AS ELECTRONICALLY TRANSMITTED TO THE SECURITIES AND EXCHANGE COMMISSION
ON MARCH 14, 1994
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NATIONAL HEALTH LABORATORIES HOLDINGS INC.
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 8071 13-3757370
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
4225 EXECUTIVE SQUARE
SUITE 800
LA JOLLA, CALIFORNIA 92037
(619) 550-0600
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
JAMES G. RICHMOND, ESQ.
NATIONAL HEALTH LABORATORIES HOLDINGS INC.
4225 EXECUTIVE SQUARE
SUITE 800
LA JOLLA, CALIFORNIA 92037
(619) 550-0600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copy to:
ALLEN FINKELSON, ESQ.
CRAVATH, SWAINE & MOORE
WORLDWIDE PLAZA
825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement and upon consummation of the transactions described in the enclosed
Proxy Statement/Prospectus.
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If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED (1) UNIT OFFERING PRICE FEE (2)
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Common Stock, $.01 par value per share 84,750,692 shares Not Applicable Not Applicable $398,185
<FN>
===================================================================================================================================
(1) This Registration Statement relates to securities of the Registrant issuable to holders of Common Stock of National Health
Laboratories Incorporated, a Delaware corporation ("NHL"), in the proposed merger of NHL with a wholly owned subsidiary of
the Registrant.
(2) Pursuant to Rule 457(f), the registration fee was computed on the basis of the market value of the NHL Common Stock to be
exchanged in the merger, computed in accordance with Rule 457(c) on the basis of the average of the high and low prices per
share of such stock on the New York Stock Exchange Composite Transactions Tape on March 11, 1994.
</TABLE>
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
===============================================================================
<PAGE>
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NATIONAL HEALTH LABORATORIES HOLDINGS INC.
Cross-Reference Sheet Pursuant to Item 501(b) of Regulation S-K
<CAPTION>
Location in
Form S-4 Item Proxy Statement/Prospectus
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A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and Outside Front
Cover Page of Prospectus................................. Outside Front Cover Page of Proxy Statement/Prospectus
2. Inside Front and Outside Back Cover Pages of Pro-
spectus.................................................. Inside Front Cover Page of Proxy Statement/Prospectus
3. Risk Factors, Ratio of Earnings to Fixed Charges and
Other Information........................................ Outside Front Cover Page of Proxy Statement/Prospectus;
General Information; Proposed Reorganization
4. Terms of the Transaction................................. Proposed Reorganization
5. Pro Forma Financial Information.......................... Not Applicable
6. Material Contracts with the Company Being Acquired....... Not Applicable
7. Additional Information Required for Reoffering by
Persons and Parties Deemed To Be Underwriters............ Not Applicable
8. Interests of Named Experts and Counsel................... Proposed Reorganization--Legal Opinions
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities........... Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants.............. Not Applicable
11. Incorporation of Certain Information by Reference........ Not Applicable
12. Information with Respect to S-2 or S-3 Registrants....... Not Applicable
13. Incorporation of Certain Information by Reference........ Not Applicable
14. Information with Respect to Registrants Other Than
S-2 or S-3 Registrants................................... Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Location in
Form S-4 Item Proxy Statement/Prospectus
------------- --------------------------
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C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3 Companies................ Not Applicable
16. Information with Respect to S-2 or S-3 Companies......... Not Applicable
17. Information with Respect to Companies Other Than
S-2 or S-3 Companies..................................... Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or Authorizations
Are To Be Solicited...................................... General Information; Proposed Reorganization;
Election of Directors; Employee Benefits Committee
Report on Executive Compensation; Ratification of
Independent Auditors; 1994 Option Plan; Stockholder Proposals
19. Information if Proxies, Consents or Authorizations
Are Not To Be Solicited in an Exchange Offer............. Not Applicable
</TABLE>
2
<PAGE>
NATIONAL HEALTH LABORATORIES INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
National Health Laboratories Incorporated:
Notice is hereby given that the Annual Meeting of Stockholders of
National Health Laboratories Incorporated, a Delaware corporation (the
"Company"), will be held on the 10th day of May 1994 at 10:30 a.m., local time,
at the Sheraton Music City Hotel, 777 McGavock Pike at Century City, Nashville,
Tennessee 37214, for the following purposes:
1. To approve a proposed corporate reorganization of the Company in
which National Health Laboratories Holdings, Inc., a newly formed, wholly owned
subsidiary of the Company, will become the parent holding company of the
Company as described herein.
2. To elect all the members of the Company's board of directors to
serve until the Company's next annual meeting and until such directors'
successors are elected and shall have qualified.
3. To ratify the selection of KPMG Peat Marwick as the Company's
independent auditors for 1994.
4. To approve and adopt the National Health Laboratories Incorporated
1994 Stock Option Plan.
5. To transact such other business as may properly come before the
annual meeting or at any adjournments thereof.
A proxy statement/prospectus describing the matters to be considered at
the annual meeting is attached to this notice. Only stockholders of record at
the close of business on March 25, 1994 are entitled to notice of, and to vote
at, the annual meeting and at any adjournments thereof.
To ensure that your vote will be counted, please complete, date and
sign the enclosed proxy card and return it promptly in the enclosed prepaid
envelope, whether or not you plan to attend the annual meeting.
By Order of the Board of Directors
Alvin Ezrin
Secretary
March ( ), 1994
PLEASE COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE. THIS WILL ENSURE THAT YOUR
SHARES ARE VOTED IN ACCORDANCE WITH YOUR WISHES.
<PAGE>
THIS DOCUMENT IS A PROXY STATEMENT FOR THE ANNUAL MEETING
OF STOCKHOLDERS OF NATIONAL HEALTH LABORATORIES INCORPORATED
AND A PROSPECTUS OF NATIONAL HEALTH LABORATORIES HOLDINGS INC.
NATIONAL HEALTH LABORATORIES INCORPORATED
NATIONAL HEALTH LABORATORIES HOLDINGS INC.
-----------------------------------------
SHARES OF COMMON STOCK
OF
NATIONAL HEALTH LABORATORIES HOLDINGS INC.
-----------------------------------------
This Proxy Statement/Prospectus is being furnished in connection with
the solicitation by the Board of Directors of National Health Laboratories
Incorporated (the "Company") of proxies to be voted at the annual meeting of
stockholders to be held on the 10th day of May 1994 at 10:30 a.m., local time,
at the Sheraton Music City Hotel, 777 McGavock Pike at Century City, Nashville,
Tennessee 37214, and at any adjournments thereof. This Proxy
Statement/Prospectus is first being sent to stockholders on or about
March ( ), 1994.
At the annual meeting, the Company's stockholders will be asked (1) to
approve the Agreement and Plan of Merger attached as Exhibit A hereto (the
"Plan of Merger"), (2) to elect the following persons as directors of the
Company until the Company's next annual meeting and until such directors'
successors are elected and shall have qualified: Ronald O. Perelman, Saul J.
Farber, M.D., Howard Gittis, Ann Dibble Jordan, James R. Maher, David J.
Mahoney, Paul A. Marks, M.D., Linda Gosden Robinson and Samuel O. Thier, M.D.,
(3) to ratify the selection of KPMG Peat Marwick as the Company's independent
auditors for 1994, (4) to approve and adopt the National Health Laboratories
Incorporated 1994 Stock Option Plan (the "1994 Option Plan") and (5) to take
such other action as may properly come before the annual meeting or any
adjournments thereof.
The Board of Directors of the Company is recommending approval of the
Plan of Merger in connection with a proposed corporate reorganization that will
create a holding company structure for the Company. National Health
Laboratories Holdings Inc. ("NHL Holdings"), a wholly owned subsidiary of the
Company that has been newly formed specifically to effect the reorganization,
will become the parent holding company of the Company. All outstanding shares
of common stock of the Company will be converted on a share-for-share basis
into shares of common stock of NHL Holdings. As a result, the owners of common
stock of the Company will become the owners of common stock of NHL Holdings.
Subsequent to the reorganization, the Company will continue to carry on its
present business as a subsidiary of NHL Holdings. The Company believes the
reorganization will provide increased alternatives available for future
financing. See "Proposed Reorganization--Reasons for Reorganization."
Reference is made to "Proposed Reorganization--Certificate of
Incorporation and By-laws of NHL Holdings" and "--Description of NHL Holdings'
Common Stock" for further information concerning the securities offered hereby.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROXY STATEMENT/
PROSPECTUS IS MARCH ( ), 1994.
<PAGE>
AVAILABLE INFORMATION
NHL Holdings has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 under the Securities Act of
1933, as amended, covering the shares of NHL Holdings' common stock to be
issued in connection with the reorganization provided for by the Plan of Merger
(the "Registration Statement"). This Proxy Statement/Prospectus does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. The Registration Statement and the exhibits thereto may be
inspected and copied, at prescribed rates, at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the Commission at the following locations: 7
World Trade Center, Suite 1300, New York, New York 10048, and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60611.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Commission.
Such reports, proxy statements and other information filed by the Company with
the Commission may be inspected and copied, at prescribed rates, at the public
reference facilities and the regional offices maintained by the Commission at
the addresses set forth above and may be inspected at the offices of the New
York Stock Exchange (the "NYSE"), 20 Broad Street, New York, New York 10005.
Copies of such materials and the Registration Statement referred to above can
also be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Following the
reorganization, NHL Holdings will file reports and other information under the
Exchange Act.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed with the Commission by the Company
pursuant to the Exchange Act are incorporated by reference in this Proxy
Statement/Prospectus:
(i) the Company's Annual Report on Form 10-K for the year ended
December 31, 1992;
(ii) the Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1993, June 30, 1993, and September 30, 1993; and
(iii) the description of the Company's common stock set forth
in the Company's registration statements filed pursuant to Section 12 of the
Exchange Act, and any amendment or report filed for the purpose of updating any
such description.
All documents and reports filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Proxy
Statement/Prospectus and prior to the date of the annual meeting shall be
deemed to be incorporated by reference in this Proxy Statement/Prospectus and
to be a part hereof from the dates of filing of such documents or reports. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Proxy Statement/Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy
Statement/Prospectus.
The Company will provide without charge to each person, including any
beneficial owner of shares of common stock of the Company, to whom this
document is delivered, upon written or oral request, a copy of any and all of
the information that has been incorporated by reference in this document (not
including exhibits to the information that is incorporated by reference unless
such exhibits are specifically incorporated by reference into the information
2
<PAGE>
that this document incorporated). Written or telephone requests for copies of
such material should be directed to National Health Laboratories Incorporated,
4225 Executive Square, Suite 800, La Jolla, California 92037, Attention:
Secretary (telephone: (619) 550-0600).
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE
AVAILABLE UPON REQUEST DIRECTED TO THE COMPANY AT THE ADDRESS OR TELEPHONE
NUMBER LISTED IN THE PRECEDING PARAGRAPH. IN ORDER TO ENSURE TIMELY DELIVERY OF
THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MAY 3, 1994.
----------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS. IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY EITHER NHL HOLDINGS OR THE COMPANY. THIS PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY SHARES OF NHL HOLDINGS COMMON STOCK, NOR DOES IT CONSTITUTE THE
SOLICITATION OF A PROXY, BY ANY PERSON IN ANY JURISDICTION OR IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER
THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF
SECURITIES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
3
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 2
INFORMATION INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . 2
GENERAL INFORMATION
Solicitation and Voting of Proxies; Revocation . . . . . . . . . . . . 5
Record Date; Beneficial Ownership. . . . . . . . . . . . . . . . . . . 5
PROPOSED REORGANIZATION
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Company and NHL Holdings . . . . . . . . . . . . . . . . . . . . . 6
Terms of Reorganization; Conditions to Consummation of the
Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Reasons for Reorganization . . . . . . . . . . . . . . . . . . . . . . 7
Amendment or Termination . . . . . . . . . . . . . . . . . . . . . . . 7
Federal Income Tax Consequences. . . . . . . . . . . . . . . . . . . . 8
New York Stock Exchange Listing. . . . . . . . . . . . . . . . . . . . 8
Stock Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . 8
Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Directors and Executive Officers . . . . . . . . . . . . . . . . . . . 9
Certificate of Incorporation and By-Laws of NHL Holdings . . . . . . . 9
Description of NHL Holdings' Capital Stock . . . . . . . . . . . . . . 9
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ELECTION OF DIRECTORS
Nominees for Election as Directors . . . . . . . . . . . . . . . . . . 10
Board of Directors and its Committees. . . . . . . . . . . . . . . . . 11
Compensation of Directors. . . . . . . . . . . . . . . . . . . . . . . 12
EXECUTIVE COMPENSATION AND BENEFIT PLANS
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . 13
Compensation Plans and Arrangements. . . . . . . . . . . . . . . . . . 14
Retirement Benefits and Savings Plan . . . . . . . . . . . . . . . . . 15
Employee Benefits Committee Report on Executive Compensation . . . . . 16
Common Stock Performance . . . . . . . . . . . . . . . . . . . . . . . 18
Employee Benefits Committee Interlocks and Insider Participation . . . 19
Stock Option Transactions in 1993. . . . . . . . . . . . . . . . . . . 20
RATIFICATION OF INDEPENDENT AUDITORS. . . . . . . . . . . . . . . . . . 21
1994 OPTION PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS. . . . . . . . . . . . 24
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . . . . . . . . . . 25
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . 26
OTHER BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Exhibit A Agreement and Plan of Merger . . . . . . . . . . . . . . . . A-1
</TABLE>
4
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GENERAL INFORMATION
SOLICITATION AND VOTING OF PROXIES; REVOCATION
The purposes of the annual meeting are set forth in the accompanying
Notice. All proxies duly executed and received by the Company will be voted on
all matters presented at the annual meeting in accordance with the instructions
given therein by the person executing such proxy or, in the absence of such
instructions, will be voted in favor of approval of the Plan of Merger, the
election to the Company's Board of Directors of the nine nominees for director
identified in this Proxy Statement/Prospectus, the ratification of the
selection of KPMG Peat Marwick as the Company's auditors and the adoption of
the 1994 Option Plan. Any stockholder may revoke his proxy at any time before
it is voted by written notice to such effect received by the Company at 4225
Executive Square, Suite 800, La Jolla, California 92037, Attention: Secretary,
by delivery of a subsequently dated proxy or by attending the annual meeting
and voting in person.
Solicitation of proxies may be made by mail and may also be made by
personal interview, telephone and facsimile transmission, and by directors,
officers and regular employees of the Company without special compensation
therefor. The Company expects to reimburse banks, brokers and other persons for
their reasonable out-of-pocket expenses in handling proxy materials for
beneficial owners.
A quorum for the annual meeting consists of a majority of the total
number of shares of voting securities outstanding on the record date. The
affirmative vote of a majority of the outstanding shares of the Company's
common stock is required for approval of the Plan of Merger and adoption of the
1994 Option Plan. Directors of the Company will be elected by a plurality vote
of the shares of the Company's common stock represented at the annual meeting.
The affirmative vote of a majority of the shares of the Company's common stock
represented at the annual meeting is required for the ratification of the
selection of KPMG Peat Marwick as independent auditors. At March 25, 1994, the
directors and executive officers of the Company and their affiliates owned
beneficially an aggregate of 21,229,463 shares of common stock of the Company,
representing approximately 25% of the total number of shares of common stock
outstanding.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE PLAN OF MERGER, THE ELECTION OF THE BELOW SPECIFIED NOMINEES FOR
DIRECTOR OF THE COMPANY, THE RATIFICATION OF THE SELECTION OF KPMG PEAT MARWICK
AS INDEPENDENT AUDITORS AND THE ADOPTION OF THE 1994 OPTION PLAN.
RECORD DATE; BENEFICIAL OWNERSHIP
Only holders of record of the Company's common stock at the close of
business on March 25, 1994 will be entitled to notice of and to vote at the
annual meeting. On that date, there were issued and outstanding 84,750,692
shares of common stock (not including treasury shares), each of which is
entitled to one vote. Of that total, 20,176,729 (or approximately 24%) is owned
by National Health Care Group, Inc. ("Health Care"), an indirect wholly owned
subsidiary of MacAndrews & Forbes Holdings Inc. ("M&F Holdings"), a corporation
wholly owned through Mafco Holdings Inc. ("Mafco" and together with M&F
Holdings, "MacAndrews & Forbes") by Ronald O. Perelman, Chairman of the Board
of the Company. See "Security Ownership of Certain Beneficial Holders." Health
Care has informed the Company that it will vote in favor of the approval of the
Plan of Merger, the election of the nominees to the Board of Directors
identified herein, the ratification of the selection of KPMG Peat Marwick as
the Company's independent auditors for 1994 and the adoption of the 1994 Option
Plan.
5
<PAGE>
PROPOSED REORGANIZATION
GENERAL
The Board of Directors of the Company has unanimously approved, and
recommended that the stockholders approve, a proposed corporate reorganization
pursuant to the Plan of Merger. The reorganization will create a parent holding
company and convert the Company's outstanding common stock into common stock of
the new holding company on a share-for-share basis. The affirmative vote of a
majority of the outstanding shares of the Company's common stock is required
for approval of the Plan of Merger.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR APPROVAL OF THE PLAN OF MERGER.
THE COMPANY AND NHL HOLDINGS
The Company is one of the leading clinical laboratory companies in the
United States. Through a national network of laboratories, the Company offers a
broad range of testing services used by the medical profession in the
diagnosis, monitoring and treatment of disease. The Company's principal
executive offices are located at 4225 Executive Square, Suite 800, La Jolla,
California 92037, and its telephone number is (619) 550-0600.
NHL Holdings, a newly formed, wholly owned subsidiary of the Company,
was organized under the laws of the State of Delaware specifically for the
purpose of becoming the new parent holding company in the reorganization. Its
executive offices are located at the Company's principal executive offices
referred to above. NHL Holdings has newly formed a wholly owned subsidiary, NHL
Sub Acquisition Corp. ("NHL Acquisition"), specifically to effect the
reorganization. Neither NHL Holdings nor NHL Acquisition has any significant
assets or capitalization nor has engaged in any business or prior activities
other than in connection with the reorganization. The formation of the holding
company structure will be accomplished through the merger of NHL Acquisition
with and into the Company, at which time the outstanding common stock of the
Company will be deemed converted into common stock of NHL Holdings on a share-
for-share basis. The form of the Plan of Merger is attached hereto as Exhibit A
and is incorporated herein by reference.
If the Plan of Merger is approved by the stockholders and not
terminated by the Board of Directors of NHL Holdings, the reorganization will
become effective at the close of business on the date that an appropriate
certificate of merger is filed with the Delaware Secretary of State as required
by Delaware law. The Company anticipates that the reorganization will become
effective promptly following the annual meeting.
Immediately following the effective time of the reorganization, NHL
Holdings will have the same consolidated assets, liabilities and stockholders'
equity and the same directors and executive officers as the Company had
immediately prior to such date. In addition, there will be no change in the
state of incorporation from the Company to NHL Holdings since both companies
are Delaware corporations with substantially identical certificates of
incorporation and By-laws. NHL Holdings expects to continue the Company's
current quarterly dividend policy.
TERMS OF REORGANIZATION; CONDITIONS TO CONSUMMATION OF THE REORGANIZATION
Pursuant to the Plan of Merger:
(i) NHL Acquisition will be merged into the Company, with the
Company being the surviving corporation.
(ii) Except as set forth in paragraph (iv) below, each
outstanding share of the Company's common stock will be changed and converted
into one share of common stock of NHL Holdings.
6
<PAGE>
(iii) The outstanding shares of common stock of NHL Acquisition
will be changed and converted into the shares of the surviving corporation.
(iv) The outstanding shares of NHL Holdings' common stock and
the Company's common stock held by the Company prior to the time the
reorganization is effected will be cancelled.
As a result of the foregoing, the Company, as the surviving corporation
in the merger, will become a subsidiary of NHL Holdings, and all the common
stock of NHL Holdings outstanding immediately after the merger will be owned by
the former common stockholders of the Company. The Company will continue to own
all outstanding stock of its existing subsidiaries.
As of the effective time of the reorganization, the stockholders of the
Company prior to the effective time will automatically become owners of NHL
Holdings' common stock and, as of the effective time, will cease to be owners
of the Company's common stock. Stock certificates representing shares of the
Company's common stock will, at the effective time, automatically represent
shares of NHL Holdings' common stock. Stockholders of the Company's common
stock will not be required to exchange their stock certificates as a result of
the reorganization. Should a stockholder desire to sell shares of NHL
Holdings' common stock after the effective time, delivery of the stock
certificate or certificates which previously represented shares of the
Company's common stock will be sufficient.
Following the reorganization, certificates bearing the name of NHL
Holdings will be issued in the normal course upon surrender of outstanding
Company common stock certificates for transfer or exchange. If any stockholder
surrenders a certificate representing shares of the Company's common stock for
exchange or transfer and the new certificate to be issued is to be issued in a
name other than that appearing on the surrendered certificate theretofore
representing the Company's common stock, it will be a condition to such
exchange or transfer that the surrendered certificate be properly endorsed and
otherwise be in proper form for transfer and that the person requesting such
exchange or transfer either (i) pay NHL Holdings or its agents any taxes or
other governmental charges required by reason of the issuance of a certificate
registered in a name other than that appearing on the surrendered certificate
or (ii) establish to the satisfaction of NHL Holdings or its agents that such
taxes or other governmental charges have been paid.
The reorganization will not be consummated unless the following
conditions are satisfied: (i) approval of the Plan of Merger by the requisite
vote of stockholders of the Company; (ii) receipt of an opinion of Cravath,
Swaine & Moore, counsel to NHL Holdings and the Company, with respect to the
federal income tax consequences of the reorganization; and (iii) effectiveness
of the Registration Statement covering the shares of NHL Holdings' common stock
to be used in connection with the reorganization.
REASONS FOR REORGANIZATION
The Company has considered and continues to consider acquisitions of
laboratory companies of varying sizes, although there are currently no
definitive plans with respect to any acquisition. In that connection, the agent
under the Company's existing revolving credit facility suggested that a holding
company structure would provide a greater degree of flexibility in structuring
financings, and thereby permit borrowing from banks, other financial
institutions or from the securities markets more readily and on more favorable
terms than presently available to the Company. NHL Holdings could borrow funds
directly and contribute them to the Company, securing such borrowings with a
pledge of all the capital stock of the Company. Alternatively, NHL Holdings
could guarantee borrowings made by the Company with such a pledge. Moreover,
following the reorganization, NHL Holdings may create an intermediate holding
company between itself and the Company which could borrow funds from financial
institutions or in the securities markets, similarly providing the foregoing
advantages and freeing NHL Holdings from any constraints that would be imposed
as a condition to such borrowings. This holding company structure also would
provide more flexibility in that companies could be acquired directly by NHL
Holdings rather than through the Company, and thereby remain independent of the
Company's present operations and free from any constraints on the Company
imposed by credit agreements or otherwise.
AMENDMENT OR TERMINATION
The Company, NHL Holdings and NHL Acquisition, by action of their
respective Boards of Directors, may amend, modify or supplement the Plan of
Merger at any time before or after its approval by the stockholders of the
Company. After such approval, no such amendment, modification or supplement may
be made or effected that by law requires further approval by such stockholders
without the further approval of such stockholders.
7
<PAGE>
The Plan of Merger provides that it may be terminated, and the
reorganization abandoned, at any time, whether before or after stockholder
approval of the Plan of Merger, by action of the Board of Directors of NHL
Holdings.
FEDERAL INCOME TAX CONSEQUENCES
The Company and NHL Holdings have been advised by their counsel,
Cravath, Swaine & Moore, New York, New York, that, in their opinion, for United
States federal income tax purposes, assuming that the reorganization will take
place as described in the Plan of Merger:
(i) No gain or loss will be recognized by the Company, NHL
Holdings or the stockholders of the Company upon the conversion or exchange of
the Company's common stock for NHL Holdings' common stock pursuant to the Plan
of Merger.
(ii) The tax basis of NHL Holdings' common stock received by
the Company's stockholders pursuant to the Plan of Merger will be the same as
their tax basis in the Company's common stock converted or exchanged.
(iii) The holding period of NHL Holdings' common stock to be
received by the Company's stockholders in connection with the Plan of Merger
will include the period during which the Company's common stock being converted
or exchanged was held, provided that the Company's common stock is held as a
capital asset in the hands of the stockholder at the effective time.
Although it is not anticipated that state or local income tax
consequences to stockholders will vary substantially from the federal income
tax consequences described above, stockholders of the Company are urged to
consult with their own tax advisors with respect thereto, as well as with
respect to any foreign taxes applicable to foreign stockholders.
NEW YORK STOCK EXCHANGE LISTING
The Company expects that the common stock of NHL Holdings will be
approved for listing on the NYSE under the same symbol ("NH") as the Company's
common stock. At the effective time of the reorganization, the Company's common
stock will cease to be listed on the NYSE. As a practical matter, current
owners of the Company's common stock will continue to be able to sell their
shares of the Company's common stock (or, after the effective time, NHL
Holdings' common stock) on the NYSE without interruption.
STOCK OPTION PLANS
If the reorganization is consummated, the Company's stock option plans
(including, if approved, the 1994 Option Plan) will be amended if necessary to
cover any eligible employees of NHL Holdings and its subsidiaries and to
provide that NHL Holdings' common stock will thereafter be issued by NHL
Holdings upon exercise of any options issued thereunder. Stockholder approval
of the reorganization constitutes approval of NHL's assumption of the
obligations of the Company under the stock option plans. The retirement and
other employee benefit plans of the Company will be similarly revised or
amended, as necessary.
REGULATORY APPROVALS
The consummation of the transactions described herein do not require
the approval of, or compliance with rules promulgated by, any federal or state
regulatory authority.
APPRAISAL RIGHTS
Pursuant to Section 262 of the Delaware General Corporation Law, the
stockholders of the Company will not have appraisal rights with regard to the
reorganization.
8
<PAGE>
DIVIDENDS
Quarterly dividends on NHL Holdings' common stock are expected to be
paid on approximately the same terms and dates as currently applicable to
dividends on the Company's common stock. Future dividends on NHL Holdings'
common stock will depend upon the earnings, financial conditions and other
factors of NHL Holdings and its subsidiaries. The quarterly dividend most
recently declared by the Board of Directors of the Company was $0.08 per share,
payable on April 26, 1994 to holders of record of the Company's common stock on
April 5, 1994.
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors of NHL Holdings, upon the effectiveness of the
reorganization, is to consist of those persons who, at the effective time of
the reorganization, are serving as directors of the Company, each to have the
term of office for which he or she was elected or appointed. NHL Holdings'
executive officers are now, and upon the effectiveness of the reorganization
are expected to be, the same as those persons who are presently employed as
executive officers of the Company.
CERTIFICATE OF INCORPORATION AND BY-LAWS OF NHL HOLDINGS
The Certificate of Incorporation and By-laws of NHL Holdings have been
prepared in accordance with the Delaware General Corporation Law and do not
differ in any material respect from the Restated Certificate of Incorporation
and By-laws of the Company. The Company's certificate of incorporation and By-
laws are included in the materials incorporated by reference in this Proxy
Statement/Prospectus and NHL Holdings' certificate of incorporation and By-laws
are included as exhibits to the Registration Statement of which this Proxy
Statement/Prospectus forms a part.
As of the effective time of the reorganization, Article FOURTH of the
Company's certificate of incorporation will be amended so that the authorized
number of shares which the Company may issue will be one thousand (1,000).
DESCRIPTION OF NHL HOLDINGS' CAPITAL STOCK
There are no material differences between the terms of the capital
stock of NHL Holdings and the capital stock of the Company. After the effective
time of the reorganization, the number of shares of NHL Holdings' common stock
outstanding will equal the number of shares of the Company's common stock
outstanding immediately prior to the effective time. Following the effective
time, NHL Holdings will also have the same number of shares of preferred stock
authorized (with none being outstanding) as will be the case with respect to
the Company immediately prior to the effective time.
All shares of NHL Holdings' common stock will participate equally with
respect to dividends and rank equally upon liquidation, subject to the rights
of holders of any prior ranking stock which may be subsequently authorized and
issued. In the event of liquidation, dissolution or winding up of NHL Holdings,
the owners of its common stock are entitled to receive pro rata the assets and
funds of NHL Holdings remaining after satisfaction of all creditors of NHL
Holdings and payment of all amounts to which owners of prior ranking stock, if
any, then outstanding may be entitled. Each share of NHL Holdings' common stock
is entitled to one vote.
The Transfer Agent and Registrar for NHL Holdings' common stock will be
the same as is presently serving in such capacity for the Company's common
stock: American Stock Transfer & Trust Co.
LEGAL OPINIONS
The legality of the shares of common stock of NHL Holdings being issued
will be passed upon by Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth
Avenue, New York, New York.
9
<PAGE>
ELECTION OF DIRECTORS
All the Company's directors will be elected at the annual meeting to
serve until the next succeeding annual meeting of the Company and until their
successors are elected and shall have qualified. All the below listed nominees
are currently members of the Board of Directors and, except as herein stated,
the proxies solicited hereby will be voted FOR the election of such nominees.
All nominees, if elected, are expected to serve until the next succeeding
annual meeting. Directors of the Company will be elected by a plurality vote of
the outstanding shares of Company common stock present in person or represented
by proxy at the annual meeting. Under applicable Delaware law, in tabulating
the vote, broker non-votes will be disregarded and have no effect on the
outcome of the vote.
The Board has been informed that all persons listed below are willing
to serve as directors, but if any of them should decline or be unable to act as
a director, the individuals named in the proxies will vote for the election of
such other person or persons as they, in their discretion, may choose. The
Board has no reason to believe that any such nominees will be unable or
unwilling to serve.
THE COMPANY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF EACH
OF THE BELOW LISTED NOMINEES FOR DIRECTOR.
NOMINEES FOR ELECTION AS DIRECTORS
The name, age, principal occupation for the last five years, selected
biographical information and period of service as a director of the Company of
each director are set forth below.
RONALD O. PERELMAN (51) has been Chairman of the Board and Director of
the Company since 1988. Mr. Perelman has been Chairman of the Board and Chief
Executive Officer of MacAndrews & Forbes for more than the past five years. Mr.
Perelman also is Chairman of the Board of Andrews Group Incorporated ("Andrews
Group"), Consolidated Cigar Corporation ("Consolidated Cigar"), New World
Communications Group Incorporated ("New World Communications"), Mafco Worldwide
Corporation ("Mafco Worldwide"), Marvel Entertainment Group, Inc. ("Marvel"),
Revlon Consumer Products Corporation ("Revlon Products") and SCI Television,
Inc. Mr. Perelman is a director of the following corporations which file
reports pursuant to the Securities Exchange Act of 1934: Andrews Group, The
Coleman Company, Inc. ("Coleman"), Coleman Holdings Inc., Coleman Worldwide
Corporation, Consolidated Cigar, Mafco Worldwide, Marvel, Marvel Holdings Inc.
("Marvel Holdings"), Marvel (Parent) Holdings Inc. ("Marvel Parent"), Marvel
III Holdings Inc. ("Marvel III"), Revlon Products, Revlon Worldwide Corporation
and SCI Television, Inc.
SAUL J. FARBER, M.D. (76) has been a Director of the Company since
1988. He has been Chairman of the Department of Medicine of the New York
University School of Medicine since 1966; Frederick H. King Professor of
Medicine since 1978 and Dean of the School of Medicine since 1987.
HOWARD GITTIS (60) has been a Director of the Company since 1988. He
has been Vice Chairman and a Director of MacAndrews & Forbes and various
affiliates since 1985. Mr. Gittis also is a Director of Andrews Group,
Consolidated Cigar, Mafco Worldwide, Revlon Products, Revlon Worldwide, Jones
Apparel Group, Inc. and Loral Corporation.
ANN DIBBLE JORDAN (59) has been a Director of the Company since 1990.
She is a consultant and was previously Field Work Assistant Professor, School
of Social Service Administration, University of Chicago from 1970 to 1987. Ms.
Jordan also is a Director of Johnson & Johnson Corporation, Capital Cities--
ABC, Inc., Primerica, Inc., Salant Corp., The Hechinger Company and Automatic
Data Processing, Inc.
10
<PAGE>
JAMES R. MAHER (44) has been President, Chief Executive Officer and a
Director of the Company since December 1992. Mr. Maher was Vice Chairman of The
First Boston Corporation from 1990 to 1992 and Managing Director of The First
Boston Corporation since 1982. Mr. Maher also is a director of First Brands
Corporation.
DAVID J. MAHONEY (70) has been a Director of the Company since 1988. He
has been President of David Mahoney Ventures since 1983 and was Chairman of
Norton Simon, Inc. for more than five years prior to 1983. Mr. Mahoney also is
a Director of NYNEX Corporation, The Dreyfus Corporation and Bionaire Inc.
PAUL A. MARKS, M.D. (67) has been a Director of the Company since 1991.
He has been President and Chief Executive Officer of Memorial Sloan-Kettering
Cancer Center since 1980. He has been a Professor of Medicine at Cornell
University Medical College since 1982 and a Professor at Cornell University
Graduate School of Medical Sciences since 1983. He is a member of the National
Academy of Sciences and American Academy of Arts and Sciences. Dr. Marks also
is a Director of Pfizer, Inc., several Dreyfus Mutual Funds, Life Technologies,
Inc. and Tularik, Inc.
LINDA GOSDEN ROBINSON (41) has been a Director of the Company since
1990. She has been President and Chief Executive Officer of Robinson, Lake,
Lerer & Montgomery/Sawyer Miller Group since 1986 and was Senior Vice
President, Corporate Affairs, of Warner Cable Communications, Inc. from 1983 to
1986. Ms. Robinson also is a Director of Bozell, Jacobs, Kenyon & Eckhardt,
Inc. and the Coro Foundation. She is a Trustee of New York University Medical
Center.
SAMUEL O. THIER, M.D. (56) has been a Director of the Company since
1992. He has been President of Brandeis University since 1991 and, commencing
June 1, 1994, Dr. Thier will become President and Chief Executive Officer of
Massachusetts General Hospital. Dr. Thier was President of the Institute of
Medicine of the National Academy of Sciences from 1985 to 1991. From 1966 to
1985 Dr. Thier served on the faculties of the medical schools at Harvard
University, University of Pennsylvania and Yale University. At Yale University,
Dr. Thier was Chairman of the Department of Internal Medicine from 1975 through
1985.
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors has an Executive Committee, an Audit Committee,
an Employee Benefits Committee, an Ethics and Quality Assurance Committee and a
Nominating Committee.
The Executive Committee consists of Messrs. Perelman, Gittis and Maher.
The Executive Committee may exercise all the powers and authority of the Board,
except as otherwise provided under the corporation law of Delaware. The Audit
Committee, consisting of Dr. Farber, Ms. Jordan and Dr. Marks, makes
recommendations to the Board regarding the engagement of the Company's
independent auditors, reviews the plan, scope and results of the audit, reviews
with the auditors and management the Company's policies and procedures with
respect to internal accounting and financial controls and reviews changes in
accounting policy and the scope of the non-audit services which may be
performed by the Company's independent auditors. The Ethics and Quality
Assurance Committee consists of Mr. Gittis, Dr. Farber and Ms. Jordan. The
Ethics and Quality Assurance Committee will be responsible to ensure that the
Company adopts and implements procedures that require the Company's employees
to act in accordance with high ethical standards and deliver high quality
services. The Ethics and Quality Assurance Committee was formed in February
1994 and did not meet in 1993. The Employee Benefits Committee, consisting of
Dr. Farber, Messrs. Gittis and Mahoney, Ms. Robinson and Dr. Thier, makes
recommendations to the Board regarding compensation, benefits and incentive
arrangements for officers and other key managerial employees of the Company.
The Employee Benefits Committee may consider and recommend awards of options to
purchase shares of common stock pursuant to the Company's 1988 Stock Option
Plan and, subject to stockholder approval as discussed herein, the 1994 Option
Plan. The Nominating Committee, consisting of Mr. Perelman, Ms. Jordan, Ms.
11
<PAGE>
Robinson and Dr. Thier, makes recommendations to the Board regarding the
qualifications for directors and procedures for identifying possible nominees.
The Nominating Committee also reviews the performance of current directors and
evaluates the appropriate size and composition of the Board.
During 1993, the Board of Directors held nine meetings and the
Executive Committee held six meetings. In 1993, the Board of Directors acted
once by unanimous written consent of all members thereof and the Executive
Committee acted 16 times by unanimous written consent of all members thereof,
each in accordance with the Company's by-laws and the corporation law of
Delaware. The Employee Benefits Committee held six meetings and acted once by
unanimous written consent, the Audit Committee held seven meetings and the
Nominating Committee held one meeting in 1993. During 1993 no director attended
fewer than 75% of the meetings of the board and the committees of which he or
she is a member.
COMPENSATION OF DIRECTORS
Directors who are not currently receiving compensation as officers or
employees of the Company or any of its affiliates are paid an annual $25,000
retainer fee, payable in monthly installments, and a fee of $1,000 for each
meeting of the Board of Directors or any committee thereof they attend.
12
<PAGE>
EXECUTIVE COMPENSATION AND BENEFIT PLANS
EXECUTIVE COMPENSATION
The compensation paid by the Company to its Chief Executive Officer and
each of the Company's four most highly compensated executive officers for
services during the year ended December 31, 1993 was as follows:
<TABLE>
Summary Compensation Table
<CAPTION>
Long
Term
Compen-
sation
Annual Compensation Awards
-----------------------------------------------------------------------------
All Other
Options/ Compensa-
Name and Principal Position Year Salary($)(a) Bonuse($)(b) SARs (#) tion ($)(c)
- --------------------------- --- ----------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C>
James R. Maher - President and
Chief Executive Officer 1993 $ 1,000,000 $ 500,000 0 $29,136
1992 $ 34,616 $1,662,500 300,000
1991 - - - $ 0
David C. Flaugh - Senior Exec- 1993 507,683 400,000 125,000 13,865
utive Vice President and Chief 1992 267,117 265,000 0 9,287
Operating Officer 1991 248,655 400,000 16,500 -
Timothy J. Brodnik - Executive 1993 325,000 262,500 50,000 11,334
Vice President 1992 238,046 243,800 0 10,007
1991 217,497 284,000 11,500 -
W. David Slaunwhite, Ph.D. - 1993 324,615 282,500 50,000 11,397
Executive Vice President 1992 267,117 265,000 0 94,644
1991 247,501 470,000 16,500 -
Bernard E. Statland, M.D., 1993 457,500 252,500 50,000 17,219
Ph.D. - Executive Vice Presi- 1992 386,243 365,000 0 15,482
dent 1991 366,340 390,000 16,500 -
<FN>
- ----------
(a) Includes salary paid or accrued for each indicated year.
(b) Includes bonus accrued or paid for each indicated year and other payments made pursuant to employment agreements. The 1992
amount for Mr. Maher represents the value, on the date of grant, of 100,000 shares of the Company's common stock granted in
1992.
(c) Reflects the following: (i) relocation expenses in 1993 for Mr. Maher of $14,001 and in 1992 for Dr. Slaunwhite of $84,365;
(ii) life insurance premiums of $8,060 in 1993 for Mr. Maher, $6,790 in 1993 and $3,414 in 1992 for Mr. Flaugh, $4,259 in 1993
and $3,141 in 1992 for Mr. Brodnik, $4,322 in 1993 and $3,413 in 1992 for Dr. Slaunwhite and $10,144 in 1993 and $8,616 in
1992 for Dr. Statland; (iii) 401(a) and (k) contributions in 1993 of $7,075 for each of such individuals named in the table
and in 1992 $5,873 for Mr. Flaugh and $6,866 for each of Mr. Brodnik, Dr. Slaunwhite and Dr. Statland.
</TABLE>
13
<PAGE>
COMPENSATION PLANS AND ARRANGEMENTS
The Company has an employment agreement with Mr. Maher which provides
for his employment as President and Chief Executive Officer of the Company
through December 31, 1995 at an annual salary of $1,000,000 and an annual year-
end retention bonus of $500,000. In addition, Mr. Maher is eligible to receive
an additional bonus as may be awarded at the sole discretion of the Board of
Directors or the Employee Benefits Committee. If the employment agreement with
Mr. Maher is terminated by the Company without cause or by Mr. Maher for
certain specified reasons (for example, assignment of duties inconsistent with
his position as Chief Executive Officer, reduction in base salary or bonus, or
relocation) or upon a Change of Control of the Company, the Company will be
required to pay Mr. Maher in a lump sum the base salary and annual bonus
payable for the remaining term of the agreement or, if such termination occurs
on or after December 31, 1993, $3,000,000. For this purpose, a "change in
control" is deemed to occur if Mr. Perelman ceases beneficially to own 5% or
more of the combined voting power of the Company's then outstanding securities.
The Company has an amended employment agreement with Mr. Flaugh which
provides for Mr. Flaugh to be employed through December 31, 1995 at a base
salary of $500,000 per annum, an annual year-end retention bonus equal to 50%
of base salary and discretionary bonuses each year to be determined in light of
his and the Company's performance, with a one year period of non-competition
following termination of employment. Mr. Flaugh is entitled to receive a
$150,000 lump sum payment in December 1994 if he is then employed by the
Company.
The Company has amended employment agreements with Mr. Brodnik, Dr.
Statland and Dr. Slaunwhite which provide for them to be employed through
December 31, 1996, December 31, 1995 and December 31, 1996, respectively, at a
base salary of $325,000 per annum, an annual year-end retention bonus equal to
50% of base salary and discretionary bonuses each year to be determined in
light of each individual's and the Company's performance, with a one year
period of non-competition following termination of employment. Pursuant to the
employment agreements, Mr. Brodnik, Dr. Statland and Dr. Slaunwhite are
entitled to receive lump sum payments of $100,000, $90,000 and $120,000,
respectively, in December 1994, in each case only if the executive is then
employed by the Company. In addition, Dr. Statland is employed by the Company
as Chairman of the Company's Board of Scientific Advisors at a base salary of
$132,500 per annum. The Company has an employment agreement with Mr. Jeub which
provides for Mr. Jeub to be employed as Executive Vice President and Chief
Financial Officer of the Company through June 30, 1995 at a base salary of
$250,000 per annum through the end of the term and an annual guaranteed
retention bonus equal to 50% of the base salary.
14
<PAGE>
RETIREMENT BENEFITS AND SAVINGS PLAN.
The following table sets forth the estimated annual retirement benefits
payable at age 65 to persons retiring with the indicated average direct
compensation and years of credited service, on a straight life annuity basis
after Social Security offset, under the Company's Employees' Retirement Plan,
as supplemented by the Company's Pension Equalization Plan.
<TABLE>
Pension Plan Table
<CAPTION>
Five year average
Compensation (1) 10 Years(2) 15 Years(2) 20 Years(2) 25 Years(2) 30 Years(2)
- ---------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 6,932 $ 10,398 $ 13,864 $ 17,330 $ 20,796
100,000 16,283 24,425 32,567 40,709 48,851
150,000 25,643 38,465 51,287 64,109 76,931
200,000 35,003 52,505 70,006 87,508 105,011
250,000 44,363 66,545 88,726 110,908 133,091
300,000 53,723 80,585 107,446 134,308 161,171
<FN>
- ----------
(1) Highest consecutive five year average base compensation during final ten years. Compensation considered for this
five year average is reflected in the Summary Compensation Table under the heading "salary." Under the Equalization
Plan, a maximum of $300,000 final average compensation is considered for benefit calculation. No bonuses are considered.
(2) Under the plans, the normal form of benefit for an unmarried participant is a life annuity with a guaranteed minimum payment
of ten years. Payments in other optional forms, including the 50% joint and survivor normal form for married participants,
are actuarially equivalent to the normal form for an unmarried participant. The above table is determined with regard to a
life only form of payment; thus, payment using a ten year guarantee would produce a lower annual benefit.
</TABLE>
The Retirement Plan, which is intended to qualify under Section 401 of
the Internal Revenue Code of 1986, as amended (the "Code"), is a defined
benefit pension plan designed to provide an employee having 30 years of
credited service with an annuity equal to 52% of final average compensation
less 50% of estimated individual Social Security benefits. Credited service is
defined generally as all periods of employment with National Health
Laboratories Incorporated, a participating subsidiary or with Revlon prior to
1992, after attainment of age 21 and completion of one year of service. Final
average compensation is defined as average annual base salary during the five
consecutive calendar years in which base salary was highest out of the last ten
years prior to normal retirement age or earlier termination. The Employment
Retirement Income Security Act of 1974, as amended, places certain maximum
limitations upon the annual benefit payable under all qualified plans of an
employer to any one individual. Such limitation for defined benefit pension
plans was $115,641 for 1993 (except to the extent a larger benefit had accrued
as of December 31, 1982) and $118,800 for 1994, and will be subject to cost of
living adjustments for future years. In addition, the Tax Reform Act of 1986
limits the amount of compensation that can be considered in determining the
level of benefits under qualified plans. The applicable limit is adjusted
annually; for 1993 the limit was $235,840 and for 1994 is reduced to $150,000
due to provisions of the Omnibus Budget Reconciliation Act of 1993. The Company
believes that, with respect to certain employees, annual retirement benefits
computed in accordance with the Retirement Plan's benefit formula may be
greater than such qualified plan limitation. The Company's non-qualified,
unfunded, Equalization Plan is designed to provide for the payment of the
difference, if any, between the
15
<PAGE>
amount of such maximum limitation and the annual benefit that would be payable
under the Retirement Plan but for such limitation.
As of December 31,1993, credited years of service under the retirement
plans for the following individuals are for Mr. Maher-none, Mr. Flaugh-21
years, Dr. Slaunwhite-11 years, Dr. Statland-1 year and Mr. Brodnik-20 years.
EMPLOYEE BENEFITS COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Employee Benefits Committee of the Board of Directors (the
"Committee") is comprised of Saul J. Farber, M.D., Howard Gittis, David J.
Mahoney, Linda Gosden Robinson and Samuel O. Thier, M.D. The Committee's duties
include determination of the Company's compensation and benefit policies and
practices for executive officers and key managerial employees. The Committee
also considers and awards options to purchase shares of the Company's common
stock pursuant to the Company's 1988 Stock Option Plan and the 1994 Option
Plan, subject to stockholder approval. In accordance with rules established by
the Commission, the Company is required to provide certain data and information
in regard to the compensation provided to the Company's Chief Executive Officer
and the four other most highly compensated executive officers. The Committee
has prepared the following report for inclusion in this Proxy
Statement/Prospectus.
Compensation Policies. The Company's current compensation arrangements
for senior executives are significantly affected by the Company's long history
as a private company until the 1988 initial public offering, after which an
Employee Benefits Committee was established. The overall compensation program
for officers historically emphasized a strong base salary position in relation
to competitive practice and a competitive annual bonus opportunity dependent
upon the operating income performance of the corporation. In contrast to the
Company's highly competitive cash compensation policy, the Company did not
offer long-term incentive opportunities as an executive compensation element
until 1989 when the first stock option awards were made. The Committee
understands that the combination of strongly competitive cash compensation and
modest use of long-term incentives is typical of private companies with
professional management leadership and this historical approach continued to
influence the Company's programs as a public company from 1989 into 1992. Late
in 1992, with the appointment of James R. Maher as President and Chief
Executive Officer, the Company's compensation philosophy changed to make a
greater portion of executive compensation dependent on the Company's long-term
stock performance.
The option grant and stock award approved in December 1992 by the
Committee for Mr. Maher reflected a shift in the Company's compensation
philosophy. This was followed early in 1993 by an award of stock options to the
next four most highly compensated officers. In 1993, the Committee also granted
options in varying amounts to 133 other senior and mid-level managers. The
option awards at all levels of management is a part of the Committee's desire
to make a growing and more significant portion of senior executive compensation
directly dependent on the Company's long term share price appreciation. The
number of options granted in 1993 to each of the four senior executives named
in the cash compensation table were determined considering the Corporation's
relatively low historical option grants, the Committee's desire to make a
greater proportion of the senior executives' compensation equity-based, an
analysis of the potential value of the options over the term of the option and
a review of option grants at the peer companies listed in the stock performance
graph.
In 1992, after consultations with Mr. Maher, the Committee decided to
raise the senior executive base salary levels and to restructure the annual
bonus opportunity as the combination of a cash year-end retention bonus equal
to 50% of base salary and a performance bonus opportunity. The general effect
of these salary and bonus actions was to set the overall cash compensation
opportunity for senior executives at or below 1992 levels, while strengthening
the retentive elements of the compensation package. When these arrangements
were established it was anticipated that the performance bonus would be based
on achieving operating income growth and the contribution of each senior
executive as evaluated by the Chief Executive Officer and approved by the
Committee.
16
<PAGE>
The Committee believes that each of the four most highly compensated
senior executives of the Company have demonstrated superior performance in 1993
during a difficult period for the Company in the aftermath of the government
settlement and the general uncertainty in the medical services marketplace.
Notwithstanding such performance, however, given industry conditions and the
effects of the changes in the industry on the Company's results, the Committee
believes that it would not be appropriate to award any discretionary bonus
above the year end retention bonus nor to increase any compensation levels for
senior executives at this time.
Compensation of Chief Executive Officer. The compensation arrangement
with the Company's President and Chief Executive Officer was entered into in
December 1992. At that time, the Committee considered the salary and incentive
pay levels at public companies whose financial characteristics and market
capitalization are similar to the Company and whose workforce skills
requirements and customer base are similar. The Committee also considered the
Company's circumstances and special leadership challenges in the aftermath of
the settlement with the federal government. In the Committee's judgment, these
circumstances required stable new direction at the chief executive officer
level to help ensure sustained quality of the Company's services and continued
employee commitment to the Company's objectives.
Based on these considerations and the Company's strategic direction for
executive compensation, it was determined to provide a cash compensation
arrangement for the Chief Executive consisting of an annual salary of $1
million, a year-end retention bonus of $500,000 for each year of the contract
term and an annual discretionary performance bonus opportunity. The Committee
also determined that it was important to structure the Chief Executive
Officer's total compensation package to reflect the policy of creating strong
financial incentives for executive officers to achieve a high level of long
term shareholder return. Accordingly, the Chief Executive Officer was awarded
100,000 shares of the Company's common stock and granted options to purchase
300,000 shares at the then fair market value of the shares, which options vest
during the term of the three year contract. The Committee views the common
stock and stock option awards as the primary means by which the Chief Executive
Officer would be rewarded for the Company's business success and believes it is
important for the Chief Executive Officer to maintain and increase his equity
interest in the Company. The annual discretionary bonus opportunity was adopted
as a special recognition vehicle appropriate for years in which the Company
achieves superior performance as measured against industry results for growth
in operating income and revenues. The Committee decided that with respect to
1993, Mr. Maher, like the other senior executives, would receive no
discretionary cash bonus in excess of his year end retention bonus.
Limit on Deductibility of Compensation. The Omnibus Budget
Reconciliation Act of 1993 ("OBRA") limits the tax deductibility of
compensation paid to the chief executive officer and each of the four highest
paid employees of public companies to $1 million for fiscal years beginning on
or after January 1, 1994. Certain types of compensation, however, including
qualifying performance-based compensation and compensation arrangements entered
into prior to February 17, 1993 are excluded from the limitation. The Company's
general policy is to preserve the tax deductibility of compensation paid to its
executive officers. OBRA recognizes stock option plans as performance-based if
such plans meet certain requirements. The Company's 1994 Option Plan that will
be voted upon at the annual meeting of stockholders is structured to meet the
requirements of OBRA. In future years, the Compensation Committee will consider
taking such steps as it deems necessary to qualify compensation so as not to be
subject to the limit on deductibility.
The Employee Benefits Committee
Saul J. Farber
Howard Gittis
David J. Mahoney
Linda Gosden Robinson
Samuel O. Thier, M.D.
17
<PAGE>
COMMON STOCK PERFORMANCE
The Commission requires a five-year comparison of stock performance for
the Company with stock performance of appropriate similar companies. The
Company's common stock is traded on the NYSE. Set forth below is a line graph
comparing the yearly percentage change in the cumulative total shareholder
return on the Company's common stock and the cumulative total return on the S&P
Composite-500 Stock Index and a peer group of companies. The peer group of
companies includes eighteen companies selected by the Company. Two of these are
medical service laboratories like the Company - Nichols Institute and Unilab
Corporation. (Other direct competitors of the Company are subsidiaries of much
larger diversified corporations which were not believed appropriate to be peer
companies.) The remaining fifteen companies are all publicly traded medical
service and medical supply companies with sales ranging from $400 million to
$1.6 billion - Continental Medical Systems, Inc., Universal Health Services,
Inc., Charter Medical Corporation, Columbia Hospital Corporation, Allergan,
Inc., C. R. Bard, Inc., Pall Corporation, Thermo Electron Corporation, United
States Surgical Corporation, Bausch & Lomb Incorporated, Millipore Corporation,
Amsco International, Inc., Beckman Instruments, Inc., FHP International
Corporation and Fisher Scientific International, Inc. (Damon Corporation which
had been included in the Company's peer group in the 1993 Proxy Statement is no
longer a public company and is therefore not included in the peer group.)
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG NATIONAL HEALTH LABORATORIES, THE S & P 500 INDEX AND A PEER GROUP
(IN DOLLARS)
<CAPTION>
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
National Health Laboratories.... 156 153 410 255 208
Peer Group...................... 126 144 258 235 207
S & P 500....................... 132 128 166 179 197
- ---------
* $100 INVESTED ON 12/31/88 IN STOCK OR INDEX --
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
</TABLE>
18
<PAGE>
EMPLOYEE BENEFITS COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Employee Benefits Committee are Saul J. Farber,
M.D., Howard Gittis, David J. Mahoney, Linda Gosden Robinson and Samuel O.
Thier, M.D. No member of the Employee Benefits Committee is an officer or
employee of the Company.
Certain Director Relationships. Robinson, Lake, Lerer &
Montgomery/Sawyer Miller Group, the corporate communications firm of which Ms.
Robinson is President and Chief Executive Officer performs corporate
communications services for MacAndrews & Forbes and its affiliates, including
the Company. The amount of compensation paid to Robinson, Lake for services to
the Company in 1993 was $180,705. On September 17, 1993, the Company purchased
66% of the common stock of a newly-formed corporation, Health Partners, Inc.
("Health Partners"). Ms. Robinson purchased 2% of the common stock of Health
Partners and, in connection with such purchase, entered into a consulting
agreement with Health Partners. A portion of Ms. Robinson's common stock is
held in escrow by Health Partners subject to vesting during the term of her
consulting agreement. Ms. Robinson currently receives no cash compensation for
her consulting services to Health Partners. In January 1993, the Company
entered into an agreement with Macalester Partners Ltd. ("Macalester"), a
corporation in which Ms. Robinson is a stockholder, pursuant to which
Macalester will provide consulting services to the Company in identifying
investment opportunities for the Company in the health care sector. The
agreement with Macalester was terminated as of September 7, 1993 in connection
with the formation of Health Partners Inc. For its services, the Company paid
Macalester $525,000 in 1993. Ms. Robinson is the wife of a consultant to
MacAndrews & Forbes who receives $250,000 per annum for his services to
MacAndrews & Forbes.
Ms. Jordan is the wife of a director of a subsidiary of MacAndrews &
Forbes who is a partner in a law firm that has on a regular basis in the past
provided services and that continues to provide services to MacAndrews & Forbes
and its affiliates, including the Company. The amount of fees and disbursements
charged to the Company for services performed by such firm in 1993 was
approximately $31,000.
Dr. Farber is on the Company's Scientific Advisory board and is paid
$15,000 per annum for such services.
19
<PAGE>
STOCK OPTION TRANSACTIONS IN 1993
During 1993, the following grants were made under the 1988 Stock Option
Plan for the executive officers named in the Summary Compensation Table:
<TABLE>
Option/SAR Grants in 1993
<CAPTION>
Grant Date
Individual Grants Value
-------------------------------------------------------- ----------
Percent of
Total
Number of Options/
Securities SARs Exercise Grant
Underlying Granted to or Base Date
Options/SARs Employees Price Expiration Present
Name Granted(a) in 1993 ($/Sh) Date Value $(b)
- ---- ----------- --------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
James R. Maher 0 0% -- -- --
David C. Flaugh 125,000 15 $16.63 1/18/03 $1,005,000
Timothy J. Brodnik 50,000 6 16.63 1/18/03 402,000
W. David Slaunwhite, 50,000 6 16.63 1/18/03 402,000
Ph.D.
Bernard E. Statland, M.D., 50,000 6 16.63 1/18/03 402,000
Ph.D.
<FN>
- ----------
(a) No tandem SARs were granted in 1993.
(b) Valuation based upon the Black-Scholes option pricing model assuming a volatility of .41 (based on the weekly closing stock
prices from January 1, 1992 to January 5, 1993; a risk free interest rate of 5.9% (the asking yield on the 10-year U.S.
Treasury Strip maturing February 2003); a dividend yield of 1.87% (the annualized dividends at time of grant divided by the
exercise or base price). The valuation assumptions have made no adjustments for non-transferability.
</TABLE>
For each grant of non-qualified options made in 1993, the exercise price
was equivalent to the fair market price per share on the date of grant. One
third of the option's shares of common stock vested on the date of grant and
one third vests on each of the first and second anniversaries of such date,
subject to their earlier expiration or termination.
20
<PAGE>
The following chart shows, for 1993, the number of stock options exercised
and the 1993 year-end value of the options held by the executive officers named
in the Summary Compensation Table:
<TABLE>
Aggregated Option/SAR Exercises in 1993
and Year End 1993 Option/SAR Values
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Year End Year End ($)(a)
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
- ---- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
James R. Maher 0 $0 200,000 $0
100,000 0
David C. Flaugh 0 0 58,167 0
83,333 0
Timothy J. Brodnik 0 0 28,167 0
33,333 0
W. David Slaunwhite, Ph.D. 0 0 33,167 0
33,333 0
Bernard E. Statland, M.D., Ph.D. 0 0 33,167 0
33,333 0
<FN>
- ----------
(a) Calculated using actual December 31, 1993 closing price per common share on the NYSE Composite Tape of $14.25
</TABLE>
RATIFICATION OF INDEPENDENT AUDITORS
The Audit Committee and the Board of Directors has selected, subject to
ratification by the stockholders, KPMG Peat Marwick to audit the accounts of
the Corporation for the fiscal year ending December 31, 1994. The ratification
of the selection of KPMG Peat Marwick will require the affirmative vote of the
holders of a majority of the outstanding shares of common stock present in
person or represented by proxy at the annual meeting and entitled to vote.
Under applicable Delaware law, in determining whether the proposal has received
the requisite number of affirmative votes, abstentions and broker non-votes
will be counted and will have the same effect as a vote against the proposal.
KPMG Peat Marwick has audited the consolidated financial statements of
the Corporation for more than the past five years. For 1993, KPMG Peat
Marwick's audit fees totalled approximately $175,000. KPMG Peat Marwick
21
<PAGE>
representatives will be present at the annual meeting with the opportunity to
make a statement if they desire to do so and will be available to respond to
appropriate questions.
THE COMPANY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF
THE SELECTION OF KPMG PEAT MARWICK AS THE COMPANY'S INDEPENDENT AUDITORS.
1994 OPTION PLAN
The Company's Board proposes that the stockholders approve the 1994
Option Plan approved by the Employee Benefits Committee on February 10, 1994
and by the Company's Board on February 15, 1994, subject to the approval of the
Company's stockholders. The approval of the 1994 Option Plan requires the
affirmative vote of the holders of a majority of the outstanding shares of the
Company's common stock. Following the reorganization, NHL Holdings will assume
all obligations under the 1994 Option Plan. See "Proposed Reorganization-Stock
Option Plans".
The Company has heretofore granted all the 2.5 million shares which
were available under its 1988 Stock Option Plan.
The following paragraphs summarize the principal features of the 1994
Option Plan. This summary is subject, in all respects, to the terms of the 1994
Option Plan. The Company will provide promptly, upon written request and
without charge, a copy of the full text of the 1994 Option Plan to each person
to whom a copy of this proxy statement is delivered. Requests should be
directed to: National Health Laboratories Incorporated, 4225 Executive Square,
Suite 800, La Jolla, California 92037, Attention: Stockholder Relations.
Subject to certain modifications required by changes in law and
regulation, the Company's 1994 Option Plan is substantially identical to its
1988 Stock Option Plan. The 1994 Option Plan will be administered by the
Employee Benefits Committee appointed by the Company's Board of Directors.
During the ten-year period ending on the tenth anniversary of the adoption of
the 1994 Option Plan, the Employee Benefits Committee will have authority,
subject to the terms of the 1994 Option Plan, to determine when and to whom to
make grants under the plan, the number of shares to be covered by the grants,
the types and terms of options and SARs granted and the exercise price of the
shares of common stock covered by options and SARs, and to prescribe, amend and
rescind rules and regulations relating to the 1994 Option Plan.
The Company's Board of Directors may amend or terminate the 1994 Option
Plan at any time except that, unless approved (at a meeting held within 12
months before or after the date of such amendment) by a majority of the voting
shares of common stock of the Company, no such amendment may (i) increase the
maximum number of shares as to which options may be granted under the 1994
Option Plan, except for adjustments to reflect stock dividends or other
recapitalizations affecting the number or kind of outstanding shares, (ii)
change the requirements as to eligibility for participation in the 1994 Option
Plan or (iii) otherwise materially change the 1994 Option Plan.
Under the terms of the 1994 Option Plan, incentive stock options
("ISOs") within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), non-qualified stock options ("NQSOs"), and SARs
may be granted by the Employee Benefits Committee in its discretion to key
employees (including officers and directors who are employees) of the Company
and any of its affiliates, except that ISOs may be granted only to employees of
the Company and its parent company and any subsidiary corporation. Due to the
provision of the plan which permits awards in the discretion of the Employee
Benefits Committee, it is not possible to determine how many employees of the
Company and its affiliates may be eligible for grants of options and SARs. The
1994 Option Plan generally provides that no individual employee may be granted
options or SARs representing an aggregate of more than 750,000 shares of the
Company's common stock. The aggregate number of shares of common stock as to
which options and SARs may be granted under the 1994 Option Plan will not
exceed 3,000,000.
22
<PAGE>
The aggregate fair market value, as defined in the 1994 Option Plan and
determined as of the date of grant of an ISO, of common stock with respect to
which ISOs granted under the 1994 Option Plan and all other option plans of the
Company and its parent company first become exercisable during any calendar
year may not exceed $100,000 for any employee. The foregoing limitation does
not apply to NQSOs.
Initially, each ISO will be exercisable over a period, determined by
the Employee Benefits Committee in its discretion, but not to exceed ten years
from the date of grant, as required by the Code. In addition, in the case of an
ISO granted to an individual who, at the time such ISO is granted, owns shares
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company (a "Ten Percent Stockholder"), the exercise
period for an ISO may not exceed five years from the date of grant. In the case
of NQSOs, the exercise period will in all cases be determined by the Employee
Benefits Committee. Options may be exercised during the option period at such
times, in such amount, in accordance with such terms and conditions, and
subject to such restrictions, as are set forth in the option agreement
evidencing the grant of such options.
The exercise price of an ISO or a NQSO ("Option Price") may not be less
than one hundred percent (100%) of the fair market value of the shares of the
common stock on the date of grant, except that, in the case of an ISO granted
to a Ten Percent Stockholder, such Option Price may not be less than one
hundred ten percent (110%) of such fair market value. The Option Price of, and
the number of shares covered by, each option will not change during the life of
the option, except for adjustments to reflect stock dividends, splits, other
recapitalizations or reclassifications or changes affecting the number or kind
of outstanding shares.
The shares of common stock purchased upon the exercise of an option are
to be paid for in cash (including cash that may be received from the Company at
the time of exercise as additional compensation) or through the delivery of
other shares of the common stock with a value equal to the total Option Price
or in a combination of cash and such shares, or with money lent by the Company
to the optionee in compliance with applicable law and on terms and conditions
to be determined by the Company.
No option may be transferred by an optionee during his lifetime. If the
employment of an optionee terminates for any reason (other than by reason of
death, disability or retirement) the optionee may, within the three-month
period following such termination, exercise such options to the extent he was
entitled to exercise such options at the date of termination. If an optionee
dies while employed (or within three months after termination of employment) or
terminates employment by reason of disability or retirement, all previously
granted options (whether or not then exercisable), may, unless earlier
terminated in accordance with their terms, be exercised by the person or
persons to whom the optionee's rights pass within one year after the optionee's
death or by the optionee within one year after the optionee's disability or
retirement.
The Employee Benefits Committee may also grant SARs either alone ("Free
Standing Rights") or in conjunction with all or part of an option ("Related
Rights"). Upon the exercise of a SAR, a holder is entitled, without payment to
the Company, to receive cash, unrestricted shares of common stock or any
combination thereof, as determined by the Employee Benefits Committee, in an
amount equal to the excess of the fair market value of one share of common
stock over the exercise price per share specified in the related option (or in
the case of a Free Standing Right, the price per share specified in such
right), multiplied by the number of shares in respect of which the SAR is
exercised.
The Company is required to charge earnings at the close of each
accounting period during which the SARs are outstanding. The charge will be
equal to the amount by which the fair market value of the shares of stock
subject to the SARs exceeds the price for which the SARs may be exercised, less
the tax deduction to which the Company may be entitled if the SARs were
exercised and less any portion of such amount charged to earnings in prior
periods. In the event that the stock subject to the SARs has depreciated in
market value since the last accounting period, there will be a credit to
earnings.
23
<PAGE>
The exercisability of options and Related Rights will be accelerated
upon a Change in Control of the Company (as defined in the 1994 Option Plan).
(The proposed reorganization discussed herein will not constitute such a Change
in Control of the Company.) If the exercisability of an option or SAR is so
accelerated, payments made with respect to such option or SAR may constitute an
"excess parachute payment" that is not deductible by the Company in whole or in
part under Section 280G of the Code. Such acceleration may also subject the
holder of such option or SAR to a 20% federal excise tax under Section 4999 of
the Code on all or a portion of the value conferred on such holder by reason of
the Change in Control. Option agreements may provide that the Company will
reimburse such holder for the full amount of any such excise tax imposed.
THE COMPANY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF THE
ADOPTION OF THE 1994 OPTION PLAN.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
The following table sets forth as of March 25, 1994, the total number
of shares of common stock beneficially owned, and the percent so owned, by each
director of the Company who is a beneficial owner of any shares of common
stock, by each person known to the Company to be the beneficial owner of more
than 5% of the outstanding common stock, by the officers named in the summary
compensation table and by all directors and officers as a group. The number of
shares owned are those "beneficially owned," as determined under the rules of
the Commission, and such information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which a person has sole or shared voting
power or investment power and any shares of common stock which the person has
the right to acquire within 60 days through the exercise of any option, warrant
or right, through conversion of any security, or pursuant to the automatic
termination of power of attorney or revocation of trust, discretionary account
or similar arrangement.
<TABLE>
<CAPTION>
Amount and Nature Percent of
of Beneficial Ownership Class
----------------------- ---------
<S> <C> <C>
Ronald O. Perelman 20,176,729(1) 24%
35 East 62nd Street
New York, NY 10021
Oppenheimer Group, Inc. 11,329,357 13
Oppenheimer Tower
World Financial Center
New York, NY 10281
GEICO Corporation 5,500,000 6
GEICO Plaza
Washington, D.C. 20076
ESL Partners, L.P. 4,653,400 5
LBP Associates, L.P.
115 East Putnam Avenue
Greenwich, CT 06830
Howard Gittis
35 East 62nd Street
New York, NY 10021 46,000(2) *
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature Percent of
of Beneficial Ownership Class
----------------------- ---------
<S> <C> <C>
James R. Maher 390,000(3) *
4225 Executive Square
La Jolla, CA 92037
Paul A. Marks, M.D. 3,000 *
1275 York Avenue
New York, NY 10021
David C. Flaugh 136,736(3) *
Timothy J. Brodnik 69,833(3) *
William D. Slaunwhite, M.D. 74,833(3) *
Bernard E. Statland, M.D., Ph.D. 58,166(3) *
Saul J. Farber, M.D. 0 0
Ann Dibble Jordan 0 0
David J. Mahoney 0 0
Linda Gosden Robinson 0 0
Samuel O. Thier, M.D. 0 0
All directors and executive officers
as a group (18 persons) 21,231,463(3) 25%
<FN>
- ----------
* Less than 1%
(1) All such shares of common stock are owned by Mr. Perelman through
MacAndrews & Forbes. Of the shares owned, approximately 12.7 million
shares have been pledged to secure indebtedness.
(2) Includes 3,000 shares owned by Mr. Gittis' spouse as to which he disclaims
beneficial ownership.
(3) Beneficial ownership by officers of the Company includes shares of common
stock which such officers have right to acquire upon the exercise of
options which either are vested or which may vest within 60 days. The
number of shares of common stock included in the table as beneficially
owned which are subject to such options is as follows: Mr. Maher -
250,000; Mr. Flaugh - 133,166; Mr. Brodnik - 69,833; Dr. Slaunwhite
- 74,833; Dr. Statland - 58,166; all directors and executive officers as
a group - 862,164.
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Tax Allocation Arrangement. The Company was included in the
consolidated federal income tax returns, and in certain state income tax
returns, of Mafco, M&F Holdings, Revlon Group Incorporated and Revlon Holdings
Inc., formerly known as Revlon Inc. As a result of the reduction of MacAndrews
& Forbes' ownership interest in the Company on May 7, 1991, the Company is no
longer a member of the Mafco consolidated tax group. For periods subsequent to
May 7, 1991, the Company files its own separate federal, state and local income
tax returns. Nevertheless, the Company will remain obligated to pay to M&F
Holdings (or other members of the consolidated group of which M&F Holdings is a
member) any income taxes the Company would have had to pay (in excess of those
which it has already paid) if it had filed separate income tax returns for
taxable periods beginning on or after January 1, 1985 (but computed without
regard to (i) the effect of timing differences (i.e., the liability or benefit
that otherwise could be deferred will be, instead, includible in the
determination of current taxable income) and (ii) any gain recognized on the
sale of any asset not in the ordinary course of business). In addition, despite
the reduction of MacAndrews & Forbes' indirect ownership of the Company, the
Company will continue to be subject under existing federal regulations to
several liability for the consolidated federal income taxes for any
consolidated return year in which it was a member of any consolidated group of
which
25
<PAGE>
Mafco, M&F Holdings, Revlon Group or Revlon was the common parent. However,
Mafco, M&F Holdings, Revlon Group and Revlon have agreed to indemnify the
Company for any federal income tax liability (or any similar state or local
income tax liability) of Mafco, M&F Holdings, Revlon Group, Revlon or any of
their subsidiaries (other than that which is attributable to the Company or any
of its subsidiaries) that the Company could be required to pay.
Registration Rights Agreement. The Company entered into a Registration
Rights Agreement with Health Care pursuant to which the Company will be
obligated, upon the request of Health Care, to file registration statements
("demand registration statements") from time to time with the Commission
covering the sale of any shares of common stock owned by Health Care. Such
demand registration statements may also cover the resale from time to time of
any shares of common stock that Health Care may purchase in the open market at
a time when it is deemed to be an affiliate (as such term is defined under Rule
144 under the Securities Act of 1933, as amended), and certain securities
issued in connection with a combination of shares, recapitalization,
reclassification, merger or consolidation, or other pro rata distribution.
Health Care will also have the right to include such common stock and other
securities in any registration statement filed by the Company for the
underwritten public offering of shares of common stock (whether or not for the
Company's account), subject to certain reductions in the amount of such common
stock and securities if the managing underwriters of such offering determine
that the inclusion thereof would materially interfere with the offering. The
Company agreed not to effect any public or private sale, distribution or
purchase of any of its securities which are the same as or similar to the
securities covered by any demand registration statement during the 15-day
period prior to, and during the 45-day period beginning on, the closing date of
each underwritten offering under such registration statement and Health Care
agreed to a similar restriction with respect to underwritten offerings by the
Company. Health Care's rights under the Registration Rights Agreement are
transferable.
STOCKHOLDER PROPOSALS
Under the rules and regulations of the Commission as currently in
effect, any holder of at least $1,000 in market value of common stock who
desires to have a proposal presented in the Company's (or, if the
reorganization is consummated, NHL Holdings') proxy material for use in
connection with the Annual Meeting of Stockholders to be held in 1995 must
transmit that proposal (along with his name, address, the number of shares of
common stock that he holds of record or beneficially, the dates upon which the
securities were acquired and documentary support for a claim of beneficial
ownership) in writing as set forth below. Proposals of stockholders intended to
be presented at the next annual meeting must be received by the Secretary,
National Health Laboratories Incorporated (or, if the reorganization is
consummated, National Health Laboratories Holdings, Inc.), 4225 Executive
Square, Suite 800, La Jolla, California 92037, not later than November 11,
1994.
Holders of common stock desiring to have proposals submitted for
consideration at future meetings of the stockholders should consult the
applicable rules and regulations of the Commission with respect to such
proposals, including the permissible number and length of proposals and other
matters governed by such rules and regulations.
26
<PAGE>
OTHER BUSINESS
The Company knows of no other matters which may come before the annual
meeting. However, if any such matters properly come before the annual meeting,
the individuals named in the proxies will vote on such matters in accordance
with their best judgment.
March ( ), 1994
By Order of the Board of Directors
Alvin Ezrin
Secretary
27
<PAGE>
EXHIBIT A
(Draft--3/9/94)
AGREEMENT AND PLAN OF MERGER dated as of March ( ), 1994,
among NATIONAL HEALTH LABORATORIES HOLDINGS INC., a Delaware corporation
("Parent"), NHL SUB ACQUISITION CORP., a Delaware corporation ("Sub") and a
wholly owned subsidiary of Parent, and NATIONAL HEALTH LABORATORIES
INCORPORATED, a Delaware corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and
the Company have approved the merger of Sub into the Company (the "Merger"),
upon the terms and subject to the conditions set forth in this Agreement,
whereby each issued and outstanding share of common stock, par value $.01 per
share, of the Company ("Company Common Stock"), other than shares owned
directly or indirectly by Parent or the Company, will be converted into the
right to receive common stock, par value $.01 per share, of Parent ("Parent
Common Stock");
WHEREAS the Merger requires the approval of the holders of a
majority of the outstanding shares of the Company Common Stock entitled to vote
thereon at the meeting of holders of Company Common Stock to be called therefor
(the "Company Stockholder Approval"); and
WHEREAS, for Federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time of the Merger (as defined in Section 1.03).
Following the Effective Time of the Merger, the separate corporate existence of
Sub shall cease and the Company shall continue as the surviving corporation
(the "Surviving Corporation") and shall succeed to and assume all the rights
and obligations of Sub in accordance with the DGCL.
SECTION 1.02. Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m. on a date to be specified by the
parties (the "Closing Date"), which shall be no later than the second business
day after satisfaction of the conditions set forth in Section 4.01, at the
offices of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New
York, New York 10019, unless another date or place is agreed to in writing by
the parties hereto.
SECTION 1.03. Effective Time. Subject to the provisions of
this Agreement, as soon as practicable following the satisfaction or waiver of
the conditions set forth in Section 4.01, the parties shall file a certificate
of merger or other appropriate documents (in any such case, the "Certificate of
Merger") executed in accordance with the relevant provisions of the DGCL and
shall make all other filings or recordings required under the DGCL. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with the Delaware Secretary of State, or at such other time as Sub and the
Company shall agree should be specified in the Certificate of Merger (the time
the Merger becomes effective being hereinafter referred to as the "Effective
Time of the Merger").
SECTION 1.04. Effects of the Merger. The Merger shall have
the effects set forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws. (a)
The certificate of incorporation of the Company, as in effect immediately prior
to the Effective Time of the Merger, shall be amended as of the Effective Time
of the Merger so that Article FOURTH of such certificate of incorporation reads
in its entirety as follows: "The total number of shares of stock which the
Corporation shall have authority to issue is one thousand (1,000) shares of
Common Stock each having a par value of $1.00 per share." and, as so amended,
such certificate of incorporation shall be the certificate of incorporation of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) The by-laws of the Company as in effect at the Effective
Time of the Merger shall be the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. Directors. The directors of the Company at the
Effective Time of the Merger shall be the directors of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of the Company at the
Effective Time of the Merger shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
<PAGE>
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. As of the Effective
Time of the Merger, by virtue of the Merger and without any action on the part
of the holder of any shares of Company Common Stock or any shares of capital
stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share
of capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Company-Owned Stock.
Each share of Company Common Stock and each share of Parent Common Stock that
is owned by the Company or its subsidiaries shall automatically be cancelled
and retired and shall cease to exist, and no Parent Common Stock or other
consideration shall be delivered in exchange for such Company Common Stock.
(c) Conversion of Company Common Stock. Each issued and
outstanding share of Company Common Stock (other than shares to be cancelled in
accordance with Section 2.01(b)) shall be converted into the right to receive
one fully paid and nonassessable share of Parent Common Stock. As of the
Effective Time of the Merger, all such shares of Company Common Stock shall no
longer be outstanding and shall automatically be cancelled and retired and
shall cease to exist, and each holder of a certificate representing any such
shares of Company Common Stock shall cease to have any rights with respect
thereto, except the right to receive the shares of Parent Common Stock to be
issued in consideration therefor upon surrender of such certificate in
accordance with Section 2.02, without interest.
SECTION 2.02. Exchange of Certificates. (a) Stock
Certificate. Following the Effective Time of the Merger, each holder of an
outstanding certificate or certificates theretofore representing shares of
Company Common Stock may, but shall not be required to, surrender the same to
Parent for cancellation or transfer, and each such holder or transferee will be
entitled to receive certificates representing the same number of shares of
Parent Common Stock as the shares of Company Common Stock previously
represented by the stock certificates surrendered. If any certificate
representing shares of Parent Common Stock is to be issued in a name other than
that in which the certificate theretofore representing Company Common Stock
surrendered is registered, it shall be a condition to such issuance that the
certificate surrendered shall be properly endorsed and otherwise in proper form
for transfer and that the person requesting such issuance shall either:
(i) pay Parent or its agents any taxes or other governmental
charges required by reason of the issuance of certificates representing shares
of Parent Common Stock in a name other than that of the registered holder of
the certificate so surrendered; or
(ii) establish to the satisfaction of Parent or its agents that
such taxes or governmental charges have been paid.
Until so surrendered or presented for transfer each outstanding certificate
which, prior to the Effective Time, represented Company Common Stock shall be
deemed and treated for all corporate purposes to represent the ownership of the
same number of shares of Parent Common Stock as though such surrender or
transfer and exchange had taken place.
(b) No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this Article II shall be deemed to
have been issued (and paid) in full satisfaction of all rights pertaining to
the shares of Company Common Stock theretofore represented by such
Certificates, subject, however, to the Surviving Corporation's obligation to
pay any dividends or make any other distributions with a record date prior to
the Effective Time of the Merger which may have been declared or made by the
Company on such shares of Company Common Stock in accordance with the terms of
this Agreement or prior to the date of this Agreement and which remain unpaid
at the Effective Time of the Merger, and there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of the
shares of Company Common Stock which were outstanding immediately prior to the
Effective Time of the Merger. If, after the Effective Time of the Merger,
Certificates are presented to the Surviving Corporation they shall be cancelled
and exchanged as provided in this Article II, except as otherwise provided by
law.
ARTICLE III
Additional Agreements
SECTION 3.01. Affiliates and Certain Stockholders. (a) Prior
to the Closing Date, the Company shall deliver to Parent a letter identifying
all persons who are, at the time the Merger is submitted for approval to the
stockholders of the Company, "affiliates" of the Company for purposes of Rule
145 under the Securities Act of 1933, as amended (the "Securities Act"). The
Company shall use its best efforts to cause each such person to deliver to
Parent on or prior to the Closing Date a written agreement substantially in the
form attached as Schedule A hereto.
(b) The Company shall deliver to Parent on the date of the
<PAGE>
proxy statement relating to the Company Stockholder Approval (such proxy
statement, as amended or supplemented from time to time, the "Proxy Statement")
and on the Closing Date letters, in each case dated as of such respective dates
and identifying all persons who are, as of such respective dates, beneficial
owners of five percent or more of the Company Common Stock. The Company shall
use its best efforts to cause each such person to deliver to counsel to Parent
and to the Company on the date of the Proxy Statement and on the Closing Date
written agreements, in each case dated as of such respective dates and
substantially in the form attached as Schedule B hereto.
ARTICLE IV
Conditions Precedent
SECTION 4.01. Conditions to Each Party's Obligation To Effect
the Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. The Company Stockholder Approval
shall have been obtained.
(b) Form S-4. The registration statement on Form S-4 to be
filed with the Securities and Exchange Commission by Parent in connection with
the issuance of Parent Common Stock in the Merger shall have become effective
under the Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(c) Tax Opinions. The Company shall have received from
Cravath, Swaine & Moore, counsel to the Company, on the date of the Proxy
Statement and on the Closing Date an opinion, in each case based on the
representations of Company provided to such counsel, dated as of such
respective dates and stating that the Merger will be treated for Federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code and that Parent, Sub and the Company will each be a party to that
reorganization within the meaning of Section 368(b) of the Code.
ARTICLE V
Termination, Amendment and Waiver
SECTION 5.01. Termination. This Agreement may be terminated
at any time prior to the Effective Time of the Merger, whether before or after
approval by the stockholders of the Company of matters presented in connection
with the Merger, by Parent.
SECTION 5.02. Effect of Termination. In the event of
termination of this Agreement as provided in Section 5.01, this Agreement shall
forthwith become void and have no effect, without any liability or obligation
on the part of Parent, Sub or the Company, other than the provisions of this
Section 5.02 and Article VI.
SECTION 5.03. Amendment. This Agreement may be amended by the
parties at any time before or after any required approval of matters presented
in connection with the Merger by the stockholders of the Company; provided,
however, that after any such approval, there shall be made no amendment that by
law requires further approval by such stockholders without the further approval
of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
SECTION 5.04. Waiver. At any time prior to the Effective Time
of the Merger, the parties may waive compliance by the other parties with any
of the agreements or conditions contained in this Agreement. Any agreement on
the part of a party to any such waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
SECTION 5.05. Procedure for Termination, Amendment, Extension
or Waiver. A termination of this Agreement pursuant to Section 5.01, an
amendment of this Agreement pursuant to Section 5.03 or a waiver pursuant to
Section 5.04 shall, in order to be effective, require in the case of Parent,
Sub or the Company, action by its Board of Directors or the duly authorized
designee of its Board of Directors.
ARTICLE VI
General Provisions
SECTION 6.01. Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally, telecopied (which is confirmed) or sent
by overnight courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Parent or Sub,
c/o National Health Laboratories Incorporated
4225 Executive Avenue, Suite 800
La Jolla, CA 92037
Telecopy No. (619) 550-0600
<PAGE>
Attention: David C. Flaugh, Senior Executive
Vice President and
Chief Operating Officer; and
(b) if to the Company, to
National Health Laboratories Incorporated
4225 Executive Avenue, Suite 800
La Jolla, CA 92037
Telecopy No. (619) 550-0600
Attention: David C. Flaugh, Senior Executive
Vice President and
Chief Operating Officer.
SECTION 6.02. Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents and instruments referred to herein) (a)
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and (b) except for the provisions of Article
II, are not intended to confer upon any person other than the parties any
rights or remedies.
SECTION 6.03. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
NATIONAL HEALTH LABORATORIES
HOLDINGS INC.,
by
______________________
Name:
Title:
Attest:
______________________
Name:
Title:
NHL SUB ACQUISITION CORP.,
by
______________________
Name:
Title:
Attest:
______________________
Name:
Title:
NATIONAL HEALTH LABORATORIES
INCORPORATED,
by
______________________
Name:
Title:
Attest:
______________________
Name:
Title:
<PAGE>
SCHEDULE A
Form of Company Affiliate Letter
Gentlemen:
The undersigned, a holder of shares of Common Stock, par value
$.01 per share ("Company Stock"), of National Health Laboratories Incorporated,
a Delaware corporation (the "Company"), is entitled to receive in connection
with the merger (the "Merger") of the Company with NHL Sub Acquisition Corp., a
Delaware corporation, securities (the "Parent Securities") of National Health
Laboratories Holdings Inc., a Delaware corporation ("Parent"). The undersigned
acknowledges that the undersigned may be deemed an "affiliate" of the Company
within the meaning of Rule 145 ("Rule 145") promulgated under the Securities
Act of 1933, as amended (the "Securities Act"), although nothing contained
herein should be construed as an admission of such fact.
If in fact the undersigned were an affiliate under the
Securities Act, the undersigned's ability to sell, assign or transfer the
Parent Securities received by the undersigned in exchange for any shares of
Company Stock pursuant to the Merger may be restricted unless such transaction
is registered under the Securities Act or an exemption from such registration
is available. The undersigned understands that such exemptions are limited and
the undersigned has obtained or will obtain advice of counsel as to the nature
and conditions of such exemptions, including information with respect to the
applicability to the sale of such securities of Rules 144 and 145(d)
promulgated under the Securities Act.
The undersigned hereby represents to and covenants with the
Company that the undersigned will not sell, assign or transfer any of the
Parent Securities received by the undersigned in exchange for shares of Company
Stock pursuant to the Merger except (i) pursuant to an effective registration
statement under the Securities Act or (ii) in a transaction which, in the
opinion of independent counsel reasonably satisfactory to Parent (the
reasonable fees of which counsel will be paid by Parent) or as described in a
"no-action" or interpretive letter from the Staff of the Securities and
Exchange Commission (the "SEC"), is not required to be registered under the
Securities Act.
In the event of a sale or other disposition by the undersigned
of Parent Securities pursuant to Rule 145, the undersigned will supply Parent
with evidence of compliance with such Rule, in the form of a letter in the form
of Annex I hereto and the opinion of counsel or no-action letter referred to
above.
The undersigned acknowledges and agrees that appropriate
legends will be placed on certificates representing Parent Securities received
by the undersigned in the Merger or held by a transferee thereof, which legends
will be removed by delivery of substitute certificates upon receipt of an
opinion in form and substance reasonably satisfactory to Parent from
independent counsel reasonably satisfactory to Parent (the reasonable fees of
which counsel will be paid by Parent) to the effect that such legends are no
longer required for purposes of the Securities Act.
The undersigned acknowledges that (i) the undersigned has
carefully read this letter and understands the requirements hereof and the
limitations imposed upon the distribution, sale, transfer or other disposition
of Parent Securities and (ii) the receipt by Parent of this letter is an
inducement and a condition to Parent's obligations to consummate the Merger.
Very truly yours,
Dated:
<PAGE>
ANNEX I
TO SCHEDULE A
(Name) (Date)
On , the undersigned sold the securities
("Securities") of National Health Laboratories Holdings Inc. ("Parent")
described below in the space provided for that purpose (the "Securities"). The
Securities were received by the undersigned in connection with the merger of
NHL Sub Acquisition Corp., a subsidiary of Parent, with and into National
Health Laboratories Incorporated.
Based upon the most recent report or statement filed by Parent
with the Securities and Exchange Commission, the Securities sold by the
undersigned were within the prescribed limitations set forth in paragraph (e)
of Rule 144 promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
The undersigned hereby represents that the Securities were sold
in "brokers' transactions" within the meaning of Section 4(4) of the Securities
Act or in transactions directly with a "market maker" as that term is defined
in Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents that the undersigned has not solicited or
arranged for the solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer or sale of
the Securities to any person other than to the broker who executed the order in
respect of such sale.
Very truly yours,
(Space to be provided for description of the Securities.)
<PAGE>
APPENDIX FOR GRAPHIC AND IMAGE MATERIAL
A line graph representing the data for "Comparison of Five Year
Cumulative Total Return" which appears on page 18 of the typeset version of the
preceding Proxy Statement/Prospectus has been omitted in this EDGAR submission
file due to its incompatibility with the required ASCII format. Pursuant to
Rule 304 of Regulation S-T, the information contained in the aforementioned
line graph has been fairly and accurately described in narrative and/or tabular
form on page 18 of this EDGAR submission file.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
As authorized by Section 145 of the General Corporation Law of
Delaware (the "Delaware Corporation Law"), each director and officer of the
Registrant may be indemnified by the Registrant against expenses (including
attorney's fees, judgments, fines and amounts paid in settlement) actually and
reasonably incurred in connection with the defense or settlement of any
threatened, pending or completed legal proceedings in which he is involved by
reason of the fact that he is or was a director or officer of the Registrant if
he acted in good faith and in a manner that he reasonably believed to be in or
not opposed to the best interests of the Registrant, and, with respect to any
criminal action or proceeding, if he had no reasonable cause to believe that
his conduct was unlawful. If the legal proceeding, however, is by or in the
right of the Registrant, the director or officer may not be indemnified in
respect of any claim, issue or matter as to which he shall have been adjudged
to be liable for negligence or misconduct in the performance of his duty to the
Registrant unless a court determines otherwise.
Article Fifth of the Certificate of Incorporation of the
Registrant, a copy of which is filed as Exhibit 3.1 to this Registration
Statement, provides that no director of the Registrant shall be personally
liable to the Registrant or its stockholders for monetary damages for any
breach of his fiduciary duty as a director; provided, however, that such clause
shall not apply to any liability of a director (1) for any breach of his duty
of loyalty to the Registrant or its stockholders, (2) for acts or omissions
that are not in good faith or involve intentional misconduct or a knowing
violation of the law, (3) under Section 174 of the Delaware Corporation Law or
(4) for any transaction from which the director derived an improper personal
benefit. In addition, Article Sixth of the Certificate of Incorporation and
Article Seventh of the By-laws, a copy of which is filed as Exhibit 3.2 hereto,
authorize the Registrant to indemnify any person entitled to be indemnified
under law to the fullest extent permitted by law.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits:
2 Agreement and Plan of Merger among the Registrant, NHL Sub
Acquisition Corp. and National Health Laboratories Incorporated
("NHL") (included as Exhibit A to the Proxy
Statement/Prospectus (schedules omitted-the Registrant agrees
to furnish a copy of any schedules thereto to the Commission
upon request))
3.1 Certificate of Incorporation of the Registrant
3.2 By-laws of the Registrant
4.1 Specimen of the Registrant's Common Stock certificate*/
5 Opinion of Cravath, Swaine & Moore regarding legality of
securities being issued
8 Opinion of Cravath, Swaine & Moore as to certain tax matters
23.1 Consent of Cravath, Swaine & Moore (included in Exhibits
5 and 8)
23.2 Consent of KPMG Peat Marwick*
24 Powers of Attorney
99 Form of Proxy Card for NHL Common Stock
- -------------
*/ To be filed by amendment.
II-1
<PAGE>
(b) Financial Statement Schedules: Not applicable.
Item 22. Undertakings
(a) As to Rule 415:
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of the securities registered hereby, a post-effective amendment to
this registration statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of this registration statement (or the most
recent post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
registration statement; and
(iii) to include any material information with respect
to the plan of distribution not previously disclosed in this registration
statement or any material change to such information in this registration
statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, as amended, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) As to documents subsequently filed that are
incorporated by reference:
The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, as amended, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934, as amended, that is incorporated
by reference in this registration statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) As to indemnification:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
under Item 15 above, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933, as amended,
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933, as amended,
and will be governed by the final adjudication of such issue.
II-2
<PAGE>
(d) The undersigned registrant hereby undertakes:
(1) that prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part of the
registration statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) under the Securities Act of 1933,
as amended, the issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form; and
(2) that every prospectus (i) that is filed pursuant to
paragraph (1) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act of 1933, as amended, and
is used in connection with an offering of securities subject to Rule 415 under
the Securities Act of 1933, as amended, will be filed as a part of an amendment
to the registration statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(e) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of
and included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on this 14th day of March, 1994.
NATIONAL HEALTH LABORATORIES HOLDINGS INC.,
by /s/ David C. Flaugh
__________________________________________
Name: David C. Flaugh
Title: Senior Executive Vice President and
Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by or on behalf of the following
persons in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
*
-----------------------
Ronald O. Perelman Chairman of the Board and Director March 14, 1994
*
-----------------------
James R. Maher President, Chief Executive Officer March 14, 1994
and Director
(Principal Executive Officer)
/s/ Michael Jeub
-----------------------
Michael Jeub Chief Financial Officer and March 14, 1994
Treasurer (Principal Financial and
Accounting Officer)
*
-----------------------
Saul J. Farber, M.D. Director March 14, 1994
*
-----------------------
Howard Gittis Director March 14, 1994
*
-----------------------
Ann Dibble Jordan Director March 14, 1994
-----------------------
David J. Mahoney Director March 14, 1994
*
-----------------------
Paul A. Marks, M.D. Director March 14, 1994
-----------------------
Linda Gosden Robinson Director March 14, 1994
*
-----------------------
Samuel O. Thier, M.D. Director March 14, 1994
*By: /s/ Joram C. Salig
---------------------
Joram C. Salig
Attorney-in-Fact
March 14, 1994
II-4
<PAGE>
INDEX TO EXHIBITS
Sequential
Exhibit Page
Number Exhibit Number
- ------- ------- ----------
2 Agreement and Plan of Merger among the Registrant, NHL Sub
Acquisition Corp. and National Health Laboratories
Incorporated ("NHL") (included as Exhibit A to the Proxy
Statement/Prospectus (schedules omitted--the Registrant
agrees to furnish a copy of any schedules thereto the
Commission upon request))
3.1 Certificate of Incorporation of the Registrant
3.2 By-laws of the Registrant
4.1 Specimen of the Registrant's Common Stock certificate */
5 Opinion of Cravath, Swaine & Moore regarding legality of securities
being issued
8 Opinion of Cravath, Swaine & Moore as to certain tax matters
23.1 Consent of Cravath, Swaine & Moore (included in Exhibits 5 and 8)
23.2 Consent of KPMG Peat Marwick*
24 Powers of Attorney
99 Form of Proxy Card for NHL Common Stock
_____________________________
*/ To be filed by amendment.
II-5
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
NATIONAL HEALTH LABORATORIES HOLDINGS INC.
FIRST: The name of the corporation is National Health
Laboratories Holdings Inc. (hereinafter the "Corporation").
SECOND: The address of the registered office of the
Corporation in the State of Delaware is 32 Lockerman Square, Suite L-100, in
the City of Dover, County of Kent. The name of its registered agent at that
address is The Prentice-Hall Corporation System, Inc.
THIRD: The purposes of the Corporation is to engage in any
lawful act or activity for which a corporation may be organized under the
General Corporation Law of the State of Delaware as set forth in Title 8 of the
Delaware Code (the "GCL").
FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is two hundred thirty million
(230,000,000) shares of which two hundred twenty million (220,000,000) shares
will be shares of Common Stock each having a par value of $0.01 per share, and
ten million (10,000,000) shares will be shares of Preferred Stock each having a
par value of $0.10 per share.
The Board of Directors is expressly authorized to provide for
the issuance of all or any shares of the Preferred Stock in one or more classes
or series, and to fix for each such class or series such voting powers, full or
limited, or no voting powers, and such distinctive designations, preferences
and relative, participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions adopted by the Board of Directors
providing for the issuance of such class or series and as may be permitted by
the GCL, including, without limitation, the authority to provide that any such
class or series may be (i) subject to redemption at such time or times and at
such price or prices; (ii) entitled to receive dividends (which may be
cumulative or non-cumulative) at such rates, on such conditions, and at such
times, and payable in preference to, or in such relation to, the dividends
payable on any other class or classes or any other series; (iii) entitled to
such rights upon the dissolution of, or upon any distribution of the assets of,
the Corporation; or (iv) convertible into, or exchangeable for, shares of any
other class or classes of stock, or of any other series of the same or any
other class or classes of stock, of the Corporation at such price or prices or
at such rates of exchange and with such adjustments; all as may be stated in
such resolution or resolutions.
FIFTH: The name and mailing address of the Sole Incorporator
is as follows:
Deborah M. Reusch
P.O. Box 636
Wilmington, DE 19899
SIXTH: The following provisions are inserted for the
management of the business and the conduct of the affairs of the Corporation,
and for further definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders:
(1) The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
(2) The directors shall have concurrent power with the
stockholders to make, alter, amend, change, add to or repeal the By-laws of the
Corporation.
(3) The number of directors of the Corporation shall be as
from time to time fixed by, or in the manner provided in, the By-laws of the
Corporation. Election of directors need not be by written ballot unless the
By-laws so provide.
(4) No director shall be personally liable to the Corporation
or any of its stockholders for monetary damages for breach of fiduciary duty as
a director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the GCL or (iv) for any transaction from
which the director derived an improper personal benefit. Any repeal or
modification of this Article SIXTH by the stockholders of the Corporation shall
not adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification with respect to acts or
omissions occurring prior to such repeal or modification.
(5) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation, subject, nevertheless, to the provisions of the GCL,
this Certificate of Incorporation and any By-laws adopted by the stockholders;
provided, however, that no By-laws hereafter adopted by the stockholders shall
invalidate any prior act of the directors which would have been valid if such
By-laws had not been adopted.
<PAGE>
SEVENTH: Meetings of stockholders may be held within or
without the State of Delaware, as the By-Laws may provide. The books of the
Corporation may be kept (subject to any provision contained in the GCL) outside
the State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the By-Laws of the Corporation.
EIGHTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
I, the undersigned, being the Sole Incorporator hereinbefore
named, for the purpose of forming a corporation pursuant to the GCL, do make
this Certificate, hereby declaring and certifying that this is my act and deed
and the facts herein stated are true, and accordingly have hereunto set my hand
this 8th day of March, 1994.
/s/ Deborah M. Reusch
---------------------
Deborah M. Reusch
Sole Incorporator
EXHIBIT 3.2
BY-LAWS
OF
NATIONAL HEALTH LABORATORIES HOLDINGS INC.
(hereinafter called the "Corporation")
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders
for the election of directors or for any other purpose shall be held at such
time and place, either within or without the State of Delaware as shall be
designated from time to time by the Board of Directors or the Chairman of the
Board of Directors and stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Annual Meetings. The Annual Meetings of
Stockholders shall be held on such date and at such time as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting, at which meetings the stockholders shall elect by a plurality vote a
Board of Directors, and transact such other business as may properly be brought
before the meeting. Written notice of the Annual Meeting stating the place,
date and hour of the meeting shall be given to each stockholder entitled to
vote at such meeting not less than ten nor more than sixty days before the date
of the meeting.
Section 3. Special Meetings. Unless otherwise prescribed by
law or by the Certificate of Incorporation, Special Meetings of Stockholders,
for any purpose or purposes, may be called at any time by the Board of
Directors. Written notice of a Special Meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called
shall be given not less than ten nor more than sixty days before the date of
the meeting to each stockholder entitled to vote at such meeting.
Section 4. Quorum. Except as otherwise provided by law or by
the Certificate of Incorporation, the holders of a majority of the capital
stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present
or represented, any business may be transacted which might have been transacted
at the meeting as originally noticed. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder entitled to vote at the meeting.
Section 5. Voting. Unless otherwise required by law, the
Certificate of Incorporation or these By-Laws, any question brought before any
meeting of stockholders shall be decided by the vote of the holders of a
majority of the stock represented and entitled to vote thereat. Each
stockholder represented at a meeting of stockholders shall be entitled to cast
one vote for each share of the capital stock entitled to vote thereat held by
such stockholder. Such votes may be cast in person or by proxy but no proxy
shall be voted on or after three years from its date, unless such proxy
provides for a longer period. The Board of Directors, in its discretion, or
the officer of the Corporation presiding at a meeting of stockholders, in his
discretion, may require that any votes cast at such meeting shall be cast by
written ballot.
Section 6. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required or
permitted to be taken at any Annual or Special Meeting of Stockholders of the
Corporation, may be taken without a meeting, without prior notice and without a
vote, in a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have
not consented in writing. In the event that the action which is consented to
is such as would have required the filing of a certificate under the General
Corporation Law, if such action had been voted on by stockholders at a meeting
thereof, the Certificate filed shall state, in lieu of any statement concerning
any vote of stockholders, that written consent and written notice has been
given as provided in this Section 6.
Section 7. List of Stockholders Entitled to Vote. The officer
of the Corporation who has charge of the stock ledger of the Corporation shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
<PAGE>
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
Section 8. Stock Ledger. The stock ledger of the Corporation
shall be the only evidence as to who are the stockholders entitled to examine
the stock ledger, the list required by Section 7 of this Article I or the books
of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
ARTICLE II
DIRECTORS
Section 1. Number and Election of Directors. The Board of
Directors shall consist of not less than one nor more than fifteen members, the
exact number of which shall be fixed from time to time by the Board of
Directors. Except as provided in Section 2 of this Article, directors shall be
elected by a plurality of the votes cast at Annual Meetings of Stockholders,
and each director so elected shall hold office until the next Annual Meeting
and until his successor is duly elected and qualified, or until his earlier
resignation or removal. Any director may resign at any time upon notice to the
Corporation. Directors need not be stockholders. Nominations for election to
the Board of Directors at an annual or special meeting of the stockholders may
be made by the Board of Directors or on behalf of the Board of Directors by a
nominating committee duly appointed by the Board of Directors, or by a
stockholder of the Corporation entitled to vote for the election of directors.
All nominations, other than those made by or on behalf of the Board of
Directors, shall be made by notice in writing delivered or mailed by first
class Untied States mail, postage prepaid, to the Secretary and received by the
Secretary not less than sixty nor more than one hundred twenty days prior to
the anniversary date of the preceding year's annual meeting, in the case of
nominations for election at an annual meeting, and not more than ten days after
the date of the Corporations notice of a special meeting, in the case of
nominations for election at a special meeting. Such stockholder's notice shall
set forth as to each proposed nominee who is not an incumbent director, the
name, age, business address and, if known, residence address of such nominee,
the principal occupation or employment of such nominee during the preceding
five years, the number of shares of stock of the Corporation which are
beneficially owned by such nominee, any other information relating to such
nominee that would be required to be set forth in a definitive proxy statement
filed in connection with a proxy solicitation pursuant to Section 14 of the
Securities Exchange Act of 1934, and the written consent of such nominee to
being named in the Corporations's proxy statement as a nominee and to serving
as a director of the Corporation, if elected; and such stockholder's notice
shall set forth as to such stockholder the name and address, as they appear on
the Corporation's books, of such stockholder, the number of shares of stock of
the Corporation which are beneficially owned by such stockholder, and all other
information relating to such stockholder that would be required to be filed
with the Securities and Exchange Commission if such stockholder were a
participant in a proxy solicitation pursuant to said Section 14. A nomination
made otherwise than as provided in this Section 1 shall be null and void and
shall not be submitted to a vote of stockholders.
Section 2. Vacancies. Vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director, and the directors so chosen shall hold
office until the next annual election and until their successors are duly
elected and qualified, or until their earlier resignation or removal.
Section 3. Duties and Powers. The business of the Corporation
shall be managed by or under the direction of the Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by these
By-Laws directed or required to be exercised or done by the stockholders.
Section 4. Meetings. The Board of Directors of the
Corporation may hold meetings, both regular and special, either within or
without the State of Delaware. Regular meetings of the Board of Directors may
be held without notice at such time and at such place as may from time to time
be determined by the Board of Directors. Special meetings of the Board of
Directors may be called by the Chairman, if there be one, the President, or any
three or more directors. Notice thereof stating the place, date and hour of
the meeting shall be given to each director either by mail not less than forty-
eight (48) hours before the date of the meeting, by telephone or telegram on
twenty-four (24) hours' notice, or on such shorter notice as the person or
persons calling such meeting may deem necessary or appropriate in the
circumstances.
Section 5. Quorum. Except as may be otherwise specifically
provided by law, the Certificate of Incorporation or these By-Laws, at all
meetings of the Board of Directors, a majority of the entire Board of Directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors. If a quorum shall not be present
at any meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present.
<PAGE>
Section 6. Actions of Board. Unless otherwise provided by the
Certificate of Incorporation or these By-Laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting, if all the members of the Board of
Directors or committee, as the case may be, consent thereto in writing, and the
writing or writing are filed with the minutes of proceedings of the Board of
Directors or committee.
Section 7. Meeting by Means of Conference Telephone. Unless
otherwise provided by the Certificate of Incorporation or these By-Laws,
members of the Board of Directors of the Corporation, or any committee
designated by the Board of Directors, may participate in a meeting of the Board
of Directors or such committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
Section 7 shall constitute presence in person at such meeting.
Section 8. Committees. The Board of Directors may, by
resolution passed by a majority of the entire Board of Directors, designate one
or more committees, each committee to consist of one or more of the directors
of the Corporation. The Board of Directors may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of any such committee. In the absence or
disqualification of a member of a committee, and in the absence of a
designation by the Board of Directors of an alternate member to replace the
absent or disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any absent or disqualified member. Any
committee, to the extent allowed by law and provided in the resolution
establishing such committee, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation. Each committee shall keep regular minutes and
report to the Board of Directors when required.
Section 9. Compensation. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
Section 10. Interested Directors. No contract or transaction
between the Corporation and one or more of its directors or officers, or
between the Corporation and any other corporation, partnership, association or
other organization in which one or more of its directors or officers are
directors or officers, or have a financial interest, shall be void or voidable
solely for this reason, or solely because the director or officer is present at
or participates in the meeting of the Board of Directors or committee thereof
which authorizes the contract or transaction, or solely because his or their
votes are counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of
Directors or committee in good faith authorizes the contract or transaction by
the affirmative votes of a majority of the disinterested directors, even though
the disinterested directors be less than a quorum; or (ii) the material facts
as to his or their relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by vote of the stockholders; or (iii) the contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or ratified, by the
Board of Directors, a committee thereof or the stockholders. Common or
interested directors may be counted in determining the presence of a quorum at
a meeting of the Board of Directors or of a committee which authorizes the
contract or transaction.
ARTICLE III
OFFICERS
Section 1. General. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a President and a Secretary. The
Board of Directors, in its discretion, may also choose a Chairman of the Board
of Directors and a Treasurer and one or more Vice Chairmen (who must be
directors) and one or more Vice Presidents, Assistant Secretaries, Assistant
Treasurers and other officers. Any number of offices may be held by the same
person, unless otherwise prohibited by law, the Certificate of Incorporation or
these By-Laws. The officers of the Corporation need not be stockholders of the
Corporation nor, except in the case of the Chairman of the Board of Directors
and any Vice Chairman, need such officers be directors of the Corporation.
Section 2. Election. The Board of Directors at its first
meeting held after each Annual Meeting of Stockholders shall elect the officers
of the Corporation who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time
to time by the Board of Directors; and all officers of the Corporation shall
hold office until their successors are chosen and qualified, or until their
earlier resignation or removal. Any officer elected by the Board of Directors
may be removed at any time by the affirmative vote of a majority of the Board
of Directors. Any vacancy occurring in any office of the Corporation shall be
filled by the Board of Directors. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors.
Section 3. Voting Securities Owned by the Corporation. Powers
<PAGE>
of attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be executed in
the name of and on behalf of the Corporation by any officer of the Corporation
and any such officer may, in the name of and on behalf of the Corporation, take
all such action as any such officer may deem advisable to vote in person or by
proxy at any meeting of security holders of any corporation in which the
Corporation may own securities and at any such meeting shall possess and may
exercise any and all rights and power incident to the ownership of such
securities and which, as the owner thereof, the Corporation might have
exercised and possessed if present. The Board of Directors may, by resolution,
from time to time confer like powers upon any other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman
of the Board of Directors, if there be one, shall preside at all meetings of
the stockholders and of the Board of Directors. Except where by law the
signature of the President is required, the Chairman of the Board of Directors
shall possess the same power as the President to sign all contracts,
certificates and other instruments of the Corporation which may be authorized
by the Board of Directors. During the absence or disability of the President,
the Chairman of the Board of Directors shall exercise all the powers and
discharge all the duties of the President. The Chairman of the Board of
Directors shall also perform such other duties and may exercise such other
powers as from time to time may be assigned to him by these By-Laws or by the
Board of Directors.
Section 5. Vice Chairman. The Vice Chairman of the Board of
Directors, if there be one, or the Vice Chairmen, if there be more than one,
shall perform such duties and may exercise such other powers as from time to
time may be assigned by these By-Laws, the Board of Directors or the Chairman
of the Board of Directors. In the absence or disability of the Chairman of the
Board of Directors, or if there be none, the Vice Chairman shall preside at
meetings of the stockholders and the Board of Directors.
Section 6. President. The President shall, subject to the
control of the Board of Directors and, if there be one, the Chairman of the
Board of Directors, be the Chief Executive Officer of the Corporation and shall
have general supervision of the business of the Corporation and shall see that
all orders and resolutions of the Board of Directors are carried into effect.
He shall execute all bonds, mortgages, contracts and other instruments of the
Corporation requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
that the other officers of the Corporation may sign and execute documents when
so authorized by these By-Laws, the Board of Directors or the President. In
the absence or disability of the Chairman of the Board of Directors, or if
there be none, the President shall preside at all meetings of the stockholders
and the Board of Directors. The President shall also perform such other duties
and may exercise such other powers as from time to time may be assigned to him
by these By-Laws or by the Board of Directors.
Section 7. Vice Presidents. At the request of the President
or in his absence or in the event of his inability or refusal to act (and if
there be no Chairman of the Board of Directors or Vice Chairman of the Board of
Directors), the Vice President or the Vice Presidents if there is more than one
(in the order designated by the Board of Directors) shall perform the duties of
the President, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. Each Vice President shall perform
such other duties and have such other powers as the Board of Directors from
time to time may prescribe. If there be no Chairman of the Board of Directors,
no Vice Chairman of the Board and no Vice President, the Board of Directors
shall designate the officer of the Corporation who, in the absence of the
President or in the event of the inability or refusal of the President to act,
shall perform the duties of the President, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the President.
Section 8. Secretary. The Secretary shall attend all meetings
of the Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors,
and shall perform such other duties as may be prescribed by the Board of
Directors, the Chairman or Vice Chairman of the Board of Directors or
President, under whose supervision he shall be. If the Secretary shall be
unable or shall refuse to cause to be given notice of all meetings of the
stockholders and special meetings of the Board of Directors, and if there be no
Assistant Secretary, then either the Board of Directors, the Chairman or Vice
Chairman of the Board of Directors or the President may choose another officer
to cause such notice to be given. The Secretary shall have custody of the seal
of the Corporation and the Secretary or any Assistant Secretary, if there be
one, shall have authority to affix the same to any instrument requiring it and
when so affixed, it may be attested by the signature of the Secretary or by the
signature of any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his signature. The Secretary shall see that all
books, reports, statements, certificates and other documents and records
required by law to be kept or filed are properly kept or filed, as the case may
be.
Section 9. Treasurer. The Treasurer, if there be one, shall
have the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors. The Treasurer shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, taking proper vouchers
for such disbursements, and shall render to the Chairman or Vice Chairman of
<PAGE>
the Board of Directors or to the President and the Board of Directors, at its
regular meetings, or when the Board of Directors so requires, an account of all
his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, the Treasurer shall give
the Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
Section 10. Assistant Secretaries. Except as may be otherwise
provided in these By-Laws, Assistant Secretaries, if there be any, shall
perform such duties and have such powers as from time to time may be assigned
to them by the Board of Directors, the Chairman or Vice Chairman of the Board
of Directors, the President, any Vice President, if there be one, or the
Secretary, and in the absence of the Secretary or in the event of his
disability or refusal to act, shall perform the duties of the Secretary, and
when so acting, shall have all the powers of and be subject to all the
restrictions upon the Secretary.
Section 11. Assistant Treasurers. Assistant Treasurers, if
there be any, shall perform such duties and have such powers as from time to
time may be assigned to them by the Board of Directors, the Chairman or Vice
Chairman of the Board of Directors, the President, any Vice President, if there
be one, or the Treasurer, and in the absence of the Treasurer or in the event
of his disability or refusal to act, shall perform the duties of the Treasurer,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the Treasurer. If required by the Board of Directors, an
Assistant Treasurer shall give the Corporation a bond in such sum and with such
surety or sureties as shall be satisfactory to the Board of Directors for the
faithful performance of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
Section 12. Other Officers. Such other officers as the Board
of Directors may choose shall perform such duties and have such powers as from
time to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE IV
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman or the Vice Chairman of the Board of Directors,
the President or a Vice President and (ii) by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares owned by him in the Corporation.
Section 2. Signatures. Where a certificate is countersigned
by (i) a transfer agent other than the Corporation or its employee, or (ii) a
registrar other than the Corporation or its employee, any other signature on
the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
Section 3. Lost Certificates. The Board of Directors may
direct a new certificate to be issued in place of any certificate theretofore
issued by the Corporation alleged to have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming the certificate
of stock to be lost, stolen or destroyed. When authorizing such issue of a new
certificate, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate, or his legal representative, to advertise the same in
such manner as the Board of Directors shall require and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate
alleged to have been lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these By-Laws. Transfers
of stock shall be made on the books of the Corporation only by the person named
in the certificate or by his attorney lawfully constituted in writing and upon
the surrender of the certificate therefor, which shall be cancelled before a
new certificate shall be issued.
Section 5. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to express consent to
corporate action in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or entitled
to exercise any rights in respect of any change, conversion or exchange of
stock, or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty days nor
less than ten days before the date of such meeting, nor more than sixty days
prior to any other action. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
<PAGE>
fix a new record date for the adjourned meeting.
Section 6. Beneficial Owners. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
ARTICLE V
NOTICES
Section 1. Notices. Whenever written notice is required by
law, the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, such notice may be given by
mail, addressed to such director, member of a committee or stockholder, at his
address as it appears on the records of the Corporation, with postage thereon
prepaid, and such notice shall be deemed to be given at the time when the same
shall be deposited in the United States mail. Written notice may also be given
personally or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required
by law, the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, in property, or in shares of the capital
stock. Before payment of any dividend, there may be set aside out of any funds
of the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.
Section 2. Disbursements. All checks or demands for money and
notes of the Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate.
Section 3. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its organization and
the words "Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
Section 5. Section 203 Election. The Corporation hereby
expressly elects not to be governed by Section 203 of the General Corporation
Law of the State of Delaware.
ARTICLE VII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings
other Than Those by or in the Right of the Corporation. Subject to Section 3
of this Article VII, the Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Corporation)
by reason of the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings
by or in the Right of the Corporation. Subject to Section 3 of this Article
VII, the Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
<PAGE>
suit by or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation; except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the Corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
Section 3. Authorization of Indemnification. Any
indemnification under this Article VII (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 1 or Section 2 of this Article VII, as the case
may be. Such determination shall be made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (ii) if such a quorum is not obtainable, or,
even if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (iii) by the stockholders.
To the extent, however, that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding described above, or in defense of any claim, issue
or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith, without the necessity of authorization in the specific case.
Section 4. Good Faith Defined. For purposes of any
determination under Section 3 of this Article VII, a person shall be deemed to
have acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, or, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe his
conduct was unlawful, if his action is based on the records or books of account
of the Corporation or another enterprise, or on information supplied to him by
the officers of the Corporation or another enterprise in the course of their
duties, or on the advice of legal counsel for the Corporation or another
enterprise or on information or records given or reports made to the
Corporation or another enterprise by an independent certified public accountant
or by an appraiser or other expert selected with reasonable care by the
Corporation or another enterprise. The term "another enterprise" as used in
this Section 4 shall mean any other corporation or any partnership, joint
venture, trust, employee benefit plan or other enterprise of which such person
is or was serving at the request of the Corporation as a director, officer,
employee or agent. The provisions of this Section 4 shall not be deemed to be
exclusive or to limit in any way the circumstances in which a person may be
deemed to have met the applicable standard of conduct set forth in Section 1 or
2 of this Article VII, as the case may be.
Section 5. Indemnification by a Court. Notwithstanding any
contrary determination in the specific case under Section 3 of this Article
VII, and notwithstanding the absence of any determination thereunder, any
director, officer, employee or agent may apply to any court of competent
jurisdiction in the State of Delaware for indemnification to the extent
otherwise permissible under Section 1 and 2 of this Article VII. The basis of
such indemnification by a court shall be a determination by such court that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standards of conduct set forth
in Sections 1 or 2 of this Article VII, as the case may be. Neither a contrary
determination in the specific case under Section 3 of this Article VII nor the
absence of any determination thereunder shall be a defense to such application
or create a presumption that the director, officer, employee or agent seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 5 shall be given to
the Corporation promptly upon the filing of such application. If successful,
in whole or in part, the director, officer, employee or agent seeking
indemnification shall also be entitled to be paid the expense of prosecuting
such application.
Section 6. Expenses Payable in Advance. Expenses incurred in
defending or investigating a threatened or pending action, suit or proceeding
shall be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
such director, officer, employee or agent to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Article VII.
Section 7. Nonexclusivity of Indemnification and Advancement
of Expenses. The indemnification and advancement of expenses provided by or
granted pursuant to this Article VII shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under any By-law, agreement, contract, vote of stockholders or
disinterested directors or pursuant to the direction (howsoever embodied) of
any court of competent jurisdiction or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, it being the policy of the Corporation that indemnification of the
persons specified in Sections 1 and 2 of this Article VII shall be made to the
fullest extent permitted by law. The provisions of this Article VII shall not
be deemed to preclude the indemnification of any person who is not specified in
<PAGE>
Section 1 or 2 of this Article VII but whom the Corporation has the power or
obligation to indemnify under the provisions of the General Corporation Law of
the State of Delaware, or otherwise.
Section 8. Insurance. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power or the obligation to indemnify him against
such liability under the provisions of this Article VII.
Section 9. Certain Definitions. For purposes of this Article
VII, references to "the Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent
of a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, shall stand in the same
position under the provisions of this Article VII with respect to the resulting
or surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued. For purposes of this
Article VII, references to "fines" shall include any excise taxes assessed on a
person with respect to an employee benefit plan; and references to "serving at
the request of the Corporation" shall include any service as a director,
officer, employee or agent of the Corporation which imposes duties on, or
involves services by, such director, officer, employee or agent with respect to
an employee benefit plan, its participants or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests of
the Corporation" as referred to in this Article VII.
Section 10. Survival of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VII shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 11. Limitation on Indemnification. Notwithstanding
anything contained in this Article VII to the contrary, except for proceedings
to enforce rights to indemnification (which shall be governed by Section 5
hereof), the Corporation shall not be obligated to indemnify any director,
officer, employee or agent in connection with a proceeding (or part thereof)
initiated by such person unless such proceeding (or part thereof) was
authorized or consented to by the Board of Directors of the Corporation.
ARTICLE VIII
AMENDMENTS
Section 1. These By-Laws may be altered, amended or repealed,
in whole or in part, or new By-Laws may be adopted by the stockholders or by
the Board of Directors, provided, however, that notice of such alteration,
amendment, repeal or adoption of new By-Laws be contained in the notice of such
meeting of stockholders or Board of Directors, as the case may be. All such
amendments must be approved by either the holders of a majority of the
outstanding capital stock entitled to vote thereon or by a majority of the
entire Board of Directors then in office.
Section 2. Entire Board of Directors. As used in this Article
VIII and in these By-Laws generally, the term "entire Board of Directors" means
the total number of directors which the Corporation would have if there were no
vacancies.
EXHIBIT 5
(Letterhead of)
CRAVATH, SWAINE & MOORE
March 14, 1994
National Health Laboratories Holdings Inc.
Common Stock $0.01 Par Value
Dear Sirs:
We have acted as counsel for National Health Laboratories
Holdings Inc., a Delaware corporation (the "Company"), in connection with the
registration on Form S-4 under the Securities Act of 1933 of 84,750,692 shares
of the common stock, $0.01 par value per share (the "Shares"), to be offered in
connection with the proposed reorganization described in the proxy
statement/prospectus forming a part of such registration statement (the
"Registration Statement"). In that connection, we have examined such corporate
records, certificates and other documents as we have considered necessary or
appropriate for purposes of this opinion. In such examination, we have assumed
the genuineness of all signatures and the authenticity of all documents
submitted to us as originals and the conformity to the originals of all
documents submitted to us as copies.
Based on such examination, we are of the opinion that (i) the
Company has full power and authority under the General Corporation Law of the
State of Delaware, under its Certificate of Incorporation and its By-laws to
issue the Shares and (ii) the shares are validly authorized and, when issued
and exchanged as contemplated in the Registration Statement, will be legally
issued, fully paid and nonassessable.
We are aware that we are referred to under the heading
"Proposed Reorganization--Legal Opinions" in the proxy statement/prospectus
forming a part of the Registration Statement, and we hereby consent to such use
of our name therein and the filing of this opinion as Exhibit 5 of the
Registration Statement.
Very truly yours,
/s/ Cravath, Swaine & Moore
National Health Laboratories
Holdings Inc.
c/o National Health Laboratories
Incorporated
4225 Executive Square
Suite 800
La Jolla, CA 92037
EXHIBIT 8
(Letterhead of)
CRAVATH, SWAINE & MOORE
March 14, 1994
National Health Laboratories Holdings Inc.
Common Stock $0.01 Par Value
Dear Sirs:
We refer to the Registration Statement on Form S-4 filed by you
with the Securities and Exchange Commission on the date hereof (the
"Registration Statement") relating to the above referenced Common Stock and the
statements made in the proxy statement/prospectus forming a part of the
Registration Statement under the heading "Proposed Reorganization--Federal
Income Tax Consequences". We confirm that the statements set forth under such
heading represent our opinion as to the matters discussed therein.
We are aware that we are referred to under the heading
"Proposed Reorganization--Federal Income Tax Consequences" in the proxy
statement/prospectus forming a part of the Registration Statement, and we
hereby consent to such use of our name therein and the filing of this opinion
as Exhibit 8 to the Registration Statement.
Very truly yours,
/s/ Cravath, Swaine & Moore
National Health Laboratories
Holdings Inc.
c/o National Health Laboratories
Incorporated
4225 Executive Square
Suite 800
La Jolla, CA 92037
EXHIBIT 24
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of David C. Flaugh, James G. Richmond and Joram
C. Salig or any of them, each acting alone, his true and lawful attorney-in-
fact and agent, with full power of substitution, for him and in his name, place
and stead, in any and all capacities, in connection with the National Health
Laboratories Incorporated (the "Corporation") Registration Statement on Form
S-4 under the Securities Act of 1933, as amended, including, without limiting
the generality of the foregoing, to sign the Registration Statement in the name
and on behalf of the Corporation or on behalf of the undersigned as a director
or officer of the Corporation, and any amendments (including post-effective
amendments) to the Registration Statement and any instrument, contract,
document or other writing, of or in connection with the Registration Statement
or amendments thereto, and other documents in connection therewith, including
this power of attorney, with the Securities and Exchange Commission and any
applicable securities exchange or securities self-regulatory body, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents
this 14th day of March 1994.
/s/ Ronald O. Perelman
Ronald O. Perelman
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of David C. Flaugh, James G. Richmond and Joram
C. Salig or any of them, each acting alone, his true and lawful attorney-in-
fact and agent, with full power of substitution, for him and in his name, place
and stead, in any and all capacities, in connection with the National Health
Laboratories Incorporated (the "Corporation") Registration Statement on Form
S-4 under the Securities Act of 1933, as amended, including, without limiting
the generality of the foregoing, to sign the Registration Statement in the name
and on behalf of the Corporation or on behalf of the undersigned as a director
or officer of the Corporation, and any amendments (including post-effective
amendments) to the Registration Statement and any instrument, contract,
document or other writing, of or in connection with the Registration Statement
or amendments thereto, and other documents in connection therewith, including
this power of attorney, with the Securities and Exchange Commission and any
applicable securities exchange or securities self-regulatory body, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents
this 14th day of March 1994.
/s/ James R. Maher
James R. Maher
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of David C. Flaugh, James G. Richmond and Joram
C. Salig or any of them, each acting alone, his true and lawful attorney-in-
fact and agent, with full power of substitution, for him and in his name, place
and stead, in any and all capacities, in connection with the National Health
Laboratories Incorporated (the "Corporation") Registration Statement on Form
S-4 under the Securities Act of 1933, as amended, including, without limiting
the generality of the foregoing, to sign the Registration Statement in the name
and on behalf of the Corporation or on behalf of the undersigned as a director
or officer of the Corporation, and any amendments (including post-effective
amendments) to the Registration Statement and any instrument, contract,
document or other writing, of or in connection with the Registration Statement
or amendments thereto, and other documents in connection therewith, including
this power of attorney, with the Securities and Exchange Commission and any
applicable securities exchange or securities self-regulatory body, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents
this 14th day of March 1994.
/s/ Saul J. Farber, M.D.
Saul J. Farber, M.D.
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of David C. Flaugh, James G. Richmond and Joram
C. Salig or any of them, each acting alone, his true and lawful attorney-in-
fact and agent, with full power of substitution, for him and in his name, place
and stead, in any and all capacities, in connection with the National Health
Laboratories Incorporated (the "Corporation") Registration Statement on Form
S-4 under the Securities Act of 1933, as amended, including, without limiting
the generality of the foregoing, to sign the Registration Statement in the name
and on behalf of the Corporation or on behalf of the undersigned as a director
or officer of the Corporation, and any amendments (including post-effective
amendments) to the Registration Statement and any instrument, contract,
document or other writing, of or in connection with the Registration Statement
or amendments thereto, and other documents in connection therewith, including
this power of attorney, with the Securities and Exchange Commission and any
applicable securities exchange or securities self-regulatory body, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents
this 14th day of March 1994.
/s/ Howard Gittis
Howard Gittis
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of David C. Flaugh, James G. Richmond and Joram
C. Salig or any of them, each acting alone, his true and lawful attorney-in-
fact and agent, with full power of substitution, for him and in his name, place
and stead, in any and all capacities, in connection with the National Health
Laboratories Incorporated (the "Corporation") Registration Statement on Form
S-4 under the Securities Act of 1933, as amended, including, without limiting
the generality of the foregoing, to sign the Registration Statement in the name
and on behalf of the Corporation or on behalf of the undersigned as a director
or officer of the Corporation, and any amendments (including post-effective
amendments) to the Registration Statement and any instrument, contract,
document or other writing, of or in connection with the Registration Statement
or amendments thereto, and other documents in connection therewith, including
this power of attorney, with the Securities and Exchange Commission and any
applicable securities exchange or securities self-regulatory body, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents
this 14th day of March 1994.
/s/ Ann Dibble Jordan
Ann Dibble Jordan
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of David C. Flaugh, James G. Richmond and Joram
C. Salig or any of them, each acting alone, his true and lawful attorney-in-
fact and agent, with full power of substitution, for him and in his name, place
and stead, in any and all capacities, in connection with the National Health
Laboratories Incorporated (the "Corporation") Registration Statement on Form
S-4 under the Securities Act of 1933, as amended, including, without limiting
the generality of the foregoing, to sign the Registration Statement in the name
and on behalf of the Corporation or on behalf of the undersigned as a director
or officer of the Corporation, and any amendments (including post-effective
amendments) to the Registration Statement and any instrument, contract,
document or other writing, of or in connection with the Registration Statement
or amendments thereto, and other documents in connection therewith, including
this power of attorney, with the Securities and Exchange Commission and any
applicable securities exchange or securities self-regulatory body, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents
this 14th day of March 1994.
/s/ David J. Mahoney
David J. Mahoney
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of David C. Flaugh, James G. Richmond and Joram
C. Salig or any of them, each acting alone, his true and lawful attorney-in-
fact and agent, with full power of substitution, for him and in his name, place
and stead, in any and all capacities, in connection with the National Health
Laboratories Incorporated (the "Corporation") Registration Statement on Form
S-4 under the Securities Act of 1933, as amended, including, without limiting
the generality of the foregoing, to sign the Registration Statement in the name
and on behalf of the Corporation or on behalf of the undersigned as a director
or officer of the Corporation, and any amendments (including post-effective
amendments) to the Registration Statement and any instrument, contract,
document or other writing, of or in connection with the Registration Statement
or amendments thereto, and other documents in connection therewith, including
this power of attorney, with the Securities and Exchange Commission and any
applicable securities exchange or securities self-regulatory body, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents
this 9th day of March 1994.
/s/ Paul A. Marks, M.D.
Paul A. Marks, M.D.
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of David C. Flaugh, James G. Richmond and Joram
C. Salig or any of them, each acting alone, his true and lawful attorney-in-
fact and agent, with full power of substitution, for him and in his name, place
and stead, in any and all capacities, in connection with the National Health
Laboratories Incorporated (the "Corporation") Registration Statement on Form
S-4 under the Securities Act of 1933, as amended, including, without limiting
the generality of the foregoing, to sign the Registration Statement in the name
and on behalf of the Corporation or on behalf of the undersigned as a director
or officer of the Corporation, and any amendments (including post-effective
amendments) to the Registration Statement and any instrument, contract,
document or other writing, of or in connection with the Registration Statement
or amendments thereto, and other documents in connection therewith, including
this power of attorney, with the Securities and Exchange Commission and any
applicable securities exchange or securities self-regulatory body, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents
this 14th day of March 1994.
/s/ Linda Gosden Robinson
Linda Gosden Robinson
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of David C. Flaugh, James G. Richmond and Joram
C. Salig or any of them, each acting alone, his true and lawful attorney-in-
fact and agent, with full power of substitution, for him and in his name, place
and stead, in any and all capacities, in connection with the National Health
Laboratories Incorporated (the "Corporation") Registration Statement on Form
S-4 under the Securities Act of 1933, as amended, including, without limiting
the generality of the foregoing, to sign the Registration Statement in the name
and on behalf of the Corporation or on behalf of the undersigned as a director
or officer of the Corporation, and any amendments (including post-effective
amendments) to the Registration Statement and any instrument, contract,
document or other writing, of or in connection with the Registration Statement
or amendments thereto, and other documents in connection therewith, including
this power of attorney, with the Securities and Exchange Commission and any
applicable securities exchange or securities self-regulatory body, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents
this 10th day of March 1994.
/s/ Samuel O. Thier, M.D.
Samuel O. Thier, M.D.
NATIONAL HEALTH LABORATORIES INCORPORATED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James G. Richmond, David C. Flaugh and
Joram C. Salig, or any of them, with full power of subsitution, proxies to vote
at the Annual Meeting of Stockholders of National Health Laboratories
Incorporated (the "Company") to be held on May 10, 1994 at 10:30 a.m. local
time, and at any adjournment or postponement thereof, hereby revoking any
proxies heretofore given, to vote all shares of common stock, par value $.01
per share, of the Company held or owned by the undersigned as indicated on the
proposals more fully set forth in the Proxy Statement/Prospectus, dated
March , 1994, and in their discretion upon such other matters as may come
before the Annual Meeting.
(TO BE SIGNED ON REVERSE SIDE)
(SEE REVERSE SIDE)
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATION, JUST SIGN
THE REVERSE SIDE, NO BOX NEED BE CHECKED.
<PAGE>
(X) Please mark your
votes as in this
example.
DO NOT PRINT IN THIS AREA
- -------------------------------------------------------------------------------
1. Approve the proposed corporate reorganization of the Company creating a
holding company.
FOR AGAINST ABSTAIN
( ) ( ) ( )
2. Election of the members of the Board of Directors as listed below.
FOR WITHHELD
(except as marked)
( ) ( )
Nominees: Ronald O. Perelman, Saul J. Farber, M.D., Howard Gittis, Ann Dibble
Jordan, James R. Maher, David J. Mahoney, Paul A. Marks, M.D., Linda Gosden
Robinson, Samuel O. Thier, M.D.
(To withhold authority to vote for any individual nominee, strike a line
through the nominee's name).
3. Ratify the selection of KPMG Peat Marwick as the Company's independent
auditors for 1994.
FOR AGAINST ABSTAIN
( ) ( ) ( )
4. Approve and adopt the Company's 1994 Stock Option Plan.
FOR AGAINST ABSTAIN
( ) ( ) ( )
The undersigned hereby acknowledges receipt of the accompanying Notice of
Annual Meeting and Proxy Statement/Prospectus and hereby revokes any Proxy or
Proxies heretofore given.
Please complete, date, sign and mail in the enclosed envelope.
SIGNATURE(S) _____________________________________________________ DATE ______
(Please sign exactly as your name appears on this Proxy. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such.)
