<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
20549
----------------------------------
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 February 28, 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
BINKS 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
-------------------------------------------------------
(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 February 28, 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:
Binks Sames Corporation and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
FEBRUARY 28, 1999 (UNAUDITED) AND NOVEMBER 30, 1998
<TABLE>
<CAPTION>
Feb 28, Nov 30,
1999 1998
------- -------
($000 omitted)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,381 5,204
Receivables, net 30,874 44,795
Inventories 17,901 16,465
Other current assets 5,273 5,227
Net assets of discontinued operations 995 1,569
-------- -------
Total current assets 58,424 73,260
Other noncurrent assets 3,410 4,547
Property, plant and equipment, at cost 12,292 12,697
Less accumulated depreciation 7,835 7,971
-------- -------
Net property, plant and equipment 4,457 4,726
TOTAL ASSETS $ 66,291 82,533
-------- -------
-------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, bank overdrafts
and current maturities of long-term debt $ 2,531 6,210
Accounts payable 23,420 30,316
Other current liabilities 12,143 16,085
-------- -------
Total current liabilities 38,094 52,611
Deferred compensation 6,851 7,366
Deferred income taxes 82 85
Long-term debt, less current maturities 1,186 1,238
-------- -------
Total liabilities 46,213 61,300
-------- -------
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
Retained earnings (886) (300)
Accumulated other comprehensive income:
Foreign currency translation adjustments (1,653) (1,084)
-------- -------
Total stockholders' equity 20,078 21,233
-------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 66,291 82,533
-------- -------
-------- -------
</TABLE>
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<PAGE>
Binks Sames Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED FEBRUARY 28, 1999 AND FEBRUARY 28, 1998
(Unaudited)
<TABLE>
<CAPTION>
For the three
months ended
-------------------------
Feb 28, Feb 30,
1999 1998
------- -------
($000 omitted)
<S> <C> <C>
Net sales $ 17,776 31,954
Cost of goods sold 9,682 24,231
-------- -------
Gross profit 8,094 7,723
Selling, general and administrative expenses 6,688 6,518
Research and development costs 994 940
-------- -------
Operating income 412 265
-------- -------
Other expense (income):
Interest expense 351 150
Other expense (income), net (530) 159
-------- -------
(179) 309
-------- -------
Income (loss) from continuing operations
before income taxes 591 (44)
Income tax benefit 13 123
-------- -------
Income from continuing operations, net of tax 604 79
Loss from discontinued operations, net of tax (1,190) (3,738)
-------- -------
Net loss $ (586) (3,659)
-------- -------
-------- -------
Income (loss) per share - basic
Continuing operations $ .20 .03
Discontinued operations (.40) (1.26)
-------- -------
Net loss $ (.20) (1.23)
-------- -------
-------- -------
Income (loss) per share - diluted
Continuing operations $ .20 .03
Discontinued operations (.40) (1.24)
-------- -------
Net loss $ (.20) (1.21)
-------- -------
-------- -------
Weighted average shares:
Basic 2,964 2,964
Effect of stock options 8 40
-------- -------
Diluted 2,972 3,004
-------- -------
-------- -------
</TABLE>
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<PAGE>
Binks Sames Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended February 28, 1999 and February 28, 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
------ ------
($000 omitted)
<S> <C> <C>
Cash flows from operating activities:
Continuing operations:
Income from continuing operations - net of tax 604 79
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 254 329
Deferred compensation, net of payments (503) 14
Other, net 188 (66)
Cash provided by (used in) changes in:
Receivables 12,361 5,146
Inventories (1,760) 2,775
Other current assets (499) (987)
Accounts payable (3,310) (8,786)
Accrued expenses (2,318) (1,783)
Income taxes - 3
------- -------
Net cash provided by (used in) operating activities 5,017 (3,276)
------- -------
Cash flows from investing activities:
Purchase of property, plant and equipment (104) (81)
Other investments and assets (28) (61)
------- -------
Net cash used in investing activities (132) (142)
------- -------
Cash flows from financing activities:
Proceeds from long-term borrowings - 3,000
Net increase (decrease) in short-term borrowings (3,436) 1,329
Principal payments on long-term debt - (10)
------- -------
Net cash provided by (used in) financing activities (3,436) 4,319
------- -------
Net cash used by discontinued operations (3,099) (3,898)
Effect of exchange rate changes on cash (173) (39)
------- -------
Net decrease in cash and cash equivalents (1,823) (3,036)
Cash and cash equivalents at beginning of period 5,204 5,610
------- -------
Cash and cash equivalents at end of period $ 3,381 2,574
------- -------
------- -------
</TABLE>
-3-
<PAGE>
BINKS SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 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 and related notes contained in the Annual Report on Form
10-K for the year ended November 30, 1998.
NOTE 2
On March 29, 1999, 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.
The Company's decision to move forward with this strategy was prompted by a
lawsuit filed March 24, 1999 in Circuit Court in Chicago, Illinois by
Illinois Tool Works Inc ("ITW"). The Company has been in discussions with 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 "Binks Business". The Company and ITW had jointly
agreed to mediate this dispute. Despite such agreement, ITW filed the suit
seeking a preliminary injunction to, among other things, prevent the Company
from making any material changes to its business. The suit does not seek
specified monetary consideration but alleges, without substantiation, that
the Company will owe ITW $20 million under the purchase price adjustment.
The Company had been in discussions with certain organizations to form
strategic multi-market alliances to broaden its current global distribution
channels. These alliances were to be consummated, and announced, during the
first week of April 1999. The Company has suspended its discussions with its
strategic alliance partners, pending resolution of the ITW matter, and
intends to vigorously challenge the ITW court action, while seeking damages
associated with this interference of the Company's future growth.
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.
-4-
<PAGE>
BINKS SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1999 (UNAUDITED) AND NOVEMBER 30, 1998 - (CONTINUED)
NOTE 4
During first quarter fiscal 1999, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income". SFAS
No. 130 establishes standards for the reporting and display of comprehensive
income and its components in a full set of general-purpose financial
statements, and requires a total for comprehensive income to be provided in
condensed financial statements of interim periods. Comprehensive income
includes all changes in stockholders' equity during the period except those
resulting from investments by owners and distributions to owners.
Comprehensive loss for the quarters ended February 28, 1999 and 1998
consisted of the following ($000 omitted):
<TABLE>
<CAPTION>
THREE MONTHS ENDED FEBRUARY 28
1999 1998
--------- ---------
<S> <C> <C>
Net loss $ (586) (3,659)
Other comprehensive income (loss):
Foreign currency translation adjustment (569) (673)
Comprehensive loss $(1,155) (4,332)
</TABLE>
-5-
<PAGE>
BINKS 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, 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.
The Company's decision to move forward with this strategy was prompted by a
lawsuit filed March 24, 1999 in Circuit Court in Chicago, Illinois by
Illinois Tool Works Inc ("ITW"). The Company has been in discussions with 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 "Binks Business". The Company and ITW had jointly
agreed to mediate this dispute. Despite such agreement, ITW filed the suit
seeking a preliminary injunction to, among other things, prevent the Company
from making any material changes to its business. The suit does not seek
specified monetary consideration but alleges, without substantiation, that
the Company will owe ITW $20 million under the purchase price adjustment.
The Company had been in discussions with specific organizations to form
strategic multi-market alliances to broaden its current global distribution
channels. These alliances were to be consummated, and announced, during the
first week of April 1999. The Company has suspended its discussions with its
strategic alliance partners, pending resolution of the ITW matter, and
intends to vigorously challenge the ITW court action, while seeking damages
associated with this interference of the Company's future growth.
On April 1, 1999, Mr. Philippe Vuillerme (47) became Managing Director of the
Company's largest subsidiary, Sames, S.A. (Sames France). Mr. Vuillerme is an
engineer by training, and has held senior positions in Europe and the United
States with multinational corporations, including Procter and Gamble and
Avery Dennison. Mr. Vuillerme has been responsible for managing supply chain
issues, information systems, key customer accounts, new product development,
and marketing. As a senior manager of the Company, Mr. Vuillerme's focus at
Sames France will be to increase profitability by reducing product cost,
shortening manufacturing cycle time, and increasing customer satisfaction
through service, quality, price and on-time delivery.
RESULTS OF OPERATIONS
The Company had net sales of $17.8 million in first quarter fiscal 1999, a
decrease of $14.2 million, or 44%, from the $32 million reported for first
quarter fiscal 1998. The majority of the sales decline was experienced by
Sames France. In first quarter 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 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, versus first
quarter 1998.
Gross profit increased $371 thousand in first quarter fiscal 1999 as compared
to first quarter fiscal 1998. The gross profit margin was 45% in first
quarter fiscal 1999 as compared to 24% for the same period last year. This
significant increase was primarily due to the favorable cost impact, and
associated benefit to gross profit and margin, of the Company's sales mix as
experienced by Sames France. The margin improvement versus first quarter 1998
was also anticipated by the Company due to the lower relative contribution to
sales of large automotive installations in the quarter as compared to the
prior year.
Due entirely to fluctuations in currency translation rates on a comparative
quarter-to-quarter basis, selling, general, and administrative expenses
increased $170 thousand (3%) as compared to first quarter fiscal 1998.
Management's continued emphasis on cost containment and profitability
resulted in these expenses remaining essentially flat in first quarter fiscal
1999 compared to first quarter fiscal 1998.
-6-
<PAGE>
BINKS SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
Expenses associated with research and development efforts increased by $54
thousand versus first quarter 1998. These costs, as incurred in France, were
similarly affected by the higher average translation rate, and were
essentially equal to the prior year's level.
Interest expense increased by $201 thousand, and was reflective of increased
borrowing levels, primarily in North America.
Other income and expense includes interest income, foreign currency exchange
gains and losses, and miscellaneous income. Other income in first quarter
fiscal 1999 amounted to $530 thousand as compared to expense of $159 thousand
during the first quarter of the prior year. The majority of other income in
first quarter fiscal 1999 was attributable to foreign currency transaction
gains.
Income tax benefit was $13 thousand on pretax income of $591 thousand in
first quarter fiscal 1999, as compared to income tax benefit of $123 thousand
on a pretax loss of $44 thousand in first quarter fiscal 1998. 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 the
utilization of available domestic net operating loss carryforwards.
As a result of all of the factors above, the Company recorded net income from
continuing operations of $604 thousand ($.20 per diluted share) in first
quarter fiscal 1999 as compared to net income of $79 thousand ($.03 per
diluted share) in first quarter fiscal 1998.
For first quarter fiscal 1999, the loss from discontinued operations was $1.2
million ($.40 per diluted share) as compared to $3.7 million ($1.24 per
diluted share) in first quarter fiscal 1998.
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 February 28, 1999, the Company had
aggregate credit facilities of approximately $16.3 million, borrowings under
these facilities of $3.5 million, and amounts available under these
facilities of $12.8 million.
In first quarter fiscal 1999, the Company generated cash flow of $5 million
from operating activities primarily due to a significant reduction in
accounts receivable from fiscal 1998 year-end levels. This was partially
offset by cash usages related to increased inventory levels and reductions of
accounts payable and accrued liabilities.
The Company used $132 thousand in investing activities during first quarter
fiscal 1999 primarily related to purchases of capital equipment.
The Company used approximately $3.4 million to reduce its short-term
borrowings during first quarter fiscal 1999.
During first quarter fiscal 1999, the Company used a net $3.1 million in
discontinued operations, including $2.4 million disbursed under the
settlement agreement described in note 3 of notes to consolidated financial
statements.
-7-
<PAGE>
BINKS 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's suppliers have been contacted requesting Year 2000
information and have responded they are currently compliant or will be
compliant soon.
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 has made an effort to minimize the potential risk associated with
Year 2000 issues. The Company expects the worst scenario to be the temporary
shutdown of a computer system that could result in a slowdown of shipments of
products. An estimate of potential loss has not been made.
The Company is currently developing a comprehensive contingency plan to
address Year 2000 compliance situations that may arise. Finally, the Company
is also 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.
-8-
<PAGE>
BINKS 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 are 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 February 28, 1999, the French franc
had depreciated by approximately 4.4% compared to the prior year end.
However, the average French franc/U.S. dollar exchange rate was approximately
5.6% higher in first quarter fiscal 1999 than in first quarter fiscal 1998.
The Company also has operations in Japan and Sweden, where transactions are
denominated in Japanese yen and Swedish krona.
In first quarter 1999, the net change in the cumulative foreign currency
translation adjustment account, which is a component of stockholders' equity,
was an unrealized loss of $569 thousand. An unrealized foreign currency
translation loss of $673 thousand was recorded in first quarter fiscal 1998.
Foreign currency exchange transactions have not typically resulted in
significant periodic gains or losses, although Sames North America recorded a
gain of approximately $407 thousand during first quarter fiscal 1999. The
gain was recorded due to the combination of a relatively high intercompany
payable to Sames France, as 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
February 28, 1999.
Statements regarding the Company's potential and pending strategic alliances,
Year 2000 compliance, discussions with ITW and effects of the euro conversion
constitute "forward-looking statements" within the meaning of 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>
BINKS SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1 See Note 4 to Consolidated Financial Statements for
the period ended February 28, 1999
(Unaudited) contained herein.
Items 2 through 5 not applicable
Item 6 (a) Exhibits
Exhibit 10.1 - First amendment to Consulting
Agreement dated as of March 30, 1999 by and between
the Company and The Dratt-Campbell Company.
(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.
BINKS SAMES CORPORATION
/s/ Kevin C. Higgins
- --------------------
Vice President - Controller International Operations and Assistant Treasurer
Principal Accounting and Financial Officer
/s/ Arnold H. Dratt
- -------------------
Arnold H. Dratt - President, Chief Executive Officer and Director
Principal Executive Officer
Date April 14, 1999
--------------
-10-
<PAGE>
EXHIBIT 10.1
FIRST AMENDMENT TO CONSULTING AGREEMENT
This First Amendment to Consulting Agreement is made as of this 30th day
of March 1999 between Binks Sames Corporation ("BSC") and The Dratt-Campbell
Company ("Consultant").
WHEREAS, BSC and Consultant entered into a Consulting Agreement dated as
of October 1, 1998 (the "Agreement") and desire to amend such Agreement as
set forth herein;
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants herein, BSC and Consultant hereby agree as follows:
1. Paragraph 3 of the Agreement is hereby amended to increase the
monthly fee paid to Consultant from $25,000.00 to $33,333.33 per month from
and after the date hereof.
2. The following provision shall be included at the end of Paragraph 5
of the Agreement:
Notwithstanding any other term of this Agreement, Consultant
shall not be able to terminate this Agreement without "good
reason" (as defined herein) prior to April 1, 2000.
3. The first two sentences of Paragraph 12 of the Agreement shall be
amended and restated as follows:
In the event of a Change of Control (as hereinafter defined)
after the Commencement Date hereof, BSC shall, simultaneously
with the Change of Control, pay to Consultant all amounts due to
and including the date of that Change of Control, shall remain
obligated to provide the Director and Officer Liability Insurance
provided by Paragraph 6 and, in addition, shall, within five (5)
business days after the date of the Change of Control, pay
Consultant a lump sum payment in an amount equal to $500,000.00
PLUS an amount equal to twelve (12) times the sum of (i) the most
recent monthly medical premiums reimbursed by BSC pursuant to
Paragraph 4(b) above and (ii) the $600.00 monthly car allowance
described in Paragraph 4(c) above (the "Pre-Termination
Payment"). In the event of a Change in Control at any time
within the six (6) month period following termination of this
Agreement (i) by BSC for reasons other than "cause", or (ii) by
Consultant for "good reason", BSC shall, within five (5) business
days after the date of the Change of Control, pay Consultant a
lump sum payment in an amount equal to $250,000.00 PLUS an amount
equal to six (6) times the sum of (i) the most recent monthly
medical premiums reimbursed by BSC pursuant to
<PAGE>
EXHIBIT 10.1
Paragraph 4(b), above, and (ii) the $600.00 monthly car allowance
described in Paragraph 4(c) above (the "Post-Termination Payment").
4. The following provisions shall be included at the end of Paragraph
12 of the Agreement:
Notwithstanding the first sentence of this Paragraph 12, in the
event the per share purchase price received by the Stockholders
of the Company in connection with a Change in Control (the "Per
Share Stock Payment") is greater than $25.25 per share (the
"Target Amount"), the Pre-Termination Payment shall be reduced by
$12,500 for each $0.125 by which the Per Share Stock Payment
exceeds the Target Amount; provided, however, the maximum
reduction in the Pre-Termination Payment pursuant to this
sentence shall be $200,000.00. Notwithstanding the second
sentence of this Paragraph 12, in the event the Per Share Stock
Payment is greater than the Target Amount, the Post-Termination
Payment shall be reduced by $12,500.00 for each $0.125 by which
the Per Share Stock Payment exceeds the Target Amount; provided,
however, the maximum reduction in the Post-Termination Payment
pursuant to this sentence shall be $100,000.00.
5. In recognition of Consultant's service to the Company and the
entering into of this First Amendment, on the date hereof the Company shall
make a loan advance to Consultant in the amount of $150,000.00 which shall be
earned and forgiven on October 1, 1999; provided, however, if on or prior to
October 1, 1999 (i) the Company terminates the Agreement for "cause" (as
defined in the Agreement) or (ii) the Consultant terminates the Agreement
without "good reason" (as defined in the Agreement) Consultant shall promptly
repay such $150,000 loan advance to the Company, and such repayment shall not
be subject to any claim or right of set-off by the Consultant.
6. All capitalized terms which are not defined herein shall have the
same meaning as set forth in the Agreement.
7. Except as amended by this Amendment, the terms of the Agreement
shall remain in full force and effect. In the event the terms of the
Agreement should conflict with this Amendment, the terms of the Amendment
shall control.
8. This Amendment may be executed in any number of counterparts, and
each such counterpart shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement. Any facsimile
of this instrument shall be considered an original document.
2
<PAGE>
EXHIBIT 10.1
IN WITNESS WHEREOF, this Amendment has been executed and delivered as of
the date first above written.
THE DRATT-CAMPBELL COMPANY:
By:/s/ Arnold H. Dratt
Name: Arnold H. Dratt
Its: President
BINKS SAMES CORPORATION:
By: /s/ Wayne F. Edwards
Name: Wayne F. Edwards
Its: Chairman of the Board
3
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0
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