<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
INTERNATIONAL TOTAL SERVICES, INC.
(Name of Issuer)
COMMON SHARES, WITHOUT PAR VALUE
(Title of Class of Securities)
46049910
(CUSIP Number of Class of Securities)
Robert A. Weitzel
5005 Rockside Road
Independence, Ohio 44131
(216) 642-4522
with a copy to:
F. Ronald O'Keefe, Esq.
Hahn Loeser & Parks LLP
3300 BP America Bldg.
200 Public Square
Cleveland, Ohio 44114
(216) 621-0150
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
NOVEMBER 25, 1998
(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 that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 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 Section 240.13d-7(b) 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).
(Continued on following page(s))
Page 1 of 29
<PAGE> 2
CUSIP No. 46049910
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF REPORTING PERSON
THE WEITZEL FAMILY LIMITED PARTNERSHIP
- -------------------------------------------------------------------------------------------------------------------
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)
NOT APPLICABLE. [ ]
- -------------------------------------------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
OHIO
- -------------------------------------------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF SHARES
BENEFICIALLY -0-
OWNED BY EACH -------------------------------------------------------------------------------
REPORTING PERSON 8. SHARED VOTING POWER
WITH
-0-
-------------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
-0-
-------------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
33.20%
- -------------------------------------------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,211,717 SHARES
- -------------------------------------------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
- -------------------------------------------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
33.20%
- -------------------------------------------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
PN
</TABLE>
Page 2 of 29
<PAGE> 3
CUSIP No. 46049910
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF REPORTING PERSON
ROBERT A. WEITZEL
- -------------------------------------------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- -------------------------------------------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------------------------------------------
4. SOURCE OF FUNDS
00
- -------------------------------------------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
NOT APPLICABLE. [ ]
- -------------------------------------------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
U.S. AMERICAN
- -------------------------------------------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF SHARES
BENEFICIALLY 15.01%
OWNED BY EACH -------------------------------------------------------------------------------
REPORTING PERSON 8. SHARED VOTING POWER
WITH
33.20%
-------------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
15.01%
-------------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
33.20%
- -------------------------------------------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,211,717 SHARES
- -------------------------------------------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
- -------------------------------------------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
48.21%
- -------------------------------------------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
</TABLE>
Page 3 of 29
<PAGE> 4
CUSIP No. 46049910
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF REPORTING PERSON
JEANETTE R. WEITZEL
- -------------------------------------------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- -------------------------------------------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------------------------------------------
4. SOURCE OF FUNDS
00
- -------------------------------------------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
NOT APPLICABLE. [ ]
- -------------------------------------------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
U.S. AMERICAN
- -------------------------------------------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF SHARES
BENEFICIALLY -0-
OWNED BY EACH -------------------------------------------------------------------------------
REPORTING PERSON 8. SHARED VOTING POWER
WITH
33.20%
-------------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
-0-
-------------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
33.20%
- -------------------------------------------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,211,717 SHARES
- -------------------------------------------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
- -------------------------------------------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
33.20%
- -------------------------------------------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
</TABLE>
Page 4 of 29
<PAGE> 5
SCHEDULE 13D
This Schedule 13D is filed on behalf of The Weitzel Family Limited
Partnership (the "Weitzel FLP") and the general partners of the Weitzel FLP,
Robert A. Weitzel and Jeanette R. Weitzel, for the purpose of reporting the
acquisition by the Weitzel FLP on November 25, 1998 of 2,211,717 shares of the
common stock, no par value per share, of International Total Services, Inc.
("ITS"), which represent 33.20% of the common stock outstanding of ITS (the
"Common Shares"). The Common Shares were acquired by the Weitzel FLP as a
capital contribution from Robert Weitzel in exchange for limited partnership
interests in the Weitzel FLP. Immediately subsequent thereto, Robert Weitzel
transferred to Jeanette Weitzel one-half of such limited partnership interests.
Robert and Jeanette Weitzel are the sole general and limited partners of the
Weitzel FLP (the Weitzel FLP, Robert Weitzel and Jeanette Weitzel are
hereinafter collectively referred to as the "Reporting Persons").
Pursuant to a Limited Partnership Agreement dated as of November 22,
1997 (the "Partnership Agreement"), the purposes of the Weitzel FLP include,
among other things, to hold the Common Shares and to exercise all of the rights
and powers that a holder of the Common Shares is entitled to exercise, including
the right to sell, exchange, dispose of, encumber and vote the Common Shares.
The Partnership Agreement was amended by an Amendment of Limited Partnership
Agreement which provides that, in the event the Weitzel FLP owns shares of stock
in a controlled corporation, as defined in Section 2036 of the Internal Revenue
Code of 1986, as amended, the Weitzel FLP is obligated to pass through to the
partners, in proportion to their partnership interests, any voting rights that
the Weitzel FLP has in the controlled corporation. Because the Weitzel FLP
would, as a result of the capital contribution of the Common Shares, own shares
in a controlled corporation, the Weitzel FLP is obligated to pass through to the
partners the voting rights with respect to the Common Shares.
Pursuant to the terms of the Partnership Agreement, Robert and Jeanette
Weitzel are each deemed to possess the shared voting control represented by the
2,211,717 Common Shares held by the Weitzel FLP. Robert Weitzel, therefore, is
deemed to beneficially own in the aggregate 3,211,717 Common Shares (consisting
of shared voting power with respect to the 2,211,717 Common Shares owned by the
Weitzel FLP plus 1,000,000 Common Shares which Mr. Weitzel individually owns),
which in the aggregate represent 48.21% of the Common Shares. Jeanette Weitzel
is deemed to beneficially own 2,211,717 Common Shares (consisting of shared
voting power with respect to the 2,211,717 Common Shares owned by the Weitzel
FLP), which represent 33.20% of the voting control of the Common Shares. The
Weitzel FLP is deemed to beneficially own and to possess the shared power to
dispose of 2,211,717 Common Shares, which represent 33.20% of the Common Shares
outstanding.
Pursuant to General Instruction C of Schedule 13D, which requires that
the information called for by Items 2-6, inclusive, of Schedule 13D be given
with respect to each partner who is denominated as a general partner of a
partnership that holds securities of a subject company and who functions as a
general partner, the information contained in Items 2-6 has been given with
respect to each of the Reporting Persons.
Page 5 of 29
<PAGE> 6
ITEM 1. SECURITY AND ISSUER.
Security: Common Shares, without par value
(Cusip No. 46049910)
Issuer: International Total Services, Inc.
5005 Rockside Road
Independence, Ohio 44131
ITEM 2. IDENTITY AND BACKGROUND.
(a) NAME
The Weitzel FLP is a family limited partnership
organized under the laws of the state of Ohio, the
general partners of which are Robert A. Weitzel and
Jeannette R. Weitzel, each of whom is an individual
and citizen of the United States.
(b) RESIDENCE OR BUSINESS ADDRESS
The principal business address of Robert Weitzel is:
5005 Rockside Road
Independence, Ohio 44131
The principal business address of each of the Weitzel
FLP and Jeanette R. Weitzel is:
7450 Main Street
Gates Mills, OH 44040
(c) PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND THE
NAME, PRINCIPAL BUSINESS AND ADDRESS OF ANY
CORPORATION OR OTHER ORGANIZATION IN WHICH SUCH
EMPLOYMENT IS CONDUCTED.
The Weitzel FLP is a family limited partnership that
was established for estate planning purposes to hold
the Common Shares and to manage and control other
investments.
Robert Weitzel is the Chief Executive Officer and a
Director of ITS, which is in the business of
providing security services to airports and
corporations. The principal office of ITS is located
at 5005 Rockside Road, Independence, OH 44131.
Jeanette Weitzel is the spouse of Robert Weitzel and
is unemployed.
Page 6 of 29
<PAGE> 7
(d) During the last five years, neither Robert Weitzel
nor Jeanette Weitzel has been convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, neither Robert Weitzel
nor Jeanette Weitzel 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.
(f) CITIZENSHIP
Robert and Jeanette Weitzel are both citizens of the
United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The Weitzel FLP has acquired the Common Shares from Robert
Weitzel as a capital contribution in exchange for all of the
limited partnership interests in the Weitzel FLP.
ITEM 4. PURPOSE OF TRANSACTION.
The Weitzel FLP has acquired the Common Shares from Robert
Weitzel in order to facilitate estate planning transactions on
behalf of Robert and Jeanette Weitzel. The Weitzel FLP intends
to hold the Common Shares for investment purposes only and not
with the purpose of changing or influencing the control of
ITS.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The aggregate number of Common Shares beneficially
owned by the Weitzel FLP is 2,211,717 Common Shares,
which represents 33.20% of the 6,662,494 Common
Shares outstanding as of September 30, 1998, the date
of ITS's Form 10-Q filing, the latest public filing
by ITS. The aggregate number of Common Shares
beneficially owned by Robert Weitzel is 3,211,717
Common Shares, which represents 48.21% of the Common
Shares outstanding. The aggregate number of Common
Shares beneficially owned by Jeanette Weitzel is
2,211,717 Common Shares, which represents 33.20% of
the Common Shares outstanding.
(b) With respect to the shares identified in Item 5(a)
above, the partners of the Weitzel FLP (Robert and
Jeanette Weitzel), each possess the shared power to
vote or to direct the vote, and the shared power to
dispose or to direct the disposition of the 2,211,717
Common Shares held by the Weitzel FLP. Robert
Weitzel, in addition, possesses the sole power to
vote and to dispose of 1,000,000 Common Shares. The
Weitzel FLP is deemed to have the shared power to
dispose of all of the 2,211,717 Common Shares held in
the Weitzel FLP, or 33.20% of the Common Shares
outstanding.
Page 7 of 29
<PAGE> 8
(c) Not applicable.
(d) The general partners of the Weitzel FLP (Robert and
Jeanette Weitzel), each possess the shared right on
behalf of the Weitzel FLP to receive or the power to
direct the receipt of dividends from, or the proceeds
from the sale of, all the securities.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Robert and Jeanette Weitzel are husband and wife who each are
deemed to beneficially own 33.20% of the Common Shares through
the Weitzel FLP. Robert Weitzel beneficially owns an
additional 15.01% of the Common Shares through his individual
ownership of 1,000,000 Common Shares, which represent in the
aggregate 48.21% of the Common Shares outstanding. As the
partners of the Weitzel FLP, Robert and Jeanette Weitzel each
possess the shared power to vote and to dispose of the Common
Shares. There is no contract, arrangement or understanding
between Robert and Jeanette Weitzel with respect to the voting
or acquisition of the Common Shares.
Page 8 of 29
<PAGE> 9
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT A - Limited Partnership Agreement between Robert A.
Weitzel and Jeanette R. Weitzel, dated as of
November 22, 1997.
EXHIBIT B - Amendment of Limited Partnership Agreement
between Robert A. Weitzel and Jeanette R.
Weitzel.
Page 9 of 29
<PAGE> 10
SCHEDULE 13D
SIGNATURE PAGE
After reasonable inquiry and to the best of his knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
DATED: December 4, 1998
/s/ Robert A. Weitzel
-----------------------------------------
Robert A. Weitzel, an individual
Page 10 of 29
<PAGE> 11
SCHEDULE 13D
SIGNATURE PAGE
After reasonable inquiry and to the best of his knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
DATED: December 3, 1998
/s/ Jeanette R. Weitzel
--------------------------------------------
Jeanette R. Weitzel, an individual
Page 11 of 29
<PAGE> 12
SCHEDULE 13D
SIGNATURE PAGE
After reasonable inquiry and to the best of his knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
DATED: December 4, 1998
THE WEITZEL FAMILY LIMITED PARTNERSHIP
By: Robert A. Weitzel, General Partner
/s/ Robert A. Weitzel
------------------------------------
Robert A. Weitzel
By: Jeanette R. Weitzel, General Partner
/s/ Jeanette R. Weitzel
---------------------------------
Jeanette R. Weitzel
Page 12 of 29
<PAGE> 13
Exhibit A
LIMITED PARTNERSHIP AGREEMENT
-----------------------------
On this _________________day of_________________, 1997, ROBERT A.
WEITZEL and JEANETTE R. WEITZEL (the "Partners"), agreed to form this limited
partnership.
RECITALS:
A. The Partners desire to enter into an agreement (the "Agreement") to
establish a limited partnership (the "Partnership") to own family property and
transact family business;
B. The Partners desire to share in the risks, benefits, profits and losses of
the Partnership's activities.
SECTION I
NAME
The Partnership's name is THE WEITZEL FAMILY LIMITED PARTNERSHIP.
SECTION 2
PLACE OF BUSINESS, ETC.
2.1. PLACE OF BUSINESS. The Partnership's principal place of business
is at 7450 Main Street, Gates Mills, Ohio 44040, although the General Partners
may change the Partnership's principal place of business to another location
and add additional places of business.
2.2. AGENT. The Partnership's agent for service of process shall be
JAMES P. FARMER, JR. at 629 Euclid Avenue, Suite 1525, Cleveland, Ohio 44114.
All records that the Partnership is required to keep at a specified office
shall be kept at the Partnership's principal place of business.
SECTION 3
PURPOSES
3.1 BUSINESS PURPOSES. The purposes of the Partnership are the
following:
3.1.1 To purchase, subscribe for, invest in, acquire, hold,
encumber, sell, exchange, transfer, and otherwise dispose of shares of
the capital stock of International Total Services, Inc. ("ITS");
3.1.2 To exercise all of the rights and powers that a holder
of ITS stock is entitled to exercise, including, but not limited to,
the right to sell, exchange or otherwise dispose of, encumber and vote
the ITS stock;
Page 13 of 29
<PAGE> 14
3.1.3 To manage and control investments in other
partnerships, businesses, and entities, whether in the form of debt,
equity, or otherwise; and to hold, buy, sell, lease, pledge, mortgage,
and otherwise deal in or dispose of those investments or similar
interests;
3.1.4 To invest in stocks, bonds, securities, annuities, real
estate and other similar interests, including, without limitation,
purchasing, selling, and dealing in stocks, bonds, notes, and
evidence of indebtedness of any person, firm, enterprise, corporation,
or association, domestic or foreign, and bonds and any other
obligations of any government, state or municipality, school district
or any political subdivision thereof, domestic or foreign, and bills
of exchange and commercial paper, and any and all other securities of
any kind, nature or description whatsoever; to form, organize,
capitalize, and invest in, along or jointly with others, and to sell
or otherwise dispose of the same to others, and to form corporations,
partnerships, joint ventures, limited liability companies, trusts, and
other business entities, and in general, without limitation of the
foregoing, to conduct such activities as are usual and customary in
connection with stocks, bonds, real estate securities, and other
investments in corporations, partnerships, joint ventures, limited
liability companies, trusts, and other business entities; and
3.1.5 To transact or engage in any other business that may be
lawfully conducted in partnership form.
SECTION 4
TERM
The Partnership begins on the date of this Agreement and ends on the
date thirty (30) years later, unless terminated earlier or later extended.
SECTION 5
CAPITAL AND PARTNERSHIP INTERESTS
5.1. PARTNERSHIP INTERESTS. Each Partner's percentage of Partnership
Interest and each Partner's percentage of the total Partnership Capital
Accounts shall be indicated on Schedule A attached to this Agreement and made a
part hereof.
5.2. ADDITIONS. Any General Partner who has a deficit balance in his
or her Capital Account when his or her Partnership Interest is liquidated must
contribute to the Partnership capital enough cash to restore that General
Partner's Capital Account balance to zero. This contribution shall be made by
the end of such taxable year or, if later, within ninety (90) days following
the date of that liquidation. Otherwise, a Partner shall not be compelled to
make any additional capital contributions.
-2-
Page 14 of 29
<PAGE> 15
5.3. ADJUSTMENTS. Each Partner's Capital Account shall be adjusted as
necessary to reflect the economic conditions of the Partners and their
Partnership Interests. These adjustments shall include, but are not limited to,
the following:
5.3.1. Adjustments to reflect each Partner's distributive
share of Partnership profits and losses, including capital gains and
losses, and tax-exempt income;
5.3.2. Adjustments to reflect each Partner's additional
contributions to the Partnership;
5.3.3. Adjustments to reflect distributions made by the
Partnership to each Partner;
5.3.4. Tax-Sensitive Adjustments (as defined below).
5.4. LOANS. A Partner's loans to the Partnership shall not be added to
his or her Capital Account.
5.5. AMOUNT OF CONTRIBUTIONS. The amount of a Partner's contributions
of property to the Partnership and of the Partnership's distributions of
property to a Partner, shall be reflected in the Partner's Capital Account at
the fair market value of the property on the date of the contribution or
distribution, reduced by any liabilities secured by that property, if those
liabilities are treated under applicable federal income tax laws as being
assumed by or taken subject to by the transferee.
5.6. NO INTEREST PAID. A Partner shall receive no interest on his or
her capital contributions or Partnership Interest.
5.7. WITHDRAWALS. A Partner may withdraw his or her Capital Account
only as expressly authorized in this instrument. For sixty (60) calendar days
immediately following any gratuitous addition to a Partner's Capital Account,
the Partner whose Capital Account is increased (a "Donee Partner"), shall have
the right to withdraw an amount equal to such increase, subject to the following
limitations:
5.7.1. This power can be exercised by a written request
delivered to the General Partners. The request may be made on behalf
of a Donee Partner who is unable to exercise this withdrawal power
because of a legal disability (including minority), by a legally
authorized guardian or other personal representative. If there is no
then serving personal representative, the General Partners shall
appoint an appropriate adult individual to act for the disabled Donee
Partner in this matter.
5.7.2. The General Partners must reasonably notify the person
who would exercise these powers of the existence of the powers, and
the existence and amount of the gratuitous addition to the
Partnership's capital.
-3-
Page 15 of 29
<PAGE> 16
5.7.3. The maximum amount that a Donee Partner may withdraw
with respect to all gratuitous increases in his or her Capital Account
made by the same donor in the same calendar year shall be the lesser
of the total amount of the increase in his or her Capital Account and
the amount of the federal gift tax annual exclusion in effect on the
date of the earliest of such contributions.
SECTION 6
PROFITS, LOSSES, AND CASH-FLOW
6.1. PROFITS AND LOSSES.
6.1.1. The Partnership's net profits and losses (and each
item of income, deduction, gain, loss, and credit that makes up net
profits and losses) shall be computed in accordance with generally
accepted accounting principles, consistently applied, and shall be
allocated among the Partners solely according to their respective
Capital Accounts.
6.1.2. Notwithstanding the general rule just stated, income,
gain, loss, and deductions with respect to property contributed to
the Partnership by a Partner shall be shared among the Partners so as
to take account of any variation between the basis and the fair market
value of the contributed property at the time of the contribution, in
accordance with any applicable U.S. Treasury regulations.
6.1.3. There shall be an "Income Offset," under which net
losses that would otherwise be allocated to a Limited Partner and that
would cause the Limited Partner's Capital Account to be in a deficit
shall instead be allocated to the General Partner. After such an
allocation of net losses, net profits shall be allocated to the
General Partners, until the General Partners shall have received an
allocation of net profits equal to the aggregate allocation of net
losses allocated under this paragraph.
6.2. ASSIGNMENT OR DEATH. When a Partner dies, retires, is expelled,
or assigns his or her Partnership Interest, profits and losses shall be
allocated based on the number of days in that year during which each Partner
owned a Partnership Interest, or on any other reasonable basis selected by the
General Partners, as long as it is consistent with applicable United States tax
laws and regulations.
6.3. CASH FLOW. The General Partners shall cause the Partnership to
distribute its Net Cash Flow annually, in proportion to Partnership Capital
Accounts.
-4-
Page 16 of 29
<PAGE> 17
SECTION 7
MANAGEMENT
7.1. GENERAL PARTNERS. The General Partners shall have the full and
exclusive power on the Partnership's behalf to manage its business and affairs
and to do or cause to be done anything deemed necessary or appropriate for the
Partnership's business. This authority includes, but is not limited to, the
following:
7.1.1. The General Partners may sell, assign, transfer or
otherwise encumber the Partnership's real or personal property assets
to any person, giving any warranties or assurances deemed appropriate;
7.1.2. The General Partners may buy, lease, or otherwise
acquire real or personal property to carry on and conduct the
Partnership's business;
7.1.3. The General Partners may borrow money for the
Partnership's business;
7.1.4. The General Partners may issue promissory notes and
other debt instruments (negotiable or nonnegotiable), in any amounts
and secured by any encumbrance on all or any part of the Partnership's
assets;
7.1.5. The General Partners may assign any debts owing to the
Partnership;
7.1.6. The General Partners may engage in any other means of
financing;
7.1.7. The General Partners may enter into any agreement for
sharing of profits and any joint venture agreement with any person or
entity engaging in any business or venture in which this Partnership
may engage;
7.1.8. The General Partners may manage, administer, conserve,
improve, develop, operate, lease, utilize, and defend the
Partnership's assets, directly or through third parties;
7.1.9. The General Partners may execute any type of agreement
or instrument in connection with any other Partnership power,
7.1.10. The General Partners may employ all types of agents
and employees (including lawyers and accountants), even if they are
related by blood, marriage, or business relationship with the General
Partners, and to pay them reasonable compensation and reimburse them
for reasonable expenses incurred on behalf of the Partnership;
-5-
Page 17 of 29
<PAGE> 18
7.1.11. The General Partners may buy or otherwise obtain the
use of any type of equipment or other property that may be convenient
or advisable in connection with any Partnership business;
7.1.12. The General Partners may incur any reasonable expense
for travel, telephone, telegraph, insurance, taxes, and such other
things, in carrying on the Partnership's business;
7.1.13. The General Partners may sue and be sued, complain
and defend in the Partnership's name of and on its behalf; and
7.1.14. The General Partners may quitclaim, release or
abandon any Partnership assets with or without consideration.
7.2. MULTIPLE GENERAL PARTNERS. If there are multiple General Partners
they shall act by a majority in interest of the General Partners.
7.3. COMPENSATION. Any General Partner shall be entitled to receive
reasonable compensation for management of the Partnership.
7.4. EXPENSES. All reasonable expenses incurred by the General
Partners in managing and conducting the Partnership's business, including (but
not limited to) overhead, administrative and travel expenses, and such
professional, technical, and other services, shall be reimbursed by the
Partnership.
7.5. LIMITED PARTNERS. A Limited Partner (other than one who is also a
General Partner) shall take no part in the management of the Partnership. No
limited partner shall have any power to transact any partnership business or to
act for or bind the partnership in any respect, and no limited partner as such
shall be personally liable for any part of the partnership's debts or other
obligations.
7.6. TAX MATTERS PARTNER. ROBERT A. WEITZEL shall be the tax
matters partner and, as such, shall be solely responsible for representing the
Partnership in all dealings with the U.S. Internal Revenue Service and any
state, local, and any foreign tax authorities. The Tax Matters partner shall
keep the other Partners reasonably informed of any Partnership dealings with
any tax agency.
SECTION 8
FINANCIAL STATEMENTS
Within a reasonable period after the close of each fiscal year, the
General Partners shall, at the Partnership's expense, give a written report to
each Partner who requests it, indicating that Partner's share of the
Partnership income or loss and any changes in that Partner's Capital
-6-
Page 18 of 29
<PAGE> 19
Account. This may be satisfied by giving each Partner a copy of any tax form
which includes such information.
SECTION 9
BANKING
All Partnership funds shall be deposited in its name in such accounts
as the General Partners may designate. The General Partners may authorize other
persons to draw checks on Partnership bank accounts, but such authority must be
in writing. Each bank in which a Partnership account is maintained is relieved
of any responsibility to inquire into a Partner's authority to deal with such
funds, and is absolved of all liability with respect to withdrawals from such
Partnership accounts by any person duly authorized by the General Partners.
SECTION 10
TRANSFER OF PARTNERSHIP INTERESTS
10.1. LIMITS ON TRANSFER. A Partner shall not Transfer any Partnership
Interest except in accordance with the terms of this section or with the prior
written consent of all of the other Partners. An attempted Transfer of
Partnership Interest not in accordance with the terms of this section shall not
be valid and shall not be reflected on the Partnership's books.
10.2. RIGHT OF FIRST REFUSAL. A Partner who wishes to Transfer any
Partnership Interest, or who has reason to believe that an involuntary Transfer
or a Transfer by operation of law is reasonably foreseeable (an "Offering
Partner," defined below), shall first give each other Partner written notice of
the intent to Transfer such Partnership Interest (the "Offered Interest,"
defined below) or of the knowledge that an Involuntary Transfer or Transfer by
operation of law is reasonably foreseeable. This notice must contain a
description of the portion of Partnership Interest to be Transferred, the
consideration (if any) to be paid, the terms of Transfer and of the payment of
consideration (including, but not limited to, the relative percentages of cash
and debt, and the terms of any debt instruments), and the name, address (both
home and office), and business or occupation of the person to whom the
Partnership Interest would be transferred, a signed copy of any offer to
purchase, and any other facts which are or would reasonably be deemed material
to the proposed Transfer.
10.2.1. Upon the receipt of such notice, each other Partner
shall have a right to buy that share of the Offered Interest having
the same proportion to all of the Offering Partner's Partnership
Interest as the buying Partner's Partnership Interest bears to the
Partnership Interests of all Partners (except the Transferring
Partner).
10.2.2. Each Partner may exercise this purchase option by
giving the Offering Partner written notice within thirty calendar days
after receipt of the latter's notice.
-7-
Page 19 of 29
<PAGE> 20
10.2.3. If any Partner elects not to exercise his or her
purchase option, the remaining Partners shall have the right, in
proportion to each Partner's Partnership Interest, to purchase the
Offered Interest. Such right shall be exercised within sixty calendar
days after receipt of the notice provided for in Section 10.2.
10.2.4. If the Partners, individually or collectively, do not
agree to buy all of the Offered Interest, the Offering Partner may
complete the intended Transfer. If this Transfer is not completed
within thirty calendar days after expiration of the option period, any
attempted Transfer shall be deemed pursuant to a new offer and this
section shall again apply.
10.3. PURCHASE PRICE. The purchase price that the Partners must pay
for the Offered Interest under this section shall be the same as those of any
proposed Transfer if the proposed Transfer for which notice was given is to be
made for any valuable consideration in money or money's worth of property.
Otherwise, the purchase price that the Partners must pay for the Offered
Interest under this section shall be the fair market value of the Offered
Interest. The fair market value of a Partnership Interest shall be determined
by an independent appraisal performed by a professional appraiser selected by
the General Partners, whose decision in this matter shall be conclusive.
10.4. PURCHASE TERMS. One-quarter of the purchase price shall be paid
in cash or by good personal check at the closing for the sale of such
Partnership Interest, and the balance shall be paid in twenty equal quarterly
principal payments beginning three months after the date of such closing.
Simple interest shall be added to each installment, computed against the
outstanding principal balance at the Applicable Federal Rate determined for
federal income tax purposes on the date of the closing. The buyer shall give
the Offering Partner a promissory note with cognovit provisions as evidence of
this debt, and the buyer may prepay all or any part of the principal balance of
the note at any time without penalty or premium.
10.5. THE CLOSING. The purchase of a Partnership Interest under this
section shall take place at a closing to be held not later than the tenth day
after the earlier of the date on which the Partners' purchase options all have
expired, or the earliest date on which the Partners in the aggregate exercise
their purchase options, if any, to buy all of the offered Partnership Interest.
The closing shall be held during normal business hours at the Partnership's
principal business office, or at any other place to which the parties agree.
10.5.1. If the Offering Partner is not present at the
closing, then the buyer shall deposit the purchase price by check,
note, or both, as this section requires, with any state or federally
chartered bank with which the Partnership has an account, as escrow
agent, to be paid to the Offering Partner as soon as is reasonably
practicable, less an appropriate fee to the Partnership (not to exceed
one thousand dollars) to cover additional administrative costs, and
the Partnership shall adjust its books to reflect the transfer of
these Partnership Interests.
-8-
Page 20 of 29
<PAGE> 21
10.6. CONDITION PRECEDENT TO ADMISSION OF SUBSTITUTE PARTNER. No
person to whom a Partnership Interest is properly transferred shall be
substituted as a new Partner in place of the Offering Partner until:
10.6.1. He or she agrees in writing to assume all of the
obligations and undertakings of the Offering Partner under this
Agreement;
10.6.2. He or she pays the Partnership a fee not to exceed
one thousand dollars to cover costs of preparing, executing and
recording all pertinent documents; and
10.6.3. He or she is elected a Partner by a unanimous vote of
the other Partners.
SECTION 11
AMENDMENTS
This Agreement shall be amended automatically to reflect any valid
Transfers of Partnership Interests. Otherwise, this Agreement shall be amended
only with the unanimous consent of the Partners.
SECTION 12
ADMISSION, EXPULSION, ETC. OF LIMITED PARTNERS
12.1. ADMISSION. A person may be admitted as an additional Limited
Partner by the decision of the General Partners, if the new Limited Partner
consents in writing to be bound by this Agreement.
12.2. EXPULSION. Any Limited Partner may be expelled from the
Partnership on the unanimous decision of the other Partners. However, the
Partnership must pay an expelled Partner an amount equal to the fair market
value of the expelled Partner's Partnership Interest. The fair market value of
an expelled Partner's Partnership Interest shall be determined by an
independent appraisal performed by a professional appraiser selected by the
General Partners whose decision in this matter shall be conclusive.
12.3. LIMITED PARTNER'S DEATH, ETC. A Limited Partner's death,
adjudication of insanity or incompetence shall not dissolve the Partnership.
Instead, the personal representative of the deceased Limited Partner's estate,
or the legal representative of an incompetent or insane Limited Partner, shall
have the same rights and be subject to the same limitations as the Limited
Partner that they represent.
-9-
Page 21 of 29
<PAGE> 22
SECTION 13
DISSOLUTION
13.1. CAUSES. The Partnership shall be dissolved upon the expiration of
its stated term, the written determination of all of the Partners, or the death
or withdrawal of the last of the General Partners.
13.2. CONTINUATION. If, within one hundred twenty (120) days from the
death or withdrawal of the last of the General Partners, the other Partners
elect to continue the Partnership, then:
13.2.1. The Partnership shall not be dissolved and it shall
continue under this Agreement; and
13.2.2. The Limited Partners shall elect a new General
Partner (and the Agreement and certificate shall be amended); and
13.2.3. The Partnership Interest of any deceased General
Partner shall be converted into a Limited Partnership Interest, and
the former General Partner's successors or assigns shall become
Limited Partners.
13.3. UPON DISSOLUTION. Upon its dissolution, the Partnership will
terminate and immediately commence to wind up its affairs. The Partners shall
continue to share in profits and losses during liquidation as they did before
dissolution. The Partnership's assets may be sold, if a price deemed reasonable
by the General Partners can be obtained. The proceeds from liquidation of
Partnership assets shall be applied as follows:
13.3.1. First, all of the Partnership's debts and liabilities
to persons other than Partners shall be paid and discharged in the
order of priority as provided by law,
13.3.2. Second, all debts and liabilities to Partners shall
be paid and discharged in the order of priority as provided by law,
13.3.3. Third, all remaining assets shall be distributed
proportionately among the Partners based on their respective positive
Capital Accounts.
13.4. GAIN OR LOSS. Any gain or loss on the disposition of Partnership
properties in the process of liquidation shall be credited or charged to the
Partners in proportion to their positive Capital Accounts; except that gain or
loss with respect to property contributed to the Partnership by a Partner shall
be shared among the Partners so as to take account of any variation between the
basis of the property so contributed and its fair market value at the time of
contribution, in accordance with any applicable U.S. Treasury regulations. Any
property distributed in kind in the liquidation shall be valued and treated as
though it were sold and the cash proceeds distributed. The difference between
the value of property distributed in kind and
-10-
Page 22 of 29
<PAGE> 23
its book value shall be treated as a gain or loss on the sale of property and
shall be credited or charged to the Partners accordingly.
13.5. PARTNERSHIP ASSETS SOLE SOURCE. The Partners shall look solely
to the Partnership Assets for the payment of any debts or liabilities owed by
the Partnership to the Partners and for the return of their capital
contributions and liquidation amounts. If the Partnership property remaining
after the payment or discharge of all of its debts and liabilities to persons
other than Partners is insufficient to return the Partners' capital
contributions, they shall have no recourse therefor against the Partnership or
any other Partners, except to the extent that such other Partners may have
outstanding debts or obligations owing to the Partnership.
SECTION 14
POWER OF ATTORNEY
14.1. GENERAL. Each Limited Partner names the General Partners as the
Limited Partner's attorney-in-fact, and gives the General Partners full power
and authority, in the place of the Limited Partner, to file and record any
written instruments that are necessary or appropriate to: (a) amend the
certificate of Partnership; (b) satisfy requirements of the laws of any state
in which the Partnership is doing business; (c) continue the Partnership, admit
additional or substituted Partners, dissolve or terminate the Partnership or
any interest in it; (d) obtain or settle any loan; and (e) transfer any
Partnership assets.
14.2. POWER WITH AN INTEREST. The power of attorney granted under this
Section 14.1: (a) is coupled with an interest; (b) is irrevocable, and survives
the Limited Partner's incompetency; (c) may be exercised by the General
Partners by a facsimile signature or by listing all of the Limited Partners
with the signatures of the General Partners as the attorney-in-fact for all of
them; and (d) survives the assignment of a Limited Partner's interest, and
empowers the General Partners to act to the same extent for any successor
Limited Partner.
SECTION 15
MISCELLANEOUS
15.1. NOTICES. Any notice under this Agreement shall be given and
served either by personal delivery to the party to whom it is directed, or by
registered or certified mail, postage and charges prepaid, and if it is sent to
a Partner, addressed with his or her address as it appears on the records of
the Partnership.
15.1.1. Any notice shall be deemed given when it is
personally delivered, or, if mailed, on the date it is postmarked by
the United States Postal Service, if it was addressed as required in
this section.
15.1.2. Any Partner may change his or her address for
purposes of this Agreement by written notice to the General Partners,
stating his or her new address. A
-11-
Page 23 of 29
<PAGE> 24
change of address shall be effective fifteen days after the notice is
received by the General Partners.
15.2. NON-WAIVER. Any party's failure to seek redress for violation of
or to insist upon the strict performance of any provision of this Agreement
shall not prevent a subsequent act, which would have originally constituted a
violation, from having the effect of an original violation.
15.3. SEVERABILITY. Every provision of this Agreement is intended to
be severable. If any term or provision hereof is invalid for any reason
whatsoever, its invalidity shall not affect the validity of the remainder of
the Agreement.
15.4. GOOD FAITH. The doing of any act or the failure to do any act by
a Partner or the Partnership, the effect of which causes any loss or damage to
the Partnership, shall not subject such Partner or the Partnership to any
liability, if done pursuant to advice of the Partnership's legal counsel or in
good faith to promote the Partnership's best interests.
15.5. GOVERNING LAW. This Agreement is to be construed according to
the laws of the state of Ohio.
15.6. CUMULATIVE RIGHTS. The rights and remedies provided in this
Agreement are cumulative and the use of any right or remedy does not limit a
party's right to use any or all other remedies. All rights and remedies in this
Agreement are in addition to any other legal rights the parties may have.
15.7. OTHER ACTIVITIES. Every Partner may engage in whatever
activities he or she chooses without any obligation to offer any interest in
such activities to any party hereof.
15.8. CONFIDENTIALITY. No Partner may, without the General Partners'
express written consent, divulge to others any information not already known to
the public pertinent to the services, clients, customers or operations of the
Partnership, whether before or after the Partnership's dissolution.
15.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all parties hereto had all signed the
same document. All counterparts shall be construed together and shall
constitute one agreement.
15.10. WAIVER OF PARTITION. Each Partner waives any right to maintain
any action for partition with respect to the Partnership's property or assets
during the Partnership's term.
15.11. BINDING TERMS. The terms of this Agreement are binding upon
and inure to the benefit of the parties and, to the extent permitted by this
Agreement, their heirs, executors, administrators, legal representatives,
successors and assigns.
-12-
Page 24 of 29
<PAGE> 25
15.12. PERSONAL PROPERTY. The interests of each Partner in the
Partnership are personal property.
15.13. GENDER AND NUMBER. Unless the context requires otherwise, the
use of a masculine pronoun includes the feminine and the neuter, and vice
versa, and the use of the singular includes the plural, and vice versa.
SECTION 16
DEFINITIONS
16.1. AGREEMENT. The "Agreement" is THE WEITZEL FAMILY LIMITED
PARTNERSHIP AGREEMENT, as amended from time to time. The Agreement shall
include all schedules, as they may be amended from time to time.
16.2. CERTIFICATE. The "Certificate" is the certificate of limited
partnership filed on behalf of THE WEITZEL FAMILY LIMITED PARTNERSHIP, as may
be amended from time to time.
16.3. Days. "Day" or "days" refers to a calendar day, including any
days which fall on legal holidays or weekends.
16.4. GENERAL PARTNERS. The "General Partner" and "General Partners"
shall refer to ROBERT A. WEITZEL, JEANETTE R. WEITZEL and any additional or
successor General Partners.
16.5. INCOME OFFSET. The "Income Offset" shall be synonymous with and
interpreted consistently with the "qualified income offset" defined in U.S.
Treasury regulations sec. 1.704-l(b)(2)(ii)(d), as amended.
16.6. LIMITED PARTNERS. The "Limited Partner" and "Limited Partners"
shall refer to ROBERT A. WEITZEL, JEANETTE R. WEITZEL, and any persons who
later become Limited Partners.
16.7. NET CASH FLOW. Net cash flow is the Partnership's total net
income, computed for federal income tax purposes, increased by any depreciation
or depletion deductions taken into account in computing taxable income and any
nontaxable income or receipts (other than capital contributions and the
proceeds of any Partnership borrowing); and reduced by any principal payments
on any Partnership debts, expenditures to acquire or improve Partnership
assets, any proceeds from the sale or exchange of Partnership assets, and such
reasonable reserves and additions thereto as the General Partners shall
determine to be advisable and in the best interests of the Partnership, having
due regard to the interests of the Limited Partners.
16.8. PARTNERS. The "Partners" or a "Partner," when used without the
words "General" or "Limited," shall refer to both the General and Limited
Partners.
-13-
Page 25 of 29
<PAGE> 26
16.9. PARTNERSHIP. The "Partnership" is the WEITZEL FAMILY LIMITED
PARTNERSHIP.
16.10. PARTNERSHIP CAPITAL. The "Partnership Capital" is the total of
the Partner's' capital contributions.
16.11. PARTNERSHIP INTERESTS. The "Partnership Interests" are the
relative interests of the individual Partners in the Partnership, as indicated
on a Schedule to the Agreement.
16.12. TAX SENSITIVE ADJUSTMENTS. The "Tax Sensitive Adjustments" are
all adjustments to a Partner's Capital Account that are not specifically
required under the terms of this Agreement, but that are required by U.S.
Treasury regulations sec. 1.704-1(b)(2)(iv) ("Maintenance of Capital
Accounts"), as amended. These adjustments shall be made annually, unless these
regulations require a more frequent adjustment.
16.13. TRANSFER. A "Transfer" of a partnership interest includes any
sale, pledging, encumbering, giving, bequeathing, or other transferring or
disposing of, or permitting to be sold, encumbered, attached, or otherwise
disposed of or have ownership changed in any manner, whether voluntarily,
involuntarily, or by operation of law. "Transfer" shall not include any
assignment of any Partnership Interest to another Partner or to any trust that
is entirely revocable by the assignor, but such trust shall be treated as the
agent of the assignor, and any subsequent disposition of such Partnership
Interest by such trust shall be deemed to have been made by the trust's settlor
or grantor.
AGREED on the date indicated above.
_______________________________ ____________________________________
Robert A. Weitzel Jeanette R. Weitzel
General and Limited Partner General and Limited Partner
-14-
Page 26 of 29
<PAGE> 27
<TABLE>
<CAPTION>
SCHEDULE A
NAME OF INITIAL
PARTNER LTD. OR GENERAL ADDRESS CONTRIBUTION % INTEREST
------- --------------- ------- ------------ ----------
<S> <C> <C>
Robert A. Weitzel General 7450 Main Street
Limited Gates Mills, Ohio 44040
Jeanette R. Weitzel General 7450 Main Street
Limited Gates Mills, Ohio 44040
</TABLE>
-15-
Page 27 of 29
<PAGE> 28
Exhibit B
AMENDMENT OF LIMITED PARTNERSHIP AGREEMENT
WHEREAS, on the 22nd day of November, 1997, ROBERT A. WEITZEL and
JEANETTE R. WEITZEL (the "Partners") entered into a Limited Partnership
Agreement; and
WHEREAS, the Limited Partnership Agreement is in full force and effect
as of the date hereof and ROBERT A. WEITZEL and JEANETTE R. WEITZEL constitute
all of the general and limited partners; and
WHEREAS, by the terms of the Limited Partnership Agreement such
Agreement may be amended from time to time; and
WHEREAS, the Partners now desire to so amend and modify the Limited
Partnership Agreement.
NOW, THEREFORE, the Weitzel Family Limited Partnership Agreement is
amended as follows:
I. The following shall be added as new subsection 7.7:
7.7 CONTROLLED CORPORATION. Notwithstanding the provisions of
subsection 7.1, if the Partnership owns Shares of Stock in a
controlled corporation, then any voting rights the
Partnership may have with respect to its ownership of such
Share of Stock shall be passed through to the Partners in
proportion to their Partnership Interest. The General
Partners shall promptly notify Partners of the existence of
any issue pertaining to a Controlled Corporation in which the
Partners would be entitled to exercise their Voting Rights.
If any Partner fails to timely direct the General Partners as
the manner in which the Partner's Voting Rights are to be
exercised, then the General Partners may exercise that
Partner's Voting Rights.
2. The Following definitions are to be added to Section 16.1 and
new subsections 16.14 and 16.15:
16.14 CONTROLLED CORPORATION. "Controlled Corporation" shall
mean any corporation in which the General Partners, alone or
with others, own sufficient Shares of Stock or possesses
sufficient Voting Rights so as to be deemed a controlled
corporation as defined in Section 2036 of the Internal
Revenue code of 1986, as amended.
Page 28 of 29
<PAGE> 29
16.15 SHARES OF STOCK. "Shares of Stock" shall mean shares of
common or preferred stock, options, warrants, other equity
interest or proxies or rights under a voting trust.
IN WITNESS WHEREOF, ROBERT A. WEITZEL AND JEANETTE R. WEITZEL have
executed this Amendment of Limited Partnership Agreement this ______ day of
____________________, 1998.
___________________________________
ROBERT A. WEITZEL
General and Limited Partner
____________________________________
JEANETTE R. WEITZEL
General and Limited Partner
-2-
Page 29 of 29
