<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
- --------------------------------------------------------------------------------
UNILAB CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
Unilab Corporation
18448 Oxnard Street
Tarzana, California 91356
---------------------
PROXY STATEMENT SUPPLEMENT
---------------------
This proxy statement supplement is being furnished to the holders of the
outstanding shares of common stock of Unilab Corporation.
This proxy statement supplement supplements the proxy statement dated
October 26, 1999 that was mailed to stockholders in connection with the
solicitation of proxies by the Unilab Board of Directors for the approval and
adoption of the agreement and plan of merger between Unilab and UC Acquisition
Sub, Inc., a corporation formed by Kelso & Company, and the approval of the
merger contemplated by that agreement. The special meeting of our stockholders
to vote on the merger agreement is scheduled to be held at 10:00 a.m., local
time, on November 23, 1999 at the Hilton New York, 1335 Avenue of the
Americas, New York, New York 10019.
Legal Proceedings Regarding the Merger
On November 4, 1999 a purported class action, Bond Opportunity Fund, et al.
v. Unilab Corporation, 99 Civ. 11074 (LAP), was filed in the United States
District Court for the Southern District of New York against Unilab and its
Board of Directors. The complaint alleged, inter alia, that the proxy
statement contained material misrepresentations and omissions in violation of
the federal proxy rules and that approval of the merger terms amounted to a
breach of the fiduciary duties owed to Unilab shareholders by Unilab's
directors. The Company believes the claims asserted in the complaint were
without merit.
On November 5, 1999, plaintiffs in the action moved for a preliminary
injunction to enjoin the special meeting of stockholders scheduled for
November 23, 1999. On November 8, the Court scheduled a hearing for November
17, 1999 on plaintiffs' motion for a preliminary injunction and on defendants'
motion to dismiss the complaint. Plaintiffs and defendants have subsequently
negotiated a settlement to dismiss the action with prejudice, subject to
completion of confirmatory discovery, completion of definitive documentation
relating to the settlement, and court approval. The settlement provides, inter
alia, that the Company issue this proxy statement supplement.
Roles of BT Alex. Brown
As described in the proxy statement, the Board of Directors of Unilab
received an opinion of its financial advisor, BT Alex. Brown Incorporated (now
operating as Deutsche Bank Securities Inc.), as to the fairness, from a
financial point of view, of the common stock merger consideration to the
holders of common stock. The proxy statement describes a number of analyses
performed by BT Alex. Brown in connection with its opinion, including a
discounted cash flow analysis. The proxy statement is supplemented to disclose
that Unilab's net operating loss carryforwards were not factored into that
discounted cash flow analysis. The proxy statement also discloses that an
affiliate of BT Alex. Brown will participate in the financing of the merger,
for which services such affiliate will receive compensation. That
participation and customary compensation are more fully described below.
In connection with having acted as one of the initial purchasers of the
$155,000,000 of 12-3/4% Senior Subordinated Notes due 2009 that will provide
part of the debt financing for the merger, an affiliate of BT Alex. Brown
purchased notes from the issuer at an aggregate discount of approximately $3.2
million from the price paid by the investors for the notes. An affiliate of BT
Alex. Brown will act as lead arranger, book manager, administrative agent and
a lender under Unilab's new credit facility that will also provide part of the
debt financing used to finance the merger. For its role, that affiliate will
receive approximately $2.3 million in fees. In
<PAGE>
addition, for acting as administrative agent, that affiliate will receive
approximately $100,000 in fees annually. An affiliate of BT Alex. Brown is
also acting as one of the dealer managers for Unilab's offer to purchase all
of its $120 million principal amount of 11% Senior Notes due 2006. For its
role as dealer manager, that affiliate will receive $315,000 in fees (assuming
that all the outstanding notes are accepted for payment).
Kelso has advised Unilab that, subsequent to the mailing of the proxy
statement, Kelso entered into discussions with an affiliate of BT Alex. Brown
regarding a potential equity investment by that affiliate in UC Acquisition
Sub. Kelso has further advised Unilab that it anticipates that such affiliate
will make an approximately $2 million to $3 million investment in UC
Acquisition Sub.
Selected Market Prices of Unilab Common Stock
The proxy statement is supplemented to add the following disclosure
concerning the market price of Unilab common stock on certain trading days
prior to the signing of the merger agreement on May 24, 1999:
On April 7, 1999, the trading day following Unilab's announcement that it
had signed a definitive agreement for Unilab to acquire substantially all of
the assets of Physicians Clinical Laboratories, Inc., Unilab's common stock
price closed at $3.675 per share up from $3.25 per share on April 6, 1999.
On May 5, 1999, the trading day following Unilab's announcement of its
financial results for the quarter ended March 31, 1999, Unilab's common stock
price closed at $4.9375 per share up from $4.50 per share on May 4, 1999.
Shares to be Retained in the Merger
As disclosed in the proxy statement, UC Acquisition Sub has advised Unilab
that it has entered into agreements with EOS Partners, L.P. and Pequot Scout
Fund, LP pursuant to which EOS Partners, L.P. has agreed to retain 855,000 of
the 1,977,400 shares of Unilab common stock it holds and Pequot Scout Fund, LP
and its affiliates have agreed to retain 940,000 of the 3,878,200 shares of
Unilab common stock they hold. The proxy statement is supplemented to state
that UC Acquisition Sub has advised Unilab that it does not anticipate that
any institutional stockholders other than EOS Partners, L.P. and Pequot Scout
Fund, LP and its affiliates will retain Unilab common stock following the
merger and that UC Acquisition Sub is not currently in negotiations with any
other institutional stockholder of Unilab regarding the retention of
outstanding shares of Unilab common stock. The proxy statement is also
supplemented to disclose that David C. Weavil, Unilab's Chairman of the Board,
President and Chief Executive Officer, has advised Unilab that he anticipates
that he will retain no more than 85,000 shares of Unilab common stock
following the merger.
Stock Options Following the Merger
The proxy statement discloses that it is anticipated that Unilab will adopt
at or following the effective time of the merger a new stock option plan for
management and employees of Unilab and that the options initially granted
under the plan, among other things, will have an exercise price of $5.85 per
share and will cover approximately 15% of the shares outstanding following the
merger on a primary basis. The proxy statement is supplemented to disclose
that it is anticipated that options initially granted to Mr. Weavil under that
plan will not exceed approximately 1.2% of the shares outstanding following
the merger on a primary basis.
Payments to Unilab's Chief Executive Officer
The proxy statement discloses that, at the effective time of the merger, Mr.
Weavil will cease serving as President and Chief Executive Officer but will
continue as Chairman of the Board, Mr. Weavil's employment agreement will
terminate and Unilab intends to enter into a five-year consulting agreement
and a non-competition agreement with Mr. Weavil. The proxy statement is
supplemented to state that, upon ceasing to serve as President and Chief
Executive Officer, Mr. Weavil will become entitled to receive an aggregate
lump sum cash payment
2
<PAGE>
under the non-competition agreement of $2.5 million and will retain rights
relating to deferred compensation and Unilab's Executive Retirement Plan. As
disclosed in the proxy statement, as a result of the merger, the account of
each participant in the Executive Retirement Plan will become fully vested and
the number of phantom stock units credited to each participant's account will
be converted into cash based on the $5.85 per share merger consideration. Upon
ceasing to serve as President and Chief Executive Officer of Unilab, Mr.
Weavil will be entitled to receive the approximately $960,000 in cash into
which his phantom stock units will be converted.
----------------
The Board of Directors unanimously recommends that you vote "FOR" approval
and adoption of the merger agreement and the transactions contemplated by that
agreement.
----------------
The date of this proxy statement supplement is November 15, 1999.
3
