SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of
the Securities Exchange Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14c-5(d)(2))
[ ] Definitive Information Statement
UNIHOLDING CORPORATION
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange ActRules 0-11(c)(1)(ii), or 14c-5(g).
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
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1) Amount Previously Paid:
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PRELIMINARY COPIES
UNIHOLDING CORPORATION
96 Spring Street, New York, New York 10012
(212) 219-9496
INFORMATION STATEMENT
Pursuant to Section 14C
of the Securities Exchange Act of 1934
and Regulation 14C and Schedule 14C thereunder
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
This Information Statement has been filed with the Securities and Exchange
Commission (the "SEC") on December 6, 1996, and shall be transmitted on or about
December 16, 1996, to the holders of record as of December 2, 1996 (the "Record
Date") of shares of Voting Common Stock, par value $0.01 per share, of
UniHolding Corporation, a Delaware corporation (the "Company" or "UniHolding").
This Information Statement is being furnished pursuant to Section 14C of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") in
connection with (i) the amendment and restatement of the Certificate of
Incorporation of the Company (as so amended and restated, the "Amended and
Restated Certificate of Incorporation"), (ii) the amendment and restatement of
the Bylaws of the Company (as so amended and restated, the "Amended and Restated
Bylaws") and (iii) the re-election of directors. Certain shareholders who are
holders of an aggregate of 52.06% of the issued and outstanding Voting Common
Stock of the Company (the "Majority Holders") have approved the amendment and
restatement of the Certificate of Incorporation of the Company and of the Bylaws
of the Company by written consent pursuant to the provisions of Sections 228(a)
and 242 of the General Corporation Law of the State of Delaware (the "DGCL"). In
addition, the Majority Holders have re-elected the directors of the Company by
written consent pursuant to the provisions of Section 228(a) of the DGCL. Under
applicable law, (i) the affirmative vote of the holders of a majority of the
issued and outstanding stock entitled to vote is required to approve the
amendment of the Company's Certificate of Incorporation and Bylaws and (ii) the
holders of a majority of the issued and outstanding shares entitled to vote
thereon may elect directors by written consent. Accordingly, the shares of
Voting Common Stock held by the Majority Holders, at the time of the execution
of the written consents, constituted a sufficient majority to approve the
amendment and restatement of the Company's Certificate of Incorporation and
Bylaws and the re-election of directors without the need to obtain the consent
of any of the Company's other stockholders. By the terms of the written consent
of the Majority Holders, (i) the directors have been re-elected for new terms
beginning upon the date of, and such amendments and restatements will be
effective upon, the filing
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with the Secretary of State for the State of Delaware of the Amended and
Restated Certificate of Incorporation of the Company and (ii) the board of
directors is authorized to so file the Amended and Restated Bylaws with the
Secretary of State for the State of Delaware at the earliest date determined by
the board of directors to be permissible under applicable laws and regulations.
Hence, no written consents or proxies have been or are being solicited or
requested by the Company from any such stockholders. You are urged to read this
Information Statement carefully. However, you are not requested or required to
take any action with respect to the amendment and restatement of the Company's
Certificate of Incorporation and Bylaws or the election of directors.
DISSENTER'S RIGHTS OF APPRAISAL
Neither the amendment and restatement of the Certificate of Incorporation
of the Company nor the amendment and restatement of the Bylaws of the Company
nor the election of directors will create any dissenter's, appraisal or similar
rights for the stockholders.
DIRECTORS, EXECUTIVE OFFICERS AND KEY MANAGEMENT PERSONNEL
The following table sets forth certain information as of December 4, 1996
regarding the directors, executive officers and key management personnel of the
Company and its subsidiaries.
Directors and Executive Officers of The Company
Name Age Position
Edgard Zwirn 50 Chairman of The Board and Director, Chief
Executive Officer and member of Audit Committee
Enrico Gherardi 48 Director and Secretary
Alessandra van Gemerden 24 Director
Tobias Fenster 50 Director
Daniel Regolatti 66 Director and member of Audit Committee
Pierre-Alain Blum 51 Director and member of Audit Committee
Paul Hokfelt 42 Executive Vice President and Chief Operating
Officer; also Chief Operating Officer, United
Laboratories Limited ("ULL"), a subsidiary of
the Company, and Chief Operating Officer,
Unilabs Clinical Trials Limited ("UCT"), a
subsidiary of the Company
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Bruno Adam 47 Chief Financial Officer
Eric Wavre 44 Executive Vice President, Treasurer and Chief
Financial and Administrative Officer-European
Affairs Key Executive and Managerial Officers
of Subsidiaries
Name Age Position
Joseph Schuler 45 Executive Vice President and Chief Operating
Officer, Unilabs SA ("ULSA"), a subsidiary of
the Company
Miguel Payro 33 Chief Financial Officer - UCT, Chief Financial
Officer - South Europe Region, Vice President -
Healthcare Management Services division, Vice
President - UCL Engineering SA ("UCLE")
Frederic Herren 41 Limited Chief Operating Officer - Unilabs
International ("ULINT"), a subsidiary of the
Company
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. Edgard Zwirn has been the Chairman of the board of
directors of Unilabs Holdings SA (a Panama corporation, "Holdings", which is the
Company's largest shareholder) since 1993, ULSA since 1989, J.S. Pathology, Ltd.
("JSP") since 1993, Unitabs Group Ltd. ("UGL") and United Laboratories Ltd.
("ULL") since its inception deemed November 10, 1993, and UCLE since its
inception in December 1991. He has been Chairman of the board, President and
Chief Executive Officer of Unilabs Holdings SA (a Swiss corporation which is the
parent company of Holdings, "Swiss Holdings") since 1987. He has been President
of UGL since October of 1993. Edgard Zwirn has been a member of Unilab
Corporation's board of directors since November 1993 after having served as a
member of the board of directors of the predecessor of Unilab Corporation from
its formation in November 1988 until November 1993. Mr. Zwirn resigned from the
Unilab Corporation 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.
Enrico Gherardi has been a Management and Financial Consultant and continues to
act as a consultant for various companies in Europe on both management and
marketing related issues. Enrico Gherardi has been a Director of the Company
since June 20, 1994. He 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.
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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. Ms. van
Gemerden holds directorships in various non-U.S. corporations involved in the
asset management business. She is the niece of Mr. Gherardi.
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 United Laboratories Espana S.A., a subsidiary of
the Company ("ULSP"). Mr. Fenster has been a Director of ULL since April 30,
1996. Mr. Fenster is Mr. Zwirn's brother-in-law.
Daniel Regolatti has been a member of UniHolding's board of directors and of the
Audit Committee since October 1996. From 1957 to 1992, Mr. Regolatti held
various positions with the Nestle group of companies, including his last
position as director of finance at the Nestle world headquarters. He is
currently an independent consultant in management and finance. Mr. Regolatti is
a director of several Swiss companies including a bank. He currently also is a
director of ULSA.
Pierre-Alain Blum has been a member of UniHolding's board of directors and of
the Audit Committee since October 1996. Mr. Blum was the founder of the EBEL
Swiss watch manufacturing group in 1970. He left EBEL in 1996. He currently is
an independent consultant in management. Mr. Blum is a director of several
companies in various countries. He currently also is a director of ULSA.
Paul Hokfelt was appointed Executive Vice President and Chief Operating Officer
of UniHolding as of June 1, 1995. Mr. Hokfelt has been Executive Vice President
and Chief Operating Officer 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.
Bruno Adam was a member of UniHolding's board of directors from April 1994 to
October 1996. Mr. Adam has been the Chief Financial Officer of UniHolding since
May 1994. He has been the Chief Financial Officer and an Executive Vice
President of Swiss Holdings since 1988. Mr. Adam has been a Director of Holdings
since 1993, Chief Financial Officer of ULSA from 1988 to 1993, and a Director of
UGL from November of 1993 to July 1996. Prior to 1988, he was employed by Arthur
Andersen in their Geneva offices.
Eric Wavre was appointed Executive Vice President and Chief Financial and
Administrative OfficerEuropean 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 was 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
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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 the Logistic, Finance and Commerce Divisions from 1988 to 1990.
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 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 operations of UCLE since
1994. Since October 1996, he has been appointed Chief Financial Officer of UCT
and of the South Europe Region. Further, also from October 1996, he has been
appointed Vice President of the newly-created Healthcare Management Services
division. 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.
Frederic Herren joined ULSA in November 1995 and was appointed Chief Operating
Officer of ULINT in October 1996. Mr. Herren was from 1980 to 1987 a member of
the Executive Board and Director of international activities of the World
Economic Forum in Geneva. From 1987 to 1995, he was a Vice President of Economic
Affairs at SGS Societe Generale de Surveillance in Geneva, where his activities
included business development in Asia and Eastern Europe.
Meetings of the Board of Directors
The board of directors of the Company met (or executed written consents)
six times during the last full fiscal year of the Company. None of the incumbent
directors attended or participated, either telephonically or in person, fewer
than 75% of the aggregate of (i) the total number of meetings and written
consents of the board of directors held or executed during the period such
person served as a director and (ii) the total number of meetings held by
committees of the board of directors on which such person served.
Audit Committee
The Audit Committee of the board of directors of the Company, which was
established on September 23, 1996, now consists of Messrs. Zwirn, Regolatti and
Blum. The Audit Committee has not yet convened since it was established. The
functions performed by the Audit Committee include oversight of the financial
condition and affairs of the Company and advance review of any transaction out
of the ordinary course of business.
As of the date hereof, there are no material proceedings to which any
director, officer or affiliate of the Company or any owner of record or
beneficially of more than five percent of any class of voting securities of the
Company, or any associate of any such director, officer, affiliate of the
Company, or security holder is a party adverse to the Company or any of its
subsidiaries or has a
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material interest adverse to the registrant or any of its subsidiaries.
Section 16(a) Beneficial Ownership Reporting Requirements
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year and of Form 5,
amendments thereto and representations with respect thereto furnished to the
Company during its most recent fiscal year, no director, officer, or beneficial
owner of more than 10% of any class of equity security of the Company registered
pursuant to Section 12 of the Exchange Act or any other person subject to
Section 16 of the Exchange Act with respect to the Company because of the
requirements of Section 30 of the Investment Company Act or Section 17 of the
Public Utility Holding Company Act failed to file any such Form on a timely
basis during or in respect of the Company's most recent fiscal year, except that
Holdings filed two reports late during the most recent fiscal year.
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 $100,000.
SUMMARY COMPENSATION TABLE (1)
Long Term Compensation
Annual Compensation Awards
Name and
Principal Position Year Salary and Bonus ($) Options (#) (6)
- ------------------ ---- -------------------- ---------------
Edgard Zwirn (2) 1996 $ 475,000 112,821
Chairman of the Board 1995 $ 470,000 50,000
1994 $ 428,000 -0-
Paul Hokfelt (4) 1996 $ 481,000 30,000
Chief Operating Office 1995 $ 420,000 12,500
1994 $ 350,000 -0-
Bruno Adam (3) 1996 $ 380,000 20,000
Chief Financial Office 1995 $ 354,000 10,000
1994 -0- -0-
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Eric Wavre (5) 1996 $ 406,000 20,000
Treasurer, CFO-Europe 1995 $ 414,000 2,500
1994 $ 350,000 -0-
(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.
(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.
Stock Options
The Company adopted a 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, as amended, is 500,000 shares of the
Company's common stock each year. The Administrator, acting in agreement with a
majority of the board of directors, 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.
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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>
Option Grants in Last Fiscal Year
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Individual Grants Term
- ----------------------------------------------------------- -------------------------------
Number Percent of Potential Potential
of Total Options realization realization
Executive Options Granted to Expiration value value
Name Granted Employees Exercise Price Date at 5% ($) at 10% ($)
<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 persons 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
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.
Compensation Committee
The Company does not have a Compensation Committee; the board of directors
determines the compensation of executive officers from time to time. No current
or former officers or employees of the Company or any of its subsidiaries
participated in deliberations of the board of directors with respect to
executive compensation.
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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 pursuant to mandatory provisions of 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 system and to such 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 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.
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 (approximately $507,000) under this
contract during the year ended May 31, 1996.
Performance Graph
The following graph shows, for the completed fiscal years of the Company
since the 1994 acquisition of the clinical laboratory business, the cumulative
total return of the Company's Voting Common Stock, as compared to the cumulative
total return for the NASDAQ Stock Market (U.S.
& Foreign) Index and the NASDAQ Health Services Stocks Index.
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COMPARISON OF CUMULATIVE TOTAL RETURNS
Nasdaq Stock Nasdaq health
Date Company Market Services
Index Index Index
-------- ------------ ---------------
05/31/94 0.000 94.351 92.249
06/30/94 0.000 90.634 85.641
07/29/94 0.000 92.782 87.707
08/31/94 0.000 98.422 96.265
09/16/94 100.000 100.000 100.000
09/30/94 96.000 98.285 102.356
10/31/94 100.000 99.996 103.753
11/30/94 101.000 96.491 100.940
12/30/94 92.000 96.661 98.987
01/31/95 100.000 96.993 104.005
02/28/95 96.000 101.952 103.069
03/31/95 80.000 105.144 108.460
04/28/95 82.000 108.560 91.904
05/31/95 86.000 111.227 91.348
06/30/95 84.000 120.188 93.358
07/31/95 87.000 128.778 103.097
08/31/95 76.000 131.293 103.324
09/29/95 88.000 134.504 108.398
10/31/95 72.000 133.465 106.798
11/30/95 68.000 136.586 120.057
12/29/95 76.000 135.750 125.735
01/31/96 65.000 136.666 131.080
02/29/96 56.000 142.042 133.687
03/29/96 67.000 142.345 131.091
04/30/96 60.500 153.971 143.685
05/31/96 61.000 160.990 151.089
Independent Public Accountants
Richard A. Eisner & Company, LLP were independent public accountants to
the Company for the fiscal year ended May 31, 1996. Accountants will next be
submitted for election by the stockholders at the annual meeting of the
stockholders in 1997.
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 the Company, of Unilabs Holdings SA, a Swiss corporation ("Swiss
Holdings"), and of Unilabs Holdings SA, a Panamanian corporation ("Holdings").
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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.
Pursuant to the Acquisition Agreement, Holdings assigned to the Company its
rights and obligations under the Stockholders' Agreement with Unilab Corporation
concerning UGL. In connection with the acquisition of 40% of UGL from Unilab
Corporation 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 on the basis of $5.50 per share (prior to the reverse split of the
Company's common stock). Accordingly, the Company issued 3,310,455 shares to
Holdings 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 finder's 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.
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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.
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 (approximately
$450,000 as of December 4, 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 (approximately $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 (approximately $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 Health
Strategies Limited ("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 Corporation, whereby a new
company, MISE S.A. ("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 Diagnostic Management,
Inc. ("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. As of December 4, 1996, the installment due in October 1996 (as
well as the capital contribution in September 1996) has not been paid because
HSL has not completed certain services it committed to deliver. Management
believes however that such delivery will occur shortly, at which time payment
will then be made. Based upon MDM's representations, MDM's board of directors
include two directors or officers of Unilab Corporation. Unilab Corporation may
be deemed to be a related party of the Company by virtue of the $15,000,000 note
due to Unilab Corporation in connection with the acquisition of Unilab
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Corporation's 40% investment in UGL on June 30, 1995, which note may under
certain circumstances be converted by Unilab Corporation into UniHolding Common
Stock. None of those two directors or officers of Unilab Corporation 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
Corporation, and was agreed upon by the UGL and UniHolding boards of directors.
The director of Unilab Corporation 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 had 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
23.3% of the voting and equity interests in Swiss Holdings. Bruno Adam is
Executive Vice President and Chief Financial Officer of Swiss Holdings.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of December 4, 1996, there were issued 6,157,118 shares of Voting
Common Stock, the only class of voting securities of the Company. Each share of
Voting Common Stock entitles its holder to one vote, with the exception of
168,000 shares of Voting Common Stock held in treasury by the Company. There are
accordingly 5,989,118 shares of Voting Common Stock presently with voting
rights. Because the Majority Holders have by written consent approved the
amendment and restatement of the Certificate of Incorporation and the Bylaws of
the Company, no consents or proxies are being solicited of the holders of the
Voting Common Stock.
The following table sets forth, as of December 4, 1996 the name and
address of each person known to the Company to be the beneficial owner of more
than 5% of the Voting Common Stock, the total number of shares of common stock
owned by each such person and the percentage of the class owned by each such
person. Except as otherwise noted, each such person has full voting and
investment power with respect to the shares so owned.
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Title of Class Name and Address Amount and Percent of Class (1)
of Beneficial Owner Nature of
Beneficial
Ownership
Voting Common Unilabs Holdings SA 2,424,979 37.56%
Stock 53rd Street
Urbanizacion Obarrio
Torre Swiss Bank
Sixteenth Floor
Panama
" Edgard Zwirn (2) 2,561,266 39.68%
28, Chemin
Bellefontaine
1223 Cologny,
Switzerland
Alessandra Van 490,125 7.59%
Gemerden (3)
12, place de Cornavin
CH 1211 Geneva,
Switzerland
" Morgan Stanley & Co. 333,333 5.16%
Inc.
1585 Broadway
New York, NY 10036
" SBC Equity Partners 298,384 4.62%
1, Europastrasse
8152 Opfikon,
Switzerland
" All Directors and 3,254,278 50.41%
Executive Officers as
a group (4)
SBC Equity Partners
Non-Voting Common 1, Europastrasse
Stock, par value $0.08152 Opfikon,
per share Switzerland 298,384 100.00%
- ----------
(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
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Company.
(2) 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.
(3) On July 9, 1996, the Company granted options to its other 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 490,125 shares of the Company's Common Stock; however, Ms.
Van Gemerden disclaims beneficial ownership of such shares except for
90,125 thereof.
(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 other 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 other 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 490,125
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.
Pursuant to the terms of a Stock Purchase Agreement, dated June 30, 1995,
by and between the Company, UGL and Unilab Corporation, the Company acquired 40%
of the common stock of UGL in exchange for a promissory note for a principal
amount of $15,000,000 (the "Note") and certain other consideration. The
principal amount of the Note was due as of June 30, 1996. Pursuant to the terms
of the Note, unless all amounts owed under the Note are fully repaid prior to
January 1, 1997, and the parties otherwise comply with the covenants related
thereto, the Note shall be converted into shares of the Company's publicly
traded common stock at a per share conversion rate equivalent to 75% of the
average closing market price of such stock during the last 90 trading days of
1996. As of December 4, 1996, the principal amount of the Note remains unpaid.
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DESCRIPTION OF AMENDMENTS TO THE CERTIFICATE OF INCORPORATION
AND TO THE BYLAWS
I. Classified Board Amendment
General
The board of directors has adopted, and the Majority Holders have approved
by written consent, amendments to the Certificate of Incorporation of the
Company (collectively, the "Classified Board Amendment") which, in general: (i)
provide that the number of directors may be fixed from time to time by or
pursuant to the Bylaws; (ii) classify the directors into three separate classes,
as nearly equal in number as possible, with one class being elected each year;
(iii) require advance notice, as specified in the Bylaws, for nomination of
directors by stockholders; (iv) provide that any vacancy on the board of
directors may be filled by the remaining directors then in office, even though
less than a quorum; (v) provide that directors may be removed only for cause and
only with the approval of holders of 75% or more of the voting power of the
Company's voting stock; and (vi) require the vote of 75% of the voting power of
the Company's voting stock to amend or repeal, or to adopt any provision
inconsistent with any of the foregoing provisions. Certain related amendments to
the Bylaws which were concurrently approved by the board of directors and the
Company's stockholders are discussed below.
Purposes and Effects of the Classified Board Amendment
General. The Classified Board Amendment, as a whole, is intended to (i)
promote continuity and stability in the management and policies of the Company,
(ii) encourage potential acquirers to negotiate with the board of directors,
acting on behalf of the Company and its stockholders, (iii) enhance the
bargaining position of the board of directors in such negotiations, and (iv)
discourage certain takeover-related tactics that may be inconsistent with the
best interests of the Company and its stockholders.
Classification of the Board of Directors. The DGCL permits the board of
directors to be divided into classes serving staggered terms. Under the
Classified Board Amendment, the Company's directors will be divided into three
classes, with the terms of two directors expiring at the annual meeting of
stockholders to be held in 1997, the terms of two directors expiring at the
annual meeting of stockholders to be held in 1998 and the terms of the remaining
two directors expiring at the annual meeting of stockholders to be held in 1999.
Commencing with the annual meeting of stockholders to be held in 1997, one class
of directors will be elected for a three-year term at each annual meeting of
stockholders. If at any time the size of the board of directors is changed, the
increase or decrease in the number of directors will be apportioned among the
three classes to make all classes as nearly equal as possible. Under the
Classified Board Amendment, the vote of 75% of the voting power of the Company's
voting stock will be required for the amendment or repeal of, or the adoption of
any provision inconsistent with, the provisions described in this paragraph. The
board of directors has no present plans, arrangements, commitments or
understandings with respect to increasing or decreasing the size of the board or
of any class of directors.
The board of directors believes that a classified board will promote
continuity and stability in
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the management and policies of the Company because, absent extraordinary
circumstances, a majority of the Company's directors at any given time will have
had prior experience as directors of the Company. The board further believes
that such continuity and stability will facilitate long-term planning for the
Company's business. The classification of directors will have the effect of
making it more difficult to change the composition of the board of directors.
Absent extraordinary circumstances, at least two stockholders meetings, instead
of one, will be required to effect a change in the majority control of the board
of directors, except in the event of vacancies resulting from removal for cause
or other reason (in which case, the remaining directors would fill the vacancies
so created as described below). The classification provisions will apply whether
or not a change in the board of directors would be beneficial to the Company and
its stockholders and whether or not some stockholders believe that such a change
would be desirable.
Removal of Directors Only for Cause. Under the DGCL, unless the
corporation's certificate of incorporation otherwise provides, the holders of a
majority of the shares then entitled to vote at an election of directors may
effect the removal of directors of a corporation the board of directors of which
is classified, but only for cause. Under the Classified Board Amendment,
directors of the Company can be removed by stockholders only for cause, and then
only by the vote of the holders of 75% of the voting power of the Company's
voting stock, voting together as a single class. In addition, the vote of 75% of
the voting power of the Company's voting stock will be required for the
amendment or repeal of, or the adoption of any provision inconsistent with, such
provisions. This portion of the Classified Board Amendment is intended to
preclude a potential acquirer or other stockholder from removing incumbent
directors without cause, but will permit the holders of 75% of the voting power
of the Company's voting stock, voting together as a single class, to remove
directors for cause. The primary purpose of this portion of the Classified Board
Amendment is to preclude the removal of any director or directors by the
proponent of an unsolicited takeover proposal or another stockholder, unless
removal is warranted for reasons other than control of the board of directors.
The precise meaning of "cause" in the context of director removal has not been
conclusively established under Delaware law. The Delaware courts have held that
actions such as embezzlement, disclosure of trade secrets and other violations
of fiduciary duty constitute "cause" in this context. Conversely, the Delaware
courts have indicated that a desire to take over the management of a corporation
or the failure to cooperate with management do not constitute "cause" in this
context. In order to clarify this ambiguity, the Classified Board Amendment
defines cause as "willful misconduct in connection with [one's] duties as a
director, officer or employee of the Company."
Advance Notice of Nomination of Directors. Under the Classified Board
Amendment, advance notice, as specified in the Bylaws, is required for the
nomination of directors by stockholders. Pursuant to the related provisions of
the Amended and Restated Bylaws, as adopted by the board of directors and
approved by the stockholders of the Company, a stockholder who wishes to
nominate one or more persons for election to the board of directors is required
to deliver to the Secretary of the Company notice of such intention not later
than the date which is ninety days prior to the anniversary date of the
preceding annual meeting. The vote of 75% of the voting power of the Company's
voting stock will be required for the amendment or repeal of, or the adoption of
any provision inconsistent with, such provisions. The primary purpose of this
portion of the Classified Board Amendment is to make it more difficult for the
proponent of an unsolicited takeover proposal or another stockholder to seek to
replace current directors and to ensure that the Company has adequate time to
prepare for any contested election of directors.
18
<PAGE>
Filling of Vacancies on the Board of Directors. Under the Classified Board
Amendment, a vacancy on the board of directors, including a vacancy created by
an increase in the number of directors, occurring prior to the expiration of the
term in office of the class in which such vacancy occurs, can be filled by the
remaining directors, but not by the stockholders. The Classified Board Amendment
also provides that any director elected to the board of directors to replace
another director will hold office for the unexpired term of the director he or
she replaced and a director elected by the board of directors to fill a vacancy
created by an increase in the number of directors will hold office until the
next election for the class to which he or she was elected. The vote of 75% of
the voting power of the Company's voting stock will be required for the
amendment or repeal of, or the adoption of any provision inconsistent with, the
provision described in this paragraph.
Although the Classified Board Amendment will permit the holders of 75% of
the voting power of the Company's voting stock, voting together as a single
class, to remove directors for cause, only the directors will have the power to
fill the vacancies created by such removal. The primary purpose of this portion
of the Classified Board Amendment is to preclude a potential acquirer or other
stockholder from removing incumbent directors and simultaneously gaining control
of the board of directors by filling the vacancies created by such removal with
its own nominees.
Fixing the Size of the Board of Directors. The Classified Board Amendment
provides that the number of directors will be as authorized by or pursuant to
the Bylaws. Pursuant to the related provisions of the Amended and Restated
Bylaws, as adopted by the board of directors and approved by the stockholders of
the Company, the number of directors is to be fixed from time to time by
resolution of the board of directors. The Classified Board Amendment and the
related provisions of the Amended and Restated Bylaws further require the vote
of 75% of the voting power of the Company's voting stock for the amendment or
repeal of, or the adoption of any provision inconsistent with, the provisions
described in the immediately preceding two sentences. The primary purpose of
this portion of the Classified Board Amendment is to prevent a potential
acquirer or other stockholder from increasing the number of directors and
attempting to fill those vacancies. The board of directors has no present plans,
arrangements, commitments or understandings with respect to increasing or
decreasing the size of the board or of any class of directors.
Amendment of the Certificate of Incorporation. Under the DGCL, amendments
to a corporation's certificate of incorporation require the approval of the
holders of a majority of the outstanding shares entitled to vote thereon and, in
certain cases, of a majority of the outstanding shares of each class entitled to
vote thereon as a class. The DGCL also permits provisions in a corporation's
certificate of incorporation that require a greater vote than the vote otherwise
required by law for any corporate action. The requirement of an increased
stockholder vote for amendment of the provisions contained in the Classified
Board Amendment is designed to prevent a potential acquirer or other stockholder
controlling a majority of the voting power of the Company's stock from avoiding
the requirements thereof by simply amending such provisions.
Certain Takeover-Related Considerations. The board of directors believes
that the provisions of the Certificate of Incorporation of the Company prior to
the adoption of the Classified Board Amendment resulted in an unacceptable
vulnerability to potentially coercive or unfair takeover practices and takeover
proposals or takeover-related tactics which are inadequate or otherwise not in
the best interests of the Company and its stockholders. In particular, the board
of directors believes
19
<PAGE>
that the imminent threat of the removal and replacement of a majority or all of
the Company's directors by means of a proxy contest in connection with an
unsolicited takeover proposal could severely curtail the ability of the board of
directors effectively to (i) negotiate with the potential acquirer to improve
the terms of such proposal or (ii) otherwise respond to such proposal,
including, under appropriate circumstances, by developing or implementing
alternatives designed to provide superior value to the Company's stockholders.
Moreover, because of the serious disruption to the Company's management,
policies and business operations that would likely result from a replacement of
a majority or all of the Company's directors, it is possible that even a person
who was not seriously interested in acquiring control of the Company could seek
to use the threat of a proxy contest or takeover proposal as a means to pressure
the Company to repurchase such person's voting securities at a substantial
premium over market price in order to avoid such disruption.
The Classified Board Amendment is not intended to, and the board of
directors believes that it will not, deter fully priced and financed cash offers
for all outstanding shares of Common Stock because the fiduciary duties of the
board of directors will require it to act in the best interests of the Company
and its stockholders in responding to an unsolicited takeover proposal. Rather,
the board of directors believes that the Classified Board Amendment will (i)
promote continuity and stability in the management and policies of the Company,
(ii) encourage potential acquirers to negotiate with the board of directors,
acting on behalf of the Company and its stockholders, (iii) enhance the
bargaining position of the board of directors in such negotiations, and (iv)
discourage certain takeover-related tactics that may be inconsistent with the
best interests of the Company and its stockholders. It is possible, however,
that the Classified Board Amendment could have the effect of discouraging an
unsolicited takeover proposal and making it more difficult to replace the
existing board of directors and management, even though such a proposal or
replacement might be beneficial to the Company and its stockholders and even
though some stockholders might otherwise desire such a proposal or replacement.
Acquisitions or other changes in control which are proposed and effected without
prior consultation and negotiation with the existing board of directors and
management are not necessarily detrimental to the Company and its stockholders.
The board of directors, however, believes that the benefits of continuity and
stability in the management and policies of the Company and the enhancement of
the ability of the board of directors to negotiate with the proponents of
unsolicited takeover proposals and otherwise respond to such proposals outweigh
the disadvantages of potentially discouraging such proposals and the possibility
of self-interest by management.
II. Stockholder Action Amendment
General
The board of directors has adopted, and the Company's stockholders have
approved, amendments (collectively, the "Stockholder Action Amendment") to the
Company's Certificate of Incorporation which, in general, (i) provide that
special meetings of the Company's stockholders may be called only by the
Chairman, the President or the Secretary of the Company within 10 calendar days
of receipt of the written request of a majority of the directors then in office
and not by stockholders and require the vote of 75% of the voting power of the
Company's voting stock to amend or repeal, or to adopt any provision
inconsistent with, such provision, (ii) provide that the Bylaws of the Company
may be amended by a resolution of the board of directors, and (iii) provide that
the Bylaws
20
<PAGE>
of the Company may not be amended or repealed by the stockholders, and no
provision inconsistent therewith may be adopted by the stockholders, without the
vote of 75% of the voting power of the Company's voting stock.
Purposes and Effects of Proposed Stockholder Action Amendment
General. The Stockholder Action Amendment, as a whole, is intended to (i)
give all stockholders an opportunity to participate at a meeting in the
determination of any proposed stockholder action, (ii) minimize the potential
expense and distractions associated with stockholder proposals by preventing the
proponents thereof from forcing the consideration of a proposal prior to the
next annual meeting of stockholders or such earlier time as an officer of the
Company having the authority to call a special meeting of stockholders deems
appropriate, (iii) discourage certain takeover-related tactics that may be
inconsistent with the best interests of the Company and its stockholders and
(iv) permit the board of directors to amend the Bylaws from time to time in a
manner that the board of directors deems to be in the best interests of the
Company.
The existing ability of the CEO, Chairman or Secretary of the Company to
call a special meeting of stockholders to act on matters prior to the next
annual meeting of stockholders will not be affected by the Stockholder Action
Amendment. The Stockholder Action Amendment applies to all special meetings of
stockholders, irrespective of the purpose thereof, and will prevent stockholders
from calling a special meeting, even though some stockholders might otherwise
desire to do so. Additionally, The Stockholder Action Amendment applies to all
resolutions of stockholders to amend or repeal the Bylaws or to adopt any
provision inconsistent therewith, irrespective of the purpose thereof and even
though some stockholders might favor such an amendment, repeal or provision. The
Stockholder Action Amendment also applies to all resolutions of directors to
amend or repeal the Bylaws, irrespective of the purpose thereof and even though
some stockholders might believe such an amendment or repeal to be undesirable.
Amendment of the Certificate of Incorporation. Under the DGCL, amendments
to a corporation's certificate of incorporation require the approval of the
holders of a majority of the outstanding shares entitled to vote thereon and, in
certain cases, of a majority of the outstanding shares of each class entitled to
vote thereon as a class. The DGCL also permits provisions in a corporation's
certificate of incorporation that require a greater vote than the vote otherwise
required by law for any corporate action. The requirement of an increased
stockholder vote for amendment of the provisions contained in the Stockholder
Action Amendment is designed to prevent a potential acquirer or other
stockholder controlling a majority of the voting power of the Company's stock
from avoiding the requirements thereof by simply amending such provisions.
Amendment of the Bylaws. Under the DGCL, amendments to a corporation's
bylaws require the approval of the holders of a majority of the outstanding
shares entitled to vote thereon or, if so provided in the certificate of
incorporation, approval by a resolution of directors. The requirement of an
increased stockholder vote for amendment of the Bylaws is designed to prevent a
potential acquirer or other stockholder controlling a majority of the voting
power of the Company's stock from avoiding the requirements thereof by simply
amending such provisions. The provision permitting the board of directors to
amend the Bylaws is designed to enable the board of directors to respond quickly
to events (including, inter alia, potentially coercive or unfair takeover
practices).
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Certain Takeover-Related Considerations. The board believes that the prior
provisions of the Certificate of Incorporation permitting stockholders to force
the call of a special meeting resulted in unnecessary vulnerability to
potentially coercive or unfair takeover practices and takeover proposals or
takeover-related tactics which are inadequate or otherwise not in the best
interests of the Company and its stockholders. In particular, the board believes
that the ability of stockholders to call a special meeting of stockholders in
connection with an unsolicited takeover proposal could severely curtail the
ability of the board of directors effectively to (i) negotiate with the
potential acquirer to improve the terms of such proposal or (ii) otherwise
respond to such proposal, including, under appropriate circumstances, by
developing or implementing alternatives designed to provide superior value to
the Company's stockholders. Although these potentially detrimental effects were
particularly acute in light of the former provisions of the Certificate of
Incorporation relating to the election, terms of office and removal of
directors, they would not necessarily have been eliminated solely by the
implementation of the Classified Board Amendment. A potential acquirer could
have sought to effect amendments to the Bylaws or to take other actions at a
special meeting of stockholders with the intention of limiting the authority or
flexibility of the board and management or otherwise pressuring the board to
capitulate to an unsolicited takeover proposal. In addition, under the prior
provisions of the Certificate of Incorporation, the board of directors would not
have had the ability to amend the Bylaws in order to permit a more effective
response to such a proposal or to mitigate or counteract any potentially
detrimental effects.
The Stockholder Action Amendment is not intended to, and the board
believes that it will not, deter unsolicited takeover proposals. Rather, the
board believes that the Stockholder Action Amendment will (i) give all
stockholders an opportunity to participate at a meeting in the determination of
any stockholder action, (ii) minimize the potential expense and distractions
associated with stockholder proposals by preventing the proponents thereof from
forcing the consideration of a proposal prior to the next annual meeting of
stockholders or such earlier time as an officer of the Company having authority
to call a special meeting of stockholders deems appropriate, (iii) discourage
certain takeover-related tactics that may be inconsistent with the best
interests of the Company and its stockholders and (iv) permit the board of
directors to amend the Bylaws from time to time in a manner that the board of
directors deems to be in the best interests of the Company. It is possible,
however, that under certain circumstances the Stockholder Action Amendment could
have the effect of making it more difficult to effect certain elements of an
unsolicited takeover proposal, even though such a proposal might be beneficial
to the Company and its stockholders and even though some stockholders might
otherwise favor such a proposal. Acquisitions or other changes in control which
are proposed and effected without prior consultation and negotiation with the
existing board and management are not necessarily detrimental to the Company and
its stockholders. The board of directors, however, believes that the benefits of
giving all stockholders an opportunity to participate at a meeting in the
determination of any stockholder action, minimizing potential expenses and
distractions associated with stockholder proposals and discouraging certain
takeover-related tactics that may be inconsistent with the best interests of the
Company and its stockholders outweigh the disadvantages of potentially
discouraging such proposals and the possibility of self-interest by management.
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CERTAIN OTHER TAKEOVER-RELATED CONSIDERATIONS
Except for the Board Classification Amendment and the Stockholder Action
Amendment, the board does not currently contemplate adopting or recommending the
approval of any other action which might have the effect of delaying, deterring
or preventing a change in control of the Company, except that the board may
consider certain amendments to the Bylaws providing for advance notice
procedures in connection with director nominations and stockholder proposals
(which amendments may be effected by the board without stockholder approval).
However, the board of directors has from time to time considered recommending
that the stockholders adopt an amendment to the Company's Certificate of
Incorporation authorizing the issuance of one or more series of preferred stock.
In the event that the board of directors recommends such an amendment to the
stockholders of the Company, the affirmative votes of the holders of a majority
of the outstanding shares entitled to vote thereon would be required to approve
such amendment.
CERTAIN EXISTING CIRCUMSTANCES POTENTIALLY
AFFECTING A CHANGE IN CONTROL OF THE COMPANY
Certain provisions of the DGCL, certain provisions of the Certificate of
Incorporation and the Bylaws of the Company pre-dating the adoption of the
Classified Board Amendment and the Shareholder Action Amendment and certain
contractual obligations of the Company may have the effect of delaying,
deterring or preventing a change in control of the Company. These circumstances
are described briefly below. The board considered all such circumstances in
determining to adopt and recommend that the Company's stockholders approve the
Board Classification Amendment and the Stockholder Action Amendment. Neither the
Board Classification Amendment nor the Stockholder Action Amendment was adopted
in response to any specific efforts of which the Company is aware to accumulate
shares of Common Stock or obtain control of the Company.
Delaware General Corporation Law
Section 203 of the DGCL prohibits the Company from engaging in certain
business combinations with any interested stockholder (which, subject to certain
exceptions, includes any person who, together with such person's affiliates and
associates, owns 15% or more of the outstanding voting stock of the Company) for
a period of three years following the time that such stockholder became an
interested stockholder, unless (i) prior to such time, the board approved the
business combination or the transaction which resulted in the stockholder
becoming an interested stockholder, (ii) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder, together with such stockholder's affiliates and
associates, owned at least 85% of the voting stock of the Company (excluding
certain management and employee plan shares), or (iii) after such time, the
business combination is approved by the board and authorized by the affirmative
vote of at least 66-2/3% of the outstanding voting stock which is not owned by
the interested stockholder.
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Certificate of Incorporation and Bylaws
The Certificate of Incorporation presently provides the Company authority
to issue 18,000,000 shares of Voting Common Stock and 2,000,000 shares of
Non-Voting Common Stock, par value $0.01 per share (the "Non-Voting Common
Stock"). As of December 4, 1996, (i) 6,157,118 shares of Common Stock were
issued, (ii) 168,000 shares of Voting Common Stock were held in treasury and
(iii) 298,384 shares of Non-Voting Common Stock were issued and outstanding. The
board has the power to determine the price and terms under which additional
shares of capital stock may be issued. Depending upon the price and terms of any
such issuance and the identity of the person or persons subscribing for any such
additional shares, the issuance of additional shares may have the effect of
delaying, deterring or preventing a change in control of the Company. Other than
the authority granted to the board of directors with respect to such additional
issuances of shares, the Certificate of Incorporation and the Bylaws of the
Company, prior to their amendment and restatement as herein described, did not
contain any provisions intended by the Company to have, or to the knowledge of
the board having, the effect of delaying, deterring or preventing a change in
control of the Company.
Anti-Dilution Rights
Pursuant to the terms of various subscription agreements, registration
rights agreements and similar agreements between the Company and certain of its
current stockholders, the Company will under certain circumstances be obligated
to offer additional shares to such stockholders in the event that the board of
directors of the Company determines to issue additional shares.
ELECTION OF DIRECTORS
The board has nominated, and the Majority Holders have by written consent
re-elected, the following persons to be directors of the Company: Pierre-Alain
Blum, Daniel Regolatti, Alessandra van Gemerden, Tobias Fenster, Edgard Zwirn,
Enrico Gherardi. Pursuant to the resolutions of the board of directors and the
written consent of the Majority Holders, the respective terms of the directors
so elected will begin upon the filing of the Amended and Restated Certificate of
Incorporation with the Secretary of State for the State of Delaware and will
end, in the case of Pierre-Alain Blum and Daniel Regolatti, at the annual
meeting of stockholders to be held in 1997, in the case of Alessandra van
Gemerden and Tobias Fenster, at the annual meeting of stockholders to be held in
1998 and, in the case of Edgard Zwirn and Enrico Gherardi, at the annual meeting
of stockholders to be held in 1999. Pending the filing of the Amended and
Restated Certificate of Incorporation, each of the above persons will continue
to serve as a director for the remainder of his or her current term.
Pierre-Alain Blum and Daniel Regolatti were each originally appointed to
the board of directors effective in October 1996 by the board of directors,
acting pursuant to the power granted to the board of directors pursuant to the
Company's Certificate of Incorporation and Bylaws as in effect at such time to
fill vacancies, including vacancies created by the resignation of directors.
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ADDITIONAL INFORMATION
The Company is delivering its 1996 Annual Report on Form 10-K (without
exhibits) to its shareholders together with this Information Statement. Upon
receipt of a written request to the Company at 96 Spring Street, New York, New
York 10012, the Company will furnish to a shareholder a copy of any exhibit to
the Annual Report on Form 10-K.
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