SCHEDULE 14C
Information Required in Information Statement
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
(AMENDMENT NO. )
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, For use of the Commission Only (as permitted
by Rule 14c-5(d)(2))
[X] Definitive Information Statement
BEST LOCK CORPORATION
(Name Of Registrant As Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii) or 14c-5(g).
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 [set forth
the amount on which the filing fee is calculated and
state how it was determined]:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[X] Fee paid previously with preliminary materials.
<PAGE>
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
Best Lock Corporation
1995 Annual Meeting of Shareholders
Information Statement
October 30, 1995
<PAGE>
BEST LOCK CORPORATION
NOTICE OF ANNUAL MEETING OF THE SHAREHOLDERS
October 30, 1995
The Annual Meeting of Stockholders of Best Lock Corporation
(the "Corporation") will be held on Monday, October 30, 1995, at
8:00 a.m., Indianapolis Time, at Omni Indianapolis North Hotel,
8181 N. Shadeland Ave., Indianapolis, Indiana for the following
purposes:
1. To elect five Directors of the Corporation for the
ensuing year.
2. To consider and act upon a proposed amendment to the
Certificate of Incorporation of the Corporation to
limit the liability of directors in accordance with
Delaware law.
3. To ratify and approve the selection of Arthur Andersen
LLP as auditors for the year 1995.
4. To transact such other business as may properly come
before the meeting.
Only shareholders of record on September 29, 1995 are
entitled to notice of and to vote at this meeting. You are
cordially invited to attend the meeting.
By Order of the Board of Directors
Gregg A. Dykstra, Secretary
October 9, 1995
Indianapolis, Indiana
<PAGE>
INFORMATION STATEMENT
BEST LOCK CORPORATION
P.O. Box 50444
Indianapolis, Indiana 46250
ANNUAL MEETING OF STOCKHOLDERS
October 30, 1995
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT
TO SEND US A PROXY. The principal executive offices of Best Lock
Corporation (the "Corporation") are located at 6161 E. 75th
Street, Indianapolis, Indiana 46250. The approximate mailing
date of this Information Statement will be October 9, 1995.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Shares of common stock, 121,653.85 of which were outstanding
as of September 29, 1995, are the only voting securities of the
Corporation. Each share is entitled to one vote. Only holders
of common stock of record at the close of business on
September 29, 1995 will be entitled to vote at the Annual Meeting
of the Stockholders.
Stock Ownership in the Corporation by Principal Holders
The following table sets forth the information as of
September 29, 1995 with respect to shares of the Corporation's
common stock which are held by the only persons known to the
Corporation to be the beneficial owners of more than 5% of such
stock based upon information received from such persons. For
purposes of this report, beneficial ownership of securities is
defined in accordance with the rules of the Securities and
Exchange Commission.
<TABLE>
<CAPTION>
Name and Address (1) Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
<S> <C> <C>
Best Universal Lock Co. 95,556.34 (2) 79%
The NBD Bank, N.A. 10,539.19 (3) 9%
One Indiana Square
Indianapolis, Indiana 46204
Russell C. Best 107,781.53 (2)(4)(5) 89%
Larry W. Rottmeyer 10,539.19 (4) 9%
Gregg A. Dykstra 10,539.19 (4) 9%
<FN>
_______________
<PAGE>
(1) Unless otherwise specified, all addresses are c/o Best Lock
Corporation, P. O. Box 50444, Indianapolis, Indiana 46250.
(2) Russell C. Best owns beneficially 44% of the outstanding
Series A Common Stock, no par value, of Best Universal Lock
Co. ("Universal") and Frank E. Best, Inc. ("Best") owns 100%
of the outstanding Series B Common Stock, no par value, of
Universal. Russell C. Best owns beneficially 66% of the
outstanding Common Stock of Best. Russell C. Best is a
director, president and chief executive officer of each of
the Corporation, Universal and Best. Universal is the
record owner of 95,556.34 shares of Common Stock of the
Corporation.
(3) The NBD Bank, N.A. held these shares in its capacity as the
Trustee of the Best Lock Corporation Stock Bonus Plan. Prior
to 1995, the Trustee voted the shares pursuant to the
instructions of the Administrative Committee. Commencing in
1995, pass-through voting rights have been extended to the
participants with the Administrative Committee retaining the
right to vote shares for which no voting instructions have
been received from participants.
(4) Includes 10,539.19 shares held by the Best Lock Corporation
Stock Bonus Plan with respect to which such person as a
member of the Administrative Committee has shared power to
direct voting and disposition.
(5) Includes 95,556.34 shares held by Universal in which Russell
C. Best is a director, president and controlling
shareholder.
</TABLE>
<PAGE>
Stock Ownership in the Corporation by Directors and Executive
Officers
The following table sets forth information as of
September 29, 1995 with respect to beneficial ownership of the
Corporation's common stock by its directors, director nominees,
named executive officers and all directors and executive officers
as a group:
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Office (1) Beneficial Ownership of Class
<S> <C> <C>
Russell C. Best, Chairman of
the Board, President, Chief
Executive Officer and Director (5) 107,781.53 (2)(3)(4) 89%
Mariea L. Best, Director (5) 1.00 -0-
Gregg A. Dykstra, Secretary/
Treasurer; Director Nominee 10,539.19 (3) 9%
Larry W. Rottmeyer, Vice President
and General Manager of Business
Development of Best Lock Corporation,
Director Nominee 10,539.19 (3) 9%
Eric M. Fogel,
Director Nominee -0- -0-
All directors and executive officers
as a group (6 persons) 107,782.53 (3)(4) 89%
<FN>
____________________
(1) Walter E. Best, Richard E. Best and Marshall W. Best
resigned all of their positions with the Corporation
effective February 15, 1995. R. Gene McCullum resigned as
director of the Corporation effective December 30, 1994 and
ceased to be employed by the Corporation as of March 1,
1995. None of these individuals owns any shares of Common
Stock of the Corporation, Frank E. Best, Inc. or Best
Universal Lock Co.
(2) Russell C. Best owns beneficially 44% of the outstanding
Series A Common Stock, no par value, of Best Universal Lock
Company ("Universal") and Frank E. Best, Inc. ("Best") owns
100% of the outstanding Series B Common Stock, no par value,
of Universal. Russell C. Best owns beneficially 66% of the
outstanding Common Stock of Best. Russell C. Best is a
director, president and chief executive officer of each of
the Corporation, Universal and Best. Universal is the
record owner of 95,556.34 shares of Common Stock of the
Corporation.
<PAGE>
(3) Includes 10,539.19 shares held by the Best Lock Corporation
Stock Bonus Plan with respect to which such person as a
member of the Administrative Committee has shared power to
direct voting and disposition.
(4) Includes 95,556.34 shares held by Universal in which Russell
C. Best is a director, president and controlling
shareholder.
(5) Russell C. Best is the spouse of Mariea L. Best.
</TABLE>
Stock Ownership in Frank E. Best, Inc. by Directors and Executive
Officers
The following table sets forth information as of
September 29, 1995 with respect to beneficial ownership of the
Common Stock of Frank E. Best, Inc. ("Best"), the ultimate parent
of the Corporation, by the directors, director nominees and named
executive officers of the Corporation and all such directors and
executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Office Beneficial Ownership of Class
<S> <C> <C>
Russell C. Best,Chairman of
the Board, President, Chief
Executive Officer and
Director (3) 395,299 (1)(2) 66%
Mariea L. Best, Director (3) 1 -0-
Gregg A. Dykstra, Secretary/
Treasurer/ Director Nominee 77,935 (2) 13%
Larry W. Rottmeyer, Vice President
and General Manager of Business
Development, Director Nominee 77,935 (2) 13%
Eric M. Fogel,
Director Nominee -0- -0-
All directors and executive
officers as a group (6 persons) 395,300 (1)(2) 66%
<FN>
_____________________
(1) Includes 204,053 shares held by Best Lock Partnership in
which Russell C. Best, a corporation in which Russell C.
<PAGE>
Best owns all of the voting securities and Best Lock
Corporation are the general partners.
(2) Includes 77,935 shares held by the Best Lock Corporation
Stock Bonus Plan with respect to which such person as a
member of the Administrative Committee of the Plan has
shared power to direct voting and disposition.
(3) Russell C. Best is the spouse of Mariea L. Best.
</TABLE>
Stock Ownership in Best Universal Lock Co. by Directors and
Executive Officers
The following table sets forth information as of September
29, 1995 with respect to beneficial ownership of the Common Stock
of Best Universal Lock Co. ("Universal"), the parent of the
Corporation, by the directors, director nominees and named
executive officers of the Corporation and all such directors and
executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Office Beneficial Ownership of Class
<S> <C> <C>
Russell C. Best, Chairman of
the Board, President, Chief
Executive Officer and
Director (3) 338,176 (1)(2) 88%
Mariea L. Best, Director (3) 1 -0-
Gregg A. Dykstra, Secretary/Treasurer,
Director Nominee 27,262 (2) 7%
Larry W. Rottmeyer, Vice President
and General Manager of Business
Development of Best Lock Corporation,
Director Nominee 27,262 (2) 7%
Eric M. Fogel,
Director Nominee -0- -0-
All directors and executive
officers as a group (6 persons)) 338,177 (1)(2) 88%
<FN>
______________________
(1) Includes 300,000 shares held by Frank E. Best, Inc. in which
Russell C. Best is a director, president and a controlling
<PAGE>
shareholder and 8,787 shares held by the Best Lock
Partnership in which Russell C. Best, a corporation in which
Russell C. Best owns all of the outstanding voting
securities and Best Lock Corporation are general partners.
(2) Includes 27,262 shares held by the Best Lock Stock Bonus
Plan with respect to which such person as a member of the
Administrative Committee has shared power to direct voting
and disposition.
(3) Russell C. Best is the spouse of Mariea L. Best.
</TABLE>
CHANGE IN CONTROL
A change in control of the Corporation occurred on May 18,
1994. On that date, Russell C. Best, then Chief Executive
Officer and a Director of the Corporation, purchased 114,325
shares of the common stock of Best. Best 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 Best. This voting control of Best
was based on the following stock ownership in Best:
Name of Shareholder Number of Shares
Russell C. Best 115,812
Walter E. Best Co., Inc.* 185,188
-------
Total 301,000
=======
* Russell C. Best owns all of the voting common
stock of Walter E. Best Co., Inc. ("WEBCO").
Accordingly, he is in effective control of
the manner in which the Best shares owned by
WEBCO are voted.
Currently, Best owns 300,000 of the 386,469 issued and
outstanding shares of common stock of Universal. Universal owns
95,556.34 of the 121,635.85 issued and outstanding shares of
common stock of the Corporation.
Based on the foregoing, the person in control of Best
controls the Corporation because Best owns approximately 78% of
the outstanding common stock of Universal, which in turn owns
approximately 79% of the outstanding common stock of the
Corporation.
After the purchase of Best stock as described above, Russell
C. Best beneficially owned, directly or indirectly, approximately
74% of the voting securities of the Corporation, taking into
consideration the 95,556.34 shares of the Corporation common
<PAGE>
stock owned by Universal and the 1,687 shares of the
Corporation's common stock individually owned by Russell C. Best.
Currently, Russell C. Best beneficially owns approximately 89% of
the voting securities of the Corporation after taking into
consideration the 10,539.19 shares held by the Best Lock
Corporation Stock Bonus Plan in addition to the common stock
owned by Universal and the stock held by him individually.
Russell C. Best purchased the 114,325 shares of Best 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 Best shares
with the proceeds of a loan in the amount of $3,400,000 from the
Corporation. The loan was made in accordance with the terms of
the Employment Agreement between the Corporation and Russell C.
Best, dated May 5, 1994 and described in "Compensation Committee
Interlocks and Insider Participation - Employment Agreement and
Agreement Respecting Sale of Stock." Prior to the acquisition of
control by Russell C. Best, no single person possessed control of
the Corporation.
SECTION 16(A) REPORTING DELINQUENCIES
Based solely upon a review of Forms 3 and 4 and amendments
thereto provided to the Corporation during the most recent fiscal
year and Form 5 and amendments thereto furnished to the
Corporation with respect to its most recent fiscal year and
written representations from its directors, officers and more
than 10% shareholders, the following table sets forth certain
information concerning Section 16(a) reporting delinquencies by
the above-referenced persons during the Corporation's most
recently completed fiscal year.
With respect to Section 16(a) of the Exchange Act, the
following insider filings were delinquent:
Late Failure
Person Form Report Transactions to File
Russell C. Best 4 N/A 2 1
Walter E. Best 4 N/A 2 1
Roger E. Beaverson 4 N/A 2 1
BLC Stock Bonus Plan 4 N/A 2 1
Russell C. Best 5 1 2 N/A
Walter E. Best 5 1 2 N/A
Roger E. Beaverson 5 1 2 N/A
BLC Stock Bonus Plan 5 1 2 N/A
All of the above failures to file have since been rectified.
<PAGE>
NOMINEES FOR ELECTION AS DIRECTORS
At the meeting five directors are to be elected to serve for a
term of one year and until their successors shall be elected and
qualified. The following slate of five nominees has been chosen
by the Board of Directors and the Board recommends that each be
elected.
<TABLE>
<CAPTION>
Position Held
With Corporation Director
Name
Age Or Principal Occupation Since
<S> <C> <C> <C>
Russell C. Best (1) 34 Chairman of the Board of 1991
the Corporation since March, 1995;
President of the Corporation since
February 15, 1995; Chief Executive
Officer of the Corporation since May,
1994; Executive Vice President
of the Corporation from June, 1992
to May, 1994; Marketing Director
of the Corporation from 1989-1992;
President and Chief Executive Officer
of Best Universal Lock Co. and
Frank E. Best, Inc. since February 15,
1995; prior thereto Vice President of
Best Universal Lock Co. and
Frank E. Best, Inc. from prior to 1990;
director of Frank E. Best, Inc. and
Best Universal Lock Co.
Mariea L. Best (1) 32 Sole shareholder and president of Best 1995
Event and Travel, Inc., a travel agency,
from 1991-1994; Special Event Coordinator
for Wiersma from 1987-1990;
Director of the Corporation,
Frank E. Best, Inc.
and Best Universal Lock Co.
Gregg A. Dykstra 39 Secretary/Treasurer of the Corporation, nominee
Frank E. Best, Inc. and Best Universal
Lock Co. since March, 1995; General Counsel
of Best Lock Corporation since November, 1989
Larry W. Rottmeyer 39 Vice President and General Manager nominee
of Business Development of
Best Lock Corporation since
June, 1995; Vice President of
Marketing of Best Lock Corporation
from October, 1994 to June, 1995;
chief executive officer/president for
Marcon Corporation, an independent
<PAGE>
marketing and research firm, from October,
1994 to June, 1995; chief executive
officer/president and senior marketing
consultant for Marcon Corporation from
1987 to October, 1994
Eric M. Fogel 40 Partner in the law firm of Holleb & nominee
Coff, Chicago, Illinois, since
December 1993; associate in the law
firm of Sonnenschein Nath & Rosenthal,
Chicago, Illinois, from July, 1989
to November, 1993
<FN>
______________________
(1) Russell C. Best is the spouse of Mariea L. Best.
</TABLE>
The Board of Directors does not have standing audit,
nominating or compensation committees.
The Board of Directors of the Corporation held three
meetings and conducted business by unanimous written consent in
lieu of meeting eight times during 1994. All directors were
present for at least 75 percent of such meetings.
Effective April 1, 1995, each member of the Board of
Directors will be entitled to fees for services rendered in his
or her capacity as a director in the amount of $25,000 per
calendar year.
EXECUTIVE COMPENSATION
Board of Directors Compensation Report
In General
The Board of Directors has responsibility for establishing
executive compensation and the Corporation does not have a
compensation committee or other board committee performing
similar functions. The compensation for executive officers of
the Corporation consists primarily of salary and a cash bonus.
Executive officers also participate, along with other employees,
in the Best Lock Corporation Stock Bonus Plan, a qualified non-
contributory defined benefit pension plan, a bonus plan and
401(k) plan. In 1994, the Corporation made no contributions to
the Stock Bonus Plan. Also, during 1994 the Corporation
implemented the 401(k) plan.
In determining the levels of salary and bonus, the Board of
Directors considers a number of factors, including corporate
performance, internal compensation equity, external pay practices
for comparable companies and the executive's level of
responsibility, experience and expertise as well as their
subjective evaluation of the performance of the executive. The
<PAGE>
Directors refer to several outside surveys and studies of
companies similarly situated in size and profitability and
utilize consultants and other outsiders in establishing the
various pay levels of the executives.
Chief Executive Officer
On May 5, 1994, the Corporation and Russell C. Best entered
into an Employment Agreement pursuant to which Russell C. Best
assumed the duties of Chief Executive Officer of the Corporation.
The initial term of this agreement expires December 31, 1998;
however, the term is automatically extended by one additional
year on December 31 of each year unless earlier terminated by
notice of either party to the other at least thirty (30) days
prior to December 31 of each year. The agreement provides for a
base salary of $425,000 per year, subject to increases for
inflation, individual performance of Mr. Best, overall corporate
performance and adjustments to salary of other senior management,
plus the participation of Russell C. Best in all general and
executive compensation and benefit plans of the Corporation,
including any incentive or bonus plans.
In March, 1995, the Board of Directors reviewed the
performance of Mr. Best since he assumed the duties of Chief
Executive Officer in May, 1994 and recognized the following
factors as evidence of the excellent performance of Mr. Best:
1. The Corporation's net income before provision for
income taxes increased from $1,149,518 in the year
ended December 31, 1993 to $2,208,155 in the year ended
December 31, 1994;
2. The Corporation's earnings per share increased by 92%
from $8.76 for the 1993 year to $16.83 for the 1994
year;
3. The Corporation's sales revenues increased by 6.24%
from $98,521,396 for the 1993 year to $104,669,003 for
the 1994 year;
Certain members of the Board of Directors also reviewed certain
compensation survey research data analyzed by an outside
consultant with respect to compensation levels of chief executive
officers of corporations comparable to the Corporation. In light
of these factors and the review of compensation survey research
data and consistent with the terms of the employment agreement,
the Board of Directors determined that Mr. Best should be paid a
bonus in the amount of $340,000 for his performance in calendar
year 1994 and as an incentive for him to continue to perform at
an excellent level. In light of these same factors and in
accordance with the employment agreement, the Board of Directors
also determined to increase Mr. Best's annual base compensation
from $425,000 to $615,000 effective as of April 1, 1995.
Prior to May, 1994, Walter E. Best was the Chief Executive
Officer of the Corporation. Mr. Best, is the eldest son of the
inventor and founder of the Corporation, Frank E. Best. Walter
E. Best was in this position since 1966 and has numerous patents
in the locking art. An important element in the determination of
<PAGE>
his compensation was his continuing effort to focus the
Corporation in its traditional areas of strength.
Submitted by Board of Directors
Russell C. Best, Mariea L. Best
<PAGE>
Summary Compensation
The information in the following table discloses all
remuneration paid to the five most highly compensated executive
officers of the Corporation, for services in all capacities to
the Corporation and its parents, Frank E. Best, Inc. ("Best") and
Best Universal Lock Co. ("Universal"), during the fiscal years
ended December 31, 1994, 1993, and 1992.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
All Other (5)
Name and Principal Position Year Salary Bonus (4) Compensation
<S> <C> <C> <C> <C>
Walter E. Best (1) 1994 $444,965 $ 3,665 $ 1,450
Chairman and President 1993 435,668 1,779 1,817
1992 430,443 420 1,997
Russell C. Best (2) 1994 $406,657 $343,665 -0-
Chief Executive Officer 1993 250,705 1,779 $ 1,750
1992 238,591 420 1,920
Marshall W. Best (1) 1994 $220,694 $ 2,015 -0-
Vice-President, Manufacturing 1993 218,092 1,779 $ 1,632
1992 188,198 420 1,586
Richard E. Best (1) 1994 $214,343 $ 1,300 -0-
Vice-President, Facilities 1993 212,374 1,779 $ 1,587
1992 191,506 420 1,610
R. Gene McCullum (3) 1994 $191,473 $ 2,015 $ 3,000
Vice-President, Administration 1993 196,706 1,779 1,474
1992 209,674 420 1,762
<FN>
_______________________
(1) Resigned effective February 15, 1995.
(2) Appointed Chief Executive Officer effective May 1, 1994.
(3) Resigned as a director December 30, 1994. Employment
terminated as of March 1, 1995.
(4) In 1992 and 1993, the bonus payments were flat amounts. In
1994, the bonus payments consisted of a flat base amount
plus a percentage based on the employee's achievement of
certain business objectives. In the case of Russell C.
Best, the bonus amount for 1994 includes an amount equal to
$340,000 in recognition of services performed in calendar
year 1994, payable in accordance with the employment
agreement with Russell C. Best as described in the Board of
Directors Compensation Report.
(5) For 1992 and 1993, these amounts represent contributions by
the Corporation to the Best Lock Corporation Stock Bonus
<PAGE>
Plan, a defined contribution plan, on behalf of the named
executive officers. For 1994 these amounts represent
contributions by the Corporation to the 401(k) plan on
behalf of the named executive officers.
</TABLE>
Compensation Pursuant to Plans
The Best Lock Corporation Stock Bonus Plan is a qualified
noncontributory defined contribution plan available to all
employees above the age of 21 with one year of full-time service.
Voluntary contributions by the Corporation to the plan are made
upon the authority of the Board of Directors and are allocated on
the basis of annual compensation and years of service. The funds
of the Plan are to be invested primarily in securities of the
Corporation or its affiliates. Amounts are distributed from the
Plan upon the resignation, retirement, termination, or death of
the employee in accordance with Plan provisions. Employer
contributions for the account of the individuals named in the
Summary Compensation Table are included in that table under All
Other Compensation.
The Corporation implemented a 401(k) profit sharing plan
during 1994 covering all employees who had completed one year of
continuous service and had reached the age of 21 years as of
October 1, 1994. Employer contributions to the 401(k) Plan are
determined by the Board of Directors. Participants begin vesting
in employer contributions after 1 year of service at which time
they are 20% vested. Employees become 100% vested after 5 years
of service. Employer contributions for the account of the
individuals named in the Summary Compensation Table are included
in that table under All Other Compensation.
Messrs. Russell C. Best, Marshall W. Best, Richard E. Best and
R. Gene McCullum, along with all other employees as of September,
1989, participate in a qualified noncontributory defined benefit
pension plan approved by the Board of Directors in 1989. The
monthly benefit payable thereunder is based on the employee's
compensation and years of past service as of September 1, 1989.
The benefits under the plan are stated in terms of a monthly
payment at age 65 determined by the product of three components:
(1) September 1, 1989 basic monthly pay rate; (2) one percent;
and (3) the greater of (a) two or (b) the participant's period of
employment (in years and months) through August 31, 1989. Normal
retirement age is 65, with provisions for earlier retirement with
reduced benefits. Such payments are to be made for their
lifetime, following which 50% of the monthly amount will be
provided for the lifetime of a surviving spouse. The estimated
annual benefits under the plan payable upon retirement at age 65
to Russell C. Best, Marshall W. Best, Richard E. Best and R. Gene
McCullum are $5,920, $7,403, $6,407 and $37,489, respectively.
Effective in 1989, the Corporation executed a Supplemental
Retirement Benefit Agreement with Walter E. Best. The payments
to be made under this agreement are based on his compensation and
years of past service as of September 1, 1989, and are payable on
<PAGE>
a monthly basis following his retirement. Such payments are to
be made for his lifetime, following which 50% of the monthly
amount will be provided for the lifetime of his surviving spouse.
The estimated annual benefits payable to Walter E. Best under
this benefit agreement as of December 31, 1994 are $132,300.
Compensation Committee Interlocks and Insider Participation
Russell C. Best, President and Chief Executive Officer of the
Corporation, Walter E. Best, former President and director of the
Corporation, and R. Gene McCullum, former Vice-President
Administration and director of the Corporation participated in
deliberations of the Board of Directors concerning executive
officer compensation. During calendar year 1994, each of these
individuals was also a member of the Board of Directors of Best
and Universal, each of which is a parent of the Corporation.
Certain Transactions
Shortly after the change in control of the Corporation
described in "Change in Control," Russell C. Best began to
implement organizational changes in the 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 the Corporation, Russell C. Best and
Gregg A. Dykstra, then General Counsel of the 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, the Corporation settled all claims
arising from the threatened derivative action as well as all
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 the Corporation, Universal, and Best; (ii)
the resignation of Richard E. Best and Marshall W. Best as
officers and employees of the 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 the
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 the Corporation and interests in a partnership as
described below. The covenants not to compete referenced above
prohibit each of the individuals for a period of five years from
engaging in or having an interest in any business in the locking
or security business or from using the name "Best" in association
with any business in competition with the 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. As a part of
the Settlement, the Corporation cancelled indebtedness in the
<PAGE>
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
the Corporation in connection with the 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 the Corporation and the two
individuals.
On February 15, 1995, the Corporation purchased an eighty-
seven percent (87%)non-voting partnership interest in Best Lock
Partnership, a newly formed Indiana general partnership (the
"Partnership") for the total consideration of $5,582,625.59.
This acquisition was made in two steps. First, on February 15,
1995, the Corporation acquired an eighty-four and one-half
percent (84.5%) interest in the Partnership from members of the
Best family for a total consideraton of $4,521,433.67. Second,
the 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 Best
and Universal from members of the Best family for the aggregate
purchase price of $1,061,191.92.
Finally, the Corporation acquired shares of its own common
stock from members of the Best Family at an aggregate purchase
price of $2,595,670.00.
After the consummation of these transactions, the total assets
of the Partnership were $6,571,711.60. Russell C. Best, Chairman
of the Board, President and Chief Executive Officer of the
Corporation, 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.
<PAGE>
The information in the following table discloses payments
received by members of the Best family in connection with the
settlement in the categories identified.
<TABLE>
<CAPTION>
Purchase Purchase Purchase Purchase Severance
Price for Price for Price for Price for and Vacation Noncom-
Partnership Best's Corporation's Universal's /Bonus petition
Name Interests Shares Shares Shares Payments Payments
<S> <C> <C> <C> <C> <C> <C>
Walter E. Best -0- $ 293.60 $ 770.00 $ 329.80 $695,132.80 $640,000.00
The Huntington Trust -0- 349,119.76 -0- -0- -0- -0-
Company, NA, as the
trustee of the
Walter E. Best
Irrevocable Trust
Walter E. Best, as 3,532,521.46 -0- -0- -0- -0- -0-
the trustee of the
Walter E. Best
Revocable Trust
Robert W. Best 250,323.45 43,746.40 734,195.00 140,737.88 429,774.56 200,000.00
Denise Best 31,223.14 -0- -0- -0- -0- -0-
Richard E. Best 250,323.45 43,658.32 649,495.00 140,737.88 442,563.08 200,000.00
Amber Best 31,223.14 -0- -0- -0- -0- -0-
Marshall W. Best 250,323.45 43,658.32 649,495.00 140,737.88 439,360.24 200,000.00
Tracey Best 31,223.14 -0- -0- -0- -0- -0-
Dona J. Best, as 144,272.44 -0- 561,715.00 158,172.08 -0- -0-
trustee of the
Dona J. Best
Revocable Trust
</TABLE>
<PAGE>
The relationships among the parties are as follows: Prior
to February 15, 1995, Walter E. Best was President, Chairman, and
a member of the Board of Directors of each of the Corporation,
Best, Universal, and Walter E. Best Company, Inc. He is the
father of the Corporation's current President, Russell C. Best,
Robert W. Best, Richard E. Best and Marshall W. Best. Prior to
February 15, 1995, Robert W. Best was Assistant to the President
of the Corporation. He is a brother of the Corporation's current
President, Russell C. Best. Prior to February 15, 1995, Richard
E. Best was a Vice President of the Corporation. He also is a
brother of the Corporation's current President, Russell C. Best.
Prior to February 15, 1995, Marshall W. Best was a Vice President
of the Corporation. He also is a brother of the Corporation's
current President, Russell C. Best. The Walter E. Best Revocable
Trust is a revocable trust established by Walter E. Best. The
Dona J. Best Revocable Trust is a revocable trust established by
Dona J. Best who is the mother of Russell C. Best, Robert W.
Best, Richard E. Best and Marshall W. Best. Denise Best is the
spouse of Robert W. Best; Amber Best is the spouse of Richard E.
Best; and Tracey Best is the spouse of Marshall W. Best.
The purchase price of the shares of Best, Universal and the
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.
The 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 the Corporation from
Huntington National Bank of Indianapolis, Indiana.
The series of transactions described above was approved
unanimously by the Corporation's Board of Directors and was
undertaken pursuant to an Agreement dated February 15, 1995. An
opinion was rendered by Merrill Lynch, Pierce, Fenner & Smith
Incorporated to the Corporation's Board of Directors that the
settlement transactions, including the severance and non-
competition payments, were fair to the Corporation from a
financial point of view.
Employment Agreement and Agreement Respecting Sale of Stock
On May 5, 1994, the Corporation and Russell C. Best entered
into an Employment Agreement pursuant to which Russell C. Best
assumed the duties of Chief Executive Officer of the 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 the
<PAGE>
Corporation, including any incentive or bonus plans. See "Board
of Directors Compensation Report - Chief Executive Officer." The
Employment Agreement further provides for a loan of up to
$3,400,000 to Russell C. Best, to be repaid to the 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 the
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 the 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, the Corporation loaned $3,400,000 to Russell C.
Best pursuant to the terms of a Loan Agreement dated May 5, 1994,
to which the Corporation and Russell C. Best are parties. The
terms of the loan were as provided in the Agreement. The current
outstanding principal balance of the loan is $3,334,001. The
loan is secured by 113,311 shares of Best common stock and 451
shares of Universal. See "Change in Control." Such shares will
be released pro rata from the pledge as the principal of the loan
is repaid.
On May 16, 1994, the 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 the Corporation to purchase from him any shares of Best
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, the 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 the Corporation in 1994 and is a director nominee,
was the president of, and owned in excess of 10% of, Marcon, Inc.
The Corporation purchased market research services from Marcon,
Inc. during 1994 paying $291,716 for such services.
<PAGE>
Mr. Rottmeyer is no longer an officer or shareholder of Marcon,
Inc.
PERFORMANCE GRAPH
The information in the following line graph compares the
yearly change in the cumulative total shareholder return on the
Corporation's common stock with the cumulative total return of
the S & P Composite 500 Index and a selected peer group of
companies for the period of five years commencing December 31,
1989 and ending December 31, 1994.
The graph and table that follows assume that $100 was
invested on December 31, 1989 in Best Lock Corporation common
stock, the S & P 500 Index and stock of the peer group. The peer
group consists of publicly traded companies in industries similar
to the Company: Ingersoll-Rand Co., Knape & Vogt Mfg. Co., Masco
Corporation, Stanley Works and L. S. Starrett Co. Total return
assumes that all dividends are reinvested.
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Best Lock
Corporation $100.00 $101.98 $103.94 $137.28 $143.17 $143.17
S & P 500 $100.00 $ 97.00 $126.00 $136.00 $150.00 $152.00
Peer Group $100.00 $ 75.14 $109.13 $127.20 $159.12 $129.14
</TABLE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of Arthur
Andersen LLP as independent auditors of the accounts of the
<PAGE>
Corporation and its consolidated subsidiary for the fiscal year
of 1995.
The Board of Directors recommends a vote for the proposal to
approve the appointment of Arthur Andersen LLP. In the event the
appointment of Arthur Andersen LLP should not be approved by the
Stockholders, the Board of Directors will make another
appointment to be effective at the earliest feasible time, either
this fiscal year or the next.
Representatives of Arthur Andersen LLP are not expected to
be at the shareholders' meeting.
PROPOSAL TO AMEND THE CORPORATION'S CERTIFICATE OF INCORPORATION
Description of the Proposed Amendment:
The full text of the proposed amendment to the Corporation's
Certificate of Incorporation is included in this Information
Statement titled Exhibit A . The following description is a
summary only and is qualified in its entirety by reference to the
text of the proposal under Exhibit A. The text of the proposal is
subject to clerical and other non-material revisions that the
Board may determine are necessary.
The Board of Directors has unanimously approved, and
proposes that the Stockholders adopt, a new Article VIII of the
Corporation's Certificate of Incorporation that would limit the
personal liability of the Corporation's directors to the
Corporation or its Stockholders for monetary damages for breach
of their fiduciary duty to the extent permitted by Delaware law.
The text of the proposed amendment appears under Exhibit A.
Section 102(b)(7) of the Delaware General Corporation Law
provides that a Delaware corporation may include in its
certificate of incorporation a provision eliminating or limiting
the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as
a director, provided that such provision cannot eliminate or
limit a director's liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law concerning an unlawful
payment of a dividend or unlawful stock purchase or redemption or
(iv) for any transaction from which the director derived an
improper personal benefit.
The proposed amendment is consistent with Section 102(b)(7)
of the Delaware General Corporation Law, which is designed, among
other things, to reduce the personal risks inherent in serving as
a director of a corporation. The proposed amendment would not
eliminate the directors' duty of care, but it would eliminate the
financial exposure of directors of the Corporation for certain
breaches of such duty. Directors would remain liable to the
Corporation and its stockholders for the acts that are
specifically excluded from the scope of the provision as listed
above. The proposed amendment would not be retroactive and
therefore would not limit the liability of directors for any act
<PAGE>
or omission occurring prior to the adoption of the proposed
amendment.
Reasons for Amendment:
Although the Corporation has had little difficulty in
attracting and retaining directors, the Board of Directors
believes that the Corporation should take all reasonable steps to
ensure that it will continue to be able to attract and retain
qualified persons for such positions and that directors will not
be inhibited in their decision-making because of undue concerns
about personal liability. Further, the amendment should have the
effect of reducing the cost to the Corporation of obtaining
directors and officers liability insurance as well as the risk
that the Corporation's assets will be depleted in defending and
indemnifying its officers and directors against frivolous
stockholder litigation.
Effect of Amendment:
If the proposed amendment is adopted, a stockholder will be
able to prosecute an action against a director for monetary
damages only if the stockholder alleges a breach of the duty of
loyalty, a failure to act in good faith, intentional misconduct,
a knowing violation of law, an unlawful dividend payment or stock
purchase or redemption or a breach of duty resulting in receipt
of an improper personal benefit. A stockholder will not be able
to prosecute such an action (including an action relating to an
attempted takeover of the Corporation) based on "negligence" or
"gross negligence" of a director in the performance of the
director's duties. However, the proposed amendment will not
limit or eliminate the right of the Corporation or any
stockholder to seek an injunction, rescission or other form of
non-monetary relief in the event of a breach of the duty of care
by a director (although such relief may not be an effective
remedy in certain circumstances). In addition, the proposed
amendment applies only to claims against a director arising out
of service in such capacity and, depending upon judicial
interpretation, it may not be effective to relieve a director
from liability under the laws of jurisdictions other than
Delaware, such as liabilities imposed under the federal
securities laws. The proposed amendment will have no effect on
tort or other claims by third parties against directors. The
proposed amendment will not preclude indemnification of a
director by the Corporation for any liability which has not been
eliminated by the amendment as permitted by the Delaware General
Corporation Law and the Corporation's Bylaws.
The Corporation has not received notice of any pending or
threatened litigation to which any current director is a party or
threatened to be made a party in such capacity to which the
protections and benefits under the proposed amendment might
apply; and the proposed amendment is not being proposed in
response to any specific resignation, threat of resignation or
refusal to serve by any director or potential director of the
Corporation.
The Board of Directors believes that the diligence exercised
by directors stems primarily from their fiduciary duty and desire
to act in the best interests of the Corporation and its
<PAGE>
Stockholders and not from fear of monetary damages. Consequently,
they believe that the level of care exercised by them in the
performance of their duties would not be lessened by the adoption
of the proposed amendment. The Board of Directors recognizes
that it and future members of the Board of Directors could
personally benefit from approval of the proposed amendment, but
for the reasons stated above, the Board of Directors believes
that the proposed amendment is in the best interests of the
Corporation and its Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE APPROVAL OF THE PROPOSED AMENDMENT TO THE CORPORATION'S
CERTIFICATE OF INCORPORATION.
VOTE REQUIRED TO APPROVE MATTERS
A quorum for the meeting requires the presence in person or
by proxy of holders of a majority of the outstanding shares of
the common stock of the Corporation. Votes cast by proxy or in
person at the meeting will be tabulated by the inspectors of
election appointed for the meeting. Abstentions, "broker non-
votes" (i.e., where brokers or nominees indicate that such
persons have not received instructions from the beneficial owner
or other person entitled to vote shares as to a matter with
respect to which the brokers or nominees do not have
discretionary power to vote) and votes withheld will be treated
as present for purposes of determining the presence of a quorum.
Brokers that do not receive instructions are entitled to vote on
the election of directors and the ratification of appointment of
auditors. With respect to the other proposal, no broker may vote
shares held for beneficial owners or other persons entitled to
vote without specific instructions from such persons.
The election of each director requires a plurality of the
votes cast. Votes withheld will be deemed not to have been cast.
The approval of the proposed amendment to the Certificate of
Incorporation requires the affirmative vote of the holders of
shares representing a majority of the shares of Common Stock
outstanding on the record date. Russell C. Best, Chairman of the
Board, President and Chief Executive Officer of the Corporation,
currently beneficially owns approximately 88% of the outstanding
common Stock of the Corporation and intends to vote his shares in
favor of the proposed amendment. With respect to such proposed
amendments, abstentions and broker non-votes will have the same
effect as a vote against the proposal.
The ratification of the appointment of the auditors requires
the affirmative vote of a majority of the shares present in
person and entitled to vote at the annual meeting.
OTHER BUSINESS
As of the date of this Information Statement, the Board of
Directors knows of no other business which will be presented for
consideration at the meeting.
<PAGE>
AVAILABILITY OF 10-K REPORT
Copies of the 1994 Annual Report on Form 10-K will be
forwarded without charge to security holders as of the record
date upon written request to the Secretary.
By Order of the Board of Directors,
Gregg A. Dykstra, Secretary
P.O. Box 50444
Indianapolis, Indiana 46250
<PAGE>
EXHIBIT A
RESOLVED, that a new Article VIII shall be, and the
same hereby is, added to the Corporation's Certificate of
Incorporation, which Article shall read in its entirety as
follows:
"No director shall be personally liable to the
corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, provided,
however, that this Article VIII shall not limit or
eliminate the liability of a director, to the extent
provided by applicable law: (i) for any breach of the
duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit. It
is the intention of this Article VIII to eliminate the
liability of the corporation's directors to the
corporation or its stockholders to the fullest extent
permitted by Section 102(b)(7) of the Delaware General
Corporation Law (or successor provision).
Any repeal or modification of the foregoing
provisions of this Article VIII by the stockholders of
the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at
the time of such repeal or modification."
