UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
UNIFLEX, INC.
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(Name of Issuer)
COMMON STOCK, $.10 PAR VALUE
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(Title of Class of Securities)
904711108
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(CUSIP Number)
Copies of Communication To:
Thomas More Griffin, Esq.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
(212) 856-7000
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
November 16, 1998
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(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement |X|. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
777188.2
<PAGE>
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CUSIP No. 904711108 SCHEDULE 13D Page 2 of 20 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
CMCO, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC, 00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e)
/ /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
54,912
NUMBER OF ------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY EACH 0
REPORTING ------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
54,912
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
CMCO, Inc.: 54,912 All Reporting Persons: 300,158
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
CMCO, Inc.: 1.31% All Reporting Persons: 7.18%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILING OUT!
777188.2
<PAGE>
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CUSIP No. 904711108 SCHEDULE 13D Page 3 of 20 Pages
- ------------------------ -------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
Robert Davidoff
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e)
/ /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A
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7 SOLE VOTING POWER
2,946
NUMBER OF ------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY EACH 0
REPORTING ------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
2,946
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
CMCO, Inc.: 2,946 All Reporting Persons: 300,158
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* /X/
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Robert Davidoff: .07% All Reporting Persons: 7.18%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILING OUT!
777188.2
<PAGE>
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CUSIP No. 904711108 SCHEDULE 13D Page 4 of 20 Pages
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- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
CMNY Capital, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC; 00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e)
/ /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
242,300
NUMBER OF ------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY EACH 0
REPORTING ------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
242,300
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
CMNY, Capital, L.P. 242,300 All Reporting Persons: 300,158
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* /X/
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
CMNY Capital, L.P.: 5.80% All Reporting Persons: 7.18%
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14 TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILING OUT!
777188.2
<PAGE>
Item 1. Security and Issuer.
This Statement relates to the shares of common stock, par value $.10
per share (the "Common Stock"), of Uniflex, Inc., a Delaware corporation (the
"Company"). The address of the principal executive office of the Company is 383
West John Street, Hicksville, New York 11802.
This Schedule 13D is being filed pursuant to the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
All share numbers set forth in this Schedule 13D give effect to a
fifty percent (50%) stock dividend paid by the Company in October 1996.
Item 2. Identity and Background.
(a)-(b) (i) The names of the persons filing this Schedule are: (1)
CMCO, Inc., a New York corporation ("CMCO") with its principal business and
offices at 135 East 57th Street, New York, New York 10022; (2) Robert Davidoff,
an individual with his office at 135 East 57th Street, New York, New York 10022;
and (3) CMNY Capital, L.P., a Delaware limited partnership and a licensee under
the Small Business Investment Company Act of 1958, as amended ("CMNY"), with
offices at 135 East 57th Street, New York, New York 10022 (sometimes
collectively the "Reporting Persons").
(ii) The names of the officers and directors of CMCO are listed
below and the business address for each officer and director of CMCO is 135 East
57th Street, New York, New York 10022:
A. Edwin S. Marks (President, Director);
B. Mark L. Claster (Vice President, Assistant Secretary);
C. Andrew M. Boas (Vice President);
D. Robert Davidoff (Vice President);
E. David F. Shnitkin (Controller & Secretary);
F. Nancy A. Marks (Director); and
G. Marjorie M. Boas (Director).
(iii) The general partners of CMNY are Robert Davidoff and Edwin
S. Marks. The business address for each general partner of CMNY is 135 East 57th
Street, New York, New York 10022. The limited partners of CMNY are Edwin S.
Marks, Marjorie M. Boas, Nancy A. Marks, Carolyn G. Marks, Linda B. Marks,
Richard S. Boas, Andrew M. Boas and Susan B. Claster. The business address for
each limited partner of CMNY is 135 East 57th Street, New York, New York 10022.
The general partners and limited partners of CMNY are collectively referred to
herein as the "Partners".
(c) (i) The principal occupation of Robert Davidoff is Vice
President of CMCO and a general partner of CMNY.
(ii) The principal business of CMCO is to invest in various
business entities.
777188.2
5
<PAGE>
(iii) The principal occupation of each officer of CMCO involves
his or her duties as an officer of CMCO.
(iv) CMNY is a small business investment company licensed by the
U.S. Small Business Administration. CMNY is in the process of being liquidated
by the U.S. Small Business Administration. The business of CMNY was to invest in
small businesses.
(v) The principal occupation of each Partner of CMNY involves his
or her duties as a Partner of CMNY.
(d) Neither CMCO, any of the officers and directors of CMCO, Robert
Davidoff, CMNY, nor any of the Partners of CMNY, during the last five years, has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) Neither CMCO, any of the officers and directors of CMCO, Robert
Davidoff, CMNY, nor any of the Partners of CMNY during the last five years, has
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(f) Each of the officers and directors of CMCO, each of the Partners
of CMNY, and Robert Davidoff, is a United States citizen.
Each of the Reporting Persons states that it, he or she, as the case
may be, is included in this filing solely for the purpose of presenting
information with respect to the ownership of the shares of Common Stock and
disclaims any knowledge, except as hereinafter expressly set forth, as to any
statements made herein on behalf of any other Reporting Person. Each Reporting
Person is signing this statement only as to information respecting or furnished
by such person, and makes no representation as to information furnished by any
other Reporting Person.
The Reporting Persons are making this filing in the event that they
are collectively deemed to be a "group" within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended.
Item 3. Source and Amount of Funds or Other Consideration.
As of the date of this filing:
(i) CMCO directly and beneficially owns 54,912 shares of Common Stock.
CMCO acquired these shares on February 28, 1982 and paid $29,193 for the shares.
Funds for the purchase of these shares of Common Stock were provided from
working capital of CMCO.
(ii) Robert Davidoff directly and beneficially owns 2,946 shares of
Common Stock. He acquired these shares on February 28, 1982 and paid $1,566 for
these shares. Funds for the purchase of the shares were provided by personal
investment funds of Mr. Davidoff.
(iii) CMNY directly and beneficially owns 242,300 shares of Common
Stock. CMNY acquired these shares on August 7, 1978 and paid $57,481 for these
shares. Funds for the purchase of these shares was provided from working capital
of CMNY.
777188.2
6
<PAGE>
Except for Robert Davidoff as described above, Item 3 does not apply
to the officers and directors of CMCO or the Partners of CMNY.
Item 4. Purpose of Transaction.
Each of the Reporting Persons originally acquired its or his shares of
Common Stock for investment purposes. The Reporting Persons have continued to
hold the shares of Common Stock for investment purposes.
On November 16, 1998, CMCO entered into a letter agreement ("Letter
Agreement") with the Company pursuant to which, subject to the satisfaction of
certain conditions, an affiliate of CMCO ("Buyer"), will acquire by statutory
merger all of the issued and outstanding shares of Common Stock and options to
purchase shares of Common Stock for an aggregate amount of approximately $33
million in cash, or $7.57 per share for each share of Common Stock and $4.90 per
option (based upon a weighted average exercise price per option of $2.67).
Pursuant to the Letter Agreement, CMCO and its affiliates who own shares of
Common Stock will exchange or contribute all of their shares of Common Stock for
equity capital of Buyer, and various officers, directors and other affiliates of
the Company will exchange or contribute no less than 322,000 shares of Common
Stock owned by them for equity capital of Buyer. The proposed acquisition is
referred to herein as the "Acquisition."
Consummation of the Acquisition is conditioned, among other things,
upon certain conditions, including:
a. Approval of the Acquisition by the boards of directors of the
Company and Buyer.
b. Negotiation and execution by February 15, 1999 of a definitive
merger agreement ("Merger Agreement") in acceptable form and substance to the
Company and Buyer, which Merger Agreement must be approved by the board of
directors and stockholders of the Company.
c. Completion of the due diligence investigations by Buyer.
d. Obtaining all third party and government approvals and consents,
required for the Acquisition (including, without limitation, expiration of
termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act, if applicable).
e. The availability of sufficient senior and subordinated mezzanine
debt funds pursuant to financing commitments to enable Buyer to consummate the
Acquisition.
f. Termination of existing employment agreements with Herbert Barry,
Chairman of the Board and Chief Executive Officer of the Company ("Barry"), and
Robert K. Semel, President and Chief Operating Officer of the Company ("Semel"),
payment of the change of control obligations due thereunder (provided that such
payments shall not exceed $1.9 million to Barry and $1.5 million to Semel) and
negotiation and execution of new employment agreements with a term of three (3)
years on terms satisfactory to Buyer and its counsel, provided that such new
employment agreements with Barry and Semel shall provide for salary reductions
of $289,586 and $171,836, respectively, from the annual compensation amounts
currently being paid to Barry and Semel, and Buyer entering into voting
agreements with Barry and Semel pursuant to which Barry and Semel agree to vote
their shares of Common Stock to approve the Merger Agreement.
g. There having been filed no litigation or governmental proceeding
seeking to enjoin or challenging, or seeking damages in connection with, the
Acquisition.
777188.2
7
<PAGE>
h. There not having occurred any material adverse change in the
Company's business, operating results, financial condition, properties or
prospects.
The Letter Agreement further provides that until February 15, 1999 the
Company will not negotiate with any party (other than CMCO and Buyer) with
respect to an Acquisition Transaction (as defined in the Letter Agreement)
concerning the Company, including by merger, stock sale, asset sale, or any
related sale transaction, provided that in the good faith exercise of their
fiduciary responsibilities, the Board of Directors of the Company may furnish
information to and negotiate with a third party in response to an unsolicited
proposal ("Proposal") with respect to an Acquisition Transaction. If the Board
of Directors of the Company approves a Proposal or if the Letter Agreement is
terminated for any reason set forth in paragraphs (b), (c) or (d) below, the
Company must pay CMCO and Buyer their legal, accounting and environmental fees
and expenses of up to $250,000, and in addition pay them $350,000 in cash.
The Letter Agreement terminates automatically if the Merger Agreement
is not executed and delivered by February 15, 1999. The Letter Agreement also
may be terminated under the following conditions:
a. (i) at any time by mutual agreement of the Company, CMCO and Buyer,
or (ii) by the Company, CMCO or Buyer if the applicable condition to
consummation set forth above in Item 4 is not met;
b. by the Company upon notice to Buyer and CMCO if a Proposal with
respect to an Acquisition Transaction is received and approved by the Company's
Board of Directors from any person, entity or group, other than Buyer or an
affiliate of Buyer, which the Company's Board of Directors determines to be more
favorable to the Company and its stockholders than the Acquisition;
c. by Buyer and CMCO upon notice to the Company:
(i) if any entity or group, other than Buyer or an affiliate of
Buyer, commences a tender offer or exchange offer for shares of Common Stock, or
any of them, and (A) the Company through its Board of Directors takes any
position other than to recommend rejection of such offer or (B) 15% or more of
the outstanding shares of Common Stock are purchased pursuant to such offer;
(ii) if any person, as defined for purposes of the Act, as amended,
other than Buyer or an affiliate of Buyer, (A) acquires 15% or more of the
outstanding shares of Common Stock or (B) files a Schedule 13D or an Amendment
to Schedule 13D which reflects ownership of 15% or more of the outstanding
shares of Common Stock of the Company; or
(iii) if the Company's Board of Directors receives and approves a
Proposal with respect to an Acquisition Transaction; and
d. by Buyer and CMCO upon notice to the Company if an Acquisition
Transaction is consummated with a party other than Buyer or an affiliate of
Buyer.
Other than as expressly set forth in this Schedule 13D, the Reporting
Persons have no present plans or intentions which would result in or relate to
any of the transactions described in subparagraphs (a) through (j) of Item 4 of
Schedule 13D.
777188.2
8
<PAGE>
Item 5. Interest in Securities of the Issuer.
(a) The table below sets forth the aggregate number and percentage of
the outstanding shares of Common Stock owned beneficially by the Reporting
Persons:
Percentage
Number of Outstanding
Name Common Shares Common Shares (1)
- ---------- ------------- -----------------
CMCO, Inc. 54,912 1.31%
Robert Davidoff 2,946 (2) .07%
CMNY Capital, L.P. 242,300 5.80%
- -------------------
(1) Based upon 4,178,260 shares of Common Stock outstanding as of August 25,
1998.
(2) Does not include 54,912 shares of Common Stock owned of record by CMCO,
and 242,300 shares of Common Stock owned by CMNY, as to which shares of
Common Stock Mr. Davidoff disclaims beneficial ownership.
Except for Robert Davidoff, no officer or director of CMCO or Partner
of CMNY has any interest in the shares of Common Stock.
(b) Each Reporting Person has the sole power to vote or to direct the
vote and the sole power to dispose or to direct the disposition of its or his,
as the case may be, respective shares of Common Stock identified in paragraph
(a) above.
(c) No transactions in the shares of Common Stock have been effected
by the Reporting Persons within the past sixty days.
(d) No person is known to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
Reporting Persons' shares of Common Stock.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understanding or Relationships with Respect
to Securities of the Issuers.
Reference is made to the proposed Acquisition, which is described in
Item 4.
Except for the Acquisition, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the Reporting Persons
and between such persons and any person with respect to any securities of the
Company, including but not limited to transfer or voting of any of the
securities of the Company, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or loss,
or the giving or withholding of proxies.
777188.2
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<PAGE>
Item 7. Material to Be Filed as Exhibits.
Exhibit 1. Agreement pursuant to Rule 13d(f)(1) of the Securities
Exchange Act of 1934 with respect to joint Schedule 13D
filings.
Exhibit 2. Letter Agreement dated November 16, 1998.
777188.2
10
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief,
the undersigned certify that the information set forth in this statement is
true, correct and complete.
Dated: November 18, 1998 CMCO, INC.
By: /s/ Robert Davidoff
-----------------------
Name: Robert Davidoff
Title: Vice President
CMNY CAPITAL, L.P.
By: /s/ Robert Davidoff
------------------------
Name: Robert Davidoff
Title: General Partner
/s/ Robert Davidoff
------------------------
Robert Davidoff
777188.2
11
EXHIBIT 1
AGREEMENT PURSUANT TO RULE 13D-1(f)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
WITH RESPECT TO JOINT SCHEDULE 13D FILINGS
The undersigned acknowledge and agree that, with respect to securities
of Uniflex, Inc. held by CMCO, Inc., Robert Davidoff, and CMNY Capital, L.P.,
the undersigned may be required to file a statement containing the information
required by Schedule 13D under the Securities Exchange Act of 1934 (the
"Exchange Act") with respect to the same securities. Accordingly, pursuant to
Rule 13d-1(f)(1) of the Exchange Act, the undersigned acknowledge and agree that
such statements on Schedule 13D shall be deemed filed on behalf of each of them,
and that for such purpose each of the undersigned appoints Robert Davidoff and
Edwin S. Marks, or either of them, with power of substitution, to execute and
file, in the name and on behalf of the undersigned, any and all such Schedules
13D and amendments thereto.
Dated: November 18, 1998 CMCO, INC.
By: /s/ Robert Davidoff
------------------------
Name: Robert Davidoff
Title: Vice President
CMNY CAPITAL, L.P.
By: /s/ Robert Davidoff
-------------------------
Name: Robert Davidoff
Title: General Partner
/s/ Robert Davidoff
-------------------------
Robert Davidoff
777188.2
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EXHIBIT 2
LETTER AGREEMENT
CMCO, INC.
135 East 57th Street
New York, New York 10022
November 16, 1998
Uniflex, Inc.
383 West John Street
Hicksville, New York 11802
Attention: Mr. Robert K. Semel
Dear Bob:
This letter agreement sets forth the intention of the parties hereto
with respect to the proposed acquisition of all of the outstanding shares of
common stock, $.10 par value per share (the "Common Stock"), and all outstanding
options ("Options"), of Uniflex, Inc., a Delaware corporation (the "Company"),
by an acquisition entity ("Buyer") to be formed by CMCO, Inc., a New York
corporation ("CMCO") and its affiliates, upon the terms and subject to the
conditions set forth herein (the "Acquisition").
By executing this letter agreement, the parties confirm their
intentions specified herein with respect to the Acquisition, but (except for the
provisions of paragraphs 5, 6, 7, 9, 10 and 11 hereof, which are intended to be
legally binding and enforceable upon the execution of this letter agreement and
which shall survive the termination of this letter agreement unless and until
modified or terminated by a definitive Merger Agreement (as defined below)) this
letter agreement is not intended to constitute a contract nor an offer to enter
into a contract nor to be binding upon the parties or create legal obligations
or rights. If the parties fail to execute and deliver a definitive agreement and
plan of merger with respect to the merger of the Company with Buyer or a
subsidiary of Buyer ("Merger Agreement"), subject only to the terms set forth
therein by February 15, 1999, then this letter agreement shall terminate
automatically (except for the provisions of paragraphs 5, 6, 7, 9, 10 and 11 as
aforesaid) without liability on the part of any party and without further action
by the parties.
It is understood and agreed that CMCO has not completed its due
diligence investigation of the Company of the sort contemplated by paragraph
4(b) hereof and that its proposal regarding the Acquisition and this letter
agreement was prepared based upon publicly available information and upon
certain limited information furnished to CMCO by the Company and representatives
of the Company.
Subject to the foregoing, it is the intention of the parties to
proceed with the proposed Acquisition as follows:
1. Form of Acquisition and Purchase Price. The transaction would take the
form of a statutory merger of the Company with Buyer or a subsidiary
of Buyer pursuant to which the holders of the Company's issued and
outstanding Common Stock and Options (exclusive of the shares of
Common Stock exchanged or contributed as contemplated in the next
sentence) would be entitled to receive an aggregate amount of
approximately $33 million in cash (exclusive of any fees and expenses
payable by the Company to Dunn
13
777188.2
<PAGE>
Johnston & Company, Inc. ("Dunn Johnston") pursuant to a separate
agreement between the Company and Dunn Johnston), or $7.57 per share
for each of the 4,178,860 shares of Common Stock outstanding and $4.90
per Option for each of the 279,350 Options outstanding based upon a
weighted average exercise price of $2.67 per share. Prior to
consummation of the merger, (i) CMCO and its affiliates who own shares
of Common Stock on the date hereof shall be obligated to exchange or
contribute all of their shares of Common Stock for equity capital of
Buyer; and (ii) officers of the Company, directors and other
affiliates of the Company listed on Schedule 1 hereto shall be
obligated to exchange or contribute no less than 322,000 shares of
Common Stock owned by them for equity capital of Buyer, as set forth
on Schedule 1 hereto.
2. Conditions. Consummation of the Acquisition is conditioned, among
other things, upon certain conditions, including:
a. Approval of the Acquisition by the boards of directors of the
Company and Company.
b. Negotiation and execution of a definitive Merger Agreement in
acceptable form and substance to the Company and Buyer and the
shareholders of the Company exchanging or contributing their
shares of Common Stock for equity capital of Buyer pursuant to
paragraph 1 above, including representations, warranties,
covenants, agreements and conditions as may be mutually agreed
to by the parties hereto and as are customarily set forth in
agreements of this nature and subject, which Merger Agreement
must be approved by the board of directors and stockholders of
the Company.
c. Completion of the due diligence investigations described in
paragraph 4(b) below to the satisfaction of Buyer, its counsel
and other advisors, provided that the Merger Agreement will not
contain a due diligence condition as a condition to the closing
of the Acquisition.
d. Obtaining all third party and governmental approvals and
consents, required for the Acquisition (including, without
limitation, expiration or termination of the waiting period under
the Hart-Scott- Rodino Antitrust Improvements Act, if
applicable).
e. The availability of sufficient senior and subordinated mezzanine
debt funds pursuant to financing commitments to enable Buyer to
consummate the Acquisition, which financing commitments shall be
on terms that are commercially reasonable. The financing is
further discussed in paragraph 4(a) herein.
f. Termination of existing employment agreements with Herbert Barry,
Chairman of the Board and Chief Executive Officer of the Company
("Barry"), and Robert K. Semel, President and Chief Operating
Officer of the Company ("Semel"), payment of the change of
control obligations due thereunder (provided that such payments
shall not exceed $1.9 million to Barry and $1.5 million to Semel)
and negotiation and execution of new employment agreements with a
term of three (3) years on terms satisfactory to Buyer and its
counsel, provided that such new employment agreements with Barry
and Semel shall provide for compensation reductions of $289,586
and $171,836, respectively, from the annual compensation levels
estimated to be paid in fiscal 1999 to Barry and Semel, and Buyer
entering into voting agreements with Barry and Semel as
contemplated in paragraph 3 below.
g. There having been filed no material litigation or governmental
proceeding seeking to enjoin or challenging, or seeking damages
in connection with, the Acquisition.
h. There not having occurred any material adverse change in the
Company's business, operating results, financial condition,
properties or prospects.
777188.2
14
<PAGE>
3. Agreements with respect to Voting of Shares of Common Stock Owned By
Barry and Semel. Simultaneously with the execution of the Merger
Agreement and as a condition thereto, each of Barry and Semel shall
enter into an agreement with Buyer pursuant to which they will agree,
so long as the Merger Agreement is in effect, to vote all of the
shares of Common Stock and Options owned by them for the merger and
the transactions under the Merger Agreement.
4. Financing; Due Diligence. (a) Funding for the Acquisition will be
provided by a combination of senior and subordinated mezzanine debt
financing and a common equity investment by CMCO and its affiliates
and the persons on Schedule 1 hereto who are contributing or
exchanging their shares of Common Stock for equity capital of Buyer
(the equity portion will be approximately 25%-30%). As part of the
debt financing, CMCO and Buyer intend to obtain for the Company a
significant unfunded revolving credit facility to be used for future
acquisitions, working capital and other purposes. The Company agrees
to cooperate with and assist CMCO and the Buyer in obtaining the
senior and subordinated mezzanine debt financing commitments by
providing information and making available senior management to
prospective financing sources as may be reasonably requested by CMCO
and Buyer. CMCO believes that the senior and subordinated mezzanine
debt financing commitments can be obtained by February 15, 1999. The
Merger Agreement shall contain a senior and subordinated mezzanine
debt financing condition as a condition to the closing of the
Acquisition, provided, however, that the senior and subordinated
mezzanine debt financing commitments shall be obtained prior to, or
simultaneously with, the entering into of the Merger Agreement.
(b) Upon the execution of this letter agreement, it is agreed
that CMCO, Buyer, their financing sources and their representatives
may continue and complete the business, financial, accounting and
legal due diligence investigation of the Company. The parties hereto
acknowledge that prospective debt financing sources of CMCO and Buyer
have not commenced their due diligence investigation of the Company.
With respect to the accounting and financial due diligence,
immediately after execution of this letter agreement CMCO will retain
an accounting firm to perform customary accounting and financial due
diligence and review the financial and accounting records and
information of the Company. The Merger Agreement shall not contain a
due diligence condition as a condition to the closing of the
Acquisition.
5. Confidentiality. In connection with the negotiation and preparation of
the Merger Agreement and other documents referred to herein and CMCO's
and Buyer's due diligence investigation referred to in paragraph 4(b)
above, the Company will make available to CMCO and Buyer and their
respective representatives all information relating to the Company and
senior management personnel which CMCO and Buyer and their respective
representatives may reasonably request. Buyer will make available to
the Company all information relating to Buyer that must, in the
opinion of counsel to the Company, be disclosed to the stockholders of
the Company pursuant to state and/or federal securities laws. Any
information concerning the Company or its affiliates disclosed to
Buyer, its affiliates or their respective representatives or
concerning Buyer or its affiliates disclosed to the Company, its
affiliates or their respective representatives, which has not been
publicly disclosed shall be kept strictly confidential by them and
shall not be disclosed or used by the recipients whether or not the
closing under the Merger Agreement occurs and until publicly disclosed
by the Company or Buyer, as the case may be. In the event that this
letter agreement is terminated or a definitive Merger Agreement is not
executed or is terminated by the parties, all documents, if any, of a
confidential nature, and copies thereof delivered by the Company to
CMCO or Buyer, their affiliates or their respective representatives or
delivered by CMCO or Buyer to the Company, its affiliates or their
respective representatives shall be immediately returned. No press
releases concerning this letter agreement or the Acquisition shall be
issued, nor shall the terms of this letter agreement be disclosed to
third parties, other than to the representatives of the parties as
contemplated in paragraph 4 above, without the mutual consent of the
Company, CMCO and Buyer (which consents will not be unreasonably
withheld), except as may be required by federal and/or
777188.2
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state securities laws and except for a press release to be issued by
the Company upon execution of this letter agreement with respect to
this letter agreement and the Acquisition, provided that if the
Company discloses this letter agreement or its terms in compliance
with such laws, it will consult with CMCO and Buyer as to the contents
and timing of such release. Buyer, CMCO and the Company will agree
upon the timing and nature of the announcement of the transaction to
employees of the Company.
6. No-Shop. (a) In recognition of the substantial time and effort which
CMCO has invested, and Buyer and CMCO will hereafter invest, in
investigating the Company and its business and in addressing the
matters related to the proposed Acquisition and the financing of the
proposed Acquisition, each of which may preempt or delay conduct of
other business activities by CMCO and its affiliates, the Company
agrees as follows:
(i) the Company and it officers, directors, employees,
representatives and agents shall cease any discussions or negotiations
with any parties conducted prior to the date hereof (such parties
referred to herein as the "Existing Non-CM Parties") other than CMCO
with respect to any Acquisition Transaction (as hereafter defined);
and
(ii) the Company and its subsidiaries, their respective officers,
directors, stockholders, employees and investment bankers, attorneys,
accountants or other representatives or agents will not solicit,
initiate, encourage, continue or enter into negotiations, directly or
indirectly, with, any person, firm, corporation or other entity
relating to an Acquisition Transaction, including any person, firm,
corporation or other entity with whom the Company is currently
negotiating, other than Buyer and CMCO, with respect to an offer for
the sale of the Company, or any of the Company's business or assets,
or the Company's Common Stock or the capital stock of any of its
subsidiaries, directly, by merger, consolidation or otherwise until
February 15, 1999, provided, however, that in the good faith exercise
of their fiduciary responsibilities, the Board of Directors of the
Company may furnish information with respect to the Company and may
negotiate with any third party concerning an Acquisition Transaction
in response to any unsolicited inquiry, proposal or offer received
after the date hereof, including any unsolicited inquiry, proposal or
offer received after the date hereof from an Existing Non-CM Party
(all of such proposals or offers referred to herein collectively as
the "Proposals" or singularly as a "Proposal"). The Company shall
promptly notify in writing Buyer and CMCO with respect to any such
Proposal with respect to an Acquisition Transaction. If the Company's
Board of Directors shall approve a Proposal or an agreement with any
person or entity providing for an Acquisition Transaction or shall
recommend acceptance of, or shall fail to recommend rejection of, a
tender offer or exchange offer that, if successful, would result in an
Acquisition Transaction, or an Acquisition Transaction otherwise shall
have been consummated (each, a "Payment Event") then the Company shall
pay to Buyer or CMCO, the Acquisition Expenses (as defined in
paragraph 7), and the No-Shop Amount (as defined in paragraph 7). For
purposes hereof, "Acquisition Transaction" shall mean any bona fide
proposal made by a third party to acquire (a) beneficial ownership (as
defined under Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) of a majority or greater interest in the Company pursuant to
a merger, consolidation or other business combination, sale of shares
of capital stock, tender offer or exchange offer or similar
transaction involving the Company including, without limitation, any
single or multi-step transaction or series of related transactions
which is structured in good faith to permit such third party to
acquire beneficial ownership of a majority or greater equity interest
in the Company, or (b) 50% or more of the Company's business (measured
by revenues for the preceding fiscal year or the current fiscal year
through the last complete fiscal quarter preceding such proposal) or
consolidated assets of the Company (other than the transactions
contemplated hereby). The Merger Agreement shall also contain a
no-shop provision similar to that set forth in this paragraph 6(a) and
provide for the payment of the Acquisition Expenses and No-Shop Amount
pursuant to paragraph 7.
777188.2
16
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(b) The Company agrees, pending execution of the Merger
Agreement, to use its best efforts consistent with sound business
practices to conduct its business (including the business of its
subsidiaries) only in the ordinary course and consistent with past
practice and to preserve intact its business organization and
goodwill, keep available the services of its officers and employees
and maintain satisfactory relationships with suppliers, customers and
others having a business relationship with the Company. The Company
agrees not to take or permit any subsidiary to take any action which
would or which might reasonably be expected to hinder the proposed
Acquisition or render it less desirable to Buyer or CMCO
7. Fees and Expenses. If the Acquisition shall not be consummated, (i)
for any reason (other than the termination of this letter agreement
pursuant to paragraphs 9(b), 9(c), or 9(d) below), each party hereto
shall pay their own (and their representative's) respective fees and
expenses incurred in connection with the negotiation, preparation,
execution and delivery of this letter agreement and of the definitive
Merger Agreement and any other agreements or documents contemplated
hereby or thereby, (ii) by reason of the termination of this letter
agreement pursuant to paragraph 9(b), 9(c), or 9(d), (x) the Company
shall reimburse Buyer for all of its reasonable out-of-pocket expenses
incurred in connection with or relating to the Acquisition, which
shall include the reasonable fees and expenses of Buyer's and CMCO's
legal counsel and accountants, and any environmental consultant (which
legal, accounting and environmental fees and expenses shall not exceed
$250,000), and the commitment fees related to the senior debt and
subordinated mezzanine financing actually paid or contractually
required to be paid to investment funds, banks or other financial
institutions providing the funds to finance the Acquisition, provided,
however that the Company shall not be responsible for such commitment
fees if the Merger Agreement is not executed and delivered by the
parties) (the "Acquisition Expenses") and (y) the Company shall pay to
--- Buyer or CMCO in cash the amount of $350,000 ("No-Shop Amount").
All payments pursuant to this paragraph 7 shall be paid in cash by
wire transfer of immediately available funds and shall be due and
payable within 5 days after termination of this letter agreement
pursuant to the applicable subsection of paragraph 9.
8. Brokers. Each of the parties agrees that no finder's fee or broker's
commission shall by reason of its actions be payable by any other
party in connection with the transactions contemplated hereby and no
party knows of any such fees payable to any party, except that any
fees and expenses payable to Dunn Johnston pursuant to a separate
agreement between the Company and Dunn Johnston shall be paid by the
Company concurrent with the closing of the Acquisition but not from
the purchase price for the Acquisition.
9. Termination. This letter agreement may be terminated:
(a) (i) at any time by mutual agreement of the Company, CMCO and
Buyer, or automatically if the Merger Agreement is not executed and
delivered by the parties by February 15, 1999, or (ii) by the Company,
CMCO or Buyer if the applicable condition in paragraph 2 above is not
met;
(b) by the Company upon notice to Buyer and CMCO if a Proposal
with respect to an Acquisition Transaction is received and approved by
the Company's Board of Directors, or a Special Committee thereof, from
any corporation, limited liability company, partnership, person or
other entity or group other than Buyer or an affiliate of Buyer which
the Company's Board of Directors determines to be more favorable to
the Company and its stockholders than the Acquisition;
(c) by Buyer and CMCO upon notice to the Company;
(i) if any corporation, limited liability company,
partnership or other entity or group, other than Buyer or
an affiliate of Buyer, commences a tender offer or
exchange
777188.2
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<PAGE>
offer for shares of Common Stock, or any of them, and (A)
the Company through its Board of Directors takes any
position other than to recommend rejection of such offer
or (B) 15% or more of the outstanding shares of Common
Stock are purchased pursuant to such offer;
(ii) if any person, as defined for purposes of the
Securities Exchange Act of 1934, as amended, other than
Buyer or an affiliate of Buyer, (A) acquires 15% or more
of the outstanding shares of Common Stock or (B) files a
Schedule 13D or an Amendment to Schedule 13D which
reflects ownership of 15% or more of the outstanding
shares of Common Stock of the Company; or
(iii) if the Company's Board of Directors receives and
approves a Proposal with respect to an Acquisition
Transaction; and
(d) by Buyer and CMCO upon notice to the Company if an
Acquisition Transaction is consummated with a party other than
Buyer or an affiliate of Buyer.
10. Binding Effect. It is understood that this letter agreement merely
constitutes a statement of our mutual intentions with respect to the
proposed Acquisition, does not contain all matters upon which
agreement must be reached in order for the Merger Agreement to be
consummated and, therefore, does not constitute a binding agreement
with respect to the Merger Agreement itself. A binding Merger
Agreement with respect to the proposed Acquisition itself will
result only from the execution of the Merger Agreement, subject to
the conditions expressed therein. Notwithstanding the two preceding
sentences of this paragraph 10, the provisions of paragraphs 5, 6,
7, and 9, and this paragraph 10 and paragraph 11 below, are fully
binding on the Company and Buyer upon the execution of this letter
agreement and the provisions of paragraph 5 (as to confidentiality)
shall survive the termination of this letter agreement unless and
until it is superseded by a definitive Merger Agreement or other
agreement between Buyer and the Company.
11. Governing Law. The parties agree that this letter agreement and
respective rights and duties and obligations hereunder shall be
governed and construed in accordance with the laws of the State of
Delaware.
12. Prior Agreements. The agreements contained in this letter agreement
and that certain Confidentiality Agreement dated July 29, 1998
between the Company and CMCO supersede all prior agreements between
the parties relating to the subject written hereof.
777188.2
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<PAGE>
If the foregoing accurately sets forth our understanding, we request
that the Board of Directors of the Company approve this letter agreement and
evidence such approval by causing the enclosed copy of this letter agreement to
be signed on behalf of the Company, dated and returned to the undersigned.
Very truly yours,
CMCO, INC.
By /s/ Robert Davidoff
------------------------
Robert Davidoff
Vice President
Accepted and agreed
as of the date first
written above:
UNIFLEX, INC.
By: /s/ Robert K. Semel
-----------------------
Name: Robert K. Semel
Title: President
777188.2
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Schedule 1
Number of Shares To
Be Contributed or
Exchanged for
Name of Owner of Equity Capital
Shares of Common Stock of Buyer
- -------------------------------- -------------------------------
Herbert Barry 75,000
Robert K. Semel 75,000
Warner Heuman 75,000
[Balance to be provided by members of junior management of the Company
acceptable to CMCO]
777188.2
