Exhibit 99.5
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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Tillie Saltzman, :
: Civil Action No. 19811 NC
Plaintiff, :
:
v. :
:
Jon H. Outcalt, Kevin B. Shaw, :
Boake A. Sells, Richard L. Osborne :
and NCS Healthcare, Inc., :
:
Defendants. :
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COMPLAINT
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Plaintiff, Tillie Saltzman, by her attorneys, alleges upon information and
belief, except as to paragraph 1 which is alleged upon personal knowledge, as
follows:
THE PARTIES
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1. Plaintiff Tillie Saltzman ("plaintiff") is the owner of common stock of
NCS Healthcare, Inc. ("NCS" or the "Company") and has been the owner of such
shares continuously since prior to the wrongs complained of herein.
2. Defendant NCS is a corporation duly existing and organized under the
laws of the State of Delaware, with its principal executive offices located at
3201 Enterprise Parkway, Suite 220, Beachwood, OH. NCS provides pharmacy and
related services to long-term care and acute care facilities. The Company
purchases and dispenses prescription and non-prescription pharmaceuticals, and
provides management services, medical record keeping, and drug therapy
evaluation.
3. Defendant Jon H. Outcalt ("Outcalt") is and at all times relevant hereto
has been Chairman of the Board of Directors of NCS. Mr. Outcalt owns
approximately 263,895 shares of
NCS Class A Stock and 3,476,086 shares of Class B Stock. Class A Stock carries
one vote per share and Class B Stock carries ten votes per share. Therefore, Mr.
Outcalt controls approximately 49% of the voting power of the Company.
4. Defendant Kevin B. Shaw ("Shaw") is and at all times relevant hereto has
been President, Chief Executive Officer, Secretary and a director of NCS. Mr.
Shaw owns approximately 106,041 Class A Stock and 1,141,134 shares of Class B
Stock, and therefore, controls approximately 16% of the voting power of the
Company. In the aggregate, Messrs. Outcalt and Shaw control approximately 65% of
the Company's voting power.
5. Defendant Boake A. Sells ("Sells") is and at all times relevant hereto
has been a director of NCS. Mr. Sells also provides NCS with consulting services
pursuant to a consulting agreement with NCS.
6. Defendant Richard L. Osborne ("Osborne") is and at all times relevant
hereto has been a director of NCS.
7. The defendants referred to in paragraphs 3 through 6 are collectively
referred to herein as the "Individual Defendants."
8. The Individual Defendants are in a fiduciary relationship with plaintiff
and the other public stockholders of NCS, and owe them the highest obligations
of good faith, fair dealing, due care, loyalty and full, candid and adequate
disclosure.
CLASS ACTION ALLEGATIONS
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9. Plaintiff brings this action on her own behalf and as a class action,
pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of herself
and the public shareholders of NCS common stock (the "Class"). Excluded from the
Class are defendants herein and any person, firm,
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trust, corporation or other entity related to or affiliated with any of the
defendants.
10. This action is properly maintainable as a class action.
11. The Class is so numerous that joinder of all members is
impracticable. As of May 10, 2002, NCS had approximately 18.4 million shares of
Class A Stock and 5.2 million shares of Class B Stock outstanding.
12. There are questions of law and fact which are common to the Class,
including INTER ALIA, the following:
(a) whether defendants have breached their fiduciary and other
common law duties owed by them to plaintiff and the other members of the Class;
and
(b) whether plaintiff and the other members of the Class would be
irreparably damaged were the transactions complained of herein consummated.
13. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. Plaintiff's claims
are typical of the claims of the other members of the Class and plaintiff has
the same interests as the other members of the Class. Accordingly, plaintiff is
an adequate representative of the Class and will fairly and adequately protect
the interests of the Class.
14. The prosecution of separate actions by individual members of the
Class would create the risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for defendants, or adjudications with respect to individual
members of the Class which would as a practical matter be dispositive of the
interests of the other members not parties to the adjudications or substantially
impair or impede their ability to protect their interests.
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15. Defendants have acted, or refused to act, on grounds generally
applicable to, and causing injury to, the Class and, therefore, preliminary and
final injunctive relief on behalf of the Class as a whole is appropriate.
SUBSTANTIVE ALLEGATIONS
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16. On July 29, 2002, NCS announced that it entered into a merger
agreement with Genesis Health Ventures, Inc. ("Genesis"), pursuant to which
Genesis would acquire all of the shares of NCS common stock for 0.1 share of
Genesis common stock, valuing each share of NCS at approximately $1.60 per
share. The agreement also provides for the assumption of $308 million in debt,
valuing the deal at approximately $340 million.
17. Though the $1.60 per share consideration is a premium over the
closing price of NCS stock the day prior to the announcement, the transaction
does not represent the true value of the assets and the future prospects of the
Company.
18. In fact, Omnicare, Inc. ("Omnicare"), a leading provider of
pharmaceutical care for the elderly, has offered up to $3.50 per share in cash
for each NCS share, and intends to commence a cash tender offer for all
outstanding shares of NCS at $3.50 per share.
19. Omnicare, among other things, serves approximately 729,500
residents in long-term care facilities in 45 states, provides clinical research
services for the pharmaceutical and biotechnology industries in 27 countries,
and has annual sales of approximately $2.1 billion.
20. In a letter to the Company dated July 28, 2002, Omnicare offered to
purchase each outstanding share of NCS for $3 per share in cash, or $400
million. Omnicare has stated that it is "prepared to negotiate quickly" and its
cash offer is not subject to financing contingencies or "break-up" fees that
would deter potential acquirers from offering a higher price for the Company. In
fact,
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Omnicare has already presented NCS with a draft merger agreement, which was sent
along with Omnicare's July 28, 2002 letter.
21. On August 1, 2002, Omnicare said it would increase its offer for
NCS to $3.50 per share, and intends to commence a tender offer at that price.
22. It does not appear that defendants sought a third party buyer for
NCS, nor did they shop the Company in order to obtain a higher price. On the
contrary, defendants have agreed to vote their shares in favor of this merger
transaction in the fact of a superior offer from Omnicare and prior to shopping
the Company.
23. The proposed consideration of $1.60 per share does not represent
the true value of the assets and future prospects of NCS and does not adequately
reflect the value of the NCS' common stock. Defendants' agreement to the
transaction for inadequate consideration constitutes breach of their fiduciary
duties.
24. Defendants have breached their fiduciary duties to plaintiffs and
NCS' public shareholders by not renegotiating and/or reformulating the terms of
the merger. Absent injunctive relief of the court, plaintiff and the Class will
be irreparably harmed as a result of defendants' breaches of their fiduciary
duties.
25. In light of the foregoing, the individual Defendants must, as their
fiduciary obligations require, act independently so that the interests of NCS'
public stockholders will be protected; and adequately ensure that no conflicts
of interest exist between the interests of defendants, including Outcalt, and
their fiduciary obligations to NCS' public stockholders or, if such conflicts
exist, to ensure that all conflicts are resolved in the best interests of NCS'
public stockholders.
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26. Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, plaintiff prays for judgment and relief as follows:
A. Ordering that this action may be maintained as a class action and
certifying plaintiff as the Class representative;
B. Preliminarily and permanently enjoining defendants and all persons
acting in concert with them, from proceeding with, consummating or closing the
transaction;
C. In the event the buyout is consummated, rescinding it and setting it
aside or awarding rescissory damages to the Class;
D. Directing defendants to account to Class members for their damages
sustained as a result of the wrongs complained of herein;
E. Awarding plaintiff the costs of this action, including a reasonable
allowance for plaintiff's attorneys' and experts' fees;
F. Granting such other and further relief as this Court may deem just
and proper.
ROSENTHAL, MONHALT, GROSS
& GODDESS, P.A.
By: /s/ Carmella P. Keener
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Suite 1401, 919 Market Street
P.O. Box 1070
Wilmington, DE 19899
(302) 656-4433
OF COUNSEL:
SCHIFFRIN BARROWAY
Three Bala Plaza East
Suite 400
Bala Cynwyd, PA 19004
(610) 667-7706
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