-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CJZsIpNTlPuMiguFUFASD45cv37n1rAhLod8/L0rpDYM9UBXCh4UeLPWInuq2vKp 7n3UL9yAWK3zXaN1l6PGbQ== 0000908834-95-000043.txt : 19951019 0000908834-95-000043.hdr.sgml : 19951019 ACCESSION NUMBER: 0000908834-95-000043 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19951018 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEST FRANK E INC CENTRAL INDEX KEY: 0000011806 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 351142810 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 000-01490 FILM NUMBER: 95581356 BUSINESS ADDRESS: STREET 1: P O BOX 50444 CITY: INDIANAPOLIS STATE: IN ZIP: 46250 BUSINESS PHONE: 3178492250 MAIL ADDRESS: STREET 1: P O BOX 50444 CITY: INDIANAPOLIS STATE: IN ZIP: 46250 10-K405/A 1 AMENDMENT TO FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 1994
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 12-31-94 [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 0-1490 FRANK E. BEST, INC. (Exact name of registrant as specified in its charter) WASHINGTON 35-1142810 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. BOX 50444, INDIANAPOLIS, INDIANA 46250 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (317) 849-2250 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered NONE Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK PAR VALUE $1.00 (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 598,710 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
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 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 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 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 $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 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. 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 ------- Total 301,000 ======= * Russell C. Best owns all of the voting common stock of Walter E. Best Co., Inc. ("WEBCO"). Accordingly, he is in effective control of the manner in which the shares of 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. 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 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.
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 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
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. 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 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: All required financial statements and schedules are included in Item 8 of this Form 10-K. (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) 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 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 FRANK E. BEST, INC. /s/ Russell C. Best ------------------------------ Russell C. Best, 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.
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
EX-10.(B) 2 EXHIBIT 10-B LOAN AGREEMENT AND AMENDMENT TO LOAN AGREEMENT 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) 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 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 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 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 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. Signed and delivered at Indianapolis, Indiana, this ______ day of May, 1994. Signature ______________________________ Russell C. Best 755 Eagle Creek Drive Zionsville, Indiana 46077 EX-10.(C) 3 EXHIBIT 10-C BEST LOCK PARTNERSHIP AGREEMENT OF GENERAL PARTNERSHIP AND 1, 2ND AND 3RD AMENDMENTS 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 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. 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 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
EXHIBIT 1 Amended Schedule A Capital Contribution Number and Type of Partnership Percentage Name Residence Description of Property Value Units Interest 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
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 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 ------------------------- 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 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 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 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 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 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 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 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
EXHIBIT 1 Amended Schedule A Capital Contribution Number and Type of Partnership Percentage Name Residence Description of Property Value Units Interest 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
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 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 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 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 ) 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. 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 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 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
SCHEDULE A Capital Contribution Number and Type of Partnership Percentage Name Residence Description of Property Value Units Interest 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
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. "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 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 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 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. 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. 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. 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 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 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. 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 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 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. 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. 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 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 -------------------- 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 --------------------
SCHEDULE A Capital Contribution Number and Type of Partnership Percentage Name Residence Description of Property Value Units Interest 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.
EX-10.(D) 4 EXHIBIT 10-D INDEMNIFICATION AGREEMENT 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. 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 EX-10.(E) 5 EXHIBIT 10-E AMENDMENT TO SUPPLEMENTAL RETIREMENT BENEFITS AGREEMENT 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. 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) EX-10.(F) 6 EXHIBIT 10-F EMPLOYMENT AGREEMENT 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. 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: - 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: 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 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 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 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. 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 ------------------------------ -----END PRIVACY-ENHANCED MESSAGE-----