SCHEDULE 14C
Information Required in Information Statement
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
(AMENDMENT NO. )
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, For use of the Commission Only (as permitted
by Rule 14c-5(d)(2))
[X] Definitive Information Statement
FRANK E. BEST, INC.
(Name Of Registrant As Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii) or 14c-5(g).
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 [set forth
the amount on which the filing fee is calculated and
state how it was determined]:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[X] Fee paid previously with preliminary materials.
<PAGE>
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
Frank E. Best, Inc.
1995 Annual Meeting of Shareholders
Information Statement
October 30, 1995
<PAGE>
FRANK E. BEST, INC.
NOTICE OF ANNUAL MEETING OF THE SHAREHOLDERS
To be Held October 30, 1995
The annual meeting of Shareholders of Frank E. Best, Inc.
(the "Corporation") will be held on Monday, the 30th day of
October, 1995, at 8:00 a.m., Indianapolis Time, at the Omni
Indianapolis North Hotel, 8181 N. Shadeland Ave., Indianapolis,
Indiana for the following purposes:
1. To consider and act upon a proposal to change the
Corporation's state of incorporation from the State of Washington
to the State of Delaware by approval and adoption of an Agreement
and Plan of Merger pursuant to which the Corporation will merge
into a newly formed Delaware corporation which is a wholly-owned
subsidiary of the Corporation.
2. In the event Proposal Number 1 is not approved by the
requisite vote of Shareholders, to consider and act upon a
proposed amendment to the Articles of Incorporation to expand the
permitted activities of the Corporation to the maximum extent
permitted under the Washington Business Corporation Act.
3. In the event Proposal Number 1 is not approved by the
requisite vote of Shareholders, to consider and act upon a
proposed amendment to the Articles of Incorporation to state the
Corporation s principal place of business.
4. In the event Proposal Number 1 is not approved by the
requisite vote of Shareholders, to consider and act upon a
proposed amendment to the Articles of Incorporation to delete the
names and addresses of the initial directors of the Corporation,
to permit the Board of Directors to increase the number of
members of the Board of Directors and to designate the directors
of the Corporation as directors rather than as trustees.
5. In the event Proposal Number 1 is not approved by the
requisite vote of Shareholders, to consider and act upon a
proposed amendment to the Articles of Incorporation eliminating
preemptive rights of the Corporation's shareholders.
6. In the event Proposal Number 1 is not approved by the
requisite vote of Shareholders, to consider and act upon a
proposed amendment to the Articles of Incorporation eliminating
the right to cumulate votes in the election of directors.
7. In the event Proposal Number 1 is not approved by the
requisite vote of Shareholders, to consider and act upon a
proposed amendment to the Articles of Incorporation to provide
for the amendment of the Articles of Incorporation by a majority
vote of the Shareholders.
8. In the event Proposal Number 1 is not approved by the
requisite vote of Shareholders, to consider and act upon a
proposed amendment to the bylaws to permit the Board of Directors
to amend, repeal or make new bylaws for the Corporation.
<PAGE>
9. To elect a Board of three Directors for the ensuing
year.
10. To ratify and approve the selection of Arthur Andersen
LLP as auditors for the year 1995.
11. To transact such other business as may properly come
before the meeting.
Only Shareholders of record on September 29, 1995, are
entitled to notice of and to vote at this meeting. You are
cordially invited to attend the meeting.
By Order of the Board of Directors,
Gregg A. Dykstra
Secretary
October 9, 1995
Indianapolis, Indiana
<PAGE>
FRANK E. BEST, INC.
P.O. Box 50444
Indianapolis, Indiana 46250
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT
TO SEND US A PROXY. The principal executive offices of Frank E.
Best, Inc. (the "Corporation") are located at 6161 E. 75th
Street, Indianapolis, Indiana 46250. This Information Statement
will be mailed to Shareholders on or about October 9, 1995.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Common stock, 598,710 shares of which were outstanding as of
September 29, 1995, are the only voting securities of the
Corporation. Each share is entitled to one vote. Only holders
of common stock of record at the close of business on
September 29, 1995 will be entitled to vote at the Annual Meeting
of the Shareholders.
Stock Ownership In the Corporation By Principal Holders
The following table sets forth the information as of
September 29, 1995, with respect to shares of the Corporation's
Common Stock which are held by the only persons known to the
Corporation to be the beneficial owners of more than 5% of such
stock based upon information received from such persons. For
purposes of this report, beneficial ownership of securities is
determined in accordance with the rules of the Securities and
Exchange Commission.
<TABLE>
<CAPTION>
Name and Address (1) Amount and Nature of Percent
of Shareholders
Beneficial Ownership of Class
<S> <C> <C>
Russell C. Best 395,299 (2)(3) 66%
Best Lock Partnership 204,053 34%
The NBD Bank, N.A.
One Indiana Square
Indianapolis, Indiana 46204 (4) 77,935 13%
Larry W. Rottmeyer 77,935 (3) 13%
Gregg A. Dykstra 77,935 (3) 13%
<FN>
_____________________
(1) Unless otherwise specified, all addresses are c/o Best Lock
Corporation, P. O. Box 50444, Indianapolis, Indiana 46250.
<PAGE>
(2) Includes 204,053 shares held by Best Lock Partnership in
which Russell C. Best, a corporation in which Russell C.
Best owns all of the voting securities and Best Lock
Corporation are general partners.
(3) Includes 77,935 shares held by the Best Lock Corporation
Stock Bonus Plan with respect to which such person as a
member of the Administrative Committee of the Plan has
shared power to direct voting and disposition.
(4) The NBD Bank, N.A. holds these shares in its capacity as
trustee under the Best Lock Corporation Stock Bonus Plan.
Prior to 1995, the Trustee voted the shares pursuant to the
instructions of the Administrative Committee. Commencing in
1995, pass-through voting rights have been extended to the
participants with the Administrative Committee retaining the
right to vote shares for which no voting instructions have
been received from participants.
</TABLE>
<PAGE>
Stock Ownership in the Corporation by Directors and Executive
Officers
The following table sets forth information as of
September 29, 1995 with respect to beneficial ownership of the
Corporation's Common Stock by its directors, director nominees,
named executive officers and all directors and executive officers
as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Office (1)
Beneficial Ownership of Class
<S> <C> <C>
Russell C. Best, President,
Chief Executive Officer and
Director (4) 395,299 (2)(3) 66%
Mariea L. Best, Director (4) 1 -0-
Gregg A. Dykstra, Secretary/
Treasurer; Director Nominee 77,935 (3) 13%
All directors and executive
officers as a group (5 persons) 395,300 (2)(3) 66%
<FN>
_____________________
(1) Walter E. Best resigned all of his positions with the
Corporation effective February 15, 1995. R. Gene McCullum
resigned as a director on December 30, 1994 and ceased to be
employed by Lock as of March 1, 1995. Roger E. Beaverson
was replaced as Secretary/Treasurer of the Corporation on
March 24, 1995 by Gregg A. Dykstra formerly general counsel
of Best Lock Corporation. Mr. Beaverson resigned from
employment on June 16, 1995. None of these individuals owns
any shares of Common Stock of the Corporation, Best
Universal Lock Co. or Best Lock Corporation.
(2) Includes 204,053 shares held by Best Lock Partnership in
which Russell C. Best, a corporation in which Russell C.
Best owns all of the voting securities and Best Lock
Corporation are general partners.
(3) Includes 77,935 shares held by the Best Lock Corporation
Stock Bonus Plan with respect to which such person as a
member of the Administrative Committee of the Plan has
shared power to direct voting and disposition.
(4) Russell C. Best is the spouse of Mariea L. Best.
</TABLE>
<PAGE>
Stock Ownership in Best Lock Corporation by Directors and
Executive Officers
The following table sets forth information as of
Sepember 29, 1995 with respect to beneficial ownership of the
common stock of Best Lock Corporation, a subsidiary of the
Corporation ("Lock"), by the directors, director nominees and
named executive officers of the Corporation and all such
directors and executive officers as a group:
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Office Beneficial Ownership of Class
<S> <C> <C>
Russell C. Best, President, Chief
Executive Officer and Director (4) 107,781.53 (1)(2)(3) 89%
Mariea L. Best, Director (4) 1.00 -0-
Gregg A. Dykstra, Secretary/Treasurer;
Director Nominee 10,539.19 (2) 9%
All directors and executive officers
as a group (5 persons) 107,782.53 (2)(3) 89%
<FN>
____________________
(1) Russell C. Best owns beneficially 44% of the outstanding
Series A Common Stock, no par value, of Best Universal Lock
Co. ("Universal") and the Corporation owns 100% of the
outstanding Series B Common Stock, no par value, of
Universal. Russell C. Best owns beneficially 66% of the
outstanding Common Stock of the Corporation. Russell C.
Best is a director, president and chief executive officer of
each of the Corporation, Universal and Lock. Universal is
the record owner of 95,556.34 shares of Common Stock of
Lock.
(2) Includes 10,539.19 shares held by the Best Lock Corporation
Stock Bonus Plan with respect to which such person as a
member of the Administrative Committee has shared power to
direct voting and disposition.
(3) Includes 95,556.34 shares held by Universal in which Russell
C. Best is a director, president and controlling
shareholder.
(4) Russell C. Best is the spouse of Mariea L. Best.
</TABLE>
<PAGE>
Stock Ownership in Best Universal Lock Co. by Directors and
Executive Officers
The following table sets forth information as of
September 29, 1995 with respect to beneficial ownership of the
Common Stock of Best Universal Lock Co. ("Universal"), a
subsidiary of the Corporation, by the directors, director
nominees and named executive officers of the Corporation and all
such directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Office Beneficial Ownership of Class
<S> <C> <C>
Russell C. Best, President,
Chief Executive Officer and
Director (3) 338,176 (1)(2) 88%
Mariea L. Best, Director (3) 1 -0-
Gregg A. Dykstra, Secretary/Treasurer;
Director Nominee 27,262 (2) 7%
All directors and executive
officers as a group (5 in number
including directors named above) 338,177 (1)(2) 88%
<FN>
______________________
(1) Includes 300,000 shares held by Frank E. Best, Inc. in which
Russell C. Best is a director, president and a controlling
shareholder and 8,787 shares held by the Best Lock
Partnership in which Russell C. Best, a corporation in which
Russell C. Best owns all of the outstanding voting
securities and Best Lock Corporation are general partners.
(2) Includes 27,262 shares held by the Best Lock Stock Bonus
Plan with respect to which such person as a member of the
Administrative Committee has shared power to direct voting
and disposition.
(3) Russell C. Best is the spouse of Mariea L. Best.
</TABLE>
CHANGE IN CONTROL
A change in control of the Corporation occurred on May 18,
1994. On that date, Russell C. Best, then Vice-President and a
Director of the Corporation, purchased 114,325 shares of the
common stock of the Corporation. The Corporation has 598,710
shares of common stock issued and outstanding. After the
<PAGE>
purchase, Russell C. Best controlled, directly or indirectly,
50.27% of the outstanding common stock of the Corporation. This
voting control of the Corporation was based on the following
stock ownership:
Name of Shareholder Number of Shares
Russell C. Best 115,812
Walter E. Best Co., Inc.* 185,188
-------
Total 301,000
=======
* Russell C. Best owns all of the voting common
stock of Walter E. Best Co., Inc. ("WEBCO").
Accordingly, he is in effective control of
the manner in which the shares of the
Corporation owned by WEBCO are voted.
After the purchase of the Corporation's stock as described
above, Russell C. Best beneficially owned, directly or
indirectly, approximately 50.27% of the voting securities of the
Corporation, taking into consideration the 185,188 shares of the
Corporation's common stock owned by WEBCO and the 115,812 shares
of the Corporation's common stock individually owned by Russell
C. Best. Currently, Russell C. Best beneficially owns
approximately 66% of the Corporation's common stock as a result
of the attribution to him of shares held by the Best Lock
Partnership in which Russell C. Best, WEBCO and Lock are general
partners and shares held by the Best Lock Stock Bonus Plan with
respect to which he has shared powers of voting and disposition
in addition to the shares individually owned by him.
Russell C. Best purchased the 114,325 shares of the
Corporation's common stock from Bank One, Indianapolis, NA, as
Trustee of the Walter E. Best Irrevocable Trust, under a Trust
Agreement dated December 28, 1972, at a price of $29.36 per
share, for a total consideration of $3,356,582. Russell C. Best
purchased the 114,325 shares with the proceeds of a loan in the
amount of $3,400,000 from Best Lock Corporation ("Lock"), a
subsidiary of a subsidiary of the Corporation. The loan was made
in accordance with the terms of the Employment Agreement between
Lock and Russell C. Best, dated May 5, 1994 and described below
in "Compensation Committee Interlocks and Insider Participation -
Employment Agreement and Agreement Respecting Sale of Stock."
Prior to the acquisition of control by Russell C. Best, no single
person possessed control of the Corporation.
<PAGE>
NOMINEES FOR ELECTION AS DIRECTORS
At the meeting three directors are to be elected to serve for
a term of one year and until their successors shall be elected
and qualified. The following slate of three nominees has been
chosen by the Board of Directors and the Board recommends that
each be elected.
<TABLE>
<CAPTION>
Position Held
With Corporation Director
Name
Age Or Principal Occupation Since
<S> <C> <C>
Russell C. Best (1) 34 Chairman of the Board of 1991
Best Lock Corporation since March, 1995;
President of Best Lock Corporation since
February 15, 1995; Chief Executive Officer
of Best Lock Corporation since May,
1994; Executive Vice President
of Best Lock Corporation from June, 1992
to May, 1994; Marketing Director
of Best Lock Corporation from 1989-1992;
President and Chief Executive Officer
of the Corporation and Best Universal
Lock Co. since February 15,
1995; prior thereto Vice President of
the Corporation and Best Universal Lock Co.
from prior to 1990; director of
the Corporation, Best
Lock Corporation and Best
Universal Lock Co.
Mariea L. Best (1) 32 Sole shareholder and president of 1995
Best Event and Travel, Inc., a travel
agency, from 1991-1994; Special Event
Coordinator for Wiersma from 1987-1990;
Director of the Corporation,
Best Lock Corporation
and Best Universal Lock Co.
Gregg A. Dykstra 39 Secretary/Treasurer of the Corporation, nominee
Best Lock Corporation and Best Universal
Lock Co. since March, 1995; General Counsel
of Best Lock Corporation since November, 1989
If the Reincorporation Proposal hereinafter described is approved
by the Shareholders, the Board of Directors will consist of five
members. The directors intend to elect the following individuals
to fill the vacancies created thereby.
Larry W. Rottmeyer 39 Vice President and General Manager
of Business Development
of Best Lock Corporation since
June, 1995; Vice President of
Marketing of Best Lock Corporation
<PAGE>
from October, 1994 to June, 1995;
chief executive officer/president
for Marcon Corporation,
an independent marketing and
research firm, from October, 1994 to
to June, 1995; chief executive officer/
president and senior marketing consultant
for Marcon Corporation from
1987 to October, 1994
Eric M. Fogel 40 Partner in the law firm of Holleb &
Coff, Chicago, Illinois, since
December 1993; associate in the law
firm of Sonnenschein Nath & Rosenthal,
Chicago, Illinois, from July, 1989
to November, 1993
<FN>
______________________
(1) Russell C. Best is the spouse of Mariea L. Best.
</TABLE>
The Board of Directors does not have standing audit,
nominating or compensation committees.
The Board of Directors of the Corporation held one meeting
and conducted business by unanimous written consent in lieu of
meeting one time during 1994. All directors were present at such
meeting.
Effective April 1, 1995 each member of the Board of
Directors of the Corporation will be entitled to fees for
services rendered in his or her capacity as a director in the
amount of $5,000 per fiscal year.
EXECUTIVE COMPENSATION
Board of Directors Compensation Report
In General
All of the compensation received by the Corporation's
executives is paid by Lock, the Corporation's primary operating
subsidiary. Accordingly, all executive compensation decisions
are made by the Board of Directors of Lock, the members of which
typically constitute the Board of Directors of the Corporation.
The Board of Directors of Lock does not have a compensation
committee or other board committee performing similar functions.
The compensation for executive officers of the Corporation
consists primarily of salary and a cash bonus. Executive
officers also participate, along with other employees, in the
Best Lock Corporation Stock Bonus Plan, a qualified, non-
<PAGE>
contributory defined benefit pension plan, a bonus plan and a
401(k) plan. In 1994, Lock made no contributions to the Stock
Bonus Plan. Also, during 1994, Lock implemented the 401(k) plan.
In determining the levels of salary and bonus, the Board of
Directors of Lock considers a number of factors, including
corporate performance, internal compensation equity, external pay
practices for comparable companies and the executive's level of
responsibility, experience and expertise as well as its
subjective evaluation of the performance of the executive. The
Directors refer to several outside surveys and studies of
companies similarly situated in size and profitability, and
utilize consultants and other outsiders in establishing the
various pay levels of the executives.
Chief Executive Officer
On May 5, 1994, Lock and Russell C. Best entered into an
Employment Agreement pursuant to which Russell C. Best assumed
the duties of Chief Executive Officer of Lock. The initial term
of this agreement expires December 31, 1998; however, the term is
automatically extended by one additional year on December 31 of
each year unless earlier terminated by notice of either party to
the other at least thirty (30) days prior to December 31 of each
year. The agreement provides for a base salary of $425,000 per
year, subject to increases for inflation, individual performance
of Mr. Best, overall corporate performance and adjustments to
salary of other senior management, plus the participation of
Russell C. Best in all general and executive compensation and
benefit plans of Lock, including any incentive or bonus plans.
In March, 1995, the Board of Directors of Lock reviewed the
performance of Mr. Best since he assumed the duties of Chief
Executive officer in May, 1994 and recognized the following
factors as evidence of the excellent performance of Mr. Best:
1. Lock's net income before provision for income taxes
increased from $1,149,518 in the year ended December
31, 1993 to $2,208,155 in the year ended December 31,
1994;
2. Lock's earnings per share increased by 92% from $8.76
for the 1993 year to $16.83 for the 1994 year;
3. Lock's sales revenues increased by 6.24% from
$98,521,396 for the 1993 year to $104,669,003 for the
1994 year;
Certain members of the Board of Directors also reviewed certain
compensation survey research data analyzed by an outside
consultant with respect to compensation levels of chief executive
officers of corporations comparable to Lock. In light of these
factors and the review of compensation survey research data and
consistent with the terms of the employment agreement, the Board
of Directors of Lock determined that Mr. Best should be paid a
bonus in the amount of $340,000 for his performance in calendar
year 1994 and as an incentive for him to continue to perform at
an excellent level. In light of these same factors and in
<PAGE>
accordance with the employment agreement, the Board of Directors
of Lock also determined to increase Mr. Best's annual base
compensation from $425,000 to $615,000 effective as of April 1,
1995.
Prior to May, 1994, Walter E. Best was the Chief Executive
Officer of Lock. Mr. Best, is the eldest son of the inventor and
founder of Lock, Frank E. Best. Walter E. Best was in this
position since 1966 and has numerous patents in the locking art.
An important element in the determination of his compensation was
his continuing effort to focus Lock in its traditional areas of
strength.
Submitted by Board of Directors
Russell C. Best, Mariea L. Best
<PAGE>
Compensation
The information in the following table discloses all
remuneration paid to the five most highly compensated executive
officers of the Corporation, for services in all capacities to
the Corporation and its subsidiaries during the fiscal years
ended December 31, 1994, 1993, and 1992.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
All other (6)
Name and Principal Position Year Salary Bonus (5) Compensation
<S> <C> <C> <C> <C>
Walter E. Best (1) 1994 $444,965 $ 3,665 $ 1,450
Chairman and President 1993 435,668 1,779 1,817
Director 1992 430,443 420 1,997
Russell C. Best (2) 1994 $406,657 $343,665 -0-
Chief Executive Officer 1993 250,705 1,779 $ 1,750
Director 1992 238,591 420 1,920
R. Gene McCullum (3) 1994 $191,473 $ 2,015 $ 3,000
Vice-President, Administration 1993 196,706 1,779 1,474
of Lock Director 1992 209,674 420 1,762
Roger E. Beaverson (4) 1994 $182,019 $ 2,015 $ 3,000
Secretary/Treasurer 1993 189,777 1,779 1,438
1992 204,099 420 1,733
Gregg A. Dykstra (4) 1994 $155,832 $ 11,475 $ 1,067
Secretary/Treasurer 1993 147,148 1,779 1,099
1992 124,891 420 1,045
<FN>
_____________________
(1) Resigned February 15, 1995.
(2) Appointed Chief Executive Officer of Best Lock Corporation
effective May 1, 1994.
(3) Resigned as Director on December 30, 1994. Employment
terminated March 1, 1995.
(4) Roger E. Beaverson was replaced as Secretary/Treasurer of
the Corporation on March 24, 1995, by Gregg A. Dykstra
formerly General Counsel of Lock. Mr. Beaverson resigned
from employment on June 16, 1995.
(5) In 1992 and 1993, the bonus payments were flat amounts. In
1994, the bonus payments consisted of a flat base amount
plus a percentage based on the employee's achievement of
certain business objectives. In the case of Gregg A.
<PAGE>
Dykstra, the bonus amount for 1994 includes $9,900 in
recognition of services performed in connection with the
internal reorganization of the Corporation. In the case of
Russell C. Best, the bonus amount for 1994 includes an
amount equal to $340,000 in recognition of services
performed in calendar year 1994, payable in accordance with
the employment agreement with Russell C. Best described in
the Board of Directors Compensation Report.
(6) For 1992 and 1993 these amounts represent contributions by
Lock to the Best Lock Corporation Stock Bonus Plan, a
defined contribution plan,on behalf of the named executive
officers. For 1994, these amounts represent contributions
by Lock to the 401(k) plan on behalf of the named executive
officers.
</TABLE>
Compensation Pursuant to Plans
The Best Lock Corporation Stock Bonus Plan is a qualified
noncontributory defined contribution plan available to all
employees above the age of 21 with one year of full-time service.
Voluntary contributions by Lock, a subsidiary of the Corporation,
to the plan are made upon the authority of the Board of
Directors, and are allocated on the basis of annual compensation
and years of service. The funds of the Plan are to be invested
primarily in securities of the Corporation or its affiliates.
Amounts are distributed from the Plan upon the resignation,
retirement, termination, or death of the employee in accordance
with Plan provisions. Employer contributions for the account of
the individuals named in the Summary Compensation Table are
included in that table under All Other Compensation.
Lock implemented a 401(k) profit sharing plan during 1994
covering all employees who had completed one year of continuous
service and had reached the age of 21 years as of October 1,
1994. Employer contributions to the 401(k) Plan are determined
by the Board Directors. Participants begin vesting in employer
contributions after 1 year of service at which time they are 20%
vested. Employees become 100% vested after 5 years of service.
Employer contributions for the account of the individuals named
in the Summary Compensation Table are included in that table
under All Other Compensation.
Messrs. Russell C. Best, R. Gene McCullum and Roger E.
Beaverson, along with all other employees as of September, 1989,
participate in a qualified noncontributory defined benefit
pension plan approved by Lock's Board of Directors in 1989. The
monthly benefit payable thereunder is based on the employee's
compensation and years of past service as of September 1, 1989.
The benefits under the plan are stated in terms of a monthly
payment at age 65 determined by the product of three components:
(1) September 1, 1989 basic monthly pay rate; (2) one percent;
and (3) the greater of (a) two or (b) the participant's period of
employment (in years and months) through August 31, 1989. Normal
retirement age is 65, with provisions for earlier retirement with
reduced benefits. Such payments are to be made for their
lifetime, following which 50% of the monthly amount will be
<PAGE>
provided for the lifetime of a surviving spouse. The estimated
annual benefits payable upon retirement at 65 to each of Mr.
Best, Mr. McCullum and Mr. Beaverson are $5,920, $37,489 and
$35,870, respectively.
Effective in 1989, Lock executed a Supplemental Retirement
Benefit Agreement with Walter E. Best. The payments to be made
under this agreement are based on his compensation and years of
past service as of September 1, 1989, and are payable on a
monthly basis following his retirement. Such payments are to be
made for his lifetime, following which 50% of the monthly amount
will be provided for the lifetime of his surviving spouse. The
estimated annual benefits payable to Walter E. Best under this
benefit agreement as of December 31, 1994 are $132,300.
Compensation Committee Interlocks and Insider Participation
Russell C. Best, President and Chief Executive Officer of
the Corporation, Walter E. Best, former President and director of
the Corporation, and R. Gene McCullum, former Vice-President
Administration of Lock and director of the Corporation
participated in deliberations of the Board of Directors of Lock
concerning executive officer compensation. During calendar year
1994, each of these individuals was also a member of the Board of
Directors and an executive officer of Lock and/or Best Universal
Lock Co. ("Universal"), each of which is a subsidiary of the
Corporation. The Board of Directors of Lock sets the
compensation for the executive officers and does not have a
compensation committee.
Certain Transactions
Shortly after the change in control of the Corporation
described in "Change in Control," Russell C. Best began to
implement organizational changes in Lock for the purpose of
streamlining operations to reduce costs that would have resulted
in a diminution in pay for certain management positions. Walter
E. Best objected to these changes and in August, 1994 threatened
Lock, Russell C. Best and Gregg A. Dykstra, then General Counsel
of Lock, with a stockholder derivative action for mismanagement
and the two individuals with an action for common law fraud (not
securities fraud). On February 15, 1995, Lock settled all claims
arising from the threatened derivative action as well as the
claims threatened against the two individuals (the "Settlement").
The material components of the settlement include: (1) the
resignation of Walter E. Best from the Board of Directors and as
President of each of the Corporation, Lock and Universal; (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
approximately $2,050,000 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
<PAGE>
total sum of $8,178,296 for the acquisition of shares of Lock and
interests in a partnership as described below. The covenants not
to compete referenced above prohibit each of the individuals for
a period of five years from engaging in or having an interest in
any business in the locking or security business or from using
the name "Best" in association with any business in competition
with Lock except, however, that in the case of Richard E. Best,
Marshall W. Best and Robert W. Best the prohibition against
engaging in, or having an interest in, a competing business
extends for only two years provided that a member of the Best
family does not own more than a de minimus equity interest in
such a business.
As a part of the Settlement, Lock cancelled indebtedness in
the approximate amount of $28,690.97 owed as of February 15, 1995
by each of Robert W. Best, Richard E. Best and Marshall W. Best
to Lock in connection with Lock's prior interest in part of the
proceeds of a joint and survivor life insurance policy owned by
Robert W. Best as Trustee of the Walter Edwin Best Irrevocable
Life Insurance Trust and agreed to reimburse Walter E. Best for
up to approximately $82,000 in legal fees incurred by Mr. Best in
formulating and considering the claims threatened against Lock
and the two individuals.
On February 15, 1995, Lock, which is a subsidiary of
Universal, which is in turn a subsidiary of the Corporation,
purchased an eighty-seven percent (87%) non-voting partnership
interest in Best Lock Partnership, a newly formed Indiana general
partnership (the "Partnership") for the total consideration of
$5,582,625.59. This acquisition was made in two steps. First,
on February 15, 1995, Lock acquired an eighty-four and one-half
percent (84.5%) interest in the Partnership by purchasing non-
voting interests in the Partnership from members of the Best
family for a total consideration of $4,521,433.67. Second, Lock
acquired a two and one-half percent (2.5%) interest in the
Partnership directly from the Partnership for $1,061,191.92.
The Partnership then acquired shares of capital stock in the
Corporation and Universal from members of the Best family for the
aggregate purchase price of $1,061,191.92.
Finally, Lock acquired shares of its own common stock from
members of the Best family at an aggregate purchase price of
$2,595,670.
After the consummation of these transactions, the total
assets of the Partnership were $6,571,711.60. Russell C. Best,
President of the Corporation and a member of the Corporation's
Board of Director's, and Walter E. Best Company, Inc., an
affiliated corporation the voting shares of which are all owned
by Russell C. Best, are the holders of the remaining thirteen
percent (13%) interest in the Partnership, which thirteen percent
<PAGE>
(13%) interest represents the entire voting interests of the
Partnership.
The information in the following table discloses payments
received by members of the Best family in connection with the
settlement in the categories identified.
<TABLE>
<CAPTION>
Purchase Purchase Purchase Purchase Severance
Price for Price for Price for Price for and Vacation Noncom-
Partnership Corporation's Lock Universal /Bonus petition
Name Interests Shares Shares Shares Payments Payments
<S> <C> <C> <C> <C> <C> <C>
Walter E. Best -0- $ 293.60 $ 770.00 $ 329.80 $ 695,132.80 $640,000.00
The Huntington Trust -0- 349,119.76 -0- -0- -0- -0-
Company, NA, as the
trustee of the
Walter E. Best
Irrevocable Trust
Walter E. Best, as 3,532,521.46 -0- -0- -0- -0- -0-
the trustee of the
Walter E. Best
Revocable Trust
Robert W. Best 250,323.45 43,746.40 734,195.00 140,737.88 429,774.56 200,000.00
Denise Best 31,223.14 -0- -0- -0- -0- -0-
Richard E. Best 250,323.45 43,658.32 649,495.00 140,737.88 442,563.08 200,000.00
Amber Best 31,223.14 -0- -0- -0- -0- -0-
Marshall W. Best 250,323.45 43,658.32 649,495.00 140,737.88 439,360.24 200,000.00
Tracey Best 31,223.14 -0- -0- -0- -0- -0-
Dona J. Best, as 144,272.44 -0- 561,715.00 158,172.08 -0- -0-
trustee of the
Dona J. Best
Revocable Trust
</TABLE>
The relationships among the parties are as follows: Prior
to February 15, 1995, Walter E. Best was President, Chairman, and
a member of the Board of Directors of each of the Corporation,
Universal, Lock and Walter E. Best Company, Inc. He is the
father of the Corporation's current President, Russell C. Best,
Robert W. Best, Richard E. Best and Marshall W. Best. Prior to
<PAGE>
February 15, 1995, Robert W. Best was Assistant to the President
of Lock. He is a brother of the Corporation's current President,
Russell C. Best. Prior to February 15, 1995, Richard E. Best was
a Vice President of Lock. He also is a brother of the
Corporation's current President, Russell C. Best. Prior to
February 15, 1995, Marshall W. Best was a Vice President of Lock.
He also is a brother of the Corporation's current President,
Russell C. Best. The Walter E. Best Revocable Trust is a
revocable trust established by Walter E. Best. The Dona J. Best
Revocable Trust is a revocable trust established by Dona J. Best
who is the mother of Russell C. Best, Robert W. Best, Richard E.
Best and Marshall W. Best. Denise Best is the spouse of Robert
W. Best; Amber Best is the spouse of Richard E. Best; and Tracey
Best is the spouse of Marshall W. Best.
The purchase price of the shares of the Corporation,
Universal and Lock were based on the respective appraised values
of such shares as of December 31, 1993 as determined by an
independent appraiser, Sigurd R. Wendin & Associates, Inc. of
Birmingham, Michigan.
Lock's acquisition of its interest in the Partnership and
its redemption of its own common shares were funded through a
line of credit obtained by Lock from Huntington National Bank of
Indianapolis, Indiana.
The series of transactions described above was approved
unanimously by the Boards of Directors of the Corporation and of
Lock and was undertaken pursuant to an Agreement dated
February 15, 1995. An opinion was rendered by Merrill Lynch,
Pierce, Fenner & Smith Incorporated to Lock's Board of Directors
that the settlement transactions, including the severance and
non-competition payments, were fair to Lock from a financial
point of view.
Employment Agreement and Agreement Respecting Sale Of Stock
On May 5, 1994, Lock and Russell C. Best entered into an
Employment Agreement pursuant to which Russell C. Best assumed
the duties of Chief Executive Officer of Lock. The initial term
of the Employment Agreement expires December 31, 1998; however,
the term is automatically extended by one additional year on
December 31 of each year unless earlier terminated by notice by
either party to the other at least thirty (30) days prior to
December 31 of such year.
The Employment Agreement provides for a base salary of a
minimum of $425,000 per year, subject to increases for inflation
and other factors, plus the participation of Russell C. Best in
all general and executive compensation and benefit plans of Lock,
including any incentive or bonus plans. See "Board of Directors
Compensation Report - Chief Executive Officer." The Employment
Agreement further provides for a loan of up to $3,400,000 to
Russell C. Best, to be repaid to Lock over a thirty year period
with interest at 7.2% per annum.
<PAGE>
The Employment Agreement also provides severance benefits in
the event of termination of employment under certain
circumstances. In the event of termination of employment by Lock
without "cause" or by Russell C. Best with "cause" (as such terms
are defined in the Employment Agreement), he will receive in each
year throughout the unexpired portion of the term of the
Employment Agreement, including any extensions occurring prior to
the date of termination, his then current base salary, plus the
average of the aggregate amounts of any bonuses, incentive
payments, and/or contingent compensation received by him in each
of the three immediately preceding calendar years. If Lock
terminates Russell C. Best's employment with "cause," or if he
terminates employment without "cause," Russell C. Best would
forfeit all compensation and benefits following such termination.
Consistent with the terms of the Employment Agreement, on
May 18, 1994, Lock loaned $3,400,000 to Russell C. Best pursuant
to the terms of a Loan Agreement dated May 5, 1994, to which Lock
and Russell C. Best are parties. The terms of the loan were as
provided in the Employment Agreement. The current outstanding
principal balance of the loan is $3,334,001. The loan is secured
by 113,311 shares of the Corporation's Common Stock and 451
shares of Universal. See "Change In Control." Such shares will
be released pro rata from the pledge as the principal of the loan
is repaid to Lock.
On May 16, 1994, Lock entered into an Agreement Respecting
Sale of Stock (the "Put Agreement") with Russell C. Best. The
Put Agreement provides that Russell C. Best has the right,
exercisable at any time on or before December 31, 1994, to
require Lock to purchase from him any shares of the Corporation
owned by him at the time of exercise at a price of $29.36 per
share. The right was not exercised and the Put Agreement has
expired.
Other Transactions
Walter E. Best is the president and owns in excess of 10% of
the stock of Best Aircraft Corporation. During the past fiscal
year, Lock leased aircraft and automobiles from Best Aircraft
Corporation, paying $180,656 for such services. As part of the
Settlement, all of the automobile leases were cancelled and Lock
purchased the automobiles used by its employees for an amount
equal to the bank indebtedness owed by Best Aircraft Corporation
with respect to each such automobile as of February 15, 1995.
Larry Rottmeyer, who became Vice President of Marketing of Lock
in 1994, was the president of, and owned in excess of 10% of,
Marcon, Inc. Lock purchased market research services from
Marcon, Inc. during 1994 paying $291,716 for such services.
Mr. Rottmeyer is no longer a shareholder or officer of Marcon,
Inc.
PERFORMANCE GRAPH
The information in the following line graph compares the
yearly change in the cumulative total shareholder return on the
<PAGE>
Corporation's common stock with the cumulative total return of
the S & P Composite 500 Index and a selected peer group of
companies for the period of five years commencing December 31,
1989 and ending December 31, 1994.
The graph and table that follows assume that $100 was
invested on December 31, 1989 in Frank E. Best, Inc. common
stock, the S & P 500 Index and stock of the peer group. The peer
group consists of publicly traded companies in industries similar
to the Company: Ingersoll-Rand Co., Knape & Vogt Mfg. Co., Masco
Corporation, Stanley Works and L.S. Starrett Co. Total return
assumes that all dividends are reinvested.
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Frank E.
Best, Inc. $100.00 $102.03 $118.93 $157.14 $163.85 $163.85
S & P 500 $100.00 $ 97.00 $126.00 $136.00 $150.00 $152.00
Peer Group $100.00 $ 75.14 $109.13 $127.20 $159.12 $129.14
</TABLE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of Arthur
Andersen LLP as independent auditors of the accounts of the
Corporation and its consolidated subsidiaries for the fiscal year
1995.
The Board of Directors recommends a vote for the proposal to
approve the appointment of Arthur Andersen LLP. In the event the
appointment of Arthur Andersen LLP should not be approved by the
Shareholders, the Board of Directors will make another
appointment to be effective at the earliest feasible time, either
this fiscal year or the next.
Representatives of Arthur Andersen LLP are not expected to
be at the shareholders' meeting.
PROPOSAL TO REINCORPORATE IN DELAWARE
<PAGE>
The following discussion summarizes certain aspects of the
proposed reincorporation of the Corporation from the State of
Washington to the State of Delaware (the "Reincorporation")
pursuant to the Agreement and Plan of Merger (the "Merger
Agreement") between the Corporation and Frank E. Best, Inc., a
Delaware corporation ("Best-Delaware") (the "Reincorporation
Proposal"). This summary is not intended to be complete and is
subject to, and qualified in its entirety by, reference to the
Delaware General Corporation Law ("Delaware Law") and the
Washington Business Corporation Act ("Washington Law"), the
Merger Agreement, a copy of which is attached to this Information
Statement as Exhibit A, the Certificate of Incorporation of Best-
Delaware (the "Delaware Certificate"), a copy of which is
attached to this Information Statement as Exhibit B, and the
Bylaws of Best-Delaware (the "Delaware Bylaws"), a copy of which
is attached to this Information Statement as Exhibit C.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED, AND FOR THE
REASONS DESCRIBED BELOW UNDER "PRINCIPAL REASONS FOR THE
REINCORPORATION" UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
APPROVE AND ADOPT, THE MERGER AGREEMENT AND THE REINCORPORATION
PROPOSAL.
Principal Reasons for the Reincorporation
For many years the State of Delaware has followed a policy
of encouraging incorporation in that state and, in furtherance of
that policy, has adopted comprehensive, modern and flexible
corporate laws which are periodically updated and revised to meet
changing business needs. As a result, many corporations have
been initially incorporated in Delaware or have subsequently
reincorporated in Delaware in a manner similar to that proposed
by the Corporation. Because of Delaware's prominence as a state
of incorporation for many corporations, the Delaware courts have
developed considerable expertise in dealing with corporate issues
and a substantial body of case law has developed construing the
Delaware Law and establishing public policies with respect to
corporations incorporated in Delaware. Consequently, Delaware
Law is comparatively well known and understood. It is
anticipated that, as in the past, Delaware Law will continue to
be interpreted and explained in a number of significant court
decisions. The Board of Directors believes that reincorporation
in Delaware should provide greater predictability with respect to
the Corporation's corporate affairs.
Principal Features of the Reincorporation
The Reincorporation will be effected by the merger (the
"Merger") of the Corporation with and into Best-Delaware, a
wholly-owned subsidiary of the Corporation which will be
incorporated under Delaware Law for purposes of the Merger.
Best-Delaware will be the surviving corporation in the Merger and
will continue under the name of Frank E. Best, Inc. The
Corporation will cease to exist as a result of the Merger.
The Merger will not become effective until the requisite
shareholders approval of the Reincorporation Proposal has been
obtained and the Merger Agreement or an appropriate certificate
of merger is filed with the Secretary of State of the State of
Delaware and the Secretary of State of the State of Washington.
<PAGE>
At the effective time of the Merger, the Corporation will be
governed by the Delaware Certificate, the Delaware Bylaws and
Delaware Law.
Upon completion of the Merger, each outstanding share of
Common Stock of the Corporation will be converted into one share
of Common Stock of Best-Delaware. As a result, the existing
shareholders of the Corporation will automatically become
shareholders of Best-Delaware, the Corporation will cease to
exist and Best-Delaware will continue to operate the business of
the Corporation under the name Frank E. Best, Inc. The stock
certificates of the Corporation will be deemed to represent the
same number of Best-Delaware shares as were represented by the
Corporation's stock certificates prior to the Reincorporation.
IT WILL NOT BE NECESSARY FOR SHAREHOLDERS TO EXCHANGE THEIR STOCK
CERTIFICATES FOR BEST-DELAWARE STOCK CERTIFICATES. Following the
Reincorporation, previously outstanding stock of the Corporation
will constitute "good delivery" in connection with sales through
a broker, or otherwise, of shares of Best-Delaware. Upon
completion of the Reincorporation, the authorized capital stock
of Best-Delaware will consist of 600,000 shares of Common Stock,
$1.00 par value, which is identical to the authorized capital
stock of the Corporation.
The Reincorporation will not result in any change to the
daily business operations of the Corporation or the present
location of the principal executive offices of the Corporation in
Indianapolis, Indiana. The consolidated financial condition and
results of operations of Best-Delaware immediately after the
consummation of the Reincorporation will be identical to that of
the Corporation immediately prior to the consummation of the
Reincorporation. In addition, at the effective time of the
Merger the Board of Directors of Best-Delaware will consist of
those persons elected directors of the Corporation at the Annual
Meeting. The size of the Board of Directors will be increased to
five and the directors intend to elect the persons described in
"Nominees For Election As Directors" to fill the vacancies. In
addition, the individuals serving as executive officers of the
Corporation immediately prior to the Merger will serve as
executive officers of Best-Delaware upon the effectiveness of the
Merger.
A vote for approval and adoption of the Merger Agreement and
Reincorporation Proposal will also constitute specific approval
of the Delaware Certificate and the Delaware Bylaws.
Confirmation and adoption of the Merger Agreement and the
Reincorporation Proposal will affect certain rights of
shareholders. Accordingly, shareholders are urged to read
carefully this entire Information Statement and the Exhibits to
the Information Statement before voting.
Dissenters' Rights of Appraisal
In China Products North America, Inc. v. Manewal, et al, 69
Wash. App. 767, 850 P.2d 565 (1993), the Washington Court of
Appeals held that although a merger is among the corporate
actions that would trigger dissenters' rights under the
Washington Law, a merger of an existing corporation into a shell
subsidiary corporation formed for the sole purpose of changing
<PAGE>
corporate domicile from the State of Washington to the State of
Delaware is not a significant enough change in the scope of the
business enterprise or in shareholders rights to warrant the
triggering of dissenters' rights. In reaching this conclusion
the court was persuaded by the fact that the majority shareholder
group in China Products owned more than two-thirds of the voting
stock. The court reasoned that since the controlling shareholder
group had the power to eliminate most of the statutory
differences between Washington and Delaware law by approving
amendments to the articles and bylaws of the Washington
corporation, this substantially undermined a claim that a change
in the state of incorporation would have significance to the
dissenters. Similarly, Russell C. Best beneficially owns 66% of
the Corporation's shares and, thus, has the power to cause the
adoption of most of the changes in shareholders rights which will
result from reincorporation through amendments to the
Corporation's Articles and Bylaws. Accordingly, although under
Washington Law shareholders have the right, under certain
circumstances, to dissent from certain corporate reorganizations
and receive cash for their shares, Washington Law does not permit
dissenters' rights in connection with the Reincorporation.
Amendment, Deferral or Termination of the Merger Agreement
If approved by the shareholders at the Annual Meeting, it is
anticipated that the Reincorporation will become effective at the
earliest practicable time. However, the Merger Agreement
provides that the Merger Agreement may be amended, modified or
supplemented before or after approval by the shareholders of the
Corporation; but no such amendment, modification or supplement
may be made if it would have a material adverse effect upon the
rights of the Corporation's shareholders unless it has been
approved by the shareholders. The Merger Agreement also provides
that the Corporation may terminate and abandon the Merger or
defer its consummation for a reasonable period, notwithstanding
shareholder approval, if in the opinion of the Board of Directors
such action would be advisable. The Merger Agreement provides
that the consummation of the Merger is subject to certain
conditions, including the absence of pending or threatened
litigation regarding the Reincorporation.
Comparison of Washington and Delaware Corporate Law and Summary
of Charter and Bylaw Changes
Washington Law and Delaware Law are similar in many respects
but there are differences that may affect the rights of
stockholders. The following includes a summary of certain
similarities and differences between Washington Law and Delaware
Law. Approval by stockholders of the Reincorporation will also
constitute approval of the Delaware Certificate and Delaware
Bylaws. The following discussion also highlights certain
differences in stockholder rights which will result from the
implementation of the Delaware Certificate and Delaware Bylaws.
This discussion is not exhaustive and is qualified in its
entirety by reference to the specific provisions of Delaware Law
and Washington Law, the Delaware Certificate and Delaware Bylaws.
Vote Required For Mergers, Consolidations and Dissolution
<PAGE>
Delaware Law relating to mergers and other corporate
reorganizations differs from Washington Law in several respects.
Both Washington and Delaware Law provide for a shareholder vote
(except as indicated below and for certain "short-form" mergers
between a parent corporation and its 90% subsidiaries) of both
the acquiring and acquired corporations to approve mergers and of
the selling corporation for the sale by such corporation of all
or substantially all of its assets. Both Washington and Delaware
Law provide for a shareholder vote to approve the dissolution of
a corporation. In addition, Washington Law requires the approval
of the shareholders of an "acquired corporation" (which is
defined as a corporation whose shares will be acquired in the
transaction) in a share exchange transaction. Delaware Law does
not have specific provisions relating to share exchanges.
Delaware Law does not require a shareholder vote of the
surviving corporation in a merger if (i) the merger agreement
does not amend the existing certificate of incorporation; (ii)
each outstanding or treasury share of the surviving corporation
in the merger is unchanged after the merger; and (iii) the number
of shares to be issued by the surviving corporation in the merger
does not exceed 20% of the shares outstanding immediately prior
to such issuance. By contrast, Washington Law requires a
shareholder vote of the surviving corporation in a merger if the
merger results in any increase in the number of "participating
shares" (defined as shares that entitle their holders to
participate without limitation in distributions) or "voting
shares" (defined as shares that entitle their holders to vote
unconditionally in elections of directors) outstanding.
To obtain shareholder approval of a merger or consolidation,
or a sale of all or substantially all of its assets, Delaware Law
requires a corporation to receive an affirmative vote of holders
of at least a majority of the outstanding stock of the
corporation entitled to vote thereon. Generally, Washington Law
provides that shareholder approval of a merger, share exchange or
sale of all or substantially all of the assets requires the
affirmative vote of holders of at least two-thirds (2/3) of all
shares entitled to vote on the matter. Additionally, separate
voting by voting groups may be required in connection with such
transactions under Washington Law. See "Separate Voting by
Voting Groups." Delaware Law also requires an affirmative vote
of holders of a majority of the outstanding stock to approve a
dissolution of the corporation. By contrast, Washington Law
generally requires approval by holders of at least two-thirds
(2/3) of all votes entitled to be cast on a dissolution proposal.
Washington Law also permits the board of directors to
condition its submission of a proposal for a merger, share
exchange, sale of all or substantially of the assets or
dissolution on any basis, including a greater vote and separate
voting by voting groups (if not otherwise required).
Appraisal Rights
Both Delaware Law and Washington Law allow stockholders,
under certain circumstances, to dissent from certain corporate
transactions and to receive fair value for their shares in lieu
of the consideration they would otherwise receive in the
transactions. Unless a corporation's certificate of
<PAGE>
incorporation provides otherwise, Delaware Law does not require
such dissenters' rights of appraisal with respect to a merger or
consolidation by (i) holders of shares a class of which is either
listed on a national securities exchange or held by more than
2,000 stockholders if such stockholders receive consideration
consisting solely of one or more of the following: (a) shares of
the surviving corporation, (b) shares of such a listed or widely
held corporation or (c) cash in lieu of fractional shares, or
(ii) holders of shares of a surviving corporation in a merger if
the merger does not require approval of such stockholders.
Delaware Law does not provide stockholders of a corporation with
appraisal rights in a merger of the corporation into a subsidiary
of the corporation or in a reorganization where the corporation
acquires another business through the issuance of its stock in
exchange for the assets or the outstanding stock of the business
to be acquired. Washington Law allows for appraisal rights in
connection with, among other transactions, (i) a merger requiring
shareholder approval, (ii) a short form merger with a subsidiary
of the corporation, and (iii) a share exchange requiring
shareholder approval. However, as discussed under
"Reincorporation Proposal -- Dissenters' Rights of Appraisal,"
Washington Law does not generally recognize dissenters' rights of
appraisal with respect to a reincorporation merger.
Cumulative Voting
Under Delaware Law, cumulative voting (which permits holders
of less than a majority of the voting securities of a corporation
to cumulate their votes and elect a director in certain
situations) is not available unless expressly provided for in the
corporation's certificate of incorporation. Washington Law
provides for cumulative voting for elections of directors, but
permits the elimination of cumulative voting if such exclusion is
specified in the corporation's articles of incorporation. If
cumulative voting is authorized (i.e., not expressly eliminated
in the articles of incorporation), Washington Law requires that
at least three (3) directors be elected at each annual meeting.
Also, under Washington Law, directors may not be removed by the
shareholders if the number of votes sufficient to elect that
director under cumulative voting is cast against the director's
removal. The Corporation's Articles of Incorporation are silent
on the subject of cumulative voting and the Corporation's
shareholders, thus, currently possess the ability to cumulate
votes in the election of directors. However, since the Delaware
Certificate does not provide for cumulative voting, the
shareholders will not have cumulative voting rights after the
consummation of the Merger. Accordingly, after the Merger,
holders of a majority of the Corporation's common stock will be
able to elect all directors to be elected at each annual meeting
and to remove any director at a special meeting held for such
purpose. Members of the Corporation's Board of Directors
currently own or control the majority of the Corporation's
outstanding common stock.
When cumulative voting for the election of directors
applies, a small minority shareholder or shareholders may be able
to elect a member to the Corporation's Board of Directors, over
the wishes of the majority, by casting all of his cumulated votes
for that individual. For example, if seven directors are elected
annually, one or more stockholders holding more than 12.5% of the
<PAGE>
voting power could elect a director. With conventional voting,
on the other hand, each director is elected by a simple majority
vote.
The Board of Directors believes that cumulative voting
should be eliminated for certain reasons. First, one of the
principal effects of cumulative voting is to make it more likely
that an individual or group of individuals who own less than a
plurality of the voting stock would be able to obtain
representation on the Board of Directors. Such an individual or
group may have interests and goals which are not consistent with
and may be in conflict with those of a majority of the
shareholders. The Corporation's Board of Directors believes that
each Director should represent the interests of all the
shareholders, rather than the interests of any special
constituency, and that the presence on the Board of one or more
directors representing such a constituency could disrupt and
impair the efficient management of the Corporation. Second, if
cumulative voting were eliminated, minority shareholders would
not in the future be able to use cumulative voting as a coercive
device, such as by threatening to obtain representation on the
Board of Directors as a means of forcing the Corporation to
purchase their stock at a price above market or by otherwise
unduly influencing management.
While the Board of Directors does not consider the
elimination of cumulative voting to be an anti-takeover measure,
the elimination may have the effect of discouraging certain
purchases of the Corporation's stock because of the reduced
likelihood of obtaining board representation. Under certain
circumstances, the elimination might also render more difficult
or discourage a merger, tender offer or proxy contest, the
assumption of control by a holder of a large block of the
Corporation's stock or the removal of incumbent managers. The
Board of Directors is not currently aware of any accumulation of
its stock for the purpose of utilizing cumulative voting to
obtain board representation. Further, the Board of Directors is
not aware of the nomination of a candidate for the office of
director in opposition to management-nominated director
candidates at any time since the organization of the Corporation
in the 1920's.
The Board is not aware of, and this proposal is not in
response to, any effort to invoke cumulative voting or to remove
any directors.
Preemptive Rights
Under Washington Law, holders of certain shares of capital
stock of a corporation have preemptive rights (which permit them
to maintain their percentage ownership in the corporation by
enabling them to purchase a portion of newly-issued shares),
unless preemptive rights are expressly eliminated in the articles
of incorporation. A shareholder generally may waive his or her
preemptive rights under Washington Law. By contrast, Delaware
Law provides that shareholders of a corporation do not have
preemptive rights unless the certificate of incorporation
expressly specifies the existence of such rights.
<PAGE>
Since the Corporation's Articles of Incorporation do not
expressly eliminate pre-emptive rights, the Corporation's
shareholders currently possess these rights. The Delaware
Certificate does not specify the existence of pre-emptive rights
and, upon consummation of the Merger, the shareholders will no
longer be entitled to exercise these rights. As a result, the
Corporation will be able to issue its capital stock to any public
or private investor without first offering such stock to the
Corporation's current shareholders. If any such shares are
issued, present shareholders' ownership as a percentage of the
total outstanding stock would be diluted. Any such issuances
would be on such terms as determined by the Board of Directors in
its lawfully exercised discretion.
Compliance with the requirements of preemptive rights, if
the Corporation should desire to issue additional common stock or
securities convertible into common stock in the future, would
involve considerable delay and substantial expense to the
Corporation. In most situations, the Corporation would be
required to initiate and complete a rights offering or solicit
and obtain Shareholders' consent to a waiver of the preemptive
rights before issuing any shares of stock. This may limit the
Corporation's flexibility to take advantage of opportunities to
raise capital for business growth or to finance acquisitions that
may become available in the rapidly changing financial markets.
Historically, preemptive rights originated at a time when
companies were generally small and had relatively few
stockholders, shares were not widely traded and there was little
opportunity to purchase additional shares at a reasonable price
except when the company had a new issue. Today, investors
wishing to maintain or increase their holdings of the
Corporation's stock may do so by purchasing shares through a
broker-dealer making a market in the Corporation's shares.
The Board of Directors believes that preemptive rights are
not a significant benefit to the Shareholders, and that any
benefit to shareholders of preemptive rights is outweighed by the
benefit to the shareholders of increased flexibility and reduced
costs in financing the operations of the Corporation.
Distributions to Shareholders
Delaware Law permits a corporation to declare and pay
dividends out of surplus or, if there is no surplus, out of net
profits for the fiscal year in which the dividend is declared
and/or for the immediately preceding fiscal year, provided that
the amount of capital of the corporation is not less than the
aggregate amount of capital represented by the issued and
outstanding stock of all classes having a preference upon the
distribution of assets. In addition, Delaware Law provides that
a corporation may redeem or repurchase its shares if such
redemption or repurchase would not impair the capital of the
corporation. In determining the amount of surplus of a
corporation under Delaware Law, the assets of the corporation may
be valued at their fair market value as determined by the board
of directors.
Under Washington Law, the payment of dividends and
repurchases or redemptions of stock are permitted if, after
<PAGE>
giving effect to such action, the corporation is able to pay its
debts as they become due in the ordinary course of business and
the corporation's total assets exceed its total liabilities plus
the amount that would be needed for preferential rights upon
dissolution. The board of directors may base its determination
that these requirements have been met on the corporation's
financial statements prepared on the basis of accounting
practices and principles that are reasonable under the
circumstances or on a fair valuation or other method that is
reasonable under the circumstances.
Removal of Directors
Under Delaware Law, any director or the entire board of
directors generally may be removed with or without cause by a
majority vote of shareholders. Delaware Law also provides,
however, that a director of a corporation with a classified board
of directors may be removed only for cause unless the certificate
of incorporation provides otherwise. Under Washington Law,
shareholders may remove directors with or without cause unless
the articles of incorporation provide for removal only for cause.
The Articles of Incorporation of the Corporation do not provide
for removal only for cause. Under both Delaware and Washington
Law, if a director is elected by a voting group consisting of the
holders of any class or series of shares, only shareholders of
that voting group may participate in a vote to remove that
director.
Shareholders' Action by Written Consent
Delaware Law provides that, unless the corporation's
certificate of incorporation specifies otherwise, shareholders
may take any action without a meeting by written consent signed
by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Washington Law also permits
shareholders to take action by written consent, but requires such
written consent to be unanimous.
Power to Amend Articles or Certificate of Incorporation
Under Delaware Law, all amendments to a corporation's
certificate of incorporation must be approved by a majority of
the outstanding stock entitled to vote thereon; provided,
however, that voting by class is required if a proposed amendment
would increase or decrease the aggregate number of authorized
shares of such class, increase or decrease the par value of
shares of such class, or alter or change the powers, preferences
or special rights of shares of such class so as to affect them
adversely.
The Corporation's Articles of Incorporation contain no
provision governing the amendment of the Articles of
Incorporation. Under Washington Law, in the case of a "public
company," the Articles may be amended by the affirmative vote of
a majority of the shares entitled to vote. A public company is
defined to include a company which has a class of shares
<PAGE>
registered with the federal Securities and Exchange Commission
pursuant to Section 12 of the Securities Exchange Act of 1934 or
any successor statute, and which has more that 300 shareholders.
The Corporation has more than 300 shareholders and thus is a
"public company" for this purpose. Accordingly, the
Corporation's Articles of Incorporation may currently be amended
by a majority of the outstanding stock under the statute. In
addition, should the Corporation have 300 or fewer shareholders
at any time, Washington Law would provide that amendments to the
Articles of Incorporation must have the approval of 2/3 of the
outstanding stock for approval. Washington Law does, however,
permit the articles of incorporation to specify that the articles
may be amended by holders of a majority of outstanding voting
stock regardless whether the corporation is public or not. The
Board of Directors believes that a simple majority is the
appropriate standard regardless of the number of the
Corporation's shareholders.
Upon consummation of the Merger the holders of a majority of
the Corporation's outstanding stock will have the authority under
Delaware Law to amend the Corporation's Certificate of
Incorporation at any annual or special meeting of shareholders,
regardless of the then current number of such shareholders.
Since Russell C. Best, Chairman of the Board, President and Chief
Executive Officer of the Corporation, currently owns beneficially
approximately 66% of the outstanding shares of Common Stock of
the Corporation, the Reincorporation would not have the effect of
enhancing the ability of the incumbent Board of Directors or
management to amend the corporate charter, even if the
Corporation were not a public company under Washington Law. The
Board of Directors does not intend this proposed change as an
anti-takeover measure.
Voting by separate voting groups on amendments to the
articles is also required under Washington Law in certain
circumstances. In addition, Washington Law also permits the
board of directors to condition its submission of a proposal to
amend the articles of incorporation on any basis, including a
greater vote and separate voting by voting groups (if not
otherwise required).
Power to Adopt, Amend or Repeal Bylaws
Delaware Law gives the power to adopt, amend or repeal
bylaws to the corporation's shareholders, provided that the
corporation's certificate of incorporation may give concurrent
power to the board of directors. The Delaware Certificate
includes such a concurrent grant of authority to the Board.
Washington Law provides that a corporation's board of directors
may amend or repeal a corporation's bylaws, or adopt new bylaws,
unless (a) the articles of incorporation or Washington Law
reserve such power exclusively to the shareholders; or (b) the
shareholders, in amending or repeating a particular bylaw,
provide expressly that the board of directors may not amend or
repeal that bylaw. Washington Law also provides that a
corporation's shareholders may also amend or repeal the
corporation's bylaws, or adopt new bylaws, even though the board
of directors also has such powers. Article VII of the
Corporation's Bylaws currently indicates that the Board of
Directors may adopt additional bylaws in harmony with the
<PAGE>
Corporation's Bylaws, but may not alter or repeal any bylaws
adopted by the shareholders of the Corporation. The majority of
the Corporation's Bylaws have been adopted by the Shareholders.
After consummation of the Merger, the Board of Directors as
well as the shareholders will have the authority to amend the
Delaware Bylaws provided, however, that the Board of Directors
will not have the power to amend or repeal any by-law which the
shareholders have provided may not be amended or repealed by the
Board. The Board of Directors believes that it is in the best
interests of the shareholders that the Board be in a position to
adopt, amend or repeal the Bylaws whenever such action becomes
desirable for the benefit of the Corporation and its
Shareholders, without the necessity and expense of obtaining
shareholder approval at an annual or special shareholders
meeting. The Bylaws generally pertain to matters of internal
corporate governance within the particular competence of the
Board of Directors and management of the Corporation. This
change is not intended to have any anti-takeover effect. Since
Russell C. Best, Chairman of the Board, President and Chief
Executive Officer of the Corporation, currently beneficially owns
approximately 66% of the outstanding Common Stock of the
Corporation, he currently effectively has the power to cause the
amendment, repeal or making of the Bylaws.
Shareholder Demand for Special Meeting
Under Delaware Law, only the board of directors and persons
authorized in the corporation's bylaws may call a special meeting
of shareholders. The Delaware Bylaws provide that the Chairman
of the Board, the President, the Board and holders of 50% of the
shares entitled to be voted at the meeting may call a special
meeting of shareholders. By contrast, Washington Law provides
that in addition to the board of directors and persons authorized
in the corporation's articles of incorporation, holders of 10% of
the shares entitled to be cast at the meeting may call a special
meeting of shareholders. Washington Law also provides that the
articles of incorporation or bylaws of a non-public corporation
may contain provisions that increase the percentage of shares
needed to call a special meeting up to 25%, and that the articles
of incorporation of a publicly-held corporation may deny or
otherwise limit a shareholder's right to call a special meeting.
The articles of incorporation of the Corporation do not contain
any provision relating to shareholders' rights to call a special
meeting.
Upon consummation of the Reincorporation, only the holders
of a majority of shares entitled to vote will be permitted to
call a special meeting thereby eliminating the possibility that a
minority shareholder could force stockholder consideration of a
proposal over the opposition of the Board of Directors by calling
a special meeting of stockholders prior to such time as the Board
of Directors believes such consideration to be appropriate. This
change is not intended to have any anti-takeover effect. Since
Russell C. Best, Chairman of the Board, President and Chief
Executive Officer of the Corporation, currently beneficially owns
approximately 66% of the outstanding common stock of the
<PAGE>
Corporation, no shareholder proposal can be adopted without his
concurrence.
Director Liability
Section 102(b)(7) of Delaware Law permits Delaware
corporations, in their certificates of incorporation, to limit or
eliminate director liability for money damages for a breach of
the fiduciary duty, except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of
law, (iii) arising from the payment of a dividend or approval of
a stock repurchase in violation of the Delaware Law, or (iv) for
any transaction from which the director derived an improper
personal benefit. The Delaware Certificate contains a provision
eliminating such liability. The proposed change would not
eliminate the directors' duty of care, but it would eliminate the
financial exposure of directors of the Corporation for certain
breaches of such duty. Directors would remain liable to the
Corporation and its stockholders for the acts that are
specifically excluded from the scope of the provision as listed
above. The change would not be retroactive and therefore would
not limit the liability of directors for any act or omission
occurring prior to the adoption of the proposed amendment.
Washington Law contains comparable provisions and prohibits
retroactive application of any provision eliminating or limiting
the liability of a director.
Although the Corporation has had little difficulty in
attracting and retaining directors, the Board of Directors
believes that the Corporation should take all reasonable steps to
ensure that it will continue to be able to attract and retain
qualified persons for such positions and that directors will not
be inhibited in their decision-making because of undue concerns
about personal liability. Further, the change should have the
effect of reducing the cost to the Corporation of obtaining
directors and officers liability insurance as well as the risk
that the Corporation's assets will be depleted in defending and
indemnifying its officers and directors against frivolous
stockholder litigation. After the Merger, a stockholder will be
able to prosecute an action against a director for monetary
damages only if the stockholder alleges a breach of the duty of
loyalty, a failure to act in good faith, intentional misconduct,
a knowing violation of law, an unlawful dividend payment or stock
purchase or redemption or a breach of duty resulting in receipt
of an improper personal benefit. A stockholder will not be able
to prosecute such an action (including an action relating to an
attempted takeover of the Corporation) based on "negligence" or
"gross negligence" of a director in the performance of the
director's duties. However, the proposed change will not limit
or eliminate the right of the Corporation or any stockholder to
seek an injunction, rescission or other form of non-monetary
relief in the event of a breach of the duty of care by a director
(although such relief may not be an effective remedy in certain
circumstances). In addition, the proposed change applies only to
claims against a director arising out of service in such capacity
and, depending upon judicial interpretation, it may not be
effective to relieve a director from liability under the laws of
jurisdictions other than Delaware, such as liabilities imposed
<PAGE>
under the federal securities laws. The proposed change will have
no effect on tort or other claims by third parties against
directors. The proposed change will not preclude indemnification
of a director by the Corporation for any liability which has not
been eliminated by the change as permitted by the Delaware
General Corporation Law and the Corporation's Bylaws.
The Corporation has not received notice of any pending or
threatened litigation to which any current director is a party or
threatened to be made a party in such capacity to which the
protections and benefits under the proposed change might apply;
and the proposed change is not being proposed in response to any
specific resignation, threat of resignation or refusal to serve
by any director or potential director of the Corporation.
The Board of Directors believes that the diligence exercised
by directors stems primarily from their fiduciary duty and desire
to act in the best interests of the Corporation and its
Stockholders and not from fear of monetary damages. Consequently,
they believe that the level of care exercised by them in the
performance of their duties would not be lessened by the adoption
of the proposed change. The Board of Directors recognizes that
it and future members of the Board of Directors could personally
benefit from approval of the proposed change, but for the reasons
stated above, the Board of Directors believes that the proposed
change is in the best interests of the Corporation and its
Stockholders.
Indemnification
Delaware Law permits indemnification of officers, directors,
employees and agents against liabilities and expenses incurred in
proceedings if such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal action, had
no reasonable cause to believe his conduct was unlawful.
Indemnification in connection with a proceeding by or in the
right of a corporation is limited to expenses actually and
reasonably incurred by the indemnified person, and no
indemnification may be made in respect of any claim, issue or
matter as to which such person has been adjudged to be liable to
the corporation unless indemnification is otherwise authorized by
a court. Delaware Law requires indemnification of officers,
directors, employees and agents to the extent such person has
been successful on the merits or otherwise in proceedings in
which the person was involved by reason of his or her status as
an officer, director, employee or agent. Delaware Law also
provides that the statutory indemnification is not exclusive of
rights to indemnification provided in the charter, bylaws or
agreement, or through resolutions of its board of directors or
shareholders.
Washington Law permits indemnification of officers,
directors, employees and agents against liabilities and expenses
incurred in proceedings if the individual acted in good faith and
reasonably believed (1) in the case of conduct in his official
capacity with the corporation, that his conduct was in its best
interests, and (2) in all other cases, that his conduct was at
least not opposed to its best interests. In the case of any
<PAGE>
criminal proceeding, the individual must either have had
reasonable cause to believe the conduct was lawful or had no
reasonable cause to believe the conduct was unlawful. Washington
Law prohibits indemnification of any person adjudged to be liable
to the corporation, unless indemnification is ordered by a court.
If a court orders indemnification in such a circumstance, the
indemnification may not exceed reasonable expenses incurred
unless the articles of incorporation or bylaws, contract or
resolution adopted by the shareholders provides otherwise.
Washington Law contains a mandatory indemnification provision
similar to Delaware's provisions, but Washington Law permits a
corporation to limit such indemnification in its articles of
incorporation.
Anti-Takeover Law
In general, Delaware Law prevents an "interested
stockholder" (which is defined as any person who, individually or
with others, owns 15% or more of the outstanding voting
securities of a corporation), from engaging in certain business
combinations (including, among other transactions, any merger or
consolidation with, or sale or disposition of a substantial
amount of assets to, an interested stockholder) with a Delaware
corporation for three (3) years following the date such person
became an interested stockholder unless certain conditions (such
as approval by the Board of Directors prior to such date or by
the affirmative vote of at least two-thirds (2/3) of the
outstanding voting stock not owned by the interested stockholder
on or after such date) are met. These anti-takeover provisions
under Delaware Law do not apply to certain corporations
(including those which do not have a class of voting stock listed
on a national securities exchange, authorized for quotation on an
inter-dealer quotation system, or held of record by more than
2,000 stockholders). However, these provisions will apply to any
corporation which so specifies in its certificate of
incorporation (or an amendment thereto).
Washington Law contains provisions regulating "interested
shareholder transactions" and "significant business
transactions". Washington Law prohibits an "interested
shareholder transaction" unless such transaction is approved by
each voting group entitled to vote separately on the transaction
by two-thirds (2/3) of the votes of disinterested holders of each
such voting group. These provisions do not apply to a
transaction (i) by a corporation with fewer than 300 holders of
record of its shares (unless its articles of incorporation
provide otherwise); (ii) approved by a majority of the
corporation's disinterested directors; (iii) in which a majority
of the disinterested directors determines that the fair market
value of the consideration to be received by noninterested
shareholders for shares of any class for which shares are owned
by any interested shareholder is not less than the highest fair
market value of the consideration paid by any interested
shareholder in acquiring shares of the same class within 24
months of the proposed transaction; (iv) by a corporation whose
original Articles of Incorporation includes a provision, or whose
shareholders adopt an amendment to its Articles of Incorporation
by two-thirds (2/3) of the votes of disinterested shareholders,
<PAGE>
expressly electing not to be covered by these statutory
provisions. For purposes of these provisions, an "interested
shareholder" is defined to include any person or group of
affiliated persons who beneficially own 20% or more of the
outstanding voting shares of a corporation.
Washington Law also prohibits a Washington corporation from
engaging in any "significant business transaction" (which is
defined as (i) a merger or consolidation with an acquiring person
or an affiliate or an associate of an acquiring person; or (ii) a
sale, lease, exchange, transfer or other disposition or
encumbrance to or with an acquiring person or an affiliate or an
associate of an acquiring person of assets of the corporation (x)
having an aggregate market value equal to 5% or more of the
aggregate market value of all assets, (y) having an aggregate
market value equal to 5% or more of all outstanding shares, or
(z) representing 5% or more of the earning power or net income of
the target corporation) for a period of 5 years following the
date on which the acquiring person obtained such status unless
such transaction is approved prior to such date by a majority of
the members of the Board of Directors. A corporation that
engages in a significant business transaction without obtaining
such approval will have its certificate of incorporation revoked,
and such significant transaction is void. For purposes of these
provisions, an acquiring person is defined as a person or group
of persons who beneficially owns 10% or more of the outstanding
voting shares of the target corporation. The provisions
restricting significant business transactions do not apply to a
corporation which does not have a class of securities registered
under Section 12 of the Securities Exchange Act of 1934, as
amended.
Separate Voting by Voting Groups
Under certain circumstances, Washington Law requires
separate voting by voting groups in connection with a merger,
share exchange, and sale of all or substantially all assets.
Delaware Law generally does not require such class voting, except
in circumstances where the transaction involves certain
amendments to the certificate of incorporation.
Number of Directors
Unless the articles of incorporation specify otherwise,
Washington Law permits the Board of Directors, as well as the
shareholders, to increase the number of directors by a simple
majority vote. The Corporation's Articles of Incorporation
provide that upon a majority vote of the outstanding stock, the
board may at any time be increased not to exceed seven. Delaware
Law provides that the number of directors shall be fixed by, or
in the manner provided in, the bylaws unless the certificate of
incorporation fixes the number. The Delaware Bylaws provide that
the board shall be composed of five members. The number of
directors can be changed from time to time by amending the
bylaws. Thus, after the Merger, either the Board or the
shareholders can amend the bylaws by a majority vote to change
the number of directors without any minimum or maximum
constraints.
<PAGE>
The Board believes that it is capable, just as the
shareholders are, of determining the advisability of expansion of
the Board of Directors, due to the Board's familiarity with the
Corporation's management and opportunities. The Board of
Directors desires to have the flexibility to respond quickly to
the availability of an excellent candidate for an additional
director position, without the burden and expense of calling a
special meeting of the shareholders.
Federal Income Tax Consequences of the Reincorporation
The Reincorporation will constitute a reorganization
described in Section 368(a)(1)(F) of the Internal Revenue Code of
1986, as amended. Accordingly, no gain or loss will be
recognized by the holders of Common Stock as a result of the
consummation of the Reincorporation and no gain or loss will be
recognized by the Corporation or Best-Delaware. Each holder of
Common Stock will have the same basis in the Best-Delaware Common
Stock received pursuant to the Reincorporation as such holder had
in the Common Stock held immediately prior to the
Reincorporation, and the holding period with respect to the Best-
Delaware Common Stock will include the period during which such
holder held the corresponding Common Stock of the Corporation, so
long as the Common Stock was held as a capital asset at the time
of consummation of the Reincorporation.
ALTHOUGH IT IS NOT ANTICIPATED THAT STATE OR LOCAL INCOME
TAX CONSEQUENCES TO SHAREHOLDERS WILL VARY FROM THE FEDERAL
INCOME TAX CONSEQUENCES DESCRIBED ABOVE, SHAREHOLDERS SHOULD
CONSULT THEIR OWN TAX ADVISOR AS TO THE EFFECT OF THE
REINCORPORATION UNDER STATE, LOCAL OR FOREIGN INCOME TAX LAWS.
Best-Delaware will succeed without adjustment to the tax
attributes of the Corporation. If the Reincorporation is
approved, Best-Delaware will be obligated to pay an annual
franchise tax in Delaware.
The Board of Directors unanimously recommends that the
shareholders vote "FOR" the approval and adoption of the Merger
Agreement and the Reincorporation Proposal.
PROPOSALS TO AMEND THE CORPORATION'S
ARTICLES OF INCORPORATION AND BYLAWS
Description of the Proposed Amendments:
The full text of the proposed amendments to the
Corporation's Articles of and Bylaws is included in Exhibit D to
this Information Statement. The following description is a
summary only and is qualified in its entirety by reference to the
text of the proposals under Exhibit D. The text of the proposals
is subject to clerical and other non-material revisions that the
Board may determine are necessary. THE BOARD OF DIRECTORS
INTENDS TO SUBMIT THESE PROPOSALS TO A VOTE OF THE SHAREHOLDERS
ONLY IF THE REINCORPORATION PROPOSAL IS NOT APPROVED BY THE
REQUISITE VOTE OF SHAREHOLDERS. THESE AMENDMENTS WOULD EFFECT
SOME BUT NOT ALL OF THE CHANGES THAT WOULD RESULT FROM THE
REINCORPORATION.
<PAGE>
PROPOSED AMENDMENT NUMBER 1
The Board of Directors has unanimously approved, and
proposes that the Shareholders adopt, an amendment to Article
SECOND of the Corporation's Articles of Incorporation which would
permit the Corporation to engage in any business, trade or
activity which may be lawfully conducted by a corporation
organized under the Washington Business Corporation Act. The
text of the proposed amendment is set forth under Exhibit D.
Reasons for Amendment:
The Corporation's Articles of Incorporation were adopted in
1920, As then drafted and adopted, the Articles limited the
Corporation's permitted activities to those expressly specified
in its Articles of Incorporation. The modern corporate practice
is to permit a corporation to conduct any and all activities
permitted to be conducted by a business corporation. This
practice is illustrated by Section 23B.03.010 of the Washington
Business Corporation Act, which provides that a Washington
corporation may engage in any lawful business, unless the
corporation's articles of incorporation set forth a more limited
purpose. The Board of Directors believes that such latitude
permits management greater flexibility to respond to changing
market conditions. At some point in time, the provisions of the
current Articles of Incorporation, although broadly defining the
Corporation's objects, purposes and permitted activities, could
limit the Corporation's ability to respond to the demands of a
changing marketplace.
Effect of Amendment:
The effect of the proposed amendment will be to permit the
Corporation to engage in any activity which may be lawfully
conducted by a corporation organized under the Washington
Business Corporation Act. The amendment removes any doubt or
technical concern as to the permitted scope of the Corporation's
activities. Management does not currently contemplate engaging
in any activity which would not be permitted under the
Corporation's current Articles of Incorporation, but believes the
proposed amendment to be in the best interests of the Corporation
and the Shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE APPROVAL OF PROPOSED AMENDMENT NUMBER 1 TO THE
CORPORATION'S ARTICLES OF INCORPORATION.
PROPOSED AMENDMENT NUMBER 2
The Board of Directors has unanimously approved, and
proposes that the Shareholders adopt, an amendment to Article
FIFTH of the Corporation's Articles of Incorporation to state
that the Corporation's principal place of business is 6161 E.
75th Street, Indianapolis, Indiana. The text of the proposed
amendment is set forth in Exhibit D.
Reasons for Amendment
Under the Washington Business Corporation Act, a
corporation's articles of incorporation are required to state the
<PAGE>
corporation's principal office or place of business. Currently,
Article FIFTH of the Corporation's Articles of Incorporation
states that the Corporation's principal office or place of
business is in the city of Seattle, King County, Washington, as
was the case when the Corporation was initially organized. The
Corporation's current principal place of business is 6161 E. 75th
Street, Indianapolis, Indiana. The Board of Directors desires
for the Corporation's Articles of Incorporation to correctly
state its principal place of business.
Effect of Amendment:
The only effect of the amendment will be to correctly state
the Corporation's principal place of business in its Articles of
Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE APPROVAL OF PROPOSED AMENDMENT NUMBER 2 TO THE
CORPORATION'S ARTICLES OF INCORPORATION.
PROPOSED AMENDMENT NUMBER 3
The Board of Directors has unanimously approved, and
proposes that the Shareholders adopt, an amendment to Article
SIXTH of the Corporation's Articles of Incorporation to delete
the names and addresses of the initial "trustees" of the
Corporation, to designate the directors of the Corporation as
"directors" rather than as "trustees," and to permit the Board of
Directors to increase the number of members of the Board of
Directors. The text of the proposed amendment is set forth in
Exhibit D.
Currently, the Washington Business Corporation Act provides
that a corporation shall be managed under the direction of its
board of directors. For many years, the Corporation has referred
to its governing board in all cases as its "board of directors."
Its Articles of Incorporation, however, have continued to use the
archaic term "trustees" to refer to the Corporation's directors.
The proposed amendment would change the references to "trustees"
in Article SIXTH to references to "directors."
Currently, Article SIXTH of the Corporation's Articles of
Incorporation provides that the Shareholders may increase the
number of the Corporation's directors from three to a greater
number not exceeding seven. The proposed amendment will permit
the Board of Directors, as well as the Shareholders, to increase
the number of directors within the same parameters.
Reasons for Amendment:
The names and addresses of the Corporation's initial
trustees are proposed to be deleted because they are of no
importance to the Corporation's current business operations. The
deletion of such names and addresses is permitted after
incorporation by the Washington Business Corporation Act.
The Board recommends that the provision regarding expansion
of the Board of Directors be amended because it is believed that
the Board is capable, just as the shareholders are, of
<PAGE>
determining the advisability of expansion of the Board of
Directors, due to the Board's familiarity with the Corporation's
management and opportunities. The Board of Directors desires to
have the flexibility to respond quickly to the availability of an
excellent candidate for an additional director position, without
the burden and expense of calling a special meeting of the
Shareholders. The proposed amendment does not limit or change in
any way the Shareholders' current entitlement to increase the
number of Directors from three to a number not greater than
seven.
Effect of Amendment:
The only practical effect of the proposed amendment will be
to permit the Board of Directors to increase the number of the
Corporation's directors from three to any number not greater than
seven, upon its own initiative.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE APPROVAL OF PROPOSED AMENDMENT NUMBER 3 TO THE
CORPORATION'S ARTICLES OF INCORPORATION.
PROPOSED AMENDMENT NUMBER 4
The Board of Directors has unanimously approved, and
proposes that the Shareholders adopt, a new Article SEVENTH of
the Corporation's Articles of Incorporation to eliminate
preemptive rights of the Shareholders. The text of the proposed
amendment is set forth in Exhibit D.
Section 23B.06.300 of the Washington Business Corporation
Act provides that, unless a corporation's articles of
incorporation provide otherwise, the Corporation's shareholders
will, subject to certain limited exceptions, have preemptive
rights. A preemptive right grants each shareholder the right to
purchase additional shares of the Corporation's stock sufficient
to preserve his proportionate interest in the Corporation's
issued and outstanding stock, before the Corporation may offer
newly issued shares to other parties or the public at large.
Because the Corporation's Articles of Incorporation are now
silent on the subject of preemptive rights, the Corporation's
shareholders currently possess them, subject to certain statutory
limitations.
Reasons for Amendment:
Compliance with the requirements of preemptive rights, if
the Corporation should desire to issue additional common stock or
securities convertible into common stock in the future, would
involve considerable delay and substantial expense to the
Corporation. In most situations, the Corporation would be
required to initiate and complete a rights offering or solicit
and obtain Shareholders' consent to a waiver of the preemptive
rights before issuing any shares of stock. This may limit the
Corporation's flexibility to take advantage of opportunities to
raise capital for business growth or to finance acquisitions that
may become available in the rapidly changing financial markets.
<PAGE>
Historically, preemptive rights originated at a time when
companies were generally small and had relatively few
stockholders and shares were not widely traded and there was
little opportunity to purchase additional shares at a reasonable
price except when the company had a new issue. Today, investors
wishing to maintain or increase their holdings of the
Corporation's stock may do so by purchasing shares through a
broker-dealer making a market in the Corporation's shares.
The Board of Directors believes that preemptive rights are
not a significant benefit to the Shareholders, and that any
benefit to shareholders of preemptive rights is outweighed by the
benefit to the shareholders of increased flexibility in financing
the operations of the Corporation.
Effect of Amendment:
After the proposed amendment is effective, the Corporation
will be able to issue shares of its authorized common stock to
any public or private investor, without first offering such stock
to the Corporation's current shareholders. If any such shares
are issued, present shareholders' ownership as a percentage of
the total outstanding stock would be diluted. Any such issuances
would be on such terms as determined by the Board of Directors in
its lawfully exercised discretion.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE APPROVAL OF PROPOSED AMENDMENT NUMBER 4 TO THE
CORPORATION'S ARTICLES OF INCORPORATION.
PROPOSED AMENDMENT NUMBER 5
The Board of Directors has approved, and proposes that the
Stockholders adopt, a new Article EIGHTH of the Corporation's
Articles of Incorporation to eliminate the right to cumulate
votes in the election of directors. The text of the proposed
amendment is set forth in Exhibit D.
Section 23B.07.280 of the Washington Business Corporation
Act provides that, unless a corporation's articles of
incorporation provide otherwise, the corporation's shareholders
are entitled to cumulate votes in the election of directors by
multiplying the number of votes they are entitled to cast by the
number of directors for whom they are entitled to vote and to
cast the product for a single candidate or distribute the product
among two or more candidates. As a corollary to this rule,
directors may not be removed by the shareholders if a number of
votes sufficient to elect that director under cumulative voting
is cast against the director's removal. Because the
Corporation's Articles of Incorporation are now silent on the
subject of cumulative voting, the Corporation's shareholders
currently possess the ability to cumulate votes in the election
of directors.
When cumulative voting for the election of directors
applies, a small minority shareholder or shareholders may be able
to elect a member to the Corporation's Board of Directors, over
the wishes of the majority, by casting all of his cumulated votes
for that individual. For example, if seven directors are elected
<PAGE>
annually, one or more stockholders holding more than 12.5% of the
voting power could elect a director. With conventional voting,
on the other hand, each director is elected by a simple majority
vote.
Reasons for Amendment:
The Board of Directors believes that cumulative voting
should be eliminated for certain reasons. First, one of the
principal effects of cumulative voting is to make it more likely
that an individual or group of individuals who own less than a
plurality of the voting stock would be able to obtain
representation on the Board of Directors. Such an individual or
group may have interests and goals which are not consistent with
and may be in conflict with those of a majority of the
shareholders. The Corporation's Board of Directors believes that
each Director should represent the interests of all the
shareholders, rather than the interests of any special
constituency, and that the presence on the Board of one or more
directors representing such a constituency could disrupt and
impair the efficient management of the Corporation. Second, if
cumulative voting were eliminated, minority shareholders would
not in the future be able to use cumulative voting as a coercive
device, such as by threatening to obtain representation on the
Board of Directors as a means of forcing the Corporation to
purchase their stock at a price above market or by otherwise
unduly influencing management.
Effect of Amendment:
The effect of the proposed amendment will be that the
holders of a majority of the Corporation's outstanding stock will
be able to elect all of the directors being elected at each
annual meeting of the Corporation. Further, the holders of a
majority of the Corporation's outstanding stock will also be able
to remove any director at a special meeting called for such
purpose. The Shareholders should be aware that the members of
the Corporation's Board of Directors currently own or control the
voting of a majority of the Corporation's outstanding common
stock.
While the Board of Directors does not consider the
elimination of cumulative voting to be an anti-takeover measure,
the elimination may have the effect of discouraging certain
purchases of the Corporation's stock because of the reduced
likelihood of obtaining board representation. Under certain
circumstances, the elimination might also render more difficult
or discourage a merger, tender offer or proxy contest, the
assumption of control by a holder of a large block of the
Corporation's stock or the removal of incumbent managers. The
Board of Directors is not currently aware of any accumulation of
its stock for the purpose of utilizing cumulative voting to
obtain board representation. Further, the Board of Directors is
not aware of the nomination of a candidate for the office of
director in opposition to management-nominated director
candidates at any time since the organization of the Corporation
in 1920.
<PAGE>
The Board is not aware of, and this proposal is not in
response to, any effort to invoke cumulative voting or to remove
any directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE APPROVAL OF PROPOSED AMENDMENT NUMBER 5 TO THE
CORPORATION'S ARTICLES OF INCORPORATION.
PROPOSED AMENDMENT NUMBER 6
The Board of Directors has approved, and proposes that the
Shareholders adopt, a new Article NINTH of the Corporation's
Articles of Incorporation to provide for amendment of the
Articles of Incorporation by the Shareholders. The text of the
proposed amendment is set forth in Exhibit D.
Currently, the Corporation's Articles of Incorporation
contain no provision governing the amendment of the Articles of
Incorporation. Under Section 23B.10.030(5) of the Washington
Business Corporation Act, in the case of a "public company," the
Articles may be amended by the affirmative vote of a majority of
the shares entitled to vote. A public company is defined in
Section 23B.01.400(21) of the Washington Business Corporation Act
to include a company which has a class of shares registered with
the federal Securities and Exchange Commission pursuant to
Section 12 of the Securities Exchange Act of 1934 or any
successor statute, and which has more that 300 shareholders.
Currently, the Corporation has more than 300 shareholders and
thus is a "public company" for this purpose. Accordingly, the
Corporation's Articles of Incorporation may be amended by holders
of a majority of the outstanding stock under the statute.
The proposed amendment incorporates the same approval
standard for amendments to the Articles of Incorporation as
currently applies pursuant to Washington law.
Reasons for Amendment:
The Board of Directors believes that a matter as important
to the Corporation as the procedure for amending its Articles of
Incorporation should be specified in the Articles of
Incorporation, rather than being left to the vagaries of state
law, which is subject to change at any time. In addition, should
the Corporation have 300 or fewer shareholders at any time,
Section 23B.10.030(5) of the Washington Business Corporation Act
would provide that amendments to the Articles of Incorporation
must have the approval of 2/3 of the outstanding stock for
approval. The Washington Business Corporation Act does, however,
permit the articles of incorporation to specify that the articles
may be amended by holders of a majority of outstanding voting
stock regardless whether the corporation is public or not. The
Board of Directors believes that a simple majority is the
appropriate standard regardless of the number of the
Corporation's shareholders.
Effect of Amendment:
The effect of the proposed amendment is that the holders of
a majority of the Corporation's outstanding stock will be able to
<PAGE>
amend the Corporation's Articles of Incorporation at any annual
or special meeting of Shareholders, regardless of the then
current number of such Shareholders. Since Russell C. Best,
President and Chief Executive Officer of the Corporation,
currently owns beneficially approximately 66% of the outstanding
shares of Common Stock of the Corporation, the amendment would
not have the effect of enhancing the ability of the incumbent
Board of Directors or management to amend the Articles of
Incorporation, even if the Corporation were not a public company
under the Washington Business Corporation Act. The Board of
Directors does not intend the proposed amendment as an anti-
takeover measure. No such amendments are currently under
consideration.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE APPROVAL OF PROPOSED AMENDMENT NUMBER 6 TO THE
CORPORATION'S ARTICLES OF INCORPORATION.
PROPOSED AMENDMENT TO CORPORATION'S BYLAWS
The Board of Directors has approved, and proposes that the
Shareholders adopt, an amendment to the Corporation's Bylaws to
permit the Board of Directors to amend, repeal or make new Bylaws
for the Corporation, in addition to the shareholders' power to do
the same. The text of the proposed amendment is set forth in
Exhibit D.
Section 23B. 10.200 of the Washington Business Corporation
Act provides that a corporation's board of directors may amend or
repeal a corporation's bylaws, or adopt new bylaws, unless (a)
the articles of incorporation or the Washington Business
Corporation Act reserve such power exclusively to the
shareholders; or (b) the shareholders, in amending or repealing a
particular bylaw, provide expressly that the board of directors
may not amend or repeal that bylaw. The same section further
provides that a corporation's shareholders may also amend or
repeal the corporation's bylaws, or adopt new bylaws, even though
the board of directors also has such powers.
Article VII of the Corporation's Bylaws currently indicates
that the Board of Directors may adopt additional bylaws in
harmony with the Corporation's Bylaws, but may not alter or
repeal any bylaws adopted by the shareholders of the Corporation.
(The majority of the Corporation's Bylaws have been adopted by
the shareholders.) Given the provisions of Washington law
described above, it is not entirely clear that this limitation
upon the Board of Directors' power to amend the Bylaws is legally
valid.
The proposed amendment clarifies the Board of Directors'
power to amend the Bylaws by essentially restating current
Washington law. Under the amendment, the Board of Directors may
amend or repeal any bylaw unless, in adopting that bylaw, the
shareholders expressly provide that it shall not be amended or
repealed by the Board of Directors. The amendment also makes
clear that the shareholders have the ultimate power to make the
Corporation's Bylaws.
Reasons for Amendment:
<PAGE>
The Board of Directors believes that it is in the
shareholders' interest that the Board be in a position to adopt,
amend or repeal the Bylaws whenever such action becomes desirable
for the benefit of the Corporation and its Shareholders, without
the necessity and expense of obtaining shareholder approval at an
annual or special shareholders meeting. The Bylaws generally
pertain to matters of internal corporate governance within the
particular competence of the Board of Directors and management of
the Corporation.
Effect of Amendment:
The effect of the proposed amendment will be that the
Corporation's Board of Directors will have the power, subject to
the subsequent review and potential amendment by the
Shareholders, to make or amend the Bylaws without prior
Shareholder approval.
The amendment is not intended to have any anti-takeover
effect. Since Russell C. Best, Chairman of the Board, President
and Chief Executive Officer of the Corporation, currently
beneficially owns approximately 66% of the outstanding Common
Stock of the Corporation, he currently effectively has the power
to cause the amendment, repeal or making of the Bylaws.
The amendment does not deprive or limit in any way the power
and entitlement which the Corporation's shareholders now have to
adopt, amend or repeal the bylaws.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE APPROVAL OF THE PROPOSED AMENDMENT TO THE CORPORATION'S
BYLAWS.
VOTE REQUIRED TO APPROVE MATTERS
A quorum for the meeting requires the presence in person or
by proxy of holders of a majority of the outstanding shares of
the common stock of the Corporation. Votes cast by proxy or in
person at the meeting will be tabulated by the inspector(s) of
election appointed for the meeting. Abstentions, "broker non-
votes" (i.e., where brokers or nominees indicate that such
persons have not received instructions from the beneficial owner
or other person entitled to vote shares as to a matter with
respect to which the brokers or nominees do not have
discretionary power to vote) and votes withheld will be treated
as present for purposes of determining the presence of a quorum.
Brokers that do not receive instructions are entitled to vote on
the election of directors and the ratification of appointment of
auditors. With respect to the Reincorporation Proposal, no
broker may vote shares held for beneficial owners or other
persons entitled to vote without specific instructions from such
persons.
The election of each director requires a plurality of the
votes cast. Votes withheld will be deemed not to have been cast.
Pursuant to Washington Law, shareholders are currently entitled
to cumulate votes in the election of directors by multiplying the
<PAGE>
number of votes they are entitled to cast by the number of
directors for whom they are entitled to vote and to cast the
product for a single candidate or distribute the product among
two or more candidates. If, however, Proposal Number 1 which
would permit the reincorporation of the Corporation in Delaware
is approved by the requisite vote of shareholders or, in the
alternative, Proposal Number 6 to amend the articles of
incorporation to eliminate cumulative voting is approved by the
requisite vote of shareholders, thereby eliminating cumulative
voting upon the effectiveness of the Merger or the amendment to
the articles, as the case may be, the Corporation intends to file
Articles of Merger with the Washington Secretary of State and the
Delaware Secretary of State or articles of amendment with the
Washington Secretary of State promptly.
The approval of the Merger Agreement and Reincorporation
Proposal requires the affirmative vote of the holders of shares
representing two-thirds of the shares outstanding on the record
date.
The approval of the proposed amendments to the Articles of
Incorporation and Bylaws requires the affirmative vote of the
holders of shares representing a majority of the shares
outstanding on the record date.
Russell C. Best, Chairman of the Board, President and Chief
Executive Officer of the Corporation, currently beneficially owns
approximately 66% of the outstanding Common Stock of the
Corporation and intends to vote his shares in favor of the
Reincorporation Proposal or, if the Reincorporation Proposal is
not approved, the proposed amendments to the Articles. With
respect to such proposals, amendments, abstentions and broker
non-votes will have the same effect as a vote against the
proposal.
The ratification of the appointment of the auditors requires
the affirmative vote of a majority of the shares present in
person and entitled to vote at the annual meeting.
OTHER BUSINESS
As of the date of this Information Statement, the Board of
Directors knows of no other business which will be presented for
consideration at the meeting.
AVAILABILITY OF 10-K REPORT
Copies of the 1994 Annual Report on Form 10-K will be
forwarded without charge to security holders as of the record
date upon written request to the Secretary.
By Order of the Board of Directors,
<PAGE>
Gregg A. Dykstra, Secretary
P.O. Box 50444
Indianapolis, Indiana 46250
<PAGE>
EXHIBITS TO INFORMATION STATEMENT
Exhibit A Merger Agreement
Exhibit B Certificate of Incorporation
Exhibit C Delaware Bylaws
Exhibit D Amendment to Articles and Bylaws
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
FRANK E. BEST, INC.
Parties:
THIS AGREEMENT AND PLAN OF MERGER ("Merger Agreement") is
entered into by and between Frank E. Best, Inc., a Washington
corporation ("Best-Washington") and Frank E. Best, Inc., a
Delaware corporation ("Best-Delaware").
Recitals:
1. Best-Washington is a corporation duly organized and
existing under the laws of the State of Washington.
2. Best-Delaware is a corporation duly organized and
existing under the laws of the State of Delaware.
3. On the date of this Merger Agreement, Best-Washington's
authorized capital consists of 600,000 shares of capital stock,
par value $1.00 per share (the "Best-Washington Common Stock"),
of which 598,710 shares are issued and outstanding.
4. On the date of this Merger Agreement, Best-Delaware's
authorized capital consists of 600,000 shares of Common Stock,
par value $1.00 per share (the "Best-Delaware Common Stock"), of
which 10 shares are issued and outstanding and owned by Best-
Washington.
5. The respective Boards of Directors of Best-Washington
and Best-Delaware have determined that it is advisable and in the
best interests of each such corporation that Best-Washington
merge with and into Best-Delaware upon the terms and subject to
the conditions of this Merger Agreement for the purpose of
effecting the reincorporation of Best-Washington in the State of
Delaware.
6. The respective Boards of Directors of Best-Washington
and Best-Delaware have approved and adopted this Merger
Agreement. Best-Washington has adopted this Merger Agreement as
the sole stockholder of Best-Delaware and the Board of Directors
of Best-Washington has directed that this Merger Agreement be
submitted to a vote of its shareholders. The affirmative vote of
the holders of two-thirds of the shares of Best-Washington Common
Stock outstanding must approve this Merger Agreement for the
merger to become effective.
7. The parties intend by this Merger Agreement to effect a
"reorganization" under Section 368 of the Internal Revenue Code
of 1986, as amended.
Terms and Provisions:
In consideration of the foregoing recitals and of the
following terms and provisions, and subject to the following
conditions, it is agreed:
<PAGE>
1. Merger. At the Effective Time (as defined in this
Section 1), Best-Washington shall be merged with and into Best-
Delaware (the "Merger"). Best-Delaware shall be the surviving
corporation of the Merger (hereinafter sometimes referred to as
the "Surviving Corporation") and the separate corporate existence
of Best-Washington shall cease. The Merger shall become
effective upon the filing of a Certificate of Merger with the
Secretary of State of the State of Delaware. The date and time
when the Merger shall become effective is herein referred to as
the "Effective Time."
2. Governing Documents.
a. The Certificate of Incorporation of Best-Delaware
as it may be amended or restated subject to applicable law, as in
effect immediately prior to the Effective Time, shall constitute
the Certificate of Incorporation of the Surviving Corporation
without further change or amendment until thereafter amended in
accordance with the provisions thereof and applicable law.
b. The Bylaws of Best-Delaware as in effect
immediately prior to the Effective Time shall constitute the
Bylaws of the Surviving Corporation without change or amendment
until thereafter amended in accordance with the provisions
thereof and applicable law.
3. Officers and Directors. The persons who are officers
and directors of Best-Washington immediately prior to the
Effective Time shall, after the Effective Time, be the officers
and directors of the Surviving Corporation, without change until
their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws and applicable law.
4. Name. The name of the Surviving Corporation shall
continue to be Frank E. Best, Inc.
5. Succession. At the Effective Time, the separate
corporate existence of Best-Washington shall cease, and the
Surviving Corporation shall possess all the rights, privileges,
powers and franchises of a public or private nature and be
subject to all the restrictions, disabilities and duties of Best-
Washington and all the rights, privileges, powers and franchises
of Best-Washington, and all property, real, personal and mixed,
and all debts due to Best-Washington on whatever account, as well
for share subscriptions and all other things in action, shall be
vested in the Surviving Corporation; and all property, rights,
privileges, powers and franchises, and all and every other
interest shall be thereafter as effectively the property of the
Surviving Corporation as the same were of Best-Washington, and
the title to any real estate vested by deed or otherwise shall
not revert or be in any way impaired by reason of the Merger, but
all rights of creditors and liens upon any property of Best-
Washington shall be preserved unimpaired, and all debts,
liabilities and duties of Best-Washington shall thenceforth
attach to the Surviving Corporation and may be enforced against
it to the same extent as if such debts, liabilities and duties
had been incurred or contracted by it; provided, however, that
<PAGE>
such liens upon property of Best-Washington will be limited to
the property affected thereby immediately prior to the Merger.
All corporate acts, plans, policies, agreements, arrangements,
approvals and authorizations of Best-Washington, its
shareholders, Board of Directors and committees thereof, officers
and agents which were valid and effective immediately prior to
the Effective Time, shall be taken for all purposes as the acts,
plans, policies, agreements, arrangements, approvals and
authorizations of the Surviving Corporation, its stockholders,
Board of Directors and committees thereof, respectively, and
shall be as effective and binding thereon as the same were with
respect to Best-Washington.
6. Conversion of Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder
thereof:
a. Each share of Best-Washington Common Stock
outstanding immediately prior to the Effective Time shall be
converted into, and shall become, one fully paid and
nonassessable share of Best-Delaware Common Stock.
b. The 10 shares of Best-Delaware Common Stock issued
and outstanding in the name of Best-Washington shall be cancelled
and retired, and no payment shall be made with respect thereto,
and such shares shall resume the status of unauthorized and
unissued shares of Best-Delaware Common Stock.
7. Stock Certificates. At and after the Effective Time,
all of the outstanding certificates which immediately prior to
the Effective Time represented shares of Best-Washington Common
Stock shall be deemed for all purposes to evidence ownership of,
and to represent shares of, Best-Delaware Common Stock into which
the shares of Best-Washington Common Stock formerly represented
by such certificates have been converted as herein provided. The
registered owner on the books and records of Best-Washington or
its transfer agent of any such outstanding stock certificate
shall, until such certificate shall have been surrendered for
transfer or otherwise accounted for to the Surviving Corporation
or its transfer agent, have and be entitled to exercise any
voting or other rights with respect to and to receive any
dividends and other distributions upon the shares of Best-
Delaware Common Stock evidenced by such outstanding certificate
as above provided. Nothing contained herein shall be deemed to
require the holder of any shares of Best-Washington Common Stock
to surrender the certificate or certificates representing such
shares in exchange for a certificate or certificates representing
shares of Best-Delaware Common Stock.
8. Other Employee Benefit Plans. As of the Effective
Time, the Surviving Corporation hereby assumes all obligations of
Best-Washington under any and all employee benefit plans in
effect as of the Effective Time or with respect to which employee
rights or accrued benefits are outstanding as of the Effective
Time.
9. Conditions. The consummation of the Merger is subject
to satisfaction of the following conditions prior to the
Effective Time.
<PAGE>
a. The Merger shall have received the requisite
approval of the holders of Best-Washington Common Stock and all
necessary action shall have been taken to authorize the
execution, delivery and performance of the Merger Agreement by
Best-Washington and Best-Delaware.
b. All approvals and consents necessary or desirable,
if any, in connection with the consummation of the Merger shall
have been obtained.
c. No suit, action, proceeding or other litigation
shall have been commenced or threatened to be commenced which, in
the opinion of Best-Washington or Best-Delaware, would pose a
material restriction on or impair consummation of the Merger,
performance of this Merger Agreement or the conduct of the
business of Best-Delaware after the Effective Time, or create a
risk of subjecting Best-Washington or Best-Delaware, or their
respective shareholders, officers or directors, to material
damages, costs, liability or other relief in connection with the
Merger or this Merger Agreement.
10. Governing Law. This Merger Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware applicable to contracts entered into and to be performed
wholly within the State of Delaware, except to the extent that
the laws of the State of Washington are mandatorily applicable to
the Merger.
11. Amendment. Subject to applicable law and subject to
the rights of Best-Washington's shareholders further to approve
any amendment which would have a material adverse effect on such
shareholders, this Merger Agreement may be amended, modified or
supplemented by written agreement of the parties hereto at any
time prior to the Effective Time with respect to any of the terms
contained herein.
12. Deferral or Abandonment. At any time prior to the
Effective Time, this Merger Agreement may be terminated and the
Merger may be abandoned or the time of consummation of the Merger
may be deferred for a reasonable time by the Board of Directors
of either Best-Washington or Best-Delaware or both,
notwithstanding approval of this Merger Agreement by the
shareholders of Best-Washington or the stockholders of Best-
Delaware or both, if circumstances arise which, in the opinion of
the Board of Directors of Best-Washington or Best-Delaware, make
the Merger inadvisable or such deferral of the time of
consummation thereof advisable.
13. Counterparts. This Merger Agreement may be executed in
any number of counterparts each of which when taken alone shall
constitute an original instrument and when taken together shall
constitute one and the same Agreement.
14. Further Assurances. From time to time, as and when
required or requested by either Best-Washington or Best-Delaware,
as applicable, or by its respective successors and assigns, there
shall be executed and delivered on behalf of the other
corporation, or by its respective successors and assigns, such
deeds, assignments and other instruments, and there shall be
taken or caused to be taken by it all such further and other
<PAGE>
action, as shall be appropriate or necessary in order to vest,
perfect or confirm, of record or otherwise, in the Surviving
Corporation the title to and possession of all property,
interests, assets, rights, privileges, immunities, powers,
franchise and authority of Best-Washington and otherwise to carry
out the purposes of this Merger Agreement, and the officers and
directors of each corporation are fully authorized in the name
and on behalf of such corporation or otherwise, to take any and
all such action and to execute and deliver any and all such
deeds, assignments and other instruments.
IN WITNESS WHEREOF, Best-Washington and Best-Delaware have
caused this Merger Agreement to be signed by their respective
duly authorized officers and delivered this ____ day of
__________, 1995.
FRANK E. BEST INC.,
a Washington corporation
By: ________________________
Title: ______________
ATTEST:
By: ___________________________
Title: _________________
FRANK E. BEST, INC.,
a Delaware corporation
By: ________________________
Title:
_______________
ATTEST:
By: _________________________
Title: _______________
<PAGE>
EXHIBIT B
CERTIFICATE OF INCORPORATION OF
FRANK E. BEST, INC.
ARTICLE I
The name of this corporation is Frank E. Best, Inc.
ARTICLE II
The address of the registered office of the Corporation in
the State of Delaware is 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered
agent at such address if The Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law
of Delaware.
ARTICLE IV
The Corporation shall have one class of stock, namely common
capital stock and shall have authority to issue 600,000 shares of
Common Stock, par value $1.00 per share.
ARTICLE V
The name and mailing address of the incorporator is Gregg A.
Dykstra, 6161 E. 75th Street, Indianapolis, Indiana 46250
ARTICLE VI
The Board of Directors is expressly authorized to make,
repeal, alter, amend and rescind any or all of the Bylaws of the
Corporation.
ARTICLE VII
No director shall be personally liable to the corporation or
its stockholders for monetary damages for breach of fiduciary
duty as a director, provided, however, that this Article VII
shall not limit or eliminate the liability of a director, to the
extent provided by applicable law: (i) for any breach of the duty
of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal
benefit. It is the intention of this Article VII to eliminate
the liability of the corporation's directors to the corporation
or its stockholders to the fullest extent permitted by Section
102(b)(7) of the Delaware General Corporation Law (or any
successor provision).
<PAGE>
Any repeal or modification of the foregoing provisions of
this Article VII by the stockholders of the Corporation shall not
adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
ARTICLE VIII
The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned has signed this
Certificate this ____ day of __________________, 1995.
_________________________
<PAGE>
EXHIBIT C
BYLAWS
OF
FRANK E. BEST, INC.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE l. OFFICES . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2. SHAREHOLDERS . . . . . . . . . . . . . . . . 1
2.1 Annual Meeting . . . . . . . . . . . . . . . . 1
2.2 Special Meetings . . . . . . . . . . . . . . . 1
2.3 Meetings by Communication Equipment . . . . . 1
2.4 Date, Time and Place of Meeting . . . . . . . 1
2.5 Notice of Meeting . . . . . . . . . . . . . . 2
2.6 Waiver of Notice . . . . . . . . . . . . . . . 2
2.7 Fixing of Record Date for Determining
Shareholders . . . . . . . . . . . . . . . . . 2
2.8 Voting Record . . . . . . . . . . . . . . . . 3
2.9 Quorum . . . . . . . . . . . . . . . . . . . . 3
2.10 Manner of Acting . . . . . . . . . . . . . . . 3
2.11 Proxies . . . . . . . . . . . . . . . . . . . 4
2.12 Voting of Shares . . . . . . . . . . . . . . . 4
2.13 Voting for Directors . . . . . . . . . . . . . 4
2.14 Action by Shareholders Without a Meeting . . . 4
ARTICLE 3. BOARD OF DIRECTORS . . . . . . . . . . . . . 5
3.1 General Powers . . . . . . . . . . . . . . . . 5
3.2 Number and Tenure . . . . . . . . . . . . . . 5
3.3 Chairman of the Board . . . . . . . . . . . . 5
3.4 Annual and Regular Meetings . . . . . . . . . 6
3.5 Special Meetings . . . . . . . . . . . . . . . 6
3.6 Meetings by Communications Equipment . . . . . 6
3.7 Notice of Special Meetings . . . . . . . . . . 6
3.7.1 Personal Delivery . . . . . . . . . 6
3.7.2 Delivery by Mail . . . . . . . . . . 7
3.7.3 Delivery by Private Carrier . . . . 7
3.7.4 Facsimile Notice . . . . . . . . . . 7
3.7.5 Oral Notice . . . . . . . . . . . . 7
3.8 Waiver of Notice . . . . . . . . . . . . . . . 7
3.8.1 In Writing . . . . . . . . . . . . . 7
3.8.2 By Attendance . . . . . . . . . . . 7
3.9 Quorum . . . . . . . . . . . . . . . . . . . . 8
3.10 Manner of Acting . . . . . . . . . . . . . . . 8
3.11 Presumption of Assent . . . . . . . . . . . . 8
3.12 Action by Board or Committees Without a
Meeting . . . . . . . . . . . . . . . . . . . 8
3.13 Resignation . . . . . . . . . . . . . . . . . 9
3.14 Removal . . . . . . . . . . . . . . . . . . . 9
3.15 Vacancies . . . . . . . . . . . . . . . . . . 9
3.16 Executive and Other Committees . . . . . . . . 9
3.16.1 Creation of Committees . . . . . . . . 9
3.16.2 Authority of Committees . . . . . . . . 9
3.16.3 Quorum and Manner of Acting . . . . . . 10
3.16.4 Minutes of Meetings . . . . . . . . . . 10
3.16.5 Resignation . . . . . . . . . . . . . . 10
3.16.6 Removal . . . . . . . . . . . . . . . . 10
3.17 Compensation . . . . . . . . . . . . . . . . . 10
ARTICLE 4. OFFICERS . . . . . . . . . . . . . . . . . . 11
4.1 Appointment and Term . . . . . . . . . . . . . 11
4.2 Resignation . . . . . . . . . . . . . . . . . 11
4.3 Removal . . . . . . . . . . . . . . . . . . . 11
4.4 Contract Rights of Officers . . . . . . . . . 11
<PAGE>
4.5 Chief Executive Officer . . . . . . . . . . . 11
4.6 President . . . . . . . . . . . . . . . . . . 12
4.7 Vice President . . . . . . . . . . . . . . . . 12
4.8 Secretary. . . . . . . . . . . . . . . . . . . 12
4.9 Treasurer . . . . . . . . . . . . . . . . . . 12
4.10 General Counsel . . . . . . . . . . . . . . . 13
4.11 Salaries and Other Compensation . . . . . . . 13
ARTICLE 5. CONTRACTS, LOANS, CHECKS AND DEPOSITS . . . . 13
5.1 Contracts . . . . . . . . . . . . . . . . . . 13
5.2 Loans to the Corporation . . . . . . . . . . . 13
5.3 Checks and Drafts . . . . . . . . . . . . . . 13
5.4 Deposits . . . . . . . . . . . . . . . . . . . 14
ARTICLE 6. CERTIFICATES FOR SHARES AND THEIR TRANSFER . 14
6.1 Issuance of Shares . . . . . . . . . . . . . . 14
6.2 Certificates for Shares . . . . . . . . . . . 14
6.3 Stock Records . . . . . . . . . . . . . . . . 14
6.4 Transfer of Shares . . . . . . . . . . . . . . 14
6.5 Lost or Destroyed Certificates . . . . . . . . 15
ARTICLE 7. BOOKS AND RECORDS . . . . . . . . . . . . . . 15
ARTICLE 8. ACCOUNTING YEAR . . . . . . . . . . . . . . . 16
ARTICLE 9. SEAL . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 10. INDEMNIFICATION . . . . . . . . . . . . . . 16
10.1 Right to Indemnification . . . . . . . . . . . 16
10.2 Prepayment of Expenses . . . . . . . . . . . . 17
10.3 Claims . . . . . . . . . . . . . . . . . . . . 17
10.4 Non-Exclusivity of Rights . . . . . . . . . . 17
10.5 Other Indemnification . . . . . . . . . . . . 17
10.6 Amendment or Repeal . . . . . . . . . . . . . 17
ARTICLE 11. INTERESTED DIRECTOR CONTRACTS AND
TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 12. AMENDMENTS . . . . . . . . . . . . . . . . 18
<PAGE>
BYLAWS
OF
FRANK E. BEST, INC.
ARTICLE l. OFFICES
The principal office of the corporation shall be located at
the principal place of business or such other place as the Board
of Directors ("Board") may designate. The corporation may have
such other offices, either within or without the State of
Delaware, as the Board may designate or as the business of the
corporation may require from time to time.
ARTICLE 2. SHAREHOLDERS
2.1 Annual Meeting.
The annual meeting of the shareholders shall be held on the
fourth Saturday in June of each year at the principal office of
the Corporation or at such other location as the Board may
designate, at a time to be determined by the Board, for the
purpose of electing Directors and transacting such other business
as may properly come before the meeting.
2.2 Special Meetings.
The Chairman of the Board, the President or the Board may
call special meetings of the shareholders for any purpose.
Further, a special meeting of the shareholders shall be held if
the holders of not less than 50% of all the votes entitled to be
cast on any issue proposed to be considered at such special
meeting have dated, signed and delivered to the Secretary one or
more written demands for such meeting, describing the purpose or
purposes for which it is to be held.
2.3 Meetings by Communication Equipment.
Shareholders may participate in any meeting of the
shareholders by any means of communication by which all persons
participating in the meeting can hear each other during the
meeting. Participation by such means shall constitute presence in
person at a meeting.
2.4 Date, Time and Place of Meeting.
Except as otherwise provided herein, all meetings of
shareholders, including those held pursuant to demand by
shareholders as provided herein, shall be held on such date and
at such time and place, within or without the State of Delaware,
designated by or at the direction of the Board.
<PAGE>
2.5 Notice of Meeting.
Written notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called shall be given by or at
the direction of the Board, the Chairman of the Board, the
President or the Secretary to each shareholder entitled to notice
of or to vote at the meeting not less than 10 nor more than 60
days before the meeting. Such notice may be transmitted by mail,
private carrier, personal delivery or communications equipment
which transmits a facsimile of the notice to like equipment which
receives and reproduces such notice. If such notice is mailed, it
shall be deemed effective when deposited in the official
government mail, first-class postage prepaid, properly addressed
to the shareholder at such shareholder's address as it appears in
the corporation's current record of shareholders. Notice given in
any other manner shall be deemed effective when dispatched to the
shareholder's address, telephone number or other number appearing
on the records of the corporation.
2.6 Waiver of Notice.
Whenever any notice is required to be given to any
shareholder under the provisions of these Bylaws, the Certificate
of Incorporation or the Delaware General Corporation Law, a
waiver thereof in writing, signed by the person or persons
entitled to such notice and delivered to the corporation, whether
before or after the date and time of the meeting, shall be deemed
equivalent to the giving of such notice. Further, notice of the
time, place and purpose of any meeting will be deemed to be
waived by any shareholder by attendance thereat in person or by
proxy, unless such shareholder at the beginning of the meeting
objects to holding the meeting or transacting business at the
meeting.
2.7 Fixing of Record Date for Determining Shareholders.
For the purpose of determining shareholders entitled (a) to
notice of or to vote at any meeting of shareholders or any
adjournment thereof, (b) to demand a special meeting, or (c) to
receive payment of any dividend, or in order to make a
determination of shareholders for any other purpose, the Board
may fix a future date as the record date for any such
determination. Such record date shall be not more than 60 days,
and in case of a meeting of shareholders not less than 10 days
prior to the date on which the particular action requiring such
determination is to be taken. If no record date is fixed for the
determination of shareholders entitled to notice of or to vote at
a meeting, the record date shall be the day immediately preceding
the date on which notice of the meeting is first given to
shareholders. Such a determination shall apply to any adjournment
of the meeting unless the Board fixes a new record date. If no
record date is set for the determination of shareholders entitled
to receive payment of any dividend or other distribution or
allotment of any rights or the shareholders entitled to exercise
any rights in respect of any change, conversion or exchange of
<PAGE>
stock, the record date shall be the date the Board adopted the
resolution relating thereto or authorized such action.
2.8 Voting Record.
At least 10 days before each meeting of shareholders, an
alphabetical list of the shareholders entitled to notice of such
meeting shall be made, with the address of and number of shares
held by each shareholder. This record shall be kept at the
principal office of the corporation for 10 days prior to such
meeting, and shall be kept open at such meeting, for the
inspection of any shareholder or any shareholder's agent.
2.9 Quorum.
A majority of the votes entitled to be cast on a matter by
the holders of shares that, pursuant to the Certificate of
Incorporation or the Delaware General Corporation Law, are
entitled to vote and be counted collectively upon such matter,
represented in person or by proxy, shall constitute a quorum of
such shares at a meeting of shareholders. If less than a majority
of such votes are represented at a meeting, a majority of the
votes so represented may adjourn the meeting from time to time
without further notice if the new date, time or place is
announced at the meeting before adjournment. Any business may be
transacted at a reconvened meeting that might have been
transacted at the meeting as originally called, provided a quorum
is present or represented thereat. Once a share is represented
for any purpose at a meeting other than solely to object to
holding the meeting or transacting business thereat, it is deemed
present for quorum purposes for the remainder of the meeting and
any adjournment thereof (unless a new record date is or must be
set for the adjourned meeting) notwithstanding the withdrawal of
enough shareholders to leave less than a quorum.
2.10 Manner of Acting.
If a quorum is present, action on a matter shall be approved
if the votes cast in favor of the action by the shares entitled
to vote and be counted collectively upon such matter exceed the
votes cast against such action by the shares entitled to vote and
be counted collectively thereon, unless the Certificate of
Incorporation or the Delaware General Corporation Law requires a
greater number of affirmative votes.
2.11 Proxies.
A shareholder may vote by proxy executed in writing by the
shareholder or by his or her attorney-in-fact or agent. Such
proxy shall be effective when received by the Secretary or other
officer or agent authorized to tabulate votes. A proxy shall
become invalid 3 years after the date of its execution, unless
otherwise provided in the proxy. A proxy with respect to a
specified meeting shall entitle the holder thereof to vote at any
reconvened meeting following adjournment of such meeting but
shall not be valid after the final adjournment thereof.
<PAGE>
2.12 Voting of Shares.
Except as otherwise provided in the Certificate of
Incorporation, each outstanding share entitled to vote with
respect to a matter submitted to a meeting of shareholders shall
be entitled to one vote upon such matter.
2.13 Voting for Directors.
Each shareholder entitled to vote at an election of
Directors may vote, in person or by proxy, the number of shares
owned by such shareholder for as many persons as there are
Directors to be elected and for whose election such shareholder
has a right to vote. Unless otherwise provided in the Certificate
of Incorporation, the candidates elected shall be those receiving
the largest number of votes cast, up to the number of Directors
to be elected. Cumulative voting for Directors is prohibited.
2.14 Action by Shareholders Without a Meeting.
Any action which could be taken at a meeting of the
shareholders may be taken without a meeting if one or more
written consents setting forth the action so taken are signed by
the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon
were present and voted and delivered to the corporation. If not
otherwise fixed by the Board, the record date for determining
shareholders entitled to take action without a meeting is the
first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the
corporation. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required
by this chapter, the record date for determining shareholders
entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior
action. Action taken by written consent of shareholders without a
meeting is effective when all required consents are in the
possession of the corporation, unless the consent specifies a
later effective date. Any such consent shall be inserted in the
minute book as if it were the minutes of a meeting of the
shareholders. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be
given to those shareholders or members, as the case may be, who
have not consented in writing.
ARTICLE 3. BOARD OF DIRECTORS
3.1 General Powers.
All corporate powers shall be exercised by or under the
authority of, and the business and affairs of the corporation
shall be managed under the direction of, the Board, except as may
be otherwise provided in these Bylaws, the Certificate of
Incorporation or the Delaware General Corporation Law.
<PAGE>
3.2 Number and Tenure.
The Board shall be composed of five Directors. The number of
Directors may be changed from time to time by amendment to these
Bylaws, but no decrease in the number of Directors shall have the
effect of shortening the term of any incumbent Director. Unless a
Director dies, resigns, or is removed, his or her term of office
shall expire at the next annual meeting of shareholders;
provided, however, that a Director shall continue to serve until
his or her successor is elected and qualified or until there is a
decrease in the authorized number of Directors. Directors need
not be shareholders of the corporation or residents of the State
of Delaware and need not meet any other qualifications.
3.3 Chairman of the Board.
The Board shall elect a director as chairman, which director
shall be known as the Chairman of the Board. The Chairman of the
Board shall preside at all meetings of the Board, and in
addition, shall perform the following functions:
a. general planning and management of all functions
of the Board of Directors;
b. organization of Board committees and assignments
thereto;
c. recruitment and nomination of additional or
successor directors;
d. determining the agenda for all Board meetings; and
e. development of Board members as appropriate for
effectiveness on behalf of shareholders.
The Chairman of the Board shall serve for a term of one (1) year
and shall be elected at the annual meeting; provided, however,
that the initial Chairman of the Board shall be elected by
Written Consent of the Board of Directors and shall serve until
the next ensuing annual meeting.
3.4 Annual and Regular Meetings.
An annual Board meeting shall be held without notice
immediately after and at the same place as the annual meeting of
shareholders. By resolution, the Board, or any committee thereof,
may specify the time and place either within or without the State
of Delaware for holding other regular meetings thereof without
notice other than such resolution.
3.5 Special Meetings.
Special meetings of the Board or any committee designated by
the Board may be called by or at the request of the Chairman of
the Board, the President, or, in the case of special Board
meetings, any three Directors and, in the case of any special
meeting of any committee designated by the Board, by the Chairman
thereof. The person or persons authorized to call special
meetings may fix any place either within or without the State of
Delaware as the place for holding any special Board or committee
meeting called by them.
<PAGE>
3.6 Meetings by Communications Equipment.
Members of the Board or any committee designated by the
Board may participate in a meeting of such Board or committee by,
or conduct the meeting through the use of, any means of
communication by which all Directors participating in the meeting
can hear each other during the meeting. Participation by such
means shall constitute presence in person at a meeting.
3.7 Notice of Special Meetings.
Notice of a special Board or committee meeting stating the
place, day and hour of the meeting shall be given to a Director
in writing or orally. Neither the business to be transacted at,
nor the purpose of, any special meeting need be specified in the
notice of such meeting.
3.7.1 Personal Delivery.
If notice is given by personal delivery, the notice shall be
effective if delivered to a Director at least two days before the
meeting.
3.7.2 Delivery by Mail.
If notice is delivered by mail, the notice shall be deemed
effective if deposited in the official government mail at least
five days before the meeting, properly addressed to a Director at
his or her address shown on the records of the corporation, with
postage thereon prepaid.
3.7.3 Delivery by Private Carrier.
If notice is given by private carrier, the notice shall be
deemed effective when dispatched to a Director at his or her
address shown on the records of the corporation at least three
days before the meeting.
3.7.4 Facsimile Notice.
If notice is delivered by wire or wireless equipment which
transmits a facsimile of the notice, the notice shall be deemed
effective when dispatched at least two days before the meeting to
a Director at his or her telephone number or other number
appearing on the records of the corporation.
3.7.5 Oral Notice.
If notice is delivered orally, by telephone or in person,
the notice shall be deemed effective if personally given to the
Director at least two days before the meeting.
<PAGE>
3.8 Waiver of Notice.
3.8.1 In Writing.
Whenever any notice is required to be given to any Director
under the provisions of these Bylaws, the Certificate of
Incorporation or the Delaware General Corporation Law, a waiver
thereof in writing, signed by the person or persons entitled to
such notice and delivered to the corporation, whether before or
after the date and time of the meeting, shall be deemed
equivalent to the giving of such notice. Neither the business to
be transacted at, nor the purpose of, any regular or special
meeting of the Board or any committee designated by the Board
need be specified in the waiver of notice of such meeting.
3.8.2 By Attendance.
A Director's attendance at or participation in a Board or
committee meeting shall constitute a waiver of notice of such
meeting, unless the Director at the beginning of the meeting, or
promptly upon his or her arrival, objects to holding the meeting
or transacting business thereat and does not thereafter vote for
or assent to action taken at the meeting.
3.9 Quorum.
A majority of the number of Directors fixed by or in the
manner provided in these Bylaws shall constitute a quorum for the
transaction of business at any Board meeting but, if less than a
majority are present at a meeting, a majority of the Directors
present may adjourn the meeting from time to time without further
notice.
3.10 Manner of Acting.
If a quorum is present when the vote is taken, the act of
the majority of the Directors present at a Board meeting shall be
the act of the Board, unless the vote of a greater number is
required by these Bylaws, the Certificate of Incorporation or the
Delaware General Corporation Law.
3.11 Presumption of Assent.
A Director of the corporation who is present at a Board or
committee meeting at which any action is taken shall be deemed to
have assented to the action taken unless (a) the Director objects
at the beginning of the meeting, or promptly upon the Director's
arrival, to holding the meeting or transacting any business
thereat, (b) the Director's dissent or abstention from the action
taken is entered in the minutes of the meeting, or (c) the
Director delivers written notice of the Director's dissent or
abstention to the presiding officer of the meeting before its
adjournment or to the corporation within a reasonable time after
adjournment of the meeting. The right of dissent or abstention is
not available to a Director who votes in favor of the action
taken.
<PAGE>
3.12 Action by Board or Committees Without a Meeting.
Any action which could be taken at a meeting of the Board or
of any committee created by the Board may be taken without a
meeting if one or more written consents setting forth the action
so taken are signed by each of the Directors or by each committee
member either before or after the action is taken and delivered
to the corporation. Action taken by written consent of Directors
without a meeting is effective when the last Director signs the
consent, unless the consent specifies a later effective date. Any
such written consent shall be inserted in the minute book as if
it were the minutes of a Board or a committee meeting.
3.13 Resignation.
Any Director may resign at any time by delivering written
notice to the Chairman of the Board, the President or the
Secretary. Any such resignation is effective upon delivery
thereof unless the notice of resignation specifies a later
effective date and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it
effective.
3.14 Removal.
At a meeting of shareholders called expressly for that
purpose, one or more members of the Board, including the entire
Board, may be removed with or without cause by the holders of a
majority of the shares then entitled to vote at an election of
Directors.
3.15 Vacancies.
Unless the Certificate of Incorporation provides otherwise,
any vacancy occurring on the Board may be filled by the
shareholders or the remaining numbers of the Board. A Director
elected to fill a vacancy shall serve only until the next
election of Directors by the shareholders.
3.16 Executive and Other Committees.
3.16.1 Creation of Committees.
The Board, by resolution adopted by a majority of the
members, may create standing or temporary committees, including
an Executive Committee, and appoint members thereto from its own
number and invest such committees with such powers as it may see
fit, subject to such conditions as may be prescribed by the
Board, these Bylaws and applicable law. Each committee must have
one or more members, who shall serve at the pleasure of the
Board.
<PAGE>
3.16.2 Authority of Committees.
Each committee shall have and may exercise all of the
authority of the Board to the extent provided in the resolution
of the Board creating the committee and any subsequent
resolutions pertaining thereto and adopted in like manner, except
that no such committee shall have the authority to: (1) adopt,
amend or repeal Bylaws, (2) amend the Certificate of
Incorporation, (3) adopt an agreement of merger or consolidation
under Sections 251, 252, 254, 255, 256, 257, 158, 263 or 264 of
the Delaware General Corporation Law, (4) recommend to the
shareholders the sale, lease, or exchange of all or substantially
all of the corporation's property or assets; or (5) recommend to
the shareholders a dissolution of the corporation or a revocation
of a dissolution.
3.16.3 Quorum and Manner of Acting.
A majority of the number of Directors composing any
committee of the Board, as established and fixed by resolution of
the Board, shall constitute a quorum for the transaction of
business at any meeting of such committee but, if less than a
majority are present at a meeting, a majority of such Directors
present may adjourn the meeting from time to time without further
notice. Except as may be otherwise provided in the Delaware
General Corporation Law, if a quorum is present when the vote is
taken, the act of a majority of the members present shall be the
act of the committee.
3.16.4 Minutes of Meetings.
All committees shall keep regular minutes of their meetings
and shall cause them to be recorded in books kept for that
purpose.
3.16.5 Resignation.
Any member of any committee may resign at any time by
delivering written notice thereof to the Chairman of the Board,
the President, the Secretary or the Board. Any such resignation
is effective upon delivery thereof, unless the notice of
resignation specifies a later effective date, and the acceptance
of such resignation shall not be necessary to make it effective.
3.16.6 Removal.
The Board may remove any member of any committee elected or
appointed by it but only by the affirmative vote of a majority of
the members.
3.17 Compensation.
By Board resolution, Directors and committee members may be
paid their expenses, if any, of attendance at each Board or
committee meeting, or a fixed sum for attendance at each Board or
committee meeting, or a stated salary as Director or a committee
<PAGE>
member, or a combination of the foregoing. No such payment shall
preclude any Director or committee member from serving the
corporation in any other capacity and receiving compensation
therefor.
ARTICLE 4. OFFICERS
4.1 Appointment and Term.
The officers of the corporation shall be a Chief Executive
Officer, a President, one or more Vice Presidents, a Secretary, a
Treasurer, a General Counsel, and any other officers appointed
from time to time by the Board or by any other officer empowered
to do so. The Board shall have sole power and authority to
appoint executive officers. As used herein, the term "executive
officer" shall mean the Chief Executive Officer, the President,
any Vice President in charge of a principal business unit,
division or function or any other officer who performs a policy-
making function. The Board or the President may appoint such
other officers and assistant officers to hold office for such
period, have such authority and perform such duties as may be
prescribed. The Board may delegate to any other officer the power
to appoint any subordinate officers and to prescribe their
respective terms of office, authority and duties. Any two or more
offices may be held by the same person. Unless an officer dies,
resigns or is removed from office, he or she shall hold office
until his or her successor is appointed.
4.2 Resignation.
Any officer may resign at any time by delivering written
notice thereof to the corporation. Any such resignation is
effective upon delivery thereof, unless the notice of resignation
specifies a later effective date; and, unless otherwise specified
therein, the acceptance of such resignation shall not be
necessary to make it effective.
4.3 Removal.
Any officer may be removed at any time, with or without
cause, by the Board or by a signed writing delivered to the
Secretary of the Corporation by the holders of a majority of the
Corporation's outstanding common stock. An officer or assistant
officer, if appointed by another officer, may be removed by any
officer authorized to appoint officers or assistant officers.
4.4 Contract Rights of Officers.
The appointment of an officer does not itself create
contract rights.
4.5 Chief Executive Officer.
The Chief Executive Officer shall perform such duties as
shall be assigned to him or her by the Board from time to time.
<PAGE>
4.6 President.
The President shall be the chief executive officer of the
corporation unless some other officer is so designated by the
Board, shall preside over meetings of the Board and shareholders
in the absence of a Chairman of the Board, and, subject to the
Board's control, shall supervise and control all of the assets,
business and affairs of the corporation. In general, the
President shall perform all duties incident to the office of
President and such other duties as are prescribed by the Board
from time to time. Unless the Board expressly directs otherwise,
the President shall have the duty and the authority to cast the
corporation's vote with respect to any shares of the stock or
securities of any other corporation or entity which are held by
the corporation. If no person is serving as Secretary, the
President shall have responsibility for the preparation of
minutes of meetings of the Board and shareholders and for
authentication of the records of the corporation.
4.7 Vice President.
In the event of the death of the President or his or her
inability to act, the Vice President (or if there is more than
one Vice President, the Vice President who was designated by the
Board as the successor to the President, or if no Vice President
is so designated, the Vice President first elected to such
office) shall perform the duties of the President, except as may
be limited by resolution of the Board, with all the powers of and
subject to all the restrictions upon the President. Vice
Presidents shall perform such other duties as from time to time
may be assigned to them by the President or by or at the
direction of the Board.
4.8 Secretary.
The Secretary shall be responsible for preparation of
minutes of the meetings of the Board and shareholders,
maintenance of the corporation's records and stock registers, and
authentication of the corporation's records and shall in general
perform all duties incident to the office of Secretary and such
other duties as from time to time may be assigned to him or her
by the President or by or at the direction of the Board. In the
absence of the Secretary, an Assistant Secretary may perform the
duties of the Secretary.
4.9 Treasurer.
The Treasurer shall have charge and custody of and be
responsible for all funds and securities of the corporation,
receive and give receipts for moneys due and payable to the
corporation from any source whatsoever, and deposit all such
moneys in the name of the corporation in banks, trust companies
or other depositories selected in accordance with the provisions
of these Bylaws, and in general perform all of the duties
incident to the office of Treasurer and such other duties as from
time to time may be assigned to him or her by the President or by
or at the direction of the Board. In the absence of the
Treasurer, an Assistant Treasurer may perform the duties of the
Treasurer. If required by the Board, the Treasurer or any
Assistant Treasurer shall give a bond for the faithful discharge
<PAGE>
of his or her duties in such amount and with such surety or
sureties as the Board shall determine.
4.10 General Counsel.
The General Counsel shall be responsible for all legal
matters and affairs affecting the business of the corporation,
and shall have such additional duties and responsibilities as
from time to time may be assigned to him or her by the President
or by or at the direction of the Board.
4.11 Salaries and Other Compensation.
The salaries and other compensation of the officers shall be
fixed from time to time by the Board or by any person or persons
to whom the Board has delegated such authority. No officer shall
be prevented from receiving such salary by reason of the fact
that he or she is also a Director of the corporation.
ARTICLE 5. CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.1 Contracts.
The Board may authorize any officer or officers, or agent or
agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation. Such
authority may be general or confined to specific instances.
5.2 Loans to the Corporation.
No significant loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in
its name unless authorized by a resolution of the Board. Such
authority may be general or confined to specific instances.
5.3 Checks and Drafts.
All checks, drafts or other orders for the payment of money,
notes or other evidences of indebtedness issued in the name of
the corporation shall be signed by such officer or officers, or
agent or agents, of the corporation and in such manner as is from
time to time determined by resolution of the Board.
5.4 Deposits.
All funds of the corporation, except for petty cash, not
otherwise employed shall be deposited from time to time to the
credit of the corporation in such banks, trust companies or other
depositories as the Board may select.
ARTICLE 6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Issuance of Shares.
No shares of the corporation shall be issued unless
authorized by the Board, or by a committee designated by the
Board to the extent such committee is empowered to do so.
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6.2 Certificates for Shares.
All stock certificates shall be signed by the Secretary and
any one of the following officers: (i) the Chairman of the Board
of Directors, (ii) the President, or (iii) any Vice President.
Any or all signatures on a certificate may be a facsimile. A
record of each certificate shall be kept with the stub, and a
stock record book shall be kept showing the holders of all
outstanding certificates of stock.
6.3 Stock Records.
The stock transfer books shall be kept at the principal
office of the corporation or at the office of the corporation's
transfer agent or registrar. The name and address of each person
to whom certificates for shares are issued, together with the
class and number of shares represented by each such certificate
and the date of issue thereof, shall be entered on the stock
transfer books of the corporation. The person in whose name
shares stand on the books of the corporation shall be deemed by
the corporation to be the owner thereof for all purposes.
6.4 Transfer of Shares.
The transfer of shares of the corporation shall be made only
on the stock transfer books of the corporation pursuant to
authorization or document of transfer made by the holder of
record thereof or by his or her legal representative, who shall
furnish proper evidence of authority to transfer, or by his or
her attorney-in-fact authorized by power of attorney duly
executed and filed with the Secretary of the corporation. All
certificates surrendered to the corporation for transfer shall be
canceled and no new certificate shall be issued until the former
certificates for a like number of shares shall have been
surrendered and canceled.
6.5 Lost or Destroyed Certificates.
In the case of a lost, destroyed or mutilated certificate, a
new certificate may be issued therefor upon such terms and
indemnity to the corporation as the Board may prescribe.
ARTICLE 7. BOOKS AND RECORDS
The corporation shall:
(a) Keep as permanent records minutes of all meetings of
its shareholders and the Board, a record of all actions taken by
the shareholders or the Board without a meeting, and a record of
all actions taken by a committee of the Board exercising the
authority of the Board on behalf of the corporation.
(b) Maintain appropriate accounting records.
(c) Maintain a record of its shareholders, in a form that
permits preparation of a list of the names and addresses of all
shareholders, in alphabetical order by class of shares showing
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the number and class of shares held by each; provided, however,
such record may be maintained by an agent of the corporation.
(d) Maintain its records in written form or in another form
capable of conversion into written form within a reasonable time.
(e) Keep a copy of the following records at its principal
office:
1. the Certificate of Incorporation and all
amendments thereto as currently in effect;
2. the Bylaws and all amendments thereto as currently
in effect;
3. the minutes of all meetings of shareholders and
records of all action taken by shareholders without a meeting,
for the past three years;
4. financial statements for the past three years;
5. all written communications to shareholders
generally within the past three years;
6. a list of the names and business addresses of the
current Directors and officers; and
7. the most recent annual report delivered to the
Delaware Secretary of State.
ARTICLE 8. ACCOUNTING YEAR
The accounting year of the corporation shall be the calendar
year, provided that if a different accounting year is at any time
selected by the Board for purposes of federal income taxes, or
any other purpose, the accounting year shall be the year so
selected.
ARTICLE 9. SEAL
The Board may provide for a corporate seal which shall
consist of the name of the corporation, the state of its
incorporation and the year of its incorporation.
ARTICLE 10. INDEMNIFICATION
10.1 Right to Indemnification.
The corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists
or may hereafter be amended, any person who was or is made or is
threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal,
administrative, or investigative (a "Proceeding") by reason of
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the fact that he, or a person for whom he is the legal
representative, is or was a director, officer, employee or agent
of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust enterprise
or non-profit entity, including service with respect to employee
benefits plans, against all liability and loss suffered and
expenses reasonably incurred by such person. The corporation
shall be required to indemnify a person in connection with a
proceeding initiated by such person only if the proceeding was
authorized by the Board of Directors of the corporation.
10.2 Prepayment of Expenses.
The corporation shall pay the expenses incurred in defending
any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a director,
officer or employee in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by
the director, officer or employee to repay all amounts advanced
if it should be ultimately determined that the director, officer
or employee is not entitled to be indemnified under this Article
or otherwise.
10.3 Claims.
If a claim for indemnification or payment of expenses under
this Article is not paid in full with sixty days after a written
claim therefore has been received by the corporation, the
claimant may file suit to recover the unpaid amount of such claim
and, if successful in whole or in part, shall be entitled to be
paid the expense of prosecuting such claim. In any such action
the corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification or
payment of expenses under applicable law.
10.4 Non-Exclusivity of Rights.
The rights conferred on any person by this Article shall not
be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Certificate
of Incorporation, these by-laws, agreement, vote of shareholders
or disinterested directors or otherwise.
10.5 Other Indemnification.
The corporation's obligation, if any, to indemnify any
person who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust, enterprise or non-profit entity shall be
reduced by any amount such person may collect as indemnification
from such other corporation, partnership, joint venture, trust,
enterprise or nonprofit enterprise.
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10.6 Amendment or Repeal.
Any repeal or modification of the foregoing provisions of
this Article shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission
occurring prior to the time of such repeal or modification.
ARTICLE 11. INTERESTED DIRECTOR CONTRACTS AND TRANSACTIONS
No contract or transaction between the corporation and one
or more of its directors or officers, or between the corporation
and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers
are directors or officers, or have a financial interest, shall be
void or voidable solely for this reason, or solely because the
director or officer is present at or participates in the meeting
of the Board of Directors or committee thereof which authorizes
the contract or transaction, or solely because his or their votes
are counted for such purpose, if: (1) the material facts as to
his relationship or interest and as to the contract or
transaction are disclosed or are known to the Board of Directors
or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative
votes of a majority of the disinterested directors, even though
the disinterested directors be less than a quorum; or (2) the
material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the
shareholders; or (3) the contract or transaction is fair as to
the corporation as of the time it is authorized, approved or
ratified, by the Board of Directors, a committee thereof, or the
shareholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or
transaction.
ARTICLE 12. AMENDMENTS
These Bylaws may be altered, amended or repealed and new
Bylaws may be adopted by the Board. The shareholders may also
alter, amend and repeal these Bylaws or adopt new Bylaws. All
Bylaws made by the Board may be amended, repealed, altered or
modified by the shareholders.
The foregoing Bylaws were adopted by the Board on
_______________.
________________________________
Chairman of the Board
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EXHIBIT D
PROPOSED AMENDMENT NUMBER 1
RESOLVED, that Article SECOND of the Corporation's Articles
of Incorporation, regarding the purposes and objects of the
Corporation, shall be. and the same hereby is, amended to provide
a new section which shall read as follows:
"To engage in any other business, trade or
activity which may be lawfully conducted by a
corporation organized under the Washington Business
Corporation Act."
PROPOSED AMENDMENT NUMBER 2
RESOLVED, that Article FIFTH of the Corporation's Articles
of Incorporation shall be, and the same hereby is, amended to
read in its entirety as follows:
"The principal office or place of business of this
corporation shall be 6161 E. 75th Street, Indianapolis,
Indiana."
PROPOSED AMENDMENT NUMBER 3
RESOLVED, that Article SIXTH of the Corporation's Articles
of Incorporation shall be, and the same hereby is, amended to
read in its entirety as follows:
"The directors of the corporation shall be three
(3) in number, provided, however, that the number of
directors may be increased, but not to exceed seven
(7), at any time by a majority vote of the stockholders
or directors at a meeting properly called for that
purpose."
PROPOSED AMENDMENT NUMBER 4
RESOLVED, that a new Article SEVENTH shall be, and the same
hereby is, added to the Corporation's Articles of Incorporation,
which Article shall read in its entirety as follows:
"No preemptive rights shall exist with respect to
shares of stock or securities convertible into shares
of stock of this corporation."
PROPOSED AMENDMENT NUMBER 5
RESOLVED, that a new Article EIGHTH shall be, and the same
hereby is, added to the Corporation's Articles of Incorporation,
which Article shall read in its entirety as follows:
"The right to cumulate votes in the election of
directors shall not exist with respect to shares of
stock of this corporation."
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PROPOSED AMENDMENT NUMBER 6
RESOLVED, that a new Article NINTH shall be, and the same
hereby is, added to the Corporation's Articles of Incorporation,
which Article shall read in its entirety as follows:
"This corporation reserves the right to amend or
repeal any of the provisions contained in these
Articles of Incorporation in any manner now or
hereafter permitted by law; and the rights of the
shareholders of this corporation are granted subject to
this reservation. Any such amendment or repeal shall
be effective if approved by a majority of the votes
entitled to be cast at any meeting of shareholders
properly called for such purpose."
PROPOSED AMENDMENT TO CORPORATION'S BYLAWS
RESOLVED, That Article VII of the Corporation's Bylaws shall
be,, and the same hereby is, amended to read in its entirety as
follows:
"These Bylaws may be altered, amended or repealed
and new Bylaws may be adopted by the Board of
Directors, except that the Board of Directors may not
repeal or amend any Bylaw that the shareholders have
adopted, and at the time of such adoption, have
expressly provided may not be amended or repealed by
the Board of Directors. The shareholders may also
after, amend and repeal these Bylaws or adopt new
Bylaws. All Bylaws made by the Board of Directors may
be amended, repealed, altered or modified by the
shareholders."