<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
CONTINENTAL MATERIALS CORPORATION
- --------------------------------------------------------------------------------
(Name of issuer)
COMMON STOCK, $.50 PAR VALUE & $.10 PAR VALUE
- --------------------------------------------------------------------------------
(Title of class of securities)
211615-20-8 ($.50 Par Value) & 211615-10-9 ($.10 Par Value)
- --------------------------------------------------------------------------------
(CUSIP number)
James G. Gidwitz
Continental Materials Corporation
225 W. Wacker Drive
Suite 1800
Chicago, IL 60606
(312) 541-7218
- --------------------------------------------------------------------------------
(Name, address and telephone number of person authorized to receive notices and
communications)
February 14, 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 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement / /. (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.
(Continued on following pages)
<PAGE>
211615-20-8
CUSIP No. 211615-10-9 13D Page 2 of 8 Pages
--------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CMC Partnership
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)/ /
(b)/ /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
363,563
SHARES ------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY ------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
363,563
REPORTING ------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
363,563
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
33%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
<PAGE>
211615-20-8
CUSIP No. 211615-10-9 13D Page 3 of 8 Pages
--------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
L.O.M. Holdings, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)/ /
(b)/ /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
23,324
SHARES ------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY ------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
23,324
REPORTING ------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
23,324
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
<PAGE>
211615-20-8
CUSIP No. 211615-10-9 13D Page 4 of 8 Pages
--------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
James G. Gidwitz
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)/ /
(b)/ /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES ------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
386,887
OWNED BY ------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
0
REPORTING ------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
386,887
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
386,887
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
211615-20-8
CUSIP No. 211615-10-9 13D Page 5 of 8 Pages
--------------
This Amendment No. 1 amends and supplements the Schedule 13D (the
"Schedule 13D") filed by the reporting persons herein, with the Securities and
Exchange Commission on November 19, 1996 relating to the shares of common stock,
$.50 par value and $.10 par value (the "Company Common Stock") of Continental
Materials Corporation, a Delaware corporation (the "Company"). Capitalized
terms used herein without definition shall have the meaning ascribed to such
terms in the Schedule 13D. Only those items reported herein are amended.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
N/A
Item 4. PURPOSE OF TRANSACTION
On February 14, 1997 James G. Gidwitz informed the Board of Directors
of the Company that he and other members of the Gidwitz family (the "Family")
have terminated their offer to acquire the Company for $21 a share. Mr.
Gidwitz also informed the Board of Directors that the Family has not changed its
previously announced position against the sale of the Company or its assets to
any other party. Mr. Gidwitz stated that the offer was terminated because the
Family concluded that under the current circumstances, they will not be able to
reach agreement on an acquisition price with the Special Committee of the Board
of Directors appointed to respond to the offer.
Each reporting person herein intends to review its investment in the
Company on a continuing basis and, depending on various factors including,
without limitation, the Company's business affairs and financial position, the
price levels of the Company Common Stock, conditions in the securities markets
and general economic and industry conditions, may in the future take such
actions with respect to its investment in the Company as it deems appropriate
including, without limitation, purchasing additional shares of the Company
Common Stock or selling some or all of its shares.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit Number Description
- -------------- -----------
1 Power of Attorney/Joint Filing Agreement dated as of November 12,
1996 by and among James G. Gidwitz and every other signatory
thereto relating to the joint filing of Schedule 13D and all
amendments thereto. (Previously filed with the Schedule 13D on
November 19, 1996 and herein incorporated by reference.)
2 Letter dated February 14, 1997 from James G. Gidwitz to the Board
of Directors of the Company.
3 Restatement of Agreement of CMC Partnership dated December 1,
1993.
<PAGE>
211615-20-8
CUSIP No. 211615-10-9 13D Page 6 of 8 Pages
--------------
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment No. 1 is true, complete
and correct.
Date: February 18, 1997
CMC PARTNERSHIP
By: /s/ James G. Gidwitz
-------------------------------
James G. Gidwitz
ATTORNEY-IN-FACT
<PAGE>
211615-20-8
CUSIP No. 211615-10-9 13D Page 7 of 8 Pages
--------------
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment No. 1 is true, complete
and correct.
Date: February 18, 1997
L.O.M. HOLDINGS, INC.
By: /s/ James G. Gidwitz
-------------------------------
James G. Gidwitz
ATTORNEY-IN-FACT
<PAGE>
211615-20-8
CUSIP No. 211615-10-9 13D Page 8 of 8 Pages
--------------
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment No. 1 is true, complete
and correct.
Date: February 18, 1997
JAMES G. GIDWITZ
By: /s/ James G. Gidwitz
-------------------------------
James G. Gidwitz
<PAGE>
PRIVILEGED AND CONFIDENTIAL
Board of Directors
Continental Materials Corporation
225 West Wacker Drive
Suite 1800
Chicago, Illinois 60606
February 14, 1997
Ladies and Gentlemen of the Board:
As you know, on November 13, 1996 I proposed to you, on behalf of myself
and other various members of my extended family (the "Family"), a "going
private" transaction involving Continental Materials Corporation (the
"Company").
Yesterday, I received a copy of the Report of the Special Committee of the
Board of Directors, dated February 12, 1997, relating to our proposed
transaction. In light of the report, and following discussions with the
Chairman of the Special Committee, the Family has decided to terminate its
offer. We have concluded that under the current circumstances, the Family will
not be able to reach agreement on an acquisition price with the Special
Committee.
We as a Family have not changed our previously announced position against
the sale of the Company or its assets to any other party.
In connection with the above decision, we believe it would be appropriate
for the Company to issue a press release. A draft is attached as Exhibit A.
Sincerely,
/s/ James G. Gidwitz
James G. Gidwitz
<PAGE>
RESTATEMENT OF
AGREEMENT ESTABLISHING
CMC PARTNERSHIP
THIS RESTATEMENT OF AGREEMENT OF PARTNERSHIP made and entered into as of
the 1st day of December, 1993, by and among each of the separate parties
subscribing hereto (which parties are sometimes hereinafter collectively
referred to as "Partners" or individually referred to as a "Partner").
R E C I T A L S:
WHEREAS, an Agreement of Partnership (the "Original Agreement of
Partnership") was previously made and entered into by certain of the Partners
forming CMC Partnership (the "Partnership");
WHEREAS, certain Partners were subsequently admitted to the Partnership;
WHEREAS, certain additional Partners now desire to be admitted to the
Partnership;
WHEREAS, the Partners desire to restate the Original Agreement of
Partnership in its entirety;
<PAGE>
WHEREAS, the Partners have contributed or will contribute to the
Partnership Common Stock (the "Stock") of Continental Materials Corporation, a
Delaware corporation ("CMC");
WHEREAS, certain Partners initially formed the Partnership because they
determined that it was in their mutual best interests to consolidate the
decision-making with respect to the Stock;
WHEREAS, the Partners have determined that it is in their mutual best
interests to continue the Partnership to maintain control of the transfer of the
Stock for the benefit of the Partners;
WHEREAS, the Partners desire to continue the Partnership in the form of a
general partnership pursuant to the Uniform Partnership Act of the State of
Illinois for the purposes set forth above and to conduct business as hereinafter
set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Partners agree as follows:
2
<PAGE>
A G R E E M E N T:
1. DEFINITIONS.
1.1 ADJUSTED CAPITAL ACCOUNT DEFICIT. "Adjusted Capital Account Deficit"
means, with respect to any Partner, the deficit balance, if any, in such
Partner's Capital Account as of the end of the relevant fiscal year, after
giving effect to the following adjustments:
(a) Credit to such Capital Account any amounts which such Partner is
obligated to restore pursuant to any provision of this Agreement or is
deemed to be obligated to restore pursuant to the penultimate sentences of
Sections 1.704-1(b)(4)(iv)(f) and 1.704-1T(b)(4)(iv)(h)(5) of the
Regulations; and
(b) Debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith.
1.2 AGREEMENT. "Agreement" means this Restatement of Agreement
Establishing CMC Partnership as amended from time to time.
1.3 APPLICABLE FEDERAL RATE. "Applicable Federal Rate" means the
appropriate rate of interest for similar obligations, then in
3
<PAGE>
effect, as announced by the United States Department of the Treasury pursuant to
Section 1274(d) of the Code.
1.4 CAPITAL ACCOUNT. "Capital Account" means, with respect to any
Partner, the Capital Account maintained for such Partner in accordance with the
following provisions:
(a) To each Partner's Capital Account there shall be credited the
amount of cash and the Gross Asset Value of any property contributed by
such Partner, such Partner's distributive share of Profits and any items in
the nature of income or gain which are specially allocated to such Partner
pursuant to Section 6.2 hereof, and the amount of any Partnership
liabilities assumed by such Partner or which are secured by any property
distributed to such Partner.
(b) To each Partner's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any property distributed to
such Partner pursuant to any provision of this Agreement, such Partner's
distributive share of Losses and any items in the nature of expenses or
losses which are specially allocated to such Partner pursuant to Section
6.2 hereof, and the amount of any liabilities of such Partner assumed by
the Partnership or which are secured by any property contributed by such
Partner to the Partnership.
(c) In the event all or a portion of an interest in the Partnership
is transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital
4
<PAGE>
Account of the transferor to the extent it relates to the transferred
interest.
(d) In determining the amount of any liability for purposes of
Section 1.4(a) and 1.4(b) hereof, there shall be taken into account Section
752(c) of the Code and any other applicable provisions of the Code and
Regulations.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Section
1.704-1(b) of the Regulations, and shall be interpreted and applied in a manner
consistent with such Regulations, it being the intention of the Partners to
maintain the Partners' Capital Accounts in accordance therewith.
1.5 CLASS A PARTNERS. "Class A Partners" means those parties listed as
Class A Partners on Exhibit A attached hereto and hereby incorporated by this
reference, as said exhibit may be revised from time to time by the Managing
Partners.
1.6 CLASS B PARTNERS. "Class B Partners" means those parties listed as
Class B Partners on Exhibit A attached hereto, as said exhibit may be revised
from time to time by the Managing Partners.
1.7 CODE. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
1.8 FIRST OPTION. "First Option" means the rights and obligations
contemplated in Section 9.5 hereof.
1.9 GROSS ASSET VALUE. "Gross Asset Value" means, with respect to any
asset, the asset's adjusted basis for federal income tax purposes, except as
follows:
5
<PAGE>
(a) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such
asset, as determined by the contributing Partner and the Partnership;
(b) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as determined
by the Managing Partners, as of the following times: (1) the acquisition
of an additional interest in the Partnership by any new or existing partner
in exchange for more than a DE MINIMIS capital contribution; (2) the
distribution by the Partnership to a Partner of more than a DE MINIMIS
amount of Partnership property as consideration for an interest in the
Partnership if the Managing Partners reasonably determine that such
adjustment is necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership; and (3) the liquidation of
the Partnership within the meaning of Section 1.704-1(b)(2)(ii)(g) of the
Regulations;
(c) The Gross Asset Value of any Partnership asset distributed to any
Partner shall be the gross fair market value of such asset on the date of
distribution; and
(d) The Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such
assets pursuant to either Section 734(b) or Section 743(b) of the Code, but
only to the extent that such adjustments are taken into account in
determining
6
<PAGE>
Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the
Regulations; provided, however, that Gross Asset Values shall not be
adjusted pursuant to this Section 1.9(d) to the extent the Managing
Partners determine that an adjustment pursuant to Section 1.9(b) above is
necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this Section 1.9(d).
1.10 NET CASH FLOW. "Net Cash Flow" for any fiscal year means the excess,
if any, of:
(a) The sum of (i) all cash receipts from all sources for such period
but excluding Sale Proceeds as defined herein, and (ii) all cash reserves
at the beginning of such period; over
(b) The sum of (i) all cash expenses paid during such period, (ii)
the amount of all payments of principal on account of any indebtedness of
the Partnership or amounts due (including interest) on such indebtedness
during such period (including repayment of advances made by the Partners
pursuant to Section 7.8 hereof), (iii) cash payments made for acquisitions
and other capitalized expenditures during such period, and (iv) such cash
reserves as of the last day of such period as the Managing Partners in
their sole discretion deem necessary to provide for the continuing conduct
of the business of the Partnership and reasonable reserves for maturing
obligations.
7
<PAGE>
1.11 OFFER PRICE. "Offer Price" means the aggregate cash price in a
Written Offer to purchase the interest (or any part thereof) in the Partnership
of any Transferor Partner, without regard to any stated interest and discounted
by the amount of (a) the total unstated interest, if any, calculated in the
manner provided in Section 483(b) of the Code without regard to Section 483(d)
of the Code or (b) the imputed interest calculated in the manner provided in
Section 1274 or Section 1274A of the Code, as the case may be.
1.12 PARTNERSHIP PERCENTAGES. "Partnership Percentages" means each
Partner's proportionate ownership interest in the Partnership, as reflected on
Exhibit A attached hereto and as such interest may be adjusted from time to time
by the admission or withdrawal of a Partner, upon the acquisition of an
additional interest by a Partner or a distribution to a Partner, or otherwise.
1.13 PARTNERSHIP VALUE. "Partnership Value" means an amount equal to
eighty percent (80%) of the fair market value of the Stock owned by the
Partnership, plus any cash on hand and the fair market value of any other assets
of the Partnership, less the liabilities of the Partnership, all as determined
by the Managing Partners, calculated as of the date notice of intent to Transfer
is given under Section 9.4 hereof.
1.14 PERMITTED TRANSFEREE. "Permitted Transferee" has the meaning
ascribed to that term in Exhibit B attached hereto and hereby incorporated by
this reference.
8
<PAGE>
1.15 PROFITS AND LOSSES. "Profits" and "Losses" means, for each fiscal
year or other period, an amount equal to the Partnership's taxable income or
loss for such year or period, determined in accordance with Section 703(a) of
the Code (for this purpose, all items of income, gain, loss, or deduction
required to be stated separately pursuant to Section 703(a)(1) of the Code shall
be included in taxable income or loss), with the following adjustments:
(a) Any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Profits or Losses
pursuant to this Section 1.15 shall be added to such taxable income or
loss;
(b) Any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) expenditures
pursuant to Section 1.704-1(b)(2)(iv)(1) of the Regulations, and not
otherwise taken into account in computing Profits or Losses pursuant to
this Section 1.15 shall be subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to Section 1.9(b) or Section 1.9(d) hereof, the amount of
such adjustment shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing Profits and Losses;
(d) Gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for
9
<PAGE>
federal income tax purposes shall be computed by reference to the Gross
Asset Value of the property disposed of, notwithstanding that the adjusted
tax basis of such property differs from its Gross Asset Value; and
(e) If the Gross Asset Value of an asset differs from its adjusted
basis for federal income tax purposes at the beginning of any period, in
lieu of the depreciation, amortization, and other cost recovery deductions
taken into account in computing taxable income or loss, there shall be
taken into account depreciation, amortization or other cost recovery which
bears the same ratio to such beginning Gross Asset Value as the federal
income tax depreciation, amortization or cost recovery for such period
bears to the beginning adjusted tax basis.
1.16 REGULATIONS. "Regulations" means the regulations issued by the
United States Department of Treasury with respect to the Code, as amended from
time to time.
1.17 SALE PROCEEDS. "Sale Proceeds" means the net proceeds received by
the Partnership on account of any sale of all or any portion of the
Partnership's property, including deferred proceeds and the interest thereon, to
the extent not applied or to be applied to the reduction of Partnership
indebtedness (including advances made by the Partners pursuant to Section 7.8
hereof) or to be retained by the Partnership in the sole discretion of the
Managing Partners, or for any other purpose permitted under this Agreement.
10
<PAGE>
1.18 SECOND OPTION. "Second Option" means the rights and obligations
contemplated in Section 9.6 hereof.
1.19 TRANSFER. "Transfer" means any conveyance of an interest in the
Partnership, including but not limited to sale, assignment, gift, bequest,
appointment, pledge, hypothecation or grant of a security interest, or a
withdrawal of a Partner from the Partnership.
1.20 TRANSFEROR PARTNER. "Transferor Partner" means any Partner who gives
notice of intent to Transfer pursuant to Section 9.4 hereof.
1.21 TRANSFER PRICE. "Transfer Price" means an amount equal to the
Partnership Value multiplied by the Transferor Partner's Partnership Percentage,
calculated as of the date notice of intent to Transfer is given under Section
9.4 hereof.
1.22 WRITTEN OFFER. "Written Offer" means a bona fide written offer, made
by a Permitted Transferee, to purchase all or a portion of a Transferor
Partner's interest in the Partnership, setting forth all material terms and
conditions of such offer.
2. FORMATION, NAME AND OFFICE.
2.1 FORMATION AND NAME. The Partners hereby form a general partnership
pursuant to the Uniform Partnership Act of the State of Illinois. The name of
the partnership is "CMC Partnership" or such other name as the Managing Partners
may, from time to time, designate. Concurrently with the execution of this
Agreement, the Partners shall execute such fictitious name certificate or other
11
<PAGE>
similar certificate and immediately thereafter cause same to be filed or
recorded in the appropriate office of Cook County, Illinois and published, all
as required by law.
2.2 PLACE OF BUSINESS. The principal place of business of the Partnership
shall be located at 325 North Wells Street, Chicago, Illinois or such other
place or places, in the State of Illinois, as the Managing Partners may
hereafter determine.
3. PURPOSE AND PROPERTY.
3.1 PURPOSE. The purpose of the Partnership shall be the business of
making, protecting, enhancing and otherwise dealing with investments of all
types, such investments to include, but not be limited to, the buying and
selling of securities of all types (including, but not limited to, common and
preferred stock, put and call options, convertible bonds, bonds and debentures);
provided, however, that nothing herein contained shall allow the Partnership to
make any investments, or do any other things, which shall not be permitted by
the Uniform Partnership Act of the State of Illinois.
3.2 STOCK. Title to any Stock contributed to or acquired by the
Partnership shall be held in the name of the Partnership, and each certificate
representing shares of such Stock will carry the following legend:
"The stock represented by this certificate is subject to the
provisions of the Restatement of Agreement Establishing CMC Partnership
dated as of the ___ day of _______, 1992 among the partners of the
partnership, a copy of which agreement may
12
<PAGE>
be inspected at the principal office of the partnership. Such agreement
restricts the transfer, including hypothecation, of this stock. The
provisions of such agreement are incorporated by this reference in this
Certificate. The stock represented by this certificate may only be
transferred by agreement of a majority of the managing partners of the
partnership."
4. TERM.
The Partnership shall continue until the first to occur of:
(a) December 31, 2025;
(b) The agreement of all of the Partners; or
(c) Dissolution by operation of law;
provided, however, that in any such event, the then remaining Partners may,
within sixty (60) days of the date such event occurs, unanimously vote to
continue the Partnership business, in which case the Partnership shall continue
thereafter as agreed to by the Partners.
5. PARTNERSHIP CAPITAL - INITIAL CAPITAL ACCOUNTS.
5.1 CONTRIBUTION OF THE PARTNERS. Each of the Partners (or such Partner's
predecessor in interest) shall contribute to the capital of the Partnership the
respective number of shares of Stock set forth opposite such Partner's name in
Exhibit A attached hereto. The Partners, in exchange for their contributions to
the capital of the Partnership, shall receive an interest in the Partnership
equal to the Partnership Percentage set forth opposite
13
<PAGE>
their names in Exhibit A. Anything in this Agreement to the contrary
notwithstanding, no person shall be deemed to be a partner of the Partnership
unless and until such person shall have made such capital contribution.
5.2 ADDITIONAL CAPITAL CONTRIBUTIONS OF THE PARTNERS. Throughout the term
of this Agreement, the Partners shall collectively contribute, in cash, to the
capital of the Partnership, in accordance with their respective Partnership
Percentages, any additional funds required to meet Partnership cash requirements
as determined by the Managing Partners.
5.3 ADDITIONAL FUNDS. With the consent of the Managing Partners, a
Partner may advance to the Partnership, pursuant to Section 7.8 hereof, any
additional funds required to meet Partnership cash requirements.
5.4 INTEREST. No interest shall be paid or accrued on the Capital Account
of any Partner.
5.5 WITHDRAWAL OF CAPITAL CONTRIBUTIONS. No Partner may withdraw any
capital from the Partnership except as expressly provided herein.
6. ALLOCATION OF PROFITS AND LOSSES, AND DISTRIBUTION OF NET CASH FLOW AND
SALE PROCEEDS.
6.1 ALLOCATION OF PROFITS AND LOSSES. After giving effect to the
allocations set forth in Section 6.2 and Section 6.3 hereof, Profits and Losses
for any fiscal year of the Partnership shall be
14
<PAGE>
allocated among the Partners in proportion to their respective Partnership
Percentages.
6.2 SPECIAL ALLOCATIONS.
(a) In the event any Partner unexpectedly receives any adjustments,
allocations, or distributions described in Section 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6) of the Regulations,
items of Partnership income and gain shall be specially allocated to each
such Partner in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, the Adjusted Capital Account Deficit of such
Partner as quickly as possible, provided that an allocation pursuant to
this Section 6.2(a) shall be made only if and to the extent that such
Partner would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Section 6 have been tentatively made as if
this Section 6.2(a) were not in the Agreement.
(b) In the event any Partner has a deficit Capital Account at the end
of any Partnership fiscal year which is in excess of the sum of (i) the
amount such Partner is obligated to restore pursuant to any provision of
this Agreement and (ii) the amount such Partner is deemed to be obligated
to restore pursuant to the penultimate sentences of Sections
1.704-1T(b)(4)(iv)(f) and 1.704-1T(b)(4)(iv)(h)(5) of the Regulations, each
such Partner shall be specially allocated items of Partnership income and
gain in the amount of such
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excess as quickly as possible, provided that an allocation pursuant to this
Section 6.2(b) shall be made only if and to the extent that such Partner
would have a deficit Capital Account in excess of such sum after all other
allocations provided for in this Section 6 have been made as if Section
6.2(a) hereof and this Section 6.2(b) were not in the Agreement.
(c) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Section 734(b) or Section 743(b) of the Code
is required, pursuant to Section 1.704-1(b)(2)(iv)(m) of the Regulations,
to be taken into account in determining Capital Accounts, the amount of
such adjustment to the Capital Accounts shall be treated as an item of gain
(if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which
the Capital Accounts are required to be adjusted pursuant to such Section
of the Regulations.
6.3 TAX ALLOCATIONS: CODE SECTION 704(C). In accordance with Section
704(c) of the Code and the Regulations thereunder, income, gain, loss and
deduction with respect to any property contributed to the capital of the
Partnership shall, solely for tax purposes, be allocated among the Partners so
as to take account of any variation between the adjusted basis of such property
to the
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Partnership for federal income tax purposes and its initial Gross Asset Value.
In the event the Gross Asset Value of any Partnership asset is adjusted,
subsequent allocations of income, gain, loss and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in the same
manner as under Section 704(c) of the Code and the Regulations thereunder.
Any elections or other decisions relating to such allocations shall be made
by the Managing Partners in any manner that reasonably reflects the purpose and
intention of this Agreement. Allocations pursuant to this Section 6.3 are
solely for purposes of federal, state and local taxes and shall not affect, or
in any way be taken into account in computing, any Partner's Capital Account or
share of distributions pursuant to any provision of this Agreement.
6.4 INTERVALS OF DETERMINATION OF PROFITS AND LOSSES. For purposes of
determining the Profits, Losses, or any other items allocable to any period,
Profits, Losses, and any such other items shall be determined on a monthly basis
or any other basis, as determined by the Managing Partners using any permissible
method under Section 706 of the Code and the Regulations thereunder.
6.5 DISTRIBUTION OF NET CASH FLOW. The Net Cash Flow of the Partnership
shall be distributed to the Partners, from time to time as determined by the
Managing Partners in their sole discretion, in proportion to the Partners'
respective Partnership Percentages.
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6.6 DISTRIBUTION OF SALE PROCEEDS. Sale Proceeds shall be distributed
among the Partners as soon as is practicable in proportion to the Partners'
respective Partnership Percentages.
7. MANAGEMENT.
7.1 GENERAL MANAGEMENT. Except as otherwise specifically provided herein,
decisions concerning the management and control of the business affairs of the
Partnership and the investment of the property of the Partnership shall be made
by the majority decision of the Managing Partners (hereinafter described). The
Managing Partners shall each be entitled to one vote on any issue requiring
their decision. The Partnership shall reimburse any Managing Partner for all
direct and reasonable out-of-pocket expenses incurred on behalf of the
Partnership. Except for acts of willful misconduct or gross negligence, the
Partnership shall reimburse, indemnify and hold harmless any Managing Partner
for and from any expense or liability incurred by him for and on behalf of the
Partnership or its property while acting in good faith.
The Managing Partners shall at all times be five in number and shall
initially be Joseph L. Gidwitz, Gerald Gidwitz, Ronald J. Gidwitz, James G.
Gidwitz and Ralph W. Gidwitz (sometimes hereinafter each individually referred
to as a "Managing Partner"). Any vacancy among the Managing Partners, by
disability, death, withdrawal or resignation, shall be filled by a Partner, as
set forth herein. In the event of a vacancy by the disability, death,
withdrawal or resignation of Gerald Gidwitz, Ronald J. Gidwitz
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or James G. Gidwitz, or any successor thereto, the following, one at a time and
in the order named, shall be successor Managing Partner: (a) Peter E. Gidwitz;
(b) Nancy Gidwitz; (c) Thomas R. Gidwitz; and (d) a Class A Partner designated
by the majority decision of all of the Class A Partners. In the event of a
vacancy by the disability, death, withdrawal or resignation of Joseph L. Gidwitz
or Ralph W. Gidwitz, or any successor thereto, the following, one at a time, and
in the order named, shall be successor Managing Partner: (a) Betsy R. Gidwitz;
and (b) a Class B Partner designated by the majority decision of all of the
Class B Partners.
7.2 POWERS OF THE MANAGING PARTNERS. Subject to such limitations as may
be imposed pursuant to the terms of this Agreement or by operation of law, the
Managing Partners are hereby authorized and empowered to carry out and implement
any and all of the purposes of the Partnership. In that connection, the powers
of the Managing Partners shall include, but not be limited to, the following:
(a) To employ, on behalf of the Partnership, such persons, firms or
corporations as they, in their sole judgment, shall deem advisable for the
operation and management of the business of the Partnership, including such
brokers, investment advisors, accountants and attorneys, on such terms and
for such compensation as they, in their sole judgment, shall determine.
The fact that a Partner or a member of his family (or the trustee or a
beneficiary of a trust which is a Partner) is directly or indirectly
interested
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in or connected with any person, firm or corporation employed by the
Partnership to render or perform a service or from which or whom the
Partnership may buy merchandise or other property shall not preclude the
Partnership from employing such person, firm or corporation or from
otherwise dealing with him or it, and neither the Partnership nor the
Partners thereof shall have any rights in or to any income or profits
derived therefrom;
(b) To authorize or approve all actions with respect to distributions
by the Partnership, dispositions of the assets of the Partnership,
borrowing of funds, contracts, guarantees, notes, and other instruments on
behalf of the Partnership; provided, however, that the Managing Partners
may not enter into an agreement involving a sale or exchange of more than
50 percent of the Partnership's property (other than financing arrangements
requiring that Partnership property be pledged or otherwise used as
security) without first obtaining the written consent of Partners owning at
least 51 percent of the Partnership Percentages;
(c) To acquire and convey corporate stock and partnership interests,
including, but not limited to, partnership interests pursuant to Section 9
hereof;
(d) To open, maintain, and close bank accounts and to draw checks and
other orders for the payment of money as provided in Section 8.3 hereof;
and
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(e) To take such other actions and to incur such expenses on behalf
of the Partnership as may be necessary or advisable in connection with the
conduct of the affairs of the Partnership.
7.3 DUTIES OF MANAGING PARTNERS. The Managing Partners shall manage, or
cause to be managed, the affairs of the Partnership in a prudent and
businesslike manner and shall devote such part of their time to the Partnership
affairs as is reasonably necessary for the conduct of such affairs; provided,
however, that it is expressly understood and agreed that neither any Managing
Partner nor any other Partner shall be required to devote his entire time or
attention to the business of the Partnership, and no Partner shall be restricted
in any manner from participating in other businesses or activities. Without
limiting the generality of the foregoing, the Managing Partners' duties shall
include the following:
(a) To render periodic progress reports to the Partners with respect
to the operations of the Partnership;
(b) To furnish financial statements on an annual basis, which, upon
the request of any Partner, shall be prepared by a recognized firm of
independent public accountants;
(c) To deposit all funds of the Partnership in one or more separate
bank accounts with such banks or trust companies as provided in Section 8.3
hereof;
(d) To maintain complete and accurate records as provided in Section
8.1 hereof;
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(e) To prepare and distribute to all Partners all reasonable tax
reporting information as provided in Section 8.2 hereof; and
(f) To cause to be filed such certificates and to do such other acts
as may be required by law to qualify and maintain the Partnership as a
partnership.
7.4 RELIANCE ON ACT OF MANAGING PARTNERS. Third parties dealing with the
Partnership shall be entitled to rely conclusively upon the power and authority
of the Managing Partners. Any business entity called upon to transfer any
property to or from the name or account of the Partnership shall be entitled to
rely on instructions or assignments signed or purporting to be signed by the
Managing Partners, without inquiry as to the authority of the person signing or
purporting to sign such instructions or assignments and without inquiry as to
the validity of any transfer to or from the name of the Partnership.
7.5 OUTSIDE ACTIVITIES. It is expressly agreed that the Partners, or any
of them, may engage in other business ventures of every nature and description,
independently or with others, whether or not it is in competition with the
Partnership, and neither the Partnership nor the Partners thereof shall have any
rights in and to any independent venture or activity or the income or profits
derived therefrom.
7.6 ACTIONS REQUIRING CONCURRENCE OF THE PARTNERS. Notwithstanding
anything in this Agreement to the contrary, no Partner or
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Managing Partner, without the prior written consent of all of the other
Partners, shall have the authority to:
(a) Expend or use Partnership funds or Partnership property except
upon the account and for the benefit of the Partnership;
(b) Confess a judgment against the Partnership;
(c) Possess Partnership property, or assign rights in specific
Partnership property for other than a Partnership purpose; or
(d) Transfer Stock held by the Partnership to any person other than a
Permitted Transferee of the Partnership, or acquire Stock from a person as
to which the Partnership is not a Permitted Transferee, and any such
attempted transfer or acquisition contrary to this clause (d) shall be null
and void.
7.7 COMPENSATION OF THE PARTNERS. Notwithstanding anything herein
contained, the Partnership shall have authority to pay to any Partner a
reasonable annual salary for his or its services to the Partnership. It is
understood that the salary paid to any Partner under the provisions of this
Section 7.7 shall be considered as an operating expense of the Partnership and
shall be deducted as an expense item in determining Profits or Losses of the
Partnership.
7.8 ADVANCES. With the consent of the Managing Partners, the Partners may
loan or advance funds to the Partnership. Such loans or advances shall bear
interest at the prime rate of interest
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charged, from time to time, by The First National Bank of Chicago and shall be
payable out of the first available funds of the Partnership prior to any
distributions to the Partners.
8. ACCOUNTING, TAX PROVISIONS AND BANKING.
8.1 BOOKS AND RECORDS. The Partnership shall maintain, or cause to be
maintained, full and accurate books and records in accordance with generally
accepted accounting principles. The Partnership shall maintain its books and
records and file its tax returns utilizing a calendar year. The Partnership's
books and records shall be kept at the principal office of the Partnership and
each Partner shall, at reasonable times, have free access thereto. The Managing
Partners shall determine the methods of accounting to be employed for purposes
of the Partnership's books of account and federal income tax reporting purposes.
8.2 TAX RETURNS. The Partnership shall prepare, or cause to be prepared,
all required returns of income. All decisions and elections as are necessary or
available with respect to the preparation of such returns shall be made by the
Managing Partners. As soon as is reasonably practical after the close of each
fiscal year, the Partnership shall furnish each Partner with a statement (which
may be in the form of a duplicate Schedule K-1 of the Form 1065 required to be
filed by the Partnership with the Internal Revenue Service, or such other
comparable form at any time hereafter required to be so filed) showing the
contributions, withdrawals, income, gains, deductions, losses and credits
charged or
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credited to such Partner and so allocated to him for such fiscal year.
James G. Gidwitz is hereby appointed the tax matters partner pursuant to
Sections 6221-6231 of the Code. In the event that James G. Gidwitz is unable or
unwilling to so serve, the Managing Partners shall designate a new tax matters
partner for the Partnership.
8.3 BANKING. All funds of the Partnership shall be deposited in the
Partnership's name in accounts at such bank or banks as shall be determined by
the Managing Partners who shall have the right to designate their agents to
execute checks for withdrawals and make, deliver, accept and endorse commercial
paper in connection with the Partnership business.
9. TRANSFER OF PARTNERSHIP INTERESTS AND LIMITATIONS THEREON.
9.1 EXCLUSIVE PROCEDURE. Except as otherwise provided herein, each
Partner agrees that he will not Transfer all or any part of his interest in the
Partnership other than in strict compliance with this Agreement. In no event
shall a Partner Transfer his interest in the Partnership to a transferee who is
not a Permitted Transferee of such Partner. This Agreement states the exclusive
procedure for Transfer of an interest in the Partnership. Any attempted
Transfer of an interest in the Partnership other than in strict compliance with
this Agreement shall be null and void.
9.2 PERMITTED TRANSFER. Subject to the First Option and the Second
Option, any Partner transferring an interest in the
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Partnership to a Permitted Transferee of such Partner shall give written notice
of any such Transfer to the Managing Partners, who shall thereupon revise the
Partnership Percentages to reflect the Transfer. With the consent of the
Managing Partners, the transferee (if he is not already a Partner) may be
admitted as an additional Partner in the Partnership.
9.3 TRANSFER OF TITLE. All Transfers of an interest in the Partnership to
any Partner pursuant to the First Option, and to the Partnership pursuant to the
Second Option, shall be transferred and delivered to such Partners or the
Partnership, as the case may be, free and clear of all liens, claims and
encumbrances of every kind and description.
9.4 NOTICE OF INTENT TO TRANSFER. Any Transferor Partner who desires to
Transfer all or any portion of his interest in the Partnership shall give notice
of his intent to Transfer, in writing, to the Managing Partners. In the event
that the Transferor Partner has received a Written Offer for the purchase of his
interest in the Partnership, said notice shall include a copy of such Written
Offer and shall set forth the Offer Price. The Managing Partners shall promptly
notify the other Partners of the Transferor Partner's intent to Transfer, which
notice shall include a copy of any Written Offer.
9.5 FIRST OPTION. The Partners, other than the Transferor Partner, shall
have an option (but not the obligation) to purchase all or any portion of the
interest in the Partnership proposed to be sold by the Transferor Partner at the
Offer Price or, if the
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Transferor Partner did not submit a Written Offer, at the Transfer Price and, in
either case, in accordance with the provisions of this Section 9. This option
shall first be available to Partners of the same class as, and who are Permitted
Transferees of, the Transferor Partner (the "Same Class Partners"). The Same
Class Partners may exercise the option by giving notice to the Managing Partners
of their intention to do so within sixty (60) days of the date of the Transferor
Partner's notice. The Same Class Partners may purchase the offered interest in
proportion to their relative Partnership Percentages of the same class or as
they may otherwise agree. If and to the extent that the Same Class Partners
fail to elect to purchase all of the offered interest, the Managing Partners
shall give prompt notice thereof to the Partners of the other class who are
Permitted Transferees of the Transferor Partner (the "Other Class Partners").
The Other Class Partners shall have the option to purchase all or part of any
remaining interest proposed to be sold. The Other Class Partners may exercise
their option by giving notice to the Managing Partners of their intention to do
so within sixty (60) days after the expiration of the Same Class Partners' sixty
(60) day option period. The Other Class Partners may purchase the offered
interest in proportion to their relative Partnership Percentages of the same
class or as they may otherwise agree. The interest in the Partnership so
purchased will be added to the interest in the Partnership of the Partners who
have purchased said interest, as an interest of the same class as that held by
each respective purchasing Partner, and their
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Partnership Percentages and Capital Accounts shall be adjusted accordingly by
the Managing Partners.
9.6 SECOND OPTION. The Partnership shall have an additional sixty (60)
days after the expiration of the two option periods set forth in Section 9.5 to
elect to purchase all or part of the interest in the Partnership of the
Transferor Partner not purchased pursuant to the First Option, at the Offer
Price or, if there is no Written Offer, at the Transfer Price. The interest in
the Partnership so purchased from a Transferor Partner, including the related
Partnership Percentage and Capital Account, shall be allocated among all of the
then remaining Partners, who shall succeed to such interest as an interest of
the same class held by such remaining Partners.
In the event a Transferor Partner has given notice of his intention to sell
his entire interest in the Partnership without a Written Offer, it being the
Transferor Partner's intention to withdraw from the Partnership, the exercise of
the Second Option shall be mandatory with respect to any portion of the
Transferor Partner's interest in the Partnership not purchased pursuant to the
First Option, and the Partnership shall exercise its Second Option with respect
to any portion of the Transferor Partner's interest in the Partnership not
purchased pursuant to the First Option.
9.7 EXERCISE OF ENTIRE OPTION. In the event that the Transferor Partner
has given notice of a Written Offer, then, if the option to purchase all of the
subject interest is not exercised pursuant to the First Option and the Second
Option, the Transferor
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Partner shall no longer be under an obligation to sell such interest pursuant to
the First Option and the Second Option and, during the ninety (90) day period
following the termination of the Second Option, the Transferor Partner may sell
the offered interest to the Permitted Transferee making the Written Offer at the
Offer Price or on other terms no more favorable than the terms contained in the
Written Offer. No Transfer may be consummated after such ninety (90) day period
or on terms more favorable than those set forth in the Written Offer without
first again complying with this Section 9. Any Permitted Transferee who
acquires an interest in the Partnership pursuant to this Section 9 shall become
a party hereto and be subject to the terms of this Agreement.
9.8 TERMS OF PURCHASE. Any interest in the Partnership to be sold
pursuant to the First Option or the Second Option shall be purchased at the
price provided in Section 9.5 or Section 9.6 hereof, as the case may be.
Subject to Section 9.12 hereof, the closing of the purchase and sale shall take
place at the Partnership's office within thirty (30) days following the
expiration of the applicable option periods. Notwithstanding any provision to
the contrary contained in a Written Offer and subject to the provisions of
Section 9.9 hereof, payment for the interest in the Partnership purchased
pursuant to the First Option or the Second Option shall be made in ten (10)
equal installments of principal. The first installment shall be made
contemporaneously with the Transfer and each succeeding payment shall be made on
the annual anniversary date thereof. The Partnership or any Partner
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purchasing an interest of the Transferor Partner may, however, prepay all or
part of the purchase price at the time of the Transfer or at any time thereafter
without premium or penalty. Each deferred payment shall bear interest at the
lesser of eight percent (8%) per annum or the prime or base rate of interest
charged by The First National Bank of Chicago. Said rate of interest shall be
determined at the time of Transfer and shall be adjusted on each annual
anniversary date thereof. In no event, however, shall the rate of interest be
less than the Applicable Federal Rate determined at the time of the Transfer.
9.9 MAXIMUM OBLIGATION OF THE PARTNERSHIP. If the Partnership purchases
the interest of one or more Transferor Partners pursuant to the Second Option,
the Partnership shall not be obligated to pay, in the aggregate in any calendar
year, pursuant to Section 9.8 hereof an aggregate amount exceeding the greater
of (a) the annual dividends received by the Partnership with respect to the
Stock or (b) two percent (2%) of the Partnership Value (the "Redemption Cap").
If, as a result of the application of the Redemption Cap, amounts otherwise due
are not paid to a Transferor Partner, such unpaid amounts shall be due and
payable in the following year; provided, however, that the Redemption Cap as
determined in the following year shall continue to limit the aggregate
obligation of the Partnership during such year so that any unpaid amounts
continue to be deferred until such time as the total payments to Transferor
Partners during a year are
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within the Redemption Cap determined for such year. In the event that there are
two (2) or more Transferor Partners at any one time and the payments due from
the Partnership to the Transferor Partners exceed the Redemption Cap, then
payments to such Transferor Partners shall be reduced proportionately, from time
to time and at any time, based on the outstanding principal owed to each
Transferor Partner.
9.10 ADMISSION OF PARTNERS. Except as otherwise provided in Section 9.2,
no additional Partners shall be admitted to the Partnership without first
obtaining the written consent of all Partners. Upon the admission of an
additional Partner, all references in this Agreement to the Partners shall be
deemed to include the new Partner. The Partners shall determine what rights and
voice an additional Partner shall have in the management and conduct of the
Partnership.
9.11 DISTRIBUTION OF A PARTNER'S INTEREST. The termination of any trust
which is a Partner shall not terminate the Partnership. Upon the allocation or
distribution of all or any portion of the Partnership interest of a trust which
is a Partner pursuant to the exercise of any power of appointment, or otherwise,
to a beneficiary of such trust or to another person or persons or to another
trust or trusts, whether or not such distribution shall terminate such
distributing trust, each such distributee, notwithstanding the provisions
hereof, shall become a Partner hereunder to the extent of the proportionate
share of the Partnership interest distributed to him, subject to all the terms
and conditions of this Agreement,
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provided however, that such distributee must, in all events, be a Permitted
Transferee. If any such intended distributee is not a Permitted Transferee, the
trustee (or any other Partner) shall give notice thereof to the Managing
Partners, whereupon the Partners and the Partnership shall have the rights set
forth in Sections 9.5 and 9.6 hereof to purchase the interest in the Partnership
owned by the trust.
9.12 TRANSFER DATE RESTRICTIONS. Notwithstanding anything in this Article
9 to the contrary, no Transfer, acquisition or redemption of an interest in the
Partnership shall be made and no adjustment to the Partners' interests in the
Partnership shall be effective, and no transferee of an interest in the
Partnership shall be admitted as a Partner, during any period between the record
date and payment date of a dividend declared to be paid with respect to shares
of the Stock. Any such purported Transfer, acquisition or redemption shall be
effective and reflected in the books of the Partnership on and as of the first
day following the dividend payment date.
10. WITHDRAWAL, DEATH OR BANKRUPTCY OF A PARTNER.
10.1 WITHDRAWAL. Any Partner, including a trust which is a Partner
hereunder, shall have the right to withdraw from the Partnership at any time
upon giving notice thereof in writing to the Managing Partners pursuant to
Section 9.4 hereof, and the provisions of Section 9 hereof shall be applicable.
In the event of such withdrawal, the Partnership shall not be wound up or
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liquidated and the withdrawing Partner shall not have the right to compel
liquidation of the Partnership. The payments to the withdrawing Partner
pursuant to Section 9 hereof shall be in lieu of any amount payable pursuant to
Section 42 of the Uniform Partnership Act including any interest or profits
payable pursuant to that section.
10.2 DEATH OF A PARTNER. Upon the death of a Partner during the term of
the Partnership, the Partnership business shall not be wound up or terminated,
but shall be continued by the remaining Partners. The executor or administrator
(the "Personal Representative") of the estate of the deceased Partner,
notwithstanding Section 9 hereof, shall immediately succeed to the interest of
the deceased Partner in the Partnership, and such Personal Representative shall
have the same rights and obligations in the Partnership as the deceased Partner
would have had had he survived (such rights and obligations shall include, but
shall not be limited to, rights to participate in the conduct of Partnership
business and to share in the profits and losses of the Partnership) except that,
if the deceased Partner was a Managing Partner, the Personal Representative
shall not have the right to become a Managing Partner. The Personal
Representative shall, if at all possible, transfer its interest to a Permitted
Transferee and, to the extent that transfer to a Permitted Transferee is not
possible, shall, promptly upon discovery thereof, give notice to the Partnership
pursuant to Section 9.4 hereof of its intention to withdraw from the
Partnership. The Personal Representative shall not have
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the right to compel liquidation of the Partnership. The rights of the Personal
Representative set forth in this Section 10.2 and the payments, if any, to a
Personal Representative that withdraws from the Partnership are in lieu of any
amount payable pursuant to Section 42 of the Uniform Partnership Act including
any interest or profits payable pursuant thereto.
10.3 BANKRUPTCY, ETC.. In the event the interest of a Partner in the
Partnership shall be attached or taken in execution, or in the event a Partner
shall be adjudicated a bankrupt or make an assignment for the benefit of
creditors, or in the event its interest is made subject to a charging order, the
Partnership shall not be wound up or terminated and the Partnership's business
shall be continued, except that upon notice thereof to that Partner, the other
Partners and the Partnership shall have the rights set forth in Sections 9.5 and
9.6 hereof to purchase the interest in the Partnership of such Partner.
11. DISSOLUTION AND LIQUIDATION.
The dissolution of the Partnership shall occur as provided in Section 4
hereof; provided, however, if an event specified in Section 4 hereof occurs, the
Partners may, within sixty (60) days of the date such event occurs, unanimously
vote to continue the Partnership business, in which case the Partnership shall
continue thereafter as agreed to by the Partners. Unless otherwise provided
herein or otherwise agreed by all of the Partners, upon dissolution of the
Partnership, the Partnership shall be terminated and the
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remaining Managing Partners shall become the liquidating trustees. The
liquidating trustees shall take full account of the Partnership's assets and
liabilities and the receivables of the Partnership shall be collected and its
assets liquidated as promptly as is consistent with obtaining the fair market
value therefor. If the liquidating trustees reasonably determine that it would
be in the best interests of the Partners to do so, all or any portion of the
assets of the Partnership shall be distributed in kind. The proceeds from the
liquidation of the assets of the Partnership and collection of the Partnership's
receivables, together with the property distributed in kind, to the extent
sufficient therefor, shall be applied and distributed in the following order of
priority:
(a) To the payment and discharge of all of the Partnership's debts
and liabilities, except (i) the claims of secured creditors whose
obligations will be assumed or otherwise transferred on the liquidation of
Partnership assets and (ii) the payment of all debts and liabilities of the
Partnership due to the Partners;
(b) To the payment of all debts and liabilities of the Partnership
due to Partners;
(c) To the establishment of reserves which the liquidating trustees
reasonably determine to be necessary; and
(d) The balance, if any, to the Partners in accordance with the
positive balances in their Capital Accounts after
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giving effect to all contributions, distributions and allocations for all
periods.
12. TRUST PARTNERS.
12.1 TRUSTEE LIABILITY. When this Agreement is executed by the trustee of
any trust, such execution is, and shall be, by the trustee, not individually but
solely as trustee in the exercise and under the power of authority conferred
upon and vested in such trustee. It is expressly understood and agreed that
nothing herein contained shall be construed as creating any liability on any
such trustee personally to pay any amounts required to be paid hereunder, or to
perform any covenant, either express or implied, contained herein, all such
liability, if any, being expressly waived by the parties hereto by their
execution hereof. Any liability of any Partner which is a trust to the
Partnership or to any third person shall be only that of such trust to the full
extent of its trust estate and shall not be a personal liability of any trustee,
grantor or beneficiary thereof.
12.2 STATUS OF SUCCESSOR TRUSTEES AS PARTNER. Any successor trustee or
trustees of any trust as a Partner herein shall be entitled to exercise the same
rights and privileges and be subject to the same duties and obligations as his
predecessor trustee. As used in this Agreement, the term "trustee" shall
include any or all such successor trustees.
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13. NOTICES.
All notices, demands and communications required to be given under the
terms of this Agreement shall be in writing and shall be served by personal
service or by mailing a copy thereof by certified or registered mail, postage
prepaid, with return receipt requested to the address of the Partner to whom the
notice, demand or communication is directed as set forth on the books and
records of the Partnership. In case of service by mail, it shall be deemed
complete on the day of actual delivery, or if delivery is refused on the date of
such refusal, as shown by the return receipt. The addresses to which notices,
demands and other communications to a Partner shall be delivered or sent may be
changed from time to time by notice served as hereinabove provided by the
Partner upon the other Partners. Any payment required or permitted to be made
to any Partner under any provision of this Agreement shall be deemed to have
been made if delivered or mailed in the manner hereinabove provided to the
address to which notices, demands and other communications to such Partners are
to be delivered pursuant to the foregoing.
14. MISCELLANEOUS PROVISIONS.
14.1 AMENDMENTS. Any and all agreements hereafter made by the Partners to
amend, extend, revise, change or discharge this Agreement, in whole or in part
and on one or more occasions, shall not be invalid or unenforceable because of
the lack of legal consideration so long as the same shall be in writing and
signed by
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Partners owning 51 percent or more of the Partnership Percentages, and shall be
binding on all Partners, except that without unanimous written consent, no
amendment to Partnership Percentages, Capital Accounts, or distributions of Net
Cash Flow or Sale Proceeds shall be effective.
14.2 FURTHER ASSURANCES. The Partners shall execute and deliver such
further instruments and do such further acts and things as may be required by
law or may be appropriate in order to carry out the intent and purpose of this
Agreement.
14.3 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
14.4 HEADINGS. Section headings are for convenience of reference only and
shall have no legal effect.
14.5 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which, when taken together, shall
be deemed to be one Agreement.
14.6 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, their successors, assigns, heirs and legal
representatives and any person who shall have acquired any of the interests or
rights of any Partner in accordance with this Agreement.
14.7 SEVERABILITY. In the event any provision of this Agreement is held
to be invalid, the remainder of this Agreement shall nevertheless be deemed to
be valid and effective.
38
<PAGE>
14.8 NOUNS, PRONOUNS AND GENDER. As used herein, all pronouns shall
include the masculine, feminine, neuter, singular, and plural thereof whenever
the context and facts require such construction.
14.9 WAIVER OF ACTION FOR PARTITION. Each of the Partners irrevocably
waives any right that it may have to maintain any action for partition with
respect to any of the Partnership's property.
14.10 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding among the parties and may not be amended or modified except as
provided herein.
14.11 INTENT TO BE BOUND. Each of the parties subscribing hereto intend to
be fully bound by this Agreement whether or not all of the other persons listed
on the signature pages hereto execute this Agreement. All persons who execute
this Agreement, or any counterpart hereof, shall become Partners and shall be
bound hereby. If any person listed on the signature pages hereto fails to sign
this Agreement, the Partnership Percentages shall be recomputed by the Managing
Partners based on the number of shares of Stock and cash actually contributed to
the Partnership.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
- ------------------------------ ------------------------------
James G. Gidwitz Peter E. Gidwitz
- ------------------------------ ------------------------------
Nancy Gidwitz Ronald J. Gidwitz
39
<PAGE>
- ------------------------------ ------------------------------
Ralph W. Gidwitz Thomas R. Gidwitz
- ------------------------------ ------------------------------
Linda B. Gidwitz Teri L. Gidwitz
- ------------------------------ ------------------------------
Steven Gidwitz Julie Gidwitz
- ------------------------------
Jill Gidwitz
AKG COLLATERAL TRUST AKG FAMILY TRUST
By: By:
--------------------------- ---------------------------
Si Richard Wynn, not Si Richard Wynn, not
individually but individually but
solely as Trustee solely as Trustee
JOSEPH L. GIDWITZ REVOCABLE THOMAS R. GIDWITZ IRREVOCABLE
TRUST TRUST
By: By:
--------------------------- ---------------------------
Joseph L. Gidwitz, not James G. Gidwitz, not
individually but individually but
solely as Trustee solely as Trustee
By:
---------------------------
Jane B. Gidwitz, not
individually but
solely as Trustee
40
<PAGE>
BETSY R. GIDWITZ GERALD GIDWITZ REVOCABLE
IRREVOCABLE TRUST TRUST
By: By:
--------------------------- ---------------------------
Joseph L. Gidwitz, not Gerald Gidwitz, not
individually but solely as individually but solely as
Trustee Trustee
JANE B. GIDWITZ REVOCABLE TRUST
By: By:
--------------------------- ---------------------------
Ronald J. Gidwitz, not Jane B. Gidwitz, not
individually but solely as individually but solely as
Trustee Trustee
TRUSTS U/W/O EMILY K. GIDWITZ TRUSTS R6701, R6702
By: By:
--------------------------- ---------------------------
Joseph L. Gidwitz, not Si Richard Wynn, not
individually but solely as individually but solely as
Trustee Trustee
By: By:
--------------------------- ---------------------------
Gerald Gidwitz, not Melvin Pollack, not
individually but solely as individually but solely as
Trustee Trustee
By:
---------------------------
Alan K. Gidwitz, not
individually but solely as
Trustee
TRUSTS J1, J2, J3, J4, J5, J6 TRUSTS A6701, A6702, A6703
By: By:
--------------------------- ---------------------------
Thomas R. Gidwitz, not Si Richard Wynn, not
individually but solely as individually but solely as
Trustee Trustee
By: By:
--------------------------- ---------------------------
Si Richard Wynn, not Melvin Pollack, not
individually but solely as individually but solely as
Trustee Trustee
41
<PAGE>
ARIES ASSOCIATES JUANITA SELLERS TRUST
By: By:
--------------------------- ---------------------------
Ronald Gidwitz, a Si Richard Wynn, not
General Partner individually but solely as
Trustee
By:
---------------------------
Melvin Pollack, not
individually but solely as
Trustee
ARB ASSOCIATES
By:
---------------------------
Ralph W. Gidwitz, a
General Partner
By: BETSY R. GIDWITZ IRREVOCABLE
TRUST, a General Partner
By:
---------------------------
Joseph L. Gidwitz, not
individually but
solely as Trustee
By:
---------------------------
Ronald J. Gidwitz, not
individually but
solely as Trustee
42
<PAGE>
EXHIBIT A
As of September 30, 1996 CMC PARNERSHIP
Partner
Number of Ownership
CLASS A PARTNERS: Shares Percentage
- ----------------------- ----------- -----------
Gerald Gidwitz 20 0.0055%
GG Trust 12,165 3.3461%
Jane B. Gidwitz Rev. Tr. 20,200 5.5561%
Ronald Gidwitz 30,156 8.2946%
James Gidwitz 30,269 8.3257%
Nancy Gidwitz 35,597 9.7912%
Peter Gidwitz 35,483 9.7598%
Thomas Gidwitz 14,126 3.8854%
Thomas R. Gidwitz Irrev. Tr. 1/1/89 21,357 5.8744%
Aries Associates 20 0.0055%
CLASS B PARTNERS:
- -----------------------
JLG Foundation 20,625 5.6730%
Betsy R. Gidwitz Irrev. Tr. 9/15/90 7,417 2.0401%
ARB Assoc. (BRG Irrev. Tr. 9/15/90) 28,254 7.7714%
J 1 Trust - as Nominee for BRG 3,051 0.8392%
J 2 Trust - as Nominee for BRG 3,061 0.8419%
Trust U/W of EKG-FBO BRG 687 0.1890%
Trust U/W of EKG-FBO Desc of BRG 1,124 0.3092%
Ralph W. Gidwitz *** 1,221 0.3358%
ARB Assoc. (Ralph) 21,475 5.9068%
J 5 Trust - as Nominee for RWG 3,051 0.8392%
J 6 Trust - as Nominee for RWG 3,062 0.8422%
Trust U/W of EKG-FBO RWG 687 0.1890%
AKG Collateral Trust 16,161 4.4452%
AKG Family Trust 8,475 2.3311%
<PAGE>
Trust U/W of EKG-FBO AKG 2,825 0.7770%
J 3 Trust - as Nominee for AKG 1,806 0.4968%
J 4 Trust - as Nominee for AKG 2,061 0.5669%
A 6701 Trust-Steven 1,799 0.4948%
A 6702 Trust-Julie 1,799 0.4948%
A 6703 Trust-Jill 1,799 0.4948%
Trust U/W of EKG-FBO Desc of AKG 400 0.1100%
Teri L. Gidwitz 5,059 1.3915%
R 6701 Trust-Teri 2,698 0.7421%
Linda Gidwitz Karamitis 3,659 1.0064%
R 6702 Trust 2,698 0.7421%
Trust U/W of EKG-FBO Desc of RWG 1,123 0.3089%
J 1 Trust - FBO of Descendants of BRG 3,051 0.8392%
J 2 Trust - FBO of Descendants of BRG 3,062 0.8422%
J 3 Trust - FBO of Descendants of AKG 2,806 0.7718%
J 4 Trust - FBO of Descendants of AKG 3,062 0.8422%
J 5 Trust - FBO of Descendants of RWG 3,051 0.8392%
J 6 Trust - FBO of Descendants of RWG 3,061 0.8419%
----------- ----------
363,563 100.0000%
----------- ----------
----------
*** Old certificates (reverse split 5 for 1)
<PAGE>
EXHIBIT B
A Permitted Transferee of a Partner shall have the following meanings:
(i) In the case of a Partner who is a natural person and the holder of
record and beneficial owner of the Partnership Interest subject to said proposed
transfer, "Permitted Transferee" means (a) the spouse of such Partner, (b) a
lineal descendant of a great grandparent of such Partner or a spouse of any such
lineal descendant, (c) the guardian or conservator of a Partner who has been
adjudged disabled by a court of competent jurisdiction, (d) the executor or
administrator of the estate of a deceased Partner, (e) a trustee of a trust
(including a voting trust) for the sole benefit of one or more Partners, other
lineal descendants of a great grandparent of such Partner, the spouse of such
Partner, the spouses of such other lineal descendants or an organization,
contributions to which are deductible for federal income, estate or gift tax
purposes (hereinafter called a "Charitable Organization"), and for the benefit
of no other person, provided that such trust may grant a general or special
power of appointment to the spouse of such Partner, any lineal descendant of
such Partner or the spouse of any such lineal descendant, and may permit trust
assets to be used to pay taxes, legacies and other obligations of the trust or
the estate of such Partner payable by reason of the death of such Partner, (f) a
Charitable Organization established by such Partner, such Partner's spouse, a
lineal descendant of a great grandparent of such Partner, a spouse of any such
lineal descendant, CMC or employees or former employees of CMC, (g) a
corporation all the outstanding capital stock of which is owned by, or a
partnership all the partnership interests in which are owned by, directly or
indirectly, one or more of such Partners, other lineal descendants of a great
grandparent of such Partner or a spouse of any such lineal descendant, the
spouse of such Partner, or the trustee of a trust determined pursuant to
subclause (e) of this clause (i), and (h) an employee stock ownership plan
described in Section 4975(e)(7) of the Internal Revenue Code of 1986, as
amended, or any successor or substitute provision thereto.
(ii) In the case of a Partner holding the Partnership Interest subject to
said proposed transfer as trustee, "Permitted Transferee" means (a) any
successor trustee or trustees of such trust; (b) the person who established such
trust; and (c) a Permitted Transferee of the person who established such trust
determined pursuant to clause (i) above.
(iii) In the case of a Partner which is a partnership and the holder of
record and beneficial owner of the Partnership Interest subject to said proposed
transfer, "Permitted Transferee" means any partner of such partnership or any
"Permitted Transferee" of such
<PAGE>
partner determined pursuant to clause (i), (ii) or (iv) hereof, as the case may
be.
(iv) In the case of a Partner which is a corporation (other than a
Charitable Organization described in subclause (f) of clause (i) above) and the
holder of record and beneficial owner of the Partnership Interest subject to
said proposed transfer, "Permitted Transferee" means any stockholder of such
corporation receiving a Partnership Interest through a dividend or through a
distribution made upon liquidation of such corporation or any "Permitted
Transferee" of such stockholder determined pursuant to clause (i), (ii) or (iii)
hereof, as the case may be.
(v) In the case of a Partner who is the executor or administrator of the
estate of a deceased Partner, guardian or conservator of the estate of a
disabled Partner or who is a trustee or receiver of the estate of a bankrupt or
insolvent Partner and provided such deceased, disabled, bankrupt or insolvent
Partner, as the case may be, was the record and beneficial owner of the
Partnership Interest subject to said proposed transfer, "Permitted Transferee"
means a Permitted Transferee of such deceased, disabled, bankrupt or insolvent
Partner as determined pursuant to clauses (i), (iii) or (iv), above, as the case
may be.
(vi) In the case of a Partner which is an employee benefit plan of CMC,
"Permitted Transferee" means the participant in such plan in whose account a
Partnership Interest is held in such plan or a Permitted Transferee of such
participant determined pursuant to clause (i) above.
(vii) In the case of a Partner which is a Charitable Organization described
in subclause (e) of clause (i) above and the holder of record and beneficial
owner of the Partnership Interest subject to said proposed transfer, "Permitted
Transferee" means any lineal descendant of a great grandparent of the creator of
such Charitable Organization or such creator's spouse.
