UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Uniflex, Inc.
--------------------
(Name of Issuer)
Common Stock, $0.10 par value per share
------------
(Title of Class of Securities)
904711108
-----------------------
(CUSIP Number)
Uniflex Acquisition Corp.
c/o RFE Investment Partners
36 Grove Street
New Canaan, CT 06840
Attention: James A. Parsons, President
with copies to:
Charles J. Downey III, Esq. Thomas More Griffin, Esq. David Allan Miller, Esq.
Finn Dixon & Herling LLP Battle Fowler LLP Graubard Mollen
One Landmark Square 75 East 55th Street & Miller
Stamford, CT 06901 New York, NY 10022 600 Third Avenue
(203) 325-5000 (212) 856-7000 New York, NY 10016
(212) 818-8881
----------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
March 5, 1999
----------------------------------------
(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 ss.ss. 240.13d-1(3), 240.13d-1(f) or 240.13d-1(g), check the
following box |_|.
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purposes of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
Page 2 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Uniflex Acquisition Corp.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 2,163,878
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
0
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,163,878
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
50.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
<PAGE>
Page 3 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RFE VI SBIC, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 2,163,878
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
0
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,163,878
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
50.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
<PAGE>
Page 4 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RFE Associates VI SBIC, LLC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 2,163,878
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
0
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,163,878
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
50.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO-LLC
- --------------------------------------------------------------------------------
<PAGE>
Page 5 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RFE Investment Partners VI, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 2,163,878
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
0
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,163,878
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
50.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
<PAGE>
Page 6 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RFE Associates VI, LLC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 2,163,878
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
0
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,163,878
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
50.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO-LLC
- --------------------------------------------------------------------------------
<PAGE>
Page 7 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CMCO, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 54,912
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
54,912
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
54,912
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
<PAGE>
Page 8 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Sterling/Carl Marks Capital, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 0
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
0
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
<PAGE>
Page 9 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CMNY Capital, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 242,300
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
242,300
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
242,300
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.6%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
<PAGE>
Page 10 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Robert Davidoff
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 2,946
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
2,946
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,946
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |X|
Excludes 54,912 shares held by CMCO and 242,300 shares held by CMNY.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
Page 11 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Robert K. Semel
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 433,800
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
433,800
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
433,800
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |X|
Excludes 300 shares held by Frances M. Semel, Robert K. Semel's wife, as
custodian for her son.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
Page 12 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Frances M. Semel, as custodian for Scott V. Eckstein
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 300
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
300
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
300
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |X|
Excludes 433,800 shares owned by Robert K. Semel, Frances M. Semel's
husband.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
Page 13 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Herbert Barry
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 435,576
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
435,576
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
435,576
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |X|
Excludes 34,914 shares owned by Betty Lou Barry, Herbert Barry's wife.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
Page 14 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Betty Lou Barry
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 34,914
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
34,914
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
34,914
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |X|
Excludes 435,576 shares owned by Herbert Barry, Betty Lou Barry's husband.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
Page 15 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warner J. Heuman
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 326,420
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
326,420
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
326,420
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |X|
Excludes 129,100 shares owned by Elaine B. Heuman, Warner J. Heuman's
wife.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.6%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
Page 16 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Elaine B. Heuman
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 129,100
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
129,100
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
129,100
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |X|
Excludes 266,420 shares and currently exercisable options to purchase
60,000 shares owned by Warner J. Heuman, Elaine B. Heuman's husband.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
Page 17 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Erich K. Vetter
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 288,999
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
288,999
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
288,999
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.7%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
Page 18 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Elliot L. Berger
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 87,300
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
87,300
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
87,300
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
Page 19 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Lee B. Cantor
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 62,704
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
17,101
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
45,603
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
62,704
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |X|
Excludes 11,797 shares owned by Melissa H. Cantor, Lee B. Cantor's wife.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
Page 20 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Melissa H. Cantor
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 57,400
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
11,797
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
45,603
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
57,400
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |X|
Excludes 17,101 shares owned by Lee B. Cantor, Melissa H. Cantor's
husband.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
Page 21 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Hy L. Brownstein
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 22,710
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
4,875
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
17,835
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
22,710
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
Page 22 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Judith R. Brownstein
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 17,835
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
0
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
17,835
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
17,835
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |X|
Excludes 4,875 shares owned by Hy L. Brownstein, Judith R. Brownstein's
husband.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
Page 23 of 51 Pages
CUSIP NO. 904711108 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Neil S. Sklar
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A)|_|
(B)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING 30,100
PERSON --------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
30,100
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
30,100
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
Page 24 of 51 Pages
Statement on Schedule 13D
This Statement on Schedule 13D (this "Schedule 13D") relates to the
beneficial ownership of the common stock, par value $0.10 per share (the "Common
Stock"), of Uniflex, Inc., a Delaware corporation (the "Company"). CMCO, Inc., a
Delaware corporation ("CMCO"), CMNY Capital, L.P., a Delaware limited
partnership ("CMNY"), and Robert Davidoff previously filed as a group, a
statement on Schedule 13D dated November 18, 1998, as amended by Amendment No. 1
dated February 16, 1999, relating to the Common Stock. The items in such
statement are hereby superseded as set forth in this Schedule 13D. This Schedule
13D is being filed on behalf of the Reporting Persons (as defined below).
ITEM 1. SECURITY AND COMPANY.
The class of equity securities to which this statement relates is the
Common Stock issued by the Company, which has its principal executive office at
383 West John Street, Hicksville, New York 11802.
ITEM 2. IDENTITY AND BACKGROUND.
(a) and (c) This statement on Schedule 13D is being filed on behalf of
each of the following (collectively, the "Reporting Persons" and individually a
"Reporting Person"):
(i) Uniflex Acquisition Corp., a Delaware corporation
("Acquisition");
(ii) RFE VI SBIC, L.P., a Delaware limited partnership ("RFE VI
SBIC");
(iii) RFE Associates VI SBIC, LLC, a Delaware limited liability
company ("RFE Associates VI SBIC");
(iv) RFE Investment Partners VI, L.P., a Delaware limited
partnership ("RFE Investment Partners");
(v) RFE Associates VI, LLC, a Delaware limited liability company
("RFE Associates VI");
(vi) CMCO;
(vii) Sterling/Carl Marks Capital, Inc., a New York corporation
("Sterling/Carl Marks");
(viii) CMNY;
<PAGE>
Page 25 of 51 Pages
(ix) Robert Davidoff;
(x) Robert K. Semel;
(xi) Frances M. Semel, as custodian for Scott V. Eckstein;
(xii) Herbert Barry;
(xiii) Betty Lou Barry;
(xiv) Warner J. Heuman;
(xv) Elaine B. Heuman;
(xvi) Erich K. Vetter;
(xvii) Elliot L. Berger;
(xviii) Lee B. Cantor;
(xix) Melissa H. Cantor;
(xx) Hy L. Brownstein;
(xxi) Judith R. Brownstein; and
(xxii) Neil S. Sklar.
As used in this Schedule 13D, the term "Stockholders" includes every
Reporting Person other than Acquisition, RFE VI SBIC, RFE Associates VI SBIC,
RFE Investment Partners and RFE Associates VI.
The Reporting Persons are making this single, joint filing because they
may be deemed to constitute a "group" within the meaning of Section 13(d)(3) of
the Act. The Agreement among the Reporting Persons to file as a group is
attached hereto as Exhibit 1. Each Reporting Person disclaims the existence of a
"group" and disclaims beneficial ownership of all shares of Common Stock other
than any shares reported herein as being owned by it, him or her, as the case
may be. 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 beneficial 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
<PAGE>
Page 26 of 51 Pages
Person is signing this statement only as to information with respect to, or
furnished by, such Reporting Person, and makes no representation as to
information furnished by any other Reporting Person.
(A) Acquisition, RFE VI SBIC, RFE Associates VI SBIC, RFE Investment
Partners, and RFE Associates VI:
Acquisition is a corporation formed solely for the purpose of consummating
the transactions contemplated by the Merger Agreement (as defined below). All of
the interests in Acquisition are owned by RFE VI SBIC. RFE VI SBIC is a private
investment partnership. RFE Associates VI SBIC is the sole general partner of
RFE VI SBIC. RFE Investment Partners is the sole member of RFE Associates VI
SBIC. RFE Associates VI is the sole general partner of RFE Investment Partners.
The following persons are executive officers or directors of Acquisition,
and are employed in the following principal occupations:
Name Principal Occupation
---- --------------------
James A. Parsons Managing Member of RFE
(President and Secretary of Acquisition) Associates VI; Managing
Member/General Partner of
other private investment
partnerships which have been
organized by the individuals
identified below in this
sub-section (A).
A. Dean Davis Managing Member of RFE
(Vice President of Acquisition) Associates VI; Managing
Member/General Partner of
other private investment
partnerships which have been
organized by the individuals
identified below in this
sub-section (A).
The following persons are managing members of RFE Associates VI. The
principal occupation of each such individual is serving as Managing Member of
RFE Associates VI and as General Partner/Managing Member of other private
investment partnerships which have been organized by such individuals:
A. Dean Davis
Michael J. Foster
<PAGE>
Page 27 of 51 Pages
Howard C. Landis
James A. Parsons
Andrew J. Wagner
Robert M. Williams
(B) CMCO, Sterling/Carl Marks, CMNY and Robert Davidoff:
The principal business of CMCO is to invest in various business entities.
The principal business of Sterling/Carl Marks is to invest in various
business entities.
CMNY is a small business investment partnership 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.
The following persons are executive officers or directors of CMCO, and are
employed in the following principal occupations:
Name Principal Occupation
---- --------------------
Edwin S. Marks President, Director of CMCO
Mark L. Claster Vice President, Assistant Secretary of CMCO
Andrew M. Boas Vice President of CMCO
Robert Davidoff Vice President of CMCO
David F. Shnitkin Controller, Secretary of CMCO
Nancy A. Marks Director of CMCO and Private Investor
Marjorie M. Boas Director of CMCO and Private Investor
The following persons are executive officers or directors of Sterling/Carl
Marks, and are employed in the following principal occupations:
- --------------------------------------------------------------------------------
Name Title Principal Occupation
- ---- ----- --------------------
- --------------------------------------------------------------------------------
Harvey Granat President, Director President of Sterling/Carl
Marks Capital, Inc.
- --------------------------------------------------------------------------------
Howard Davidoff Director Vice President, CMNY Capital
II, L.P.
- --------------------------------------------------------------------------------
Harvey Rosenblatt Executive Vice President Executive Vice President of
Director Sterling/Carl Marks Capital,
Inc.
- --------------------------------------------------------------------------------
<PAGE>
Page 28 of 51 Pages
- --------------------------------------------------------------------------------
Robert G. Davidoff Director Vice President of CMCO
- --------------------------------------------------------------------------------
Arthur Friedman Secretary Secretary of Sterling
Equities, Inc.
- --------------------------------------------------------------------------------
Michael Katz Assistant Secretary, Chief Financial Officer of
Assistant Treasury, Sterling Equities, Inc.
Director
- --------------------------------------------------------------------------------
George Fishman Director Private Investor
- --------------------------------------------------------------------------------
Saul B. Katz Director President, Sterling Equities,
Inc.
- --------------------------------------------------------------------------------
Marvin B. Tepper Director Senior Vice President,
Sterling Equities, Inc.
- --------------------------------------------------------------------------------
Mark L. Claster Director Vice President, Assistant
Secretary of CMCO
- --------------------------------------------------------------------------------
The following persons are general partners of CMNY, and are employed in
the following principal occupations:
Name Principal Occupation
---- --------------------
Robert Davidoff Vice President of CMCO; General Partner of CMNY
Edwin S. Marks President and Director of CMCO; General Partner of CMNY
(b) The business address for each of Acquisition, RFE VI SBIC, RFE
Associates VI SBIC, RFE Investment Partners, RFE Associates VI, James A.
Parsons, A. Dean Davis, Michael J. Foster, Howard C. Landis, Andrew J. Wagner
and Robert M. Williams is 36 Grove Street, New Canaan, Connecticut 06840.
The business address for each of CMCO, CMNY, Robert Davidoff, Edwin S.
Marks, Mark L. Claster, Andrew M. Boas, David F. Shnitkin, Nancy A. Marks, and
Marjorie M. Boas is 135 East 57th Street, New York, New York 10022.
The business address for each of Sterling/Carl Marks and Messrs. Granat,
Rosenblatt, Friedman, Michael Katz, Saul Katz, and Tepper is c/o Sterling
Equities, Inc., 100 Great Neck Road, Great Neck, NY 11021.
The business address for Mr. Fishman is 35 Frost Creek Drive, Locust
Valley, NY 11560.
The business address for each of the other Reporting Persons is c/o the
Company, 383 West John Street, Hicksville, New York 11802.
<PAGE>
Page 29 of 51 Pages
(d) No Reporting Person or other person listed in Item 2 of this Schedule
13D has been convicted during the last five years in a criminal proceeding
(excluding traffic violations or similar misdemeanors).
(e) No Reporting Person or other person listed in Item 2 of this Schedule
13D has been during the last five years a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding is or has been subject to any civil 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 in respect
to such laws.
(f) Acquisition, RFE VI SBIC, RFE Associates VI SBIC, RFE Investment
Partners, RFE Associates VI, CMCO and CMNY are organized under the laws of
Delaware. Sterling/Carl Marks is organized under the laws of New York. All
natural persons listed in Item 2 of this Schedule 13D are citizens of the United
States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Acquisition may be deemed to have acquired beneficial ownership of
2,163,878 shares of the Common Stock by virtue of the Voting Agreements (as
defined and described in Item 6), representing approximately 50.3% of the issued
and outstanding shares of Common Stock. Acquisition requested that the
Stockholders, all of which are present stockholders of the Company (except
Sterling/Carl Marks, which is not presently a stockholder of the Company but
which is party to the Sterling/Carl Marks Commitment Letter described below)
enter into the Voting Agreements as a condition to Acquisition's willingness to
enter into the Merger Agreement (as defined and described in Item 4). The Voting
Agreements will also apply to shares of Common Stock that may be acquired after
the date thereof by such Stockholders. No additional consideration was given in
exchange for the Voting Agreements.
The following description of shares of Common Stock acquired and held by
the indicated persons is expressed in terms of currently outstanding shares and,
in certain cases, includes the effect of stock dividends declared and paid
subsequent to the date of acquisition.
CMCO currently 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.
Robert Davidoff currently 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.
CMNY currently 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 of Common Stock were provided from working capital of
CMNY.
Except for Robert Davidoff as described above, Item 3 does not apply to
the officers and directors of CMCO or the Partners of CMNY.
Robert K. Semel currently owns 433,800 shares of Common Stock which were
acquired as follows: 270,000 shares were purchased from the Company for an
aggregate purchase price of approximately $202,500, of which $198,000 was
provided by a loan from the Company and the balance came from personal funds;
141,000 shares were purchased from the Company upon the exercise of stock
options with personal funds for an aggregate purchase price of approximately
<PAGE>
Page 30 of 51 Pages
$75,180; 22,650 shares were issued to Mr. Semel by the Company as bonus
compensation; and 150 shares were purchased in market transactions with personal
funds for an aggregate purchase price of approximately $600.
Frances M. Semel, as custodian for Scott V. Eckstein, holds 300 shares of
Common Stock, which were purchased in market transactions with personal funds
for an aggregate purchase price of approximately $1,100.
Herbert Barry owns 435,576 shares of Common Stock which were acquired as
follows: 113,946 shares were purchased in market transactions with personal
funds for an aggregate purchase price of approximately $102,551; 177,630 shares
were purchased from family members with personal funds for an aggregate purchase
price of approximately $96,000; 7,500 shares were issued to Mr. Barry by the
Company as bonus compensation; and 136,500 shares were purchased from the
Company upon the exercise of stock options with personal funds for an aggregate
purchase price of approximately $56,725.
Betty Lou Barry owns 34,914 shares of Common Stock which were acquired as
follows: 34,764 shares were acquired by gift from her spouse and a family
member; and 150 shares were purchased in market transactions with personal funds
for an aggregate purchase price of approximately $600.
Warner J. Heuman owns 266,420 shares of Common Stock (exclusive of 60,000
shares of Common Stock subject to currently exercisable stock options) which
were issued to him as a founder of the Company upon its initial capitalization.
Elaine B. Heuman owns 129,100 shares of Common Stock which were acquired
by gift from her spouse.
Erich K. Vetter owns 288,999 shares of Common Stock which were acquired as
follows: Mr. Vetter was a founder of the Company and 226,000 shares were
acquired from the Company upon its initial capitalization; 60,000 shares were
purchased from the Company upon the exercise of stock options with personal
funds for an aggregate purchase price of approximately $41,202; and 2,999 shares
were purchased in market transactions with personal funds for an aggregate
purchase price of approximately $9,700.
Elliot L. Berger owns 87,300 shares of Common Stock which were acquired as
follows: 50,000 shares were issued to Mr. Berger by the Company in connection
with a business acquisition by the Company; 36,750 shares were purchased in
market transactions with personal funds for an aggregate purchase price of
approximately $174,287; and 550 shares were issued to Mr. Berger by the Company
as bonus compensation.
<PAGE>
Page 31 of 51 Pages
Lee B. Cantor owns individually 17,101 shares of Common Stock which were
acquired as follows: 4,901 shares were purchased in market transactions with
personal funds for an aggregate consideration of approximately $19,604; 9,300
shares were purchased from the Company upon the exercise of stock options with
personal funds for an aggregate purchase price of approximately $27,900; and
2,900 shares were issued to Mr. Cantor by the Company as bonus compensation.
Melissa H. Cantor owns individually 11,797 shares of Common Stock which
were acquired as follows: 6,951 shares were purchased in market transactions
with personal funds for an aggregate consideration of approximately $10,426;
2,250 shares were purchased from the Company upon the exercise of stock options
with personal funds for an aggregate purchase price of approximately $9,000; and
2,596 shares were acquired by gift from a family member.
Lee B. Cantor and Melissa H. Cantor own jointly 45,603 shares of Common
Stock which were purchased in market transactions with personal funds for an
aggregate purchase price of approximately $228,015.
Hy L. Brownstein owns individually 4,875 shares of Common Stock issued to
him by the Company as bonus compensation and Hy L. Brownstein and Judith R.
Brownstein own jointly 17,835 shares of Common Stock which were purchased in
market transactions with personal funds for an aggregate purchase price of
approximately $62,014.
Neil S. Sklar owns 30,100 shares of Common Stock which were acquired as
follows: 27,100 shares were issued to Mr. Sklar by the Company in connection
with a business acquisition by the Company; and 3,000 shares were purchased in
market transactions with personal funds for an aggregate purchase price of
approximately $21,000.
ITEM 4. PURPOSE OF TRANSACTION.
On March 5, 1999, Acquisition entered into an Agreement and Plan of Merger
and Recapitalization (the "Merger Agreement") with the Company. Subject to the
satisfaction or waiver of certain terms and conditions of the Merger Agreement,
Acquisition will merge (the "Merger") with and into the Company and, as a result
of the Merger, RFE VI SBIC, the sole stockholder of Acquisition, will own
approximately 49% of the issued and outstanding shares of Surviving Corporation
Common Stock (as defined in the Merger Agreement). In connection with the Merger
Agreement, Acquisition entered into the Voting Agreements with the Stockholders
who, collectively, own approximately 50.3% of the issued and outstanding shares
of Common Stock. In addition, as described under Item 6, Sterling/Carl Marks has
delivered a letter to the Company indicating its commitment to purchase
additional shares of Common Stock immediately prior to the consummation of the
Merger. However, because Sterling/Carl Marks will have acquired such shares
immediately prior to the Merger, it is unlikely that such shares will be
eligible to vote upon the
<PAGE>
Page 32 of 51 Pages
approval of the Merger. The purpose of the Voting Agreements and the
transactions contemplated thereby is to facilitate approval of the Merger.
At the Effective Time (as defined in the Merger Agreement), Acquisition
will be merged with and into the Company, with the Company continuing as the
Surviving Corporation (as defined in the Merger Agreement) and the directors
identified in the Merger Agreement serving as the initial directors of the
Surviving Corporation.
At the Effective Time (as defined in the Merger Agreement), each share of
Common Stock held by the Company's stockholders (other than Treasury Securities
and Dissenting Shares (each as defined in the Merger Agreement) and other than
Retained Shares (as defined in the Merger Agreement), which Retained Shares will
represent approximately 51% of the total outstanding shares of Surviving
Corporation Common Stock) will be converted into the right to receive $7.57 in
cash.
Except as otherwise agreed to in writing between the Company and the
holder of any Option (as defined in the Merger Agreement), and as consented to
by Acquisition, immediately prior to the Effective Time (as defined in the
Merger Agreement), each outstanding Option granted under the Stock Option Plans
(as defined in the Merger Agreement) or otherwise, whether or not then
exercisable, shall be canceled by the Company, and at the Effective Time, or as
soon as practicable thereafter, the former holder thereof shall be entitled to
receive from the Company in consideration for such cancellation an amount in
cash equal to the product of (i) the number of vested shares of Common Stock
previously subject to such Option and (ii) the excess, if any, of $7.57 over the
exercise price per share, if any, previously subject to such Option, reduced by
the amount of withholding or other taxes required by law to be withheld.
Upon the consummation of the Merger, the issued and outstanding shares of
Acquisition will be converted into approximately 49.0% of the total outstanding
shares of Surviving Corporation Common Stock.
It is anticipated that the transactions contemplated in the Merger
Agreement will result in the Common Stock ceasing to be quoted on the American
Stock Exchange and becoming eligible for termination of registration pursuant to
the Act.
The foregoing description of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the text of such
agreement, which is filed as an exhibit to this Schedule 13D and is incorporated
by reference herein.
ITEM 5. INTEREST IN SECURITIES OF THE COMPANY.
<PAGE>
Page 33 of 51 Pages
(a) Acquisition: Pursuant to the proxy granted in the Voting Agreements,
Acquisition has the shared power to vote, or to direct the vote of, an aggregate
of 2,163,878 shares of Common Stock held by the Stockholders, representing
approximately 50.3% of the outstanding shares of Common Stock (calculated on the
basis of the 4,300,352 shares outstanding, as provided by the Company to the
Reporting Persons). Acquisition does not own of record any shares of Common
Stock.
RFE VI SBIC: By virtue of its position as sole stockholder of Acquisition,
RFE VI SBIC may be deemed to have the power to vote, or the power to direct the
vote of, all of the shares of Common Stock which Acquisition has the power to
vote, or of which Acquisition has the power to direct the vote. RFE VI SBIC does
not own of record any shares of Common Stock.
RFE Associates VI SBIC: By virtue of its position as general partner of
RFE VI SBIC, RFE Associates VI SBIC may be deemed to have the power to vote, or
the power to direct the vote of, all of the shares of Common Stock which
Acquisition has the power to vote, or of which Acquisition has the power to
direct the vote. RFE Associates VI SBIC does not own of record any shares of
Common Stock.
RFE Investment Partners: By virtue of its position as sole member of RFE
Associates VI SBIC, RFE Investment Partners may be deemed to have the power to
vote, or the power to direct the vote of, all of the shares of Common Stock
which Acquisition has the power to vote, or of which Acquisition has the power
to direct the vote. RFE Investment Partners does not own of record any shares of
Common Stock.
RFE Associates VI: By virtue of its position as general partner of RFE
Investment Partners, RFE Associates VI may be deemed to have the power to vote,
or the power to direct the vote of, all of the shares of Common Stock which
Acquisition has the power to vote, or of which Acquisition has the power to
direct the vote. RFE Associates VI does not own of record any shares of Common
Stock.
Each of the individuals identified in Item 2 as managing members of RFE
Associates VI, by virtue of his or her position as a managing member of RFE
Associates VI, may be deemed to share the power to vote or direct the voting of
and to dispose or direct the disposition of the shares of Common Stock
beneficially owned by certain of the Reporting Persons. Each such individual
disclaims beneficial ownership of all shares of Common Stock. No such individual
owns of record any shares of Common Stock.
<PAGE>
Page 34 of 51 Pages
Other Reporting Persons:
The table below sets forth the aggregate number and percentage of the
outstanding shares of Common Stock owned beneficially by the following Reporting
Persons:
Percentage of
Number of Outstanding
Name Common Shares Common Shares(1)
- ---- ------------- ----------------
CMCO 54,912 1.3%
Sterling/Carl Marks 0 0.0%
CMNY 242,300 5.6%
Robert Davidoff 2,946 (2) 0.1%
Robert K. Semel 433,800 (3) 10.1%
Frances M. Semel, as custodian
for Scott V. Eckstein 300 (4) 0.0%
Herbert Barry 435,576 (5) 10.1%
Betty Lou Barry 34,914 (6) 0.8%
Warner J. Heuman 326,420 (7) 7.6%
Elaine B. Heuman 129,100 (8) 3.0%
Erich K. Vetter 288,999 6.7%
Elliot L. Berger 87,300 2.0%
Lee B. Cantor 62,704 (9) 1.5%
Melissa H. Cantor 57,400(10) 1.3%
Hy L. Brownstein 22,710(11) 0.5%
Judith R. Brownstein 17,835(12) 0.4%
Neil S. Sklar 30,100 0.7%
(1) Calculated on the basis of 4,300,352 shares outstanding, as provided by
the Company to the Reporting Persons.
(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 Robert Davidoff disclaims beneficial ownership.
(3) Does not include 300 shares of Common Stock held by Frances M. Semel,
Robert K. Semel's wife, as custodian for her son, as to which shares of
Common Stock Robert K. Semel disclaims beneficial ownership.
<PAGE>
Page 35 of 51 Pages
(4) Does not include 433,800 shares of Common Stock owned by Robert K. Semel,
Frances M. Semel's husband, as to which shares of Common Stock Frances M.
Semel disclaims beneficial ownership.
(5) Does not include 34,914 shares of Common Stock owned by Betty Lou Barry,
Herbert Barry's wife, as to which shares of Common Stock Herbert Barry
disclaims beneficial ownership.
(6) Does not include 435,576 shares of Common Stock owned by Herbert Barry,
Betty Lou Barry's husband, as to which shares of Common Stock Betty Lou
Barry disclaims beneficial ownership.
(7) Includes 60,000 shares of Common Stock subject to currently exercisable
options; does not include 129,100 shares of Common Stock owned by Elaine
B. Heuman, Warner J. Heuman's wife as to which shares of Common Stock
Warner J. Heuman disclaims beneficial ownership.
(8) Does not include 266,420 shares of Common Stock owned by Warner J. Heuman,
Elaine B. Heuman's husband, and currently exercisable options to purchase
60,000 shares of Common Stock owned by Warner J. Heuman, as to which
shares of Common Stock and options Elaine B. Heuman disclaims beneficial
ownership.
(9) Includes 45,603 shares of Common Stock owned jointly with Melissa H.
Cantor, Lee B. Cantor's wife; excludes 11,797 shares of Common Stock
individually owned by Melissa H. Cantor, as to which shares of Common
Stock Lee B. Cantor disclaims beneficial ownership.
(10) Includes 45,603 shares of Common Stock owned jointly with Lee B. Cantor,
Melissa H. Cantor's husband; excludes 17,101 shares of Common Stock
individually owned by Lee B. Cantor, as to which shares of Common Stock
Melissa H. Cantor disclaims beneficial ownership.
(11) Includes 17,835 shares of Common Stock owned jointly with Judith R.
Brownstein, Hy L. Brownstein's wife.
(12) Consists of 17,835 shares of Common Stock owned jointly with Hy L.
Brownstein, Judith R. Brownstein's husband; excludes 4,875 shares of
Common Stock individually owned by Hy L. Brownstein, as to which shares of
Common Stock Judith R. Brownstein disclaims beneficial ownership.
<PAGE>
Page 36 of 51 Pages
(c) Except as described in this statement, none of the entities or persons
named in Item 2 has effected any transaction in the Company's securities in the
past 60 days. The responses set forth in Item 4 are incorporated herein.
(d) Each of RFE VI SBIC, RFE Associates VI SBIC, RFE Investment Partners,
and RFE Associates VI and James A. Parsons disclaims the power to vote, or the
power to direct the vote of, the shares of Common Stock which Acquisition has
the shared power to vote, or of which Acquisition has the shared power to direct
the vote.
The Stockholders, based on their respective percentage ownership of the
Common Stock, have the right to receive, or the power to direct the receipt of,
dividends from or the proceeds from any sale of the Common Stock.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE COMPANY.
The responses set forth in Item 4 and Item 5 are incorporated herein.
Pursuant to Voting Agreements, dated as of March 5, 1999, by and between
Acquisition and the Stockholders (the "Voting Agreements"), each Stockholder has
agreed (and the Voting Agreements include irrevocable proxy provisions for the
benefit of Acquisition with respect to the shares of Common Stock owned by each
Stockholder), to vote (or cause to be voted) the Shares (as defined in the
Voting Agreements) owned by such Stockholder (i) in favor of the Merger and
adoption of the Merger Agreement, the execution and delivery by the Company of
the Merger Agreement and the approval of the terms thereof and in favor of each
of the other actions contemplated by the Merger Agreement and the Voting
Agreements and any actions required in furtherance thereof, provided that no
Stockholder shall be required to vote to approve the Merger if any amendment to
the Merger Agreement (x) decreases the amount of Merger Consideration or (y)
materially adversely affects the Stockholder's interests in the Merger, unless
such Stockholder agrees to such amendment to the Merger Agreement; (ii) against
any action or agreement that would (or would be reasonably likely to) result in
a breach of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Merger Agreement or the Voting Agreements;
and (iii) except as specifically requested in writing by Acquisition in advance,
against the following actions (other than the Merger and the transactions
contemplated by the Merger Agreement): (1) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company or any of its subsidiaries; (2) a sale, lease or transfer
(whether by merger, consolidation, operation of law or otherwise) of a material
amount of assets of the Company or any of its subsidiaries or a reorganization,
recapitalization, dissolution or liquidation of the Company or any of its
subsidiaries; (3) (a) any change in the majority of the board of directors
<PAGE>
Page 37 of 51 Pages
of the Company; (b) any change in the present capitalization of the Company or
any amendment of the Company's certificate of incorporation or by-laws; (c) any
other material change in the Company's corporate structure or business; or (d)
any other action which is intended, or could reasonably be expected, to impede,
interfere with, delay, postpone, discourage or materially adversely affect the
Merger or the transactions contemplated by the Merger Agreement or the Voting
Agreements. In addition, each Stockholder agreed not to enter into any agreement
or understanding with any person or entity in any manner inconsistent with
clauses (i), (ii) or (iii) of the preceding sentence.
Each Stockholder has also agreed, until the termination of the Voting
Agreements, among other things, not to: (i) except pursuant to the terms of the
Merger Agreement and to Acquisition pursuant to the Voting Agreements, offer for
sale, sell, transfer (whether by merger, consolidation, operation of law or
otherwise), tender, pledge, encumber, assign or otherwise dispose of, enforce or
permit the execution of the provisions of any redemption agreement with the
Company or enter into any contract, option or other arrangement or understanding
with respect to or consent to the offer for sale, sale, transfer (whether by
merger, consolidation, operation of law or otherwise), tender, pledge,
encumbrance, assignment or other disposition of, or exercise any discretionary
powers to distribute, any or all of such Stockholder's Shares or any interest
therein, (ii) except as contemplated by the Voting Agreements, grant any proxies
or powers of attorney with respect to any Shares, deposit any Shares into a
voting trust or enter into a voting agreement with respect to any Shares; or
(iii) take any action that would make any representation or warranty of such
Stockholder contained in the Voting Agreements untrue or incorrect or have the
effect of preventing or disabling such Stockholder from performing such
Stockholder's obligations under the Voting Agreement.
The foregoing description of the Voting Agreements does not purport to be
complete and is qualified in its entirety by reference to the text of each such
agreement, which are filed as exhibits to this Schedule 13D and are incorporated
by reference herein.
Pursuant to a letter agreement, dated February 12, 1999, from
Sterling/Carl Marks to the Company (the "Sterling/Carl Marks Commitment
Letter"), Sterling/Carl Marks has committed to provide the Company with an
aggregate of up to $750,000 of financing to ensure, subject to the terms and
conditions set forth in the Sterling/Carl Marks Commitment Letter and in the
Merger Agreement, the performance of Acquisition's obligations under the Merger
Agreement. The foregoing description of the Sterling/Carl Marks Commitment
Letter does not purport to be complete and is qualified in its entirety by
reference to the text of the Sterling/Carl Marks Commitment Letter, which is
filed as an exhibit to this Schedule 13D and is incorporated by reference
herein.
Pursuant to a letter agreement, dated March 5, 1999, from RFE VI SBIC to
the Company (the "RFE Commitment Letter"), RFE VI SBIC has committed to provide
the Company with an aggregate of up to $5,250,000 of financing to ensure,
subject to the terms and conditions set forth in the RFE Commitment Letter and
in the Merger Agreement, the performance of Acquisition's
<PAGE>
Page 38 of 51 Pages
obligations under the Merger Agreement. The foregoing description of the RFE
Commitment Letter does not purport to be complete and is qualified in its
entirety by reference to the text of the RFE Commitment Letter, which is filed
as an exhibit to this Schedule 13D and is incorporated by reference herein.
Pursuant to a letter agreement, dated March 5, 1999 (the "Letter
Agreement"), among all of the Reporting Persons, each such Reporting Person has
agreed (i) that the information provided by him, her or it for inclusion in
certain securities law filings of Acquisition and/or the Company will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, (ii) that, upon the Effective Time, he, she or it will execute a
stockholders agreement and a registration rights agreement relating to the
shares of common stock of the Surviving Corporation, each in forms previously
reviewed and approved by the Reporting Persons, (iii) as to the post-closing
capitalization and employee stock option arrangements of the Surviving
Corporation, and (iv) as to other matters. The foregoing description of the
Letter Agreement does not purport to be complete and is qualified in its
entirety by reference to the text of such Letter Agreement, which is filed as an
exhibit to this Schedule 13D and is incorporated by reference herein.
Pursuant to a Commitment Letter, dated March 5, 1999, from The Chase
Manhattan Bank and Fleet Bank, National Association (collectively, the "Banks"),
to the Company and to Acquisition (the "Senior Financing Letter"), the Banks
have committed to provide the Company with an aggregate of up to $23,500,000,
subject to the terms and conditions set forth in the Senior Financing Letter.
The foregoing description of the Senior Financing Letter does not purport to be
complete and is qualified in its entirety by reference to the text of the Senior
Financing Letter, which is filed as an exhibit to this Schedule 13D and is
incorporated by reference herein.
Pursuant to a Commitment Letter, dated March 5, 1999, from Allied
Signal Master Pension Trust ("Allied Signal"), to the Company (the "Subordinated
Debt Letter"), Allied Signal has committed to provide the Company with an
aggregate of up to $7,000,000.00, subject to the terms and conditions set forth
in the Subordinated Debt Letter. The foregoing description of the Subordinated
Debt Letter does not purport to be complete and is qualified in its entirety by
reference to the text of the Subordinated Debt Letter, which is filed as an
exhibit to this Schedule 13D and is incorporated by reference herein.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Joint Filing Agreement, dated as of March 5, 1999, by and among
Uniflex Acquisition Corp., RFE VI SBIC, L.P., RFE Associates VI
SBIC, LLC, RFE Investment Partners VI, L.P., RFE Associates VI, LLC,
CMCO, Inc., Sterling/Carl Marks Capital, Inc., CMNY Capital, L.P.,
Robert Davidoff, Robert K. Semel, Frances
<PAGE>
Page 39 of 51 Pages
M. Semel, as custodian for Scott V. Eckstein, Herbert Barry, Betty
Lou Barry, Warner J. Heuman, Elaine B. Heuman, Erich K. Vetter,
Elliot L. Berger, Lee B. Cantor, Melissa H. Cantor, Hy L.
Brownstein, Judith R. Brownstein and Neil S. Sklar.
Exhibit 2 Power of Attorney of Warner J. Heuman, Elaine B. Heuman, Erich K.
Vetter, Elliot L. Berger, Lee B. Cantor, Melissa H. Cantor, Hy L.
Brownstein, Judith R. Brownstein and Neil S. Sklar in favor of
Robert K. Semel and Herbert Barry.
Exhibit 3 Agreement and Plan of Merger and Recapitalization, dated as of March
5, 1999, by and between Uniflex, Inc. and Uniflex Acquisition Corp.
(incorporated by reference to Exhibit 2.1 to the Company's Current
Report on Form 8-K dated March 8, 1999).
Exhibit 4 Voting Agreement, dated as of March 5, 1999, by and between Uniflex
Acquisition Corp. and the other parties signatory thereto.
Exhibit 5 Voting Agreement, dated as of March 5, 1999, by and between Uniflex
Acquisition Corp. and CMNY Capital, L.P., Sterling/Carl Marks
Capital, Inc., CMCO, Inc. and Robert Davidoff.
Exhibit 6 Letter Agreement, dated February 12, 1999, from Sterling/Carl Marks
Capital, Inc. to Uniflex, Inc.
Exhibit 7 Letter Agreement, dated March 5, 1999, from RFE VI SBIC, L.P., to
Uniflex, Inc.
Exhibit 8 Letter Agreement, dated March 5, 1999, among all of the Reporting
Persons.
Exhibit 9 Commitment Letter, dated March 5, 1999, from The Chase Manhattan
Bank and Fleet Bank, National Association, to Uniflex, Inc. and
Uniflex Acquisition Corp.
Exhibit 10 Commitment Letter, dated March 5, 1999, from Allied Signal Master
Pension Trust to Uniflex, Inc.
Exhibit 11 Press Release (incorporated by reference to Exhibit 99.1 to the
Company's Current Report on Form 8-K dated March 8, 1999).
<PAGE>
Page 40 of 51 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: March 9, 1999
UNIFLEX ACQUISITION CORP.
By: /s/ James A. Parsons
------------------------
Name: James A. Parsons
Title: President
<PAGE>
Page 41 of 51 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Date: March 9, 1999
RFE VI SBIC, L.P.
By: RFE Associates VI SBIC, LLC,
its General Partner
By: RFE Investment Partners VI, L.P.,
its sole member
By: RFE Associates VI, LLC,
its General Partner
By: /s/ James A. Parsons
-----------------------
Name: James A. Parsons
Title: Managing Member
<PAGE>
Page 42 of 51 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: March 9, 1999
RFE ASSOCIATES VI SBIC, LLC
By: RFE Investment Partners VI, L.P.,
its sole member
By: RFE Associates VI, LLC,
its General Partner
By: /s/ James A. Parsons
-----------------------
Name: James A. Parsons
Title: Managing Member
<PAGE>
Page 43 of 51 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Date: March 9, 1999
RFE INVESTMENT PARTNERS VI, L.P.
By: RFE Associates VI, LLC,
its General Partner
By: /s/ James A. Parsons
----------------------------
Name: James A. Parsons
Title: Managing Member
<PAGE>
Page 44 of 51 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: March 9, 1999
RFE ASSOCIATES VI, LLC
By: /s/ James A. Parsons
-----------------------
Name: James A. Parsons
Title: Managing Member
<PAGE>
Page 45 of 51 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Date: March 9, 1999
CMCO, INC.
By: /s/ Robert Davidoff
-----------------------
Name: Robert Davidoff
Title: Vice President
<PAGE>
Page 46 of 51 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: March 9, 1999
STERLING/CARL MARKS CAPITAL, INC.
By: /s/ Harvey Granat
--------------------
Name: Harvey Granat
Title: President
<PAGE>
Page 47 of 51 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Date: March 9, 1999
CMNY CAPITAL, L.P.
By: /s/ Robert Davidoff
---------------------
Name: Robert Davidoff
Title: General Partner
<PAGE>
Page 48 of 51 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Date: March 9, 1999
/s/ Robert Davidoff
-------------------
Robert Davidoff
<PAGE>
Page 49 of 51 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Date: March 9, 1999
/s/ Robert K. Semel
-------------------
Robert K. Semel
FRANCES M. SEMEL, as custodian
for Scott V. Eckstein
/s/ Frances M. Semel
------------------------
Name: Frances M. Semel
Title: Custodian
<PAGE>
Page 50 of 51 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Date: March 9, 1999
/s/ Herbert Barry
-----------------------
Herbert Barry
/s/ Betty Lou Barry
-----------------------
Betty Lou Barry
<PAGE>
Page 51 of 51 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: March 9, 1999
Warner J. Heuman
Elaine B. Heuman
Erich K. Vetter
Elliot L. Berger
Lee B. Cantor
Melissa H. Cantor
Hy L. Brownstein
Judith R. Brownstein
Neil S. Sklar
/s/ Robert K. Semel
-----------------------------
By: Robert K. Semel
Title: Attorney in Fact
Exhibit 1
Joint Filing Agreement
In accordance with Rule 13d-1(f) under the Securities Exchange Act
of 1934, as amended, the persons named below agree to the joint filing on behalf
of each of them of a statement on Schedule 13D (including amendments thereto)
with respect to the common stock, par value $.10 per share, of Uniflex, Inc. and
further agree that this Joint Filing Agreement be included as an Exhibit to such
joint filing. In evidence thereof, the undersigned, being duly authorized,
hereby execute this Agreement as of March 5, 1999.
UNIFLEX ACQUISITION CORP.
By: /s/ James A. Parsons
--------------------------
Name: James A. Parsons
Title: President
RFE VI SBIC, L.P.
By: RFE Associates VI SBIC, LLC,
its General Partner
By: RFE Investment Partners VI, L.P.,
its sole member
By: RFE Associates VI, LLC,
its General Partner
By: /s/ James A. Parsons
-----------------------------
Name: James A. Parsons
Title: Managing Member
<PAGE>
RFE ASSOCIATES VI SBIC, LLC
By: RFE Investment Partners VI, L.P.,
its sole member
By: RFE Associates VI, LLC,
its General Partner
By: /s/ James A. Parsons
-----------------------------
Name: James A. Parsons
Title: Managing Member
RFE INVESTMENT PARTNERS VI, L.P.
By: RFE Associates VI, LLC,
its General Partner
By: /s/ James A. Parsons
-----------------------------
Name: James A. Parsons
Title: Managing Member
RFE ASSOCIATES VI, LLC
By: /s/ James A. Parsons
-----------------------------
Name: James A. Parsons
Title: Managing Member
CMCO, INC.
By: /s/ Robert Davidoff
-----------------------------
Name: Robert Davidoff
Title: Vice President
<PAGE>
STERLING/CARL MARKS CAPITAL, INC.
By: /s/ Harvey Granat
---------------------------
Name: Harvey Granat
Title: President
CMNY CAPITAL, L.P.
By: /s/ Robert Davidoff
----------------------------
Name: Robert Davidoff
Title: General Partner
/s/ Robert Davidoff
----------------------------------
Robert Davidoff
/s/ Robert K. Semel
----------------------------------
Robert K. Semel
FRANCES M. SEMEL, as custodian for Scott V. Eckstein
/s/ Frances M. Semel
----------------------------------
Name: Frances M. Semel
Title: Custodian
/s/ Herbert Barry
----------------------------------
Herbert Barry
<PAGE>
/s/ Betty Lou Barry
-----------------------------------
Betty Lou Barry
Warner J. Heuman
Elaine B. Heuman
Erich K. Vetter
Elliot L. Berger
Lee B. Cantor
Melissa H. Cantor
Hy L. Brownstein
Judith R. Brownstein
Neil S. Sklar
By: /s/ Herbert Barry
------------------------------
Name: Herbert Barry
Title: Attorney in Fact
Exhibit 2
Power of Attorney
The undersigned hereby makes, constitutes and appoints each of Robert K.
Semel and Herbert Barry (each, an "Attorney"), with full power of substitution,
the true and lawful attorney in fact for the undersigned, in the undersigned's
name, place and stead and on the undersigned's behalf, to complete, execute and
file with the United States Securities and Exchange Commission (the
"Commission"), a statement on Schedule 13D with respect to the securities of
Uniflex, Inc., a Delaware corporation, and any and all amendments thereto
pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder, and any other forms,
certificates, documents or instruments (including a Joint Filing Agreement) that
either Attorney deems necessary or appropriate in order to enable the
undersigned to comply with the requirements of said Section 13(d) and said rules
and regulations.
This Power of Attorney shall remain in effect for a period of two years
from the date hereof or until such earlier date as a written revocation thereof
is filed with the Commission.
Dated: March 5, 1999
/s/ Warner J. Heuman
---------------------------
Warner J. Heuman
/s/ Elaine B. Heuman
---------------------------
Elaine B. Heuman
/s/ Erich K. Vetter
---------------------------
Erich K. Vetter
/s/ Elliot L. Berger
---------------------------
Elliot L. Berger
/s/ Lee B. Cantor
---------------------------
Lee B. Cantor
/s/ Melissa H. Cantor
---------------------------
Melissa H. Cantor
<PAGE>
/s/ Hy L. Brownstein
---------------------------
Hy L. Brownstein
/s/ Judith R. Brownstein
---------------------------
Judith R. Brownstein
/s/ Neil S. Sklar
---------------------------
Neil S. Sklar
Exhibit 4
VOTING AGREEMENT
AGREEMENT dated as of March 5, 1999 by and between UNIFLEX ACQUISITION
CORP., a Delaware corporation ("Acquisition") and the other parties signatory
hereto (each a "Stockholder").
RECITALS
A. Concurrently herewith, Acquisition and Uniflex, Inc., a Delaware
corporation (the "Company"), are entering into an Agreement and Plan of Merger
and Recapitalization of even date herewith (as such agreement may be amended
from time to time, the "Merger Agreement"; capitalized terms used but not
defined herein shall have the meanings set forth in the Merger Agreement)
pursuant to which (and subject to the terms and conditions specified therein)
Acquisition will be merged with and into the Company (the "Merger").
B. As a condition to Acquisition entering into the Merger Agreement,
Acquisition requires that each Stockholder enter into, and each such Stockholder
hereby agrees to enter into, this Agreement.
AGREEMENT
To implement the foregoing and in consideration of the mutual agreements
contained herein, the parties hereby agree as follows:
1. Representations and Warranties of Stockholders. Each Stockholder hereby
severally and not jointly represents and warrants to Acquisition as follows:
a. Ownership of Shares.
i. Such Stockholder is the record holder or beneficial owner
of the number of shares of Company Common Stock as is set forth
opposite such Stockholder's name on Schedule I hereto (such shares
shall constitute the "Existing Shares", and together with any shares
of Company Common Stock acquired of record or beneficially by such
Stockholder in any capacity after the date hereof and prior to the
termination hereof, whether upon exercise of options, conversion of
convertible securities, purchase, exchange or otherwise shall
constitute the "Shares").
ii. On the date hereof, the Existing Shares set forth opposite
such Stockholder's name on Schedule I hereto constitute all of the
outstanding shares
1
<PAGE>
of Company Common Stock owned of record or beneficially by such
Stockholder. Such Stockholder does not have record or beneficial
ownership of any Shares not set forth on Schedule I hereto.
iii. Such Stockholder has sole power of disposition with
respect to all of the Existing Shares set forth opposite such
Stockholder's name on Schedule I and sole voting power with respect
to the matters set forth in Section 2 hereof and sole power to
demand appraisal rights, in each case with respect to all of the
Existing Shares set forth opposite such Stockholder's name on
Schedule I, and sole power to agree to all of the matters set forth
herein with no restrictions on such rights, subject to applicable
federal securities laws and the terms of this Agreement.
iv. Such Stockholder will have sole power of disposition with
respect to Shares other than Existing Shares, if any, which become
beneficially owned by such Stockholder and will have sole voting
power with respect to the matters set forth in Section 2 hereof and
sole power to demand appraisal rights, in each case with respect to
all Shares other than Existing Shares, if any, which become
beneficially owned by such Stockholder with no restrictions on such
rights, subject to applicable federal securities laws and the terms
of this Agreement.
b. Organization; Power; Binding Agreement. If such Stockholder is a
corporation, such Stockholder is a corporation duly formed, validly existing and
in good standing under the laws of its jurisdiction of its organization. If such
Stockholder is a corporation, such Stockholder has the necessary corporate power
and authority to enter into and perform all of such Stockholder's obligations
under this Agreement and has taken all corporate action necessary to execute and
deliver this Agreement, to consummate the transactions contemplated hereby and
to perform its obligations hereunder, and no other corporate proceedings on the
part of such Stockholder are necessary to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby. If such Stockholder is an individual, such Stockholder has
the legal capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. This Agreement has been duly and
validly executed and delivered by such Stockholder and constitutes a valid and
binding agreement of such Stockholder, enforceable against such Stockholder in
accordance with its terms. If such Stockholder is married and such Stockholder's
Shares constitute community property, this Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding agreement of such
Stockholder's spouse, enforceable against such person in accordance with its
terms.
c. No Conflicts. Except for filings under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), if applicable,
and any required amendments to any Schedule 13D, Form 3 or Form 4 filed by any
such Stockholder, (A) no
2
<PAGE>
filing with, and no permit, authorization, consent or approval of, any state or
federal public bodyor authority is necessary for the execution of this Agreement
by such Stockholder and the consummation by such Stockholder of the transactions
contemplated hereby and (B) neither the execution, delivery or performance of
this Agreement by such Stockholder nor the consummation by such Stockholder of
the transactions contemplated hereby nor compliance by such Stockholder with any
of the provisions hereof shall (x) conflict with or result in any breach of any
applicable certificate of incorporation, bylaws, trust, partnership agreement or
other agreements or organizational documents applicable to such Stockholder, (y)
result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which such Stockholder is a party or by
which such Stockholder or any of such Stockholder's properties or assets may be
bound or (z) violate any order, writ, injunction, decree, judgment, law,
statute, rule or regulation applicable to such Stockholder or any of such
Stockholder's properties or assets.
d. No Transfer. Except as described on Schedule II, such
Stockholder's Shares and the certificates representing such Shares are now and
at all times during the term hereof will be held by such Stockholder, or by a
nominee or custodian for the benefit of such Stockholder, free and clear of all
liens, claims, security interests, community property interests, proxies, voting
trusts or agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances or proxies arising hereunder.
e. No Finders. No broker, investment banker, financial adviser or
other person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of such Stockholder in his
or her capacity as such.
f. Acknowledgment. Such Stockholder understands and acknowledges
that Acquisition is entering into the Merger Agreement in reliance upon such
Stockholder's execution and delivery of this Agreement.
2. Agreement To Vote; Proxy.
a. Voting. Each Stockholder hereby severally and not jointly agrees
that, until the Termination Date (as defined in Section 7 hereof), at any
meeting of the stockholders of the Company, however called, or in connection
with any written consent of the stockholders of the Company, such Stockholder
shall vote (or cause to be voted) the Shares owned by such Stockholder (i) in
favor of the Merger and adoption of the Merger Agreement, the execution and
delivery by the Company of the Merger Agreement and the approval of the terms
thereof and in favor of each of the other actions contemplated by the Merger
Agreement and this Agreement and any actions required in furtherance hereof and
thereof, provided that each
3
<PAGE>
Stockholder shall not be required to vote to approve the Merger if any amendment
to the Merger Agreement (x) decreases the amount of Merger Consideration or (y)
materially adversely affects the Stockholder's interests in the Merger, unless
such Stockholder agrees in writing to such amendment to the Merger Agreement;
(ii) against any action or agreement that would (or would be reasonably likely
to) result in a breach of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or this
Agreement; and (iii) except as specifically requested in writing by Acquisition
in advance, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (1) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or any of its subsidiaries; (2) a sale, lease
or transfer (whether by merger, consolidation, operation of law or otherwise) of
a material amount of assets of the Company or any of its subsidiaries or a
reorganization, recapitalization, dissolution or liquidation of the Company or
any of its subsidiaries; (3)(a) any change in the majority of the board of
directors of the Company; (b) any amendment of the Company's certificate of
incorporation or by-laws; (c) any other material change in the Company's
corporate structure or business; or (d) any other action which is intended, or
could reasonably be expected, or impede, interfere with, delay, postpone,
discourage or materially adversely affect the Merger or the transactions
contemplated by the Merger Agreement or this Agreement. Such Stockholder shall
not enter into any agreement or understanding with any person or entity prior to
the Termination Date to vote or give instructions after the Termination Date in
any manner inconsistent with clauses (i), (ii) or (iii) of the preceding
sentence.
b. PROXY. EACH STOCKHOLDER HEREBY GRANTS TO, AND APPOINTS,
ACQUISITION AND JAMES A PARSONS, PRESIDENT OF ACQUISITION, AND A. DEAN DAVIS,
VICE PRESIDENT OF ACQUISITION, IN THEIR RESPECTIVE CAPACITIES AS OFFICERS OF
ACQUISITION, AND ANY INDIVIDUAL WHO SHALL HEREAFTER SUCCEED TO ANY SUCH OFFICE
OF ACQUISITION, AND ANY OTHER DESIGNEE OF ACQUISITION, EACH OF THEM
INDIVIDUALLY, SUCH STOCKHOLDER'S IRREVOCABLE (UNTIL THE TERMINATION DATE) PROXY
AND ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION) TO VOTE THE SHARES AS
INDICATED IN SECTION 2(a) ABOVE. EACH STOCKHOLDER INTENDS THIS PROXY TO BE
IRREVOCABLE (UNTIL THE TERMINATION DATE) AND COUPLED WITH AN INTEREST AND WILL
TAKE SUCH FURTHER ACTION AND EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY
TO EFFECTUATE THE INTENT OF THIS PROXY AND HEREBY REVOKES ANY PROXY PREVIOUSLY
GRANTED BY SUCH STOCKHOLDER WITH RESPECT TO SUCH STOCKHOLDER'S SHARES.
3. Certain Covenants of Stockholders. Except in accordance with the terms
of this Agreement, each Stockholder hereby severally covenants and agrees as
follows:
4
<PAGE>
a. No Solicitation. Prior to the Termination Date, no Stockholder
shall, in its capacity as such, directly or indirectly (including through
advisors, agents or other intermediaries), solicit (including by way of
furnishing information) or respond to any inquiries or the making of any
proposal by any person or entity (other than Acquisition or any Affiliate
thereof) with respect to the Company that constitutes or could reasonably be
expected to lead to an Acquisition Proposal (as defined in Section 6.4 in the
Merger Agreement). If any Stockholder in his or its capacity as such receives
any such inquiry or proposal, then such Stockholder shall promptly inform
Acquisition, on a prompt and ongoing basis, of the terms and conditions, if any,
of such inquiry or proposal, the identity of the person making it and the
status, content and progress of any negotiations. Each Stockholder, in its
capacity as such, will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. Notwithstanding the foregoing, nothing in
this Section 3.1 shall restrict a Stockholder who is also a director or officer
of the Company from taking actions in such Stockholder's capacity as a director
or officer to the extent and in the circumstances permitted by Section 6.4 of
the Merger Agreement.
b. Restriction on Transfer, Proxies and Noninterference; Restriction
on Withdrawal. Prior to the Termination Date, no Stockholder shall, directly or
indirectly: (i) except pursuant to the terms of the Merger Agreement and to
Acquisition pursuant to this Agreement, offer for sale, sell, transfer (whether
by merger, consolidation, operation of law or otherwise), tender, pledge,
encumber, assign or otherwise dispose of, enforce or permit the execution of the
provisions of any redemption agreement with the Company or enter into any
contract, option or other arrangement or understanding with respect to or
consent to the offer for sale, sale, transfer (whether by merger, consolidation,
operation of law or otherwise), tender, pledge, encumbrance, assignment or other
disposition of, or exercise any discretionary powers to distribute, any or all
of such Stockholder's Shares or any interest therein, (ii) except as
contemplated by this Agreement, grant any proxies or powers of attorney with
respect to any Shares, deposit any Shares into a voting trust or enter into a
voting agreement with respect to any Shares; or (iii) take any action that would
make any representation or warranty of such Stockholder contained herein untrue
or incorrect or have the effect of preventing or disabling such Stockholder from
performing such Stockholder's obligations under this Agreement.
c. Waiver of Appraisal Rights. Except to the extent a Stockholder is
permitted to vote against the Merger pursuant to paragraph 2 hereof, each
Stockholder hereby waives any rights of appraisal from the Merger or rights to
dissent from the Merger that such Stockholder may have.
4. Further Assurances. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further action as may be reasonably
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
5
<PAGE>
5. Certain Events. Each Stockholder agrees that this Agreement and the
obligations hereunder shall attach to such Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including without
limitation such Stockholder's heirs, guardians, administrators or successors or
as a result of any divorce.
6. Stop Transfer. Each Stockholder agrees with, and covenants to,
Acquisition that such Stockholder shall not request that the Company register
the transfer (book-entry or otherwise) of any certificate or uncertificated
interest representing any of such Stockholder's Shares, unless such transfer is
made in compliance with this Agreement.
7. Termination. The obligations of the Stockholders under this Agreement
shall terminate upon the earlier of (i) the Effective Time of the Merger, (ii)
the date the Merger Agreement is terminated in accordance with its terms, or
(iii) any event described in Section 8.1(a)(v)(A), (B), (D) or (E) of the Merger
Agreement has occurred (such date being referred to herein as the "Termination
Date"). The termination of this Agreement shall not relieve any party from
liability for any breach of this Agreement.
8. Fiduciary Duties. Nothing set forth in this Agreement shall prevent any
Stockholder who is a director or officer of the Company from exercising his
fiduciary duties as a director or officer of the Company in connection with the
Merger Agreement and Merger.
9. Miscellaneous.
a. Entire Agreement; Assignment. This Agreement (i) constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and (ii)
shall not be assigned by operation of law or otherwise without the prior written
consent of the other parties.
b. Amendments. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
c. Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received, if personally delivered;
when transmitted, if transmitted by telecopy, upon receipt of electronic
confirmation; the day after it is sent, if sent for next day delivery to a
domestic address by recognized overnight delivery service (e.g., Federal
Express); and upon receipt, if sent by certified or registered mail, return
receipt requested. In each case notice shall be sent to:
6
<PAGE>
If to a Stockholder:
To the address and facsimile number set forth on Schedule I
hereto.
With a copy to:
Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016
Attention: David Alan Miller, Esq.
Telecopy: (212) 818-8881
If to Acquirer, addressed to:
Uniflex Acquisition Corp.
c/o RFE Investment Partners
36 Grove Street
New Canaan, Connecticut 06840
Attention: James Parsons
Telecopy: (203) 966-3109
c/o CMCO, Inc.
135 East 57th Street
New York, New York 10022
Attention: Robert Davidoff
Telecopy: (212) 980-2630
With a copy to:
Battle Fowler LLP
75 East 55th Street
New York, NY 10022
Attention: Thomas More Griffin, Esq.
Telecopy: (212) 856-7823
And a copy to:
Finn Dixon & Herling LLP
One Landmark Square
Stamford, Connecticut 06901
Attention: Charles J. Downey III, Esq.
Telecopy: (203) 348-5777
7
<PAGE>
And a copy to:
Uniflex, Inc.
383 West John Street
Hicksville, NY 11802
Attention: Robert K. Semel
Telecopy: (516) 997-4834
With a copy to:
Olshan Grundman Frome Rosenzweig & Wolosky LLP
505 Park Avenue
New York, NY 10022
Attention: Jeffrey S. Spindler, Esq.
Telecopy: (212) 755-1467
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
d. 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.
e. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement.
f. Counterparts; Facsimile Signature. This Agreement may be executed
(i) in two or more counterparts, each of which shall be deemed to be an
original, but both of which shall constitute one and the same Agreement and (ii)
by facsimile (provided an original of the facsimile is provided).
g. Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
h. Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or
8
<PAGE>
portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
10. Definitions; Construction. For purposes of this Agreement:
a. "Beneficially own" or "beneficial ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to
any agreement, arrangement or understanding, whether or not in writing. Without
duplicative counting of the same securities by the same holder, securities
beneficially owned by a Person shall include securities beneficially owned by
all other Persons with whom such Person would constitute a "group" as described
in Section 13(d)(3) of the Exchange Act.
b. "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
c. In the event of a stock dividend or distribution, or any change
in the Company Common Stock by reason of any split-up, subdivision,
recapitalization, combination, exchange of shares or the like, the term "Shares"
shall be deemed to refer to and include the Shares as well as all stock
distributed pursuant to such stock dividends and distributions and any shares
into which or for which any or all of the Shares may be changed, exchanged,
split, subdivided, combined or recapitalized.
11. Stockholder Capacity. Notwithstanding anything herein to the contrary,
no person executing this Agreement who is, or becomes during the term hereof, a
director or officer of the Company makes any agreement or understanding herein
in his or her capacity as such director or officer, and the agreements set forth
herein shall in no way restrict any director or officer in the exercise of his
or her fiduciary duties as a director or officer of the Company. Each
Stockholder has executed this Agreement solely in his or her capacity as the
record or beneficial holder of such Stockholder's Shares.
[Signature Page Follows]
9
<PAGE>
IN WITNESS WHEREOF, Acquisition and each Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
UNIFLEX ACQUISITION CORP.
By: /s/ James A. Parsons
---------------------------
Name: James A. Parsons
Title: President
STOCKHOLDERS:
/s/ Robert K. Semel
-------------------------------
Robert K. Semel
/s/ Herbert Barry
-------------------------------
Herbert Barry
/s/ Warner Heuman
-------------------------------
Warner Heuman
/s/ Erich Vetter
-------------------------------
Erich Vetter
/s/ Elliott Berger
-------------------------------
Elliott Berger
/s/ Lee Cantor
-------------------------------
Lee Cantor
/s/ Melissa Cantor
-------------------------------
Melissa Cantor
/s/ Hy Brownstein
-------------------------------
Hy Brownstein
/s/ Neil Sklar
-------------------------------
Neil Sklar
10
<PAGE>
/s/ Frances M. Semel
----------------------------------------------
Frances M. Semel, as custodian for
Scott V. Eckstein
/s/ Betty Lou Barry
----------------------------------------------
Betty Lou Barry
/s/ Elaine B. Heuman
----------------------------------------------
Elaine B. Heuman
/s/ Judith R. Brownstein
----------------------------------------------
Judith R. Brownstein
11
<PAGE>
Schedule I
Number of
Name Address and Facsimile Number Existing Shares
- ---- ---------------------------- ---------------
Herbert Barry ** 435,576
Betty Lou Barry ** 34,914
Robert K. Semel ** 433,800
Frances M. Semel, as ** 300
custodian for
Scott V. Eckstein
Warner J. Heuman ** 326,420
Elaine B. Heuman ** 129,100
Erich K. Vetter ** 288,999
Elliott L. Berger ** 87,300
Lee B. Cantor ** 62,704*
Melissa H. Cantor ** 57,400*
Hy L. Brownstein ** 22,710
Judith R. Brownstein ** 17,835
Neil Sklar ** 30,100
------------
Total Number of Shares 1,863,720*
============
- ----------
* Of these shares, 45,603 are jointly held by Lee and Melissa Cantor.
** Address and facsimile number of each Stockholder is set forth on next page.
<PAGE>
Schedule II
Herbert Barry Robert K. Semel
Betty Lou Barry Frances M. Semel
1 Ripley Lane 202 Northwood Court
Muttontown, NY 11771 Jericho, NY 11753
Hy L. Brownstein Lee B. Cantor
Judith R. Brownstein Melissa H. Cantor
23 Pickering Place 5 Quaker Ridge Dr.
Dix Hills, NY 11746 Brookville, NY 11545
Warner J. Heuman Erich K. Vetter
Elaine B. Heuman 468 Wolfhill Road
8 Hartley Road Dix Hills, NY 11746
Great Neck, NY 11024
Neil Sklar Elliot L. Berger
1 Thompson Drive 4920 Camino De Monie
East Rockaway, NY 11518 Albuquerque, NM 87111
CARL MARKS GROUP - - UNIFLEX, INC.
VOTING AGREEMENT
AGREEMENT dated as of March 5, 1999 by and between UNIFLEX ACQUISITION
CORP., a Delaware corporation ("Acquisition") and the other parties signatory
hereto (each a "Stockholder").
RECITALS
A. Concurrently herewith, Acquisition and Uniflex, Inc., a Delaware
corporation (the "Company"), are entering into an Agreement and Plan of Merger
and Recapitalization of even date herewith (as such agreement may be amended
from time to time, the "Merger Agreement"; capitalized terms used but not
defined herein shall have the meanings set forth in the Merger Agreement)
pursuant to which (and subject to the terms and conditions specified therein)
Acquisition will be merged with and into the Company (the "Merger").
B. As a condition to Acquisition entering into the Merger Agreement,
Acquisition requires that each Stockholder enter into, and each such Stockholder
hereby agrees to enter into, this Agreement.
AGREEMENT
To implement the foregoing and in consideration of the mutual agreements
contained herein, the parties hereby agree as follows:
1. Representations and Warranties of Stockholders. Each Stockholder hereby
severally and not jointly represents and warrants to Acquisition as follows:
a. Ownership of Shares.
i. Such Stockholder is the record holder or beneficial owner
of the number of shares of Company Common Stock as is set forth
opposite such Stockholder's name on Schedule I hereto (such shares
shall constitute the "Existing Shares", and together with any shares
of Company Common Stock acquired of record or beneficially by such
Stockholder in any capacity after the date hereof and prior to the
termination hereof, whether upon exercise of options, conversion of
convertible securities, purchase, exchange or otherwise shall
constitute the "Shares").
ii. On the date hereof, the Existing Shares set forth opposite
such Stockholder's name on Schedule I hereto constitute all of the
outstanding shares
1
<PAGE>
of Company Common Stock owned of record or beneficially by such
Stockholder. Such Stockholder does not have record or beneficial
ownership of any Shares not set forth on Schedule I hereto.
iii. Such Stockholder has sole power of disposition with
respect to all of the Existing Shares set forth opposite such
Stockholder's name on Schedule I and sole voting power with respect
to the matters set forth in Section 2 hereof and sole power to
demand appraisal rights, in each case with respect to all of the
Existing Shares set forth opposite such Stockholder's name on
Schedule I, and sole power to agree to all of the matters set forth
herein with no restrictions on such rights, subject to applicable
federal securities laws and the terms of this Agreement.
iv. Such Stockholder will have sole power of disposition with
respect to Shares other than Existing Shares, if any, which become
beneficially owned by such Stockholder and will have sole voting
power with respect to the matters set forth in Section 2 hereof and
sole power to demand appraisal rights, in each case with respect to
all Shares other than Existing Shares, if any, which become
beneficially owned by such Stockholder with no restrictions on such
rights, subject to applicable federal securities laws and the terms
of this Agreement.
b. Organization; Power; Binding Agreement. If such Stockholder is a
corporation, such Stockholder is a corporation duly formed, validly existing and
in good standing under the laws of its jurisdiction of its organization. If such
Stockholder is a corporation, such Stockholder has the necessary corporate power
and authority to enter into and perform all of such Stockholder's obligations
under this Agreement and has taken all corporate action necessary to execute and
deliver this Agreement, to consummate the transactions contemplated hereby and
to perform its obligations hereunder, and no other corporate proceedings on the
part of such Stockholder are necessary to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby. If such Stockholder is an individual, such Stockholder has
the legal capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. This Agreement has been duly and
validly executed and delivered by such Stockholder and constitutes a valid and
binding agreement of such Stockholder, enforceable against such Stockholder in
accordance with its terms. If such Stockholder is married and such Stockholder's
Shares constitute community property, this Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding agreement of such
Stockholder's spouse, enforceable against such person in accordance with its
terms.
c. No Conflicts. Except for filings under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), if applicable,
and any required amendments to any Schedule 13D filed by any such Stockholder,
(A) no filing with, and no
2
<PAGE>
permit, authorization, consent or approval of, any state or federal public body
or authority is necessary for the execution of this Agreement by such
Stockholder and the consummation by such Stockholder of the transactions
contemplated hereby and (B) neither the execution, delivery or performance of
this Agreement by such Stockholder nor the consummation by such Stockholder of
the transactions contemplated hereby nor compliance by such Stockholder with any
of the provisions hereof shall (x) conflict with or result in any breach of any
applicable certificate of incorporation, bylaws, trust, partnership agreement or
other agreements or organizational documents applicable to such Stockholder, (y)
result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which such Stockholder is a party or by
which such Stockholder or any of such Stockholder's properties or assets may be
bound or (z) violate any order, writ, injunction, decree, judgment, law,
statute, rule or regulation applicable to such Stockholder or any of such
Stockholder's properties or assets.
d. No Transfer. Such Stockholder's Shares and the certificates
representing such Shares are now and at all times during the term hereof will be
held by such Stockholder, or by a nominee or custodian for the benefit of such
Stockholder, free and clear of all liens, claims, security interests, community
property interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever, except for any such
encumbrances or proxies arising hereunder.
e. No Finders. No broker, investment banker, financial adviser or
other person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of such Stockholder in his
or her capacity as such.
f. Acknowledgment. Such Stockholder understands and acknowledges
that Acquisition is entering into the Merger Agreement in reliance upon such
Stockholder's execution and delivery of this Agreement.
2. Agreement To Vote; Proxy.
a. Voting. Each Stockholder hereby severally and not jointly agrees
that, until the Termination Date (as defined in Section 7 hereof), at any
meeting of the stockholders of the Company, however called, or in connection
with any written consent of the stockholders of the Company, such Stockholder
shall vote (or cause to be voted) the Shares owned by such Stockholder (i) in
favor of the Merger and adoption of the Merger Agreement, the execution and
delivery by the Company of the Merger Agreement and the approval of the terms
thereof and in favor of each of the other actions contemplated by the Merger
Agreement and this Agreement and any actions required in furtherance hereof and
thereof, provided that each
3
<PAGE>
Stockholder shall not be required to vote to approve the Merger if any amendment
to the Merger Agreement (x) decreases the amount of Merger Consideration or (y)
materially adversely affects the Stockholder's interests in the Merger, unless
such Stockholder agrees in writing to such amendment to the Merger Agreement;
(ii) against any action or agreement that would (or would be reasonably likely
to) result in a breach of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or this
Agreement; and (iii) except as specifically requested in writing by Acquisition
in advance, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (1) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or any of its subsidiaries; (2) a sale, lease
or transfer (whether by merger, consolidation, operation of law or otherwise) of
a material amount of assets of the Company or any of its subsidiaries or a
reorganization, recapitalization, dissolution or liquidation of the Company or
any of its subsidiaries; (3)(a) any change in the majority of the board of
directors of the Company; (b) any amendment of the Company's certificate of
incorporation or by-laws; (c) any other material change in the Company's
corporate structure or business; or (d) any other action which is intended, or
could reasonably be expected, or impede, interfere with, delay, postpone,
discourage or materially adversely affect the Merger or the transactions
contemplated by the Merger Agreement or this Agreement. Such Stockholder shall
not enter into any agreement or understanding with any person or entity prior to
the Termination Date to vote or give instructions after the Termination Date in
any manner inconsistent with clauses (i), (ii) or (iii) of the preceding
sentence.
b. PROXY. EACH STOCKHOLDER HEREBY GRANTS TO, AND APPOINTS,
ACQUISITION AND JAMES A PARSONS, PRESIDENT OF ACQUISITION, AND A. DEAN DAVIS,
VICE PRESIDENT OF ACQUISITION, IN THEIR RESPECTIVE CAPACITIES AS OFFICERS OF
ACQUISITION, AND ANY INDIVIDUAL WHO SHALL HEREAFTER SUCCEED TO ANY SUCH OFFICE
OF ACQUISITION, AND ANY OTHER DESIGNEE OF ACQUISITION, EACH OF THEM
INDIVIDUALLY, SUCH STOCKHOLDER'S IRREVOCABLE (UNTIL THE TERMINATION DATE) PROXY
AND ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION) TO VOTE THE SHARES AS
INDICATED IN SECTION 2(a) ABOVE. EACH STOCKHOLDER INTENDS THIS PROXY TO BE
IRREVOCABLE (UNTIL THE TERMINATION DATE) AND COUPLED WITH AN INTEREST AND WILL
TAKE SUCH FURTHER ACTION AND EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY
TO EFFECTUATE THE INTENT OF THIS PROXY AND HEREBY REVOKES ANY PROXY PREVIOUSLY
GRANTED BY SUCH STOCKHOLDER WITH RESPECT TO SUCH STOCKHOLDER'S SHARES.
3. Certain Covenants of Stockholders. Except in accordance with the terms
of this Agreement, each Stockholder hereby severally covenants and agrees as
follows:
4
<PAGE>
a. No Solicitation. Prior to the Termination Date, no Stockholder
shall, in its capacity as such, directly or indirectly (including through
advisors, agents or other intermediaries), solicit (including by way of
furnishing information) or respond to any inquiries or the making of any
proposal by any person or entity (other than Acquisition or any Affiliate
thereof) with respect to the Company that constitutes or could reasonably be
expected to lead to an Acquisition Proposal (as defined in Section 6.4 in the
Merger Agreement). If any Stockholder in his or its capacity as such receives
any such inquiry or proposal, then such Stockholder shall promptly inform
Acquisition, on a prompt and ongoing basis, of the terms and conditions, if any,
of such inquiry or proposal, the identity of the person making it and the
status, content and progress of any negotiations. Each Stockholder, in its
capacity as such, will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing.
b. Restriction on Transfer, Proxies and Noninterference; Restriction
on Withdrawal. Prior to the Termination Date, no Stockholder shall, directly or
indirectly: (i) except pursuant to the terms of the Merger Agreement and to
Acquisition pursuant to this Agreement, offer for sale, sell, transfer (whether
by merger, consolidation, operation of law or otherwise), tender, pledge,
encumber, assign or otherwise dispose of, enforce or permit the execution of the
provisions of any redemption agreement with the Company or enter into any
contract, option or other arrangement or understanding with respect to or
consent to the offer for sale, sale, transfer (whether by merger, consolidation,
operation of law or otherwise), tender, pledge, encumbrance, assignment or other
disposition of, or exercise any discretionary powers to distribute, any or all
of such Stockholder's Shares or any interest therein, (ii) except as
contemplated by this Agreement, grant any proxies or powers of attorney with
respect to any Shares, deposit any Shares into a voting trust or enter into a
voting agreement with respect to any Shares; or (iii) take any action that would
make any representation or warranty of such Stockholder contained herein untrue
or incorrect or have the effect of preventing or disabling such Stockholder from
performing such Stockholder's obligations under this Agreement.
c. Waiver of Appraisal Rights. Each Stockholder hereby waives any
rights of appraisal from the Merger or rights to dissent from the Merger that
such Stockholder may have.
4. Further Assurances. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further action as may be reasonably
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
5. Certain Events. Each Stockholder agrees that this Agreement and the
obligations hereunder shall attach to such Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by
5
<PAGE>
operation of law or otherwise, including without limitation such Stockholder's
heirs, guardians, administrators or successors or as a result of any divorce.
6. Stop Transfer. Each Stockholder agrees with, and covenants to,
Acquisition that such Stockholder shall not request that the Company register
the transfer (book-entry or otherwise) of any certificate or uncertificated
interest representing any of such Stockholder's Shares, unless such transfer is
made in compliance with this Agreement.
7. Termination. The obligations of the Stockholders under this Agreement
shall terminate upon the earlier of (i) the Effective Time of the Merger, (ii)
the date the Merger Agreement is terminated in accordance with its terms, or
(iii) any event described in Section 8.1(a)(v)(A), (B), (D) or (E) of the Merger
Agreement has occurred. The termination of this Agreement shall not relieve any
party from liability for any breach of this Agreement.
8. Miscellaneous.
a. Entire Agreement; Assignment. This Agreement (i) constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and (ii)
shall not be assigned by operation of law or otherwise without the prior written
consent of the other parties.
b. Amendments. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
c. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
Stockholders at the addresses and facsimile numbers set forth on Schedule I
hereto (with a copy to their counsel, Battle Fowler LLP, whose address is listed
below). All communications hereunder shall be delivered to Acquisition as
follows:
Uniflex Acquisition Corp.
c/o RFE Investment Partners
36 Grove Street
New Canaan, Connecticut 06840
Attention: James Parsons
Facsimile No.: (203) 966-3109
6
<PAGE>
c/o CMCO, Inc.
135 East 57th Street
New York, New York 10022
Attention: Robert Davidoff
Facsimile No.: (212) 980-2630
copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Thomas More Griffin
Facsimile No.: (212) 856-7823
copy to:
Finn Dixon & Herling LLP
One Landmark Square
Stamford, Connecticut 06901
Attention: Charles J. Downey III
Facsimile No.: (203) 348-5777
With a copy to:
Olshan Grundman Frome Rosenzweig & Wolosky LLP
505 Park Avenue
New York, NY 10022
Attention: Jeffrey S. Spindler, Esq.
Facsimile No.: (212) 753-0751
And a copy to:
Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016
Attention: David Alan Miller, Esq.
Facsimile No.: (212) 818-8881
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
7
<PAGE>
d. 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.
e. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement.
f. Counterparts; Facsimile Signature. This Agreement may be executed
in (i) two or more counterparts, each of which shall be deemed to be an
original, but both of which shall constitute one and the same Agreement and (ii)
by facsimile (provided an original of the facsimile is provided).
g. Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
h. Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
9. Definitions; Construction. For purposes of this Agreement:
a. "Beneficially own" or "beneficial ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to
any agreement, arrangement or understanding, whether or not in writing. Without
duplicative counting of the same securities by the same holder, securities
beneficially owned by a Person shall include securities beneficially owned by
all other Persons with whom such Person would constitute a "group" as described
in Section 13(d)(3) of the Exchange Act.
b. "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
c. In the event of a stock dividend or distribution, or any change
in the Company Common Stock by reason of any split-up, subdivision,
recapitalization, combination,
8
<PAGE>
exchange of shares or the like, the term "Shares" shall be deemed to refer to
and include the Shares as well as all stock distributed pursuant to such stock
dividends and distributions and any shares into which or for which any or all of
the Shares may be changed, exchanged, split, subdivided, combined or
recapitalized.
10. Stockholder Capacity. Notwithstanding anything herein to the contrary,
no person executing this Agreement who is, or becomes during the term hereof, a
director of the Company makes any agreement or understanding herein in his or
her capacity as such director, and the agreements set forth herein shall in no
way restrict any director in the exercise of his or her fiduciary duties as a
director of the Company. Each Stockholder has executed this Agreement solely in
his or her capacity as the record or beneficial holder of such Stockholder's
Shares.
[Signature Page Follows]
9
<PAGE>
IN WITNESS WHEREOF, Acquisition and each Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
UNIFLEX ACQUISITION CORP.
By: /s/ James A. Parsons
------------------------
Name: James A. Parsons
Title: President
STOCKHOLDERS:
CMNY CAPITAL, L.P.
By: /s/ Robert Davidoff
-----------------------
Name: Robert Davidoff
Title: General Partner
CMCO, INC.
By: /s/ Robert Davidoff
-----------------------
Name: Robert Davidoff
Title: Vice President
/s/ Robert Davidoff
---------------------------
Robert Davidoff
10
<PAGE>
Schedule I
Name Address and Facsimile Number Number of Existing Shares
- ---- ---------------------------- -------------------------
CMNY Capital, L.P. * 242,300
CMCO, Inc. * 54,912
Robert Davidoff * 2,946
- --------
* Address and facsimile number for each Stockholder is 135 East 57th
Street, New York, New York 10022, Fax: (212) 980-2630
[Logo]
STERLING/CARL MARKS CAPITAL, INC.
INVESTMENT COMMITMENT
February 12, 1999
Uniflex, Inc.
383 West John Street
Hicksville, NY 11802
Gentlemen:
Based on our recent meetings and discussions, we are pleased to outline the
following terms and conditions relating to Sterling/Carl Marks Capital, Inc.'s
("Sterling") proposed investment in the Company. This commitment is subject to
the completion of documentation with respect to this investment that is
satisfactory to Sterling and its counsel.
Investor:
Sterling/Carl Marks Capital, Inc. ("Investor")
Company:
Uniflex, Inc. ("Uniflex" or the "Company")
383 West John Street
Hicksville, NY 11802
Amount of Investment:
$750,000.00.
Issue:
Common Stock $750,000.00
===========
Use of Proceeds:
Purchase of equity in Uniflex, Inc. in connection with the merger
of Uniflex, Inc. with Uniflex Acquisition Corp.
(EACH PARTY EXECUTING THIS COMMITMENT AFFIRMS THAT ALL OF THE PROCEEDS OF
THIS INVESTMENT WILL BE UTILIZED BY THE COMPANY FOR THE BUSINESS PURPOSES
SUMMARIZED ABOVE AND FOR NO OTHER PURPOSE WHATSOEVER.)
<PAGE>
Uniflex, Inc. Page 2.
February 12, 1999
Equity Participation:
Investor is purchasing stock in Uniflex, Inc. on a pari passu basis with
CMNY Capital, L.P., CMCO, Inc., and Robert Davidoff (the "Existing Carl
Marks' Investors"), entities controlled by RFE Investment Partners, and
Uniflex's Management (including Herbert Barry and Robert K. Semel) (the
"Existing Management Investors") as part of a $10.75 Million equity
investment for a purchase of 100% of the equity of the Company. The
Existing Carl Marks' Investors and the Existing Management Investors will
retain their existing shares of Uniflex Common Stock.
Investor's investment of $750,000 will result in Investor purchasing
99,075 shares of Uniflex, Inc. stock.
Expenses/Break-Up Fee:
Pursuant to the Letter of Intent between the Company and CMCO, Inc. dated
November 16, 1998.
Other Conditions:
(a) Board Representation: Investor would have the option to designate two
(2) of seven (7) members to the Company's Board of Directors;
(b) Documentation: Funding of the transaction would be conditional upon
completion of such documents, opinions, covenants, representations and
warranties as the Investors or their counsel might request in connection
with funding this Investment. Such documents will include, among other
things, restrictions on dividends, distributions, officer compensation and
redemptions of equity;
(c) No Adverse Change: There shall have occurred no material adverse
change in the Company's financial conditions or its businesses; and
(d) Legal Matters: The Company's counsel shall provide the Investor with
opinions requested. The Company shall not be a party to any litigation or
other proceedings, or no such litigation or proceeding shall have been
threatened that would have a material adverse effect on the Company or
their business if decided or resolved adversely to the Company;
Each of the undersigned acknowledges and agrees that Investor is licensed as
Small Business Investment Company by the Small Business Administration ("SBA"),
and, as a result, must comply with all rules and regulations promulgated by SBA,
in the conduct of its operations, including the making of the Investment
contemplated hereunder. As a result, all of the terms and conditions of this
Commitment are subject to compliance with SBA laws, rules and regulations.
<PAGE>
Uniflex, Inc. Page 3.
February 12, 1999
If this Commitment meets with your approval, please sign below where indicated
and return one (1) copy to us.
Very truly yours,
STERLING/CARL MARKS CAPITAL, INC.
By: /s/ Harvey Granat
Harvey Granat, President
ACCEPTED:
UNIFLEX, INC.
By: /s/ Robert K. Semel, President Date:3/4/99
------------------------------- ------
Name & Title
RFE VI SBIC, L.P.
36 Grove Street
New Canaan, CT 06840
March 5, 1999
Uniflex Acquisition Corp.
36 Grove Street
New Canaan, CT 06840
Re: $5,250,000.00 Equity Financing
Ladies and Gentlemen:
RFE VI SBIC, L.P. (the "Purchaser") is pleased to advise you of the terms
and conditions pursuant to which the Purchaser will purchase from Uniflex
Acquisition Corp. (the "Company") 693,527 shares (the "Securities") of the
common stock, par value $0.01 per share (the "Common Stock"), of the Company,
for an aggregate purchase price of $5,250,000.00 in connection with the merger
of the Company with and into Uniflex, Inc., a Delaware corporation ("Uniflex").
The number of shares of voting Common Stock and the number of shares of
non-voting Common Stock comprising the Securities will be specified by the
Purchaser.
The Company has advised us that:
(A) pursuant to an Agreement of Merger and Recapitalization, dated
as of March 5, 1999, between Uniflex and the Company (the "Merger
Agreement"), the Company will be merging (the "Merger") with and into
Uniflex, with Uniflex being the surviving corporation (the "Surviving
Corporation") in the Merger. At the effective time of the Merger (the
"Effective Time"): (i) each outstanding stock option (the "Options") with
respect to shares of the common stock, par value $0.10 of Uniflex (the
"Uniflex Common Stock") and each share of Uniflex Common Stock (other than
shares held by the Company, Retained Shares (as defined in the Merger
Agreement), shares held by stockholders who have exercised their rights
under the General Corporation Law of the State of Delaware to an appraisal
of their shares ("Dissenting Shares") and shares held in treasury by
Uniflex ("Treasury Securities")) shall automatically be converted into the
right to receive, (1) with respect to the Uniflex Common Stock, $7.57 per
share, and (2) with respect to each Option, the difference between $7.57
and the per-share
<PAGE>
-2-
exercise price thereof (the "Merger Consideration"); (ii) each share of
Uniflex Common Stock held by the Company and all Treasury Securities shall
be canceled and shall be retired without any payment therefore and cease
to exist; (iii) the shares of Common Stock and the Retained Shares not
converted into the Merger Consideration pursuant to the Merger shall
represent shares of capital stock of the Surviving Corporation; and (iv)
any Dissenting Shares shall be entitled to the rights applicable to such
shares under applicable law and the terms of the Merger Agreement; and
(B) Certain beneficial and record stockholders of Uniflex have
agreed to enter into one or more voting agreements (the "Voting
Agreements") pursuant to which such stockholders have agreed to vote the
shares of Uniflex Common Stock held by them in favor of the execution and
delivery by Uniflex of the Merger Agreement and the consummation of the
transactions contemplated thereby; and
(C) Sterling/Carl Marks Capital, Inc. ("Sterling/Carl Marks") has,
subject to the prior or concurrent satisfaction of the terms and
conditions set forth in that certain Investment Commitment dated February
12, 1999 from Sterling/Carl Marks to and accepted by Uniflex, agreed to
purchase from Uniflex, prior to the Effective Time, 99,075 shares of
Uniflex Common Stock for a cash purchase price of $750,000.00; and
(D) Allied Signal Master Pension Trust ("Allied") has, subject to
the prior or concurrent satisfaction of the terms and conditions set forth
in that certain letter dated March 5, 1999 from Allied to Uniflex, agreed
to purchase from Uniflex Senior Subordinated Debentures due in an amount
equal to $7,000,000.00 (the "Senior Subordinated Debentures"); and
(E) Fleet Bank, National Association and The Chase Manhattan Bank
(collectively, the "Banks") have, subject to the prior or concurrent
satisfaction of the terms and conditions set forth in that certain
commitment letter dated March 5, 1999 from the Banks to and accepted by
the Company and Uniflex, agreed to provide to Uniflex two senior secured
credit facilities in the aggregate amount of $23,500,000.00 consisting of
an $18,500,000.00 secured six year term loan and a $5,000,000.00 secured
three year revolving credit loan (collectively, the "Senior Debt" and,
collectively with the Senior Subordinated Debentures, the "Debt
Financing"); and
(F) the proceeds of the $5,250,000.00 purchase price to be paid by
the Purchaser, the proceeds of the $750,000.00 purchase price to be paid
by Sterling/Carl Marks and the proceeds of the Debt Financing are intended
to be
<PAGE>
-3-
utilized (i) to pay the Merger Consideration, (ii) to pay various fees and
expenses associated with the Merger and the consummation of the
transactions contemplated in connection therewith and (iii) to provide
working capital to Uniflex.
The Purchaser has entered into this letter agreement in reliance upon the
information supplied by Uniflex and the Company to the Purchaser, and this
letter agreement is subject to the accuracy of all information, representations,
exhibits and other materials submitted by Uniflex and the Company in connection
with the Company's request for financing hereunder. Any material or substantial
change thereto prior to the consummation of the transactions described herein
will, at the option of the Purchaser, void all of the obligations of the
Purchaser under this letter agreement. The Company must immediately notify the
Purchaser of any such change.
In reliance upon the foregoing, and subject to the satisfaction of those
conditions set forth below and in Schedule A attached hereto and incorporated
herein by reference, the Purchaser hereby commits to purchase the Securities for
an aggregate purchase price of $5,250,000.00 (the "Purchase").
The obligation of the Purchaser to consummate the Purchase and the
transactions contemplated in connection therewith (collectively, the "Equity
Financing") is subject to the terms and conditions set forth in Schedule A and
(i) the preparation, execution and delivery of a Securities Purchase Agreement
(the "Agreement") by and between the Company and the Purchaser in form and
substance satisfactory to the Purchaser and its counsel and such other
documents, certificates or instruments in connection therewith as the Purchaser
may require, (ii) the absence of any material adverse change in the business,
condition (financial or otherwise), operations, performance or prospects of the
Company or Uniflex and (iii) the Company's compliance with the terms and
conditions hereof.
In consideration of the Purchaser's commitment hereunder, the Company
agrees to reimburse promptly the Purchaser and its affiliates from time to time
on demand for all out-of-pocket expenses (including, without limitation, due
diligence expenses, fees and expenses of environmental consultants and
accountants, commitment or other fees paid by, or expenses reimbursed by, the
Purchaser to the Banks and/or to Allied, and the fees, disbursements and other
charges of Finn Dixon & Herling LLP, counsel for the Purchaser) incurred in
connection with the preparation, negotiation, execution and delivery of this
letter agreement, the Agreement, the Merger Agreement and all documents related
to the transactions contemplated hereby and thereby regardless of whether the
Agreement is executed and the transactions contemplated hereby or thereby
(including the Merger) are consummated.
In consideration of the Purchaser's commitment hereunder, the Company
hereby agrees to indemnify, defend and hold harmless the Purchaser and its
affiliates and their respective
<PAGE>
-4-
officers, directors, managers, members, employees and agents from and against
any liabilities, losses, claims, damages, obligations, deficiencies, judgments,
amounts paid in settlement of any suits, actions, claims, proceedings or
investigations, costs and expenses (including, but not limited to, interest,
penalties, costs of investigation and attorneys' and accountants' fees and
disbursements (whether such attorneys' fees are incurred in a dispute between
the parties or between a party and third parties)) (collectively, "Losses")
suffered, sustained, incurred or required to be paid by the Purchaser and/or its
affiliates, or any of their respective officers, directors, managers, members,
employees or agents, as the case may be, based upon, arising out of or otherwise
with respect to this letter agreement, the Agreement, the Merger Agreement or
any related documents or agreements, or the transactions contemplated hereby or
thereby; provided, however, that the Company shall not have any such
indemnification obligation to the extent that such Losses arise out of the gross
negligence or willful misconduct of a party seeking indemnification.
The Purchaser's commitment hereunder shall expire on July 30, 1999;
provided, however, that the expense reimbursement and indemnity provisions
hereof shall survive any such expiration. The terms and conditions of the
Purchaser's commitment hereunder and of the Equity Financing are limited to the
terms and conditions set forth herein and matters which are not covered by the
provisions of this letter agreement are subject to our approval. This letter
agreement may not be modified or changed orally but only by a writing signed by
the party against whom enforcement of the modification or change is sought.
This letter agreement is not assignable by the Company. Nothing in this
letter agreement, express or implied, shall give any person, other than the
parties hereto, any benefit or any legal right, remedy or claim under this
letter agreement.
<PAGE>
-5-
This letter agreement shall be governed by and construed under the laws of
the State of New York without regard to the conflict of law provisions thereof.
This letter agreement may be executed by facsimile and in one or more
counterparts, each of which shall constitute an original and all of which, taken
together, shall constitute one and the same instrument.
[Remainder of page intentionally blank.]
<PAGE>
-6-
If the foregoing is acceptable to the Company, kindly indicate the
Company's agreement to the terms and provisions of this letter agreement,
including Schedule A hereto, by signing and returning to the Purchaser the
enclosed copy of this letter. If this letter is not so signed by the Company and
received by the Purchaser by 11:59 p.m., New York City time, on March 5, 1999,
it shall be null and void.
Very truly yours,
RFE VI SBIC, L.P.
By: RFE ASSOCIATES VI SBIC, LLC,
Its General Partner
By: RFE INVESTMENT PARTNERS VI, L.P.,
Its Sole Member
By: RFE ASSOCIATES VI, LLC,
Its General Partner
By: /s/James A. Parsons
Name: James A. Parsons
Title: Managing Member
AGREED TO AND ACCEPTED BY:
UNIFLEX ACQUISITION CORP.
By: /s/James A. Parsons
Name: James A. Parsons
Title:President
<PAGE>
-7-
Schedule A
The obligations of the Purchaser to purchase the Securities are subject to
the fulfillment on or prior to the earlier of the Effective Time (as defined in
the Merger Agreement) and July 30, 1999 of the following conditions (it being
specifically agreed that none of the following conditions may be waived without
the prior written consent of the Purchaser):
a. Company Representations and Warranties. The representations
and warranties made by the Company in the Agreement shall have been
true and correct in all respects when made, and shall be true and
correct in all respects as of the date (the "Closing Date") of the
closing of the Transactions (as defined below) (the "Closing").
b. Company Covenants. All covenants, agreements, and conditions
contained in the Agreement to be performed by the Company on or
prior to the Closing shall have been performed or complied with in
all respects.
c. Compliance Certificate. The Company shall have delivered to
the Purchaser a compliance certificate in the form required by the
Purchaser executed by the president of the Company, dated the
Closing Date, and certifying to the fulfillment of the conditions
specified thereon.
d. Blue Sky Law. The Company shall have obtained, or shall obtain
within the time periods required by applicable law, all necessary
blue sky law permits and qualifications, or secured exemptions
therefrom, required by any state identified in Schedule A to the
Agreement for the offer and sale of the Securities at the Closing.
e. Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated hereby and by the
Agreement and all documents and instruments incident to the
transactions contemplated thereby or by the Merger Agreement
(collectively, the "Transactions") shall be satisfactory in
substance and form to the Purchaser and its counsel, and the
Purchaser shall have received all such counterpart originals or
certified or other copies of such documents as the Purchaser may
request.
f. Board of Directors. The Surviving Corporation's board of directors
shall, immediately after the Effective Time, consist of no more than
ten (10) members, as follows: (i) four (4) designees of senior
management of Uniflex; (ii) two (2) designees of the Purchaser;
(iii) two (2) designees of Sterling/Carl Marks and CMNY Capital,
L.P. ("CMNY" and, together with Sterling/Carl Marks, the
"Sterling/Carl Marks Investors"); (iv) one (1) designee of Allied;
and (v) one (1) designee designated by mutual agreement of the
Purchaser, the Sterling/Carl
<PAGE>
Marks Investors, and senior management of Uniflex. The Board of
Directors of the Company shall have established an Audit Committee
and a Compensation Committee, each comprised exclusively of
non-management board members, with a director designated by each of
the Purchaser and the Sterling/Carl Marks Investors serving on the
Compensation Committee and a director designated by each of the
Purchaser and the Sterling/Carl Marks Investors serving on the Audit
Committee.
g. No Litigation. No action, suit or other proceeding shall be
pending or threatened before any court, tribunal, or governmental
authority seeking or threatening to restrain or prohibit the
consummation of the Transactions or seeking to obtain substantial
damages in respect thereof or which would otherwise materially and
adversely affect the Purchaser, the Company, Uniflex, or the
Surviving Corporation, or any of their respective businesses,
assets, prospects, financial condition or results of operations.
h. Voting Agreements. Certain beneficial and record stockholders
of Uniflex designated by the Purchaser shall have entered into the
Voting Agreements, which shall be in form and substance satisfactory
to the Purchaser and its counsel, and such Voting Agreements shall
be in full force and effect.
i. Registration Rights Agreement. The Company, the Purchaser and
the other stockholders of the Surviving Corporation shall have
entered into a Registration Rights Agreement, which shall be in form
and substance satisfactory to the Purchaser and its counsel.
j. Stockholders Agreement. The Company, the Purchaser and the
other Stockholders of the Surviving Corporation shall have entered
into a Stockholders Agreement which shall be in form and substance
satisfactory to the Purchaser and its counsel.
k. Legal and Other Fees. At the Closing, the Company or the
Surviving Corporation will pay (a) the legal fees and out-of-pocket
expenses of Finn Dixon & Herling LLP, special counsel to the
Purchaser, in connection with the negotiation, execution and
delivery of the Agreement, the consummation of the Transactions and
the negotiation of the documents contemplated in connection with the
Transactions, and (b) the Purchaser's reasonable out-of-pocket
expenses for due diligence and otherwise in connection with the
negotiation, execution and delivery of the Agreement, the Merger
Agreement and all related documents and agreements contemplated in
connection with the Transactions and with the consummation of the
Transactions.
<PAGE>
l. Consents and Approvals. The Company shall have procured all
required governmental and third party consents and approvals
required in connection with the issuance and sale of the Securities
and the consummation of the Transactions.
m. Small Business Concern Documents. The Company and/or the
Surviving Corporation, as applicable, shall have executed and
delivered to the Purchaser (i) a Size Status Declaration on SBA Form
480, (ii) an Assurance of Compliance on SBA Form 652D and (iii) a
written certification from the Company and/or the Surviving
Corporation regarding its intended use of the proceeds of this
financing, and shall have provided to the Purchaser (i) information
necessary for the preparation of a Portfolio Financing Report on SBA
Form 1031 and (ii) a list, after giving effect to the transactions
contemplated by the Agreement, of (a) the name of each of the
directors of the Company and the Surviving Corporation, (b) the name
and title of each of the officers of the Company and the Surviving
Corporation, and (c) the name of each of the stockholders of the
Company and the Surviving Corporation, setting forth the number and
class of shares held.
n. Reliance Certificates. Each of Herbert Barry and Robert Semel
shall have executed and delivered to the Purchaser and to the
Company a certificate in the form and substance satisfactory to the
Purchaser and its counsel certifying that he has reviewed the
representations, warranties and covenants of Uniflex contained in
the Merger Agreement and all agreements relating to the Debt
Financing and that such representations and warranties are true,
correct and complete, and such covenants have been performed, as of
the Closing Date.
o. Conditions to Merger Agreement. All of the Company's
conditions to closing contained in Sections 7.1 and 7.3 of the
Merger Agreement shall have been satisfied (and not waived, unless
such waiver has been consented to in writing by the Purchaser ).
p. Sterling/Carl Marks Agreement. Sterling/Carl Marks shall have
purchased, or shall concurrently purchase, 99,075 shares of Uniflex
Common stock pursuant to the agreement to be entered into by and
between Uniflex and Sterling/Carl Marks which shall be in form and
substance satisfactory to the Purchaser and its counsel (the
"Sterling/Carl Marks Agreement") and the purchase price of
$750,000.00 to be paid by Sterling/Carl Marks shall be available for
payment as a portion of the Merger Consideration under the Merger
Agreement.
q. Allied Agreement. Allied shall have purchased, or shall
concurrently purchase, the Senior Subordinated Debentures pursuant
to the agreement to be entered into by and between Uniflex and
Allied which shall be in form and substance satisfactory to the
Purchaser and its counsel (the "Allied Agreement")
<PAGE>
and the purchase price of $7,000,000.00 to be paid by Allied shall
be available for payment as a portion of the Merger Consideration
under the Merger Agreement.
r. Financing. The terms and conditions for the financing of the
Merger and the payment of the Merger Consideration, and the
financing of the Surviving Corporation (collectively, the
"Financing"), including the Debt Financing and any other credit
facilities being provided by senior and/or subordinated lender(s),
satisfactory to the Purchaser in its sole discretion, pursuant to a
senior loan agreement, a senior subordinated loan or note purchase
agreement and all related documents (collectively, the "Loan
Documents"), shall be satisfactory to the Purchaser in its sole
discretion. Concurrently with the Closing, the Company or the
Surviving Corporation, as applicable, shall have borrowed or have
available for borrowing, as term loans, the aggregate principal
amount of $18,500,000.00, and an additional $5,000,000.00 principal
amount as a revolving credit facility. A complete and correct copy
of all Loan Documents shall have been delivered to the Purchaser,
together with evidence satisfactory to the Purchaser of such
borrowings, or the availability thereof, under the Loan Documents,
and no other agreements or instruments shall exist relating to the
terms of such borrowings.
s. Satisfactory Review. The Company, the Purchaser and their
respective representatives shall have completed a legal, business,
and accounting review of the assets, properties and businesses of
Uniflex, with results satisfactory to the Purchaser in its sole
discretion.
t. Environmental Assessment. The Company shall have received from
consultants engaged by the Purchaser and/or the Company an
environmental assessment(s) with respect to all owned, leased or
other real property currently or previously owned, operated, leased
or used by Uniflex or any of its subsidiaries or affiliates, in each
case in form and substance satisfactory to the Purchaser.
u. Arrangements with Senior Management. The Company shall enter
into arrangements reasonably satisfactory to the Purchaser in its
sole discretion with each member of senior management identified by
the Purchaser. Each member of management of Uniflex designated by
the Purchaser shall have delivered to Uniflex a letter indicating
that he will not exercise certain rights under his respective
employment agreement with Uniflex with respect to change of control
payments.
v. Consummation of Transactions. The acquisition of the
Securities shall be consummated immediately prior to the Effective
Time.
<PAGE>
w. Termination of Existing Arrangements. Each of the existing
agreements of Uniflex designated by the Purchaser shall be
terminated and of no further force or effect.
x. Capitalization of Surviving Corporation. Immediately after the
Effective Time, the capitalization of the Surviving Corporation
shall be as set forth on Annex I.
ANNEX I
Uniflex, Inc.
Capitalization Table
<TABLE>
<CAPTION>
----------------------------------------------------------------
Voting Control Calculation
----------------------------------------------------------------
Fully Diluted Voting % Non-Voting % Total %
Investor Amount Price Shares Shares Voting Shares Non-voting Shares Ownership
- --------------------------- ---------- ----- ------------- ------- ------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RFE Investment Partners 5,250,000 7.57 693,527 246,729 39.80% 446,798 56.22% 693,527 49.0%
CMNY Capital, L.P. 1,834,211 7.57 242,300 86,201 13.90% 156,099 19.64% 242,300 17.1%
Sterling/Carl Marks Capital 750,000 7.57 99,075 35,247 5.69% 63,828 8.03% 99,075 7.0%
CMCO, Inc. 415,684 7.57 54,912 19,535 3.15% 35,377 4.45% 54,912 3.9%
Robert Davidoff 22,301 7.57 2,946 1,048 0.17% 1,898 0.24% 2,946 0.2%
---------- ------------- ------- ------- ---------- ---------- --------- ---------
8,272,196 1,092,760 388,760 62.71% 704,000 88.58% 1,092,760 77.2%
Herbert Barry 567,750 7.57 75,000 53,600 8.65% 21,400 2.69% 75,000 5.3%
Robert Semel 567,750 7.57 75,000 49,400 7.97% 25,600 3.22% 75,000 5.3%
Warner Heuman 567,750 7.57 75,000 51,800 8.36% 23,200 2.92% 75,000 5.3%
Elliot Berger 98,410 7.57 13,000 8,200 1.32% 4,800 0.60% 13,000 0.9%
Erich Vetter 113,550 7.57 15,000 15,000 2.42% 0 0.00% 15,000 1.1%
Lee Cantor 113,550 7.57 15,000 7,100 1.15% 7,900 0.99% 15,000 1.1%
Melissa Cantor 113,550 7.57 15,000 7,100 1.15% 7,900 0.99% 15,000 1.1%
Hy Brownstein 98,410 7.57 13,000 13,000 2.10% 0 0.00% 13,000 0.9%
Neil Sklar 196,820 7.57 26,000 26,000 4.19% 0 0.00% 26,000 1.8%
---------- ------------- ------- ------- ---------- ---------- --------- ---------
2,437,540 322,000 231,200 37.29% 90,800 11.42% 322,000 22.8%
----------
Subtotal 10,709,736
Allied Signal Pension Trust 7.57 0.00 0.00 0.0% 0 0 0 0
Management Options 7.57 0.00 0.00 0.0% 0 0 0 0
------------- ------- ------- ---------- ---------- --------- ---------
0.00 0.00 0.0% 0.00 0.00 0.00 0.00
Fully diluted shares 1,414,760 619,960 100.0% 794,800 100.0% 1,414,760 100.0%
============= ======= ======= ========== ========== ========= =========
SBIC Ownership 62.7%
Warrants 0.0%
Options 0.0%
<CAPTION>
Fully-Diluted
-------------------------------------------------------------
Voting Non-Voting Management Fully-diluted %
Inventor Shares Shares Options Shares Ownership
- --------------------------- ----------- --------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C>
RFE Investment Partners 246,729 446,798 0 693,527 41.7%
CMNY Capital, L.P. 86,201 156,099 0 242,300 14.6%
Sterling/Carl Marks Capital 35,247 63,828 0 99,075 6.0%
CMCO, Inc. 19,535 35,377 0 54,912 3.3%
Robert Davidoff 1,048 1,898 0 2,946 0.2%
----------- --------- ---------- ------------- ---------
388,760 704,000 0.00 1,092,760 65.7%
Herbert Barry 53,600 21,400 11,884 86,884 5.2%
Robert Semel 49,400 25,600 11,884 86,884 5.2%
Warner Heuman 51,800 23,200 0 75,000 4.5%
Elliot Berger 8,200 4,800 11,884 24,884 1.5%
Erich Vetter 15,000 0 0 15,000 0.9%
Lee Cantor 7,100 7,900 11,917 26,917 1.6%
Melissa Cantor 7,100 7,900 11,884 26,884 1.6%
Hy Brownstein 13,000 0.00 11,884 24,884 1.5%
Neil Sklar 26,000 0.00 11,884 37,884 2.3%
----------- --------- ---------- ------------- ---------
231,200 90,800 83,221 405,221 24.3%
---------
Subtotal 1,497,981
Allied Signal Pension Trust 0.00 0.00 0.00 83,221 5.0%
Management Options 0.00 0.00 0.00 83,221 5.0%
----------- --------- ---------- ------------- ---------
0.00 0.00 0.00 166,442 10.0%
Fully diluted shares 619,960 794,800 83,221 1,664,423 100.0%
=========== ========= ========== ============= =========
SBIC Ownership
Warrants 5.0%
Options 5.0%
</TABLE>
March 5, 1999
Uniflex Acquisition Corp.
36 Grove Street
New Canaan, CT 06840
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger and Recapitalization
of even date herewith between Uniflex Acquisition Corp., a Delaware corporation
("Acquirer"), and Uniflex, Inc., a Delaware corporation (the "Company") (as such
agreement may be amended from time to time, the "Merger Agreement"; capitalized
terms used but not defined herein shall have the meanings set forth in the
Merger Agreement) pursuant to which (and subject to the terms and conditions
specified therein) Acquirer will be merged with and into the Company (the
"Merger").
As a condition to Acquirer entering into the Merger Agreement, Acquirer
has required that each Stockholder enter into, and each such Stockholder has
entered into, those Voting Agreements, dated as of the date hereof (the "Voting
Agreements").
Furthermore, as a condition to entering into a Voting Agreement, each of
the parties has required that the other parties execute and deliver this letter
agreement (this "Letter Agreement") setting forth certain expectations and
understandings of the parties.
For purposes hereof, the term "Stockholder" refers to any of the
Management Stockholders (as set forth on the signature pages hereto) and any of
the Sterling/Carl Marks Investors (as set forth on the signature pages hereto).
To implement the foregoing and in consideration of the mutual agreements
contained herein, the parties hereby agree as follows:
1. Certain Understandings:
(a) Employment Agreements. Each of the parties hereby agrees that it is
contemplated that, at the Effective Time, each of the Employment Agreements,
dated as of the date hereof, between Acquirer and each of Herbert Barry and
Robert K. Semel (the "Employment Agreements"), shall remain in full force and
effect in accordance with their terms, unless previously terminated in
accordance with their respective terms.
<PAGE>
-2-
(b) Option Agreements. Each of the parties hereby agrees that at or
immediately after the Effective Time, the Surviving Corporation will grant the
83,221 options described below to each of the following persons in the amounts
set forth opposite such persons' respective names (so long as he or she is then
eligible to receive such options under the Surviving Corporation's Stock Option
Plan (the form of such Stock Option Plan and the form of option agreement for
the Management Stockholders having been circulated among the parties on or prior
to the date hereof)):
- --------------------------------------------------------------------------------
Recipient No. Shares Vesting Exercise Price
- --------- ---------- ------- --------------
- --------------------------------------------------------------------------------
Herbert Barry 11,884 Five Years - equal $7.57 (or 110%
Robert K. Semel 11,844 monthly vesting thereof, if required
Elliot Berger 11,884 for ISO treatment)
Lee Cantor 11,917
Melissa Cantor 11,884
Hy Brownstein 11,884
Neil Sklar 11,884
- --------------------------------------------------------------------------------
(c) Retained Shares. Each of the Stockholders acknowledges and agrees that
the shares designated as "Retained Shares" on Schedule I attached hereto shall
be treated as Retained Shares for purposes of the Merger Agreement, and, after
the Effective Time, shall represent shares of common stock of the Surviving
Corporation, all as more fully set forth in the Merger Agreement.
(d) Post-Closing Capitalization. Immediately after the Effective Time, the
capitalization of the Surviving Corporation will be as set forth on Schedule II
attached hereto.
(e) Post-Closing Shareholder Arrangements. Each of the parties hereto
acknowledges that the forms of stockholders agreement and registration rights
agreement of the Surviving Corporation, as circulated among the parties on or
prior to the date hereof, will be the stockholders agreement and registration
rights agreement among such parties and the Surviving Corporation immediately
after the Effective Time (subject to immaterial modifications which do not
disadvantage any particular party).
(f) Fee to SCM Management LLC. Each of the parties hereto acknowledges
that it is contemplated that at the Effective Time, the Surviving Corporation
will pay a fee of $499,999.00 to SCM Management LLC in consideration of its
services in connection with the Merger.
2. Representation of Acquirer to Stockholders. Acquirer represents and warrants
to each of the Management Stockholders as follows:
(a) Acquirer was formed solely for the purpose of engaging in the
transactions contemplated by the Merger Agreement.
<PAGE>
-3-
(b) As of the date hereof and immediately prior to the Effective Time,
except for (i) obligations or liabilities incurred in connection with its
incorporation or organization and the transactions contemplated by this Letter
Agreement, and (ii) the Merger Agreement and other agreements or arrangements
contemplated by the Merger Agreement or in furtherance of the transactions
contemplated thereby, Acquirer has not incurred, directly or indirectly, through
any Subsidiary or Affiliate, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any Person.
3. Information included in Securities Law Filings.
(a) Each party shall cooperate with the others in the preparation of the
Proxy Statement, the preparation by the appropriate filing parties of the
Schedule 13E-3 and the preparation by the appropriate filing parties of any
Schedule 13D required under the Exchange Act. Each party shall furnish all
information concerning him, her or it required to be included therein and, after
consultation with each other, shall respond promptly to any comments made by the
SEC with respect to any of the Proxy Statement, the Schedule 13E-3 and any
Schedule 13D.
(b) Each party agrees that the information supplied or to be supplied by
him, her or it in writing for inclusion in the Proxy Statement, the Schedule
13E-3 or any Schedule 13D shall not, at the time the Proxy Statement is mailed
or, in the case of any Schedule 13D, upon filing with the SEC, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading or, at the
time of the Special Meeting (as defined in the Merger Agreement), as then
amended or supplemented, or at the Effective Time, omit to state any material
fact necessary to correct any statement originally supplied by such party in
writing for inclusion in the Proxy Statement, the Schedule 13E-3 or any Schedule
13D which has become false or misleading. If at any time prior to the Effective
Time any event relating to any party or any of its Affiliates, or its
Affiliates' respective officers, directors, partners, managers, members or
shareholders should be discovered which should be set forth in an amendment of,
or a supplement to, such Proxy Statement, Schedule 13E-3 or Schedule 13D, such
party shall promptly so inform the Acquirer.
4. Confidentiality; No Hire.
(a) Each Management Stockholder agrees that for a period ending five years
after the Effective Time, such Management Stockholder will not disclose to any
other party (other than in connection with the performance of his duties for the
Company), unless required to do so by law, any Confidential Information relating
to the Company or to any Subsidiary or Affiliate thereof which information was
acquired during the course of such Management Stockholder's relationship with
the Company. As used in this Letter Agreement, the term "Confidential
Information" means information that is not generally known or available to the
public and that is used, developed or
<PAGE>
-4-
obtained by the Company or its Subsidiaries or Affiliates in connection with its
businesses, including but not limited to information relating to (i) products or
services; (ii) fees, costs or pricing structures; (iii) designs; (iv) computer
software, including operating systems, applications or program listings; (v)
flow charts, manuals or documentation; (vi) data bases; (vii) accounting or
business methods; (viii) inventions, devices, new developments, methods or
processes, whether patentable or unpatentable and whether or not reduced to
practice; (ix) customers or customer requirements, order levels or projections
and customer or client lists; (x) other copyrightable works; (xi) all technology
and trade secrets; and (xii) all similar or related information in whatever
form. Confidential Information will not include any information that has been
published or circulated in a form generally available to, or otherwise known by,
the public (other than through the fault of any Management Stockholder) prior to
the date any Management Stockholder proposes to disclose or use such
information.
(b) Each Management Stockholder agrees that for a period ending two years
after the Effective Time, without the prior written consent of the Company,
neither such Management Stockholder nor any business or enterprise with which
such Management Stockholder is associated as an officer, director or controlling
shareholder or other investor (in each case, with the power to direct or cause
the direction of the management of such business or enterprise) will employ or
attempt to employ any employee of the Company or any of its Subsidiaries or
joint ventures.
(c) For purposes of this Section 4, all references to the Company shall be
deemed to include the Surviving Corporation.
(d) This Section 4 shall not apply to Herbert Barry and Robert Semel,
whose Employment Agreements contain applicable provisions. To the extent that
this Section 4 is inconsistent with any written agreement between a Management
Stockholder and the Company (an "Existing Agreement"), the Existing Agreement
shall be controlling.
5. Further Assurances. From time to time, at the other parties' reasonable
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further reasonable action as
may be reasonably necessary or desirable to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Letter Agreement.
6. Termination. The obligations of the parties under this Letter Agreement
(other than the obligations under Sections 2, 3 and 4, which shall survive the
Effective Time) shall terminate upon the earlier of (i) the date the Merger
Agreement is terminated in accordance with its terms and (ii) immediately after
the Effective Time of the Merger. The termination of this Letter Agreement shall
not relieve any party from liability for any breach of this Letter Agreement,
any Voting Agreement, either of the Employment Agreements, or any other related
agreement or instrument.
<PAGE>
-5-
7. Miscellaneous.
(a) Entire Agreement; Assignment. This Letter Agreement (i) constitutes
the entire agreement among the parties with respect to the specific subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral (other than Existing Agreements referred to in Section 4),
among the parties with respect to the subject matter hereof and (ii) shall not
be assigned, by operation of law or otherwise, without the prior written consent
of the other parties. This Agreement shall inure to the benefit of the parties
hereto and their respective permitted successors and assigns and shall not inure
to the benefit of any other Person.
(b) Amendments. This Letter Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by (i) Acquirer, (ii) with respect to the Management
Stockholders, by Herbert Barry and Robert Semel, and (iii) the holders of a
majority of the shares of Common Stock of the Company held by the Sterling/Carl
Marks Investors; provided that Acquirer, on the one hand, and any Stockholder,
on the other hand, may waive any of his, her or its rights hereunder without
obtaining the consent of any other party.
(c) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
Stockholders at the addresses set forth in the Voting Agreements. All
communications hereunder shall be delivered to Acquirer as follows:
UNIFLEX ACQUISITION CORP.
c/o RFE Investment Partners
36 Grove Street
New Canaan, Connecticut 06840
Attention: James A. Parsons
<PAGE>
-6-
c/o CMCO, Inc.
135 East 57th Street
New York, New York 10022
Attention: Robert Davidoff
copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Thomas More Griffin, Esq.
copy to:
Finn Dixon & Herling LLP
One Landmark Square
Stamford, Connecticut 06901
Attention: Charles J. Downey III, Esq.
Any notice to the Management Stockholders shall also be delivered to:
Graubard Mollen & Miller
600 Third Avenue
New York, NY 10016-2097
Attention: David A. Miller, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(d) Governing Law. This Letter 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.
(e) Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Letter Agreement were not performed
in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Letter Agreement and to enforce
specifically the terms and provisions of this Letter Agreement.
<PAGE>
-7-
(f) Counterparts; Facsimile Signatures. This Letter Agreement may be
executed in two or more counterparts (which may be by facsimile), each of which
shall be deemed to be an original, but all of which shall constitute one and the
same Agreement.
(g) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Letter Agreement.
(h) Severability. Whenever possible, each provision or portion of any
provision of this Letter Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Letter Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Letter Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision or portion of any
provision had never been contained herein.
8. Definitions; Construction. For purposes of this Letter Agreement:
"Affiliate" or "affiliate" shall mean, with respect to any Person, any
other Person that, directly or indirectly, controls or is controlled by or is
under common control with such Person. As used in this definition of
"affiliate", the term "control" and any derivatives thereof mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract, or otherwise.
"Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
9. Stockholder Capacity. Notwithstanding anything herein to the contrary, no
person executing this Letter Agreement who is, or becomes during the term
hereof, a director or officer of the Company makes any agreement or
understanding herein in his or her capacity as such director or officer, and the
agreements set forth herein shall in no way restrict any director or officer in
the exercise of his or her fiduciary duties as a director or officer of the
Company. Each Stockholder has executed this Letter Agreement solely in his or
her capacity as the record or beneficial holder of such Stockholder's Shares.
[Signature Pages Follow]
<PAGE>
-8-
IN WITNESS WHEREOF, Acquirer and each Stockholder have caused this Letter
Agreement to be duly executed as of the day and year first above written.
ACQUIRER:
UNIFLEX ACQUISITION CORP.
By: /s/ James A. Parsons
Name: James A. Parsons
Title: President
MANAGEMENT STOCKHOLDERS:
/s/ Robert K. Semel
Robert K. Semel
/s/ Herbert Barry
Herbert Barry
/s/ Warner J. Heuman
Warner J. Heuman
/s/ Erich K. Vetter
Erich K. Vetter
/s/ Elliott L. Berger
Elliott L. Berger
/s/ Lee B. Cantor
Lee B. Cantor
<PAGE>
-9-
/s/ Melissa H. Cantor
Melissa H. Cantor
/s/ Hy L. Brownstein
Hy L. Brownstein
/s/ Neil S. Sklar
Neil S. Sklar
<PAGE>
-10-
STERLING/CARL MARKS INVESTORS:
CMNY CAPITAL, L.P.
By: /s/ Robert Davidoff
--------------------------
A General Partner
CMCO, INC.
By: /s/ Robert Davidoff
--------------------------
Name:
Title:
/s/ Robert Davidoff
------------------------------
Robert Davidoff
STERLING/CARL MARKS CAPITAL, INC.
By /s/ Harvey Granat
Name: Harvey Granat
Title: President
<PAGE>
-11-
Schedule I
Retained Shares
---------------
Robert K. Semel 75,000
Herbert Barry 75,000
Warner J. Heuman 75,000
Erich K. Vetter 15,000
Elliott L. Berger 13,000
Lee B. Cantor 15,000
Melissa H. Cantor 15,000
Hy L. Brownstein 13,000
Neil Sklar 26,000
<PAGE>
-12-
Schedule II
Capitalization Table
<TABLE>
<CAPTION>
----------------------------------------------------------------
Voting Control Calculation
----------------------------------------------------------------
Fully Diluted Voting % Non-Voting % Total %
Investor Amount Price Shares Shares Voting Shares Non-voting Shares Ownership
- --------------------------- ---------- ----- ------------- ------- ------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RFE Investment Partners 5,250,000 7.57 693,527 246,729 39.80% 446,798 56.22% 693,527 49.0%
CMNY Capital, L.P. 1,834,211 7.57 242,300 86,201 13.90% 156,099 19.64% 242,300 17.1%
Sterling/Carl Marks Capital 750,000 7.57 99,075 35,247 5.69% 63,828 8.03% 99,075 7.0%
CMCO, Inc. 415,684 7.57 54,912 19,535 3.15% 35,377 4.45% 54,912 3.9%
Robert Davidoff 22,301 7.57 2,946 1,048 0.17% 1,898 0.24% 2,946 0.2%
---------- ------------- ------- ------- ---------- ---------- --------- ---------
8,272,196 1,092,760 388,760 62.71% 704,000 88.58% 1,092,760 77.2%
Herbert Barry 567,750 7.57 75,000 53,600 8.65% 21,400 2.69% 75,000 5.3%
Robert Semel 567,750 7.57 75,000 49,400 7.97% 25,600 3.22% 75,000 5.3%
Warner Heuman 567,750 7.57 75,000 51,800 8.36% 23,200 2.92% 75,000 5.3%
Elliot Berger 98,410 7.57 13,000 8,200 1.32% 4,800 0.60% 13,000 0.9%
Erich Vetter 113,550 7.57 15,000 15,000 2.42% 0 0.00% 15,000 1.1%
Lee Cantor 113,550 7.57 15,000 7,100 1.15% 7,900 0.99% 15,000 1.1%
Melissa Cantor 113,550 7.57 15,000 7,100 1.15% 7,900 0.99% 15,000 1.1%
Hy Brownstein 98,410 7.57 13,000 13,000 2.10% 0 0.00% 13,000 0.9%
Neil Sklar 196,820 7.57 26,000 26,000 4.19% 0 0.00% 26,000 1.8%
---------- ------------- ------- ------- ---------- ---------- --------- ---------
2,437,540 322,000 231,200 37.29% 90,800 11.42% 322,000 22.8%
----------
Subtotal 10,709,736
Allied Signal Pension Trust 7.57 0.00 0.00 0.0% 0 0 0 0
Management Options 7.57 0.00 0.00 0.0% 0 0 0 0
------------- ------- ------- ---------- ---------- --------- ---------
0.00 0.00 0.0% 0.00 0.00 0.00 0.00
Fully diluted shares 1,414,760 619,960 100.0% 794,800 100.0% 1,414,760 100.0%
============= ======= ======= ========== ========== ========= =========
SBIC Ownership 62.7%
Warrants 0.0%
Options 0.0%
<CAPTION>
Fully-Diluted
-------------------------------------------------------------
Voting Non-Voting Management Fully-diluted %
Inventor Shares Shares Options Shares Ownership
- --------------------------- ----------- --------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C>
RFE Investment Partners 246,729 446,798 0 693,527 41.7%
CMNY Capital, L.P. 86,201 156,099 0 242,300 14.6%
Sterling/Carl Marks Capital 35,247 63,828 0 99,075 6.0%
CMCO, Inc. 19,535 35,377 0 54,912 3.3%
Robert Davidoff 1,048 1,898 0 2,946 0.2%
----------- --------- ---------- ------------- ---------
388,760 704,000 0.00 1,092,760 65.7%
Herbert Barry 53,600 21,400 11,884 86,884 5.2%
Robert Semel 49,400 25,600 11,884 86,884 5.2%
Warner Heuman 51,800 23,200 0 75,000 4.5%
Elliot Berger 8,200 4,800 11,884 24,884 1.5%
Erich Vetter 15,000 0 0 15,000 0.9%
Lee Cantor 7,100 7,900 11,917 26,917 1.6%
Melissa Cantor 7,100 7,900 11,884 26,884 1.6%
Hy Brownstein 13,000 0.00 11,884 24,884 1.5%
Neil Sklar 26,000 0.00 11,884 37,884 2.3%
----------- --------- ---------- ------------- ---------
231,200 90,800 83,221 405,221 24.3%
---------
Subtotal 1,497,981
Allied Signal Pension Trust 0.00 0.00 0.00 83,221 5.0%
Management Options 0.00 0.00 0.00 83,221 5.0%
----------- --------- ---------- ------------- ---------
0.00 0.00 0.00 166,442 10.0%
Fully diluted shares 619,960 794,800 83,221 1,664,423 100.0%
=========== ========= ========== ============= =========
SBIC Ownership
Warrants 5.0%
Options 5.0%
</TABLE>
FLEET BANK, NATIONAL ASSOCIATION THE CHASE MANHATTAN BANK
300 Broad Hollow Road 7600 Jericho Turnpike
Melville, New York 11747 Jericho, New York 11797
March 5, 1999
Uniflex, Inc.
383 West John Street
Hicksville, New York 11802
Uniflex Acquisition Corp.
c/o RFE Investment Partners
36 Grove Street, 2nd Floor
New Canaan, Connecticut 06840
Re: $23,500,000 Senior Secured Credit Facilities
Gentlemen:
You have advised us that, through a multistep transaction (the
"Transaction"), (i) CMNY Capital, L.P., CMCO, Inc. and Robert Davidoff (the
"Carl Marks Group"), (ii) Sterling/Carl Marks Capital, Inc. ("Sterling/Carl
Marks"); (iii) Uniflex Acquisition Corp. ("Acquisition Corp."), a corporation
owned by RFE VI SBIC, L.P. ("RFE") and (iv) Herbert Barry, Robert Semel, other
senior management members and directors of Uniflex, Inc. (the "Management
Group") will acquire Uniflex, Inc., a Delaware corporation (the "Borrower")
pursuant to the terms and conditions of an Agreement and Plan of Merger and
Recapitalization between Acquisition Corp. and Borrower ("Merger Agreement").
You have further advised us that the Transaction will be structured under the
Merger Agreement as a merger and recapitalization ("Merger"), pursuant to which
(i) Acquisition Corp. will be merged with and into Borrower, with Borrower
surviving as the surviving corporation of the Merger; (ii) the common stock of
Acquisition Corp. owned by RFE will be converted into shares of common stock of
Borrower; (iii) shares of common stock of Borrower owned by the Carl Marks
Group, Sterling/Carl Marks and the Management Group aggregating 721,233 shares
of Borrower common stock will be retained by the holders in connection with the
Merger; (iv) all stockholders of the Borrower (other than holders of retained
shares and dissenting shares) shall received $7.57 per share in cash as merger
consideration in the Merger; and (v) all holders of options
<PAGE>
to purchase common stock of Borrower shall receive in the Merger cash per share
representing the difference between $7.57 and the per share option exercise
price. Upon consummation of the Merger, on a fully diluted basis, RFE will own
approximately 41.7%, the Carl Marks Group and Sterling/Carl Marks Group 24.0%,
and the Management Group approximately 20% of the outstanding shares of common
stock of Borrower. It is intended that the Transaction be recorded as a
recapitalization for financial reporting purposes. In order to finance the
Transaction, (i) RFE and certain investors will contribute $5,250,000 in cash to
Acquisition Corp. in exchange for one hundred (100%) percent of the common stock
of Acquisition Corp., (ii) Sterling/Carl Marks shall purchase shares of common
stock of the Borrower immediately prior to the Merger for a purchase price of
$750,000, (iii) the Borrower will issue $7,000,000 of senior subordinated
debentures (the "Senior Subordinated Debentures") and (iv) the Borrower will
borrow an additional $20,200,000 under the terms and conditions set forth
herein.
The Chase Manhattan Bank ("Chase") and Fleet Bank, National Association
("Fleet") are pleased to advise you that attached is a Summary of Terms and
Conditions dated the date hereof (the "Term Sheet") of the principal terms and
conditions of the proposed commitments in the maximum aggregate principal amount
of $23,500,000 (the "Senior Secured Credit Facilities") to be provided to the
Borrower by Chase and Fleet (Fleet and Chase, each a "Lender" and, collectively,
the "Lenders"). The Senior Secured Credit Facilities shall consist of (i) an
$18,500,000 secured six year term loan (the "Term Loan") and (ii) a $5,000,000
secured three year revolving credit loan (the "Revolving Credit Facility"). Each
Lender hereby commits to lend its commitment percentage of the Term Loan and the
Revolving Credit Facility, in each case, subject to the terms, conditions
described herein and in the Term Sheet. Each Lender's commitment percentage
shall be fifty (50%) percent. It is a condition to each Lender's commitment
hereunder that the portion of the Senior Secured Credit Facilities not being
provided by such Lender shall be provided by the other Lender. In connection
with the closing of the Senior Secured Credit Facilities, the existing mortgage
loan (the "Mortgage Loan") extended by Chase to the Borrower secured by the real
property and improvements located at 383 West John Street, Hicksville, New York
shall be amended as set forth in the attached Term Sheet, which amendment shall
include, among other items, an increase in the fixed interest rate thereof by
ninety four (94) basis points.
The proceeds of the Term Loan will be used to finance the payment to the
shareholders of the Borrower entitled to receive cash for their shares at the
effective time of the Merger in accordance with the Merger Agreement governing
the Merger (the "Merger Payment"). The proceeds of loans under the Revolving
Credit Facility shall be used by the Borrower (i) to finance up to $1,700,000 of
the Merger Payment and (ii) for working capital purposes. It is agreed that
Chase will act as the sole administrative agent (in such capacity, the
"Administrative Agent") and Fleet shall act as the sole documentation agent (in
such capacity, the "Documentation Agent") (the Documentation Agent and the
Administrative Agent, each an "Agent" and, collectively, the "Agents") for the
Senior Secured Credit Facilities.
Please note, however, that the terms and conditions of this commitment and
undertaking are not limited to those set forth in this letter. Those matters
that are not covered or made clear herein
2
<PAGE>
or in the attached Term Sheet are subject to mutual agreement of the parties.
The terms and conditions of this commitment and undertaking may be modified only
in writing. In addition, this commitment and undertaking is subject to: (a) the
preparation, execution and delivery of mutually acceptable loan documentation,
including a credit agreement incorporating substantially the terms and
conditions outlined herein and in the Term Sheet, (b) the satisfactory
completion of each Lender's due diligence review of the business and affairs of
the Borrower and its subsidiaries, (c) the absence of (i) a material adverse
change in the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower or any of its subsidiaries,
since October 31, 1998 and (ii) any material adverse change in loan syndication
or financial or capital market conditions generally from those currently in
effect, (d) the accuracy and completeness of all representations that you make
to us and all information that you furnish to us in connection with this
commitment and undertaking and your compliance with the terms of this letter,
(f) no development or change occurring after the date hereof, and no information
becoming known after the date hereof that (i) results in or could reasonably be
expected to result in a material change in, or material deviation from, the
information previously delivered by you or could reasonably be expected to be
materially adverse to you or any of your subsidiaries or its subsidiaries or to
the Agents or the Lenders, or to the legal tax, accounting or financial aspects
of the Transaction, or (ii) has had or could reasonably be expected to have a
material adverse effect in the business, condition (financial or otherwise),
operations, performance, properties or prospects of the Borrower or any of its
subsidiaries, and (g) the negotiation and delivery of definitive documentation
on or before the date of the funding of the Senior Secured Credit Facilities. In
addition, the structure and documentation relating to the Transaction, the
organization and structure of the Borrower after giving effect to the Merger,
the terms of the Subordinated Debentures, the equity contributions prior to the
Merger, the rights of the shareholders of the Borrower after giving effect to
the Merger, and the financial, accounting, and tax aspects of the Transactions
shall be satisfactory to the Agents.
As consideration for the Lenders' commitments hereunder and the agreement
you agree to pay the Agents and the Lenders the fees set forth in the Term Sheet
as allocated in the Term Sheet. Notwithstanding the foregoing or any provision
of this letter or the Term Sheet, in the event the transactions contemplated
hereby do not close, in the absence of fraud, misrepresentation, bad faith or
willful misconduct on the part of the Borrower, all obligations of the Borrower
to pay fees and expenses of the Lenders or to indemnify the Lenders shall be
borne by Sterling/Carl Marks and RFE and the Borrower shall have no further
obligation with respect thereto.
You acknowledge that Chase and Fleet and their respective affiliates (the
term "Chase" and "Fleet" being understood to refer hereinafter in this paragraph
to include such affiliates) may be providing debt financing, equity capital or
other services (including financial advisory services) to other companies in
respect of which you may have conflicting interests regarding the transactions
described herein or otherwise. Neither Chase nor Fleet will use confidential
information obtained from you by virtue of the transactions contemplated by this
Commitment Letter or Chase's or Fleet's other relationships with you in
connection with the performance by Chase and Fleet of services for other
companies, and neither Chase nor Fleet will furnish any such information to
other companies. You acknowledge that neither Chase nor Fleet has any obligation
to use in connection with the
3
<PAGE>
transactions contemplated by this Commitment Letter, or to furnish you,
confidential information obtained from other companies.
You agree, jointly and severally, (a) to indemnify and hold harmless each
of the Lenders, their respective affiliates and their respective officers,
directors, employees, agents and advisors from and against any and all losses,
claims, damages, liabilities and expenses arising out of or in connection with
this letter agreement or the transactions contemplated hereby or any claim,
litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether of whether any of such indemnified parties is a party
thereto, and to reimburse each of such indemnified parties upon demand for any
reasonable legal or other reasonable expenses incurred in connection with
investigating or defending any of the foregoing; provided, however, that the
foregoing indemnity will not, as to any indemnified party, apply to losses,
claims, damages, liabilities or expenses to the extent they have resulted from
the willful misconduct or gross negligence of such indemnified party and (b) to
promptly reimburse each Lender, and their respective affiliates from time to
time on demand for all out-of-pocket expenses, (including, without limitation,
the reasonable fees, disbursements and other charges of Farrell Fritz, P.C.,
counsel for the Agents and the Lenders) incurred in connection with the
preparation of this letter and definitive documentation for the Senior Secured
Credit Facilities and the other transactions contemplated hereby regardless of
whether definitive documentation for the Senior Secured Credit Facilities is
executed.
If the Term Sheet and this letter correctly set forth your understanding
of the terms we have discussed, please indicate your acceptance by signing in
the space indicated and returning the original to us.
Based upon your acceptance of this letter and Term Sheet, we shall
authorize our attorneys to prepare the necessary documentation, the reasonable
fees and expenses for which you agree to pay whether or not the transaction is
completed.
This offer is contingent upon (a) delivery to each Lender of your written
acceptance of this letter by March 5, 1999; and (b) the execution of the
appropriate final documentation no later than July 30, 1999.
4
<PAGE>
We appreciate this opportunity to work with you and look forward to the
continued development of our relationship.
Very truly yours,
FLEET BANK, NATIONAL ASSOCIATION THE CHASE MANHATTAN BANK
By: /s/ David M. Saunders By: /s/ Stephen M. Zajac
David M. Saunders Stephen M. Zajac
Vice President Vice President
Accepted and Agreed this
5th day of March, 1999.
UNIFLEX, INC.
By: /s/ Robert K. Semel
Name: Robert K. Semel
Title: President
UNIFLEX ACQUISITION CORP.
By: /s/ James A. Parsons
Name: James A. Parsons
Title: President
5
<PAGE>
With respect to their obligations under the fifth paragraph of this letter only:
STERLING/CARL MARKS CAPITAL, INC.
By: /s/ Harvey Granat
Name: Harvey Granat
Title: President
RFE VI SBIC, L.P.
By: RFE ASSOCIATES VI SBIC, LLC,
Its General Partner
By: RFE INVESTMENT PARTNERS VI, L.P.
Its Sole Member
By: RFE ASSOCIATES VI, LLC
Its General Partner
By: /s/ James A. Parsons
Name: James A. Parsons
Title: Managing Member
6
<PAGE>
UNIFLEX, INC.
SUMMARY OF TERMS AND CONDITIONS
Capitalized terms not defined herein shall have the
respective meanings giving to such terms in the commitment letter
to which this Summary of Terms and Conditions is attached
March 5, 1999
Borrower: Uniflex, Inc. ("Borrower")
Guarantors: All now existing or hereafter created or acquired
subsidiaries of the Borrower. All guarantees shall
be joint and several irrevocable, unconditional and
of payment.
Administrative Agent: The Chase Manhattan Bank ("Chase").
Documentation Agent: Fleet Bank, National Association ("Fleet").
Lenders: Fleet and Chase.
Closing Date: The date all appropriate documentation is executed
by all relevant parties to this transaction, but
not later than July 30, 1999.
Senior Secured Credit
Facilities:
i. Revolving Credit A $5,000,000 secured three year revolving credit
Facility: facility (the "Revolving Credit Facility"). The
Revolving Credit Facility shall have a $500,000
sublimit for standby letters of credit ("Standby
Letters of Credit"), letters of credit, wherein the
draft is drawn payable on sight or upon presentment
("Sight Letters of Credit") and letters of credit
wherein the draft is drawn payable a certain number
of days after sight or presentation for acceptance
("Time Letters of Credit") (Standby Letters of
Credit, Sight Letters of Credit and Time Letters of
Credit, collectively, "Letters of Credit"). The
percentage of the Revolving Credit Facility which
each Lender agrees to make available to the
Borrower will be referred to herein as such
Lender's "Commitment Percentage". Each Lender
commits to finance $2,500,000 of the Revolving
Credit Facility.
<PAGE>
ii. Term Loan: An $18,500,000 secured six year term loan (the
"Term Loan"). Each Lender commits to finance
$9,250,000 of the Term Loan.
The Revolving Credit Facility and the Term Loan
shall be cross- defaulted, cross-collateralized and
cross-guaranteed.
iii. Letters of Credit: Subject to the terms and conditions to be contained
in the Facility Documents, the Administrative Agent
shall issue the Letters of Credit at any time prior
to expiration of the Revolving Credit Facility with
pro rata participation by each of the Lenders in
accordance with their respective Commitment
Percentage. No Letter of Credit shall have an
expiry date later than the third business day
preceding the termination date of the Revolving
Credit Facility. Drawings under the Letters of
Credit shall be reimbursed by the Borrower (whether
with its own funds or with proceeds of Revolving
Credit Loans) on the same business day; provided,
however, Time Letters of Credit shall be reimbursed
on the date of payment by the Administrative Agent
of the related draft. To the extent that the
Borrower does not so reimburse, the Lenders shall
be irrevocably and unconditionally obligated to
reimburse the Administrative Agent on a pro rata
basis.
Purposes: The proceeds of the Senior Secured Credit
Facilities are to be used exclusively (i) with
respect to the Term Loan, to partially finance the
payment to the shareholders of the Borrower
entitled to receive cash for their shares at the
effective time of the Merger in accordance with the
agreement governing the Merger (the "Merger
Payment"), (ii) with respect to the Revolving
Credit Facility (x) to finance up to $1,700,000 of
the Merger Payment and (y) to finance the
Borrower's and its domestic subsidiaries' working
capital requirements, (iii) with respect to Sight
Letters of Credit and Time Letters of Credit, to
provide the primary payment mechanism in connection
with the purchase of any materials, goods or
services by the Borrower or its subsidiaries in the
ordinary course of business and (iv) with respect
to Standby Letters of Credit for purposes in
connection with and in the ordinary course of
business of the Borrower and consistent with the
historical purposes of Standby Letters of Credit
issued on the account of the Borrower prior to the
date hereof. In addition, the Borrower may use
proceeds of the Revolving Credit Facility to
finance up to $625,000 of capital expenditures
during each fiscal year through its fiscal year
ending January 31, 2003, and up to $700,000 of
capital expenditures during each fiscal year
thereafter.
2
<PAGE>
Security: All obligations of the Borrower with respect to the
Senior Secured Credit Facilities shall be secured
by a (i) first priority security interest in all
assets of the Borrower and of all Guarantors, and
(ii) a pledge of all of the outstanding capital
stock of the Borrower and each of its subsidiaries.
The Lenders shall perfect the lien of pledge of the
outstanding capital stock of the Borrower by filing
UCC-1 financing statements and shall not take
possession of such pledged shares. At the request
of the Lenders, the share certificates for such
pledged shares shall be marked with a legend
acceptable to the Lenders indicating that the
shares evidenced by such certificates are subject
to the lien of a pledge agreement in favor of the
Lenders. The Lenders shall perfect the lien of the
pledge of the outstanding capital stock of the
Borrower's subsidiaries by taking possession of the
certificates evidencing such shares.
Expiration Date of Three (3) years from the Closing Date (the
Revolving Credit Facility: "Revolving Credit Expiration Date").
Term Loan Maturity Six (6) years from the Closing Date (the "Term Loan
Date: Maturity Date").
Borrowings Under The Lenders will lend to the Borrower such amounts
Revolving Credit Facility: as the Borrower may request from time to time
(individually, a "Revolving Credit Loan" or
collectively the "Revolving Credit Loans"), which
amounts may be borrowed, repaid and reborrowed
provided, however, that the aggregate amount of
such Revolving Credit Loans outstanding at any one
time shall not exceed the lesser of (i) $5,000,000
or, if the Commitments are reduced in accordance
with the terms hereof, such lesser aggregate amount
as is then in effect or (ii) the Borrowing Base (as
defined below). Each Revolving Credit Loan shall be
made by the Lenders pro rata, according to their
respective Commitment Percentages, and shall be
evidenced by a promissory note of the Borrower
given to each Lender (a "Revolving Credit Note" or,
collectively, the "Revolving Credit Notes") each of
which shall mature on the Revolving Credit
Expiration Date, at which time the entire
outstanding principal balance and all accrued and
unpaid interest thereon shall be due and payable.
3
<PAGE>
Borrowing Base: Availability under the Revolving Credit Facility
shall be subject to a Borrowing Base limitation
equal to the sum of 80% of the Borrower's and its
domestic subsidiaries' Eligible Accounts Receivable
plus 40% of the Borrower's and its domestic
subsidiaries' Eligible Inventory. The definition of
"Eligible Accounts Receivable" and "Eligible
Inventory" will be determined by the Agents upon
their completion of their due diligence
investigation of the Borrower; provided, however,
in any event Eligible Accounts Receivable shall
exclude (i) accounts receivable ninety (90) days or
greater past due, (ii) foreign accounts receivable,
(iii) accounts receivable due from affiliates of
the Borrower, and (iv) accounts receivable due from
an account debtor if 50% or more of the accounts
receivable due from such account debtor are not
Eligible Accounts Receivable. The Lenders will
reconsider the advance rates specified above based
upon the results of collateral audits to be
conducted at the Borrower's expense, but shall be
under no obligation to change such advance rates.
Borrowing of Term Loan: On the Closing Date, provided that all conditions
to lending have been satisfied, the Lenders will
lend to the Borrower the Term Loan. The Term Loan
shall be made by the Lenders pro rata, according to
their respective Commitment Percentages and shall
be evidenced by a promissory note of the Borrower
given to each Lender (a "Term Note" or,
collectively, the "Term Notes") each of which shall
mature on the Term Loan Maturity Date.
Amortization:
i. Revolving Credit Interest only with all principal due and payable
Facility upon the Revolving Credit Expiration Date.
4
<PAGE>
ii. Term Loan The outstanding principal balance of the Term Loan
shall be repaid in twenty four (24) consecutive
quarterly installments (payable on the last day of
each fiscal quarter of the Borrower commencing with
(i) if the closing occurs on or before May 31,
1999, the fiscal quarter ending July 31, 1999 and
(ii) if the closing occurs on or after June 1,
1999, the fiscal quarter ending October 31, 1999).
The amount of each installment is set forth below:
Installment Principal Repaid
----------- ----------------
1-4 $ 400,000
5-8 $ 525,000
9-12 $ 675,000
13-16 $ 850,000
17-20 $1,050,000
21-24 $1,125,000
Amounts repaid in respect of the Term Loan may not
be reborrowed.
Interest Rates: Each Revolving Credit Loan and the Term Loan shall
bear interest (i) at a rate per annum equal to the
Prime Rate Option (as defined below) (a "Alternate
Base Rate Loan") or (ii) at a rate per annum based
upon the LIBOR Rate Option (as defined below) (a
"LIBOR Loan").
Alternate Base Rate Loans shall be made in the
minimum principal amount of $250,000 and in
increased integral multiples of $100,000 and shall
be made upon same day notice to the Administrative
Agent if the request for such Loan is made to the
Administrative Agent before 11:00 a.m. on the date
of borrowing. LIBOR Loans shall be made in the
minimum principal amount of $1,000,000 and in
increased integral multiples of $500,000 and shall
be made upon three (3) business days' prior written
notice to the Administrative Agent. The outstanding
principal balance of any Loan may be converted from
the Prime Rate Option to the LIBOR Rate Option, or
vice versa provided that LIBOR Loans may only be
converted on the last day of the Interest Period
applicable thereto.
5
<PAGE>
(a) Alternate Base Rate Option. Alternate Base
Rate Loans shall bear interest at an annual rate
equal at all times to the Alternate Base Rate as
quoted by the Administrative Agent plus the
Applicable Margin (as defined below). For purposes
hereof, "Alternate Base Rate" shall mean, for any
day, the higher of (a) the prime rate, the rate
publicly announced by the Agent at its principal
office from time to time as its prime rate and (b)
the Federal Funds Effective Rate in effect from
time to time plus one-half of one percent per
annum.
(b) LIBOR Rate Option. LIBOR Loans shall bear
interest, for selected Interest Periods (as
described below), at an annual rate or rates equal
to the Adjusted LIBOR Rate plus the Applicable
Margin (as defined below). LIBOR Loans will be
available for interest periods ("Interest Periods")
of one, two, three, and six months. No Interest
Period may extend beyond the Revolving Credit
Termination Date, the Term Loan Maturity Date or
the Mortgage Loan Maturity Date, as applicable. The
Adjusted LIBOR Rate is the rate per annum (rounded
upward, if necessary, to the nearest 1/32 of one
percent) for deposits in U.S. dollars in the London
interbank market having a maturity equal to the
applicable Interest Period which appears on the
Telerate Page 3750 as of 11:00 a.m. (London time)
on the second business day before (and for value
on) the commencement of such Interest Period, such
rate to be adjusted for reserve requirements;
provided, that if such rate does not appear on the
Telerate System on any applicable interest
determination date, such rate shall be the rate
(rounded upwards as described above, if necessary)
for deposits in U.S. dollars for a period
substantially equal to the Interest Period on the
Reuters Page "LIBO" (or such other page as may
replace the LIBO Page on that service for the
purpose of displaying such rates), as of 11:00 a.m.
(London Time) on the second business day before the
beginning of such Interest Period. If the
Applicable Margin changes during an Interest Period
for a LIBOR Loan, the interest rate on such LIBOR
Loan shall change accordingly.
6
<PAGE>
Applicable Margins:
i. Revolving Credit The Applicable Margin shall be determined by the
Loans and Term Administrative Agent quarterly, within 10 days
Loans after receipt by the Administrative Agent of the
Borrower's quarterly or annual financial
statements, as applicable commencing with financial
statements for the fiscal year ending January 31,
2000, together with the compliance certificate
required therewith. Until the Administrative
Agent's receipt of the Borrower's January 2000
financial statements when due in accordance with
the terms of the Credit Agreement, the Applicable
Margin shall be 75 basis points with respect to
Alternate Base Rate Loans and 250 basis points with
respect to Libor Loans. Thereafter, the Applicable
Margin shall be determined as follows:
(i) If the Borrower's Senior Debt to EBITDA Ratio
(as defined below) as of the end of the immediately
preceding fiscal quarter is greater than 3.25:1.00,
the Applicable Margin shall be:
(a) with respect to Alternate Base Rate Loans:
125 basis points; and
(b) with respect to LIBOR Loans: 300 basis
points.
(ii) If the Borrower's Senior Debt to EBITDA Ratio
as of the end of the immediately preceding fiscal
quarter is less than or equal to 3.25:1:00 but
greater than 2.75:1.00, the Applicable Margin shall
be:
(a) with respect to Alternate Base Rate Loans:
75 basis points; and
(b) with respect to LIBOR Loans: 250 basis
points.
(iii) If the Borrower's Senior Debt to EBITDA Ratio
as of the end of the immediately preceding fiscal
quarter is less than or equal to 2.75:1:00 but
greater than 2.25:1.00, the Applicable Margin shall
be:
(a) with respect to Alternate Base Rate Loans:
50 basis points; and
(b) with respect to LIBOR Loans: 225 basis
points.
7
<PAGE>
(iv) If the Borrower's Senior Debt to EBITDA Ratio
as of the end of the immediately preceding fiscal
quarter is less than or equal to 2.25:1.00 but
greater than 1.75:1.00, the Applicable Margin shall
be:
(a) with respect to Alternate Base Rate Loans:
25 basis points; and
(b) with respect to LIBOR Loans: 200 basis
points.
(v) If the Borrower's Senior Debt to EBITDA Ratio
as of the end of the immediately preceding fiscal
quarter is less than 1.75:1.00, the Applicable
Margin shall be:
(a) with respect to Alternate Base Rate Loans:
25 basis points; and
(b) with respect to LIBOR Loans: 175 basis
points.
Once determined for a fiscal quarter, the
Applicable Margin shall remain in effect until
re-determined in accordance with this subparagraph.
If the Borrower fails to submit its financial
statements and required compliance certificate on
the date they are due, the Applicable Margin will
be those set forth in (i) above until the financial
statements and required compliance certificate are
submitted and the respective Applicable Margin is
re-determined as set forth above. During the
existence of a Default or an Event of Default, the
Applicable Margin may be, as a result of changes in
the Borrower's Senior Debt to EBITDA Ratio,
adjusted upwards but not downwards.
8
<PAGE>
The "Senior Debt to EBITDA Ratio" shall mean the
ratio of (i) the Borrower's total liabilities for
borrowed money (including capital leases) as of the
date of determination, less Subordinated Debt to
(ii) the EBITDA. For purposes of this Summary of
Terms and Conditions, "EBITDA" shall mean the sum,
as of the date of determination, of the Borrower's
(a) net income, plus (b) interest expense, plus (c)
taxes accrued and paid, plus (d) depreciation
expense, plus (e) amortization of intangible
assets, plus (f) "stay" bonuses to be paid to
Herbert Barry or Robert K. Semel during the
Borrower's fiscal year ending January 31, 2000 not
to exceed $3,400,000 in the aggregate, in each case
calculated on a rolling four quarter basis. For
purposes of calculating "EBITDA," no effect will be
given to a one time expense for "plates and
engravings" in an amount equal to $514,000 to be
incurred in the first quarter following the closing
of the transactions contemplated hereby.
Commitment Fee: The Borrower shall pay to the Administrative Agent,
for the pro rata distribution to the Lenders, from
the Closing Date and for as long as the Revolving
Credit Facility remains in effect, on the last day
of each calendar quarter, payable in arrears, a
commitment fee computed at an annual rate equal to
one-quarter of one percent (.25%) per annum
(computed on the basis of the actual number of days
elapsed over a year of 360 days) on the average
daily unused amount of the Revolving Credit
Facility.
9
<PAGE>
Other Fees: The Borrower shall pay to the Agents for their own
account (i) a non- refundable annual Agents' Fee of
$15,000 payable on the Closing Date and on each
anniversary of the Closing Date during the term of
the Senior Secured Credit Facilities, (ii) a
non-refundable advisory fee equal to one (1%)
percent of the sum of the Revolving Credit Facility
plus the Term Loan (less $50,000 to be paid by
Acquisition Corp. upon acceptance of the Commitment
Letter), which shall be paid on the Closing Date
and (iii) a non-refundable mortgage modification
and amendment fee in the amount of $20,000 payable
on the Closing Date. Acquisition Corp. shall pay a
non-refundable advisory fee of $50,000 which shall
be payable upon execution of this Commitment
Letter. Each of the foregoing fees shall be paid
one-half to Chase and one-half to Fleet.
The Borrower shall pay a commission on all issued
and outstanding Standby Letters of Credit at a per
annum rate equal to 2.00% (360 day basis). The
Borrower shall pay a commission on all issued and
outstanding Sight Letters of Credit and Time
Letters of Credit equal to .25% of the amounts
drawn under such Letters of Credit. Such commission
shall be shared ratably among the Lenders and shall
be payable quarterly in arrears in the case of
Standby Letters of Credit and on the date of
drawings with respect to Sight Letters of Credit
and Time Letters of Credit. A fronting fee equal to
.125% of the face amount of each Letter of Credit
shall be payable on the issuance of such Letter of
Credit to the Administrative Agent for its own
account. In addition, customary administrative,
issuance, amendment, payment and negotiation
charges shall be payable to the Administrative
Agent for its own account.
10
<PAGE>
Payments; Voluntary (a) Payments. All principal payments shall be made
Prepayments; to the Administrative Agent, for pro rata
Commitment Reductions; distribution to the Lenders.
and Mandatory
Prepayments: (b) Voluntary Prepayment. Alternate Base Rate Loans
may be repaid in whole or in part, at any time
without penalty or premium. Such partial
prepayments shall be in the minimum principal
amount of $250,000 and in increased integral
multiples of $100,000 in excess thereof. LIBOR
Loans may be prepaid, in whole but not in part, at
any time provided the Borrower pays to the
Administrative Agent, for distribution to the
Lenders, any prepayment indemnity or break funding
costs customarily charged by the Lenders in
connection with such prepayments. Such prepayments
shall be in the minimum principal amount of
$1,000,000 and in increased integral multiples of
$100,000 in excess thereof. Prepayments of the Term
Loan shall be applied to the remaining installments
of principal of the Term Loan in inverse order of
maturity. Notwithstanding the foregoing, the
Borrower shall not be permitted to voluntarily
prepay the Term Loan, or any portion thereof, on or
prior to January 31, 2001.
(c) Revolving Credit Commitment Reductions. The
Borrower shall have the right upon three (3)
business days prior written notice to the
Administrative Agent and the Lenders to reduce
commitments in minimum aggregate amounts of
$1,000,000. Each such reductions shall be applied
to the outstanding commitments of the Lenders, pro
rata in accordance with their respective commitment
proportions. The Revolving Credit Commitments once
reduced may not be reinstated.
11
<PAGE>
(d) Mandatory Prepayments:
(i) If at any time the aggregate outstanding
principal balance of the Revolving Credit Loans
exceeds the Borrowing Base as in effect at such
time, the Borrower shall immediately prepay the
Revolving Credit Loans to the extent necessary to
cause compliance with the Borrowing Base. Any such
prepayment shall be applied first to Alternate Base
Rate Loans and then to LIBOR Loans.
(ii) Upon the payment in full of the Term Loan and
the Revolving Credit Loans and the termination of
the Revolving Credit Commitments, the Borrower
shall immediately prepay the Mortgage Loan in full.
(iii) The Borrower shall prepay the outstanding
amount of the Term Loan in an amount equal to fifty
percent (50%) of Excess Cash Flow (to be defined in
the Credit Agreement but giving effect to annual
changes in working capital of the Borrower
determined on an historical basis) for each fiscal
year of the Borrower. Such prepayments shall be
applied to the remaining installments of principal
of the Term Loan in inverse order of maturity.
Interest Payments: Interest shall be payable to the Administrative
Agent, for pro rata distribution to the Lenders. In
the case of the Alternate Base Rate Loans, interest
shall be payable monthly in arrears. In the case of
the LIBOR Loans, interest shall be payable (i) in
the case of Interest Periods of less than three
months, at the end of the Interest Period, and (ii)
in the case of Interest Periods of three months or
greater, quarterly and at the end of the Interest
Period. Interest shall be calculated on the
principal balance of the Loan outstanding from time
to time and based upon the actual number of days
elapsed divided by 360.
12
<PAGE>
Default Rate: Upon the occurrence and during the continuance of a
default or Event of Default, each Loan outstanding
(excluding any defaulted payment of principal or
interest accruing interest in accordance with the
immediately following paragraph) shall at the
option of Lenders holding not less than 51% of the
commitments under the Senior Secured Credit
Facilities bear interest at a rate equal to three
percent (3%) above the rate otherwise in effect.
Default Interest: At any time the Borrower is in default in the
payment of principal or interest or any other
amount with respect to the Senior Secured Credit
Facilities, the Borrower shall on demand pay
interest on such defaulted amount at a rate of 3%
per annum above (a) the rate otherwise in effect or
(b) if no rate is in effect, the Prime Rate.
Conditions of Closing: The usual for credit facilities of these types,
those specified below and others to be specified by
the Lenders, including but not limited to borrowing
certificates; borrowing base certificates; legal
opinions; certified copies of corporate
documentation; corporate resolutions; incumbency
certificates; no default certificate; good standing
certificates; satisfactory lien search results;
receipt of valid security interests as contemplated
herein; due authorization and execution of the
Facility Documents; accuracy of representations and
warranties; absence of defaults; evidence of
authority; government approvals; consents of all
persons; compliance with applicable laws; evidence
of adequate insurance; review of material loan or
credit agreements, lease agreements and other
material contracts; absence of material adverse
change in business, assets, property, condition,
financial or otherwise, or prospects; no pending or
threatened material litigation; payment of fees and
satisfaction of conditions precedent, all in form
acceptable to the Lenders and their counsel.
In addition, the Lenders will require the
following:
1. receipt and satisfactory review by the Lenders
and their counsel of all documents executed in
connection with the Transaction, including,
without limitation, the merger agreement and
the simultaneous closing of the Transaction;
13
<PAGE>
2. receipt and satisfactory review by the Lenders
and their counsel of employment contracts
between the Borrower and Herb Barry and Robert
Semel, which contracts shall have minimum
terms of 3 years and shall otherwise be on
terms satisfactory to the Lenders;
3. results satisfactory to the Lenders of a field
examination of the accounts receivable and
related books and records of the Borrower and
the Guarantors, performed by the Lenders or
their designated representatives, with all
reasonable expenses of such field examination
for the account of the Borrower and the
Guarantors;
4. the execution by the Borrower of an amendment
to the note and mortgage evidencing the
Mortgage Loan with Chase and secured by the
real property located at 383 West John Street,
Hicksville, New York, (the "Premises"), which
amendment shall (i) amend the events of
default therein to include a cross- default to
the Senior Secured Credit Facilities, (ii)
conform financial covenants set forth therein
to the financial covenants in the Senior
Secured Credit Facilities and (iii) increase
the interest rate with respect to the fixed
rate by ninety-four (94) basis points. In
addition, Fleet shall have executed a fifty
(50%) percent risk participation in the
Mortgage Loan with Chase in form and substance
satisfactory to each Lender;
14
<PAGE>
5. receipt and satisfactory review by the Lenders
of a consolidated pro forma balance sheet (as
of a date not later than fifteen days prior to
the Closing Date) of the Borrower and its
subsidiaries which is (a) based upon the
financial statements of the Borrower as of the
period ending October 31, 1998 or, if
available, the fiscal year ending January 31,
1999, and (b) which fairly reflects the
consummation of the Transaction, prepared in
accordance with generally accepted accounting
principles;
6. If the transactions contemplated hereby have
not yet closed, receipt and satisfactory
review by the Lenders within sixty (60) days
following April 30, 1999, of consolidated
financial statements of the Borrower and its
subsidiaries as of such date and for the
fiscal period then ended for the fiscal period
then ended;
7. results satisfactory to the Lenders of all due
diligence investigations of the business,
management, financial condition and operations
of the Borrower and the Guarantors;
8. receipt and satisfactory review by the Lenders
of the most recent audited financial
statements, including revised forecasts of
balance sheets, income statements, cash flows
and supporting schedule of the Borrower and
the Guarantors, together with the most recent
financial statements for each;
9. receipt and satisfactory review by the Lenders
of revised projections (including balance
sheets, income statements and statements of
cash flows) for the Borrower and the
Guarantors for a three year period commencing
on the proposed closing date;
10. receipt and satisfactory review by the Lenders
of the due diligence report prepared by Arthur
Andersen & Co. with respect to the Borrower;
15
<PAGE>
11. evidence satisfactory to the Lenders that (i)
Acquisition Corp. has received additional
contributions to its capital in an aggregate
amount of not less than $5,250,000 in cash,
(ii) the 322,000 shares of certain senior
management, officers and directors of the
Borrower and the 300,158 shares of the Carl
Marks Group and its affiliates will not be
entitled to receive any consideration in
connection with the merger of Acquisition
Corp. with and into the Borrower, (iii) the
Borrower has issued additional shares of its
common stock to Sterling/Carl Marks for an
aggregate purchase price of $750,000, and (iv)
the Borrower has received proceeds from the
issuance of Senior Subordinated Debentures in
an amount not less than $7,000,000. The
Subordinated Debt shall contain subordination
provisions, amortization, interest rates, and
other covenants and terms satisfactory to the
Lenders and their counsel. The covenants in
the agreement governing the Subordinated Debt
will not be more restrictive than the
covenants in the Credit Agreement;
12. receipt and satisfactory review by the Lenders
of a Phase I environmental audit of the
Premises from Louis Berger & Associates, Inc.,
together with evidence that the Borrower has
received all necessary municipal approvals to
maintain the improvements upon the Premises;
13. The Administrative Agent and the Lenders shall
have received a certificate signed by each of
the President and Chief Financial Officer of
the Borrower certifying the solvency of the
Company and each of its subsidiaries after
giving effect to the Transaction in form and
substance satisfactory to the Administrative
Agent and the Lenders;
14. Evidence that simultaneously with the making
of the Senior Secured Credit Facilities, the
Borrower shall affect interest rate, exchange
agreements and/or other appropriate interest
rate hedging transactions satisfactory to the
Lenders for an amount not less than 75% of the
principal amount of the Term Loan; and
15. such other documents or information as the
Lenders may reasonably request.
16
<PAGE>
Facility Documents: The Term Loan and the Revolving Credit Loan will be
made pursuant to a credit agreement (the "Credit
Agreement") among the Borrower, the Administrative
Agent and the Lenders. The Credit Agreement, the
Term Notes and the Revolving Credit Notes and all
other documents required in connection therewith
(the "Facility Documents") will be prepared or
reviewed by counsel to the Agents and will be in
form and content acceptable to the Agents, the
Lenders and their counsel. The Facility Documents
will contain certain covenants and conditions
affecting the Borrower and the Guarantors,
including, but without limitation, usual and
customary representations and warranties,
affirmative and negative covenants governing the
operations of the Borrower and the Guarantors,
provisions describing defaults and covenants
requiring the reporting of certain financial
information. Without limiting the foregoing, the
Facility Documents will contain provisions and
covenants described below.
Representations and Those usual and customary for facilities of this
Warranties: size, type and purpose, including, but not limited
to, the Borrower's and Guarantor's due organization
and good standing, the Borrower's and Guarantor's
corporate organization, all documents having been
duly authorized, no requirement for any further
consents, no contravention of any other Borrower or
Guarantor documents, all necessary approvals having
been obtained, all loan documents being legal,
valid and binding obligations, accuracy of
financial statements, solvency, no adverse
litigation, payment of all taxes, possession of all
required licenses, permits, franchises, etc.,
Borrower and Guarantor not a party to any adverse
agreements, Borrower and Guarantor not engaged in
extending credit for purposes of carrying margin
stock, Borrower and Guarantor in material
compliance with all federal and state laws and
regulations, ERISA compliance, environmental
compliance, use of proceeds, Year 2000 Compliance
and there being no material adverse change in the
business, condition (financial or otherwise),
operations, performance, properties, prospects of
the Borrower or any Guarantor.
17
<PAGE>
Affirmative Covenants: Those usual and customary for credit facilities of
this size, type and purpose, including, but not
limited to, compliance with laws, reporting of
financial information, including, but without
limitation, the financial reporting requirements
set forth below, payment of taxes, maintenance of
corporate existence, maintenance of properties and
insurance, maintenance of books and records,
visitation, compliance with all other agreements,
compliance with ERISA, maintenance of all required
licenses, permits, becoming Year 2000 complaint,
etc. The financial reporting requirements of the
Borrower will include, but not be limited to, the
following:
(i) Annually, within one hundred twenty (120) days
after the end of each fiscal year of the Borrower,
submission of (A) consolidated fiscal year-end
audited and unqualified financial statements of the
Borrower and its subsidiaries which shall include
balance sheets, income statements and statements of
cash flows, each prepared by a nationally
recognized accounting firm acceptable to the
Administrative Agent and the Lenders, and (B)
corresponding consolidating financial statements of
the Borrower and its subsidiaries prepared by
management of the Borrower, together with a
compliance certificate, prepared by the Borrower's
auditors, with calculations of the financial
covenants;
(ii) Promptly, but in any event within sixty (60)
days after the end of the second fiscal quarter of
the Borrower, submission of the quarter end
consolidated and consolidating financial statements
of the Borrower and its subsidiaries which shall
include balance sheets, income statements and
statements of cash flow of the Borrower and its
subsidiaries for the quarter and interim fiscal
period then ended, with comparative figures for the
same fiscal quarter and interim fiscal period for
the prior fiscal year and cash flow information for
the interim fiscal period then ended with figures
for the comparable fiscal period for the prior
fiscal year, prepared on a reviewed basis by
Borrower's auditors;
18
<PAGE>
(iii) Promptly, but in any event within sixty (60)
days after the end of each of the first and third
fiscal quarters of the Borrower, submission of
management prepared quarter-end consolidated and
consolidating financial statements of the Borrower
and its subsidiaries, which shall include balance
sheets, income statements and statements of cash
flow of the Borrower for the quarter and interim
fiscal period then ended, with comparative figures
for the same fiscal quarter and interim fiscal
period for the prior fiscal year and cash flow
information for the interim fiscal period then
ended with figures for the comparable interim
fiscal period for the prior fiscal year,
accompanied by a compliance certificate prepared by
management of the Borrower with calculations of
each financial covenant;
(iv) Promptly, but in any event within fifteen (15)
days after the end of each calendar month and
simultaneously with any request for a Revolving
Credit Loan, a borrowing base certificate, as of
the end of such period, in form satisfactory to the
Administrative Agent;
(v) Promptly, but in any event within fifteen (15)
days after the end of each fiscal quarter of the
Borrower a detailed report of accounts receivable
and accounts payable agings as of the end of such
period for the Borrower and its domestic
subsidiaries, in form and substance satisfactory to
the Administrative Agent;
(vi) If applicable, copies of all annual or
quarterly reports, proxy statements, reports on
form 8-K and of all final registration statements
filed by the Borrower with the Securities and
Exchange Commission and, upon the request of any
Lender, copies of any other reports filed by the
Borrower with the Securities and Exchange
Commission;
19
<PAGE>
(vii) Promptly, upon the written request therefor,
such other financial data or information as the
Administrative Agent or any Lender may reasonably
request;
(viii) Promptly, but in any event within fifteen
(15) days after the end of each calendar month a
schedule of inventory of the Borrower and each
domestic subsidiary certified by the Chief
Financial Officer and current as of the last
business day of the preceding month, which schedule
shall contain a breakdown of such inventory by
type, amount and warehouse and production facility
location, appropriately completed, all in form
satisfactory to the Lenders;
(ix) Simultaneously with the delivery of the fiscal
year-end financial statements above, a copy of the
management letter, if any, prepared by the
Borrower's auditors.
(x) Promptly, but in any event within thirty (30)
days after delivery of the fiscal year-end
statements of the Borrower above, a three year
projection of the financial condition and results
of operation of the Borrower and its subsidiaries
on a consolidated and consolidating basis for the
next three succeeding fiscal years (which shall
include a balance sheet, statement of income,
retained earnings and cash flow for each such
fiscal year).
Negative Covenants: Those usual and customary for credit facilities of
this size, type and purpose, including, but not
limited to, limitations on liens, limitations on
additional indebtedness, limits on lease
obligations, limitations on mergers, consolidations
and acquisitions of stock or assets, limitations on
sales of assets, limitations on investments,
limitations on transactions with affiliates,
limitations on prepayment of other outstanding
debt, limitations on guarantees and other
contingent obligations, limitations on dividends
and limitations on capital expenditures,
limitations on amendments or modifications of
subordinated debt, etc.
20
<PAGE>
Financial Covenants: Senior Debt to EBITDA - Permit the ratio of Senior
Debt to EBITDA as of the end of any fiscal quarter
during the period set forth below to be greater
than the ratio set forth opposite such period
below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
April 30, 2000 through January 30, 2001 3.40:1.00
January 31, 2001 through January 30, 2002 2.90:1.00
January 31, 2002 through January 30, 2003 2.70:1.00
January 31, 2003 through January 30, 2004 2.25:1.00
January 31, 2004 through January 30, 2005 1.75:1.00
January 31, 2005 and thereafter 1.50:1.00
</TABLE>
Funded Debt to EBITDA - Permit the Funded Debt to
EBITDA as of the end of any fiscal quarter during
the period set forth below to be greater than the
ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
April 30, 2000 through January 30, 2001 4.90:1.00
January 31, 2001 through January 30, 2002 4.00:1.00
January 31, 2002 through January 30, 2003 3.40:1.00
January 31, 2003 through January 30, 2004 2.90:1.00
January 31, 2004 through January 30, 2005 2.50:1.00
January 31, 2005 and thereafter 2.25:1.00
</TABLE>
Minimum Debt Service Coverage Ratio - Permit the
Minimum Debt Service Coverage Ratio as of the end
of any fiscal quarter during the period set forth
below to be less than the ratio set forth opposite
such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
July 31, 2000 through January 30, 2001 1.25:1.00
January 31, 2001 and thereafter 1.20:1.00
</TABLE>
Debt Service Coverage Ratio shall be defined as
EBITDA less unfinanced capital expenditures, less
dividends/distributions, less cash taxes accrued
and paid divided by the required principal payments
on long term debt plus interest made during the
prior four quarters calculated on a rolling four
quarter basis.
21
<PAGE>
Minimum Working Capital Ratio - Permit the Minimum
Working Capital Ratio at any time to be less than
the ratio set forth below opposite the relevant
period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing through January 30, 2001 2.00:1.00
January 31, 2001 through January 30, 2002 2.00:1.00
January 31, 2002 through January 30, 2003 1.50:1.00
January 31, 2003 through January 30, 2004 1.50:1.00
January 31, 2004 and thereafter 1.25:1.00
</TABLE>
Working Capital will be defined in accordance with
generally accepted accounting principles,
consistently applied provided that the aggregate
outstanding principal amount of Revolving Credit
Loans shall be deemed to constitute short term
debt.
Capital Expenditures. Permit Capital Expenditures
to exceed $1,250,000 in any fiscal year ending on
or prior to January 31, 2003 or $1,400,000 in any
fiscal year thereafter.
Net Worth. Permit Net Worth to be less than
($8,750,000) at any time during the period from the
Closing Date through January 31, 2000 and, with
respect to each fiscal year thereafter, to be less
than actual Net Worth as of the last day of the
immediately preceding fiscal year plus $1,000,000.
22
<PAGE>
Minimum EBITDA - Permit EBITDA (calculated with
respect to each fiscal period set forth below) as
of the end of any fiscal period to be less than the
amount set forth opposite such fiscal period below:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
Nine month period ending October 31, 1999 $3,550,000
Twelve month period ending January 31, 2000 $5,300,000
Three month period ending April 30, 2000 $1,500,000
</TABLE>
Minimum EBITDA to Interest Expense - Permit the
ratio of EBITDA to interest expense, determined on
a rolling four quarter basis, for any period to be
less than the ratio set forth below opposite such
period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
April 30, 2000 through January 30, 2001 2.80:1.00
January 31, 2001 through January 30, 2002 3.20:1.00
January 31, 2002 through January 30, 2003 3.60:1.00
January 31, 2003 through January 30, 2004 4.10:1.00
January 31, 2004 and thereafter 5.00:1.00
</TABLE>
The financial covenants shall be calculated on a
consolidated basis for the Borrower and its
consolidated subsidiaries.
Events of Default: Customary for credit facilities of this size, type
and purpose, including, without limitation,
payment, misrepresentation, covenant, bankruptcy,
ERISA, judgments, change of control and cross
defaults.
Funding and Yield The Facility Documents shall contain provisions
Protections: relating to the interest rate option selection
funding and yield protection in favor of the
Lenders, increased costs suffered by the Lenders
and capital requirements imposed on the Lenders,
all as are usual and customary for credit
facilities of this type and size.
23
<PAGE>
Assignments and Assignments must be pro rata and must be to
Participations: Eligible Assignees (to be defined in the loan
documentation) and in each case, other than an
assignment to a Lender or an assignment of the
entirety of a Lender's interest in the Senior
Secured Credit Facility, in a minimum amount of
$5,000,000. Each Lender may grant participations in
its Loans and Commitments without the consent of
the Agents or the Borrower.
Expenses: All fees and expenses of the Agents and the Lenders
related to this transaction (including, without
limitation, all reasonable out-of- pocket fees and
legal fees incurred by the Administrative Agent)
and in connection with the enforcement of, and the
protection of their rights under, the documentation
for the Senior Secured Credit Facilities would be
paid by the Borrower whether or not the transaction
contemplated hereby is consummated. The transaction
documentation will contain indemnification
provisions for the benefit of the Administrative
Agent and the Lenders customary for transactions of
this type.
Voting Rights: Amendments and waivers with respect to the Facility
Documents shall require approval of Lenders holding
not less than 51% percent of the commitments under
the Senior Secured Credit Facilities except certain
matters customary and usual for transactions of
this type for which the approval of all Lenders
shall be required.
Miscellaneous: (a) Neither any Agent nor any Lender has engaged
any broker for the issuance of this Commitment or
the making of the Senior Secured Credit Facilities.
Neither any Agent nor any Lender shall be required
to pay any brokerage fees, commissions or other
compensation arising from the issuance of this
Commitment or the making of the Senior Secured
Credit Facilities, and the Borrower agrees to
indemnify and hold harmless each Agent and each
Lender against any and all such claims in
connection therewith. The Borrower's obligation
hereunder shall survive expiration of this
Commitment or termination as a result of the
closing of the Senior Secured Credit Facilities or
otherwise.
24
<PAGE>
(b) The Agents' counsel is Farrell Fritz, P.C., EAB
Plaza, Uniondale, New York 11556, Telephone No.
516-227-0700. All instruments and documents
required hereby evidencing the Senior Secured
Credit Facilities or the Notes or relating to the
Borrower's capacity and authority to enter into the
Senior Secured Credit Facilities and to execute the
Facility Documents and such other documents,
instruments, certificates, opinions, assurances,
consents and approvals as the Agents or their
counsel may reasonably request and all procedures
connected with the Senior Secured Credit Facilities
shall be subject to the approval, as to form and
content, of the Agents and their counsel.
(c) The documentation for the Senior Secured Credit
Facilities will be governed by laws of the State of
New York, without giving effect to principles of
conflicts of law.
(d) The Borrower and each Guarantor will consent to
the jurisdiction of New York Federal Courts and New
York State Courts in New York County, Nassau County
and Suffolk County.
(e) The Borrower, each Guarantor, each Agent and
each Lender will waive trial by jury.
25
March 5, 1999
Uniflex, Inc.
383 West John Street
Hicksville, New York 11802
Ladies and Gentlemen:
AlliedSignal Inc. Master Pension Trust ("AlliedSignal") is pleased to provide
its commitment, subject to the terms and conditions herein, to purchase from
Uniflex, Inc. ("Uniflex") up to US$7,000,000 of Senior Subordinated Debentures
of Uniflex (the "Debentures"), terms and conditions of the Debentures to be as
set forth in the attached "Mezzanine Financing Term Sheet" and as to be more
specifically set forth in a detailed purchase agreement and ancillary documents,
including, without limitation, a form of debenture and a form of warrant to
purchase five percent (5%) of the fully diluted outstanding common shares of
Uniflex ("Definitive Documentation").
This commitment is conditional upon (i) completion, with results satisfactory to
AlliedSignal, of our due diligence examination of Uniflex, its operations,
facilities, financial condition and personnel; (ii) execution and delivery of
the Definitive Documentation in form and substance satisfactory to AlliedSignal;
(iii) consummation of the merger between Uniflex and Uniflex Acquisition Corp.,
as contemplated by that certain Agreement and Plan of Merger and
Recapitalization dated March 5, 1999; and (iv) $23,500,000 in funds being
provided to Uniflex by The Chase Manhattan Bank ("Chase") and Fleet Bank,
National Association ("Fleet") pursuant to Senior Secured Credit Facilities as
contemplated by the commitment letter from Chase and Fleet to Uniflex of even
date herewith.
Sincerely,
AlliedSignal Inc. Master Pension Trust
By: The Northern Trust Company as Trustee for
AlliedSignal. Inc. Master Pension Trust
- --------------------------------------------------------------------------------
By: /s/ Susan J. Wallace The Northern Trust Company executes this
--------------------- instrument as Trustee as aforesaid, and is not
to be held liable in its individual capacity
Name: Susan J. Wallace in any way by reason of this instrument.
---------------------
Title: Second Vice President
---------------------
- --------------------------------------------------------------------------------
<PAGE>
MEZZANINE FINANCING TERM SHEET
Description: $7,000,000 principal amount of Senior Subordinated
Debentures of Uniflex, Inc. ("Uniflex" or
"Borrower")
Purchaser: AlliedSignal Inc. Master Pension Trust
Closing: Anticipated June 1999
Debentures:
Maturity: 8 years from date of closing
Interest Rate: 12.75%
Interest Payments: Quarterly
Subordination: The right to certain payments under the Senior
Subordinated Debentures is subordinate to the debt
provided under the Senior Secured Credit Facilities
provided by Fleet Bank, National Association and
The Chase Manhattan Bank, as to be set forth in a
Subordination Agreement .
Structure Fee: 1% of the principal amount ($70,000) for
documentation, to be paid at the closing.
Prepayment: Borrower shall have the right at any time, and in
the event of a change of control of Borrower shall
have the obligation, to purchase all but not less
than all the Senior Subordinated Debentures for the
following amounts relative to par, plus accrued and
unpaid interest:
During the first year after issuance 106.375%
During the second year after issuance 105.464%
During the third year after issuance 104.553%
During the fourth year after issuance 103.642%
During the fifth year after issuance 102.732%
During the sixth year after issuance 101.821%
During the seventh year after issuance 100.911%
During the eighth year after issuance 100.000%
Warrants:
Number of Warrants: Five percent of the fully diluted outstanding
common shares of Uniflex at the time of closing.
1
<PAGE>
Life: May be exercised at any time until and including
the tenth anniversary of closing
Exercise Price: $.01 per share
Right to Put: Commencing on the day following the eighth
anniversary of closing, if the Senior Subordinated
Debentures have been repaid in full, the
stockholders, including warrant holders, shall have
the right to require Uniflex to purchase the
shares, warrants and shares underlying warrants as
set forth in section 5 of the Stockholders
Agreement to be executed at the time of closing.
Other Conditions: One seat on the Board of Directors of Uniflex
Registration Rights as set forth in the
Registration Rights Agreement to be executed at the
time of closing
This commitment is subject to execution and
delivery of definitive documentation acceptable to
AlliedSignal Inc. Master Pension Trust and Uniflex,
and due diligence including the ability to visit
with the management team and tour the facilities.
Holders of the Senior Subordinated Debentures will
have the right to approve any sale of significant
assets of Borrower.
Financial Covenants:
Note: For the financial covenants, "EBITDA" shall mean
the sum, as of the date of determination, of (a)
the Borrower's net income, plus (b) interest
expense, plus (c) taxes accrued and paid, plus (d)
depreciation expense, plus (e) amortization of
intangible assets, plus (f) "stay" bonuses to be
paid to Herbert Barry and Robert K. Semel during
the Borrower's fiscal year ending January 31, 2000
not to exceed $3,400,000 in the aggregate, and (g)
no effect will be given to a one-time expense for
plates and engraving in an amount equal to $514,000
to be incurred in the first quarter following the
closing of the transaction contemplated hereby, in
each case calculated on a rolling four quarter
basis.
Senior Debt to EBITDA The ratio of Senior Debt to EBITDA as of the end of
any fiscal quarter during the period set forth
below shall not be greater than
2
<PAGE>
the ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
April 30, 2000 through January 30, 2001 3.75:1.00
January 31, 2001 through January 30, 2002 3.25:1.00
January 31, 2002 through January 30, 2003 3.00:1.00
January 31, 2003 through January 30, 2004 2.50:1.00
January 31, 2004 through January 30, 2005 1.95:1.00
January 31, 2005 and thereafter 1.65:1.00
</TABLE>
Funded Debt to EBITDA The ratio of Funded Debt to EBITDA as of the end of
any fiscal quarter during the period set forth
below shall not be greater than the ratio set forth
opposite such period below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
April 30, 2000 through January 30, 2001 5.40:1.00
January 31, 2001 through January 30, 2002 4.50:1.00
January 31, 2002 through January 30, 2003 3.80:1.00
January 31, 2003 through January 30, 2004 3.25:1.00
January 31, 2004 through January 30, 2005 2.75:1.00
January 31, 2005 and thereafter 2.50:1.00
</TABLE>
Minimum Debt Service The Minimum Debt Service Coverage Ratio as of the
Coverage Ratio end of any fiscal quarter during the period set
forth below shall not be less than the ratio set
forth opposite such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
July 31, 2000 through January 30, 2001 1.15:1.00
January 31, 2001 and thereafter 1.10:1.00
</TABLE>
Debt Service Coverage Ratio shall be defined as
EBITDA less unfinanced capital expenditures, less
dividends/distributions, less cash taxes accrued
and paid divided by the current portion of required
principal payments on long debt plus interest made
during the prior four quarters calculated on a
rolling four quarter basis.
Capital Expenditures. Capital Expenditures shall not exceed $1,325,000 in
any fiscal year ending on or prior to January 31,
2003 or $1,500,000 in any fiscal year thereafter.
Net Worth. Net Worth shall not be less than ($9,250,000) at
any time during
3
<PAGE>
the period from the Closing Date through January
31, 2000 and, with respect to each fiscal year
thereafter, not less than actual Net Worth as of
the last day of the immediately preceding fiscal
year plus $900,000.
Minimum EBITDA EBITDA (calculated with respect to each fiscal
period set forth below) as of the end of any fiscal
period shall not be less than the amount set forth
opposite such fiscal period below:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
Nine month period ending October 31, 1999 $3,200,000
Twelve month period ending January 31, 2000 $4,800,000
Three month period ending April 30, 2000 $1,350,000
</TABLE>
Minimum EBITDA to The ratio of EBITDA to interest expense, determined
Interest Expense on a rolling four quarter basis, for any period
shall not be less than the ratio set forth below
opposite such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
April 30, 2000 through January 30, 2001 2.50:1.00
January 31, 2001 through January 30, 2002 3.70:1.00
January 31, 2002 through January 30, 2003 3.25:1.00
January 31, 2003 through January 30, 2004 3.65:1.00
January 31, 2004 and thereafter 4.50:1.00
</TABLE>
The financial covenants shall be calculated on a
consolidated basis for the Borrower and its
consolidated subsidiaries.
4
