UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended August 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
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
96 Spring Street, 8th Floor, New York, New York 10012
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 219- 9496
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___
As of October 14, 1996, there were 6,455,502 shares of Common Stock, par value
$0.01 per share, of the Registrant outstanding.
<PAGE>
UNIHOLDING CORPORATION AND SUBSIDIARIES
Form 10-Q for the Quarterly Period Ended August 31, 1996
INDEX
Part I - FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheets - August 31, 1996 and May 31, 1996
Consolidated Statements of Operations - Three month periods ended
August 31, 1996 and 1995
Consolidated Statements of Cash Flows - Three month periods ended
August 31, 1996 and 1995
Notes to Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II - OTHER INFORMATION:
Item 1. Legal Proceedings
Item 5. Other Items
Item 6. Exhibits
Signatures
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<PAGE>
UNIHOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS August 31, 1996 May 31, 1996
(Unaudited)
--------------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 3,033 $ 1,587
Accounts receivable, net of allowance for
doubtful accounts 17,513 18,726
Due from related companies 7,425 4,960
Inventories 1,992 1,910
Prepaid expenses 1,853 2,535
Other current assets 1,369 1,051
-------- --------
Total current assets 33,185 30,769
-------- --------
NON-CURRENT ASSETS:
Long-term notes receivable 818 818
Intangible assets, net 56,986 54,828
Property, plant and equipment, net 34,732 33,238
Investment in equity affiliates 1,406 1,423
Other assets, net 2,451 2,176
-------- --------
Total non-current assets 96,393 92,483
-------- --------
$129,578 $123,252
======== ========
See notes to financial statements
<PAGE>
UNIHOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY August 31, 1996 May 31, 1996
(Unaudited)
---------------- -------------
<S> <C> <C>
CURRENT LIABILITIES:
Bank overdrafts $ 6,825 $ 6,686
Lease payable, short-term portion 1,482 1,331
Payable to related parties -- 9
Trade payables 5,468 6,843
Accrued liabilities 6,358 4,568
Note payable 15,000 15,000
Long-term debt, current portion 10,745 2,971
Taxes payable, current portion 3,129 3,175
--------- ---------
Total current liabilities 49,007 40,583
--------- ---------
NON-CURRENT LIABILITIES:
Lease payable, non-current 3,341 2,633
Long-term debt, non-current 28,510 35,721
Taxes payable, long-term portion 211 199
Deferred taxes 4,269 4,410
--------- ---------
Total non-current liabilities 36,331 42,963
--------- ---------
Total liabilities 85,338 83,546
--------- ---------
MINORITY INTERESTS 5,099 5,464
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value;
Voting; authorized 18,000,000 shares;
issued 6,455,502 at August 31, 1996
and 5,823,785 at May 31, 1996 61 58
Non-Voting; authorized 2,000,000 shares;
issued and outstanding 298,384 at August 31,
1996, and 298,384 at May 31, 1996 3 3
Additional paid-in capital 37,426 32,429
Cumulative translation adjustment 1,155 (239)
Retained earnings 3,658 5,153
--------- ---------
42,303 37,404
Less - cost of 163,000 shares of Common Stock
held in treasury at August 31,1996
and May 31, 1996, respectively (3,162) (3,162)
--------- ---------
Total stockholders' equity 39,141 34,242
--------- ---------
$ 129,578 $ 123,252
========= =========
</TABLE>
See notes to financial statements
<PAGE>
UNIHOLDING CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
Three Months ended
August 31, August 31,
1996 1995
----------- -----------
REVENUE $22,844 $22,063
Operating expenses:
Salaries and related charges 10,291 9,963
Supplies 3,834 3,457
Other operating expenses 6,480 5,216
Depreciation and amortization of tangible assets 1,296 1,526
Amortization of intangible assets 581 585
----------- -----------
OPERATING INCOME 362 1,316
Interest, net (963) (473)
Equity in loss of affiliates (34) --
Other, net (558) 679
----------- -----------
Income (loss) before taxes and minority interests (1,193) 1,522
Tax provision (165) (403)
----------- -----------
Income (loss) before minority interests (1,358) 1,119
Minority interests in income (137) (315)
----------- -----------
NET INCOME (LOSS) ($1,495) $804
=========== ===========
Weighted average common shares outstanding 6,263,473 6,076,215
Earnings (loss) per share of common stock ($0.24) $0.13
See notes to financial statements
<PAGE>
UNIHOLDING CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months ended
August 31 August 31
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($1,495) $804
Adjustments to reconcile net income to net cash
provided by operations:
Equity in loss of affiliates 34 --
Minority interests in income 137 315
Depreciation and amortization of tangible assets 1,296 1,526
Amortization of intangible assets 581 585
Other non-cash expenses 466 (4)
Net changes in assets and liabilities, net of acquisitions:
(Increase) Decrease in accounts receivable 1,994 1,918
(Increase) Decrease in inventories 8 --
(Increase) Decrease in prepaid expenses 725 189
(Increase) Decrease in other assets (192) 255
Increase (Decrease) in trade payables (1,583) 292
Increase (Decrease) in accrued liabilities 445 (249)
Increase (Decrease) in reserve for taxes (223) 348
Increase (Decrease) in deferred taxes (474) (378)
-------- --------
Net cash provided by operating activities 1,719 5,601
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash proceeds from issuance of share capital 5,000 525
Repayment of long-term debt (960) (1,628)
Cash proceeds from long-term debt -- --
Proceeds (reimbursement) from (of) bank overdrafts (7) (974)
Dividend paid to minority shareholders -- --
Proceeds (repayment) of lease debt (34) 563
Payment for purchase of treasury stock -- (2,945)
-------- --------
Net cash provided by (used in) financing activities 3,999 (4,459)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for purchases of property and equipment ($1,505) (1,681)
Loans and advances (to) from affiliates,
related companies and shareholders (2,300) (868)
Payment for purchase of interest in subsidiaries (544) (13,000)
Payment for purchase of intangible assets (50) (227)
Proceeds from sale of assets 52 50
-------- --------
Net cash used in investing activities (4,347) (15,726)
-------- --------
Effect of exchange rate changes on cash 75 (58)
Net increase (decrease) in cash and cash equivalents 1,446 (14,642)
Cash and cash equivalents, beginning of year 1,587 16,939
-------- --------
Cash and cash equivalents, end of period $3,033 $2,297
======== ========
</TABLE>
See notes to financial statements
<PAGE>
UNIHOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Monetary amounts in thousands, except per share data)
1. Basis of Presentation
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.
2. Management Opinion
In the opinion of management, the accompanying unaudited interim financial
statements reflect all adjustments which are necessary to present fairly the
financial position, results of operations and cash flows for the interim periods
reported. All such adjustments made were of a normal recurring nature.
The results of operations and financial position for interim periods are
not necessarily indicative of those to be expected for a full year, due, in
part, to the seasonal fluctuations which are normal for the Company's business.
The accompanying interim financial statements and related notes should be
read in conjunction with the consolidated financial statements of the Company
and related notes as contained in the Annual Report on Form 10-K for the year
ended May 31, 1996.
3. Net Income (Loss) Per Share
Net income (loss) per share is computed by dividing net income or net loss
by the weighted average number of common shares outstanding.
4. Cumulative Translation Adjustment
The Company's operations are located in Switzerland, the United Kingdom,
Italy and Spain. Its net assets, revenues and expenses are substantially all
denominated in Swiss franc, Sterling pound, Italian lire, and Spanish pesetas,
while the Company presents its consolidated financial statements in US dollars.
In accordance with generally accepted accounting principles in the United
States, net gains and losses arising upon translation from local currency
financial statements 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 investments.
<PAGE>
5. Supplemental Disclosure of Cash Flow Information
Three months ended August 31
1996 l995
---- ----
Cash paid during the period for
Interest $ 615 $ 747
Income taxes 918 369
During the period ended August 31, 1995, 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.
During the period ended August 31, 1996, in connection with its acquisition
of 300 shares of the share capital of ULSA, the Company incurred a future
obligation of $1,100.
During the period ended August 31, 1996, capital lease obligations of $ 787
were incurred when the Company entered into leases for new capital equipment.
6. Capital Stock and Additional Paid In Capital
During the period ended August 31, 1996, ULSA acquired 300 shares (or 1.9%)
of its own common stock from independent investors in ULSA for a total
consideration of $ 1,700, out of which it paid $ 600 during the period.
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.
7. Investment in Equity Affiliates
NDA Clinical Trials Services Inc.
As of 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.
<PAGE>
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.
Also on July 23, 1996, the Company, through GUCT, made a loan of $ 700 to
NDA (the "NDA Loan"). The NDA Loan is repayable in principal and interest on
December 31, 1996, and bears interest at 12% per annum. The NDA Loan is
unsecured.
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%.
MISE S.A.
During the period ended August 31, 1996, MISE S.A., an equity investee, 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, purchased from
either 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.
8. 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, 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 previously 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.
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 investment in unconsolidated affiliates.
<PAGE>
Quarter Ended August 31
-----------------------
1996 1995
---- ----
Revenues from unaffiliated customers:
Diagnostic Laboratory division $ 21,627 $ 21,166
Clinical Trials division 1,217 897
Healthcare Management Services division - -
Operating Profit or Loss:
Diagnostic Laboratory division 1,320 1,234
Clinical Trials division (958) 82
Healthcare Management Services division - -
Identifiable Assets:
Diagnostic Laboratory division 126,678 114,707
Clinical Trials division 2,900 818
Healthcare Management Services division - -
9. Subsequent Events
On October 8, 1996, the Company, through a subsidiary, signed a joint
venture agreement with the State Affiliated company MEDINCENTER of the Main
Administration for Services to the Diplomatic Corps of the Ministry of Foreign
Affairs of the Russian Federation. Pursuant to the agreement, the Company will
invest an amount of $ 240 and will hold 50% of Unimed Laboratories (a
newly-established Russian close joint stock company, "Unimed"), which will
establish a diagnostic laboratory in Moscow and provide a comprehensive range of
clinical laboratory tests to public and private medical institutions, doctors
and patients in Russia. The new Unimed laboratory is expected to start
operations in 1997.
<PAGE>
Item 2. Management's Discussions and Analysis of Financial Condition and Results
of Operations
Results of Operations
The Company's results of operations for the period ended August 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 tables present 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.
<TABLE>
<CAPTION>
Three Months ended August 31, 1996
--------------------------------------------------------------
Healthcare
Diagnostic Management Clinical
Laboratory Services Trials
division division division As Reported
--------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE $ 21,627 -- $ 1,217 $ 22,844
Operating expenses:
Salaries and related charges 9,714 -- 577 10,291
Supplies 3,789 -- 45 3,834
Other operating expenses 4,978 -- 1,502 6,480
Depreciation and amortization of
tangible assets 1,256 -- 40 1,296
Amortization of intangible assets 570 -- 11 581
----------- ----------- ----------- -----------
OPERATING INCOME (LOSS) 1,320 -- (958) 362
Interest, net (938) -- (25) (963)
Equity in loss of affiliates 0 -- (34) (34)
Other, net (558) -- 0 (558)
----------- ----------- ----------- -----------
Income (loss) before taxes and
minority interests (176) -- (1,017) (1,193)
Tax provision (482) -- 317 (165)
----------- ----------- ----------- -----------
Income (loss) before minority interests (658) -- (700) (1,358)
Minority interests in income (137) -- 0 (137)
----------- ----------- ----------- -----------
NET INCOME (LOSS) ($ 795) $ 0 ($ 700) ($ 1,495)
=========== =========== =========== ===========
Weighted average common shares outstanding 6,263,473 6,263,473 6,263,473 6,263,473
Earnings (loss) per share of common stock $ (0.13) $ 0.00 $ (0.11) $ (0.24)
</TABLE>
As discussed in Note 1 to the accompanying financial statements, the
Company's results for the three month period ended August 31, 1996, give effect
to the acquisition by UniHolding and UGL, as of June 30, 1995, of 40% of the
capital stock of UGL, while the Company's results for the three month period
ended August 31, 1995 included a 40% minority interest on UGL's earnings for the
month of June 1995. The following table
<PAGE>
presents the required adjustments to the results of operations for the three
month period ended August 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, 1995 (unaudited). The results of operations for the
three month period ended August 31, 1995 were translated into U.S. dollars using
the exchange rates which were then valid.
<TABLE>
<CAPTION>
Three Months ended August 31, 1995
--------------------------------------------------------------------------
Diagnostic Clinical
Laboratory Trials
division division As Reported Adjustments Pro Forma
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUE $ 21,166 $ 897 $ 22,063 $ 22,063
Operating expenses:
Salaries and related charges 9,963 0 9,963 9,963
Supplies 3,457 0 3,457 3,457
Other operating expenses 4,403 813 5,216 5,216
Depreciation and amortization of
tangible assets 1,525 1 1,526 1,526
Amortization of intangible assets 584 1 585 8 (d) 593
----------- ----------- ----------- ----------- -----------
OPERATING INCOME (LOSS) 1,234 82 1,316 (8) 1,308
Interest, net (472) (1) (473) (138)(b) (611)
Equity in loss of affiliates -- -- -- --
Other, net 679 0 679 679
----------- ----------- ----------- ----------- -----------
Income (loss) before taxes and
minority interests 1,441 81 1,522 (146) 1,376
Tax provision (376) (27) (403) 41 (c) (362)
----------- ----------- ----------- ----------- -----------
Income (loss) before minority interests 1,066 53 1,119 (105) 1,014
Minority interests in income (308) (7) (315) 116 (a) (199)
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 757 $ 47 $ 804 $ 11 $ 815
=========== =========== =========== =========== ===========
Weighted average common shares
outstanding 6,076,215 6,076,215 6,076,215 6,076,215 6,076,215
Earnings (loss) per share of
common stock $ 0.12 $ 0.01 $ 0.13 $ 0.13
</TABLE>
(a) To record the cancellation of the 40% minority interest in the June 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% for June 1995.
(c) To record the tax benefit at 30% on the interest cost on repurchase of 40%
in UGL.
(d) To record goodwill amortization on the acquisition of 40% in UGL for June
1995.
Three months ended August 31, 1996 compared with the three months ended August
31, 1995
Consolidated revenue was $ 22.8 million for the three months ended August
31, 1996, representing an increase of $ 0.7 million (including the effect of the
change in the US dollar exchange rate of $ 0.9 million) from the comparable
prior year period. Revenue generated by the Swiss operations increased by
approximately 4.5% as a result of additional specimen volume of 4.6% partly
offset by a decrease in the test mix of 0.1%. Revenue
<PAGE>
generated by the UK increased in respect of the Diagnostic Laboratory division
due to additional revenue resulting from the new contract with a major public
transport service being offset by under performance of the private doctors
division. Revenues of $ 1.2 million were recorded by the Clinical Trials
division due to the signing of further new contracts. The Spanish operations
increased revenues to $1.1 million, representing an 111% increase from the
comparable prior year period.
Operating income for the year ended August 31, 1996 decreased by $ 0.9
million (including the effect of the change in the US dollar exchange rate of $
0.1 million) versus the comparable prior year. The small increase in operating
income of the Diagnostic Laboratory division ($ 0.1 million) reflects the
continued investment in the Spanish market. The variance in operating results of
the Clinical Trials division (an operating loss of $ 1.0 million as compared to
an operating profit of $ 0.1 million) reflects fixed expenses which are not
matched with income to be recorded in the future from a backlog of contracts due
to lead-time of up to six months from the signing of a contract to the actual
start of a study. Italian operations, continue to maintain a small positive
contribution to operating income.
Interest expense, net, increased $ 0.5 million during the three months
ended August 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 a decrease in interest rates.
Other losses were recorded from exchange loss provisions on certain assets
and liabilities as a result of fluctuations in exchange rates, versus a gain of
$ 0.7 million in the prior year comparable period.
Provision for income taxes increased $ 0.2 million in the three months
ended August 31, 1996, after taking into account the period losses of UCT which
gave rise to a tax benefit of $ 0.3 million which management believes the
Company will recover through future income of such division. Other potential
future tax benefits arising from losses of other subsidiaries (primarily in
Spain) have been entirely provided for.
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, and the acquisition of 1.9% minority interest in ULSA as of
June 1, 1996.
<PAGE>
Liquidity and Capital Resources
Net cash provided by operating activities for the three months ended August
31, 1996 amounted to $ 1.7 million, a decrease of $ 3.9 million from the prior
year primarily due to working capital needs of the Diagnostic Laboratory
division and the net losses of the Clinical Trials division, partly offset by
closer credit control and other variances in working capital needs.
Net cash provided by financing activities for the three months ended August
31, 1996 was $ 4.0 million, as compared to $ 4.5 million used in financing
activities in the prior year. The increase of $ 8.5 million primarily resulted
from the issuance of new shares of common stock, reduced repayment of long term
debt as compared to the prior year and the use of $ 2.9 million in the prior
year to purchase treasury stock.
Net cash used in investing activities for the period ended August 31, 1996
was $ 4.3 million, a decrease of $ 11.4 million from the prior period,
consisting primarily of the purchase of the 40% minority interest in UGL in the
prior period, offset in the current period by increased lending to affiliates of
$ 2.3 million including $ 1.6 million to the Company's controlling shareholder
and $ 0.7 million to NDA.
The Company's bank facilities provide for a total of approximately $ 41.7
million, including secured senior revolving facilities consisting of term loans,
working capital loans and/or guarantees. As of October 16, 1996, the Company had
approximately $ 4.8 million of availability under the aggregate credit
facilities.
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 $ 15.8 million at August
31, 1996, compared to $ 9.8 million at May 31, 1996. The increase in the
deficiency is due primarily to the reclassification as a current liability of
the short-term portion of long-term debt owed by ULSA maturing on June 30, 1997.
Of that amount of $ 15.8 million, $ 15 million is due to Unilab, and was due on
June 30, 1996. 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 on
January 1, 1997 shall be converted into UniHolding Common Stock at 75%
<PAGE>
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.
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
1996/97. 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.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Arbitration
As described and discussed more thoroughly in the Company's Annual Report
on Form 10-K for the year ended May 31, 1996, the Company is entitled to 80% of
the net recovery (less legal fees and costs) of any settlement or successful
resolution of the pending arbitration instituted by Americanino Capital Corp.
("ACC") pursuant to an agreement by which the Company sold its remaining
interest in ACC.
During the quarter ended August 31, 1996, there have been no further
material developments in the proceedings. The Company's management will
continuously monitor and report the progress of the proceedings.
See also the discussion on Foreclosure Proceedings and Attachment Claim in
the 1996 Annual Report on Form 10-K.
Item 5. Other items
Plans to Maximize Shareholder Value
The Company announced as of February 27, 1996 that it is considering
several alternative proposals to maximize shareholder values, including the
selling of a minority or majority stake in some of its operations, and the
floating of one or more of its subsidiaries on a major European exchange. The
Company expects that such action will generate cash permitting the financing of
new developments and/or acquisitions in countries which offer significant
potential opportunities. The Company continues exploring those alternatives.
Regulation S Offering
The Company is reviewing several alternatives to expand its operations. In
order to raise funds to enable the Company to consider such actions, the Company
continues to offer a maximum of 1,875,000 newly-issued shares of the Company in
the offshore market to certain European investors presently not affiliated with
the Company. The shares are being offered in the offshore market in accordance
with Regulation S, which provides an exemption to registration of the shares
from the Securities Act of 1933, as amended. There are 1,812,500 shares
presently available for issuance under the Regulation S Offering.
<PAGE>
Proposed Registration of Shares
The Company is finalizing the preparation of its Registration Statement and
Prospectus to be filed with the Securities & Exchange Commission and NASDAQ with
a view to register a substantial number of the outstanding shares of the
Company's Common Stock under the Securities Act of 1933, as amended.
Appointment of independent directors and Audit Committee
At a meeting of the board of directors held on September 23, 1996, it was
decided to create an independent Audit Committee of three directors with two of
such directors being new independent members. The board nominated Mr. Daniel
Regolatti and Mr. Pierre- Alain Blum. Mr. Blum is the founder of the EBEL watch
manufacturing group, and is a member of the board of many Swiss and foreign
companies. Mr. Regolatti is a self-employed consultant, after having been chief
financial officer at NESTLE's world headquarters. He also sits on the board of
several well-known Swiss companies. The Company's chairman will be the third
member of the Audit Committee. The board has decided that any transaction out of
the ordinary course of the Company's business should first be reviewed by the
independent Audit Committee.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
10.1 Stock Purchase Agreement, dated as of July 23, 1996, between Morgan Stanley
& Co. Incorporated and UniHolding Corporation
27 Financial Data Schedule
(b) Reports on Form 8-K. There have been no reports on Form 8-K during
the quarter ended August 31, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UniHolding Corporation
By:/s/ Bruno Adam
------------------------------
Bruno Adam, CFO
Date: 10-18-96
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ------------ ------------
10.1 Stock Purchase Agreement, dated as of July
23, 1996, between Morgan Stanley & Co.
Incorporated and UniHolding Corporation
27 Financial Data Schedule
STOCK PURCHASE AGREEMENT
dated as of
July 23, 1996
between
MORGAN STANLEY & CO. INCORPORATED
and
UNIHOLDING CORPORATION
relating to the purchase and sale
of
333,333 shares (5.16%) of the Common Stock
of
UNIHOLDING CORPORATION
<PAGE>
STOCK PURCHASE AGREEMENT
Stock Purchase Agreement dated as of July 23, 1996 between UNIHOLDING
CORPORATION, a Delaware corporation (the "Company"), and MORGAN STANLEY & CO.
INCORPORATED, a Delaware corporation ("Morgan Stanley").
WHEREAS, the Company proposes to issue to Morgan Stanley 333,333 shares
(the "Initial Shares") of its voting common stock, par value $0.01 per share
(the "Common Stock") at a price of $15.00 per share and Morgan Stanley desires
to purchase the Initial Shares from the Company, upon the terms and subject to
the conditions hereinafter set forth; and
WHEREAS, in consideration of Morgan Stanley's agreement to purchase the
Initial Shares, the Company proposes to grant certain antidilutive and
preemptive rights to Morgan Stanley as further described herein, whereby, under
certain circumstances, Morgan Stanley will have the right to receive additional
shares of Common Stock (in each case, the "Additional Shares" and, with the
Initial Shares, the "Shares");
NOW, THEREFORE, in consideration of the mutual covenants and agreements and
other considerations set forth herein, the parties hereto agree as follows:
1. Representations and Warranties. (a) The Company hereby represents and
warrants to and agrees with Morgan Stanley as of the date hereof and as of the
date of the issuance and delivery of any Additional Shares:
(i) The Company has been duly incorporated, and is validly existing as
a corporation in good standing under the laws of the State of Delaware.
(ii) The Company has the corporate power and authority to own its
property and conduct its business as currently conducted and as proposed to
be conducted, and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries, taken
as a whole.
(iii) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in
<PAGE>
good standing under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own its property and to conduct its
business as currently conducted and as proposed to be conducted and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(iv) The Shares have been duly authorized and when delivered in
accordance with the terms of this Stock Purchase Agreement, will be validly
issued, fully paid and non-assessable, and the-issuance of such Shares will
not be subject to any preemptive or similar rights, except as specified
herein.
(v) The Company has all requisite power and authority (corporate and
other), and has taken all necessary corporate action (i) to authorize,
execute, deliver and perform this Stock Purchase Agreement and the
Registration Rights Agreement dated July 23, 1996 between Morgan Stanley
and the Company (the "Registration Rights Agreement"), (ii) to execute,
issue, sell, and deliver the Shares and (iii) to perform all of its
obligations under this Stock Purchase Agreement and the Registration Rights
Agreement.
(vi) Each of this Stock Purchase Agreement and the Registration Rights
Agreement has been duly executed and delivered by the Company and is a
legal, valid and binding agreement of the Company enforceable in accordance
with its terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability.
(vii) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Stock Purchase
Agreement and the Registration Rights Agreement will not contravene any
provision of applicable law or the certificate of incorporation or by-laws
of the Company or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any
<PAGE>
judgment, order or decree of any government body, agency or court having
jurisdiction over the Company or any subsidiary, and no consent, approval,
authorization or order of or qualification with any governmental body or
agency is required for the performance by the Company of its obligations
under this Stock Purchase Agreement or the Registration Rights Agreement,
except such as may be required by the Securities Act, the securities or
Blue Sky laws of the various states or the rules and regulations applicable
to the listing of securities on NASDAQ (as defined below) in connection
with the reoffer and resale of the Shares by Morgan Stanley.
(viii) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(ix) The Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1995, Quarterly Reports on Form 10-Q for the periods ended
August 31, 1995, November 30, 1995 and February 29, 1996 (as furnished to
Morgan Stanley) and any additional reports on Form 10-K or 10-Q, or Current
Reports on Form 8-K, furnished to Morgan Stanley on or prior to the
delivery of any of the Shares (collectively, the "1934 Act Reports"), at
the time they were filed did not, and as of the date hereof (or of delivery
of Additional Shares) do not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(x) There has not occurred any material adverse change in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the 1934 Act Reports.
(xi) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D under the Securities Act ("Regulation D")) of the Company
has directly, or through any agent, sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of any security (as
defined in the Securities Act) that is or will be integrated with the sale
of the Shares in a manner that would require the registration under the
Securities Act of the offering contemplated by this Stock Purchase
Agreement. The Company also agrees not to sell, offer for sale or solicit
offers to
<PAGE>
buy or otherwise negotiate in respect of any security (as defined in the
Securities Act) that would be integrated with the sale of the Shares in a
manner that would require the registration under the Securities Act of the
offering contemplated by this Stock Purchase Agreement.
(xii) No form of general solicitation or general advertising (as those
terms are defined in Regulation D under the Securities Act) was used by the
Company or any of its representatives in connection with the offer and sale
of the Shares.
(xiii) There are no material legal or governmental proceedings pending
or threatened to which the Company or any of its subsidiaries is a party or
to which any of the properties of the Company or any of its subsidiaries is
subject that are required to be described by Item 103 of Regulation S-K
under the Securities Act and are not described as required in the 1934 Act
Reports.
(xiv) The Company acknowledges and understands that from time to time
Morgan Stanley or one or more affiliates of Morgan Stanley may hedge Morgan
Stanley's position in the Shares through short sales of shares of Common
Stock and by purchasing and selling any other instruments that it may wish
to use in connection with such hedging and from time to time may adjust
such hedge through the purchase and sale of Common Stock and by purchasing
and selling any other instruments that it may wish to use in connection
with such hedging.
(b) Morgan Stanley agrees that it will not sell any of the Shares
except in compliance with the registration requirements of Section 5 of the
Securities Act, or in a transaction that is exempt from registration under
the Securities Act.
2. Purchase and Sale of the Initial Shares. Upon the terms and subject to
the conditions of this Stock Purchase Agreement, the Company agrees to sell to
Morgan Stanley and Morgan Stanley agrees to purchase from the Company, the
Initial Shares on the date hereof. The aggregate purchase price for the Initial
Shares (the "Purchase Price") is U.S.$5,000,000. Payment for the Initial Shares
sold to Morgan Stanley pursuant to this Stock Purchase Agreement shall be made
by wire transfer to the account of the Company in immediately available funds
upon delivery of the Initial Shares at the office of Morgan Stanley & Co.
Incorporated, 1585 Broadway, New York, New
<PAGE>
York, at 10:00 A.M., New York City time, on July 23, 1996. The time and date of
such payment is hereinafter referred to as the Closing Date.
3. Conditions to Closing. The obligations of the Company and Morgan Stanley
hereunder are subject to the following conditions:
(a) Morgan Stanley shall have received on the Closing Date a
certificate dated the Closing Date and signed by an executive officer of the
Company, to the effect that the representations and warranties of the Company
contained in this Stock Purchase Agreement are true and correct as of the
Closing Date and that the Company has complied in all material respects with all
of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder and under the Registration Rights Agreement on
or before the Closing Date.
(b) Morgan Stanley shall have received on the Closing Date (i) the
opinion of Dolgenos Newman & Cronin LLP, counsel for the Company, dated the
Closing Date, set forth in Exhibit A attached hereto, (ii) an opinion of counsel
for Unilabs Holdings SA, a Panama corporation (the "Parent"), dated the Closing
Date, set forth in Exhibit B attached hereto and (iii) an opinion of counsel for
Unilabs Holdings SA, a Switzerland corporation (the "Grandparent"), dated the
Closing Date, set forth in Exhibit C attached hereto.
(c) Morgan Stanley shall have received on the Closing Date (i) a copy
of the Registration Rights Agreement duly executed and delivered by the Company
and (ii) a copy of the side letter (the "Side Letter Agreement") among Morgan
Stanley, the Parent, the Grandparent and Edgard Zwirn of Chemin Bellefontaine,
1223 Cologny, Switzerland (the "Controlling Shareholder"), duly executed and
delivered by the Parent, Grandparent and such Controlling Shareholder, relating
to certain tag-along rights of Morgan Stanley.
4. Indemnification by the Company. The Company agrees to indemnify and hold
harmless Morgan Stanley, its officers, directors and agents, and each person, if
any, who controls Morgan Stanley within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a
<PAGE>
material fact contained in the 1934 Act Reports, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading.
5. Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to Section 4 such
person (the "Indemnified Party") shall promptly notify the person against whom
such indemnity may be sought (the "Indemnifying Party") in writing and the
Indemnifying Party, upon request of the Indemnified Party, shall retain counsel
reasonably satisfactory to the Indemnified Party to represent the Indemnified
Party and any others the Indemnifying Party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in respect of the legal expenses of any Indemnified Party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) at any time for the Indemnified Party, and that all such
fees and expenses shall be reimbursed as they are incurred. In the case of any
such separate firm for the Indemnified Party, such firm shall be designated in
writing by the Indemnified Party. The Indemnifying Party shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party agrees to indemnify the Indemnfied Party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an Indemnified Party shall have requested
an Indemnifying Party to reimburse the Indemnified Party for fees and expenses
of counsel as contemplated by the second and third sentences of this Section 5,
the Indemnifying Party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
<PAGE>
entered into more than 90 business days after receipt by such Indemnifying Party
of the aforesaid request and (ii) such Indemnifying Party shall not have
reimbursed the Indemnified Party in accordance with such request prior to the
date of such settlement. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Party is or could have
been a party and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such proceeding.
6. Contribution. To the extent the indemnification provided for in Sections
4 and 5 of this Stock Purchase Agreement is unavailable to an Indemnified Party
or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each such Indemnifying Party under such Section, in
lieu of indemnifying such Indemnified Party thereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
the relative fault of the Indemnifying Party on the one hand and the Indemnified
Party on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of Morgan Stanley on the other shall be determined by reference to,
among other things, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and Morgan Stanley agree that it would not be just or equitable
if contribution pursuant to this Section 6 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, Morgan Stanley shall not be
required to contribute any amount in excess of the amount by which the proceeds
to Morgan Stanley
<PAGE>
of a sale of Shares exceeds the amount of any damages which Morgan Stanley has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
7. Rule 144. The Company covenants that it will file any reports required
to be filed by it under the Securities Act and the Exchange Act to the extent
required from time to time to enable Morgan Stanley to sell Shares, as the case
may be, without registration under the Securities Act within the limitation of
the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule
may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC (as so amended and along with any such similar rule
or regulation, "Rule 144"). Upon the request of Morgan Stanley, the Company will
deliver to Morgan Stanley a written statement as to whether it has complied with
such requirements.
8. Antidilution Right. The Company covenants that if it elects to repay all
or a portion of the $15,000,000 promissory note made on June 30, 1995 and owed
to Unilab Corporation ("UL") (the "Note") with Common Stock, it shall, as of the
date of any such repayment (each a "Note Repayment Date") compensate Morgan
Stanley for the dilutive effect of such repayment by transferring to Morgan
Stanley additional shares of Common Stock, for which transfer for the Purchase
Price paid pursuant to Section 2 hereof shall be deemed full consideration, such
that 0.0516 (or, if prior to the Note Repayment Date, Morgan Stanley has sold
any Shares, a number representing the quotient of the number of Shares held by
Morgan Stanley immediately prior to such Note Repayment Date divided by the
total number of outstanding shares of Common Stock immediately prior to such
Note Repayment Date) (the "Investment Percentage") shall equal the quotient of:
(a) the sum of (i) the number of Shares held by Morgan Stanley prior to such
Note Repayment Date and (ii) the number of Additional Shares received by Morgan
Stanley pursuant to this section, divided by (b) the sum of (i) the total number
of outstanding shares of Common Stock immediately prior to such Note Repayment
Date, (ii) the number of shares of Common Stock issued on such Note Repayment
Date as full or partial repayment of the Note and (iii) the number of Additional
Shares received by Morgan Stanley pursuant to this section.
<PAGE>
9. Preemptive Right. (a) The Company will not, and will not permit any of
its Affiliates (as defined below) to, sell, pledge, encumber or otherwise
transfer any shares of Common Stock at a Cash Price (as defined below) below the
then Current Market Value (as defined below) (the "Offer Price") of the Common
Stock as of any date (the "Offer Date") without first giving Morgan Stanley
prior notice thereof (an "Offer Notice") and the opportunity to purchase a
number of Additional Shares (the "Offered Additional Shares") at such Offer
Price such that the Investment Percentage shall equal the quotient of: (i) the
sum of (A) the number of Shares held by Morgan Stanley immediately prior to the
Offer Date and (B) the Offered Additional Shares, divided by (ii) the sum of
(without duplication) (X) the total number of outstanding shares of Common Stock
immediately prior to the Offer Date, (Y) the number of shares of Common Stock so
sold, pledged, encumbered or otherwise transferred and (Z) the Offered
Additional Shares. The Offer Notice shall constitute an offer (the "Offer") by
the Company to sell the Offered Securities to Morgan Stanley at the Offer Price.
(b) The Offer may be accepted within 60 days of receipt by Morgan
Stanley of the Offer Notice and, if accepted, the Offered Additional Shares
shall be purchased within 60 days after such acceptance. If the Offer is not
accepted or the Offered Additional Shares are not purchased as contemplated
above, the Company may sell the Offered Additional Shares to such prospective
purchaser or transferee at a price not less than the Offer Price. If the sale to
such prospective purchaser or transferee is not consummated as contemplated
above within 45 days after the expiration of the 60-day period or earlier
irrevocable rejection of such Offer or failure to purchase the Offered
Securities after acceptance of the Offer, no sale may be made by the Company
without again complying with this Section 9. Payment for any Additional Shares
sold to Morgan Stanley pursuant to this Section 9 shall be made by wire transfer
to the account of the Company in immediately available funds upon delivery of
the Additional Shares at the office of Morgan Stanley & Co. Incorporated, 1585
Broadway, New York, New York, at such time on such date as shall be agreed to by
the parties hereto.
(c) If the consideration offered by the prospective purchaser or
transferee includes non-cash consideration, the Company and Morgan Stanley shall
in good faith seek to agree upon the value of such non-cash consideration. If
Morgan Stanley and the Company fail to agree on such value within 30 days
following receipt by
<PAGE>
Morgan Stanley of the Offer Notice, then the items in dispute shall be referred
to a nationally recognized investment banking firm selected jointly by Morgan
Stanley and the Company. Morgan Stanley and the Company shall share all expenses
of such investment banking firm. The value of any securities offered as
consideration shall be the then current market value of such securities
determined on a fully diluted basis, and the value of any property other than
securities shall be the then current market value of such property. If a
determination under this paragraph (c) is required, any date for acceptance of
an Offer provided for in paragraph (b) of this Section 9 shall be postponed
until the second business day after the date of such determination. All
determinations made pursuant to this paragraph (c) shall be final and binding on
Morgan Stanley and the Company.
(d) For purposes of this section:
(i) "Affiliate" means with respect to any specified person, (A) any
other person directly or indirectly controlling or controlled by, or under
direct or indirect common control with, such specified person or (B) any
officer or director of such other person. For purposes of this definition,
the term "control" (including the terms "controlling", "controlled by" and
"under common control with") of a person means the possession, direct or
indirect, of the power (whether or not exercised) to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise.
(ii) "Cash Price" means the sum of the amount of any cash plus the
fair market value (determined pursuant to paragraph (c) above) of any other
consideration offered by the prospective purchaser or other transferee.
(iii) "Current Market Value" with respect to the Common Stock means
the average closing price for such Common Stock on the last five trading
days immediately prior to (and including) the Offer Date on which a closing
trading price for the Common Stock was reported, on the NASDAQ Stock
Market/NASDAQ Small Caps ("NASDAQ") (or any successor market).
10. Company Call Right. (a) On any Business Day prior to January 15, 1997
(the "Call Date"), the Company shall have the right (the "Call Right") to
purchase, in
<PAGE>
whole or in part, the Shares, if any, then held by Morgan Stanley for cash, at a
price of $18.00 per share; provided, however, the Company may not exercise the
Call Right while a Change of Control Event exists, without the prior written
consent of Morgan Stanley.
(b) In order to exercise the Call Right on any Call Date, the Company
shall give irrevocable written notice (the "Exercise Notice") to Morgan Stanley
15 Business Days prior to such Call Date stating that the Company desires to
purchase the Shares then held by Morgan Stanley for cash at a price of $18.00
per share.
(c) Notwithstanding the Call Right, Morgan Stanley may sell any or all
of the Shares, without notice to the Company (except as provided in the
Registration Rights Agreement), at any time prior to Morgan Stanley's receipt of
the Exercise Notice. Once Morgan Stanley has agreed in writing to sell any
Shares as contemplated by the preceding sentence, such Shares shall no longer be
subject to the Call Right.
(d) Payment for the Shares sold to the Company pursuant to the Call
Right shall be made by wire transfer to the account of Morgan Stanley in
immediately available funds at the office of Morgan Stanley & Co. Incorporated,
1585 Broadway, New York, New York, at 10:00 A.M., New York City time, on the
Call Date or on such other date as shall be agreed to by the parties hereto.
Delivery of the Shares from Morgan Stanley to the Company shall occur
simultaneously with payment for such Shares.
(e) For purposes of this Section:
(i) "Change of Control Event" means that either (A) the Company (or
the Parent or Grandparent, as applicable) is considering, has agreed to or
is aware of a third party's proposal to effect a Change of Control or (B)
there has been a public announcement by the Company (or the Parent or
Grandparent, as applicable) or a third party of its intent to effect a
Change of Control.
(ii) Change of Control" means any of the following: (A) the sale,
lease, conveyance or other disposition of all or substantially all of the
Company's, the Parent's or the Grandparent's assets as an entirety or
substantially as an entirety to any Person or group of Persons (within the
meaning of Section 13(d)(3) of the Exchange Act) in one or a series
<PAGE>
of transactions, (B) the acquisition by the Company and/or any of its
Subsidiaries, by the Parent and/or any of its Subsidiaries or by the
Grandparent and/or any of its Subsidiaries of 50 percent or more of the
aggregate voting power of all classes of Common Equity of, respectively,
the Company, the Parent or the Grandparent in one transaction or a series
of related transactions, (C) the liquidation or dissolution of the Company,
the Parent or the Grandparent or (D) any transaction or a series of related
transactions (as a result of a tender offer, merger, consolidation or
otherwise) that results in, or that is in connection with, (I) any Person
(excluding the Parent, the Grandparent or the Controlling Shareholder),
including, a "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) acquiring beneficial ownership (as determined in accordance
with Rule 13d-3 under the Exchange Act), directly or indirectly, of 50
percent or more of the aggregate voting power of all classes of Common
Equity of the Company, the Parent or the Grandparent or of any Person that
possesses beneficial ownership (as determined in accordance with Rule 13d-3
under the Exchange Act), directly or indirectly, of 50 percent or more of
the aggregate voting power of all classes of Common Equity of the
Grandparent or (II) less than 50 percent (measured by the aggregate voting
power of all classes) of the Common Equity of the Company being registered
under Section 12(b) or 12(g) of the Exchange Act.
(iii) "Common Equity" of any Person means all Capital Stock of such
Person that is generally entitled (i) to vote in the election of directors
of such Person, or (ii) if such Person is not a corporation, to vote or
otherwise participate in the election of the governing body, partners,
managers or others that will control the management and policies of such
Person.
11. Miscellaneous. (a) No Inconsistent Agreements. The Company will not
hereafter enter into any agreement with respect to its securities that is
inconsistent with the rights granted to Morgan Stanley in this Stock Purchase
Agreement.
(b) Additional Rights of Morgan Stanley. The Company acknowledges
that, in addition to the rights specified herein and with respect to the Shares,
Morgan Stanley will retain all other rights of a holder of Common Stock.
<PAGE>
(c) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Stock Purchase Agreement may not be amended, modified or
supplemented, and waivers or consents to or departures from the provisions
hereof may not be given unless consented to in writing by each party.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing and shall be deemed given (x) when
made, if made by hand delivery, (y) upon confirmation, if made by telex or
telecopy or (z) one (1) business Day after being deposited with a reputable
next-day courier, postage prepaid, to the parties as follows:
(i) if to Morgan Stanley: Morgan Stanley & Co. Incorporated, 1585
Broadway, New York, New York 10036, Attention: Mukesh Patel and Thomas
Yankou;
(ii) if to the Company: Unilabs SA, 12, Place de Cornavin, CH 1211
Geneva, Switzerland, Attention: Chairman, UniHolding Corporation; copy to
UniHolding Corporation, 96 Spring Street, New York, New York, 10012,
Attention: Secretary.
(e) Successors and Assigns. This Stock Purchase Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties.
(f) Counterparts. This Stock Purchase Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(g) Headings. The headings to this Stock Purchase Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Governing Law. This Stock Purchase Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
(i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained
<PAGE>
herein shall not be in any way impaired thereby.
(j) Survival. The indemnity and contribution provisions contained in
Sections 4 through 6 and the representations, warranties and agreements of the
Company contained in this Stock Purchase Agreement shall remain operative and in
full force and effect regardless of (i) any termination of this Stock Purchase
Agreement and (ii) any investigation made by or on behalf of Morgan Stanley or
any person controlling Morgan Stanley, or the Company, its officers or directors
or any person controlling the Company.
IN WITNESS WHEREOF, the parties have executed this Stock Purchase Agreement as
of the date first written above.
UNIHOLDING CORPORATION
By: /s/ Edgard Zwirn
------------------------------
Name: Edgard Zwirn
Title: Chairman
MORGAN STANLEY & CO. INCORPORATED,
By: /s/ Mukesh D. Patel
------------------------------
Name : Mukesh D. Patel
Title: Managing Director
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
COMPANY'S FINANCIAL STATEMENTS FOR THE QUARTER ENDED AUGUST 31, 1996 AS
SUBMITTED IN ITS QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS WITH REFERENCE TO THE ANNUAL
REPORT FILED ON FORM 10-K FOR THE YEAR ENDED MAY 31, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1996
<PERIOD-END> AUG-31-1996
<CASH> 3,033
<SECURITIES> 0
<RECEIVABLES> 26,438
<ALLOWANCES> 1,500
<INVENTORY> 1,992
<CURRENT-ASSETS> 33,185
<PP&E> 68,055
<DEPRECIATION> 33,323
<TOTAL-ASSETS> 129,578
<CURRENT-LIABILITIES> 49,007
<BONDS> 0
0
0
<COMMON> 61
<OTHER-SE> 39,080
<TOTAL-LIABILITY-AND-EQUITY> 129,578
<SALES> 22,844
<TOTAL-REVENUES> 22,844
<CGS> 14,125
<TOTAL-COSTS> 22,482
<OTHER-EXPENSES> 558
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 963
<INCOME-PRETAX> (1,193)
<INCOME-TAX> 165
<INCOME-CONTINUING> (1,358)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,495)
<EPS-PRIMARY> (0.24)
<EPS-DILUTED> (0.24)
</TABLE>
