-----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, K46ysIvuZIjVgTkUCEeb2+m9qq074tj73IRZhxMMe4Gq8R77vzf3qX1esoaaqbru t4eADmR2KMf8jkfPseeeFQ== 0000950117-03-000003.txt : 20030102 0000950117-03-000003.hdr.sgml : 20030101 20030102144159 ACCESSION NUMBER: 0000950117-03-000003 CONFORMED SUBMISSION TYPE: SC TO-T/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20030102 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: 03500664 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 a34096.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. 40 ------------------- 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) CHERYL D. HODGES SENIOR VICE PRESIDENT AND SECRETARY 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 $144,283,651 $13,274.10
* Estimated for purposes of calculating the amount of the filing fee only. This amount assumes the purchase of (i) 18,523,502 shares of the class A common stock, par value $0.01, of NCS Healthcare, Inc., a Delaware corporation (the 'Company'), representing all of the issued and outstanding shares of such class as of July 28, 2002 (less 1,000 shares of such class owned by Omnicare, Inc.), (ii) 5,193,307 shares of the class B common stock, par value $0.01, of the Company, representing all of the issued and 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. [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. 40 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 issued and 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., a Delaware corporation (the "Company"), at a price of $5.50 per share, net to the seller in cash, without interest and less required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated August 8, 2002 (the "Offer to Purchase"), as amended and supplemented by the Supplement to the Offer to Purchase, dated December 23, 2002 (the "Supplement"), and in the related revised Letter of Transmittal (the "Letter of Transmittal" which, together with the Offer to Purchase and the Supplement, as hereby or hereafter amended or supplemented from time to time, constitute the "Offer"). Copies of the Offer to Purchase, the Supplement and the related revised Letter of Transmittal are attached as Exhibits (a)(1)(A), (a)(1)(HHH) and (a)(1)(III), respectively, to the Schedule TO. Capitalized terms used and not defined herein shall have the meanings assigned such terms in the Offer to Purchase, the Supplement and the Schedule TO. Item 11. Additional Information. The discussion set forth under Section 18 ("Legal Proceedings") of the Offer to Purchase and Section 11 ("Legal Proceedings") of the Supplement is hereby amended and supplemented as follows: On December 30, 2002, NCS HealthCare, Inc., Boake A. Sells and Richard L. Osborne (collectively, the "NCS Defendants") filed a motion to intervene as defendants (the "Motion to Intervene") in an action filed by the Company stockholder-plaintiffs. In their action, which was filed with the Court of Chancery of the State of Delaware (the "Chancery Court") on December 27, 2002, the stockholder-plaintiffs are seeking, among other things, to set aside $13,500,000 of the amount otherwise payable to the Company's stockholders in the Offer. On the same day, the stockholder-plaintiffs made a Motion for Temporary Restraining Order (the "TRO") relating to their action. The NCS Defendants argue that they are moving to intervene as defendants in the stockholder-plaintiffs' action because, although Omnicare is paying $5.50 per share of Company common stock in accordance with the terms of the merger agreement between Omnicare and the Company (the "Merger Agreement"), the relief sought by the stockholder-plaintiffs would result in the Company's stockholders receiving less than $5.50 per share and (i) the Company, as a party to the Merger Agreement, has an interest in enforcing the terms of the agreement, which provides, among other things, that the Company's stockholders shall receive $5.50 per share in cash in the Offer and the subsequent merger, and (ii) Messrs. Sells and Osborne, as stockholders of the Company, have an interest in ensuring that they receive $5.50 per share in the transaction with Omnicare. In addition, the NCS Defendants argue that they are entitled to intervene as of right because their interests are not being adequately represented by any party to the stockholder-plaintiffs' action. The NCS Defendants also filed an answer (the "Answer in Intervention") to the allegations set forth in the complaint filed by the stockholder-plaintiffs. The full text of the Motion to Intervene and the Answer in Intervention are filed as Exhibit (a)(1)(QQQ) and Exhibit (a)(1)(RRR), respectively, hereto and are incorporated herein by reference. On the same day, counsel for the NCS Defendants submitted a letter (the "Letter") to the Chancery Court opposing the TRO. The NCS Defendants, through counsel, argue that the stockholder-plaintiffs have not met their heavy burden of demonstrating, as required, a reasonable probability of success on the merits, irreparable injury if the TRO is not granted and that the balancing of hardships favors them. Specifically, the NCS Defendants argue, among other things, (i) under the Merger Agreement, the Company's stockholders are entitled to $5.50 per share in cash and that setting aside any amount from the consideration to be paid to such stockholders for attorneys' fees, as the stockholder-plaintiffs request, would deprive the Company's stockholders of the consideration agreed upon in the Merger Agreement, (ii) the stockholder- plaintiffs' request would require that Omnicare alter the Offer consideration to be paid to the Company's stockholders, which is not permitted under the Merger Agreement, (iii) in similar circumstances, it is typical for an acquiror to pay the class counsel's fees, subject to the acquiror's right to challenge the amount of such fees and the court's approval, and (iv) the stockholder- plaintiffs' have failed to satisfy their burden of justifying the amount of the Offer consideration which they seek to have withheld for the payment of their counsel's fees, which, based on the number of hours that the stockholder- plaintiffs' counsel claims to have spent on this matter, equals approximately $4,500 per hour. The full text of the Letter is filed as Exhibit (a)(1)(SSS) hereto and is incorporated herein by reference. On January 2, 2003, Omnicare and Purchaser submitted a response (the "Omnicare Response") to the stockholder-plaintiffs' action and the TRO, as well as the Motion to Intervene and Letter submitted by the NCS Defendants, to the Chancery Court. Although Omnicare and Purchaser take no position with respect to the stockholder-plaintiffs' action and the TRO, they note that there is no support in the documents submitted by the stockholder-plaintiffs for a fee award in the extraordinary amount of $13,500,000. In addition, Omnicare and the Purchaser agree that the NCS Defendants should be permitted to intervene in the stockholder-plaintiffs' action, however, they oppose the NCS Defendants' unsupported suggestion that Omnicare should be ordered to pay the stockholder-plaintiffs' attorneys' fees. In the Omnicare Response, Omnicare and the Purchaser point out, among other things, and the stockholder-plaintiffs recognize, that the "common fund doctrine," which is the basis for the stockholder-plaintiffs' request, requires that the Company's stockholders, not Omnicare, compensate the stockholder-plaintiffs' attorneys out of the common fund created by the stockholder-plaintiffs' litigation. Although, as the NCS Defendants argue, in certain circumstances successful acquirors have voluntarily paid the fees of plaintiffs' counsel, even the cases cited by the NCS Defendants make clear that the acquiror is in no way legally obligated to pay such fees. Here, as Omnicare and Purchaser explain, it is the Company's stockholders who will receive a substantial benefit as a result of the stockholder-plaintiffs' litigation, not Omnicare. As the NCS Defendants point out, Omnicare has agreed to pay $5.50 per share in cash to acquire all of the outstanding shares of the Company's common stock. Regardless of whether the Chancery Court issues the order sought by the stockholder-plaintiffs', Omnicare will still be paying $5.50 per share in cash for each outstanding share of the Company's common stock, as required by the Merger Agreement and described in the Supplement. If the Chancery Court grants the relief sought by the stockholder-plaintiffs, Omnicare and the Purchaser explain, it simply would mean that some portion of the consideration being paid by Omnicare in the Offer will be available to satisfy the amount, if any, that the Chancery Court determines the Company's stockholders are required to pay their counsel. Neither the Merger Agreement nor the Supplement, which provide that Omnicare shall pay $5.50 per share net to the seller in cash to acquire all of the outstanding shares of the Company's common stock, (i) could preclude the Chancery Court from ordering that a portion of the consideration paid to the Company's stockholders be set aside to pay the stockholders' attorneys' fees or (ii) shifts the obligation to pay the stockholders' attorneys' fees to Omnicare, which would have the effect of increasing the consideration being paid by Omnicare to the Company's stockholders beyond what Omnicare already has agreed to pay. The full text of the Omnicare Response is filed as Exhibit (a)(1)(TTT) hereto and is incorporated herein by reference. Item 12. Exhibits. Item 12 is hereby amended and supplemented with the following information: Exhibit (a)(1)(QQQ) The NCS Defendants' Motion to Intervene filed in the Court of Chancery of the State of Delaware on December 30, 2002. Exhibit (a)(1)(RRR) The NCS Defendants' Answer in Intervention filed in the Court of Chancery of the State of Delaware on December 30, 2002. Exhibit (a)(1)(SSS) The NCS Defendants' Letter to the Court of Chancery of the State of Delaware, dated December 30, 2002. Exhibit (a)(1)(TTT) Omnicare's Response to the Court of Chancery of the State of Delaware, dated January 2, 2003. 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: January 2, 2003 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)(1)(U) Press Release issued by Omnicare, Inc. on October 4, 2002.* (a)(1)(V) Defendant's Motion to Dismiss the Second Amended Complaint filed in the Chancery Court, New Castle County, Delaware on October 3, 2002.* (a)(1)(W) Omnicare's Reply Memorandum of Law in Further Support of the Motion to Dismiss the First Amended Complaint filed in the United States District Court for the Northern District of Ohio on October 15, 2002.* (a)(1)(X) Second Amended Complaint filed in the Chancery Court, New Castle County, Delaware on October 16, 2002.*
(a)(1)(Y) Plaintiff's Memorandum of Law in Opposition to the NCS Defendants' Motion to Dismiss Omnicare's Second Amended Complaint filed in the Chancery Court, New Castle County, Delaware on October 17, 2002.* (a)(1)(Z) Omnicare's Memorandum of Law in Opposition to Plaintiff's Motion for Preliminary Injunction filed in the United States District Court for the Northern District of Ohio on October 17, 2002.* (a)(1)(AA) The NCS Defendants' Memorandum of Law in Opposition to Omnicare's and the Class Plaintiffs' Motion for Summary Judgment filed in the Chancery Court, New Castle County, Delaware on October 17, 2002.* (a)(1)(BB) Defendant Jon H. Outcalt's Brief in Opposition to Omnicare's Motion for Summary Judgment on Count I of the First Amended Complaint filed in the Chancery Court, New Castle County, Delaware on October 17, 2002.* (a)(1)(CC) Defendant Kevin B. Shaw's Memorandum of Law in Opposition to Omnicare's Motion for Summary Judgment on Count I of the Second Amended Complaint filed in the Chancery Court, New Castle County, Delaware on October 17, 2002.* (a)(1)(DD) Brief of Defendants Genesis Health Ventures, Inc. and Geneva Sub, Inc. in Opposition to Omnicare's and the Class Plaintiffs' Motions for Summary Judgment on Count I of their Complaints filed in the Chancery Court, New Castle County, Delaware on October 17, 2002.* (a)(1)(EE) Press Release issued by Omnicare, Inc. on October 22, 2002.* (a)(1)(FF) Reply Memorandum of Law in Further Support of Omnicare's Motion for Summary Judgment as to Count I of the Second Amended Complaint filed in the Chancery Court, New Castle County, Delaware on October 22, 2002.* (a)(1)(GG) The NCS Defendants' Reply Memorandum of Law in Support of Their Motion to Dismiss Omnicare's Second Amended Complaint filed in the Chancery Court, New Castle County, Delaware on October 22, 2002.* (a)(1)(HH) Reply Brief of Defendants Genesis Health Ventures, Inc. and Geneva Sub, Inc. in Support of Their Motion to Dismiss the Second Amended Complaint filed in the Chancery Court, New Castle County, Delaware on October 22, 2002.* (a)(1)(II) Omnicare, Inc. v. NCS HealthCare, Inc., et al., C.A. No. 19800 (Del. Ch. October 25, 2002).* (a)(1)(JJ) Press Release issued by Omnicare, Inc. on October 28, 2002.* (a)(1)(KK) Omnicare, Inc. v. NCS HealthCare, Inc., et al., C.A. No. 19800 (Del. Ch. October 29, 2002).* (a)(1)(LL) Press Release issued by Omnicare, Inc. on October 30, 2002.* (a)(1)(MM) Excerpts from the Transcript of Omnicare's Third Quarter 2002 Conference Call, dated October 31, 2002.* (a)(1)(NN) Press Release issued by Omnicare, Inc. on November 5, 2002.* (a)(1)(OO) Selected material from a presentation of Omnicare, Inc. at the CIBC World Markets 13th Annual Health Care Conference on November 5, 2002 at The Plaza Hotel, New York, New York.* (a)(1)(PP) Press Release issued by Omnicare, Inc. on November 19, 2002.* (a)(1)(QQ) Brief filed by Omnicare, Inc. in the Supreme Court of the State of Delaware on November 14, 2002.* (a)(1)(RR) In Re NCS HealthCare, Inc., Shareholders Litigation, Consolidated C.A. No. 19786 (Del. Ch. November 22, 2002).*
(a)(1)(SS) Press Release issued by Omnicare, Inc. on November 25, 2002.* (a)(1)(TT) Answering Brief filed by Appellees NCS HealthCare, Inc., Boake A. Sells and Richard L. Osborne in the Supreme Court of the State of Delaware on November 22, 2002.* (a)(1)(UU) Answering Brief filed by Appellees Jon H. Outcalt and Kevin B. Shaw in the Supreme Court of the State of Delaware on November 22, 2002.* (a)(1)(VV) Answering Brief filed by Appellees Genesis Health Ventures, Inc. and Geneva Sub, Inc. in the Supreme Court of the State of Delaware on November 22, 2002.* (a)(1)(WW) Press Release issued by Omnicare, Inc. on December 4, 2002.* (a)(1)(XX) Order of the Supreme Court of the State of Delaware, issued on December 3, 2002.* (a)(1)(YY) Order of the Supreme Court of the State of Delaware, issued on December 4, 2002.* (a)(1)(ZZ) Press Release issued by Omnicare, Inc. on December 5, 2002.* (a)(1)(AAA) Order of the Supreme Court of the State of Delaware, issued on December 10, 2002.* (a)(1)(BBB) Press Release issued by Omnicare, Inc. on December 11, 2002.* (a)(1)(CCC) Omnicare, Inc. v. NCS HealthCare, Inc., et al., C.A. No. 19786 (Del. Ch. December 11, 2002).* (a)(1)(DDD) Press Release issued by Omnicare, Inc. on December 12, 2002.* (a)(1)(EEE) Rules and Procedures for Submission of Proposals for NCS HealthCare, Inc., dated December 13, 2002.* (a)(1)(FFF) Press Release issued by Omnicare, Inc. on December 16, 2002.* (a)(1)(GGG) Press Release issued by Omnicare, Inc. on December 18, 2002.* (a)(1)(HHH) Supplement to the Offer to Purchase dated December 23, 2002.* (a)(1)(III) Revised Letter of Transmittal.* (a)(1)(JJJ) Revised Notice of Guaranteed Delivery.* (a)(1)(KKK) Revised Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.* (a)(1)(LLL) Revised Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.* (a)(1)(MMM) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.* (a)(1)(NNN) Press Release issued by Omnicare, Inc. on December 23, 2002.* (a)(1)(OOO) Complaint filed by the stockholder-plaintiffs in the Court of Chancery of the State of Delaware on December 27, 2002.* (a)(1)(PPP) Motion for Temporary Restraining Order, together with (i) Plaintiffs' Memorandum of Law in Support of Motion for Temporary Restraining Order and (ii) the Affidavit of Joseph A. Rosenthal in Support of Application for a Temporary Restraining Order, filed by the stockholder-plaintiffs in the Court of Chancery of the State of Delaware on December 27, 2002.* (a)(1)(QQQ) The NCS Defendants' Motion to Intervene filed in the Court of Chancery of the State of Delaware on December 30, 2002. (a)(1)(RRR) The NCS Defendants' Answer in Intervention filed in the Court of Chancery of the State of Delaware on December 30, 2002. (a)(1)(SSS) The NCS Defendants' Letter to the Court of Chancery of the State of Delaware, dated December 30, 2002. (a)(1)(TTT) Omnicare's Response to the Court of Chancery of the State of Delaware, dated January 2, 2003. (a)(5)(A) Form of Agreement and Plan of Merger proposed by Omnicare, Inc.* (a)(5)(B) Agreement and Plan of Merger executed by Omnicare, Inc.* (a)(5)(C) Agreement and Plan of Merger executed and delivered by Omnicare, Inc. on December 12, 2002.* (a)(5)(D) Termination and Settlement Agreement, dated December 15, 2002, between Omnicare, Inc., Genesis Health Ventures, Inc. and Geneva Sub, 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.* (d)(2) Agreement and Plan of Merger, dated December 17, 2002, between Omnicare, Inc., NCS Acquisition Corp. 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 exa1-qqq.txt EXHIBIT (A)(1)(QQQ) Exhibit (a)(1)(QQQ) IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - ------------------------------------------------x DOLPHIN LIMITED PARTNERSHIP I, L.P., et al., | | Plaintiffs, | | v. | | | Civil Action No. 20101 | NCS ACQUISITION CORP. and OMNICARE, INC., | | Defendants, | - ------------------------------------------------x NOTICE OF MOTION TO: Joseph A. Rosenthal, Esquire Robert J. Kriner, Esquire Rosenthal, Monhait, Gross & Goddess P.A. Chimicles & Tikellis, LLP Mellon Bank Center, Suite 1401 One Rodney Square P.O. Box 1070 P.O. Box 551 Wilmington, DE 19899 Wilmington, DE 19899 Donald J. Wolfe, Jr., Esquire Porter Anderson & Corroon 1313 North Market Street P.O. Box 1347 Wilmington, Delaware 19801 PLEASE TAKE NOTICE that the attached NCS Defendants' Motion to Intervene and Answer of the NCS Defendants in Intervention will be presented to the Court at the earliest convenience of the Court and counsel. /s/ Edward P. Welch ------------------- Edward P. Welch Edward B. Micheletti Katherine J. Neikirk James A. Whitney SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP One Rodney Square P.O. Box 636 Wilmington, DE 19899 (302) 651-3000 Attorneys for Defendants NCS HealthCare, Inc., Richard L. Osborne and Boake A. Sells OF COUNSEL: Mark A. Phillips BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP 2300 BP Tower, 200 Public Square Cleveland, OH 44114-2378 (216) 363-4500 December 30, 2002 2 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - ------------------------------------------------x DOLPHIN LIMITED PARTNERSHIP I, L.P., et al., | | Plaintiffs, | | v. | | | Civil Action No. 20101 | NCS ACQUISITION CORP. and OMNICARE, INC., | | Defendants, | - ------------------------------------------------x THE NCS DEFENDANTS' MOTION TO INTERVENE Pursuant to Court of Chancery Rules 24(a)(2) and 24(b)(2), NCS Healthcare, Inc. ("NCS"), Boake A. Sells and Richard L. Osborne (collectively, the "NCS Defendants") respectfully more to intervene as defendants in the captioned case. NCS has been informed by Omnicare that it does not object to intervention by the NCS Defendants. The grounds for the NCS Defendants' Motion to Intervene (the "Motion to Intervene") are as follows: 1. On December 27, 2002, Plaintiffs filed a complaint and motion for a temporary restraining order ("TRO Application") against Omnicare, Inc. ("Omnicare") and NCS Acquisition Corp., a wholly owned subsidiary of Omnicare. In their Complaint and TRO Application, Plaintiffs seek to set aside $13,500,000 of the consideration to be 3 paid to NCS stockholders as a result of the NCS/Omnicare Merger Agreement for payment of their attorneys' fees and expenses. 2. Court of Chancery Rule 24(a)(2) provides that upon a timely application to intervene, "anyone shall be permitted to intervene...when the applicant claims an interest relating to the property or transaction which is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest, unless the applicant's interest is adequately represented by existing parties." 3. No one can seriously dispute that the Motion to Intervene is timely. First, this Motion was filed on the business day following the day Plaintiffs filed their complaint and TRO Application. Second, no answering briefs or pleadings have been filed and no judicial action has been taken in connection with the above captioned action. Granting of the Motion to Intervene will not cause harm or prejudice or harm to any existing party. See Wilmington Trust Co. v. Lucks, No. 98C-02-001 HDR, 1999 WL 743255, at *6 (Del. Super. June 18, 1999) (holding motion to intervene timely because existing parties not harmed or prejudiced by any delay in filing by proposed intervener) (attached hereto as Exhibit A). 4. The NCS Defendants have an interest in the subject matter of the litigation. As a party to the NCS/Omnicare Merger Agreement, NCS has an interest in enforcing the terms of that agreement. As stockholders of NCS, Sells and Osborne have 4 an interest in seeing that they receive $5.50 per share "net to the seller in cash" as promised by Omnicare's Supplement to the Offer to Purchase for Cash NCS Acquisition Corp. ("December 23 Tender Offer Supplement"). (December 23 Tender Offer Supplement at 1) 5. The NCS Defendants' interests are not adequately represented by any existing party. Sells and Osborne are not members of the class represented by Plaintiffs and certainly have no interest in seeing their consideration reduced by Plaintiffs' attorneys' fees. Nor are the NCS Defendants' interests adequately represented by Omnicare or NCS Acquisition Corp. For these reasons, the NCS Defendants are entitled to intervene as a matter of right. 6. In the alternative, this Court should exercise its discretion to permit the NCS Defendants to intervene in the captioned action pursuant to Court of Chancery Rule 24(b)(2). Court of Chancery Rule 24(a)(2) provides that upon a timely application to intervene, "anyone shall be permitted to intervene...when an applicant's claim or defense and the main action have a question of law or fact in common." 7. The NCS Defendants' Answer and the captioned action have questions of law and fact in common. Plaintiffs' Complaint and TRO Application seeks to set aside $13,500,000 of the consideration to be paid NCS stockholders. The NCS Defendants' Answer defends on the grounds that the consideration cannot be reduced under the terms of the NCS/Omnicare Merger Agreement, Plaintiffs have failed to show 5 they are entitled to a TRO and that Plaintiffs have not brought suit in the name of the real party in interest. For these reasons, this Court should grant the NCS Defendants permission to intervene into the captioned action. WHEREFORE, the NCS Defendants request that the Court permit it to intervene in the captioned case for all purposes. /s/ Edward P. Welch ------------------- Edward P. Welch Edward B. Micheletti Katherine J. Neikirk James A. Whitney SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP One Rodney Square P.O. Box 636 Wilmington, DE 19899 (302) 651-3000 Attorneys for Defendants NCS HealthCare, Inc., Richard L. Osborne and Boake A. Sells OF COUNSEL: Mark A. Phillips BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP 2300 BP Tower, 200 Public Square Cleveland, OH 44114-2378 (216) 363-4500 December 30, 2002 6 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - ------------------------------------------------x DOLPHIN LIMITED PARTNERSHIP I, L.P., et al., | | Plaintiffs, | | v. | | | Civil Action No. 20101 | NCS ACQUISITION CORP. and OMNICARE, INC., | | Defendants, | - ------------------------------------------------x ORDER IT IS HEREBY ORDERED this ___ day of ______, 2002, that the NCS Defendants' Motion to Intervene is granted. ----------------------------------------- Vice Chancellor 7 EX-99 4 exa1-rrr.txt EXHIBIT (A)(1)(RRR) Exhibit (a)(1)(RRR) IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - ---------------------------------------------------X DOLPHIN LIMITED PARTNERSHIP I, L.P., et al, : : Plaintiffs : : v. : : NCS ACQUISITION CORP. and OMNICARE, INC. : C.A. No. 20101 : Defendants, : : - ---------------------------------------------------X
ANSWER OF THE NCS DEFENDANTS IN INTERVENTION Defendants NCS HealthCare, Inc., Boake A. Sells and Richard L. Osborne (collectively, the "NCS Defendants"), by their attorneys, Skadden, Arps, Slate, Meagher & Flom LLP, respond as follows to the allegations of the Complaint: 1. The NCS Defendants lack knowledge or information sufficient to form a belief as to the truth of the allegations in the first sentence of paragraph 1 of the Complaint, except admit that NCS is being acquired by Omnicare and its wholly owned subsidiary, NCS Acquisition Corp., pursuant to a tender offer and merger at $5.50 per share. The NCS Defendants deny the allegations in the second and third sentences of paragraph 1 of the Complaint. As to the allegations in the fourth sentence of paragraph 1 of the Complaint, the NCS Defendants admit, with the clarification that NCS stockholders would have received one tenth of a share of Genesis Common Stock for each share of NCS Common stock they held, which consideration was valued at $1.60 as of July 28, 2002, the date the NCS/Genesis Merger Agreement was executed. The NCS Defendants admit the allegations in sentences five, six and seven of paragraph 1 of the Complaint. The allegations of the eighth sentence of paragraph 1 of the Complaint do not require a response. 2. The NCS Defendants lack knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 2 of the Complaint, except admit that the named plaintiffs were plaintiffs in the Shareholders Action. 3. Admitted. 4. The NCS Defendants admit the allegations in the first sentence of paragraph 4 of the Complaint, and deny the remaining allegations. 5. The NCS Defendants deny the allegations in the first sentence of paragraph 5 of the Complaint. The NCS Defendants deny the allegations in the second sentence of paragraph 5, except admit that the Director Defendants entered into the Genesis Merger Agreement. As to the remaining allegations, the NCS Defendants respectfully refer the court to the NCS/Genesis Merger Agreement for its terms and deny the remaining allegations to the extent they are inconsistent therewith. 6. Admitted. 2 7. Admitted. 8. Admitted. 9. Admitted. 10. Admitted. 11. Admitted. 12. Admitted. 13. Admitted. 14. Admitted. 15. Admitted. 16. The NCS Defendants admit the allegations in the first two sentences of paragraph 16. As to the remaining allegations, the NCS Defendants respectfully refer the Court to the Order of the Delaware Supreme Court dated December 10, 2002, for its contents, and deny the remaining allegations to the extent they are inconsistent therewith. 17. Admitted. 18. Admitted. 19. The NCS Defendants admit the allegations in the first two sentences of paragraph 19 of the complaint, and deny the remaining allegations. 20. The NCS Defendants respectfully refer the Court to the Agreement and Plan of Merger by and among Omnicare, NCS Acquisition Corp, and NCS, 3 dated December 17, 2002, for its contents, and deny the allegations of paragraph 20 to the extent they are inconsistent therewith. 21. Denied. 22. Denied. 23. Denied. AFFIRMATIVE DEFENSES FIRST AFFIRMATIVE DEFENSE Plaintiffs are barred in whole or in part because the NCS/Omnicare Merger Agreement calls for Omnicare to pay NCS stockholders $5.50 "net to the seller in cash" and does not permit Omnicare to reduce that price. In addition, that provision of the Merger Agreement was negotiated with the full knowledge on the part of Omnicare of the participation by the stockholder plaintiffs, and no right of set-off of merger consideration to pay attorney's fees was ever requested by Omnicare. SECOND AFFIRMATIVE DEFENSE Plaintiffs' claims are barred in whole or in part because, pursuant to Court of Chancery Rule 17, they are not brought in the name of the real party in interest. WHEREFORE, the Defendants respectfully request that this Court enter an Order and Judgment: 4 (i) denying Plaintiffs' Motion for a TRO; (ii) awarding NCS the reasonable costs of suit, including reasonable attorneys' fees; and (iii) grant such other relief as the Court deems just and proper. Respectfully submitted, /s/ Edward P. Welch ------------------------------------- Edward P. Welch Edward B. Micheletti Katherine J. Neikirk James A. Whitney SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP One Rodney Square P.O. Box 636 Wilmington, DE 19899 (302) 651-3000 Attorneys for NCS HealthCare, Inc. Boake A. Sells and Richard L. Osborne OF COUNSEL: Mark A. Phillips BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP 2300 BP Tower, 200 Public Square Cleveland, OH 44114-2389 (216) 363-4500 DATED: December 30, 2002 5 CERTIFICATE OF SERVICE I,Katherine J. Neikirk, hereby certify that on December 30, 2002, I caused two copies of the Notice of Motion, the NCS Defendants' Motion to Intervene, Order and Answer of the NCS Defendants in Intervention to be served upon the following counsel of record in the manner indicated below. BY HAND DELIVERY Joseph A. Rosenthal, Esquire Rosenthal Monhait, Gross & Goddess, P.A. Mellon Bank Center, Suite 1401 Wilmington, Delaware 19801 Donald J. Wolfe, Jr., Esquire Potter Anderson & Corroon LLP 1313 North Market Street Wilmington, DE 19899 Robert J. Kriner, Jr., Esquire Chimicles & Tikellis LLP One Rodney Square Wilmington, DE 19899 /s/ Katherine J. Neikirk ----------------------------------- Katherine J. Neikirk 6 EX-99 5 exa1-sss.txt EXHIBIT (A)(1)(SSS) Exhibit (a)(1)(SSS) [LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP] December 30, 2002 BY HAND - ------- The Honorable Stephen P. Lamb Vice Chancellor Court of Chancery 500 North King Street Wilmington, Delaware 19801 Re: Dolphin Limited Partnership I, L.P., et al. v. NCS Acquisition Corp. et al., Civil Action No. 20101 ------------------------------------------------ Dear Vice Chancellor Lamb: I write on behalf of defendants NCS Healthcare, Inc. ("NCS"), Boake A. Sells and Richard L. Osborne (collectively, the "NCS Defendants") to oppose Plaintiffs' Attorneys' application for a temporary restraining order (the "TRO Application") setting aside $13,500,000 of the consideration to be paid to NCS stockholders for payment of their attorneys' fees and expenses. A TRO is an extraordinary remedy that "will be granted only where it appears that immediate action is required to preserve the status quo and to prevent an immediately threatened irreparable injury that will occur before the matter can be heard on a motion for a preliminary injunction." MacFadden Holdings, Inc. v. John Blair & Co., No. 8489, 1986 WL 7356 at *3 (Del. Ch. July 2, 1986) (attached hereto as Exhibit E). As the party seeking a TRO, Plaintiffs' Attorneys bear the heavy burden of showing a reasonable probability of success on the merits, irreparable injury if the TRO is not granted and that the balancing of hardships favors them. See id.; Sarabyn v. Jessoc, Inc., No. 07, 1978 WL 2504, at *2-*3 (Del. Ch. Sept. 20, 1978) (refusing to restrain shareholder meeting scheduled to vote on merger agreement) (attached hereto as Exhibit F). Plaintiffs' Attorneys cannot satisfy any of these requirements.(1) - --------------- (1) Enclosed are courtesy copies of the NCS Defendants Motion to Invervene and (continued...) The Honorable Stephen P. Lamb December 30, 2002 Page 2 First, pursuant to the terms of NCS/Omnicare Merger Agreement and Omnicare's Supplement to the Offer to Purchase for Cash NCS Acquisition Corp. ("December 23 Tender Offer Supplement"), NCS stockholders are entitled to $5.50 per share "net to the seller in cash." (NCS/Omnicare Merger Agreement at 1) (emphasis added) (attached hereto as Exhibit A) Any amount of attorneys' fees deducted from the merger consideration would deprive NCS stockholders of the $5.50 per share they have been promised. The size of the fee request (in absolute terms, larger than any fee amount previously granted by this Court in a reported decision, with the exception of Joseph v. Shell Oil Co., Nos. 7450, 7699, 1985 WL 150466 (Del. Ch. Apr. 22, 1985) (awarding $15 million in fees) (attached hereto as Exhibit G), coupled with the relatively small number of shares in the class represented, would materially decrease the consideration to be received by stockholders.(2) Second, Omnicare does not have the right to alter the tender offer consideration under the NCS/Omnicare Merger Agreement. Section 1.1 of the NCS/Omnicare Merger Agreement provides that "without the consent of the Company [NCS], Parent [Omnicare] and Sub [NCS Acquisitioni Corp.] shall not ... (ii) reduce the consideration payable in the Offer; or (vi) amend any other term of the Offer in any manner adverse to the Company Stockholders." (NCS/Omnicare Merger Agreement 'SS'1.1) (emphasis added) If Omnicare had desired to set aside a - ------------ (1) (...continued) Answer of the NCS Defendants in Intervention filed with the Court today. (2) Excluding the Class A shares held by the individual defendants and their families, Plaintiffs purport to represent an uncertified class of stockholders owning 18,142,534 shares of Class A Common Stock. See Consolidated Amended Complaint at [p]24; Tender Offer at 5; Osborne 21; Outcalt 86; Sells 20; Shaw 88. The Omnicare Tender Offer purports to provide "$5.50 net to the seller in cash", or approximately $3.90 more per share than the NCS/Genesis Merger Agreement as of July 28, 2002 (without considering the differing tax consequences of the two transactions). The net benefit to the class is thus approximately $70,760,000. Plaintiffs' Attorneys' fee demand represents 19.08% of the benefit, and would effectively reduce the merger consideration for the class to less than $5.00 per share. The Honorable Stephen P. Lamb December 30, 2002 Page 3 portion of the merger proceeds to pay Plaintiffs' Attorneys' fees, it could have raised the issue prior to entering into the NCS/Omnicare Merger Agreement. Omnicare never did so. Moreover, this issue could not have been overlooked by Omnicare, which was well-aware of Plaintiffs' participation and, indeed, was actively working with Plaintiffs during the course of the litigation. In fact, this demand for fees could not have come as any surprise to Omnicare, which has already agreed to pay $22 million to Genesis to terminate its merger agreement with NCS. Omnicare's December 23 Tender Offer Supplement similarly emphasizes that the tender offer price is "$5.50 per share net to the seller in cash, without interest and less required withholding taxes." (December 23 Tender Offer Supplement at 1) (emphasis added) (attached hereto as Exhibit B) Although the Tender Offer Supplement discloses that Plaintiffs' Attorneys had indicated they would seek an order from the Court of Chancery setting aside a portion of the payment made to NCS stockholders, Omnicare has no right under the NCS/Omnicare Merger Agreement to reduce the price, which is $5.50 per share "net to the seller in cash." (NCS/Omnicare Merger Agreement at 1) (emphasis added) Nowhere in the NCS/Omnicare Merger Agreement did the parties indicate that the offer price of $5.50 per share "net to the seller in cash" would be reduced by Plaintiffs' Attorneys' fees. (NCS/Omnicare Merger Agreement at 1) (emphasis added) The current price of NCS's stock also demonstrates that NCS stockholders and the public have no expectation that the offer price of $5.50 will be reduced in order to pay attorneys' fees. NCS Class A Common Stock traded at between $5.40 and $5.41 per share on December 27. See December 27, 2002 Yahoo Finance Stock Quote (attached hereto as Exhibit C). If Plaintiffs' Attorneys' fees were to be deducted from the merger consideration, and trading in NCS Stock accounted for this deduction, NCS Common Stock should instead be trading at less than $5.00, a price which would reflect the merger consideration after this deduction. In addition, NCS stock has consistently traded well in excess of $5.00 per share since the announcement of Omnicare's "irrevocable offer" of $5.50 on December 12, 2002. Third, it is typically the case that an acquirer will agree to pay class counsel's fees, subject to its right to challenge the amount of those fees and the court's approval. See, e.g., Mentor Graphics Corp. v. Quickturn Design Sys., Inc., The Honorable Stephen P. Lamb December 30, 2002 Page 4 789 A.2d 1216, 1221 (Del. Ch. 2001) (noting that after class plaintiffs filed TRO to place portion of merger consideration in escrow for payment of attorneys' fees, acquirer agreed to pay attorneys' fees itself, leaving full amount of merger consideration for shareholders); In re Dunkin' Donuts S'holders Litig., Civ. A. No. 10825, 1990 WL 189120, at *3 (Del. Ch. Nov. 27, 1990) (noting tender offeror agreed to cause target to pay class plaintiffs' attorneys' fees to facilitate tender offer) (attached hereto as Exhibit K). This is undoubtedly what Omnicare had in mind when it specifically agreed to pay $5.50 net to the seller in cash. See In re First Interstate Bancorp Consol. S'holder Litig., 756 A.2d 355, 362 (Lamb, V.C.) (Del. Ch. 1999) (applying equitable principles to require acquirer to pay plaintiffs' attorneys' fees). Finally, Plaintiffs have failed to satisfy their burden of justifying the amount of the tender offer consideration which they seek to have withheld. There is no doubt that Plaintiffs' Attorneys received substantial assistance from Omnicare's counsel in their litigation efforts. Prior to Omnicare's dismissal for lack of standing, its counsel took the lead at all of the depositions and handled the bulk of the briefing. Even after Omnicare was dismissed, Omnicare continued to participate in the preparation of litigation documents used by Plaintiffs' Attorneys. Indeed, the footer of the office of Omnicare's local counsel appeared on documents filed by Plaintiffs' Attorneys. See Notice of Objection to Restrictions On Public Access (filed November 11, 2002) (attached hereto as Exhibit D). Omnicare's counsel has also represented to counsel for the NCS Defendants that it performed the majority of the work in the shareholder action, even after Omnicare's action was dismissed. See In re MCA, Inc. S'holder Litig., Civ. A. No. 11740, 1993 WL 43024, at *6 (Del. Ch. Feb. 16, 1993) aff'd 633 A.2d 370 (Del. 1993) (reduced attorneys' fees awarded will be awarded where benefit is partly caused by activities of others) (attached hereto as Exhibit H). Moreover, NCS understands Plaintiffs' Attorneys claim to have spent approximately 3,000 hours on this matter. In light of their $13,500,000 fee demand, that number works out to approximately $4,500 per hour. By any standard, that is simply too high. See In re North American Phillips Stockholders Litig., 1987 WL 28434, at *1 (Del. Ch. Dec. 16, 1987) (requiring consideration of time and labor expended) (attached hereto as Exhibit I); see also In re McCaw Cellular Communications, Inc. S'holder Litig., Civ. A. NO. 12793, 1994 WL 544017, at *3-4 (Del. Ch. The Honorable Stephen P. Lamb December 30, 2002 Page 5 Oct. 18, 1994) (refusing to rule on fee application where plaintiffs' counsel "played no role in negotiating the merger transaction that is the foundation for the claimed benefit" and provided no other basis for determining reasonable fee) (attached hereto as Exhibit J). Plaintiffs have not met the heavy burden required of them before this Court will issue a TRO. Accordingly, the TRO Application should be denied. Respectfully, /s/ Edward P. Welch --------------------------- Edward P. Welch cc: Register in Chancery (by hand delivery) Joseph A. Rosenthal, Esquire (by hand delivery) Robert J. Kriner, Jr., Esquire (by hand delivery) Donald J. Wolfe, Jr., Esquire (by hand delivery) Jon E. Abramczyk, Esquire (by hand delivery) Edward M. McNally, Esquire (by hand delivery) EX-99 6 exa1-ttt.txt EXHIBIT (A)(1)(TTT) Exhibit (a)(1)(TTT) [LETTERHEAD OF POTTER ANDERSON & CORROON LLP] January 2, 2003 VIA HAND DELIVERY - ----------------- The Honorable Stephen P. Lamb Vice Chancellor Court of Chancery New Castle County Courthouse 500 North King Street Wilmington, DE 19801 Re: Dolphin Limited Partnership L.L.P., et al v. NCS Acquisition Corp. and Omnicare Inc., Del. Ch., C.A. No. 20101-NC ----------------------------------------------------------------- Dear Vice Chancellor Lamb: We represent defendants Omnicare Inc. ("Omnicare") and NCS Acquisition Corp. (collectively with Omnicare, "Defendants") in the above-captioned action. We write in response to: (a) plaintiffs' motion for a temporary restraining order directing Defendants to deposit into an interest bearing escrow account $13.5 million of the monies to be paid to the stockholders of NCS Healthcare, Inc. ("NCS") pursuant to Omnicare's tender offer; and (b) the motion to intervene and letter brief and submitted by NCS in opposition to plaintiffs' motion. We are advised that the Court will hear plaintiffs' application this afternoon at 2:00 p.m. Defendants take no position with respect to the relief requested by plaintiffs, although we note that there is no support in the papers submitted by plaintiffs for a fee award in the extraordinary amount of $13.5 million. In addition, if any temporary restraining order is issued, we ask that, as a technical matter, any such order provide that Defendants shall deposit the escrow fund into the escrow account within three (3) business days after the closing of the Omnicare tender offer. Defendants agree that NCS should be permitted to intervene. Defendants do, however, oppose NCS's unsupported suggestion that this Court should order Omnicare to pay plaintiffs' attorneys fees. As plaintiffs recognize, the common fund doctrine requires that NCS The Honorable Stephen P. Lamb January 2, 2003 Page 2 stockholders compensate plaintiffs' attorneys out of the common fund created as a result of the litigation prosecuted by plaintiffs. See, e.g., Goodrich v. E.F. Hutton Group, Inc., 681 A.2d 1039, 1044 (Del. 1996) (citing Boeing Co. v. Van Gemert, Inc., 444 U.S. 472, 478 (1980)) ("common fund doctrine is founded on the equitable principle that those who have profited from litigation should share its costs"); United Vanguard Fund, Inc. v. Takecare, Inc., 727 A.2d 844, 850 (Del. Ch. 1998) ("where a litigant has conferred a common monetary benefit upon an identifiable class of stockholders, all of the stockholders should contribute to the costs of achieving that benefit") (citation omitted). Thus, for example, in United Vanguard Fund, this Court held that the stockholder plaintiffs' attorneys fees would properly be paid out of $4.8 million that had been withheld from the total consideration paid by the acquiror. Id. at 847. While it is true that on occasion successful acquirors have voluntarily paid plaintiffs' attorneys fees, the cases cited by NCS in support of this undisputed (and largely irrelevant) point make clear that the successful acquiror is in no way legally obligated to do so. See, e.g., Mentor Graphics Corp. v. Quickturn Design Sys., Inc., 789 A.2d 1216 (Del. Ch. 2001). In Mentor Graphics, for example, the losing bidder, Mentor, sought payment of its attorneys fees by Quickturn, the winning bidder. Although Quickturn had ultimately agreed to pay the stockholder plaintiffs' counsel fees and expenses up to $825,000, id. at 1221, the Court noted with approval that the stockholder plaintiffs had pursued attorneys fees from "the proper source; i.e., the fund itself," before it was distributed to the stockholders. Id. at 1233. The Court thus denied Mentor's application on the grounds that it sought "fees from the wrong party" and held that requiring the winning bidder to pay a losing bidder's attorneys fees -- like requiring a winning bidder to pay stockholder plaintiffs' attorneys fees -- would create a "totally unprincipled result which runs counter to the rationale that those who receive the benefit from a shareholder's litigative efforts should share the costs of creating that benefit." Id. Here, the claimed benefit was conferred on the NCS stockholders. NCS's reference to this Court's decision in In re First Interstate Bancorp Consol. S'holder Litig., 756 A.2d 353 (Del. Ch. 1999) is similarly misplaced. In First Interstate, the Court explicitly recognized the well-settled principle that "in cases where plaintiffs' litigation efforts result in or contribute to the creation of a fund distributed to a class, it is generally appropriate that any fee award should be paid out of that fund." Id. at 362. While the Court ultimately required, on the facts before it, that the requested attorneys fees be paid out of the acquiring corporation's treasury, it did so based on two factors not present here. Id. First, the merger in First Bancorp was a stock-for-stock transaction; thus, the stockholders of the target corporation (who received the benefit of the litigation) had become stockholders of the acquiring corporation. Second, the merger had already been completed -- and the consideration had already been distributed; thus there was no longer any "common fund" from which the attorneys could be paid. Accordingly, under those facts -- which are in many ways the exact opposite of the facts in this case -- this Court "regard[ed] the assets of [the acquiror] as `being a fund belonging to the stockholders in common'" and ordered that the acquiror pay the attorneys fees. Id. The Honorable Stephen P. Lamb January 2, 2003 Page 3 Here, by contrast, Omnicare is purchasing all NCS common stock for $5.50 per share in cash, which consideration has not yet been distributed to NCS stockholders. Pursuant to the order requested by plaintiffs, a portion of that consideration would be held in escrow and plaintiffs' attorneys fees eventually paid out of the escrowed amount. NCS's repeated assertion that, under plaintiffs' proposal, Omnicare would somehow be "reducing the merger consideration" or violating the terms of the merger agreement is nonsense. Regardless of whether or not this Court issues the order requested by plaintiffs, Omnicare will be paying out $5.50 per share -- the full consideration contemplated by the merger agreement. In the event this Court grants the relief requested by plaintiffs and requires Omnicare to place some portion of that $5.50 per share in escrow, this means only that some portion of the consideration being paid out to NCS stockholders will be available to pay whatever fee the Court eventually determines NCS stockholders owe plaintiffs' counsel for helping to bring that fund into existence in the first place. Finally, NCS's assertion that the use of the phrase "$5.50 per share net to the seller in cash" to describe the consideration to be paid to NCS stockholders in the Offer to Purchase somehow prohibits this Court from determining that NCS stockholders should be required to pay their lawyers out of that consideration fails for similar reasons. As the Offer to Purchase makes clear, "net to the seller in cash" means net of customary expenses, such as brokerage fees or commissions. See Supplement to the Offer to Purchase, Summary Term Sheet, Question 3 (explaining that the stockholder "will not have to pay brokerage fees, commissions or similar expenses") (enclosed herewith). It most decidedly does not guarantee NCS stockholders $5.50 per share net of any conceivable liabilities, such as legal expenses, that NCS stockholders might have. For example, the Offer to Purchase specifically refers to certain amounts to be deducted from the $5.50 per share purchase price. See, e.g., id. (noting that offer is $5.50 per share "less required withholding taxes"). Nor does it (a) preclude the Court from ordering that the stockholders set aside (and eventually use) some portion of the consideration to pay their lawyers, or (b) shift the obligation to pay plaintiffs' counsel to Omnicare, over and above the $5.50 per share it has agreed to pay, which would effectively increase the consideration to NCS stockholders beyond that which Omnicare has agreed to pay. Respectfully, /s/ Donald J. Wolfe, Jr. Donald J. Wolfe, Jr. DJW/slh/564579 cc: Register in Chancery (Via Hand Delivery) Joseph M. Rosenthal, Esquire (Via Hand Delivery) Edward P. Welch, Esquire (Via Hand Delivery) David C. McBride, Esquire (Via Hand Delivery) Elizabeth Ann Brown, Esquire (Via Hand Delivery) Jon E. Abramczyk, Esquire (Via Hand Delivery) -----END PRIVACY-ENHANCED MESSAGE-----