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Motion for Expedited Discovery

Posted by: on Fri, Jan 17, 2014

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MOT

G. Mark Albright, Esq.

Nevada Bar No. 1394

ALBRIGHT,
STODDARD,

   WARNICK & ALBRIGHT

801 South Rancho Drive, Suite D-4

Las Vegas, NV
89106

Tel:       (702)
384-7111

Fax:      (702)
384-0605

Email:   gma@albrightstoddard.com

Liaison
Counsel for Plaintiffs

(Additional
Counsel on Signature Page)

Don Springmeyer, Esq.

Nevada Bar No. 1021

WOLF, RIFKIN, SHAPIRO, SCHULMAN & RABKIN, LLP

3556 E. Russell Road, 2nd Floor

Las Vegas, NV
89120

Tel:       (702)
341-5200

Fax:      (702)
341-5300

Email:   dspringmeyer@wrslawyers.com

Counsel
for Moshe Billet

 

EIGHTH JUDICIAL DISTRICT COURT OF THE STATE
OF NEVADA

IN AND FOR THE COUNTY OF CLARK

 

MOSHE BILLET,
Individually and on behalf of all others similarly situated,

 

Plaintiff,

 

v.

 

NTS, INC., TOWER
THREE PARTNERS, LLC, T3 NORTH INTERMEDIATE HOLDINGS, LLC, NORTH MERGER SUB,
INC., GUY NISSENSON, NIV KRIKOV, SHEMER SCHWARZ, ARIE ROSENFELD, TIMOTHY
FARRAR, ALAN BAZAAR, DON BELL III, ANDREW MACMILLAN, JEFFREY EBERWEIN, and
RICHARD COLEMAN, JR.,

 

Defendants.

 

 

Consolidated Case
No. A-13-690634-C

 

Dept. No.:        XXXI

 

Consolidated with:      A-13-690982-C

A-13-691059-B

A-13-691247-C

A-13-691562-B

A-13-691831-C

 

MILESTONE VIMBA
FUND LP, on behalf of itself and all others similarly situated, 

Plaintiff,

 

v.

 

NTS, INC., GUY
NISSENSON, SHEMER S. SCHWARZ, ARIE ROSENFELD, TIMOTHY M. FARRAR, ALAN L.
BAZAAR, DON CARLOS BELL III, RICHARD K. COLEMAN, JR., JEFFREY E. EBERWEIN,
ANDREW J. MACMILLAN, T3 NORTH INTERMEDIATE HOLDINGS, LLC, NORTH MERGER, SUB,
INC., and TOWER THREE PARTNERS LLC,

 

Defendants.

 

IN RE NTS, INC.
STOCKHOLDER LITIGATION 

PLAINTIFFS’ MOTION TO CONSOLIDATE ALL CASES
INTO BUSINESS COURT, WAIVE REQUIREMENTS OF NRCP 16.1, ORDER FOR LIMITED
EXPEDITED DISCOVERY, EX PARTE MOTION FOR AN ORDER SHORTENING TIME, AND MEMORANDUM
OF POINTS AND AUTHORITIES IN SUPPORT THEREOF

Plaintiffs David Wender, Courtney Cowart, Moshe Billet, Tina Albritton,
Milestone Vimba Fund LP and Rina Brodt, by and through their undersigned
counsel, hereby move this Court for an Order consolidating the District Court
cases set forth below into Business Court.

Plaintiffs further move the Court, pursuant to NRCP 16.1(f) for an Order
designating this litigation as complex and thereby waiving the requirements of
Rule 16 and permit them to conduct limited discovery in connection with their
anticipated Motion to Enjoin the Proposed Transaction of NTS, Inc. by Tower
Three Partners LLC, including an injunction prohibiting any stockholder vote on
the Proposed Transaction.

This Motion is based upon the attached Memorandum of Points and
Authorities, the pleadings and papers on file herein and such other matters as
may be considered at the time of hearing.

Plaintiffs also move, ex parte,
for an Order Shortening the Time for hearing the above referenced motion.  This ex
parte
Motion for an Order Shortening Time is made and based upon the affidavit
of G. Mark Albright in support thereof as set forth below.

DATED this 19th day
of December, 2013.

 

ALBRIGHT, STODDARD,


WARNICK & ALBRIGHT

 

 

 

                                                                       

G. Mark
Albright (Bar No. 1394)

801 South
Rancho Drive, Suite D-4

Las
Vegas, Nevada 89106

Liaison Counsel for Plaintiffs

 

KIRBY
McINERNEY LLP

Ira M.
Press

Randall
K. Berger

J.
Brandon Walker

825 Third
Avenue, 16th Floor

New York,
NY 10022

 

Robert J.
Gralewski, Jr.

600
B Street, Suite 1900

San
Diego, CA 92101

Lead Counsel for Plaintiffs

 

 

WOLF, RIFKIN, SHAPIRO, SCHULMAN &
RABKIN, LLP

 

 

 

                                                                       

Don
Springmeyer, Esq. (Bar No. 1021(

3556 E.
Russell Road, 2nd Floor

Las
Vegas, Nevada  89120

Counsel for Moshe Billet

 


APPLICATION FOR ORDER SHORTENING TIME

            COMES
NOW, G. Mark Albright, Esq., declaring as follows in support of an Application
and Order Shortening Time on the Instant Motion:

  1. I am
    over the age of eighteen, competent and willing to testify to the matters set
    forth herein.
  2. I am a
    partner of Albright, Stoddard, Warnick & Albright, in which capacity I
    represent the Plaintiffs in this action.
  3. This
    stockholder class action is brought by Plaintiffs against NTS, Inc. (“NTS”),
    its Board of Directors (“Board”), Tower Three Partners LLC (“Tower Three”), its
    affiliate, T3 North Intermediate Holdings, LLC (“T3”), and T3’s wholly owned
    subsidiary, North Merger Sub, Inc., arising out of the Board’s efforts to sell
    NTS to Tower Three, through an unfair process at an inadequate and unfair price
    and without disclosure of material information to Company stockholders,
    rendering them unable to cast an informed vote at the impending shareholder
    meeting regarding the Proposed Transaction.
  4. Defendants
    announced the Proposed Transaction on October 21, 2013 and filed the
    Preliminary Proxy with the SEC on November 22, 2013.
  5. Based on
    the rushed basis upon which Defendants herein are contemplating a stockholder
    vote in the very near future, this matter cannot be heard in the normal course.
  6. If the
    stockholder vote regarding the sale of NTS to Tower Three is allowed to proceed
    prior to Plaintiffs being afforded, at least, preliminary limited discovery,
    Plaintiffs would be irreparably harmed.

I DECLARE
THE FOLLOWING TO BE TRUE AND CORRECT UNDER THE PENALTY OF PERJURY UNDER THE
LAWS OF THE STATE OF NEVADA.

Dated this 12th day of December, 2013.

/s/  G. Mark Albright                                       

G. MARK ALBRIGHT

 

ORDER SHORTENING TIME

            The Court having reviewed
Plaintiffs’ Application for an Order consolidating the cases, an Order
Shortening Time on their Motion to Waive Requirements of NRCP 16.1, and an Order
for Limited Expedited Discovery, and good cause appearing:

IT IS HEREBY ORDERED that
Plaintiffs’ Motion to Waive Requirements of NRCP 16.1 and Order for Limited
Expedited Discovery will be heard before the Above Court on the ____ day of
____________ 201_ at ______ a.m./p.m., or as soon thereafter as counsel may be
heard.

Dated this ____ day of December,
2013.

 

                                                                       

DISTRICT COURT JUDGE

 

 

 

 

 

 

 

[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK]

 

 

 

 

 

 

MEMORANDUM OF POINTS AND AUTHORITIES

            By this Motion, Plaintiffs David
Wender, Courtney Cowart, Moshe Billet, Tina Albritton, Milestone Vimba Fund LP
and Rina Brodt (“Plaintiffs”) seek an order consolidating the District Court
cases set forth below into Business Court, waiving the requirements of Rule
16.1 of the Nevada Rules of Civil Procedure and permitting them to conduct
limited expedited discovery in advance of Plaintiffs’ forthcoming Motion for
Preliminary Injunction.

  1. I.
    INTRODUCTION

These stockholder class actions were brought by Plaintiffs against NTS, Inc.
(“NTS” or the “Company”), its Board of Directors (the “Board”), Tower Three
Partners LLC (“Tower Three”), its affiliate, T3 North Intermediate Holdings,
LLC (“T3”), and T3’s wholly owned subsidiary, North Merger Sub, Inc. (“Merger
Sub”) (collectively the “Defendants”), arising out of their efforts to sell NTS
to Tower Three (the “Proposed Transaction”) through an unfair sales process at
an inadequate and unfair price and without sufficient disclosure of material
information to Company stockholders, rendering them unable to cast an informed
vote at the impending shareholder meeting regarding the Proposed Transaction.

Six related putative stockholder
class actions have been filed in the District Court, Clark County, Nevada
(collectively, the “Actions”):

David
Wender v NTS, Inc,., et al.
, Case
No. A-13-690634-C, Dept. XXXI;

Courtney
Cowart v NTS, Inc., et al.
, Case
No. A-13-690982-C, Dept. I;

Moshe
Billet v. NTS, Inc., et al.
, Case
No. A-13-691059-B, Dept. XXV;

Tina
Albritton v. Nissenson, et al.
, Case
No. A-13-69214-C, Dept. XXXII;

Milestone
Vimba Fund LP v.
, NTS, Inc., et al., Case
No. C-13-691562-C, Dept. XXVI (now Business Court, Dept. XXIX); and

Rina
Brodt v. NTS, Inc., et al.
, Case
No. A-1-691-813-C, Dept. XXII

The Actions were filed on behalf of the same putative class, against the
same or virtually the same Defendants, and assert the same or substantially
similar claims that Defendants breached their fiduciary duties in connection
with the Transaction or aided and abetted such breaches of fiduciary duty;

The four non-business court Actions were consolidated in Department XXXI
on December 19, 2013, and Albright, Stoddard, Warnick & Albright was
appointed as Liaison Counsel.

On December 17, 2013, Plaintiff Milestone Vimba Fund LP, filed a Request to
Transfer to Business Court, and on December 18, 2013, said case was transferred
to Department 29.  Thus, two of the
actions (Billet v NTS, Inc., et al.
and Milestone Vimba Fund LP v. NTS, Inc.,
et al.
) are presently in Business Court Departments of this court;

Plaintiffs now desire to have all of the foregoing cases (the four cases
consolidated in Department XXXI and the two cases presently in Business Court)
under the jurisdiction of one business court judge.

Rule 16.1(f) of the Nevada Rules of Civil Procedure provides that the
Court “may, upon motion and for good cause shown,” waive the Rule 16.1 pretrial
discovery requirements in “a potentially difficult or protracted action that
may involve complex issues, multiple parties, difficult legal questions, or
unusual proof problems[.]”  Good cause
exists in this instance because Plaintiffs require limited discovery in order
to file a preliminary injunction motion to halt the Proposed Transaction that
imminently threatens to deprive them of their ownership interest in the
Company.

  1. II.
    SUMMARY OF THE ALLEGATIONS

On October 21, 2013, NTS and Tower Three announced that they had entered
into an agreement and plan of merger (the “Merger Agreement”) pursuant to which
NTS will become an indirect, wholly-owned subsidiary of Tower Three.  Under the terms of the Proposed Transaction,
NTS stockholders will receive $2.00 per share in cash for each share of NTS
common stock owned, valuing the Company’s equity at approximately $90 million.  The Proposed Transaction and sales process
were fraught with conflicts of interest.
According to the Preliminary Proxy Statement (“Proxy”) and Schedule
13E-3 (“13E3”) filed by NTS with the SEC on November 22, 2013, Guy Nissenson
(“Nissenson”), Chairman, CEO and President of NTS began meeting with the Managing
Director of Tower Three, Michael Nold (“Nold”), and Adam Breslawsky
(“Breslawsky”), a representative of Oberon Securities, LLC (“Oberon”), an
investment bank with prior relationships with both Nissenson and Nold in March
2013.  The Board was not informed of
these discussions.

On April 10, 2013, Nissenson and Nold, on behalf of NTS and Tower Three,
entered into a confidentiality agreement and Tower Three was provided with due
diligence materials, including the April Projections mentioned in the Proxy but
not provided for stockholders.  On May
29, 2013, at a meeting between Nissenson and Nold, Tower Three indicated that
it might be willing to pay $2.00 per share to acquire the Company.  On June 17, 2013, NTS formally retained
Oberon to advise the Company in connection with a possible sale to Tower Three,
pursuant to which it would be entitled to $2.3 million if a transaction was
consummated.  Then, in late July 2013,
Nissenson and Tower Three had discussions regarding Nissenson’s role at the Company
following a transaction.  In addition to
rolling over a significant portion of his equity, Nissenson was told that he
would be asked to serve on the board of directors and enter into a new
employment agreement with the Company following a transaction.  Pursuant to the Proxy, the Board was never
informed of any of this activity until August 2, 2013, when Nissenson received
a preliminary indication of interest from Tower Three to take the Company
private.

In addition to not disclosing why Nissenson never informed the Board of
his meetings with Tower Three, and his discussion of employment and roll over
equity following a transaction, the Proxy also fails to disclose that Nissenson
and Nold have been acquainted since at least 2010 when Nold, on behalf of the
Gores Group (his previous employer) had discussions, through Oberon, with NTS
regarding its portfolio company First Communications.  Similarly, the Proxy fails to disclose
Oberon’s relationship with Tower Three.

Nissenson directed, coordinated or was otherwise involved in nearly every
step of the sales process.  He negotiated
a Rollover Agreement with Tower Three whereby he will receive an equity
interest in the private company post-merger rather than cash out his shares,
and he agreed to vote his 16.2% stock ownership in favor of the Proposed
Transaction.  Further, even after the
Board was made aware of the various discussions and decided to appoint a
Special Committee, Nissenson was tasked with participating in Special Committee
meetings.

Nissenson is not the only interested director on the Board.  He and other members of NTS’s management are
receiving significant benefits in connection with the Proposed
Transaction.  Certain NTS executives,
including Nissenson, are keeping their jobs following the close of the Proposed
Transaction.  Additionally, NTS officers
and directors are the beneficial owners of an illiquid block of 16,232,204
shares of NTS stock, or nearly 39% of the Company’s issued and outstanding
stock, and as such stand to gain over $32 million from the Proposed
Transaction.  The Proposed Transaction
allows NTS management the best of both worlds – cashing in their illiquid
holdings of NTS stock while retaining their current positions.  Essentially, the Proposed Transaction is a
management buyout, backed by Tower Three.

What’s more, upon consummation of the Proposed Transaction the Chairman
of the Special Committee, Defendant Jeffrey E. Eberwein (“Eberwein”), stands to
gain more than $5.7 million for his otherwise illiquid holdings as the beneficial
owner of more than 2.8 million shares, amounting to nearly 7% of the Company’s
outstanding stock.  Defendant Eberwein is
not independent.  The remaining members
of the Special Committee are also not independent.  All three members of the Special Committee
were elected to the Board on December 20, 2012 with the majority of shares
voting being those of the Individual Defendants.  The Special Committee’s lack of independence
is further illustrated by its failure to even attempt to engage Tower Three on
Price.  The initial $2.00 per share
suggested to Nissenson by Tower Three in May 2013 was not even subject to a
counter offer by the Special Committee.

Moreover, the Individual Defendants have agreed to sell the Company at a
time when it is just starting to monetize its investments in its
Fiber-To-The-Premises (“FTTP”) network.  Following
its acquisition of NTS Communications, Inc. (“NTSC”) in 2008, NTS has focused
its resources on the build out of its high-speed FTTP network with great
success.  During 2013, the Company has
experienced greater than 25% growth in each of the first three quarters of 2013
in FTTP revenues and FTTP customers.  Nevertheless,
just as NTS is beginning to reap the dividends from its large investment in the
FTTP business, the Individual Defendants have agreed to take the Company
private for the too low price of $2.00 per share.

Rather than undertake a full and fair auction to maximize stockholder
value as their fiduciary duties require, the Individual Defendants agreed to a
30-day go-shop period which ended on November 19, 2013 and proved to be
illusory in light of the deal protection devices in the Merger Agreement, the
conflicted officers and directors’ control of nearly 39% of stockholder voting
power, and management’s support of the transaction with Tower Three because
they have been told they are keeping their jobs.

The unreasonable deal protection devices include:  (i) a no-shop clause precluding the Company
from soliciting potential competing bidders after the 30-day “go-shop” period
that ended on November 19, 2013; (ii) a notice provision requiring the Company
to disclose to Tower Three all confidential information regarding any
alternative proposal it may receive; (iii) a matching rights provision granting
Tower Three four (4) business days to match any competing proposal made to the
Company (making it much less likely that a third party will submit a bid
knowing that Tower Three can always easily top it); and (iv) a termination fee
provision requiring the Company to pay $2.3 million if the Proposed Transaction
is terminated in favor of a superior proposal resulting from the go-shop
period, or $4.1 million if the superior proposal occurs after the go-shop
period has ended, and up to $2.25 million in expense reimbursements, representing
5.45% to 7.6% of the Company’s equity value at the $2.00 per share Proposed
Transaction price.

Compounding the above breaches of fiduciary duty, the Proxy omits and/or
misrepresents material information, including, but not limited to:  (i) any potential or actual conflicts of
interest suffered by NTS officers and management; (ii) any potential or actual
conflicts of interest suffered by Oberon as to NTS or Tower Three, or any of
their affiliates, and the details of any business relationships or services
provided to NTS or Tower Three, or any of their affiliates, in the last two
years; (iii) details regarding Oberon’s business relationship with Michael Nold
as a representative of Tower Three and in his previous capacity at the Gores
Group, including but not limited to the 2010 discussions with NTS regarding
their portfolio company First Communications; (iv) the reasons the Special
Committee engaged a second financial advisor, B. Riley & Co., LLC, (“B.
Riley”) on October 2, 2013 and any specific services, if any, B. Riley has
provided to NTS or Tower Three, or any of their affiliates, in the last two
years including compensation received for such services; (v) any benchmarking
analysis Oberon and/or B. Riley conducted for NTS in relation to the selected comparable public companies and
the selected comparable precedent
transactions
; and (vi) whether the confidentiality agreements entered into
with third parties during the go-shop period contained standstill provisions
currently preventing them from making a competing offer for the Company.

In particular, the Proxy fails to adequately disclose why, despite having
provided Tower Three with updated management projections on September 21, 2013
and September 29, 2013 (which should be disclosed to stockholders), management
prepared yet another set of projections on October 11, 2013 that Oberon and B.
Riley relied on for their fairness opinions.
The October 11, 2013 projections appear to have been prepared at the
direction of Oberon and B. Riley.
Further, the Proxy does not adequately disclose why Oberon and B. Riley
could not rely on the earlier projections, who requested that the October 11,
2013 projections be prepared, or how they differed from the earlier
projections.

Without access to this material information, NTS stockholders are unable
to make a fully informed decision as to whether to vote in favor of the
Proposed Transaction.  Plaintiffs, and
the Class, seek to enjoin the Proposed Transaction unless and until a fair process
is employed by Defendants to provide NTS’s public stockholders a fair price for
their stock.  As such, Plaintiffs’
request expedited discovery to present the Court with a full and fair record in
support of their anticipated Motion to Enjoin the Proposed Transaction.

According to the Proxy, Defendants will seek to complete the Proposed
Transaction during the first quarter of 2014; therefore, time is of the essence.  If discovery is done pursuant to routine
timeframes, it will be months before Plaintiffs get the information they need
to prosecute this case and the Proposed Transaction will have already been
subject to a stockholder vote.  Under
such circumstances, to present the Court with any meaningful opportunity to
weigh the Proposed Transaction and the arguments as to whether it should be
enjoined, expedited discovery is necessary.
As discussed below, courts across the country have routinely granted
expedited discovery when faced with requests for injunctive relief,
particularly in the context of corporate mergers, which move quickly, divest
stockholders of their corporate ownership, and are nearly impossible to
“unscramble” once they close.

  1. III.
    ARGUMENT
  2. A.
    Consolidation into Business Court is
    Appropriate Under NRCP 42

NRCP 42(a) provides the standard to be used in determining whether more than
one action may be consolidated:

(a)
Consolidation.  When actions involving a common question of
law or fact are pending before the court, it may order a joint hearing or trial
of any or all the matters in issue in the actions; it may order all the actions
consolidated; and it may make such orders concerning proceedings therein as may
tend to avoid unnecessary costs or delay.

In construing NRCP 42(a), which is identical to Rule 42(a) of the Federal
Rules of Civil Procedure, the Nevada Supreme Court held that “consolidation is
permitted as a matter of convenience and economy in administration.”  Mikulich
v. Carner
, 68 Nev. 161, 228 P.2d 257 (1951) (quoting Johnson v. Manhattan R. Co., 289 U.S. 479, 53 S. Ct. 721, 77 L.Ed.
1331, 1345) (1933).

Because the above-referenced actions involve common questions of law or
fact, the Court will save considerable time and resources by consolidating the
actions into one matter and the parties to these actions will not be prejudiced
by such a consolidation.

EDCR 2.50(a) provides:

Motions
for consolidation of two or more cases must be heard by the judge assigned to
the case first commenced.  If
consolidation is granted, the consolidated case will be heard before the judge
ordering consolidation.

The six (6) actions which Plaintiffs
in these actions seek to consolidate involve common questions of law and fact,
specifically shareholder action seeking to enjoin Defendants from approving a
proposed acquisition of the common stock.
As such, the cases should be consolidated.

This motion for assignment to
Business Court is made pursuant to EDCR 1.61(a) which provides in sub part
(2)(iii) that business matters include “claims arising from the purchase or
sale of (A) the stock of a business. . . .”
In addition, Rule 1.61(c)(2) provides that a request for assignment to
Business Court may be made by a petitioner by identifying the category that
provides the basis for assignment as a business matter.

  1. B.
    Good Cause Exists for Waiver of Rule 16.1’s
    Requirements

“A trial judge must be afforded reasonable discretion in controlling the
conduct of pretrial discovery.”  Jones v. Bank of Nevada, 91 Nev. 368,
370 (1975).  The Nevada legislature has
granted courts wide latitude to fashion appropriate discovery procedures where
justice so requires.  See NRCP 26 (“By order, the court may
alter the limits in these rules or set limits on the number of depositions and
interrogatories, the length of depositions under Rule 30 or the number of
requests under Rule 36.”); NRCP 29 (“the parties may by written stipulation . .
. modify the
procedures governing or limitations placed upon discovery”); NRCP 34 (“A shorter or
longer time
may be directed by the court or, [in the] absence of such an order,
agreed to in writing by the parties subject to Rule 29.”).  Rule 16.1(f) facilitates the court’s ability
to control the conduct of pretrial discovery in complex cases by “waiv[ing] any
or all of the [mandatory pretrial] requirements” of Rule 16.1.  See NRCP 16.1(f).

Good cause exists for waiving the requirements of Rule 16.1 and granting
limited expedited discovery as this action involves “complex issues, multiple
parties, difficult legal questions, or unusual proof problems.”  NRCP 16.1(f).
Plaintiffs have alleged that Defendants are breaching their fiduciary
duties owed to Plaintiffs and the Class of NTS public stockholders by
attempting to consummate the Proposed Transaction, pursuant to an unfair
process designed to prevent maximization of stockholder value by precluding a
full and fair sale process.

In Speight v. O’Brien, this
Court granted expedited document and deposition discovery in the context of a
pending corporate merger transaction.  Speight v. O’Brien, No. 10-OC-00340 IB,
(2010) Order Waiving Requirements of Nev. R. Civ. P. 16.1 and for Limited
Expedited Discovery (Carson City Dist. Ct. Aug. 31, 2010).  The
Proposed Transaction is a classic, all-cash sale-of-control transaction in
which “the directors must focus on one primary objective – to secure the
transaction offering the best value reasonably available for the shareholders –
and they must exercise their fiduciary duties to further that end.”  Paramount Commc’ns, Inc. v. QVC Network,
Inc
., 637 A.2d 34, 44 (Del. 1994).

Plaintiffs must request expedited discovery as
a result of Defendants’ short timeframe for completion of the Proposed Transaction.  Plaintiffs expect the stockholder vote on the
Proposed Transaction to occur in early January 2014.  If the normal course of discovery is not
expedited, Plaintiffs will be precluded from presenting the Court with the
evidentiary record necessary to support their anticipated Motion for
Preliminary Injunction, resulting in irreparable harm to Plaintiffs and the
Class.  See Merrill Lynch, Pierce,
Fenner & Smith v. O’Connor
, 194 F.R.D. 618, 624 (N.D. Ill. 2000)
(“[W]here a plaintiff seeks expedited discovery to prepare for a
preliminary injunction hearing, it makes sense to examine the discovery request
. . . on the entirety of the record to date and the reasonableness of the
request in light of all the surrounding circumstances.”).  See also State of Wis. Inv.
Bd. v. Bartlett
, C.A. No. 17727, 2000 Del. Ch. LEXIS 22, at 7 (Del. Ch.
Feb. 9, 2000) (“shareholders will suffer irreparable harm as a matter of law if
they must vote for or against the merger [on the planned date] given []
findings that they will not have adequate time to receive, absorb and consider
the supplemental material”); Sealy Mattress Co. of N.J., Inc. v. Sealy, Inc.,
532 A.2d 1324, 1340 (Del. Ch. 1987) (finding that where stockholders have not
received sufficient information to make an informed decision, “the inability to
make that choice constitutes irreparable harm . . .”).

Here, the timing of the Proposed Transaction,
the conflicts of interest among Board members, the failure of the Individual Defendants
to disclose material information to the public stockholders, and the
unfavorable terms of the Merger Agreement demonstrate that Plaintiffs’ claims that
Defendants’ breached their fiduciary duties, or aided in those breaches, are
colorable and granting the requested relief will serve to promote the
administration of justice, outweighing any hardship the Defendants may claim.

  1. C.
    The Limited Discovery Plaintiffs Seek

Importantly, producing the documents requested herein will involve
little-to-no additional burden on Defendants.
Defendants’ counsel likely already collected and reviewed the documents
regarding the Proposed Transaction in drafting the Proxy filed on November 22,
2013.  Producing the limited discovery
Plaintiffs seek involves little to no burden to Defendants, is entirely
appropriate, and is necessary to the fair adjudication of this matter.

For the reasons enumerated above, Plaintiffs request that the Court order
Defendants to produce the limited expedited discovery set forth herein within ten
(10) days of an Order granting Limited Expedited Discovery.  Defendants shall produce the following documents
from March 1, 2013 to the date of production:

a)
The meeting minutes, including drafts of such
minutes and any handwritten notes taken at the meetings (with attachments,
exhibits, handouts, and other materials reviewed at the meetings) of the
Company’s Board, and all committees thereof, including, without limitation, the
Special Committee, insofar as the materials relate to the Proposed Transaction
(or any other offer or proposed transaction);

b)
All presentations made to the Company’s Board and
Special Committee relating to the Proposed Transaction (or any other offer or proposed
transaction), including, but not limited to, bankers presentations, as well as
any drafts of such presentations, projections of the Company’s future financial
performance and valuations of the Company’s assets;

c)
Any budgets, internal valuations, projections, or
forecasts of NTS’ investments or for the Company itself, including the April
Projections, projections and revisions from September 21, 2013, September 29,
2013, October 11, 2013, and all others that were presented to or approved by
the Board, from March 1, 2013 to the present;

d)
All communications between and among Defendants NTS,
the Acquirors, and any other entity that expressed an interest in pursuing a
strategic or financial transaction with NTS, including but not limited to any
non-disclosure agreements, confidentiality agreements, standstill agreements,
offers, indications of interest, or withdrawals;

e)
All communication between and among Defendants NTS,
the Acquirors, and/or Advisors Oberon and B. Riley concerning the Proposed
Transaction including, but not limited to, engagement letters, any potential
and/or actual conflicts of interest, the sales process, including negotiations,
strategic relationships or agreements with Tower Three, any potential
acquisition by or business combination with any other entity, any voting
agreements, and the Rollover Agreement;

f)
All documents and correspondence explaining the
relationship between and among NTS, or any of its affiliates, the Gores Group,
and Oberon, since January 1, 2009, including, without limitation, the
discussions in 2010 regarding NTS’ portfolio company First Communications.

g)
Any employment agreements, severance packages,
executive and/or director packages, and change-in-control agreements, including
any amendments thereto since the Company’s last proxy statement, with NTS or
Tower Three or any related entity concerning Defendants
or Company executives;

h)
Any due diligence materials provided to Tower
Three or other potential bidder by NTS.

Depositions

Defendants
should also be required to make the following individuals available for deposition
during the week of January 6, 2014:

a)
Defendant Guy Nissenson;

b)
Defendant Jeffrey E. Eberwein;

c)
Adam Breslawsky, or the person(s) most knowledgeable
at Oberon concerning the Proposed Transaction;

d)
The person(s) most knowledgeable at B. Riley
concerning the Proposed Transaction; and

e)
Michael Nold, or the person most knowledgeable at Tower
Three concerning the Proposed Transaction.

 

 

  1. IV.
    CONCLUSION

For the foregoing reasons, Plaintiffs respectfully
request that the Court grant their Motion consolidating the District Court
cases, Waiving the Requirements of Rule 16.1 and Permitting Limited Expedited
Discovery in advance of Plaintiffs’ forthcoming Motion for Preliminary
Injunction.

DATED this 19th day
of December, 2013.                   Respectfully
submitted,

 

ALBRIGHT, STODDARD,


WARNICK & ALBRIGHT

 

 

 

                                                                       

G. Mark
Albright (Bar No. 1394)

801 South
Rancho Drive, Suite D-4

Las
Vegas, Nevada 89106

Liaison Counsel for Plaintiffs

 

KIRBY
McINERNEY LLP

Ira M.
Press

Randall
K. Berger

J.
Brandon Walker

825 Third
Avenue, 16th Floor

New York,
NY 10022

 

Robert J. Gralewski, Jr.

600 B
Street, Suite 1900

San Diego, CA 92101

Lead Counsel for Plaintiffs and Chair of
Plaintiffs’ Executive Committee

 

 

WOLF, RIFKIN, SHAPIRO, SCHULMAN

   &
RABKIN, LLP

 

 

 

                                                                       

Don
Springmeyer, Esq. (Bar No. 1021(

3556 E.
Russell Road, 2nd Floor

Las
Vegas, Nevada  89120

Counsel for Moshe Billet

 

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