<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)*
Pharmhouse Corp.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
717137103
(CUSIP Number)
Stanley Pollack, Esq. at Rosenthal & Rosenthal, Inc., 1370 Broadway, New York,
New York 10018 (212) 356-1441
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
June 23, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13-1(b)(3) or (4), check the following box / /.
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
SCHEDULE 13D
- ------------------- ------------------
CUSIP NO. 717137103 PAGE 2 OF 18 PAGES
- ------------------- ------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 13-1238943
Rosenthal & Rosenthal, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
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
-0-
NUMBER OF -------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 209,195
OWNED BY -------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON -------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
209,195
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
209,195
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- 0 -
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
SCHEDULE 13D
- ------------------- ------------------
CUSIP NO. 717137103 PAGE 3 OF 18 PAGES
- ------------------- ------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Rosenthal, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
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
-0-
NUMBER OF -------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 209,195
OWNED BY -------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON -------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
209,195
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
209,195
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- 0 -
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 4
AMENDMENT NO. 1 TO SCHEDULE 13D
This Amendment No. 1 dated June 30, 1997 to Schedule 13D amends the
Schedule 13D relating to Pharmhouse Corp. (formerly known as S.E. Nichols Inc.)
filed with the Securities and Exchange Commission in January 1992 by Rosenthal &
Rosenthal, Inc. (the "Initial Schedule 13D"). Capitalized terms used and not
defined herein shall have the meanings ascribed to them in the Initial Schedule
13D. A copy of the Initial Schedule 13D (without exhibits) is attached to this
Amendment as Schedule I.
ITEM 1. SECURITY AND ISSUER
Item 1 is hereby amended in its entirety to read as follows:
This Statement relates to the Common Stock, $.01 par value (the
"Shares"), of Pharmhouse Corp., a New York corporation (formerly known as S.E.
Nichols Inc. and hereinafter referred to as the "Corporation"). The address of
the principal executive office of the Corporation is 860 Broadway, New York, New
York 10003. The names of the principal executive officers of the Corporation are
as follows:
<TABLE>
<CAPTION>
Name Business Address Position
- ---- ---------------- --------
<S> <C> <C>
Manfred Brecker Pharmhouse Corp. Chairman of the Board
860 Broadway
New York, New York 10003
Kenneth A. Davis Pharmhouse Corp. President and Chief
860 Broadway Executive Officer
New York, New York 10003
Marcie B. Davis Pharmhouse Corp. Senior Vice President-
860 Broadway Finance, Secretary
New York, New York 10003 and Treasurer
Joseph Keller Pharmhouse Corp. Senior Vice President-
860 Broadway Administration
New York, New York 10003 and Operations
Richard A. Davis Pharmhouse Corp. Senior Vice President-
860 Broadway Finance and Chief
New York, New York 10003 Financial Officer
</TABLE>
4
<PAGE> 5
ITEM 2. IDENTITY AND BACKGROUND
Item 2 is hereby amended in its entirety to read as follows:
(a), (b), (c) and (f). This Statement on Schedule 13D is being filed on
behalf of Rosenthal & Rosenthal, Inc., a New York corporation ("R&R"), and
Rosenthal, Inc., a Delaware corporation (the "Parent"). R&R and the Parent
(together, the "Reporting Persons") are filing the statement jointly, pursuant
to the provisions of Rule 13d-1(f)(1) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as separate persons and not as members
of a group. See Exhibit 7 for their Joint Filing Agreement.
R&R is wholly owned by the Parent. The Parent is owned by the estate
of Imre J. Rosenthal and two separate family trusts established for the benefit
of the children of Imre J. Rosenthal.
The principal business of R&R is factoring and asset based financing.
The principal office and principal place of business of R&R is 1370 Broadway,
New York, New York 10018. The names and addresses of the directors and executive
officers of R&R are set forth on Schedule 1 attached hereto.
The principal business of the Parent is factoring and asset based
financing. The principal office and principal place of business of the Parent is
1370 Broadway, New York, New York 10018. The names and addresses of the
directors and executive officers of the Parent are set forth on Schedule 1
attached hereto.
(d) and (e). During the last five years, none of the Reporting Persons
and none of the persons set forth on Schedule 1 attached hereto has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Item 3 is hereby amended by adding the following at the end thereof:
Due to a 1 to 4.35 reverse stock split effected by the Corporation in
April 1993, the underlying Shares and exercise price of each of the Class A
Warrants, Class B Warrants and Class C Warrants were adjusted pursuant to the
Warrant Agreement as follows: (a) the Class A Warrants were adjusted to entitle
R&R to purchase 59,770 Shares at an exercise price of $.1884 per share; (b) the
Class B Warrants were adjusted to entitle R&R to purchase 119,540 Shares at an
exercise price of $.435 per share; and (c) the Class C Warrants were adjusted to
entitle R&R to purchase 29,885 Shares at an exercise price of $1.914 per share.
On July 17, 1996, the Corporation and R&R executed Amendment No. 1 to
the Warrant Agreement which accelerated the expiration date of the Class A
Warrants to December 31, 1997 and extended the respective expiration dates of
the Class B Warrants and the Class C Warrants to December 31, 1997 in
consideration of R&R's agreement not to exercise certain of its registration
rights under the Warrant Agreement prior to a certain date.
5
<PAGE> 6
The foregoing is a summary of Amendment No. 1 to the Warrant Agreement.
A copy of such Amendment is attached hereto as Exhibit 6, and the foregoing
summary is qualified by reference to the full text of such Amendment, which
Amendment is incorporated by reference herein.
On June 23, 1997, R&R exercised all of its Class A Warrants, Class B
Warrants and Class C Warrants for an aggregate exercise price of $120,460.48,
thereby purchasing 209,195 Shares in the aggregate. R&R funded such aggregate
exercise price out of its working capital.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 is hereby amended in its entirety to read as follows:
See Item 3. The Class A Warrants, the Class B Warrants and the Class C
Warrants were acquired by R&R for investment purposes. R&R intends to sell all
of its 209,195 Shares from time to time at the prices prevailing on the NASDAQ
Small Cap Market or privately, either directly to purchasers or through one or
more brokers or dealers. However, neither R&R, nor any of the persons listed in
Item 2 has any plans or proposals which relate to or would result in (a) the
acquisition by any person of additional securities of the Corporation, (b) an
extraordinary corporate transaction involving the Corporation or any of its
subsidiaries, (c) a sale or transfer of a material amount of assets of the
Corporation or any of its subsidiaries, (d) a change in the present board of
directors or management of the Corporation, (e) a material change in the
present capitalization or dividend policy of the Corporation, (f) any other
material change in the Corporation's business or corporate structure, (g)
changes in the Corporation's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control of the
Corporation by any person, (h) causing a class of securities of the Corporation
to be delisted from a national securities exchange or to cease to be authorized
to be quoted in an inter-dealer quotation system of a registered national
securities association, (i) a class of equity securities of the Corporation
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934 or (j) any action similar to those
enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
Paragraphs (a) and (b) of Item 5 are hereby amended in their entirety
to read as follows:
(a) R&R beneficially owns 209,195 Shares or 8.1% of the outstanding
Shares (this percentage was calculated based upon the 2,374,442 Shares issued
and outstanding as of May 31, 1997, as reported by the Corporation in its
Quarterly Report on Form 10-Q for the quarter ended May 3, 1997, adjusted to
reflect R&R's exercise of Class A Warrants, Class B Warrants and Class C
Warrants for 209,195 Shares). The Parent does not own Shares directly. However,
because the Parent owns all of the outstanding capital stock of R&R, the Parent
may be deemed to beneficially own all of the 209,195 Shares owned by R&R
pursuant to the provisions of Rule 13d-3 under the Exchange Act.
(b) R&R and the Parent share voting power and dispositive power with
respect to all of the 209,195 Shares owned directly by R&R.
6
<PAGE> 7
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Item 7 is hereby amended as follows:
(a) The reference to Exhibit 5 is amended in its entirety to read as
follows:
Exhibit 5 - Warrant Agreement dated as of December 24, 1991 by and
between the Corporation and R&R (incorporated herein by
reference to Exhibit 10.1 to the Corporation's
Registration Statement on Form S-3, File No. 333-28077, as
amended).
(b) New Exhibits 6 and 7 are added as follows:
Exhibit 6 - Amendment No. 1 to Warrant Agreement dated as of July
17, 1996 by and between the Corporation and R&R
(incorporated herein by reference to Exhibit 10.14 to the
Corporation's Registration Statement on Form S-3, File No.
333-28077, as amended).
Exhibit 7 - Joint Filing Agreement dated as of July 1, 1997 by and
between R&R and the Parent.
7
<PAGE> 8
SIGNATURES
After reasonable inquiry and to the best of each of the undersigned's
knowledge and belief, each of the undersigned hereby certifies that the
information set forth in this statement is true, complete and correct.
Dated: July 1, 1997
ROSENTHAL & ROSENTHAL, INC.
By /s/ Stanley Pollack
--------------------------------------
Name: Stanley Pollack
Title: Senior Executive Vice President
ROSENTHAL, INC.
By /s/ Stanley Pollack
--------------------------------------
Name: Stanley Pollack
Title: Executive Vice President
8
<PAGE> 9
Schedule 1 is hereby amended in its entirety to read as follows:
Schedule 1
A. Executive Officers and Directors of Rosenthal & Rosenthal, Inc.
<TABLE>
<CAPTION>
Name Business Address Position
---- ---------------- --------
<S> <C> <C>
1. Stephen J. Rosenthal 1370 Broadway President and Director
N.Y., N.Y. 10018
2. Eric J. Rosenthal 1370 Broadway Vice President and Director
N.Y., N.Y. 10018
3. Stanley Pollack 1370 Broadway Senior Executive
N.Y., N.Y. 10018 Vice President
4. Brent Baumgardt 1370 Broadway Treasurer
N.Y., N.Y. 10018
5. Jerry Sandak 1370 Broadway Executive Vice President
N.Y., N.Y. 10018
6. Loretta Ponticello 1370 Broadway Assistant Secretary
N.Y., N.Y. 10018
</TABLE>
B. Executive Officers and Directors of Rosenthal, Inc.
<TABLE>
<S> <C> <C>
1. Stephen J. Rosenthal 1370 Broadway Director and President
N.Y., N.Y. 10018
2. Eric J. Rosenthal 1370 Broadway Director
N.Y., N.Y. 10018
3. Stanley Pollack 1370 Broadway Executive Vice President
N.Y., N.Y. 10018
4. Loretta Ponticello 1370 Broadway Assistant Secretary
N.Y., N.Y. 10018
</TABLE>
<PAGE> 10
EXHIBIT INDEX
Exhibit 5 - Warrant Agreement dated as of December 24, 1991 by and between
the Corporation and R&R (incorporated herein by reference to
Exhibit 10.1 to the Corporation's Registration Statement on Form
S-3, File No. 333-28077, as amended).
Exhibit 6 - Amendment No. 1 to Warrant Agreement dated as of July 17, 1996
by and between the Corporation and R&R (incorporated herein by
reference to Exhibit 10.14 to the Corporation's Registration
Statement on Form S-3, File No. 333-28077, as amended).
Exhibit 7 - Joint Filing Agreement dated as of July 1, 1997 by and between
R&R and the Parent.
10
<PAGE> 1
EXHIBIT 7
JOINT FILING AGREEMENT
The undersigned hereby agree to file jointly Amendment No. 1 to the
Statement on Schedule 13D (the "Statement") relating to the Common Stock, $.01
par value per share, of Pharmhouse Corp. (formerly known as S.E. Nichols Inc.)
and any further amendments thereto which may be deemed necessary pursuant to
Regulation 13D or G promulgated under Section 13 of the Securities Exchange Act
of 1934, as amended.
It is understood and agreed that a copy of this Agreement shall be
attached as an exhibit to the Statement, filed on behalf of each of the parties
hereto.
This Agreement may be executed in multiple counterparts, each of which
shall constitute an original, one and the same instrument.
IN WITNESS WHEREOF, each of the undersigned has executed this Agreement
as of July 1, 1997.
ROSENTHAL & ROSENTHAL, INC.
By /s/ Stanley Pollack
--------------------------------------
Name: Stanley Pollack
Title: Senior Executive Vice President
ROSENTHAL, INC.
By /s/ Stanley Pollack
--------------------------------------
Name: Stanley Pollack
Title: Executive Vice President
11
<PAGE> 2
SCHEDULE I
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ___)*
S.E. Nichols Inc.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
653803-20-5
(CUSIP Number)
Stanley Pollack, Esq. at
Rosenthal & Rosenthal, Inc. 1370 Broadway, New York, New York 10018
(212) 356-1441
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
December 24, 1991
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement /X/ (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 3
SCHEDULE 13D
- --------------------- -------------------
CUSIP NO. 653803-20-5 PAGE 2 OF 185 PAGES
- --------------------- -------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 13-1238943
Rosenthal & Rosenthal, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
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
910, 000
NUMBER OF -------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY - 0 -
OWNED BY -------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 910,000
PERSON -------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
- 0 -
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
910,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- 0 -
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
2
<PAGE> 4
ITEM 1. SECURITY AND ISSUER
This Statement relates to the Common Stock, $.01 par value (the
"Shares"), of S.E. Nichols Inc., a New York corporation (the "Corporation"). The
address of the principal executive office of the Corporation is 860 Broadway,
New York, New York 10003. The names of the principal executive officers of the
Corporation are as follows:
<TABLE>
<CAPTION>
Name Business Address Position
- ---- ---------------- --------
<S> <C> <C>
Manfred Brecker S.E. Nichols Inc. Chairman of the Board
860 Broadway
New York, New York 10003
Kenneth A. Davis S.E. Nichols Inc. President and Chief
860 Broadway Executive Officer
New York, New York 10003
Marcie B. Davis S.E. Nichols Inc. Senior Vice President-
860 Broadway Finance, Secretary
New York, New York 10003 and Treasurer
William Hoffert S.E. Nichols Inc. Senior Vice President-
860 Broadway Merchandising
New York, New York 10003
Joseph Keller, Jr. S.E. Nichols Inc. Senior Vice President-
860 Broadway Operations
New York, New York 10003
Michael Stock S.E. Nichols Inc. Management Information
860 Broadway Services
New York, New York 10003
</TABLE>
ITEM 2. IDENTITY AND BACKGROUND
(a-c) This Statement is being filed by Rosenthal & Rosenthal, Inc., a
New York corporation ("R&R"), the principal business of which is factoring and
asset based financing. The principal office and principal place of business of
R&R is 1370 Broadway, New York, New York 10018.
(d-e) During the last five years, neither R&R nor any of the persons
listed on Schedule 1 has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors), or was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
3
<PAGE> 5
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Pursuant to the terms of a Security Agreement Accounts Receivable dated
August 30, 1990 (the "Security Agreement") between Sterling National Bank and
Trust Company of New York ("Sterling") and the Corporation, Sterling agreed to
make loans to the Corporation from time to time in an aggregate principal amount
not to exceed $10,000,000 at any time outstanding (the "Sterling Loans"). In
partial consideration for the Sterling Loans, the Corporation agreed to deliver
to Sterling, upon the date of consummation of the Corporation's Plan of
Reorganization (the "Plan"), a warrant agreement (the "Sterling Warrant").
Pursuant to the terms of a Participation Agreement dated August 30, 1990 (the
"Participation Agreement"), between Sterling and R&R, R&R purchased a 50%
interest in the Sterling Loans from Sterling. Pursuant to a Letter Agreement
dated October 15, 1990 between Sterling and R&R (the "Letter Agreement") and in
partial consideration for R&R's participation in the Sterling Loans, Sterling
agreed to transfer to R&R, 45% of the Sterling Warrant. Such 45% share, issued
as a separate warrant (the "Class A Warrants") entitles R&R to purchase 260,000
shares at an exercise price of $.0433 per Share (subject to certain adjustments
as provided in the Warrant Agreement referred to below) from the date of
issuance of the Class A Warrant until December 31, 1998. In lieu of accepting
its share of any warrants, Sterling accepted cash from the Corporation.
Sterling's loan facility with the Corporation was subsequently paid off.
Pursuant to a Revolving Credit Agreement dated as of December 24, 1991
between the Corporation and R&R (the "Credit Agreement"), R&R agreed to make
loans to the Corporation from time to time in an aggregate principal amount not
to exceed $5,000,000 at any time outstanding. In partial consideration for the
loans made and to be made under the Credit Agreement, the Corporation agreed to
deliver to R&R, upon the consummation of the Plan, (i) warrants (the "Class B
Warrants"), entitling R&R to purchase 520,000 Shares at an exercise price of
$.10 per Share (subject to certain adjustments as provided in the Warrant
Agreement referred to below) at any time until December 31, 1996 and (ii)
warrants (the "Class C Warrants") entitling R&R to purchase 130,000 Shares at an
exercise price of $.44 per share (subject to certain adjustments as provided in
the Warrant Agreement referred to below) at any time until December 31, 1996.
On December 24, 1991, the Corporation consummated the Plan and executed
a Warrant Agreement with R&R (the "Warrant Agreement") which provides for the
Class A Warrants, Class B Warrants and Class C Warrants.
The foregoing is a summary of the Security Agreement, the Participation
Agreement, the Letter Agreement, the Credit Agreement and the Warrant Agreement.
A copy of each of the Security Agreement, the Participation Agreement, the
Letter Agreement, the Credit Agreement and the Warrant Agreement are attached
hereto as Exhibit 1, 2, 3, 4 and 5 respectively, and the foregoing summary is
qualified by reference to the full text of such agreements, which agreements are
incorporated by reference herein.
ITEM 4. PURPOSE OF TRANSACTION
See Item 3. The Shares were acquired by R&R for investment purposes.
Neither R&R, nor any of the persons listed in Item 2 has any plans or proposals
which relate to or would result in (a) the acquisition by any person of
additional securities of the Corporation, or the disposition of securities of
the Corporation, (b) an extraordinary corporate transaction involving the
Corporation or any of its subsidiaries, (c) a sale or transfer of a material
amount of assets of the Corporation or any of its subsidiaries, (d) a change in
the present board of directors or management of the Corporation, (e) a
4
<PAGE> 6
material change in the present capitalization or dividend policy of the
Corporation, (f) any other material change in the Corporation's business or
corporate structure, (g) changes in the Corporation's charter, bylaws or
instruments corresponding thereto or other actions which may impede the
acquisition of control of the Corporation by any person, (h) causing a class of
securities of the Corporation to be delisted from a national securities exchange
or to cease to be authorized to be quoted in an inter-dealer quotation system of
a registered national securities association, (i) a class of equity securities
of the Corporation becoming eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities Exchange Act of 1934 or (j) any action
similar to those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) The aggregate number of Shares owned beneficially by R&R is 910,000
or 7% of the outstanding Shares.
(b) Not applicable
(c) See Item 3
(d-e) Not applicable
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
See Item 3.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1 - Security Agreement Accounts Receivable dated August
30, 1990 by and between Sterling and the Corporation.
Exhibit 2 - Participation Agreement dated August 30, 1990 by and
between Sterling and R&R.
Exhibit 3 - Letter Agreement dated October 15, 1990 by and between
Sterling and R&R.
Exhibit 4 - Revolving Credit Agreement dated as of December 24,
1991 by and between the Corporation and R&R.
Exhibit 5 - Warrant Agreement dated as of December 24, 1991 by and
between the Corporation and R&R.
5
<PAGE> 7
After reasonable inquiry and to the best of the undersigned's knowledge
and belief, the undersigned hereby certifies that the information set forth in
this statement is true, complete and correct.
Dated: January 2, 1992
ROSENTHAL & ROSENTHAL, INC.
By /s/ Imre J. Rosenthal
------------------------------------------
Name: Imre J. Rosenthal
Title: Chairman of the Board of Directors,
President and Secretary
6
<PAGE> 8
Schedule 1
A. Executive Officers and Directors of Rosenthal & Rosenthal, Inc.
<TABLE>
<CAPTION>
Name Business Address Position
---- ---------------- --------
<S> <C> <C>
1. Imre J. Rosenthal 1370 Broadway Chairman of the
N.Y., N.Y. 10018 Board of Directors,
President and
Secretary
2. Stephen J. Rosenthal 1370 Broadway Executive Vice
N.Y., N.Y. 10018 President and Director
3. Eric J. Rosenthal 1370 Broadway Vice President
N.Y., N.Y. 10018 and Director
4. Brent Baumgardt 1370 Broadway Treasurer
N.Y., N.Y. 10018
5. Jerry Sandak 1370 Broadway Executive Vice
N.Y., N.Y. 10018 President
6. Loretta Ponticello 1370 Broadway Assistant
N.Y., N.Y. 10018 Secretary
</TABLE>
B. R & R is wholly owned by Rosenthal, Inc. which is wholly owned by Imre
J. Rosenthal, individually, and as trustee for trusts established for his
children.
C. Executive Officers and Directors of Rosenthal, Inc.:
<TABLE>
<S> <C> <C>
1. Imre J. Rosenthal 1370 Broadway Chairman of the
N.Y., N.Y. 10018 Board of Directors,
President and
Secretary
2. Stephen J. Rosenthal 1370 Broadway Director and
N.Y., N.Y. 10018 Vice President
3. Eric J. Rosenthal 1370 Broadway Director
N.Y., N.Y. 10018
4. Stanley Pollack 1370 Broadway Executive Vice
N.Y., N.Y. 10018 President
5. Loretta Ponticello 1370 Broadway Assistant Secretary
N.Y., N.Y. 10018
</TABLE>
