<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
of the securities exchange act of 1934
For the transition period from ___________________ to ___________________
Commission file number 0-1490
BEST LOCK CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 35-1092570
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. BOX 50444, INDIANAPOLIS, INDIANA 46250
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 849-2250
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /
Indicate the number of shares outstanding of each of the registrant's classes of
common, as of May 5, 1995.
COMMON STOCK 124,358.85 SHARES
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<PAGE>
INDEX
-----
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income for the
three months ended March 31, 1995 and 1994 3
Condensed Consolidated Balance Sheets at March 31,
1995 and December 31, 1994 4-5
Condensed Consolidated Statements of Shareholders'
Equity at March 31, 1995 and December 31, 1994 6
Condensed Consolidated Statements of Cash Flows for
the three months ended March 31, 1995 and 1994 7
Notes to Condensed Consolidated Financial Statements 8-10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11-12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURE 14
Exhibit 15-34
2
<PAGE>
BEST LOCK COMPANIES
BEST LOCK CORPORATION AND SUBSIDIARY
BEST UNIVERSAL LOCK CO. (A NON-OPERATING HOLDING COMPANY) AND SUBSIDIARIES
FRANK E. BEST, INC. (A NON-OPERATING HOLDING COMPANY) AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Three Months Ended March 31
1995 1994
------------ ------------
<S> <C> <C>
NET SALES $29,352,842 $23,390,011
OPERATING EXPENSES
Cost of Goods Sold 15,764,524 12,082,356
Selling 7,488,437 6,529,344
General and Administrative 4,042,870 3,143,423
Engineering, research and development 625,440 898,548
------------ -----------
Total operating expenses 27,921,271 22,653,671
------------ -----------
OPERATING INCOME 1,431,571 736,340
Interest expense (137,346) (5,046)
Other income, net 132,519 54,534
------------ -----------
INCOME before provision for income taxes 1,426,744 785,828
Provision for income taxes 597,541 318,149
------------ -----------
NET INCOME, Best Lock Corporation and Subsidiary 829,203 467,679
Minority interest in net income, Best Lock
Corporation and Subsidiary (175,750) (127,162)
Corporate--Best Universal Lock Co. expense (96) (311)
------------ -----------
NET INCOME, Best Universal Lock Co. and
Subsidiaries 653,357 340,206
Minority interest in net income, Best Universal
Lock Co. and Subsidiaries (192,332) (76,104)
Corporate--Frank E. Best, Inc. expense (66) (310)
------------ -----------
NET INCOME, Frank E. Best, Inc. and Subsidiaries $ 460,959 $ 263,792
------------ -----------
------------ -----------
</TABLE>
<TABLE>
<CAPTION>
Best Universal Lock Co.
Best Lock ------------------------ Frank E.
Corporation Series A Series B Best Inc.
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Earnings per common share:
Three months ended March 31, 1995 $ 6.49 $ 1.71 $ 1.71 $ 0.90
---------- --------- ---------- ----------
---------- --------- ---------- ----------
Three months ended March 31, 1994 $ 3.56 $ 0.88 $ 0.88 $ 0.44
---------- --------- ---------- ----------
---------- --------- ---------- ----------
Weighted average shares outstanding:
1995 127,827.43 82,731.60 300,000.00 511,919.46
---------- --------- ---------- ----------
---------- --------- ---------- ----------
1994 131,238.85 86,469.00 300,000.00 598,710.00
---------- --------- ---------- ----------
---------- --------- ---------- ----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
BEST LOCK CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
March 31 December 31
1995 1994
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,774,105 $ 4,792,083
Trade receivables:
Direct 12,269,604 11,680,289
Sales representatives and other 2,909,800 2,688,434
Allowance for uncollectible accounts (301,954) (244,829)
Estimated refundable income taxes 0 68,407
Current portion of notes receivable 85,438 81,987
Inventories 15,455,546 14,579,058
Prepaid income taxes 3,166,828 3,566,922
Other prepaid expenses 62,713 152,342
------------ -----------
Total current assets 37,422,080 37,364,693
------------ -----------
PROPERTY, PLANT AND EQUIPMENT, at cost
Land and buildings 13,968,937 13,934,021
Machinery and equipment 29,624,515 29,725,748
Tooling 8,310,593 8,185,849
Furniture, fixtures and other 8,720,442 8,398,681
Construction work-in-progress 2,023,117 975,301
------------ -----------
62,647,604 61,219,600
Less - accumulated depreciation (32,053,421) (31,082,462)
------------ -----------
Total property, plant and equipment 30,594,183 30,137,138
------------ -----------
OTHER ASSETS
Long-term notes receivable 3,290,037 3,280,332
Other assets 1,440,501 221,256
------------ -----------
Total assets $ 72,746,801 $ 71,003,419
------------ -----------
------------ -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
BEST LOCK CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
March 31 December 31
1995 1994
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable $ 2,500 $ 2,500
Current portion of retirement benefit obligations 1,369,954 1,381,967
Trade accounts payable 2,184,108 1,641,302
Customer advances 1,492,018 1,501,304
Accrued liabilities:
Income taxes 236,682 868,407
Property and other taxes 1,217,361 960,153
Payroll and vacation pay 3,425,293 3,918,751
Accrued severance 429,031 2,394,593
Accrued medical claims 880,000 850,000
Other 384,823 820,713
------------ -----------
Total current liabilities 11,621,770 14,339,690
------------ -----------
LONG-TERM DEBT 12,000,000 --
RETIREMENT BENEFIT OBLIGATION 4,274,403 4,444,971
DEFERRED INCOME TAXES 2,276,932 2,269,369
------------ -----------
Total liabilities 30,173,105 21,054,030
------------ -----------
COMMON STOCK AND COMMON STOCK OF UNIVERSAL AND
BEST, REDEEMABLE UNDER STOCK BONUS PLAN 8,939,316 8,939,316
------------ -----------
SHAREHOLDERS' EQUITY:
Common stock, no par value, 200,000 shares
authorized; 145,128.85 shares issued;
124,358.85 shares outstanding 1995,
131,185.85 shares outstanding 1994 1,407,841 1,407,841
Accumulated earnings 50,353,061 49,523,858
Cumulative translation adjustment (191,830) (197,955)
Common stock and common stock of Universal
and Best, redeemable under Stock Bonus Plan (8,939,316) (8,939,316)
Treasury stock (8,995,376) (784,355)
------------ -----------
Total shareholders' equity 33,634,380 41,010,073
------------ -----------
Total liabilities and shareholders' equity $72,746,801 $71,003,419
------------ -----------
------------ -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
BEST LOCK CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
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<TABLE>
<CAPTION>
March 31 December 31
------------ ------------
1995 1994
------------ ------------
<S> <C> <C>
COMMON STOCK, no par value, 200,000 shares
authorized; 145,128.85 shares issued;
124,358.85 shares outstanding 1995,
131,185.85 shares outstanding 1994 $ 1,407,841 $ 1,407,841
------------ ------------
ACCUMULATED EARNINGS:
Balance at beginning of year 49,523,858 48,024,394
Net income (three months ended March 31, 1995
and twelve months ended December 31, 1994) 829,203 2,208,155
Cash dividends (see below) -- (708,691)
------------ -----------
Balance at end of period 50,353,061 49,523,858
------------ -----------
COMMON STOCK REDEEMABLE UNDER
STOCK BONUS PLAN (8,939,316) (8,939,316)
------------ -----------
CUMULATIVE TRANSLATION ADJUSTMENT (191,830) (197,955)
------------ -----------
TREASURY STOCK
Balance at beginning of year (784,355) (763,950)
Shares purchased (8,211,021) (20,405)
------------ -----------
Balance at end of period (8,995,376) (784,355)
------------ -----------
Total shareholders' equity $33,634,380 $41,010,073
------------ -----------
------------ -----------
Cash dividends per share: $ 0.00 $ 5.40
------------ -----------
------------ -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
BEST LOCK CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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<TABLE>
<CAPTION>
Three Months Ended March 31
-----------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 28,379,629 $ 24,629,902
Cash paid to suppliers and employees (31,115,783) (20,113,901)
Interest received 291,808 20,022
Interest paid (28,416) (5,008)
Income taxes paid (753,443) (61,856)
-------------- --------------
Net cash provided by operating activities (3,226,205) 4,469,159
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment 1,161 9,147
Capital expenditures (1,581,654) (1,456,996)
-------------- --------------
Net cash used in investing activities (1,580,493) (1,447,849)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings against unsecured line of credit 12,000,000 --
Purchase of treasury stock (8,211,021) --
-------------- --------------
Net cash used in financing activities 3,788,979 --
-------------- --------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (259) (4,993)
-------------- --------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (1,017,978) 3,016,317
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,792,083 1,602,492
-------------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,774,105 $ 4,618,809
-------------- --------------
-------------- --------------
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net income $ 829,203 $ 467,679
Adjustments-
Depreciation and amortization 1,146,730 1,146,641
Provision for losses on accounts receivable 78,619 3,726
(Gain) loss on sale of property, plant and equipment (1,123) (3,418)
Changes in assets and liabilities-
(Increase) decrease in:
Accounts and notes receivable (812,800) 1,208,797
Refundable income taxes 68,407 --
Inventories (872,482) 461,321
Prepaid income taxes and other expenses 471,480 51,244
Other assets (1,248,833) (7,845)
Increase (decrease) in:
Accounts payable, customer advances and accrued liabilities (2,078,422) 857,754
Income taxes payable (631,966) 227,958
Deferred income taxes 7,563 21,000
Retirement benefit and benefit obligation (182,581) 34,302
-------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ (3,226,205) $ 4,469,159
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE>
BEST LOCK COMPANIES
BEST LOCK CORPORATION AND SUBSIDIARY
BEST UNIVERSAL LOCK CO. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES
FRANK E. BEST, INC. (A NONOPERATING HOLDING COMPANY) AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements have not been
audited by independent accountants. In the opinion of the Company's management,
the financial statements reflect all adjustments necessary to fairly present the
results of operations for the three-month periods ended March 31, 1995 and 1994,
the Company's financial position at March 31, 1995 and December 31, 1994, and
the cash flows for the three-month periods ended March 31, 1995 and 1994. These
adjustments are of a normal recurring nature.
Certain notes and other information have been omitted from the interim
financial statements presented in this Quarterly Report on Form 10-Q.
Therefore, these financial statements should be read in conjunction with the
Company's 1994 Form 10-K.
The results for the first quarter of 1995 are not necessarily indicative of
future financial results.
The condensed consolidated financial statements for each parent company in
the Best Lock Companies (the Company) include their respective subsidiaries as
indicated below:
Percent Owned
Parent Company Subsidiaries as of March 31, 1995
-------------- ------------ --------------------
Frank E. Best, Inc. Best Universal Lock Co. 79%
(Best)
Best Universal Lock Best Lock Corporation 77%
Co. (Universal)
Best Lock Best Universal Locks Limited (Canada) 100%
Corporation (Lock)
2. INCOME TAXES
The effective tax rate for the first quarter of 1995 was 41.9 percent compared
with 40.5 percent for the first quarter of 1994. The effective tax rates are
higher than the U.S. Federal statutory rate of 34% due to a higher tax rate in
Canada and state income taxes.
8
<PAGE>
3. FINANCING AND RELATED PARTY ARRANGEMENTS
The Company entered into a new unsecured line of credit agreement on
February 15, 1995. The new credit agreement expires on February 15, 2002 and
bears interest at a variable rate, based upon the prime rate, LIBOR or the
Federal Funds rate, at the Company's election. The variable rate also
fluctuates based upon the amounts borrowed under the credit agreement. The
Company is subject to the maintenance of certain financial ratio covenants under
terms of the credit agreement. The amounts available under this credit
agreement are $25,000,000 through February 14, 1998 less $3,750,000 for each one
year period thereafter until expiration. Borrowings under the credit agreement
are convertible, at the Company's option, into term notes ranging from five to
seven years, up through February 14, 1998. The Company borrowed $12,000,000
under this agreement on February 15, 1995. The interest on these borrowings is
based on LIBOR, and was 7.43% as of March 31, 1995. The weighted average
interest rate (interest expense divided by weighted average borrowing) during
the period the borrowings were outstanding was 7.43%.
4. RECLASSIFICATIONS
Certain reclassifications have been made to the condensed consolidated
balance sheet and statement of income for the three months ended March 31, 1994
to conform to the current year presentation.
5. OTHER MATTERS
On February 15, 1995, the Company settled all claims arising from a
derivative action threatened against it by a director, as well as all claims
against Lock's Chief Executive Officer and another officer. The material
components of the settlement included: (i) the resignation of Walter E. Best
from the Board of Directors and as President of each of Lock, Universal, Best,
and Walter E. Best Company, Inc.; (ii) the resignation of Richard E. Best and
Marshall W. Best as officers and employees of Lock and the resignation of Robert
W. Best as an employee; (iii) the payment of the total sum of $2,134,349 as
severance, vacation and bonus payments to Walter E. Best, Robert W. Best,
Richard E. Best, Marshall W. Best and Edwina McLemore, an employee of Lock; (iv)
the payment of the total sum of $1,240,000 in exchange for covenants not to
compete from Walter E. Best, Robert W. Best, Richard E. Best and Marshall W.
Best; and (v) the payment of the total sum of $8,178,296 for the acquisition of
shares of Lock and interests in a partnership as described below.
On February 15, 1995, Lock purchased for cash an 87% non-voting interest in
a partnership for $5,582,626. The sole purpose of the partnership, which was
newly formed, was to acquire shares of Best and Universal from Walter E. Best
and certain other family members and related trusts. The purchase price of the
shares was based on the appraised value of such shares as of December 31, 1993
as determined by an independent appraiser. An opinion that the transactions
were fair to the Company was rendered by Merrill Lynch, Pierce, Fenner & Smith
Incorporated to the Company's Board of Directors. The partnership owns directly
or indirectly 204,053 shares of Best common stock, 8,787 shares of Universal
Series A common stock and 11.25 shares of Universal preferred stock.
In addition, on February 15, 1995, Lock acquired 6,742 shares of its own
common stock at an appraised value of $385.00 per share or $2,595,670.
9
<PAGE>
Lock's acquisition of its interest in the partnership and its redemption of
its own common shares were funded through the utilization of a portion of the
unsecured line of credit of $25,000,000 as discussed in Note 3.
The Company accounted for the purchase of the Lock shares and the 87%
partnership interest as treasury stock, which resulted in a reduction to
shareholders' equity of Lock of $8,178,296, Universal of $5,582,626 and Best of
$5,077,403. As a result of these transactions, the minority interest of
Universal decreased from 27% to 23% and the minority interest of Best decreased
from 22% to 21%.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Since Frank E. Best, Inc. and Best Universal Lock Co. are non-operating parents
of Best Lock Corporation, a discussion of Best Lock Corporation's business is
necessary in order to understand the character and development of the total
enterprise. As the variations between the financial statements of these three
companies are not significant, the discussion and analysis of Best Lock
Corporation is representative of all. The following, therefore, is a discussion
of the business of Best Lock Corporation (the Company).
ANALYSIS OF RESULTS OF OPERATIONS
Sales for the first quarter of 1995 increased $6 million (25%) over the same
period of 1994. Sales from the manufacturing division (BLM) to independent
distributors and Authorized Contract Construction Dealers accounted for $2.5
million of the increase. The remainder of the increase resulted from higher
sales at the company's distribution division (BLS), which is at least partially
attributable to severe weather conditions in 1994.
The gross profit on sales, while increasing by $2.3 million, decreased to 46.3%
of sales, compared to 48.3% in the prior year. Higher manufacturing overhead in
the BLM division, mainly attributable to increased fringe benefit costs of
approximately $400,000, caused the reduction in the gross profit percentage.
Operating income improved by $695,000 (94%) to 4.9% of net sales from 3.1% for
the same period in 1994. Selling and administrative expenses increased by 19.2%
due to higher salaries and fringe benefits of approximately $1 million. The
Company is also in the process of implementing software for the order
processing, inventory management, and accounting functions, which increased
professional fees by $700,000.
Engineering expenses decreased by $273,000 (30.4%) over the first quarter of
1994, due to reductions in personnel associated with the development of certain
product lines and lower expenditures for engineering-related professional fees .
The Company's effective tax rate was 41.9% in the first quarter of 1995 as
compared to 40.5% for the same period in 1994. The effective tax rates are
higher than the U.S. Federal statutory rate of 34% due to a higher tax rate in
Canada and state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity continues to be strong for the first quarter of 1995.
Working capital increased by $2.8 million, mainly due to the utilization of the
unsecured line of credit, as discussed in Note 3 to the condensed consolidated
financial statements. The current ratio of 3.2:1 at March 31, 1995 improved
significantly from the ratio of 2.6:1 at December 31, 1994. Current liabilities
decreased by $2.7 million due to payments primarily associated with the
resignations discussed in Note 5 to the condensed consolidated financial
statements, which reduced accrued severance, accrued vacation and other accrued
expenses. Days sales outstanding decreased to 46 days from 55 days at December
31, 1994 due to an overall improvement in collections. Inventory turns of 4.2
in the first quarter of 1995 increased from 3.4
11
<PAGE>
in the first quarter of 1994 due to increased sales and the Company's continued
emphasis on inventory management and control. Inventory levels increased by
$876,000 in the first quarter of 1995. This increase is a result of a decrease
in backlog in the manufacturing division and an increase in inventory at the
corporate-owned distribution offices.
Capital expenditures for the first quarter of 1995 were $1.6 million. Capital
spending is projected to total between $5.0 and $7.0 million for the year. This
total includes approximately $3.0 million for enhanced computer systems and
related software.
During the first quarter of 1995, the Company borrowed $12 million against an
unsecured line of credit to fund the purchase of $8.2 million in treasury stock.
Proceeds from the borrowing were also used to pay severance and accrued vacation
as described above.
The Company plans to meet its 1995 working capital and capital expenditure
requirements through funds from operations and borrowings on the line of credit.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3 of the Company's Form 10-K for the year ended
December 31, 1994. There have been no new legal proceedings initiated during
the quarter, nor has there been a change in status or termination of any
previously reported legal proceeding.
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The Settlement Agreement executed in connection with the resignations described
in Note 5 to the condensed consolidated financial statements is attached hereto
as an exhibit.
A Form 8-K was filed on March 2, 1995 for each of the companies (Lock, Universal
and Best) to reflect the transaction described in Note 5 above.
13
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BEST LOCK CORPORATION
---------------------
(Registrant)
Date: May 15, 1995 By: /s/ Edward C. Memmen. Jr.
------------ -------------------------
Vice President of Finance and Controller
(Principal Accounting Officer)
14
<PAGE>
This AGREEMENT (the "Agreement") is entered into this 15th day of February
1995, by and among the following listed parties:
1. Best Lock Corporation (the "Corporation"),
2. Best Aircraft Corporation ("Aircraft"),
3. Best Lock Partnership (the "Partnership"),
4. Walter E. Best Company, Inc. ("WEBCO"),
5. Frank E. Best, Inc. ("FEB"),
6. Best Universal Lock Co. ("BUL"),
7. Walter E. Best, as Trustee of the Walter E. Best Revocable Trust
(the "WEB Trust"),
8. Dona J. Best, as Trustee of the Dona J. Best Revocable Intervivos
Trust (the "DJB Trust"),
9. Walter E. Best,
10. Dona J. Best,
11. Robert W. Best,
12. Denise Best,
13. Richard E. Best,
14. Amber Best,
15. Marshall W. Best,
16. Tracey Best,
17. Russell C. Best, and
18. Gregg A. Dykstra.
W I T N E S S E T H:
WHEREAS, the Corporation is a publicly traded, for-profit corporation that
is organized under the laws of the state of Delaware, that has its principal
place of business in Indianapolis, Indiana, and that engages principally in the
business of designing and manufacturing locks and locking devices;
WHEREAS, the Corporation is a subsidiary corporation of BUL, FEB, and
WEBCO (hereinafter collectively referred to as the Corporation's "Affiliates");
WHEREAS, the Corporation shall purchase units of non-voting interests in
the Partnership, an Indiana general partnership in which Russell C. Best and
WEBCO are partners and that has as its principal asset shares of FEB common
stock, to establish and maintain the Partnership as an investment vehicle to
benefit the shareholders of the Corporation in the following ways: (i) it will
permit the purchase of the interests held by certain senior members of the
Corporation's management in the Corporation and certain affiliates of the
Corporation in a manner that will afford the Corporation enhanced flexibility to
undertake future restructuring transactions, should such transactions be
determined to be beneficial to the Corporation and its shareholders, in a manner
that reduces tax costs; (ii) it will enhance the flexibility of the Corporation
to structure a sale of assets in a tax efficient manner should the Corporation
ever determine to sell its assets; (iii) it will assist the accomplishment of
the objective of causing the Corporation and certain of its affiliates to become
members of a consolidated group for federal income tax purposes and, thereby, to
achieve savings in federal income taxation for the Corporation's primary
shareholder, Best Universal Lock Co., including with respect to distributions of
dividends; and (iv) it will assist the accomplishment of the objective of
reducing the financial and other costs of compliance with requirements imposed
upon the Corporation by the Securities Exchange Act of 1934;
WHEREAS, BUL, a subsidiary of FEB, is a publicly traded, for-profit
corporation organized under the laws of the state of Washington with its
principal place of business located in Indianapolis, Indiana;
WHEREAS, FEB is a publicly traded, for-profit corporation organized under
the laws of the state of Washington with its principal place of business in
Indianapolis, Indiana;
WHEREAS, WEBCO is a privately held, for-profit corporation organized under
the laws of the state of Indiana with its principal place of business in
Indianapolis, Indiana;
15
<PAGE>
WHEREAS, the following persons serve as employees of the Corporation in the
following capacities: (1) Russell C. Best - Chief Executive Officer, (2) Walter
E. Best - Chairman and President, (3) Richard E. Best - Vice President, (4)
Marshall W. Best - Vice President, and (5) Robert W. Best - Assistant to the
President (hereinafter these five individuals are referred to as the "Best
Family Managers");
WHEREAS, Gregg A. Dykstra serves as the Corporation's general counsel;
WHEREAS, Dona J. Best, wife of Walter E. Best, Denise Best, wife of Robert
W. Best, Amber Best, wife of Richard E. Best, and Tracey Best, wife of Marshall
W. Best, legally and/or beneficially own shares in the Corporation and/or one or
more of the Corporation's Affiliates;
WHEREAS, serious differences of opinion respecting the management and the
desired future direction of the Corporation exist among the Best Family Managers
and Gregg A. Dykstra;
WHEREAS, these differences of opinion have prevented the Corporation's
Board of Directors, of which Walter E. Best and Russell C. Best are members,
from operating effectively;
WHEREAS, Walter E. Best has expressed strong criticism and disagreement
with certain proposals advanced by, as well as certain past conduct of, Russell
C. Best and Gregg A. Dykstra;
WHEREAS, the Corporation's Board of Directors has considered and reviewed
the dispute among the Best Family Managers and Gregg A. Dykstra and has
determined that the interests of the Corporation's shareholders cannot be best
served if the dispute continues and all of the Best Family Managers remain
employees of the Corporation;
WHEREAS, the Corporation and all the members of its Board of Directors
believe, that the interests of the Corporation's shareholders are best served by
terminating the dispute among the Best Family Managers and eliminating the
conflict that now prevents the Corporation's Board of Directors from operating
effectively by severing the relationship that Walter E. Best, Robert W. Best,
Richard E. Best, and Marshall W. Best have with the Corporation pursuant to the
terms of a severance arrangement;
WHEREAS, the parties have executed a Letter of Intent, dated November 29,
1994, as amended by an Amendment dated January 6, 1995 and by a Second Amendment
dated January 27, 1995, which sets forth their agreement in principle with
respect to the terms of the severance arrangement;
WHEREAS, the Corporation has engaged Merrill Lynch, Pierce, Fenner & Smith
Incorporated to review the terms of the proposed severance arrangement, and
Merrill Lynch has issued its written opinion, dated February 14, 1995, that the
proposed severance arrangement, if effected, is fair to the shareholders of the
Corporation from a financial perspective;
WHEREAS, the parties desire this Agreement to constitute their definitive
agreement respecting the terms of the severance arrangement detailed in the
Letter of Intent, as amended;
WHEREAS, the Corporation desires that the current dispute among the Best
Family Managers and Gregg A. Dykstra and between Russell C. Best and Walter E.
Best, as members of the Board of Directors of the Corporation, be resolved;
WHEREAS, Walter E. Best, Dona J. Best, Robert W. Best, Denise Best, Richard
E. Best, Amber Best, Marshall W. Best, and Tracey Best desire to divest
themselves of all their relationships with the Corporation, including all
ownership, management, and employment relationships, by selling all of their
stock in the Corporation and its Affiliates and by resigning all positions,
including but not limited to, Director, Officer, and Employee held in the
Corporation and its Affiliates, and its Stock Bonus Plan;
WHEREAS, Aircraft is a closely held corporation that is organized under the
laws of the state of Indiana, has its principal place of business in
Indianapolis, Indiana, and engages in the business of owning and leasing various
aircraft and automobiles for executive transportation;
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WHEREAS, Aircraft leases automobiles to the Corporation, both Aircraft and
the Corporation desire to terminate their leasing relationship and the
Corporation desires to purchase and Aircraft desires to sell certain of these
automobiles;
NOW, THEREFORE, in consideration of the mutual covenants expressed herein
and other good and sufficient consideration, the parties hereto agree to the
following:
ARTICLE 1: REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
makes the following representations and warranties:
1. ORGANIZATION OF THE CORPORATION. The Corporation is a
corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware and is duly
qualified to transact all the business required herein. The
Corporation has the full power and authority to purchase and sell
tangible and intangible property and to borrow funds and to carry
on its business as now conducted.
2. CORPORATE AUTHORITY. The Corporation has full right, power,
capacity, and authority to enter into this Agreement, to
consummate the transactions contemplated hereby, and to comply
with the terms, conditions, and provisions hereof. The
execution, delivery, and performance of this Agreement by the
Corporation have been duly authorized and approved by the Board
of Directors of the Corporation and do not require any further
authorization or consent. This Agreement and all the other
documents, papers, and instruments related directly or indirectly
thereto, constitute, in accordance with their terms, valid,
enforceable, and legally binding obligations of the Corporation.
3. NO VIOLATION, ARTICLES OF INCORPORATION, BY-LAWS, ETC. The
execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereby and the
compliance with or fulfillment of the terms and provisions hereof
and of any other agreement or instrument contemplated hereby, do
not and will not (i) conflict with or result in a breach of any
of the provisions of the Articles of Incorporation, or the By-
Laws of the Corporation, (ii) contravene any law, rule, or
regulation of any state or of the United States, or any order,
writ, award, judgment, decree, or other determination that
affects or binds the Corporation, or any of its respective
properties, (iii) conflict with, result in a breach of,
constitute a default under, or give rise to a right of
termination under any contract, deed of trust, mortgage, trust,
lease, governmental, or other license, permit or other
authorization, contract, agreement, note, or
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any other agreement, instrument, or restriction to which the
Corporation is a party or by which any properties of the Corporation
may be affected or bound, or (iv) require the approval, consent or
authorization of, or registration with, any third party or any
foreign, federal, state or local court, governmental authority, or
regulatory body.
B. REPRESENTATIONS AND WARRANTIES OF AIRCRAFT. Aircraft makes the
following representations and warranties:
1. ORGANIZATION OF AIRCRAFT. Aircraft is a corporation duly
organized, validly existing, and in good standing under the laws
of the State of Indiana and is duly qualified to transact all the
business required herein. Aircraft has the full power and
authority to purchase and sell tangible and intangible property
and to borrow funds and to carry on its business as now
conducted.
2. CORPORATE AUTHORITY. Aircraft has full right, power, capacity,
and authority to enter into this Agreement, to consummate the
transactions contemplated hereby, and to comply with the terms,
conditions, and provisions hereof. The execution, delivery, and
performance of this Agreement by Aircraft have been duly
authorized and approved by the Board of Directors of Aircraft and
do not require any further authorization or consent.
3. NO VIOLATION, ARTICLES OF INCORPORATION, BY-LAWS, ETC. The
execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereby and the
compliance with or fulfillment of the terms and provisions hereof
and of any other agreement or instrument contemplated hereby, do
not and will not (i) conflict with or result in a breach of any
of the provisions of the Articles of Incorporation, or the By-
Laws of Aircraft (ii) contravene any law, rule, or regulation of
any state or of the United States, or any order, writ, award,
judgment, decree, or other determination that affects or binds
Aircraft, or any of its respective properties, (iii) conflict
with, result in a breach of, constitute a default under, or give
rise to a right of termination under any contract, deed of trust,
mortgage, trust, lease, governmental, or other license, permit or
other authorization, contract, agreement, note, or any other
agreement, instrument, or restriction to which Aircraft is a
party or by which any properties of Aircraft may be affected or
bound, except for the contractual arrangement that Aircraft has
with National City Bank of Indianapolis, Indiana (the "NCB
Contract"), or (iv) require the approval, consent or
authorization of, or registration with, any third party or any
foreign, federal, state or local court, governmental authority,
or regulatory body except that the approval of National City Bank
of Indianapolis ("NCB") to the transfer of the automobiles
contemplated herein is required and has been secured.
4. TITLE AND CONDITION. Except for the interest of NCB in certain
automobiles as reflected in the NCB Contract, Aircraft currently
has, and as of the date of closing, will have good and marketable
title, free and clear of any and all Liens, as hereinafter
defined, to each of the automobiles identified in EXHIBIT A. The
automobiles owned and held by Aircraft are in good and
serviceable condition and suitable for the uses for which they
are intended. For purposes of this Agreement, a "Lien" shall
mean any lien, encumbrance, mortgage, hypothecation, pledge,
conditional sales contract, equity, charge, hire or hire purchase
agreement, or other similar conflicting ownership or security
interest in favor of any third party, except for any lien for
state or local property taxes that is not yet due and payable.
II. ARTICLE 2: ECONOMIC PROVISIONS
A. ORDER OF TRANSACTIONS. The transactions described within this Article
2 shall occur in the order prescribed in this Section 2.1, and in the
event the order prescribed herein may conflict with the order in any
other provision, this Section 2.1 shall control.
1. FIRST TRANSACTION. WEBCO's redemption of all the WEBCO shares
owned by the DJB Trust, the WEB Trust, Robert W. Best, Denise
Best, Richard E. Best, Amber Best, Marshall W. Best, and Tracey
Best for non-voting interests in the Partnership.
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2. SECOND TRANSACTION. The Corporation shall purchase all the non-
voting interests in the Partnership owned by the DJB Trust, the
WEB Trust, Robert W. Best, Denise Best, Richard E. Best, Amber
Best, Marshall W. Best, and Tracey Best.
3. THIRD TRANSACTION. The Partnership shall purchase all the shares
of stock in FEB and BUL owned by Walter E. Best, the DJB Trust,
Robert W. Best, Richard E. Best, and Marshall W. Best.
4. FOURTH TRANSACTION. The Corporation shall redeem all the shares
of stock in the Corporation owned by Walter E. Best, the DJB
Trust, Robert W. Best, Richard E. Best, and Marshall W. Best.
5. FIFTH TRANSACTION. All the transactions that are not identified
as part of the first, second, third, or fourth transactions above
shall occur as part of this fifth transaction.
After the transactions contemplated hereunder are effected, the
Corporation will own an 87.00 percentage interest in the Partnership.
B. SHARES OWNED BY WALTER E. BEST.
PURCHASE BY PARTNERSHIP. ON February 15, 1995, the Partnership shall
purchase from Walter E. Best, and Walter E. Best shall sell to the
Partnership, all the shares of capital stock that he owns in FEB and
BUL.
REDEMPTION BY CORPORATION. On February 15, 1995, the Corporation
shall redeem from Walter E. Best, and Walter E. Best shall present to
the Corporation for redemption, all the shares of stock he owns in the
Corporation, for cash in the amount equal to the aggregate appraised
value of the Corporation shares on December 31, 1993, as determined by
Sigurd R. Wendin & Associates, Inc. and reflected in Richard Wendin's
letter dated May 16, 1994, which is attached as EXHIBIT B (the "Wendin
Appraisal I").
These transactions shall occur as follows:
1. FEB COMMON. The Partnership shall purchase ten (10) shares of
common stock in FEB from Walter E. Best for $293.60 in cash,
based on the FEB common stock appraised fair market value of
$29.36 per share.
2. BUL COMMON. The Partnership shall purchase five (5) shares of
common stock in BUL from Walter E. Best for $329.80 in cash,
based on the BUL common stock appraised fair market value of
$65.96 per share.
3 CORPORATION COMMON. The Corporation shall redeem two (2) shares
of common stock in the Corporation from Walter E. Best for
$770.00 in cash, based on the Corporation common stock appraised
fair market value of $385.00 per share.
Walter E. Best shall deliver to the Corporation no later than February
15, 1995 all stock certificates and properly endorsed and executed
stock powers in a form sufficient to permit the transfer of ownership
of the stock.
C. SHARES OWNED BY THE DONA J. BEST REVOCABLE INTERVIVOS TRUST.
REDEMPTION BY WEBCO AND PURCHASE BY CORPORATION. On February 15,
1995, WEBCO shall redeem from the DJB Trust, and the DJB Trust shall
present to WEBCO for redemption, all the non-voting shares of common
stock that the DJB Trust owns in WEBCO in return for a non-voting
interest in the Partnership, and the Corporation shall then purchase
the non-voting interest in the Partnership from the DJB Trust for cash
in the amount equal to the aggregate appraised fair market value of
the non-voting WEBCO common shares that the DJB Trust redeemed, valued
as of December 31, 1993, as determined by the Wendin appraisal dated
December 21, 1994, which is attached as EXHIBIT C (the "Wendin
Appraisal II").
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PURCHASE BY PARTNERSHIP. On February 15, 1995, the Partnership shall
purchase from Dona J. Best, as trustee of the Dona J. Best Revocable
Trust, created under the trust agreement dated December 19, 1991, as
amended (the "DJB Trust"), and the DJB Trust shall sell to the
Partnership, all the common stock the DJB Trust owns in BUL in return
for cash in the amount equal to the aggregate value of the shares as
appraised in the Wendin Appraisal I.
REDEMPTION BY CORPORATION. On February 15, 1995, the Corporation
shall redeem from the DJB Trust, and the DJB Trust shall present for
redemption to the Corporation all the stock the DJB Trust owns in the
Corporation, in return for cash in the amount equal to the aggregate
appraised value of the Corporation shares as appraised in the Wendin
Appraisal I.
These transactions shall occur as follows:
1. WEBCO NON-VOTING COMMON. WEBCO shall redeem TWO HUNDRED SIXTY-
EIGHT (268) shares of non-voting common stock in WEBCO from the
DJB Trust for a non-voting interest in the Partnership. The
Corporation shall then purchase the non-voting Partnership
interest from the DJB Trust for $144,272.44 in cash. The
$144,272.44 price of the non-voting Partnership interest is based
on the appraised fair market value of the TWO HUNDRED SIXTY-EIGHT
(268) WEBCO non-voting common shares of $538.33 per share.
2. BUL COMMON. The Partnership shall purchase TWO THOUSAND THREE
HUNDRED NINETY-EIGHT (2,398) shares of common stock in BUL from
the DJB Trust for $158,172.08 in cash, based on the BUL common
stock appraised fair market value of $65.96 per share.
3. CORPORATION COMMON. The Corporation shall redeem ONE THOUSAND
FOUR HUNDRED FIFTY-NINE (1,459) shares of the Corporation's
common stock from the DJB Trust for $561,715.00 in cash, based on
the Corporation stock appraised fair market value of $385.00 per
share.
The DJB Trust shall deliver to the Corporation, no later than
February 15, 1995, all stock certificates and properly endorsed and
executed stock powers in a form sufficient to permit the transfer of
ownership of the stock.
D. SHARES OWNED BY THE WALTER E. BEST REVOCABLE TRUST.
REDEMPTION BY WEBCO AND PURCHASE BY CORPORATION. On February 15,
1995, WEBCO shall redeem from Walter E. Best, as trustee of the Walter
E. Best Revocable Trust, created under the Trust Agreement dated May
8, 1992, as amended (the "WEB Trust"), and the WEB Trust shall present
to WEBCO for redemption, all the shares of non-voting common stock
that the WEB Trust owns in WEBCO in return for a non-voting interest
in the Partnership, and the Corporation shall then purchase the non-
voting interest in the Partnership from the WEB Trust for cash in the
amount equal to the aggregate appraised fair market value of the non-
voting WEBCO common shares that the WEB Trust redeemed, valued as of
December 31, 1993, pursuant to the Wendin Appraisal II.
These transactions shall occur as follows:
1. WEBCO NON-VOTING COMMON. WEBCO shall redeem SIX THOUSAND FIVE
HUNDRED SIXTY-TWO (6,562) shares of non-voting common stock in
WEBCO from the WEB Trust for a non-voting interest in the
Partnership. The Corporation shall then purchase the non-voting
Partnership interest from the WEB Trust for $3,532,521.46 in
cash. The $3,532,521.46 price of the non-voting Partnership
interest is based on the appraised fair market value of the SIX
THOUSAND FIVE HUNDRED SIXTY-TWO (6,562) WEBCO non-voting common
shares of $538.33 per share;
The WEB Trust shall deliver to the Corporation, no later than February
15, 1995, all stock certificates and properly endorsed and executed
stock powers in a form sufficient to permit the transfer of ownership
of the stock.
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E. SHARES OWNED BY ROBERT W. BEST, DENISE BEST, RICHARD E. BEST, AMBER
BEST, MARSHALL W. BEST, AND TRACEY BEST.
REDEMPTION BY WEBCO AND PURCHASE BY CORPORATION. On February 15,
1995, WEBCO shall redeem from Robert W. Best, Denise Best, Richard E.
Best, Amber Best, Marshall W. Best, and Tracey Best, and Robert W.
Best, Denise Best, Richard E. Best, Amber Best, Marshall W. Best, and
Tracey Best shall present for redemption, all the non-voting shares of
common stock in WEBCO that they own in return for non-voting interests
in the Partnership, and the Corporation shall then purchase the non-
voting Partnership interests from these persons for cash in the amount
equal to the aggregate appraised fair market value of the non-voting
WEBCO common shares that they redeemed, valued as of December 31,
1993, pursuant to the Wendin Appraisal II.
PURCHASE BY PARTNERSHIP. On February 15, 1995, the Partnership shall
purchase from Robert W. Best, Denise Best, Richard E. Best, Amber
Best, Marshall W. Best, and Tracey Best, and Robert W. Best, Denise
Best, Richard E. Best, Amber Best, Marshall W. Best, and Tracey Best
shall sell to the Partnership, all the capital stock in FEB and BUL
that they own for cash in the amount equal to the aggregate appraised
value of the respective FEB and BUL shares on December 31, 1993,
pursuant to the Wendin Appraisal I.
REDEMPTION BY CORPORATION. On , 1995, the Corporation shall redeem
from Robert W. Best, Denise Best, Richard E. Best, Amber Best,
Marshall W. Best, and Tracey Best, and Robert W. Best, Denise Best,
Richard E. Best, Amber Best, Marshall W. Best, and Tracey Best shall
present for redemption to the Corporation, all the capital stock in
the Corporation that they own for cash in the amount equal to the
aggregate appraised value of the Corporation shares on December 31,
1993, pursuant to the Wendin Appraisal I.
These transactions shall occur as follows:
1. ROBERT W. BEST.
a) WEBCO NON-VOTING COMMON. WEBCO shall redeem FOUR HUNDRED
SIXTY-FIVE (465) shares of non-voting common stock in WEBCO
from Robert W. Best for a non-voting interest in the
Partnership. The Corporation shall then purchase the non-
voting Partnership interest from Robert W. Best for
$250,323.45 in cash. The $250,323.45 price of the non-
voting Partnership interest is based on the appraised fair
market value of the FOUR HUNDRED SIXTY-FIVE (465) WEBCO non-
voting common shares of $538.33 per share;
b) FEB COMMON. The Partnership shall purchase ONE THOUSAND
FOUR HUNDRED NINETY (1,490) shares of FEB common stock from
Robert W. Best for $43,746.40 in cash, based on the FEB
common stock appraised fair market value of $29.36 per
share;
c) BUL COMMON. The Partnership shall purchase TWO THOUSAND ONE
HUNDRED TWENTY-EIGHT (2,128) shares of BUL common stock from
Robert W. Best for $140,362.88 in cash, based on the BUL
common stock appraised fair market value of $65.96 per
share;
d) BUL PREFERRED. The Partnership shall purchase THREE AND
THREE-FOURTHS (3.75) shares of BUL preferred stock for
$375.00 in cash, based on the BUL preferred stock appraised
fair market value of $100.00 per share, which shares are
owned jointly as tenants in common by Robert W. Best,
Richard E. Best, Marshall W. Best, and Russell C. Best (the
"Best Brothers"), and which shares represent Robert W.
Best's undivided TWENTY-FIVE PERCENT (25%) interest in the
FIFTEEN (15) shares of BUL preferred stock jointly owned by
the Best Brothers;
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e) CORPORATION COMMON. The Corporation shall redeem ONE
THOUSAND NINE HUNDRED SEVEN (1,907) shares of the
Corporation's common stock from Robert W. Best for
$734,195.00 in cash, based on the Corporation common stock
appraised fair market value of $385.00 per share.
Robert W. Best shall deliver to the Corporation, no later than
February 15, 1995, all stock certificates and properly endorsed
and executed stock powers in a form sufficient to permit the
transfer of ownership of the stock.
2. DENISE BEST.
a) WEBCO NON-VOTING COMMON. WEBCO shall redeem FIFTY-EIGHT
(58) shares of non-voting common stock in WEBCO from Denise
Best for a non-voting interest in the Partnership. The
Corporation shall then purchase the non-voting Partnership
interest for $31,223.14 in cash. The $31,223.14 price of
the non-voting Partnership interest is based on the
appraised fair market value of the FIFTY-EIGHT (58) WEBCO
non-voting common shares of $538.33 per share.
Denise Best shall deliver to the Corporation, no later than
February 15, 1995, all stock certificates and properly endorsed
and executed stock powers in a form sufficient to permit the
transfer of ownership of the stock.
3. RICHARD E. BEST.
a) WEBCO NON-VOTING COMMON. WEBCO shall redeem FOUR HUNDRED
SIXTY-FIVE (465) shares of non-voting common stock in WEBCO
from Richard E. Best for a non-voting interest in the
Partnership. The Corporation shall then purchase the non-
voting Partnership interest from Richard E. Best for
$250,323.45 in cash. The $250,323.45 price of the non-
voting Partnership interest is based on the appraised fair
market value of the FOUR HUNDRED SIXTY-FIVE (465) WEBCO non-
voting common shares of $538.33 per share;
b) FEB COMMON. The Partnership shall purchase ONE THOUSAND
FOUR HUNDRED EIGHTY-SEVEN (1,487) shares of FEB common stock
from Richard E. Best for $43,658.32 in cash., based on the
FEB common stock appraised fair market value of $29.36 per
share;
c) BUL COMMON. The Partnership shall purchase TWO THOUSAND ONE
HUNDRED TWENTY-EIGHT (2,128) shares of BUL common stock from
Richard E. Best for $140,362.88 in cash, based on the BUL
common stock appraised fair market value of $65.96 per
share;
d) BUL PREFERRED. The Partnership shall purchase THREE AND
THREE-FOURTHS (3.75) shares of BUL preferred stock for
$375.00 in cash, based on the BUL preferred stock appraised
fair market value of $100.00 per share, which shares are
owned jointly as tenants in common by the Best Brothers and
which shares represent Richard E. Best's undivided TWENTY-
FIVE PERCENT (25%) interest in the FIFTEEN (15) shares of
BUL preferred stock jointly owned by the Best Brothers;
e) CORPORATION COMMON. The Corporation shall redeem ONE
THOUSAND SIX HUNDRED EIGHTY-SEVEN (1,687) shares of the
Corporation's common stock from Richard E. Best for
$649,495.00 in cash, based on the Corporation common stock
appraised fair market value of $385.00 per share.
Richard E. Best shall deliver to the Corporation, no later than
February 15, 1995, all stock certificates and properly endorsed
and executed stock powers in a form sufficient to permit the
transfer of ownership of the stock.
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4. AMBER BEST.
a) WEBCO NON-VOTING COMMON. WEBCO shall redeem FIFTY-EIGHT
(58) shares of non-voting common stock in WEBCO from Amber
Best for a non-voting interest in the Partnership. The
Corporation shall then purchase from Amber Best the non-
voting Partnership interest for $31,223.14 in cash. The
$31,223.14 price of the non-voting Partnership interest is
based on the appraised fair market value of the FIFTY EIGHT
(58) WEBCO non-voting common shares of $538.33 per share.
Amber Best shall deliver to the Corporation, no later than
February 15, 1995, all stock certificates and properly endorsed
and executed stock powers in a form sufficient to permit the
transfer of ownership of the stock.
5. MARSHALL W. BEST.
a) WEBCO NON-VOTING COMMON. WEBCO shall redeem FOUR HUNDRED
SIXTY-FIVE (465) shares of non-voting common stock in WEBCO
from Marshall W. Best for a non-voting interest in the
Partnership. The Corporation shall then purchase the non-
voting Partnership interest from Marshall W. Best for
$250,323.45 in cash. The $250,323.45 price of the non-
voting Partnership interest is based on the appraised fair
market value of THE FOUR HUNDRED SIXTY-FIVE (465) WEBCO non-
voting shares of $538.33 per share;
\1 FEB COMMON. The Partnership shall purchase ONE THOUSAND
FOUR HUNDRED EIGHTY-SEVEN (1,487) shares of FEB common stock
from Marshall W. Best for $43,658.32 in cash, based on the
FEB common stock appraised fair market value of $29.36 per
share;
c) BUL COMMON. The Partnership shall purchase TWO THOUSAND ONE
HUNDRED TWENTY-EIGHT (2,128) shares of BUL common stock from
Marshall W. Best for $140,362.88 in cash, based on the BUL
common stock appraised fair market value of $65.96 per
share;
d) BUL PREFERRED. The Partnership shall purchase THREE AND
THREE-FOURTHS (3.75) shares of BUL preferred stock for
$375.00 in cash, based on the BUL preferred stock appraised
fair market value of $100.00 per share, which shares are
owned jointly as tenants in common by the Best Brothers and
which shares represent Marshall W. Best's undivided TWENTY-
FIVE PERCENT (25%) interest in the FIFTEEN (15) shares of
BUL preferred stock jointly owned by the Best Brothers;
e) CORPORATION COMMON. The Corporation shall purchase ONE
THOUSAND SIX HUNDRED EIGHTY-SEVEN (1,687) shares of the
Corporation's common stock from Marshall W. Best for
$649,495.00 in cash, based on the Corporation common stock
appraised fair market value of $385.00 per share.
Marshall W. Best shall deliver to the Corporation, no later than
February 15, 1995, all stock certificates and properly endorsed
and executed stock powers in a form sufficient to permit the
transfer of ownership of the stock.
6. TRACEY BEST.
a) WEBCO NON-VOTING COMMON. WEBCO shall redeem FIFTY-EIGHT (58)
shares of non-voting common stock in WEBCO from Tracey Best
for a non-voting interest in the Partnership. The
Corporation shall then purchase the non-voting Partnership
interest from Tracey Best for $31,223.14 in cash. The
$31,223.14 price of the non-voting Partnership interest is
based on the appraised fair market value of the FIFTY-EIGHT
(58)
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WEBCO non-voting shares of $538.33 per share.
Tracey Best shall deliver to the Corporation, no later than
February 15, 1995, all stock certificates and properly endorsed
and executed stock powers in a form sufficient to permit the
transfer of ownership of the stock.
F. SHARES OF FEB COMMON STOCK OWNED BY THE 1972 IRREVOCABLE TRUST. The
Huntington Trust Company, N.A., as the Trustee of the 1972 Irrevocable
Trust, created under the trust agreement dated December 28, 1972, for
the benefit of the four Best Brothers (the "1972 Trust"), shall sell
to the Partnership on February 15, 1995, ELEVEN THOUSAND EIGHT HUNDRED
NINETY-ONE (11,891) shares of FEB common stock, which constitute the
total 11,891 FEB common shares held by the 1972 Trust, for $349,119.76
in cash, based on the Wendin Appraisal I fair market value of $29.36
per share.
G. RESULT OF SHARE TRANSACTIONS. After all the transactions involving
sales and purchases of shares and interests of FEB, BUL, BLC, WEBCO,
and the Partnership, which are described in Sections 2.2 through 2.6,
are completed, BLC will own an eighty-seven percent (87.00%) interest
in the Partnership.
H. SEVERANCE PAYMENT: WALTER E. BEST. On February 15, 1995, the
Corporation shall pay to Walter E. Best in cash as compensation a
severance payment of $500,000.
I. COVENANT NOT TO COMPETE: WALTER E. BEST. On February 15, 1995, the
Corporation shall pay to Walter E. Best $640,000 in cash for his
covenant not to compete against the Corporation, as provided in this
Section 2.9.
For a period of five years beginning on February 15, 1995, the
effective date of this Agreement, and ending on February 15, 2000,
Walter E. Best shall not: (i) engage in any capacity (including, but
not limited to, capacities as an employee, independent contractor, or
agent) or have any interest, direct or indirect, in any business in
the locking and security industry or otherwise in competition with the
Corporation's business; or (ii) use, or permit the use of, the name
"Best" for marketing or commercial purposes in association with any
business in the locking and security industry or otherwise in
competition with the Corporation's business with which he may become
associated. Walter E. Best may request that the Corporation waive the
enforcement of its rights under the covenants herein in a particular
situation, and the Corporation may or may not agree to waive its
rights.
J. RESIGNATIONS: WALTER E. BEST. Walter E. Best shall resign as an
employee, officer, and member of the Board of Directors of the
Corporation and as an officer and member of the Board of Directors of
each of FEB, BUL, WEBCO, and Best Universal Locks Limited, effective
as of February 15, 1995. Walter E. Best shall resign as a member of
the Administrative Committee of the Corporation's Stock Bonus Plan,
effective as of February 15, 1995.
K. RESIGNATIONS: ROBERT W. BEST, RICHARD E. BEST, AND MARSHALL W. BEST.
Robert W. Best shall resign as an employee of the Corporation,
effective as of February 15, 1995. Each of Richard E. Best and
Marshall W. Best shall resign as an employee and officer of the
Corporation, effective as of February 15, 1995.
L. CANCELLATION OF INDEBTEDNESS. On February 15, 1995, the Corporation
shall cancel $28,690.97, which is the approximate amount of the
indebtedness owed on that date by each of Robert W. Best, Richard E.
Best, and Marshall W. Best to the Corporation under the terms of the
promissory notes each of them executed in connection with the
Corporation's prior interest in part of the proceeds of the joint and
survivor life insurance policy owned by Robert W. Best, as Trustee of
the Walter Edwin Best Irrevocable Life Insurance Trust, created under
the trust agreement dated April 15, 1989. The canceled promissory
notes shall be given to Robert W. Best, Richard E. Best, and Marshall
W. Best by the Corporation upon the execution of this Agreement.
Further, the Corporation shall not charge Robert W. Best, Richard E.
Best, or Marshall W. Best for expenses the Corporation has incurred to
permit them to attend any training classes or seminars.
M. SEVERANCE PAYMENT: ROBERT W. BEST. On February 15, 1995, the
Corporation shall pay to Robert W.
24
<PAGE>
Best in cash as compensation a severance payment of $405,612.
N. SEVERANCE PAYMENT: RICHARD E. BEST. On February 15, 1995, the
Corporation shall pay to Richard E. Best in cash as compensation a
severance payment of $423,381.
O. SEVERANCE PAYMENT: MARSHALL W. BEST. On February 15, 1995, the
Corporation shall pay to Marshall W. Best in cash as compensation a
severance payment of $416,614.
P. COVENANT NOT TO COMPETE: ROBERT W. BEST, RICHARD E. BEST, AND
MARSHALL W. BEST. In connection with the purchase of their shares in
FEB, BUL, the Corporation, and WEBCO, each of Robert W. Best, Richard
E. Best, and Marshall W. Best covenants as follows:
1. GENERAL COVENANT. For a two (2) year period, beginning on
February 15, 1995, the effective date of the Agreement, and
ending on February 15, 1997, he shall not engage in any capacity
(including, but not limited to, capacities as an employee,
independent contractor, or agent) or have any interest, direct or
indirect, in any business in the locking and security industry or
otherwise in competition with the Corporation's business.
2. OTHER COVENANTS. For a five (5) year period, beginning on
February 15, 1995, the effective date of the Agreement, and
ending on February 15, 2000, he shall not:
a) Participate in any marketing or similar effort to promote a
product or service in the locking and security industry or
otherwise competitive with any product or service then
marketed by the Corporation;
b) Engage in any capacity (including, but not limited to,
capacities as an employee, independent contractor, or agent)
or have any interest, direct or indirect, in any business in
the locking and security industry or otherwise in
competition with the Corporation's business if any Best
Family Member (as defined in Section 2.19 below) or person
related to a Best Family Member by blood owns any equity
interest in such business other than a de minimus interest;
or
c) Use, or permit the use of, the name "Best" for marketing or
commercial purposes in association with any business in the
locking and security industry or otherwise in competition
with the Corporation's business with which he may become
associated.
3. ACTIVITIES OUTSIDE THE COVENANTS NOT TO COMPETE. Notwithstanding
any other provision of this Section 2.16, Richard E. Best shall
be free at any time to perform services for, or have an interest,
direct or indirect, in, any enterprise that is not in the locking
industry and that does not have as one of its principal
activities the marketing or promotion of locks or locking
systems. For example, Richard E. Best shall be free at any time
to perform services as a manager of plant or building security
for any enterprise that is not in the locking industry and that
does not have as one of its principal activities the marketing or
promotion of locks or locking systems. Similarly, Richard E.
Best shall be free at any time to perform managerial services for
a corporation in the security industry, such as Nora Security, so
long as such corporation does not have as one of its principal
activities the marketing or promotion of locks or locking
systems.
4. PAYMENT FOR COVENANTS. On February 15, 1995, in return for their
covenants not to compete reflected in this Section 2.16, the
Corporation shall pay to each of Robert W. Best, Richard E. Best,
and Marshall W. Best $200,000 in cash.
5. WAIVER. Any of Robert W. Best, Richard E. Best, and Marshall W.
Best may request that the Corporation waive the enforcement of
its rights under these covenants in a particular situation, and
the Corporation may or may not agree to waive its rights.
Q. VACATION AND BONUS DAYS. In accordance with the Corporation's
personnel policies, the Corporation shall compensate Walter E. Best,
Robert W. Best, Richard E. Best, and Marshall W. Best for
25
<PAGE>
their vacation days and bonus days accrued to and including December
31, 1994, as follows:
1. WALTER E. BEST. On February 15, 1995, the Corporation shall pay
to Walter E. Best, for his 113 vacation days and 57 bonus days,
the aggregate amount of $195,132.80.
2. ROBERT W. BEST. On February 15, 1995, the Corporation shall pay
to Robert W. Best, for his 25 vacation days and 18 bonus days,
the aggregate amount of $24,162.56.
3. RICHARD E. BEST. On February 15, 1995, the Corporation shall pay
to Richard E. Best, for his 19 vacation days and 13 bonus days,
the aggregate amount of $19,182.08.
4. MARSHALL W. BEST. On February 15, 1995, the Corporation shall
pay to Marshall W. Best, for his 22 vacation days and 14 bonus
days, the aggregate amount of $22,746.24.
Each of Walter E. Best, Robert W. Best, Richard E. Best, and Marshall
W. Best waives any right he may have to receive payment for vacation
and/or bonus days in excess of the amounts reflected in this Section
2.17.
R. SEVERANCE ARRANGEMENT: EDWINA MCLEMORE. Upon execution of a
customary release and waiver of claims against the Corporation in
connection with the termination of her employment, attached as EXHIBIT
D, on February 15, 1995, the Corporation shall pay to Edwina McLemore
in cash as compensation a severance payment of $38,188, and shall pay
to her $4,848 for her 20 vacation days and 13 bonus days accrued to
and including December 31, 1994. The aggregate amount of this
severance package to be paid to Edwina McLemore is $43,036. Under
this severance arrangement, Edwina McLemore's employment with the
Corporation shall terminate on February 15, 1995. In addition, Walter
E. Best shall ensure that on or before the date of closing Edwina
McLemore waives any right she may have to receive payment for vacation
and/or bonus days in excess of the amounts reflected in this Section
2.18.
S. CORPORATION INDEMNIFICATION POLICY AND REIMBURSEMENT OF LEGAL FEES
INDEPENDENT OF INDEMNIFICATION POLICY. The Corporation's Board of
Directors shall adopt and maintain a policy to indemnify directors and
executive officers that includes the advancement of legal fees, so
long as the maintenance of such a policy is legally permissible, at
all times that the Corporation is in existence.
All legal fees up to $82,208.50 in the aggregate that have been
incurred by Walter E. Best in connection with the formulation and/or
consideration of the claims Walter E. Best has advanced shall be paid
by the Corporation as additional consideration to Walter E. Best.
T. GENERAL RELEASE. Upon the fulfillment of all the parties' payment
obligations set forth herein, each of Walter E. Best, Dona J. Best,
Robert W. Best, Denise Best, Richard E. Best, Amber Best, Marshall W.
Best, Tracey Best (collectively hereinafter termed the "Best Family
Members"), Walter E. Best, as Trustee of the WEB Trust, and Dona J.
Best, as Trustee of the DJB Trust, shall provide a general release of
any and all claims, in substantially the form of release attached as
EXHIBIT E (the "Release"),that each may have against WEBCO, FEB, BUL,
and the Corporation and the Corporation's officers, directors, and
agents, including, but not limited to, Gregg A. Dykstra, John R.
Rogers, Donald L. Beckerich, David M. DeWitt, Douglas P. Long, and
Russell C. Best. Each of WEBCO, FEB, BUL, the Partnership, the
Corporation, Gregg A. Dykstra, and Russell C. Best shall provide, and
the Corporation shall, in good faith, use its best efforts to ensure
that the other above-named individuals shall provide, a Release of
claims that each may have against any of the Best Family Members, the
WEB Trust, the DJB Trust, John R. Price, Herbert A. Jensen, Michael
Williams, Michael R. Franceschini, and Kent Newton.
U. COVENANT NOT TO ACQUIRE SHARES. Each of the Best Family Members, the
WEB Trust, and the DJB Trust covenants not to acquire, or assist
others in acquiring, any FEB, BUL, Corporation, or WEBCO shares or
Partnership interests. Each of the Best Family Members, the WEB
Trust, and the DJB Trust covenants that if any of them ever acquires
any such shares or interests, for example by inheritance or as a
distribution from the Corporation's Stock Bonus Plan, he, she, or it
shall sell the shares to the Corporation for the value of the shares
or the interests to the Partnership for the value of the interests,
the
26
<PAGE>
value of the shares or interests to be determined as appraised by a
reputable and experienced independent appraiser. All appraisal fees
shall be paid by FEB, BUL, the Corporation, WEBCO, or the Partnership,
as the case may be.
V. CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 1985 LAWS. The
Corporation shall comply with all laws imposed under the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA") in connection with
the termination of employment of Robert W. Best, Richard E. Best,
Marshall W. Best, Edwina McLemore, and Walter E. Best.
W. CONFIDENTIAL AND PROPRIETARY INFORMATION OF THE CORPORATION. Each of
the Best Family Members shall return to the Corporation any and all
confidential and proprietary information of WEBCO, FEB, BUL, or the
Corporation that is currently in his or her possession and shall
covenant never to disclose any confidential or proprietary information
of the Corporation and its Affiliates to third parties.
X. DUTY TO NOTIFY. During the five (5) year period, beginning February
15, 1995, the effective date of the Agreement, and ending on February
15, 2000, each of Walter E. Best, Robert W. Best, Richard E. Best, and
Marshall W. Best shall notify the Corporation of the identity of any
entity engaged in business in the locking and security industry with
which he secures employment or other work. Any notification required
shall be given to the Corporation within ten (10) days after the
employment or other work is secured.
Y. WALTER E. BEST: OFFICE PROPERTY. Walter E. Best may take, at no
expense to him, the file cabinets, electric typewriter, and personal
effects from his office at the Corporation at his convenience before
February 15, 1995, as evidenced by his signature on the receipt
attached as EXHIBIT F. Walter E. Best may use his office for as long
as necessary through February 15, 1995, to organize materials and
clear the office. Walter E. Best shall return to the Corporation any
corporate property in his possession, with the exception of the
property identified above, no later than February 15, 1995.
Z. AIRCRAFT PROPERTY. As of the closing date, Aircraft has removed all
its property from the Corporation's premises, and the Corporation has
delivered to Walter E. Best all the books and records of Aircraft that
are in the Corporation's possession as evidenced by the signed receipt
in EXHIBIT F.
AA. PHOTOGRAPH. The Corporation shall provide a duplicate of the
photograph of Frank E. Best to Marshall W. Best not later than
February 15, 1995.
BB. MARSHALL W. BEST: OFFICE FURNITURE. By February 15, 1995, the
Corporation shall convey to Marshall W. Best, at no expense to him,
the wood cabinet and desk that are located in the Corporation's
hangar, as evidenced by his signature on the receipt in EXHIBIT F.
CC. AGREEMENT TERMS NOT CONFIDENTIAL. Each of the parties to the
Agreement is free to discuss the terms of the Agreement with anyone at
any time and at any place.
DD. PROHIBITION AGAINST SEEKING FUTURE EMPLOYMENT. None of the Best
Family Members shall apply for employment with WEBCO, FEB, BUL, the
Corporation, or the Partnership at anytime after February 15, 1995.
EE. WEBCO DIVIDEND. Walter E. Best and Russell C. Best shall cause WEBCO
to declare and pay cash dividends in the amount of $9.00 per share on
or before February 15, 1995.
FF. NO OBLIGATION TO GIFT WEBCO DIVIDENDS. Russell C. Best shall have no
obligation to gift or otherwise transfer to Robert W. Best, Richard E.
Best, or Marshall W. Best any part of the cash dividends he is paid in
1995 or in subsequent years with respect to WEBCO voting or non-voting
shares that he owns or may in the future own.
GG. SALE OF FURNITURE. The Corporation shall offer to sell the following
items of furniture and equipment at the appraised values identified in
EXHIBIT J to Richard E. Best: an executive swivel chair, four (4)
caster chairs, a conference table, two (2) lamps, and a blueprint
file. Any sale shall be effected not later
27
<PAGE>
than February 15, 1995.
HH. CANCELLATION OF AUTOMOBILE LEASES. The Corporation and Aircraft shall
cancel, effective February 15, 1995, the lease agreements pursuant to
which the Corporation leases from Aircraft company cars used by Robert
W. Best, Richard E. Best, and Marshall W. Best. The Corporation does
not object to Robert W. Best, Richard E. Best, and Marshall W. Best
purchasing the cars that they currently use from Aircraft following
the cancellation of the Corporation's leases of those vehicles from
Aircraft.
II. FEDERAL AND STATE INCOME TAX PREPARATION. The Corporation shall pay
Robert W. Best, Richard E. Best, Marshall W. Best, and Walter E. Best
for the costs of accounting services incurred by each of them to
prepare their individual 1994 federal and state income tax returns in
the following amounts: (1) to Walter E. Best: $4,250.00, (2) to
Robert W. Best: $2,235.00, (3) to Richard E. Best: $1,170.00, and (4)
to Marshall W. Best: $400.00. The Corporation shall cooperate in the
preparation of all the tax returns by promptly providing all the
information necessary for completing the returns.
JJ. CANCELLATION OF LEASES AND PURCHASE OF AUTOMOBILES. The Corporation
and Aircraft shall cancel the lease agreements pursuant to which the
Corporation leases from Aircraft the automobiles, which are listed on
EXHIBIT A, that are owned by Aircraft and are currently used by
employees of the Corporation. The Corporation shall purchase each of
the automobiles reflected in Exhibit K for an amount equal to the
amount of bank indebtedness owed by Aircraft respecting each such
automobile on February 15, 1995. The Corporation shall pay the
purchase price to Aircraft either by paying cash or by assuming the
amount of Aircraft's bank indebtedness owed on the closing date
respecting each of the automobiles, as identified on the attached
EXHIBIT K. Aircraft shall endorse the titles to the automobiles
listed on EXHIBIT K to the Corporation. Copies of the titles to be
endorsed are attached as EXHIBIT L.
KK. DOCUMENTS OF BEST FOUNDATION, INC. The Corporation shall perform no
services, including accounting services, for Best Foundation, Inc. or
Best Aircraft, Inc. after February 15, 1995, the effective date of the
Agreement. The Corporation shall deliver to Walter E. Best, by
February 15, 1995, all books and records of Best Foundation, Inc. that
are in the Corporation's possession.
LL. WAIVER OF RIGHTS TO INVENTIONS AND INTELLECTUAL PROPERTY. Each of
Robert W. Best, Richard E. Best, Marshall W. Best, and Walter E. Best
hereby waives, and, if deemed necessary by the Corporation, shall
assign to the Corporation, any rights he may have in any inventions or
other intellectual property, whether or not patentable, that he may
have worked with or on while an employee of the Corporation.
MM. PKS LITIGATION. Walter E. Best shall, in good faith and to the best
of his abilities, render services to the Corporation's outside counsel
with respect to the litigation with ILCO ("the PKS litigation") to
which the Corporation is now a party. The Corporation shall pay NINE
THOUSAND DOLLARS ($9,000.00) to Walter E. Best for the services he
renders respecting the PKS litigation after February 15, 1995.
NN. SUPPLEMENTAL RETIREMENT BENEFITS AGREEMENT. The Corporation shall
honor and keep in full force and effect the Supplemental Retirement
Benefits Agreement, as amended, with Walter E. Best dated March 14,
1990.
OO. REMOVAL OF PERSONAL EFFECTS. As of the closing date, Walter E. Best,
Robert W. Best, Richard E. Best, and Marshall W. Best have removed all
their personal effects from their offices at the Corporation as
evidenced by the receipts in EXHIBIT F .
PP. STOCK BONUS PLAN. As further consideration for this Agreement, Walter
E. Best, Robert W. Best, Richard E. Best, AND Marshall W. Best
covenant as follows:
1. IRREVOCABLE WAIVER OF RIGHT TO VOTE STOCK. Each of Walter E.
Best, Robert W. Best, Richard E. Best, and Marshall W. Best
irrevocably waives the right to vote the stock allocated to their
respective accounts, pursuant to the terms of the Best Lock
Corporation Stock Bonus Plan and Trust Agreement (the "Plan"), as
evidenced by signed forms of irrevocable waiver attached as
EXHIBIT G, which shall be given to the Plan Trustee, NBD.
28
<PAGE>
2. IRREVOCABLE ELECTION TO RECEIVE CASH DISTRIBUTIONS. Each of
Walter E. Best, Robert W. Best, Richard E. Best, and Marshall W.
Best irrevocably elects to receive any amounts distributed to
them, pursuant to the terms of the Plan, in cash, not in the form
of stock, as evidenced by the signed forms of irrevocable
election attached as EXHIBIT H, which shall be given to the Plan
Trustee, NBD.
QQ. IRREVOCABLE WAIVER OF RIGHT TO VOTE STOCK UNDER IRREVOCABLE TRUST.
Walter E. Best shall relinquish certain of his rights, powers, and
interests with respect to the Walter E. Best Irrevocable Trust , under
Agreement dated December 28, 1972, by executing the Irrevocable Waiver
that is attached as EXHIBIT I.
RR. LIFE INSURANCE POLICIES. The Corporation's indebtedness under each of
the split-dollar agreements to which it is a party with each of
Richard E. Best and Marshall W. Best, satisfied respectively, will be
by payment out of the cash value of the policies and the Corporation
shall, upon the satisfaction of such indebtedness, no longer have any
rights or interests respecting either such policy.
III ARTICLE 3: GENERAL PROVISIONS
A. EFFECTIVE DATE AND CLOSING DATE. The effective date and the closing
date of this Agreement are February 15, 1995.
B. GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the state of Indiana and
shall be enforced in either federal or state court located in Marion
County, Indiana.
C. COUNTERPARTS. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all
of which shall constitute but one and the same instrument.
D. COMPLETE AGREEMENT. This Agreement and the Exhibits attached hereto
contain the entire agreement between the parties with respect to the
transactions described herein and shall supersede all previous oral or
written and all contemporaneous oral negotiations, commitments, and
understandings.
E. HEADINGS. The Headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
F. SEVERABILITY. Any provision of this Agreement that is invalid,
illegal, or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity,
illegality, or unenforceability, without affecting in any way the
remaining provisions hereof in the jurisdiction and without rendering
that or any other provision of this Agreement invalid, illegal, or
unenforceable in any other jurisdiction.
G. EXPENSES OF TRANSACTIONS. Except as otherwise specifically stated in
this Agreement, the parties are responsible for paying all their own
expenses in giving effect to this Agreement. The parties are
responsible for their own tax consequences due to this Agreement.
H. EXHIBITS. Each of the Exhibits referenced in or attached to this
Agreement forms an integral part of the Agreement and by this
reference is incorporated herein as if set forth in this Agreement
verbatim.
I. AUTHORIZATION. The parties represent that they are each properly
authorized to execute the Agreement and the Exhibits hereto.
J. NOTICES. Any notices pursuant to this Agreement shall be in writing
and deemed complete when delivered by hand or when mailed by
registered or certified mail, postage pre-paid and return receipt
requested, addressed as follows:
29
<PAGE>
Best Lock Corporation
6161 East 75th Street
P.O. Box 50444
Indianapolis, IN 46250
Best Aircraft Corporation
8111 Bayberry Court
Indianapolis, IN 46250
The Best Lock Partnership
6161 East 75th Street
P.O. Box 50444
Indianapolis, IN 46250
Walter E. Best Company, Inc.
6161 East 75th Street
P.O. Box 50444
Indianapolis, IN 46250
Frank E. Best, Inc.
6161 East 75th Street
P.O. Box 50444
Indianapolis, IN 46250
Best Universal Lock Co.
6161 East 75th Street
P.O. Box 50444
Indianapolis, IN 46250
Walter E. Best, as Trustee of the Walter E. Best Revocable Trust
8111 Bayberry Court
Indianapolis, IN 46250
Dona J. Best, as Trustee of the Dona J. Best Revocable Intervivos
Trust
8111 Bayberry Court
Indianapolis, IN 46250
Walter E. Best
Dona J. Best
8111 Bayberry Court
Indianapolis, IN 46250
Robert W. Best
Denise Best
6518 Calais Circle
Indianapolis, IN 46220
Richard E. Best
Amber Best
12535 Richlane Drive
Indianapolis, IN 46236
Marshall W. Best
Tracey Best
10858 Tenacious Drive
Indianapolis, IN 46236
30
<PAGE>
Russell C. Best
755 Eagle Creek Court
Zionsville, IN 46077
Gregg A. Dykstra
1838 Arrowwood Drive
Carmel, IN 46033
K. REMEDIES FOR BREACH. Any party to this Agreement may seek any legal
or equitable remedy provided by law for the breach of any of the
provisions herein.
L. WAIVERS. The waiver of one provision in this Agreement does not
constitute the waiver of any others.
M. SUCCESSORS AND ASSIGNS. This Agreement and the provisions hereof
shall be binding upon and inure to the benefit of each of the parties
and their respective heirs, successors, and assigns. No party to this
Agreement may assign any of his rights or obligations hereunder
without the written consent of each of the other parties to this
Agreement.
N. THIRD PARTIES. No provision contained herein shall be deemed to
confer upon any person or entity, other than the parties hereto and
their respective heirs, successors, and assigns, any right or remedy
under, or by reason of, this Agreement.
O. CONSENT TO I.R.C. SECTION 1377(a)(2) ELECTION. All parties that own
or owned shares of stock in WEBCO during the 1995 calendar year shall
give written consent, in substantially the same form that is attached
hereto as EXHIBIT M, to the election required under I.R.C. Section
1377(a)(2) that will permit WEBCO's year to be split into two separate
taxable years: the first taxable year beginning January 1, 1995, and
ending on the date of the redemption of the WEBCO non-voting shares
under this Agreement, and the second taxable year beginning the day
after the date of redemption and ending on December 31, 1995.
P. AGREEMENT TO NOTIFY TO AVOID ATTRIBUTION. Walter E. Best shall
execute the "Agreement to Notify Under I.R.C. Section
302(c)(2)(A)(iii) to Avoid Application of Family Attribution Rules"
attached as EXHIBIT N pursuant to I.R.C. Section 302(c)(2)(A)(iii)
and Treas. Reg. Section 1.302-4(a)1. Dona J. Best shall execute the
"Agreement to Notify Under I.R.C. Section 302(c)(2)(A)(iii) Waiver of
to Avoid Attribution" attached as EXHIBIT O pursuant to I.R.C. Section
302(c)(2)(A)(iii) and Treas. Reg. Section 1.302-4(a)1.
Q. COMPENSATION. All compensation to be paid by the Corporation under
this Agreement is identified in the gross amount before deduction of
amounts for withholding FICA, FUTA, and income taxes.
IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Agreement on February 15, 1995.
BEST LOCK CORPORATION
Date: By:
-------------------- ----------------------------------------
Russell C. Best, Chief Executive
Officer
BEST AIRCRAFT CORPORATION
Date: By:
-------------------- ----------------------------------------
Walter E. Best, President
BEST LOCK PARTNERSHIP
31
<PAGE>
Date: By:
-------------------- ----------------------------------------
Russell C. Best, General Partner
WALTER E. BEST COMPANY, INC.
Date: By:
-------------------- ----------------------------------------
Walter E. Best, President
FRANK E. BEST, INC.
Date: By:
-------------------- ----------------------------------------
Walter E. Best, President
BEST UNIVERSAL LOCK CO.
Date: By:
-------------------- ----------------------------------------
Walter E. Best, President
WALTER E. BEST REVOCABLE TRUST,
UNDER AGREEMENT DATED MAY 8, 1992, AS
AMENDED
Date: By:
-------------------- ------------------------------------
Walter E. Best, Trustee
DONA J. BEST REVOCABLE INTERVIVOS TRUST,
UNDER AGREEMENT DATED DECEMBER 19, 1991, AS
AMENDED
Date: By:
-------------------- -----------------------------------
Dona J. Best, Trustee
Date:
-------------------- -----------------------------------
WALTER E. BEST
Date:
-------------------- -----------------------------------
DONA J. BEST
Date:
-------------------- -----------------------------------
ROBERT W. BEST
32
<PAGE>
Date:
-------------------- -----------------------------------
DENISE BEST
Date:
-------------------- -----------------------------------
RICHARD E. BEST
Date:
-------------------- -----------------------------------
AMBER BEST
Date:
-------------------- -----------------------------------
MARSHALL W. BEST
Date:
-------------------- -----------------------------------
TRACEY BEST
Date:
-------------------- -----------------------------------
RUSSELL C. BEST
Date:
-------------------- -----------------------------------
GREGG A. DYKSTRA
33
<PAGE>
INDEX OF EXHIBITS TO AGREEMENT
Exhibit A - Automobiles
Exhibit B - Wendin Appraisal I
Exhibit C - Wendin Appraisal II
Exhibit D - Edwina McLemore Release
Exhibit E - General Releases
Exhibit F - Receipts
Exhibit G - Irrevocable Waiver of Right to Vote Stock
Exhibit H - Irrevocable Election to Receive Cash Distributions
Exhibit I - Irrevocable Waiver of Right to Vote Stock Under Irrevocable Trust
Exhibit J - Sale of Furniture
Exhibit K - Schedule of Automobile Purchase Prices
Exhibit L - Automobile Titles
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 3,774,105
<SECURITIES> 0
<RECEIVABLES> 15,264,842
<ALLOWANCES> 301,954
<INVENTORY> 15,455,546
<CURRENT-ASSETS> 37,422,080
<PP&E> 62,647,604
<DEPRECIATION> 32,053,421
<TOTAL-ASSETS> 72,746,801
<CURRENT-LIABILITIES> 11,621,770
<BONDS> 12,000,000
<COMMON> 1,407,841
0
0
<OTHER-SE> 32,226,539
<TOTAL-LIABILITY-AND-EQUITY> 72,746,801
<SALES> 29,352,842
<TOTAL-REVENUES> 29,352,842
<CGS> 15,764,524
<TOTAL-COSTS> 27,921,271
<OTHER-EXPENSES> 137,346
<LOSS-PROVISION> 78,619
<INTEREST-EXPENSE> 137,346
<INCOME-PRETAX> 1,426,744
<INCOME-TAX> 597,541
<INCOME-CONTINUING> 829,203
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 829,203
<EPS-PRIMARY> 6.49
<EPS-DILUTED> 6.49
</TABLE>
