<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
of the securities exchange act of 1934
For the transition period from ___________________ to ___________________
Commission file number 0-1490
FRANK E. BEST, INC.
(Exact name of registrant as specified in its charter)
WASHINGTON 35-1142810
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. BOX 50444, INDIANAPOLIS, INDIANA 46250
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 849-2250
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /
Indicate the number of shares outstanding of each of the registrant's classes of
common, as of May 5, 1995.
COMMON STOCK 421,183.89 SHARES
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<PAGE>
INDEX
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income for the three months
ended March 31, 1995 and 1994 3
Condensed Consolidated Balance Sheets at March 31, 1995 and
December 31, 1994 4-5
Condensed Consolidated Statements of Shareholders' Equity at
March 31, 1995 and December 31, 1994 6
Condensed Consolidated Statements of Cash Flows for the three
months ended March 31, 1995 and 1994 7
Notes to Condensed Consolidated Financial Statements 8-10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11-12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURE 14
Exhibit 15-34
2
<PAGE>
BEST LOCK COMPANIES
BEST LOCK CORPORATION AND SUBSIDIARY
BEST UNIVERSAL LOCK CO. (A NON-OPERATING HOLDING COMPANY) AND SUBSIDIARIES
FRANK E. BEST, INC. (A NON-OPERATING HOLDING COMPANY) AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Three Months Ended March 31
1995 1994
------------ ------------
<S> <C> <C>
NET SALES $29,352,842 $23,390,011
OPERATING EXPENSES
Cost of Goods Sold 15,764,524 12,082,356
Selling 7,488,437 6,529,344
General and Administrative 4,042,870 3,143,423
Engineering, research and development 625,440 898,548
------------ -----------
Total operating expenses 27,921,271 22,653,671
------------ -----------
OPERATING INCOME 1,431,571 736,340
Interest expense (137,346) (5,046)
Other income, net 132,519 54,534
------------ -----------
INCOME before provision for income taxes 1,426,744 785,828
Provision for income taxes 597,541 318,149
------------ -----------
NET INCOME, Best Lock Corporation and Subsidiary 829,203 467,679
Minority interest in net income, Best Lock
Corporation and Subsidiary (175,750) (127,162)
Corporate - Best Universal Lock Co. expense (96) (311)
------------ -----------
NET INCOME, Best Universal Lock Co. and
Subsidiaries 653,357 340,206
Minority interest in net income, Best Universal
Lock Co. and Subsidiaries (192,332) (76,104)
Corporate - Frank E. Best, Inc. expense (66) (310)
------------ -----------
NET INCOME, Frank E. Best, Inc. and Subsidiaries $ 460,959 $ 263,792
------------ -----------
------------ -----------
</TABLE>
<TABLE>
<CAPTION>
Best Universal Lock Co.
Best Lock ------------------------ Frank E.
Corporation Series A Series B Best Inc.
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Earnings per common share:
Three months ended March 31, 1995 $ 6.49 $ 1.71 $ 1.71 $ 0.90
---------- --------- ---------- ----------
---------- --------- ---------- ----------
Three months ended March 31, 1994 $ 3.56 $ 0.88 $ 0.88 $ 0.44
---------- --------- ---------- ----------
---------- --------- ---------- ----------
Weighted average shares outstanding:
1995 127,827.43 82,731.60 300,000.00 511,919.46
---------- --------- ---------- ----------
---------- --------- ---------- ----------
1994 131,238.85 86,469.00 300,000.00 598,710.00
---------- --------- ---------- ----------
---------- --------- ---------- ----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
FRANK E. BEST, INC. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
March 31 December 31
1995 1994
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,807,315 $ 4,843,579
Trade receivables:
Direct 12,269,604 11,680,289
Sales representatives and other 2,909,800 2,688,434
Allowance for uncollectible accounts (301,954) (244,829)
Estimated refundable income taxes 0 141,708
Current portion of notes receivable 85,438 81,987
Inventories 15,455,546 14,579,058
Prepaid income taxes 3,166,828 3,566,922
Other prepaid expenses 62,713 152,342
------------ -----------
Total current assets 37,455,290 37,489,490
------------ -----------
PROPERTY, PLANT AND EQUIPMENT, at cost
Land and buildings 13,805,742 13,770,826
Machinery and equipment 29,376,911 29,478,143
Tooling 8,214,928 8,090,184
Furniture, fixtures and other 8,664,169 8,342,408
Construction work-in-progress 2,023,117 975,301
------------ -----------
62,084,867 60,656,862
Less - accumulated depreciation (31,490,684) (30,519,725)
------------ -----------
Total property, plant and equipment 30,594,183 30,137,137
------------ -----------
OTHER ASSETS
Long-term notes receivable 3,290,037 3,280,332
Other assets 1,024,492 54,050
------------ -----------
Total assets $ 72,364,002 $ 70,961,010
------------ -----------
------------ -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
FRANK E. BEST, INC. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
March 31 December 31
1995 1994
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable $ 2,500 $ 2,500
Current portion of retirement benefit obligations 1,369,954 1,381,967
Trade accounts payable 2,184,108 1,641,302
Customer advances 1,492,018 1,501,304
Accrued liabilities:
Income taxes 236,038 941,064
Property and other taxes 1,217,361 960,153
Payroll and vacation pay 3,425,293 3,918,751
Accrued severance 429,031 2,394,593
Accrued medical claims 880,000 850,000
Other 407,807 861,819
------------ -----------
Total current liabilities 11,644,110 14,453,453
------------ -----------
LONG-TERM DEBT 12,000,000 -
RETIREMENT BENEFIT OBLIGATION 4,274,403 4,444,971
DEFERRED INCOME TAXES 2,276,932 2,269,369
------------ -----------
Total liabilities 30,195,445 21,167,793
------------ -----------
MINORITY INTEREST IN SUBSIDIARIES 18,733,104 21,736,524
------------ -----------
COMMON STOCK AND COMMON STOCK OF UNIVERSAL AND
BEST, REDEEMABLE UNDER STOCK BONUS PLAN 2,288,171 2,288,171
------------ -----------
SHAREHOLDERS' EQUITY:
Common stock, $1 par value, 600,000 shares
authorized and issued, 421,183.89 shares
outstanding 1995; 598,710 shares
outstanding 1994 598,710 598,710
Capital surplus 77,972 77,972
------------ -----------
Total capital stock 676,682 676,682
Accumulated earnings 27,952,905 27,491,946
Cumulative translation adjustment (116,731) (111,935)
Common stock and common stock of Universal
and Best, redeemable under Stock Bonus Plan (2,288,171) (2,288,171)
Treasury stock (5,077,403) -
------------ -----------
Total shareholders' equity 21,147,282 25,768,522
------------ -----------
Total liabilities and shareholders' equity $72,364,002 $70,961,010
------------ -----------
------------ -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
FRANK E. BEST, INC. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
March 31 December 31
------------ ------------
1995 1994
------------ ------------
<S> <C> <C>
COMMON STOCK, $1 par value, 600,000 shares
authorized and issued, 421,183.89 shares
outstanding 1995; 598,710 shares
outstanding 1994 $ 598,710 $ 598,710
CAPITAL SURPLUS 77,972 77,972
Total capital stock ------------ -----------
676,682 676,682
------------ -----------
ACCUMULATED EARNINGS:
Balance at beginning of year 27,491,946 26,688,607
Net income (three months ended March 31, 1995
and twelve months ended December 31, 1994) 460,959 1,153,290
Cash dividends (see below) -- (311,330)
Difference between dividends of Series A and
Series B common shareholders of Best Universal
Lock Co. -- (38,621)
------------ -----------
Balance at end of year 27,952,905 27,491,946
------------ -----------
COMMON STOCK AND COMMON STOCK OF UNIVERSAL AND
BEST, REDEEMABLE UNDER STOCK BONUS PLAN (Note 8) (2,288,171) (2,288,171)
------------ -----------
CUMULATIVE TRANSLATION ADJUSTMENT (116,731) (111,935)
------------ -----------
TREASURY STOCK
Balance at beginning of year -- --
Shares purchased (5,077,403) --
------------ -----------
Balance at end of period (5,077,403) --
------------ -----------
Total shareholders' equity $26,224,685 $25,768,522
------------ -----------
------------ -----------
Cash dividends per share: $ 0.00 $ 0.52
------------ -----------
------------ -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
FRANK E. BEST, INC. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended March 31
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 28,379,629 $ 24,629,902
Cash paid to suppliers and employees (31,134,075) (20,124,659)
Interest received 291,808 20,022
Interest paid (28,416) (5,008)
Income taxes paid (753,443) (78,856)
-------------- --------------
Net cash provided by operating activities (3,244,497) 4,441,401
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment 1,161 9,147
Capital expenditures (1,581,654) (1,456,996)
-------------- --------------
Net cash used in investing activities (1,580,493) (1,447,849)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings against unsecured line of credit 12,000,000 -
Purchase of treasury stock (8,211,021) -
-------------- --------------
Net cash used in financing activities 3,788,979 -
-------------- --------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (253) (4,992)
-------------- --------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (1,036,264) 2,988,560
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,843,579 1,704,989
-------------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,807,315 $ 4,693,549
-------------- --------------
-------------- --------------
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net income $ 460,959 $ 263,793
Adjustments-
Depreciation and amortization 1,126,063 1,146,641
Provision for losses on accounts receivable 78,619 3,726
(Gain) loss on sale of property, plant and equipment (1,123) (3,418)
Minority interest related to current year earnings 368,082 203,265
Changes in assets and liabilities-
(Increase) decrease in:
Accounts and notes receivable (812,800) 1,208,797
Refundable income taxes 68,407 -
Inventories (872,482) 461,321
Prepaid income taxes and other expenses 471,480 51,244
Other assets (1,323,561) (113,240)
Increase (decrease) in:
Accounts payable, customer advances and accrued liabilities (2,001,157) 953,010
Income taxes payable (631,966) 210,959
Deferred income taxes 7,563 21,000
Retirement benefit and benefit obligation (182,581) 34,303
-------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ (3,244,497) $ 4,441,401
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE>
BEST LOCK COMPANIES
BEST LOCK CORPORATION AND SUBSIDIARY
BEST UNIVERSAL LOCK CO. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES
FRANK E. BEST, INC. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements have not been
audited by independent accountants. In the opinion of the Company's management,
the financial statements reflect all adjustments necessary to fairly present the
results of operations for the three-month periods ended March 31, 1995 and 1994,
the Company's financial position at March 31, 1995 and December 31, 1994, and
the cash flows for the three-month periods ended March 31, 1995 and 1994. These
adjustments are of a normal recurring nature.
Certain notes and other information have been omitted from the interim
financial statements presented in this Quarterly Report on Form 10-Q.
Therefore, these financial statements should be read in conjunction with the
Company's 1994 Form 10-K.
The results for the first quarter of 1995 are not necessarily indicative of
future financial results.
The condensed consolidated financial statements for each parent company in
the Best Lock Companies (the Company) include their respective subsidiaries as
indicated below:
Percent Owned
Parent Company Subsidiaries as of March 31, 1995
-------------- ------------ --------------------
Frank E. Best, Inc. Best Universal Lock Co. 79%
(Best)
Best Universal Lock Best Lock Corporation 77%
Co. (Universal)
Best Lock Best Universal Locks Limited (Canada) 100%
Corporation (Lock)
2. INCOME TAXES
The effective tax rate for the first quarter of 1995 was 41.9 percent compared
with 40.5 percent for the first quarter of 1994. The effective tax rates are
higher than the U.S. Federal statutory rate of 34% due to a higher tax rate in
Canada and state income taxes.
8
<PAGE>
3. FINANCING AND RELATED PARTY ARRANGEMENTS
The Company entered into a new unsecured line of credit agreement on
February 15, 1995. The new credit agreement expires on February 15, 2002 and
bears interest at a variable rate, based upon the prime rate, LIBOR or the
Federal Funds rate, at the Company's election. The variable rate also
fluctuates based upon the amounts borrowed under the credit agreement. The
Company is subject to the maintenance of certain financial ratio covenants under
terms of the credit agreement. The amounts available under this credit
agreement are $25,000,000 through February 14, 1998 less $3,750,000 for each one
year period thereafter until expiration. Borrowings under the credit agreement
are convertible, at the Company's option, into term notes ranging from five to
seven years, up through February 14, 1998. The Company borrowed $12,000,000
under this agreement on February 15, 1995. The interest on these borrowings is
based on LIBOR, and was 7.43% as of March 31, 1995. The weighted average
interest rate (interest expense divided by weighted average borrowing) during
the period the borrowings were outstanding was 7.43%.
4. RECLASSIFICATIONS
Certain reclassifications have been made to the condensed consolidated
balance sheet and statement of income for the three months ended March 31, 1994
to conform to the current year presentation.
5. OTHER MATTERS
On February 15, 1995, the Company settled all claims arising from a
derivative action threatened against it by a director, as well as all claims
against Lock's Chief Executive Officer and another officer. The material
components of the settlement included: (i) the resignation of Walter E. Best
from the Board of Directors and as President of each of Lock, Universal, Best,
and Walter E. Best Company, Inc.; (ii) the resignation of Richard E. Best and
Marshall W. Best as officers and employees of Lock and the resignation of Robert
W. Best as an employee; (iii) the payment of the total sum of $2,134,349 as
severance, vacation and bonus payments to Walter E. Best, Robert W. Best,
Richard E. Best, Marshall W. Best and Edwina McLemore, an employee of Lock; (iv)
the payment of the total sum of $1,240,000 in exchange for covenants not to
compete from Walter E. Best, Robert W. Best, Richard E. Best and Marshall W.
Best; and (v) the payment of the total sum of $8,178,296 for the acquisition of
shares of Lock and interests in a partnership as described below.
On February 15, 1995, Lock purchased for cash an 87% non-voting interest in
a partnership for $5,582,626. The sole purpose of the partnership, which was
newly formed, was to acquire shares of Best and Universal from Walter E. Best
and certain other family members and related trusts. The purchase price of the
shares was based on the appraised value of such shares as of December 31, 1993
as determined by an independent appraiser. An opinion that the transactions
were fair to the Company was rendered by Merrill Lynch, Pierce, Fenner & Smith
Incorporated to the Company's Board of Directors. The partnership owns directly
or indirectly 204,053 shares of Best common stock, 8,787 shares of Universal
Series A common stock and 11.25 shares of Universal preferred stock.
In addition, on February 15, 1995, Lock acquired 6,742 shares of its own
common stock at an appraised value of $385.00 per share or $2,595,670.
9
<PAGE>
Lock's acquisition of its interest in the partnership and its redemption of
its own common shares were funded through the utilization of a portion of the
unsecured line of credit of $25,000,000 as discussed in Note 3.
The Company accounted for the purchase of the Lock shares and the 87%
partnership interest as treasury stock, which resulted in a reduction to
shareholders' equity of Lock of $8,178,296, Universal of $5,582,626 and Best of
$5,077,403. As a result of these transactions, the minority interest of
Universal decreased from 27% to 23% and the minority interest of Best decreased
from 22% to 21%.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
Since Frank E. Best, Inc. and Best Universal Lock Co. are non-operating parents
of Best Lock Corporation, a discussion of Best Lock Corporation's business is
necessary in order to understand the character and development of the total
enterprise. As the variations between the financial statements of these three
companies are not significant, the discussion and analysis of Best Lock
Corporation is representative of all. The following, therefore, is a discussion
of the business of Best Lock Corporation (the Company).
ANALYSIS OF RESULTS OF OPERATIONS
Sales for the first quarter of 1995 increased $6 million (25%) over the same
period of 1994. Sales from the manufacturing division (BLM) to independent
distributors and Authorized Contract Construction Dealers accounted for $2.5
million of the increase. The remainder of the increase resulted from higher
sales at the company's distribution division (BLS), which is at least partially
attributable to severe weather conditions in 1994.
The gross profit on sales, while increasing by $2.3 million, decreased to 46.3%
of sales, compared to 48.3% in the prior year. Higher manufacturing overhead in
the BLM division, mainly attributable to increased fringe benefit costs of
approximately $400,000, caused the reduction in the gross profit percentage.
Operating income improved by $695,000 (94%) to 4.9% of net sales from 3.1% for
the same period in 1994. Selling and administrative expenses increased by 19.2%
due to higher salaries and fringe benefits of approximately $1 million. The
Company is also in the process of implementing software for the order
processing, inventory management, and accounting functions, which increased
professional fees by $700,000.
Engineering expenses decreased by $273,000 (30.4%) over the first quarter of
1994, due to reductions in personnel associated with the development of certain
product lines and lower expenditures for engineering-related professional fees .
The Company's effective tax rate was 41.9% in the first quarter of 1995 as
compared to 40.5% for the same period in 1994. The effective tax rates are
higher than the U.S. Federal statutory rate of 34% due to a higher tax rate in
Canada and state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity continues to be strong for the first quarter of 1995.
Working capital increased by $2.8 million, mainly due to the utilization of the
unsecured line of credit, as discussed in Note 3 to the condensed consolidated
financial statements. The current ratio of 3.2:1 at March 31, 1995 improved
significantly from the ratio of 2.6:1 at December 31, 1994. Current liabilities
decreased by $2.7 million due to payments primarily associated with the
resignations discussed in Note 5 to the condensed consolidated financial
statements, which reduced accrued severance, accrued vacation and other accrued
expenses. Days sales outstanding decreased to 46 days from 55 days at December
31, 1994 due to an overall improvement in collections. Inventory turns of 4.2
in the first quarter of 1995 increased from 3.4
11
<PAGE>
in the first quarter of 1994 due to increased sales and the Company's continued
emphasis on inventory management and control. Inventory levels increased by
$876,000 in the first quarter of 1995. This increase is a result of a decrease
in backlog in the manufacturing division and an increase in inventory at the
corporate-owned distribution offices.
Capital expenditures for the first quarter of 1995 were $1.6 million. Capital
spending is projected to total between $5.0 and $7.0 million for the year. This
total includes approximately $3.0 million for enhanced computer systems and
related software.
During the first quarter of 1995, the Company borrowed $12 million against an
unsecured line of credit to fund the purchase of $8.2 million in treasury stock.
Proceeds from the borrowing were also used to pay severance and accrued vacation
as described above.
The Company plans to meet its 1995 working capital and capital expenditure
requirements through funds from operations and borrowings on the line of credit.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3 of the Company's Form 10-K for the year ended
December 31, 1994. There have been no new legal proceedings initiated during
the quarter, nor has there been a change in status or termination of any
previously reported legal proceeding.
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The Settlement Agreement executed in connection with the resignations described
in Note 5 to the condensed consolidated financial statements is attached hereto
as an exhibit.
A Form 8-K was filed on March 2, 1995 for each of the companies (Lock, Universal
and Best) to reflect the transaction described in Note 5 above.
13
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FRANK E. BEST, INC..
(Registrant)
Date: MAY 15, 1995 By: /s/ Edward C. Memmen, Jr.
---------------------
Vice President
(Principal Accounting Officer)
14
<PAGE>
This AGREEMENT (the "Agreement") is entered into this 15th day of
February 1995, by and among the following listed parties:
1. Best Lock Corporation (the "Corporation"),
2. Best Aircraft Corporation ("Aircraft"),
3. Best Lock Partnership (the "Partnership"),
4. Walter E. Best Company, Inc. ("WEBCO"),
5. Frank E. Best, Inc. ("FEB"),
6. Best Universal Lock Co. ("BUL"),
7. Walter E. Best, as Trustee of the Walter E. Best
Revocable Trust (the "WEB Trust"),
8. Dona J. Best, as Trustee of the Dona J. Best Revocable
Intervivos Trust (the "DJB Trust"),
9. Walter E. Best,
10. Dona J. Best,
11. Robert W. Best,
12. Denise Best,
13. Richard E. Best,
14. Amber Best,
15. Marshall W. Best,
16. Tracey Best,
17. Russell C. Best, and
18. Gregg A. Dykstra.
W I T N E S S E T H:
WHEREAS, the Corporation is a publicly traded, for-profit corporation
that is organized under the laws of the state of Delaware, that has its
principal place of business in Indianapolis, Indiana, and that engages
principally in the business of designing and manufacturing locks and locking
devices;
WHEREAS, the Corporation is a subsidiary corporation of BUL, FEB, and
WEBCO (hereinafter collectively referred to as the Corporation's "Affiliates");
WHEREAS, the Corporation shall purchase units of non-voting interests in
the Partnership, an Indiana general partnership in which Russell C. Best and
WEBCO are partners and that has as its principal asset shares of FEB common
stock, to establish and maintain the Partnership as an investment vehicle to
benefit the shareholders of the Corporation in the following ways: (i) it will
permit the purchase of the interests held by certain senior members of the
Corporation's management in the Corporation and certain affiliates of the
Corporation in a manner that will afford the Corporation enhanced flexibility to
undertake future restructuring transactions, should such transactions be
determined to be beneficial to the Corporation and its shareholders, in a manner
that reduces tax costs; (ii) it will enhance the flexibility of the Corporation
to structure a sale of assets in a tax efficient manner should the Corporation
ever determine to sell its assets; (iii) it will assist the accomplishment of
the objective of causing the Corporation and certain of its affiliates to become
members of a consolidated group for federal income tax purposes and, thereby, to
achieve savings in federal income taxation for the Corporation's primary
shareholder, Best Universal Lock Co., including with respect to distributions of
dividends; and (iv) it will assist the accomplishment of the objective of
reducing the financial and other costs of compliance with requirements imposed
upon the Corporation by the Securities Exchange Act of 1934;
WHEREAS, BUL, a subsidiary of FEB, is a publicly traded, for-profit
corporation organized under the laws of the state of Washington with its
principal place of business located in Indianapolis, Indiana;
WHEREAS, FEB is a publicly traded, for-profit corporation organized
under the laws of the state of Washington with its principal place of business
in Indianapolis, Indiana;
WHEREAS, WEBCO is a privately held, for-profit corporation organized
under the laws of the state of Indiana with its principal place of business in
Indianapolis, Indiana;
15
<PAGE>
WHEREAS, the following persons serve as employees of the Corporation in
the following capacities: (1) Russell C. Best - Chief Executive Officer, (2)
Walter E. Best - Chairman and President, (3) Richard E. Best - Vice President,
(4) Marshall W. Best - Vice President, and (5) Robert W. Best - Assistant to the
President (hereinafter these five individuals are referred to as the "Best
Family Managers");
WHEREAS, Gregg A. Dykstra serves as the Corporation's general counsel;
WHEREAS, Dona J. Best, wife of Walter E. Best, Denise Best, wife of
Robert W. Best, Amber Best, wife of Richard E. Best, and Tracey Best, wife of
Marshall W. Best, legally and/or beneficially own shares in the Corporation
and/or one or more of the Corporation's Affiliates;
WHEREAS, serious differences of opinion respecting the management and
the desired future direction of the Corporation exist among the Best Family
Managers and Gregg A. Dykstra;
WHEREAS, these differences of opinion have prevented the Corporation's
Board of Directors, of which Walter E. Best and Russell C. Best are members,
from operating effectively;
WHEREAS, Walter E. Best has expressed strong criticism and disagreement
with certain proposals advanced by, as well as certain past conduct of, Russell
C. Best and Gregg A. Dykstra;
WHEREAS, the Corporation's Board of Directors has considered and
reviewed the dispute among the Best Family Managers and Gregg A. Dykstra and has
determined that the interests of the Corporation's shareholders cannot be best
served if the dispute continues and all of the Best Family Managers remain
employees of the Corporation;
WHEREAS, the Corporation and all the members of its Board of Directors
believe, that the interests of the Corporation's shareholders are best served by
terminating the dispute among the Best Family Managers and eliminating the
conflict that now prevents the Corporation's Board of Directors from operating
effectively by severing the relationship that Walter E. Best, Robert W. Best,
Richard E. Best, and Marshall W. Best have with the Corporation pursuant to the
terms of a severance arrangement;
WHEREAS, the parties have executed a Letter of Intent, dated November
29, 1994, as amended by an Amendment dated January 6, 1995 and by a Second
Amendment dated January 27, 1995, which sets forth their agreement in principle
with respect to the terms of the severance arrangement;
WHEREAS, the Corporation has engaged Merrill Lynch, Pierce, Fenner &
Smith Incorporated to review the terms of the proposed severance arrangement,
and Merrill Lynch has issued its written opinion, dated February 14, 1995, that
the proposed severance arrangement, if effected, is fair to the shareholders of
the Corporation from a financial perspective;
WHEREAS, the parties desire this Agreement to constitute their
definitive agreement respecting the terms of the severance arrangement detailed
in the Letter of Intent, as amended;
WHEREAS, the Corporation desires that the current dispute among the Best
Family Managers and Gregg A. Dykstra and between Russell C. Best and Walter E.
Best, as members of the Board of Directors of the Corporation, be resolved;
WHEREAS, Walter E. Best, Dona J. Best, Robert W. Best, Denise Best,
Richard E. Best, Amber Best, Marshall W. Best, and Tracey Best desire to divest
themselves of all their relationships with the Corporation, including all
ownership, management, and employment relationships, by selling all of their
stock in the Corporation and its Affiliates and by resigning all positions,
including but not limited to, Director, Officer, and Employee held in the
Corporation and its Affiliates, and its Stock Bonus Plan;
WHEREAS, Aircraft is a closely held corporation that is organized under
the laws of the state of Indiana, has its principal place of business in
Indianapolis, Indiana, and engages in the business of owning and leasing various
aircraft and automobiles for executive transportation;
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WHEREAS, Aircraft leases automobiles to the Corporation, both Aircraft
and the Corporation desire to terminate their leasing relationship and the
Corporation desires to purchase and Aircraft desires to sell certain of these
automobiles;
NOW, THEREFORE, in consideration of the mutual covenants expressed
herein and other good and sufficient consideration, the parties hereto agree to
the following:
ARTICLE 1: REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The
Corporation makes the following representations and warranties:
1. ORGANIZATION OF THE CORPORATION. The Corporation is a
corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware and is duly
qualified to transact all the business required herein. The
Corporation has the full power and authority to purchase and
sell tangible and intangible property and to borrow funds
and to carry on its business as now conducted.
2. CORPORATE AUTHORITY. The Corporation has full right, power,
capacity, and authority to enter into this Agreement, to
consummate the transactions contemplated hereby, and to
comply with the terms, conditions, and provisions hereof.
The execution, delivery, and performance of this Agreement
by the Corporation have been duly authorized and approved by
the Board of Directors of the Corporation and do not require
any further authorization or consent. This Agreement and
all the other documents, papers, and instruments related
directly or indirectly thereto, constitute, in accordance
with their terms, valid, enforceable, and legally binding
obligations of the Corporation.
3. NO VIOLATION, ARTICLES OF INCORPORATION, BY-LAWS, ETC. The
execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby and
the compliance with or fulfillment of the terms and
provisions hereof and of any other agreement or instrument
contemplated hereby, do not and will not (i) conflict with
or result in a breach of any of the provisions of the
Articles of Incorporation, or the By-Laws of the
Corporation, (ii) contravene any law, rule, or regulation of
any state or of the United States, or any order, writ,
award, judgment, decree, or other determination that affects
or binds the Corporation, or any of its respective
properties, (iii) conflict with, result in a breach of,
constitute a default under, or give rise to a right of
termination under any contract, deed of trust, mortgage,
trust, lease, governmental, or other license, permit or
other authorization, contract, agreement, note, or
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any other agreement, instrument, or restriction to which the
Corporation is a party or by which any properties of the
Corporation may be affected or bound, or (iv) require the
approval, consent or authorization of, or registration with,
any third party or any foreign, federal, state or local
court, governmental authority, or regulatory body.
B. REPRESENTATIONS AND WARRANTIES OF AIRCRAFT. Aircraft makes the
following representations and warranties:
1. ORGANIZATION OF AIRCRAFT. Aircraft is a corporation duly
organized, validly existing, and in good standing under the
laws of the State of Indiana and is duly qualified to
transact all the business required herein. Aircraft has the
full power and authority to purchase and sell tangible and
intangible property and to borrow funds and to carry on its
business as now conducted.
2. CORPORATE AUTHORITY. Aircraft has full right, power,
capacity, and authority to enter into this Agreement, to
consummate the transactions contemplated hereby, and to
comply with the terms, conditions, and provisions hereof.
The execution, delivery, and performance of this Agreement
by Aircraft have been duly authorized and approved by the
Board of Directors of Aircraft and do not require any
further authorization or consent.
3. NO VIOLATION, ARTICLES OF INCORPORATION, BY-LAWS, ETC. The
execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby and
the compliance with or fulfillment of the terms and
provisions hereof and of any other agreement or instrument
contemplated hereby, do not and will not (i) conflict with
or result in a breach of any of the provisions of the
Articles of Incorporation, or the By-Laws of Aircraft (ii)
contravene any law, rule, or regulation of any state or of
the United States, or any order, writ, award, judgment,
decree, or other determination that affects or binds
Aircraft, or any of its respective properties, (iii)
conflict with, result in a breach of, constitute a default
under, or give rise to a right of termination under any
contract, deed of trust, mortgage, trust, lease,
governmental, or other license, permit or other
authorization, contract, agreement, note, or any other
agreement, instrument, or restriction to which Aircraft is a
party or by which any properties of Aircraft may be affected
or bound, except for the contractual arrangement that
Aircraft has with National City Bank of Indianapolis,
Indiana (the "NCB Contract"), or (iv) require the approval,
consent or authorization of, or registration with, any third
party or any foreign, federal, state or local court,
governmental authority, or regulatory body except that the
approval of National City Bank of Indianapolis ("NCB") to
the transfer of the automobiles contemplated herein is
required and has been secured.
4. TITLE AND CONDITION. Except for the interest of NCB in
certain automobiles as reflected in the NCB Contract,
Aircraft currently has, and as of the date of closing, will
have good and marketable title, free and clear of any and
all Liens, as hereinafter defined, to each of the
automobiles identified in EXHIBIT A. The automobiles owned
and held by Aircraft are in good and serviceable condition
and suitable for the uses for which they are intended. For
purposes of this Agreement, a "Lien" shall mean any lien,
encumbrance, mortgage, hypothecation, pledge, conditional
sales contract, equity, charge, hire or hire purchase
agreement, or other similar conflicting ownership or
security interest in favor of any third party, except for
any lien for state or local property taxes that is not yet
due and payable.
II. ARTICLE 2: ECONOMIC PROVISIONS
A. ORDER OF TRANSACTIONS. The transactions described within this
Article 2 shall occur in the order prescribed in this Section 2.1,
and in the event the order prescribed herein may conflict with the
order in any other provision, this Section 2.1 shall control.
1. FIRST TRANSACTION. WEBCO's redemption of all the WEBCO
shares owned by the DJB Trust, the WEB Trust, Robert W.
Best, Denise Best, Richard E. Best, Amber Best, Marshall W.
Best, and Tracey Best for non-voting interests in the
Partnership.
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2. SECOND TRANSACTION. The Corporation shall purchase all the
non-voting interests in the Partnership owned by the DJB
Trust, the WEB Trust, Robert W. Best, Denise Best, Richard
E. Best, Amber Best, Marshall W. Best, and Tracey Best.
3. THIRD TRANSACTION. The Partnership shall purchase all the
shares of stock in FEB and BUL owned by Walter E. Best, the
DJB Trust, Robert W. Best, Richard E. Best, and Marshall W.
Best.
4. FOURTH TRANSACTION. The Corporation shall redeem all the
shares of stock in the Corporation owned by Walter E. Best,
the DJB Trust, Robert W. Best, Richard E. Best, and Marshall
W. Best.
5. FIFTH TRANSACTION. All the transactions that are not
identified as part of the first, second, third, or fourth
transactions above shall occur as part of this fifth
transaction.
After the transactions contemplated hereunder are effected, the
Corporation will own an 87.00 percentage interest in the
Partnership.
B. SHARES OWNED BY WALTER E. BEST.
PURCHASE BY PARTNERSHIP. ON February 15, 1995, the Partnership
shall purchase from Walter E. Best, and Walter E. Best shall sell
to the Partnership, all the shares of capital stock that he owns
in FEB and BUL.
REDEMPTION BY CORPORATION. On February 15, 1995, the Corporation
shall redeem from Walter E. Best, and Walter E. Best shall present
to the Corporation for redemption, all the shares of stock he owns
in the Corporation, for cash in the amount equal to the aggregate
appraised value of the Corporation shares on December 31, 1993, as
determined by Sigurd R. Wendin & Associates, Inc. and reflected in
Richard Wendin's letter dated May 16, 1994, which is attached as
EXHIBIT B (the "Wendin Appraisal I").
These transactions shall occur as follows:
1. FEB COMMON. The Partnership shall purchase ten (10) shares
of common stock in FEB from Walter E. Best for $293.60 in
cash, based on the FEB common stock appraised fair market
value of $29.36 per share.
2. BUL COMMON. The Partnership shall purchase five (5) shares
of common stock in BUL from Walter E. Best for $329.80 in
cash, based on the BUL common stock appraised fair market
value of $65.96 per share.
3. CORPORATION COMMON. The Corporation shall redeem two (2)
shares of common stock in the Corporation from Walter E.
Best for $770.00 in cash, based on the Corporation common
stock appraised fair market value of $385.00 per share.
Walter E. Best shall deliver to the Corporation no later than
February 15, 1995 all stock certificates and properly endorsed and
executed stock powers in a form sufficient to permit the transfer
of ownership of the stock.
C. SHARES OWNED BY THE DONA J. BEST REVOCABLE INTERVIVOS TRUST.
REDEMPTION BY WEBCO AND PURCHASE BY CORPORATION. On February 15,
1995, WEBCO shall redeem from the DJB Trust, and the DJB Trust
shall present to WEBCO for redemption, all the non-voting shares
of common stock that the DJB Trust owns in WEBCO in return for a
non-voting interest in the Partnership, and the Corporation shall
then purchase the non-voting interest in the Partnership from the
DJB Trust for cash in the amount equal to the aggregate appraised
fair market value of the non-voting WEBCO common shares that the
DJB Trust redeemed, valued as of December 31, 1993, as determined
by the Wendin appraisal dated December 21, 1994, which is attached
as EXHIBIT C (the "Wendin Appraisal II").
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PURCHASE BY PARTNERSHIP. On February 15, 1995, the Partnership
shall purchase from Dona J. Best, as trustee of the Dona J. Best
Revocable Trust, created under the trust agreement dated December
19, 1991, as amended (the "DJB Trust"), and the DJB Trust shall
sell to the Partnership, all the common stock the DJB Trust owns
in BUL in return for cash in the amount equal to the aggregate
value of the shares as appraised in the Wendin Appraisal I.
REDEMPTION BY CORPORATION. On February 15, 1995, the Corporation
shall redeem from the DJB Trust, and the DJB Trust shall present
for redemption to the Corporation all the stock the DJB Trust owns
in the Corporation, in return for cash in the amount equal to the
aggregate appraised value of the Corporation shares as appraised
in the Wendin Appraisal I.
These transactions shall occur as follows:
1. WEBCO NON-VOTING COMMON. WEBCO shall redeem TWO HUNDRED
SIXTY-EIGHT (268) shares of non-voting common stock in WEBCO
from the DJB Trust for a non-voting interest in the
Partnership. The Corporation shall then purchase the non-
voting Partnership interest from the DJB Trust for
$144,272.44 in cash. The $144,272.44 price of the non-
voting Partnership interest is based on the appraised fair
market value of the TWO HUNDRED SIXTY-EIGHT (268) WEBCO non-
voting common shares of $538.33 per share.
2. BUL COMMON. The Partnership shall purchase TWO THOUSAND
THREE HUNDRED NINETY-EIGHT (2,398) shares of common stock in
BUL from the DJB Trust for $158,172.08 in cash, based on the
BUL common stock appraised fair market value of $65.96 per
share.
3. CORPORATION COMMON. The Corporation shall redeem ONE
THOUSAND FOUR HUNDRED FIFTY-NINE (1,459) shares of the
Corporation's common stock from the DJB Trust for
$561,715.00 in cash, based on the Corporation stock
appraised fair market value of $385.00 per share.
The DJB Trust shall deliver to the Corporation, no later than
February 15, 1995, all stock certificates and properly endorsed
and executed stock powers in a form sufficient to permit the
transfer of ownership of the stock.
D. SHARES OWNED BY THE WALTER E. BEST REVOCABLE TRUST.
REDEMPTION BY WEBCO AND PURCHASE BY CORPORATION. On February 15,
1995, WEBCO shall redeem from Walter E. Best, as trustee of the
Walter E. Best Revocable Trust, created under the Trust Agreement
dated May 8, 1992, as amended (the "WEB Trust"), and the WEB Trust
shall present to WEBCO for redemption, all the shares of non-
voting common stock that the WEB Trust owns in WEBCO in return for
a non-voting interest in the Partnership, and the Corporation
shall then purchase the non-voting interest in the Partnership
from the WEB Trust for cash in the amount equal to the aggregate
appraised fair market value of the non-voting WEBCO common shares
that the WEB Trust redeemed, valued as of December 31, 1993,
pursuant to the Wendin Appraisal II.
These transactions shall occur as follows:
1. WEBCO NON-VOTING COMMON. WEBCO shall redeem SIX THOUSAND
FIVE HUNDRED SIXTY-TWO (6,562) shares of non-voting common
stock in WEBCO from the WEB Trust for a non-voting interest
in the Partnership. The Corporation shall then purchase the
non-voting Partnership interest from the WEB Trust for
$3,532,521.46 in cash. The $3,532,521.46 price of the non-
voting Partnership interest is based on the appraised fair
market value of the SIX THOUSAND FIVE HUNDRED SIXTY-TWO
(6,562) WEBCO non-voting common shares of $538.33 per share;
The WEB Trust shall deliver to the Corporation, no later than
February 15, 1995, all stock certificates and properly endorsed
and executed stock powers in a form sufficient to permit the
transfer of ownership of the stock.
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E. SHARES OWNED BY ROBERT W. BEST, DENISE BEST, RICHARD E. BEST,
AMBER BEST, MARSHALL W. BEST, AND TRACEY BEST.
REDEMPTION BY WEBCO AND PURCHASE BY CORPORATION. On February 15,
1995, WEBCO shall redeem from Robert W. Best, Denise Best,
Richard E. Best, Amber Best, Marshall W. Best, and Tracey Best,
and Robert W. Best, Denise Best, Richard E. Best, Amber Best,
Marshall W. Best, and Tracey Best shall present for redemption,
all the non-voting shares of common stock in WEBCO that they own
in return for non-voting interests in the Partnership, and the
Corporation shall then purchase the non-voting Partnership
interests from these persons for cash in the amount equal to the
aggregate appraised fair market value of the non-voting WEBCO
common shares that they redeemed, valued as of December 31, 1993,
pursuant to the Wendin Appraisal II.
PURCHASE BY PARTNERSHIP. On February 15, 1995, the Partnership
shall purchase from Robert W. Best, Denise Best, Richard E. Best,
Amber Best, Marshall W. Best, and Tracey Best, and Robert W. Best,
Denise Best, Richard E. Best, Amber Best, Marshall W. Best, and
Tracey Best shall sell to the Partnership, all the capital stock
in FEB and BUL that they own for cash in the amount equal to the
aggregate appraised value of the respective FEB and BUL shares on
December 31, 1993, pursuant to the Wendin Appraisal I.
REDEMPTION BY CORPORATION. On , 1995, the Corporation shall
redeem from Robert W. Best, Denise Best, Richard E. Best, Amber
Best, Marshall W. Best, and Tracey Best, and Robert W. Best,
Denise Best, Richard E. Best, Amber Best, Marshall W. Best, and
Tracey Best shall present for redemption to the Corporation, all
the capital stock in the Corporation that they own for cash in the
amount equal to the aggregate appraised value of the Corporation
shares on December 31, 1993, pursuant to the Wendin Appraisal I.
These transactions shall occur as follows:
1. ROBERT W. BEST.
a) WEBCO NON-VOTING COMMON. WEBCO shall redeem FOUR
HUNDRED SIXTY-FIVE (465) shares of non-voting common
stock in WEBCO from Robert W. Best for a non-voting
interest in the Partnership. The Corporation shall
then purchase the non-voting Partnership interest from
Robert W. Best for $250,323.45 in cash. The
$250,323.45 price of the non-voting Partnership
interest is based on the appraised fair market value
of the FOUR HUNDRED SIXTY-FIVE (465) WEBCO non-voting
common shares of $538.33 per share;
b) FEB COMMON. The Partnership shall purchase ONE
THOUSAND FOUR HUNDRED NINETY (1,490) shares of FEB
common stock from Robert W. Best for $43,746.40 in
cash, based on the FEB common stock appraised fair
market value of $29.36 per share;
c) BUL COMMON. The Partnership shall purchase TWO
THOUSAND ONE HUNDRED TWENTY-EIGHT (2,128) shares of
BUL common stock from Robert W. Best for $140,362.88
in cash, based on the BUL common stock appraised fair
market value of $65.96 per share;
d) BUL PREFERRED. The Partnership shall purchase THREE
AND THREE-FOURTHS (3.75) shares of BUL preferred stock
for $375.00 in cash, based on the BUL preferred stock
appraised fair market value of $100.00 per share,
which shares are owned jointly as tenants in common by
Robert W. Best, Richard E. Best, Marshall W. Best, and
Russell C. Best (the "Best Brothers"), and which
shares represent Robert W. Best's undivided TWENTY-
FIVE PERCENT (25%) interest in the FIFTEEN (15) shares
of BUL preferred stock jointly owned by the Best
Brothers;
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e) CORPORATION COMMON. The Corporation shall redeem ONE
THOUSAND NINE HUNDRED SEVEN (1,907) shares of the
Corporation's common stock from Robert W. Best for
$734,195.00 in cash, based on the Corporation common
stock appraised fair market value of $385.00 per
share.
Robert W. Best shall deliver to the Corporation, no later
than February 15, 1995, all stock certificates and properly
endorsed and executed stock powers in a form sufficient to
permit the transfer of ownership of the stock.
2. DENISE BEST.
a) WEBCO NON-VOTING COMMON. WEBCO shall redeem FIFTY-
EIGHT (58) shares of non-voting common stock in WEBCO
from Denise Best for a non-voting interest in the
Partnership. The Corporation shall then purchase the
non-voting Partnership interest for $31,223.14 in
cash. The $31,223.14 price of the non-voting
Partnership interest is based on the appraised fair
market value of the FIFTY-EIGHT (58) WEBCO non-voting
common shares of $538.33 per share.
Denise Best shall deliver to the Corporation, no later than
February 15, 1995, all stock certificates and properly
endorsed and executed stock powers in a form sufficient to
permit the transfer of ownership of the stock.
3. RICHARD E. BEST.
a) WEBCO NON-VOTING COMMON. WEBCO shall redeem FOUR
HUNDRED SIXTY-FIVE (465) shares of non-voting common
stock in WEBCO from Richard E. Best for a non-voting
interest in the Partnership. The Corporation shall
then purchase the non-voting Partnership interest from
Richard E. Best for $250,323.45 in cash. The
$250,323.45 price of the non-voting Partnership
interest is based on the appraised fair market value
of the FOUR HUNDRED SIXTY-FIVE (465) WEBCO non-voting
common shares of $538.33 per share;
b) FEB COMMON. The Partnership shall purchase ONE
THOUSAND FOUR HUNDRED EIGHTY-SEVEN (1,487) shares of
FEB common stock from Richard E. Best for $43,658.32
in cash., based on the FEB common stock appraised fair
market value of $29.36 per share;
c) BUL COMMON. The Partnership shall purchase TWO
THOUSAND ONE HUNDRED TWENTY-EIGHT (2,128) shares of
BUL common stock from Richard E. Best for $140,362.88
in cash, based on the BUL common stock appraised fair
market value of $65.96 per share;
d) BUL PREFERRED. The Partnership shall purchase THREE
AND THREE-FOURTHS (3.75) shares of BUL preferred stock
for $375.00 in cash, based on the BUL preferred stock
appraised fair market value of $100.00 per share,
which shares are owned jointly as tenants in common by
the Best Brothers and which shares represent Richard
E. Best's undivided TWENTY-FIVE PERCENT (25%) interest
in the FIFTEEN (15) shares of BUL preferred stock
jointly owned by the Best Brothers;
e) CORPORATION COMMON. The Corporation shall redeem ONE
THOUSAND SIX HUNDRED EIGHTY-SEVEN (1,687) shares of
the Corporation's common stock from Richard E. Best
for $649,495.00 in cash, based on the Corporation
common stock appraised fair market value of $385.00
per share.
Richard E. Best shall deliver to the Corporation, no later
than February 15, 1995, all stock certificates and properly
endorsed and executed stock powers in a form sufficient to
permit the transfer of ownership of the stock.
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4. AMBER BEST.
a) WEBCO NON-VOTING COMMON. WEBCO shall redeem FIFTY-
EIGHT (58) shares of non-voting common stock in WEBCO
from Amber Best for a non-voting interest in the
Partnership. The Corporation shall then purchase from
Amber Best the non-voting Partnership interest for
$31,223.14 in cash. The $31,223.14 price of the non-
voting Partnership interest is based on the appraised
fair market value of the FIFTY EIGHT (58) WEBCO non-
voting common shares of $538.33 per share.
Amber Best shall deliver to the Corporation, no later than
February 15, 1995, all stock certificates and properly
endorsed and executed stock powers in a form sufficient to
permit the transfer of ownership of the stock.
5. MARSHALL W. BEST.
a) WEBCO NON-VOTING COMMON. WEBCO shall redeem FOUR
HUNDRED SIXTY-FIVE (465) shares of non-voting common
stock in WEBCO from Marshall W. Best for a non-voting
interest in the Partnership. The Corporation shall
then purchase the non-voting Partnership interest from
Marshall W. Best for $250,323.45 in cash. The
$250,323.45 price of the non-voting Partnership
interest is based on the appraised fair market value
of THE FOUR HUNDRED SIXTY-FIVE (465) WEBCO non-voting
shares of $538.33 per share;
b) FEB COMMON. The Partnership shall purchase ONE
THOUSAND FOUR HUNDRED EIGHTY-SEVEN (1,487) shares of
FEB common stock from Marshall W. Best for $43,658.32
in cash, based on the FEB common stock appraised fair
market value of $29.36 per share;
c) BUL COMMON. The Partnership shall purchase TWO
THOUSAND ONE HUNDRED TWENTY-EIGHT (2,128) shares of
BUL common stock from Marshall W. Best for $140,362.88
in cash, based on the BUL common stock appraised fair
market value of $65.96 per share;
d) BUL PREFERRED. The Partnership shall purchase THREE
AND THREE-FOURTHS (3.75) shares of BUL preferred stock
for $375.00 in cash, based on the BUL preferred stock
appraised fair market value of $100.00 per share,
which shares are owned jointly as tenants in common by
the Best Brothers and which shares represent Marshall
W. Best's undivided TWENTY-FIVE PERCENT (25%) interest
in the FIFTEEN (15) shares of BUL preferred stock
jointly owned by the Best Brothers;
e) CORPORATION COMMON. The Corporation shall purchase
ONE THOUSAND SIX HUNDRED EIGHTY-SEVEN (1,687) shares
of the Corporation's common stock from Marshall W.
Best for $649,495.00 in cash, based on the Corporation
common stock appraised fair market value of $385.00
per share.
Marshall W. Best shall deliver to the Corporation, no later
than February 15, 1995, all stock certificates and properly
endorsed and executed stock powers in a form sufficient to
permit the transfer of ownership of the stock.
6. TRACEY BEST.
a) WEBCO NON-VOTING COMMON. WEBCO shall redeem FIFTY-
EIGHT (58) shares of non-voting common stock in WEBCO
from Tracey Best for a non-voting interest in the
Partnership. The Corporation shall then purchase the
non-voting Partnership interest from Tracey Best for
$31,223.14 in cash. The $31,223.14 price of the non-
voting Partnership interest is based on the appraised
fair market value of the FIFTY-EIGHT (58)
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WEBCO non-voting shares of $538.33 per share.
Tracey Best shall deliver to the Corporation, no later than
February 15, 1995, all stock certificates and properly
endorsed and executed stock powers in a form sufficient to
permit the transfer of ownership of the stock.
F. SHARES OF FEB COMMON STOCK OWNED BY THE 1972 IRREVOCABLE TRUST.
The Huntington Trust Company, N.A., as the Trustee of the 1972
Irrevocable Trust, created under the trust agreement dated
December 28, 1972, for the benefit of the four Best Brothers (the
"1972 Trust"), shall sell to the Partnership on February 15, 1995,
ELEVEN THOUSAND EIGHT HUNDRED NINETY-ONE (11,891) shares of FEB
common stock, which constitute the total 11,891 FEB common shares
held by the 1972 Trust, for $349,119.76 in cash, based on the
Wendin Appraisal I fair market value of $29.36 per share.
G. RESULT OF SHARE TRANSACTIONS. After all the transactions
involving sales and purchases of shares and interests of FEB, BUL,
BLC, WEBCO, and the Partnership, which are described in Sections
2.2 through 2.6, are completed, BLC will own an eighty-seven
percent (87.00%) interest in the Partnership.
H. SEVERANCE PAYMENT: WALTER E. BEST. On February 15, 1995, the
Corporation shall pay to Walter E. Best in cash as compensation a
severance payment of $500,000.
I. COVENANT NOT TO COMPETE: WALTER E. BEST. On February 15, 1995,
the Corporation shall pay to Walter E. Best $640,000 in cash for
his covenant not to compete against the Corporation, as provided
in this Section 2.9.
For a period of five years beginning on February 15, 1995, the
effective date of this Agreement, and ending on February 15, 2000,
Walter E. Best shall not: (i) engage in any capacity (including,
but not limited to, capacities as an employee, independent
contractor, or agent) or have any interest, direct or indirect, in
any business in the locking and security industry or otherwise in
competition with the Corporation's business; or (ii) use, or
permit the use of, the name "Best" for marketing or commercial
purposes in association with any business in the locking and
security industry or otherwise in competition with the
Corporation's business with which he may become associated.
Walter E. Best may request that the Corporation waive the
enforcement of its rights under the covenants herein in a
particular situation, and the Corporation may or may not agree to
waive its rights.
J. RESIGNATIONS: WALTER E. BEST. Walter E. Best shall resign as an
employee, officer, and member of the Board of Directors of the
Corporation and as an officer and member of the Board of Directors
of each of FEB, BUL, WEBCO, and Best Universal Locks Limited,
effective as of February 15, 1995. Walter E. Best shall resign as
a member of the Administrative Committee of the Corporation's
Stock Bonus Plan, effective as of February 15, 1995.
K. RESIGNATIONS: ROBERT W. BEST, RICHARD E. BEST, AND MARSHALL W.
BEST. Robert W. Best shall resign as an employee of the
Corporation, effective as of February 15, 1995. Each of Richard
E. Best and Marshall W. Best shall resign as an employee and
officer of the Corporation, effective as of February 15, 1995.
L. CANCELLATION OF INDEBTEDNESS. On February 15, 1995, the
Corporation shall cancel $28,690.97, which is the approximate
amount of the indebtedness owed on that date by each of Robert W.
Best, Richard E. Best, and Marshall W. Best to the Corporation
under the terms of the promissory notes each of them executed in
connection with the Corporation's prior interest in part of the
proceeds of the joint and survivor life insurance policy owned by
Robert W. Best, as Trustee of the Walter Edwin Best Irrevocable
Life Insurance Trust, created under the trust agreement dated
April 15, 1989. The canceled promissory notes shall be given to
Robert W. Best, Richard E. Best, and Marshall W. Best by the
Corporation upon the execution of this Agreement. Further, the
Corporation shall not charge Robert W. Best, Richard E. Best, or
Marshall W. Best for expenses the Corporation has incurred to
permit them to attend any training classes or seminars.
M. SEVERANCE PAYMENT: ROBERT W. BEST. On February 15, 1995, the
Corporation shall pay to Robert W.
24
<PAGE>
Best in cash as compensation a severance payment of $405,612.
N. SEVERANCE PAYMENT: RICHARD E. BEST. On February 15, 1995, the
Corporation shall pay to Richard E. Best in cash as compensation a
severance payment of $423,381.
O. SEVERANCE PAYMENT: MARSHALL W. BEST. On February 15, 1995, the
Corporation shall pay to Marshall W. Best in cash as compensation
a severance payment of $416,614.
P. COVENANT NOT TO COMPETE: ROBERT W. BEST, RICHARD E. BEST, AND
MARSHALL W. BEST. In connection with the purchase of their shares
in FEB, BUL, the Corporation, and WEBCO, each of Robert W. Best,
Richard E. Best, and Marshall W. Best covenants as follows:
1. GENERAL COVENANT. For a two (2) year period, beginning on
February 15, 1995, the effective date of the Agreement, and
ending on February 15, 1997, he shall not engage in any
capacity (including, but not limited to, capacities as an
employee, independent contractor, or agent) or have any
interest, direct or indirect, in any business in the locking
and security industry or otherwise in competition with the
Corporation's business.
2. OTHER COVENANTS. For a five (5) year period, beginning on
February 15, 1995, the effective date of the Agreement, and
ending on February 15, 2000, he shall not:
a) Participate in any marketing or similar effort to
promote a product or service in the locking and
security industry or otherwise competitive with any
product or service then marketed by the Corporation;
b) Engage in any capacity (including, but not limited to,
capacities as an employee, independent contractor, or
agent) or have any interest, direct or indirect, in
any business in the locking and security industry or
otherwise in competition with the Corporation's
business if any Best Family Member (as defined in
Section 2.19 below) or person related to a Best Family
Member by blood owns any equity interest in such
business other than a de minimus interest; or
c) Use, or permit the use of, the name "Best" for
marketing or commercial purposes in association with
any business in the locking and security industry or
otherwise in competition with the Corporation's
business with which he may become associated.
3. ACTIVITIES OUTSIDE THE COVENANTS NOT TO COMPETE.
Notwithstanding any other provision of this Section 2.16,
Richard E. Best shall be free at any time to perform
services for, or have an interest, direct or indirect, in,
any enterprise that is not in the locking industry and that
does not have as one of its principal activities the
marketing or promotion of locks or locking systems. For
example, Richard E. Best shall be free at any time to
perform services as a manager of plant or building security
for any enterprise that is not in the locking industry and
that does not have as one of its principal activities the
marketing or promotion of locks or locking systems.
Similarly, Richard E. Best shall be free at any time to
perform managerial services for a corporation in the
security industry, such as Nora Security, so long as such
corporation does not have as one of its principal activities
the marketing or promotion of locks or locking systems.
4. PAYMENT FOR COVENANTS. On February 15, 1995, in return for
their covenants not to compete reflected in this Section
2.16, the Corporation shall pay to each of Robert W. Best,
Richard E. Best, and Marshall W. Best $200,000 in cash.
5. WAIVER. Any of Robert W. Best, Richard E. Best, and
Marshall W. Best may request that the Corporation waive the
enforcement of its rights under these covenants in a
particular situation, and the Corporation may or may not
agree to waive its rights.
Q. VACATION AND BONUS DAYS. In accordance with the Corporation's
personnel policies, the Corporation shall compensate Walter E.
Best, Robert W. Best, Richard E. Best, and Marshall W. Best for
25
<PAGE>
their vacation days and bonus days accrued to and including
December 31, 1994, as follows:
1. WALTER E. BEST. On February 15, 1995, the Corporation shall
pay to Walter E. Best, for his 113 vacation days and 57
bonus days, the aggregate amount of $195,132.80.
2. ROBERT W. BEST. On February 15, 1995, the Corporation shall
pay to Robert W. Best, for his 25 vacation days and 18 bonus
days, the aggregate amount of $24,162.56.
3. RICHARD E. BEST. On February 15, 1995, the Corporation
shall pay to Richard E. Best, for his 19 vacation days and
13 bonus days, the aggregate amount of $19,182.08.
4. MARSHALL W. BEST. On February 15, 1995, the Corporation
shall pay to Marshall W. Best, for his 22 vacation days and
14 bonus days, the aggregate amount of $22,746.24.
Each of Walter E. Best, Robert W. Best, Richard E. Best, and
Marshall W. Best waives any right he may have to receive payment
for vacation and/or bonus days in excess of the amounts reflected
in this Section 2.17.
R. SEVERANCE ARRANGEMENT: EDWINA MCLEMORE. Upon execution of a
customary release and waiver of claims against the Corporation in
connection with the termination of her employment, attached as
EXHIBIT D, on February 15, 1995, the Corporation shall pay to
Edwina McLemore in cash as compensation a severance payment of
$38,188, and shall pay to her $4,848 for her 20 vacation days and
13 bonus days accrued to and including December 31, 1994. The
aggregate amount of this severance package to be paid to Edwina
McLemore is $43,036. Under this severance arrangement, Edwina
McLemore's employment with the Corporation shall terminate on
February 15, 1995. In addition, Walter E. Best shall ensure that
on or before the date of closing Edwina McLemore waives any right
she may have to receive payment for vacation and/or bonus days in
excess of the amounts reflected in this Section 2.18.
S. CORPORATION INDEMNIFICATION POLICY AND REIMBURSEMENT OF LEGAL FEES
INDEPENDENT OF INDEMNIFICATION POLICY. The Corporation's Board of
Directors shall adopt and maintain a policy to indemnify directors
and executive officers that includes the advancement of legal
fees, so long as the maintenance of such a policy is legally
permissible, at all times that the Corporation is in existence.
All legal fees up to $82,208.50 in the aggregate that have been
incurred by Walter E. Best in connection with the formulation
and/or consideration of the claims Walter E. Best has advanced
shall be paid by the Corporation as additional consideration to
Walter E. Best.
T. GENERAL RELEASE. Upon the fulfillment of all the parties' payment
obligations set forth herein, each of Walter E. Best, Dona J.
Best, Robert W. Best, Denise Best, Richard E. Best, Amber Best,
Marshall W. Best, Tracey Best (collectively hereinafter termed the
"Best Family Members"), Walter E. Best, as Trustee of the WEB
Trust, and Dona J. Best, as Trustee of the DJB Trust, shall
provide a general release of any and all claims, in substantially
the form of release attached as EXHIBIT E (the "Release"),that
each may have against WEBCO, FEB, BUL, and the Corporation and the
Corporation's officers, directors, and agents, including, but not
limited to, Gregg A. Dykstra, John R. Rogers, Donald L. Beckerich,
David M. DeWitt, Douglas P. Long, and Russell C. Best. Each of
WEBCO, FEB, BUL, the Partnership, the Corporation, Gregg A.
Dykstra, and Russell C. Best shall provide, and the Corporation
shall, in good faith, use its best efforts to ensure that the
other above-named individuals shall provide, a Release of claims
that each may have against any of the Best Family Members, the WEB
Trust, the DJB Trust, John R. Price, Herbert A. Jensen, Michael
Williams, Michael R. Franceschini, and Kent Newton.
U. COVENANT NOT TO ACQUIRE SHARES. Each of the Best Family Members,
the WEB Trust, and the DJB Trust covenants not to acquire, or
assist others in acquiring, any FEB, BUL, Corporation, or WEBCO
shares or Partnership interests. Each of the Best Family Members,
the WEB Trust, and the DJB Trust covenants that if any of them
ever acquires any such shares or interests, for example by
inheritance or as a distribution from the Corporation's Stock
Bonus Plan, he, she, or it shall sell the shares to the
Corporation for the value of the shares or the interests to the
Partnership for the value of the interests, the
26
<PAGE>
value of the shares or interests to be determined as appraised by
a reputable and experienced independent appraiser. All appraisal
fees shall be paid by FEB, BUL, the Corporation, WEBCO, or the
Partnership, as the case may be.
V. CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 1985 LAWS. The
Corporation shall comply with all laws imposed under the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA")
in connection with the termination of employment of Robert W.
Best, Richard E. Best, Marshall W. Best, Edwina McLemore, and
Walter E. Best.
W. CONFIDENTIAL AND PROPRIETARY INFORMATION OF THE CORPORATION. Each
of the Best Family Members shall return to the Corporation any and
all confidential and proprietary information of WEBCO, FEB, BUL,
or the Corporation that is currently in his or her possession and
shall covenant never to disclose any confidential or proprietary
information of the Corporation and its Affiliates to third
parties.
X. DUTY TO NOTIFY. During the five (5) year period, beginning
February 15, 1995, the effective date of the Agreement, and ending
on February 15, 2000, each of Walter E. Best, Robert W. Best,
Richard E. Best, and Marshall W. Best shall notify the Corporation
of the identity of any entity engaged in business in the locking
and security industry with which he secures employment or other
work. Any notification required shall be given to the Corporation
within ten (10) days after the employment or other work is
secured.
Y. WALTER E. BEST: OFFICE PROPERTY. Walter E. Best may take, at no
expense to him, the file cabinets, electric typewriter, and
personal effects from his office at the Corporation at his
convenience before February 15, 1995, as evidenced by his
signature on the receipt attached as EXHIBIT F. Walter E. Best
may use his office for as long as necessary through February 15,
1995, to organize materials and clear the office. Walter E. Best
shall return to the Corporation any corporate property in his
possession, with the exception of the property identified above,
no later than February 15, 1995.
Z. AIRCRAFT PROPERTY. As of the closing date, Aircraft has removed
all its property from the Corporation's premises, and the
Corporation has delivered to Walter E. Best all the books and
records of Aircraft that are in the Corporation's possession as
evidenced by the signed receipt in EXHIBIT F.
AA. PHOTOGRAPH. The Corporation shall provide a duplicate of the
photograph of Frank E. Best to Marshall W. Best not later than
February 15, 1995.
BB. MARSHALL W. BEST: OFFICE FURNITURE. By February 15, 1995, the
Corporation shall convey to Marshall W. Best, at no expense to
him, the wood cabinet and desk that are located in the
Corporation's hangar, as evidenced by his signature on the receipt
in EXHIBIT F.
CC. AGREEMENT TERMS NOT CONFIDENTIAL. Each of the parties to the
Agreement is free to discuss the terms of the Agreement with
anyone at any time and at any place.
DD. PROHIBITION AGAINST SEEKING FUTURE EMPLOYMENT. None of the Best
Family Members shall apply for employment with WEBCO, FEB, BUL,
the Corporation, or the Partnership at anytime after February 15,
1995.
EE. WEBCO DIVIDEND. Walter E. Best and Russell C. Best shall cause
WEBCO to declare and pay cash dividends in the amount of $9.00 per
share on or before February 15, 1995.
FF. NO OBLIGATION TO GIFT WEBCO DIVIDENDS. Russell C. Best shall have
no obligation to gift or otherwise transfer to Robert W. Best,
Richard E. Best, or Marshall W. Best any part of the cash
dividends he is paid in 1995 or in subsequent years with respect
to WEBCO voting or non-voting shares that he owns or may in the
future own.
GG. SALE OF FURNITURE. The Corporation shall offer to sell the
following items of furniture and equipment at the appraised values
identified in EXHIBIT J to Richard E. Best: an executive swivel
chair, four (4) caster chairs, a conference table, two (2) lamps,
and a blueprint file. Any sale shall be effected not later
27
<PAGE>
than February 15, 1995.
HH. CANCELLATION OF AUTOMOBILE LEASES. The Corporation and Aircraft
shall cancel, effective February 15, 1995, the lease agreements
pursuant to which the Corporation leases from Aircraft company
cars used by Robert W. Best, Richard E. Best, and Marshall W.
Best. The Corporation does not object to Robert W. Best, Richard
E. Best, and Marshall W. Best purchasing the cars that they
currently use from Aircraft following the cancellation of the
Corporation's leases of those vehicles from Aircraft.
II. FEDERAL AND STATE INCOME TAX PREPARATION. The Corporation shall
pay Robert W. Best, Richard E. Best, Marshall W. Best, and Walter
E. Best for the costs of accounting services incurred by each of
them to prepare their individual 1994 federal and state income tax
returns in the following amounts: (1) to Walter E. Best:
$4,250.00, (2) to Robert W. Best: $2,235.00, (3) to Richard E.
Best: $1,170.00, and (4) to Marshall W. Best: $400.00. The
Corporation shall cooperate in the preparation of all the tax
returns by promptly providing all the information necessary for
completing the returns.
JJ. CANCELLATION OF LEASES AND PURCHASE OF AUTOMOBILES. The
Corporation and Aircraft shall cancel the lease agreements
pursuant to which the Corporation leases from Aircraft the
automobiles, which are listed on EXHIBIT A, that are owned by
Aircraft and are currently used by employees of the Corporation.
The Corporation shall purchase each of the automobiles reflected
in Exhibit K for an amount equal to the amount of bank
indebtedness owed by Aircraft respecting each such automobile on
February 15, 1995. The Corporation shall pay the purchase price
to Aircraft either by paying cash or by assuming the amount of
Aircraft's bank indebtedness owed on the closing date respecting
each of the automobiles, as identified on the attached EXHIBIT K.
Aircraft shall endorse the titles to the automobiles listed on
EXHIBIT K to the Corporation. Copies of the titles to be
endorsed are attached as EXHIBIT L.
KK. DOCUMENTS OF BEST FOUNDATION, INC. The Corporation shall perform
no services, including accounting services, for Best Foundation,
Inc. or Best Aircraft, Inc. after February 15, 1995, the effective
date of the Agreement. The Corporation shall deliver to Walter E.
Best, by February 15, 1995, all books and records of Best
Foundation, Inc. that are in the Corporation's possession.
LL. WAIVER OF RIGHTS TO INVENTIONS AND INTELLECTUAL PROPERTY. Each of
Robert W. Best, Richard E. Best, Marshall W. Best, and Walter E.
Best hereby waives, and, if deemed necessary by the Corporation,
shall assign to the Corporation, any rights he may have in any
inventions or other intellectual property, whether or not
patentable, that he may have worked with or on while an employee
of the Corporation.
MM. PKS LITIGATION. Walter E. Best shall, in good faith and to the
best of his abilities, render services to the Corporation's
outside counsel with respect to the litigation with ILCO ("the PKS
litigation") to which the Corporation is now a party. The
Corporation shall pay NINE THOUSAND DOLLARS ($9,000.00) to Walter
E. Best for the services he renders respecting the PKS litigation
after February 15, 1995.
NN. SUPPLEMENTAL RETIREMENT BENEFITS AGREEMENT. The Corporation shall
honor and keep in full force and effect the Supplemental
Retirement Benefits Agreement, as amended, with Walter E. Best
dated March 14, 1990.
OO. REMOVAL OF PERSONAL EFFECTS. As of the closing date, Walter E.
Best, Robert W. Best, Richard E. Best, and Marshall W. Best have
removed all their personal effects from their offices at the
Corporation as evidenced by the receipts in EXHIBIT F .
PP. STOCK BONUS PLAN. As further consideration for this Agreement,
Walter E. Best, Robert W. Best, Richard E. Best, AND Marshall W.
Best covenant as follows:
1. IRREVOCABLE WAIVER OF RIGHT TO VOTE STOCK. Each of Walter
E. Best, Robert W. Best, Richard E. Best, and Marshall W.
Best irrevocably waives the right to vote the stock
allocated to their respective accounts, pursuant to the
terms of the Best Lock Corporation Stock Bonus Plan and
Trust Agreement (the "Plan"), as evidenced by signed forms
of irrevocable waiver attached as EXHIBIT G, which shall be
given to the Plan Trustee, NBD.
28
<PAGE>
2. IRREVOCABLE ELECTION TO RECEIVE CASH DISTRIBUTIONS. Each of
Walter E. Best, Robert W. Best, Richard E. Best, and
Marshall W. Best irrevocably elects to receive any amounts
distributed to them, pursuant to the terms of the Plan, in
cash, not in the form of stock, as evidenced by the signed
forms of irrevocable election attached as EXHIBIT H, which
shall be given to the Plan Trustee, NBD.
QQ. IRREVOCABLE WAIVER OF RIGHT TO VOTE STOCK UNDER IRREVOCABLE TRUST.
Walter E. Best shall relinquish certain of his rights, powers, and
interests with respect to the Walter E. Best Irrevocable Trust ,
under Agreement dated December 28, 1972, by executing the
Irrevocable Waiver that is attached as EXHIBIT I.
RR. LIFE INSURANCE POLICIES. The Corporation's indebtedness under
each of the split-dollar agreements to which it is a party with
each of Richard E. Best and Marshall W. Best, satisfied
respectively, will be by payment out of the cash value of the
policies and the Corporation shall, upon the satisfaction of such
indebtedness, no longer have any rights or interests respecting
either such policy.
III. ARTICLE 3: GENERAL PROVISIONS
A. EFFECTIVE DATE AND CLOSING DATE. The effective date and the
closing date of this Agreement are February 15, 1995.
B. GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the state of Indiana
and shall be enforced in either federal or state court located in
Marion County, Indiana.
C. COUNTERPARTS. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an
original, but all of which shall constitute but one and the same
instrument.
D. COMPLETE AGREEMENT. This Agreement and the Exhibits attached
hereto contain the entire agreement between the parties with
respect to the transactions described herein and shall supersede
all previous oral or written and all contemporaneous oral
negotiations, commitments, and understandings.
E. HEADINGS. The Headings contained in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
F. SEVERABILITY. Any provision of this Agreement that is invalid,
illegal, or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity,
illegality, or unenforceability, without affecting in any way the
remaining provisions hereof in the jurisdiction and without
rendering that or any other provision of this Agreement invalid,
illegal, or unenforceable in any other jurisdiction.
G. EXPENSES OF TRANSACTIONS. Except as otherwise specifically stated
in this Agreement, the parties are responsible for paying all
their own expenses in giving effect to this Agreement. The
parties are responsible for their own tax consequences due to this
Agreement.
H. EXHIBITS. Each of the Exhibits referenced in or attached to this
Agreement forms an integral part of the Agreement and by this
reference is incorporated herein as if set forth in this Agreement
verbatim.
I. AUTHORIZATION. The parties represent that they are each properly
authorized to execute the Agreement and the Exhibits hereto.
J. NOTICES. Any notices pursuant to this Agreement shall be in
writing and deemed complete when delivered by hand or when mailed
by registered or certified mail, postage pre-paid and return
receipt requested, addressed as follows:
29
<PAGE>
Best Lock Corporation
6161 East 75th Street
P.O. Box 50444
Indianapolis, IN 46250
Best Aircraft Corporation
8111 Bayberry Court
Indianapolis, IN 46250
The Best Lock Partnership
6161 East 75th Street
P.O. Box 50444
Indianapolis, IN 46250
Walter E. Best Company, Inc.
6161 East 75th Street
P.O. Box 50444
Indianapolis, IN 46250
Frank E. Best, Inc.
6161 East 75th Street
P.O. Box 50444
Indianapolis, IN 46250
Best Universal Lock Co.
6161 East 75th Street
P.O. Box 50444
Indianapolis, IN 46250
Walter E. Best, as Trustee of the Walter E. Best Revocable Trust
8111 Bayberry Court
Indianapolis, IN 46250
Dona J. Best, as Trustee of the Dona J. Best Revocable Intervivos
Trust
8111 Bayberry Court
Indianapolis, IN 46250
Walter E. Best
Dona J. Best
8111 Bayberry Court
Indianapolis, IN 46250
Robert W. Best
Denise Best
6518 Calais Circle
Indianapolis, IN 46220
Richard E. Best
Amber Best
12535 Richlane Drive
Indianapolis, IN 46236
Marshall W. Best
Tracey Best
10858 Tenacious Drive
Indianapolis, IN 46236
30
<PAGE>
Russell C. Best
755 Eagle Creek Court
Zionsville, IN 46077
Gregg A. Dykstra
1838 Arrowwood Drive
Carmel, IN 46033
K. REMEDIES FOR BREACH. Any party to this Agreement may seek any
legal or equitable remedy provided by law for the breach of any of
the provisions herein.
L. WAIVERS. The waiver of one provision in this Agreement does not
constitute the waiver of any others.
M. SUCCESSORS AND ASSIGNS. This Agreement and the provisions hereof
shall be binding upon and inure to the benefit of each of the
parties and their respective heirs, successors, and assigns. No
party to this Agreement may assign any of his rights or
obligations hereunder without the written consent of each of the
other parties to this Agreement.
N. THIRD PARTIES. No provision contained herein shall be deemed to
confer upon any person or entity, other than the parties hereto
and their respective heirs, successors, and assigns, any right or
remedy under, or by reason of, this Agreement.
O. CONSENT TO I.R.C. SECTION 1377(A)(2) ELECTION. All parties that
own or owned shares of stock in WEBCO during the 1995 calendar
year shall give written consent, in substantially the same form
that is attached hereto as EXHIBIT M, to the election required
under I.R.C. Section 1377(a)(2) that will permit WEBCO's year to
be split into two separate taxable years: the first taxable year
beginning January 1, 1995, and ending on the date of the
redemption of the WEBCO non-voting shares under this Agreement,
and the second taxable year beginning the day after the date of
redemption and ending on December 31, 1995.
P. AGREEMENT TO NOTIFY TO AVOID ATTRIBUTION. Walter E. Best shall
execute the "Agreement to Notify Under I.R.C. Section
302(c)(2)(A)(iii) to Avoid Application of Family Attribution
Rules" attached as EXHIBIT N pursuant to I.R.C. Section 302
(c)(2)(A)(iii) and Treas. Reg. Section 1.302-4(a)1. Dona J. Best
shall execute the "Agreement to Notify Under I.R.C. Section
302(c)(2)(A)(iii)Waiver of to Avoid Attribution" attached as
EXHIBIT O pursuant to I.R.C. Section 302 (c)(2)(A)(iii) and Treas.
Reg. Section 1.302-4(a)1.
Q. COMPENSATION. All compensation to be paid by the Corporation
under this Agreement is identified in the gross amount before
deduction of amounts for withholding FICA, FUTA, and income taxes.
IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Agreement on February 15, 1995.
BEST LOCK CORPORATION
Date: __________________ By: _________________________________
Russell C. Best, Chief Executive Officer
BEST AIRCRAFT CORPORATION
Date: __________________ By: _________________________________
Walter E. Best, President
BEST LOCK PARTNERSHIP
31
<PAGE>
Date: __________________ By: ________________________________
Russell C. Best, General Partner
WALTER E. BEST COMPANY, INC.
Date: __________________ By: _________________________________
Walter E. Best, President
FRANK E. BEST, INC.
Date: __________________ By: _________________________________
Walter E. Best, President
BEST UNIVERSAL LOCK CO.
Date: __________________ By: _________________________________
Walter E. Best, President
WALTER E. BEST REVOCABLE TRUST,
UNDER AGREEMENT DATED MAY 8, 1992, AS AMENDED
Date: __________________ By: _________________________________
Walter E. Best, Trustee
DONA J. BEST REVOCABLE INTERVIVOS TRUST,
UNDER AGREEMENT DATED DECEMBER 19, 1991, AS
AMENDED
Date: __________________ By: _________________________________
Dona J. Best, Trustee
Date: __________________ __________________________________
WALTER E. BEST
Date: __________________ __________________________________
DONA J. BEST
Date: __________________ __________________________________
ROBERT W. BEST
32
<PAGE>
Date: __________________ __________________________________
DENISE BEST
Date: __________________ __________________________________
RICHARD E. BEST
Date: __________________ __________________________________
AMBER BEST
Date: __________________ __________________________________
MARSHALL W. BEST
Date: __________________ __________________________________
TRACEY BEST
Date: __________________ __________________________________
RUSSELL C. BEST
Date: __________________ __________________________________
GREGG A. DYKSTRA
33
<PAGE>
INDEX OF EXHIBITS TO AGREEMENT
Exhibit A - Automobiles
Exhibit B - Wendin Appraisal I
Exhibit C - Wendin Appraisal II
Exhibit D - Edwina McLemore Release
Exhibit E - General Releases
Exhibit F - Receipts
Exhibit G - Irrevocable Waiver of Right to Vote Stock
Exhibit H - Irrevocable Election to Receive Cash Distributions
Exhibit I - Irrevocable Waiver of Right to Vote Stock Under Irrevocable Trust
Exhibit J - Sale of Furniture
Exhibit K - Schedule of Automobile Purchase Prices
Exhibit L - Automobile Titles
34
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<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 3,807,315
<SECURITIES> 0
<RECEIVABLES> 15,264,842
<ALLOWANCES> 301,954
<INVENTORY> 15,455,546
<CURRENT-ASSETS> 37,455,290
<PP&E> 62,084,867
<DEPRECIATION> 31,490,684
<TOTAL-ASSETS> 72,364,002
<CURRENT-LIABILITIES> 11,644,110
<BONDS> 12,000,000
<COMMON> 598,710
0
0
<OTHER-SE> 20,548,572
<TOTAL-LIABILITY-AND-EQUITY> 72,364,002
<SALES> 29,352,842
<TOTAL-REVENUES> 29,352,842
<CGS> 15,764,524
<TOTAL-COSTS> 27,921,271
<OTHER-EXPENSES> 368,244
<LOSS-PROVISION> 78,619
<INTEREST-EXPENSE> 137,346
<INCOME-PRETAX> 1,058,500
<INCOME-TAX> 597,541
<INCOME-CONTINUING> 460,959
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 460,959
<EPS-PRIMARY> .90
<EPS-DILUTED> .90
</TABLE>
