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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K*
*Amendment No. 1 to Form 10-K for the fiscal year ended December 31, 1994
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1994
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 0-1491
BEST LOCK CORPORATION
(Exact name of registrant as specified in its charter)
<S> <C>
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 (Zip Code)
offices)
Registrant's telephone number, including area code: (317) 849-2250
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
<PAGE>
None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK WITHOUT NOMINAL OR PAR VALUE
(Title of class)
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of filing.
(Any sales of the registrant's stock by nonaffiliates within 60 days prior to
the date of filing would have sold at a price unknown to the registrant.)
Indicate the number of shares outstanding of each of the registrant's classes
of common, as of March 15, 1995.
COMMON STOCK 124,358.85 SHARES
Documents incorporated by reference: List the following documents if
incorporated by reference and the part of the form 10-K into which the
document is incorporated: (1) Any annual report to security holders; (2) Any
proxy or information statement; and (3) Any prospectus filed pursuant to Rule
424(b) or (c) under the Securities Act of 1993. The listed documents should be
clearly described for identification purposes.
NONE
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<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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 consolidated 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.
RESULTS OF OPERATIONS - 1994 vs. 1993
In order to more efficiently manage its operations, the
Company reorganized into two divisions during 1994. The Best
Lock Manufacturing (BLM) Division is responsible for
manufacturing and supplying security products to the Company's
distribution division, Best Locking Systems (BLS).
The Company's net sales for 1994 increased 6% over 1993,
primarily due to improved sales volume in the Best Locking
Systems Division and the recognition of a full year of sales for
offices that began operations during 1993. The overall higher
level of retail sales at the distribution level improved gross
margins to 48.4%, compared to 45.2% in 1993. The Company also
negotiated a three year purchase agreement with its major brass
supplier which resulted in the Company not experiencing an
increase in the per pound cost of brass despite the market price
for brass, the largest raw material component of its products,
increasing approximately 11% in 1994.
Salaries and wages were $4.3 million higher than 1993
levels. A portion of the increase relates to a charge of $2.1
million in the fourth quarter for anticipated employee-related
expenses related to the settlement of claims arising from a
derivative action. The material financial components of this
settlement, which was concluded on February 15, 1995 and is
described in Item 13, include 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, 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 the payment by
Best Lock Corporation of $8,178,296 for the acquisition of shares
of Best Lock Corporation and interests in a partnership described
in Item 13. The severance, vacation and bonus payments made to
these individuals were accrued as expense in 1994. The aggregate
payment for the covenants not to compete will be amortized as
follows: $206,667 in 1995, $248,000 in each of the years 1996-
1999, and $41,333 in 2000. Best Lock Corporation does not
<PAGE>
believe that the departure of Walter E. Best will have a material
adverse impact on its business or future results of operations.
Expansion of the Company's sales distribution offices during
1993, when only a partial year of operating expenses were
recognized, also resulted in an increase in salaries and wages
during 1994. Employee benefit costs increased $2 million over
1993 due primarily to (1) an increase in health insurance claims
costs of approximately $1.0 million, which the company is
self-funding; and (2) a change in the assumptions used in
calculating the present value of the retirement benefit for the
former President, Walter E. Best, which increased expense by
$800,000. The discount rate used to calculate the actuarial
present value of the accumulated retirement benefit obligation
was changed from 7.5% in 1993 to 8% in 1994, resulting in a
reduction in employee benefits expense of $434,000.
Total selling, general and administrative and engineering
expenses increased $5.3 million, or 12% over 1993. Reductions
in bad debt expense of approximately $500,000 and lower repairs
and utilities expenditures of approximately $500,000 partially
offset the increase in salaries and benefits costs described
above. Professional fees increased by $1.1 million as the
Company sought assistance in selecting software for the order
processing, inventory management, and accounting functions as
well as for other special projects. Research and development
expenditures increased to $2.7 million in 1994 over the 1993
total of $2.2 million. The Company is continuing to develop an
electronic access security product. The costs of this
development are being expensed currently.
Net income of $2.2 million increased 23% over 1993. Income
taxes decreased to 8% of income before taxes, compared to an
effective tax rate of 43% in 1993. The reduction in the
effective tax rate for 1994 is primarily attributable to the
recognition of a $656,000 income tax benefit in 1994 and certain
other tax credits. In connection with the finalization of the
Company's 1993 U. S. Federal income tax return in September,
1994, it was determined that the Company would have $656,000 of
unutilized foreign tax credits available to offset certain future
U. S. tax obligations. The Company believes these foreign tax
credits will be utilized during the carryover period and thus has
recorded the benefit of the item as a reduction to the provision
for income taxes for the year ended December 31, 1994.
On February 15, 1995, the Company settled all claims arising
from a derivative action that had been threatened by a director
during the third quarter of 1994. Professional fees incurred
related to the settlement of the claims increased other
non-operating expenses by $700,000 during 1994.
RESULTS OF OPERATIONS - 1993 VS. 1992
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Net sales for 1993 increased 16% over 1992. The increase
was principally due to expansion of corporate owned sales
distribution offices throughout the country and a price increase
of approximately 5%. The expansion of the sales offices at the
distribution level allows for greater sales at retail compared to
wholesale sales to independent distributors, which improved the
gross margin to 45.2%, compared with 41.4% in 1992. These higher
sales and margins were partially offset by higher selling and
general and administrative expenses required by operating the
additional offices, such as sales and support personnel.
The Company has continued to enhance its distribution
structure in anticipation of a higher level of sales in the
future. During 1993, the Company established regions across the
United States, each of which has a manager who will assist the
company in providing greater customer service and satisfaction.
In addition, a sales training program was presented across the
nation in the fall of 1993 to enhance the abilities and knowledge
of the Company's sales force, at a cost of approximately
$350,000.
Net income decreased in 1993 to $1.8 million , or 1.8% of
sales, from $2.46 million or 2.9% of sales in 1992. Operating
expenses increased $11 million primarily due to higher salaries,
wages, related taxes and benefits of $6.9 million. Repairs and
rent, travel, and professional fees also increased $1.2 million,
$660,000 and $705,000, respectively, mainly due to the expansion
and development of the Company's sales distribution offices as
described above. Profitability was affected by a variety of
specific factors, several of which were determined during the
fourth quarter of 1993. The Company paid a discretionary bonus
to all employees in November, 1993, in the amount of slightly
over $1.1 million. Furthermore, the change in the discount rate
for the retirement benefit obligation from 8% in 1992 to 7.5% in
1993 resulted in additional pension expense of approximately
$431,000 in 1993. Year end physical inventories resulted in an
unexpected charge of $700,000.
Total research and development expenditures were
approximately $2.2 million in 1993 compared to $2.0 million in
1992, as the Company continued to develop an electronic security
access product, the costs of which are being expensed currently.
The increased expenditures for research and development, the
enhancements made related to expanding the corporate owned sales
distribution offices, and the increase in capital expenditures
represent the Company's investment in the future, which will
result in an increased emphasis on the customer and will enhance
the growth potential and profitability of the Company in future
years.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's current ratio, while continuing to be strong,
decreased to 2.6 at December 31, 1994 compared to 3.9 at December
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31, 1993. Cash and cash equivalents increased $3.2 million as a
result of (1) the implementation of a company-wide enhanced cash
management system in late 1993 and (2) a modest reduction in days
sales outstanding. Any excess cash generated over current
operating needs is invested in a daily money market fund at a
variable interest rate. At December 31, 1994, $2.3 million was
invested in this fund. The current ratio was affected by an
increase in current liabilities of $5.9 million due to the
establishment of an accrual for estimated severance expenses,
increases in customer advances, and an increase in accrued
medical claims. The Company's continued emphasis on inventory
management and control in 1994 resulted in a slight decrease in
finished goods inventory from 1993, even though the number of
corporate owned sales distribution facilities increased. The
overall inventory increased less than 1%. Property, plant and
equipment additions decreased by approximately $800,000 to $3.9
million in 1994 from the 1993 total of $4.7 million and by $1.2
million from the 1992 total of $5.1 million. Expenditures in
1993 and 1992 included costs of the expansion of the corporate
owned sales distribution offices, which slowed slightly during
1994. The majority of the capital additions were to improve
productivity and efficiency. Capital expenditures for 1995 are
expected to be in the $7 million range, which includes
approximately $3 million for enhanced computer systems and
related software. From time to time, the Company acquires
property that is constructed over time, normally at a vendor's
facility. Such costs are accumulated in a construction in
progress account until placed into service.
On May 18, 1994, the Company loaned $3.4 million to Russell
C. Best, Chief Executive Officer, under the terms of an
Employment Agreement entered into by Best Lock Corporation and
Russell C. Best on May 5, 1994. The terms of the loan include
repayment over a 30 year period and interest at 7.2%. Total
current liabilities increased by $5.8 million from 1993 to 1994.
The Company continues to do more business in the construction
industry, which resulted in an increase of $685,000 in customer
advances. Payments are received from these customers prior to
the fulfillment of the orders, and the income is not recognized
until the completion of the work. Accrued income taxes increased
by $692,000. As described above, the Company established a $2.3
million liability for estimated severance costs, a portion of
which were incurred on February 15, 1995. The severance is
expected to reduce annual employee costs by approximately $1.0
million beginning in the third quarter of 1995. The liability
for estimated medical claims was increased by $635,000 due to an
overall increase in 1994 health insurance claims.
The Company desires to retain its strong credit rating, and
therefore attempts to pay all vendors according to terms and take
all discounts offered.
During 1994, the principal source of the Company's funds was
from operations. Cash provided by operating activities totaled
<PAGE>
$11 million for 1994, compared with $5.4 million in 1993. The
increase was due primarily due to a $4.1 million increase in
accounts payable, customer advances, and accrued liabilities. In
addition, accounts and notes receivable increased only $703,000
in 1994 compared to an increase of $3 million in 1993 and $2
million in 1992.
Prior to the refinancing in February 1995, the Company
maintained an unsecured bank line of credit under which it could
borrow up to $7 million. No borrowings were needed during 1994.
The line was utilized for short-term needs during 1993, the
largest amount borrowed being $2 million. In February 1995, the
Company negotiated a $25 million unsecured bank line of credit,
in part for the purpose of acquiring shares of Best Lock
Corporation and an 87% interest in a partnership which owns
directly or indirectly shares in Best Lock Companies, as
discussed in Note 14 to the consolidated financial statements.
On February 15, 1995, $12 million was borrowed under the line of
credit in order to finance this and other transactions as
described in Note 14 to the consolidated financial statements.
The remainder of the line remains available for additional funds,
if required. The Company expects to repay the loan from current
operating funds. The Company believes that the amounts available
from operating cash flows and under the line of credit will be
sufficient to meet its expected cash needs, including planned
capital expenditures.
While not having a material impact on the current level of
sales, the growth potential of future sales may be affected by
the outcome of the following action: Best Lock Corporation vs.
ILCO - Unican Corporation (Federal District Court, Indianapolis,
Cause No. IP 93-1092C). This action by the Company against ILCO,
a North Carolina corporation, charges ILCO with infringement of
the Company's trade dress and trademark right in certain patented
keys and other keys, and with unfair competition. The trial was
concluded on March 14, 1995, but no verdict has been rendered in
the case to date. Management is not able to assess the
likelihood of a favorable outcome in this case.
OTHER
Foreign sales continued at approximately 7% of total sales
during 1994 and 1993. The profit on these sales improved
slightly during 1994. The profit on foreign sales improved more
significantly from 1992 to 1993, because, in 1992, significant
costs related to the installation of a retirement benefit in the
Company's Canadian subsidiary were recognized in the amount of
$813,000.
The Best Lock Corporation Stock Bonus Plan was amended in
1994. Under the plan, participants, upon reaching certain
eligibility requirements, may receive cash or shares of the
Company. In the event the participants elect or are required to
receive shares, the participants have the right to require Lock
<PAGE>
to repurchase such shares in cash at its fair market value. As a
result, in 1994, the fair market value of the shares, determined
based on an independent appraisal, held by the Stock Bonus Plan,
has been reflected in the accompanying balance sheet as "Common
Stock and Common Stock of Universal and Best,
Redeemable Under Stock Bonus Plan."
The firm backlog of approximately $6.4 million as of March
15, 1995 is slightly lower than the level of the prior year. The
Company continues to focus on customer satisfaction in the areas
of delivery and service, which includes shorter lead times.
The Company has not experienced any unusual inflation in its
purchases or sales for the years 1994, 1993, or 1992.
The Company is not aware of any environmental expenses, past
or present, which the Company believes will result in a
significant liability or cost.
<PAGE>
Item 13. Certain Relationships and Related Transactions
A change in control of Frank E. Best, Inc. occurred on May
18, 1994. On that date, Russell C. Best, then Vice-President
and a Director of Frank E. Best, Inc., purchased 114,325 shares
of the common stock of Frank E. Best, Inc. Frank E. Best, Inc.
has 598,710 shares of common stock issued and outstanding. After
the purchase, Russell C. Best controlled, directly or indirectly,
50.27% of the outstanding common stock of Frank E. Best, Inc.
This voting control of Frank E. Best, Inc. 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
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Total 301,000
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* 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 Frank E.
Best, Inc. owned by WEBCO are voted.
After the purchase of Frank E. Best, Inc.'s stock as
described above, Russell C. Best beneficially owned, directly or
indirectly, approximately 50.27% of the voting securities of
Frank E. Best, Inc., taking into consideration the 185,188 shares
of Frank E. Best, Inc.'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 Frank E. Best, Inc.'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
Best Lock Corporation 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 Frank E.
Best, Inc.'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, a subsidiary of
a subsidiary of Frank E. Best, Inc. The loan was made in
accordance with the terms of the Employment Agreement between
Best Lock Corporation and Russell C. Best, dated May 5, 1994 and
described below. Prior to the acquisition of control by Russell
C. Best, no single person possessed control of Frank E. Best,
Inc.
<PAGE>
Shortly after the change in control of Frank E. Best, Inc.
described above, Russell C. Best began to implement
organizational changes in Best Lock Corporation 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 Best Lock Corporation, Russell C. Best and Gregg A.
Dykstra, then General Counsel of Best Lock Corporation, 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, Best Lock Corporation 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: (i) the resignation of Walter E. Best from the Board of
Directors and as President of each of Frank E. Best, Inc., Best
Lock Corporation and Best Universal Lock Co.; (ii) the
resignation of Richard E. Best and Marshall W. Best as officers
and employees of Best Lock Corporation 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 Best Lock
Corporation; (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 Best Lock Corporation and interests in a partnership as
described below. 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 Best Lock Corporation in connection with Best
Lock Corporation'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 Best
Lock Corporation and the two individuals. 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 Best Lock Corporation 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.
On February 15, 1995, Best Lock Corporation, which is a
subsidiary of Best Universal Lock Co., which is in turn a
subsidiary of Frank E. Best, Inc., purchased an eighty-seven
percent (87%) non-voting partnership interest in Best Lock
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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, Best Lock Corporation 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, Best
Lock Corporation 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
Frank E. Best, Inc. and Best Universal Lock Co. from members of
the Best family for the aggregate purchase price of
$1,061,191.92.
Finally, Best Lock Corporation 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 Frank E. Best, Inc. and a member of Frank E. Best,
Inc.'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
(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.
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Purchase Purchase Purchase Purchase Severance
Price for Price for Price for Price for Best and Vacation Noncom-
Partnership Frank E. Best Lock Universal /Bonus petition
Name Interests Best, Inc.'s Corporation Lock Co. Payments Payments
Shares Shares Shares
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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
<PAGE>
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
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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 Frank E. Best, Inc.
Best Universal Lock Co. and Best Lock Corporation and Walter E.
Best Company, Inc. He is the father of Frank E. Best, Inc.'s
current President, Russell C. Best, Robert W. Best, Richard E.
Best and Marshall W. Best. Prior to February 15, 1995, Robert W.
Best was Assistant to the President of Best Lock Corporation. He
is a brother of Frank E. Best, Inc.'s current President, Russell
C. Best. Prior to February 15, 1995, Richard E. Best was a Vice
President of Best Lock Corporation. He also is a brother of
Frank E. Best, Inc.'s current President, Russell C. Best. Prior
to February 15, 1995, Marshall W. Best was a Vice President of
Best Lock Corporation. He also is a brother of Frank E. Best,
Inc.'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 Frank E. Best, Inc.,
Best Universal Lock Co. and Best Lock Corporation 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.
Best Lock Corporation'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 Best Lock Corporation
from Huntington National Bank of Indianapolis, Indiana.
The series of transactions described above was approved
unanimously by the Boards of Directors of Frank E. Best, Inc. and
of Best Lock Corporation 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 Best
Lock Corporation from a financial point of view.
<PAGE>
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 Best Lock Corporation.
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 Best
Lock Corporation, including any incentive or bonus plans. The
Employment Agreement further provides for a loan of up to
$3,400,000 to Russell C. Best, to be repaid to Best Lock
Corporation over a thirty year period with interest at 7.2% per
annum.
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 Best
Lock Corporation 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 Best Lock Corporation 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, Best Lock Corporation loaned $3,400,000 to Russell
C. Best pursuant to the terms of a Loan Agreement dated May 5,
1994, to which Best Lock Corporation 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 Frank E. Best, Inc.'s Common Stock and 451 shares of
Best Universal Lock Co. Such shares will be released pro rata
from the pledge as the principal of the loan is repaid to Best
Lock Corporation.
On May 16, 1994, Best Lock Corporation 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 Best Lock Corporation to purchase from him any
<PAGE>
shares of Frank E. Best, Inc. 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, Best Lock Corporation 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 Best Lock Corporation in 1994, was the president
of, and owned in excess of 10% of, Marcon, Inc. Best Lock
Corporation 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.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) Financial Statements of registrant unconsolidated
are omitted because (1) consolidated financial statements are
included; and (2) registrant is an operating company and the
subsidiary included in the consolidated financial statements is
totally-held.
All required financial statements and schedules
are either included in Item 8 of this Form 10-K or are omitted
because the required information is included in the financial
statements or in the notes thereto.
(b) Reports on Form 8-K: None filed in the last
quarter of 1994.
(c) Exhibits.
Exhibit
10-A Settlement Agreement, dated February 15,
1995, by and among certain members of the
Best family and their affiliates and Best
Lock Corporation, Frank E. Best, Inc. and
Best Universal Lock Co. (incorporated by
reference to Exhibit 99 to the Form 10-Q of
Frank E. Best, Inc. for the Quarter ended
March 31, 1995)
<PAGE>
10-B Loan Agreement, dated May 5, 1994, between
Best Lock Corporation and Russell C. Best as
amended by Amendment To Loan Agreement, dated
February 15, 1995
10-C Best Lock Partnership Agreement of General
Partnership, dated February 13, 1995, as
amended by First Amendment, Second Amendment
and Third Amendment thereto
10-D Indemnification Agreement among Best Lock
Corporation, Best Aircraft, Inc. and Walter
E. Best
10-E Amendment to Supplemental Retirement Benefits
Agreement between Best Lock Corporation and
Walter E. Best
10-F Employment Agreement, dated May 5, 1994,
between Russell C. Best and Best Lock
Corporation
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned.
Date: October 12, 1995
BEST LOCK CORPORATION
/s/ Russell C. Best
----------------------------
Russell C. Best, Chairman of
the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the date indicated.
<TABLE>
<CAPTION>
<S> <S> <S>
Signature Title Date
1. Principal Executive Officer:
/s/ Russell C. Best President and Chief October 12, 1995
------------------------ Executive Officer
Russell C. Best
2. Principal Financial Officer:
/s/ Gregg A. Dykstra Secretary and Treasurer October 12, 1995
------------------------
Gregg A. Dykstra
/s/ Paula J. Tinkey Manager of Accounting October 12, 1995
------------------------
Paula Tinkey
3. A majority of the
Board of Directors:
/s/ Russell C. Best Director October 12, 1995
------------------------
Russell C. Best
/s/ Mariea L. Best Director October 12, 1995
------------------------
Mariea L. Best
</TABLE>
<PAGE>
Amendment to LOAN AGREEMENT
This Amendment to the Loan Agreement dated May 5, 1994 is
made this 15th day of February, 1995, by and between Best Lock
Corporation (the "Corporation") and Russell C. Best, a resident
of Zionsville, Indiana (the "Executive").
WHEREAS, the Parties entered into the Loan Agreement dated
May 5, 1994 which, in recognition of Employee's major
contribution to the profitability, growth, and financial strength
of the Corporation during present and future employment with the
Corporation, provided for a loan of a certain amount of funds to
the Executive;
WHEREAS, Executive pledged to the Corporation all of the
shares of Frank E. Best, Inc., a Washington corporation, ("FEB")
he purchased with the proceeds of the loan as collateral to
guarantee repayment of the loan to the Corporation;
WHEREAS, the formation of Best Lock Partnership, an Indiana
general partnership formed by Walter E. Best Company, Inc., an
Indiana corporation ("WEBCO") and Executive (the "Partnership"),
will require the contribution by Executive of 2,500 shares of FEB
common stock to the Partnership; and,
WHEREAS, by this Amendment, the parties desire to amend the
Loan Agreement to allow Executive to contribute such FEB shares
to the Partnership by permitting Executive to substitute 451
unencumbered shares of Best Universal Lock Corporation, a
Washington Corporation ("BUL"), currently owned by Executive, in
place of 1,014 FEB shares, which are equal in value to the FEB
shares for which the substitution is to be made.
NOW, THEREFORE, the Loan Agreement is amended as follows:
Section 1. Incorporation and Recitals. The Recitals set
forth above are incorporated in and made a part of this
Amendment.
Section 2. Nature and Effect of Amendment. Except as
otherwise provided hereunder, the terms of the Loan Agreement
shall remain unchanged.
Section 3. New Section 4. Section 4 of the Loan Agreement
is amended and restated as follows:
Section 4. Collateral Security. The Executive
shall deliver to the Corporation stock certificate(s)
<PAGE>
representing 113,311 shares of capital stock of Frank
E. Best, Inc., a Washington corporation, ("FEB") which
the Executive purchased with the proceeds of the loan
contemplated hereunder, and 451 shares of Best
Universal Lock Corporation, a Washington Corporation
("BUL") to secure full payment by the Executive of
amounts owing under the terms of this Agreement and the
Promissory Note. So long as the Executive is not in
default under the terms of this Agreement and the
Promissory Note, all voting and dividend rights in any
such FEB or BUL shares so pledged shall belong to the
Executive. As payments of principal are made under the
terms of the Promissory Note, the Corporation shall
first release stock certificates representing ownership
of FEB shares and then, after all FEB shares are
released, the Corporation shall release BUL shares, in
such amounts so that the Corporation will never hold
stock certificates as security hereunder representing
FEB and/or BUL shares having an aggregate value greater
than the aggregate amount of principal and accrued
interest owing under the terms of the Promissory Note.
Upon the full payment of the total amount of principal
and accrued interest owing under the terms of the
Promissory Note, the Corporation shall deliver to the
Executive all stock certificates and other collateral
security which it may hold under the terms of this
Agreement and shall release all such security into the
possession of and to the account of the Executive.
Wherefore, the Parties hereby amend the Loan Agreement dated
May 5, 1994 as set forth above as of this 15th day of February,
1995.
BEST LOCK CORPORATION
By: /s/ Walter E. Best
------------------------
Walter E. Best, President
Attest:
By: /s/ Mark G. Ahearn
-----------------------
Mark G. Ahearn
Its: Associate Counsel
/s/ Russell C. Best
------------------------------
Russell C. Best
<PAGE>
LOAN AGREEMENT
This Loan Agreement (the "Agreement"), entered into this 5th
day of May, 1994, by and between Best Lock Corporation, a
Delaware corporation, (the "Corporation") and Russell C. Best, a
resident of Zionsville, Indiana, (the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive has been for several years, and is now,
employed as an executive officer of the Corporation and has made,
and is expected to make, a major contribution to the
profitability, growth, and financial strength of the Corporation;
WHEREAS, the Corporation considers the continued services of
the Executive to be in the best interests of the Corporation and
its shareholders and desires to assure the continued services of
the Executive on behalf of the Corporation on an objective and
impartial basis and without distraction or conflict of interest
in the event of an attempt to obtain control of the Corporation;
WHEREAS, the Executive is willing to remain in the employ of
the Corporation upon the understanding that the Corporation will
provide him with certain economic benefits;
WHEREAS, the Corporation and the Executive have entered into
an Employment Agreement dated May 5th, 1994 (the "Employment
Agreement"), pursuant to which the Corporation and the Executive
have agreed that the Executive will continue to be employed as an
executive officer of the Corporation and will provide certain
services in return for the Corporation providing certain economic
benefits to Executive, including the loaning of funds to
Executive;
WHEREAS, the Executive desires to borrow funds from the
Corporation and the Corporation is willing to loan funds to the
Executive pursuant to the terms of the Employment Agreement; and
WHEREAS, the Corporation and the Executive wish to record the
terms of their agreement in writing in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises made
hereunder and consistent with the terms of the Employment
Agreement, the parties agree as follows:
Section 1. Loan of Funds. The Corporation will loan the
Executive at such time as the Executive requests within the next
Ninety (90) days of the date of this Agreement an amount not to
exceed Three Million Four Hundred Thousand Dollars ($3,400,000)
at an interest rate of seven and two-tenths percent (7.2%) per
annum and on such other terms pursuant to the provisions of a
Promissory Note substantially in the form attached hereto as
Exhibit 1. The Executive will repay the principal amount and all
<PAGE>
interest accrued on the principal amount in accordance with the
terms of the Promissory Note and not later than April 30, 2024.
The Executive may prepay without penalty any or all of the
principal and accrued interest owing under the terms of this
Agreement and the Promissory Note.
Section 2. Execution of Promissory Note by the Executive. On
the date of this Agreement, the Executive will execute a
Promissory Note substantially in the form attached hereto as
Exhibit 1.
Section 3. Executive's Use of Funds. The Executive may use
the funds loaned to him by the Corporation for such purpose or
purposes as the Executive desires.
Section 4. Collateral Security. Within ten (10) days after
the loan transaction contemplated hereunder is closed, the
Executive shall deliver to the Corporation stock certificates
representing any shares of capital stock of Frank E. Best, Inc.,
a Washington corporation, ("FEB") which the Executive shall have
purchased with the proceeds of the loan contemplated hereunder,
to secure full payment by the Executive of amounts owing under
the terms of this Agreement and the Promissory Note. So long as
the Executive is not in default under the terms of this Agreement
and the Promissory Note, all voting and dividend rights in any
such FEB shares so pledged shall belong to the Executive. As
payments of principal are made under the terms of the Promissory
Note, the Corporation shall release stock certificates
representing ownership of FEB shares in such amounts so that the
Corporation will never hold stock certificates as security
hereunder representing FEB shares having an aggregate value
greater than the aggregate amount of principal and accrued
interest owing under the terms of the Promissory Note. Upon the
full payment of the total amount of principal and accrued
interest owing under the terms of the Promissory Note, the
Corporation shall deliver to the Executive all stock certificates
and other collateral security which it may hold under the terms
of this Agreement and shall release all such security into the
possession of and to the account of the Executive.
Section 5. Event of Default. The occurrence of any of the
following shall constitute a default under the Promissory Note
and under this Agreement: (i) the failure of the Executive to
make timely payment of principal or interest under the terms of
the Promissory Note; (ii) the admission by the Executive in
writing of an inability to pay his debts as they become due;
(iii) the appointment of a receiver or trustee for any part of
the Executive's property; or (iv) an assignment for the benefit
of the Executor's creditors.
Upon any default, the Corporation, at its option and without
notice or demand, may declare all amounts owing to it by the
Executive secured hereby immediately to be due and payable, and
shall have all the remedies of a secured party available under
<PAGE>
Indiana law. These remedies include, without limitation, the
right to take permanent possession of all collateral, including
stock certificates, held at such time hereunder and to succeed to
all voting and dividend rights related thereto.
Section 6. Amendment of Agreement. This Agreement may be
amended in any or all of its provisions only if the amendment is
reduced to writing and signed by the Corporation and either the
Executive or, if he is legally incompetent, his personal
representative.
Section 7. Successors. All of the terms or provisions of
this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their heirs, administrators,
executors, successors, and permitted assigns.
Section 8. Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall be
deemed to have been given if placed in the United States mail,
registered or certified, return receipt requested, postage
prepaid, or if personally delivered, addressed as follows:
To the Corporation: Best Lock Corporation
6161 East 75th Street
Indianapolis, Indiana 46250
To the Executive: Russell C. Best
755 Eagle Creek Drive
Zionsville, Indiana 46077
Section 9. Governing Law. This Agreement shall be construed
and interpreted in accordance with, and shall be governed by, the
laws of the State of Indiana.
IN WITNESS WHEREOF, the Corporation and the Executive have
caused this Agreement to be executed on the day and year first
above written.
"CORPORATION"
/s/ Walter E. Best
-----------------------------
Walter E. Best, President
Attest: /s/ Roger E. Beaverson
----------------------
Roger E. Beaverson, Secretary
"EXECUTIVE"
/s/ Russell C. Best
-----------------------------
Russell C. Best
<PAGE>
EXHIBIT 1
INSTALLMENT PROMISSORY NOTE
$3,400,000 Final Installment Due Date: April 30, 2024
For value received, the undersigned promises to pay to the
order of Best Lock Corporation, a Delaware corporation, the sum
of Three Million Four Hundred Thousand Dollars ($3,400,000), at
6161 East 75th Street, Indianapolis, Indiana, or at such other
place as the holder hereof may direct in writing, with interest
upon the unpaid principal balance at the rate of seven and two-
tenths percent (7.2%) per annum from the date of this instrument
until maturity, and nine and two-tenths percent (9.2%) per annum
after maturity until paid, with attorneys' fees and costs of
collection and without relief from valuation and appraisement
laws, payment of principal and interest to be made as follows:
Principal and interest shall be paid in equal annual
installments (each installment including both principal and
interest) in the amount of $______________. Each annual
installment shall be paid on April 30. The first annual
installment shall be paid on April 30, 1995, with additional
installments to be paid on April 30 each year thereafter.
The final annual installment shall be paid on April 30, 2024
and shall be in the amount of $_______________.
This note may be prepaid in full or in part at any time.
In the event of default in payment of any of said installments
when due, the entire unpaid balance of principal and interest
shall become due and payable immediately, without notice, at the
election of the holder hereof.
The maker and any indorser(s) jointly and severally waive
demand, presentment, protest, notice of protest, and notice of
nonpayment or dishonor of this note, and each of them consents to
extensions of the time of payment of this note.
No delay or omission on the part of the holder hereof in the
exercise of any right or remedy shall operate as a waiver
thereof, and no single or partial exercise by the holder hereof
of any right or remedy shall preclude other or further exercise
thereof or of any other right or remedy.
This note, and any extensions or renewals hereof, is secured
by a Loan Agreement dated May ____, 1994 and executed in favor of
and delivered to the payee hereof by the undersigned, to which
reference is made for other rights as to prepayment and
acceleration.
<PAGE>
Signed and delivered at Indianapolis, Indiana, this ______ day
of May, 1994.
Signature
______________________________
Russell C. Best
755 Eagle Creek Drive
Zionsville, Indiana 46077
THIRD AMENDMENT TO AGREEMENT OF GENERAL PARTNERSHIP
This Third Amendment to Agreement of General Partnership
effective as of the 15th day of February, 1995 by and among: (i)
Russell C. Best ("RCB"), as a General Partner holding Class A
units of interest ("Class A Units") in the Best Lock Partnership,
an Indiana general partnership, (the "Partnership"); (ii) Walter
E. Best Company, Inc., an Indiana corporation ("WEBCO"), as a
General Partner holding Class A Units in the Partnership; and
(iii) Best Lock Corporation, a Delaware corporation ("BLC"), as a
General Partner holding Class B units of interest ("Class B
Units") in the Partnership.
WHEREAS, BLC desires to contribute $1,061,191.92 in cash to
the capital of the Partnership to acquire 12,583.08 additional
Class B Units;
WHEREAS, Russell C. Best, in his capacity as a General
Partner holding Class A Units in the Partnership, and WEBCO, in
its capacity as a General Partner holding Class A Units in the
Partnership, are agreeable to the issuance by the Partnership to
BLC of 12,583.08 additional Class B Units upon BLC's payment to
the Partnership of $1,061,191.92;
WHEREAS, Russell C. Best, WEBCO, and BLC desire to remain
bound by the terms of the Agreement of General Partnership, as
amended by the First Amendment to Agreement of General
Partnership dated February 15, 1995; the Second Amendment to
Agreement of General Partnership dated February 15, 1995; and
this Third Amendment to Agreement of General Partnership, (the
"Agreement"); and
WHEREAS, Russell C. Best, WEBCO, and BLC desire to reflect
their agreement in writing.
NOW, THEREFORE, each of the parties, in consideration of the
acts and promises of the other, agrees as follows:
Section 1. Issuance to BLC of Additional 12,582.31 Class B
Units. BLC hereby contributes $1,061,191.92 in cash to the
Partnership's capital. In return, the Partnership hereby issues
to BLC 12,583.08 additional Class B Units. After this issuance,
the total number of Class B Units held by BLC will be 66,192.68.
Section 2. Amendment of Schedule A. Schedule A of the
Agreement of General Partnership is amended and restated in its
<PAGE>
entirety as shown on Exhibit 1, which is attached hereto and made
a part hereof.
Section 3. Agreement of Partners to Remain Bound by the
Terms of the Agreement. Each of RCB, WEBCO, and BLC has
acknowledged its or his agreement to remain bound by the terms of
this Agreement.
Section 4. Ratification of Other Provisions of Agreement of
General Partnership. Unless expressly amended hereby, all terms
and provisions of the Agreement of General Partnership dated
February 13, 1995, as amended by the First Amendment to Agreement
of General Partnership dated February 15, 1995 and by the Second
Amendment to Agreement of General Partnership dated February 15,
1995, are hereby ratified and shall remain in full force and
effect.
<PAGE>
This Third Amendment to Agreement of General Partnership is
entered into as of the date above written.
CLASS A GENERAL PARTNERS
/s/ Russell C. Best
--------------------------
Russell C. Best
WALTER E. BEST COMPANY, INC.
By: /s/ Walter E. Best
----------------------
Walter E. Best, President
CLASS B GENERAL PARTNERS
BEST LOCK CORPORATION
By: /s/ Russell C. Best
-----------------------
Russell C. Best,
Chief Executive Officer
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Russell C. Best, in his capacity as a General
Partner holding Class A Units in the Best Lock Partnership, who
acknowledged the execution of the foregoing Third Amendment to
Agreement of General Partnership, and who, having been duly
sworn, stated that all matters referred to therein are true.
WITNESS my hand and Notarial Seal this 14th day of February,
1995.
My Commission Expires:
5-25-95 /s/ Marianne Marshall
------------- -------------------------------
Notary Public
My County of Residence:
Hancock Marianne Marshall
------------------------ -------------------------------
Printed
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Walter E. Best, President of Walter E. Best
Company, Inc., a General Partner holding Class A Units in the
Best Lock Partnership, who acknowledged the execution of the
<PAGE>
foregoing Third Amendment to Agreement of General Partnership,
and who, having been duly sworn, stated that all matters referred
to therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Russell C. Best, Chief Executive Officer of
Best Lock Corporation, a General Partner holding Class B Units in
the Best Lock Partnership, who acknowledged the execution of the
foregoing Third Amendment to Agreement of General Partnership,
and who, having been duly sworn, stated that all matters referred
to therein are true.
WITNESS my hand and Notarial Seal this 14th day of February,
1995.
My Commission Expires:
5-25-95 /s/ Marianne Marshall
------------- -------------------------------
Notary Public
My County of Residence:
Hancock Marianne Marshall
------------------------ -------------------------------
Printed
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 1
Amended Schedule A
Capital Contribution
Number and
Type of
Partnership Percentage
Name
Residence Description of Property Value Units Interest
<S> <C> <C> <C> <C> <C>
Class A General
Partners
Russell C. Best 755 Eagle Creek Court 2,500 shares of $73,400 734 0.96%
Zionsville, IN 46077 common stock of Class A Units
Frank E. Best, Inc.
Walter E. Best 6161 East 75th Street 31,188.21 shares of $915,686.01 9,156.86 12.04%
Company, Inc. Indianapolis, IN 46250 common stock of Class A Units
Frank E. Best, Inc.
Class B General
Partners
Best Lock 6161 East 75th Street 1. Assignee of interest $5,582,625.59 66,192.68 87.00%
Corporation Indianapolis, IN 46250 2. Contributed
$1,061,191.92 Class B Units
</TABLE>
<PAGE>
SECOND AMENDMENT TO AGREEMENT OF GENERAL PARTNERSHIP
This Second Amendment to Agreement of General Partnership
effective as of the 15th day of February, 1995 by and among: (i)
Russell C. Best ("RCB"), as a General Partner holding Class A
units of interest ("Class A Units") in the Best Lock Partnership,
an Indiana general partnership, (the "Partnership"); (ii) Walter
E. Best Company, Inc., an Indiana corporation, ("WEBCO"), as a
General Partner holding Class A Units in the Partnership; and
(iii) each of the following persons (collectively the
"Transferring Partners" and individually a "Transferring
Partner"), as a General Partner holding Class B units of interest
("Class B Units") in the Partnership: the Walter E. Best
Revocable Trust, Walter E. Best, Trustee; the Dona J. Best
Revocable Trust, Dona J. Best, Trustee; Robert W. Best; Denise
Best; Richard E. Best; Amber Best; Marshall W. Best; and Tracey
Best.
WHEREAS, each of the Transferring Partners desires to
transfer all of its, his, or her Class B Units in the Partnership
to Best Lock Corporation, a Delaware corporation, ("BLC");
WHEREAS, Russell C. Best, in his capacity as a General
Partner holding Class A Units in the Partnership, and WEBCO, in
its capacity as a General Partner holding Class A Units in the
Partnership, are agreeable to the assignments by the Transferring
Partners of all of their Class B Units to BLC and the admission
of BLC as an additional partner of the Partnership;
WHEREAS, BLC desires to be admitted to the Partnership as a
General Partner holding Class B Units and desires to be bound by
the terms of the Agreement of General Partnership, as amended by
the First Amendment to Agreement of General Partnership dated
February 15, 1995 and by this Second Amendment, (the
"Agreement"); and
WHEREAS, Russell C. Best, WEBCO, the Transferring Partners,
and BLC desire to reflect their agreement in writing.
NOW, THEREFORE, each of the parties, in consideration of the
acts and promises of the other, agrees as follows:
Section 1. Transfers by Transferring Partners of Class B
Units. The transfer to BLC by each of the Transferring Partners
noted below of the number of Class B Units of interest in the
Partnership noted below is approved:
Transferring Partner Number of Class B Units
Transferred to BLC
Walter E. Best Revocable Trust,
Walter E. Best, Trustee 41,884.30
<PAGE>
Dona J. Best Revocable Trust, 1,710.61
Dona J. Best, Trustee
Robert W. Best 2,968.03
Denise Best 370.20
Richard E. Best 2,968.03
Amber Best 370.20
Marshall W. Best 2,968.03
Tracey Best 370.20
Section 2. Admission of BLC as Additional Partner. BLC is
admitted to the Partnership as a General Partner holding
53,609.60 Class B Units of interest in the Partnership.
Section 3. Amendment of Schedule A. Schedule A of the
Agreement of General Partnership is amended and restated in its
entirety as shown on Exhibit 1, which is attached hereto and made
a part hereof.
Section 4. Agreement of BLC to be Bound by the Terms of the
Agreement. BLC has acknowledged its agreement to be bound by the
terms of this Agreement.
Section 5. Ratification of Other Provisions of Agreement of
General Partnership. Unless expressly amended hereby, all terms
and provisions of the Agreement of General Partnership dated
February 13, 1995, as amended by the First Amendment to Agreement
of General Partnership dated February 15, 1995, are hereby
ratified and shall remain in full force and effect.
This Second Amendment to Agreement of General Partnership is
entered into as of the date above written.
CLASS A GENERAL PARTNERS
/s/ Russell C. Best
------------------------
Russell C. Best
WALTER E. BEST COMPANY, INC.
Witness: By: /s/ Walter E. Best
/s/ --------------------
------------------ Walter E. Best, President
CLASS B GENERAL PARTNERS
/s/ Walter E. Best
<PAGE>
-------------------------
Walter E. Best Revocable Trust,
Walter E. Best, Trustee
/s/ Dona J. Best
--------------------------
Dona J. Best Revocable Trust,
Dona J. Best, Trustee
/s/ Robert W. Best
--------------------------
Robert W. Best
/s/ Denise Best
--------------------------
Denise Best
/s/ Richard E. Best
--------------------------
Richard E. Best
/s/ Amber Best
--------------------------
Amber Best
/s/ Marshall W. Best
--------------------------
Marshall W. Best
/s/ Tracey Best
---------------------------
Tracey Best
<PAGE>
Agreement of Additional Partner
In consideration for admission as a General Partner holding
Class B Units of interest in the Best Lock Partnership, Best Lock
Corporation agrees to be bound by all provisions of the Agreement
of General Partnership of the Best Lock Partnership, as amended
by the First Amendment to Agreement of General Partnership dated
February 15, 1995 and as amended by this Second Amendment to
Agreement of General Partnership dated February 15, 1995.
Dated this 15th day of February, 1995.
BEST LOCK CORPORATION
Attest: /s/ By: /s/ Russell C. Best
---------------------------
Russell C. Best, Chief
Executive Officer
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Russell C. Best, in his capacity as a General
Partner holding Class A Units in the Best Lock Partnership, who
acknowledged the execution of the foregoing Second Amendment to
Agreement of General Partnership, and who, having been duly
sworn, stated that all matters referred to therein are true.
WITNESS my hand and Notarial Seal this 14th day of February,
1995.
My Commission Expires:
5-25-96 /s/ Marianne Marshall
---------------------- ------------------------
Notary Public
My County of Residence:
Hancock Marianne Marshall
---------------------- ------------------------
Printed
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Walter E. Best, President of Walter E. Best
Company, Inc., in its capacity as a General Partner holding Class
A Units in the Best Lock Partnership, who acknowledged the
execution of the foregoing Second Amendment to Agreement of
General Partnership, and who, having been duly sworn, stated that
all matters referred to therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Walter E. Best, Trustee of the Walter E. Best
Revocable Trust, in his capacity as a General Partner holding
Class B Units in the Best Lock Partnership, who acknowledged the
execution of the foregoing Second Amendment to Agreement of
General Partnership, and who, having been duly sworn, stated that
all matters referred to therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Dona J. Best, Trustee of the Dona J. Best
Revocable Trust, in her capacity as a General Partner holding
Class B Units in the Best Lock Partnership, who acknowledged the
execution of the foregoing Second Amendment to Agreement of
General Partnership, and who, having been duly sworn, stated that
all matters referred to therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Robert W. Best, in his capacity as a General
Partner holding Class B Units in the Best Lock Partnership, who
acknowledged the execution of the foregoing Second Amendment to
Agreement of General Partnership, and who, having been duly
sworn, stated that all matters referred to therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Denise Best, in her capacity as a General
Partner holding Class B Units in the Best Lock Partnership, who
acknowledged the execution of the foregoing Second Amendment to
Agreement of General Partnership, and who, having been duly
sworn, stated that all matters referred to therein are true.
WITNESS my hand and Notarial Seal this 15ath day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Richard E. Best, in his capacity as a General
Partner holding Class B Units in the Best Lock Partnership, who
acknowledged the execution of the foregoing Second Amendment to
Agreement of General Partnership, and who, having been duly
sworn, stated that all matters referred to therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Amber Best, in her capacity as a General
Partner holding Class B Units in the Best Lock Partnership, who
acknowledged the execution of the foregoing Second Amendment to
Agreement of General Partnership, and who, having been duly
sworn, stated that all matters referred to therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Marshall W. Best, in his capacity as a
General Partner holding Class B Units in the Best Lock
Partnership, who acknowledged the execution of the foregoing
Second Amendment to Agreement of General Partnership, and who,
having been duly sworn, stated that all matters referred to
therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Tracey Best, in her capacity as a General
Partner holding Class B Units in the Best Lock Partnership, who
acknowledged the execution of the foregoing Second Amendment to
Agreement of General Partnership, and who, having been duly
sworn, stated that all matters referred to therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Russell C. Best, Chief Executive Officer of
Best Lock Corporation, in its capacity as a General Partner
holding Class B Units in the Best Lock Partnership, who
acknowledged the execution of the foregoing Second Amendment to
Agreement of General Partnership, and who, having been duly
sworn, stated that all matters referred to therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
5-25-96 /s/ Marianne Marshall
---------------------- ------------------------
Notary Public
My County of Residence:
Hancock Marianne Marshall
----------------------- -------------------------
Printed
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 1
Amended Schedule A
Capital Contribution
Number and
Type of
Partnership Percentage
Name
Residence Description of Property Value Units Interest
<S> <C> <C> <C> <C> <C>
Class A General
Partners
Russell C. Best 755 Eagle Creek Court 2,500 shares of $73,400 734 1.16%
Zionsville, IN 46077 common stock Class A Units
of Frank E. Best, Inc.
Walter E. Best 6161 East 75th Street 31,188.21 shares of $915,686.01 9,156.86 14.42%
Company, Inc. Indianapolis, IN 46250 common stock Class A Units
of Frank E. Best, Inc.
Class B General
Partners
Best Lock 6161 East 75th Street Assignee of interest $4,521,433.67 53,609.60 84.42%
Corporation Indianapolis, IN 46250 Class B Units
</TABLE>
<PAGE>
FIRST AMENDMENT TO AGREEMENT OF GENERAL PARTNERSHIP
This First Amendment to Agreement of General Partnership
effective as of the 15th day of February, 1995 by and among: (i)
Russell C. Best ("RCB"), as a General Partner holding Class A
units of interest ("Class A Units") in the Best Lock Partnership,
an Indiana general partnership, (the "Partnership"); (ii) Walter
E. Best Company, Inc., an Indiana corporation, ("WEBCO"), as a
General Partner holding Class A Units in the Partnership; and
(iii) WEBCO, as a General Partner holding Class B units of
interest ("Class B Units") in the Partnership.
WHEREAS, WEBCO, in its capacity as the holder of Class B
Units in the Partnership, desires to transfer all of its Class B
Units to the following persons (the "Redeeming WEBCO
Shareholders") as consideration for the redemption of their WEBCO
shares: (i) the Walter E. Best Revocable Trust, Walter E. Best,
Trustee; (ii) the Dona J. Best Revocable Trust, Dona J. Best,
Trustee; (iii) Robert W. Best; (iv) Denise Best; (v) Richard E.
Best; (vi) Amber Best; (vii) Marshall W. Best; and (viii) Tracey
Best; and
WHEREAS, Russell C. Best, in his capacity as a General
Partner holding Class A Units in the Partnership, and WEBCO, in
its capacity as a General Partner holding Class A Units in the
Partnership, are agreeable to the assignment by WEBCO of all of
its Class B Units to the Redeeming Shareholders and the admission
of each of the Redeeming Shareholders as an additional partner of
the Partnership; and
WHEREAS, each of the Redeeming Shareholders desires to be
admitted to the Partnership as a General Partner holding Class B
Units and desires to be bound by the terms of the Agreement of
General Partnership, as amended by this First Amendment, (the
"Agreement"); and
WHEREAS, Russell C. Best, WEBCO, and the Redeeming
Shareholders desire to reflect their agreement in writing.
NOW, THEREFORE, each of the parties, in consideration of the
acts and promises of the other, agrees as follows:
Section 1. Transfer by WEBCO of Class B Units. The
transfer by WEBCO of Class B Units of interest in the Partnership
to the following persons in the following amounts is approved:
Transferee Number of Class B Units
Walter E. Best Revocable Trust,
Walter E. Best, Trustee 41,884.30
Dona J. Best Revocable Trust,
Dona J. Best, Trustee 1,710.61
<PAGE>
Robert W. Best 2,968.03
Denise Best 370.20
Richard E. Best 2,968.03
Amber Best 370.20
Marshall W. Best 2,968.03
Tracey Best 370.20
---------
Total 53,609.6000
Section 2. Admission of Persons as Additional Partners.
Each of the eight persons identified in Section 1 hereof as a
transferee is admitted to the Partnership as a General Partner
holding the number of Class B Units of interest in the
Partnership set opposite its, his, or her name in Section 1
hereof.
Section 3. Amendment of Schedule A. Schedule A of the
Agreement of General Partnership is amended and restated in its
entirety as shown on Exhibit 1, which is attached hereto and made
a part hereof.
Section 4. Agreement of Redeeming Shareholders to be Bound
by the Terms of the Agreement. Each of the Redeeming
Shareholders admitted hereby as a General Partner of the
Partnership has acknowledged its, his, or her agreement to be
bound by the terms of this Agreement.
Section 5. Ratification of Other Provisions of Agreement of
General Partnership. Unless expressly amended hereby, all terms
and provisions of the Agreement of General Partnership dated
February 13, 1995 are hereby ratified and shall remain in full
force and effect.
This First Amendment to Agreement of General Partnership is
entered into as of the date above written.
CLASS A GENERAL PARTNERS
/s/ Russell C. Best
---------------------------
Russell C. Best
WALTER E. BEST COMPANY, INC.
Witness: /s/ By: /s/ Walter E. Best
-----------------------
Walter E. Best, President
<PAGE>
CLASS B GENERAL PARTNERS
WALTER E. BEST COMPANY, INC.
Attest: /s/ By: /s/ Walter E. Best
-----------------------------
Walter E. Best, President
Agreement of Additional Partners
In consideration for admission as a General Partner holding
Class B Units of interest in the Best Lock Partnership, each of
the undersigned agrees to be bound by all provisions of the
Agreement of General Partnership of the Best Lock Partnership, as
amended.
Dated this 15th day of February, 1995.
/s/ Walter E. Best
------------------------------
Walter E. Best Revocable Trust,
Walter E. Best, Trustee
/s/ Dona J. Best
------------------------------
Dona J. Best Revocable Trust,
Dona J. Best, Trustee
/s/ Robert W. Best
------------------------------
Robert W. Best
/s/ Denise Best
------------------------------
Denise Best
/s/ Richard E. Best
------------------------------
Richard E. Best
/s/ Amber Best
------------------------------
Amber Best
/s/ Marshall W. Best
------------------------------
Marshall W. Best
/s/ Tracey Best
------------------------------
Tracey Best
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Russell C. Best, in his capacity as a General
Partner holding Class A Units in the Best Lock Partnership, who
acknowledged the execution of the foregoing First Amendment to
Agreement of General Partnership, and who, having been duly
sworn, stated that all matters referred to therein are true.
WITNESS my hand and Notarial Seal this 14th day of February,
1995.
My Commission Expires:
5-25-95 /s/ Marianne Marshall
------------- -------------------------------
Notary Public
My County of Residence:
Hancock Marianne Marshall
------------------------ -------------------------------
Printed
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Walter E. Best, President of Walter E. Best
Company, Inc., as a General Partner holding Class A Units and as
a General Partner holding Class B Units in the Best Lock
Partnership, who acknowledged the execution of the foregoing
First Amendment to Agreement of General Partnership, and who,
having been duly sworn, stated that all matters referred to
therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
----------------------- -----------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- -----------------------
Printed
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
<PAGE>
Before me, a Notary Public in and for said County and State,
personally appeared Walter E. Best, Trustee of the Walter E. Best
Revocable Trust, who acknowledged the execution of the foregoing
First Amendment to Agreement of General Partnership, and who,
having been duly sworn, stated that all matters referred to
therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Dona J. Best, Trustee of the Dona J. Best
Revocable Trust, who acknowledged the execution of the foregoing
First Amendment to Agreement of General Partnership, and who,
having been duly sworn, stated that all matters referred to
therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Robert W. Best, who acknowledged the
execution of the foregoing First Amendment to Agreement of
General Partnership, and who, having been duly sworn, stated that
all matters referred to therein are true.
<PAGE>
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Denise Best, who acknowledged the execution
of the foregoing First Amendment to Agreement of General
Partnership, and who, having been duly sworn, stated that all
matters referred to therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Richard E. Best, who acknowledged the
execution of the foregoing First Amendment to Agreement of
General Partnership, and who, having been duly sworn, stated that
all matters referred to therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
<PAGE>
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Amber Best, who acknowledged the execution of
the foregoing First Amendment to Agreement of General
Partnership, and who, having been duly sworn, stated that all
matters referred to therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Marshall W. Best, who acknowledged the
execution of the foregoing First Amendment to Agreement of
General Partnership, and who, having been duly sworn, stated that
all matters referred to therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, a Notary Public in and for said County and State,
personally appeared Tracey Best, who acknowledged the execution
of the foregoing First Amendment to Agreement of General
Partnership, and who, having been duly sworn, stated that all
matters referred to therein are true.
WITNESS my hand and Notarial Seal this 15th day of February,
1995.
My Commission Expires:
9-10-95 /s/ Donna Kaye Badger
---------------------- ---------------------------
Notary Public
My County of Residence:
Hendricks Donna Kaye Badger
----------------------- ----------------------------
Printed
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
Capital Contribution
Number and
Type of
Partnership Percentage
Name
Residence Description of Property Value Units Interest
<S> <C> <C> <C> <C> <C>
Class A General Partners
Russell C. Best 755 Eagle Creek Court 2,500 shares of $73,400 734 1.16%
Zionsville, IN 46077 common Stock of Class A Units
Frank E. Best, Inc.
Walter E. Best 6161 East 75th Street 31,188.21 shares of $915,686.01 9,156.86 14.42%
Company, Inc. Indianapolis, IN 46250 common stock of Class A Units
Frank E. Best, Inc.
Class B General
Partners
Walter E. Best 8111 Bayberry Court Assignee of interest $3,532,521 41,884.30 65.9559%
Revocable Trusst, Indianapolis, IN 46250 Class B Units
Walter E. Best,
Trustee
Dona J. Best 8111 Bayberry Court Assignee of interest $144,272 1,710.61 2.6937%
Revocable Trust, Indianapolis, IN 46250 Class B Units
Dona J. Best,
Trustee
Robert W. Best 6518 Calais Circle Assignee of interest $250,323 2,968.03 4.6738%
Indianapolis, IN 46220 Class B Units
Denise Best 6518 Calais Circle Assignee of interest $31,223 370.20 .5829%
Indianapolis, IN 46220 Class B Units
Richard E. Best 12535 Richlane Drive Assignee of interest $250,323 2,968.03 4.6738%
Indianapolis, IN 46236 Class B Units
Amber Best 12535 Richlane Drive Assignee of interest $31,223 370.20 .5829%
Indianapolis, IN 46236 Class B Units
Marshall W. Best 10858 Tenacious Drive Assignee of interest $250,323 2,968.03 4.6738%
Indianapolis, IN 46236 Class B Units
Tracey Best 10858 Tenacious Drive Assignee of interest $31,223 370.20 .5829%
Indianapolis, IN 46236 Class B Units
</TABLE>
<PAGE>
BEST LOCK PARTNERSHIP
AGREEMENT OF
GENERAL PARTNERSHIP
THIS AGREEMENT OF GENERAL PARTNERSHIP effective as of the 13
day of February, 1995 by and between: i) Russell C. Best
("RCB"), as a General Partner; and ii) Walter E. Best Company,
Inc., an Indiana corporation ("WEBCO"), as a General Partner.
WHEREAS, the parties hereto desire to form and operate a
general partnership under the laws of the State of Indiana and
the terms and conditions recited herein;
NOW, THEREFORE, each of the parties, in consideration of the
acts, capital contributions and promises of the other, agrees as
follows:
ARTICLE I
Defined Terms
The defined terms used in this Agreement shall have the
meanings specified below:
"Additional Partner" means any person admitted to the
Partnership as Partner pursuant to Article IX.
"Affiliated Person" means any (i) Partner, (ii) member of
the Immediate Family of any Partner, (iii) legal representative
of any Person referred to in the preceding clauses (i) and (ii),
(iv) trustee of a trust for the benefit of any Person referred to
in the preceding clauses (i) and (ii), (v) corporation of which a
majority of the voting interest is owned by any one or more of
the Persons referred to in the preceding clauses (i) through
(iv), or (vi) officer, director, employee or stockholder of a
corporation referred to in the preceding clause (v).
"Agreement" means this Agreement of General Partnership as
amended from time to time.
"Capital Contribution" means the amount of cash and/or
property contributed to the Partnership by each Partner as shown
in the Schedule.
"Class A Partner" shall mean a Partner who owns one or more
Class A Units.
"Class B Partner" shall mean a Partner who owns one or more
Class B Units.
<PAGE>
"Class A Units" shall refer to all Units of Partnership
Interest which carry unlimited voting rights.
"Class B Units" shall refer to all Units of Partnership
Interest other than Class A Units.
"Code" means the Internal Revenue Code of 1986, as amended.
"Entity" means any general partnership, limited partnership,
corporation, limited liability company, joint venture, trust,
business trust, cooperative or association.
"General Partner" means any Person designated as a General
Partner in the Schedule or any Person who becomes a General
Partner as provided herein, in such Person's capacity as a
General Partner of the Partnership.
"Immediate Family" means, with respect to any person, his
spouse and descendants, including any such adopted individuals.
"Interest" or "Partnership Interest" means the ownership
interest of a Partner in the Partnership at any particular time,
including the right of such Partner to any and all benefits to
which such Partner may be entitled as provided in this Agreement
and in the Uniform Act, together with the obligations imposed by
this Agreement and the Uniform Act.
"Net Cash Receipts" means, for each fiscal year of the
Partnership, revenues of the Partnership received in cash during
such fiscal year, net of cash expenses and debt service payments
of the Partnership paid during such fiscal year, but excluding
capital contributions, proceeds of any loan to the Partnership
arising from refinancing or otherwise, proceeds from the sale or
disposition of Partnership assets, and the amount reasonably
designated by the Partners as a cash reserve for the aggregate
authorized non-capital expenditures and capital expenditures or
investments then anticipated by the Partners to be incurred
during the next Partnership fiscal year. In determining the
amount of the cash reserve, the Partners shall take into account,
to the extent they deem appropriate, cash receipts then
anticipated to be received during such fiscal year by the
Partnership.
"Partner" means any General Partner, whether a Class A
Partner or a Class B Partner.
"Partnership" means the general partnership formed in
accordance with this Agreement by the parties hereto, as said
general partnership may from time to time be construed and
amended.
"Percentage Interest" means, with respect to any Partner,
the percentage set forth opposite such Partner's name on the
Schedule. In the case of any Partner, such Percentage Interest
<PAGE>
shall be adjusted from time to time as the Partners may
unanimously agree to take into account any Capital Contributions
made by any individual or Entity subsequent to the making of the
initial Capital Contributions.
"Person" means any individual or Entity, and the heirs,
executors, administrators, successors and assigns of such person
where the context so admits; and unless the context otherwise
requires, the singular shall include the plural, and the
masculine gender shall include the feminine and the neuter and
vice versa.
"Retirement" means, as to a Partner, the occurrence of any
of the following: death, adjudication of insanity or
incompetence, bankruptcy, retirement, voluntary or involuntary
withdrawal for any reason, expulsion or, in the case of a Partner
who is acting as a Partner by virtue of being a trustee of a
trust, the termination of the trust. Voluntary withdrawal shall
occur on the date of such withdrawal stated in a written notice
from the withdrawing Partner to all other Partners, which date of
withdrawal shall be at least 30 days after the date such notice
is given. Bankruptcy shall be deemed to occur whenever a Partner
shall be adjudicated a bankrupt or execute an assignment for the
benefit of creditors, or be subject to the direction and control
of a receiver and such receivership proceedings shall not be
dismissed within 90 days of the receiver's appointment.
"Schedule" means Schedule A annexed hereto as amended from
time to time and as so amended at the time of reference thereto.
"State" means the State of Indiana.
"Uniform Act" means the Uniform Partnership Act as adopted
by the State, IC Section 23-4-1-1 et seq., as hereafter amended
from time to time.
"Unit" shall mean a unit of Partnership Interest.
ARTICLE II
Formation; Name and Purpose
Section 2.1 Formation
Commencing on the date of this Agreement, the parties hereto
hereby form a partnership pursuant to the provisions of the
Uniform Act and this Agreement.
Section 2.2 Name and Office
The Partnership shall be conducted under the name of the
"Best Lock Partnership." The principal office of the Partnership
shall be at 6161 East 75th Street, Indianapolis, Indiana 46250 or
<PAGE>
at such other locations as may hereafter be determined by the
Partners. The Partners may at any time change the location of
the principal office and shall give due notice of any such change
as appropriate.
Section 2.3 Registered Agent
The registered agent of the Partnership is Russell C. Best.
The address of the registered agent is 6161 East 75th Street,
Indianapolis, Indiana 46250.
Section 2.4 Character of Business
The purpose of the Partnership is to acquire and hold
securities for investment purposes.
The Partnership is authorized:
(a) to borrow or raise money from time to time,
without limit as to amount; to execute, accept, endorse, and
deliver, as evidence of such borrowing, all kinds of
securities, including, but without limiting the generality
thereof, promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, and other negotiable or non-
negotiable instruments and evidences of indebtedness; and to
secure the payment and full performance of such securities
by mortgage on, or pledge, conveyance, or assignment in
trust of, the whole or any part of the assets of the
Partnership, real, personal or mixed, including contract
rights, whether at the time owned or thereafter acquired;
(b) to enter into, make, perform and carry out all
types of contracts, and to execute any and all other
instruments as deemed necessary by the Partners;
(c) to exercise any voting rights respecting any
securities owned by the Partnership;
(d) to purchase, lease or otherwise acquire any real
or personal property in connection with or relating to, the
business of the Partnership;
(e) to lease, sell or exchange all or any part of any
real or personal property owned by the Partnership;
(f) to execute, extend or modify leases or sub-leases
of any personal property or real property owned or leased by
the Partnership;
(g) to prepay in whole or in part, refinance, recast,
increase, modify or extend any debt or mortgage which may
affect any property owned or leased by the Partnership and
in connection therewith, execute any extensions, renewals or
modifications of such debt or mortgage or execute new
<PAGE>
instruments of debt or mortgage on the property in lieu of
the existing instruments of debt or mortgage subject to all
applicable Partnership provisions; and
(h) to have and exercise all powers necessary or
convenient to effect any or all of the purposes for which
the Partnership is formed.
ARTICLE III
Partners; Capital
Section 3.1 Initial Partners
The Partners of the Partnership are RCB and WEBCO. Their
addresses, their Percentage Interests and the amounts contributed
to the capital of the Partnership by them in their capacities as
Partners are as set forth in the Schedule.
Section 3.2 Classes of Partners
There shall be two classes of Partners: Class A Partners
and Class B Partners. A Class A Partner is a Partner who holds
Class A Units of Partnership Interest. Partners who hold Class A
Units shall be entitled to vote with respect to the Class A Units
on all matters subject to the vote of the Partners. Each Class A
Unit shall carry one vote.
A Class B Partner is a Partner who holds Class B Units. A
Partner who holds Class B Units of Partnership shall have no
right to vote with respect to the Class B Units on any matter
subject to the vote of the Partners except as the Uniform Act or
this Agreement may otherwise specifically provide. The
Partnership shall not engage in any of the following
transactions, however, without the prior unanimous written
consent of all Partners, both Class A Partners and Class B
Partners: (1) the sale of substantially all of the Partnership's
assets; (2) the liquidation of the Partnership; or (3) the
redemption of any Unit or Units held by any Partner.
A person may hold both Class A Units and Class B Units. In
this case, such person is a Class A Partner as respects the Class
A Units which he holds and a Class B Partner as respects the
Class B Units which he holds.
Section 3.3 Partnership Capital
The capital of the Partnership shall be the aggregate amount
of cash and the agreed value of property contributed by the
Partners, as set forth in the Schedule. Partners may make
additional Capital Contributions at any time.
The original capital amount of each Partner shall be the
amount of his initial Capital Contribution.
<PAGE>
Section 3.4 Interest on Capital
No interest shall be paid on any Capital Contribution to the
Partnership.
Section 3.5 Withdrawal of Capital
No Partner shall have the right to withdraw his Capital
Contribution or the right to receive any funds or property of the
Partnership except as may be specifically provided in this
Agreement.
Section 3.6 Loans by Partners
If any Partner shall loan any monies to the Partnership, the
amount of any such loan shall not be an increase in his Capital
Contribution or entitle him to any increase in his share of the
profits, losses or distributions of the Partnership; but the
amount of any such loan shall be an obligation of the Partnership
to such Partner, and unless otherwise provided and agreed shall
be repaid to him without interest.
Section 3.7 Additional Partners
No Additional Partner may be admitted to the Partnership
without the prior written consent of each Partner.
ARTICLE IV
Rights, Powers, and Duties of Partners
Section 4.1 Authorized Acts
Subject to the provisions of this Agreement, the Partners,
in the name and on behalf of the Partnership shall have the
authority to manage the Partnership and its business and, in
furtherance of same shall, acting collectively or singly, have
the authority to perform all acts which the Partnership is
authorized to perform.
Section 4.2 Management of Partnership Business
The business affairs of the Partnership shall be managed by
the Partners. For this purpose, the Partners shall devote such
amounts of their time and services as they deem necessary in
their discretion. Any party may rely on any action taken by any
Partner within the scope of the Partnership's purposes as having
been a duly-authorized act of the Partnership. Each of the
Partners consents that any Partner may engage in and/or possess
an interest in other business ventures of any nature and
description, independently or with others.
<PAGE>
Section 4.3 Indemnification
The Partnership shall indemnify and save harmless the
Partners against any claims or liability incurred by them
provided that the acts or omissions giving rise to such claims or
liabilities were performed in good faith in the reasonable belief
that they were acting within the scope of their authority under
this Agreement.
Section 4.4 Dealing with Affiliated Persons
The Partners may, in the name and on behalf of the
Partnership, enter into such agreements, contracts or the like
with any individual who is an Affiliated Person, as an
individual, as distinguished from his capacity, if any, as a
Partner, to undertake and carry out the business of the
Partnership as if such Affiliated Person were an independent
contractor; and the Partners may obligate the Partnership to pay
for and on account of any such services reasonable compensation
therefor. Similarly, the Partners may, in the name of and on
behalf of the Partnership, enter into such agreements, contracts
or the like with an Affiliated Person which is not an individual.
The fact that a Partner or a member of his family is
employed or engaged, or is directly interested in or connected
with any Person, firm, corporation or other Entity employed or
engaged by the Partnership to render or perform a service, or
from whom or which the Partnership may buy merchandise or other
property, shall not prohibit the Partners from employing,
engaging or otherwise dealing with such Person, and neither the
Partnership nor any Partner shall have any rights in or to any
income or profits derived therefrom.
ARTICLE V
Term and Dissolution
Except as provided in Article VI, the Partnership shall be
dissolved and shall terminate and its affairs shall be wound up
only upon:
(a) the Retirement of a Partner unless, within 90 days
of the date of such Retirement, the remaining Partners agree
to continue the Partnership;
(b) the mutual written consent of all Partners; or
(c) December 31, 2035.
<PAGE>
ARTICLE VI
Retirement of a Partner
Upon the Retirement of a Partner, the business of the
Partnership shall be carried on by any remaining Partners only if
the remaining Partners agree unanimously within 90 days of the
date of such Retirement to continue the Partnership.
ARTICLE VII
Transferability of Partnership Interests
Section 7.1 Restrictions on Transfer
No Partnership Interest shall be transferred (i) without
receipt of the Partnership of an opinion (oral or written) of one
or more professional advisors to the Partnership reasonably
satisfactory to the Partners, both as to opinion and advisor, to
the effect that such transfer (a) may be made without
registration of such Interest under the Securities Act of 1933
and without any violation of any applicable Federal securities
laws, (b) may be made without registration under, and without any
violation of, any applicable state "Blue Sky" law or other state
securities law, and (c) alone or in conjunction with the transfer
of other Interests, will not adversely affect, or tend to
adversely affect, the taxation of the Partnership as a
partnership under the Code, or result in the termination of the
Partnership for Federal income tax purposes pursuant to Section
708 of the Code in a manner which would create any adverse
federal income tax consequences to the Partnership; or (ii) to a
person who is under eighteen (18) years of age or who is legally
incompetent.
Section 7.2 Assignment of a Partner's Interest
Except as provided under Sections 7.3 and 7.4, a Partner may
not transfer, sell or assign his Interest as a Partner in the
Partnership except with the unanimous written consent of the
remaining Partners.
Section 7.3 Sale or Other Transfer for Consideration
(a) If any Partner ("Selling Partner") desires to sell
or otherwise transfer for consideration all or part of the
Selling Partner's Interest in the Partnership, whether the
potential purchaser is or is not a Partner and whether the
sale or transfer is a private or public transaction, then
the Selling Partner shall promptly give the other Partners
("Purchasing Partners") written notice of the terms and
conditions of such sale or transfer. The Purchasing
Partners shall then determine whether the requirements of
Section 7.1 of this Article VII have been satisfied. Upon
<PAGE>
determining that the requirements of Section 7.1 of this
Article VII have been satisfied, a notice of which
determination shall be sent to all Partners, the Selling
Partner shall promptly offer to sell such Interest to the
Purchasing Partners for the price and on the terms and
conditions of the proposed sale or transfer. The Purchasing
Partners shall have a period of 90 days after the date
notice of such offer is given by the Selling Partner within
which to notify the Selling Partner in writing that the
Purchasing Partners, or one or more of them, elects to
purchase all of such Interest. Each of the Purchasing
Partners shall be entitled to purchase the Interest so
offered in the same proportion that his Percentage Interest
at such time bears to the total of the Percentage Interests
of all the Purchasing Partners.
In the event one or more of the Purchasing Partners
declines to purchase the portion of the Interest to which he
is entitled, then the remaining Purchasing Partners shall
have 30 days after the expiration of said 90-day period
specified above within which to accept the offer with
respect to the portion of the Interest so declined, it being
specifically understood and agreed that each of the
remaining Purchasing Partners shall be entitled to purchase
the portion of the Interest so declined in the same
proportion that his Percentage Interest bears to the total
of the Percentage Interests of the remaining Purchasing
Partners and that in no event shall the time for acceptance
of the Selling Partner's offer be extended beyond said 30-
day period. In the event the entire Interest offered by the
Selling Partner is not accepted by one or more of the
Purchasing Partners within the time and in the manner set
forth above, then the Selling Partner shall have the right
to consummate the sale on the terms and conditions upon
which such Interest was offered to the Purchasing Partners
within 30 days after the expiration of said 120-day period.
In the event of any change in the identity of the potential
purchaser, or in the price, terms or conditions of the sale
or transfer, or in the event the sale to the potential
purchaser is not closed within said 30-day period, then the
Selling Partner shall not sell, convey, transfer or assign
such Interest without first making a new offer to the
Purchasing Partners in accordance with this Section 7.3(a).
(b) In the event one or more of the Purchasing
Partners accepts the entire Interest offered by the Selling
Partner, within the time and in the manner set forth above,
then the Selling Partner and such Purchasing Partners shall
have the duty to close such transaction. The closing shall
be held at the time and place and on the date designated by
such Purchasing Partners by written notice to the Selling
Partner, which date shall be not more than 90 days after the
acceptance by the Purchasing Partners of the offer of the
<PAGE>
Selling Partner relating to the sale of the Selling
Partner's Interest.
(c) Any offer made pursuant to this Section 7.3, and
any purchase or sale pursuant hereto, shall include the
Selling Partner's interest in and to the Partnership and all
assets of the Partnership. The Selling Partner shall convey
his interest in such assets by bill of sale, subject only to
such title defects and encumbrances as exist on the date the
original offer hereunder was made.
Section 7.4 Transfer to Members of Immediate Family or by
Operation of Law
The restrictions on transfer and assignment of Partnership
Interests contained in Sections 7.2 and 7.3 of this Article VII
shall not apply to transfers or assignments to or for the benefit
of the transferor or any member of his Immediate Family, provided
that any such transfers shall be subject to Sections 7.5 and 7.6.
The restrictions on transfer and assignment of Partnership
Interests contained in Sections 7.1 through 7.3 shall not apply
to transfers or assignments by will or operation of law, provided
that any such transfers shall be subject to Sections 7.5 and 7.6.
Section 7.5 Substitute Partners or Additional Partners
No Partner shall have the right to substitute an assignee as
a Partner in his place. An assignee may be admitted as a
substitute Partner only upon the unanimous written consent of the
Partners. Similarly, a person may be admitted as an Additional
Partner only upon the unanimous written consent of the Partners.
Any such substitute Partner or Additional Partner shall, as a
condition of receiving any interest in the Partnership property,
agree to be bound by the provisions of this Agreement, and shall
also agree to accept such other terms and conditions as the
Partners may reasonably determine.
Upon the admission of a substitute Partner or Additional
Partner, the Schedule shall be amended to reflect the name and
address of such substitute Partner or Additional Partner and as
otherwise agreed by the Partners. Each substitute Partner or
Additional Partner shall execute such instrument or instruments
as shall be required by the Partners to signify his agreement to
be bound by all provisions of this Agreement.
Section 7.6 Assignees
In the event of the death or incapacity of a Partner, his
personal representative or its successor or assign shall have the
same status as an assignee of the Partner unless and until the
Partners shall permit such personal representative or successor
or assign to become a substitute Limited Partner on the same
terms and conditions as herein provided to assignees generally.
<PAGE>
An assignee of a Partner who does not become a substitute
Partner as provided aforesaid shall have the right to receive the
same share of profits, losses and distributions of the
Partnership to which the assigning Partner would have been
entitled if no such assignment had been made by such Partner.
Any Partner who shall assign all his interest in the
Partnership shall cease to be a Partner of the Partnership, and
shall no longer have any rights or privileges of a Partner except
that, unless and until the assignee of such Partner becomes a
substitute Partner, the assignor Partner shall retain all the
statutory rights and be subject to all the statutory obligations
of an assignor Partner.
In the event any assignment of the interest of a Partner
shall be made, there shall be filed with the Partnership a duly-
executed and acknowledged counterpart of the instrument making
such assignment, and such instrument must evidence the written
acceptance of the assignee of all the terms and provisions of
this Agreement and until such instrument is so filed, the
Partnership need not recognize any such assignment for any
purpose hereunder.
An assignee of the interest of a Partner who does not become
a substitute Partner as provided aforesaid and who desires to
make a further assignment of his interest shall be subject to all
the provisions of this Article VII to the same extent and in the
same manner as any Partner desiring to make an assignment of his
interest.
ARTICLE VIII
Capital Accounts; Profits and Losses; Distributions
Section 8.1 Capital Contributions
The initial capital accounts of the Partners, representing
the agreed initial capital amounts which are being contributed to
the Partnership, shall equal the amounts of cash or values of
property (net of liabilities assumed by the Partnership or to
which the property is subject) as set forth on the Schedule.
Section 8.2 Capital Accounts
A Partner may hold an interest in the Partnership as either
a Class A Partner or a Class B Partner and a separate capital
account shall be established and maintained for each partner in
his capacity as a Class A or Class B Partner. Unless the
Partners unanimously agree and reflect their agreement in a
written amendment to this Agreement, the capital account of each
Partner shall consist of: i) the sum of the amount of cash and
the fair market value of any property contributed to the
Partnership by the Partner that constitutes his original capital
<PAGE>
contribution (net of liabilities assumed by the Partnership and
liabilities to which the property is subject) as provided in
Section 8.1 hereof; ii) increased by the amount of any cash and
the fair market value of any property contributed as his
additional capital contributions (net of liabilities assumed by
the Partnership and liabilities to which the property is
subject), and by his distributive share of Partnership gain and
Partnership income (including income exempt from tax); and iii)
decreased by his distributive share of Partnership loss and
deduction, the amount of cash and the fair market value of
property distributed to him (net of liabilities assumed by such
Partner and liabilities to which the property is subject), and
his distributive share of expenditures described in Section
705(a)(2)(B) of the Code. Except as otherwise unanimously agreed
by the Partners in an amendment to this Agreement, in all
respects, the capital account of each Partner will be maintained
in accordance with the rules of Treasury Regulation Section
1.704-1(b)(2)(iv).
Section 8.3 Restoration of Negative Capital Account
Balances Upon Dissolution and Winding Up
If a Partner has a negative balance in his capital account
upon the dissolution of the Partnership and the winding up of the
Partnership's affairs, such Partner shall be liable to restore to
the Partnership the amount of any such negative balance, which
amount shall, when paid to the Partnership, be distributed by the
Partners to the creditors of the Partnership or to one or more
other Partners, as the case may be.
Section 8.4 Profits and Losses
Every Partner shall have an interest in the Partnership, and
the profits and losses shall be shared by each Partner in the
Percentage Interests set forth on the Schedule. Every item of
income, expense, gain, loss, deduction, credit or tax preference
entering into the computation of profit and loss, or applicable
to the period during which such profit or loss was realized,
shall be allocated to each Partner in the same proportion as
profits and losses are allocated to such Partner; provided,
however, that all depreciation, gain, loss, and credit with
respect to any contributed property shall be allocated among the
Partners as required by Section 704(c) of the Code and Treasury
Regulation Section 1.704-3.
Section 8.5 Distributions
(a) Distributions of Net Cash Receipts. Subject to
the rights of creditors, Net Cash Receipts will be
distributed at such time and in such amounts as the Partners
may unanimously agree subject to the conditions that: (i)
all distributions shall be made in accordance with the
Partners' respective Percentage Interests; and (ii) unless
otherwise agreed by persons holding Percentage Interests
<PAGE>
aggregating more than 75%, all of the Net Cash Receipts for
a Partnership fiscal year shall be distributed not later
than reasonably soon after the end of such fiscal year.
(b) Distribution of Other Assets. The Partners, in
their sole discretion, may determine at what times and in
what amounts other distributions may be made. Any such
additional distributions shall be made at such times and in
such manner as the Partners may unanimously agree and, in
any case, in accordance with the Partners' respective
Percentage Interests.
(c) Upon Termination. As soon as practicable after the
effective date of dissolution of the Partnership, but in any
event within one year after dissolution of the Partnership,
the Partnership's assets shall be applied and distributed in
the following manner and order of priority:
(i) the claims of all creditors of the
Partnership who are not Partners shall be paid and
discharged or reasonably reserved against;
(ii) the claims of all creditors of the
Partnership who are Partners shall be paid and
discharged or reasonably reserved against;
(iii) the claims of all creditors that are
contingent, conditional or unmatured and are known to
the Partnership, whether or not the identity of the
claimant is known, shall be reasonably reserved
against; and
(iv) the remaining assets of the Partnership
shall be distributed to the Partners, in proportion to,
and to the extent of, the positive balances of the
capital accounts of the Partners, as such accounts have
been adjusted to take account of any gain or loss upon
the sale of Partnership property and assets.
In the case of a distribution consisting both of cash and
assets distributed in kind, each of the cash portion and the in-
kind portion will be distributed, as nearly as practicable, in
proportion to the capital account balances of the Partners as of
the date of distribution.
ARTICLE IX
Admission of Additional or Substitute Partners
Additional Partners or Substitute Partners may be admitted
to the Partnership pursuant to Section 7.5 upon execution of a
proper amendment of this Agreement.
<PAGE>
ARTICLE X
Books and Records, Accounting, and Tax Elections
Section 10.1 Books and Records
The books and records of the Partnership shall be kept and
maintained at the office of the Partnership and shall be
available for examination by any Partner, or his duly authorized
representatives, during regular business hours. The Partnership
may maintain books and records and may provide such financial or
other statements as the Partners in their discretion deem
advisable.
Section 10.2 Bank Accounts
The bank accounts of the Partnership shall be maintained in
such banking institutions as the Partners shall determine;
withdrawals shall be made on the signature of any Partner.
Section 10.3 Federal Income Tax Elections
All income tax returns of the Partnership shall be prepared
by the Partners or accountant(s) chosen by the Partners, and the
Partners, in their discretion, shall determine the elections and
other items to be reported in such tax returns. Russell C. Best
shall be the Tax Matters Partner.
Section 10.4 Special Basis Adjustments
In the event of the distribution of property by the
Partnership within the meaning of Section 734 of the Code, or the
transfer of an interest in the Partnership within the meaning of
Section 743 of the Code, the Partners, in their sole discretion
may elect to adjust the basis of the Partnership property
pursuant to Sections 734, 743 and/or 754 of the Code. However,
the determination of profits, losses, distributions and capital
accounts shall, for purposes of Article VIII of this Agreement,
be made without taking into account any such special basis
adjustments. Each Partner will furnish the Partnership with all
information necessary to give effect to any such election.
ARTICLE XI
General Provisions
Section 11.1 Notices
Any notice called for under this Agreement shall be deemed
adequately given only if in writing and actually received by the
party to whom such notice is directed.
<PAGE>
Section 11.2 Binding Provisions
The covenants and agreements contained herein shall be
binding upon, and inure to the benefit of, the heirs, executors,
administrators and assigns of the respective parties hereto.
Section 11.3 Applicable Law
This Agreement shall be construed and enforced in accordance
with the laws of the State.
Section 11.4 Counterparts
This Agreement may be executed in several counterparts and
as so executed shall constitute one agreement binding on all
parties hereto, notwithstanding that all the parties have not
signed the original or the same counterpart.
Section 11.5 Separability of Provisions
Each provision of this Agreement shall be considered
separable and if, for any reason, any provision or provisions
herein are determined to be invalid and contrary to any existing
or further law, such invalidity shall not impair the operation or
affect those portions of this Agreement which are valid.
Section 11.6 Paragraph Titles
Paragraph titles are for descriptive purposes only and shall
not control or alter the meaning of this Agreement as set forth
in the text.
Section 11.7 Amendments
This Agreement may be amended by the unanimous written
consent of all of the Partners.
Section 11.8 Gender References
All references in this Agreement to any person's gender
shall mean and include the masculine, feminine or neuter gender
as the context may require.
WITNESS the execution hereof as of the date first above
written.
CLASS A GENERAL PARTNERS
/s/ Russell C. Best
----------------------------
Russell C. Best
<PAGE>
WALTER E. BEST COMPANY, INC.
By: /s/ Walter E. Best
------------------------
Walter E. Best, President
CLASS B GENERAL PARTNERS
WALTER E. BEST COMPANY, INC.
By: /s/ Walter E. Best
------------------------
Walter E. Best, President
This instrument was prepared by Douglas P. Long, Esq., Hall,
Render, Killian, Heath & Lyman, P.C., 2000 One American Square,
Box 82064, Indianapolis, Indiana 46282, (317) 633-4884.
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, this 13 day of February, 1995, personally
appeared Russell C. Best, a Class A General Partner of the
Partnership, who having been duly sworn did acknowledge the
execution of the foregoing Agreement in such capacity.
/s/ Jeffrey W. Short
--------------------------
Notary Public (Signature)
Jeffrey W. Short
--------------------------
Notary Public (Printed)
Commission Expires:
1/1/96
--------------------
County of Residence:
Marion
--------------------
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, this 13th day of February, 1995, personally
appeared Walter E. Best, as President of Walter E. Best Company,
Inc., a Class A General Partner and a Class B General Partner of
the Partnership, who having been duly sworn did acknowledge the
execution of the foregoing Agreement in such capacity.
/s/ Donna Kaye Badger
----------------------------
Notary Public (Signature)
Donna Kaye Badger
----------------------------
Notary Public (Printed)
Commission Expires:
9-10-95
--------------------
County of Residence:
Marion
--------------------
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
Capital Contribution
Number and
Type of
Partnership Percentage
Name
Residence Description of Property Value Units Interest
<S> <C> <C> <C> <C> <C>
Class A General
Partners
Russell C. Best 755 Eagle Creek Court 2,500 shares of $ 73,400 734 Class 1.16%
Zionsville, IN 46077 common stock of A Units
Frank E. Best, Inc.
Walter E. Best 6161 East 75th Street 31,188.21 shares of $ 915,686.01 9,156.86 Class 14.42%
Company, Inc. Indianapolis, IN 46250 common stock of A Units
Frank E. Best, Inc.
Class B General
Partners
Walter E. Best 6161 East 75th Street 153,999.79 shares of $4,521,433.67 53,609.60 Class 84.42%
Company, Inc. Indianapolis, IN 46250 common stock of B Units
Frank E. Best, Inc.
</TABLE>
INDEMNIFICATION AGREEMENT
This Agreement effective as of the 15th day of February, by
and among Best Lock Corporation, a Delaware corporation ("BLC"),
Best Aircraft, Inc., an Indiana corporation ("Aircraft"), and
Walter E. Best.
WHEREAS, Aircraft is indebted to National City Bank, Indiana
on debt instruments (the "Notes") related to certain automobiles
owned by Aircraft which Aircraft has leased to BLC;
WHEREAS, BLC has guaranteed Aircraft's obligation to make
payment on these Notes;
WHEREAS, BLC is purchasing certain automobiles from Aircraft
as part of a series of transactions to which BLC, Walter E. Best,
and others are parties;
WHEREAS, in consideration for BLC's entering into certain
settlement transactions with Aircraft and Walter E. Best,
Aircraft and Walter E. Best desire to indemnify BLC against any
damages or expenses which BLC may incur in the event that
Aircraft defaults in discharging its obligations under the Notes;
and
WHEREAS, the parties wish to record their agreement in
writing.
NOW, THEREFORE, in consideration for the parties' promises
reflected herein and entrance into the settlement transactions,
the parties record their agreement as follows.
Section One. Indemnification. Aircraft and Walter E. Best
will indemnify BLC against any and all damages, costs, and
expenses, including reasonable attorneys' fees, which BLC may
incur by reason of being a guarantor of any indebtedness of
Aircraft to National City Bank, Indiana which may arise upon the
occurrence of any default by Aircraft upon any of its obligations
under the Notes.
Section Two. Governing Law. This Agreement will be
governed by the laws of the State of Indiana.
Section Three. Amendment. This Agreement may be amended
only in a written instrument executed by all parties hereto.
Dated this 15th day of February, 1995.
<PAGE>
BEST LOCK CORPORATION
Attest: By: /s/ Russell C. Best
--------------------------
Russell C. Best,
Chief Executive Officer
BEST AIRCRAFT, INC.
Attest: By: /s/ Walter E. Best
---------------------------
Walter E. Best, President
/s/ Walter E. Best
--------------------------------
Walter E. Best
Amendment to SUPPLEMENTAL RETIREMENT BENEFITS AGREEMENT
This Amendment to the Supplemental Retirement Benefits
Agreement dated March 14, 1990 (but retroactively effective as of
September 1, 1989) is made this 15th day of February, 1995, by
and between Best Lock Corporation (the "Corporation") and Walter
E. Best (the "Employee").
Whereas, the Parties entered into the Supplemental
Retirement Benefits Agreement dated March 14, 1990 which, in
recognition of Employee's services to Corporation during
employment with Corporation, provides for supplemental retirement
benefits to Employee upon retirement or other termination of
employment with Corporation; and
Whereas, by this Amendment, the parties desire to amend the
Supplemental Retirement Benefits Agreement to clarify that
Employee is not required to or expected to perform services on
behalf of Corporation after retirement from or other termination
of employment with Corporation as a condition of receiving such
supplemental retirement benefits.
NOW, THEREFORE, the Supplemental Retirement Benefits
Agreement is amended as follows:
Section 1. Incorporation and Recitals. The Recitals set
forth above are incorporated in and made a part of this
Amendment.
Section 2. Nature and Effect of Amendment. Except as
otherwise provided hereunder, the terms of the Supplemental
Retirement Benefits Agreement shall remain unchanged.
Section 3. New Section 2.7. A new Section 2.7 is added
which states as follows:
Section 2.7. No Performance of Services by
Employee After Date of Termination of Employee.
Employee shall have no duty to perform services
pursuant to the terms of this Agreement after the
termination of his employment with the Corporation.
All payments to be made by the Corporation hereunder
shall be in consideration for services provided to the
Corporation by Employee prior to the date of Employee's
termination of employment.
<PAGE>
WHEREFORE, the Parties hereby amend the Supplemental
Retirement Benefits Agreement dated March 14, 1990 as set forth
above as of this 15th day of February, 1995.
BEST LOCK CORPORATION
By: /s/ Russell C. Best
-----------------------------
Russell C. Best,
Chief Executive Officer
Attest:
By: /s/ Mark G. Ahearn
------------------------
Mark G. Ahearn
Its: Associate Counsel
/s/ Walter E. Best
-------------------------
Walter E. Best (Employee)
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), made and dated
as of May 5th, 1994, by and between Best Lock Corporation, a
Delaware Corporation, ("BLC") and Russell C. Best, a resident of
Boone County, Indiana, ("Best").
W I T N E S S E T H :
WHEREAS, Best is a member of the Board of Directors of BLC
and in such capacity participates in policy making decisions for
BLC and is in receipt of BLC's confidential business information;
WHEREAS, Best is employed by BLC as an executive officer;
WHEREAS, Best desires to be assured of a secure minimum
compensation for his services as chief executive officer of BLC
over a defined term;
WHEREAS, BLC desires to assure Best's continued employment
by BLC as its chief executive officer;
WHEREAS, BLC desires reasonable protection of the
confidential business information of BLC, BLC's subsidiaries, and
BLC's other affiliated corporations which has been developed over
the years at substantial expense and assurance that Best will not
compete with BLC for a reasonable period of time after
termination of his employment with BLC;
WHEREAS, BLC and Best desire to record the terms of their
agreement in writing.
<PAGE>
NOW, THEREFORE, in consideration of these premises, the
mutual covenants and undertakings herein contained, and the
continued employment of Best by BLC as its chief executive
officer, the receipt and sufficiency of which are hereby
acknowledged, BLC and Best, each intending to be legally bound,
covenant and agree as follows:
Section 1. The Agreement is hereby effective May 1, 1994.
Section 2. Upon the terms and conditions set forth in this
Agreement, BLC employs Best as its chief executive officer, and
Best accepts such employment by BLC.
Section 3. Best shall devote his full time and best efforts
to BLC and to fulfilling the duties of his position as chief
executive officer of BLC pursuant to the direction of the BLC
Board of Directors. Provided, however, that the constraints
imposed by this section and Section 11 hereof shall not preclude
Best from serving as an officer, employee, and/or director of any
subsidiary or affiliate of BLC; or, at the direction of or with
the approval of BLC, any other organization.
Section 4. The term of this Agreement shall be from the
date hereof until December 31, 1998. Provided, however, that
such term shall be automatically extended for an additional year
on December 31, 1994, and on December 31 of each year thereafter
unless either party hereto gives written notice to the other
party not to so extend at least thirty (30) days prior to
December 31 of the year notice is given, in which case no further
automatic extension shall occur and the term of this Agreement
shall end at 11:59 p.m. on the fifth (5th) December 31 subsequent
to the date of such notice.
Section 5. For all services rendered pursuant to this
Agreement and as consideration for the covenants contained
herein, Best shall receive an annual minimum salary of Four
Hundred Twenty-Five Thousand Dollars ($425,000.00) ("Base
Compensation") payable while Best is an employee of BLC in
accordance with BLC's policy for payment of salaries to its
senior management personnel as in effect from time to time. BLC
covenants and guarantees that the Base Compensation shall be paid
by BLC as provided herein while Best is an employee of BLC and
BLC shall pay the amounts of Base Compensation and any additional
compensation amounts after Best's employment by BLC is terminated
as provided by Section 10 hereof. BLC shall consider from time
to time increases in the salary it pays Best based upon the
following standards:
<PAGE>
- Past performance of Best and the contribution which
Best will make to the business and profits of BLC
during the term and any extension of the term of this
Agreement;
- Adjustments to the salaries of other senior management
personnel of BLC; and
- Inflation.
Section 6. So long as Best is employed by BLC pursuant to
this Agreement, he shall be included as a participant in all
benefit plans generally available to employees of BLC or
specifically available to executive officers of BLC. Further, so
long as Best is employed by BLC pursuant to this Agreement, in
addition to Base Compensation provided for by this Agreement,
Best shall participate in all bonus and incentive plans made
available by BLC to its senior management personnel and he shall
be entitled to receive bonuses and incentive payments as provided
by such plan(s) in amounts consistent with his salary/Base
Compensation and with his position as an executive officer of
BLC.
Section 7. During the term and any extensions of the term
of this Agreement, Best shall receive reimbursement from BLC for
all reasonable business expense incurred in the course of his
employment by BLC.
Section 8. Immediately after the effective date of this
Agreement, BLC shall loan Best a sum of money not more than Three
Million Four Hundred Thousand Dollars ($3,400,000.00) and in such
amount as Best and BLC's Board of Directors may approve pursuant
to the terms of an installment promissory note (the "Note")
substantially in the form attached hereto as Exhibit 1. At such
time, Best shall deliver the Note to BLC. The principal owing
under the Note shall be payable in equal annual installments over
a period of thirty (30) years. Such Note shall: (i) bear
interest at a rate of seven and two-tenths percent (7.2%) per
annum; (ii) provide that the entire unpaid balance of principal
and accrued interest may be prepaid at any time without penalty;
(iii) be secured with assets acceptable in value and nature to
both parties hereto, but in any case with any and all assets
purchased by Best with the loaned funds; and (iv) provide that in
the event of a default in the payment of any installment of
principal or interest, the entire unpaid balance of principal and
accrued interest shall become immediately due and payable and may
be called for payment by BLC as provided by the Note.
Section 9. Subject to the respective continuing obligations
of the parties including, but not limited to, those set forth in
Subsections 11(a), 11(b), and 11(c) hereof, Best's employment by
BLC may be terminated prior to the expiration of the term or any
extensions of the term of this Agreement as follows:
<PAGE>
a. BLC, by action of its Board of Directors and upon
written notice to Best, may terminate Best's employment
with BLC immediately for cause. For purposes of this
Subsection 9(a), "cause" shall be defined as: (i) the
willful and continued failure of Best to substantially
perform his duties as an executive officer of BLC; (ii)
action by Best involving willful misfeasance or gross
negligence in the performance of his duties as an
executive officer of BLC; (iii) upon the order of a
federal or state court or administrative agency having
jurisdiction over BLC where such order involves or
relates to Best's fitness for continued employment by
BLC; (iv) conviction of Best of the commission of a
felony; or (v) any intentional breach by Best of a
material term, condition, or covenant of this
Agreement.
b. BLC, by action of its Board of Directors and upon
written notice to Best, may terminate Best's employment
with BLC immediately without cause.
c. Best, by written notice to BLC, may terminate his
employment with BLC immediately for cause. For
purposes of this Subsection 9(c) "cause" shall be
defined as: (i) any action by BLC's Board of Directors
to remove Best as an executive officer of BLC, except
where BLC's Board of Directors properly acts to remove
Best from the position of an executive officer for
"cause" as defined in Subsection 9(a) hereof; or(ii)
any intentional breach by BLC of a material term,
condition, or covenant of this Agreement.
d. Best, upon written notice to BLC, may terminate his
employment with BLC without cause.
e. Best's employment with BLC shall terminate in the event
of Best's death or disability. For purposes hereof
"disability" shall be defined as Best's inability by
reason of illness or other physical or mental
incapacity to perform the duties required by his
employment for any consecutive three hundred sixty-five
(365) day period, provided that notice of any
termination by BLC because of Best's "disability" shall
have been given to Best ninety (90) days prior to the
occurrence of the three hundred sixty-fifth (365th)
consecutive day of disability and prior to the full
resumption by Best of the performance of such duties.
Section 10. The following definitions are applicable to
this section and any other section of this Agreement in which
these terms appear. "Actual Salary" shall mean the actual salary
compensation amount paid to Best including Base Compensation and
any increases to such compensation received pursuant to Section 5
of this Agreement, exclusive of any lump sum bonuses, incentive
<PAGE>
payments, or contingent compensation amounts. "Average
Compensation Amount" shall mean the amount of compensation equal
to the average of the aggregate amounts of Actual Salary, lump
sum bonuses, incentive payments, or contingent compensation
received by Best in each of the three (3) calendar years
immediately preceding the year in which Best's employment by BLC
is terminated. In the event of termination of Best's employment
with BLC pursuant to Section 9 hereof, Best shall continue to be
paid by BLC as follows:
a. In the event of termination pursuant to Subsection 9(a)
or 9(d), BLC shall continue to pay Best his Actual
Salary through the date of termination specified in the
notice of termination, and Best shall be entitled to no
additional compensation payments pursuant to this
Agreement.
b. In the event of termination pursuant to Subsection 9(b)
or 9(c), BLC shall continue to pay Best his Actual
Salary through the date of termination specified in the
notice of termination, and continue to pay Best his
Actual Salary through the term and any then current
extensions of this Agreement. In addition, BLC shall
pay Best on December 31 of each year within the term of
this Agreement and any then current extensions thereof,
an amount equal to the difference between the Average
Compensation Amount and the Actual Salary received by
Best during that calendar year as an additional
compensation payment.
c. In the event of termination pursuant to Subsection
9(e), BLC shall pay Best his Actual Salary (i) in the
event of his death, through the date of his death, or
(ii) in the event of Best's disability, through the
date of proper termination because of disability as
required by Subsection 9(e), and Best shall be entitled
to no additional compensation payments pursuant to this
Agreement.
Section 11. In order to induce BLC to enter into this
Agreement, Best hereby covenants and agrees as follows:
a. Best shall keep confidential and not improperly divulge
for the benefit of another party or use for his own
benefit during the term and any extensions of the term
of this Agreement any of the intellectual property,
business secrets, or other confidential information of
any of BLC or any corporation affiliated with BLC
including, but not limited to, Frank E. Best, Inc.
("FEBI"), Best Universal Lock Co. ("BUL"), Walter E.
Best Company, Inc. ("WEBCO"), or any of BLC's
subsidiaries. All of each such corporation's
<PAGE>
confidential information shall be the sole and
exclusive property of each such corporation,
respectively.
b. Best shall not during the term and any extension of the
term of this Agreement, during or after termination of
his employment with BLC pursuant to Section 9 hereof,
except as an officer, employee, and/or director of any
of the corporations set forth in Section 11(a) hereof,
enter into the locking or security system business or
otherwise place himself in a position to be in
competition with BLC, FEBI, BUL, WEBCO, any subsidiary
of BLC, or any other corporation affiliated with BLC,
at any place within the United States.
c. Best shall not, except in the good faith performance of
his duties as an executive officer of BLC, either on
his own account or for any other person, firm, or
company, solicit, interfere with, or endeavor to cause
any employee of BLC or any corporation affiliated with
BLC to leave his or her employment or to induce or
attempt to induce any such employee to breach any
employment agreement with BLC or any corporation
affiliated with BLC.
Section 12. Any termination of Best's employment with BLC
as contemplated by Section 9 hereof, except in the circumstance
of Best's death, shall be communicated by written "Notice of
Termination" by the terminating party to the other party hereto.
Any "Notice of Termination" pursuant to Subsections 9(a), 9(c),
or 9(e) shall indicate the specific provisions of this Agreement
relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for such
termination.
Section 13. If a dispute arises regarding the termination
of Best pursuant to Section 9 hereof or as to the interpretation
or enforcement of this Agreement and Best obtains a final
judgment in his favor in a court of competent jurisdiction or his
claim is settled by BLC prior to the rendering of a judgment by
such a court, all reasonable legal fees and expenses incurred by
Best in contesting or disputing any such termination or seeking
to obtain or enforce any right or benefit provided for in this
Agreement or otherwise pursuing his claim shall be paid by BLC,
to the extent permitted by law.
Section 14. Best is not required to mitigate the amount of
the Base Compensation, Actual Salary, or Average Compensation
Amount payable pursuant to this Agreement after termination of
his employment by BLC by seeking other employment or otherwise,
nor shall the amount of any payment of Base Compensation, Actual
Salary, or Average Compensation Amount provided for in this
Agreement after termination of Best's employment with BLC be
reduced by any compensation earned by Best as a result of
<PAGE>
employment by another employer when such employment is not in
breach of the covenants contained in Section 11 of this
Agreement.
Section 15. Should Best die after termination of his
employment with BLC under circumstances where any payments are
being made pursuant to Subsection 10(b) or 10(c) hereof and while
any amounts are payable to him hereunder, this Agreement shall
inure to the benefit of and be enforceable by Best's executors,
administrators, heirs, distributees, devisees, and legatees and
all amounts payable hereunder shall be paid in accordance with
the terms of this Agreement to Best's devisee, legatee, or other
designee or, if there is no such designee, to his estate.
Section 16. For purposes of this Agreement, notices and all
other communications provided for herein shall be in writing and
shall be deemed to have been given when delivered or mailed by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Best: Russell C. Best
755 Eagle Creek Drive
Zionsville, Indiana 46077
If to BLC: Best Lock Corporation
6161 East 75th Street
Indianapolis, Indiana 46250
or to such address as any party hereto may have furnished to the
other party in writing in accordance herewith, except that
notices of change of address shall be effective only upon
receipt.
Section 17. The validity, interpretation, and performance
of this Agreement shall be governed by the laws of the State of
Indiana and the United States of America.
Section 18. No provision of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or
discharge is agreed to in writing and signed by Best and BLC.
Section 19. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by any party which are not set forth
expressly in this Agreement.
Section 20. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement which
shall remain in full force and effect.
Section 21. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one in the same agreement.
<PAGE>
Section 22. This Agreement is personal in nature and each
party hereto shall not, without consent of the other party,
assign or transfer this Agreement or any rights or obligations
hereunder except as provided in Section 15 above. Provided,
however, that this Agreement and the provisions hereof shall
inure to the benefit of and be binding upon any successor in
interest of BLC through merger, reorganization or otherwise
through the operation of law. In the event of any merger,
reorganization, or other transaction affecting BLC as a corporate
entity, all references to BLC, as the circumstance may be, herein
shall be construed to mean the surviving corporation or entity
existing after such merger, reorganization, or other transaction.
IN WITNESS WHEREOF, the parties have caused the Agreement to
be executed and delivered as of this day and year first above set
forth.
BEST LOCK CORPORATION
By: /s/ Walter E. Best
----------------------------
Walter E. Best, President and
Chief Executive Officer
ATTEST:
/s/ Roger E. Beaverson
-----------------------------
Roger E. Beaverson, Secretary
RUSSELL C. BEST
/s/ Russell C. Best
------------------------------