<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
CONTINENTAL MATERIALS CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
CONTINENTAL MATERIALS CORPORATION
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1997 annual meeting of stockholders of Continental Materials Corporation
(the "Company") will be held at The Northern Trust, 50 South LaSalle Street,
Chicago, Illinois, on Wednesday, May 28, 1997, at 10:00 a.m., to consider and
act upon the following matters:
(a) The election of three directors to serve until the 2000 annual
meeting or until their successors are elected and qualified.
(b) The ratification of the appointment of independent certified public
accountants to the Company for the fiscal year ending January 3, 1998.
(c) The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 31, 1997, are
entitled to notice of and to vote at the annual meeting or any adjournment
thereof.
Accompanying this notice are the Annual Report for the fiscal year ended
December 28, 1996, a proxy statement, a form of proxy, and an envelope for
returning the executed proxy to the Company. Stockholders unable to attend the
annual meeting in person are requested to date, sign and return the enclosed
proxy at once.
By Order of the Board of Directors,
Mark S. Nichter
Secretary
Chicago, Illinois
April 15, 1997
<PAGE>
CONTINENTAL MATERIALS CORPORATION
225 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
PROXY STATEMENT
----------------
GENERAL INFORMATION
The enclosed proxy is solicited by and on behalf of the Board of Directors
(the "Board") of Continental Materials Corporation, a Delaware corporation (the
"Company"), for use at the annual meeting of the Company's stockholders to be
held on May 28, 1997, and is revocable at any time before it is exercised. Such
revocation may be effected by written notice to the Secretary of the Company, by
executing a subsequent proxy or by voting at the meeting in person. All proxies
duly executed and received will be voted on all matters presented at the
meeting. Where a specification as to any matter is indicated, the proxy will be
voted in accordance with such specification. Where, however, no such
specification is indicated, the proxy will be voted for the named nominees and
in favor of all proposals. The approximate date on which this proxy statement
and the enclosed proxy are first sent or given to stockholders is April 16,
1997.
The holders of record on March 31, 1997, of the 1,104,221 outstanding shares
of common stock of the Company are entitled to notice of and to vote at the
annual meeting. Each such share is entitled to one vote for each Director.
The three nominees for election as directors at the 1997 annual meeting of
stockholders who receive the greatest number of votes cast for the election of
directors at that meeting by the holders of the Company's common stock entitled
to vote at that meeting, a quorum being present, shall become directors at the
conclusion of the tabulation of votes. An affirmative vote of the holders of a
majority of the voting power of the Company's common stock, present in person or
represented by proxy and entitled to vote at the meeting, a quorum being
present, is necessary to approve the ratification of the appointment of
independent certified public accountants for the fiscal year ending January 3,
1998. Under Delaware law and the Company's Restated Certificate of Incorporation
and By-Laws, the aggregate number of votes entitled to be cast by all
stockholders present in person or represented by proxy at the meeting, will be
counted for purposes of determining the presence of a quorum. Abstentions and
broker non-votes are counted for purposes of determining the presence or absence
of a quorum. If a quorum is present at the meeting, the total number of votes
cast FOR each of these matters will be counted for purposes of determining
whether sufficient affirmative votes have been cast. Shares not voted, whether
by abstention, broker non-vote, or otherwise, have the same legal effect as a
vote AGAINST the matter even though the stockholder or interested parties
analyzing the results of the voting may interpret such a vote differently.
1
<PAGE>
ELECTION OF DIRECTORS
The Company has a Board of Directors consisting of nine persons, divided
into three classes. At this year's annual meeting three directors will be
elected to serve for a term of three years or until their successors are elected
and qualified. It is the intention of the persons named in the accompanying form
of proxy to vote for the nominees named below. Management has no reason to
believe that any nominee will be unable to serve. If any nominee should not be
available, the persons named in the proxy will vote for the election of such
persons as will continue as nearly as possible the existing management goals of
the Company.
<TABLE>
<CAPTION>
NAME, AGE AND OTHER SERVED AS CURRENT TERM
POSITIONS, IF ANY, DIRECTOR AS DIRECTOR
WITH COMPANY SINCE BUSINESS EXPERIENCE EXPIRES
- - ------------------------------------------ --------- ---------------------------------------------- -------------
<S> <C> <C> <C>
NOMINEE DIRECTORS
Thomas H. Carmody, 50..................... 1994 Consultant to Chairman and Chief Executive
Officer of Reebok International, Ltd., a
publicly traded footwear, apparel and fitness
equipment company. Mr. Carmody has also
previously served as Vice President, U.S.
Operations and Vice President, Sports
Division of Reebok. Prior to April, 1992, Mr.
Carmody was President of Brooks Shoes, Inc. 1997
Ronald J. Gidwitz, 52..................... 1974 President of Helene Curtis, a producer of
personal care products, since July 1, 1979
and Chief Executive Officer since 1985. 1997
Darrell M. Trent, 58...................... -- Chairman of the Board and Chief Executive
Officer of Acton Development Company, Inc., a
real estate development and property
management company, since 1988. Mr. Trent was
also Chairman of the Board and Chief
Executive Officer of Clean Earth
Technologies, Inc., an environmental
management venture from 1992 to 1994. --
CONTINUING DIRECTORS
James G. Gidwitz, 50, Chairman of the
Board and Chief Executive Officer....... 1978 Chairman of the Board and Chief Executive
Officer of the Company since 1983. 1998
Betsy R. Gidwitz, 56...................... 1996 Former Professor from Massachusetts Institute
of Technology. 1998
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE AND OTHER SERVED AS CURRENT TERM
POSITIONS, IF ANY, DIRECTOR AS DIRECTOR
WITH COMPANY SINCE BUSINESS EXPERIENCE EXPIRES
- - ------------------------------------------ --------- ---------------------------------------------- -------------
<S> <C> <C> <C>
Joseph J. Sum, 49, Vice President and
Treasurer............................... 1989 Elected Assistant Treasurer of the Company in
1978. Served as Controller of the Company
from 1979 through January 1989 and Secretary
from 1983 through February 1993. Elected Vice
President and Treasurer on August 8, 1988. 1998
Ralph W. Gidwitz, 61...................... 1984 President, Chief Executive Officer and
Director of RKG Corporation, a company
engaged in mergers and acquisitions since
1991. 1999
William G. Shoemaker, 80.................. 1968 Independent business consultant since January,
1991. 1999
Theodore R. Tetzlaff, 52.................. 1981 Partner in the Chicago law firm of Jenner &
Block since 1982. 1999
</TABLE>
FAMILY RELATIONSHIPS
James G. Gidwitz and Ronald J. Gidwitz are sons of Gerald S. Gidwitz. The
late Joseph L. Gidwitz was Gerald S. Gidwitz's brother. Ralph W. Gidwitz is a
son of, and Betsy R. Gidwitz is a daughter of, Joseph L. Gidwitz. Gerald S.
Gidwitz, together with his wife, and their descendants as well as the
descendants of Joseph L. Gidwitz are herein referred to as the "Gidwitz Family."
See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
COMMITTEES OF THE BOARD
The Company's Board of Directors has established an Audit Committee and a
Compensation Committee. There is no standing nominating committee or other
committee performing similar functions.
In 1996 the Audit Committee was composed of Theodore R. Tetzlaff, William G.
Shoemaker and Ralph W. Gidwitz. The function of the Audit Committee is to review
and make recommendations regarding: the hiring or retention of an independent
accounting firm to audit the Company's financial statements; the Company's
policies with respect to maintaining its books and records and furnishing
information to its independent auditors; the scope and effectiveness of the
independent auditor's audit procedures; the implementation of recommendations
made by the independent auditors in their annual management letter; the adequacy
and competency of Company personnel engaged in such activities; the procedures
of the Company in furnishing the public financial information, in accordance
with generally accepted accounting principles and practices; and such other
matters relating to the Company's financial affairs and accounts as the Audit
Committee deems desirable or in the best interest of the Company. There was one
committee meeting in 1996.
The Compensation Committee was composed of Ronald J. Gidwitz and Theodore R.
Tetzlaff in 1996. See "COMPENSATION COMMITTEE REPORT" for discussion of
responsibilities. The Committee held two meetings in 1996.
3
<PAGE>
BOARD MEETINGS
The Board of Directors held four meetings in fiscal 1996. All directors
except Ronald J. Gidwitz and Betsy R. Gidwitz attended 75% or more of the
aggregate number of meetings of the Board of Directors and the Committees of the
Board of Directors during the time when they served.
DIRECTOR'S COMPENSATION
Each director who is not an officer or employee of the Company receives a
set fee of $10,000 per year, plus additional fees of $500 for each board meeting
or board committee meeting which he attends, with a $5,000 cap on the aggregate
meeting fee.
EXECUTIVE COMPENSATION
The following table summarizes the compensation of the Company's chief
executive officer and its two other executive officers for the years 1994
through 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------
PAYOUTS
AWARDS ----------
ANNUAL COMPENSATION -------------------- LONG-TERM
---------------------------------------- RESTRICTED INCENTIVE
NAME AND PRINCIPAL OTHER ANNUAL STOCK STOCK PLAN ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION (1) AWARDS OPTIONS PAYOUTS COMPENSATION (2)
- - ----------------------- --------- --------- --------- ------------------ --------- --------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James G. Gidwitz -- 1996 $ 346,813 $ 246,900 -- None None None $ 97,918
Chairman and Chief 1995 338,850 68,000 -- None 30,000 None 72,955
Executive Officer 1994 315,350 236,550 -- None None None 57,734
Joseph J. Sum -- 1996 154,958 73,300 -- None None None 29,697
Vice President and 1995 150,000 11,250 -- None 12,000 None 16,360
Chief Financial 1994 130,000 50,000 -- None None None 21,089
Officer
Mark S. Nichter -- 1996 90,292 31,700 $ 15,125 None None None 17,581
Secretary 1995 87,218 5,500 -- None None None 8,380
1994 80,000 25,000 -- None None None 11,349
</TABLE>
- - ------------
(1) Where no amounts are shown, Other Annual Compensation does not exceed the
reporting thresholds.
(2) For 1996, the amounts shown include employer matching contributions to the
Company's 401(k) Plan of $96,312, $28,240 and $16,761 for Messrs. Gidwitz,
Sum and Nichter, respectively. For Messrs. Gidwitz and Sum, these amounts
include amounts deferred under a Supplemental Profit Sharing Plan. The
amounts shown also include group term life insurance premiums paid by the
Company in the amount of $1,606, $1,457 and $820 for Messrs. Gidwitz, Sum
and Nichter, respectively.
Mr. William A. Ryan relinquished his duties as President and Chief Operating
Officer on July 13, 1995. The Company agreed to pay Mr. Ryan his then current
annual salary through December 31, 1996. In addition, Mr. Ryan continued to
participate in the Company's group health and life insurance programs. Mr. Ryan
was paid a total of $295,335 during 1996. Certain additional retirement benefits
had been extended to Mr. Ryan pursuant to a Deferred Compensation Agreement.
Under this program, Mr. Ryan will receive annual retirement benefit payments
from the Company of approximately $89,000 for a period of ten years beginning in
1997.
STOCK OPTIONS
The Company's Amended and Restated 1994 Stock Option Plan provides for the
granting of stock options to attract, retain and reward key managerial employees
of the Company or its subsidiaries. The Stock Option Plan provides that grants
of options and option prices will be established by the Compensation Committee
of the Board of Directors. Option prices may not be less than the fair market
value of the
4
<PAGE>
stock at the date of the grant. During 1995 there were options granted for
78,000 shares of stock at an exercise price of $13.125. All 78,000 options
became exercisable during 1996 although none were exercised. There were no
options granted during 1996. During March 1997, 12,000 of the shares were
forfeited when the grantee resigned from the Company.
The following table sets forth the number of shares for which stock options
were exercised during the last fiscal year, the value realized, the number of
shares for which options were outstanding and the value of those options as of
the fiscal year end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
IN-THE-MONEY
OPTIONS AT
FY-END
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- - ---------------------------------------------- --------------------- ----------------------- ------------- --------------
<S> <C> <C> <C> <C>
James G. Gidwitz.............................. 0 0 30,000/0 $247,500/0
Joseph J. Sum................................. 0 0 12,000/0 99,000/0
</TABLE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation.
The Executive Compensation Program is administered by the Compensation
Committee of the Board of Directors (the "Committee"). The Committee's major
responsibilities are:
1. Reviewing the Company's major compensation and benefit practices,
policies and programs including administration of the Company's Amended
and Restated 1994 Stock Option Plan with respect to executive officers;
and
2. Reviewing executive officers' salaries and bonuses.
COMPENSATION PHILOSOPHY
It is the philosophy of the Company to ensure that executive compensation is
linked to corporate performance. Accordingly, in years in which performance
goals are achieved or exceeded, executive compensation should be higher than in
years in which the performance is below expectation. At the same time, the
Committee is cognizant of its need to offer compensation that is competitive. By
providing the opportunity for compensation that is comparable to the levels
offered by other similarly situated companies, the Company is able to attract
and retain key executives. The Committee regularly reviews the Company's
compensation programs to ensure that pay levels and incentive opportunities are
competitive and reflect the performance of the Company. In conducting this
review the Committee retains independent compensation consultants.
COMPENSATION PROGRAM COMPONENTS
To achieve its compensation goals, the compensation program consists
primarily of two components, base salary and bonuses. Both components are
adjusted based upon corporate performance and individual initiative and
performance. Total pay levels, that is the aggregate of base salary and annual
bonus, are largely determined through comparisons with companies of similar size
and complexity. Total pay levels for the executive officers are competitive
within a range that the Committee considers to be reasonable and necessary.
5
<PAGE>
PERFORMANCE MEASURES
The Committee uses various performance measures in evaluating annual
executive compensation. The Committee examined earnings as an important measure
of performance. The Committee also considered return on net investment and
personal goals. In its consideration, the Committee did not assign quantitative
relative weights to these factors or follow mathematical formulae. Rather, the
factors discussed above are compared by the Committee with the Company's annual
business plan, the Company's prior year's performance and the performance of
other companies in the industry segments in which the Company competes. The
Committee then made judgments after considering the various factors. The
Committee believes that these performance measures serve to align the interests
of executives with the interests of stockholders.
1996 COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In evaluating the compensation of the Company's chief executive officer (the
"CEO"), the Committee reviewed the CEO's existing compensation arrangements, the
performance of the Company (taking into account the performance measures
discussed above) and the CEO and compensation of chief executive officers in
similarly situated companies. Based on this review, the Committee increased the
CEO's salary by 2.4% in 1996 as compared with 7.5% in 1995 and 3.6% in 1994. In
setting the 1996 increase, the Committee considered, among other things, the
level of compensation of executives in similarly situated companies. In granting
the CEO's bonus in 1996, the Committee likewise considered the incentive
compensation paid to CEOs of similar companies and the Company's performance in
1996. The Company's performance in 1996 exceeded all goals set forth in the
Company's annual business plan. Net income grew 246% to $2,355,000 compared to
$681,000 in 1995. Accordingly, the Committee granted the CEO a bonus of $246,900
for 1996 compared to $68,000 last year.
STOCK OPTION AND LONG-TERM PLANS
The Company maintains the Continental Materials Corporation Amended and
Restated 1994 Stock Option Plan, as discussed under the heading "Stock Options"
above. The Company has no other long term compensation plans.
SUMMARY
After reviewing all of its existing compensation programs, the Committee
continues to believe that the total compensation program for executives of the
Company is competitive with the compensation programs provided by other
corporations of similar size and complexity. Moreover, the Committee believes
that it has set compensation at levels that reflect each executive officer's
contribution towards the Company's objectives.
6
<PAGE>
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
RONALD J. GIDWITZ AND THEODORE R. TETZLAFF
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
Theodore R. Tetzlaff, a member of the Compensation Committee, is a partner
in the Chicago law firm of Jenner & Block. From time to time, the Company
retains Jenner & Block to provide it with legal services. The dollar amount of
fees paid to Jenner & Block by the Company in 1996 did not exceed 5% of that
firm's annual gross revenues.
The Company engaged in various transactions in which members of the Gidwitz
Family, including Ronald Gidwitz, had an interest.
L.O.M. Holdings, Inc. ("L.O.M."), a company whose subsidiaries are engaged
in the travel agency business, is owned by members of the Gidwitz Family. The
Company purchased a total of approximately $41,000 in airline tickets and other
travel services from subsidiaries of L.O.M. during its last fiscal year.
Management believes that these purchases were on terms that were as favorable as
might be obtained from an unrelated third party.
The Company is currently serving as the sponsoring corporation in an
Insurance Purchasing Group (the "Group"), which consists of the Company and its
subsidiaries and other companies in which the Gidwitz Family are the principal
owners. The cost of such insurance is allocated among all members of the Group
based on such factors as, but not limited to, nature of the risk, loss history
and size of operations. From time to time, the Company will advance payments to
the insurance carriers on behalf of the individual members of the Group. The
Company invoices each member of the Group for their respective share of each
payment. Interest at the rate of prime plus one percent is charged on all
amounts not paid by a member after 30 days from receipt of an invoice sent by
the Company. During fiscal year 1996, certain members of the Group were indebted
to the Company with respect to advances made by the Company under the insurance
purchasing program. The largest aggregate amount of indebtedness outstanding at
any time during fiscal year 1996 with respect to these companies equalled
approximately $450,000. As of the date of this proxy statement, no past due
amounts are owing to the Company from any member of the Group. The Company's
participation in the Group has, in management's opinion, resulted in significant
savings to the Company in terms of the cost of insurance premiums and other
insurance charges.
7
<PAGE>
COMPARISON OF TOTAL SHAREHOLDER RETURN
The following graph compares the Company's cumulative total stockholder
return on its common stock for a five year period (December 31, 1991 to December
31, 1996), with the cumulative total return of the American Stock Exchange
Market Value Index ("ASEMVI"), and a peer group of companies selected by the
Company. The "Peer Group" is more fully described below. Dividend reinvestment
has been assumed with respect to the ASEMVI and the Peer Group. The companies in
the peer group are weighted by market capitalization as of the beginning of the
measurement period. The Company has never paid a dividend.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CONTINENTAL MATERIALS AMEX MARKET INDEX PEER GROUP INDEX
<S> <C> <C> <C>
1991 $100.00 $100.00 $100.00
1992 112.96 86.62 101.37
1993 118.52 103.56 120.44
1994 172.22 101.74 106.39
1995 179.63 129.71 137.13
1996 314.81 163.36 144.70
</TABLE>
Although the Company's per share price closed the year at $21.25, a proposal
(the "proposal") to take the Company private for $21 per share was outstanding
during the period November 13, 1996 through February 18, 1997. The Company's
stock price immediately preceding the proposal was $18.375 per share. Upon
termination of the proposal, the per share price declined to $19.25.
The Company manufactures and markets products in two separate industries.
These industries are (i) heating and air conditioning and (ii) construction
materials, primarily ready-mix concrete. The Company's principal activities have
occurred exclusively in these two industries for over 15 years. The Peer Group
selected by the Company for the above graph is a combination of companies from
these two industries. The companies included in the Peer Group are: American
Business Computer Corporation; Danaher Corporation; Fedders Corporation; Florida
Rock Industries Inc.; ICC Technologies; Kysor Industrial Corporation; Lancer
Corporation; LSB Industries, Inc.; Mesteck Inc.; Tecumseh Products Inc.;
Westinghouse Electric Corporation; and Wynn's International, Inc.
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following information is furnished as to the Common Stock of the Company
owned beneficially as of March 31, 1997 by (i) each director, (ii) the executive
officers named in the summary compensation table, (iii) directors and executive
officers as a group, and (iv) persons that have reported beneficial ownership of
more than 5% of the Company's Common Stock.
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OF CLASS
OF BENEFICIAL OWNER NO. OF SHARES (1)
- - -------------------------------------- --------------- ------------
<S> <C> <C>
Gidwitz Family
225 West Wacker Drive, Suite 1800
Chicago, Illinois 60606 393,109(2) 35.6%
Warren G. Lichtenstein
750 Lexington Avenue
New York, New York 10022 78,450(4) 7.1%
Continental Materials Corporation
Employees Profit Sharing
Retirement Plan 61,608 5.6%
Thomas H. Carmody 100
James G. Gidwitz --(2)(3)
Betsy R. Gidwitz --(3)
Ralph W. Gidwitz --(3)
Ronald J. Gidwitz --(3)
Mark S. Nichter --(2)
William A. Ryan 600
William G. Shoemaker 160
Joseph J. Sum 200(2)
Theodore R. Tetzlaff 0
All directors and officers as a group
(includes ten persons) 455,777 41.3%
</TABLE>
- - ---------
(1) The shares owned in each case except as otherwise indicated, constitute less
than 1% of the outstanding shares of the Company's common stock.
(2) Excludes 61,608 shares held by the Company's Employee Profit Sharing
Retirement Plan as to which James L. Gidwitz, Mark S. Nichter and Joseph J.
Sum share voting power as trustees of such Plan.
(3) Excludes shares held indirectly as follows:
(a) 363,563 shares owned by a partnership whose managing partners are Betsy
R. Gidwitz, Gerald S. Gidwitz, James G. Gidwitz, Ralph W. Gidwitz, and
Ronald J. Gidwitz.
(b) 23,384 shares owned by L.O.M. whose beneficial owners include members of
the Gidwitz Family.
(c) 6,162 shares held directly by family members of Joseph L. Gidwitz other
than those family members included in the security ownership of
management table above.
9
<PAGE>
With respect to the shares referenced in this Note, the beneficial owners
indicated in (c) have sole voting and investment power and the beneficial owners
indicated in (a) and (b) have shared voting and investment power.
(4) Represents 78,450 shares held by Steel Partners II L.P. By virtue of his
position with Steel Partners II, Mr. Lichtenstein has sole power to vote and
dispose of such 78,450 shares.
PROPOSAL FOR RATIFICATION OF EMPLOYMENT OF
INDEPENDENT AUDITORS
The Board of Directors and the Audit Committee recommend ratification of the
continued employment of Coopers & Lybrand L.L.P., Certified Public Accountants,
to audit the Company's books for the fiscal year ending January 3, 1998. An
appropriate resolution ratifying such employment will be submitted to the
stockholders at the annual meeting. If such resolution is not adopted,
management will reconsider such appointment.
A representative of Coopers & Lybrand is expected to be present at the
stockholders' annual meeting. The representative will have an opportunity to
make a statement if he/she desires to do so, and he/she will be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
STOCKHOLDER PROPOSALS AND OTHER MATTERS
The deadline for receipt of stockholder proposals for inclusion in the
Company's proxy statement for its 1997 fiscal year is December 19, 1997.
The management does not know of any matters to be presented at the annual
meeting other than those set forth in this proxy statement. If any other matters
not now known come before the annual meeting, it is intended that the persons
named in the proxies will act according to their best judgment.
EXPENSES
The entire expense of preparing, printing and mailing the form of proxy and
the material used for the solicitation thereof will be borne by the Company. In
addition, the Company has retained the services of Beacon Hill Partners, Inc. to
solicit proxies from nominees and brokers' accounts at a cost of approximately
$4,000. Solicitation of proxies will be made by mail but also may be made
through oral communications by directors, officers or employees of the Company
who will receive no additional compensation for such efforts.
By Order of the Board of Directors,
James G. Gidwitz
Chairman of the Board
10
<PAGE>
PROXY CONTINENTAL MATERIALS CORPORATION
PROXY CARD FOR ANNUAL MEETING ON MAY 28, 1997
The undersigned hereby appoints James G. Gidwitz and Joseph J. Sum as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote as designated below, all the shares of common
stock of Continental Materials Corporation held on record by the undersigned on
March 31, 1997, at the annual meeting of stockholders to be held on May 28, 1997
or any adjournment thereof.
The Board of Directors unanimously recommends a vote FOR the following:
<TABLE>
<S> <C> <C> <C>
(1) Election of three nominees to the Board of Directors.
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees listed
below) below
</TABLE>
Thomas H. Carmody, Ronald J. Gidwitz and Darrell M. Trent
<TABLE>
<S> <C> <C> <C>
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a line through that nominee's name.)
(2) Approval and ratification of the Directors' appointment of Coopers & Lybrand as the Company's
independent auditors for the year ending January 3, 1998.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C> <C>
(3) In their discretion, the Proxies are authorized to vote upon such other business as may properly
come before the meeting.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
(Continued, and to be signed on the other side)
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO INSTRUCTIONS ARE GIVEN, IT
WILL BE VOTED "FOR" ELECTION OF ALL NOMINEES AS DIRECTORS OF THE COMPANY, AND
"FOR" APPROVAL AND RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS.
DATED: ___________________ , 1997
_________________________________
Signature
_________________________________
Signature if held jointly
Please vote, sign, date and
return this proxy promptly.
Please sign exactly as name appears above. Executors, administrators, trustees,
guardians, attorneys-in-fact, etc. should give their full titles. If signer is a
corporation, please give full corporate name and have a duly authorized officer
sign, stating title. If a partnership, please sign in partnership name by
authorized person. If stock is registered in two names, both should sign.
