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IN THE COURT OF CHANCERY
IN AND FOR THE STATE OF DELAWARE
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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.
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SECOND AMENDED COMPLAINT
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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
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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:
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.
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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.
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.
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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.
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:
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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
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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.
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"):
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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
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
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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
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.
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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
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:
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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-based 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
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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.
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-for-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-owned subsidiary, UGL.
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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.
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-owned 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
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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.
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.
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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
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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.
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
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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.
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
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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
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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.
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.
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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.
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
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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
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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.
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
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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.
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.
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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).
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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.
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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.
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.
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- 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.
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 bring an action to protect the interests of its
minority U.S. shareholders would be no more favorable.
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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 asserted
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-dealing
and control exercised by Zwirn, UGL, and Panama Holdings relating to the
February 25, 1999 Stock Swap and the other Corporate Transactions.
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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
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.
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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.
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.
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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.
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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.
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.
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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.
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 detrimental 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.
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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.
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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: May 2, 2000 KLETT ROONEY LIEBER & SCHORLING
By: /s/ Richard S. Cobb
-----------------------
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
35
