<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
20549
------------------------------
FORM 10-Q
(Mark One)
-------- Quarterly Report Pursuant to Section 13 or 15(d) of the
X Securities Exchange Act of 1934
-------- For the quarterly period ended May 31, 1998
-------- 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 1-1416
BINKS SAMES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-0808480
-------------- ---------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9201 WEST BELMONT AVENUE, FRANKLIN PARK, ILLINOIS 60131
(Address of principal executive offices)
Registrant's telephone number, including area code 847-671-3000
Indicate by check mark whether the registrant (l) 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
-------- ----------
The number of shares outstanding of each of the issuer's classes of common
stock, as of the close of the period covered by this report:
Class Outstanding May 31, 1998
--------------------- ---------------------------------
Common, par value $1.00 2,963,837
<PAGE>
PART I - FINANCIAL INFORMATION
SUMMARIZED FINANCIAL STATEMENTS
Company or group of companies
for which report is filed:
Binks Sames Corporation and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
MAY 31, 1998 (UNAUDITED) AND NOVEMBER 30, 1997
<TABLE>
<CAPTION>
May 31 Nov 30
1998 1997
-------- ---------
($000 omitted)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,947 7,220
Receivables, net 60,954 73,638
Inventories 72,104 78,144
Other current assets 7,952 7,070
-------- --------
Total current assets 143,957 166,072
Other noncurrent assets 6,059 5,661
Property, plant and equipment, at cost 41,504 42,656
Less accumulated depreciation 23,114 22,655
-------- --------
Net property, plant and equipment 18,390 20,001
-------- --------
TOTAL ASSETS $168,406 191,734
-------- --------
-------- --------
</TABLE>
-1-
<PAGE>
PART I - FINANCIAL INFORMATION - (Continued)
Binks Sames Corporation and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
MAY 31, 1998 (UNAUDITED) AND NOVEMBER 30, 1997
<TABLE>
<CAPTION>
May 31 Nov 30
1998 1997
-------- ---------
($000 omitted)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, bank overdrafts
and current maturities
of long-term debt $ 12,788 8,628
Accounts payable 35,846 58,249
Other current liabilities 27,186 23,295
-------- --------
Total current liabilities 75,820 90,172
Deferred compensation 7,288 7,313
Deferred income taxes 269 452
Long-term debt, less current maturities 65,908 60,946
-------- --------
Total liabilities 149,285 158,883
-------- --------
Stockholders' equity:
Capital stock, $l.00 par value.
Authorized 12,000,000 shares;
issued 2,963,837 shares 2,964 2,964
Additional paid-in capital 19,629 19,629
Retained earnings 745 13,333
Foreign currency translation
adjustments (4,217) (3,075)
-------- --------
Total stockholders' equity 19,121 32,851
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $168,406 191,734
-------- --------
-------- --------
</TABLE>
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<PAGE>
Binks Sames Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1998 AND MAY 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
For the three For the six
months ended months ended
-------------------------------------------------------------------------
May 31 May 31 May 31 May 31
1998 1997 1998 1997
-------- -------- -------- --------
($000 omitted) ($000 omitted)
<S> <C> <C> <C> <C>
Net sales $ 52,218 52,967 112,082 117,558
Cost of goods sold 35,482 37,162 80,449 83,130
--------- --------- --------- ---------
Gross profit 16,736 15,805 31,633 34,428
Selling, general and administrative expenses 29,892 17,718 47,026 35,240
-------- -------- -------- --------
Operating loss (13,156) (1,913) (15,393) (812)
-------- -------- -------- --------
Other expense (income):
Interest expense 1,927 1,189 3,542 2,263
Other expense (income), net (1,013) (388) (1,101) (518)
-------- -------- -------- --------
914 801 2,441 1,745
Loss before income taxes (14,070) (2,714) (17,834) (2,557)
Income tax benefit (5,141) (832) (5,246) (817)
--------- --------- --------- ---------
Net loss $ (8,929) (1,882) (12,588) (1,740)
--------- --------- --------- ---------
--------- --------- --------- ---------
Basic and diluted loss per share $ (3.02) (.61) (4.25) (.56)
--------- --------- --------- ---------
--------- --------- --------- ---------
Average basic and diluted shares outstanding 2,963,837 3,088,837 2,963,837 3,088,837
--------- --------- --------- ---------
--------- --------- --------- ---------
Cash dividends declared per share $ .00 .10 .00 .10
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
-3-
<PAGE>
Binks Sames Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended May 31, 1998 and May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
---------------- ---------------
($000 omitted)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (12,588) (1,740)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 1,536 2,161
Deferred compensation, net of payments 34 115
Deferred income taxes (198) (41)
Other, net (976) 106
Cash provided by (used in) changes in:
Receivables 10,642 5,036
Inventories 5,042 7,128
Other current assets (1,038) (3,101)
Accounts payable (21,021) (13,291)
Accrued expenses 5,251 (9,096)
Income taxes (924) (1,559)
---------------- ---------------
Net cash used in operating activities (14,240) (14,282)
---------------- ---------------
Cash flows from investing activities:
Purchase of property, plant and equipment (457) (1,111)
Proceeds from sale of real estate and equipment 1,406 62
Other investments and assets (283) 67
---------------- ---------------
Net cash provided by (used in) investing activities 666 (982)
---------------- ---------------
Cash flows from financing activities:
Proceeds from long-term borrowings 5,082 5,642
Dividends paid - (309)
Net increase in short-term borrowings 4,445 2,002
Principal payments on long-term debt (116) (254)
---------------- ---------------
Net cash provided by financing activities 9,411 7,081
---------------- ---------------
Effect of exchange rate changes on cash (110) (544)
---------------- ---------------
Net decrease in cash and cash equivalents (4,273) (8,727)
Cash and cash equivalents at beginning of period 7,220 16,200
---------------- ---------------
Cash and cash equivalents at end of period $ 2,947 7,473
---------------- ---------------
---------------- ---------------
</TABLE>
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<PAGE>
BINKS SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1998 (UNAUDITED) AND NOVEMBER 30, 1997
NOTE 1
The accompanying consolidated financial statements are unaudited, but
in the opinion of management include all adjustments, consisting only
of normal recurring adjustments, necessary for a fair presentation of
the results of operations and financial position for the periods
presented. Results of operations for any interim period are not
necessarily indicative of results for any other period or for the full
year. These interim financial statements should be read in conjunction
with the consolidated financial statements and related notes contained
in the Annual Report on Form 10-K/A for the year ended November 30,
1997.
NOTE 2
In February 1998, the Board of Directors of the Company announced that
it would pursue a sale of the Company in order to maximize shareholder
value. The Board of Directors has determined that in addition to
pursuing the sale of the Company as a whole, the Board will consider
other possible strategic alternatives which may include the sale of
only component parts of the Company.
On July 1, 1998 the Company's Board of Directors created a three member
Special Committee of the Board to consider offers and alternatives
relating to the sale of the Company or other possible strategic
alternatives involving the Company. The members of the Special
Committee, the majority of which consists of outside directors, are
Donald G. Meyer, Wayne F. Edwards and Clifford J. Vaughan.
NOTE 3
At the Company's annual meeting on April 28, 1998, Doran J. Unschuld,
74, retired as President and Chief Executive Officer of the Company.
Mr. Unschuld will continue his term as a member of the Board of
Directors of the Company. Dr. Donald G. Meyer, 63, Chairman of the
Board of Directors of the Company since February 1998, a director of
the Company since 1996, and previously a director of the Company from
1990 to 1995, has assumed the position and responsibilities of
President and Chief Executive Officer.
NOTE 4
On March 20, 1998, a suit was filed against the Company concerning a
lease related to a headquarters facility that had been planned for
Vernon Hills, Illinois. The suit was brought by the developer alleging
default by the Company under the lease. The Company has asserted in a
counterclaim that the developer had previously repudiated the lease and
has filed a third party claim against the real estate advisor that
arranged the lease. The advisor has recently filed a counterclaim
against the Company. The Company is unable to make a meaningful
estimate of the amount or range of loss that might result from an
unfavorable resolution of these matters.
The Company has also settled litigation that was pending with former
financial advisors. The settlement agreement calls for payments by the
Company to such advisors of $750 thousand on July 1, 1998, which has
been paid, and $75 thousand on September 4, 1998. The entire amount of
the settlement is included in second quarter fiscal 1998 results as a
component of selling, general and administrative expenses in the
consolidated statement of operations.
On July 10, 1998, the Company settled patent infringement actions
brought in the United States by Behr Systems, Inc. and in Germany by
Durr Systems GmbH, the parent of Behr Systems, Inc. The Company decided
to settle the patent infringement actions because of recent technical
tests, which conflicted with previous evidence and caused uncertainty
regarding the issue of infringement In the settlement, the Company has
agreed to a paid-up royalty of $9 million for a world-wide license for
the life of all patents at issue in the actions, to be paid on the
earlier of (1) five business days following the closing of the sale of
the Company or any separate sale of the Company's subsidiaries Sames,
S.A. and Sames Electrostatic, Inc. or (2) December 31, 1998. The
Company anticipates that if the Company or a substantial component
thereof is not sold by December 31, 1998, the Company would need to
seek other sources of funds in order to pay the settlement. There can
be no assurance that such funds will be available and, if available, on
terms favorable to the Company. The entire amount of the settlement
payment is included in second quarter fiscal 1998 results as a
component of selling, general and administrative expenses.
-5-
<PAGE>
BINKS SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
MAY 31, 1998 (UNAUDITED) AND NOVEMBER 30, 1997
The Company has certain other contingent liabilities resulting from
litigation and claims incident to the ordinary course of business.
Management believes that the probable resolution of such contingencies
will not materially affect the financial position or results of
operations of the Company. For information relating to other legal
matters involving the Company, reference is made to Item 3 "Legal
Proceedings" in the Company's Form 10-K/A for the year ended November
30, 1997.
NOTE 5
In the second quarter of fiscal 1998, the Company sold real estate and
machinery in Belgium. The pretax and net gains on these sales amounted
to approximately $1.1 million and are included in other income in the
consolidated statement of operations.
NOTE 6
In the second quarter of fiscal 1998, the Company received Federal
income tax refunds of approximately $4.2 million relating to operating
losses experienced in fiscal year 1997. The second quarter fiscal 1998
earnings impact from these refunds amounted to approximately $1.4
million and is reflected as an income tax benefit in the consolidated
statement of operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SIGNIFICANT DEVELOPMENTS
Beginning in June 1996, the Company's Board of Directors adopted
various measures as part of a comprehensive reorganization and
restructuring of the Company. These measures included: (i) closing
of the Company's manufacturing facility in Franklin Park, Illinois
and shifting production to the Company's new Longmont, Colorado
manufacturing facility; (ii) reduction of manufacturing capacity
with increased outsourcing; (iii) rationalization of the Company's
product line to eliminate non-profitable products; (iv) headcount
reductions related primarily to manufacturing; and (v) reorganization
of the Company's sales and marketing, product management, research and
development, manufacturing and distribution functions along geographic
and operational lines.
In fiscal 1997, the Company recorded a net loss of $40.1 million, which
followed a net loss of $11.1 million in fiscal 1996. The Company's net
losses included special charges of $21.1 million in 1997 and $18.9
million in 1996 due to impairment and restructuring charges, inventory
writedowns and warranty and dispute resolution costs. The fiscal 1997
net loss also included a charge of $10 million to reduce the balance
sheet carrying amounts of deferred tax assets initially recorded in
prior years.
In February 1998, the Board of Directors of the Company announced that
it would pursue a sale of the Company in order to maximize shareholder
value. The Board of Directors has determined that in addition to
pursuing the sale of the Company as a whole, the Board will consider
other possible strategic alternatives which may include the sale of
only component parts of the Company.
On July 1, 1998 the Company's Board of Directors created a three member
Special Committee of the Board to consider offers and alternatives
relating to the sale of the Company or other possible strategic
alternatives involving the Company. The members of the Special
Committee, the majority of which consists of outside directors, are
Donald G. Meyer, Wayne F. Edwards and Clifford J. Vaughan.
At the Company's annual meeting on April 28, 1998, Doran J. Unschuld,
74, retired as President and Chief Executive Officer of the Company.
Mr. Unschuld will continue his term as a member of the Board of
Directors of the Company. Dr. Donald G. Meyer, 63, Chairman of the
Board of Directors of the Company since February 1998, a director of
the Company since 1996, and previously a director of the Company from
1990 to 1995, has assumed the position and responsibilities of
President and Chief Executive Officer.
-6-
<PAGE>
BINKS SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED
RESULTS OF OPERATIONS
The Company had net sales of $112.1 million for six months fiscal 1998,
a decrease of $5.5 million, or 5%, from the $117.6 million reported for
six months fiscal 1997. In second quarter fiscal 1998, sales declined
1% to $52.2 million as compared to second quarter fiscal 1997 sales of
$53 million. The majority of the six month sales decline occurred in
the Americas where sales declined 11% compared to the prior year. This
decline was largely attributable to product line rationalization and
the resulting impact on sales during six months fiscal 1997 of products
that are now discontinued. Sales in European and Pacific Rim markets
increased by 9% compared to six months fiscal 1997 and would have grown
by over 15% if prevailing six months fiscal 1997 currency exchange
rates had remained in effect during six months fiscal 1998.
Gross profit declined $2.8 million (8%) in six months fiscal 1998
compared to six months fiscal 1997. The gross profit margin was 28.2%
for six months fiscal 1998 as compared to 29.3% for the same period
last year. This decline was primarily due to the impact of increased
sales of lower margin automotive systems in Europe during first quarter
fiscal 1998. Gross profit margin in the Americas increased to 26.9%
for six months fiscal 1998 from 24.1% during the same period last year;
in second quarter fiscal 1998 gross profit margin improved to 32.1% as
compared to the 29.8% attained in second quarter fiscal 1997. This
improvement was primarily due to product sales mix and efficiencies
realized in the Americas.
For six months fiscal 1998, selling, general, and administrative
expenses were $47 million (up 33%) as compared to $35.2 million for six
months fiscal 1997. This increase was entirely attributable to $13.5
million of 1998 nonrecurring expenses which include lawsuit settlements
and associated legal fees, costs related to the efforts to sell all or
component parts of the Company, and costs and expenses related to the
March 1998 amendments of the bank credit facility and senior notes, as
described in the section, Liquidity and Capital Resources.
Interest expense increased by $1.3 million (57%) for the six month
period due to higher average borrowing levels and higher interest
rates.
Other income, which increased $582 thousand for the six month period,
includes interest income, currency exchange gains and losses, gains on
sales of fixed assets, and miscellaneous income. The majority of this
increase was attributable to the sale of the Company's facility in
Belgium during second quarter fiscal 1998.
Income tax benefit was $5.2 million on a pretax loss of $17.8 million
in six months fiscal 1998, compared to income tax benefit of $817
thousand on a pretax loss of $2.6 million in six months fiscal 1997.
The 1998 income tax benefit consists primarily of a tax benefit in
France relating to a lawsuit settlement and U.S. Federal income tax
refunds in excess of previously anticipated amounts relating to
carrybacks of the 1997 U.S. net operating loss.
As a result of all of the factors above, the Company recorded a net
loss of $12.6 million ($4.25 per share) in six months fiscal 1998, and
a net loss of $8.9 million ($3.02 per share) in second quarter fiscal
1998 as compared to a net loss of $1.7 million ($.56 per share) for six
months fiscal 1997, and a net loss of $1.9 million ($.61 per share) in
second quarter fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operations is the primary source of the Company's
liquidity. Short-term funds are also provided for current operations
through bank loans. The Company maintains substantial lines of credit
for general corporate purposes. The unused lines of credit were
approximately $18.2 million at May 31, 1998.
The Company's cash balances decreased $4.3 million during the six
months ended May 31, 1998, largely due to cash outflows of $14.2
million used in operating activities. In addition to the net loss from
operations, operational cash outlays for reductions of accounts payable
were $21 million, which were partially offset by reductions of
receivables and inventories of $15.7 million and increases in other
current liabilities of $5.2 million. The Company generated $666
thousand from investing activities in six months fiscal 1998. This was
primarily due to the sale of the Company's facility in Belgium
partially offset by purchases of capital equipment. Financing
activities provided $9.4 million to the Company during six months
fiscal 1998 which was primarily used to lower accounts payable and
accrued liabilities.
-7-
<PAGE>
BINKS SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED
On September 23, 1997, the Company entered into a $50 million unsecured
five-year credit facility with a syndicate of Chicago area banks. As of
November 30, 1997, the Company was not in compliance with several of
the financial covenants contained in the credit facility. On March 16,
1998, the Company agreed with the bank group to collateralize the
credit facility, pay amendment fees, increase the interest rate to
prime plus 1/2% on existing borrowings and prime plus 1% on new
borrowings, and shorten the duration of the agreement to two years, in
exchange for waiving all existing defaults, amending certain terms, and
increasing the total line of credit to $52.5 million to accommodate the
projected cash flow needs of the Company. On March 16, 1998, the
Company also agreed with the holder of its 7.14% senior notes to pay
amendment fees, increase the interest rate to 7.64%, and shorten the
maturity to September 30, 1999 in exchange for waiving all existing
defaults and amending certain terms of the agreement.
On July 10, 1998, the Company settled patent infringement actions
brought in the United States by Behr Systems, Inc. and in Germany by
Durr Systems GmbH, the parent of Behr Systems, Inc. The Company
decided to settle the patent infringement actions because of recent
technical tests, which conflicted with previous evidence and caused
uncertainty regarding the issue of infringement In the settlement,
the Company has agreed to a paid-up royalty of $9 million for a
world-wide license for the life of all patents at issue in the
actions, to be paid on the earlier of (1) five business days
following the closing of the sale of the Company or any separate
sale of the Company's subsidiaries Sames, S.A. and Sames
Electrostatic, Inc. or (2) December 31, 1998. The Company obtained
waivers from its lenders permitting the Company to enter into a
settlement agreement. The Company anticipates that if the Company or
a substantial component thereof is not sold by December 31, 1998,
the Company would need to seek other sources of funds in order to
pay the settlement. There can be no assurance that such funds will
be available and, if available, on terms favorable to the Company.
The entire amount of the settlement payment is included in second
quarter fiscal 1998 results as a component of selling, general and
administrative expenses.
PART II - OTHER INFORMATION
Item 1 See Note 4 to Consolidated Financial Statements
for the period ended May 31, 1998
(Unaudited) contained herein.
Items 2 through 5 Not applicable
Item 6 (a) Exhibits.
- Exhibit 10.1 - Amendment and Consent No. 1
dated June 30, 1998 to Amended and Restated
Credit Agreement dated as of March 16, 1998.
- Exhibit 10.2 - Consent and Third Amendment
to Note Purchase Agreement, dated as of
June 30, 1998, by and between the Company
and the Equitable Life Assurance Society of
the United States.
- Exhibit 10.3 - Settlement Agreement and
Mutual Releases dated as of June 11, 1998,
by and among the Company, Continental
Partners Group and Schiff Hardin & Waite.
- Exhibit 10.4 - Patent License and
Settlement Agreement dated as of July 10,
1998 by and among the Company, Sames, S.A.,
Sames Electrostatic, Inc., Behr Systems,
Inc. and Durr Systems, GmbH.
- Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
1. On March 23, 1998, the Company filed a
Current Report on Form 8-K reporting that
the Company had issued a press release on
March 17, 1998 regarding its financial
results for the fiscal year ended November
30, 1997.
2. On March 26, 1998, the Company filed a
Current Report on Form 8-K reporting that
the Company had issued a press release
regarding the retirement of Doran J.
Unschuld as President and Chief Executive
Officer of the Company.
3. On April 15, 1998, the Company filed a
Current Report on Form 8-K reporting that
the Company had issued a press release
regarding its financial results for the
period ended February 28, 1998.
4. On July 13, 1998, the Company filed a
Current Report on Form 8-K reporting that
the Company had issued a press release
regarding its financial results for the
period ended May 31, 1998.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
BINKS SAMES CORPORATION
/s/ Jeffrey W. Lemajeur
--------------------------------
Jeffrey W. Lemajeur, Treasurer/
Chief Financial Officer
/s/ Donald G. Meyer
---------------------------------
Donald G. Meyer, President and
Chief Executive Officer
Date JULY 15, 1998
-8-
<PAGE>
EXHIBIT 10.1
AMENDMENT AND CONSENT NO. 1
DATED AS OF JUNE 30, 1998
TO
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF MARCH 16, 1998
THIS AMENDMENT AND CONSENT NO. 1 TO AMENDED AND RESTATED CREDIT AGREEMENT
("AMENDMENT") is made as of this 30th day of June, 1998 by and among BINKS SAMES
CORPORATION, a Delaware corporation (the "BORROWER"), the financial institutions
listed on the signature pages hereof (the "LENDERS"), and THE FIRST NATIONAL
BANK OF CHICAGO, in its individual capacity as a Lender and in its capacity as
Agent ("AGENT"), under that certain Amended and Restated Credit Agreement dated
as of March 16, 1998 by and among the Borrower, the Lenders and the Agent (as
the same may be amended, restated, supplemented or modified from time to time,
the "CREDIT AGREEMENT").
WITNESSETH
WHEREAS, the Borrower, the Lenders and the Agent are parties to the Credit
Agreement;
WHEREAS, the Borrower has requested that the Agent and the Lenders enter
into certain amendments to the Credit Agreement;
WHEREAS, the Lenders and the Agent have agreed to enter into this Amendment
on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises set forth above, the terms
and conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower, the
Lenders and the Agent have agreed to the amendments with respect to the Credit
Agreement as set forth below. Capitalized terms used in this Amendment which
are not otherwise defined herein, shall have the meanings given such terms in
the Credit Agreement.
1. AMENDMENT TO CREDIT AGREEMENT. Effective as of the date hereof and
subject to the satisfaction of the conditions precedent set forth in SECTION 3
below, on and after the date hereof, the parties hereto agree that the Credit
Agreement is amended as follows:
a. SECTION 1.1 OF THE CREDIT AGREEMENT IS AMENDED TO ADD THE FOLLOWING
DEFINITIONS IN THE APPLICABLE ALPHABETICAL LOCATION:
"DURR ENTITIES" MEANS BEHR SYSTEMS, INC. AND DURR SYSTEMS, GMBH
"DURR PATENTS" MEANS U.S. PATENT NO. 4,405,086 ENTITLED "DEVICE FOR
ATOMIZING LIQUID COLOR" AND THE RELATED FOREIGN PATENTS.
<PAGE>
"DURR LITIGATION" MEANS (A) THAT CERTAIN PATENT INFRINGEMENT ACTION
BROUGHT BY BEHR AGAINST SEI AND SAMES, S.A. IN THE UNITED STATES DISTRICT
COURT FOR THE EASTERN DISTRICT OF MICHIGAN, CIVIL ACTION NO. 97-72744; (B)
THE SUIT FILED IN GERMANY BY DURR SYSTEMS, GMBH AGAINST THE BORROWER AND/OR
ANY OF ITS SUBSIDIARIES OR AFFILIATES ; AND (C) ANY OTHER PENDING ACTIONS
OR THREATENED ACTIONS BY ANY DURR ENTITY AGAINST THE BORROWER OR ANY OF ITS
SUBSIDIARIES OR AFFILIATES RELATING TO OR ARISING OUT OF THE DURR PATENTS.
"DURR SETTLEMENT AGREEMENT" MEANS A PATENT LICENSE AND SETTLEMENT
AGREEMENT AMONG THE BORROWER, SAMES, S.A., SEI AND THE DURR ENTITIES ON
SUBSTANTIALLY THE SAME TERMS AND CONDITIONS AS THE DRAFT DATED JUNE 25,
1998 DISTRIBUTED TO THE LENDERS BY COVER LETTER FROM THE BORROWER'S COUNSEL
ON JUNE 26, 1998; PROVIDED THE PAYMENT DATE FOR THE AMOUNTS PAYABLE UNDER
SECTION 3.2 THEREOF MAY BE CHANGED TO DECEMBER 31, 1998.
b. SECTION 1.1 OF THE CREDIT AGREEMENT IS FURTHER AMENDED TO DELETE THE
DEFINED TERM "RESTRICTED PAYMENT" THEREFROM IN ITS ENTIRETY AND TO
SUBSTITUTE THE FOLLOWING THEREFOR:
"RESTRICTED PAYMENT" MEANS (I) ANY DIVIDEND OR OTHER DISTRIBUTION,
DIRECT OR INDIRECT, ON ACCOUNT OF ANY EQUITY INTERESTS OF THE BORROWER NOW
OR HEREAFTER OUTSTANDING, EXCEPT A DIVIDEND PAYABLE SOLELY IN THE
BORROWER'S CAPITAL STOCK (OTHER THAN DISQUALIFIED STOCK) OR IN OPTIONS,
WARRANTS OR OTHER RIGHTS TO PURCHASE SUCH CAPITAL STOCK, (II) ANY
REDEMPTION, RETIREMENT, PURCHASE OR OTHER ACQUISITION FOR VALUE, DIRECT OR
INDIRECT, OF ANY EQUITY INTERESTS OF THE BORROWER OR ANY OF ITS
SUBSIDIARIES NOW OR HEREAFTER OUTSTANDING, OTHER THAN IN EXCHANGE FOR, OR
OUT OF THE PROCEEDS OF, THE SUBSTANTIALLY CONCURRENT SALE (OTHER THAN TO A
SUBSIDIARY OF THE BORROWER) OF OTHER EQUITY INTERESTS OF THE BORROWER
(OTHER THAN DISQUALIFIED STOCK), (III) ANY REDEMPTION, PURCHASE,
RETIREMENT, DEFEASANCE, PREPAYMENT OR OTHER ACQUISITION FOR VALUE, DIRECT
OR INDIRECT, OF ANY INDEBTEDNESS OTHER THAN THE OBLIGATIONS, (IV) ANY
PAYMENT OF A CLAIM FOR THE RESCISSION OF THE PURCHASE OR SALE OF, OR FOR
MATERIAL DAMAGES ARISING FROM THE PURCHASE OR SALE OF, ANY INDEBTEDNESS
(OTHER THAN THE OBLIGATIONS) OR ANY EQUITY INTERESTS OF THE BORROWER OR ANY
OF THE BORROWER'S SUBSIDIARIES, OR OF A CLAIM FOR REIMBURSEMENT,
INDEMNIFICATION OR CONTRIBUTION ARISING OUT OF OR RELATED TO ANY SUCH CLAIM
FOR DAMAGES OR RESCISSION AND (V) ANY PAYMENT TO ANY PERSON IN CONNECTION
WITH THE DISCLOSED DISPUTES (OTHER THAN THE PAYMENT OF ORDINARY COURSE
LITIGATION MANAGEMENT COSTS TO PERSONS NOT A PARTY TO THE LITIGATION OR
DISPUTE, INCLUDING, WITHOUT LIMITATION, COURT REPORTER SERVICES, DOCUMENT
MANAGEMENT SERVICES AND ATTORNEYS' AND PARALEGALS' FEES AND EXPENSES).
c. SECTION 7.3(A)(x) OF THE CREDIT AGREEMENT IS AMENDED TO DELETE THE "AND"
IMMEDIATELY PRIOR TO CLAUSE (b) THEREOF AND SUBSTITUTE IT WITH a ";" AND
TO ADD THE FOLLOWING IMMEDIATELY AFTER CLAUSE (b) THEREOF:
; AND (c) UNSECURED INDEBTEDNESS IN AN AMOUNT NOT TO EXCEED THE AMOUNT
SET FORTH IN SECTION 3.2 OF THE DURR SETTLEMENT AGREEMENT PROVIDED
SUCH INDEBTEDNESS IS INCURRED IN CONNECTION WITH A FULL AND COMPLETE
SETTLEMENT OF THE DURR LITIGATION ON THE TERMS SET FORTH IN THE DURR
SETTLEMENT AGREEMENT AND PROVIDED FURTHER SUCH INDEBTEDNESS
2
<PAGE>
SHALL REDUCE THE AMOUNT AVAILABLE UNDER SECTION 1(c) OF THE DISCLOSURE
LETTER FOR AGREEMENTS IN CONNECTION WITH ANY OF THE OTHER DISCLOSED
DISPUTES BY THE AMOUNT OF SUCH INDEBTEDNESS;
d. SECTION 7.4 OF THE CREDIT AGREEMENT IS AMENDED TO ADD THE FOLLOWING AT THE
END THEREOF:
(E) Notwithstanding anything herein to the contrary, each of the
financial covenants set forth in clauses (B) through (D) above shall
be calculated without taking into account the non-cash charge taken by
the Borrower in connection with the Company's execution of the Durr
Settlement Agreement.
2. CONSENT. Notwithstanding the terms of SECTION 1(c) of the Disclosure
Letter, the Borrower, Sames, S.A. and SEI shall be permitted to incur the
unsecured settlement obligations set forth in SECTION 3.2 of the Durr Settlement
Agreement provided the amount of those obligations shall count against the
dollar basket set forth in such SECTION 1(c).
3. CONDITIONS OF EFFECTIVENESS. This Amendment shall not become
effective unless on or before July 2, 1998 (a) this Amendment shall have been
executed by the Borrower, the Agent and the Required Lenders on or before
July 2, 1998 and (b) the Borrower shall have entered into a parallel amendment
to the Master Note Agreement on terms and conditions substantially identical
to this Amendment.
4. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower hereby
represents and warrants as follows:
(a) This Amendment and the Credit Agreement as previously executed and as
amended hereby, constitute legal, valid and binding obligations of the Borrower
and are enforceable against the Borrower in accordance with their terms.
(b) Upon the effectiveness of this Amendment, the Borrower hereby
reaffirms all covenants, representations and warranties made in the Credit
Agreement and the other Loan Documents to the extent the same are not amended or
waived hereby, agrees that all such covenants, representations and warranties
shall be deemed to have been remade as of the effective date of this Amendment.
(c) No Default or Unmatured Default has occurred under the Credit
Agreement.
5. REFERENCE TO THE EFFECT ON THE CREDIT AGREEMENT.
(a) Upon the effectiveness of SECTION 1 hereof, on and after the date
hereof, each reference in the Credit Agreement to "this Credit Agreement,"
"hereunder," "hereof," "herein" or words of like import shall mean and be a
reference to the Credit Agreement as amended hereby.
3
<PAGE>
(b) Except as specifically modified or waived above, the Credit Agreement,
the Disclosure Letter and all other documents, instruments and agreements
executed and/or delivered in connection therewith, shall remain in full force
and effect, and are hereby ratified and confirmed.
6. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of Illinois.
7. HEADINGS. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
8. COUNTERPARTS. This Amendment may be executed by one or more of the
parties to the Amendment on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A facsimile signature page hereto sent to the Agent or the Agent's
counsel shall be effective as a counterpart signature provided each party agrees
to deliver originals to the Agent thereof.
9. NO STRICT CONSTRUCTION. The parties hereto have participated jointly
in the negotiation and drafting of this Amendment and the Credit Agreement. In
the event an ambiguity or question of intent or interpretation arises, this
Amendment and the Credit Agreement as hereby amended shall be construed as if
drafted jointly by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Amendment or the Credit Agreement.
[Remainder of this Page Intentionally Blank.]
4
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and
year first above written.
BINKS SAMES CORPORATION
By /S/ JEFFREY W. LEMAJEUR
-----------------------
Title: Vice President
and Chief Financial Officer
THE FIRST NATIONAL BANK OF CHICAGO, AS THE
AGENT AND AS A LENDER
By /s/ Linda M. Thompson
---------------------
Title: First Vice President
LASALLE NATIONAL BANK, AS A LENDER
By /s/ Rob McMahon
---------------
Title: Vice President
COMERICA BANK, AS A LENDER
By /s/ Cynthia B. Jones
--------------------
Title: Vice President
HARRIS TRUST AND SAVINGS BANK, AS A LENDER
By /s/ Sandra J. Sanders
Title: Vice President
Signature Page to Binks Sames Corporation
Amendment and Consent No. 1
<PAGE>
EXHIBIT 10.2
BINKS SAMES CORPORATION
_______________________
CONSENT AND THIRD AMENDMENT TO NOTE PURCHASE AGREEMENT
_______________________
RE:
NOTE PURCHASE AGREEMENT DATED AS OF NOVEMBER 30, 1993
AND
$15,000,000 ORIGINAL PRINCIPAL AMOUNT OF
7.64% SERIES A SENIOR NOTES DUE SEPTEMBER 30, 1999
DATED AS OF NOVEMBER 30, 1993
<PAGE>
BINKS SAMES CORPORATION
CONSENT AND THIRD AMENDMENT TO NOTE PURCHASE AGREEMENT
RE:
NOTE PURCHASE AGREEMENT DATED AS OF NOVEMBER 30, 1993
AND
$15,000,000 ORIGINAL PRINCIPAL AMOUNT OF
7.64% SERIES A SENIOR NOTES DUE SEPTEMBER 30, 1999
THIS CONSENT AND THIRD AMENDMENT TO NOTE PURCHASE AGREEMENT (this
"AMENDMENT") is made as of this 30th day of June, 1998, between BINKS SAMES
CORPORATION, a Delaware corporation (the "COMPANY"), and THE EQUITABLE LIFE
ASSURANCE SOCIETY OF THE UNITED STATES (the "NOTEHOLDER"), with respect to that
certain Note Purchase Agreement dated as of November 30, 1993, as amended by a
Waiver and First Amendment to Note Purchase Agreement dated September 23, 1997,
and a Waiver and Second Amendment to Note Purchase Agreement dated March 16,
1998, between the Company and the Noteholder (the "EXISTING NOTE PURCHASE
AGREEMENT," and the Existing Note Purchase Agreement as amended by this
Amendment, the "AMENDED NOTE PURCHASE AGREEMENT"). Capitalized terms used in
this Amendment which are not otherwise defined herein shall have the meanings
given such terms in the Existing Note Purchase Agreement.
WITNESSETH
WHEREAS, the Company and the Noteholder are parties to the Existing Note
Purchase Agreement; and
WHEREAS, the Company requests the amendment of certain provisions of the
Existing Note Purchase Agreement and a consent to the settlement of certain
pending litigation specified herein;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Noteholder (subject to the satisfaction of the
condition set forth below in Section 3) hereby agree as follows:
1. AMENDMENT OF EXISTING NOTE PURCHASE AGREEMENT
(a) AMENDMENT OF SECTION 11.1 OF THE EXISTING NOTE PURCHASE
AGREEMENT. Section 11.1 of the Existing Note Purchase Agreement is amended
to add the following definitions in appropriate alphabetical order:
"DURR ENTITIES" means Behr Systems, Inc. and Durr Systems, GmbH.
<PAGE>
"DURR PATENTS" means U.S. Patent No. 4,405,086 entitled "DEVICE
FOR ATOMIZING LIQUID COLOR" and the related foreign patents.
"DURR LITIGATION" means (a) that certain patent infringement
action brought by Behr Systems, Inc. against SEI and Sames, S.A. in
the United States District Court for the Eastern District of Michigan,
Civil Action No. 97-72744; (b) the suit filed in Germany by Durr
Systems, GmbH against the Company and/or any of its Subsidiaries or
Affiliates; and (c) any other pending actions or threatened actions by
either of the Durr Entities against the Company or any of its
Subsidiaries or Affiliates relating to or arising out of the Durr
Patents.
"DURR SETTLEMENT AGREEMENT" means a Patent License and Settlement
Agreement among the Company, Sames, S.A., SEI and the Durr Entities on
substantially the same terms and conditions as the draft dated June
30, 1998 and distributed to the Noteholder by cover memorandum from
the Company's counsel dated June 30, 1998.
(b) AMENDMENT OF SECTION 11.1 OF THE EXISTING NOTE PURCHASE
AGREEMENT. Section 11.1 of the Existing Note Purchase Agreement is further
amended by amending and restating the defined term "Restricted Payment" to
read as follows:
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any Equity Interests
of the Company now or hereafter outstanding, except a dividend payable
solely in the Company's Capital Stock (other than Disqualified Stock)
or in options, warrants or other rights to purchase such Capital
Stock, (ii) any redemption, retirement, purchase or other acquisition
for value, direct or indirect, of any Equity Interests of the Company
or any of its Subsidiaries now or hereafter outstanding, other than in
exchange for, or out of the proceeds of, the substantially concurrent
sale (other than to a Subsidiary of the Company) of other Equity
Interests of the Company (other than Disqualified Stock, (iii) any
redemption, purchase, retirement, defeasance, prepayment or other
acquisition for value, direct or indirect, of any Indebtedness other
than the Notes, (iv) any payment of a claim for the rescission of the
purchase or sale of, or for material damages arising from the purchase
or sale of, any Indebtedness (other than the Notes) or any Equity
Interests of the Company or any of the Company's Subsidiaries, or of a
claim for reimbursement, indemnification or contribution arising out
of or related to any such claim for damages or rescission and (v) any
payment to any Person in connection with the Disclosed Disputes (other
than the payment of ordinary course litigation management costs to
Persons not a party to the litigation or dispute, including, without
limitation, court reporter services, document management services and
attorneys' and paralegals' fees and expenses).
(c) AMENDMENT OF SECTION 7.3(A)(x) OF THE EXISTING NOTE PURCHASE
AGREEMENT. Section 7.3(A)(x) of the Existing Note Purchase Agreement is
amended to delete the "and" immediately prior to clause (b) thereof and
substitute it with a ";" and to add the following immediately after clause
(b) thereof:
; and (c) unsecured Indebtedness in an amount not to exceed the amount
set forth in Section 3.2 of the Durr Settlement Agreement PROVIDED
such Indebtedness is incurred in connection with a full and complete
settlement of the Durr Litigation on the terms set forth in Durr
2
<PAGE>
Settlement Agreement and PROVIDED FURTHER such Indebtedness shall
reduce the amount available under Section 1(c) of the Disclosure
Letter for agreements in connection with any of the other Disclosed
Disputes by the amount of such Indebtedness.
(d) AMENDMENT OF SECTION 7.4 OF THE EXISTING NOTE PURCHASE AGREEMENT.
Section 7.4 of the Existing Note Purchase Agreement is amended to add the
following at the end thereof:
(F) Notwithstanding anything herein to the contrary, each of the
financial covenants set forth in clauses (B) through (D) above shall
be calculated without taking into account the non-cash charge taken by
the Company in connection with the Company's execution of the Durr
Settlement Agreement.
2. CONSENT
Notwithstanding the terms of Section 1(c) of the Disclosure Letter, the
Company, Sames, S.A. and SEI shall be permitted to incur the unsecured
settlement obligations set forth in Section 3.2 of the Durr Settlement Agreement
provided the amount of such obligations shall count against the dollar basket
set forth in Section 1(c) of the Disclosure Letter.
3. CONDITION OF EFFECTIVENESS
This Amendment shall not become effective unless, on or before July 2,
1998, the Company shall have entered into a parallel amendment to the Credit
Agreement on terms and conditions substantially identical to this Amendment.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants as follows:
(a) This Amendment and the Amended Note Purchase Agreement constitute
legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms.
(b) Upon the effectiveness of this Amendment, the Company hereby
reaffirms all covenants, representations and warranties made in the
Existing Note Purchase Agreement and the other Financing Documents to the
extent the same are not amended or waived hereby, and agrees that all such
covenants, representations and warranties shall be deemed to have been
remade as of the effective date of this Amendment.
(c) No Default or Event of Default has occurred under the Amended
Note Purchase Agreement.
5. MISCELLANEOUS
(a) EFFECT OF AMENDMENT AND WAIVER. Upon the execution and delivery
by the Company and the Noteholder, the Existing Note Purchase Agreement
shall be deemed to be amended as set forth above and the consent set forth
above shall be deemed to be effective. This Amendment shall be binding
upon, and shall inure to the benefit of, the permitted successors and
3
<PAGE>
assigns of the parties hereto and the holders from time to time of the
Amended Notes. Except as expressly provided herein, (i) no terms or
provisions of any agreement are modified or changed by this Amendment,
(ii) the terms of this Amendment shall not operate as a waiver by the
Noteholder of, or otherwise prejudice the Noteholder's rights, remedies or
powers under, the Existing Note Purchase Agreement or under any applicable
law and (iii) the terms and provisions of the Existing Note Purchase
Agreement shall continue in full force and effect, as amended by this
Amendment.
(b) NO LEGEND REQUIRED. Any and all notices, requests, certificates
and other instruments including, without limitation, the Amended Notes, may
refer to the Note Purchase Agreement or the Note Purchase Agreement dated
as of November 30, 1993 without making specific reference to this Consent
and Third Amendment to Note Purchase Agreement, but nevertheless all such
references shall be deemed to include this Consent and Third Amendment to
Note Purchase Agreement unless the context shall otherwise require.
(c) FEES AND EXPENSES. Whether or not the transactions herein
contemplated shall be consummated, the Company agrees to pay directly all
of the Noteholder's reasonable out-of-pocket expenses in connection with
the preparation, negotiation, execution and delivery of this Amendment, and
the transactions contemplated hereby, including, but not limited to, the
fees and disbursements of Hebb & Gitlin, the Noteholder's special counsel.
(d) SURVIVAL. All warranties, representations, certifications and
covenants made by the Company in this Amendment or in any certificate or
other instrument delivered by it or on its behalf under this Amendment
shall be considered to have been relied upon by the Noteholder and shall
survive the execution of this Amendment, regardless of any investigation
made by or on the Noteholder's behalf. All statements in any such
certificate or other instrument shall constitute warranties and
representations of the Company under this Amendment.
(e) DUPLICATE ORIGINALS; EXECUTION IN COUNTERPART. Two or more
duplicate originals of this Amendment may be signed by the parties, each of
which shall be an original but all of which together shall constitute one
and the same instrument. This Amendment may be executed in one or more
counterparts and shall be effective when at least one counterpart shall
have been executed by each party to this Amendment, and each set of
counterparts which, collectively, show execution by each such party to this
Amendment shall constitute one duplicate original.
(f) GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
6. NO STRICT CONSTRUCTION
The parties hereto have participated in jointly in the negotiation and
drafting of this Amendment and the Existing Note Purchase Agreement. In the
event of an ambiguity or question of intent or interpretation arises, this
Amendment and the Amended Note Purchase Agreement shall be construed as if
drafted jointly by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Amendment or the Amended Note Purchase Agreement.
[Remainder of this Page Intentionally Blank.]
4
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and
year first above written.
BINKS SAMES CORPORATION
By /s/ Jeffrey W. Lemajeur
--------------------------------
Name: Jeffrey W. Lemajeur
Title: VP, Chief Financial Officer
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By:/s/ Joel Serebransky
---------------------------------
Name: Joel Serebransky
Title: Investment Officer
<PAGE>
EXHIBIT 10.3
SETTLEMENT AGREEMENT AND MUTUAL RELEASES
This Settlement Agreement and Mutual Releases are entered into this 11th
day of June, 1998, by and among (1) Continental Partners Group, Inc.
("Continental Partners"); (2) Binks Sames Corporation, formerly Binks
Manufacturing Company ("Binks"); and (3) Schiff Hardin & Waite.
WHEREAS Continental Partners has brought suit against Binks in the Law
Division of the Circuit Court of Cook County, Illinois in a case captioned
CONTINENTAL PARTNERS GROUP, INC. V. BINKS MANUFACTURING COMPANY, 91 L 17815,
alleging that Binks is liable for the payment of an independence fee and
certain expenses associated with a certain engagement agreement (the "Suit");
WHEREAS Binks has denied the allegations of Continental Partners in the
Suit and has alleged that it properly terminated any agreement with
Continental Partners, thereby ending any liabilities to Continental Partners
as alleged;
WHEREAS Binks has filed a suit in the Chancery Division of the Circuit
Court of Cook County, Illinois captioned BINKS MANUFACTURING COMPANY V.
SCHIFF HARDIN & WAITE AND CONTINENTAL PARTNERS GROUP, INC., Case No. 96 CH
002863, alleging that Continental Partners has tortiously interfered with
Binks' relationship with its former counsel, Schiff Hardin & Waite, and
further alleging that, in the event that Binks was found liable for the fees
sought by Continental Partners in the Suit, that Binks would be entitled to
indemnification from Schiff Hardin & Waite for those amounts (the "Chancery
Action").
<PAGE>
WHEREAS Continental Partners and Schiff Hardin & Waite deny that they
have any liability as alleged to Binks or that they have committed the acts
alleged by Binks in the Chancery Action;
WHEREAS the parties hereto desire to compromise and settle their various
disputes and acknowledge that this settlement agreement is a compromise of
unproven and disputed claims and in no way constitutes an admission of
liability by any of the parties to this agreement, but each considers it
desirable and in their best interest to avoid further expense, inconvenience
and distraction associated with the various litigation; and
WHEREAS each of the parties hereto acknowledges that they are receiving
good and valuable consideration for the releases and discharges of the
respective claims as set forth above;
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, the parties desiring to resolve their disputes and disagreements and
intending to legally bind themselves, hereby agree as follows:
1. Binks agrees to pay to Continental Partners the amount of $825,000
payable in the following manner:
a. $750,000 to be paid in cash or cashier's check on or before July
1, 1998; and
b. The $75,000 balance to be paid in cash or cashier's check on
the earlier date of (a) the sale or merger of Binks or (b) September 4, 1998.
2. In consideration for the undertakings set forth above, by their
signatures hereto, Continental Partners, on behalf of itself, its parents,
subsidiaries, affiliates, successors, predecessors, heirs and assigns and all
past and present officers, directors, employees, agents,
2
<PAGE>
servants, attorneys and other representatives of any of the foregoing, fully,
finally, unconditionally, irrevocably, and forever release and discharge
Binks, its parents, subsidiaries, affiliates, successors, predecessors, heirs
and assigns and all past and present officers, directors, shareholders,
employees, agents, servants, attorneys and other representatives of any of
the foregoing, who are liable or who might be claimed to be liable in any
manner, from any and all claims, liabilities, causes of action, rights of
action and actions, demands, suits, proceedings, covenants, contracts,
controversies, agreements, promises, accounts, damages, debts, losses,
obligations, costs, fees and expenses or claims for contribution, indemnity
or insurance whether legal or equitable, known or unknown, liquidated or
unliquidated, suspected or unsuspected, claimed or concealed, mentioned or
not mentioned herein, fixed or contingent and without regard to date of
accrual, which Continental Partners ever had, now has, claims to have, or
hereafter can, shall, or may have against any of them, for, upon, or by
reason of any matter, cause or thing whatsoever from the beginning of the
world to the date of this release, including, without limitation, any and all
claims which were or could have been asserted in the Suit or the Chancery
Action.
3. In consideration for the undertakings set forth above, by their
signatures hereto, Binks, on behalf of itself, its parents, subsidiaries,
affiliates, successors, predecessors, heirs and assigns and all past and
present officers, directors, employees, agents, servants, attorneys and other
representatives of any of the foregoing, fully, finally, unconditionally,
irrevocably, and forever release and discharge Continental Partners, its
parents, subsidiaries, affiliates, successors, predecessors, heirs and
assigns and all past and present officers, directors, employees, agents,
servants, attorneys and other representatives of any of the foregoing, who
are liable or who might
3
<PAGE>
be claimed to be liable in any manner, from any and all claims, liabilities,
causes of action, rights of action and actions, demands, suits, proceedings,
covenants, contracts, controversies, agreements, promises, accounts, damages,
debts, losses, obligations, costs, fees and expenses or claims for
contribution, indemnity or insurance whether legal or equitable, known or
unknown, liquidated or unliquidated, suspected or unsuspected, claimed or
concealed, mentioned or not mentioned herein, fixed or contingent and without
regard to date of accrual, which Binks ever had, now has, claims to have, or
hereafter can, shall, or may have against any of them, for, upon, or by
reason of any matter, cause or thing whatsoever from the beginning of the
world to the date of this release, including, without limitation, any and all
claims which were or could have been asserted in the Suit or the Chancery
Action.
4. In consideration for the undertakings set forth above, by their
signatures hereto, Binks, on behalf of itself, its parents, subsidiaries,
affiliates, successors, predecessors, heirs and assigns and all past and present
officers, directors, employees, agents, servants, attorneys and other
representatives of any of the foregoing, fully, finally, unconditionally,
irrevocably, and forever release and discharge Schiff Hardin & Waite, its
successors, predecessors, heirs and assigns and all past and present partners,
shareholders, employees, agents, servants, attorneys and other representatives
of any of the foregoing, who are liable or who might be claimed to be liable in
any manner, from any and all claims, liabilities, causes of action, rights of
action and actions, demands, suits, proceedings, covenants, contracts,
controversies, agreements, promises, accounts, damages, debts, losses,
obligations, costs, fees and expenses or claims for contribution, indemnity or
insurance whether legal or equitable, known or unknown, liquidated or
unliquidated, suspected or unsuspected, claimed or concealed, mentioned or not
mentioned herein, fixed or contingent and
4
<PAGE>
without regard to date of accrual, which Binks ever had, now has, claims to
have, or hereafter can, shall, or may have against any of them, for, upon, or
by reason of any matter, cause or thing whatsoever from the beginning of the
world to the date of this release, including, without limitation, any and all
claims which were or could have been asserted in the Suit or the Chancery
Action.
5. In consideration for the undertakings set forth above, by their
signatures hereto, Schiff Hardin & Waite, on behalf of itself, its successors,
predecessors, heirs and assigns and all past and present partners, shareholders,
employees, agents, servants, attorneys and other representatives of any of the
foregoing, fully, finally, unconditionally, irrevocably, and forever release and
discharge Binks, its parents, subsidiaries, affiliates, successors,
predecessors, heirs and assigns and all past and present officers, directors,
shareholders, employees, agents, servants, attorneys and other representatives
of any of the foregoing, who are liable or who might be claimed to be liable in
any manner, from any and all claims, liabilities, causes of action, rights of
action and actions, demands, suits, proceedings, covenants, contracts,
controversies, agreements, promises, accounts, damages, debts, losses,
obligations, costs, fees and expenses or claims for contribution, indemnity or
insurance whether legal or equitable, known or unknown, liquidated or
unliquidated, suspected or unsuspected, claimed or concealed, mentioned or not
mentioned herein, fixed or contingent and without regard to date of accrual,
which Schiff Hardin & Waite ever had, now has, claims to have, or hereafter can,
shall, or may have against any of them, for, upon, or by reason of any matter,
cause or thing whatsoever from the beginning of the world to the date of this
release, including, without limitation, any and all claims which were or could
have been asserted in the Suit or the Chancery Action.
5
<PAGE>
6. Binks and Continental Partners agree that within ten (10) days of the
execution of this settlement agreement they shall each execute a stipulation to
dismiss their respective foregoing lawsuits with prejudice and without costs,
and all parties hereto agree to bear their own costs and attorneys' fees.
7. No verbal statements, agreements, promises, undertakings,
arrangements, understandings, or any conduct, act or omission of any party
occurring subsequent to the date of this settlement agreement shall be deemed an
amendment or modification hereof unless reduced to writing and signed by each of
the parties hereto.
8. This settlement agreement constitutes the entire agreement between the
parties and no representations, agreements or understandings of any kind either
written or oral shall be binding upon the parties unless expressly contained
herein.
9. This settlement is a complete and exhaustive statement of the terms of
the parties' agreement, which may not be explained or supplemented by evidence
of consistent additional terms or contradicted by evidence of any prior,
contemporaneous agreement. The parties acknowledge that this agreement is the
product of the parties' negotiations, and the contributions of each, and that no
rule of strict construction of this agreement shall apply against any party
deemed to have been the principal drafter.
10. The parties and all signatories to this agreement hereby acknowledge
that the settlement agreement and release shall be governed by and construed in
accordance with the internal laws of Illinois without regard to conflict of law
principles. The parties hereby acknowledge that they are represented by their
respective attorneys, who have advised their clients regarding all matters
relating to the settlement agreement, including the parties' rights and
6
<PAGE>
obligations hereunder. Each of the undersigned parties represents that he, she
or it is fully empowered and authorized to enter into, execute, deliver and
perform the terms and conditions of
7
<PAGE>
the settlement agreement. The parties each represent and warrant that they have
not assigned any of the claims released in this agreement to any other person or
entity. This agreement shall be binding upon each of the parties hereto and
their respective successors and assigns.
11. This agreement may executed in any number of counterparts. Facsimile
copies of executed signature pages shall be deemed to constitute originals for
the purposes of this agreement and shall together constitute one and the same
legal instrument.
IN WITNESS WHEREOF, we have set our hands and seals this 11th day of June,
1998.
BINKS SAMES CORPORATION CONTINENTAL PARTNERS GROUP, INC.
By: /s/ Donald G. Meyer By: /s/ Mark Colbert
------------------- ----------------
Its: President and CEO Its: Assistant Secretary
SCHIFF HARDIN & WAITE
By: /s/ Barry S. Alberts
--------------------
Its: Partner
8
<PAGE>
EXHIBIT 10.4
PATENT LICENSE AND SETTLEMENT AGREEMENT
BETWEEN
BINKS SAMES CORPORATION, SAMES, S.A.
AND SAMES ELECTROSTATIC, INC.
AND
DURR SYSTEMS GmbH AND BEHR SYSTEMS, INC.
This Patent License and Settlement Agreement ("Agreement") is entered into
as of July 10, 1998, by and between Binks Sames Corporation ("Binks"), Sames,
S.A. ("SSA") and Sames Electrostatic, Inc. ("SEI") (collectively referred to as
"Binks Entities") on one hand, and Behr Systems, Inc. ("Behr") and Durr Systems,
GmbH ("Durr") (collectively referred to as "Durr Entities") on the other hand,
is in settlement of pending litigation brought by the Durr Entities against the
Binks Entities.
1. BACKGROUND
1.1 The Durr Entities own U.S. Patent No. 4,405,086 entitled
"DEVICE FOR ATOMIZING LIQUID COLOR" and the related foreign patents
identified on Exhibit A ("the Durr Patents").
1.2 Behr has filed suit in the United States District Court for the
Eastern District of Michigan in Civil Action No. 97-72744 and Durr has filed
suit in Germany against the Binks Entities for infringement of the Durr
Patents ("the Lawsuits"). The Lawsuits seek the entry of a permanent
injunction and damages for past infringement of the Durr Patents.
1.3 The parties have agreed to settle the Lawsuits and release each
other as set forth below.
1.4 The Durr Patents are valid, enforceable and infringed by the
PPH 605 and PPH 607 atomizers and bell cups for the PPH 605 and PPH 607
atomizers, all made and/or sold by the Binks Entities.
2. RESOLUTION OF THE PENDING LITIGATION
2.1 Within five (5) business days after the date first written
above, the parties and their attorneys will execute and file a Consent
Judgment in a form attached hereto as Exhibit B, in both the United States
District Court for the Eastern District of Michigan and the applicable court
in Germany where the Lawsuits are pending. Said Consent Judgment shall
declare the Durr Patents
<PAGE>
valid, enforceable and infringed, shall dismiss the Lawsuits with prejudice
and shall provide that each party will bear its own attorneys' fees and costs.
2.2 The Durr Entities release the Binks Entities from any and all
Claims (as defined in paragraph 2.4) relating to the Durr Patents which have
been or could have been asserted in the Lawsuits to the date of this
Agreement and covenant not to sue the Binks Entities under such Claims.
2.3 The Binks Entities release the Durr Entities from any and all
Claims (as defined in paragraph 2.4) relating to the Durr Patents which have
been or could have been asserted in the Lawsuits to the date of this
Agreement and covenant not to sue the Durr Entities under such Claims.
2.4 "Claims" shall refer to all obligations, actions, causes of
action, suits, debts, covenants, contracts, controversies, agreements,
promises, damages, judgments, and demands whatsoever, of any kind, type or
description, whether known or unknown, disputed or undisputed, accrued or
unaccrued, liquidated or contingent, foreseen or unforeseen, direct,
vicarious or derivative, asserted or unasserted, in law (by virtue of common
law, statute, operation of law or otherwise), equity or admiralty.
3. LICENSE
3.1 Upon payment as described in paragraph 3.2 below, the Binks
Entities shall have a non-exclusive, fully paid-up, worldwide license under
the Durr Patents (including any continuations, reissues and reexaminations
thereof) for their remaining life of the Durr Patents. If at the time of
payment, SSA and SEI are no longer affiliated with Binks, then only SSA and
SEI shall have the non-exclusive, fully paid-up, worldwide licenses under the
Durr Patents for their remaining life.
3.2 Within five (5) business days after the closing of the sale of
Binks or the closing of any separate sale of SSA and SEI, but in any event
(regardless of whether a sale occurs) no later than December 31, 1998, the
Binks Entities (or such purchaser) shall wire transfer to an account
designated in writing by the Durr Entities the sum of $9,000,000 U.S.
Dollars. In the event that the Binks Entities fail for any reason to make
full payment as provided in the Agreement, the license shall terminate and
the parties stipulate to entry of an immediate permanent injunction in both
the United States District Court for the Eastern District of Michigan and the
applicable court in Germany where the Lawsuits are currently pending. Such
injunction shall, on a worldwide basis, permanently enjoin the Binks
Entities, along with their successors, assigns, agents and representatives,
from making, using, selling, or offering to sell any product that infringes
the Durr Patents, including but not limited to the PPH 605 and PPH 607
atomizers and the bell cups for PPH 605 and PPH 607 atomizers and similar
products, and is in addition to any remedies the Durr Entities may have to
enforce payment of the sum specified above.
2
<PAGE>
3.3 The Binks Entities will have no right to grant sublicenses or
bring suit under the Durr Patents.
3.4 Any improvements will be the sole property of the party making
the improvement.
3.5 This Agreement is binding on the successors of the Binks
Entities (including any purchaser of any of them) and Durr Entities. This
Agreement shall be assignable by the Binks Entities upon the sale of Binks,
or upon the sale of SSA and SEI, should SSA and SEI be sold separately, but
only to the purchaser(s) of such entities. In all other instances, this
Agreement is assignable only with the prior written consent of the other
parties, which consent may be withheld in the sole discretion of such other
parties.
3.6 The Durr Entities warrant that they possess full and
unencumbered title to the Durr Patents, have the right to enter into this
Agreement and that the Durr Patents on Exhibit A remain in force and shall be
maintained in all countries for their full term.
3.7 The Binks Entities agree to notify the Durr Entities of any
infringement of the Durr Patents and cooperate with the Durr Entities in any
other lawsuits that the Durr Entities may bring regarding the Durr Patents.
The Binks Entities agree not to assist and/or cooperate with other persons or
entities who challenge the validity, enforceability, or infringement of the
Durr Patents.
4. MISCELLANEOUS
4.1 This Agreement shall be governed in all respects by the laws of
the State of Michigan without regard to choice of law principles. The U.S.
District Court for the Eastern District of Michigan shall have exclusive
jurisdiction of any controversy between the parties regarding this Agreement.
4.2 This Agreement constitutes the entire agreement between the
parties with respect to any matter related to the Lawsuits or set forth in
this Agreement. The terms of this Agreement may not be varied except by
written agreement executed by all parties. No other agreements, written or
oral, express or implied, exist between the parties.
4.3 This Agreement is not a license or release under any other
patents or patent applications owned by the Durr Entities.
4.4 The parties shall execute and deliver such further documents and
take such further actions as may be necessary to effect, consummate, confirm
or evidence their respective obligations in accordance with this Agreement.
3
<PAGE>
4.5 Each and every covenant and agreement contained herein shall
inure to the benefit of, and be binding upon, the agents, parents,
subsidiaries, employees, officers, directors, assigns and successors in
interest of the parties hereto.
4.6 Each of the parties represents and warrants that it has not
assigned or otherwise transferred all or any part of its claims, demands,
costs, expenses, liabilities, damages, actions or causes of action against
another party.
4.7 This Agreement shall be applicable in all territories throughout
the world.
4.8 All notices, requests, demands or other communications made
pursuant to the Agreement shall be made in writing and shall be deemed to
have been duly given when transmitted by facsimile to the addressee at the
facsimile number below, hand delivered by courier to the party to whom
addressed, or five (5) business days after dispatch by United States mail,
first class, postage prepaid to the following addresses, or at such other
addresses as the parties may designate by written notice in the manner
aforesaid:
If to the Durr Entities: Robert J. Mulholland
Behr Systems, Inc.
2469 Executive Hills Blvd.
Auburn Hills, Michigan 48326
Telephone: 734/459-6800
Facsimile: 734/459-6256
With copy to: Robert J. Gordon, Esq.
Jaffe, Raitt, Heuer Weiss P.C.
Suite 2400
One Woodward Avenue
Detroit, Michigan 48226
Telephone: 313/961-8380
Facsimile: 313/961-8358
If to the Binks Entities: Binks Sames Corporation
9201 Belmont Avenue
Franklin Park, Illinois 60131-2887
Telephone: 847/671-3000 x496
Facsimile: 847/671-3164
Attention: Donald G. Meyer, Chairman
4
<PAGE>
With copy to: Guy E. Snyder, Esq.
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601
Telephone: 312/609-7500
Facsimile: 312/609-5005
4.9 Any provision of this Agreement which is invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction, be in
effective to the extent of such invalidity, illegality or unenforceability,
without in any manner effecting the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
4.10 This Agreement may be signed using one or more counterparts.
The several executed copies together shall be considered an original and
shall be binding on the parties. In the event this Agreement is not executed
by all the parties hereto and delivered to Binks prior to 5:00 p.m. Chicago
time on July 8, 1998, this Agreement shall become null and void in its
entirety.
ACCEPTED AND AGREED TO:
DURR SYSTEMS, GmbH BINKS SAMES CORPORATION
By: /s/ Hans Dieter Potsch By: /s/ Donald G. Meyer
------------------------ -----------------------
Its: Chairman Its: Chief Executive Officer
------------------------ -----------------------
Date: 7-8-98 Date: 7/10/98
------------------------ -----------------------
BEHR SYSTEMS, INC. SAMES, S.A.
By: /s/ Robert J. Mulholland By: /s/ Stephen R. Mathers
------------------------ ----------------------
Its: President Its: President
------------------------ ----------------------
Date: 7-8-98 Date: 7/10/98
------------------------ ----------------------
SAMES ELECTROSTATIC, INC.
By: /s/ Stephen R. Mathers
------------------------
Its: President
------------------------
Date: 7/1/98
------------------------
5
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