in a particular way with concomitant quantifiable monetary loss. The inadequacy of a remedy at law and the importance that Congress has attached to accurate disclosure of material information establishes irreparable harm. Polaroid Corp. v. Disney, 862 F.2d 987, 1006 (3d Cir. 1988) (holding that target corporation established probability of success on claim that tender offeror misrepresented that offer could be consummated without violating certain margin regulations and without acquiring shares held by employee stock ownership plan). The Clearfield court found this reasoning directly on point in the same situation presented here: material omissions made by a tender offeror to defeat a pending merger. Clearfield, 65 F. Supp. 2d at 346. And, as in Clearfield, the risk of harm to other interested parties by the grant or denial of injunctive relief is not applicable. See id. Finally, the issuance of a preliminary injunction is without question in the public interest. "A takeover effected through a tender offer containing a material nondisclosure is not in the public interest." Clearfield, 65 F. Supp. 2d at 346. See also Polaroid, 862 F.2d at 1006 (noting 21 that Congress, in passing the Williams Act, decided that takeovers "were not in the public interest if effected through tender offers containing material misrepresentations"). CONCLUSION For the foregoing reasons and authorities cited NCS respectfully requests that the Court deny Omnicare's Motion to Dismiss the First Amended Complaint, grant NCS's Motion for a Preliminary Injunction, and enter such other and further relief in favor of NCS as the Court finds just and equitable. Respectfully submitted, /s/ Mark A. Phillips ---------------------------------------------- MARK A. PHILLIPS (0047347) JEFFREY A. CROSSMAN (0063550) BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP 2300 BP Tower, 200 Public Square Cleveland, OH 44114 Telephone: (216) 363-4500 Facsimile: (216) 363-4588 mphillips@bfca.com Of Counsel: Edward P. Welch Edward B. Micheletti SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP One Rodney Square P.O. Box 636 Wilmington, DE 19899-0636 Telephone: (302) 651-3000 Facsimile: (302) 651-3001 ewelch@skadden.com 22 CERTIFICATE OF SERVICE A copy of the foregoing Plaintiff's Combined Memorandum was filed electronically this 30th day of September, 2002. Notice of this filing will be sent to all parties by operation of the Court's electronic filing system. Parties may access this filing through the Court's system. /s/ Mark A. Phillips -------------------------------- MARK A. PHILLIPS 23 -----END PRIVACY-ENHANCED MESSAGE-----