<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
UNIHOLDING CORPORATION
-----------------------------------------
(Name of Issuer)
Common Stock, $.01 Par Value
-----------------------------------------
(Title of Class Securities)
904761202
-----------------------------------------
(CUSIP Number)
David J. Allen, Esquire, 290 South County Farm Rd., Third
Floor, Wheaton, IL 60187-4526 (630) 588-7200
-----------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notice and Communications)
August 28, 2000
-----------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject
of this Schedule 13D, and is filing this schedule because of
Section 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box /X/.
Note: Schedules filed in paper format shall include a
signed original and five copies of the schedule,
including all exhibits. See Section 240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect
to the subject class of securities, and for any subsequent
amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section
18 of the Securities Exchange Act of 1934 ("Act") or
otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act
(however, see the Notes).
<PAGE> 2
SCHEDULE 13D
CUSIP NO. 872876107 PAGE 2 OF 31 PAGES
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Grace Brothers, Ltd.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP(See
Instructions)
(a)/ /
(b)/X/
3 SEC USE ONLY
4 SOURCE OF FUNDS(See Instructions)
OO
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)/ /
6 CITIZENSHIP OR PLACE OR ORGANIZATION
ILLINOIS LIMITED PARTNERSHIP
7 SOLE VOTING POWER
NUMBER OF 444,587 SHARES
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0 (see Item 5)
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 444,587 SHARES
WITH 10 SHARED DISPOSITIVE POWER
0 (see Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
444,587 SHARES
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES /X/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.5%
14 TYPE OF REPORTING PERSON*
BD,PN
*Based on 2,069,848 shares indicated as outstanding on the
Form 10-K filed by UniHolding Corporation on February 18,
2000.
<PAGE> 3
Page 3 of 31 Pages
Item 1. Security and Issuer
This Schedule 13D relates to the Common Stock, par
value $.01 per share (the "Common Stock"), of
UniHolding Corporation, a Delaware corporation, (the
"Company"). The principal executive office of the
Company is located at 96 Spring Street, New York,
New York 10012.
Item 2. Identity and Background
(a) This statement is filed by Grace Brothers, Ltd., an
Illinois limited partnership (the "Reporting Person").
Bradford T. Whitmore ("Whitmore") and Spurgeon Corporation
("Spurgeon") are the general partners of the Reporting
Person.
(b) The business address of the Reporting Person and Whitmore
is 1560 Sherman Avenue, Suite 900, Evanston, Illinois 60201.
The business address of Spurgeon is 290 South County Farm
Road, Third Floor, Wheaton, Illinois 60187.
(c) The Reporting Person is engaged in the business of
purchasing, selling, investing and trading in securities.
Whitmore's principal occupation is that of being a general
partner of the Reporting Person. The required information
for Spurgeon is set forth in Exhibit A hereto and
incorporated herein by this reference.
(d) None of the persons referred to in this Item 2 has been
convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) during the last five
years.
(e) None of the persons referred to in this Item 2 has been a
party to a civil proceeding of a judicial or administrative
body of resulting in a judgement, decree or final order
enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or
finding any violation with respect to such laws.
(f) The Reporting Person is an Illinois limited partnership
and Spurgeon is an Illinois Corporation. Whitmore is a
citizen of the United States.
Item 3. Source and Amount of Funds
Reporting Person entered into a Subparticipation Agreement
with Donaldson Luftkin & Jenrette Securities Corporation
("DLJ") under which it purchased a subparticipation interest
(for a cost of $4,000,000.00) in the November 7, 1996
participation Agreement between DLJ and Unilab Corporation
("Participation Agreement"). As part of the Participation
Agreement, DLJ purchased a 100% interest in a Promissory Note
dated June 30 1995 in the original principal amount of
$15,000,000 of Unilabs Group Limited and Company, as makers,
to Unilab Corporation ("Promissory Note"). The Promissory
Note provided that if the debt was not paid in full by
January 1, 1997, "payment shall be effected by UniHolding
[Company] immediately converting the unpaid amount of such
obligation into shares of UniHolding's publicly traded common
stock." The debt under the Promissory Note was not paid, and
accordingly, on January 1, 1997, the Promissory Note
converted into 1,394,963 shares of Company common stock.
Reporting Person received 464,987 and currently holds 429,787
of those shares as part of this conversion. Reporting Person
is also the owner of 14,800 shares of the Company stock, which
it purchased in the open market at a price of $64,600.00.
<PAGE> 4
Page 4 of 31 Pages
Item 4. Purpose of Transaction
The Reporting Person previously reported its position in the
Company on Schedule 13G. This position is now being reported
on this Schedule 13D due to the Reporting Person's actions
concerning the Company as described herein. The Reporting
Person believes that the Reporting Person's share price is
undervalued in light of the share price of other public
companies similarly situated, and believes it is in the best
interest of the Company's stockholders to explore alternative
ways of increasing stockholder value. To that end, on August
29, 2000, the Reporting Person submitted to the Company a
request to include on the proxy statement to be distributed
to the Company's stockholders in connection with the
solicitation of proxies for the next meeting of the Company's
stockholders a request to include on such proxy statement the
names of three (3) persons that the Reporting Person is
nominating for election to the Company's Board of Directors.
The Reporting Person will nominate those persons whom it
believes will seek to enhance stockholder value through the
exploration of various alternatives and the issuance of
directives to the Company's officers to act on one more of
these alternatives. The Reporting Person also intends to
have future communications with the Company's senior
management and board of directors regarding taking actions to
increase Company shareholder value.
The Reporting Person and Banc of America Securities, LLC
("BOA"), a subsidiary of Bank of America Corporation have an
unwritten agreement that BOA will vote all of the shares
beneficially owned by it for those persons whom the Reporting
Person nominates for election to the Board of Directors of
the Company, and the Reporting Person will vote all the
shares beneficially owned by it for the person whom BOA
nominates for election to the Board of Directors of the
Company. BOA has beneficial ownership of 232,494 shares
(approximately 11.2% of the total outstanding).
The Reporting Person expressly disclaims any admission that
it has beneficial ownership of, or any pecuniary interest in,
any shares of Common Stock except for the 444,587 shares with
respect to which it possesses sole voting and dispositive
power. In addition, the Reporting Person further disclaims
the existence of a group.
Item 5. Interest in Securities of the Issuer.
(a) As of the date of this filing, the Reporting Person
beneficially owns 444,587 shares of Common Stock of the
Company, representing approximately 21.5% of the 2,069,848
shares outstanding as reported in the Company's most recently
filed annual report on Form 10-K filed with the SEC on
February 18, 2000 for the fiscal year ended May 31, 1999.
<PAGE> 5
Page 5 of 31 Pages
As noted in Item 4, BOA has agreed to vote its 232,494 shares
of common stock beneficially owned by it in favor of the
Reporting Person's nominees to the Board of Directors. The
Reporting Person expressly disclaims beneficial ownership of
such shares.
(b) The Reporting Person has sole voting and dispositive
power with respect to 444,587 shares of Common Stock of the
Company. BOA has sole voting and dispositive power with
respect to 232,494 shares of Common Stock of the Company,
provided, however, that BOA has agreed to vote such shares in
favor of the Reporting Person's nominees to the Board of
Directors.
(c) There were no transactions in the Common Stock by the
Reporting Persons in the past sixty days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer
As more fully described in Item 4, the Reporting Person has
an unwritten understanding with BOA that BOA will vote all of
the shares of Common Stock beneficially owned by it for those
persons whom the Reporting Person nominates for election to
the Board of Directors of the Company.
In addition, the Reporting Person and BOA are Plaintiffs in
an action in Delaware Chancery Court, in which the Company,
Unilabs Holdings SA ("Panama Holdings") (a Panamanian
corporation which was formerly the Company's largest
stockholder), Unilabs Group Limited ("UGL") (a British Virgin
Island corporation which was formerly a wholly-owned
subsidiary of the Company), and members of the Board of
Directors of the Company are co-defendants. The Plaintiffs
have alleged in the action that the co-defendants breached
their fiduciary duties to the Company's non-controlling
stockholders by allowing the controlling shareholders to
obtain control of the Company's primary asset, its ownership
of UGL, in self-dealing transactions. A copy of the Second
Amended Complaint is attached as Exhibit B.
Item 7. Material to be filed as Exhibits.
Exhibit A - Information Concerning Spurgeon.
Exhibit B - Complaint filed in the court of Chancery in the
State of Delaware. (excluding exhibits)
<PAGE> 6
Page 6 of 31 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
Dated: September 7, 2000
Grace Brothers, Ltd.
By:/s/ Bradford T. Whitmore
------------------------
Bradford T. Whitmore
General Partner
EXHIBIT A
Directors and Executive Officers of Spurgeon Corporation
Judith M. Van Kampen
101 Washington St.
Suite 770
Grand Haven, MI 49417-0070
Director of Spurgeon. Trustee of Judith M. Van Kampen Trust
which is Manager of Van Kampen Asset Management Company, LLC.
Carla M. Van Kampen/Pierre
101 Washington St.
Suite 770
Grand Haven, MI 49417-0070
Director of Spurgeon. Trustee of Judith M. Van Kampen Trust
which is Manager of Van Kampen Asset Management Company, LLC.
David G. Wisen
101 Washington St.
Suite 770
Grand Haven, MI 49417-0070
Director and President of Spurgeon. President of Van Kampen
Asset Management Company, LLC.
David J. Allen
290 South County Farm Road
Third Floor
Wheaton, IL 60187
Director, Vice President and Secretary of Spurgeon. Trustee
of Judith M. Van Kampen Trust which is Manager of Van Kampen
Asset Management Company, LLC. Senior Vice President and
General Counsel of Van Kampen Asset Management Company, LLC.
Jerald A. Trannel
290 South County Farm Road
Third Floor
Wheaton, IL 60187
Vice President and Treasurer of Spurgeon. Controller of
Grace Brothers, Ltd. and Senior Vice President and Treasurer
of Van Kampen Asset Management Company, LLC.
J. Timothy Onufrock
290 South County Farm Road
Third Floor
Wheaton, IL 60187
Assistant Secretary of Spurgeon.
All are United States Citizens.
The business address of Van Kampen Asset Management Company,
LLC is 290 South County Farm Road, Third Floor, Wheaton, Il
60187. The principal business of Van Kampen Asset Management
Company LLC is investment and asset management.
<PAGE> 7
Page 7 of 31 Pages
IN THE COURT OF CHANCERY
IN AND FOR THE STATE OF DELAWARE
Grace Brothers, Ltd. and Banc of America C.A. No. 17612-NC
Securities LLC,
Plaintiffs,
v.
UniHolding Corporation, Unilabs Group
Limited, Unilabs Holdings SA, Edgard Zwirn,
Enrico Gherardi, Alessandra van Gemerden,
Tobias Fenster, Daniel Regolatti,
Pierre-Alain Blum, and Bruno Adam,
Defendants.
SECOND AMENDED COMPLAINT
This Amended Complaint is filed pursuant to Rule 15 of
Delaware's Chancery Court Rules to supplement previous
allegations of interest, domination and control and to
provide additional factual information disclosed by the
Defendants to the Securities and Exchange Commission.
As and for their Second Amended Complaint against Defendants
UniHolding Corporation ("UniHolding"), Unilabs Group Limited
("UGL"), Unilabs Holdings SA ("Panama Holdings"), Edgard Zwirn
("Zwirn"), Enrico Gherardi ("Gherardi"), Alessandra van
Gemerden("van Gemerden"), Tobias Fenster ("Fenster"), Daniel
Regolatti("Regolatti"), Pierre-Alain Blum ("Blum"), and Bruno
Adam ("Adam")(UniHolding, UGL, Panama Holdings, Zwirn,
Gherardi, van Gemerden,Fenster, Regolatti, Blum, and Adam are
collectively referred to as the "Defendants"), Plaintiffs
Grace Brothers, Ltd. ("Grace Brothers") and Banc of America
Securities LLC ("Banc of America") (Grace Brothers and Banc
of America are jointly referred to as the "Plaintiffs") by
and through their attorneys, Oppenheimer Wolff & Donnelly LLP
and Klett Rooney Lieber & Schorling, states and alleges as
follows:
<PAGE> 8
Page 8 of 31 Pages
I. INTRODUCTION
1. Plaintiffs are minority shareholders of UniHolding. This is
an action for damages against the Defendants relating to the
violation of Plaintiffs' rights under 8 Del. C. Section 262.
This action also asserts claims against certain Defendants, who owned
or controlled the majority of the common stock of UniHolding, for
breach of their fiduciary duty owed to Grace Brothers and Banc of
America as minority shareholders. Finally, this action asserts
claims against certain officers and directors of UniHolding for
corporate waste and mismanagement.
2. Each of the Defendants either participated in or knowingly
facilitated the dissolution of UniHolding for the benefit of the
Defendants and to the detriment of UniHolding and Plaintiffs as
minority shareholders. As a result of Defendants'actions or
inactions, UniHolding: (a) no longer has any business
operations, (b) has been delisted from the NASDAQ Small Cap
Market, (c) has no revenue to fund operations, and (d) has
pledged its only remaining asset to defend demands from minority
shareholders for information pursuant to 8 Del. C. Section 220.
The self-dealing of the Defendants in this case has specially damaged
Grace Brothers and Banc of America as minority U.S. shareholders
of UniHolding.
II. PARTIES
3. Plaintiff Grace Brothers is an Illinois limited partnership,
with its principal place of business in Evanston, Illinois.
4. Plaintiff Banc of America is a subsidiary of Bank of America
Corporation which is a Delaware corporation.
5. Defendant UniHolding is a corporation organized and existing
under the laws of the State of Delaware, and was a Delaware
corporation for all times relevant to this action.
6. Defendant UGL is a corporation organized and existing under
the laws of the British Virgin Islands. The business address of
UGL is: Unilabs Group Limited, 207-208 Neptune House, Marina
Bay, Gibralter.
7. Defendant Panama Holdings is a corporation organized and
existing under the laws of Panama. The business address of
Panama Holdings is: Unilabs Holdings SA, 53rd Street,
Urbanizaction ObarrioTorre Swiss Bank, Sixteenth Floor, Panama.
8. Defendant Zwirn is a citizen of Belgium, who lists his
business address as Unilabs Group Limited, 207-208 Neptune House,
Marina Bay, Gibraltar.
9. On information and belief, Defendant Gherardi is not a citizen
of the United States, but may be a resident of the United States.
<PAGE> 9
Page 9 of 31 Pages
10. Defendant van Gemerden is not a resident of the United
States. Defendant van Gemerden lists her business address as
Unilabs SA, 12 place de cornavin, CH 1211, Geneva, Switzerland.
11. On information and belief, Defendant Fenster is not a citizen
of the United States. Defendant Fenster's address is listed as
Vy-des-Crets 4, 1295 Mies, Switzerland.
12. On information and belief, Defendant Regolatti is not a
citizen of the United States. Defendant Regolatti's address is
listed as Ch. de la Cote-Rouge 13, 1805 Jongny, Switzerland.
13. Defendant Blum is a citizen of Switzerland, who lists his
business address as IKF Holding SA, 6 Rue Duble, 2000 Neuchatel,
Switzerland.
14. Defendant Adam is a citizen of France, who lists his business
address as Unilabs Group Limited, 207-208 Neptune House, Marina
Bay, Gibraltar.
III. JURISDICTION
15. Defendant UniHolding is a corporation organized and existing
under the laws of the State of Delaware, and jurisdiction over
UniHolding is proper in this Court pursuant to 10 Del. C. Section
1331.
16. Defendants Zwirn, Gherardi, van Gemerden, Fenster, Regolatti,
and Blum (collectively referred to as "Defendant Directors") are
all directors of UniHolding, and jurisdiction over such
individuals is proper in this Court pursuant to 10 Del. C.
Section 3114.
17. On information and belief, both UGL and Panama Holdings are
owned or controlled by Defendant Zwirn, and knowingly
participated in the actions or inactions of UniHolding
and the Defendant Directors to injure Plaintiffs as a minority
shareholders of UniHolding and to deprive Plaintiffs of their
rights under Delaware General Corporation law as a minority
shareholders of UniHolding. Zwirn has sufficient contact with
the State of Delaware through his participation in the operations
of UniHolding making it reasonable for him to expect to be
brought into an action in Delaware. Accordingly, and as more
fully set forth below, jurisdiction over Defendants Zwirn, UGL,
and Panama Holdings is proper pursuant to 10 Del. C. Section 3104.
18. Panama Holdings is a corporation organized under the laws of
Panama. Plaintiffs will seek to serve Panama Holdings pursuant
to the Inter-American Convention on Letters Rogatory and
Additional Protocol to which the United States and Panama are
signatory parties.
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Page 10 of 31 Pages
19. Defendant Adam has performed work on behalf of UniHolding in
the State of Delaware making it reasonable for him to expect to
be brought into an action in Delaware, including, but not limited
to the following:
a. Defendant Adam has regularly signed documents on behalf of
UniHolding for filing with the Securities and Exchange
Commission;
b. Defendant Adam also has executed documents and participated in
meetings of the Defendant Directors relevant to the Corporate
Transactions (as defined below);
c. Defendant Adam has participated in litigation in the State of
Delaware by signing a Declaration dated November 9, 1999 relating
to the demand by Grace Brothers under 8 Del. C. Section 220; and
d. Defendant Adam knew or should have known of the actions or
inactions of the Defendant Directors to injure Plaintiffs as
minority shareholders of UniHolding and to deprive Plaintiffs of
their rights under Delaware General Corporation Law as minority
shareholders of UniHolding. Accordingly, and as more fully set
forth below, jurisdiction over Defendant Adam is proper pursuant
to 10 Del. C. Section 3104.
IV. INTERESTS OF GRACE BROTHERS AND BANC OF AMERICA
20. Grace Brothers is the record owner of 12,600 shares of common
stock of UniHolding. Grace Brothers is, and has been for all
times relevant to this action, the beneficial owner of 444,587
shares of common stock of UniHolding.
21. Banc of America is, and has been for all times relevant to
this action, the beneficial owner of 232,494 shares of common
stock of UniHolding.
22. Plaintiffs entered into a Subparticipation Agreement
("Subparticipation Agreement") with Donaldson Lufkin & Jenrette
Securities Corporation ("DLJ") under which they purchased a
subparticipation interest in the November 7, 1996 Participation
Agreement between DLJ and Unilab Corporation ("Participation
Agreement").
23. As part of the Participation Agreement, DLJ purchased a 100%
interest in a Promissory Note dated June 30, 1995 in the original
principal amount of $15,000,000 of UGL and UniHolding, as makers,
to Unilab Corporation ("Promissory Note"). The Promissory Note
provided that if the debt was not paid in full by January 1,
1997, "payment shall be effected by UniHolding immediately
converting the unpaid amount of such obligation into shares of
UniHolding's publicly traded common stock."
24. The debt under the Promissory Note was not paid, and
accordingly, on January 1, 1997, the Promissory Note converted
into 1,394,963 shares of UniHolding common stock. Plaintiffs
received their shares of UniHolding stock as part of this
conversion on or about January 1, 1997.
<PAGE> 11
Page 11 of 31 Pages
V. CORPORATE TRANSACTIONS
25. At the time Plaintiffs became beneficial owners of UniHolding
common stock in January of 1997, UniHolding, through its
subsidiaries, provided clinical laboratory testing services to
physicians, managed care organizations, hospitals and other
health care providers. The clinical laboratory business was
operated through laboratories in Switzerland, Italy, Spain,
Russia, and Turkey.
26. UniHolding also operated, up until February 27, 1998, a
clinical testing division through Global Unilabs Clinical Trials,
Ltd. ("GUCT"), a wholly-owned subsidiary of UniHolding. GUCT
performed testing in relation to clinical tests for the
pharmaceutical industry.
27. In April of 1997, Unilabs SA, a corporation organized and
existing under the laws of Switzerland ("ULSA") was listed on the
Swiss Exchange. As of May 1998, UniHolding held 54% of ULSA.
The remainder of the equity of ULSA was held by the public.
28. On information and belief, after the listing of ULSA, the
Defendants determined that UniHolding was no longer necessary or
desirable to their individual interests.
29. From August of 1997 through February of 1999, Defendants,
individually or collectively, facilitated the following
transactions affecting UniHolding and its business operations
(collectively referred to as the "Corporate Transactions"):
A. August 8, 1997 Proposed Merger
30. On or about August 8, 1997, UniHolding announced that it
intended to merge into UGL, its wholly-owned subsidiary. The
publicly-stated reason for the merger was to streamline the
corporate structure of UniHolding and its subsidiaries.
31. UniHolding reported to shareholders that the principle
concept of the merger was approved by the Board of Directors of
UniHolding. It further stated that the proposed merger was
subject to shareholder approval.
32. No shareholder approval was requested or obtained for a
merger.
33. UniHolding did not make any further disclosure to
shareholders regarding the proposed merger until October 29, 1998
(see paragraph 50 below).
B. February 27, 1998 Clinical Trials Spin-off
<PAGE> 12
Page 12 of 31 Pages
34. On or about January 13, 1998, the Board of Directors for
UniHolding voted to approve a spin-off of GUCT and its clinical
trials business.
35. On February 27, 1998, GUCT was spun-off to UniHolding's
shareholders.
36. The spin-off was effectuated in the form of a distribution by
UniHolding to its shareholders of all the common stock of GUCT, a
British Virgin Islands corporation.
37. The publicly-stated reason in the April 1, 1998 Form 8-K for
the spin-off was as follows:
UniHolding's management and Board of Directors have concluded
that the Distribution is in the best interests of UniHolding and
its shareholders. They believe that the Distribution will (i)
allow UniHolding to focus its attention on its Diagnostic
Laboratory business, by creating a separate company focused on
clinical trials testing for the pharmaceutical industry, and (ii)
permit UniHolding and GUCT to offer management incentives more
directly tied to the performance of their respective businesses.
UniHolding management also believes that a separate clinical
trials testing company with strategies, organizational goals and
employee incentives more narrowly focused will be best able to
maximize its own financial performance.
38. Shareholders of UniHolding received a pro rata share of 7.9
million shares of GUCT common stock as part of this transaction.
UniHolding also retained $20 million, on a historical cost basis,
of non-voting preferred stock in GUCT which it transferred to
UGL, its then wholly-owned subsidiary.
39. The spin-off resulted in a net loss to UniHolding of $2.8
million.
40. After the spin-off, UniHolding reported in the April 1, 1998
Form 8-K:
GUCT intends to file a Registration Statement on Form 20-F as
soon as practicable after audited financial statements of GUCT as
of May 31, 1998, are available. When the Form 20-F is filed and
becomes effective, GUCT will be subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended,
and, in accordance therewith, will file reports and other
information with the Securities and Exchange Commission.
41. To date, GUCT has not filed a Form 20-F or any other
disclosure with the SEC.
42. The stock of GUCT is not listed or traded on any public
market.
C. April 24, 1998 Stock Swap
<PAGE> 13
Page 13 of 31 Pages
43. On or about April 24, 1998, UGL, at the time the wholly-owned
subsidiary of UniHolding, issued new shares of UGL stock in exchange for
the same number shares of common stock of UniHolding. The transaction
was described as follows in the April 24, 1998 Form 8-K:
On April 24, 1998 the Registrant's subsidiary, Unilabs Group Limited
("UGL") issued 3,156,700 new shares of its common stock in exchange for
the same number of shares of common stock of the Registrant
[UniHolding]. The newly-issued UGL shares were issued to Unilabs
Holdings SA and its affiliates and certain European institutional
investors in exchange for shares of Registrant on a one-for-one basis.
As a result of these transactions, UGL now directly holds approximately
3.9 million shares (60%) of the Registrant.
44. Before the stock swap, UniHolding held all of the outstanding common
stock of UGL. After the stock swap, UniHolding held less than half of
the common stock of UGL.
45. In an Amended Schedule 13-D dated April 24, 1998, UGL disclosed the
reason for the stock swap as follows:
Panama Holdings and its affiliates and certain European institutional
investors transferred their shares of the Issuer for the same number of
UGL Shares because they preferred holding their investments through a
British Virgin Islands entity (such as UGL) rather than a Delaware
corporation (such as the Issuer). While the undersigned reporting
persons have not solicited nor made any offer for additional transfers,
they at present do not intend to oppose any effort by other shareholders
of the Issuer to transfer their shares in consideration for UGL Shares
of the same one-for-one basis.
UGL also plans to investigate the quoting or listing of the UGL Shares
on various markets. Depending upon the progress with respect to such
markets, there could be further developments and transactions involving
UGL and the Issuer.
46. Before the stock swap, the stockholders of UniHolding held stock in
a Delaware corporation with numerous subsidiaries. The stock swap
resulted in the shareholders holding stock in the same Delaware
corporation, with substantially less assets and organized as a
subsidiary of a British Virgin Islands corporation.
47. Based on disclosures made by UniHolding to the Securities and
Exchange Commission, Plaintiffs believe that Defendants Zwirn, Gherardi
and van Gemerden exchanged their UniHolding shares for shares of UGL in
connection with the February 1998 stock swap.
48. The stock of UGL is not listed or traded on a public market.
D. April 24, 1998 Stock Swap Rescinded
<PAGE> 14
Page 14 of 31 Pages
49. Sometime after the April 24, 1998 stock swap, the transaction was
rescinded, and UniHolding again announced its intention to examine a
merger with UGL.
50. In its Form 10-K filed on October 29, 1998, UniHolding stated:
On August 8, 1997, the Company announced its intention to merge
UniHolding into its wholly-owned subsidiary, UGL, with a view toward
streamlining the corporate structure. The proposed merger was and is
subject to shareholder and regulatory approvals. In the fourth quarter
of fiscal 1998, a major shareholder, Unilabs Holdings SA, a Panama
corporation ("Holdings") reported the contribution to UGL of
approximately 3.1 million shares of UniHolding common stock in exchange
for the same number of shares of UGL common stock. However, this was
rescinded. Accordingly, at present UGL remains a wholly-owned
subsidiary of UniHolding. The Company is now continuing to examine the
feasibility of the proposed merger with UGL.
51. UniHolding made no further public disclosure to shareholders
regarding the rescission or proposed merger between UGL and UniHolding.
E. February 25, 1999 Stock Swap
52. In a press release dated March 2, 1999, UniHolding disclosed the
following transaction ("February 25, 1999 Stock Swap"):
Unilabs' European founders had until recently held their controlling
stake through a holding company, Unilabs Group Limited, itself owned by
UniHolding Corporation, a US, Nasdaq-listed, corporation. With a view
to simplify the group's shareholding structure and avoid any subsequent
confusion with this US corporation's activities, the founders of Swiss-
ased Unilabs SA now hold their majority stake directly through Unilabs
Group Limited.
. . .
As summarized in the above Unilabs SA press release, the Board of
Directors of UniHolding was informed by its subsidiary Unilabs Group
Limited (a British Virgin Islands corporation, "UGL"), that UGL has
reached a definitive agreement with Unilabs Holdings SA (a Panama
corporation, "Holdings") on Holdings' own behalf and on behalf of
affiliates of Holdings. Under such agreement, UGL has agreed to issue
to Holdings approximately 2.8 million newly-issued shares of UGL common
stock for a consideration consisting of approximately 2.8 million shares
of UniHolding common stock. Prior to the transaction, Holdings was the
single largest shareholder of UniHolding. According to UGL, the purpose
of the transaction was to enable the controlling group, which includes
the group founders, to simplify the structure of their holdings without
necessarily proceeding with a more massive restructuring entailing for
example the liquidation of UniHolding; a restructuring which might not
have been in the best interest of the companies and all their
shareholders, while, according to UGL the described transaction was made
with a view to preserve the interests of the minority shareholders.
<PAGE> 15
Page 15 of 31 Pages
53. No shareholder approval was requested or received with respect to
the February 25, 1999 Stock Swap.
54. UniHolding's March 12, 1999 Form 8-K confirms that a stock swap
occurred on February 25, 1999.
On February 25, 1999, the Registrant's subsidiary, Unilabs Group Limited
("UGL") issued approximately 2.8 million new shares of its common stock
in exchange for the same number of shares of common stock of the
Registrant. The newly-issued UGL shares were issued to Unilabs Holdings
SA and its affiliates in exchange for shares of the Registrant on a one-
or-one basis. As a result of these transactions, UGL now directly holds
approximately 4.7 million shares (60%) of the Registrant. The
Registrant continues to hold 2.5 million shares of UGL, the initial
amount of UGL shares issued and outstanding when the Registrant owned
100% of UGL.
55. UniHolding did not disclose any information as to the February 25,
1999 Stock Swap or a possible merger with UGL in the October 29, 1998
Amended Form 10-Q; December 7, 1998 Amended Form 10-K; December 8, 1998
Amended Schedule 13-G; January 14, 1999 Form 10-Q; and January 14, 1999
Amended Form 10-Q.
56. Defendant Zwirn orchestrated the February 25, 1999 Stock Swap and,
upon information and belief, other members of the UniHolding Board of
Directors were intimately involved in the formulation and implementation
of the "two-step" restructuring of UniHolding and its formerly wholly-
wned subsidiary, UGL.
57. Upon information and belief, Defendants Zwirn, Gherardi and van
Gemerden participated in and exchanged their UniHolding shares for
shares of UGL as part of the February 25, 1999 Stock Swap.
58. The Defendant Directors had the ability, as the Board of Directors
of UniHolding, to control the activities of its wholly-owned subsidiary,
UGL, and to prevent UGL from issuing shares in connection with the
February 25, 1998 Stock Swap.
VI. AFFILIATIONS OF DEFENDANTS
59. Defendant Zwirn is, and was at all times relevant to the Corporate
Transactions, a Director, Chairman of the Board, and Chief Executive
Officer of UniHolding. Zwirn is also a member of the Audit Committee of
UniHolding.
60. Defendant Zwirn is, and was at all times relevant to the Corporate
Transactions, a Director, Chairman of the Board, and President of UGL.
61. Defendant Zwirn is, and was at all times relevant to the Corporate
Transactions, a Director and Chairman of the Board of Panama Holdings.
On information and belief, at all times relevant to the Corporate
Transactions, Panama Holdings was the largest shareholder of UGL.
<PAGE> 16
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62. Defendant Zwirn is, and was at all times relevant to the Corporate
Transactions a Director, Chairman of the Board, President, and Chief
Operating Officer of Swiss Holdings, a corporation organized and
operating under the laws of Switzerland. Panama Holdings is a wholly-
wned subsidiary of Swiss Holdings.
63. Defendant Zwirn owns 23.3% of the voting and equity interests of
Swiss Holdings, either individually or together with certain members of
his immediate family. According to disclosures made by UniHolding to
the Securities and Exchange Commission, Defendant Zwirn, individually
and by virtue of his status as Chairman of the Board of Swiss Holdings,
directly and beneficially owned and controlled over 3,149,866 shares of
UniHolding voting common stock, or 42.3% of the issued and outstanding
voting common stock of UniHolding, until the February 25, 1999 stock
swap was consummated.
64. Defendant Zwirn is, and was at all times relevant to the Corporate
Transactions, a Director and Chairman of the Board of ULSA. The stock
of ULSA is publicly traded on the Swiss Exchange.
65. Defendant UGL owns a majority of the stock of ULSA.
66. Defendant Zwirn is, and was at all times relevant to the Corporate
Transactions, a Director and Chairman of the Board of GUCT, Unilabs
International, Limited ("UIL"), and UCT International, Inc. ("UCTI").
(UGL, Swiss Holdings, Panama Holdings, ULSA, UIL, GUCT, and UCTI are
collectively referred to as the "Affiliated Companies").
67. By virtue of his substantial direct and beneficial ownership of
UniHolding common stock, Zwirn personally benefited from the Corporate
Transactions at issue.
68. UGL owns 2,000,000 shares of preferred stock of GUCT, which it
received from UniHolding when GUCT was spun-off to shareholders on
February 27, 1999.
69. UCTI is a subsidiary of GUCT.
70. UIL is a subsidiary of UniHolding.
71. Defendant Adam is, and was at all times relevant to the Corporate
Transactions, the Chief Financial Officer of UniHolding. Defendant Adam
also was a Director of UniHolding from 1994 to 1996.
72. Defendant Adam is, and was at all times relevant to the Corporate
Transactions, a Director of Panama Holdings.
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73. Defendant Adam is, and was at all times relevant to the Corporate
Transactions, the Chief Financial Officer and Executive Vice President
of Swiss Holdings.
74. Defendant Adam is, and was at all times relevant to the Corporate
Transactions, the Chief Financial Officer of ULSA.
75. Defendant Adam has been a Director of UCTI since 1998.
76. Defendant Gheradi was at times relevant to the Corporate
Transactions a Director and Secretary of UniHolding. UniHolding claims
in documents that it filed with the Securities and Exchange Commission
that Gherardi resigned from his directorship with UniHolding as of May
31, 1999. Documents produced by UniHolding pursuant to Grace Brothers'
Section 220 Demand, however, indicate that Gherardi was still a member
of the Board of Directors when the Board met on June 16, 1999.
77. According to disclosures made by UniHolding to the Securities and
Exchange Commission, Gherardi enjoyed beneficial ownership and control
over 249,875 shares of UniHolding voting common stock, and these
disclosures indicate that Gherardi held beneficial ownership of such
shares until the consummation of the February 25, 1999 Stock Swap.
78. By virtue of his substantial direct and beneficial ownership of
UniHolding common stock, Gherardi personally benefited from the
Corporate Transactions.
79. Defendant Gheradi is, and was at all times relevant to the Corporate
Transactions, a Director of ULSA.
80. In light of public disclosures made by UniHolding to the Securities
and Exchange Commission, Plaintiffs believe that either Defendant
Gherardi or Defendant van Gemerden, or both, were at all times relevant
to the Corporate Transactions a Director or Directors of UGL.
81. Defendant Gherardi has personal, financial and business
relationships with, and is beholden to, Defendants Zwirn and UGL.
Specifically, UniHolding's February 18, 2000 Form 10-K reveals that
during the years 1997 through 1999, UGL subsidiary ULSA, a company
controlled by Zwirn and in which Zwirn occupies the positions of
Chairman of the Board and Director, caused to be made to a company
affiliated with Gherardi payments exceeding $1.6 million in the form of
unspecified consulting fees. In addition, during the years 1997 through
1999, GUCT, a company controlled by Zwirn and in which Zwirn is Chairman
and a Director, caused to be made to a company affiliated with Gherardi
payments of $300,000 per annum in the form of unspecified consulting
fees.
<PAGE> 18
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82. Gherardi occupied the position of UniHolding Director and occupies
his current directorships with ULSA and UGL at the pleasure of Zwirn.
By virtue of Zwirn's control over ULSA, the payments being made to
businesses affiliated with Gherardi are also at the pleasure of
Defendant Zwirn.
83. Defendant van Gemerden is, and was at all times relevant to the
Corporate Transactions, a Director of UniHolding, UIL, GUCT, and UCTI.
Defendant van Gemerden is the niece of Defendant Gheradi. Defendant van
Gemerden holds her directorship positions at the pleasure of Defendant
Zwirn.
84. According to disclosures made by UniHolding to the Securities and
Exchange Commission, Defendant van Gemerden enjoyed beneficial ownership
and control over 490,125 shares of UniHolding voting common stock, or
6.5% of the issued and outstanding voting common stock of UniHolding.
These disclosures further indicate that van Gemerden enjoyed beneficial
ownership of such shares until the February 25, 1999 stock swap was
consummated.
85. By virtue of her substantial direct and beneficial ownership of
UniHolding common stock, van Gemerden personally benefited from the
Corporate Transactions.
86. Defendant van Gemerden has personal, financial and business
relationships with, and is beholden to, Defendants Zwirn and UGL.
Specifically, UniHolding's February 18, 2000 Form 10-K reveals that
during the years 1997 through 1999, UGL subsidiary ULSA, a company
controlled by Zwirn and in which Zwirn occupies the positions of
Chairman of the Board and Director, caused to be made to a company
affiliated with van Gemerden payments exceeding $1.6 million in the form
of unspecified consulting fees. In addition, during the years 1997
through 1999, GUCT, a company controlled by Zwirn and in which Zwirn is
Chairman and a Director, caused to be made to a company affiliated with
van Gemerden payments of $300,000 per annum in the form of unspecified
consulting fees. Such payments are being made to companies affiliated
with van Gemerden at the pleasure of Defendant Zwirn.
87. Defendant Fenster is, and was at all times relevant to the Corporate
Transactions, a Director of UniHolding, UIL, GUCT, and UCTI. Defendant
Fenster is and was at all times relevant the Chief Executive Officer of
United Laboratories Espana, SA ("ULSP"), the Spanish subsidiary of ULSA.
Fenster occupies each of these positions at the pleasure of Zwirn.
Defendant Fenster is the brother-in-law of Defendant Zwirn.
88. Defendant Regolatti is, and was at all times relevant to the
Corporate Transactions, a Director of UniHolding and a member of the
Audit Committee of UniHolding. Defendant Regolatti is also a Director
of ULSA. Defendant Regolatti occupies these positions at the pleasure
of Defendant Zwirn.
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89. Defendant Blum is, and was at all times relevant to the Corporate
Transactions, a Director of UniHolding and a member of the Audit
Committee of UniHolding. Defendant Blum is also a Director of ULSA.
Defendant Blum occupies these positions at the pleasure of Defendant
Zwirn.
90. Eric Wavre ("Wavre") is, and was at all times relevant to the
Corporate Transactions, the Executive Vice President, and Chief
Financial and Administrative Officer of the European affairs of
UniHolding. From 1994 through 1996, Wavre was a Director of UGL and
Executive Vice President and Chief Financial Officer of UGL.
VII. DEMAND TO INSPECT CORPORATE BOOKS AND RECORDS UNDER SECTION 220 OF
DELAWARE GENERAL CORPORATION LAW
91. On April 6, 1999, Mutual European Fund, through its authorized agent
Franklin Mutual Advisers, Inc. ("FMAI"), caused to be delivered by
personal service to UniHolding at its principal place of business at 96
Spring Street, New York, NY 10012, written demands, under oath,
demanding the right, pursuant to Section 220(d) of the Delaware General
Corporation Law, to inspect and to make copies or extracts of certain
books and records of UniHolding ("Mutual European Demand"). FMAI had
the voting authority respecting the shares of UniHolding which FMAI held
for the benefit of Mutual European.
92. At the time of the Mutual European Demand, Mutual European Fund was
the record owner of 500 shares of common stock of UniHolding. Mutual
European Fund also was the beneficial holder of in excess of 500,000
shares of common stock of UniHolding.
93. In July of 1999, prior to resolution of the Mutual European Demand,
Mutual European Fund sold all of its beneficial interests in the common
stock of UniHolding. On information and belief, the stock was sold for
approximately $2.00 a share. Plaintiffs have not been able to determine
whether those shares were purchased by one or more of the Defendants, or
individuals or entities controlled by one or more of the Defendants.
94. On April 7, 1999, Plaintiff Grace Brothers caused to be delivered by
personal service, to UniHolding at its principal place of business at 96
Spring Street, New York, NY 10012, and by facsimile to UniHolding's
counsel Eugene M. Cronin at Dolgenos Newman & Cronin LLP, 96 Spring
Street, 8th Floor, New York, NY 10012, written demands, under oath,
demanding the right, pursuant to Section 220(d) of the Delaware General
Corporation Law, to inspect and to make copies or extracts of certain
books and records of UniHolding ("Section 220 Demand").
95. The purpose of the Section 220 Demand was to obtain information
regarding possible claims for corporate mismanagement and waste relating
to the Corporate Transactions.
<PAGE> 20
Page 20 of 31 Pages
96. On April 8, 1999, Grace Brothers served a copy of the Section 220
Demand by facsimile to UniHolding's counsel, Eugene M. Cronin at
Dolgenos Newman & Cronin LLP, 96 Spring Street, 8th Floor, New York, NY
10012.
97. On April 30, 1999, Grace Brothers filed a complaint in Delaware
Court of Chancery seeking to inspect the corporate documents of
UniHolding. At the request of UniHolding, the trial on the Section 220
action was continued from September 14, 1999, to October 25, 1999, and
finally, to December 3, 1999.
98. In an attempt to settle the Section 220 Demand, Grace Brothers
narrowed the scope of the Section 220 Demand to include only those
documents in the possession or control of UniHolding relating to the
Corporate Transactions. A detailed summary of the information that
UniHolding agreed to produce is attached as Exhibit A. On or about
October 19, 1999, UniHolding agreed to produce all of the documents in
its possession or control relating to items set forth in Exhibit A.
99. UniHolding, through its counsel, produced certain information to
Grace Brothers on or about October 22 and October 26, 1999. On November
9, 1999, Bruno Adam as the Chief Financial Officer of UniHolding
executed a statement under oath that the information delivered on or
about October 22 and October 26, 1999 is all the information in the
possession or control of UniHolding as requested in Exhibit A. A true
and correct copy of the statement is attached as Exhibit B.
100. Among other things, the information produced to Grace Brothers by
UniHolding indicates the following:
a. UniHolding either prepared or received drafts of corporate documents
for a merger between UniHolding and UGL on or about November 1997;
b. The merger documents require the approval of shareholders of
UniHolding to consummate the transaction;
c. UniHolding has no minutes or any other record of a meeting of its
Board of Directors approving the merger;
d. UniHolding has no minutes or any other record of a meeting of its
Board of Directors relating to: (1) the February 28, 1998 Clinical
Trials Spin-off, (2) the April 24, 1998 Stock Swap, (3) the April 24,
1998 Stock Swap Rescission.
e. UniHolding has no reports, recommendations, analyses, fairness
opinion, or other communication among its officers and directors (other
than with counsel for UniHolding) relating to: (1) the February 28, 1998
Clinical Trials Spin-off, (2) the April 24, 1998 Stock Swap, (3) the
April 24, 1998 Stock Swap Rescission.
Attached hereto as Exhibit C are true and correct copies of the
memoranda and related minutes produced by UniHolding in response to
Grace Brothers' Section 220 Demand.
<PAGE> 21
Page 21 of 31 Pages
VIII. POST-DEMAND ACTIVITIES
101. After Grace Brothers filed its Section 220 Demand for information
regarding the Corporate Transactions, the Board of Directors for
UniHolding convened a meeting on June 16, 1999 to discuss whether
UniHolding should take any action with respect to its shareholders.
102. At the June 16, 1999 meeting, the Board of Directors acknowledged
and accepted the "restructuring" which the meeting minutes recite was
initiated by its wholly-owned subsidiary, UGL. The Board also
acknowledged that, as a result of the February 25, 1999 Stock Swap,
UniHolding became a subsidiary of UGL.
103. UGL sent a memorandum dated June 7, 1999 regarding the February 25,
1999 Stock Swap to the UniHolding Board of Directors. UniHolding's
Directors attached this memorandum to the minutes of their June 16, 1999
Board meeting. The expressed purpose of the memorandum was "to explain
[to the UniHolding Board] the restructuring that has been undertaken by
Unilabs Group Limited between UniHolding Corporation, Unilabs Group
Limited, and their shareholders, including Unilabs Holdings ("UHP")."
This "restructuring" was described as a two-step process, the first
being the February 25, 1999 Stock Swap. "Step Two" of the
"Restructuring" involved an exchange of UGL shares for UniHolding
shares. According to the June 7, 1999 memorandum, however, "the UGL
Board and the UniHolding Board" had already "reached an agreement in
principle" relative to the restructuring in advance of the June 16, 1999
meeting of the Board of Directors. See Exhibit C at U0045.
104. In the June 7, 1999 memorandum, UGL stated that Panama Holdings
(the controlling shareholder of UGL) and certain other non-U.S.
stockholders of UniHolding have concluded that "the benefits of holding
their indirect interest in ULSA through a US listed vehicle are
significantly outweighed by their share of the costs of maintaining
UniHolding and its US listing." UGL acknowledged that the February 25,
1999 Stock Swap was problematic because it had "the effect of diluting
the UniHolding shareholders with respect to their indirect ownership in
ULSA, the core operating entity" of UGL.
105. The two-step restructuring contemplated in the June 7, 1999
memorandum could not be carried out without the participation in and
approval of the UniHolding Board of Directors.
106. As requested by UGL, the Board of Directors of UniHolding, as they
had agreed to do prior to June 7, 1999, by unanimous written consent
agreed to exchange 430,000 shares of UGL stock held by UniHolding for
5,856,272 shares of UniHolding held by UGL pursuant to a Stock Purchase
Agreement dated September 3, 1999. In doing so, the Board of Directors
implicitly acknowledged that UniHolding's common stock, which had been
swapped for UGL common stock on a one-for-one basis just months before,
had lost much of its value as a result of the Corporate Transactions in
which they had engaged.
<PAGE> 22
Page 22 of 31 Pages
107. On information and belief, Defendant Zwirn executed the Stock
Purchase Agreement on behalf of UGL and Defendant Adam executed the
Stock Purchase Agreement on behalf of UniHolding. If this transaction
is consummated, UGL purportedly would no longer have any interest in
UniHolding.
108. Under the direction of Zwirn as Chairman, the Board of Directors
also authorized UniHolding to sell all non-trading assets of UniHolding
to UGL for the sum of $10,000. This amount was purportedly the book
value of the assets as of May 31, 1994. Zwirn explained to the Board
"that, in view of the nature of the assets, it would be difficult if at
all possible for a third party to perform a valuation of such assets
with a view to come up with a range of fair values, and that such an
independent valuation would only be a waste of effort and money." After
the sale, the only asset of UniHolding is stock of UGL.
109. Also at the June 16, 1999 meeting, Zwirn advised the Board of
Directors that UniHolding did not have any source of revenue to pay its
day-to-day expenses. Zwirn further advised the Board of Directors "[i]n
view of the new relationship between UGL and [UniHolding], he felt that,
contrary to what happened previously, UGL would no longer make financial
resources available to [UniHolding] and it was necessary to arrange for
bridge financing." In light of this information, the Board of Directors
authorized UniHolding to pledge 320,000 shares of its UGL common stock
as collateral for a $500,000 loan.
110. As a result of the February 25, 1999 Stock Swap, and the subsequent
actions of the Board of Directors, UniHolding: (a) no longer has any
business operations, (b) has been delisted from the NASDAQ Small Cap
Market, (c) has no revenue to fund operations, and (d) has pledged its
only asset to defend the Section 220 Demand of Grace Brothers.
IX. LATE FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION
111. Throughout the period of the Corporate Transactions, UniHolding has
failed to disclose material information regarding its business and the
implications of the Corporate Transactions on its business to
shareholders.
112. UniHoldings also has consistently failed to file its required
disclosures with the Securities and Exchange Commission ("SEC") on a
timely basis.
<PAGE> 23
Page 23 of 31 Pages
113. On January 15, 1998, UniHolding filed a Form 12b-25 Notification of
Late Filing for a Form 10-Q. Form 10-Q's are due 45 days after the end
of the quarter, which quarter ended November 30, 1997. Accordingly, the
Form 10-Q was originally due on January 14, 1998. The Form 12b-25 gave
UniHolding an extension of five days from the original due date for the
Form 10-Q. The five-day extension made the due date January 19, 1998.
The Form 10-Q was filed on February 2, 1998. It was 19 days late from
the original due date and 14 days past the extension. The reason given
in the Form 12b-25 for the late filing was that:
The Registrant has been unable to assemble all of the material from
certain affiliates necessary to effect the filing without unreasonable
effort or expense and the Registrant has been delayed due to attention
to a major transaction decided upon by the Board on January 13, 1998.
114. On April 14, 1998, UniHolding filed another Form 12b-25
Notification of Late Filing for a Form 10-Q. The Form 10-Q was for
quarter ended February 28, 1998. It was originally due on April 14,
1998, and with the five-day extension was due on April 20, 1998. It was
filed on April 20, 1998. The reason given in the Form 12b-25 for the
late filing was:
The Registrant has been unable to assemble all of the materials from
certain affiliates necessary to effect the filing without unreasonable
effort or expense.
115. On September 1, 1998, UniHolding filed another Form 12b-25
Notification of Late Filing for its Form 10-K. The annual Form 10-K is
due 90 days after the close of the fiscal year. UniHolding's fiscal
year ended May 31 making the Form 10-K due August 31, 1998. The Form
10-K was due "on or before the fifteenth calendar day following the
prescribed due date." September 1, 1998 Form 12b-25. The due date with
the extension was September 15, 1998. The Form 10-K was not filed until
October 26, 1998. It was 56 days late from the original filing date and
41 days late from the extension. The reason given in the Form 12b-25
Notification of Late Filing was:
The Registrant has been unable to assemble all of the material from
certain affiliates necessary to effect the filing without unreasonable
effort or expense.
116. On October 16, 1998, UniHolding filed another Form 12b-25 for the
Form 10-Q for period ending August 31, 1998. It was due on October 15,
1998 and with the extension was due on October 20, 1998. It was filed
on October 29, 1998. It was filed 14 days past the original due date
and nine days past the extension. The reason given in the Form 12b-25
for the delay was:
As a result of delays in filing its Annual Report on Form 10-K for the
fiscal year ended May 31, 1998 (which the Registrant expects to file
next week), the Registrant has been unable to assemble and complete the
filing without unreasonable effort or expense.
117. On April 15, 1999, UniHolding filed a Form 12b-25 Notification of
Late Filing for its Form 10-Q. It filed the Form 10-Q on April 16,
1999. The reason given in the Form 12b-25 Notification of Late Filing
was:
As a result of delays in obtaining the accounts of certain foreign
subsidiaries, the Registrant has been delayed in preparing its accounts
and has been unable, without unreasonable effort or expense, to complete
the filing of the Form 10-Q for the period ended February 28, 1999
(which the Registrant expects to complete and file within the next day).
<PAGE> 24
Page 24 of 31 Pages
118. On August 30, 1999, UniHolding filed another Form 12b-25
Notification of Late Filing for its Form 10-K. The annual Form 10-K was
due on August 31, 1999. The reason given in the Form 12b-25 was:
The Registrant, which has several affiliates operating in different
countries, has been unable to assemble all of the material from certain
affiliates necessary to effect the filing without unreasonable expense.
The due date with the extension was September 14, 1998. The Form 10-K
was finally filed by UniHolding on February 18, 2000.
119. From October 16, 1996 through present, UniHolding filed an
extension (Form 12b-25) for every annual report (Form 10-K) that was due
and all but one quarterly report (Form 10-Q). On September 17, 1999,
the SEC delisted UniHolding for its failure to timely file its annual
Form 10-K originally due on August 31, 1999.
120. The trading price of UniHolding's common stock on the NASDAQ Small
Cap Market has generally declined from a high of $23.50 a share in
August of 1995 to a low of about $2.00 a share before being delisted.
From and after January 1, 1997, when Plaintiffs acquired their shares,
the trading price of UniHolding stock has generally declined from a
price of approximately $12.00 in January of 1997 to a low of about $2.00
a share before being delisted. UniHolding has not paid any dividends to
stockholders since Plaintiffs acquired their shares.
121. Contrary to the performance of UniHolding, the stock price of ULSA
has risen consistently since going public in April of 1997. ULSA also
has paid substantial dividends to its shareholders. On information and
belief, the performance of ULSA has been to the substantial benefit of
the Defendants.
X. DEMAND ON UNIHOLDING'S BOARD IS FUTILE
122. Plaintiffs restate and reallege paragraphs 1 through 121 above.
123. The conduct of the Defendants as set forth in paragraphs 1 through
120 of this Complaint has specially damaged Plaintiffs as minority U.S.
shareholders.
124. The conduct of the Defendants as set forth in paragraphs 1 through
120 of this Complaint have generally damaged UniHolding.
<PAGE> 25
Page 25 of 31 Pages
125. Defendant Zwirn beneficially owned and controlled the majority of
the voting stock of UniHolding, through Swiss Holdings, Panama Holdings,
UGL and other individuals and companies under the control of either
Zwirn or UGL. By virtue of his ownership and controlling interest,
Zwirn was self-interested and personally benefited from the Corporate
Transactions in the following ways:
* Zwirn exchanged his substantial block of UniHolding shares, which
shares are now interests in an insolvent corporation with no income
producing assets, for more valuable shares of UGL.
* Zwirn appropriated control over all of UniHolding's income producing
assets for the benefit of Panama Holdings for no consideration and
without regard to the rights of minority shareholders under Delaware
law.
* The restructuring benefited Zwirn and Panama Holdings by permitting
them to hold their interests in UGL directly and without the perceived
burdens they associated with holding their shares through the Delaware
corporation they had earlier established.
126. Each of the Defendants who are officers or directors of UniHolding
have substantial business and personal interests with Zwirn, UGL, and
the Affiliated Companies such that they are beholden to Zwirn and not
able to act independently and in the best interests of UniHolding and
its minority U.S. shareholders:
* Each of the Director Defendants occupy directorship positions with
UniHolding and one or more of the Affiliated Companies, and each serves
in such position at the pleasure of Zwirn.
* Each of the Director Defendants received $10,000 in compensation
during 1999 for serving as a Director of UniHolding.
* van Gemerden and Gherardi are affiliated with companies that received
payments during the years 1997 through 1999 exceeding $2.6 million,
which payments were made by companies controlled by Zwirn and at the
pleasure of Zwirn.
* van Gemerden and Gherardi, who personally and beneficially owned
substantial blocks of UniHolding shares, personally benefited from the
February 25, 1999 Stock Swap for all of the reasons that Zwirn
personally benefited.
* Fenster is Zwirn's brother-in-law, and occupies the position of Chief
Executive Officer in a company Zwirn controls at the pleasure of Zwirn.
127. Defendant Zwirn directed the Director Defendants to endorse the
February 25, 1999 Stock Swap, to consent to the September 3, 1999 stock
exchange as the final step to the restructuring of UniHolding and UGL,
and to engage in the related Corporate Transactions at issue.
128. Each of the Director Defendants have substantial conflicts of
interest which prevent them from objectively considering a demand by
Plaintiffs to bring any action against the Defendants on behalf of the
corporation. These conflicts of interest and the futility of a demand
on the Board of Directors of UniHolding are illustrated by the actions
of the Board of Directors since Grace Brothers filed its Section 220
Demand on April 30, 1999.
<PAGE> 26
Page 26 of 31 Pages
129. On or about June 16, 1999, the Board of Directors of UniHolding
ratified the Corporate Transactions perpetrated by Zwirn and the
majority shareholders of UniHolding. The Board of Directors resolved
that management of UniHolding would seek to mitigate the concerns of
Grace Brothers in its request for information with a view to "avoid a
protracted legal claim which would only be a waste of money for all
parties." Clearly, if the Board of Directors viewed the request of
Grace Brothers for information regarding the Corporate Transactions as a
waste of money", its view of a demand on the Board of Directors to
ring an action to protect the interests of its minority U.S.
shareholders would be no more favorable.
130. On or about June 16, 1999, the Board of Directors of UniHolding
authorized Zwirn as Chairman of the Board to pledge stock of UGL owned
by UniHolding, which is the only tangible asset of UniHolding, to defend
against and fight the Section 220 Demand of Grace Brothers.
131. Under these circumstances, Plaintiffs' demand under 8 Del. C.
Section 327 and Rule 23.1 of Delaware's Chancery Court Rules would be
futile.
XI. CLAIMS FOR RELIEF
COUNT I - MAJORITY SHAREHOLDER BREACH OF FIDUCIARY DUTY
132. Plaintiffs restates and realleges paragraphs 1 through 131 above.
133. Prior to the Corporate Transactions, UniHolding, as the parent
company holding 100% of the voting stock of UGL, had direct or indirect
control over the businesses of UGL and its subsidiaries. Among other
things, this relationship allowed the funding of UniHolding and its
business operations.
134. As a result of the February 25, 1999 Stock Swap, UniHolding is now
a minority shareholder of UGL and has no direct or indirect control over
the business operations of UGL and its subsidiaries. Moreover,
UniHolding has no funding to carry on its business and has been delisted
from the NASDAQ Small Cap Market.
135. Defendant Zwirn, in his capacity as a shareholder and through his
positions of control of the Affiliated Companies, caused the corporate
restructuring of UGL and UniHolding to the ultimate detriment of
UniHolding and Plaintiffs as minority U.S. shareholders of UniHolding.
136. Defendants Zwirn and Panama Holdings, as the largest shareholder of
UniHolding prior to the February 25, 1999 Stock Swap, directly benefited
from consummation of the February 25, 1999 Stock Swap.
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137. As a result of their actions or inaction, Defendants Zwirn, UGL,
and Panama Holdings breached their fiduciary duty as majority
shareholders to Plaintiffs as minority U.S. shareholders of UniHolding.
138. The conduct of Defendants Zwirn, UGL, and Panama Holdings
constitutes self-dealing and does not meet the test of entire fairness
required under Delaware law. The conduct of Defendants Zwirn, UGL, and
Panama Holdings has caused special injury to Plaintiffs as minority U.S.
shareholders of UniHolding.
139. As a result of the actions or inaction of Defendants Zwirn, UGL,
and Panama Holdings, Plaintiffs have been damaged in an undetermined
amount in excess of $50,000.
COUNT II - USURPATION OF MINORITY SHAREHOLDER RIGHTS
140. Plaintiffs restate and reallege paragraphs 1 through 139 above.
141. But for their conflicts of interests, and the control exercised by
Defendant Zwirn, the Defendant Directors would have required a merger of
UGL and UniHolding as originally contemplated and announced to
shareholders on or about August 8, 1997, and as subsequently announced
on or about October 29, 1998 after the April 24, 1998 stock swap was
rescinded.
142. In the event of a merger between UniHolding and UGL, Plaintiffs, as
minority U.S. shareholders, would have voted against the merger and
sserted their appraisal rights under 8 Del. C. Section 262.
143. The actions or inaction of the Defendants in facilitating the
February 25, 1999 Stock Swap, and in subsequently endorsing the February
25, 1999 Stock Swap, violated the rights of Plaintiffs for an appraisal
under 8 Del. C. Section 262.
144. The Defendant Directors knew or should have known of the self-
ealing and control exercised by Zwirn, UGL, and Panama Holdings
relating to the February 25, 1999 Stock Swap and the other Corporate
Transactions.
145. The Defendant Directors knew or should have known that the February
25, 1999 Stock Swap would have the effect of violating the Plaintiffs'
rights under 8 Del. C. Section 262.
146. The Defendant Directors knew or should have known that the February
25, 1999 Stock Swap would result in special injury to Plaintiffs as
minority U.S. shareholders of UniHolding.
147. As a result of the action or inactions of Defendant Directors,
Plaintiffs have been damaged in an undetermined amount in excess of
$50,000.
COUNT III - BREACH OF FIDUCIARY DUTY OF LOYALTY
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148. Plaintiffs restate and reallege paragraphs 1 through 147 above.
149. The Defendant Directors owed a duty of loyalty to UniHolding
and its shareholders.
150. Prior to the Corporate Transactions, UniHolding was the sole
shareholder of UGL. As the sole shareholder of UGL, UniHolding, through
the action or inaction of the Defendant Directors, allowed UGL to issue
an additional 2,800,000 shares of UGL to Panama Holdings. Through this
issuance, and as a result of the February 25, 1999 Stock Swap between
UGL and Panama Holdings, UniHolding became a subsidiary of UGL holding
only a minority interest in UGL.
151. By allowing the issuance of additional shares of UGL, and by
subsequently ratifying the February 25, 1999 Stock Swap, the Defendant
Directors acted in their own self-interest and to the detriment of
UniHolding and Plaintiffs as minority U.S. shareholders.
152. By allowing the issuance of additional shares of stock of UGL, and
by subsequently endorsing the February 25, 1999 Stock Swap, the
Defendant Directors breached their duty of loyalty to UniHolding and
Plaintiffs as minority U.S. shareholders.
153. By authorizing UniHolding to pledge its only asset to defend
against the demands for information by Grace Brothers and Mutual
European Fund under 8 Del. C. Section 220, the Defendant Directors have
breached their duty of loyalty.
154. Plaintiffs have been specially injured as a result of the conduct
and self-dealing of the Defendant Directors.
155. As a result of the Defendant Directors' breaches, Plaintiffs have
been damaged in an undetermined amount in excess of $50,000.
COUNT IV - BREACH OF FIDUCIARY DUTY OF CARE
156. Plaintiffs restate and reallege paragraphs 1 through 155 above.
157. The Defendant Directors owe a duty of care to discharge their
responsibilities in the management of the business affairs of UniHolding
with the degree of diligence that a prudent person would use under
similar circumstances.
158. By allowing UGL, as a wholly-owned subsidiary of UniHolding, to
issue additional shares of stock to consummate the February 25, 1999
Stock Swap for the sole benefit of the stockholders who own or control
the majority of common stock in UniHolding, and to the detriment of
Plaintiffs as minority U.S. stockholders, and by endorsing the series of
transactions that led to the February 25, 1999 Stock Swap, the Defendant
Directors failed in their duty of care. Moreover, the Defendant
Directors have failed to establish the entire fairness of the Corporate
Transactions.
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159. By allowing UniHolding's constant late filings with the SEC
ultimately causing the delisting of the stock from NASDAQ Small Cap
Market, the Defendant Directors have failed in their duty of care to
Plaintiffs as minority U.S. shareholders.
160. By authorizing UniHolding to pledge its only asset to finance
litigation against Grace Brothers and Mutual European Fund, two minority
U.S. shareholders, the Defendant Directors have failed in their duty of
care.
161. The conduct of the Defendant Directors as described above served no
legitimate corporate purpose of UniHolding and was taken in bad faith to
prefer the interests of Zwirn and the majority shareholders to the
detriment and injury of minority shareholders.
162. Plaintiffs have been specially injured as a result of the conduct
and self-dealing of the Defendant Directors.
163. As a result of the Defendant Directors' breaches, Plaintiffs have
been damaged in an undetermined amount in excess of $50,000.
COUNT V - CORPORATE WASTE
164. Plaintiffs restate and reallege paragraphs 1 through 163 above.
165. Defendants Zwirn, Gherardi, van Gemerden, Fenster, Regolatti, Blum,
and Adam ("Defendant Officers and Directors"), as officers and directors
of UniHolding, have a duty to act in the best interest of the
corporation.
166. The actions or inaction of Defendant Officers and Directors in
facilitating the Corporate Transactions did not benefit the corporation
or Plaintiffs as minority U.S. shareholders.
167. The actions or inaction of Defendant Officers and Directors in
facilitating the Corporate Transactions were detrimental to UniHolding
and the trading price of UniHolding's stock on the NASDAQ Small Cap
Market.
168. Defendant Officers and Directors knew or should have known of the
self-dealing and control exercised by Zwirn, UGL, and Panama Holdings
relating to the February 25, 1999 Stock Swap and the other Corporate
Transactions.
169. Defendant Officers and Directors knew or should have known that the
February 25, 1999 Stock Swap and their subsequent endorsement of same
would result in UniHolding: (a) no longer having any business
operations, (b) being delisted from the NASDAQ Small Cap Market, (c) no
longer having a source of revenue to fund operations, and (d) pledging
its only asset to fund operations of the company.
<PAGE> 30
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170. The conduct of the Defendant Directors as described above served no
legitimate corporate purpose of UniHolding and was taken in bad faith to
prefer the interests of Zwirn and the majority shareholders to the
detriment and injury of minority shareholders.
171. The actions or inaction of Defendant Officers and Directors
constitute corporate waste.
172. Defendant Officers and Directors knew or should have known that the
February 25, 1999 Stock Swap, and the Defendant Directors' subsequent
endorsement of the February 25, 1999 Stock Swap, would result in special
injury to Plaintiffs as minority U.S. shareholders of UniHolding.
173. As a result of the action or inaction of Defendant Officers and
Directors, Plaintiffs, as minority U.S. shareholders, have been damaged
in an undetermined amount in excess of $50,000.
COUNT VI - MISMANAGEMENT
174. Plaintiffs restate and reallege paragraphs 1 through 173 above.
175. Defendant Officers and Directors have a duty to act in the best
interest of the corporation.
176. The actions or inaction of Defendant Officers and Directors in
facilitating the Corporate Transactions did not benefit the corporation
or Plaintiffs as minority U.S. shareholders of UniHolding.
177. Defendant Officers and Directors knew or should have known of the
self-dealing and control exercised by Zwirn, UGL, and Panama Holdings
relating to the February 25, 1999 Stock Swap and the other Corporate
Transactions.
178. Defendant Officers and Directors failed to obtain reports,
recommendations, analyses, and/or fairness opinions with respect to the
Corporate Transactions or any transactions affecting the interests of
UniHolding and its minority shareholders.
179. Defendant Officers and Directors knew or should have known
that the February 25, 1999 Stock Swap and their subsequent endorsement
of same would result in UniHolding: (a) no longer having any business
operations, (b) being delisted from the NASDAQ Small Cap Market, (c) no
longer having a source of revenue to fund operations, and (d) pledging
its only asset to fund operations of the company.
180. The actions or inaction of Defendant Officers and Directors in
facilitating the Corporate Transactions were detrimental to UniHolding
and the trading price of UniHolding's stock on the NASDAQ Small Cap
Market.
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181. The actions or inaction of Defendant Officers and Directors in
allowing UniHolding's constant late filings with the SEC ultimately
causing the delisting of the stock from NASDAQ Small Cap Market were
etrimental to UniHolding and the trading price of UniHolding's stock on
the NASDAQ Small Cap Market.
182. The actions or inaction of Defendant Officers and Directors
constitute mismanagement of the corporate affairs of UniHolding.
183. Defendant Officers and Directors knew or should have known that the
actions of Zwirn, UGL, and Panama Holdings would result in special
injury to Plaintiffs as minority U.S. shareholders.
184. The conduct of the Defendant Directors as described above served no
legitimate corporate purpose of UniHolding and was taken in bad faith to
prefer the interests of Zwirn and the majority shareholders to the
detriment and injury of minority shareholders.
185. As a result of the actions or inaction of Defendant Officers and
Directors, Plaintiffs have been damaged in an undetermined amount in
excess of $50,000.
XII. PRAYER FOR RELIEF
186. By reason of the foregoing, Plaintiffs request that this Court
enter an order:
a. Granting Plaintiffs judgment against the Defendants for all direct
and consequential damages they have suffered;
b. Granting Plaintiffs judgment against the Defendants for all attorneys
fees and expenses in connection with this action; and
c. Granting Plaintiffs such other and further relief as the Court may
deem appropriate, including costs, attorneys' fees, and expenses of this
action.
Dated: _____________ KLETT ROONEY LIEBER & SCHORLING
By: ____________________________________
Richard S. Cobb
1201 Market Street, Suite 1501
Post Office Box 195
Wilmington, Delaware 19801
Telephone: (302) 552-4200
Facsimile: (302) 552-4295
-and-
OPPENHEIMER WOLFF & DONNELLY LLP
Michael B. Fisco
Jerome A. Miranowski
James M. Jorissen
3300 Plaza VII
45 South Seventh Street
Minneapolis, Minnesota 55402
Telephone: (612) 607-7000
Facsimile: (612) 607-7100
ATTORNEYS FOR PLAINTIFFS GRACE
BROTHERS, LTD. AND BANC OF AMERICA
SECURITIES LLC
