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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X]Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended May 31, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period to
Commission File No. 0-9833
UNIHOLDING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 58-1443790
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(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
96 Spring Street, New York, New York 10012
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212)219-9496
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $ 0.01 Par Value Per Share
--------------------------------------------
(title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[ ]
As of September 13, 1996, 6,455,502 shares of Registrant's Common Stock, par
value $0.01 per share, were outstanding. The aggregate market value of the
Common Stock, based on the closing price on The Nasdaq Stock Market/Nasdaq Small
Cap as of September 16, 1996, held by nonaffiliates of the Registrant was
approximately $51 million.
DOCUMENTS INCORPORATED BY REFERENCE
Page 1 of 75
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PART I
ITEM 1. BUSINESS
1.1 General
UniHolding Corporation (the "Company" or "UniHolding") is a Delaware
corporation organized in 1987. The present name of the Company was adopted
August 30, 1993, as UniHolding Corp. and modified into UniHolding Corporation in
December 1995. The Company's principal business and operations are in European
clinical laboratory testing services (the "Diagnostic Laboratory division"), and
in clinical trials testing for the pharmaceutical industry ("the Clinical Trials
division").
The Company entered the clinical laboratory industry on March 31, 1994,
when the Company acquired a majority interest in a group of companies in the
European clinical laboratory industry pursuant to a Stock Exchange Agreement
dated March 9, 1994 (the "Acquisition Agreement") with Unilabs Holdings SA, a
Panama corporation ("Holdings"). In accordance with the Acquisition Agreement,
the Company (1) issued 3,275,865 shares of Common Stock, par value $0.01 (the
"Common Stock") to Holdings thereby giving Holdings 65.75% of the outstanding
shares of the Company, (2) issued a promissory note in the principal amount of
$18 million bearing interest at the annual rate of five percent (5%) to
Holdings, and (3) canceled a loan in the approximate amount of $2.9 million due
to the Company from Holdings. In exchange, the Company received 60% of the
outstanding shares of Unilabs Group Limited, a British Virgin Islands
corporation ("UGL"), and 100% of the outstanding shares of Uni Clinical
Laboratories UCL Engineering SA, a Switzerland corporation ("UCLE") from
Holdings. Pursuant to the terms of the Acquisition Agreement, the Company also
received options to purchase Holdings' majority interests in its Italian and
Spanish operating subsidiaries, which the Company exercised on May 31, 1995.
UGL is a medical services holding company which supplies clinical testing
services in Switzerland and the United Kingdom through its majority owned
subsidiary, Unilabs SA, a Switzerland corporation ("ULSA") and its wholly-owned
subsidiary, United Laboratories Limited ("ULL"), a holding company, which holds
100% of JS Pathology ("JSP"), Farrer-Brown Histopathology Limited ("FBH"), and
Unilabs Trust Laboratories Limited ("UTL"), all of which are United Kingdom
corporations. UCLE provides scientific and quality control services primarily to
the Company's subsidiaries.
Since its inception in 1987, ULSA has grown into the largest clinical
laboratory group in Switzerland, with a network of 9 laboratories which provide
a full spectrum of clinical laboratory tests which are used in the diagnosis,
monitoring and treatment of diseases and illnesses. As of December 1, 1994, ULSA
acquired a customer list of an unrelated Geneva based laboratory for use by its
Swiss operating subsidiaries at an approximate cost of $1.7 million.
UCLE is a wholly-owned subsidiary of the Company acquired pursuant to the
Acquisition Agreement. UCLE was organized in December 1991 basing its operations
in Geneva, Switzerland. UCLE provides scientific and quality control services
for clinical laboratories. UCLE provides most of its services to the Company's
laboratories.
ULL is a holding company which holds 100% of JSP, FBH and UTL. JSP was
acquired by UGL on November 10, 1993. ULL was formed by UGL shortly after the
acquisition of JSP, and JSP was then transferred to ULL in a reorganization; as
such, ULL is considered to have been acquired on November 10, 1993. Thereafter,
FBH was acquired on January 1, 1994 by ULL. UTL was formed in November 1994 in
order to manage the contract with the North Hertfordshire NHS Trust signed on
August 11, 1994. On May 29, 1995, with
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a view to streamlining the European subsidiary structure, UGL sold ULL, its
wholly-owned subsidiary, to ULSA, currently an 87.2% subsidiary of UGL.
Therefore, as from May 29, 1995, ULL became a wholly-owned subsidiary of ULSA,
while during fiscal year 1995 ULL was a subsidiary of UGL.
On June 30, 1995, the Company acquired the remaining 40% of UGL from Unilab
Corporation, a Delaware corporation, in consideration for $13 million in cash,
the assumption of a $2 million\ note due by Unilab Corporation to JS Pathology,
a wholly owned subsidiary of UGL, and a $15 million one year note. As of the
above date, the Company owns and controls 100% of UGL.
On May 31, 1995, the Company exercised the options granted under the terms
of the Acquisition Agreement for the purchase of Holdings' majority interests in
the Italian and Spanish operations (the "Italian Option" and the "Spanish
Option"). The Company exercised the Italian Option obtaining 100% of Istituto
Medico Di Torino SpA and 50% of Medil Srl at an exercise price of SFr 5.3
million ($4.5 million) in the form a one year interest-bearing promissory note
(the "Italian Note"). The Company exercised the Spanish Option obtaining 98% of
United Laboratories Espana S.A. at an exercise price of SFr 3.3 million ($2.8
million) in the form of a one year interest-bearing promissory note (the
"Spanish Note"). Both the Italian Note and the Spanish Note were offset against
cash advances previously made to Holdings.
On March 1, 1995, the Company entered into a Cooperation Agreement, a
Licensing Agreement and Marketing Agreement (together referred to as the "NDA
Agreements") with NDA Clinical Trials Services Inc., a Delaware corporation
based in New York, to provide a global product of laboratory testing services to
the pharmaceutical industry in clinical evaluations in the United States and
Europe utilizing similar procedures in testing and data management. The Company
has established two new European subsidiaries to undertake the laboratory
testing for clinical evaluations in Europe, Unilabs Clinical Trials Limited, a
United Kingdom subsidiary ("UCT"), and Pharmasoft SA, a Swiss subsidiary. As of
October 16, 1995, the Company entered into a Stock Purchase Agreement and an
Option Agreement with NDA. Under these Agreements, the Company acquired 17% of
NDA's capital through the purchase of newly-issued shares, together with an
option to increase its stake in NDA to 30% on or before May 31, 1998. The
consideration for the acquisition of 17% was $1,188,000 paid in cash at closing.
Simultaneously, UCT granted to NDA and NDA's stockholders (excluding the
Company), an option to subscribe to new shares of UCT. This option was
contingent upon the Company exercising its option on 13% of NDA's equity. As of
July 23, 1996, the reciprocal options on 13% of NDA's equity and on new shares
of UCT were terminated by mutual consent. As of July 23, 1996, the Company
transferred the assets of its Clinical Trials division, consisting of 100% of
the equity of UCT, 100% of the equity of Pharmasoft SA and 17% of the equity of
NDA to a newly formed wholly-owned British Virgin Islands subsidiary, Global
Unilabs Clinical Trials Ltd. ("GUCT") in exchange for 217,000 ordinary shares
representing all of the issued and outstanding shares of GUCT. The Company
intends to offer its shareholders the right to subscribe directly to an $8
million increase in the equity of GUCT (see hereinafter "Clinical Trials
Operations"). If the offering is fully subscribed, the Company's ownership in
GUCT will be diluted to approximately 24%.
UCT is a wholly-owned subsidiary of the Company established as of May 31,
1995, in London in connection with the Company's expansion into the
pharmaceutical testing industry. UCT provides central laboratory services and
evaluations for the pharmaceutical industry throughout Europe. Such service is
provided using the laboratory facilities of JSP in London and those of the
Company's partner in the United States, NDA. The Company cooperates with NDA and
utilizes certain software and know-how of NDA adapted to the European market and
industry practices and regulations. The Company and NDA jointly
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market their services on both sides of the Atlantic. On June 1, 1996, UCT
acquired the clinical trials business thus far performed by JSP, for a
consideration comprising a note of $610,000 and the establishment of a five-year
subcontracting and service agreement between UCT and JSP for the provision of
testing services by JSP, the renting of space in JSP's facilities and the
provision of business administration services. The price for the subcontracting
of testing has been fixed such that JSP makes a profit over the period of the
contract which, together with the note, equals the fair value of the business as
of June 1, 1996.
Pharmasoft SA is a Swiss company and, from May 31, 1995, is a wholly-owned
subsidiary of the Company established for the purpose of maintaining and
updating the software systems and background support services necessary for the
clinical trials operations performed by UCT.
On May 30, 1995, the Company formed a wholly-owned subsidiary, Unilabs
Management Company Limited (a Gibraltar corporation, "UMC") for the purpose of
providing financial consulting, bookkeeping services and other administrative
support to the Company and its subsidiaries. Operations started in July 1995, at
which time UMC was transferred to ULSA for approximately $150,000, a
consideration equal to the issued share capital of UMC.
On September 14, 1995, UGL entered into an agreement with Health Strategies
Limited, (a Jersey Channel Islands corporation, "HSL", a company which may be
deemed to be related to the Company for the reasons mentioned elsewhere herein,
and which the Company believes may be deemed to be controlled by a director of
Unilab), whereby a new company, MISE S.A. (a British Virgin Islands corporation,
"MISE") was formed. UGL invested $3,005,000 in MISE for 33.3% of the voting
rights and for 66.6% of the equity in MISE stock of which $2,005,000 was paid
during the year ended May 31, 1996, and the balance is payable in two
installments of $500,000 each in September 1996 and 1997. HSL owns the remaining
voting and equity interests in MISE for which it contributed a nominal amount of
cash and its agreement to obtain for MISE certain know-how and related software
and services. MISE then acquired for $1,500,000 certain know-how and computer
software from HSL, which know-how and software were simultaneously acquired for
$250,000 by HSL from Medical Diagnositc Management Inc. (a U.S. corporation,
"MDM"). Further, MISE committed to pay HSL a total of $1,500,000 for certain
plans for marketing the know-how and software in several European countries. Out
of such amount, $500,000 was paid during the year ended May 31, 1996, and the
balance is payable in two installments of $500,000 each in October 1996 and
1997. The fee agreed for the marketing plans also includes support services and
customization to European needs. The investment provides the Company access to
certain know-how developed by MDM. MDM is a start-up company which is active in
the industry of health information services in the U.S., and is focusing on
organizing and managing access to discounted provider networks for ambulatory
diagnostic services (radiology, other imaging techniques, and laboratory). Its
strategy is to be a clinical, financial, administrative and information
management intermediary among referring physicians, payers and diagnostic
providers. The know-how acquired by MISE from HSL includes, but is not limited
to, a certain computerized information system proprietary to MDM. HSL granted to
MISE a perpetual license for the use of the MDM know-how and related software
for use in Western Europe. In addition, HSL agreed to provide marketing and
support services for a three-year period at no further cost to MISE. Both UGL
and HSL agreed to use their best efforts to implement the MISE business in
Western Europe and agreed not to compete with MISE in the same territory. The
Company, through MISE, intends to market the concept, including the computerized
information system, to health insurance companies throughout Europe. The Company
believes that such a concept should be particularly useful and applicable in the
context of the ongoing deregulation of the health care system and may provide a
useful tool to achieve substantial savings in health care costs in several
European countries. During the year ended May 31, 1996, MISE had no activity.
The Company's management believes that operations will start in fiscal year
1997.
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1.2 The Clinical Testing Industry in Europe
Clinical laboratory tests are used by both general practitioners and
specialists and other health care providers to diagnose, monitor and treat
illnesses, diseases and other medical conditions through the detection of
substances or abnormalities in blood, urine or other body fluids and tissue
samples. Clinical laboratory tests are primarily performed in hospitals,
physician-owned laboratories and independent laboratories.
The European clinical testing industry differs from the United States
industry as it is characterized by fragmentation and substantial cultural,
social, ethical and regulatory differences from country to country. Overall, the
European clinical testing volume is estimated to be at least $20 billion
annually. There are at least 12,000 active, independent clinical laboratory
companies in Europe. The Company presently operates its laboratory interests in
Switzerland, the United Kingdom, Italy and Spain.
The Swiss market is an approximately $1.5 billion a year industry, for a
population of approximately 7 million people. Currently, the Company estimates
that physician-owned laboratories represent approximately 50% of the Swiss
clinical testing market, with hospitals (private and public) representing 30%
and private clinical laboratories, including the Company and its subsidiaries
(i.e., ULSA), representing the remaining 20% of the market.
The clinical testing market in the United Kingdom (UK) is dominated by the
National Health Service ("NHS"). The NHS spends approximately $3 billion
annually for clinical testing, representing more than 90% of the market.
Otherwise, the industry and market are highly fragmented with at least 200
independent laboratories competing on a local basis. However, the NHS is
presently implementing a cost control program based on the decentralization of
financial responsibility and the allocation of budgets at a unit level (referred
to as "trusts"). These efforts are expected to provide opportunities for
independent clinical laboratories. Specifically, new UK legislation deems public
health care providers to be trusts and doctors and administrators to be
fundholders who have both the authority and responsibility to run their
respective businesses within a set budget utilizing outside independent
contractors, laboratories, etc. to improve the quality of services and contain
costs through competitive bidding. This process is hoped to bring about
increased competition and improved performance within the industry. The Company
has recently been awarded the first contract of this kind in the UK for an NHS
hospital.
The Company estimates that the Italian market for clinical testing
services is approximately $4 billion. In Italy, where physicians are prohibited
from performing clinical laboratory tests, tests performed by hospitals and
private laboratories represent approximately 75% and 25% of the total volume,
respectively. There are presently approximately 2,000 private laboratories in
Italy. The Italian health care sector is undergoing radical changes, including
revisions of Social Security reimbursement practices, fueling the emergence of a
growing private health insurance sector. The Company has entered the Italian
market based on the growth potential in the market for private laboratories, and
on the potential for managing public hospitals' laboratories.
The clinical testing market in Spain is currently estimated at $2 billion
and comprises approximately 1,000 private laboratories, the vast majority of
which are very limited in size. Spain is experiencing rapid growth in its
private health insurance market forcing price containment and consolidation in
the industry. Currently, the Company estimates that private laboratories
represent approximately 25% of the Spanish clinical testing market, with
hospitals (private and public) representing the remaining 75%. Due to the
Companies network of laboratories in Spain, management believes the operations
are well situated to take advantage of the changing marketplace.
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With respect to laboratory testing in clinical trials for the
pharmaceutical industry, the European market for Phase II and Phase III is
estimated to be approximately $ 270 million currently, with approximately 50% of
the European market concentrated within four countries: the UK, Germany, France
and Italy. The market for laboratory testing and data management services is
expected to continue growing at an annual rate of 13% to 17%, based on growth in
the underlying market for pharmaceutical research and development expenditures.
In the Company's view, the European clinical testing services market will
continue to grow based on a number of factors. These include (i) rising health
care expenditures resulting from an aging population, rising standards of living
and the availability of both new and improved treatments for diseases and other
medical conditions, (ii) increasing emphasis placed by health care providers on
preventive care and the early detection of diseases, (iii) increasing
occupational testing by insurance companies and large public and private
employers, (iv) increasing testing for substance abuse, sexually transmitted
diseases and AIDS, (v) increasing numbers and types of clinical tests resulting
from an expanding base of scientific, technical and medical knowledge and (vi)
expanding development of highly automated laboratory testing equipment, leading
to increasing laboratory operating efficiencies.
1.3 Current Operations
As a result of its decision to expand in the business of clinical testing
in connection with clinical trials performed by the pharmaceutical industry on
one hand, and of its investment in MISE on the other hand, the Company currently
has three business segments : its core clinical laboratory business (the
Diagnostic Laboratory division), the clinical trials testing business (the
Clinical Trials division), and the Healthcare Management Services division.
Following are the key financial data of the respective businesses for purposes
of segment information. Such information does not include segment data relating
to the Company's equity investments in unconsolidated affiliates.
(in thousands of dollars)
Year Ended May 31
1996 1995
Revenues from unaffiliated customers:
Diagnostic Laboratory division $ 92,634 $ 79,003
Clinical Trials division 4,427 3,540
Healthcare Management Services - -
division
Operating Profit (Loss):
Diagnostic Laboratory division 10,270 10,031
Clinical Trials division (1,832) 486
Healthcare Management Services
division - -
Identifiable Assets:
Diagnostic Laboratory division 121,052 133,558
Clinical Trials division 2,200 NA
Healthcare Management Services
division - -
While the Clinical Trials division commenced to exist during the year
ended May 31, 1996, the Company, through JSP, already had some activities in the
clinical trials business during the year ended May 31, 1995, which activities
were transferred to UCT as of June 1, 1996. Accordingly, for analysis and
comparative purposes, the activities conducted by JSP in the clinical trials
business during both years have been included under the Clinical Trials division
caption. provided for on its balance sheet as of May 31, 1996.
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The Company has invested $3 million during the year ended May 31, 1996, in
its Healthcare Management Services division, through its investment in MISE and
has recognized a loss from such equity investment of the same amount. As
explained in further detail elsewhere herein, MISE has recorded a charge of $3
million to reflect the write-off of its investment in certain know-how and
marketing plans, in accordance with U.S. generally accepted accounting
principles. However, the Company actually believes that there has been no
impairment of its investment in its Healthcare Management Services division
although such investment has been fully provided for on its balance sheet as of
May 31, 1996.
Diagnostic Laboratory Operations
As European clinical laboratories are perceived as proximity services, a
successful service implies personal interaction and on-site facilities which are
capable of producing quality testing. However, these laboratories need to be
supervised, networked and centrally supported to fulfill their role and survive
economically in the changing marketplace.
On a local level, laboratory operations must be appropriately located in
the cities near hospitals, patients and physicians. Whereas, on a national
level, the operations must be complemented with access to specialized entities
which can produce high-level resources, whether human, scientific or technical
to enhance the service and productivity of each of the operations.
The Company operates in Switzerland, the United Kingdom, Italy and Spain
within a competitive environment. The Company believes it is the largest
independent clinical laboratory group in each of Switzerland and the United
Kingdom and plans to capitalize on its experience, knowledge, and solid growth
to maintain its market leadership. The Company's laboratory operations offer a
wide range of tests and deliver quality services typically within 24 hours
through the use of highly advanced testing equipment, thorough procedures and
its advanced proprietary data processing systems. The Company centralizes the
development and maintenance of such data processing systems and scientific
control and monitoring in specialized entities to enhance its overall services
and profitability. More specifically attributable to the Company's success is
its ability to allow each laboratory to have a local commercial autonomy, while
in the aggregate the laboratories are supervised, coordinated and centrally
supported in order to provide for greater administrative and management
efficiencies.
The Company expects to further develop its market leadership and achieve
further growth in the private health care sector through volume increases,
market share gain and improvement in its test mix, while also continuing to
optimize its operations to achieve maximum efficiencies. In addition, the
Company is now well positioned to capitalize on opportunities in the public
health care sector, primarily in the United Kingdom where the industry is moving
towards privatization thereby allowing private market forces to deliver quality,
efficient medical services within the public system. The Company's size,
economies of scale and experience in acquiring and integrating new operations
furnishes it with a clear competitive advantage. The Company is already leading
the industry in this growth area, having signed the first contract with a large
public hospital in the United Kingdom to manage and operate the hospital's
laboratory and provide other necessary clinical testing through its own
laboratories. The Company intends to pursue other such contracts with large
health care providers in various countries.
The Italian and Spanish markets offer similar opportunities for growth due
to changes in governmental policies and funding which will be monitored and
pursued to increase the customer bases in those countries if such opportunities
meet the Company's criteria.
In a rapidly evolving industry which is subject to concentration,
technological innovation and political changes, the Company believes it is
uniquely positioned to take advantage of the opportunities for expansion and
acquisitions that are being created in the European clinical laboratory
industry, where the Company at present is the only multinational group.
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The Company is well-positioned to realize such market expansion and
increased efficiencies due to a number of factors. The management of the Company
believes its experience in operating a network of laboratories of varying sizes
in diverse geographic regions, its automated testing equipment and its
sophisticated data processing (relating to both medical tests and financial
data) and communication systems make it a credible partner for large-scale
health care providers. Increasing pressure for cost containment and improved
quality of health care are leading to consolidation in the highly fragmented
European markets where clinical testing is performed by private laboratories.
Similar pressures are leading health care providers in both the public and
private sector to contract with private laboratories in order to achieve lower
costs, greater efficiency and better quality care. The management of the Company
believes its size, economies of scale and experience in acquiring and
integrating new operations give it competitive advantages in the current and
evolving marketplace.
Diagnostic Laboratory Services:
The Company's core business is its network of laboratories which offers a
comprehensive range of clinical tests to its clients, performing routine tests
(tests which its laboratories perform every day, irrespective of the discipline
or complexity of the test) and esoteric tests (non-routine and specialized
tests) for physicians, hospitals, clinics, other health care providers and
employers. The laboratories make extensive use of automated testing equipment
and data processing systems. Test results are communicated to its clients by
mail, courier, facsimile, telephone or electronic transmission.
Examples of the broad range of clinical tests offered include (i) the
testing of blood, urine and other body fluids for the presence or absence of a
specific disease or medical condition; (ii) the cultivation, identification and
treatment of bacterial diseases in connection with the testing for general
infections and tropical parasites; (iii) the detection of viral diseases through
the study of the effects of viral infections on blood serum (including the
testing for hepatitis, many sexually transmitted and tropical diseases, AIDS and
German measles); (iv) pathological testing to detect abnormalities that are
associated with disease in the composition, form or structure of tissue; and (v)
the examination of cells (e.g., PAP smear) under a microscope to detect
abnormalities in composition, form or structure which are associated with
disease. In addition to testing for diseases, routine tests are often performed
in connection with the preparation of patient profiles that include basic
chemical and hematological screening information, such as sugar, urea,
cholesterol, blood count and coagulation levels. Examples of esoteric tests
include tests for antibodies, vitamins and metals, among other substances.
Most of the Company's laboratories process specimens on a continuous flow
basis, which means that specimens arrive from clients or from collection
stations throughout the day and are processed as soon as possible, most often
within 24 hours. All test results are scanned by computer to identify results
which are not within the standard ranges. Any such results are verified by a
second testing. Final test results are further reviewed by a physician to check
for abnormalities. If, at any time in the course of the testing process, an
imminently life-threatening result is found, the referring physician is
contacted immediately. Results are delivered by mail or courier service or by
telefax, telephone or electronic transmission as instructed by the client.
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Additionally, the Company offers specialized testing in histopathology and
cytology through its UK subsidiary, FBH, which is the largest industry sector
laboratory specializing in this area. FBH is also one of two UK laboratories
which is able to offer PAPNET(TM), a computerized cytology screening system
which can significantly reduce the rate of false negative screening results.
PAPNET(TM) is a registered Trade Mark of NSI Europe B.V.
The Company was also the first to provide pathology services through a NHS
hospital. The implementation of this contract has been made possible by
governmental reforms of the NHS. Under the present UK health care structure,
trusts administer the provision of health care, primarily through public
hospitals and general practitioners. Patients are entitled to receive care free
of charge at the point of delivery financed through Government taxation. In
accordance with reforms launched several years ago, each Trust is also
responsible for the delivery of services, and is responsible for its own
financial control within a pre-defined budget. The purpose of the reforms is to
maintain or enhance the quality of health care while containing cost.
Accordingly, the Trusts are encouraged to look for alternative outside service
providers when such could lead to long term savings and economies of scale.
In August 1994, the Company signed a seven year contract to provide
pathology services to the North Hertfordshire NHS Trust at its 400 bed hospital
in Stevenage, England commencing on December 1, 1994. The contract was won
through a competitive tendering process. The on-site laboratory run by the
Company provides pathology services both to the hospital and to local General
Practitioners. The laboratory has been comprehensively renovated by the Company
to provide an efficient open plan work area with certain new machinery. A new
computerized laboratory management system developed by the ULL group has been
installed. The Company believes that it can effectively contribute to containing
the costs of laboratory services to patients and taxpayers, while assuring an
undisputed high level of service quality.
Clients, Sales, Marketing and Client Service:
The Company's sales strategy is tailored to the requirements of the
various cultural preferences of its clients and patients and the local markets
in which it operates. Each of the laboratories generally operates under its own
name with its own local reference. The Company was careful not to disturb the
valuable existing commercial structures upon acquiring each laboratory. It
respects the cultural diversity and aims to improve and enhance the image of the
existing business rather than promote a group or network concept.
The Swiss laboratories direct their marketing efforts to physicians,
hospital laboratories and hospital administrators. No advertising may be made
directly to patients. Their clients are primarily physicians, who, in fiscal
years 1994, 1995 and 1996, accounted for more than 90% of its consolidated net
revenues and the remaining portion of revenues were derived from hospitals,
clinics, referrals from other laboratories and other clients. No single client
represents more than 1% of ULSA's revenues. ULSA's clinical testing laboratories
primarily provide services to clients whose patients are covered by the private
health insurance sector.
The UK laboratories provide clinical testing services principally for the
medical profession and are used to confirm doctors' clinical diagnoses and to
monitor patients' responses to treatment. In addition to general practitioners
and consultants, representing 33% of its net revenues, JSP's services are used
by private hospitals, representing 20% of its net revenues and clinics,
pharmaceutical companies and health screening centers, collectively 47%. The UK
laboratories only accept patient referrals from members of the medical and
allied professions. Personal service to the referring doctor has been in the
past, and remains, pivotal to the success of the UK labs. All clinicians have
direct access to the medical staff of the laboratory or the technically
qualified heads of each department for discussion of required tests or
interpretation of results.
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The Italian laboratories primarily serve those medical doctors consulting
in the Turin region as well as providing occupational medical testing through
Medil, a majority owned subsidiary, to large industrial companies. No
advertising may be made directly to patients. The laboratories have earned a
first class reputation in the Turin area and caters primarily to those patients
who can afford the quality services offered by a private diagnosis center and by
a private laboratory as the patients know that, in most cases, they will receive
limited reimbursement or no reimbursement from their insurance. While this
private market is estimated to represent a maximum of only 25% of the total
market presently, it is a lucrative market.
The Company's Spanish subsidiary operations, ULSP, caters primarily to
"private pay" patients. In recent years, however, the private mutual health
insurance sector has grown very rapidly, especially in the more developed urban
areas such as Madrid and Barcelona. ULSP is approved by all the major health
insurers in Spain which have become its major clients. In addition, ULSP
provides services to fully private patients and to hospitals and clinics, where
in certain cases ULSP manages the on-site emergency laboratory. ULSP further
undertakes clinical trials for pharmaceutical firms and occupational health
testing for employee health check-up programs. No advertising may be made
directly to patients; however, being on the approved list of health insurers is
a strong marketing point for patients as this ensures that laboratory costs will
be reimbursed.
Government and Industry Regulation:
The Swiss clinical testing industry is currently subject to limited
government regulation. In Switzerland, prices are regulated by the Office
Federal des Assurances Sociales ("OFAS"), which publishes detailed maximum price
lists for all types of clinical testing that are applicable to private
laboratories and on which such laboratories base their billing. Effective
January 1, 1994, OFAS implemented changes in its price list which have resulted
in a reduction in prices for certain routine clinical testing services and an
increase in prices for other routine and esoteric tests. The Company estimates
that prices for routine tests performed by some private laboratories may have
been reduced by as much as 10% to 25%, depending upon the particularities of
their clientele. Owing to their own clientele mix, the Company's laboratories
have experienced an average overall price reduction of less than 5% in fiscal
1994, 1995 and 1996. Physician-owned laboratories, which represent approximately
50% of the Swiss clinical testing market, are permitted to invoice customers at
prices based on cantonal guidelines, which now typically approximate to 20% to
30% higher than the published OFAS prices. While such cantonal prices have not
been affected by the OFAS price change, discussions are currently being held in
a number of cantons between Medical Associations, health authorities and health
care insurance federations to adjust cantonal price lists to the OFAS price
list, although the timing of such adjustments, if any, are uncertain. In
addition, the current OFAS price list requires all clinical testing laboratories
to participate satisfactorily in specified quality control programs.
Laboratories which fail to maintain adequate quality standards are subject to a
25% price reduction. In Switzerland, new clinical testing laboratories must be
inspected to receive certification to perform testing. In addition, new
laboratories must be authorized by the government of the canton in which the
laboratory is located. Swiss regulations also require that all laboratory
supervisors be Swiss citizens. Yet, there are currently no ongoing verification
or inspection processes. In addition, Switzerland regulates the disposal of
radioactive waste and has adopted a law with respect to infectious waste
disposal. The Company believes its procedures are sufficient to protect its
employees and to comply with Swiss law. The Company's management does not
believe these regulations will have a material effect on its ability to operate
its business. However, the Company cannot predict the potential effect of any
future regulations which may be imposed on its operations.
The UK clinical testing industry is currently subject to limited
governmental regulation and there are no statutory requirements to hold a
license from a governmental authority in order to carry out pathology or
clinical testing services specifically. However, there are other UK legislative
measures which are relevant in the industry, including generally applicable
legislation such as the Health and Safety at Work Regulations and more specific
legislation depending on the tests carried out and substances used, including,
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for example, authorization under the Misuse of Drugs Act 1971 which is required
for persons in possession of certain drugs and chemicals, registration under the
Radioactive Substances Act 1960 and under the Data Protection Act 1984. In
addition, there are compliance programs, including, for example, those by the
Department of Health ("DOH") and the Royal College of Pathology accreditation
programs and quality assessment programs. The UK General Medical Council also
issues ethical guidelines for the medical profession with which JSP fully
complies.
In Italy, where physicians are prohibited from performing clinical
laboratory tests, tests performed by hospitals and private laboratories
represent approximately 75% and 25% of the total volume, respectively. The
Italian health care sector is undergoing radical changes, including revisions of
Social Security reimbursement practices, fueling the emergence of a growing
private health insurance sector. Expected changes in laboratory regulations will
likely allow private laboratories to cover a greater geographical area, since,
for example, present restrictions on the transportation of blood should be
abolished. Both trends are expected to lead to a needed consolidation among
Italy's almost 2,000 private laboratories. While the reforms have been
long-awaited and necessary because of the growing inability of the public sector
to serve patients in an acceptable manner at acceptable costs, the timing of
these reforms has been delayed by political instability through the recent
years. However, it now appears that the reform is beginning to take place
because the state can no longer entertain the costly structures it currently
uses. The reforms should also increase the potential for private companies to
manage laboratories of public hospitals, a segment IMT will be interested and
well positioned to develop.
In Spain, like Italy, physicians are prohibited from performing clinical
laboratory tests so tests are performed by hospitals and private laboratories.
The Spanish health care sector is also undergoing fundamental changes, including
the rapid growth of private health insurers and the need to revise the Social
Security system. Pricing in the private laboratory sector is set freely by
laboratories, except for private insurers which issue their own price lists. In
addition to exerting downwards pressure or containment on test prices, private
insurers have raised quality requirements in order to reduce the number of
approved laboratories capable of providing reliable testing. As a result, the
private sector is undergoing a growing consolidation. In addition to price and
quality, the ability to offer a national service through a network of
laboratories is an important competitive advantage of ULSP.
Competition:
The Swiss clinical testing industry is highly fragmented, with
approximately 120 independent private laboratories. Competition is based
primarily on the accuracy, reliability and timeliness of results, variety and
quality of service, and price. ULSA, the Swiss subsidiary holding company,
currently competes effectively in all of its markets, although certain of its
local competitors are larger in particular localities and may be willing to
devote greater resources in such localities. ULSA is the largest provider of
clinical testing services in all of Switzerland. The Company believes its size,
economies of scale and experience in acquiring and integrating new operations
give it competitive advantages in the marketplace.
In the UK, JSP provides its services primarily to the independent health
care sector. Patients are a mixture of those with health insurance and those who
pay personally. The UK clinical testing industry is also fragmented, with at
least 200 independent laboratories competing on a local basis. Most of these are
attached to private hospitals, but there is a concentration of stand-alone
private laboratories around the Harley Street area in London. Competition is
based primarily on the reliability and timeliness of results, the variety and
quality of service, and price. JSP's principal competition in its traditional
markets are laboratories run by BMI/Columbia Healthcare Group, The Doctors
Laboratory, the London Clinic and a number of smaller laboratories.
Traditionally the private pathology operators have serviced private
practitioners, and National Health Service ("NHS") laboratories have serviced
NHS practitioners. JSP has gone into competition with NHS laboratories by
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actively seeking work from GP Fundholders and community units. This is very much
in line with the government's policy towards privatization under the
provider/purchaser arrangements. The NHS has not been able to match the level of
service offered by the private sector in the opinion of the Company's
management, but has managed to retain its customary markets by low, and probably
subsidized, prices and through doctors' loyalties to the NHS. ULL has entered
this market through the provision of testing by the JSP laboratories to GP
Fundholders and through the contract between UTL and the North Hertfordshire NHS
Trust.
The Company believes its Italian and Spanish laboratories are the leading
private laboratories in their operating regions. It is estimated that the
Italian laboratories compete with approximately 10 local laboratories, while the
Spanish laboratories compete with approximately 50 local competitors in each
city of operations.
Quality Assurance:
The Company considers the accuracy and reliability of its testing services
to be of paramount importance. The Company has established its own comprehensive
and rigorous quality control program. This program includes control testing,
regular review of test data by laboratory technicians and medical personnel and
repetitive testing for abnormal results.
Each laboratory is supervised by a medical director who is a physician and
who is assisted in most cases by a technical director and other qualified
medical professionals. A primary role of laboratory professionals is to ensure
the accuracy of test results. Each laboratory is equipped with sophisticated
testing equipment, which is routinely checked in accordance with a regular
maintenance program.
In 1995, ULSA applied to the Swiss Federal Accreditation Service for
accreditation of all its Swiss laboratories under the European Standard EN 45001
("General criteria for the operation of testing laboratories"). Accreditation is
awarded based on an external audit of the laboratory's ability to provide
testing services of a high quality, certifying the laboratory's competence and
its compliance with international standards and good laboratory practices. The
process comprises two stages: first, laboratories assess themselves against the
EN 45001 standards, indicating compliance with or exemption from such standards;
and second, an on-site assessment is conducted by the accrediting body to verify
the laboratory's claims. Once accredited, laboratories are subject to periodic
re-inspection. The accreditation process is progressing according to schedule,
and ULSA currently expects the accreditation to be completed within another
year. As part of its quality plan, ULSA also participates in industry
proficiency testing programs as required by the new OFAS regulations. Such
programs generally require ULSA's laboratories to perform tests, the results of
which are already known, enabling verification of the accuracy of ULSA's test
procedures. These programs are conducted by groups such as the Swiss Center for
Clinical Testing Quality Control or the German Clinical Chemistry Association
and other industry organizations. To date, ULSA has met all the requirements for
accuracy in all such programs in which it has participated.
The UK laboratories recognize the fundamental importance of accurate and
reproducible results, and therefore attaches very high priority to quality
procedures. Accuracy of results through internal and external quality control is
imperative. To this end, JSP has established a free-standing Quality Systems
Department under the leadership of a Head of Corporate Quality. As well as
certification for Good Laboratory Practice, run by the UK Department of Health,
JSP is the first independent laboratory to have all its services fully
accredited by Clinical Pathology Accreditation (UK) Ltd., the new benchmark
standard for clinical laboratories. JSP further intends to seek acceptance by
the College of American Pathologists for their accreditation scheme, giving
greater recognition of JSP's laboratories on the international stage. In
addition to comprehensive in-house quality control programs involving the
continual checking of results by an independent operator and repeated monitoring
of any drift in machines, JSP also participates in various national and
international quality assessment programs where "unknown" samples are sent to
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JSP for analysis and the results are adjudicated by the programs' organizers.
These external programs cover all major aspects of the analytical work. An
example of one such programs is the national Clinical Chemistry program, which
comprise several hundred laboratories throughout the UK, including the major
teaching hospitals. Each participant in this program receives, on a twice-weekly
basis, a serum sample from which 15 constituents of unknown value are analyzed
and the results are returned to the quality control center for comparison with
the other laboratories. Similarly, there is the international program, which
involves a wide range of unknown constituents and has some 1,600 participating
laboratories. JSP's performance has been consistently above average for
participating laboratories over the past four years in all such programs.
Overall, JSP participates in approximately 60 such quality control programs both
nationally and internationally. FBH has obtained full Clinical Pathology
Accreditation. FBH additionally takes part in external quality assurance schemes
run by independent agencies. All cytology smears presented for screening are
re-checked by a 30 second "quick screen" after initial screening with all
abnormal smears and suspicious historical cases being re-screened by a
pathologist. The PAPNET(TM) system also provides a further check for negative
results.
The Italian and Spanish laboratories adhere to the same strict quality
control procedures as instituted throughout the laboratory group. Regular
quality control tests are performed under the supervision of UCLE. UCLE provides
scientific services to both the group laboratories and the users of the services
provided by the group laboratories. UCLE is primarily responsible for assisting
and preparing the Company's laboratories for accreditation under regional
quality control practices, including the processing of the necessary
documentation, records, forms and files. Accreditation is awarded based on an
external audit of each laboratory's ability to provide testing services of a
high quality certifying the laboratory's competence and its compliance with
international standards and good laboratory practices. These standards cover a
set of defined conditions used throughout laboratories and covering all aspects
of an investigation, including specimen collection and reporting. UCLE has
established a Scientific Advisory Board ("SAB") to assist the Company's
management in understanding and addressing scientific issues affecting the
Company's operations and scientific trends in clinical testing. The SAB also
assists in making decisions with respect to test indications, reporting,
interpretation and quality control for each region. The members of the SAB
currently are:
Jack Bierens de Haan, Ph.D., Geneva, Switzerland. Doctorate in Analytical
Chemistry. Former Vice President Scientific Affairs of UCLE, Secretary of
the Scientific Committee of the International Federation of Clinical
Chemistry, International Union of Pure and Applied Chemistry, Clinical
Chemistry Division, Commission on Automation, Secretary of the Council of
the European Committee on Clinical Laboratory Standards.
Callum Fraser, Ph.D., Dundee, United Kingdom. Clinical
Biochemist. Chief of the Department of Biochemical Medicine,
Ninewells Hospital and Medical School in Dundee. Senior lecturer
in biochemical medicine and life sciences, University of St.
Andrews, United Kingdom.
Joseph Henny, Ph.D., Nancy, France. Clinical Biologist. Director
of the laboratory of the Preventive Medicine Center, Nancy.
Lay Houang, M.D., Annemasse, France. Microbiologist. Retired,
former head of the Health Laboratory Technology and Blood Safety
Unit at the World Health Organization headquarters in Geneva,
Switzerland.
Dolphe Kutter, M.D., Ph.D., Luxemburg. Clinical Chemist.
Visiting Professor at the Universities of Lausanne, Nancy and
Berlin. Director of an independent clinical laboratory in
Luxemburg.
Ingmar Jungner, M.D., Stockholm, Sweden. Clinical Chemist,
Instrumentation and Automation Specialist. Medical Director of
an independent clinical laboratory in Stockholm.
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Information technology services:
As of January 1, 1995, with a view to increasing the efficiency of
operations, the information technology services and systems development
previously handled by UCLE together with systems personnel were taken over by
ULSA. All the Company's Swiss laboratories use the UNI400 computer software
package, which is a comprehensive laboratory information and management software
running on the IBM AS/400 range of computers. UNI400 handles all stages of a
clinical sample laboratory processing :
- Operational Planning and Monitoring : generating both bar-coded labels
and work schedules; supporting bi-directional connections to laboratory
instrumentation; managing in real time the volume of samples being
processed in each laboratory department and by each technician thereby
allowing processing time to be kept to a minimum and to optimize use of
reagents and equipment; providing process monitoring, interactive entry,
automated controls and computer-assisted test validation through on-screen
consultation and reports.
- Data Retrieval and Reporting : downloading test requests and
retrieving test results, on-line.
- Test Prescription : in case of intercompany reference testing between
several of ULSA's laboratories, the requesting laboratory transmits its
test prescription electronically to the reference laboratory, avoiding
duplication of specimen collection and test data entry between
laboratories. In hospital environments, the system allows nurses and
physicians in hospital wards to electronically prescribe tests on the
laboratory's system. In addition, ULSA provides Uni-Medical-Media ("UMM"),
a proprietary multi-media computer communication software which enables
clients (physicians, hospitals, etc.) to prescribe tests directly on their
personal computers and to transmit such requests electronically to the
Company's laboratories (see below).
- Request Validation and Control : the system handles all data-entry
connected with test prescriptions (consultation, verification,
modification); requests for all medical disciplines are handled in one
single step.
- Transmission of Results : routing and dispatching, videotext
access, electronic fax service and downloading to the
prescriber's computer or to UMM or hospital ward stations.
- Administrative Management : handling test and result
archiving, inventory management and operational statistics.
- Marketing : enabling easy client monitoring and provides such
marketing tools as mail merging and videotext services.
- Financial Control : invoicing, debtors accounting and
receivables collection management.
UMM is a full-fledged software package combining a data base with powerful
communication and multi-media tools which runs on both Apple Macintosh and
DOS-based personal computers. UMM integrates both requests and results of
clinical tests on the physician's own personal computer. This software, which
the Company believes integrates unique features, establishes a direct link
between the laboratory and the physician's office easing workload in connection
with the collection of samples, production of test requests, and transmission of
test results.
The Company believes that the efficient handling of information by a
clinical laboratory is a critical factor in success over the competition.
Therefore, the Company places a high degree of priority on the appropriate
evolution of its management information systems, and is investing considerable
amounts of money each year in this area in each region.
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Employees:
The Company employs approximately 827 people throughout its clinical
laboratory operations. Approximately 670 are full-time employees with
approximately 157 part-time employees. The Company has never experienced any
work stoppages, slow-downs, or other material labor problems and believes its
relations with its employees are satisfactory.
Seasonality:
The laboratory operations, like those of most clinical laboratory
companies, are affected by certain seasonal trends. Testing volumes tend to be
lower during the holiday seasons which vary throughout the year according to the
cultural and regional influences. Therefore, the Company's results for a
particular quarter may not be indicative of results in future quarters.
Clinical Trials Operations
During the year ended May 31, 1995, the Company decided to expand in
testing performed in connection with the conduct of clinical evaluations for the
pharmaceutical industry. It thus created a Clinical Trials division, as opposed
to its core Diagnostic Laboratory division. As of May 31, 1996, the Clinical
Trials division includes the following components: the UCT Operations, the NDA
Operations, and Pharmasoft.
The Company believes that the Clinical Trials division will be subject to
substantial development in the near future. The Company believes that there will
be intense competition in this industry area in Europe, but equally believes
that its new concept and its association with NDA will offer it a competitive
advantage.
In order to maximize the future potential of the Clinical Trials division,
the Company has decided to reorganize it. The decision to reorganize the
Clinical Trials division was based on the following reasons: (i) that a
significant amount of investment would be needed to fund the growth of the
Clinical Trials division before revenues derived from such business would be
sufficient so as to not burden the operating results of the core Diagnostic
Laboratory division of the Company during a period estimated to be at least two
years; (ii) that the Clinical Trials division has diverse operating requirements
from the core Diagnostic Laboratory division and would thus benefit from a
proper delineation of responsibility and streamlined corporate governance; (iii)
that the development strategy for future growth of the Clinical Trials division
and the Diagnostic Laboratory division are different, requiring different
courses of action which are not necessarily compatible within one same operating
structure; and (iv) that shareholders' value could be better maximized in both
the long and short term through a separation. The Company first gave
consideration to effecting a spin-off to its shareholders of the Clinical Trials
division. However, after considerable review, it appeared that some requirements
of the Securities and Exchange Commission with respect to the spin off of a
publicly-held corporation could not be met (particularly with respect to
operating in separate premises and avoiding any significant sharing of
personnel), and that certain possible resulting tax consequences on the Company
and its shareholders would be too great to undertake a spin-off.
Upon reaching the conclusion that a spin-off was not feasible, the Company
reviewed alternative courses of action. Management acknowledges that the
development of the Clinical Trials division and business will require
substantial financial resources of approximately $8 million over the next 12
months, which the Diagnostic Laboratory division does not have the financial
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capability to fund. Further, it is management's view that the ability to seek
financing for the benefit of the Clinical Trials division would be hindered by
the fact that the two divisions would remain under one same corporate structure.
Management believes that the separation of the Clinical Trials division could
lead to alternative financing for its own benefit in a fast-growing industry
sector. For these reasons, UniHolding first transferred the Clinical Trials
division to a newly-formed subsidiary, Global Unilabs Clinical Trials Ltd.
("GUCT"). UniHolding thus transferred its 100% ownership of UCT, its 100%
ownership of Pharmasoft, and its 17% of NDA to GUCT in exchange for 217,000
ordinary shares of GUCT. After the transaction, GUCT was a wholly-owned
subsidiary of UniHolding. The ownership of the 217,000 shares of GUCT was then
transferred to UGL at book value.
The separation will allow GUCT to increase its financial flexibility by
permitting it to issue additional common equity to finance future growth,
internally or through acquisitions. The UniHolding board of directors has
granted to the board of GUCT the necessary power to undertake any action that
will be deemed necessary to obtain new financing, and has indicated that it will
not use any new financial resources of UniHolding to capitalize GUCT nor any of
GUCT's constituents. The boards of directors of UniHolding and GUCT have
mutually concluded that it is in the best interests of the Company and its
shareholders, and also in the best interests of GUCT, for GUCT to offer to
UniHolding's shareholders the opportunity to participate on a pro rata basis in
a registered subscription rights offering of GUCT common stock. It is therefore
intended that GUCT will grant subscription rights to the then present holders of
record of UniHolding in proportion to their equity holding in UniHolding.
The GUCT shares to be offered will be registered pursuant to the
Securities Act of 1933, as amended, by filing a registration statement relating
to these securities with the Securities and Exchange Commission. The offering
will be made only by means of a prospectus. Each shareholder will receive a
prospectus and a subscription agreement outlining in detail the terms and
conditions of the rights offering. There will be no obligation for any Company
shareholder to subscribe to the offering. Subject to the successful completion
of the offering by GUCT, UniHolding's ownership in GUCT is expected to be
diluted to an approximate 24% holding. This Annual Report shall not constitute
an offer to sell or the solicitation of an offer to buy nor shall there be any
sale of these securities in any State in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities
laws of any such State.
Clinical Trials Services:
The clinical trials services of the Company are provided primarily through
UCT, a UK subsidiary, in cooperation with NDA in the U.S. UCT is dedicated
exclusively to providing central laboratory testing and project support services
for clinical trials to pharmaceutical company sponsors, clinical research
organizations (CROs) and investigating clinicians on a uniform, global basis.
UCT offers these services to its clients based on a co-operation agreement with
NDA signed on March 1, 1995 encompassing marketing, software and laboratory
standardization, as well as an agreement providing for certain testing services
to be performed by or through JSP. UCT's services are provided through the JSP
laboratory facility in London and the laboratory of NDA in the United States.
The two laboratories are fully accredited and provide automated same-day
reports with reference ranges in accordance with customers' wishes. They operate
under common operational procedures and utilize similar or comparable technology
producing comparable laboratory data. This data is presented to sponsors through
the use of a specifically designed software program providing a protocol
management system.
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The UCT service also includes a regional Local Monitoring Office (LMO)
network providing investigator support locally. UCT employs 19 such LMOs around
Europe and the Far East.
Most modern prescription drugs are born in the research laboratories of
pharmaceutical manufacturers. But before they may be sold, they must undergo a
rigorous, step-by-step approval process overseen by government agencies such as
the U.S. Food and Drug Administration (FDA). In the U.S., for instance, the
process begins only after the new drug has been successfully tested in animals.
Armed with the test results, sponsors of the product submit an Investigational
New Drug (IND) application to the FDA. If the IND is approved, sponsors may
begin clinical trials of the drug in humans.
The clinical trials process consists of three, and sometimes four, phases:
Phase I examines the drugs clinical pharmacology; its effects on the body,
preferred modes of administration and dosage ranges. These tests are
usually done on small numbers of healthy volunteers.
Phase II tests the safety and efficacy of the drug at expected dosage
levels among a few patient volunteers who have the medical condition
the drug is designed to treat.
Phase III trials are broad studies involving hundreds or even thousands of
patients, where new drugs are compared with placebos and with existing
similar drugs. This is the busiest and most intensive part of a
clinical research program and is the pivotal study for approval where
researchers are gathering further information on a drug's benefits and
risks.
Phase IV trials are post-marketing tests mandated either for some
exceptionally potent or complex drugs to gather additional data on
their effects in the general population, or marketing studies aimed at
further comparing a drug with its competitors or extending a drugs
range of indications.
After Phase III trials, the manufacturer submits a New Drug Application.
In the United States, it is only when the FDA has approved this Application that
the drug may be sold to the public. The entire approval process from initial
submission of the IND to final approval of the New Drug Application takes an
average of five years.
The process is generally similar in Europe but must typically be repeated
for each individual country (and must sometimes be performed at a regional
level). New European regulations aimed at simplifying the process (by allowing
one single submission for the whole EEC) have been proposed by the European
Medical Commission but the timing of such is uncertain.
Because of the importance and complexity of clinical trials (a typical
submission to the FDA can run to thousands of pages), most manufacturers employ
outside specialists to perform the trials. Often, the manufacturer hires a
clinical research organization (CRO) to manage the trial. The CRO, in turn,
hires several clinical laboratories which will perform the actual tests required
by the trial protocol. The final link is a network of investigators, usually
physicians, who work directly with patients, monitoring their medical status and
gathering clinical samples for testing. Data management capacity is thus an
essential factor in the whole drug approval process.
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Competition and Markets:
The European market for Phase II and Phase III clinical trial laboratory
testing is estimated to be approximately $270 million based on current hospital,
physician and commercial laboratory fees. Approximately 50% of the European
market is concentrated within four countries: the UK, Germany, France and Italy.
The market for laboratory testing and data management services is expected to
continue growing at an annual rate of 13% to 17%, based on growth in the
underlying market for pharmaceutical research and development expenditures.
This significant growth is explained by a shift from U.S. to
European-based clinical trials as a result of the approval of European Good
Clinical Practices (GCPs) in 1991 and the introduction by a growing number of
countries of Good Laboratory Practices (GLPs). These programs, which make it
possible for pharmaceutical companies to obtain FDA drug approval in the U.S.
with European clinical trials data, will cause some of the European-based
pharmaceutical companies to shift the geographical focus of their clinical trial
activity towards Europe because of the logistical benefits and cost savings.
This shift also enables a reduction in the global number of patients submitted
for testing of a new drug, thus reducing costs.
Most of the laboratory testing for European clinical trials is currently
performed by local hospitals and is initiated by and through each sponsor's
national subsidiary offices. Approximately 70% of all trials conducted in Europe
are multi-country suggesting that the concept of a global service/single
sourcing would be attractive to industry participants. It is estimated that
between 20 to 30 European companies offer some form of centralized clinical
testing facilities.
Quality Assurance:
UCT and NDA have devised a system to ensure that both laboratories operate
as one, including the use of instruments and reagents from the same
manufacturer. Identical operating and validation procedures have been
instituted. Further, quality control data is transmitted electronically between
sites on a daily basis to assure each site of the other's performance.
External quality control data from the College of American Pathologists
(CAP) is used to monitor bias. JSP has British GLP accreditation and NDA is CAP
accredited. JSP is currently pursuing CAP accreditation and expects to be
accredited by the middle of 1997. A laboratory services co-ordinator ensures
close adherence to all these criteria. All the procedures guarantee the high
quality of all results and allow them to be combined into a trial database as if
they had been generated from one laboratory.
Employees:
UCT presently has 30 full time staff.
Healthcare Management Services Operations
On September 14, 1995, UGL entered into an agreement with HSL, whereby a
new company, MISE was formed. The investment was made with a view to provide the
Company access to certain know-how developed by MDM. MDM is a start-up company
active in the industry of health information services in the U.S. territory, and
which is focusing on organizing and managing access to discounted provider
networks for ambulatory diagnostic services (radiology, other imaging
techniques, and laboratory). MDM's strategy is to be a clinical, financial,
administrative and information management intermediary among referring
physicians, payers and diagnostic providers. UGL owns 33.3% of the voting rights
and 66.6% of the equity in MISE. HSL sold to MISE the know-how acquired from
MDM. The know-how acquired by MISE from HSL includes, but is not limited to,
certain computerized information system proprietary to MDM. In addition, as part
of its agreement with HSL, the Company has acquired perpetual rights to use the
know-how and the computerized information system on an exclusive basis in the
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territory of Western Europe. The Company, through MISE, intends to market the
concept, including the computerized information system, to health insurance
copanies throughout Europe. The Company believes that such a concept should be
particularly useful and applicable in the context of the ongoing deregulation of
the health care system and may provide a useful tool to achieve substantial
savings in health care costs in several European countries. During the year
ended May 31, 1996, MISE had no activity. The Company plans that operations will
start in fiscal year 1997.
ITEM 2. PROPERTIES
All of the laboratory facilities have been improved and adapted for the
sole purpose of providing clinical testing services. Accordingly, the facilities
are suitable and adequate and utilized solely for such services. Following are
the descriptions of each regional facility.
ULSA
ULSA's executive management is located in Geneva, Switzerland. Its
principal laboratories are located in Geneva (13,500 square feet), Bern (7,500
square feet), Zurich (5,000 square feet) and St. Gallen (27,500 square feet).
Regional laboratories are located in the following areas: Geneva, Bern, Montreux
and Baden. ULSA leases laboratory space and other service sites and facilities
at various locations at market rates. ULSA believes that such laboratory spaces,
service sites and facilities are fully suitable and adequate for its business.
The leases expire at various dates through May 31, 2001. Upon expiration of any
lease, ULSA could find alternative space at competitive market rates and
relocate its operations.
ULL
In 1982, JSP acquired a long-term lease expiring in 2065 on its 80 Harley
Street facility, which is currently used for patient services. In September
1988, JSP acquired a freehold site at Camden Lock, London NW1, where it
constructed a new building on the site to provide laboratory space to meet
present requirements and those for the foreseeable future. The new building,
completed in 1991, provides approximately 54,000 square feet of usable space and
is suitable and adequate for its purposes. Except for the service site at Harley
Street, all activities of ULL in London are located in the Camden Lock building.
IMT/Medil
IMT occupies two floors of a building located in the heart of Turin. The
total surface area is 6,000 square feet, out of which 5,000 square feet are
owned by IMT, and 1,000 square feet are leased under a long-term lease. IMT
believes that such laboratory space and facilities are fully suitable and
adequate for its business.
Medil occupies 500 square feet in a nearby building, under a long-term
lease.
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ULSP
ULSP's executive management is located in Madrid, Spain. Its principal
laboratories are located in Madrid and Barcelona. ULSP leases laboratory space
and other service sites and facilities at various locations at market rates.
During the year ended May 31, 1996, ULSP completed a move to new Madrid
facilities of approximately 10,000 square feet. ULSP believes that such
laboratory spaces, service sites and facilities are fully suitable and adequate
for its business. Upon expiration of any lease, ULSP could find alternative
space at competitive market rates and relocate its operations.
Regional laboratories are located in Valencia and Murcia.
UCLE
UCLE is located in Geneva, Switzerland, where it subleases office space
from ULSA at market rates. UCLE believes that such facilities are fully suitable
and adequate for its business. The leases expire at various dates through May
31, 1999. Upon expiration of any lease, the Company could find alternative space
at competitive market rates and relocate its operations.
UCT
UCT is located in London, UK, where it subleases office space from JSP at
market rates. UCT believes that such facilities are fully suitable and adequate
for its business. Upon expiration of any lease, the Company could find
alternative space at competitive market rates and relocate its operations.
Pharmasoft
Pharmasoft is domiciled in Neuchatel, Switzerland. Pharmasoft believes
that, when there is a need for office space in the future, it can find
facilities suitable and adequate for its business at competitive market rates.
I-19
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
In 1990 and 1991, the Company under the name of United Fashions, Inc.,
through various stock purchase and stock exchange agreements, acquired up to
91.5% of the outstanding capital stock of Americanino Capital Corporation, a
Delaware corporation ("ACC") which held interests in the Italian apparel goods
industry. However, in 1991, the Company decided to divest itself of its
controlling interest in the group of apparel companies as the business did not
meet with the expected success. The Company consummated the disposition in 1993
in an Asset Purchase Agreement and a Sharing Agreement (the "ACC Sale
Agreement") with Linford Enterprises Inc., a British Virgin Islands corporation
("Linford") for an aggregate consideration consisting, among other things, of $
50,000 in cash and approximately 80% of the value of the net appreciation of the
shares of ACC arising from any subsequent sale by Linford of all or a portion of
such shares of ACC. In addition, the ACC Sale Agreement provided that ACC would
use its best efforts to pursue legal action against certain parties involved in
the purchase by ACC of the various Italian apparel businesses, based on certain
management actions and misrepresentations made to ACC and others at the time of
such purchase. The Company is entitled to 80% of the net recovery (less legal
fees and costs), limited to the amount of approximately $ 15 million, of any
settlement or successful resolution of the pending arbitration instituted by ACC
pursuant to the ACC Sale Agreement by which the Company sold its remaining
interest in ACC.
In February 1993, ACC instituted the arbitration proceedings against Mr.
Eugenio Schiena, Mr. Raffaele Palma, Mr. Tonino Manzali, FIBRA S.p.A., GEFAPI
S.r.l., "S.G.F." SOCIETE GENERALE COMMERCIALE ET FINANCIERE S.A., PARIBAS
FINANZIARIA S.p.A., BANQUE PARIBAS (Milan, Italy), and BANQUE PARIBAS (Paris,
France) (hereinafter collectively referred to as the "Defendants") for
misrepresentations and fraudulent conduct in the negotiation, consummation and
performance under an agreement by and between the above mentioned parties. The
arbitration is presently pending before an Arbitral Tribunal of three qualified
arbitrators (the "Arbitral Tribunal") under the auspices of the International
Court of Arbitration. As of November 9, 1994, the Terms of Reference were
established by the Arbitral Tribunal and sent to all the parties for signature.
The Terms of Reference were signed by ACC and certain of the Defendants. Some
Defendants did not sign them within the time limit set by the Arbitral Tribunal,
but, in accordance with the prevailing arbitration rules, the proceedings are
going forward irrespective of who has signed the Terms of Reference. The
International Court of Arbitration further summoned all the Defendants to
effectuate payment within 30 days in the amount of $212,500 representing their
share of the advance costs. The Arbitral Tribunal fixed a deadline date of April
30, 1995 for the Claimant, ACC, to file its brief on jurisdiction and on the
merits of its claim; and fixed a deadline date of July 31, 1995 for all the
Defendants to file their briefs in reply. ACC filed its Brief with the
International Court of Arbitration in compliance with the deadline. In July
1995, the Company decided to open a bank guarantee in favor of the International
Court of Arbitration to cover the amount of $212,500 which the Defendants have
failed to pay, in order for the proceedings to continue. In July 1995, ACC was
notified by the Arbitral Tribunal that PARIBAS FINANZIARIA S.p.A., BANQUE
PARIBAS (Italy), and BANQUE PARIBAS (France) on one hand, and Mr. MANZALI on the
other hand, had each appointed new legal counsels, who requested an extension of
the July 31 reply deadline in order to be able to study the files. The Arbitral
Tribunal agreed to such an extension. Accordingly, a new deadline date of
September 30, 1995 was set by the Arbitral Tribunal for all the Defendants to
file their briefs in reply. To the Company's knowledge, all Defendants filed
their briefs in reply, with the exception of Messrs. Schiena and Palma, and
GEFAPI. ACC filed a further brief in response to the replies on April 1, 1996.
I-20
<PAGE>
In the meantime, ACC had agreed to withdraw its claim against BANQUE PARIBAS
(Italy), and BANQUE PARIBAS (France) in an effort to simplify the arbitration
proceedings and recognizing that its claim against PARIBAS FINANZIARIA is
sufficient under the circumstances of the arbitration. ACC also informed the
Company that, independently from the arbitration, it filed suit against BANQUE
PARIBAS (France), BANQUE PARIBAS (Suisse) and BANQUE PARIBAS (Milan) before the
Commercial Court of Paris (France).
While, to the best of the Company's knowledge, the Claimant appears to
have a legitimate claim, there can be no assurance that an award will be
rendered in ACC's favor and thus benefit the Company as provided under the terms
of the ACC Sale Agreement. The Company believes that any estimate of recovery is
still subject to many factors beyond the Company's control. Pending developments
in the arbitration proceedings, and in absence of other criteria, the management
of the Company has recorded its rights at a present fair market value of
$10,000 which is estimated to be the amount an unrelated party might presently
pay to acquire all such rights arising from the ACC Sale Agreement. Realization
of any amount is entirely dependent upon a favorable award from the Court and
the collection thereof, if any, from the Defendants. The Company's management
will continuously monitor and report the progress of the proceedings.
Foreclosure Proceedings
Pursuant to the CORA/Kinghino Sale Agreement, ACC sold its interest in
CORA, one of the Italian apparel companies, to two of the original sellers of
the Italian interest (the "Sellers"). (See, the Company's Annual Report on Form
10-K for the year ended December 31, 1993 incorporated by reference herein).
Simultaneously, the Sellers agreed to replace certain security previously
arranged by the Company to guarantee bank loans of Americanino and CORA (the
"CORA Guarantees"). As security for the fulfillment of the Sellers' obligations
to replace such guarantees, the Sellers executed notes totaling Lit. 7.6 billion
in favor of the Company, secured by mortgages on all buildings owned by CORA
(the "CORA Buildings"). The debt was recorded at its estimated fair value of $
1.26 million in connection with its deemed acquisition by ULSA and UCLE as of
March 31, 1994.
Because the Sellers have defaulted on their commitment to compensate the
Company for the execution of the CORA Guarantees, the Company has instituted
legal foreclosure proceedings to foreclose upon the CORA Buildings. Such
proceedings have been brought in the domicile and situs of the properties in
Italy. Upon successful completion of the foreclosure proceedings, the Company
intends to sell the CORA Buildings as market conditions permit; however, the
Company cannot determine when such proceedings will be completed, nor when any
sale will take place thereafter. The management of the Company believes the
proceeds from the future sale of the CORA Buildings will be sufficient to cover
the carrying value of the notes receivable.
During June 1994, one of the CORA Buildings was sold. The Company has
received Lit. 469 million ($0.290 million) less certain incidental fees and
expenses from the sale. The Company's management anticipates that another
building may be sold prior to May 31, 1997. Such building was recently valued by
a professional appraiser at Lit. 2,000 million ($1.3 million).
Attachment Claim
On April 6, 1995, the Company presented a Complaint, a Memorandum of Law
in Support of a Motion for a Writ or Order of Attachment and an Affidavit in
Support of Motion for Attachment with an Order to Show Cause to the United
States District Court in Newark, New Jersey against Tonino Manzali, Alessandra
Sichirollo, Claudio Barozzi, Frederica Sichirollo, Marco Martinolli, Giuseppe
Mortellaro, Giampaolo Pattarello, Giorgio Pezzolato, Brigida Russo and Anna
Zinetti (known as the "Manzali Group"). The Company presented therewith the
Motion for Attachment against two of the above shareholders, Tonino Manzali and
I-21
<PAGE>
Alessandra Sichirollo. Mr. Manzali and Ms. Sichirollo have taken the necessary
steps to dissipate the assets (their shares) during the pendency of the above
arbitration proceeding of which they are a party. On April 17, 1995, the Court
awarded and ordered the Attachment against Defendants Manzali and Sichirollo as
they did not show cause against the Attachment.
On February 13, 1996, the Court placed the attachment proceeding on its
suspense docket until such time as the parties re-open the proceedings for good
cause shown for the entry of any stipulation or order, or for any other purpose
required to obtain a final determination of the litigation. The Company will
re-open the proceedings upon a decision being rendered in the above arbitration.
On March 22, 1996, upon notice of a request for transfer of additional
shares of the Manzali Group held in the name of Antonio Sichirollo, the Company
filed an adverse claim with its transfer agent estopping the further transfer of
such shares for a 30 day period. Since such time, the Company has retained
counsel to proceed with an attachment claim in the state of Colorado based on
the same facts and circumstances as the attachment claim made in the United
States District Court of New Jersey.
On July 26, 1996, the Colorado Court placed the proceeding on its suspense
docket until such time as the parties re-open the proceedings for good cause
shown or entry of any order or for any other purpose required to obtain final
determination of the litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were presented to the shareholders for a vote in the last
quarter.
I-22
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS
MATTERS
The Company's common stock is currently traded on the National Association
of Securities Dealers Automated Quotation System Small Cap Market ("NASDAQ/Small
Cap") under the symbol UHLD. Prior to quotation on the NASDAQ/Small Cap, the
Company was traded on the over-the-counter market and quoted on the OTC Bulletin
Board under the same symbol.
Until the March 1994 acquisition by the Company, the Company's shares had
no substantial established public trading. In May 1994, there were four market
makers who were engaged in quoting the Company's shares on the OTC Bulletin
Board. Presently, the Company has three market makers who engage in quoting the
Company's shares on the NASDAQ/Small Cap since the Company's inclusion in
September 1994. The following table sets forth the high and low ask and bid
prices for the Company's common stock by calendar quarters, as reported by
NASDAQ through May 31, 1996. The prices represent prices between dealers,
without retail mark-up, mark-down or commission and may not reflect actual
transactions.
The following table reflects for all periods presented the four-to-one
reverse split which UniHolding effected as of December 27, 1995.
Year ended May 31, 1996
Quarter Ended High Low
August 31 $ 23.50 $ 18.00
November 30 $ 22.00 $ 15.00
February 29 $ 17.50 $ 13.25
May 31 $ 18.00 $ 13.25
Year ended May 31, 1995
Quarter Ended High Low
August 31 $ 23.00 $ 21.00
November 30 $ 24.50 $ 22.00
February 29 $ 26.00 $ 22.00
May 31 $ 25.00 $ 20.00
As of September 13, 1996, there were 6,455,502 shares of common stock of
the Company outstanding, held by 452 holders of record.
The Company has not paid any cash dividends with respect to its common
stock since its inception and does not expect to do so in the foreseeable
future.
II-1
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
Historical Selected Financial Information
The following selected financial data for the three years ended May 31,
1996 is derived from the audited financial statements included elsewhere herein
and should be read in conjunction therewith. The following selected financial
data for the years ended May 31, 1993 and 1992 is derived from audited financial
statements not included herein.
<TABLE>
(in thousands, except per share data)
<CAPTION>
For the Years Ended May 31 1996 1995 1994 1993 1992
Predecessor Predecessor
<S> <C> <C> <C> <C> <C>
Revenue $ 97,061 $ 82,543 $ 63,926 $ 47,814 $ 41,219
- --------------------------------------------------------------------------------------------------
Earnings before Interest, Taxes,
Depreciation and Amortization 16,317 17,719 15,800 14,222 12,589
- --------------------------------------------------------------------------------------------------
Operating Income 8,438 10,517 10,474 10,566 9,531
- --------------------------------------------------------------------------------------------------
Income before Taxes
and Minority Interests 3,038 8,811 9,439 9,510 7,315
- --------------------------------------------------------------------------------------------------
Tax Provision 2,355 1,975 2,792 2,856 2,918
- --------------------------------------------------------------------------------------------------
Minority Interests 983 3,763 3,569 2,318 1,531
- --------------------------------------------------------------------------------------------------
Income (loss) from
Continuing Operations (300) 3,073 3,078 4,336 2,866
- --------------------------------------------------------------------------------------------------
Net Income (loss) (300) 2,839 3,078 4,336 2,866
- --------------------------------------------------------------------------------------------------
Net Income (loss) per common share,
from Continuing Operations ($0.05) $0.53 $0.86
- --------------------------------------------------------------------------------------------------
Net Income (loss) per common share ($0.05) $0.49 $0.86
- --------------------------------------------------------------------------------------------------
Weighted Average Number of
Common Shares Outstanding 6,006 5,783 3,560
- --------------------------------------------------------------------------------------------------
Total Assets 123,252 133,558 99,099 49,244 35,738
- --------------------------------------------------------------------------------------------------
Long-term debt 38,354 34,048 37,182 12,887 16,102
- --------------------------------------------------------------------------------------------------
Shareholders' Equity 34,242 37,877 12,612 8,510 3,998
- --------------------------------------------------------------------------------------------------
</TABLE>
As a result of the acquisition, as of March 31, 1994, of a group of
clinical testing laboratories in Europe, the financial data for the years 1993
and 1992 consist of the operations of the Company's predecessor, ULSA and UCLE.
The financial data for years 1996, 1995 and 1994 are inclusive of ULSA, UCLE,
UGL and UniHolding.
II-2
<PAGE>
Pro Forma 1995 Selected Financial Information
During the year ended May 31, 1995, the Company entered into two
transactions which it believes would have had a material impact on its 1995
results of operations if those transactions had been effected as of June 1,
1994. These are (a) the restructuring which occurred on May 29, 1995, whereby
UGL sold its wholly-owned subsidiary ULL to ULSA, currently an 87.2% subsidiary,
and (b) the purchase by UGL on June 30, 1995, of 40% of its own capital stock.
Giving effect to the above mentioned transactions as of June 1, 1994, pro
forma summarized results of operations for the year ended May 31, 1995, would
have been as follows (unaudited):
(in thousands, except per share data)
For the Years Ended May 31 1995 1995
Pro Forma Actual
Revenue $ 82,543 $ 82,543
--------------------------------------------------------
Earnings before Interest, Taxes,
Depreciation and Amortization 17,719 17,719
--------------------------------------------------------
Operating Income 10,434 10,517
--------------------------------------------------------
Income before Taxes
and Minority Interests 7,071 8,811
--------------------------------------------------------
Tax Provision 1,053 1,975
--------------------------------------------------------
Minority Interests 1,394 3,763
--------------------------------------------------------
Income from
Continuing Operations 4,624 3,073
--------------------------------------------------------
Net Income 4,390 2,839
--------------------------------------------------------
Net Income per common share,
on Continuing Operations $ 0.80 $ 0.53
---------------------------------------------------------
Net Income per common share $ 0.76 $ 0.49
---------------------------------------------------------
Weighted Average Number of
Common Shares Outstanding 5,783 5,783
---------------------------------------------------------
Total Assets 121,859 133,558
---------------------------------------------------------
Long-term debt 34,048 34,048
---------------------------------------------------------
Shareholders' Equity 37,877 37,877
---------------------------------------------------------
II-3
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
7.1 Change of Accounting Entity and Basis of Comparisons
The Company made significant acquisitions and expanded its operations
during the fiscal year ended May 31, 1994. The significant events were accounted
for as follows.
UniHolding's acquisition of 60% of UGL in March 1994 was treated as the
reverse acquisition of UniHolding by a predecessor "accounting entity" (the
"Predecessor") consisting of the Company's proportionate interests in ULSA and
UCLE. The net assets of UniHolding, prior to the transaction, are deemed to have
been purchased by the Company at their fair value of approximately $3.1 million
in exchange for the issuance of 1,706,704 of its shares outstanding immediately
prior to the transaction.
The acquisition of ULL by UGL was accounted for as a purchase and the
results of its operations are included in the Company from the date of its
acquisition, November 10, 1993.
Unaudited Pro Forma earnings per share for fiscal year 1994 were $0.52 as
compared to earnings per share of $0.88 on a consolidated accounting basis as
described above. The decrease was primarily attributable to the retroactive
effect of the deemed acquisition of the net assets of UniHolding in exchange for
the issuance of 1,706,704 of its shares outstanding immediately prior to the
transaction, and the issuance of approximately 825,000 shares which arose from
the prepayment of the $18 million promissory note subsequent to May 31, 1994.
Further, during the fiscal year ended May 31, 1995, the Company acquired
from Holdings additional shares of common stock of ULSA, as well as the Italian
and Spanish laboratory operations through the exercise of an option.
With respect to the acquisition from Holdings, through UGL, of 186
additional shares of ULSA, the excess of the purchase price over Holdings'
predecessor cost, $960,000, was charged to additional paid-in capital.
With respect to the acquisition of Spanish and Italian laboratory
operations from Holdings, the excess of the purchase price over Holdings'
predecessor cost, $375,000, was charged to additional paid-in capital.
As of June 30, 1995, the Company acquired the remaining 40% of UGL. Such
acquisition was accounted for as a purchase and the excess of the purchase price
over the fair value of the assets acquired, $3,301,000, was allocated to
goodwill.
7.2 Results of Operations for the Three Years Ended May 31, 1996
Twelve months ended May 31, 1996 compared with the twelve months ended May 31,
1995
As discussed in Note 11 to the accompanying financial statements, the
Company's results of operations for the year ended May 31, 1996, include the
operations of the Company's core business (the "Diagnostic Laboratory division")
and of the Company's expanded activities in clinical trials testing for the
pharmaceutical industry (the "Clinical Trials division") and in healthcare
management services (the "Healthcare Management Services division"). The
following table presents a reconciliation of the results of operations of each
division with the consolidated statement of operations, for the purpose of
discussing the results of operations. While the Clinical Trials division
II-4
<PAGE>
commenced to exist during the year ended May 31, 1996, the Company, through JSP,
already had some activities in the clinical trials business during the year
ended May 31, 1995, which activities were transferred to UCT as of June 1, 1996.
Accordingly, for analysis and comparative purposes, the activities conducted by
JSP in the clinical trials business during both years have been included under
the Clinical Trials division caption.
<TABLE>
<CAPTION>
Year Ended May 31, 1996
-------------------------------------------------------------------------------------
Diagnostic Healthcare Clinical
Laboratory Mgt. Services Trial
Division Division Division Adjustments As Reported
---------- ------------ ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
REVENUE $93,409 $4,427 ($775) $97,061
OPERATING EXPENSES:
Salaries and related charges 38,569 1,413 39,982
Supplies 15,083 157 15,240
Other operating expenses 21,747 4,551 ( 775) 25,521
Depreciation and amortization
of tangible assets 5,387 61 5,448
Amortization of intangible assets 2,354 77 2,431
------ ----------- ---------- ----------- ----------
OPERATING INCOME 10,270 0 (1,832) 0 8,439
Interest, net (2,935) (49) (2,984)
Equity in loss of affiliate (3,005) (294) (3,299)
Other, net 846 37 883
------ ----------- ---------- ----------- ----------
Income before taxes and minority
interests 8,181 (3,005) (2,138) 0 3,038
Tax provision (2,979) 624 (2,355)
------ ----------- ---------- ----------- ----------
Income before minority interests 5,202 (3,005) (1,514) 0 683
Minority interest in income (942) (41) (983)
------ ----------- ---------- ----------- ---------
NET INCOME $4,260 (3,005) ($1,555) $0 $2,901
====== =========== ========== =========== =========
Weighted average common shares
outstanding 6,005,643 6,005,643 6,005,643 6,005,643
Earnings per share of common stock $0.71 ($0.50) ($0.26) $0.05
</TABLE>
Further, as discussed in Note 1 to the accompanying financial statements,
the Company's results for the year ended May 31, 1996 give effect to the
acquisition by UGL, as of June 30, 1995, of 40% of the capital stock of UGL,
while the Company's results for the year ended May 31, 1995 included a 40%
minority interest in UGL's earnings. The financial statements also give effect
to the acquisition of ULL by ULSA from UGL. The following table presents the
required adjustments to the results of operations for the year ended May 31,
1995, providing a comparative analysis with the comparable period in the current
fiscal year, had the 40% of UGL's common stock been acquired as of June 1, 1994,
and had ULL been owned by ULSA as of June 1, 1994 (unaudited). The results of
operations for the year ended May 31, 1995 were translated into U.S. dollars
using the exchange rates which were then valid.
II-5
<PAGE>
Had the Spanish and Italian operations been acquired by the Company as of
June 1, 1994, there would have been no material effect on the consolidated
operations of the Company for the year ended May 31, 1995.
<TABLE>
<CAPTION>
Year Ended May 31, 1995
---------------------------------------------------------------------------------------
Diagnostic Clinical
Laboratory Trials
Division Division As Reported Adjustments Pro Forma
---------- --------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
REVENUE $79,003 $ 3,540 $82,543 $82,543
OPERATING EXPENSES:
Salaries and related charges 34,436 556 34,992 0 34,992
Supplies 13,554 138 13,692 13,692
Other operating expenses 13,792 2,348 16,140 16,140
Depreciation and amortization of
intangible assets 5,244 11 5,255 5,255
Amortization of intangible assets 1,947 0 1,947 83 (i) 2,030
----------- --------- ------------- ----------- ----------
OPERATING INCOME 10,031 486 10,517 (83) 10,434
Interest, net (1,509) 0 (1,509) (1,656)(b) (3,165)
Other, net (197) 0 (197) (197)
----------- --------- ------------- ----------- ----------
Income before taxes and minority interests 8,325 486 8,811 (1,739) 7,072
Tax provision (1,832) (143) (1,975) 497 (c) (1,053)
262 (e)
163 (g)
----------- --------- ------------- ----------- ----------
Income before minority interests from
continuing operations 6,492 344 6,836 (817) 6,019
Minority interests in income on
continuing operations (3,719) (44) (3,763) 2,246 (a) (1,395)
177 (d)
(34)(f)
(21)(h)
----------- --------- ------------- ------------ ----------
Income from continuing operations 2,773 300 3,073 1,551 4,624
Loss on disposition of discontinued
operation, net of tax and minority interests (234) 0 (234) 0 (234)
----------- --------- ------------- ------------ ----------
NET INCOME $2,539 $300 $2,839 $1,551 $4,390
=========== ========= ============= ============ ==========
Weighted average common shares 5,782,902 5,782,902 5,782,902 5,782,902
Earnings per share of common stock
On income from continuing operations $0.48 $0.05 $0.53 $0.80
On loss on disposition of discontinued ($0.04) $0.00 ($0.04) ($0.04)
operations
On net income $0.44 $0.05 $0.49 $0.76
(a) To record the cancellation of the 40% minority interest in the 1995 net income of UGL.
(b) To record the interest cost on the repurchase of 40% in UGL at an effective rate of 5.5%.
(c) To record the tax benefit at 30% on the interest cost on repurchase of 40% in UGL.
(d) To record a 12.8% minority interest to be borne by the ULSA minority shareholders in the ULL 1995 losses.
(e) To record the tax benefit to ULSA of reversing interest received from UGL during 1995.
(f) To record the minority interest effect on (e), at 12.8%, the minority shareholders' share in ULSA.
(g) To record the tax benefit on the interest charge incurred by ULSA on the SFr. 12 million loan due to UGL.
(h) To record the minority interest effect on (g), at 12.8%, the minority shareholders' share in ULSA.
(i) To record goodwill amortization on the acquisition of 40% in UGL.
</TABLE>
II-6
<PAGE>
Consolidated revenue increased to $97.1 million for the twelve months
ended May 31, 1996, representing an increase of $14.5 million from the
comparable prior year period. Excluding the effect of the change in the US
dollar exchange rate versus the Swiss franc and the pound Sterling
(approximately $4.2 million for the twelve months), and excluding revenue
generated by the newly-acquired Italian, and Spanish operations ($7.1 million
for the twelve months, consolidated for the first year in 1996), revenue
increased by approximately $3.0 million, as compared to the prior year. Revenue
generated by the Swiss operations increased by approximately 2.7% as a result of
additional specimen volume of 3% partly offset by a decrease in the test mix of
0.3%. Revenue generated by the UK operations increased by approximately 12% in
respect of the Diagnostic Laboratory division due to additional revenue
resulting from the NHS contract and a new contract with a major public transport
service, offset by the final effects on revenues due to the prior loss of a
significant client. Revenues of $4.4 million were recorded by the Clinical
Trials division due to the expansion of client base and the signing of new
contracts as a result of intensive marketing efforts. During the second half of
the year Spain almost doubled its revenue versus the comparable prior year
period.
Operating income for the year ended May 31, 1996 decreased by $2.1 million
versus the comparable prior year. This decrease is comprised of the effect of
the change in the US dollar exchange rate versus the Swiss franc and the pound
Sterling (approximately $1.2 million), an increase in operating costs related to
the strengthening of certain administrative functions and controls, business
development costs related to the research of new markets ($0.5 million), and the
Clinical Trials division operating costs and expenses ($6.2 million) offset by
increased performance in the United Kingdom Diagnostic Laboratory division.
Operating losses generated by the Spanish operations ($0.8 million) resulted
from the Company's strategic decision to increase penetration in the Spanish
market requiring investment in facilities and human resources. Italian
operations, on the other hand, maintained a small positive contribution ($0.1
million) to operating income.
Interest expense, net, increased $1.5 million during the twelve months
ended May 31, 1996 as compared to the prior year, primarily due to higher
average borrowing levels by the Company resulting from the Company's acquisition
of the 40% minority interest in UGL and other capital expenditures, partly
offset by an overall decrease in interest rates.
Other income was recorded from exchange gains realized on certain assets
and liabilities as a result of fluctuations in exchange rates.
Other income was also negatively impacted by a charge of $3.0 million
resulting from the equity pick-up of the Company's investment in MISE recorded
by the Healthcare Management Services division. This was due to the fact that
MISE has recorded a one-time amortization of the know-how and computer software
it purchased during the year. While the Company's management believes that the
fair value of its investment in MISE has not been impaired, accounting
principles generally accepted in the U.S. require that know-how and marketing
plans such as those purchased by MISE, whether they are purchased from either
related or unrelated parties, be expensed as incurred.
Provision for income taxes increased $0.4 million in the twelve months
ended May 31, 1996, The first-year losses of UCT gave rise to a tax benefit of
$0.8 million which management believes the Company will recover through future
income of such division.
Minority interests in income decreased substantially as compared to the
comparable prior year, resulting primarily from the decrease in the minority
interests in income due to the acquisition of the 40% minority interest in UGL
as of June 30, 1995.
II-7
<PAGE>
Twelve months ended May 31, 1995 compared with the twelve months ended May 31,
1994
Revenue increased to $82.5 million for the twelve months ended May 31,
1995 representing an increase of $18.6 million from the comparable prior year
period. The increase in revenue resulted from additional specimen volume
generated primarily by the Swiss laboratories and FBH in the UK. The start of
the North Hertfordshire NHS Trust contract in the UK contributed an additional
$2.2 million to revenue. However, such increases were offset by a decrease in
revenue in the UK as a result of the loss of two significant clients in the UK
market. Revenue was further offset by higher operating expenses to prepare for
expansion of the Company.
In Switzerland, revenue increased to $60.3 million for the twelve months
ended May 31, 1995 representing an increase of 0.9 million or 1.5% from the
comparable prior year period. Excluding the effect of the revenues generated by
the Swiss subsidiary disposed of in fiscal year 1995, the increase in revenue
would have been $3.1 million or 5.7%, whereas the test mix remained stable. The
stability in the test mix was achieved despite the price change resulting from
the implementation by the "OFAS" on January 1, 1994. In the UK, revenue for the
year ended May 31, 1995 increased by $1.4 million or 6.7% over the prior year
period. The increase is primarily due to the start of the North Hertfordshire
NHS Trust contract and an increase in cytology and histology revenue from FBH.
Operating income for the twelve months ended May 31, 1995 increased
slightly ($0.1 million) over the prior year. This increase resulted primarily
from the increase in sales, but such increase was offset by higher personnel
costs and other operating costs relating to the Company's expansion and
restructuring of the UK operations. The restructuring expenses relate to the
reorganization and downsizing of the laboratory and administrative personnel in
the UK in order to improve productivity and streamline operations. Costs
associated with providing severance pay to released personnel in the UK was $0.4
million. The client loss in the UK further contributed to the reduction of
operating income for the year as well as the costs associated with the Company's
expansion into new markets. In particular, the UK operating income decreased by
$2.35 million whereas the Swiss operating income increased by $0.8 million.
Interest expense, net, increased $0.6 million in the twelve months ended
May 31, 1995 from the prior year primarily due to certain interest income earned
in the prior year period and increased borrowings in the UK. Swiss subsidiaries
were able to lower their average borrowings level (with such borrowing being at
lower interest rates for the year) and increase their interest-bearing accounts
receivable from related companies.
Provision for income taxes decreased $1.0 million in the twelve months
ended May 31, 1995, as compared to the prior year primarily due to the operating
losses in the UK and a change in the tax computation system applied in
Switzerland.
A non-recurring charge of $0.2 million net of related minority interests
and tax effects was recorded during the period upon disposition of a Swiss
subsidiary involved in the distribution of medical products. Management
determined that it was in the best interest of the Company to dispose of such
subsidiary, which was non-strategic and did not meet the Company's standards for
profitability, when the opportunity to sell became available on terms management
concluded could not be improved.
Income before taxes and minority interest decreased by $0.6 million as a
result of an increase in operating expenses due to the Company's expansion and
restructuring of the UK operations, in addition to the loss of the two
significant UK clients.
II-8
<PAGE>
Twelve months ended May 31, 1994 compared with the twelve months ended May 31,
1993
The increase in revenue from approximately $47.8 million in fiscal year
1993 to $64 million in fiscal year 1994 reflects the acquisition of ULL in
November 1993. Exclusive of the revenue of ULL (JSP and FHB) from November 10,
1993 to May 31, 1994, the revenue of the Company for its fiscal year 1994
increased approximately $4.7 million or 10% over 1993 which increased
approximately $6.6 million, or 16% over 1992. The increase in revenue is due to
an increase in specimen volume within each laboratory. Although the Swiss
government has generally reduced the fee schedule for private laboratories, the
effect on the Swiss operation's revenue was more than offset by an increase in
specimen volume testing.
The increase in operating expenses from approximately $37.2 million in
fiscal year 1993 to $53.4 million in fiscal year 1994 reflects the acquisition
of ULL in November 1993. Exclusive of the operating expenses of ULL, the
operating expenses of the Company for its fiscal year 1994 increased
approximately $5.5 million, or 15% over 1993 which increased approximately $5.5
million, or 17% over 1992. In fiscal year 1994, the Company completed the
installation of the UNI400 computer system in all its Swiss laboratories which
resulted in higher operating costs.
Minority interests in income were 30% in both 1993 and 1992. As a result
of the November 1993 reorganization whereby the Company acquired 60% of UGL and
a 40% minority interest was created in UGL (which owned 70% of ULSA and 100% of
ULL), the minority interest in the net income of ULSA increased to 58% on a
consolidated basis. From January 31, 1994, the interest of the minority
shareholders in ULSA decreased from 30% to 14% (a decrease to 48% on a
consolidated basis) as a result of the acquisition of 16% of ULSA's equity by
UGL.
Net income decreased approximately $1.3 million, or 30% in fiscal year
1994 from fiscal year 1993 which increased $1.4 million, or 48% over fiscal year
1992. The decrease in 1994 resulted primarily from the increase in minority
interests and from lower margins resulting from the inclusion of ULL from
November 10, 1993. The increase from fiscal year 1992 to 1993 resulted primarily
from reorganization and integration of the Swiss laboratories leading to
increased operating efficiencies.
7.3 Liquidity and Capital Resources
Net cash provided by operating activities for the twelve months ended May
31, 1996 amounted to $11.3 million, an increase of $1.0 million from the prior
year primarily due to decreased working capital needs of the Diagnostic
Laboratory division, offset by the cash utilization of $2.3 million by the
Clinical Trials division start up.
Net cash used in financing activities for the twelve months ended May 31,
1996 was $0.2 million, as compared to $19.5 million in the prior year. The
decrease of $19.7 million resulted from less cash proceeds in the current year
from the issuance of share capital and from long term debt, and the higher
repayment of lease debt as compared to the prior year, and the use of $3.2
million in the purchase of treasury stock.
Net cash used in investing activities for the year ended May 31, 1996 was
$26.3 million, an increase of $12.0 million from the prior year, consisting
primarily of capital expenditures incurred in connection with new laboratory
equipment, lending to affiliates, the purchase of the 40% minority interest in
UGL, the purchase of the 17% minority interest in NDA and the purchase of
know-how represented by the investment in MISE.
The Company's bank facilities provide for a total of approximately $40.7
million, including secured senior revolving facilities consisting of term loans,
working capital loans and/or guarantees. As of August 22, 1996, the Company had
approximately $3 million of availability under the aggregate credit facilities.
II-9
<PAGE>
On July 3, 1995, the Company issued 25,000 new shares of its common stock
to an overseas investor at $22.00 per share, including warrants for 12,500
shares at a price of $26.00 exercisable for 18 months from the date of purchase.
On October 5, 1995, the Company issued 37,500 new shares of its common stock to
two overseas investors at $22.00 per share, including warrants for 18,750 shares
at a price of $26.00 exercisable for 18 months from the date of purchase. On
July 23, 1996, the Company issued 333,333 new shares of its common stock to a
U.S. institutional investor at $15.00 per share.
The Company has a working capital deficiency of $9.8 million at May 31,
1996. Of that amount $15 million is due to Unilab. In accordance with the
agreements between Unilab and the Company, both parties must in such an
instance, so long as all interest accrued on the $15 million note have been
fully paid, use their respective reasonable efforts to agree upon a mutually
acceptable resolution. All interest accrued as of March 31 and June 30, 1996,
have been paid by UGL. If such a mutually acceptable resolution is not found,
the amount of principal and accrued unpaid interest shall be converted on
January 1, 1997 into UniHolding Common Stock at 75% of the market price. Until
such time as the note is paid either in cash or in UniHolding Common Stock, the
UGL shares so acquired remain in escrow.
The Company is currently considering raising additional capital through
debt or equity financing with a view to repaying the $15 million note issued to
Unilab in connection with the acquisition of 40% of UGL, which was due on June
30, 1996.
With respect to the Diagnostic Laboratory division, the Company believes
that the liquidity provided by the existing cash balances and borrowing
arrangements described above will be sufficient to meet the Company's capital
requirements for fiscal 1997 including anticipated operating expenses arising
from the Company's recent expansion into the Spanish and Italian markets, as
well as debt repayments except the $15 million Unilab note. However, if the
Company determines that additional financial resources are necessary or
appropriate, it may choose to raise additional capital through debt or equity
financing during fiscal year 1997 to strengthen its financial position, to
facilitate growth and to provide the Company with additional flexibility to take
advantage of business opportunities that may arise.
With respect to the Clinical Trials division, the Company intends to offer
to its shareholders, in proportion to their respective holdings in UniHolding,
the right to subscribe to a $8 million equity offering by GUCT, its newly formed
subsidiary conducting clinical trials testing for the pharmaceutical industry.
This new equity issuance of $8 million is expected to be sufficient to finance
acquisitions, and meet working capital requirements and debt repayments of the
Clinical Trials division. Such registered offering will be made by means of a
prospectus upon the registration statement becoming effective once filed with
the Securities and Exchange Commission in accordance with the Securities Act of
1933, as amended. This annual report shall not constitute an offer to sell or a
solicitation of an offer to buy.
With respect to the Healthcare Management Services division, the Company is
currently reviewing detailed marketing plans that are considered in several
countries, with a view to start actual operations during the fiscal year
1996/1997. The Company believes that no significant new funding will be required
to meet working capital requirements during that period.
In addition, the Company has outstanding obligations and commitments under
capital leases which mature over the next five to ten years.
II-10
<PAGE>
7.4 Other Information
The Company operates in Europe in the currencies of the countries in which
it is located. For reporting purposes the financial statements are translated in
accordance with U.S. generally accepted accounting principles which require,
generally, that assets, liabilities and equity are translated at the exchange
rates in effect at the balance sheet date and revenues and expenses at the
weighted average rates during each year. Accordingly assets, liabilities and
shareholders' equity will be affected by changes in such exchange rates.
The Company's operating results will continue to be affected by the
volume, mix and timing of test orders received during a period and by conditions
in the industry (including pricing regulations) and in the economies in which
the Company operates, such as recessionary periods, political instability, and
fluctuations in interest or currency exchange rates.
The Company further experiences both increases and decreases in its volume
of testing due to seasonality shifts. All laboratories experience a slow down
during the holiday seasons, primarily in summer. This may lead to quarterly
information which is not indicative of the trend of the Company's business.
Inflation was not a material factor in either revenue or operating
expenses during the year presented, and is not expected to be in the current
year.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
II-11
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page Number
Report of Independent Auditor...................... II-F-2
UniHolding Corporation and Subsidiaries Consolidated
Balance Sheets as of May 31, 1996, and 1995........ II-F-3
UniHolding Corporation and Subsidiaries Consolidated
Statements of Operations for the Years Ended
May 31, 1996, 1995 and 1994........................ II-F-5
UniHolding Corporation and Subsidiaries Consolidated
Statements of Stockholders' Equity for the Years Ended
May 31, 1996, 1995 and 1994........................ II-F-6
UniHolding Corporation and Subsidiaries Consolidated
Statements of Cash Flows for the Years Ended
May 31, 1996, 1995 and 1994........................ II-F-7
UniHolding Corporation and Subsidiaries Notes to
Consolidated Financial Statements for the Years Ended
May 31, 1996, 1995 and 1994........................ II-F-9
II-F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
UniHolding Corporation
New York, New York
We have audited the accompanying consolidated balance sheets of UniHolding
Corporation and subsidiaries (the "Company") as at May 31, 1996 and May 31,
1995, and the related consolidated statements of income, stockholders' equity
and cash flows for each of the years in the three-year period ended May 31,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of UniHolding Corporation and
subsidiaries at May 31, 1996 and May 31, 1995, and the results of their
operations and their cash flows for each of the years in the three-year period
ended May 31, 1996 in conformity with generally accepted accounting principles.
As more fully described in Note 11, during the year ended May 31, 1996, the
Company invested $3 million in a newly formed company accounted for by the
equity method, which in turn, used the funds to acquire know-how, software and
marketing plans. The equity investee's loss was charged to earnings in the year
ended May 31, 1996.
/s/ Richard A. Eisner & Company, LLP
New York, New York
September 26, 1996
II-F-2
<PAGE>
UNIHOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
May 31
1996 1995
------ ------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $1,587 $16,939
Accounts receivable, net of allowance for doubtful
accounts of $1,500 in 1996 and $1,901 in 1995 18,726 17,890
Due from related companies 4,960 124
Inventories 1,910 1,867
Prepaid expenses 2,535 2,921
Other current assets 1,051 1,413
------- -------
Total current assets 30,769 41,154
NON-CURRENT ASSETS:
Long-term notes receivable 818 2,815
Intangible assets, net 54,828 55,654
Property, plant and equipment, net 33,238 33,511
Investment in equity affiliates 1,423 -
Other assets, net 2,176 424
------- ------
Total non-current assets 92,483 92,404
------- ------
$123,252 $133,558
========= ========
See notes to financial statements
II-F-3
<PAGE>
UNIHOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
May 31
1996 1995
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank Overdrafts $ 6,686 $ 6,501
Lease payable, short-term portion 1,331 1,021
Payable to related parties 9 338
Trade payables 6,843 4,854
Accrued liabilities 4,568 4,997
Note payable 15,000 -
Long-term debt, current portion 2,971 4,378
Taxes payable, current portion 3,175 2,751
-------- --------
Total current liabilities 40,583 24,840
-------- --------
NON-CURRENT LIABILITIES:
Lease payable, non-current 2,633 1,386
Long-term debt, non-current 35,721 32,662
Taxes payable, long-term portion 199 195
Deferred taxes 4,410 4,534
-------- --------
Total non-current liabilities 42,963 38,777
-------- --------
Total liabilities 83,546 63,617
-------- --------
MINORITY INTERESTS 5,464 32,064
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value;
Voting; authorized 18,000,000 shares;
issued 5,823,785 at May 31, 1996 and
6,060,182 at May 31, 1995 58 60
Non-Voting; authorized 2,000,000 shares;
issued and outstanding 298,384 at May 31, 1996
and -0- at May 31, 1995 3 -
Additional paid-in-capital 32,429 31,190
Cumulative translation adjustment (239) 1,174
Retained earnings 5,153 5,453
-------- --------
37,404 37,877
Less - cost of 168,00 and -0- shares of
Common stock held in treasury at May 31, 1996
and May 31, 1995, respectively (3,162) -
-------- --------
Total stockholders' equity 34,242 37,877
-------- --------
$123,252 $133,558
========= ========
See notes to financial statements
II-F-4
<PAGE>
<TABLE>
<CAPTION>
UNIHOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
Year ended May 31
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
REVENUE $97,061 $82,543 $63,926
Operating expenses:
Salaries and related charges 39,982 34,992 23,504
Supplies 15,240 13,692 11,732
Other operating expenses 25,522 16,140 12,890
Depreciation and amortization of
tangible assets 5,448 5,255 3,953
Amortization of intangible assets 2,431 1,947 1,373
-------- -------- --------
OPERATING INCOME 8,438 10,517 10,474
Interest expense, net of interest income of
$664 in 1996 (2,984) (1,509) (927)
Equity in loss of affiliates (3,299) - -
Other, net 883 (197) (108)
-------- -------- ---------
Income before taxes and minority interests 3,038 8,811 9,439
Tax provision (2,355) (1,975) (2,792)
-------- -------- ---------
Income from continuing operations before
minority interests 683 6,836 6,647
Minority interests in income of continuing
operations (983) (3,763) (3,569)
-------- -------- ---------
Income from continuing operations (300) 3,073 3,078
Loss on disposition of discontinued operation, net of
tax benefit of $195 and minority interests of $220 - (234) -
-------- -------- --------
NET INCOME ($300) $2,839 $3,078
======== ======== ========
Weighted average common share outstanding 6,005,643 5,782,902 3,560,316
Earnings per share of common stock
Net income from continuing operations ($0.05) $0.53 $0.86
Loss on disposition of discontinued operation - ($0.04) -
Net income ($0.05) $0.49 $0.86
See notes to financial statements
</TABLE>
II-F-5
<PAGE>
<TABLE>
<CAPTION>
UNIHOLDING CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in thousands)
Common Stock Additional Cumulative Total
Voting Non-Voting Paid-in Translation Retained Treasury Stockholders
Shares Amount Shares Amount Capital Adjustment Earnings Stock Equity
------ ------ --------- ------ ---------- ----------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, May 31, 1993 0 $0 0 0 $ 5,839 $ 24 $ 2,647 $ 8,510
Paid-in capital
arising from purchase of ULL 33,515 33,515
Net Income 3,078 3,078
Acquisition of minority
interest in ULSA 3,366 3,366
Assumed purchase of
net assets of
UniHolding Corp. 1,706,704 17 3,113 3,130
Issuance of shares
in reverse acquisition
by UGL 3,275,865 33 (36,505) (413) (3,111) (39,996)
Cumulative translation
adjustment 1,009 1,009
------ ------ --------- ------ ---------- ----------- -------- -------- ----------
Balances, May 31, 1994 4,982,569 50 0 0 9,328 620 2,614 0 12,612
Net income 2,839 2,839
Excess of purchase price
of subsidiaries over
predecessor cost (1,335) (1,335)
Issuance of Common Stock
for repayment of note
and accrued interest due
to stockholder 827,613 8 18,199 18,207
Issuance of Common Stock
for cash, net of expenses
of $250 250,000 2 4,998 5,000
Cumulative translation
adjustment 554 554
------ ------ --------- ------ ---------- ----------- -------- --------- ----------
Balances, May 31, 1995 6,060,182 60 0 0 31,190 1,174 5,453 0 37,877
Net income (300) (300)
Adjustment for 4-to-1
reverse split (513) 0
Issuance and exchange of
Non-Voting Common Stock
for Voting Common Stock (298,384) (3) 298,384 3 0
Issuance of Common Stock
for cash, net of
expenses of $113 62,500 1 1,239 1,240
Cost of Common Stock
held in treasury (3,162) (3,162)
Cumulative translation
adjustment (1,413) (1,413)
------ ------ --------- ------- ---------- ----------- --------- --------- ---------
Balances, May 31, 1996 5,823,785 $58 298,384 $3 $32,429 ($239) $5,153 ($3,162) $34,242
====== ====== ========= ======= ========== =========== ========= ========= =========
See notes to financial statements
II-F-6
</TABLE>
<PAGE>
UNIHOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Years ended May 31
1996 1995 1994
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ($ 300) $2,839 $3,078
Adjustments to reconcile net income
to net cash provided by operations:
Equity in loss of affiliates 3,299 - -
Minority interests in income 983 3,543 3,569
Depreciation and amortization of
tangible assets 5,448 5,255 3,953
Amortization of intangible assets 2,431 1,947 1,373
Other non-cash expenses (22) 7 (34)
Net changes in assets and liabilities,
net of acquisitions:
(Increase) Decrease in accounts receivable (2,027) 172 (1,561)
(Increase) Decrease in inventories (164) 758 -
(Increase) Decrease in prepaid expenses 174 (171) (153)
(Increase) Decrease in other assets (496) 218 (557)
Increase (Decrease) in trade payables 2,362 (2,604) (1,916)
Increase (Decrease) in accrued liabilities (130) (373) 981
Increase (Decrease) in reserve for taxes 675 (1,756) (58)
Increase (Decrease) in deferred taxes (922) 445 912
------- ------- ------
Net cash provided by operating activities 11,311 10,280 9,587
======= ======= ======
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash proceeds from issuance of share
capital, net of expenses 1,240 5,000 -
Repayment of long-term debt (1,156) (1,504) (5,482)
Cash proceeds from long-term debt 4,560 13,415 6,647
Proceeds (reimbursement) from (of)
bank overdrafts 171 3,796 (4,801)
Dividend paid to minority shareholders (331) (319) (521)
Repayment of lease debt (1,539) (826) (839)
Payment for purchase of treasure stock (3,162) - -
------- ------- ------
Net cash provided by (used in)
financing activities (217) 19,562 (4,996)
======= ======= ======
(continued)
II-F-7
<PAGE>
UNIHOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(continued)
Years ended May 31
1996 1995 1994
---- ---- ----
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for purchases of property
and equipment (3,788) (4,611) (3,671)
Loans and advances (to) from
affiliates, related companies and
shareholders (6,142) 503 (3,763)
Payment for purchase of interest
in subsidiaries (16,418) (8,948) -
Payment for purchase of intangible
assets (456) (2,249) (1,096)
Proceeds from sale of assets 481 1,047 134
------- ------- -------
Net cash used in investing activities (26,323) (14,258) (8,396)
======= ======= =======
Effect of exchange rate changes on cash (123) 260 (99)
Net increase (decrease) in cash and
cash equivalents (15,352) 15,844 (3,904)
Cash and cash equivalents, beginning
of year 16,939 1,095 4,999
------ ------- -------
Cash and cash equivalents, end of year $1,587 $16,939 $1,095
====== ======= =======
See notes to financial statements
II-F-8
<PAGE>
UNIHOLDING CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Monetary amounts in 000's, except per share data)
1. Description of the Company and Basis of Presentation
UniHolding Corporation ("UniHolding") and its subsidiaries (collectively
the "Company") primarily provide clinical laboratory testing services to
physicians, managed care organizations, hospitals and other health care
providers through its laboratories in Switzerland, the United Kingdom, Italy and
Spain. It also provides clinical laboratory testing services in connection with
clinical trials conducted for pharmaceutical companies.
On March 31, 1994 UniHolding issued 3,275,865 (post reverse split, see Note
6) shares (then 65.75%) of its common stock, a promissory note in the amount of
$18,000 and canceled a debt in the amount of $2,900 in exchange for 60% of the
capital stock of Unilabs Group Limited ("UGL"), 100% of the capital stock of Uni
Clinical Laboratories UCL Engineering SA ("UCLE") and options to acquire certain
laboratory operating companies in Spain and Italy from Unilabs Holdings SA, a
Panama corporation, ("Holdings") pursuant to a stock exchange agreement between
UniHolding and Holdings.
The acquisitions set out in the preceding paragraph were accounted for as
the reverse acquisition of UniHolding by an "accounting entity" consisting of
Unilabs SA ("ULSA") and UCLE because, following the transaction, the former
shareholder of ULSA and UCLE was in control of the Company.
UGL was formed pursuant to a Stock Purchase Agreement dated January 19,
1993 among Unilab Corporation ("Old Unilab"), MetCal, Inc. (now known as "Unilab
Corporation" or "Unilab") and Holdings. Pursuant to the agreement, which closed
on November 10, 1993, Holdings contributed 70% of ULSA, subject to the
assumption by Unilab from UGL of a liability of $21,000 to Holdings and Unilab
contributed 100% of the capital stock of JS Pathology plc ("JSP") in exchange
for 60% and 40%, respectively, of the capital stock of UGL. Subsequent to
November 10, 1993, Holdings and Unilab agreed upon an increase in the relative
value of Holdings' original contribution by approximately $4,100. Accordingly,
UGL issued a note in this amount to Holdings. JSP was subsequently transferred
to United Laboratories Limited ("ULL"), a newly formed United Kingdom
corporation and 100% subsidiary of UGL, in a reorganization which is deemed to
have occurred as of November 10, 1993.
On May 31, 1995, the Company exercised its options, obtained on March 31,
1994, to acquire Spanish and Italian laboratory operations from Holdings for an
aggregate cost of $7,342 paid in the form of two promissory notes offset against
cash advances. The acquisitions were accounted for at predecessor cost and the
excess of the purchase price over Holdings' carrying value, $375, was charged to
additional paid-in capital.
Had the Spanish and Italian operations been acquired by the Company as of
June 1, 1994, there would have been no material effect on the consolidated
operations of the Company for the year ended May 31, 1995.
As of May 29, 1995, with a view to streamlining the European subsidiary
structure, UGL sold ULL, its wholly-owned subsidiary, to ULSA, currently an
87.2% subsidiary of UGL.
Acquisitions of laboratory operations made by ULSA during the year ended
May 31, 1994 were accounted for as purchases. The excess of the purchase prices
over the fair value of the net assets acquired was allocated to goodwill. Had
II-F-9
<PAGE>
those acquisitions been made on the first day of the fiscal year in which they
were acquired, there would have been no material effect on the operations of the
Company for such year.
During the year ended May 31, 1995, the Company sold to a third-party a
subsidiary engaged in a separate line of business, the operations of which were
not material, and realized a non-recurring loss on discontinued operations of
approximately $234 (or $ 0.04 per share).
As of June 30, 1995, UniHolding and UGL entered into an agreement whereby
UGL acquired from Unilab 40% of UGL's common stock for a total consideration of
$30,000. The consideration was paid $13,000 in cash, $2,000 through the
assumption of a debt from Unilab to JSP, and $15,000 in the form of a one-year,
interest-bearing promissory note. The interest on the $15,000 promissory note is
the greater of (i) 10% and (ii) the 3-month LIBOR rate on the business day
immediately preceding the first day of a calendar quarter plus 3.25%. Such
interest started accruing on January 1, 1996. The agreement provides that if the
note is still unpaid six months after its due date, it shall be converted into
shares of UniHolding's common stock at 75% of then market value. As of September
10, 1996, the note was unpaid. All interest accrued as of March 31 and June 30,
1996, have been paid by UGL. In accordance with the agreements between Unilab
and the Company, both parties must in such an instance, so long as all interest
accrued on the $15,000 note have been fully paid, use their respective
reasonable efforts to agree upon a mutually acceptable resolution. If such a
mutually acceptable resolution is not found, the amount of principal and accrued
unpaid interest is convertible on January 1, 1997 into UniHolding Common Stock
at 75% of the market price. Until such time as the note is paid either in cash
or in UniHolding Common Stock, the UGL shares so acquired remain in escrow. The
acquisition of the minority interest in UGL was accounted for as a purchase and
the excess of the purchase price over the fair value, which approximates the
carrying value, of the assets acquired, $3,301, was allocated to goodwill.
Had this additional 40% of UGL's common stock been acquired as of June 1,
1994, and had ULL been owned by ULSA as of June 1, 1994, consolidated operations
of the Company for the year ended May 31, 1995 would have been as follows. Such
unaudited pro forma financial information may not be indicative of the results
of operations that would have been actually achieved had the transactions taken
place at the date indicated and should not be construed as indicative of
UniHolding's results of operations for any future period.
Sales $ 82,543
Operating income 10,434
Income from continuing operations 4,624
Net income 4,390
Per share, from continuing operations $ 0.80
Per share $ 0.76
II-F-10
<PAGE>
2. Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of UniHolding
and its majority-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated. The investment in the Company's equity
affiliates, NDA Clinical Trials Services Inc. and MISE S.A., is accounted for on
the equity method.
Use of estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions. Actual results may differ from those estimates.
Inventories
Inventories, which consist principally of purchased clinical laboratory
supplies, are valued at the lower of cost (first-in, first-out method) or
market.
Revenue Recognition
Revenue is recognized at the time service is provided. The Company's
revenue is based on the amount billed or billable.
Property and Equipment
Property and equipment are stated at cost and depreciated using the
straight line method over the estimated useful lives of the related assets which
range from 3 to 50 years. Property and equipment includes items acquired under
finance leases which are capitalized and the related equipment is amortized over
its useful life. Leasehold properties are depreciated over the lease period,
which may range from 1 to 10 years and leasehold improvements are depreciated
using the straight-line method over the remaining term of the related lease or
their useful life, whichever is shorter. Capitalized data processing software
development costs are depreciated over 3 to 5 years.
Goodwill
Goodwill represents the excess of cost over the fair value of net tangible
and identifiable intangible assets acquired and is amortized using the straight
line method over 40 years. Goodwill is evaluated periodically based on
undiscounted expected future cash flows and adjusted if necessary, if events and
circumstances indicate that a permanent decline in value below the current
unamortized historical cost has occurred.
Other Intangible Assets
Customer lists are recorded at cost and amortized utilizing the straight
line method over periods determined by the relative circumstances but not
exceeding 15 years. The value of the customer lists is reviewed and evaluated
periodically by management and adjusted, if necessary, if events and
circumstances indicate that a permanent decline in value below the current
unamortized historical cost has occurred.
II-F-11
<PAGE>
Income Taxes
The Company accounts for income taxes utilizing the asset and liability
approach requiring the recognition of deferred tax assets and liabilities for
the expected future tax consequences of temporary differences between the basis
of assets and liabilities for financial reporting purposes and tax purposes.
ULSA is fully liable for Swiss federal, cantonal and communal income and
capital taxes. Accrued taxes cover all Swiss federal, cantonal and communal
income and capital taxes to be levied on income and net assets reported through
May 31, 1996, and for prior years. Under applicable United Kingdom tax laws, tax
on UK corporate earnings is calculated on an actual accounting period basis and
falls due for payment 9 months after the end of the accounting period concerned.
Neither ULSA, nor ULL, nor any of their direct or indirect subsidiaries
have accrued deferred income taxes on the undistributed earnings of their
respective subsidiaries, because either such taxes are fully recoverable or no
distribution is intended. Such undistributed earnings totaled approximately
$17,200 as of May 31, 1996 and $12,400 as of May 31, 1995. Furthermore, ULSA
benefits from a Swiss tax ruling, whereby interest and dividend income from
subsidiaries, as well as capital gains on permanent investments, are partially
exempt from income taxes.
UniHolding, through UGL, does not presently intend to receive dividends
from ULSA. Should it do so, the Swiss withholding tax rate applicable to
distribution from ULSA would be 35%, which the Company could not recover.
Foreign Currency Transactions
Gains and losses resulting from foreign currency transactions and changes
in foreign currency positions are included in income or expense currently. Other
income, net includes a gain of approximately $696 in fiscal 1996. Exchange gains
or losses were immaterial in fiscal 1995 and 1994.
Foreign Currency Translation
The Company's operations are located in Switzerland, the United Kingdom,
Italy and Spain. Net assets, revenues and expenses are substantially all
denominated in the currency of those countries, while the Company presents its
consolidated financial statements in US dollars. Assets and liabilities are
translated at the exchange rates in effect at the balance sheet date. Revenues
and expenses are translated at the weighted average exchange rates for the
period. Net gains and losses arising upon translation of local currency
financial statements to US dollars are accumulated in a separate component of
Stockholders' Equity, the Cumulative Translation Adjustment account, which may
be realized upon the eventual disposition by the Company of part or all of its
European investments.
Income (Loss) Per Common Share
For the years ended May 31, 1996 and 1995, income per common share was
computed by dividing net income or net loss by the weighted average number of
voting and non-voting shares outstanding during the year. For the year ended May
31, 1994, income per common share was computed by dividing net income by the
weighted average number of shares outstanding during the year, with the
assumption that 3,275,865 (post reverse split, see Note 6) shares, the number of
shares issued for the acquisition of UGL and UCLE, had been outstanding from
June 1, 1993.
II-F-12
<PAGE>
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers cash and
all highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents.
Fair Value of Financial Instruments
The carrying amount reported in the consolidated balance sheets for cash,
accounts receivable, accounts payable and accrued liabilities approximates fair
value because of the immediate or short-term maturity of these financial
instruments. The carrying amount reported for outstanding bank indebtedness
approximates fair value because the debt is generally at a variable rate that
reprices frequently. The Company believes that its non-bank indebtedness
approximates fair value based on current yields for debt instruments of similar
quality and terms.
Recently Issued Accounting Pronouncements
In 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 121 ("SFAS 121"), "Accounting for the
Impairment of Long Lived Assets and for the Long Lived Assets to be Disposed
of", and Statement of Financial Accounting Standard No. 123 ("SFAS 123"),
"Accounting for Stock-Based Compensation". SFAS 121 is effective for the
Company's fiscal year ended May 31, 1997, and SFAS 123 has various effective and
transition dates. The Company believes adoption of SFAS 121 and SFAS 123 will
not have a material impact on its financial statements. The Company expects to
continue to account for employee stock-based compensation in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" using intrinsic values with appropriate disclosures using the fair
value based method. The Company does not intend to make an early adoption of
SFAS 123.
3. Property, Plant and Equipment, net and Intangible Assets
Property, Plant and equipment, net consists of the following :
May 31, 1996 May 31, 1995
Land and buildings $ 20,508 $ 21,202
Long-term leasehold and improvements 8,849 9,158
Furniture and fittings 5,446 5,001
Laboratory and office equipment 27,329 25,692
Capitalized data processing software 3,133 2,821
----------- -----------
$ 65,265 $ 63,874
Less : Accumulated depreciation
and amortization (32,027) (30,363)
------------ -----------
$ 33,238 $ 33,511
=========== ===========
Depreciation and amortization of tangible assets expense was $5,448,
$5,255 and $3,953 in the years ended May 31, 1996, 1995 and 1994.
II-F-13
<PAGE>
Routine maintenance and repair, which are charged to expense, amounted to :
May 31, 1996 : $2,125
May 31, 1995 : $1,788
May 31, 1994 : $1,374
The net amount of capitalized data processing software is $2,047 and $2,181
as of May 31, 1996 and 1995 respectively. The gross amount of assets under
capital leases is $7,856 and $6,259 as of May 31, 1996 and 1995 respectively.
Property leased under capital leases included above consist of :
May 31, 1996 May 31, 1995
Equipment $ 6,816 $ 5,016
Furniture and fittings 607 659
Automobiles 433 584
-------------- --------------
7,856 6,259
Less-Accumulated
amortization (3,813) (3,736)
Net leased property -------------- --------------
under capital lease $ 4,043 $ 2,523
============== ==============
Intangible assets consist of :
May 31, 1996 May 31, 1995
Goodwill $ 53,430 $ 52,199
Customer lists 11,650 12,559
Other 529 -
-------------- --------------
65,609 64,758
Less Accumulated
amortization (10,781) (9,104)
-------------- --------------
$ 54,828 $ 55,654
============== ==============
Amortization of intangible and other assets was $2,431, $1,947 and
$1,373 in the years ended May 31, 1996, 1995 and 1994.
II-F-14
<PAGE>
4. Long Term Debt
Long term debt consists of the following :
May 31, 1996 May 31, 1995
Senior secured debt :
ULSA Credit Agreements $ 30,141 $ 30,395
JSP Term Loan 2,555 2,606
ULL Term Loan 1,278 1,587
UTL Term Loan 1,530 -
Note to seller in connection
with an acquisition by JSP 1,379 1,428
Other debt 1,800 1,024
Capital leases :
gross obligation 4,411 2,629
interest component (438) (222)
------------- --------------
$ 42,656 $ 39,447
Less : current portion (4,302) (5,399)
------------- --------------
$ 38,354 $ 34,048
============= ==============
Senior Secured Debt
On May 24, and July 25, 1994, and on May 9, 1995, ULSA entered into several
credit agreements with a bank, providing for borrowings up to an aggregate
principal amount which, after having duly made all required repayments of SFr.
4,200 ($3,333), is amounting to SFr. 38,300 ($30,397) as of May 31, 1996. Such
borrowings were in the form of secured senior debt consisting of term loans,
working capital loans and/or guarantees. The proceeds of these loans were used
to refinance existing debt of ULSA and to finance the acquisition of ULL by
ULSA. On May 31, 1996, SFr. 37,978 ($30,141) was outstanding under these
facilities.
On June 18, 1996, ULSA entered with the same bank into a new credit
agreement (the "ULSA New Credit Agreement") replacing all previous agreements.
The ULSA New Credit Agreement provides for borrowings up to an aggregate
principal amount of SFr. 38,300 ($30,397) in the form of secured senior debt
consisting of term loans, working capital loans and/or guarantees.
The ULSA New Credit Agreement is secured by a pledge of the common stock of
all ULSA's Swiss subsidiaries and by a pledge of the common stock of ULL.
Interest on the term loans is generally at Swiss Franc LIBOR plus 1%. At
May 31, 1996, the effective interest rate was between 2.844% and 5.625%
depending upon the maturity dates of the fixed term advances. Interest on the
working capital loans was 6.25% per annum at May 31, 1996. The working capital
loans also include a utilization fee of 0.25% per quarter. The ULSA New Credit
Agreement require principal payments of SFr. 7,500 ($5,952) on June 30 of each
year starting on June 30, 1997, with a final repayment of SFr. 8,300 ($6,587)
on June 30, 2001.
II-F-15
<PAGE>
The provisions of the ULSA Credit Agreement require, among other things,
that ULSA will not incur any additional liens and will not pay dividends without
the prior approval of the bank. They also require that the repayment by ULSA of
its debt to UGL will be subordinated to the claims of the bank.
On December 3, 1993, JSP entered into a credit agreement with a bank,
providing for borrowings of $3,000 in the form of senior debt consisting of a
seven-year term loan (the "JSP Term Loan"). The proceeds of this loan were used
to repay debt owed to the previous chairman of JSP. At May 31, 1996, $2,555 was
outstanding under this facility. In addition, on March 16, 1994, ULL entered
into a credit agreement with the same bank, providing for borrowings of $1,600
in the form of senior debt consisting of a seven-year term loan (the "ULL Term
Loan"). The proceeds of the new loan were used to finance an acquisition; a
balance of $1,379 remains due to the seller, over which a bank guarantee has
been issued. At May 31, 1996, $1,278 was outstanding under this facility. Also,
on April 5, 1994, JSP entered into a credit agreement with a bank, now providing
for borrowings of up to $6,426 in the form of senior debt consisting of working
capital loans and bank overdrafts (the "JSP Working Capital Loan"). The proceeds
of the new loan were used to refinance existing debt and fund working capital.
At May 31, 1996, $6,169 was outstanding under this facility.
On January 24, 1996, a subsidiary of ULL entered into a credit agreement
with a finance company, providing for a borrowing of $1,530 for a duration of 7
years (the "UTL Term Loan"). The proceeds of the UTL Term Loan were used to fund
working capital and expansion.
The JSP, ULL and UTL Term Loans and the JSP Working Capital Loan are
secured by JSP's and ULL's land, building, accounts receivable and other assets,
and are cross-guaranteed by all other subsidiaries of JSP and ULL, respectively.
In addition, the UTL Term Loan is secured by a guarantee from UniHolding.
Interest on the UTL Term Loan is at 10%. Interest on the JSP and ULL Term
Loans is at Pound Sterling LIBOR plus 1.75%. On May 31, 1996, such interest rate
was approximately 7.75%. Interest on the JSP Working Capital Loan was between
6.85% and 7.00% per annum at May 31, 1996, depending on the funding options
chosen. The JSP Term Loan requires quarterly payments of approximately $100.
The ULL Term Loan requires 23 quarterly payments of approximately $63 which
commenced in June 1995. The UTL Term Loan requires monthly repayments of $13
during 17 months which commenced in February 1996 and monthly repayments of $30
during the following 67 months, all including interest.
Maturities
At May 31, 1996, future scheduled principal payments of long-term debt and
capital lease obligations were as follows :
II-F-16
<PAGE>
Net obligation
1997 $ 3,474
1998 9,483
1999 7,731
2000 7,203
2001 6,669
thereafter 8,096
--------------
$ 42,656
Less : current maturities (4,302)
--------------
$ 38,354
==============
5. Income Taxes
Deferred income tax assets and liabilities are provided for temporary
differences between financial statement income and the amounts currently taxable
in the jurisdictions in which the Company operates. Income (loss) before income
taxes and minority interests of domestic and foreign corporations is as follows:
Years ended May 31
1996 1995 1994
---- ---- ----
Domestic $ 118 $ (232) $ (102)
Foreign 2,920 9,043 9,541
---------- ----------- ----------
Total $ 3,038 $ 8,811 $ 9,439
========== =========== ==========
The provision for income taxes is as follows :
Years ended May 31
1996 1995 1994
---- ---- ----
Current :
Foreign $ 3,468 1,543 2,172
Deferred :
Foreign (1,113) 432 620
---------- --------- -----------
Total $ 2,355 $ 1,975 $ 2,792
=========== ========= ===========
Deferred taxes are provided principally in relation to temporary
differences in the amortization of intangibles and to different book and tax
rates of depreciation of tangible assets.
II-F-17
<PAGE>
The deferred tax assets (included in other assets) and liabilities as of
May 31, 1996, are as follows :
Assets Liabilities
Depreciation of tangible assets $ - $ 3,348
Amortization of intangibles - 1,062
Operating loss carryforwards 1,497 -
---------- ----------
1,497 4,410
Valuation allowance (396) -
---------- -----------
$ 1,101 $ 4,410
========== ==========
The net change in the valuation allowance for deferred tax assets was a
increase of $173, relating to benefits arising from operating loss
carryforwards.
The tax charge in Switzerland is an accumulation of the taxes due to the
city, the canton (state) and the federal authorities. Therefore, the tax burden
varies from one entity to another depending upon its location. While the actual
tax rate is a function of the percentage of profitability in relation to taxable
equity, the Company believes that 30% is a fair approximation of the effective
cumulative rate. In addition, as Swiss tax laws do not permit consolidated tax
filings, possible tax losses in one entity do not offset taxable income in
another. United Kingdom corporation tax is based on profits for the period at a
rate of 33%.
On January 1, 1995, a new federal tax law, and for most Swiss cantons, a
new cantonal tax law, came into force in Switzerland. The new laws provide for a
change in the system of assessment from a two-year past assessment period to a
one-year current assessment period. Because the change in the law may create a
gap during which certain profits made in prior financial years may be not or
partially taxed, the new law has provided for a transition period during which a
special method is followed to calculate income taxes. Since the 1995 taxes due
based on the old methods of assessment had been fully accrued for during 1993
and 1994, the 1995 tax charge only relates to the adjustment needed based on the
1995 income.
During the year ended May 31, 1996, the Company decided to merge two of its
principal Swiss subsidiaries. This has had the effect of decreasing the
effective tax rate of Swiss operations to approximately 24%, but has caused a
non-recurring charge of $1,092.
A reconciliation between the actual income tax expense and income taxes
computed by applying the US Federal income tax rate of 34% to earnings before
taxes and minority interests is as follows (in thousands) :
II-F-18
<PAGE>
Years ended May 31
1996 1995 1994
---- ---- ----
Computed income taxes
at rate of 34% $ 1,033 $ 2,996 $ 3,209
Impact of difference between
statutory and US tax rates (647) (145) (112)
Permanent differences 175 815 50
Impact of change
in Swiss tax law - (1,577) -
Impact of change
in effective Swiss tax rate (730) - -
Impact of merger
of certain Swiss subsidiaries 1,092 - -
Change in valuation reserves
on deferred tax assets 173 (16) (437)
Impact of equity in loss
of affiliates 1,021 - -
Other 238 (98) 82
--------- ----------- -----------
$ 2,355 $ 1,975 $ 2,792
========= =========== ==========
Certain of the Company's subsidiaries have incurred losses which can be
used to offset their taxable income for up to six years after incurring the
losses, depending on the applicable tax legislation. Total net operating loss
carry forwards amount to $4,200. Management has reviewed the probability of
realization of the tax benefits which may arise from these losses being carried
forward. Based on the estimated realization, the Company has reserved for the
tax benefits in all cases where it has not been satisfied that it is more likely
than not that the benefits will be realized. Otherwise the Company has
recognized deferred tax assets of $ 1,101. The underlying net operating loss
carry forwards are expected to expire starting in 1999.
6. Capital stock, Additional Paid In Capital, Stock Options and Warrants
Effective as of December 27, 1995, UniHolding effected a four-to-one
reverse split of its Common Stock. These financial statements reflect this
reverse split for all periods presented including corresponding adjustments to
share amounts and purchase prices of the underlying share amounts. The reverse
split has no effect on the financial position or results of operations of the
Company.
As of the same date, UniHolding decreased its authorized shares of Common
Stock from 60 million to 20 million.
Capital stock and Additional Paid-in Capital
On March 31, 1994, immediately prior to the acquisition of UGL and UCLE,
UniHolding had 1,706,704 shares of common stock outstanding. On that date it
issued 3,275,865 shares in connection with the acquisition. Because the
acquisition was accounted for as the reverse acquisition of UniHolding by an
"accounting entity" consisting of ULSA and UCLE, it is deemed that 3,275,865
shares of capital stock of UniHolding, which were issued in connection with the
reverse acquisition, have been outstanding from June 1, 1993 up to March 31,
1994 when 1,706,704 shares were deemed issued by the Company in exchange for the
net assets of UniHolding.
II-F-19
<PAGE>
In March 1994, the Company entered into an agreement with Unilab, effective
as of January 31, 1994, whereby Unilab contributed to UGL 678 shares of capital
stock of ULSA (4.3%) which it purchased in 1993 for $5,000, and Holdings
contributed 1,876 shares of capital stock of Unilabs SA (11.7%) subject to a
note of approximately $7,100, thereby increasing UGL's ownership of ULSA to
approximately 86%. The shares received from Unilab have been recorded at their
fair value of $5,695 of which $660 was allocated to tangible net assets and
$5,035 was allocated to goodwill. The shares received from Holdings were
recorded at Holdings' predecessor cost, resulting in a decrease in goodwill of
$3,973.
At various times during the year ended May 31, 1995, UGL acquired from
Holdings 186 shares of capital stock of ULSA (1.2% of that company's share
capital) for cash. The excess of the purchase price over Holdings' carrying
value, $960, was charged to additional paid-in capital.
On May 31, 1995, the Company exercised its options to acquire Spanish and
Italian laboratory operations from Holdings. The excess of the purchase price
over Holdings' carrying value, $375, was charged to additional paid-in capital.
In connection with the March 31, 1994, acquisition discussed in Note 1,
UniHolding issued a promissory note of $18,000 in favor of Holdings. Such note
was repayable after five years, and carried an interest rate of 5% per annum
payable at UniHolding's option either in cash or in shares, or any combination
thereof. On June 22, 1994, the note, together with then accrued interest of
$207, was repaid in advance by issuing to Holdings 825,000 newly-issued shares
of UniHolding's common stock, calculated on the basis of the price of $22 per
share. If such additional shares had been issued on March 31, 1994, the weighted
average number of shares outstanding during the period ended May 31, 1994, would
have been 3,698,251, and, considering the effect of the interest charge of $155
on the period, earnings per share would have been $ 0.88 for the year ended May
31, 1994, and the effect of earnings for the year ended May 31, 1995 would not
have been material.
As of April 28, 1995, UniHolding issued 250,000 new shares of common stock
to two investors, at the price of $21 per share.
As of July 3, 1995, UniHolding issued 25,000 new shares of common stock to
one investor, at a price of $22.00 per share, including warrants for 12,500
shares at a price of $26.00 exercisable for 18 months from July 3, 1995.
Further, as of October 5, 1995, UniHolding issued 37,500 new shares of common
stock to two investors, at a price of $22.00 per share, including warrants for
18,750 shares at a price of $26.00 exercisable for 18 months from October 5,
1995.
Non-Voting Common Stock
As of March 11, 1996, UniHolding amended its Certificate of Incorporation
and designated 2,000,000 million of its authorized shares as Non-Voting Common
Stock. The Non-Voting shares have identical rights and privileges as the Voting
shares, other than the vote. The Non-Voting shares are convertible into an equal
number of Voting shares at the holder's option, except in certain circumstances.
In February 1996, Holdings exchanged with UniHolding 298,384 shares of
Common Stock for 298,384 shares of Non-Voting Common Stock. Holdings then
exchanged with a wholly-owned subsidiary of Swiss Bank Corporation 298,384
shares of Common Stock and 298,384 shares of Non-Voting Common Stock for 1600
shares (10%) of the common stock of ULSA. In compliance with certain U.S.
regulations on banks, the exchange agreement provides that the Non-Voting shares
are not convertible into Voting Shares as long as they are held by such
subsidiary of Swiss Bank Corporation.
II-F-20
<PAGE>
Treasury Stock
During the year ended May 31, 1996, UniHolding acquired 155,000 shares of
UniHolding's common stock from Holdings for $2,900, the fair market value of
such shares which was less than the cost of such shares to Holdings. Further,
during the year, the Company acquired 13,000 of its own shares on the market for
$217.
Stock Options
As of June 28, 1994, UniHolding's Board of Directors adopted a Stock Option
Plan for the Company whereby options can be granted to directors, key officers
or management personnel of the Company or any of its subsidiaries or affiliates
by the Administrator of the Plan, acting in agreement with the Board. 500,000
shares of UniHolding's common stock can be so reserved each year for issuance
pursuant to the Plan, as amended. Options are granted with an exercise price at
no less than 100% of the fair market value of UniHolding's common stock on the
date of the grant or the book value on the date of the most recent financial
statements. Shares subscribed by Option grantees must be held for two years from
the date of grant prior to sale. The Plan will expire on June 28, 2004.
Accordingly, the Company will be able to grant 4 million options in addition to
those already granted.
On August 17, 1995, a total of 163,750 options were granted. These options
are all exercisable on or after February 17, 1997, at $22 per share for 63,750
options and at $ 24 per share for 100,000 options, and expire on June 28, 2004.
On July 9, 1996, a total of 357,142 additional options were granted. These
options are all exercisable on or after January 9, 1998, at $16 per share, and
expire on June 28, 2004.
7. Related Party Transactions
The following were the receivables and payables to related parties :
May 31, 1996 May 31, 1995
Receivables :
Unilabs Holdings SA $ 4,703 $ 124
Others 257 -
------------- -------------
$ 4,960 $ 124
============= =============
Payables :
Unilabs Holdings SA $ - $ 338
Others 9 -
------------- -------------
$ 9 $ 338
============= =============
Advances to and from related companies bear an interest rate based on the 3
months LIBOR plus 2% per annum. These advances are unsecured.
II-F-21
<PAGE>
In March 1992, the Company's Predecessor entered into a cooperation
agreement with Holdings covering (i) the use of its logo and provision of
financial and market research advisory services to the Predecessor ("General
Services") and (ii) mergers and acquisitions advisory services. The agreement,
which expired on May 31, 1996, provides for an annual General Services fee of
$260 to be paid by ULSA. In connection with the Acquisition Agreement and other
transactions described in Note 1, Holdings assigned the benefits of the
cooperation agreement to UniHolding as of March 31, 1994. During the year ended
May 31, 1994, Holdings also billed $ 355 to the Company, representing general
and administrative expenses incurred by Holdings in providing certain
administrative support on behalf of UniHolding and its subsidiaries, and an
additional $69 for various other consulting services provided to the Company;
the Company billed Holdings $ 387 related to laboratory management, consulting
and financial engineering consulting services.
During the year ended May 31, 1994, the Company entered into a management
services contract with a company owned by the Chairman of UniHolding's Board of
Directors. The management contract replaced and superseded his previous
employment contract with one of the Company's subsidiaries. The contract
provided for an annual payment of SFr. 600 ($476 at year end exchange rate) for
a term of 5 years. Under this contract the Company paid SFr. 600 ($470 at
average exchange rate) and SFr. 600 ($507 at average exchange rate) for the
years ended May 31, 1995 and May 31, 1996 respectively.
During the year ended May 31, 1995, the Company entered into a management
services contract with a company affiliated with a Director of the Company. The
Company paid $470 under this contract during the year ended May 31, 1995. As of
May 31, 1995, the contract was terminated.
During the year ended May 31, 1996 the Company made payments for
consultancy services to an individual related to a Director of the Company. The
Company paid SFr. 600 ($507 at average exchange rate) under this contract
during the year ended May 31, 1996.
Net interest payments made by Holdings to the Company during the years
ended May 31, 1996, 1995 and 1994 amounted to $160, $113 and $483, respectively.
During the year ended May 31, 1996, UniHolding exchanged with Holdings
298,384 shares of UniHolding's Voting Common Stock for 298,384 shares of
UniHolding's Non-Voting Common Stock. See Note 6.
During the year ended May 31, 1996, UniHolding, through UGL, acquired an
investment in MISE S.A. and thus acquired rights to certain know-how of a
company which may be deemed to be related. See Note 11.
8. Retained Earnings
Retained earnings of Swiss subsidiaries are partially restricted by law as
to distribution. Restricted amounts (including temporary restrictions) were
approximately $3,885 and $2,300 at May 31, 1996 and 1995.
9. Retirement plans
All of the Company's Switzerland-based employees, including its executive
officers, participate in the legally required pension or retirement plans
existing in Switzerland, which are similar to defined contribution plans. All of
them are subject to the two pension and retirement plans required under Swiss
law. The first such plan is the Assurance Vieillesse et Survivants ("AVS"), a
government-administered plan, under which ULSA deducts on a monthly basis 5.05%
of employee compensation and pays it to the AVS fund, while itself contributing
an additional 5.05% to the fund for each employee's account. The second such
II-F-22
<PAGE>
plan is the Prevoyance Professionnelle plan ("LPP"), a company-sponsored plan
which is currently administered by an independent insurance company. Under this
plan, an amount equal to between 4% and 10% of each employee's compensation,
depending on age and sex, is deducted by the Company and paid to each employee's
account in the LPP fund, while the Company contributes a like amount to the
fund. In addition to the legally required plans, the Company offers to its
executive officers and other employees supplemental LPP programs. The Company
has no pension or retirement liability other than its obligation to make
contributions to the AVS fund and the LPP fund and to see that the appropriate
employee amounts are deducted and paid. Total LPP plans expenses (including
supplemental programs) for executive officers and other employees was
approximately $1,134, $943 and $607 for ULSA for the years ended May 31, 1996,
1995 and 1994 respectively.
In the United Kingdom, the Company operates various defined optional
contribution pension plans and one defined benefit pension plan, with at least
one plan open to each full time employee. At May 31, 1996, 93 of its employees
participated in the plans. The Company's contribution, which matches that of
employees, varies between 2.5% and 10% of each employee's base salary. This
contribution is expensed in the period that the cost is incurred. Total pension
plan expenses for ULL was approximately $ 290 for the year ended May 31, 1996,
$217 for the year ended May 31, 1995, and $125 for the seven-month period to May
31, 1994. The defined benefit pension plan covers 30 employees, and was not
materially underfunded at year end.
The Company does not maintain any plans for other post-employment or
post-retirement employee benefits.
10. Commitments and Contingencies
The Company is obligated under capital and operating leases for laboratory
premises, offices and equipment expiring at various times through 2065. Minimum
lease payments for leases that have initial or remaining noncancellable terms in
excess of one year approximate :
Operating leases Capital leases
1997 $ 2,939 $ 1,574
1998 2,478 1,309
1999 1,617 1,025
2000 750 471
2001 579 30
thereafter 8,428 -
------------
Minimum lease payments 4,409
Less : amount representing interest (438)
Present value of net minimum -------------
lease payments $ 3,971
=============
Operating lease expenses, which primarily relate to the rental of
buildings, office furniture and equipment, were approximately $3,476, $2,500 and
$2,200 for the years ended May 31, 1996, 1995 and 1994 respectively.
II-F-23
<PAGE>
In the normal conduct of its business the Company is party to certain
litigation which in the opinion of management would not in the aggregate have a
material effect on the financial position or results of operations of the
Company.
Certain key officers have employment agreements which provide for aggregate
annual salaries of $1,300 and which include non-competition clauses. In the
event that the Company invokes such clauses after termination of the employment
agreements, the Company may be obligated, under certain circumstances, to
compensate these individuals for differences in salary between the compensation
paid to them by the Company on the date of the expiration of the employment
agreements and their new annual salaries.
At the request of an affiliate of Holdings, the Company has deposited 51%
of the capital stock of ULSA and 67% of the capital stock of UGL with a bank to
be held in safe keeping until a loan to the affiliate in the amount of $7,143
at May 31, 1996 is repaid. The shares deposited with the bank may not be sold or
transferred while the loan is outstanding without the consent of the bank.
In the United Kingdom, JSP has sublet certain leased properties to third
parties but retains a contingent liability to pay the rent in the event of
default by the assignee. The contingent liability related to assigned property
leases is $4,136 as of May 31, 1996.
In connection with its contract with the North Hertfordshire NHS Trust,
which started in December 1994, the Company has committed to make annual minimum
payments of $750 over the duration of the contract which is 7 years. As of May
31, 1996, the total commitment therefore amounts to approximately $4,100, which
the Company's management believes will be offset by revenues generated by the
contract.
Among the assets of UniHolding deemed to have been acquired by the Company
is the contract right to receive from a former subsidiary, Americanino Capital
Corporation ("ACC") and/or from the present majority shareholder of ACC, Linford
Enterprises Inc., 80% of any appreciation in value of the capital stock of that
subsidiary and 80% of any net proceeds from an arbitration being conducted by
ACC in connection with its acquisition of certain Italian apparel concerns, net
of legal costs, limited to $15,023. While, to the best of the Company's
knowledge, ACC appears to have a legitimate claim, there can be no assurance
that an award will be rendered in ACC's favor. Therefore, the Company has
recorded its rights at present fair value of $ 10 which is estimated to be the
amount an unrelated party might presently pay to acquire such rights. Ultimate
recovery of this amount is solely dependent upon the Court's award and upon the
collection thereof, if any, as to which there can be no assurance at the present
time.
11. Investment in Equity Affiliates
NDA Clinical Trials Services Inc.
As of March 1, 1995, the Company entered into a Cooperation Agreement, a
License Agreement and a Marketing Agreement (together referred to as the "NDA
Agreements") with NDA Clinical Trials Services Inc., a Delaware corporation
("NDA") to provide laboratory testing services to the pharmaceutical industry in
clinical evaluations conducted in both the United States and Europe.
In connection therewith, the Company formed a wholly-owned subsidiary whose
only activity is to sell and perform clinical trials services. This subsidiary,
Unilabs Clinical Trials Ltd. ("UCT") is based in London (UK), and commenced
operations during the year ended May 31, 1996.
II-F-24
<PAGE>
In connection with its decision to expand into the clinical trials
business, as of October 16, 1995, the Company entered into a Stock Purchase
Agreement and an Option Agreement with NDA. Under these Agreements, the Company
acquired 17% of NDA's capital through the purchase of newly-issued shares,
together with an option to increase its stake in NDA to 30% on or before May 31,
1998. The consideration for the acquisition of 17% was $1,188 paid in cash at
closing. Simultaneously, UCT granted to NDA and NDA's stockholders (excluding
the Company), an option to subscribe to new shares of UCT. This option was
contingent upon the Company exercising its option on 13% of NDA's equity.
As of July 23, 1996, the reciprocal options on 13% of NDA's equity and on
new shares of UCT were terminated by mutual consent.
MISE S.A.
On September 14, 1995, UGL entered into an agreement with Health Strategies
Limited, (a Jersey Channel Islands corporation, "HSL", a company which may be
deemed to be related to the Company for the reasons mentioned below, and which
the Company believes may be deemed to be controlled by a director of Unilab),
whereby a new company, MISE S.A. (a British Virgin Islands corporation, "MISE")
was formed. UGL invested $3,005 in MISE for 33.3% of the voting rights and for
66.6% of the equity in MISE stock of which $2,005 was paid during the year ended
May 31, 1996, and the balance is payable in two installments of $500 each in
September 1996 and 1997. HSL owns the remaining voting and equity interests in
MISE for which it contributed a nominal amount of cash and its agreement to
obtain for MISE certain know-how and related software and services. MISE then
acquired for $1,500 certain know-how and computer software from HSL, which
know-how and software were simultaneously acquired for $250 by HSL from Medical
Diagnositc Management Inc. (a U.S. corporation, "MDM"), which may be deemed to
be related to HSL, and, for the reasons mentioned below, may also be deemed to
be related to the Company. Further, MISE committed to pay HSL a total of $1,500
for certain plans for marketing the know-how and software in several European
countries. Out of such amount, $500 was paid during the year ended May 31, 1996,
and the balance is payable in two installments of $500 each in October 1996 and
1997. The fee agreed for the marketing plans also includes support services and
customization to European needs. Based upon MDM's representations, MDM's board
of directors include two directors or officers of Unilab. Unilab may be deemed
to be a related party of the Company by virtue of the $15,000 note due to Unilab
in connection with the acquisition of Unilab's 40% investment in UGL on June 30,
1995, which note may under certain circumstances be converted by Unilab into
UniHolding Common Stock (see Note 1). None of those two directors or officers of
Unilab are directors or officers of UniHolding, and no director or officer of
UniHolding has any direct or indirect interest in either of HSL or MDM. The
acquisition value of the know-how was determined on MISE's behalf through
negotiations between the Company and a director of MDM who is also a director of
Unilab, and was agreed upon by the UGL and UniHolding boards of directors. The
director of Unilab is HSL's designee to the board of directors of MISE.
The investment provides the Company access to certain know-how developed by
MDM. MDM is a start-up company which is active in the industry of health
information services in the U.S., and is focusing on organizing and managing
access to discounted provider networks for ambulatory diagnostic services
(radiology, other imaging techniques, and laboratory). Its strategy is to be a
clinical, financial, administrative and information management intermediary
among referring physicians, payers and diagnostic providers. The know-how
acquired by MISE from HSL includes, but is not limited to, a certain
computerized information system proprietary to MDM. HSL granted to MISE a
perpetual license for the use of the MDM know-how and related software for use
in Western Europe. In addition, HSL agreed to provide marketing and support
services for a three-year period at no further cost to MISE. Both UGL and HSL
agreed to use their best efforts to implement the MISE business in Western
II-F-25
<PAGE>
Europe and agreed not to compete with MISE in the same territory. The Company,
through MISE, intends to market the concept, including the computerized
information system, to health insurance companies throughout Europe. The Company
believes that such a concept should be particularly useful and applicable in the
context of the ongoing deregulation of the health care system and may provide a
useful tool to achieve substantial savings in health care costs in several
European countries. To accomplish its objectives for MISE, the Company has
budgeted additional investments of $200 for each of the fiscal years 1996/97 and
1997/98.
During the year ended May 31, 1996, MISE had no activity, however, the
Company's management is of the opinion that there has been no impairment of its
investment, and that operations will start in fiscal year 1997. Accounting
principles generally accepted in the U.S. require that know-how and marketing
plans such as those purchased by MISE, whether they are purchased from related
or unrelated parties, be expensed as incurred. Accordingly, during the year
ended May 31, 1996, the Company has recognized a loss from its equity investee
of $3,000.
12. Subsequent Events
Clinical Trials Division Reorganization
On July 23, 1996, the Company transferred the assets of its clinical trials
division, consisting of 100% of the equity of Unilabs Clinical Trials Limited,
100% of the equity of Pharmasoft SA and 17% of the equity of NDA to a newly
formed wholly-owned British Virgin Islands subsidiary, Global Unilabs Clinical
Trials Ltd. ("GUCT") in exchange for 217,000 ordinary shares representing all of
the issued and outstanding shares of GUCT. After the transaction, GUCT was a
wholly-owned subsidiary of UniHolding. The ownership of the 217,000 shares of
GUCT was then transferred to UGL at book value.
The Company intends to offer its shareholders the right to subscribe
directly to an increase of the equity of GUCT of up to $8,000. Subject to the
successful completion of such offering, the Company's ownership in GUCT may be
diluted to approximately 24%.
Capital Stock Issuance.
On July 22, 1996, UniHolding issued 333,333 new shares of common stock to
an investor, at a price of $15 per share. The investor received certain
antidilution and preemptive subscription rights. The antidilution provisions
provide that if the Company issues its Common Stock to repay the $15,000 note
owed to Unilab, it will transfer to the investor additional shares of Common
Stock so that the percentage of ownership of the investor will remain
substantially unchanged. The preemptive right provisions provide that the
Company and its affiliates will not sell, pledge, encumber or otherwise transfer
any shares of Common Stock at a value below market without first offering the
same shares to the investor on the same conditions. The Company has a call right
on the shares of the investor at a price of $18 per share, exercisable on or
before January 15, 1997.
13. Supplemental Disclosures of Cash Flow Information
(in thousands) Years ended May 31
1996 1995 1994
---- ---- ----
Cash paid during the year for :
Interest $ 3,048 $ 1,845 $1,146
Income taxes 2,756 3,682 1,818
Capital lease obligations of $3,581, $1,391 and $598 were incurred
during the years ended May 31, 1996, 1995 and 1994 respectively.
During the year ended May 31, 1995, a loan from Holdings amounting to
$18,000, plus accrued interest of $207, was converted into 827,614 shares of
UniHolding's common stock.
During the year ended May 31, 1996, in connection with its acquisition of
40% of the share capital of UGL, the Company issued a note of $15,000 and
assumed a note of $2,000 payable to JSP.
II-F-26
<PAGE>
14. Quarterly Financial Data (unaudited)
Summarized unaudited quarterly financial data for the years ended May 31,
1996 and 1995 is as follows (in thousands, except per share data) :
Year ended May 31, 1996
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- ------- ------- -------
Revenue $22,063 $25,612 $23,587 $25,799
Operating income 1,316 3,441 827 2,855
Income (loss) from continuing
operations 804 (2,012) 105 803
Loss on disposition of discontinued
operation - - - -
Net income (loss) 804 (2,012) 105 803
Per share data :
Income (loss) from continuing
operations $ 0.12 ($ 0.33) $ 0.02 $ 0.13
Loss on disposition of discontinued
operation - - - -
Net income (loss) $ 0.12 ($ 0.33) $ 0.02 $ 0.13
Price range :
High $ 23.50 $ 22.00 $ 17.50 $ 18.00
Low $ 18.00 $ 15.00 $ 13.25 $ 13.25
The unaudited financial data for the second quarter has been revised from
the quarterly report on Form 10-Q previously filed to reflect a $3,000 loss from
an equity investee.
Year ended May 31, 1995
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- ------- ------- --------
Revenue $18,229 $20,775 $20,237 $23,302
Operating income 1,464 3,045 2,278 3,730
Income from continuing operations 182 878 435 1,578
Loss on disposition of discontinued
operation - (234) - -
Net income 182 644 435 1,578
Per share data :
Income from continuing operations $ 0.04 $ 0.15 $ 0.07 $ 0.27
Loss on disposition of discontinued
operation - ($ 0.04 - -
Net income $ 0.04 $ 0.11 $ 0.07 $ 0.27
Price range :
High $ 23.00 $ 24.50 $ 26.00 $ 25.00
Low $ 21.00 $ 22.00 $ 22.00 $ 20.00
Earnings per share are computed independently for each of the quarters
presented. Therefore, the sum of the quarterly earnings per share for a year
does not equal the total computed for the year due to stock transactions which
occurred during the years.
II-F-27
<PAGE>
15. Segment Information
During the year ended May 31, 1996, the Company expanded its activities in
testing performed in relation with clinical trials for the pharmaceutical
industry (see Note 11), and therefore distinguishes its core clinical laboratory
business (the "Diagnostic Laboratory division") from its clinical trials testing
business (the "Clinical Trials division"). In connection therewith, the Company
transferred to UCT, as of June 1, 1996, certain clinical trials activities
heretofore performed by JSP. Accordingly, for analysis and comparative purposes,
the activities conducted by JSP in the clinical trials business during both
years have been included under the Clinical Trials division caption.
Further, during the year ended May 31, 1996, the Company formed a new
Healthcare Management Services division, through its investment of $3,005 in
MISE and has recognized a loss from such equity investment of the same amount.
As explained in further detail elsewhere herein, MISE has recorded a charge of
$3,000 to reflect the write-off of its investment in certain know-how and
marketing plans in accordance with U.S. generally accepted accounting
principles. However, the Company actually believes that there has been no
impairment of its investment in its Healthcare Management Services division
although such investment has been fully provided for on its balance sheet as of
May 31, 1996.
Following are the key financial data of the respective businesses for
purposes of segment information. Such information does not include segment data
relating to the Company's investments in unconsolidated affiliates.
Year Ended May 31
1996 1995
------ ------
Revenues from unaffiliated customers:
Diagnostic Laboratory division $92,634 $79,003
Clinical Trials division 4,427 3,540
Healthcare Management Services
division - -
Operating Profit or Loss:
Diagnostic Laboratory division 10,270 10,031
Clinical Trials division (1,832) 486
Healthcare Management Services
division - -
Identifiable Assets:
Diagnostic Laboratory division 121,052 133,558
Clinical Trials division 2,200 NA
Healthcare Management Services
division - -
II-F-28
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information as of September 13,
1996 regarding the directors, executive officers and key management personnel of
the Company and its subsidiaries.
Directors and Executive Officers of Registrant, UniHolding:
Name Age Position
Edgard Zwirn 50 Chairman of the Board and Director, President
and Chief Executive Officer
Bruno Adam 47 Director and Chief Financial Officer
Enrico Gherardi 48 Director and Secretary
Alessandra
Van Gemerden 24 Director
Tobias Fenster 50 Director
Paul Hokfelt 42 Executive Vice President and Chief Operating
Officer; also Chief Operating Officer, ULL, and
Chief Operating Officer, UCT.
Eric Wavre 44 Executive Vice President, Treasurer and Chief
Financial and Administrative Officer-European
Affairs
Melanie K. Stapp 30 General Counsel - U.S. Affairs*
Key Executive and Managerial Officers of Subsidiaries:
Name Age Position
Joseph Schuler 45 Executive Vice President and Chief Operating
Officer, ULSA
Miguel Payro 33 Vice President, UCLE
*Ms. Stapp resigned her position as of August 30, 1996.
III-1
<PAGE>
Edgard Zwirn has been Chairman and a member of UniHolding's Board of
Directors since April 28, 1994. Edgard Zwirn was appointed as Chief Executive
Officer of UniHolding on April 26, 1994. He has been Chairman of the Board,
President and Chief Executive Officer of Swiss Holdings since 1987. Edgard Zwirn
has been the Chairman of the Board of Directors of Holdings since 1993, ULSA
since 1989, JSP since 1993, UGL and ULL since its inception deemed November 10,
1993, and UCLE since its inception in December 1991. He has been President of
UGL since October of 1993. Edgard Zwirn has been a member of Unilab
Corporation's ("Unilab") Board of Directors since November 1993 after having
served as a member of the former Unilab's Board of Directors from its formation
in November 1988 until he became a director of the present Unilab. He was also
director of the predecessor entity of Unilab from December 1986 until November
1988. Mr. Zwirn resigned from the Unilab Board as of June 30, 1995. He has held
various senior management positions with companies in Belgium principally in the
areas of computer software for medical applications and technical equipment
leasing. Previously, he had been a director of IESA Investissements SA from
April 1987 to February 1992.
Bruno Adam has been a member of UniHolding's Board of Directors since
April 1994. Bruno Adam is currently the Chief Financial Officer of UniHolding
and has been so since May 1994. He has been an Executive Vice President and the
Chief Financial Officer of Swiss Holdings since 1988. Bruno Adam has been a
Director of Holdings since 1993 and Secretary and CFO of Swiss Holdings since
1988, CFO of ULSA from 1988 to 1993, and a Director of UGL since its inception
in November of 1993 to July 1996. Previously, he was employed by Arthur Andersen
in their Geneva offices.
Enrico Gherardi has been a Management and Financial Consultant and
continues to consult various companies in Europe on both management and
marketing related issues. Enrico Gherardi has been a Director of the Company
since June 20, 1994. Enrico Gherardi has been a Director of Team International,
Inc., a Massachusetts corporation, since its inception in April 1993. He became
Chairman of the Board of Directors of Team International in November 1993.
Enrico Gherardi has been a Director of ULL since April 30, 1996, and a Director
of ULSA since November 28, 1995. Mr. Gherardi was appointed Secretary of
UniHolding in April 1996.
Alessandra Van Gemerden has been a member of UniHolding's Board of
Directors since July 1996. She holds degrees in Management and Psychology, and
has had prior experience in public relations and management of investment
portfolios. Alessandra Van Gemerden has been a Director of ULL since April 30,
1996.
Tobias Fenster has been a member of UniHolding's Board of Directors since
July 1996. He holds degrees in Industrial Engineering and Business
Administration from Stanford University. His previous work experience includes
consulting services with Booz Allen & Hamilton, and management of closely-held
enterprises in the wood industry and in the computer distribution industry.
Tobias Fenster currently is General Manager of ULSP. Mr. Fenster has been a
Director of ULL since April 30, 1996.
Paul Hokfelt was appointed Executive Vice President and COO of UniHolding
as of June 1, 1995. Mr. Hokfelt has been Executive Vice President and COO of UGL
from November 1993 to July 1996. He has been a Director of UGL from April 1994
to July 1996. He was the General Manager of ULSA from 1989 to 1994. From 1987 to
1989, Paul Hokfelt was a self-employed consultant and the manager of a finance
company acquired by Swiss Holdings in 1988. From 1978 to 1987, he held various
management positions with various financial institutions, including the Finans
Skandic and Barclays Bank groups.
III-2
<PAGE>
Eric Wavre was appointed Executive Vice President and Chief Financial and
Administrative Officer-European Affairs of UniHolding as of June 1, 1995. Mr.
Wavre has been Executive Vice President and Chief Financial and Administrative
Officer of UGL from January 1994 to July 1996. He has been a Director of UGL
from April 1994 to July 1996. From 1978 to 1993, Eric Wavre held various
management positions at Swiss Bank Corporation in Geneva where he was first
hired as a lawyer in the Legal Department in 1978. He then joined the Domestic
Credit Department in 1981 and was appointed Senior Vice President in charge of
the Commercial Division in 1992, after having been the Senior Vice President at
the Luxembourg branch in charge of Logistic, Finance and Commerce Divisions from
1988 to 1990.
Melanie K. Stapp was General Counsel of UniHolding from May 1994 through
August 30, 1996. She was the Secretary of UniHolding from May 1994 to April
1996. Melanie Stapp served as the Manager of UniHolding for its U.S. operations
from August 1993 to May 1994. She was President, Secretary, Treasurer and
Director of Team International, Inc., a Massachusetts corporation from November
1993 to March 1994. Prior to August 1993, she obtained her Master of Law in
International Business and Finance from the University of London and her Juris
Doctor from Southern Methodist University. From June 1990 through August 1991,
Melanie Stapp was employed by the Federal Depository Insurance Corporation in
Dallas where she worked with fellow attorneys in numerous legal matters dealing
with state and federal laws and regulations.
Joseph Schuler was appointed as Executive Vice President and Chief
Operating Officer of ULSA in June 1994. From 1989 to 1994, Dr. Joseph Schuler
was Executive Vice President of Enzymlabor Dr. H. Weber AG, a laboratory owned
by ULSA. He was also the Department Chief of Hematology in the same such
laboratory from 1986 to 1989. Dr. Joseph Schuler has also previously worked as a
medical doctor in several Swiss hospitals.
Miguel Payro has been a Vice President in charge of the operations of UCLE
since 1994. From 1993 to 1994, he was a Vice President of ULSA. From 1991 to
1993, he was an officer at Holdings. From 1989 to 1991, Miguel Payro was
employed by Banque Paribas (Suisse) SA where he was a manager, active in mergers
and acquisitions and acquisition financing. From 1986 to 1988, he was Assistant
Vice President of Manufacturers Hanover (Suisse) SA in charge of the New Bond
Issue and Syndication Department.
Based solely upon the Company's review of the Forms 3 and 4, and any
amendments thereto, furnished to it during its most recent fiscal year and the
written representations from each of the person or entities required to file
such Forms, only Holdings was required to file a Form 5. Unilabs Holdings SA
filed two reports required by Section 16(a) of the Exchange Act late during the
most recent fiscal year.
III-3
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
From 1991 through April 1994, none of the Company's Directors or Executive
Officers were compensated for their services. At present, no Director of the
Company is compensated for his services to the Company in such capacity.
The following table sets forth the annual and long-term compensation paid
or accrued by the Company for services rendered in all capacities to UniHolding
and its subsidiaries during the last three years of those persons who were at
May 31, 1996, (i) the Chief Executive Officer of the Company and (ii) the other
three executive officers of the Company whose total annual salary and bonus for
the year ended May 31, 1996 exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE (1)
Long Term Compensation
Annual Compensation Awards
Name and
Principal Position Year Salary and Bonus($) Options(#)(6)
- ------------------ ---- -------------------- -------------
<S> <C> <C> <C>
Edgard Zwirn (2) 1996 $ 475,000 112,821
Chairman of the Board 1995 $ 470,000 50,000
1994 $ 428,000 -0-
Bruno Adam (3) 1996 $ 380,000 20,000
Director and CFO 1995 $ 354,000 10,000
1994 -0- -0-
Paul Hokfelt (4) 1996 $ 481,000 30,000
Chief Operating Officer 1995 $ 420,000 12,500
1994 $ 350,000 -0-
Eric Wavre (5) 1996 $ 406,000 20,000
Treasurer, CFO-Europe 1995 $ 414,000 2,500
1994 $ 350,000 -0-
</TABLE>
(1) Until May of 1996 and the date hereof, UniHolding did not compensate any of
its Directors or Executive Officers. All Directors and Executive Officers are
compensated by Company subsidiaries.
(2) Since the fiscal year 1994 Mr. Edgard Zwirn is compensated by the Company's
subsidiary, ULSA, through a Management Consulting Agreement providing for a
management fee of SFr 600,000 annually (approximately $475,000 as of May 31,
1996) paid to a company wholly-owned by Mr. Zwirn. The management contract
replaced his previous employment contract with ULSA.
(3) Mr. Bruno Adam began his employment with ULSA, a subsidiary company, in June
1994.
(4) During the years ended May 31, 1996 and 1995, Mr. Hokfelt was compensated by
ULSA and by ULL, whereas in the previous year, he was compensated by ULSA.
III-4
<PAGE>
(5) Mr. Eric Wavre began his employment with ULSA, a subsidiary company, in
January 1994
(6) The Company has granted such Options to such individuals on August 17, 1995,
and July 9, 1996, with such Options so granted not being exercisable until
February 17, 1997 and January 9, 1998, respectively.
Pension Benefits
Other than Mr. Edgard Zwirn, who is compensated through a management
contract with a company he owns, all of the named Executive Officers have
retirement benefits according to Swiss law. Under this system, amounts ranging
from 9% and 15% of each employee's compensation, depending on age and sex, is
deducted by the Company and paid to the Swiss social security and to each
employee's account in a fund managed by an independent insurance company, while
the Company contributes like amounts. In addition to the legally required plans,
the Company offers to its executive officers and other employees supplemental
retirement programs, based upon a defined contribution system. During the year
ended May 31, 1996, the Company's contribution to the supplemental retirement
programs of the named Executive Officers averaged approximately $30,000 for
each. Upon termination of employment contracts, the total employer contribution
may be transferred to new pension plans. Relative to its Executive Officers, the
Company has no other pension or retirement liability and has no unfunded
liability.
Employment Agreements
Mr. Bruno Adam's employment agreement does not contain any special clause
other than a notice period of 12 months by either party, with or without cause.
His agreement does not contain any provisions of mandatory bonus or additional
compensation based upon Company performance or results.
Mr. Paul Hokfelt's employment agreement does not contain any special
clause other than a notice period of 12 months by either party, with or without
cause. His agreement does not contain any provisions of mandatory bonus or
additional compensation based upon Company performance or results.
Mr. Eric Wavre's employment agreement does not contain any special clause
other than a notice period of 6 months by either party, with or without cause.
His agreement does not contain any provisions of mandatory bonus or additional
compensation based upon Company performance or results.
The Board of Directors of the Company may award bonuses or incentive pay
to employees during the year at their discretion.
During the year ended May 31, 1996, the Company made payments for
consultancy services to an individual related to Mr. Gherardi, a Director of the
Company. The Company paid SFr. 600,000 ($475,000) under this contract during the
year ended May 31, 1996.
III-5
<PAGE>
Stock Options
The Company amended its Stock Option Plan dated June 28, 1994 whereby
options may be granted to directors, key officers or management personnel of the
Company or any of its subsidiaries or affiliates. The aggregate number of shares
available for issuance under such Plan is 500,000 shares of the Company's common
stock each year. The Administrator, acting in agreement with a majority of the
Board, determines the number of shares which shall be subject to each Option,
the time or times when such Option(s) shall be granted, the exercise date(s) of
such Option(s), and the exercise price of each Option, but not less than 100% of
the fair market value of the common stock on the date of granting such Option.
This Plan will expire as of June 28, 2004.
On August 17, 1995, the Company implemented its amended Stock Option Plan
with the grant of 163,750 shares of common stock to certain of its personnel.
The options so granted are exercisable beginning in February 1997.
On July 9, 1996, a total of 357,142 additional options were granted. These
options are all exercisable beginning in January 1998.
The options granted by the Company to its Executive Officers named in the
Summary Compensation Table for the year ended May 31, 1996, are as follows:
<TABLE>
<CAPTION>
Option Grants for Last Fiscal Year
Executive Options Percent of Exercise Expiration Potential Potential
Name Granted Total Options or Base Date realization value realization value
Granted to Price at 5%($) at 10%($)
Employees
- ----------- --------- ----------- ---------- ----------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Edgard Zwirn 112,821 31% $ 16.00 6-28-2004 $ 576,121 $ 1,492,707
Bruno Adam 20,000 6% $ 16.00 6-28-2004 $ 102,130 $ 264,615
Paul Hokfelt 30,000 8% $ 16.00 6-28-2004 $ 153,195 $ 396,923
Eric Wavre 20,000 6% $ 16.00 6-28-2004 $ 102,130 $ 264,615
</TABLE>
In addition, on July 9, 1996, the Company granted Mr. Enrico Gherardi, a
Director, an option for 112,821 shares of common stock at a price of $ 16.00 per
share exercisable on or after January 9, 1998.
The aggregate number of options granted to date by the Company to the above
named executives are as follows:
Executive Name Fiscal Year 1995 Fiscal Year 1996 Aggregate Options
- -------------- ---------------- ---------------- -----------------
Edgard Zwirn 50,000 112,821 162,821
Bruno Adam 10,000 20,000 30,000
Paul Hokfelt 12,500 30,000 42,500
Eric Wavre 2,500 20,000 22,500
Enrico Gherardi 50,000 112,821 162,821
III-6
<PAGE>
The options granted in fiscal year 1995 will become exercisable on or
after February 17, 1997, while those issued in fiscal year 1996 will become
exercisable on or after January 9, 1998. None of the options granted are in the
money.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
DIRECTORS
As of September 13, 1996, there were issued and outstanding 6,455,502
shares of Common Stock, the only class of voting securities of the Company. Each
share of Common Stock entitles its holder to one vote, with the exception of
168,000 shares of Common Stock held in treasury by the Company, and 298,384
non-voting shares. Thus, the Company has 5,989,118 shares of Common Stock
presently with voting rights.
The following table sets forth, as of August 20, 1996, the name and
address of each person who is known to the Company to be the beneficial owner of
more than 5% of the Company's currently issued and outstanding Common Stock and
the amount and nature of beneficial ownership and percent of class owned by each
such person, as well as information with respect to the Company's Common Stock
owned beneficially by each director and by all directors and executive officers
as a group. Except as noted below, each person has full voting and investment
power over the shares indicated.
Name and Address Number of Percent of
of Beneficial Owner Outstanding Shares Class (1)(2)
------------------- ------------------- ------------
Unilabs Holdings SA 2,424,979 37.6%
53rd Street
Urbanizacion Obarrio Torre
Swiss Bank
Sixteenth Floor
Panama
Edgard Zwirn (3) 2,561,266 39.7%
28, Chemin Bellefontaine
1223 Cologny
Switzerland
All Officers and Directors 3,054,278 47.3%
as a group (4)
SBC Equity Partner
1, Europastrasse 298,384 voting 4.6%
8152 Opfikon 298,384 non-voting 4.6%
Switzerland
Morgan Stanley & Co. Inc. 333,333 5.2%
1585 Broadway
New York, New York 10036
III-7
<PAGE>
(1) Percent of Class is calculated by dividing the number of currently issued
and outstanding shares held by such beneficial owner by the total number of
currently issued and outstanding shares of the Company.
(2) The named beneficial owners have sole voting and investment power with
respect to the listed shares, except as otherwise indicated in the footnotes
below.
(3) Edgard Zwirn may be deemed to be the beneficial owner of 2,424,979 shares by
virtue of his position as Chairman of the Board of Unilabs Holdings SA, a
Switzerland corporation ("Swiss Holdings") which is the parent of Unilabs
Holdings SA (Panama). However, Mr. Zwirn disclaims beneficial ownership of such
shares except for 22.3% thereof, his proportionate ownership of Swiss Holdings
or 540,770 shares. He directly owns 136,287 shares of the Common Stock of the
Company. Mr. Zwirn has the right to acquire an additional 50,000 shares of
common stock pursuant to an option granted by the Company on August 17, 1995 and
exercisable in February 1997, and 112,821 shares of common stock pursuant to an
option granted by the Company on July 9, 1996 and exercisable in January 1998.
(4) Of the officers and directors as a group, Edgard Zwirn may be deemed to
beneficially own 2,561,266 shares of the Company's Common Stock. Enrico
Gherardi, a Director, is deemed to beneficially own 202,875 shares of the
Company's Common Stock. Mr. Gherardi has the right to acquire 50,000 shares of
common stock of the Company pursuant to an option granted by the Company on
August 17, 1995 and exercisable in February 1997, and 112,821 shares of common
stock pursuant to an option granted by the Company on July 9, 1996 and
exercisable in January 1998. On August 17, 1995, the Company granted options to
its executive officers totaling 27,500 shares of common stock of the Company
exercisable in February of 1997. On July 9, 1996, the Company granted options to
its executive officers totaling 70,000 shares of common stock of the Company
exercisable in January of 1998. Alessandra Van Gemerden, a Director, is deemed
to beneficially own 290,125 shares of the Company's Common Stock; however, Ms.
Van Gemerden disclaims beneficial ownership of such shares except for 90,125
thereof.
Three Swiss pension funds, Retraites Populaires, Caisse de Pensions de
l'Etat de Vaud and Caisse Intercommunale de Pensions, acquired 579,038 shares,
or approximately then 9.97% of the Company's common stock in 1994. However, no
one fund owns over 5% individually and each pension fund maintains its own
voting power and control.
III-8
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH RELATED PERSONS
The following sets forth certain relationships among beneficial
shareholders, executive officers and directors of the Company, in particular,
the relationship between Mr. Zwirn and Mr. Adam as Executive Officers and
Directors of UniHolding, Swiss Holdings and Holdings.
The acquisition of March 31, 1994, whereby the Company acquired 60% of
UGL and 100% of UCLE from Holdings with an option to purchase Holdings' majority
interests in its Italian and Spanish operating subsidiaries is considered a
related party transaction. Pursuant to the Acquisition Agreement, Holdings
assigned to the Company its rights and obligations under the Stockholders'
Agreement with Unilab concerning UGL. In connection with the acquisition of 40%
of UGL from Unilab on June 30, 1995, such Stockholders' Agreement was
terminated.
During fiscal 1994, UGL acquired some of the minority interests in ULSA
from Holdings through an offset of receivables from Holdings (aggregating
approximately $10 million) against payables to Holdings. UGL thereafter owned
86% of ULSA.
On June 22, 1994, the Board of Directors of the Company determined that
it would be in the best interest of the Company to accelerate the payment of the
$18 million Promissory Note (the "Note") to Holdings with shares of the
Company's common stock in lieu of cash. The terms of the Note required payment
of principal and interest (accruing at 5% per annum), in cash or shares, over
five years with the first installment being due March 31, 1995. Holdings
accepted early payment of the Note in shares of the Company's common stock in
lieu of cash. Further, Holdings agreed that such payment would be calculated on
the basis of $5.50 per share (pre reverse split). Accordingly, the Company
issued 3,310,455 (pre reverse split) shares of common stock valued at $5.50 (pre
reverse split) per share to Holdings (equivalent to the principal and accrued
interest of $18,207,500 as of June 22, 1994) in consideration for the
cancellation of the Note.
During the year ended May 31, 1995, the Company acquired from Holdings (a)
186 additional shares of ULSA for a consideration of $1,800,000 paid in cash,
and (b) the Italian and Spanish laboratory operations for a consideration of
$7,342,000 represented by two promissory notes subsequently offset against
advances.
ULSA previously entered into a Cooperation Agreement dated March 25, 1992
with Holdings covering (i) the use of the Unilabs logo and provision of
financial and market research advisory services to ULSA ("General Services") and
(ii) mergers and acquisitions advisory services. The agreement, which expired on
May 31, 1996, provides for an annual General Services fee of $238,000 payable by
ULSA. The Cooperation Agreement was assigned to and assumed by UniHolding
pursuant to the Acquisition Agreement. Holdings also billed ULSA an additional
$355,000 for general and administrative expenses and $282,000 as a finders fee
in relation to the acquisition of JSP during fiscal year 1994. The Company also
billed Holdings $387,000 relating to laboratory management and consulting
services in fiscal 1994. The management fees paid to Holdings by the Company
provided for, among other things, the services of Mr. Bruno Adam up to May 31,
1994.
In December 1993, the Company extended a loan of approximately $2.9
million to Holdings bearing interest at an annual rate of 3.375% which was
subsequently canceled by the Company on March 31, 1994, in partial consideration
for the acquisition of the European clinical testing companies.
III-9
<PAGE>
Edgard Zwirn, as CEO of the Company, is compensated for his services
through and pursuant to a Management Consulting Agreement between a subsidiary
of the Company, ULSA, and Maruca SA, a company which is wholly-owned by Mr.
Zwirn. The agreement requires an annual payment of SFr 600,000 ($476,000 as of
May 31, 1996) for a term of five years which commenced as of June 1, 1993.
During the year ended May 31, 1995, the Company entered into a management
services contract with a company which is affiliated with Mr. Gherardi, a
Director of the Company. The Company paid SFr. 600,000 ($470,000) under this
contract during the year ended May 31, 1995. As of May 31, 1995, the contract
was terminated. During the year ended May 31, 1996, the Company made payments
for consultancy services to an individual related to Mr. Gherardi, a Director of
the Company. The Company paid SFr. 600,000 ($507,000) under this contract during
the year ended May 31, 1996.
During the year ended May 31, 1996, UniHolding acquired 155,000 shares of
UniHolding's common stock from Holdings for $2,900,000, the fair market value of
such shares which was less than the cost of such shares to Holdings. The Company
also purchased 13,000 shares of UniHolding's common stock for $217,000.
On September 14, 1995, UGL entered into an agreement with HSL, a company
which may be deemed to be related to the Company for the reasons mentioned
below, and which the Company believes may be deemed to be controlled by a
director of Unilab, whereby a new company, MISE S.A. (a British Virgin Islands
corporation, "MISE") was formed. UGL invested $3,005,000 in MISE for 33.3% of
the voting rights and for 66.6% of the equity in MISE stock of which $2,005,000
was paid during the year ended May 31, 1996, and the balance is payable in two
installments of $500,000 each in September 1996 and 1997. HSL owns the remaining
voting and equity interests in MISE for which it contributed a nominal amount of
cash and its agreement to obtain for MISE certain know-how and related software
and services. MISE then acquired for $1,500,000 certain know-how and computer
software from HSL, which know-how and software were simultaneously acquired for
$250,000 by HSL from MDM, which may be deemed to be related to HSL, and, for the
reasons mentioned below, may also be deemed to be related to the Company.
Further, MISE committed to pay HSL a total of $1,500,000 for certain plans for
marketing the know-how and software in several European countries. Out of such
amount, $500,000 was paid during the year ended May 31, 1996, and the balance is
payable in two installments of $500,000 each in October 1996 and 1997. The fee
agreed for the marketing plans also includes support services and customization
to European needs. Based upon MDM's representations, MDM's board of directors
include two directors or officers of Unilab. Unilab may be deemed to be a
related party of the Company by virtue of the $15,000,000 note due to Unilab in
connection with the acquisition of Unilab's 40% investment in UGL on June 30,
1995, which note may under certain circumstances be converted by Unilab into
UniHolding Common Stock. None of those two directors or officers of Unilab are
directors or officers of UniHolding, and no director or officer of UniHolding
has any direct or indirect interest in either of HSL or MDM. The acquisition
value of the know-how was determined on MISE's behalf through negotiations
between the Company and a director of MDM who is also a director of Unilab, and
was agreed upon by the UGL and UniHolding boards of directors. The director of
Unilab is HSL's designee to the board of directors of MISE.
Following is a list of entities which are affiliated with the Company:
Holdings. Swiss Holdings owns 100% of Holdings. Edgard Zwirn is Chairman.
Bruno Adam is Director, Secretary and Chief Financial Officer of Holdings. On
May 31, 1996, the Company has an intercompany receivable of $4.7 million due
from Holdings.
Swiss Holdings. Edgard Zwirn is Chairman of the Board of Directors of
Swiss Holdings and, together with certain members of his immediate family, he
owns 22.3% of the voting and equity interests in Swiss Holdings. Bruno Adam is
Executive Vice President and Chief Financial Officer of Swiss Holdings.
III-10
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
Page No.
FINANCIAL STATEMENTS AND SCHEDULES:
1. Financial Statements - See Index to Financial Statements
at ITEM 8............................................. II-F-1
2. Financial Statement Schedule will be filed as an
amendment to the Annual Report within 5 days.
An Independent Auditor's Report will accompany the
above amendment to the Annual Report not later than
5 days.
EXHIBITS:
The information required pursuant to Item 601 of Regulation
S-K is incorporated by reference to the Exhibit Index of this
report....................................................... IV-3
REPORTS ON FORM 8-K:
1. Current Report on Form 8-K dated August 3, 1995
Reporting on Item 5
IV-1
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Tab No.
2.1 NDA Clinical Trial Services Inc. Stock 2
Purchase Agreement, dated as of September
27, 1995
2.2 Cancellation of Option Agreement between 2
NDA Clinical Trial Services Inc. and
UniHolding Corp. dated as of September
27, 1995, and of UCT Option Agreement
between NDA Clinical Trial Services Inc.
and Others and Unilabs Clinical Trials
Ltd. and UniHolding Corp. dated as of
September 27, 1995
2.3 Share Exchange Agreement by and between 2
UniHolding Corporation and Global Unilabs
Clinical Trials Ltd.
2.4 Assignment of GUCT Share Interests 2
3.1 Amended Certificate of Incorporation of 3
UniHolding Corporation (filed in paper
under Form SE)
3.2 Bylaws of UniHolding Corporation 3
10.1 Memorandum of Agreement between Health 10
Strategies Ltd. and Unilabs Group Ltd.
10.2 Stock Purchase Agreement between 10
UniHolding Corporation and Unilabs
Holdings SA
10.3 Amended Stock Option Plan 10
21 Subsidiaries of Registrant 21
27 Financial Data Schedule 27
IV-2
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
UniHolding Corporation
Date: 9-30-96 By: /s/ Bruno Adam
Bruno Adam
Treasurer/CFO
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
By: /s/ Edgard Zwirn Date: 9-30-96
Edgard Zwirn
CEO and Director
By: /s/ Bruno Adam Date: 9-30-96
Bruno Adam
CFO, Treasurer and Director
By: /s/ Enrico Gherardi Date: 9-30-96
Enrico Gherardi
Director and Secretary
By: /s/ Alessandra Van Gemerden Date: 9-30-96
Director
By: /s/ Tobias Fenster Date: 9-30-96
Director
IV-3
<PAGE>
NDA CLINICAL TRIAL SERVICES INC.
STOCK PURCHASE AGREEMENT
Dated as of September 27, 1995
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
THE SHARES
1.1. Issuance, Sale and Delivery of the Shares........................5
1.2. The Closing......................................................5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1. Organization, Qualifications and Corporate Power.................6
2.2. Authorization of Agreements, etc.................................6
2.3. Validity.........................................................7
2.4. Authorized Capital Stock.........................................7
2.5. Financial Statements.............................................8
2.6. Events Subsequent to the Date of the Balance Sheet...............9
2.7. Litigation; Compliance with Law..................................9
2.8. Proprietary Information of Third Parties........................10
2.9. Title to Properties.............................................10
2.10. Leasehold Interests.............................................11
2.11. Insurance.......................................................11
2.12. Taxes...........................................................11
2.13. Other Agreements................................................12
2.14. Patents, Trademarks, etc........................................14
2.15. Loans and Advances..............................................14
2.16. Assumptions, Guaranties, etc. of Indebtedness
of Other Persons..............................................15
2.17. Significant Customers and Suppliers.............................15
2.18. Governmental Approvals..........................................15
2.19. Disclosure......................................................15
2.20. Offering of the Shares..........................................15
2.21. Brokers.........................................................16
2.22. Officers........................................................16
2.23. Transactions With Affiliates....................................16
2.24. Employees.......................................................16
2.25. Updating........................................................17
2
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF UNIHOLDING
3.1. UniHolding Representations......................................17
ARTICLE IV
CONDITIONS TO THE OBLIGATIONS OF UNIHOLDING
4.1. UniHolding Closing Conditions...................................17
ARTICLE IV-A
CONDITIONS TO THE OBLIGATIONS OF NDA
4A.1. NDA Closing Conditions..........................................20
ARTICLE V
COVENANTS OF NDA
5.1. Financial Statements, Reports, etc..............................21
5.2. Right of First Refusal..........................................23
5.3. Corporate Existence.............................................24
5.4. Properties, Business, Insurance.................................24
5.5. Inspection, Consultation and Advice.............................25
5.6. Restrictive Agreements Prohibited...............................25
5.7. Transactions with Affiliates....................................25
5.8. Expenses of Directors...........................................25
5.9. Use of Proceeds.................................................25
5.10. Board of Directors Meetings.....................................26
5.11. Budget and Operating Forecast...................................26
5.12. Compensation....................................................26
5.13. By-laws.........................................................26
5.14. Employee Agreements.............................................26
5.15. Maintenance of Ownership of Subsidiaries........................27
5.16. Compliance with Laws............................................27
5.17. Keeping of Records and Books of Account.........................27
5.18. Obligations and Taxes...........................................27
5.19. Indemnification.................................................27
5.20. Corporate Actions...............................................28
3
<PAGE>
ARTICLE VI
MISCELLANEOUS
6.1. Expenses........................................................29
6.2. Survival of Agreements..........................................29
6.3. Brokerage.......................................................29
6.4. Parties in Interest.............................................29
6.5. Notices.........................................................30
6.6. Governing Law...................................................30
6.7. Entire Agreement................................................30
6.8. Counterparts....................................................30
6.9. Amendments......................................................31
6.10. Severability....................................................31
6.11. Titles and Subtitles............................................31
6.12. Certain Defined Terms...........................................31
INDEX TO SCHEDULES
SCHEDULE 2.4 Security Holders
SCHEDULE 2.6 Events Subsequent
SCHEDULE 2.10 Leasehold Interests
SCHEDULE 2.13
(A) and (B) Material Agreements
SCHEDULE 2.14 Intellectual Property
SCHEDULE 2.15 Loans and Advances
SCHEDULE 2.22 Officers
SCHEDULE 2.23 Affiliate Transactions
SCHEDULE 5.9 Use of Proceeds
INDEX TO EXHIBITS
EXHIBIT A Registration Rights Agreement, as amended
EXHIBIT B Stockholders' Agreement, as amended
EXHIBIT C Charter Documents
EXHIBIT D Form of Employee Non-Disclosure, Non-Competition
and Inventions Agreement, together with Sales
Incentive Riders
4
<PAGE>
STOCK PURCHASE AGREEMENT dated as of September 27, 1995 between NDA
Clinical Trial Services Inc., a Delaware corporation, with its principal place
of business at 260 Smith Street, Farmingdale, New York 11735 ("NDA" or the
"Company") and UniHolding Corp., a Delaware corporation, with its principal
place of business at 96 Spring Street, New York, New York, 10012 ("UniHolding").
WHEREAS, the Company wishes to issue and sell to UniHolding (i) 8,932
shares ("Shares") of the authorized but unissued Class A Common Stock, $.01 par
value (the "Common Stock"), of the Company for a purchase price of $133.00 per
share (the "Purchase Price"); and (ii) the Option as defined in that certain
Option Agreement of even date herewith executed between the parties ("Option
Agreement"); and
WHEREAS, UniHolding wishes (i) to purchase the Shares on the terms and
subject to the conditions set forth in this Agreement and (ii) to purchase the
Option on the terms and conditions set forth in the Option Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, the parties agree as follows:
ARTICLE I
THE SHARES
SECTION 1.1. Issuance, Sale and Delivery of the Shares. Subject to the
terms and conditions of this Agreement, at the Closing, NDA will issue and sell
to UniHolding, and UniHolding will purchase the Shares for the Purchase Price.
SECTION 1.2. The Closing. The closing ("Closing") shall take place at the
offices of Meltzer, Lippe, Goldstein, Wolf, Schlissel & Sazer, P.C., 190 Willis
Avenue, Mineola, New York, 11501 on October 8, 1995 at 10:00 a.m. or at such
other time and date mutually agreeable to NDA and counsel to UniHolding, but in
no event later than October 15, 1995 ("Closing Date"). At the Closing, NDA will
deliver to UniHolding a certificate for the Shares being purchased by
UniHolding, registered in the name of UniHolding, against payment to NDA of the
Purchase Price, by wire transfer, check or other method acceptable to the
Company. It is understood and agreed that UniHolding will pay 10% of the
Purchase Price upon execution of this Agreement. If at the Closing any of the
conditions specified in Article IV shall not have been fulfilled, UniHolding
shall, at its election, be relieved of all of its obligations under this
Agreement, the Option Agreement and the UCT
5
<PAGE>
Option Agreement (as hereinafter defined) without thereby waiving any other
rights it may have by reason of such failure or such non-fulfillment. If at the
Closing any of the conditions specified in Article IV-A shall not have been
fulfilled, NDA shall, at its election, be relieved of all of its obligations
under this Agreement, the Option Agreement and the UCT Option Agreement (as
hereinafter defined) without thereby waiving any other rights it may have by
reason of such failure or such non-fulfillment.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As of the execution of this Agreement and at the Closing Date, NDA
represents and warrants to UniHolding that, except as set forth in any Schedule
attached hereto:
SECTION 2.1. Organization, Qualifications and Corporate Power. (a) NDA is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and is duly licensed or qualified to transact
business as a foreign corporation and is in good standing in each jurisdiction
in which the nature of the business transacted by it or the character of the
properties owned or leased by it requires such licensing or qualification. NDA
has the corporate power and authority to own and hold its properties and to
carry on its business as now conducted and as proposed to be conducted, to
execute, deliver and perform this Agreement, the Registration Rights Agreement
dated December 15, 1994, as amended, in the form attached as Exhibit A (the
"Registration Rights Agreement"), the Stockholders' Agreement dated December 15,
1994, as amended, in the form attached as Exhibit B (the "Stockholders'
Agreement") and the Option Agreement, and to issue, sell and deliver the Shares.
(b) NDA does not (i) own of record or beneficially, directly or indirectly,
(A) any shares of capital stock or securities convertible into capital stock of
any other corporation or (B) any participating interest in any partnership,
joint venture or other non-corporate business enterprise or (ii) control,
directly or indirectly, any other entity.
SECTION 2.2. Authorization of Agreements, etc. (a) The execution and
delivery by NDA of this Agreement, the Option Agreement, the Registration Rights
Agreement and the Stockholders' Agreement, the performance by NDA of its
obligations hereunder and thereunder, and the issuance, sale and delivery of the
Shares and the Option have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any court or
other agency of government, the Certificate of
6
<PAGE>
Incorporation of NDA or the By-laws of NDA, as amended (the "Charter
Documents"), which are attached as Exhibit C, or any provision of any indenture,
agreement or other instrument to which NDA, or its properties or assets is
bound, or conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any such indenture, agreement or other
instrument, or result in the creation or imposition of any lien, charge,
restriction, claim or encumbrance of any nature whatsoever upon any of the
properties or assets of NDA or any of its subsidiaries.
(b) NDA has secured any required waivers and consents from its stockholders
in connection with the execution and delivery by NDA of this Agreement and the
Option Agreement and the performance by NDA of its obligations hereunder and
thereunder, including but not limited to, the delivery of all shares of Common
Stock issuable to UniHolding under this Agreement and the Option Agreement free
of any preemptive rights of any stockholders of NDA. Notwithstanding the
foregoing, it is agreed and acknowledged by NDA and UniHolding that the addition
of a sixth director which will be a nominee of Uniholding as provided in the
Stockholders' Agreement (as amended contemporaneously herewith) will require an
amendment to NDA's Certificate of Incorporation which will be effected by NDA
within 30 days of the Closing.
(c) The Shares have been duly authorized and, when issued in accordance
with this Agreement and the Charter Documents will be validly issued, fully paid
and nonassessable with no personal liability attaching to the ownership thereof
and will be free and clear of all liens, charges, restrictions, claims and
encumbrances except as set forth in the Stockholders Agreement and the
Registration Rights Agreement. The issuance, sale and delivery of the Common
Stock is not subject to any preemptive right of stockholders of NDA or to any
right of first refusal or other right in favor of any person that has not been
waived to the extent necessary to permit the transactions contemplated by this
Agreement to occur. The shares of Common Stock issuable pursuant to the Option
will, upon issuance, be duly authorized, validly issued, fully paid and
non-assessable, free of any preemptive right and right of first refusal or any
other lien or encumbrance.
SECTION 2.3. Validity. Each of the Agreement, the Option Agreement, the
Registration Rights Agreement and the Stockholders' Agreement has been duly
executed and delivered by NDA and constitutes the legal, valid and binding
obligation of NDA, enforceable in accordance with its respective terms.
SECTION 2.4. Authorized Capital Stock. The authorized capital stock of NDA
consists of 500,000 shares of Common Stock, of which 40,518 shares are issued
and outstanding and 50,000 shares of Class
7
<PAGE>
B Non-Voting common stock ("Class B Stock") of which 2,280 shares are issued and
outstanding. In addition, options to purchase 775 shares have been granted and
an additional 2,525 shares of Common Stock are reserved for issuance to
management employees of the Company, all pursuant to the Company's 1994 Stock
Incentive Plan (the "Stock Option Plan"). The stockholders of record and holders
of subscriptions, warrants, options, convertible securities and other rights
(contingent or other) to purchase or otherwise acquire equity securities of NDA
and the number of shares of Common Stock and Class B Stock and the number of
such subscriptions, warrants, options, convertible securities, and other such
rights held by each, are as set forth in the attached Schedule 2.4. Except as
set forth in the attached Schedule 2.4, Schedule 2.6, this Agreement and the
Option Agreement, (i) no person owns of record or is known to NDA to own
beneficially any shares of Common Stock or Class B Stock, (ii) no subscription,
warrant, option, convertible security or other right (contingent or other) to
purchase or otherwise acquire equity securities of NDA is authorized or
outstanding and (iii) there is no commitment by NDA to issue shares,
subscriptions, warrants, options, convertible securities or other such rights or
to distribute to holders of any of its equity securities any evidence of
indebtedness or asset. Except as provided for in the Charter Documents or as set
forth in the attached Schedule 2.6, NDA has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its equity securities
or any interest therein or to pay any dividend or make any other distribution in
respect thereof. Other than (i) the Stockholders' Agreement and (ii) as set
forth on Schedule 2.6 hereof, there are, to the best of NDA's knowledge, no
voting trusts or agreements, stockholders' agreements, pledge agreements,
buy-sell agreements, rights of first refusal, preemptive rights or proxies
relating to any securities of NDA (whether or not NDA is a party thereto). All
of the outstanding securities of NDA were issued in compliance with all
applicable Federal and state securities laws.
SECTION 2.5. Financial Statements. NDA has furnished to UniHolding the
unaudited balance sheet of NDA as of December 31, 1993 and the audited balance
sheet of NDA as of December 31, 1994 and the related statements of income,
stockholders equity and cash flows of NDA for the years ended December 31, 1993
and 1994 (unaudited for 1993 and audited for 1994). NDA has also furnished to
UniHolding its interim unaudited income statement and balance sheet for the six
months ended June 30, 1995. All such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
and fairly present the consolidated financial position of NDA at the dates and
for the periods to which they relate. Since the June 30, 1995 balance sheet, (i)
there has been no change in the assets, liabilities or financial condition of
NDA from that reflected in such balance sheet except for changes in the ordinary
course of business which
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in the aggregate have not been materially adverse and (ii) none of the business,
prospects, financial condition, operations, property or affairs of NDA has been
materially adversely affected by any occurrence or development, individually or
in the aggregate, whether or not insured against.
SECTION 2.6. Events Subsequent to the Date of the Balance Sheet. Since the
June 30, 1995 balance sheet, NDA has not (i) except as set forth in the attached
Schedule 2.6, issued any stock, bond or other corporate security, (ii) borrowed
any amount or incurred or become subject to any liability (absolute, accrued or
contingent), except current liabilities incurred and liabilities under contracts
entered into in the ordinary course of business, (iii) discharged or satisfied
any lien or encumbrance or incurred or paid any obligation or liability
(absolute, accrued or contingent) other than current liabilities shown on the
June 30, 1995 balance sheet and current liabilities incurred since the date of
such balance sheet in the ordinary course of business, (iv) declared or made any
payment or distribution to stockholders or purchased or redeemed any share of
its capital stock or other security, (v) mortgaged, pledged or subjected to lien
any of its assets, tangible or intangible, other than liens of current real
property taxes not yet due and payable, (vi) sold, assigned or transferred any
of its tangible assets except in the ordinary course of business, or cancelled
any debt or claim, (vii) sold, assigned, transferred or granted any exclusive
license with respect to any patent, trademark, trade name, service mark,
copyright, trade secret or other intangible asset, (viii) suffered any loss of
property or waived any right of substantial value whether or not in the ordinary
course of business, (ix) made any change in officer compensation except in the
ordinary course of business and consistent with past practice, (x) made any
material change in the manner of business or operations of NDA, (xi) entered
into any transaction except in the ordinary course of business or as otherwise
contemplated hereby or (xii) entered into any commitment (contingent or
otherwise) to do any of the foregoing.
SECTION 2.7. Litigation; Compliance with Law. NDA is not aware of any (i)
action, suit, claim, proceeding or investigation pending or threatened against
or affecting NDA, at law or in equity, or before or by any Federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) arbitration proceeding relating to
NDA pending under collective bargaining agreements or otherwise or (iii)
governmental inquiry pending or, to the best of NDA's knowledge, threatened
against or affecting NDA (including, without limitation, any inquiry as to the
qualification of NDA to hold or receive any license or permit). NDA has not
received any opinion or memorandum or legal advice from legal counsel to the
effect that it is exposed, from a legal standpoint, to any
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liability or disadvantage which may be material to its business, prospects,
financial condition, operations, property or affairs. NDA is not in default with
respect to any order, writ, injunction or decree known to or served upon NDA of
any court or of any Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign. There
is no action or suit by NDA pending or threatened against others. NDA has
complied with all laws, rules, regulations and orders applicable to its
business, operations, properties, assets, products and services, and NDA has all
necessary permits, licenses and other authorizations required to conduct its
business as conducted and as proposed to be conducted. There is no existing law,
rule, regulation or order, and NDA after due inquiry is not aware of any
proposed law, rule, regulation or order, whether Federal or state, which would
prohibit or restrict NDA from, or otherwise materially adversely affect NDA in,
conducting its business in any jurisdiction in which it is now conducting
business or in which it proposes to conduct business.
SECTION 2.8. Proprietary Information of Third Parties. To the best of NDA's
knowledge, no third party has claimed or has reason to claim that any person
employed by or affiliated with NDA has (a) violated or may be violating any of
the terms or conditions of his employment, non-competition or non-disclosure
agreement with such third party, (b) disclosed or may be disclosing or utilized
or may be utilizing any trade secret or proprietary information or documentation
of such third party or (c) interfered or may be interfering in the employment
relationship between such third party and any of its present or former
employees. No third party has requested information from NDA which suggests that
such a claim might be contemplated. To the best of NDA's knowledge, no person
employed by or affiliated with NDA has employed or proposes to employ any trade
secret or any information or documentation proprietary to any former employer,
and to the best of NDA's knowledge, no person employed by or affiliated with NDA
has violated any confidential relationship which such person may have had with
any third party, in connection with the development, manufacture or sale of any
product or proposed product or the development or sale of any service or
proposed service of NDA, and NDA has no reason to believe there will be any such
employment or violation. To the best of NDA's knowledge, none of the execution
or delivery of this Agreement, the Option Agreement, the Registration Rights
Agreement and the Stockholders' Agreement, or the carrying on of the business of
NDA as officers, employees or agents by any officer, director or key employee of
NDA, or the conduct or proposed conduct of the business of NDA, will conflict
with or result in a breach of the terms, conditions or provisions of or
constitute a default under any contract, covenant or instrument under which any
such person is obligated.
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SECTION 2.9. Title to Properties. NDA has good and marketable title to its
properties and assets reflected on the June 30, 1995 balance sheet or acquired
by it since the date of said balance sheet (other than properties and assets
disposed of in the ordinary course of business since the date of said balance
sheet), and all such properties and assets are free and clear of mortgages,
pledges, security interests, liens, charges, claims, restrictions and other
encumbrances, except for liens for or current taxes not yet due and payable.
SECTION 2.10. Leasehold Interests. Except as set forth in Schedule 2.10,
(i) each lease or agreement to which NDA is a party under which it is a lessee
of any property, real or personal, is a valid and subsisting agreement without
any default of NDA thereunder and, to the best of NDA's knowledge, without any
default thereunder of any other party thereto; (ii) no event has occurred and is
continuing which, with due notice or lapse of time or both, would constitute a
default or event of default by NDA under any such lease or agreement or, to the
best of NDA's knowledge, by any other party thereto; and (iii) NDA's possession
of such property has not been disturbed and, to the best of NDA's knowledge, no
claim has been asserted against NDA adverse to its rights in such leasehold
interests.
SECTION 2.11. Insurance. NDA holds valid policies covering all of the
insurance required to be maintained by it under Section 5.4.
SECTION 2.12. Taxes. NDA has filed all tax returns, Federal, state, county
and local, required to be filed by it, and NDA has paid all taxes shown to be
due by such returns as well as all other taxes, assessments and governmental
charges which have become due or payable, including, without limitation, all
taxes which NDA is obligated to withhold from amounts owing to employees,
creditors and third parties. All such taxes with respect to which NDA has become
obligated pursuant to elections made by NDA in accordance with generally
accepted practice have been paid and adequate reserves have been established for
all taxes accrued but not yet payable. The Federal income tax returns of NDA
have never been audited by the Internal Revenue Service. No deficiency
assessment with respect to or proposed adjustment of NDA's Federal, state,
county or local taxes is pending or, to the best of NDA's knowledge, threatened.
There is no tax lien, whether imposed by any Federal, state, county or local
taxing authority, outstanding against the assets, properties or business of NDA.
NDA is a C corporation. Neither NDA nor any of its stockholders has ever filed a
consent pursuant to Section 341(f) of the Internal Revenue Code of 1986, as
amended (the "Code"), relating to collapsible corporations. NDA's net operating
losses for Federal income tax purposes, as set forth in the financial statements
referred to in
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Section 2.5, are not subject to any limitations imposed by Section 382 of the
Code and the full amount of such net operating losses are available to offset
the taxable income of NDA for the current fiscal year and, to the extent not so
used, succeeding fiscal years. Consummation of the transactions contemplated by
this Agreement or by any other agreement, understanding or commitment
(contingent or otherwise) to which NDA is a party or by which it is otherwise
bound will not have the effect of limiting NDA's ability to use such net
operating losses in full to offset such taxable income.
SECTION 2.13. Other Agreements. Except as set forth in the attached
Schedule 2.13(A), NDA is not a party to or otherwise bound by any written or
oral contract or instrument or other restriction which individually or in the
aggregate could materially adversely affect the business, prospects, financial
condition, operations, property or affairs of NDA. Except as set forth in the
attached Schedule 2.13(B), Schedule 2.6 and Schedule 2.15, NDA is not a party to
or otherwise bound by any written or oral:
(a) distributor, dealer, manufacturer's representative or sales agency
contract or similar agreement which is not terminable on less than ninety (90)
days' notice without cost or other liability to NDA;
(b) sales contract which entitles any customer to a rebate or right of
set-off, to return any product to NDA after acceptance thereof or to delay the
acceptance thereof, or which varies in any material respect from NDA's standard
form contracts;
(c) contract with any labor union (and, to the knowledge of NDA, no
organizational effort is being made with respect to any of its employees);
(d) contract or other commitment with any supplier containing any provision
permitting any party other than NDA to renegotiate the price or other terms, or
containing any pay-back or other similar provision, upon the occurrence of a
failure by NDA to meet its obligations under the contract when due or the
occurrence of any other event;
(e) contract for the future purchase of fixed assets or for the future
purchase of materials, supplies or equipment in excess of its normal operating
requirements;
(f) contract for the employment of any officer, employee or other person
(whether of a legally binding nature or in the nature of informal
understandings) on a full-time or consulting basis which is not terminable on
notice without cost or other liability
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to NDA, except normal severance arrangements and accrued vacation pay;
(g) bonus, pension, profit-sharing, retirement, hospitalization, insurance,
stock purchase, stock option or other plan, contract or understanding pursuant
to which benefits are provided to any employee of NDA (other than group
insurance plans applicable to employees generally);
(h) agreement or indenture relating to the borrowing of money or to the
mortgaging or pledging of, or otherwise placing a lien or security interest on,
any asset of NDA;
(i) guaranty of any obligation for borrowed money or otherwise;
(j) voting trust or agreement, stockholders agreement, pledge agreement,
buy-sell agreement or first refusal or preemptive rights agreement relating to
any securities of NDA;
(k) agreement, or group of related agreements with the same party or any
group of affiliated parties, under which NDA has advanced or agreed to advance
money or has agreed to lease any property as lessee or lessor;
(l) agreement or obligation (contingent or otherwise) to issue, sell or
otherwise distribute or to repurchase or otherwise acquire or retire any share
of its capital stock or any of its other equity securities;
(m) assignment, license or other agreement with respect to any form of
intangible property;
(n) agreement under which it has granted any person any registration
rights, other than the Registration Rights Agreement;
(o) agreement under which it has limited or restricted its right to compete
with any person in any respect;
(p) other contract or group of related contracts with the same party
involving more than $10,000 or continuing over a period of more than six months
from the date or dates thereof (including renewals or extensions optional with
another party), which contract or group of contracts is not terminable by NDA
without penalty upon notice of thirty (30) days or less, but excluding any
contract or group of contracts with a customer of NDA for the sale, lease or
rental of NDA's products or services if such contract or group of contracts was
entered into by NDA in the ordinary course of business; or
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(q) other contract, instrument, commitment, plan or arrangement, a copy of
which would be required to be filed with the Securities and Exchange Commission
(the "Commission") as an exhibit to a registration statement on Form S-1 if NDA
were registering securities under the Securities Act of 1933, as amended (the
"Securities Act").
NDA, and to the best of NDA's knowledge, each other party thereto have in all
material respects performed all obligations required to be performed by them to
date, have received no notice of default and are not in default (with due notice
or lapse of time or both) under any lease, agreement or contract now in effect
to which NDA is a party or by which it or its property may be bound. NDA has no
present expectation or intention of not fully performing all its obligations
under each such lease, contract or other agreement, and NDA has no knowledge of
any breach or anticipated breach of the other party to any contract or
commitment to which NDA is a party. NDA is in full compliance with all of the
terms and provisions of its Certificate of Incorporation and By-laws, as
amended.
SECTION 2.14. Patents, Trademarks, etc. Set forth in Schedule 2.14 is a
list and brief description of all patents, patent rights, patent applications,
trademarks, trademark applications, service marks, service mark applications,
trade names and copyrights, and all applications for such which are in the
process of being prepared, owned by or registered in the name of NDA, or of
which NDA is a licensor or licensee or in which NDA has any right, and in each
case a brief description of the nature of such right. NDA owns or possesses
adequate licenses or other rights to use all patents, patent applications,
trademarks, trademark applications, service marks, service mark applications,
trade names, copyrights, manufacturing processes, formulae, trade secrets and
know-how (collectively, "Intellectual Property") necessary or desirable to the
conduct of its business as conducted and as proposed to be conducted, and no
claim is pending or, to the best of NDA's knowledge, threatened to the effect
that the operations of NDA infringe upon or conflict with the asserted rights of
any other person under any Intellectual Property, and there is no basis for any
such claim (whether or not pending or threatened). To the best of NDA's
knowledge, no claim is pending or threatened to the effect that any such
Intellectual Property owned or licensed by NDA, or which NDA otherwise has the
right to use, is invalid or unenforceable by NDA, and there is no basis for any
such claim (whether or not pending or threatened). To the best of NDA's
knowledge, all technical information developed by and belonging to NDA which has
not been patented has been kept confidential. NDA has not granted or assigned to
any other person or entity any right to manufacture, have manufactured, assemble
or sell the products or proposed products or to provide the services or proposed
services of NDA, except to UniHolding and its related companies.
SECTION 2.15. Loans and Advances. Other than as set forth on Schedule 2.15,
NDA does not have any outstanding loans or advances to any person and is not
obligated to make any such loans or advances, except, in each case, for advances
to employees of NDA in respect of reimbursable business expenses anticipated to
be incurred by them in connection with their performance of services for NDA.
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SECTION 2.16. Assumptions, Guaranties, etc. of Indebtedness of Other
Persons. NDA has not assumed, guaranteed, endorsed or otherwise become directly
or contingently liable on any indebtedness of any other person (including,
without limitation, liability by way of agreement, contingent or otherwise, to
purchase, to provide funds for payment, to supply funds to or otherwise invest
in a debtor, or otherwise to assure a creditor against loss), except for
guaranties by endorsement of negotiable instruments for deposit or collection in
the ordinary course of business.
SECTION 2.17. Significant Customers and Suppliers. No customer or supplier
which was significant to NDA during the period covered by the financial
statements referred to in Section 2.5 or which has been significant to NDA
thereafter, has terminated, materially reduced or threatened to terminate or
materially reduce its purchases from or provision of products or services to
NDA, as the case may be.
SECTION 2.18. Governmental Approvals. Subject to the accuracy of the
representations and warranties of UniHolding set forth in Article III, no
registration or filing with, or consent or approval of or other action by, any
Federal, state or other governmental agency or instrumentality is or will be
necessary for the valid execution, delivery and performance by NDA of this
Agreement, the Option Agreement, the Registration Rights Agreement or the
Stockholders' Agreement, the issuance, sale and delivery of the Shares, other
than (i) filings pursuant to state securities laws (all of which filings have
been made by NDA) in connection with the sale of the Shares and (ii) with
respect to the Registration Rights Agreement, the registration of the shares
covered thereby with the Commission and filings pursuant to state securities
laws.
SECTION 2.19. Disclosure. Neither this Agreement, nor any Schedule or
Exhibit to this Agreement, contains an untrue statement of a material fact or
omits a material fact necessary to make the statements contained herein or
therein not misleading. None of the statements, documents, certificates or other
items prepared or supplied by NDA with respect to the transactions contemplated
hereby contains an untrue statement of a material fact or omits a material fact
necessary to make the statements contained therein not misleading. There is no
fact which NDA has not disclosed to UniHolding and its counsel in writing and of
which NDA is aware which materially and adversely affects or could materially
and adversely affect the business, prospects, financial condition, operations,
property or affairs of NDA.
SECTION 2.20. Offering of the Shares. Neither NDA nor any person acting on
its behalf has taken or will take any other action (including, without
limitation, any offer, issuance or sale of any security of NDA under
circumstances which might require the integration of such security with Common
Stock under the Securities Act or the rules and regulations of the Commission
thereunder), in either case so as to subject the offering, issuance or sale of
the Shares to the registration provisions of the Securities Act.
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SECTION 2.21. Brokers. NDA has no contract, arrangement or understanding
with any broker, finder or similar agent with respect to the transactions
contemplated by this Agreement.
SECTION 2.22. Officers. Set forth in Schedule 2.22 is a list of the names
of the officers of NDA, together with the title or job classification of each
such person and the total compensation anticipated to be paid to each such
person by NDA in 1995. None of such persons has an employment agreement or
understanding, whether oral or written, with NDA, which is not terminable on
notice by NDA without cost or other liability to NDA.
SECTION 2.23. Transactions With Affiliates. Except as set forth in Schedule
2.23, no director, officer, employee or stockholder of NDA, or member of the
family of any such person, or any corporation, partnership, trust or other
entity in which any such person, or any member of the family of any such person,
has a substantial interest or is an officer, director, trustee, partner or
holder of more than 5% of the outstanding capital stock thereof, is a party to
any transaction with NDA, including any contract, agreement or other arrangement
providing for the employment of, furnishing of services by, rental of real or
personal property from or otherwise requiring payments to any such person or
firm.
SECTION 2.24. Employees. Each of the officers of NDA, each key employee and
each other employee now employed by NDA who has access to confidential
information of NDA has executed an Employee Non-Disclosure, Non-Competition and
Developments Agreement substantially in the form of Exhibit D (the
"Non-Competition Agreement"), and such agreements are in full force and effect.
No officer or key employee of NDA has advised NDA (orally or in writing) that he
intends to terminate employment with NDA. NDA has complied in all material
respects with all applicable laws relating to the employment of labor, including
provisions relating to wages, hours, equal opportunity, collective bargaining
and the payment of Social Security and other taxes, and with the Employee
Retirement Income Security Act of 1974, as amended.
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SECTION 2.25 Updating. NDA agrees to update the representations and
schedules herein for any changes between the execution hereof and the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF UNIHOLDING
SECTION 3.1. UniHolding Representations. At the execution of this Agreement
and at the Closing Date, UniHolding represents and warrants to NDA that:
(a) it is an "accredited investor" within the meaning of Rule 501 under the
Securities Act and was not organized for the specific purpose of acquiring the
Shares;
(b) it has sufficient knowledge and experience in investing in companies
similar to NDA in terms of NDA's stage of development so as to be able to
evaluate the risks and merits of its investment in NDA and it is able
financially to bear the risks thereof;
(c) it has had an opportunity to discuss NDA's business, management and
financial affairs with NDA's management;
(d) the Shares being purchased by it are being acquired for its own account
for the purpose of investment and not with a view to or for sale in connection
with any distribution thereof;
(e) it understands that (i) the Shares have not been registered under the
Securities Act by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) thereof
promulgated under the Securities Act, (ii) the Shares must be held indefinitely
unless a subsequent disposition thereof is registered under the Securities Act
or is exempt from such registration, (iii) the Shares will bear a legend to such
effect and (iv) NDA will make a notation on its transfer books to such effect.
(f) it has made its own decision to purchase the Shares and has not relied
on the decision of any other stockholder of the Company to purchase the Shares
in making its investment.
ARTICLE IV
CONDITIONS TO THE OBLIGATIONS OF UNIHOLDING
SECTION 4.1. UniHolding Closing Conditions. The obligation of UniHolding to
purchase and pay for the Shares and the Option is, at its option, subject to the
satisfaction, on or before the Closing Date, of the following conditions:
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(a) Opinion of Company's Counsel. UniHolding shall have received from
counsel for NDA, an opinion dated the Closing Date in form and scope
satisfactory to UniHolding and its counsel, in the form attached hereto as
Schedule 4.1(a).
(b) Representations and Warranties to be True and Correct. The
representations and warranties contained in Article II shall be true, complete
and correct on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date, and the
President and Chief Executive Officer of NDA shall have certified to such effect
to UniHolding in writing.
(c) Performance. NDA shall have performed and complied with all agreements
contained herein required to be performed or complied with by it prior to or at
the Closing Date and the President and Chief Executive Officer of NDA shall have
certified to UniHolding in writing to such effect and to the further effect that
all of the conditions set forth in this Article IV have been satisfied.
(d) All Proceedings to be Satisfactory. All corporate and other proceedings
to be taken by NDA in connection with the transactions contemplated hereby and
all documents incident thereto shall be satisfactory in form and substance to
UniHolding and its counsel, and UniHolding and its counsel shall have received
all such counterpart originals or certified or other copies of such documents as
they reasonably may request.
(e) Supporting Documents. UniHolding and its counsel shall have received
copies of the following documents:
(i) (A) NDA's Certificate of Incorporation, certified as of a recent
date by the Secretary of State of Delaware and (B) a certificate of the
Secretary of State of the State of Delaware dated as of a recent date as to
the due incorporation and good standing of NDA, the payment of all excise
taxes by NDA and listing all documents of NDA on file with said Secretary;
(ii) a certificate of the Secretary or an Assistant Secretary of NDA dated
the Closing Date and certifying: (A) that attached thereto is a true and
complete copy of the By-laws of NDA as in effect on the date of such
certification; (B) that attached thereto is a true and complete copy of all
resolutions adopted by the Board of Directors or the stockholders of NDA
authorizing the execution, delivery and performance of this Agreement, the
Option Agreement, the Registration Rights Agreement and the Stockholders'
Agreement, the issuance, sale and delivery of the Shares, and that all such
resolutions are in full force and effect and are all the resolutions
adopted in connection with the transactions contemplated by this Agreement,
the Registration Rights Agreement and the Stockholders, Agreement; (C) that
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NDA's Certificate of Incorporation attached hereto as Exhibit C is in full
force and effect and has not been amended; (D) no default, or occurrence or
omission which, with notice or the passage of time or both, would result in
an event of default under any agreement to which NDA is a party, shall have
occurred or will occur as a result of the sale of Shares; and (E) to the
incumbency and specimen signature of each officer of NDA executing this
Agreement, the Option Agreement, the Registration Rights Agreement, the
Stockholders' Agreement and the stock certificates representing the Shares
and a certification by another officer of NDA as to the incumbency and
signature of the officer signing the certificate referred to in this clause
(ii); and
(iii) such additional supporting documents and other information with
respect to the operations and affairs of NDA as UniHolding or its counsel
reasonably may request.
(f) Registration Rights Agreement. NDA shall have executed and delivered
the Registration Rights Agreement.
(g) Stockholders' Agreement. The Stockholders' Agreement shall have been
executed and delivered by NDA.
(h) Option Agreement. The Option Agreement shall have been executed and
delivered by NDA.
(i) Election of Directors. The current Board of Directors shall have
resolved that the number of directors constituting the entire Board of Directors
of NDA shall have been increased to six; further the current Board of Directors
shall have resolved to effect an amendment to the Certificate of Incorporation
within 30 days thereof providing for such increase to six Directors and the
current Board shall have resolved to elect UniHolding's nominee for its Director
pursuant to the terms of the Stockholders' Agreement, as amended
contemporaneously herewith within 30 days thereof; and provided that as a
further condition of Closing that David Deutsch, Ronald Gambardella, Poly
Ventures II, Limited Partnership and the Long Island Venture Fund, in their
respective capacities as NDA stockholders, shall have consented to such
amendment to the Certificate of Incorporation. NDA acknowledges that, subject to
the terms of the Stockholders' Agreement, as amended contemporaneously herewith,
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Long Island Venture Fund, L.P., Poly Ventures II, Limited Partnership and
UniHolding shall each be entitled to have one nominee as a member of NDA's Board
of Directors.
(j) Compensation Committee. The Board of Directors shall have appointed a
Compensation Committee consisting of one representative designated by Poly
Ventures II, Limited Partnership and one member from management, which shall
consider and recommend to the Board of Directors compensation for NDA's officers
and directors and the participation of employees in NDA's Stock Option Plan. In
the event the Compensation Committee is "dead-locked" and unable to reach
agreement on any particular matter or issue, then the members of the
Compensation Committee will use reasonable efforts to resolve all such disputes,
but if a final resolution is not obtained within five (5) days after the date
the particular issue is first addressed by the Compensation Committee, then any
remaining disputes will be submitted to a third party, which party shall be
mutually agreed to by both members of the Compensation Committee and shall not
be an affiliate of any UniHolding or NDA, and whose decision with respect to
such disputes shall be final, conclusive and binding on the parties. If the
members of the Compensation Committee cannot agree on a third party to resolve a
dispute, then such dispute will be submitted to, and resolved exclusively
pursuant to arbitration in accordance with the commercial arbitration rules of
the American Arbitration Association (with such arbitration to take place in
Nassau County, New York and shall be subject to the substantive law of the State
of New York, except where by its terms the General Corporation Law of Delaware
applies). Decisions pursuant to such arbitration shall be final, conclusive and
binding on the parties.
(k) Preemptive Rights. All stockholders of NDA having any preemptive, first
refusal or other rights with respect to the issuance of the Shares and the
shares of Common Stock issuable pursuant to the Option shall have irrevocably
waived the same in writing.
(l) Key Person Insurance. NDA shall use its best efforts to maintain a term
life insurance policy in the face amount of $1 million for each of David Deutsch
and Ronald Gambardella and $500,000 for Jeffrey Prisco, in each case, naming NDA
as sole beneficiary.
All such documents and arrangements shall be satisfactory in form and
substance to UniHolding and its counsel.
ARTICLE IV-A
CONDITIONS TO THE OBLIGATIONS OF NDA
SECTION 4A.1. NDA Closing Conditions. The obligation of NDA to issue the
Shares and the Option is subject to the satisfaction of the following
conditions, on or before the Closing Date:
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(a) that the UCT Option Agreement, of even date herewith, shall have been
signed by UCT and UniHolding and shall have been delivered to NDA;
(b) that the President or Chief Executive Officer of UniHolding shall have
certified at and as of the Closing Date as follows:
(i) UniHolding is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware;
(ii) that it has requisite corporate authority to enter into this
Agreement and the Option Agreement and perform the transactions
contemplated hereunder and thereunder and such actions will not
violate any provision of law or any governmental order, decree or
judgment to which it is bound; and
(iii) that neither the execution of this Agreement or the Option
Agreement, or the performances contemplated herein or therein,
conflict with, or result in a breach of or constitute a default under
any agreement to which UniHolding or its properties or assets are
bound.
(iv) that all of Uniholding's representations and warranties shall be
true and correct as at the Closing Date.
ARTICLE V
COVENANTS OF NDA
NDA covenants and agrees with UniHolding that:
SECTION 5.1. Financial Statements, Reports, etc. NDA shall furnish to
UniHolding the following:
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(a) within ninety (90) days after the end of each fiscal year of NDA a
balance sheet of NDA as of the end of such fiscal year and the related
consolidated statements of income, stockholders, equity and cash flows for the
fiscal year then ended, prepared in accordance with generally accepted
accounting principles and certified by a "big six" firm of independent public
accountants of recognized national standing selected by the Board of Directors
of NDA;
(b) within forty-five (45) days after the end of each fiscal quarter in
each fiscal year (other than the last fiscal quarter in each fiscal year) a
balance sheet of NDA and the related statements of income, stockholders' equity
and cash flows, unaudited but prepared in accordance with generally accepted
accounting principles and certified by the Chief Financial Officer of NDA, such
consolidated balance sheet to be as of the end of such fiscal quarter and such
statements of income, stockholders' equity and cash flows to be for such fiscal
quarter and for the period from the beginning of the fiscal year to the end of
such fiscal quarter, in each case with comparative statements for the
corresponding period in the prior fiscal year;
(c) within thirty (30) days after the end of each month in each fiscal year
(other than the last month in each fiscal year) a balance sheet of NDA and its
subsidiaries (if any) and the related statements of income, stockholders' equity
and cash flows, unaudited but prepared in accordance with generally accepted
accounting principles and certified by the Chief Financial Officer of NDA, such
consolidated balance sheet to be as of the end of such month and such
consolidated statements of income, stockholders' equity and cash flows to be for
such month and for the period from the beginning of the fiscal year to the end
of such month, in each case with comparative statements for the prior fiscal
year; provided that NDA's obligations under this Section 5.1(c) shall terminate
and be of no further force or effect upon the closing of a firm commitment
underwritten public offering of NDA's securities that qualifies as a Designated
Offering;
(d) at the time of delivery of each annual financial statement pursuant to
Section 5.1(a), a certificate executed by the Chief Financial Officer of NDA
stating that such officer has caused this Agreement to be reviewed and has no
knowledge of any default by NDA in the performance or observance of any of the
provisions of this Agreement or, if such officer has such knowledge, specifying
such default and the nature thereof;
(e) at the time of delivery of each monthly statement pursuant to Section
5.1(c), a management narrative report explaining all significant variances from
forecasts and all significant current developments in staffing, marketing, sales
and operations;
(f) promptly following receipt by NDA, each audit response letter,
accountant's management letter and other written report submitted to NDA by its
independent public accountants in connection with an annual or interim audit of
the books of NDA;
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(g) promptly after the commencement thereof, notice of all actions, suits,
claims, proceedings, investigations and inquiries of the type described in
Section 2.7 that could materially adversely affect NDA;
(h) promptly upon sending, making available or filing the same, all press
releases, reports and financial statements that NDA sends or makes available to
its stockholders or directors or files with the Commission; and
(i) promptly, from time to time, such other information regarding the
business, prospects, financial condition, operations, property or affairs of NDA
and its subsidiaries as UniHolding reasonably may request.
SECTION 5.2. Right of First Refusal. As long as any shares of Common Stock
are outstanding, NDA shall, prior to any issuance by NDA of any of its
securities (other than debt securities with no equity feature), offer to each
person or entity set forth on Schedule 5.2 hereof (a "Holder") by written notice
the right, for a period of thirty (30) days, to purchase on a pro rata basis a
number of such securities as will enable such Holder to maintain, on a fully
diluted basis, the percentage of ownership of NDA such Holder has at the time of
such proposed issuance, for cash at an amount equal to the price or other
consideration for which such securities are to be issued; provided, however,
that the first refusal rights pursuant to this Section 5.2 shall not apply to
securities issued, (A) as a stock dividend or upon any subdivision of shares of
Common Stock, provided that the securities issued pursuant to such stock
dividend or subdivision are limited to additional shares of Common Stock, (B)
pursuant to subscriptions, warrants, options, convertible securities, or other
rights which are listed in Schedule 2.4 as being outstanding on the Closing
Date, (C) solely in consideration for the acquisition (whether by merger or
otherwise) by NDA or any of its subsidiaries of all or substantially all of the
stock or assets of any other entity, (D) pursuant to a firm commitment
underwritten public offering of NDA's securities that qualifies as a Designated
Offering, and (E) pursuant to the exercise of options to purchase Common Stock
granted to employees of NDA, not to exceed in the aggregate 3,300 shares,
appropriately adjusted to reflect stock splits, stock dividends, combinations of
shares and the like with respect to the Common Stock less the number of shares
(as so adjusted) issued pursuant to options outstanding on the date of this
Agreement and listed in Schedule 2.4 pursuant to clause (B) above (the shares
exempted by this clause (E) being hereinafter referred to as the "Reserved
Employee Shares"). NDA's written notice to the Holders shall describe the
securities proposed to be issued by NDA and specify the number, price and
payment terms. Each Holder may accept NDA's offer as to the full number of
securities offered to it or any lesser number, by written notice thereof given
by it to NDA prior to the expiration of the aforesaid thirty (30) day period, in
which event the Company shall promptly sell and such Holder shall purchase, upon
the terms specified, the number of securities agreed to be purchased by such
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<PAGE>
Holder. Notwithstanding the foregoing, if the Holders agree, in the aggregate,
to purchase more than the full number of securities offered by the Company, then
each Holder accepting NDA's offer shall first be allocated the lesser of (i) the
number of securities which such Holder agreed to purchase and (ii) the number of
securities as is equal to the full number of securities offered by NDA
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock held by such Holder as of the date of NDA's notice of offer and
the denominator of which shall be the aggregate number of shares of Common Stock
(calculated as aforesaid) held on such date by all Holders who accepted NDA's
offer, and the balance of the securities (if any) offered by NDA shall be
allocated among the Holders accepting NDA's offer in proportion to their
relative equity ownership interests in NDA (calculated as aforesaid); provided,
that no Holder shall be allocated more than the number of securities which such
Holder agreed to purchase; and provided, further, that in cases covered by this
sentence, all Holders shall be allocated among them the full number of
securities offered by NDA.
NDA shall be free at any time prior to ninety (90) days after the date of
its notice of offer to the Holders, to offer and sell to any third party or
parties the number of such securities not agreed by the Holders to be purchased
by them, at a price and on payment terms no less favorable to NDA than those
specified in such notice of offer to the Holders. However, if such third party
sale or sales are not consummated within such ninety (90) day period, NDA shall
not sell such securities as shall not have been purchased within such period
without again complying with this Section 5.2.
Notwithstanding the foregoing, the terms and conditions of this Section 5.2
shall terminate and be of no further force or effect upon the closing of a firm
commitment underwritten public offering of NDA's securities that qualifies as a
Designated Offering.
SECTION 5.3. Corporate Existence. NDA shall maintain and cause each of its
subsidiaries to maintain their respective corporate existence, rights and
franchises in full force and effect.
SECTION 5.4. Properties, Business, Insurance. NDA shall maintain and cause
each of its subsidiaries to maintain as to their respective properties and
business, with financially sound and reputable insurers, insurance against such
casualties and contingencies and of such types and in such amounts as is
customary for companies similarly situated, including but not limited to fire
and other risks insured against by extended coverage, product liability
insurance and public liability insurance against claims for personal injury or
death or property damage occurring upon, in, about or in connection with the use
of any properties owned, occupied or controlled by NDA, which insurance shall be
deemed by NDA to be sufficient; and maintain workers' compensation insurance and
such other insurance as may be required by law. For so long as its Board of
Directors determines it to be desirable, NDA shall maintain in effect "key
person" life insurance policies, payable to NDA, as set forth in Section 4.1(n).
NDA shall not cause or permit any assignment or change in beneficiary and shall
not borrow against any such policy.
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SECTION 5.5. Inspection, Consultation and Advice. NDA shall permit and
cause each of its subsidiaries to permit designated representatives of
UniHolding at the expense of UniHolding, to visit and inspect any of the
properties of NDA and its subsidiaries, examine their books and take copies and
extracts therefrom, discuss the affairs, finances and accounts of NDA and its
subsidiaries with their officers, employees and public accountants (and NDA
hereby authorizes said accountants to discuss with UniHolding and such designees
such affairs, finances and accounts), and consult with and advise the management
of NDA and its subsidiaries as to their affairs, finances and accounts, all at
reasonable times and upon reasonable notice.
SECTION 5.6. Restrictive Agreements Prohibited. Neither NDA nor any of its
subsidiaries shall become a party to any agreement which by its terms restricts
NDA's performance of this Agreement, the Option Agreement, the Registration
Rights Agreement, the Stockholders Agreement or NDA's Certificate of
Incorporation.
SECTION 5.7. Transactions with Affiliates. Except for transactions
contemplated by this Agreement or as otherwise specifically approved by
UniHolding, neither NDA nor any of its subsidiaries shall enter into any
transaction with any director, officer, employee or holder of more than 5% of
the outstanding capital stock of any class or series of capital stock of NDA or
any of its subsidiaries, member of the family of any such person, or any
corporation, partnership, trust or other entity in which any such person, or
member of the family of any such person, is a director, officer, trustee,
partner or holder of more than 5% of the outstanding capital stock thereof (each
an "Affiliate"), except for transactions on customary terms related to such
person's employment with NDA.
SECTION 5.8. Expenses of Directors. NDA shall promptly reimburse in full
each director of NDA who is not an employee of NDA for all of his or her
reasonable out-of-pocket expenses incurred in attending each meeting of the
Board of Directors of NDA or any Committee thereof.
SECTION 5.9. Use of Proceeds. NDA shall use the proceeds from the sale of
the Shares solely for such uses as set forth in the attached Schedule 5.9.
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SECTION 5.10. Board of Directors Meetings. NDA shall use its best efforts
to ensure that meetings of its Board of Directors are held at least four times
each year and at least once each quarter.
SECTION 5.11. Budget and Operating Forecast. For each fiscal year of NDA
commencing with the fiscal year of NDA beginning on January 1, 1996, at least 30
days prior to the last day of the prior fiscal year, management of NDA will
prepare and submit to the Board of Directors of NDA, annual consolidated
operating and capital budgets, cash flow projections and income and loss
projections in respect of such fiscal year, with monthly breakdowns in
reasonable detail prepared by management and approved by the President and Chief
Financial Officer of NDA, and, promptly after preparation, provide any revisions
to any of the foregoing (the "Budget"). The Budget shall be accepted as the
Budget for such fiscal year when it has been approved by the Board of Directors
of NDA. The Budget shall be reviewed by NDA periodically and all changes therein
and all material deviations therefrom shall be resubmitted to the Board of
Directors of NDA in advance and shall be accepted when approved by the Board of
Directors of NDA, and NDA shall not make any such changes or material deviations
to or from the Budget without such prior approval of the Board of Directors of
NDA.
SECTION 5.12. Compensation. NDA shall not pay to its management
compensation in excess of that compensation customarily paid to management in
companies of similar size, of similar maturity, and in similar businesses.
SECTION 5.13. By-laws. NDA shall at all times cause its Bylaws to provide
that, (a) unless otherwise required by the laws of the State of Delaware, (i)
any two directors and (ii) any holder or holders of at least 20% of the
outstanding shares of Common Stock shall have the right to call a meeting of the
Board of Directors or stockholders, and (b) the number of directors fixed in
accordance therewith shall in no event conflict with any of the terms or
provisions of the Stockholders' Agreement. NDA shall at all times maintain
provisions in its By-laws and/or Certificate of Incorporation indemnifying all
directors against liability and absolving all directors from liability to NDA
and its stockholders to the maximum extent permitted under the laws of the State
of Delaware, or, if there is a reduction in the permitted scope of
indemnification under Delaware law, at the level existing prior to such
reduction for any actions occurring before such reduction.
SECTION 5.14. Employee Agreements. NDA shall obtain, and shall cause its
subsidiaries to use their best efforts to obtain, an Employee Agreement from all
future officers, key employees and other employees who will have access to
confidential information of NDA, upon their employment by NDA.
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SECTION 5.15. Maintenance of Ownership of Subsidiaries. NDA shall not sell
or otherwise transfer any shares of capital stock of any Subsidiary, except to
NDA or another Subsidiary, or permit any Subsidiary to issue, sell or otherwise
transfer any shares of its capital stock or the capital stock of any Subsidiary,
except to NDA or another Subsidiary.
SECTION 5.16. Compliance with Laws. NDA shall comply, and cause each
Subsidiary to comply, with all applicable laws, rules, regulations and orders,
noncompliance with which could materially adversely affect its business or
condition, financial or otherwise.
SECTION 5.17. Keeping of Records and Books of Account. NDA shall keep, and
cause each Subsidiary to keep, adequate records and books of account, in which
complete entries will be made in accordance with generally accepted accounting
principles consistently applied, reflecting all financial transactions of NDA
and such Subsidiary, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.
SECTION 5.18. Obligations and Taxes. NDA shall pay all of its indebtedness
and obligations promptly and in accordance with their terms and pay and
discharge promptly all taxes, assessments and governmental charges or levies
imposed upon it or its income or profits or in respect of its property, before
the same shall become in default, as well as all lawful claims for labor and
supplies or otherwise which, if unpaid, might become a lien or charge upon such
properties or any part thereof; provided however, that NDA shall not be required
to pay and discharge or to cause to be paid and discharged any tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings and NDA shall set aside on
its books such reserves as are required by generally accepted accounting
principles with respect to any such tax, assessment, charge, levy or claim so
contested.
SECTION 5.19. Indemnification. NDA shall, with respect to the
representations and warranties made by NDA herein, indemnify, defend and hold
UniHolding harmless against all liability, loss or damage, together with all
reasonable costs and expenses related thereto (including legal and accounting
fees and expenses) (collectively, "Damages"), arising from the untruth,
inaccuracy or breach of any such representations, and warranties of NDA;
Provided however, that UniHolding shall only be entitled to indemnification
hereunder if the aggregate of all Damages exceeds $50,000; provided further,
that if the aggregate of all Damages exceeds $50,000, UniHolding shall be
entitled to indemnification for all Damages beginning with the first dollar of
Damages suffered or incurred.
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SECTION 5.20. Corporate Actions. Prior to a Designated Offering, NDA will
not take any of the following actions without the prior affirmative vote of at
least four directors, which vote shall not be unreasonably withheld or unduly
delayed:
(a) Authorize or issue shares of any class or series of equity security or
of any securities convertible into any class or series of equity securities,
except for grants of Common Stock pursuant to the Stock Option Plan.
(b) Merge or consolidate into or with any other corporation or sell all of
substantially all of NDA's assets, or sell pledge, license or otherwise dispose
of assets (tangible or intangible) of NDA for consideration of more than
$100,000 (other than licenses granted or assets sold in the ordinary course of
business).
(c) Redeem, repurchase, retire or otherwise acquire any shares of equity
securities, except as contemplated by this Agreement or the Stockholders'
Agreement.
(d) Pay or declare any dividend or distribution on any shares of NDA's
capital stock.
(e) Voluntarily liquidate, dissolve or wind up NDA or conduct any form of
recapitalization or reorganization of NDA.
(f) Incur any obligation involving payments or consideration of more than
$100,000 per year, except for short term borrowing for working capital or
borrowings to fund parts, materials, and labor costs to fill purchase orders.
(g) Sell any equity or debt securities in NDA's present or future
subsidiaries to third parties.
(h) Amend or repeal any provision of, or add any provision to, NDA's
Certificate of Incorporation or NDA's by-laws.
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(i) Adopt any fundamental change to NDA's business, i.e. changes which
would result in more than 25% of NDA's assets being deployed in, or gross
revenues derived from, businesses other than clinical laboratories or blood
testing.
(j) Acquire any capital asset for more than $100,000 and or make any
investment in or acquire another business entity.
(k) Enter into any transaction with an Affiliate, except for transactions
on customary terms related to such person's employment with NDA.
(l) Make any investment in or acquire any other business entity.
(m) Sell or transfer any intangible property other than licenses granted in
the ordinary course of business.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Expenses. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby whether or not such
transactions shall be consummated.
SECTION 6.2. Survival of Agreements. All covenants, agreements,
representations and warranties made herein or in the Registration Rights
Agreement, the Stockholders' Agreement, or any certificate or instrument
delivered to UniHolding pursuant to or in connection with this Agreement, the
Registration Rights Agreement or the Stockholders' Agreement, shall survive the
execution and delivery of this Agreement, the Registration Rights Agreement, the
Stockholders' Agreement and the issuance, sale and delivery of the Shares for a
period of three (3) years from the date of this Agreement. All statements
contained in any certificate or other instrument delivered by NDA hereunder or
thereunder or in connection herewith or therewith shall be deemed to constitute
representations and warranties made by NDA.
SECTION 6.3. Brokerage. Each party hereto will indemnify and hold harmless
the other party against and in respect of any claim for brokerage or other
commissions relative to this Agreement or to the transactions contemplated
hereby, based in any way on agreements, arrangements or understandings made or
claimed to have been made by such party with any third party.
SECTION 6.4. Parties in Interest. All representations, covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. Without limiting the
generality of the foregoing, all representations, covenants and agreements
benefiting UniHolding shall inure to the benefit of any and all subsequent
holders from time to time of UniHolding's shares of Common Stock.
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SECTION 6.5. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in person or
mailed by certified or registered mail, return receipt requested, or telexed in
the case of non-U.S. residents, addressed as follows:
(a) if to NDA, at NDA Clinical Trial Services, Inc., 260 Smith Street,
Farmingdale, NY 11735, Attention: President, with a copy to David I. Schaffer,
Meltzer, Lippe, Goldstein, Wolf, Schlissel & Sazer, P.C., 190 Willis Avenue,
Mineola, NY 11501; and
(b) if to UniHolding, at the address set forth opposite its name, with a
copy to Mr. Paul Hoekfelt, Chief Operating Officer, UniHolding Corp., 12, place
de Cornavin, CH 1211 Geneva, Switzerland;
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
SECTION 6.6. Governing Law. This Agreement shall be construed and enforced
in accordance with, and governed by, the laws of the State of New York, except
where by its terms the General Corporation Law of Delaware applies, regardless
of the jurisdiction of creation or domicile of NDA or its successors or of
UniHolding or its successors (without giving effect to the choice of law
principles of such State). Each party hereby consents to the exclusive
jurisdiction of the State and Federal courts in the State of New York in
connection with any action arising out of the matters covered hereby and any
litigation commenced by any party arising from the transactions provided for
hereby or relating hereto shall only be commenced in such courts.
Notwithstanding the foregoing, NDA agrees that if Uniholding brings suit, and
its principal place of business has moved to another location in the United
States, NDA will consent to jurisdiction in the Federal and State Courts of the
location in that state that is then Uniholding's principal place of business.
Each party hereby irrevocably submits to the personal jurisdiction of the above
courts, irrevocably agrees not to interpose any defenses based on lack of
personal jurisdiction or forum non conveniens, and irrevocably agrees to service
of any process in connection with this agreement by certified or registered
mail, in addition to any other service permitted by law.
SECTION 6.7. Entire Agreement. This Agreement, including the Schedules and
Exhibits hereto, constitutes the sole and entire agreement of the parties with
respect to the subject matter hereof. All Schedules and Exhibits hereto are
hereby incorporated herein by reference.
SECTION 6.8. Counterparts. This Agreement may be executed in 9/27/95 two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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SECTION 6.9. Amendments. This Agreement may not be amended or modified, and
no provisions hereof may be waived, without the written consent of NDA and
UniHolding.
SECTION 6.10. Severability. If any provision of this Agreement shall be
declared void or unenforceable by any judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
affected thereby.
SECTION 6.11. Titles and Subtitles. The titles and subtitles used in this
Agreement are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Agreement.
SECTION 6.12. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable,to both the singular and plural forms of the terms defined):
(a) "Designated Offering" shall mean a firmly underwritten public offering
of securities of NDA in an aggregate amount in excess of $5,000,000 at a per
share price at least equal to $364.05 per share, as adjusted for stock splits,
combinations and other recapitalizations; provided, that immediately following
the consummation of such offering, NDA's shares are listed on a national stock
exchange, the National Association of Securities Dealers Automated Quotation
National Market or the National Association of Securities Dealers Automated
Quotation SmallCap Market.
(b) "person" shall mean an individual, corporation, trust, partnership,
joint venture, unincorporated organization, government agency or any agency or
political subdivision thereof, or other entity.
(c) "Subsidiary" shall mean, as to NDA and in connection with any
Subsidiary NDA may own subsequent to the date of this Agreement, any corporation
of which more than 50% of the outstanding stock having ordinary voting power to
elect a majority of the Board of Directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned by NDA, or by one
or more of its Subsidiaries, or by NDA and one or more of its Subsidiaries.
SECTION 6.13. Assignment. This Agreement may not be assigned by either
party without the consent of the other. It is understood and agreed that
UniHolding may not, without NDA's prior written consent, under any circumstances
transfer its shares in NDA to a competitor of NDA.
IN WITNESS WHEREOF, NDA and UniHolding have executed this Stock Purchase
Agreement as of the day and year first above written.
NDA CLINICAL TRIAL
SERVICES INC.
By: /s/ David Deutsch
Name: David Deutsch
Title: CEO
[Corporate Seal]
Attest:
/s/ David Deutsch
Secretary
UNIHOLDING CORP.
By: /s/ Melanie Stapp
Name: Melanie Stapp
Title: Secretary/General Counsel
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CANCELLATION OF UCT OPTION AGREEMENT
The undersigned, NDA Cinical Trial Services, Inc. ("NDA") and shareholders
representing a majority of the outstanding shares of capital stock of NDA,
hereby agree, for good and valuable consideration, the receipt of which is
hereby acknowledged, that the certain Option Agreement among NDA and its
shareholders, Unilabs Cinical Trials, Ltd. and UniHolding Corp. dated September
27, 1995 is hereby cancelled, null and void as of the date hereof.
Dated: August 26, 1996
NDA CLINICAL TRIAL SERVICES, INC.
By: /s/ Ronald Gambardella
Name: Ronald Gambardella
POLY VENTURES II
By: /s/ Robert Brill
Name: Robert Brill
LONG ISLAND VENTURE FUND
By: /s/ Paul Lowell
Name: Paul Lowell
By: /s/ David Deutsch
Name: David Deutsch
By: /s/ Ronald Gamberdella
Name: Ronald Gamberdella
<PAGE>
SHARE EXCHANGE AGREEMENT
BY AND BETWEEN
UNIHOLDING CORPORATION
AND
GLOBAL UNILABS CLINICAL TRIALS LIMITED
<PAGE>
AGREEMENT made this 23rd day of July, 1996, by and between UniHolding
Corporation, a Delaware corporation ("Seller" or "UniHolding"), with its
principal place of business at 96 Spring Street, 8th Floor, New York, NY 10012
and Global Unilabs Clinical Trials Limited, a British Virgin Islands corporation
("Buyer" or "GUCT"), with its principal place of business located at 207-208
Neptune House, Marina Bay, Gibraltar.
WITNESSETH:
WHEREAS, Seller is engaged in the business of providing clinical trials
testing to the pharmaceutical industry through its wholly-owned subsidiaries
Unilabs Clinical Trials Limited ("UCT") and Pharmasoft SA ("Pharmasoft") in
cooperation with NDA Clinical Trial Services, Inc., a Delaware corporation
("NDA") of which the Seller owns a 17% minority interest, in addition to an
option to purchase an additional 13% thereof pursuant to the Stock Purchase
Agreement and Option Agreement between NDA and UniHolding dated October 16, 1995
(the "NDA Interest") (together known as the "Clinical Trials Business"
hereinafter).
WHEREAS, the parties have reached an understanding with respect to the sale
and purchase of all the outstanding assets of the Clinical Trials Business
(hereinafter defined) of UniHolding in exchange for all the outstanding stock of
GUCT;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties, and upon terms and subject to the conditions
hereinafter set forth, the parties do intend to be bound and hereby agree as
follows:
ARTICLE 1
TERMS OF SALE AND PURCHASE OF BUSINESS ASSETS
1.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, Buyer, in reliance upon the representations and warranties of Seller
made herein, will at the Closing (hereinafter defined), acquire from Seller, and
Seller, in reliance upon the representations and warranties of Buyer made
herein, will at the Closing transfer, convey, assign and deliver to Buyer, all
of Seller's right, title and interest in and to the assets, properties and
business of Seller, whether tangible or intangible, wherever located, including
claims and rights under contracts, all books and records relating to the assets
and property being conveyed, transferred and assigned hereunder, which are used
exclusively in connection with the conduct of the Clinical Trials Business
(collectively, the "Assets"), including without limitation, the following:
(a) all the Seller's rights, title and interests in Unilabs Clinical Trials
Ltd., a United Kingdom corporation and wholly-owned subsidiary of the
Seller ("UCT"), including all the outstanding stock of UCT, 500,000
ordinary registered shares par value (pound)1 per share fully paid and
non-assessable duly endorsed.
(b) all the Seller's rights, title and interests in Pharmasoft Limited, a
Switzerland corporation and wholly-owned subsidiary of the Seller
("Pharmasoft"), including all the outstanding stock of the Pharmasoft, 250
bearer shares par value Swiss Franc 1,000 per share fully paid and
non-assessable duly endorsed.
<PAGE>
(c) all rights, title and interests under the agreements and contracts of
whatever nature and all other property and rights of every kind and nature
owned or held by Seller in relation to its present 17% interest in NDA.
in exchange for capital stock of Buyer, as more fully described in paragraphs
1.3 and 3.6.
1.2 The Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of UniHolding, at its principal
offices in New York, commencing at 10 a.m. on the 23rd day of July, 1996 or at
such other time and/or place as the parties may mutually agree (the "Closing
Date").
1.3 Purchase Price. Immediately after the execution of this Agreement,
Buyer shall issue to Seller or its nominees, 217,000 shares of $0.64 par value,
fully paid, and non-assessable voting shares of the Buyer (the "GUCT Shares") in
exchange for the Assets. If Buyer effects a stock split, stock dividend, reverse
stock split, spin-off, or similar change in its capital structure between the
date of this Agreement and the Closing Date, there shall be an equitable
adjustment to the number of shares to be issued in accordance with the terms of
this paragraph to reflect such change or changes.
1.4 Instruments of Transfer. On the Closing Date, both the Seller and the
Buyer shall deliver duly executed instruments of transfer and assignment of the
Assets and the GUCT Shares sufficient to vest in each respective party the
interests in the Assets and the GUCT Shares being conveyed in accordance with
the terms of this Agreement.
1.5 Payment of Taxes and Other Charges. Buyer shall pay, at the Closing or,
if due thereafter promptly when due, all transfer taxes, sales taxes, stamp
taxes, and any other taxes (other than income taxes payable by Seller) payable
in connection with the transactions contemplated hereby.
1.6 Assumption. Buyer understands and agrees that, from and after the
Closing, except as specifically provided in paragraphs 1.6 and 1.7 hereof to the
contrary, neither Seller or any of its affiliates shall have any liability or
responsibility for any liability or obligation of or arising out of or relating
to the Assets or the Clinical Trials Business of whatever kind or nature,
whether contingent or absolute, whether arising prior to or on or after, and
whether determined or indeterminable on, the Closing Date, and whether or not
specifically referred to in this Agreement (such liabilities and obligations,
except as set forth in paragraphs 1.4 and 1.7 hereof, being collectively
referred to as the "Liabilities"). Accordingly, Buyer agrees that, effective
upon the Closing, Buyer shall assume and shall thereafter pay, perform, and
discharge and, effective as of the Closing, Buyer does hereby assume the
Liabilities, and further agrees that it shall indemnify Seller and its
affiliates and hold each of them harmless against any liability, loss, damage,
claim, cost or expense (collectively a "Loss") incurred or suffered by any of
them arising out of (i) any of the Liabilities or (ii) any breach by Buyer or,
or failure by Buyer to comply with, any of the provisions of this Agreement.
1.7 Exceptions. The following are excluded from the assumptions of
liabilities provided for in the preceding paragraph:
(i) Income and Franchise Tax. Any liability for the payment of accrued and
unpaid federal income taxes or franchise taxes of Seller for the period
from May 31, 1995 to the Closing Date, except any tax whatsoever which
could be imputed in relation to the present Agreement;
(ii) Undisclosed Liabilities. Buyer is not acquiring, directly or
indirectly, any liability which is not fully disclosed to it. For purposes
of this Agreement, the liabilities disclosed to Buyer shall be those which
are reflected in or reserved against Seller's balance sheets, books of
<PAGE>
accounts, and records, as well as contingent liabilities and pending claims
as more fully set forth on a Disclosure Schedule attached hereto and
incorporated herein by reference.
(iii) Assurance. Seller warrants and represents that Buyer will not at any
time suffer any liability in respect of the foregoing liabilities not
assumed by Buyer.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to the Buyer as follows:
2.1 Corporate Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
the requisite corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby.
2.2 Financial Statements. Seller has delivered to Buyer unaudited balance
sheet information and a statement of operations for UCT and Pharmasoft for the
year ended May 31, 1995 and unaudited balance sheet and operating information
for the quarters ended August 31, 1995, November 30, 1995 and February 29, 1996
(collectively, the "Financial Statements"). The Financial Statements fairly
present the net assets and results of operations of UCT and Pharmasoft as of
such corresponding dates in accordance with United States generally accepted
accounting principles. Further, Seller has delivered to Buyer unaudited balance
sheet information and a statement of operations of NDA as of December 31, 1995.
Seller does not take any responsibility for the contents or representations made
within the financial statements of NDA.
2.3 Absence of Certain Changes or Events. Except as set forth in the
attached Disclosure Schedule, since the date of the Financial Statements,
neither the Clinical Trials Business nor Seller on behalf of the Clinical Trials
Business has (a) suffered any damage, destruction or casualty loss to its
physical properties materially and adversely affecting the business or financial
condition of the Clinical Trials Business; (b) incurred or discharged any
obligation or liability except in the ordinary course of business and except
obligations or liabilities that are not individually or in the aggregate
material to the business or financial condition of the Clinical Trials Business;
or (c) entered into any transaction not in the ordinary course of its business
except as permitted in or contemplated by other sections of this Agreement.
2.4 Contracts. The Disclosure Schedule, attached hereto and incorporated
herein by reference, contains a list of each contract, agreement or
understanding (including each governmental license, permit or other governmental
authorization) whether written or oral (including any and all amendments
thereto) to which Seller or the Clinical Trials Business is a party, or to which
either of them may be bound, which relates to the ownership of the Assets or the
conduct of the business of the Clinical Trials Business (collectively, the
"Contracts") and which is material to the business or financial condition of the
Clinical Trials Business. Except as disclosed in the Disclosure Schedule, to
Seller's knowledge, Seller is not in default under any of the Contracts, which
default would have a material adverse effect on the business or financial
condition of the Clinical Trials Business.
2.5 Consents. Seller will use its best efforts, and will cooperate with
Buyer, to secure all necessary consents, approvals, authorizations, exemptions
and waivers from third parties as shall be required in order to enable Seller to
effect the transactions contemplated hereby and will otherwise use its best
efforts to cause the consummation of such transaction in accordance with the
terms and conditions hereof.
<PAGE>
2.6 Litigation. No suit, action, or legal, administrative, arbitration, or
other proceeding or governmental investigation is pending, or to Seller's
knowledge is threatened against Seller or Seller's Assets, which might
materially or adversely affect Seller's financial condition or the conduct of
Seller's business. There is no outstanding judgment, decree, or order against
Seller which affects Seller in any way.
2.7 Compliance with Laws. Except as set forth in the Disclosure Schedule,
to Seller's knowledge, the Clinical Trials Business, or Seller on behalf of the
Clinical Trials Business, is in compliance with all laws, rules, regulations and
orders applicable to its business (including without limitation, those relating
to occupational safety and health and equal opportunity employment practices)
except where the failure to comply therewith does not have a material adverse
effect on the business or financial condition of the Clinical Trials Business.
2.8 Corporate Power and Authority; Effect of Agreement. The execution,
delivery and performance by Seller of this Agreement and the consummation by
Seller of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement has been duly
and validly executed and delivered by Seller and constitutes a valid and binding
obligation of Seller, enforceable in accordance with its terms, subject to (a)
applicable bankruptcy, insolvency or other similar laws relating to creditors'
rights generally, and (b) general principles of equity. The execution, delivery
and performance by Seller of this Agreement and the consummation by Seller of
the transactions contemplated hereby will not, with or without giving of notice
or the lapse of time, or both, subject to obtaining any required consents,
approvals, authorizations, exemptions or waivers, (c) violated any order,
judgment or decree applicable to Seller, or (d) conflict with, or result in a
breach or default under, any term or condition of the Certificate of
Incorporation or the By-laws of Seller or any agreement or other instrument to
which Seller is a party or by which Seller may be bound; except in each case,
for violations, conflicts, breaches or defaults which in the aggregate would not
materially hinder or impair the consummation of the transactions contemplated
hereby.
2.9 Representation and Warranties. No representation or warranty by Seller
in this Agreement or any documents provided hereunder contains or will contain
any untrue statement or omits or will omit to state any material fact necessary
to make the statements contained herein not misleading. All representations and
warranties made by Seller in this Agreement and all documents provided hereunder
shall be true and correct as of the Closing Date with the same force and effect
as if they had been made on and as of such date.
2.10 Registration under the Exchange Act. After execution of this
Agreement, should the Seller desire to register the GUCT Shares under the
Securities Act of 1933, as amended (the "Securities Act") and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), Buyer shall cooperate
with Seller in furnishing all information necessary and relevant to the
preparation and filing of such documentation.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 Corporate Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the British Virgin Islands and
has the requisite corporate power and authority to carry on its business as it
is now being conducted, and to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby.
3.2 Corporate Power and Authority; Effect of Agreement. The execution,
delivery and performance by Buyer of this Agreement and the consummation by
Buyer of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of
<PAGE>
Buyer. This Agreement has been duly and validly executed and delivered by Buyer
and constitutes the valid and binding obligation of Buyer, enforceable in
accordance with its terms, subject to (a) applicable bankruptcy, insolvency or
other similar laws relating to creditors' rights generally, and (b) general
principles of equity. The execution, delivery and performance by Buyer of this
Agreement and the consummation by Buyer of the transactions contemplated hereby
will not, with or without the giving of notice or the lapse of time, or both,
subject to obtaining any required consents, approvals, authorizations,
exemptions or waivers, (c) violate any order, judgment or decree applicable to
Buyer or (d) conflict with, or result in a breach or default under, any term or
condition of the Certificate of Incorporation, the By-laws or other similar
charter documents of Buyer, or any agreement or other instrument to which Buyer
or any of its subsidiaries is a party or by which any of them may be bound;
except, in each case, for violations, conflicts, breaches or defaults which in
the aggregate would not materially hinder or impair the consummation of the
transactions contemplated hereby.
3.3 Compliance with Laws. To Buyer's knowledge, the Buyer is in compliance
with all laws, rules, regulations and orders applicable to its business
(including without limitation, those relating to occupational safety and health
and equal opportunity employment practices) except where the failure to comply
therewith does not have a material adverse effect on the business or financial
condition of the Buyer.
3.4 Consents. No consent, approval or authorization of, or exemption by, or
filing with, any governmental or regulatory authority is required in connection
with the execution, delivery and performance by Buyer of this Agreement or the
taking of any other action contemplated hereby, excluding, however, consents,
approvals authorizations, exemptions, waivers and filing, if any, which Seller
is required to make.
3.5 Litigation. No suit, action, or legal, administrative, arbitration, or
other proceeding or governmental investigation is pending, or to Buyer's
knowledge is threatened against Buyer, which might materially or adversely
affect Buyer's financial condition or the conduct of Buyer's business. There is
no outstanding judgment, decree, or order against Buyer which affects Buyer in
any way.
3.6 Stock. The aggregate number of Buyer's shares consists of 250,000
ordinary registered shares, par value $0.64 each (the "GUCT Common Stock"), of
which 2 registered shares were issued and outstanding prior to the Closing of
this Agreement. There are no outstanding options, rights, or warrants entitling
the holder thereof to purchase shares of Buyer or any securities which are
convertible into or exchangeable for such shares. In accordance with paragraph
1.3, Buyer shall issue and deliver 217,000 ordinary registered shares to the
Seller or its nominee per its instructions at the Closing Date or at a date
thereafter mutually agreeable to the parties.
3.7 Registration under the Securities Act. If Buyer shall forthwith file
with the Securities and Exchange Commission and appropriate state agencies a
registration statement under the Securities Act, Buyer shall register the shares
issued hereunder, and take all other necessary action to validate the
registration of such shares. The Buyer shall pay all fees and expenses incurred
by its counsel and accountants, printing and blue sky costs, filing and
registration fees, and expenses and commissions of underwriters, if applicable.
3.8 Registration under the Exchange Act. In accordance with paragraph 2.10,
if Seller elects to register the GUCT Shares, Buyer recognizes it will have a
duty to file corporate updates to its registration as a issuer with the
Securities and Exchange Commission pursuant to the rules and regulations of the
Exchange Act, specifically Section 12(g).
3.9 Compliance with Securities Laws. To the best of Buyer's knowledge,
neither Buyer nor any officer, director, affiliate, or controlling person of
Seller has committed any violation, or been
<PAGE>
in any way in contravention, of any law, rule or regulation governing
transactions in securities, in connection with the transactions herein.
3.10 Inspection and Value. Buyer has formed its own opinion as to the value
of Seller's Assets being purchased hereunder. The parties agree that Seller's
warranties include only the express written warranties that are contained in
this Agreement. Seller hereby disclaims all implied warranties. The parties
acknowledge that Buyer has inspected such Assets to the full extent of Buyer's
desire, and Seller has given Buyer ample opportunity to conduct such
inspections. Buyer recognizes that the success of the business in which Seller's
Assets will be utilized is dependent upon Buyer's skills and ability in the
industry.
3.11 Assumption of Business Contracts. Buyer shall assume the
responsibility for the performance of any contract, agreement or commitment
involving Seller as disclosed in the Disclosure Schedule. However, Buyer shall
have no responsibility to perform any such activities to the extent contracted
for by Seller between the date of this Agreement and the Closing without Buyer's
consent. Buyer shall indemnify and hold Seller harmless from all claims, loss,
or liability arising out of Buyer's performance or failure to perform under any
such contract, agreement or commitment.
3.12 Representation and Warranties. No representation or warranty by Buyer
in this Agreement or any documents provided hereunder contains or will contain
any untrue statement or omits or will omit to state any material fact necessary
to make the statements contained herein not misleading. All representations and
warranties made by Buyer in this Agreement and all documents provided hereunder
shall be true and correct as of the Closing Date with the same force and effect
as if they had been made on and as of such date.
ARTICLE 4
COVENANTS OF SELLER
Seller hereby covenants and agrees with Buyer as follows:
4.1 Seller's Cooperation. Seller will use its best efforts, and will
cooperate with Buyer, to secure all necessary consents, approvals,
authorization, exemptions and waivers from third parties as shall be required in
order to enable Seller to effect the transactions contemplated hereby and will
otherwise use its best efforts to cause the consummation of such transactions in
accordance with the terms and conditions hereof.
Further Seller shall furnish correct and complete information, including
financial statements, data and other documents Buyer shall reasonably request.
4.2 Conduct of Business. Seller covenants with Buyer that pending the
Closing:
(a) The Clinical Trials Business will be conducted its business only in the
ordinary course and use its best efforts to preserve the business
organization of the Clinical Trials Business intact.
(b) No dividend or other distribution or payment will be declared or paid
with respect to UCT or Pharmasoft's outstanding shares, and it will not
redeem, purchase, or otherwise acquire such shares.
(c) The Clinical Trials Business will make no changes in any of its
contracts or commitments, except those that occur in the ordinary course of
business.
<PAGE>
(d) The Clinical Trials Business will make no new contracts or commitments,
except contracts in the ordinary course of business for the purchase of
merchandise, materials, and supplies.
(e) The Seller will use its best efforts to preserve the Clinical Trials
Business's relationships with its material lenders, suppliers, customers,
licensors and licensees and others having material business dealings with
it such that its business will not be substantially impaired.
4.3 Additional documents. Seller shall, at any one or more times after the
Closing Date, upon Buyer's request, execute, acknowledge, and deliver all
further deeds, assignments, transfers, conveyances, powers of attorney, and
assurances that are required for the better assigning, transferring, granting,
conveying, assuring, and confirming to Buyer, or to its successors and assigns,
or for aiding and assisting in collecting and reducing to possession, any of or
all the assets and properties to be conveyed, to Buyer, and any of or all the
obligations of Seller to be assigned to, and assumed, paid, performed and
discharged by, Buyer.
ARTICLE 5
COVENANTS OF BUYER
Buyer hereby covenants and agrees with Seller as follows:
5.1 Buyer's Cooperation. Buyer will furnish Seller correct and complete
information, including financial statements, data and other documents Seller
shall reasonably request for inclusion as required in certain filings with the
Securities and Exchange Commission and the National Association of Securities
Dealers in order to fully effect the distribution to its shareholders of the
GUCT Common Stock.
Further, Buyer will use its best efforts, and will cooperate with Seller,
to secure all necessary consents, approvals, authorizations, exemptions and
waivers from third parties as shall be required in order to enable Buyer to
effect the transactions contemplated hereby, and will otherwise use its best
efforts to cause the consummation of such transactions in accordance with the
terms and conditions hereof.
5.2 Buyer's Knowledge of Business; Seller's Representations Modified by
Buyer's Knowledge. To the knowledge of Buyer, Seller's representations and
warranties made in this Agreement are true and correct. Buyer hereby agrees
that, to the extent any representation or warranty of Seller made herein is, to
the knowledge of Buyer acquired prior to the Closing, untrue or incorrect, if
Buyer elects to close, (i) Buyer shall have no rights under this Agreement by
reason of such untruth or inaccuracy, and (ii) any such representation or
warranty by Seller shall be deemed to be amended to the extent necessary to
render it consistent with such knowledge of Buyer.
Further, Buyer acknowledges that the success of the business in which
Seller's Assets will be utilized is solely dependent upon Buyer's skills and
ability in the industry.
5.3 Contracts. Buyer shall undertake the responsibility for the performance
of any contract, agreement or commitment involving Seller as disclosed in the
Disclosure Schedule. However, Buyer shall have no responsibility to perform any
such activities to the extent contracted for by Seller between the date of this
Agreement and the Closing without Buyer's consent. Buyer shall indemnify and
hold Seller harmless from all claims, loss, or liability arising out of Buyer's
performance or failure to perform under any such contract, agreement or
commitment.
5.4 Additional documents. Buyer shall, at any one or more times after the
Closing Date, upon Seller's request, execute, acknowledge, and deliver all
further instruments or documents and
<PAGE>
take all such further action as Seller may reasonably request in order to
evidence the consummation of the transactions contemplated hereby.
ARTICLE 6
MUTUAL COVENANTS OF BUYER AND SELLER
6.1 Confidentiality. Buyer and Seller mutually acknowledge that, pursuant
to their respective rights to inspect the other's books, accounts and records,
they may become privy to the other's confidential information, and that
communication of such confidential information to third parties could damage the
other's business after the transaction is completed. Buyer and Seller therefore
mutually agree to take reasonable steps to insure that such information about
the other, obtained by Buyer or Seller respectively, or any of their respective
employees, officers, agents, attorneys, or other accredited representatives,
shall remain confidential and not be disclosed or revealed to outside sources.
"Confidential information" includes information not ordinarily known by non
company personnel, including customer lists, supplier lists, trade secrets,
pricing policy and records, and all other information normally understood to be
confidential or otherwise designated as such by Seller or Buyer respectively.
6.2 Taxes.
(a) In accordance with paragraph 1.6 and 1.7 herein above, Seller shall be
liable for all income and franchise taxes payable as a result of the
operations of the Clinical Trials Business prior to Closing. Buyer shall be
liable for all income and franchise taxes payable as a result of the
operations of the Clinical Trials Business from and after the Closing.
(b) After the Closing Date, Buyer and Seller shall make available to the
other, as reasonably requested, and to any taxing authority, all
information, records or documents relating to tax liabilities or potential
tax liabilities of or relating to the Clinical Trials Business for all
periods prior to or including the Closing Date and shall preserve all such
information, records and documents until the expiration of any applicable
statute of limitations or extensions thereof. Buyer shall prepare and
provide to Seller any federal, state, local or foreign tax information
package requested by Seller for Seller's use in preparing its tax returns.
Such tax information packages shall be completed by Buyer and provided to
Seller within a reasonable time upon request after the Closing. Each party
shall bear its own expense in complying with the foregoing provisions.
(c) Buyer shall promptly notify Seller in writing upon receipt by Buyer,
any affiliate of Buyer or the Clinical Trials Business of notice of any
pending or threatened federal, state, or local or foreign income or
franchise tax audits or assessments of or relating to the Clinical Trials
Business for taxable periods ending prior to or including the Closing Date.
Seller shall have the sole right to represent the Clinical Trials
Business's interests in any tax audit or administrative or court proceeding
relating to taxable periods for which Seller is responsible for the payment
of taxes, and to employ counsel of its choice at its expense. Buyer agrees
that it will cooperate fully with Seller and its counsel in the defense
against or compromise of any claim in any said proceeding.
6.3 Access to records. Before the Closing Date, the parties' officers and
accredited representatives shall each have full access to the properties, books,
accounts, and records of every kind, and each will furnish the other with all
additional financial and operating data and other information as to its business
and properties that is from time to time reasonably requested. Each party shall
authorize and direct its respective independent auditors to make available to
the other party any information, including access to work papers, requested by
such party.
<PAGE>
ARTICLE 7
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to sell the Assets shall be subject to the
satisfaction (or waiver) on or prior to the Closing Date of all the following
conditions:
7.1 Representations and Warranties. All Buyer's representations and
warranties contained in this Agreement shall be true in all material respects as
of and at the Closing. Seller shall have received a certificate of Buyer, from
an authorized officer thereof, certifying the following as to the Buyer and its
operations:
(i) Buyer is a corporation duly organized and existing in good standing
under the laws of the British Virgin Islands and is duly qualified to do
business in that country.
(ii) Buyer has full power and authority to make, execute, deliver, and
perform this Agreement; all corporate and other proceedings required to be
taken by Buyer, its directors and shareholders to authorize Buyer to enter
into and carry out this Agreement and the transaction contemplated hereby
have been duly and properly taken; this Agreement constitutes a valid
obligation binding upon Buyer in accordance with its terms, and Buyer is
and has the corporate power to conduct the type of business presently
conducted by Seller.
(iii) The execution, delivery, and consummation of this Agreement do not
conflict with result in breach of, or constitute a default under, Buyer's
Articles of Incorporation or By-laws, or other similar charter documents of
Buyer, or any material agreement or instrument of which such counsel has
knowledge and to which Buyer is a party or by which it is bound.
(iv) The authorized officer does not know of any litigation proceeding or
governmental investigation pending or threatened against or relating to
Buyer which would adversely affect in any way the business of Buyer.
(v) At the Closing, Seller or its nominees shall be issued capital stock of
the Buyer, GUCT, in the amount of 217,000 shares, par value $0.64 in
denominations, amounts and names requested by Seller. Subsequent to the
Closing, Buyer shall cooperate with Seller upon Seller's request, to
execute all further transfers and conveyances that are required for better
transferring, granting, conveying assuring and confirming to Seller, or to
its successors and assigns, or for aiding and assisting in collecting and
reducing to possession, any or all the shares to be conveyed to Seller or
its nominees.
(vi) Buyer has complied with all applicable statutes, the provisions of its
Certificate of Incorporation and By-laws, or other similar charter
documents, and all other laws and regulations in all jurisdictions
applicable to the transaction contemplated to be performed by it hereunder,
including, but not limited to the federal securities laws in the United
States. Buyer acknowledges and agrees that it shall file with the SEC all
corporate updates to any registration under the Exchange Act filed by the
Seller on behalf of the Buyer as set out in paragraph 2.10.
7.2 Performance and Consent. Buyer shall have performed and complied with
all its agreements, terms and conditions under this Agreement on or before the
Closing, including, but not limited to, the execution of all necessary consents,
approvals, authorizations, exemptions or waivers in regard to the issuance of
new securities of GUCT, the assumption of contracts and liabilities and the
compliance with federal securities laws in relation to mandatory filings.
7.3 Bankruptcy or Similar. Buyer shall not be in bankruptcy or similar
proceedings.
<PAGE>
ARTICLE 8
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to purchaser the Assets and assume the Liabilities
of Seller shall be subject to the satisfaction (or waiver) on or prior to the
Closing Date of all the following conditions.
8.1 Representations and Warranties. All Seller's representations and
warranties contained in this Agreement shall be true in all material respects as
of and at the Closing Date with the same effect as if they had been made on and
as of Closing, except as otherwise contemplated or specifically permitted by the
terms hereof. Buyer shall have received a certificate of Seller, from an
authorized officer thereof, certifying as to the following as to the Seller and
its operations:
(i) Seller is a corporation duly organized and existing in good standing
under the laws of the State of Delaware, has full corporate power to own or
sell its assets and to conduct its business, and is duly qualified to do
business in that state.
(ii) Seller has full power and authority to make, execute, deliver, and
perform this Agreement; all corporate and other proceedings required to be
taken by Seller, its directors and shareholders to authorize Seller to
enter into and carry out this Agreement and the transaction contemplated
hereby have been duly and properly taken; this Agreement constitutes a
valid obligation binding upon Seller in accordance with its terms, and
Seller is and has the corporate power to conduct the type of business
presently conducted by Buyer.
(iii) The execution, delivery, and consummation of this Agreement do not
conflict with result in breach of, or constitute a default under, Seller's
Articles of Incorporation or By-laws, or any material agreement or
instrument of which such counsel has knowledge and to which Seller is a
party or by which it is bound.
(iv) At the Closing, Buyer shall receive good and marketable title to the
Assets being sold and transferred hereunder, free and clear of any
interests, encumbrances, subject only to matters expressly set forth herein
or in the Disclosure Schedule annexed hereto.
(v) The authorized officer does not know of any litigation proceeding or
governmental investigation pending or threatened against or relating to
Seller or the Assets which would adversely affect in any way the business
or Assets.
(vi) All corporate and other proceedings and actions and filings required
by this Agreement or by law or any rules or regulations promulgated
thereunder, to be taken by or on the part of the Seller, its board of
Directors or shareholders to authorize Seller to execute, deliver, and
perform its duties and obligations hereunder have been duly and validly
taken.
(vii) Seller has complied with all applicable statutes, the provisions of
its Certificate of Incorporation and By-laws, and all other laws and
regulations applicable to the transaction contemplated to be performed by
it hereunder, more specifically, the federal securities laws of the United
States.
8.2 Performance and Consent. Seller shall have performed and complied with
all its agreements, terms and conditions under this Agreement on or before the
Closing Date, including, but not limited to, the execution of all necessary
consents, approvals, authorizations, exemptions or waivers especially in regard
to the spin-off and subsequent registration of the Buyer, GUCT, under the
Exchange Act.
<PAGE>
8.3 Bankruptcy or Similar. Seller shall not be in bankruptcy or similar
proceedings.
ARTICLE 9
MISCELLANEOUS
9.1 No Survival. The representations and warranties made in this Agreement
or in any certificate or other document delivered pursuant hereto or in
connection therewith and the covenants and agreements contained herein to be
performed or complied with at or prior to the Closing shall not survive the
Closing. The covenants and agreements contained herein to be performed or
complied with after the Closing shall survive without limitation as to time,
unless the covenant or agreement specifies a term, in which case such covenant
or agreement shall survive for a period of one year following the expiration of
such specified term and shall thereupon expire.
9.2 Entire Agreement. This Agreement (including the Disclosure Schedule)
and those other documents annexed hereto, supersedes all prior agreements and
constitutes the sole understanding of the parties with respect to the subject
matter hereof. Matters disclosed by Seller or Buyer pursuant to any paragraph of
this Agreement shall be deemed to be disclosed with respect to all paragraphs of
this Agreement.
9.3 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors of
the parties hereto; provided, however, that this Agreement may not be assigned
by any party without prior written consent of the other party hereto, except
that Buyer may, at its election, assign this Agreement to any direct or indirect
wholly-owned subsidiary so long as the representations and warranties of Buyer
made herein are equally true of such assignee. Such assignee shall execute a
counterpart of this Agreement agreeing to be bound by the provision hereof as
"Buyer" and, if there is more than one assignee, agreeing to be jointly and
severally liable for all of the obligations of the assignor hereunder. If this
Agreement is assigned with such consent or pursuant to such exception, the terms
and conditions hereof shall be binding upon and shall inure to the benefit of
the parties hereto and their respective assigns; provided, however, that no
assignment of this Agreement or any of the rights or obligations hereof shall
relieve the assignor of its obligations under this Agreement.
9.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
9.5 Headings. The headings of the Articles and paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction hereof.
9.6 Modifications and Waivers. No amendment, modification or alteration of
the terms or provisions of this Agreement shall be binding unless the same shall
be in writing and duly executed by the parties hereto, except that any of the
terms or provisions of this Agreement may be waived in writing at any time by
the party which is entitled to the benefits of such waived terms or provisions.
No waiver of any of the provisions of this Agreement shall be deemed to or shall
constitute a waiver of any other provision hereof (whether or not similar). No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof.
9.7 Expenses. Seller and Buyer shall each pay all costs and expenses
incurred by it or on its behalf in connection with this Agreement and the
transaction contemplated hereby, including, without limiting the generality of
the foregoing, fees and expenses of its own financial consultants, accountants
and counsel.
<PAGE>
9.8 Notices. Any notice, request, instruction or other document to be given
hereunder by either party hereto to the other party shall be in writing and
delivered personally or sent by registered or certified mail (or air mail when
applicable), postage prepaid,
if to Seller to : UniHolding Corporation
96 Spring Street, 8th Floor
New York, New York 10012
Attn: Melanie Stapp
with a copy to: UniHolding Corporation
c/o Unilabs SA
12, place de Cornavin
CH 1211 Geneva 1
Switzerland
Attn: Bruno Adam
if to Buyer to: Global Unilabs Clinical Trials Ltd.
207-208 Neptune House
Marina Bay
Gibraltar
Attn: Helen Beards
with a copy to: Unilabs Group Limited
207-208 Neptune House
Marina Bay
Gibraltar
Attn: Helen Beards
or at such other address for a party as shall be specified by like notice. Any
notice which is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party. Any notice which is addressed and mailed in the manner
herein provided shall be conclusively presumed to have been duly given to the
party to which it is addressed at the close of business, local time of the
recipient, on the third day after the day it is so placed in the mail.
9.9 Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the state of Delaware. Each of the parties agrees to (i)
the irrevocable designation of the Secretary of State of Delaware as its agent
upon whom process against it may be served and (ii) personal jurisdiction in
any, action brought in any court, Federal or State, within Delaware having
subject matter jurisdiction arising under this Agreement.
9.10 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal representatives,
successors and assigns.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed on its behalf as of the date first above written.
UNIHOLDING CORPORATION, Seller
By: /s/ Edgard Zwirn
Title: Chairman
By: /s/ Bruno Adam
Title: Director
Attest:
By:/s/ Melanie Stapp
Name: Melanie Stapp
GLOBAL UNILABS CLINICAL TRIALS, Buyer
By: /s/ Alessandra Van Gemerden
Title: Director
By: /s/ Paul Hokfelt
Title: Director
Attest:
By:/s/ Melanie Stapp
Name: Melanie Stapp
<PAGE>
ASSIGNMENT OF
GLOBAL UNILABS CLINICAL TRIALS LIMITED
SHARE INTERESTS
UniHolding Corporation, Assignor ("UHLD"), hereby assigns its rights, title and
interests in the Global Unilabs Clinical Trials ("GUCT") capital stock acquired
pursuant to the Share Exchange Agreement by and between UHLD and GUCT dated July
23, 1996, to Unilabs Group Limited, Assignee ("UGL"), its wholly-owned
subsidiary, in consideration for the reduction of US$2,177,000 to the
outstanding debt balance between UHLD and UGL.
The GUCT capital stock assigned hereby consists of 217,000 ordinary registered
shares, par value US$0.64.
Each of the parties hereto has caused this Agreement to be executed on its
behalf as of the date below.
Dated: July 23, 1996
UniHolding Corporation Unilabs Group Limited
Assignor Assignee
By: /s/ Edgard Zwirn By: /s/
Name/Title: Edgard Zwirn, Chairman Name/Title:
By: /s/ Bruno Adam By: /s/
Name/Title: Bruno Adam, Director Name/Title:
<PAGE>
Amended Articles of Incorporation of UniHolding Corporation
filed in paper under Form SE
- -----------------------------
You may request a copy from the Company at the following address or
telephone number:
UniHolding Corporation
96 Spring Street, 8th Floor
New York, New York 10012
(212) 219-9496
<PAGE>
UNIHOLDING CORP.
originally
IRT REALTY SERVICES, INC.
B Y - L A W S
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington, County
of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
shall be held in the City of New York, State of New York, at such place as may
be fixed from time to time by the board of directors, or at such other place
either within or without the State of Delaware as shall be designated from time
to time by the board of directors and stated in the notice of the meeting.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year 1988,
shall be held on the last business day of the month following the close of each
fiscal year if not a legal holiday, and if a legal holiday, then on the next
secular day following, at 10 A.M., or at such other date and time as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting, at which they shall elect by a plurality vote a board of
directors, and transact such other business as may properly be brought before
the meeting.
Section 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than 10 nor more than 60 days before the date of the meeting.
<PAGE>
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, a the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of meeting during
the whole time thereof, and may be inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president or chairman of the board and shall
be called by the president or secretary at the request in writing of a majority
of the board of directors, or at the request in writing of stockholders owning a
majority in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than 10 nor more than 60 days before the date of the
meeting, to each stockholder entitled to vote at such meeting.
Section 7. The majority of the holders of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
<PAGE>
Section 8. When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the statutes or of the
certificate of incorporation, a different vote is required in which case such
express provision shall govern and control the decision of such question.
Section 9. Unless otherwise provided in the certificate of incorporation
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be voted on after eleven
months from its date, unless the proxy provides for a longer period.
At all elections of directors of the corporation each stockholder having
voting power shall be entitled to exercise the right of cumulative voting if
provided in the certificate of incorporation.
Section 10. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special meeting of stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall' constitute the whole board
shall be not less than three nor more than seven. The first board shall consist
of three directors. Thereafter, within the limits above specified, the number of
directors shall be determined by resolution of the board of directors or by the
stockholders at the annual meeting. The directors shall be elected at the annual
meeting of the stockholders, except as provided in Section 2 of this Article,
and each director elected shall hold office until his successor is elected and
qualified. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a
<PAGE>
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until the
next annual election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in office, then an
election of directors may be held in the manner provided by statute. If, at the
time of filling any vacancy or any newly created directorship, the directors
then in office shall constitute less than a majority of the whole board (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least ten percent
of the total number of the shares at the time outstanding having the right to
vote for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. The business of the corporation shall be managed by or under the
direction of its board of directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors shall
be held at such time and place as shall be fixed by the vote of the stockholders
at the annual meeting and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event of the failure of the stockholders to fix
the time or place of such first meeting of the newly elected board of directors,
or in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver signed by all
of the directors.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board may be called by the president on
10 days' notice to each director, either personally or by mail or by telegram;
special meetings shall be called by the president or secretary in like
<PAGE>
manner and on like notice on the written request of two directors unless the
board consists of only one director; in which case special meetings shall be
called by the president or secretary in like manner and on like notice on the
written request of the sole director. Attendance of a director at a meeting
shall constitute a waiver of notice and a waiver of all objections to the place
and time of such meeting.
Section 8. At all meetings of the board a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the board of directors the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of incorporation
or these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of incorporation
or these by-laws, members of the board of directors, or any committee designated
by the board of directors, may participate in a meeting of the board of
directors, or any committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of two or more of the directors of the corporation. The board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may
<PAGE>
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the board
of directors, shall have and may exercise all the powers and authority of the
board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, (except
that a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the board of directors
as provided in Section 151(a) fix any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation) adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock or to adopt a certificate of ownership and
merger. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of incorporation
or these by-laws, the board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
<PAGE>
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of incorporation
or by law, any director or the entire board of directors may be removed, with or
without cause, by the holders of a majority of shares entitled to vote at an
election of directors.
ARTICLE IV
NOTICES
Section l. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the provisions
of the statutes or of the certificate of incorporation or of these by-laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
<PAGE>
Section 4. The salaries of all officers and agents of the corporation shall
be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect. Unless otherwise ordered by the Board of
Directors, the president shall have full power and authority to attend and to
vote at any meetings of security holders of corporations in which the
corporation holds securities.
Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. In the absence of the president or in the event of his inability
or refusal to act, the vice-president (or in the event there be more than one
vice-president, the vice presidents in the order designated by the directors, or
in the absence of any designation, then in the order of their election) shall
perform the duties of the president, and when so acting, shall have all powers
of and be subject to all the restrictions upon the president. The
vice-presidents shall perform such other duties and have such other powers as
the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of
<PAGE>
directors, and shall perform such other duties as may be prescribed by the board
of directors or president, under whose supervision he shall be. He shall have
custody of the corporate seal of the corporation and he, or an assistant
secretary, shall have authority to affix the same to any instrument requiring it
and when so affixed, it may be attested by his s signature or by the signature
of such assistant secretary. The board of directors may give general authority
to any other officer to affix the seal of the corporation and to attest the
affixing by his signature.
Section 10. The assistant secretary, or if there by more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURER
Section 11. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors (or
if there be no such determination, then in the order of their
<PAGE>
election) shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
treasurer and shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
ARTICLE VI
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by a
certificate. Certificates shall be signed by, or in the name of the corporation,
by the chairman or vice chairman of the board of directors, or the president or
a vice-president and the treasurer or an assistant treasurer, or the secretary
or an assistant secretary of the corporation.
Upon the face or back of each stock certificate issued to represent any
partly paid shares shall be set forth the the amount of the consideration to be
paid therefor and the amount paid thereon.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions or such
preferences and/or rights.
Section 2. Any of or all the signatures on a certificate may be facsimile.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore
<PAGE>
issued by the corporation alleged to have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming the certificate
of stock to be lost, stolen or destroyed. When authorizing such issue of a new
certificate or certificates, the board of directors may, in its discretion and
as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require and/or
to give the corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for duly endorsed or accompanied by proper evidence
of succession, assignation or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
FIXED RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any divided or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting: provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
<PAGE>
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting, and
at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
CHECKS
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
<PAGE>
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
Section 7. The corporation shall indemnify its officers, directors,
employees and agents to the extent permitted by the General Corporation Law of
Delaware.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new by-laws
may be adopted by the stockholders or by the board of directors, when such power
is conferred upon the board of directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors if notice of
such alteration, amendment, repeal or adoption of new by-laws be contained in
the notice of such special meeting. If the power to adopt, amend or repeal
by-laws is conferred upon the board of directors by the certificate of
incorporation it shall not divest or limit the power of the stockholders to
adopt, amend or repeal by-laws.
<PAGE>
MEMORANDUM OF AGREEMENT
between
HEALTH STRATEGIES LIMITED
17 Bond St
St.Helier
Jersey
Channel Islands
(herein called "HSL")
of the one part
and
UNILABS GROUP LIMITED
Road Town
Pasea Estate
P.O. Box 3149 TORTOLA
British Virgin Islands
(herein called "UGL")
of the other part
Whereas
(A) HSL is engaged in the health services industry and has acquired the
European copyright and other intellectual property rights described in
Part I of the First Schedule to this Agreement (herein called "the
Rights") in a software package and related know-how described in Part II
of the First Schedule to this Agreement (herein called "the Product").
(B) HSL wishes to introduce and distribute the Product in Europe.
(C) UGL is experienced in the health services industry in Europe and wishes
to participate in the introduction and distribution of the Product in
Europe.
THE PARTIES HAVE AGREED AS FOLLOWS:
I.
To incorporate a company with the characteristics more particularly set forth in
the Second Schedule hereto (herein called "the Company") as soon as possible
after signature of this Agreement but in any event at the latest on the 15th of
September 1995.
II.
To pay in United States dollars upon incorporation the following amounts to the
Company (or to such account for the Company as HSL may direct in writing in the
form of paid in capital and surplus:-
capital surplus
HSL $2'500 nil
UGL $5'000 $2'000'000
<PAGE>
III.
In addition UGL undertakes to pay in United States dollars the following further
amounts to the Company (or to such account for the Company as HSL may direct in
writing)in the form of paid in surplus no later than the date set next to each
amount:
surplus date of payment
UGL $500'000 15 September 1996
UGL $500'000 15 September 1997
IV.
Subject to II above and within 10 days of 15 September 1995, or such other date
as each of the parties to this Agreement may agree, HSL will procure that the
Rights are transferred to the Company in exchange for a cash payment by the
Company to HSL or its nominee of US$1'500'000.
V.
Commencing 1st October 1995, HSL or its nominee will develop for the Company a
marketing plan for the Product for which HSL or its nominee will be remunerated
by the Company in United States dollars as follows:
Date of Payment Amount
1st October 1995 $500'000
1st October 1996 $500'000
1st October 1997 $500'000
The parties will procure that the Company enters into an agreement for the
development of a marketing plan with HSL or its nominee which agreement will
comply with the terms set forth in the Third Schedule hereto and shall contain
no more onerous provisions as regards HSL without its prior agreement.
VI.
All other matters required to make the Company a going concern will be
determined by the Company by its directors and where required its shareholders
after incorporation. Each party undertakes to use its best endeavours for and on
behalf of the Company to successfully introduce and distribute the Product in
Europe.
Each of HSL and UGL agree and undertake not to compete directly or indirectly
with the business of the Company within the territory of Europe such obligation
not including but not being limited to refraining from (directly or indirectly)
investing, controlling, entering into an employment, consulting or other
relationship with competing companies or businesses and not soliciting any
clients or employees of the Company. This undertaking shall continue for so long
as the Company has not been liquidated.
VII.
Each party may assign its rights and obligations under this Agreement to a
company or person of its choosing after obtaining the prior written consent of
the other party and subject to the condition (which the assignor and the
assignee must accept in writing addressed to the other party to this Agreement)
that the assignor party to this Agreement
<PAGE>
and the assignee are jointly and severally liable for all obligations of the
assignor under or connected with this Agreement.
The parties hereto hereby agree that in the event of nonperformance of any
assignee (including non-payment of any payment required under Articles II and
III above) the assignor party to this Agreement and the assignee will be jointly
and severally liable to remedy the default (including pay any unpaid amount) to
the Company.
VIII.
UGL hereby irrevocably agrees that the capital to be paid by it pursuant to
Article II above is to be used by the Company to pay the British Virgin Islands
Government taxes and registered office fees and the surplus amounts to be paid
by it pursuant to Articles II and III above are to be paid by the Company to HSL
or its nominee in pursuance of Articles IV and V above and are not to be used
for any other purpose. UGL will exercise any and all of its rights in the
Company (including procuring that its representative on the Board of Directors
approves all such action) to obtain that the Company enters into the agreements
for transfer of the Rights and for development of a marketing plan contemplated
under Articles IV and V hereof and UGL hereby irrevocably and unconditionally
guarantees all payments to be made to HSL or its nominee pursuant to this
Agreement and such further agreements as are made between the Company and HSL or
its nominee.
Other financing requirements of the Company will be met by agreement between the
parties, either by further capital contributions or by third party financing.
IX.
In the event that, for any reason whatsoever, the Company is not incorporated or
the proposed marketing plan is not required or continued with after
incorporation of the Company, or in the event of breach of its non-compete
obligation or breach of its secrecy undertaking, UGL hereby unconditionally and
irrevocably agrees to pay HSL or its nominee US$3'000'000 as liquidated damages
provided that the liquidated damages of US$3'000'000 shall be reduced by any
amounts already paid to HSL or its nominee by the Company in accordance with
Articles IV and V above.
X.
Both parties hereby agree to sign a complete secrecy undertaking with respect to
the Rights and the Product and the business affairs of the Company.
XI.
This Agreement shall be governed by and construed in accordance with the laws of
Switzerland and the parties hereby agree to submit any disputes arising with
respect to or in connection with this Agreement to be finally decided by one or
more arbitrators in accordance with the Rules of Arbitration of the Chamber of
Commerce and Industry of Geneva. The arbitration proceedings shall be conducted
in English and the arbitration shall take place in Geneva.
<PAGE>
Made in Jersey , on 14 September 1995
In two original copies
/s/
SIGNED SEALED AND DELIVERED BY
HEALTH STRATEGIES LIMITED
/s/
SIGNED SEALED AND DELIVERED BY
UNILABS GROUP LIMITED
<PAGE>
THE FIRST SCHEDULE
Part I. "the Rights"
Name of Software Software known as "MDM" as
developed by Medical Diagnostic Management
Inc.
Description of Understanding of how ancillary services
Know-How (such as clinical laboratory testing,
radiology services, physical therapy, medical
equipment rental, and chiropractic services)
are provided to the out patient market,
particularly, how to organize such services
in an efficient and cost effective network,
saving costs to the payor whilst maintaining
delivery to the patient and doctor.
Part II. "the Product"
A software package known as "MDM" which operates as a sophisticated payments
system for health insurance companies. The package and related know-how permits
processing of payments by the relevant insurance company and through a
networking system also checks claims for tests provided at the relevant doctor's
request against industry averages thereby identifying test service providers who
deviate from the industry norm.
Health insurance companies who use the system will pay a service fee per
transaction to the Company.
[END OF FIRST SCHEDULE]
<PAGE>
THE SECOND SCHEDULE
("the Company")
1. JURISDICTION : British Virgin Islands.
AND TYPE An International Buisness Company incorporated
under the International Buisness Companies
Ordinance, 1984 (hereinafter "the Ordinance").
2. NAME : Medical Insurance Services (Europe)S.A. or MISE S.A.
or available alternative.
3. OBJECT : To acquire the Rights to the Product (both
described in the First Schedule), to develop a
complete marketing plan in at least three European
jurisdictions for the Product and to commence
marketing the Product by 1st October 1997 and for
this purpose the Company should have the widest
objects clause permitted under the Ordinance.
4. AUTHORISED : US$50'000.
CAPITAL
5. SHARES : Two classes of shares of one series comprising 100
Class A ordinary shares without par value and 100
Class B ordinary shares without par value.
The shares will be registered only.
The Class A shares will have the following rights
attached:
1. Four votes per share.
2. The right to appoint two
directors.
3. A first right of refusal over any
Class B shares that a Class B
shareholder wishes to transfer at a
price equal to the proportion of
the net asset value of the Company
represented by the paid in amount
(capital and surplus) on the shares to
be transferred as determined
by an independent accountant in the
absence of agreement with the
disposing Class B shareholder.
<PAGE>
The Class B shares will have the following
rights attached:
1. One vote per share.
2. The right to appoint one director.
3. A first right of refusal over any
Class A shares that the Class A
shareholder wishes to transfer at a
price equal to the proportion of the
net asset value of the Company
represented by the paid in amount
(capital and surplus) on the shares to
be transferred as determined by an
independent accountant in the absence
of agreement with the disposing Class
A shareholder.
A positive vote of each Class of shares shall
be required to modify any of the above
rights, to elect more than three directors,
to create a new Class or Classes, to modify
the Memorandum and Articles of Association
and to liquidate the Company.
In all other matters, the A and B shares
shall be voted as one class, decisions being
taken by an absolute majority of the number
of votes represented by the shares present
and voting.
6. ISSUED CAPITAL : Health Strategies Limited - 25 Class A
ordinary shares without par value for a
consideration designated as capital by the
directors of $100 per share.
Unilabs Group Limited - 50 Class B ordinary
shares without par value for a consideration
designated as capital by the directors of
$100 per share and surplus $40'000 per share.
7. DIRECTORS : Minimum of two and maximum of five, the first
directors to be:
1. Representative of Class A Shareholder:
2. Representative of Class B Shareholder:
[END OF SECOND SCHEDULE]
<PAGE>
THE THIRD SCHEDULE
Marketing Plan Agreement
PARTIES: The Company of the one part and HSL or its nominee of the
other part.
COMMENCEMENT: 1st October 1995.
DURATION: Two years ending on 1st October 1997.
UNDERTAKINGS: (1) The Company shall pay the remuneration specified in
Article V of the Memorandum of Agreement in accordance
with the terms thereof.
(2) HSL or its nominee shall:
(a) Prepare a preliminary report for the directors
of the Company of the potential for application
of the Product in Germany, France, Switzerland
and the United Kingdom.
(b) For any two of the territories included in the
preliminary report designated by the board of
directors of th Company, do the following in each
territory:
(i) establish a network of providers of
ancillary services;
(ii) negotiate initial contracts with an
insurance health care payor;
(iii) identify personnel requirements of the
Company and select candidates for available
posts;
(iv) select possible office premises and when
premises have been rented by the Company,
set up the EDP systems; and
(v) prepare a business plan for the period to
1st October 1997 and a budget projection
for three years thereafter.
[END OF THIRD SCHEDULE]
<PAGE>
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
UNIHOLDING CORPORATION
AND
UNILABS HOLDINGS SA
<PAGE>
AGREEMENT made this day of August, 1996, by and between UniHolding
Corporation, a Delaware corporation ("UniHolding"), with its principal place of
business at 96 Spring Street, 8th Floor, New York, NY 10012 and Unilabs Holdings
SA, a Panama corporation ("Holdings"), with its principal place of business
located 53rd Street, Urbanizacion Obarrio Torre, Swiss Bank, 16th Floor, Panama.
WITNESSETH:
WHEREAS, Holdings owes to UniHolding an amount which as of August 31, 1995
was $2,938,439;
WHEREAS, such amount was primarily lent to Holdings in stages for the
purpose of providing interim financing;
WHEREAS, Holdings wishes to retain its cash resources and has offered
shares of UniHolding common stock in repayment of its loan;
WHEREAS, UniHolding has agreed to such repayment in the form of UniHolding
common stock;
NOW, THEREFORE, in consideration of the mutual covenants, representations
and warranties, and upon terms and subject to the conditions hereinafter set
forth, the parties do intend to be bound and hereby agree as follows:
ARTICLE 1. TERMS OF PURCHASE
1.1 Share Purchase. Subject to the terms and conditions set forth herein, at the
Closing (hereinafter defined) UniHolding, in reliance upon the representations
and warranties of Holdings, will acquire from Holdings, and Holdings, will
transfer, convey, and deliver to UniHolding, all of Holdings's right, title and
interest in 620,000 shares of UniHolding common stock, par value $0.01 per share
("Purchase Shares") as of the Closing.
1.2 The Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of UniHolding, at its principal
offices in New York, or at such other time and/or place as the parties may
mutually agree, on the 31st day of August, 1995 (the "Closing Date").
1.3 Purchase Price. Immediately after the execution of this Agreement, Holdings
shall transfer or hold on behalf of UniHolding the Purchase Shares at a price of
$4.75 per share, totaling $2,945,000 in payment of the outstanding loan balance
between the parties. UniHolding and Holdings acknowledge that the price of $4.75
is the current bid market price, that it has been such since August 8, 1995, and
therefore it represents the best available valuation for such shares.
1.4 Instruments of Transfer. On the Closing Date, both the Holdings and the
UniHolding shall deliver duly executed instruments of transfer for the Purchase
Shares sufficient to vest the interests in the Purchase Shares being conveyed in
accordance with the terms of this Agreement. The transfer of such shares will be
made upon the request of UniHolding. Pending such request, which may be made in
one or more occurences, the Purchase Shares will remain under the custody of
Holdings, for the account and at the risk of UniHolding. While in the custody of
Holdings, the
<PAGE>
Purchase Shares shall remain in Holdings' name if they are materialized by
physical certificates, or on Holdings' account if they are held in Depository
Trust Company.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF HOLDINGS. Holdings represents and
warrants to the UniHolding as follows:
2.1 Corporate Organization. Holdings is a corporation duly organized, validly
existing and in good standing under the laws of Panama, and has the requisite
corporate power and authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby.
2.2 Consents. Holdings will use its best efforts, and will cooperate with
UniHolding, to secure all necessary consents, approvals, authorizations, and
exemptions as shall be required in order to enable Holdings to effect the
transactions contemplated hereby and will otherwise use its best efforts to
cause the consummation of such transaction in accordance with the terms and
conditions hereof.
2.3 Compliance with Laws. To Holdings's knowledge, it is in compliance with all
laws, rules, regulations and orders applicable to its business except where the
failure to comply therewith does not have a material adverse effect on the
business or financial condition Holdings.
2.4 Compliance with Securities Laws. To the best of Holding's knowledge, neither
Holdings nor any officer, director, affiliate, or controlling person has
committed any violation, or been in any way in contravention, of any law, rule
or regulation governing transactions in securities, in connection with the
transactions herein.
2.5 Corporate Power and Authority; Effect of Agreement. The execution, delivery
and performance by Holdings of this Agreement and the consummation by Holdings
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Holdings. This Agreement has been duly
and validly executed and delivered by Holdings and constitutes a valid and
binding obligation of Holdings, enforceable in accordance with its terms. The
execution, delivery and performance by Holdings of this Agreement and the
consummation by Holdings of the transactions contemplated hereby will not, with
or without giving of notice or the lapse of time, or both, subject to obtaining
any required consents, approvals, authorizations, exemptions or waivers, (c)
violated any order, judgment or decree applicable to Holdings, or (d) conflict
with, or result in a breach or default under, any term or condition of the
Certificate of Incorporation or the By-laws of Holdings or any agreement or
other instrument to which Holdings is a party or by which Holdings may be bound;
except in each case, for violations, conflicts, breaches or defaults which in
the aggregate would not materially hinder or impair the consummation of the
transactions contemplated hereby.
2.6 Representation and Warranties. No representation or warranty by Holdings in
this Agreement or any documents provided hereunder contains or will contain any
untrue statement or omits or will omit to state any material fact necessary to
make the statements contained herein not misleading. All representations and
warranties made by Holdings in this Agreement and all documents provided
hereunder shall be true and correct as of the Closing Date with the same force
and effect as if they had been made on and as of such date.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF UNIHOLDING.
3.1 Corporate Organization. UniHolding is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power
<PAGE>
and authority to carry on its business as it is now being conducted, and to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby.
3.2 Corporate Power and Authority; Effect of Agreement. The execution, delivery
and performance by UniHolding of this Agreement and the consummation by
UniHolding of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of UniHolding. This Agreement has
been duly and validly executed and delivered by UniHolding and constitutes the
valid and binding obligation of UniHolding, enforceable in accordance with its
terms. The execution, delivery and performance by UniHolding of this Agreement
and the consummation by UniHolding of the transactions contemplated hereby will
not, with or without the giving of notice or the lapse of time, or both, subject
to obtaining any required consents, approvals, authorizations, exemptions or
waivers, (c) violate any order, judgment or decree applicable to UniHolding or
(d) conflict with, or result in a breach or default under, any term or condition
of the Certificate of Incorporation, the By-laws or other similar charter
documents of UniHolding, or any agreement or other instrument to which
UniHolding or any of its subsidiaries is a party or by which any of them may be
bound; except, in each case, for violations, conflicts, breaches or defaults
which in the aggregate would not materially hinder or impair the consummation of
the transactions contemplated hereby.
3.3 Compliance with Laws. To UniHolding's knowledge, the UniHolding is in
compliance with all laws, rules, regulations and orders applicable to its
business except where the failure to comply therewith does not have a material
adverse effect on the business or financial condition of the UniHolding.
3.4 Consents. No consent, approval or authorization of, or exemption by, or
filing with, any governmental or regulatory authority is required in connection
with the execution, delivery and performance by UniHolding of this Agreement or
the taking of any other action contemplated hereby, excluding, however,
consents, approvals authorizations, exemptions, waivers and filing, if any,
which Holdings is required to make.
3.5 Compliance with Securities Laws. To the best of UniHolding's knowledge,
neither UniHolding nor any officer, director, affiliate, or controlling person
has committed any violation, or been in any way in contravention, of any law,
rule or regulation governing transactions in securities, in connection with the
transactions herein.
3.6 Representation and Warranties. No representation or warranty by UniHolding
in this Agreement or any documents provided hereunder contains or will contain
any untrue statement or omits or will omit to state any material fact necessary
to make the statements contained herein not misleading. All representations and
warranties made by UniHolding in this Agreement and all documents provided
hereunder shall be true and correct as of the Closing Date with the same force
and effect as if they had been made on and as of such date.
ARTICLE 4. MUTUAL COVENANTS OF HOLDINGS AND UNIHOLDING. Both parties hereby
covenants and agrees as follows:
4.1 Cooperation. Holdings and UniHolding will use their best efforts, and will
cooperate with each other, to secure all necessary consents, approvals,
authorization and exemptions as shall be required in order to enable Holdings to
effect the transactions contemplated hereby and will otherwise use their best
efforts to cause the consummation of such transactions in accordance with the
terms and conditions hereof.
4.2 Conduct of Business. Holdings covenants with UniHolding that pending the
Closing, Holdings will not sell or in any way impair the Purchase Shares.
<PAGE>
4.3 Additional documents. Holdings and UniHolding shall, at any one or more
times after the Closing Date, upon request, execute, acknowledge, and deliver
all further instruments, transfers, conveyances, doucments, and assurances that
are required for the better assigning, transferring, granting, conveying,
assuring, and confirming to UniHolding, or to its successors and assigns, or for
aiding and assisting in collecting and reducing to possession the Purchase
Shares, to UniHolding.
ARTICLE 5. MISCELLANEOUS.
5.1 No Survival. The representations and warranties made in this Agreement or in
any certificate or other document delivered pursuant hereto or in connection
therewith and the covenants and agreements contained herein to be performed or
complied with at or prior to the Closing shall not survive the Closing. The
covenants and agreements contained herein to be performed or complied with after
the Closing shall survive without limitation as to time, unless the covenant or
agreement specifies a term, in which case such covenant or agreement shall
survive for a period of one year following the expiration of such specified term
and shall thereupon expire.
5.2 Entire Agreement. This Agreement supersedes all prior agreements and
constitutes the sole understanding of the parties with respect to the subject
matter hereof. Matters disclosed by Holdings or UniHolding pursuant to any
paragraph of this Agreement shall be deemed to be disclosed with respect to all
paragraphs of this Agreement.
5.3 Successors and Assigns. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors of the
parties hereto; provided, however, that this Agreement may not be assigned by
any party without prior written consent of the other party hereto.
5.4 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall for all purposes be deemed to be an original and all of
which shall constitute the same instrument.
5.5 Headings. The headings of the Articles and paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
5.6 Modifications and Waivers. No amendment, modification or alteration of the
terms or provisions of this Agreement shall be binding unless the same shall be
in writing and duly executed by the parties hereto, except that any of the terms
or provisions of this Agreement may be waived in writing at any time by the
party which is entitled to the benefits of such waived terms or provisions. No
waiver of any of the provisions of this Agreement shall be deemed to or shall
constitute a waiver of any other provision hereof (whether or not similar). No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof.
5.7 Expenses. Holdings and UniHolding shall each pay all costs and expenses
incurred by it or on its behalf in connection with this Agreement and the
transaction contemplated hereby, including, without limiting the generality of
the foregoing, fees and expenses of its own financial consultants, accountants
and counsel.
5.8 Notices. Any notice, request, instruction or other document to be given
hereunder by either party hereto to the other party shall be in writing and
delivered personally or sent by registered or certified mail (or air mail when
applicable), postage prepaid,
<PAGE>
if to UniHoldings to : UniHolding Corporation
96 Spring Street, 8th Floor
New York, New York 10012
Attn: Melanie Stapp
with a copy to: UniHolding Corporation
c/o Unilabs SA
12, place de Cornavin
CH 1211 Geneva 1
Switzerland
Attn: Bruno Adam
if to Holdings:
with a copy to:
or at such other address for a party as shall be specified by like notice. Any
notice which is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party. Any notice which is addressed and mailed in the manner
herein provided shall be conclusively presumed to have been duly given to the
party to which it is addressed at the close of business, local time of the
recipient, on the third day after the day it is so placed in the mail.
5.9 Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the state of Delaware. Each of the parties agrees to (i)
the irrevocable designation of the Secretary of State of Delaware as its agent
upon whom process against it may be served and (ii) personal jurisdiction in
any, action brought in any court, Federal or State, within Delaware having
subject matter jurisdiction arising under this Agreement.
5.10 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal representatives,
successors and assigns.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed on its behalf as of the date first above written.
UNIHOLDING CORPORATION
By:/s/ Edgard Zwirn
Title: CEO and President
Attest:
By: /s/ Bruno Adam
Name: Bruno Adam
UNILABS HOLDINGS SA, Panama
By:/s/ Bruno Adam
Title: Treasurer
Attest:
By:/s/ Edgard Zwirn
Name: Edgard Zwirn
<PAGE>
ANY SHARES SO PURCHASED THROUGH THIS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED OR SOLD IN
THE UNITED STATES OR TO U.S. PERSONS (OTHER THAN DISTRIBUTORS) WITHOUT
REGISTRATION UNDER THE ACT, UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
AMENDED STOCK OPTION PLAN
Statement of Stock Option Plan, dated June 28, 1994, amended this 30th
day of May 1996, for UniHolding Corporation (the "Company").
Whereas, the Board of Directors of the Company (the "Board"), deems it
in the best interest of the Company that certain directors, officers, key
management personnel and key employees employed by the Company, its subsidiaries
and affiliates be given an opportunity to acquire a stake in the growth of the
Company, as a means of assuring their maximum effort and continued association
with the Company, and
Whereas, the Board believes that the Company can best obtain these and
other benefits by granting stock options to designated employees from time to
time,
Now, therefore, the Board has adopted this Amended Stock Option Plan,
effective upon their unanimous vote:
1. Purpose. The purpose of this 1994 Amended Stock Option Plan of UniHolding
Corporation (the "Plan"), is to promote the interests of the Company by
affording an incentive to certain directors, officers and key management
personnel to remain in the employ of the Company and to use their best efforts
in its behalf; and further to aid the Company in attracting, maintaining, and
developing capable management personnel of a caliber required to insure the
Company's continued success, by means of an offer to such person of an
opportunity to acquire or increase their proprietary interest in the Company
through the granting of options to purchase the Company's Common Stock pursuant
to the terms of this Plan.
2. Definitions. When used herein, the following terms shall have the following
meanings:
"Administrator" means the Chairman of the Board, duly appointed to
administer the Plan.
"Affiliate" means any business entity in which the Company has or holds a
significant interest or an entity which has or holds a significant interest in
the Company.
"Board" means the Board of Directors of the Company.
"Book Value" means for the purposes of resales to the Company, the book
value of such shares at the close of the Company's last fiscal year prior to the
transaction to resale such shares, as shown on the Company's balance sheet which
has been prepared and certified by the firm of accountants then servicing the
Company.
"Change in control" means that any of the following events have occurred:
<PAGE>
(a) any person or entity as defined in Section 13(d) of the Exchange Act of
1934 as amended (the "Exchange Act") becomes a beneficial owner of 40% or more
of the outstanding Common Stock; or
(b) as the consequence of any cash tender or exchange offer, merger, or
other business combination (a "Transaction"), the persons who were directors of
the Company before a Transaction cease to constitute a majority of the Board
following such Transaction.
"Common Stock" means the common stock of the Company par value $0.01 per
share.
"Company" means UniHolding Corporation, a Delaware corporation with
principal offices at 96 Spring Street, 8th Floor, New York, New York 10012.
"Date of Grant" means the date on which an Option is granted under the
Plan.
"Employees" shall generally include directors, officers, key management
personnel and key employees of the Company, its parent, subsidiaries and
affiliates.
"Exchange Act" means the Securities Exchange Act of 1934 as amended.
"Fair Market Value" means, with respect to the Common Stock, the average
mean between the highest and the lowest selling prices at which shares of Common
Stock were traded on the NASDAQ Small Cap or NASDAQ National System for the ten
days prior to the Date of Grant, or, if not traded on said date, upon the basis
of the mean of such prices on the date nearest preceding the Date of Grant, or,
if the Common Stock is not included in the NASDAQ Small Cap or NASDAQ National
System, the fair value of such stock as determined from time to time by the
Board in its sole discretion.
"Fiscal Year" means the period beginning June 1 and ending May 31.
"Grantee" means any person to whom the Administrator has selected as a
participant and granted an Option under an Option Agreement pursuant to the
terms herein under the Plan and the terms of such Option Agreement.
"Key Employees" shall include any employee of the Company, its subsidiaries
and affiliates who has contributed in the past or is expected to contribute in
the future to the operation and success of the Company in the discretion of the
Administrator.
"Key Management Personnel" shall be deemed to include the following
employees of the Company, its subsidiaries or affiliates: directors, officers,
department heads, and division managers.
"Option" means a right granted under the Plan to a Participant to purchase
a stated number of share of Common Stock.
"Option Period" means the period within which the Option may be exercised
pursuant to the Plan.
"Participant" means any full-time key employee or key management personnel
of the Company, its subsidiary or affiliate who is selected to participate in
the Plan in accordance with Section 4 herein.
<PAGE>
"Plan" means the UniHolding Corporation 1994 Amended Stock Option Plan.
"Subsidiary" means any company or business entity in which the Company owns
a majority of the voting shares, or any company in a chain of companies
connected with the Company through ownership of at least fifty percent (50%) of
its voting shares by any company in the chain.
3. Policy. Options may be granted by the Administrator to Participants from time
to time, but in no event after the fiscal year end 2004, to purchase shares of
the Company pursuant to the terms herein.
4. Administration. This Plan shall be administered by the Administrator, the
Chairman of the Board acting in agreement with a majority of the Board of
Directors. The Administrator shall have full power and authority to construe,
interpret and administer the plan and may from time to time adopt such rules and
regulations for carrying out this Plan as he may deem proper and in the best
interests of the Company. Subject to the terms, provisions, and conditions of
this Plan, the Administrator shall have sole discretion (i) to select the
participants to whom Options shall be granted, (ii) to determine the number of
shares of Common Stock subject to each Option, provided that no Option shall be
granted after the expiration of the period of ten years from the effective date
of this Plan specified in Section 24 hereinafter, (iii) to determine the time or
times when Options will be granted, (iv) to determine the Option Price of the
shares subject to each Option, (v) to determine the time when each Option may be
exercised and whether in whole or in installments, (vi) to fix such other
provisions of the Option Agreement as the Administrator may deem necessary or
desirable consistent with the terms of this Plan, and (vii) to determine all
other questions relating to the administration of this Plan. The Administrator
shall consider the year(s) of service rendered by the participant to the
Company, the compensation awarded to the participant, and the nature of the job
performed by the participant when determining the amount of shares subject to an
Option, the Option price and exercise or vesting schedule for each such Option
granted. The interpretation of any provisions of this Plan by the Administrator
shall be final, conclusive and binding upon all persons and the full Board of
Directors shall place into effect the determination of the Administrator.
5. Shares subject to the Plan. The shares to be delivered upon exercise of
Options granted under this Plan shall be made available, at the discretion of
the Board, from the authorized and unissued shares of Common Stock, shares held
in the treasury of the Company, or shares purchased on the open market by the
Company. Subject to adjustments made pursuant to the provisions of Section 16
hereinafter, the aggregate number of shares available for issuance, in whole or
in part, upon exercise each year of the Options granted under this Plan shall
not exceed 500,000 shares of Common Stock, with such shares being reserved for
Options granted under this plan. In the event that any Option granted under this
Plan expires or terminates for any reason whatsoever without having been
exercised in full, the shares subject to, but not delivered under such Option
shall become available for other Options to the same employee or other employees
without decreasing the aggregate number of shares which may be granted under the
Plan, or shall be available for any lawful corporate purpose. More than one
Option may be granted to a Grantee pursuant to this Plan.
6. Option Agreements. (a) Each Option under this Plan shall be evidenced by an
Option Agreement, which shall be signed by an officer of the Company and by the
Grantee and which shall contain such provisions as may be approved by the
Administrator.
<PAGE>
(b) The Option Agreements shall constitute binding contracts between the
Company and the Grantee and every Grantee, upon acceptance of such Option
Agreement, shall be bound by the terms and restrictions of this Plan and the
Option Agreement.
(c) The terms of the Option Agreements shall be in accordance with this
Plan, but may include additional provisions and restrictions, provided that the
same are not inconsistent with this Plan.
7. Eligibility. Key employees and Key Management Personnel as defined
hereinabove of the Company, its subsidiaries and affiliates shall be eligible to
receive Options. The fact that an employee, officer or director has been granted
an Option under this Plan shall not in any way affect or qualify the right of
the employer to terminate his employment at any time. Nothing contained herein
shall be construed to limit the right of the Company to grant Options otherwise
under the Plan for any proper and lawful corporate purpose. Key employees and
key management personnel to whom Options may be granted under this Plan will be
those selected by the Administrator from time to time, in his sole discretion,
who have contributed in the past or who may be expected to contribute materially
in the future to the successful performance of the Company.
8. Agreement upon Voluntary Termination. Should the Grantee upon his/her own
will terminate his/her employment with the Company after the date of grant of
such Option, any Option(s) granted to him/her under this Plan theretofore which
shall not have been exercised shall be cancelled, except at the discretion of
the Administrator as set out in Article 14.
9. Option Price. The option price or prices of the Company's Common Stock per
share offered to any Grantee under this Plan shall be determined by the
Administrator in his absolute discretion at the time of granting an Option,
provided, however, that such price or prices shall in no event be less than 100%
of the Fair Market Value ("FMV"), as defined hereinabove in Section 2, of the
Common Stock shares on the date of granting the Option. However, under no
circumstances shall the FMV as determined by the Administrator be less than the
Book Value of the Company's Common Stock as reflected in the Company's most
recent financial statements.
10. Exercise of Options. (a) Subject to the provisions of this Plan, except with
respect to Restrictions under Section 11 and Severance, Death under Section 14
hereinafter, the period during which each Option may be exercised shall be fixed
by the Administrator at the Date of Grant and provided for within the respective
Option Agreement, but such period shall expire not later than ten years from the
Date of Grant or the termination date of the Plan, which ever first occurs.
(b) Each Option granted under this Plan may be exercised in accordance with
a vesting schedule provided in its respective Option Agreement.deletion Subject
to the foregoing limitations and the terms and conditions of the respective
Option Agreement, each Option shall be exercisable in whole or in part at such
time or times as the Administrator may prescribe and specify in the vesting
schedule within the applicable Option Agreement.
(c) The option price of the shares as to which an Option shall be exercised
shall be paid in full in cash to the Company at the time of exercise.
<PAGE>
(d) No Grantee shall have any rights as a stockholder with respect to any
shares subject to his/her Option prior to the date on which he/she is recorded
as the holder of such shares on the records of the Company.
(e) This Plan, the grant and exercise of Options hereunder, and the
obligation of the Company to sell and deliver shares under such Options, shall
be subject to all applicable federal and state laws, rules and regulations and
to such approvals by any government or regulatory agency as may be required. The
Company, in its discretion, may postpone the issuance or delivery of shares upon
any exercise of an Option until completion of any stock exchange listing, or
other qualification of such shares under any state or federal law, rule or
regulation as the Company may consider appropriate, and may require the
Participant, beneficiary or legal representative to make such representations
and furnish such information as it may consider appropriate in connection with
the issuance or delivery of the shares in compliance with applicable laws, rules
and regulations.
(f) Each Option Agreement may contain an undertaking that, upon the demand
of the Board or the Administrator for such a representation, the Grantee or any
person(s) acting under Section 14 hereinafter shall deliver to the Board or the
Administrator at the time of any exercise of an Option a written representation
that (i) the shares to be acquired upon such exercise are to be acquired for his
own account and not with a view to, or for resale in connection with, any
distribution, and (ii) if the Grantee should decide to sell, transfer, or
otherwise dispose of any of such shares, the Grantee may do so only if the
shares are registered under the Securities Act of 1933, unless, in the opinion
of counsel for the Company, such registration is not required, or the transfer
is pursuant to the Securities and Exchange Commission Rule 144. Upon such
demand, delivery of such representation prior to the delivery of any shares
issued upon exercise of an Option shall be a condition precedent to the right of
the Grantee or such other person(s) to purchase any shares.
11. Restrictions. (a) Each share certificate representing shares of Common Stock
shall be issued in the sole name of the Grantee, and each such certificate shall
bear the following Restrictive Legend:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "Act") and may not be offered for
sale, sold or otherwise transferred in the United States or to a "U.S. person"
except pursuant to an effective registration statement under the Act, or
pursuant to an exemption from registration under the Act, the availability of
which is to be established to the satisfaction of the Company."
(b) Each share certificate representing shares of Common Stock shall be
held regardless for a period of six (6) months and five (5) days from the Date
of Exercise by the Grantee pursuant to Section 16 of the Exchange Act of 1934,
as amended. As such, the Grantee shall not sell or dispose of any shares
purchased pursuant to such Option within the immediate six months and five days
after exercising the Option or any part thereof. Where the Grantee is an officer
or director of the Company, its subsidiary or affiliate, he/she shall insure
that any action taken in regard to his/her rights under the Option Agreement or
the Option shall be in full compliance with Section 16 of the Exchange Act of
1934 in particular and such other applicable rules and regulations .
12. Transferability of Options. Any Option granted under this Plan shall be
exercisable only by the Grantee to whom such Option was granted during his
lifetime, and shall not be transferred except by will or by laws of descent and
distribution.
<PAGE>
13. No Claim or Right Under the Plan. No employee shall at any time have the
right to be selected as a Participant in this Plan nor, having been selected as
a Participant and granted an Option, be granted any additional Option.
14. Severance, Death. (a) In the event that a Grantee shall cease to be employed
by the Company, its subsidiary or affiliate upon his/her own will, any Option or
Options theretofore granted to him under this Plan which shall not have been
then exercised shall be deemed at that time canceled, except that the
Administrator may in his absolute discretion extend the privilege to such
Grantee to exercise any Options previously granted to him, which have not then
expired, within three (3) months after cessation of employment. Furthermore, if
any such cessation of employment is caused by the Grantee's retirement from the
Company, its parent, subsidiary or affiliate employing the Grantee at such time,
the Grantee shall have the right to exercise such Option(s), which have not then
expired, at any time within three (3) months after such retirement, or such
longer period as the Administrator may determine, and shall then terminate.
(b) In the event that a Grantee shall die while employed by the Company,
its subsidiary or affiliate, or shall die within three (3) months after his
retirement from the Company, its parent, subsidiary or affiliate, any Option(s)
granted to him under this Plan which shall not have been exercised at he time of
his death shall be exercisable by the estate of the Grantee, or by any person
who acquired such Option by bequest or inheritance from the Grantee, in
accordance with the terms of such Option within six (6) months after the death
of the Granee, or until the expiration of the Option, if that shall first occur.
15. Capital Adjustments affecting Stock. In the event of a capital adjustment
resulting from a stock dividend, stock split, reorganization, recapitalization,
merger, consolidation, or a combination or exchange of shares, or of any similar
change affecting the Common Stock, the number of shares of stock which
thereafter may be optioned and sold under this Plan and the number of shares
under Option in outstanding Option Agreements and the purchase price per share
thereof shall be appropriately adjusted consistent with such change in such a
manner as the Board may deem equitable to prevent substantial dilution or
enlargement of the rights granted to, or available for Participants under this
Plan. The granting of an Option pursuant to this Plan shall not affect in any
way the right or power of the Company to make adjustments, reorganizations,
reclassifications or changes of its capital or business structure or to merge,
consolidate, dissolve, liquidate, or sell or transfer all or any part of its
business or assets.
16. Effect of Change in Control. Notwithstanding the provisions of Section 16,
if there should be a Change in Control of the Company, the Company shall give
each Participant written notice of such change as promptly as practicable prior
to the effective date thereof and, at the discretion of the Board or the
Administrator, all of the Options granted to a Participant not currently
exercisable shall become immediately exercisable as of the effective date of
such change in control.
17. Liquidation. Upon the complete liquidation of the Company, any unexercised
Options previously granted under this Plan shall be deemed canceled, except as
otherwise provided in Section 16 hereinabove on the occasion of a merger or
consolidation. In the event of the complete liquidation of the parent,
subsidiary or an affiliate, or in the event that such company ceases to be a
subsidiary or affiliate as that term is defined in Section 2 hereinabove, any
unexercised Options previously granted to Participants employed by such company
shall be deemed canceled unless such Participant shall become employed by the
Company or by any other subsidiary or affiliate on the occurrence of any such
event.
<PAGE>
18. Amendment and Discontinuance. The Board or Administrator may, with
prospective or retroactive effect, amend, suspend or discontinue this Plan or
any portion thereof at any time; provided, however, that the Board or
Administrator shall not, without the written consent of the holders of Options,
alter or impair unexercised Options that may have been previously granted under
this Plan, except insofar as merger or consolidation of the Company, or a
termination of employment of a Participant, or a liquidation or dissolution
shall effect a cancellation of an Option under the terms of Section 14, 15 and
17 hereof.
19. Taxes. The Administrator may make such provisions and take such steps as he
may deem necessary or appropriate for the withholding of all federal, state,
local and other taxes required by law to be withheld by the Company with respect
to Options under this Plan including, but not limited to (a) reducing the number
of shares of Common Stock otherwise deliverable, based upon their FMV on the
date of exercise, to permit deduction of the amount of any such withholding
taxes from the amount otherwise payable under this Plan, (b) deducting the
amount of any such withholding taxes from any other amount then or thereafter
payable to the Participant, or (c) requiring a Participant, beneficiary, or
legal representative to pay to the Company the amount required to be withheld or
to execute such documents as the Administrator deems necessary or desirable to
enable the Company to satisfy its withholding obligations as a condition of
releasing the Common Stock.
20. No Liability of Board Members. No member of the Board, including the
Administrator, shall be personally liable by reason of any contract or other
instrument executed by such member or on his behalf in his capacity as a member
of the Board or as Administrator nor for any mistake of judgment made in good
faith, and the Company shall indemnify and hold harmless each employee, officer,
or director of the Company to whom any duty or power relating to the
administration or interpretation of this Plan may be allocated or delegated,
against any cost or expense (including counsel fees) or liability (including any
sum paid in settlement of a claim with the approval of the Board) arising out of
any act or omission to act in connection with this Plan unless arising out of
such person's own fraud or bad faith.
21. Unregistered Shares Representation. The Participant/Grantee shall represent
in an Option Agreement that he/she understands that the shares are not now
registered under the Securities Act of 1933 or under any state securities law
and that the shares will not be so registered in the foreseeable future.
22. Captions. The captions herein have been inserted solely as a matter of
convenience and shall not in any manner define or limit the scope or intent of
any provisions of this Plan.
23. Governing Law. This Plan shall be governed by and construed in accordance
with the laws of the State of Delaware.
24. Effective Date. This Plan shall became effective as of June 28, 1994 and
remains so effective as amended this 30th day of May 1996.
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all the Directors of
UniHolding Corporation, hereby adopt and execute the above Amended Plan with the
signatures of the full Board of Directors this 30th day of May 1996.
/s/ Edgard Zwirn
/s/ Bruno Adam
/s/ Enrico Gherardi
<PAGE>
SUBSIDIARY LIST
Unilabs Group Limited (BVI) - 100%
Unilabs SA (Swiss) - 87.1%
United Laboratories Limited (UK) - 100%
JS Pathology Plc (UK) - 100%
Farrer-Brown Histopathology Limited (UK) - 100%
Unilabs Medizin. Labor. AG (Swiss) - 100%
Laboratorie Ritton SA (Swiss) - 100%
Enzym-Labor Dr. H. Weber AG (Swiss) - 100%
Diagnostica, Lab. AG (Swiss) -100%
SQ-Lab Aerztelabor AG (Swiss) - 100%
Medizin. Labor Baden AG (Swiss) - 100%
Medizin.Labor Dr. H.R. Ebersold AG (Swiss) -100%
Laboratoire Riotton SR SA (Swiss) -100%
Vivagen Diagnostics AG (Swiss) - 100%
Biomedical SA (Swiss) - 100%
MS Chimie SA (Swiss) - 100%
Praxilab Gem. Prakt. Aerzte AG (Swiss) - 65%
Pathologie-Labor Brunnhof AG (Swiss) - 51%
Uni Clinical Laboratories UCL Engineering SA (Swiss) - 100%
Global Unilabs Clinical Trials Ltd. (BVI) - 100%
Unilabs Clinical Trials Ltd. (UK) - 100%
Pharmasoft SA (Swiss) - 100%
NDA Clinical Trial Services Inc. (US) - 17%
Unilabs Management Company Limited (Gibraltar) - 100%
Instituto Medico Di Torino SpA (Italy) - 100%
Medil Srl (Italy) - 50%
United Laboratories Espana SA (Spain) - 98%
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> May-31-1996
<PERIOD-START> Jun-01-1995
<PERIOD-END> May-31-1996
<EXCHANGE-RATE> 1
<CASH> 1,587
<SECURITIES> 0
<RECEIVABLES> 18,726
<ALLOWANCES> 1,500
<INVENTORY> 1,910
<CURRENT-ASSETS> 30,769
<PP&E> 33,238
<DEPRECIATION> 5,448
<TOTAL-ASSETS> 123,252
<CURRENT-LIABILITIES> 6,686
<BONDS> 0
0
0
<COMMON> 61
<OTHER-SE> 34,181
<TOTAL-LIABILITY-AND-EQUITY> 123,252
<SALES> 0
<TOTAL-REVENUES> 97,061
<CGS> 0
<TOTAL-COSTS> 55,222
<OTHER-EXPENSES> 25,522
<LOSS-PROVISION> 1,500
<INTEREST-EXPENSE> (2,984)
<INCOME-PRETAX> 3,038
<INCOME-TAX> (2,355)
<INCOME-CONTINUING> (300)
<DISCONTINUED> 0
<EXTRAORDINARY> (3,299)
<CHANGES> 0
<NET-INCOME> (300)
<EPS-PRIMARY> ($0.05)
<EPS-DILUTED> ($0.05)
</TABLE>
