-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OwPkQy/PsVR989lUv8jD7RVwLHBwmn9u8W1LkiFZmNHyrgdK7xJtEfUfxc01zHHB 3S4jjjkFKSEE0yT0s/HwOQ== 0001047469-98-014879.txt : 19980415 0001047469-98-014879.hdr.sgml : 19980415 ACCESSION NUMBER: 0001047469-98-014879 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980414 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: BINKS SAMES CORP CENTRAL INDEX KEY: 0000012180 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT [3560] IRS NUMBER: 360808480 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-01416 FILM NUMBER: 98592999 BUSINESS ADDRESS: STREET 1: 9201 W BELMONT AVE CITY: FRANKLIN PARK STATE: IL ZIP: 60131 BUSINESS PHONE: 8476713000 MAIL ADDRESS: STREET 1: 9201 WEST BELMONT AVENUE CITY: FRANKLIN PARK STATE: IL ZIP: 60131 FORMER COMPANY: FORMER CONFORMED NAME: BINKS MANUFACTURING CO DATE OF NAME CHANGE: 19920703 10-Q 1 10-Q 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, 1998 / / Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period From _________ to ________ Commission file number 1-1416 BINKS SAMES CORPORATION ----------------------- (Exact name of registrant as specified in its charter) DELAWARE 36-0808480 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer 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, 1998 - ---------------------------- ----------------------------- Common, par value $1.00 2,963,837 PART I - FINANCIAL INFORMATION SUMMARIZED FINANCIAL STATEMENTS Company or group of companies for which report is filed: Binks Sames Corporation and Consolidated Subsidiaries CONSOLIDATED BALANCE SHEETS FEBRUARY 28, 1998 (UNAUDITED) AND NOVEMBER 30, 1997
Feb 28 Nov 30 1998 1997 ------- ------- ($000 omitted) ASSETS Current assets: Cash and cash equivalents $ 3,258 7,220 Receivables, net 64,856 73,638 Inventories 72,424 78,144 Other current assets 7,423 7,070 --------- ------- Total current assets 147,961 166,072 Other noncurrent assets 6,038 5,661 Property, plant and equipment, at cost 42,302 42,656 Less accumulated depreciation 23,146 22,655 --------- ------- Net property, plant and equipment 19,156 20,001 --------- ------- TOTAL ASSETS $ 173,155 191,734 --------- ------- --------- -------
-1- PART I - FINANCIAL INFORMATION - (Continued) Binks Sames Corporation and Consolidated Subsidiaries CONSOLIDATED BALANCE SHEETS FEBRUARY 28, 1998 (UNAUDITED) AND NOVEMBER 30, 1997
Feb 28 Nov 30 1998 1997 ------- ------- ($000 omitted) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable, bank overdrafts and current maturities of long-term debt $ 10,858 8,628 Accounts payable 42,304 58,249 Other current liabilities 19,997 23,295 --------- ------- Total current liabilities 73,159 90,172 Deferred compensation 7,309 7,313 Deferred income taxes 453 452 Long-term debt, less current maturities 63,842 60,946 --------- ------- Total liabilities 144,763 158,883 --------- ------- Stockholders' equity: Capital stock, $l.00 par value. Authorized 12,000,000 shares; issued 2,963,837 shares 2,964 2,964 Additional paid-in capital 19,629 19,629 Retained earnings 9,674 13,333 Foreign currency translation adjustments (3,875) (3,075) --------- ------- Total stockholders' equity 28,392 32,851 --------- ------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 173,155 191,734 --------- ------- --------- -------
-2- Binks Sames Corporation and Consolidated Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED FEBRUARY 28, 1998 AND FEBRUARY 28, 1997 (Unaudited)
For the three months ended ------------------------ Feb 28 Feb 28 1998 1997 ------- ------- ($000 omitted) Net sales $ 59,864 64,591 Cost of goods sold 44,967 45,968 ----------- --------- Gross profit 14,897 18,623 Selling, general and administrative expenses 17,134 17,522 ----------- --------- Operating income (loss) (2,237) 1,101 ----------- --------- Other expense (income): Interest expense 1,615 1,074 Other expense (income), net (89) (130) ----------- --------- 1,526 944 Earnings (loss) before income taxes (3,763) 157 Income tax expense (benefit) (104) 15 ----------- --------- Net earnings (loss) $ (3,659) 142 ----------- --------- ----------- --------- Basic and diluted earnings (loss) per share $ (1.23) .05 ----------- --------- ----------- --------- Average diluted shares outstanding 2,963,837 3,121,627 ----------- --------- ----------- --------- Cash dividends declared per share $ - - ----------- --------- ----------- ---------
-3- Binks Sames Corporation and Consolidated Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended February 28, 1998 and February 28, 1997 (Unaudited)
1998 1997 --------- ------- ($000 omitted) Cash flows from operating activities: Net earnings (loss) $ (3,659) 142 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 861 1,052 Deferred compensation, net of payments 12 (17) Deferred income taxes (278) (294) Other, net 64 56 Cash provided by (used in) changes in: Receivables 7,061 (2,150) Inventories 4,950 8,087 Other current assets (456) (1,350) Accounts payable (15,099) (9,030) Accrued expenses (2,410) (6,333) Income taxes 102 54 --------- ------- Net cash provided by (used in) operating activities (8,852) (9,783) --------- ------- Cash flows from investing activities: Purchase of property, plant and equipment (238) (719) Proceeds from sale of equipment 8 29 Other investments and assets (166) 67 --------- ------- Net cash provided by (used in) investing activities (396) (623) --------- ------- Cash flows from financing activities: Proceeds from long-term borrowings 3,024 1,035 Net increase (decrease) in short-term borrowings 2,405 1,971 Principal payments on long-term debt (40) (140) --------- ------- Net cash provided by (used in) financing activities 5,389 2,866 --------- ------- Effect of exchange rate changes on cash (103) (217) --------- ------- Net increase (decrease) in cash and cash equivalents (3,962) (7,757) Cash and cash equivalents at beginning of period 7,220 16,200 --------- ------- Cash and cash equivalents at end of period $ 3,258 8,443 --------- ------- --------- -------
-4- BINKS SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FEBRUARY 28, 1998 (UNAUDITED) AND NOVEMBER 30, 1997 NOTE 1 The accompanying financial statements are unaudited, but in the opinion of management include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of operations and financial position for the periods presented. Results of operations for any interim period are not necessarily indicative of results for any other period or for the full year. These interim financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Annual Report on Form 10-K/A for the year ended November 30, 1997. NOTE 2 As a result of successive years of losses in fiscal 1996 and fiscal 1997, and the related impact on the Company's financial condition, the Board of Directors has determined to seek a sale of the Company. The Company has retained financial and other advisors to identify potential purchasers. NOTE 3 On February 13, 1998, John J. Schornack, 67, resigned and retired as Chairman of the Board of Directors of the Company. Dr. Donald G. Meyer, 63, a director of the Company since 1996, and previously a director of the Company from 1990 to 1995, was elected Chairman of the Board to succeed Mr. Schornack. Doran J. Unschuld, 74, the Company's President and Chief Executive Officer since 1996, and an employee of the Company since 1952, has announced that he will retire as President and Chief Executive Officer at the Company's annual meeting in April 1998. Dr. Meyer will assume the position and responsibilities of President and Chief Executive Officer upon the retirement of Mr. Unschuld. NOTE 4 In January 1998, the Company notified the developer and landlord of its planned future headquarters site in Vernon Hills, Illinois that the Company wanted to terminate the project. The Company had previously entered into a 20 year lease agreement for the Vernon Hills site. On March 20, 1998, the landlord filed suit against the Company claiming that the Company is in default of its obligations under the lease. While groundbreaking for the new site never occurred, it is anticipated that the Company will incur lease termination costs. The Company is unable to make a meaningful estimate of the amount or range of loss that could result from an unfavorable resolution of this matter. The Company is the defendant in a lawsuit filed by former financial advisors seeking approximately $900 thousand under terms of a contract. Management believes that all required payments have been made and no further amounts have been provided for. The Company has certain other contingent liabilities resulting from litigation and claims incident to the ordinary course of business. Management believes that the probable resolution of such contingencies will not materially affect the financial position or results of operations of the Company. For information relating to other legal matters involving the Company, reference is made to Item 3 "Legal Proceedings" in the Company's form 10-K/A for the year ended November 30, 1997. -5- BINKS SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SIGNIFICANT DEVELOPMENTS Beginning in June 1996, the Company's Board of Directors adopted measures as part of a comprehensive reorganization and restructuring of the Company. These measures included: (i) closing of the Company's manufacturing facility in Franklin Park, Illinois and shifting production to the Company's new Longmont, Colorado manufacturing facility; (ii) reduction of manufacturing capacity with increased outsourcing; (iii) rationalization of the Company's product line to eliminate non-profitable products; (iv) headcount reductions related primarily to manufacturing; and (v) reorganization of the Company's sales and marketing, product management, research and development, manufacturing and distribution functions along geographic and operational lines. In fiscal 1997, the Company recorded a net loss of $40.1 million, which followed a net loss of $11.1 million in fiscal 1996. The Company's net losses included special charges of $21.1 million in 1997 and $18.9 million in 1996 due to impairment and restructuring charges, inventory writedowns and warranty and dispute resolution costs. The fiscal 1997 net loss also included a charge of $10 million to reduce the balance sheet carrying amounts of deferred tax assets initially recorded in prior years. As a result of the successive years of losses and the related impact on the Company's financial condition, the Board of Directors has determined to seek a sale of the Company. The Company has retained financial and other advisors to identify potential purchasers. On February 13, 1998, John J. Schornack, 67, resigned and retired as Chairman of the Board of Directors of the Company. Dr. Donald G. Meyer, 63, a director of the Company since 1996, and previously a director of the Company from 1990 to 1995, was elected Chairman of the Board to succeed Mr. Schornack. Doran J. Unschuld, 74, the Company's President and Chief Executive Officer since 1996, and an employee of the Company since 1952, has announced that he will retire as President and Chief Executive Officer at the Company's annual meeting in April, 1998. Dr. Meyer will assume the position and responsibilities of President and Chief Executive Officer upon the retirement of Mr. Unschuld. RESULTS OF OPERATIONS The Company had net sales of $59.9 million in first quarter fiscal 1998, a decrease of $4.7 million, or 7%, from the $64.6 million reported for first quarter fiscal 1997. The majority of the sales decline occurred in the Americas where sales declined 12% compared to the prior year. This decline was largely attributable to continuing logistical issues associated with restructuring North American manufacturing operations during fiscal 1997. However, there has been significant recent improvement in order delivery and order backlog on a total Company basis has declined by just under $9 million since November 30, 1997. Sales in European and Pacific Rim markets increased by 1% compared to first quarter fiscal 1997 and would have grown by 9% if prevailing first quarter fiscal 1997 currency exchange rates had remained in effect during first quarter fiscal 1998. Gross profit declined $3.7 million in first quarter fiscal 1998 compared to first quarter fiscal 1997. The gross profit margin was 24.9% in first quarter fiscal 1998 as compared to 28.8% for the same period last year. This decline was primarily due to the cost impact of increased lower margin automotive systems sales in Europe. Gross profit in the Americas increased to 26.7% in first quarter fiscal 1998 from 22.9% during the same period last year. Selling, general, and administrative expenses decreased $387 thousand (2%) as compared to first quarter fiscal 1997 reflecting cost reductions resulting from the restructuring of worldwide operations. Interest expense increased by $541 thousand (50%), due to higher average borrowing levels combined with higher effective interest rates. Other income, which decreased $41 thousand, includes interest income, exchange gains and losses, gains on sales of fixed assets, and miscellaneous income. The majority of this decrease was in European and Pacific Rim markets. Income tax benefit was $104 thousand on a pretax loss of $3.7 million in first quarter fiscal 1998, compared to income tax expense of $15 thousand on a pretax profit of $157 thousand in first quarter fiscal 1997. As a result of all of the factors above, the Company recorded a net loss of $3.7 million ($1.23 per share) in first quarter fiscal 1998 as compared to a net profit of $142 thousand ($.05 per share) in first quarter fiscal 1997. -6- BINKS SAMES CORPORATION AND CONSOLIDATED SUBSIDIARIES MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED LIQUIDITY AND CAPITAL RESOURCES Revenue generated from operations is the primary source of the Company's liquidity. Short-term funds are also provided for current operations through bank loans. The Company maintains substantial lines of credit for general corporate purposes. The unused lines of credit were approximately $21.8 million at February 28, 1998. The Company's cash balances decreased $3.9 million during the quarter ended February 28, 1998, largely due to cash outflows of $8.8 million used in operating activities. In addition to the net loss from operations, operational cash outlays for reductions of accounts payable and other current liabilities were $17.5 million, which were partially offset by reductions of receivables and inventories of $12 million. The Company used $396 thousand in investing activities in first quarter 1998, primarily for the purchase of capital equipment. Financing activities provided $5.4 million to the Company during first quarter fiscal 1998 which was primarily used to lower accounts payable and accrued liabilities. On September 23, 1997, the Company entered into a $50 million unsecured five-year credit facility with a syndicate of Chicago area banks. As of November 30, 1997, the Company was not in compliance with several of the financial covenants contained in the credit facility. On March 16, 1998, the Company agreed with the bank group to collateralize the credit facility, pay amendment fees, increase the interest rate to prime plus 1/2% on existing borrowings and prime plus 1% on new borrowings, and shorten the duration of the agreement to two years, in exchange for waiving all existing defaults, amending certain terms, and increasing the total line of credit to $52.5 million to accommodate the projected cash flow needs of the Company. On March 16, 1998, the Company also agreed with the holder of its 7.14% senior notes to pay amendment fees, increase the interest rate to 7.64%, and shorten the maturity to September 30, 1999 in exchange for waiving all existing defaults and amending certain terms of the agreement. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable -7- 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, 1998 (Unaudited) contained herein. Items 2 through 5 Not applicable Item 6 (a) Exhibit 10.9 Form of bonus agreements with certain executive officers and key employees (b) On February 17, 1998, the Company filed a Current Report on Form 8-K reporting that the Company had issued a press release regarding the Company's intention to pursue a sale of the Company and certain management changes. On March 23, 1998, the Company filed a Current Report on Form 8-K reporting the Company's fiscal 1997 year end results and arrangements made with the Company's bank group. On March 26, 1998, the Company filed a Current Report on Form 8-K reporting certain management changes. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Binks Sames Corporation /s/ Jeffrey W. Lemajeur - -------------------------------- Jeffrey W. Lemajeur, Treasurer/ Chief Financial Officer /s/ Doran J. Unschuld - -------------------------------- Doran J. Unschuld, President/ Chief Executive Officer Date April 14, 1998 -------------- -8- EX-10.9 2 EXHIBIT 10.9 BONUS AGREEMENT THIS BONUS AGREEMENT is effective as of the ______ day of _______________, 1998, by and between Binks Sames Corporation, a Delaware corporation (the "Company"), and _______________ (the "Employee"). W I T N E S S E T H: WHEREAS, Employee is now employed by the Company; WHEREAS, Company is exploring certain strategic alternatives for the Company and/or its affiliates that may result in a transaction involving a Change in Control (as is hereinafter defined), and Employee acknowledges that prior to and after such a transaction Employee may become aware of confidential information which could cause irreparable harm to the Company and/or its stockholders if disclosed; WHEREAS, Company and Employee acknowledge that in order to facilitate such a transaction, it is desired that the Employee continue to be employed by the Company through the date of such transaction; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained in this Agreement, it is agreed as follows: 1. EXISTING EMPLOYMENT AGREEMENT. Nothing in this Agreement shall be construed to supersede the rights and obligations of the Employee or Company contained in any employment agreement. 2. STAY BONUSES/CLOSING BONUS. (a) FIRST STAY BONUS. The Company shall pay Employee an amount (the "First Stay Bonus") equal to the product obtained by multiplying (x) the amount of the Employee's Base Salary (as hereinafter defined) earned during the month of August 1998, by (y) six (6), less withholding taxes, other normal payroll taxes and any other amounts required by law to be withheld from the First Stay Bonus, no later than September 30, 1998, provided that (i) the Employee remains continuously employed with the Company for the period beginning March 1, 1998 through and including August 31, 1998 (the "First Six Month Period") and (ii) the Employee complies fully with the terms of this Agreement and any other current or future agreement between the Employee and the Company. "Base Salary" shall mean the gross amount of the Employee's base salary prior to withholding taxes, other normal payroll deductions and any other amounts required by law to be withheld for the specified one (1) month period, excluding any bonuses, benefits, profit sharing, pension, fringe benefits, or any other forms of compensation beyond the Employee's base salary. (b) SECOND STAY BONUS. The Company shall pay Employee an amount (the "Second Stay Bonus") equal to the product obtained by multiplying (x) the amount of the Employee's Base Salary earned during the month of February 1999, by (ii) six (6), less withholding taxes, other normal payroll taxes and any other amounts required by law to be withheld from the Second Stay Bonus, no later than March 31, 1999, provided that (i) the Employee remains continuously employed with the Company for the First Six Month Period and the period beginning February 28, 1998, through and including February 28, 1999 (the "Second Six Month Period") and (ii) the Employee complies fully with the terms of this Agreement and any other current or future agreement between the Employee and the Company. Except as otherwise provided in this Agreement, the First Stay Bonus and the Second Stay Bonus (collectively the "Stay Bonuses") are in addition to and not in lieu of the compensation, benefits and/or other bonuses that the Employee earns or is entitled to receive. The Stay Bonuses, Closing Bonus and death/Disability Payment (as hereinafter defined) are collectively referred to hereinafter as the "Bonuses". (c) CLOSING BONUS. If the Employee's employment with the Company is terminated (the "Change in Control Termination") as a direct result of a Change in Control during the First Six Month Period or Second Six Month Period, the Company shall pay the Employee an amount (the "Closing Bonus"), equal to the product obtained by multiplying (x) the amount of the Employee's Base Salary earned during the calendar month immediately preceding the month in which the Change in Control Termination occurred, by (y) twelve (12) if the Change in Control Termination occurs during the First Six Month Period, or by six (6) if the Change in Control Termination occurs during the Second Six Month Period, less withholding taxes, other normal payroll taxes and any other amounts required by law to be withheld from the Closing Bonus, within thirty (30) days after the date of the Change in Control Termination, provided that (i) the Employee remains continuously employed with the Company until the date of the Change in Control Termination, and (ii) the Employee complies fully with the terms of this Agreement and any other current or future agreement between the Employee and the Company. The Closing Bonus shall be paid to Employee in lieu of and not in addition to (A) the Stay Bonuses if the Change in Control Termination occurs during the First Six Month Period, (B) the Second Stay Bonus if the Change in Control Termination occurs during the Second Six Month Period and (C) any of the other Bonuses or payments provided for in this Agreement. (d) DEATH/DISABILITY. If the Employee dies or suffers a Disability (as defined below) during the First Six Month Period or Second Six Month Period, the Company shall pay Employee an amount (the "death/Disability Payment") equal to the product obtained by multiplying (x) the amount of the Employee's Base Salary earned during the calendar month immediately preceding the month in which the Employee dies or suffers a Disability, by (y) twelve (12) if the death/Disability occurs during the First Six Month Period, or by six (6) if the death/Disability occurs during the Second Six Month Period, less withholding taxes, other normal payroll taxes and any other amounts required by law to be withheld from the death/Disability Payment, within thirty (30) days after the date of death of the Employee or the date it is determined that the Employee has suffered a Disability (as provided for below), provided that (i) the Employee remains continuously employed with the Company until the date of the Employee's death/Disability, and (ii) the Employee complies fully with the terms of this Agreement and any other current or future agreement between the Employee and the Company. The death/Disability Payment shall be paid to Employee in lieu of and not in addition to (A) the Stay Bonuses if the date of the Employee's death/Disability occurs during the First Six Month Period, (B) the Second Stay Bonus if the date of the Employee's death/Disability occurs during the Second Six Month Period and (C) any of the other Bonuses or payments provided for in this Agreement. For purposes of this Agreement, the Employee shall be deemed to have 2 suffered a "Disability" if the Employee shall be: (i) deemed to be mentally or physically disabled by the insurance carrier which provides disability insurance coverage for employees of the Company and such mental or physical disability continues for six (6) months; (ii) in the absence of such disability insurance, when in the judgment of the Board of Directors of the Company, the Employee is unable to continue to perform the Employee's then current duties and such mental or physical disability continues for a period of six (6) months; or (iii) deemed to be mentally or physically disabled by a licensed practicing physician of the Company's choice. Notwithstanding Subsection (ii) or (iii) above, in the event of a dispute between the parties as to the Employee's Disability, the parties shall select a licensed practicing physician to determine the Employee's condition. In the event the parties cannot agree on the selection of a physician, the issue shall be submitted to arbitration for immediate resolution in accordance with Section 9. The determination of such physician shall be binding on the Company and the Employee and/or the Employee's personal representative. Termination of this Agreement or the Employee's employment hereunder due to the Employee's Disability shall not relieve the Employee of the Employee's obligations under Section 4. 3. CHANGE IN CONTROL. The term "Change in Control" means any transaction or a series of related transactions, whether involving the Company or the holders of any class or series of its stock, (a) in which the current shareholders of the Company cease to be the beneficial owners, directly or indirectly, of a majority of stock of Company or of any successor by merger, consolidation or similar transaction or (b) in which all or substantially all of the Company's assets shall be sold, leased, conveyed or otherwise disposed of as an entirety or substantially as an entirety to any person or entity. If a Change in Control is accomplished pursuant to (b) above, the person or entity purchasing substantially all of the assets of the Company shall become a party to this Agreement and shall assume all of Company's rights and obligations under this Agreement. If the person or entity purchasing substantially all of the assets of the Company does not become a party to this Agreement and assume the Company's rights and obligations hereunder, the Company shall not be released of its obligations hereunder. 4. EMPLOYEE'S DUTIES. (a) During the term of this Agreement the Employee agrees that Employee will not use for Employee's own account and, except pursuant to a court order, statute or government regulation, as is necessary to the performance of the Employee's duties to the Company or as requested by the Company's Chief Executive Officer, communicate or disclose to any person, or advise, discuss with, or in any way assist any other person or firm in obtaining or learning about, information concerning: (i) the potential or actual sale of the Company's assets or stock; (ii) the name(s) of any potential or actual purchaser; (iii) the terms of any offers (whether or not accepted); and (iv) the terms of this Agreement, including but not limited to the amount of the Bonuses provided for in Section 2. The Employee further covenants and agrees that Employee shall retain all such knowledge and information concerning the foregoing in trust for the sole benefit of the Company and its successor or assign. The Employee agrees to provide Company with prompt notice of any requests for information, court orders, subpoena, civil investigative demands or similar processes, seeking information or documents relating to the information enumerated in subparts (i)-(iv) of this paragraph, so that Company may seek an appropriate protective order, and, Employee further agrees to use the 3 Employee's best efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to such confidential information. (b) Employee shall not, during the term of this Agreement and for one (1) year thereafter, directly or indirectly provide services in the capacity as an owner, independent contractor, principal, agent, officer, director, partner, stockholder, employee or consultant to any person or entity that contacts or is contacted by the Company or one of its agents in connection with the anticipated disposition of the Company's assets or stock; PROVIDED, HOWEVER, that the restriction on Employee set forth in this Subsection 4 (b) shall not apply in the event the Company terminates the Employee's employment with the Company without Cause by Company (as defined below), including a Change in Control Termination, or the Employee terminates the Employee's employment with the Company with Cause by Employee (as defined below). 5. TERM. This Agreement shall terminate thirty-two (32) days after the end of the Second Six Month Period, unless terminated earlier pursuant to the provisions hereof. 6. TERMINATION BY COMPANY. (a) The Company may terminate this Agreement and Employee's employment with the Company at any time, with or without Cause by Company (as defined below), by written notice to Employee. Such written notice shall specify whether the termination is with or without Cause by Company and if such termination is with Cause by Company the notice shall specify in reasonable detail the underlying failure or misconduct giving rise to such termination with Cause by Company. If the Company terminates Employee's employment with Cause by Company, the Employee shall not be entitled to receive any of the Bonuses provided for in Section 2 of this Agreement. If, however, the Company terminates Employee's employment without Cause by Company (other than a Change in Control Termination) during the First Six Month Period or Second Six Month Period, the Company shall immediately pay the Employee an amount equal to the product obtained by multiplying (x) the amount of the Employee's Base Salary earned during the calendar month immediately preceding the month in which the Employee was terminated without Cause by Company, by (y) twelve (12) if such termination occurs during the First Six Month Period, or by six (6) if such termination occurs during the Second Six Month Period, less withholding taxes, other normal payroll taxes and any other amounts required by law to be withheld from such payment, within thirty (30) days after the date of such termination, provided that (i) the Employee remains continuously employed with the Company until the date of the Employee is terminated without Cause by Company, and (ii) the Employee complies fully with the terms of this Agreement and any other current or future agreement between the Employee and the Company. The payment provided for in the immediately preceding sentence shall be in lieu of and not in addition to (A) the Stay Bonuses if the date the Employee is terminated without Cause by the Company occurs during the First Six Month Period, (B) the Second Stay Bonus if such date occurs during the Second Six Month Period and (C) any of the other Bonuses or payments provided for in this Agreement. (b) The term "Cause by Company" shall mean: 4 (i) except in the event of the Employee's Disability, an act of misconduct or material failure by the Employee to perform the Employee's material duties or reasonable obligations to the Company which the Employee fails to remedy within thirty (30) days after written notice is received by the Employee specifying the alleged act of misconduct or failure in reasonable detail; (ii) conviction by the Employee of a felony; (iii) a material act of dishonesty or breach of trust on the part of the Employee resulting, or intending to result, directly or indirectly in personal gain or enrichment at the expense of the Company or its shareholders or other detriment to the Company or its shareholders; and (iv) disclosure of any proprietary information of the Company to the detriment of the Company or its shareholders (except pursuant to a court order or as otherwise permitted by this Agreement). (c) Termination of this Agreement and the Employee's employment by the Company with or without Cause by Company shall not relieve the Employee of the Employee's obligations under Section 4 of this Agreement, notwithstanding that Employee's compensation and benefits shall otherwise terminate. 7. TERMINATION BY EMPLOYEE. (a) The Employee may terminate this Agreement and the Employee's employment with the Company at any time with or without Cause by Employee (as such term is defined below), by written notice to the Company. Such written notice shall specify whether the termination is with or without Cause by Employee and if such termination is with Cause by Employee the notice shall specify in reasonable detail the underlying failure or breach giving rise to such termination with Cause by Employee. If the Employee terminates this Agreement and the Employee's employment with the Company without Cause by Employee, the Employee shall not be entitled to receive any of the Bonuses provided for in Section 2. If, however, the Employee terminates the Employee's employment with the Company with Cause by Employee (other than a Change in Control Termination) during the First Six Month Period or Second Six Month Period, the Company shall immediately pay the Employee an amount equal to the product obtained by multiplying (x) the amount of the Employee's Base Salary earned during the calendar month immediately preceding the month in which the Employee's employment is terminated with Cause by Employee, by (y) twelve (12) if such termination occurs during the First Six Month Period, or by six (6) if such termination occurs during the Second Six Month Period, less withholding taxes, other normal payroll taxes and any other amounts required by law to be withheld from such payment, within thirty (30) days after the date of such termination, provided that (i) the Employee remains continuously employed with the Company until the date the Employee's employment is terminated with Cause by Employee, and (ii) the Employee complies fully with the terms of this Agreement and any other current or future agreement between the Employee and the Company. The payment provided for in the immediately preceding sentence shall be in lieu of and not in addition to (A) the Stay Bonuses if the date the Employee's 5 employment is terminated with Cause by Employee occurs during the First Six Month Period, (B) the Second Stay Bonus if such date occurs during the Second Six Month Period and (C) any of the other Bonuses or payments provided for in this Agreement. (b) The term "Cause by Employee" shall mean: (i) a material breach by the Company of any material covenant or agreement hereunder where the Company has failed to remedy such alleged breach within sixty (60) days after written notice is received by the Company from the Employee specifying the alleged breach in reasonable detail; (ii) a reduction of the Employee's compensation and/or benefits without Cause by Company from the current amounts which the Employee is currently earning or entitled; (iii) a reduction of the Employee's duties and/or title without Cause by Company as they currently exist; and (iv) requiring the Employee to work in a location other than the location where the Employee is currently employed. (c) Termination by the Employee with or without Cause by Employee of this Agreement or the Employee's employment hereunder shall not relieve the Employee of the Employee's obligations under Section 4 of this Agreement, notwithstanding that Employee's compensation and benefits shall otherwise terminate. 8. REMEDIES. Notwithstanding Section 9 of this Agreement, in the event of a breach or threatened breach by the Employee of Section 4, the Company shall be entitled to a temporary restraining order and an injunction restraining the Employee from the commission of such breach. Nothing herein contained shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of money damages. In any dispute arising from this Agreement, the prevailing party shall be entitled to reimbursement from the other party of reasonable attorney's fees and costs incurred in connection with such dispute. 9. ARBITRATION. Except as otherwise provided for in this Agreement, the Company and Employee agree to settle any controversy or claim arising out of or relating to this Agreement or the breach thereof by arbitration in the City of Chicago, Illinois, in accordance with the rules then obtaining of the American Arbitration Association, and judgment upon the award rendered may be entered in any court having jurisdiction thereof. 10. WAIVER OF BREACH. The waiver by either party of a breach of any provision of this Agreement by the other party shall not operate nor be construed as a waiver of any subsequent breach by the other party. 11. BINDING EFFECT. This Agreement shall inure to the benefit of and shall be binding upon the parties hereto and their respective successors, assigns, heirs and legal representatives, including 6 the person or entity purchasing the assets or stock of the Company which causes a Change in Control. Insofar as the Employee is concerned, this Agreement, being personal, cannot be assigned. 12. HEADINGS. The headings contained in this Agreement are for reference purposes only and shall not affect the construction or interpretation of this Agreement. 13. SEVERABILITY. Whenever possible each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 14. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall, when executed, be deemed to be an original, but all of which together shall constitute one and the same instrument. 15. GOVERNING LAW. This Agreement shall be construed (both as to validity and performance) and enforced in accordance with and governed by the laws of the State of Illinois, without reference to the conflict of law provisions of such state. 16. NOTICE. All notices which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given when delivered in person or three (3) days after being mailed by registered or certified first class mail, postage prepaid, return receipt requested, if to the Employee, at the address listed under his name, or if to the Company, at the address listed under its name or to such other address as such party shall have specified by notice to the other party hereto as provided in this Section. 17. ENTIRE AGREEMENT. Except as specifically provided for in this Agreement, this Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and date first above written. EMPLOYEE: COMPANY: BINKS SAMES CORPORATION By: - -------------------------------------- -------------------------------- Name: Name: ------------------------------ Its: ------------------------------- Address: Address: - -------------------------------------- 9201 Belmont Avenue Franklin Park, Illinois 60131 - -------------------------------------- 7 EX-27 3 EXHIBIT 27
5 1,000 3-MOS NOV-30-1998 DEC-01-1997 FEB-28-1998 3,258 0 64,856 0 72,424 147,961 42,302 23,146 173,155 73,159 63,842 0 0 2,964 25,428 173,155 59,864 59,864 44,967 44,967 0 0 1,615 (3,763) (104) (3,659) 0 0 0 (3,659) (1.23) (1.23)
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