<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Amendment No. 4)
Under the Securities Exchange Act of 1934
Dairy Mart Convenience Stores, Inc.
(Name of Issuer)
Class B Common Stock, Par Value $.01 per share
(Title of Class of Securities)
233860105
(CUSIP Number)
DM Associates Limited Partnership
c/o Charles Nirenberg
Dairy Mart Convenience Stores, Inc.
One Vision Drive
Enfield, CT 06082
(203) 741-4444
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 27, 1995
(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 this
statement:
<PAGE>
CUSIP No. 233860105
1) Name of Reporting Person, S.S. or I.R.S. Identification No.
of Above Person: DM ASSOCIATES LIMITED PARTNERSHIP
IRS Identification No.: 06-1334995
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a)
(b) X
3) SEC Use Only:
4) Source of Funds: WC,00
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e):
6) Citizenship or Place of Organization: Connecticut
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7) Sole Voting Power: Voting and dispositive power of the
Shares (as defined in this Schedule 13D) owned of record by
DM Associates Limited Partnership are held by its general
partners, DM Management I and DM Management II.
8) Shared Voting Power: See question 7 above.
9) Sole Dispositive Power: See question 7 above.
10) Shared Dispositive Power: See question 7 above.
11) Aggregate Amount Beneficially Owned by Each Reporting
Person: 0 (See Item 5)
12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares: X
13) Percent of Class Represented by Amount in Row (11): Not
applicable.
14) Type of Reporting Person: PN
<PAGE>
CUSIP No. 233860105
1) Name of Reporting Person, S.S. or I.R.S. Identification No.
of Above Person: NEW DM MANAGEMENT ASSOCIATES I
IRS Identification No.: Applied For
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a)
(b) X
3) SEC Use Only:
4) Source of Funds: Not Applicable
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e):
6) Citizenship or Place of Organization: Connecticut
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7) Sole Voting Power: 0
8) Shared Voting Power: 1,531,140
9) Sole Dispositive Power: 0
10) Shared Dispositive Power: 1,531,140
11) Aggregate Amount Beneficially Owned by Each Reporting
Person: 1,531,140 (See Item 5)
12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares: X
13) Percent of Class Represented by Amount in Row (11): 54.9%
14) Type of Reporting Person: PN
<PAGE>
CUSIP No. 233860105
1) Name of Reporting Person, S.S. or I.R.S. Identification No.
of Above Person: NEW DM MANAGEMENT ASSOCIATES II
I.R.S. Identification No.: Applied For
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a)
(b) X
3) SEC Use Only:
4) Source of Funds: Not Applicable
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e):
6) Citizenship or Place of Organization: Connecticut
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7) Sole Voting Power: 0
8) Shared Voting Power: 327,603
9) Sole Dispositive Power: 0
10) Shared Dispositive Power: 327,603
11) Aggregate Amount Beneficially Owned by Each Reporting
Person: 327,603 (See Item 5)
12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares: X
13) Percent of Class Represented by Amount in Row (11): 11.7%
14) Type of Reporting Person: PN
<PAGE>
CUSIP No. 233860105
1) Name of Reporting Person, S.S. or I.R.S. Identification No.
of Above Person: Charles Nirenberg
S.S. No.: ###-##-####
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a)
(b) X
3) SEC Use Only:
4) Source of Funds: PF
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e):
6) Citizenship or Place of Organization: United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7) Sole Voting Power: 500
8) Shared Voting Power: 1,530,590
9) Sole Dispositive Power: 1,531,090
10) Shared Dispositive Power: 0
11) Aggregate Amount Beneficially Owned by Each Reporting
Person: 1,531,090 (See Item 5)
12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares: X
13) Percent of Class Represented by Amount in Row (11): 54.9%
14) Type of Reporting Person: IN
<PAGE>
CUSIP No. 233860105
1) Name of Reporting Person, S.S. or I.R.S. Identification No.
of Above Person: Robert B. Stein, Jr.
S.S. NO.: ###-##-####
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a)
(b) X
3) SEC Use Only:
4) Source of Funds: PF
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e):
6) Citizenship or Place of Organization: United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7) Sole Voting Power: 750
8) Shared Voting Power: 1,524,442
9) Sole Dispositive Power: 750
10) Shared Dispositive Power: 0
11) Aggregate Amount Beneficially Owned by Each Reporting
Person: 1,525,192 (See Item 5)
12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares: X
13) Percent of Class Represented by Amount in Row (11): 54.7%
14) Type of Reporting Person: IN
<PAGE>
CUSIP No. 233860105
1) Name of Reporting Person, S.S. or I.R.S. Identification No.
of Above Person: Gregory G. Landry
S.S. No.: ###-##-####
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a)
(b) X
3) SEC Use Only:
4) Source of Funds: PF
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e):
6) Citizenship or Place of Organization: United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7) Sole Voting Power: 21,374
8) Shared Voting Power: 1,199,999
9) Sole Dispositive Power: 327,603
10) Shared Dispositive Power: 0
11) Aggregate Amount Beneficially Owned by Each Reporting
Person: 1,527,602 (See Item 5)
12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares: X
13) Percent of Class Represented by Amount in Row (11): 54.8%
14) Type of Reporting Person: IN
<PAGE>
CUSIP No. 233860105
1) Name of Reporting Person, S.S. or I.R.S. Identification No.
of Above Person: Mitchell J. Kupperman
S.S. No.: ###-##-####
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a)
(b) X
3) SEC Use Only:
4) Source of Funds: PF
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e):
6) Citizenship or Place of Organization: United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7) Sole Voting Power: 14,974
8) Shared Voting Power: 1,509,073
9) Sole Dispositive Power: 14,974
10) Shared Dispositive Power: 0
11) Aggregate Amount Beneficially Owned by Each Reporting
Person: 1,524,047 (See Item 5)
12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares: X
13) Percent of Class Represented by Amount in Row (11): 54.7%
14) Type of Reporting Person: IN
<PAGE>
CUSIP No. 233860105
1) Name of Reporting Person, S.S. or I.R.S. Identification No.
of Above Person: Frank Colaccino
S.S. No.: ###-##-####
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a)
(b) X
3) SEC Use Only:
4) Source of Funds: PF
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e):
6) Citizenship or Place of Organization: United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7) Sole Voting Power: 365,611
8) Shared Voting Power: 0
9) Sole Dispositive Power: 59,382
10) Shared Dispositive Power: 0
11) Aggregate Amount Beneficially Owned by Each Reporting
Person: 365,856 (See Item 5)
12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares: X
13) Percent of Class Represented by Amount in Row (11): 11.94%
14) Type of Reporting Person: IN
<PAGE>
Item 1. Security and Issuer
This Schedule 13D relates to the Class B Common Stock, par
value $.01 per share (the "Shares"), of Dairy Mart Convenience
Stores, Inc, a Delaware corporation (the "Company"). The
Company's principal executive offices are located at One Vision
Drive, Enfield, Connecticut 06082. This Schedule 13D amends and
restates a Schedule 13D dated March 12, 1992, as amended by
Schedule 13D (Amendment No. 1), dated August 29, 1994, and
Amendments No. 2, dated September 1, 1994 and September 28, 1994.
Item 2. Identity and Background
This statement is being filed jointly by the following
reporting persons and entities (collectively, the "Reporting
Persons"): (i) DM Associates Limited Partnership ("DM
Associates"); (ii) New DM Management Associates I ("DM Management
I"); (iii) New DM Management Associates II ("DM Management II");
(iv) Charles Nirenberg; (v) Robert B. Stein, Jr.; (vi) Gregory G.
Landry; (vii) Mitchell J. Kupperman; and (viii) Frank Colaccino.
Each Reporting Person disclaims membership in a "group," within
the meaning of Rule 13d-1(f)(2) and Rule 13d-5(b)(1) of the
Securities Exchange Act of 1934, as amended (the "Act").
1. DM Associates. DM Associates is a Connecticut limited
partnership whose general partners are DM Management I and DM
Management II and whose limited partners are HNB Investment Corp.
("HNB"), Mr. Nirenberg and The Nirenberg Foundation, Inc. (the
"Foundation"). DM Associates' principal business is holding the
1,858,743 Shares described herein.
2. DM Management I. DM Management I is a Connecticut
general partnership whose general partners are Messrs. Stein,
Landry, Kupperman and Nirenberg. The principal business of DM
Management I is to serve as a general partner of DM Associates.
3. DM Management II. DM Management II is a Connecticut
general partnership whose general partners are Messrs. Stein,
Landry, Kupperman, Nirenberg and Colaccino. The principal
business of DM Management II is to serve as a special general
partner of DM Associates. The address of the principal businesses
and offices of DM Associates, DM Management I and DM Management
II is c/o Charles Nirenberg, Dairy Mart Convenience Stores, Inc.,
One Vision Drive, Enfield, CT 06082.
4. Information Regarding Individuals. Set forth below are
the name, business or residence address and principal occupation
of each of the Reporting Persons who are individuals.
<PAGE>
Business or Principal
Name Residence Address Employment
Charles Nirenberg One Vision Drive Chairman of the
Board-
Enfield, CT 06082 the Company
Robert B. Stein, Jr. One Vision Drive Chief Operating
Enfield, CT 06082 Officer-the Company
Gregory G. Landry One Vision Drive Executive Vice
Enfield, CT 06082 President, Treasurer
and Chief Financial
Officer-the Company
Mitchell J. One Vision Drive Executive Vice
Kupperman Enfield, CT 06082 President-Human
Resources-the Company
Frank Colaccino 57 Thistledown
Suffield, CT 06078
All of the foregoing individuals are United States citizens.
None of the persons or entities set forth above has, during
the last five years: (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors); or
(ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction in which such
person was subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
In March 1992 DM Associates purchased in cash from certain
stockholders of the Company, as described in Item 4 below,
1,233,743 Shares at $12.00 per share, aggregating $14,804,916
(the "Purchase Price"). In addition, 625,000 Shares were
contributed to DM Associates by: (i) Mr. Nirenberg who
contributed 616,667 Shares; and (ii) the Foundation, a charitable
foundation controlled by Mr. Nirenberg, which contributed 8,333
Shares, as described in Item 4 below.
The source of funds for the Purchase Price was: (i) a
$7,100,000 loan (the "Loan") to DM Associates by the Connecticut
Development Authority ("CDA") pursuant to a certain Loan
Agreement (the "Loan Agreement") dated March 12, 1992, between DM
Associates and the CDA; and (ii) cash equity contributions to DM
<PAGE>Associates by certain of its partners. The Loan is secured
by a collateral pledge to the CDA by DM Associates of 1,220,000
Shares (the "Pledged Shares"), pursuant to a Stock Pledge
Agreement (the "Stock Pledge Agreement") dated March 12, 1992,
between DM Associates and the CDA. 638,743 of the Shares have not
been pledged. The Loan will mature and be due and payable on July
31, 1997.
Each Share of Class B Common Stock has voting rights equal
to that of ten times the voting power of each share of Class A
Common Stock. The Shares owned directly by DM Associates
represent approximately 60.7% of the total voting power of all
the issued and outstanding shares of Class A Common Stock and
Class B Common Stock combined.
On September 30, 1994, FCN Properties Corporation ("FCN"), a
corporation owned by Mr. Nirenberg, purchased all of CDA's right,
title and interest in and to the Loan.
Item 4. Purpose of Transaction
Mr. Nirenberg, his wife Janet Nirenberg, the Foundation, and
the Janet Nirenberg 1987 Trust and the Charles Nirenberg
Charitable Remainder Trust (both such trusts being referred to as
the "Trusts"), entered into a Stock Purchase Agreement with DM
Associates dated March 12, 1992. Pursuant to the Stock Purchase
Agreement, Mr. Nirenberg, Janet Nirenberg, the Foundation and the
Trusts agreed to sell, and DM Associates agreed to purchase,
1,233,743 Shares for $12.00 per Share. In addition, Mr. Nirenberg
and the Foundation contributed to DM Associates 625,000 Shares in
exchange for limited partnership interests in DM Associates,
pursuant to a Contribution and Exchange Agreement dated March 12,
1992. The acquisition of such 1,875,743 Shares is referred to
herein as the "1992 Acquisition."
At the time of the 1992 Acquisition, the sole general
partner of DM Associates was DM Management Associates (the
"Former General Partner"). The Former General Partner was a
Connecticut general partnership whose managing general partner
was Mr. Colaccino.
On August 30, 1994, the Former General Partner was dissolved
as a result of the withdrawal of a general partner of the Former
General Partner and the failure of the remaining general partners
to continue the Former General Partner. On September 8, 1994, the
limited partners of DM Associates, pursuant to the Partnership
Agreement of DM Associates (including the Amendments to the
Limited Partnership Agreement described below, the "Limited
Partnership Agreement"), appointed New DM Management Associates
("NDMMA"), a Connecticut general partnership whose managing
general partner was Mr. Nirenberg and whose other general
<PAGE>partners were Messrs. Stein, Landry and Kupperman, as the
sole general partner of DM Associates. On January 27, 1995, NDMMA
was dissolved by agreement of its general partners. Effective
September 8, 1994, the Limited Partnership Agreement was amended
(the "Amendments to the Limited Partnership Agreement"): (i) to
appoint DM Management I as a new general partner of DM
Associates; (ii) to appoint DM Management II as a special general
partner of DM Associates; and (iii) to modify, among other
things, the voting and dispositive rights of the partners with
respect to the Shares that are nominally owned by DM Associates.
The Amendments to the Limited Partnership Agreement were formally
executed on January 27, 1995. NDMMA did not take any action with
respect to the Shares or otherwise during the period from
September 8, 1994 through January 27, 1995.
In connection with the 1992 Acquisition, DM Associates, the
Former General Partner and Mr. Colaccino filed a Schedule 13D,
dated March 12, 1992, as amended by Schedule 13D (Amendment No.
1), dated August 29, 1994, and Amendments No. 2, dated September
1, 1994 and September 8, 1994 (collectively the "1992 Schedule
13D"). In order to reflect: (i) changes in the number of Shares
beneficially owned by certain Reporting Persons; (ii) that the
Former General Partner has ceased to be the beneficial owner of
more than five percent of the Shares; and (iii) that the
Reporting Persons disclaim membership in a "group," within the
meaning of Rule 13d-1(f)(2) and Rule 13d-5(b)(1) of the Act, the
Reporting Persons have caused this Schedule 13D (Amendment No. 4)
to be filed. This Schedule 13D (Amendment No. 4) amends and
restates the entire 1992 Schedule 13D.
None of the Reporting Persons has any plan or proposal to:
(i) change the number or the composition of the present Board of
Directors or management of the Company; (ii) acquire any
additional securities of the Company (other than the receipt of
stock options and similar compensation as management of the
Company); or (iii) take any of the other actions set forth in
Item 4 of Schedule 13D.
<PAGE>
Item 5. Interest in Securities of the Issuer
The following table sets forth certain information
concerning beneficial ownership of Shares by each Reporting
Person:
SHARES
BENEFICIALLY PERCENT OF
NAME OF REPORTING PERSON OWNED CLASS (1)
DM Associates naging Partner d --
DM Management I 1,531,140 54.9% (2)
DM Management II 327,603 11.7% (3)
Charles Nirenberg 1,531,090 55.0% (4)
Robert B. Stein, Jr. 1,525,192 54.7% (5)
Gregory G. Landry 1,527,602 54.8% (6)
Mitchell J. Kupperman 1,524,047 54.7% (7)
Frank Colaccino 365,611 11.94% (8)
(1) Based on 2,785,996 Shares issued and outstanding as of
December 31, 1994.
(2) DM Management I, as managing general partner of DM
Associates, has voting and dispositive power with respect to
these Shares.
(3) DM Management II, as special general partner of DM
Associates, has voting and dispositive power with respect to
these Shares.
(4) Includes: (i) 500 Shares which Mr. Nirenberg beneficially
owns individually and has sole voting and dispositive power;
and (ii) 1,530,590 Shares as to which Mr. Nirenberg (a)
shares voting power with Messrs. Stein, Landry and
Kupperman, as general partners of DM Management I, and (b)
has sole dispositive power as managing general partner of DM
Management I. Mr. Nirenberg, as an officer, director and the
sole shareholder of FCN, also has shared voting and
dispositive power as the pledgee under the Stock Pledge
Agreement, with respect to 1,220,000 of the 1,530,590 Shares
listed in (ii) of this Note 4. Does not include 500 shares
of Class A Common Stock beneficially owned by Mr. Nirenberg.
<PAGE>
(5) Includes: (i) 750 Shares subject to currently exercisable
options, which Mr. Stein beneficially owns individually and
has sole voting and dispositive power; and (ii) 1,524,442
Shares as to which Mr. Stein shares voting power with
Messrs. Nirenberg, Landry and Kupperman, as general partners
of DM Management I. Does not include 59,475 shares of Class
A Common Stock beneficially owned by Mr. Stein, 59,375 of
which are subject to currently exercisable options.
(6) Includes: (i) 1,199,999 Shares as to which Mr. Landry shares
voting power with Messrs. Nirenberg, Stein and Kupperman, as
general partners of DM Management I; and (ii) 327,603 Shares
as to which Mr. Landry has sole dispositive power, as a
general partner of DM Management II. Mr. Landry also has
sole voting power as a general partner of DM Management II
with respect to 21,374 of the 327,603 Shares listed in (ii)
of this Note 6. Does not include 35,375 shares of Class A
Common Stock subject to currently exercisable options which
are beneficially owned by Mr. Landry.
(7) Includes: (i) 14,974 Shares which Mr. Kupperman beneficially
owns individually and has sole voting and dispositive power,
3,750 of which are subject to currently exercisable options;
and (ii) 1,509,073 Shares as to which Mr. Kupperman shares
voting power with Messrs. Nirenberg, Stein and Landry, as
general partners of DM Management I. Does not include 70,931
shares of Class A Common Stock beneficially owned by Mr.
Kupperman, 66,250 of which are subject to currently
exercisable options.
(8) Includes: (i) 59,382 Shares which Mr. Colaccino beneficially
owns individually and has sole voting and dispositive power,
10,000 of which are subject to currently exercisable
options; and (ii) 306,229 Shares as to which Mr. Colaccino
has sole voting power as a general partner of DM Management
II. Does not include 144,725 shares of Class A Common Stock
beneficially owned by Mr. Colaccino, 140,000 of which are
subject to currently exercisable options.
Each Reporting Person expressly declares that such Reporting
Person is not part of a "group," within the meaning of Rule 13d-
1(b)(2) and Rule 13d-5(b)(1) of the Act, with any other Reporting
Person and that the filing of this Schedule 13D by each Reporting
Person shall not be construed as an admission that such Reporting
Person is, for purposes of Section 13(d), or 13(g) of the
Securities Exchange Act of 1934, as amended, the beneficial owner
of any Shares reported in this Schedule 13D other than the Shares
listed next to the Reporting Person's name in the column "Shares
Beneficially Owned" in the foregoing table.
<PAGE>
As set forth in Item 6 below, upon certain defaults
occurring under the Loan, FCN may vote and/or sell the Pledged
Shares and realize the proceeds thereof. In addition, dividends
declared on the Pledged Shares may either be pledged to FCN or
applied as partial prepayments against the outstanding loan
balance, at DM Associates' option.
FCN and Mr. Nirenberg, as an officer, director and the sole
shareholder of FCN, have shared voting and dispositive power with
respect to 1,220,000 of the 1,530,590 Shares reported as
beneficially owned above, as the pledgee under the Stock Pledge
Agreement. FCN and Mr. Nirenberg filed a Schedule 13D, dated
September 30, 1994, as amended by Schedule 13D (Amendment No. 1),
dated January 27, 1995, with respect to such 1,220,000 pledged
Shares.
During the past sixty days, none of the Reporting Persons
has effected any transactions in the Shares.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
DM Management I, as the managing general partner of DM
Associates, has the right to exercise all voting, dispositive and
other rights with respect to 1,531,140 of the Shares (the "DM
Management I Shares") held by DM Associates. DM Management II, as
the special general partner of DM Associates, has the right to
exercise all voting, dispositive and other rights with respect to
the remaining 327,603 Shares (the "DM Management II Shares") held
by DM Associates. DM Management I cannot dispose of more than
360,000 of the DM Management I Shares and DM Management II cannot
dispose of any of the DM Management II Shares without the prior
approval of the DM Associates limited partners owning at least
60% of the percentage interests of DM Associates. Mr. Nirenberg
and HNB are the only limited partners of DM Associates whose
limited partnership interests aggregate to 60% of the percentage
interests of DM Associates. In addition, prior to voting the
1,858,743 Shares, DM Management I and DM Management II will
consult with HNB as to the voting of such Shares. If, after
consultation with HNB, DM Management I and DM Management II vote
the Shares in a manner with which HNB disagrees, HNB shall have
the right to dissolve DM Associates.
<PAGE> Pursuant to the Partnership Agreement of DM Management
I, Mr. Nirenberg, as managing general partner of DM Management I,
cannot exercise voting rights with respect to the DM Management I
Shares, unless he obtains the consent of the general partners
owning 50% of the percentage interests of DM Management I (which
50% may include the percentage interest owned by Mr. Nirenberg).
If Mr. Nirenberg fails to vote the DM Management I Shares in such
a manner as the partners representing more than 50% of the
percentage interests of DM Management I direct, then such shares
may be voted by the general partners owning 50% of the percentage
interests. Mr. Nirenberg, Mr. Stein, Mr. Landry and Mr. Kupperman
own 46.4287%, 17.8571%, 17.8571% and 17.8571%, respectively, of
the percentage interests of DM Management I. The number of DM
Management I Shares which the managing general partner or the
general partners owning 50% of the percentage interests may vote
is reduced by the number of shares that has the same amount of
voting power as the aggregate number of Non-DM I Shares, as
defined below, as to which the applicable partner has voting or
dispositive power (the "Excluded Shares"). Non-DM I Shares means
shares of Class A or Class B Common Stock of the Company which a
partner beneficially owns, other than the DM Management I Shares.
Mr. Nirenberg, as managing general partner of DM Management
I, has the right to exercise all dispositive power with respect
to the DM Management I Shares (except for the Excluded Shares
that are applicable to Mr. Nirenberg), subject to the approval of
the limited partners of DM Associates owning at least 60% of the
percentage interests of DM Associates.
Pursuant to the Partnership Agreement of DM Management II,
Mr. Colaccino, as a general partner of DM Management II, has the
right to exercise all voting rights with respect to 306,229 of
the DM Management II Shares. Mr. Landry, as a general partner of
DM Management II, has the right to exercise (i) all voting rights
with respect to the remaining 21,374 DM Management II Shares, and
(ii) all dispositive rights with respect to all of the DM
Management II Shares, subject to the approval of the limited
partners of DM Associates owning at least 60% of the percentage
interests of DM Associates. Prior to voting the DM Management II
Shares, Mr. Colaccino is required to obtain the prior approval of
Mr. Landry as to the manner in which they are to be voted.
The Partnership Agreement provides in Section 6.7 thereof
for certain priorities and preferences with respect to
distributions to the partners, which Section is specifically
incorporated herein by reference.
<PAGE>
In addition, the Loan Agreement and Stock Pledge Agreement
require the consent of FCN before the Pledged Shares owned by DM
Associates can be voted for certain events or transactions,
including dissolution of the Company, merger of the Company,
acquisition of the Company by any other person and amendment of
the charter of the Company in a manner that would effect a change
in the preference or priority of the Shares or which would
violate or result in a default under the Loan Agreement. The Loan
Agreement also provides that a default of the Loan will occur
upon certain events occurring, as set forth in Section 6.1 of the
Loan Agreement, which section is incorporated herein by
reference. If a default occurs under the Loan Agreement, FCN has
the right to sell or otherwise dispose of the Pledged Shares
pursuant to the Stock Pledge Agreement. Unless such a default
occurs, DM Associates has the right to vote the Pledged Shares,
subject to having received the required consents of FCN as set
forth above with respect to certain matters.
Item 7. Material to be Filed as Exhibits
The following are filed as Exhibits to this Schedule 13D:
Exhibit A - Loan Agreement dated March 12, 1992, between DM
Associates and CDA. Incorporated herein by reference
to Exhibit A of the Schedule 13D, dated March 12,
1992, filed by DM Associates, the Former General
Partner and Mr. Colaccino.
Exhibit B - Stock Pledge Agreement dated March 12, 1992, between
DM Associates and CDA. Incorporated herein by
reference to Exhibit B of the Schedule 13D, dated
March 12, 1992, filed by DM Associates, the Former
General Partner and Mr. Colaccino.
Exhibit C - Stock Purchase Agreement dated March 12, 1992, among
DM Associates and the Selling Stockholders.
Incorporated herein by reference to Exhibit C of the
Schedule 13D, dated March 12, 1992, filed by DM
Associates, the Former General Partner and Mr.
Colaccino.
Exhibit D - Contribution and Exchange Agreement dated March 12,
1992, among DM Associates, Mr. Nirenberg and the
Foundation. Incorporated herein by reference to
Exhibit D of the Schedule 13D, dated March 12, 1992,
filed by DM Associates, the Former General Partner
and Mr. Colaccino.
<PAGE>
Exhibit E - DM Associates Limited Partnership Agreement dated
March 12, 1992. Incorporated herein by reference to
Exhibit E of the Schedule 13D, dated March 12, 1992,
filed by DM Associates, the Former General Partner
and Mr. Colaccino.
Exhibit F - First Amendment to Partnership Agreement of DM
Associates Limited Partnership dated as of September
8, 1994.
Exhibit G - Partnership Agreement of DM Management I dated as of
September 8, 1994.
Exhibit H - Partnership Agreement of DM Management II dated as
of September 8, 1994.
Exhibit I - Section 6.7 of DM Associates Limited Partnership
Agreement.
Exhibit J - Section 6.1 of Loan Agreement.
Exhibit K - Agreement relating to the joint filing of this
Schedule 13D as required by Rule 13d-1(f).
<PAGE>
After reasonable inquiry and the best of our knowledge and
belief, we certify that the information set forth in this
statement is true, complete and correct as of this 6th day of
February, 1995.
NEW DM MANAGEMENT ASSOCIATES I DM ASSOCIATES LIMITED
PARTNERSHIP
By New DM Management Associates
I
By: /s/ Charles Nirenberg Its General Partner
Charles Nirenberg
Its Managing Partner
By: /s/ Charles Nirenberg
Charles Nirenberg
Its Managing General Partner
NEW DM MANAGEMENT ASSOCIATES II
/s/ Charles Nirenberg
By: /s/ Charles Nirenberg Charles Nirenberg
Charles Nirenberg
Its Managing Partner
/s/ Robert B. Stein, Jr.
Robert B. Stein, Jr.
/s/ Gregory G. Landry
Gregory G. Landry
/s/ Mitchell J. Kupperman
Mitchell J. Kupperman
/s/ Frank Colaccino
Frank Colaccino
<PAGE>
EXHIBIT F
FIRST AMENDMENT TO
PARTNERSHIP AGREEMENT OF
DM ASSOCIATES LIMITED PARTNERSHIP
This Agreement is made as of the 8th day of September,
1994, among HNB Investment Corp. Charles Nirenberg, The Nirenberg
Foundation, Inc., New DM Management Associates I and New DM
Management Associates II, as an amendment to the Partnership
Agreement of DM Associates Limited Partnership ("DM Associates").
PREAMBLE
DM Associates was formed on March 12, 1992, by the
execution of a Partnership Agreement on that date (the
"Partnership Agreement"). Subsequent thereto, the general
partner of DM Associates, DM Management Associates, has been
dissolved and Limited Partners of DM Associates constituting a
Super Majority (as defined in the Partnership Agreement) have
appointed New DM Management Associates I, a Connecticut general
partnership, as a general partner of DM Associates. Such Super
Majority has also appointed New DM Management Associates II, a
Connecticut general partnership, as a special general partner of
DM Associates (the "Special General Partner"), which Special
General Partner shall have certain rights with respect to the
voting of certain of the Class B Common Stock of Dairy Mart
Convenience Stores, Inc. ("DMCS") owned by DM Associates. This
Agreement is an amendment to the Partnership Agreement which sets
forth the appointment of such new general partners and certain
other amended terms of the Partnership Agreement that have been
agreed upon in conjunction therewith. Capitalized terms used
herein which are not defined herein shall have the meaning
ascribed to them in the Partnership Agreement.
WITNESSETH
Now, therefore, the parties hereto have agreed as
follows:
1. New DM Management Associates I is hereby appointed as a
general partner of DM Associates. Except to the extent expressly
set forth herein to the contrary, (a) the defined term "General
Partner" in the Partnership Agreement and herein shall refer to
New DM Management Associates I, (b) all references to the General
Partner in the Partnership Agreement shall refer to New DM
Management Associates I, and (c) New DM Management Associates I
shall have all of the powers, rights, privileges and obligations
of the General Partner under the Partnership Agreement.
<PAGE>
2. New DM Management Associates II is hereby appointed as
a special general partner of DM Associates, provided that it
shall have only those powers, rights, privileges and obligations
as are expressly set forth in Section 8.1(c) (which is being
added to the Partnership Agreement by paragraph 8 below), and no
others.
3. Section 2.1 of the Partnership Agreement is hereby
amended to add the words "and the Special General Partner" after
"The General Partner" in the first line of such Section 2.1.
4. Section 2.3 of the Partnership Agreement is hereby
deleted and the following is substituted therefor:
The principal office of the Partnership shall be
located at One Vision Drive, Enfield, Connecticut,
Attn: Charles Nirenberg, or such other place or places
as the General Partner may, from time to time,
designate after notice to all the Limited Partners. The
agent for service of process shall be Charles
Nirenberg, or such successor as may, from time to time,
be designated by the General Partner.
5. Section 5.1(a) of the Partnership Agreement is hereby
deleted. Exhibit A to the Partnership Agreement is hereby
deleted and replaced with Exhibit A attached hereto. The parties
hereto acknowledge that the General Partner shall be deemed to
have contributed to the capital of the Partnership in cash the
amount of $700,000 (which is the amount that was previously
contributed to the capital of the Partnership by a prior General
Partner of the Partnership, DM Management Associates). The
Special General Partner has made a $10 cash contribution to DM
Associates in exchange for the Percentage Interest in the
Partnership set forth on Exhibit A hereto. The Partners shall
have the Percentage Interests in DM Associates set forth on
Exhibit A hereto.
6. Section 6.3(f) is hereby deleted and the following is
substituted therefor:
(f) Sixth, an amount of such proceeds up to the
Unrecovered Capital of the General Partner and the
Special General Partner shall be distributed to the
General Partner and the Special General Partner,
respectively;
7. The following Section 6.7(a)(5A) is hereby added to the
Partnership Agreement after Section 6.7(a)(5) thereof:
(5A) Then, to the Special General Partner until the
positive balance of the Capital Account of the Special
<PAGE> General Partner is equal to the Unrecovered Capital of
the Special General Partner.
8. Sections 8.1 and 8.2 of the Partnership Agreement are
hereby deleted and the Sections 8.1 and 8.2 set forth on Exhibit
B hereto are substituted therefor.
9. Section 8.3A of the Partnership Agreement is hereby
deleted and the following Section 8.3A is substituted therefor:
Section 8.3A - Definition of Majority in Certain
Circumstances. In the event the General Partner (or any
person having an interest therein) holds any limited
partnership interests in the Partnership, then, with
respect to any proposed amendment to or modification of
the rights, obligations or liabilities of the General
Partner hereunder, which proposed amendment or
modification requires a Majority (and not a different
percentage) vote (assuming that there are provisions
which require only such Majority vote; it being
understood that if no such matters exist, this
provision shall be deemed superfluous and without
meaning), Majority shall mean Partners owning more than
fifty percent (50%) of the Percentage Interests in the
Partnership and in addition thereto the approval of the
Class A Limited Partners.
10. Section 12.5(a) is hereby deleted and the following is
substituted therefor:
(a) of an inconsequential nature and do not affect the
rights of the Limited Partners or the Special General
Partner in any material respect;
11. Section 9.1, Section 13.1, Article XIV, and Section
15.5 are hereby amended by adding the words "or the Special
General Partner" after each reference to the General Partner
therein.
12. Section 13.1 is hereby amended by adding to the last
sentence of said Section after the word "misconduct" the
following:
malfeasance or fraud; or any act or acts outside the
scope of its duties, as defined in Section 8.1 of this
Agreement (as added by the First Amendment to this
Agreement); or if it has breached any representation or
warranty or any agreement or covenant contained in this
Agreement and such breach has had a material adverse
effect on the Partnership.
<PAGE> 13. The first sentence of Section 14.1 is hereby
amended by adding after the word "misconduct" the following:
malfeasance or fraud; or any act or acts outside the
scope of its duties, as defined in Section 8.1 of this
Agreement (as added by the First Amendment to this
Agreement); or if it has breached any representation or
warranty or any agreement or covenant contained in this
Agreement and such breach has had a material adverse
effect on the Partnership.
14. Section 14.1 is hereby further amended by adding the
words "(a) Except as set forth in Section 14.1(b) below" to the
beginning of the second sentence of Section 14.1 and by adding
the following Section 14.1(b):
(b) In lieu of a notification signed by a Super
Majority of the Partners, the General Partner and/or
the Special General Partner may be removed as a general
partner of the Partnership by written notice by HNB
Investment Corp. to the General Partner or Special
General Partner, as applicable, if HNB Investment Corp.
delivers therewith a written opinion of outside legal
counsel selected by HNB Investment Corp. to the General
Partner and/or Special General Partner, as applicable,
to the effect that the standards for removal of such
general partner of the Partnership set forth in this
Section 14.1 of this Partnership Agreement have been
met. Notwithstanding the foregoing, such removal of the
General Partner and/or the Special General Partner
shall not be effective if the General Partner and/or
Special General Partner, as applicable, notifies HNB
Investment Corp., within 5 days after receiving such
notice and such opinion of outside legal counsel, that
the General Partner or Special General Partner, as
applicable, disagrees with the conclusions set forth in
such written opinion of counsel, unless an independent
arbitrator to be selected by HNB Investment Corp. and
the General Partner or Special General Partner, as
applicable, determines that such standards for removal
have been met.
15. Section 15.1(c)(1) is hereby deleted and the following
is substituted therefor:
(1) a remaining General Partner, if any, other than
the Special General Partner, continues the business of
the Partnership, or
16. Section 15.1(e) is hereby deleted and the following is
substituted therefor:
<PAGE>
(e) The failure to elect a successor to a sole
remaining General Partner which has withdrawn,
dissolved or been removed, within the time required by
Section 14.3; provided, however, that, for purposes of
determining whether a Person is the sole remaining
General Partner of the Partnership, the Special General
Partner shall not be deemed to be a General Partner of
the Partnership.
17. References in the definition of "UnrecoverePartner
e General Partner are hereby amended to add the words "and the
Special General Partner" to each such reference.
18. In the following Sections or provisions in Sections,
the words "and/or the Special General Partner" (or, as
applicable, the words "and/or the Special General Partner's") are
hereby added after the word "Partners" or "Partner" (but not
after the words "General Partner"): (a) the definition of
"Capital Contribution"; (b) paragraphs (b) and (d) of the
definition of "Gross Asset Value"; (c) the definition of
"Percentage Interest"; (d) Section 5.2; (e) Section 6.2; (f) the
fifth line of Section 6.3; (g) Section 6.4; (h) Section 6.5; (i)
Section 6.6(c); (j) Section 6.7; and (k) Sections 6.8, 6.9, 6.10,
6.13, and 9.2.
19. In the following Sections or provisions in Sections,
the words "and/or the Special General Partner" are hereby added
after the words "Limited Partner" or "Limited Partners": (a)
Section 10.4 (not including the references to "Class A Limited
Partner" and "such Limited Partner" in the 3rd and 5th lines of
such Section), and (b) Section 12.1.
20. Except to the extent expressly amended herein, the
Partnership Agreement shall continue in full force and effect in
accordance with its terms.
21. This Agreement, together with the letter from Charles
Nirenberg to HNB Investment Corp., The Nirenberg Foundation,
Inc., Gregory G. Landry, Mitchell J. Kupperman, and Robert B.
Stein, Jr. dated as of the date of this Agreement and agreed to
in writing by such addressees; the letter regarding the
dissolution of New DM Management Associates; and the letter dated
as of the date of this Agreement regarding the applicatPartner
to the indebtedness owed by the Partnership to FCN Properties
Corporation, constitutes the entire agreement among the parties
with respect to the subject matter hereof and supersedes any
prior agreement or understanding among them, oral or written
(includiess owed by the tation, that certain letter agreement,
dated September 8, 1994, among the parties, to the extent
inconsistent herewith).
<PAGE> IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
HNB INVESTMENT CORP.
/s/ Michael J. Kinney /s/ Charles Nirenberg
By
Michael J. Kinney CHARLES NIRENBERG
Its President
THE NIRENBERG FOUNDATION, INC. NEW DM MANAGEMENT ASSOCIATES I
/s/ Charles Nirenberg /s/ Charles Nirenberg
By By
Charles Nirenberg Charles Nirenberg
Its President Its Managing Partner
NEW DM MANAGEMENT ASSOCIATES II
/s/ Charles Nirenberg
By
Charles Nirenberg
Its Managing Partner
<PAGE> Exhibit A
TO FIRST AMENDMENT TO
PARTNERSHIP AGREEMENT OF
DM ASSOCIATES LIMITED PARTNERSHIP
Capital Percentage
Partner Contribution Interest
General Partners:
New DM Management Associates I $ 700,000 4.31%
New DM Management Associates II 10 .01%
Class A Limited Partner:
HNB Investment Corp. 8,000,000 49.38%
Class B Limited Partners:
Charles Nirenberg 7,400,000 45.68%
The Nirenberg Foundation, Inc. 100,000 0.62%
TOTAL $16,200,000 100.00%
<PAGE> Exhibit B
TO FIRST AMENDMENT TO
PARTNERSHIP AGREEMENT OF
DM ASSOCIATES LIMITED PARTNERSHIP
Section 8.1 - Power and Authority of the General Partner or the
Special General Partner.
(a) Except for actions requiring approval by a Super
Majority or Majority and except as set forth in Section 8.1(c)
below, full and complete discretion in the management and control
of the affairs of the Partnership shall be vested in the General
Partner, the Managing Partner of which is Charles Nirenberg.
(b) The General Partner's management authority under
Section 8.1(a) shall include, but not be limited to, except to
the extent specifically otherwise provided in Sections 8.1(c),
8.1(d) and 8.1(e) below, (i) the right to exercise all voting and
consensual rights (including, without limitation, in respect to
the election of directors of DMCS) of the Partnership with
respect to DMCS Shares held by the Partnership, (ii) the right to
exercise all rights the Partnership has with respect to holding
the DMCS Shares, (iii) subject to the provisions of Section 8.2
below, the authority, on behalf of the Partnership, to DMCS
Shares form, consummate and close any Purchase and Sale
Agreements with respect to the acquisition or disposition of the
DMCS Shares, and (iv) subject to the provisions of Section 8.2
below, to execute financial application for, and all documents
pertaining to, the financing, if any, of the acquisition of the
DMCS Shares and/or any subsequent financing, refinancing or
disposition of the DMCS Shares, all upon such terms and
conditions as the General Partner, in its sole discretion, shall
determine.
(c) Notwithstanding anything herein to the contrary,
except as provided in Sections 8.1(d) and 8.1(e) below, the
Special General Partner shall have the limited right and
management authority (i) to exercise all voting and consensual
rights (including, without limitation, in respect to the election
of directors of DMCS) that the Partnership has with respect to
the Specified Voting Percentage of the DMCS Shares held by the
Partnership, (ii) subject to the provisions of 8.2 below, the
authority, on behalf of the Partnership, to execute, perform,
consummate and close any Purchase and Sale Agreements with
respect to the acquisition or disposition of the Specified
Dispositive Percentage of the DMCS Shares and (iii) subject to
the provisions of Section 8.2 below, to execute financial
<PAGE>application for, and all documents pertaining to, the
financing, if any, of the acquisition of the Specified
Dispositive Percentage of the DMCS Shares and/or any subsequent
financing, refinancing or disposition of the Specified
Dispositive Percentage of the DMCS Shares, all upon such terms
and conditions as the Special General Partner, in its sole
discretion, shall determine; provided, however, that such limited
right and management authority of the Special General Partner
shall terminate upon the earlier to occur of (A) the dissolution
of the Special General Partner, or (B) a Termination Event (as
defined in Section 6.5(d) of the partnership agreement of the
Special General Partner). For the purposes of this Agreement,
the "Specified Voting Percentage" means shares of Class B Common
Stock of DMCS representing the greater of (x) 10% of the voting
power of all outstanding capital stock of DMCS, or (y) such
percentage of the voting power of all outstanding capital stock
of DMCS as is necessary in order for the voting power of the
General Partner with respect to DMCS capital stock not to exceed
50% of the voting power of all such outstanding capital stock of
DMCS. For purposes of this Agreement the "Specified Dispositive
Percentage" means shares of Class B Common Stock of DMCS
representing such percentage of the voting power of all
outstanding capital stock of DMCS as is necessary in order to
limit the General Partner's power to dispose of shares of capital
stock of DMCS owned by the Partnership to a number of shares
representing no more than 50% of the voting power of all
outstanding capital stock of DMCS.
(d) Notwithstanding anything herein to the contrary,
(A) the General Partner shall not sell, transfer or exchange, on
behalf of the Partnership, more than 360,000 DMCS Shares in the
aggregate (including all prior transfers of DMCS Shares by the
General Partner on behalf of the Partnership) without the
approval of a Super Majority, and (B) the Special General Partner
shall not sell, transfer or exchange, on behalf of the
Partnership, any DMCS Shares without the approval of a Super
Majority.
(e) Notwithstanding any other provision herein to the
contrary, prior to voting the DMCS Shares held by the Partnership
at a meeting of stockholders of the Company or exercising any
consensual rights of such DMCS Shares, the General Partner and
the Special General Partner shall consult with HNB Investment
Corp. as to such matters. If, after such consultation, the
General Partner and/or the Special General Partner votes or
exercises consensual rights attaching to the DMCS Shares in a
manner with which HNB Investment Corp., in its sole discretion,
disagrees, then HNB Investment Corp. shall have the right to
dissolve the Partnership.
<PAGE> 8.2 Actions Requiring a Super Majority. In addition
to the actions set forth elsewhere in this Agreement, the General
Partner and the Special General Partner shall not take any of the
following actions without the approval of a Super Majority:
(a) Change the nature of the Partnership business;
(b) Agree to any modification of the CDA Loan Agreement or
any agreements in respect of any other material indebtedness of
the Partnership; provided, however, that the Limited Partners (i)
acknowledge that amendment of the CDA Loan Agreement will be
required in connection with the modifications contemplated by
this Amendment and related current events, and (ii) agree that
their consent to such amendments to the CDA Loan Agreement will
not be unreasonably withheld. Consent shall be deemed
unreasonably held unless the proposed form of CDA amendment would
materially, adversely affect the economic value of their
respective investments as Limited Partners in the Partnership.
(c) Convert the DMCS Shares to Class A Common Stock of
DMCS;
(d) Approve an amendment, other than an amendment in
accordance with Section 12.5, to this Agreement;
(e) Do any act in violation of any applicable law or
regulation, or do any act which would cause the Partnership to be
in violation of any applicable law or regulation;
(f) Do any act in contravention of this Agreement
(including any act required to be consented to by the Limited
Partners unless such consent has been obtained);
(g) Sell, transfer, convey, refinance, mortgage, encumber,
pledge or otherwise dispose of all or substantially all of the
assets of the Partnership (other than as required by the CDA Loan
Agreement);
(h) Admit any person as General Partner or a Limited
Partner, or withdraw as General Partner, except upon thirty days
prior written notice to all of the Partners of the Partnership.
(i) Engage in transactions in which the General Partner or
an Affiliate of the General Partner has an actual or potential
conflict of interest with the Limited Partner or the Partnership.
(j) Enter into any contract or agreement with an Affiliate
of a General Partner which relates to the Partnership;
<PAGE>
(k) Incur a debt on behalf of the Partnership;
(l) Borrow funds from the Partnership;
(m) Commingle Partnership funds or assets with the funds or
assets of a General Partner or any partnership or other entity
owned or operated by the General Partner;
(n) Confess a judgment against the Partnership;
(o) Execute or deliver any assignment for the benefit of
the creditors of the Partnership;
(p) File a voluntary petition for bankruptcy of the
Partnership;
(q) Dissolve the Partnership; or
(r) Indemnify any partner or other person (except as
otherwise set forth in this Agreement).
<PAGE> EXHIBIT G
NEW DM MANAGEMENT ASSOCIATES I
PARTNERSHIP AGREEMENT
THIS PARTNERSHIP AGREEMENT is made as of September 8, 1994
by and among CHARLES NIRENBERG, an individual with a business
address at One Vision Drive, Enfield, Connecticut; MITCHELL J.
KUPPERMAN, an individual with a business address at One Vision
Drive, Enfield Connecticut; GREGORY G. LANDRY, an individual with
a business address at One Vision Drive, Enfield Connecticut; and
ROBERT B. STEIN, JR., an individual with a business address at
One Vision Drive, Enfield, Connecticut.
ARTICLE I. DEFINITIONS
As used in this Agreement, the following terms shall have
the following meanings:
1.1 "Act" means The Uniform Partnership Act of the State of
Connecticut, as amended from time to time.
1.2 "Agreement"means this Partnership Agreement, as
amended, modified, supplemented or restated from time to time.
1.3 "Available Cash" means Partnership cash, demand
deposits and short-term marketable securities, reduced by such
amounts as the Managing Partner deems reasonable in order to
provide for any anticipated expenditures or liabilities of the
Partnership. Available Cash shall not include Capital
Contributions or the proceeds of any Interim Capital Transaction
or Capital Transaction.
1.4 "Capital Account" means, with respect to any Partner,
the Capital Account established and maintained for such Partner
under Section 3.9.
1.5 "Capital Contribution" means the total amount of cash
and the fair market value of any property contributed to the
Partnership by a Partner.
1.6 "Capital Transaction" means any Partnership transaction
not in the ordinary course of its business which results in the
dissolution and liquidation of the Partnership, including,
without limitation, sales, exchanges or other dispositions of
real or personal property, condemnations, recoveries of damage
awards and insurance proceeds (other than business or rental
interruption insurance proceeds), and receipt by the Partnership
<PAGE>of debt service payments on loans made by it pursuant to
the terms of any such sale.
1.7 "Code" means the Internal Revenue Code of 1986, as
amended, and the corresponding provisions of any successor
statute.
1.8 "Departure" means the retirement, resignation (other
than for Good Reason) or termination of a Partner (other than
Charles Nirenberg) from Dairy Mart Convenience Stores, Inc.
(sometimes referred to herein as the "Company"), at any time,
other than due to death or disability.
1.9 "Fiscal Year" means the calendar year.
1.10 "Good Reason" means the occurrence, without the
Partner's express written consent, of any of the following
circumstances:
(a) the assignment to the Partner of any duties
inconsistent with his office with the Company as of the date
of this Agreement, his removal from that position, or a
substantial diminution in the nature or status of his
responsibilities from those in effect immediately prior to
the date hereof; or
(b) a reduction by the Company in his annual base
salary, annual bonus or fringe benefits as in effect on the
date hereof or as the same may be increased from time to
time.
1.11 "Interim Capital Transaction" means a refinancing, or a
sale of a portion of the Property or an interest therein, and any
similar transaction (other than the receipt of Capital
Contributions) which is not in the ordinary course of the
business of the Partnership but which does not result in the
dissolution and liquidation of the Partnership.
1.12 "Majority of the Number of Partners" means the consent
of at least three of the four Partners in the Partnership. If at
any time there exists three Partners in the Partnership, then
such term shall mean the consent of at least two of such three
Partners. If at any time there exist two Partners in the
Partnership then such term shall mean the consent of a majority
of the Partner Percentage Interests of the Partners.
1.13 "Managing Partner" means CHARLES NIRENBERG, for so long
as he shall serve in such position, or his successor in such
capacity.
1.14 "Minimum Gain" means the amount determined by
computing, with respect to each Nonrecourse Liability of the
Partnership, the amount of gain (of whatever character), if any,
that the Partnership would realize if it disposed in a taxable
<PAGE>transaction of the Partnership property subject to such
Nonrecourse Liability in full satisfaction thereof (and for no
other consideration), and by then aggregating the amounts so
computed.
1.15 "Nonrecourse Liability" has the meaning set forth in
Section 1.704-1T(b)(4)(iv)(k)(3) of the Treasury Regulations.
1.16 "Partner Percentage Interests" means the percentage
interests set forth on Exhibit A hereto.
1.17 "Partners" means, collectively, each of CHARLES
NIRENBERG, MITCHELL J. KUPPERMAN, GREGORY G. LANDRY and ROBERT B.
STEIN, JR., to the extent that such person remains a partner in
the Partnership, and/or any person who, at the time of reference
thereto, is a partner of the Partnership in addition to or in
lieu of any of the foregoing.
1.18 "Partnership" means the general partnership hereby
formed, as such partnership may from time to time be constituted.
1.19 "Property" means that certain general partnership
interest in DM Associates Limited Partnership, a Connecticut
limited partnership.
1.20 "Standard Allocation" has the meaning set forth in
Section 3.8.
1.21 "Taxable Income or Tax Losses" means the income or loss
of the Partnership for each Fiscal Year as determined for federal
income purposes.
1.22 "Unrecovered Capital Contribution" means, with respect
to any Partner, the excess of (i) the aggregate Capital
Contributions of such Partner, or (ii) the aggregate
distributions to such Partner pursuant to Section 5.2(d).
ARTICLE II. FORMATION
2.1 Business. The business of the Partnership is acquiring,
holding, managing and ultimately disposing of a general
partnership interest in DM Associates Limited Partnership, a
Connecticut limited partnership.
2.2 Principal Place of Business. The principal place of
business of the Partnership is One Vision Drive, Enfield,
Connecticut, Attention: Charles Nirenberg. The Partnership may
maintain such other offices at such other places within and
without the State of Connecticut as the Managing Partner deems
advisable or as required by law.
2.3 Term. The term of the partnership commenced on the
date hereof, and shall continue until September12, 1997,
<PAGE>unless sooner terminated in the manner provided in Section
9.1, or unless extended as provided by Section 9.1(a)(1).
2.4 Name. The name of the Partnership is NEW DM MANAGEMENT
ASSOCIATES I. The business of the Partnership may be conducted,
upon compliance with all applicable laws, under any other name
agreed to in writing by all the Partners.
2.5 Qualification of Partnership. The Managing Partner
shall cause the Partnership to be registered under assumed or
fictitious name statutes or similar laws in any jurisdiction in
which the Managing Partner deems such registration to be
necessary or appropriate.
ARTICLE III. PARTNER'S CAPITAL
3.1 Initial Capital Contributions of Partners. The initial
Capital Contribution of each Partner is listed on Exhibit A
attached hereto. Each Partner shall contribute his initial
Capital Contribution upon execution and delivery of this
Agreement.
3.2 Additional Capital Contributions.
(a) In the event that the Managing Partner determines
that the Partnership requires additional capital for any
Partnership purpose, and a Majority of the Number of Partners
agree with the Managing Partner's decision, the Partnership shall
have the right to require the Partners to make additional Capital
Contributions pursuant to the provisions of Section 3.2(b)
hereof. Each Partner agrees to furnish any such additional
Capital Contribution in proportion to his interest in Partnership
profits (as determined pursuant to Section 3.8 hereof).
(b) In the event additional capital is required
pursuant to Section 3.2(a), the Partnership shall notify each
Partner in writing of the amount of additional funds required,
together with a description of the purpose thereof. Each Partner
shall deposit his proportionate share of the total sum requested
with the Partnership not later than ten days following the
receipt of such notice.
(c) In the event that any Partner (a "Defaulting
Partner") fails to pay his proportionate share of any additional
Capital Contribution within the time prescribed by Section
3.2(b), and such failure continues for ten days after he receives
written notice thereof from the Partnership or the other
Partner(s), one or more of the other Partners (the "Non-
Defaulting Partner(s)") shall have the right to advance any part
or all of the additional Capital Contribution on behalf of the
<PAGE>Defaulting Partner. Such right shall be exercisable by the
Non-Defaulting Partners in proportion to their respective
interests in Partnership profits (as determined pursuant to
Section 3.8) or in such other proportions as they may agree. Any
such advance shall be nonrecourse to the Defaulting Partner and
shall be secured by, and the Non-Defaulting Partner(s) advancing
such funds shall have a security interest in, the Partnership
interest of the Defaulting Partner to secure the obligation of
the Defaulting Partner to repay the amount advanced, with
interest thereon at a rate equal to 15% per annum or the highest
legal rate that the Defaulting Partner may be required to pay
under Connecticut law, whichever is less. Any funds that become
available for distribution to the Defaulting Partner from the
Partnership shall immediately be applied to repaying the Non-
Defaulting Partner(s) for any sums so advanced on behalf of the
Defaulting Partner, plus interest accrued thereon. If no funds
have been advanced by any Non-Defaulting Partner, any funds that
become available for distribution to the Defaulting Partner from
the Partnership shall be retained by the Partnership and applied
to the additional Capital Contribution obligation of the
Defaulting Partner.
3.3 No Interest; No Return. No Partner shall be entitled to
receive interest on any Capital Contribution or on such Partners'
Capital Account. No Partner shall have any right to demand or
receive the return of his Capital Contribution or to receive any
distributions from the Partnership, except as specifically
provided in this Agreement.
3.4 No Distributions in Kind. No Partner shall be entitled
to demand or receive property other than cash in return for his
Capital Contribution. If, in the event of a liquidation and
winding up of the Partnership, the Managing Partner in his
discretion determines that some or all of the Partnership's
property shall be distributed in kind, such property shall be
valued and gain or loss shall be determined as though such
property had been sold. The deemed gain or loss with respect to
such property shall be allocated to the Partners in accordance
with Section 4.2 and the Capital Accounts of the Partners shall
be appropriately adjusted to reflect such allocation.
3.5 No Priority Among Partners. Except as specifically
provided in this Agreement, no Partner shall have priority over
any other Partner either as to the return of Capital
Contributions or as to profits, losses or distributions.
3.6 Loans By Partners. From time to time, any Partner may
make loans to the Partnership or advance money on its behalf (but
only to the extent required by the business of the Partnership,
as determined by the Managing Partner and agreed to by a Majority
of the Number of Partners). Such loans shall bear interest at the
<PAGE>Prime Rate of Chemical Banking Corporation, or any
successor thereto as in effect from time to time, with changes in
such interest rate taking effect as and when changes in such
prime rate shall occur. The amount of any required payments of
principal and interest with respect to any such loan or advance
shall be an obligation of the Partnership to the lending Partner
that is payable before any distributions are made from Available
Cash or from the proceeds of Interim Capital Transactions or a
Capital Transaction.
3.7 No Deficit Restoration. In no event shall any Partner,
by reason of his execution of this Agreement, be obligated, upon
the liquidation of the Partnership, to make an additional Capital
Contribution to the Partnership in an amount equal to a deficit
balance in his Capital Account.
3.8 Allocations and Distributions Among Partners. Unless
otherwise provided herein, all Capital Contributions required to
be made by the Partners, all allocations to the Partners of
Taxable Income and Tax Losses, and all distributions to the
Partners shall be apportioned, allocated or distributed, as the
case may be as follows (the so-called "Standard Allocation"):
Standard
Partner Allocation
Charles Nirenberg 46.4287%
Mitchell J. Kupperman 17.8571%
Gregory G. Landry 17.8571%
Robert B. Stein, Jr. 17.8571%
3.9 Capital Accounts. The Partnership shall establish a
Capital Account for each Partner, which shall be adjusted and
maintained in accordance with the principles set forth in the
Code and Treasury Regulation Sections 1.704-1(b).
3.10 Admission of Additional Partners. Except as provided in
Article VI, no person shall be admitted to the Partnership
without the prior written consent of a Majority of the Number of
Partners in the Partnership.
ARTICLE IV. ALLOCATIONS OF TAXABLE INCOME AND LOSSES
4.1 Taxable Income and Tax Losses from Operations. Except
as provided in Section 4.3, all Taxable Income and Tax Losses of
the Partnership from operations in the ordinary course of its
business (as distinguished from Interim Capital Transactions and
Capital Transactions) for each Fiscal Year or part thereof shall
be allocated in accordance with the Partner Percentage Interests.
<PAGE>
4.2 Taxable Income and Tax Losses from Interim Capital
Transactions and Capital Transaction. Except as provided in
Section 4.3, all Taxable Income and Tax Losses of the Partnership
from the occurrence of an Interim Capital Transaction or a
Capital Transaction shall be allocated in the following order of
priority:
(a) In the event there is Taxable Income to be
allocated:
(i) first, Taxable Income shall be allocated pro
rata among the Partners to the extent
necessary to cause the Capital Account of
each Partner to be equal to his Unrecovered
Capital Contribution; and
(ii) then, any remaining Taxable Income shall be
allocated in accordance with the Partner
Percentage Interests.
(b) In the event that there are Tax Losses to be
allocated:
(i) if any one or more of the Partners has a
positive balance in his Capital Account, an
amount of Tax Losses equal to the aggregate
among such Partners in the proportion that
the positive balance of each such Partner's
Capital Account bears to the aggregate
positive balances of all such Partners'
Capital Accounts; and
(ii) then, after such allocations have been made
(or in the event that each Partner has a zero
or negative balance in his Capital Account),
any remaining Tax Losses shall be allocated
in accordance with the Partner Percentage
Interests.
4.3 Allocations Relating to Nonrecourse Liabilities.
(a) Notwithstanding anything in this Agreement to the
contrary, in the event that there is a net decrease in the
Minimum Gain for any Fiscal Year, each Partner shall, before any
other allocation is made for such Fiscal Year, be allocated items
of income and gain for such Fiscal Year (and, if necessary, for
subsequent Fiscal Years) in proportion to, and to the extent of,
the portion of such Partner's share of the net decrease in the
Minimum Gain during such Fiscal Year that is attributable to the
disposition of Partnership property subject to one or more
<PAGE>Nonrecourse Liabilities of the Partnership. Any such
Minimum Gain chargeback required pursuant to this Section 4.3(a)
for a Fiscal Year shall consist first of gains recognized from
the disposition of items of Partnership property subject to one
or more Nonrecourse Liabilities to the extent of the decrease in
Minimum Gain attributable to the disposition of such items of
property (or, if such gains exceed the amount of Minimum Gain
chargeback for such Fiscal Year, the Minimum Gain chargeback
shall consist of a proportionate share of each share gain), and
the remainder of such Minimum Gain chargeback shall consist of a
pro rata portion of the other items of Partnership income and
gain for the Fiscal Year.
(b) Pursuant to section 1.752-1T(e)(3)(ii)(C)(1) of
the Treasury Regulations, the Partners' interest in Partnership
profits for purposes of determining their share of the
Nonrecourse Liabilities of the Partnership shall be determined
under Section 3.8 hereof.
ARTICLE V. DISTRIBUTIONS
5.1 Distribution of Available Cash. The Managing Partner
shall have the right, in his sole discretion, to cause the
Partnership to distribute to the Partners any portion or all of
the Partnership's Available Cash at any time and from time to
time, or may determine to make no distributions whatsoever. Any
Available Cash which the Managing Partner determines to
distribute shall be distributed in accordance with the Partner
Percentage Interests.
5.2 Distribution of Proceeds of Interim Capital
Transactions. The proceeds of an Interim Capital Transaction
shall be distributed in the following order of priority:
(a) to the payment of the debts and liabilities of the
Partnership then due, except debts and liabilities owing to the
Partners;
(b) to the establishment of any reserves which a
Majority of the Number of Partners deems reasonably necessary for
any anticipated, contingent or unforeseen liabilities or
obligations of the Partnership arising out of, or in connection
with, the conduct of the business of the Partnership. However,
if the Managing Partner does not agree with the decision made by
the Majority of the Number of Partners with respect to
establishing reserves, the Managing Partner shall have the right
to obtain a written report from an independent accounting firm
which report must be given consideration by the Partners in
connection with the re-vote that will occur after such report has
been reviewed;
<PAGE> (c) to the repayment of any debts and liabilities
then due from the Partnership to the Partners;
(d) then, to the Partners pro rata on the basis of
their respective Unrecovered Capital Contributions until each
Partner has received an aggregate amount equal to his Unrecovered
Capital Contribution; and
(e) any remaining proceeds shall be distributed in
accordance with the Partner Percentage Interests (subject to
adjustments under Section 6.5(b)).
5.3 Distributions of Proceeds of Capital Transaction. The
proceeds of a Capital Transaction and from the liquidation of the
assets of the Partnership following dissolution, after the excess
of such liquidation, shall be distributed in the following order
of priority:
(a) to the payment of the debts and liabilities of the
Partnership then due, except debts and liabilities owing to the
Partners;
(b) to the establishment of any reserves which a
Majority of the Number of Partners deems reasonably necessary for
any anticipated, contingent or unforeseen liabilities or
obligations of the Partnership arising out of, or in connection
with, the conduct of the business of the Partnership. However,
if the Managing Partner does not agree with the decision made by
the Majority of the Number of Partners with respect to
establishing reserves, the Managing Partner shall have the right
to obtain a written report from an independent accounting firm
which report must be given consideration by the Partners in
connection with a re-vote that will occur after such report has
been reviewed;
(c) to the repayment of any debts and liabilities
owing by the Partnership to the Partners; and
(d) then, to the Partners pro rata on the basis of
their respective Unrecovered Capital Contributions until each
Partner has received an aggregate amount equal to his Unrecovered
Capital Contribution; and
(e) to the Partners in accordance with the Partner
Percentage Interests (subject to adjustment under Section
6.5(b)).
<PAGE> ARTICLE VI. ASSIGNMENT AND SUBSTITUTION
6.1 Restrictions on Transfers.
(a) No Partner shall have the right to, and each
Partner hereby agrees that he will not, sell, assign, transfer or
otherwise dispose of (collectively referred to as "Transfers" and
each individually as a "Transfer") his interest in the
Partnership or any part thereof except as permitted herein. Any
Transfer in violation of this Agreement shall be null and void as
against the Partnership except as otherwise provided by law.
(b) No Partner shall pledge, hypothecate or otherwise
encumber his interest in the Partnership without the prior
written consent of all of the other Partners, which may be given
or withheld in their sole and absolute discretion.
(c) No transferee of any part or all of the
Partnership interest of the Partner shall become a substitute
Partner without the prior written consent of all of the other
Partners, which may be given or withheld in their sole and
absolute discretion.
6.2 Transfers by Partners.
(a) In the event that any Partner (the "Offering
Partner") wishes to Transfer all or a portion of his Partnership
interest the ("Offered Interest") to any Person, whether or not a
Partner,, the other Partners shall have the right to purchase the
Offered Interest as provided herein.
(b) In the event that the Offering Partner shall
receive a bona fide firm offer, acceptable to him, or shall enter
into a bona fide contract to Transfer his Partnership interest
(which, in either case, shall be subject to the right of purchase
provided hereunder), the Offering Partner shall deliver a
photocopy of such offer or contract to the other Partners,
together with the name and address of the proposed Transferee.
The Offeree Partners shall have the right to purchase the Offered
Interest at the same price and upon the same terms and conditions
set forth in such offer or contract by giving written notice to
that effect to the Offering Partner within 20 days following
receipt of the photocopy of the offer or contract. The Offeree
Partners shall have the right to purchase the Offered Interest in
proportion to their respective interests in Partnership profits
(as determined pursuant to Section 3.8) or in such other
proportions as they may agree.
(c) In the event that the Offering Partner has not
received written notice within the 20-day period described above
that one or more of the Offeree Partners is purchasing the entire
Offered Interest, the Offeree Partners shall be deemed to have
<PAGE>waived their right to purchase the Offered Interest and the
Offering Partner shall then be free to close and complete the
Transfer of the entire Offered Interest at the price and upon the
same terms and conditions set forth in such offer or contract.
If, however, any such proposed Transfer is not closed and
completed within 60 days thereafter in accordance with the terms
of such offer or contract, the rights of the Offeree Partners
under this Section 6.2 shall be fully restored and reinstated. No
Transfer of a Partnership interest shall be made on terms
materially different than those set forth in the original offer
or contract without first re-offering such interest to the other
Partners on such different terms.
(d) Any closing among the Partners in respect of the
transactions described in this Section 6.2 shall be held on a
date specified by the purchasing Partner(s) to the Offering
Partner at the office of the Partnership or at the office of the
Partnership's attorneys, but, in any event, not later than 90
days after the date on which Offeree Partners received
photocopies of the original offer or contract from the Offering
Partner. If more than one Offeree Partner wishes to purchase the
Offered Interest, then, unless they agree otherwise, they shall
purchase the Offered Interest in proportion to their respective
interests in Partnership profits (as determined pursuant to
Section 3.8 hereof). At such closing, the purchaser(s) shall pay
the purchase price of the Offered Interest in accordance with the
terms of the offer or contract, and the Offering Partner shall
execute and deliver all appropriate documents to transfer the
Offered Interest to the purchaser(s) thereof.
6.3 Permitted Assignment. Each Partner may assign from time
to time his rights to receive any portion or all of the
distributions to which he may be entitled under the terms of this
Agreement and any or all allocations of items of income, gain,
loss, deduction, credit and other Partnership items with which he
may be credited or charged hereunder; provided, however, that no
such assignment shall be effective until the Partner has given
notice to the Managing Partner of such assignment and the
Managing Partner has determined that such assignment is not
prohibited under Section 6.4.
6.4 Limitation on Transfer and Assignments. Notwithstanding
anything in this Agreement to the contrary, no Transfer, pledge
or hypothecation of a Partnership interest shall be effective and
no Partner shall have the right to consent thereto, unless, in
the opinion of counsel to the Partnership, such transaction would
not result in the classification of the Partnership as an
association taxable as a corporation for Federal income tax
purposes or a violation of any applicable law or regulation. Any
Transfer, pledge or hypothecation shall be effected in such
<PAGE>manner as shall, in the opinion of counsel to the
Partnership, be necessary to maintain the classification of the
Partnership as a partnership for Federal income tax purposes and
compliance with all applicable laws and regulations.
6.5 Consequences Upon the Departure of a Partner.
(a) Early Departure. In the event of the occurrence of
an Early Departure with respect to any Partner other than Charles
Nirenberg, such Partner's interest in the Partnership may, at the
option of the Partnership, be purchased by the Partnership at a
purchase price equal to the lesser of (a) or (b), where (a)
equals the amount that such Partner would receive if all of the
assets held by DM Associates Limited Partnership were sold at
their fair market value and the net proceeds from such sale were
distributed among the Partners of DM Associates Limited
Partnership in accordance with the terms of the limited
partnership agreement of DM Associates Limited Partnership and,
thereafter, the Partnership were dissolved in accordance with the
terms of this Agreement, or (b) such Partner's Unrecovered
Capital Contribution plus 6% per annum simple interest on such
Unrecovered Capital Contribution from the date the Partner
contributed his initial capital to the Partnership to the date of
the occurrence of such Partner's Early Departure. In the event
the Partnership does not give such departing Partner written
notice, within 30 days after the later of (i) the effective date
of the Partner's Departure, or (ii) the date that the Partner
notifies the Partnership in writing of the commencement of the
30-day period under this sentence, of the Partnership's intent to
purchase the departing Partner's interest then such Partner's
Departure shall thereafter be treated as a Later Departure.
Such purchase price shall be payable, at the option of the
Managing Partner, in either cash or notes. If said purchase price
is payable with a note, said note shall be payable in full upon
the earlier of (i) five years from the date of the occurrence of
the Early Departure, or (ii) the liquidation of the Partnership,
and shall bear simple interest at the lower of 10% per annum or
at a fixed rate equal to the Prime Rate of Chemical Banking
Corporation on the date of the Note, which interest shall accrue
and be payable upon the maturity of the note. In addition,
payment of such note shall not be a Partnership priority but
shall be paid on a pro rata basis with the distributions that are
or will be made to the Partners under Section 5.2(d) and (e) and
Section 5.3(d) and (e).
(b) Later Departure. In the event of the occurrence of
a Later Departure with respect to any Partner (other than Charles
Nirenberg, as to whom none of the provisions of this Section
6.5(b) are applicable), such Partner shall not be required to
sell his interest in the Partnership to the Partnership at such
<PAGE>time. However, in such event, any cash that might be
thereafter allocable to such Partner under Section 5.2(e) and
Section 5.3(e) (and a corresponding amount of taxable income)
shall be reduced by a percentage equal to the Later Departure
Percentage. Any amount that is allocated away from the departing
Partner shall be reallocated (along with the corresponding
income) to the remaining Partners in the Partnership in
accordance with their relative Partner Percentage Interests in
the Partnership.
(c) Definitions. For purposes of this Section 6.5:
(i) an "Early Departure" shall mean, with respect
to any Partner (other than Charles
Nirenberg), a Departure which occurs either
(a) by resignation by such Partner of his
employment by Dairy Mart Convenience Stores,
Inc. prior to March 12, 1996 of this
Agreement or (b) at any time after the date
of this Agreement by virtue of termination of
such Partner's employment by Dairy Mart
Convenience Stores, Inc. for Cause.
(ii) a "Later Departure" shall mean, with respect
to any Partner (other than Charles
Nirenberg), a Departure which occurs either
(a) by resignation by such Partner of his
employment by Dairy Mart Convenience Stores,
Inc. on or after March 12, 1996, or (b) at
any time by virtue of termination of such
Partner's employment by Dairy Mart
Convenience Stores, Inc. without Cause.
(iii) the "Later Departure Percentage" shall equal
the percentage equivalent of the fraction,
the numerator of which is the number of
months from the date of the Partner's
Departure to the date of the subject
distribution under either Section 5.2 or
Section 5.3 and the denominator of which is
the number of months from March 12, 1992 to
the date of the distribution under either
Section 5.2 or Section 5.3. For purposes of
computing the fraction, the beginning month
and ending month of each time sequence shall
be treated as whole months. For example, if a
Partner leaves on January 2, 1996 and a
distribution is made under Section 5.2(e) on
December 25, 1997, then the amount that the
Partner would have otherwise received had he
remained a Partner would be reduced by 24/72
or 33-1/3%.
<PAGE>
(iv) "Cause" shall mean either (a) failure of a
person to follow the directions or
instructions of the President or Board of
Directors of Dairy Mart Convenience Stores,
Inc. and continuation of such failure for
fifteen (15) days after receipt by such
person of written notice from the President
or Board as to the specific nature of such
failure, providing that such directions or
instructions are lawful and do not require
the violation of professional standards, or
(b)commission of a criminal act by a person
which involves moral turpitude or which
arises out of theft, embezzlement, or other
actions against Dairy Mart Convenience
Stores, Inc. or specifically arising out of
the person's employment, or (c) other acts
expressly constituting cause for termination
under the laws of Connecticut.
ARTICLE VII. RIGHTS AND DUTIES OF THE PARTNERS
7.1 Management Powers.
(a) Subject to the provisions of Section 10.2 hereof,
CHARLES NIRENBERG shall serve as Managing Partner until he dies,
becomes disabled, withdraws from the Partnership or voluntarily
relinquishes his position. In the event that there is at any time
no Managing Partner serving hereunder, a Majority of the Number
of Partners shall, at a meeting called by any Partner upon at
least ten days' notice to the other Partners, elect a new
Managing Partner by the vote of a Majority of the Number of
Partners. Pending such election, the Partners (acting by a
Majority of the Number of Partners) shall, except as provided in
Section 7.2, have all authority provided under the Act to manage
the business of the Partnership (subject to the provisions of the
Agreement of Limited Partnership of DM Associates Limited
Partnership).
(b) The Managing Partner shall take such action as he
deems necessary to provide for and supervise the operation of the
Property and to manage the Partnership for the purposes set forth
in Section 2.1, including, but not limited to, exercising on
behalf of the Partnership, any and all authority and rights
granted to the Partnership, as general partner of DM Associates
Limited Partnership, a Connecticut limited partnership, pursuant
to the Agreement of Limited Partnership of DM Limited
Partnership, except
<PAGE>that the Managing Partner shall not, and shall not have the
authority to, vote or exercise consensual rights or direct the
voting or exercise of consensual rights of any DMCS Shares, as
defined in the Partnership Agreement of DM Associates Limited
Partnership (the "DMCS Shares"), that the Partnership has the
power and authority to vote pursuant to such Partnership
Agreement, as to any matter, unless such vote or exercise of
consensual rights by the Managing Partner is agreed to by
Partners representing more than 50% of the Partner Percentage
Interests (and the Managing Partner shall vote (or direct the
voting of) such DMCS Shares, or shall exercise consensual rights
(or direct the exercise of consensual rights) in connection with
such DMCS Shares in such manner as Partners representing more
than 50% of the Partner Percentage Interests shall direct). If
the Managing Partner fails to vote (or direct the voting of) or
exercise consensual rights with respect to (or direct the
exercise of consensual rights with respect to) DMCS Shares that
the Partnership has the power and authority to vote, in such
manner as Partners representing more than 50% of the Partner
Percentage Interests shall direct, then such DMCS Shares may be
voted by ballot, proxy, or consent executed by Partners
representing more than 50% of the Partner Percentage Interests.
Notwithstanding anything in this Section 7.1(b) to the contrary,
prior to the occurrence of a Termination Event (as defined in
Section 6.5(d) of the Partnership Agreement of New DM Management
Associates II) no Partner shall have the right to vote, or agree
to or give any direction as to the voting of, any Excluded Shares
(as defined below) applicable to such Partner (it being
understood that any such Excluded Shares may be voted as directed
by the other Partners only if and to the extent that such other
Partners represent more than 50% of the Partner Percentage
Interests). For purposes hereof, the "Excluded Shares" mean, with
respect to any Partner, the number of DMCS Shares that has the
same amount of voting power as the aggregate number of Non-DM I
Shares (as defined below) as to which such Partner is deemed to
have beneficial ownership under Rule 13d-3 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); and "Non-
DM I Shares" means, with respect to any Partner, shares of the
Class A or Class B Common Stock of Dairy Mart Convenience Stores,
Inc. as to which such Partner is deemed to have beneficial
ownership under Rule 13d-3 of the Exchange Act, other than the
DMCS Shares (including, without limitation, any of such DMCS
Shares pledged by DM Associates Limited Partnership to FCN or as
to which FCN Properties Corporation or Charles Nirenberg, through
his ownership interest in FCN Properties Corporation, may
otherwise also be deemed to have beneficial ownership under Rule
13d-3 of the Exchange Act) as to which the Partnership has voting
or dispositive power pursuant to the Partnership Agreement of DM
Associates Limited Partnership or otherwise may be deemed to have
beneficial
<PAGE>ownership under Rule 13d-3 of the Exchange Act. By way of
example, if Mr. Stein individually owned in the aggregate shares
of Class A or Class B Common Stock of Dairy Mart Convenience
Stores, Inc. having voting power equal to 1,000 of the DMCS
Shares owned by DM Associates at the time that a vote of the DMCS
Shares was being held (and such vote was being held prior to the
occurrence of a Termination Event), then Mr. Stein's direction
under this Section 7.1(b) as to the voting of the DMCS Shares
owned by DM Associates would not be effective as to 1,000 of such
DMCS Shares, and the 50% approval needed for the voting of such
1,000 DMCS Shares would have to be obtained from Partners other
than Mr. Stein. The Managing Partner agrees to manage and control
the affairs of the Partnership to the best of his ability and to
conduct the operations contemplated by this Agreement in a
careful and prudent manner. The Managing Partner shall devote to
the Partnership business all such time and effort as shall be
required to operate and manage the business of the Partnership
effectively and to carry out the purposes set forth in Section
2.1.
(c) Except as provided in Section 7.2 and in Section
7.1(b), the Managing Partner shall have full charge of the
management of the Partnership and the conduct of the
Partnership's business in all respects. The Managing Partner
shall have all of the rights and powers of a general partner as
provided in the Act and as otherwise provided by law.
7.2 Limitation on Authority of Managing Partner.
(a) Notwithstanding anything in this Agreement to the
contrary, (i) the Managing Partner shall not have the power to,
and the Managing Partner does hereby agree that he will not,
without the prior written consent of a Majority of the Number of
the Partners, change the nature of the Partnership's business and
(ii) any withdrawal of funds deposited in a bank account of DM
Associates Limited Partnership shall require the signatures of at
least two Partners.
(b) In the event that a Partner fails to respond to
any written request for approval from the Partnership or another
Partner under this Agreement within 30 days after receipt
thereof, he shall be deemed for all purposes of this Agreement to
have approved such request.
(c) Notwithstanding anything in this Agreement to the
contrary, prior to the occurrence of a Termination Event the
Managing Partner shall not have the power to sell or dispose of
any Excluded Shares applicable to the Managing Partner.
<PAGE>
7.3 Compensation. No Partner shall receive any fee, profit,
or other compensation for carrying out his responsibilities under
this Agreement. The Partnership shall reimburse the Managing
Partner for all expenses incurred by him in performing his duties
hereunder.
7.4 Limitation on Liability of Partners. No Partner shall
be liable, responsible or accountable in damages or otherwise to
the Partnership or any other Partner for any act performed or
omitted to be performed by him, except in the case of gross
negligence, malfeasance, or fraud. The Partnership shall
indemnify and hold each Partner harmless against any loss,
damage, liability, cost or expense, including reasonable
attorneys' fees, arising out of any act or failure to act by such
Partner, if such act or failure is not attributable to gross
negligence, malfeasance or fraud. The Managing Partner is
authorized to cause the Partnership to obtain and maintain
insurance in respect of the obligation set forth in this Section
7.4.
7.5 Indemnification.
(a) In the event that any one or more of the Partners
(an "Indemnified Partner") at any time pays or becomes obligated
to pay an amount in connection with any Partnership indebtedness,
he shall promptly notify the other Partners of the amount
(estimated, if not then known or liquidated) and nature of such
obligation. The other Partners shall immediately pay to the
Indemnified Partner their Proportionate Share of such amount so
that each Partner bears his Proportionate Share of the total
Partnership obligation. As used herein, a Partner's
"Proportionate Share" shall be such Partner's Partner Percentage
Interest. Any Partner who fails to pay his contribution in full
within five days after receiving a demand therefor shall be in
default hereunder and shall be liable for all incidental damages,
costs and expenses (including reasonable attorneys' fees)
suffered by the Partnership and the Indemnified Partner as a
result thereof. In addition to, and not in limitation of, any
other legal or equitable remedies that may be available against
such Partner as a result of such default, the amount of the
contribution then in default plus the amount of such incidental
damages shall bear interest at the rate specified in Section 3.6
until paid in full.
<PAGE> (b) The Managing Partner and/or the Tax Matters
Partner shall not be liable to the Partners due to any actions
taken by either of them. In addition, any act or omission by the
Managing Partner and/or the Tax Matters Partner nience Stores,
Iich may cause or result in loss or damage to the Partnership or
the Partners, if done in good faith and in accordance with sound
business practices and otherwise in accordance with the terms of
this Agreement, shall not subject the Managing Partner and/or the
Tax Matters Partner, or any of their representatives, successors
and assigns, to any liability. The Partnership agrees to
indemnify and hold the Managing Partner and/or the Tax Matters
Partner, their representatives, successors and assigns, harmless
from any claim, loss, expense, liability, action or damage
resulting from any such act or omission, including, without
limitation, reasonable costs and expenses of administrative
reviews and hearings with the IRS or other government agencies,
litigation and appeal (and the reasonable fees and expenses of
attorneys and accountants engaged by the Managing Partner and/or
the Tax Matters Partner in connection with any such
administrative procedure or in the prosecution or defense of such
litigation or appeal), but the Managing Partner and Tax Matters
Partner shall not be entitled to be indemnified or held harmless
due to, or arising from, either of their gross negligence or
willful misconduct.
(c) Each Partner hereby grants to the other Partners a
security interest in his interest in the Partnership, together
with all proceeds thereof, to secure his obligation to pay all
<PAGE>contributions, interest, incidental damages, costs and
expenses suffered by any Indemnified Partner under this Section
7.5. In the event that any Partner fails to pay his contribution
within the time prescribed in Section 7.5(b) and such failure
continues for ten days after he receives written notice thereof
then, in addition to all other rights and remedies available at
law or in equity, the Indemnified Partner shall have all of the
rights of a secured party under the Connecticut Uniform
Commercial Code with respect to such collateral.
7.6 Other Business Ventures. Any of the Partners may engage
in or possess an interest in other business ventures of every
nature and description, independently or with others, and neither
the Partnership nor the Partners shall have, or have the right to
acquire, any right by virtue of this Agreement in and to such
independent ventures or to the income or profits derived
therefrom.
<PAGE>
7.7 Right to Rely on Authority of the Managing Partner. In
no event shall any person dealing with the Managing Partner with
respect to any Partnership business be obligated to ascertain
that the terms of this Agreement have been complied with or to
inquire into the necessity or expediency of any act or action
with the Managing Partner. Every contract, agreement, deed,
mortgage, deed of trust, promissory note or other instrument or
document executed by the Managing Partner with respect to any
Partnership property or transaction shall be conclusive evidence
in favor of any and every person relying thereon or claiming
thereunder that (i) at the time of the execution and/or delivery
of such instrument or document, this Agreement was in full force
and effect, (ii) such instrument or document was duly executed in
accordance with the terms of this Agreement and is binding upon
the Partnership, and (iii) the Managing Partner was duly
authorized and empowered to execute and deliver such instrument
or document for and on behalf of the Partnership.
ARTICLE VIII. PARTNERSHIP FISCAL AFFAIRS
8.1 Banking. All funds of the Partnership shall be
deposited and kept in its name in such Partnership bank account
or other accounts as shall be designated by the Managing Partner.
The Managing Partner shall disburse from such Partnership account
any and all Partnership expenditures. Withdrawals therefrom
shall, subject to the provisions of Section 7.2(a) hereof, be
made upon such signature(s) as the Managing Partner shall
determine.
8.2 Partnership Funds. The Managing Partner shall have the
authority temporarily to invest any funds of the Partnership that
are not immediately necessary to meet Partnership expenses and
obligations in such interest-bearing investments as the Managing
Partner in his discretion shall determine.
<PAGE>
8.3 Books and Records. The Partnership shall maintain full
and accurate books and records on the method of accounting
determined by the Managing Partner and the Partnership's
accountants, on a tax return basis or in accordance with
generally accepted accounting principles consistently applied at
all times during its continuance. At any time and from time to
time while the Partnership continues and until its complete
liquidation, each Partner or his representative may, upon
reasonable notice and during reasonable business hours, fully
examine the Partnership's books, records, accounts and assets,
and may cause such examination to be made by any certified public
accountant employed by him at his expense.
8.4 Accounting and Reports.
(a) Within 180 days after the end of each Fiscal Year,
each Partner shall be furnished with a copy of the statement
showing the profits and losses of the Partnership for such Fiscal
Year and a copy of the detailed balance sheet of the Partnership
as of the end of such Fiscal Year.
(b) As soon as reasonably practicable after the end of
each Fiscal Year, but in no event later than April 1 of the next
succeeding year, each partner shall be furnished with such
information as shall be necessary for the preparation of his
Federal, state and local income and other tax returns. All
accounting shall be determined by the Managing Partner and the
Partnership's accountants.
8.5 Income Tax Audits.
(a) CHARLES NIRENBERG is hereby designated the tax
matters partner (the "TMP"). If at any time the TMP ceases to
represent the Partnership as the TMP, or voluntarily relinquishes
his position as TMP, a new TMP shall be appointed by the Managing
Partner. The TMP shall have primary responsibility for conducting
negotiations with the Internal Revenue Service in connection with
any administrative proceedings at the partnership level, and, if
necessary, for filing a petition for a readjustment of a final
partnership administrative adjustment.
(b) The TMP may engage legal counsel and/or such other
professionals as are in his judgment appropriate to represent the
Partnership in any administrative and judicial proceedings in
which the Partnership is involved. All reasonable expenses
incurred by the TMP in connection with any administrative
proceeding and/or judicial review of such proceeding, including
reasonable attorneys' and accountant's fees, shall be paid by the
Partnership.
<PAGE>
ARTICLE IX. DISSOLUTION
9.1 Causes of Dissolution.
(a) Without violating this Agreement, a dissolution of
the Partnership shall be caused:
(i) by expiration of the term specified in
Section 2.3, unless all of the Partners agree
in writing to extend the term;
(ii) by the written vote of all Partners who have
not assigned their Partnership interests,
either before or after the expiration of the
term specified in Section 2.3; and
(iii) by the sale, assignment or other disposition
of all orher proportions ll of the assets of
the Partnership; provided, however, that in
the event that the Partnership receives notes
or other evidences of indebtedness in
consideration of a sale or other disposition
of all or substantially all of its assets,
the Partnership shall not dissolve under this
clause (iii) until the date on which such
notes or evidences of indebtedness have been
paid in full or otherwise disposed of by the
Partnership.
(b) Unless a Majority of the Number of Partners agree
in writing to continue the business of the Partnership within 90
days after the event listed, a dissolution shall also be caused:
(i) by the bankruptcy of any Partner or the
Partnership (within the meaning of Section
34-69(5) of the Act);
(ii) by the death or incompetency of any Partner;
(iii) by the removal or withdrawal of a Partner
from the Partnership;
(iv) by any event that makes it unlawful for the
business of the Partnership to be carried on
or for the Partners to carry it on in
partnership form; or
<PAGE>
(v) by decree of court pursuant to the Act.
9.2 Effect of Dissolution. In the event of a dissolution of
the Partnership, the Managing Partner or, in the case of a
dissolution described in Section 9.1(b)(i), (ii) or (iii) that
was caused by the Managing Partner, the remaining Partners (in
either case, the "Liquidating Partner") shall proceed to wind up
and terminate the affairs and business of the Partnership. The
Liquidating Partner shall liquidate the assets of the Partnership
as promptly as possible, but in an orderly and businesslike
manner so as not to involve undue sacrifice. Pending such
liquidation, the Liquidation Partner shall conduct the business
and affairs of the Partnership so as to maintain the continuous
operation thereof and to preserve the assets of the Partnership.
9.3 Completion of Liquidation.
(a) The Liquidating Partner shall cause the
Partnership's accountants to prepare a statement setting forth
the assets and liabilities of the Partnership as at the date of
dissolution, which statement shall be furnished to all of the
Partners.
(b) The net proceeds of the liquidation of the
Partnership shall be distributed to the Partners in accordance
with Section 5.3 not later than the end of the taxable year in
which the dissolution and liquidation of the Partnership occurs
or, if later, within 90 days following the date of such
dissolution and liquidation. Any reserves established pursuant to
Section 5.3(b) for anticipated, contingent or unforeseen
liabilities shall be paid over to an escrow agent selected by the
Liquidating Partner and held by such agent for the purposes of
disbursing such reserves in payment of any of the aforementioned
liabilities, and, at the expiration of such period as the
Liquidating Partner deems advisable, any balance shall be
distributed to the Partners in accordance with Section 5.3.
<PAGE>
ARTICLE X. MISCELLANEOUS
10.1 Notices. All notices and demands under this Agreement
shall be in writing, and either hand-delivered or sent by
nationally-utilized overnight delivery service or mailed, first
class postage prepaid, by certified or registered mail, return
receipt requested, directed to the parties at their respective
addresses set forth in this Agreement and to the Partnership at
its place of business set forth above. Any such notices and
demands shall be deemed to have been given and made on the date
on which hand-delivered or one business day following the date
sent by nationally-utilized overnight delivery service or four
days following the date mailed as hereinabove provided, as the
case may be. Any party hereto may designate a different address
to which notices and demands shall thereafter be directed by
written notice given to the other Partners and the Partnership in
the manner set forth above.
10.2 Amendment. This Agreement may be modified or amended at
any time and from time to time by a writing signed by Partners
representing more than 50% of the Partner Percentage Interests;
provided, however, in the event Gregory Landry and the Managing
Partner each furnish a written consent to such modification or
amendment, Mr. Landry's consent will be considered null and void
and shall be deemed to not have been cast; provided further,
however, that the Partnership Agreement may not be amended to
change the identity, powers or rights of the Managing Partner
without receipt of a written consent from one or more Limited
Partners of DM Associates Limited Partnership holding not less
than a forty-five percent limited partnership therein, which
consent shall be accompanied by a letter to the effect that such
limited partner does not believe that the Managing Partner is
acting in the best interests of the limited partners, taken as a
whole, and supported by reasonable factual determinations.
10.3 Additional Documents. Each Partner agrees to execute,
with acknowledgment or affidavit if required by the Managing
Partner, any and all documents and writings which may be
necessary or expedient in connection with the creation of the
Partnership and the achievement of its purposes.
10.4 Waiver of Partition. Each Partner hereby irrevocably
waives any right that he may have to maintain any action for
partition with respect to any Partnership property.
10.5 Validity. In the event that any provision of this
Agreement shall be held to be invalid, the same shall not affect
in any respect whatsoever the validity of the remainder of this
Agreement.
10.6 Entire Agreement. This Agreement, together with (a) the
letter from Charles Nirenberg to HNB Investment Corp., The
Nirenberg Foundation, Inc., Gregory G. Landry, Mitchell J.
Kupperman, and Robert B. Stein, Jr. dated as of the date of this
Agreement and agreed to in writing by such addressees, (b) the
Partnership Agreement of New DM Management Associates II being
executed of even date herewith among the parties hereto and Frank
Colaccino, (c) the Partnership Agreement of DM Associates Limited
Partnership, as amended by the First Amendment thereto being
executed of even date herewith, and (d) the letter agreement
among DM Associates Limited Partnership, its Partners, the
<PAGE>Partners of New DM Management Associates II, and FCN
Properties Corporation, dated as of the date of this agreement
and relating, among other things, to the application of $325,000
to the indebtedness owed by DM Associates Limited Partnership to
FCN Properties Corporation, constitute the entire agreement among
thece in his Capitaspect to the subject matter hereof and thereof
and supersedes any prior agreement or understanding among them,
oral or written (including, without limitation, that certain
letter agreement, dated September 8, 1994, among the parties, to
the extent inconsistent herewith).
10.7 Headings, Etc. The headings in this Agreement are for
the convenience and reference only and shall not affect the
interpretation of this Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular or
the plural shall include the plural and the singular, and
pronouns stated in the masculine shall include the feminine and
the neuter.
10.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut
applicable to agreements made and to be performed entirely within
this state.
10.9 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all
of which shall constitute on and the same instrument.
10.10 Successors and Assigns. This Agreement shall be
binding upon the parties hereto, and their respective heirs,
executors, administrators, other legal representatives,
successors and assigns, and shall inure to the benefit of the
parties hereto, and, except as otherwise provided herein, to
their respective heirs, executors, administrators, other legal
representatives, successors and assigns.
<PAGE> IN WITNESS WHEREOF, the parties hereto have executed
this Partnership Agreement as of the date first above written.
/s/ Charles Nirenberg
CHARLES NIRENBERG
/s/ Mitchell J. Kupperman
MITCHELL J. KUPPERMAN
/s/ Gregory G. Landry
GREGORY G. LANDRY
/s/ Robert B. Stein, Jr.
ROBERT B. STEIN, JR.
<PAGE> Exhibit A
TO NEW DM MANAGEMENT ASSOCIATES I
PARTNERSHIP AGREEMENT
Initial Percentage
Partner Capital Interest
Charles Nirenberg $325,000 46.4287%
Mitchell J. Kupperman $125,000 17.8571%
Gregory G. Landry $125,000 17.8571%
Robert B. Stein, Jr. $125,000 17.8571%
Total $700,000 100%
<PAGE> EXHIBIT H
NEW DM MANAGEMENT ASSOCIATES II
PARTNERSHIP AGREEMENT
THIS PARTNERSHIP AGREEMENT is made as of September 8, 1994
by and among CHARLES NIRENBERG, an individual with a business
address at One Vision Drive, Enfield, Connecticut; MITCHELL J.
KUPPERMAN, an individual with a business address at One Vision
Drive, Enfield Connecticut; GREGORY G. LANDRY, an individual with
a business address at One Vision Drive, Enfield Connecticut; and
ROBERT B. STEIN, JR., an individual with a business address at
One Vision Drive, Enfield, Connecticut, and FRANK COLACCINO, an
individual with an address at 57 Thistledown, Suffield,
Connecticut.
ARTICLE I. DEFINITIONS
As used in this Agreement, the following terms shall have
the following meanings:
1.1 "Act" means The Uniform Partnership Act of the State of
Connecticut, as amended from time to time.
1.2 "Agreement"means this Partnership Agreement, as
amended, modified, supplemented or restated from time to time.
1.3 "Available Cash" means Partnership cash, demand
deposits and short-term marketable securities, reduced by such
amounts as the Managing Partner deems reasonable in order to
provide for any anticipated expenditures or liabilities of the
Partnership. Available Cash shall not include Capital
Contributions or the proceeds of any Interim Capital Transaction
or Capital Transaction.
1.4 "Capital Account" means, with respect to any Partner,
the Capital Account established and maintained for such Partner
under Section 3.9.
1.5 "Capital Contribution" means the total amount of cash
and the fair market value of any property contributed to the
Partnership by a Partner.
1.6 "Capital Transaction" means any Partnership transaction
not in the ordinary course of its business which results in the
dissolution and liquidation of the Partnership, including,
without limitation, sales, exchanges or other dispositions of
real or personal property, condemnations, recoveries of damage
awards and insurance proceeds (other than business or rental
interruption insurance proceeds), and receipt by the Partnership
of debt service payments on loans made by it pursuant to the
terms of any such sale.
<PAGE> 1.7 "Code" means the Internal Revenue Code of 1986, as
amended, and the corresponding provisions of any successor
statute.
1.8 "Departure" means the retirement, resignation (other
than for Good Reason) or termination of a Partner (other than
Charles Nirenberg or Frank Colaccino) from Dairy Mart Convenience
Stores, Inc. (sometimes referred to herein as the "Company"), at
any time, other than due to death or disability.
1.9 "Fiscal Year" means the calendar year.
1.10 "Good Reason" means the occurrence, without the
Partner's express written consent, of any of the following
circumstances:
(a) the assignment to the Partner of any duties
inconsistent with his office with the Company as of the date
of this Agreement, his removal from that position, or a
substantial diminution in the nature or status of his
responsibilities from those in effect immediately prior to
the date hereof; or
(b) a reduction by the Company in his annual base
salary, annual bonus or fringe benefits as in effect on the
date hereof or as the same may be increased from time to
time.
1.11 "Interim Capital Transaction" means a refinancing, or a
sale of a portion of the Property or an interest therein, and any
similar transaction (other than the receipt of Capital
Contributions) which is not in the ordinary course of the
business of the Partnership but which does not result in the
dissolution and liquidation of the Partnership.
1.12 "Majority of the Number of Partners" means the consent
of at least three of the Partners in the Partnership other than
Frank Colaccino so long as the Partnership has four Partners
other than Frank Colaccino. If at any time there are only three
Partners in the Partnership other than Frank Colaccino, then such
term shall mean the consent of at least two of such three
Partners. If at any time there exist two Partners in the
Partnership other than Frank Colaccino then such term shall mean
the consent of a majority of the Partner Percentage Interests of
such two Partners.
1.13 "Managing Partner" means CHARLES NIRENBERG, for so long
as he shall serve in such position, or his successor in such
capacity.
1.14 "Minimum Gain" means the amount determined by
computing, with respect to each Nonrecourse Liability of the
Partnership, the amount of gain (of whatever character), if any,
that the Partnership would realize if it disposed in a taxable
transaction of the Partnership property subject to such
Nonrecourse Liability in full satisfaction thereof (and for no
other consideration), and by then aggregating the amounts so
computed.
<PAGE> 1.15 "Nonrecourse Liability" has the meaning set forth
in Section 1.704-1T(b)(4)(iv)(k)(3) of the Treasury Regulations.
1.16 "Partner Percentage Interests" means the percentage
interests set forth on Exhibit A hereto.
1.17 "Partners" means, collectively, each of CHARLES
NIRENBERG, MITCHELL J. KUPPERMAN, GREGORY G. LANDRY, ROBERT B.
STEIN, JR.AND FRANK COLACCINO, to the extent that such person
remains a partner in the Partnership, and/or any person who,
at the time of reference thereto, is a partner of the
Partnership in addition to or in lieu of any of the foregoing.
1.18 "Partnership" means the general partnership hereby
formed, as such partnership may from time to time be constituted.
1.19 "Property" means that certain general partnership
interest in DM Associates Limited Partnership, a Connecticut
limited partnership.
1.20 "Standard Allocation" has the meaning set forth in
Section 3.8.
1.21 "Taxable Income or Tax Losses" means the income or loss
of the Partnership for each Fiscal Year as determined for federal
income purposes.
1.22 "Unrecovered Capital Contribution" means, with respect
to any Partner, the excess of (i) the aggregate Capital
Contributions of such Partner, or (ii) the aggregate
distributions to such Partner pursuant to Section 5.2(d).
ARTICLE II. FORMATION
2.1 Business. The business of the Partnership is acquiring,
holding, managing and ultimately disposing of a general
partnership interest in DM Associates Limited Partnership, a
Connecticut limited partnership.
2.2 Principal Place of Business. The principal place of
business of the Partnership is One Vision Drive, Enfield,
Connecticut, Attention: Charles Nirenberg. The Partnership may
maintain such other offices at such other places within and
without the State of Connecticut as the Managing Partner deems
advisable or as required by law.
2.3 Term. The term of the partnership commenced on the
date hereof, and shall continue until September 12, 1997, unless
<PAGE>sooner terminated in the manner provided in Section 9.1, or
unless extended as provided by Section 9.1(a)(1).
2.4 Name. The name of the Partnership is NEW DM MANAGEMENT
ASSOCIATES II. The business of the Partnership may be conducted,
upon compliance with all applicable laws, under any other name
agreed to in writing by all the Partners.
2.5 Qualification of Partnership. The Managing Partner
shall cause the Partnership to be registered under assumed or
fictitious name statutes or similar laws in any jurisdiction in
which the Managing Partner deems such registration to be
necessary or appropriate.
ARTICLE III. PARTNER'S CAPITAL
3.1 Initial Capital Contributions of Partners. The initial
Capital Contribution of each Partner is listed on Exhibit A
attached hereto. Each Partner shall contribute his initial
Capital Contribution upon execution and delivery of this
Agreement.
3.2 Additional Capital Contributions.
(a) In the event that the Managing Partner determines
that the Partnership requires additional capital for any
Partnership purpose, and a Majority of the Number of Partners
agree with the Managing Partner's decision, the Partnership shall
have the right to require the Partners other than Frank Colaccino
to make additional Capital Contributions pursuant to the
provisions of Section 3.2(b) hereof. Each Partner agrees to
furnish any such additional Capital Contribution in proportion to
his interest in Partnership profits (as determined pursuant to
Section 3.8 hereof).
(b) In the event additional capital is required
pursuant to Section 3.2(a), the Partnership shall notify each
Partner in writing of the amount of additional funds required,
together with a description of the purpose thereof. Each Partner
shall deposit his proportionate share of the total sum requested
with the Partnership not later than ten days following the
receipt of such notice.
(c) In the event that any Partner (a "Defaulting
Partner") fails to pay his proportionate share of any additional
Capital Contribution within the time prescribed by Section
3.2(b), and such failure continues for ten days after he receives
written notice thereof from the Partnership or the other
Partner(s), one or more of the other Partners (the "Non-
Defaulting Partner(s)") shall have the right to advance any part
or all of the additional Capital Contribution on behalf of the
<PAGE>Defaulting Partner. Such right shall be exercisable by the
Non-Defaulting Partners in proportion to their respective
interests in Partnership profits (as determined pursuant to
Section 3.8) or in such other proportions as they may agree. Any
such advance shall be nonrecourse to the Defaulting Partner and
shall be secured by, and the Non-Defaulting Partner(s) advancing
such funds shall have a security interest in, the Partnership
interest of the Defaulting Partner to secure the obligation of
the Defaulting Partner to repay the amount advanced, with
interest thereon at a rate equal to 15% per annum or the highest
legal rate that the Defaulting Partner may be required to pay
under Connecticut law, whichever is less. Any funds that become
available for distribution to the Defaulting Partner from the
Partnership shall immediately be applied to repaying the Non-
Defaulting Partner(s) for any sums so advanced on behalf of the
Defaulting Partner, plus interest accrued thereon. If no funds
have been advanced by any Non-Defaulting Partner, any funds that
become available for distribution to the Defaulting Partner from
the Partnership shall be retained by the Partnership and applied
to the additional Capital Contribution obligation of the
Defaulting Partner.
3.3 No Interest; No Return. No Partner shall be entitled to
receive interest on any Capital Contribution or on such Partners'
Capital Account. No Partner shall have any right to demand or
receive the return of his Capital Contribution or to receive any
distributions from the Partnership, except as specifically
provided in this Agreement.
3.4 No Distributions in Kind. No Partner shall be entitled
to demand or receive property other than cash in return for his
Capital Contribution. If, in the event of a liquidation and
winding up of the Partnership, the Managing Partner in his
discretion determines that some or all of the Partnership's
property shall be distributed in kind, such property shall be
valued and gain or loss shall be determined as though such
property had been sold. The deemed gain or loss with respect to
such property shall be allocated to the Partners in accordance
with Section 4.2 and the Capital Accounts of the Partners shall
be appropriately adjusted to reflect such allocation.
3.5 No Priority Among Partners. Except as specifically
provided in this Agreement, no Partner shall have priority over
any other Partner either as to the return of Capital
Contributions or as to profits, losses or distributions.
3.6 Loans By Partners. From time to time, any Partner may
make loans to the Partnership or advance money on its behalf (but
only to the extent required by the business of the Partnership,
as determined by the Managing Partner and agreed to by a Majority
of the Number of Partners). Such loans shall bear interest at the
<PAGE>Prime Rate of Chemical Banking Corporation, or any
successor thereto as in effect from time to time, with changes in
such interest rate taking effect as and when changes in such
prime rate shall occur. The amount of any required payments of
principal and interest with respect to any such loan or advance
shall be an obligation of the Partnership to the lending Partner
that is payable before any distributions are made from Available
Cash or from the proceeds of Interim Capital Transactions or a
Capital Transaction.
3.7 No Deficit Restoration. In no event shall any Partner,
by reason of his execution of this Agreement, be obligated, upon
the liquidation of the Partnership, to make an additional Capital
Contribution to the Partnership in an amount equal to a deficit
balance in his Capital Account.
3.8 Allocations and Distributions Among Partners. Unless
otherwise provided herein, all Capital Contributions required to
be made by the Partners, all allocations to the Partners of
Taxable Income and Tax Losses, and all distributions to the
Partners shall be apportioned, allocated or distributed, as the
case may be as follows (the so-called "Standard Allocation"):
Standard
Partner Allocation
Charles Nirenberg 46.4286%
Mitchell J. Kupperman 17.8571%
Gregory G. Landry 17.8571%
Robert B. Stein, Jr. 17.8571%
Frank Colaccino .0001%
3.9 Capital Accounts. The Partnership shall establish a
Capital Account for each Partner, which shall be adjusted and
maintained in accordance with the principles set forth in the
Code and Treasury Regulation Sections 1.704-1(b).
3.10 Admission of Additional Partners. Except as provided in
Article VI, no person shall be admitted to the Partnership
without the prior written consent of a Majority of the Number of
Partners in the Partnership.
ARTICLE IV. ALLOCATIONS OF TAXABLE INCOME AND LOSSES
4.1 Taxable Income and Tax Losses from Operations. Except
as provided in Section 4.3, all Taxable Income and Tax Losses of
the Partnership from operations in the ordinary course of its
business (as distinguished from Interim Capital Transactions and
<PAGE>Capital Transactions) for each Fiscal Year or part thereof
shall be allocated in accordance with the Partner Percentage
Interests.
4.2 Taxable Income and Tax Losses from Interim Capital
Transactions and Capital Transaction. Except as provided in
Section 4.3, all Taxable Income and Tax Losses of the Partnership
from the occurrence of an Interim Capital Transaction or a
Capital Transaction shall be allocated in the following order of
priority:
(a) In the event there is Taxable Income to be
allocated:
(i) first, Taxable Income shall be allocated pro
rata among the Partners to the extent
necessary to cause the Capital Account of
each Partner to be equal to his Unrecovered
Capital Contribution; and
(ii) then, any remaining Taxable Income shall be
allocated in accordance with the Partner
Percentage Interests.
(b) In the event that there are Tax Losses to be
allocated:
(i) if any one or more of the Partners has a
positive balance in his Capital Account, an
amount of Tax Losses equal to the aggregate
among such Partners in the proportion that
the positive balance of each such Partner's
Capital Account bears to the aggregate
positive balances of all such Partners'
Capital Accounts; and
(ii) then, after such allocations have been made
(or in the event that each Partner has a zero
or negative balance in his Capital Account),
any remaining Tax Losses shall be allocated
in accordance with the Partner Percentage
Interests.
4.3 Allocations Relating to Nonrecourse Liabilities.
(a) Notwithstanding anything in this Agreement to the
contrary, in the event that there is a net decrease in the
Minimum Gain for any Fiscal Year, each Partner shall, before any
other allocation is made for such Fiscal Year, be allocated items
of income and gain for such Fiscal Year (and, if necessary, for
subsequent Fiscal Years) in proportion to, and to the extent of,
the portion of such Partner's share of the net decrease in the
<PAGE>Minimum Gain during such Fiscal Year that is attributable
to the disposition of Partnership property subject to one or more
Nonrecourse Liabilities of the Partnership. Any such Minimum
Gain chargeback required pursuant to this Section 4.3(a) for a
Fiscal Year shall consist first of gains recognized from the
disposition of items of Partnership property subject to one or
more Nonrecourse Liabilities to the extent of the decrease in
Minimum Gain attributable to the disposition of such items of
property (or, if such gains exceed the amount of Minimum Gain
chargeback for such Fiscal Year, the Minimum Gain chargeback
shall consist of a proportionate share of each share gain), and
the remainder of such Minimum Gain chargeback shall consist of a
pro rata portion of the other items of Partnership income and
gain for the Fiscal Year.
(b) Pursuant to section 1.752-1T(e)(3)(ii)(C)(1) of
the Treasury Regulations, the Partners' interest in Partnership
profits for purposes of determining their share of the
Nonrecourse Liabilities of the Partnership shall be determined
under Section 3.8 hereof.
ARTICLE V. DISTRIBUTIONS
5.1 Distribution of Available Cash. The Managing Partner
shall have the right, in his sole discretion, to cause the
Partnership to distribute to the Partners any portion or all of
the Partnership's Available Cash at any time and from time to
time, or may determine to make no distributions whatsoever. Any
Available Cash which the Managing Partner determines to
distribute shall be distributed in accordance with the Partner
Percentage Interests.
5.2 Distribution of Proceeds of Interim Capital
Transactions. The proceeds of an Interim Capital Transaction
shall be distributed in the following order of priority:
(a) to the payment of the debts and liabilities of the
Partnership then due, except debts and liabilities owing to the
Partners;
(b) to the establishment of any reserves which a
Majority of the Number of Partners deems reasonably necessary for
any anticipated, contingent or unforeseen liabilities or
obligations of the Partnership arising out of, or in connection
with, the conduct of the business of the Partnership. However,
if the Managing Partner does not agree with the decision made by
the Majority of the Number of Partners with respect to
establishing reserves, the Managing Partner shall have the right
to obtain a written report from an independent accounting firm
which report must be given consideration by the Partners in
connection with the re-vote that will occur after such report has
been reviewed;
<PAGE>
(c) to the repayment of any debts and liabilities then
due from the Partnership to the Partners;
(d) then, to the Partners pro rata on the basis of
their respective Unrecovered Capital Contributions until each
Partner has received an aggregate amount equal to his Unrecovered
Capital Contribution; and
(e) any remaining proceeds shall be distributed in
accordance with the Partner Percentage Interests (subject to
adjustments under Section 6.5(b)).
5.3 Distributions of Proceeds of Capital Transaction. The
proceeds of a Capital Transaction and from the liquidation of the
assets of the Partnership following dissolution, after the excess
of such liquidation, shall be distributed in the following order
of priority:
(a) to the payment of the debts and liabilities of the
Partnership then due, except debts and liabilities owing to the
Partners;
(b) to the establishment of any reserves which a
Majority of the Number of Partners deems reasonably necessary for
any anticipated, contingent or unforeseen liabilities or
obligations of the Partnership arising out of, or in connection
with, the conduct of the business of the Partnership. However,
if the Managing Partner does not agree with the decision made by
the Majority of the Number of Partners with respect to
establishing reserves, the Managing Partner shall have the right
to obtain a written report from an independent accounting firm
which report must be given consideration by the Partners in
connection with a re-vote that will occur after such report has
been reviewed;
(c) to the repayment of any debts and liabilities
owing by the Partnership to the Partners; and
(d) then, to the Partners pro rata on the basis of
their respective Unrecovered Capital Contributions until each
Partner has received an aggregate amount equal to his Unrecovered
Capital Contribution; and
(e) to the Partners in accordance with the Partner
Percentage Interests (subject to adjustment under Section
6.5(b)).
<PAGE> ARTICLE VI. ASSIGNMENT AND SUBSTITUTION
6.1 Restrictions on Transfers.
(a) No Partner shall have the right to, and each
Partner hereby agrees that he will not, sell, assign, transfer or
otherwise dispose of (collectively referred to as "Transfers" and
each individually as a "Transfer") his interest in the
Partnership or any part thereof except as permitted herein. Any
Transfer in violation of this Agreement shall be null and void as
against the Partnership except as otherwise provided by law.
(b) No Partner shall pledge, hypothecate or otherwise
encumber his interest in the Partnership without the prior
written consent of all of the other Partners, which may be given
or withheld in their sole and absolute discretion.
(c) No transferee of any part or all of the
Partnership interest of the Partner shall become a substitute
Partner without the prior written consent of all of the other
Partners, which may be given or withheld in their sole and
absolute discretion.
6.2 Transfers by Partners.
(a) In the event that any Partner (the "Offering
Partner") wishes to Transfer all or a portion of his Partnership
interest the ("Offered Interest") to any Person, whether or not a
Partner,, the other Partners shall have the right to purchase the
Offered Interest as provided herein.
(b) In the event that the Offering Partner shall
receive a bona fide firm offer, acceptable to him, or shall enter
into a bona fide contract to Transfer his Partnership interest
(which, in either case, shall be subject to the right of purchase
provided hereunder), the Offering Partner shall deliver a
photocopy of such offer or contract to the other Partners,
together with the name and address of the proposed Transferee.
The Offeree Partners shall have the right to purchase the Offered
Interest at the same price and upon the same terms and conditions
set forth in such offer or contract by giving written notice to
that effect to the Offering Partner within 20 days following
receipt of the photocopy of the offer or contract. The Offeree
Partners shall have the right to purchase the Offered Interest in
proportion to their respective interests in Partnership profits
(as determined pursuant to Section 3.8) or in such other
proportions as they may agree.
(c) In the event that the Offering Partner has not
received written notice within the 20-day period described above
that one or more of the Offeree Partners is purchasing the entire
Offered Interest, the Offeree Partners shall be deemed to have
<PAGE>waived their right to purchase the Offered Interest and the
Offering Partner shall then be free to close and complete the
Transfer of the entire Offered Interest at the price and upon the
same terms and conditions set forth in such offer or contract.
If, however, any such proposed Transfer is not closed and
completed within 60 days thereafter in accordance with the terms
of such offer or contract, the rights of the Offeree Partners
under this Section 6.2 shall be fully restored and reinstated. No
Transfer of a Partnership interest shall be made on terms
materially different than those set forth in the original offer
or contract without first re-offering such interest to the other
Partners on such different terms.
(d) Any closing among the Partners in respect of the
transactions described in this Section 6.2 shall be held on a
date specified by the purchasing Partner(s) to the Offering
Partner at the office of the Partnership or at the office of the
Partnership's attorneys, but, in any event, not later than 90
days after the date on which Offeree Partners received
photocopies of the original offer or contract from the Offering
Partner. If more than one Offeree Partner wishes to purchase the
Offered Interest, then, unless they agree otherwise, they shall
purchase the Offered Interest in proportion to their respective
interests in Partnership profits (as determined pursuant to
Section 3.8 hereof). At such closing, the purchaser(s) shall pay
the purchase price of the Offered Interest in accordance with the
terms of the offer or contract, and the Offering Partner shall
execute and deliver all appropriate documents to transfer the
Offered Interest to the purchaser(s) thereof.
6.3 Permitted Assignment. Each Partner may assign from time
to time his rights to receive any portion or all of the
distributions to which he may be entitled under the terms of this
Agreement and any or all allocations of items of income, gain,
loss, deduction, credit and other Partnership items with which he
may be credited or charged hereunder; provided, however, that no
such assignment shall be effective until the Partner has given
notice to the Managing Partner of such assignment and the
Managing Partner has determined that such assignment is not
prohibited under Section 6.4 or 6.5(d).
6.4 Limitation on Transfer and Assignments. Notwithstanding
anything in this Agreement to the contrary, no Transfer, pledge
or hypothecation of a Partnership interest shall be effective and
no Partner shall have the right to consent thereto, unless, in
the opinion of counsel to the Partnership, such transaction would
not result in the classification of the Partnership as an
association taxable as a corporation for Federal income tax
purposes or a violation of any applicable law or regulation. Any
Transfer, pledge or hypothecation shall be effected in such
<PAGE>manner as shall, in the opinion of counsel to the
Partnership, be necessary to maintain the classification of the
Partnership as a partnership for Federal income tax purposes and
compliance with all applicable laws and regulations.
6.5 Consequences Upon the Departure of a Partner.
(a) Early Departure. In the event of the occurrence of
an Early Departure with respect to any Partner other than Frank
Colaccino or Charles Nirenberg, such Partner's interest in the
Partnership may, at the option of the Partnership, be purchased
by the Partnership at a purchase price equal to the lesser of (a)
or (b), where (a) equals the amount that such Partner would
receive if all of the assets held by DM Associates Limited
Partnership were sold at their fair market value and the net
proceeds from such sale were distributed among the Partners of DM
Associates Limited Partnership in accordance with the terms of
the limited partnership agreement of DM Associates Limited
Partnership and, thereafter, the Partnership were dissolved in
accordance with the terms of this Agreement, or (b) such
Partner's Unrecovered Capital Contribution plus 6% per annum
simple interest on such Unrecovered Capital Contribution from the
date the Partner contributed his initial capital to the
Partnership to the date of the occurrence of such Partner's Early
Departure. In the event the Partnership does not ]give such
departing Partner written notice, within 30 days after the later
of (i) the effective date of the Partner's Departure, or (ii) the
date that the Partner notifies the Partnership in writing of the
commencement of the 30-day period under this sentence, of the
Partnership's intent to purchase the departing Partner's interest
then such Partner's Departure shall thereafter be treated as a
Later Departure.
Such purchase price shall be payable, at the option of the
Managing Partner, in either cash or notes. If said purchase price
is payable with a note, said note shall be payable in full upon
the earlier of (i) five years from the date of the occurrence of
the Early Departure, or (ii) the liquidation of the Partnership,
and shall bear simple interest at the lower of 10% per annum or
at a fixed rate equal to the Prime Rate of Chemical Banking
Corporation on the date of the Note, which interest shall accrue
and be payable upon the maturity of the note. In addition,
payment of such note shall not be a Partnership priority but
shall be paid on a pro rata basis with the distributions that are
or will be made to the Partners under Section 5.2(d) and (e) and
Section 5.3(d) and (e).
(b) Later Departure. In the event of the occurrence of
a Later Departure with respect to any Partner (other than Frank
Colaccino or Charles Nirenberg, as to whom none of the provisions
of this Section 6.5(b) are applicable), such Partner shall not be
required to sell his interest in the Partnership to the
<PAGE>Partnership at such time. However, in such event, any cash
that might be thereafter allocable to such Partner under Section
5.2(e) and Section 5.3(e) (and a corresponding amount of taxable
income) shall be reduced by a percentage equal to the Later
Departure Percentage. Any amount that is allocated away from the
departing Partner shall be reallocated (along with the
corresponding income) to the remaining Partners in the
Partnership in accordance with their relative Partner Percentage
Interests in the Partnership.
(c) Definitions. For purposes of this Section 6.5:
(i) an "Early Departure" shall mean, with respect
to any Partner (other than Frank Colaccino
and Charles Nirenberg), a Departure which
occurs either (a) by resignation by such
Partner of his employment by Dairy Mart
Convenience Stores, Inc. prior to March 12,
1996, or (b) at any time after the date of
this Agreement by virtue of termination of
such Partner's employment by Dairy Mart
Convenience Stores, Inc. for Cause.
(ii) a "Later Departure" shall mean, with respect
to any Partner (other than Frank Colaccino
and Charles Nirenberg), a Departure which
occurs either (a) by resignation by such
Partner of his employment by Dairy Mart
Convenience Stores, Inc. on or after March
12, 1996, or (b) at any time by virtue of
termination of such Partner's employment by
Dairy Mart Convenience Stores, Inc. without
Cause.
(iii) the "Later Departure Percentage" shall equal
the percentage equivalent of the fraction,
the numerator of which is the number of
months from the date of the Partner's
Departure to the date of the subject
distribution under either Section 5.2 or
Section 5.3 and the denominator of which is
the number of months from March 12, 1992 to
the date of the distribution under either
Section 5.2 or Section 5.3. For purposes of
computing the fraction, the beginning month
and ending month of each time sequence shall
be treated as whole months. For example, if a
Partner leaves on January 2, 1996 and a
distribution is made under Section 5.2(e) on
December 25, 1997, then the amount that the
Partner would have otherwise received had he
remained a Partner would be reduced by 24/72
or 33-1/3%.
<PAGE>
(iv) "Cause" shall mean either (a) failure of a
person to follow the directions or
instructions of the President or Board of
Directors of Dairy Mart Convenience Stores,
Inc. and continuation of such failure for
fifteen (15) days after receipt by such
person of written notice from the President
or Board as to the specific nature of such
failure, providing that such directions or
instructions are lawful and do not require
the violation of professional standards, or
(b) commission of a criminal act by a person
which involves moral turpitude or which
arises out of theft, embezzlement, or other
actions against Dairy Mart Convenience
Stores, Inc. or specifically arising out of
the person's employment, or (c) other acts
expressly constituting cause for termination
under the laws of Connecticut.
(d) Departure of Frank Colaccino. Prior to the
occurrence of a Termination Event, Frank Colaccino shall not have
the right to withdraw, or retire as a Partner of the Partnership,
and Frank Colaccino shall not have the right to assign any of his
rights or obligations with respect to his Partnership interest in
the Partnership, without the express written consent of Partners
holding more than 50% of the Partner Percentage Interests. For
purposes of this Agreement, "Termination Event" means the
execution of a written consent by the holders of more than 50% of
the Partner Percentage Interests, in which such holders terminate
the Partnership interest of Frank Colaccino in the Partnership,
either based upon (i) the determination of such holders, in their
discretion, that such termination is in the best interests of the
Partnership, or (ii) the determination, in their judgment, that
such termination would not have a material adverse effect upon
DMCS with respect to any outstanding Notes of DMCS. Upon the
occurrence of any Termination Event, the Partnership interest of
Frank Colaccino hereunder shall immediately and automatically
terminate and he shall have no further rights as a Partner of the
Partnership. The Partnership shall pay to Frank Colaccino $100 in
cash within 30 days after the occurrence of a Termination Event
(but no delay in paying or failure to pay such amount shall
change in any way the effectiveness of the termination of the
Partnership interest of Frank Colaccino at the time of the
aforesaid Termination Event.)
<PAGE> ARTICLE VII. RIGHTS AND DUTIES OF THE PARTNERS
7.1 Management Powers.
(a) Subject to the provisions of Section 10.2 hereof,
Charles Nirenberg shall serve as Managing Partner until he dies,
becomes disabled, withdraws from the Partnership or voluntarily
relinquishes his position. In the event that there is at any time
no Managing Partner serving hereunder, a Majority of the Number
of Partners shall, at a meeting called by any Partner upon at
least ten days' notice to the other Partners, elect a new
Managing Partner by the vote of a Majority of the Number of
Partners. Pending such election, the Partners (acting by a
Majority of the Number of Partners) shall, except as provided in
Sections 7.1(b) and 7.2, have all authority provided under the
Act to manage the business of the Partnership (subject to the
provisions of the Agreement of Limited Partnership of DM
Associates Limited Partnership).
(b) The Managing Partner shall take such action as he
deems necessary to provide for and supervise the operation of the
Property and to manage the Partnership for the purposes set forth
in Section 2.1, including, but not limited to, exercising on
behalf of the Partnership, except to the extent expressly set
forth to the contrary in Section 7.2 below, any and all authority
and rights granted to the Partnership, as general partner of DM
Associates Limited Partnership, a Connecticut limited
partnership, pursuant to the Agreement of Limited Partnership of
DM Limited Partnership, except that (i) prior to the occurrence
of a Termination Event, (A) the Managing Partner shall not, and
shall not have the authority to, vote or exercise consensual
rights or direct the voting or exercise of consensual rights of
any DMCS Shares, as defined in the Partnership Agreement of DM
Associates Limited Partnership (the "DMCS Shares"), that the
Partnership has the power and authority to vote pursuant to such
Partnership Agreement, and (B) the Managing Partner shall not,
and shall not have the authority to, sell or otherwise dispose of
or direct the sale or other disposition of any DMCS Shares that
the Partnership has the power and authority to sell or otherwise
dispose of pursuant to the terms of such Partnership Agreement,
and (ii) after the occurrence of a Termination Event, the
Managing Partner shall not, and shall not have the authority to,
vote or exercise consensual rights or direct the voting or
exercise of consensual rights of any DMCS Shares that the
Partnership has the power and authority to vote pursuant to such
Partnership Agreement, unless such vote or exercise of consensual
rights by the Managing Partner is agreed to by Partners
representing more than 50% of the Partner Percentage Interests
(and the Managing Partner shall vote (or direct the voting of)
such DMCS Shares or shall exercise consensual rights (or direct
the exercise of consensual rights) in connection with such
<PAGE>DMCS Shares in such manner as Partners representing more
than 50% of the Partner Percentage Interests shall direct). After
the occurrence of a Termination Event, if the Managing Partner
fails to vote (or direct the voting of) or exercise consensual
rights with respect to (or direct the exercise of consensual
rights with respect to) DMCS Shares that the Partnership has the
power and authority to vote, in such manner as Partners
representing more than 50% of the Partner Percentage Interests
shall direct, then such DMCS Shares may be voted by ballot,
proxy, or consent executed by Partners representing more than 50%
of the Partner Percentage Interests. The Managing Partner agrees
to manage and control the affairs of the Partnership to the best
of his ability and to conduct the operations contemplated by this
Agreement in a careful and prudent manner. The Managing Partner
shall devote to the Partnership business all such time and effort
as shall be required to operate and manage the business of the
Partnership effectively and to carry out the purposes set forth
in Section 2.1.
(c) Except as provided in Section 7.2 and in Section
7.1(b), the Managing Partner shall have full charge of the
management of the Partnership and the conduct of the
Partnership's business in all respects. The Managing Partner
shall have all of the rights and powers of a general partner as
provided in the Act and as otherwise provided by law.
7.2 Limitation on Authority of Managing Partner.
(a) Notwithstanding anything in this Agreement to the
contrary, (i) the Managing Partner shall not have the power to,
and the Managing Partner does hereby agree that he will not,
without the prior written consent of a Majority of the Number of
the Partners, change the nature of the Partnership's business and
(ii) any withdrawal of funds deposited in a bank account of DM
Associates Limited Partnership shall require the signatures of at
least two Partners.
(b) In the event that a Partner fails to respond to
any written request for approval from the Partnership or another
Partner under this Agreement within 30 days after receipt
thereof, he shall be deemed for all purposes of this Agreement to
have approved such request.
(c) Subject to the provisions of the Agreement of
Limited Partnership of DM Associates Limited Partnership, Frank
Colaccino shall have the right (but not be obligated), prior to
the occurrence of a Termination Event, to vote or exercise
consensual rights on behalf of the Partnership with respect to
the Specified Percentage of DMCS Shares owned by DM Associates
Limited Partnership, except that Frank Colaccino shall not have
the right to make any such vote or give any such consent unless
<PAGE>and until (i) Frank Colaccino shall have given not less
than 7 days and not more than 30 days written notice to Gregory
Landry (unless a Majority in Number of the Partners waives such
notice with respect to a particular vote or consent) as to the
proposal or election which is the subject of the vote or consent
and as to whether Frank Colaccino intends to vote or consent in
favor of such proposal or election (identifying the persons to be
voted for), and (ii) Gregory Landry has expressly consented in
writing to such vote or consent, by a writing delivered to Frank
Colaccino. The Partnership shall give notice to Frank Colaccino
as soon as reasonably practicable of any solicitation of proxies
or consents relating to the DMCS Shares. Any such consent of
Gregory Landry may be given or withheld in his sole discretion.
When and if Gregory Landry receives a written notice from Frank
Colaccino pursuant to this paragraph, Gregory Landry shall, if it
is reasonably practicable to do so before the meeting or consent
that is the subject of the notice, endeavor to send a copy of
such notice to the other Partners; provided, however, that no
failure to give a copy of such notice to the other Partners shall
affect (x) the authority of Frank Colaccino, with the consent of
Gregory Landry, to make such vote or give such consent or (y) the
validity of such vote or consent. For the purposes of this
Agreement, the "Specified Percentage" means a number of shares of
the Class B Common Stock of DMCS representing 10% of the voting
power of all outstanding capital stock of DMCS.
(d) Prior to the occurrence of a Termination Event,
Gregory Landry shall have the authority to vote or exercise
consensual rights, or to direct the voting or exercise of
consensual rights, of any DMCS Shares that the Partnership has
the power and authority to sell or otherwise dispose of pursuant
to the terms of such Partnership Agreement, except for those of
such DMCS Shares as to which voting and consensual rights are
governed by Section 7.2(c) above.
(e) Prior to the occurrence of a Termination Event,
Gregory Landry shall have the authority to sell or otherwise
dispose of or direct the sale or other disposition of any DMCS
Shares that the Partnership has the power and authority to sell
or otherwise dispose of pursuant to the terms of such Partnership
Agreement; provided, however, that any and all rights of Gregory
Landry under this Section 7.2(e) shall be subject to any and all
applicable limitations and provisions set forth in the
Partnership Agreement of DM Associates Limited Partnership.
(f) After the occurrence of a Termination Event,
Sections 7.2(c), 7.2(d) and 7.2(e) shall be of no further effect
and any voting or consensual rights to be exercised by the
Partnership with respect to DMCS Shares shall be exercised in
accordance with the provisions of Section 7.1(b) above and any
<PAGE>and all rights to be exercised by the Partnership with
respect to the sale or other disposition of DMCS Shares shall be
exercised by the Managing Partner under the broad grant of
authority vested in the Managing Partner pursuant to Sections
7.1(a) and 7.1(b) to manage the business and affairs of the
Partnership, subject to any and all applicable limitations and
provisions set forth in the Partnership Agreement of DM
Associates Limited Partnership.
(g) Notwithstanding anything in this Agreement to the
contrary, it is expressly agreed that so long as Frank Colaccino
remains a Partner he shall have no duties to the Partnership or
the other Partners except for (i) the duty to perform the
obligations expressly given to him herein and (ii) the duty not
to take any other actions on the behalf or in the name of the
Partnership or any other Partner hereof. In addition, Frank
Colaccino shall have no liability or responsibility of any kind
to the Partnership or its Partners, except for gross negligence,
misconduct or fraud in the conduct of such aforementioned duties.
7.3 Compensation. No Partner shall receive any fee, profit,
or other compensation for carrying out his responsibilities under
this Agreement. The Partnership shall reimburse the Managing
Partner for all expenses incurred by him in performing his duties
hereunder.
7.4 Limitation on Liability of Partners. No Partner shall
be liable, responsible or accountable in damages or otherwise to
the Partnership or any other Partner for any act performed or
omitted to be performed by him, except in the case of gross
negligence, malfeasance, or fraud. The Partnership shall
indemnify and hold each Partner harmless against any loss,
damage, liability, cost or expense, including reasonable
attorneys' fees, arising out of any act or failure to act by such
Partner, if such act or failure is not attributable to gross
negligence, malfeasance or fraud. The Managing Partner is
authorized to cause the Partnership to obtain and maintain
insurance in respect of the obligation set forth in this Section
7.4.
7.5 Indemnification.
(a) In the event that any one or more of the Partners
(an "Indemnified Partner") other than Frank Colaccino at any time
pays or becomes obligated to pay an amount in connection with any
Partnership indebtedness, he shall promptly notify the other
Partners (other than Frank Colaccino) of the amount (estimated,
if not then known or liquidated) and nature of such obligation.
The other Partners (other than Frank Colaccino) shall immediately
pay to the Indemnified Partner their Proportionate Share of such
amount so that each Partner (other than Frank Colaccino) bears
his Proportionate Share of the total Partnership obligation. As
<PAGE> used herein, a Partner's "Proportionate Share" shall be
such Partner's Partner Percentage Interest. Any Partner who
fails to pay his contribution in full within five days after
receiving a demand therefor shall be in default hereunder and
shall be liable for all incidental damages, costs and expenses
(including reasonable attorneys' fees) suffered by the
Partnership and the Indemnified Partner as a result thereof. In
addition to, and not in limitation of, any other legal or
equitable remedies that may be available against such Partner as
a result of such default, the amount of the contribution then in
default plus the amount of such incidental damages shall bear
interest at the rate specified in Section 3.6 until paid in full.
(b) The Managing Partner, the Tax Matters Partner,
and/or Frank Colaccino shall not be liable to the Partners due to
any actions taken by any of them, except for their own gross
negligence, willful misconduct or breach of this Agreement. In
addition, any act or omission by the Managing Partner, the Tax
Matters Partner, and/or Frank Colaccino the effect of which may
cause or result in loss or damage to the Partnership or the
Partners, if done in good faith and in accordance with sound
business practices and otherwise in accordance with the terms of
this Agreement, shall not subject the Managing Partner, the Tax
Matters Partner, and/or Frank Colaccino, or any of their
representatives, successors and assigns, to any liability. The
Partnership agrees to indemnify and hold the Managing Partner,
the Tax Matters Partner, and/or Frank Colaccino, their
representatives, successors and assigns, harmless from any claim,
loss, expense, liability, action or damage resulting from any
such act or omission, including, without limitation, reasonable
costs and expenses of administrative reviews and hearings with
the IRS or other government agencies, litigation and appeal (and
the reasonable fees and expenses of attorneys and accountants
engaged by the Managing Partner, the Tax Matters Partner and/or
Frank Colaccino in connection with any such administrative
procedure or in the prosecution or defense of such litigation or
appeal), but the Managing Partner, Tax Matters Partner, and/or
Frank Colaccino shall not be entitled to be indemnified or held
harmless due to, or arising from, their own gross negligence or
willful misconduct.
(c) Each Partner hereby grants to the other Partners a
security interest in his interest in the Partnership, together
with all proceeds thereof, to secure his obligation to pay all
contributions, interest, incidental damages, costs and expenses
suffered by any Indemnified Partner under this Section 7.5. In
the event that any Partner fails to pay his contribution within
the time prescribed in Section 7.5(b) and such failure continues
for ten days after he receives written notice thereof then, in
addition to all other rights and remedies available at law or in
equity, the Indemnified Partner shall have all of the rights of a
<PAGE> secured party under the Connecticut Uniform Commercial
Code with respect to such collateral.
7.6 Other Business Ventures. Any of the Partners may engage
in or possess an interest in other business ventures of every
nature and description, independently or with others, and neither
the Partnership nor the Partners shall have, or have the right to
acquire, any right by virtue of this Agreement in and to such
independent ventures or to the income or profits derived
therefrom.
7.7 Right to Rely on Authority of the Managing Partner. In
no event shall any person dealing with the Managing Partner with
respect to any Partnership business be obligated to ascertain
that the terms of this Agreement have been complied with or to
inquire into the necessity or expediency of any act or action
with the Managing Partner. Every contract, agreement, deed,
mortgage, deed of trust, promissory note or other instrument or
document executed by the Managing Partner with respect to any
Partnership property or transaction shall be conclusive evidence
in favor of any and every person relying thereon or claiming
thereunder that (i) at the time of the execution and/or delivery
of such instrument or document, this Agreement was in full force
and effect, (ii) such instrument or document was duly executed in
accordance with the terms of this Agreement and is binding upon
the Partnership, and (iii) the Managing Partner was duly
authorized and empowered to execute and deliver such instrument
or document for and on behalf of the Partnership.
ARTICLE VIII. PARTNERSHIP FISCAL AFFAIRS
8.1 Banking. All funds of the Partnership shall be
deposited and kept in its name in such Partnership bank account
or other accounts as shall be designated by the Managing Partner.
The Managing Partner shall disburse from such Partnership account
any and all Partnership expenditures. Withdrawals therefrom
shall, subject to the provisions of Section 7.2(a) hereof, be
made upon such signature(s) as the Managing Partner shall
determine.
8.2 Partnership Funds. The Managing Partner shall have the
authority temporarily to invest any funds of the Partnership that
are not immediately necessary to meet Partnership expenses and
obligations in such interest-bearing investments as the Managing
Partner in his discretion shall determine.
8.3 Books and Records. The Partnership shall maintain full
and accurate books and records on the method of accounting
determined by the Managing Partner and the Partnership's
accountants, on a tax return basis or in accordance with
generally accepted accounting principles consistently applied at
<PAGE> all times during its continuance. At any time and from
time to time while the Partnership continues and until its
complete liquidation, each Partner or his representative may,
upon reasonable notice and during reasonable business hours,
fully examine the Partnership's books, records, accounts and
assets, and may cause such examination to be made by any
certified public accountant employed by him at his expense.
8.4 Accounting and Reports.
(a) Within 180 days after the end of each Fiscal Year,
each Partner shall be furnished with a copy of the statement
showing the profits and losses of the Partnership for such Fiscal
Year and a copy of the detailed balance sheet of the Partnership
as of the end of such Fiscal Year.
(b) As soon as reasonably practicable after the end of
each Fiscal Year, but in no event later than April 1 of the next
succeeding year, each partner shall be furnished with such
information as shall be necessary for the preparation of his
Federal, state and local income and other tax returns. All
accounting shall be determined by the Managing Partner and the
Partnership's accountants.
8.5 Income Tax Audits.
(a) CHARLES NIRENBERG is hereby designated the tax
matters partner (the "TMP"). If at any time the TMP ceases to
represent the Partnership as the TMP, or voluntarily relinquishes
his position as TMP, a new TMP shall be appointed by the Managing
Partner. The TMP shall have primary responsibility for conducting
negotiations with the Internal Revenue Service in connection with
any administrative proceedings at the partnership level, and, if
necessary, for filing a petition for a readjustment of a final
partnership administrative adjustment.
(b) The TMP may engage legal counsel and/or such other
professionals as are in his judgment appropriate to represent the
Partnership in any administrative and judicial proceedings in
which the Partnership is involved. All reasonable expenses
incurred by the TMP in connection with any administrative
proceeding and/or judicial review of such proceeding, including
reasonable attorneys' and accountant's fees, shall be paid by the
Partnership.
<PAGE> ARTICLE IX. DISSOLUTION
9.1 Causes of Dissolution.
(a) Without violating this Agreement, a dissolution of
the Partnership shall be caused:
(i) by expiration of the term specified in
Section 2.3, unless all of the Partners agree
in writing to extend the term;
(ii) by the written vote of all Partners who have
not assigned their Partnership interests,
either before or after the expiration of the
term specified in Section 2.3; and
(iii) by the sale, assignment or other disposition
of all or substantially all of the assets of
the Partnership; provided, however, that in
the event that the Partnership receives notes
or other evidences of indebtedness in
consideration of a sale or other disposition
of all or substantially all of its assets,
the Partnership shall not dissolve under this
clause (iii) until the date on which such
notes or evidences of indebtedness have been
paid in full or otherwise disposed of by the
Partnership.
(iv) by the occurrence of a Termination Event,
unless all of the then remaining Partners
agree, in a writing signed by all of them
within 90 days of the date of the Termination
Event, to continue the Partnership.
(b) Unless a Majority of the Number of Partners agree
in writing to continue the business of the Partnership within 90
days after the event listed, a dissolution shall also be caused:
(i) by the bankruptcy of any Partner or the
Partnership (within the meaning of Section
34-69(5) of the Act);
(ii) by the death or incompetency of any Partner;
(iii) by the removal or withdrawal of a Partner
from the Partnership;
(iv) by any event that makes it unlawful for the
business of the Partnership to be carried on
<PAGE> or for the Partners to carry it on in
partnership form; or
(v) by decree of court pursuant to the Act.
9.2 Effect of Dissolution. In the event of a dissolution of
the Partnership, the Managing Partner or, in the case of a
dissolution described in Section 9.1(b)(i), (ii) or (iii) that
was caused by the Managing Partner, the remaining Partners (in
either case, the "Liquidating Partner") shall proceed to wind up
and terminate the affairs and business of the Partnership. The
Liquidating Partner shall liquidate the assets of the Partnership
as promptly as possible, but in an orderly and businesslike
manner so as not to involve undue sacrifice. Pending such
liquidation, the Liquidation Partner shall conduct the business
and affairs of the Partnership so as to maintain the continuous
operation thereof and to preserve the assets of the Partnership.
9.3 Completion of Liquidation.
(a) The Liquidating Partner shall cause the
Partnership's accountants to prepare a statement setting forth
the assets and liabilities of the Partnership as at the date of
dissolution, which statement shall be furnished to all of the
Partners.
(b) The net proceeds of the liquidation of the
Partnership shall be distributed to the Partners in accordance
with Section 5.3 not later than the end of the taxable year in
which the dissolution and liquidation of the Partnership occurs
or, if later, within 90 days following the date of such
dissolution and liquidation. Any reserves established pursuant to
Section 5.3(b) for anticipated, contingent or unforeseen
liabilities shall be paid over to an escrow agent selected by the
Liquidating Partner and held by such agent for the purposes of
disbursing such reserves in payment of any of the aforementioned
liabilities, and, at the expiration of such period as the
Liquidating Partner deems advisable, any balance shall be
distributed to the Partners in accordance with Section 5.3.
ARTICLE X. MISCELLANEOUS
10.1 Notices. All notices and demands under this Agreement
shall be in writing, and either hand-delivered or sent by
nationally-utilized overnight delivery service or mailed, first
class postage prepaid, by certified or registered mail, return
receipt requested, directed to the parties at their respective
addresses set forth in this Agreement and to the Partnership at
its place of business set forth above. Any such notices and
<PAGE> demands shall be deemed to have been given and made on the
date on which hand-delivered or one business day following the
date sent by nationally-utilized overnight delivery service or
four days following the date mailed as hereinabove provided, as
the case may be. Any party hereto may designate a different
address to which notices and demands shall thereafter be directed
by written notice given to the other Partners and the Partnership
in the manner set forth above.
10.2 Amendment. This Agreement may be modified or amended at
any time and from time to time by a writing signed by Partners
representing more than 50% of the Partner Percentage Interests;
provided, however, that the Partnership Agreement may not be
amended to change the identity, powers or rights of the Managing
Partner without receipt of a written consent from one or more
Limited Partners of DM Associates Limited Partnership holding not
less than a forty-five percent limited partnership therein, which
consent shall be accompanied by a letter to the effect that such
limited partner does not believe that the Managing Partner is
acting in the best interests of the limited partners, taken as a
whole, and supported by reasonable factual determinations.
10.3 Additional Documents. Each Partner agrees to execute,
with acknowledgment or affidavit if required by the Managing
Partner, any and all documents and writings which may be
necessary or expedient in connection with the creation of the
Partnership and the achievement of its purposes.
10.4 Waiver of Partition. Each Partner hereby irrevocably
waives any right that he may have to maintain any action for
partition with respect to any Partnership property.
10.5 Validity. In the event that any provision of this
Agreement shall be held to be invalid, the same shall not affect
in any respect whatsoever the validity of the remainder of this
Agreement.
10.6 Entire Agreement. This Agreement, together with (a) the
letter from Charles Nirenberg to HNB Investment Corp., The
Nirenberg Foundation, Inc., Gregory G. Landry, Mitchell J.
Kupperman, and Robert B. Stein, Jr. dated as of the date of this
Agreement and agreed to in writing by such addressees, (b) the
Partnership Agreement of New DM Management Associates I being
executed of even date herewith among the parties hereto and Frank
Colaccino, (c) the Partnership Agreement of DM Associates Limited
Partnership, as amended by the First Amendment thereto being
executed of even date herewith, and (d) the letter agreement
among DM Associates Limited Partnership, its Partners, the
Partners of the Partnership, and FCN Properties Corporation,
dated as of the date of this agreement and relating, among other
<PAGE> things, to the application of $325,000 to the indebtedness
owed by DM Associates Limited Partnership to FCN Properties
Corporation, constitute the entire agreement among the parties
with respect to the subject matter hereof and thereof and
supersedes any prior agreement or understandings among them, oral
or written (including without limitation, to the extent
inconsistent herewith, that certain letter agreement dated
September 8, 1994 among the parties hereto and HNB Investment
Corp.).
10.7 Headings, Etc. The headings in this Agreement are for
the convenience and reference only and shall not affect the
interpretation of this Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular or
the plural shall include the plural and the singular, and
pronouns stated in the masculine shall include the feminine and
the neuter.
10.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut
applicable to agreements made and to be performed entirely within
this state.
10.9 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all
of which shall constitute on and the same instrument.
10.10 Successors and Assigns. This Agreement shall be
binding upon the parties hereto, and their respective heirs,
executors, administrators, other legal representatives,
successors and assigns, and shall inure to the benefit of the
parties hereto, and, except as otherwise provided herein, to
their respective heirs, executors, administrators, other legal
representatives, successors and assigns.
<PAGE> IN WITNESS WHEREOF, the parties hereto have executed
this Partnership Agreement as of the date first above written.
/s/ Charles Nirenberg
CHARLES NIRENBERG
/s/ Mitchell J. Kupperman
MITCHELL J. KUPPERMAN
/s/ Gregory G. Landry
GREGORY G. LANDRY
/s/ Robert B. Stein, Jr.
ROBERT B. STEIN, JR.
/s/ Frank Colaccino
FRANK COLACCINO
<PAGE> Exhibit A
TO NEW DM MANAGEMENT ASSOCIATES II
PARTNERSHIP AGREEMENT
Initial Percentage
Partner Capital Interest
Charles Nirenberg $ 4.64 46.4286%
Mitchell J. Kupperman 1.79 17.8571%
Gregory G. Landry 1.78 17.8571%
Robert B. Stein, Jr. 1.78 17.8571%
Frank Colaccino .01 .0001%
Total $10.00 100%
<PAGE> EXHIBIT I
SECTION 6.7 OF DM ASSOCIATES LIMITED PARTNERSHIP AGREEMENT
Section 6.7 - Allocation of Net Profits and Net Loss from
Capital Transactions Upon a Liquidation of the Partnership.
(a) Except as provided in Section 6.8, all Net Profits
of the Partnership in connection with a dissolution and winding
up of the Partnership shall be allocated to the Partners and/or
the Special General Partner in the following manner and priority:
(1) First, to the Class A Limited Partner until
the positive balance in the Capital Account of the Class A
Limited Partner is equal to the sum of the Unrecovered Capital of
the Class A Limited Partner and the 6% Preferred Return;
(2) Then, to the Class B Limited Partners until
the positive balance in the Capital Account of the Class B
Limited Partners is equal to the Unrecovered Capital of the Class
B Limited Partners.
(3) Then, to the Class A Limited Partner until
the positive balance in the Capital Account of the Class A
Limited Partner is increased by an amount equal to the Balance of
the Class A Limited Partner's 9% Preferred Return;
(4) Then, to the Class B Limited Partners until
the positive balance in the Capital Account of the Class B
Limited Partners is increased by an amount equal to the 9%
Preferred Return;
(5) Then, to the General Partner until the posi-
tive balance of the Capital Account of the General Partner is
equal to the Unrecovered Capital of the General Partner;
(5A) Then, to the Special General Partner until
the positive balance of the Capital Account of the Special
General Partner is equal to the Unrecovered Capital of the
Special General Partner.
(6) Then, to the Limited Partners until the
positive balance in the Capital Account of the Limited Partners
is increased by an amount equal to the Balance of the Limited
Partners' 15% Preferred Return under Section 6.3(g);
(7) Then, to the Class B Limited Partners and the
General Partner until the positive balance in their Capital
Accounts is increased by the Balance of the Special 15% Priority
that is or was distributed to such Partners under Section 6.3(h);
<PAGE>
(8) Next, to the General Partner until the posi-
tive balance in the Capital Account of the General Partner is
increased by an amount equal to the 15% Preferred Return;
(9) Thereafter, to the Partners and/or the
Special General Partner in accordance with, and in proportion to
the amounts received, or to be received, by them pursuant to
Section 6.3(j).
(b) Net Losses from Capital Transactions upon a
liquidation of the Partnership shall be allocated first to those
Partners and/or the Special General Partner with positive Capital
Account balances, pro rata, until such Capital Account balances
have been reduced to zero. The balance of Net Losses, if any,
shall be allocated, pro rata, in accordance with the Partners'
Percentage Interests.
<PAGE> EXHIBIT J
SECTION 6.1 OF LOAN AGREEMENT
6.1 Events of Default
Each of the following is an Event of Default under this
Agreement:
(a) The failure of the borrower to make payment of
principal and/or interest due under the Note when due;
(b) the failure of the Borrower to pay any amount due the
Authority pursuant to Section 5.2 or Section 5.3 or any other
Secured Obligations within the time prescribed by this Agreement,
and if no time is prescribed, within thirty (30) days of demand
therefor made by the Authority;
(c) the inaccuracy in any material respect of any
representation made by or on behalf of the Borrower or the
Company in the Loan Application, this Agreement or any of the
other Financing Documents, provided that, if such inaccuracy is
susceptible to cure, such inaccuracy continues for thirty (30)
days after notice thereof from the Authority;
(d) the material breach by the Borrower of any of its
warranties in Section 4 of this Agreement or in any of the other
Financing Documents, provided that, if such breach is susceptible
to cure, such breach continues for thirty (30) days after notice
thereof from the Authority;
(e) the failure, for thirty (30) days after notice thereof
from the Authority, of the Borrower to observe or perform any
other covenant or agreement of the Borrower in this Agreement,
including but not limited to Section 5, or in any of the other
Financing Documents;
(f) the failure, for thirty (30) days after notice thereof
from the Authority, of the Company to perform or observe, or to
cure any breach of, any term or condition set forth in the
Company Letter, whether expressed as a matter of intent, warranty
or agreement and without regard to whether such term or condition
is enforceable against the Company or such failure by the Company
is excusable as a matter of law;
(g) the occurrence of any event of default under the Credit
Agreement and either (i) the declaration by the Agent of the
termination of any lending commitment thereunder, or (ii) the
acceleration of, or notice by the Agent of the acceleration of,
the maturity of any indebtedness due thereunder;
<PAGE>
(h) without the authority's prior written consent, (i) the
disposition of assets by the Company (including by way of the
disposition of the stock or assets of any Subsidiary) in any one
fiscal year of an aggregate net book value in excess of
$10,000,000 other than in the ordinary course of business, or
which causes the Company's Consolidated Tangible Capital (as
defined in the Credit Agreement as of the date hereof, except
that for purposes hereof the aggregate outstanding principal
amount of the Company's Subordinated Debentures (also as defined
in the Credit Agreement) shall be excluded from Consolidated
Tangible Capital) to fall below $11,000,000, (ii) the dissolution
or liquidation of the Company, (iii) the merger or consolidation
of the Company into or with any other Person, (iv) the
acquisition of the Company by any other Person, or (v) any
amendment to the Restated Certificate of Incorporation of the
Company effecting any change in the provisions with respect to
the Class B Common Stock, or the preference or priority of any
class or series of capital stock of the Company relative to the
Class B Common Stock, or which would violate or result in the
violation of any other provisions of the Financing Documents or
constitute or result in a Default or Event of Default.
(i) without the Authority's prior written consent, the
issuance of any additional shares of common stock of the Company
or of any securities convertible into shares of common stock of
the Company, except
(1) common stock issued to employees, officers and
directors pursuant to and within the limits of the Company's
stock option and employee stock purchase plans as described in
and in existence as of the date of the Company's 1991 Proxy
Statement; and
(2) additional shares of common stock or convertible
securities the issuance of which does not result in a reduction,
which in the reasonable judgment of the Authority is material, in
either book value per share or earnings per share for the
Company's common stock on a fully-diluted basis (giving effect to
the issuance of such additional shares of common stock or
convertible securities) below the book value per share and
earnings per share, respectively, reported by the Company for the
fiscal year ended February 1, 1992 (the "Target Amounts per
Share");
and provided further that, following the issuance of any such
common stock or convertible securities otherwise permitted under
clause (1) or (2) hereof, the common stock of the Company owned
by the Borrower continues to represent at least 51% of the voting
power of the Company's common stock generally. For purposes of
this subparagraph (i): (A) the Target Amounts per Share shall be
adjusted appropriately for the effect of any stock split, stock
dividend, recapitalization or similar event otherwise permitted
under this Agreement; (B) earnings after giving effect to the
issuance of such additional shares of common stock or convertible
securities shall be deemed to be the sum of (y) the Company's net
income for its most recent four fiscal quarters for which results
<PAGE>are then publicly available, and (z) an amount equal to the
after-tax savings that would be reasonably expected to result
over the twelve-month period following the date of such issuance
if the net proceeds to the Company of such issuance were applied
to the repayment of principal outstanding under the Credit
Agreement, assuming for purposes hereof that the borrowing rate
for such twelve-month period was the borrowing rate in effect
under the Credit Agreement on the date of such issuance; (C) any
non-cash net proceeds realized from the issuance of such
additional shares of common stock shall be valued for the
purposes of clause (B) above at the market value of the Company's
common stock issued in consideration thereof; and (D) the effect
of the issuance of convertible securities on earnings per share,
book value per share and voting control shall be determined on
the date that the convertible securities are issued (as if the
securities were converted, for the conversion price, on the date
of issuance), rather than on the date that such securities are in
fact converted.
(j) the creation or issuance of any class of capital stock
of the Company having any preference or priority over the Class B
Common Stock;
(k) the conversion by the Borrower of any of its Class B
Common Stock into the Company's Class A Common Stock;
(l) the failure of the Borrower or the Company generally to
pay its debts as such debts become due; and
(m) the entry of a decree or order for relief by a court
having jurisdiction in respect of the Borrower or the Company in
an involuntary case under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or the appointment
of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Borrower or the Company
or for any substantial part of the Property of either, or the
issuance of an order for the winding-up or liquidation of the
affairs of the Borrower or the Company and the continuance of any
such decree or order unstayed and in effect for a period of 60
consecutive days; or upon the commencement by the Borrower or the
Company of a voluntary case under the federal bankruptcy laws, as
now or hereafter constituted, or any other applicable federal or
state bankruptcy, insolvency or other similar law, or the consent
by the Borrower or the Company to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) of the
Borrower or the Company or for any substantial part of the
property of either or the making by the Borrower or the Company
of any assignment for the benefit of creditors, or the taking of
<PAGE> partnership or corporate action by the Borrower or the
Company, respectively, in furtherance of any of the foregoing.
<PAGE> EXHIBIT K
The undersigned agree that a statement on Schedule 13D to be
filed with the Securities and Exchange Commission on February
6th, 1995, will be filed on behalf of each of them.
NEW DM MANAGEMENT ASSOCIATES I DM ASSOCIATES
LIMITED PARTNERSHIP
/s/ Charles Nirenberg By New DM Management Associates
I
By: Its General Partner
Charles Nirenberg
Its Managing Partner /s/ Charles Nirenberg
By:
Charles Nirenberg
Its Managing General Partner
NEW DM MANAGEMENT ASSOCIATES II
/s/ Charles Nirenberg
/s/ Charles Nirenberg
By: Charles Nirenberg
Charles Nirenberg
Its Managing Partner /s/ Robert B. Stein, Jr.
Robert B. Stein, Jr.
/s/ Gregory G. Landry
Gregory G. Landry
/s/ Mitchell J. Kupperman
Mitchell J. Kupperman
/s/ Frank Colaccino
Frank Colaccino
<PAGE>
