<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
20549
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FORM 10-Q
(Mark One)
/X/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended May 31, 1999
/ / 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
SAMES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-0808480
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9201 WEST BELMONT AVENUE, FRANKLIN PARK, ILLINOIS 60131
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(Address of principal executive offices)
Registrant's telephone number, including area code 847-737-5970
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, 1999
- ---------------------------------------- -----------------------------
Capital Stock, par value $1.00 2,964,837
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 SUMMARIZED FINANCIAL STATEMENTS
Company or group of companies for which report is filed:
Sames Corporation and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
MAY 31, 1999 (UNAUDITED) AND NOVEMBER 30, 1998
<TABLE>
<CAPTION>
May 31, Nov 30,
1999 1998
------------ ------------
($000 omitted)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,473 5,204
Receivables, net 32,253 44,795
Inventories 18,429 16,465
Other current assets 4,816 5,227
Net assets of discontinued operations 1,140 1,569
------------ ------------
Total current assets 64,111 73,260
Other noncurrent assets 3,168 4,547
Property, plant and equipment, at cost 11,935 12,697
Less accumulated depreciation 7,627 7,971
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Net property, plant and equipment 4,308 4,726
TOTAL ASSETS $ 71,587 82,533
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, bank overdrafts
and current maturities of long-term debt $ 7,593 6,210
Accounts payable 26,749 30,316
Other current liabilities 9,662 16,085
------------ ------------
Total current liabilities 44,004 52,611
Deferred compensation 6,720 7,366
Deferred income taxes 79 85
Long-term debt, less current maturities 1,132 1,238
------------ ------------
Total liabilities 51,935 61,300
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Stockholders' equity:
Capital Stock, $1.00 par value. Authorized 12,000,000 2,965 2,965
shares; issued and outstanding 2,964,837
Additional paid-in capital 19,652 19,652
Accumulated deficit (1,031) (300)
Accumulated other comprehensive income:
Foreign currency translation adjustments (1,934) (1,084)
------------ ------------
Total stockholders' equity 19,652 21,233
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 71,587 82,533
------------ ------------
------------ ------------
</TABLE>
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Sames Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1999 AND MAY 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
For the three For the six
months ended months ended
--------------------------- ---------------------------
May 31, May 31, May 31, May 31,
1999 1998 1999 1998
------- ------- ------- -------
($000 omitted) ($000 omitted)
<S> <C> <C> <C> <C>
Net sales $22,900 28,410 40,676 60,364
Cost of goods sold 15,033 18,905 24,715 43,136
------- ------- ------- -------
Gross profit 7,867 9,505 15,961 17,228
Selling, general and administrative expenses 7,163 7,069 13,851 13,587
Research and development costs 1,022 940 2,016 1,880
Litigation settlement costs - 9,550 - 9,550
------- ------- ------- -------
Operating income (loss) (318) (8,054) 94 (7,789)
------- ------- ------- -------
Other expense (income):
Interest expense 172 162 523 312
Other expense (income), net (640) 233 (1,170) 392
------- ------- ------- -------
(468) 395 (647) 704
------- ------- ------- -------
Income (loss) from continuing operations
before income taxes 150 (8,449) 741 (8,493)
Income tax benefit 177 3,673 190 3,796
------- ------- ------- -------
Income (loss) from continuing operations,
net of tax 327 (4,776) 931 (4,697)
Loss from discontinued operations, net of tax (472) (4,153) (1,662) (7,891)
------- ------- ------- -------
Net loss $ (145) (8,929) (731) (12,588)
------- ------- ------- -------
------- ------- ------- -------
Income (loss) per share - basic
Continuing operations $ .11 (1.61) .31 (1.58)
Discontinued operations (.16) (1.40) (.56) (2.66)
------- ------- ------- -------
Net loss $ (.05) (3.01) (.25) (4.24)
------- ------- ------- -------
------- ------- ------- -------
Income (loss) per share - diluted
Continuing operations .11 (1.61) .31 (1.58)
Discontinued operations $ (.16) (1.40) (.56) (2.66)
------- ------- ------- -------
Net loss $ (.05) (3.01) (.25) (4.24)
------- ------- ------- -------
------- ------- ------- -------
Weighted average shares:
Basic 2,965 2,964 2,965 2,964
Effect of stock options 9 - 7 -
------- ------- ------- -------
Diluted 2,974 2,964 2,972 2,964
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
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<PAGE>
Sames Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MAY 31, 1999 AND MAY 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
($000 omitted)
<S> <C> <C>
Cash flows from operating activities:
Continuing operations:
Income (loss) from continuing operations, net of tax 931 (4,697)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 486 489
Deferred compensation, net of payments (594) 29
Other, net (44) 114
Cash provided by (used in) changes in:
Receivables 9,446 3,920
Inventories (2,841) 6,398
Other current assets 308 (1,297)
Accounts payable 1,878 (11,749)
Accrued expenses (5,305) 4,136
Income taxes (377) 584
-------------- --------------
Net cash provided by (used in) operating activities 3,888 (2,073)
-------------- --------------
Cash flows from investing activities:
Purchase of property, plant and equipment (395) (202)
Other assets 221 (34)
-------------- --------------
Net cash provided by (used in) investing activities (174) (236)
-------------- --------------
Cash flows from financing activities:
Proceeds from long-term borrowings 1,064 5,073
Net increase in short-term borrowings 3,000 4,136
Principal payments on long-term debt (1,007) (56)
-------------- --------------
Net cash provided by financing activities 3,057 9,153
-------------- --------------
Net cash used by discontinued operations (4,124) (10,651)
Effect of exchange rate changes on cash (378) (81)
-------------- --------------
Net increase (decrease) in cash and cash equivalents 2,269 (3,888)
Cash and cash equivalents at beginning of period 5,204 5,610
-------------- --------------
Cash and cash equivalents at end of period $ 7,473 1,722
-------------- --------------
-------------- --------------
</TABLE>
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<PAGE>
SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1999 (UNAUDITED) AND NOVEMBER 30, 1998
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 consolidated financial
statements should be read in conjunction with the consolidated financial
statements contained in the Annual Report on Form 10-K for the year ended
November 30, 1998.
NOTE 2
On March 29, 1999, Sames Corporation (the "Company") announced that it had
received unsolicited inquiries by parties interested in acquiring all or a part
of its operations. The Company has directed its primary external financial
advisor, William Blair & Company, to review these unsolicited inquiries and to
explore various strategic alternatives to enhance shareholder value, including
the possible sale of all or a portion of the Company to a third party. This
process is ongoing.
The Company continues to be in discussions with Illinois Tool Works Inc. ("ITW")
to resolve the amount of the purchase price adjustment associated with its sale
to ITW, effective September 30, 1998, of certain assets, operations and
subsidiaries that included specific standard, or non-electrostatic, products
that are referred to as the "Binks Business." ITW has withdrawn the lawsuit
filed March 24, 1999 that sought a preliminary injunction to, among other
things, prevent the Company from making any material changes to its business.
NOTE 3
In January 1998, the Company notified the developer and landlord of a site in
Vernon Hills, Illinois, which had been expected to serve as the Company's
headquarters, that the Company wanted to terminate the project. The Company had
previously entered into a 20-year lease agreement for the Vernon Hills site. In
February 1999, the Company entered into a settlement agreement with the
developer relating to litigation associated with the lease cancellation. The
settlement agreement was for $2.4 million, which was paid by the Company in
February 1999. The settlement cost was classified as a component of discontinued
operations in the Company's fiscal 1998 consolidated financial statements.
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 for the year ended
November 30, 1998.
NOTE 4
Comprehensive loss for the six months ended May 31, 1999 and 1998 consisted of
the following ($000 omitted)
<TABLE>
<CAPTION>
Six months ended May 31
-----------------------
1999 1998
--------- ----------
<S> <C> <C>
Net loss $ (731) $ (12,588)
Other comprehensive loss:
Foreign currency translation adjustments (850) (366)
--------- ----------
Comprehensive loss $ (1,581) $ (12,954)
--------- ----------
--------- ----------
</TABLE>
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<PAGE>
SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SIGNIFICANT DEVELOPMENTS
On March 29, 1999, Sames Corporation (the "Company") announced that it had
received unsolicited inquiries by parties interested in acquiring all or a part
of its operations. The Company has directed its primary external financial
advisor, William Blair & Company, to review these unsolicited inquiries and to
explore various strategic alternatives to enhance shareholder value, including
the possible sale of all or a portion of the Company to a third party. This
process is ongoing.
The Company continues to be in discussions with Illinois Tool Works Inc. ("ITW")
to resolve the amount of the purchase price adjustment associated with its sale
to ITW, effective September 30, 1998, of certain assets, operations and
subsidiaries that included specific standard, or non-electrostatic, products
that are referred to as the "Binks Business." ITW has withdrawn the lawsuit
filed March 24, 1999 that sought a preliminary injunction to, among other
things, prevent the Company from making any material changes to its business.
The Company had been in discussions with specific organizations to form
strategic multi-market alliances to broaden its current global distribution
channels. On April 29, 1999, the Company entered into an Amended and Restated
Product Supply Agreement with one of its main customers for the last fifteen
years, Fanuc Robotics North America, Inc. (FRNA). Under the terms of the
agreement, FRNA has agreed to purchase liquid application products from the
Company and the Company has agreed to purchase robotic paint products from FRNA
for a minimum of three years at set quantities, prices and deliveries. The
Company designates FRNA as their exclusive distributor for all liquid
application equipment and systems for automotive and tier one customers in North
America and the big three automakers in South America. In addition, there is a
strong focus to jointly develop products, and also market products and systems
to customers located outside the North and South American Markets. Both parties
have agreed to provide each other with reasonable product training as well as
engineering and technical assistance. FRNA has taken over the Company's North
American automotive demonstration /laboratory facility through June 30, 2000.
Recently, FRNA has hired thirteen key technical and service employees formerly
employed by the Company. Lastly, for certain monthly royalty considerations and
under the protective clauses of a license agreement, the Company has granted
FRNA a limited non-exclusive license to manufacture, use and sell Bell Machines
(liquid) over a term that is coterminous with the Supply Product Agreement.
On April 27, 1999, the stockholders of the Company approved a name change from
the former Binks Sames Corporation to Sames Corporation.
RESULTS OF OPERATIONS
NET SALES
Net sales for the three months ended May 31, 1999 ("Second Quarter 1999")
were $22.9 million compared to $28.4 million for the three months ended May
31, 1998 ("Second Quarter 1998"), a decrease of $5.5 million, or 19%. Net
sales for the six months ended May 31, 1999 were $40.7 million compared to
$60.4 million for the six months ended May 31, 1998, a decrease of $19.7
million, or 33%. Sames, S.A. ("Sames France") experienced the majority of the
sales decline during the three and six month periods. During fiscal 1999, the
sales mix of Sames France was more heavily weighted toward lower volume,
higher margin standard equipment and spare part sales. This sales volume
decline, relative to the prior year, was anticipated as the backlog and
stages of completion of large automotive installations resulted in unusually
strong revenue recognition primarily in first quarter fiscal 1998. The
remaining sales decline was attributable to slightly lower sales levels in
the Company's other geographic locations, partially offset by currency
translation gains, on a consolidated basis.
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<PAGE>
SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GROSS PROFIT
Gross profit of $7.9 million and $16 million for Second Quarter 1999 and the six
months ended May 31, 1999, respectively, decreased $1.6 million, or 17%, and
$1.3 million, or 7%, respectively, from the comparable 1998 periods. Gross
profit was 34% and 39% of sales for Second Quarter 1999 and the six months ended
May 31, 1999, respectively, compared to 33% and 29%, respectively, for the
comparable 1998 periods. The increase in the gross profit margin in the Second
Quarter 1999 and the six months ended May 31, 1999, respectively, were primarily
due to the impact of Company cost improvements and favorable sales mix as
experienced mainly by Sames France and also due to the lower relative
contribution to sales in fiscal 1999 of lower margin automotive systems in
Europe as recorded in fiscal 1998.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative ("SG&A") expense was $7.2 million and
$13.9 million for the Second Quarter 1999 and the six months ended May 31,
1999, respectively, compared to $7.1 million and $13.6 million, respectively,
for the comparable 1998 periods. SG&A expense as a percentage of sales was
31% and 34% for the Second Quarter 1999 and the six months ended May 31,
1999, respectively, and 25% and 23%, respectively, for the comparable 1998
periods. In the Second Quarter, the Company's division in France took a
one-time charge for severance costs in the amount of $.5 million. Excluding
this charge, the Company's expenses decreased from comparable periods in
1998. These decreases are the result of management's cost control programs
and emphasis on profitability while the higher percentages of SG&A to Net
Sales are reflective of the sales volume decline in the six months ended May
31, 1999 as previously discussed.
RESEARCH AND DEVELOPMENT
Research and development ("R&D") expense was $1 million and $2 million for the
Second Quarter 1999 and the six months ended May 31, 1998, respectively,
compared with $.9 million and $1.9 million, respectively, for the comparable
1998 periods. The Company is continually engaged in experimental work on various
paint and powder coating systems. The R&D costs were incurred solely in Sames
France and were essentially equal to the prior year's level.
LITIGATION SETTLEMENT COSTS
The Company recorded litigation settlement costs of $9.6 million in the Second
Quarter 1998. The amount paid was related to the settlement of patent
infringement litigation, which provided the Company with a non-exclusive,
worldwide, lifetime license to use the patents in question.
INTEREST EXPENSE
Interest expense was $.2 million and $.5 million for the Second Quarter 1999 and
the six months ended May 31, 1999, respectively, compared with $.2 million and
$.3 million, respectively, for the comparable 1998 periods. Interest expense
increased in the six months ended May 31, 1999 primarily due to increased
borrowing levels in North America.
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<PAGE>
SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - (CONTINUED)
OTHER EXPENSE - NET
Other income was $.6 million and $1.2 million for the Second Quarter 1999 and
the six months ended May 31, 1999, respectively, compared with other expense of
$.2 million and $.4 million, respectively, for the comparable 1998 periods. The
majority of other income in the Second Quarter 1999 and the six months ended May
31, 1999 was attributable to foreign currency transaction gains, principally in
North America. The majority of other expenses in the six months ended May 31,
1998 was due to miscellaneous other expenses in Sames France.
INCOME TAXES
The Company recorded an income tax benefit of $.2 million for the Second Quarter
1999 and the six months ended May 31, 1999. An income tax benefit of $3.7
million and $3.8 million was recorded for the Second Quarter 1998 and the six
months ended May 31, 1998, respectively, based on a pretax loss of $8.5 million
in both prior year periods, which consisted chiefly of the settlement of a
patent infringement litigation discussed above. The consolidated relationship of
income tax benefit and pretax income or loss was a function of the Company's
geographical mix of pretax profitability, and, generally, the utilization of
available domestic net operating loss carryforwards.
NET INCOME (LOSS)
As a result of all of the factors above, the Company recorded income from
continuing operations of $.3 million ($.11 per diluted share) and $.9 million
($.31 per diluted share) in the Second Quarter 1999 and the six months ended May
31, 1999, respectively, compared to net loss from continuing operations of $4.8
million (($1.61) per diluted share) and $4.7 million (($1.58) per diluted
share), respectively, for the comparable 1998 periods.
The Company also recorded loss from discontinued operations, net of taxes of $.5
million (($.16) per diluted share) and $1.7 million (($.56 per diluted share)
for the Second Quarter 1999 and the six months ended May 31, 1999, respectively,
compared to losses, net of tax of $4.2 million (($1.40) per diluted share) and
$7.9 million (($2.66) per diluted share) for the Second Quarter 1998 and the six
months ended May 31, 1998, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operations are the primary source of the Company's liquidity.
Short-term funds are also provided for current operations through lines of
credit and overdraft facilities. At May 31, 1999, the Company had aggregate
credit facilities of approximately $17 million, borrowings under these
facilities of $7.6 million, and amounts available under these facilities of $9.4
million.
In the six months ended May 31, 1999, the Company generated cash flow of $3.9
million from operating activities primarily due to a significant reduction in
accounts receivable and, to a lesser degree, an increase of accounts payable
from fiscal 1998 year-end levels. This was partially offset by cash usages
related to increased inventory levels and reductions of accrued liabilities.
The Company obtained additional sources of funds of $3.1 million as a result of
$4.1 million of long-term and short-term borrowings, less principal payments on
long-term debt of $1 million.
In the six months ended May 31, 1999, cash of $4.1 million was used by
discontinued operations, including $2.4 million disbursed under the settlement
agreement described in note 3 of notes to consolidated financial statements.
-7-
<PAGE>
SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - (CONTINUED)
QUARTERLY FLUCTUATIONS
The Company has experienced significant quarterly fluctuations in operating
results and anticipates that those fluctuations will continue. The fluctuations
have been caused by periodic changes in the components of the Company's sales
mix. In particular, the Company's sales of large automotive installations can
fluctuate substantially and they generally result in relatively lower gross
profit margins. Sales of standard products and spare parts typically generate
relatively higher gross profit margins. The Company therefore believes that
quarter-to-quarter comparisons of its results are not necessarily meaningful and
should not be relied upon as indications of future performance.
CONVERSION TO THE EURO
On January 1, 1999, eleven European Union member states adopted the euro as
their common national currency. From that date until January 1, 2002 (the
transition period), either the euro or a participating country's present
currency will be accepted as legal tender. Beginning on January 1, 2002,
euro-denominated bills and coins will be issued, and by July 1, 2002, only euro
currency will be used.
The Company will evaluate the strategic, financial, legal, and systems issues
related to the various phases of transition. While the Company does not believe
the ultimate costs of conversion will be material to its results of operations,
cash flow, or financial position, efforts will be made to address customer and
business needs on a timely basis and anticipate and prevent any complications
during the transition period.
YEAR 2000 COMPLIANCE
The "Year 2000 Issue" refers generally to the problems that some software may
have in determining the correct century for the year. For example, software with
date-sensitive functions that are not Year 2000 compliant may not be able to
determine whether "00" means 1900 or 2000, which may result in failures or the
creation of erroneous results.
The Company has developed a phased Year 2000 readiness plan for the current
versions of its products. The plan includes development of corporate awareness,
assessment, implementation, validation testing, and contingency planning. The
Company responds to customer concerns about prior versions of its products on a
case-by-case basis.
The Company has largely completed all phases of the plan with respect to the
current versions of all its products. All products (software and hardware
including micro-processors and micro-controllers) manufactured by Sames have
been verified and modified if necessary. All products sold today comply with
Year 2000 requirements. The Company is currently addressing and assuring its
customers regarding their concerns.
The Company's internal systems include both information technology ("IT") and
non-IT systems. The Company has completed an assessment of its IT systems and
non-IT systems. Outside consultants were contracted to provide assistance and
assurances.
The Company has funded the Year 2000 readiness plan from operating cash flows.
Costs incurred in connection with Year 2000 compliance projects have not been
material. Costs incurred in fiscal 1998 were approximately $200 thousand. Total
additional costs, to be incurred during fiscal 1999, are estimated to be
approximately $100 thousand.
The Company's suppliers have been contacted requesting Year 2000 information and
have responded they are currently compliant or will be compliant soon. Since the
Company is relying on information provided to it by third parties to assess the
Year 2000 readiness of such vendors, the Company cannot provide assurances that
all of its critical vendors are or will be Year 2000 ready. Also, the Company is
subject to external forces that might generally affect industry and commerce,
such as utility or transportation company Year 2000 compliance failures and
related service interruptions. Due to these external factors, the Company cannot
provide assurances that it will not be adversely affected by the Year 2000 date
change.
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<PAGE>
SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A substantial portion of the Company's non-U.S. transactions is denominated in
French francs. Although Sames France is not typically subject to significant
foreign exchange transaction gains or losses, its financial statements are
translated into U.S. dollars as part of the Company's consolidated financial
reporting. Fluctuations in the French franc/U.S. dollar exchange rate therefore
will affect the Company's consolidated balance sheets and statements of
operations. At May 31, 1999, the French franc had depreciated by approximately
9.0% compared to the prior year-end. However, the average French franc/U.S.
dollar exchange rate was approximately 2.3% higher in the six months ended May
31, 1999 than in the comparable 1998 period. The Company also has operations in
Japan and Sweden, where transactions are denominated in Japanese yen and Swedish
krona.
In the six months ended May 31, 1999, the net change in the cumulative foreign
currency translation adjustment account, which is a component of stockholders'
equity, was an unrealized loss of $850 thousand. An unrealized foreign currency
translation loss of $366 thousand was recorded in the six months ended May 31,
1998.
Foreign currency exchange transactions have not typically resulted in
significant periodic gains or losses, although Sames North America recorded a
gain of approximately $687 thousand during the six months ended May 31, 1999.
The gain was recorded due to the combination of a relatively high intercompany
payable to Sames France, denominated in French francs, and the depreciation of
the French franc relative to the U.S. dollar during the period. The Company
generally does not use derivative financial instruments to manage currency
exchange risks and no such instruments were outstanding at May 31, 1999.
Statements regarding the Company's potential and pending strategic alliances,
discussions with William Blair & Company, Year 2000 compliance, exploration of
strategic alliances for the Company, discussions with ITW and effects of the
euro conversion constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, and are subject to the safe harbor created
thereby. Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations reflected in such forward-looking statements will prove to be
correct. Important factors that could cause actual results to differ materially
from the Company's expectations include, without limitation, general economic
and market conditions, the ability of the Company to reach definitive agreements
with potential strategic partners, the effectiveness of the Company's Year 2000
compliance, transition issues related to the euro and the outcome of legal
proceedings involving ITW. No assurance can be given that the forward-looking
statements will prove to be correct.
-9-
<PAGE>
SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1 See Note 4 to Consolidated Financial Statements for the
period ended May 31, 1999
Items 2, 3 and 5 Not applicable
Item 4 Submission of Matters to a Vote of Security-Holders
The annual meeting of stockholders of the Company was held
on April 27, 1999. Three proposals were submitted to
stockholders as described in the Company's proxy statement
dated March 18, 1999. The following is a brief description
of the matters voted upon, the number of votes cast for and
against each proposal, and the number of abstentions.
1. The election of one director of the Company
Due to the announced sale process, George L. Joeckel,
Jr., decided not to stand for election as a director.
2. The approval of an amendment to Article First of the
Company's Restated Certificate of Incorporation, as
amended (the "Certificate of Incorporation"), to change
the name of the Company to "Sames Corporation."
Votes for: 2,666,537
Votes Against: 16,388
Abstain: 12,519
3. The ratification of KPMG LLP as the Company's
independent accountants for the fiscal year ended
November 30, 1999.
Votes for: 2,675,548
Votes Against: 7,253
Abstain: 12,643
Item 6 (a) Exhibits
- Exhibit 10.1 - Amended and Restated Product Supply
Agreement between Sames, S.A., Sames North
America, Inc., Binks Sames Corporation and Fanuc
Robotics North America, Inc., dated, April 29, 1999.
- Exhibit 10.2 - First Amendment to Financing Agreement
between the CIT Group/Business Credit, Inc. and Sames
Electrostatic, Inc., dated, May 25, 1999.
- Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K - None
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.
SAMES CORPORATION
/s/ Ronald A. Koltz
- -------------------
Vice President - Controller Corporate Accounting
Principal Accounting and Financial Officer
/s/ Arnold H. Dratt
- -------------------
Arnold H. Dratt - President, Chief Executive Officer and Director
Principal Executive Officer
Date July 15, 1999
-------------
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<PAGE>
EXHIBIT 10.1
AMENDED AND RESTATED
PRODUCT SUPPLY AGREEMENT
This AMENDED AND RESTATED PRODUCT SUPPLY AGREEMENT ("Agreement") is made
effective this 29th day of April, 1999, and is by and between SAMES, S.A., a
French corporation ("SAMES"), SAMES NORTH AMERICA, INC. (formerly known as Sames
Electrostatic, Inc.), a Connecticut corporation ("SAMES, N.A."), BINKS SAMES
CORPORATION, a Delaware corporation ("BINKS"; BINKS, SAMES, N.A. and SAMES are
hereinafter collectively referred to as "Seller"), and FANUC ROBOTICS NORTH
AMERICA, INC., a Delaware corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller and Buyer are parties to that certain Product Supply
Agreement dated May 29, 1998 (the "Prior Agreement");
WHEREAS, Seller and Buyer desire to amend and restate the Prior Agreement
as herein provided;
WHEREAS, Seller has agreed to supply the products listed on EXHIBIT A
attached hereto (collectively, the "Sames Products" and individually, the "Sames
Product") to Buyer, and Buyer has agreed to purchase and accept delivery of the
Sames Products from Seller for a certain minimum period, on the terms and
conditions set forth herein;
WHEREAS, Buyer desires to become the distributor for Seller, and in said
capacity, to market and sell the Sames Products to predetermined purchasers in a
predetermined market;
WHEREAS, Buyer desires a license to manufacture the Sames Products
referenced as "Bell Machines" (liquid) on EXHIBIT A attached hereto (the "Sames
Bell Machines");
WHEREAS, Buyer has agreed to supply the robotics equipment listed on
EXHIBIT C attached hereto (the "FRNA Paint Equipment") to Seller, and Seller has
agreed to accept delivery of the FRNA Paint Equipment from Buyer for use in
Seller's technology center in Grenoble, France, on the terms and conditions set
forth in Buyer's standard Bailment Agreement attached hereto as EXHIBIT C;
WHEREAS, Buyer has agreed to supply the paint products listed on EXHIBIT B
attached hereto (collectively, the "FRNA Paint Products" and individually, the
"FRNA Paint Product"), to Seller, and Seller has agreed to purchase and accept
delivery of the FRNA Paint Products from Buyer for a certain minimum period, on
the terms and conditions set forth herein;
WHEREAS, Seller desires a non-exclusive right and license to use, market
and sell the FRNA Paint Products;
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WHEREAS, Seller and Buyer have agreed to provide each other with reasonable
product training as well as engineering and technical assistance in connection
with the Sames Products, FRNA Paint Products and FRNA Paint Equipment;
WHEREAS, Buyer desires exclusive use of Seller's automotive laboratory
located on Capital Street in Livonia, Michigan, on the terms and conditions set
forth in the Agreement attached hereto as EXHIBIT D;
WHEREAS, Seller and Buyer desire to jointly participate in the development
of new products.
NOW, THEREFORE, in consideration of the mutual covenants of the parties
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Buyer and Seller agree as
follows:
SECTION 1. TERM.
(a) Subject to earlier termination as provided herein, and except with
respect to the "ACCUSTAT" and "AQUA" licenses described in Section 13, the term
of this Agreement shall commence on the date hereof and shall continue for three
years.
(b) This Agreement shall be automatically renewable for three one-year
terms, unless either party gives the other party written notice of its intention
not to renew the Agreement not less than one hundred and eighty (180) days prior
to the expiration of the initial term or any renewal term of this Agreement.
(c) Seller shall have the right to immediately cancel this Agreement
following either: (i) a breach by Buyer of any of its agreements or obligations
under this Agreement and such failure(s) to perform continues for at least
thirty (30) days after written notice thereof; or (ii) the insolvency or
bankruptcy of Buyer.
(d) Buyer shall have the right to immediately cancel this Agreement
following either: (i) the breach by Seller of any of its agreements or
obligations under this Agreement and such failure(s) to perform continues for at
least thirty (30) days after written notice thereof; or (ii) the insolvency or
bankruptcy of Seller.
(e) Sections 8 and 18 of this Agreement shall survive termination of
this Agreement.
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SECTION 2. LIST OF SAMES PRODUCTS AND INVENTORY; PURCHASES. Subject to the
terms and conditions of this Agreement, Buyer agrees to purchase from Seller,
and Seller agrees to sell to Buyer, the Sames Products and all enhancements to
the Sames Products (hereinafter collectively, the "Sames Products") in the
minimum quantities set forth on EXHIBIT A hereto. Notwithstanding the terms and
conditions of Seller's standard warranty attached hereto as EXHIBIT F, if Buyer
experiences a problem with any particular Sames Product, Seller shall use its
reasonable best efforts to cure such problem within sixty (60) days of written
notice to Seller. Further, if such problem is not reasonably cured by Seller
within sixty (60) days of written notice to Seller, Buyer may, in its sole
discretion, cancel the minimum quantity requirement for such Sames Product. The
list of Sames Products to be supplied by Seller hereunder may change from time
to time and any such changes shall be noted on a revised EXHIBIT A and such
revised EXHIBIT A shall be signed and dated by both Seller and Buyer. Buyer
agrees to purchase from Seller, and Seller agrees to sell to Buyer, on or before
August 1, 1999, existing inventory of Sames, N.A. (the "Sames Inventory") at
current prices up to a maximum aggregate amount of $100,000. Any Sames Inventory
purchased by Buyer shall be credited against Buyer's minimum quantity
commitments for Sames Products set forth herein.
SECTION 3. PURCHASE PRICE; TERMS OF PAYMENT; DELIVERY OF SAMES PRODUCTS AND
SAMES INVENTORY.
(a) Seller agrees that its pricing of the Sames Products listed under
the "Main Component" heading on EXHIBIT A hereto (hereinafter, the "Main
Component Products") to Buyer shall at all times be the lowest pricing of such
Main Component Products to any customer of Seller purchasing similar quantities
of Main Component Products.
(b) The Purchase Price of Sames Products which are added to EXHIBIT A
as provided in Section 2 shall be mutually agreed upon at the time such Sames
Products are added.
(c) From August 1, 1999, at Seller's request, Buyer shall pay in
advance to Seller an amount (in U.S. dollars) equal to the purchase price, as
defined in EXHIBIT A, for the remaining minimum commitment under the Prior
Agreement through March 1, 2000 (the "Prepayment") and such Prepayment shall
satisfy Buyer's purchase price for minimum quantities of Sames Products through
May 31, 2000; provided, however, that the amount of such Prepayment shall not
exceed $1,500,000.. The purchase price for Sames Products subject to the
Prepayment shall be subject to a discount of 4.875%. Buyer shall submit its
purchase order for the Sames Products subject to the Prepayment within ten (10)
days of Seller's request for the Prepayment.
(d) The purchase price for Sames Products other than the Sames
Products subject to the Prepayment shall be paid by Buyer to Seller net in cash
(in U.S. dollars) within thirty (30) days of invoice receipt.
(e) The purchase price for any Sames Product or Sames Inventory is
exclusive of any delivery and installation charges and any taxes, excises or
other governmental charges
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applicable to the sale of the Sames Products or the Sames Inventory, which
amounts shall be for Buyer's account and added as separate items on Seller's
invoices.
(f) All Sames Products originating from Grenoble, France are F.O.B.
Rochester Hills, Michigan, except Bell Machines with freight charges prepaid by
Sames S.A. (Grenoble). All Sames products manufactured and assembled by Sames,
N.A. will be F.O.B. Livonia, Michigan. All Bell Machines (liquid) will be F.O.B.
Grenoble, France.
(g) The delivery times for Main Component Products shall be within the
ranges set forth on EXHIBIT A hereto.
SECTION 4. MANUFACTURING AND MARKETING RIGHTS.
(a) Buyer shall be granted a non-exclusive right and license to
manufacture the Sames Bell Machines (liquid) to automakers as provided in
subsection (b) below, subject to the terms and conditions of the Amended and
Restated License Agreement attached hereto as EXHIBIT H.
(b) Seller hereby grants Buyer the exclusive right to market and sell
the Sames Products, to all automakers throughout North America and solely to
Ford, GM and Chrysler in South America. Seller and Buyer hereby acknowledge and
agree that where the automaker in South America is, for example, Ford/Volvo or
Daimler/Chrysler, Buyer's exclusive right under this Section 4(b), extends only
to customers whose name plate is either Ford, GM or Chrysler, unless otherwise
agreed by the parties hereto. While this Agreement is in effect, Seller shall
not grant any other person or entity the right to market and sell the Sames
Products to all automakers throughout North America and to Ford, GM and Chrysler
in South America. The Seller reserves the right to market and sell the Sames
product line for the sole purpose of replacing or upgrading existing equipment.
Buyer has the right to first refusal.
SECTION 5. LIST OF FRNA PAINT EQUIPMENT AND PRODUCTS; PURCHASES; MARKETING
RIGHTS.
(a) Seller agrees to purchase from Buyer, and Buyer agrees to sell to
Seller, the FRNA Paint Products set forth on EXHIBIT B attached hereto subject
to the terms and conditions of this Agreement. Buyer agrees to supply Seller
with the FRNA Paint Equipment set forth on EXHIBIT C attached hereto for use by
Seller at its technology center located in Grenoble, France (the "Technology
Center") subject to the terms and conditions of the Bailment Agreement attached
hereto as EXHIBIT D. The list of FRNA Paint Products may change from time to
time and any such changes shall be noted on a revised EXHIBIT B and such revised
EXHIBIT B shall be signed and dated by Seller and Buyer. Notwithstanding the
foregoing, Buyer shall be solely responsible for all costs associated with any
demonstrations conducted at the Technology Center for Buyer's exclusive use and
Buyer agrees to indemnify Seller for any damages resulting from all such
demonstrations.
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(b) Buyer hereby grants Seller a non-exclusive right to market FRNA
Paint Products only as part of a bell system and only in Europe.
SECTION 6. PURCHASE PRICE; TERMS OF PAYMENT; DELIVERY OF FRNA PAINT
EQUIPMENT AND PRODUCTS.
(a) The initial prices for FRNA Paint Products listed under the "Paint
Products" heading on EXHIBIT B attached hereto (hereinafter "FRNA Paint
Products") shall be those prices set forth on EXHIBIT B attached hereto;
provided, however, that pricing of FRNA Paint Products to Seller shall be the
lowest pricing of such FRNA Paint Products to any competitor of Seller
purchasing any such FRNA Paint Products where Seller is bidding with a direct
competitor of Seller.
(b) The purchase price for FRNA Paint Products which are added to
EXHIBIT B as provided in Section 5 shall be mutually agreed upon at the time
such FRNA Paint Products are added. The initial purchase price for FRNA Paint
Products is set forth on EXHIBIT B hereto.
(c) The purchase price for FRNA Paint Products shall be paid by Seller
to Buyer net in cash (in U.S. dollars) within thirty (30) days of invoice
receipt.
(d) The purchase price for any FRNA Paint Product is exclusive of any
delivery and installation charges or any taxes, excises or other governmental
charges applicable to the sale of the FRNA Paint Products, which amounts shall
be for Seller's account and added as separate items on Buyer's invoices.
(e) All FRNA Paint Products shall be shipped F.O.B. FANUC Robotics
North America, Inc., Rochester Hills, Michigan.
SECTION 7. PRODUCT TRAINING, ENGINEERING AND TECHNICAL ASSISTANCE.
(a) Buyer and Seller agree to provide each other, upon reasonable
request, with product training and engineering and technical assistance. The
nature, manner and costs associated with such training and assistance shall be
mutually agreed by the parties prior to the performance thereof.
(b) Seller will employ, pay, supervise, direct and discharge all
Seller personnel providing the product training and engineering and technical
assistance hereunder. Seller will be solely responsible for the payment of
benefits and any other direct or indirect compensation for Seller personnel
assigned to perform the product training and engineering and technical
assistance hereunder. Seller also agrees to be responsible for the employees'
worker's compensation insurance, employment taxes and other employer liabilities
relating to such personnel.
(c) Buyer will employ, pay, supervise, direct and discharge all Buyer
personnel providing the product training and engineering and technical
assistance hereunder. Buyer will be solely responsible for the payment of
benefits and any other direct and indirect compensation for
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Buyer personnel assigned to perform the product training and engineering and
technical assistance hereunder. Buyer also agrees to be responsible for the
employees' worker's compensation insurance, employment taxes and other employer
liabilities relating to such personnel.
(d) Seller and Buyer hereby indemnify and agree to defend and hold
harmless each other, their respective affiliated corporations, and agents,
employees and representatives, from and against any liability, claim, demand,
loss, damage, cost and expense, including reasonable attorney's fees and
litigation costs, arising out of or in connection with the performance of the
product training and engineering and technical assistance hereunder which occurs
as a result of the gross negligence or willful misconduct of either Seller or
Buyer, or their respective employees, agents, contractors, or subcontractors.
SECTION 8. WARRANTY.
(a) The parties agree that all Sames Products shall be subject to
Seller's standard warranty terms and conditions attached hereto as EXHIBIT F.
(b) In the event a customer of Buyer requires warranty terms and
conditions other than Seller's standard warranty terms and conditions, Seller,
in its sole discretion, may supply Sames Products on such non-standard warranty
terms and conditions, provided, however, that such agreement to supply Sames
Products on such non-standard warranty terms and conditions shall not be
unreasonably withheld and shall be consistent with the past practices of the
parties. Seller's refusal to supply Sames Products on non-standard warranty
terms and conditions shall not constitute a Change in Control Breach (as
hereinafter defined).
(c) Seller agrees to provide Buyer with non-warranty service in
connection with Buyer's installed base of Seller's Sames Products during the
term of this Agreement and shall charge Buyer for such service at the rate
charged to Seller's other automotive customers for similar non-warranty service.
(d) The parties agree that Seller shall directly warrant and service
all Sames Products sold for the products listed on EXHIBIT G attached hereto.
(e) The parties agree that Buyer shall directly warrant and service
all FRNA Paint Equipment and FRNA Paint Products supplied or sold by Buyer
hereunder subject to Buyer's standard warranty terms and conditions attached
hereto as EXHIBIT L.
(f) The parties agree to indemnify each other for damages caused by
any breach of this Section 8.
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SECTION 9. AUTOMOTIVE LABORATORY. Buyer shall be granted an exclusive use
of Seller's automotive laboratory located on Capital Street in Livonia, Michigan
subject to the payments and other conditions described on EXHIBIT E attached
hereto. Seller represents and warrants that it has full authority to grant such
use and shall indemnify Buyer for damages caused by any breach of such
representation and warranty. Buyer and Seller agree to cooperate to allow
continued product validation and testing to be jointly completed at the Capital
Street laboratory.
SECTION 10. BUYER'S SPECIAL REMEDIES; LICENSES. If, following either a
"Binks change in control" or a "Sames/Sames, N.A. change in control" (as such
terms are defined below), Seller or their successor breaches the Agreement (a
"Change in Control Breach") and such Change in Control Breach is not cured
within thirty (30) days following written notice from Buyer to the other parties
hereto, Buyer shall be entitled to exercise either or both of the special
remedies set forth below:
(a) SPECIFIC PERFORMANCE. Buyer shall, in addition to all other
remedies, be entitled to specific performance or injunctive relief to enforce
the terms of this Agreement.
(b) LICENSE. Buyer shall be granted a limited license, effective upon
the failure to timely cure a Change in Control Breach, to make, use or sell any
of the Sames Product solely in conjunction with the sale of Buyer's products and
in accordance with the terms and conditions of this Agreement. The term of the
license shall be coterminous with this Agreement. In connection with such
license, Buyer agrees (i) not to compete with Seller in the sale of the Sames
Products other than in conjunction with the sale of Buyer's products, (ii) not
to copy or disclose to third parties (except as described below), and to return
to Seller all data, drawings, specifications, technical information, know-how
and similar information concerning the Sames Products (the "Confidential Product
Information") following the expiration of such license, (iii) not to use, in any
manner, any of Seller's trademarks in connection with Buyer's manufacture, use
or sale of the Sames Products, and (iv) to pay Seller a monthly royalty equal to
the sum of the products obtained by multiplying the number of each of the Sames
Products sold during the previous month by the respective price Seller last
charged Buyer for such Sames Product by the respective royalty rate listed on
EXHIBIT A hereto. The Confidential Product Information shall be placed in escrow
following the execution and delivery of this Agreement, pursuant to the Escrow
Agreement attached hereto a EXHIBIT H. Following the effective date of the
license, Buyer shall be allowed to disclose the Confidential Product Information
to third parties solely for the purpose of manufacturing the Sames Products
provided that such third parties sign and deliver to Seller a mutually agreeable
limited license and confidentiality agreement which shall, without limitation,
prohibit such third parties from disclosing the Confidential Product Information
and from using such information for any purpose other than producing the Sames
Products for Buyer. The Buyer's license and any license of a third party
supplier shall automatically terminate upon Buyer's breach or such supplier's
breach of the respective agreements, which breach is not cured within thirty
(30) days following written notice from Seller or their successor, and Seller
shall be entitled to specific performance or injunctive relief enforcing such
agreements. The terms of such license shall be in accordance with the Amended
and Restated License Agreement which is attached hereto as EXHIBIT I.
Notwithstanding the foregoing, Buyer's license to manufacture, use and
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sell Sames Bell Machines (liquid) under the Amended and Restated License
Agreement shall be limited in scope pursuant to the terms of Section 4 of this
Agreement.
(c) BINKS CHANGE IN CONTROL. "Binks Change in Control" shall mean the
merger or acquisition of Binks Sames Corporation with or by a third party.
(d) SAMES/SAMES, N.A. CHANGE IN CONTROL. "Sames/Sames, N.A. Change in
Control" shall mean the merger or acquisition of Binks Sames France, S.A. and
Sames North America, Inc. with or by a third party.
SECTION 11. SELLER'S SPECIAL REMEDIES. If Buyer breaches this Agreement and
such breach is not cured within thirty (30) days following written notice from
Seller or their successor to Buyer, Seller or their successor, as the case may
be, shall, in addition to all other remedies, be entitled to specific
performance or injunctive relief to enforce the terms of this Agreement.
SECTION 12. RELEASE OF BINKS. If, following a Sames/Sames, N.A. Change in
Control, Sames and Sames, N.A. retain non-exclusive rights to the Products that
are subject to the license granted to Buyer under Section 10 hereof and such
rights are sufficient to allow Sames and Sames, N.A. to perform the licensor's
obligations under such license, the parties hereby acknowledge and agree that
Binks shall, as of the effective date of the Sames/Sames, N.A. Change in
Control, no longer be a party to this Agreement, the License Agreements attached
hereto as EXHIBIT I and EXHIBIT J, respectively, and the Escrow Agreement
attached hereto as EXHIBIT H and shall have no further rights or obligations in
to and under this Agreement, the License Agreements and the Escrow Agreement,
with the exception of the obligation of Binks not to interfere with Buyer's
exclusive right to purchase "ACCUSTAT" and "AQUA" Sames Products under this
Agreement.
SECTION 13. ACCUSTAT/ AQUA/ ACCUBELL LICENSES.
(a) Buyer covenants and agrees to purchase all Sames Products
referenced as "ACCUSTAT" and "AQUA" on EXHIBIT A hereto exclusively from Seller
and Seller hereby grants Buyer an exclusive right to purchase such "ACCUSTAT"
and "AQUA" Sames Products, whether stand-alone or as a component of another
product or system, coterminous with this Agreement.
(b) Buyer hereby grants Seller a non-exclusive and royalty free
license for the respective lives of Buyer's linear potentiometer patents subject
to the terms of the License Agreement which is attached hereto as EXHIBIT I, and
Seller hereby agrees to supply to Buyer, on an exclusive basis, "ACCUSTAT" and
"AQUA" Sames Products during the period of such license.
(c) Buyer covenants and agrees to purchase all Sames Products
referenced as "ACCUBELL" on EXHIBIT A hereto on a non-exclusive basis from
Seller and Seller hereby grants Buyer a non-exclusive right to purchase such
"ACCUBELL" Sames Products.
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(d) Buyer covenants and agrees to purchase all spare parts for all
Sames Products exclusively from Seller at current published automotive prices.
SECTION 14. PRODUCT DEVELOPMENT. Seller and Buyer hereby agree to jointly
participate in the development of new products to be identified by marketing and
product development representatives of Seller and Buyer. Prior to commencement
of any joint product development project, Seller and Buyer shall mutually agrees
as to the ownership rights, costs, and use of such product.
SECTION 15. FORCE MAJEURE. Neither Buyer nor Seller shall be responsible
for any loss resulting from the non-fulfillment of any terms of this Agreement
caused by riots, wars, acts of enemies, national emergencies, strikes, floods,
fires, acts of God, or by any other cause not within the control of the party
whose performance is interfered with which by the exercise of reasonable
diligence such party is unable to prevent.
SECTION 16. INDEPENDENT CONTRACTOR. Seller and Buyer are each acting as an
independent contractor and not as a partner, joint venturer, or agent the other
in connection with the execution and performance of this Agreement. Nothing in
this Agreement will be deemed or construed to create between the parties a
partnership, association, joint venture, franchise or agency. Neither party is
in any way the legal representative of the other party, and neither party has
any authority to assume or create any obligation on behalf of the other.
SECTION 17. TERMS AND CONDITIONS OF SALE.
(a) All purchases of Sames Products and Sames Inventory under this
Agreement shall be made under the terms and conditions of sale set forth on
EXHIBIT K attached hereto.
(b) All purchases of FRNA Paint Products under this Agreement shall be
made under the terms and conditions of sale set forth in EXHIBIT L attached
hereto.
(c) Seller and Buyer expressly understand and agree that the terms and
conditions set forth in this Agreement and in any Exhibit hereto supersede any
terms and conditions printed on any Buyer purchase order for Sames Products
delivered to Seller or Seller purchase order for FRNA Paint Products delivered
to Buyer to the extent the terms and conditions of this Agreement and the
Exhibits hereto and the terms and conditions of such Buyer purchase order or
Seller purchase order may be inconsistent with each other.
SECTION 18. CONFIDENTIALITY; SOLICITATION; RESTRICTIONS ON USE.
(a) Seller and Buyer covenant and agree that for a period of five (5)
years from the date of disclosure to either party each will keep confidential
and will not disclose to any third party, any information marked confidential,
or if transmitted visually or verbally is identified as confidential at the time
of such disclosure and reduced to writing information marked confidential
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within fifteen (15) days, of Seller or Buyer, including, but not limited to,
data, drawings, specifications and other technical information, including any
and all items deposited with the escrow agent under the Escrow Agreement
attached hereto as EXHIBIT G (the "Confidential Information"), furnished
directly or indirectly to either party. Confidential Information will not
include information which (i) was heretofore in the public domain or becomes a
part of the public domain through no fault or negligence on the part of Seller
or Buyer, (ii) is received by Seller or Buyer in good faith from a third party
who has the right to disclose such information, or (iii) Seller or Buyer is
legally obligated to disclose.
(b) Seller and Buyer agree that the Confidential Information shall not
become the property of the other party and shall be used solely for the purpose
of fulfilling the parties' respective obligations hereunder.
(c) The parties covenant and agree not to solicit the hiring of any
officer, director or employee of the other party during the term of this
Agreement and for a period of two (2) years following the termination of this
Agreement. Notwithstanding the foregoing, Buyer shall have the right to solicit
and employ those employees of Seller identified on EXHIBIT L hereto (the
"Employees') and Seller shall cooperate and encourage such employees to accept
employment with Buyer. Seller shall be responsible and liable for any salary,
wages, bonuses, commissions, accrued vacations, or sick-leave time, profit
sharing or pension benefits, as well as any actions or causes of action,
including, but not limited to, unemployment compensation claims and worker's
compensation claims and claims for race, age and sex discrimination and sexual
harassment that any of its employees assert in connection with their employment
or separation from Seller, or both. Seller shall further be responsible for all
rights of Seller's employees under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA). It is understood by Buyer and Seller that
Buyer will not assume or accept any of Seller's employment benefit plans or
other employment benefit obligations of Seller. Seller, and not Buyer, shall be
responsible for liabilities and claims for employee benefits under Seller's
employee benefit plans or with regard to any severance or layoff benefits that
are claimed to arise as a result of the transactions contemplated herein. Seller
shall indemnify Buyer for damages caused by the breach of this Section 18(c).
The parties covenant and agree that the terms and conditions of that certain
February 1998 Mutual Confidentiality and Non-Disclosure Agreement shall remain
effective with respect to the Employees.
(d) Seller agrees that all stand-alone robotic systems shall be
handled by a FANUC Ltd. subsidiary or affiliate unless otherwise agreed by the
parties hereto.
SECTION 19. NOTICE. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given to any
party (i) upon delivery to the address of such party specified below if
delivered in person or by prepaid courier, or (ii) upon dispatch if transmitted
by facsimile transmission, in any case to the parties at the following addresses
or telecopy numbers, as the case may be:
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If to Buyer, at:
FANUC ROBOTICS NORTH AMERICA, INC.
3900 W. Hamlin Road
Rochester Hills, MI 48309
Attention: Corporate Counsel
Facsimile Number: (248) 377-7362
If to Seller, at:
BINKS SAMES CORPORATION
9201 Belmont Avenue
Franklin Park, IL 60131
Attention: Arnold H. Dratt
Facsimile Number: (847) 671-3062
With a copy to:
Guy E. Snyder, Esq.
Vedder Price Kaufman & Kammholz
222 North LaSalle Street, Suite 2600
Chicago, Illinois 60601-1003
Facsimile Number: (312) 609-5005
SECTION 20. ASSIGNMENT. This Agreement may not be assigned by either party
without the prior written consent of the other party. Notwithstanding the
foregoing, the parties hereby acknowledge and agree that a Binks Change in
Control or a Sames/Sames, N.A. Change in Control, as the case may be, shall be
considered a permitted assignment under this Agreement; provided that in the
event Seller, collectively or individually, sells, merges, or transfers any
material portion of its assets, including, without limitation, its rights under
this Agreement, to a robotic competitor of Buyer, Buyer shall have the right to
terminate this Agreement.
SECTION 21. CHOICE OF LAW; BINDING EFFECT . This Agreement and the rights
and obligations of the parties hereto shall be governed and construed in
accordance with the laws of the State of Illinois applicable to agreements to be
executed and performed wholly within Illinois, and shall inure to the benefit of
the and be binding upon the parties hereto and their respective successors and
permitted assigns.
SECTION 22. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the
entire agreement between the parties, and may not be altered, modified,
terminated or discharged except in a writing signed by both parties.
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SECTION 23. SEVERABILITY; WAIVER. Should any covenant or provision of this
Agreement be determined to be void and unenforceable, in whole or in part, it
shall not be deemed to affect or impair the validity of any other covenant or
provision or any part thereof, and such covenant or provision or part thereof
shall be deemed modified to the extent required to permit enforcement. Any
waiver by either party hereto of any breach of any kind or character whatsoever
by the other party, whether such waiver be direct or implied, shall not be
construed as a continuing waiver of or consent to any subsequent breach of this
Agreement on the part of the other party.
SECTION 24. EXECUTION; COUNTERPARTS. This agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
FANUC ROBOTICS NORTH AMERICA, INC. BINKS SAMES CORPORATION
By: /s/ Richard E. Schneider By: /s/ Arnold H. Dratt
-------------------------------- -----------------------------------
Its: President Its: President
------------------------------- ----------------------------------
SAMES NORTH AMERICA, INC.
By: /s/ Arnold H. Dratt
-----------------------------------
Its: President
----------------------------------
SAMES, S.A.
By: /s/ Arnold H. Dratt
-----------------------------------
Its: President
----------------------------------
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Exhibit 10.2
FIRST AMENDMENT TO
FINANCING AGREEMENT
May 25, 1999
Sames Electrostatic, Inc.
11998 Merriman Road
Livonia, MI 48150
RE: Financing Agreement dated as of October 21, 1998 (the "Financing
Agreement") between The CIT Group/Business Credit, Inc. (CITBC") and
Sames Electrostatic, Inc. (the "Company")
Ladies and Gentlemen:
Reference is made to the Financing Agreement. All capitalized terms used in
this letter and not defined herein shall have the meanings given to such terms
in the Financing agreement.
This letter shall confirm the agreement of CITBC and the Company to amend
the Financing Agreement in the following matter:
1. Clause iv) of paragraph (g) of Section 7.10 of the Financing Agreement
is amended and restated in its entirety to read as follows:
"iv) to pay the obligations of Parent to Illinois Tool Works Inc.
which arise under Section 2.3 and 9.1 of the Agreement of Purchase and
Sale of Assets and Stock between Parent and Illinois Tool Works Inc.
(including payments in settlement of any such obligations), but only
if x) the Company notifies CITBC in writing of the proposed amount of
payment (including associated attorneys fees and other expenses) at
least five (5) days prior to such payment; y) the Availability, after
giving effect to the projected amount of such payment (including
associated attorneys fees and other expenses), remains equal to or
greater than $1,500,000 at all times during the period thirty (30)
days preceding the date of such payment; and z) the Availability,
after giving effect to the actual amount of such payment (including
associated attorneys fees and
<PAGE>
Sames Electrostatic, Inc.
May 25, 1999
Page 2
other expenses), remains equal to or greater than $1,500,000 at all
times during the period thirty (30) days after the date of such
payment".
2. Paragraph (k) of Section 10.1 of the Financing Agreement is amended by
deleting the reference to "$1,500,000" set forth therein and substituting
in its place the clause "i) $750,000 at any time that the outstanding
amount of the Obligations is less than $5,000,000 or ii) $1,500,000 at any
time that the outstanding amount of the Obligations is equal to or greater
than $5,000,000".
Except as modified above, the Financing Agreement shall remain unmodified and in
full force and effect, and shall apply with such force and effect to this
amendment.
Please acknowledge the agreement of the Company to the terms of this
amendment by executing this letter in the space provided below and returning it
to CITBC. In addition, Parent also shall execute this amendment where indicated
below to confirm that Parent's obligations to CITBC under the Guaranty Agreement
dated as of October 21, 1998 and the Stock Pledge Agreement dated as of October
21, 1998 are unaffected and remain and in full force and effect notwithstanding
the amendments to the Financing Agreement set forth herein.
Very truly yours,
THE CIT GROUP BUSINESS CREDIT, INC.
By: /S/
-----------------------------------
Its: Assistant Secretary
----------------------------------
Agreed to this 25 th day of May, 1999:
-----
SAMES ELECTROSTATIC, INC.
By: /S/ Todd W. O'Neill
------------------------------------------
Title: Treasurer
---------------------------------------
SAMES CORPORATION
By: /S/ Arnold H. Dratt
------------------------------------------
Title: President and Chief Executive Officer
---------------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-START> DEC-01-1998
<PERIOD-END> MAY-31-1999
<CASH> 7,473
<SECURITIES> 0
<RECEIVABLES> 32,253
<ALLOWANCES> 0
<INVENTORY> 18,429
<CURRENT-ASSETS> 64,111
<PP&E> 11,935
<DEPRECIATION> 7,627
<TOTAL-ASSETS> 71,587
<CURRENT-LIABILITIES> 44,004
<BONDS> 1,132
2,965
0
<COMMON> 0
<OTHER-SE> 16,687
<TOTAL-LIABILITY-AND-EQUITY> 71,587
<SALES> 40,676
<TOTAL-REVENUES> 40,676
<CGS> 24,715
<TOTAL-COSTS> 24,715
<OTHER-EXPENSES> 14,697
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 523
<INCOME-PRETAX> 741
<INCOME-TAX> 190
<INCOME-CONTINUING> 931
<DISCONTINUED> (1,662)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (731)
<EPS-BASIC> (0.25)
<EPS-DILUTED> (0.25)
</TABLE>
