CARELLA, BYRNE, CECCHI, OLSTEIN, BRODY & AGNELLO, P.C.

COUNSELLORS AT LAW

_____________ 

CHARLES C. CARELLA 

BRENDAN T. BYRNE 

PETER G. STEWART 

ELLIOT M. OLSTEIN 

ARTHUR T. VANDERBILT, II 

JAN ALAN BRODY 

JOHN M. AGNELLO 

CHARLES M. CARELLA 

JAMES E. CECCHI 

JAMES D. CECCHI (1933-1995) 

JOHN G. GILFILLAN III (1936-2008)

JAMES T. BYERS 

DONALD F. MICELI 

A. RICHARD ROSS 

KENNETH L. WINTERS 

JEFFREY A. COOPER 

CARL R. WOODWARD, III 

MELISSA E. FLAX 

DENNIS F. GLEASON 

DAVID G. GILFILLAN 

G. GLENNON TROUBLEFIELD 

BRIAN H. FENLON 

KHOREN BANDAZIAN 

LINDSEY H. TAYLOR 

5 BECKER FARM ROAD 

ROSELAND, N.J. 07068-1739 

PHONE (973) 994-1700 

FAX (973) 994-1744 

www.carellabyrne.com

 RICHARD K. MATANLE, II 

 FRANCIS C. HAND 

 AVRAM S. EULE 

 RAYMOND W. FISHER 

 ______ 

 OF COUNSEL 

RAYMOND J. LILLIE 

WILLIAM SQUIRE 

ALAN J. GRANT°

MARC D. MICELI 

RAYMOND E. STAUFFER°

STEPHEN R. DANEK 

ERIC MAGNELLI 

DONALD A. ECKLUND 

VINCENZO M. MOGAVERO 

AUDRA E. PETROLLE 

°MEMBER N.Y. BAR ONLY 

 

July 11, 2011 

Honorable Michael A. Shipp 

United States Magistrate Judge 

United States District Court 

Martin Luther King, Jr. Federal Building & U.S. Courthouse 

50 Walnut Street 

Newark, New Jersey 07101 

 Re: Botton v. Ness Technologies, Inc., et al; 2:11-cv-03950 (SRC)(MAS) 

 

Dear Judge Shipp: 

 We represent the Plaintiff, Nissim Botton, in the above referenced matter 

and write to advise the Court of Plaintiff’s urgent need for limited expedited 

discovery in advance of a preliminary injunction of the shareholder vote being 

challenged by this Action. In this regard, Plaintiff respectfully requests a 

telephonic conference with Your Honor at Your Honor’s earliest convenience. 

Background

This case concerns an attempt by Citi Venture Capital International 

(“CVCI”), through its affiliates Jersey Holding and Jersey Acquisition Corporation, 

a wholly-owned subsidiary of Jersey Holding, to acquire all of the outstanding 

shares of Ness which CVCI did not already own, in an all cash transaction valued at 

approximately $307 million (the “Proposed Transaction”). Under the terms of the 

definitive Agreement and Plan of Merger announced June 10, 2011, holders of Ness 

common stock will receive $7.75 in cash for each share of common stock they hold. 

On June 27, 2011, a one-time competing bidder with Ness, identified as 

“Bidder D” in the Proxy, sent the Company a scathing letter accusing Ness of 

violating the exclusivity and confidentiality agreements entered between the two 

parties, along with other specific accusations not disclosed in the Proxy. According 

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to the Proxy, Bidder D offered far more favorable terms under a proposed merger 

agreement which would have provided a generous 30 day “go shop” period and a 

termination fee of just $3 million, compared to the termination fee of over $8 million 

agreed to in the Merger Agreement with CVCI. However, the merger negotiations 

with Bidder D were mysteriously abandoned when the Individual Defendants 

rejected further consideration of Bidder D’s proposal. 

 

On June 30, 2011, the Company filed the Proxy with the Securities and 

Exchange Commission as a first attempt to move forward to schedule a shareholder 

vote regarding the Proposed Transaction. In the Proxy, the board of directors of 

Ness recommended that Ness shareholders vote in favor of the Proposed 

Transaction. However, the Proxy fails to provide material information necessary to 

a shareholders ability to cast an informed vote. 

Critically, in connection with the Proposed Transaction, Defendants have 

omitted from and/or misrepresented in the Proxy material information necessary for 

shareholders to make an informed decision as to whether to vote their shares in 

favor of consummating the Proposed Transaction in violation of §14(a) and §20(a) of 

the Securities Exchange Act of 1934. Without the material information, Plaintiff 

and all other Ness shareholders will be denied a fair opportunity to make an 

informed decision as to these matters. 

Plaintiff’s Complaint lays out in great detail the material information that 

has been omitted from the Proxy. Among other things, the Proxy does not describe 

in sufficient detail the sales process leading up to the Proposed Transaction or the 

flaws that might have permeated the sales process. For example, the Proxy fails to 

provide an adequate explanation as to why the Board chose to abandon negotiations 

with Bidder D, despite the superior terms under a putative merger agreement 

proposed by Bidder D, and instead rejected any further consideration of its proposal. 

More troubling, the Proxy does not disclose the why Bidder D is accusing Ness of 

violating its exclusivity and confidentiality agreements, or the specific accusations 

made by Bidder D in the letter dated June 27, 2011, which is not attached to the 

Proxy. This information is material to shareholders ability to cast an informed vote. 

Moreover, the analyses in support of the fairness opinion prepared by 

Jefferies & Company, Inc. (“Jefferies”), who acted as the financial advisor to the 

Special Committee, is plagued by materially false statements and omissions fails to 

disclose information which would allow shareholders to intelligently determine 

whether or not they should vote in favor of the Proposed Transaction. 

Furthermore, the analyses in support of the fairness opinion prepared by 

Merrill Lynch, Pierce, Fenner & Smith Incorporated (“BofA Merrill Lynch”) who 

acted as financial advisor to the Board, is similarly plagued by materially false 

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statements and omissions and fails to disclose information which would allow 

shareholders to intelligently determine whether or not they should vote in favor of 

the Proposed Transaction. 

In addition, while the Proxy discloses certain Company projections, it fails to 

disclose Ness’ unlevered free cash flows or even the key inputs necessary to reach 

free cash flows, which are critical to understanding the basis for those projections as 

well as the projections for years 2011-2015 used by both Jefferies and BofA Merrill 

Lynch in their analyses. 

The omitted information is highly relevant and material to Ness shareholders 

and these shareholders cannot be expected to make a fully-informed decision 

regarding the Proposed Transaction without this vital information. 

Accordingly, Plaintiff has brought suit alleging that the Individual 

Defendants breached the fiduciary duties they owe to Plaintiff and the other 

shareholders of the Company by, inter alia, preventing them from receiving the fair 

value of their interest in the Company and depriving them of full and fair 

disclosures. Plaintiff alleges that he and the Company’s other shareholders will 

suffer irreparable harm if the Individual Defendants continue to breach their 

fiduciary duties. For this reason, Plaintiff requests leave of this Court to obtain 

discovery from the defendants on an expedited basis in anticipation of moving for a 

preliminary injunction to halt the shareholder vote regarding the Proposed 

Transaction. Indeed, following the shareholder vote on the Proposed Transaction, 

Plaintiff and absent class members will be forever foreclosed from making a 

meaningful, informed decision concerning the Proposed Transaction. 

Plaintiff intends to move the Court for injunctive relief that enjoins 

Defendants from consummating the Proposed Transaction until Defendants cure 

the defects and provide shareholders with all material information concerning the 

Proposed Transaction. Time is of the essence because Defendants are moving 

quickly to consummate the Proposed Transaction. Accordingly, if the normal course 

of discovery is not altered, Plaintiff may not have an opportunity to present this 

Court with the record required for the injunctive relief sought. 

 

Expedited Discovery Sought

1. Production of minutes from any meetings attended by any member of 

Ness’ Board of Directors at which the Proposed Transaction or any 

other potential strategic transactions were discussed, including any 

discussions regarding voting on the Proposed Transaction. 

2. Production of all communications or documents concerning the 

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financial advisors retained in connection with the Proposed 

Transaction. This request includes, but is not limited to, retainer 

agreements, fairness opinions, bankers’ books and any drafts thereof, 

presentation documents, and documents or information sufficient to 

identify the assumptions and calculations that formed the bases for the 

financial advisors’ analyses. 

3. Production of all communications between Ness, CVCI and their 

financial advisors related to the Proposed Transaction, as well as any 

and all bidders interested in a potential acquisition of Ness. 

4. Production of all financial projections prepared by Ness’ management 

during the past 12 months, including but not limited to projections 

provided to any investment bankers or financial advisors in connection 

with any fairness opinion(s) provided in connection with the Board’s 

consideration of the Proposed Transaction. 

5. Production of all presentation documents prepared by Ness’ 

management or any bankers or financial advisors referenced in 

Paragraph 2, concerning the Proposed Transaction or any other 

potential strategic transaction, merger, or acquisition. 

6. Production of any valuations prepared assessing the value of Ness as 

an enterprise, or Ness’ stock, in the past 12 months. 

7. Production sufficient to identify any benefits to be received by any 

officer, director, or member of management of Ness in connection with 

the Proposed Transaction, including, but not limited to, stock grants, 

retention payments, and consulting agreements. 

8. Deposition of the person most knowledgeable with respect to the 

Proposed Transaction and any other potential strategic transactions 

considered by the Board during the past 12 months. 

9. Deposition of the person most knowledgeable regarding the financial 

projections of Ness. 

10. Deposition of the person most knowledgeable from Jefferies concerning 

the Proposed Transaction. 

11. Deposition of the person most knowledgeable from BofA Merrill Lynch 

concerning the Proposed Transaction 

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Such discovery is relatively limited and will not unduly burden the 

Defendants.1

 Counsel for Plaintiff and the putative class will, of course, cooperate 

with counsel for the Defendants to reasonably accommodate the difficulties 

presented by expedited discovery. 

Legal Standard

 Rule 26(d) of the Federal Rules of Civil Procedure generally provides that 

formal discovery will not commence until after the parties have conferred as 

required by Rule 26(f). Quest Commc'ns Int'l Inc. v. Worldquest Networks, Inc., 213 

F.R.D. 418, 419 (D.Colo. 2003); Avyash v. Bank Al-Madina, 233 F.R.D. 325, 326 

(S.D. N.Y. 2005). “However courts may expedite discovery before the Rule 26(f) 

conference upon a showing of good cause.” Quest Commc'ns Int'l, Inc., 213 F.R.D. at 

419. Good cause exists where the need for expedited discovery, in consideration of 

 

1 Defendants may try to advance an argument that PSLRA stay of discovery is 

warranted if they file a motion to dismiss. While the PSLRA provides that “all 

discovery and other proceedings shall be stayed during the pendency of any motion 

to dismiss...”, 15 U.S.C. §78u-4(b)(3)(B), the purpose and intent of this stay is: “(1) 

to minimize the incentives for plaintiffs to file frivolous securities class actions in 

the hope either that the corporate defendants will settle those actions rather than 

bear the high costs of discovery; (2) or that the plaintiff will find during discovery 

some sustainable claim not alleged in the complaint.” Courts have lifted the 

discovery stay where these concerns do not exist. See Tobias Holdings, Inc. v. Bank 

United Corp., 177 F. Supp. 2d 162, 167 (S.D.N.Y. 2001) (citing In re Grand Casinos 

Sec. Litig., 988 F. Supp. 1270, 1272 (D. Minn. 1997) (“If...Congress had intended 

an absolute stay on discovery, then Congress would not have authorized a judicial 

reprieve from such a stay, when a reprieve is needed.”)); In re WorldCom, Inc. Sec. 

Litig., 234 F. Supp. 2d 301, 305 (S.D.N.Y. 2002) (lifting PSLRA stay, where the 

plaintiffs were not engaged in a fishing expedition or an abusive strike suit, because 

they did not act in contravention of the fundamentals underlying the PSLRA 

discovery stay); see also In re Tyco Int’l, Ltd. Multidistrict Litig., MDL No. 02-1335-

B, 2003 WL 23830479 (D.N.H. January 29, 2003); In re Royal Ahold N.V. Sec. & 

ERISA Litig., 220 F.R.D. 246, 249 (D. Md. 2004). Just as the stay provision is in 

place to prevent frivolous lawsuits from going forward, conversely, the stay cannot 

be used by defendants as a procedural tactic to prevent litigation from occurring in 

a forum unfavored by defendants. The PSLRA permits a lifting of the stay to allow 

discovery to proceed “upon the motion of any party that [a] particularized discovery 

is necessary [b] to preserve evidence or to prevent undue prejudice to that party.” 15 

U.S.C. §78u-4(b)(3)(B). Here, particularized discovery is requested to enable 

Plaintiff to seek a preliminary injunction in advance of the shareholder vote with 

supporting evidence to allow for the protection of the Ness shareholders. 

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the administration of justice, outweighs the prejudice to the responding party. 

Semitoole Inc. v. Tokyo Electron Am., Inc., 208 F.R.D. 273, 275 (N.D. Cal. 2002). 

The good cause standard may be satisfied where a party seeks a preliminary 

injunction. Quest Commc'ns Int'l, Inc., 213 F.R.D. at 419. 

 

 In New Jersey, courts have generally employed one of two standards for 

determining the appropriateness of expedited discovery. Better Packages, Inc. v. 

Zheng, 2006 WL 1373055, 2 (D.N.J. 2006). The first is the more formal analysis 

outlined in Notaro v. Koch, 95 F.R.D. 403 (S.D.N.Y. 1982). Id. The Notaro standard 

is very similar to a preliminary injunction analysis and looks more closely at the 

merits of the requests. Id. The second is the reasonableness standard, which 

requires the party seeking discovery to prove that the requests are reasonable 

under the circumstances. Id. 

 Under the Notaro standard, the moving party must demonstrate “(1) 

irreparable injury, (2) some probability of success on the merits, (3) some connection 

between the expedited discovery and the avoidance of the irreparable injury, and (4) 

some evidence that the injury that will result without expedited discovery looms 

greater than the injury that the defendant will suffer if the expedited relief is 

granted.” Id. 

 The reasonableness standard is considerably more liberal than the Notaro

standard and has evolved considerably recently. Better Packages, Inc. at 3. 

Application of this standard depends on the actual circumstances of each case, as 

well as consideration of certain factors such as a pending preliminary injunction 

hearing, the need for the discovery and the breadth of the requests. Id. Expedited 

discovery is particularly appropriate when a plaintiff seeks injunctive relief because 

of the expedited nature of injunctive proceedings. Id. If narrowly tailored to fit the 

needs of a preliminary injunction hearing, leave to conduct expedited discovery 

should be granted. Id. The court should examine the appropriateness of a request 

for expedited discovery by weighing the need for the discovery at that point in the 

litigation with the breadth of the discovery requests. Id. 

 A number of courts have applied a “good cause” test. This test weighs the 

need for expedited discovery by considering the overall administration of justice 

against the prejudice to the responding party. Id. The factors considered include 

how far in advance of the formal start of discovery the request is made, whether the 

discovery are requests narrowly tailored, the purpose of the requested early 

discovery, whether the discovery burdens the defendants, and whether the 

defendants are able to respond to the requests in an expedited manner. Id. 

 

In opting to apply the reasonableness standard in Better Packages, Inc., the 

court noted that a large part of the reasoning behind the courts heightened 

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standard for expedited discovery in Notaro was that the nonmoving party needed 

protection from plaintiff’s discovery requests at such an early stage of the litigation 

and the matter did not involve a pending preliminary injunction hearing. Id. 

 In the instant case, while Plaintiff submits he should prevail under either 

standard, the Court should apply the reasonableness standard in determining the 

appropriateness for Plaintiff’s limited expedited request for discovery. Where as 

here, there are material deficiencies in the documents presented to shareholders 

courts have routinely granted motions for expedited proceedings finding that the 

threat of an uninformed shareholder decision constitutes irreparable harm. See 

Grimes v. Vitalink Communications Corp., 17 F.3d 1553, 1555 (3d Cir. 1994) 

(granting expedited discovery in suit concerning allegations that Defendants 

breached their fiduciary duties in approving a merger). 

 Plaintiff must quickly develop the evidentiary basis for a preliminary 

injunction. Plaintiff seeks discovery that will allow him to pursue injunctive relief 

on a more complete record and has sought to limit any burden or hardship on 

Defendants by requesting discovery that should be easily accessible and readily 

available to Defendants. As such, the burden on Defendants in producing such 

documents on an expedited basis will be minimal. 

 Accordingly, Plaintiff respectfully requests that the Court schedule a 

conference call on at Your Honor’s earliest convenience. We appreciate the Court’s 

attention to this urgent matter and remain available at Your Honor’s convenience. 

Respectfully submitted, 

CARELLA, BYRNE, CECCHI, 

OLSTEIN, BRODY & AGNELLO, P.C. 

/s/ James E. Cecchi 

JAMES E. CECCHI 

cc: Juan E. Monteverde, Esq. 

 Scott A. Bursor, Esq. 

 Thomas Fleming, Esq. 

 John Donovan, Esq. 

 Carmine Boccuzzi, Esq. 

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