<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
SCHEDULE 13D
Information to be included in statements filed pursuant to Rule 13d-1(a)
and amendments thereto filed pursuant to Rule 13d-2(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 6 )*
NUMED HOME HEALTH CARE, INC.
- ------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- ------------------------------------------------------------------------------
(Title of Class of Securities)
67052T201
- ------------------------------------------------------------------------------
(CUSIP Number)
Marc C. Krantz, Kohrman Jackson & Krantz P.L.L., 1375 East 9th Street,
Cleveland, Ohio 44114
216-736-7204
- ------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
December 14, 1998
- ------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box / /.
NOTE: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7(b)
for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
Page 1 of 8 Pages
<PAGE>
SCHEDULE 13D
CUSIP NO. 67052T201
- ------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Turkey Vulture Fund XIII, Ltd.
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e)
[ ]
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
- ------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 578,500
----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
----------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
578,500
----------------------------------------------------
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER
WITH
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
578,500
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [____]
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.6%*
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- ------------------------------------------------------------------------------
* Excluding 744,680 Shares granted to Jugal K. Taneja. See Items 4 and 5.
Page 2 of 8 Pages
<PAGE>
CUSIP NO. 67052T201
This Amendment No. 6 to Schedule 13D Statement is filed on behalf of
Turkey Vulture Fund XIII, Ltd., an Ohio limited liability company (the
"Fund"), for the purpose of reporting the status of certain litigation
instituted by NuMED Home Health Care, Inc., a Nevada corporation ("NuMED" or
the "Company"), and the Fund's purchase of shares of NuMED's common stock,
par value $0.001 per share (the "Shares").
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 is amended and supplemented as follows:
The Shares acquired by the Fund since the filing of Amendment No. 5 to
Schedule 13D Statement on December 4, 1998 were acquired for the aggregate
purchase price of approximately $7,250 with working capital of the Fund.
Item 4. PURPOSE OF TRANSACTION.
Item 4 is amended and supplemented as follows:
On November 12, 1998, the Committee for a New NuMED (the "Committee"),
of which Richard M. Osborne, the sole Manager of the Fund, is a member, filed
a preliminary copy of its proxy statement with the Securities and Exchange
Commission, as required by the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"). In response, the Company filed a lawsuit
against the Fund captioned NUMED HOME HEALTH CARE, INC. V. TURKEY VULTURE
FUND XIII, LTD. (U.S. Dis. Ct., Florida, Tampa Division, No.
98-2354-CIV-T-17F). The complaint is described in the Fund's Amendment No. 3
to Schedule 13D Statement filed with the Securities and Exchange Commission
(the "SEC") on November 24, 1998, and is attached as Exhibit 7.4 to that
Amendment.
On November 23, 1998, NuMED announced that it had reached an "agreement"
with Mr. Taneja for him to step down as Chairman of the Board and Chief
Executive Officer of the Company. Mr. Taneja retained his seat on the Board
of Directors. In its public announcement, the Company failed to disclose any
of the details of its agreement with Mr. Taneja. At the same time, the
Company announced it had postponed the 1998 annual meeting for 31 days, until
January 28, 1999. On December 4, 1998, the Company filed documents with the
SEC revealing that on November 23, 1998 -- at a time when the Company's
financial condition has never been worse and Mr. Taneja and the Board faced
the threat of removal at a long-overdue stockholders' meeting -- NuMED's
Board of Directors entered into a Termination, Noncompetition and Mutual
Release Agreement with Mr. Taneja, which purports to guarantee him payments
totaling $250,000 in cash, issue him 744,680 Shares of NuMED stock, and
extend the terms of all of his stock options and warrants for three years, to
November 23, 2001. Mr. Taneja paid nothing to the Company for his 744,680
Shares.
On December 14, 1998, the Fund filed its answer to the Company's complaint
denying liability and requesting that the complaint be dismissed. On December
16, 1998, the Fund filed its verified amended answer and counterclaim for
preliminary and permanent injunction, motion for summary judgment and memorandum
in support of its motion for summary judgment, copies of which are attached as
Exhibits 7.6, 7.7 and 7.8. In its amended answer, the Fund argued that it has
Page 3 of 8 Pages
<PAGE>
CUSIP NO. 67052T201
cured any alleged Section 13(d) deficiencies by filing Amendment No. 3 to its
Schedule 13D. As a matter of law, this constitutes the sole relief, if any,
to which the Company would be entitled in its lawsuit under Section 13(d) of
the Exchange Act. The Fund also pointed out that NuMED has secured for
itself the "cooling-off" period it seeks by rescheduling the upcoming
stockholders' meeting from December 28, 1998 to January 28, 1999, and noted
that there is no basis in law for the Company's request for attorney's fees.
In the motion for summary judgment, the Fund requested that the Court dismiss
the Company's complaint with prejudice.
In addition, the Fund counterclaimed against the Company and Jugal K.
Taneja, Susan J. Carmichael, Robert P. Ottman and Thomas V. Chema, all
directors of the Company, seeking "immediate injunctive relief to preserve
the integrity of the proxy solicitation and voting at the annual meeting of
NuMED stockholder scheduled for January 28, 1999." In its counterclaim, the
Fund stated that (1) the severance payment to Mr. Taneja constitutes a
prohibited transaction under Nevada law, (2) the severance agreement was
entered into without a valid business reason, solely to secure Mr. Taneja's
seat on the Board and to foil the other stockholders' right to elect a Board,
(3) the Company failed to disclose the terms of Mr. Taneja's severance
package in its November 23, 1998 press release and that the shares of other
stockholders, and those who made purchases in advance of the record date,
would be diluted at the annual meeting, (4) the Fund, and all other
stockholders, will suffer irreparable harm if Mr. Taneja is permitted to vote
the shares illegally issued to him at the upcoming annual stockholders'
meeting, (5) the Fund will suffer irreparable harm if the annual meeting is
further delayed beyond January 28, 1999, and (6) NuMED has failed to provide
the Fund with a stockholders' list as required by Nevada law.
In its counterclaim, the Fund seeks a preliminary and permanent
injunction (a) barring Mr. Taneja from voting any of the shares issued to him
as part of his severance agreement, (b) enjoining NuMED and its directors and
officers from taking or authorizing further action outside the ordinary
course of business or which benefit NuMED directors, officers or employees,
pending completion of the annual meeting, (c) enjoining NuMED and its
directors from changing the date of the annual meeting or the related record
date, (d) requiring NuMED to provide the Fund with an updated stockholders'
list for the annual meeting, and (e) granting any further relief, legal or
equitable, to which the Fund may be entitled.
The Fund will continue to vigorously defend itself from the Company's
frivolous lawsuit, and will take all necessary steps to insure that the
stockholders of NuMED have the opportunity to elect a Board of Directors.
On December 15, 1998, the Company filed a preliminary proxy statement.
In the preliminary proxy statement, the Company disclosed that on December 1,
1998, a full two weeks before the disclosure in the preliminary proxy
statement, the Board of Directors of NuMED had filled three vacancies on the
Company's Board. The vacancies were filled with William L. LaGamba and Paul
Santostasi, who work for another of Mr. Taneja's companies, and Peggy Loesch,
an employee of one of the Company's divisions. The Fund believes that this
packing of the Board with individuals whom the Fund believes are under the
control of Mr. Taneja is simply further evidence of the Board's disdain for
the democratic process and a blatant attempt to deny NuMED's stockholders the
Page 4 of 8 Pages
<PAGE>
CUSIP NO. 67052T201
right to choose their Board of Directors. The Fund will continue to act to
preserve the rights of the Company's stockholders to vote in a fair election.
Mr. Osborne and the Fund continue to reserve the right to modify their,
and the Committee's, plans and proposals described in Item 4, as amended and
supplemented. Further, subject to applicable laws and regulations, they may
formulate plans and proposals that may result in the occurrence of any event
set forth in clauses (i) through (ix) of Item 4 as set forth in the original
Schedule 13D Statement filed by the Fund on December 23, 1996.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is amended and supplemented as follows:
(a) According to the most recently available filing with the Securities
and Exchange Commission by NuMED, there are 5,711,300 Shares outstanding.
Excluding the 744,680 Shares that the Fund believes were illegally granted to
Mr. Taneja, there are 4,996,620 Shares outstanding
The Fund beneficially owns 578,500 Shares, or approximately 11.6% of the
outstanding Shares, excluding the 744,680 Shares granted to Mr. Taneja.
Because Mr. Osborne is the sole Manager of the Fund, Mr. Osborne may be
deemed to beneficially own these Shares.
(b) Mr. Osborne, as sole Manager of the Fund, has sole power to vote,
or to direct the voting of, and the sole power to dispose or to direct the
disposition of, the 578,500 Shares owned by the Fund.
(c) Since the filing of Amendment No. 5, the Fund has purchased 15,000
Shares in the following open market transactions:
<TABLE>
<CAPTION>
Number of Shares Per Share Price
Date (Excluding Commission)
----------------- ---------------- ----------------------
<S> <C> <C>
December 8, 1998 5,000 $0.50
December 10, 1998 5,000 $0.50
December 15, 1998 5,000 $0.45
</TABLE>
(d) Not Applicable.
(e) Not Applicable.
Page 5 of 8 Pages
<PAGE>
CUSIP NO. 67052T201
Item 7. MATERIALS TO BE FILED AS EXHIBITS.
Exhibit 7.6 Verified Amended Answer and Counterclaim for Preliminary and
Permanent Injunction filed by Vulture Fund XIII, Ltd. in the
United States District Court, Middle District of Florida, Tampa
Division, Case No. 98-2354-CIV-T-17F. Copies of exhibits to the
Answer are not included but will be provided to the Commission
upon request.
Exhibit 7.7 Motion for Summary Judgment filed by Turkey Vulture Fund XIII,
Ltd. in the United States District Court, Middle District of
Florida, Tampa Division, Case No. 98-2354-CIV-T-17F. Copies of
exhibits to the Motion are not included but will be provided to
the Commission upon request.
Exhibit 7.8 Memorandum in Support of Motion for Summary Judgment filed by
Turkey Vulture Fund XIII, Ltd. in the United States District
Court, Middle District of Florida, Tampa Division, Case
No. 98-2354-CIV-T-17F. Copies of exhibits to the Memorandum
are not included but will be provided to the Commission
upon request.
Page 6 of 8 Pages
<PAGE>
CUSIP NO. 67052T201
After reasonable 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: December 21, 1998 TURKEY VULTURE FUND XIII, LTD.
By: /s/ Richard M. Osborne
---------------------------
Richard M. Osborne, Manager
Page 7 of 8 Pages
<PAGE>
CUSIP NO. 67052T201
EXHIBIT LIST
Exhibit 7.6 Verified Amended Answer and Counterclaim for Preliminary and
Permanent Injunction filed by Vulture Fund XIII, Ltd. in the
United States District Court, Middle District of Florida, Tampa
Division, Case No. 98-2354-CIV-T-17F. Copies of exhibits to the
Answer are not included but will be provided to the Commission
upon request.
Exhibit 7.7 Motion for Summary Judgment filed by Turkey Vulture Fund XIII,
Ltd. in the United States District Court, Middle District of
Florida, Tampa Division, Case No. 98-2354-CIV-T-17F. Copies of
exhibits to the Motion are not included but will be provided to
the Commission upon request.
Exhibit 7.8 Memorandum in Support of Motion for Summary Judgment filed by
Turkey Vulture Fund XIII, Ltd. in the United States District
Court, Middle District of Florida, Tampa Division, Case
No. 98-2354-CIV-T-17F. Copies of exhibits to the Memorandum
are not included but will be provided to the Commission
upon request.
Page 8 of 8 Pages
<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
NUMED HOME HEALTH CARE, INC. )
) CASE NO. 98-2354-CIV-T-17F
PLAINTIFF, )
)
V. )
)
TURKEY VULTURE FUND XIII, LTD.)
)
DEFENDANT )
)
) TURKEY VULTURE FUND XIII,
V. ) LTD.'S VERIFIED AMENDED
) ANSWER AND COUNTERCLAIM
JUGAL K. TANEJA, ) FOR PRELIMINARY AND
5770 ROOSEVELT BOULEVARD ) PERMANENT INJUNCTION
SUITE 700 )
CLEARWATER, FLORIDA 34620 )
)
AND )
)
SUSAN J. CARMICHAEL )
5770 ROOSEVELT BOULEVARD )
SUITE 700 )
CLEARWATER, FLORIDA 34620 )
)
AND )
)
ROBERT P. OTTMAN )
1926 PEACH STREET )
ERIE, PENNSYLVANIA 16502 )
)
AND )
)
THOMAS V. CHEMA )
1100 HUNTINGTON BUILDING )
925 EUCLID AVENUE )
CLEVELAND, OHIO 44115 )
)
COUNTERCLAIM DEFENDANTS. )
<PAGE>
Defendant Turkey Vulture Fund XIII, Ltd. answers the Plaintiff's
Complaint as follows:
1. Defendant admits the allegations in paragraph 1 of the Complaint.
2. Defendant admits the allegations in paragraph 2 of the Complaint.
3. Defendant denies that this Court has jurisdiction under the authority
of 28 U.S.C. Section 2201 and denies that venue is proper in this District
pursuant to 28 U.S.C. Section 1391(b) or any other provision of law. Defendant
admits the remaining allegations of paragraph 3 of the Complaint.
4. Defendant admits the allegations in paragraph 4 of the Complaint.
5. Defendant admits the allegations in paragraph 5 of the Complaint.
6. Defendant admits the allegations in paragraph 6 of the Complaint.
7. Defendant admits the allegations in paragraph 7 of the Complaint but
further alleges that the proxy statement was submitted by the Committee for a
New NuMed, and not by Richard M. Osborne.
8. Defendant denies that there are any existing violations of Section
13(d) of the Securities Exchange Act of 1934 as of the date of this Answer and
therefore denies that Plaintiff can suffer any harm from such violations.
9. Defendant admits the allegations in paragraph 9 of the Complaint.
10. Defendant admits the allegations in paragraph 10 of the Complaint.
11. Defendant denies the allegations in the first and last sentences of
paragraph 11 of the Complaint, and states that on November 12, 1998, the
Committee for a New NuMed filed with the Securities and Exchange Commission
<PAGE>
a proxy statement disclosing, among other things, Turkey Vulture's
acquisition of additional shares in NuMed Home Health Care, Inc., and the
Committee's intention to solicit proxies for a stockholders' meeting in order
to elect a new slate of directors and to effect a change in the Corporation's
By-Laws which would eliminate its classified Board of Directors. Defendant
further states that on November 24, 1998, it filed Amendment No. 3 to its
Schedule 13D containing disclosures identical to the proxy statement.
Amendment No. 3 to Schedule 13D is attached to this Answer and Counterclaim
as Exhibit A. Defendant admits the remaining allegations in paragraph 11 of
the Complaint.
12. Defendant denies the allegations in paragraph 12 of the Complaint
and further states that it has cured any alleged violation of Section 13(d)
by filing Amendment Nos. 3 and 4 to its Schedule 13D on November 24 and 25,
1998, respectively. Amendment No. 4 to the Schedule 13D is attached to this
Answer and Counterclaim as Exhibit B.
13. Defendant denies the allegations in paragraph 13 of the Complaint
and states that Plaintiff is entitled to no relief whatsoever - legal or
equitable -in light of the November 12, 1998 proxy statement, Defendant's
filing of Amendment Nos. 3 and 4 to its Schedule 13D on November 24 and 25,
1998, respectively, and in light of Plaintiff's own rescheduling of the
stockholders' meeting from December 28, 1998 to January 28, 1999.
14. Defendant denies the allegations in paragraph 14 of the Complaint
-3-
<PAGE>
and states that Plaintiff is entitled to no relief whatsoever - legal or
equitable -in light of the November 12, 1998 proxy statement, Defendant's
filing of Amendment Nos. 3 and 4 to its Schedule 13D on November 24 and 25,
1998, respectively, and in light of Plaintiff's own rescheduling of the
stockholders' meeting from December 28, 1998 to January 28, 1999.
15. Defendant denies the allegations in paragraph 15 of the Complaint.
16. Defendant lacks knowledge or information sufficient to form a belief
as to the truth of the allegations in paragraph 16 of the Complaint.
17. Defendant denies any remaining allegations in the Complaint not
otherwise specifically admitted in this Answer.
DEFENSES
18. The Complaint fails to state a claim on which relief can be granted.
19. The Plaintiff's claims are moot by reason of the November 12, 1998
proxy statement, Defendant's filing Amendment Nos. 3 and 4 to its Schedule
13D on November 24 and 25, 1998, respectively, and by reason of Plaintiff's
rescheduling the stockholders' meeting from December 28, 1998 to January 28,
1999.
20. The Court lacks jurisdiction over the subject matter of Plaintiff's
claims.
21. Venue is improper in this District.
WHEREFORE, Defendant prays that the Complaint be dismissed, with prejudice,
at Plaintiff's cost, and for any other relief, legal or equitable, to which it
-4-
<PAGE>
may be entitled.
COUNTERCLAIM
For its Counterclaim against Plaintiff NuMed Home Health Care, Inc.
("NuMed" or the "Company") and additional Counterclaim Defendants Jugal K.
Taneja, Susan J. Carmichael, Robert P. Ottman and Thomas V. Chema, Turkey
Vulture Fund XIII, Ltd. ("Turkey Vulture") states as follows:
NATURE OF CLAIM
1. Turkey Vulture, a stockholder in NuMed Home Health Care, Inc.,
seeks immediate injunctive relief to preserve the integrity of the proxy
solicitation and voting at the annual meeting of NuMed stockholders scheduled
for January 28, 1999. This relief is necessitated by an illegal transaction
between NuMed and Taneja, its former Chairman and Chief Executive Officer,
which was hidden from stockholders until December 4, 1998.
2. As his reward for shepherding NuMed to the brink of financial ruin
over the past three years, the NuMed Board granted Taneja an extraordinary
and excessive severance package worth in excess of $600,000. This "golden
parachute" included 744,680 shares of newly issued stock, representing a 15%
equity interest in the Company, which Taneja will be eligible to vote at the
January 28, 1999 meeting of NuMed stockholders. Taneja paid nothing for the
shares.
3. On information and belief, the issuance of this stock to Taneja is a
-5-
<PAGE>
prohibited transaction under Nevada law. In addition, it dilutes the
ownership interests of Turkey Vulture and all other common stockholders
except Taneja, whose stake in the Company would soar to 27.9% of the shares
outstanding. Since the transaction occurred during the process of proxy
solicitation in advance of the January 28, 1999 stockholders' meeting, it
represents a material fact which both Taneja and NuMed were obliged by law to
disclose to the investing public.
4. Turkey Vulture seeks injunctive relief which would preserve the
integrity of the proxy solicitation and voting at the upcoming annual meeting
by prohibiting Taneja from voting the newly issued shares at the meeting and
otherwise preserving the status quo from these and other "scorched earth"
tactics the Board may employ in attempting to preserve its incumbency.
PARTIES AND PLAYERS
5. Turkey Vulture is an Ohio limited liability company with its
principal place of business in Mentor, Ohio. Turkey Vulture's business is to
acquire, hold, sell or otherwise invest in all types of securities and other
investment instruments. Turkey Vulture owns 563,500 shares of NuMed stock,
comprising approximately 11% of the outstanding voting stock of the Company
prior to being diluted by the illegal issuance of stock to Taneja.
6. NuMed is a Nevada corporation with its principal place of business
in Pinellas County, Florida. NuMed is a publicly-traded company engaged in
the business of providing home health care and rehabilitation services.
-6-
<PAGE>
7. Third-Party Defendant Jugal K. Taneja is a director of NuMed and,
until November 23, 1998, served as its Chairman of the Board and Chief
Executive Officer. Taneja is NuMed's largest stockholder, owning or
controlling in excess of 20.2% of the common stock prior to the illegal
transaction challenged by Turkey Vulture in this lawsuit.
8. Counterclaim Defendants Susan J. Carmichael, Robert P. Ottman and
Thomas V. Chema are the other members of NuMed's Board. These parties are
joined in this action under the authority of Fed. R. Civ. P. 13(h) and 20(a)
because the claims against them arise out of the same series of transactions
or occurrences as Defendant's counterclaims against Plaintiff NuMed.
9. Richard M. Osborne is the sole Manager of Turkey Vulture. He is
also a member of the Committee for a New NuMed (the "Committee"), a group of
concerned individuals formed to solicit proxies to be voted in favor of a new
Board of Directors at the stockholders' meeting originally scheduled for
December 28, 1998. The Committee believes that a new board of experienced
business people is required in order to reverse a situation where NuMed's
stock has precipitously declined while management has enriched itself and
consistently rejected Turkey Vulture's requests for an annual meeting.
NUMED'S DECLINE
10. Prior to November 13, 1998, NuMed stock was traded on the Nasdaq
SmallCap Market. Under Taneja's stewardship, NuMed's stock plunged from a high
-7-
<PAGE>
of $6 per share in May, 1994 to less than $0.44 per share on November 11,
1998 -- a decrease of over 90%.
11. On November 13, 1998, the Nasdaq Stock Market, Inc. delisted NuMed
because the Company no longer met the Market's requirements regarding minimum
net tangible assets and income, minimum market value of the public float, and
minimum bid price for the shares. The delisting has further eroded the trading
market, liquidity and price of NuMed's stock.
12. The decline in value of NuMed's stock accurately reflects the waning
of the Company's balance sheet. From April 1, 1995 through September 30, 1998,
the Company reported net losses totaling about $4 million. The Company's net
worth has declined from over $10 million on March 31, 1996 to less than $6
million on September 30, 1998.
13. While NuMed's stock plummeted and its finances deteriorated, the
Company paid Taneja, then Chairman of the Board and Chief Executive Officer,
a lucrative compensation package totaling $722,344 over three years, and
granted him the right to purchase 920,000 shares of NuMed stock.
14. NuMed lined the pockets of Taneja's "corporate family" as well.
Over the past six years, the Company has paid two companies owned or
controlled by him approximately $2 million: Bancapital Corporation, owned and
controlled by Taneja, and A.T. Brod & Co., a securities brokerage firm which
is a wholly-owned subsidiary of Bancapital Financial Corporation, of which
Taneja is a majority
-8-
<PAGE>
stockholder and Chief Executive Officer.
15. On March 28, 1995, A.T. Brod, which had made a market for NuMed
stock, was shut down by the new York Stock Exchange for violating rules of
that organization as well as those of the Securities and Exchange Commission.
The demise of A.T. Brod led to a lack of investor support for NuMed stock
which continues to this day.
16. Management's recent attempts to cure the ailing NuMed have only made
matters worse. During 1998, NuMed announced two merger agreements which would
have led to a change of control of the Company. Both were abandoned. In its most
recent annual report, the Company admitted that its profitability was impaired
by, among other things, "EXCESSIVE legal and other costs relating primarily from
failed acquisitions." (emphasis added)
TURKEY VULTURE PRESCRIBES A CURE
17. Since first acquiring an equity stake in NuMed, Turkey Vulture,
through Richard Osborne, has repeatedly sought to utilize the corporate
machinery to reverse NuMed's decline. Taneja and the Board, for their part,
have consistently frustrated these efforts.
18. Contrary to its own By-Laws and Nevada law, the Company has not
held an annual meeting since March 29, 1996, and stockholders have since been
deprived of their annual right to elect directors. In April, 1997, Turkey
Vulture requested to inspect the Company's list of stockholders as it is
entitled to do under
-9-
<PAGE>
Nevada law in order to communicate with other stockholders about NuMed's ill
fortunes.
19. When the Company failed to respond, Turkey Vulture renewed its
request in September, 1997, and in addition, requested that the Board of
Directors schedule a long-overdue annual meeting of stockholders. After the
Board once again ignored Turkey Vulture's request, Turkey Vulture repeated
its demand for a stockholders' meeting in October, 1997.
20. The Company persisted in avoiding Turkey Vulture's call for a
meeting, and as a result, in November, 1997, Turkey Vulture filed a lawsuit
in Nevada seeking to compel NuMed to provide it with a stockholder list and
to schedule an annual meeting. For the next ELEVEN MONTHS, Osborne, on behalf
of Turkey Vulture, pressed NuMed management to negotiate a settlement of the
lawsuit and to schedule an annual meeting. NuMed's only response was to
request millions of dollars in capital from Turkey Vulture and no settlement
was reached.
21. On October 8, 1998, Turkey Vulture yet again renewed its demand
that the Board schedule an annual meeting, and on October 19, 1998, renewed
its demand for a stockholders list. Copies of these demands are attached to
this Answer and Counterclaim as Exhibit C.
22. After delaying for over FOURTEEN MONTHS, NuMed management finally
capitulated and on November 2, 1998, the Company announced that it would hold
an annual meeting of stockholders on December 28, 1998. The Company has since
-10-
<PAGE>
postponed the stockholders' meeting until January 28, 1999. However, the
Company has not responded to the demand for a stockholders list.
MANAGEMENT'S RESPONSE: ENTRENCHMENT AND AVOIDANCE
23. In the past, NuMed's managers have not hesitated to follow a course
calculated to entrench themselves and insulate themselves from the stockholders'
prerogative to elect new directors. The incumbent Board's contempt for the will
of the stockholders is best expressed by their persistent refusal to hold an
annual meeting for over two years, as required by the By-laws and by Nevada law,
despite repeated demands.
24. The Board has also resorted to various corporate machinations to
ensure their incumbency. In January, 1996, shortly before the last scheduled
stockholders' meeting, NuMed's Board of Directors adopted an amendment to the
Company's By-laws which called for a classified, or staggered, Board of
Directors. The classified Board would be comprised of three groups of two or
three directors, and the stockholders would only vote for one group per year.
This amendment passed without shareholder approval.
25. Management expressly recognized that the classified board was a
useful tool for evading accountability to stockholders. As the Company
conceded in its 1996 proxy materials, the classified board
... could have the effect of discouraging a third party
from initiating a proxy contest, making a tender offer
or otherwise attempting to obtain control of the Company,
EVEN THOUGH SUCH A TRANSACTION COULD BE
-11-
<PAGE>
BENEFICIAL TO THE COMPANY AND ITS STOCKHOLDERS.
(emphasis added)
26. Turkey Vulture's fear that Taneja and NuMed's Board would engage in
similar entrenchment machinations in advance of the next stockholders meeting
has been realized in shocking fashion.
DESPERATE MEASURES
27. On November 12, 1998, in anticipation of the stockholders' meeting,
The Committee for a New NuMed filed with the Securities and Exchange
Commission a preliminary proxy statement indicating its intention to seek
election of a new Board of Directors who will replace Taneja as Chief
Executive Officer and "implement new policies and programs designed to
improve the Company's poor operating record and financial condition."
28. On November 23, 1998, NuMed announced that it had reached an
"agreement" whereby Mr. Taneja would step down as Chairman of the Board and
Chief Executive Officer and Susan J. Carmichael, President of the Company,
would don the mantle of Chief Executive. Mr. Taneja would retain, however,
his seat on the Board. In its public announcement, NuMed failed disclose any
of the details of its agreement with Mr. Taneja. At the same time, the
Company announced it had postponed the annual meeting for 31 days, until
January 28, 1999.
29. On December 4, 1998, the Company filed documents with the SEC
revealing that on November 23, 1998 -- at a time when the Company's financial
-12-
<PAGE>
condition has never been worse and Taneja and the Board faced the threat of
removal at a long-overdue stockholders' meeting -- NuMed's Board of Directors
entered into a Termination, Noncompetition and Mutual Release Agreement with
Taneja, guaranteeing him payments totaling $250,000 in cash, issuing him
744,680 shares of stock for which the Company received no cash payment, and
extending the term of all his former stock options and warrants for three
years, to November 23, 2001. A copy of this Agreement is attached to this
Answer and Counterclaim as Exhibit D.
EXCESSIVE COMPENSATION
30. The total value of Taneja's severance package is in excess of
$600,000, and is at least three times what he was entitled to receive as
severance payments under his September 1, 1995 Employment Agreement. There is
no valid business reason for this wasteful transaction, which was entered
into solely to secure Taneja's seat on the Board and to foil the
stockholders' right to choose a Board.
31. Under the terms of his prior employment agreement, if Taneja's
employment was terminated during the "first one-year renewal or option period
following the initial 3 year term," Taneja would be entitled to severance pay
"equal to his ... annual base salary." On information and belief, Taneja's
base salary is approximately $180,000.
ILLEGAL TRANSACTION
32. On information and belief, the issuance of 744,680 shares of stock
under these circumstances is a prohibited transaction under Nevada law. As a
-13-
<PAGE>
beneficial owner of more than 10% of the voting shares of NuMed, Nevada law
classifies Taneja as an "interested stockholder." N.R.S. Section 78.423.
33. His outright receipt of stock having an aggregate value in excess
of 5% of the aggregate value of all outstanding shares constitutes a
"combination" under N.R.S. Section 78.416. Nevada prohibits a "combination"
with an "interested stockholder" except when authorized by the corporation's
articles or under certain circumstances when all other shareholders receive
similar or proportionate consideration. SEE N.R.S. Sections 78.439 to 78.444.
NuMed's articles do not authorize the corporation to engage in "combinations"
with "interested stockholders," and no consideration of any kind was granted
to other stockholders as a part of Taneja's "golden parachute."
FAILURE TO DISCLOSE MATERIAL FACTS
34. On November 23, 1998, the date of Taneja's extraordinary severance
agreement, NuMed issued a press release, a copy of which is attached to this
Answer and Counterclaim as Exhibit E. Although it announces the new date of
the stockholders' meeting and the new record date, the release is silent on
the cash award and the issuance of 744,680 shares of stock to Taneja, and
fails to disclose that the shares of other stockholders, and those who made
purchases in advance of the new record date, would be diluted as of the
January 28, 1999 annual meeting. Turkey Vulture lacked this material
information when it purchased 55,000 additional shares of NuMed stock on
December 2, 1998.
-14-
<PAGE>
35. For his part, Taneja failed to disclose his acquisition of an
additional 15% interest in NuMed in a Schedule 13D filing with the SEC until
December 7, 1998.
THE COMMITTEE HAD ALREADY PREPARED ITS PROXY STATEMENT
36. On the morning of December 4, 1998, the SEC informed the Committee
for a New NuMed that it had no further comments to the proxy solicitation.
Later that day, NuMed disclosed for the first time the terms of Taneja's
severance agreement. Turkey Vulture, on behalf of the Committee, spent
considerable funds and has suffered significant prejudice by mailing a proxy
without the benefit of material information relating to an illegal agreement
reached between NuMed and Taneja on November 23, 1998.
37. Given NuMed's practice of concealing material facts from
stockholders, Turkey Vulture has no confidence that the Board will not
continue to take further unauthorized, wasteful or illegal steps to ensure
their re-election. Turkey Vulture's proxy solicitation has already been
rendered less effective because of NuMed's actions, and injunctive relief is
absolutely necessary to preserve the integrity of the proxy solicitation
process and the vote at the annual meeting.
COUNT ONE
38. The allegations of the foregoing paragraphs 1 through 37 are realleged
and incorporated herein by reference.
39. On information and belief, NuMed has violated Nevada law, N.R.S.
-15-
<PAGE>
Sections 78.439 - 78.444, and entered into an unauthorized transaction by
issuing Taneja 744,680 shares of NuMed stock.
40. Turkey Vulture, and all other stockholders, will suffer irreparable
harm if Taneja is permitted to vote those illegally issued shares at the
upcoming annual stockholders' meeting.
41. Turkey Vulture is entitled to a preliminary and permanent injunction
which would preclude Taneja from voting those shares at the stockholders'
meeting.
COUNT TWO
42. The allegations of the foregoing paragraphs 1 through 41 are
realleged and incorporated herein by reference.
43. Turkey Vulture will suffer irreparable harm if the Board of
Directors is permitted to institute further changes to NuMed's corporate
structure, or to implement those severance agreements, golden parachutes and
By-Law changes it has or may have already approved in advance of the upcoming
annual meeting and the seating of a new Board.
44. The harm suffered by Turkey Vulture far outweighs the harm to NuMed
if such an injunction maintaining the status quo is not granted.
45. Turkey Vulture is entitled to an injunction to maintain the status
quo against any transactions outside the ordinary course of NuMed's business
pending the election and seating of the new directors.
COUNT THREE
-16-
<PAGE>
46. The allegations of the foregoing paragraphs 1 through 45 are realleged
and incorporated herein by reference.
47. NeMed's By-Laws at Article III, Section 1 require that the Company
hold annual meeting of stockholders in July of each year.
48. NuMed is in violation of its By-Laws and N.R.S. Section 78.330 by
failing to hold a stockholders' meeting for the election of directors since
March 29, 1996.
49. NuMed has changed both the date of the stockholders' meeting and
the record date after Turkey Vulture, through the Committee for a New NuMed,
submitted its proxy statement to the SEC. The Committee has since mailed its
proxy solicitation to stockholders.
50. As a matter of law, Turkey Vulture will suffer irreparable harm if
the annual meeting is further delayed or advanced from January 28, 1999 or if
the December 22, 1998 record date is otherwise changed. Accordingly, NuMed
should be enjoined from any further delays in the stockholders' meeting.
COUNT FOUR
51. The allegations of the foregoing paragraphs 1 through 50 are
realleged and incorporated herein by reference.
52. On October 19, 1998, Turkey Vulture submitted a written demand for
a stockholders list in accordance with the procedure set forth in N.R.S.
Section 78.105. SEE Exhibit C.
-17-
<PAGE>
53. NuMed has failed to respond to this demand as required by law.
54. In order to ensure the integrity of the vote and proxy solicitation
process, NuMed should be ordered to provide Turkey Vulture with an updated
stockholders' ledger as of the new record date, which is December 22, 1998.
WHEREFORE, Defendant Turkey Vulture Fund XIII, Ltd. requests that the
Court enter an Order:
i) preliminarily and permanently enjoining Taneja from
voting any of the 744,680 shares issued to him as part
of his November 23, 1998 Termination, Noncompetition
and Mutual Release Agreement, or enjoying any other legal
or equitable rights associated with ownership of such
shares;
ii) preliminarily and permanently enjoining NuMed and those
acting in concert with it, including its Directors and
officers, from (a) taking or authorizing further action
outside the ordinary course of business; and (b) taking any
action to effectuate any decisions made by the Board or any
committee of the Board since October 1, 1998 that have the
purpose or effect of bestowing any benefits upon any NuMed
Director, officer or employee, pending the completion of the
annual meeting and the seating of new Directors following
that meeting;
iii) preliminarily and permanently enjoining NuMed and its
Directors from postponing or advancing the January 28, 1999
stockholders' meeting or from postponing or advancing the
December 22, 1998 record date for that meeting;
iv) requiring NuMed to provide Turkey Vulture an updated
stockholders' ledger as of the December 22, 1998 record date
for the January 28, 1999 annual meeting;
-18-
<PAGE>
v) granting any further relief, legal or equitable, to which
Turkey Vulture may be entitled.
Respectfully submitted,
/s/ Ernest J. Marquart
------------------------------------
C. Philip Campbell, Jr. (Fla. Bar No. 160973)
Ernest J. Marquart (Fla. Bar No. 905860)
SHUMAKER, LOOP & KENDRICK, LLP
Suite 2800
101 East Kennedy Boulevard
Tampa, Florida 33602
(813) 229-7600
(813) 229-1660 (Fax)
Joshua R. Cohen (Ohio St. Bar Reg. 32368)
James B. Rosenthal (Ohio St. Bar Reg. 62872)
KOHRMAN JACKSON & KRANTZ P.L.L.
1375 East Ninth Street
20th Floor
Cleveland, Ohio 44114
(216) 696-8700
(216) 621-6536 (Fax)
Attorneys for Defendant Turkey Vulture
Fund XIII, Ltd.
<PAGE>
VERIFICATION
I declare under penalty of perjury that the foregoing is true and correct.
Executed on: December 15, 1998
/s/ Richard M. Osborne
------------------------------------
Richard M. Osborne, Manager
TURKEY VULTURE FUND XIII, LTD.
<PAGE>
CERTIFICATE OF SERVICE
I certify that a true copy of the foregoing was served this 16 day of
December, 1998, by hand delivery, on the following:
James M. Landis
Richard Thomas Petitt
Amee B. Flowers
Foley & Lardner
100 N. Tampa Street
Suite 2700
P.O. Box 3391
Tampa, Florida 33601-3391
and will be served by hand delivery, via service of process, to Counterclaim
Defendants.
/s/ Ernest J. Marquart
------------------------------------
Ernest J. Marquart
-21-
<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
NUMED HOME HEALTH )
CARE, INC., )
) CASE NO. 98-2354-CIV-T-17F
PLAINTIFF, )
) (DISPOSITIVE MOTION)
V. )
)
TURKEY VULTURE FUND )
XIII, LTD., )
)
DEFENDANT. )
- ------------------------------------------------------------------------------
DEFENDANT TURKEY VULTURE FUND XIII, LTD.'S
MOTION FOR SUMMARY JUDGMENT
- ------------------------------------------------------------------------------
Under the authority of Fed. R. Civ. P. 56 and Middle District of Florida
Local Rule 3.01, Defendant Turkey Vulture Fund XIII, Ltd. moves for summary
judgment on the entirety of Plaintiff's claims.
As set forth in the accompanying memorandum, events occurring since the
filing of the Complaint obviate any relief to which Plaintiff NuMed Home
Health Care, Inc. may have been entitled. Turkey Vulture cured any alleged
deficiencies in its Schedule 13D by filing Amendment No. 3 on November 24,
1998. As a matter of law, this constitutes the sole relief to which NuMed is
entitled in this lawsuit under
<PAGE>
Section 13(d) of the Securities and Exchange Act of 1934, 15 U.S.C. Section
78m(d). In addition, NuMed has secured for itself the "cooling-off" period it
seeks by postponing the upcoming stockholders' meeting from December 28, 1998
to January 28, 1999.
Under the circumstances, NuMed no longer has any viable cause of action and
its Complaint should be dismissed, with prejudice.
Respectfully submitted,
/s/ Ernest J. Marquart
---------------------------------------------
C. Philip Campbell, Jr. (Fla. Bar No. 160973)
Ernest J. Marquart (Fla. Bar No. 905860)
SHUMAKER, LOOP & KENDRICK, LLP
Suite 2800
101 East Kennedy Boulevard
Tampa, Florida 33602
(813) 229-7600
(813) 229-1660 (Fax)
Joshua R. Cohen (Ohio St. Bar Reg. 32368)
James B. Rosenthal (Ohio St. Bar Reg. 62872)
KOHRMAN JACKSON & KRANTZ P.L.L.
1375 East Ninth Street
20th Floor
Cleveland, Ohio 44114
(216) 696-8700
(216) 621-6536 (Fax)
Attorneys for Defendant Turkey Vulture
Fund XIII, Ltd.
-2-
<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
NUMED HOME HEALTH )
CARE, INC., )
) Case No. 98-2354-CIV-T-17F
Plaintiff, )
) (Dispositive Motion)
v. )
)
TURKEY VULTURE FUND )
XIII, LTD., )
)
Defendant. )
- ------------------------------------------------------------------------------
MEMORANDUM IN SUPPORT OF DEFENDANT TURKEY VULTURE FUND XIII, LTD.'S MOTION
FOR SUMMARY JUDGMENT
- ------------------------------------------------------------------------------
NuMed Home Health Care, Inc. filed this lawsuit alleging that Turkey
Vulture Fund XIII, Ltd. violated Section 13(d) of the Securities Exchange Act of
1934, 15 U.S.C. Section 78m(d), by failing to amend its Schedule 13D with
information regarding its acquisition of additional NuMed stock and its plans
to seek changes in NuMed's management and By-Laws at a stockholders' meeting
originally scheduled for December 28, 1998.
The only substantive relief sought by NuMed is: i) the entry of a
"temporary and permanent injunction requiring the Turkey Vulture Fund to file an
amendment
<PAGE>
to the Schedule 13D" and ii) a temporary injunction preventing Turkey Vulture
from exercising voting rights and soliciting proxies "during the pendency of
this lawsuit and an appropriate 'cooling-off' period, which will permit the
investing public to have a reasonable amount of time to digest any amendment
to the Schedule 13D ordered by this Court." SEE Complaint at PARA 16.
As set forth below, NuMed's claims are moot. On November 24, 1998,
Turkey Vulture cured any alleged deficiencies in its Schedule 13D by filing
an Amendment disclosing its acquisition of additional stock and its plans to
solicit proxies in favor of various changes at an upcoming stockholders'
meeting. The need for any "cooling-off" period has been obviated by NuMed's
unilateral decision to postpone the stockholders' meeting for 31 days, from
December 28, 1998 to January 28, 1999.
Under the circumstances, NuMed has already obtained all the relief it
could have hoped for in this action. There are no disputed facts, and Turkey
Vulture is entitled to judgment as a matter of law.
I. FACTUAL BACKGROUND
Plaintiff NuMed Home Health Care, Inc. is a publicly-traded Nevada
corporation engaged in the business of providing home health care services.
Defendant Turkey Vulture Fund XIII, Ltd. is an Ohio limited liability company
engaged in the business of buying, selling and holding all types of
securities and investment instruments. Richard M. Osborne is Turkey Vulture's
sole Manager. Since 1996, Turkey Vulture has acquired in excess of 563,500
shares of NuMed
-2-
<PAGE>
stock, comprising approximately 11% of the outstanding voting stock of the
Company. This amount includes 55,000 shares acquired on December 2, 1998. SEE
Affidavit of Richard M. Osborne at PARAS 2-4, attached to this Memorandum.
In keeping with its legal obligations, Turkey Vulture has made various
submissions to the Securities and Exchange Commission to document its
acquisition of NuMed stock. In particular, Turkey Vulture made the following
submissions:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Filing Date Disclosure
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<S> <C> <C>
Schedule 13D December 23, 1996 Ownership of 340,000
shares of NuMed stock
- ------------------------------------------------------------------------------
Schedule 13D Amendment No. 1 January 28, 1997 Ownership of 390,000
shares of NuMed stock
Schedule 13D Amendment No. 2 April 9, 1997 Ownership of 485,000
shares of NuMed stock
- ------------------------------------------------------------------------------
Schedule 13D Amendment No. 3 November 24, 1998 Ownership of 508,500
shares of NuMed stock;
intention to seek
election of new Board of
Directors and changes in
By-Laws
- ------------------------------------------------------------------------------
</TABLE>
SEE Osborne Affidavit at PARA 5.
This case was precipitated by the efforts of Turkey Vulture Fund to reverse
NuMed Home Health Care's financial free-fall by voting its own shares -- and
soliciting proxies and votes from other stockholders -- in favor of certain
changes to NuMed's management and By-Laws. Although NuMed's By-Laws and Nevada
law require that a stockholders' meeting be held annually for the election of
directors, NuMed has failed to hold an annual meeting since March 29, 1996.
After repeated
-3-
<PAGE>
demands from Turkey Vulture for over a year -- and even litigation over the
matter -- NuMed management finally succumbed and scheduled a stockholders'
meeting for December 28, 1998. SEE Osborne Affidavit at PARA 7.
In anticipation of that meeting, on November 12, 1998, Richard Osborne
organized the Committee for a New NuMed and submitted to the SEC a
Preliminary Proxy Statement disclosing his beneficial ownership of Turkey
Vulture's 508,500 shares of NuMed stock and the Committee's intention to seek
various changes to NuMed's management and By-Laws at the upcoming
stockholders' meeting. On the basis of that filing, NuMed filed this lawsuit
claiming that Turkey Vulture had failed to amend its Schedule 13D to include
this information. SEE Osborne Affidavit at PARA 8.
As the above chart demonstrates, Turkey Vulture's ownership of 508,500
shares and its intent to seek changes in NuMed's management and By-Laws were
a matter of public record ALMOST TWO WEEKS BEFORE NuMed filed its Complaint
charging that the Fund's failure to amend Schedule 13D deprived the investing
public of that material information. More to the point, the very next day
after Turkey Vulture's counsel received a copy of the Complaint -- on
November 24, 1998 -- Turkey Vulture filed the very Amendment to Schedule 13D
which NuMed now asks the Court to force Turkey Vulture to make. SEE Osborne
Affidavit at PARA 5.
Turkey Vulture obviated one item of relief NuMed seeks here by filing
Amendment No. 3 to its Schedule 13D, and NuMed employed "self-help" to obtain
for itself the second item of relief -- a "cooling-off" period -- by
announcing on November 23, 1998 that the December 28, 1998 stockholders'
meeting would be
-4-
<PAGE>
delayed until January 28, 1999. SEE Osborne Affidavit at PARA 10. This
additional 31 days in advance of the stockholders' meeting is more than
sufficient for investors to absorb the information contained in Turkey
Vulture's November 12, 1998 Preliminary Proxy Statement and the November 24,
1998 Amendment No. 3 to its Schedule 13D.
II. LAW AND ARGUMENT
Summary judgment must be granted if there is no genuine issue as to any
material fact and the movant is entitled to judgment as a matter of law. Fed.
R.Civ. P. 56(c). The facts material to this motion are set forth in the
Affidavit of Richard M. Osborne, but, due to the nature of Plaintiff's
claims, are also matters of public record contained in various documents
filed with the Securities and Exchange Commission.
The sole question governing this motion is whether Turkey Vulture's
filing of Amendment No. 3 to its Schedule 13D obviates any relief which
Section 13(d) might bestow on NuMed for alleged deficiencies in the Fund's
required disclosures. As explained below, judgment must be granted in favor
of Turkey Vulture.
A. NUMED HAS NO RIGHT TO RELIEF UNDER SECTION 13(d)
NuMed claims a violation of its rights under Section 13(d) of the
Securities Exchange Act of 1934, 15 U.S.C. Section 78m(d) and Rule 13d-1(a)
of the Securities Exchange Commission. Section 13(d) obligates investors to
reveal the following information in a Schedule 13D when a purchase of stock
gives them at least five-percent of a company's outstanding shares:
1) the number of shares they have come to own;
-5-
<PAGE>
2) their identity and background;
3) the nature of their ownership of the shares;
4) the means by which they acquired the shares;
5) the existence of any plans to acquire control of the issuer to
effect some significant change in its structure; and
6) any arrangement they have made with others regarding the issuer's
securities or the conduct of its business.
15 U.S.C. Section 78m(d).
1. SECTION 13(d) SERVES EXCLUSIVELY TO PROTECT SHAREHOLDERS' RIGHT
TO KNOW THE PERTINENT FACTS
Section 13(d) serves to illuminate large aggregations of stock that
signal "potential shift[s] in corporate control." SEA CONTAINERS, LTD. V.
STANA AB, 741 F. Supp. 231, 233 (D.D.C., AFF'D, 890 F.2d 1205 (D.C. Cir.
1989). The provision "was designed SOLELY to get [this] needed information to
the investor." FLORIDA COMMERCIAL BANKS V. CULVERHOUSE, 772 F.2d 1513, 1515
(11th Cir. 1985) (emphasis added). In keeping with this principle,
"shareholder protection" constitutes the exclusive rationale underlying
Section 13(d). BNS, INC. V. KOPPERS CO., 683 F. Supp. 458, 467 (D. Del.
1988).
2. CORRECTIVE DISCLOSURE REPRESENTS THE SOLE RELIEF TO WHICH NUMED IS
ENTITLED
While issuers of stock such as NuMed have standing to sue under Section
13(d), they may assert such claims only to vindicate the interests of
investors by obtaining an injunction requiring full and fair disclosure. SEE
ICN PHARMACEUTICALS, INC. V. KAHN, 2 F.3d 484 (2d Cir. 1993); UNIVERSAL
CONTAINER CORP. V. HORWITZ, [1977-1978 Transfer Binder] Fed. Sec. L. Rep.
(CCH) PARA 96,161 at 92,242 (S.D.N.Y.
-6-
<PAGE>
Sept. 6, 1977).
The provision is not intended to be a weapon that companies can use to
thwart an investor's accumulation of stock or his use of that stock to effect
corporate change. RONDEAU V. MOSINEE PAPER CORP., 422 U.S. 49, 58 (1975). To
the contrary, an issuer of stock may sue under Section 13(d) solely for the
purpose of ensuring "that a complete and accurate ... 13D is filed in
accordance with the statute." NEWELL CO. V. VERMONT AM. CORP., 725 F. Supp.
351, 382 (N.D. Ill. 1982). Given Section 13(d)'s singular policy of
protecting stockholders, even issuers that succeed in proving "misleading
statements" at most become entitled to "a curative disclosure." PANTRY PRIDE,
INC. V. ROONEY, 598 F. Supp. 891, 900 (S.D.N.Y. 1984).
Purchasers satisfy both the letter and spirit of Section 13(d) when such
a revised filing reports all of the information purportedly omitted from the
original submission. TREADWAY CO. V. CARE CORP., 638 F.2d 357, 380 (2d Cir.
1980). Such an amendment extinguishes any claim the company might have had,
since it entails the total relief available to such entities under Section
13(d). GEARHART INDUS., 741 F.2d 707, 715-716 (5th Cir. 1984). In the event
that the defendant's conduct causes pecuniary loss, only shareholders -- not
the issuer -- may sue for damages. SEE RONDEAU, 422 U.S. at 60.
3. TECHNICAL VIOLATIONS WILL NOT SUPPORT A CLAIM UNDER SECTION 13(d)
"The function of the court in enforcing [Section 13(d)] is not to engage in
exhaustive nitpicking." NEWELL CO. V. VERMONT AM. CORP., 725 F. Supp. 351, 382
-7-
<PAGE>
(N.D. Ill 1982). Technical or "de minimis violations ... constitute an
INADEQUATE basis" to support a company's claims under this provision.
TREADWAY CO. V. CARE CORP., 490 F. Supp. 660, 664 (S.D.N.Y.), AFF'D, 638 F.2d
357 (2d Cir. 1980) (emphasis added).
As already note, investors satisfy both the letter and spirit of Section
13(d) when a revised filing reports all of the information supposedly omitted
from the original Schedule. TREADWAY CO. V. CARE CORP., 638 F.2d at 380.
Accordingly, once a purchaser substantially complies with pertinent
disclosure requirements, companies no longer have any basis to pursue relief
under this provision. CITIZENS FIRST BANKCORP V. HARRELD, 559 F. Supp. 867
(W.D. Ky. 1982).
NuMed's complaint alleges that facts disclosed on Turkey Vulture's
Preliminary Proxy Statement were not also disclosed on an amendment to its
Schedule 13D. This is a purely technical violation, because the information
was already a matter of public record, and was cured the day after the
Complaint was filed.
4. ONLY THE THREAT OF "IRREPARABLE HARM" WILL JUSTIFY A "COOLING-OFF"
PERIOD UNDER SECTION 13(d)
Relief beyond compliance with the reporting requirements -- such as the
imposition of a "cooling-off" period -- is justified only if the petitioner
can show irreparable harm in the absence of such relief. RONDEAU, 422 U.S. at
61. The threat of irreparable harm cannot relate to the detriment that an
allegedly defective Schedule imposes upon "management's resistance" to the
defendant's acquisition of
-8-
<PAGE>
stock. GEARHART INDUS., 741 F.2d at 715. Instead, the harm must entail some
significant impairment of the shareholders' disclosure rights that Section
13(d) serves to protect. DAN RIVER, INC. V. ICAHN, 701 F.2d 278 (4th Cir.
1983).
In this case, the investing public has had full disclosure of Turkey
Vulture's acquisitions of stock and its intentions with respect to the
December 28, 1998 stockholders' meeting since November 24, 1998 at the latest
and November 12, 1998 at the earliest. With its own postponement of the
meeting by 31 days, NuMed cannot possibly claim irreparable harm from a lack
of full and fair disclosure. Where corrective disclosure has been made under
these circumstances, "[t]here is ... no precedent for a cooling-off period."
CHROMALLOY AM. CORP. V. SUN CHEMICAL CORP., 611 F.2d 20 (8th Cir. 1979).
Moreover, courts eschew any lengthy "cooling-off" period because of the
risk that it goes beyond corrective disclosure and serves in addition to
punish the investor whose activities are inhibited. "Such punishment ....
contravenes the purpose behind federal securities laws." PABST BREWING CO. V.
JACOBS, 549 F. Supp. 1068 (D. Del. 1982). In light of Turkey Vulture's
corrective disclosures and the amount of time before the stockholders'
meeting, NuMed can demonstrate no irreparable harm and no entitlement to any
additional "cooling-off" period.
5. SECTION 13(d) DOES NOT PROVIDE FOR AN AWARD OF ATTORNEY'S
FEES OR COSTS
In addition to its other claims for relief, NuMed seeks an award of
attorney's fees and costs. Section 13(d) makes no provision for these items of
damage and the
-9-
<PAGE>
Complaint is devoid of any other allegations pursuant to which such an award
could be made. CHAMPION PARTS, INC. V. OPPENHEIMER & CO., 878 F.2d 1003, 1006
(7th Cir. 1989).
B. NUMED'S CLAIMS UNDER SECTION 13(d) ARE MOOT
Developments may occur during the pendency of litigation that eliminate
any current need for judicial resolution of the contested issues. SEE CHILES
V. THORNBURGH, 865 F.2d 1197 (11th Cir. 1989). Claims thus become moot if
"interim ... [events] completely and irrevocably eradicated the effects of
the alleged violation" attributed to the defendants. COUNTY OF LOS ANGELES V.
DAVIS, 440 U.S. 625, 631 (1979); REICH V. OCCUPATIONAL SAFETY AND HEALTH
REVIEW COM'N, 102 F.3d 1200 (11th Cir. 1997). As these authorities dictate,
the plaintiff is not entitled to proceed with its case when the legal or
factual basis for the cause of action no longer exists. Since NuMed has
obtained all the relief it has asked for - beyond even that to which it is
entitled - its claims are moot and the Complaint should be dismissed.
III. CONCLUSION
The amended Schedule 13D filed by Turkey Vulture fully alerted NuMed
stockholders to the matters supposedly concealed from the market as of the
time Turkey Vulture filed its Preliminary Proxy Statement with the SEC. Since
this amendment embodies the full breadth of relief available, NuMed's claim
under Section 13(d) has become moot. By the same token, NuMed's claim for a
"cooling-off" period in advance of the December 28, 1998 stockholders'
meeting has been satisfied by the postponement of that meeting until January
28, 1999, ample time for
-10-
<PAGE>
investors to absorb the matters disclosed in Turkey Vulture's November
24, 1998 amendment to its Schedule 13D. Judgment should be granted in Turkey
Vulture's favor.
Respectfully submitted,
/s/ Ernest J. Marquart
--------------------------------------------
C. Philip Campbell, Jr. (Fla. Bar No. 160973)
Ernest J. Marquart (Fla. Bar No. 905860)
SHUMAKER, LOOP & KENDRICK, LLP
Suite 2800
101 East Kennedy Boulevard
Tampa, Florida 33602
(813) 229-7600
(813) 229-1660 (Fax)
JOSHUA R. COHEN (OHIO ST. BAR REG. 32368)
JAMES B. ROSENTHAL (OHIO ST. BAR REG. 62872)
KOHRMAN JACKSON & KRANTZ P.L.L.
1375 East Ninth Street
20th Floor
Cleveland, Ohio 44114
(216) 696-8700
(216) 621-6536 (Fax)
Attorneys for Defendant Turkey Vulture
Fund XIII, Ltd.
-11-
